Thank you, Annie, and welcome everyone to our GenEraq Fireside Session. Special thanks to Nick, Aldo, and Sara for joining from GenEraq, and glad to have you guys back at the conference. Thanks for participating. I think I wanted to kick off with sort of a high-level kind of frame-up type question, then get into some of the comings and goings of the business model and the market backdrops. Nick, maybe if you could discuss Snap-on's market position, competitive distinction and challenges, and high-level management style and philosophy. Sure. Yes. Look, Snap-on is, I suppose, it's the, I would say, the premier tool company in the world, and certainly has a brand that is substantially one of the most powerful, if not the most powerful, with working men and women in the United States, all over the world, really, but particularly in the United States. Where we operate is we operate where the jobs are critical. That is, the need for repeatability and reliability justifies a Snap-on level tool or a piece of software or so on. We used to just provide wrenches, hand tools, but now we found, and we used to just sell through our van channel, which is now 40% of our business. We found that we could provide things, a wrench, of course, but a piece of software or anything in between, as long as it solved critical tasks. We could sell through our vans well, but we could also sell through distributors and direct. We have a big direct sales force. Our principal value-creating mechanism is a little different than others. We tend to want to be at the place of work so we can observe that work and figure out the particular challenges in the critical environments. When I say critical environments, I of course mean automotive repair, but also aviation, oil and gas, heavy-duty truck, education, mining, a lot of different things, again, where the penalty for failure is high. We like to be there. In fact, we are there. We spend more time in more workplaces than anybody else in the world. We call on a million technicians almost every week, almost a million technicians almost every week. We are there. We observe the work, and we get insight from that that says, "Boy, we could make a tool. We could make an innovation that would make that work easier, that would create greater ease in that work." That is the fundamental value-creating system that we have. We tend to make in the markets where we sell because the essence of our business is to be at the point of work. As such, we have 36 factories around the world, 15 here in the United States. In the parlance of the day, tariffs are not terrifying us. We are not immune to them, but we are resistant to them. We can maneuver around them very well. In terms of our management philosophy, I think it comes down to that. We like to be forwardly placed. We like to drive the decision-making down as close to the customer as possible. We try to be vertically integrated, which we are. Again, we try to be as close to the customer, all while trying to make sure that we keep reinforcing one incontrovertible fact: work is essential. We saw it in the pandemic. We try to reinforce the pride and dignity of work. One of the best supports for that is that Snap-on brand is the outward sign of pride and dignity that working men and women take in their profession. They ask us, they take pictures on their wedding days in front of a Snap-on box or off a Snap-on truck. They put a Snap-on wrench in the hands of their newborns, and they ask us for Snap-on boxes so they can bury their loved ones' ashes in them. I ain't kidding about that too. It is the outward sign of pride and dignity, pride and dignity for working men and women. That is our company. Great. Thanks for that, Nick. Right now, we're in an environment where you have a, I think you call it confidence poor, the condition for the techs presently with all the headlines and issues. Your response has been what it's been in the past: SOT, assortment, pivot work. You had some nice initial momentum, it looked like, in the third quarter. Effectiveness arguably ebbed into the first quarter as maybe that sort of sentiment fatigue got built more with the techs' condition. Are there other adjustments to make there? Is it more just kind of block and tackle, execute the pivot? I think this, Chris. I think I would characterize it slightly differently. I think we kept making progress in the first quarter. It's just there was such a huge drop in confidence in that quarter. Now, you might say, "Well, it's baloney." You're just kind of taking windshield ideas of supporting maybe or justifying a downward trend. If you think about it qualitatively, we were seeing, just let me back up and say, the garages are filled. We don't think they're cash poor. We think they're cash rich. They keep getting cash. The problem is, all through the past year, they've been looking at the bad news they're getting for breakfast, like the two wars. Now, you might say, "Okay, it's the Ukraine and the Middle East. How's that going to affect us?" If you're twirling wrenches in a garage, you're pretty sure that your children, if we fight, your children are going to be among those who fight. You see, that's the thing. It weighs on the grassroots. These are people who have FICO scores 600, 620, that kind of thing. They're at the bottom level of the economic chain. Now they do pretty well. They keep their families warm and safe and dry, and they have money for tools and so on, but they're not the same level as the people on this call. They have a view for this. They see things like the border was kind of chaotic, and they saw the idea that the prices went up in the post-pandemic period when Shanghai or China interrupted a supply chain and it hadn't gone down. Beef is still 44% above what it was in pre-pandemic levels, and milk is still 23% above. Eggs are quite a bit above, but for a lot of reasons. They see that, and they worried about that uncertainty. They pulled back from big-ticket items. Now, big-ticket items in Snap-on's parlance are like the box behind me. They get financed over three, four, five years. They did not want to, less willing to tie themselves to that kind of cash obligations. They were willing, though, to go into the quicker payback items, which they liquidated the payments in 12-15 weeks. They kind of had a consumer shift, and we were pivoting our product line. 30% of our product line are those big-ticket items that are longer paybacks and are financed over three to four to five years. The other two-thirds are pretty much the shorter items. We were pivoting more of our product line to that. It was working. The uncertainty kept going. The uncertainty did not abate, but we kept closing the gap through last year by virtue of the effectiveness and the pivot. The new administration came. They are looking at this and they are hearing the rapid fire coming out of Washington, words like, "Gaza. We are going to build a hotel in Gaza. We are going to take over Greenland. I do not know what we are going to do with Canada." You hear that, and you hear the tariff blizzard, the fog of tariffs, and they are thinking, "Geez, what is really going to happen now?" If you think about that, it is a higher level of uncertainty for virtually everyone now, qualitatively. Quantitatively, if you want to look at consumer sentiment, it dropped 30 percentage points since December to the second lowest ever. What happened was our pivot kept working. We were learning things about what we could sell that they would accept, like lower levels of some of these boxes. People still bought those or lower-level diagnostic units. We did that. We learned some things and made some gains, but the confidence dropped much more precipitously. Thus, the change. Great. Helpful frame-up. Thank you. How would you size the unmitigated tariff costs and timeline to neutralizing? Is it primarily sourcing and production shifts relative to pricing? No, look, I think it's, boy, you know, Wrangler. The thing is that it's not, who knows now? I mean, where do you think Vietnam tariffs are going to land? They're talking about talking to China now. You don't know. You don't know. Particularly, I think a particular thing is it seems like every day we're actually tracking the announcements out of the White House. Every day. We have somebody tracking the announcements because they're going wild. Every day there's a new revelation that comes out. I'm meeting with this guy. I'm going to exempt the consumer goods, things like that. I think it's pretty hard to judge. Also, in our case, where we don't have big flows as imports. Remember, we make in the markets where we sell. What comes off the van, 80% is made in America. Our main products, the tool storage box behind me, the hand tools we have, 100% U.S., U.S. steel, everything. A lot of others are mostly U.S. products, and some come from places like Europe. There is a kind of complex cocktail of sourcing. As the tariffs go up and down, it is very hard to predict that. On top of it, we have the ability to direct our sales through our promotion programs to things we think are unaffected by the tariffs. Thirdly, we have experience in shifting things that occurred in the pandemic, right after the pandemic, when, as I said, when the supply chains were interrupted. If you look at that, you say it is hard to predict what the exposure is going forward because we would like it to be very minimal. Now, it's not going to be minimal, but we're working pretty hard to do this. We're enabled to do this because if you step back and think about it, people have talked about three to five years to put up manufacturing plants in the U.S. We're not going to do that. The barriers to those manufacturings are three things. Do you have the facilities? We have 15 plants in the U.S. The biggest ones, we've just expanded. Do you have the know-how? We make a version of almost everything we sell in the U.S. already, even if we import it from other places. We make a version of it. We have the know-how here to do most of our stuff. Finally, people say, and I think this is true, it's hard to get workers. We have a pretty good reputation with our workers, and we can hire because we did not lay off in the pandemic. We have not had trouble getting workers. I think we are, one, we have a thinner wedge exposed. We are kind of advantaged versus others in this situation because we are making the markets where we sell. We are experienced recently in having done this. By facility, if you count the plant space, the know-how, and the workers, we are pretty enabled in this situation. How that all plays out going over the future is hard to say, but I kind of like our chances to be among the best in this. Thanks. Appreciate that. I wanted to discuss the resilience we've seen out of our RS&I's OEM business. To what degree is that isolated from OEM production challenges and profitability on EVs, all the noise that they're facing on the production side? Obviously, the service centers are a different business under that, but within the same entities. There is a business, I presume you're referring to the business within RS&I, we call equipment services, that really has done well recently. It has done well on two things. I haven't talked about this very much, but it has been one of the drivers. RS&I, by the way, was up 3.7% in the quarter, and its profitability was 25.7%, up 140 basis points. That profitability went up 70 basis points of gross margin. It was pretty cool in that situation. Within that, one of the late bloomers here over the last, I'd say, three or four years, you follow us, Chris, is that our EQS business, which gets projects or programs from the OEMs and provides those to the dealerships. What this might be, it usually is something like this. Every time somebody brings out a new car, believe me, there are repair idiosyncrasies built into that car that they do not foresee. When they finally see the finished car, they would say, "Whoops, it is going to be hard to get this wiring harness. It is going to be hard to get those spark plugs. We need a software patch or something like that." They would engage us to provide that product and distribute it to their dealerships. They prescribe five to every dealership or one or two, things like that. It could be something like a lift table for batteries in an electric vehicle. Every time a new model comes out, there is some of that. Every time there is a recall, there is some of that. That gets driven by the programs. What you're seeing now, even though you could argue that when the auto industry is down, they might pull back from some of those programs if they were discretionary. If you're bringing out new, some of them can be discretionary to improve vehicles as well, to improve the service. There are three types of things. One, new model. One, recall. One, improve the service. You might see the improved service come out if the OEMs were difficult. OEM sales, I think, are kind of down. The new model introductions keep going. That's probably going to keep that business moving. It is a lumpy business because you got to get a program. You got to get a program. Sometimes there'll be a quarter without the program. Lately, it's been a nice drumbeat, and I don't see an interruption to that. Here's something else that happened in that space. As we've gotten more and more in this business, and as we've become more capable, and as the OEMs have become more familiar with our capability, I think it's pretty sure that we're gaining a larger share of those programs. That's what's been driving us. In the quarter, that business was up kind of double digits. It did pretty well in terms of profitability. That was up. I don't see that going down in the near term. That doesn't back away, Chris, from the overall thing that it is a kind of lumpy business, and you could see some flat spots from quarter to quarter to quarter. I'm not telling you anything about the next quarter, by the way. I'm just saying. I understand. I see it going upwards because I see us gaining share. I see a number of new models coming out just staying at a good beat. Great. Going over to C&I, had some military softness more than offset a decent trend at the balance of critical industries and just modest international softness. You have talked about, been here before with military change of administration. Sometimes people take a pause. What is your base case for how the military demand phases? It seems to be kind of steering directionally what C&I is going to do. Look, I think, the military, let's put it this way. Here's the quarter for C&I. C&I was down, I think, 2.9% organically. Its profitability was 15.5%, up 10 basis points. Its gross margin was up 180 basis points. Fundamentally, the C&I profitability would have been substantially stronger if we did not keep spending around a lot of those areas. We kept spending. Actually, that's a theme for Snap-on in total. Snap-on gross margin was up in the quarter, 50.7%, up 20 basis points. We kept spending even with lower volume. That is what drives some of the profitability financials in this quarter. Gross margin pretty strong, reasonably strong, not up where we want it to go, but it is still up and offset by just same SG&A at lower volume. You come back to C&I, they were down in the quarter, up in profitability, but the whole down was explainable by the military. The military is in what we call the critical industry segment of C&I, piece of C&I. We find this not every time a new administration comes in, but often. New administration comes in, it's a new sheriff in town. I'm going to put my stamp on it. Usually what happens is after a while, and this is a time space of indeterminate proportion. What happens really is in the end, the new stuff does not work as well as the new people thought it was going to. It clogs the system as it did now. It tends to stop the system. The war fighters complain. Nobody wants the guy to be standing there. When the 50-caliber bullets are going overhead and the wrench breaks, they want to have the best stuff there. In the end, the war fighters, when it goes back to normal. I think you'll see that happen. I can't predict when that will happen, but it will come back. I have to say, I do think, boy, I think our view is, in fact, I think most people would say this. I think the wind is blowing on the side of more military spending, I think. I don't think that's going to be a hole in the system. Now, overall, that business has been doing okay. Its profitability has been going up. C&I's profitability has gone up. The critical industries have been driving it, even against the headwinds of the international markets. C&I is our most international of businesses. I would say where the tools group, maybe 85% United States, and RS&I maybe 70% United States or North America, rather. C&I is like 40, and the rest is outside somewhere. I think you can see some waves associated with international business. In this quarter, Europe was weaker than before. It has not been strong since the Ukraine wars. What we saw in this quarter, the Nordic countries seemed to turn down. Maybe Spain and Italy were a little weaker. Germany seemed to get better for us. When you go out to Asia, I mean, China is kind of a basket case. Japan was okay, but it had a currency problem in the quarter in terms of importing stuff. Indonesia, and India is weakening, I think, because Modi, the prime minister, has lost his mortal lot majority and able to impose things. It's starting to drift away in terms of a great economy now. You kind of see those things happen internationally. I do think when you look at that business, boy, the critical industries are getting bigger and better than ever before, higher profitability. This time, the military gave them a hold. Everything else, you looked at everything else, they were up nicely. I do believe you got that. The rest of the business will just have to deal with the ebbs and flows. There are ebbs, but then there are positives. I do really think we have something going there in C&I. Okay. Great. I think I'll try to come back to that. Wanted to jump over to the liquidity that you have, the cash position. I'm going to pause to remind anyone listening in. We have the portal. I'll check it for Q&As in a bit. You have $1 billion foreign cash, $230 million net cash. Just wanted to revisit thoughts on carrying so much liquidity. Some would argue it's inefficient with the dividend payout over two times covered. Historically, share purchase and bolt-on activity has been fairly modest. The cash position, coupled with the capital allocation posture, seems to beg, it seems to leave a gap with the capital intentions there. Okay. I'll tell you our intentions. Our first priority is working capital. We're working capital hogs. You only have to look at our working capital. We're working capital intensive. We get a good return on it, though. Our return on assets, I think, is in the 30s someplace, mid-30s. I think that's not so bad, I do think. It generally goes upwards. I think that's proven to be a good formula for us. We are working capital hogs. Secondly, yes, we do pay a dividend. We started paying a dividend in 1939, and we have paid one every quarter since, and we have never reduced it, which means our dividend policy is perpetuity. We want to make sure that we can keep that up because we think that's a very big positive to our long-term shareholders. We do make acquisitions. I like to be ready to make big or small acquisitions. We've made some bolt-ons in the past that have been significant. For example, Car-O-Liner or Norbar, Car-O-Liner, the collision business, and Norbar, the heavy-duty torque business, or Dealer-FX, the software business for running dealer shops. Those have been reasonable. We're not afraid to make a big one, actually. You might think we are. I'm just not looking for something transformative. If I found something that was coming our way that was coherent with our businesses, that is, expand, enhance the van channel, expand with repair shop owners and managers, extend to critical industries, and build in emerging markets that would enable us in the critical, we'd be willing to take, we'd be willing to go after that. We review every quarter. We review these things pretty extensively, but we're careful about our money. We buy back shares. We have bought back some shares in reasonable proportion to those things if you actually go back and look at it. On top of it, the consumer sentiment just dropped 30%. I'm not sure I am moaning about having cash. I'm not sure. I don't think Warren Buffett is moaning either. We are not Warren Buffett either. I don't think this is the worst time to have cash. That does not mean I think we are going to need it, but I like having it there because I do think we might make an acquisition or we might do something else. I do not know. Those are our priorities. Okay. Great. Appreciate the Buffett comparison. He does like to have a lot of cash on. He retired before you did, so. That's true. He's a lot older than me, though, I want to point out. He is. Good point. I may be old, but he was old. He's a lot older. While we're on the topic of bigger strategic prospects and probabilities and considerations here, the C&I strategic growth target is above, more into the heavier mid-single digits. You've gotten that in spots. It's been tough to do that on a compound basis, even though the backdrop of having less market share makes sense why that would be your leading growth business through the time. We talked about one thing goes this way, one thing goes that way. To what extent do you and the board review the idea of maybe slimming down? Do you need to be in European tools, APAC? Can you better configure the portfolio composition at C&I at large to better enable, say, a 5% or 6% compound truly through the cycle? Look, two years ago, it would have been penal not to be in China. It is still the largest market in the world, or maybe one of the largest markets in the certainly large automotive market in the world. I am not so sure I like pulling out of there. I do have faith in Asia. It is running through a spot now where there is a lot of turbulence, but I am not abandoning the idea that that is an opportunity. This is kind of very judgmental. I happen to be a judgment. My judgment is Asia is still an opportunity for us. It is because it is still emerging. It has tremendous economic power in a lot of different places. I feel that is some place you want to be. I think Europe, you have some question about Europe. We do review this periodically. It is not like we're not looking at this with a critical eye. We learn things in Europe. Our businesses in Europe around RS&I are pretty good. You could say the European hand tools business in Asia, I mean, in Europe that's in C&I has had its ups and downs. We kind of have faith in it because we see a transition going in there. It used to be an off-the-shelf type of distributor business. Now, increasingly, it has become a customization business. That is working. We see some of that working, maybe not as quick or as powerfully as we want it. It is not like we do not have a strategy to make it better because we do. We do think we can work that through. It is just that it is hard to overcome the ups and downs. Again, it is a judgmental thing. Do you think Europe will be considerably constantly down? I tend not to think that. I tend, okay, they're going to fix the Ukraine thing, and then they're going to find their way through this. That is our sort of strategic take on that. If you look at C&I in total, yes, the international markets have buffeted them. We have decided because we have a favorable view of the trajectory of those long-term for those markets that we keep our position in there. If you then look at the critical industries worldwide, you would see that that business grew in the range where we expect it to grow over the last five years. Its profitability has gone up pretty much as where we want the profitability to rise, like maybe over 70-80 or 90 basis points. I think we kind of like what's going on there. Now, when you look at it and you're a modeler, I don't think you like taking the, I don't know. We don't like taking the Buffett's, the ups and downs. Then it comes back to what's your belief about the long-term view of those geographic positions? We tend to be still okay with them. Perfect. Good. Very clear answer. Thank you, Nick. I wanted to dive into the software business because the RS&I margin trends have been a nice steady story. I think you just have a bit of a perpetual mixed tail in there. I just wanted to touch on the scope. I think you've called software a third of the RS&I segment. Yeah, it's growing. Yeah. Yeah. Look, here's the thing. Remember, I didn't lead off with this, but our groups are facing certain customer bases. The tools group faces the technicians. RS&I faces the garages themselves. They come together in RS&I making diagnostic units and then selling it through the van channel. C&I is where we roll the Snap-on brand out of the garage to other industries. If you look at the software business in general, I'd rather talk to it in general than just in C&I because of the diagnostics business. Software is becoming more important. Now, everybody would know this. Boy, if you can put efficient systems to run the garage, then the garages will love it. Whether it's independent garages or dealerships, we're in both those places. By the way, all that gives you early warnings on what repair is going to look like in the future. You have things like electronic parts catalogs, which we're the market leader, I think, in that. Here's the cool thing about it. If you think about repairing cars, there are four steps. One is you get kind of maybe there's something wrong with the car. The cars these days have thousands of data points. They call them electronic trouble codes in the car. You have to read them. They call it scanning. We scan. You have to have a huge library because every car, every model is different. You have to have a huge library to actually read it. We have the biggest library. Our handheld diagnostic units have the biggest library. Now, what happened is it used to be that technicians would diagnose just by listening to the car or driving it a little bit. Now they look at the data points. Then what happens is, experienced technicians can look at the data points themselves and say, "The data is saying this." As the data points get larger, it's harder to do that. The galaxy of data points, the growing galaxy of data points that are in there, it's hard to do it by the seat of your pants. Okay, you could go, the OEMs provide you some guide. You go through a decision tree based on the data and say, "It's a mass airflow sensor." We have databases based on experience in cars, 3 billion actual repair events. You can plug it in and say, "I've got an Audi, a 2015 Audi that's got 85,000 miles on it. Here's what the footprint, here's what the signature of the data points are, the electronic trouble codes are. We'll give you a Pareto diagram." You do not have to go through a long decision tree to say, "Okay, 69% of the time, it was the mass airflow sensor." We scan. We have the best scanners, the widest library of scan data. We have the only proprietary database of how to diagnose the car. By the way, we have a 3 billion unit database, and we have a 500 billion database for the things that do not show up that happen so infrequently. They do not show up on that Pareto diagram. We can teach as the number of data points get bigger and mechanics get more and more confused by it, they can turn to our database, and it helps them. On top of it, all of this just told you what's wrong. How do you actually take the part out? A senior mechanic has to memorize 2,000 procedures. 2,000. How many does a surgeon memorize, by the way? By the way, junior mechanics don't know all those procedures, so they can go to our Mitchell One database and figure out how to do it. Once they figure out how to do it, it still doesn't mean it's easy to do. You turn to a Snap-on tool to make it easy. We've got that full range covered. As the software, as the car gets more complex, the software that we have that's proprietary becomes more essential to do the repair. That's why you're seeing software goes up in RS&I. It's one of the reasons RS&I was up 140 basis points this time. Great. Thank you for that. SOT, the decremental margins were pretty steep. I know volume was down, and you talk about continuing the investment spend because you have a long-term focus, and you're thinking about two, three, five years out, even as you're thinking about today. I appreciate that. Just curious about the impacts across volume mix and pivot program investments. Just any perspective on how. Yeah. It was down like 360 basis points, I think. It is not the most comfortable situation, but still 20%. They did not chop liver. That is 500 basis points above 2019, by the way. Okay. Here is the thing. You wanted to mention it. Half of it is SG&A. Half of that percentage, Chris, is keep spending. We are not keeping spending for the we are spending for the four or five years, but I am spending so I am ready when this confidence comes back. I do not know when it will come back. When it comes back, just like when the pandemic fixed, we kept spending through the pandemic, and we were ready to come out. We came out roaring. I am following that playbook again. That was half of it. The other half, I think you could say maybe 60/40 volume mix, maybe 50/50 volume mix. In this particular interlude, the first quarter, we had a program around the lower-end diagnostics. Remember I said that we learned that we could nibble at the bottom end of the bigger ticket items, the longer payback items, and get people to buy those things if they were smaller, smaller tickets themselves. We did it in diagnostics. Diagnostics was a bigger portion of its sales this time. It grew in an atmosphere that, overall, that was down, Chris. What that means for the corporation is great margins. For the tools group, they share the margins on diagnostics with the RS&I group. Fundamentally, for the tools group, diagnostics is one of the lower-margin businesses. That is what drove the mix in this time. All right. We've got to pivot to the next blocks, both you and I. Awesome chatting with you, Nick. Have a great day. Appreciate the time. All right. Good to talk to you, Chris. See you later. Take care.