Thank you, Efrain, and, welcome everybody. We're gonna move into our session with Snap-on, with CEO Nick Pinchuk. Nicholas Thomas Pinchuk is the full name, and Nick, thanks for joining us today and, and returning to the conference. Looking forward to-
Hi. Good to see you, Chris.
And, yeah, for those in the audience, we'll prompt a few times if there's any questions, so that I don't intend to monopolize it, but we'll do fireside throughout if there's no questions from the audience as well. So, Nick, just to kick things off, you know, Snap-on has a relatively dominant position in the professional direct channel to automotive technicians and, seemingly with some incremental share pickup over the past few years. But, you know, there's some well-run competitors in this kind of captive market, too. So, curious if you could, at a high level, discuss, you know, competitive stability and rationality and how Snap-on can continue to protect or grow share long term.
Sure. Look, yeah, we do have a I think, you know, we've had a strong position for some time, and I think we've made it stronger. I think the Snap-on product line is fairly large. You know, the tools business has 40,000 SKUs, and it keep growing, and most of those are nonpareil. The brand is, I think, defining for people who use it, and we tend to think, and I believe this is quite true, is that Snap-on proposition is strong, so we get among the best people to drive our vans and work in this industry. The other guys are smart guys, though.
You know, they, as you say, they're, they're, they're well-backed, and they're smart, and they can expand or contract, as they have over the years, and right now they're expanding some in terms of number of vans. But I think in general, our position is pretty solid. I just was with the National Franchise Advisory Council, and we talked about the market and so on, and the, the market today is quite turbulent, and there's a lot of uncertainty in it, but we're confident in our position. And, how have we held onto this over the years or expanded on it? One is we keep expanding our product lines.
Existing products, we keep pushing up the state-of-the-art of products, and our new synergy ratchet, for example, 100-tooth, you know, stronger than any other ratchet and gets in places where no one else can get. Some of our diagnostics with the databases, and we keep expanding on that. But also, because we have more people in the garages, we spend more time in garages, we're able to configure tools which will address certain particular problems, like the spark plugs on an F-350 truck or the holding pins on Toyota SUVs. That just solves some difficult and sticky problems for mechanics, and we have a growing array of those. Then you look at our—how do we, how do we maintain our position? Brands.
Just keep emphasizing the Snap-on brand, 'cause for a long time, and still is, clearly, it's the outward sign of pride and dignity that working men and women take in their profession. Then we try to take care of our people. We try to train them and not lose them, and they stay with Snap-on for a long time. I just had our annual meeting, and we recognized somebody with 48 years with Snap-on, 50 years with Snap-on, and 52 years from Snap-on, and the guy with 52, his father had been with us almost 25 years.
Sounds good. And then, on the recent slowing in SOT volumes, what do you think is the mix of kind of market drivers there? And, you know, I know your focus is on driving, assortment and mix-
Yeah
... to growth, so you sort of have this dynamic where, you know, you've had your typical toolkit of optimizing mix, working in tandem with market strength. Now, that's maybe going against you a little bit, but you've shown in the past some pivot potential and realigning assortment. So, yeah, curious how you think that-
Yeah, that's right. I look, I think, boy, you know, yes, the performance, the growth of the Tools Group was not what we would call standard. And the principle, I've been out talking to people in the field. You know, we interviewed more than several dozen franchisees, not to mention the National Franchise Advisory Council, and then also just random calls to talk to people or visits. And generally, what's happened today, probably interesting pivot in the summertime and in the spring when the I think the financial markets were more worried about the where the Fed was going, the people in the garages seemed to be unstoppable.
And then I would say in the fall, somewhere in early October, you know, late October, they started to get overwhelmed, what I would call bad news for breakfast, and the uncertainty associated with them seems palpable. I'm talking to people. I talked to one guy in Nevada, one of our franchisees, and he said, "You know, it seems like, it seems like people are getting caught up in the headlines." I talked to a guy in the Northwest who said, "you know, customers seem a little afraid now. They don't wanna stretch out. They don't want bigger ticket items 'cause it requires them to commit to payment terms that they're not so sure about that future." Guy in Kentucky said sort of the same thing. And so, but that, that's just a snapshot of it.
So you're seeing our customer base, and this happened through the fall, and it's kind of playing out, pivoting to saying, "Well, if I'm gonna solve my problems, I like a lot of Snap-on products. I'm gonna try to pivot toward what I would call quicker payback items. I'll pay, I'll pay some money now. You know, I'll be able to use it right away, like if I can better remove the pins in the Toyota or some of the smaller diagnostics, or maybe the synergy wrenches in that expansion. Those kinds of things, or cheaper, you know, carts or lower-end tool storage items. Those things or accessories, which aren't as expensive, those are the kinds of things that are popular in this situation.
We've seen it happen before in the great financial recession, and in fact, as the COVID hit, as we're in the early days of coming out of the COVID, this is exactly what we did. We sold shorter payback items, quicker payback items, and we did it in the financial recession. Now, what it required us to do is pivot our manufacturing, our design, you know, our design efforts and our selling efforts to try to emphasize those areas, and that's what we're doing to respond to the market. But really, it's at the core of it is... There's probably multiple reasons, but at the core of it is this uncertainty that you see, and you know, you can read it in The Wall Street Journal and The New York Times, a bunch of different other places.
We were one of the first to see it, though, I think.
Okay. And then at RSI, OEM demands continued very sturdy, compounding several years now. So just wanna take a little dive into that business model, the drivers for sustained growth and runway versus, you know, kind of a notional external bias to an eventual pause after some significant expansion.
Yeah, well, that's a multipoint explanation of its growth.
Yeah, Nick, do you want me to back up and redo the question a little?
No, no, no, I got it. No, no, no, I don't need you to back up. I was just gonna say, there are several reasons for its growth. Now, what was it up, like, 3% or 3.3% in the quarter, organically? But, but if it also sells to the tools group, Chris, so it's important to realize that the RSI group grew organically, externally. External organic sales were up 5.8%, so it's still growing pretty strongly, and our—you know, it's, it's why margins were up, what, 90 basis points in a quarter. So it's still pretty robust, and, and it's been robust for a while, and what's driving it are several pieces. The one thing you just alluded to, I think, has been very good for us.
It was this traditionally lumpy business that takes OEM projects that quite often, quite regularly, accompany the launch of new models and serves them, and these are kinds of things I think you and I have had the conversation, which lasts, like, several quarters, and that goes away, and you gotta get new ones, you know, those kinds of things. It isn't consistent business. But what's happened in recent days is the number of new models, I think, driven by the new technologies, the new, new powertrains, seem to be rising and being more consistent. Now, I think one question would be, is that gonna continue? Well, it can't continue forever, but I heard the Stellantis CEO on TV, you know, about 6 weeks ago, saying he's bringing out 30 new models.
So it seems like there's gonna be pretty good runway, and it should be some pretty good runway in that area for some time. I cannot predict when it goes back to more lumpy situations. That's one. Two is the equipment business has grown. The undercar equipment business has grown nicely in this period, both from some of our new products that we've brought into that space, in alignment and, you know, balancers and tire changing and lifts. In particular, we've done pretty well in lifts, but particularly around our investment, our propitious investment in collision.
About 5, 6 years ago, we bought this company, you know, one of the leaders in collision, Car—in fact, the leader, Car-O-Liner, and collision has bloomed because what's happened is collision shops are now being asked not only to restore the car to its original shape, but they also have to work on the car because every time a car gets dented, it disrupts the neural network of sensors that are in there that are needed to create all these advanced driver assist systems. And that's a much more complicated task that the collision shops, in a lot of ways, are being asked to take on, and we have the products to do this.
So what's happened in collision, not only has there been more sophistication in metals, you know, and materials, so restoring it to near net shape to the proper shape has been more difficult, and therefore, we can get a boost from activity in that area. But also, the idea of calibrating sensors, restoring them and calibrating is an incredibly software-based task that Collision shops need, and that's helped us boost. And then the third thing I think is. You know, we used to look at software in electronic repair a car, in a laptop or a car.
You plugged it in, and what it did is it told you what the trouble codes were in the car, the signature of the car, the trouble signature of the car, and that moved over the years, just kept going. 25 years ago, it was dozens, now it's tens of thousands, and that became more difficult. But that became more difficult, and we've kept up with that. But what's happened is, instead of, I would call that single-point software, you know, trying to find what those different, different, trouble codes are and amass them into a code, a fingerprint, but the fingerprint itself is not definitive. So then there's another phase. You scan the car to find out what the car is saying. Then you gotta figure out, what does it really mean? That's called diagnosis.
What we found is, instead of depending on the usual OEM prescribed decision tree, you keep going through a car, physical activity to keep going through and then coming up with, say, a mass airflow sensor or a certain wiring harness. You can use data, which we have, 2.7 billion repair records of data of real actual repairs that happened in a car, and we can classify it by model and by mileage and all those kinds of things, and trouble code, and it'll give a Pareto diagram, cutting that in half. Then the other thing is, for the much more complicated and rarer events, we have a 4 and 12 billion now database that allows you shortcuts those repairs, and that cuts a lot of time out for mechanics.
And so what helps, what has helped that grow is that growth of that database, making it more and more efficacious as cars have become more complex, but that's only gonna continue. And we, the OEMs, are blind to that database, and recently we had an event that confirmed the proprietary nature of that database for Snap-on. So we feel pretty good about that.
Yeah, could you describe just how that came to pass, where the database is so proprietary? I mean, this is auto repair is an industry that touches anyone who owns a car. The market to service autos is huge. Why such a singular position for one player in this repair records?
We're in the garages more. We touch the garages through a number of different ways. We touch them with our software, we touch them with our people, we touch them with our diagnostic units, the original scan tool units that were in the garage. And so we have. That's what we found over the years. Instead of just looking at what the car is saying and using that data, we realized we had this reservoir of data, which we could marshal and keep growing, and that's what's happening. Now, the interesting thing about it is, though it's not just having the data, although I, I believe we're the only ones who actually have the data. This data is all written or recorded in what I would call technician.
It's a different language, and so you have to have the code, you have to have the decoder ring, and we have that. So this is one of the things that, you know, has given us a real proprietary position in that, in that situation. And like I said, it's just recently been confirmed that it is proprietary for us. And there was never any question that the OEMs wouldn't have it, because it's after warranty. Most of it happens after warranty, so it's in independent garages, and we are clearly the behemoth in independent garages.
Right. Okay, and then, you know, so the software, your diagnostics tools sales, they're volatile, they're lumpy, they're up and down, but the software grows persistently, I believe. Does that difference reflect conversion to subscription model or?
Yeah. Well, yeah, sure. One thing that's happening is we have—we used to, as you know, I think, we used to sell what we call titles. Every six months we had an update. Now, more and more people are moving to a subscription model, where they pay us every week, and therefore, we don't have to resell them on this stuff. They stay in it. So that's helped the software go up. You know, I think it's important to realize, so I think this is an interesting thing. It isn't—you know, it's not only software, but it's the basic data. You know what I mean? We have the basic data in our database, which is really a big advantage. So when we say software, we mean both of those. But that's been a big factor for us.
You know, I think what's gonna happen is, as people, as cars get more and more complex, Chris, one is that more and more technicians are gonna realize that they need electronic assist in diagnosing the cars. They're already, you know, they had long. It, one thing we've talked for a long time, you and I, about the idea people are gonna need more and more diagnostic units, but in a way, that was a, that was a dialogue around scanning, knowing what the car is saying, and therefore, more and more repairs require somebody to get in there and understand the repair codes. That was, you know, 40% of new cars - 40% of repairs on the road need a diagnostic unit. 80% of new cars need this. That's mostly about scan.
But more and more, and so what would have been happening is technicians, and particularly the senior ones, have been saying, "Well, you know, once you tell me what the car says, I can fix it, 'cause I know what that means." But it's getting more and more complicated to figure that out, and so they need someone to aid them in that second step, which is diagnosis, and that is where the database becomes incredibly strong. And so one good thing is, as more and more technicians realize that need, as the cars get more complex, that plays to the, you know, our proprietary position. And one of the things we do is, you're gonna see our vans become better and better at explaining that and wielding that.
It ain't so easy with the 412 billion data points to explain it in 7 minutes. So we get better and better at doing that. So you see those, those sort of two or three trends that are very favorable to us.
Okay, and you know, there's a view out there that diagnostic tools themselves are pretty fully penetrated, at least in terms of the scanning aspect. So would you call that dynamic mature?
I would call it more mature. You know what I mean? Actually, I don't think it's fully mature yet. You know, a lot of these guys don't think they need anything, you know, and especially in, like, truck shops and stuff like that. But in reality, I think there's still more room, but it's certainly way more mature than the diagnostics piece of this. So one of the things that's happening here is, it's a lot more, it's an important thing to have coverage in scanning, Chris, but it's more pedestrian, harder to diagnose. You see what I mean? So, and then, as the cars get more and more complex, the messages are gonna be harder to decode mentally by the guys, and therefore, they're gonna turn to these things.
There are a bunch of ways people do that, but we clearly have the database that makes a difference.
When you say the scanning identifies the repair type, when you say diagnosis, you mean the repair tiering the repair protocol options?
... No, what I mean, there are actually three steps. One is scan. It tells you what the electronic codes are saying to you. But the thing I think a lot of people don't understand, this is not definitive. There's a lot of interpolation or interpretation that needs to be done on that. Then you go to diagnosis. You take that electronic data and boil it down to saying, "Okay, it leads to say that the mass airflow sensor, for example, is bad." That's the second point. Then the third thing is, how do you take out the mass airflow sensor, or how do you repair it? How do you repair a certain wiring harness? That's a repair information thing.
There are almost three steps, but the one I'm talking about here now is the handoff between scanning and diagnosis.
Gotcha. Okay, and,
You're gonna need help on all three of those.
And, for C&I, critical industries.
Yeah
... I think, I think recently you referenced the critical industries. There's about 40% of that, and, you know, put up mid-single-digit growth on a double-digit comp. Not too shabby, but, you know, wanna discuss the global mix and key verticals in that.
Sure
... C&I.
Okay, well, look, I think, like I said, the crown jewel of C&I these days is the pure critical industry play. We call it the Industrial Division, and it fundamentally provides products that solve particularly sticky problems in industries where the penalty for failure is high. So this is a bunch of big verticals like aviation in the United States and outside. It's natural resources, you know, wind and oil and gas. It's the military. You know, 50-caliber bullets going overhead, I think they need help. You're talking about general industry. You're talking about the education of the technicians in these areas, which are also pretty critical for the situation. You're talking about things like mining. You're talking about things about heavy-duty equipment. Talking about things which provide some general industry help for factories.
So those are the big, big swaths of that, and, you know, generally, they're doing pretty well. I mean, every quarter we have some goes ins and goes outs. The military and aviation seem to have stayed strong in this period. So that business, like you say, has grown, you know, mid, mid-high single digits, and profitability is very strong. And what happened to us there is we morphed over time. We said we wanted to do this, and we had tools. You know, I like to say, you know, somebody, you say, "Okay, I got wrenches," you use them. But then we started to realize that what people wanted were kits that addressed...
The F-35, we provide the kit for both the manufacturing and the flight line repair of an F-35, and what it is, is it's a box in which we put Snap-on tools in, and plus some other tools, smear the Snap-on patina brand over it and ship it. And we were getting such demand about two years ago that we couldn't keep up, you know, and so we expanded capacity out here, right here in Kenosha, you know, for assembling these complex kits, and the business exploded. It went. Last year, all four quarters were nice, strong double digits, and as you point out, this year was a nice, strong growth against the pretty good double-digit growth last year, and its profitability. Then, if you step back, you get the other pieces of C&I.
You have the European hand tools business, which has got its, you know, typical European problems, the mixed economies there. I think seven countries in Europe are in technical recession, and we're seeing that. We're seeing good news in places like the UK and Sweden and Finland and Spain and so on, and Italy, and bad news in places like France and Germany and Netherlands. You know, so you see a mixed bag, and that's working that out in that situation. And then, you got the Asia-Pacific business, which is, you know, mixed. Again, China's down. Japan's okay, but it's being pressured because of the yen. And you see India growing, and the rest of the place is kind of being affected by China's funk.
So you see that business okay, profitability-wise, okay, but not really contributing much to the growth. Because at the end of the day, you step back in C&I, it was up 10 basis points in OI margin against, I think 40 basis points of bad news currency and acquisition, 'cause we acquired a business there that wasn't quite as profitable. I think its gross margins were up 200 basis points, and its sales grew. You know, its sales were down 2.7%, but if you step back and you looked at it. It also sells to the tools group. It sells power tools and torque wrenches to the tools group. And if you step back and look at external sales, it was up, you know, mid-single dig—no, low single digits.
So it was up as opposed to down, and then but its profitability was up against some difficulty. The star was C&I, which we always wanted it to be there, and what it proves is, the thing we like about that is it makes the point with emphasis that the Snap-on brand can be rolled out of the garage for growth and strong profitability.
Okay, yeah, it seems like APAC and Europe have been mixed for a little while now, and probably, does it feel like the bottom's kind of firmed up there and you-
You mean in Asia-Pacific?
Yeah, Europe's been more sideways, really, on a net basis than especially pressured. But it feels like they've been working through churn for a year now, so it feels like it must be pretty stable and maybe next stage is constructive.
Well, yeah, you could say that. I mean, you would – the theory is that nothing else happens in China. They don't go further down. The Chinese, though, I'll tell you what. I was just in Asia, and I've never seen the Chinese people more cash poor and confidence poor. They seem afflicted, you know, mentally. You know, I just, that's a technical term, you know? But they don't seem that happy. And other places are. Interestingly, there are a lot of other economies out there that are affected by China tourism. Thailand, in the first quarter, I think the auto industry was down, like, over 20%. So I do think there's some balance there. I do think it's gonna get better, though. India's booming. India's booming.
It seems as though they have confidence. They have confidence in Modi. They're moving forward. Japan should figure it out. What happens with exchange rates is, you know, they went, they were suffering for a while with that rise in the yen, but after a while, people get used to the exchange rates and so on. I don't know what to say about China and the, like, say, Southeast Asia. I'm not sure. I'm not sure.
Fair enough. Fair enough.
Yeah.
On capital allocation, you know-
Sure
... cash balance is up $1 billion, practically no net debt. You're very selective with the acquisitions and, and mainly bolt-ons at any rate. So what do you regard as an efficient cash balance? And, you know, not, not that there's any immediate urgency, but, you know, if you're sticking at $1 billion and building over time, what is- what's the predilection for more accelerated buyback?
Look, I think I say this, our policy's driven by the fact that we believe the best returns, the very best returns for our shareholders, is to invest it in our business in some way, either organically or non-organically, or, you know, maybe the dividend. We also consider buybacks as well, and opportunistic. I don't have any hard and fast rule. I do think this is a turbulent time, as I described with the mechanics, you know, with the technicians. I'm not so upset about having a little cash at this time, although I'm not worried about the future. Plus, I do think if the tools group starts to grow again, we are working capital hogs. You know, we get a return on our money.
Our returns are pretty good, you know, but, I mean, our, our asset returns are pretty good, so you wanna have some there. I do believe we keep looking at acquisitions, and if you're in a turbulent time, maybe acquisitions come up at a more rapid rate. So I have that, and then I have the dividend, which, as you know, we've, we've paid a dividend every quarter since 1939, and we have never reduced it. And so I bet you can figure what our... the, the core of our dividend policy is, and so that. And then, we do look at share buybacks, but I don't think, you know, we're not being moved one way or another by this amount of cash or that we're moved by the situation and the... or where we think we can have opportunities to use the cash.
Okay, and working capital hogs or not, you generate good cash every year, year in and-
Yeah
... year out. So, you know, at this rate, you'll start to move towards $2 billion.
On the other hand, Warren Buffett just said he's going to $200 billion, and he liked it, right?
Yeah, but he's got one of the biggest reinsurance companies in the world.
Sure, sure. I know it's not the same. I was just saying, he was-
You don't have a reinsurance subsidiary, do you?
No, we do not. Right.
Okay. I'm gonna take a quick pause, ask if anyone in the wings there has a question or wants to chime in. I'll give that a few seconds. Okay, yeah, it was Snap-on often talks about, you know, the SKU breadth. You mentioned 40,000 plus SOT, I think about double that overall. And also, you talk about vertically integrated manufacturing. So, can you just touch on the merits of, of that model, and-
Yeah, we love it! I mean, I think it fits Snap-on pretty well, you know, because then we can... the more integrated you are, the more you can guarantee the quality, and that's one of the things. And remember that in a lot of our tools, if you're talking about a hand tool, the essence of the hand tool's in the manufacturing as much as it is in the design. You know, lots of times... So for example, if you look at, I just talked about the synergy ratchet with the 100-tooth, 100-tooth gears and the thin head, still with strength, that's all about metallurgy, and metallurgy is all about the process in the factory. How you forge it under heat or near-net pressure, or under heat or cold pressure to near-net shape.
You anneal it to take those stresses out. You grind it to sometimes one-thirtieth of a human hair, especially in some of those long things. You heat-treat it to make sure, and this is the black art, it's hard to duplicate, is makes it flexible and strong at the same time, and you coat it to make it look like a jewel. Then, you ship it on to your customer directly into the hands of your customer. So there are a couple of things about that. One, since we are putting tools in the hands of the actual users, the guys and gals who twirl the wrenches, push the buttons or punch the screens, then we know what their problems are. We observe those problems, and we take those insights to create more new products. And so this is a good thing for us.
That verticality creates a tremendous strategic advantage. Secondly, as I said, you can guarantee the—you know, the quality when you control a lot of the processes, and that's all true, too. And then thirdly, maybe it's a disadvantage, but it's an advantage in that when you're going forward, like now, we have more than 85,000 SKUs. We are vertically integrated, so on the way to the customer, every tool goes through a bunch of steps in Snap-on, from the raw iron to the hand of the customer, and you have 85,000 incidents of that. What happens is, you have a lot of interstices to keep improving. So one of our core processes is keep making our product more complex to sell to more people, and then pounding down the cost of that product every day, every day.
Every cell gets up, every department gets up, every factory gets up and says, "I gotta do things better." And that's been—that's what's driven us. A lot of people ask, "Well, how is your profitability going up from, like, 6% or five, five and change?" You know, maybe 18, 18 years ago, is because we've improved. There's been some scale, and there's been new product where we've got value, but it's been that improvement. And people ask, "Well, can you improve?" Well, we, right now, are at, what was it? 22.9% in a quarter, you know, 22% if you take out the legal stuff. And you, you—we have—we're carrying huge complexity disadvantages right now, and so we have an opportunity to beat them down and get more profitable.
You can see it somewhat, even in a quarter that was below standard... I don't like to talk about gross margin, but since it was different, and look, you know, our gross margins in a difficult period was up 70 basis points. Tools Group was up gross margin. C&I was up gross margin. RSI was up gross margin. That's an example of continuous improvement in innovation of product. You know, to the extent that we had lower SG&A because we didn't have leverage, we had higher SG&A percentages. Yeah, that's true. We don't like to pay for the same ground twice, so when things get a little bit below standard, we don't pull back because we have confidence in the future, and that's what we're doing.
Yep, this is good, good note there on sustaining the OpEx. And we've got a couple minutes left, so just maybe a brief comment on SOC. Just curious for your comment on what really drives just such low net charge-offs through credit cycles, even at credit bottoms?
Well, I think it's because the credit company never gets confused. Its job is to finance, provide financing in support of the Tools Group. The main element of that is lending to technicians who are buying big-ticket items. It does some financing of vans and for franchisees, and there's a slight bit in terms of shop owners, but generally that's it. And what enables that, Chris, as you know, is the franchisees themselves. First, you know, first of all, the credit company has an advantage versus almost all other credit companies because it sticks to its knitting, and in fact, it's lending to the same person over and over, a vehicle technician. So they have proprietary credit scoring just for vehicle technicians, which allows them to ferret the credit actually pretty well.
Secondly, that is all enabled by the franchise system. The franchisees call on customers every week. They see them every week. They know their lives. They know really where their cash position is. And the franchisees, everything off the truck is sold on credit. So if it's a big-ticket item, it's sold through the credit company, but if it's a small item, the franchisee fronts the money for 15 weeks, not a long period. And so every sale for a franchisee is a credit decision. Will I let that guy get into me for $500 for 15 weeks or not? And then every interaction with the interaction with those guys are collection, but it's the same in the big-ticket items.
When a customer wants to borrow for a big tool storage unit and the credit company's involved, we ask the franchisees to tell us whether they're to augment our own credit scoring model, to say whether we should loan them or not. If the franchisee says yes, and we believe that, you know, the franchisee is a good one, we give them the money. And so every big-ticket item, the franchisee is involved in the credit decision, and he's the collecting agent, and he's on the hook for 25% of anything if it goes wrong. So fundamentally, you have a person who is interacting with the customer, who knows the customer intimately, who's telling our credit company whether he's lendable or not.
Secondly, we have that guy involved in the collection, and that person is on the hook if things go bad. So we're employing... The credit company is good. It only lost maybe 100 basis points in the great financial recession.
Right
... because it knows the technician, and it's employing possibly the most practiced credit collection force in the world. That's the Snap-on franchisees.
Makes sense. Nick, thanks. We also went about a minute over, so thanks for the extra minute. I know you got a full se-