Welcome to the Snap-on Inc. 2012 Second Quarter Results Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Leslie Kratcoski, Vice President, Investor Relations.

Thanks, Rica, and good morning, everyone. Thanks for joining us today to review Snap-on's second quarter 2012 results, which are detailed in our press release issued earlier this morning. We have on the call today Nick Pinchuk, Snap-on's Chief Executive Officer; and Aldo Pagliari, Snap-on's Chief Financial Officer. Nick will kick-off our call this morning with his perspective on our performance. Aldo will then provide a more detailed review of our financial results. After Nick provides closing thoughts, we'll take your questions. As usual, we have provided slides to supplement our discussion. You can find a copy of these slides on our website next to the audio icon for this call. These slides will be archived on our website along with the transcript of today's call. Any statements made during this call relative to management's expectations, estimates or beliefs or otherwise state management's or the company's outlook, plans or projections are forward-looking statements and actual results may differ materially from those made in such statements. Additional information and the factors that could cause our results to differ materially from those in the forward-looking statements are contained in our SEC filings. Finally, today's discussion and presentation include reference to certain non-GAAP financial measures that exclude an $18 million arbitration settlement gain recorded in the second quarter of last year. Please refer to our earnings release issued this morning and to the slides accompanying this webcast for a reconciliation of these non-GAAP financial measures to those most directly comparable GAAP financial measures. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Thanks, Leslie. Good morning, everybody. As we normally do on these calls, I'll begin with some of the highlights of our second quarter and I'll provide my perspective on the business and on the various markets in which we operate. Then I'll turn the call over to Aldo for a detailed review of the financials. I will say that we were encouraged by the results. EPS of $1.30 represents a rise of 14% from last year's comparable $1.14. Organic sales were up 4.5% despite the clear headwinds of Europe. The OpCo operating margin of 14.2% increased 60 basis points, overcoming an $8.3 million in higher restructuring charges. And Financial Services added $25.6 million in operating earnings, up from a comparable $17.5 million in 2011. I'll remind you that in the second quarter of last year, we resolved the dispute with our former Financial Services joint venture partner and recorded at that time a one-time $18 million pretax arbitration settlement gain. That settlement was worth $0.19 a share. And given the nature of the item, I've excluded it, as we believe it's appropriate from the FinCo earnings and the EPS comparisons I just referenced. On balance though, the quarter was another positive point, extending an encouraging growth trend. That continuing trend demonstrates significant progress along our clearly defined runways for growth. Extending into critical industries, building in emerging markets, enhancing the franchise network and expanding in vehicle repair shops. And the operating margin expansion is a reflection of our Snap-on Value Creation Processes at work. As I said before, these are a crucial set of principles that we apply every day. A focus on safety, on quality, customer connection, Rapid Continuous Improvement or RCI and on innovation. It's a powerful framework and it is helping to fuel our results. I mentioned…

Thanks, Nick. Our consolidated operating results are summarized on Slide 6. Net sales in the second quarter totaled $737.9 million. Excluding foreign currency translation, organic sales increased 4.5%, led by double-digit growth in Snap-on tools and across the majority of our businesses serving customers in emerging markets in critical industries. Consolidated gross profit of $349.9 million in the quarter increased $7.7 million from 2011 levels, and gross margin of 47.4% improved 30 basis points from 47.1% last year. Operating expenses of $245.3 million in the quarter were up $1.9 million from 2011 levels and the operating expense margin improved 30 basis points from 33.5% last year to 33.2% this year. Restructuring cost in the quarter of $10.2 million were higher by $8.3 million as compared to prior year levels, largely due to the inclusion of $6.8 million as anticipated for the settlement of a pension plan, following last year's closure of the new market Canada tool storage facility. Operating earnings before Financial Services of $104.6 million increased $5.8 million year-over-year and improved as a percentage of sales, 60 basis points from 13.6% last year to 14.2% this year despite 110 basis points of higher year-over-year restructuring cost. Operating earnings from Financial Services of $25.6 million in the quarter increased $8.1 million or 46.3% from comparable 2011 levels, which exclude last year's $18 million arbitration settlement gain. Operating earnings of $130.2 million in the quarter increased $13.9 million from comparable prior year levels, excluding the settlement gain. And operating margin improved 130 basis points from 15.4% a year ago to 16.7% this year. Finally, net earnings in the second quarter of $76.4 million or $1.30 per diluted share increased 14.2% from comparable 2011 levels of $66.9 million or $1.14 per share, again excluding the settlement gain related to last year's earnings,…

Thanks, Aldo. We are encouraged by the second quarter results. More than anything else, we believe that it confirms Snap-on's abundant runway for improvement and for growth. It extends our favorable trend, achieved despite turbulence in Europe, which given our position in Spain has been with us for some time. The quarter shows we are making strategic progress in the areas that we believe are decisive for our future. The Van network is stronger. Sales were up double digits again with the U.S. leading the way. We are extending into critical industries, also up by double digits in the quarter. A strong position is being built in emerging markets. Sales growing substantially above local GDPs and physical capabilities, factories, product lines, distribution, all strengthening. And we do see progress with repair shop owners and managers. Although overall RS&I is flat, the crucial high margin core of diagnostics, repair information and shop management systems grew at high single digits, bringing RS&I profitability to a high level. And again this quarter, we're seeing Snap-on Value Creation Processes, driving progress on our runways for improvement. OpCo OI percent of 14.2%, up 60 basis points despite substantially increased restructuring. I think everybody knows that these are interesting times and there are challenges. But we've been facing headwinds like Spain for some time. We're confident of our capabilities, encouraged by our strengthening position, focused on our abundant opportunities and believe that we will continue to find advantage despite the turbulence. Before I close, I believe it's appropriate to recognize that Snap-on's results and the encouraging trends reflect the extraordinary effort and our strong commitment and the strong commitment of our associates and our franchisees around the world. I know many of them listen to this call, so for your energy, for your dedication and for your support, you have my congratulations and you have my thanks. Now I'll turn the call over to the operator. Operator?

[Operator Instructions] And our first question, Mike Wherley with Janney Capital Markets.

I wanted to talk a little bit about the critical industries. You mentioned that you signed on with a large airline maintenance facility, and I'm wondering, are there other potential opportunities like that and do they deliver the same margins that you might get in your other critical industries business?

There are different -- there are many more opportunities. Of course, that's the biggest one, the United States, that's why mentioned it. But what I meant there was focus, product and presence. And at the base of our extension into critical industries, is the fact that in the past, Snap-on would sell on an almost default basis to some of those customers. We were calling on the 4,000 -- we were calling on that site, but very sporadically. We never focused on it as a distinct customer base that we wanted to solve their problems and make their work easier. And this an example of what we will be doing around the country with other places, focus on them, call on them as they need, provide a product line that fits them. Now we're doing that there, it's just early days, we started that in the quarter, but there are many other places to do that in -- to do the same thing. Regarding margins, the margins are just as good with that business as they are throughout the corporation.

Okay. And is it something where you have sort of a direct way to sell to those technicians or is it something where the maintenance facility just buys them for the technician?

It's a mix. In this particular, in fact, I think, in this facility, it's a mix, the facilities buy some and the technicians buy some. And we sell it through a direct presence that's there virtually every day. It's kind of a direct sale. And if you look at the landscape throughout the country or throughout the world, you would find a mix of what you just described. In some facilities, the facility buys and provides the tools and in other facilities it’s the technicians themselves.

Okay. And then just one other question I had on the...

But let offer, in any case, that's a classic example of a Snap-on positioning. It's why it doesn't matter to us so much who buys because the buyer is not -- is usually not a corporate buyer, it's a buyer located very close to the point of use. Even if it's the facility, he's up close -- that buyer is up close and personal to the technician themselves, so the technician has a great influence on what actually gets purchased. So that means that our -- the capabilities of the Snap-on products are quite appreciated and weigh heavily in the purchase, that's why we get the margins.

And will you be extending credit to those technicians?

No.

Okay. The other question I have was just on the restructuring that you're doing in Europe to sort of reset those cost levels in the S&A Europe. Is that complete, and when do you expect the benefits to sort of be fully realized?

It's not complete. That's an ongoing basis. You'll probably be some more restructuring going forward, the kind of restructuring you've seen in other quarters if you look back in our history, you'll see we're kind of controlled restructurers and we have had restructuring in most quarters. And you're going to see that in our future, much of it directed at S&A Europe, so that will happen. When you see benefits, I would say, it's hard to say it varies from project to project, but a good rule of thumb would be to say 2 year paybacks. And that will give you some indication of how -- what gets off it from the spending.

David Leiker, Robert W. Baird.

This is John Wein [ph] for David. Just on the C&I margin this quarter, it was up 140 bps on what essentially is flat revenue quarter-over-quarter. I'm just wondering what exactly is going on there. Whether it's mix or some of the European restructuring already is starting to take place?

Well, I think it's -- I don't know what you mean by flat. I think it's up 5.5% on an organic basis.

Sequentially, sorry.

Right. Are you saying sequential?

Yes, sorry.

I think 5.5%. If you're talking about recorded -- reported, that has currency inside it. But on an organic basis, it's up -- it is sequentially flat, I know. What you're seeing in C&I is a number of different things. One is, of course, the effect of the Snap-on Value Creation Process as we obviously turns a focus on it in the past couple of quarters so you're seeing that flow through in terms of things like RCI, Rapid Continuous Improvement. And then you are seeing some improvements in Europe and the bottom line associated with some of those restructuring coming through. So you're seeing both of those effects happening. I don't think you can call it a mix thing. We're not seeing much mix in C&I. So that's -- what you're seeing there is pure productivity.

Okay, great. On the -- for a long time, you've had kind of a 15% OI margin target for the OpCo. And essentially, you're already there if you make the adjustments. I'm just wondering when looking ahead and looking the further leverage you can pull, is it more on the manufacturing side where we could expect a greater improvement in gross margins? Is it on the operating expenses or SG&A? Just any feel you might have for that.

Well, I think it's all of the above there. I think there are -- I think we've said fairly consistently over the years that we see 2 distinct runways. One, what you're referring to are runways for improvement, but Rapid Continuous Improvement, driving better efficiency and productivity even at flat sales. And you'll see that play out both in gross margin and in SG&A and in operating expense. And then, you'll see leverage associated with growth that goes forward because we believe those runways are open to us. Things like extending the critical industries and expanding in the repair garage and building in emerging markets, and the Van network, which has been mid-double digits for 3 or 4 quarters now. So I can see all 3 of those things in play. A kind of efficiencies around both areas and margins and expenses, and the leverage associated with volume. Now I'll quickly say that the leverage is not as -- leverage isn't always as definable each and every quarter as you might think, because sometimes you get more sales and the RCI effect to handle all sales to raise the productivity of your factory doesn't adjust quickly enough and you'll get some inefficiencies at first, and as RCI catches up, that drops to the bottom line much more effectively. You get that leverage. We see that in some of our results, particularly the Tools Group this time. The other thing I'd emphasize pretty carefully, as I look out and I see these runways for growth, and I see that growth happening and I see the operating margin happening, this is over a longer term. When we look forward to the third quarter, for example, everybody will probably want to know about the third quarter, this is the most uncertain quarter for us every year. There's a lot of windage in our third quarters. So we see things like the effects of European vacations and the effects of the Van vacations. Remember the van drivers are owner-operators, usually single person in the business. So when they take the couple weeks off or a week off for a vacation, the Van doesn't roll. So our third quarter is not a trend quarter. It's a quarter that has a lot of variation in it. But when you look out over time, we're going to see that -- those 3 things in place, leverage and productivity improvements both at the gross margin line and the operating expense line.

Okay, great. That's helpful. Just wondering given where the euro is and the potential headwind it creates, how much of your SG&A is incurred in Europe or denominated in euros?

Well, I guess, I don't know if I have that number exactly. I can offer this to you that about -- what do we say, about 22% of our business is in Europe. And the euro denomination about 15% of our activity is in the euro currency. So if that's helpful.

No, yes, that's helpful. And then my last one is on the growth in the Tools Group. You add Mac Tools had high single-digit growth during the quarter. So you've obviously beat that, and I'm guessing if I just did a U.S. to U.S. comp, your U.S. tools business grew above the 10% that the overall segment did, so I'm just...

Yes, it did.

Okay. So just trying to get a sense of -- from my side what exactly is going on, and one of the things just kind of thinking about it, having the credit operation internally now, have you been able to kind of pull some levers or maybe do some creative promotions now that you're managing that, that you weren't able to do when CIT was running it? That might be helping you capture incremental tool buyers?

Actually, you said a lot of great things there that are accurate. Let me just say first, the tools group has put together 3 or 4 outstanding growth quarters around 9%, 10%. And you have to give credit to the team there. They are hitting. In baseball parlance, they are pounding the ball. And so a lot of credit has to be given to that team for this. And what you're seeing with them are a couple of things. One is, is that we have some great new products, like I talked about, the ratchet -- the flexible ratchet. Then we have the marketing efforts like the rock 'n roll cab which is generating to think about it, a van is really small and so how many boxes can a van driver carry on his van? So when the mechanic gets on, he can only see 2 colors or 2 sizes, the rock and roll cabbie can see a whole wall of this stuff and so it generates a sort of the impulse purchase. And so you're seeing that great marketing effort. And then, our van network has been just getting stronger and stronger when you look at the health metrics of the van, the sales were up, the equity is up, the terminations are down -- just gotten stronger right off the recession because we invested in them. And finally, we've invested in productivity in our vans. So that our drivers are spending more time selling. So you've got those 3 things happening, you got all 4 things happening, that's driving those sales. And so that's how I explain that, the van business and the expansion there.

Dax Vlassis with Gates Capital Management.

Nick, just curious on the margin side. If you add back the restructuring charges, you're well in excess of a 15% target. I'm just wondering there was another question about this -- the growth of that and the sustainability of that. Can you speak to the new benchmark you've sort of set as far as margins in the go forward from here if -- some of that...

Okay. I'm really happy about the 15.8% in tools and the number without it. But it's one quarter, so I don't know if I'm actually resetting my benchmarks yet. I've got to think about it. And I would also say that when you look -- I just want to emphasize, when you look forward, things happen from quarter-to-quarter, we feel pretty good about our trends, but this is one quarter and I am confident in our upward trend. I am confident in the runways for growth and improvement. But I'm not sure I yet want to reset my target based on one quarter achieving it.

But around this level, let's say, in the first half of this year, did you feel that's a sustainable margin sort of basis to look at the business?

Sure. I think so, but I want to say that we've been here -- we're just getting to this level. And when I say something, I don't mean every quarter.

Of course.

Every quarter. I'm talking about -- I think it's a great sustainable direction. I've already said that the third quarter is kind of squirrely, and you never predict anything about this. But I think over trend -- over the trends, this is a good base for thinking about our business. And I've also said to so many, I think maybe I said to you when I met with you, is that I believe that Snap-on. And I've been around the block. This is not my first rodeo. I've been around the block and Snap-on has a great, great franchise in the broadest sense in terms of brand, in terms of products, in terms of customer reception, customer loyalty and if we can't get top level returns, then we'd be disappointed.

And then my second question is around the cash flow. It looks like, especially given the contributions that the free cash flow cash, flow from ops minus CapEx that you generated in the quarter was the highest in 2 years. It's great to see you generating such strong cash. Can you talk about your future? It looks like you're stepping up a little bit on the CapEx for the second half of the year. And can you just talk about your working capital management and whether you expect to sustain this great cash flow? And then on top of that, to add on to that question is uses of cash. Can you talk about the acquisition environment and if there's any areas that you can put a larger amount of shareholder capital to work at good returns?

Yes, I think, talking about moving forward, our uses of cash, I think I've said in the past are to invest in the business, and you've seen us step up CapEx. I think we raised our target this time because we can see opportunities to invest in, particularly in things like capacity and so on we can -- and in emerging markets. So we can see great opportunities for payback in those things and we're actually getting more capable in spending. So one of the things that keeps you -- that makes this possible is we're just getting more effective in managing those CapEx expenditures. Secondly, you just talked about it, the working capital, as you grow, you need working capital. I have cautioned everybody that I don't see working capital as a source of cash going forward. It will be probably a use of cash going forward because we expect to grow. And then I see M&A, I see acquisitions around the coherency of our businesses, around the critical industries, around the repair shops serving owners and managers and in emerging markets. I see acquisitions to make in those areas. And so those are the places where we'll be spending our money.

But have you seen any -- are you closer to doing something than you have been in the past or is it...

I don't think we'd comment on those kinds of things. But I think we are obviously closer. We're getting further out of the credit company.

My final question is with respect to the earning assets of the FinCo. Is there any -- I mean, I know there's going to be some further growth for the rest of this year given the targets that you sort of set for '12, but it's really not that much in capital investments from here as far as receivables and contract receivables or finance receivables. What would be the growth rate past '12? Are we getting to the point where you're not going to have to make any more investments and it'll just be pure cash that rolls off from the operating income of that business?

This is Aldo. Just to comment, Dax, I think if you look past 2012, the growth of Snap-on Credit will be more closely aligned to the growth in the Snap-on Tools Group. Largely the CIT transition will have been completed by the end of this year. So whatever the Tools Group grows, it won't -- they never match up perfectly quarter-to-quarter, but it's a good reflection. And what that means is that you'll still probably see the portfolio growth, be consuming slightly more cash than what you would get if you allocate interest expense and taxes as we do in our cash flow slide to the Financial Services segment. So there'll still be a user of cash to some extent, but not to the extent that it is today.

Let me just add one thing at the end. I think I mentioned the use of cash, and I take it as a given around here and that is dividend. We have paid a dividend every quarter since 1939 and we have not reduced it. So that's part of our DNA here. So that would be another use of cash that I want to make sure that I don't overlook when I discuss it here.

Gary Prestopino, Barrington Research.

Going through your narrative, you mentioned some countries in Europe that were particularly strong. And I couldn't all write that down. Could we go through that? I mean, and then some of the weaker ones...

I think I only mentioned Russia pretty much in Europe in the script anyway, but you can think of -- really what we're talking about, Gary is the periphery, the Eastern Europe and we put Turkey in there and things like Belarus and other places. If you think about -- actually the Maghreb countries would be part of that. So they would be -- we happen to sell into Northern Africa. So I kind of think of it as a circle around Europe. In the middle, we're selling some in those areas. So that's where the business is up. Why we're encouraged by that is that, that seems to us to confirm that the business in Europe is still robust and has a great value proposition as long as the economies are unafflicted, people keep buying.

So these are newer countries to you, so this would be considered part of your emerging markets initiatives or am I incorrect?

Yes. I think mostly, mostly. Actually not North Africa so much. We've been in North America for the dog’s age. But Russia and Belarus and places like that.

What I'm trying to get at -- so in your established countries, you said Spain and Italy are bad. Very bad. As you went through the quarter, ex Spain and Italy, in your more established countries, did you start to see a slower growth if that's the best word or more...

No, what we saw -- those are down. It is like this. How I would describe Europe is like this. The Spain, deep reductions. Spain -- the Southern Europe is deep reduction. As we've seen, the periphery up robustly and the core is mid-single digits down. That's what we're seeing. And what we -- I think a one little nuance in this call is -- or this report is we're not seeing decelerate -- we're not seeing acceleration of that downward motion. It's still down, but the comparisons are about the same. But they haven't gotten worse. That's sort of the report I would give you as our look on Europe.

So it doesn't feel like it did in 2008?

Well, yes, right. Well, 2008 -- 2008, yes. It doesn't feel like that. It doesn't feel like it was in the first quarter. I think things -- we thought things, the fourth and the first quarter of 2011 and the first quarter, we saw things getting deeper. On a year-over-year basis, things aren't getting any deeper now. They're still agony on a year-over-year basis. But it isn't -- the hole isn't deepening.

Just kind of a rhetorical question, I mean, your sales were up about 1.5% quarter-over-quarter. Without foreign currency, it was about 4%. And even given that low single-digit sales growth numbers, if we extrapolate that going forward, do you still feel these RCI initiatives would be enough to expand your margins even with such sluggish sales growth?

First, I beg to -- if it's possible for me, I beg to differ a little bit in your characterization of 4.5% as low. I have always characterized our growth as 4% to 6% organically. And 4.5% Is within that range. And so, therefore, from my perspective, this is just another data point. I never said we were going to hit 5% every year right in the middle of that in the quarter. So to me, the organic growth is kind of what you expect. We'll see some bigger than that. But I like being in the range. And I believe Snap-on value creation, I think I've said this before, Snap-on value creation, it authors improved profitability at flat sales, let alone small growth, small growth. So I think that's a factor, of course, your margin expansion gets slower then, but you still get that -- you still get margin expansion.

Richard Hilgert with MorningStar.

Just a few quick questions here. With the economy here in the states appearing to slow down a little bit, are -- your driver is saying and are you seeing fundamentals in the repair businesses still holding up? I know the revenues were good in the quarter still, especially in the Snap-on Tool business, but I'm just curious here as you exited the quarter, what some of the driver feedback you're getting? Have collections started to be a bit slower and are folks looking to repair their vehicles a little bit less at this point and trying to postpone some repairs?

No. The answer to this is no. I was just -- about 2 weeks ago, I was with 700 customers at the national NHRA championships in Joliet, and I didn't get to meet all 700 of course, but I got to meet quite a few of them, and they were uniformly positive. And just a couple of days ago, I was out on a van riding around the countryside stopping at garages and shops and so on. And they seemed, I would say, fairly positive and full of business. So I don't think that the grassroots level you see much out there in terms of moaning or saying, this is -- things are tough or anything like that. I don't see that. Now there's the odd person that has a problem depending on what's been happening, particularly if it's a franchisee and let's say Ford and General Motors have closed a dealership in his area, so he's re-adjusting with other stops we give him. But generally, I'm seeing fairly good positioning. Now I'll remind you that we view ourselves as recession-resistant, not immune. So what happened the last time is when the recession eventually rose people kept buying -- people kept repairing cars. The journal was running articles like economy is glum, but repair shops hum. And what happened was our customers kept buying short payback items like wrenches and hand tools, but they stopped buying big-ticket items like toolboxes, tool storage units, and we're still seeing that business robust.

How about on the industrial side?

I don't think so either. We're not -- again, we operate in criticality. So generally, our customers hold on to our buys a little longer. And what I mean by operating in the space of criticality is that you're selling to someone who knows that if the machine he's or whatever he's maintenancing or whatever he's supporting has a problem, the consequences of failure are high. Therefore, he has a tremendous motivation to try to pay for the repeatability and reliability of a Snap-on level product. And so that tends to be more resilient. Now it's not unaffected by recession either, but we were up double digits in that business. And there's a lot of landscaping there. The military was flat, the government was flat, the aerospace is up, natural resource is up and it's always so. There's always landscaping, but it was pretty good. Emerging markets. People ask me about emerging markets all the time, but everybody's talking about China slowing down, and it maybe so. But if you think about this, repair business in China hasn't even started, the repair wave hasn't started. They sold more in cars in China than any place else in the world last year, but all the cars in the road are new versus -- and not many of them, 60 million, 70 million cars on the road and they're all new versus United States where there are 300 million cars on the road and the average is 11 years old. So the business hasn't even started in China, just rising. So when we look at our results, we're not a good barometer of economy there. We should be rising anyway because our sector is just rising.

Okay. The $21 million currency hit in the quarter in revenue. You've got operations set up over in Europe. Do you have your cost pretty much in line with your revenues in terms of currency impact?

Actually, yes. The profitability impact was lower than that. So it's not -- you're looking at that $21 million is give or take -- government work is 3% impact, the profitability impact is substantially lower than that. Looking forward, you'll see. You can -- if the exchange rates stay where they are, you could be thinking about 3% again I guess. And then I think when you start to look at year-over-year, the comparisons get a little easier as you get out into other quarters.

Right. Okay. So then in environment where the euro is gaining ground against the dollar, we would see more of an increase in revenue, but less of an increase in profitability?

Yes, right. Right, sure. Sure.

On the RCI initiatives, what kind of a cost savings run rate would you project coming out of RCI? I mean you've been doing this program for quite a while now? What would you expect in terms of the kind of magnitude of cost savings that you can continue to get from RCI?

Well, I think that's hard to say, but I think you could say $25 million, $30 million a year or something like that, those kind of numbers. I don't know. We try not to put a number on that. I kind of try to address that when I said the restructuring paybacks was 2 years in Europe.

You count restructuring the same as RCI?

No, not -- no, it's not the same. We have restructuring, but we also get RCI. They're different -- they're distinct things, but, I guess, I was trying to give you some kind of a view of the kinds and numbers we were going to get out restructuring. But you can look at that number, you can go back and look at our productivity numbers, you can see the kinds of numbers we've generated on an annual basis, on sort of flat sales, and I think you could see that going forward. Normally, how I answer this question is that people I think are -- I don't know if this is your concern is that, maybe you run out of opportunities. And I don't think we are. I think there's a lot of a -- Snap-on. Mainly because there are a lot of processes in Snap-on. A hand tool is heavily integrated if you think about it. You don't buy many components. You have a piece of steel comes in the back of the hand tool plant, the finish products goes out the output front and really, pretty much everything that goes into the hand tool is done inside the plant, you don't buy anything for it. So there's a lot of opportunities for RCI and then you have 65,000 SKUs, which creates a complex landscape. So we see a continuous run, but I hate to commit any one particular number. I know you'd like to have one for your model, but I hate to commit to that. I just say that I believe we hold ourselves to a standard that on flat sales we expect to have improvement.

On that Masters of Metal tour, I hope you're in a rush toward a pot of sales gold at the end of a rainbow. It won't turn out to go over like a led zeppelin.

And that was our final question. Ms. Kratcoski, I'll turn it over back to you for closing remarks.

Thanks, everyone for joining us this morning. A replay of the call will be available shortly. And, as always, we appreciate your interest in Snap-on. Goodbye.

And that concludes today's conference. You may now disconnect.