Please, stand by. Good day, everyone, and welcome to today's Snap-on Incorporated 2015 Fourth Quarter and Full Year Results Conference. Just as a reminder, today's call is being recorded. At this time, I'd like to turn the call over to your host for today, Leslie Kratcoski. Please, go ahead.

Thanks, Sarah, and good morning, everyone. Thanks for joining us today to review Snap-on's fourth quarter 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've provided slides to supplement our discussion. These slides can be accessed under the Downloads tab in the webcast viewer as well as on our website under Investor Information. 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. With that said, I'll now turn the call over to Nick Pinchuk. Nick?

Thanks, Leslie. Good morning, everybody. I'll start with the highlights of our fourth quarter and our year. As usual, I'll give you my perspective on the results, on the environment and on our progress. And after that, Aldo will move into a more detailed review of the financials The Snap-on fourth quarter; organic sales up and profits well above last year. The period continued our positive trajectory of performance. Again this quarter, we had opportunities and we had headwinds. We took advantage of those opportunities and we overcame the headwinds. Organic sales grew 3.1%. If we include the impact of $33.2 million of unfavorable foreign currency translation, overall sales in the quarter were $851.7 million, a small decrease from last year. Our EPS was $2.22, up 12.7% from $1.97 in 2014. And that rise reflects an OpCo operating margin of 19.1%, an increase of 220 basis points. Financial service earnings of $45 million in the quarter were also up, leading to a consolidated operating margin, including both financial services and OpCo, of 22.7%, an improvement of 230 basis points. The results were encouraging. Our markets, the automotive repair-related segments, they continue to be favorable. Changing technologies and aging vehicles are requiring new tools and more repairs. Our Tools Group and our Repair Systems & Information, or the RS&I Group, took advantage of those opportunities and grew across our franchise network and with repair shop owners and managers. Now, for our Commercial & Industrial Group, or our C&I Group, markets were mixed, headwinds a bit more pronounced in the quarter, impacted by few down sectors and macro economically challenged geographies, leading to organic volume just under 2014. A couple of those difficult environments were natural resources and the U.S. military, both substantially lower in the fourth quarter. Oil and gas, a…

Thanks, Nick. Our fourth quarter consolidated operating results are summarized on slide six. Net sales of $851.7 million in the quarter were up 3.1% organically, reflecting increases in our businesses serving automotive repair, notably, the Snap-on Tools Group, as well as our diagnostics and repair information business, partially offset by some headwinds in our C&I segment. On a reported basis, net sales, which included $33.2 million of unfavorable foreign currency translation decreased $5.7 million or 0.7% from 2014 levels. As you know, Snap-on has significant international operations and is subject to foreign currency fluctuations. Largely due to the strengthening of the U.S. dollar, foreign currency movements adversely impacted our Q4 sales comparisons by 400 basis points. Consolidated gross margin of 48.4% in the quarter improved 40 basis points primarily due to higher organic sales and savings from RCI initiatives, partially offset by 20 basis points of unfavorable foreign currency effects. Operating expenses of $250 million yielded an operating expense margin of 29.3% in the quarter, an improvement of 180 basis points from last year, primarily due to organic sales volume leverage and savings from RCI initiatives, as well as lower performance-based and stock-based compensation expenses. No restructuring costs were incurred in the quarter. We incurred $1.1 million of such costs in the fourth quarter of last year. As a result of these factors, operating earnings before financial services of $162.3 million in the quarter, including $9.2 million of unfavorable foreign currency effects, increased 11.8% as compared to the prior year and as a percentage of sales, improved 220 basis points to 19.1%. Financial services revenues of $63.1 million in the quarter increased 6.2% from 2014 levels and operating earnings of $45 million increased 6.6%. These increases primarily reflect the continued growth of the financial services portfolio. Consolidated operating earnings of…

Thanks, Aldo. Snap-on's fourth quarter, an encouraging period; taking advantage of tailwinds, overcoming headwinds, growing organically, improving performance significantly, again. There is turbulence, deep decreases in the military and oil and gas and difficulties across the geographies. But there are tailwinds. The aging and changing of vehicles continue, so vehicle repair remains robust. In this environment, we keep driving down our strategic runways for growth, launching innovative new products and advancing our position. And despite the difficulties, we continue moving down our runways for improvement. Snap-on Value Creation, safety and quality. Customer connection and innovation working better and better. We had more new hit products in 2015 than ever before, not just for the Tools Group but for the corporation overall. Runways, growth and improvement, authored 3.1% organic growth in the quarter against the wind. EPS of $2.22, up 12.7% over last year's fourth quarter, against $0.11 of unfavorable currency. And a 19.1% OpCo operating margin, a rise of 220 basis points, all extending our ongoing upward trend that has continued for some time. And we believe that the strength of our business model, the power of our brand and the capabilities of our team position us well to continue that positive trend as we go forward. Before I turn the call over to the operator, I'll say a word to our franchisees and associates. I know many of you are hearing this call. The encouraging results of our fourth quarter and the year and our potential for continuing the encouraging trends reflect your capability and your dedication. For the success you've achieved, for your contribution to our future and for your commitment to our team, you have my congratulations, you have my admiration and you have my thanks. Now, I'll turn the call over to the operator for questions. Operator?

Thank you. We'll go first to Tom Hayes of Northcoast Research.

Hey. Good morning, gentlemen.

Good morning.

Good morning.

Yes. Nick, I was just wondering maybe you could talk a little bit more or provide a little bit more detail on the critical industries side. Certainly, military and oil and gas has been kind of a challenge in the year. Maybe talk about the cadence as it went through that quarter and then the outlook for 2016?

Well, I mean, I think, we're seeing deep declines in both of those places. We're talking multiple double digit declines in the military again and oil and gas in particular. If you're talking about the outlook we've set for some time that military – those two businesses are driving C&I in general. If you look at C&I beyond those businesses, it grew by about just over 5%. So, you see how much they influence the situation. So, you say to yourself, well, what's going to happen with those businesses? And we've said for the military for a long time that it's uncertain. And so you say to yourself, well, that uncertainty is dependent on the government situation and so we're poised to take advantage and it could come back in a short-term or it could continue for a while. In terms of oil and gas, I think we're seeing a historic downturn, 70% decline in the business. I mean, in the oil price just in the last – in a recent time. And we haven't – we saw that at the big recession in 2009. We saw at the Iran-Iraq War. So, it's kind of an unusual situation. When that comes back, I expect oil and gas to come back.

Okay. And maybe just a little bit...

On the other hand, as we said in our release and our comments, aviation was pretty good for us in the quarter. So, you see some goes-ins and goes-outs, but the dominant factor in those businesses are the oil and gas and the military.

Okay. And then maybe just a question on the expense line, the operating expense was down meaningfully. How much of the decline was tied to – you called out less stock-based comp, how much of that was contributed to the decline?

I don't know.

Let's say about 20 basis points.

Yes, 20 basis points. The big thing, if you're looking at operating expenses, there's quite a few goes-ins and goes-outs, but a lot of that is RCI. But also, if you step back last year in the fourth quarter, we talked about the – there was a 53rd week. But 53rd week, in general, if I looked at it from the trajectory of the corporation, it was kind of not significant. It wasn't significant. It shouldn't change your view of where we're going. But if you start to look at it on account by account, it, of course, becomes an issue associated with the operating expenses, because you have that extra week of operating expenses. You start to look at accounts, you had an extra week of sales, 1.7% extra sales, but last year, so that wouldn't be an issue. But if you step back and look at it, we don't think the 53rd week was significant, in general, or would change your view of the corporation. But if you look at it on account, like operating expense, it really is a factor. And you have currency in operating expense as well. So, you have those things rolling through, RCI, currency and things like the special events of last year.

Great. Thank you.

Up next, from Longbow Research, we go to David MacGregor.

Yes. Good morning, Nick. Good morning, everyone. Nick, can you just talk about demand patterns in January and any deterioration that may be visible beyond critical industries?

We almost traditionally never talk about the current quarter. We never give guidance. But I will say, look, I will say, that I was just on a van out here in Addison Itaska (37:03), and I have to say that when I talked to the people in the field, both our franchisees and the customers – you get out of a van and you go from – you know this, you go from shop to shops. They all seemed very positive and that might stop with the positiveness and the optimism that I saw at the kickoff meetings. We have a lot of these around the country. And I was at one of them and the rest of our staff was at others and they come back, and certainly, we're seeing a qualitative view of optimism. And so, I can offer that.

Okay. Is there – just within that SG&A pullback, notwithstanding it was 70 basis points in the C&I business, I guess, I get that. But how much of that was just attributable to the weaker military and oil and gas business versus what may have been in that number in terms of structural cost takeouts? And I guess, also, can you say to what extent there may have been some cost items that were pushed forward into 1Q or pulled back into last quarter's...

I don't think we did that. I think – look, I think if you look at – if you're talking about – are you talking about the 130 basis points of margin improvement in C&I?

I was talking about the $16 million of SG&A drop, which was great. But I'm just trying to get a sense of what the nature of that was.

That's overall, though. The $16 million is overall.

Right.

Right? That's not just for C&I.

Correct.

And that didn't have much push or pull. What's in there is, like I said, you had currency, a big number of currency, with the currency year-over-year affects that SG&A and shrinks it. You have RCI. You've got – as somebody mentioned before, you have some goes-ins and goes-outs in terms of pension going the other way, compensation going one way. And you also have the 53rd week last year which was an extra week of operating expenses. Like I said – and so, therefore, the comparison issue isn't favorable, you get paid back at the sales line for that because the sales ends up being a little bit smaller. But if you look at it – I don't want to – I want to focus that, if you look at that one account, you start to see the effect of the 53rd week. If you look at it in total, it wasn't much of an effect for us.

Okay. Last question, just if you could talk about the trends you're seeing in tool storage and whether you're seeing a deceleration in demand patterns.

No. No. Our big ticket items in total, we never talk particularly about tool storage, but our big ticket items in total were up a little bit more than the tools did (39:27) in the quarter. And I don't see that, really. I really don't see it. We haven't identified any particular cooling of that activity. Now, from quarter-to-quarter, these things always change. But I don't see as a downturn. Like I said, our big ticket items continued.

Great. Thanks very much.

Sure.

We'll go next to Liam Burke of Wunderlich.

Thank you. Good morning, Nick. Good morning, Aldo.

Hey, Liam.

Good morning.

Nick, can you give us a sense – you had a good year in new product introductions and hit products. What can we look forward? I mean, are you continuing to see growth in that area with more new introductions to create more hit products?

Yes, I am. But, look, I hate to pin myself to the rack of continual increases in million-dollar hit products. I'm trying not to do that. But that's our drive. I can tell you this. We're getting better and better at customer connection and innovation. And if you think about it, a complex product line (40:37) 65,000-plus SKUs is asymmetrically (40:40) enabled by new technology like 3D printing and finite element analysis and some of the other things like X-ray diffractometers, which is new to us, and electron microscopes and so on. So, from a design point of view, we're getting better, so we don't have to put as much upfront into every product. And from a calling-the-airstrikes point of view, in other words, reacting to customer connection, we're getting better. And that has authored the continual improvement of our hit products. This year, it was up again. I would be aiming to bring it up next year, but we're not – it's not something we always report about. But I think every year, our new products become more impactful and more effective. I mean, just look at the VERUS Edge. The VERUS Edge is simply the best product available in diagnostics. And diagnostics is a rising category. It's faster, smarter, easier to use, and it gives you handheld access to our unique millions of records in – database of millions of records that allows technicians to shortcut the repair process. This is revolutionary, and that's just one thing. We pointed out the prybar today in our – now, we use the prybar for a reason. The prybar is just – it's a prybar, yet customer connection and innovation showed us how to make that long-standing category so much better. That's what's happening in Snap-on. That's what's driving the business for us. And it works in the Tools Group. And we're confident it's going to work for critical industries, although there's turbulence as you can see in critical industries with oil and gas. I mean, oil and gas, I think, we – oil and gas, and military, we never – we always said that our penetration was low and we wouldn't see an impact, but we didn't contemplate going from $115 oil to $30 oil, which is cataclysmic.

Okay. And with the end markets in the automotive repair continuing to grow, are you seeing any change in the competitive front?

I don't think so. I listen to the same publicity that you would listen to. And so people are – I think it's a robust market, so there's room for everybody to have some kind of good news in this market. But, when I go out – and I checked this the other day with our people, when I go out to the franchisees around the vans, they don't talk about the competitors. They talk about our business and how we can make it better. So I don't think we're seeing any kind of change at present. I rode on a van where the guy talks about the numbers of competitors that left his route, in other words, gave up the business and went out. He keeps track of it, but that's all. I mean, he doesn't worry about the competition. He worries about himself. He worries about, well, okay our – things like, questions like, our power tool is actually a lot better than our old power tool, the one I replaced. Or maybe it isn't as good. We need to make it a little bit better. Those are the kinds of things we talk about. Or how much our productivity advancements like providing – for the vans, providing a mobile tablet for van drivers, a couple of mobile tablets for a van. 570 of our van drivers have assistance and the mobile tablet allows them to spread both the principal and the assistant out into different areas, greatly increasing their reach. They talk about that and the efficacy of that. They don't talk about the competitors.

Great. Thank you, Nick.

Sure.

From Barrington Research, we'll go to Gary Prestopino.

Hey. Good morning, everyone.

Hi, Gary.

Couple of questions here. I know somebody asked this about million-dollar products, but, Nick, could you maybe quantify what was the growth in million-plus products that you put out this year versus last year?

I'm not going to actually quantify. I've tried to avoid quantifying that, and I'm not going to change that in this call. But I would say it was up this year by a reasonable margin. In fact, you might even call it a substantial margin in terms of what was launched. So we had a pretty good year in terms of new products. And remember, what I have said is that the number is now five times or six times what it was in 2006. That's a pretty...

...good number.

Pretty good increase.

That's helpful. And you would anticipate that, obviously, you're going to continue to try and strive to put out more new products, especially --

Sure. The whole point is yes. I'm probably not going to slit my wrists if it doesn't increase as much next year, you know what I mean? But certainly, we do target that and that's part of our plan. We would expect that to happen. We put the capabilities and the elements in place to make that happen. And we're getting – it's simply, Gary, we're getting better at it. We're getting better at it. You can see it in the Tools Group numbers.

Right.

You know, okay, 8.7% against 1% or 2% GDPs.

Right. Can you maybe – we've – at least we think that you've had a recovery here for -- we're going into year seven, especially in the U.S. and the automotive market. Is there anything different that you're experiencing in this recovery versus maybe prior recoveries in your experience with Snap-on?

Actually, no. I don't think so. Actually, the recovery has been going on since 2009 and so I don't think so. I do think automotive repair, which is 70% of our business – 70%-plus of our business -- is relatively robust determined by the aging of the vehicles and the changing of the vehicles which isn't interrupted so much by economics. And so, I think automotive repair is in a good place and makes us resistant to these – not immune to these kinds of changes, but resistant. I don't see any change there. Look, I think, if you look at other geographies and industries, they go up and down like you see in oil and gas and in military, like in anybody else, but I don't see anything different about those that I haven't seen in a number of different ups and downs except that maybe the oil and gas (47:37).

Hello? Oh, Jesus.

Please stand by, while we reconnect with our speakers. One moment. Once again, ladies and gentlemen, please stay on the line. [Music] (48:27 – 48:37) Please stand by, as the speakers are joining. Give us just one moment. And you have rejoined. Please continue.

Hello, Gary, are you still there?

Yes, Gary, your line is open.

Yes. Sorry. What did you hear last? Sorry. We got cut off here, I guess.

No. That was fine. I think we were talking about just maybe differences in the recovery, what you're seeing.

Yes. I don't think that much. I mean this is just – I mean certainly oil and gas is a bigger downturn than anybody's seen in a while. It's unusual, right? But other than that, I don't think so. This isn't our first rodeo. So, we've seen it. And automotive repair seems to be chunking along, I think.

Okay. And then one last...

Doing pretty well. Sure.

That's good to hear. One last question for Aldo; in terms of your international sales, they run, what, about 25% of your business, right, somewhere around there?

Yes. That's a – I think you have Europe is about 18% of the mix and emerging markets add another 10%.

That's what I'm getting at. In terms of currencies, the currencies that really impact you would probably be the pound, the euro and then what else?

You have it pretty much right. If you're looking at the sales line, Gary, the most important currency that creates a headwind is the euro. In addition to the euro, you have the Canadian dollar. Lot of people forget about that, but the Canadian dollar, the British pound would be the next most significant ones. When it comes to the bottom line, we have more natural hedges throughout the continent of Europe. So, the euro actually has less of an impact on the bottom line. The biggest impact to our profitability is actually the Canadian dollar, the British pound.

Okay. So, the Canadian dollar and the pound are on (50:37)

Gee, that's why you see most of the impact manifesting itself in the Tools Group. If you think about the Tools Group is largely a sales footprint. So, they don't have a lot of cost that enjoy the benefit of the haircut in the weaker currencies in the United Kingdom and in Canada or Australia for that matter. So they don't enjoy the protection that you get where you have a euro-based organization. There's a lot more cost that decrease in U.S. dollar terms.

Yes. The Tools Group was up 17.5% – was up 100 basis points. But that was against 70 basis points of negative currency. So, you can see where that affects, okay?

Okay. Thanks a lot, guys.

Sure.

We'll go next to David Leiker, Robert W. Baird. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning. This is Joe Vruwink in for David.

Hi, Joe. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): The one slice of C&I that I don't believe you commented on yet was Asia. Any updates on growth rates or trends from the Asia Pacific region?

It was mixed in the quarter. China was weaker than we've seen in a while. And so, we had China being weak and we had some – whereas Indonesia had been weak before. Indonesia was up, India was up, so we kind of had a balance there in terms of our mix in Asia Pacific, China being more difficult in this quarter. We see a lot of variation from quarter-to-quarter in Asia Pacific. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): And in China, is it possible to determine – this will sound strange, but if a slowdown in new vehicle demand, which may actually cause the fleet to age a bit ultimately ends up being more beneficial to Snap-on?

I don't know. I don't think so. I mean, I kind of think the cars that are there in the park, they're going to age anyway. I don't think that the cars or the new cars that are being purchased are making the old cars go away. That's what I think. I don't think they're shipping those overseas to any big extent. Now, I could be wrong about that, but that's our general impression about China, it's a lot of different markets and a lot of different areas. I think the slowdown would probably help some, but I don't think it would be as big a factor as you might think. It's usually the size of the park. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): And then one last one on C&I. Is there any correlation in the military business for Snap-on to the wheeled vehicle programs getting rolled out? So if JLTV production starts ramping at Oshkosh, does Snap-on typically see a benefit in their defense business?

Well, I don't know if we've tied to particularly Oshkosh or something like that, but certainly, wheeling out of new programs help us a lot. For example, the F-35 is a help to us, the fighter vehicle, the fighter, because we have a lot of the business associated with supporting that for both production and for repair. So that kind of program is an underlying program. But across the programs in the defense department, particularly around the projects, around with those new products, that business is very weak – was very weak this quarter. If they launch new products, like you say, a wheeled vehicle product at Oshkosh, that provides an opportunity and we're well-positioned to take advantage of that. So those kinds of programs, new vehicles do help us. But I don't know... Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): And so...

I don't know if you can just trace it to an Oshkosh program. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): No, no. I was thinking more broadly on the programs that you commented on. And so, is it, maybe, fair to say the duration of this pullback in military spending might be shorter than what's Snap-on dealt with in 2012, 2013, around the sequester?

Yes. Gee. I don't know. I think the government business is kind of uncertain. We've said, the military business was up in the quarter – up in the first two quarters. And we said we knew it was going to be uncertain. And now when it's down, I still say the same thing. Certainly, the things you're talking about. New programs are going to help and would shorten the cycle. That's true. Stabilization of the budget would help. It may be not as chronic as the controller of the prior cycle, but I can't really say for sure. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): Okay. I will leave it there. Thank you.

Thank you.

From Jefferies, we'll hear from Bret Jordan.

Good morning. This is actually David Kelley in for Bret this morning. Thanks for taking my questions. A couple of quick follow-ups on RS&I here. And I guess first regarding the flat undercar sales you mentioned. I know U.S. service chain reported a fourth quarter comp decline and largely due to some mild winter weather conditions along the East Coast. Just wondering if you saw some weather-related headwinds in the quarter and I guess how was domestic undercar performance? And how do we think about that segment going forward given the robust auto repair market we're talking about and really some of the significant miles driven gains we've seen over the last three months...

Yes. Look, there's a lot of goes-ins and goes-outs in the undercar equipment business. First and foremost, that flatness is impacted by Eastern Europe. Among all our businesses, the undercar equipment business had the strongest position in Eastern Europe and Russia. So, the dips in those places impacted that business as just squeezed down to a smaller place the most. That's number one. In terms of the other businesses, of course, weather can be a factor in undercar, and that might have been – say, it might be entitled to some of that in the fourth quarter and some of that bad weather. And then the other thing is, it was up quite – our undercar business is a longer wave business. It isn't just a quarter business. When we have a good quarter like we had in the third quarter, sometimes you'll have resources devoted to installation of those new products, flowing into the next quarter which will put a weight on the next quarter. So, you see those three things rolling through it. I would expect – to your question about the longer-term, I expect that undercar repair will follow along with the generally robust vehicle repair market in the U.S. and in Europe as the cars get older. And by the way, as the cars get lighter and need more fuel economy, the precision of balancing and alignment needs to be stronger. So, we're very positive about the long-term future of that business, and we have a major share of it.

All right, great. I appreciate the color. And then, just quickly, if you can provide some, maybe, color around the 260 basis points margin expansion for RS&I; just wondering how much of that is basic blocking and tackling around these RCI initiatives that continue to provide you, guys, tailwinds here?

Well, RCI is a big dollop of it. And then, of the 260 basis points, I would say, you've got a little bit of negative currency, and you got about 70 basis points or so, what I would call favorable mix. As you follow us over time, you will see that RS&I has quite a variation from business to business in terms of operating margin. It could be thousands of basis points. And so, what happened in this quarter is we had another strong quarter of diagnostics and Mitchell, the business to independents which are high margin business, and a reduction of the hardware business which is equipment. So, that generated that 70 basis points, or so, of help from business mix. So, that's what you're seeing. RCI and business mix.

All right, great. Thank you. And then, just a final one from me and this is more kind of a big picture thought question here. You're mentioning sales to OEM dealerships were up again single digits. And I guess as we think about maybe being on the back end of a cyclical recovery in new vehicle sales, do you think there might be a shift in dealership ordering patterns of equipment, either they're focusing more on parts than service retention or maybe they're spending less due to a flat retail sales market? How do you think about the dealership channel over the next...

I'm not sure. Having worked in the auto industry for 11 years myself, I would say that's a hard call. I mean, I don't think you can make a lot out of this. I guess, we were saying mid-single digits or low single digits in the OEM dealership business this quarter. But I don't think you can make a conclusion on one quarter. Some of that got driven by programs out of OEM manufacturers, the essential diagnostics and so on. I do think you make a point that as new car sales attenuate, dealerships tend to focus a little bit more on parts and service. I think that is true to the extent that the time constants on which that rolls into our business, I'm not sure.

All right, great. Thanks for taking my question.

Sure.

David MacGregor of Longbow Research has a follow-up question. Please go ahead.

Yes. Just a follow-up, Nick; somewhere within your portfolio, there's got to be a line of business or a product or some franchise that serves as a pretty reliable leading indicator for you. And I'm just wondering if you could talk a little bit about where you're seeing leading indicators in your business and basically what they're telling you. There's obviously some concerns here about your ability to sustain growth in 2016. I just wanted to give you an opportunity to talk a little bit about why you're feeling confident to – certainly in the first half of 2016?

Well, our leading indicators are pretty much what we hear from our franchisees and what we see about the programs in terms of the changing of the vehicles and what we hear from our franchisees about their outlooks for the demand in their businesses. You can go out and talk to them, and the leading indicators are, gee, are we providing the kinds of tools that would solve the new problems that are coming on the horizons in the independent garages? Now, this isn't a quantitative leading indicator, but it's been pretty reliable for us. And so what we see is the optimism coming out from them saying, boy, I think things are good and the fact that we our new product portfolios, our innovative new products are solving more problems than ever. Those are the kinds of things and that hasn't abated. So, I feel pretty good about that business. And in terms of the other businesses, I just think we also feel good about our growing strength in the critical industries. It's just that you see some very big headwinds in some of those critical industries. And I can't predict where those are going to go.

Can you just remind us again what...

On the other hand, I will just offer that, we've seen up and down before and we've been able to grow profitability against the winds; not every quarter necessarily but in terms of a trend. We view our situation as a trend. If you go back and you look at our numbers from 2006 onwards, sales and profits, the trend continued and even through the recession, and the dip in the recession, that trend continued.

So, you continue to see growth in your future-dated orders?

We don't have future-dated orders, really. We're not a future-dated order business. So, we don't have much of an order backlog.

Yes.

We don't have that kind of thing. We have to rely on the kinds of things I've talked about.

All right. Okay. And just last question. Can you just remind us what critical industries represents as a percentage of total C&I?

It represents about I'd say 40%. David, you can say given for government worth, it's $450 million business roughly, right?

Right, right.

Okay.

Thanks, Nick.

Sure.

And our final question today will come from Richard Hilgert of Morningstar.

Congratulations on a great quarter, guys.

Thanks, Richard.

Just wanted to get your feel for what you're seeing in terms of puts and takes with some of the issues that we're facing right now on the new car side of the business. We're seeing diesel being a big issue right now. We're seeing hybrids being a big issue. We're seeing active safety coming into play over the next couple of years. I would imagine that with more and more electronic control, there's going to be more opportunities for diagnostics, maybe, but also I'm wondering on the Tools side, if there's any opportunities there. What's some of the puts and takes that you're seeing with all these changes coming down the pike?

Actually, Richard, all of those things are positive for our business. When the vehicles change, that requires new tool loads, new electronics, new undercar equipment to deal with the changes. If you just take one and if you think about self-driving vehicles and things like that, I mean, the more people rely on internal mechanisms inside the car, the more precise calibration has to be, and therefore, the more careful and more detailed the mechanical job is, the mechanics have to be. And so if it gets more electronic, there's opportunities for diagnostics. If it gets more attended to onboard computers to control the car, more equipment and more diagnostics. And, ironically, during the time in which the cars have electrified, it's gone from – in the 1990s, it went from 50, 60 engine codes for a car to now thousands of engine codes. In that time, demand for hand tools has only increased because the reparability of the car is so far down in terms of the design considerations that the cars have become more and more difficult to physically repair, let alone diagnose associated with electronics. So, all of those things are good for us. We see a very positive future and trend, and we're confident. That continues the trend that you see in our numbers. If you look at our numbers and you see over periods of time, sales and OI margin, continual trends in good times and challenged times.

Great. Thank you very much.

Okay.

And it appears there are no further questions at this time. I would like to turn the call back over to Leslie Kratcoski for closing remarks.

Thanks, everyone, for joining us today. A replay of today's call will be available shortly on snapon.com. And as always, we thank you for your interest in Snap-on. Good day.