Good day and welcome to the Snap-on Incorporated 2016 Fourth Quarter and Full Year Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Miss. Leslie Kratcoski. Please go ahead, ma'am.

[audiogap] (00:26 – 00:39) 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 some closing thoughts, we'll take your questions. As usual, we have 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, snapon.com, under Investor Information. These slides will be archived on our website along with a 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, this presentation includes non-GAAP measures of financial performance which are not meant to be considered in isolation or as a substitute for their GAAP counterparts. Additional information regarding these measures is included in our Q3 earnings release issued today, which can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Thanks, Leslie. Good morning, everybody. I'll start with the highlights of our fourth quarter and of our year and I'll give you my perspective on the results, on the environment and on our progress. After that, Aldo will move into a more detailed review of the financials. The Snap-on fourth quarter, sales increases and broad profit gains marking another period of encouraging performance; again this quarter we had opportunities and we had headwinds. We took advantage of those opportunities and we overcame the headwinds. Overall sales in the quarter were $889.8 million, 4.5% higher than last year. That total included acquisition related volume from Car-O-Liner and Sturtevant Richmont and it also included the impact of $15.2 million of unfavorable foreign currency. Our organic growth in the quarter was 3.6% with gains registered across every group. EPS, it was $2.47, up 11.3% from the $2.22 registered in 2015. Our OpCo operating margin reached 19.8%, an increase of 70 basis points and those profits include $3.7 million of adverse foreign currency. Financial services earnings of 51.6% (sic) [$51.6 million] (3:27) were also up, leading to a consolidated operating margin including both financial services and OpCo of 23.6%, an improvement of 90 basis points in the quarter. And our markets, well the Automotive Repair segment continues to remain favorable, changing technology, the aging vehicles requiring new tools and more repairs. Our Tools Group – progress in all geographies, gains throughout the franchise network and the repair systems and information, our RS&I Group, advancements across our businesses serving repair shops, owners and managers. All of them. Taken together these businesses confirm the ongoing strength of the repair market, and clearly demonstrate the opportunity available. Now for our Commercial & Industrial Group, or C&I, the markets were mixed but overall positive. There were of course…

Thanks, Nick. Our fourth quarter consolidated operating results are summarized on slide six. Net sales of $889.8 million in the quarter increased $38.1 million, or 4.5% from 2015 levels, reflecting a $30 million, or 3.6% organic sales gain, $23.3 million of acquisition related sales, and $15.2 million of unfavorable foreign currency translation. Due to the strengthening of the U.S. dollar, foreign currency movements adversely impacted our Q4 sales comparisons by 190 basis points. The organic sales gain reflects continued progress in serving the vehicle repair sector, as well as its sales improvements in our Commercial & Industrial segment. Consolidated gross margin of 49.9% improved 150 basis points year-over-year, primarily due to sales leverage and savings from RCI initiatives. Operating expenses of $267.8 million yielded an operating expense margin of 30.1% in the quarter, an increase of 80 basis points, primarily due to higher acquisition related and other expenses including operating expenses for Car-O-Liner and Sturtevant Richmont, which were both acquired in the fourth quarter, as well as a 30 basis point benefit in the fourth quarter of 2015, primarily from a gain on sale of a former manufacturing facility. As a result of these factors, operating earnings before financial services of $176.1 million, including $3.7 million of unfavorable foreign currency effects, increased 8.5% and as a percentage of sales, improved 70 basis points to 19.8%. Financial services revenue of $74.2 million in the quarter increased 17.6% from 2015 levels, and operating earnings of $51.6 million, including $0.6 million of unfavorable foreign currency effects increased 14.7%. Consolidated operating earnings of $227.7 million, including $4.3 million of unfavorable foreign currency effects increased 9.8%, and the operating margin of 23.6% improved 90 basis points from 22.7% a year ago. Our fourth quarter effective income tax rate of 30.8% compared to 31.1% last year.…

Thanks, Aldo. Well, you heard about our year and our fourth quarter. I believe they represent continuing confirmation of the opportunities along our runways for growth and testimony to the possibilities inherent in Snap-On value creation and our runways for improvement. C&I growing again in a very turbulent environment, finding the opportunities where they exist in critical industries, continuing the upward trend in Europe in difficult and uncertain economies, reaching an OI margin of 15.3%, one of its highest, up 40 basis points. The Tools Group growing, not equal to recent periods, but still displaying the hallmarks of continuing achievement: a robust vehicle repair sector, positive franchisee health, strong product introductions, and a continuing enthusiasm across the franchisees and the customers. And through it all, profit growth, OI margin of 17.6%, up 10 basis points, despite a 70 basis-point headwind from unfavorable currency. And RS&I, 8.9% organic growth, confirming the strength of vehicle repair, progress with independent shops and dealerships, exciting new products spearheading those advancements, and OI margins reaching 25.8%, up despite the impact of Car-O-Liner and its lower profit levels. And the acquisitions, Car-O-Liner and Sturtevant Richmont adding more product fuel for growth and providing more opportunity for improvement. It all came together to bring our OpCo operating margin to 19.8%, up 70 basis points. And when you add Financial Services, the overall operating margin was 23.6%, up 90 basis points. It was an encouraging quarter and an encouraging year. And we believe we have the market and the position and the team to continue the trend of extended positive performance through 2017 and beyond. Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates. I know, again, many of you are listening. The progress accomplished is a direct reflection of the capability and perseverance you contribute to our effort. For your achievements in the quarter and the year, you have my congratulations, and for your continuing commitment to our team, you have my thanks. Now I'll turn the call over to the operator. Operator?

We'll take our first question from Bret Jordan from Jefferies. Please go ahead. Your line is open.

Good morning, guys. It's David Kelley on for Bret this morning. Just a couple quick questions. And first on RS&I, strong organic growth in the quarter, Just want to drill down on the double-digit diagnostics growth you pointed out. Was there something specific to the quarter that drove the robust performance there, given some of the cadence of....

Yes, there was.

Go ahead.

Yes, there was, there was. Look, the thing is, as we said, we launched two dynamite new products and actually the thermal imager for us is a whole new category of diagnosing a vehicle, not data driven but physically driven by looking at a vehicle. Like, for example, if you're looking for a bad cylinder, it's tough to tell from the electronic diagnostics, but you can tell if you focus the thermal imager on it and see which one is hot. That changed everything. That created a lot of volume in that situation, a lot of attention for diagnostics. And then the MODIS Edge was another extension of our already pretty robust line, but a pretty good tool. So those two really drove the business into that 8.9%. Then you had the Mitchell 1 had its usual strong performance in terms of selling to shops. And then we had some comeback with dealerships, which can be lumpy. The lumpy side can be dealerships. But mostly, the story is new product.

Great. No, appreciate the color. And I guess given the favorable secular tailwind that should benefit that sector, how do we think about maybe longer-term organic growth opportunity in RS&I looking out over the next two to three years?

Well, we always say, look, it's 4% to 6%. That's what we're targeting in most environments. We expect RS&I to be in the middle of that, and the RS&I numbers in the last three years are 4.9%, 4.9%, 4.7%. But this particular one with these new products we feel pretty positive.

Okay, great. Thanks. And then one more from me and I'll pass it along. Just on the Tools growth, I was wondering if maybe you'd be able to give us a feel for cadence in the quarter. I was wondering if there was any pickup late in December or any uptick you've even seen in January year-to-date that's contributing to that confidence in a rebound in 2017 here.

No. Look, okay, the Tools Group was not equal to its normal trend, but 3% isn't a poke in the eye with a stick in a 1.9% economy. So we still feel okay about that. But you could have reasonably expected more. But everything we look at, the enthusiasm of the market, the strength of our product, our franchisees, how they react, we feel pretty positive about that. So what I'm saying is, is that you look at those numbers and you may say, below trend but in anything you look at from a physical point of view or for a conversational point of view or seeing a product pipeline point of view, you feel confident.

Okay, great. Again, appreciate the color. Thank you.

Thank you. And we'll take our next question from David Leiker from Baird. Please go ahead. Your line is open. David Leiker - Robert W. Baird & Co., Inc. (Broker): Good morning.

Morning.

Morning. David Leiker - Robert W. Baird & Co., Inc. (Broker): Guys, just as a follow-up on that last question on the Tools side, is there anything – obviously, that number is a lot weaker than what we've been seeing here for actually quite a while. Is there anything from a timing perspective or regional perspective or anything as you dig down inside there that could give us a little bit more color?

No, I don't think so. The timing is not really – we have up weeks and down weeks. It's hard to make any interpretation in that, David. I think simply stated, I hate to use an analogy like this, but sometimes your clean-up hitter hits a single and a double and doesn't hit a homerun and you still win the game, and that's the way we see this quarter. I wouldn't use the word weaker 3%. I hate to use that word because I think it's a reasonable growth, but yeah, it is below trend and we are unsatisfied with that number. David Leiker - Robert W. Baird & Co., Inc. (Broker): I know you don't talk about numbers on a go-forward basis, but can you give us any sense of what our proper expectation should get zeroed in on as we look at 2017 for that business?

Well, we always say our growth is going to be in the 4% to 6% range, and that's the kind of thing we think of. And Tools Group grew at 5.6% in the last quarter – I mean last year, sorry, last year. And so I don't think we see anything to interrupt our trajectory, let's put it that way. David Leiker - Robert W. Baird & Co., Inc. (Broker): Okay. And then the second item here is on the credit company. When you dig down into the credit stats, some of them at the margin are getting a little bit weaker I guess. The losses are up, the delinquencies, there's some seasonality there. The originations growth, which I'm sure is tied into the Tools number. But can you talk a little bit about what you're doing there? Your allowances you said you took up a little bit, but it looks like the losses are a little bit. Is this something that's just an adjustment, or do you think this is a start of a trend?

Well, I'll speak to the originations. Look, originations is in the Tools Group (44:02), it follows the Tools Group. And fundamentally in the quarter what you see is high growth in the diagnostics area. The diagnostics products were the hottest, in particular the thermal imager, which tends to be at the bottom end of the diagnostics range, we would still classify it as big ticket. But the origination, the credit penetration in that area of diagnostics tends to be lower. So you fundamentally look at the characteristics of the diagnostic sales and we shake our head and say, yes, lower administration, makes a lot of sense based on what we sold in the Tools Group. And so that's kind of our view in that – and It's perfectly explainable in those kinds of situations and seeing what happens with the Tools Group. It's a lot less change next quarter because of the characteristics of what sells and what new products come out. In terms of the reserves, I'll let Aldo talk about that.

Well, David, if you look at the cash flow statement, you'll see that our provision, if you look year-over-year, it's up about $4.4 million, just to give you a little color on that. If you just still look at what I would call the normal sized growth in the portfolio, that would account for about a third of the provision. So you have, yes, two-thirds of extra growth in the provision relates to the delinquency and characteristics of the trends. So at the end of the quarter, we think the reserve's adjusted accordingly. It reflects that. And as we move forward, we're not alarmed by any of the statistics. These are within the range of deviation that we've seen over recent times, so we're comfortable. David Leiker - Robert W. Baird & Co., Inc. (Broker): I got a few emails this morning. There are some who are saying that that's a sign that the end market, that your customer is weakening, and that the credit company is the canary in the coal mine.

Well, we don't see the end market weakening, actually. That was the whole point of half of my script here. I don't think we see that to the extent that anything we see – I was just on a van the other day, two days ago, and it didn't seem that way. I was in the garages and those guys seemed pretty robust in their view of the world, talking about how they've had to turn away business, in fact. I know this is a windshield survey, but in terms of the kickoffs were three weeks ago. And we all go out all over the country and everybody came back saying, our guys are more pumped than ever before. So we don't see that, anyway. We don't see the end-market weakening at all. David Leiker - Robert W. Baird & Co., Inc. (Broker): Okay. And then just one quick housekeeping question, Aldo, on the acquisitions. It looks like the revenue contribution there was more than just what you would think given the calendar and the timing of the acquisitions. Is there some seasonality in there that skewed that contribution?

There is a bit. If you look at the collision business itself, the fourth quarter tends to be one of their better quarters. We owned Car-O-Liner practically speaking for a full two months, Sturtevant Richmont to a lesser extent was really only about a little over about five-, six-week ownership period. But yes, the collision business does skew a bit to the fourth quarter. David Leiker - Robert W. Baird & Co., Inc. (Broker): Okay, great. And thank you very much.

And we'll take our next question from David MacGregor at Longbow Research. Please go ahead. Your line is open.

Yes. Good morning, everyone. Just a question on the Tools segment. Can you just talk a little bit about the growth you saw in big ticket versus smaller ticket business?

I think ticket was up, but it was – when we say that big ticket you can classify it into three pieces or three general pieces, David. You've got the tool storage boxes, right. They're the biggest of the big ticket, and almost all of them get financed. And then you've got diagnostics that goes through a range. And then you have some other dribs and drabs, like we'll sell welders and things like that, but that is not a big ticket item. Big ticket grew faster in Tools Group, but the lion's share of that growth was in the diagnostic product, the MODIS Edges, which are expensive, and they are – maybe list price is probably $6,000, $5,999, something like that. And then you've got the thermal imager, which was at the bottom of the range. The list price is somewhere I think around $1,300, $1,400. So the thing is, is that you've got a lower end at that level. So your big ticket was greater than the Tools Group, but more anchored in the lower end of big ticket than in maybe the quarters we've been used to lately. Tool storage was slightly off this quarter. So the tool storage representation was not as strong in this. So thus the smaller originations than it used to because thermal imagers, the penetration, the need for financing is a lot lower than for tool storage box.

You're talking about stronger diagnostics. I realize in response to an earlier question you said timing wasn't an issue here, but I know you ran a storage promotion in late third quarter. Is it possible you just pulled forward some storage out of 4Q into 3Q, and that's accounting for the slower growth?

No, maybe. There's a lot of things. I think – I don't know. Fundamentally these kinds of things are fairly judgmental in that situation (49:23). That's certainly a possibility, although we don't think – we try not to pull ahead those kinds of things, but certainly launches of new products really affect this kind of thing. And remember that you're talking about difference between 3% growth and 6% growth in the Tools Group, you're talking about one set of sockets once a week for every franchisee. So it's a difficult thing to – when you're talking about those differences, it's a difficult thing to pin down exactly the results. I would say if you're talking about tool storage, the biggest effect was hot diagnostics taking a lot of attention.

Same question. Just your net income margin continues to grow. You're now up to pretty impressive 16%. Just given the operating leverage in the business, is there an upside to this number in 2017 when materials' costs are going to be re-inflating and maybe big ticket growth in Tools may be slowing?

Yeah. There is. I mean I think we say that we keep driving up the margin, there's a lot of reasons for this. I mean fundamentally we see a lot of opportunities even today for improvement in Snap-On in every division, that's number one. Number two is, yes, material prices are rising, but we don't buy that much and you've never heard me explain on this call variance associated with material costs and we've made a couple of acquisitions now that gives us more grist for the Snap-On value creation mill.

Okay.

So I see lots of opportunities there still. So I don't think, by no means have we hit the top anywhere.

Okay. Last question for me. Just on the balance sheet. You ended another year with roughly 1 times net debt-to-EBITDA. You're doing bolt-on transactions, you've obviously been successful in augmenting growth. But just given the strength of your free cash flow, is the capacity here to continue to bolt-ons and grow the dividend while also accelerating your share repurchase activity?

Yeah, Dave, it's Aldo. Our principal focus for free cash flow is to look for investment opportunities whether that be organic or by way of acquisitions, that is what we look to. And, again, our strategy along share repurchase is still more or less to offset dilution. And, again, we continue to make contributions into our pension plan. So as we go forward and things change, we'll reexamine those on a quarterly basis, but that's kind of the pecking order right now.

Thanks a lot.

Thank you. And we'll take our next question from Gary Prestopino from Barrington Research Associates. Please go ahead. Your line is open.

Good morning, everyone. A lot of the questions relating to the Tools Group have been answered, but, Nick, I mean, with the Rock 'N Roll Express vans, which I understand are the ones that are selling these big ticket storage items, have you been increasing that on an absolute basis? Or year-over-year is it pretty steady in terms of the units that are out there?

Bingo! It was flat, but we increased the Techno-Vans, which sells diagnostics. We moved those up 10% in the quarter, 20% year-over-year. So that's a relevant question. I didn't add that before, but that's one of the things that helped drive the diagnostics business. It all come together, new product and more power in the field's marketing of all this. Now, as I've said in the past, I'm not so sure that has an effect, and the fact that we didn't increase Rock 'N Roll vans doesn't necessarily have an effect because we think we get better every quarter at using them, but the fact is we haven't increased them for some time.

Okay. So that helps. And then the other thing you mentioned in your commentary that it was a record number of hit products this year, which I assume a hit product is one that generates over a million of sales.

Exactly.

Could you give us an idea of the magnitude of that growth on a percentage basis, or just the absolute number of hit products...

I'll just say, I don't like to talk about the absolute number because I don't want to get pinned to the cross of reporting on hit products every year. But I'll just tell you this, versus 10 years ago we've reached more than 6 times.

Okay.

And we keep growing on a regular basis.

Okay. All right. Thank you.

Thank you. And we'll take our next question from Scott Stember from C.L. King. Please go ahead. Your line is open. Scott L. Stember - C.L. King & Associates, Inc.: Good morning and thanks for taking my questions.

Sure. Scott L. Stember - C.L. King & Associates, Inc.: Could you maybe talk about currency, I know that heading into the back part of the year, before Brexit we were hoping that we'd get some bouncing out or some flattening of currency, but with the sterling falling off the way that it did certainly it started to hurt. But we've seen the pound actually rebound somewhat. Can you maybe just give us an idea of what your reset expectations are for 2017 for when we could start to see a bottom with impact from currency?

Just to ground ourselves, in the fourth quarter we took about a $15 million hit in revenue from currency and about $0.05 or $4 million on the bottom line in currency. And for the full year we had about $50 million, just north of $50 million, $51.5 million and $0.26 or $23 million in currency. Looking forward, this is the darndest thing; at the end of the year we would have said same stuff. It would have been the same numbers, right. When we looked at it we figured we're going to see more or less the same currency effect that we had last year. You kind of rolled it out maybe a little different in conversation. But since the year-end things have changed, and we think the currency number's kind of half, for ballpark numbers you can kind of look at a half type currency. Look, maybe a little bit more than that early, right now if rates stay right where they are today we think it ends up being about half. And the interesting thing about this is we talked about delinquencies and provisions in the credit company. The effect of currency, the $23 million, is humongous compared to our noise around that. And of course currencies can always change, so tomorrow I may wake up and this may all be different. But if you took them today, we'd expect some relief. And that relief would be big, would be nice. Scott L. Stember - C.L. King & Associates, Inc.: Got it. And going over to RS&I, you broke out some of the categories. I missed the growth for the independent shop owners. Could you give that number again?

Oh, we're saying double-digit growth for the independent shop owners. The repairs, the diagnostics and software for the independent repair shop owners, Mitchell 1 sells the software in terms of SureTrack with the hundreds of millions of dollars of records of repair. And then diagnostics is the hardware and software-based sale, things like a thermal imager or a handheld diagnostic that will decode everything a car wants to say. So if you take that together it's like double-digits. Scott L. Stember - C.L. King & Associates, Inc.: Right. And just last question, you talked about the undercar equipment business being, I think, you said low single-digits. Could you just maybe flesh that out? Whether weather-related products for the wheel, tire aligners, wheel aligners and (56:42)...

I don't know. I hear all that, but I'm not sure I believe it. The thing is that every time I go in a garage sometimes the guys will tell me the weather has shafted us, and other people will say, the snow will make it bad for us because people can't get in. Other people will say the snow makes it good because they have a lot more procedures. So I'm not so sure how to play with that. What I will tell you about this is the Europeans tend to follow this. And the European business was much more sluggish compared to the North American business in this particular area. And Eastern Europe hasn't been too good to us in the equipment business either. Scott L. Stember - C.L. King & Associates, Inc.: Got it. That's all I have. Thanks again.

Okay.

And we'll take our next question from Liam Burke from Wunderlich. Please go ahead. Your line is open.

Thank you, and good morning, Nick.

Good morning, Liam.

Nick, on C&I you've invested a fair amount in emerging markets. Are you seeing any meaningful move there to help absorb some of that upfront investment?

No. I wish I could say that I was, but the problem is, it seems like when we take one step forward, we take a step backwards in another place. For example, we're up in China this year, India difficult. I'm sure you're probably familiar with the demonetization in India and people ran out of cash. And a lot of our smaller distributors do a cash business, so our business went – kind of weakened in the third quarter. So we're seeing that kind of balance. The turbulence has bedeviled us lately in terms of Indonesia being down and Thailand being up. So we see progress from a physical point of view, I feel better about the business, but we haven't been able to monetize it yet. I'm confident we will, but it hasn't been a meaningful contributor to us.

Okay. In terms of RCI...

It will be though. It will be.

Okay.

I'm just saying, I'm confident it will be. But it hasn't been yet because we're managing over all those differences.

Okay. Got it. And on RCI, you talk about, obviously, the internal processes. You've moved that out to the van channel, Rock 'N Roll Van and – are some of the examples. Do you have any RCI programs pushed out to the van channel beyond the company-owned vans?

Well, yeah. I mean the thing is, is that a couple of things. Of course, increasingly the franchisees are deciding on their own to add assistants. Now we have about 20% of them up with assistants; I think there's 695 or something like that, up about 20% year-over-year. And that gives them more – in effect adds time to each van. And what we've done is, we've put programs in place to support them: new computer systems, tablets that allow them to have two people wandering around a garage or separated off the van and can still have a cash register in their hand. And so that's been a kind of positive event. That's one thing I can think of for sure. And then, of course, just this quarter we expanded the Techno-Vans, another 10% growth quarter-over-quarter, 20% year-over-year. And that saves time because it puts an expert at the beck and call of a franchisee for a short period of time, and it also gives him and expands his selling space. So the Techno-Vans both amplify the time and allow him to time share more space for selling. So you have those two things going on. There's a number of smaller things which we focus on in terms of how they're going to manage their inventory, how they're going to do other things.

Great. Thanks, Nick.

Sure.

Thank you. And we'll take our last question from Richard Hilgert at the Morningstar. Please go ahead. Your line is open.

Thanks, Good morning, guys, and thanks for taking my questions. Just wanted to ask about future technologies in the industry. We're hearing more and more about hybrids coming sooner, battery electrics coming sooner, and obviously some of these things are already out there today, along with autonomous features of vehicles. Are you already developing tools for some of these areas, and if so, what are some of the areas that you're already seeing coming through for new tooling and electronics diagnostics?

Sure. I mean we are developing, actually remember: change is our friend. It requires the mechanic to change his tool set and to get new implements to allow him to repair these cars. And make no mistake about it, they need repair. And so we are working on this but just to be clear, unfortunately for us, it ain't happening next Thursday. There are 300 million vehicles on the road in North America and a very micro-percentage of them are really hybrids and electronic, even today. But we are doing new things. For example, hybrids and electronics, we have a whole line of insulating tools. If you're poking around inside those engine compartments whether they are electric or hybrid, there's a lot of voltage in there, you don't want to get fried. And in fact there's a lot of danger. So a whole set of tools has to be used to particularly do that and we have them available. In terms of automated cars, that's what I was talking about in terms of torque. Any time a car becomes more reliant on a system, it requires more calibration, more precise adjustment. And torque is one of the things that's more important. Of course, there's a whole bunch of other things like alignment and tire balancing, and a number of things that emanate from precision that opens up a whole new range of opportunities for us. So as cars become more automatic, we're investing in torque. You heard me talk about the AT300. Because of the need for that precision, that's why the SUVs and light trucks are requiring this precise torques of such large numbers. They didn't used to do that. And in terms of things like lane departure systems or self-parks or adjusting automated cruise control, they all need more of this and that means precision. That's why we're buying in the torque sector because we believe this is a natural emanation of it. And one of the bright spots of the Tools Group in the fourth quarter was torque was up substantially, verifying that, confirming that view of the world.

Okay. Great. My other question, it deals with some of the questions that I'm getting from investors with respect to the finance operations. Aldo, I was wondering if you could talk a little bit about the credit policy there and how it works. Some of the pushback I get is that there's concern that the franchisees are given too much credit authority, and that collecting it back might be more difficult for them. Is there any kind of comments you can make about the credit policy standards right now? And the fact that the business isn't necessarily growing because policies are getting weak, it's just a matter of the business and its natural growth rates?

Yeah, Richard. I think that last word is a good one. The business policy of sorts is to rely heavily on our experience. And when I say our experience that also includes the experience curve of the franchisees themselves. We have a traditional database that you get reports from various agencies and credit bureaus and things of that nature. We have our own internal history, which means a lot, and we keep that as a reservoir of information at the credit company. And we actually stripe and monitor the progress that our franchisees make along their path through a career in this business and track trends, and are able to instill in them some training. We provide training when we go to the periodic conferences. But they are in a position to meet their customers up close and personal each and every week for the most part, and offer back to the credit company, an informed credit decision that might not be apparent in the bureaus or in the database, such as, what's the peer group feedback on that technician in a garage. What is the garage itself doing? Is there a stream of work or does it look like a garage vulnerable to a downturn? My point is that there's a lot of information resident in the franchisees and their own employees, because some of them do have employees. And we try to incorporate that into our final decision when we make a credit choice. So as the model evolves, it's always enhanced. As the franchisees attempt to grow, they reach into new spaces, they meet new customers, those customers will have different credit profiles. And you adjust accordingly along the way.

Very good. Thanks again for taking my questions.

Sure.

Thank you. And it appears we have no further questions at this time. I'd like to turn it back over to Ms. Leslie Kratcoski for any additional or closing remarks.

Thanks, Savannah. We appreciate everyone joining the call today. A replay will be available on snapon.com shortly. And as always, we thank you for your interest in the company. Good day.

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a great day.