Good day and welcome to the Snap-on Incorporated First Quarter 2021 Results Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Sara Verbsky, Vice President, Investor Relations. Please go ahead.

Thank you, Nick, and good morning, everyone. Thank you for joining us today to review Snap-on's first 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 some 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, snapon.com, under the Investor section. 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, 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 including a reconciliation of non-GAAP measures is included in our earnings release and in our conference call slides on Pages 14 through 16. Both can be found on our website. With that said, I'd now like to turn the call over to Nick Pinchuk. Nick?

Thanks, Sara. Good morning, everybody. As usual, I'll start the call by covering the highlights of our first quarter and along the way, I'll give you my perspective on our results, they are encouraging, on our markets they're standing firm and, on our progress, it's made us stronger than ever before. And we'll also speak about what it all means. We believe it means we're getting better and better position for more even while we're still in the midst of a once in a 100-year pandemic. After all that Aldo will move into a more detailed review of the financials. We believe our first quarter is clear confirmation of Snap-on's ability to continue its trajectory of positive results, further accommodating to the virus environment, overcoming periods of period variations from business-to-business, dealing with macroeconomic headwinds and advancing along our runways for both growth and improvement. Our reported sales in the quarter of $1.246 billion were up 20.2%, including 19.2 million a favorable foreign exchange and 11.3 million of acquisition related sales. Organic sales growth was 16.3% gains in every group. It's our third straight, straight quarter of being above our pre-pandemic levels and ongoing contributions from our Strap-on value creation processes. The principles we use every day safety quality, customer connection, innovation, and rapid continuous improvement or RCI. They all combine to drive that progress, progress there was. OpCo operating income of 200.9 9 million was up 62 million from last year, which included 7.5 million of restructuring charges. OpCo operating margin was 19.6% up from the 2020 level of 16.3% or 17.2% as adjusted for restructuring. For financial services, operating income of 65.3 million increased 14.8% and the delinquencies were down even in the midst of a pandemic stress test during a commercial trial of what we would call…

Thanks Nick. Our consolidated operating results is summarized on Slide 6. The first quarter of 2021 exhibited robust financial performance, particularly as compared to last year when we experienced initial shock of the virus. The quarter's results also compared favorably with the first quarter of 2019, which being a pre-pandemic time period may serve to be the more meaningful baseline. Net sales of $1.246 billion in the quarter increased 20.2% from 2020 levels, reflecting a 16.3% organic sales again, $11.3 million of acquisition related sales and $19.2 million of favorable foreign currency translation. Additionally, net sales in the period increased 11.2% from $921.7 million in the first quarter of 2019, including an 8.1% organic gain, $15.3 million of acquisition related sales and $11.6 million of favorable foreign currency translation Consolidated gross margin of 50.1% compared to 49.5% last year, which included 60 basis points from restructuring costs. The gross margin contributions from the higher sales volumes of benefit from the company's RCI initiatives were offset by 40 basis points of unfavorable foreign currency effects. Operating expenses as a percentage of net sales of 30.5% improved 270 basis points from 33.2% last year, which included 30 basis points from restructuring costs. The improvements primarily reflect the impact of higher sales and cost containment actions, partially offset by higher stock-based cost and 30 basis points of operating expenses related to acquisitions. Operating earnings before financial services of $200.9 million, compared to $138.9 million in 2020, reflecting a 44.6% year-over-year improvement. As a percentage of net sales, operating margin before financial services of 19.6% improved 330 basis points from 16.3% last year, which included 90 basis points for restructuring costs. Financial services revenues of $88.6 million in the first quarter of 2021, compared to $85.9 million last year, while operating earnings of $65.3…

Thanks Aldo. Well, that's our first quarter, another encouraging period, resilient markets through the shock and on the way to psychological recovery, the third straight quarter of upward trajectory, clear year-over-year achievement, and the third straight quarter of results exceeding the pre-pandemic levels of 2019. RS&I sales continuing upward with a wide margins of 23.4% attenuated, but still strong. CNI, ongoing sequential growth across the world. And OI margins 14.7% up nicely, even from 2019. And then the tools group, sales up organically 25% versus 2020 up in all product lines and in all geographies, volume up 15.1% versus 2019 and an OI margin of 20.7%. Finally, financial services in the midst of the greatest stress test profits up delinquencies down, rock solid, and they all came together with Snap-on sales rising organically 16.3% versus 2020 and 8.1% versus '19. OI margin 19.6% up significantly despite the virus, the unfavorable currency and the acquisition impacts and the EPS $3.50 a substantial rise versus both 2020 and 2019. We do believe that Snap-on has abundant opportunity as the COVID recedes and the world shifts away from the cities and away from shared transportation and as new vehicle technologies make the car park more complex. And we further believe that we are stronger today than when we entered the storm. Our advantages of product, brand and people are even greater. And we're in a favorable position to wield those strengths, realize the opportunities and continue our positive trajectory throughout 2021 and beyond. Before I turn the call over to the operator, I'll speak directly to our franchisees and associates. Many are listening. I want you to know that your work in this weathering has made a difference to our company and to our society. For your efforts in keeping our world and its critical mobility intact, you have my admiration. For your contribution to our progress in this first quarter, you have my congratulations. And for your unfailing dedication to our team in both smooth and turbulent times, you have my thanks. Now we'll turn the call over to the operator. Operator?

Thank you. [Operator Instructions] And our first question comes from Gary Prestopino with Barrington Research. Please go ahead, sir.

Hey, good morning, everyone.

Good morning Gary,

Couple of questions here Nick, we haven't really seen this kind of growth in the tools group since probably earlier part of last decade, a lot of that was dealing with tool storage. And I don't think it's the same issues now. I mean, if you could cite three or four things that are different in the growth metrics now what you're seeing, especially over the last couple of quarters versus what you saw, maybe when tool storage was really rubbing up on an earlier period last decade.

Yeah, I think there's a couple of things, I think one, this isn't a tool storage and that it was a much more focused growth. We introduced the - certainly the first thing is when we had that rise, we introduced the Rock N' Roll Cabs and the Techno's, which really focused on more or less a particular product line. This was a - this is a broader thing, much more rooted in kind of agnostic process from a product point of view of expanding the capabilities of the tools - of the franchisees. We harness social media better, we're training them better to get the elevator pitch down, and we RCI their vans, or we worked on this for quarters before maybe even in 2019. And we worked really hard in the COVID, because we had time to focus on it. And that's really paying off. It's showing that these franchisees can hit this 20%. The other thing is, I think we got some good products, particularly around hand tools. We package the hand tools, so we're selling not only individual tools, but also kits aimed at a particular problem, and they're becoming pretty profitable, popular. We didn't talk about them on the call. I mean things like putting together a set of sockets that are for particular applications in foam. They're wildly popular. And then the other products we have in terms of tool storage and diagnostics. They're really baffled and that's driving that that broad appeal. And then the final thing, I think you could think, look, there's a lot of this condition, you could - people might say this is recovery, but the sales off the van over last year exceeded the sales to the van, so you wouldn't think there'd be recovery in that. Not so much recovery in that situation. It's going off the van at the same level. The whole year was up. And same things happening this quarter, sales up the van is the same as we're selling to them. So you look at this, you might say it's a stimulus and the stimulus could be helping us this way. We don't know, when you're talking to technicians and people in a practice stimulus seems to be always going into bank accounts or paying off debt. And the other thing about it is, by the way, we think it's product and process based because the international business, UK, Australia and Canada are up and a regional stimulus is there.

Right, okay, that's good. And then in terms of I guess, it's Dealer-FX, a couple of questions on this one. What can you tell us in terms of their installed base across dealerships versus the amount of dealerships that you actually service? Can you give us some idea of just how much whitespace there is out there for this product?

Yeah, they tend to be - they're in I would say maybe in the double digit percentage of the dealerships, but they tend to be concentrated in a couple of OEMs. And so there's a lot of whitespace to grow in that situation. We see that tremendous opportunity. And the other thing about Dealer-FX, I think we talked about this in the acquisition, they're just now sort of rolling out this new - their updated system that was ready to go, but the COVID hit. So now they get the chance sight at the apple with full force. But again, these are things we knew when we acquired them. It's early days, we've only owned them for a couple months. So we're still getting on, but we're pretty confident we're in the right place at the right time like I said in my comments.

Are they going to be - are their revenues booked in the RS&I segment?

Yeah, they're going to be in RS&I.

In RS&I?

Yeah, because they're going to sell to dealers, we see them as sort of like the advanced warning net for us from a strategic point of view. You remember the old do line, I used to be across Canada, to make sure we figured out what the Russia bombers were doing when they're coming over the goal - over the North. So this is the same kind of thing.

Okay and then you also just mentioned some new tools for the EV market. Could you maybe elaborate a little bit on that?

Well, those things are particular to a particular vehicle. We have a business. We call the EQS business that really is rooted in new technology. When new technologies roll out, or one of the people, the OEMs come to, to say, hey, put together a set of tools. Now in one of these, we have a 70 unit toolset that we provide that supports a certain new vehicle that's coming out. So I mean, that's, that's one of the things and so - and yet there's another one for another new vehicle. So as people roll out new vehicles, they commission these kinds of things to facilitate the dealerships to be ready to deal with it. And then everybody figures out what other things might happen and that shows up and we launched other tools to match that that the OEMs didn't even anticipate going forward. Those are the kinds of things. And we have a set of tools. We have a standard set of tools for electrics that are what we call insulating tools with glass infused nylon that allows us to - technician to use them safely against - and be approved against some pretty high voltages and so that's sockets and pliers and screwdrivers and kits to disconnect the electric vehicle safely and that kind of thing.

Okay and just lastly real quick, I don't want to take up too much more time. I would assume some of these calibration tools for ADAS and things that you've got out there, these are also applicable to the EV market?

Yeah. Sure. They're rooted - they're pretty much agnostic to the power train. They're more or less having to do with the sensors - the neural net of the sensors around the vehicle.

Thank you so much.

Sure.

Thank you. And our next question comes from Christopher Glynn with Oppenheimer. Please go ahead, sir.

Thanks. Good morning. Congratulations on the -

Good morning.

So picking up on your answer to one of Gary's questions you talked about coming out with new kits and follow-on tools as new platforms come out in EV and elsewhere. So it underscores your visibility. And then with the Dealer-FX group, you talked about how that extends your visibility. I'm just curious how that pairs with your already seeming copious visibility into the new platforms?

Well, the thing is that we have visibility into the new platforms. We are franchisees, which visit the dealers every day. So they tend to have a look at the, what I would call the more persnickety problems that arise all the time associated with vehicles that no one ever anticipated. The Dealer-FX is the repair shop management software. So you get to see what's happening in an aggregate kind of like databases to look at this kind of thing and say, okay, well, they're having a lot of problems here, they're having a lot of problems there. And you get to understand the difficulties associated with that. So it's not so much an observational thing it's a computational thing. Those are the kinds of things that help. So it just adds to our position. And then we also have a non-peril position in the repair shops afterwards, after vehicles age, and they end up in independent repair shops, which is what you're referring to. We're in more shops for more hours in days. And that's what drives our product line. So when new technologies show in whether you're talking about automated vehicles or electric vehicles, they're going to roll through this, we're going to see them via Deale-FX probably first, then we're going to see them via the franchisees that call on dealerships to understand the nuances of some smaller and more difficult problems that are harder to predict via just maybe the bigger problems, the 20,000 foot problems that the software might see. And then as they roll into the aftermarket, we have probably almost proprietary visibility on that. That's what generates our proprietary databases that I talked about 200 billion repair records.

Great and then on SOT, you talked a lot about the kind of throughput enhancements. Do these sales levels that you've seen the past few quarters represent pretty maximized realization of the newly availed bandwidth of the franchise channel into the addressable market?

Well, that I don't know. You know what I mean? I don't know that. All I know, is they can go that high. You know what I mean? We now approved, it's sort of like a stress test. We know they can go that high. And they're not complaining. I had a franchisee telling me, I asked him about something about his market. I asked him about what is the market like and so on? He says, I don't know, I'm too busy selling tools. So he's out there now. He didn't say he didn't have more capacity, because he was asking me for more units. So in other words, he was short of a particular product line. So he thought he could sell them more. So we think they probably have a little more upside. But in this kind of situation, Chris, you'd have to keep pounding. We'd say okay, we got to keep working on expanding the capabilities because no matter where they are, you want more when you go forward, right.

Right, so you feel you have further runway to continue to work on the throughput side of the equation?

Sure. What happens is - just one question. What happens is you observe what's happening at a certain throughput level and that reveals the pinch points and you work on that.

Great last one for me, finance receivable collections just exceeded additions. I don't recall many years seeing that - are you seeing more customers paying with cash?

Well, Chris, I think what you see is the technician base, they're employed. They got more money in their pocket, and they seem to be servicing their debt and buying tools to supplement their needs. So I guess it's just an overview I think provided earlier, people are servicing the debt in a more pragmatic way.

Sounds great, thanks, guys.

Sure.

Thank you. And our next question comes from Luke Junk with Baird. Please go ahead.

Good morning, guys.

Good morning.

Couple of questions, first a new term question, Nick, hoping you could just talk qualitatively about daily sales trends through the quarter, certainly? Looking at the 2019 comps for the tools group, especially help to frame the absolute level to be really well, but I just want to better understand the sequential momentum you saw in the first quarter.

Yeah, look, I think one of the things we're seeing is our third quarter - third month was higher in this period, but they're, they're almost always higher a little bit, if you look at this. So I would say, we would have said that adjusted for what we expect. The sales were about level through the quarter kind of constant. Generally we have our own sort of like, view of what's going to happen when you roll out of the beginning in first quarter for example, and so we have some view, but this generally seemed about we expected. We weren't surprised by any month in this quarter, I would say. So I think - we think it's kind of held strong each quarter. I don't see attenuation, if that's what you're asking.

It is, thanks for that.

Yeah, Nick. I don't - we didn't see any attenuation.

Okay and then a bigger picture question more on the strategy side. And it has come up already a couple of times this morning in terms of the big shifts that we've seen in the new car market the past, say six or nine months with respect to electrification, especially ADAS as well. And all these changes take a while, of course, to ultimately filter through to the aftermarket. Hoping you could just expand on how these changes are impacting your thinking around investment priorities today, both organically and M&A? And should we think that, for instance, they impacted the thinking around the Dealer-FX acquisition, for example?

Well, yes. I mean, the thing is sure. Look, we like change. Like we said, I think we've said the house come home, that changes our friend and we love to have it. And the earlier we can see change, the more we can, as you say, call in the air strikes about investment and so on. And so the Dealer-FX acquisition was about positioning ourselves at the forefront at the vanguard, if you will, of new technologies, not just electric vehicles, but new technologies that would impinge on the car park. So that's what we're doing. And so we'll continue to look at that in terms of, okay, what do we learn from that, how can we invest in other places to follow that change. But make no mistake about it. The revelations occur in each aging of the vehicle, so things change as you roll out. When the vehicle rolls in, people think this is what's needed. And then a couple of years go by and we see that these are what's needed. And some of it isn't even - this is what I was trying to say before is some of it isn't the fact that you have to repair, let's say, a particular item or you have to recalibrate the sensors. It might be revealed to us in the difficulty of doing those products - those processes, which everybody - first, you understand you got to do it and then you realize, wait a minute. On these particular vehicles, you need special tools just to do them because they're configured in an odd way. This is - and we learned that as it went through. And so basically, we see ourselves this electric vehicle, the EV, the new technologies. It's just the version of what's happened before, only maybe hopefully at a faster pace, which gives us more to sell. And so our activities will be to try to anticipate those changes more quickly, invest in them and then enjoy.

Good. I'll leave it there.

Okay.

And we'll take our next question from Scott Stember with C.L. King. Please go ahead.

Good morning, guys, and congrats on the strong results in the quarter.

Thank you.

I think you - Aldo, you might have answered this question, but the growth in originations versus the tools organic sales. Obviously, there's a pretty big delta there. Is that entirely because more you're seeing more mechanics basically buy with cash, or is there something else - some other nuance that we just need to know about?

A couple of things, I think there's a little bit. I think there's more cash in the system. So that's probably - if anything, that's probably not negative, it's probably a positive. I think that, again, you're still at stages where your psychological recovery is not completely the same everywhere in the country. So I think people, broadly speaking, It's still a little bit more measured when they approach big ticket items as compared to hand tools, power tools, things of that nature. I still think there's that nuance. But when the tools group sells 25% organically, without having to dig deep into extend the credit, we feel that means there's borrowing capacity down the road that opens up future opportunities for them. So we kind of like the mix in that respect.

Got it and in RS&I, the - on the car care, I mean, that was the first time we've seen a major increase like that in a while. So I'm wondering, is that being driven by stronger collision market demand? And if so, what are you hearing about miles driven? Because obviously, collision repair is based - a lot of it is based on the miles driven of the car.

Yeah. Look, I think - actually, it's not really - collision repair was better in the United States, not so good in Europe. I would say the big feature there for us was the undercar equipment, aligners in particular, but this ADAS stuff, stuff that really focuses on the neural network of the business. That's what drove that change. You're right. It was a really welcome change, double digits for the equipment. That was a turn of events that we really love. We haven't talked about a thing like that associated with equipment in a while. So that's part of the overhang that because it's a lower-margin business, that's part of the mix overhang on RS&I. But that turn, I think, based on the change in vehicle complexity now driven by the autonomy, these autonomous features, and therefore, undercar equipment was important. We're starting to see some recovery in collision in the US. Like I said, Europe seems to be dead as a door nail. The miles driven, we're seeing it start to come back. The curve looks just like other years. It's just came back from the shock of the virus. So it went down 30% year-over-year in the shock. And now it's according to BLS data - according to the data we see, it's staying around 10% below pre-COVID levels that it's inching back. I would expect, though, that as people - and that's not surprising every time you look you turn on TV, you see people feeding in from home. Once people go back, I think this all changes.

Got it and just last question on flushing out the tools group, you said it was pretty much everything was up, but it sounds like hand tools and diagnostics probably led the way, if I heard correctly?

Yeah. Yes. Not pretty much, everything was up, but hand tools led the way. Diagnostics was strong. Power tools was nice as well. So smaller ticket items were - are ascended in this period. You can see our RI business, how the kind of sets because the guys are a little more - like I use the word, there's still an air of vigilance. They're positive. But they're a little more vigilant in this situation. So even the tool storage, they tend to be focused on the smaller purchases in the tool storage area. So that thing. But I would say that each of the - each of them, each product line had a pretty good quarter, maybe not up to the 25%, we're pretty satisfied with all the product lines, but the top one was hand tools.

Got it. That's all I have. Thank you.

Okay, thank you.

Thank you. And our next question comes from Curtis Nagle with Bank of America. Please go ahead, sir.

Curt?

Hey, guys. Good morning. Thanks very much.

Good morning.

Good, how are you? Yeah, so Just a quick one on inflation, so I know you said this plenty of times that steel is only I don't know 85, 90 mil of COGS, but prices are up a good bit, pretty persistently. So anything in terms of potential price increases or rising costs relating to inputs that you would elaborate on?

Yeah. Look - yes, well, look, we've got material inflation in these numbers. We can't see them, can you, right. And so part of the thing is you got - you kind of got an interesting cocktail of reduced travel, controlled costs, material inflation floating through this. And the general managers in our businesses are balancing all these, like balls in the air. And so yeah, we might see some, but we're not - at the same time, we can also price. And I think the tools group has got another price increase going out. They just announced in April - early April, they announced the price increase, so they're going to have one coming up. And so we think we're the price leader and we can price for visible inflation, so you have that in the play too. So we might see some going forward where we think it's under control. I mean, this is - I think I said in another forum that this is kind of what they pay us for to manage this stuff.

Okay, fair enough. And then if I wasn't mistaken, did I hear that the education segment was up in 1Q?

Yeah.

So that sounds like a change. Yeah, what happened there?

Well, look, I think - yeah. I think everybody is anticipating the schools. I think there are some schools back. And then - but I would say the big factor, Curt is that the schools are starting to anticipate the return of the students. So they're starting to facilitate. So the education business is up principally because you're selling to the schools. And so we have a two-pronged view there. We sell to the students and the schools and we see a lot of students starting to warm up. And I think - I also think in this day and age, just starting to see, if I were sitting in a community college and I'd see the Biden administration rolling in there, and I don't think it's a political statement to reveal that he has a particular bent, given his wife's orientation and then things he said to community college technical training. And so I think that might be a positive view and created an area of optimism in the school. So I think that changed the dynamic some. It was - we're pretty pleased to see it. And in fact, again the critical industry businesses got back above the pre-COVID levels. I think that - I don't want people to miss that. We're above pre-COVID levels. And by the way, we're bearing the COVID at the same time. So I think that - and that's where C&I was. They've been going each quarter. They've been getting a little closer to 2019. This time they flipped above it. We view that as an incredibly positive event.

Got it, makes sense. All right, guys thanks very much. Good luck for the second quarter.

Thank you. And our next question comes from Dave MacGregor with Longbow Research. Please go ahead.

Yes. Good morning, everyone and good morning, Nick. Congratulations - yeah, congratulations on the strong results.

Thanks.

I guess first question, I'm still really struggling on this disparity between originations and the sell-through. You had indicated the sell-through was equivalent with the sell-in. So let's call it the sell-through up 25%, originations up 2.4%, which is one of the -

Well, wait a minute. Wait, hold it just a minute. The sell-through is equal absolute. It was a little bit better in the first quarter of last year. So when you're comparing those things, you start to get bollocks stuff a little bit. Last year wasn't as bad sell-through as it - as sell to the vans was in the first quarter. So we - but generally to come back and say - so I just want to stop you there. But in general, if you're talking about volume, the volume off the van is same as the volume on the van this quarter. Understand what I said?

Yeah. I want to - what should we be using then as a sell-through number for this quarter?

Well, it's roughly the same.

Same as the sell-in?

Right.

Okay. It's a large disparity nonetheless, however you want to cut it. And I guess I'm really struggling with just kind of the nature of that given you also indicated that all the segments are up. And I guess the question just becomes given that originations generally revolve around extended credits and contract credits obviously as well, but it's bigger ticket. So I guess the question is just can you break out a big ticket for us and help us just understand what big ticket was on a year-over-year basis?

Well, here's what I'll tell you, is that the big-ticket items weren't up in - it weren't up like the 25%, but they were up nicely in the quarter. So they were up -

Is it double digits?

No. They weren't up double digits in the quarter, but they were up. Again, when you look at the absolute numbers, they were reasonable in that situation. So we're pleased with those numbers. So you had that. And then within the big-ticket items, let's put diagnostics side, if you look at tool storage, the tool storage mix has been for a while, closer to the, let's say, carts and other things, and there's a lot more RA going on. So the franchisees are flushed with cash. So you're seeing some of those franchisees finance these items. That's really the factor. Now you could argue that - you could also argue, Dave, that we're - I think that's really what's going on. You could also see it's hard to tell this. You could see we're getting stimulus need to pay for some of those things instead of borrowing. But we kind of view that as great because as Aldo said you just got borrowing capacity out there in the future. So this is a really good thing for us. We love it when RA is up.

Okay. Well, maybe I'll take that offline with Aldo and try and get through the math a little bit better. I wanted to ask you about - you'd indicated about just volumes on the quarter because you indicated that you'd announced in April a price increase, which I think is May 1. You've got kind of - you communicated to the franchisees that you're experiencing growing backlogs. I don't know if that's around tool steel or what may be responsible for that. But under those circumstances, my understanding is there's some pre-buy going on in the month of March. And I'm just wondering if you can quantify for us the extent to which you can just combine -

I think you are missing thoughts about that.

I'm sorry?

I don't think that - we don't think that's true. First of all, the announcement goes out in April. So I don't think people are pre-buying. The people may be buying. Generally, what happens in these kinds of things are buying off the kickoff programs or the - even back to the kickoff program. So they're fundamentally buying off that. I'm talking to a bunch of franchisees so they keep telling me their inventories are low on this stuff. They can - they'd like to get more, but they don't get them. They don't have it. So I think this is - the idea of the pre-buy, we didn't see any of that. Now I'm not saying franchisees are what, 3,500 of them. So you can get windshield surveys on them and you can get different ones will have different views. I can probably get a hundred different opinions when I go out. But generally, we don't see that, Dave. We see the situation - they're not stock. In fact, we think we're confident that franchisees' inventories are actually down or flat at best. They're not up.

Really? So -

And if you look back to the first quarter of last year, sales off the van exceeded sales to the van.

Yeah. I find that a little surprising given everybody in the franchise world knows that there's stimulus money coming down the pipe and they want to be positioned for that. And then my understanding is you communicated to the franchisees that there was a backlog issue in March, and I would have presumed that guys would pre-buy on that. So I'm always surprised to hear that inventories on the truck are flat to slightly down, a little bit counterintuitive, I guess. And then last question for me is just on price elasticity -

I don't necessarily see it that way. But anyway, necessarily, they could order, but they might not have them.

Yeah, okay.

Right.

Can you just talk about -

So we wouldn't have a sale. What?

Right. Okay. And then price elasticity around storage. I guess, it's - these are some pretty big increases we're seeing in steel prices right now. And as a consequence, I would expect some pretty big increases on price tags on some of the storage product at least and maybe in hand tools given what's going on with nickel alloy product. But can you just talk about how you expect that to play out over the balance of the year as you raise your prices? How vulnerable do you think that category is to higher prices given -

You know what, Dave? Sure. Look, I think it gets to be a complex question, David, because almost everything is - there's a lot of promotions floating through the system. So it's not just the list price increases. It's also what are your promotions and so on. So we've never had a problem, tool storage or otherwise in terms of getting or matching inflation. We've never seen that. So I can only tell you what is in history. And it's a complex cocktail. You raise the list price. You adjust your promotions. You have long-term promotions, you have drop in promotions. It's a dizzying array of those things. And what comes out the other end is a matching of the inflation. So generally, you feel we can do that on a macro basis. And you can't do that unless you do it until storage and hand tools.

Great. I'm more focused around the mechanics capacity to purchase and their purchasing power and these products just maybe finding themselves a little bit of reach. You're not concerned about that right now? You're not getting an indication that -

All right. We don't see that being a problem right now and there was inflation in this period. So I mean the thing is we don't see that being a problem now. Of course, you can't say it'd go on forever. But I think the - look, I think the whole thing is this. The mechanics seem to love to buy tools. It's one of the top things on their priorities. I think that these kinds of changes don't necessarily make a difference. Now who's to say how the inflation would play out across the country in a lot of different commodities, but I think - I would tell you this, I think we would be going to be one of the last to be affected by it.

Great, if I could, just for the model, two quick ones. What was the U.S. versus international in terms of growth and -

About the same, it's about the same.

And, secondly, what percentage of trucks now are to associates and how has that changed year over year?

It's about the same. It's up a little bit. It's in the 20% to 25% range.

Okay. Thanks very much, gentlemen.

Sure.

And that concludes today's question-and-answer session. Ms. Verbsky, at this time, I would like to turn the conference back to you for any additional or closing remarks.

Thank you all for joining us today. A replay of this call will be available shortly on snapon.com. As always, we appreciate your interest in Snap-on. Good day.

And this concludes today's call. Thank you all for your participation. You may now disconnect.