Good day and welcome to the Snap-on Inc. 2021 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 Ms. Sara Verbsky, Vice President of Investor Relations. Please go ahead.

Thank you, Christina and good morning, everyone. Thank you for joining us today to review Snap-on's fourth quarter and full year 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 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 the Investors section. 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 our 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 those measures is included in our 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, Sara. Good morning, everybody. Today, I'll start with a view of our fourth quarter, give you an update on the environment and the trends we see and I'll take you through some of the turbulence we've overcome and the advancements we've made and Aldo will then, as usual, give you a more detailed review of the financials. The fourth quarter was encouraging. It affirm the characteristics that make Snap-on the company we know it to be, the resilience of our markets, the power of our strategic position and the consistent and capable execution of our teams. It all added up to momentum, cutting through the challenges and the numbers testified to just that. Our reported sales in the quarter of $1,108.3 million were up 3.2%, including $12.2 million from acquisitions being offset by $3 million of unfavorable foreign currency exchange. Organically, our sales grew by 2.3%. Importantly, if you compare to the prepandemic levels of 2019, before the period-to-period variability of last year, you see a clear and unmistakable upward drive. Versus 2019, sales in this past quarter were up 16% as reported and 13% organically, continuing an ongoing trend of accelerating expansion, increasing higher and higher over pre-COVID levels. The quarter also bears the marks of the Snap-on value creation processes. Safety, quality, customer connection, innovation and rapid continuous improvement, or RCI, as we call it, all combining to offer significant progress. The progress, there was. Opco operating income of $232.2 million was up $16.16 million point from last year and the OI margin was 21%, an all-time high, up 90 basis points from last year and 310 basis points from 2019, all achieved by overcoming the challenges of this day. For financial services, operating income of $67.2 million was down from the $68.5 million of last year.…

Thanks, Nick. Our consolidated operating results are summarized on Slide 6. During the fourth quarter of 2021, the resilience and continued strength of our business model enabled Snap-on to close the year with another period of robust financial performance. The quarter also compared favorably with the fourth quarter of 2019 which being a pre-COVID-19 time period, in some cases, may serve to be the more meaningful baseline. Net sales of $1,108.3 million in the quarter increased 3.2% from 2020 levels, reflecting a 2.3% organic sales gain and a $12.2 million of acquisition-related sales, partially offset by $3 million of unfavorable foreign currency translation. Additionally, net sales in the period increased 16% from $955.2 million in the fourth quarter of 2019, including a 13% organic gain, $20.9 million of acquisition-related sales and $7.1 million of favorable foreign currency translation. In both comparisons, the organic gains more than offset lower sales for the military. Consolidated gross margin of 48.1% improved 10 basis points from 48% last year. The gross margin contributions from the higher sales volume, pricing actions, 30 basis points of favorable foreign currency effects and benefits from the company's RCI initiatives offset higher material and other costs. For the quarter, the corporation continued to navigate effectively the supply chain dynamics associated with the global pandemic. Operating expenses as a percentage of net sales of 27.1%, improved 80 basis points from 27.9% last year which included 10 basis points of cost from restructuring actions. The improvement is primarily due to higher sales volumes, partially offset by 40 basis points of unfavorable acquisition effect. Operating earnings before financial services of $232.2 million compared to $216.2 million in 2020 and $171.4 million in 2019, reflecting an improvement of 7.4% and 35.5%, respectively. As a percentage of net sales, operating margin before financial services…

Thanks, Aldo. That's our fourth quarter. Positive performance, overcoming challenges as we expect to do. In these times of turbulence, we continue to rise based on the resilience of our markets, vehicle repair expanding at the shop level, tax pumped and garage is optimistic, overcoming the postponement of essential OEM programs. Critical industry is mixed but with promising areas, gains in general industry, natural resources and education and progress in emerging markets. Difficulties are in the air but we're able to prosper nonetheless on the power of our strategic position, controlling the customer interface with our wide product line and unique brand. And perhaps most importantly, we rose on the consistent and capable execution by our team, employing agile marketing, considered an active pricing, new and higher-value products, quick redesigns to match available materials, aggressive spot buying and as always, our ongoing RCI. It's a combination that offers another positive performance and has all spelled out clearly in our numbers. Sales rising organically over prepandemic levels by 13% with the last four periods, up organically 8%, 9%, 11% and 13%, expanding the gain over 2019, demonstrating a positive second derivative in the rising sales quarter-by-quarter. Opco OI margins of 21%, a record high in the midst of multiple challenges, up 90 basis points from last year and up substantially more from 2019. And it all came together for an EPS of $4.10, up 7.2% from last year and 33% from the prepandemic period, leading to a full year EPS of $14.92, new heights despite the storm. It was an encouraging quarter and a year. The period clearly had challenges but we were able to overcome maintaining our progress, extending our upward trend. And we believe that Snap-on exits 2021 with a substantial momentum that will carry us forward. And as we mine the abundant opportunities of our resilient markets, we held the advantages of our unique strategic position and engage the considerable capabilities of our challenged-tested team. We'll continue to track progress throughout 2022 and well beyond. Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates. Many of them are listening to this call. My friends, you are the base of the success we've registered this quarter and this year. For the extraordinary progress you achieved, you have my congratulations. For the unique individual and collective capabilities you brought to bear against the challenges, you have my admiration. And for the commitment you bring to our now and the conviction you hold in our future, you have my thanks. Now, I'll turn the call over to the operator. Operator?

[Operator Instructions] We'll take our first question from Scott Stember with CL King.

Hi, good morning, guys and thanks for taking my questions.

Good morning, Scott.

To better frame things out, obviously, as the comparisons are getting more difficult, can you maybe talk about, in the Tools Group, in the U.S., on a two year stack and maybe also sort of flush it out by tools and some of the other segments?

Well, look, I think the Tools Group is demonstrating itself. I mean, if you look at the prepandemic levels, it's been up now six straight quarters and it was up over 21% in this quarter. I think it was 21.5%. So it seems to be moving upwards. And all of our good power -- in this time of turbulence, the Tools Group is really well positioned. When I say a strategic advantage of being -- with wide product line and unique brand to control the interface with the end customer, that's exactly what the Tools Group does in spades. It's able to price. It's able to bring value, new value products that don't look like price increases because people are paying for more features. And so that's a very strong position they have. Also, they can market agilely. So if you have supply chain problems, they can pitch their promotions to move people towards what we have a lot of and have a way somewhat from things we have less of. At the same time, they're working pretty well in the factories because they're vertically integrated. So you see their kind of numbers. The 21.9%, I think we were very encouraged by when we saw it. And so you see the Tools Group doing well in sales, in terms of profitability. And if you look back to 2019, what's happened is, I think I said before, is that we have figured out over the period, we were investing in SG&A in, say, like '18 and '19 to try to figure out how to expand the Tools Group's selling capability. And it seems to have worked. Our selling capability, our franchisees has gone up each quarter over that. You can see the expansion. The second derivative looks pretty good. So you're…

Got it. And just last question. This seems to be the first quarter that we've heard about or any quasi meaningful impact from supply chain. Can you maybe talk about that? And any further mitigation efforts that you guys could put through, whether it's RCI or anything else?

Well, let me just say, though, I didn't say -- I said when I burrowed down on C&I, I mentioned supply chain. But our view of this is it's always something. It's always something. And if you look at our numbers, up, what, 15% -- 13% over prepandemic levels, 21% OI margin. I don't know if you look at the numbers, you can see any turbulence in those numbers. So I think we're managing through it. Yes, of course, it will get better as we go forward. I mean, it's hard for me to predict. But as you get into the moment, you get better at managing it. Right now, we're pretty good at agile marketing. We're good at managing or redesigning our products. We're good at spot buying. So we don't get it disruptive in general. We have certain modules of disruption that we'll figure out and we'll solve but you don't really get that kind of problem going forward. Now some of our businesses like, for example, you could look at tool storage. We could sell more tool storage if we could turn some more out and we're working on that. So you may see some of that going forward. But I don't accept the idea that we're being impacted by this. We're dealing with it. I think the number is saying, that was a good quarter whether we thought we had turbulence or not.

Got it. Thanks for the color. That's all I had.

And we'll take our next question from Bret Jordan with Jefferies.

Hey, good morning, guys.

Good morning.

Good morning, Bret.

You called out, I guess, some of the pricing contracts in C&I as obviously, costs of everything have gone up versus the prices you received. Could you talk maybe about the magnitude and the timing of some of the pricing resets that you have going forward?

Yes. I don't -- they're all over the map in terms of that situation and they're by segment. But look, C&I is -- I just -- our point there was C&I is a longer wave business. So you have commitments with some customers, not all customers, so you see some impact on that and you price associated with that. We're getting some pricing in C&I, some but not as much as not other things. Our big thing isn't so much about pricing. It's managing those costs. And so the idea of C&I, I think our disruption is mostly associated with what I pointed out in terms of the custom kitting situation, trying to deliver those things. That's been more probably the biggest impact on this, attenuating some of their volumes, particularly in critical industries.

Okay. great. And then within the OE business, was there any improvement in cadence as we got through the quarter? Obviously, some of the OEs on the auto side are talking about some improvement in supply chain but did you see any change in their buying patterns as the quarter progressed?

Yes, I'd be kidding. Their fourth quarter was terrible, wasn't it? I thought the fourth quarter for those guys was brutal. So we didn't see much -- if we're talking about projects, we didn't see much cadence difference. I mean, actually, there's a lot of new models coming out that are going to come out new features and I don't think we saw any cadence change in the quarter. Now I'm on shaky ground a little bit about saying that there might have been some of it but I -- my macro view of it, Bret, is it was a tough quarter for the auto companies. So I think as we go forward, it's got to get better. They're going to shake loose some of those. And so we're going to get -- because we're already involved in some of those products, we're just waiting for them to come out. That's what I see. I think the -- if you look at the dealerships, if you go -- like I thought I'd try to make clear, at the dealerships level, the repair is great at that situation. So we're seeing dealerships buy equipment. And one of the upticks in we didn't -- I don't think I mentioned it here but one of the upticks in the RS&I business, it's a rise -- a nice rise in repair shop undercar equipment. Collision and the balances and changes and those kinds of things. And so that's been going up. Also, they're buying software from us. So that's pretty good in that situation. But if you're talking about the programs out of the OEM, your guess is as good as mine when that breaks loose. All we know is they've got a backlog in there that's going to be good for us when it breaks.

Okay, great. And then one final question. I guess you called out hand tools as strong in the Tools Group a couple of times. Did you say what the spread was sort of hand tools relative to storage and diagnostics?

I did not.

Why did not?

And the reason is I want to get away from talking about the numbers by product line in the Tools Group. To us, it doesn't matter. We skin the cat many ways. So the point about the Tools Group is 21.9% margin. Now hand tools were a nice piece of that. But I will tell you the big ticket items were also up in that period. Tool storage and diagnostics were up. The hand tools are sort of the flavor of the day -- these days because, of course, we're more vertically integrated. Fundamentally, when the hand tool comes in the door, all we add is steel, capital and labor, boom. So it was -- but it's been strong for a number of different periods. So, I don't really want to get down that road. Just saying hand tools was a nice product. Nice -- but as was diagnostics in the period and we had increases in tool storage as well.

Okay, great. Thank you.

Great.

We'll take our next question from Luke Junk with Baird.

Good morning, thanks for taking my questions. First question, Nick, I wanted to ask a follow-up on something that you mentioned a couple callers ago and that's regarding the investment spending past year as we begin '22 or maybe even more broadly as we go through the next few years at this stage of the cycle, you've been steadfast about maintaining the rate of investment in the Tools Group, in particular and you referenced plumbing to death of these capacity creation initiatives from here. Just wondering if you're able to talk about any new focus areas, or within the capacity creation initiatives where we might see the company push a little incrementally in '22?

Look, I think this, we have -- of course, we're taking a look at where -- how we source and where we need more capacity in the factories and those kinds of things. But I don't see it there -- I don't see it distorting our financials in that regard. I think a couple of things. When I said that I didn't mean that the OE was going to explode or anything like that. Fundamentally, our OE was higher before because we were spending a lot of effort and a lot of different corridors trying to figure out what would actually resonate with the Tools Group and make a difference. Our OE is in a nice place now. And of course, as you come out, you know how you say this, you're kind of loosening your belt a little bit when you've had a downtick in the COVID but I think our OE is at a nice level. It may go up a little bit but not that much. We're not going to -- but the areas where we're going to spend, I think, would be -- we're going to push more on social media because we've learned more about that. Boy, you know what, we've got a lot of data on our franchisees. We get the franchisees and our customers. We got oodles of data and we could do a better job in terms of predictive behavior on those things. So we're spending time looking at that right now. I don't have anything to report other than, boy, it's obvious to us we have Mitchell-type SureTrack data which we have about cars. We have that about our customers. And so we think we'll be able to wheel that to make the Tools Group even more effective. So our guys can make better choices when they engage customers. That's probably another area we're looking at right now.

Okay. And then I want to ask a bigger picture question as a follow-up. Thank you for that. Dealer FX were, I think, approaching the one year anniversary of that acquisition. I don't know if you could to progress in year one under the company's ownership? And looking forward, more importantly, should we expect to hear more about this business in the future as a complementary software platform sitting alongside Mitchell 1 in that dealership environment? Thank you.

Sure. I mean, look, I think that's why we bought it for two reasons. One, from a financial point of view, it is a twin of Mitchell 1. And I don't know if you're familiar with Mitchell 1 but if you pay -- I know you are, we've been paying -- we've been talking about the growth of our diagnostics and software in independent repair shops almost every quarter since I've been here. They just keep going upward. Boom, boom, boom. And so Mitchell 1 knows how to handle that interface. And so we're using that knowledge that, I would say, challenged-tested understanding of the business to apply to Dealer FX and in the fullness of time, that's going to work it's magic there. We believe we'll have a kind of a twin. I'm not saying it's going to be as great as Mitchell 1, it may be but it's going to be a good business. So you're going to see it from a financial point of view but it's also important from us strategically because as you know, it has a window on what happens with these new technologies and the new technology is going to be the drivers of the future and it's going to call it -- help us call in the airstrikes for what product we develop because we're going to see it first in Dealer FX. So you're going to hear us talking about that. But these are early days. It's the first year. There's a lot of turbulence, these kinds of things. In terms of Canada, I think Justin Trudeau just got the COVID himself. So this impacts the activity in Canada. But I believe certainly Dealer FX was up in the quarter and we're making -- we're sort of making our expectations in this but you'll hear more of it as we go forward because it's going to be a big factor on us in terms of early warning. Also, financially.

Great. Well, yes, I appreciate that it's still early days there. That's great color and I'll leave it there.

Okay. Sure.

We'll take our next question from Liz Suzuki with Bank of America.

So this one is for Aldo. I guess could you just talk about the inflation impact that you expect through the course of the year and how the cadence of that could work out with the dynamic of cost and price and how that would impact the P&L?

Well, certainly, of course, everybody is talking more about inflation than in the past and Snap-on is not immune from that. However, Liz, I think it is something we manage and strive. First, we always look for alternative ways to reduce cost, whether that be alternative sourcing, alternative componentry, rapid continuous improvement to get some productivity. And of course, if we can't cover that, then we look for pricing actions to help us out. We do believe we have pricing power personified by the Tools Group. And then as Nick already has said, we get pricing over time in the commercial industrial group and repair systems and information in light of the fact that they have longer-term customer agreements. So, we don't immediately just put pen to paper and say, oh, it's got to be this pricing. We try and strive to see what we can offset internally. At the same time, we're cognizant of the new features we always bring to market. So rather than bring a price increase to market, our preference is, can we bring a higher featured product to market and talk more about that feature, even though it might cost more to the customer. We try to create that vision as there's more productivity being brought to market. So that's kind of our broad-based approach. So yes, there's more inflation but we'll continue to try to bring more innovation and more value add for the customer.

Now to put in perspective, Liz, just I'd add on that, if you just look at our hit products, we bring couple of three dozen new products every quarter to the market. So that's a big factor for us.

Great. And I guess second question is just on priorities for capital. I mean, your net debt-to-capital ratio came down about three percentage points since last year. It's at a historically low level. What are you thinking about for this upcoming year and beyond in terms of where your priorities lie?

Well, look, I think our priorities are still in line. I think, we believe, the best return on capital for our people -- for our investors and for constituents is investing in our business. So to the extent we can invest it in business in some of these new activities or anything like that, we will. We support that. Secondly, we have a pretty full, I would say, pipeline of acquisitions that we keep looking at. And I kind of think, call me crazy but I think in the turbulence, the acquisitions may be more available in this situation. So we're kind of hoping that -- we're kind of focused on a few things that may have some ability to move. And we're not afraid to take big ones or small ones in that situation. And then we have -- our Board just reloaded our share buyback situation and I think now another $500 million. And we have our dividend which we look at and we're kind of -- I think it's been kind of a front piece for Snap-on where we have paid a dividend every quarter for -- since 1939 and we've never reduced it. So we hold it in perpetuity in terms of our policy. And we always look to see if it's appropriate to upgrade it. So those are the kinds of things we're looking at. I think every year changes and this year, it's marked by the idea there's a lot of turbulence out there, maybe there's some opportunities for us.

Great, thank you. It's very helpful.

And we'll go to our next question from David MacGregor with Longbow Research.

Hi, good morning, everyone. Nick, it's encouraging to hear you leaning a little more into the data analytics. So I think that has the potential to move the needle. So congratulations on that initiative. I guess to start off with, what do you think sales of the truck were up year-over-year?

I think about the same. I think roughly the same as the Tools Group, I would say, in the same ballpark. In fact, if you look over -- David, if you look over two years' worth, there's differences from quarter-to-quarter. But if you look back over two years, they've been about the same, like we generally see and this quarter was the same kind of thing. There's a little bit of noise with the 53rd week and the franchisees probably doing a little more than they would order from us. But I think generally, it's roughly the same. They're in practically lockstep. So we see the inventory kind of on the Tools Group holding pretty flat.

Got it. And then just still on the Tools Group, you talked about the 300 basis points of operating margin improvement. About 200 basis points of that came out of SG&A and 60 basis points was FX. So clearly, it feels like the price cost pressures that everybody else in the world seems to be feeling are coming home to roost at Snap-on as well. Go ahead.

We make -- holding gross margins are -- is a common occurrence in this environment.

Well, I'm just trying to get a kind of -- I'm just trying to get it to kind of the price cost pressure.

It's like this though. I think, look, I think yes, we have pressures on a lot of different things. There's a lot of things that go in that gross margin and there are a lot of things that go in the SG&A. I think our view was on the OI margin in general, the up to 300 basis points. We -- I think I've said this on other calls long ago that we're kind of agnostic between those two numbers. We kind of focus on the OI margin, up 300 basis points, not bad. Now you could say, okay, well, the gross margin is up less than the OE. But if you look back to prepandemic levels, they're both up reasonably well. I think, 100 basis points and 200 basis points. And I don't think that's chop-liver in this environment. Yes, there are pressures associated with the supply and sourcing but we're able to manage it such that we don't give up anything.

So, I guess my question on this is really just as you look forward to 2022, Nick, you talked about is the opportunity to -- Aldo referenced the opportunity to raise pricing within the tools segment but also to bring kind of better margin products and better incremental margin products to the marketplace and cover your cost that way or cost and productivity that way. Can you give us a sense of how you're thinking about the split between those two opportunities? Do you think you'll be leaning a little more on to the pricing side and then supplementing that with a better margin product? Or are you leaning a little more towards a better margin product and supplementing that with pricing?

Well, generally, I think if it's the latter, I think that we would rather have it with our new products and then be foolish around those. I think it isn't a ball-based. I mean, fundamentally, I just want to come back to your original question. It would be a mistake to think that the costs weren't coursing through our numbers this quarter because they are. And so we have those and we're holding our own against those with pricing and with those -- like I said, people -- I think sometimes people don't realize how many new products we bring out. If you just look at the hit products and they're the ones that are the incandescent ones, $1 million in the first year, we have two to three dozen every quarter. And so we have a lot of opportunity in both those areas. And I think that's what allows us to maintain this. And our -- this ain't our first rodeo. So we know how to manage this. I think our team -- not me. I'm just a trained dog at the top of the [indiscernible]. But the thing is the guys know how to manage this such they can bring with the combination of direct pricing plus promotions plus the new products. They can manage that interface very well. That's what I meant about the strategic position. So we're not hanging our hands at all, David.

Great. Okay. I guess I wanted to also ask about the originations down, 6%. Are you -- and I noticed the yield is coming down a little bit on the portfolio as well. Are you just seeing changes in patterns in terms of how new techs are using credit? Or how much of this is maybe just substitution of RA credit. You're just losing share to your franchisees on the credit front. Or -- and how much it might just be alternative sources of credit as some others have talked about?

I don't think -- I was just with the franchisees at the kickoff in Omaha. I got to go to Omaha. I'll go back to Orlando. You can figure that one out in January. But I was with the group. Our franchisees don't think we're losing any share to other alternative sources. They just think, look, these guys are flushed; so they're willing to pay. I mean, if you look at the numbers, the BLS data says that investment in repair, up double digits on a year-over-year basis in both nominal and real basis and the technician wages are up over 5% year-over-year. And the number of technicians out there are growing. So I think you see this kind of a growing flush group of people and they're not -- they're staying with RA. They don't want to pay the interest. We think it's great because fundamentally, the guys have debt capacity available when they need it. The other factor is, I think, in this is that I never wanted to say this. I said it wouldn't last time. But if you look at the 53rd week last year, generally, our stuff cuts off. But even if the franchisees go out for a day or two or three, they're going to generate more year-over-year originations because it happens in the field at some point. I don't know how much that accounts for but you can knock down some of that. So I don't think that's an unusual situation.

And then the credit origination is down 16.6. What -- can you talk a little bit about what might have been happening there?

Well, Aldo -- I'd say if you take into account $10 million that I mentioned that, that extra week allowed, we would have probably been up slightly, I'd say, in the U.S. environment. Down a little bit international. International is not quite as robust as the U.S. I think we mentioned that as well that we were up in the U.S. in terms of our sales versus international. And then, if you look at the -- even the contract originations, in 2020, we had more new start-ups. There's a little bit more stable environment now with the franchisees. So there was less startups in the international arena in particular. And when you start up franchise, David, many of the franchisees tend to like the lease vans and borrow from Snap-on credit; so that could affect it. So, it's really -- I don't want to dismiss it. And I always try to remind people that you're still not in a completely certain environment that we find over the time of history that people tend to buy lower price point items until certainty restores. So I don't think tool storage has been as robust as you see in the revolving credit accounts and therefore, you see more revolving action on the [indiscernible].

That makes sense. Last question for me is just with respect to the share repurchase activity and you talked about the fact that you just had another authorization from the Board. But activity in the fourth quarter really didn't change much year-over-year, roughly in that $70-odd million. A good number for the full year, by the way. So good activity there. But how do we think about share repurchase here? And why wouldn't you step up and just get a lot more aggressive here in terms of buying back your stock at these levels?

Well, we always think of things like that. But if you look at the funnel of time, it averages between 2% and 3% of the outstanding share count, more or less. And it's hard to be an expert in this market. I have no idea if the advertising revenues of Facebook will impact Snap-on the next day when I get up and things of that nature and I'm being extreme of that example. But we try to take a measured approach to it. It has it's role. It's not the only solution in terms of how to use cash.

Okay, great. Thanks very much, gentlemen.

Welcome, David.

That concludes today's question-and-answer session. Ms. Verbsky, at this time, I will 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.

This concludes today's call. Thank you for your participation. You may now disconnect.