实耐宝 (SNA) 2026年第三季度业绩电话会议：创纪录的C&I利润率抵消工具业务疲软

核心要点

• 实耐宝（Snap-on）公布2026财年第三季度净销售额为11.837亿美元，同比减少710万美元。有机销售额下降2.8%，部分被收购带来的2560万美元收入所抵消。
• 稀释后每股收益（EPS）为4.64美元，而2025财年第三季度为5.02美元。上年同期业绩包含每股0.31美元的税后诉讼和解收益；2025财年第三季度调整后EPS为4.71美元。
• 商业与工业（C&I）部门实现创纪录的销售额和盈利能力。有机销售额增长7.4%，营业利润率上升290个基点，达到18.5%的创纪录历史新高。
• 实耐宝工具（Snap-on Tools）有机销售额下降7.0%，原因是本季度柴油价格飙升约40%，加盟商减少库存以保留现金。管理层表示，加盟商移动工具车对技师的销售额同比略有增长。
• 维修系统与信息（RS&I）部门有机销售额下降5.5%，主要原因是整车厂（OEM）新车型发布减少，导致项目相关活动降低。排除上年同期的法律和解收益后，营业利润率仅下降10个基点至25.5%。
• 管理层预计2026财年资本支出约为1.00亿美元，全年实际所得税率约为22%。

关键财务数据

截至本季度末，实耐宝拥有现金16.70亿美元。第三季度内，公司支付了1.261亿美元的股息，并以8710万美元回购了220,500股股票。剩余股票回购授权额度为4.312亿美元。

业务与运营表现

商业与工业部门

商业与工业部门（C&I）销售额增至4.043亿美元，其中包括7.4%的有机增长和收购带来的1000万美元。增长反映出关键行业实现中单位数增长、美国军事领域活动强劲、通用工业销售额上升，以及特种扭矩工具产品实现两位数增长。

亚太地区业务在跨境和本地市场活动中均录得高单位数增长。C&I营业利润增长29.9%至7470万美元，同时毛利率上升60个基点至41.5%，营业利润率达到创纪录的18.5%。

实耐宝工具

实耐宝工具（Snap-on Tools）销售额从5.060亿美元降至4.715亿美元，有机销售额下降7.0%。美国市场销售额呈高单位数下滑，而国际业务录得低单位数降幅。

管理层将这一下滑主要归因于加盟商去库存，因为迅速上涨的柴油成本促使经营者增加现金储备。技师需求保持稳定，加盟商移动工具车的销售额同比略有上升。电动工具和性价比更高的工具储存车属于表现较强的产品类别。

营业利润从1.099亿美元降至8480万美元，营业利润率收缩370个基点至18.0%。销量下降、产品组合变化以及在产品培训和品牌支持方面的持续支出对盈利能力造成了拖累。

维修系统与信息

RS&I销售额为4.547亿美元，其中包括收购带来的1560万美元。有机销售额下降5.5%，主要由于北美整车厂（OEM）减少或推迟了新车型平台的发布，从而减少了与项目相关的经销商活动。

独立维修厂的销售额大致持平，而数据库和车间管理解决方案取得进展。得益于有利的业务组合，毛利率提升了110个基点至48.1%。

营业利润为1.161亿美元，而上年同期为1.412亿美元。2025财年第三季度包含了2200万美元的诉讼和解收益。除去该项目后，尽管销量有所下降，营业利润率仅下降10个基点至25.5%。

金融服务

金融服务收入减少250万美元至9860万美元，原因是平均融资应收款项组合规模缩小导致利息收入减少。营业利润微降至6830万美元。

新增贷款发放量下降1.3%至2.706亿美元。美国60天以上逾期率同比上升10个基点至2.1%。过去12个月净损失占展期信用应收款项的3.63%，较2026财年第二季度的3.7%有所改善。

管理层业绩指引

管理层预计2026财年全年资本支出约为1.00亿美元，实际所得税率约为22%。

公司还指出，2025财年第四季度包含一个额外的运营周，而2026财年第四季度将恢复至13周。上年同期的这一额外周增加了金融服务利息收入，但对综合利润的贡献很大程度上被增加一周的固定费用所抵消。

管理层未提供近期销售指引。公司表示柴油价格似乎已趋于平稳，汽车维修和关键行业基本面依然强劲，但加盟商库存复苏的时间尚不确定。

风险与关注领域

• 加盟商采购对柴油价格依然敏感。管理层表示柴油价格在第三季度上涨了约40%，引发了广泛的去库存行动。
• 整车厂（OEM）新车发布的时间仍难以预测。管理层预计会有所改善，但认为项目业务正进入一段较为平缓的时期。
• 钢铁和运费成本仍是原材料成本方面的阻力，不过RCI成本节约和其他抵消因素对综合毛利率形成了支撑。
• 对高单价大件商品的需求放缓继续拖累新增贷款发放，因为技师更青睐投资回收期较短的产品。
• 中东和乌克兰正在进行的冲突加剧了本季度的经济不确定性和燃料价格波动。

分析师问答要点

• 技师需求与加盟商订单对比：管理层表示，加盟商移动工具车对技师的销售额略有增长，而加盟商减少了向实耐宝的采购以释放现金。公司目前预计短期内不会再次出现类似规模的去库存。
• 潜在的库存复苏：加盟商通常希望维持较多库存以实现即时销售，但管理层表示补货时间尚不明确，部分取决于燃料价格趋势。
• 产品需求：电动工具表现良好，且随着实耐宝扩大回收期较短的产品线，性价比更高的工具储存车受到青睐。加盟商去库存本身是广泛的，而非集中在单一类别。
• 投资支出：尽管工具集团（Tools Group）销量有所放缓，但管理层目前不打算减少在产品、培训、品牌支持或人员方面的支出。
• 整车厂项目展望：实耐宝能够了解潜在项目的动态，但对发布时间或整车厂何时授权相关支出信心不足。
• 资本配置：管理层重申，现金可能用于营运资金、收购、派发股息和股票回购。

业绩电话会议完整文字实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good day, and welcome to the Snap-on Inc. 2026 Third Quarter Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sara Verbsky, Head of Investor Relations. Please go ahead.

Sara Verbsky

Thank you, Chloe, and good morning, everyone. We appreciate you joining us today as we review Snap-on's third quarter results. which are detailed in our press release issued earlier this morning. We have on the call Nick Pinchuk, Snap-on's Chief Executive Officer; and also Aldo Pagliari, sons 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 Investors section. The 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 that otherwise discuss 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 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?

Nicholas Pinchuk

Thanks, Sara. Good morning, everyone. As usual, I'll give you my thoughts on our markets, our results and on the way forward. Then Aldo will provide a detailed review of the financials. Well, these really are interesting times. I mean, you don't have to look any further for confirmation of that than the Snap-on quarter. It takes some understanding. But our quarter is primarily marked by 3 major themes: the impact of diesel prices despite what is fundamentally a stable technician market, the continued rise in the critical industries reaching new heights, and Snap-on's capability to absorb substantial turbulence and despite the difficulties keep margins strong. The result of it all is that our numbers were mixed marked by the turbulence, but with laser light from the underlying strength of our enterprise shining through.

Now for the results. For the third quarter, our sales were [ $1.1837 ] billion as reported, representing a 0.6% increase. Adjusting for currency and acquisitions, organic sales were short by 2.8%, with mixed results across the corporation. We'll talk about that later. OpCo operating income or OI for the quarter was $248.1 million, down from the $278.5 million last year, which is important to note, included $22 million from a 2025 nonrecurring legal settlement. The OI margin was 21%, lower by 240 basis points versus last year, but that included 190 basis points from the legal gain. Adjusting for the onetime legal item, the OI margin was down by 50 basis points.

Now the gross margin improved 10 basis points to what I consider a very robust 51% strong despite the environment. It's a real demonstration of Snap-on's resilience. In effect, our margin combine strong gross margins and a belief in our way forward, impelling continued spending on maintaining and strengthening our advantages in product, in brand and in people even in a wave of turbulence, executing on the belief that -- our belief that the future holds considerable opportunity and our conviction that we want to attack that potential at full strength.

For the Financial Services, operating income of $68.3 million was down slightly from last year's $68.9 million. And the overall as-reported OI margin in the quarter, including both financial and OpCo was 24.7%. Quarterly EPS was $4.64, below last year's level of $5.02, which again included a legal item from the prior year, and that was where the $0.31 boost in the 2025 numbers.

Those are results. Now let's talk to the markets. Vehicle repair is a varying picture with subsectors of players having different perspectives, but the underlying market remains strong. When we visit the shops, as we have during the quarter, the garages are constantly crowded and full. And the owners and managers are always looking for more tech. It's the first thing they mention when you see them. And the technicians themselves, they're busy and prosperous and see continued stability in both work and income. So at its core, at the grassroot level, repair is strong. And you can see then the numbers, household spending on fixing cars up mid-single digits and technician wages continuing to rise. It's still a great time to work in a garage.

So in this environment, technicians remain cash strong. They can buy what they want or need. But at the same time, there's still confidence for -- actually, it's actually based on a number of articles in I think respective publications, papers and magazine, the loss of confidence in the near future as a perspective that appears now to be more commonly present across the economy.

For the tax, this continues to play out as a reluctance for committing to the extended financial obligations that are associated with big ticket items. Loan originations are down again this quarter, reflecting that sentiment. So the focus is on quicker payback items like power tools and hand tools. In effect, the story we've been telling you for some time. It's a stable story.

So vehicle repair itself remains strong as it has been, but Snap-on's [indiscernible] to our tech customers are the franchisees. And up to this point, they've been relatively unaffected by the environment. But now the precipitous and unprecedented acceleration in diesel fuel prices has grabbed their attention. The result is that franchisees have built cash to manage the rising fuel costs without stress by reducing inventory. You can see it in our results. Samter Vans were down, while volume off the trucks to technicians is stable. The resulting ripple drove significant variations in our results as a reduction in rate is passing.

So while the numbers look turbulent, the underlying core tech market remains as it has been for some time. On the upstream portion of the vehicle repair, repair shop owners and managers, the market is mixed to get. Independent shops are reasonably optimistic recognizing what could be called , I think the great days of automotive repair. Budget opportunities for more work is a car park, evolve more complex vehicles and they fully understand the need for more sophisticated systems that match those challenging trends and Snap-on has just the products for the task.

For OEM dealerships, view is quite different. The repair bays are full, but dealerships tend to be heavily influenced by new car sales, and that picture isn't as positive. Volume is down, and I guess, impacted by the reduced numbers of a number of new car model launches, car buyers and [indiscernible] enthusiastic about buying older models. And as you might expect, the trials of those lower volumes spill over into repair departments kind of attenuating the appetite for shop upgrades. At the same time, lower vehicle introductions mean fewer tool up programs to support new models, taking our already lumpy program business to lower levels. And you can see it in RS&I numbers. In their numbers, overall volume is down, but much of that shortfall is driven by the decreases in the EQS project-driven business, the lumpy business.

So overall, vehicle repair is robust, but various sectors have been influenced by end period challenges, I guess you could call it.

Now to the critical industries. This is where C&I operates, and I can tell you, it's looking good. Experts in [indiscernible] regulate and delivering -- declared the economy is strong. Well, this is part of military, general industries, natural resources, places where the penalty for failure is high and the need for repeatability and reliability justifies a Snap-on level product. It's a segment where the growing emphasis on precision and efficiency is driving demand for greater and greater customized products, and this is the Snap-on sweet spot. It's music to our ears. And you can see why when you look at the encouraging C&I numbers.

It's not just this period. C&I keeps taking full advantage of the favorability, racking up gains quarter after quarter. So that's the market. Vehicle repair mixed, but with a strong core and the critical industries booming.

Now let's move to the segments. Let's talk about C&I. It was an encouraging demonstration of strength. Sales were $404.3 million, an organic sales gain of 7.4%, and that excludes the $10 million from the recent [indiscernible] acquisition. It's an all-time high. It's a robust increase fueled by innovative new product launches and by the games piling up in the industrial business, driven by growing demand for our customer solutions in the military and general industries and a natural resources, broad volume progress across the critical industries.

From an earnings perspective, the C&I results get even better. Operating income of $74.7 million improved -- $74.7 million, improved $17.3 million or 29.9%, and the operating margin was 18.5%, up 290 basis points, another record for the group. Gangbusters. And once again, the primary force was the industrial division continuing to forge the path forward, taking a Snap-on out of the garage very profitably. C&I quarter was about leveraging customer connection, observing more identifying complexity and engineering solutions that make work easier and our Murphy, North Carolina Power Tool Plant executed that process with precision. Our power tools are designed to match specific repair test, not a broad range within industries. For instance, in September, the team is the first of its kind CTR-851,14.4-volt 3H Drive Flex a cordless ratchet. Unlike any other tool in its category, the head pivots forward and backwards 30 degrees, 60% total movement specifically developed for tight engine compartments. Techs love this tool. Modern engines are packed in, often requiring additional work to remove the barriers to access the components that need replacement or repair. Now this gem is vertically narrow, sliding between the hoses and frame rails with the pivoting head enabling the techs to set just the right angle of approach to reach the fastener.

And once engaged, 60-foot pounds of torque and 275 RPMs make cook work of extracting or installing a bolt. And the tool also has our Ring of Fire LED system, illuminating the workplace, another idea, especially powerful in compliance spaces. The CTR-851, a quick payback item, just what the techs are looking for. It's a great addition to our lineup for Murphy.

Another Murphy special is the CT-9055 0.1-inch 18-volt drive cordless impact. It's a beast in a small frame, access and power. And this tool is packing 1,400 foot pounds of torque surpassing even pneumatic tool level. This is the strongest half inch tool we have ever built. It makes lightning work of suspension jobs and heavy-duty application, and it's fueled by our new accelerated Tables battery platform, longer run time and increased power. It's another innovation that's improving productivity and making complex tasks simple and our customers are impressed.

Well, that's the overview of C&I raising the bar. Organic sales up 7.4%, OI up 29.9% and operating margin, a new all-time high, 18.5%, [indiscernible] quarter.

C&I launching customized solutions, maintaining its strong momentum in the critical industries, it's extending out of the garage and reaching new heights and profitability.

Now let's turn to the tools. Sales were $471.5 million, down 7% organically. Franchisees pulling down their inventory, freeing up cash, responding to the onset of accelerating fuel -- responding to offset accelerating fuel prices even while technician spending remains stable. Operating income was 84.8% compared to the -- $84.8 million compared to the $109.9 million last year. Lower volumes and continued investments in brand and product and people [indiscernible] that margin. Operating margin was 18%, down 370 basis points.

Now again, this quarter, we did see customer connection plan out in the Tools Group. For instance, our Algona, Iowa tool storage plan rolled out the new -- people often ask us, can we -- is the pivot going to keep going? Yes, it will. Rolled out -- our Iowa tool storage plant rolled out a new KHP430 [indiscernible] cart. It's available on 9 colors. And it's a small pet compact footprint that's ideal for moving tools around the shop floor with 6 stores and a deep 9-inch top compartment that organizes large items and a power strip for charges -- for chargers, lights and electrical devices. It's quite versatile. And when I say maneuver the tools, I need a lot of tools. The 1 piece of welded frame is weighs in at 248 pounds, but it has a low capacity of 2,400 pounds. We aren't kidding when we say this will hold a ton of tools Plus the 2-piece sliding bed liner top lines underlifted vehicles, positioning the tech arsine tools right at the workplace, improving productivity and reducing wasted motion going back to a larger box retreated tool. And it's at a price point that qualifies as a faster payback item.

Tools Group is stretching foot payback to a wider array of products. Another example of customer retention, centers on a task that I think -- that seems pretty simple to everybody, but it can quickly become a bigger problem, take wheel bearing dust caps. The small basic components that help keep the Greece in a hub assembly while keeping the dirt out, enabling the well to do it -- enables the wheel to do its job and rolls smoothie down the road, you get the picture. But replacement is usually a routine job. But when a dust cap doesn't seat properly, a headache starts. A simple repair turns into damaged parts and rework and potential failure. Observing that challenge, our engineers developed our new A1310 DCT especially for dust caps. It includes 3 different size adapters that can be used with a drive handle or paired with an air hammer. So it gives techs a wide range of flexibility depending on the application. What makes the tool effective is its simplicity. The adapter cradle the metal tap and distributes the force evenly, helping push the part into place without the form in the outer shell. And the result is an easier, more reliable seating of the component, but it creates a better seal with less risk of problems down the road.

The timing of product that addresses common frustrations and technicians run into every day, nothing flashy. Just a smarter way to get the job done right saving a lot of time, and it's based on feedback we received. The technicians have noticed it. They like it. Well, that's the Tools Group.

Soaring diesel costs, franchisees, leveraging inventories, tech spending steady and the group yielding insights and observations to design application-specific products.

Now let's turn to RF9. Sales in the quarter were $454.7 million, down 2.2%, including $15.6 million from the recent diesel laptops acquisition and an organic shortfall of 5.5%, primarily due to the low and lumpy volumes in the OEM segment that derived from fewer new model release programs. But we did see progress with our database and shop management solutions. And reflecting that somewhat, OI in the quarter was $116.1 million compared to the $141.3 million last year, but that included $22 million from the legal settlement, from the legal payment.

Now the group's operating margin was something else. It was 25.5%, a strong number, but down 490 basis points from -- down from 490 basis points from last year, but that is that 490 basis points included [ 480 ] basis points due to the legal settlement in 2025. Actually, margins were quite robust. Gross margin was 48.1%, up 110 basis points from last year, and the OI margin was 25.5%, comparing pretty closely to last year's 25.6% as adjusted for the legal settlement, and that's all despite the reduced volume.

You can see the core strength -- you can see RS9's core strength coming to life on our new electronic parts catalog or EPC built by our team in Richfield, Ohio. This software helps dealership parts counters run much more smoothly. You see a big parts department challenge is that every component on a vehicle to be describing at least a dozen different ways. You got technician jargon, you got OEM descriptions, parts numbers, stock numbers and repair manual terminology and more. And they rarely line up. So when the phone rings, [indiscernible] is the department department take the tech speak and translated into a hard -- a bar code that's on the shelf that translates to something on the shelves. Well, that's where we have an edge, a real age utilizing our $3.4 billion proprietary repair records. We employ large language models to connect all of dots. A parts representative can enter the phrase or terminology given and [indiscernible] locate just the part -- just the SKU regardless of nomenclature.

And just as importantly, the system sees the part that's proposed and recommends related items that should also be replaced or installed at the same time, making sure the repair is done right the first time. It's -- I guess it's a great efficiency driver and it's fast becoming a must-have making RS&I a vital cog is driving dealership success.

We have great confidence in our RS&I business. And our customers an NHC partners share the same belief. That fact was on display as the professional tools and equipment news, T10 announced the [indiscernible] 2026 Innovation Awards and People's Choice awards. And the group RS&I was well representative on that front with winning products like our Triton handheld diagnostic platform, our Prolink heavy-duty diagnostic platform, Mitchell One's manager SEE inspections feature and Challengers adapter cart, all recognized as winners by the techs who actually use the tools every day.

In fact, collectively, the corporation was honored with a total of 23 T10 awards across the 54 possible categories. We believe it's a true testament to our competitive advantage and product across the corporation. RS&I expanding its reach with repair shop owners and managers, confronting the increasing complexity, focusing on developing innovations that simplify the difficult and helping shops prosper along the way.

But also the third quarter results, Tools Group, sales below our standards, impacted by accelerated sisal turbulence. Tech demand remaining stable, launching new products and maintaining their network. C&I above [indiscernible], standing resilient, 7.4% organic increase. Operating margin that represents a new record of 18.5%, up 290 basis points, making great strides and releasing our compelling power tools and precision torque products, purpose-built to make work easier, and an expanding array of customized solutions driving growth in critical industries worldwide.

RS&I gross margin is up 110 basis points, operating margin, 25.5%, balancing the headwinds about equal to last year despite the turbulence. And overall, the corporation as reported sales about flat. Gross margins of 51%, strong and up 10 basis points versus last year, and OI margin 21%. Snap-on navigating the wave of diesel turbulence holding steady against the wind.

Now I'll turn the call over to Aldo. Aldo?

Aldo Pagliari

Thanks, Nick. Our consolidated operating results for the third quarter are summarized on Slide 6. Net sales of [ $1.1837 ] billion in the quarter represented a decrease of $7.1 million from 2025 levels, reflecting a 2.8% organic decline, partially offset by $25.6 million of sales from acquisitions. Heightened turbulence related to the ongoing conflicts in the Middle East and Ukraine, including the rapidly escalating price of diesel fuel during the quarter, dampened the sales in our automotive repair markets, which led to lower sales to our mobile band network.

With respect to our Repair Systems & Information group, substantial changes to the rollout of new OEM vehicle platforms impacted sales in the quarter. These declines were moderated by continued higher activity in our industrial-facing end markets within our Commercial & Industrial sector or C&I.

Consolidated gross margin of 51% remained steady and compared to 50.9% in the third quarter last year. The improvement of 10 basis points primarily reflected savings from the company's RCI initiatives, partially offset by higher material costs.

Operating expenses as a percentage of net sales of 30% rose from 27.5% last year, primarily due to a 190-basis-point nonrecurring benefit from a legal settlement in 2025 as well as from our continued investments in support of our brand and other business opportunities.

Operating earnings before financial services of $248.1 million in the quarter compared to $278.5 million in 2025, which included a $22 million benefit from the legal settlement. As a percentage of net sales, operating margin before financial services of 21% compared to 23.4% reported last year, including the 190-basis-point benefit that occurred in the third quarter of 2025.

Financial Services revenue of $98.6 million in the third quarter compared to $101 million last year, while operating earnings of $68.3 million compared to $68.9 million in 2025.

Consolidated operating earnings of $316.4 million compared to $347.4 million last year, which included the benefit from the legal settlement. As a percentage of revenues, the operating earnings margin of 24.7% compared to 26.9% in 2025, which included the benefit from the legal item.

Our third quarter effective income tax rate was 22.3% in 2026 and 22.6% last year.

Net earnings of $243 million or $4.64 per diluted share compared to $265.4 million or $5.02 per diluted share in 2025 and which included a $16.2 million or $0.31 per share after tax benefit from the legal settlement. Excluding the $0.31 legal benefit, earnings per share as adjusted in the third quarter of 2025 was $4.71.

Now let's turn to our segment results for the quarter, starting with C&I group on Slide 7. Sales of $404.3 million rose $36.6 million compared to 2025 levels, reflecting a 7.4% organic gain and $10 million from acquisitions. Sales to customers in critical industries rose mid-single digits in the period, including robust activity with the U.S. military and continued higher sales in general industry end markets.

The group also benefited from another quarter of double-digit gains in our specialty torque business, which included a strong performance from our high-precision electronically controlled mountains product line. Our Asia Pacific operation also grew the border, registering a high single-digit increase, advancing in both their cross-border activities and in their local markets. Overall, the C&I group continues to make progress with gains across North America as well as in Asia and other emerging markets.

Gross margin improved 60 basis points to 41.5% in the quarter from 40.9% last year, mostly due to the increased sales and savings from the segment's RCI initiatives.

Operating expenses as a percentage of sales of 23% in the quarter improved 230 basis points from last year, primarily reflecting the higher sales volumes and a 130-basis-point benefit associated with the sale of a building, partially offset by a 40-basis-point impact from acquisitions.

Operating earnings for the C&I group was $74.7 million compared to $57.5 million in 2025, and the operating margin of 18.5% improved 290 basis points from last year.

Turning now to Slide 8. Sales in the Snap-on Tools Group of $471.5 million compared to $506 million last year, reflecting a 7% organic sales decline. The organic decrease was due to a high single-digit decline in the U.S. and a low single-digit reduction in the segment's international operations.

During the quarter, we believe that deepening economic uncertainty and rapid increases in diesel fuel prices impacted franchisees' willingness to expand their purchases, leading to a drawdown of the inventory as they use destocking to generate cash. Gross margin of 46% in the quarter compared to 46.8% last year. The 80-basis-point decline primarily reflected the lower sales volume. Higher material costs were offset by 60 basis points of favorable foreign currency effects.

Operating expenses as a percentage of sales of 28% compared to 25.1% in 2025. This increase was mostly due to the lower sales, but also include continued investment in supporting the Snap-on brand.

Operating earnings for the Snap-on Tools Group of $84.8 million compared to $109.9 million in 2025. The operating margin of 18% compared to 21.7% last year.

Turning to the RS&I Group shown on Slide 9. Sales of $454.7 million compared to $464.8 million a year ago, reflecting a 5.5% organic decline, partially offset by $15.6 million of acquisition-related sales. The organic decrease largely reflects lower sales to OEM dealerships. This resulted from a sharp reduction in program-related activity in the period, particularly across North American OEMs as they adjust roll-offs of new vehicle launches.

Gross margin for the RS&I group of 48.1% improved 110 points from last year, primarily due to the favorable business mix.

Operating expenses as a percentage of sales of 22.6% compared to 16.6% in 2025, which included a 480-basis-point benefit from the legal settlement. The remaining year-over-year increase of 120 basis points is mostly due to lower sales volume.

Operating earnings of $116.1 million compared to $141.2 million last year, which included the $22 million benefit from the legal settlement. The operating margin of 25.5% compared to 30.4% reported in 2025. Excluding the 480-basis-point benefit from the legal item in 2025, operating margin as adjusted declined 10 basis points versus last year.

Now turning to Slide 10. Revenue from financial services of $98.6 million decreased $2.5 million from last year primarily due to the lower interest income resulting from a year-over-year decrease in the size of the average finance receivable portfolio in the period.

Financial services expenses of $30.3 million decreased from $32.2 million in 2025, mostly due to $2.3 million of lower provisions for credit losses. As a result, Financial Services operating earnings of $68.3 million compared to $68.9 million last year. In the third quarters of both 2026 and 2025, the average yield on finance receivables was 17.7% and the average yield on contract receivables was 9.1%.

Total loan originations of $270.6 million in the third quarter represented a decrease of $3.5 million or 1.3% from 2025 loans.

Moving to Slide 11. Our quarter end balance sheet includes approximately $2.5 billion of gross financing receivables with $2.1 billion from our U.S. operation. For extended credit or finance receivables, the U.S. 60-day plus delinquency rate of 2.1% is up 10 basis points from the third quarter of 2025.

Trailing 12-month net losses for the overall extended credit portfolio of $70.1 million represented 3.63% of outstandings at quarter end, down sequentially from 3.7% in the second quarter of this year. We believe that these portfolio performance metrics remain relatively balanced considering the current environment.

Now turning to Slide 12. Cash provided by operating activities of $247.7 million in the quarter compared to $277.9 million last year. Net cash used by investing activities of $18.3 million in the quarter included capital expenditures of $24.7 million. Net cash used by financing activities of $205.3 million included cash dividends of $126.1 million and the repurchase of 220,500 shares of common stock for $87.1 million under our existing share repurchase programs.

As of quarter end, we have remaining availability to repurchase up to an additional $431.2 million of common stock under our existing authorizations.

Turning to Slide 13. Trade and other accounts receivable of $922.1 million represented an increase of $40.7 million from 2025 year-end levels, including $12.2 million from acquisitions. Days sales outstanding were 68 days at the end of the third quarter and compared sequentially to 70 days at the end of the second quarter and to 67 days in 2025 year-end.

Inventories, including $18.5 million from acquisitions, increased by $54.4 million from 2025 year-end. On a trailing 12-month basis, inventory turns of 2.3x at the end of the period compared to 2.4 at the end of last year.

Our quarter end cash position of $1.670 billion compared to [ $1.6245 billion ] at the end of 2021. That concludes my remarks on our third quarter performance. I'll now review a few of the guidance for the remainder of 2026.

As a reminder, the fourth quarter of 2025 contained an extra week of operating results associated with the company's fiscal calendar. In 2026, we returned to a 52-week fiscal year with 13 weeks in the fourth quarter. While the impact of this additional week was not material to Snap-on's consolidated fourth quarter 2025 total revenues or net earnings, our Financial Services segment did earn an additional full week of interest income from its financing portfolio.

At the consolidated level, the net earnings benefit from the additional week of financial services interest income was largely offset by a corresponding additional week of fixed expenses, primarily personnel-related costs.

We expect the capital expenditures for the year will be approximately $100 million, and we currently anticipate that our full year 2026 effective income tax rate will approximate 22%.

I'll now turn the call back to Nick for his closing thoughts. Nick?

Nicholas Pinchuk

Thanks, Aldo. Well, that's a Snap-on quarter, marked by 3 large themes. First, the accelerated seemingly limitless rise in diesel during the quarter and the franchisees reducing inventory as a reaction to that unprecedented wave despite the fact that technician markets remain stable. And you can see that in Tools Group results, sales to the bands down 7%, even as the volume of the franchise trucks was stable. Second, the continuing rise of our critical industries business reopening our advantages in customized products to a stronger effect. And that trend was quite visible in C&I's encouraging results. Sales up 10% as reported, organic activity rising by 7.4%, C&I volume reaching an all-time high, and the group's OI margin, 18.5%, up 290 basis points, another all-time high.

The C&I story again this quarter was a reminder of the robust and rising potential in the critical industry sector of our growing power to take advantage of that opportunity and of the capability of our team to brick -- the capability our team brings to bear and rolling the Snap-on brand out of the garage with strong profitability.

Finally, the quarter is a demonstration of our ability to hold strong margins even in the midst of considerable and unusual headwinds, and that's all visible in our gross margins, strong in an absolute and relative sense. 51% for the corporation, up 10 basis points despite the varying environment. And looking forward, we believe we have a continuing opportunity to progress.

The diesel wave appears to have flattened and our principal markets, vehicle repair and critical industries are both fundamentally strong, and we have the ability to capitalize building our advantages in product, brand and people, strengths in which we have kept investing in the midst of turbulence. And as such, our product line keeps expanding and the offerings really do make work faster and easier.

Our brand stands alone. It really does represent the outward sign of pride [indiscernible] workingmen and women taking their profession. We hear that every day. And our people really are experienced, battle tested and committed to Snap-on success.

So as we proceed on our path forward, we believe that with our markets and our clear advantages in product and brand and people, we will meet the turbulence and return to our well-established positive trajectory throughout the quarters and the years ahead.

Now before I turn the call over to the operator, I'll speak directly to our franchisees and associates. I know many of you are listening and our resilience in these particularly challenging times is deeply rooted in your endeavors. So for your contributions to the advancement of our enterprise, you have my great respect. For the energy and capability you bring to bear every day, you have my admiration. And for your unwavering dedication to our team and its future, you have my thanks.

Now I'll turn the call over to the operator. Operator?

Operator

[Operator Instructions] The first question today comes from Scott Stember with ROTH.

分析师问答

Scott Stember

Just wanted to dig into the commentary about sales off of the truck. When you say stable, are we talking flattish in the quarter? And then you also talked about how the diesel wave seems to be flattening. Have you seen a reversal in October of orders?

Nicholas Pinchuk

First of all, we don't give guidance. I won't comment on October. I'll tell you this though, is that the sales of the truck are up, but not by much. So -- but they're positive. So that's where you see all this playing out. It's the negative in the Tools Group and the sales of the van that are kind of as they were, that's what we call stable. And if you're talking about, yes, flatten -- all you got to do is look at the diesel prices. The diesel prices are flattened. So I don't know where they're going. But I think our people have mentally absorbed where the diesel prices are now. I don't know what they're going to do about that going forward because if they stay at the current level, they'll still want to have some cash to to make it easier when they stay at that level. If it comes down, I don't know what will happen. It's hard to predict what they'll do with the inventory. But it does create a future potential at some time, but the timing of that potential is not necessarily clear.

Scott Stember

Got it. Good to hear that about the coming off of the van. So can you just give us an idea of what is moving? Has there been any -- I imagine there's -- hasn't been any breaking of that trend of not buying higher ticket items? Is there anything in particular that -- of the van that was noticeable, that was positive?

Nicholas Pinchuk

Yes. Look, I think power tools, power tools, I'm talking about part tools because they seem to be inconsistent. These dates are really good. We have a good product line. And we've had a series of -- I see a guy at the SFC who -- something I didn't mention that long that ratchet. He sold 115 of them and I don't know how many customers they have, but that seems like every other customer or so. So power tool is selling well. They sold well in the quarter. And these carts are selling okay. And so like the carts I talked about, which is kind of reaching up making them semi quick payback items and they tend to be popular.

Scott Stember

All right. And just last question on RS&I. Outside of the OEM dealer orders, can you give us an idea of how some of the other subsegments did?

Nicholas Pinchuk

Well, I think we say that in our -- basically, anything associated with the OEM dealers didn't do that well. The parts catalog business, which is associated with they did okay. But generally, it was sort of that. I mean, there was a lot of mix. Diagnostics was -- didn't have its most robust quarter. It didn't launch anything this quarter. [indiscernible] one did great. And also you look at those kinds of things. So I think we say in our notes that sales to the OEM dealerships were down. And maybe to the independent shops was kind of flattish in this situation in total.

Operator

The next question comes from Brett Jordan with Jefferies.

Bret Jordan

Could you talk about sort of what you're hearing sort of about franchisee health and sentiment? I guess, the largest public auto dealer reported yesterday and commented about negative car accounts and service. Are they concerned beyond diesel that there's some softening at the absolute garage level?

Nicholas Pinchuk

You mean our franchisees?

Bret Jordan

Yes, yes.

Nicholas Pinchuk

No, I don't think so. I mean, look, who knows. They don't seem that way. We just met with a bunch of franchisees in -- and we met with -- during the quarter, we met with a bunch of them in the Northeast franchisees and shop managers and technicians. And then we just met with a bunch of franchisees from the, what we say, the North Central region, around St. Louis. And they -- first thing out of their mouth was diesel prices. And then they started waxing eloquent about some of the power tools and some of the products we're taking out. So I didn't get that feeling. I got the feeling that it's just as I described. The underlying business was pretty good in repair. I do think, as I said, you probably know this better than I do, that I'm not sure that dealerships are doing that well because they always pay attention to new car sales. I don't know. I've read a bunch of articles and we've kind of here talks about that from my dealer friends about the lack of new models making a difference. And I do think isn't car sales down this year, our car sales down this year in the United States, a couple of percent.

Bret Jordan

Yes. What they're seeing is push back on pricing of the service. So I think you're seeing some customer reaction to what's been in high inflation in labor and parts pricing. So you're seeing...

Nicholas Pinchuk

You're talking about the dealerships?

Bret Jordan

Yes, yes. It's not so much...

Nicholas Pinchuk

But, Brett, dealerships, the dealerships, the repair shops are -- you feel like the management is a descended to Jessie James when you go in there any time and get pricing. People are pushing back all the time. I think, really, I mean, people have complained about it. It's why independent shops have held so long robustly against the dealerships is because the pricing drives everybody to independent shops once it's off of warranty. This is not something new.

Bret Jordan

And on that same topic of affordability, you said you're stretching quick payback. Or if we think about like a same SKU tool price or is the incremental product offering, sort of targeting a lower trend -- or lower selling price to make this more affordable? Or...

Nicholas Pinchuk

What I meant by that, a good example of that is in tool storage. You got the big boxes. These things are monsters. There's a lot of sheet metal. There's a bunch of features in it as they go for, I don't know, 5 figures, stuff like that. And then -- but we're making a robust expansion. We're making robust expansions in the car side of that, less sheet metal, cheaper. So more within the reach. So people who need tool storage, they're not going to be paying a huge amount of money. They can buy a cart. By the way, the cart I talked about whole tons of tools. So I mean, I think -- or a tone of tools rather sorry, a tone tools, that's what I meant by that. We're stretching the designs to come down some in places in categories where we used to [indiscernible]. People would say, oh, they're definitely big ticket. We're trying to get maybe you could argue middle ticket out of that.

Bret Jordan

Okay. And sorry, just to round out the first question. I guess, is there a metric that you use internally to sort of measure the health of the franchisee or their liquidity, like delinquencies on contract receivables, or I assume they're not there are no delinquencies since you...

Nicholas Pinchuk

Yes. No, we look at a bunch of different things, but a lot of the things are emphasize because they don't have to report everything on all these things. So generally, my best feeling is when I talk to them, and so I always feel pretty good about -- I felt pretty good about talking to them lately, except for the diesel thing. I think the diesel thing shook them up. If you look at diesel, if you put yourself back in the third quarter, it was looking like it was going to the moon.

Bret Jordan

This is what serves bought to higher diesel visiting their customer less frequently or just...

Nicholas Pinchuk

No, I don't think so. I don't think so. I don't think so. You would think maybe. i mean, look, there are thousands of franchisees. So probably someone might be doing that, but I don't think it's a common phenomenon.

Operator

The next question comes from John Babcock with Barclays.

John Babcock

Just a quick follow-on there from one of the questions earlier. Do you think that franchisees are now holding level that their -- levels of inventory that they're happy with? Or do you think that there is still a little bit more that has to fall out there? And then also, have you guys started adjusting production to account for the pullback that occurs this last quarter?

Nicholas Pinchuk

Well, we already had it. But the thing is, is that, look, the pullback, I don't expect them to go further, although those could be famous last words, I don't know. But I think the way that -- if I look at the numbers and the pullback this quarter, that's got them okay for some time. So I don't think that's going to happen in the near term. I don't see them doing that. Look, I think -- I don't think they think -- franchisees like inventory. They like to have it. And the reason is, John, is because it allows them to strike while the iron is hot. If they go out and somebody says, "All right, I like I think 2 storage blocks and I want a blue one," If they don't have a blue one, then they order one by the time they get back the guys wife may have talked them out of there, something like that, or he may have had second thoughts. And so they like to strike, so they like more inventory. I don't see them trying to -- I don't see them being satisfied with this level necessarily. And I'm not saying they're widely dissatisfied, they get along without it, but it isn't as powerful as when you have a fairly robust inventory on the van and some play maybe in a warehouse.

John Babcock

And just in terms of like the products, did they pull back on any particular type of products? Was it higher priced products, lower-priced products, like where were those...

Nicholas Pinchuk

Actually not, it was pretty much across the board.

John Babcock

Okay. Got you. Helpful. And then just last question before I turn it over. Material costs, you talked about that being a little bit of a headwind for the Tools Group. I was wondering if you might be able to provide a little bit more color there.

Nicholas Pinchuk

Material cost is -- I think it's primarily associated with steel when we talk about material costs. I mean there's some freight involved there, freight costs when they're shipping. But look, I think our guys have managed over that. So while I have it and -- while we have it in the discussion of material costs, really, if you look at the gross margins, it doesn't appear we're suffering, I'd say. I think we're managing them. We have offsets like from rapid continuous improvement and other things.

Operator

The next question comes from David MacGregor with Longbow Research.

David S. MacGregor

I want to start off by just asking about the SFC and just any observations you could offer on this SFC? And then it seems as though there may have been a larger-than-normal order cancellation around that event this year. So I wonder if I could just start off by getting you to talk about that.

Nicholas Pinchuk

Sure. Look, the SFC in Washington is always by population weaker. It isn't one of them -- it isn't the most popular. If you go to Orlando, more people [indiscernible]. That's simply -- it's on the margins, but so on. The SFC, I know that people give different views of it, but the SFC orders weren't that strong. They were already down. People were pulling back at the SFC. So we came out of that somewhat lower than we might have expected, and that's what you're seeing there.

Now I will say that the franchisee -- if you talk to the franchisees and you didn't look at the order numbers, you might say, well, okay, everything is hunky dory. They were pretty positive. But the numbers ended up metastasizing in that way. And I think when we talk to people afterwards, which is why we went out and talked to people, it was about diesel prices.

David S. MacGregor

Right. So on the SFC, it sounds like you had sort of good ticket response, but the traffic was down. And then talking about cancelation...

Nicholas Pinchuk

Also I wouldn't say good ticket response. I would say, it was okay, but it wasn't up to our standard. I would say we're -- I don't like to use words like disappointment or anything like that. But the thing is it wasn't where we hoped.

David S. MacGregor

Got it. And then what about the cancellation rates afterwards?

Nicholas Pinchuk

I don't think they're any different actually in a situation. So it's not -- this is not higher cancellations or anything. I mean we started to see this for -- you never know. Third quarter is squarely. So you never know an order pattern as you go through the months. But when you get to the SFC and you see -- not where you think it should be, you start to know that something is a miss.

David S. MacGregor

Got it. And then how would we be thinking about franchisee attrition here? Do these kind of conditions shake loose the marginal franchisee into retirement? Or what are you seeing?

Nicholas Pinchuk

Yes, it can. But the franchisees, like I said, the sales or demand aren't down. They're okay. So I don't think -- I don't know -- I'm not sure -- I realize there's a lot of turbulence floating around and people could say, "Oh, I want out, or I get tired." Mostly people retire at a certain age. That's what tends to drive this, and it tends to be the [indiscernible] that drive a lot of it. Of course, as you say, marginal franchisees get under pressure, but a lot of those guys probably would have made it anyway. So I don't really see that. What drives the up and down, I think, is the aging.

David S. MacGregor

Got it. And then on the -- you talked about the fact that franchisees are becoming a lot more cautious. What are the implications there for revolving account credit? Are we likely to see more flips in the end of the year? Or how are you feeling about...

Nicholas Pinchuk

I didn't say, wait a minute, wait a minute I don't know. I don't think I said more cautious about the franchisees. I'm not sure. I don't think the franchisees are more cautious. I think this is a very specific phenomenon. They looked at this diesel price and he said, "This thing is [indiscernible], it's going to cost me more money. I don't want to give -- I still want to give my son, the GI Joe with the [indiscernible], as they say. For Christmas, and so therefore, I don't want to cut back anything else. I'd just soon pull back a little bit now and give myself a little cushion for the future, but I think their attitudes aren't really that bad. They're not -- I don't think anything has changed at the basic -- fundamentally, one of the things we try to convey here, not much actually changes the Tools Group except for the diesel price.

David S. MacGregor

Got it. And then last question is just capital allocation. Pretty lazy balance sheet right now with all that cash. What are your thoughts on bringing that to work?

Nicholas Pinchuk

Well, I think, look, I think what we say our capital allocations, we were working capital intense. So therefore, you need it for that. We like acquisitions. We like the dividend. It's in perpetuity. So we're looking at what dividend we're going to, and we look at share buybacks. We look at them all.

Operator

The next question comes from Quinn Fredrickson with Baird.

Quinn Fredrickson

A question on Tools Group operating margins, just the decremental margin there seemed kind of sharp. Wondering if you could just split out how much was just lower volume versus the brand building and other cost factors you called out? And would you expect to moderate some of your investment if the environment continues to remain somewhat challenging? Or do you see attractive enough...

Nicholas Pinchuk

Look, I think the Tools Group -- there are a bunch of things that happened in the Tools Group. There's some product mix that's driving through that. In other words, they had -- if you look at gross margins, they had better sales of power tools and torque as part of its sale to the vans. And for those products, they split the margins with C&I. So their margin -- while the margins are great for the corporation, they aren't as good for any one particular division. So you have some of that rolling through. There was a volume component in gross margin and a volume component in the OE. The OE -- I think gross margins were down like 80 basis points or 60 basis points, something like that. And so that wasn't bad given the volume. So volume and mix there. If you look at all the big kahuna in that was OE margins, and there was volume and we continued spending in things like training. You roll out the product, you roll out -- one of the things we found out is in trying to do the pivot for lower payback is, you've got to keep rolling out a lot of new products and you need to train the field to be able to deal with this, you need to jackup the training. And so that's part of the cost.

The SFC, even though even though I talked about it being a little bit down, we spent money on the SFC and maybe we could have pulled back on that, but we consider the effect. I think the numbers were pretty high for a Washington event. So we kept that up there because we wanted the brand build. I mean if you're selling the top-of-the-line product, I think it's somewhat questionable whether you should pull back on investing in product and brand and people. So you won't see us pull back. I don't think -- I don't foresee that right now.

Quinn Fredrickson

And then second question, just on RS&I on the OEM dealerships. You discussed delays to vehicle launches. Just as you look forward, are you seeing anything in the program pipeline, perhaps new year model launches that gives you confidence activity could improve ahead? Or is visibility still fairly limited?

Nicholas Pinchuk

Visibility is kind of limited because I think the OEMs are kind of trying to figure out what they want to do around this and having worked for Ford myself in the engineering and finance. Its -- there's a lot that goes into launching one of these programs. So we know about programs, but we don't know about the timing when they launch. We're not confident in that timing because there's a whole bunch of variation. And secondly, more than that, we don't know when they pull the trigger on the programs. It doesn't necessarily happen on the day of the timing. So we have that that in place.

I think we'd expect it to improve somewhat, but I think we're in a flatter period for that business.

Operator

The next question comes from Gary Prestopino with Barrington Research.

Gary Prestopino

In your experience with running the company, exiting out what happened during the pandemic, have you ever had something of this magnitude like an exogenous shock on the franchise channel that impacted their purchasing power? And if you did, how long did it take to correct that?

Nicholas Pinchuk

I never saw anything like this so concentrated. I mean, diesel prices are going up before, but these things rose 40% in the third quarter. That's like a rocket ship. And that's actually -- look, a lot of this, Gary, wasn't -- I don't think it was that they needed the cash. It was that they're pretty savvy small businessmen, and they say, "This thing is getting out of control, this diesel." And by the way, if you look at it, third quarter is about the time when I think America started thinking, wait a minute, this Iran thing looks like it has no resolution. And so I think this kind of psyche of surrounding the diesel got 2 of them, and they said, "Gee, I want to get some cushion. It's not so much person but the fact that they wanted cushion. So it isn't -- they took back more inventory than they needed to pay 1 month's worth of higher diesel prices, but I think there -- I think when you talk to them, they are cushioning against it's going on for a while.

Gary Prestopino

Okay. But I guess what I'm having a lot of problems squaring here is -- and again, I'm not the smartest guy in the world, but volumes were stable, sales were down, which I guess that's indicative of maybe a product mix, right? But...

Nicholas Pinchuk

No, no, wait a min. Wait. Go ahead. Keep going.

Gary Prestopino

No, no, go ahead, if I'm wrong on that point then I can...

Nicholas Pinchuk

So wait. Let me try to explain. Sales were down because they decided not to -- in general, it's kind of a group thing, says, I want to get ahead of this diesel thing so I'm not ordering that much. But they still sold the van driver, to the -- they still sold to the technicians. And the sales for the technicians were up slightly year-over-year. So that's the thing they pulled back despite the fact there wasn't any emergency in the technician mark.

Gary Prestopino

Okay. What I was leading to is that, okay, so the technician market is okay. The franchisees pull back their sales. I mean, are they going to be short inventory going into this quarter? that's kind of...

Nicholas Pinchuk

Well, no, I don't think they'll be short. But inventory is kind of flexibility about what you sell. I can strike now. It's like an inventory is about -- they have a catalog and they get all kinds of electronic things to show people the tools. But the inventory is there so they can hit the guy right away. You want this, I put it in your hand.

And so if you reduce your inventory, you get less capability to do that, the effect on an individual franchisee is quite variable and it varies from time to time, depending on the situation that presents themselves, presents them in the garage.

Operator

This conclude our question-and-answer session. I would like to turn the conference back over to Sara Verbsky for any closing remarks.

Sara Verbsky

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.

Operator

The conference has now concluded. Thank you for attending the presentation. You may now disconnect.