Nicholas T. Pinchuk
Chairman and Chief Executive Officer at Snap-on
Thanks, Sara. Good morning, everybody. As usual, I'll start the call by covering the highlights of our second quarter. Along the way, I'll give you my perspective on our results. Once again, they are encouraging. And our markets, they're robust, resilient and promising. And I'll talk about our progress. We believe we're now stronger than ever. And we'll also speak about what it all means. And we believe it means that we're better positioned for more, a lot more. Then, I will go into a more detailed review of the financials. All you have to do is follow the news and you know that we live today in the midst of turmoil, inflation varying supply, continuing unpredictable outbreak, precipitous lockdowns, a war in the Ukraine, and Snap-on has shone through it all wielding our advantages in product, in brand and in people, progressing down our runways for growth, engaging our Snap-on value creation, driving improvement, making the most of our resilient markets and extending our positive trajectory piercing the turbulence. The story of our second quarter is simply one of rising momentum. We've been meeting the challenges quarter after quarter and we're simply getting even better at overcoming the difficulties. And going forward we are confident of our capabilities to continue to advance. And here are the numbers that say we should be confident.
Our reported sales in the quarter were $1,136,600,000 up versus last year by $55.2 million or 5.1% including $32.4 million or 330 basis points of unfavorable foreign exchange. Organic sales growth was 8.4%, with gains in every group. I compare it to the pre-pandemic levels of 2019, our upward drive is clear as a bell. Versus 2019, sales in the quarter rose 19.5% as reported and 18.7% organically. This is now eight straight quarters of being above pre-pandemic levels. We believe we're continuing an ongoing trend of accelerating expansion and are building momentum with emphasis, increasing higher and higher, demonstrating that we're only getting stronger every day. The opco operating income of $246.6 million was up $29.5 million and the operating margin, it was 21.7%, up 160 basis points from last year and 170 basis points from 2019. For financial services, operating income of $65.3 million compared to the $68.9 million of last year. And that result combined with opco for a consolidated operating margin of 25%, up 100 basis points from last year and 130 from 2019. And EPS was $4.27, up 13.6% from last year and 32.6% above the comparable pre-pandemic level recorded in 2019 of $3.22. I have been saying it since the third quarter of 2020 and I'll say it again. We believe that Snap-on is stronger now than when we entered this great withering, and the second quarter numbers say it's so.
Now, let's talk about the markets. Order repairs remains positive. Most if not all of our key indicators are quite favorable. Spending on vehicle maintenance and repair, up, number of tax, up, mechanic wages, up, the techs are optimistic about the prospects and about the greater need for the skills as new technologies, new complexity advance across the car park, and we saw a confirmation of -- and that broadly held believe for several quarters now, is a number of automotive repair technicians continue expanding upward, period after period, higher now than at any of the last three decades. And when I speak with shop owners or is managers as I often do, it's clear that there is a need for more, many more. And at Snap-on, we love it. People repair as a strong and resilient market, a feeling that's also reinforced by our franchisees. You can see it in our numbers, you can hear it in their voices. We believe they're more prosperous ever. Besides franchisees in technicians there's vehicle repair shop owners and managers. This is RS&I's arena. Demand for new and used cars is high but supplies are limited. It's a well known story. The pandemic has impacted the auto supply chain. Sure. But it doesn't matter. Lots of new cars or scarcity of new vehicles, the car park is large, ageing, getting more complex, and demand for repair remains strong come heck or high water. And the shops are seeing this clearly and starting to invest to be the current leaders to get ready for the future. The variety of drivetrains is expanding, internal combustion, hybrid, plug and play-in electric, full electric and every day there's more driver assistance in more vehicle automation, increasing vehicle complexity. Shops now have a greater need for new and updated equipment and they're becoming more and more reliant on service and repair information to guide them through the galaxy of new requirements and procedures. It's all music to our ears actually, because Snap-on makes great tools and equipment and it's clearly repair information headquarters. RS&I has taken advantage of that trend, creating new equipment and advanced database solutions.
We now have a strong array of products in that vital areas. Mitchell 1 repair information software and shop management software, SPX electronic parts catalogue, our Dealer-FX shop management technologies, Electric Vehicle Health Check solutions and our heavy-duty and fast track intelligent diagnostics hardware. These are big databases and getting more powerful and easier to use, helping the shop the fix it right the first time, and efficiently. The repair shop is changing, rising complexity and RS&I has the products to match it.
Finally, let's talk about critical industries. With Snap-on, we say Snap-on rolls out of the garage solving tasks of consequence. And we do. This is a C&I territory. Our most international operations, and it's where we see the most continuing impact of the pandemic. And its children like supply chain inflation and it's supply chain disruption in inflation where customers have been slower to accommodate, where headwinds are still persisting and where our multi-SKU product offerings are particularly impacted by supply chain challenges. I suppose everybody knows about the two-month lockdown in Shanghai. That area is a significant C&I business center, and it's also key transportation hub for our China factory. So the lockdown was an obstacle. And beyond that focused event, C&I is particularly challenged by its considerable geographic reach, jousting with the varying impacts and protocols and economic turbulence from countries -- with a varying virus impacts and protocols, and the economic turbulence from country to country.
But I would say, if you look at the quarter, the C&I team rose to the occasion, and in the quarter we won gains in North America, in Europe and in Asia despite the difficulties. So I'd describe C&I markets as representing continuing opportunity and coupled with automotive repair, we believe our overall markets are robust right now. And there is considerably more opportunity ahead as we move along our runways for growth. And I can leave this section about robust progress in abundant possibilities without, once again, speaking of our -- of the engine of our advanced Snap-on Value Creation, particularly in customer connection and innovation. Developing new products and solution, born of the observation gathered, right in the workplace. Insights that that create great new offerings, and at the same time help guide the expansion of our franchisee selling capacity with better processes, more effective training and more powerful communication. All of that helped drive our progress overcoming the difficulties accommodating the virus, taking full advantage of the market opportunities, charting a continuing positive trend moving forward, and we're going to keep it going.
Well, that's the overview. Now, let's move to the segments. In the C&I group, sales in the quarter were up 2.5% as reported, or $8.6 million versus 2021 and that includes $25.3 million -- that includes a $25.3 million or 7.6% organic gain driven by progress across all our divisions. From an earnings perspective, C&I income was 51.7%, a decrease of 3.8% compared to 2021. $2 million of that was unfavorable foreign currency, and the rest represents the impact of supply chain turbulence on the multi-SKU C&I products. The OI margin was 14.4%, down 140 basis points from 2021 but did represent progress in that it's a 100 points sequential improvement from the last quarter. When compared with the prepaid endemic 2019 periods, sales were up 7.4% organically and the OI margin of 14.4% was down 20 basis points, but that included an 80 point impact from acquisitions and unfavorable currency.
Now continuing bright spot in C&I this quarter and again this quarter was SNA Europe. It did deliver yet another quarter of growth, expanding double digits year-over-year and well beyond pre-pandemic levels all against the wins in Europe with the innovative solutions of our Bacho ERGO Tool Management System leading the way, tailoring product specific to customer needs. Now, Europe is a varied market and SNA Europe is making increasing gains by matching the products to the specific tasks. And that positive SNA Europe was joined in C&I quite valuable contribution from recovering areas in critical industries like aerospace and general industry and from countries in Asia-Pacific like India, Japan and South Korea, all combined to overcome the decline and slower to recover sectors like the military and natural resources. We do remain confident in and committed to extending in critical industries and that commitment is confirmed with great new products.
Speaking of product, last quarter to help solve crucial tasks across both critical industries and automotive repair, we strengthened our 14.4 volt micro lithium power to lineup with the new Snap-on CT861 3/8" impact wrench. It's very attractive but it's also quite functional featuring a compact design to reach tight spaces a nylon based housing for rugged durability and a special toggle switch trigger for precise control. The new unit also includes a tri beam headlight for broad illumination in an entire work area. Now that's a feature that makes complex multi-point jobs much easier in the low-light conditions that often occur in the workshop or in road repair. You can imagine it. The impact wrench also delivers a a robust 225 foot pounds of bolt breakaway torque and it's controlled by a variable speed drive. So the operator apply just the right force for each job. And the 14 volt battery with its 2.5 amp hours ensures consistent output and an extended run time which makes for a lot more efficient work day. The CT361 began shipping early in the quarter and it was right on target, quickly becoming a $1 million hit products. And it sold out in what seemed like a blink of an eye. Great product. Well, that's C&I, a promising quarter, volume up nicely starting to overcome the turbulence, moving down it's runways for growth.
Now for the Tools Group. Sales of $520.6 million, up $36.5 million, including $7.7 million of unfavorable currency and a 9.3% organic gain. And the operating margin? 23.9%, up 50 basis points. Compared with pre-virus, 2019, sales grew $114.8 million, including a 28.1% organic gain. And this quarter is 23.9% operating margin was up 630 basis points compared with those pre-virus numbers. Coming out of the pandemic stronger, indeed. Another positive quarter for the Tools Group with growth across all product lines. And beyond this, we see further indications of continuing strength. Other data, like the franchisee health metrics, which we monitor every quarter, they remain quite favorable and on a clearly positive trend. We do believe our van network remains quite strong. And it's not just the numbers. Just a few weeks ago, I spent time with a couple of dozen franchisees representing the regions on our U.S. and Canadian National Franchisee Advisory Councils, and they were motivated and prosperous, enthusiastic about the current performance, positive about the trajectories of the other vans in the various areas that they represent and very optimistic about the prospects for even more going forward. They believe in the opportunities and they are confident about our future. The Tools Group, strong quantitatively and qualitatively.
And that positivity was not just internal. Once again, this quarter, it was reinforced by the external view. Snap-on was recognized, again this year, among the Top 50 in the franchise industry by Entrepreneur magazine. And once again in that ranking we rated in the top of the Tool's Distribution category, a place we've had for some time. Now, this type of recognition reflects fundamental and contemporary strength of our franchisees and of our overall mobile van network. It is a powerhouse business. And that momentum would not have been achieved without a continuous stream of unique new products. And one of those that helped drive our hand tools up again this quarter was our new long nose slip joint pliers. It's a special tool. With our patented 3 position joint, precisely machined for effortless switching and control, allowing the pliers to -- it allows the pliers to keep the jaws parallel, increasing the contact with the workpiece. It has got a relocated joint, optimized handle shape and unique talon grips curated jaws. With all of that our new pliers provide over 50% more pulling power. The machined and hardened teeth are sharp and strong and present three different gripping geometries. From heavy separations at the base to fine groves at the tip, great variability for multiple applications, you can ply different parts of the job. As a matter of fact, they're manufactured right here in our Milwaukee factory and their fashion from special cold-forged alloy steel for greater durability and strength. These pliers were launched at the beginning of the past quarter and they've been very well received. When I talk to the franchisees at the NFAC, they said they are flying off the truck. And their right. The sales have already made a hit product status, just in one quarter.
Our new offerings are in fact making a difference in the Tools Group. You can't miss it in the numbers. Eight straight quarters above pre-pandemic levels. The Tools Group is moving onward and upward with eye-catching momentum. And you know, if you look at the numbers or spend any time with the team you'll believe it's all systems go, and it is.
Now, on to RS&I. Sales were up 4.6% or $18.2 million versus last year, including $27.4 million or 7% organic uplift with double-digit growth in undercar equipment with diagnostics and information advancing and with the dealership activity flat. From an earnings perspective RS&I operating income of $95.7 million represents a rise of $9 million or 10.4%, and the operating margin was 23%, up 120 basis points in the last year. Compared with 2019, sales were up 19.5% as reported and the organic growth was $58 million or 16.8% with strong advances in undercar equipment and improvement in diagnostics and information products. For profitability, the OI margin of 23% was down 200 basis points -- 240 basis points versus 2019, pretty much reflecting a 110 point impact just from acquisitions and the effect of the margin dilution from the higher sales of undercar equipment that we've been seeing. We believe RS&I has great opportunities and we're fortifying its way forward with new products like our Hofmann 609 aligner, specifically designed for independent general repair shops, where alignment is -- it's not currently a primary focus and the a space is short. The new offering allows those all-purpose garage to keep the low volume alignment business in-house with its compact footprint and portability Kit enabling easy storage when not in use, and efficient deployment alignment is actually need. It saves a lot of space, but it gets the job done. With our latest 3D system offering OEM approved accuracy, the 609 enables handling of even the most complex alignment systems by those general repair shops. It generates a high return on the investment, doesn't occupy space needed for other repairs -- often for other repairs and it fortifies the garage's reputation for technical capability. It's a great value for the general repair shops. And they are noticing.
Our equipment business has been on a roll with strong double-digit equipment growth for double-digit quarters for some time. And the Hofmann 609 aligner is a big player in that mix. RS&I, approving its position with repair shop owners and managers, growth in undercar equipment and diagnostics and Information products and an array of innovative new products and product lines to lead the way.
Well, those are the highlights of our quarter. Tools Group, strong progress, everywhere, unmistakable strength. C&I, recording a positive performance against the variation across industries and geographies and RS&I expanding profitable volume with repair shop owners and managers. Snap-on overall sales rising markedly, both versus last year at 8.4% organically and up 18.7% organically compared with pre-pandemic levels, continuing and clear positive trajectory. Opco operating margin, a strong 21.7%, rising again this quarter, rising again this quarter, up 150 basis points. EPS, $4.27 up versus last year, up versus last quarter and up versus pre-pandemic levels. It was an encouraging quarter.
Now, I'll turn the call over to Aldo. Aldo?
