So, hand tools were down some. But if you looked at it, the thing that – one of the things that drove the margins, I think the important point out of that, Scott, what drove the margin improvement in the Tools Group despite the lower volume was that the stuff they make, the carts at Algona, the tool storage items and the hand tools were a bigger portion of their sales than in prior year – in the prior year. And so that that welded a much greater mix because from hands and what the tools group sells for hand tools and tool storage, they get both distribution and manufacturer margins for things like diagnostics and power tools and shopping tech stuff, they only get the distribution margin. So, there’s a pretty big difference between those. So, you can get some pretty good news or bad news depending on how that mix works.
Scott Stember: So, going forward, obviously, you’re focusing on quicker payback items. So, obviously, that would be hand tools? You’re going to start cranking that up a little bit more?
Nicholas Pinchuk: You would say it this way. I mean there’s – we like to think, Scott, that we could find quicker payback items than everything. Hand tools clearly mostly often, I should say often, our quick payback. The technicians can see quick payback. Certain versions of tool storage, as I’ve said, the carts in particular, which tend to be substantially cheaper and more efficacious because they’re kind of an option to add on to a big box. And then or somebody can’t afford a lot and wants to just get a Snap-On tool storage in some way at an affordable level. And then the lower end of that product, the classic series, which we’re working on having in terms of in terms of programs coming up, which we’ve got scheduled for February and March.
And so that would be the case. Diagnostics, it all tends to be bigger ticket items. So, there are – there is the sales at the lower end, and we have some – bring out a new diagnostic at some point during the year, which creates interest. But the lower ticket items is just at the bottom end of diagnostics. And then power tools can have I don’t want to say big ticket items, but the 18 volts are a little more expensive. 14-volt is a lot more affordable and you tend to have a very focused application for where the 18-volt tends to be broader applications to bring that power to any place whereas the 18 – the 14-volt tend to be saying, I got this problem in this particular chassis area of the car I see, so I’m going to use that 14-volt. So, that tends to be quick payback as well.
Those are the kinds of things you see.
Scott Stember: Got it. And then just a last question on the bigger picture. You said that the overall market, the underlying conditions look pretty strong. You’re not seeing any warning signs for the businesses themselves, demand. I mean O’Reilly reported last night, and they said that their the professional business was up double-digits. So, I just want to make sure that we’re not – this is not a canary in the coal mine that the underlying business–
Nicholas Pinchuk: I don’t think so. I mean I think everybody says the business is good. I mean, I don’t know. First of all, I have two amps to that. One is the metrics. If you look at the BOL data, that all seems positive. I mean, the miles driven are up in that. It’s a long way thing. But the spending on – household spending on repair up 4% year-over-year. That’s a pretty good number. The number of tech up 4.5%. I used to be 1%. They’re growing at 4.5%. The technician wage is up 7%. So those kinds of things good things and the car park, of course, keeps growing, and so they keep pumping it in. And the auto industry, while this doesn’t make a difference too much is starting to come back, and they’re still rolling out those new technologies.
So all that seems to be from a quantitative point of view seems to be positive. Now the Bureau labor data can trail, so I don’t know, and people have questions about that. But then, when you go out in the windshield survey and you talk to not only the people our franchisees who are out there every day, but to talk to the general people who work, they think cash is rolling for them. They’re not going to say they’re cash rich, but they are. And so I think things look good right now. And I don’t expect this to change.
Scott Stember: Got it. And just to firm up a follow-up on something you said earlier. You would not be surprised to see the Tools Group return to positive organic growth?
Nicholas Pinchuk: No, we don’t give guidance. But I think I said like four times in my remarks, they weren’t at standard.
Scott Stember: Got it.
Nicholas Pinchuk: We expect them to grow. If we don’t, if we don’t grow, they will be below our expectations.
Scott Stember: Got it. That’s all I had. Thank you.
Nicholas Pinchuk: Sure.
Operator: And our last question today comes from David McGregor with Longbow Research. Please go ahead.
David McGregor: Yes. Good morning, everyone and thanks for taking my questions. Let me just start by sort of picking up on the last line of questioning. It sounds like hand tools and storage is doing maybe a little bit better in relative terms. But that’s also where you were adding capacity in Elizabeth and Milwaukee and Algona. Are they doing a little bit better because you finally just have a little more capacity you’re able to liquidate some of that backlog? Or is there maybe a better underlying demand story in those categories?
Nicholas Pinchuk: That’s a complicated question because of the situation, you know? I mean, I guess, I don’t know. I think this way, though, I’m pretty sure we’re doing better because we had in the queue some ability to adjust for shorter payback items in those areas. That’s pretty much the way I can answer it. Now what I will tell you is – David, this is an operating guys song is that when you’re thinking that you’re going to have – you’re going to have promotions rolling out of your factories and all of a sudden, your customers come up and, say, never mind, we want to go over here. This tends to create a lot of, shall I say, inefficiencies. And so you have to adjust to that. So I don’t think we got the full result the capacities we had hoped the capacity expansions we had hoped to get in the fourth quarter because of those changes, they just optimize what you’ve added.
