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Financing and Trade Receivables
 3 Months Ended
Apr. 03, 2026
Credit Loss [Abstract]  
Financing and Trade Receivables FINANCING AND TRADE RECEIVABLES
Financing receivables are primarily comprised of commercial purchase security agreements originated between the Company’s franchisees and technicians or independent shop owners that are assumed by the Company (“PSAs”) and commercial loans to the Company’s franchisees (“Franchisee Notes”) in the Repair Solutions segment. The Company also has financing receivables in its Environmental & Fueling Solutions and Mobility Technologies segments which totaled $25.5 million and $20.1 million as of April 3, 2026 and December 31, 2025, respectively.
The following disclosures relate to the financing receivables in the Repair Solutions segment.
Repair Solutions Financing Receivables
PSAs are installment sales contracts originated between the franchisee and technicians or independent shop owners which enable these customers to purchase tools and equipment on an extended-term payment plan. PSA payment terms are generally up to five years. Upon origination, the Company assumes the PSA by crediting the franchisee’s trade accounts receivable. As a result, originations of PSAs are non-cash transactions. The Company records PSAs at amortized cost.
Franchisee Notes have payment terms of up to 10 years and include financing to fund business startup costs including: (i) installment loans to franchisees used generally to finance inventory, equipment, and franchise fees; and (ii) lines of credit to finance working capital, including additional purchases of inventory.
Financing receivables are generally secured by the underlying tools and equipment financed.
Revenues associated with the Company’s interest income related to financing receivables are recognized to approximate a constant effective yield over the contract term. Accrued interest is included in Accounts receivable, less allowance for credit losses on the Consolidated Condensed Balance Sheets and was insignificant as of April 3, 2026 and December 31, 2025.
Product sales to franchisees and the related financing income is included in Cash flows from operating activities in the accompanying Consolidated Condensed Statements of Cash Flows.
The components of financing receivables with payments due in less than twelve months that are presented in Accounts receivable, less allowance for credit losses on the Consolidated Condensed Balance Sheets were as follows:
($ in millions)April 3, 2026December 31, 2025
Gross current financing receivables:
PSAs$97.5 $97.6 
Franchisee Notes30.9 31.5 
Current financing receivables, gross128.4 129.1 
Allowance for credit losses:
PSAs18.6 10.5 
Franchisee Notes8.7 9.0 
Total allowance for credit losses27.3 19.5 
Net current financing receivables:
PSAs, net78.9 87.1 
Franchisee Notes, net22.2 22.5 
Total current financing receivables, net$101.1 $109.6 
The components of Long-term financing receivables, less allowance for credit losses, which consists of financing receivables with payments due beyond one year, were as follows:

($ in millions)April 3, 2026December 31, 2025
Gross long-term financing receivables:
PSAs$240.4 $241.3 
Franchisee Notes60.4 60.9 
Long-term financing receivables, gross300.8 302.2 
Allowance for credit losses:
PSAs26.6 26.6 
Franchisee Notes5.3 5.1 
Total allowance for credit losses31.9 31.7 
Net long-term financing receivables:
PSAs, net213.8 214.7 
Franchisee Notes, net55.1 55.8 
Total long-term financing receivables, net$268.9 $270.5 

As of April 3, 2026 and December 31, 2025, the net unamortized discount on our financing receivables was $18.8 million and $18.9 million, respectively.
During the three months ended April 3, 2026, the Company began using internal risk ratings to assess the credit quality of its PSAs financing receivables portfolio. The internal risk rating is determined at the time of origination based on the overall creditworthiness of the borrower, with an “A” rating representing the highest credit quality.
Internal risk rating and distributor tenure are the primary indicators of credit quality for the Company’s financing receivables. The amortized cost basis and current period gross write-offs of PSAs and Franchisee Notes by origination year as of and for the three months ended April 3, 2026, is as follows:
($ in millions)20262025202420232022PriorTotal
PSAs
Internal Risk Rating:
A$27.7 $67.9 $41.8 $20.9 $7.2 $1.5 $167.0 
B14.7 41.7 28.8 14.5 5.0 1.7 106.4 
C5.7 19.7 14.5 6.5 2.4 0.7 49.5 
D2.6 5.4 3.0 2.6 1.0 0.4 15.0 
Total PSAs$50.7 $134.7 $88.1 $44.5 $15.6 $4.3 $337.9 
Franchisee Notes
Active distributors$12.4 $20.7 $13.6 $8.8 $5.1 $7.4 $68.0 
Separated distributors— 0.4 2.3 5.3 4.6 10.7 23.3 
Total Franchisee Notes$12.4 $21.1 $15.9 $14.1 $9.7 $18.1 $91.3 
Current Period Gross Write-offs
PSAs$— $0.2 $1.2 $1.5 $0.5 $0.4 $3.8 
Franchisee Notes— — 0.3 0.2 0.8 0.4 1.7 
Total current period gross write-offs$— $0.2 $1.5 $1.7 $1.3 $0.8 $5.5 

Past Due
PSAs are considered past due when a contractual payment has not been made. If a customer is making payments on its account, interest will continue to accrue. The table below sets forth the aging of the Company’s PSA balances as of:
($ in millions)30-59 days past due60-90 days past dueGreater than 90 days past dueTotal past dueTotal not considered past dueTotalGreater than 90 days past due and accruing interest
April 3, 2026$3.3 $2.1 $9.4 $14.8 $323.1 $337.9 $7.1 
December 31, 20253.6 2.0 7.7 13.3 325.6 338.9 7.7 
Franchisee Notes are considered past due when payments have not been made for 21 days after the due date. Past due Franchisee Notes (where the franchisee had not yet separated) were insignificant as of April 3, 2026 and December 31, 2025.
Uncollectable Status
PSAs are deemed uncollectable and written off when they are both contractually delinquent and no payment has been received for 180 days.
Franchisee Notes are deemed uncollectable and written off after a distributor separates and no payments have been received for one year.
The Company stops accruing interest and other fees associated with financing receivables when (i) a customer is placed in uncollectable status and repossession efforts have begun; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) other instances in which management concludes collectability is not reasonably assured.
Allowance for Credit Losses Related to Financing Receivables
The Company calculates the allowance for credit losses considering several factors, including the aging of its financing receivables, historical credit loss and portfolio delinquency experience and current economic conditions. The Company also evaluates financing
receivables with identified exposures, such as customer defaults, bankruptcy or other events that make it unlikely it will recover the amounts owed to it. In calculating such reserves, the Company evaluates expected cash flows, including estimated proceeds from disposition of collateral, and calculates an estimate of the potential loss and the probability of loss. When a loss is considered probable on an individual financing receivable, a specific reserve is recorded.
The following is a rollforward of the PSAs and Franchisee Notes components of the Company’s allowance for credit losses related to financing receivables as of:
April 3, 2026
($ in millions)PSAsFranchisee NotesTotal
Allowance for credit losses, beginning of year$37.1 $14.1 $51.2 
Provision for credit losses11.1 1.5 12.6 
Write-offs(3.8)(1.7)(5.5)
Recoveries of amounts previously charged off0.8 0.1 0.9 
Allowance for credit losses, end of period$45.2 $14.0 $59.2 
Allowance for Credit Losses Related to Trade Accounts Receivables
The following is a rollforward of the allowance for credit losses related to the Company’s trade accounts receivables, excluding financing receivables, and the Company’s trade accounts receivable cost basis as of:

($ in millions)April 3, 2026
Cost basis of trade accounts receivable$436.4 
Allowance for credit losses balance, beginning of year14.1 
Provision for credit losses2.5 
Write-offs(2.1)
Foreign currency and other(0.2)
Allowance for credit losses balance, end of period14.3 
Net trade accounts receivable balance$422.1