Earnings Call: H1 2021

Aug 12, 2021

Ladies and gentlemen, welcome to Tektronik Industries 2021 Interim Results Announcement Analyst and Investor Webcast. In this interim results webcast, TTi will share the updated performance for the 6 months ending June 30, 2021. Before we begin, let me introduce to you the key management of TTi with us today. They are Mr. Horst Putwill, Group Chairman Mr. Joe Galli, our CEO and Mr. Frank Chan, our CFO. Mr. Horst Podwill will first give us his opening remarks. Then Mr. Frank Chan will walk us through the half year financial results, followed by the business overview and strategy by Mr. Joe Galli. Without further ado, let me pass the time to our Chairman. Mr. Pudwill, please. Thank you for attending TTi's 2021 interim result announcement. Given the continued public health concern and We are presenting our interim result announcement via webcast. I'm pleased to announce that we delivered another set of outstanding results for the first half of twenty twenty one. We achieved exceptional revenue and net profit growth of 52% 57%, respectively. We continued strengthening our global leadership position, growing in every business unit in all geographic regions. At TTi, we have built an exceptional world class team headed by our group CEO, And we would like to recognize the outstanding achievements for delivering strong results. We are proud of the Board Strategic decisions we have made over the past 18 months to position ourselves for the strong second half of twenty twenty one And for the year ahead, Frank Shan, our group CFO, will now provide you with a 2021 first half financial overview and Joe Galli, our Group's CEO We'll cover the business overview and strategy. I will now hand over to Frank Shan or Joe Galai for the presentation. Thank you. Thank you, Mr. Chairman. First half twenty twenty one results have been really extraordinary. Our sales grew by 52 percent to US6.4 billion dollars an increase of close to US2.2 billion dollars When compared to the 2019 first half revenue, our sales went up by 71%, while Milwaukee was up 84%. Our revenue growth being driven by our continuous investments in new products, strategic inventory build to serve our Customers with consistently high service levels, our flourishing world class e commerce capability delivering exceptional results Together with our bold investments in manufacturing, distribution and productivity throughout our global operations. Gross profits Increased it by 54.3 percent to close to US2.5 billion dollars with margin further improved it for the 13th consecutive period Launching margin accretive new innovative products and categories, mix management, volume leverage, Effective cost control and high level of operational and production efficiencies. EBIT increased by 57.4 percent to US572 million dollars with margins improved by 30 basis points. Our net profits increased by 57.9 percent to US524 million dollars Net profit margin also increased it by 30 basis points, both outpaced our sales growth. Earnings per share increased by 57.8 percent to approximately US0.2862 dollars per share. The Board declared an interim dividend of HKD0.85 per share, representing an increase of 60.4% over last year and a Payout ratio of 38.3%. Our key financial metric has always been EBIT and net profit increase must outperform sales growth. As earlier mentioned, we have again been able to deliver this target. Over the 13 periods under review, Sales CAGR was at 13%, while our EBIT and net profit delivered a compound annual growth rate of 20% 26%, respectively. Power Equipment division, accounting for 91% of the Group's revenue, increased it by 55.3 percent to US5.8 billion dollars Our flagship Milwaukee business delivered an astounding growth of 64.1% globally. This record growth was mainly from innovative new products launched, our focus on end users' commercial and strong commercial execution. Our consumer power suit division also performed exceptionally well across all brands and delivered solid double digit growth in the first half, Led by the launch of new high powered Ryobi Brushes Tools and our global leadership range of battery powered mowers and handheld outdoor equipment. Operating profits of this division increased by 57.1 percent, with 10 basis points margin improvement as compared to first half Floor Care and Cleaning Business account for 9% of the group's revenue, We increased it by 25.3 percent to US574 $1,000,000 We have operating profits increased it By 90% to US6.8 million dollars and margins improved it by 40 basis points. We are highly encouraged by the traction We will continue to build our high potential cordless 1 power systems together with our strategic cover washers and formulas, Setting stage for future strong performance. From a geographic perspective, all regions contributed to our impressive revenue growth. North America, 76.4 percent of the group's revenue grew by 50.2 percent Europe, 15.9% of total sales grew by 62.3%, while rest of the world grew 50%. Our strong first half results was driven by our self funded strategic SG and A Investments. SG and A as a percentage to sales was at 29.7% as compared to 29.5% same period last year. We have continued to invest in high speed new product development, distribution, market expansion, capturing additional market share, while we've Also been able to leverage our volume and delivered an 8 basis point savings on non strategic SG and A. R and D spend was at 3.1 percent of sales, a 20 basis point increase over last year's same period. Investments in innovative and technologically advanced new products allow us to achieve sales levels in excess of our competition And continue to fuel the growth momentum and margin expansion. Net finance cost Was at $8,600,000 approximately 0.13 percent of sales. The increase was only $1,500,000 over last year's same period, While our sales increased by US2.2 billion dollars We firmly believe we can continue to deliver very effective and efficient finance to support our future growth. Effective tax rates remain comparable to last year at 7% as compared to 6 point 9% last period. In view of the global tax developments impacting traditional tax plans, We have been consistently improving our tax structure and plans to enable us to continue to deliver this very effective tax rates going forward. Our balance sheet remains healthy and strong with shareholders' equity now in excess of US4.2 billion dollars as compared to US3.5 billion dollars same period last year. Net current assets was at approximately US2.4 billion As at June 30, 2021, Our gearing was at 14.8% as compared to 4% same period last year. The increase in gearing at interim mainly due to our Through global supply chain constraints together with our US128 $1,000,000 additional CapEx investing in manufacturing, Productivity and distribution to allow us to continue to deliver strong growth in the future. We believe gearing will remain low by end of 2021. Total working capital as a percentage to sales was 18.3% as compared to 15.8% same period last year. The increase of $874,000,000 in working capital was a result of our continued strategic cordless inventory build To support our above market growth, to serve our customers with consistently high service levels and to insulate us from potential Inventory days was at 136 days. The increase in inventory, however, been partly financed By the increase in payables, which was at 125 days as we've been able to leverage our volume increase, order visibility Financial strength to improve our trade terms. Receivable days also improved it by 9 days to 56 days. CapEx for the first half amounted to US245 $1,000,000 an increase of US128 $1,000,000 over last year's same period, reflecting our bold investments into the future. We have invested in manufacturing, productivity, distribution throughout our global operations As we strategically build up our working capital and additional US128 $1,000,000 CapEx spend, Total net debt increased by US485 million dollars However, we have continued to maintain a very healthy Cash balance of close to US2.3 billion dollars Capturing the current low cost environment and working capital financing, We've increased our floating rate debt portfolio to approximately 75% of our total debts. As most of these working capital financing are of a shorter tenure, short term debts now account for 68% of our total However, we have already initiated to arrange debts with longer dated tenure to finance our long term capacity investments We will also continue to optimize our portfolio leveraging our financial strength and current low cost environment to support our growth for the years to come. And now I will pass the presentation to our CEO, Mr. Joe Gallai. Hi, I'm Joe Galli and I am beyond excited to share with you the results of TTi's first half 2021, along with some highlights that you can expect from us in the months years to come. People continue to ask us what we think is going to happen Near term, long term based on the virus, other issues that we face in the world today. And our response is Very simple here. We believe that the best way to predict the future is to control it, to create it, as Lincoln said. And this is exactly what we intend to do. We are building a company here that will flourish in good times and bad, Whatever the overall overarching circumstances are. And that's exactly what we have done in 21 and we will continue to do. Now greatness is an elusive quality among companies and It takes a lot of courage to be great. As Teddy Roosevelt famously said, we must dare to be great. And for TTi, greatness means not only building a powerful company with outstanding financial results, but also a company that cares deeply about ESG. And you're going to see in our highlights today that we are incredibly obsessed with And focused on doing the right things for our business, for our shareholders and for the planet. And I'm excited to share that with you as we go. Okay. First half, Can you imagine a power tool company growing 52 percent? We were at a cool 2 point $188,000,000,000 in sales in the first half of twenty twenty one. And the Milwaukee business, which is our flagship high margin professional business, It was absolutely up 64%. Now what makes these numbers even more extraordinary Is when you look back at our performance versus 2019, you'll see even more incredible numbers. In fact, versus 2019, we grew the company 71%, and Milwaukee 84%. This is meaningful because many of our competitors actually Saw their sales collapse last year in the first half while we grew. So we think it's very important that you look at a 2 year track record here in terms of sales results. And I think up 71 for the company, up 84 for Milwaukee is pretty darn good. One of the There's been some misinformation that was introduced by our large competitor in the U. S. And it's now in the public domain. And I intend to correct some of this misinformation today. For example, our largest competitor actually said that TTi is Really good in North America and Australia, but the rest of the world, not so much. And just so our investors understand, our European theater of operations is Flourishing. In fact, I think Europe may be the biggest opportunity we have in this company. And Europe was up 71% when you compare Versus 2019, 71 percent. Of course, rest of the world also grew nicely. So you need to look at TTi not as a U. S. Or To report that our floor care business contributed nicely to our first half this year. Floor care was up 25.3%, that's global floor care. It's a direct result of a lot of hard work and a lot of new products we've launched in the fiercely competitive floor care market. But when you take Floor Care out, you have to remember that Power Equipment, our tool business grew even more impressively, actually up 55%. All in all, it's pretty astounding to look at what this company was able to deliver in the first half of twenty twenty one. When you look at our P and L, You see not only sales exploded at 52%, but gross margin improved yet another 58 basis points. We invested some of that gross margin as our strategy As we've stated consistently with our strategy, we've invested some of that back in strategic SG and A. Our profit grew at a faster rate than sales. On EBIT line, we were up 57.4 percent and net profit up a cool 57.9% in the first half of twenty twenty one. One of the things that we obsess over in this company is our gross margin improvement. We believe It's critical that we outgrow the market on the top line while we continue to improve gross margin at a pace of roughly 50 basis And actually, we exceeded that target in the first half growing gross margin 58 basis points while we grew. What this tells you Is that the market share we're capturing, and believe me, we're capturing a lot, is not a result of us cutting price and denigrating the quality of our brands or our products in your mind to the consumer, we are growing at premium prices and growing like crazy because our products are demonstrably superior to our competitors. We have technological advantages that no one else has and it's you can clearly see that in a company that's growing at this rate with gross margins consistently improving. And in fact, talk about consistently improving. We have now improved gross margin in the first half, 13 consecutive years. Can you imagine? 13 consecutive years, we've gone up on average 50 basis points a year in terms of gross margin. This is essential for our strategy because we take Some of that gross margin improvement and we invested right back into what we call strategic SG and A. So make no mistake, we are ruthless about squeezing Non strategic SG and A, unnecessary overhead, administrative overhead, we squeeze it like crazy. We did again in the first half, where we were down 8 basis points. But In the strategic SG and A area, we invest like crazy into new products, new geographic expansion opportunities, More sales coverage, marketing, whatever we end user conversion, when we identify strategic areas of investment, we take Some of that gross margin improvement and we invest it right back into our future. And this bodes well for TTi over the next Over the back half of this year, over the next 5 years, over the next decade, because these investments are going to pay off like crazy in the months years If you look at our working capital in the first half, you clearly see a very different strategy than many of our competitors. We actually have weaponized inventory. We believe strongly in our ability to grow this company as we go forward and that's why we have built High levels of inventory so that we position TTi to grow, continue to outgrow the market in the back half of twenty twenty one and on into 2020 2 and beyond. So yes, we added 34 days of inventory. We had 136 days of inventory finishing up in the And that's exactly what we planned so that we would be in a position to take more market share and serve our customers around the world. At the same time, our marketing sales companies globally have been incredibly disciplined in managing receivables. That's why we have Virtually no bad debt in this company. Our days receivables actually went down from 65 last year in the first half down to 56 days this year. And we one of the reasons is we just we don't go into countries where there's high risk, bad debt risk. We are very, very careful and disciplined about this Because anybody can book a sale, but if you don't collect the money, it really is not a sale and it shows up later. So we're as you can see, our team is doing a great job with this. And When you look at payables, with our payables performance shows you and we were up from 109 to 125 days payable. So we're paying our suppliers in 125 days. And this shows you that our suppliers are working very closely with us to enable us to build the inventory we need To continue to capture market share and grow this company well above the market. And we're very grateful for our supplier partners. We work very closely with them. We've grown with our suppliers years years years now in a way that bodes well for both TTi and the supplier base. So, working capital as a percent of sales still finished under our goal of 20%. And we did it the right way. We don't cut inventory off in the middle of June So that we can impress Wall Street and investors with the lower days of inventory. We are building this company to win in the market. And we still had outstanding working capital as Percent of sales. Okay. One of the things I mentioned upfront is TTi is excited to embrace ESG as a corporate obsession. We you will see we are maniacally focused on being a global world class leader When it comes to ESG, we are we have many, many initiatives in the company that we've embarked on that will help us achieve And exceed world class standards in ESG. You will see many examples as I go through this update in terms of the products, The disruptive products we're introducing that will allow us to help save this planet and put put the society in a better place. But let me give you a big example. So we are going to be the global leader in battery powered lithium mowers, whether it's riding mowers or push mowers. And we decided to build our battery lawnmower factory in the United States so that we wouldn't have the ocean freight issues that are A very bad thing for sustainability. And we also think just building that product close to market This is a real live ESG example, and we have dozens and dozens and dozens of examples that we'll share with you As time goes on here, as we roll out our ESG initiative. But you should feel free to ask questions and follow-up with us. Many of you want to discuss ESG and we would love to share with you why we are so far ahead of our competitors here that this will be yet another advantage TTi Has versus the market competitors that we go up against. Okay. Let's shift gears to talk about Milwaukee. It's hard not to be impressed with our global Milwaukee team here at TTi. Milwaukee grew 64.1% in the first half. Can you imagine? 64% in the 1st 6 months of this year. We and contrary to what our Largest competitor suggested a couple of weeks ago, we we yes, we're we're doing a great job in North America. That part, our competitors got right. But Europe was up 90% in the first half this year in Milwaukee, 90%, which ought to dispel this notion that we're not strong Outside the U. S. And Canada. And of course, rest of the world was up 58%, which is not bad. We're very proud of The global build out our Milwaukee team has put in place and we intend to aggressively take market share in the pro market around the world, Not just in the back half, but for many, many years to come. Milwaukee is pursuing aggressively pursuing a disruptive strategy of Verdi, legacy power sources to clean lithium battery powered tools. And the three areas of attack here are all areas that really were created in World War II. These are World War II era Technologies that we are now attacking and we intend to launch this global revolution away from these traditional power sources, Which are not good for the environment and into battery powered lithium. So the first power source that we're going after is the corded tool. Yes, the corded plug in the wall AC tool is still in the professional arena, still a massive part of the market. In fact, this is an example. This chop saw, 99% of all these chop saws around the world are still corded. 99% and there are there There's so much opportunity in front of us to convert just a corded power tool to battery powered tools. And we are on the vanguard of this revolution and we intend to be very aggressive Liberating people from these dangerous cords where there's electrocution risk and all kind of other Factors that inhibit productivity on job sites. And we intend to move people to clean lithium powered products. This job saw is an amazing product. This will actually cut With the same power, speed, torque as a corded version and the life is actually longer on our cordless, on our battery powered chops Than traditional units. So this is yet another example of the many, many different corded products that exist on job sites today that we intend to make cordless. Let me give you another example. This is a more striking, more crazy example of how much opportunity there is in front of us. So the nailer, everyone has seen that the residential construction arena globally has grown nicely And we believe that ResCon will continue to grow here over the next 3 to 5 years. So if you are a residential construction Contractor. You need a device called a nailer. The nailer is used, of course, to fire a nail through 2 pieces of wood to attach them together So believe it or not, the technology that's ubiquitous today on job sites all over the world is the pneumatic air Naylor. And I want you to think about this. In in in 1944, Howard Hughes actually hired an engineer To help him build his spruce goose wooden aircraft. And this engineer came up with the idea of a pneumatic nailer instead of a manual version. And so we're talking about technology that's 75 years old that's still present everywhere on job sites. And when you have A pneumatic nailer, it's not you don't just have a nailer, you have to have a nailer that attaches to a hose where you have the compressed air to fire the nail. The hose, which is long and will be and heavy, connects to a gas powered compressor. So you have to pull the cord on a gas Compressor, which creates a generation generates electricity, which compresses air in with a pump device in a compressor and then fires the air through the nail. And of course, you need your trusty gas can because those trips to the Exxon station are a requirement all throughout the day as you're framing houses. So can you imagine this technology is World War II vintage. The noise level of this technology is deafening. We have literally noise ordinances that are trying to control this stuff. And the fumes And the maintenance required and just the weight, the sheer weight of driving these things around is madness. So we are leading this revolution to Cordless nailers. This is the product on the right is our latest introduction. It's a framing nailer that's selling like crazy. And we intend to be the global leader in non compressor powered, non pneumatic nailers. These are lithium battery powered nailers. There's no gas cartridge. They're just clean burnings, ultra quiet nailers that will revolutionize the way contractors build houses. So we're going after the AC market, we're going after the pneumatic market and of course we're going after the petrol or the gas market. Milwaukee will be our brand that targets the Professional landscaper. And this is a massive opportunity that today this market is largely gas and petrol, believe it or not. And in Milwaukee, we won't make the mistake of having any gas products under this brand. Milwaukee will be pure lithium battery powered cordless. And just think about this for a second. You have products here like a chainsaw where historically If you're using a chainsaw and you're doing any kind of trim work, you have literally the gas engine in your face and you fire these things up And you have the fumes coming at you along with the other debris. And so every time we develop a cordless version To eradicate this gas nightmare, it enhances productivity. It's great for sustainability. And it's really cool to use. I mean, This is a one handed chainsaw that will out cut a gas equivalent. And for the pro landscaper, this is a real breakthrough. Now we have, in the Milwaukee family, we have a roadmap of a number of high performance Battery powered lithium battery products. Next year, in fact, we will launch a lawnmower, a Milwaukee branded lawnmower It's battery powered. This lawnmower not only will blow away any of the battery mowers that are on the market today, but Actually, out cut outperformed the gas mowers, the best ones we've tested all over the planet. We'll roll us out this year. And I think We intend to see Milwaukee on a vanguard of this against this once in a generation revolution stampede away from filthy gas Polluting power sources to clean burning cordless. Today, we are the global leader in full size Cordless, pro cordless with Milwaukee M18, our full size cordless system. This slide, though, is misleading because in 3 years, You will see double the amount of cordless products on this line. I have to get we have to shrink the tools down to a smaller size. We have so many new products in the pipeline, it will blow your mind. And the idea here is to get people away from the cord, the pneumaticos, the petrol, the hydraulic products are still in use And to liberate the professional user into something that makes sense for not only for their productivity, but for ESG for sustainability. Milwaukee is already the global leader in subcompact cordless. Subcompact is critical because you have In full size cordless, you have power and runtime concerns. But in many cases, because our technology is so advanced and our electronics is so advanced, We're able to miniaturize or to shrink up our product and make it much lighter and smaller and easier to use, less unwieldy. And this is Creating a massive opportunity for us with a professional user. Let me give you the latest example here. This is Our brand new revolutionary subcompact blower. This little device is actually a super powerful blower for job site cleanup in Take places, in high places, etcetera. And as we develop this, the end user reaction to this is unbelievable. People can't they can't believe the power And the convenience of a blower that's literally 1 handed and super compact. But we think subcompact It's a vast opportunity and this is a complementary range to full size. So many end users, many pros will buy a whole fleet A full size cordless products, but they complement it with a subcompact line. And we have a lot of these subcompact products That will end up in their fleets. Here's another really cool product. This is the audit we think the automotive aftermarket and the whole transportation arena It's massive. Right now, it's very difficult to buy a used car in most any country. You can't rent cars. You can't buy used cars. Cars are scarce and so people are repairing cars at record levels. This is A big opportunity for DIY Ampro. One of the many products we have for this transportation arena is this really cool underbody Worklight. So this device actually has 2 magnets. One magnet here is what you attach to the bottom of a car or truck Whatever the work surface is. And then the other magnet is on the side. And so as you remove a lug nut or a bolt, you can instead of it Dropping on the floor into a greasy bucket, you just stick it right here in a magnet and you can control this work activity. So As we showed users this sample, they didn't want to give it back. The auto mechanics just fell in love with the idea of this. And remember, it's the same battery we have in all of our other Subcompact products. Let's just say we think the Subcompact family of Milwaukee has vast, Vast opportunity for growth. By shrinking down traditional power tools into these smaller sizes, You make tools safer, you make them less unwieldy, you enhance productivity in many, many ways. And it expands The market because many users are saying now they want a full size product and a subcompact product for those applications where size and weight matters. Our MX cordless equipment series is flourishing around the world today. This is the first ever Line of equipment. This is real live equipment that's not powered by gas or pneumatic compressors, etcetera. We are launching a brand new backpack vibrator. This is to for the commercial contractor, the concrete the masonry market, So that you're able to pour super smooth concrete surfaces, whether it's for roads, bridges, What have you in with the infrastructure boom that we're about to see globally, this product is just in time and it hits It's exactly what the users are looking for. And so this vibrator will give gives us an expanded fleet of MX Equipment products. You have to remember, most of these equipment products today are powered by gas, which is terrible for a job site. And Try to use a gas cutoff saw indoors to do masonry work. It's madness, because the fumes and The noise is deafening. So we have a more quiet, much cleaner range here of equipment. We expect this to be a multibillion dollar platform for the company long term. And we're enormously excited about the reaction we're getting from the end users as we share with them the MX Fuel series. Okay. So shifting gears in Milwaukee, our Milwaukee accessory business is flourishing. We are Rapidly expanding our Milwaukee accessory line with one new leadership breakthrough product after another. This will be a $1,000,000,000 platform on its way to 2,000,000,000 Long term, we are incredibly excited about the management team we've assembled here and the new product ideas we have here in accessories. It's just This is another great way to enhance the performance of cordless products because if you design the right accessory, these accessories will allow the tool actually to have longer run time And extended battery life. And that's the obsession in our company is to try and make the cordless experience better and better every year and far better than AC or pneumatic or gas. We also find that the mechanics hand tool market globally Is vast, full of vulnerable competitors and we intend to attack this market aggressively. So Mechanics' hand tools are used in in 2 main areas. 1 is the transportation arena, whether you're repairing a submarine, a a plane, a boat, a car, a motorcycle, A dump truck, a bulldozer or in the construction side where you're assembling buildings and or factories and these mechanics hand tools are pervasive in these Applications in. We have a mechanics hand tool line that many professionals prefer over the incumbent lines Today and we're going to expand this range aggressively here as we go forward in the second half this year and on into the next 3 years. Our PACOUT Storage system has created this cult like following. So you can't believe what's happened with professional users when it comes to storage. People today view PACOUT as a superior solution for mobile storage, also for stationary storage and In terms of vehicular storage, as in your van or your pickup truck, this the PACCAR system is a perfect way to store Your tools, accessories and fasteners and other things you would need on a job site. And in order to propagate the system even further, We're launching a series of new PACCAR products this year. This rolling chest is a super cool way to store large, heavier cordless power tools. We have these deep organizers we're launching now. So whatever materials or tools you have that require more depth, this will provide that opportunity. And there are dozens and dozens of additional PACOUT storage solutions that we're adding to this system. Remember, all these PACOUT products interconnect, So an end user can configure his or her ideal storage solution, whether it's mobile, vehicular or stationary storage. And we expect PACCAR to be another $1,000,000,000 plus on their way to $2,000,000,000 long term opportunity for Milwaukee and for TTi. Safety equipment, jobsite safety is growing in terms of popularity and In terms of government support and requirements, the OSHA's of the world, Occupational Safety and Health Association Organizations around the world that police jobsite safety are insisting on better and better PP and E products, personal protective equipment products. This has nothing to do with the virus. This is a a trend that will continue. It's continuing. It's it's it's This trend is growing like crazy in Europe and North America, but all throughout Asia, you're seeing more and more focus on jobsite safety. So we have pioneered a unique range of hard hats That we'll actually make in the USA. These hard hats are loaded with features you can customize based on your application. And these hard hats will be The cornerstone of a full range of personal protective equipment that we will roll out under the Milwaukee brand. We have We've begun launching some of these products and the reaction in the market has been incredible. And this will be yet another Multibillion dollar platform in our company as time goes on. We think there's so much room to improve jobsite safety, which is the right thing to do. It's a great business, but it's the right thing to do to protect the workers who use our products and really demand To have safer work environments in the future. Okay. So look, Let me shift gears and talk about Ryobi for a bit. There's a couple of comments here that I have to clear up. Our largest competitor did suggest 2 weeks ago, they stated that they have a DIY brand that's a better brand than Ryobi. And this is, of course, absurd. Ryobi is 3 times the size of this brand that our competitors are referring to. And Ryobi is a global brand, a competitive brand is in 2 countries. And our people that run Ryobi around the world were Quite upset about this misinformation. In fact, they asked me to show you this video that they put together just to show the globality And the scope of the Ryobi brand around the world. We're passing the phone to our friends with the best maple syrup who love hockey. Hi from Rovi, Canada. We're passing the phone to our friends who love fish and chips And Big Ben. See you, Jay. Hi from Roy over UK. We're passing the phone to the country who's home to ABBA. Good day from RYOBI, Australia. Hang on. Let's get that. We're passing the phone to our friends. From Rovi New Zealand. We're passing the phones to our friends who love football and are home to the Statue of Liberty. We're passing the phone to you, Ryobi Nation. Okay. So look, we are very fortunate. We have an outstanding team Ryobi product managers, sales executives, logistics people, etcetera, around the world. And make no mistake, Ryobi is the strongest DIY brand in our industry by far. Ryobi is a brand that has an overarching cordless platform between power tools And outdoor equipment and floor care and cleaning products and many, many other subsets. And we intend to build on that global strength with Ryobi. The other misinformation that came out a couple of weeks ago is that this whole idea that the DIY market is now flattened out, While the pro market is the only market that's growing, this is, of course, highly inaccurate. The DIY market has massive opportunity in cordless. Of course, the gas DIY market is shrinking. The AC market is down and so is pneumatic. But the cordless DIY market, we think, has All kinds of potential. And one of the things that we work on at TTi is creating the newly minted do it yourselfer. So many people are first time homeowners. They're finally they're graduating from university or they're moving into the workforce. And these newly minted homeowners can become newly minted DIYers if you show them the Right opportunities and the right ideas. And that's exactly what we're doing. For example, as I mentioned earlier, the automotive aftermarket right now Is growing like crazy because there's such a dearth of used cars, new cars, etcetera. And people have rediscovered The notion of repairing a car, in the old days, we used to call these people shade tree mechanics. But make no mistake, the DIYer is spending a lot of time and money repairing cars, trucks, etcetera. And Ryobi is uniquely positioned to serve this DIYer in the automotive aftermarket. For example, This is an extended reach ratchet, which these automotive enthusiasts love. Here's a impact wrench For high torque applications in the automotive aftermarket arena, here's a die grinder, which is ideally Designed for many automotive applications. And in fact, we have an incredibly exciting line of DIY Automotive aftermarket products. One of my favorite is this little polisher. This is a super lightweight polisher for If you want to wax or polish attract the car, the camper, the glamper, the motorcycle, boat, Trailer, you name it. This is perfect. And of course, the battery pops out of this device and works in all the other DIY automotive products. So we see just the automotive aftermarket alone is an enormous opportunity here that we intend to capitalize on. But there's also the DIY market is also flourishing when it comes to nailers. I mean, remember, If you're a new limited DIYer or if you're a homeowner and you want to do any kind of work around the house, in the old days, having to get that gas powered compressor And the hose and all that noise comes from a gas powered device versus buying a Ryobi, we call Airstrike cordless nailer that's Super quiet, super powerful and is selling like crazy today. This is another example of where we think we can drive more DIY adoption here in the months and years to come. We have now introduced 22 new to the world, brand new, high performance RYOBI DIY brushless products, we call these HP high performance brushless. Why? Because We think this is a way for us to catalyze DIY activity. We could show a DIYer that instead of having to hire a contractor or instead of You can go to the Home Depot or Bunnings or one of our other global customers And you can buy the right product for the job and in fact attack these DIY projects in your home. So we do not think that the DIY market in any way is mature. In fact, there's an old saying, there's no such thing as mature Markets, there are only mature managers and we don't have those here. So we expect to grow this space in the future. Okay. Let's now turn to outdoor, which is something we're very excited about. We think the outdoor Arena, around the world with a DIYer and a landscaper is a massive opportunity to really achieve greatness and sustainability. And also Convenience and productivity and value, there's just there's so many advantages to battery powered outdoor power equipment versus gas and petrol. It's and there's so much upside here, you can't believe it. So our team did a great job in the first half this year. We grew 57.8% And battery powered outdoor equipment. But let me tell you, you ain't seen nothing yet. This is just the beginning. When you see what we have coming over the next 3 years, It'll be clear that we that our quest for greatness here in the outdoor market is alive and well. Now Let's remember what's going on around the world today. Take the U. S. In the U. S, California has already introduced legislation Proposing that all gas powered outdoor equipment be outlawed in 2024. Can you imagine? GAAP means gas, lawn mowers, string trimmers, hedge trimmers, Snow blowers, blower vacs, chainsaws, and all the other gas products that the gas outdoor companies have propagated, They'll be outlawed in California. Once California goes, it is our view that many states will follow suit and try and do their part in this Green movement in trying to save the planet. Illinois has got legislation similar to California proposed. And one of the fastest growing Trends we see with municipalities is that municipalities are increasingly sick and tired of the hideous noise you get from a gas Blower vac or a gas lawnmower, you get up in Saturday morning and your neighbor starts firing away with that gas blower And you want to go nuts. And so you have literally municipalities outlawing the use of gas blowers and other gas outdoor power equipment in the US. This is going on all over the world. This trend is going to be a stampede. And we are believe me, we are going to accelerate the pace in which this happens. We are going to be the disruptors in this space. So the thing that In this space. So the thing that is that we think is a massive opportunity in addition to eliminating Fumes and pollution is to work on noise. So we have pioneered a concept called the Whisper series. These Whisper products Led by this blower vac here. These are super quiet. Noise pollution is an issue too. It's not just the fume pollution, but noise pollution is an issue. And these logos, you turn them on, you don't even know they're on. They're super powerful. It's just that our acoustical engineers have really Achieved breakthrough level advancements when it comes to controlling noise, not only the decibel level, but also the tonality of these things. Some of these the tone of some of these devices is so bad, it just it hurts your ears, you want to buy earmuffs. So we are Launching a whole line of Whisper Series outdoor power equipment, all powered by battery, lithium battery, no petrol, no gas. And we think this will contribute to the literally the once in a generation revolution that we want to ignite From polluting noisy gas products to clean lithium battery products. This is an incredibly exciting Unique development here at TTi. Additionally, we have established our company as the clear global leader when it comes to battery powered lithium Line mowers, whether the mowers are push mowers or riding mowers, we I intend to continue to be on the vanguard here of this space and we will lead the global charge away from gas and corded to Lithium battery powered units. And what's mind boggling to us is that our largest competitor is literally buying a company now That has over 150 different gas mowers. Can you imagine? Our competitor is going to have 150 Lawnmowers powered by a gas or petrol engine with all those fumes, all that noise. And all we're doing is going after we want to be the Tesla of the We are going after the battery powered versions of these things. The reaction with our end user and with our retail partners has been phenomenal And for good reason. It's about time that we eradicate the pollution that comes from these gas line mowers all over the world. It's about time. So let me tell you another exciting area that nobody none of our competitors ever really admit and talk about. And this is the category of the snowblower. Now, I grew up in Pittsburgh where it snows a lot. And so I'm very familiar with how dreadfully bad And hideously smelling that the snowblower products are today. So today, snowblowers are largely gas powered. In fact, our largest competitor has over 40 gas snowblower products, 40 gas, different ones, 40. And so we are rolling out and let me tell you what happens with the gas snowboard. With a gas unit, because the mufflers are always located on the top of these products, the fumes come right out at eye level. The fumes mix with the snow. That's why when you use a gas snowblower, the snow goes from white to black. That black is the emissions, the pollution that comes out of A gas snowblower. And believe it or not, snowblowers are like the least regulated gas powered equipment product you can find. There are no regulations. So the gas manufacturers have gotten away with murder here for a long time. And if you use one of these, you smell like you just Not the coal mine. The pollution combined with the moisture in the air and the snow you're blowing in the ice, It all mixes up and it's just a hideous toxic cocktail. And so you end up after After you clean out the driveway, you go in the house and your family kicks you back out because of the smell. It's I mean, this is an awful thing. So we have Developed a range of battery powered lithium snow blowers. This is our 2 stage unit. So this is our high end unit. It will Throw snow over 50 feet as good as any gas unit. It's much more quiet. There's no cord to pull. Of course, there's no You don't have to keep filling that up with gas. And your neighbors will thank you because the noise level on these things is so much better. And this is all part of our ESG movement. We could sell gas snowblowers. We could sell them like all the other competitors do. But we're going to be Tesla here. We are going to pioneer The battery side of this market. And so we have 6 snow removal products we're rolling out this year. And I can tell you, we intend to be Leaders here, we will be on the vanguard of battery powered snow blowers on into the future. So this is yet another example of our obsession here With ESG and with moving people from gas to battery. Let me give you another cool example. Okay. So, this device is called a post hole digger. This is a giant auger that's used If you're installing a fence around your farm or garden, you use a postal digger to dig large diameter holes in the ground so that you can install the fence. Okay. The problem is most post hole diggers that are sold, virtually all of them today are gas and the engine is right at eye level. When you turn these things on today, the fumes would come right into your face. Can you imagine using one of these things all day? You need 3 levels of hazmat suits to protect you from the fumes. And then so we literally have a cordless version, cordless series of these augers, these postal diggers and these things are So these things are super powerful. They're just as fast as gas. They last just as long as gas. They make one half the noise or less. There's no maintenance required. And we're selling these things like crazy. We can't believe the reaction here. But think about it. Would you really want those fumes in your face if you're a professional landscaper installing a fence or if you're a DIYer And you're doing any work in the yard that requires post hole digging, you would love to have this. So there's a lot of opportunity for us to eradicate gas. Another example. Today, pressure washers, which are terrific products for cleaning in and around the house, car, etcetera, pressure washers Powered either by gas engine or by ACORD AC. Both power sources, of course, should be eliminated. The gas pressure washer especially, but even a corded pressure washer, think you have all this water with an electric cord. It's unwieldy. It's hard to use. So we are pioneering pressurized power cleaners. We haven't got to the PSI levels of pressure washer yet, But we will get there. We are working on really cool technology here to get rid of the gas engine in a pressure washer or the cord. This product this 40 volt power cleaner is a great example and it's it works terrific and you will see us continue to push the envelope here in technology when it comes to using So just let's put this in perspective. Next year for 2022, we will launch at TTi 73 new battery powered outdoor products. 73. We're not out buying a gas lawn mower company. We are pioneering Organically developing lithium powered outdoor equipment that we think will help eradicate this dreadful polluting issue of gas Outdoor Power Equipment. And let me assure you that this is just the start. Between Ryobi and Milwaukee, our attack On gas outdoor power equipment is just beginning. We intend to be global leaders in the pro landscaping arena and in the DIY side With these products that we're launching. Okay. Finally, I want to acknowledge our Flour Care team for delivering An impressive first half in twenty twenty one. I know many of you have been frustrated with our inability to turn FLIRCAR Into a contributing business where you can be assured that we now have an excellent team globally. We have a great product road in front of us And we have results. In fact, 25% growth in first half is excellent. And okay, the profit levels are still too low, but we did Almost double the profit in the first half this year and we are really excited about what we have in our future in floor care. Our carpet washing and formula business It's particularly exciting. We are taking market share here. We are developing products that outperform what's on the market today. And we're going to enhance this program with our brand new spot cleaner series. We'll launch this spot cleaner first. But this spot cleaner element of this carpet washing business is significant. We have it we participated poorly here at BEST over the years. And so we now have a leadership product. We have more on the way. And this bodes well for our floor care business because carpet washing It's a significant part of the business and the formula aftermarket here is a compelling financial contributor to the We also are continuing to push the envelope once again on lithium cordless powered cleaning and floor care products. Whether it's the Hoover brand, the Vax brand or one of our other brands of Floor Care, we really think that we can get people away from using a cord when it comes to a cleaning product And into Cordless Inn. This is yet another example of that overarching theme in the company where we just We really believe this whole clean tech notion, this whole ESG notion can pervade every part of our company, and Fler Care is no exception. And we're very excited about what's coming here To see from us in the second half this year and over the next 5 years. But what the important takeaway here is that our future has never been brighter at TTi. No matter what the economy does around the world, no matter how long it takes to eradicate this terrible virus that we've all had to deal No matter what the geopolitical issues are that we face, we feel like we, as Lincoln said, the best way to predict the future is to create it. And that's exactly what we're doing. And remember Teddy Roosevelt said, one must dare to be great. You have to have the courage to pursue greatness. Greatness is elusive. And If you see how hard our team is working around the world, if you saw the talent level of our engineers, our product development people, our logistics team It performed heroically in the first half and really over the last 18 months. You would see why I'm so Enthusiastic about our future. We are going to have a good second half this year. We will outgrow the market for sure. We will outgrow the market in 20 22, we will launch more new products than all of our competitors combined and we will not fall into this trap of trying to dress up Our financial results by adding gas, power equipment that's got a short term future and really all it's doing is harming our planet. So, we think, like I said upfront, we think greatness in TTi, it will be a function of outstanding continually improving financial results While we achieve greatness in ESG and trying to help society and this planet get to the right place. So thank you so much. And by the way, I I look forward to the questions from our investor community and all of our analysts. We have no limit on investor questions. So you guys fire away. I can't wait to talk to you after you go through this review. Thank you. Thank you for your participation. And this concludes today's interim results announcement Analyst and investor webcast. You may now disconnect.