Good morning, ladies and gentlemen. I would like to welcome all of you to TTI's Group 2018 first half results announcement. The group delivered an unprecedented revenue increase of approximately 20%, 19.1% to be exact, in the first half, while driving other period of record profit and gross margin. We have seen nine consecutive periods of revenue growth and consecutive period of gross margin improvement, which is a true testament of the group's strategy. I will now pass on the floor to Mr. Joe Galli to explain in details our strategy a little bit more detailed.
Yes.
For Mr. Frank Chan, our CFO, to go on the financials.
Thank you, Mr. Chairman. Frank, why don't you start with the good news? By the way, there's no bad news, I start to disappoint the sell-side analysts that may have written a few things they regret. Frank, would you start, please?
Yes, ongoing good news. Thank you, Chairman and Joe. As Chairman highlighted, again, another set of record first half results for 2018. Our sales increased by 19.1%, to be exact, to over $3.4 billion. This outsized performance mainly driven by the strong organic growth momentum of Milwaukee and RYOBI ONE+, as Chairman pointed out, which significantly outpaced the power tools industries, delivering robust double-digit growth, together with sales improvements by our Floor Care and Appliances division, which also delivered a double-digit growth. It's worth highlighting that Milwaukee delivered eight consecutive period of growth, 29.8% in the reporting period, and a CAGR of 22.5% from 2010. Gross profit, despite all the cost headwinds and challenging environment that we heard about in the market, increased it by 20.6% to over $1.27 billion, with a 50 basis points margin improvements to 37.1%. Our 10 consecutive period of margin growth.
The improvements mainly driven by our proven strategy, a continual flow of new innovative products, favorable mix, operational excellence in lean manufacturing and automations, very efficient and effective global procurement and supply chain programs, and our focus in improving quality, efficiency, and productivity. EBIT increased it by 20.7% to $280.7 million, with a 10 basis points margin improvements to 8.2%. During the period under review, we reinvested our gross profits into strategic SG&A, R&D in particular, to fuel our growth momentum and continuous margin improvements. Net profit increased it by 24.6% to close to $255 million. Net profit margin increased it by 30 basis points to 7.4%, as we managed our finance costs very efficiently and continued to maintain low effective tax rates. Earnings per share increased it by 24.4% to $0.139 per share.
The board declared an interim dividend of HKD 0.38 per share, an increase of close to 37% over last year, representing a payout ratio of 35.2% as compared to last year's 32%. Power Equipment division, representing 86.4% of the group's revenue, led by Milwaukee and RYOBI's global organic growth, increased it by 20.1%, with operating profits increased by 20.7%, with a 10 basis points margin improvements to 9.5%. With the launch of new exciting innovative products, which Joe will share with you later, our very disciplined cost management, together with higher volume in the second half of the year, we do expect that the growth momentum will continue with margins further improved. Floor Care and Appliances division now account for only 13.6% of the group's business, delivered a revenue growth of 12.8% with EBIT slightly improved.
The sales increase was from new cordless products, which grew an impressive 45% over last year, and the selling of our legacy corded products. We do believe the performance of this division will continue to improve with the industries transitioning from corded to cordless applications and the launch of our new cordless platform. From a geographic perspective, North America delivered an 18.1% growth. The division represents approximately 76% of the group's revenue. Europe, led by Milwaukee's very strong sales growth, delivered a sales increase of 24.43%. Europe now account for approximately 16.2% of the group's business. Rest of the world, representing the balance 8.1% also delivered a strong 17.6% growth, led by Australia and South Korea. During the period under review, we increased our R&D spend by 20 basis points to 2.9% of group's revenue.
This strategic spend was to continue our high velocity growth momentum with Milwaukee, in particular, and positioned ourselves as a leader in cordless technology in the industry. During the period under review, we have continued with our strategic investments in areas like leadership development program and end-user conversions, increased sales coverage and geographic expansion Yielding unprecedented organic growth and further enhancing gross margins, while at the same time leveraging on our non-strategic SG&A spend. Based on our growth momentum, we do expect that the total SG&A spend can be lever-down going forward. Again, leveraging on our very healthy financial position and liquidity, together with prudent cash management, we've managed to reduce our net finance cost by 42% to only $5.3 million, which account only for 0.1% of the group's revenue.
We will continue with this strategy with the objective to offset any additional finance cost increase due to US LIBOR rate increase or volatility in the financial market. Effective tax rate was at 7.5%, lower than that of last year's same period, but higher than last year's full year effective tax rate of 6.9%. We have taken a conservative approach reviewing our tax position, but we do maintain that our low effective tax rate is very sustainable for full year 2018 and going forward. Our balance sheet continued to be very strong and healthy with shareholder's equity increased by 14.8% to now over $2.9 billion USD, and net current assets increased by 26.1% to now over $1.6 billion USD. Gearing was at 1.8% as compared to 8.8% same period last year.
Working capital normally is higher in the first half of the year, but we do expect that this gearing ratio will be further improved by the end of the year. Working capital as a percentage to sales was at 17% as compared to 19.1% reported same period last year. With our very focused and disciplined working capital management, we do project that this percentage will not be higher than the 20% target level for the full year. Inventory days was at 88 days, same as that of last year, same period. As previously reported, we strategically carried a slightly higher level of inventory to support our strong sales growth, and we project our inventory days will be at similar level for the full year. The slightly higher inventory level, however, being partially financed by our payable days, which increased from 87 to 93 days.
We will continue to leverage our volume, order visibility, and financial strength for the best trade terms from our suppliers. Receivable days remained very comparable to 67 days. CapEx at interim was mainly due to timing of spend. We maintain that the current year's full year CapEx will be between $240 million-$260 million USD, and be in line with our policy that operating CapEx be matched to depreciation charges, so effectively it's self-financing. When compared to the same period last year, our total net debt reduced by $173 million USD or 77.2%. Approximately 40% of our debts are short-term, which are mainly trade finance related. Debt structure remained comparable to last year, approximately 89% in floating rate and 11% in fixed.
We will continue to prudently manage our debt portfolio, capitalizing our strong balance sheet for the best optimal debt structure for the long-term growth of the group and for the best effective borrowing cost. With that said, I'll pass the floor to Joe.
Frank, I'm sorry. The slide is stuck here. I'm not going to be able to move past the 19.1% growth.
Yeah.
By the way, Frank, we didn't mention that is 100% organic growth. No acquisitions where we have restructuring charges, which we bury below the line, which sell-side analysts often overlook when our competitors do this. This is pure organic growth, which we think is the most powerful way to build the company, and it's working like crazy. Yes, Floor Care was up 12/9. It's a small start. The base is low. We're not celebrating the Floor Care success yet, although it's certainly progress. We will, next year, share Floor Care strategies that we think will allow us to win in this market. It will be abundantly clear that we care about this category, and we have a good strategy. Power Equipment. This growth rate is so high, people think we're exaggerating. I'm glad we actually, Frank, were able to show the numbers.
We've had questions about the second half. People say, "Okay, first half was great. Does that mean the second half is going to be below expectations?" Listen, our guidance has not changed in the last five years, Stephan, and it won't change in the next five. We will guide strong single-digit growth on the top line. Milwaukee will grow 20% a year on the top line, even though the base is huge now. Our gross margin will continue to go up, and I'll explain tariff and commodity in a moment. We had many questions about second half. Is the growth in the first half, did it come at the expense of the second half? The answer is no. We're not going to guide 19%, Stephan, but we guide strong single digit. Believe me, our team is not satisfied with strong single digits.
As you saw in the first half, our team over-delivered. I'm incredibly proud of the performance of the organization. These are amazing numbers. The P&L, Frank covered. I want to talk to you about the SG&A investment we made for a moment, because it's another area where we need to help the sell-side analysts understand that we don't have an issue of escalating costs. We have a strategic decision to invest aggressively in those elements of SG&A, Stephan, that drive our future. It's something that I'm extremely proud that we have had the discipline to do, and our competitors just don't do it. Gross margin up, Frank, 50 basis points to 37.1%. This trend will not stop. I know that we have competitors that are announcing dramatic drops in their gross margin as a percent of sales. You won't hear that from us.
I actually believe, and I'm very confident, that over the next five years, it's a long time, but I believe the gross margin will continue, Frank, to go up year after year, half after half. Might be 30 basis points, might be 68 basis points, but it won't go down. In fact, I think history is the best indicator of the future. After 10 years of consecutive performance, I think we have some credibility here when we talk about gross margin. I would challenge you to find a competitor that can put up that chart. There's no excuses. We don't blame other issues beyond our control. Our team just goes out and makes it happen. We build a company that's quite capable of being nimble and reacting to whatever policy that might come about that might be scaring the financial markets.
For us, we view these things as an opportunity. In fact, let's just talk for a moment about the tariff situation. People need to understand, tariffs don't discriminate. All of our competitors manufacture in China. We manufacture in China. Our operation there is world-class. All of our competitors manufacture there, too. The issue is not what impact tariffs will have on TTI. The issue is which competitor is best able and best positioned to be nimble and flexible and respond to whatever tariffs come about, and things are certainly not finalized. Who can manage it best? I can tell you right now that we are not making an excuse in advance in telling you that tariffs are going to affect our gross margin or our EBIT margins. They will not.
We have a very thoughtful plan that leverages the decades of flexibility we've built into our system. We have six factories in the U.S. In fact, we're the only major floor care manufacturer that kept a factory in the U.S. When we bought a company called Oreck, we were criticized for not closing the factory because our competitors are restructuring experts. We decided to maintain that U.S. manufacturing facility, not because we anticipated tariffs, but because we don't want all the eggs in one basket. We feel like a global manufacturing supply chain network is smart. That's why we have opened up a Vietnamese manufacturing operation, which is new, which Vietnam has a wonderful relationship with the U.S. today. We have two manufacturing facilities in Europe. We have six in the U.S.
We are quite confident that whatever tariffs end up being finalized, that we will offset the impact with our incredibly flexible manufacturing network. In addition, our productivity programs are flourishing. We believe that we are global leaders in taking cost out of our manufacturing and supply chain network. I have to admit that volume is our friend. When you grow 19%, it's not via acquisition, can you imagine how the profit just comes out of the walls through leverage? That is why we didn't announce and make an excuse that commodities are going to hurt our first half. We have competitors that have announced with excruciating detail how commodities are going to affect their results. We buy the same copper our competitors do. The difference is we will offset those issues, plus, we will continue to march ahead and improve our gross margin.
Again, I believe that our future has never been more exciting. To be honest, I really think that all this noise about tariff and trade war is a tremendous advantage for TTI because of the flexibility that our chairman has built into this company and that I've tried to perpetuate. I think this is going to show how speed and decisiveness and planning for the future is a massive advantage. I used to believe that flexibility was our major advantage in new product development, and that's certainly true. In fact, our product development program is on fire. We have so much new cordless innovative product coming that I could tie you up for the next day, and I still wouldn't cover all the products we have. I'll do my best to skim the surface today.
The fact is, there is no company that's remotely close to TTI in generating high-impact, demonstrably superior, technologically advanced new products. That's a major part of why we're winning worldwide. Okay, let's talk about SG&A. I know that there are a number of sell-side analysts that say, "Oh, my goodness. Yes, the growth is up, the gross margin's up, there they go again, expenses are up, too." We have stratified for you SG&A into two general buckets: non-strategic, which is basically administrative overhead, which, by the way, is down 30 basis points in the first half, not up. Then we have strategic SG&A, which was up 60 basis points. To be honest, I would have spent more money if I could have hired the engineers we were after in the first half.
Although we're hiring five times the number of engineers that any competitor is hiring in the same period of time. I wish we could have hired more. These MIT engineers are incredibly helpful, and the other 10 top schools where we hire technical Gen Xers, right, David? Gen Xers. I am incredibly proud that we have had the discipline, and Horst has had the vision to not back off on the build-out of our engineering system while our competitors are buying up second-rate companies and actually laying off engineers so they can make some kind of an SG&A target, which is what many sell-side analysts are looking for. What are the six areas where we invest? R&D. We're hiring not just the old manufacturing engineer and electrical engineer.
We're hiring software development engineers because our cordless tools are flourishing and are in a leadership position because of the software and the firmware and the electronics that we build onboard. We're so far ahead in the technical arena here that I believe that we are on the way of building an unassailable, competitive leadership position in cordless, and that's in RYOBI, and that's in outdoor, and that's in Milwaukee. We also have a vaunted product management system. It's the best I've ever seen. I've seen some good ones. This product management system, so the product manager, which is an individual that we recruit off the college campus in our LDP program, she or he leads the product development of a category of products. We have hundreds of product managers in the company. We haven't cut back.
I think that there's nobody in our space that has anywhere near the talent that we have in something called product management. We have something that's misunderstood called end-user conversion. We're investing a lot of money in end-user conversion. We don't buy billboards in Fenway Park in Boston so that our executives can have free tickets to baseball games. We don't do that. What we're doing with that money is investing in experts, end-user specialists who go to the job site, and I'm not talking home building. ResCon is so misunderstood by many of the people in the room, and I'm really going to try to help you understand it. New home construction is important to us. It's about 7% of our company's future.
The big areas, the big verticals are the other 26 verticals, like power utility companies, and the whole commercial plumbing arena, and datacom installation. There are so many areas that are so much more exciting with so much more potential than home building. If The Wall Street Journal publishes that home building starts are down, all of a sudden our stock gets hit and we have analysts that actually think that affects our results. Hopefully, you'll see that we have to look past that. End-user conversion, I'll get to more in a minute. Sales coverage means more salespeople in existing geographies. When we have a dominating position and we've achieved global leadership, for example, in RYOBI cordless, and the RYOBI brand is the number one brand in the world for DIY tools and by far number one in DIY cordless.
Milwaukee professional cordless is now number one in the U.S., Canada, Australia, New Zealand, and on the way to being number one in a lot of countries that'll surprise you. Why is that? Because when we go into a market and we get traction, we don't back off to save the SG&A. We're continuing to hire the amazing talent that we have so that we can show growth rates that are well above market. 20% guidance on Milwaukee without an acquisition for the next five years is pretty darn good growth guidance, I would think. You won't hear that from a competitor. Geographic expansion. This is quite different. We are moving into new markets we've never been in before. What I would like our analysts to do is also recognize, I think some of the things I'm most proud of are the things we didn't do.
For example, what's in the headline today, Stephan? Turkey. We decided not to go into Turkey six years ago when every competitor went in, and we were criticized for that. We pulled out of Brazil long before the Olympics. We haven't had, Frank, a bad debt write-off-
No
for so long that it's almost tedious and boring for our auditors. Every company has a bad debt reserve. Why don't we use it? If you're not in Turkey, you don't have to deal with writing off the accounts that don't pay their bills, right? Now, where we do go are markets where we study the market and we decide, okay, this is a good investment. That's why our South Korea business is exploding. It's growing so fast. I was in Malaysia two weeks ago with David Butts, and our Malaysian company's gone from zero to a significant market share position in four years. It's incredible. I can name about 20 countries, some Eastern European markets, some Latin markets, some Asian markets, where we've gone in, and it takes SG&A. When you go into a new country, you don't make money the first year.
It's why other companies are afraid to do this. You make money third or fourth year out, and then you make a lot of money once you build the market share. That's exactly what we're doing. By the way, that's what we've done in Australia, New Zealand. It's what we've done in Canada. We know how to do this, and I can assure you that the geographic expansion is paying off like crazy. One of the reasons why we have so much ability versus our competitors to grow at a faster rate is because of something called Leadership Development, LDP. This year, we will hire 530 graduates off the college campuses around the world, 100 of them now outside the U.S. and Canada.
This doesn't include the engineers we'll hire this year, which the target is 100 engineers, and these are blue-chip software development specialists that will allow us to continue to revolutionize the industry. For 12 years, David, we have hired off the college campuses, and you notice during the financial crisis, we didn't cut this to look good for a short-term sell-side analyst. We stuck to our guns here, and Horst and I feel very strongly that this youth movement that we began to recruit into the company, this represents the future leadership of the company. We're 12 years in, so we have kids that we hired off the campus that are now running significant parts of our company. This is such a massive advantage, and you will see that if you visit our operations.
I believe that all of our competitors combined don't have a fraction of this kind of campus recruiting going on. It's the first thing they cut because you get no benefit from this for the first three years. Again, we have a disciplined long-term strategy. We stick to it. We don't respond to headlines. We're not managing this company for next quarter or next half. We're managing it. I'm giving you guidance for five years without acquisition benefit, and I think that's pretty special. Okay, first half productivity. We have a basic productivity measurement, sales up 19%, headcount up 6%. Yeah, we're investing in highly skilled college graduates, but we're reducing the headcount because our productivity programs and our automation programs are going extremely well.
Even with all the volume, we've been able to manage this headcount growth at a level that I think is pretty impressive. Excuse me. Okay. Damn it, Frank, this thing is stuck again on the slide.
Yeah.
This is a number you won't see often for a business that was classified as a GNP grower linked to housing starts. This is a number you see in Silicon Valley by some very famous tech companies. What I love about it is while we're growing Milwaukee 29.8%, the gross margin continues to go up year after year. We don't cut our prices at the end of a quarter to make a number. We don't discount Milwaukee to sell. In fact, we feel strongly that there's reverse price elasticity here. In other words, pricing notes quality. These contractors, they buy these tools, they read the menu from the right-hand side. They look for the price guides them and tells them that there must be something going on with our product.
Thankfully, when you turn one of our products on, our cordless Milwaukee products, we so outperform our competition that it becomes very clear that you should make the switch to Milwaukee. We are growing at this rate for two big reasons. One is Milwaukee is basically on the vanguard of leading a once-in-a-generation revolution in labor-saving devices, in power tools specifically, from corded, from pneumatic, from hydraulic to cordless. We also are developing so many power-assisted hand tools that we're revolutionizing the way mechanics and hand tool users perform their function. This is the first reason. We won't have all the business in cordless, just the best part of it, the high end of the market, and that's okay with me. Secondly, we are growing at this rate because we have an end-user conversion program that it's caught fire around the world.
Let's look at the globality of this Milwaukee success story for a second. Yes, North America was up 27. Frank, I've never seen you make a mistake, but you mentioned the U.S. was up a lot. Actually, NA is not the U.S. People forget Canada is not one of the 50 states. Trudeau will make that clear to you. The fact is, our Canadian company is the crown jewel of TTI. There's no tariffs in Canada. We've become number one in the market. That tends to increase the ratio that we link to North America. The U.S. is growing too, okay, but not as fast as Europe. Look at the star of the company in the first half. The European theater of operations at TTI for Milwaukee grew 43%.
This is in Europe, where you read one bad article after another. We're up 43%. Rest of world is Asia, Australia, New Zealand, Latin America. That's up a cool 29.8%. These are growth numbers that you won't see from our competition. It's obvious we're outgrowing the market and taking market share at rates that nobody's ever seen in this industry. This all reflects what I said earlier, which I know it sounds like I'm exaggerating. We are leading a global stampede, a revolution from other power sources that are archaic and pollute and are inherently dangerous. We're leading this stampede to high-performance cordless. Let me give you a couple of examples of end-user conversion. End users, you're going to notice there's not one house builder in this discussion.
I hope that our sell- side friends will recognize that home building is a very small fraction of what we're doing at TTI Milwaukee. Here's a cell phone company you might have heard of called Verizon. We converted their existing legacy brand of tools to all Milwaukee, 100%. This is an all-cordless, it's a major deal. Once you convert a company like this to your cordless platform, they have the batteries and chargers. The loyalty goes beyond relationship. The loyalty is common sense because you have an installed base. It becomes very difficult to change. Another example, San Diego Gas & Electric. We convert their entire tool fleet from our enemy to Milwaukee. Here's Hydro-Québec, a power utility company outside of Montreal. We convert their entire tool fleet from our enemy to Milwaukee. Here's a large water utility company in France, Saur.
Again, 100% conversion from existing brands to high-performance Milwaukee cordless. We have this windmill company in Denmark that decided to convert again 100% from the enemy to all Milwaukee cordless. By the way, we're not doing these conversions on price. We're doing it because we enhance productivity, we increase job site safety. We have the bold vision of expanding cordless tenfold over the next decade, probably more. The end users say, "Wow. These guys are really committed." They're not putting their toe in the water in cordless. They're still launching pneumatic and cord and petrol. We have competitors that are actually still rolling out broad lines of corded tools, gas-powered petrol tools, pneumatic tools, hydraulic tools. People don't even realize that's like rolling out a new line of pay phone.
It's preposterous. It looks good in the announcement. Short term, you load the channel. We are hyper-focused on cordless. It's a major part of our success. Here's a big company in Australia, another power utility company, converted from another enemy 100% to Milwaukee. This is interesting. We had a distributor in Australia that carried none of our products five years ago. They came to us and said, "We want to build a Milwaukee showcase inside of our store." This is what we came up with to help them. Once one distributor in the world does something like this, believe me, there's a lot of showcase envy that happens. I think that this will suddenly become much more prevalent around the world.
Two reasons why Milwaukee is outgrowing the market without any acquisition benefit and increasing gross margin at a rate that's never been seen in the industry. Two reasons. One was the end-user conversion program, and I just showed you a small sample. When you ask me about SG&A, remember, we're hiring these millennials and now Gen Xers who go to Gen Zers.
Gen Z.
Sorry, Gen Zers. I have a son who says Gen Zers. He's going to kill me if he heard I said that. We go to the job site, and we convert the user. It's a very special skill, and our people are highly trained, and there's no one that's putting the kind of money into that process. The second thing is new product. We launched this year the three most important new cordless introductions ever. We have competitors that are brilliant with propaganda and with Wall Street management, and they actually announced a program a couple of years ago that hurt our stock and people misperceived to be important. I tried to assure everybody that we don't copy our competitors, and we certainly don't copy mistakes.
I believe that the three things I will highlight for you now are not only the most important developments ever in power tool cordless technology history but are catalysts for growth for a long time, beyond the five years that I've talked about. The first is we just rolled out our third generation of brushless motor fuel driver impact drivers. Our second generation was so incredibly successful that our second generation outgrew our competitor's entire new system that so many of you wrote about a couple of years ago. Now we already have our third generation. This third generation, these are 18-volt products that are smaller, lighter, faster, run with less heat, more powerful with longer life, faster charge times, and more features, including connectivity, et cetera. There is no competitor that's even remotely in the neighborhood of our third generation.
Our second generation is still considered to be, by the experts, the best products in the world. This new generation is 40% better, David, all the way around. There's two products in this next gen, the drill driver and the impact driver. We have a mandate inside the company, an R&D mandate, that every two years, we expect to launch another generation. It may take two years and four months, but like Apple launches new iPhones, we will not launch a generation and rest on our laurels and milk it like a cow so that we can have a short-term benefit. We will continue to invest in the next generation and the one after that. In fact, we have three generations out over the next six years that we already have laid out exactly what we plan to do.
You have to do a lot of invention to achieve that, it's not the old kind of mechanical engineering invention. This is all about the software. This is all about software development engineering, that's why it's so hard to hire these kids because they want to go work in Silicon Valley and work on apps for your iPhone. We are fortunately in the Midwest, if a brilliant graduate goes to the University of Michigan or to Cornell or MIT, or Clemson, we've been very successful in recruiting these people. The key to the future of tools is all about the software. That's what the next gen does. The second major breakthrough we're launching and this one blew our competition and our customers away. We rolled this out last month.
We've launched five new tools, for the first time, we can replace continuous runtime corded tools or, for that matter, petrol or hydraulic or pneumatic. We can replace it with a cordless alternative. Because the battery that we developed is so powerful and because these tools are so well-engineered, the end user picks these things up, literally, they're blown away with the performance. People said, "Well, why don't you have a flexible voltage system that goes up from 18 to 60?" Because that's primitive technology. We have an 18-volt system, if you design it right with the right software, you can over-engineer and deliver better performance than the competition. Just think about it for a second.
Your iPhone, if you hold it up, your iPhone does more things, performs better than the pay phone or landline that those of you in maybe my generation grew up with. Why is that? The iPhone's smaller, lighter, it's more expensive, it's because it's all about the software and the engineering. People think we're a power tool company, we've become a technology company that happens to sell power tools and floor care. When you realize that, you'll look at the multiple, you'll roll your eyes like we do and say, "Someday, somebody's going to be very smart and recognize the opportunity here." Right, Horst? Let's look at these five tools. I know I'm enthusiastic and proud of what we've done because our team is amazing, I'm trying to represent the outstanding performance and the talent we have in this company.
This is the battery. This battery is better than our competition, not only because it's the first-ever 12-amp battery, but also because if you open that thing up and look at the software and the electronics inside, you'll think you just opened up your iPad. It is a very sophisticated device. That's why our batteries are safer in hazardous conditions. That's why our batteries last longer, they charge faster, and that's why we harness and harvest more of the inherent power in our batteries than our competition does. With that battery, we've rolled out five continuous runtime tools. The first, here's a cordless reciprocating saw, 18-volt 12-amp. This actually not only outperforms every cordless recipsaw on the planet, but it actually outperforms our 15-amp corded recipsaw, which is amazing.
We've been global leaders in recipsaws forever with Milwaukee, and we have a cordless product that's lighter than corded and outperforms the very best corded recipsaw we've sold for years. It's an amazing product. Next, we have a circ saw. This is a circ saw. Again, it's 12-amp 18-volt. One of the things our competition did a good job of is demonstrate that in their flexible system, their circ saw would cut faster than the saws that we had before. We stunned the market by launching an 18-volt circ saw, not 60, that actually cuts faster than the 60-volt competitor. It also has the battery last longer, it's got more features, it's easier to use. We believe people who are using circ saws for a living will flock to this product. Next, we have a table saw.
This is a cordless table saw that outperforms the other cordless table saws in the market. It's selling like crazy, and it allows the user who is accustomed to stationary equipment to remove the cord and take these tools wherever the work takes them. Here is an angle grinder. This is not a SwingGrinder. This is a LAG, a large angle grinder. These products are used on the Alaskan pipeline, on the Malaysian pipeline, on all sorts of offshore drilling rigs, et cetera. This is a tool that you use for two shifts. It's an all-day tool. That's why it's been very difficult to get any of these users, these pipeline wildcatters we call them, to switch to cordless until now, because you can use that product continuously in a hazardous, frigid, or humid and hot condition, and it will outperform corded.
You don't have the danger of electrocution. You're not tethered to some generator which burns petrol, which makes all sorts of noise and bad for the environment. It's another example of how we're pioneering this cordless revolution. The most successful and most surprising to me, success here in these five new high-performance continuous runtime products is the chainsaw. This is a chainsaw. Of course, it outperforms our competitor's cordless chainsaws. That's kid stuff now. We actually, with that chainsaw, we will cut faster than the world's best-selling petrol chainsaw. This is an amazing development. You don't need to go to the Exxon station to get the petrol. You don't have fumes. You don't have the heat. You don't have to pull a cord. You just push the button, and it'll cut faster than the best-selling gas-powered chainsaws in the world.
I think when people try these, they can't believe it. If you were a naysayer or a reluctant participant in cordless before, that product is what people say, "Okay, I give up. I'm going cordless." Because it just blows people away. By the way, we have other 18-volt products that are also interesting. I'll cover just a few. The fastest-growing floor care brand in the company is called Milwaukee. Here's another floor care product. One thing I've learned over the years is every job site, every single job site in the world, at the end of the day, is filthy, and you have to vacuum the floor. We are developing a series of job site floor care products.
We use the technology that we are fortunate enough to have with Hoover and VAX, we adapt that technology to job site commercial conditions, we use the same cordless battery that you use in your drill. The user now doesn't have to fumble around looking for other power sources or a generator to power the vacuum cleaner at the end of the day. They just use the same cordless system called Milwaukee M18, it's selling like crazy. This is where we are today with our M18 full-sized professional-grade cordless program. There's more tools there than any competitor can offer in full size. There's more brushless products there than anybody has. Don't memorize that slide because in three years, there'll be double the number of tools on that slide, that's if we don't achieve all of our internal goals.
We have so many ideas on the drawing board that this is literally just the beginning. When you're leading a once-in-a-generation global revolution, you better be ready to perpetuate that success, that's exactly what we're doing. Yes, we'll spend some money on SG&A, yes, Frank, eventually we'll lever down. If we can hire more MIT engineers that are coding the software, we will do it, investors will be the one to benefit. Once you realize what we're doing, you'll see the benefit. Okay. Next. The third major innovation in professional cordless that nobody understands and there's no recognition of with our sell-side community is our subcompact series. Our competitors launched a system that flexes to 60-volt, they announced that this is the most important revolutionary cordless program ever launched. Except they forgot that the fastest-growing market in cordless is subcompact.
People want smaller and lighter. Is your iPhone bigger and heavier than the pay phone? People want smaller and lighter and more ergonomic. If you can deliver the same kind of performance in a compact package, wouldn't that be a colossal advantage versus the bigger, heavier stuff that we're used to? That's why when this flexible system doesn't even approach, doesn't even touch the subcompact market, it's hard to read reports that say, "Oh, this is going to take share from TTI." The fastest-growing cordless business in the world today is the subcompact, we are by far the global leaders here. We have so many subcompact cordless products that it's already achieved a position of unassailable leadership. One of the reasons why our subcompact program is selling so well is we're on our sixth year of selling heated jackets that all have a 12-volt battery.
It's a Trojan horse. Many people enter the system, believe it or not, with our apparel program, which is our Milwaukee heated jacket line. That battery, when you pop it out of the jacket, works in 50 other tools on our way to 250. A Trojan horse strategy sometimes is a little bit stealthy but can be very powerful long term. Now we roll out one breakthrough subcompact cordless product after another. What we've done in the last six months is going to change the industry as you know it for cordless professional. For example, here's a cordless rivet gun. This is not a full-size 18-volt. We were able to engineer this device with a subcompact 12-volt battery, and it's so well-engineered and so powerful, it changes the way that sheet metal workers, which are not ResCon, by the way, not home builders.
Sheet metal workers do their job. This will pop a rivet in seconds with no effort. If you've ever used a rivet tool, a pop rivet tool, you will know it is a challenging, onerous task. Carpal tunnel and all sorts of other ailments come about because these things are not designed with the user in mind. This is selling at rates so far above the forecast, I'm ashamed of our forecast, but I think that's a high-class problem. Secondly, we have an inflator. We've had inflators for years, but we now have a pro-grade inflator for use on a job site, and there are so many vehicles, David, that require air on a job site that I wish I hadn't overlooked this before, but this is selling like crazy. Next, we have a soldering iron. This one is a shock.
This little tiny device replaces a large, cumbersome, unwieldy device that's plugged in, can be stationary or portable. This is a soldering iron that changes the way end users who work with this kind of activity, whether it's in the automotive channel or plumbers or dozens of other verticals, it changes the way they do their work. The sales are, again, incredible. We have our whole line of ratchets. A ratchet, these are cordless subcompact ratchets. This is a power-assisted hand tool. In the old days, we could only use this device, this hand tool, which is a socket and a ratchet. By the way, we're going to launch these, too. I'll mention that in a second because we have many automotive users and transportation vertical-focused end users who still want their old socket and ratchet.
We have a beautiful line of these that's going to surprise some different competitors when we roll this out. Well, we just launched it. Why use that if you can pick this up, push the button, and have effortless performance with exactly the right torque and without all the hassle of a hand tool. We have a series of ratchets, and here we have these are called stubby impact wrenches. This is a breakthrough, again. These are little tiny subcompact impact wrenches to replace big, heavy pneumatic devices. Pneumatic means you would have an impact wrench that's three times the weight of this, that has a hose, that connects to a compressor, that on a job site has to connect to a generator, which is full of diesel or petrol, in order to power the whole system.
You're tethered twice with the most noisy, polluting devices on a job site. Now all that's gone, and you just have this. The performance of these is actually better than the pneumatic. They're quite amazing. In fact, you could take a subcompact impact wrench and break the lug nuts on a car, on a vehicle. If you've ever done that application, you know it's very tough. This, you pull the trigger, boom, the lug nut comes off, and you don't, again, you don't have the noise and the aggravation of pneumatic, which is 40-year-old technology. This keeps going. Here's a brand-new another invention of ours. This is a subcompact cut-off saw. This user is cutting a muffler pipe off to replace it.
It's a common automotive application, there's dozens of things you can do with this. This replaces a device four times the size and weight, that's six times the noise. It's four times more expensive, you just pull the trigger, and you go. That's all subcompact. This is a completely overlooked, revolutionary range of innovative products that we've launched and that we now have built an amazing leadership position worldwide. That's our M12 series today. Don't memorize the slide because it will change a lot as we go forward. A couple of other comments. Lighting. We have pioneered cordless lighting. If you think about a job site, if you're building this building, there's no power until the job is complete.
You need to wheel in a generator, which makes a lot of noise and requires petrol, you plug the lights into the generator so you can light up the work site so the user can do his job. You think of how preposterously silly that is. If the user already has 15 batteries and six chargers, why would you make him carry a generator into a job site to light it up? We allow that user to take his Milwaukee or her Milwaukee battery, plug it into the lights, and these lights are all LED. They're amazing designs. There's a lot of unique IP-focused invention here, this stuff is selling like crazy.
We got so many requests for personal lighting that we rolled this out last year almost as a favor to several of our customers, sales are fivefold because the Milwaukee brand's hot and because these products are all well-designed. You can see a few of these things if you wish later. Let me just mention a few verticals that are unappreciated and misunderstood. First is the drain cleaning vertical. This is maybe not a pleasant thought, if you ever have a plumbing issue where you have a clog, you call a plumber, historically, you would use a corded device to try to break through the issue. Here we have a full line of cordless, revolutionary drain cleaning solutions that, again, will revolutionize the way a plumber does his job. Here's another vertical that is completely misunderstood.
People think the President of the United States has to somehow fund infrastructure for infrastructure to be important. That's absurd. First of all, the power utility companies don't ask the government for money. They're all monopolies. They control regions of a country, and they make so much money because they have a monopolistic position. What these companies are doing is investing their own money, not government funds, into improving, upgrading, or repairing, let's just say, a legacy, a decades-old network of power lines, et cetera. In the power utility area, we have all sorts of tools used to cut wire, repair it. We have hand tools that are specifically targeted for this space. We have actually something called a bucket light, and this light actually hangs on the area where the user is standing. Oh, this is a bucket. Okay.
This is a light, and you actually hook it on to that white area where the user is 30 feet above the ground. By the way, people don't have to fix power lines in the daytime with a beautiful blue sky. When a power line goes down is when there's a storm, usually at night when people call and say, "Oh my God, my power is out." This light hangs on that cherry picker chamber for the user. This is the first one ever. The utility companies look at this, and they can't believe it. They say, "Well, this is exactly what we need." We probably have 30 products in the power utility space, David, that are like that.
That are just like, "Wow, I can't believe somebody has thought about us as an end user." Anyhow, here's another vertical that is fascinating to me. For years, there are other companies that have controlled the, they call it the automotive aftermarket. We don't look at this as the automotive aftermarket. We look at this as a transportation vertical. It's cars and buses and trucks and trains and tractors and motorcycles and whatever other vehicle you can think of. All these vehicles need maintenance and repair. As of today, that's the range we have to support this vertical. This has nothing to do with home building. This product line is growing like crazy. Yes, we decided to enter into the mechanics hand tool market, and we don't enter something unless we have something better than what our competitors offer.
We have some pretty good competitors in this space. When you look at these hand tools, you'll see they're all engineered to perfection with features that our competitors don't have. Yes, we price them at a premium. Yes, we had to hire engineers to develop it. Long term, shareholders are going to be very, very pleased that we are making those kind of long-term investments. When we go see a Mercedes dealer or a company that repairs buses, we don't just go in with a couple of tools. We go in with a full range, storage, hand tools, accessories, power tools, all are better than what they're using today. There's no pneumatic here, which is what they tend to use. I think that you'll see the growth from this vertical is the potential is quite vast.
These hand tools, by the way, if you're going to do something, you have to do it right. Our Chairman would accept nothing less. I love that philosophy. It took us a while, but the mechanics hand tools we have are gorgeous. They look like jewelry. In fact, I really think people will buy these, take them home and display them. They continue to use the old stuff that they have now. That's okay. Eventually, the old stuff will go. That's a pretty interesting step. Tape measures, a business we weren't in. We have a competitor that controlled 80% of the global market. That's changing fast. The STUD Tape Measure. My team named this. I actually didn't name it, but I'll give credit for that. The STUD Tape Measure has got the best blade in history.
This is your indestructible long-lasting tapes. The margins are great. You know what I love most is you pick our competitor's version up and pick this up, you'll see ours is better. This is a big market. These are almost disposable hand tools. We now have a broad range of tapes. Our customers have come to us and insisted that we do something about striking tools. The Milwaukee brand is white hot. We have a line of Milwaukee hammers. They're priced up at a premium. So far, David, the sales are amazing. We have come up with some new technology and accessories, too.
This is a whole line of carbide tip, carbide tooth cutting tools, Sawzall blades, hole saws, all that outperform competition. All that are a big step in terms of technology for the business end of our cordless tool. Here's something brand new. We just rolled out a line of Milwaukee carbide tip circular saw blades for the circ saw I just showed you. Not only are they gorgeous, they perform beautifully. We did this as an experiment, but the sales suggest it's beyond experimentation. This is going to be a nice line of accessories for the company. Of course, I showed you before, PACKOUT. PACKOUT is. We have a competitor, a large competitor, that doesn't call their tool business the tool business. They call it tools and storage.
They don't call it tools and storage because storage is small. They happen to have a very large position they've had forever in the storage space. We think that PACKOUT is the most important development in storage ever. Not only is the PACKOUT a great way to organize all. If you think about this room full of things, where would you put them if you're a professional user or a do-it-yourselfer? You have to put these somewhere. PACKOUT allows you to store and organize in a mix-and-match system that's patented. Not only can you store it's also mobile. You can wheel these things just like your luggage through an airport. For a contractor, that's a real breakthrough. Perhaps, of course, that's why the sales on PACKOUT are three times what I originally told you.
I'm not as good at forecasting as I used to be, again, it's a high-class problem. Let me tell you the greatest success of the first half. I just spent more time than I should have on our Milwaukee brand because I'm quite excited about it. The most impressive success and the thing I'm most proud of in the first half is what we've done with our RYOBI brand. Because the DIY market is about one-sixth the size of the professional market. It's not growing nearly as fast. Yet our RYOBI business posted amazing breakthrough growth results in the U.S. and Canada and Europe and Australia and New Zealand. It's incredible. Why is that? Because we've spent years. In fact, almost 20 years perpetuating and improving, expanding the same cordless system, the RYOBI ONE+ 18-volt system.
We have competitors that have changed their battery interface and their chargers 20 times in the same period of time. They're creating all these orphans you find in a consumer's garage. You have one charger and battery for your string trimmer, another one for your hand vac, a third one for a drill. I mean, it's absurd. It's so confusing that users are bewildered by this. We simplify the whole thing. You choose RYOBI, you'll never have to worry again about what charger to use, what battery works, because they all work, they're all fully compatible. When you take that compatibility discipline and combine it with an onslaught of new products year after year, you end up with RYOBI, which is now the globe's leader in DIY power tools. This is a cordless compressor.
It looks like a real compressor that powers pneumatic tools. This is a cordless compressor. It's got the hose so you can fill up the car. For the user that's reluctant to go make the switch to cordless, this eases the switch because it looks like what he or she used before. The RYOBI line is not only DIY. There's a surprising number of professionals, budget-oriented professionals, that buy RYOBI because actually we over-engineer, we have for years, we over-engineer RYOBI. RYOBI outperforms the specs of a DIY tool. That's why people just pick it up. They know it's going to work. Actually, plumbers are buying these. These are PEX pinch clamps.
It's a fancy term for a device that takes the non-copper plumbing and allows you to manipulate it and install it in a home or in a commercial installation. Here's one of the top-selling vacuum cleaners in North America. This is a RYOBI stick vac. It uses the ONE+ battery system, so you can buy it without paying for a charger and battery like our competitors always charge you when they sell you a stick vac. The performance is better than the leading competitor in the world in terms of suction life, because we're good at charging, we're good at batteries. It is exceeding our expectations and selling like crazy because there's so many people in RYOBI cordless that it's not a hard decision to buy the stick vac.
We now have, and if you can just look at the wall here, we have the world's largest range of DIY cordless. This is our 18-volt wall. It's over 130 tools in this system. Again, you can assume every time we see you that there'll be more tools on that wall. One of the reasons why we're so successful in RYOBI is because we have the only overarching platform. We go from power tools, and we arch into the outdoor arena with the same battery, and now we're in some new categories. For example, we have a swimming pool vac. You take your handle, put it underwater, and you can vacuum your pool. It outperforms the traditional overpriced pool cleaning devices that you buy. It uses the same battery. People look at this and say, "Why not?" To add to their system. Okay.
Interesting situation we saw develop in the first half this year is we had, again, a major competitor that actually blamed the weather and said their outdoor business was going to be down this year because the weather was so bad in the U.S. We happened to have the same weather. We sell in the same 50 states, and our outdoor business had an amazing record-breaking 20%+ growth in the first half in the same weather. Why is that? Because we're not perpetuating petrol and clinging to old technology. We are obsessed with cordless. This is our cordless mower program. This is just our mower program. We are now the largest cordless mower company in the world. We have the best technology. We have 20 different cordless mowers now for three continents that cater to the indigenous needs.
These mowers are a wonderful Trojan horse for outdoor, whether they're 18 volt or 40 volt. Once you buy a mower, it's not a hard step to buy a string trimmer, hedge trimmer, blower, vac, chainsaw, it all works off the same battery system. We have dozens and dozens of new outdoor products, whether they're smaller 18 volt or larger 40 volt, that we think will exactly revolutionize the way people, whether you're a landscaper or a homeowner, the way that people take care of their yard. Okay, finally, I can't wait till next year to show you everything we're doing at floor care. What I can tell you, with great confidence and enthusiasm, that our floor care business is, Frank, not only do we have a good first half, but we have a strategy to win.
Business, it's no fun if you don't have a way to win. Being a fast follower, being number 3 is not interesting to us. It's taken longer than it should have, and I apologize for that, but I will assure you that the strategy we have now is gaining traction and is very exciting. Okay, there's two elements to the leadership floor care program. First is carpet washing. No, we don't have cordless carpet washing yet because you have to heat the water, and we're still working on the technology. We will have it, and I believe we'll be first, and I believe we'll have something amazing. But right now, these new carpet washers are selling like crazy. In fact, we're up 38% in the first half in carpet washing. We haven't been up in a decade, 38%.
We re-engineered the full-size carpet washer called SmartWash. It's a lot easier to use. It's better than our competitor. I'm really excited about the PowerDash because many people don't want to wash all the carpets in all the rooms in the house. If there's an issue with a pet or some other glass of wine issue, you take the PowerDash and in minutes you can clean up the spill or the issue on a carpet, and it stores easily in any closet. Again, it's selling like crazy. The other part of floor care that is incredibly exciting, and this is the small tip of the iceberg, is what we call the Blade. We actually had a young engineer in Birmingham, U.K., that has already revolutionized the concept of the stick vac.
We have an impressive competitor that created the stick vac, cordless stick vac, which is the way people around the world now vacuum their floors. The Blade is amazing because it's the first ever stick vac with a motor mounted horizontally instead of vertically. The ergonomic advantages of this are abundantly clear when you pick this thing up. It's so much easier to use than the vertical mount. The suction is amazing, Stephan. The preliminary sales for a company that has seemingly struggled in floor care, preliminary sales are quite encouraging. Cordless, we are going to win in floor care by being leaders in carpet washing, by being leaders in cordless floor care.
Next year, when we're prepared to launch something a little more inspiring than one item, you will agree with me that we're at least on the right track, and I think the numbers show that, of course. Just in summary, we continue to be a company that is winning, not through being desperate acquirers and paying for restructuring charges that you don't see or recognize in the sell side. We're not making excuses about housing starts, the weather, or whatever some political leader does in terms of tariffs, or commodities. We have all the same issues.
Our team has learned that if we just dig in and we use our speed, our talent, and our absolute obsession with being number one, that we believe we can overcome these issues and continue to deliver the same kind of results going forward, which is above market growth, gross margin expansion, and yes, EBIT growth that will be impressive to our investors. Let me now turn it over to our chairman, Horst Pudwill. Horst?
Joe, very well spoken, I have no doubt that the strategy we have developed and implemented over the past year will continue to deliver exceptional results for the group. We are growing faster organically than our competitors with acquisition. Let me put that in perspective. You took $550 million in the first half or whatever you annualize. If you buy a company today with between $500 million or $1 billion in sales and revenue, you have to pay between 2 times and 4 times sales. What we are adding to the company is $2 billion to $3 billion every year in additional value. What we gain, our competitors pay out. Name me one competitor who has zero gearing. You can't. Thank you very much. I assure you, we will continue to deliver fantastic results.