Earnings Call: H2 2016

Mar 15, 2017

Good morning, ladies and gentlemen. I am so happy everybody has received finally I was sold over 1,000 people, looks more like 3 100. Welcome all of you to TTi's 2016 annual results announcement. I'm very happy to report that TTi delivered another year of record profit, revenue and gross margin. We had solid and America and wherever we have focused over the last 3 years, we recorded great success. Not only did our profit on our EBIT and up, in fact, our gross margin and Joe did a hard job driving that. And we are confident that we will continue having a successful future. And will give you a little bit more so much as talk on the street about broader tax, this tax, that tax. We are very prepared and we never mentioned that in any of our analyst meeting. People don't know that one close to one quarter of our activities are in the United States. And we have production in China. We don't have production in Mexico. We have production in the United States. And we are very prepared. And when we look back 5 or 6, 7 years ago, today, we produce twice in one in our industry is as well prepared as we are whatever may come in the United States. We are not politician, but we are very prepared to deliver you a a solid future over the next years to come. Joe, great presentation. Thank you. Thank you, Mr. Chairman. So I'll give a brief overview on our financial performance and then I'll give the floor to Joe, who you are looking forward to. So as Chairman highlighted, 2016 was another record year for us on revenue, gross margin, EBIT and net profit. Our revenue increased it by 8 point 8% to close to US5.5 billion dollars So excluding the negative effect on currency translations to the top line, our revenue actually grew by approximately 9.8%. This growth further demonstrates the strength of our core strategy, a continuous flow of new innovative products and technology, strategic investments in growing our business and very focused in improving our operations productivity, efficiencies and quality. Milwaukee continue to deliver another over 21% growth on a global basis is one perfect example of the success of our strategy. Gross profits increased by 10.4 percent to US1.98 billion dollars with our gross margin. Good morning, ladies and gentlemen. I'm so happy everybody has received finally ever sold over 1,000 people. It looks more like 300. Welcome all of you to TTi's 2016 Annual Results announcement. I'm very happy to report that TTi delivered another year of record profit, revenue and gross margin. We had solid and stable growth all across the region, including Europe, Asia, Australasia, U. S, Central America and we had focused over the last 3 years, we recorded great success. Not only did our profit on our EBITDA, in fact, our gross margin and Joe did a hard job driving that. And we are confident that we will continue having a successful future. And we'll give you a little bit more so much as talk on the street about broader tax, this tax, that tax. We are very prepared and we never mentioned that in any of our analyst meetings. People don't know that one close to one quarter of our activities are in the United States. And we have production in China. We don't have production in Mexico. We have production in United States. And we are very prepared. And when we look back 5 or 6, 7 years ago, today, we produce twice the amount of power tools in volume and money, and we are having only 50% of our workforce in China. That means we doubled the efficiency on productivity. And I think no one in our industry is as well prepared as we are whatever may come in the United States. We are not politician, but we are very prepared to deliver you a solid future over the next years to come. Joe, please go through the details. And we hope we can give you a pleasant surprise this morning and a great presentation. Thank you. Give a I'll give a brief overview on our financial performance and then I'll give the floor to Joe who you are looking forward to. So as Chairman highlighted, 2016 was another record year for us on revenue, gross margin, EBIT and net profit. Our revenue increased by 8.8% to close to US5.5 billion dollars So excluding the negative effect on currency translations to the top line, our revenue actually grew by approximately 9.8%. This growth further demonstrates the strength of our cost strategy, a continuous flow of new innovative products and technology, strategic investments in growing our business and very focused in improving our operations productivity, efficiencies and quality. Milwaukee continue to deliver another over 21% growth on a global basis is one perfect example of the success of our strategy. Gross profit increased it by 10.4 percent to US1.98 billion dollars with our gross margins improved by for the 8th consecutive year from 35 point percent to 36.2 percent, a further 50 basis points increase. EBIT increased by 12.6 percent to US450 $1,000,000 with a margin improvement of 30 basis points. This strong performance is a result of new products and favorable mix, operating leverage from global procurement programs, bean manufacturing and automations. Net profits increased for the 9th consecutive year to US409 $1,000,000 an increase of 15.4%. Net profit margin also improved by 50 basis points to 7.5%. Earnings per share increased by 15.2% as compared to 2015 to US0.223 dollars per per share. The Board recommended a final dividend of HK0.30 dollars per share, an increase of 29% over last year. Together with the HK0.20 income dividend declared, total dividend for 2016 amount to HK0.50 dollars per share, representing a payout ratio of close to 29%. Power Equipment division representing approximately 82% of the Group's revenue led by Milwaukee's strong momentum and Ryobi's outstanding double digit growth delivered a 20.6% increase or 13.3% excluding currency effect. It's worth pointing out that our European Power Tool business despite the challenging economic environment and currency headwinds delivered a growth of 9.1% or 11.4% excluding FX effects. Operating profits of segment also increased by 13.4 percent to US430 $1,000,000 with 20 basis points margin improvements. There has been reports saying that our margin slowed down due to higher costs. As a matter of fact, we did not. Compared to first half, our Power II sales in the second half increased by 2.8%, but our operating profits increased by 32.8%, delivering another 10 point 8% operating margins. With the new products and channel expansions Joe will be talking to you about later, we are very confident that the margins will continue to expand. Floorcare and Appliances divisions revenue representing 18% of the group's revenue was 5.3% lower than that of 2015. Currency translations, pound sterling in the second half of the year in particular had a negative effect on our European business. Our North America business however delivered encouraging growth in the second half of twenty sixteen. Operating on innovative cordless and professional products with technology driven solutions. We firmly believe that we will be able to turn this around in the coming years. Improved it by for the 8th consecutive year from 35 point 7% to 36.2 percent a further 50 basis points increase. EBIT increased by 12.6 percent to US450 $1,000,000 with a margin improvements of 30 basis points. This strong performance is a result of new products and favorable mix, operating leverage from global procurement programs, and automations. Net profits increased for the 9th consecutive year to $409,000,000 an increase of 15 0.4%. Net profit margin also improved by 50 basis points to 7.5%. Earnings per per share increased by 15.2% as compared to 2015 to US0.223 dollars per share. The Board recommended a final dividend of HK0.30 dollars per share, an increase of 29% over last year. Together with the HK0.20 dollars income dividend declared, total dividend for 20 16 amount to HK0.50 per share, representing a payout ratio of close to 29%. Power Equipment division representing approximately 82% of the Group's revenue led by Milwaukee's strong momentum and 0.1% or 11.4 percent excluding FX effects. Operating profits of this segment also increased by 13.4% to $30,000,000 with a 20 basis points margin improvements. There has been reports saying that our margin slowed down due to higher costs. As a matter of fact, we did not. Compared to first half, our Power Tools sales in the second half increased by 2 point 8%, but our operating profits increased by 32.8%, delivering another 10.8% operating margins. With the new products and channel expansions Joe will be talking to you about later, we are very confident that the margins will continue to expand. Floorcare and Appliances divisions revenue representing 18% of the group's revenue was 5.3% lower than that of 20 15. Currency translations, pound sterling in the second half of the year in particular had a negative effect on our European business. Our America business however delivered encouraging growth in the second half of twenty sixteen. Operating profits was at US20 $1,000,000 but we have a 10 basis points margin improvements despite the slowdown in sales. Under our new leadership team on 4 ks, we have a very clear strategy revitalizing and expanding our product portfolio focused on innovative colors and professional products with products with technology driven solutions. We firmly believe that we will be able to turn this division around in the coming years. From a geographic perspective, North America representing approximately 76% of the group's revenue delivered a 10.3% growth or 10.6% excluding currency effect. With our new products and category expansions, we are confident that this strong growth momentum will continue. Europe despite the challenging economic condition and currency headwind continue to grow by 3.3% or 7.1% if we take out the FX effect. Rest of the world led by Australia and South Korea delivered a 6.2% revenue increase or 7.9% excluding currency. Representing 28.1 percent of the Group's revenue. The spend in the second half of twenty sixteen however was only 27 point 6 percent of revenue as compared to 28.7 percent in the first half of the year. The year on year increase was due to the strategic spend on further growth opportunities we have identified. As highlighted, a continuous flow of new innovative products is of critical importance. In 2016, R and D spend was at 22.7% of sales as compared to 2.5% last year. Again, the increase was mainly due to the opportunities we've identified our revenue growth with administrative expenses. Admin expenses only increased by 3.6% on a sales growth of 8 point 8%. Net finance costs reduced it by 21.1 percent to US10 million dollars only. The reduction was mainly due to the further improvements in the Group's liquidity and very effective funding cost leveraging on our strong balance sheet. Effective tax rate was at 7.1%. We understand that tax rules and rates changes every now and then, but we've already proven that we can always fine tune and amend our structure to optimize our tax plans. We therefore continue to maintain that low effective tax rate is still very sustainable going forward. We have a very strong balance sheet. We have shareholders' equity increased it to 2 US2.4 billion dollars Total net current assets also increased by 22% to US1.13 $1,000,000,000 Gearing ratio was at 5.2% as a result of our very healthy cash flow generated from operations and our very disciplined working capital management and spending. Our gearing is expected to remain low going forward. And cash conversion has always been one of our key metrics, key performance metrics. In 2016, we increased our free cash flow by 192 $1,000,000 with net profit conversion of 84.1%, nearly doubled than that of last year. The key element to the from a growth from a geographic perspective, North America representing approximately 76% of the group's revenue delivered a 10.3% or 10.6% excluding currency effect. With our new products and category expansions, we are confident that this strong growth momentum will continue. Europe, despite the challenging economic condition and currency headwind, continue to grow by 3.3 percent or 7.1% if we take out the FX effect. Rest of the world led by Australia and South Korea delivered a 6 and A increased by 9.8%, representing 28.1% excluding currency. Total SG and A increased by 9.8%, representing 28.1% of the Group's revenue. The spend in the second half of twenty sixteen, however was only 27.6 percent of revenue as compared to 28.7% in the first half of the year. The year on year increase was due to the strategic spend on further growth opportunities we have identified. As highlighted, a continuous flow of new innovative products is of critical importance. In 2016, R and D spend was at 2.7 percent of sales as compared to 2.5% last year. Again, the increase was mainly due to the opportunities we've identified and our strategy to launch new products as soon as practicable. We have however managed to leverage our revenue growth administrative expenses. Admin expenses only increased by 3.6% on a sales growth of 8 point 8%. Net finance costs reduced it by 21.1 percent to US10 $1,000,000 only. The reduction was mainly due to the further improvements in the Group's liquidity and very effective funding cost leveraging on our strong balance sheet. Effective tax rate was at 7.1%. We understand that tax rules and rates changes every now and then, but we've already proven that we can always fine tune and amend our structure to optimize our tax plans. We therefore continue to maintain that low effective tax rate is still very sustainable going forward. We have a very strong balance sheet with shareholders' equity increased it to US2.4 billion dollars Total net current assets also increased by 22% to US1.13 billion dollars Gearing ratio was at 5.2 percent as a result of our very healthy cash flow generated from operations and our very disciplined working capital management and spending. Our gearing is expected to remain low going forward. And cash conversion has always been one of our key metrics, key performance metrics. In 2016, we increased our free cash flow by US192 million dollars with net profit conversion of 84.1%, nearly doubled than cash flow is our very focused working capital management. Working capital as a percentage to sales was at 16.4% as compared to the 17% reported in 2015. Inventory days was at 86 days same as that of last year 2015, 7 days lower than the 93 days reported at interim. We believe the inventory days can be further improved Receivable days remained very comparable to that of last year at 62 days. Our receivables are of very high quality and we do not anticipate any collection issues. CapEx spend was at US119 million dollars very much in line with our budget and projections. We project that our 2017 percent be spent on infrastructures, expanding our R and D centers, distribution logistics centers and production capabilities. Total net debt reduced by 57.2 US124 $1,000,000 only. We have maintained a portfolio of approximately 60% debt 40% for working capital. 53% of our debts are long term and 47% short term. Currently all debts are still on floating rates, but we have already started studying the best optimal structure for the group taking into considerations the interest rates may increase going forward or will increase going forward. This concludes my review and I'll pass the floor to our CEO, Mr. Joe Galli. Thank you. And thank you for joining everyone. We're delighted to share with you yet another record breaking year. Sales were up 9.8% in a marketplace that's not grown anywhere near that. We're clearly outpacing our competitors in every geographic region. Sales of our power equipment business were up an amazing 13.3%. This is not just Milwaukee. This is our entire power equipment business, our DIY business, our OEM business, our outdoor business. And these results reflect just amazing performance in our local operations around the world. Flirt down 3.3%, but that's misleading when you consider that the future of our FlerCare business was actually up 53%. So look, the overall floor care business needs to be improved. We recognize that and we're dedicated to that. But let's not lose sight of the progress our team has made launching a very exciting stream of cordless floor care products. And you'll see in a moment that we have an outstanding pipeline of products in FLOOR Care that will fuel the turnaround of the business and help it to catch up to the power tool progress that we've made. As Frank had pointed out, our sales were up double digit, gross margin up 50 basis points. This is the improvement in free cash flow is our very focused working capital management. Working capital as Inventory days was at 86 days same as that of last year 2015, 7 days lower than the 93 days reported at interim. We believe the inventory days can be further improved going forward. There is slightly higher inventory remain very comparable to that of last year at 62 days. Our receivables are of very high quality and we do not anticipate any collection issues. CapEx spend was at US190 $1,000,000 very much in line with our budget and projections. We project that our 2017 CapEx will be around US240 $1,000,000 approximately dollars Approximately 80% is spent on operations, including productivity, efficiencies and quality, while the balance 20% we spend on infrastructures, expanding our R and D centers, distribution logistics centers and production capabilities. Total net debt reduced by 57.2 percent to US124 $1,000,000 only. We have maintained a portfolio of approximately 60% debt 40% for working capital. 53% of our debts are long term and 47% short term. Currently all debts are still on floating rates, but we have already started studying the best optimal structure for the Group taking into considerations the interest rates may increase going forward or will increase going forward. This concludes my review and I'll pass the floor to our CEO, Mr. Joe Galli. Thank you. And you for joining everyone. We're delighted to share with you yet another record breaking year. Sales were up 9.8% in a marketplace that's not grown anywhere near that. We're clearly outpacing our competitors in every geographic region. Sales of our power equipment business were up an amazing 13.3%. This is not just Milwaukee, this is our entire power equipment business, our DIY business, our OEM business, our outdoor business. And these results reflect just amazing performance in our local operations around the world. Fleur Care down 3.3%, but that's misleading when you consider that the future of our Fleur Care business was actually up 53%. So look, the overall Fleur Care business needs floor floor care products. And you'll see in a moment that we have an outstanding pipeline of products in floor care that will fuel the turnaround of the business and help it to catch up to the power tool progress that we've made. As Frank had pointed out, our sales were up double digit, gross margin up 50 basis points. This is the 8th consecutive year, Frank, of improvement in gross margin, 8th consecutive year, the 36.2%. And we were able to leverage our sales growth into a performance of EBIT at 12.6 percent growth. Net profit is up 15%, which is in the environment we're in with the level of investment we're making, we think is quite acceptable. This is a chart we love to talk about. So for 8 consecutive years, we have driven gross margin up from a modest starting point of 30.8 to a level now of 36.2. As Horst pointed out upfront, we've basically doubled our output in China with the same headcount. So think about we doubled our headcount with the same doubled our output with the same headcount. And we are uniquely positioned to transition to any geographic region like the U. S. If the legal environment and the political environment creates an opportunity or a requirement to produce there, we can move at a very quick rate and I'll show you that in a moment. Okay. Frank pointed out working capital was better than last year at 16.4%. That's world class. That still continues to be the best in the industry. And yet we do think there's improvement in inventory as we go forward. But what we won't do is compromise our service level to our customers. And if you were to look at Home Depot or Bunnings or any of our other major customers, what you'd see is that we're routinely awarded vendor of the year recognition for outstanding service levels. We expense of customer service. That's a hallmark of TTi. So look, the Milwaukee business is one of the growth engines of the company along with Ryobi. We were able to grow Milwaukee last year 21%. Now think about that, that's 21% growth in a power tool industry. We're not in Silicon Valley here. We're talking about power tools, a G and P business for years. And this significant part of the company is growing 21%. So, as we've shared before, we're take market share and stimulate market growth with our cordless strategy. And I'm going to share that with you here as we go. The Milwaukee growth is extraordinary not because only because of 21%, but because we were able to do it in every region that we're attacking around the world. So North America was really strong at 20.6%. But Europe was the star of the company last year with a 21% growth rate in Milwaukee. As you know, the European theatre is in a state of contraction. There's all sorts of concern about the economic health of the region and yet TTi was able to grow Milwaukee 21.3%. That's maybe the most exciting result that we had last year. Of course, rest of world is by Australia, New Zealand, where we have become the number one pro supplier of power tools. But also we're beginning to focus on other countries in Asia, like Korea, like Taiwan, where we've had amazing success with our Milwaukee program and not at a discounted level. We're going in with significant premium pricing and we're finding users willing to pay up for the quality and the safety that we provide with Milwaukee. Hirsch mentioned upfront and we're 8th consecutive year, Frank, of improvement in gross margin, 8th consecutive year, the 36.2% and we were able to leverage our sales growth into a performance EBIT at 12.6% growth. Net profit is up 15%, which is in the environment we're in with the level of investment we're making, we think is quite acceptable. This is a chart we love to talk about. So for 8 consecutive years, we have driven gross margin up from a modest starting point of 30.8 to a level now of 36.2. As Horst pointed out upfront, we've basically doubled our output in China with the same headcount. So think about we doubled our headcount with the same doubled our output with the same headcount. And we are uniquely positioned to transition to any geographic region like the U. S. If the legal environment and the political environment creates an opportunity or a requirement to produce there, we can move at a very quick rate and I'll show you that in a moment. Okay, Frank pointed out working capital was better than last year at 16.4%. That's world class. That still continues to be the best in the industry. And yet we do think there's improvement in inventory as we go forward. But what we won't do is compromise our service level to our customers. And if you were to look at Home Depot or Bunnings or any of our other major customers, what you'd see is that we're routinely awarded vendor of the year recognition for outstanding service levels, we routinely exceed the levels of our competition. And we're doing it with an acceptable level of inventory. Now that may come down a bit as we go forward, but never at the expense of customer service. That's a hallmark of TTi. So look, the Milwaukee business is one of the growth engines of the company along with Ryobi. We were G and A business, We're not in Silicon Valley here. We're talking about power tools, a G and P business for years. And this significant part of the company is growing 21%. So, as we've shared before, our plan is to grow at a 20% clip really for the next 5 years in Milwaukee as we continue to take market share and stimulate market growth with our cordless strategy. And I'm going to share that with you here as we go. The Milwaukee growth is extraordinary, not because only because of 21%, but because we were able to do it in every region that we're attacking around the world. So North America was really strong at 20.6%. But Europe was the Europe was the star of the company last year with a 21% growth rate in Milwaukee. As you know, the European theatre is in a state of contraction. We 1.3%. That's maybe the most exciting result that we had last year. Of course, rest of world is paced by Australia, New Zealand where we have become the number one pro supplier of power tools. But also we're beginning to focus on other countries in Asia like Korea, like Taiwan, where we've had amazing success with our Milwaukee program and not at a discounted level. We're going in with I think it's important to point out now that we have never put all our eggs in one basket when it comes to manufacturing. We have an outstanding manufacturing foundation in the U. S. This is not something that we reacted to. This has been in in place for a long time for a lot of reasons. We always felt that we should have geographic diversity when it comes to manufacturing. We also have by the way, we also have manufacturing in Europe. So these decisions are made based on a strategic plan that would allow TTi to flourish no matter what local laws are passed. So if something happens in the U. S. And there's some sort of border tax, it's going to affect everybody equally, Everybody manufacturers in Asia. It's not like we're the only company producing power tools in China. The great news is that we are positioned to ramp up fast in our manufacturing operations. We have 2 main Lockheed factories. We have a Ryobi operation, a Flirtier operation and can decision to increase manufacturing. So if you say, well, what's going to happen to TTi if you do this? Well, first of all, of course, U. S. Has higher labor rates, but we'll save the freight. We have learned to automate our manufacturing and we've proven that over the last 5 years. And we have an amazing world class manufacturing operation in China that is a perfect operation to supply the rest of the world. The U. S. Is everybody's talking today about the U. S, but we're growing like crazy in Canada and in Europe and in Australia and Korea and Latin America. And so we have China ready to go to supply the rest the world if the U. S. Focuses on production locally. And again, I think you have to understand that the laws that may come across in the U. S. Won't discriminate. Every manufacturer will be dealing with the same situation. It's just the winner will be the company that can move most quickly. And I think our execution track record speaks for itself. So, okay, here's another interesting highlight of the company's success. We are continue to be dedicated to hiring college graduates to fund our to provide manpower power for our growth. So this year, we will actually hire over 500 college graduates over 50 campuses in the U. S. And in other 12 countries around the world. This is a program that provides the future leadership for TTi. And it's an interesting group that we hire. These millennials that we hire are there's 52% female, there's 18% biotri lingual graduates. We look at 100 resumes, we interview 10 people, we pick 1, we do that 500 times. And then the top 10% of those people are promoted into the company's opportunities or product management jobs, etcetera, throughout the world. There is no one in our industry that's remotely close to this kind of commitment to developing future leadership. And it's one of the things about having so many millennials around, millennials all want to save the world, but they also live on social media and they think their iPhone should control everything. So you're going to see TTi blazing a trail when it comes to iPhone and Bluetooth capabilities on our products, whether it's in Flourcare or in Power Tools. And this is an enormous advantage and I think it's underestimated. I think to have a group of 50 year old executives sitting around trying to figure out how to turn I think it's important to point out now that we have never put all our eggs in one basket when it comes to manufacturing. We have an outstanding manufacturing foundation in the U. S. This is not something that we reacted to. This has been in place for a long time for a lot of reasons. We always felt that we should have geographic diversity when it comes to manufacturing. We also have by the way, we also have manufacturing in Europe. So these decisions are made based on strategic plan that would allow TTi to flourish no matter what local laws are passed. So if something happens in the U. S. And there's some sort of border tax, it's going to affect everybody equally, everybody manufacturers in Asia. It's not like we're the only company producing power tools in China. The great news is that we are positioned to ramp up fast in our manufacturing operations. We have 2 main Lockheed factories. We have a Ryobi operation, a Flirt Care operation and a Hansel operation. And we have a lot of friendly governors that seem to be anxious manufacturing. So if you say, well, what's going to happen to TTi if you do this? Well, first of all, of course, U. S. Has higher labor rates, but we'll save the freight. We have learned to automate our manufacturing and we've proven that over the last 5 years. And we have an amazing world class manufacturing operation in China that is a perfect operation to supply the rest of the world. The US is everybody is talking today about the US, but we're going like crazy in Canada and in Europe and in Australia and Korea and Latin America. And so we have China ready to go to supply the rest of the world if the U. S. Focuses on production locally. And again, I think you have to understand that the laws that may come across in in the U. S. Won't discriminate. Every manufacturer will be dealing with the same situation. It's just the winner will be the company that can move most quickly. And I think our execution track record speaks for itself. So, okay, here's another interesting highlight of the company's success. We are continue to be year, we will actually hire over 500 college graduates over year, we will actually hire over 500 college graduates over 50 campuses in the U. S. And in another 12 countries around the world. This is a program that provides the future leadership for TTi. And it's an interesting group that we hire. These millennials that we hire are they're 52% female, there's 18% biortri lingual graduates. We look at 100 resumes, we interview 10 people, we pick 1, we do that 500 times. And then the top 10% of those people are promoted into the company's opportunities or product jobs, etcetera, throughout the world. There is no one in our industry that's remotely close to this kind of commitment to developing future leadership. And it's one of the things about having so many millennials around, millennials all want to save the world, but they also live on social media and they think their iPhone should control everything. So you're going to see TTi blazing a trail when it comes to iPhone and Bluetooth capabilities on our products, whether it's in Flourcare or in power tools. And this is an enormous advantage and I think it's underestimated. I think to have a group of 50 year old executives sitting around trying to figure out how to turn the iPhone into a device on the job site might not be the best strategy. And I think that our campus recruiting program is going to bear fruit here as we go forward. So, I'd like to introduce today a way for you to think about our market over the next 5 years. Many people have said, what are you going to do next? And Horst and I talk about this all the time. Milwaukee is growing like crazy. Ryobi is an amazing success story. What's going to happen next? And I think we wanted to share with you our vision about the marketplace over the next 5 years to give you some confidence that we can continue to grow our company the way we have in the past and deliver outstanding financial results in the businesses that we serve today. And this growth we have will be fueled by one of our most prominent analysts has coined the phrase the growth drivers of the company. We have Milwaukee and Ryobi are powerful growth drivers soon to be joined by Floor Care. And let me show you how that growth will manifest itself in the market. So, okay. So, first of all, we think in 5 years, we're talking about serving a market that could be $35,000,000,000 $36,000,000,000 plus. Now these are internal estimates. This relates to a marketplace that we are in fact helping to create and develop. And so our vision is to stimulate and create a market much like Apple did with iPhone and iPad. And we will learn to be in a position to harvest the benefit of that creation. We recognize we're never going to control the whole market. And I think what people miss, none of our competitors have to lose for us to win. We have some very good competitors, Bosch, Makita, Stanley DeWalt. These are well managed companies and they are very strong in their own geographic regions and we understand that. We intend to be leaders in the market, particularly in cordless where we already are exhibiting that leadership. But what we create here will benefit everyone. And the key is, we want to be the apple. We want to be in the vanguard and being the company that's creating the opportunity. So, and the power tool market has changed dramatically. And the reason this is so exciting is exciting is because of what we call the network effect in cordless. In the old days, power tools was called a best of breed business. So you'd walk into Home Depot and you'd buy Milwaukee saws on a Bosch router, Makita circular saw and you were considered to be a smart user that knew what brands to buy for what category. And there was no interconnectivity. So it didn't your truck looked like a rainbow of colors and it didn't matter if one tool will talk to the other because there was no synergy, no connectivity. That's all over now. The power tool market is going to go to cordless. In fact, the whole power equipment market is going to go to cordless and along with floor care. And the market is going to go to cordless along with floor care. And the opportunity for us is because we have the broadest network, the broadest range of products that work out the same battery platforms, we think that we can convince a user to buy our tool kits to start and lock them into our network over the long haul. And this is a way where you can build a much higher level of market share and a much higher level of growth than the old Best of Breed Day. So let's take a look at this cordless market potential. So the total power equipment market potential, we think say $36,000,000,000 That's a big number, 2021, much bigger than today, more than double today. So iPhone into a device on the job site might not be the best strategy. And I think that our campus recruiting program is going to bear fruit here as we go forward. So, I'd like to introduce today a way for you to think about our market over the next 5 years. Many people said, what are you going to do next? I mean, Horst and I talk about this all the time. Milwaukee is going like crazy, Ryobi is an amazing success story. What's going to happen next? And I think you we wanted to share with you our vision about the marketplace over the next 5 years to give you some confidence we can continue to grow our company the way we have in the past and deliver outstanding financial results in the businesses that we serve today. And this growth we have will be fueled by one of our most prominent be joined by Floor Care. And let me show you how that growth will manifest itself here in the market. So, okay. So, first of all, we think in 5 years, we're talking about serving a market that could be $35,000,000,000 $36,000,000,000 plus. Now these are internal vision is to stimulate and create a market much like Apple did with iPhone and iPad. And we want to be in a position to harvest the benefit of that creation. We recognize we're never going to control the whole market. And I think what people miss, none of our competitors have to lose for us to win. We have some very good competitors, Bosch, Makita, Stanley, DeWalt. These are well managed companies and they're very strong in their own geographic regions and we understand that. We intend to be leaders in the market, particularly in cordless where we already are exhibiting that leadership. But what we create here will benefit everyone. And the key is, we want to be the apple. We want to be in the vanguard and being the company that's creating the opportunity. So, and the power tool market has changed dramatically. And the reason this is so exciting is because of what we call the network effect in cordless. In the old we Power Tools was called a best of breed business. So you'd walk into Home Depot and you'd buy Milwaukee saws, Bosch router, Makita circular saw. And you were considered to be a smart user that knew what brands to buy for what category. And there was no interconnectivity. So it didn't your truck looked like a rainbow of colors and it didn't matter if one tool talked to the other because there was no synergy, no connectivity. That's all over now. The power tool market is going to go to cordless. In fact, the whole power equipment market is going to go to cordless along with floor care. And the opportunity for us is because we have the broadest network, the broadest range of products that work out the same battery platforms, we think that we can convince a user to buy our tool kits to start and then lock them into our network over the long haul. And this is a way where you can build a much higher level of market share and a much higher let's take a look at this cordless market potential. So, the total power equipment market potential, we think, say, dollars 36,000,000,000 that's a big number, 20 21, much bigger than today, more than double today. So there's 9 drivers. Let me just touch on 9 things that we think will help stimulate that. And then I will share with you why we think we're in a unique unique position to harvest the biggest benefit of this growth. So, first of all, there's the logical corded to cordless, right? Corded power tools, is the logical corded to cordless, right. Cordless corded power tools are obviously going to become obsolete just like landlines have in the phone arena. And we think that we will continue to stimulate a switch from corded to cordless. This is happening as we speak. It's happening at a much faster rate than people realize even in floor care and it will continue to happen. But that's not the only opportunity here that's driving growth. Then we have pneumatic, pneumatic, traditional pneumatic products moving to cordless. Now pneumatic tools are driven by compressors with a hose. They are heavy, they are noisy, they're awkward to use and cordless is incredibly liberating because there's no hose, you're not tethered. The noise is very different and we think it represents the future. Okay. So we have gas to cordless. This is huge. The greenhouse gas movement, the whole notion of environmentally friendly products is going to benefit TTi because we're on the vanguard here of developing cordless products to replace petrol. It's mostly in the outdoor area, although there's some heavy equipment categories that also fall into this category. Next, we have a massive opportunity that we have literally created, we're pioneering and that's the whole notion of lighting. So every job site gets dark in the evening and every job site when the building is not complete and there is no power, there is no light. So you need to provide temporary lighting sources. And traditionally, these are based on archaic dangerous halogen products that are running off generators or off of the mainline. And with the TTi technology, with Milwaukee cordless and also RYOGI technology, we can light up a job site with the same batteries that people use in their tools. This is such a big category, you can't believe it. And there's no one remotely close to TTi in terms of the broad range of products or the innovative solutions for this category. Okay. Next, we have the whole idea of power assisted hand tools. So hand tools can because cordless products are becoming have cordless or the ultra small cordless products that adapt themselves to automating these manual applications. Okay, next you have hydraulic. Automating these manual applications. Next, you have hydraulic. When you hear our U. S. President talk about infrastructure, you should think, oh my goodness, TTi is in great position, because we've been working on infrastructure products for the last 5 years. One of the key infrastructure areas is the old hydraulic. Are these hydraulic tools are tools powered by large noisy, thought for decades. And we have been able to take cordless products and come up with solutions here that will liberate the infrastructure user. And I'll show you some of those products today. We have over 50 infrastructure oriented products that we're rolling out this year alone. I don't think anybody else even thought about the category like that. And this is an exciting part of the CorVelers. Okay. One of the things you see with the whole iPhone unique position to harvest stimulate that and then I will share with you why we think we're in a unique position to harvest the biggest benefit of this growth. So first of all, there's the logical corded to cordless, right. Corded power tools are obviously going to become obsolete just like landlines have in the phone arena. And we think that we will continue to stimulate a switch from corded to cordless. This is happening as we speak. It's happening at a much faster rate than people realize even in floor care and it will continue to happen. But that's not the only opportunity here that's driving growth. Then we have pneumatic, pneumatic, tradition of pneumatic products moving to cordless. Now pneumatic tools are driven by compressors with a hose. They're heavy, they're noisy, they're awkward to use and cordless is incredibly liberating because there's no hose, you're not tethered, the noise is very different and we think it represents the future. Okay, so we have gas to cordless. This is huge. The greenhouse gas movement, the whole notion of environmentally friendly products is going to benefit TTi because we're on the vanguard here of developing cordless products to replace petrol. It's mostly in the outdoor area, although there's some heavy equipment categories that also fall into this category. Next, we have a massive opportunity that we have literally created, we're pioneering and that's the whole notion of lighting. So, light. So, you need to provide light. So you need to provide temporary lighting sources. And traditionally, these are based on archaic, dangerous halogen products that are running off generators or off of the main line. And with the TTi technology, with Milwaukee cordless and also we can light up a job site with the same batteries that people use in their tools. This is such a big category you can't believe it. And there is no one remotely close to TTi in terms of the broad range of products or the innovative solutions for this category. Okay. Next, we have the whole idea of power assisted hand tools. So hand tools can because cordless products are becoming lighter and more powerful, we can take traditional categories that were manual and turn them into power assisted products, cordless products. And we have a unique opportunity here because we're the only company that is committed to what we call compact cordless, so the ultra small cordless products that adapt themselves to automating these manual applications. Next, When you hear our U. S. President talk about infrastructure, you should think, oh my goodness, TTi is in great position, because we've been working on infrastructure products for the last 5 years. One of the key infrastructure areas is the old hydraulic or these hydraulic tools are tools powered by large noisy dated contraptions that haven't been rethought for decades. And we have been able to take cordless products and come up with solutions here that will liberate the infrastructure user. And I'll show you some of those products today. We have over 50 infrastructure oriented products that we're rolling out this year alone. I don't think anybody else even thought about the category like that. And this is an exciting part of the Correlis. Okay. One of the things you see with the whole iPhone market is that people today replace their phones much more often than they used to in the old days before cordless phones existed. And the same is true in power tools. End users don't want to be caught on a job site with their customers using a tool, a cordless tool that's 3 or 4 years out of date. And so the replacement cycle of power tools is changing rapidly. It's not iPhone and it's not iPad yet, but it's a lot more in the old days, power tools would be in place 6, 8 or 10 years and now 3 years is kind of the average cycle, although it varies based on user. Okay. One of the things that people are grossly underestimating is the long term impact of the battery aftermarket. Remembering that batteries have no price elasticity if you're in a system, if you're in a Ryobi or Milwaukee system, the battery replacement is a must purchase and the margin potential for the companies to control or have leadership in cordless is immense. We haven't even begun to benefit from what's going to happen as we look 3, 4 years out because there's a lag time when for the battery aftermarket. But it's a very exciting element of our future. And let's not forget, there is a significant opportunity in cordless, it's very different than the old days of power tools. So a user watching to a Home Depot today and they buy a combo kit of Milwaukee tools, say a drill driver and a saw. Suddenly, our reps sits with them and says, if you buy you already made the investment in this $1,000 combo kit. You can buy bare tools, tools without batteries or chargers. You can them for a fraction of the cost of a loaded cordless product. So instead of paying $2.50 for a cordless circ saw, you can buy one for $89 the bare tool and use your battery you already have to power that circ saw. So we have and we trained our sales network very carefully to encourage users to add on to their purchase. And so the ASPs of our sales have gone from the old days where it was $99 or $199 and today it's very common for us to sell $1,000 or $2,000 worth of to one user who was planning to spend a couple of $100 and suddenly they realize the economic benefit of these bare tools. And if you go into retail partners or industrial distributors, you'll see bare tool walls down on display. We're not the only company in this business. We're just furthest ahead. And we intend to market the bare tool benefits in Milwaukee, in Ryobi, in Flour Care and in all the pockets of our company. It's a major deal. And one thing I may also mention to you, we are also the only company that's discontinued nickel cadmium batteries in our professional side of our market now. Our competitors are talking about cordless and they're selling a lot of cordless. But there's an interesting high percentage of cordless sales by some of our competitors that are still nickel cadmium, which is an out of date archaic technology. The reason they do it is because it's inexpensive and it allows the numbers to be better. We decided to discontinue NiCAD. But there's so many NiCAD cordless products that are installed in the installed base around the world and that's a frothy target for us to go after. We want to pursue those nightcap users and liberate much more often than they used to in the old days before cordless phones existed. And the same is true in power tools. End users don't want to be caught on a job site with their customers using a tool, a cordless tool that's 3 or 4 years out of date. And so the replacement cycle of power tools is changing rapidly. It's not iPhone and it's not iPad yet, but it's a lot more in the old days, power tools would be in place 6, 8 or 10 years. And now 3 years is kind of the average cycle, although it varies based on user. Okay. One of the things that people are grossly under underestimating is the long term impact of the battery aftermarket. Remembering that batteries have no price elasticity if you're in a system, if you're in a Ryobi or Milwaukee system, the battery replacement is a must purchase and the margin potential for the companies that control or have leadership in cordless is immense. We haven't even begun to happen as we look 3, 4 years out because there's a lag time for the battery aftermarket. But it's a very exciting element of our future. And let's not forget, there is a significant opportunity in cordless, it's very different than the old days of power tools. So, a user watching to a Home Depot today and they buy a combo kit of Milwaukee tools, say a drill driver and a saw. Suddenly, our reps sits with them and says, if you buy you've already made the investment in this $1,000 combo kit. You can buy bare tools, tools without batteries or chargers. You can buy them for a fraction of the cost of a loaded cordless product. So instead of paying $2.50 for a cordless circ saw, you can buy one for $89 the bare tool and use your battery you already have to power that circ saw. So we have and we trained our sales network very carefully to encourage users to add on to their purchase. $1,000 or $2,000 worth of tools to one user, common for us to sell $1,000 or $2,000 worth of tools to one user who was planning to spend a couple of $100 and suddenly they realize the economic benefit of these bare tools. And if you go into our retail partners or industrial distributors, you'll see bare tool walls down on display. We're not the only company in this business. We're just furthest ahead. And we intend to market the beer tool benefits in Milwaukee, in Ryobi, in Flour Care and all the pockets of our company. It's a major deal. And one thing I may also mention to you, we are also the only company that's discontinued nickel Cadmium batteries in our professional side of our market now. Our competitors are talking about cordless and they're selling a lot of cordless. But there's an interesting high percentage of cordless sales by some of our competitors that are still nickel cadmium, which is an out of date archaic technology. The reason they do it is because it's inexpensive and it allows the numbers to be better. We decided to discontinue NiCAD. But there's so many NiCAD cordless products that are installed they're in the installed base around the world and that's a frothy target for us to go after. We want to pursue those NiCd users and NIKEAD users and liberate them with the wonderful qualities of lithium. And we're in a position to do that because we don't have to worry about our NIKEAD sales going down. We discontinued years ago. We had great pain at the time in terms of sales and profit because we were absolutely committed to lithium. So, okay, If you look at okay, so maybe you say $36,000,000,000 is crazy. I can't get my mind around market that big. But even if it's $30,000,000,000 the implication for and I have a feeling, my people think that I'm conservative. So believe it or not, they think that there's more opportunity than what I've just articulated. Who knows what it is? The fact is we're creating a market for cordless. We're driving it. We're convincing users to switch. Our competitors are benefiting too. So if our competitors come out with an announcement and their sales are up and not down that doesn't mean that we're losing share. That doesn't mean that it's affecting us. I mean, I actually think it's good. I think it shows that the overall market is healthy and we've created opportunities for everyone. Now, my Chairman expects us to be leaders and believe me, we will. We will leaders in the space. But I think every time a competitor sends out an announcement and their sales are up 4 or 5 points, that doesn't it had any effect on us. So and in fact, our leadership position in Power Tools is crystal clear. So we're the only company the fastest growing segment of cordless over the last 5 years is called subcompact. These are ultra compact tools that are they cater to the user of the future. These are ergonomically friendly tools that are easy to use, they are lightweight and because lithium and because restless motors combine to give you so much power with such lightweight, we're able to replicate what traditional full size tools can do with these tools that weigh a fraction, a third as much. We're the only company that's made a commitment to subcompact. We have competitors that are talking about generations of cordless that cover all kind of platform, all kind of voltages and they've skipped the whole subcompact sector. So, I always thought cordless products were supposed to be smaller, lighter, more compact and more convenient than corded like your iPhone. People aren't buying cordless phones that look like landlines, they're buying smaller, lighter, more compact products and that's what subcompact gives us. And if you look, we have raced ahead in this space and it's almost game over. There is no one that's even close to having the leadership position in the 80 plus subcompact tools that we've got, which will be 100 and 100 in 5 years. But we also make no mistake, we have a clear leadership position in terms of technology and breadth of line and user acceptance when it comes to full size cordless. And if you look at that picture, 5 years ago, there were 25 tools in the picture. And I can tell you 5 years from now I'm going to have to get Horst to get us a bigger screen because there will be 3 times the amount of cordless products that you see in that photo. And it was interesting that Bloomberg this morning I was doing a live interview with Bloomberg and they always ask you to say, I'm tired cliche, what is your biggest worry as a CEO? My biggest worry is hiring enough engineers to develop all the products that our guys have come up with. Our product pipeline is so stacked that the trick for us is how do we convert all those cool ideas into products that we can raise to market. So far we're doing pretty well and with the wonderful qualities of lithium. And we're in a position to do that because we don't have to worry about our NiCd sales going down. We discontinued NiCAD 7 years ago in great pain at the time in terms of sales and profit because we were absolutely say $ say $36,000,000,000 is crazy. I can't get my mind around the market that big. But even if it's $30,000,000,000 The implication for and I have a feeling, my people think that I'm conservative. So believe it or not, they think that there's more opportunity than what I've just articulated. Who knows what it is? The fact is we're creating the market for cordless, we're driving it, we're convincing users to switch. Our competitors are benefiting too. So if our competitors come out with an announcement and their sales are up and not down, that doesn't mean that we're losing share. That doesn't mean that it's affecting us. I mean, I actually think it's good. I think it's good. I think it shows that the overall market is healthy and we've created opportunities for everyone. Now, my Chairman expects us to be leaders and believe me, we will. We will be leaders in the space. But I think every time a competitor sends out an announcement and their sales are up 4 or 5 points, that doesn't mean it had any effect on us. So and in fact, our leadership position in Power Tools is crystal clear. So we're the only company the fastest growing segment of cordless over the last 5 years is called subcompact. These are ultra compact tools that are they cater to the user of the future. These are ergonomically friendly tools that are easy to use, they are lightweight and because lithium and because restless motors combine to give you so much power with such lightweight, we are able to replicate what traditional full size tools can do with these tools that weigh a fraction, a third as much. We're the only company that's made a commitment to subcompact. We have competitors as you're talking about new generations of cordless that cover all kind of platform, all kind of voltages and they've skipped the whole subcompact sector. So, I always thought cordless products were supposed to be smaller, lighter, more compact and more convenient than corded like your iPhone. People aren't buying cordless phones that look like landlines, they are buying smaller, lighter, more compact products and that's what subcompact gives us. And if you look, we have raced ahead in this space and it's almost game over. There's no one that's even close to having the leadership position in the 80 plus sub compact tools that we've got, which will be 100 and 100 in 5 years. But we also make no mistake, mistake, we have a clear leadership position in terms of technology and breadth of line and user acceptance when it comes to full size cordless. And if you look at that picture, 5 years ago, there were 25 tools in the picture. And I can tell you, 5 years from now, I'm going to have to get a horse to get us a bigger screen because there will be 3 times the amount of cordless products that you see in that photo. And it was interesting that Bloomberg this morning I was doing a live interview with Bloomberg and they was asking you to say, I'm tired cliche, what is your biggest worry as a CEO? My biggest worry is hiring enough engineers to develop all the products that our guys have come up with. Our product pipeline is so stacked that the trick for us is how do we convert all that those cool ideas into products that we can raise to market. So far, we're doing pretty well. And we're hiring an awful lot of engineers, but it's a high class problem. Now, I love the notion of twin drivers of growth. We have not only amazing success with Milwaukee, but you have to recognize the Ryobi brand has gone from one of many do it yourself power tool brands to a point where today it is Ryobi has got a commanding global leadership position in DIY power tools and in number 2 competitor in DIY tools, you will have a hard time covering. I'm name the number 2 competitor in DIY tools, you will have a hard time coming up with it because it's Ryobi and then there's 5 other brands that are almost meaningless in this category. And there's no global brand and there is no brand that has taken the notion of an overarching platform where 1 battery works in outdoor products, garage door openers, a host of power tools, etcetera. So, when we talk about cordless, it's true that professional market for cordless is going to be vast and probably 5 times bigger than DIY. But the DIY market is big too and we're ready to go with 3OB in the DIY side. So it's very exciting. Okay. And there's one other thing that Horst and I felt like we should clear up with the investment community. We often, if housing starts in the U. S. Go down 3%, investors sell our stock and people think it's going to have some kind of effect on TTi. And it's true, ResCon in the U. And worldwide is an important segment for TTi. It's about $1,800,000,000 as we project stuff on in 2021 out of the $36,000,000,000 But there's 23 other verticals that I never hear about from our investors and our analysts. So think about it. There is 24 verticals. Rescon gets unbelievable airtime. Now one of our competitors is hyper focused on Rescon. And I know hyper focused on a broad base of verticals. And I know that because I launched their brand and it was and I wrote the strategy was all ResCon. But TT and I is different. We are hyper focused on a broad base of verticals, including all these infrastructure areas that you hear the new U. S. President talk about. But I can tell you, there's a lot of them. And we are not just a restaurant company. So, and you'll see today some examples of this. Okay. Let's look at let's flip through some highlights on Milwaukee. There's way too many for today's review. But like always, we'll just share a couple of highlights on some new things. We were first to market with the launch similar launch similar versions 6 months or a year later, which is fine. We'll have a new version, as you know, in the future to stay ahead. But we cannot keep these high cost, high powered power tools fueled by that battery in stock. It is amazing what's happened with these products. The highlight of our Q4 launch program was our miter saw. We have engineered a cordless miter saw that is actually smaller, much lighter and more compact than corded units and even the other cordless units. And it's selling like crazy. Of mid, we call mid torque impact drivers, impact wrenches. These are of mid, we call mid torque impact drivers, impact wrenches. These products are used in a variety of infrastructure applications to drive lag bolts any kind of threaded mechanical fasteners that are a little bit thicker, which is what you see in the infrastructure arena. And we have a line of these that's unique. They're incredibly powerful. And this is designed to replace the pneumatic impact ranges that you see in all sorts of applications. You recognize them in the automotive channels because if you get your car repaired, you'll see these pneumatic impact crunches to buy a new set of tires. But what you don't see perhaps is the nuclear power plants and the offshore drilling rigs and the thousands of infrastructure projects that all rely on this kind of device. The thing is historically they've been pneumatic. In the future, we think it'll be cordless. We won't get 100% of it, but we're going to get an awful lot of this cordless market because we're first and we have a terrific design. We also are entering on the Milwaukee side, the petro replacement outdoor products. These are great for professional landscapers. This is yet another range we're launching. I think one of the biggest opportunities in the company and the line that's very much still underestimated, misunderstood is high performance lighting. So here's an example of a wonderful infrastructure product. So a utility, if you ever see a utility repairman working on a power line, a telephone line or a power line, they go they're lifted up in a bucket or a cherry picker, a device that raises you up to get so you can work on a power line. And so this is a bucket light. It hangs off of that bucket. So because a lot of times the power goes down at night and a lot of times that user is up there trying to fumble with a flashlight and fix the issue. So, these lights are designed to change the way performance lighting products that we're rolling out that all use the same batteries as our 12 and 18 volt system. They're all unique to TTi. They all use the unbelievable LED lighting technology, which replaces the dreadful halogen and fluorescent incandescent solutions in the past. And the potential for this is so vast, I think people can't believe it. Now, this has become very topical. We were as Horace knows, we were working on these devices long before we had a new President in the United States. This is an example of an infrastructure centric product. This is a 3 inches thick cordless cable cutter. So, if you are working on lines, cable lines under in New York City under the streets and you have to cut a 3 inches thick cable, you're not going to do that with a wire cutter. And historically, people do this with if it's a live wire, there if it's a live wire, there's no real way to detect that and you can get this arc arcing which is not a good thing. So we have control cable cutter. So you can orient this to cut the cable, you can activate it remotely. If there's any juice in that cable, there's no danger to the user. So this will be adopted by safety oriented countries in a millisecond. And it's cordless, it works out the same battery as the rest of the system. And it won't get it's not a sexy product that sells at retail, but it's an infrastructure product that's got vast potential. Here's another example. This is another cable cutting product. This is cut above ground cable. There's lots of these various types of, we call them force logic hydraulic replacement products, all infrastructure based, whether it's a dam, a bridge, a tunnel, all these infrastructure projects need these kinds of unique, they're incredibly powerful and this is designed to replace the pneumatic impact ranges that you see in all sorts of applications. You recognize them in the new set buy a new set of tires. But what you don't see perhaps is the nuclear power plants and the offshore drilling rigs and the thousands of infrastructure projects that all rely on this kind of device. The thing is historically they've been pneumatic. In the future we think it will be cordless. We won't get 100% of it but we're going to get an awful lot of this cordless market because we're first we have a terrific design. We also are entering on the Milwaukee side, the petrol replacement outdoor products. These are great for professional landscapers. This is yet another range we're launching. I think one of the biggest opportunities in company and the line that's very, very much still underestimated, misunderstood is high performance lighting. So here's an example of a wonderful infrastructure product. So, utility, if you ever see a utility repairman working on a power line, a telephone line or a power line. They go they are lifted up in a bucket or a cherry picker, a device that raises you up to get so you can work at a power line. And so this is a bucket light. It hangs off of that bucket. So because a lot of times the power goes down at night and a lot of times that users up there try to fumble with a flashlight and fix the issue. So these lights are designed to change the way the utility worker can light up his job site. And there are dozens of these high performance lighting products that we're rolling out that all use the same batteries as our 12 and 18 volt system. They're all unique to TTi. They all use the unbelievable LED lighting technology, which replaces the dreadful halogen and fluorescent incandescent solutions in the past. And the potential for this is so vast, I think people can't believe it. Now, this has become very topical. We were Horst knows, we were working on these devices long before we had a new President in the United States. This is an example of an infrastructure centric product. This is a 3 inches thick cordless cable cutter. So, if you are working on lines, cable lines under in New York City under the streets and you have to cut a 3 inches thick cable, you're not going to do that with a wire cutter. And historically, people do this with these enormous expensive hydraulic cutting devices and they're inherently unsafe because if it's a live wire, there's no real way to detect that and you can get this arc arcing which is not a good thing. So we have a remote control cable cutter. So you can orient this to cut the cable, you can activate it remotely. If there's any juice in that cable, there's no danger to the user. So this will be adopted by safety oriented countries in a millisecond. And it's cordless, it works out the same battery as the rest of the system. And infrastructure product that's got vast potential. There's another cable cutting product. This is to cut above cable. There's lots of these various types of what we call them force logic hydraulic replacement products, all infrastructure based, whether it's a dam, a bridge, a tunnel, all these infrastructure projects need these kind of tools. And we're trying to liberate that user too, not just the DIYer with a cordless solution that uses the same battery they use in their drill and their saw and their recent saw. And so, this is how we come up with crazy numbers like $36,000,000,000 because the infrastructure market is the potential is it's hard to size it. But I can tell you whatever it is, we tend to be leaders in the space. We also one of the cool things about having a Flour Care company and a Power Tool company together is that we can sell an awful lot of Flour Care devices under our power tool brands targeting different users. So this is a Milwaukee pole vac, it's super powerful, it's a different user than Hoover or Durtell or a VAX user. It's a job site user that needs a quick clean up with a lot of power. It's noisy, it's got great suction and it's perfect for job sales. By the way, I believe a lot of homeowners will take I believe a lot of contractors will take this home too. So that's okay. Now here's an interesting thing. The benefit of hiring millennials again is that you develop marketing ideas and products that are tied to your iPhone. So this lovely device is called a tick. It's not meant to be a brand name that makes you feel good, but it's descriptive. So the TIC is a job site tool and construction tracking device. There are consumer versions of these things now, but they don't hold up on the job site. They don't have quite the distance capability. So this has got 100 feet distance capability. It's indestructible. You attach it to a ladder or a drill or a wheelbarrow or your kid's motorcycle, whatever it is, but you attach it to any device and it will track on your iPhone, the same Milwaukee One Key app that's being downloaded at record levels in our industry, that same app is used to track these tick enabled products. So anyhow, it's not a great brand name, but the margins and sales potential are quite exciting. Okay, let's turn to Ryobi, the other growth engine of the company today. Ryobi is, as I said, number 1 in the world in consumer or DIY cordless. And that means we're number 1 above Bosch, above the old brand, which I was involved with 3 years above all the brands in Australia and U. S, etcetera. But that number one position is only going to get better. So here's just this 1st 6 months this year, we're going to launch a myriad of new OnePlus products. So you have a miter saw, you have a brussels hammer drill, you have a belt sander first time in 1 plus, you have a really cool sump pump, cordless sump pump, which has got lots of applications around home and I think we're going to see these on job sites. You have a glue gun cordless finally, you have a palm router, you have a inflatable toy inflator. So we've never put this in Milwaukee, but it Ryobi is perfect for an air mattress, etcetera. And it's the same battery you use in your drill. So you can see the potential for this in the home. And we have a palm sander. And this goes on and there's a new planer. We have so many one plus, so many ideas in RYOBI with our DIY team that I think we're very confident over the next 5 years that we can grow that business not at the rate of Milwaukee but certainly way above what the market expects. And remember, cordless is inherently more profitable than corded. There is the network effect which accumulates even more sales and the battery aftermarket is quite exciting. And our key retailers are 100% behind the Ryobi 1 plus phenomenon. In fact, they're helping to drive it because they're seeing the benefit. And none of this stops with Outdoor. Our Outdoor team has been outstanding at coming up with cordless innovation. And the whole idea in outdoor is to liberate people from petrol to cordless. Naturally, we're still selling petrol. We sell a few plug in outdoor products, but the future is going to be increasingly more cordless. And this is our 5th version of an 18 volt string trimmer, this one with a restless motor. So, it's lighter, it's more powerful, it's got less noise and it's amazing performance for an 18 volt string trimmer. And we have a mower that is this is a 40 volt mower that will literally replace your gas or your petrol lawnmower. The one charge gives you 45 minutes of run time which is the same as the tank of gas and accounting performance is amazing. And there is no cord to pull, there is no noise, there is no greenhouse gas issue and suddenly we have a growth a cordless growth driver in a space where we've never participated, which is the in a space where we've never participated, which is the lawnmower space. The new blower, same thing, a fantastic revolutionary blower the same battery is the mower. So, okay. And just the final part of our story this morning is Floor Care. We are not pleased with the performance of our Floor Care operation worldwide. We are incredibly pleased with the strategy that our team has put together. As Frank pointed out upfront and Horace, we have hired an outstanding team in FLORICARE. We are focused on a strategy that we think long term will allow TTi to succeed. And the focus is on cordless and robots. And the focus is React actually adjusts automatically the floor care product, the vacuum put it with, it's cordless recorded. It will adjust to the floor surface and set the beater brush and the height to exactly the height you need for that surface. So what house or what building has the same floor surface everywhere? None. So you go from carpet to tile, you go from linoleum to another floor surface and this will adjust because of the sensors in the system. And it's controlled by your iPhone. There's so many capabilities here that we think we're on to something really big with Floorcare. And the technology is called FloorSense, we'll show you later, but it's amazing. And it will also adapt the technology is called FLORCENCE, we'll show you later, but it's amazing. And it will also adapt to cordless, which we'll launch later this year. We finally are launching robots. Robots are tricky because the suction is important, but we think we have robots that will be really cool and whizz around your flat and also deliver the appropriate suction that we're proud Vax products. So you can look at the overall sales and say, oh boy, these guys are really struggling in the floor care. But actually, it's not true because the hottest product right now in the UK is the VAX Blade, which is a unique product that we pioneered. We launched it in the UK. It's got this technology called Helix, which orients the pole vac, so it weighs like 1 third of an upright. And it's an example of thinking differently in Flour Care in a way that will allow us to achieve, we think in the future, what we've been able to pull off in the past with power tools. So anyhow, I'll turn it back over to our Chairman, Horst Pudwell, for his final comments. Thank you very much, Joe. I don't know one question was asked. What is our space, our floor space? On the fact they're helping to drive it because they're seeing the benefit. And none of this stops with Outdoor. Our Outdoor team has been outstanding at coming up with cordless innovation. And the whole idea in outdoor is to liberate people from petrol to cordless. Naturally, we're still selling petrol. We sell a few plug in outdoor products. But future is going to be increasingly more cordless. And this is our 5th version of an 18 volt string trimmer, this one with a restless motor. So it's lighter, it's more powerful, it's got less noise and it's amazing performance for an 18 volt string trimmer. And we have a mower that is this is a 40 volt mower that will literally replace your gas or your petrol lawnmower. The one charge gives you 45 minutes of run time, which is same as the tank of gas and the kind of performance is amazing. And there is no cord to pull, there is no noise, there is no greenhouse gas issue and suddenly we have growth a cordless growth driver in a space where we've never participated, which is the lawnmower space. The new blower, same thing, a fantastic revolutionary blower off the same battery is the mower. So, okay, and just the final part of our story this morning is Floor Care. We are not pleased with the performance of our Floor Care operation worldwide. We are incredibly pleased with the strategy that our team has put together, as Frank pointed out and Horace, we've hired an outstanding team in FLORICARE. We are focused on a strategy that we think long term will allow TTi to succeed. And the focus is on cordless and robots. And the focus is not just me too product, but it's on technology. For example, we created a capability called React. React actually adjusts automatically the automatically the floor care product, the vacuum put it with, it's cordless recorded. It will adjust to the floor surface and set the beater brush and the height to exactly the height you need for that surface. So, what house or what's the to another floor surface and this will adjust because of the sensors in the system. And it's controlled by your iPhone. Is so many capabilities here that we think we're on to something really big with FLORCARE. And the technology is called FLORCENCE, we'll show you later, but it's amazing. And it will also adapt to cordless which we will launch later this year. We finally are launching robots. Robots are tricky because the suction is important but we think we have robots that will be really cool and whizz around your flat and also deliver the appropriate suction that we're proud of it with the Hoover and the VAX brand names. We have some wonderful success over in the U. K. With our new cordless VAX products. So you can look at the overall sales and say, oh boy, these guys are really struggling in floor care. But actually, that's not true because the hottest product right now in the UK is the VAX Blade, which is a unique product that we pioneered. We launched it in the UK. It's got this technology called Helix, which is the motor on its side and gives it more suction and separating capability than a traditional motor. And it's cordless and it's a pullback. So it weighs like 1 third of an upgrade. And it's an example of thinking differently in FLORCARE in a way that will allow us to achieve, we think in a future, what we've been able to pull off in the past with power tools. So anyhow, I'll turn it back over to our Chairman, Horst Pudwell, for his final comments. Thank you very much, Joe. I don't know one question was asked. What is our space, our floor space? We purchased our property in China in 2,003. Still onefour is not used yet and ready for expansion. And in the United States, we just purchased or given close to 5,000,000 square feet in South Carolina, a fantastic location. So we still have another 3,000,000 square feet for expansion, which already has been built into our CapEx cost. And whatever we spend in 2017 or 2018, We can move £200,000,000 which we have half to North America and half in Asia. So we are very flexible. Anyhow, previously said I'm very pleased to announce with our performance, I would like to ask you, I hope you are very pleased with the announcement and the performance we're having now March 2017. We have very good visibility. All I can tell you that we're heading for another very M M and A was mentioned very little. We are constantly looking on devaluation companies, which is a strategic fit for us and technically advanced technology. And we are working on it. And we also discussed in our board meeting that we will improve further improve improve our communication with our investor, giving them more from time to time update. I know we're reporting twice a year in Hong Kong, in the U. S. Quarterly, but we owe you more frequently update. And we will not disappoint you with our performance. And thank you very much for attending and looking forward to seeing you here again with another record result. Thank you very much. We purchased our property in China in 2,003. Still onefour is not used yet and ready for expansion. And in the United States, we just purchased or we were given close to 5,000,000 square feet in South Carolina, a fantastic location. So we still have another 3,000,000 square feet for expansion, which already has been built into our CapEx cost. And whatever we spend in 2017 or 2018, geographically, we can move €200,000,000 which we have half to North America and half in Asia. So we are very flexible. Anyhow, I previously said I'm very pleased to announce with our performance. I would like to ask you, I hope you are very pleased with the announcement and the performance we're having now March 2017. We have very good visibility. All I can tell you that we're heading for another very M M and A was mentioned very little. We are constantly looking on the valuation companies, technically advanced technology. And we are working on it. And we also discussed in our Board meeting that we will improve further improve our communication with our investor, giving a more from time to time update. I know we're reporting twice a year in Hong Kong, in the U. S. Quarterly. But frequently update. And we will not disappoint you with our performance. And thank you very much for attending and looking forward to seeing you here again with another record result. Thank you very much.