Techtronic Indus Ltd Adr

It gives me great pleasure to welcome all of you to our TTI Groups of Company 2025 annual results announcement. Obviously you can see we are trying to save money. Last year the table was twice as big. Anyhow, we are in a semi-war condition. What I can tell you and deliver you today by our Group CFO, Mr. Steve Richman, by Chairman Stephan, our Group CFO, Frank Chang, I think that we have done fantastic and none of our competitors has duplicated our results over the last three years. And we will go with full confidence ahead. To make it short, we delivered a strong 2025, particularly given the macroeconomic and geopolitical volatility. We continued driving market shares and gained market share and delivered record profit with the third consecutive year of free cash flow above One billion. Now, to make it easy to understand, one billion means 1,000 million. So we're talking about 3,000 billion. And that is an achievement. I'm now going to hand over the floor to our group CEO, Mr. Steve Richman, to explain and enlighten you about our activities and our future and why we are so bullish in looking forward for 2026 with a strong momentum like never before. Please, Steve.

Well, before Steve gives you the most exciting news and prospects, I will start from giving you our results first. So, yeah, like I said, thank you, Chairman. 2025 indeed was a pretty challenging year and yet we managed to deliver a 4.4% revenue growth to US dollar $15.3 billion and a record net profit of $1.2 billion, a 6.8% increase. New Lockley continued to fill the group's growth with an 8.1% reported sales growth. Excluding the discretionary suspension of some promotion programs in the second half of 2025, on an underlying basis, Milwaukee actually grew 10.3% last year. The OB business had another outstanding year with sales growth 5.4% in local currency. Our 9% non-core business declined by 20.4% due to the planned exit of the hard business and the rationalization of our forecast sales. Gross profit increased by 6.7% to $6.3 billion with margins increased by 91 business points to 41.2%. The improvements due to the positive mix of Milwaukee and RYOBI business with higher margins, strong EMEA performance and our ongoing focus in improving productivity and operational efficiencies across all business units and manufacturing locations. With growth margins increased by 91 basis points and our SG&A increased by only 80 basis points, our EBIT grew 5.2% to 1.3 billion, with margins improved to 8.8%. After adjusting the associated costs for the exit of the hard business, our normalized EBIT margin will be at 9.3%, a 57 basis points increase. Net profits increased by 6.8% to close to $1.2 billion as we continue to further reduce our finance costs, despite partially offset by slightly higher effective tax rates. Net profit margin of 2025 was at 7.9%. Earnings per share increased by 6.8% to 65.6 US cents per share. The Board recommended a final dividend of HK$132 per share, an 11.9% increase as compared to the HK$118 per share in 2024. Together with the HK$125 interim dividend paid, subject to shareholders' approval to the recommended final dividend, total dividend for the year 2025 will be HK$257 per share, an increase of 13.7% over 2024. representing a payout ratio of 50.5% as compared to 47.5% in 2024. We have continued to invest in strategic selling expenses and RMD for new products, innovations, and to improve our group's performance. In 2025, SG&A as a percentage to sales was at 32.5%, 80 basis points higher than 2024. Part of the increase was due to the one-time write-off of intangible assets as we exited the hard business, which will not be recurring in 2026, and the associated causes related to the rationalization of underperforming product lines and business units. We have, however, managed to level down our non-strategic SG&As by 42 basis points. Admin expenses now account for 9.8% of sales, and we do expect further efficiencies improvements can be achieved. Net finance costs reduced by 37.6% to $33.6 million as we continue to leverage our very strong balance sheet, exceptional free cash flows generated to effectively manage our debt portfolio and get very favorable terms from our finance providers. Effective tax rates was at 8%, 20 basis points higher than 2024 as we continue to take a prudent but proactive approach to the Group's global tax strategy. We continue to maintain that current high single-digit effective tax rate is sustainable going forward. Our balance sheet continues to be very healthy and strong. Sheldon's equity increased by 9.3% to close to $7 billion. Net current assets increased by 21.8% to $3.4 billion. With this strong balance sheet, we will be able to navigate any changes in this still very challenging global environment. Working capital as a percentage to sales was at 15.5%, slightly higher than the 14.4% in 2024, and yet we believe this ratio is still one of the best in our industry. Inventory days increased by four days to 106 days, mainly on finished goods due to tariffs. We are comfortable with the current level, but expect there can be further improvements in inventory days going forward. Receivable days was at 46 days, lower than last year by one day, while our payable days held flat at 96 days. CapEx spend was at $289 million, very comparable to the $291 million reported in 2024. The spend mainly focused on new products, automation, quality and productivity across all our global manufacturing units. We expect the capex plan for 2026 will be at a similar level, approximately 2% of sales. We've delivered over 1.2 billion operating free cash flows each year in 2023 and 2024. In 2025, we've continued to deliver a close to 1.4 billion free cash flows despite all the tariffs headwinds. We firmly believe we will be able to continue to deliver another $1 billion free cash flows in 2026. With our very strong cash flows generated and prudent working capital and capex management, we ended the year 2025 in a net cash position of $700 million. We have continued to cost-effectively manage our debt portfolio. In 2025, we've reduced our total gross debt by $300 million, or 23.5%, while increased our cash balance by $446 million to close to $1.7 billion. As a result, we are in a net cash position of $700 million at the end of 2025. Fixed-rate lower-cost debts account for 80% of the group's total debt portfolio, while short-term debts only representing only 36% of the total debt. With our robust balance sheet and strong cash flows, we've been asked a lot about our capital allocation strategy. We structured our capital allocation strategy with the primary objective to expand enterprise value and deliver long-term attractive returns to our shareholders. First priority is to invest in our core business to deliver sustainable growth with continued profit margin expansion. Next is to evaluate high-quality acquisition opportunities that will create growth opportunities and synergies with our current core business to further improve the group's value. We will continue to assess our dividend policy, balancing the payback and internal growth opportunities. Over the past 10 years, our dividend per share growth has outpaced our net profit growth, with dividend per share delivering a 21.8% CAGR, while net profit delivered a 14.1 CAGR during this period. Last but not least, share buybacks. The Board intends to implement a discretionary share buyback plan of up to 500 million U.S. dollars over a period of 18 months to be administered by an independent leading financial institutions. With that, I would like to pass the floor to our CEO, Mr. Steve Richman.

Thanks, Frank. Good morning, everybody. Our journey at TTI has been one based on our bookends of success, our people and our culture. We recruit, retain and invest in the best people throughout the globe. That is core to who we are at TTI every single day. Now our users, our distribution partners, our shareholders have seen it firsthand what these people mean. how they're passionate about our business, how they drive solutions every single day, and how they drive the top line and bottom line performance. Our people, the passion they have and what they deliver has resulted in outstanding performance year after year after year. And that is because a relentless focus on our consumers and our professional end users delivering outstanding solutions that help their lives every single day. The end result, another record-breaking year in 2025. Now, when we talk about 2025 leading into 2026, there's three areas that we really need to talk about. Those areas all combine from growth, profitability, and execution. All of this is based on a one team performance. If you think about TTI, it's about the people throughout the company coming together as one team. And how do we deliver as one team? Well, our operations people challenge each other based on the manufacturing in the Ryobi business or the Milwaukee business. Our new product development system says, what does great look like and how do we get better? How do we improve? How do we change the game? Our growth engine from our sales and our job site solutions and our commercialization all challenge each other to say, what does great look like? That one team philosophy leads to outstanding results year in, year out. How does that occur? It occurs clearly through leadership. We talk a lot about leadership. Do you believe we can have this success without great leaders? And I'll tell you, no way. And we have outstanding leaders from the entry-level leaders we bring into the company and grow and learn and educate to our middle management leaders that have been here five years or ten years that are growing with experience. And those leaders continue to have a thirst for growing and learning and educating and getting better. And then, of course, there's our senior leadership group. Now think about this for a second. How many companies do you know where the senior leaders have been together for over 19 years? Very few. What does that mean? It's because of our culture. It's because of these gentlemen up here. It's because of what has been developed year after year at TTI. That senior leadership group with the relationships they have built over the 19 years is exceptional. But what they have because of that relationship is part of our culture. They have the candid dialogue, candid communication, where they can challenge each other. Alex Duarte, who runs our EMEA business, can challenge Daryl Hendricks and Greg Borland and the rest of the sales team on where do we go from here? What does great look like? What's the right commercialization plans? We do the same in the operations side, the supply chain piece, the financial side of our business. And this is what drives excellence every single day. That is because we are TTI and we think of these things differently. How does that tie to 2025 and beyond? When we think about growth, we think about how are we going to grow in the future? And what does that look like? Let's start with EMEA. EMEA and the team dominate. in specific markets, both in the consumer side of the business and in the professional business. However, there's also opportunity. And that opportunity is to take that same domination and expand that domination into new other markets on the consumer front with RYOBI and on the professional front with Milwaukee. The next opportunity is where we're at the beginning of our journey of growth. Asia and Latin America On the Milwaukee part of the business, we've gone from a test and learn to be able to now grow, now invest more, now understand how we drive solutions in those markets in a significant way. David Butts on the Milwaukee side in the Asia portfolio is driving that kind of success as we enter markets like Japan and say, how big can we become? How do we earn the right with that professional end user? We have that same opportunity in Asia and Latin America now for the first time with our RYOBI business, our consumer business, the number one brand in the globe. And we have that opportunity to be able to say, how do we test and learn in Asia? How do we test and learn in Latin America? And how do we drive that success so we become, like in other regions, the dominant brand? Our success, many of you believe or may believe, that how can you grow more in North America? How can you grow more in Australia with both the Milwaukee brand and the Ryobi brand? Well, let me tell you, we believe we're still in the early innings of our journey. The question may be why? And the why is because we have a relentless opportunity to expand the market, get users into new businesses. And as we build new businesses, the opportunity to grow becomes more and more significant every single day. That expansion is also how we think of those businesses and how we say, how can we solve the problem of the consumer and the pro in North America and Australia in a different way? Not only taking market share, expanding those markets, launching those new businesses and earning the right from the consumer and the pro to grow. Next in 2025 and beyond is profitability. We made some hard decisions. We eliminated the heart business. We made a decision in our floor care business to restructure the entire business and start from scratch. We brought in one leader, a veteran in floor care, but understands that we need a change. how we do product development, how we do manufacturing, how we look at supply chain, clearly how we commercialize. And the focus there is how do we follow what RYOBI and Milwaukee has done and understand we have to earn the right with the consumer to win. And if we do that in a way where we're delivering disruptive innovation, leveraging our technology partners from RYOBI and Milwaukee, leveraging the people as one team from both, then this journey, even though it's at the beginning, has a bright future in many, many years to come. Last but not least is how we think about the globe and how we say, how can we leverage our back office? How can we leverage our negotiating costs on IT? How can we do the things globally to be able to free up more cash to invest in the two most dominant brands in the globe, Milwaukee and RYOBI? And that continues and will be the path for 26 and beyond. Last is clearly execution. Now, many people believe that execution is the easy part. We are a paranoid group at TTI. We actually believe this is the most challenging part of any business. You have to prioritize. You have to execute flawlessly. And what do you do? I could stand up here all day and so could Ty Stavisky and Shane Ball who are coming up next and talk about our execution throughout the globe in each and every business and all of the regions. I'm going to give you two examples today. One is the foundation of our global manufacturing organization that we put together years ago on the basis that the world was going to change and we had to have a global footprint. Last year, you combined that with a one-time sales suspension in North America, and that combination allowed us to mitigate tariffs in a way that no one else could. The second is, how many of you have heard of disasters with ERP implementation at companies? That shut down distribution, shut down manufacturing, shut down sales. It occurs every single day, and you read about it. Our teams in North America were relentless about this. They understood the risk. They put a robust plan together. They understood that project leadership and execution and a one team was absolutely essential. And they did that in a manner to ensure that we were going to have success. And guess what? They executed flawlessly. The combination of growth. The combination of the right profitability and the combination of execution is the foundation, not only for what we delivered in 25, combined with our people and our culture, but why we're confident about 26 and beyond. Now, our financial focus areas, as Frank just talked about, and horse sales growth, absolutely essential for our success. We all understand that. We are a growth company. We are a technology company that must grow. How do we do that? How do we accomplish that? Mid-single-digit growth for TTI. No question about it. Double-digit for Milwaukee. Single-digit for RYOBI. Profitability. Our internal plan, as we stated, is to grow to 10% EBIT in 2027. And last, which is clear, is free cash flow with a target over a billion dollars. These fundamentals of financial focus are throughout the company. All the leaders understand. And we've all embraced it together to understand this means we are doing the right things for our consumers and our professionals and our distribution partners throughout the globe. Now let's talk a little bit about the business in 2025 by brand. If you think about the business today versus where it was many years ago, We have the two most dominant brands in the world, the number one consumer brand and really the number one professional brand in Milwaukee. Ninety one percent of our sales today in twenty twenty five and growing are these two brands. With that, the results from those two brands delivered over 4% growth in 2025. Even with the challenges we had with tariffs and other factors, as Ty will discuss and Frank already took you through. The Milwaukee business grew over 7.9%. The RYOBI business had a great year at 5.4%. Outstanding results overall and just the beginning. Now, why did we dominate so well with both of those brands? The relentless pursuit of all of our team members for our consumers and our professional end users. We understand that clearly. What makes up that dominance? Clearly, Cordless leads the way for the dominance with both of the brands. Why are we unique with Cordless? We've been in the Cordless lithium ion product lines and product range longer than anybody else. And part of that is for over 20 years, both in RYOBI and in Milwaukee, we have clearly been forward and backward compatible with every product that a user would buy on the consumer space or the professional space. Now, why is that important? It's the confidence. It's the confidence. If I'm a pro on a job site, I understand that all of my batteries are going to fit all of the products. If I'm a consumer buying a lawn and garden product today and I had a power tool, I know that they will all fit. That confidence is unique and something that Milwaukee and RYOBI have built year after year after year. Now, let's spend a couple of minutes on Milwaukee. Shane Maul is going to take you through an extensive perspective on the Milwaukee business. But let me just cover a couple of facts. $160 billion opportunity. Total addressable market. Now, that's based on the verticals that we're in today. The market segments we're in today. The regions that we are in today. It is not based on the future. The future is bright because... We're going to go into more markets, more regions of the world. We're adding more businesses throughout. We're adding more verticals. And what we want to leave you with is we're not a product company. Milwaukee is a solution company. We deliver productivity and safety on the job every single day for our users. That's why the pros trust us everywhere in the world. RYOBI. 80 billion total addressable market. Number one brand in the globe. Once again, opportunities to expand into new markets and dominate markets. Markets in EMEA. Markets in Asia. Markets in Latin America. Add new businesses underneath the RYOBI platform. continue to innovate and disrupt in a significant way. All of that with RYOBI leads us to success. And the RYOBI brand, what is it? It's the brand that the consumer is confident in. In their home, in their garage, in their outdoor power equipment and outdoor space, and clearly in their lifestyle space where they can bring it to a soccer field or bring it to the mountains for camping. That is RYOBI. We combine that, like Milwaukee, that has the best distribution partners in the globe. But in RYOBI, think about our dominance in ANZ and the Americas. In the Americas, we have the number one distribution partner in the globe in the Home Depot. In ANZ in New Zealand, we have the number one distribution partner called Bunnies. The combination of that gives us a clear competitive advantage versus everybody else in the market. And then you combine the opportunities for other distribution partners everywhere in the world today and into those new markets. Now, when we think of innovation, we at TTI think about disruptive innovation every single day. Disruptive innovation, many of you remember what we talked about last year. Disruptive innovation clearly comes from Clayton Christensen's Harvard professor's model about the innovator's dilemma. How do we disrupt what we are doing it? Many of you may believe this is about product. And what you see is just the product we introduced in 2025. And we clearly believe our ability to deliver disruptive product for the consumer and the professional is better than anybody else in the globe. No question. However, disruptive innovation for us is not just product alone. It's how we leverage AI in the supply chain. It's how we use AI to leverage quality and manufacturing inside our facilities. It's how we disrupt what we are doing. It's how we think about our service strategy throughout the globe and what matters in one country versus another as we disrupt the current formula. Disruption is not about product alone. Although it's important and we believe we're best in the world in delivering those solutions to our consumers and professionals, We believe that disruption is part of our DNA and TTI and leads to our success year in, year out. And that's what we are dominating with TTI. Now, let me turn this over right now to two of our other outstanding leaders. Ty Stavisky is going to take you through, after Frank, some in-depth analysis on our financials going forward. And Shane Ball, who's going to take you through some information you've been asking for in the Milwaukee brand and the detail behind where we're taking the markets to disrupt with Milwaukee going forward throughout the globe. Ty?