Techtronic Indus Ltd Adr

For the six-month period ended June 30th, 2026. After the presentation, there will be question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that this conference is being recorded today. Before we begin, I would like to draw your attention to our four looking statements on our presentation slide. Now let me introduce to you the key management of TTI with us today. They are Mr. Horst Pudwill, Executive Chairman, Mr. Frank Chen, our CFO, Mr. Steve Richman, our CEO, and Mr. Ty Savitsky, Group Deputy CFO. Without further ado, let me pass our time to our Executive Chairman for the opening remark. Mr. Pudwill, please.

Thank you for attending TTI's first half 2026 results announcement. We delivered an outstanding first half with record revenue, gross profit, EBIT and net profit. I am also proud to say we had a strong free cash flow, further strengthening our balance sheet and our net cash position. All of our core businesses delivered solid results with our flagship Milwaukee and RYOBI businesses yielding underlying growth of 8.2% in local currency. With our global businesses diversified operation on supply chain and the best team in the industry, we are well positioned to continue outperforming the market. We continue investing in areas that matter, such as product development and R&D, allowing us to confidently maintain our leadership position. The strong first half we delivered is the result of our strength and dedication of our outstanding team. It is a strategic focus and operational excellence that allows us to continue delivering value to our customers and shareholders. I will now hand over the presentation to our Group CFO, Frank Chan. who will talk you through the financials, followed by our Group CEO Steve Richman and Deputy CFO Ty Savitsky who will walk you through our operation.

Thank you Mr Chairman. We are pleased to report both record sales and profits for the first half of 2026. Our reported sales was at USD 8.3 billion, an increase of 5.9% or 4% in local currencies. Milwaukee and Ryobi combined delivered an underlying growth of 8.2% in local currencies, only being offset by the exit of HUD and the rationalisation of our non-core business. Milwaukee grew 10.5% on an underlying basis in local currencies after adjusting the planned timing impact of our ERP conversion. Weobie grew 1.7% in local currencies. Weobie Power Tools delivered strong results with sales up mid-single digit, only partially offset by a softer outdoor season. Our other 6.6% non-core business declined by 19.4% in local currencies due to the hard exit and continued streamlining of floor care and other consumer brands. We will have a more detailed sales growth by brand breakdown later. Ross profits increased by 12.6% to $3.6 billion, with margins improved by 258 basis points to 42.9%. If we normalise the 2025 first half gross margin, adjusting the excess tariffs incurred during the peak level and the dilution effect by heart, our 2026 gross margins effectively increased by 163 basis points as compared to the 41.2% normalised margin in the first half of 2025. These exceptional 163 basis points improvements mainly attributed to the annualisation of tariff mitigation effects, additional margin accretion across EMEA and Australia regions, favourable mix, strong Milwaukee performance, surfacing the high growth end markets and continued improvements in our non-core business. Our EBIT increased by 15.9% to $822 million with margin improved by 86 basis points to 9.9%. We believe we are very well positioned to meet or exceed our internal target of 10% EBIT margin by 2027. We will also have a gross margin and EBIT margin walk later in the presentation by Tai. Net profits increased by 17.5% to $738 million. Net profit margin increased by 88 basis points due to the lower net finance costs and with effective tax rates remain comparable to that of last year. Earnings per share increased by 17.8% to US$0.405 per share. The Board of Directors declared an interim dividend of HK$150 per share, an increase of 20% over last year with a payout ratio of 47.8% as compared to 46.9% first half 2025. During the period, we have changed our segment reporting from the business segment of power equipment and floor care cleaning to professional and consumer as this reflects how management refilled the structure and operations from end users and blend platform perspective. Professional segment mainly through Milwaukee Brand delivered a sales of $5.9 billion in the first half of 2026, an increase of 9.7% in reported currencies. EBIT increased by 16% with margin improved 57 basis points to 10.5%. Sales of consumer segments through Ryobi, AEG, WAX, Hoover and other brands servicing the consumer channel decreased by 2.5% to $2.4 billion. The decline mainly due to the continued sales personalisation of 4K and other consumer brands and hard exit, while Ryobi delivered a 1.7% growth in local currencies. EBIT, however, delivered a 15.8% increase with margins improved by 133 basis points to 8.5%. The improvement reflects the benefits of the hard exit and our focus on profitability across all consumer brands. SG&A increased it by 170 basis points to 33% of sales, closely in line with the second half of 2025. This increase reflects our continued investments in new products, technology, service levels, and write-off of intangibles related to the rationalisation of underperforming categories. Strategic selling expenses represent 19.1% of sales, while R&D spend remained comparable to first half last year at 4.6%. We have, however, continued to leverage our sales growth and managed to reduce our non-strategic administrative expenses from 9.5% of sales last year to 9.3%. With the strong and healthy balance sheet and the over $1 billion operating free cash flows generated past three consecutive years, we have been able to continue to reduce our net finance costs. Our net finance causes for the first half was $19.6 million, representing 0.23% of sales, a reduction of $8.2 million or 29.4%. Effective tax rates remain the same as full year 2025 at 8%. We have continued to maintain that with our proactive and yet prudent tax strategy and plan, the current level of effective tax rates is very sustainable. Our balance sheet remained very healthy and strong with shareholders' equity at $7.4 billion, an increase of $791 million or 11.9% over that of the same period last year. Net current assets increased by 25.8% to $3.87 billion. In this very dynamic and challenging macroeconomic environment, we will continue to prudently manage our balance sheet to invest and grow our business. Working capital as a percentage of sales was at 16.6%. 20 basis points improved when compared to same period last year. Total inventory days decreased by 3 days to 100 days. Finished goods inventory reduced by 6 days while raw materials increased by 4 days and work in progress decreased by 1 day. Receivable days reduced by 5 days to 55 days and payable days also reduced to 94 days. Improving working capital efficiencies has always been our primary focus, and we believe we can further improve it going forward. CapEx spend was at $92 million, comparable to that of last year. With capacity expansions planned in Vietnam and Mexico for the next 12 to 18 months' time, we continue to project that our CapEx spend will be broadly stable as a percentage of sales in the coming years. In this current business environment, we focus very much in free cash flow generation. In the first half of 2026, we have delivered an operating free cash flow of $753 million, an increase of $285 million compared to the same period last year. For the full year, our internal target is to deliver approximately $1.3 billion operating free cash flows, and we are very confident in achieving this target. When compared to first half 2025, our net cash position increased from $126 million to close to $1.1 billion in 2026, demonstrating our cash flow generating capabilities, prudent working capital and balance sheet management. We are confident that we will continue to be in a net cash position by end of 2026. In the first half of 2026, we've increased our cash balance by $281 million or 17.5% to close to $1.9 billion, while reduced our total borrowings by $659 million or 44.5%. The reduction in borrowings were mainly by paying down $418 million, the more expensive floating rate working capital borrowings, and $241 million longer-term fixed rate debts matured during the period. Lower-cost fixed-rate debts now account for 80% of our total debt portfolio. We will continue to leverage our strong balance sheet for opportunities to increase our long-term fixed-rate borrowings with the most cost-effective courses to support our long-term growth strategy going forward. With that, I would like to pass the presentation to our CEO, Mr. Steve Richman.