Techtronic Industries Stock

[Audio Gap] for the 6 month period ended June 30, 2026. Please be advised that this conference is being recorded today. Before we begin, I would like to draw your attention to our forward-looking statement 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 Richmond, our CEO; and Mr. Tai Sisky, Group Deputy CFO. Without further ado, let me pass our time to our Executive Chairman for the opening remarks. Mr. Putwill, 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'm 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 confidentially maintain our leadership position. The strong first half we delivered is a 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 Richmond; and Deputy CFO, Ty Stravinski, 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 HART and rationalization of our noncore business.

MILWAUKEE grew 10.5% on an underlying basis in lower currencies after adjusting the planned timing impact of our ERP conversion. RYOBI grew 1.7% in local currencies. RYOBI power tools delivered strong results with sales up mid-single digit, only partially offset by a softer outdoor season.

Our other 6.6 noncore business declined by 19.4% in local currencies due to the HART exit and continue streamlining our floor care and other consumer brands. We will have a more detailed sales growth by brand breakdown later.

Gross profits increased by 12.6% to $3.6 billion with margins improved by 258 basis points to 42.9%. If we normalize the 2025 first half gross margin, adjusting the excess tariffs incurred during the peak level and the dilution effect by HART, our 2026 gross margins effectively increased by 163 basis points as compared to the 41.2% normalized margin in the first half of 2025. This exceptional 163 basis points improvements mainly attributed to the annualization of tariff mitigation effects, additional margin accretion across EMEA and Australia regions, favorable mix, strong MILWAUKEE performance, servicing the high-growth end markets and continued improvements in our noncore 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 work later in the presentation by ty.

Net profit increased by 17.5% to $738 million. Net profit margin increased by 88 basis points due to the lower net finance cost and with effective tax rate remain comparable to that of last year. Earnings per share increased by 17.08% to $0.405 per share. The Board of Directors declared an interim dividend of HKD 1.50 per share, an increase of 20% over last year with a payout ratio of 47.8% and as compared to 46.9% first half 2025.

During the period, we have changed our segment reporting from the business segments of power equipment and for care cleaning to professional and consumer as this reflects how management refill the structure and operations from end users and plant 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 personalization of floor care and other consumer brands and HART 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 HART exit and our focus on profitability across all consumer brands.

SG&A increased by 17 basis points to 33% of sales, closely in line with the second half of 2025. This increase reflects our continued investment in new products, technology, service levels and write-off of intangibles related to the rationalization 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 manged to reduce our nonstrategic and administrative expenses from 9.5% of sales last year to 9.3%.

With a strong and healthy balance sheet and the over $1 billion operating free cash flows generated past part 3 consecutive years, we have been able to continue to reduce our net finance costs. Our net finance costs 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 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 rate is very sustainable.

Our balance sheet remains very healthy and strong with shareholders' equity at $7.4 billion, an increase of $791 million or 11.9% over that of 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 the 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 payroll 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 MENA and Mexico for the next 12 to 18 months' time. We continue to project that our CapEx spend to be broadly stable as a percentage of sales to in the coming years.

In this current business environment, we focused very much in free cash flow generation. In the first half of 2026, we've delivered an operating free cash flow of $753 million, an increase of $285 million compared to same period last year. For the full year, our internal target is to deliver approximately USD 1.3 billion operating free cash flow, 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 tenor fixed rate debt 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 Richmond.

Our journey at TTI has always been built on our 2 bookends of success, our people and our culture. We recruit, retain and invest in the best people around the world, and that is core to who we are every single day. Our users, our distribution partners and our shareholders have all seen firsthand a passion these people bring, how they drive solutions every single day, how they drive both the top line and the bottom line. That passion is exactly what delivered another record first half in 2026.

Now what sets TTI apart is that we perform as 1 global team. Our operations, our new product development, our commercialization teams challenge each other constantly to define what great looks like and how we improve, how we get better every single day. And that 1 team philosophy is anchored by a senior leadership group that has been together for nearly 2 decades as well as the next generation of leaders that are coming up that have been together for over a decade. All of them together understand that they have to have candid dialogue and trust that come from those relationships that they have built and this is a genuine competitive advantage and a core part of our culture.

As we look at the first half of 2026 and beyond, there are 3 areas I want to focus on: growth, profitability and execution. Let's start with growth. And EMEA, our teams dominate specific markets on both the consumer and the professional business. And the opportunity ahead is to extend that same donation into new markets. With RYOBI on the consumer front and MILWAUKEE on the professional front, in the first half, AVA delivered outstanding double-digit growth in MILWAUKEE. In Asia and Latin America, we are still at the beginning of our journey. On the MILWAUKEE side, we have moved from test and learn to an invest-and-grow approach, and for the first time, we now have that same runway opportunity for RYOBI, the #1 consumer brand in the world.

And even in our most established markets, North America and Australia, we believe we are still in the early innings because our relentless focus is on expanding the market, launching new businesses and earning the right every day with our consumer and pro to grow.

Now the second is profitability. I have never seen us more aligned as 1 team than we are right now. In the first half, we expanded gross margin to a record 42.9% and grew EBIT margin to a record 9.9%. All of this comes from disciplined portfolio choices, the mix benefit of our 2 dominant higher-margin brands and the annualization of our tariff mitigation work. But what excites me most is underneath those numbers, we are unlocking leverage and global alignment at a scale, coordinating across brands and regions and functions in a way that lets us drive down cost to reinvest in the business.

We are also deliberate about where that margin comes from. In our consumer businesses, we are at the beginning of a journey on a radical approach to cost, reengineering our products that they are designed around what the end user, what that consumer actually needs, delivering the features that matter while taking cost out of everything that does not. And in MILWAUKEE, we still have significant room to capture value because of the productivity and safety our solutions bring to our end users every single day on the job. We put that together and this is why our confidence in reaching our 10% EBIT margin target by '27 has only grown.

Third is execution, and this is clearly the hard part. Execution takes leadership and grid. It is where companies separate themselves. The first half of 2026 tested exactly that. Commodity pressures ramped up meaningfully, oil. And metals and the cost of freight, all moved against us. And managing that was generally a complex job for our operations team. They deliver protecting our margins while keeping our factories and our supply chain running. And that is the kind of disciplined execution that never makes a headline, but shows up an outstanding results.

But execution is about offense as much as defense. We have to execute for the consumer, bringing the innovation they actually want. So we keep on growing the business. And we have to execute on expanding the highest growth professional end markets, like the vertical supporting data centers, energy, utilities and critical infrastructure, where demand for productivity and our safety solutions delivering is only accelerating. Doing both of these at once under real cost pressure is a hard, and it is exactly what our teams delivered in the first half.

Our financial focus areas remain clear at TTI and are shared by every leader in the company. First of all, sales growth is a nonnegotiable. We are a growth company and a technology company that must grow. Our internal cadence is mid- to high single-digit growth for TTI overall. Double-digit for MILWAUKEE and single digit for RYOBI. On profitability, our internal plan is to reach a 10% EBIT margin in 2027. And after delivering 9.9% in the first half of 2026, our confidence in meeting or exceeding that target has only increased.

And on cash, we are raising our internal free cash flow target for 2026 from over USD 1 billion to over USD 1.3 billion, and we're comfortable with sustaining similar levels of cash flow on a medium-term basis.

Beginning this period, we have realigned our reporting into 2 segments: professional and consumer, which better reflects how we run the business every single day. Professional is led by MILWAUKEE, consumer is led by RYOBI. Together, these core brands now represent 93% of our sales and both delivered exactly what we expect of them in the first half of 2026.

Let's start with MILWAUKEE. On an underlying basis, MILWAUKEE grew 10.5% in local currency, with double-digit growth in every region throughout the world. The Americas up 10.5% on an adjusted local currency basis, EMEA up 10.5% and the rest of the world up 9.9%.

Now MILWAUKEE, as you know, is not a product company, it is a solution company, addressing roughly USD 160 billion market and delivering productivity and safety on the job every single day. Structural labor shortages across the trays we serve from mechanical and electrical and plumbing and transportation maintenance and utility keep increasing demand for exactly the solutions we build every day.

In the first half, we brought breakthrough innovation to those trays. A few of them, the MAT Fuel Stryker, the world's first cordless hammers and the MX fuel electrofusion processor for gas utility work, all connected through ONE-KEY, the industry's largest IoT platform. MILWAUKEE is also dedicated to creating innovative solutions that help our users stay safe. Our new dipped gloves with wear defense protection expands our robust glove product offering, delivering the longest glove life while providing high dexterity for demanding applications. We are a solution company driving solutions and productivity on the job every single day.

On the consumer side, RYOBI, the #1 consumer brand in the world, addressing roughly a USD 80 billion market, grew 1.7% in local currency to $1.9 billion. Our Power Tool business grew mid-single digits, while outdoor was roughly flat against a softer weather-affected season across EMEA and parts of the United States and the timing of seasonal load-ins. Our platform has never been stronger. We hold the largest installed base of users in the world across USB Lithium, 80-volt ONE+ and our 40-volt platform. And in the first half, we extended that lead with new technology, 80-volt ONE+ Edge [indiscernible] batteries an all-new line of the highest-performing 40-volt mowers and outdoor products and further expansion into cleaning and lifestyle and recreation with great examples of innovation such as our pull vacuum and our outstanding fan portfolio with the best distribution partners anywhere, the Home Depot in North America, Bunnings in Australia and New Zealand and our early expansion into Latin America, Asia, RYOBI keeps on growing, even against modest housing turnover.

The other half of the portfolio is disciplined. Our noncore businesses now represent just 6.6% of global revenue. And we deliberately brought them down 19.4% in local currency versus last year. The largest piece is the planned exit of HART. About USD 156 million of our 2025 sales that will not repeat. And the balance is that continue revitalization of our floor care and our other consumer brands. While we are walking away from unprofitable revenue and rebuilding floor care the right way, applying what RYOBI in MILWAUKEE have taught the teams about us earning the right with the consumer, driving disruptive innovation, technology and best cost. These are hard decisions, but they are the right ones. Shrinking the noncore, precisely what lifted our consumer segment's EBIT margin 133 basis points to 8.5%, and freed us to invest more into the MILWAUKEE and RYOBI brand.

Let me spend a couple of minutes in MILWAUKEE and the size of the opportunity in front of us. What you see on this slide is $150 billion plus global opportunity. Now I want to make clear about what that number is and what it is not. It is based on the trade verticals we serve today. The market segments, those trades working today and the regions we operate in today. It is not based on the future and the future is bright because we are going into markets more and more and more regions of the world, adding more businesses and even more verticals every single year. That opportunity is anchored in our core trades. Today, MILWAUKEE is building deep relationships across 10 key trade verticals mechatical and electrical and plumbing and remodeling and utility and transportation maintenance and general contracting, landscaping and tree care, energy and mining, a level of scale and focus that is simply unmatched by any other company in the industry. And this is not marketing, it starts with more than 1,600 highly skilled job site solutions team members embedded with the trade every single day, understanding the rapidly changing needs and developing solutions with them. Solutions, they not only trust, but specify and demand to drive productivity and safety and their work. This is what makes MILWAUKEE different.

We are not a product company. We are a solution company, delivering productivity and safety on the job every single day. And that is why the pros trust us everywhere in the world. Today, that pipeline shows up as more than 17 distinct global businesses, each built for a specific [indiscernible] and led by subject matter experts who understand the problems those trades face. And because we solve the problems of today while anticipating the problems of tomorrow, we do not just enter markets, we create entirely new ones, which is exactly how we keep expanding, this $160 billion-plus opportunity well into the future. You saw that again in the first half of 2026 with over 200-plus breakthrough new products aimed squarely at these high-value trades.

From our new dip gloves with wear defense protection to the M18 fuel Stryker, the world's first cordless hammers [indiscernible] for transportation maintenance and the MX fuel electrofusion processor for the gas utilities, all connected through ONE-KEY. This is the engine behind the a purposeful strategy. the deepest relationships with the trades in the industry and a runway to grow this opportunity for years to come.

Steven shared this slide with you last time. and we are showing it to you again this time because it is simply that important. The key takeaway is where MILWAUKEE's demand is anchored and even more importantly, where the growth is today and where is it going. Let's start with technology and energy and manufacturing, which is 32% of our demand. This end market has taken off. The sector is growing at a 20% rate. This is data centers, high-tech manufacturing and power, water, gas and telecom utilities, all supported by heavy investment in AI, reindustrialization, grid monitorization and electrification. And consider this, the work required by mechanical and electrical and plumbing trades inside a single data center is roughly double the work of a traditional nonresidential construction site.

In a market where skilled labor has never been more constrained, which is exactly why their trades partner with us on safety and productivity.

Next is service and maintenance, our largest and most durable end market at 47% of demand, which tends to grow at a 10% rate. This is work that has been done regardless of the economic environment, residential and commercial services, transportation, maintenance and mining driven by aging homes, aging commercial buildings, aging industrial facilities and an aging vehicle fleet, all creating steady surge of retrofit repair and upgrade work. The rest of our business, home remodeling, new home construction and other nonresidential sells into a space that is essentially flat. Put it together and our 2 anchor end markets are about 80% of demand worldwide, which greatly overweights our exposure to the traditional residential construction and remodeling markets.

That is the whole point of this chart. We are purposely entrenched in the fastest, largest and most resilient segments in the world. And it is why we remain so confident in MILWAUKEE's 10%-plus growth well into the future. Here, we are driving innovation specifically for the users that care about productivity and safety on the job every single day with 20% and 10% end markets. This is where we are focused on adding over 200 new products alone in the first half of 2026.

Now I want to spend a moment on something that does not always get enough attention, our distribution partners because a great brand is only as strong as our partners who bring it to the world. What you see on this slide are the best distribution partners in the industry, all around the globe. And the message is simple, MILWAUKEE is the brand that distribution counts on [indiscernible]. We are intentionally selective about who sells MILWAUKEE, and we partner with the very best in every single market throughout the globe. From the Home Depot in North America, to the leading industrial and electrical and plumbing distribution partners across North America and Europe and Asia and Australia and Latin America, these are not vendor relationships, they are true partnerships built over many years, grew together and win together.

And the reason these partnerships endure is that we deliver for our partners both sales and profitability. When MILWAUKEE is on the shelf, we bring demand with us. Our teams in the field create the pull-through. And we back our partners with a service and support that protects their margin and their reputation. We add value to their business, and they help us grow ours. This is what the best partnership in the industries looks like. That is the whole story of the slide. strong support for our core trades, delivered through the strongest distribution network in the world. It is a genuine competitive advantage, and it is one more reason we are so confident in where MILWAUKEE is headed in '26 and beyond.

Now let me turn to RYOBI and the $80 billion plus global opportunity in front of the #1 consumer brand in the world. What this slide lays out is our do-it-yourself user strategy and the idea behind it is simple. We serve the DIY user across their entire life, not just one quarter of it, from light do-it-yourself first to having do-it-yourself first, transportation maintenance, lawn and garden lifestyle and recreation and cleaning, RYOBI is the brand that consumer routes for in their home, in their garage, in their yard and everywhere in between.

The power of this strategy is our platform. We hold the largest installed base of consumer users in the world across USB Lithium, 18-volt ONE+ and 40-volt, for over 20 years, those platforms have been forward and backward compatible. So every toll user understands whatever product they have bought, it works with the batteries they already own. That confidence is what pulls the do-it-yourselfer deeper into the RYOBI system, adding to their collection year after year, and it is what lets us keep expanding into entirely new categories, most recently cleaning and lifestyle and recreation, reaching consumers of every type throughout the world.

We combine that with the best distribution partners in the world, The Home Depot in North America and Bunnings across Australia and New Zealand, where our dominance is unmatched. Together with our top European retail partners, and we are still in the early innings. We are just beginning to expand RYOBI into Latin America and Asia, exactly the kind of runway that keeps this $80 billion-plus opportunity growing well into the future. You saw the strategy at work in the first half of 2026. RYOBI grew 1.7% in local currency to a USD 1.9 billion, led by mid-single-digit growth in power tools as we extended our lead with a new 18-volt ONE+ Edge Tablets batteries and an all-new line of the highest-performing 40-volt lowers and outdoor products and a growing lineup of cleaning, lifestyle and recreation products.

From the most powerful misting fan as part of our leading portfolio of fans to our new pull vacuum, that is the RYOBI user strategy, serve the DIY consumer across every part of their life. Keep them on our platform, keep on giving them reasons to grow with us every day, everywhere in the world. RYOBI's growth strategy comes down to a single idea. It is owning the consumer, and we earn that position through 3 reinforcing engines. Number one, consumer innovation; number two, enabling technology; and number three, demand generation. They all work together to turn a first-time buyer into a lifelong RYOBI loyalist.

Let's start with consumer innovation, bringing the products consumers actually want. In the first half of 2026 alone, that meant the new 18-volt ONE+ Edge batteries, and all new generation of the highest-performing 40-volt mowers and outdoor products and continued expansion into cleaning, lifestyle and recreation. We are constantly giving the consumer a reason to reach for RYOBI first.

Underneath those products is our enabling technology. The batteries, the motors, the electronics that most users never see. Our new 18-volt ONE+ Edge tabless battery is the perfect example. It gives every ONE+ user an instant upgrade more power, more run time, while running cooler, charging faster and lasting longer. And it is fully compatible with a platform they already own. That technology developed and protected across USB lithium, 80-volts ONE+ and 40-volt is what makes owning the end user possible.

The third engine is demand generation, getting those solutions in front of our consumers and pulling them into the system. That is where our distribution advantage comes in. The best partners in the world, The Home Depot and Bunnings and our top European retailers, and a growing digital and in-store present that builds awareness and drives trial across every one of our categories. Put the 3 engines together and you get the outcome at the center of this slide, owning the consumer and creating a RYOBI loyalist. We already hold a large installed base of consumer users in the world and millions of new users join every single year, adding to the RYOBI collection over time. That is the flywheel. The more we innovate, the more users we win, the more of the platform they are, the more loyal they become and the more durable RYOBI's growth becomes for years to come.

Now let me turn it over to Ty and he is going to take you through all give you some color on the financials.

Thanks, Steve. I have the pleasure to be here today to provide more detail and clarity into the financials of the business. Let's start with sales growth by brand. And the main point on this slide is our 2 core brands. The combination of MILWAUKEE and RYOBI delivered underlying local currency growth of 8.2% in the first half. MILWAUKEE grew 10.5% on an underlying basis in local currency after adjusting for the 2025 timing impact of the MILWAUKEE Americas ERP system conversion. And RYOBI grew 1.7% in local currency to USD 1.9 billion, led by mid-single-digit growth in power tools with a softer weather-affected outdoor season across the globe.

That 8.2% of core brand growth was then offset by the deliberate exit of the HART business and the continued rationalization of floor care and the other consumer brands, which together brought our noncore business now just 6.6% of global revenue, down 19.4% in local currency.

Net of all of that, TTI delivered record first half revenue of USD 8.3 billion, up 5.9% on a reported basis and up 5.9% on an underlying basis in local currency.

Now let me spend a moment on MILWAUKEE's sales momentum because I want everyone to understand the magnitude of what we are working towards. Our 10.5% underlying growth in the first half is right in line with our internal goal of low double-digit sales growth for MILWAUKEE. And that is a goal that we have been telling you you about and delivering against for a number of years. But here is the point I want to really land. Growing MILWAUKEE at low double digits now represents more than $1 billion of sales growth every single year based on our scale. And all of it is organic. None of it comes from acquisitions. This is no easy feat, and our team has done a phenomenal job delivering to these high expectations and making MILWAUKEE the #1 professional productivity solution provider in the industry.

Now let's walk the gross margin for the first half, and I want to do this in 2 steps, start with the first half of 2025. On a reported basis, gross margin was 40.3%, but that was a number that was held down by 2 things worth normalizing out; one, the drag on gross margin from the HART business; and two, the excess tariffs we were absorbing at the time when we saw global tariffs peak at their highest in Q2 of 2025.

Normalizing the first half of 2025 for both of these brings our comparable base to roughly 41.2%. From that normalized base of roughly 41.2%, the walk to our record 42.9% begins with 1 headwind in the period, higher commodity prices as oil, metals and freight all moved against us. We more than offset that through our 2026 activities annualizing our tariff mitigation actions, which include optimizing production, productivity gains and a strong supplier partnerships, margin accretion across EMEA and Australia, favorable mix towards our higher profitability core businesses, the strength of MILWAUKEE in the high-growth technology, energy and manufacturing end markets that Steve mentioned in his section and continued improvement in our noncore business.

Net of the commodity headwind, those activities delivered 163 basis points of expansion to a record 42.9% gross margin or 258 basis points on a reported basis versus the first half of last year.

Let me be clear. Our first half gross margin had no favorability for IEEPA tariff refunds as we did not receive any meaningful refunds and do not have any clarity on how much we will be receiving in the future.

Let's now turn to the EBIT margin walk for the first half, and it follows the same logic. We started the first half of 2025 at 9.1% EBIT margin. From there, the 258 basis points of gross margin expansion I just walked you through was by far the biggest driver, partially offset by 173 basis points of higher SG&A as we deliberately invested in our new product development, field resources and commercialization activities along with some write-offs of intangibles tied to product categories we were rationalizing.

Netted out, and we finished at a record 9.9% EBIT margin, up 86 basis points. And with 9.9% already in hand at the half, we are firmly on track towards our internal target of 10% EBIT margin in 2027 with further upside beyond.

Let me close with cash because this is what ties it all together. We generated $753 million of free cash flow in the first half, up $285 million year-on-year and ended the period in a net cash position of $1.066 billion. That balance sheet strength gives us the confidence to raise our internal free cash flow target for 2026 from over USD 1 billion to over USD 1.3 billion.

And we're putting that strength to work for shareholders. In June, we commenced our $500 million share buyback plan. And through the end of July, we've already repurchased USD 41.5 million of stock. Record first half sales, record growth and EBIT margins and record profit together with $753 million of free cash flow and the healthiest balance sheet in our history is exactly the combination that lets us keep investing in the business while increasing returns to our shareholders for years to come.

With that, I'd like to hand back to the Chairman to close. Thank you.

As you can see from our presentation of our results, I'm extremely excited and confident about the remainder of the year and the future of our company. We thank you for your attendance today, and we express our deep appreciation for your continued support of the group.

[Operator Instructions] And your first question comes from the line of Tim Wojs from Baird.

Maybe just the first question, and I'm not sure who wants to take it, but with you guys doing 9.9% EBIT margins in the first half, what are the puts and takes to getting to that 10% EBIT margin in 2026 or a year earlier?

Yes, Tim, this is Ty. I think we're constantly looking at what the back half and modeling out what that looks like. As we spoke in the EBIT margin walk, we do have some commodity pressures that we're working to offset in the back half of the year as we look forward to that and trying to balance that out with the continuation of delivering the results. But we have extreme confidence in delivering it in 2027, and we're working towards -- yes, we're working towards delivering that and taking a look at what that means. And just note that any forecast that we do have and any projection that we're looking at right now doesn't bake in any tariff refunds or anything of that nature. So we could potentially see some of that in the back half, so...

Okay. Okay. And then just kind of stepping back on kind of the high-tech and data center and kind of large job site business. Could you just give us a little bit of an overview of like how embedded you guys are on these job sites? Because it's my understanding that you guys have a lot of people in the field that's hard to replicate, and you've obviously been investing in that market for a very long period of time. So if you could just kind of give us a little bit of flavor in terms of people out in the field, relationships and then how those job sites actually function from a tool demand standpoint?

Thanks for the question, Tim. This is Steve. No question. This has been part of our long-term journey, as you're well aware and many other people are. Let me just frame it this way. For 20 years plus, our strategy throughout the globe is to become those exclusive partners with the best mechanical and electrical contractors throughout the globe. As you're well aware and everybody is aware that, that is the biggest piece of the data center builds. And our relationships are from the top level of the owners of the companies and the trade associations, all the way to the people in the field and the safety directors as well as how we approach the builders or the companies themselves that are driving that demand.

The other piece that ties to that is how myself and Shane and the entire MILWAUKEE team globally, Alex in Europe, Mike Brendle in Australia, Craig Baxter in Canada, David Butts but in Asia, every one of us is committed to be on those sites. So this is not about us showing up and visiting one site and one location and saying that we're trying to learn it. We have been in the sites from the conventional data centers to the AI data centers. We just finished trips in the past 6 months. We were in Milan. We were in Frankfurt. We've been in the Canadian market. I just finished Canada and Japan last week, all over the U.S. with our partners from the builders and the construction companies all the way to the largest mechanical and electrical companies throughout the globe. And each and every one of our job site solutions team that is responsible for those sites understands how to show productivity and safety on that job. So we have a deep relationship throughout that part of the business, and it just didn't start yesterday, as you're well aware.

We will now take our next question from Karen Li from JPMorgan.

Okay. Congratulations on the fantastic set of results. I'm really glad to see that TTI is back on track for growth and be. Stephen, you mentioned in the presentation that the technology, energy and manufacturing revenue growth, if I hear that correctly, is growing at over 20% rate. I believe this is mainly driven by AI PC-related revenue. Is it possible to share how much this revenue now sitting within this segment? Just to confirm, I think previously, we heard about half of this technology segment. And how is this going to accelerate in second half this year, more importantly, going into the next few years?

So the reason why I'm asking is because we noticed Quanta Services, which I believe is one of the key partner for data center build-out, they have just a few days ago, upgrading their technology and low center revenue growth guidance to 220% to 240%. I believe this is for full year 2026. This has just been lifted from like 100% to 120% in first quarter. I believe there's a strong issue to TTI this part of revenue, but I definitely want to hear about this from you. Yes. This is the first question.

This is Shane Moll. Thank you for the question. So we're excited about the growth that's happening in that segment of the end market that we're deeply engaged with, as Steve noted, on a global basis. And we see roughly half of that segment of technology, energy and manufacturing is tied to work we're seeing in data centers, and that continues to be a robust part of our business, and we expect that to continue in the future.

Is it possible to probably just get some idea like what would be the related AI PC revenue like, say, like in 2030. We see Quantum Services, for example, is painting, I think, a big pie as big as, I think, USD 800-something billion for revenue 10 related to AI PC. How is it going to translate to TTI's revenue, particularly? I think Stephen mentioned again, MILWAUKEE is [indiscernible] is looking at USD 160 billion plus.

Well, based on where we see that end market today, that it's outpacing the growth of our total business at the current rate, and we expect that to continue in the future based on what we have line of sight to today. So we remain deeply engaged with the contractors that perform the work with the owners and the hyperscalers, and we're building partnerships and those partnerships continue to strengthen every single day. So this is all business that we continue to earn, as Steve noted, for a very long time with our partners and that end market demand remains very strong, and we expect that to continue as we move forward.

Got it. So I don't know whether I can ask one quick question. Does it count the 2 that I just asked Okay. This is possible. Can I probably just quickly check with Ty. Ty, I think you highlighted very well. We are really, I think, a strong free cash flow generating machine. The net cash balance at the end of last year, I believe, I think it's piling out to historical from context, very high level. We are stepping up on buyback, and we are actually raising the payout. But I think with this pace of free cash flow generation, we -- what we're going to do, I think, in the next few years.

So I think the question is around the capital allocation strategy, right, and what we're looking to do with the free cash flow. And I think our policy is what we've laid out in our previous earnings where we continue to see a strong, healthy balance sheet. We see strong cash generation from operations. We've -- we're executing the buyback that we're doing. We continue to increase the dividend payout in accordance to that. And then we're also making sure that we've got enough cash on the balance sheet as we look for any potential maybe acquisitions that we see out there that may be small in nature and fit within our businesses. And then we'll continue to keep looking as we -- in reevaluating the Board has agreed that we'll continue to assess the buyback in the future and take a look at how we continue to return the cash to shareholders.

[Operator Instructions] Your next question comes from Sky Hong from UBS.

First of all, congratulations, right? You guys never disappointed. Great job again. Can you hear me, right?

We sure can. Thank you.

Okay. I think, Steve, you mentioned, right, compared to traditional sort of non-infrastructure spending, right, AIBC sort of density is 2x, right? So for example, like for one like AIDC investment, total investment, what percentage will go for tool related related [indiscernible]?

Scott, maybe could you repeat the question? Are you asking what percentage of like a typical project, a typical data center project might be allocated to tools?

Yes. Correct me if I'm wrong. I think Steve mentioned AIDC to spending like 2x of traditional non-infrastructure spending, right? I think Steve mentioned that number, right?

That's correct. I think you need to think about this a little bit differently and that you can't look at the dollar spend of the billions to be able to put a data center up. What you can say is that the more complex from mega job sites and data center and infrastructure and utility, the more complex the build is where the type of worker that is required is more concerned about productivity and safety and getting that job done faster and more efficiently, what the end user wants at that point in time are tools that will enable them to be able to complete that task faster. And that's where we fit in.

So if you talk about a drill driver and impact, there's a lot of great products out there. Yes, we think we have the best product in the world. But if you talk about a roll groover, if you talk about a cutter in a gripper, if you talk about our Bolt helmets, if you talk about our Made in America hand tools, if you go through the extensive array of products that we have that solve problems with those users, that is why we are the brand of choice on those difficult, challenging jobs where productivity and safety are very important.

I see. But do we have any like rough percentage of like for the AIDC total investment, what percentage, like are we talking about like below 1%, 0.5%, do we have any sense? Like do you guys have any like quantitative numbers?

No, we don't look at the percent of the cost of a data center build or a new fab build and look at the cost of tools, accessories, safety, hand tools and all of the other businesses we're in today and the potential businesses we're in the future.

Sky, I think the other thing you might just want to consider, too, is just the positive mix impact you get from the business that you're referring to. And certainly, some of the -- if you look at the gross margin expansion that we had in the first half of the year, one of the very key drivers of that was the outgrowth that we saw in our high-growth markets, which account for about 1/3 of the global MILWAUKEE business.

We will now take our next question from the line of Eric Lau from Citigroup.

Congratulations for the management for the excellent result. May I have just 2 questions regarding the margin and cost. We see the Ty have done a good job for the gross margin breakdown, actually by almost 250 basis points. However, we spun out the distribution cost also increased significantly around 190 basis points by almost 2% point on the sales. So I'm not sure the gross margin expansion at a large degree and then distribution cost increased also at a large degree. I'm not sure any change of the accounting policy for booking margin and also the distribution cost or actually impacted by the tariff.

Eric, I guess the question is, is that the -- in our EBIT margin walk, we really pointed to the annualization of the tariff mitigation efforts, that's net, right, of what we're seeing. So it's not just the one side of it, but it's actually a net impact there from that so...

No. I mean why the distribution cost increased significantly by almost 190 basis points?

Yes, the selling cost is in the distribution.

Right. But actually, distribution cost increased 17%, right, versus the sales growth only mid-single digit. Why is that?

Yes. I think the -- I mean, I think from the standpoint, Eric, one of the things you need to think about is the MILWAUKEE business is mixing to a higher, right, number from that aspect. So as we take a look, even though the selling distribution cost is up, it's all about the field resources that we're investing in, in that. It's the product development, the NPD costs that we have, it's a significant amount of that. And as we mix more towards the MILWAUKEE business, which has higher SG&A costs, you see that from that perspective. So...

I see. I see. So the company booked the tariff refund into P&L during the second half, if Andy or just the cash flow statement?

We have -- in the second half of the year, we will determine how we handle the tariff rebates if and when we get any. But just to reiterate, the first half, these results did not include any tariff rebate pickup.

Right. My last question is excluding the tariff refund in the second half. So under a normal circumstance, second half profit usually higher than the first half, right? So do you see no exception for this for 2026, right?

No.

Okay. Got it. So sorry, one more follow-up question. What do you think about the gross margin and EBIT margin sequential improvement in the second half versus first half? Do you think how much there?

Yes, Eric, you know that we have a track record of looking at cost out and mitigating off our commodity increases, and that's kind of our mentality. And we hope to maintain a gross margin in the levels that we're currently seeing in the first half.

And as Ross reiterated, our mix of products are heavy in gross margin on the MILWAUKEE brand that are feeding mega job sites, data centers and those types of end users throughout the globe, which will continue to mix in a positive way.

We will now take next question from John Choi from Daiwa.

Congratulations on the strong results. Just a quick follow-up on, I think, Eric's question, and I think, Ty, you answered. So you mentioned that the tariff or refunds were not included in the first half, and you guys have not determined how to book it in the second half. So I'm just wondering if that's the case, should we be expecting this -- if there's potential refund, could be viewed as incremental gross margin upside, or it could be booked as more of a one-off? And apart from that, GP margins, the trend -- this trend should be similar through that? And then I have another set of question.

Yes. I think what we were mentioning before in Eric's question, as we take a look at the business as usual ex the -- any tariff refunds, we are continuing to model our gross margins in line with what we're expecting to see in the front half and the reason being of what Steve just said, too, with the mix towards the higher MILWAUKEE margin products as we see the growth in the back half.

When it comes to the -- and I can also queue up to Frank here. But as we take a look at the second half and as we look at any potential refunds, rebate refunds, we will have to determine how we're going to properly account for that in accordance with accounting standards and how we view it from that standpoint. So it could be treated either as one-off or net of impacts to that -- from that side.

So the current -- this is Frank. The current direction is more to call it the one-off item. And otherwise, there will be another EBIT margin walk next year, taking out this tariff refunds. So the current thinking -- also, we need to agree with the auditors. The current thinking is that this is a one-off nonrecurring item.

And unlike other companies that are out there in the environment, we're clearly not showing EBIT, as we have said in the first half from any tariff refunds that we haven't seen, and that clearly will not be our practice in the second half as well.

Great. That's very clear. Just quickly shifting gears to RYOBI. I think first half, you guys grew 1.7% in local currency, but you also mentioned mid-single-digit growth in power tools, offset by softer outdoor business. What kind of -- what gives you guys the confidence that RYOBI can come back to mid- to high single growth? Is it the first half weakness obviously one-off because of weather? And are you seeing kind of a pickup on the consumer demand side? And any color on this will be very helpful.

I think the perspective from many people has led to understating the value of the RYOBI brand, which is the #1 consumer brand throughout the globe. And what we want to make clear is that the pipeline of new products the viewpoint of the backward and forward compatibility. The fact that we're launching more and more products like pool cleaners and lifestyle products and core power tools inside that area, products for camping, everything inside the house and outside the house. And the results in the first half, we believe, bode well for those same type of results with the best distribution partners throughout the globe with the RYOBI brand in the second half of the year.

I'll take our next question from the line of Terence Chang from Macquarie Capital Securities.

Can you hear me okay?

Yes.

Yes. So first of all, congratulations on the strong set of results. So my question is actually on the tariff rates that the company is seeing in the second half. I just want to kind of get a feel from the management on how are you guys going to mitigate the tariffs in second half? And obviously, I think in the announcement, you guys also mentioned about stepping up in further fine-tuning your manufacturing footprint in the Americas and also in Vietnam over the next 12 to 18 months. So can you guys just share with us in terms of kind of CapEx spend on this, and how it will benefit you on the tariff mitigation standpoint?

Yes. Terence, thanks for the question. So I think that as we take a look at -- it's a continuation of the mitigation efforts that we've put in place. So I think when we take a look back 18 months and when this kind of all started, we did a lot of work to optimize our production and get it into what we believe would be the lowest tariff jurisdictions from a production standpoint from that. Since then, obviously, we were running at the set tariff rates that we had in the first half and knowing that the tariff rates have increased a little bit in the back half, some from the 10% to the 12.5%. We've now modeled that into our financials for the back half of the year as we're taking a look at it and still considering all of that, we still believe we're capable of delivering what we believe is the gross margin that we talked about in the last couple of questions.

From the capital spend that we're looking to do over the next couple of years that the team mentioned in the presentation, it's further not so much about readjusting the global footprint as it is for handling the growth that we're experiencing in the business. And I think the beauty that our operations team did when we built the factories that we have in both Vietnam and Mexico is we built them with the assumption that they would be able to be expanded at a lower cost -- capital cost in the future because we had already built the infrastructure, whether it be the pad for the flooring, for the building in the first phase or whether it was acquiring the land and building out in that.

So as we knew we needed to continue to expand, we knew that it was easy to do on the existing sites that we already had using some of the prework that we had already done in the prior years and the prior capital expenses that we had already spent. So we anticipate that we're not going to see a big uptick in CapEx, not like we've seen in the past where we were going into Mexico or going into Vietnam initially, we're talking about expanding the facilities that we currently have at a much lower capital expense rate.

And the second question is actually on the finance cost. So obviously, first half, you're already seeing kind of reduction in the financing costs. And with the strong free cash flow that you guys are generating and the net cash balance, should we expect you guys to further pay down debt, hence, even lower financing expense into the second half of the year?

Definitely. Yes, we will definitely leverage on our strong balance sheet and on our cash flow generating capabilities to drive our net finance costs further down. That's definitely in our plan and in our second half projections.

And a final question, in terms of the effective tax rate, any kind of changes or kind of things that we need to be aware? Or we are basically still able to keep the relatively low tax rate.

Income, our effective tax rate was at 8%. And as I mentioned, we are pretty comfortable with our current tax plans and structures that this high single-digit type of effective tax rate is very sustainable.

We will now take our next question from Helen Fang from HSBC.

Congratulations on the great results. Well, I have a more strategic question because I noticed that during this earnings, we have changed the reportable segments from power equipment and floor care and cleaning to professional and consumers. I was just wondering, is there any strategic underlying message to that change? For example, you're going to focus more on MILWAUKEE and RYOBI and maybe less resources towards floor care, et cetera? Can you share some color, much appreciated.

There's clearly no change to our strategic direction. And our strategic direction is, and we have been talking about it for some time now that we have 2 extremely valuable brands. And those brands are MILWAUKEE, the #1 professional brand throughout the globe, driving safety and productivity, and RYOBI, the brand of choice for consumers inside the home, in the garage, lifestyle and inside the yard. And they are clearly a focus. At the same time, what we have said is that in the cleaning segment with our Vax and Hoover brands, it's a matter of us restructuring how we think about it, really revitalizing the brands from the product development areas and every single aspect. And as we do that, and we -- you have seen the numbers go down. And the next phase of that will be how do we put more new product development in those products, do more demand creation and figure out what the next step of that revitalization will be in 2027 and beyond.

Understood. Well, I think AIDC, we've talked a lot about it. I think it's representing almost like 16% of the MILWAUKEE sales as of the reported quarter. I was just wondering, is it a cyclical or structural high-growth driver that in your view? And if it is a structural one, what gives you the confidence in its durability beyond, say, 2026 or even 2027? Any color you can share with us here?

Thank you for the question. We definitely view this as a structural growth driver behind our business. We're very close to the trades that are performing the work and the owners that are investing in this work. So we're confident that this is a strong growth driver for the MILWAUKEE business into the foreseeable future.

[Operator Instructions] Our next question comes from the line of Frank Teng from Nomura.

Congratulations on the strong results. I would like to ask one question at the level of the customers actually buying the products, not the end market demand. So the question is, when you look at the first half growth coming from the non-Home Depot channel, are you seeing the same users buying more products and buying different products? Or are you seeing new users coming to the base?

With Home Depot and our other distribution partners, we have a blend of MILWAUKEE enthusiasts and loyalists and RYOBI loyalists, and both of them continue to buy in our forward and backward compatible cordless systems and platforms. And our other systems and platforms such as [indiscernible] on storage on the MILWAUKEE side, bold helmets from the PPE side as well as other product categories because of the loyalty to the brand and the fact that we deliver productivity and safety on MILWAUKEE. And on RYOBI, we deliver what that consumer needs every single day.

At the same time, we target new users. And those are new consumer users who are first in the market for do-it-yourself or for landscaping or for leisure or for any single aspect of the business. And we do that from a digital-first approach to the business through all different vehicles to be able to accomplish that throughout the globe. And on the MILWAUKEE side, we do that through converting those new users on the job sites throughout the globe to our platforms where they want better performing products that deliver productivity and safety for them based on where the world is today. And this is from Home Depot to our industrial channels to Bunnings in Australia to direct-to-consumer in the European sector on the RYOBI side. So all aspects of our business do both.

That is the end of the question-and-answer session. Thank you for your participation. This concludes today's interim results announcement analyst and investor webcast. You may now disconnect.

Good morning, everybody. It gives me great pleasure to welcome all of you to our TTI Group 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. And what I can tell you and deliver you today by our Group CEO, Mr. Steve Richman; Vice Chairman, Stephan; Group CFO, Frank Chan.

I think that we have done fantastic and none of our competitor has duplicated our results over the last 3 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 continue driving market share and gained market share and delivered record profit, with the third consecutive year of free cash flow above $1 billion. Now to make it easy to understand, $1 billion means $1,000 million. So, we're talking about $3,000 million, 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 on our future and why we are so bullish 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 yes, 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 USD 15.3 billion and a record net profit of $1.2 billion, a 6.8% increase.

MILWAUKEE continued to fuel the group's growth with 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. RYOBI business had another outstanding year, with sales grew 5.4% in local currency. Our 9% non-core business declined by 20.4% due to the planned exit of the HART business and the rationalization of our floorcare sales.

Gross profit increased by 6.7% to $6.3 billion, with margins increased by 91 basis points to 41.2%. The improvement is 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 gross 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 cost for the exit of the HART business, our normalized EBIT margin will be at 9.3%, a 57 basis points increase. Net profit 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 USD 0.656 per share.

The Board recommended a final dividend of HKD 1.32 per share, an 11.9% increase as compared to the HKD 1.18 per share in 2024. Together with the HKD 1.25 interim dividend paid, subject to shareholders' approval to the recommended final dividend, total dividend for the year 2025 will be HKD 2.57 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 R&D for new product 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 HART business, which will not be recurring in 2026 and the associated costs related to the rationalization of underperforming product lines and business units.

We have, however, managed to lever down our non-strategic SG&A by 42 basis points. Admin expenses now account for 9.8% of sales, and we do expect further efficiency 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 rate 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 continued to be very healthy and strong. Shareholders' 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 4 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 1 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 spend for 2026 will be at the 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 close to $1.4 billion free cash flows despite all the tariff headwinds. We firmly believe we will be able to continue to deliver another $1 billion free cash flow 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 debt account for 80% of the group's total debt portfolio, while short-term debt is 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 our 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 USD 500 million 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 need, 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 of 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 3 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 5 years or 10 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 Darrell Hendrix 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 #1 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. 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 HART 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 to 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 2 most dominant brands in the globe, MILWAUKEE and RYOBI. And that continues and will be the path for '26 and beyond.

Last, just 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 can stand up here all day and so could Ty Stravinski and Shane Moll, 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 2 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 combine 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 Horst, 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 $1 billion. 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 2 most dominant brands in the world, the #1 consumer brand in RYOBI, the #1 professional brand in MILWAUKEE, 91% of our sales today in 2025 and growing are these 2 brands. With that, the results from those 2 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 Moll 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, #1 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 #1 distribution partner in the globe in The Home Depot. In ANZ in New Zealand, we have the #1 distribution partner called Bunnings. The combination of that gives us a clear competitive advantage versus everybody else in the market. And then you combine the opportunities for our 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? 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 in 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 2 of our other outstanding leaders, Ty Stravinski, who's going to take you through after Frank, some in-depth analysis on our financials going forward. and Shane Moll, 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?

Great. Thanks, Steve.

I'm super excited to be here today, and I'm going to go through a little bit more of in-depth into the financial results that Frank mentioned upfront. So, we're going to start off with our first slide, which is the sales growth -- full-year sales growth for TTI. Our 2 leading brands, MILWAUKEE and RYOBI, delivered solid results in 2025.

MILWAUKEE reported 7.9% in reported growth, but a 10.3% in underlying growth when adjusted for the non-recurring events. RYOBI reported 5.4% in local currency. Our other non-core businesses, as Steve mentioned, represent 9% of our total global revenue. That declined 20.4% due to that planned exit of our HART business, along with the market softness and rationalization of our Floor Care business. After adjusting for the non-recurring MILWAUKEE events, the TTI adjusted full-year sales growth was 5.7% versus the reported 4.1% in local currency.

Let's dive a little bit deeper into that MILWAUKEE underlying growth, so you can get some clarity there. Full-year sales growth was impacted by our decision made at peak tariff times to suspend certain product sales and promotions in the second half that were disproportionately affected by tariffs. MILWAUKEE reported a global sales growth of 7.9% in local currency, but the estimated underlying sales demand of 10.3% after adjusting for the 4.2% of the reduction related to the sales suspension, offset by the 1.8% of pricing actions that we had. The underlying MILWAUKEE demand remains strong and consistent with our multi-year growth trajectory and reinforcing our confidence in our continued growth in the future.

Turning to our RYOBI sales. The RYOBI business had an outstanding year, growing 5.4%, marking the second consecutive year of single-digit growth off of the high pandemic levels. Power tools grew single -- high-single-digits, and our outdoor products grew low-single-digits as certain storm events from 2024 did not reoccur in 2025. As the business is more closely tied to our consumer spending and weather, these results demonstrate the strength of the RYOBI platform, and they reinforce its ability to deliver sustainable long-term growth.

When you look at our other business, Steve hit on it a little bit, but looking at the other areas of business, we're really focused on driving profitability and improvement and stabilization. We reduced the all other business sales, which now make up 9% of the total global revenue by 20.4% in local currency in 2025. The planned exit of the HART business contributed 40% decline to this decrease and the $156 million of sales will not repeat in 2026.

Now, I want to take a little bit of time and talk through some of the color and clarity around the first half and second half sales growth for TTI. When you look at how the non-recurring items impacted the first half and second half sales growth, you'll see the adjusted sales growth is well balanced across both halves with a slight acceleration into the second half as sales were reported 5.6% in the first half and 5.7% in the second half.

The main driver of the adjusted sales growth relates to the major ERP conversion that Steve mentioned that we did in the MILWAUKEE business on July 1. This required the pull forward of sales from the second half into the first half, and this inflated the first half sales by 1.9% and impacted the second half sales.

The second non-recurring item relates to the MILWAUKEE sales suspension I mentioned in the prior slides. This impacted the second half sales for TTI by 3.2 points in the second half. Clearly, this demonstrates that the strong demand continued for our products across both periods within 2025.

Gross margin walk. So, looking at our full-year gross margin compared to 2025, we saw a 91 basis point accretion. The main contributors were outperformance and growth in our higher-margin businesses of MILWAUKEE and RYOBI, which now make up 91% of our total global revenue. This drove a 55 basis point margin improvement. Our strong performance in our EMEA and Asia regions, which have higher gross margins, drove 57 basis points of margin accretion for the business.

The work the teams did to really leverage costs in our factories and work with our supply base to drive down costs and move and mitigate tariff activities, but we still saw a 21% drag even over these efforts in our -- after our pricing actions. Overall, TTI continued its overall year-over-year increase in gross margin in a challenging tariff environment and landscape.

Looking at our EBIT. We delivered a normalized EBIT margin before the HART exit cost of 9.3%, which is a 57 basis point increase versus 2024. The main drivers were the work that we've done to take out the structural corporate, admin and G&A costs and really leverage synergies, AI and leveraging our assets. As I mentioned earlier, the gross margin performance from our EMEA and Asia regions drove additional EBIT margin accretion of 18 basis points after the investment in resources to drive the growth in those regions.

Finally, the mix towards higher-margin businesses aligned with the leverage of the global initiatives that Steve mentioned before, really delivered another 19 basis points of improvement. These combined brought our normalized margin to 9.3%, which is where we're using as our basis as we build towards our internal target of 10% EBIT margin in the near future.

As Frank mentioned in his section, we've delivered 3 consecutive years of over $1 billion in free cash flow generation, and our gearing is now negative 10%. This performance, along with our confidence in our future plans, allows us to continue our increased dividend trend and to announce our intended stock buyback plan of USD 500 million over the next 18 months. We anticipate that the combination of our plans, along with these actions will further increase shareholder returns for years to come.

Thank you very much. And I'd now like to turn it over to Shane Moll, Group President of MILWAUKEE Tool to go through some more exciting details regarding the MILWAUKEE business.

[Presentation]

All right. MILWAUKEE Tool employees throughout the word are united by a single mindset that is to disrupt everything we do for the greatest outcome for our users. As you saw in the video there from Dan, Max and Tony, leaders at the center of our innovation engine, we challenge the status quo in what we do every single day. Our expertise in machine learning and AI is reshaping how we're bringing new solutions to market. We continue to extend our capability to increase the safety, productivity and quality of our users throughout the world.

MILWAUKEE continues to expand our capability to address the problems that are being approached in the field every single day. Today, I will share with you how MILWAUKEE remains unique in understanding the distinct problems that are encountered by the trades throughout the world and how we're leveraging technology to increase safety and productivity.

I'll share with you how MILWAUKEE is purposeful and intentional in the verticals that we serve and the end markets that we compete in. We serve in end markets that are not only recession-proof, but are also delivering the highest growth in the world. And finally, I will share with you how we continue to invest in innovation that's purposeful to keep MILWAUKEE in a leadership position, to expand our profitability and accelerate our growth.

Today, MILWAUKEE is developing deep relationships within 10 key trade verticals, a level of scale and focus unmatched by anybody in the industry. MILWAUKEE continues to compete in these trade verticals with execution that begins with over 1,600 highly skilled job site solutions team members that are embedded deep, building partnerships with the trades to understand the rapidly changing needs.

The workplace is simply becoming more complex, and MILWAUKEE continues to engage in the field to better understand the challenges that they face every single day. Our partnerships enable us to develop solutions with the trades that we partner together, solutions that they not only trust but specify and demand in their work, creating an opportunity for MILWAUKEE to increase our position in the market and expand our profitability. Solving the challenges today, in addition to anticipating the problems that will occur in the field together, enables us to continue to expand our $160 billion total addressable market.

MILWAUKEE's pipeline of innovation is evidenced by over 17 distinct global businesses, each catered specifically for our core trades and aligned with the problems that they're facing in the field every single day. Each of these businesses are led by subject matter experts, experts that understand the challenges that we are facing together. These subject matter experts work together to address this $160 billion total addressable market that is bound by our understanding of the trades unlike anybody in the industry.

As the job sites continue to evolve, we ensure that we stay ahead by continuing to address the problems that the trades face every single day, and we address them together. Not only does this allow us to enter businesses, this allows us to create entirely new businesses to continually increase our progressive opportunity for growth well into the future. This results in a cycle of innovation, business creation and partnerships that make MILWAUKEE the brand of choice.

Now, I would like to thank the investment community for this next topic we're going to address because this is something that we've been asked for quite some time. And the question is, what is MILWAUKEE's end market exposure? Well, before I get into the detail, a couple of key takeaways. Number one, our exposure to our end markets is purposeful. It ties to the trade verticals that we're focused on, the segments that they work in, the solutions that we deliver. So, this is intentional in the markets that we serve. We serve markets that are both recession-proof as well as high growth.

So if you look at MILWAUKEE's end market exposure, the key takeaway is that we are anchored by the highly durable market of service and maintenance work that is work that requires to be done regardless of the economic environment, in addition to taking advantage of the high-growth opportunities that are in the markets of technology, energy and manufacturing. So, MILWAUKEE is anchored to both durable markets that are recession-proof as well as these high-growth markets, is one of the reasons why we continue to be very confident in our 10%-plus growth well into the future.

Now, let's talk a little bit about each of these markets. Service and maintenance, as I shared, is highly durable. It's one of the most robust and fastest-growing segments of the market for MILWAUKEE. This represents residential services, commercial services, transportation maintenance and mining. And if you think about this aspect of work, it's around us everywhere; aging homes, aging commercial buildings, aging industrial facilities and aging vehicle fleet and increasing demand in transportation and mining throughout the world is resulting a surge in retrofit, repair and upgrade work.

In addition, electrical efficiency mandates in addition to smart building adoption as well as labor that's being outsourced as the trades exit in a lot of these facilities where the work needs to be done. That's why MILWAUKEE is partnering with these trades within service and maintenance to deliver safety and productivity solutions that we can address the problems together. This is why MILWAUKEE continues to invest in this very robust and fast-growing segment of our market.

Next, technology, energy and manufacturing. It simply is hard to ignore. This is areas of the market and the fastest-growing markets across the developed regions throughout the world. This includes data centers, high-tech manufacturing, power utility, water utility, gas as well as telecom utilities. These are simply put the fastest-growing segments of construction throughout the world. They're supported by heavy investment throughout the world, led by artificial intelligence, reindustrialization, grid modernization and electrification. And if you look at these segments of work, why we like them a lot is we've been focused on our trade verticals coming up on 2 decades. And if you look at a job inside of a data center, in a data center, the work required by the mechanical, electrical and plumbing trades is double the amount of work in a traditional non-residential construction site.

So simply put, in a market where the constraints on labor have never been more challenging, that's why they work with us to develop these safety and productivity-driven solutions. So as you see, as you look at these 2 end markets combined, these end markets represent about 80% of the demand for the solutions of our product worldwide. These greatly overweigh our exposure to residential construction and remodeling. This is why MILWAUKEE is so confident in our growth as we move forward to deliver 10%-plus growth because we are anchored to in a purposeful strategy to the fastest, largest and most resilient segments in the world.

Now in order for us to be relevant in these end markets requires a continued investment in innovation. Now, you see this innovation as we release hundreds of new solutions every single year. But the true matter of differentiation for MILWAUKEE is not just the solutions that we deliver, it's the manner in which we innovate. Because we're deep, tied partner to the trades, we have unique insight unlike anybody in the industry, solving the problems with them. So, we're able to pinpoint our investment in R&D and our investment in innovation to maximize the safety and productivity of the trades.

You could see this in 3 key areas throughout our business. First is the physical solutions that we deliver to truly interrupt workflows. One of the unique solutions that we delivered this year is the M18 Branch Conduit Bender. This is an application that's done in data centers and high-tech manufacturing throughout the world. It's one of the largest consumptions of labor on job sites, period. And why is that the case? Because today, it's being done by manual tools.

MILWAUKEE innovated by bringing powered intelligence to this application that brings a high level of quality, drastically increases productivity on the job site as well as in pre-fab environments to provide a safety and productivity solution that is unmatched in bringing productivity to the job site.

Another example is in a newer end market that we're servicing, which is the natural gas technician. MILWAUKEE just introduced the MX FUEL Electrofusion Processor. That is a unique product that provides portability and capability unlike the industry has ever seen. In addition, it provides the intelligence to deliver traceability and quality of work that MILWAUKEE can only deliver. These solutions let these end markets know that we are focused on delivering solutions specifically for them.

If you look at the area of PPE, one of the fastest-growing segments of our business, what we've done with our BOLT Safety program worldwide in our helmet program simply is remarkable. We recently received accolades by receiving the top 2 spots of the 5-star Virginia's Tech Gold Standard Safety study that have reaffirmed to us independently that we are leveraging innovation to increase the safety of workers throughout the world.

Coupled with this, MILWAUKEE continues to invest in innovation across our platform technology, the things that are hard to see unless you crack open our tools. What we're doing to innovate in areas of motors, batteries, electronics and sensors to truly bring intelligence and productivity unlike anybody in the industry.

And last but not least, is that MILWAUKEE is very well known for our physical solutions, but we probably have not talked a lot about our digital solutions as well. MILWAUKEE continues to invest in software, connectivity, AI and machine learning to create digital unified ecosystems like what we delivered with AUTOSTOP, deliver safety to the world that has never been seen before by leveraging machine learning and the largest connected tool platform in ONE-KEY.

ONE-KEY is the largest digital enterprise-wide inventory management system that allows unmatched investment and productivity for trades throughout the world. So as you see, MILWAUKEE is not only adjacent and tied to the end markets that deliver resilient growth, we also are delivering solutions that is the reason why they continue to ask and partner with MILWAUKEE on job sites throughout the world. I think you see MILWAUKEE has been executing a very unique strategy over the past 20 years.

It's a strategy that enables us to have unmatched insight into the challenge that the trades face every day. It enables us to not only deliver new solutions, but also create new market opportunities for growth and purposely aligned to the end markets that are recession-proof and are the highest growth in the world. MILWAUKEE continues to invest in innovation to provide safety and productivity that will enhance our profitability and enhance our growth well into the future. But as Steve noted, all of this is anchored by remarkable people and an exceptional culture.

Thank you.

All right. Thank you, management team. We'll now go to the Q&A session portion of the presentation. Fast, maybe if everybody can just say their name and firm and try to keep it to one question and a follow-up to give everybody an opportunity.

Karen?

Yes. This is Karen from JPMorgan. Thanks a lot for the management team once again making efforts to fly to Hong Kong. I know it's a lot of effort flying from the U.S., particularly given the current situation. And then congratulations on the solid results. I do have -- I can ask only one question, is it?

So, maybe I think my first and foremost question will be regarding your revenue growth. I hear you regarding, I think, mid- to high single-digit blended revenue growth for MILWAUKEE plus will be low teen for MILWAUKEE in 2026. I think that is certainly very solid, particularly given a lot of uncertainty going on in the world, including the U.S. But how do we actually think about while we've been talking about in terms of TAM expansion, a very solid demand driver?

I think Shane is highlighting, and thanks so much for sharing the breakdown in terms of the end demand for MILWAUKEE. We are definitely seeing the data center and so on is now forming a big part of that. But how do we think about how this is playing into our numbers? And particularly, yes, Home Depot, which is our partner is also talking about the TAM expansion.

And then can I ask, Steven, what is the underlying assumption for that revenue growth in terms of interest rate fiscal policy in the U.S.?

Go ahead, Steve.

Clearly, as you heard from Shane and from Ty and from Frank, we clearly believe that the TAM expansion as we add new businesses and as we go into more depth in the verticals that, that opportunity becomes very, very relevant for us on the MILWAUKEE side as well as on the RYOBI side of the business. Both of them have geographical expansion opportunities as well.

The one thing you have consistently seen from us is, as we add new businesses, our current TAM for each one of those verticals continues to grow and our opportunities that we see globally continue to grow as well. Underlying demand is extremely positive. And that's positive because of our ability to drive market expansion. It's our ability to be able to go deeper and partner with our core users.

It's clearly the ability on the MILWAUKEE side where there's a shortage of labor everywhere in the globe of that talented labor, and they are looking for more productivity solutions and more safety solutions every day. And that's why our confidence level for double-digit growth continues year after year and our investment in disruptive innovation to be able to accomplish that.

Are you assuming any interest rate cut for the year behind that 10% to 15% level?

We are not assuming anything dramatic in terms of interest rate cuts or changes. As you saw from Shane, the majority of our business is not based on residential construction. And that's why we are so confident in terms of the verticals we're in, the users we supply every single day.

This is Jacqueline Du from Goldman Sachs. First of all, I just want to say, I think this is TTI's best ever results presentation. And thank you so much for the very detailed top line breakdown as well as the performance attribution analysis. Super helpful.

I just have one question. I think you have a slide on EBIT margin walk. If we take a forward-looking perspective, you have this 10% OP margin target by 2027, right? I just want to know what are the detailed measures to deliver that target? Can you do a forward-looking attribution analysis as well?

Yes. First off, I think if you take a look when we back out the HART business, right, and you take a look, you can get to that 9.3%, from that perspective, it's a continuation of what we do as a business, right? It's a continuation of what Shane talked about. And as we look at new product verticals to get into additional trade verticals to get into where we see higher profit margins from those products, as we continue to expand our geographical regions, right, into different parts of EMEA into Latin America, as we get into the Asia markets more, those tend to be higher gross margin regions of the world for us, both from the RYOBI and the MILWAUKEE side of the business. And that really helps us drive that gross margin side.

And then from an SG&A side, we've continued to look at ways to leverage costs, leverage the back-office operations, leverage technology, AI, continue to work as one team globally to try to leverage in those costs, too. So, we have the plan put forth, I mean, to get to the 10% internal target. And as Steve mentioned, it's a matter of execution, which is what we do really good.

This is Johnson from Jefferies. Thank you for giving me the opportunity to once again meet you guys. It feels like every 6 months, we see all the friends and the whole investor community all here at the TTI results presentation. So from the set of results, I get the sense that TTI is very focused on profitability, which is something I really like to see. And exiting that HART business was, I think, one way to go to that path. So, what was the reason though? Why we exited the HART business? Because I remember a few years back, sitting in the same room, we were very excited about the HART business. So, was there a relationship breakdown with Walmart that led to this? What was the lessons that we took away from this exit of the HART business? So, that would give us some clarity on that.

Thanks, Johnson. Let me be real clear. As we stated, yes, we're focused on profitability. But we are a technology company based on growth. And our growth drivers are the 2 most dominant brands in the globe, one being MILWAUKEE on the professional side and the other being RYOBI on the consumer side. Overall, it was our decision that as we have this most dominant brand in RYOBI, the ability and the need to be able to compete with ourselves was not strategically the right approach versus us to, say, how do we leverage and increase innovation in the RYOBI brand? How do we take that brand and develop more market opportunities with that? How do we expand into new markets? And how do we look at all of that together? And that led us to the conclusion that the strategy to exit HART was the right call.

So the RYOBI products will now be sold in Walmart or that will not?

No, that's not what I'm saying. What I'm saying is that we believe in the RYOBI brand. We believe in our distribution strategy that we have today for the RYOBI brand. And we believe that there's additional new markets for us to attack from Asia to Latin America, as well as delivering more and more innovation and more and more new businesses under the RYOBI brand and the RYOBI platform.

This is Xiao Feng from CITIC CLSA. So, 2 quick questions. I think this is a very interesting presentation regarding the downstream market exposure breakdown for the MILWAUKEE Tools. So the first one is, what do you expect a potential change of the exposure? I'm very glad to hear that you guys are very recession-proof, but do you think the breakdown between manufacturing, energy, technology, manufacturing versus maintenance, repairment, will that breakdown change potentially in the future based on your outlook?

The second question is, what is the downstream exposure of RYOBI? How does that look like?

I'll take the MILWAUKEE question. So, one of the exciting things about these end markets that we serve that represent a majority of our demand is on the technology, energy manufacturing side, there's a very significant backlog of work that needs to get done and a lot of the challenges are driven by the access to labor and the shortage of labor. So, we think that the current relationship between those 2 end markets for our business is going to be very consistent into the near future, driven largely by the stability and the durability of what's happening in the service and maintenance side as that continues to -- it's hard to ignore the aging infrastructure and what's happening. And then also technology and energy and manufacturing, you see the investment there continues.

The backlog is incredibly strong. We're very close to our trade partners that are completing the work as well as the owners that are investing in these projects. So, we feel confident with the mix into the near term in terms of our end market exposure. So, we don't expect that, that is going to change drastically moving forward.

On the consumer front, let's talk a little bit about RYOBI and why we're so confident in the brand. There is the future piece of new geographical expansion. There is the ability to be able to say, we're going to enter new businesses under RYOBI. But the core is real clear. When you have an installed base of millions and millions of batteries and products that are out with individuals throughout the globe. And that platform is backward and forward compatible for over 20-plus years. And people have already invested in that platform and that system. The ability for them to continue to buy and acquire more and more products into that platform that will help them solve their needs in the house, in the garage, in the yard, in the lifestyle that they live is absolutely unbelievable in terms of long-term growth and long-term opportunity.

You combine that within the Americas and Australia, as I said, with the 2 largest, best understanding consumer-driven distribution partners with The Home Depot and Bunnings. And that's why we are confident on top of the rest of the growth opportunities that we have nothing but growth in the future.

Eric?

Eric from Citi. Actually, a big congrats to the management for the excellent result. And then thank you so much for the great presentation.

May I have just a follow-up question about the top line growth like Karen just asked? You said the top line growth mid- to high single digit. And then my question is, why don't we set higher, right, high single-digit, then assuming MILWAUKEE, not low teens, but should be mid-teens? Because the point is we see a couple of tailwind this year. You just mentioned you are going to reduce the tariff exposure, right. Suppose this speed up the industry consolidation.

And then the second is the -- you just mentioned AI machine also improve their R&D, speed up the new product development. And then more important is the largest customer, Home Depot and then the competitor, Lowe's also speed up the same-store sales growth this year, around 2% as maximum, right, versus flat last year. So, why don't we set mid-teen for the MILWAUKEE growth this year?

Eric, you always have an optimistic...

So my point is concern...

No, let's walk through it a little bit. I mean, when we think about what that looks like for 2026, we continue to charge forward with the double-digit 10% to 12%, let's use that range for the MILWAUKEE side. RYOBI is always going to -- we're looking at a low single-digit to mid-single-digit growth from that side. We're exiting the HART business, which won't be repeating.

So, you're going to have a drag, right, in '26 from that aspect. And we're still working on that stabilization and improving the profitability of the all other business right now. So, we're going to continue to have that as a continued shrinking piece of the business as we go forward. So when you model all of that together, I think when you get to -- that gets you to a mid-single digits with a stretch to get higher, but obviously, mid-single digits from that perspective.

Yes. I know. My point is why don't you set a little bit higher for MILWAUKEE growth, I mean, say, mid-teens rather than low teens, I mean?

10% and 12% on a -- really big number, is a big number, Eric. Right?

It's a lot of new companies, Eric. Lot of new companies.

I mean, what's your concern or growth constraint for this year? Can you share a little bit more color here?

Growth constraint or concern? We don't have concern. We do not have concern. We believe everything that Shane talked about in MILWAUKEE is why it will continue to grow, while the new dominance in new markets and regions will continue to grow, that the Asia and Latin America are opportunities. All of that is opportunities for continued growth. The level of growth that you want is we love the passion that you always have about the business and the growth expectations. At the same time, we are -- believe that we are very prudent in terms of saying this is where our numbers are as we go forward into 2026.

Yes. And Steve, internally, we do have a higher target for our business units.

There's always a stretch.

There's always a stretch, Eric. Always a stretch.

This is Terence Chang from Macquarie. So, I just want to kind of ask management about -- obviously, last year, the company did a great job in mitigating the tariffs. And obviously, a week ago, we have the Supreme Court ruling on the tariff. So, I guess it's a 2-part question. In terms of first part, on the U.S. business, what exactly is your sourcing exposure by region, hopefully? And also with the tariff rate currently at 10% as compared to 20% for Vietnam specifically, are we going to see some potential tailwind going into the second half of the year, while maybe first half, you will see some sort of tariff headwinds? So, maybe it will be helpful if you can walk through the sourcing part and also on the tariff cadence -- impact of the tariff cadence.

So as we discussed years ago, we made a strategic decision to have a global manufacturing strategy, which clearly means China, clearly means Vietnam, Mexico, U.S., Germany, throughout the globe and many other parts throughout the globe as well. That plan was clearly executed, as we said, by the end of last year, which leaves us in a situation to supply the U.S. market that we will not be shipping product from China for the U.S. portfolio and the market today for 2026.

Now, you say what's next? What does it mean with all the rulings? There's clearly not clarity. We are in a fluid situation that changes sometimes daily, sometimes weekly, sometimes monthly. And because of that, we cannot give you any distinct clarity on what that's going to look like for the rest of this year until we have some final clarity ourselves on what that means for ourselves and our distribution partners.

Good. Why don't we wrap it up there? Let me hand it back to the management team for some closing remarks.

It's not getting boring. Don't worry. I think the strength of TTI is that we have accumulated cash. We are ready for opportunities. And I'm very proud to say of our management. We have a succession plan, and you have seen that our business has been growing from strength to strength in the last years. And I assure you the best is still to come for TTI. If you have watched what was presented by Shane Moll and by you, Ty, you are not wrong, why keep an eye on TTI and invest. And I will be one of the first one who will lead the coup.

Thank you very much for attending.