Techtronic Industries Co Ltd

HKEX:669

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to Techtronic Industries Company Limited 2020 Interim Results Announcement Webcast. During the presentation, TTI will share the updated performance for the 6 months ended 30th of June 2020.

Before we begin, let me introduce to you the key management of TTI with us at the webcast today. They are: Mr. Horst Pudwill, our Chairman; Mr. Stephan Pudwill, Vice Chairman; Mr. Joseph Galli, CEO; Mr. Frank Chan, CFO.

On this call, our Chairman, Mr. Pudwill, will give us an opening remark. Mr. Frank Chan, our CFO, will walk us through the first half results of 2020. Then we'll have the operation review conducted by our CEO, Mr. Joe Galli.

Without further ado, let me pass the time to our Chairman. Mr. Pudwill, please.

[Horst Pudwill, executive]

Thank you for attending TTI's 2020 interim result announcement. Given the continued public health concern caused by the global pandemic, we have decided to present our interim result announcement by audio webcast.

I'm pleased to announce that we have delivered another set of outstanding results for the first half of 2020 with record revenue and profit. And it's worth mentioning that our Floor Care division has made an important contribution to these results. The coronavirus has created an unpredictable global environment. Our first priority continues to ensure that we provide a safe environment for our employees around the world. We have adapted quickly and efficiently throughout the organization to reach and serve our customer and endure safely in the best way possible.

Our efficient action to ensure minimal disruption within our global organization supply chain has provided TTI with a strong position at the first half of the year. We will continue to invest in exciting breakthrough new products, which are proceeding on schedule. TTI is uniquely positioned to continue outperforming the market. We have a strong balance sheet together with a highly disciplined fixed and working capital management. Our dedicated talented management team is leading our company not only to succeed throughout the unprecedented time but also to continue our march towards global leadership and exceptional performance.

Frank Chan, our Group CFO, will now provide you with the first half financial overview. And Joe Galli, our Group CEO, will cover the business overview and strategy.

[Chi Chung Chan, executive]

Thank you, Mr. Chairman. As Chairman stated, we have delivered another set of record results for the first half of 2020 under this challenging global coronavirus headwinds. Our first half revenue increased for the 11th consecutive period by 12.8% or 14% in local currencies to over USD 4.2 billion. This strong growth momentum was driven by our successful deployment of long-term initiatives by launching a series of exciting new products, accelerated new product development, expanding our global sales network and our ability to develop and strengthen the e-commerce channel.

Gross profits increased by 13.9% to close to USD 1.6 billion with margin improved for the 12th consecutive period by 40 basis points to 38%. New products, improving manufacturing productivity, expanding manufacturing footprint, very efficient and effective supply chain management are all major contributing factors to these improvements.

EBIT increased by 15.6% to USD 363 million. Despite our accelerated investments in strategic SG&A, EBIT margin increased by 20 basis points to 8.6%. Net profit increased for the 11th consecutive period by 16.3% to USD 332 million with a 30 basis points margin improvement. Earnings per share increased by 16.2% to $0.1814 per share.

The Board declared an interim dividend of HKD 0.15 per share, representing an increase of 17.8% and a payout ratio of 37.7% as compared to 37.2% same period last year.

One of our key performance metrics is net EBIT and net profit increase must outperform revenue growth. We again managed to deliver this target. Over the 12 periods under review, sales CAGR increased by over 10%, while for the same period, CAGR of EBIT and net profit increased by over 17% and 23%, respectively.

Our Power Equipment division, account for 89.1% of the group's revenue, delivered a growth of 12.8% or 14% in local currencies, with revenue reaching over USD 3.7 billion. Both MILWAUKEE and RYOBI ONE+ delivered double-digit growth in the first half. With our continuous investments in exciting new products, disruptive cordless breakthrough technology and categories expansion, we are confident that the growth momentum will continue into the second half of the year and beyond. Operating profit of this division increased by 14.5% with a 10 basis point margin improvement to 9.6%.

Floor Care division, account for the balance 10.9% of the group's revenue, delivered a sales growth of 12.7% or 13.6% in local currencies. The increase was driven by our relentless efforts successfully transformed our global Floor Care business with exciting range of new products and a streamlined business model. With the rollout of our ONEPWR cordless systems, together with a series of new carpet cleaning products, we are confident that the division will enter the second half of this year with strong growth momentum.

Operating profit was at USD 3.6 million as compared to breakeven same period last year. EBIT margin of this division is expected to improve with all the strategic initiatives being delivered.

From a geographic perspective, North America remained to be our major market, representing 77.3% of the group's revenue, delivered a growth of 14.5% in local currencies. Europe, despite the very challenging first half due to the coronavirus, managed to deliver a very impressive growth of 8.2% in local currencies. Europe represents 14.9% of the group's business. Rest of the world also delivered an exceptional 21% growth in local currencies.

We have continued to invest in strategic SG&A to grow our business and improve profitability. SG&A as a percentage to sales was at 29.5% as compared to 29.3% same period last year. The 20 basis points increase mainly due to our investment in strategic SG&A while leveraging 10 basis point savings from nonstrategic SG&A.

R&D spend was -- as a percentage to sales was the same as that of last year at 2.9%, while our administrative spend was lower than that of last year as a percentage to sales.

Net finance costs remained the same as that of last year despite a sales increase of over USD 478 million. We will continue to capitalize on the current low interest rate environment to deliver cost-efficient financing initiatives.

Effective tax rate was at 6.9% as compared to 7.1% last year. We continue to maintain that with our very effective and yet prudent tax planning arrangements. This low effective tax rate is very sustainable.

Our balance sheet remains strong with net current assets increased by 13.7% and -- 30.7%, and shareholders' equity increased by 12.8% to close to USD 3.6 billion.

As at June 30, 2020, our gearing was at 4% as compared to 13.1% same period last year. With our very disciplined working capital management and very diligent CapEx spend, we are confident that the gearing by end of this year, if any, will remain low and is sustainable going forward.

Working capital as a percentage to sales was at 15.8% as compared to 18.4% same period last year. Inventory days increased by 8 days to 102 days as we continued with our strategic build of inventory to maintain our high service level to customers and to maintain the growth momentum. The increase in inventory days had been financed by the increase in payable days of 109 days, an increase of 18 days when compared to same period last year or 4 days when compared to December 31, 2019.

The surge in payable days when compared to June 2019 was partly due to the slowdown of orders in Q1 but then stepped up significantly in Q2. That's a higher amount of payables not yet due for payment by end of June this year. We've also been able to leverage our volume, financial strength and order visibility to further improve our trade terms.

Receivable days remained comparable to that of last year at a comfortable 65 days level.

We have taken a very disciplined approach to our CapEx spend after the outbreak of the coronavirus put on a hit on nonessential spend, but continue to invest in new product developments and capacity expansion. CapEx for the period was at USD 117 million as compared to $211 million last year. Backing out the onetime infrastructure of CapEx reported last year, we invested a higher amount in operating CapEx this year.

We have continued to maintain a very prudent approach managing our financial position and to maximize finance cost efficiencies. During the period, we have arranged at a very favorable fixed rate of over USD 250 million of long-term debts. Long-term debts now account for approximately half of our total debt portfolio.

We've also maintained 69% of our debt in floating rate and 31% in fixed rates to capitalize on the current low interest rate environment. We will continue to enhance our debt portfolio and structure to maximize our operational and balance sheet efficiencies and be ready to support our exciting growth opportunities ahead of us.

And now I would like to pass the presentation to our CEO, Mr. Joe Galli.

[Joseph Galli, executive]

Hello, everyone. We are thrilled to share with you highlights of our first half 2020 results. There's no question that the coronavirus pandemic is a global crisis. And we -- at TTI, we believe that a crisis doesn't build character, a crisis reveals character. We believe a crisis reveals a lot of things about a company and the company's leadership. It reveals a lot of things about a company's strategy.

When this virus first became, clearly, a global issue back in late March, we immediately, at TTI, identified an action plan and moved very quickly to put, first of all, the proper coronavirus safety protocol in place throughout all of our operations worldwide. Every warehouse, every factory we have, every R&D center, every office building, every sales network we have, we deployed immediately a world-class series of protocols to ensure that -- first and foremost, that the people in our company and their families were safe.

Secondly, we observed when the virus first really became clearly an issue, we observed our competitors reacting in a very different way than we felt was appropriate. We saw competitors literally panic and announced that they were going to see double-digit sales declines, and they announced massive cost-cutting efforts. And we actually took a different path. We spent a lot of time -- actually, we were 24/7 here in the early -- in late March and early April, listening very carefully to our customers all over the world. We listen very carefully to our salespeople all over the world. And what became clear to us is that, yes, the virus was a global issue, but that didn't mean that our customers weren't going to sell our products and the consumers weren't going to consume products. In fact, what we heard from customers and our salespeople is that there was so much pent-up demand in the early phase of the virus that we actually decided to implement a dramatically different plan of attack than our competitors. Instead of boasting about our cost reduction programs and boasting how we were going to cut hundreds of millions, actually, we had a large competitor that actually said they would cut $1 billion worth of costs out of their company. I mean how can they have $1 billion of costs?

So what we announced is that we would invest, first of all, in production and in inventory. And we ramped up our manufacturing process. We invested more manufacturing capacity. We also invested aggressively in even more product development. We wanted to accelerate product development because we felt there were so many opportunities for us to capture market share and to increase the pace in which we are achieving global leadership in the tool market. And we also decided to invest heavily in rolling out more salespeople. We wanted -- we felt strongly that if our customers, if our retail partners and our distributors were open for business during the virus, then we had to be in those stores, in those showrooms, helping our customers sell through their products and helping the end users select the right tools for -- in this time of virus crisis.

So we expanded our sales force dramatically. We -- again, we accelerated new product. We did our best to serve our customers with inventory and with production capacity expansion. And because of that, our first half this year, we dramatically outperformed the market. Our competitors announced double-digit declines in sales, while we grew our company's sales in the first half of this year 12.8%. We were up 14% in local currency.

And let me assure you that this first half result is not a snapshot. It's not a onetime occurrence. We have so much momentum now going into the back half of 2020 that we are very confident we will continue on a trend of outperforming our competition and outgrowing the market. Our sales success in the first half wasn't only our vaunted Power Equipment business but also Floor Care, as we promised. Our floor care business now is demonstrating that the turnaround plan that we put in place is gaining traction and is working. And so Floor Care was up double digit, along with Power Equipment.

Our P&L in the first half reflected yet another significant example of improving our financial performance over last year. So while sales were up 12.8%, we grew our gross margin 40 basis points. We invested in SG&A, but we did achieve leverage because gross margin grows faster than the rate in which we invest in SG&A. And so our EBIT came in at a cool $363 million for the first half, which is a 15.6% growth in EBIT. And as Frank mentioned, our net profit was up 16.3%.

We are particularly pleased with our team's gross margin improvement performance. When you look at our performance, what -- you have to say a little bit, how can we be growing 12.8% when our largest competitor is down double-digit? You might draw the wrong conclusion that we're actually achieving this dramatic sales success based on price. But actually, our gross margin is going up while we outgrow the market, which tells you that our new products that we are launching that have demonstrably better features and performance characteristics than our competition that -- are commanding premium prices in the market.

So we are able to grow our company double-digit through this crisis while we improve gross margin, which shows you that we're selling -- we're rolling out and selling premium products that are priced up versus our competition and delivering accretive gross margins. And we are -- this chart every year seems to get smaller because for the 12th consecutive year, we have improved our gross margin year-on-year in the first half, 12 consecutive years. And if you look at our industry, you'll see competitors have -- with gross margins that are collapsing, while we just keep grinding our gross margin up half after half, year after year.

A particular highlight of the company's performance in the first half was our working capital performance. We actually improved our working capital as a percentage of sales from last year's 18.4% to this year's 15.8%. And I am really, really proud of our organization for being so disciplined with working capital. But the way we achieve our working capital performance is very different than other companies in our industry.

We actually invested in inventory because we felt so strongly that our customers needed products on the shelves when the end users were shopping in required power tools or lawn and garden equipment or floor care, et cetera. So we actually improved -- we actually increased inventory from 94 days to 102 days throughout the first half. But because we are so disciplined in managing receivables and because our supplier partners are working with us so aggressively and extended our payable terms for us, so we moved payables from 91 days to 109 days, because of that, the overall working capital management, we were able to increase inventory while we reduce working cap as a percentage of sales.

And I think this theme you see here is really critical. We are working right now very hard to increase manufacturing production and to build the inventory so that we can support what we believe will be excellent growth levels in the second half of 2020 and certainly in 2020 and '21 and beyond. We have a bright future at TTI. We intend to outgrow the market not just 2020 but over the next 5 years. And we believe that our strategy, which is so radically different than our competitors who continue to boast about taking costs out and firing people and reducing their overhead, we think that there is an incredible opportunity for TTI to accelerate the pace in which we achieve global leadership in the power tool market and the overall tool market in general.

One of the highlights of our company is our leadership development program. And this is a program where we go to over 75 college campuses all over the world, and we recruit handpicked, overachieving students that we feel will be a good cultural fit for TTI. And in the first half this year, while our competitors continue to announce that they were freezing hiring, we hired over a 1,000 college graduates and -- to support our sales network, our product management system, our marketing teams, our -- importantly, our engineering networks that we have all over the world and also our operations and supply chain teams. So there'll be over 1,000 people we'll end up hiring that we will deploy throughout 2020.

And can you imagine the infusion of talent and energy and excitement in the company? Here we are in the global pandemic. Many companies have frozen all campus recruiting. Many companies are cutting off any kind of hiring, and we're bringing people in as fast as we can identify top talent. And this is the perfect environment, by the way, to hire the very best graduates because there are so many companies that stopped recruiting because of the virus. We are so bullish about our future that we feel this is a critical part of our overall model for long-term leadership.

Okay. Let's turn toward our various business units, and let me share with you some highlights of new products that we're developing and some highlights in terms of our sales performance. In the first half this year, our flagship MILWAUKEE industrial tool business grew 13.3%. And this is important because one of the things that happened with the virus is that do-it-yourself activity actually saw a surge throughout the second quarter. But the industrial construction business globally got hit hard initially by the virus. However, that issue, that headwind that we faced in industrial construction, that rapidly dissolved because there's so much investment going on right now in terms of infrastructure development. There's so much investment in the power utility vertical. And there's massive construction underway, and there's some changes in what's being constructed. But the hospital construction and all sorts of other support facilities, buildings all over the world are now under construction. And we see a major opportunity for our MILWAUKEE industrial construction business, not only in the second half this year but, again, in the years to come.

I was so proud of our global MILWAUKEE team in the first half. We, of course, grew our core North American business double digit, and the North America team was up 12.8%, which is significantly better than competitors that -- our competitors were down, in some cases, double digits in the first half. Well, we're up 12.8% in North America.

In Europe, our team did an extraordinarily great job because the European theater was hit hardest by the virus throughout the first half, particularly, starting in mid-March, Europe really got hit the hardest. And yet, our European team really came through and delivered 8.5% growth in MILWAUKEE for the first half.

And then in the rest of the world business for TTI, we were at 27.6%. Can you imagine? So our rest of the world is Australia, New Zealand. And it also is our new Asian build-out. We are literally building out MILWAUKEE Asia country-by-country with a very aggressive strategy of where we're developing country marketing and sales operations to deploy the MILWAUKEE strategy that's been so wildly successful in North America, Australia, New Zealand and Europe. And so for rest of world, up 27.6%.

And I think it's important to note here, one of the things we don't get credit for is what we don't do at TTI. We don't chase what people could call emerging markets when it doesn't make sense. We backed out of Latin America long before that economic environment went through its recent travails. We don't invest in India and in Turkey. We are very careful about our investments in Russia. And because of that, we see other companies reporting dreadfully bad results in RoW or in emerging markets, and we're up 27.6%. So we're really, really proud of our team for this kind of performance.

Our new products that we are rolling out now in MILWAUKEE are, without question, the most exciting, the most advanced, the best cordless products that you'll see in the industry. So let me give you some examples of some of the highlights of products we're rolling out.

This lovely device is called 1-inch impact wrench. This is the most powerful cordless impact wrench in the world today. It's an incredible piece of equipment. This wrench is ideal for the plumbing -- I'm sorry, for the mining industry, for all kind of infrastructure projects. It's super powerful. It's cordless. So it's inherently safe. There's no pneumatic hose or cord to deal with. And we think this changes the way that these kind of end users will perform their daily function.

We are rolling out, as we speak, a -- the world's most powerful, fastest-cutting, cordless, metal-cutting circ saw. And this is a cordless metal cutter that actually outperforms all the corded metal-cutting circ saws that are available in the world today. And it's cordless. And we will complement this with a full array of metal-cutting circular saw blades for all kind of different materials, shapes, sizes, et cetera. And this will enhance our leadership position in the whole metal fabrication, metal cutting vertical arena that we serve.

We are excited about our brand-new cordless, portable bandsaw. This is the most powerful and the fastest-cutting cordless bandsaw available in the world today, perfect for plumbers and all kind of infrastructure build-outs around the world.

We rolled out a really cool cordless compressor. So this is a cordless compressor. It makes like half the noise of any of the other -- of these type of compressors that are in the market today. It's super convenient for all kind of industrial construction applications.

We're rolling out an expansion of our leadership cordless nailer program. This is something that we're really excited about. So for years, since World War II, nailers have been powered by a hose. They've been pneumatic-powered products. And there are cordless nailers in the market today, but nothing like what we just rolled out. So this is the new MILWAUKEE cordless framing nailer. It's much faster and much more powerful than any other cordless nailer available in the world today. And this literally eliminates the need for the hose and the noisy and polluting compressor and generator that you see on job sites. You can literally just take -- you can now frame a house or any kind of construction project, hose-free, cord-free, and you can achieve the job fast and with a tremendous level of productivity. And needless to say, these framing nailers are selling like crazy all over the world as we speak.

We now have in our MILWAUKEE full-size M18, 18-volt fleet of cordless tools. We have an incredibly broad platform. We will continue to expand this range in the months and years to come. And this will enhance our global leadership position in the industrial cordless market.

In addition, we are continuing to expand our subcompact range of MILWAUKEE M12 cordless products. This particular new item is super cool. This is a -- we call this the hatchet. This is a cordless version of the old hatchet, the old ax. It's the world's first truly subcompact cordless chainsaw. And there are dozens, hundreds of applications that we think end users will find this is the perfect solution for. In addition to being easy to maneuver and super lightweight, it's really, really fast. And we think, actually, while the pros will flock to this product, we think there's a lot of DIYers that will also love the new MILWAUKEE hatchet cordless chainsaw.

We are rolling out a unique line of right angle, super torque, super powerful impact wrenches for -- this is -- again, this is -- one of these products is ideal for infrastructure repair and work of all kinds, and there are many other applications perfect for this unique line of subcompact right angle impact wrenches.

We have now a subcompact oscillating multi-tool. These -- this subcompact isolating tool is the fastest and most powerful cordless version of these products available in the world today. And we -- several years ago, we made a small acquisition, and we bought a company called Imperial, which is the only U.S. manufacturer of oscillating blades and accessories. And we have just developed a step-up range of industrial-grade oscillating accessories in our MILWAUKEE family that we're rolling out as we speak and that we are seeing great traction from our retail partners and distributors all over the world.

Today, MILWAUKEE has, without question, the broadest line of cordless subcompact tools for industrial construction applications. And what you see here in this slide is just the beginning because we are developing, as we speak, dozens and dozens and dozens of new subcompact cordless products, which further enhances our company's leadership position in cordless industrial construction tools.

I'm pleased to say that the lighting program that we've pioneered, which -- the MILWAUKEE high-output lighting program is -- this is such a fantastic program because, historically, job site lighting was a very dangerous thing. The bulbs were hot. The lighting would all run off generators, which, of course, burn gas, make noise and pollute. And our cordless solutions are changing the way job sites are illuminated all over the world. And we are expanding this lighting program with a number of new high-performance, high-output lighting products in personal-size lighting and in stationary lighting, and there's so much more to come here. This is a very exciting long-term growth area for the company.

Let's go back for a moment and talk about MX FUEL. We launched MX FUEL. As you know, we discussed this in our March announcement. With the virus, our rollout of MX was delayed a bit in the first half because we weren't -- this is a program where you have to go to job sites, in our opinion, and demonstrate why these cordless products are better than the petrol-powered products or the pneumatic products that they replace or AC products. Fortunately, we have -- because -- first of all, we are now welcomed on job sites because our sales team really does practice impeccable coronavirus safety protocol. We're super careful with masks and hand sanitizing and eye protection and hand protection, and we -- and, of course, social distancing. And because of this, we have not only been allowed on job sites, we are actually -- we're getting calls. We are being welcomed on job sites.

End users -- and believe me, there are construction projects that are active all over the world as we speak. And these job sites are actually reaching out and asking us for not only assistance with tool use but also actually in managing the virus on the job sites. So anyhow, now that we're back in attacking job sites globally, the MX FUEL program is now gaining very exciting traction. The end user feedback on this program has been incredibly positive. And I think you will see in the second half and in the years to come MX FUEL become an enormous sales and profit stream for TTI. And the products that you see here, just the beginning, we have a number of cordless equipment concepts that are underway that will further amplify our leadership position in this new space for the company.

It's -- the MILWAUKEE shipping gears, the MILWAUKEE PACKOUT system has become the preferred mobile storage solution for industrial and professional users all over the world. Our PACKOUT system is unique. It's an interlocking system. It's industrial-grade. It's incredibly convenient to use. And we are expanding this PACKOUT program that we have, platform that we have, with a number of additional PACKOUT capable products. For example, the new PACKOUT ratchet and socket set is a super cool way for you to take these hand tools to the job site. They're nested beautifully in your PACKOUT storage case. And these tools can pop in any one of the PACKOUT other products, and this gives you another convenient way to take these products at a job site.

So we have dozens of PACKOUT concepts underway in the company. And when you see this in the second half and in years to come, you'll realize why we're so excited about PACKOUT and why PACKOUT is the global leadership mobile storage solution for industrial professional customers.

And talk about fortuitous timing, we -- our MILWAUKEE team has been working diligently developing a line of PP&E, protective -- personal protective equipment or safety equipment. And so fortuitously, as we moved into the first half this year, our wide and growing range of protective gear is now in stores, in distributors, and it's selling like crazy. And of course, we're talking about masks and ear protection, eye protection, hard hats, hi-vis vests, gloves. And this goes on and on.

We intend to be a global leader in professional-grade PP&E products. Our sales here are taking off, of course, with the virus environment that we're all having to deal with. And we think that we -- actually, we think this space is loaded with innovation potential, and we intend to innovate like crazy here as we go forward.

Okay. Shifting gears to our DIY business. MILWAUKEE -- the MILWAUKEE business has got incredible momentum today as we speak. But it's not the only element of our company that's got momentum. We, in fact, have been working very hard to reengineer and revitalize and energize our global leadership position in DIY tools with our RYOBI brand. And I am very pleased to announce that we have come up with a brand-new line of RYOBI, we call high-performance brushless products. And we're now rolling this out in the second half of 2020.

This range is -- these products are so cool. This is a subcompact range of cordless DIY tools that, actually, the performance is so good here because of the brushless motors and the advanced electronics that we've engineered into these tools. These are also appropriate for professional use. So whether it's a DIY or a value-oriented pro, this new range will be, we think, a massive success for the company.

And every one of these tools is a masterpiece DIY product. For example, this little cut-off saw, this thing is super light. It's incredibly versatile. You can cut dozens and dozens of different kind of materials with this -- with saw. And again, it's feather light, super powerful, super torque, and it's unique RYOBI product that we've developed in this family.

We, of course, have a brand-new subcompact, brushless, high-performance drill driver. We have a fabulous impact driver in this program, again, super compact, very torque, very powerful. We have a one-handed recip saw that is -- it's subcompact. And this -- because of the way we engineered, this thing is incredibly fast. In fact, this will cut twice or 3x faster than competitive versions of these products that are on the market today. From professional -- supposedly professional brands, and this is a DIY tool. And when you pick it up, you can't believe it.

So we -- in addition in our RYOBI family, our timing, once again, it was fortuitous because we've been working on a cleaning series, RYOBI cleaning products, utilizing our unique battery technology and the fact that we have so many end users in the U.S. and worldwide that are now part of the RYOBI ONE+ 18-volt battery family. So we've created a whole line of cleaning products. And these products are unique. They're incredibly versatile.

And right now, let's -- with the world of virus, cleaning products have never been more an essential part of the DIYers' daily life. And here's a good example. And this is actually the best-selling version. This is a long-handle brush -- scrub brush. You can use it for bathtubs, pools, a variety of surfaces. We have a whole series of accessories that enhance the versatility of whether the -- by the long-handle brusher or the cordless short-handle scrub brusher. These are submersible. The batteries are protected, and we have a watertight seal around the battery. And we expect big things from this new rollout of cleaning products.

So -- and as you think about RYOBI, this RYOBI family of ONE+ 18-volt batteries, this is the only overarching platform of DIY cordless products in the world today with this many different kinds of products. So there are now over 175 tools that will use that same RYOBI ONE+ battery. This is -- and by the way, we've had the same battery configuration now for decades. We don't change battery interface. We want to have reverse compatibility so that people that are loyal to RYOBI don't have to worry about us changing that battery out. And because of that, we have legions of DIYers that are fiercely loyal to RYOBI and actually look forward to and welcome the addition of additional RYOBI ONE+ products.

And the RYOBI brand is not just DIY tools. The RYOBI brand has now become the global leader in DIY outdoor products. And specifically in battery-powered or cordless outdoor products, we were up in the first half this year, 25% in RYOBI outdoor. Can you imagine, 25%. Again, if you would just look at all the competitors that serve this market, there are competitors who were actually down double-digit in this space, and we're up 25%. And we believe our obsessive focus and investment in battery-powered or cordless outdoor products has served us well and put us in a position to really lead a global revolution away from petrol- or gas-powered lawn mowers and gas equipment in general and lead people to the sustainable right choice, which is to use a battery-powered lawnmower and not that polluting gas-powered product that they've used for years.

We are the Tesla of this space. We intend to spearhead and lead this -- again, this global revolution away from gas-powered equipment for the outdoors and into battery-powered products. And I have to tell you, the -- our team has done a magnificent job designing and engineering mowers, along with a variety of other products that work off the same battery.

And it's interesting. We now have the broadest line of battery-powered or cordless mowers in the world today. We have over 25 different cordless, battery-powered lawnmowers from various regions around the world that have indigenous requirements and for various end user requirements in different types of grass, et cetera.

And it's -- this illustrates and amplifies TTI's strategy beautifully versus our competitors. We actually have a large competitor that's buying a gas-powered lawnmower company. Can you imagine, in the midst of a global stampede away from gas-powered equipment, a competitor buying a gas-powered lawnmower company? I mean this is unimaginable to us. We intend to be the sustainable solution when it comes to outdoor equipment. And that's why we're so hyper-focused and obsessive about our battery-powered lawnmower family.

And these lawnmowers will be a -- one element of our outdoor strategy, but we have many, many other products we're developing. For example, for the first time, TTI will really be serious about cordless snowblowers. And any region around the world where there's snow, believe me, these products are incredibly useful and in demand. And we intend to develop the snowblowing element of our outdoor strategy with a series of leadership products that we're developing now as we speak.

So RYOBI now has the broadest line of battery-powered, cordless outdoor equipment for the DIYer available in the world today. We -- and what you see in this photo is really the tip of the iceberg because we have so many ideas on how to transform outdoor maintenance and landscaping and to move these users away from petrol products and into these maintenance-free, no cord pooling cordless products. We're very excited about our leadership position here.

So turning toward final business unit in the company, Floor Care. I'm delighted to report that, yes, our floor care turnaround strategy has worked beautifully. We're getting fantastic traction with our new floor care products. And the results speak for themselves. And look, the P&L in the first half this year finally shows progress in Floor Care where we grew sales 12.7%. And our profit was actually up from last year's $100,000 to this year's $3.6 million of profit.

And look, $3.6 million is a small number. I understand that. But I can assure you now that we are confident that we will continue to march forward and demonstrate improved financial performance of Floor Care. We will achieve excellent sales growth, and the profit level of this business will go up as we look at the future. And I think it will be a welcome addition to the profit improvement of the overall company and to our financial results. So stay tuned because you will see Floor Care will no longer be something we apologize for in the company. It will actually become one of our highlights.

And the reason is the products that we're developing in Floor Care are really awesome. Our carpet cleaners are viewed as the best-in-class. They're selling like crazy along with our formulas. Our new line of cordless HOOVER products are now gaining traction in sell-in and allowing us to turn our business around in Floor Care. And these are beautifully engineered, beautiful cleaning products. The time now for -- with the virus, there is an obsessive focus with consumers about keeping their homes clean, and we intend to help consumers and provide them with the products they need to have a safe environment for their families. And that's exactly what these products do.

Our U.K. team, our U.K. Floor Care team has done an exceptional job of turning around their Floor Care business. We had a very, very strong first half in our VAX U.K. Floor Care business, both in vax and in carpet cleaners. And that momentum in Britain is very encouraging as we look toward the future.

So we -- again, we can tell you that our Floor Care business is now on track to improve, no more excuses, no more setbacks. We now see a very encouraging future here for the Floor Care business globally.

And so just in summary, I think, again, it's important to draw attention to this global pandemic crisis that we're in. What you need to understand is the virus doesn't discriminate. The virus has affected all competitors equally. So what sets us apart is how we manage through this crisis. And look, we don't have a crystal ball. We have no idea how many months or years we're going to have to deal with the reality of the coronavirus. But what I can tell you is that we are not crawling up in a fetal position and panicking over something we can't control. What we're doing is intelligently investing in those things that we think will drive sales and profit for TTI. And more importantly, we are investing and developing products that help our consumers and our professional users manage their -- this new reality that we're all in the middle of, called the virus.

We are developing so many products that actually will help people -- whether it's helping contractors build hospitals or it's whether helping people keep their homes clean or helping people who in and around their homes and developing home offices, home gyms, areas for their children to do homeschooling. Whatever the construction requirements are, we intend to provide the best products in the world, focusing on cordless to allow consumers to get through the new reality, which is coronavirus.

And also, as I mentioned upfront, I think it's really important to recognize what an amazing job our team has done worldwide in implementing impeccable coronavirus safety protocol. Every warehouse we have, every factory we have, all the R&D centers and new product development operations we have, have all really been amazing and incredibly disciplined in implementing the proper preventative steps so that we can minimize the impact that this virus has on our employees in the company and on the families and our employees' families.

And also, we have been incredibly disciplined. When we work in a store or in a distributor showroom, we really want to work carefully with our customers and our end users, practicing this coronavirus safety protocol and just being helpful as we possibly can be in a time where people are trepidacious for sure about venturing out into a store, to a showroom or to a job site.

So anyhow, with all that, I can just tell you that the results in the first half of 2020 this year are something we're very proud of at TTI. We made some bold, aggressive decisions early on when the virus became a global pandemic. Very proud of the decisions we made. But let me assure you that what we've achieved in the first half of this year is just the beginning because we have so much new product on the way, and we have so many talented people that are in training right now that we intend to have a very good second half of 2020. And we believe the next 5 years, TTI will really break through and demonstrate global leadership, strong global [ unassembling ] leadership positions in the markets that we serve.

Thank you so much, and I look forward to our next announcement next March.