Brookfield-based Milwaukee Tool saw sales increase by 21.7 percent in 2017 and the chief executive of its Hong Kong-based parent company says the brand will continue to deliver those results for the next five years.
“We have such aggressive plans for new product that we are determined to not ever go below 20 percent growth in Milwaukee over the next five years,” said Joe Galli Jr., Techtronic Industries Co. chief executive officer.
TTI reported sales of $6.1 billion last year, up 10.6 percent from 2016. At the same time the company improved its net profit 15 percent to $470 million.
The continued growth comes as Milwaukee Tool is seeking state and local support for a second major expansion of its Brookfield headquarters. The company announced plans in January for a 114,500-square-foot office building along Lisbon Road.
The $32 million project would be supported by $3.5 million in tax incremental financing from the city and the company is also in talks with the Wisconsin Economic Development Corp. for additional support. The state provided up to $18 million in tax credits for a 2016 expansion of the company’s headquarters.
Frank Chan, TTI chief financial officer, told investors that Techtronic Industries’ 2018 capital expenditures would be around $250 million, up from $205 in 2017. He said about 70 percent to 75 percent of that would go towards operation with the remainder going to expanded facilities.
Revenue in the Techtronic Industries power equipment segment, which also includes do-it-yourself brand Ryobi, was up 14.9 percent to $5.1 billion. Operating profit for the segment was $512 million, up 18.9 percent.
Techtronic Industries does not report sales totals for Milwaukee Tool, but it first crossed $2 billion in 2015. Last year’s growth, combined with 19.8 percent growth in 2016, would put Milwaukee Tool at least close to $3 billion in revenue for 2017.
“Year after year we have pulled this off,” Galli said, joking that it was easier to do when the base was smaller. Milwaukee has had a compound annual growth rate of 20.9 percent over the last five years.
The largest geographic portion of the business is North America, where sales were up 20.5 percent. Austrailia and New Zealand saw the strongest growth at 33.6 percent. Europe was up 23.7 percent and rest of world was up 24 percent.
“I don’t want any investor to believe we’re anywhere near topped out in terms of growth,” Galli said. “If anything I think we have misled you and we’ve underestimated the size and the scope of the market that cordless, labor saving devices can potentially become.”
Galli said the company will continue to expand product offerings in regular and subcompact power tools while also adding offerings in new or newer categories like lighting, storage and mechanics tools.