As chief executive officer of
Techtronic Industries, Joe Galli says he is regularly asked if an increasingly challenging macroeconomic environment will slow down
Milwaukee Tool’s run of impressive growth.
“We know the world is challenging today, but that in no way shape or form is going to inhibit us from achieving our long-term goals,” Galli said.
Hong Kong-based TTI is the parent company of Brookfield-based Milwaukee Tool, which has grown at least 20% every year since 2010. The company’s growth has been fueled by a focus on cordless power tools and professional users along with expansion into new product categories.
“I’m not worried at all,” Galli said Wednesday of the macroeconomic environment in relation to Milwaukee Tool as TTI announced its results for the first half of the year. The Milwaukee business focuses on professional users while the Ryobi brand, which TTI also owns, focuses on do-it-yourself users. Galli acknowledged the consumer and DIY business faced more challenges.
The Milwaukee Tool business saw its sales increase 25.8% in the first half of the year and Galli noted the company had its best point of sale week of the year last week. For the year, he said Milwaukee Tool's sales will be up a minimum of 20%.
Overall, TTI grew sales 10% in the first half of the year. The company is expecting a mid-single digit sales increase for the year for the entire group.
Galli said Milwaukee Tool would cross $8 billion in sales for the year this year and would represent 58% of TTI, up from just 19% in 2010.
The actual sales total is likely much higher than $8 billion. The company first crossed $2 billion in sales in 2015 and reached at least $5.66 billion in 2020. Growth of almost 41% in 2021 and another 20% this year would put sales at more than $9.5 billion.
Milwaukee Tool has also been a major contributor to TTI’s profitability over the years, helping to push gross margins from 32.6% in 2010 to 35.6% in 2015 and 38% in 2020. In the first half of the year, gross margins for the group improved from 38.6% to 39.1%.
Galli noted that Milwaukee Tool is accretive to the company’s gross margins so the business gets a product mix boost to gross margin whenever Milwaukee Tool outgrows the rest of the company.
“In the next five years, Milwaukee will continue to outgrow the company,” he said.
Focusing on cordless power tools helps boost margins with aftermarket demand for batteries, Galli said, adding that new products also generally have better margins than the versions they are replacing.
On Wednesday, the company
celebrated the opening of its new plant in West Bend.
