2018 Full Year Results Presentation. 31 August 2018

Transcription

1 2018 Full Year Results Presentation 31 August 2018

2 Disclaimer Important Notice and Disclaimer Disclaimer The material in this presentation has been prepared by Reece Limited (ABN ) ( Reece") (ASX:REH) and is general background information about Reece's activities current as at the date of this presentation. The information is given in summary form and does not purport to be complete. In particular you are cautioned not to place undue reliance on any forward looking statements regarding Reece's belief, intent or expectations with respect to Reece s businesses, market conditions and/or results of operations. Although due care has been used in the preparation of such statements, actual results may vary in a material manner. No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including Reece). Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Reece disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in this presentation to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation shall under any circumstances create an implication that there has been no change in the affairs of Reece since the date of these materials. Information in this presentation, including any forecast financial or other information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities. Before acting on any information you should consider the appropriateness of the information having regard to these matters and, in particular, you should seek independent financial advice. Non-IFRS Financial Information Reece uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are collectively referred to as non-ifrs financial measures. Although Reece believes that these measures provide useful information about the financial performance of Reece, they should be considered as supplemental to the measures calculated in accordance with Australian Accounting Standards and not as a replacement for them. Because these non-ifrs financial measures are not based on Australian Accounting Standards, they do not have standard definitions, and the way Reece calculates these measures may differ from similarly titled measures used by other companies. Readers should therefore not place undue reliance on these non-ifrs financial measures. Note: All financial amounts contained in this presentation are expressed in Australian dollars unless otherwise stated. Any discrepancies between totals and the sum of components in tables contained in this presentation are due to rounding Full Year Results The Reece Group - Works for you

3 Our purpose To improve the lives of our customers and our people by striving for greatness every day. Daily mantra Strive for greatness every day. 3 AGM 2018 Full Presentation Year Results 2018 The Reece Group - Works for you

4 Contents Financial Highlights Operational Highlights Recap of MORSCO acquisition FY18 Financial Performance Full Year Results The Reece Group - Works for you

5 Financial Highlights Full Year Results The Reece Group - Works for you

6 FY18 Highlights Sales Revenue EBITDA 10.7% to $2,689 million 5.4% to $378 million NPAT Dividend per share 6.1% to $225 million 1.3% to cps Full Year Results The Reece Group - Works for you

7 Financial Highlights Sales Revenue (A$2,689m) FY17 - $2,429m FY18 - $2,689m 10.7% CAGR 10.9% Column1 $2,689 $2,276 $2,429 $2,085 Record sales result $1,776 Strong performance in underlying business Building activity solid FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

8 Financial Highlights EBITDA (A$378m) FY17 - $357m FY18 - $378m CAGR 5.4% 13.6% Column1 $331 $357 $378 $280 $227 Investment in people to support growth Invested in technology and innovation FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

9 Financial Highlights NPAT (A$225m) FY17 - $212m FY18 - $225m CAGR 6.1% 16.2% $212 $225 $192 $166 $123 Record NPAT result FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

10 Financial Highlights Dividends (cps) FY17 20cps FY cps 1.3% CAGR 12.2% Total dividend declared for FY 2018 of cents per share Final dividend of cents per share FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

11 Underlying Australian economic indicators remain supportive Dwelling Approvals Dwelling Completions (000 s) (000 s) FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Alterations and Additions (000 s) 7,907 Non-residential Commencements (000 s) 7,015 7,708 7,339 7,019 7,130 7,269 7,312 7,296 7,590 7, FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Source: BIS Oxford Economics Full Year Results The Reece Group - Works for you

12 Operational Highlights Full Year Results The Reece Group - Works for you

13 Three focus areas in 2018 Customer > > Innovate & Digitise MORSCO Full Year Results The Reece Group - Works for you

14 Customer Highlights OUTLETS *2019 acquisitions not included Full Year Results The Reece Group - Works for you

15 Customer Highlights Continue to deliver market leading products Full Year Results The Reece Group - Works for you

16 Customer Highlights WORLD CLASS NPS F12 F F14 F F Full Year Results 2018 Full Year Results F11 F16 F17 F18 The Reece Group - Works for you

17 Three focus areas in 2018 Customer > > Innovate & Digitise MORSCO Full Year Results The Reece Group - Works for you

18 Digitise and Innovate Next Design and Innovation capability & culture Innovation Centre, Next. Trout Unique brand experiences Superseed New growth opportunities Full Year Results The Reece Group - Works for you

19 Digitise and Innovate Incubate Layout an Manage Layout an Disrupt Layout an Full Year Results The Reece Group - Works for you

20 Digitise and Innovate + + = Core systems Online Integration Digitised Reece Full Year Results The Reece Group - Works for you

21 Digitise and Innovate Full Year Results The Reece Group - Works for you

22 Digitise and Innovate Deliver the Reece Support Centre of the future 22 RLT 2018 September Full Year Results 2018 The Reece Group - Works for you

23 Three focus areas in 2018 Customer > > Innovate & Digitise MORSCO Full Year Results The Reece Group - Works for you

24 MORSCO Strategic platform in the growing US Sun Belt region Access to large, growing markets with strong demand drivers Experienced management team with proven track record Ability to leverage operational expertise and relationships Significant opportunity to drive future organic and acquisitionled growth 24 AGM 2018 Full Presentation Year Results 2018 The Reece Group - Works for you

25 MORSCO About MORSCO 16 States 171 Branches 2,500 Employees Plumbing branch Waterworks branch HVAC branch Full Year Results The Reece Group - Works for you

26 MORSCO Creating a A$5.0bn sales plumbing, HVAC-R and waterworks distribution business $2.3bn $5bn $2.7bn Reece MORSCO MergeCo MORSCO total sales in A$m Full Year Results The Reece Group - Works for you

27 Positive momentum sustained in US market Single and multi-family housing starts E Leading indicator of remodeling activity Q ( 000 s) Single Family Multi-Family $425 $400 Homeowner improvements four-quarter moving totals ($bn) Projections based on LIR US Census Bureau four qtr rate of change LIRA four qtr projected rate of change 10% 336 1, $375 $350 $325 $300 $ % % % 5.1% 4.5% % % % 6.3% % % 6.3% 6.4% % 7.3% % 7.2% % 5% 3% 1, ,003 $250 $225 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2(p) 3(p) 4(p) 1(p) 0% E 2018E 2019E 2020E Source: National Association of Realtors Mortgage Bankers Association, Fannie Mae, National Association of Home Builders as of May 2018, John Burns Consulting as of April 2018 Non-residential building construction expenditures ($bn) Source: Joint Center for Housing Studies of Harvard University, LIRA and U.S. Census Bureau as of Q Water Supply construction expenditures ($bn) Source: FMI as of Q E 2019E 2020E 2021E 2022E Source: FMI as of Q Note: Includes both private and public expenditures E 2018E 2019E 2020E 2021E Full Year Results The Reece Group - Works for you

28 Contents Financial Highlights Operational Highlights Recap of MORSCO acquisition FY18 Financial Performance Full Year Results The Reece Group - Works for you

29 FY18 Financial Performance Full Year Results The Reece Group - Works for you

30 FY18 Financial Performance Results summary June year end (A$m) FY18A FY17A Var. (%) Net sales $2,689 $2, EBITDA $378 $ EBIT $324 $ NPAT $225 $ EPS (cents) FY18 was a record sales and profit result Strong performance in a market that has been resilient Completion of acquisitions Continued investment in people, technology and innovation Dividend in line with guidance DPS (cents) Key metrics EBITDA margin 14.1% 14.7% (0.6) EBIT margin 12.0% 12.7% (0.7) NPAT margin 8.4% 8.7% (0.3) Full Year Results The Reece Group - Works for you

31 FY18 Financial Performance Cash Flow June year end (A$m) FY18A FY17A Var. (%) EBITDA Net movements in working capital (91) (44) Historical cashflow from operations Column1 (FY14A FY18A) Non-cash items in EBITDA Income Tax Paid (109) (98) 11.1 $215 Finance Costs (5) (6) (14.7) $166 $190 $181 Cash flow from operations (15.8) $146 Capital expenditure (88) (95) (7.0) Proceeds from sale of assets 6 19 (70.5) Business Acquisitions (54) (4) 1,417.0 Net Investing cash flow (67.4) FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

32 FY18 Financial Performance Balance Sheet Net debt June year end (A$m) As at 30 June 2018 As at 31 Dec Cash and cash equivalents Total debt Net debt (540) 50 FY18 EBIT / Net finance costs Balance sheet used to fund FY18 acquisitions in Australia and NZ Equity raise of $600m completed in May Subsequently raised US$1.1bn via US TLB to fund the acquisition of MORSCO Repaid $100m loan facility FY13 FY14 FY15 FY16 FY17 FY Full Year Results The Reece Group - Works for you

33 FY18 Summary Strong financial position Investing in the future World-class customer experience Innovation and digitisation focus Acquisition of MORSCO AGM Full Presentation Year Results 2018 The Reece Group - Works for you

34 Thank you Full Year Results The Reece Group - Works for you