2018 AGM - Reece Group · AGM Presentation 2018 Reece Group - Works for you. Disclaimer. The...

118 Burwood Highway Burwood Victoria 3125

Private Bag 107 Burwood Victoria 3125

T 61 3 9274 0000 F 61 3 9274 0199

ABN 84 004 097 090 www.reecegroup.com.au 1

ASX Announcement 25 October 2018

2018 AGM Chairman’s Address and CEO Presentation

Attached is the Chairman’s Address and CEO’s presentation for the 2018 Annual General Meeting.

Gavin Street Company Secretary

About the Reece Group

Reece Group is a leading distributor of plumbing, waterworks and HVAC-R products to commercial and residential customers through 800 branches in Australia, New Zealand and the United States.

Established in 1920 and listed on the Australian Securities Exchange (ASX: REH), Reece Group has approximately 8,000 employees committed to improving the lives of their customers by striving for greatness every day.

For further information on Reece Group and its portfolio of businesses please visit www.reecegroup.com.au.

http://www.reecegroup.com.au/

118 Burwood Highway Burwood Victoria 3125

Private Bag 107 Burwood Victoria 3125

T 61 3 9274 0000 F 61 3 9274 0199

ABN 84 004 097 090 www.reecegroup.com.au 2

Chairman’s Address

Financial year 2018 was another record result for Reece, with a sales revenue up 10.7% to $2.7b and net profit after tax up 6.1% to $225m.

We finalised acquisitions in Australia, New Zealand, and the United States and completed a well-supported debt and equity raising.

We announced the retirement of Bruce Wilson (senior) after almost 50 years with the company and Ron Pitcher after nearly 15 years as a Director. I would like to thank them both for their contributions.

Additionally, the Board added new capability with the appointment of Andrew Wilson as a Non-Executive Director, effective 1 September 2018.

The Board was very pleased to announce an increase in dividend.

Total dividends paid and to be paid for the year ending 30 June 2018 were 20.25 cents per share.

The final fully franked dividend of 14.25 cents per share will be paid today, the 25th of October 2018.

I will now pass you over to our CEO & MD, Peter Wilson, who will take you through our financial year 2018 results and give an indication of the company’s performance in the first quarter of financial year 2019.

Mr Alan Wilson Executive Chairman

25 October 2018

2018 AGM

AGM Presentation 2018 Reece Group - Works for you

DisclaimerThe material in this presentation has been prepared by Reece Limited (ABN 49 004 313 133) (“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 InformationReece 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.

Important Notice and Disclaimer

2


CEO & MD’s Address

Mr Peter Wilson

3

2018 year in review


Financial Performance MORSCO

OperationalHighlights

Preview to FY19

4

2018 year in review




Preview to FY19

5

%FY17 - $2,429mFY18 - $2,689m

Financial Performance

Sales Revenue

AGM Presentation 2018 Reece Group - Works for you6


Sales Revenue(A$m)

$1,776$2,085

$2,276 $2,429$2,689

FY14 FY15 FY16 FY17 FY18

Column1


7

CAGR10.9%

%FY17 - $357mFY18 - $378m


EBITDA



EBITDA (A$m) CAGR13.7%

$227$280

$331$357

$378

FY14 FY15 FY16 FY17 FY18


9

%


FY17 - $212mFY18 - $225m


NPAT

10


NPAT (A$m) CAGR16.2%


11

Chart1

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

Column1

97

114

119

113

119

123

166

192

212

224.6

Sheet1

Column1

FY0997

FY10114

FY11119

FY12113

FY13119

FY14123

FY15166

FY16192

FY17212

FY18224.6

2018 year in review




Preview to FY19

12

1 / Customers2 / People3 / Innovation4 / Community

Customers


Highlights

Continued network growth

Strengthening customer relationships

World-class net promoter score

Customer Highlights

14

New innovative products

Strong uptake of maX

People


Highlights

Workplace of the Future

Employee NPS

Strengthening our graduate and trainee programs

People Highlights

Enabling LeadershipPrograms

Innovation


Innovation Highlights

18

Highlights

Opened our design and innovation centre, NEXT

Superseed and goodwork

Innovation toolkit

Digitising the customer’s experience

Community


Community Highlights

20

Highlights

The Reece Grant

Solar Installation Program

2018 year in review




Preview to FY19

21


Unique opportunity

for long term growth

Leverage expertise and relationships

Strategic platform in Sun

Belt region Accessto biggest plumbing,

HVAC, waterworks

markets

Experienced management

team

Opportunityfor future

organic andacquisition-led

growth

MORSCO

22


A$5.0bn salesdistribution

business

MORSCO

23

FY18Summary


FY18 Summary

World-class customer

experience

Strong financial position

Investing in the future

Innovation and digitisation focus

Acquisition of MORSCO

25

2018 year in review




Preview to FY19

26

Australia


$135

$176 $168$149

$165

$199

$230 $238 $222$231

$198

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E

Underlying Australian economic indicators remain supportive

28

Dwelling approvals (000’s)

150 $151$161

$146 $148$162

$192$202

$219$211 $216


Dwelling completions (000’s)

Non-residential commencements ($m)

$31,131

$42,885

$32,897

$37,224$34,466

$36,962

$30,618

$35,361$39,291

$44,951$47,051

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 EFY19

$7,015

$7,907

$7,708

$7,339

$7,019$7,130

$7,269 $7,312 $7,309

$7,601

$7,756


Alterations and additions ($m)

Source: BIS Oxford Economics

FY19E

United States


1,465

1,046

622442 471 434 536

619 648 715782 849

915 965 1,003

336

309

283

112 114 178246

307.5 355395

392 354384 346

344

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E

Single Family Multi-Family

$253 $254$266 $277

$293$311

$327$347

$367$387

$400

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

$217 $209$199

$220 $217$239

$228 $228 $237$250

$262

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

$434

$348 $337 $355$360

$392

$446$480 $489

$515$547

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

Positive momentum sustained in the US market

30

Single and multi-family housing starts (000’s) Repair and remodelling spending (US$bn)

Non-residential building construction expenditure (US$bn) Infrastructure construction spending (US$bn)

40 year average

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

Source: L.E.K., U.S. Census, and NAHB

Source: FMI as of Q2 2017 Source: FMI as of Q2 2017


Q1FY19


Q1FY19 (AUD$m)

1st Quarter Sales Revenue

32

$652 $732

$1,379

$40 $40

$647

Q1 FY 2018 Reece OrganicGrowth

ReeceAcqusition

Growth

Total Reece Morsco Q1 FY 2019


ThankYou

33

25 October 2018

2018 AGM

181025 Chairman's Address and AGM Presentation181002 AGM presentation for ASX - draft V6Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Sales Revenue �(A$m) Slide Number 8EBITDA (A$m) Slide Number 10NPAT (A$m) Slide Number 12�CustomersSlide Number 14�PeopleSlide Number 16�InnovationSlide Number 18�CommunitySlide Number 20Slide Number 21Slide Number 22Slide Number 23FY18�SummaryFY18 SummarySlide Number 26Slide Number 27Slide Number 28Slide Number 29Slide Number 30Slide Number 31Slide Number 32Slide Number 33Slide Number 34

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