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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
AGM Presentation 2018 Reece Group - Works for you
CEO & MD’s Address
Mr Peter Wilson
3
2018 year in review
AGM Presentation 2018 Reece Group - Works for you
Financial Performance MORSCO
OperationalHighlights
Preview to FY19
4
2018 year in review
AGM Presentation 2018 Reece Group - Works for you
Financial Performance MORSCO
OperationalHighlights
Preview to FY19
5
%FY17 - $2,429mFY18 - $2,689m
Financial Performance
Sales Revenue
AGM Presentation 2018 Reece Group - Works for you6
AGM Presentation 2018 Reece Group - Works for you
Sales Revenue(A$m)
$1,776$2,085
$2,276 $2,429$2,689
FY14 FY15 FY16 FY17 FY18
Column1
Financial Performance
7
CAGR10.9%
%FY17 - $357mFY18 - $378m
Financial Performance
EBITDA
AGM Presentation 2018 Reece Group - Works for you8
AGM Presentation 2018 Reece Group - Works for you
EBITDA (A$m) CAGR13.7%
$227$280
$331$357
$378
FY14 FY15 FY16 FY17 FY18
Financial Performance
9
%
AGM Presentation 2018 Reece Group - Works for you
FY17 - $212mFY18 - $225m
Financial Performance
NPAT
10
AGM Presentation 2018 Reece Group - Works for you
NPAT (A$m) CAGR16.2%
Financial Performance
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
AGM Presentation 2018 Reece Group - Works for you
Financial Performance MORSCO
OperationalHighlights
Preview to FY19
12
1 / Customers2 / People3 / Innovation4 / Community
Customers
AGM Presentation 2018 Reece Group - Works for you
Highlights
Continued network growth
Strengthening customer relationships
World-class net promoter score
Customer Highlights
14
New innovative products
Strong uptake of maX
People
AGM Presentation 2018 Reece Group - Works for you
Highlights
Workplace of the Future
Employee NPS
Strengthening our graduate and trainee programs
People Highlights
Enabling LeadershipPrograms
Innovation
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Innovation Highlights
18
Highlights
Opened our design and innovation centre, NEXT
Superseed and goodwork
Innovation toolkit
Digitising the customer’s experience
Community
AGM Presentation 2018 Reece Group - Works for you
Community Highlights
20
Highlights
The Reece Grant
Solar Installation Program
2018 year in review
AGM Presentation 2018 Reece Group - Works for you
Financial Performance MORSCO
OperationalHighlights
Preview to FY19
21
AGM Presentation 2018 Reece Group - Works for you
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
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A$5.0bn salesdistribution
business
MORSCO
23
FY18Summary
AGM Presentation 2018 Reece Group - Works for you
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
AGM Presentation 2018 Reece Group - Works for you
Financial Performance MORSCO
OperationalHighlights
Preview to FY19
26
Australia
AGM Presentation 2018 Reece Group - Works for you
$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 $216
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E
Dwelling completions (000’s)
Non-residential commencements ($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
$7,756
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E
Alterations and additions ($m)
Source: BIS Oxford Economics
FY19E
United States
AGM Presentation 2018 Reece Group - Works for you
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
AGM Presentation 2018 Reece Group - Works for you31
Q1FY19
AGM Presentation 2018 Reece Group - Works for you
Q1FY19 (AUD$m)
1st Quarter Sales Revenue
32
$652 $732
$1,379
$40 $40
$647
Q1 FY 2018 Reece OrganicGrowth
ReeceAcqusition
Growth
Total Reece Morsco Q1 FY 2019
AGM Presentation 2018 Reece Group - Works for you
ThankYou
33
25 October 2018
2018 AGM
181025 Chairman's Address and AGM Presentation181002 AGM presentation for ASX - draft V6Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Sales Revenue �(A$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