Reliance Worldwide Corp. Ltd. · ASX:RWC
Reliance Worldwide — Investor Day (October 2020)
95 slides from Reliance Worldwide's investor day presentation, Oct 1, 2020
Slide 1: Investor Day
Investor Day 1 October 2020
Slide 2: Important notice
Important notice This presentation contains general information about the activities of Reliance Worldwide Corporation Limited and its operati ng businesses at the date of presentation (1 October 2020). It is information given in summary form and does not purport to be complete. It should be read in
Slide 3: Welcome and Objectives
Investor Day Welcome and Objectives Thursday, October 1, 2020 3
Slide 4: Welcome and RWC introductions
Welcome and RWC introductions Heath Sharp Andrew Johnson Group CEO Group CFO Sean McClenaghan Edwin de Wolf Brad Reid Tracy Scott CEO Am ericas CEO EMEA CEO APAC Group SVP Operations Phil King Christopher Sandman Kal Nanji Group IR Director VP Strategy and M&A VP Group Strategic Marketing 4
Slide 5: Agenda
Agenda Welcome and Objectives 8:30am – 8:40am Heath Sharp Trading Update 8:40am – 8:45am Andrew Johnson Safety and Operations 8:45am – 9:00am Tracy Scott Strategy 9:00am – 9:20am Christopher Sandman Markets and Growth 9:20am – 9:40am Kal Nanji Session 1 Q&A 9:40am – 10:00am All Break 10:00am – 10:10
Slide 6: Trading Update
Trading Update Andrew Johnson, Group CFO 6
Slide 7: Trading update
Trading update All regions have seen a continuation of the trends noted at the FY20 results announcement Sales % change over Region pcp Commentary (constant currency) Americas July: +22% • Continued recovery seen in Wholesale sales and Canada August: +15% • Retail and Hardware sales growth remains s
Slide 8: Safety and Operations Review
Investor Day Safety and Operations Review Thursday October 1, 2020 8
Slide 9: Agenda
Agenda 1. Safety and COVID-19 2. Operations Excellence 9
Slide 10: Safety
Safety Our top priority remains our people Tracy Scott, Group SVP Operations 10
Slide 11: COVID-19
COVID-19 Focus on health and safety of our people while ensuring delivery to customers People Procedure Supply Chain ▪ Temperature check and health ▪ Following government protocols ▪ Redesigned workstations for social questionnaire for employees distancing, with some productivity ▪ Implemented socia
Slide 12: Operations Excellence
Operations Excellence Driving efficiency across our global supply chain Tracy Scott, Group SVP Operations 12
Slide 13: Operations Excellence Focus
Operations Excellence Focus World Class ▪ Superior safety performance Safety Performance ▪ Cost savings to offset non-commodity inflation ▪ Lean management to drive plant efficiency ▪ Employee engagement/ownership Manufacturing and Continuous ▪ Standardize and leverage global spend Capacity Improvem
Slide 14: Operations Excellence – CI and Procurement
Operations Excellence – CI and Procurement Advancing our Continuous Improvement culture and processes Lean Implemented visual Rigorous initiative Increasing global best Lean Management tracking process practice sharing Management Executed Procurement risk mitigation Managed Standardize procurement s
Slide 15: Operations Excellence – Supply Chain
Operations Excellence – Supply Chain Continuous improvement in Supply Chain processes to drive efficiency and service Supply Chain Actions Rigorous Supply Chain Management Ongoing Results ▪ Implemented S&OP in ▪ 98+% OTIF into US Americas; translate to retail despite COVID other regions in FY21 chal
Slide 16: Operations Focus – Manufacturing Strategy
Operations Focus – Manufacturing Strategy Strategic actions to ensure productive and efficient operations footprint Strategy Assessments Current Actions Ongoing Activity ▪ Consolidated HoldRite facility into Cullman ▪ Exploring alternative ▪ Ongoing assessments manufacturing conducted for operations
Slide 17: Strategy and Market Review
Investor Day Strategy and Market Review Thursday October 1, 2020 17
Slide 18: Agenda
Agenda 1. Strategy Review 2. Markets and Growth 18
Slide 19: Our Strategy
Our Strategy Focused priorities delivering growth and profitability Christopher Sandman, VP Strategy and M&A 19
Slide 20: Strategy summary
Strategy summary A focused plan to generate shareholder value through growth and profitability Generate sustainable demand Attract and retain the best Drive results with distinctive capabilities for our products talent in our industry Know the Customer Product Leadership Support Our People Serve the
Slide 21: Generate sustainable demand for our products
Generate sustainable demand for our products Focus relentlessly on the needs of our customers to generate sustainable demand for RWC solutions across regions Goals Our Strategy in Action ▪ Understand their day to day ▪ Through in-depth customer interactions, image challenges developing solutions to
Slide 22: Attract and retain the best talent in our industry
Attract and retain the best talent in our industry Invest in an inclusive, supportive, and sustainable business to attract and retain the best talent in our industry Goals Our Strategy in Action ▪ Ongoing employee engagement ▪ Continuously improving measurements to benchmark and employee engagement
Slide 23: Drive results with distinctive capabilities
Drive results with distinctive capabilities Create value through delivery of quality products with world class cost structure to grow revenue, increase profitability, and build shareholder value Goals Our Strategy in Action ▪ Deliver an unrivaled portfolio ▪ Leveraging our R&D centers across our of
Slide 24: Product Leadership – Know the Customer
Product Leadership – Know the Customer Successful Firestop solution developed by gaining insights through customer empathy and responsive, iterative development Commercialize and Launch Empathize Ideate Field & Lab Tests Prototype 24
Slide 25: Product Leadership – R&D Capability
Product Leadership – R&D Capability Our R&D centers of excellence leverage insights to develop solutions solving end user challenges for our customers around the world Our Capabilities in Action RWC GROUP R&D Engineering Centers of Excellence Product Manager in Atlanta leverages customer insight for
Slide 26: Distributor Partnerships – Retail Excellence
Distributor Partnerships – Retail Excellence We create tremendous value for our strategic partners through demand generation, service excellence, and proactive engagement Value Creation in Action Growth through increasing space for existing, in demand categories 2018 Lowe’s Vendor Partner of the Yea
Slide 27: Strategic priorities support our long-term vision
Strategic priorities support our long-term vision Be the premier plumbing products company worldwide, recognized for customer focused innovation, value generating brands, unmatched service, and a dynamic team culture Generate sustainable demand Attract and retain the best Drive results with distinct
Slide 28: Markets and Growth
Markets and Growth Powerful global brands in relevant categories supporting our End Use Customer Kal Nanji, VP Group Strategic Marketing 28
Slide 29: Category leadership
Category leadership Growing diversification offers a basket of product solutions for our core markets Category sizes based on Group FY20 gross revenue 29
Slide 30: Fittings provide a strong foundation
Fittings provide a strong foundation A variety of fittings solutions that deliver efficiency and reliability available through a vast network of outlets across markets and channels 45% Plumbing PTC SharkBite™ available across Americas, UK, and Australia ▪ #1 position in Americas ▪ #1 position in Aus
Slide 31: Growing category diversification
Growing category diversification RWC has built a complete portfolio of solutions with top market positions - all aligned with the SharkBite value proposition – ease of use, efficiency, labor savings, and availability Pipe PEX pipe available across global regions ▪ Top 3 producer in US ▪ Top 2 in UK
Slide 32: Category relevance to End Use
Category relevance to End Use RWC categories offer broad relevance across core segments and upside opportunity in emerging segments Fittings Pipe Valves Integrated FluidTech* Installation Solutions RMI Broad category relevance across key end use segments that represent our core New Build Category re
Slide 33: End Use by Region
End Use by Region Core RMI market represents significant share of global end use segments 33 Note* - FluidTech segment includes w ater treatment, drinks and dispense, air and pneumatics, and blow n fiber applications; Segment splits based on Group FY20 net external sales
Slide 34: Core End Use Segment – Americas RMI
Core End Use Segment – Americas RMI What drives the long-term market for our largest end use segment? RWC End Use Segments by Region Highly Correlated Indicators for RMI Increasing Existing Home Values Home Sales Historical Category Focused Metrics Non- Kitchen and Discretionary Bath (Repair) Remode
Slide 35: Highly Correlated Indicators – Home Values
Highly Correlated Indicators – Home Values Strong historical correlation of home improvement expenditure to home values 2.5% CAGR Home Improvement 3.5% Total Homeowner Improvement Expenditure CAGR Expenditures and S&P Case Shiller Home Price Index from 1995 to 2019 Home Value Index 35 Source: S&P/Ca
Slide 36: Highly Correlated Indicators – Existing Home Sales
Highly Correlated Indicators – Existing Home Sales Strong historical correlation of home improvement expenditure to existing home sales Home Improvement 2.5% Expenditure CAGR Total Homeowner Improvement Expenditures and Existing Home Sales from 1995 to 2019 Existing Home Sales 36 Source: National As
Slide 37: Key Historical Metrics – Homeowner Replacement
Key Historical Metrics – Homeowner Replacement Stable, historical growth of 3% CAGR in homeowner replacement of internal pipes 7% CAGR Nondiscretionary Homeowner 3% CAGR Replacement Expenditures from 1995 to 2017 37 Source: JCHS tabulations of US Department of Housing and Urban Development (HUD), 19
Slide 38: Key Historical Metrics – Homeowner Improvements
Key Historical Metrics – Homeowner Improvements Bath and Kitchen remodels are highly correlated to existing home sales Discretionary Homeowner Improvement Expenditures from 1995 to 2017 Kitchen and 4% Bath Remodel CAGR Expenditure 4% CAGR Existing Home Sales Source: JCHS tabulations of US Department
Slide 39: Key Driving Fundamentals – Age of Housing Stock
Key Driving Fundamentals – Age of Housing Stock Strong historical correlation with home improvement expenditure Total Homeowner Improvement Expenditures and Age of US Housing Stock from 2001 to 2019 39 Source: US Census Bureau, JCHS tabulations of US Department of Housing and Urban Development (HUD)
Slide 40: Key Driving Fundamentals – Household Formation
Key Driving Fundamentals – Household Formation Household formation spikes drive home improvement expenditure Home Improvement Expenditure Total Homeowner Improvement Expenditures and Additional Household Formation change by year from Household Formations 1995 to 2019 Total 129M 99M 1% CAGR HHLDS Ris
Slide 41: Stable historical growth and key fundamentals support our core repair segment
Stable historical growth and key fundamentals support our core repair segment Long term market growth of 2% to 3% annually Highly Correlated Historical Category Key Driving Fundamentals Indicators for RMI Focused Metrics Non- Increasing Existing Home Kitchen and Median Age of Household Discretionary
Slide 42: US Growth Estimate – Potential Upside
US Growth Estimate – Potential Upside In any given period, targeted base business growth rate with upside from specific customer and product initiatives Variable Variable 1% to 2% 3% to 5% 2% to 3% Market Growth Above Market Growth Base Business Initiatives Potential Growth Based on US core market g
Slide 43: UK Growth Estimate – Potential Upside
UK Growth Estimate – Potential Upside Building and validating a confidence measurement for UK base business growth Variable Variable 1% to 4% 2% to 6% 1% to 2% Market Growth Above Market Growth Base Business Initiatives Potential Growth Based on UK core market growth, we can Potential customer and p
Slide 44: Q&A – Session 1
Q&A – Session 1 44
Slide 45: Break
Break 10 minutes 45
Slide 46: Regional Review
Investor Day Regional Review Thursday October 1, 2020 46
Slide 47: EMEA Review
EMEA Review Edwin de Wolf, CEO EMEA 47
Slide 48: Agenda
Agenda 1. EMEA business snapshot 2. Market update 3. Strategy 4. Key investments 48
Slide 49: EMEA business snapshot
EMEA business snapshot Exceptionally strong brands in a diversified set of markets and geographies Category mix2 Geographic mix2 Brands £173m Net Sales 1 Continental Plumbing Europe and Heating Fluid Tech Managing UK £43m Adjusted EBITDA1 15 End Use Segments Footprint 1,100+ Employees R&D Manufactur
Slide 50: RWC EMEA Operations snapshot
RWC EMEA Operations snapshot Robust operations footprint producing over 1B components annually LAUNCESTON Key performance objectives delivered UK Manufacturing Footprint 33k sq ft manufacturing/ >40 machines ▪ Continued improvement on HSE with focus on leadership ▪ Molding, welding & assembly ▪ Prod
Slide 51: RWC EMEA talent and organization snapshot
RWC EMEA talent and organization snapshot Strengthened leadership team and UK organizational structure to better support growth and collaboration Additional keys to New Hire / New function leadership and EMEA CEO structural changes: Edwin de Wolf ▪ Leverage strong roster of talent from legacy JG Hea
Slide 52: RWC EMEA geographic snapshot
RWC EMEA geographic snapshot RWC’s stronghold in UK plumbing and heating market is similar to the Americas whereas continental Europe is focused on OEMs in FluidTech markets End Market Mix 1 Channel Mix1 Example customers Representative products International Plumbing Wholesale and Heating OEM UK Fl
Slide 53: Market update
Market update Short-term CV19 impact but underlying, long-term fundamentals strong Plumbing and heating Fluid Tech UK private housing RMI 1 UK new build: domestic and commercial1 Manufacturing output by country2 120 140 10% 100 120 0% 100 -10% 80 -20% 80 60 -30% 60 40 40 -40% 20 20 -50% 0 0 Jul-17 J
Slide 54: EMEA strategy
EMEA strategy Enabling specific initiatives in UK and Europe to accelerate, expand and access Key underlying drivers UK Continental Europe Expand basket for Goals Plans Goals Plans existing end users with focus on driving ▪ P&H RMI: expand share and ▪ FluidTech: further develop Achieve offering in c
Slide 55: Key investments and organizational enhancements
Key investments and organizational enhancements Investment continues to support core competencies and optimise the organization for future growth Continued investment in equipment and automation to drive Operations greater efficiency and output Continued investment made in upgraded equipment and IT
Slide 56: APAC Review
APAC Review Brad Reid, CEO APAC 56
Slide 57: Agenda
Agenda 1. APAC business snapshot 2. Market dynamics 3. Strategy and growth initiatives 4. Talent and organization 5. Operations footprint 57
Slide 58: RWC APAC snapshot
RWC APAC snapshot Exceptionally strong brands in a diversified set of markets, and geographies Category Mix – AUS/NZ Category Mix - Asia Brands Plastic Fluid Tech A$245 M Fittings PTC Pipe Other Brass PTC Plastic PTC Net Sales 1 Brass Fittings PTC Pipe Fittings Managing Non-PTC Other A$44 M EBITDA 1
Slide 59: APAC snapshot: products and customers
APAC snapshot: products and customers RWC’s stronghold in Australia/New Zealand back of wall plumbing market is where the company began, and remains the market leader Channel Mix1 Example customers Representative products Whol esale SharkBite® Australia Ha rdware New Zealand OEM TMV Export Auspex Di
Slide 60: Solutions for the built environment
Solutions for the built environment Wide ranging applications across multiple segments drive our continued growth High Rise Solutions Domestic Housing Melbourne Across Australia SharkBite® push-to-connect Proven design and quality fittings reduced installation for home construction, time by 75%. Now
Slide 61: APAC market update
APAC market update Short-term outlook clouded by economic uncertainty, but long-term fundamentals remain strong Short term macro trends Long term fundamentals strong ▪ COVID-19 introduced short-term uncertainty ▪ Long term Australian outlook is positive prior to ▪ APAC 2021 forecast decline 10%, but
Slide 62: Our growth strategies and priorities
Our growth strategies and priorities Driving core product initiatives in APAC to serve existing markets and emerging opportunities Goals APAC plans Achieve profitable growth in ▪ Australia/New Zealand: expand share core, new build markets in and offering in core market piping Australia and New Zeala
Slide 63: APAC – AUS Core Growth Initiatives
APAC – AUS Core Growth Initiatives Evolving market conditions and new opportunities drive our growth in our core market End users and channels What We Deliver Value Creation Wholesale ▪ Full Wholesaler support package including training and full customer care service We support the Licensed Plumber
Slide 64: Talent and organization
Talent and organization Strong and experienced leadership team is the backbone of the APAC organization, with combined unequalled industry knowledge in our core markets Additional keys to APAC CEO leadership: Brad Reid 20+ yrs ▪ Industry leading talent pool in all business departments Head of Head o
Slide 65: RWC APAC operations snapshot
RWC APAC operations snapshot Robust operations footprint producing over 30M finished products annually APAC Manufacturing Eagle Farm, BRISBANE Key performance objectives ▪ Continued improvement on HSE with focus on leadership c5k sq MT manufacturing Footprint ▪ Brass machining ▪ Deliver Continuous I
Slide 66: Americas Review
Americas Review Sean McClenaghan, CEO Americas 66
Slide 67: Agenda
Agenda 1. Americas business snapshot 2. Market dynamics 3. Strategy and growth initiatives 4. Operations update 67
Slide 68: RWC Americas snapshot
RWC Americas snapshot (in USD) Well positioned brands across a diverse product range serving multiple segments Category Mix Channel Mix Brands Export E-Commerce OEM $496M USD Plastic Net Sales1 Brass PTC PTC Fittings Non- Retail Wholesale PTC $79M USD Adjusted Pipe Other EBITDA2 Hardw are Integrated
Slide 69: Americas distribution strategy
Americas distribution strategy A multichannel approach is core to our go-to-market strategy supporting both RMI and new construction end markets with broad product availability Key RWC Brands End Use Segments Channel Value Proposition • Residential ▪ Product availability Home • Service & Repair Pros
Slide 70: Long term fundamentals support growth
Long term fundamentals support growth Despite recent economic volatility, long-term conditions that drive demand for our solutions remain solid Overall Core Segments New Construction Economy relatively heathy with varying Underlying fundamentals of housing age Steady SF housing demand, dampened effe
Slide 71: Changing market dynamics favoring RWC
Changing market dynamics favoring RWC COVID19 induced market disruptions have driven sector changes increasing demand for RWC products and leveraging growth strategy CV19 Market Disruption RWC's Strengths Societal change resulting in additional time at home ▪ Trusted Brands ▪ Value Proposition Whole
Slide 72: Although certain sectors facing headwinds
Although certain sectors facing headwinds COVID19 and the general recessionary environment are presenting challenges for certain sectors today and likely to impact demand in CY2021 CV19 Market Disruption Limited commercial space Decline in federal stimulus occupancy programs impacting spending Lower
Slide 73: Americas growth plan
Americas growth plan Utilize strength of brand, product offering and focused innovation approach across distribution network to expand market share Goals Representative initiatives ▪ Commercial end market selling investment Own the ▪ Extend brands to new categories Demand… project ▪ Add proven solut
Slide 74: Investment in growth initiatives providing return
Investment in growth initiatives providing return Prior actions and investment across multiple sales channels have positioned RWC to capitalize on these changing market dynamics • Value Adds • Innovation Product • Line Extensions • New Categories • Packaging • Product Sequencing Merchandising • Sign
Slide 75: Growth initiatives – retail channels
Growth initiatives – retail channels Drive above market growth in the home improvement and hardware channels by leveraging product portfolio, brands, NPD and merchandising capabilities Adjacent Category Secure Additional Shelf Drive Core Product Expansion Space ▪ Value add and line extensions of ▪ U
Slide 76: Retail Video
Growth initiatives – retail channels Retail Video 76
Slide 77: Growth initiatives – commercial segment
Growth initiatives – commercial segment (in USD) Penetrate attractive segment leveraging existing wholesale distribution and RWC value proposition to provide product and customer diversification Commercial Market Market Update New Products & Programs ▪ Large, attractive market ▪ Commercial sales1 +9
Slide 78: Filling product gaps will fuel growth in commercial segment
Filling product gaps will fuel growth in commercial (in USD) segment Attractive market requiring investment in product, service, sales and M&A to capture full potential Illustrative potential revenue RWC addressable products by construction phase opportunity per project 1 2 3 4 5 US$155k Accy . 5 St
Slide 79: Commercial Video
Growth initiatives – commercial segment Commercial Video 79
Slide 80: Talent and organization
Talent and organization Strong and scalable leadership team supported by organization deep in sales, operations and product development Americas CEO Additional keys to Sean leadership: McClenaghan 30+ yrs ▪ Talent pool comprised of internally and externally developed Head of Head of Head of Head of
Slide 81: RWC Americas operations snapshot
RWC Americas operations snapshot Operations and distribution facilities will require additional investment as business continues to scale Key performance objectives US Manufacturing Footprint CULLMAN, AL ▪ Creating a safety focused culture 395k sq ft manufacturing ▪ Maintaining employee health durin
Slide 82: Operations Video
RWC Americas operations snapshot Operations Video 82
Slide 83: Q&A and Wrap Up
Investor Day Q&A and Wrap Up Thursday October 1, 2020 83
Slide 84: Priorities for FY21
Priorities for FY21 We will continue investing in the future growth of the business while meeting the operational challenges and market uncertainties of the current environment ▪ Health & safety and wellbeing of our people, especially in the context of ongoing COVID, Support our including enhanced c
Slide 85: In Summary
In Summary We remain well positioned for future growth and the resilience of the business has been demonstrated through the Covid-19 pandemic ▪ The RWC business is robust, successfully weathering recent extreme challenges ▪ The plumbing & heating market, and especially our primary repair and mainten
Slide 86: Q&A – Session 2
Q&A – Session 2 86
Slide 87: Solutions to Shape the World
Solutions to Shape the World’
Slide 88: Appendix
Appendix 88
Slide 89: Glossary
Glossary BD – business development D&I – diversity and inclusion DuPont™ STOP® – Safety Training Observation Program (DuPont’s proprietary workplace safety program) DWV – drain, waste, vent ESG – environmental, social, and governance HFP – HydroFlame™ Pro HSE – health, safety, and environment MEP –
Slide 90: RWC Group snapshot
RWC Group snapshot Global operations across the Americas, EMEA and APAC Net Sales1 Managing Operating Innovation $1,162 14 24 5 Million Manufacturing Distribution R&D AUD Facilities Centers Facilities Employing Holding Manufacturing Distributing 2,300+ 900+ 22,000+ 18 Employees Patents and SKUs Bran
Slide 91: RWC Business Canvas
RWC Business Canvas Articulation of our value proposition, purpose, and scope 91
Slide 92: Safety
Safety 92
Slide 93: Injury Rate
Injury Rate 46% reduction in injury rate since FY18 Group Reportable - Group 7 FY20 results 6 ▪ Slight increase in RIR ▪ Increased focused on employee 5 engagement and incident reporting 4 ▪ Injury severity is decreasing as Lost Time rate declined 40% in FY20 and 3 68% since FY18 2.43 2 1.17 1.23 1.
Slide 94: Our safety strategy remains unchanged
Our safety strategy remains unchanged Build a world-class safety culture to drive performance Safety culture evolution Goals ▪ Zero injuries INJURY RATE ▪ Safety as a value ▪ Employee-led safety ▪ Safety by natural ▪ Management ▪ Personal knowledge, ▪ Care for others ▪ Continuous culture instinct co
Slide 95: Employee engagement and leading indicators
Employee engagement and leading indicators Over 4,800 leading indicator reports in the last 12 months Leading indicator reports FY20 actions DuPont™ STOP ™ ▪ Safety committees established in all regions 600 ▪ Implemented near miss/hazard 500 reporting – leading indicator ▪ Launched DuPont™ STOP™ 400