Reliance Worldwide Corp. Ltd. · ASX:RWC
Reliance Worldwide — H1 FY2021 Earnings Presentation
33 slides from Reliance Worldwide's earnings presentation, Feb 22, 2021
Slide 1: HY2021 Results Presentation
HY2021 Results Presentation 22 February 2021 RELIANCE WORLDWIDE CORPORATION LIMITED ABN 46 610 855 877
Slide 2: Important Notice
Important Notice This presentation contains general information about Reliance Worldwide Corporation Limited’s activities at the date of presentation (22 February 2021). It is information given in summary form and does not purport to be complete. The presentation is not an offer or invitation for su
Slide 3: Agenda
Agenda 1. HY2021 Results Overview 4 2. Group Financial Performance 10 3. Capital Management 20 4. Strategy and Outlook 23 3
Slide 4: HY2021 Results Overview
HY2021 Results Overview 4
Slide 5: Introduction
Introduction Strong revenue and earnings growth driven by heightened repair and remodelling activity levels in all markets Net sales growth of 17% on a constant currency basis • Americas recorded 22% constant currency sales growth, US market especially strong • Asia Pacific constant currency sales
Slide 6: HY2021 Financial Highlights
HY2021 Financial Highlights Net sales EBITDA Adjusted NPAT $642.4 million $166.3 million $99.3 million +13% growth overall1 +32% on pcp +56% on pcp +17% in constant currency Operating cash flow Net debt reduction Interim dividend $155.6 million $76 million 6.0 cps +17% Net debt $226 million +33% on
Slide 7: Strong operating cash flow performance
Strong operating cash flow performance Cash generated has enabled further reduction in net debt Cash Flow from $m Operations Net Debt/EBITDA Total Dividends Declared ($m) 155.6 50 47.4 160 1.7 1.67 45 140 132.8 1.57 40 1.5 35.6 120 35 31.6 100 1.3 30 80 25 1.1 20 60 53.6 0.88 0.9 15 40 10 0.7 20 5 0
Slide 8: The story of the first half
The story of the first half While COVID-19 presented significant operational challenges we continued to make progress on key initiatives Markets Strong volume growth in all key markets – EMEA recovery evident from August onwards Repair and remodel markets were resilient – new housing constructio
Slide 9: The story of the half
The story of the half Strong service and delivery performance recognised by our channel partners Lowe’s USA: The Home Depot Canada: Building Products Vendor Partner of the Year Partner of the Year, D26 Plumbing Rough Plumbing Vendor Partner of the Year 9
Slide 10: Group Financial Performance
Group Financial Performance 10
Slide 11: Summary of HY2021 Performance
Summary of HY2021 Performance A$m HY2020 HY2021 % Net sales for the six months ended 31 December 2020 Change of $642.4 million were 13% higher than pcp Net Sales 569.3 642.4 13% • On a constant currency basis, sales were up by 17% EBITDA increased 32% to $166.3m, driven by stronger EBITDA 126.3
Slide 12: HY2021 Group EBITDA margin drivers
HY2021 Group EBITDA margin drivers Strong volume growth and cost reduction initiatives were the major drivers HY2021 EBITDA increased by 38% on a constant currency basis, EBITDA margin on a constant currency basis was 26.1% Carryover savings included procurement savings and additional John Guest
Slide 13: Segment results: Americas
Segment results: Americas Consistently strong sales growth throughout the half, operating margin expansion US$m HY2020 HY2021 % over pcp Commentary on 1st Half Performance Net Sales 237.4 289.6 22% US sales boosted by surge in residential repair and remodel activity EBITDA 36.7 54.8 49% EBITDA mar
Slide 14: Americas: 22% first half revenue growth
Americas: 22% first half revenue growth COVID -19 impact estimated to be half of Americas first half sales growth Figures are in US$m Market growth – source: LIRA 14
Slide 15: Segment results: Asia Pacific
Segment results: Asia Pacific Stronger sales in Australian market boosted by remodelling activity and new housing construction A$m HY2020 HY2021 % over pcp Commentary on 1st Half Performance Net Sales 125.4 138.1 10% External sales up 8% reflecting stronger Australian new EBITDA 22.8 29.9 31% hous
Slide 16: Segment results: EMEA
Segment results: EMEA Strong sales recovery post COVID-19 lock down GBPm HY2020 HY2021 % over pcp Commentary on 1st Half Performance Net Sales 94.4 104.6 11% Sales volumes recovered in July and August following easing EBITDA 28.4 34.6 22% of COVID-19 government restrictions EBITDA margin 30.1% 33.
Slide 17: Cash flow performance
Cash flow performance Strong cash performance, cash conversion on target at 94% A$m HY2020 HY2021 % Reported EBITDA 126.3 166.3 32% Changes in working capital (6.5) (10.7) Cash flow from operations 132.8 155.6 17% Operating cash flow conversion 105% 94% Capital expenditure 25.4 11.9 -53% Cash divide
Slide 18: Capital expenditure
Capital expenditure FY2021 forecast capital expenditure of $40m to $50m 90 6.3% 5.6% 6.0% 80 5.0% $70m 70 5.0% 4.2% 3.7% 60 4.0% 50 $40m-$50m Maintenance $38m $43m 40 $30m 3.0% 30 $26m Growth 2.0% 20 1.0% % of Sales 10 0 0.0% FY16 FY17 FY18 FY19 FY20 FY21 Cullman Phase 1 Property acquisition Capacit
Slide 19: Balance Sheet further strengthened
Balance Sheet further strengthened Debt metrics Commentary A$m 31 Dec 2019 31 Dec 2020 Strong balance sheet with net leverage of 0.88x as at 31 December 2020 Cash and cash equivalents 24.4 39.6 Net debt reduced by $168.7m since 31 December 2019, and Gross debt 419.1 265.7 by $76.2m in 1H21: $3
Slide 20: Capital Management
Capital Management 20
Slide 21: RWC's Capital Management approach
RWC’s Capital Management approach Capital management approach aims to minimise the cost of capital and ensure ongoing access to funding to meet future requirements Strong Financial Value creation Capital management Focus Improving long term Organic Capital Capital Consistent Capital Acquisitions mar
Slide 22: Capital Management
Capital Management Considerations in setting leverage targets and distribution strategy RWC will target a leverage ratio (Net Debt to EBITDA) in the range of 1.5x to 2.5x Maintaining leverage within this range will ensure the company has ready access to debt markets with appropriately low levels
Slide 23: Strategy and Outlook
Strategy and Outlook 23
Slide 24: Strategy overview
Strategy overview Our strategy is unchanged but with a near term focus on execution Creating value through Product Leadership • Solutions for the end-user: improving contractor productivity, empowering the DIYer • Value for the distributor: increasing value on their shelf, providing broadest acces
Slide 25: Outlook for FY 2021
Outlook for FY 2021 RWC is not providing earnings guidance due to the continued uncertain market outlook and potential impacts of further COVID-19 outbreaks 1 We will ensure the market has appropriate visibility on trading conditions as FY2021 progresses Sales growth rates may change materially
Slide 26: Segment performance drivers: Americas
Segment performance drivers: Americas Outlook for US home improvement in 2021 has strengthened Market backdrop: US gains in homeowner spending for improvements and repairs expected to continue in 2H21 The surge in DIY and small project activity also expected to continue lifting the remodelling m
Slide 27: Segment performance drivers: Asia Pacific
Segment performance drivers: Asia Pacific Improving Australian new residential construction should positively impact volumes Market backdrop: Australian Residential Approvals1 250,000 Residential demand proved resilient throughout COVID Government stimulus has boosted house construction 200,000
Slide 28: Segment performance drivers: EMEA
Segment performance drivers: EMEA Strong rebound in repair and maintenance activity in the UK Market backdrop: UK new work, repair and maintenance1 110 First half demand in the UK driven by plumbing and heating volume growth with restocking of distributors and a strong 100 recovery in the repair a
Slide 29: Copper Cost Impacts
Copper Cost Impacts RWC consumes c.8,000 tonnes of brass p.a. of which copper is the main input Average Copper Price FY EBIT Managing copper cost impacts – a multi-pronged approach: (US$/tonne) Impact Price increases - depending on region (incl. currency) and 1H 2H FY YoY product mix, with indexin
Slide 30: Priorities for FY2021
Priorities for FY2021 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, including enhanced communicati
Slide 31: Summary
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 maintenanc
Slide 32: 2020 Social Impact Report
2020 Social Impact Report Released recently along with RWC’s first Modern Slavery Statement RWC’s approach integrates our strategy and our ESG approach through the lens of product leadership, operational excellence, supporting our people, and robust governance Diversity and Inclusion: framework
Slide 33: Q&A
Q&A