Reece Limited · ASX:REH
Reece — Earnings Presentation (April 2020)
40 slides from Reece's earnings presentation, Apr 6, 2020
Slide 1: Equity raise - Enabling our long-term success
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Equity raise - Enabling our long- term success 6 April 2020 FULL YEAR RESULTS_2019 September 2019
Slide 2: Disclaimer
Disclaimer This presentation is dated 6 April 2020 and has been prepared and authorised by Reece Limited (ABN 49 004 313 133) (“Reece”) in connection with: • a fully underwritten 3 for 55 pro rata accelerated non renounceable entitlement offer of new Reece fully paid ordinary shares ("New Shares") (
Slide 3: Disclaimer (cont’d)
Disclaimer (cont’d) NOT FINANCIAL PRODUCT ADVICE This presentation is for information purposes only and is not financial product advice or investment advice, nor a recommendation to acquire New Shares, will not form part of any contract for the acquisition of New Shares and has been prepared without
Slide 4: Disclaimer (cont’d)
Disclaimer (cont’d) FORWARD LOOKING STATEMENTS (cont’d) To the maximum extent permitted by law, responsibility for the accuracy or completeness of any forward-looking statements whether as a result of new information, future events or results or otherwise is disclaimed. Reece disclaims any responsib
Slide 5: Disclaimer (cont’d)
Disclaimer (cont’d) In this presentation references to 'Reece', 'we', 'us' and 'our' are to Reece Limited and its controlled subsidiaries. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly
Slide 6: Presenters
Presenters NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Peter Wilson Gavin Street Chief Executive Officer & Chief Financial Officer Managing Director since 2008 10+ years experience at Reece 25+ years experience at Reece, including roles as General Former Chief Financial Officer Manager of O
Slide 7: Living in unprecedented times
• Facing a health & economic crisis Living in • We have a clear response plan to unprecedented manage risk times • Equity raise sits alongside: NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES • Temporary suspension of dividends • Managing our business to enhance liquidity Reece Group | Equity R
Slide 8: The Plumber Protects the Health of the Nation
“The Plumber Protects the Health of the Nation” NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The plumber provides society with essential services including: • Sanitation • Clean water • Hot water • Heating • Drainage FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 20
Slide 9: Our purpose and values guide us
Our purpose and values guide us NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Improving the lives of our customers and people by striving for greatness every day FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 9
Slide 10: Setting Reece up for long-term success
Setting Reece up for long-term success NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Look after Build liquidity Strengthen Accelerate our people and to manage risk our balance our strategy customers sheet FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 10
Slide 11: Setting Reece up for the future
Setting Reece up for the future Reece is taking pre-emptive and decisive action to Following the equity offering, Reece’s pro forma net NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES fortify the balance sheet and position Reece strongly leverage1 as at 31 December 2019 will reduce to 1.9x and
Slide 12: Our vision remains clear
Our vision remains clear NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES United Australia & States New Zealand Growth Platform Customised service in a digital landscape FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 12
Slide 13: A different story for each region - ANZ
A different story for each region - ANZ Plumbing & construction an essential service in AU NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES March sales up Supply chain solid Keeping our people on prior year Stock & customers safe YTD in line with PCP position normal Online activity Managing NZ i
Slide 14: A different story for each region - US
A different story for each region - US Supply chain solid Stock position normal NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Plumbing & construction Supporting March sales considered an our customers up on prior year essential service in the Sun-Belt Opportunity to grow Agile and adaptive Fi
Slide 15: Protecting our customers, people and business
Protecting our customers, people and business NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Best Practice Containment and Acted Early approach productivity FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 15
Slide 16: Providing essential services in a time of crisis
Providing essential services in a time of crisis NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Home Hot Repair, Maintenance Online Comfort Water & Infrastructure Access FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 16
Slide 17: Securing our role for decades to come
Securing our role for decades NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES to come FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 17
Slide 18: The plumber’s role is more important than ever
The plumber’s role is more important than ever NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 18
Slide 19: Strengthened balance sheet with enhanced liquidity
Strengthened balance sheet with enhanced liquidity Pro forma liquidity and capitalisation1,2 Equity raising significantly strengthens the balance sheet and enhances liquidity As at Impact of Pro forma 31-Dec-19 the Offer (31-Dec-19) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Total pro form
Slide 20: Detail of the Equity Raising
Detail of the Equity Raising Offer structure and • Fully underwritten 3 for 55 accelerated non-renounceable entitlement offer (“Entitlement Offer”) to raise approximately A$232 million, a fully underwritten A$368 million Placement (“Placement”), and a non-underwritten Share Purchase Plan size • Appr
Slide 21: Detail of the Equity Raising (cont’d)
Detail of the Equity Raising (cont’d) • The Wilson Family, Reece's major shareholder group, is fully supportive of the equity raising and will subscribe for A$170 Shareholder million of New Shares as part of the equity raising participation • The various Wilson Family shareholders will be offered pa
Slide 22: Indicative timetable
Indicative timetable Event Date Record date for SPP 7:00pm (Sydney time), Friday, 3 April 2020 Trading halt, announcement of the Equity Raising, Institutional Entitlement Offer and Placement opens Monday, 6 April 2020 Institutional Entitlement Offer closes Monday, 6 April 2020 Institutional Placemen
Slide 23: Our position is solid and will set us up for the long-term
Our position is solid and will set us up for the long-term NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Look after our Build liquidity Strengthen Accelerate people and to manage our balance our strategy customers risk sheet FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising A
Slide 24: Appendices
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendices FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 24
Slide 25: Appendix A, B, C overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix A Appendix B Appendix C Risk factors Foreign selling Underwriting restrictions agreement summary FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 25
Slide 26: Appendix A: Risk factors
Appendix A: Risk factors This section discusses some of the key risks associated with any investment in Reece together with the general risks and risks relating to the participation in the Offer, which may affect the future operating and financial performance of Reece and the value of Reece shares.
Slide 27: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) Impact of COVID-19 (cont’d) As a result of stage 4 restrictions in New Zealand (Reece's smallest market), more than half of Reece's branches in New Zealand have closed with the remaining branches supplying only essential services (which has led to a material reducti
Slide 28: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) Counterparty risk There is a risk that counterparties (including customers) may fail to meet their contractual obligations (particularly to the extent that the relevant counterparties are facing financial distress, NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATE
Slide 29: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) Supply chain and Information technology risks (cont’d) In addition, Reece could be adversely impacted by technical malfunctions or employee errors, cyber attacks, viruses and other forms of cybercrime, such as attempts by hackers to gain access to NOT FOR DISTRIBUTI
Slide 30: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) Retention of key personnel Reece is dependent upon a number of key management personnel and executives to manage the day to day requirements of the business. The loss of the services of one or more key NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES management
Slide 31: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) Interest rate and access to capital risk (cont’d) Reece may need to access additional debt finance or capital to fund its operations. However, developments in global financial markets, such as the impact of COVID-19, may adversely affect the NOT FOR DISTRIBUTION OR
Slide 32: Appendix A: Risk factors (cont’d)
Appendix A: Risk factors (cont’d) General and Offer Risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Risks associated with an investment in shares There are general risks associated with investments in equity capital such as Reece shares. The trading price of Reece shares may fluctuate wit
Slide 33: Appendix A, B, C overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix A Appendix B Appendix C Risk factors Foreign selling Underwriting restrictions agreement summary FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 33
Slide 34: Appendix B: Foreign selling restrictions
Appendix B: Foreign selling restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold
Slide 35: Appendix B: Foreign selling restrictions (cont’d)
Appendix B: Foreign selling restrictions (cont’d) Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATE
Slide 36: Appendix B: Foreign selling restrictions (cont’d)
Appendix B: Foreign selling restrictions (cont’d) United Kingdom (cont’d) In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) NOT FOR DISTRIBUTION OR RELEAS
Slide 37: Appendix A, B, C overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix A Appendix B Appendix C Risk factors Foreign selling Underwriting restrictions agreement summary FULL YEAR RESULTS_2019 September 2019 Reece Group | Equity Raising April 2020 37
Slide 38: Appendix C: Underwriting agreement summary
Appendix C: Underwriting agreement summary Reece has entered into an underwriting agreement with the Underwriter (Underwriting Agreement), pursuant to which the Underwriter has agreed to fully underwrite the Entitlement Offer and the Placement on the terms and conditions of the Underwriting Agreemen
Slide 39: Appendix C: Underwriting agreement summary (cont’d)
Appendix C: Underwriting agreement summary (cont’d) • Reece is prevented from allotting and issuing the shares to be issued under the Offer within the times required by the timetable for the Offer, the ASX Listing Rules, applicable laws, an order of a court of competent jurisdictions or a government
Slide 40: Appendix C: Underwriting agreement summary (cont’d)
Appendix C: Underwriting agreement summary (cont’d) • any adverse change, or an event that is likely to result in an adverse change, occurs in the assets, liabilities, financial position or performance, profits, losses or prospects of Reece and the Reece group (insofar as the position in relation to