Reliance Worldwide Corp. Ltd. · ASX:RWC
Reliance Worldwide — FY2021 Earnings Presentation
34 slides from Reliance Worldwide's earnings presentation, Aug 23, 2021
Slide 1: FY2021 Results Presentation
FY2021 Results Presentation 23 August 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 (23 August 2021). It is information given in summary form and does not purport to be complete. The presentation is not an offer or invitation for subs
Slide 3: FY21 Results Overview
FY21 Results Overview 3
Slide 4: Introduction
Introduction FY21 a record year: revenue and earnings growth driven by continued strength in repair and remodelling activity in all regions ▪ Net sales growth of 25% on a constant currency basis • Americas recorded 27% constant currency sales growth: continued strength of US repair and remodelling a
Slide 5: FY21 Financial Highlights
FY21 Financial Highlights Net sales Adjusted EBITDA Adjusted NPAT $1,341 million $349.2 million $211.9 million +15% growth overall1 +39% on pcp +63% on pcp +25% in constant currency Operating cash flow Net debt reduction Final dividend $334.3 million $128.3 million 7.0 cps Total FY21 dividends +20%
Slide 6: Strong operating cash flow performance
Strong operating cash flow performance Cash generated has enabled further reduction in net debt and higher FY21 dividend Cash Flow from $m Operations Net Debt/EBITDA Total Dividends Declared ($m) 1.8 120 400 1.67 1.6 102.7 350 334.3 100 1.39 1.4 300 278.3 1.2 80 71.1 250 1.0 200 60 55.3 178.9 0.8 15
Slide 7: The story of the year
The story of the year Strong demand in all major markets persisted throughout the year with volume growth along with tight cost control contributing to higher operating margins Markets ▪ Strong volume growth in all key markets, US sales boosted further by winter freeze event in second half ▪ Repair
Slide 8: RWC 5-Year Post-IPO Performance History
RWC 5-Year Post-IPO Performance History Net Sales A$m Adjusted EBITDA A$m Adjusted NPAT A$m 5 Year CAGR: 22% 400 5 Year CAGR: 30% 5 Year CAGR: 34% 349 250 1,600 350 212 1,400 1,341 300 277 200 1,162 251 1,200 1,104 250 158 1,000 150 200 130 800 769 151 150 100 602 121 600 79 66 100 400 50 50 200 0 0
Slide 9: Group Financial Performance
Group Financial Performance 9
Slide 10: Summary of FY21 Performance
Summary of FY21 Performance A$m FY20 FY21 % Change ▪ FY21 net sales were 15% higher than pcp, up by 25% on a constant currency basis Net Sales 1,162.4 1,340.8 15% ▪ Adjusted EBITDA increased 39% to $349.2m, driven by Reported EBITDA 217.9 340.7 56% stronger sales in all regions Adjusted EBITDA 251.3
Slide 11: Summary of FY21 Performance in US$
Summary of FY21 Performance in US$ US$ reporting from 1st Quarter FY22 will better reflect Group performance trends US$m1 FY20 FY21 % Change ▪ A$ reported Sales growth of 15% versus: Net Sales 781.6 1,001.6 28% • Constant currency Sales growth of 25% Reported EBITDA 145.8 254.3 74% • US$ sales growt
Slide 12: FY21 Adjusted EBITDA up 45% in constant currency
FY21 Adjusted EBITDA up 45% in constant currency Strong volume growth the major driver, cost reduction initiatives offset inflation ▪ FY21 Adjusted EBITDA increased 45% on a constant currency basis, up 39% on a reported basis ▪ EBITDA margin on a constant currency basis was 27.2%, up from 22.3% pcp
Slide 13: Cost inflation was a feature of FY21
Cost inflation was a feature of FY21 Commodity price, inflation impacts and COVID costs impacted results Cost Items FY21 Impact (A$m) Cost Reduction Initiative FY21 Savings (A$m) Copper 7.2 Product development savings 4.9 Other input materials incl. resins 3.5 Relocation of HoldRite plant 1.0 Freigh
Slide 14: Segment results: Americas
Segment results: Americas Sustained growth in repair and remodel activity, US winter freeze boosted 2nd half demand US$m FY20 FY21 % US$m 1H21 % over pcp 2H21 % over pcp Net Sales 495.8 629.9 27% Net Sales 289.6 22% 340.2 32% EBITDA 64.9 116.6 80% EBITDA 54.8 49% 61.9 119% Adjustments 14.4 3.5 n/m A
Slide 15: Americas: 27% revenue growth in FY21
Americas: 27% revenue growth in FY21 Excluding US freeze, Americas recorded 19% constant currency sales growth in FY21 Values are in US$ 15 Market growth source: LIRA. LIRA values are nominal and are not adjusted for price inflation
Slide 16: Segment results: Asia Pacific
Segment results: Asia Pacific Volume growth from Australian R&R activity and intra-Group exports to Americas A$m FY20 FY21 % A$m 1H21 % over pcp 2H21 % over pcp Net Sales 244.8 277.3 13% Net Sales 138.1 10% 139.1 17% EBITDA 44.3 66.2 50% EBITDA 29.9 31% 36.3 21% Adjustments - - - Adjustments - - - -
Slide 17: Segment results: EMEA
Segment results: EMEA Rebound in activity in UK R&R and Continental Europe volumes GBPm FY20 FY21 % GBPm 1H21 % over pcp 2H21 % over pcp Net Sales 172.7 216.8 26% Net Sales 104.6 11% 112.2 43% EBITDA 43.2 70.3 63% EBITDA 34.6 22% 35.7 142% Adjustments 6.3 1.2 - Adjustments - - 1.2 - Adjusted EBITDA
Slide 18: Strong cash flow: balance sheet strengthened
Strong cash flow: balance sheet strengthened Cash flow performance Commentary A$m 30 Jun 2020 30 Jun 2021 % ▪ Cash flow from operations up 20%, cash conversion ahead Reported EBITDA 217.9 340.7 56% of 90% target at 98% Changes in working capital 60.4 (6.4) - ▪ Higher cash dividend payments reflect p
Slide 19: Capital expenditure
Capital expenditure FY22 forecast of A$80m to A$90m includes a range of capacity expansion projects 90 6.3% 80 6.0% 5.0% $70m $90m 70 5.0% Maintenance 60 3.7% 3.7% 4.0% 50 Growth 40 $38m 3.0% $49m 30 $43m % of Sales 2.0% 20 1.0% 10 0 0.0% FY18 FY19 FY20 FY21 FY22F Capacity expansion Expansion of pro
Slide 20: Consolidating distribution in US and UK
Consolidating distribution in US and UK FY21 one-off costs of $8.5m will enable future warehousing and logistics improvements Americas EMEA ▪ New 600,000 sq ft facility in Alabama ▪ Consolidate 5 warehouse locations across the UK (130,000 sq ft) into single facility in centre of UK ▪ Will enable con
Slide 21: Strategy and Outlook
Strategy and Outlook 21
Slide 22: RWC strategy summary
RWC strategy summary Creating Value through Product Leadership Create and deliver plumbing products that are the first choice for users Solutions for SA \w Operational the end-user X2d & Excellence Smart product solutions that Increasing value for the distributor Premium quality products improve con
Slide 23: Strategy overview
Strategy overview Our strategy remains focused on driving growth in core and adjacent markets ▪ Solutions for the end customer: Pro-plumbers and DIY customers • Smart product solutions which make the lives of our end customers easier and improves their productivity ▪ Strong Distributor relationships
Slide 24: 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 25: Outlook for FY22
Outlook for FY22 1 RWC will provide expanded quarterly trading updates from the first quarter of FY2022 PRICES: ▪ Average price rises announced in FY21 of 6% will mitigate inflation impacts ▪ Price increases will flow through to Sales in FY22, regional variations will reflect different product mix a
Slide 26: Regional outlook for FY22
Regional outlook for FY22 1 AMERICAS: ▪ COVID brought about a step change in residential remodelling activity in FY21 ▪ Home remodelling activity is expected to remain strong given fundamentals in core US residential segments ▪ FY22 sales (excl freeze) expected to continue to grow at above market ra
Slide 27: Segment performance drivers: Americas
Segment performance drivers: Americas Strong outlook for US home improvement in FY22 Market backdrop: ▪ Home remodelling activity expected to remain strong, underpinned by ongoing strength of home sales, LIRA inputs house price appreciation, and new residential and outputs construction activity are
Slide 28: Segment performance drivers: Asia Pacific
Segment performance drivers: Asia Pacific Improving Australian new residential construction expected to positively impact volumes Australian Residential Approvals1 Market backdrop: 250,000 ▪ Rising house values have supported increase in standalone new dwelling construction 200,000 ▪ Remodelling act
Slide 29: Segment performance drivers: EMEA
Segment performance drivers: EMEA Strong rebound in repair and maintenance activity in the UK Index of UK new work, repair and maintenance1 Market backdrop: ▪ UK residential repair and remodelling sectors are expected to remain strong with short term economic indicators 100 remaining favourable ▪ Co
Slide 30: Priorities for FY22
Priorities for FY22 Our focus is building on strong growth delivered in FY21 through new products, capacity expansion and excellent channel partner relationships ▪ Delivery of above market top line growth in all key geographies ▪ Continued focus on operational excellence and execution, remaining agi
Slide 31: Summary
Summary RWC is well positioned for future growth and resilience of the business has been demonstrated through the COVID-19 pandemic ▪ RWC is focused on creating value through product leadership • Solutions for the end-user: improving contractor productivity, enabling the DIYer • Value for distributo
Slide 32: Q&A
Q&A
Slide 33: Reconciliation of Reported NPAT and Adjusted NPAT
Appendix: Reconciliation of Reported NPAT and Adjusted NPAT 30-Jun-21 30-Jun-20 Twelve months ended: Variance ($ million) ($ million) Net sales 1,340.8 1,162.4 15.3% Reported EBITDA 340.7 217.9 56.4% Adjusted for one-time items: - Restructuring and asset impairment charges 8.5 33.4 n/m Adjusted EBIT
Slide 34: Overview of LCL Acquisition
Appendix: Overview of LCL Acquisition ▪ Business assets of LCL Pty Ltd (“LCL”) acquired for A$37m in August 2021 ▪ LCL is one of Australia’s largest producers of high-quality copper-based alloys ▪ LCL recycles copper material and manufactures lead-free brass for use in the delivery of potable water