Reliance Worldwide Corp. Ltd. · ASX:RWC
Reliance Worldwide — Investor Day (October 2020)
96 slides from Reliance Worldwide's investor day presentation, Oct 1, 2020
Slide 1: Investor day presentation slides
ASX Announcement For personal use only 1 October 2020 Investor day presentation slides Attached is a copy of the presentation being given today by members of the senior management team of Reliance Worldwide Corporation Limited (ASX: RWC). A live webcast of the investor day presentation will commence
Slide 2: Investor Day
For personal use only Investor Day 1 October 2020
Slide 3: Important notice
Important notice For personal use only 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
Slide 4: Welcome and Objectives
For personal use only Investor Day Welcome and Objectives Thursday, October 1, 2020 3
Slide 5: Welcome and RWC introductions
Welcome and RWC introductions For personal use only 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 Strategi
Slide 6: Agenda
Agenda For personal use only 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
Slide 7: Trading Update
For personal use only Trading Update Andrew Johnson, Group CFO 6
Slide 8: Trading update
Trading update All regions have seen a continuation of the trends noted at the FY20 For personal use only 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
Slide 9: Safety and Operations Review
For personal use only Investor Day Safety and Operations Review Thursday October 1, 2020 8
Slide 10: Agenda
For personal use only Agenda 1. Safety and COVID-19 2. Operations Excellence 9
Slide 11: Safety
For personal use only Safety Our top priority remains our people Tracy Scott, Group SVP Operations 10
Slide 12: COVID-19
COVID-19 Focus on health and safety of our people while ensuring delivery to customers For personal use only People Procedure Supply Chain ▪ Temperature check and health ▪ Following government protocols ▪ Redesigned workstations for social questionnaire for employees distancing, with some productivi
Slide 13: Operations Excellence
For personal use only Operations Excellence Driving efficiency across our global supply chain Tracy Scott, Group SVP Operations 12
Slide 14: Operations Excellence Focus
Operations Excellence Focus For personal use only 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 s
Slide 15: Operations Excellence – CI and Procurement
Operations Excellence – CI and Procurement Advancing our Continuous Improvement culture and processes For personal use only Lean Implemented visual Rigorous initiative Increasing global best Lean Management tracking process practice sharing Management Executed Procurement risk mitigation Managed Sta
Slide 16: Operations Excellence – Supply Chain
Operations Excellence – Supply Chain Continuous improvement in Supply Chain processes to drive efficiency and For personal use only service Supply Chain Actions Rigorous Supply Chain Management Ongoing Results ▪ Implemented S&OP in ▪ 98+% OTIF into US Americas; translate to retail despite COVID othe
Slide 17: Operations Focus – Manufacturing Strategy
Operations Focus – Manufacturing Strategy Strategic actions to ensure productive and efficient operations footprint For personal use only Strategy Assessments Current Actions Ongoing Activity ▪ Consolidated HoldRite facility into Cullman ▪ Exploring alternative ▪ Ongoing assessments manufacturing co
Slide 18: Strategy and Market Review
For personal use only Investor Day Strategy and Market Review Thursday October 1, 2020 17
Slide 19: Agenda
For personal use only Agenda 1. Strategy Review 2. Markets and Growth 18
Slide 20: Our Strategy
For personal use only Our Strategy Focused priorities delivering growth and profitability Christopher Sandman, VP Strategy and M&A 19
Slide 21: Strategy summary
Strategy summary A focused plan to generate shareholder value through growth and profitability For personal use only 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 Suppor
Slide 22: 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 personal use only for RWC solutions across regions Goals Our Strategy in Action ▪ Understand their day to day ▪ Through in-depth customer interactions, image challenges de
Slide 23: 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 For personal use only the best talent in our industry Goals Our Strategy in Action ▪ Ongoing employee engagement ▪ Continuously improving measurements to benchmark an
Slide 24: Drive results with distinctive capabilities
Drive results with distinctive capabilities Create value through delivery of quality products with world class cost structure to For personal use only grow revenue, increase profitability, and build shareholder value Goals Our Strategy in Action ▪ Deliver an unrivaled portfolio ▪ Leveraging our R&D
Slide 25: Product Leadership – Know the Customer
Product Leadership – Know the Customer Successful Firestop solution developed by gaining insights through customer For personal use only empathy and responsive, iterative development Commercialize and Launch Empathize Ideate Field & Lab Tests Prototype 24
Slide 26: Product Leadership – R&D Capability
Product Leadership – R&D Capability Our R&D centers of excellence leverage insights to develop solutions solving end For personal use only user challenges for our customers around the world Our Capabilities in Action RWC GROUP R&D Engineering Centers of Excellence Product Manager in Atlanta leverage
Slide 27: Distributor Partnerships – Retail Excellence
Distributor Partnerships – Retail Excellence We create tremendous value for our strategic partners through demand For personal use only generation, service excellence, and proactive engagement Value Creation in Action Growth through increasing space for existing, in demand categories 2018 Lowe’s Ven
Slide 28: Strategic priorities support our long-term vision
Strategic priorities support our long-term vision For personal use only 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
Slide 29: Markets and Growth
For personal use only Markets and Growth Powerful global brands in relevant categories supporting our End Use Customer Kal Nanji, VP Group Strategic Marketing 28
Slide 30: Category leadership
Category leadership Growing diversification offers a basket of product solutions for our core markets For personal use only Category sizes based on Group FY20 gross revenue 29
Slide 31: Fittings provide a strong foundation
Fittings provide a strong foundation A variety of fittings solutions that deliver efficiency and reliability available through For personal use only a vast network of outlets across markets and channels 45% Plumbing PTC SharkBite™ available across Americas, UK, and Australia ▪ #1 position in America
Slide 32: Growing category diversification
Growing category diversification RWC has built a complete portfolio of solutions with top market positions - all aligned with For personal use only the SharkBite value proposition – ease of use, efficiency, labor savings, and availability Pipe PEX pipe available across global regions ▪ Top 3 produce
Slide 33: Category relevance to End Use
Category relevance to End Use RWC categories offer broad relevance across core segments and upside For personal use only opportunity in emerging segments Fittings Pipe Valves Integrated FluidTech* Installation Solutions RMI Broad category relevance across key end use segments that represent our core
Slide 34: End Use by Region
End Use by Region Core RMI market represents significant share of global end use segments For personal use only 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 35: Core End Use Segment – Americas RMI
Core End Use Segment – Americas RMI What drives the long-term market for our largest end use segment? For personal use only RWC End Use Segments by Region Highly Correlated Indicators for RMI Increasing Existing Home Values Home Sales Historical Category Focused Metrics Non- Kitchen and Discretionar
Slide 36: Highly Correlated Indicators – Home Values
Highly Correlated Indicators – Home Values Strong historical correlation of home improvement expenditure to home values For personal use only 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 I
Slide 37: Highly Correlated Indicators – Existing Home Sales
Highly Correlated Indicators – Existing Home Sales Strong historical correlation of home improvement expenditure to existing For personal use only home sales Home Improvement 2.5% Expenditure CAGR Total Homeowner Improvement Expenditures and Existing Home Sales from 1995 to 2019 Existing Home Sales
Slide 38: Key Historical Metrics – Homeowner Replacement
Key Historical Metrics – Homeowner Replacement Stable, historical growth of 3% CAGR in homeowner replacement of internal For personal use only pipes 7% CAGR Nondiscretionary Homeowner 3% CAGR Replacement Expenditures from 1995 to 2017 37 Source: JCHS tabulations of US Department of Housing and Urban
Slide 39: Key Historical Metrics – Homeowner Improvements
Key Historical Metrics – Homeowner Improvements Bath and Kitchen remodels are highly correlated to existing home sales For personal use only Discretionary Homeowner Improvement Expenditures from 1995 to 2017 Kitchen and 4% Bath Remodel CAGR Expenditure 4% CAGR Existing Home Sales Source: JCHS tabula
Slide 40: Key Driving Fundamentals – Age of Housing Stock
Key Driving Fundamentals – Age of Housing Stock Strong historical correlation with home improvement expenditure For personal use only 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 U
Slide 41: Key Driving Fundamentals – Household Formation
Key Driving Fundamentals – Household Formation Household formation spikes drive home improvement expenditure For personal use only Home Improvement Expenditure Total Homeowner Improvement Expenditures and Additional Household Formation change by year from Household Formations 1995 to 2019 Total 129M
Slide 42: Stable historical growth and key fundamentals support core repair segment
Stable historical growth and key fundamentals support our core repair segment For personal use only 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 H
Slide 43: US Growth Estimate – Potential Upside
US Growth Estimate – Potential Upside In any given period, targeted base business growth rate with upside from specific For personal use only 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 Bas
Slide 44: UK Growth Estimate – Potential Upside
UK Growth Estimate – Potential Upside Building and validating a confidence measurement for UK base business growth For personal use only 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 Po
Slide 45: Q&A – Session
For personal use only Q&A – Session 1 44
Slide 46: Break
For personal use only Break 10 minutes 45
Slide 47: Regional Review
For personal use only Investor Day Regional Review Thursday October 1, 2020 46
Slide 48: EMEA Review
For personal use only EMEA Review Edwin de Wolf, CEO EMEA 47
Slide 49: Agenda
For personal use only Agenda 1. EMEA business snapshot 2. Market update 3. Strategy 4. Key investments 48
Slide 50: EMEA business snapshot
EMEA business snapshot Exceptionally strong brands in a diversified set of markets and geographies For personal use only 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+ Em
Slide 51: RWC EMEA Operations snapshot
RWC EMEA Operations snapshot Robust operations footprint producing over 1B components annually For personal use only LAUNCESTON Key performance objectives delivered UK Manufacturing Footprint 33k sq ft manufacturing/ >40 machines ▪ Continued improvement on HSE with focus on leadership ▪ Molding, wel
Slide 52: RWC EMEA talent and organization snapshot
RWC EMEA talent and organization snapshot Strengthened leadership team and UK organizational structure to better For personal use only support growth and collaboration Additional keys to New Hire / New function leadership and EMEA CEO structural changes: Edwin de Wolf ▪ Leverage strong roster of tal
Slide 53: RWC EMEA geographic snapshot
RWC EMEA geographic snapshot RWC’s stronghold in UK plumbing and heating market is similar to the Americas For personal use only whereas continental Europe is focused on OEMs in FluidTech markets End Market Mix 1 Channel Mix1 Example customers Representative products International Plumbing Wholesale
Slide 54: Market update
Market update Short-term CV19 impact but underlying, long-term fundamentals strong For personal use only 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% 2
Slide 55: EMEA strategy
EMEA strategy Enabling specific initiatives in UK and Europe to accelerate, expand and access For personal use only 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
Slide 56: Key investments and organizational enhancements
Key investments and organizational enhancements Investment continues to support core competencies and optimise the For personal use only organization for future growth Continued investment in equipment and automation to drive Operations greater efficiency and output Continued investment made in upgr
Slide 57: APAC Review
For personal use only APAC Review Brad Reid, CEO APAC 56
Slide 58: Agenda
For personal use only Agenda 1. APAC business snapshot 2. Market dynamics 3. Strategy and growth initiatives 4. Talent and organization 5. Operations footprint 57
Slide 59: RWC APAC snapshot
RWC APAC snapshot Exceptionally strong brands in a diversified set of markets, and geographies For personal use only 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
Slide 60: APAC snapshot: products and customers
APAC snapshot: products and customers RWC’s stronghold in Australia/New Zealand back of wall plumbing market is where For personal use only the company began, and remains the market leader Channel Mix1 Example customers Representative products Whol esale SharkBite® Australia Ha rdware New Zealand OE
Slide 61: Solutions for the built environment
Solutions for the built environment Wide ranging applications across multiple segments drive our continued growth For personal use only High Rise Solutions Domestic Housing Melbourne Across Australia SharkBite® push-to-connect Proven design and quality fittings reduced installation for home construc
Slide 62: APAC market update
APAC market update Short-term outlook clouded by economic uncertainty, but long-term For personal use only 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 for
Slide 63: Our growth strategies and priorities
Our growth strategies and priorities Driving core product initiatives in APAC to serve existing markets and emerging For personal use only opportunities Goals APAC plans Achieve profitable growth in ▪ Australia/New Zealand: expand share core, new build markets in and offering in core market piping A
Slide 64: APAC – AUS Core Growth Initiatives
APAC – AUS Core Growth Initiatives Evolving market conditions and new opportunities drive our growth in our core market For personal use only End users and channels What We Deliver Value Creation Wholesale ▪ Full Wholesaler support package including training and full customer care service We support
Slide 65: Talent and organization
Talent and organization Strong and experienced leadership team is the backbone of the APAC For personal use only 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 depa
Slide 66: RWC APAC operations snapshot
RWC APAC operations snapshot Robust operations footprint producing over 30M finished products annually For personal use only APAC Manufacturing Eagle Farm, BRISBANE Key performance objectives ▪ Continued improvement on HSE with focus on leadership c5k sq MT manufacturing Footprint ▪ Brass machining
Slide 67: Americas Review
For personal use only Americas Review Sean McClenaghan, CEO Americas 66
Slide 68: Agenda
For personal use only Agenda 1. Americas business snapshot 2. Market dynamics 3. Strategy and growth initiatives 4. Operations update 67
Slide 69: RWC Americas snapshot (in USD)
RWC Americas snapshot (in USD) Well positioned brands across a diverse product range serving multiple segments For personal use only 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 EBITDA
Slide 70: Americas distribution strategy
Americas distribution strategy A multichannel approach is core to our go-to-market strategy supporting both RMI For personal use only and new construction end markets with broad product availability Key RWC Brands End Use Segments Channel Value Proposition • Residential ▪ Product availability Home •
Slide 71: Long term fundamentals support growth
Long term fundamentals support growth For personal use only 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
Slide 72: Changing market dynamics favoring RWC
Changing market dynamics favoring RWC COVID19 induced market disruptions have driven sector changes increasing For personal use only demand for RWC products and leveraging growth strategy CV19 Market Disruption RWC's Strengths Societal change resulting in additional time at home ▪ Trusted Brands ▪ V
Slide 73: Although certain sectors facing headwinds
Although certain sectors facing headwinds COVID19 and the general recessionary environment are presenting challenges for For personal use only certain sectors today and likely to impact demand in CY2021 CV19 Market Disruption Limited commercial space Decline in federal stimulus occupancy programs im
Slide 74: Americas growth plan
Americas growth plan Utilize strength of brand, product offering and focused innovation approach across For personal use only distribution network to expand market share Goals Representative initiatives ▪ Commercial end market selling investment Own the ▪ Extend brands to new categories Demand… proj
Slide 75: Investment in growth initiatives providing return
Investment in growth initiatives providing return Prior actions and investment across multiple sales channels have positioned RWC For personal use only to capitalize on these changing market dynamics • Value Adds • Innovation Product • Line Extensions • New Categories • Packaging • Product Sequencin
Slide 76: Growth initiatives – retail channels
Growth initiatives – retail channels Drive above market growth in the home improvement and hardware channels by For personal use only leveraging product portfolio, brands, NPD and merchandising capabilities Adjacent Category Secure Additional Shelf Drive Core Product Expansion Space ▪ Value add and
Slide 77: Growth initiatives – retail channels: Retail Video
Growth initiatives – retail channels For personal use only Retail Video 76
Slide 78: Growth initiatives – commercial segment (in USD)
Growth initiatives – commercial segment (in USD) Penetrate attractive segment leveraging existing wholesale distribution and RWC For personal use only value proposition to provide product and customer diversification Commercial Market Market Update New Products & Programs ▪ Large, attractive market
Slide 79: Filling product gaps will fuel growth in commercial segment
Filling product gaps will fuel growth in commercial (in USD) segment For personal use only 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
Slide 80: Growth initiatives – commercial segment: Commercial Video
Growth initiatives – commercial segment For personal use only Commercial Video 79
Slide 81: Talent and organization
Talent and organization Strong and scalable leadership team supported by organization deep in sales, For personal use only operations and product development Americas CEO Additional keys to Sean leadership: McClenaghan 30+ yrs ▪ Talent pool comprised of internally and externally developed Head of He
Slide 82: RWC Americas operations snapshot
RWC Americas operations snapshot Operations and distribution facilities will require additional investment as business For personal use only continues to scale Key performance objectives US Manufacturing Footprint CULLMAN, AL ▪ Creating a safety focused culture 395k sq ft manufacturing ▪ Maintaining
Slide 83: RWC Americas operations snapshot: Operations Video
RWC Americas operations snapshot For personal use only Operations Video 82
Slide 84: Q&A and Wrap Up
For personal use only Investor Day Q&A and Wrap Up Thursday October 1, 2020 83
Slide 85: Priorities for FY21
Priorities for FY21 We will continue investing in the future growth of the business while meeting the For personal use only operational challenges and market uncertainties of the current environment ▪ Health & safety and wellbeing of our people, especially in the context of ongoing COVID, Support ou
Slide 86: In Summary
In Summary For personal use only 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 prim
Slide 87: Q&A – Session
For personal use only Q&A – Session 2 86
Slide 88: Solutions to Shape the World
For personal use only ft a . = == — Solutions to Shape the World’
Slide 89: Appendix
For personal use only Appendix 88
Slide 90: Glossary
Glossary For personal use only 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,
Slide 91: RWC Group snapshot
RWC Group snapshot Global operations across the Americas, EMEA and APAC For personal use only 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
Slide 92: RWC Business Canvas
RWC Business Canvas Articulation of our value proposition, purpose, and scope For personal use only 91
Slide 93: Safety
For personal use only Safety 92
Slide 94: Injury Rate
Injury Rate 46% reduction in injury rate since FY18 For personal use only 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 FY
Slide 95: Our safety strategy remains unchanged
Our safety strategy remains unchanged Build a world-class safety culture to drive performance For personal use only Safety culture evolution Goals ▪ Zero injuries INJURY RATE ▪ Safety as a value ▪ Employee-led safety ▪ Safety by natural ▪ Management ▪ Personal knowledge, ▪ Care for others ▪ Continuo
Slide 96: Employee engagement and leading indicators
Employee engagement and leading indicators Over 4,800 leading indicator reports in the last 12 months For personal use only Leading indicator reports FY20 actions DuPont™ STOP ™ ▪ Safety committees established in all regions 600 ▪ Implemented near miss/hazard 500 reporting – leading indicator ▪ Laun