The Reliance Worldwide Corporation Ltd (ASX: RWC) share price will be on watch this morning after it reported its FY19 result.
Reliance Worldwide Corporation is an Australian plumbing supplies and water solutions business, perhaps best known by plumbers for its SharkBite pipe connector. It is the world’s largest manufacturer of push to connect plumbing fittings and specialist water control valves.
Reliance Worldwide’s FY19 Result
Reliance Worldwide announced that its reported net sales increased by 43% to $1.1 billion and includes the first full year contribution from the John Guest business.
Excluding the John Guest business, core Reliance Worldwide sales increased by 5% to $782.9 million with underlying sales growth of 8% in the Americas of 8%. John Guest net sales rose by 8% to $321.1 million. The second half performance was in line with the guidance given in May 2019.
Management were pleased to announce that the successful integration of John Guest with synergies realised in the year of $14.2 million, ahead of its $10 million target. Synergies achieved by the end of FY19 exceeding $20 million per year on a run rate basis. Total annual synergies still expected to exceed $30 million by the end of FY20.
Reported EBITDA (click here to learn what EBITDA means) rose by 79% to $242.5 million and reported net profit after tax (NPAT) increased by 102% to $133 million. ‘Adjusted’ net profit went up 80% to $152 million.
On a per share basis, reported profit went up by 38% to 17 cents.
Reliance Worldwide Dividend
The Reliance Worldwide Board decided to declare a dividend of 5 cents per share. Total dividends for FY19 rose by 38.4% to 9 cents per share.
Is Reliance Worldwide A Buy?
Reliance said it expects to achieve sales growth above that of broader markets. It also expects net profit for FY20 to be in the range of $150 million to $165 million and EBITDA to be $280 million to $305 million.
Therefore, the company is expecting another year of profit growth. At under 20 times this year’s earnings with further profit growth expected, I think Reliance could be a decent long term idea at this price, particularly due to the share price almost halving over the past year.
But, the growth shares in the free report below could be better ideas to try to beat the market over the next few years.
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