The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is up more than 17% after reporting its FY20 result.
This company is 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’s FY20 result
Reliance Worldwide reported that in FY20 its net sales increased by 5% to $1.16 billion.
There was a “strong” Americas performance with 11% second half constant currency sales growth, with 6% for the year overall.
Asia Pacific external sales went up 2% despite the slowdown in Australian new residential construction.
Management said that UK and European sales were adversely impacted by COVID-19, but a recovery was occurring towards the year end.
The company said it generated ‘adjusted EBITDA’ (click here to learn what EBITDA means) of $251.3 million, down from last year’s $277 million result. This excludes restructuring and impairment charges.
EBITDA was $217.9 million when including those restructuring and impairment charges amounting to $33.4 million.
Adjusted net profit after tax was down 18% to $130.3 million and reported net profit after tax fell 33%.
Included in the profit was John Guest synergies of $13.8 million, with total synergies realised since the acquisition of $31.3 million.
Despite the difficult trading, operating cashflow rose by 56% to $278.3 million which helped reduce net debt by $124 million. It finished with net debt of $302.2 million.
Dividend
Reliance Worldwide declared a final dividend of 2.5 cents per share, bringing the full year dividend to 7 cents per share – down from 9 cents per share in FY19.
Management comments
RWC CEO Heath Sharp said: “Our performance this year has been impacted by what occurred in the second half with COVID-19, with sales trends varying by region reflecting the differing market responses to the pandemic.
“What’s been really pleasing is that through the efforts of our people we were able to maintain our high levels of service to our channel partners despite the substantial growth in demand and supply chain challenges that arose due to COVID-19.”
Outlook
The company said it couldn’t provide any earnings guidance for FY21 due to the COVID-19 uncertainty.
However, in July the company has seen US sales growth of 22% compared to July 2019. In APAC external sales are slightly ahead. Sales in the first three weeks in August have continued to show positive momentum.
This was clearly pleasing to investors. I don’t know enough about the company to have much conviction about a long term buy – however, positive momentum is good news for shareholders. There are other ASX growth shares and ASX dividend shares that I’d prefer to buy for international growth such as Bub Australia Ltd (ASX: BUB) and Pushpay Holdings Ltd (ASX: PPH).
