The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is up more than 9% after announcing its FY24 result and revealing some outlook commentary.
Reliance makes water flow and control products used in plumbing fittings.
FY24 result
Here are some of the highlights from the 12 months to 30 June 2024:
- Net sales grew 0.2% to US$1.24 billion
- Adjusted EBITDA flat at US$274.6 million
- Adjusted net profit after tax (NPAT) dropped 6% to US$146.9 million
- Cash flow from operations rose 7% to US$314.2 million.
- Final dividend of US$0.025 per share
- On-market share buyback of US$19.6 million, or US$0.025 per share
The company said it achieved cost savings of $23 million during the period, driven by Americas restructuring in the prior reporting period, procurement savings, restructuring in Europe, the Middle East and Africa (EMEA) and “other continuous improvement initiatives”.
Net sales benefited from a partial contribution from Holman Industries, which was acquired on 1 March 2024. External sales in the Americas were down 1%, Asia Pacific external sales excluding Holman were down 3% and EMEA external sales decreased by 10%.
Volumes in all regions were softer due to “weaker remodel and residential new construction markets, but new product revenues and the acquisition of Holman mitigated these impacts.”
There were $27.1 million of one-off costs related to the closure of the Supply Smart business in the Americas, restructuring in EMEA and the impairment of manufacturing assets in Spain, and costs associated with the acquisition of Holman.
Management commentary
The RWC CEO Heath Sharp commented:
We introduced a range of new products in the Americas which drove an above-market sales performance, while cost reduction programs in all regions helped to mitigate the impact of lower volumes and offset cost inflation, enabling RWC to achieve stable operating margins in line with the prior year.
Our focus on working capital management meant we generated strong operating cash flows. This has enabled us to fund the acquisition of Holman and also further reduce our borrowings. We have ended the year in a very strong financial position, with leverage now near the bottom end of our target range.
We’ve been really pleased with the cultural fit and depth of talent in Holman and are very excited by the growth potential we now have with the combination of RWC and Holman.
Outlook for the Reliance share price
For the first six months of FY25 trading, RWC is expecting total external sales to be “broadly flat”, excluding the impact of Holman and Supply Smart.
Management are expecting a similar trajectory in each region. New product and revenue initiatives are expected to help mitigate the impact of weaker end-markets.
Cost reduction and efficiency measures will “continue to be pursued” and RWC is targeting an improvement in its ‘consolidated EBITDA’ margin (excluding Holman) in the first half of FY25 compared to the prior corresponding period. Holman is “on track to meet the expectations established at the time of acquisition.”
