REECE LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

ASX Announcement 25 February 2021

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HY21 Results Presentation

Proudly essential for 100 years

Reece Limited (“ Reece Group ”; ASX:REH) announces record financial results for the half-year ending 31 December 2020.

Attached is the HY21 Results Presentation.

For further information contact:

Michael Thorneycroft Scott Newstead Media Relations Investor Relations Reece Group Reece Group E: michael.thorneycroft@reece.com.au E: scott.newstead@reece.com.au T: 0411 639 636 T: 0437 066 512

This announcement has been authorised by Chantelle Duffy, Company Secretary at the direction of the Board of Directors.

About the Reece Group

Reece Group is a leading distributor of plumbing, waterworks and HVAC-R products to commercial and residential customers through over 800 branches in Australia, New Zealand and the United States.

Established in 1920 and listed on the Australian Securities Exchange (ASX: REH), Reece Group has approximately 8,000 employees committed to improving the lives of its customers by striving for greatness every day.

For further information on Reece Group and its portfolio of businesses please visit www.reecegroup.com.au.

118 Burwood Highway Burwood Victoria 3125

Private Bag 109 T 61 3 9274 0000 Burwood Victoria 3125 F 61 3 9274 0199

ABN 49 004 313 133 www.reecegroup.com.au

1

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Half Year Results

2021

25 February 2021

Reece Group – Half Year Results 2021 2

Presenters

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Peter Wilson

Group Chief Executive Officer & Managing Director since 2008

25+ years' experience at Reece, including roles as General Manager of Operations and Chief Operating Officer Board member since 1997

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Andrew Cowlishaw

Group Chief Financial Officer

20+ years' experience in finance roles. Former Partner at EY Long-term advisor to Reece working on key acquisitions

Reece Group – Half Year Results 2021 3

Disclaimer

The material in this presentation has been prepared by Reece Limited (ABN 49 004 313 133) (“Reece") (ASX:REH) and is general background information about Reece's activities current as at the date of this presentation. The information is given in summary form and does not purport to be complete. In particular you are cautioned not to place undue reliance on any forward-looking statements regarding Reece's belief, intent or expectations with respect to Reece’s businesses, market conditions and/or results of operations. Although due care has been used in the preparation of such statements, actual results may vary in a material manner. No representation, warranty or assurance (express or implied) is given or made in relation to any forward-looking statement by any person (including Reece).

Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Reece disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements in this presentation to reflect any change in expectations in relation to any forward-looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation shall under any circumstances create an implication that there has been no change in the affairs of Reece since the date of these materials.

Information in this presentation, including any forecast financial or other information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities. Before acting on any information you should consider the appropriateness of the information having regard to these matters and, in particular, you should seek independent financial advice.

Non-IFRS Financial Information

Reece uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are collectively referred to as non-IFRS financial measures. Although Reece believes that these measures provide useful information about the financial performance of Reece, they should be considered as supplemental to the measures calculated in accordance with Australian Accounting Standards and not as a replacement for them. Because these non-IFRS financial measures are not based on Australian Accounting Standards, they do not have standard definitions, and the way Reece calculates these measures may differ from similarly titled measures used by other companies. Readers should therefore not place undue reliance on these non-IFRS financial measures.

Reece use non-IFRS financial measures, Normalised EBITDA and constant currency basis to reflect the underlying performance. These measures allow the comparability of the underlying financial performance by excluding the impact of business acquisition costs and finance income. Constant currency basis applies the same exchange rate of 0.6844 from HY20 to eliminate the effect of fluctuations when calculating comparative sales numbers from HY20 to HY21.

Non-IFRS performance measures have not been subject to audit or review.

Note: All financial amounts contained in this presentation are expressed in Australian dollars unless otherwise stated. Any discrepancies between totals and the sum of components in tables contained in this presentation are due to rounding.

Reece Group – Half Year Results 2021 4

Agenda

01 02 03 04 Our focus Financial Business HY21 financial summary highlights performance

Reece Group – Half Year Results 2021 5

Agenda

01 02 03 04 Financial Business HY21 financial summary highlights performance Our focus

Reece Group – Half Year Results 2021 6

Our purpose and values have guided us now more than ever

Improving the lives of our customers and people by striving for greatness every day.

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Customers Discover Grow as Innovate Try. Try. Try.
for life. your best. a team. big and small.
Own it. Keep it Do the Be humble. Write the
simple. right thing. next chapter.
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Reece Group – Half Year Results 2021 7

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2020 - Celebrating our 100[th] year

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“My favourite part of the job is the customer feedback and hearing the customer is happy.” David, Kimber Plumbing

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Our long-term regional approach

Australia & New Zealand

Customised service in a digital landscape

United States

Growth platform

Reece Group – Half Year Results 2021 9

Protect and accelerate through COVID-19

Protect and preserve

Resilience Adapting through to the new uncertainty COVID normal

Accelerate for the long-term Customised US growth service in a platform digital landscape

Reece Group – Half Year Results 2021 10

Protect and accelerate through COVID-19

Protect and preserve

Resilience Adapting through to the new uncertainty COVID normal

Accelerate for the long-term Customised service in a US growth digital platform landscape

Reece Group – Half Year Results 2021 11

Protect and accelerate through COVID-19

Protect and preserve

Resilience Adapting through to the new uncertainty COVID normal

Accelerate for the long-term

Customised US growth service in a platform digital landscape

Reece Group – Half Year Results 2021 12

Our ESG approach FY21

Our customer led sustainability strategy Launching the Reece Foundation

Reece Group – Half Year Results 2021 13

Agenda

02 01 03 04 Our focus Business HY21 financial Financial highlights performance summary

Reece Group – Half Year Results 2021 14

Financial highlights

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Sales Normalised EBIT NPAT EPS
Revenue EBITDA
A
up 4% up 12% up 15% up 17% up 2%
to $3.1b to $349m to $236m to $123m to 19 cents
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Half year dividend

Leverage ratio _(Net Debt / EBITDA)*_

6 cents per share

1.9 x

A: EPS has been diluted in HY21 due to 85.2m shares being issued in the April 2020 Equity raising. *Normalised EBITDA excludes business acquisition costs and finance income/(costs) net ** Leverage ratio is senior debt and lease liabilities less cash and cash equivalents and add/(less) net FX derivative

Reece Group – Half Year Results 2021 15

Segment performance

ANZ

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3,074
Sales Revenue 2,962
(A$m)
1,564
1,465 1,496 1,509
ANZ US Total
HY20 HY21
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•
Sales up 7%
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US

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•
Sales up 1% on reported basis
•
Sales up 7% on constant
currency basis
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Group

• Sales up 4%

• Unfavourable FX impact $97m

Refer to Appendix A further information on FX impact for HY21

Reece Group – Half Year Results 2021 16

Agenda 03 01 02 04 Our focus Financial HY21 financial Business summary performance highlights

Business highlights

Digitising the customer experience in ANZ

Foundations for growth in the US

Business highlights Digitising the customer experience in ANZ

Reece Group – Half Year Results 2021 19

Digitising the customer experience

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Continue to invest in digitising the the customer experience

Accelerate utilisation of maX and online

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Further embedding FieldPulse - integrating with key platforms

Blending the face to face experience with digital in new stores

Reece Group – Half Year Results 2021 20

Bathroom Life

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Reece Group – Half Year Results 2021 21

Expanding our market-leading products

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Ryker

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Memo

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Kaden

Zurn

Reece Group – Half Year Results 2021 22

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ANZ branches
11
123
52
44
179
640
182
34
15
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Investing in the people experience

Culture

Our people are engaged and feel supported across the Group

Investing in our people

LXP, our innovative approach to blended learning Top 10 Graduate Employer

Business highlights

Digitising the customer experience in ANZ

Foundations for growth in the US

Business highlights

Foundations for growth in the US

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Reece Group – Half Year Results 2021 26
Investing in
our people
Launched our people promise
Focus on building long-term
capability
Strengthened commitment
to learning
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Reece Group – Half Year Results 2021 27

Understanding our customers

Understanding the local market

New store design trials

Rebuilding eCommerce approach

Reece Group – Half Year Results 2021 28

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US branches
189
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Economic commentary

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ANZ economic commentary

Dwelling Approvals

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(000s)
231 239 232
223
200
187 190
173 174
165
150
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
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Alterations + Additions

($ million)

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10,228
8,996
7,865 7,527 7,640 7,792 7,833 7,827 8,164 8,126 8,094
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
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Dwelling Completions
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(000s) 219 213 215
202
193 193
181
162 157
146 148
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
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Non-residential Commencements
47,543
($ million) 45,449 45,909
41,363 40,873
38,571 38,507 38,780
37,105
35,878
31,819
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
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Source: BIS Oxford Economics

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US economic commentary

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Single + multi-family housing starts
(000s)
Single -family housing starts 230
Multi-family housing starts 390 250
354 374 402
392
395
355
307
245
1,180
980 1,070
619 648 715 782 849 876 888
536
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E
Source: John Burns Consulting, J.P. Morgan forecasts as of July 2020
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Non-residential building construction expenditure

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(US$bn)
552
530 530
504
487 480
453 446
394
355 360
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E
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Source: FMI as of Q1 2020 (Includes both private and public expenditures)

Leading indicator of remodeling activity

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(US$bn / ROC%)
6.4% 6.3% 6.0% 6.1% 6.0% 6.3% 6.7% 6.8% 6.5% 6.2%
5.6%
4.5% 4.1%
3.4%
3.3% 2.9%
2.1% [2.2%]
1.7%
338 338 336 337
332
325 327 325 327
320
315
312
307 308
302 301
297 296
292
2017-1 2 3 4 2018-1 2 3 4 2019-1 2 3 4 2020-1 2 3 4 2021-1 2 3
Source: Joint Center for Housing Studies of Harvard University, LIRA and US Census Bureau as of June 2020
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Water supply construction expenditure (US$bn)

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17.3 17.3
15.5 15.9 16.1
13.0 13.6 13.4 13.4 13.9 14.2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E
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Source: FMI as of Q1 2020

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Agenda 04 01 02 03 Our focus Financial Business HY21 financial summary highlights performance

Reece Group – Half Year Results 2021 33

Financial highlights

Sales Normalised EBIT NPAT EPS Revenue EBITDA* up 4% up 12% up 15% up 17% up 2% to $3,074m to $349m to $236m to $123m to 19 cents from $2,962m from $313m from $205m from $105m from 18.7cents Half year 6 cents per share, fully Normalised up 81 bps dividend franked EBITDA 11.4% margin from 6 cents per share from 10.6%**

Normalised EBITDA excludes business acquisition costs and finance income/(cost) net. *EPS has been diluted in HY21 due to 85.2m shares being issued in the April 2020 Equity raising.

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ANZ segment performance

• Record increase in financial metrics • Sales revenue up 7% reflecting solid demand across all regions • EBITDA margin expansion of 80 bps a function of sales volume and operational discipline	Half Year 21 31 December 2020 (A$m) HY21 HY20 Var. (%)
	Sales revenue 1,564 1,465 7%
	Normalised EBITDA 235* 208 13%
	EBIT 175 152 15%
	Normalised EBITDA margin 15.0% 14.2% 80 bps

*Normalised EBITDA excludes business acquisition costs and finance income/(cost) net

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US segment performance

• Sales up 7% on a constant currency basis • Unfavourable FX impact $97m • Normalised EBITDA up 17% on constant currency basis • Expansion of 60 bps in EBITDA margin	Half Year 21 31 December 2020 (A$m) HY21 HY20 Var. (%)
	Sales revenue 1,509 1,496 1%
	Normalised EBITDA 114* 104 10%
	EBIT 61 53 15%
	Normalised EBITDA margin 7.6% 7.0% 60 bps

*Normalised EBITDA excludes business acquisition costs and finance income/(cost) net

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Cashflow

Net Working Capital (A$m)

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	Half Year 21 31 December 2020 (A$m)	HY21	HY20
	Normalised EBITDA*	349	313
	Net movements in working capital	(130)	(24)
	Non-cash items in EBITDA	3	3
	Income tax paid	(85)	(47)
	Finance costs	(38)	(44)
	Cash flow from operations	99	201
	Capital expenditure	(28)	(46)
	Proceeds from sale of assets	7	6
	Lease payments	(51)	(50)
	Dividends paid	(39)	(80)
	Cash flow before acquisitions and repayment of borrowings	(12)	31
	Business acquisitions/ investments	(13)	(186)
	Net proceeds from borrowings	(8)	130
	Net decrease in cash	(33)	(25)

*Normalised EBITDA excludes business acquisition costs and finance income/(cost) net

Reece Group – Half Year Results 2021 37

Balance sheet

Net Debt*

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(A$m)
716
648
716 647
FY18
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Net debt including lease liabilities

	(A$m)	HY21	FY20
	Cash and cash equivalents	954	1,005
	Senior debt	1,565	1,765
	Lease liabilities	647	716
	Net debt*	1,258	1,476
	Net Financial asset/ (liability) FX derivative	(71)	14
	Net debt including FX derivative impact	1,329	1,462
	Leverage Ratio (Net Debt / EBITDA)	1.9 x	2.3 x

Refer to Appendix B for detailed reconciliation to previously disclosed leverage ratios excluding lease liabilities

• Net debt is senior debt and lease liabilities less cash and cash equivalents and add/(less) net FX derivative **Normalised EBITDA excludes business acquisition costs and finance income/(costs) net

Summary

Reece Group – Half Year Results 2021 39

Summary

Record result

Resilient business model, providing an essential service

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Focus on what we can control Protect & Accelerate

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Reece Group – Half Year Results 2021 40

Q&A

Reece Group – Half Year Results 2021 41

Appendix A - FX bridge

(A$m)

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(97)
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Appendix B – AASB 16 Leases reconciliation

• AASB 16 was appliable to the Group for the first time in FY20

• FY20 leverage ratio was previously disclosed excluding lease liabilities

• Reconciliation below shows previously disclosed net leverage ratio and comparative leverage ratio including lease liabilities for the same period	• Reconciliation below shows previously disclosed net leverage ratio and comparative leverage ratio including lease liabilities for the same period
Excluding lease liabilities Including lease liabilities	(A$m) FY20
	Cash and cash equivalents 1,005
	Senior debt 1,765
	Net debt 760
	Net Financial asset(FX derivative) 14
	Net debt includingFX derivative impact 746
	Leverage Ratio_excluding_lease liabilities (Net Debt / Pre-AASB 16 EBITDA) 1.4 x Lease liabilities 716
	Net debt includinglease liabilities 1,462
	Leverage Ratio_including _lease liabilities(Net Debt/EBITDA*) 2.3 x

*Normalised EBITDA excludes business acquisition costs and finance income/(costs) net