At the time, Reece told investors it had run out of opportunities in Australia. It was already the No.1 player in an industry where it had a large chunk of the bathroom and plumbing supplies market.
So it headed to the US, where growth rates in the plumbing market were said to be twice as high as Australia’s.
Reece has had a bit of a rollercoaster ride in the US since.
Ready to roll
Supply chain issues hampered its performance during the COVID-19 pandemic, while its most recent earnings results showed improving EBIT margins to nearly 5 per cent.
Macquarie’s analysts said the recent result beat expectations, thanks to the US business’ performance.
Reece told shareholders in February it was focused on optimising the fundamentals of its existing business, but flagged potential growth opportunities across markets and formats.
The company also refinanced its US TLB debt with $1.25 billion in syndicated loans, which could be drawn in either Australian or United States dollars.
It comes as Reece shareholders have also had a rollercoaster ride. The stock hit at all-time high above $27 at the end of last year, only to give back 32 per cent in 2022 to date.
Still, it remains a first choice for plenty of industrial-minded fundies, who love both Reece and the Wilson family and have tracked it closely for decades.
Reece shares were trading at 19-times forecast EBITDA on Thursday and 37-times forecast earnings per share. The market (S&P/ASX 200) was at about 16.4 times 2022 and 2023 forecast profit, on Credit Suisse’s numbers.
