#1reece group™ ASX Announcement 27 February 2024 HY24 Investor Presentation Attached for release is Reece Limited's HY24 investor presentation for the 6 month period ended 31 December 2023. For further information contact: Georgina Freeman Investor Relations Reece Group E: [email protected] T: 0401 684 722 Siobhan Weaver Corporate Affairs Reece Group E: [email protected] T: 0477 480 813 This announcement has been authorised by Chantelle Duffy, Company Secretary at the direction of the Reece Limited Board. About the Reece Group Reece Group is a leading distributor of plumbing, waterworks and HVAC-R products to commercial and residential customers through approximately 900 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 9,000 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 group.reece.com/au. 57 Balmain St Cremorne Victoria 3121 Private Bag 109 Burwood Victoria 3125 T 61 3 9274 0000 F 61 3 9274 0199 ABN 49 004 313 133 group.reece.com/au#2reece Works for you. Half Year Results FY24 6 months ended 31 Dec 2023 reece re re MAXIMUM CLEA#3Disclaimer 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, 27th February 2024. 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. Group definitions are included in the appendix and supplementary information at the end of the presentation. 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 or calculation of components in tables contained in this presentation are due to rounding. Any discrepancies in the calculation of percentage movements in financial amounts from one period to another are due to rounding. 2 Reece. Works for you.#4Presenters 3 Peter Wilson Group CEO Andy Young Group CFO Reece. Works for you.#5Agenda E Treed 03 01 HY24 overview 02 Strategy recap 04 read Financial review 95 05 Outlook reece Works for you Operational review 06 THERMANN SL ELECTRIC Summary Reece. Works for you.#601. HY24 overview LO TH reece Poflag Kjdu fotec plies with ONTEN Reece. Works for you.#7CO Financial overview Strong execution supported solid result in subdued environment. Sales revenue up 2.5% to $4.5b ↑ Adjusted EBIT up 5% to $367m ↑ Adjusted NPAT up 6% to $224m لا Adjusted EPS ↑ up 6% to 35 cents ANZ Sales revenue US* Sales revenue Net leverage ratio up 2% to $2.0b flat to US$1.7b 0.7x Half-year dividend 8 cents per share (fully franked) *US sales revenue up 3% to A$2.6b All statutory metrics (EBIT, NPAT and EPS) included on slide 27 All Group definitions included on slide 28 Reece. Works for you.#8M 02. Strategy recap 3RDENT reece Reece. Works for you.#980 Our Blueprint Inspired by our Purpose Live the Reece Way Embrace Execute our 2030 Vision Strategic Priorities Deliver Customer Promise To improve the lives of our customers and our people by striving for greatness every day. Our purpose and values guide our decisions and our actions, big and small. We will be our trade's most valuable partner. Operational Excellence Customised service. Accelerating Q Innovation = Investing for Profitable Growth Reece. Works for you.#10Strategy positions Reece for long term success 1 6 A trusted brand with a differentiated customer proposition Clear track record 2 through economic cycles Diversified business 3 by region, segment & customer; R+R focus Large markets 4 with attractive long term fundamentals Long term view 5 with a multi decade time horizon Well capitalised 6 enabling investment to build a stronger business Reece. Works for you.#1110 03. Operational review ER AS CON reece Works for you. Reece. Works for you.#1211 Strong operational execution maintained in HY24 Operational Excellence • Ongoing focus on being brilliant at the fundamentals, • continuous improvement and delivery of our customer promise. Attracting and retaining talent to strengthen capability. Embedding The Reece Way in the US an ongoing priority. Accelerating Innovation • Innovation initiatives supporting trade of the future. Ongoing development in digitising and enhancing customer experience tools. Enhancing supply chain to ensure lean path to market. • Investing for Profitable Growth ANZ network upgrades and non-plumbing network expansion. US network expansion and Reece rebrand progressing well. 2030 Vision Reece. Works for you.#13ANZ network of scale 12 52 52 Network density continues to enable customer promise, ongoing investment in network standards. 10 44 186 15 124 185 655 Branches 39 Reece. Works for you.#1413 Building scale in the US Continuing to expand and upgrade network, and strong progress on Reece rebrand. reece reece reece 240 Branches reece reece Reece. Works for you.#1514 04. review Financial reece RS26 60°C 6* 9 26L 9505079 NG 17.5kg 60°C 6* 6 12 26L 26L N96 NG NG 60°C 6* 6 12 reece Reece. Works for you.#1615 Group financial highlights Statutory Sales ↑ Statutory EBITDA ↑ Statutory EBIT ↑ up 2.5% up 13% to $4.5b to $526m From $4.4b From $466m up 13% to $367m From $325m Statutory NPAT up 20% to $224m From $186m Statutory EPS up 20% to 35 cents From 29 cents ↑ Constant currency sales ↑ Adjusted EBITDA ↑ Adjusted EBIT ↑ Adjusted NPAT ↑ up 8% up 5% to $526m to $367m up 6% to $224m up 1% From $488m From $348m From $210m Adjusted EPS up 6% to 35 cents From 33 cents Adjusted (non-IFRS) metrics are statutory metrics adjusted to exclude government incentive scheme income (BAC income), impairment expenses and business acquisition costs All Group definitions included on slide 28 ↑ Reece. Works for you.#1716 ANZ financial highlights Focus on operational disciplines in softening trading environment. Sales up 2% • Backlog continued to support activity. to moderate during HY24. Adjusted EBIT up 6% • HY24 Growth driven by inflation which continued 31 December 2023 (A$m) HY24 HY23 Var. HY22 Sales revenue 1,972 1,928 2% 1,733 Adjusted EBITDA 307 287 7% 241 Adjusted EBITDA margin 15.6% 14.9% 72bps 13.9% Adjusted EBIT 233 221 6% 181 EBIT 233 198 18% 186 Continued focus on the fundamentals enabled solid performance despite macro headwinds. Disciplined management of cost base and wage inflation. Investment through the cycle to build a stronger business, focus on network standards and digital capability. Reece. Works for you.#1817 US financial highlights Ongoing operational uplift in challenging market conditions. Sales flat (US dollars) • Trading environment subdued. Modest deflation for the half. Adjusted EBIT up 2% (US dollars) • Continuing to embed fundamentals of the Reece model. • • Disciplined management of cost base and wage inflation. Investing through the cycle to build a stronger business, focus on network upgrade and expansion. AUD HY24 31 December 2023 HY24 HY23 Var. HY22 (A$m) Sales revenue 2,566 2,500 3% 1,867 Adjusted EBITDA 219 202 8% 148 Adjusted EBITDA margin 8.5% 8.1% 46bps 7.9% Adjusted EBIT 134 127 5% 89 EBIT 134 127 5% 89 USD HY24 31 December 2023 HY24 HY23 Var. HY22 (US$m) Sales revenue 1,683 1,678 0% 1,364 Adjusted EBITDA 143 136 6% 108 Adjusted EBITDA margin 8.5% 8.1% 46bps 7.9% Adjusted EBIT 87 86 2% 65 EBIT 87 85 2% 65 55 Reece. Works for you.#1918 Cashflow • • Improved operating cash flow. Net working capital to sales 18% (FY23: 19%). Increased investment in priority areas: branch refurbishments, rebrand, new stores, fleet and technology. Interest expense range of $65m - $75m* expected for full year. Anticipate ~30%* effective income tax rate for FY24. HY24 HY24 HY23 31 December 2023 (A$m) Adjusted EBITDA 526 488 Net movements in working capital (incl. FX) 4 (186) Non-cash items and BAC income (1) 15 Income tax paid (105) (90) Net finance costs (30) (24) Lease interest paid (16) (15) Cash inflow from operations 378 188 Capital expenditure (115) (88) Proceeds from sale of assets Dividends paid 8 7 (110) (97) Cash inflow before acquisitions 161 10 *Estimate is indicative only and based on current drawdowns, interest and exchange rates (excludes AASB16 Leases interest) **Estimate is indicative only and subject to US tax adjustment (LIFO) and repayment of borrowings Business acquisitions/investments (1) (49) Net repayment of borrowings (including leases) (193) (42) Net decrease in cash (33) (81) Free cash flow 341 139 Reece. Works for you.#2019 Balance sheet HY24 HY24 FY23 31 December 2023 (A$m) Cash 337 373 Trade and other receivables 1,230 1,338 • Strong balance sheet provides flexibility through the cycle. Inventories 1,441 1,505 Other current assets 3 US$300m USPP note issuance, diversifying funding sources and extending average maturity. Total current assets 3,008 3,219 PPE and leases 1,641 1,586 Intangible assets 1,953 2,021 HY24 31 December 2023 HY24 FY23 Other non-current assets 101 98 Total non-current assets 3,695 3,705 Net leverage ratio 0.7x 0.9x Trade and other payables 1,041 1,179 Average debt maturity 5.4 years 3.2 years Other current liabilities 244 242 Available liquidity $1,463m $944m Total current liabilities 1,285 1,421 Interest bearing liabilities 947 1,097 Net debt $610m $725m Other non-current liabilities 798 781 Return on capital employed 16.1% 15.3% Total non-current liabilities 1,745 1,878 Net assets 3,673 3,625 Net tangible assets ratio 2.58 2.41 Reece. Works for you.#21Capital management priorities 20 20 01. Enable sustainable long term growth 02. 03. Invest in growth Organic investments and M&A. Strong balance sheet With flexibility for growth. Shareholder returns Dividends, share buyback. Reece. Works for you.#2205. Outlook 21 21 Reece. Works for you.#23H2 Outlook • • Anticipating subdued demand environment to continue; softening in ANZ. Medium to long term industry fundamentals remain supportive. • Reece approach remains unchanged. 22 22 • • Focus on customer proposition and being brilliant at the fundamentals. Disciplined approach to costs while maintaining customer proposition. • Investing through the cycle to build a stronger business. reec NIN THE reece Works for you. 00#2423 23 06. Summary THERMANN™ 25L ELECTRIC VATER HEATER TERMARK APPROVED nnneeering reec ece plumbing centres COMTRUK Reece. Works for you.#2524 DO Summary Grks for you. Solid Result Subdued environment Long term Focus Investing for the Future Reece. Works for you.#2625 25 reece group™#27Appendix and supplementary information 26 Reece. Works for you.#28Key metrics Reconciliation from Statutory EBIT to Adjusted EBIT Reconciliation from Statutory NPAT to Adjusted NPAT HY24 HY24 HY24 HY23 Var. HY24 HY23 Var. 31 December 2023 (A$m) 31 December 2023 (A$m) EBIT (statutory) 367 325 13% NPAT (statutory) 224 186 20% Add back/deduct: Add back/deduct (tax effected): BAC income Impairment (7) BAC income 29 Impairment Business acquisition costs Adjusted EBIT 1 Adjusted NPAT 367 348 5% EPS (statutory) - (5) 29 224 210 6% 35 cents 29 cents 20% Adjusted EPS Reconciliation from Statutory EBIT to Adjusted EBITDA 35 cents 33 cents 6% (based on adjusted NPAT) HY24 HY23 Var. 367 325 13% HY24 31 December 2023 (A$m) EBIT (statutory) Add back/deduct: BAC income (7) Depreciation and amortisation 159 140 Impairment 29 Business acquisition costs 1 Adjusted EBITDA 526 488 8% 27 27 Reece. Works for you.#2928 Group definitions 1 Adjusted EBITDA 2 Net leverage ratio 3 BAC income 4 Free cash flow 5 Available liquidity Return on capital employed 7 Net tangible asset ratio 8 Constant currency basis EBITDA adjusted to exclude government incentive scheme income (BAC income), impairment expenses and business acquisition costs Net debt over 12-month rolling EBITDA, calculated on a pre-AASB16 Leases basis Income from Boosting Apprenticeship Commencements (BAC) government incentive scheme Adjusted EBITDA less net movements in working capital, income tax paid and lease payments Cash plus headroom on the Group's available facilities at period end 12-month rolling Adjusted EBIT as a percentage of shareholders equity plus net debt Net assets less intangible assets, over the number of ordinary shares fully paid on issue (as reported in the Appendix 4D) Constant currency basis applies the same US foreign exchange rate of 0.6717 from HY23 to current period sales to eliminate the foreign exchange impact when comparing sales to pcp Reece. Works for you.#3029 29 FX impact on sales 1,972 2,505 60 99 4,537 ANZ Sales US Sales FX impact HY24 Sales Reece. Works for you.