RWC’s Adjusted EBITDA Climbs 15.2% to $143.8 Million in H1 FY25

Strong First Half Performance

Reliance Worldwide Corporation Limited (RWC) delivered a robust first half for the fiscal year ending December 31, 2024, with net sales climbing 14.8% to US$676.5 million. This growth was largely underpinned by the strategic acquisition of Holman Industries, which contributed six months of sales, alongside organic growth in key markets such as Australia and a pull-forward of demand in the Americas.

Adjusted EBITDA rose 15.2% to US$143.8 million, reflecting not only higher sales but also improved operational efficiencies. The adjusted EBITDA margin edged up to 21.3%, and when excluding Holman, margin improvement was even more pronounced, rising to 22.2% from 21.2% in the prior corresponding period.

Segment Performance Highlights

The Americas segment showed resilience with sales up 3.3% to US$440.6 million, or 5.4% excluding the discontinued Supply Smart model. This was supported by new product introductions and early ordering ahead of an ERP upgrade, which was successfully completed during the period. Adjusted EBITDA in the Americas increased 8.9%, with margins improving to 21.0%.

Asia Pacific sales surged 90.5% on a reported basis to US$150.3 million, driven primarily by Holman’s integration. Excluding Holman, sales were flat, reflecting ongoing weakness in new home construction in Australia. The segment’s adjusted EBITDA more than doubled, boosted by Holman synergies and cost rationalisation, including the closure of distribution centres.

Conversely, the EMEA region faced headwinds with sales down 4.0% in reported currency and 7.0% in local currency, reflecting subdued residential remodel and new construction markets, particularly in the UK. Despite lower volumes, adjusted EBITDA margin improved slightly to 29.2% due to cost reduction initiatives.

Financial Position and Cash Flow

RWC’s net profit after tax rose 31.8% to US$67.2 million, including one-off items. Adjusted net profit after tax increased 12.3% to US$76.0 million, with adjusted earnings per share up 14.0% to 9.8 US cents. Operating cash flow was US$127.0 million, down 16.2% from the prior year, impacted by higher working capital following the Holman acquisition. Cash flow conversion was 88.3% of adjusted EBITDA, below the prior period’s 121.5%.

Net debt decreased slightly to US$380.6 million, with leverage at 1.41 times EBITDA, below the company’s target range of 1.5 to 2.5 times. The weighted average debt maturity stands at 6.2 years, with 62% of debt at fixed rates and a cost of funding of 4.83%.

Dividend and Capital Management

RWC declared a total distribution of 5.0 US cents per share for the half-year, split evenly between an unfranked cash dividend and an on-market share buy-back, representing 58% of reported NPAT. This aligns with the company’s policy to distribute 40-60% of annual NPAT, balancing shareholder returns with capital management.

Outlook and Market Conditions

Looking ahead, RWC remains cautious. Despite some easing of interest rates in the US and UK, residential markets continue to face pressure from high mortgage rates and weak new construction activity, particularly in Australia and the UK. The company expects full-year FY25 external sales growth of mid-single digits, driven by Holman, but flat sales excluding Holman and Supply Smart.

Segment outlooks vary: the Americas anticipate broadly flat sales excluding Supply Smart, Asia Pacific expects mid-single digit growth excluding Holman, while EMEA sales are forecast to decline by mid-single digits. RWC aims to further improve adjusted EBITDA margins through ongoing cost reductions and synergy realisation.

Capital expenditure is forecast between US$35 million and US$40 million, with operating cash flow conversion targeted above 90%. The adjusted effective tax rate is expected between 18% and 21%, and net interest expense in the range of US$28 million to US$30 million.