Ann: HY21 Investor Presentation, page-3

Given what it's achieved in a few short years in the USA, and the headwinds such as Daniel Andrews' lockdowns/curfew/five kilometre travel restrictions in Australia/NZ/USA from 'the virus', this is a pleasing or at worst a solid result depending on one's perspective.

REH now has almost 50 per cent of its sales (A$1509m in the period) in the USA against $1564m in Australia and New Zealand. Yet there's just 189 branches in the USA compared to 640 in Oz/NZ, so the sales per outlet in USA must be much higher.

While margins in the USA are only about half of Australia's (7.6 per cent against Oz's/NZ's 15 per cent), it's great that net margins expanded respectively from 14.2 and seven per cent in the previous comparable period.

That NPAT rose 17 per cent is stellar when one considers the wildly appreciating A$ (against the US$) meant an adverse foreign exchange 'hit' of A$97m if I can put it that way. Overall, sales rose well ahead of population growth.

REH was also hit by coronavirus in that USA-based staff may have contracted it and some stores over there closed for periods which was not the case in Australia.

Despite that A$7.60 a share issue around April 2020, EPS managed to rise form 18.7 cents to 19 cents.

Non-residential commencements have been depressed in Australia, not something I see as changing in the short term as immigration is likely to be lower for a while, if not in perpetuity as there's community pressure to cut arrival numbers. If (heaven forbid) a Federal Labor government was elected, it would almost certainly ensure immigration rose markedly.

It was great that REH managed to keep its Oz outlets open as they truly are an essential service in my book. Plumbers prevent so many residential, commercial and industrial building problems.

Debt is reducing but I'll leave it to qualified others to opine whether it is still too high.

The great aspect for REH holders is that in Australia, in some subsectors the company faces limited competition. Every plumber I've ever engaged with knows and uses Reece, although very few appear to be aware it's a public company in which they can hold shares.

The share price appreciation since the early 2020 issue has been wonderful but it's important that REH has not lost focus on building a sustainable business here and in the USA/NZ for the future.