The Reece Ltd (ASX: REH) share price will be one to watch on Friday.
This follows the release of the plumbing parts company’s half year results after the market close yesterday.
How did Reece perform in the first half?
For the six months ended 31 December, Reece reported a 4% increase in sales revenue to $3,074 million.
This was driven by a 7% lift in Australia and New Zealand sales revenue to $1,564 million and a 1% increase in US sales revenue to $1,509 million. The latter was up 7% in constant currency.
Things were even better for its earnings thanks to margin expansion. The company reported a 12% increase in normalised earnings before interest, tax, depreciation and amortisation (EBITDA) to $349 million. And on the bottom line, net profit after tax increased 17% to $123 million.
However, due to dilution caused by its $647 million balance-sheet strengthening equity raise at the height of the pandemic, earnings per share only grew 2% to 19 cents.
At the end of the period, Reece had a significant cash balance of $953.8 million.
However, despite this cash balance and its profit growth, Reece declared a fully franked interim 6 cents per share dividend. This was flat on the prior corresponding period.
Reece’s CEO, Peter Wilson, commented: “Through a period of continuing uncertainty, we have remained focused on supporting the essential work of our customers, and we’re proud to have delivered another record result.”
“Our response to the dual health and economic crises has ensured that we’ve protected our business today while also accelerating our strategy for long-term growth. The Reece Group strategy, business model, and people have proven resilient through this period and we are in a strong position to capitalise on future growth opportunities.”
No guidance or trading update was provided by the company.
How does this compare to expectations?
Analysts at Morgans were forecasting underlying EBITDA to be up 1% to $315.6 million. So, this result appears to have smashed its forecast. This could bode well for the Reece share price today.