RWC - Reliance Worldwide Corporation

[Trav.]

resistance drawn at $3.12 where the small gap occurred (3.12 to 3.20). Holding

Broke through my resistance level to close @ $3.14 (high of $3.18), volume picking up and happy to continue to hold.

 

[Boggo]

Broke through my resistance level to close @ $3.14 (high of $3.18), volume picking up and happy to continue to hold.

I'm still in the red on this but holding on too.

Next area of potential decision.

(click to expand)

 

[Trav.]

I like the look of that last weekly bar. up 15%.

I was lucky enough to get in at $2.43 so looking at a nice winner here. But I'm sure that you will get back in the green soon enough.

 

[Trav.]

Interesting spike in volume today, maybe some profit taking ? or just the big boys shuffling some shares around.

 

[Boggo]

I'm still looking at it from a weekly view but the daily VSA is not saying nice things after today.

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[Trav.]

Yes I like Karthik Marar and reference his work often.

We will need to watch for confirmation tomorrow but I think we can smell something fishy going on here. I was tempted to exit today but trying very hard to follow the system.....

Confirmation required -

A wide spread down-bar that appears immediately after any up-thrust,
tends to confirm the weakness (the market makers are locking in traders into poor positions).
​

@Boggo are you using VPA V.3.0 or 4.0 ? as I am only getting the up-thrust signal on V.3.0

 

[Boggo]

Yes I like Karthik Marar and reference his work often.

We will need to watch for confirmation tomorrow but I think we can smell something fishy going on here. I was tempted to exit today but trying very hard to follow the system.....

Confirmation required -

A wide spread down-bar that appears immediately after any up-thrust,
tends to confirm the weakness (the market makers are locking in traders into poor positions).
​

@Boggo are you using VPA V.3.0 or 4.0 ? as I am only getting the up-thrust signal on V.3.0

Looks like I may have to update, I'm still on Version 1.2 !

 

[Trav.]

Closed out my position on RWC today @ $3.29 as I've had a good run and resistance of $3.32 looks be holding at this stage anyway.

~35% gain over 1 month si very nice...so another couple of big fat rabbits for me.

 

[Boggo]

Follow on from here...
https://www.aussiestockforums.com/posts/1074355/

Touched the first potential resistance today and then the sellers moved in.

Based on recent run up to here I think (and hope ) it has more upside still.

(click to expand)

 

[Dona Ferentes]

Resilient American householders more inclined to tackle a plumbing job rather than call in a plumber helped offset a sharp fall in sales in Europe for Reliance Worldwide Corp during Covid. Chief executive Heath Sharp said there was still high volatility in the market after a partial rebound in sales in July/ August, but making predictions about customer behaviour in the UK and Europe, in particular, was fraught. But buoyant results out of Reliance's US market helped trigger a 17 per cent surge in the share price [following release of FY results].

The US makes up about 50 per cent of the plumbing supplier's overall business and the impact of COVID19 that market was in stark contrast to Europe, which comprises about 35 per cent of the operations.

In the June half, sales in the Americas region jumped 19 per cent as plumbers headed to hardware stores to stock up on items they were having trouble sourcing from wholesalers, while DIY enthusiasts also spent up as they had a go at home plumbing jobs themselves.

But in the UK and Europe, sales fell 20 per cent because of harder lockdowns by the British government and ''cultural'' and licensing issues, which mean professional plumbers are virtually the only avenue for repairs and renovations. There is more of a mindset in the United States to tackling those DIY projects, Mr Sharp said. While there had been some pent up demand in the UK, there was still major uncertainty. The UK business is not back to normal by any stretch, he said.

Net profit fell 33 per cent to $89.4 million, even though net sales revenue rose 5 per cent to $1.16 billion. The company will pay a final dividend of 2.5¢, which is half the payout a year ago.

Reliance is also scrutinising its global supply chain and Mr Sharp said the company would rely less on output from China in the future.

"There's a lot to be said for making close to the market. We are looking globally at our supply chain and where we are making our products."

 

[Dona Ferentes]

the self-reliance (pardon the pun) of home owners continues .. up 10% to near pr-Covid trading.


Sales are continuing to surge in its big northern hemisphere markets due to do-it-yourself repairs and renovations as people stay home during the pandemic.

Sales have been strongest in the Americas and Europe, the Middle East and Africa (EMEA) regions. Americas sales leapt 29 per cent in the month to September 25, and EMEA sales jumped 24 per cent compared with the previous consecutive period. The increases follow sales jumps in August in the two regions

Australian-Pacific sales were up 4 per cent in September, compared with a 2 per cent drop in August.

"The first quarter of the 2021 financial year has been particularly strong from a sales perspective," said chief executive Heath Sharp said on Thursday ahead of an investor day. But he warned the company remained cautious about the future.

"Given the continuing uncertainties in all our markets as a result of COVID-19, we would caution against extrapolating the first quarter's sales performance for the full year."

The US has been boosted by a surge in DIY activity due to a shortage of plumbers and the return of construction activity to pre COVID-19 levels, but without further government stimulus this growth was likely to slow, Reliance said.

The company also expects some softening in the Australian market due to a drop in new housing construction approvals, which is expected to reduce building activity and has forecast a 10 per cent sales drop for 2021 with "a chance to be flat dependent on bounce back from COVID-19."

 

[peter2]

RWC reported good and improving results.

The severe cold weather in Texas has burst many water pipes. Texans will be heading to RWC to buy the Sharkbite fittings.
I bought an initial position yesterday (before earnings) and added more today on the dip. The chart shows a two year resistance line near 5.00. That's the first hurdle to overcome for higher prices.

 

[Dona Ferentes]

and again... nice set of numbers. RWC got to 2+ year high but has given back the 5% morning lift

Strong sales growth was recorded in all regions, reflecting buoyant demand for plumbing products, driven by increased spending on residential repairs and remodelling in particular. A significant weather freeze event in the US in February also boosted demand for plumbing supplies in the quarter. We estimate that the impact of the freeze event accounted for over half of the sales increase in the Americas (up 38%) for the quarter. Sales in APAC (up 11%) were driven by continued strength in the residential new construction market in Australia and growth in remodelling activity. Export sales to the Americas were up strongly.

However, cost pressures are emerging. So far, so good (but push back always happens).

RWC is continuing to implement price rises for products which have seen sustained input cost increases, particularly brass products which have been impacted by higher copper and zinc costs. We continue to expect to be able to pass on the impact of metal commodity and other cost increases through price adjustments. Commercial confidentiality prevents us from elaborating further other than to re‐iterate that the process is progressing as expected.

“In terms of pricing increases, our largest OEM customers are on indexed pricing and therefore adjustments have already been made. For our wholesale customers, we note that the market overall is moving a second time this year to pass through higher copper cost impacts. “Pricing discussions with other channel partners are progressing and we remain confident of achieving acceptable cost recovery outcomes”.

 

[Dona Ferentes]

Reliance Worldwide has declined to provide 2021-22 guidance due to the ongoing uncertainty surrounding market conditions and any potential impacts of further COVID outbreaks.

Perhaps it wonders if the flood of assistance to home building and construction in many of its markets from governments and central banks might be overwhelmed this time by Covid Delta?

But the company has benefited from record low interest rates and support schemes such as Homebuilder in Australia, that sparked a surge in construction of new homes and renovations, and by the upturn in online sales that saw a surge in the construction of logistics facilities such as warehouses and depots.

RWC yesterday reported that it more than doubled full year profit on a much slower rise in revenue, enabling it to triple its final dividend payout after heightened home building and renovation activity during the pandemic helped it beat sales expectations.

Reliance reported that profit had more than doubled to $188.5 million on a 15.3% to $1.34 billion, a figure better than the market was forecasting.

Final dividend rose from 2.5 cents in 2019-20 to 7 cents per share, partially franked. With the 6 cents a share interim, the total for the year is 13 cents a share, almost double the 7 cents a share paid for 2019-20.

Investors focused on the CEO’s remarks about tougher trading conditions in recent weeks because of Covid, even though sales were up:

CEO Heath Sharp said: “We experienced positive sales growth over the equivalent period in the prior year in all three regions with reported net sales in July up 9% overall and 6% on a constant currency basis.

“The rate of growth was lower than for FY2021, reflecting very strong sales growth in the Americas at the start of FY2021 and the strong recovery in volumes experienced in the UK from July 2021 onwards. Australian sales maintained their growth momentum supported by growth in residential construction activity.

“Underlying demand remains strong, but sales are being constrained by ongoing supply chain disruption including raw materials availability, shipping delays, and a shortage of labour in plumbing trades.”

He said the company will update investors each quarter on trading conditions in its three regions, including sales and operating earnings.

Looking at 2020-21, Reliance said increased consumer spending on repair and remodel activity in all key markets – coupled with increased new residential home building activity – underpinned its result, while the winter freeze event in Texas in early 2021 also lifted sales demand.

Full-year net sales in the Americas grew 14% driven by the strength of the residential repair and remodelling markets in the US and Canada. Asia Pacific sales were up 13% higher for the year with external sales up 11%, reflecting stronger Australian new housing construction and remodel (renovation) markets.

Higher commodity prices for copper, resins and steel pushed up manufacturing input costs, while higher packaging and freight costs combined to hit earnings by $16.9 million.

Disruptions arising from the incidence of COVID cases in the UK, Europe and the US also put additional pressure on our operations due to increased employee sickness and absenteeism as well as supply chain and logistics disruptions,” Mr Sharp said.

 

[peter2]

While I'm in this jovial mood let me tell you another story. I recently bought into RWC again after last years nice trend. Now, RWC has this annoying habit of opening gap up and selling off all day to close at a low. It's done this the last two days (prior to today) and the gap up opens were very near to my T1 target of my first entry (for the Combo portfolio). This morning I placed a limit sell at the T1 (5.40) price level. About one minute before the open the estimated open price was 5.25 so I wasn't expect my order to trigger.

There was a nice surprise awaiting me after the open which was 5.55! Thankfully, I stuffed the +1.5R win into the bag. It's so nice when an unlikely plan comes together. I'll wait for another setup to re-buy RWC as I think it and REH can rebound soon.

Both RWC and REH are worthy medium term trades (oncoming US winter).

 

[peter2]

The short term gain mentioned in the prior post was very pre-mature as price continued higher to 6.50. Taking the short term profit means missing out on a bigger profit as I didn't consider a re-entry (rookie error) when price went higher.

However since Jan22 price has fallen significantly lower to 4.00. It's impossible to know why the selling was so strong. Concerns about supply, higher inventory costs, inflationary forces etc.

Price seems to have found some support at 4.00 as it hasn't gone lower. I've bought some RWC today as I think the R:R is acceptable here. I would call this an aggressive entry into a possible reversal as there hasn't been a retest of the low (or higher low).

 

[Ann]

However since Jan22 price has fallen significantly lower to 4.00. It's impossible to know why the selling was so strong. Concerns about supply, higher inventory costs, inflationary forces etc.

Wondering if the sell-off was due to it failing the 200dsma.
I see a lovely big volume spike at the bottom, noticing more and more as I look into volume spikes this may herald a rise.

 

[Ann]

Or perhaps it was the combination of the 200dsma and the rising trendline support that failed and caused the dramatic fall? Sorry, I should have taken more time to look at this chart before posting! Slack!

 

[Dona Ferentes]

Reliance Worldwide said a fall-off in new housing starts in Australia in the June half put its Australian operations under pressure. CEO Heath Sharp described the performance in 2022-23 of Reliance as resilient.

• net profit after tax up 2 per cent to $US139.7 million.
• sales in the Asia-Pacific region slipping 4 per cent overall in the 12 months ended June 30.
• The Americas division generated sales growth of 13 per cent as it benefited from a full-year contribution from the EZ-Flo plumbing connections business in the United States ( purchased in Nov 2021)
• final dividend kept steady at 9.5 cents per share

 

[Dona Ferentes]

Has RWC been caught up in the 'bursting pipes' saga, that is affecting FBU? Has dropped nearly 10 per cent over the past few days.

.
There's been nothing on the website or on the wires. I trust they are 'true to label' and maintain a superior product.