Operator

Thank you for standing by, and welcome to the Reliance Worldwide Corporation Full Year Earnings Call. [Operator Instructions]

I would now like to hand the conference over to Heath Sharp, CEO. Please go ahead.

Heath Sharp
CEO, MD & Director

Good morning, everyone. Welcome to RWC’s Financial Year 2026 Results Call. This is Heath Sharp, and I’m joined here in Sydney by Andrew Johnson, our CFO.

This morning, we released our full year results material. But before we turn to the results, I want to deal with our second announcement this morning. So let’s start on Slide 3 of our presentation.

RWC has entered into a process deed with Brookfield Capital Partners on August 17. This relates to Brookfield’s unsolicited nonbinding indicative proposal to acquire RWC for AUD 4.75 cash per share. The proposal follows earlier approaches from Brookfield at $4.15, $4.25 and $4.50 per share, which the board considered insufficient.

Following a period of engagement including providing Brookfield with nonpublic information over an approximately 8-week period, Brookfield submitted its current $4.75 proposal. The proposal values RWC at an enterprise value of approximately AUD 4.1 billion. This represents an FY ’26 EV-to-EBITDA multiple of 12.9x on a pre-AASB 16 basis. This is at the upper end of

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SYDNEY — The S&P/ASX 200 traded modestly higher Tuesday afternoon, up 5.9 points, or 0.07%, to 9,079.1 as of 2:25 p.m. AEST, as a wave of strong earnings from healthcare and materials heavyweights offset weakness across much of the broader Australian market during the peak of the country’s corporate reporting season.

By midday, the benchmark had climbed 0.1% to 9,084 points, according to market tracking, with strong results from BHP, CSL, Pro Medicus and Cochlear helping lift the healthcare sector by a striking 7.3% on the day, even as the broader market remained largely in negative territory. Materials and energy sectors also advanced, up 1.2% and 0.7% respectively, while consumer staples, telecommunications and financials all weighed on the index, falling 1.3%, 1.2% and 1.1% respectively.

Tuesday’s session followed a soft finish to Monday’s trade, when the ASX 200 fell 42 points, or 0.46%, to close at 9,073.2, while the broader All Ordinaries index dropped 34.2 points, or 0.37%, to 9,279. Energy and raw materials were the only sectors to finish Monday’s session convincingly higher as commodity prices provided support.

Global mining giant BHP posted a surge in profit driven by elevated copper prices, contributing significantly to Tuesday’s gains in the materials sector. Meanwhile, biotech giant CSL reported its first annual loss since the company listed on the ASX in 1994, a historic milestone that nonetheless failed to dent investor enthusiasm, with CSL shares among those propelling the healthcare sector’s outsized gain for the day. Diagnostic imaging software company Pro Medicus and hearing implant maker Cochlear also posted strong results that added to the sector’s rally.

Elsewhere in Tuesday’s earnings news, Bendigo and Adelaide Bank was hit with a $70 million financial penalty tied to risk management failures, a development that weighed on the broader financial sector alongside other factors pressuring bank stocks during the session.

Plumbing products manufacturer Reliance Worldwide reported lower adjusted earnings, citing the impact of tariffs, higher copper input costs and softer sales volumes. The company’s board separately confirmed it had received an unsolicited takeover proposal from investment firm Brookfield, a development that prompted the board to withdraw its planned final dividend as the two parties work toward a binding Scheme Implementation Deed. Exclusivity restrictions tied to the proposal apply for four weeks, running through Sept. 15, and the Reliance Worldwide board has recommended shareholders take no immediate action while the proposal remains subject to confirmatory due diligence.

Insignia Financial, the wealth management platform operator, reported record platform net inflows of $18.9 billion for the year, in line with analyst estimates, while lifting its platform market share to 9.9% as of March 31, up from 8.6% a year earlier. The company’s total dividend for the financial year rose 39% to 78.0 cents per share, fully franked, and it set a fiscal 2028 platform funds-under-administration target of between $186 billion and $200 billion.

Energy producer Amplitude Energy delivered record full-year production, revenue and cash flow figures, driven by strong output from its Orbost facility as the company continues progressing its East Coast Supply Project. Sales revenue rose 7% to $285.8 million on higher sales volumes and a 5% increase in average realized gas prices to $10.36 per gigajoule, while underlying earnings before interest, tax, depreciation, amortization and exploration expenses rose 12% to $191.8 million at a 67% margin.

Monday’s session had also featured significant earnings-driven volatility. JB Hi-Fi shares crashed 12% following the release of the electronics retailer’s results, even as the company reported record full-year sales. Brokerage firm Bell Potter characterized the sell-off as a potential buying opportunity, retaining its buy rating on the stock while trimming its price target to $81.00 from $87.00, implying potential upside of roughly 13% along with an expected 4.4% dividend yield for fiscal 2027. In a note to clients, Bell Potter wrote that while it anticipates “challenging trading conditions over the next ~9 months for the overall Consumer Discretionary sector” with fiscal 2027 representing “the cyclical low point for most retailers,” the firm sees JB Hi-Fi positioned to “relatively outperform the peer group from 2H27e onwards.”

Property group Lendlease also fell sharply Monday, diving more than 11% after the real estate developer swung to its fourth annual loss in five years, driven by continued write-downs tied to its messy retreat from various international markets. Rail freight operator Aurizon likewise declined by a similar margin Monday despite reporting a 24% increase in full-year profit to $463 million, illustrating the extent to which investor reaction to earnings season results has, at times, diverged sharply from the underlying financial performance being reported.

Looking ahead, Santos, Evolution Mining, Temple & Webster, Whitehaven Coal and Mirvac are scheduled to report results Wednesday, with July employment figures due for release Thursday, continuing a heavy stretch of scheduled economic and corporate data expected to keep driving volatility across the Australian market this week.

The Australian dollar traded at its highest level in 11 weeks Tuesday, buying 71.22 U.S. cents, up from 70.68 U.S. cents at 5 p.m. AEST Friday, reflecting broader currency market dynamics playing out alongside the domestic earnings season.

Ahead of Tuesday’s open, ASX 200 futures had pointed to a soft start to the session, down 0.4% at 7 a.m. Sydney time, following a weaker overnight lead from Wall Street. The Dow Jones Industrial Average fell 0.5%, the S&P 500 lost 0.5% and the Nasdaq Composite slipped 0.3% overnight, with 10 of the S&P 500’s 11 sectors finishing lower. Energy was the sole standout sector on Wall Street, supported by Brent crude prices nudging toward $91 a barrel amid renewed concern over instability in the Middle East, where an anticipated period of calm has shown signs of proving short-lived.

The ASX 200 remains well below the all-time high of 9,198.6 points it reached in February, having settled closer to the 8,800 level by July before recovering some ground through August’s earnings season. With reporting season set to continue through the remainder of the week, investors are likely to remain focused on how individual company results, particularly from the materials, energy and consumer sectors still due to report, shape the index’s trajectory heading into the final stretch of August trading.

Mumbai: Mid- and small-cap companies delivered strong earnings performance in the June quarter, posting their sharpest revenue growth in 16 quarters, shrugging off the impact of rising commodity prices, mainly oil, amid West Asia conflict.

Of the sample of 113 companies in the Nifty MidCap 150 index, aggregate revenue in April-June climbed 20%, its biggest jump since June 2022, from the same period a year ago. Operating profit rose 27%, extending its streak of double-digit growth to 13 quarters, according to Capitaline data. Aggregate net profit surged 23% year on year, marking the second consecutive quarter of double-digit growth.

Total costs increased 17.2% year on year, the sharpest rise in 14 quarters.

The smallcap segment recorded an even stronger performance. Of the sample of 213 companies in the Nifty SmallCap 250 index, aggregate net profit surged 42.5%, its biggest jump in six quarters. Revenue rose 19.3%, its strongest growth in 14 quarters, while operating profit increased 27.5%, its biggest jump in five quarters. Total costs rose 18%, the sharpest increase in 13 quarters.

“A favourable base has certainly helped smallcaps,” said Siddhartha Khemka, head of research, Wealth Management, Motilal Oswal Financial Services. “The June-quarter numbers represent a combination of favourable base effects, revenue growth, operating leverage, improving margins and some low-base and loss-to-profit benefits.”

The sample for both indices excludes banking, financial services, insurance, and oil and gas companies. Vodafone Idea has also been excluded from the small-cap index as it reported a large one-time gain in the March 2026 quarter.
The better-than-anticipated results fuelled the run-up in the mid-cap and small-cap stocks. The Nifty MidCap 150 and Nifty SmallCap 250 gained 17% and 24.5%, respectively. In comparison, the Sensex gained nearly 6.3% during the quarter, while the Nifty advanced 6.8%.
Read more: Gold appears set for a rebound as it regains safe-haven appeal after US-Iran war selloff

Within midcaps, metals, technology, pharma and select companies were among the stronger contributors, while in smallcaps, chemicals, metals, building materials, auto and select industrial and consumer-facing businesses led the earnings growth.

Market participants said the earnings growth is supporting the elevated valuations of mid-cap and small-cap stocks. “Given the valuation levels, investors may need a longer horizon to allow that earnings potential to play out,” said Harshad Borawake, Head of Research & Fund Manager, Mirae Asset Mutual Fund. “Our approach, therefore, is to stay bottomup — backing individual ideas on their merits rather than making a top-down call on the index or any one sector.”

The Nifty’s current estimated Price to Earnings (PE) ratio is at 22 times, compared with its 10-year average of 23.5 times. The Nifty MidCap 150’s PE ratio based on reported earnings stood at 33 times, against its five-year average of 34, while the Nifty SmallCap 250’s stood at 32 times, above its five-year average of 29 times.

NEW YORK — The Nasdaq Composite edged higher Monday morning, climbing 25.30 points, or 0.095%, to 26,754.47 as of 9:36 a.m. EDT, as investors weighed the Federal Reserve’s next policy move ahead of this week’s Jackson Hole symposium and braced for a slate of major retail earnings reports expected to offer fresh insight into the health of the American consumer.

The modest gain came after U.S. stock futures wavered heading into Monday’s open. Futures on the Dow Jones Industrial Average slipped 0.2%, while S&P 500 futures gained 0.1% following the benchmark index’s third consecutive weekly advance. Nasdaq-100 futures had risen 0.5% ahead of the opening bell, reflecting a relatively calm week on Wall Street heading into a stretch that market participants expect to bring renewed volatility.

Big-box retailers including Walmart, Target, Lowe’s and Home Depot are scheduled to report quarterly results this week, providing investors with a closely watched read on consumer spending patterns during the critical back-to-school shopping season. The reports come at a moment when broader consumer sentiment data has shown signs of deterioration, adding weight to how markets are likely to interpret the retail sector’s performance.

Traders have recently pulled back the odds of a September interest rate cut from the Federal Reserve following its Jackson Hole meeting to less than one-third, according to market pricing, as a mix of inflation and jobs data has painted an increasingly mixed economic picture. Oil prices have remained a key variable for both markets and the central bank, with Brent crude closing in on $90 a barrel as fighting between Israel and Iran-backed Hezbollah dealt a fresh setback to efforts aimed at ending overlapping conflicts in the Middle East.

Monday’s modest advance followed a softer finish to last week. On Friday, the S&P 500 eased 0.2% from its record high, while the Dow Jones Industrial Average shed 108 points, or 0.20%, to close at 53,732 points, and the Nasdaq 100 slipped 0.1%. Declines on the Dow were led by Salesforce, down 2.25%, Cisco Systems, down 1.67%, and Amgen, down 1.28%. Those losses were partially offset by gains in Walt Disney, up 2.05%, Chevron, up 1.16%, and UnitedHealth, up 0.61%.

Friday’s pullback came alongside weaker-than-expected economic data. The University of Michigan’s preliminary August consumer sentiment index fell to 51.0, down from 55.2 in July and well below the 55 economists had forecast, marking a roughly 8% monthly decline that ended two consecutive months of improving sentiment. Survey director Joanne Hsu attributed much of the decline to worsening expectations for future business conditions. “Consumer sentiment fell about 8% this August, ending two consecutive months of improvement. While views of personal finances saw only minor declines, expected business conditions sank 11% for the short run and 17% for the long run,” Hsu said. She added that the decline was broad-based across political affiliations, noting that “decreases in sentiment were seen across the political spectrum, with Republicans exhibiting the strongest month-to-month decline in August.”

Inflation expectations also ticked higher in the same survey, with one-year expectations rising to 4.3% in August from 4.2% in July, a figure that remains well above the 3.4% level that prevailed before the recent conflict involving Iran began affecting global energy markets.

Retail sales data released last week added to the mixed economic picture. July retail sales declined 0.6%, a significant miss relative to the 0.1% increase economists polled by Dow Jones had expected, following a 0.2% gain in June. Excluding automobile sales, retail sales fell 0.3% in July, compared with expectations for a 0.2% gain. Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research, described the miss as notable. “The retail sales report came in much softer than expected,” Martin said, though he noted the weakness partly reflected lower gasoline prices and declining auto sales rather than a broader pullback in consumer spending.

Despite the softer data, individual stock stories have continued to draw investor attention within the technology and semiconductor space. Storage and semiconductor makers including Sandisk and Micron Technology rallied in premarket trading Monday. Sandisk in particular has been a standout performer in 2026, having risen roughly sixfold this year on the back of surging memory demand tied to the broader artificial intelligence buildout. JPMorgan recently upgraded the stock to overweight from neutral, setting a $2,250 price target that implies significant additional upside from recent trading levels, citing the company’s positioning within a tightening global memory supply chain.

With no major economic data releases scheduled for Monday itself, according to a market preview from Charles Schwab, investor attention is expected to shift more heavily toward Tuesday’s slate, which includes July housing starts and building permits data, July industrial production figures, and earnings reports from Home Depot, Baidu and Toll Brothers.

The overall market backdrop entering this week reflects a delicate balancing act for investors: continued strength in artificial intelligence-linked technology and semiconductor stocks against a softening consumer picture, elevated oil prices tied to escalating Middle East tensions, and diminishing expectations for near-term Federal Reserve rate cuts. How that combination resolves is likely to depend heavily on the coming week’s retail earnings reports and any signals Federal Reserve officials offer regarding the path of monetary policy during the Jackson Hole symposium, an annual gathering of central bankers and economists that has historically served as a venue for significant policy signaling.

As of Monday morning’s modest gain, the Nasdaq remained close to the record territory it has approached in recent sessions, even as broader market indicators suggest investors remain cautious heading into a week likely to bring more clarity on both the health of American consumers and the Federal Reserve’s next policy steps.