Key Highlights

• EBITDA was flat at $901 million, while EBIT declined 2.6% to $534 million and net profit after tax slipped 2.8% to $308 million.

• Australia and New Zealand, where Reece has a long-established network, saw sales rise 8.3% to $4.2 billion in FY26, which management linked to recovering volumes and Investment in team capability.

• Net Debt rose to $744 million at the end of FY26, which the summary attributed mainly to network growth and funding of a share buyback.

• A search listing also referred to first-quarter FY27 sales of $2.5 billion disclosed around the company's 2026 annual general meeting.

How is Reece Limited (ASX:REH) managing two plumbing and bathroom distribution businesses that are moving in different directions? The FY26 result, released on 24 August 2026, gives the clearest answer so far. Group sales Revenue rose to $9,378 million for the year to June 2026, yet Earnings before interest and tax fell to $534 million, because a rebound in Australia and New Zealand was offset by weak residential construction in the United States. That split is the central issue for anyone following the stock.

What the FY26 result showed

EBITDA was flat at $901 million, while EBIT declined 2.6% to $534 million and net profit after tax slipped 2.8% to $308 million. Return on Capital edged up five basis points to 11.9%.

Revenue growth with flat EBITDA and lower EBIT suggests the extra sales came with higher costs and depreciation.

The Board declared a final Dividend of 13.40 cents per share, fully franked.

How the Business earns its revenue

Reece is a distributor of plumbing, bathroom, heating, ventilation, air conditioning and refrigeration products, serving trade customers and, increasingly, retail renovators. Revenue depends on housing activity: new construction, renovation and maintenance work, and the volumes trade customers move through branches and digital channels. Margins are shaped by product mix, supplier pricing and the cost of running a branch network, which is a fixed-cost-heavy model that benefits from Operating Leverage when volumes recover and suffers when they stall.

Two regions drive the group. Australia and New Zealand, where Reece has a long-established network, saw sales rise 8.3% to $4.2 billion in FY26, which management linked to recovering volumes and investment in team capability. The United States, a far larger addressable market, was softer because weak residential new construction held back growth.

The ANZ recovery and the US drag

Peter Wilson, Chairman and CEO, described FY26 as a year of improved momentum in ANZ as volumes recovered, while pointing to a weak residential housing market in the US. For FY27, the company said it expects continued ANZ momentum supported by an encouraging project pipeline, and a more subdued US, where residential construction remains difficult and non-residential activity has been steadier.

This divergence is the key analytical point. A distributor with a large US footprint is exposed to interest rates and housing affordability there, factors management itself flagged as ongoing challenges. If US residential activity stays depressed, group earnings growth depends heavily on ANZ and on non-residential work. If it recovers, the existing branch investment could produce faster earnings growth than revenue growth, but that is a scenario, not a forecast.

Balance sheet and capital allocation

Net debt rose to $744 million at the end of FY26, which the summary attributed mainly to network growth and funding of a share buyback. Net leverage stood at 1.0 times. Group Capital Expenditure was $174 million. A Leverage Ratio of 1.0 times is moderate for a distributor, leaving room to keep opening branches, but it also shows that cash is being committed to both growth and Buybacks while profit is slightly lower.

Competitive position

Reece competes with other specialist plumbing distributors and buying groups in each market, along with big-box retailers for renovation customers. Its advantage rests on branch density, product range, stock availability and trade relationships. Management says its focus is on its customer promise, its innovation agenda and digital capability, which are the levers used to defend share where volumes are weak.

Risks and what to monitor

Several risks are visible in the disclosed information.

- US housing: management itself describes residential new construction as weak. A prolonged downturn would weigh on the largest growth region.

- Interest rates and affordability: flagged in the outlook as ongoing challenges, they affect both new construction and renovation spending in both regions.

- Cost growth: EBIT fell while sales rose, so cost control and operating leverage are worth watching in the first-half FY27 result.

- Capital allocation: net debt increased, partly for buybacks, while profit declined. Whether leverage stays near 1.0 times is a point to monitor.

- Execution on new branches, particularly if they open into a soft market.

A search listing also referred to first-quarter FY27 sales of $2.5 billion disclosed around the company's 2026 annual general meeting.

What to watch next

The next scheduled catalyst is the half-year result, expected in February 2027 based on the previous year's timing (this is an assumption, not a confirmed date). Useful indicators include ANZ Volume growth, US same-branch trends, gross margin, operating costs as a share of sales, net debt and any change to the pace of branch openings.

Reece's FY26 result shows a company whose ANZ operations are recovering while its larger growth opportunity in the US waits on housing conditions. The balance between those two forces, rather than headline revenue growth, is what will decide the next set of earnings.