Reliance Worldwide Makes Acquisition of EZ-FLO

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Reliance Worldwide Makes Acquisition of EZ-FLO

  • EZ-FLO owns the powerful EASTMAN brand, the market-leader in large appliance connections in the US and provides a low-cost manufacturing and sourcing capability in China
  • Price is 7 times EZ-FLO’s Pro Forma Adjusted EBITDA post synergies, for the 12 months ended 31 July 2024
  • Leverage increased to 1.78 times Net Debt to Pro Forma EBITDA, at completion of the acquisition, comfortably within target leverage ratio range of 1.5 to 2.5 times
  • First quarter sales up 8 percent, EBIT up 5 percent, but higher raw material and freight costs trim operating margin by 1 percent
  • Increased expenditure on home remodelling and new house construction supports medium-term outlook.

 Reliance Worldwide Corporation Limited (‘Reliance’ or the ‘Company‘) designs, manufactures and supplies premium branded quality water flow and control products and solutions. The Company’s products have application in the residential and commercial property sectors, especially the less cyclical residential repair and renovation end-market. Reliance operates in Australia, New Zealand, Canada, the United States, Spain and the United Kingdom, through 5000 channel partner outlets.

Acquisition of EZ-FLO International, Inc. for US$325 million

Reliance has expanded its brand presence in the US with the acquisition of premium brand manufacturer and distributor, EZ-FLO, which manufactures and distributes plumbing specialty products, appliance supply lines, gas connectors and other accessories. Since 2000, EZ-FLO has owned the powerful EASTMAN brand, which is the market-leader in large appliance connections in the US. The acquisition also provides Reliance with a low-cost manufacturing and sourcing capability in China.

At US$325 million, Reliance is paying 12 times EZ-FLO’s Pro Forma Adjusted EBITDA before synergies, for the 12 months ended 31 July 2021. Including estimated revenue and cost synergies, this multiple reduces to 7 times, by 2024. Shareholders are not being asked to fund the acquisition. Instead, reliance has used cash and an AUD$100 million bank draw down to fund the purchase.  This will leave Reliance with US$127 million of undrawn, committed borrowing facilities. Leverage has been increased to 1.78 times Net Debt to Pro Forma EBITDA at the completion of the acquisition, comfortably within Reliance’s target leverage ratio range of 1.5 to 2.5 times.  

EZ-FLO recorded net sales of US$169 million in FY21, and Pro Forma Adjusted EBITDA of US$27 million. Ninety percent of sales are sourced from the US, while Eastman products account for 70 percent of total sales.

First Quarter Trading Update

Reliance has experienced net sales growth of 8 percent to US$246 million while EBIT is up 5 percent, compared to the first quarter in FY21. The outlook for RWC’s key markets in FY22 is positive, from a demand perspective. However, operating margins are being impacted by higher input costs, including the price of steel, copper and resins, as well as rising energy and freight costs. The margin impact is 100 basis points or 1 percent, at the EBITDA level. Reliance expects to pass on these commodity cost increases to customers, although the customary lag effect means that the Company doesn’t anticipate that it will restore operating margins before the third quarter, at the earliest.

The Future

Fundamentally, Reliance is supported by resilient demand for its premium brand products and the trend of increased expenditure on home remodelling activity and new house construction. The combination of a low-cost Chinese manufacturing capability and powerful brands like SharkBite, HoldRite and now EASTMAN, suggest that this trend appears sustainable for the foreseeable future.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at

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