Good morning, everyone, and thank you for joining us for our first-half year results call. I'm Peter Wilson, and with me today is Sasha Nikolic and Andy Young.

This morning, I'm going to provide an overview of the results and then recap the strategy. Sasha will provide an operational update.

Andy will then run through the financial results in more detail, and then I'll provide an outlook and we'll open it up to Q&A. Please note that all figures in this presentation are in Australian dollars unless otherwise stated.

Turning now to an overview of the half-year results. Our performance was certainly mixed.

There was some good, some solid, and some challenged. Our result clearly reflects the complexity that we outlined last year.

Housing affordability continues to be a key issue in both our regions, resulting in soft demand settings. Group sales were up 6% to $4.6 billion, largely supported by network expansion.

Group like-for-like sales were flat, reflecting the subdued backdrop. EBITDA declined 6% to $448 million, while EBIT declined 14% to $262 million.

Softer earnings and ongoing investment impacted the group's return on capital ratio, which is down 222 basis points to 10.8%. The board declared an interim dividend of 5.44 cents per share.

While the half-year tracked broadly as expected in the current environment, we do want to do better. We are focused on building a stronger business for the long term, whilst at the same time operating more efficiently.

If we now turn to recap on our strategy. As I've outlined before, everything we do at Reece is guided by our blueprint, from purpose to promise.

Our purpose, building a better world for our customers by being the best, inspires us. Together with our values is how we live the Reece Way.

Our 2030 vision is to be our trade's most valuable partner. The commitment to our blueprint, especially in these challenging periods, enables us to deliver on our customer promise and succeed in the long term.

Turning to our strategic priorities, we do have three clearly defined pillars. Operational excellence is about being the best at the basics every single day.

Innovation is critical to keeping us ahead of our customers' needs. Investing for profitable growth enables us to continue to expand our presence and improve our business for the long term.

I'll now hand over to Sasha, who will provide more detail on the activities in each region.

Thank you, Peter. Starting with our branch network in Australia and New Zealand, our network density remains a key competitive advantage, helping us to deliver our customer promise.

We continue to enhance the network through targeted infill and upgrades. During the half, we added four net new branches and completed 17 refurbishments.

Moving to the next slide. Our success in ANZ is grounded in our team and their deep relationships with our customers.

This half, we have continued to invest in and broaden our offering, launching new product ranges and designs that enhance quality at competitive price points. In the digital space, we combined Shadowboxer and our existing team together into one digital experience team, boosting collaboration, productivity, and accelerating customer-focused innovation.

We also introduced new digital tools to make complex projects easier to manage and help our team serve customers better. Finally, we continue to invest in our people, making strong progress in rolling out core leadership training programs to our people leaders.

Moving now to the US. We have continued to roll out branches to expand our US presence, making life easier for our customers.

During the half, we added 19 new branches to our network, bringing the total to 286. We continue to see a run rate of 10 to 15 new branches per year as a sustainable level of annual growth.

In some periods, we will deliver outside this range based on capacity and development time frames. Turning to the next slide.

Developing our US team is a critical factor to our long-term success. We are focused on supporting our network growth through an experienced team, well versed in local knowledge and market dynamics.

This half, we continue to invest in development programs to deepen trading skills and leadership capabilities. Alongside this, we launched a range of new initiatives to make life easier for customers, including rapid delivery and a Spanish-enabled version of our app, Max.

We further enhanced our digital capabilities with tools that streamline quoting, reduce turnaround times, and enable our teams to deliver a better customer experience. I will now hand over to Andy to provide more detail on the first-half results.

Thank you, Sasha, and good morning, everyone. Sales revenue for the half was up 4% to $2.1 billion, supported by modest volume growth, although sales performance remains mixed across states.

EBITDA declined by 4% to $261 million, and our EBITDA margin contracted by 104 basis points. Costs remain elevated in the ANZ region.

The market for talent remains competitive, and we've continued to invest in our employee proposition to support retention and growth. We've also invested in digital projects, which are an important part of delivering our strategy and investing through the cycle to build a stronger business.

In addition, our operational expenditure continues to experience some inflationary pressure in areas such as labor, IT, and property costs. Despite these headwinds, our cost run rate is trending down as we exit the half, supported by tight management of FTE and discretionary spend.

EBIT was down 7% to $179 million, with our EBIT margin at 8.7%, down 106 basis points year on year. Turning now to the US region.

US sales were up 6% to USD 1.7 billion, driven by incremental sales from continued network expansion. On a like-for-like basis, US sales declined by low single digits during the half.

The residential new construction sector remains soft, with housing units under construction still down year on year in the Sunbelt region. EBITDA was down 9%, with our EBITDA margin contracting by 120 basis points.

This reflects higher costs from elevated network expansion over the past 12 to 18 months and some ongoing operating cost inflation. We anticipate year-on-year cost growth to remain elevated through the remainder of FY 2026 as these new branches mature.

EBIT declined by 26% to USD 55 million, and our EBIT margin was down 143 basis points, inclusive of higher D&A from ongoing growth investments. Turning to the group's cash flow position.

The group generated net operating cash inflows of $199 million for the half. Our capex to sales ratio was 1.8%, supporting network expansion, branch refurbishments, and technology investments.

During the half, we also deployed $401 million of capital to support share buyback activity. Gross interest expense for the half-year was $31 million, and based on current drawn debt, we anticipate gross interest expense in the range of $65 to $75 million for full year FY 2026.

Moving to the balance sheet. Our group net working capital to sales ratio was 20%, an increase of 1% since 30 June.

The uplift in net working capital is driven by seasonality in receivables and payables. Our net debt position increased to $1 billion, driven by lower operating net cash inflow and partial funding for our share buyback program.

The group's balance sheet remains strong, with a conservative net leverage ratio and capacity to fund future growth. Moving to the next slide.

Returns have been impacted by the soft market conditions and elevated costs from increased network expansion. Despite this, we remain focused on our long-term investment strategy and disciplined approach to capital deployment.

We take a long-term view through the cycle and expect to see our return profile improve as the market recovers and the impact of new growth investments moderates. Turning to our capital allocation approach.

The allocation and deployment of group capital is guided by our well-defined capital management framework. Our first priority is to invest in the growth of the business, both organic investments and strategic M&A.

Our second priority is to maintain a strong balance sheet, retaining flexibility for growth. Our third priority is to provide returns to shareholders via ordinary dividends.

When we have surplus capital or excess balance sheet capacity, we will consider returning capital to shareholders. During the half, we have executed on this framework, returning a total of $401 million of capital via our off-market and on-market share buyback programs.

I will now hand back to Peter to provide some comments on the outlook for the remainder of FY 2026.

Thank you, Andy. Starting with the ANZ region, we have seen signs of a housing market recovery emerging this half, but this is geographically mixed.

Housing affordability does still remain a challenge. We are also cautious about the pace of the near-term recovery and the impact of the recent interest rate rise.

Turning to the US. In the US, the residential new construction sector is still experiencing weak demand, especially in the regions we operate.

Competitive dynamics also continue to present headwinds, and we've had a challenging start to the second half with extreme weather conditions in January. Improving housing affordability will be critical for increasing demand.

We don't expect a substantial change in performance in the second half, but we continue to take a long-term view on the opportunity in the region. As a result of this outlook in both regions, we are anticipating group EBIT for the full year FY 2026 to be within the range of $520 to $540 million.

To conclude, it has been one of the more complex periods that we have ever experienced. We continue to focus on our long-term strategy and our approach.

We are working harder than ever before to stay one step ahead of our customers' needs while running our business more efficiently. We do operate in large, attractive markets with compelling long-term fundamentals.

Our priority is always to build a stronger, more resilient business. Thank you.

We will now open the line for questions.

Thanks, Peter, Sasha, Andy. Appreciate your time.

Peter, perhaps just honing in on ANZ and reflecting on the competitive environment that you mentioned, a lot of focus on employee value proposition, could you give us a sense of what it is that you believe you need to do or continue to do in that space and how you think your particular position in the market can withstand some of the pressures that are obviously relatively new found in Australia?

G'day, Peter. Yes.

Look, I think I mentioned that at the full year, just obviously with the new owners of Tradelink, which is an owner that we obviously respect deeply and have a pretty strong knowledge and understanding and relationship with them. Look, when it comes to Australia, really, our entire focus is really focusing on ourselves, just to execute our strategy and keep building our capabilities so that we can play our own game and withstand whatever gets thrown up our way.

Everyone knows the Australian model pretty well. We got a very strong market position here.

We got a strong model with strong capabilities. I'm feeling pretty comfortable with where we are in Australia.

The big challenge that we've got to solve for, I think that's every Australian company, is how we navigate the future, embedding and leveraging AI so that runs right throughout our entire business. That's probably what keeps me up more at night than the competition, Peter.

Look, we came from a single or two-store operation. We are used to competing in quite fierce environments.

That's pretty normal. We focus on our own game.

I think the bigger challenge for us, which I think applies to every single Australian company, is how we embed and leverage AI, which is going to have profound impact on everything we do.

Thanks, Peter. May just go to the other side of the ocean here to just get your perspective on the US trading context.

Given your exposure to the sort of mid and smaller end of the new construction market, it looks like a low single-digit volume performance is actually a really commendable one. Just your perspective on what the network expansion did to your comparative experience there, but more specifically, the evolution of the competitive position vis-a-vis some of the peers there, because it does feel like you're actually doing a little better than perhaps certainly we expected.

Peter, maybe what you're saying there, that's our strategy, really, which is that organic store rollout. There was a lot of stores have been opened in the last number of years.

I think that is what is driving the growth there. In terms of the end markets there, yeah, we were pretty clear, I think, in the half-year.

It's still in our regions is still quite soft. How would I describe it?

We've used the term and I think a lot of people have that the housing market is relatively frozen. It really is an affordability issue in the US.

You've still got over 50% of the outstanding mortgages have got they're below 4%. That effectively is 200 basis points below what you could get a new mortgage for now.

Yes, the long-term mortgages have fallen a little bit since we've last spoke. You're in the early 6s there.

For any real substantial recovery, you've got to see some affordability changes, and that big part of that is the mortgage rate. We'll see how that all plays out.

I think most of what you've seen from us is linked to the store expansion, the store rollout. That's part of our strategy.

We're sticking to what we can control. A lot of the environment part, the external parts are out of our control.

Hopefully that gives you a little bit of color there.

Thanks, Peter. Appreciate it.

Thanks, Peter.

Good morning, all. Maybe either of you, Peter or Andy.

Andy, you mentioned earlier on the call for ANZ, and this relates to something you can control, inside the business rather than externalities, but I think in the last results, it was mentioned that the cost run rate was a bit too high for the ANZ division. There was going to be some trimming of that spend, and it certainly seems that is the case.

Andy, when you talk about the cost run rate is trending down due to FTE and discretionary spend, just wondering how much further have you got to go on that one? If you can give us an indication of the order of magnitude of benefits, because it certainly seems like that's helped the margin in the period, and it sounds like it is indeed sustainable.

Thank you.

Keith. I'll hand that to Andy, I think that's who you're directing that to.

Over to you, Andy. Yeah.

Thanks, Peter. Thanks, Keith.

Look, I think we're not going to give an outlook on the cost run rate, Keith, but what I would say is, as I said in the presentation, there's ongoing inflation pressure in the ANZ cost base. We are working to offset that, but we haven't been able to mitigate the full impact of that in the half.

That said, we are continuing to drive those initiatives and just balance that with ongoing investment in the business. I think that's the sort of right focus for us, to control what we can.

Thanks. Maybe if I can step one level—

Also, Keith, just to add, I think what Andy might say in that there will be a follow-up question is the majority of that cost structure comes from the new store expansion with depreciation and all that sort of stuff. That will be a follow-up, no doubt.

Definitely. At the group level, it's expansionary.

Then in ANZ, you've got a little bit of that, but as I said, it is also driven by the investment in the business, Keith, and then the operating cost inflation that we're continuing to experience.

Thank you. If we go maybe a couple of levels higher then, just at the EBIT margin level.

I know I'm not asking for you to do our homework for us, but just trying to get a gauge of whether you believe that the first-half margin outcome represents the bottom for the ANZ division, and from here on in, we should see some margin expansion, particularly given the end-market demand is improving a bit as well?

Keith, I'll take this. Look, it's been a complex period for us, which I indicated in August.

What I would say is we will always be this. Look, there are signs of a starting of a housing market recovery, I would say minus Victoria.

That's when I said geographically mixed. We have to be cautious just as that is starting to emerge.

We've got an interest rate rise, and it's not just one. It's been clearly indicated that there's multiple on the agenda.

That's the caveat to all of that. We focus on trying to optimize our margin, but it's a culmination of balancing between customer demands, shareholder demands, and then, just a competitive environment.

I think we've probably done more. We don't normally do this with guidance, and it doesn't mean we're going to keep doing it.

When we feel it's some level of uncertainty out there, which there is for lots of people, we felt it might be better just to give a guidance for the second half just to make it easy for you guys. That's probably as much as we're going to share, but it's not like we've got this huge recovery and off to the races.

We're just starting to see green shoots, and then the interest rate rise hit. That's why I'm saying it's complicated, and yeah, I think we've been more helpful on this half than in previous, but that will still be just horses for courses, Keith, trying to be a bit helpful on this.

No, that's good. Then maybe just one quick one on the US.

It certainly seems as though the competitive backdrop has settled. Sasha, I think you mentioned you guys were looking at targeting 10 to 15 stores, even though you're running ahead in the first half even for your full-year target.

Does that mean for the store rollout in the second half, you take a breather, kind of bed down what you've got or you can still build or is it the case that you can still be opportunistic in the second half?

I think we might answer this in two parts. I'll do the high level and then I reckon Sasha is just arrived back last week.

I've said this from day dot, from 8 years ago when we did it. Maybe I was a bit too vulnerable.

I was taken out of context a fraction at the August one. Look, when we acquired MORSCO, we were very clear what we were getting, and we were eyes wide open.

We did a very thorough DD, and we studied it for a long time. We knew that this was a multi-decade story, and we knew that America is the biggest, the most competitive market in the world.

It is structurally different to Australia. It has big resource competitors, it's got large independents, and it's got a very strong manufacturing base, which is largely owned by very, very big family, multi-generational businesses that control lots of the margin.

We shared a fair bit what was going on with Fortiline. We've learned a lot.

It definitely surprised us at the time. We've learned how we're going to have to compete and fight back, and it's more BAU now.

We're quite comfortable with how we're going to respond. We will be taking a multi-decade time frame, we'll see who actually outlast in that competitive threat.

In the meantime, Sash can probably talk to how we look at the sustainable rate of stores, so. Over to you, Sash.

He's just come back and a bit jet-lagged.

Yeah. Thanks, Pete.

Keith, look, we had a very good first half in terms of rollout, and that is part, as you described, opportunistic and the timing. With softening, we do get to accelerate.

We do have a solid pipeline in H2 also, when we look out there, but not at the same rate as H1. I will reiterate, we are looking at that 10 to 15 in the long term, but there will be periods where stars aligned and we have the capability now to be able to accelerate.

Great. Thanks so much, gents.

Appreciate it.

Thanks.

Good morning. Thanks for taking my question.

Just the first one for me on the US. If we go back to the last half, I think you guys are sort of saying that there's some share challenges in the plumbing segment in the US, where I think you're sort of suggesting that lack of scale was a disadvantage when market activity is low.

Certainly seems like that's kind of turned around, and now you seem to performing at least in line with the market, if not better. Could you just provide some comments in terms of what's changed, like what you've done to kind of improve your share performance in the plumbing segment in particular?

Because I think you've said Waterworks is more BAU, but just the plumbing segment in particular. Thanks.

G'day, Brook. No, I reckon I don't think much has changed.

I think we're holding our own. No, we're obviously opening stores in plumbing, so that does, yeah, but that really wouldn't make that much difference in the 6 months.

Maybe look, the residential new construction is soft, and I think that's well known because of the whole mortgage part and the fact that the housing market is relatively frozen. It's not like it's falling off a cliff, it's not like we're talking GFC-type, but the part that's plumbing that seems to be going well is in the commercial part with the data centers.

We're in states where we're getting some of that work as well. I think I wouldn't say any dramatic change since the August, just maybe there's a bit more focus from the team.

Sometimes when you deliver these somewhat disappointing performances that we did identify in August, it can nettle your team, and you get more focus. We're focusing on what we can control.

I wouldn't say any dramatic change there at this point, Brook.

Okay. That's fair enough.

Thanks for the color. Just a last question for me on inventory.

Looking through the accounts, it looks like there's a $9 million reduction in the allowance for slow-moving inventory in the half. Can you just confirm does that sort of flow through to the underlying EBIT performance as that provision unwinds a bit?

Then maybe some color on what actually sort of drove the change would be great. Thanks.

I'll give that to Andy to answer. Over to you, Andy.

Thanks, Brook. Yes, there's a reduction in that provision, Brook, in the half.

I think if you remember the comments we made at full year, we talked about the provision had increased as we've seen some of the sell-through rates reduce. We've actually had a little bit of volume uplift, particularly in ANZ, you would have seen in the first half of this year.

That's allowed us to revise those provisioning levels. Yes, it does flow through, and we'll just continue to sort of monitor that level and look at what happens from a volume perspective to see what further happens in the second half of the year.

That's great. Thank you.

Thank you.

Thanks, Brook.

Oh, good morning. Thanks for taking my questions, and thank you for providing that second-half guidance.

It's helpful. Just firstly, wondering if you could talk through the drivers in a bit more detail of that ANZ margin improvement versus that second half, and perhaps where do you think you could take this to sort of mid-cycle versus the historical levels, which were about sort of 10 to 12%, if we look over the last decade or so?

Are there any structural changes now, such as competition, that need to be factored in? Thank you.

Thanks, Harry. I'll hand that to Sash.

Thanks, Harry. Look, from an ANZ perspective, to answer the second part there, we have historically had very good margins.

This market, we have a good business. As Peter has already answered, it's very complex.

It's very challenging. It's a patchwork out there across the states, and so we won't be making any calls around the historical levels to get out there, nor will we be making calls around peaks and troughs.

What we can say is we do control what we can control, and the team is focused on continuing to manage the things that are within our control and provide that customer experience that Reece is renowned for out in the market. We believe if we do those things, then the margins take care of themselves.

All right. Thank you.

Follow-up, I'll ask it anyway, just on the US margins. If we look where they're sitting now versus around that sort of 5% level over the last few years before the sort of deterioration last year, I guess what will we need to see for you to take margins sort of back to that level or beyond that level?

Is it around sort of those stores maturing, given you added a lot of stores, or is there more to it than that?

Harry, look, there's a whole bunch of things. As we said in the operational updates, we're very focused on developing our leaders at a local level that understand the market, put the training around leadership in there.

We've spoke about trading skills investment. It is time for these new branches that we've put in quite a few in a short period of time to mature.

That is what we see as the US strategy that we've been consistent for a very long time.

Right. Thank you.

Just the last one for me. I guess where would you see capex more normalized now given that sort of lower rate in the first half, please?

I might start, Harry, and then hand it over to Andy. Look, when you look at the capex, obviously, there's the timing of when we recognize the capex versus when the store starts trading.

That is to take into account some of the half-on-half or year-to-half view in the reduction. Look, we sit here thinking that our level of capex is probably at that normalized level, but I'll invite Andy to add a little bit more color there.

Thanks, Harry. As Harry, it's not guidance, but we tend to target somewhere in that 2 to 3% range.

Look, each year, it just depends on how much network expansion we tend to have that drives that. I think as Sash said, there's a little bit lower in the first half, but a lot of that capex around those new branches was occurred in the back end of '25, why the number looks a little bit lower.

We'd expect to be somewhere in that range again for the full year.

Great. Thank you.

Harry, we've always, through these cycles, we continue to invest. Normally in history, we normally come out stronger through these cycles because of that commitment to investing.

We're going to keep doing that. It might be different this time because I think we're entering a world that we have never seen before.

It may not go exactly like it did last time, but we continue to invest, to build capabilities because that is the only way we're going to get a chance to get to where we want to get to in the US over a long period of time. There'll be a few hiccups like we had last year.

Understood. Thank you.

Thanks. Morning, guys.

Just quickly on ANZ. Notice you've talked to volume's been positive, but you've probably moved away, unless I missed it, from like-for-likes.

Is the right assumption there that price was negative or am I just reading too much into that?

Over to you, Andy. That's too hard for me to answer that one.

Sam, look, I think the volume performance like-for-like was pretty similar for ANZ versus the first quarter. We said at the first quarter, we had some low single-digit growth.

That's really held across the half. In terms of the price-volume sort of mix there, there's very little price impact in that result for ANZ.

That's largely volume.

Got it. Just trying to clarify, your like-for-like sales in ANZ were positive in the first quarter, but

has that continued— So—

—because you haven't talked to like-for-like for the half? Just kind of trying to understand the moving piece there.

Sam, what you need to say is that we, in our commentary, we're definitely seeing the beginnings of a housing recovery, right? You've got housing starts and commencements.

They're all positive. That's definitely positive for Australia.

I'd say there's definitely green shoots there minus Victoria. There's not green shoots in Victoria.

That would be that. The only thing is we do have to be cautious because just as you're getting started, this looks different to the last time, or the last cycles.

We've already now had an interest rate rise with forecast more to come. Now, that will actually have an impact.

Okay. Maybe then just talking about the second half.

Thanks for the guide, really appreciate it. Given obviously the US has had that weak start, does it kind of imply that a meaningful step-up in the ANZ second-half business or is there something, your commentary's been relatively muted?

No, Sam. Look, we've done more than we normally do.

We've given you a lot of help there with the guidance, right? We're in pretty narrow range, so that's probably as much as we're going to disclose here, Sam.

We're doing a lot more than we've done before, what my gut sees a replay of what's happened in the first half happening in the second half in both regions. We had a challenging start to January in America.

We had extreme weather. We thought, given the uncertainty, if we don't watch out, we could get a whole lot of different messages.

We decided that we should give guidance for the year.

Got it. Can I just ask a quick housekeeping on trading days in the second half?

I imagine you had a headwind last year just trying to think about that. Sam,

I'll pick that one up. Look, the trading is broadly evenly split across the year.

Last year, we had a bit of difference in ANZ particularly given the timing of sort of Anzac Day and Easter holidays. Broadly, the profile is pretty evenly split across the half.

All depends on what happens

with the weather.

I think the bigger issue is what happens in the weather, Sam, rather than the trading days. That's America.

Appreciate the color.

Thanks. Thanks, Sam.

Hi, Peter, Andy, Sasha. Thanks for the time today.

Peter, just on the the the US rollout strategy, maybe just confirm the stores this half and and the the one Sasha mentioned for the second half are largely new greenfield stores. Then just any color you can you or Sasha can give us around changes in in timing for those stores to mature both on a revenue and and margin profile?

I think in the past, you've you've said it's kind of 3 to 5-year stores 5 years for those stores to ramp up. Be interested if there's any changes that you're you're seeing in the US now.

G'day, Lee. No changes to how they ramp up.

That's in line with what we've experienced in the past. The only way that it might ramp up a bit quicker is if you get into really boom conditions, but that's not the case.

I don't know whether that helps.

But— Maybe another way—

We are not budgeting for any, we're trying to do it, but there's just a certain time to competence on both what you need to do with the people. Maybe down the track, once we've mastered the art of AI and robotics, the whole thing could be changed.

Then so maybe the next stage.

That's useful. Thanks.

Maybe to ask another way, like the 286 branches in the US, how many do you think would still be in that ramp-up phase? Because you've obviously opened a lot of greenfield stores and you'd think they should be coming through now, right?

I'll give that to Sasha. I would normally say that that's confidential and not going to actually answer that.

I will leave it to Sasha to see whether he can fleece me.

Thanks, Peter. Look, Lee, we've been very transparent in telling you how many branches we've opened each and every year in the past.

More than happy for you to go and do your work. If we go back to the strategy, we have always said we were going to be slow and deliberate and learn.

Then we had the pandemic. As we've come out of that, we have increased.

That will give you that sense.

Okay. Then

also, we're also conscious not to we've opened a lot, but ideally we know a sustainable rate that we can do, which is not going to have too much impact. We've, by circumstance of planning and just we opened a lot that's not going to be a regular occurrence how many we open in the last half.

Thank you. Would have been brave by Sasha to overrule the boss.

Then just a final one, there's obviously a lot going on with tariffs, but any sort of view or color as to how you think that impacts you, the announcements over the weekend?

No, we're fortunate we've got a flexible model where we can adapt, and it's more the hassle and the uncertainty of all of the work we got to do to then notify and update and backwards and forwards. It's more that.

We're in the same boat as everybody else. If you haven't taken away, you're reducing what your customer gets or if you're getting tariffs, they're paying more.

I think, no, we've got an ability to be able to manage that okay. I think we managed that pretty well.

The only thing is it does all it does it creates a lot of uncertainty. Which then will flow through to maybe where the long-term mortgage rates are.

You wouldn't mind just getting some certainty so that you've had the short-term interest rate cuts there, but you've had a slight reduction in the long-term mortgage rates. We need it to go lower again if you want to actually get the housing market moving.

That would be the only thing I would add on.

Excellent. Thanks.

Appreciate the color.

Thanks, Lee.

good morning, gents. Just wanted to ask a little bit more around your digital innovation strategy.

I'm just keen to understand how you're thinking that's going to help manage some of the increased competitive intensity that you've been seeing both in Australia, New Zealand, and maybe just sort of walk us through sort of near-term, medium-term priorities around that digital innovation strategy. I'm also keen just to get an understanding of what level of capital you think will be required to sort of fund that strategy?

Look, that's a good question. We have had a focus to digitize the place since about 2016.

In Australia, we're definitely a leader, and there is a lot of investing going in. Then ultimately, the whole CX has got to be digitized to create all those seamless experiences.

That's just going to be an ongoing part of how we operate. Then a big part of the whole digital agenda that we'll all be grappling with is how we embed and leverage AI to every part of the business.

That's what we're all going to try and solve for. I don't really think anyone's really got a clue.

We're working hard. We've got lots of use cases.

We've rolled out Copilot to all of our people here at support center. We've got a different version in the US.

There's a lot of experimenting going on. You can see we're just getting started.

There's an enormous transformation going to go underway in the next 5 or 10 years that no one's really got a clue how it's going to play out. You've got to be in there having a red-hot go.

Hopefully that helps.

No, that's fine. Thank you, in terms of your approach.

Just in terms of the level of capital you'd be expecting to deploy there?

Look, and then some parts, we're not going to go too much detail. I don't know, Andy, whether you wanted to add any more, but you're not going to get anything from me.

No, look, the only thing I'd add to it, Nathan, is remember it's not all capex. As you're building capability and you're running these digital initiatives, there's obviously an opex component of that as well, it's both.

Okay. Thanks very much.

Thank you.

Good morning, Peter, Sasha, and Andy. Thanks for taking my question.

Just the first one I had just around the US Waterworks business. How would you characterize Fortiline's operational health today in terms of turnover, leadership stability, customer retention?

I think do you want to answer this, Sasha, or do you want me to have the first crack?

You go first, and then I'll follow up.

Yeah. No.

Look, I think I said earlier that I think, when we entered the US, we knew that we're entering the most competitive, most brutal industry with a whole lot of different dynamics that's structurally different. We went in, yeah, for a multi-decade story and we knew there were going to be hurdles.

Certainly, we got surprised with what happened to our Fortiline business. We didn't expect to have what happened.

I wouldn't say it's BAU now, but we've got our response. We're fighting back.

You can see we're holding our own. It's definitely much more contested.

I think the whole Waterworks sector has now been changed in America forever. You've got a new competitor that adds to the competitive nature of it, but you got to focus on what you can control.

Things have stabilized. We've got a Waterworks leader now.

We're doing different things. I don't know if you wanted to add anything more detail, Sash.

You've just been back.

Joe, the only thing I would characterize it as building back. We've got a team there that is actually building back capabilities, building back the relationships across the board.

We are committed to Waterworks, and, as Peter's already said on this call, we're here for the long term.

Got it. Just a follow-up question on the Waterworks—

What I'd say, we're really in the middle of it at the last call. We've got our plans, we're fighting back.

It is guerrilla warfare. Once you get your head around it, that's basically how we built Reece.

I do know we've got a very, very long-term time frame, we'll see who outlasts who.

Got it. Then just a follow-up there, just a question around data centers, which are obviously big consumers of water.

Just wondering if there's a meaningful opportunity there for Fortiline?

I'll get Sash to answer. It's more than just Fortiline, so, Sash, you want to give an overview of it's not just Fortiline, it's Australia as well.

Although we don't build as many here as America. We don't have the energy, Sash.

We don't have a lot of the things in place. Over to you, Sash.

Joe, it's a very good question. Look, I think it's no secret.

There are certain pockets in the US that have a very heavy data center exposure to them. I think in those areas where we've got a presence, we are doing well in terms of getting our share there.

To reiterate, yeah, you're 100% right. There is opportunities for the Waterworks business, there's opportunities for the plumbing, there's opportunities for the HVAC around the cooling elements.

Also watch this space as chips evolve and things change. Definitely in the markets where data centers are going up in the US, we are participating.

Great. Then just a last question I had just on the US store rollout, just picking up on an earlier comment from Sasha.

I think you said you've now got the capability to accelerate the rollout. I'm just wondering what is that capability?

Is it talent, systems, is it a store pipeline? Can you maybe expand on that comment?

Sure. It's making sure that our design of the store is right to make it easier for customers to do business with us in that physical environment, to make sure that our team can actually service in a quicker way, to keep it safe and organized, as well as our partners in terms of building the facilities.

At the end of the day, the bottleneck always comes down to the people and our ability to get the right branch leadership in place. That's why we reiterate that 10 to 15, albeit there are some times when we will take those opportunities.

Great. Thank you.

Hi, guys. Thanks for taking my question.

Just a quick one from me. Just in terms of the US store openings, the 19 this half, could you just help provide some color where they were opened in terms of whether it was in HVAC, Waterworks, or plumbing?

I'll take this one, Daniel. I'll say that it's been an even spread across the portfolio of the business.

We're not going to go into any details around the mix, but you can basically follow the size of the business, and that's a pretty good proxy of where the branches were opened. Long way of saying we've opened across all of our divisions.

Right, thanks. Maybe if I could just ask one further back.

Just R&R was a big strategic pivot of the MORSCO deal. Were any of them in the R&R segment, or with trying to orientate themselves around the R&R market?

Can you just give us some insights into those stores that you have focused R&R, how that's going, because that was a bit more of a new area for MORSCO?

R&R still obviously a focus for us. You can see we've dropped the nature.

We've got to keep building capabilities on all the segments. R&R still a very small part of the business, and it will take many years before it becomes meaningful.

Definitely R&R still a focus, but as is the HVAC business, as is the Waterworks business. They're all and the R&C part.

It's still a focus, but we are looking to improve all elements of what we've got in the US.

Great. Thanks.

Hey, good morning, guys. Just a quick one on ANZ.

Peter, last result, you were pretty frustrated with the Victorian market in particular. Just wondering what you're seeing there, any stabilization or change in that operating environment?

Then also just on the ANZ business more broadly, where do you see the store opportunity focused on? Maybe what states or markets that you're focused on most?

If you look at ANZ, the store network's very mature, so that you're just talking very, very small. You can see them from what we've done in the half.

It's very mature. If you go to Victoria, yeah, definitely.

I was taken out of context because I'd never blame anyone for anything other than ourselves. Some of my messaging was maybe more for our own internal stakeholders.

We were deeply frustrated because we have invested heavily both in our office here in Cremorne and our innovation center in Collingwood, and we weren't getting the benefits from it. That's why I said everything's on the table.

Pleasingly, since that somewhat outburst or whatever, we have seen an improvement. We are getting more people back into the office, but that is still not satisfactory for where we are.

We're going again, and we will be getting more into the office. We feel that Reece is an essential service.

Most of the business is done out in branches. We got a culture.

One of our values is one team. We are better when we're all together.

We feel very strongly that we owe it to this generation, Gen Z, and the generation after that for them to really experience what it's like to come in and to work with people, to understand relationships, to understand what it's like to give and receive feedback, to have difficult conversations. Given that AI is about to totally disrupt the entire world, I think it's in everyone's interest the relationship part really matters.

Definitely improvement from where we were, just we're not exactly where we are, where I want us to be, but we will get there. Hopefully that answers the question.

Thanks.

I think that's back to me. Great.

Thank you. Everyone, thank you for attending the half-year results webcast today.

I will close by thanking the Reece team for their ongoing support in what has been a pretty challenging, complex environment. I also want to thank our shareholders for their ongoing support.

On that note, thank you, and we will see you for the August one. Thank you very much.

Bye.