Reece 1Q FY26: Revenue growth, profit margin pressures, and a $365m buyback

The Reece Ltd (ASX: REH) share price is in focus after the company released a trading update. The plumbing and HVAC distributor reported 8% revenue growth to $2.41 billion for 1Q FY26, while EBITDA fell 8% to $222 million.

What did Reece report?

• Group sales revenue of $2,407 million, up 8% on prior year (6% on constant currency basis)
• Like-for-like sales increased 2%, with low single-digit growth in ANZ and decline in US
• EBITDA down 8% to $222 million
• EBIT decreased 18% to $129 million, impacted by higher depreciation and amortisation
• Added 15 net new branches during the quarter (5 in ANZ, 10 in US)
• Completed $365 million off-market share buyback at $13.00 per share

What else do investors need to know?

Reece’s sales growth was underpinned by ongoing network expansion across Australia, New Zealand, and the United States, even as underlying markets remained subdued. The company noted elevated costs related to growth investments and labour cost inflation, especially in the US.

The recently completed off-market share buyback returned $365 million to shareholders, funded through a mix of cash and debt. Reece expects gross interest expense on debt and borrowings to be between $65 million and $75 million for FY26.

What did Reece management say?

Peter Wilson, Chair and CEO, said:

As we expected, the first quarter was soft reflecting subdued housing markets. Sales were supported by network expansion over the past 12 months. Costs remain elevated driven by network growth, ongoing investment in core capabilities and the impact of labour cost inflation in competitive markets, especially the US. We are still expecting a period of soft activity in both regions. We have navigated cycles before and, as ever, take a long-term view and will continue to invest to build a stronger business for our team and customers.

What’s next for Reece?

Reece continues to focus on network growth and investing in its core capabilities, despite the soft market environment in both ANZ and the US. Management remains committed to a long-term approach and building resilience for future cycles.

Shareholders can expect ongoing investment to support both expansion and operational improvements, while the group manages costs and monitors borrowing levels following the recent buyback.

Reece share price snapshot

Over the past 12 months, Reece shares have declined 55%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

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The post Reece 1Q FY26: Revenue growth, profit margin pressures, and a $365m buyback appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.