Once a market darling, Reece finds itself stuck in American nightmare

The plumbing and bathroom giant controlled by the billionaire Wilson family is being buffeted by big competitors and sluggish spending. Can it turn that around?

Tim Tysinger was at it again. “The future is bright, and we’re just getting started,” the chief executive chirped on LinkedIn last month, announcing promotions at his North Carolina pipes and drainage company.

The success of that company, STAline Waterworks, is becoming a serious headache halfway around the world, at the Melbourne headquarters of Reece, the Australian bathroom and plumbing giant controlled by the billionaire Wilson family and once worth $18 billion.

What is particularly galling is that STAline has been built by a group of former employees of one of the businesses which Reece acquired in 2018 in the United States, a lucrative market where the company has spent billions of dollars and focused its growth efforts.

From a standing start less than three years ago, STAline – STA stands for Second Time Around – has built a network of 23 branches across North Carolina, Florida, Georgia and Texas with $21 million in venture capital backing. Reece operates in many of the same markets.

The threat has become so great that Reece has gone after its rival in the courts, alleging breaches of non-compete agreements and the use of confidential information to poach staff. It has lost one case, with three others pending.

For years, the Wilson family’s punt on expansion into the US appeared to be working.

The $1.9 billion purchase of Morsco, a sprawling commercial and residential plumbing network in 2018, kick-started those plans and transformed Reece, founded in 1920, into a global business.

Shares more than doubled – rising 138 per cent from acquisition to a record $28.52 at the end of 2024. Less than two years on, however, and more than $10 billion has been wiped from the company’s valuation.

Its core business is under threat from reinvigorated competitors that have secured new, deep-pocketed owners.

In the US, it is getting squeezed by larger distributors and a sluggish market, pushing earnings well below expectations.

But Reece chief executive Peter Wilson says investors knew they were backing a decades-long US expansion strategy when they bought into the business.

“When we raised the funds to acquire the business, we said to shareholders to only invest if they were taking a long-term view alongside us – we were very clear on that. And I’ve reiterated this often since,” he said.

There’s one suggestion that Wilson, who succeeded his father, Alan, as Reece’s chief executive in 2008, wants to quash: Reece did not err in buying Morsco from a major private equity firm, even if one of the unwritten rules of the corporate sector is to be very, very wary of buyout groups selling.

Private equity investor Advent International, which has a portfolio of investments exceeding $US100 billion ($139 billion), had spent seven years expanding Morsco – once the Morrison Supply Company – through acquisitions in a fragmented industry.

One of those acquisitions, in 2016, was Fortiline Waterworks, the business that now makes up 20 per cent of Reece’s US revenues. That’s where Tysinger and some of his executives at STALine originally hailed from.

Chief executive Wilson says Reece is not obsessing over STAline’s next move, but instead is working on servicing its own customers better and winning more business.

“We’re focusing on the customer first, taking our time, thinking about it in decades, always being guided by how to be a valuable partner for the trade,” said Wilson, pointing to plenty of new work on commercial plumbing jobs, particularly on large data centre construction projects.

Despite those comments, Reece has been aggressively pursuing STAline over the past two years in the courts, arguing that non-compete clauses have been breached and executives are using confidential information to target customers.