Thank you for standing by, and welcome to the Reece Limited full year results 2022 conference call. All participants are in a listen-only mode, and there will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Peter Wilson, CEO. Please go ahead. Hi, everyone, and thank you for joining us today. I'm Peter Wilson, the Reece Group CEO, and I'm joined today by Andrew Cowlishaw, our Group CFO, to outline our full year results for the end of June 30th, 2022. Today we're gonna take you through an overview of the results and our strategic priorities, as well as a review of our operational highlights for the year with some thoughts on the macro environment. Please note for consistency, all figures are in Australian dollars unless otherwise stated. FY 2022 was another year of external change and challenge. We continued to navigate issues from constrained supply chains to disruptive weather events, ongoing COVID impacts, high demand, and high inflation. Our approach was to focus on the fundamentals of looking after our team and delivering our customer promise. We did this while continuing to invest to improve our business for the future. Our customers and our network were busier than ever, and I'm really proud of how the team withstood these constraints. This environment translated into a strong result for Reece. Sales were up 22% on the prior year to AUD 7.7 billion as we saw strong demand across all regions and a significant inflation tailwind driving growth. ANZ sales were up 12% and U.S. sales were up 33% in Australian dollars or 28% on a U.S. dollar basis. Our philosophy of holding higher stock weight has served us well in the supply chain disruption, and our focus on the trading fundamentals at the heart of our model were important drivers of the result. As Andrew will outline, we experienced an increase of cost of doing business in both our regions, and we saw a step change in our CapEx program in line with our strategy. Normalized EBITDA for the period was up 16% to AUD 838 million, sorry. The net profit after tax was up 37% to AUD 392 million, boosted by significant tax credit in the U.S. The board has declared a final dividend of AUD 0.15 per share, bringing the total dividends to AUD 0.225 per share. In short, this was a strong result driven by the market conditions and supported by our resilient business model and strong execution. Now turning to our focus. As we've outlined previously, our blueprint guides what we do across all areas of our business. We are a purpose and values-led organization, and our 2030 Vision and strategic priorities help bring that to life. Each of these elements come together to help us deliver on our promise of customized service. Now turning to the detail of our vision and strategy. Our 2030 Vision is to be the trade's most valuable partner. We're bringing this vision to life through our three strategic priorities. The first is being brilliant at the fundamentals of trade distribution. It's an intentional focus on the foundations of the Reece model, and we cannot achieve our vision unless we are the best at the basics. The second is investing for growth. Like we've always done, continuing to grow our business through reinvesting in our stores and systems and expanding in adjacencies and markets where we can realize growth opportunities. Finally, staying ahead of our customers' needs through our innovation approach. In the U.S., we focus on the first two areas while we bed down the basics, and we'll leverage innovation learnings where it makes sense. This strategy will help us realize the opportunities in our regions. In Australia and New Zealand, our markets have robust long-term prospects driven by housing fundamentals and infrastructure investment. We are the market leader, and we have an opportunity to capture further growth in our newer segments and through innovation and new adjacencies. We do enjoy the benefits of scale and a resilient model focused on the R&R plumber. In the U.S., we are in a large market, and we have an opportunity to build a differentiated position of scale over time, and we're gonna spend more time on this later in the presentation. Now turning to the strategic progress in each of our business units this year. In ANZ, we continued to progress a wide range of brilliant fundamentals activity while investing and driving innovation forward. As our network was stretched and our customers still suffering capacity constraints, focusing on the fundamentals was critical. We looked for ways to give our branches and our customers time back in their day. An example of this was the trial of a new training approach for onboarding branch staff. Early signs show this is delivering a major step up in the speed to competency for new team members. In a labor-constrained market where retention is a key challenge, this is meaningful change. On the innovation front, we have also made good progress. We've moved to a new support center called The Works in April, and we've delivered a range of other initiatives. Turning to look at some of these activities in a little more detail. As ever, the team were key to our performance. While COVID impacts continued, we supported our people, maintaining a strong focus on safety and investing in leadership programs, including focus training and support for women in leadership. Now turning to look at our network footprint. In the high demand, high disruption environment that we've already outlined, our network density in ANZ remained a competitive advantage. It enabled us to take a very flexible approach to directing our resources effectively, allowing us to deliver our customer promise despite a high level of absenteeism and supply chain disruptions. We continued to invest in the network. We opened three new stores during the period, taking the total to 645, and we also delivered 33 refurbishments over the course of the year. We have kept providing our customers with quality products. Examples of this include our Mizu bathroom sensor technology range, which has been appealing to consumers in the current hygiene-focused environment while saving on water costs and looking great. Sustainable solutions in our best-selling Thermann hot water range. Our new model has improved energy efficiency and lower running costs. Our Waterworks range, DIMAX, which is manufactured to the highest tolerances and developed specifically to cope with Australian conditions. Turning to our strategic priority focused on delivering innovation. We continue to focus our efforts on the trade of the future with four priority areas. Firstly, creating future leaders to enable world-class people experiences. Secondly, digitizing and enhancing the customer experience. Thirdly, creating new services, and finally, developing the supply chain of the future. As I mentioned, this year, we moved to our new support center in Cremorne, Melbourne. The building is a strategic investment to help us attract and retain talent, facilitating new ways of working, inspire collaboration, and deliver innovation for our customers. An example of the type of innovation we wanna keep driving was the launch of our new 3D bathroom planner. The planner is called Imagin3D, which uses visualization technology to help customers bring their vision to life with quality bathroom renders. We've kept innovating in the digital space to support our customers' needs. In maX, our customer-facing digital platform, we've kept improving the customer experience online, seeing a 17% increase in online sales for the year, which is up 85% over the past three years. In FieldPulse, a service which has been developed to save customers time and help grow their business, we launched the Plumbers' Price Book, which helps plumbers provide quotes to their customers faster. We are challenging ourselves to stay one step ahead of our customers' needs, and we'll keep evolving to stay at the forefront of our industry. Now turning to the U.S. business. Before we look at FY 2022 specifically, I wanted to take a minute to reflect on where we are four years on from the acquisition of MORSCO. In 2018, we outlined what we saw as a significant opportunity to secure a foothold in a large and growing market through a business model that we knew and understood. Four years on, the rationale for the acquisition is still intact. We believe this is proving to be a highly strategic platform in an attractive and growing region. Despite all the external challenges that we've had to navigate since, the business is on track and the opportunity remains. Turning to look at some of the activity of the last four years in more detail. Today, we have established a platform to build a bigger and more successful business. We don't want to overplay what we've done so far. We know we've got a long way to go, but we are pleased with our progress. We know from our experience in ANZ that the only way to win is to play the long game. We've stuck to the plan we set out, but importantly, always being humble and taking our time to listen and learn about the local market and get close to the customer. Everything we've focused on is about embedding the brilliant fundamentals of trade distribution. Some of these actions aren't immediately visible, but we know they will enable our long-term success, and we are very proud of what the U.S. team has achieved to date. With that, we have reached another milestone which I outlined at the half year moving to a single Reece brand in the U.S. This symbolic move is acknowledgment that we are approaching a moment when our customer promise can be delivered in the U.S. market. This began with the Reece corporate brand launch during the year and now progressing to rebranding the network over the next few years, starting in California in November. Looking now at the activity under our strategic priorities in FY 2022, embedding brilliant fundamentals was a big focus. We continue to deliver operational upgrades and roll out training and development programs, focusing on areas like leadership and selling skills, and we are starting to see some of the benefit of this. We have also built out the leadership team, which is now complete. We've launched our online offer, maX, tailored to the local market. Building scale and upgrading standards across the network also remained a priority. Turning to the network in a little more detail. We have a multipronged strategy to upgrade and improve our existing network and to roll out new stores in refreshed formats across our business units. In particular, we see an opportunity to increase our offering to the more resilient R&R market that we're exposed to in ANZ, and we believe that we have a differentiated proposition. We rolled out nine new stores this year, four of which was in the second half, and we completed 11 refurbishments. As we roll out these stores, the customer responses so far have been very positive. As flagged at the half year, we have also completed a small bolt-on acquisition in the R&R space. We have a clear pipeline of new stores for FY 2023, and we anticipate the rate of new stores to increase and land at around 10-15 stores per year. I'm gonna hand over to Andrew to go through the financial results for FY 2022 in more detail. Thank you, Peter. FY 2018 was the last financial year for Reece prior to the acquisition of MORSCO in the U.S. In FY 2018, the Group achieved sales revenue of AUD 2.7 billion and EBIT of AUD 324 million across 615 branches in Australia and New Zealand. Four years later, in FY 2022, the Group has achieved sales revenue of AUD 7.7 billion and EBIT of AUD 578 million across nearly 850 branches in Australia, New Zealand, and the U.S. Over the last five years, the challenges have been numerous. Reece has benefited over this time by having a long-term lens and deeply disciplined operational culture with a focus on, one, a long-term investment strategy. Two, leveraging net working capital, including deliberate inventory investment and partnering with our suppliers to fulfill demand. Three, maintaining pricing disciplines through our selling strategy we call Selling the Reece Way. That brings us to where we are today. Now onto the financial highlights of FY 2022. Despite the complex operating environment across our markets, Reece performed well and delivered a strong result. Sales revenue for the Group was up 22% to AUD 7.7 billion. Normalized EBITDA was up 16% for the year to AUD 838 million, and EBIT increased 17% to AUD 578 million. Net profit after tax was up 37% to AUD 392 million. It is worth noting that the Group benefited from the significant tax credit in our U.S. business relating to inventory valuation. This credit reduced the Group's effective tax rate for FY 2022 to 23% compared to FY 2021 at 25%. Earnings per share for the financial year of AUD 0.61 is up 37% on the previous period. Our net leverage ratio as at June 30, 2022 was 1.2 x. Normalized EBITDA margin decreased by 50 basis points for FY 2022, the result of elevated operational expenses, primarily driven by higher employee numbers and wage inflation. Cost of doing business increased by 25% from the prior year. Now onto the ANZ region. The ANZ region delivered a solid result, but remained impacted by COVID-related lockdowns and construction restrictions during the first half year. Sales revenue for FY 2022 was up 11.5% to AUD 3.5 billion. From a quality of earnings perspective, it is important to note that we experienced product inflation across our range of 9% during the period. Normalized EBITDA was up 4.8% to AUD 526 million, and EBIT increased 4.2% to AUD 398 million. Normalized EBITDA margin decreased 90 basis points for the year, and this is inclusive of BAC income, which is a government incentive scheme, and the cost of our December 2021 debt refinance. These two items are non-recurring and are therefore excluded in the calculation of Adjusted EBITDA. Adjusted EBITDA margin experienced a 150 basis point compression. This was primarily a function of higher employee numbers and wage inflation, together with a deliberate strategy to invest in supply chain, innovation, and marketing. We remain cautious on the outlook for the ANZ region, and as such, we're prudent in assessing inventory valuation and accounts receivable. The U.S. region produced a very strong performance for FY 2022, with record results being achieved across the majority of our markets. Sales revenue of AUD 4.1 billion was up 33%. On a constant currency U.S. dollar basis, the region was up 28%. It is important to note that product inflation was significant and the average inflation for our U.S. business was estimated to be circa 20%. Although diminished, COVID-19 continued to impact our U.S. operations through supply chain disruptions, staff shortages, and illness. Operating expenses in the U.S. have increased, driven by additional headcount, wage inflation, and inflation across other components of our costs of doing business. Normalized EBITDA was up 42.5% to AUD 312 million, and EBIT was up 63% to AUD 181 million. Notwithstanding the higher operating expenses, the U.S. region was able to increase its normalized EBITDA margin by 50 basis points. In line with the approach taken in the ANZ region, the U.S. region was also prudent in assessing inventory valuation and accounts receivable. There was an AUD 222 million operating cash inflow for the year versus an AUD 352 million inflow for FY 2021. The key driver of the reduction in cash flow from operations was the investment in working capital, which I will discuss in more detail on the next slide. FY 2022 also presented a significant step up in capital expenditure, inclusive of software capitalization. The increase in CapEx to AUD 200 million, up from AUD 70 million, was in line with our expectations. In December 2021, we announced the successful refinancing of our existing debt facilities with AUD 1.25 billion of syndicated multi-currency revolving facilities. Subsequent to the half year, the Group upsized the facility limits to AUD 1.4 billion. Business acquisitions and investments of AUD 93 million includes the AUD 43 million payment of the third consideration for the Todd Pipe & Supply acquisition, venture investments through Superseed, and some small bolt-on acquisitions in ANZ and the U.S. Now looking at the Group's key areas of strategic investment. As referred to on the previous slide, net working capital increased during the financial year. Net working capital for FY 2022 was 21.9% of sales versus 19.1% in the prior year. The uplift for the year was primarily driven by a AUD 390 million increase in inventory. This elevated inventory investment reflects the Reece philosophy regarding stock as a strategic asset. As supply chain disruptions have persisted, we have actively managed the incidence of being out of stock on critical items by increasing our safety stock levels. We expect inventory to remain elevated from pre-pandemic levels until the supply chain and demand dynamics in our regions normalize. We continue to focus on the long term and investing through the cycle. Capital expenditure to sales increased to 2.6% from 1.1% in FY 2021. The Group's capital expenditure during the financial year was directed towards branch refurbishments and new stores, fleet growth and upgrades, and investment into digital capabilities. As referred to on the previous slide, the Group refinanced Term Loan B debt with a multi-tranche revolving syndicated facility, repaying Term Loan B debt of AUD 1.36 billion. This refinance is expected to drive interest savings, increase treasury flexibility, and provide diversity of tenor. Based on drawn debt as of June 30 2022, we would expect interest expense in the range of AUD 40 million-AUD 50 million for FY 2023, assuming no material changes to interest rates or FX. During the year, Reece has used cash reserves to reduce debt, invest in working capital and capital expenditure, resulting in a closing cash balance of AUD 220 million. Senior debt was reduced to AUD 1.1 billion, and available liquidity at June 30, 2022 was AUD 520 million, which provides operational and strategic flexibility. The Group closes the financial year with a strong balance sheet. Into FY 2023, we will maintain investment in net working capital and expand and develop our branch network. We will continue to focus on debt management and the prudent payment of dividends. We'll also keep applying a disciplined M&A approach, executing bolt-on acquisitions where appropriate, as well as investing in digital transformation. I will now hand back to Peter to discuss the macro outlook. Thank you, Andrew. Looking ahead, the complexity of the current macro environment makes it difficult to predict the future. Looking at some of the specific factors at play, firstly, we expect supply chain to remain challenging, with some potential improvement in the U.S. towards the second half. Secondly, we assume some moderation in inflation becoming a headwind over FY 2023. Thirdly, we expect the rising interest rate trajectory to impact sentiment and demand. Lastly, we don't see any significant change to ongoing labor and constraint issues across markets. Offsetting these factors are positive dynamics like long backlogs, pent-up demand for trades, strong consumer balance sheets, a structural change in the use of the home, and longer-term factors like the under-build in U.S. housing. In this environment, we are operating on the assumption that we are past the peak of this cycle, and we are preparing the business for all scenarios. Taking a step back from the external environment, we think our business is well-placed to navigate complexity. Firstly, we are a trusted brand with a clear customer proposition. Secondly, we have a track record of delivering a sustainable level of profitability through the economic cycle, and we are a more diversified business than ever before, with a strong focus on the less cyclical R&R market. We are also operating in what we think are the two most attractive geographic regions in the current environment. Of course, we have a strong balance sheet to fund our well-established long-term focus on investing to build a stronger business regardless of the economic cycle. Now, before we conclude, I'd like to take a minute to acknowledge the announcement that we've made about our board succession process. My father, Alan Wilson, will be transitioning to an Executive Director role on the board after over 20 years as Chair and 40 years as the CEO and Managing Director. With more of his time now available, he will also be more active doing what he loves, being in the business, mentoring, advising the team. My dad founded our plumbing model, our culture of reinvestment, and our focus for the long term. These factors have been the drivers of our success. We are fortunate that we'll continue to have his access to his knowledge. Dad is seen by so many people as a mentor and a father figure, and he'll continue to really benefit from his presence in the business. Tim Poole, who's currently the Deputy Chair, will take on the Acting Chair role and will manage our chair succession process. From a board perspective, this solution provides great continuity while also being an opportunity to bring in some fresh perspectives. Importantly, we are 100% focused on retaining what is unique about Reece. Nothing about our approach or long-term perspective will change. In summary, we've delivered another strong result in FY 2022, driven by the positive external setting and execution by the team. We believe we are well-placed to manage the external environment in FY 2023, always maintaining our long-term focus and investing to deliver our 2030 Vision. Thank you for your time. We will now take your questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Lisa Hines with JP Morgan. Please go ahead. Hi. Morning. Morning, Peter. Morning, Andrew. I just had a question, firstly on inflation, just what's driving the inflation differential between Australia and the U.S., I think in the second half? I mean, 9% and 20% is quite wide based on, you know, very similar inflation dynamics kind of playing out. Hi, Lisa. Yeah, it's a good question. I think what you're seeing is what's actually happening in both regions. I think in the U.S., I've just had two weeks in the U.S. to come back to for the first time in two and a half years. There is higher inflation dynamic going on in the U.S. economy than there is in Australia. I think you're seeing that at play and I think that's what has happened. I mean, I think that's where the industry is, and I think we've been fortunate that we have been able to obviously pass through most of that inflation in both regions. I think it's just where both regions are at from an economic perspective. Yeah, I guess so U.S. manufacturers are kind of feeling the hit a little bit more, from that perspective. I guess, you know, you made some comments around, inflation, the moderation in inflation being a headwind in FY 2023. I guess, based on your plans, price rises and, you know, just the expectations around, commodity prices for now, I guess. We should probably expect that to begin normalizing in the second half of 2023. Is that how we should be thinking about things? Look, Lisa, I think it's hard. It's very hard. I think at this part, it's just so hard to predict where it's gonna be, where the future. I mean, we're still in the current environment. We're still seeing what we've been witnessing. I mean, that is the likely scenario, and it obviously, I guess, depends how far interest rates rise and how much demand gets impacted. I think there's a lot of moving parts, and it is really hard to predict. Okay. Sure. Understood. I just guess a second follow-up on, just labor costs. You've been adding staff. Can you just give us a bit more color around, you know, where that's been and whether you think the headcount's at probably the right level now? Yeah. I think. I mean, clearly, we've known. I mean, there's been a big lift in activity. We're a service business, and that means you need people to actually provide the service. Clearly we've had an increase in headcount for the service levels. Probably a little bit of catch up from the start of COVID as well. The investments happening in both regions. We feel we're about right with where the business is now. I think, you know, we're managing the environment as well as anybody. I don't know whether you wanted to add anything, Andrew. Yeah. I think, Lisa, probably just to break it out a bit further for you, there's been significantly more growth in employees in the U.S. business than in the ANZ business. As you know, that business, we've been building out the tech capabilities there. We've started to build out the supply chain capabilities, and we've also started to build out the marketing and category management capabilities of that business. A bit biased towards the U.S. region. Okay. Sure. Thanks. That's a good color. I'll leave it there. Thanks, guys. Thanks, Lisa. Your next question is from Peter Steyn with Macquarie Group. Please go ahead. Morning, Peter and Andrew. Thanks very much. Just wanted to drill into the U.S. You called out the inflation, but 35% U.S. dollar sales growth implies there's a pretty strong fundamental uplift in the sales cadence. You know, obviously a little bit of acquisition impact there, but could you just give us a little bit of color on what you're seeing in the market and your performance within that context? Peter, is there a dramatic lift on sales cadence in the business? Hi, Peter. Look, I think how I would summarize it, I think our performance has been, you know, really good. I think the market is really strong, and I think if you see where all the market leaders are in the U.S., they're all experiencing strong growth. I do, I think I've said this a few times. I think in this current environment, it's the market leaders that have benefited the most with scale and have taken advantage. You know, I think we are building capability. I was really pleased with what I've seen in the last two weeks. I think we're going with where the market is. Yeah, I think, as much as anything, it's a good execution. We're building capability, but you know, I think we're benefiting from where the economy is. You wouldn't necessarily say that you've had much by way of market share growth? Well, I think if you look at the other leaders, they're all, I think, we're all growing at the similar sort of rates. I think we're holding our own. I think, in my estimation, in both regions, it's the smaller independents that have probably struggled because you've needed to have the scale and the balance sheet to invest in working capital to capitalize or to work through what has been just an incredible 18 months to two years. You know, the smaller, less capitalized players have struggled. I think the leaders have been exhibiting similar growth rates. Yeah. We're holding our own, and we're building capability. I'm pleased. Thanks, Peter. Just on inventory, two quick questions. The commodity price impact in that AUD 390 million, if you wouldn't mind giving us a bit of a sense of that, and then the nature of the SKUs, presumably a lot of the growth in relatively core lines as opposed to fringe lines where obsolescence may be a greater risk. I'll take that one, Peter. If you look at our year-end stock buy, that AUD 390 million, what if we try and break that out between the inflation impact and let's call it the stock on hand unit impact, it's effectively balanced across the two. Half of it's inflation and half of it's higher stock rates. In relation to what type of, what type of, I guess, SKUs are we holding more of, we talked in the presentation about increasing our safety stock levels, and the safety stock are effectively the must-have items. What we've done is making sure we've got the must-have items that are effectively like, the bread and milk of the trades and ensure that the jobs can get done. That's been the bias of the stock build. Thanks, Andrew. My last quick question is just around your bad debt provisions, going from AUD 11 million-AUD 32 million, perhaps the comment on the region specifics. Are you more worried Australia versus the U.S.? Just an overlay there, please. Yeah. No, it's a good question, Peter. On the ECL, yes, obviously we're up AUD 22 million. A big part of that is really just applying a conservative lens around the potential macroeconomic outlook. If you look at the two businesses or the two regions, they've got very different characteristics around their ledger. In the ANZ business, we're able to insure all the debtors here. In the U.S., we don't. I think ultimately the mix of business is also different. U.S. business has more commercial customers. The ANZ business has a more of a bias towards R&R customers. We think it's prudent for the current outlook. There's no real differentiation. The growth in bad debt provision in relation to sales would probably be proportional, on both businesses. Is that sort of the read, then? No, we're not saying that, but I think. Yeah. The process we go through, Peter, is there's a matrix we apply to effectively calculate a provision, and then we apply a macroeconomic overlay. The macroeconomic overlay is directionally similar but nuanced for the two markets. The ECL is not split necessarily by revenue. Perfect. Thanks, Andrew. I'll leave it there. Peter, appreciate it. Thank you. Thanks, Peter. Your next question is from Brook Campbell-Crawford with Barrenjoey. Please go ahead. Yeah, thanks for taking my question. Just one here on the Australian market. You flagged in the outlook commentary that you're past the peak of the cycle now, which is understandable and matches up with the data. I guess just given where your network is and you have a decent share here in plumbing and heating in particular, are you able to share any thoughts about what you're doing to sort of protect the business and support earnings over the next couple of years as we see softer demand? Look, hi, Brooke. I mean, our lens obviously is always to the long term. I think we've said so many times we play the long game and, you know, we do think we're past the peak of this cycle. Like, there's still pent-up demand for trades, there's a backlog of work done. If you try to build a house or get a trade, it's really hard to. We are still seeing activity currently at levels of where they've been. In terms of, well, how we're preparing for all scenarios, if things do change and interest rates take off and everything and it becomes more negative, we will obviously adjust, like we've always done. For the immediate, I think our plans are pretty set for the next 12 months. Beyond that, we will flex up and down, but with a lens to investing for the long term. Yeah. Understandable. That's definitely consistent. If you go to the U.S., I mean, you did just comment a moment ago that there's more sort of commercial type customers, which I presume is the home builders in the U.S. relative to your business here in Australia, which is more R&R focused. But could you provide a bit of an update in that U.S. business perhaps? What proportion is new construction at the moment? And I know you're building capability and rolling out stores on the R&R front, but yeah, what's your current exposure to new housing construction versus other segments would be very helpful. Thanks. Well, Brooke, as you know, some things we just don't disclose. The only thing I'm gonna say, like I've always said before, that when we bought MORSCO, it was primarily focused to residential and commercial construction. The smaller part was R&R. That's just the way the large part of the wholesale industry, the plumbing wholesale industry targets. Clearly over many years, we are wanting to build out to have a bigger presence in the R&R, the repair and replace part, but that is a long-term play. You've gotta build the capability, you've gotta build the stores, build the service, build the people. But MORSCO is predominantly a residential construction and commercial construction led business. That is the big difference between the U.S. and Australia. Obviously that's how we're gonna pivot over the next, you know, 10-20 years. Understood. Maybe just one final one for Andrew. CapEx was roughly AUD 200 million in FY 2022. Is this a good number to sort of extrapolate into FY 2023 and 2024, just given your plans around sort of store refurbishments and rollouts in the U.S.? Yeah. We're at about 2.6% of revenue, Brook. Our view is that 2%-3% should be our ongoing average. That's helpful. Thanks. Thanks, Brook. Your next question is from Samuel Seow with Citi. Please go ahead. Morning, all. Thanks for taking my questions. Just looking, I guess at the second half CapEx there, it looks a bit elevated for full stores. Is there anything to read there? Just, you know, general thoughts around the store rollout in, into the softer environment. I'll take the latter part and then Andrew can take the first part. Look, where we've got to in the U.S. after, you know, four years into with a number of trials and we are building capability to plan to roll out between 10-15 new stores a year. We think that is a level that is, you know, gonna challenge us, but still sustainable because you've gotta find the sites, you've gotta build the stores, you've gotta build the teams, the managers, the assistant managers. That's what we're going for. That's taken us a little while to work through. Andrew, did you wanna take the first part? On the new stores/maintenance point, Sam, look, the vast majority, more than half of the CapEx is for maintenance. Store refurbs, that's store refurbs, which we've alluded to in the presentation across ANZ, but also the U.S. In the U.S., the business that we acquired, there's been a program planned, which we have struggled to implement during COVID around trying to upgrade those store formats. It biases towards maintenance CapEx. There's also a CapEx in there around refreshing the fleet and building out the fleet, 'cause the fleet's an important part of our business proposition. We did 33 refurbs in Australia and we did 11 in the U.S. The sites in the U.S. are bigger than they are in Australia. That gives you some more context as well. Awesome. Thanks for that. Just quickly, appreciate your thoughts on market share gains in FY 2022 in answering the previous question. I guess looking forward, given your focus on building inventory still, is that implying, you know, in a soft market you're going a bit harder on market share in the future? Or is that just still safety stock or what you're seeing in the environment? Well, I think ultimately the stock part is all about delivering on the customer promise. I mean, ultimately we're about building this sustainable long-term business that serves its customers, and we obviously wanna grow our customers over the long term. You know, we don't deliberately go out, say we're gonna just take market share. It's just we wanna grow the business and do it in a sustainable way. That's how I think we've answered that question. Absolutely. Thanks for that, guys. Thank you. The next question is from James Casey with Ord Minnett. Please go ahead. Good morning, gents. Peter, just in terms of the end markets, and specifically your commentary regarding being past the peak of the cycle, can you just provide a little bit more color from a U.S. perspective on residential versus commercial? What you think we'll see over the next, or over the medium term? I think the trends are quite similar in both regions, James. There are some areas where you can see there could be some commercial, you know, non-residential part being quite strong. Clearly in the Waterworks, you know, the Waterworks where the infrastructure, there's obviously lots of investing there. But yeah, in the residential part, you know, all the forecasts are showing we've sort of peaked from a residential perspective. You know, we know that that's been driven by population growth, household formation, interest rates, jobs, you know, employment. There's a whole lot of varying ways this can go. But how we're looking at it is, you know, we're in the Sun Belt, which is growing faster than the North or the Snow Belt. Really, how we see things, it's still a relatively small business, and we're just focused on building our capability and working on our strategy. I think things will take care of itself in the long term if we do that. Okay. Historically, going back over a long period, you've invested potentially more aggressively into weak markets or weaker markets. You've taken advantage of the situation to build out more new stores and make acquisitions. Do you think that's the way you're gonna treat the U.S. market going forward? I think you've got to look at your past to predict where you're gonna go. Definitely. I mean, I think, James, it's a, you know, we did do that, obviously, through the GFC, and we've always done that. I mean, we've really got a long-term lens just to keep investing and it's all about the customer and the business. The interesting part now is that everyone says the same thing this, you know. I'm not sure if it's gonna be the competitive advantage 'cause I, every person I speak to or listen to is saying the same thing. "Oh, well, we're gonna invest in the down cycle." We'll just see. Well, I mean, you just got to see how far that down cycle goes. If it goes down, and then who's got the courage to really do it if it gets that low. Certainly we are planning to invest through this cycle. I think Andrew's that guide of 2%-3%. If you go back to the years, you know, 2008-2012, we actually had a higher percentage for sales, but no one was really following us there. A big part of our model is investing for growth, a big strategic priority. Just the last one. Andrew, that tax rate obviously was lower in FY 2022. Will that go back to a more normalized rate going forward to the 25% level? Yeah. Obviously the driver of it, James, is the LIFO tax credit in the U.S. Yeah. If the LIFO tax credit was excluded from FY 2022, we'd go back to an effective income tax rate of about 28%. We don't know what's gonna happen with inflation in FY 2023. Our, I guess our view is that it probably moderates from the levels we have observed in FY 2022. We wouldn't expect, all else being equal, to have the same sort of size LIFO credit in FY 2023. Okay. Thanks, guys. Thanks, James. The next question is from Andrew Scott with Morgan Stanley. Please go ahead. Thank you and good morning. Just first question, very similar to James, but maybe here in Australia, you give us a good summary of your network on slide 14. Just thinking that if we do see a slowdown, sometimes that creates opportunities. Are there any obvious regional kind of gaps that you have in mind? You don't need to necessarily name them, but do you think there's more you would like to do to complement that network if opportunities arise? Oh, Andrew, I think we're pretty mature in this market. Nothing's really gonna move the needle. That's why we went to the U.S. That's our growth opportunity. You know, we've got to keep making sure we're relevant. We've got to keep investing so that no one takes our spot here. Certainly we've got a big innovation and digital agenda for that digital ecosystem. In terms of any significant downturn that might come or might not, if it does come, our network's very mature here and hence why we've moved ourselves into the U.S. No, understood. Then the big working capital lift, I understand the need to carry safety stock in the environment we've just had. I guess it's two-part question. One, does this highlight the opportunity for a DC network, distribution center sort of network to manage that and flex that inventory a little bit? If I preempt the answer a little bit, I suspect the answer is we don't have scale yet. Does that really bring home the need to, or the imperative to, add that scale with a larger sort of step-out acquisition? Yeah. I reckon. Well, are you talking the U.S. here? I am talking about the U.S., yes. Yeah, yeah. No, no, I definitely think you've answered it. I think you know, there's big investments required for that DC network and supply chain. There's a big capability to build, and unless you've got the scale, you can't really justify it. It doesn't mean we're gonna do a big acquisition, but we've always said we've got the organic way, which is new stores. I mean, there's a lot of investing in the existing part, and there's lots of small M&A opportunities as well. I think over time we'll get there, but we're still building capabilities in other areas. That's certainly one for the midterm. Understood. Appreciate the call. Thank you. Thanks, Andrew. Sorry, the next question is from Samuel Seow with Citi. Please go ahead. Oh, hey, guys. Thanks for taking the follow-up. Just quickly on the margin compression in ANZ. Could we get a quick comment there and how you expect that to play out over FY 2023? Yeah, yeah, look, I'll take that one, Sam. Look, I mean, the issue with the ANZ margin has really just been increased cost of doing business. We've been able to basically pass on the price inflation, as Peter referred to in one of the earlier responses. What we haven't really been able to manage as well, I guess, is inflation in wages and also in other areas of our cost of doing business. That's fuel, that's cartage, that's the use of consultants for some of our tech and supply chain projects. There's an inflation element sitting in our cost of doing business as well, which has put that pressure on the EBITDA margins in ANZ. Compression was more pronounced in, I guess, first half and then so improving in the second half. That will continue to improve into FY 2023? There's a dynamic there, though, Sam. The first half in ANZ was pretty heavily impacted by COVID in Q1 and Q2, especially in Victoria, South Australia, and New South Wales. We had construction lockdowns, which obviously were a while ago, but actually impacted volumes and activity during Q1 and Q2. Okay. Thanks for that. Appreciate it. Thanks. Okay. Well, I think there's no other questions. I think that wraps up the FY 2022 results. Again, guys, thank you for your time. It's been yeah, another really strong result. We've had a great year. The team have held up extremely well, and it's without our people, we wouldn't be able to deliver this. Thank you for joining us, and we'll see you soon. Thanks. Bye. That does conclude our conference for today. Thank you for participating. You may now disconnect.