day and welcome to the Reece Limited Half Year 2024 Results Conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Peter Wilson, Group CEO, to begin the conference. Peter, over to you. Thanks, Gavin, and good morning, everyone. Thank you for joining us for our Half Year 2024 Results call. Today, I'm going to take you and cover an overview of our results, our strategy, and operational highlights. I will then pass to Andy Young, who is joining us for the first time as our Group CFO, and I would like to say a big welcome to him. Andy will take us through the result for the first half in more detail before handing back to me for some remarks on the outlook for the remainder of the year. All results will be shared in Australian dollars unless otherwise stated. Turning now to an overview of our financial performance for the first half, we delivered a very solid result in a subdued environment. Group sales were up 2.5% on the prior year to AUD 4.5 billion. ANZ sales were up 2% to AUD 2 billion, driven by inflation and supported by historical backlogs. US sales were flat at $1.7 billion, with modest deflation for the first half. We focused on strong execution of the fundamentals and tight cost control. This helped us deliver adjusted EBIT up 5% to AUD 367 million and an adjusted NPAT up 6% to AUD 224 million. The board has declared an interim dividend of AUD 0.08 per share. Turning now to recap our strategy and our blueprint. As we've outlined previously, our blueprint guides what we do across our business. We are a purpose and values-led organization, and our 2030 vision used to be our trade's most valuable partner. Our three strategic priorities help bring our vision to life, and each of these elements comes together to help us deliver on our promise of customized service. This long-term approach guides us in everything we do and enables us to build a stronger business. The blueprint enables our long-term success and has helped us develop a clear customer proposition, a trusted brand in ANZ, and a growing presence in the US. We have a track record of delivering a sustainable level of profitability through the cycle. We are a diversified business by geography, customer, and end market, with a long-term focus on the less cyclical R&R market. We also operate in what we think are two of the most attractive geographical regions. We are well-capitalised to support our long-term approach of investing for the long term. Now, turning to look at the strategic progress in our business during the half. We continue to focus on strong operational execution in the first six months of FY24. We remain driven by fulfilling our customers' needs, which are at the heart of our decision-making and our approach. In particular, we've taken the opportunity, following the extreme demand of the past few years, to focus on the fundamentals of our business. We've also continued investing in our team and strengthening our culture to help us deliver our service standards across both regions. And we continue enhancing our network, optimizing our supply chain, and building our digital and innovation tools. In the ANZ region, the density of our branch network does remain a competitive advantage and an important part of our customer promise. We've continued to optimize and enhance the network during the half with 5 relocations, one branch closure, and one new branch opening. Maintaining network standards for both customers and our people remains an ongoing focus with 6 branch refurbishments. After a high number of store openings during FY23, we have a number of new stores in the pipeline for the second half of FY24. Turning to the U.S., we continue moving at pace to upgrade and expand our network. We rolled out 9 new branches, 4 of which were in the new R&R format, and we also completed 4 refurbishments. The Reece brand rollout continued to progress, with 62 branches now trading as Reece across 6 states. The next stage of the brand rollout includes Texas, Oklahoma, and Kansas. We are pleased with the response to the new stores and the Reece brand rollout, which provides us with an employee value proposition to attract talent. We continue to see a sustainable rate of organic new store openings as 10-15 per year, and we remain focused on increasing our offering to the more resilient R&R market, which we do think we have a differentiated proposition. I'll now hand over to Andy to run through the financial review. Thank you, Peter, and good morning, everyone. Overall, the group has delivered a very solid result for the first half of the FY24 financial year. As Peter has already mentioned, sales revenue for the group was up 2.5% to AUD 4.5 billion, partly supported by favorable foreign exchange movements. On a constant currency basis, sales were up 1%, with a neutral impact from product inflation at the overall group level. We've taken the opportunity to streamline our reporting this half to present a single view of underlying earnings. There were no material adjustments between statutory and adjusted earnings this current half, which makes it a very clean transition period and will simplify our reporting moving forward. Adjusted EBITDA was up 8% for the half to AUD 526 million, with growth across both regions. Adjusted EBIT increased by 5% to AUD 367 million, and within this result, group costs, excluding depreciation and amortization, grew at 3.6%, principally driven by year-on-year wage increases. Including depreciation and amortization, overall group costs increased by 5% for the half, reflecting the impact of capital spend associated with our U.S. rebranding activities, network expansion and renewals, and amortization of intangibles. Adjusted net profit after tax was up 6% to AUD 224 million, with consistent growth in adjusted earnings per share, which was AUD 0.35 for the first half 2024 period. Now, onto the ANZ region. In a softening trading environment, we feel the ANZ business delivered a very credible result for the first half. Sales revenue was up 2% to AUD 2 billion, which was largely driven by inflation, which, in line with our Q1 commentary, continued to moderate across the period. Volumes in the ANZ business were subdued in the first half, supported by a backlog of activity. Adjusted EBITDA was up 7% to AUD 307 million, and our adjusted EBITDA margin increased by 72 basis points, supported by strong focus on the fundamentals of our business, along with disciplined cost management as we trade through the current economic cycle. Adjusted EBIT increased 6% to AUD 233 million. Within this result, we've maintained a cautious approach to cost control while seeking to maintain our service proposition and continue to invest through the cycle. As noted previously, both regions have seen an uptick in depreciation and amortization. Within the ANZ business, recent investments in the network, both organic and inorganic, and in our digital capabilities, have driven an increase in depreciation and amortization relative to the first half of last year. Finally, I wanted to touch briefly on the delta between adjusted EBIT and statutory EBIT, which was primarily due to the goodwill impairment of AUD 29 million relating to Metalflex, which we recognized last year. There are no differences between statutory and adjusted earnings for the current half-year period. Now, onto the U.S. region. Our U.S. business also performed well for the first half despite challenging market conditions. Sales revenue of $2.6 billion was up 3%, the headline growth rate benefiting from favorable foreign exchange movements between periods. On a U.S. dollar basis, sales were flat, with modest deflation for the half. Adjusted EBITDA on a USD basis was up 6% to $143 million, with a 46 basis points increase in our adjusted EBITDA margin. Similar to our ANZ business, this result reflects a continued focus on embedding operational excellence within the business and tight management of the cost base. Adjusted EBIT increased 2% to $87 million on a U.S. dollar basis. We continue to focus on investing across our U.S. business. The rebrand rollout and network expansion remain key investment priorities, as Peter referenced earlier, both of which are contributing to an elevated level of depreciation for the period. Now, turning to the group's cash flow position. The group generated operating cash inflows of AUD 378 million in the half, supported by an improved net working capital-to-sales ratio. Capital expenditure was up on the prior comparative period by AUD 27 million, driven by network expansion, branch refurbishment costs, and the Reece rebrand in the U.S. The group repaid borrowings during the half in line with our capital management priorities, which I will discuss shortly. Net finance costs increased during the period, driven by an increase in variable interest rates. Based on current drawn debt, we anticipate interest expense to be in the range of AUD 65 million-AUD 75 million for the full year. We continue to expect the group's overall effective tax rate to sit at around 30% for FY24, noting, of course, this is subject to our annual LIFO adjustments relevant to our U.S. tax expense, which will be reflected at financial year-end. Now, looking at the balance sheet. The group has closed the half with a very strong balance sheet, which supports our long-term growth approach and provides flexibility as we trade through the current economic cycle. Net debt was down to AUD 610 million, reflective of both debt repayment and a strong cash position, and the group's net leverage ratio is currently sitting at 0.7x. During the half, we completed a $300 million unsecured note issuance in the U.S. private placement market. The notes have fixed coupon rates with a mixture of 7 and 10-year maturities, which has enabled us to diversify our funding sources, reduce our variable interest rate exposure, and increase our overall debt maturity profile. The note proceeds were used to repay drawn debt under our existing syndicated debt facilities and increase our available liquidity, providing the group with ongoing operational and strategic flexibility. Return on capital employed has increased to 16.1% at the end of the half. I will now take you through our approach to capital management. We remain disciplined in our approach to managing capital. The business has a defined framework, which guides the allocation and deployment of group capital to ensure we achieve our primary goal of enabling the sustainable long-term growth of the business. Our first priority is to invest in organic growth and strategic bolt-on M&A to support the ongoing expansion of the group. Second, to maintain a strong balance sheet while maintaining flexibility for growth. Third, to provide returns to shareholders through the payment of dividends, ordinary dividends, and where surplus-free cash flow exists, special dividends or share buybacks. I'll now hand back to Peter to discuss the macro outlook. Thank you, Andy. Looking ahead to the remainder of this financial year, we are expecting softening in ANZ where the tail of completions is slowing. In the U.S., we are anticipating the challenging demand setting to continue. We don't expect to see any material impact from green shoots in the new residential construction setting emerging until calendar year 2025. We do see the potential for margin pressures in this environment as we will continue to focus on remaining competitive for our customers. We are focused on strong execution as we navigate through the cycle, supporting our customers and our people, and continuing to invest in the business. Over the long term, we see no change to the positive fundamentals in our sector, particularly our housing underbuild, population growth, and the ongoing need for infrastructure in both regions. In summary, we have delivered a very solid result in the face of a subdued environment in the first half. We will continue to focus on the long term, like we always do, investing to ensure we set ourselves up for future success. Thank you. I'll now hand over and open the line for questions. If you wish to ask a question, please press star followed by one on your telephone and wait for your name to be announced. That is star one if you wish to ask a question. Your first question comes from the line of Peter Steyn from Macquarie. Your line is open. Hi, Peter and Andy. Thanks very much for your time. Just keen to get a bit of a read on your U.S. result in the context of the margin uplift we saw there. You called out deflation at a product level, but curious below that, what you're seeing in terms of traction with, let's call it, a more value-added proposition, Peter, particularly in those R&R-oriented stores and whether that's really starting to gain traction and making a mixed difference to your margin outcomes. Again, Peter, look, at this stage, the new stores that we're rolling out are still pretty immaterial, and the numbers are still small. So I wouldn't say that the performance is reflective of that. It's more just, I think, if you look at what's happened over the last two or three years, I mean, we're building capability, the strong execution by the team. And I think, really, that's just an outcome of all that. But at this point, it's still too early to have any material impact from what we're doing with the new stores. Perfect. And perhaps just a little bit of a follow-up there. You've recently opened a big DC, presumably, to just further your supply chain strategy there. Could you talk to that a little bit, what your anticipated supply chain strategy will be and whether that incrementally unlocks further efficiencies in your expectation? I think, again, look, if you call it an Jim Collins statement, it's like firing a bullet. So for us, obviously, it's our first. We've got a lot of experience in ANZ with our supply chain strategy. It is definitely different in the U.S. The supply chain strategy here was largely driven around sort of the private label home brand. In the U.S., it's a test case for Texas, and it's primarily about building a service capability for our store. So it's a test. It's possibly the team were pushing probably earlier. We've just launched it. So we're open a month and up and running. So at this point, Peter, it's really just one of those things that we do at Reece where you've got capabilities we're trying to build, and this is one of those tests that we've just commenced. Perfect. Thanks, Peter. I'll leave it there, and congratulations on a strong result. Yeah. Thanks, Peter. Your next question, caller, is Keith Chau from MST Marquee. Your line is open. Good morning, Peter and Andy. Thank you for allowing me to ask some questions today. The first one, just on your store rollout. Obviously, the Californian stores were rebranded last year. You're working your way east through Arizona, Nevada, North Carolina, etc. Is there a metric that you could call out? And I don't know if you've spoken about NPS metrics in Australia before, but just trying to help us characterize the traction that you are gaining with customers in the U.S. and the acceptance of the service proposition. I'm trying to understand. I think there's two parts to the question. I think in terms of the brand rollout, I mean, we've started. We've done the six states, and we're obviously progressing that. So for the rebranding part, as much as anything, it is for the employment proposition. So we've got a brand so we can attract the talent. It's also to be seen as a single brand as we are dealing with all the different vendors and suppliers. So when it comes to trade distribution businesses, this investment you do in the corporate ID, it really is a long-term part. There isn't a short-term payoff. So it's just part of what we do and part of the whole brand makeup. In terms of how we are measuring the customer loyalty, customer proposition, it's certainly front and center. We've got lots of metrics, and mostly, we keep to ourselves for competitive market reasons. But certainly, I think the performance of all that is the result. So I mean, we are comfortable with the progress we're making, but we've still got a long, long way to go. Thank you. That's a very good color. And secondly, just to follow on Peter's question on deflation, so obviously calling out deflation or some deflation in that U.S. revenue number. But can you help us understand whether you're seeing some deflation in the cost base as well and whether that's driving some of the price-cost spread? Yeah. Hi, Keith. Andy here. I'll pick that one up. Look, just first on the product deflation piece, the first point I probably noticed, it's not across all categories. So it's quite contained to some lines that are more commodity-linked where we have less of a labor component. We tend to see that wash through pretty quickly. So fast-moving lines that you see the impact in the sales result within that number were reported to the half. Similar factors in ANZ, but not quite as pronounced as U.S. On a cost-based perspective, remember, our cost base is largely people-driven. So most of that cost-based increase is really driven by elevated people costs. And obviously, that's worked through with our annual REM cycle. So they're the key driver, and we manage that quite tightly, obviously, with things like turnover and those sorts of levers as we navigate through a period where we've got a lower top line. Yeah. So just to build on, we're definitely not seeing deflation in our cost part. In both, it's the opposite, in fact, the pressures from an employee perspective and then also the additional costs. So definitely, that is something we're managing, which Andy's leading, managing pretty closely. Understood. Maybe if I can squeeze one last one in, the 9-store rollout in the first half was a pretty good number in the context of your total target of 10-15. Can I confirm whether those were organic store rollouts, or were some of those acquired? Thank you. Good question. Organic. Definitely organic in the first half. Great. Okay. Thanks very much, gents. Appreciate it. Yeah. Thanks, Keith. Your next question, caller, is from Barrenjoey. Your line is open. Good morning. Thanks for taking my question. I'd like just to go back to the gross margin angle that others have asked about. So back at the last result, you couldn't have been more clear that you're seeing softening demand. You're seeing cost inflation. Therefore, you're expecting margins to be going under pressure. And I guess in the half, you've driven group gross margins higher by about 60 basis points. So if we kind of just recap, what's kind of played out differently to what you were expecting back when you last addressed the market? Thanks. Did I break it, Peter, just how I yeah, I did say that. I remember saying that. And I think what I said then I mean, I think probably just a little bit early. I think we're seeing all of what I said then probably still to play out now. So it's just the continuation of the elevated cycles that we've experienced just have gone a bit longer. So obviously, yeah, it is a really solid result. So we've definitely acknowledged that. I've acknowledged that to our people here. But certainly, if you look at ANZ, for example, if you look at where all the lead indicators are going, which is where the housing starts, commencements, R&R, it is expected to soften. And the completions part is just about unwound. And the U.S. has definitely had some more challenging market dynamics. And so it does feel like the U.S. is ahead of Australia. So yeah, I think we have produced a good result, and I'm still consistent with what I said six months ago. There is that risk for it to be definitely more challenging for the next. So hopefully, that helps give a bit of color. No, that's fine. Yeah, still to come. That's helpful. Thank you. And just on product inflation, do you mind just providing some examples and color about why you're seeing product deflation in the U.S. but product inflation, albeit at a moderating rate, in ANZ? So just examples, kind of compare and contrast what you're seeing there on product inflation across the two divisions. Thanks. Yeah. I feel that. I just think it's a if you look there are similarities. It's a timing thing here and maybe a magnitude. So the U.S. had higher inflation, and obviously, they were first to increase interest rates, and they went higher. So I think that is the dynamic in the U.S. We obviously went slower, and we didn't go as high. So that's why we've sort of had the lag in comparison to the U.S. But I mean, the best probably example, as we've normalized our supply chains, we've worked through it. Categories like, for example, PVC, which is a core category, is now all of the manufacturers have gone back to normalization. They're all in stock. And you could argue that there could be some spare capacity that will actually start coming into the market. So deals come into the market, and then so those deals come in to the big players and the small players. And so therefore, you're starting to trade. So that is one example for the U.S. And it's probably going to play here in Australia too. Reliance acquired Holman last week or the week before. They announced it. There are already big incumbent PVC manufacturers that have invested heavily to play catch-up. And so we will soon be well and fully at capacity. So therefore, the dynamics post that are the margin pressures that I outlined earlier. So hopefully, that helps, Brook. No, that's great. Maybe one really quick last one. You've got a notable increase there in your balance sheet liquidity following the US PP issuance, which is great. And you talked earlier on just about how that provides you with some strategic flexibility. Do you mind just providing some additional color and comments about what might be in store for that headroom? Thanks. Well, I think ultimately, it's just that it was the right thing to do to go down that path. Obviously, with the current environment that we've got, I think we said all along, really, five or six years ago, that going to the U.S. was both organic and inorganic play. There was definitely a lot of opportunity. It's very fragmented, and nothing has changed from what we said five or six years ago. There still is all that there's lots of those opportunities. We just need to be really disciplined and selective. It just gives us more, I guess, firepower if the right opportunities come up. Certainly, we've still got to keep investing in our organic capabilities as well. That's the main part. Certainly, there could well also be opportunities come in this region, Australia, New Zealand. So it just gives strength and flexibility, which is, I think, always the best place to be. Absolutely. Thanks. Thanks, Brook. Thanks, Brook. Your next question, Caller, is for Xia Wei from Bank of America. Your line is open. Good morning, Peter. Morning, Andy. And thank you for taking my question. Just a quick one on the competitive landscape, Peter. I'm just wondering, how do you view that as evolving in Australia and that in the backdrop of one of your key competitors looking to exit the market? And just quickly following up from Brook's question, and I know you said your priority was U.S. Just wondering if you potentially could be looking at something if something interesting comes up in Australia. Thank you. I feel there's a few questions there. Thank you for those. Yeah. I mean, the competitive landscape, I mean, it is always moving and always changing. There is never a dull moment when I guess every industry, but certainly in this one, both in the U.S. and in Australia. In terms of our main competitor here in Australia, yeah, that was obviously what Fletchers have signalled. I mean, my message I always say, which we've been saying for about 20, 25 years, it is hard enough to control your own team and your own business and get it all aligned to worry about really what everybody else is doing. So I think how that will play out, we'll just see. Obviously, we have always respected our competitors and what Fletchers and Tradelink have done. So that'll be interesting to see where that plays out. In terms of opportunities for Australia, I mean, there is definitely always having a strong balance sheet allows you to exploit anything that does come up. So I mean, there's always things being put in front of us. They're just going to meet our criteria. Thanks, Peter. Thank you. Helpful. Thank you. Yeah. Thank you. Your next question, caller, is from UBS. Your line is open. Hi, Peter. Hi, Andy. Peter, take your comments around softening in ANZ, and I take your point that it's probably just taking a little bit longer to see it. It's always obviously hard to get kind of core repair and remodel data in Australia. Do you have a view on how long that air pocket that you think will last before we enter into another growth phase? Lee, hi. No, I don't. Even if I said it, I don't think anyone would believe me anyway. So yeah, my nature on these calls is to be cautious as well because I think it's the right thing to do. So I mean, I think it's the right thing to do to be I mean, all of the signs for us I mean, it is softening. It is definitely softening. So there won't be inflation in Australia, and the market's softening, and we're seeing that. So how long and how deep that lasts, I actually don't know. But I mean, if you look at the approvals and commencements, just where sentiment is, all that, I mean, it shows it is going to get a bit more challenging from where it has been. But you've just got to see through that and then have faith in the long-term parts, which we do, in terms of the fundamentals of Australia. So there's still a lot of population growth. It's a great country. There's a lot of great things going for it in our sector. So I mean, it traditionally has been cyclical, and this is probably the start of one of those little cycles. So I'm not sure how long it will be, but you would think given the fact that we're pretty much at full employment, things are still the economy's still pretty strong, although there are challenges. And I mean, the consumer is feeling the pinch with all of the cost of living pressures. So you've just got to weigh all that up and work through how it's going to play out with interest rates and obviously some of the tax cuts and so on. So there's definitely a bit to play out. It is definitely hard to get a read on, but I'm pretty confident that Australia's going to be. It's in a softening period. No, I appreciate that. Then I mean, you've obviously, as a few people have mentioned, done quite good on the cost control piece. If we think about Australia, the subdued environment you talked about, the network additions you've talked about in the second half, is there anything meaningful initiatives in ANZ that you're thinking about on the cost front, or is it just more incremental cost control and kind of more of what you're being doing already? No, good question. I mean, that's the whole big transformational part. But no, it's been, Reece has been well run for a long period of time. So I think, yeah, it definitely has to be incremental on the fundamentals, operational excellence. There are definitely, we are hoping that we can get more productive with all the investments, but largely, it's going to be incremental. And anything too radical can have an impact on the culture. So it's been well run. We've produced good results. So largely, I think you can expect to be incremental. Okay. Thanks. And maybe a final one, if I can, the brand rollout in the U.S. You're obviously getting more traction on that. Is there any view around that pace of that rollout? Have you thought about speeding it up, coming with the current pace as you kind of get through it and get more stores rolled out? No, we're comfortable. I mean, everything you've got to try to do is in a sustainable way. So Texas is a big state, and it's a big I mean, the economy's bigger than Australia. So we're definitely comfortable with that plan, and it's going to plan. I think the response has been positive. So yeah, I think we're at the right rate for what the business can handle and obviously the rate of change in the U.S. Excellent. Thank you. Appreciate the color. Thanks, Lee. Your next question comes to the line of Harry Saunders from E&P. Your line is open. Hi, guys. Thanks for taking my questions. Firstly, just noticed on the outlook comments, you've now sort of confined the softening to ANZ only rather than the whole business. So can you just set out, I guess, how you're thinking about the US in the second half, given the improving new construction environment, your strong average store count growth both from M&A last year and the organic you've seen in the first half? Would you expect your volumes to outpace any deflation and perhaps deliver similar low single-digit growth at the first half? A very good question. No, I think, look, we're obviously the focus is there on Australia just to signal that we are expecting it to be more challenging. Look, if you speak to our team, it's definitely been challenging. And if you look at all the commentary from all our peers, it's that way. If you look at the work that's under construction, it has been in decline. So I think we just to be honest, we just want to get through this calendar year. So I mean, I'm not sure when that's what we've signalled, that maybe some of the green shoots will appear in calendar year 2025. So it's still a year to go. So that's sort of how we're seeing it. Yeah. Got it. I mean, perhaps your average store count looks to be probably in that circuit, 10% on PCP in the second half. So even if you're sort of end markets down, I'm presuming you're aiming to outperform that. Well, that's part of the organic growth story. So yeah, I mean, that's the aim. Just remembering, all the new stores take time to break even and to profitability. So you can get top line, but maybe not bottom line. So yeah, hopefully, that gives a bit more color. Thanks. And then just on that strong margin performance, I know we've talked a lot about that, but looking at your gross margin at the group level, I think that was up 60 basis points. So just wondering what the main driver is there and perhaps more general margin outlook for the two divisions in the second half, I guess, given as we've already discussed, you've previously talked about cost pressures in outlook, and then we didn't sort of have a margin reduction in either division. Yeah. Well, look, I always remind everybody, we definitely don't give guidance. So I'm not going to give too much color. And look, I think I mentioned earlier that our anticipation, what I said, was going to happen in this half. It's just been delayed, I think. Look, our model, the reason why we've produced it is it's an outcome of the model and our performance. So you've got to balance it between your customers and shareholder needs. But ultimately, margin and everything is an outcome of the performance. So I think we perform well. The model's going well. We've managed the selling part well. We've managed the cost pretty well. So that's delivered the margin. That gets harder when the market gets softer. So hopefully, that just gives a bit more context. No, that's really helpful. I guess when you say it's been delayed, effectively, that margin sort of comment, if we think about, for example, the U.S., are you expecting that margin, therefore, to be incrementally sort of worse in the second half, or am I sort of reading too much into that? I think getting into this whole guidance part here, I think you've got to try to best interpret. I'm trying to give a flavor that we see the status quo continuing in the US, which has been challenging, and it's going to get softer in Australia. So when you apply that through to the model and performance and the fact that we're at capacity, it is going to get harder. Understood. Thank you. Wondering as well about the HVAC regulatory changes in the U.S. Do you see that providing a benefit to your business, noting some competitors are starting to see a benefit there? Look, whenever you have these, I mean, it's going to force change over. So that actually creates that definitely creates business. I mean, HVAC is a pretty small part of our business in the U.S. So it's only in Texas. So it's relatively small. It's not going to be material. But from an environment and an overall market perspective, it definitely has an impact for the industry. But we are pretty small. Great. Thank you. Last one, just on pricing in Australia. I've seen a lot of list price increases coming through in the last few months. So just wondering overall, I guess, on your inflation outlook for the Australian business, say, over the next 12 months? Well, I think we're basically, look, you were already if you take time to have a look through what we've just gone through, there is basically no inflation in our product inflation now in the business. So there was a little bit for the first half, but Andy, I don't know if you want to build it. No, I think that's right, Peter. I think, Harry, if you have a look at it, it's moderated significantly, and it's continued to moderate as we've come through the first half of the year. We don't anticipate that's going to materially change across the rest of the FY24 financial period. I think it's going to be a bit of time before we start to see a return to those more normalized pricing cycles in the business. Great. Thank you. Hopefully, that helps. That's great. Thank you. Your next question comes to the line of Sam Teeger from Citi. Your line is open. Oh, morning, guys. Thanks for taking my question. Just a quick one on the U.S. Just wondering about the composition of sales. You've obviously called out deflation there. And I'm guessing by the trading commentary being subdued, volumes may have declined. So just one, just checking that's the right assumption. And two, I guess, what's offsetting negative price vol to give you that kind of flat to up sales? Is it acquisitions, or? Yeah. Yeah. Just want to understand that, please. Yeah. Thanks, Sam. It's Andy here. I'll pick that one up. If you look at the half, actually, we've had a little bit of deflation. So actually, what's offsetting that's actually a little bit of volume growth in the U.S. market. So overall, pretty square. They sort of offset each other. There's a little bit of an impact of network expansion and acquisition stuff. But look, it's not material. These are bolt-ons, and we keep to a relatively small number of new store sort of extensions each year, as you know. So they don't have an overall or material impact on the overall profile. So small volume growth offset by a small amount of deflation is basically the story for the U.S. Got it. Thanks. And then maybe in ANZ, I might try and ask a question on the margins again, try my luck. But remember, you had a fairly large labour increase during the half, but clearly, you produced a pretty good margin outcome. Just want to understand, what was the main driver there that gave you that kind of 70 basis points to offset, which should have been a pretty large kind of wage increase? So Sam, on the cost side, there's a couple of things to just unpick there. So if you look at the headline cost growth, one of the things that has stepped up in that is actually depreciation and amortization. And we've actually increased our CapEx this half. So we invest through the cycle. So that's actually adding a little bit of top line growth to the overall cost number. If you take that out, the underlying cost growth's sitting at about 3.6. So that's really where we're sitting. And as we said earlier, most of our costs are really people-related. So that gives you a bit of a sense of that underlying level of wage inflation. And we manage that cautiously. As Peter said earlier, we're always mindful of the turnover in the business, and that gives us a lever to manage. We're conscious of not impacting the customer office. That's the way we tend to play into that. Obviously, to the extent that we manage that well, it has a bit of a benefit to the overall leverage on margin performance. Great. Thanks. And maybe just one quick one. The ANZ stores, noticed that sequentially, they didn't grow. And I'm sure that hasn't happened too many times before. I just want to just double-check that that I mean, it appears to be a timing issue, but yeah, just checking that assumption, and we should be satisfied. Yeah. No, the truth no, we didn't. And there have been periods through post-2009, we didn't really grow for four or five years in that period too. So we actually, as a business, didn't grow revenue from 2009 to about 2013, 2014. So there are periods of Reece where you consolidate and you build capabilities. So it has happened before. And so it's definitely it's not an error. The network is mature. So yeah, I think that just gives some context. That's not just all a straight line at Reece. So hopefully, that gives some context and flavor to all the questions. Terrific. Thank you, guys. Appreciate it. Thanks. Your next question comes to the line of James Casey of Ord Minnett. Your line is open. Good morning, gentlemen. My apologies, I was late on the call. I just wanted to check on the distribution center network both in Australia and the U.S. Firstly, in Australia, I seem to remember you were coming up against capacity constraints with your distribution center here in Melbourne. I just wonder whether there's been any plans in advance there and any CapEx tied into that, and then if there'd been any further thoughts on what you're going to do with regards to a distribution center network in your U.S. market. Thank you. Yeah, James. It's Peter. Yeah, we have covered this, James. We need to get onto the call on time next time. So I'll keep it. Okay. My apologies. No, it's okay. I'll keep it at that high level. So look, in ANZ, we've got a pretty mature supply chain that is all about getting optimization. So I think there is definitely work for us to do going forward. But because things have normalized, we're not feeling some of the pain points that we were 12, 18 months ago. So I think we're okay here. Definitely a piece of work for longer term in terms of what the supply chain looks like. And then in the US, we've done our first in Texas, our first DC, which is really it's like an experiment. It is different to here because here has been largely driven around our private label sort of strategy, home brand strategy. It's really about a service proposition there. So it's a different supply chain strategy. We've built it to experiment and to see if the supply chain, that element of our business, is the way to go. We won't really know for a year or two. Hopefully, that helps, James. Okay. Thank you. Yes. Okay. I think that's okay. Thanks, Siobhan. There are no further questions at this time, so I'll hand it back to our presenters. Oh, that's me. Sorry. I was just waiting. I was actually okay. Thank you, everybody, for the call today. Finish up by saying a big thank you to our team for everything they do and also for everyone on the call. Thanking you for your support. Hope it has given you some more context and color. Look forward to catching up again with you all next time. Thank you very much. That does conclude our conference for today. Thank you for participating. You may now all disconnect.