Good day, welcome to the Ferguson plc conference call. Today's conference is being recorded, at this time, I'd like to turn the conference over to the Vice President of Investor Relations and Communications, Brian Lantz. Please go ahead, sir. Thank you, Kathryn. Good morning, everyone, and welcome to Ferguson's Q3 earnings conference call and webcast. Hopefully, you've had a chance to review the press release we issued this morning. The release is available on the investor section of our website, and a recording of this call will be made available later today. I want to remind everyone that some of our statements today, both in our prepared remarks or in the question and answer session, may be forward-looking, including within the meaning of the United States Private Securities Litigation Reform Act, and are subject to certain risks and uncertainties that could cause actual results to differ materially, including those noted under the legal disclaimer in our Q3 earnings announcement this morning, as well as under principal risk and uncertainties in our half-year earnings release and risk factors in our Form 20-F. Other than in accordance with our legal and regulatory obligations, we undertake no obligation to undertake or update or revise any forward-looking statements. With me on the call today are Kevin Murphy, our CEO, and Bill Brundage, our CFO. I will now turn the call over to Kevin for his prepared remarks. Kevin? Thank you. Good morning and good afternoon, welcome to this third quarter results conference call. You've got Bill Brundage and I presenting this morning. I'd also like to welcome Brian Lantz, our recently appointed Vice President of IR and Communications, who's in the process of handing over from Mark Fearon, who will leave us later in the year as we continue to migrate our corporate functions to the U.S. We brought forward the Q3 update earlier than planned to ensure we provide you with a rapid assessment of how we're driving our business model to support our customers at a time of strong demand. These recent developments have had a material impact on our financial outlook. On today's call, we'll give you a sense of how we traded through the third quarter, how we're seeing our end markets, and what we've been seeing on the ground in our various businesses since our last update in mid-March. I'll first give you some color on trading and markets, and Bill will take you through the Q3 trading performance. Of course, we'll then be happy to answer your questions. Our revenue growth rate accelerated sequentially through the third quarter as the U.S. economy started to reopen more fully. This acceleration was built upon many of the themes we were talking to you about in March during our half-year results. It's also played into the key strengths of the Ferguson business model as we've been able to serve our customers. Residential markets, which represent just over half our U.S. revenue, were strong in the first half and accelerated further in the third quarter in both RMI and new construction. New residential housing starts and permits continued to grow well in the third quarter, and residential RMI markets improved as the U.S. economy continued to reopen and trade professionals returned to consumer projects. There's been growth in trade remodeling projects such as major kitchen and bath renovations. This has benefited Ferguson's trade professional customer base, and they're seeing strong demand. Turning to non-residential, as we told you back in March, there are bright spots in the commercial market in areas like data centers and distribution centers, but we're also now seeing increased activity in hospitality and in education. We also told you we expected industrial to start to bottom out in the third quarter from a prior year revenue comparative standpoint. Activity levels, while still negative for the quarter, are improving, and our customers have benefited from easier access to undertake repair and maintenance work in manufacturing facilities. Civil projects have largely continued in flight with some anticipation of future infrastructure funding further down the track. Sales inflation was a significant factor in Q3. It built through the early part of the calendar year, and we saw it first in commodities, which is about 10% of our sales, and it's now accelerated rapidly into finished goods. We estimate that total inflation in the U.S. in the third quarter was about 5% across our business, up from about flat in the first half. We are very pleased with the hard work of our associates to positively drive price in the market, which enhanced our revenue growth rate and also our gross margins. We've also been using our advantage business model in other areas to serve our customers, including the strength of our balance sheet and the scale of our supply chain to maintain unmatched product availability for our customers at a time of great scarcity. Manufacturing supply chains are struggling to balance increased demand with staffing and transportation pressures. We think this has led to a gravitational pull of customers to Ferguson as we've continued to gain share. Of course, these recent developments have also created some uncertainty for our customers, not least around the medium-term impact of limited price availability and rising price inflation. We remain very focused on continuing to ensure high levels of availability for our customers and will continue to drive the benefits of our scale and our business model. However, we're mindful of the ongoing risks of both project cancellation and pull forward of demand should project costs continue to rise or scarcity becomes more of a medium-term issue. We aren't seeing that today, but it is something we're watching very carefully over the coming weeks and months. Turning to the outlook, you will have seen from our announcement this morning that our financial outlook for the business has changed materially. Revenue picked up strongly through the quarter, continuing into early May, and we're pleased with the momentum in our business. Given the better than expected Q3 results, we're revising our outlook for fiscal year 2021 upwards as we expect to continue to outperform strong end markets in Q4. Based on our latest view of the operating environment, we expect to generate group trading profit in fiscal 2021, including the impact of IFRS 16, in the range of $2 billion - $2.1 billion. Given the much stronger revenue tailwinds, this is materially ahead of the guidance that we provided in March, which has led to today's brought forward announcement. Ladies and gentlemen, I hope this gives you some insight into what we're seeing and how we're driving the business to benefit from this strengthening demand environment. Let me now hand you over to Bill, who will take you through the Q3 numbers. Thanks, Kevin, and good morning, ladies and gentlemen. Let me start with the trading performance in Q3. Overall, group revenue of $5,916,000,000 grew by 24.5%. Revenues accelerated through the quarter, driven by improving end markets, weaker comparators in April, and acute inflation. Prices increased sequentially and averaged 5% in the quarter. Group gross margins of 30.9% were 110 basis points ahead of last year, principally driven by the pass-through of higher sales inflation enabled by our sales associates and the strength of our supply chain, combined with channel mix improvement. We're conscious the inflation-driven margin benefit could moderate or reverse in coming quarters, but the timing and extent of this risk is uncertain. We continue to carefully manage the cost base in order to simultaneously take advantage of market growth opportunities while also improving productivity and profitability. In order to flex the labor cost base through this unique period, we continue to make localized decisions to adjust the levels of permanent, temporary, and overtime resource to suit the prevailing conditions. We also remain committed to investing in digital capabilities and our supply chain to better serve our customers. We are mindful of the inflationary pressures on the cost base in areas such as transportation and wages, but we believe we can manage through those appropriately. Overall, we are really pleased with the group's performance, with underlying trading profit coming in at $560 million, a 9.5% trading margin, and $227 million ahead of last year. Turning to the U.S., Q3 revenue growth was 23.3%, with acquisitions and one additional trading day contributing 1.6% each to the quarter. We've seen strong positive growth in our residential trade and residential showroom customer groups, with increased customer traffic across both counter and showroom networks. HVAC revenues grew 40%, and e-business grew at over 50% as a result of exceptionally strong residential demand from the project-minded consumer and the light decorative pro. The commercial mechanical customer group continued to be mixed but returned to growth in the quarter, and Waterworks delivered robust growth in the quarter as a number of projects commenced. The industrial revenue decline slowed in the quarter, and we are seeing signs of improvement. Gross margins in the U.S. were strong, driven by the same dynamics discussed in the group numbers, and the cost base was well managed. Therefore, we generated underlying trading profit in the U.S. of $560 million, $217 million ahead of last year. In Canada, total revenue growth was just over 50%, of which 35% was organic. Residential demand was particularly strong, and we have seen exceptional growth across Quebec and the Greater Toronto Area. Gross margins were stable in the quarter, and the cost base is in good shape. Consequently, we generated a $12 million underlying trading profit. With regards to cash and liquidity, the group remains in a strong financial position, with net debt excluding leases at April 30th of $0.9 billion and the ratio of net debt to last 12 months Adjusted EBITDA of 0.4 x. During the quarter, we completed $140 million of the $400 million share buyback announced on March 16th. Additionally, on May 11th, we paid $567 million of ordinary and special dividends to shareholders. If you consider the $260 million outstanding on the buyback program and adjust for the post-period end dividend payment, the pro forma leverage is approximately 0.8 x. With that, let me hand you back to Kevin. Thank you, Bill. In summary, sat here today, our business is in very good shape. We're extremely proud of how our associates have continued to rise to the challenge, and we're staying focused on protecting their well-being as well as our customers. During these challenging times, we're incredibly thankful and proud of what they continue to accomplish. We're pleased with the operational delivery, and we will continue to focus on execution. We are well-positioned to manage through the near term, though we're mindful of the ongoing effect of inflation on sales and gross margins and its potential adverse impact on operating costs. Looking ahead, we are confident in our strategy, and we remain committed to investing in our talented associates, world-class supply chain, and digital capabilities to better serve our customers. Thank you, ladies and gentlemen. Bill and I will be happy to take any of your questions. Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. If you'd like to ask a question via the web interface, simply type your question in the Ask Question box and click Send. Again, that is star one to ask the question. We'll pause just for a moment to allow everyone the opportunity to signal for a question. Thank you. We'll now take the first question from James Rose at Barclays. Please go ahead. Hi there. Good morning, all. I've got two, please. The first one is on the gross margin uplift you saw in the third quarter. I'm going to presume that most of the uplift came from you selling inventory you've already got at higher prices relative to what you acquired that inventory at earlier in the year. Firstly, is that right? Secondly, is that a temporary effect? Do you expect gross margins to return to more normal levels in the fourth quarter? I appreciate your thoughts on that. Secondly, when it comes to when you set your guidance and the sort of moving parts for the fourth quarter, there's still quite a wide range implicit within that. It looks like fourth quarter organic could still be very strong. To the extent where even the upper end to your guidance still looks a bit conservative, perhaps. Appreciate your thoughts on the sort of moving parts for when you set that guidance. Thanks. Good morning, James. I'll start and then Kevin can fill in on both those questions. First off, on the gross margin lift, yes, there's absolutely a benefit there coming through from price inflation and the rapid kind of sequential improvement that we saw there in the quarter. There'd be a bit of that is, to your point, maybe some sell-through of older average cost of inventory. We're quite proud with the performance of our associates being able to take that price up. Really, it's become as much an issue of product availability trumping price in the marketplace. The strength of our supply chain and our inventory availability has really helped to play through that strength. We are mindful that may moderate over time, and could reverse in the future if pricing comes off. We're quite confident in the near term of the strength of those gross margins. As you maybe get to your question on guidance, yes, the reality is there are still a number of uncertainties out there as we play through the fourth quarter. Not the least of which is that inflation, how it plays through, both from a top-line perspective, but also through the gross margins. We've played through those various dynamics and really honed in on a trading profit dollar range, recognizing that there are various dynamics at play there. Yeah, James, thank you. This is Kevin. On the gross margin question, if I go back, yes, there is a certain impact on the existing inventory, but we're really pleased with the stewardship of price that our associates have driven. As we talked at the half one results, in-flight projects are the most concerning. We obviously take price to the market for point-of-purchase decisions immediately. Having to renegotiate and work together with the owners of projects on in-flight projects is extremely important. It has a bit of a productivity drain, but we're really pleased with that hard yardage that our associates were able to drive and will continue to drive as we look forward. Great. Thanks very much. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll now take the next question from Will Jones at Redburn. Please go ahead. Thank you. Good morning. A couple from me as well, please. The first one's just coming back on the supply chain. I think at the Q2 stage, you gave us some good figures around manufacturer fill rates, how they had declined, but how your own performance was still offsetting that. Perhaps you could update us on that interplay and just any more anecdotes about how you're managing that supply chain situation, given how tight the market is currently. The second question is really around the people side of the business. I just wonder how you're thinking about your hiring needs amid renewed volume growth. Clearly, you made some organic headcount reductions this time last year. I think some came back on in the first half. Should we think about that headcount number moving back maybe to pre-COVID levels, just given activity? At the moment, do you think temporary workers, overtime, that side of things can fill the gap? Thank you. Will, thank you. Yeah, I'll hit on some of what we're seeing from a supply chain perspective. I'll start by saying we're really proud of what the category management sourcing and supply chain associate base is doing together with incredible vendor partners to make sure that we utilize the scale of our business to ensure best fill rates in the industry. That has a knock-on impact on price, as Bill indicated earlier. From a fill rate perspective, we've seen a continued degradation of inbound fill rates into our DC network across our vendor partners. When we were together at half one, we were talking about fill rates moving from 75% - 48% across that DC inbound. We're now down below 40% to about 37% inbound fill rates as continued demand and stress on the transportation and manufacturing sectors play out. We're turning that 37% though, still into 90% outbound DC to branch, DC to customer fill rates, and our branch in stocks to- date have remained at 95%. We're very pleased with our ability to utilize that scale. Then, as we talked about in half one, our associates' ability to drive in a consultative way to those products to satisfy demand that we can fill and that also are in line with our product strategy over the long haul. Is that an ongoing concern? Of course it is. Our manufacturer partners across all aspects are struggling with what that demand looks like, but we're really pleased with that interaction. On the people side, we are absolutely in a bit of a stressed position right now, as is most of the economy, as you think about the labor side of the world. Bill highlighted wage and what we're seeing in terms of demand from driver warehouse. That's certainly the case that we have strong demand in this country for truck drivers, warehouse, and customer service representatives. We have to make sure that we continue to be the employer of choice as we're out there trying to build up the right intellectual property to grow this business and serve our customers. Yeah. Will, maybe just to add on a little bit there. We are, to Kevin's point, absolutely adding headcount and resource back into the system to take advantage of those growth opportunities. We added about 700 people in the quarter as we've seen growth rates accelerate. You should expect us to continue to invest on that people side of the business as those market opportunities play out. Great. Thanks a lot. We'll now take the next question from Elodie Rall at JPMorgan. Please go ahead. Hi. Good morning. Maybe one question first on the trends that you have seen in May, in particular versus Q3. Have you seen any tapering off versus the Q3 trends? That's my first question. Second, maybe you can give us an update on the U.S. listing process. Is it on track for a primary listing sooner rather than the one-year target that you had? I think I asked the question last time when you had in March, you had referred to a 34- Elodie, you broke up at the end there. I think I got the gist of the question. First of all, from a trends in May standpoint, as we said, the Q3 revenue accelerated through the quarter, and we saw organic strength continue, although we're only two weeks into trading from a May perspective. We still see the same market dynamics at play, both in terms of demand, residential, commercial bright spots, but also in supply chain pressure and the need to have great fill rates for your customers in order to take advantage of that strength. On the U.S. listing side, not too much has changed from that perspective. As we said at the half year results, we felt like, and we had said early on in the process, that we felt like we could bring a second vote within 12 months of standing up the additional listing in the U.S. We still think that's appropriate, especially given not just the workload attached to that transition or that set up for that vote, but also given the economic circumstances that we're working through and the challenges from a day-to-day perspective in making sure that we're the best path to market for our vendors and provide the best service for our customers. That time horizon still plays for us, Elodie. We'll now take the next question from Kathryn Thompson at Thompson Research Group. Please go ahead. Good morning. Thank you for taking my questions today. On your guidance for the full year, obviously, you're giving implied guidance for Q4, and the trading profit looks to be $550-$750 versus last year's $530. Just wanted to make sure that that's the correct way to think about it. I know you gave the trading profit guidance, but just be helpful for the top line, is it fair to assume you're giving at least double-digit top line both given easy comps and given current trends? Yeah, Kathryn, I'll take that one. If you take the $2 billion-$2.1 billion trading profit range, that includes IFRS, and you back out the year- to- date $1.454 billion, that implies a Q4 trading profit of $546 million-$646 million. Pretty close to the numbers you just suggested. There is clearly a range on both revenue and gross margins and how those dynamics play through to that bottom line. We would expect double-digit growth in Q4. Okay. Given the inflationary environment, are you able to more than offset costs with pricing actions? Yeah. We would expect, certainly we are seeing some pressures from a cost standpoint on transportation costs as well as wages, and Kevin alluded to some of that, particularly on the driver and warehouse side of the equation. We would typically say in a normal period, overarching wage inflation for our company is about 3% year in, year out. We would expect that and are seeing that pressured and would expect that to move up. Probably less of an impact in Q4, but more of an impact as we turn to next year, expecting those wage pressures to increase. Yeah, Kathryn, both historically and in the current environment, we believe that our cost inflation should be handled by price inflation in the market appropriately driven. We continue to work together with our loyal customers, making sure that we t ake proper stewardship in driving price through the supply chain against some pretty strong demand. Right now we're seeing that price increase and that price inflation be accepted through the marketplace as demand for end projects continues to be very strong. That's not just on the residential, new or residential RMI side of the world, that's also in the non-res portion of our business, as we see commercial distribution center activity being extremely robust right now, from Waterworks and underground infrastructure, all the way up through mechanical, fire suppression, and the like, and making sure that we can get product on time to get those projects stood up in a timely fashion has become more important than ever before. Okay. Helpful. Just getting to just the fundamentals, you had in your prepared commentary on both resi and non-resi, but you've always said that your Waterworks is a good leading indicator for your resi. Could you give a little bit more color on terms of what you're seeing with trends in Waterworks, both sequentially and year-over-year from a momentum standpoint? Also a little bit more color in terms of what you're seeing in that commercial end market, other than what you had outlined in the prepared commentary. Thank you. Yeah, Kathryn, that Waterworks business is a good leading indicator as they're the first on projects, in most cases. We're seeing good broad-based growth across that Waterworks sector. Public works infrastructure or civils, commercial, and residential work, as well as municipal spend, as budgets aren't as stretched as what we thought they were going to be. On the residential side, we have not seen project cancellations broadly across the U.S. in new residential subdivision, single-family growth, and so we're encouraged by that. We've also seen strong commercial demand, and we've talked about this, both at the half year as well as today. The distribution and big box warehouse space has been very strong, and it continues to play very strongly for our Waterworks business, which is a good leading indicator for our commercial mechanical and fire, and fabrication businesses. The public works side, we had anticipated that that may be under a bit of pressure, again, from stretched budgets at the municipal level. We're seeing projects stay in flight and continue on, and then as we talked about, we'll see what happens from an infrastructure spending bill as we get further on into the year. Long story short, a good broad-based piece of encouraging news from our Waterworks business. Okay. If I could sneak one more in. How does Ferguson win against the backdrop of a potential U.S. infrastructure bill? Yeah, and Kathryn, as we've said historically, it really depends on the type of infrastructure spend that makes it through the bill. If it is in the roads and transportation areas, we certainly benefit from soil stabilization, from underground infrastructure as that road project works. If it's in airports, if it's in transportation related physical facilities or education or low-income housing, that really benefits a more broad-based Ferguson business portfolio from underground water and sewer infrastructure all the way up through commercial and even residential. It really depends on what makes it through into the ultimate legislation. Okay. Thank you very much. Thank you. We'll now take the next question from Keith Hughes at Truist. Please go ahead. Yeah. Thank you. I guess as you give us kind of a deeper trading profit for the fourth quarter and some rough revenue, I guess on margins, it appears you're going to have margin gains in the fourth quarter, maybe not as robust as what we saw in the reported period. Is that interpolation correct, and so is that the influence of inflation, of a little bit of a drag of pushing that pricing through to your customers? Yeah, Keith, good morning, and thanks for the question. There's a range of outcomes inclusive of a range of outcomes on trading margin in the fourth quarter. The reality is there's still a bit of uncertainty on how that inflation will react and play through over the next several months, and that will have an impact on that Q4 trading margin outcome. We're pretty confident in the range that we've put out there from a trading profit dollar perspective. If I think kind of year-over-year, we've talked a lot the last several quarters about that Q4 trading margin that we put up last year that was driven by very different dynamics at that time. Increasing revenue at a time where we had taken out cost from a temporary cost action standpoint during the lockdown. We have very different dynamics at play this year that will drive a range of outcomes, but pretty confident in the trading profit dollar number that we've provided as guidance. Yeah, Keith, to speak to that uncertainty, it really is a day-to-day, week-to-week view as to how inflation and how product availability is playing through. It's more dynamic than we've ever seen as commodity increases and record commodity prices start to flow through into finished goods, and then are further exacerbated by transportation pressures and manufacturing strain. We're really focused on making sure our procurement and category management specialists and our business groups are dealing with our partner vendors to make sure we use the balance sheet appropriately to get product closer to customers and maintain fill rates. Maintaining fill rates is hugely important for us. I'm confident in our people's ability to pass through that price increase, but really that product availability issue is first and foremost, and we're confident in where that sits today. Okay. If you look at the last time you talked, what would be the leading sector that's coming in higher than your expectations over this period of time? Certainly, the robust growth in e-business has continued to see that strength in over 50%. Quite honestly, the residential side of the business has improved from when we were sitting here, call it two months ago in mid-March. We've seen that continued building of strength on the residential side of the business. Yeah, we're pleased, Keith, with the balance that we've been able to achieve in res and non-res. About 56% of our business being in that residential with a good split of RMI and new construction, and then that non-res piece that includes commercial, industrial and civil. That balance is serving us well, and we've seen great growth in that residential space. HVAC at over 40% growth is a really strong portion of that growth story. Even, again, in the commercial markets, as we see both Waterworks as well as commercial mechanical driving good growth in the pockets of strength. As we said, our customers will gravitate towards those growth areas, even as things like office and retail may be pressured in the overall commercial markets. Okay, final question on Canada. I just missed the number you said. I think you gave me the revenue growth over Canada. Could you just repeat that? Sure, yeah. The total revenue for Canada was $317 million, which is growth of about 52%. 35% of that was organic. Thank you very much. Yeah, Keith, a similar story in Canada as we really are focused on making sure we have great connections between our U.S. and Canadian operations, driving good functional expertise across all of North America, and then making sure that we're taking advantage of, again, that strong residential market: single family new construction, multifamily new construction, and HVAC. Now I'll take the next question from Gregor Kuglitsch at UBS. Please go ahead. Hi. Good morning, guys. Thanks for the call. A couple of questions, maybe three actually. Maybe sorry to labor the point on the growth. Just to be clear, because it's a bit challenging for us because of the monthly comps and zone change. Just to understand correctly, you're saying your May trend and kind of exit rate or whatever you want to call it, is above that 20-odd percent growth. Is that what you're saying? Just to be clear on that, notwithstanding the comps kind of getting a little bit, I guess, more normal, I think, in May. That's the first thing. The second question is back to the relisting point. What's the trigger for you to say, hey, I'm going to hold this vote now. Is the register changing? Is it your conversation with shareholders? I guess what should we be thinking about re that actually happening? The criteria, I guess. Then finally, if you care to comment anything relevant relating to M&A, is there anything to say pipeline wise? Is there deals in the pipe or perhaps there's a valuation issue or maybe not, I don't know. I'd just be interested to see what you're seeing on that side. Thank you. Gregor, at the risk of jumbling the question, I'll take number two first, and then I'll let Bill jump in on May comps and where we sit with M&A. There is no trigger that we're looking for. We're not looking for a shift in the register. It really gets back to that workload that we're talking about in terms of making sure that we methodically prepare the company in areas like U.S. GAAP, Sarbanes-Oxley, and all the things that we're needing to do, moving the functional expertise over to the U.S. and all the things that we had talked about leading up to that decision. Also making sure that we stay focused on delivering results in the business. It is not a normal environment right now, making sure that we're serving our customers is the first thing on our mind. Really, there's no trigger that we're looking for, but we believe that we can achieve that 12-month time horizon. Maybe Bill can take one and three. Yeah, Gregor, from your question on growth, to your point, the comps month-to-month are a little unique, just to say the least, from last year. April was down 10.8% last year in the U.S. I'd say the exit rate to the entry rate is a little bit misleading, but we've continued to see continued growth and strength as we've exited the quarter in total with 20% organic growth into the first couple weeks of May. I would caution you, it's a couple weeks of May. Last year, we saw sequential improvement in that growth rate May to June to July. The comps get a little bit tougher, albeit still negative for the quarter last year. We've seen continued growth against that. From an M&A perspective, really no change. We have a healthy pipeline of potential deals as we've talked about in the past. The timing of those deals is always a bit uncertain and to some extent out of our control as we're trying to bring, in many cases, family businesses to a closing table and timing will vary. You should expect a normal pipeline of bolt-on and capability M&A from us as we move forward. Yeah, as we think forward, we think activity will continue to be solid and perhaps increase, especially as you look at decently healthy markets as you look at digital becoming table stakes for future customer service propositions, as you look at product availability concerns stressing the system, and then quite frankly, as people contemplate what tax legislation might come out and the impact of that on their succession and the sale proceeds of the business. Thank you. That was really clear. Thanks. We'll now take the next question from Annelies Vermeulen at Morgan Stanley. Please go ahead. Thank you and good morning. Just two left from me. Firstly, just to follow up on the wage inflation point. I know historically you've been very good at managing that, and obviously employing your own drivers and having good employee engagement programs helps with that. I'm just wondering to what extent you're concerned about all the recent headlines that we've seen on this topic, particularly a number of very large blue-collar employers raising wages and offering incentives and so on, and a lot of other businesses calling out issues with recruitment. Of those 700 or so people that you added in the quarter, did you have to do anything above and the ordinary in order to get them back in the door? Equally, have you had to take on a higher number than normal of temp workers? I'm just wondering about that because I'm guessing the productivity of those would be lower than some of your permanent employees. Also secondly, in terms of where the leverage is on the balance sheet. I know in recent months you've said you've been happy to be at the lower end of your leverage range given where we are in the world, but given how much stronger things have been for you lately, I'm just wondering if that's still the case, and following the payment of the dividend and so on in the start of the buyback, how you're thinking about that over the rest of the year. Thank you, Annelies. I'll take the first on wage inflation. We are absolutely seeing wage inflation. We believe wage inflation will continue in the current environment. It starts at that driver warehouse level. It plays into customer service representatives, our training program with young people coming off of college campuses, and the like. In relation to the news, we have historically valued our associates and make sure that we bring in best associates. We've had a $15 an hour minimum wage already in place, so that's not an effect for us. We believe in good balance across variable as well as salary or hourly wage compensation so that our associates are rewarded as the shareholder is rewarded and as our business succeeds. That goes across not just our salaried workforce, but also our hourly workforce. From an incentive perspective, that's part of our culture. That needs to be an ongoing piece. As we think about temporary labor versus new hires, it is a balance. It's a balance that's handled at the business unit level inside of local markets where we flex overtime, we flex temporary labor, and full-time equivalents that we're bringing on. The most important thing is making sure that we have the proper contact and service level for our customers, which is why making sure we have best associates and are hiring full-time equivalents in line with volumetric growth inside of our business is most important. Annelies, on the leverage question, yes, we're very pleased with the strength of our balance sheet sitting at 0.4 x, 0.8x if you factor in the payment of the dividends as well as the in-progress share buyback program. We're using that balance sheet today to invest in the organic growth of the business, particularly around inventory. As we've talked about the supply chain disruptions and product availability concerns, we've added another $100+ million of inventory in the quarter, which brings us to over $500 million of incremental investment from the beginning of the fiscal year. From a range perspective, we do intend to operate in our 1x -2x range. We're clearly right in the middle of the share buyback program, which we would anticipate wrapping up as we round out this fiscal year. We'll come back to you with the year-end balance sheet and update you on plans further from that standpoint. That's very clear. Thank you very much. We'll now take the next question from Emily Biddulph at Credit Suisse. Please go ahead. Morning, guys. Thanks for taking my questions. I've got two, please. The first one was just on your outperformance versus the market. Obviously, usually you say you think it's sort of 2%-3%. Given what you said about supplier fill rates, do you think you're running at something that's materially higher than that at the moment? I realize it might be difficult to quantify it in this market, but if you could, that would be great. Do you see the risk that kind of swings back the other way at some point? Do you think by attracting customers, you're able to keep a share of wallet for longer, even if supplier fill rates start to improve over time? Secondly, I appreciate it feels like it's a long way away at the moment, but if we think about 2022, if we're still thinking about this being a sort of more moderate but still positive volume market and still in an inflationary environment, given what you said about gross margin and also your ability to put through price to offset operating cost inflation, would you be completely uncomfortable with us thinking that we'd get positive operating leverage and an improvement in trading margins for next year? I assume you don't want us to go away and make our normal kind of double-digit drop through assumption, but where would you encourage us to think about it at this stage? Thank you. Yeah, thank you. I'll take the first one, you're right, it is difficult to gauge that outperformance. We traditionally call out 200 - 300 basis points of outperformance. We do think there's a gravitational pull to strength in times like this, and we believe that we are growing faster relative to market than we historically do over time. From a data perspective, A, we've seen an elongation of starts with permits being at about 1.8 starts at about 1.7. That new residential piece is good. We think that the trade professional as part of the repair remodel side of residential is stronger. The latest HIRI numbers on the pro show 15% growth in terms of that target, so we still think we're outperforming that. In terms of the ongoing share gains, we do believe that times like this create enhanced loyalty and relationship, and as you know, we're very focused on making sure that that human relationship that we have to serve our customers in a consultative way to make their project better because they dealt with our company, is beginning to get supported by the best digital relationship and continuing to invest in that. When we think about share gains over the long haul, it's about having the best people and relationships with the best digital relationships, a world-class supply chain sourcing organization that provides best fill rates, and then making sure that we're driving that product strategy both for margin as well as to make sure that we enhance that best fill rate. We think that continues over the long haul. Yeah, in terms of your question on FY 2022, look, I think you're right. If you look over the last really two years, last fiscal year and then building into this fiscal year, we have had a significant step up in trading margin. Part of that driven by the inflation that we've seen in the last quarter, part of that driven by the productivity and the drop-through that we've generated prior to inflation. As we look forward into fiscal 2022, clearly a lot of uncertainties out there, particularly around how inflation is going to unfold, and we'll certainly be in a better position as we round out this fiscal year to give more views on next year after Q4. I think we're in a period of unprecedented inflation. I do think there's some risk of that moderating and even reversing from a trading margin standpoint. I'd have a little bit of caution and would not model through your example of that double-digit drop-through on the growth next year, given how quickly we've increased trading margins over the last 18 months. That's perfect. Thanks, guys. Thank you. That concludes today's questions and answer session. Mr. Kevin Murphy, I'd now like to turn the call over to you for any additional closing remarks. Yes. Thank you all for taking the time with us today. Just leave with, again, we believe that we are well-positioned through the near term. We are very thankful for what our associates have done to drive this operational accomplishment, especially in light of challenging circumstances with regards to supply chain, with regards to customer communication and the ability to serve our customers in the marketplace, as well as personal challenges as we more open this economy from COVID. We think we're well-positioned as we go forward to continue to drive positive stewardship on price inflation and manage this supply chain. We're confident in our strategy as we go forward, really continuing to invest in talented associates, world-class supply chain, and digital capabilities to best serve our customers in some attractive residential and non-residential markets. Thank you for your time today. Very much appreciate the support. That concludes today's call. Thank you for your participation. You may now disconnect.