Morning, ladies and gentlemen. My name is Emily, and I'll be your conference operator today. At this time, I would like to welcome you to Ferguson's Q4 conference call. All lines have been placed on mute to prevent any interference with the presentation. At the end of the prepared remarks, there will be a question and answer session. To ask a question at that time, please press Star and then the number one on your keypad. To withdraw your question, please press Star and then two. Thank you. I would now like to turn the call over to Mr. Brian Lantz, Ferguson's Vice President of Investor Relations and Communications. You may begin your conference call. Good morning, everyone, and welcome to Ferguson's Q4 earnings conference call and webcast. Hopefully, you've had a chance to review the earnings announcement we issued this morning. The announcement is available in the investor section of our corporate website and on our SEC Filings webpage. A recording of this call will be made available later today. I want to remind everyone that some of our statements today may be forward-looking and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including the various risks and uncertainties discussed in the section entitled Risk Factors in our Form 10-K, available on the SEC's website. Also, these forward-looking statements represent the company's expectation only as of today, and we specifically disclaim any obligation to update these statements. In addition, on today's call, we will discuss certain non-GAAP financial measures. Please refer to our earnings presentation and announcement on our website for additional information regarding those non-GAAP measures, including reconciliations to their most directly comparable GAAP financial measures. 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. Thank you, Brian, and welcome everyone, to Ferguson's Q4 results conference call. On today's call, I'll cover highlights of our full year and Q4 performance, as well as a more detailed view of our performance by end market and customer groups. After that, I'll turn the call over to Bill for the financials and our outlook for fiscal year 2024. Finally, I'll come back at the end to give a brief update on our view of market share and some of the significant opportunities we see in the years ahead before Bill and I take your questions. So starting with our full year performance, our teams delivered strong results in a dynamic and challenging year. We'd like to express sincere thanks to our associates for their unwavering commitment to help make our customers' projects simple, successful, and sustainable. Revenue of $29.7 billion was 4.1% above last year, further building on the 25% growth we saw in fiscal year 2022. Our teams delivered solid gross margins, and we proactively managed our operating expenses, delivering adjusted operating profit of $2.9 billion, down 1% on prior year, while we grew adjusted diluted earnings per share by 1%. Cash delivery in the year has been excellent, driven in part by disciplined inventory management, with net cash provided by operating activities increasing $1.6 billion to $2.7 billion. This cash delivery allowed us to execute against our capital allocation priorities. We returned $1.6 billion to shareholders via dividends and share buybacks during the year, and we're pleased to welcome associates from 8 acquisitions during the year, continuing our strategy of consolidating our fragmented markets. Our balance sheet remains strong at the bottom end of our leverage range, with 1x net debt to Adjusted EBITDA, and we continued to deliver strong overall returns on capital of 35% for the year. Focusing on the most recent quarter, we were pleased to deliver a robust Q4 performance against strong comparables. Our balanced business mix continues to serve us well in challenging markets, and we continued to take share as we leverage our consultative approach, our scale, our global supply chain, and our strong balance sheet to help improve our customers' projects. As expected, we saw a slight revenue decline in the quarter, but we're pleased with revenue stepping up by nearly 20% compared to the equivalent quarter in fiscal year 2021. We delivered solid gross margins and remained diligent in managing costs, delivering adjusted operating profit of $814 million at an adjusted operating margin of 10.4% and adjusted diluted earnings per share of $2.77, down slightly on the prior year, but representing significant growth from two years ago. We're proud of these results for both the quarter and the year, which came in toward the top end of our guidance, and are confident in the strength of our business model as we go forward. Turning to our performance by end markets in the United States. Net sales compressed for a second consecutive quarter as we lapped strong comparables and markets became more challenged. Residential markets remained impacted by the slowdown in new residential construction in an area serving the project-minded consumer, whereas RMI markets, particularly with our core trade professionals and in high-end remodel, proved to be more resilient. Our residential revenues, which comprise just over half U.S. revenue, declined 4% during the quarter. As expected, non-residential markets continued to outperform residential due to strength in industrial markets, offsetting some softness in more traditional non-residential areas. Overall, net sales in non-residential grew by 2% in the quarter. As we previously discussed, we'll continue to focus on maintaining our balanced end market mix... and while we expect our growth rates will fluctuate over time, we seek to maintain this healthy balance. Shifting now to revenue across our customer groups in the U.S. Residential Trade Plumbing declined by 11% against a 21% prior year comparable growth, as declines in new residential construction activity weighed on performance. While leading indicators, such as new residential permits and starts, have stabilized, they still remain down on the prior year. HVAC grew by 4% with a two-year stack of 22%, driven by the execution of our HVAC growth strategy. Residential Building and Remodel grew by 2% on top of a 21% prior year comparable, supported by higher end remodel projects. Residential Digital Commerce declined by 9% as consumer demand remained subdued. Waterworks revenues were broadly flat on top of a prior year growth comparable of 36%. We continue to benefit from our diversified waterworks business mix, from residential to commercial to public works and municipal exposure. The Commercial Mechanical customer group declined by 1%, while our Industrial, Fire and Fabrication, and Facilities Supply businesses delivered a combined 6% growth in the quarter against a 27% comparable, driven by the continuation of non-residential trends such as onshoring, manufacturing, plant turnaround work, and general industrial activity. Our breadth of customer groups allows us to bring value to the total project while retaining a broad and balanced end market exposure. Turning to our performance against the broader end markets for the year in total. We've continued to take share across both residential and non-residential end markets. We believe our residential end markets declined approximately 6%, due principally to the weaker new construction environment. We outperformed with organic revenue down 3%. Non-residential demand proved more resilient, with U.S. organic revenue growth of 7%, outperforming a modestly growing market. We've consistently outgrown our markets and believe we're well positioned to continue organically outperforming our markets by approximately 3%-4% in future years. Our ability to grow organically and outperform our markets is our principal focus, and it's at the core of what we do and what our business model delivers. But leveraging our scale and market-leading positions to consolidate our fragmented markets through acquisition adds another dimension to our growth. We've made in excess of 50 acquisitions over the past five years, representing a rich mix of geographic bolt-ons and capability deals. While we're acquiring physical assets such as locations, vehicles, and inventory, the real value we gain is from the people, their expertise, and their customer relationships that they bring to the business. We spend a lot of time ensuring we have a good cultural fit and aligned values with the target. As we present Ferguson to potential targets, we believe we're the acquirer of choice in our industry because we provide these acquisitions and their associates access to the best platform and capabilities in the industry, and a proven ability to grow their careers far beyond their existing opportunities. We acquire these companies at attractive multiples and then leverage our scale to drive revenue, gross profit, and operating cost synergies to generate strong returns. As I mentioned earlier, this year has been no exception as we welcomed associates from eight high-quality businesses, bringing approximately $800 million of annualized revenue to Ferguson. We're particularly pleased to complete three HVAC deals, expanding our geographic reach while strengthening our relationships with both vendors and customers. There are significant opportunities as we look to service the needs of the dual trade, plumbing and HVAC professional, and I'll touch on this in a bit more detail later on. The two waterworks acquisitions bolster our market-leading positions in the East as we look to support aging infrastructure in the U.S. The remaining businesses we acquired this year span industrial, commercial, mechanical, and residential building and remodel customer groups, highlighting the balanced approach that we continue to take with M&A. As we look forward, we maintain a healthy pipeline of future deals as we look to further consolidate our fragmented markets. Let me now hand over to Bill, who'll take you through the financials in a little more detail. Thank you, Kevin, and good morning or afternoon, everyone, and let me start with the Q4 results. Net sales were 1.7% below last year, driven by a 5.3% organic decline, partially offset by 2.2% from acquisitions and 1.4% from the combined net impact of one additional sales day and foreign exchange. As expected, price inflation stepped down further from 5% in Q3 to approximately 1% in Q4. Gross margin of 30.6% was up 10 basis points over the prior year. Our teams maintained pricing discipline despite deflation in certain commodity categories. We had a strong own brand performance, and we managed inventories down further, resulting in some gross margin benefit on the sell-through of older inventory. Cost base has been well contained through our seasonally largest quarter, enabling us to deliver a 10.4% adjusted operating margin, down 30 basis points over last year. Adjusted operating profit of $814 million was down $35 million, or 4.1% lower compared to prior year. Adjusted diluted earnings per share was 2.8% lower than last year, with the reduction due to lower adjusted operating profit and higher interest expense, partially offset by the impact of our share repurchase program. And our balance sheet remains strong at 1x net debt to adjusted EBITDA. Moving to our segment results, the U.S. business delivered another solid quarterly performance against strong comparables. Net sales declined by 1.5%. Organic revenue declined 5.5% on top of a 19.8% prior year comparable, and this was partially offset by a 2.4% contribution from acquisitions and a 1.6% positive impact from one additional sales day. We delivered Adjusted Operating Profit of $804 million, down 3% over the prior year, delivering a 10.8% Adjusted Operating Margin. Turning to our Canadian segment, markets softened further with some sustained pressure from the adverse impact of foreign exchange rates. Net sales declined 5.1%. Organic revenue declined 2.7% against a strong 14.2% comparable, with a 4% decline from the impact of foreign exchange rates, partially offset by a 1.6% contribution from one additional sales day. We have seen similar trends in Canadian markets to those in the U.S., with non-residential end markets proving more resilient than residential. Adjusted Operating Profit of $22 million was $13 million below last year, and we continue to invest in the Canadian business and expect to improve the return profile over the longer term. Turning to the full year results, net sales were 4.1% ahead of last year, with Organic Growth of 1.5%. Acquisitions contributed 2.5% to revenue, with a further 0.1% net contribution from Sales Day and the impact of foreign exchange rates. Average inflation during the year was approximately 8%. Gross margin was 30.4%, down 30 basis points as expected, against a strong prior year comparable. During the year, we were proactive in managing both labor and non-labor operating expenses to respond to lower sales volumes. As a result, Adjusted Operating Profit of $2.9 billion was 1% lower than last year, delivering a 9.8% Adjusted Operating Margin. Adjusted Diluted EPS grew by 1%, benefiting from our share repurchase program. We delivered excellent cash flow this year. Disciplined working capital management drove operating cash flow to $2.7 billion, an increase of $1.6 billion over the prior year. As supply chains have normalized, we managed inventory down by approximately $600 million during the fiscal year, excluding the impact of acquisitions. We continue to invest in organic growth through CapEx, investing $441 million in the business, with the increase over the prior year attributable to our multi-year Market Distribution Center rollout strategy. As a result, Free Cash Flow was $2.3 billion, a significant increase of $1.4 billion over the prior year. Our balance sheet position is strong, with net debt to Adjusted EBITDA of 1x. We target a net leverage range of 1x-2x, and we intend to operate towards the low end of that range through cycle to ensure we have the capacity to take advantage of growth opportunities, as well as to maintain a resilient balance sheet. We allocate capital across four clear priorities. First, we're investing in the business to drive above-market organic growth. As previously mentioned, working capital had a positive impact on cash flow, and we invested $441 million into CapEx, principally focused on our market distribution centers, branch network, and technology programs. Second, we continue to sustainably grow our ordinary dividend. Our board declared a $0.75 per share quarterly dividend, bringing our full-year dividend declared to $3, representing a 9% increase over our fiscal 2022 declared dividends and reflecting our confidence in the business and cash generation. Third, we're consolidating our fragmented markets through bolt-on geographic and capability acquisitions. As Kevin outlined, we are pleased to have welcomed associates from 8 high-quality businesses this year. We invested $616 million, bringing in approximately $780 million of incremental annualized revenue. Our deal pipeline remains healthy, and we will continue to execute our consolidation strategy. Finally, we are committed to returning surplus capital to shareholders when we are below the low end of our target leverage range. We returned $908 million to shareholders via share repurchases this year, reducing our share count by approximately 7 million, and we ended the year with $540 million outstanding under the current share repurchase program. Turning last to our view of fiscal year 2024 guidance. Given the uncertainty of the market backdrop, there's a broad range of potential outcomes, and taking this into account, we believe revenue will be broadly flat for the year. This reflects a continued challenging market, particularly in the first half of our fiscal year, against strong prior year comparables. Our assumptions are based on our end markets declining in the mid-single-digit range, us outperforming these markets by approximately 300-400 basis points, a tail from already completed acquisitions, which we expect to generate just over $500 million of revenue, and the benefit of one additional sales day landing in the Q3. Overall, we are assuming broadly neutral pricing environment for the year.... We have provided a range for adjusted operating margin between 9.2%-9.8%, with the midpoint reflecting modest continued normalization, largely driven by strong first half comparables. We expect interest expense to rise slightly to between $190-$210 million. Our adjusted effective tax rate should stay broadly consistent at approximately 25%, and we expect to invest between $400 million-$450 million in CapEx, similar levels to fiscal 2023. To summarize, we had a strong finish to the year at the top end of our expectations, and we remain focused on execution. We believe the combination of our strong balance sheet, flexible business model, and balanced end market exposure positions us well stepping into fiscal 2024. Thank you, and I'll now pass back to Kevin. Thank you, Bill. I want to touch very briefly on the latest views of our market share and the total addressable market within North America. With three-quarters of our revenue coming from leading positions in a $340 billion market opportunity, we're confident in our strategy to grow both organically and by acquisition. During the past year, we've talked about how the breadth of our customer groups uniquely position us in the markets that we serve. We're able to leverage our knowledge, expertise, scale, and product breadth to better serve our customers' project needs in a more holistic way. That means bringing together our core strengths, our value-added solutions, our global supply chain, our digital experience, and our associates across customer groups to help make complex projects simple, successful, and sustainable. The trade professional is our core customer, but we're expanding our role to influence and serve the general contractor, the developer, the architect, engineer, and owner. We build relationships with key decision-makers that influence the construction landscape. Our multi-customer group solutions and the integration of environmental product solutions generate synergistic value as we bring scale to highly fragmented markets. When we do this, we add value and can sell from the ground up solutions, focusing on the entire project rather than just selling products. Our ability to bring together market-leading capabilities in both plumbing and HVAC provide us with a competitive advantage for serving these professionals in capturing growth from the dual trade market for years to come. The combined HVAC and residential trade plumbing market amounts to approximately $100 billion, of which we estimate nearly $30 billion of the market is serviced by more than 65,000 dual trade, plumbing and HVAC professionals. This segment of the market is growing rapidly. We're focused on expanding our HVAC offering across all of our plumbing markets, executing on both an organic growth and acquisition strategy. We're further building our capabilities to provide a single point of service to dual trade professionals, while further differentiating our services as we simplify process, harmonize pricing, and coordinate pickups and deliveries. We believe we are positioned with strength to service this dual trade market, leveraging our expertise to drive efficiencies for our customers. Turning to non-residential markets, our view of the opportunities ahead with large-scale mega projects remains unchanged. The data continue to point towards structural tailwinds from mega project construction spend over the next five years, supported by onshoring activity, recent legislative acts, and the aging infrastructure. As I said before, when we leverage our core strengths, products, and services across our businesses, we add value and have the ability to sell from the ground up solutions, focusing on the entire project rather than simply selling products. We continue to estimate our total addressable market for these mega projects with over $400 million of total construction value to be over $30 billion across our platform over the next five years. And while it's still early days from a revenue perspective, we are seeing increasing bidding activity. We believe our scale and multi-customer group proposition strongly position us to capture meaningful growth from these significant and complex projects over the medium term. To close, let me again thank our associates for their dedication to serving our customers. We're pleased with our team's execution in the quarter and for the year as a whole. Despite the challenging macro environment, we're well positioned with a balanced business mix, residential and non-residential, new construction, and repair, maintenance, and improvement. We have an agile business model and a flexible cost base that allows us to adapt to changing market conditions. Our cash generative model allows us to continue to invest for organic growth, consolidate our fragmented markets through acquisitions, and return capital to shareholders. We intend to do this while maintaining a strong balance sheet, operating at the low end of our target leverage range. We remain confident in the strength of our markets over the medium and longer term. Our scale and breadth allows us to leverage our competitive position across our customer groups in order to capture opportunities from structural changes in our end markets. Thank you for your time today. Bill and I are now happy to take your questions, and, Operator, I'll hand the call back over to you. Thank you. For our Q&A, if you would like to ask a question, please press Star and then one on your telephone keypad now. If you change your mind, please press Star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from the line of Matthew Bouley with Barclays. Matthew, please go ahead. Your line is now open. Hey, good morning, everyone. Thanks for taking the question. I guess first, just asking around the kind of build up to your growth guidance in fiscal 2024. And then kind of given your assumptions around H2 versus H1, I'm curious what the implied improvement might be in the H2. And, I guess further to that, if you could sort of break out your residential versus non-residential assumptions through all that. Thank you. Yeah. Good morning, Matt. It's Bill. I will start with that. Thank you for the question. First off, from a quarter to date perspective, through August and September to date, organic decline is about in the same range of where it was in Q4. So Q4, we were down 5.3%. It's been a very similar range to that. And that's to be expected as we entered the year in a very similar market environment to where we exited the year, and the compareables are still quite tough. If you take a look back at Q1 last year, we had 13% organic growth last year, 15% price inflation. So we'd expect that growth would continue to be pressured as we step into the H1, through the Q1 into the Q2. Then our guidance does imply for the year, getting back to broadly flat, that organic would still be down slightly for the year, with then the tail of acquisitions and the additional sales day bringing us back to that broadly flat midpoint of our range. In terms of resi versus non-resi, from a residential perspective, we're expecting residential to be down in the mid to high single digit range. We expect new res to be a bit worse than that, RMI to be a bit better than that. Then from a non-residential perspective, we're expecting non-residential markets for the year to be down in the low single digit range. Got it. That's perfect color. Thank you for that, Bill. Second one, I guess, jumping down to the margin line, again, on the guidance. So, you know, the assumption of a 30 basis points decline in operating margin at the, at the midpoint, I'm curious, you know, how to think about the gross margin within that. And maybe in this question, also, if you could touch on, I think you said in Q4 here, you had, still a little bit of a benefit to the gross margin, from sell-through of older inventory. So maybe you can kind of quantify that in the Q4 and then sort of the expectations around gross margin next year. Thank you. Yeah. So to your point, Matt, the guide of 9.2%-9.8% operating margin for the year, midpoint of 9.5, does imply being down about 30 basis points from where we finished the full year this year. That's really driven by strong H1 compareables, particularly Q1. Again, if you look back, I just commented on the growth environment we had in Q1 and the inflation environment we had in Q1 last year, but also from an operating margin perspective, we delivered nearly an 11% Q1 operating margin. So given where organic decline is right now, again, about where it was in Q4, we're expecting to have some margin compression as we step through into Q1, into Q2. So most of that, normalization, modest normalization is driven by that strong comparable. In terms of the gross margin in Q4, 30.6%, look, we were really pleased with how the teams delivered in a pretty choppy environment. First off, from a commodity pressure perspective, we did see some pressure on commodities from a pricing deflation point of view. Commodity deflation was down in the high single digits in Q4, and our teams maintained really strong pricing discipline. Secondly, we're pleased with our Own Brand performance. Just under 10% of our revenue was Own Brand. And then lastly, yes, we did highlight. We did sell through some older cost inventory. If you look at the inventory reduction for the year, down about $600 million organically, 300 of that came in Q4. So a piece of that strong 30.6% gross margin was driven by that sell-through of some older cost of goods sold inventory. And then rather than trying to quantify those specific points, we just go back to the fact that through this normalization period, we are expecting those gross margins to normalize somewhere in the low 30% range and then get back to a period where we would grow them over time as we execute our gross margin and our product strategy. Perfect. Thanks, Bill. Good luck, guys. Our next question comes from Mike Dahl with RBC Capital Markets. Mike, please go ahead. Your line is now open. Morning. Thanks for taking my questions. Just as a follow-up, can we talk specifically more about the pricing environment? I think came in as expected in terms of the deceleration to 1% versus 5% contribution last quarter. I think prior quarter, you had talked about seeing some some price declines sequentially, specifically on the commodity dynamics. You're talking about broadly neutral in terms of the full year, you know, impact from price in 2024. But can you walk us through, in a little more detail, what the dynamics are? Are you actually entering the year with slight pressure on price due to the commodity dynamics and then expecting that to improve through the year, or how would you characterize that dynamic? Yeah, Mike, it's Bill. I'll start and then pass it over to Kevin. So to your point, if you look back at last fiscal year, we saw compression of price through the year as we were rolling over difficult compareables. So go back again to first quarter last year, we had price inflation in total of 15%. That dropped to about 10 in Q2, about five in Q3, and then as we just highlighted, about 1% in Q4. That 1%, we're still seeing low single digit inflation on finished goods, which again, finished goods are roughly 85% of our revenue. And again, commodities in the fourth quarter were down in the high single digit range. As we've stepped into Q1, we have seen pricing in total go slightly negative. Again, that's to be expected if you go back to that 15% comparable from a price inflation point of view in Q1 last year. But maybe more importantly, if you look at the two-year stack on price inflation, it was close to 30% over two years in Q1 that we're facing. So we're expecting that price to go a bit negative, and we've seen that. However, as we roll through the year, we would expect to get back to a more normalized pricing environment for the industry, which, as we talked about in the past, is likely in the low single digit range. Calling which quarter that actually happens is pretty difficult, but we've still seen good supportive pricing on the finished goods side of the world. Mike, we're, we're experiencing very much what we thought we would experience. So if you do look at what our commodity-based product basket is, it's about 15% of what we do, and we knew that that was going to move into a deflationary period. But we also believed that not all those products would move in the same direction at the same velocity. And that's what we're seeing. You look at our commodity-based product basket of PVC pipe and fittings, copper tube and fittings, cast iron, ductile iron, and carbon steel. Yes, they've moved into deflationary territory, but haven't moved at the same velocity for different customer groups. And then to Bill's point, we do believe that there's a structural floor, principally from labor costs inside of manufacturing, around that finished goods portion of our business, which is 85% of what we do, and we're seeing that play out. And we don't think that there are any real catalysts for further abnormal price inflation as we go through our fiscal year, which is why we think that the pricing environment is going to be broadly neutral. And then we'll get back to a place where annualized price increases will start to flow through on that finished goods side of the business. Okay, got it. That's, that's very helpful. Thanks for that. Second question, I guess, just on the capital deployment. It's good to see some of the recent M&A activity, both in terms of kind of size and, and types of business. I know you, you, you know, you're playing across a lot of different verticals with a lot of opportunities. You've got plenty of capital, so you don't necessarily need to pick and choose, but maybe just help us, frame up kind of, you do have some points of emphasis on things that you want to focus on. So kind of where, where are you seeing the focus and then when you talk about the pipeline being healthy, you know, any additional color on kind of mix and size of deals in terms of types of businesses or, again, relative size? Mike, I'll start with that and then pass it over to Bill to talk a little bit about the pipeline that we're seeing. If you take a step back and look at our business, we, during our strategic planning process, are looking at all of our different customer groups, all of our different geographies, and finding where we need to invest, both organically as well as through M&A, to have the right relationships in the local marketplace that allows us to outperform organically as we go forward. But then if you take a look at where our focus areas have been over the course of the last 12-24 months and where they'll continue to be, we really are focused on making sure that we are focused on HVAC acquisitions, to make sure that we have good HVAC capabilities and good OEM manufacturer relationships across the entirety of the country, so that we have HVAC wherever we're plumbing, and that expertise can be driven for that dual trade, HVAC, and plumbing contractor that we think is so important to the growth of the market. We're also focused on the waterworks business when you look at our diversification strategy in areas like storm water, urban green infrastructure, and soil stabilization. It gives us a great complement to an already incredibly strong Waterworks business, where the customers are buying these products. They just may not have been buying them from us. It further offers us an opportunity to drive specification with engineers that allow us to capture the whole of the project. Those are two real strong focus areas for us as we go forward. Maybe Bill can touch on where we're seeing the pipeline. Yeah, the pipeline is still quite full and healthy. It is a good mix of both geographic and capability acquisitions, most from a size range. As you've seen in the past, most of the targets in our industry are in that, call it $30 million-$300 million revenue range. And look, we still feel good as we look out at the medium-term outlook, that we can add between 1%-3% annualized revenue growth through consolidating our markets over time. Certainly, that's going to ebb and flow in any one quarter or any one fiscal year, but we feel pretty positive about the pipeline as we look at it today. Great. Thank you. Thanks, Mike. Our next question comes from Ryan Merkel with William Blair. Ryan, please go ahead. Your line is now open. Hey, guys, congrats on the quarter. Thanks, Ryan. My first question is just a follow-up to what you said earlier about the outlook for non-res in 2024, down low single digits. Can you just unpack that a little bit more? I think you mentioned softness in traditional non-res, but then the mega projects, you're seeing increased bidding activity. How do we, how do we think about that? Yeah, that's, that's exactly right, Ryan. As we look at non-res overall, and obviously there are concerns out there around interest rate and what's happening with the natural office environment, and that's really what we're seeing. We're seeing some pressure across the country in those traditional areas of commercial, things like office, knock on retail after residential, and that traditional tailwind that you would have seen after good, strong residential build-out on the non-res side. And then, as we've discussed previously, we do think that it really is a generational opportunity with some of these mega project tailwinds, but they're gonna be a bit stretched out. These are long-term projects, three years plus, in terms of what that life cycle looks like. If you look at our experience, as well as what we're seeing from a data perspective, you're starting to see a ramp up, but we probably won't see that peak until, call it, 2025 and 2026. But what we're seeing right now is, across multiple customer groups, working together with the owners, engineers, and so forth, we're ramping up our bidding activity at a pretty substantial rate. We're starting to see that revenue play through, but there likely will be that air gap, if you will, between that slowdown in traditional commercial and what that pickup is in these large mega projects. And that's why we think that the market will be down low single digits, and it'll start to pick up from there. Got it. Makes sense. Okay. Then a question on SG&A. You've done a really good job controlling expenses. How are you thinking about SG&A in 2024? Yeah, Ryan, thank you for that. And, and we've been pretty pleased with the ability to flex the cost base. If you, if you look at the actions we took during the year, both on the labor side of the equation as well as the, the non-labor side of the equation, the teams did a really nice job, first off, managing FTEs, full-time equivalents, down, both with some permanent actions, but more importantly, managing down overtime and, and temporary labor. So if you look at where we exited the year, and you look at full-time equivalents, year-on-year, we were down about 6%, which is right in line with where organic volume decline was. And that, that 6% was down, excluding acquisitions. So we feel like we're entering the year in a good spot from a, from a headcount perspective and from managing that labor cost perspective. As we step through the year, we're still facing wage pressure. Wage inflation has been in that, call it, mid to high single digit range still. It, it's been that way for the last 2-3 years. We'd expect that to continue to be somewhere in that range as we step through the year. So we're gonna do everything we can to manage volumetric headcount, manage discretionary spend, recognizing that, as we've set out in our guidance, we think that we're gonna be operating in a, in a broadly flat revenue environment for the year. So you'll likely see a little bit of pressure from a year-on-year perspective in SG&A through the first half, as we're expecting more challenging markets. And then as we get back to more supportive markets, we'd expect to get back to better operating leverage in the future. Very helpful. Thank you. Pass it on. Thanks, Ryan. Thanks. The next question comes from John Lovallo with UBS. John, please go ahead. Your line is now open. Good morning, guys. Thank you for taking my questions as well. The first one is just going back on the outlook for operating margin of 9.2%-9.8%. Just curious kind of what drives the high and low end of that 60 basis point range, given, you know, the expectation for relatively flat sales? Yeah, sure. At the top end, John, we would expect maybe a bit more of a supportive market. Kevin talked a lot about mega projects. If we get a little bit more of that activity coming through quicker, and then if we get more stabilization on the commodity pricing side of the world, and maybe a bit of a tailwind and an easing of some of that commodity deflation pressure that we're facing right now as we step into the fiscal year. The bottom end of the operating margin range would contemplate a bit more market pressure and a bit more commodity pressure that can't be fully offset in the short term from an SG&A perspective a nd so that kind of frames both the top and the bottom end of that, of that operating margin guidance. Okay, that's helpful. And then, you know, there's obviously been a lot of media reports about consumer savings starting to dwindle, you know, credit card balances rising, you know, student loan payments resuming. I'm curious, you know, how you guys think about the impact of these factors. You know, have you seen any impact so far, and, you know, would you expect more impact, if there was any, on sort of the more discretionary categories in the portfolio? Yeah, John, we have seen some pressure on the consumer as it relates to our business, particularly in the area of our residential digital commerce business. You saw that having continued pressure, quarter on quarter, and then we saw it play through a bit in the normal RMI or remodel side of the business. But generally speaking, we tend to skew towards the higher end of that remodel project. and we've seen good supportive markets. If you look at the custom builder, custom remodeler activity, we still see good growth in our showroom. Yes, it's not a frenetic pace for that custom builder and custom remodeler like it was previously, but it's still a good pace with good growth. The phone's still ringing, and we're seeing good activity in the showroom. And to see that building and remodel group in Q4 being +2 on a +21 comp, we're pretty pleased with what that looks like. Great. Thank you, guys. Thank you, John. Our next question comes from David Manthey with Baird. David, please go ahead. Your line is now open. Thank you. Good morning, everyone. Kevin, did I hear you right, that the low end of the guidance range would be mainly because of revenue coming in less than expected, that you feel you can hold that 30% line on the gross margin, and the higher end would be better than expected gross margin? Is that how we should read what you said? Yeah, David, it's Bill. I'll take that. So, look, there is a wide range of outcomes on either side of that broadly flat revenue guide. This is certainly a bit more pressure from a top-line perspective, or a bit more benefit, would move the operating margin midpoint guidance around a bit. And then really highlighting the fact that commodity pressure in general could have a more pointed impact on both gross margin and operating margins. If we had more commodity pressure in the short term, would probably move us down towards that low end of the operating margin guide, versus if commodities stabilize and return to, you know, more normalized, more normalized inflationary environment, that would help move us up. So it's a, a bit of a combination of both revenue and gross margin outcomes that could impact that operating margin guidance. Okay. Thanks for that, Bill. And then on the commodity basket, have prices stabilized, sequentially, or are they still falling as you enter the new fiscal year? And then, I guess, related on inventory levels, are they where they need to be today? And, any categories where you're seeing extended lead times still? Yeah, David, I'll take the second question or second portion of the question first, and that's on supply chain and inventories. We do have inventories back to where we want them to be, and we're making sure that we're focused on having the right levels of inventory for our branches to make sure that they can take care of customers same day, next day. If you look at where supply chain pressures are, as we discussed in the last quarter, they have pretty much normalized, and last quarter, we called out a couple of key areas where we were still seeing some pressure. Even those have normalized. There may be just a handful of products on the luxury side of the appliance market that still have some supply chain challenges, but generally speaking, we're in a good place from an inventory perspective. When you take a look at commodities, we did say that, and we do believe we're seeing that commodities are moving at different velocities for different portions of the business and different customer groups. I don't think that we've seen necessarily the end. I won't point to that, but we have seen some stabilization. We see some areas where even in the areas of PVC pipe, where we're seeing increases being announced and then flowing through the marketplace. So, we believe that we have framed the guidance right to being pricing broadly neutral for the fiscal year, and that encompasses what we think we're going to see from a deflationary perspective inside the commodity basket. Very good. Thanks, guys. Thanks, David Our next question comes from Kathryn Thompson with Thompson Research Group. Kathryn, please go ahead. Your line is now open. Hi, thank you for taking my question today. Appreciated the color that you had on the non-res end market and the focus on Mega Projects within the U.S. But if you could step back historically and look at what has been your mix for more traditional light commercial, so a lot of the follow-on post-residential construction, where that is historically, where that is today, and any additional quantification of understanding where your what mix is of these larger projects. Thank you. Yeah. So, Kathryn, if you look at the overall non-residential market, we have historically performed quite well as it relates to the knock-on commercial side of the business, call it roughly, you know, 33% of, of what we do from that non-res piece. And if you look at where that mega project landscape is, is playing out, it's playing out with some of those larger contractors. These are complex projects that require sophisticated, resources. And so that plays well to our customers who have historically drifted to that knock-on commercial build-out, who are now focused on, on what those mega projects look like. And the, the good part for us, we look at it as a catalyst for what the Ferguson growth strategy is, and that is getting closer to the owner, engineer, and driving product specification from underground water, wastewater, storm water infrastructure, up through mechanical piping systems, fire suppression and industrial pipe, valve, and fitting. And we think that that catalyst with mega projects really allows us to unlock what those capabilities are. And so that partnering with those large contractors for this work-... Okay, helpful. And then as you think about your, your strategy outlined with expanding the HVAC, how, how does that strategy fit into kind of bifurcating the, the res versus non-res in terms of your targeted mix? So when we look at the residential portion of the business, just over half of what we do with non-residential, just being under half, that HVAC build-out, and we've been in the HVAC business for a number of years. In fact, we're currently trading in over 46 states. We've got good exposure, but we just need to have that expertise being driven throughout all of our operations that have standard and really solid plumbing business. And so you see us doing that with a balance of M&A and organic growth. But if you look at where we think the residential trade repair market is going, we think it's gravitating towards that dual trade, multi-trade contractor. We see consolidation in that contractor market, which we think plays quite well to a national platform that allows for expertise in plumbing and HVAC, with a good partnership with equipment manufacturers, both unitary and ductless. And we think that we're building out capabilities that'll be very valuable for that trade professional. All right. Thanks very much. Thanks, Kathryn. Our next question comes from Phil Ng with Jefferies. Phil, please go ahead. Your line is now open. Hey, guys. Bill, if I heard you correctly, for 2024, you're expecting your resi business to be down mid- to high-single digits. If I'm looking at the Q4, trend was down about 4%. So can you, can you help us unpack that? Just because from a builder commentary, it sounds like orders and the starts are starting to kind of inflect. I would expect things to be a little less bad. And provide a little more color on the R&R side, certainly higher rates, what that could mean for remodeling projects. Any color, how to think about the shape of the year and just your resi business more broadly would be helpful. Yeah, Phil, hey, thanks for the question, and let me clarify. When I was talking about resi down mid to high single digits, that was our view of the market, not our view of our performance. Certainly, we would expect to continue to take share against that. But if you look right now, to your point where we exited Q4, with resi down 4%, which had a sales day in it, you know, we're trading down in that mid-single digit range from a growth perspective, and we're stepping into the year in a very similar environment. So from a new perspective, yes, we've seen starts and permits seem to have stabilized around that 1.4 million start range, as we saw in August. Starts dropped a bit, down 15% year-over-year. So it's still a bit of a choppy environment, and it's, it's difficult for us to predict exactly what the impact of continued rising rates will be on that new resi side. But given where we're entering the year, and given how we expect the year to play out, that total resi market down mid- to high-single digits, with new resi being a bit more pressured, that's our best view of, of the world today, and, and we'll certainly, you know, provide guidance and updates as we go throughout the year. On the RMI side, we just talked a bit about some of that consumer pressure, and we've seen that consumer pressure in the digital commerce side of our business. While our building and remodel business has held up quite well, and as Kevin highlighted, that being more pointed towards the higher-end consumer, larger projects, there, there's no doubt there's tougher compareables as we step through there. If you look at some of the indicators, just take the home improvement remodeling index, for example, that was negative in our second half, and the forecast is for that market to be down for the first three quarters of this next fiscal year. We think it'll be better than new resi, but still down for the year, in negative territory. And Phil, at the risk of repetition, we do see signs of stabilization, as Bill indicated, on that new res side, especially as existing home turnover has been slightly diminished, and we've seen continued demand for housing. But that said, as Bill indicated, we had some good results inside of that building and remodel business that were coming up against tough comps. And on the rough plumbing side, which will be really the first after our waterworks business to have exposure to new residential upticks, that's got good commodity pieces involved in it with PVC pipe and the like. And so we're a bit cautious, even though we're seeing green shoots and signs of stabilization. Kevin, any more color on the RMI side? I mean, it's more of a debate just because existing homes sales remain under pressure and rates are high. How are you seeing that market? Is it stable to flat next year, or you're seeing some green shoots on things picking up? How do you think about the RMI side of things? We think the RMI is going to be down from a market perspective, although not as down as what we're seeing in new res. We do think that there's been some shift. If you just take the HVAC side of the business, for example, just like we saw in 2008, 2009, we're seeing a movement from replace, from a system perspective, to repair. We're seeing break fix starting to take a bigger portion of the business than what we're seeing in terms of maybe some of those smaller remodel jobs. But like I said, when you look at our overall exposure, that exposure to the higher end of the market, particularly in that showroom, serves us well. Serves us well from a maybe less pressured consumer on that remodel side. And so when you look at the pro-... The higher end remodel side, we're still seeing pretty good traffic inside of those showrooms and pretty good traffic with our residential trade plumbing group as they start to do those remodel projects. Got you. That's helpful. One last one. On the free cash flow generation, certainly very impressive this past year. Did a great job in managing down inventory. Bill, any more color on how we should think about free cash flow in 2024? How much more do you have on the working capital front? And how should we think about capital deployment? Yeah, no, no—first off, no change to capital deployment in terms of our capital priorities, investing for organic growth, sustainably growing our dividend, both on M&A, and then as you saw, we still have about $540 million left on our share buyback authorization, and we're gonna manage to the low end of that 1-2 times net debt to EBITDA range. We were quite pleased with the free cash delivery. Really, a bounce back after investing heavily through the pandemic in inventory. Actually, a bit ahead of our expectations. We had come through last year talking about maybe about $400 million of inventory that we thought we would normalize. That came through more like 600, as we moved through the year. That 600 is for an organic inventory decline, offset a bit by acquisitions we did for the year. So as Kevin highlighted, look, we think we're in a fairly normalized inventory environment. We think we would get back to our normalized operating cash to net income generation of about 100% as we step through over the next couple of years. Pleased with the delivery. And then if you think about just seasonality, typically, we would draw down inventories during the summer months and have a little bit of a build back as we step into the first part of our fiscal year into the fall. But you should think about it very much as a more normalized working capital and cash flow generation environment now. Okay. Thank you. Appreciate the call. Thanks. Our final question today comes from Bobby Zolper with Raymond James. Bobby, please go ahead. Your line is now open. Thanks for taking my question. Could you help us understand what decremental margins might look like in the H1, particularly given there may be some negative year-over-year pricing? Yeah, I mean, look, we're-- we, we don't really set out, and it's difficult to guide on quarterly or, or half year operating margins. If you, if you take a step back, we exited the year with a 10.4% operating margin in Q4 at our seasonal peak from a revenue perspective. And as, as we already highlighted last year, delivering that nearly 11% Q1 operating margin, we would, we would absolutely expect to be down on that as we step into the year, particularly with organic growth in the, call it, mid-single-digit decline range. So we will have more pressure on operating margin year-on-year as we step through the first half, and then as markets stabilize and we roll past some of those difficult compareables from a pricing standpoint, we'd expect to get back to some more stabilization as we step through the second half. Okay, got it. Thank you. And then, you mentioned that you're seeing slight negative year-over-year pricing. Can you give us any magnitude? Is that, you know, down 1%, down 2%? Any kind of quantification you could give on that would be helpful. Yeah, to date, through the first, call it, whatever, seven weeks or so, we're. I'd say it's very low single digits as we stepped into the year. Nothing dramatic, but more a continuation of that trend that we saw, again, rolling over those very difficult commodity inflation compareables. All right, great. Thank you very much. I appreciate it. Thanks, Bobby. This concludes today's Q&A session. I'll now hand over to Kevin Murphy for closing remarks. Yeah, thank you, and thank you for your time today. In closing, I just wanna say thank you again to our associates. Their execution during the quarter and the year as a whole was something we're very thankful for, and in addition, really, their dedication to serving our customers and making their complex projects more simple, successful, and sustainable. And despite the challenging macro environment that we find ourselves in, believe the business is really well positioned with a balanced business mix, res, non-res, new construction, RMI, and it's an agile business model with a flexible cost base, generating good cash, normalizing our customers' ordering patterns to get back to a traditional working capital profile and generating cash to fund our capital priorities. So as we go through the year, it looks like it's gonna be a tale of two halves, our best guess. H1, H2, almost the inverse of what we saw this past year. So we're looking forward to what our associates can do to leverage the model that we've built to go after some structural trends in both our residential and non-residential markets that will serve us well for years to come. Thank you for your time. Very much appreciate it, and we'll talk soon. That concludes the Ferguson Q4 and year-end results conference call. I'd like to thank you for your participation, and you may now disconnect your line.