00:02 Good morning, ladies and gentlemen, my name is Wong, and I will be your conference operator today. At this time, I'd like to welcome you to the Ferguson plc First Quarter Results 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. [Operator Instructions]. 00:31 Thank you. I'd now like to turn the call over to Mr. Brian Lantz, Ferguson's VP of Investor Relations and Communications. You may now begin your conference.

00:43 Good morning, everyone and welcome to Ferguson's first quarter earnings conference call and webcast. Hopefully, you've had a chance to review the earnings announcement we issued this morning. This is available in the Investors and Media section of our corporate website and on our SEC filings webpage. A recording of this call will be made available later today. 01:05 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. Additional information is included under the legal disclaimer in our earnings announcement this morning. 01:22 In addition, we will be discussing certain non-GAAP financial measures. Please refer to the earnings announcement on our website for additional information. Including a reconciliation to the most directly comparable financial measures calculated in accordance with GAAP. 01:40 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.

01:49 Good morning, everyone, and welcome to Ferguson's first quarter results conference call. On today's call, I'll give you some highlights from our Q1 results and an update on our end markets before I turn the call over to Bill for the financials. I'll come back at the end to set our outlook for the rest of the fiscal year before Bill and I take your questions. 02:07 We begin by saying, the Group delivered exceptional performance in the first quarter, driven in part by strong market share gains. This success is due largely to our associates, who we would like to express our sincere thanks to as they continue to make our customers projects simpler and more successful. We continue to leverage our global supply chain and strong balance sheet to support our local customers through a period of supply chain disruption. Reliably delivering in a period of industry supply chain pressures remains a gravitational pull for our customers to our business and has helped us to continue to capture these outsized market share gains. 02:46 Technology remains a key strength, allowing us to make our customers as productive as possible, while at the same time, enhancing our own productivity. For our end markets, residential, which comprises just over half our U.S. revenue remained robust in the first quarter. Both new construction and RMI saw strong demand and our residential revenues grew by approximately twenty four percent in the first quarter. 03:12 Non-residential end markets grew faster than residential as we lapped negative comparables in the prior year. With an acceleration of activity in areas such as education, healthcare, and hospitality. Our non-residential revenue grew by approximately thirty one percent and near-term economic indicators appear to be in pretty good shape. 03:32 Inflation trends stepped up further in the quarter, driven both by finished goods and commodities. Our pricing discipline and particularly strong gross margins contributed to profit growing significantly faster than revenue, delivering strong operating leverage in the quarter. 03:49 On the acquisition front, we acquired four high quality businesses, bringing in approximately one hundred and twenty five million dollars in annualized revenue. And we're pleased to welcome these associates to Ferguson as these local relationships help us drive further growth in the future. We initiated our new one billion share buyback program, completing approximately one hundred million dollars in the first month of execution. 04:13 And finally, we remain on track to hold our second vote on listing in the spring of twenty twenty two, as we look to move our primary listing to the New York Stock Exchange. So again, we are proud of our strong results in the first quarter and are confident in the ongoing strength of our business model. 04:30 Now let me pass you over to Bill, who will take you through the financial numbers in more detail.

04:36 Thank you, Kevin, and good morning, or afternoon everyone. As I start today, I wanted to remind you that we adopted U.S. GAAP effective August first, and therefore, the first quarter results we will cover today are presented on that basis. 04:49 Now turning to the results. As expected, we've seen a continuation of trends from the fourth quarter with strong market share gains, contributing to revenue growth of twenty six point six percent. Organic growth of twenty four point five percent was at similar levels to Q4 of last fiscal year. 05:07 And as Kevin mentioned, price inflation stepped up in the first quarter into the low-teens. Gross margins were one seventy basis points ahead of last year, reflecting the value we deliver to our customers, the strength of our business model and our ability to manage price inflation. Operating costs continue to be well controlled as we focused on productivity and efficiencies, while investing in our talented associates, supply chain capabilities, and technology program. As such, adjusted operating profit grew by two hundred and eighty three million dollars, up fifty eight point five percent, and adjusted diluted EPS grew by sixty four point five percent. 05:50 Moving to our segment results, the U.S. business mirrors the Group results with a strong performance. Total revenues grew twenty seven point one percent with organic growth of twenty five point two percent and a further one point nine percent from acquisitions. Price inflation stepped up further in the first quarter into the low-teens. We expanded gross margins, tightly controlled costs and generated strong operating leverage. Headcount and variable costs grew to appropriately support volume growth and consequently, adjusted operating profit came in at seven hundred and fifty two million dollars, two hundred and eighty million dollars ahead of last year…

09:35 Thank you, Bill. Since the start of the second quarter, we continued to generate revenue growth similar to that of the first quarter. That being said, we do continue to expect a tapering of growth rates as we enter the second half. The recent tailwinds we've seen from inflation on our gross margins are likely to moderate, but the timing and the extent of this remain unclear. Given the momentum in the business and the strength of our business model, our full year expectations have now increased. 10:05 So to summarize, the first quarter, the business is performing extremely well. We're leveraging our core strengths in the face of global supply chain challenges to deliver outsized market share gains. We believe we are well-positioned for growth and remain focused on executing our strategy over the rest of the fiscal year and beyond. 10:24 Thank you for your time today. Bill and I are now happy to take your questions. Operator, I'll hand the call back over to you.

10:32 Thank you. [Operator Instructions] And our first question comes from Will Jones from Redburn. Please Will, your line is now open.

Thank you. Good morning. A couple from me, please. The first was just whether we could -- or you could help us unpack the gross margin uplift in the quarter of one seventy basis points by -- is it possible to dissect by factor. I am particularly interested within that as to how much was inventory holding gains as opposed to other factors like servicing the customers well and mix? 11:18 And the second was really just more around market share, whether you had a view on your out-performance in the quarter. I appreciate it's only a small period, but within that how much is -- how much you think is a function of constrained supply chains and really how you go about then retaining those customers potentially once supply chains normalize through, say, calendar twenty twenty two. And I guess within the whole issue of market share, just interested in that Waterworks fifty percent, it's the stand out versus the other areas and is there anything particularly to note there around market share gain? Thank you.

11:52 Yes, good morning, Will. This is Bill. I'll take the first part of that question and thank you for that question. If you think about our Q1 gross margins of thirty one point three percent, they were really a continuation of what we saw in Q4, which is right about the same level thirty one point four percent, really driven by the continued step-up in inflation, as we said in our release, in our prepared comments, inflation moved from about eight percent in Q4, up into the low-teens. The majority of that further increase was driven by finished goods inflation. And that enabled us to continue to put up a very strong gross margin in the first quarter. 12:35 So again, very much as that inflation continues to move up, we're able to translate that, manage that price inflation and leverage the strengths of our supply chain to produce those outsized gross margins. We would expect that as inflation tapers at some point in the future, that those margins will moderate at some point, but it is difficult to say when that's going to happen and to what extent that will be. But certainly the majority of that driven by our ability to manage price in the first quarter.

13:08 Yes, Will, and if we tick down your question to market share, as we think about market share in the quarter, it's difficult for us to tease out exactly what that market share gain looks like, but I would think of it as broadly similar to what we experienced as we exited the fiscal year last year. And so that market out-performance is slightly above that two hundred basis points to three hundred basis points that we normally target. 13:32 And as we said at the end of our fiscal year, really that's driven in large part by that supply chain chaos that's happening and our ability to service customers. And like we said at the close of the fiscal year, hanging on to new customers and the durability of those new relationships, we believe is in fact durable and the reason for that is these customers have been targets of ours for a period of time. And given the opportunity to service that customer to make their project better, we think is a bit of a durable proposition. You're going to win some, you're going to lose some, but we think we win more than we lose over the long haul. 14:13 In terms of the Waterworks outperformance, we're really pleased with the balance of that performance, that balance across municipal, public works, residential new construction, commercial, and when you look across that performance, you've got a balance of inflation, especially in the commodity side of the business, things like PVC on the piping material side with also good volume growth. And we think that's about call it, half and half in terms of the growth inside of the quarter. So really pleased with what that brings, because if you look at the totality of the project, that's the opening gambit, if you will, for our company as we look to then take advantage of opportunities with the finished side of that building above underground construction, especially in residential and commercial settings.

15:07 Right. Thank you.

15:12 Thank you. And our next question comes from Elodie Rall from J.P. Morgan. Please Elodie, your line is now open.

15:20 Hi, thank you. Good morning, gentlemen. Maybe two questions on your end markets. So one of -- first of all a follow-up on your Waterworks business. So it's done really well in Q1, how would you quantify the upside for this business from the U.S. [indiscernible] plan that was just announced? And second, maybe, could you give us a bit of an updated view on the new housing market in the U.S. in light of the rising interest rate environment, [indiscernible]? Thank you.

15:58 Thanks, Elodie. I'll take the beginning of that and then if Bill wants to add in. In terms of that end market residential and infrastructure and commercial, when we think about Waterworks, the infrastructure bill will certainly be a tailwind. And it will likely play out over time as we think about what those projects are going to start to look like. And then as we discussed previously, there is a bit of a pressure on trade labor. And so putting those projects into action will take a bit of time in our view. But it certainly will be a tailwind for us. 16:36 I reflect back to that residential commercial side inside of Waterworks because of the broad-based nature of that performance. And the residential new construction market across the U.S., in particular, appears to continue to be quite strong. We've seen good bidding activity inside of that Waterworks business. We haven't seen any substantial reduction in lot count for subdivisions or postponement of new subdivision construction, which again points well towards our residential trade business, our building remodel business and in the rest of the construction process inside of Ferguson. 17:14 In terms of the new housing market, the external indicators look to be good, permit activity at one point six five starts at about one point five two look to be good. And so that new construction growth appears to be strong, as we move into the next calendar year.

17:38 Great. Thanks for that.

17:41 Thank you. Our next question comes from Keith Hughes from Truist. Please Keith, your line is now open.

17:48 Thank you. Question on inflation, can you give any sort of feel on the inflation levels you saw in your commodity products versus how much you saw more of the value add of HVAC, finished plumbing and things of that nature?

18:04 Yes, good morning, Keith. Thanks for the question. Commodities really trended in a very similar level from an inflation standpoint to what they did in Q4. So think of that in the fifty percent inflation range year-over-year, so very similar, some puts and takes in there between the different commodity categories, but overall, very similar level. As you know commodities represent today what used to be about ten percent to twelve percent of our business today, it's more like thirteen percent to fourteen percent just given the fact of that price increase. 18:36 But where we've really seen the step up and we talked about this a bit on the Q4 call is we're now seeing the commodity and the input costs playing through to finished goods. And so we saw that finished goods inflation step up into the high-single digits in Q1. And so it's really the combination of that and the acceleration on the finished goods side that drove that further uptick in inflation from Q4 to Q1.

19:02 Okay, thank you. And I guess one other question, maybe the lion share repurchase you talked about the progress on one billion dollar plan. Could you just give us an idea where you are in share count right now given all the repurchase activity?

19:14 Yes, we're just under two hundred and twenty one million dollars shares today, Keith. And to date we've purchased about two hundred and twenty five million dollars to date on that billion dollar share buyback program.

19:30 Okay. And just one kind of I guess, bigger picture question to finish off here. As you had talked about the inflation will probably subside, do you have any historical evidence of when you have periods of inflation and then in that goes away, how much of that you're able to keep. Is there any rough guide to use on -- and this is not on the commodity products, more on the finished goods, more of the value-add product. Is there any -- do you have any good historical examples?

19:59 Well, we're in a -- I'll tell you, Keith, we're in a period that is unusually high from an inflation standpoint, so we don't have any great historical data points. But if you think about the gross margins that we delivered last year stepping up to thirty point six percent, and now stepping up further into the mid thirty one percent range, we would anticipate that moderating somewhat. But really focused on the overall operating margins of the business. We were quite pleased with stepping that up from about eight percent to about nine point two percent last fiscal year. And we talked about that being a new base from which we could grow incrementally into the future. And sitting here today we still believe that, that we can grow that operating margin over time. Gross margins will come off a bit, but really difficult to say where they're going to ultimately settle.

20:53 Okay, great. Thank you very much.

20:55 Thank you. Our next question comes from Gregor Kuglitsch from UBS. Please Gregor, your line is now open.

21:03 Hi, good morning. Couple of questions. I mean maybe firstly, you say you have raised your expectations, if you could maybe share with us sort of what you're thinking about now, and I guess -- or maybe putting it differently, what the sort of different building blocks are to get there, that's the first question? 21:23 The second question is, on previous calls you talked about fill rates into the DC into the branch and so on, if you could just update us where we are in the whole supply chain challenges and if they are perhaps easing a little bit? 21:38 And then maybe final question is, I think in the statement you reiterated your desire to have a vote for re-listing in the spring, can you just share with us if there is any specific kind of news or I suppose any incremental step towards perhaps compared to the last time you spoke in September? Thank you.

22:02 Yes, sure, thanks Gregor. If I go back to your question on expectations first, we started the fiscal year in strong fashion and really pleased with the growth almost twenty four percent, twenty five percent organic growth in Q1. And really pleased with the operating leverage that we produced. And as we said, we've started from a growth perspective, even though it's early, we've started Q2 at a very similar growth range. So I play that through and we would expect to have a very strong first half set of results. 22:36 As you turn to the second half, as we've talked about in the past, the organic comparables get much tougher, they moved from roughly three percent in the first half to twenty two percent in the second half. And there are some uncertainty as we've already talked about a bit today from an inflation standpoint in terms of how that will play through to gross margins. So we would expect a tapering still of growth. But sitting here today, two months after, we last spoke to the market, given the start to the year given the momentum, we have we're incrementally more positive for the full year outlook at this point.

23:12 Yes, thank you, Gregor and building on to the fill rate and supply chain area, as we discussed previously, we were using our balance sheet to invest in inventory, using our supply chain to make sure that we took what were pressured fill rates at the time, call it, in that thirty percent area on time and in full into our DC, and turning that into high nineties fill rate and in stock for our customers at the branch level. That hasn't changed materially in terms of what that on time in full looks like into our DC. And it hasn't changed materially in terms of our fill rate and in stocks at the branch level. What has changed is we have seen as we exited the quarter some improvement and some firming up of the ground under our feet in that supply chain area, especially in certain product categories, certain SKUs, but it has been intermittent. 24:11 And so, the way we've been looking at this is, we have certain areas of our product catalog that are coming in at normalized fill rates and normalized time horizons. And the way we measure that as we look at the entirety of a purchase order to one of our suppliers, and how quickly we can get to, say, seventy five percent of that purchase order being filled into our DCs. And that time horizon to get that fill has improved by roughly twenty six percent as we exited the quarter. So we're starting to see some of that improvement. 24:45 Now that's going to play out with a little bit of challenge inside of our network, because you've got to make sure that you can take care of the project for the customer in its totality. And so, we're going to use that scaled relationship with the supplier. We're going to use our location base and our supply chain to make sure that we can aggregate that product and make sure that we can bring it to the customer on time and in full. 25:10 So, it's improving, but there is still some inconsistencies that are going to lead to a bit of challenges as we go forward into the new calendar year.

25:22 Thank you.

25:23 Last question on the -- on the vote. Nothing new to talk about as it relates to vote number two, we had talked about bringing that vote in the spring time and originally when we took the first vote for the additional listing of shares in New York, we said that we would bring that vote back within one year of stand-up of the additional listing, we think that's largely still on track.

25:53 Thank you.

25:56 Thank you. Our next question comes from Kathryn Thompson from Thompson Research. Please Kathryn, your line is now open.

26:05 Hi, thank you for taking my questions today. Just a follow-up on supply chain and narrowing it a little bit, could you give an update on the build-out of the DC supply chain and tech improvements. And particularly given in light of continued challenges with supply chain, how is this contributing to gaining market share, in other words, with next day delivery targets that you put out, and also any changes in terms of purchasing from key suppliers, in other words, doing some advanced purchasing to ensure that you have in inventory for finished goods. Thank you.

26:45 Yes, Kathryn, I'll start on your MDC questions. So as you know, we opened our first new format MDC in the second half of last fiscal year in Denver, we have Phoenix under construction today, should open in the spring, and we're well underway with our next one which will be Dallas, which will then be followed by Houston. So we are layering on that build out of that MDC very much -- that MDC plan very much according to our strategy and our plan. 27:14 We're seeing early feedback in Denver in terms of having that product availability, that service offering, showing an ability to enhance market share gains. But it's early days, we're a few months into that building, but we're very optimistic and encouraged by not only the efficiency there, but also what we believe that can do for us in that market.

27:39 Yes, Kathryn, thank you. And in terms of changes in purchasing behavior, we haven't really stepped up any changes in purchasing behavior or forward buys to any discernible degree. This has been a very unique environment, as everyone knows. And we've been working together with our suppliers to make sure that we can be their best path to market and have the best fill rates for our customers and move product around our network to make sure that we can fill any gaps that exist in any local market for that particular supplier. 28:12 In terms of how we think about the go forward purchasing behavior though, one of the key things on our mind is even in normalized markets, we want to help the manufacturer to make their manufacturing activity, a bit more predictable. We want to make sure that we are doing everything we can to smooth that out. In unpredictable environments, we want to also be helpful in that environment. 28:33 And so, when we look at right now, a tendency for end customers and our trade professional to want to place orders earlier to get ahead of any supply chain disruption, we want to make sure that we're getting the right required dates, so that we can make sure that we have inventory on hand for their job when they need it and avoid an excessive pull forward of demand. That's important for us as we go forward.

29:03 Okay. A follow-up on the raised expectation certainly too, and I appreciate your earlier comments on that. But we want to dig a little bit deeper, in the past and really understanding which bucket has improved? Previously you had outlined a path for high single-digit to low double-digit growth of GDP growing to two percent to three percent, industry growth of one hundred bps and Ferguson growing above the market by two hundred basis points to three hundred basis points. And then one hundred basis points to two hundred basis points of M&A to growth. When you look at those disparate buckets, what is driving the raised expectations? And then, is this from conservative estimates, are there end markets or regions that are out-performing that are raising some of those buckets for expectations?

30:01 Yes, Kathryn, I think right now we're in a period where market growth is quite strong. And as we've talked about both in the last fiscal year call as well as this morning, our market share gains are a bit out-sized versus that traditional two hundred basis points to three hundred basis points. So we are closer to four hundred basis points to five hundred basis points at the end of last year. And as Kevin outlined today, while we can't pinpoint it in Q1, we're probably in a similar range. So it's really the combination of market strength, but then our ability to generate those outsized market gains, again driven by the strength of our associates, our supply chain and our technology platform.

30:39 Yes, we're not seeing any major geographic disparities in terms of where that growth is coming from as you can imagine, we're seeing good growth in the Southeast in Texas in the Mid-South area, but generally speaking that growth is strong across the nation and through Canada as well.

31:01 Okay. In that four hundred basis point to five hundred basis point, that's -- that you noted and this appears to be a continuation of trend, what are the top two to three buckets that are driving that out-sized growth in your opinion? Thank you.

31:16 Yes, and Kathryn, not to be evasive here, it really has been broad-based as we talked about earlier in the Q&A session of this call, the Waterworks performance at fifty percent growth has been very strong, aided in large part by some commodity inflation in that business, but really across the board from residential trade plumbing through our building remodel business, our digital commerce business with that light decorative pro and project-minded consumer through HVAC and into that non-res space as well within industrial, commercial mechanical. 31:50 So it has been a very solid broad-based performance inside the business. And when you look at the share gains in those individual customer groups, it really is a testament to what they're working on together for the construction of the project as a whole in both residential and non-residential.

32:12 Great. Thank you so much.

32:15 Thank you. Our next question comes from Ami Galla from Citigroup. Please Ami, your line is now open.

32:22 Yes, thank you guys. Just a couple of questions from me, if I could have one follow-up on the sort of gross margin question. Can you talk a bit about where do we think the sustainable gross margins in this business should trend towards even considering in the context of own brand mix that is there in the business? 32:42 And the second question was really on inflation on the overhead base, if you could give us the moving parts or color around those elements?

32:53 Yes, sure, Ami. Thanks for the question. In terms of that gross margin again, it's a bit out-sized right now at thirty one point three percent. And it's difficult to pinpoint exactly where that will settle. But if you go back to the full-year results from last year, where we are in the mid thirty percent range, so thirty point six percent, we think that's probably a more reasonable range. 33:15 And then we do believe that we will continue to incrementally grow both gross margins and more importantly operating margins over time. Some of that driven by the own brand portfolio and strategy that we have in addition to our overarching product strategy and the strengths that we bring from a global sourcing and supply chain and purchasing power perspective. So we do believe that gross margins will come off a bit as inflation normalizes, and then we'll continue to incrementally grow those over time as we have done consistently over the last decade or so.

33:56 And -- sorry, and my second one was just on the overhead costs, can you talk a bit about the inflationary trends that you've seen at the overhead cost levels?

34:07 Yes, sure. Apologies. We have seen wage inflation step up a bit. And if you think about for our cost base wages and labor costs are about two-thirds of our cost base, just over sixty percent. Generally those would run kind of three percent to four percent kind of normalized wage increases year-in year-out. We're seeing that at a higher level, largely driven by drivers and warehouse associates where there is more pressure from an overarching market perspective for that type of talent and that type of labor costs. 34:42 So we've seen that increase, we would expect those pressures to continue as we step into calendar twenty twenty two. But overall, we feel good about our ability to manage those wage increases and that inflation from a cost perspective, driven by the growth we're seeing on the top-line productivity and continued focus there. So it's being well managed, but we are seeing more pressure from a cost perspective.

35:10 Thank you.

35:12 Thank you. Our next question comes from Arnaud Lehmann from Bank of America. Please Arnaud, your line is now open.

35:21 Thank you very much. Good morning, Kevin. Good morning, Bill. My first question is on is on M&A, especially in the context of your balance sheet, which is I guess in very, very strong shape, and your net debt to EBITDA below where you want it to be. Appreciate the priorities organic growth. But do you see a strong pipeline, we heard about some potential changes in capital gains, taxes in the U.S. I don't believe that going ahead. But could you accelerate some activity going forward? That's my first question. 35:55 And my second question is just a technical one and sorry, if it's silly, but I still see twenty five million dollars income from discontinued operations. I am assuming this has nothing to do with the U.K., so is there something else here that, which you're selling? Thank you.

36:13 Yes, sure, Arnaud. Thanks for the question. Our M&A pipeline is pretty healthy right now, you've seen us complete four deals to date in the fiscal year and we have a number of other bolt-on and capability acquisitions in the pipeline. 36:29 To your point, we have seen that activity pick up over the last twelve months, after we got out of the immediate kind of concerns and lockdown periods early on in COVID. I think we've seen that pick up for a number of reasons: One, the market is fairly supportive right now, so the businesses are performing quite well; two, you have seen most of our acquisitions and most of our competitive set is small to medium sized family-run businesses, and those businesses having run through a COVID period and a lockdown period and looking forward to the future and understanding what it's going to take to compete. I think that's spurred on some more people and more of those businesses to think about selling -- selling their firms. 37:15 And then certainly noise around potential capital gains rates has probably added to that a bit. So we're seeing a fairly healthy pipeline, which we would expect to continue for the rest of this fiscal year at least.

37:30 And we're really pleased with that pipeline being very well balanced -- well balanced with bolt-on acquisitions geographically and the quality of companies that we're able to bring in to Ferguson. As you know our markets are incredibly fragmented and as we look to consolidate those markets, we found some really strong opportunities with great associates and local relationships that we can bolt onto supply chain technology, global sourcing and functional expertise. 38:02 That together with some of our capability acquisition, capabilities in business expansion like Geosynthetics for our Waterworks business, but also in own brand. And you saw a little bit of that in our first four deals in fiscal twenty twenty two, that will continue, bringing in good solid own brand companies that don't own manufacturing assets, but that have high quality brands that we can then drive through our bricks and mortar and digital channels and accelerate growth. So that balance is pretty strong right now.

38:33 And then last, on your question on the twenty five million dollars, that related to the disposal of a property from a former discontinued operations, it was actually property from the Nordic business, not the U.K., but you should very much consider that a one-time event.

38:49 Very clear. Thank you very much.

38:54 Thank you. And we have time for one more question on today's conference call. And the last question comes from Dominic Edridge from Deutsche Bank. Please Dominic, your line is now open.

39:05 Thank you very much. Just to go back to the point on, on the gross margins, so maybe looking at slightly different way. Could you maybe just discuss how your gross profit per sort of units is looking in terms of, compared with history. And is there sort of any element of inventory gain on that in the current quarter that should sort of taper off a bit as we go into future quarters. So I think there was a comment you made earlier on Waterworks was about fifty-fifty volume to price, is that sort of -- did I get that right? 39:39 And then the sort of second question was just more on demand side. Of all these price increases, what sort of customer behavior you're seeing? Are you seeing any signs of people putting off works because of price increases? Or are we still a level where basically people are pretty price elastic at the current time? Thank you very much.

39:59 Yes, on gross margins, either gross profit per unit or more so across different product lines where we've seen higher levels of inflation, we've been able to leverage that into higher flow through and higher gross margins. Some of that coming from certainly our ability to leverage and to sell through inventory. And so as we've seen that continued step up in inflation, we've seen that play through to more benefit from a gross margin perspective. 40:29 And again, we would expect that to moderate come off at some point, but calling exactly what that will moderate to, is a bit difficult. You did hear the Waterworks revenue description correctly, about half -- maybe just over half of that fifty percent growth driven by inflation, the rest driven by volume.

40:50 In terms of demand and what we're seeing in the market from the customer base, we have been concerned that price inflation, especially as it entered the finished goods side would cause some degree of concern for postponing projects. As you look at the balance of new construction and RMI that we have inside the business, we have not seen any discernible behavior of postponing projects. We have seen a touch inside of the public works infrastructure space, but as we all know, that's going to have some additional demand created from the infrastructure bill. 41:27 But on the residential and non-residential portions of our business, specifically commercial, we actually haven't seen any postponement of construction activity due to price that demand continues to be quite strong. And in fact, as we discussed during Kathryn's question, we're trying to make sure that we understand exact needs and delivery requirements so that we don't have a dramatic pull forward of demand to get project -- product on-site early. So we see a pretty consistent play of demand.

42:03 That's very clear. Thank you very much.

42:08 Thank you. We currently have no time for further questions. I will now hand over to Kevin Murphy for any final remarks.

42:16 Yes, thank you operator. And thank you all for your time today, very much appreciate it. Maybe just a quick close as we began. We're pleased with the growth and improvement for our organization in Q1. As you've heard through our Q&A, our markets remain supportive both residential, non-residential, new construction and RMI. We're pleased with the continued investments that we're making in high quality associates coming into our industry and into our company and high quality associates coming in through acquisition. 42:51 The investments we're making in supply chain for best breadth and depth in the local marketplace for same-day, next day delivery and the investments we're making from a technology perspective to make our customers more productive as well as our associates. And most of all, we are thankful to those associates who continue to deliver for our customers, they continue to deliver on the promise to make that customer's project more simple and successful and to ensure their ongoing trust in our company as their supplier of choice. 43:23 So thank you again. And we look forward to speaking with everyone again very soon. Thanks for your time.

43:31 This concludes today's call. Thank you so much for joining. You may now disconnect your lines.