Reliance Worldwide Corporation Ltd

ASX:RWC

Earnings Call Transcript 2021-Q1

[Heath Sharp, Group CEO, MD & Director]

Hello, everybody, and welcome to our 2020 Investor Day. Of course, we had hoped to host you all here in Atlanta this year, but not to be. Nonetheless, we will do our very best to make this an informative and useful session for you today.Before we get into it, a couple of words on the logistics before we start. We'll be splitting this session this morning into 2 halves with the Q&A at the end of each half. [Operator Instructions] Phil King will be aggregating the questions and moderating the -- both of the Q&A sessions.We will do our best to keep the session as tight as possible today. We certainly appreciate this is a tough format. You're on the other side of the screen. A couple of hours in, it's going to start to feel like a long time. We'll keep it as tight and as punchy as we can. We will break halfway through, so you can rest your eyes and ears and more importantly, get a fresh cup of coffee. We will be done by 11:30 a.m. Australian Eastern Standard time.We are recording this session, and a copy of that will be available on the RWC website fairly soon after we're finished. You may have seen that we released a trading update to the ASX this morning. That update, along with this deck, the presentation material from today will be available on the ASX.All of our presenters will be live today, except for Edwin de Wolf in the Netherlands, given the time zone challenge, and more importantly, to make sure we had a clear audio and video connection, Edwin's session has been prerecorded, but he is live for the Q&A session at the end. So that's the start. We move on.This page here is really a cross-reference view. These are our presenters today. You can check back and look at this page as you need. We will be introducing each presenter as we go. This is what we'll be covering today.So first of all, we'll start with a brief trading update. Andrew will be talking to the announcement that we've just released to the ASX. We'll then be following up with an operations update, specifically touching on COVID and how that's impacting us in the factories and the distribution centers. We'll then move on to strategy overview and how we create value in the business and then to what makes up growth in the North American market.That will make up the first half of the session this morning. In the second half, the regions will provide an update on their businesses and their strategic objectives.As a final comment, we will not be covering today ESG, diversity and inclusion, employee engagement or talent development. These are all very important areas for us, and we do have significant projects underway, but given the format, we want to keep it tight today. We will cover those issues in subsequent sessions.With that, I'm going to pass over to Andrew to go through the trading update for today.

[Andrew Johnson, Group Chief Financial Officer]

Thanks, Heath. And now for a brief trading update, if you will turn with me to Page 7. Overall, first quarter sales performance in each of the 3 regions has continued to track in line with what we reported at year-end. Americas strong sales growth continues into September with improved wholesale and as Canada continues to recover. Overall, retail and hardware point of sales has remained relatively consistent over the last 3 months, with fluctuations in our sales to the retailer driven by either supply chain timing or the number of shipping days in the respective months.APAC external sales in September are holding up well, up slightly over the prior comparative period. Internal sales of SharkBite to the Americas are also higher. In EMEA, we continue to see volumes recover in the U.K. and Europe as those markets continue to open. Note, we do believe the improved sales activity in September is partly driven by pent-up demand and from channel partners rebuilding inventory.In all of our regions, we are pleased with how sales have developed. However, we remain cautious on the outlook. As we outlined in the trading update, repair and remodel activity in the U.S. will likely slow without further government stimulus measures. We also expect APAC sales to soften with lower building activity in the coming months. In the U.K., we are uncertain where demand will settle after satisfying the pent-up demand for our plumbing parts.And in all regions, we are watching the COVID-19 numbers very closely and are cautious on the ongoing impact, not only to our business but to the businesses of our customers. Based on these uncertainties, we remain cautious that first quarter sales may not be indicative of our full year sales performance.And with that, I'll turn it over to Tracy.

[Tracy Scott, Group Senior Vice President of Operations]

Thanks, Andrew. Hello, everyone. I'm Tracy Scott, group SVP of Operations. And for our operations update today, I'd like to discuss, first, safety, as Heath said, with the emphasis on our actions that we've been taking during COVID-19, but also share progress on our operations excellence initiative since we last talked at Investor Day last year.So let's start with safety. Before I get into COVID, I would like to provide a quick summary of our safety performance, which is summarized in a few slides in the appendix. Over the last 2 years, our injury rate has been reduced by 46%. Last year, the injury rate was up slightly which we believe is attributed to our emphasis on leading indicator reporting, which is part of our overall safety strategy. Importantly also, the severity of our injuries is improving as the lost time injury rate has declined 68% since fiscal year '18. So again, you could see more details of the safety performance in the appendix.Now I would like to discuss how we've been managing to protect the health and safety of our employees during COVID-19. First, regarding our people. Those who could work from home have been doing so with only limited people at the office to manage the essential business along with our operations' employees who continue to work in our facilities.For those who worked from one of our facilities, we implemented temperature checking and deployed PPE to minimize the risk of COVID impacting the people in our operations. We also implemented new procedures in our facilities, including social distancing, frequent cleaning and managing return-to-work protocol for anyone affected by COVID.Now we also had to adjust our supply chain actions to both protect our employees and fulfill the strong customer demand. An example of this is the picture on the right, you can see a manual assembly area which previously had employees working very closely together. We've now modified the workstations to incorporate the required social distancing as one example of the changes we've made as we had to adjust to COVID-19.Lastly, we have a global supply chain that was largely impacted by COVID-19, but our procurement and supply chain teams have and continue to closely manage constraints to avoid major disruptions.Now I'd like to update you on the status of our operations excellence initiative. We made good progress on our strategy that we discussed last year. And our focus remains on, first and foremost, driving world-class safety performance, cost savings and efficiency improvements in both our operations and supply chain, procurement efficiency and strategies to address risks and, finally, our manufacturing footprint and capacity strategies.Now let's take a closer look in each of these focus areas, starting with continuous improvement. We made great progress driving cost savings through lean management, through procurement, efficiency and rigorous management of cost savings projects across the globe. And with this effort, we more than achieved our goal of offsetting noncommodity inflation.In procurement, we've developed and executed strategies for each of our spend categories, and we're now developing strategies and implementing strategies to mitigate risk across our supply chain, many of which were more than highlighted during the COVID-19 situation.We've also applied a similar continuous approach to optimize our supply chain. We implemented a sales and operations planning process in the U.S. as we discussed last year, and this is driving improved efficiency in our plants, helping us optimize our inventory and improving service to our customers. We've also better aligned supply chain management between the regions and plan to begin implementing S&OP at both APAC and EMEA in FY '21, which will link the supply chain management across the entire group. And this will allow us to continue growing and scaling more efficient processes.Lastly, we've executed parts of our strategy to optimize our operational footprint. We consolidated our Holdrite facility in Tennessee into our Cullman, Alabama facility this year. We also outsourced our brass operation in the U.K., and in the coming year, we will be expanding our distribution center footprint in Cullman. The footprint strategy is an ongoing assessment, which includes evaluating new technologies and our operations footprint that is needed to enable efficient growth in the future.Thank you, and I'll turn it back to Heath.

[Heath Sharp, Group CEO, MD & Director]

Thank you, Tracy. Thank you, Andrew. Andrew, I suspect you'll be back later. There will be some questions on that trading update, no doubt.So now I'm on Page 17 of the presentation, and I'm in control of the clicker, so I will do that. Look, the key points of those 2 updates there. Firstly, on the trading update, it has been, or it's looking certainly like we'll finish this quarter quite solidly, and that's great. Certainly, though, there's a lot of -- clearly, there's a lot of uncertainty ahead. So we are cautious as we look forward. From an operations point of view, we've got a lot of work underway, Tracy and his team continuing to improve and gain efficiencies, even as -- and this is critical, even as we make sure we keep our people safe.So now we'll make a quick or a slight change in direction for the presentation. We're going to head to strategy and key market data. Christopher Sandman will revisit our strategy and the key elements, the 3 key elements that drive our growth. Kal Nanji will then step through the breakdown of our sales and provide more details on the nature of our key repair and maintenance market in the U.S.So with that, Christopher, I think it's over to you.

[Christopher Sandman]

Thanks, Heath. All right. My name is Christopher Sandman, and I am part of the strategy team here at RWC. I'm going to share with you how we think about value creation and, more specifically, how we remain focused on the core building blocks that make us competitive in the market.In spite of the challenging year COVID has given us, we've proven how RWC is a resilient business. The demand for our products is strong. The diversification we have across geographies and channels gives us balance, and the strength of our organization, specifically, our operations and supply chain teams has enabled us to navigate the storm. But COVID isn't over yet, and as such, we will continue to concentrate significant attention in the coming quarters on execution, making sure to mitigate challenges as they arise and be ready to take advantage of opportunities as they come.Over the next 10 minutes or so, my goal is to highlight how, in addition to being resilient, this business has tremendous potential in front of it. And we have a focused plan for how we're going to get after that potential. To preview, we're going to break down our strategy presentation in 2 elements, as Heath just mentioned. First, I'm going to talk about the core capabilities we invest in to create and sustain our advantage. Then I'll hand it over to Kal who will share perspectives on our markets that we participate in.So how do we think about creating value? To provide some structure, here's a simple framework we use to organize and communicate our value creation strategy. Before I walk you through it, let's start with the end in mind. Our objective is to continue to increase the value of this company through a balance of above-market growth and strong margins. This page provides the framework for how we make it happen.Down the middle of the page are the 3 distinctive capabilities that are core to our strategy. These capabilities are product leadership, strong distribution partnerships and operational excellence. I will be talking more about these capabilities and why we believe they are the right focus areas for our business. But before that, I want to speak briefly to the concepts we have represented on the outside of this page.We think of these 2 things as cornerstones of our strategy. These cornerstones provide the foundation for our performance. On the left is our focus on the needs of our customers. Listening intently to the needs of our customers allows us to generate sustainable demand for the products we make. On the right side of the page is our focus on our people, attracting and retaining the best people in our industry enables us to outperform the competition and sustain our success over the long term. Ultimately, this is all about focus. We believe that by concentrating our energy and resources we improve our ability to do what matters at a world-class level.In the next pages, I'll use a few examples to bring this strategy to life. Also, once we get to Q&A, I'll be happy to answer any questions you might have. So here's our first cornerstone. Through our relentless focus on the needs of our customers, we are able to generate sustainable demand for our products.Why are we so focused on our customers? Well, by staying focused on the needs of our customers, we are able to better serve them, both today and in the future. By providing great customer service and consistently delivering reliable products, we win the loyalty of our customer base. This pays dividends, both in the short and long term. As we think about the future, knowing our customers allows us to adapt our service, improve our products and identify new areas that we can expand into. I will return to this topic in a little bit to give examples of how this focus makes an impact across multiple facets of our business.So here's our second cornerstone. We believe that in order to have an organization that can continue to deliver on our long-term goals, we must make RWC a great place for talented people to work and thrive. Before highlighting a couple of the specific initiatives and programs we are working on, let me hit on why we think our focus on people is important for us. First, as a company that strives to outgrow the market, we must remain nimble and hungry. By having a team that is motivated top to bottom, we have the ability to identify opportunities faster and then execute on them efficiently. Second, as a global business with a distributed organization, we need to promote and support autonomy, while at the same time, keeping everyone marching in the same direction with a common set of values and clear vision for where we are headed. We have created an environment that balances between these 2 guardrails. Quickly, before I move on, let me highlight just a couple of examples we are excited about. The first is an effort to promote diversity and inclusion at RWC. Our team is committed to making a long-term positive impact through this effort. And we know from early feedback and engagement that there is broad support and enthusiasm across our organization for this topic. The second is an effort to promote and strengthen our core values across the organization. A strong set of values helped us maintain consistency in how our regional teams allocate time and resources, while giving them the flexibility to make decisions optimized for each local market.So now that we've talked through the 2 cornerstones, let me shift gears and talk about what makes us a strong long-term competitor in this industry. As previously mentioned, we believe there are 3 capabilities that determine our ability to win. The first is product leadership. We bring products to the market that save time, are easier to use and have exceptional quality. We are creating value for the person doing the job. We also have strong brands, brands that matter to the end-user and help us create separation from our competitors. By delivering better products under strong brand names, we are creating demand that is strong enough to pull our portfolio through our channels.The second strength is our distribution partnerships. We proactively work with our distribution partners to identify ways to put more value on the shelf. By consistently delivering value for our partners, we are able to protect the business we have while creating access to future opportunities.The third is our commitment to operational excellence. While we believe strongly in our ability to drive revenue as a product leader, we can't make it happen without a significant focus on operations. Simply put, we must deliver reliable products at the right time in place with a competitive cost structure. Our emphasis on topics, such as lean manufacturing, sales and operations planning and on-time delivery performance are all vital examples of the work our teams put in to maintain and improve our operational strength.Since Tracy has just provided an overview of operations, I will now provide more context for how we think about our other 2 core capabilities of product leadership and distribution partnerships. So how will we continue to be a product leader? At the highest level, we are a product leader because we are committed to the process of innovation. We believe the first step in a successful new product development starts with knowing the customer. At the risk of oversimplifying, let me share 3 basic questions I use to think about a new product idea.First, do we have a problem to solve that the customer really cares about? Second, can we engineer a solution that solves that problem and that is significantly better than the status quo? And third is the proposed solution financially viable? And specifically, are there margins, potential margins that will work both for us and our partners?Starting with the first question, how do we know when we have found a problem worth solving? We answer this question by staying relentlessly focused on the needs, challenges and pain points of our customers. It is also worth calling out the impact the deep customer insights have on M&A. Just as these insights feed our product development teams, they also play a role in how we think about and prioritize M&A efforts.For a specific example, this page shows the innovation life cycle for our fire stop sleeves. The inspiration for this product started on the job site, observing a process that was messy, time-consuming and inconsistent. This insight served as a spark for new product development and is a great example of how we keep our customers front and center in our new product development system.Now let's talk about what comes next and why RWC is built to turn problem statements like this into exciting new products. So obviously, finding problems worth solving isn't the end of product development. We still have important work to do. We need to engineer a solution that significantly improves the experience for our intended user, and we need a business case that makes financial sense. This is where our R&D capability comes in.You all know this well, but worth mentioning that product innovation in our market comes with its own set of challenges. First of all, a new product for the plumbing market needs to be bulletproof. The quality and reliability standards are extremely high. When we bring a new product to the market, it must work. Secondly, codes and standards are essential and vary by end market. Specific market expertise matters. And finally, new product adoption takes time. The plumbing market is filled with late adopters and rationally so.With deep R&D expertise across our global footprint, we are able to overcome these challenges by tapping into expertise and problem-solving skills from each of our regions as well as our centralized group function. Also, the differences across our end markets becomes an asset for new product development, as the differences give our collective team exposure to what has worked in other markets, giving us a more diverse set of insights and perspectives to accelerate the ideation process.As the last of our examples, I'd like to talk about the importance of our distributor partnerships and why this is a key part of our strategy. Our ability to serve our partners at the highest level really rests on many of the things we have already discussed including getting the highest quality products where they need to be, when they need to be there through our operational excellence and creating demand by developing market-leading products and wrapping them in brands that communicate our commitment to value and reliability.But our success also comes from how we partner with our distributors. We are proactive in our approach and actively seek to bring new ways to create value for them. The strength of our approach to partnership pays off in a number of ways. It gives us more opportunities to test new things with our partners, which helps us maintain our product leadership position. It also helps bring opportunities our ways -- our way as distributors often look to us when they want to improve their performance on their shelf.So before I hand it over to Kal to talk about our end markets, I want to quickly pause on this page and highlight our long-term vision. Our aspiration is to be the premier plumbing products company worldwide recognized for customer-focused innovation, value-generating brands, unmatched service and a dynamic team culture.That's it for me. Thanks for your time. And now I'll hand it over to Kal.

[Kalpesh Nanji]

Thanks, Christopher. Good morning. I'm Kal Nanji. I lead Strategic Marketing for Reliance. And going to talk a little bit today about our markets and potential growth opportunities going forward. As you can see, there's much more to SharkBite -- much more Reliance than SharkBite. In fact, the visual that you see right now represents the value of each one of our categories to our business. Our goal with product leadership is to maximize the value of all these products as components within a basket of solutions. For the end-user and distributor, it creates tremendous value because all of these products work together as a total solution and available from 1 source, more importantly, also 1 technical support number and 1 customer service number. Currently, the other categories that we're diversifying in, pipe, valves, Fluid Tech and integrated installation solutions form about half of our business, while brass PTC, plastic PTC and non-PTC fittings combined represent a little bit over half as well. Let's talk a little bit more about fittings. Making up about 45% of our business, the push-to-connect products provide a really strong foundation. SharkBite is available across all of our regions with #1 positions in the Americas,and Australia and growing positions in EMEA. We are the global leader in plastic PTC with #1 positions in our key plumbing and heating markets. Finally, the non-PTC fittings that we are focused on, essentially crimp and expansion fittings are products that complete a basket of solutions for end-users. This drives sales across categories and leverages our distribution network. We are growing the diversity of our product portfolio. These categories are largely aligned with the SharkBite value proposition. Whether it's efficiency, labor savings or availability, they all help our end-user be more productive. With pipe as one of the essential components, we have become a leading producer across all of our regions. At about 11% of our business, our valves category is as diverse in product as it is an application. And it's availability across all of our markets, we have become a top player.Integrated installation solutions are an innovative set of products that support the insulation of pipe and fittings along with water heater installation and fire-stopping protection. The beauty of this category is that our competition is not necessarily other products, rather we're converting people from makeshift, field-devised methods and creating efficiency and reliability in the process.Finally, with John Guest, we acquired a vast new category of Fluid Tech solutions, which include a range of end-use applications from beer and drink dispensing to telecom fittings with our blown fiber range. In fact, we've become -- we have top positions in drinks and dispense in the U.K. and in water treatment fittings in the U.S.Now let's take a look at how these categories offer relevance to our core end-use markets. As you can see, we have broad relevance across both RMI and new build segments that represent our core globally. Additionally, as we expand into the emerging commercial segments, these same categories, you see similar strong relevance. Finally, we're able to leverage our expertise and push-to-connect technology in the Fluid Tech segment across on multiple applications.Now we started looking at our end-use markets in that previous slide. Let's take a closer look at what our end-use split is by region. As you can see here, clearly, RMI has significant share across the board, while new build represents a larger share in Australia and Fluid Tech with the good size share of EMEA, the Americas RMI market, though, is the largest end-use market business. And going forward, let's review a little bit what makes that market tick.As this segment is a critical element of our business, we've taken a closer look at some key indicators that will assist us in determining long-term growth. We've categorized them into 3 main buckets with about 2 indicators in each. First off, we looked at increasing home values and existing home sales as key leading indicators for RMI activity. We took an extra view of this historically to further validate that correlation. Additionally, we wanted to look specifically at category metrics from a historical view and see how those correlated to existing home sales and home values. Further, we looked at some key driving fundamentals, which include the median age of housing stock in the U.S. and household formations.Let's move through that data. As is widely acknowledged, total home improvement expenditure and home values are highly correlated. This further view offers that historical confirmation and further validity on the importance of home improvement expenditure to home values. So with existing home sales, another key RMI indicator, you can also see strong historical correlation between RMI activity and existing home sales. Now that's whether buyers are moving into new homes and updating or sellers who are updating in preparation to sell their home.Let's take a little bit of a look at product categories that are relevant to us. Now this is historical in terms of nondiscretionary spend. We see homeowner replacement of internal pipes and subsequently fittings has grown at about a 3% CAGR from 1995 to 2017. Plumbing fixtures like toilets, lab faucets, bath faucets and related pictures, which also use our product solutions and installation, have been replaced at a higher clip with growth at about 7% CAGR from 1995 to 2017.Another metric we looked at where rough plumbing solutions are used is both kitchen and bather models. And these are discretionary expenditures. They have grown at a 4% CAGR over the last 25 years or so. Both of these discretionary improvements have a high correlation to both increasing existing home sales and as we saw -- as we've seen in previous charts, home values as well.Now let's take a look with some key fundamentals, starting with age of housing stock, which really supports the increased repair work done in homes. Aside from the outlier of spending activity between 2003 and 2007, that's really associated with the housing bubble. There's a high correlation between the growth and average age of housing and RMI activity.Another fundamental that we looked at is household formation. Now household formation has typically been associated as a supporting metric from new single-family and multifamily construction, where it does demonstrate the need for new housing units to keep up with underlying demand. However, the data presented here can support using this metric as an indicator for RMI activity also. As you can see, the rising RMI expenditure after the larger spikes and household formation indicated by the light blue bars.So in summary, we've seen strong historical correlation of increasing home values and existing home sales through about 25 years of market cycles, and it's driven an RMI market with about a 2.5% CAGR over the last 25 years. In our categories, we've seen internal water pipes and fittings replaced or repaired at a rate of about 3% and plumbing fixtures at a rate about 7%. Kitchen bather models, where our solutions are also used, are highly correlated to existing home sales and grew at about 4% CAGR from 1995 to 2019. The median age of housing stock has grown at 2% CAGR and total housing stock has grown at about 1% carrier. Finally, the data shows RMI activity allows household -- follows household formation spikes with about a 1% CAGR from 1995 to 2019 and also strong future household formation with about 12 million new households estimated, which appears to about 1% CAGR.Now with all this data that we just reviewed and based on -- and acknowledging the fact that there will be variance on a year-over-year basis, we believe a long-term market growth of 2% to 3% annually is a reasonable target.So given the previous review, we've put together a view on what a growth estimate can look like for the U.S. As you can see here, we can target a 3% to 5% annual growth rate based on a 2% to 3% market growth and our ability to convert users and take share with above-market growth of about 1% to 2%. On top of that, on the right side, you can see we have some variable upside in any given period based on specific customer and product initiatives that we target regularly but are not always guaranteed in every period.We'll approach the U.K. growth estimate in a similar way. We currently have estimated about a 1% to 2% market growth in volume and about a 1% to 4% above-market growth, which also includes price. Now these estimates are still being validated, but it does provide some insight into what a long-term view could look like. And again, as you see on the right, we have variable upside based specifically on future strategy execution in the U.K. around customer and product initiatives that are targeted again regularly, but not always achieved in every period.So that's the end of the section. We can move on to our first Q&A session. Thank you.

[Philip King, Group Investor Relations Director]

Thank you, Christopher. So I believe, Phil, you've got the questions there and going to throw them out. [indiscernible] to us.

[Heath Sharp, Group CEO, MD & Director]

Okay. So welcome back, everybody. I hope you've all got a fresh cup of coffee. We'll now jump to Edwin for the EMEA update, roll on to Asia Pacific and then come back here to Atlanta for the Americas update. So I think with that, we'll jump to the EMEA presentation.

[Edwin de Wolf, Chief Executive Officer of EMEA]

Welcome to you all. I'm Edwin de Wolf, and it's my pleasure to give you an update on the EMEA region. I would like to start with giving you a snapshot of our current EMEA business. After that, I will share with you an update on our market as we're obviously in turbulent times. And we'll move into the strategy for our region, which you will see has a very different approach in the U.K. versus Continental Europe. We'll round it off with highlighting the key investments being made to further enhance our business.I'd like to begin by commenting on the efforts of the entire team throughout the COVID period. The work ethic and dedication throughout the organization was incredible. But the factory and distribution staff deserves special recognition in their efforts to manufacture and deliver to our key customers throughout this period.Looking at the current business. You saw in our annual results, the EMEA region generated GBP 173 million of revenues in fiscal year '20. I think it's fair to say, this year was one with significant up and downs, we had a relative slow start with acceleration after the clear election victory of Boris Johnson and with that belief, that the Brexit approach was decided on and just needed executing. The latest, however, is that negotiations are not progressing well, and the reality of a hard Brexit is a real possibility.At the end of March, we saw a significant drop-off in orders driven by the COVID lockdown measures. U.K. plumbing and heating got hit the hardest, but also the Continental Europe job are substantial. Today, we do see a recovery in order rate, although there is some underlying noise like restocking by our customers, which makes it difficult to judge the true demand.Just to highlight a couple of other points. We're fortunate to have a very strong brand in Speedfit for U.K. plumbing and heating and John Guest for fluid tech in Europe and globally. Of our employees, about 85% is based in the U.K. and the remaining 15% is spread over Continental Europe. Our business is split between plumbing and heating accounting for 65% of the total and 35% is fluid tech. Geographically, we do most of our revenues in the U.K.At the bottom of the page, you see our footprint. In Continental Europe, we have distribution capabilities in major countries as well as pipe production in our facility in Granada, Spain.On the next page, I will give you some more detail about our U.K. footprint. In the U.K., we have various manufacturing sites with West Drayton being our major site. As some of you have already seen during your visit to that facility, we produce the Speedfit plumbing and heating range there, from molding all parts to assembling everything on our in-house design and produce automation and equipment. We also produce a high-tech volume fluid tech fittings in that facility.Next to that being the main manufacturing site, West Drayton serves also as the component center for engineering, covering product, tooling as well as automation equipment. In Launceston, we also produce fittings, focusing on specific ranges such as telecom fittings as well as handling the smaller series products. All of our pipe is produced centrally in our Maidenhead facility. Vale Park and Hayes serve our OEM and underfloor heating customers as we do small assemblies for them, which we supply on a just-in-time concept.Finally, our central distribution is in Bracknell from where we supply most of our customers.On the right-hand side, you can see some more details. But what always jumps out at me is the vast amount of components we make every single year. Health and safety is always our key priority. But in the COVID area, even more so.As you can see, with the images at the bottom of the page, we have had to adopt our ways of working, and this has had an impact on efficiencies throughout our facilities. However, these changes ensure we protect the safety of our employees and their families.I wanted to also provide you with an update on the organizational structure. As we've pointed out before, we strive to have a good mix of John Guest and RWC legacy influences, combined with external knowledge and expertise. The 2 major changes we've made since we showed this page last year are hiring a new CFO, who brings a wealth of experience in manufacturing-type environment. We also brought in a Director of Business transformation, who helps us with streamlining the continuous improvement projects we have going on across our business. We continue to look at ways to enhance our organizational structure every single day. I would also like to recognize the efforts of the leadership team over the last several months. It continues to be a really testing time, and I'm proud of the way the team came together to address these challenges.To round off the business snapshot, let's provide you with some more detail about our customers and distributors. Plumbing and heating is the largest part of the U.K. business, which consists of Speedfit, push fit fittings, pipes, underfloor heating alongside the Reliance self product ranges. The plumbing and heating revenues are generated through a diverse set of channel partners, both in wholesale as well as retail. We're the market leader with an innovative, high-quality product available in virtually all plumbing and heating outlets. We're proud to have long-standing relationships built up with our channel partners over several decades and this has been crucial in developing a successful brand.Continental Europe is inverse with fluid tech making up the majority of the sales. We service a very diverse set of end markets where the John Guest brand is well established. We serve primarily OEMs and specialist wholesalers in applications as diverse as beverage, automotive, water treatment and telecommunications. Similar to the U.K. plumbing and heating business, we're seen as the market leader.Let's move into the market update. As just mentioned, our plumbing and heating stronghold is in RMI, and the fundamentals remain strong, with existing houses in the U.K., being one of the oldest in Europe, which increasingly need to be either repaired or maintained. The value of houses are still increasing, which makes it worth spending money on doing home improvements and also the rate of new build is failing to keep up with demand.As you can see from the slide, both RMI as well as new build has been hit by the measurements taken around COVID-19, but we're seeing a bounce back from the April and May lows. Drivers for there are the reopening of the economy, restocking by our customers and pent-up demand, driven by projects that were put on hold with plumbers now able to work again in the homes of their customers. Despite the recent challenges associated with COVID, the earlier mentioned long-term fundamentals remain strong. Short-term uncertainty absolutely remains, and we're making sure we're as flexible as possible to ramp up or down with the market demand.On the fluid tech side, with OEMs being our customers, a clear dip in production output was seen as a result of COVID-19, be it to a lesser degree than the dip in the U.K. plumbing and heating segment. We're seeing positive signs of bounce back in these various markets as well.We're now moving into the strategy part of the presentation. We've highlighted throughout this presentation the difference between U.K. and Continental Europe. And therefore, we also have a different strategy for them. This page is in line with what we showed you last year as our strategy has not fundamentally changed. We've refined parts from a technical point of view, which help align the organization to this strategy. Although we have been executing on our strategy, we've had to be extremely focused on daily operations to provide our customers what was required at the right time, especially as COVID restrictions added complexity to the overall supply chain.Starting with U.K. We clearly have an established platform in the plumbing and heating segment from which we can grow and for that, we're adopting parts of the U.S. playbook, building on our end user relationship to create pool for new products and solutions, which we, in turn, supply through our loyal channel partners. These new products and solutions can either be developed through our own R&D as well as with targeted M&A activities. Various evaluations are underway at different stages, and we're making progress, particularly with the U.K. plumbing and heating opportunities. We will set out more detail in future presentations and be able to speak about customer and product initiatives as a way of expanding our growth following a similar profile to the U.S.In Europe, we need a platform for the plumbing and heating business. We're evaluating which platform could make sense and when, so we're prepared should an opportunity present itself. Simultaneously, we keep developing the fluid tech market by driving existing products into new segments as well as developing new products for both existing as well as targeted markets. Again, our strategy is constant despite the COVID-19 impact, and we're redefining it where needed.To round off the EMEA overview, I'd like to share some initiatives we have taken to further strengthen the business. I spoke before about the vast amount of parts we make and therefore, we need to continue to invest in new equipment to support the growth. Automation, obviously, drives efficiencies. But in this COVID area, it also helps with our health and safety focus as we need to make sure we distance people sufficiently.We continue to upgrade our IT system, and we have just completed the transfer of the whole U.K. business onto 1 ERP system replacing over 15 legacy systems. This is not only helpful with being aligned with the other RWC divisions but also eliminated the risk of being dependent on in-house developed software, of which the support was becoming increasingly difficult.Finally, we're implementing a restructuring to align the business with the current realities, the gains we get from improved IT systems as well as the changed skill set. This will be finalized by the end of October.With that, I've come to the end of the EMEA overview, and I'll be handing it over to Brad, who will give you an overview of the APAC region.

[Brad Reid, Chief Executive Officer of APAC]

Good morning. Thanks, Edwin. Thank you for the handover. My name is Brad Reid. I am the CEO of APAC. And it's my pleasure to give you a little bit of insight into the APAC region.Firstly, we'll start off with a business snapshot, go over the market dynamics in play, our strategy and growth initiatives in general, our talent and the organization, and finally, the operations footprint.So first slide. This slide gives you a pretty good summary of the business. Starting on the left-hand side, we've got the turnover, approximately AUD 245 million, an EBIT of $44 million. About 400 employees at the moment and 1,500 locations across APAC. Not quite the scale of the U.K., but very much Australian focused in that footprint.Talking about the brands, we certainly utilized the key international brands we have, including SharkBite and John Guest, but we also have a very strong offering in Australian brands, such as AUSPEX, RMC valves, TubeFit industrial fittings. So we have quite a broad range of both international and domestic brands, and we also have quite a number of domestic private labels that we make for our customers.In terms of the end user segments, we are very much focused on residential or domestic dwellings, that is in the form of a house or in multi units these days. In both those applications, we've got pipe sizes from 15, 16 millimeter up to 25 millimeter, and that's our strong point, and our products are behind the wall. The second area of focus for us in the APAC region is our OEMs. In OEMs, we've had a long history with the heating industry in Australia and certainly, a broader interest these days with the John Guest product in water appliances such as water filters or water dispensers in refrigerators.Moving to the top right-hand side there shows you a little bit of difference between the Australia/New Zealand segment of APAC and the Asia, the greater Asia area. Certainly, our history is much longer and much more diverse in the Australia/New Zealand markets, and that's shown by the quite diverse range of products. And we have a strong offering of valves, pipes, fittings of all types and other products, complementary products such as water meters and backflow.When you move to the Asia side of the APAC story, quite different, where we're very much focused on the OEM products, and they tend to be fluid tech products, which are more international product and they go into manufacturing in Asia, which is then the final finished product is exported back to western markets, particularly the U.S.A., some come back to Australia and some goes to the Europeans.The bottom right-hand side part of that slide shows you the footprint. We have, once again, heavily based in Australia, manufacturing in Australia and New Zealand. Good distribution right across Australia and New Zealand. And on top of that, we have a sales office and warehouse in 2 other external locations, 1 in South Korea and 1 in China.Next slide, please. Moving on to products and customers. Much the same as what Edwin said. We have quite a different structure of products depending on the region. Once again, coming to Australia/New Zealand, the top section of these diagrams shows that our focus there in terms of the customers is very much wholesalers. In Australia, most of you would recognize that our products are licensed products to be installed by licensed tradesmen. So they're not so much a DIY product. They're very much for the plumbing trade.We support that through our wholesale customers, and you can see there our large dependence on them. And that's the likes of Reece, Tradelink, Plumbing Plus and all major plumbing distributors. And then with our subset of products in industrial, we move into distributors such as PIRTEK and other industrial suppliers. That's our primary wholesale customers.You'll also see in that Australia/New Zealand graph, there's a good share in the OEM market, and that's made up of historically hot water valves, the storage hot water manufacturers. And in particular, we are still exclusive supply to people like Rheem and Dux. And then we move into other applications of slightly commercial, but a lot of hot water management with Enware. And then other OEM customers such as Honeywell and ASSA ABLOY. In general, our OEM customers consume more valve water control type products from us or subcomponents go into their products.The bottom section shows Asia. Asia is, once again, different customer, predominantly OEM, predominantly John Guest fluid tech fittings. So you can see some of the big names that we supply there, all tend to be quite large international companies. And our components, once again, are embedded deep within their appliances. Could be inside the refrigerator or a water filtration unit, for example, but once again, predominantly based around fluid tech products from John Guest.Next slide, please. So once again, just to reinforce, where do our products end up. It's fair to say that we generally categorize ourselves as a behind-the-wall product manufacturer. That is you often don't see our products in the finished product of a house or a caravan or whatever filtration system, for example. But just some examples of where we do end up and where our products do the hard work behind the scenes.A good example always is something like Q1 in the Gold Coast. Getting a few years of life in it now, but that building, as an example, one of the tallest residential buildings in Australia, the backbone of that system of supplying water to the residents in that building, it's all SharkBite. In addition to that, this also utilizes our pressure control devices and also our temperature control or thermostatic devices to regulate the temperature of water to each unit or apartment.The second section there is something that we're really proud of as we've been moving forward in the last decade, particularly over half of the high-rise buildings you see on the skyline in Melbourne, and they're starting to dwindle a little bit these days, but historically, over half of those buildings are all being plumbed with SharkBite. Why? Because the efficiency we give those contractors in high-rise construction. And that's a really important part of the solution we offer the customer is that we give them a solution, which helps them do their job better. So that's been something that we've been gradually increasing our penetration into Tier 1 corporate plumbers in Melbourne, Sydney and Brisbane, for that matter, all because of the efficiency of our products.The third section there is an interesting one. That's come along since John Guest has joined our group of products. And that's caravans and RVs. We now have a very strong position, a majority position in terms of the plumbing systems within mobile vehicles. And the John Guest product is perfect for that. Being all plastic, both the connection and the pipe makes it a very light fitting or a light system and very flexible for the application of caravans. So we have a strong presence there, and we work closely with those people to keep innovating products.Lastly, our mainstay in Australia and that is domestic plumbing. Just about every home in Australia will have RMC products in them or RWC products in them guaranteed, whether it be the plastic piping system in fittings, whether it be the valves around the hot water service or whether it be the temperature control devices for the kitchens and bathrooms to avoid scalding. That's where we came from in the beginning, and that's -- we still hold a market-leading position in that segment.Next slide, Phil. Now a little bit on the market. Hard to avoid the topic of COVID. But as a summary statement, what I would say is that while we've had some uncertainty this year, the Australian business, particularly, and to a greater extent, the APAC business has seen the storm pretty well. Interruptions to the business has been quite limited. And we've kept operating and our customers have kept operating pretty well through this period.So in the short term, a little bit messy and a little bit uncertain, but certainly, the fundamentals of why we exist as a business and the products we provide to the market is absolutely strong, and I expect a strong bounce back once the uncertainty clears with regard to the current pandemic. So in the short term, yes, we've seen some fluctuating business. To be honest, not as much as I would have expected at this stage, business is still strong. Market forecasts for the future though, vary widely, depending on who you speak with, but in essence, approvals are down. And that's a criteria that everyone can follow with approvals down quite significantly at the moment. Ultimately, you need an approval to get to a commencement of a building. So without that approval, you don't get the commencement.So the one thing we're watching closely is government initiatives in this department, trying to prop up and reenergize those approvals. And if that's successful, the dip should be gentle, but I suspect that by the end of this calendar year and early next calendar year, there will be a dip in construction, which has flowed on from the lack of approvals in the last 3 to 6 months.Once again, switching to the longer term, the outlook is really great for us. Our market peaked, particularly around F '18, F '19, and since then, we've been a declining market. All of the predictions from the analysts was that F '20, particularly was going to be a turnaround year, and we would start to ramp back up. COVID has probably pushed that back at least a year, but I don't think much more. So our expectation is that F '21 we should see some good strengthening in our market. At the end of the day, our core products go into a core -- the core infrastructure that is domestic housing and that is rock solid and will come back strong, I believe, from F '21 on.The other big advantage we have with our products, as noted in the high-rise construction in Melbourne, is that our products allow our customers to do their job quicker, more efficiently with a high-quality product. That has been very important in high-rise situations where the work and the cost of those projects is very competitive. So any dollar that can be saved needs to be saved for our customer. But I think it's going to become really important in basic domestic construction going forward. And it's a fairly -- everyone agrees that there's a shortage of skilled labor. And once again, we're a licensed market, you need licensed people to install our products. And as that market tightens with available people to do the work, I think the efficiency of our products will help us continue to grow market share.Next slide, Phil. So strategies and priorities. This one is very broad and very much dependent on which market we're in. Once again, in Australia/New Zealand, that's our oldest market. RWC began here. We've been a strong player and a leading player in that market for over 30 years now. So our #1 criteria is making sure that we stay as the leader in the market, and we are doing that quite comfortably.Taking that leadership position is really important then to continue to bring new products in that we developed or we acquired through acquisitions. But also to find new customers and to keep spreading the current package of products we have. And that -- both of those things add to the value as we move forward and are both absolutely in our plans on a daily and a monthly and a weekly basis.That certainly applies to the Australia/New Zealand markets, where we have a great heritage, a great brand name and a great following. When we move to Asia, we're very selective in the areas of those markets that we play in. And those markets need to require high-quality products built to high standards. And generally, that only applies to products which are then going to be exported from Asian manufacturers back to western markets, which require those technical standards. As such, that's where we've been quite successful with the John Guest product. And all of the John Guest product that goes into Asia at this point in time goes into building products, which are essentially exported to western markets.Asia is a big place. Lots of places we haven't explored yet. We continue to find new manufacturers and new manufacturers are trying to break into our western markets every day. And that's the objective there and the challenge there is to find those innovative and new manufacturers and get our products embedded inside their products. That will continue. That really gives us an expanding opportunity and access to different markets, but we also have to be mindful of the standards of the base market within the Asian countries requires quite different standards to our standards, which are applied in the Americas and Australia, particularly. So a lot of our basic products, take, for example, a hot water control valve is really not applicable to an Asian market, their standards are quite different.Okay. Next slide, please, Phil. Just zeroing in a little bit on Australia. Australia represents 80% of the APAC turnover. So it's quite an important part of our puzzle down here. And so I think it's worth just talking about it in particular. Once again, the left-hand side, the end user channels are shown. Wholesale is certainly clearly number one. I put that together with hardware because of a similarity in product offering, not because of size. So if we combine wholesale and hardware together, that's our primary market in Australia/New Zealand and our secondary market is OEMs.So going across the page, when we combine wholesale and hardware, what do we deliver? Well, we essentially deliver everything behind the wall. So from the water connection, the water meter out at the front of the property or the apartment, from that point, we can provide everything through to the tap, the shower head or the bath of the toilet. Once again, all the big products that you don't see when the job is done, everything behind the wall, and that's why the quality and security of our products is so important. Once they're installed, you want them to last, and they do.So we provide value to that wholesale chain through a number of mechanisms. Firstly is our product range. We have the biggest and best product range in the Australia/New Zealand markets by far. So we have everything that the customer or end user needs. Secondly, we have, by far, the best customer care service of any of our competitors. That gives the plumber, in some cases, that extra security in terms of how to use the product and how best to use the product. And certainly, the customer, the end user knows that there's a great Australian company behind the products they're using or being put into their premises.And lastly is our distribution. Once again, we lead against in comparison with all of our competitors by far, we have our products in every outlet all over Australia and New Zealand. So you can walk into any plumbing wholesaler, and you'll find our products there ready for your consumption.Moving down to OEMs, very different mindset and strategy behind supporting an OEM. An OEM, a classic one for us is someone like Rheem. They've been our partner for 30, 40 years now. So we exclusively provide all of their control valves that go around their storage hot water systems, and the same applies to people like Dux. Why that's an incredibly important thing for our business is that those type of customers give us a base volume in manufacturing terms to keep our efficiencies very high. So we provide those guys exclusively. But the 2 things that really ensure we maintain a strong business connection with the OEM customer is our engineering support and our ability to produce in volume.So the OEMs we work with are not the smaller OEMs, they are the large market-leading OEMs. So once you engineer a product with them, the second thing is you have to be able to supply it. And we have a strong manufacturing base in Australia, and we can, therefore, adequately not only work with them in an engineering sense, but we can then back it up with supply through our own production. And generally, that production goes straight to their production lines. So that interface of supply chain is incredibly important for them and for us looking after that customer.Okay. Phil, next, please. Organization. This makes me smile. I can absolutely say we have the best team in our market in Australia and New Zealand by far. And that is a basin point, having the best people in the business really makes the rest of the job easy. We have the best manufacturing team. We have the best financial control of that manufacturing team. It's a well-honed machine. Beyond that, we have a great product management team and a great sales team.That all puts together an amazing outfit with an amazing skill set. All of the people leading those individual departments have been with the business for a considerable period of time, are all well experienced in their individual fields. And not only that, we have a lot of cross-pollination between divisions or departments within the business. That gives us a great backup in case of an extra workload in operations at a point in time or product management or where ever it may be, we can all chip in and help.When we move to the rest of Asia, we have -- we actually have a small office in India as well. But in India, China and Korea, we have a good lead there with small teams under them that allow us to quite effectively and efficiently address the needs of those markets.But at the end of the day, once again, can't be prouder of the team that we have, the amazing ability that they have to manage the customers' expectations and deliver on what the customer wants next is incredible. And also, there's a strong belief in the next generations in the business. And that's something we work on daily, bringing in new people, new young people into the business and mentoring them so that one day, in the not-too-distant future, they can take over some of these senior roles.Next slide, please, Phil. The last slide here is the operations snapshot. This has been -- it sounded a bit like an Australian story, but we are APAC. But when it comes to manufacturing, certainly, there's 3 primary locations for our manufacturing. Brisbane, the historic base of RWC, is still a strong manufacturing plant. That plant is based on valve assembly and manufacturing. In Melbourne, we now have 6 plants. They are based around fittings, manufacturer, pipe extrusion and plastic component production. And then thirdly, we have a small operation in Auckland, which is a brass machining plant.It's fair to say that still the Australian operations are very heavily brass and plastic based in terms of their production capabilities. But in all cases, we're working with basic raw materials, whether it'd be brass bar or steel or aluminum and plastic raw materials and taking it from those raw material states right through to a finished tested product.In terms of just to give you a little bit of a feel for what the operations produced in the last financial year, we produced over 200 million components for valves, fittings and other things. That went into about 30 million finished fitting products during the year. We produced about 12 million meters of pipe just for the Australian market, and we produced over 1 million safety and thermostatic valves. All pretty amazing figures for an Australian business managing to compete with the world in terms of manufacturing efforts.That's about it for me. I hope that's given you a little bit of an insight into what's happening in Australia and love the opportunity to show people around the plant at any time. But for now, it's time to hand over to Sean. Thank you.

[Sean McClenaghan, Chief Executive Officer of Americas]

Thank you, Brad, and good morning, everybody. I'm Sean McClenaghan, CEO of the Americas. Like Brad and Edwin, this morning, I'll provide an overview of the Americas business, provide a brief update on our market as well as our growth strategy, and will conclude with an operational update.At USD 496 million in revenue, the Americas region is the group's largest. About 50% or half of our revenue is currently based in SharkBite push-to-connect fittings and SharkBite push-to-connect accessories. The balance of our revenue is split between our other pipe, valve, fitting and integrated solution product lines.With product available at more than 23,000 locations, we are primarily focused on servicing the residential, commercial and OEM rough plumbing markets and our focus on both repair, improvement and new construction applications. I will point out that compared to our businesses in the U.S. -- in the U.K. as well as in APAC, we are disproportionately focused on repair and improvement activities here in the U.S.If you look at our footprint, our 2 largest locations are manufacturing and distribution complex, it's located in Northern Alabama, and our headquarters here in Atlanta. We are also supported by distribution centers in New Jersey, Metropolitan Toronto, Las Vegas and have a regional engineering office in Southern California.Key to our strategy has been a multichannel go-to-market approach that has been supporting the needs and preferences of both the RMI and new construction sector. For us, home improvement is our largest path to market, representing half of our revenue, and wholesale distribution is our second largest channel, approaching 25% of sales. This is followed by sales through our hardware and OEM channels, and then collectively, e-commerce, while an important and growing segment, still remains small and today represents about 2% to 3% of our revenue.Many market factors support the long-term growth opportunity for RWC here in the Americas, including the size of the attainable market and the fragmented playing field of our competitive base. But 3 specific long-term demand drivers exist, and you heard Kal speak to some of these, but these are the ones that we consider especially important as we formulate our growth strategies and select where to invest over the next 5 to 10 years. These specific factors are highlighted in bold on this page, but they are the shortage of trade labor in plumbing, the age of both the U.S. and Canadian housing stock, and the fundamental supply demand imbalance that exists in single family, multifamily housing. While many other factors also contribute and impact our business, we consider these 3 to be particularly important as we choose where to invest over the next decade.But looking and thinking more immediately, the impact of the global pandemic and the particular response to that pandemic that has been taken in the Americas has brought clear disruption to our market. These disruptions have driven several sector changes, which has increased demand for our product and have overlaid well with our growth strategy. We don't cover all of these on this particular slide, but there's a few that I want to talk to.First, there's been a clear societal change with regards to the amount of time individuals and families are spending in their homes. Not only do we live in our home today, but we work in our home, we educate in our home, we're vacationing in our home. And all this increased activity within the home has driven a huge increase in surge in home improvement products -- projects, excuse me. In addition to that, this additional time in the home has really increased wear and tear on many of the infrastructure systems, including the potable water system. This has all been fueled by a large increase in disposable income for many American families. Some of this has been supplemented by federal stimulus programs, but much of it is just fundamentally a shift in where American families are choosing to spend their disposable income. Instead of spending it on vacation or dining out or an entertainment or on clothing, much of it is being spent on improving their homes.The second interesting disruptive factor is that across all of our channels, wholesale has been slow to respond to these changing dynamics. This has been the case in many wholesale markets, but particularly true in plumbing. Over the course of the months of April and May, many wholesalers shut down entirely or completely limited amount of traffic that went through their branches. In addition, many wholesalers weren't set up well to handle curbside business and a lot of smaller wholesalers have no e-commerce alternative.Even 24 weeks into COVID-19 and the market response here in the U.S., many wholesalers are still struggling to adapt and change. Because of the fundamental increase in demand, these pros are looking for alternative locations to buy and much of this shift -- much of this demand has shifted to the retail-formatted channels. Home improvement, hardware and e-commerce have all been the clear beneficiary of this channel's slow response to the pandemic.Lastly, the third factor, a disruptive force I want to talk about is what's occurred on new construction job sites in the U.S. and Canada. Early in months of April and May, several regions of our country and provinces in Canada had job sites shut down. But even once these all reopened beginning of the month of June, across both the U.S. and Canada, there have been fundamental changes to how trades have to operate on these job sites. There are new work rules impacting the amount of time they can spend, there are work rules impacting the amount of building tradesmen they can have on the site. All this has played well really to our core value proposition, which is driving more efficiency within the trade.So if you step back and look at these disruptive factors and think about RWC's strengths, think about our broad product availability across multiple channels. If you look at our in stock position, and you couple that with our trusted brands and the core of our value proposition, which is about optimizing labor time, this has resonated very well into today's COVID-19 market.While mostly favorable, however, not all the sectors that we support here in the Americas have experienced a favorable change in demand. If you dig deep into the repair and maintenance sector, particularly our MRO and fluid tech product lines, factors such as lower occupancy in commercial office space, lower occupancy in restaurants and retail have really driven a reduction in maintenance activity and repair activity in these sectors. In addition, we've seen lower turnover in rented homes and apartments, which have been a negative impact as well.But more importantly, as we look forward into calendar year '21, you can clearly see some potential headwinds that we'll have to face. At some point in time, the impact of higher unemployment in the U.S. and Canada will impact discretionary spending that can be spent on home improvement projects. In addition, there will be a likely decrease in federal stimulus programs as we move into next calendar year. And then if you look at several indexes, including the architectural index, you can clearly see there's a potential slowdown in commercial new construction activity that will likely impact our business next calendar year.And then finally, when you consider the fact that the economy will eventually reopen, there will be a shift in discretionary spending from home improvement activities to more traditional activities like vacation, dining and entertainment. So clearly, we've seen some very positive impacts of COVID-19, but as we look into calendar year '21, there are some clear headwinds that we'll face.If I move from the market update to our ongoing growth of our business, our plans are to continue execution of our previously communicated growth strategy. We will continue to utilize the strength of the RWC brands, the breadth of our product offering, select innovation and our broad distribution network to drive growth and expand share. Our goals remain the same. We want to increase share of wallet with the repair and maintenance plumber, we want to increase share of wallet with the plumbing mechanical contractor in new commercial construction. Fundamentally, we want to own more of the project.We want to continue to ensure that product is available where the pro desires to purchase the product, and we will continue to increase access to our product. If you look at the pros buying patterns and behavior, it has been changing over the last decade and will continue to change over the next 5 to 10 years. We will have our product located where they choose to buy.Several others have mentioned this morning the fact that we're going to continue to listen to our customers and end users. We will understand their needs, and we'll continue to innovate extension improvements to our current product offering. And then lastly, we'll expand our product offering within the strategy of servicing the needs of mechanical, electrical and plumbing professionals through targeted M&A to help increase that share of wallet that I mentioned earlier.So underpinning our strategy and growth over the past decade has been our investment in the business. I believe Heath has mentioned this, often, it is ahead of demand. This has been critical to our growth. And we continue -- and we plan to continue our execution of the strategy. These investments have been across multiple sales channels and products and have enabled RWC to benefit from the changing market dynamics and requirements, and this has been especially true today.It's easy for us to think about the investments we make in our supply chain, in our factories and in our distribution centers, but the investments we make in our business are much broader than that. We continue to invest in our product, both organically and inorganically to again, own a larger share of the project. We invest in merchandising to improve the shopping experience in the retail and wholesale format.Over the last decade, we've invested a lot in expanding the footprint, gaining those 23 outlets that I mentioned earlier. We will continue to look for new avenues and opportunities when they exist to increase both the outlets that we're selling in today as well as the shelf space we have in our existing outlets to meet the pros changing path to market.We talked about this before as well. We are focused on diversifying into commercial construction. This is an attractive market, providing needed diversification for our business and one we continue to invest in going forward. And then lastly, both globally and regionally, we will invest in our supply chain and manufacturing capacity to meet the needs of our end users. This is both in terms of capacity and inventory required to serve a seasonal business requiring 98% to 99% on time and full supply chain performance.Next, I will provide an example of 2 key growth areas. The first is in our retail channels. We will continue to drive above-market growth in the home improvement and hardware channels by leveraging our strengths, which again include our brands and our ability to execute and service the retail customer base. This slide highlights some of the methods that we use to drive this growth, but it includes driving core product growth through value-added merchandising and product sequencing as well as pure assortment optimization. It includes growing our brand presence in the rough plumbing department by expanding into 8 adjacent categories. Historically, this has included PEX and crimp, more recently it has included pipe support and stop valves. And then again, we'll continue to secure additional shelf space when available as real estate is vital to success in the retail channel.Thanks to travel restrictions, we understand that it's impossible for many of you to visit job sites or our stores this year. So for this reason, we have created a few brief videos. The first will be a visual update of the retail shopping environment and tie specifically to the growth initiatives that I just covered. The intent of this particular video is to highlight 4 things; how we're driving growth through innovative merchandising, how we're simplifying the shopping experience to increase sales, how we're utilizing product line expansions to capitalize on new growth opportunities and finally, as you watch the video, you'll see how we continue to maintain high service levels with inventory availability.With that, we'll play a short 1-minute video.[Presentation]

[Sean McClenaghan, Chief Executive Officer of Americas]

Second growth area I will highlight this morning is in the area of commercial new construction. This is an attractive market that aligns well with the core value proposition of our product offering. And while a cyclical market, it provides key diversification for our business here in the Americas. Despite pandemic-related job site shutdowns in the months of April and May, we did see 9% year-over-year growth in this segment during fiscal year '20.And since these job sites have reopened, we've seen double-digit growth beginning of the month of June through the balance of this first quarter of fiscal year '21. For this market, Holdrite and its product portfolio are critically important to us as are certain legacy RWC pipe valve and fitting offerings. We continue to invest in scale and scale our commercial sales and support team that's required to support this channel and are adding new products to the range.And as we've discussed previously and as others have mentioned this morning, to gain additional scale in this sector, we'll need to invest both organically and inorganically. We'll look for specific acquisitions that have a focus in this area to help us fill both capability and product line gaps to help continue the scaling and growth of this product line.This brings us to our second video, which highlights the selling process into commercial construction. In commercial construction, our goal is to provide a broad suite of solutions during every phase of construction. What we do is allow contractors to work more efficiently and keep projects on schedule which, while always important, is even more important during COVID-19. In this video, you'll see our products used during 4 phases of construction. During stage 1 or when concrete is being poured, you'll see the use of HydroFlame Pro and our fire-stopping solutions. During the drain waste vent installation, you'll see use of our TestRite products as well as Holdrite hyper strengths for the drainage systems. During the third stage, where the plumbing is being roughed in, you'll see the use of PEX pipe, EvoPEX fittings and Holdrite pipe supports. And lastly, in this particular video, as the fixtures are being put in, you'll see the use of Cash Acme thermostatic release relief valves. Let's play the second video, please. [Presentation]

[Sean McClenaghan, Chief Executive Officer of Americas]

Like our other regions, the Americas has a strong and scalable leadership team. But most importantly, this team is supported by over 600 associates in an organization that has depth in the areas that are critically important to our growth. This include depth in retail and commercial sales, operations, supply chain and S&OP planning, product management, engineering and marketing. It is this team that's continued to drive our success and will do so into the future. I'm going to conclude our overview of the Americas business with a brief synopsis of our manufacturing and distribution facilities that are located in Cullman, Alabama. As Tracy has mentioned earlier this year, we completed the consolidation of our La Vergne, Tennessee facility, which was acquired as part of the whole right acquisition into Cullman. Today, in Cullman, we manufacture a broad range of products. In addition to Cash Acme control valves, we manufacture PEX pipe, SharkBite and EvoPEX push-to-connect fittings, and the entire Holdrite product suite, including water heater accessories, pipe support systems and Hydroflame Pro. Thank you. We also have extensive packaging and distribution operations in our Alabama facilities, and all of this is supplemented by distribution locations in Nevada, Northern New Jersey and metropolitan, Toronto. As we continue to grow, we'll continue to invest in our manufacturing and distribution capabilities and will do so further in fiscal year '21 and '22. Now I know many of you have visited Cullman in the past, but much has changed. We are going to conclude our section on the Americas with a 2-minute video, providing a brief facility tour, which will then end RWC Americas review. Thank you. [Presentation]

[Heath Sharp, Group CEO, MD & Director]

Okay. So thank you, Edwin, Brad, and Sean. You guys now aren't done yet. I've seen the questions. They're some good ones. So we'll throw to that in just a moment. Look, hopefully, with those sessions, what you've seen is that our strategy is the same across the regions. And it's based on product leadership, strength of distribution networks and industry-leading execution. Certainly, we're at a different stage of maturity in each of our regions. The Australian region is the most mature. In North America, at the moment, certainly the most opportunity and the most activity right now. In the U.K., we now have the platform. 2 years in, we think we've got our arms around the John Guest business. We're now at the point where we can build on that platform, adopting essentially the same methodologies and approaches that we've used here in the U.S. So I would think, in the future, you will hear us talking about product and customer initiatives in the U.K. in the same way that we have been talking about them here in the U.S. So I hope that came through. Look, I also hope what came through all of the sessions are that we really are focused on execution right now. So in our factories, with our customers and with our distributors. So finally, I'd just like to remind you of our priorities for '21 -- for financial year '21. We did touch on this at year-end, but I certainly think it's worth hitting again. #1 priority, of course, the safety, health and well-being of our people. That will always be the case. As we move through FY '21, our focus will remain on execution. We'll continue to provide industry-leading customer service and support. And these things will assist us to achieve ongoing above-market growth rate in all of our regions. We'll also pursue ongoing margin expansion through continuous improvement initiatives, through supply chain improvements and general cost management. And finally, of course, we'll continue to allocate capital appropriately, given the uncertainty, but we'll also closely watch demand and adjust our capacity, increase our capacity as we need. We cannot be in a position where we run out of capacity clearly. So they are our priorities for financial year '21. So to wrap up. Our business is robust. These are trying times for sure. Our teams have performed well and continue to perform well. Our markets are resilient, particularly our core repair and maintenance markets focused on plumbing and heating. As I've said, our focus has turned to execution, and that will remain the case through the remainder of '21, at least. Certainly, there's significant lack of clarity ahead. The RWC business, however, is well positioned and appropriately structured to move through the near-term challenges and to accelerate out as visibility improves. And I hope what's come through over the last hour or so is that we have a clear plan to grow the business, to increase profitability and to create value for all stakeholders. So that's the wrap-up. I think with that, Phil, I will pass over to you to collate the questions. And Edwin, Brad and Sean, we're going to step out of the road and let you guys take the questions. So Phil, over to you.

[Philip King, Group Investor Relations Director]

Thank you, Heath. Edwin and I've switched devices because apparently, the sound quality was poor before. So you won't see my face anymore, which is good, I think, just the RWC logo. So a few questions for you, Edwin, for EMEA. Firstly, have you got any specific thoughts that you can share in relation to M&A plans in Europe. First question for Peter Steyn, what we continue to do with M&A in Europe, both in terms of geography and product focus?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Yes. I think what we obviously want to do is stay close to what we would know well. We're obviously a pipe and fitting and ballast company, predominantly, at least from a European point of view. So it would be logical that you'd be looking in that space. And that would then also be in one of the kind of like major European countries because if you want to build a platform, you want to do something that is substantial. And you want to do that to gain capabilities, both from our product as well as distribution and just basically looking for another platform, the platform in the U.K. we have, as Heath mentioned before, and this would be an extension to that in the same product category.

[Philip King, Group Investor Relations Director]

And a couple more questions for you, Edwin, both from Peter Wilson. In the U.K., we've indicated we intend to borrow from the U.S. playbook. Compared to the U.S., can you speak to the opportunities to grow shelf or share, grow shop space or share of shop space and the potential to bring on new distribution partners?

[Edwin de Wolf, Chief Executive Officer of EMEA]

So the last piece dropped off for me, Phil, I apologize.

[Philip King, Group Investor Relations Director]

So growing shelf space and bringing on new distribution partners.

[Edwin de Wolf, Chief Executive Officer of EMEA]

Yes. I think if you look at the U.K., we are represented in, I'd say, the vast majority, if not all of the plumbing and heating distribution outlets. So it's more of getting more shelf space. And just as an example of that, and what we've done in the U.S. is getting more and more product on the space with those customers that we know so well. We're actually here in Europe launching today, at least in a couple of hours when the sun comes up here, our first products where we have a combination of the valves that we get from our partners in Australia and combine those with Speedfit. So that's just an example of how we're trying to get more shelf space at the customers that already take our product lines.

[Philip King, Group Investor Relations Director]

And another question from Peter Wilson. This is about plumbing and heating on the continent, do we have an edge, which would allow us to compete with the French suppliers?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Well, I think this is why we have to look at M&A because I think if you want to go from a position where you are today, and you would like to fight yourself into, indeed, a market that has some really good companies in there that will be difficult. So that's why we've said in our strategy that it's more likely for us to get a platform through M&A, and we -- then to be able to build that up from the bottom.

[Philip King, Group Investor Relations Director]

Another question for you, Edwin. Can we do more on price in EMEA?

[Edwin de Wolf, Chief Executive Officer of EMEA]

I think as Heath mentioned before, I think we've got a very diligent market where through the distribution channel, we've been able to actually do annual price increases. Can you do more than an annual one? I don't think so. But can you hold on to that annual one? I think, yes, given the discipline in the distribution channel. So I think we -- current year is obviously difficult. We'll hold the flexible on all the fluctuations we've got going on. On the other hand, you could say that's maybe a good reason to bring up a little bit of price. But again, I don't see any reason why we could not stick with what has historically been an annual price increase.

[Philip King, Group Investor Relations Director]

A couple more, Edwin, if you will. We furloughed a number of our workers in the U.K. and Europe due to COVID. Is the business back to full employment?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Sorry, again, I can hardly hear you, Phil. I apologize.

[Philip King, Group Investor Relations Director]

Okay. No -- are we back to full employment? Is everyone who was on furlough returned to operations?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Yes. And with the exception, obviously, because the first thing that we look at is to make sure that people that have either themselves or family members that have underlying conditions, those people we've allowed to be on -- still be on furlough, but that is not because of not having a demand, but that's because of taking care of the health and safety of our people. But we have brought everybody in step-wise because bringing people in, you can only do when you make sure that you have the changes in place that fulfill our internal requirements of making sure people are safe, but also obviously the government requirements. But in principle, everybody is back and given the nice surge in orders that we've seen, we've actually got some additional contractors working every single day with us. So yes, in principle, everybody's back that is, from a health point of view, is possible.

[Philip King, Group Investor Relations Director]

Thank you, Edwin. A couple for you, Brad. If you can hear me?

[Brad Reid, Chief Executive Officer of APAC]

Yes.

[Philip King, Group Investor Relations Director]

It's from Peter Steyn. Can you give us a sense of our exposure to multifamily versus detached housing in APAC?

[Brad Reid, Chief Executive Officer of APAC]

I guess the simple answer to that is that our exposure is greater to detached housing. And certainly, I don't really want to get a scale on that, but yes, it's much more biased towards detached housing. We have, generally speaking, more product in a detached house. And in addition to that, a detached house is not a one-on-one comparison with a high-density premise, generally speaking, there's more materials in detached house. And so I'm not saying it's 2:1, but it's a substantial ratio. And on top of that, we have quite a few more systems options, which are very strong in detached housing. So we have Auspex, we have a SharkBite system, we have a PEX system now. So we have actually probably more product offerings that are going into that segment at this point in time.

[Philip King, Group Investor Relations Director]

Can you give us a feel for the split between wholesale and OEM channels?

[Brad Reid, Chief Executive Officer of APAC]

Yes. Certainly, as per the presentation, you would have seen quite a substantial difference in magnitude between those 2, and that really is quite representative of where we stand. So the wholesale segment is substantially more valuable than the OEM segment to us. And it's in order of 2 to 3x more valuable.

[Philip King, Group Investor Relations Director]

Yes. And then another question for you, Brad. Given the increased efficiency in high-rise installation on the labor front, it would seem that PTC technology will become an established an essential requirement. So is there still a market penetration story for us here?

[Brad Reid, Chief Executive Officer of APAC]

Great question, and I'd love to spend the next hour or so trying to answer that one well. At the end of the day, we have customers and customers have a desire for options, let's say. Certainly, one thing I still believe is that the push-to-connect system appeals to a certain segment of the market for a number of reasons, but it doesn't appeal to all segments of the market. So as an example, we do have some Tier 1 plumbing contractors who prefer crimp joints. And that's a technical decision on their part. And they do the best that they can with those products. So while the push-to-connect system has given us an incredible launch into the efficiency space associated with high-rise and we command a much greater share of that market than we do in the general market since, I think there are limitations to that because people do prefer to have different technologies and different options. Having said that, certainly, the reason we will see continued growth in push-to-connect in Australia is in the detached houses is for the same reasons. Those same pressures are slowly coming to bear more in detached housing construction, where people are looking for faster turnaround times and faster pass-through installation time. So there's still runway for us to take, but I'm also really precautious in our market. We have 3 really good systems, okay? It's not just SharkBite push-to-connect system. We have other great systems, which we need to spend time on, and those systems are also growing at a great rate for us through the channels that we operate in.

[Philip King, Group Investor Relations Director]

Great. Thank you. Sean, a couple for you. If there are no dominant players and a few barriers to entry in U.S. commercial, why will Reliance be able to get a good outcome from what is obviously a very competitive market.

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. So I mean, the commercial space is large and fragmented, which is part of the attractive piece of it. There are a number of players that play. There are some large and quite capable players that tend to have focuses on certain niche products or areas within commercial construction. We think there's room for innovation and improvement within that space. I think if you look at what we've done with HydroFlame Pro, with TestRite, with pipe supports, I think that's all a testament to the fact that there's an avenue to help innovate within commercial construction. I think what's particularly important, though, with commercial construction and you think about our value proposition of most of our products, is the plumbing labor rate in commercial construction is by far the highest of any sector here in the U.S. So the sensitivity around labor optimization is the highest within that sector. So we think our focus on innovation provides an avenue and the type of products we bring to market, provide an avenue for growth within that sector.

[Philip King, Group Investor Relations Director]

And sort of a linked question really from Peter Steyn. What makes fire-stop a revolutionary that you can seemingly build your commercial offering around it?

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. So there's a few things, right? If we look at who we're competing against on plumbing -- excuse me, fire-stopping for plumbing penetrations, there's a couple of large competitors that are key in that space, but there's also about 30% to 35% of existing plumbing penetrations that are fire-stop with what's known as a mix shift or field device method. So we're taking share from both this mix shift, field device method, but also from some of the leaders in the space because the products that we have through Hydroflame Pro offer a lot of innovative features that again, save time and money for the plumbing mechanical contractor that's on the job site. So what we've done through Holdrite is looked at some of the shortcomings of the alternative product offerings and have designed improvements into the product to the point now where the leaders in the space are actually looking at our products and thinking about how do they design around some of the innovations and patents that we have in the space. So it's really -- and what's important about Hydroflame Pro, and you saw it in the video, that is the first plumbing product utilized on a job site. When that concrete is poured, we have Hydroflame Pro in there. So our discussions with the general contractor -- with the plumbing mechanical contractor at times with the engineer or even the developer starts early. And it's those relationships that we can then leverage to sell other products as we go kind of into later phases of construction. So it's an important product line. It's one that we're continuing to grow, and it's one we continue to invest in. I think you saw some of the expansions that we've done to the SKU assortment over the past 18 months. If you look forward, in the next 12 months, you'll see some additional SKUs that are going to go into that space that will be highly differentiated compared to the competitors, let alone the field device method.

[Philip King, Group Investor Relations Director]

And another one for you, Sean, if I can find it. So this is from Peter Wilson. How many points was a shift from wholesale to retail added to our sales growth in the Americas in the 3 months to September? Are we right to assume that Reliance is disproportionately represented in retail?

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. So was that Peter asked that question?

[Philip King, Group Investor Relations Director]

Yes.

[Sean McClenaghan, Chief Executive Officer of Americas]

Hard to pinpoint, Peter. So here's what's happened over time. And we're not talking about a huge window here. If we go back to March, April, May, June and then into the 3 months that we're into in this fiscal year. So you saw a significant share shift in the latter half of our second fiscal year or in the months of April, May into June, because of the dynamic I talked about earlier, where wholesalers had restrained operations. So we saw a lot of channel shift that took place during that point in time. We believe we also saw share shift because our presence in retail format, such as hardware, home improvement and e-commerce, is significantly higher than our presence in wholesale. So as business shifted from wholesale to retail, we saw a share shift as well. Move forward into the last 3 months or the first 3 months of this fiscal year, July, August and September, the wholesale channel has adapted, but are still behind what home improvement and hardware has done. So we believe there's still some share shift that's occurring because of that. But at the same time, we think fundamental demand is up so high because of this increase in home improvement activity that we're seeing solid performance this quarter, both in wholesale as well as in retail and hardware to the point that they're starting to equalize. In addition, earlier and during COVID, and I might have mentioned this during that particular section, that not only did wholesalers stop allowing traffic through their stores, many of them went into cash conservation mode as well, and that included a reduction in inventory in the months of April and May going into June. Most, not all, have corrected that starting in June through August and September of this year. So product is now available again in wholesale. So we think we've seen some share shift. If you're asking me to kind of come up with a specific number, it's a challenge for us to do. We think we've seen share shift. We know we've seen channel shift. I think despite the fact that we will face some serious headwinds in the next calendar year, and you have heard us speak in the past of the shift that we see because of the freeze event that occurs in our business when more individuals, DIY-ers, handyman and pros are introduced both to our product and then particularly, and most importantly, are made aware of where that product is available, some of them will continue to use that post the freeze event. The wildcard for us, as we look into calendar year '21 is the fact that we've experienced a national freeze event for 24 to 25 weeks, that will likely continue for another month or 2. So we anticipate we'll retain some share shift, but at the same time, we'll see a slowdown in fundamental demand because spending on home improvement will retract as we go into next calendar year. So there's a lot of clouds in the crystal ball there, Peter. But if you look at it, we think they're going to net out to be slightly favorable for us going into the second half of next calendar year.

[Philip King, Group Investor Relations Director]

Thanks, Sean. Edwin, I have one for you from Simon Thackray. He notes that concerning the reemergence of COVID in the EU, whilst the restocking event in the first quarter is helpful, how do you think the channels would react to a second COVID-19? And would it be different to what we saw first time around?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Yes. I think that's very difficult to judge. Will it be a little bit different? Yes, because I think not just us, but also our channel partners, we have now measurements in place that we could move through a second phase like that. But obviously, if there's -- if we go back to what is a complete lockdown, and people, for instance, like the -- in the beginning of March, April, they were afraid to have contractors in their house doing work that will definitely have an impact on the business. But that is really difficult to predict. And quite frankly, if you talk to our distributors, they also can't judge what that would be. It depends on the severity of the lockdown, I guess.

[Philip King, Group Investor Relations Director]

And a second one for you, Edwin. Can you just talk through sort of sales run rates we're seeing in the U.K. versus the EU year-to-date? Are they similar? Or is one market growing quicker than the other?

[Edwin de Wolf, Chief Executive Officer of EMEA]

Sorry, is the question that the run rate difference between the EU and the U.K.?

[Philip King, Group Investor Relations Director]

Yes.

[Edwin de Wolf, Chief Executive Officer of EMEA]

Yes. I think we've seen Europe rebounding a little bit quicker than the U.K., but maybe to the tune of a couple of weeks, not more than that. I think what is -- was more obvious to me is that some countries in Europe, like Germany, didn't have that severe of a dip compared to the U.K. So they also had to come from less of a negative. But I'd say, across the board, both Continental Europe as well as the U.K., things have picked up significantly and in some countries in Europe, and as you saw from the last trading update, across the board, we see some good results over the last month.

[Philip King, Group Investor Relations Director]

Thank you, Edwin. Brad, I have one for you from Abraham Akra. Can you separate the sales trends for Victoria out from the rest of Australia? I guess, in other words, he's asking what are we seeing in Victoria versus the rest of Australia and is Victoria a drag?

[Brad Reid, Chief Executive Officer of APAC]

First point, really difficult to separate the 2 because oftentimes, our products from our DCs go to a wholesaler DC and the actual final destination of that varies. One thing, I would say, though, is some of our core products, we do have a different penetration, if you like, of products, depending on which state or which market you're in. And certainly, the products which are key to the Victorian market are doing well at this point in time. So the short answer is incredibly -- no, the severe lockdown in Victoria hasn't actually flowed through to a clear lagging of what's happening in the Victorian market. So I would suggest at this point in time, no. Once again, with slowed approvals and the previous activity in Victoria, I suspect we will feel a little bit more in Victoria going forward there. But to this point in time, it's been very strong construction, even though that's been under restrictions, has actually kept going pretty well for us in Victoria.

[Philip King, Group Investor Relations Director]

Thank you. Sean one's for you. And it's from Simon Thackray asking about the Cullman and what our total labor force is there and whether we have more opportunities for automation at that site?

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. So our workforce there is roughly about 400 employees, and we use a fair amount of automation, but we are absolutely looking at other opportunities to automate, particularly some of the assembly activities you saw on the video on Holdrite. There's clearly an opportunity there with automation. So as part of our relocation to Cullman from La Vergne, the first phase was to really replicate and then match efficiencies that we had out of that La Vergne facility. Stage 2 is to look at ways to increase efficiencies on those same product lines and automation will be a key part of it.

[Philip King, Group Investor Relations Director]

Another couple for you, Sean, from Chloe Lim. Can we do anything to improve the visibility of our order book from 2 to 3 days? Or is that unlikely, given our exposure to the retail channel?

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. Ironically, the industry here is taking it into the opposite direction. So clearly, we sit down with our major customers and talk about long-term forecast. And Heath and others have mentioned, we get point-of-sale data from roughly 7,000 retail outlets across the U.S. and Canada. In addition to the point-of-sale data, we get inventory or in-stock data as well. All that is critical. But if you look at how our retailers are running their supply chain, they're taking more inventory out of it, they're providing shorter and shorter notices. From some of our home improvement customers, we get 1-day notice on an order and 1-day visibility. I think the goal of the entire channel is to drive it in that direction, it enables them to flow inventory quicker. In addition, if you look at some of the large home improvement retailers, they really don't even stock product in a distribution center. Once they order product from us, it just flows all the way through to a store shelf. So they're looking to streamline it more so than to provide additional backlog of information. But what's interesting about that, and while it's clearly a challenge operationally, it's one of the key things that distinguishes our value proposition into that channel, right? It's a combination of product, brand, knowing how the retail customers work themselves, but being able to cope and adapt to these type of very stringent and demanding requirements. So now unfortunately, as we look at our system, we look to get better to really short -- to really support shorter lead times with, again, 98% to 99% on time and full fill rates.

[Philip King, Group Investor Relations Director]

And then a second question from Chloe. Based on the macro indicators in the slides, would it be fair to say there's a shift towards more cyclical R&R exposure versus prior thinking about repair and maintenance, which is more stable?

[Sean McClenaghan, Chief Executive Officer of Americas]

Is that for the Americas? Phil?

[Philip King, Group Investor Relations Director]

Yes, sorry, for usual, yes.

[Sean McClenaghan, Chief Executive Officer of Americas]

So roughly 85% of our business here in the Americas today is really what I'd categorize as repair, maintenance or small project. If you start getting into a core construction, new construction, be it multifamily, single-family or commercial, it's a fairly small segment. So what we're looking to do is actually continue to drive our growth within RMI because it is less cyclical. It tends to have a lot of attractive pieces to that market. But it's also dominated by 1 or 2 channels in a handful of customers. So what we're looking to do is really diversify or provide additional product, channel and customer diversification for the business into the most attractive sector, which -- that's in addition to repair and maintenance, and we find that to be the commercial new construction space, which, again, we lump multifamily into that and really separate out and don't target single family. If you look at our book of business, in a lot of ways, we're trying to grow a book of business that looks similar to what Brad has in APAC. We want to provide more end market diversification. Now clearly, the channels and how the trade works is different in APAC than here. But if you look at his fittings, diversification, his product line diversification and his end market diversification, 5 years, 10 years from now, we want to look more like that than have the concentration that we have today, which, again, is a pretty significant improvement in the business from where it was even 5 to 7 years ago.

[Philip King, Group Investor Relations Director]

Thank you, Sean. And I think it's a link question. We haven't talked about expanding into new build housing construction in the U.S. Is that no longer a target for us?

[Sean McClenaghan, Chief Executive Officer of Americas]

Right. We clearly continue to provide product into, what I call, single-family new construction. We'll always have some bleed over revenue and sales in that segment. But it's not a focus area for us. And we might have highlighted on this before, but the primary reason for that is the fact that it is the lowest segment -- margin segment kind of within the Americas market. Very competitive, very cost focused. I talked about commercial having the highest labor cost for a professional plumber. In single-family new construction, not only is it the lowest, in many instances, the individuals actually plumbing the house aren't plumbers themselves. They are overseen by a plumber that's on the job site. So the value proposition and margin expectations and cost pressures in pure single-family new construction in the U.S. isn't that attractive to us. So we are really focusing in other areas. Again, that does not mean there won't be sales in that segment. It's just not where we're focusing our selling, marketing and product development activities. Mainly, again, if you think about the importance of labor, it is the least important in that segment versus any of the others in terms of the cost of that labor.

[Philip King, Group Investor Relations Director]

Another one from Peter Wilson for you, Sean. Can you give us an update on plastic PTC water fitting sales in the U.S. and also any lessons from the dual-brand strategy in retail, i.e., with EvoPEX and then the John Guest product?

[Sean McClenaghan, Chief Executive Officer of Americas]

Yes. So the question is pertaining, I believe, to EvoPEX. So EvoPEX continues to grow. It is actually seeing an uptick and spike at the beginning of this year, really through all of COVID for some of the reasons we mentioned earlier. In addition, we expanded our distribution of that product significantly earlier this year. So we're continuing to see growth in it. We think it will be a consistent performer and grower. It has a specific niche within the market that it's going after, right? So it is focused on -- it's a PEX-only system, primarily for large remodel or newer construction, right? So it is focused on that one specific area. I think today, it's probably -- I get a look at the numbers specifically, but it's our second largest PTC system here. If you look at the number of units we sell with EvoPEX, it actually is larger than number of plastic poly crimp fittings that we sell today. So it's growing. It's taking share, but it will always be a niche product offering for us. And likewise, with John Guest, from a small diameter fitting perspective. That product continues to grow and do well within its targeted area. It has a strong hold in smaller diameter applications, particularly in areas such as beverage and OEM sales into the filtration market. We, too, think that's going to continue to grow at a nice rate but is much smaller end market for us and a more focused set of applications. Again, much different than Edwin in the U.K., where those core John Guest fittings are really going after core plumbing. We're utilizing the John Guest portfolio to attack areas kind of around core plumbing.

[Philip King, Group Investor Relations Director]

Thank you. Edwin, I have a couple for you from Brook Campbell-Crawford. The first one is, in a normal year, the seasonality between the first quarter ending September and the second quarter ending December, is there any great difference between the first and second quarters for you in EMEA, normally?

[Edwin de Wolf, Chief Executive Officer of EMEA]

No, I think we normally see actually a little bit more of a difference between the first half and the second half given our broken book year. Because in our territory, we actually then have the July, August vacation and December vacation period, both in the first half. So we don't see that much seasonality. A little bit -- actually, not that much between Q1 and Q2, more between first half is normally -- second half is normally better than first half.

[Philip King, Group Investor Relations Director]

And just on the margins you're seeing in the September quarter, EBITDA margins, I guess, between the September quarter this year and last year.

[Edwin de Wolf, Chief Executive Officer of EMEA]

Having closed the books of September, yes. So that's a difficult one, but I think I'll align with Andrew's comment that volume obviously helped.

[Philip King, Group Investor Relations Director]

Yes. Thank you, Edwin. Sean, a couple more for you. Firstly, this is from Ab Akra. Can you talk about differing PTC market shares in the different regions of the U.S., is there any great variation in the penetration of PTC in different parts of the U.S.?

[Sean McClenaghan, Chief Executive Officer of Americas]

We definitely see some regional differences in pockets. I mean, there's areas where it is particularly strong, if you think of areas like Buffalo, West Philadelphia. The Pennsylvania market, it's an area that is particularly strong. You move out to California or even Florida, it will be less strong in those areas. So we do see regional differences. It gets back a little bit to some of the preferences and regional preferences that Brad spoke of when it comes to fittings, plumbers and mechanical contractors like choice. Various pipe systems have various preferences in various parts of the country. For example, in the Southeastern U.S., CPVC is heavily used. You move to other parts of the country, and it's rarely used. So in areas where CPVC is heavily used, we'll see fewer PEX systems and less use of push-to-connect in general. Because they are particularly price-sensitive markets. They're using CPVC because it is absolutely the lowest-cost system they can install. So there are tremendous regional differences. How you build, design and pipe a house in the state of Florida, it looks very different than in the mountains of Colorado or the state of New Hampshire, right? There's significant regional differences that we do see across plumbing and even particularly the PTC.

[Philip King, Group Investor Relations Director]

I guess, Sean, one last one for you. How do you or we think about operating leverage and margins in the Americas this year and going forward?

[Sean McClenaghan, Chief Executive Officer of Americas]

Well, a few things. I think Andrew will hit on some of the highlights, right? I think we're in a period now of fairly favorable commodity in FX at this moment. As we look forward into the second half, some of that favorability is going to move away from us. I mean, clearly, you see what's happening with copper. What's happening with the U.S. dollar to Chinese yuan. I mean, those things will be headwinds for us in the second half of the year but are positives this year. The second area is the fact that, like most businesses, we'll see reduced SG&A cost during this period is limited to no travel, there's no trade shows. A lot of the core selling and marketing activity has had to go virtual and be augmented, not only by us, but by the entire competitive base. You saw some of those job sites. You allowed fewer visits to job sites. So now during this period of somewhat isolated behavior here in the Americas, we will see a reduction in SG&A. The second area, I highlighted all those investments that we've made in the business. I mean, we're capitalizing on those investments today. As Heath indicated, we always have a pipeline of new product -- program opportunities that we're trying to work with our wholesale and retail customers. The acceptance of those programs depend on a number of factors. But this particular year, the likelihood of them getting accepted is lower. And so with each of those comes an investment that we're likely not to see this year as we would in normal years. But again, that will mitigate as we move into the second half of next fiscal year and into the following fiscal year, we'll begin to kind of go back to a more normal operating leverage.

[Philip King, Group Investor Relations Director]

Thanks, Sean. I might get Heath to join you up there. A couple for him.

[Heath Sharp, Group CEO, MD & Director]

Go ahead, Bill.

[Philip King, Group Investor Relations Director]

Welcome back, Heath. A couple for you from James Brennan-Chong. And it's about, to what extent would we consider adding products, which are slower growing or lower margin because they would be defensive, help us take shelf space, et cetera?

[Heath Sharp, Group CEO, MD & Director]

Yes. Well, look, we'll certainly consider that. There's a limit, of course. I think the stop valves that we rolled into Lowe's is a good example. I mean, they are a lower margin item unless differentiated than, of course, SharkBite, for example. But it made perfect sense to us to increase the shelf space, offer a better solution, a more coherent solution. And of course, the additional cost that we had to put into the business there wasn't great. So the drop-through to the bottom line is still a nice number. Now at some point, you -- that stops being the case, but there's a lot of opportunity out there that still falls into that category that's attractive for us for sure.

[Philip King, Group Investor Relations Director]

And beyond our 3 regions, are there any geographies which are missing from our portfolio?

[Heath Sharp, Group CEO, MD & Director]

Not really. In each of our 3 core geographies, we are working on sort of lower priority projects sort of outside our core key markets, but our real opportunities are the ones we set out tonight, which are focused on our core market, where we've got good distribution relationships. So that's certainly the focus going forward.

[Philip King, Group Investor Relations Director]

And to what extent -- this is also from James. To what extent could COVID-19 have a lasting positive impact on our long-term revenue growth expectations, with a more permanent work-from-home, less travel, et cetera?

[Heath Sharp, Group CEO, MD & Director]

So looking through the uncertainty in the near-term to the uncertainty in the long-term, look, I'd say some of -- what Sean touched on, I think, is quite interesting is some of that potential channel shift. So some of the Pro customers who weren't buying from retail previously are now some of them have gone back to wholesale, but I suspect it's a little bit sticky in some cases. Now what percentage of that, is that is at 2%? Is that 20%? We don't know. But that's potentially a benefit to us. How much of this mindset of invest in your home sticks, there's a little bit of bullishness out there. And I'm personally a little more skeptical. I think, Sean, as you touched on is once people can go back on vacation, sort of -- I think that we're going to go back on vacation, but we'll see how that unfolds. So there's some -- I think we're well placed to take advantage of the potential opportunities there. It's really unclear what they are and how great they are those, absolutely.

[Philip King, Group Investor Relations Director]

A couple more, Heath, and then I'll wrap it up. What is your comment on the efficiencies of each region, perhaps using the U.S. business as a guide i.e. 600 FTE in the U.S. given their revenues and earnings. So how we would sort of evaluate the 3 regions from that point of view?

[Heath Sharp, Group CEO, MD & Director]

Sorry, can you say that again?

[Philip King, Group Investor Relations Director]

The relative efficiency of each of our 3 regions from a margin point of view or operational efficiency point of view, just based on the headcount?

[Heath Sharp, Group CEO, MD & Director]

Yes. Where it's really hard to make that assessment is some of the margin for the sales work that's done here in the U.S. sits in Australia. The manufacturing of SharkBite comes from there, and it's a little bit the same from the U.K. The Fluid Tech fittings which are made in the U.K. sold in Australia and in the U.S. So I guess it's a little bit hard to break that up. So off the top of my head, not really, it gets a bit complex to try to crumple that apart.

[Philip King, Group Investor Relations Director]

Okay. One you maybe, Andrew, from Keith Chau. We guided CapEx to $35 million to $55 million, given the recent demand strengths. Are we going to pull forward some of that CapEx? And any thoughts of adding plant or line extensions, et cetera?

[Andrew Johnson, Group Chief Financial Officer]

Well, Keith, the $35 million to $55 million was always a range that we felt like depending on demand, we would hit the higher end of that range, but we would take a wait-and-see approach. I feel like we're more than likely to see the higher end of that now, given the volumes that's going through the factories. So yes, that's kind of what we see. What was the last bit of that question, Phil?

[Philip King, Group Investor Relations Director]

Whether we'd be looking to add more capacity or line extensions?

[Andrew Johnson, Group Chief Financial Officer]

Yes. Look, I think line extensions quite possibly in both Americas and EMEA, but pieces, we'll fill in here and there where we've got bottlenecks. But certainly, nothing large scale, like a new factory, but more just filling in and possibly a new line here or there.

[Philip King, Group Investor Relations Director]

Thank you. Heath, so one for you...

[Andrew Johnson, Group Chief Financial Officer]

We are also adding distribution space in Cullman. That's something that we feel like is necessary in order to support the business. But that will be a lease, of course, not on property.

[Philip King, Group Investor Relations Director]

Thanks, Andrew. Heath, one more for you. If we were still a private business, would we do things differently to change the business from this uncertainty?

[Heath Sharp, Group CEO, MD & Director]

Look, inevitably, there'll be some things we do differently. I think around the edges, though, by and large, the strategy and the approach that's got us to where we are today is still valid going forward. I think what you were just talking about there was -- Andrew is a good example, is we've always tried to a do a pretty good job, frankly, of keeping ahead of demand from a capacity point of view. That means making a decision today that will impact the fill rate for a customer in 2.5 years' time. I mean, you've got to do it. It is -- the interesting situation we've got right now in the U.S. is this higher demand, which is an abnormal demand in retail. Will that come off at some point? Yes, probably is my view, but we don't really know. But from a capacity planning point of view, we've got to assume that it sticks, that seems to be the analyst view right now. We'll build that inventory, that inventory, that capacity accordingly. And if we need it, then fantastic. If we don't, well, we'll use it 6 months or 12 months, we'll need it 6 months or 12 months later. So I think the decisions that we made and the philosophy we had as a private company remains today.

[Philip King, Group Investor Relations Director]

Last question is from James Casey. Are we looking to do any more large transformational-type acquisitions and what balance sheet capacity do we have for acquisitions?

[Heath Sharp, Group CEO, MD & Director]

I'd say our thinking is more along the lines of bolt-ons right now. Quite a few of the sessions today referred to gaps in product offerings, increasing share of wallet or the size of the basket of products offering to the end user or shelf space. All of that points, I believe, to bolt-on acquisitions to augment our product range. And right now, I think we've got the capacity from a balance sheet point of view to support those sorts of things. So not particularly on the lookout for a transformational acquisition at this point in time.

[Philip King, Group Investor Relations Director]

Thank you. Over to you, Heath, to close.

[Heath Sharp, Group CEO, MD & Director]

Okay. Well, very good. Thank you, Phil. Thank you very much to the RWC team for putting this together and participating. Edwin, I think it's about, I don't know, 3 A.M. something your time. So you need to get some sleep so you can get up early for that product launch tomorrow. But most of all, thank you very much, everyone, who sat in on the call. Thank you for your interest and your support. I hope it's been informative and interesting, and we look forward to next time. Thank you.

[Philip King, Group Investor Relations Director]

I love them to you [indiscernible] So the first one is regarding actually the growth in the 2 markets, the Americas and EMEA, referencing the slides that Kal just talked about. And noting our expectations the growth of above-market is greater in EMEA than for the Americas, why have we taken this to -- particularly given PTC plastic plumbing is further penetrated in the U.K. than Russia by the U.S. markets.

[Heath Sharp, Group CEO, MD & Director]

Yes, sure. Look, the main point there, and Kal just did mention it as he hit that slide is, we've included price, which is quite a broad range, but we've included price in that above-market growth rate. So there's an argument to say that's actually part of the market growth. That's where we've represented, and that makes up a chunk of that number. So that's the reason there.And look, the other thing I'd say is, we're certainly more advanced in analyzing and assessing that U.S. growth than we are in the U.K. So that's one to look out for going forward as we refine that.

[Philip King, Group Investor Relations Director]

Next -- Chris, you're making a lot of noise. Could you please be quiet. The next one, I think we'll leave the regional discussion next. But here one for Heath, heading into the end of the year, retailers typically stock up ahead of the natural winter freeze to a greater or lesser extent depending on seasonal conditions in the prior winter.This year, the ramp-up at the end of the year will take place during a strong period of underlying demand. Will there be any significant changes to manufacturing configuration this year to manage the volumes required until winter freeze?

[Heath Sharp, Group CEO, MD & Director]

Look, I'll touch on that briefly now. Sean may be going to get into that a little bit later on. The short answer is yes, we are trying to put a little bit of inventory on the shelf as we head into winter. In fact, we are quite busy right now. A lot of product going out the door. So that is a little challenge. I mean that is certainly still the goal to be prepared for winter.Look, my view is that as the business grows, that impact of a freeze is proportionately shrinking as a percentage of our overall business. It's more related to how many houses or how many pipes, I suppose, to a percentage of our business. So we don't ever expect a freeze to have the same percentage impact on our business that it did back in 2014, for example.Nonetheless, we're following our normal cycle, building inventory towards the end of the half to be prepared for it. And then the second half will deal with it one way or the other. We'll ship a whole lot of extra product, or we'll then have to pull back manufacturing to wind inventory down. So following the same process at this point.

[Philip King, Group Investor Relations Director]

Okay. Another question, this relates to the trading update this morning. Can we provide an estimate of the EMEA channel restocking benefit in September which we've referenced and the U.S. are relevant and whether this channel restocking has been completed?

[Heath Sharp, Group CEO, MD & Director]

Look, it's pretty tough, Andrew. It's -- I don't think we can really put our finger on exactly what that proportion is in the U.K. Look, my gut feeling says, at some point, the wholesalers get all the inventory they need on the shelf. The harder one to read, I think, is probably the pent-up demand in the U.K. is exactly where that's at. I mean we've got 2 or 3 or 4 months' worth of pent-up demand to meet as well as what the run rate is. I think that's the biggest -- the bigger factor right now, a little bit hard to tell and unknown. So it's a bit hard or it's impossible, in fact, for us to put out a more accurate number on that.The second part of that, Phil, was with regard -- I didn't quite catch it, with regard the U.S. demand?

[Philip King, Group Investor Relations Director]

Yes, whether there's any impact in the growth we're seeing from distributors restocking in the U.S.?

[Heath Sharp, Group CEO, MD & Director]

I think a little bit, not too much, maybe on the wholesale side of it. Wholesale sort of recovered -- a couple of months, it's recovered back to about normal. There was probably a little bit of inventory movement there, nothing material, certainly the refills in the hardware. They feel about right for inventory right now. So I don't think there's too much to read into that.

[Philip King, Group Investor Relations Director]

Thank you. The next one question [indiscernible] is should we outline how our product development process has changed in recent years, especially in relation to ongoing monitoring and reviews to ensure we stay on track, the product development process.

[Heath Sharp, Group CEO, MD & Director]

Yes, certainly. So this is a subject that could take up the rest of the session if we allowed it, but we won't. We -- our process has become more structured and more robust. And I think -- I'd like to think that we're a dynamic learning organization. And certainly, we put more effort upfront. And Christopher Sandman touched on this when he spoke about how we assess opportunities in the marketplace. We spend more time to put more effort into that front-end to determine what the real opportunity is, the scale, what sort of solution will make a difference and what that financial modeling looks like.And then we certainly have a more structured, more robust, if you like, stage gates along the way to determine how that project is tracking. And before we, at each stage, determining whether those assumptions that we made in the first place is still valid or not. So no major deviation directionally, but certainly more structured and more robust than what it has been in the past.

[Philip King, Group Investor Relations Director]

Next question. To be the premier planning products company worldwide, do you believe you need to broaden your product much beyond the current mix?

[Heath Sharp, Group CEO, MD & Director]

Sure, for sure. And look, that's a big part of the second half of the presentation. And most notably, I'd say, in the U.S. offering a broader array, a bigger basket of products for our end-users is really a key part of that, and as Christopher said, providing product leadership there. So absolutely, and that impacts our view on research and development and also acquisitions. So yes, that part of it, and there's a lot of opportunity there without question.

[Philip King, Group Investor Relations Director]

Thank you. One from Lee Power, the variable wording on growth estimate implies great above the base business rate and not be achieved on a recurring basis. Why would new product development not lead to recurring growth beyond the base business?

[Heath Sharp, Group CEO, MD & Director]

That was a little bit harder to hear. So the gist of the question, Phil, is why or how does product development impact growth beyond the market growth?

[Philip King, Group Investor Relations Director]

Why is it not -- why is it lumpy? I think, why is it not recurring? Well, put it this way, why is growth above...

[Heath Sharp, Group CEO, MD & Director]

[indiscernible] the product or customer initiatives. Many factors some within our control, many that aren't within our control, where our distributors are in terms of a place on the shelf or their implementation teams to roll new range of products into the store. The product development life cycle is not perfectly linear, not everything takes exactly 3 months or 6 months or 9 months to develop. That varies depending on product. So there's a number of factors there.We will try and get 1 of those initiatives in the U.S. every period. I think it's worth saying, we don't expect to achieve that this financial year, simply because all of our distribution partners are quite busy in the U.S. in filling the demand. And we're obviously quite busy as well meeting that demand. So our expectation is we won't be able to get one of those this year. Now look, if we do, then that's a bonus, but the expectation is we won't. So a lot of factors at play there.

[Philip King, Group Investor Relations Director]

And as a follow-up, is growth above the base business more likely to come from internal new product development or M&A?

[Heath Sharp, Group CEO, MD & Director]

A combination, definitely a combination, which has always been the case and will continue to be the case. And look, the goal with an acquisition is to get hold of some clever products and be able to amplify that through our distribution. So both of those elements, internal development and acquisition will be contributed to our growth going forward, for sure.

[Philip King, Group Investor Relations Director]

A question back on R&D. What expertise sits in R&D, how many professionals, how many engineers, how many graphic designers, et cetera? So someone wanting a bit more detail on our R&D capability across this company.

[Heath Sharp, Group CEO, MD & Director]

Okay. Look, globally, we've got in excess of 100 engineers working in our business, split across the Brisbane facility here in the U.S., Brisbane engineers, obviously, Melbourne as well, and a good number of really capable engineers in the U.K. as well. We split the development in different parts of the world. So Brisbane is the valve center of excellence, and Christopher presented some information on that in relation to a valve that the U.S. team -- sorry, the Brisbane team develops specifically for the U.S. market. So although it's a team that sits in Brisbane, it definitely provides development expertise and products for the whole world. If you jump to the U.K., that's clearly heavily a pipe and fitting development team. And again, there's work that they do in the U.K. on pipes and fittings that we are looking to use in other parts of the world as we go forward.

[Philip King, Group Investor Relations Director]

Another question on R&D. It's a big part of the growth opportunity for the business. Can you give us some insight on how we prioritize the allocation of R&D spend?

[Heath Sharp, Group CEO, MD & Director]

Look, simply is what product is going to move the needle. What's going to generate the greatest income? Look, it's not that simple. We'll make strategic moves along the way. And sometimes, you might have a product range of 100 items. You have to fill those last 20 items as well. You can't just have the core -- the 80 that one [indiscernible] over to the volume, you need to have that whole range. But other than that, it's developing those products that will have the biggest impact in the key markets around the world.

[Philip King, Group Investor Relations Director]

So thank you. Changing gears slightly, and this is talking more the Tracy's piece. Can we confirm that we are targeting margin growth given that Tracy stated that the goal of operational excellence is only to offset noncommodity inflation and given that we're not currently getting much price.

[Heath Sharp, Group CEO, MD & Director]

Well, definitely, I'll answer this for Tracy. We strive for more than that. I think Tracy said at least or minimum offsetting inflation. I know this is an issue that gets Andrew pretty wound up and rightly so. He seems to go red in the face whenever we talk about only offsetting inflation. And I think he's probably right there. So no, these activities on efficiencies, cost savings, procurement savings are all aimed at expanding the margin.

[Philip King, Group Investor Relations Director]

A question, it starts in the context of EMEA, but I guess it could apply in any market. Do we think we can be better on price in EMEA firstly and other markets more generally?

[Heath Sharp, Group CEO, MD & Director]

It's a tough area right now. The U.K. is quite focused on are the wholesalers open. Can you actually ship the product and get it delivered to the distributor? It's a pretty basic fundamental focus right now for our business and our distributors business. So -- and that will remain the case for some months out.Nonetheless, and particularly the U.K., really good discipline of pushing our prices through to the market. We expect that will continue going forward. The amount of that varies and I think that came through in Kal's chart. Is that a 1%, is it a 2%, is it a 3%, is it a 4% price increase, that varies year-by-year, for sure. But I'd like to think we can keep that discipline going.

[Philip King, Group Investor Relations Director]

Thank you. So excluding logistics time and the additional trading day, this is back to the trading update. Excluding logistics timing and the additional trading day, what do you think U.S. growth was versus PTC and have September included any promotional activity?

[Heath Sharp, Group CEO, MD & Director]

There's no specific promotional activity shown in any of the first 3 months of the year. I think the variation in July, August, September is really logistics timing variation. So I think if you average across those 3 months, that would be -- that would look pretty close to what we're seeing from a point of sales point of view with our customers.

[Philip King, Group Investor Relations Director]

Thank you. The next question. How would you suggest that we, as an analyst, anticipate the upside years? For example, what is the gestation period for new initiatives in price?

[Heath Sharp, Group CEO, MD & Director]

Can you go again, please, Phil? I missed that one.

[Philip King, Group Investor Relations Director]

Yes. How would you suggest that an analyst anticipates the upside years? For instance, what is the gestation period for new initiatives?

[Heath Sharp, Group CEO, MD & Director]

Look, it's difficult for us in the business to know exactly what's going to hit when. The gestation period for a product, look, it depends. Some of the service valves we rolled out there measured in months. If you look at something like an EvoPEX fitting, that's measured in years, many years. So it's difficult to put a single figure on it. And that's really why we tried to -- per Kal's chart, to break it down to show that core market and above-market growth rate as being the sort of the more solid repeatable part of our business, and we'll strive to put more on top of that in any given period. That might be an extra 0.5%. It might be -- we've had periods where it's been double-digit increase just for the initiative.Now I think there's some big movements we've had over previous years that we won't see again. We've had periods where it was more than 20%. That's going to be very unlikely going forward. I think if you look at the last half of FY '20, where we moved by about 3 points, if we could land one of those every period or so, that would be a good outcome, but certainly not guaranteed. And again, I think this year, we'll be devoid of that opportunity, not for one of trying on our part just factors outside our control.

[Philip King, Group Investor Relations Director]

Thank you. Question from Andrew Scott now. You spoke to the broad product range, but you're still selling individual products rather than complete systems. How do you try to ensure that a customer for one product buys the broader RWC range of products, is a systems approach achievable as an end goal?

[Heath Sharp, Group CEO, MD & Director]

For sure. Absolutely. In all of our markets around the world. The pipe and the fittings in the U.K., the SharkBite system in Australia is a pipe and fitting system. Sharkbite EvoPEX here in the U.S. is the same. And I think the slides that Christopher showed where he talked about the distribution partnerships. Looking closely at those slides, it shows how we present the product on the shelf. It's a complete coherent, branding and presentation of product on the shelf with the explicit goal of showing that those products can work together.I think that's a really important part of what we do is, if you walk down the aisle in a retailer or you're in a wholesaler at their counter, you want to see that all these products are part of the same brand with the same colors and packaging and so on, that gives you the reassurance that they work together. I think that's a really important part of our product offering.And just back to this question of what's the opportunity going forward, there's -- more product can go into that basket for the end user or onto that shelf for our distributor. And we will leverage our brands and the colors in the packaging and the clever point of sales material to show that these products work together. That's a key element of our approach. Absolutely.

[Philip King, Group Investor Relations Director]

Moving to the U.S. Can we talk about the retail versus wholesale channel competition for Pro and how that's progressing in the U.S. and how we balance those 2 relationships? And there's a follow-on?

[Heath Sharp, Group CEO, MD & Director]

I think [indiscernible], he's going to touch on that in his session. So we'll leave it for that. I think if there's additional questions, we can catch it at the second half.

[Philip King, Group Investor Relations Director]

Okay. Very good. Next question. Can we talk to how we monitor competitive product developments in core and adjacent markets? And whether we see any emerging or growing competitive threats and our response generally to competition?

[Heath Sharp, Group CEO, MD & Director]

That's a broad question right there. It's going to sound silly. I mean, we live and breathe it. Our people in the field, watching the trade magazines, keeping your ear to the -- on the great bonus to what's happening, all of that contributes to seeing what's going on out there.Our distribution partners are important here. They give us the heads up on what's happening in the marketplace, for sure, and certain. But I think the key aspect is, again, let's go back to what Christopher presented in relation to knowing the customer. And that's the end-use customer. That's the contractor he was talking about there, spending time in the field on the ground is probably the most important place for us to learn. If we're going to see some tested product from a competitor or a new idea, that's probably where we'll see it. A contract that we've got a good relationship with that we go along to service as part of our routine, if he's come across something new or something special, he'll tell us. I think that's a valuable part of our relationship with our customers. So from all sorts of directions, but I'd tell you in the field, a lot of answers come from the field without question in relation to many aspects of our business.

[Philip King, Group Investor Relations Director]

Thank you. The next question from Pete Wilson. Restocking and destocking has been a large source of period-to-period volatility. So we have initiatives planned to smooth this out, for example, to a more integrated replenishment planning.

[Heath Sharp, Group CEO, MD & Director]

Not particularly. I mean we stay close to our distributors. We are a little sort of beholden to them. And I think we mentioned at the year-end is we had a period of some days where one of our major retailers didn't pick up for -- just based on transport availability. That happened to move volume from 1 month to the next. I mean, fundamentally, it's not a difference in the demand in the marketplace. It can move our number around month by month.Our -- so I've said a few times, our order book is a couple of days long. I mean that's the visibility that we get.I think we're as close to our customers as our -- to our distribution partners as it's possible to be. Sometimes we've got to move quickly to fill an order. Sometimes, we end up with something sitting on the dock for a couple of days for other reasons. But there's no major initiatives there that I think can change that circumstance.

[Philip King, Group Investor Relations Director]

Okay. The next question, slightly more broader one. Will we become a more diversified planning product company over time? Or will we push-to-connect always be around 30%?

[Heath Sharp, Group CEO, MD & Director]

No, I think we'll become more diversified. Sorry, Phil, I know you're pushing me for crisp answers forever. That's as crisp as I can get.

[Philip King, Group Investor Relations Director]

That's very crisp. I'm impressed. A question from Raju Ahmed on the trading update. What are our customers collectively saying about forward demand potential going into Christmas? Is it consistent with our observation or expectation of softened growth at some point?

[Heath Sharp, Group CEO, MD & Director]

Look, can we leave that one maybe to the second half as well? We'll touch on that in each of the regions a little bit.

[Philip King, Group Investor Relations Director]

A question from Simon Thackray. This is about the restocking. Heath, I understand and acknowledge the restocking that is occurring across regions. What sort of visibility can we have to the end of this stage, if any, to gauge what we think underlying demand is? And -- yes. That is, probably.

[Heath Sharp, Group CEO, MD & Director]

It varies a little bit by region. In the U.S., for example, we get good point of sales data from a handful of major customers. That's really the more important data for us than the shipping data -- our shipping data, quite frankly. The U.K., on the other hand, is not quite as -- that information is not quite as available. And right now, it's really not available. So that's the challenge for us is the U.K. market right now in terms of getting that visibility. Frankly, we deal with it, say, day by day, week by week, month by month at this point in time.

[Philip King, Group Investor Relations Director]

And how does the customer feedback move forward for us?

[Heath Sharp, Group CEO, MD & Director]

That is quite a broad question. Again, it varies. We're dealing with the hardware stores and the retailers here in the U.S. I mean, it's -- we're dealing data. It's like we pull down data on a regular basis and assess what's happening there. Once you get to the wholesalers, it's more based on conversations and not so much anecdotal, just conversations and staying close to your wholesale partners and hearing what's going on and understanding what their plans are and what they're seeing in the market. So there's no magic bullet there. It's just staying connected, feet on the ground, a little bit similar to where we come up with our -- for our ideas for new products and how our competitor is doing. It's just being out in the market and engaged.

[Philip King, Group Investor Relations Director]

Okay. A question on the brand refresh that we did last year. What impact has this had with our customers and distributors? Has it enabled a greater share of shelf space in the channel? Has sales per dollar of marketing has been risen?

[Heath Sharp, Group CEO, MD & Director]

It's been an assistance without question. I mean, the hard work is in the basics of the business, coming out with the product. The operational excellence, the execution capabilities with the customer. I mean, that all is really important. But back to the question of how we display the product on the shelf and how does the user knows that this is a system and all the products will go together, that branding is a key part of that. And we started with -- take the U.S. Before we did the brand refresh, we had dark blue for SharkBite, we had purple for Holdrite, we had orange for Cash Acme. I mean that's quite a clash of colors. And there's nothing about those colors nor the branding that indicated those products work together.If you now walk through a store and look at the Holdrite product and the Cash Acme product and the SharkBite product, it's all of the same font, same colors and style. It's clearly part of the same family. And then the inference is that those products work together. So look, it's not the driving force, but it's part of that overall packaging solution that we bring to the market. It's that execution with the customer in the store that I think is a real advantage for us in the marketplace. And that branding is part of it.

[Philip King, Group Investor Relations Director]

Thank you. Can we talk about our ability to manage the cost base through the cycle? Should we expect steady margin through the cycle?

[Heath Sharp, Group CEO, MD & Director]

I'm out because you've heard enough from me. I'm going to step aside slowly, and I'm going to let Andrew come in and he can answer that question because I'm sure you're sick of hearing from me. I'll be back.

[Andrew Johnson, Group Chief Financial Officer]

Phil, if you could, could you repeat that question, please?

[Philip King, Group Investor Relations Director]

Yes. Can you -- Andrew, you talked about our ability to manage the cost base through the cycle? Should we expect steady margin through the cycle?

[Andrew Johnson, Group Chief Financial Officer]

Well, there's always some things that are going to push margin around a bit. We've talked about exchange rates, and we've talked about currency fluctuations in commodities. Outside of those 2 big things, we would expect to see margin improve progressively.

[Philip King, Group Investor Relations Director]

Thank you. Andrew, stay there because I've got another question on this. I've got another question on this. In relation to the strong sales that we have updated the market within the U.K. and the U.S., can we comment on manufactured costs? And has a strong sales growth rate translated to margin expansion in the first half?

[Andrew Johnson, Group Chief Financial Officer]

Well, as you would expect, with improved volume, you're going to see improved margins. And so I think it's fair to say that with the margins that we've seen in EMEA and the Americas, it certainly benefited from the high volumes.

[Philip King, Group Investor Relations Director]

Thank you. At this point, I've reached the end of the questions submitted at this -- for this part of the presentation. So we might go to our first break now.Heath, why don't you wrap up first part proceedings?

[Heath Sharp, Group CEO, MD & Director]

So Phil, we're going to take 10 minutes now. Is that right?

[Philip King, Group Investor Relations Director]

Yes, yes.

[Heath Sharp, Group CEO, MD & Director]

Okay, 10 minutes. We'll see you back here then. Thank you.

[Philip King, Group Investor Relations Director]

Thank you.[Break]