Reliance Worldwide Corporation Limited (RWC) Earnings Call Transcript & Summary

Okay. So welcome, everybody. We thought we kicked off a little earlier, give us a little bit more time for the inevitable Q&A later in the session. Thanks very much, everyone, for traveling to spend some time with us today. I know it's not easy to get to Atlanta from -- certainly from the East Coast of Australia. So I'm grateful for you taking the time, making the effort. And it is really good to be back together face-to-face after a few years of trying to do this by Zoom, and I think we're all Zoomed out. So thanks very much. I really appreciate it. So let's get straight into it. I think you met or were able to catch up with all these folks last night. This is who's presenting today. The one point -- I'm not going to go through the names again. But the point I would make is we're not covering Asia Pac today. We're going to focus on the Americas and EMEA. So -- and we've got people from those two regions here today as well as people from our group or our corporate function. So this is the agenda. Today, for us, it's all about our story, what we want to talk about as opposed to a couple of weeks ago, which is everything that you wanted to talk about through the earnings release. And this is -- this is about our long-term growth. This is how we view our business and why we think we're really well-positioned and can grow this business over the long term. We will, I suspect, stop briefly on August trading because I know if we don't, we'll get a whole lot of questions on that, so we will stop briefly on August trading and answer one or two questions here, if there are any. And then we'll get into the meat of it. So we'll start with the business overview. So for those of you who aren't that familiar with our business, it will help position it. And for those of you who are it will be a reminder of what we do and where. And then the middle section there, that's the core of the presentation today. Okay? So that's about how we grow the business, how we drive the business going forward. And then the final -- the third section today is we'll talk about why we believe we're really well-positioned to outperform the market going forward to continue to outperform the market going forward. We'll then touch on ESG and our people focus, which is really a core for our business. Our people drive this business, we get them engaged and aligned, we're going to get a good outcome. So we want to touch on that as well. Before I hand over, though, these I think are the key highlights that I'd really like you to take away today. So four points here. First one, we really are optimistic about the growth outlook for the business, okay? So our strategy is unchanged, still valid and it's really powerful, okay? It will continue to drive our growth going forward. That's the first point. Second point, we are really well-positioned. We are in the defensive repair and remodel market. So this combined with the strength of our brand, the relationships we've got and our execution capability and the nature of our product, all these things together will allow us to outperform the market generally regardless of what the market does. Third point, last years have been tough, really tough. And we focus necessarily on day-to-day execution. It's been hand-to-hand combat on time, it feels like. But we have still spent a lot of time and effort investing in the business over that period of time. We have not, in any way, shape or form neglected the future. And we want to step you through that as well. We are really well positioned to accelerate out of whatever slowdown, dip may or may not occur in the future. So we like the way we're positioned. So they are the first three points. The fourth point is really this afternoon when we'll get hands on with our products over in our training center. And what we want to do there is bring to life what we're going to talk about here this morning, okay? So we want you to understand from that hands-on experience, why our end users want to use our product, why they demand our product, and we want you to understand why the distributors want those products on the shelf. That's absolutely fundamental to our business. It's what's driven our growth up to now and it's what's driven our growth going forward. So that hands-on activity this afternoon is intended to reinforce point one up there, which is what's the driver of our growth of our business is. So there are four points. And before I hand over, though, I need to say, it's really pleasing for me to be here today with an incredibly talented group of people from the RWC business. So these really high-caliber committed people make this business what it is and has driven us to where we are and will drive us going forward. So it's -- makes my job thoroughly enjoyable. So thank you, everyone. I look forward to seeing you all present during the course of the day. And that's it. So please enjoy being in our business today. Hopefully, you'll have some fun moments along the way, and we'll do a safety brief for moment. No one goes away injured. We'll do a safety brief when we get to the trainer this afternoon. Safety here this morning is office safety, the same as your normal work environment. So with that, over to Andrew.

Thanks, Heath. So we did think we would hit August trading quickly and get that out of the way. And so what I'd like to share with you just a couple of points on the numbers, the percentages we're showing year-over-year, it is in constant currency. Please don't extrapolate 1 month or even 2 months. Our business just is not linear that way. But we did want to walk you through, we felt like we had a strong result in August. So group sales for the month was up 45% on the prior year when you -- I'm sorry. You'll tell me that more than once, I'm sure before I finish this -- up 45% on the prior year. When you exclude EZ-FLO, it's up 20%. So as we walk down through the Americas including EZ-FLO up 62%, and that's a great number. EZ-FLO was $19.6 million in the month of August that's up on July, and that's also up on the average we saw in the fourth quarter of FY '22. So good to see continued momentum and continued growth in that business and that acquisition, we're very pleased with where we are right now. When you exclude EZ-FLO, Americas business was up 19% in August. So positive revenue growth in all channels, strong results in retail, wholesale, hardware. That's the key message. We saw good demand, good pull-through in all of our channels in the month of August. In Asia Pac, August was up 11%. External sales were up 22%, the internal intercompany sales of the SharkBite fittings made primarily in Melbourne, sold to the U.S. were down 3% year-over-year. And in EMEA, very pleased to see the U.K. number in August, up 27% year-over-year. Intercompany sales were actually down 35% during the month. And so that works out to an 8% up overall for that EMEA business in the month of August. So overall, a good result in August, pleased to see the numbers. I think it confirms the outlook that we gave in August that contractors are busy, demand is certainly holding up for our products and that our products, we feel will be resilient given our exposure to repair and remodel. So with that, I will quickly open up for a few questions if there are any. Lee?

You may dispose about [indiscernible] impact on those numbers?

So in terms -- in wholesale, so we did -- yes, customer or channel inventories had no impact to our business in the month of August. And that's kind of as expected. When we talked about in July, we felt like there was a cautiousness in the wholesale channel, and that was mostly anecdotal. We didn't see that in August. And standing here today are not aware, at least for our products of plans in the wholesale channel to bring inventories down. On the OEM side, I think there's still a lot of water heater inventory in the market. And as we talked, they did the shutdown in July. I'm not aware of further shutdowns in August. So that demand was -- we'll adjust fairly quickly, we feel.

Can you provide a breakdown of pricing volume for the 20%.

So I don't want to talk region-specific. But when you exclude EZ-FLO in the month of August, if you look back last year, we were starting to get traction on pricing. So there was price coming through in August. And so when you look year-over-year, pricing that 20% globally would be mid-single digits.

To manage the Q&A, if you could raise your hand and we hand you the mic because we're going to capture this for video purposes. Sorry, we should have said at the outset.

Can you just comment even if I mean qualitatively, what's going to happen to margins and margin recovery now that price increases have come through?

Look, and I appreciate the question. I feel like margins continue to develop as expected. The pricing that we had planned, certainly through the fourth quarter. And so a couple of those pricing actions that we had planned in -- as new pricing actions have come through as we thought, I think margins, we're going to have to continue to have a dynamic business and react to what we see in terms of inflation and also volumes and inventory movements. When you look at the intercompany sales for EMEA and APAC, they're down year-over-year, and that's part of our -- the work that we're doing to bring inventories down. And we know that as a manufacturing business, that will impact recoveries, but that just -- that is what it is. It's what we need to do for the business. So overall, I think it's trending as expected.

Andrew, so I guess in terms of the boost that we saw in August, do you have any more color around what's driving it? Is it just largely catch up from a slower July? Do you have any insight into that?

I think that there were some one-offs in July that obviously, we didn't see in August. So I think the August trading really reflects more of the normal trend that we're seeing in the business. So nothing unusual to call out, no big customer initiatives, no swings in terms of channel partner demand. August really looks like what we would have typically seen in July, had we not had a couple of the things that we've been talking about.

Andrew, just with regards to your inventory investment, have you seen any easing of supply chain issues so that you can sort of reduce your -- that investment?

It's a very dynamic situation. I do think overall, container shipments are moving better through the supply chain but there certainly still is struggles. It is something that we are keenly focused on. In the U.S., there's discussions around railroad workers' strike. Hopefully, that got averted based on news we heard last night. But that just lets you know how dynamic things are, but it does feel like things have improved.

Andrew, would you mind commenting what the Americas EZ-FLO growth in August sort of been if you adjust for the Lowe's warehousing change in the PCP?

So -- and I don't want to bridge it for you. But we did have that lows inventory reduction based on their distribution changes that they made last year. And we felt like we note here that it was roughly $6 million in August. When you adjust for that and you adjust for price, unit growth was roughly flat in the Americas. Okay. Well, with that, I think we'll move on to the...

We got one more.

Okay. So Christian.

Andrew, just that improvement in EMEA in August. Can you maybe talk about the U.K. versus the continent and just that improved U.K. performance?

You'll get more color on the U.K. through the course of the presentation, and we've got Edwin here, who runs our EMEA business. But through the course of FY '22, certainly in the second half of FY '22, we had 2 parts of the business. We had Continental Europe with the Fluid Tech fittings, and they were really doing well. And then we saw demand soften in the U.K. That feels to have kind of flipped around a little bit in that -- some of that reopening demand on the Fluid Tech side, which again is tied to repair hospitality, bars, restaurants, with drink dispeners, water filtration and whatnot. That feels like that's softening up, but the U.K. business has held up quite well, and we didn't give you monthly commentary, but it's not -- it's not something we've just seen recently. That's a trend we've seen over the last few months. We'll see where we go. Again, that's a very dynamic situation. And generally speaking, demand in the U.K. and in Europe will be a part of the business that we're watching closely.

Okay. Well, thanks for that. So normally, the finance guy just -- I have to stick to the numbers. And so they're letting me present some of the strategy slides here, which I'm pretty excited about. Hopefully -- Heath, hopefully, I don't screw this up. So this section, we're going to talk about our purpose. What's the purpose of RWC? This is something that -- a tagline that has developed organically in our business, certainly over the last couple of years. Plumbing has been a good place to be and certainly through COVID and supply chain issues and other things that we've seen. The reason why it's Plumbing Matters. Plumbing matters in our daily lives. Plumbing matters whether we're in a low interest rate, high home turnover environment, it's going to matter if we're in a high interest rate, low turnover environment. We joke all the time that if you've got a leak in your house, that becomes your top priority, not even for the day, that's your top priority like for that minute. So plumbing matters, and I think it will always matter. Certainly, I'm very pleased that my family's income is tied to the plumbing industry because it's a great place, a great place to be. And I think RWC, specifically, given where we play in the plumbing space is a great place to be. Plumbing matters and RWC makes it better. We make it easier for the contractor. We make them more efficient, they can get more work done in less time, more profitably. We make it easier for the do-it-yourselfer and the homeowner. So we empower those type of users to work on projects and they do. And I think importantly, and especially credit to our internal teams, we make it better for our channel partners and our ability to execute, our ability to put product on the shelf, our ability to display those products, how we manage our planograms. That's why we've been so successful with those channel partners. We make it better for them. We make it easy for them, and that's what they want. So plumbing matters, RWC makes it better. Our vision overall is that we want to continue to expand our plumbing catalog to meet those plumbers' needs, to meet that professional plumber's need. Everything on the plumbers truck is what we're targeting. And that's a great visual for us. It's a great visual for, I think, people that are interested in our business and how we're going to grow. We're going to take over that plumbers truck. And everything that a plumber would have, pipes, fittings, valves, the wide range. I think that we've made a lot of inroads in that direction. We're probably more represented on a plumbers truck than most people would realize. But we've got a long ways to go. And I think that's going to be a great growth vehicle for the business. Our aspiration for this business is to continue, and I think that's the key word is to continue to build a stronger, more diversified business through profitable and that -- for the finance guy, that's an important word, profitable growth, both organic growth and M&A. I think you can ask the question, well, what makes you confident that you can continue that? And I think our confidence comes from our track record. Nothing supports our aspiration better than looking back over the last 10 years in this business and even before that. This is a chart, I think, that we're all very, very proud of. And it walks you through in the blue bars, how we performed pre-IPO, and it shows the black bars, which are post-IPO. How many companies can show a chart like that, where not only did we grow top line revenue, not only did we invest in the business. Not only did we take what was a relatively small Australian public -- private company into a global public business that it is now, but we also grew EBITDA margins. 440 basis points from 2016 to 2022. We feel like that's really remarkable, and that's something that certainly we're proud of. And the growth rate is a great picture, 20% CAGR post-IPO. We had roughly a 13% CAGR pre-IPO. That's a track record that we're extremely proud of, and that's a track record that we'll stand behind. And that's what gives us the confidence to say that we're not ex growth, we've always grown, and we'll continue to grow this business. How are you going to grow, someone may ask. I think we're going to follow the same playbook in the future that we followed in the past. And we've talked a lot over the last couple of years about how we grow this business. And it's really a consistent approach. We're fortunate that market growth for our products are going to be in that 2% to 3% range. And what this chart does is it tries to break down that growth from the IPO to 2022. We're fortunate that plumbing products grow. Typically, it's close to GDP, but we feel like it's been more in the 3% range market growth through that period. And then we're going to put growth on top of that. So we're keenly focused on above-market growth. Above-market growth really is supported by the strong brands that we have in our portfolio. You can talk to anyone about SharkBite and you'll get a great response. But it's not just SharkBite. It's Cash Acme, it's HoldRite. It's John Guest, now EZ-FLO, Eastman. We've got great brands in our portfolio. And we're also taking share. And that's not just share from our competitors. That's growing the interest and the willingness of the plumber to use our products, primarily push to Connect. Push to Connect, we continue to get plumbers that will use our product, and there's a wide range. There's plumbers that say, I never use that product, but yet they've got half a dozen on the truck all the way to plumbers, they use it exclusively. But I think now that we're -- gosh, how many years into this heat, all plumbers use our product to some extent. And that's continuing. We're continuing to find ways, plumbers are continuing to find ways to use our products. And that's really part of how we grow above market. Organic growth, you're going to hear a lot about products and new product development. Certainly, that's a key part of our organic growth. There's customer initiatives that are in that bucket, and we've talked about those. And there where you'll find the channel partner relationships really come into play. And then of course, we've got M&A. RWC has a strong track record of making good acquisitions and are doing a good job with integrating those into our business. And I think we're pretty proud that early days, but it looks like EZ-FLO will fall into that category. I know I'm going over here, but -- and I'm almost done. A lot of numbers on this page, but here we're talking about our foundation. What is the foundation of our business. And it's -- really it's two things. It's our people and our culture. And the other part of that is our products. But this is what we -- this is how we've developed now in 2022. Across three regions, 21 facilities in the Americas, 14 in EMEA and 22 in APAC, and you can see the numbers on the left about how that breaks down by the types of facilities. We're very proud of every dot on that map. Every dot on that map also represents people, and you'll see quite a few here today that make this business run every day. And so of all those numbers that you see there, the most important number is one. I think we're one team, one culture. We've got one system that runs our business. That allows us to speak one language, look at the business in the same ways, and that is RWC. Our culture, I feel like is the most important part of what we've developed over the last few years. Just quickly, most people, I don't think realize that our products participate in projects across the spectrum, from residential to multifamily, all the way up to large high rise. Now not all participate in all projects, but we're certainly represented. And most importantly, as I mentioned, with very strong brands that have real power in the marketplace. I love this chart because picture this with everything on the plumbers truck. We want every plumbing fitting in your house. And I think we have a lot of them. And so you can see this is kind of like one of those kids books where you can spot the plumbing, the RWC fitting, but they're everywhere in your home when you start looking for them. Quite a few on there that we haven't even called out. So the more we look at this, in the more we realized, you know what, that could have had a line to the stove because now we have gas connectors. Or if we could have put a coffee maker on the counter and how the Fluid Tech fitting as a connection. We've got plumbing teams in every room in your house where there's water. Not only that, we go from meter to main in terms of products that we have that deliver to a residential environment. So very proud about that and very excited about where we feel like we can take this business. To recap, our purpose plumbing matters, and we make it better. Our foundation is our people, our culture and great products. So thanks for that. And now I'll hand over to Edwin -- who heads the EMEA business.

See this one works. Good morning, everybody. It's my pleasure to give you an update on the European business. I'll start with a high-level overview, then I'll take you through some of the customers and some of the channels that we serve in our region. And then finally, I'll take you through some of the new product launches that we've been doing over the fiscal year '22, which is key to us because new products is close to our heart and helps us to build our business. So to start with, the majority of our production is actually in the U.K. I know some of you have visited our largest site in West Drayton, where we make actually the full range of John Guest, Speedfit fittings and Fluid Tech fittings, okay? On top of that, we have a smaller facility that is in Launceston, Cornwall that actually makes smaller run products and specific products. So imagine 15 mill elbows and Ts are the big runners for us in the Speedfit range. But then obviously, we also have the 26, 28 mill, which is a lot less requested, and that's what we make, for instance, in Launceston. On top of that, we make a lot of our flexi hose in Launceston, then we make specific Fluid Tech products fully in Launceston. The third manufacturing site that we have in the U.K. is Maidenhead where we have centralized all of our extrusions. So all of our extruded product comes out of that Maidenhead facility, okay? To stay in West Drayton for a second. Yes, we have our headquarters there, but that's not the most important piece. The most important piece that we have next to the manufacturing is our design and engineering team, which gives us a lot of capability in heating, I'll talk throughout this presentation a little bit more around that, okay? If I then move to Continental Europe, we have one production site in Granada, Spain where we actually produce predominantly -- a little bit for our European customers. And all the other sites in Europe are basically sales offices, but with their own warehousing and distribution capability. That's extremely key to us because, as you'll see later on, the customers that we serve in Europe are more OEM type of customers rather than wholesale customers, and therefore, you need to be much more flexible in what you supply, when you supply and how quickly you can supply and having your own warehouse and your own capability to do that is very helpful to us. If you look at what we actually sell across Europe, as you can see, we sell about 75% of what we would do in total into the plumbing and heating market, and about 25% is going into Fluid Tech. You could actually even make that same split geographically because if you look in the U.K., our predominant sales is into Plumbing and Heating, whilst in Europe, the predominant sales is into Fluid Tech. Finally, if you look at just the U.K. Plumbing and Heating, as you can see, we sell about 75% to 80% into repair and remodel and the rest is what we do into new build. In new build, some of our fittings are being sold, our Speedfit fittings, but also we sell there are on the floor heating systems. We sell some of the Reliance valves, which predominantly end up into new build rather than into the repair model. So that's how our business high level is made up. If I then move into our customer base a little bit. If you look at the U.K., we actually have two channels how we go to market in the U.K. First channel is our wholesale channel, okay? That sells to the list of customers that you see on the top the driver purposes, the World suite of this world, big sales activity. If you look in the U.K., the U.K. has approximately 7,700 branches across the countries. We are represented in 93% of those branches. So that means we've got an enormous reach to our customers, and you basically can find our product on every street corner. I think it's fair to say that based on the history and the quality and the reputation that the product has built over the last 60 years that most of our distributors consider us as a must-have product in the region. And hence, we get to the 93% coverage. The other channel that we have in the U.K. is actually what we call our specialty sales. And they are actually handling the customers that you see on the top on the right-hand side. More of the OEM customers, both in the plumbing and heating side, like the [ Boxes ] of this world and in the -- on the fluid tax side, like the [ MTELs ] of this world. The reason we split that up is that if you look at specialty sales and if you look at OEMs, it's a different type of sale. It's much more specification sales, it's much more support sales to the big plumbing and heating, and we didn't want that piece of the business to get overwhelmed by the large wholesale numbers, okay? It's an important piece for us. It allows us to kind of like specify our product and make sure that we are represented well. If you look at -- in Continental Europe, we have more a country organization. And over the last year, we've gone through taking them away as P&Ls and making a more one-off sales organization throughout Europe. And as we said, we sell more to OEMs there because the majority of what we sell is actually in the Fluid Tech business categories. The only new name that -- really new name that we have on there is [ Hornbach ], which is a large cross-European retailer, where we started to put on our European short by into their shelves. And that's for me a good segue to move into the next page, which is our NPD. Before I think you to summary examples, I mean, we -- in fiscal year '22, we did more than 200 new SKUs across Europe in our ranges. We do that either to do a range extension. We do that to open a new market or we do that to actually protect what we have and bring in new features to products that we are already supplying. If I give you a couple of the examples that you see here on the page on the right top side, you see our new underfloor heating system. As I said before, we actually sell underfloor heating in the new build market. but our systems were actually too big into having to be in the remodel market. And we've been able to make that a different, what we call flat lay system that is much more easy to use in the remodeling market. And from that point of view, we can now also sell our under-floor heating in that segment that we were excluded from before. Next to that, you see our European SharkBite. What I just said is we put a range of 55 new SKUs into a pan-European retailer called [ Hornbach ]. Obviously, we use a lot of the knowledge both in Australia as well as in the U.S. on SharkBite in order to get that to market more quickly than we could have done on our own. Further on the left-hand side, you'll see on the top left-hand side and you'll see a video on that later on, is our first valve development actually for the Continental European organization. So it's a valve that is developed in Australia for our French market. So we're starting to get some traction with our valves also in Continental Europe. And finally, on the top -- on the bottom on the left-hand side, a full new range of blown fiber connectors. And it's a very different market. If you want to be really creative, we say it's not something that moves -- keeps water out. It is actually used to connect fiber optics that are being put in the ground everywhere. It's a very differentiating product because it's the only product that you can put in the ground without having to have channels around it. You can do it what we call a direct bury. It's got such a high impact resistance that you don't need to protect it. And on top of that, it transparency, you can see that the connection between the fibers that you blow through is actually happening. So that is just kind of like a small flavor of what we do from an NPD point of view. And with that, I'd like to hand it over to Kevin.

Actually, if you wouldn't mind that over there. Good morning, ladies and gentlemen. My name is Kevin Buckner. I am the Chief Commercial Officer for the Americas. And we're going to start this morning, making sure we've already had the slide. So I'm going to give you the lay of the land of the Americas business. And first and foremost, right there in the center of the page, we are a branded manufacturer, a manufacturer of branded products. Our brands are trusted and well-known in the American marketplace. Now when I say trust and a well-known, go all the way out to the end user plumber, trusted brands by that end user, then come back up the food chain to the folks that are in the middle, our customers, direct customers, trusted brand names. They trust putting that brand name on their shelf and they trust their customer, which is our end user coming in and seeing that brand trust and that brand and picking it up. So we are a -- and we are a company that is known by its brands. So let's talk about our diversified product portfolio. So we have a very nicely diversified product portfolio. You'll see the gray slice of the pie there, EZ-FLO. Now with the acquisition recently EZ-FLO has further diversify that with the suite of products that they bring to us with appliance connectors leading the way, being the biggest piece of that. And a couple of call outs here that you may not be familiar with. So you see on the Top right of the category mix, integrated installation solutions. That's how we refer to our HoldRite portfolio product, and that's kind of our internal nomenclature. And then Fluid Tech, interestingly, is our John Guest brand product here in the United States and that goes out into a Fluid Tech type of industry and application. And speaking just a little bit about the end markets there, the 60%, 20%, 20%. So repair remodel and new construction repair course, as we've already said, being the biggest piece of that pie. Now when you get into repair, it's anything from just a very small leak repair, it could be with a small plumber, one truck plumber. It could be a water heater installation for someone who has to have a new water heater in an existing home. So there's a lot that kind of goes into and lives into that repair section. Remodel is kind of the same way, it could be a relatively small remodel, it could be a larger remodel. As you look at these end markets, think about the end user. So smaller 1 truck plumbers, 5 truck, 10 truck plumbers as the plumbing contractor gets larger. So there's a lot of sort of segments of end users that are in each of those slices of the pie. And then new construction, we're going to talk a little bit more about that as I go forward. There's really every type of new construction. We're very focused on commercial residential new construction, which we're going to talk more about, that would include single-family residential as well. And so talking a little bit just quickly about the channel mix. No surprises there. I'm sure for any of you in terms of for instance, retail and wholesale being our two largest segments that we go to market here in the United States. And on the bottom left, more than 23,000 locations, that is a real number. So we are everywhere. I share some on last night that there's more locations where you can find RWC product, and you can find McDonald's hamburgers in the United States. So it's a lot. And then as Andrew touched on, with the extensive distribution network that we have here puts us very close to our customers allows us to service our customers really well by being out there and being close to them, especially in any of those markets, our channels of distribution that might be a little bit more fragmented. -- and have lots of points of receipts. And I don't want to leave out the far right there are China manufacturing, which is new and is going to get talked about later, that has now come to us through the EZ-FLO acquisition. So let's talk about our main channels of distribution. So a little bit of a drill down here. And again, retail and wholesale being those two largest pieces of the pie. So the thing to note here is that the customers that you are seeing here on the screen, these are the largest customers. These are the ones that we partner most closely with. But of course, we are selling every one. There's not anyone who is in this business that we are in, who we do not sell. So we go down all the way down, cascading down to very -- even very small customers. But what you see up here for each of these channels is these are the elites. And RWC as where with all and the knowledge and expertise to deal with these customers, many of whom are some of the most sophisticated retailers, not just in the United States but across the globe. So they -- that's also to say the expectations are extremely high and in servicing these customers, and we do a very good job at it. An example of that is that we could show you a long list of Supplier of the Year awards that we have won recently, just in the last 3 years of probably upwards of 10 awards across the channel. So for every channel that you are seeing here, we, in the last 3 years, have won a Supplier of the Year award. Part of that is to say to the supplier for the company, the retailer distributor to say to the supplier, RWC, you're doing a wonderful job, you're doing better than others. And I think it's also intended to say to the rest of their suppliers, this is how you need to behave, and this is how you need to partner with us. And so we are a great example out there in the industry of how to perform. Let me call out OEM, a really interesting channel and one that has grown now with the three acquisitions that we've made over the last 5 years. So historically, for us, working with the large water heater manufacturers with our temperature and pressure valves, which is critical to that componentry and the safety of a tank water heater. So that's pretty much in our DNA. And then with the acquisition of John Guest 4 years ago, took us out into, for instance, a lot of water filtration, Fluid Tech. And so we have Culligan as the example there of big OEM that we work with. And now with EZ-FLO, Electrolux or global major appliance manufacturer. They have -- EZ-FLO had built a very nice relationship with Electrolux in the U.S. in order for the product, the water connectors, electrical cords, et cetera, that get attached to their major appliances when they get installed. And so we sell to Electrolux, and then Electrolux attaches that product as it goes out into the market. So let's talk a little bit about new products. So new products, very simply, the lifeblood of our business. If we don't do this, we don't grow. And I will say that we -- it's something that we do really well, and I'm not trying to -- one of my colleague, but we -- on an average, over the last few years, we've done 400 SKUs per year. So it's just a very big country. So that's the explanation there. And -- so let me break down the sort of types of new products that we do, and I'm going to give you four different ones. So the first one, which is probably the highest SKU count that we do, packaging configurations and things of that nature. So if it's in a 1 pack and a pro is going to prefer to have that in the 6 pack, we're going to make a 6-pack. We're going to find space forward on the shelf. So we do a lot of that. We optimize it that way because we see the data come back to us from the market, then we can see that there's something that we ought to get ahead of and change. Second one would be product improvements, which can be any real type of value add that you can think of a feature, the way that a product is installed. So we've got our product managers and our engineers are constantly thinking about that. We are -- as a key principle of all this, we constantly have our eyes and ears on our end users, not to ignore our middle sort of customer, but we're really most curious about what's happening with the end user and what they're telling us and what we should do. Internally, we're also really good at looking at our product lines, understanding from a manufacturing basis from a continuous improvement basis, is there an opportunity to take cost out? So we're always looking at those two things. That's the second one. The third one is we have the ability to source product. We see an opportunity in the market, and we've got to get there quickly and we're not yet currently manufacturing that product and maybe not even sourcing it, but it's something that's very close into everything else that we do. We can run really fast that now with a better footprint in China even faster, and we can develop our source product. The fourth one, probably the most important of all is innovation, generally a very long-term play in terms of understanding what's a -- what is the need in the marketplace? What is the gap in the marketplace that we could fill and how can we innovate in order to take advantage of that opportunity. So those are the four kind of pillars of how we think about new products. And so how does that happen? I talked about customer end user. It's really new product development in terms of how we get out there and we listen to the market very multifaceted. We do it from a sort of scientific research standpoint, a lot. We also pride ourselves on being on the job site. So we have an entire sales team where their responsibility is to be on job sites every day, and they are listening and they are gathering information and they're talking back to their colleagues, product managers and engineers and marketing folks to understand what we ought to be doing. And I will say, and I won't go into going across all our functions, but there's many functions of the organization that are involved in this effort, and every one of them plays a very significant role, a very important role, and we're well equipped to do it. And so how do we do it? Well, execution -- process and execution are extremely important in developing new products. We have a really robust stage gate process that we have developed and that we utilize really well. Our internal nomenclature for that is called Launch Pad. So we are launching our products through Launch Pad. And that is -- well going to any of the products here that you're seeing on the screen, but that is kind of a good overview just to sort of how we think about it. And I think that takes us to Q&A. Wow.

Just a quick one on the EMEA region. I think in the U.K. in particular, you said it was about 75% repair and remodel. Do you have a sense of the split within that of repair versus remodel?

Yes, I think we are -- but it's also how do you want to quantify that I mean. How big does a job need to be before you call remote to get it repaired -- but I think we are -- sorry. But I think we are predominantly in remote.

And then just, again, that same pie chart does the new product launches, something in the underfloor heating, in particular, Will that meaningfully do you think move that 75-25 over, say, a couple of years?

It will have -- it will be in the percent range. It will not change that the 80-20 or something if you look at the size of the market -- because the volume revenue on the filing speed fit side is significantly larger than any other thing that we do.

Edwin, while I might ask you about your SKU count. So the 200 that you introduced into the market last year, can you give us a sense of what the base level of SKUs in the business is. So what are the active SKUs that you're selling? And what does that 200 represent in some.

Yes, I think it was on the I think we have about 2,000 active predominantly selling SKUs, but we have many more not kind of like have less of attraction. But I think you saw on the. And you'll see later on, on the Fluid Tech side, we have about 1,400 and about kind of like 900 of the sweet fit really active SKUs.

And maybe same question for Kevin, for the U.S.

Yes. Sorry, if you could just restate?

Just the 400 SKUs, which you so kindly assume it was about double what even is doing -- can you give us a sense of how many active SKUs.

Yes. I mean we're well into the thousands, yes. We have a lot of SKUs. So clearly, 400 is new, and that's on top of thousands of SKUs.

Yes. So would you basically use me you got 4,000 or 5,000, if we're running at the same rate...

I'm probably going to let my supply chain colleagues answer that. But yes, it would be in that range, yes.

Okay. And Andrew, just maybe either yourself or Kevin talking about growth in new products, where you're expanding, there's a slide in there that talked about filling the plumbers truck. Can you give us a sense of which part of the plumbers truck are we talking about? Would you go so far as saying expanding in front of the wall products, not necessarily in the design elements, but the more technically focused products.

Yes. I would say, in terms of what part of the truck, behind the steering wheel -- the area we want to cover. Strictly behind the wall, valves, fittings pipe -- I don't think we have -- I don't have any more hair left, but to get into fashion is just not a business. So we'll stay behind the wall. So yes. We're just coming off the wall if we're connecting. You'll have an upside, you'll have to supply stuff technically outside the wall. Now with EZ-FLO with connectors coming to an appliance. But to Andrew's point, behind the wall.

And anything outside of pipes, fittings and valves?

Yes, I'm not sure I understand your question in terms of...

Just in terms of product categories. So would you expand beyond pipes, fittings and valves.

Fittings and valves -- Yes, and we have, and we don't necessarily get into and drill down into every type of product. This afternoon when you get the train center, you're going to get a better sense of that. EZ-FLO has now brought us even more diversification because I didn't mention even some of the things that they're doing in appliance installation. It's water connectors, it's gas, it's electrical cords. It's venting for closed dryers. So yes, there's depending on which segment you're talking about, it can get pretty deep.

Just over here. I had a question on the Americas end markets, but I suppose given sometimes the difficulty of visibility of sale to the end customer. Just kind of how you get confidence on that split of 60% repair versus the remodel and new build?

Yes, that's a good question. It takes a lot of data points to kind of roll that together. We've got certainly syndicated data that we can pull in. We have understanding the types of customers that we're selling to. As I mentioned, we are very focused on job sites and commercial new construction, multifamily residential, high-rise residential. So based on that, we -- so kind of triangulating with all the data that we have access to, we're able to make those estimates.

I just have two questions about the plumbers truck. I haven't seen it in detail myself, so I probably need a bit of a guidance. So -- and I think you briefly touched a bit on it when Keith was asking the question. Can you be a bit more specific on what part of the plumbers truck what products that we are not yet selling or kind of in terms of broad categories? And then secondly, is there much of a difference in the plumbers truck in North America versus EMEA? Is there -- what are they all the same?

So first of all, the first part of my answer is not intended to avoid your question, but it does depend. So on the type of plumber and on the focus of their business. So you can look right here, even just in Atlanta, there's going to be plumbers that is going to be highly, highly focused on just doing water heater installation. So that -- you're going to open the doors behind that truck and you're going to see a suite of products that's very targeted to that. You're going to have somebody who's very general in their plumbing, but very repair focused. That's going to have its suite of products. So even to talk about a handyman type of person, who's going to be, for instance, going into a Lowe's or Home Depot, may not have much at all on the truck because they may do plumbing 1 week and then not do it for 3 more weeks. So it really does depend who that end user is. And I won't go into off into a commercial world because then that becomes different altogether...

In terms of what we're doing. Can I just add one point to that. The other way to think about the plumbers truck is think about the aisle in a Lowe's store or a Depot store. Ultimately, what's on all those racks ends up in the truck, which ends up getting installed. So that for me is actually a bit of an easier visual than trying to picture the plumbers truck and where on the truck. And it does vary depending on the nature of the work they do. but it's extensive. I would eliminate from that though, the fashion stuff that we talked about before. And also, I'd say the, if you like, the capital items, so the boiler or the water heater is sort of a thing that's purchased for the job, but everything else that's needed every day by that plumber to install that capital item or install that fashion plumbing, that I think is within our purview.

Edwin, just in terms of what's happening in the EU, the broader EU and U.K. cost environment. From a strategic perspective, do you see that playing into you from an opportunity perspective. So your cost base relative to alternatives. I'm not talking about your direct peers, but alternatives. Is that playing to some degree of strength relatively? Or is it -- is there potentially a weakness there? .

I think we'll -- in Europe, we're all faced with the same alike utilities pressures. So I don't think that's any different for us than anybody else. I think we relatively don't use that much of utility compared to, but I think others are in the same position. So I don't see it kind of playing more negatively to us or extremely more positive. I think we're all facing the same thing, and it's -- I don't see it.

Even outside widen and [indiscernible] So I'm thinking about the broader plumbing landscape, substitutes as well. .

No, I don't think that will drive a different substitution. I really don't think so.

And then just the second question around the U.K. and the housing specifications around energy probably going to ramp up. What further opportunities do you see as a consequence of that? And how far will it take you? Obviously, in the context of underfloor heating, there's a few things. But...

Well, obviously, the U.K. will follow what we see in the rest of Europe that there's a transformation of not having gas in houses anymore, and therefore, moving into heat pumps as the most likely alternative. There are some other things that are being looked at with hydrogen and stuff like that, but it's a heat pumps. If you look at the rest of Europe, if you look at my home country in the Netherlands, that is already mandated for the last year, there's no new houses being built where that is not forced to be or forced where there's no gas or you need to use the heat pumps. And then the heating has been done through the heat pumps in the majorities than underfloor heating, no more radiators and stuff like that in the houses. So I think that's going to change. With the heat pump, you'll need different products to regulated, different type of valves, which opens an opportunity for us.

I think that's just back on that issue of sustainability. I mean as the world moves to more complicated systems, heat pump systems and so on, I think there's definitely an opportunity there from a controls point of view. The other aspect is, I'd rather be in plastic piping than copper piping. I mean from a heat loss point of view, plastics a whole lot better. So I think that's a nice opportunity for the future as well. .

Kevin, I just wanted to ask, do you have any line of sight to the end exposure of the OEM channel? One, R&R versus new home, but also as a lead indicator, given Andrew's commentary earlier about seeing a bit of difference in demand in that channel versus retail?

In terms of the OEM equipment that sort of the their trend level out into the market.

Well, who they sell to and whether we can use that as any kind of lead indicator?

Yes, I'm not going to suggest that we would really have much visibility into who they are selling to. Yes, we're not receiving that data on the other side. So really just our shipments going in into the OEM. So yes, that would be difficult to understand because we wouldn't know for instance, if they were maybe building inventory or -- yes, that would be a difficult one to get at.

So certainly, on a day-by-day basis or a point in time basis, it's difficult to know exactly where they're at in the cycle. If you step back though and look at where they end up, there's depending on the year between 8 million -- 10 million water heaters sold a year. If you look at how many new houses are built, then that puts it at the sort of 15%, maybe 20% mark is going to new construction, which means bulk of it's going to repair and maintenance, which actually models kind -- or mirrors where we're at. It's essentially the same end user base and same ultimate location. And when we get into leading indicators after the section after this, we're going to get into a little bit of that. So we'll hold to that.

It can be a little bit hard to gauge the potential of your new products, just given you are so many SKUs. So of each of you is what you're rolling out now? Is this an exceptional year for new products? Or is it more typical of what you'd expect a year and year out? And specifically Edwin, I was interested in the European chart part. What is the potential of that? And why is it a European not a John Guest speed fit that's been rolled out?

Because in that retail market based on the studies that we did with them, they really wanted a broad solution. So that the market is different than the U.K. market where everything is plastic is really different from Continental Europe. So that's just kind of trying to listen to the market and bring in the product that they want. And what's the other piece of your question?

Just a general comment is the amount of products you're launching now, is this exceptional? Or is it just a typical year in terms of your new product?

No. Like I said, I mean, developing new products is what we do every day. Do we launch every year 200? Probably not, but you could have a year where you do more. You have a year where you do less. We're not striving for a certain number. And it also depends on what type of new product that you're launching. As Kevin gave you the examples, if it's something that is in a new bag or a different packaging, different amount in a bag is very different than if you want to launch something like the whole blown fiber range that we did where you got to design the product, design the malls for it then make sure you can automate, go to customers, make sure that you get traction in the market. So there's a very different time lag, I would say, between the different new products that you launch.

Just to maybe anchor that product question because it's come up a few times. Certainly didn't feel like an unusual year. Interesting for these 2 guys, no, cameras got me. Interesting for these 2 guys. Asia Pac actually did the most products of all 3 regions last year, so it was more than 400, just to sort of throw that in. And that's -- it varies region by region, depending on the year. I mean they had Asia Pac had a whole new generation of 1 product group that were 200 SKUs. That was the next-generation incremental margin, incrementally better for the end user. But there was 1 slide that Andrew showed about what drove our growth over the last since '06. And the second one down was above market growth. That's what drives the above-market growth. Incremental above-market growth driven by the ongoing new product introductions and the brand and the execution. But that's why we're able to get a little bit more than the market every year because of these ongoing improvements. A lot of it's range extension, minor addition. Some of it -- this is pretty unglamorous. It's a new place to bag or a new piece of packaging from an existing item, but that allows us to get into a new store and some new shelf space. That could be really profound, really fundamental some of you down the track. But there was one product there, which represents a much longer-term development, which was the blown fiber in the bottom left-hand corner of the EMEA page, that is -- the engineering me just geeks out on that. That is an unbelievable innovation and technology there that took many, many years to come up with, okay? It's also not going to move the needle until 05 or 06 or 07 or 8 years down the track because it's innovative, it's disruptive, it will change the way the installer has to work. We need to be doing that. That needs to be -- we need to periodically release that sort of stuff, but you can't bank it for a long time. But that combination of periodic major disruptions innovations, combined with that ongoing incremental new product releases, what gives us those 2 action middle bars in that growth chart.

Two really good examples that you're going to see here today. One, just shortly in the presentation. We'll talk about gas connectors and EZ-FLO. We're running really hard on that. We've got a little bit of a case study on that. And then when you get over to the training center, you're going to part of what you're going to get taken through is our retail laboratory and you're going to sort of see visuals of the evolution of just the Home Depot, and that will make that really come to life.

We got the times up. So we might -- sorry. .

Just quickly, can you maybe talk to the percentage of NPD that's internally generated versus requested of you by an OEM or retail.

Had you differentiate? I mean, at some point, it all mergers doesn't is those conversations that you have in the field, do they ask for it, that we ask for it, that we recognize it together at the same time, it's pretty -- it's not a clear...

Can I just ask, in the Americas, the channel and the retail channel, you had Amazon up there. Can you just talk a little bit about the, I guess, the materiality of Amazon, that online channel, how suitable your products are for sale there? And if there's any difference in economics selling through an Amazon?

Less than the other 2? I don't want to sort of split down. It's growing and will continue to grow, but the first 2 there will be pretty important. So that's really as much granularity I want to throw out to be. Okay. Shift gears here.

All right. For the next section, so we're kind of moving through our story here. We've hit our purpose. We've talked about our foundation, and now we're going to talk about strategy. And with me today to help tell that story is mostly some of our top operational minds, which I think speaks a little bit to what we want to do today, which is really bring to life the focus that we have with our strategy and how it really has played out day in, day out throughout our operations. For those of you who have followed RWC over the years, hopefully much of what we're going to talk about feels very familiar. We've really worked to improve the way we articulate it. And a lot of that is for our own internal purposes. We want to drive a lot of focus and energy across our organization. And what we're going to show to you today is really that coming to light. So it starts with product leadership, which you've heard a lot about today already. And the first pillar of our strategy is our focus on solutions for job site. As our team has shared already in quite a few examples, and we'll continue to share through the day. We really focus on solving real-world problems for the end user, products that are easier, faster and more dependable for the plumber. We've got a tremendous legacy of brands like you all are well familiar with. And then the last point on this one is that there's just so much energy that you feel across our organization, because this is innovation, this is thinking about the future. This is us being a leader, a very visible leader in the marketplace. The second pillar, which really was foreshadowed quite well in the last section is the value we bring for our channel partners. And like Kevin touched on, we work with many of the leading channel partners across the globe and their expectations are high. And that's an opportunity for us because we believe that we can outperform our competition and deliver a higher level of service for those channel partners. And a lot of that comes down to thoughtful partnering. We're really thinking about their business and how we can solve problems for them, and ultimately just putting more value on their shelf. And then the third pillar is our industry-leading execution. We're actually going to spend a bit more time here during this section talking about that third pillar, really bringing that to life. But like Heath mentioned, I think kind of right out of the gate, we've never stopped investing in the business. So in spite of a couple of very challenging years from a supply chain and operations standpoint, where we have delivered at an incredibly high level, we have also continued to invest in our business, setting ourselves up for what's to come. I will note that later this afternoon, we're really going to bring these first 2 pillars to life through show and tell, actually get to meet more of our people, see the products, see how they work and see, importantly, how they're differentiated from what else is out there in the market. Another thing we're going to do here, we're going to share a few videos. So I'm going to start with the first one now, which is -- which hits our first pillar, solutions for the job site. And what you will see is a global team. Eric, who's from the U.K., Abishek from Australia and then Damian and Samir from our French team. And they're going to share with us very quickly a recent project they've been working on for the French market. [Presentation]

Very good. Now I'm going to hand it over to Kevin, who's going to share another case study from HoldRite and what that opens up course here in the U.S.

Very good. Thank you. So 5 years ago today, you would have found us very early on in our integration of the HoldRite organization. So what did HoldRite do for RWC? I'm going to start with sort of one of the most high-level aspects of that, which is it took us, first of all, into a completely different arena. You've already heard -- it took us into a completely different arena, I've talked a little bit about already commercial new construction, a combination of multifamily, high-rise residential. One of the really unique dynamics that are in that market is that we have the ability to be out all the way at the project site, end user site, building that demand, generating that demand, following that demand all the way to the and then that all -- 100% of that product gets pulled through our established distribution channels. That's a really great dynamic. And we have a really great team that works on that effort, goes on the demand generation side at the job site and then also on distribution as well. So you can see from the products that are listed here and it's certainly not everything that's shown. But these are key patented innovations, which is a big part of how we go out and we service and we show up and service these very sophisticated plumbers. So I won't go to do a deep dive and on the follow on to the question that I answered earlier in terms of type of plumber, but these are your largest funding contractors, your most sophisticated plumbing contractors. These are engineered level folks that we're dealing with. and a lot of decision-makers and influencers that live in that channel. Over the 5 years, we have really built up our capabilities and scaled our capabilities to go out into this market to drive this market and service this market and pulling more and more products through the channel. The phases that you're seeing up here are the phases of a typical build, commercial new construction build. We are involved well ahead of any dirt being moved on a project site year or years prior to that in terms of working with developers, specifiers, engineers, et cetera. And then we -- with the product catalog that we have, we are able to sell into each of the phases of the build. And that continues to expand. The good example is our EZ-FLO products that have now joined the portfolio and can show up there in what we call a top out or when the appliances are being put in, what the sinks are being put in and things are being connected as a for instance, with water connectors, with gas connectors, et cetera.

Great. Thanks, Kevin. All right. So now we're going to shift to the second pillar of value for the distributor and to continue to showcase our amazing global team. We're going to hear from a bay and Clayton, who are going to talk a little bit about how we work with Lowe's and Home Depot. [Presentation]

A real quick note on that, when you saw some pictures of actually our training center that's across the partner which is what you're going to see this afternoon, just to see what these base look like and how we use them to problem solve with our channel partners to see that in real life. Kevin?

Very good. Thank you. So 12 days of product. That doesn't happen by accident, that you have to be -- plumbing has to really make a difference and it does for a large retailer. Plumbing is a magnet for who they are trying to attract, for the pros that Home Depot has and wants to have and for the pros that Lowe's has, wants to have they need to have that attraction. And so plumbing makes a big difference and plumbing makes a lot of money for the retailers. There are days across plumbing that from a sort of retail profitability standpoint are some of the highest across the store. It probably doesn't be paint, but some of the highest across the store. So let me talk a little bit what's on the slide here, focusing on EZ-FLO delivering value. So I want to give you -- tell you a real quick story, which is a really clear illustration of the value that EZ-FLO acquisition brought to RWC. So very coincidentally, I was at a meeting with one of our large retailers, 26th October 2021, the day of the announcement of the acquisition. And by the time we got there in the afternoon, they were already aware of what was happening so they kind of beat us through the punch on that. We had our meeting. We were in a store, having a meeting in a store, which we often do. And right, as that portion of the meeting closed, the senior merchant took me over to a bay and where there was a small amount of participation. And he said, I think EZ-FLO can really participate in this bay in a very big way. Can we do that? The answer is yes. And since that time, we have been running very, very fast in executing programs, building SKUs, et cetera. So a really good illustration of how it was very immediate. EZ-FLO acquisition brought 2 new Pro brands to us, not just brands, but what we need, which are Pro brands, brands at the pro knows, brands that the Pros are going to be attracted to brands that the retailers are going to know will attract the Pro into their store and into the shelf. We had 2 new product categories of core product categories, appliance connectors, a very large portion of the EZ-FLO portfolio and then gas connectors, which is very much up and coming. And I'll talk a little bit more in detail about that later. And then in terms of channel penetration, so the value that RWC brought them to EZ-FLO in terms of getting it under the umbrella is our strength in retail and wholesale channels. And as you saw, how large slices of the pie that was earlier in the presentation. So the sort of under-penetration, if you will, of some of the products that they had in those 2 channels, we were able to immediately plus my illustration at retail to be able to use that leverage and run very quickly and get additional penetration in channels where we have our biggest strengths.

Great. Thanks, Kevin. All right. So now we turn to the third pillar. And so we've got a few case studies that our team is going to take you through. But before we go there, we've got one more video. And here, we're going to hear from our team in the U.K., and we're going to talk about some of the important investments we're making to become every day a more efficient manufacturer. [Presentation]

All right. Now I'm going to hand it off to Andrea to share with us some more of the kind of operational side of the benefits that came along with our acquisition of EZ-FLO. Andrea?

Okay. Good morning. I'm Andrea Hill. I'm VP of Supply Chain for the Americas. And I'm going to talk for a minute about through the EZ-FLO Eastman acquisition, one of the things that we gained, and that was a manufacturing facility in Ningbo, China. And 2 key things we're going to point out about this location. One is the manufacturing capabilities that it has provided us. So it gives us the opportunity to have manufacturing for water heater connectors as well as appliance connectors. Now this facility was a really good facility that we've acquired, but we are beginning that process of moving into a stage of operational excellence as we integrate it into the RWC family. So today, we've already seen increased manufacturing efficiencies through lean manufacturing principles and Kaizen events. And we're seeing yielding reduced, work-in-progress inventories through those lean manufacturing processes and what we refer to as level scheduling. The manufacturing cost reductions are being achieved, and we are benchmarking with comparable Chinese manufacturing already. So these are great achievements we're seeing already, but we still have more to come. We have investment in automation for the facility as well as continued manufacturing cost improvements, which is going to give us a competitive pricing on these items that we manufacture from this location. We're going to continue to roll out operational excellence at this facility, which is going to continue to build the capabilities at this location. So while we have gained a valuable asset, we're going to continue to make it better at this location. Another important piece of this location in Ningbo is that it's located in the FTZ or free trade zone. What does this give us? It gives us the opportunity really to be able to have sourcing through this facility and improve our logistics capabilities. The free trade zone allows us to have tariff management -- very effective tariff management as well as shipping consolidation. So today, in this location, where we purchase, acquire product in this region of China, we're able to bring it into the free trade zone, consolidate it and then move it into our facilities in the United States. In addition, we're well positioned within the free trade zone area, and we have a good working relationship with them. This location has a proven track record of high-volume container consolidation and shipments. So again, this is an added benefit for the RWC family. So as we move forward, some additional things that we're going to gain. And this is really key for our business for RWC. We have the opportunity to explore further consolidations of items that we purchase in this key area in Ningbo, China. We also have commitment from the free trade zone authorities for growth and expansion. Our procurement collaboration across the regions, across all 3 regions is already beginning so that we can leverage this facility for all of RWC. And we're enhancing the capabilities of the team, our purchasing processes and best practices within that team to drive further improvements. So again, these are 2 key things that we would say are -- have been enabled through the acquisition of Eastman EZ-FLO manufacturing capability for those new product categories as well as logistics and sourcing capabilities. Mr. Dixon?

Thank you, Andrew. So first up in the operational excellence category. We flagged up several things that underpin the pillar. Two main ones are lean manufacturing and strategic sourcing. I'm going to go through a couple of real-world examples from the Americas that kind of bolster those goals and targets that we have. The first one -- and so the first one in the strategic sourcing category. Andrea also mentioned everything -- when you first thing in strategic sourcing, you think of hey, can I take this to another vendor? Can I utilize multiple different vendors get better pricing, better quality? That's the first thing you think of. And with the team in Ningbo to help the team in Coleman, to help the team in the U.K. and the team in APAC and the purchasing organizations, that is absolutely underway. But the flip side of strategic sourcing is can we make it better than a third-party vendor? Can we make it cheaper? Can we shorten the supply chain? I mean, obviously, over the last couple of 3 years, the shortest, tightest supply chain is going to be super efficient. And so a great example here in the yellow box over my shoulder is we have a range of plastic crimp fittings that we were buying from a third-party vendor. The team in Coleman started looking at it -- looking at the design saying, "Hey, can we do this better? We already have the injection molding capability within the plant, could we bring these fittings in-house? And so we began doing the design. We began doing the review and looking at it and said, yes, this is a really, really good cost savings, and this is a place where we can take that supply chain and shorten it down. A key to it in injection molding, the absolute key, the most important thing is the tooling. Great news is that our friends in EMEA have a world-class tooling shop inside the factory. Inside John Guest, they develop and manufacture all their injection molding tooling. So the U.S. group was able to go work with the U.K. group, develop all of the tooling for all of the parts, run all of the parts in the U.K., pick the molds up, ship them to the U.S., run them on the exact same machines that are run in the U.K. From the time they took the molds, they unbolted them, cleaned them up by the time they had them in the machine plug all the numbers that have been developed in the U.K. They had parts -- sellable good parts in 2 hours. Tremendously successful program. The second piece of the puzzle is lean manufacturing. Most people immediately when you think of lean, you think of people, as few people as possible, but really lean goes beyond that. It's really more -- I need more with less. Less floor space, less people, less resources, less time. And so I think most of you all have been to the Coleman facility. You've seen the 3 manufacturing SharkBite manufacturing lines that we have in the facility. Obviously, SharkBite has continued to grow. And we have needed additional capacity to support that growth. But instead of just doing a copy paste, so the 3 lines that we have now are all very similar. But instead of doing a copy paste to a fourth line, which would have been an easy route, we challenged the Coleman team to look at it from the ground up, can we get more? And what they come up with is both the 2 -- the middle and the dark blue and the light blue, both are new equipment to support SharkBite growth that those single pieces of equipment get double the output of the old equipment, same floor space, same people, but a completely new concept in the line that doubles the output for a single piece of equipment. So we're able to get more capacity with the same floor space and the same people. So 2 really, really good examples of this operational excellence. And now I'll turn it over to Edwin.

All right. When I talked to you before, I said in West next to the manufacturing we have our center of excellence of engineering. So if you look at that group, we basically develop and design the new products together with the sales team, but not just a product, we also design in-house the owned tools, and then we design the assembly equipment that is needed to put the parts together. The engineering team also supports our manufacturing organization on a daily basis and especially with the automation. I think those of you who have visited us we are I would say, space constraints. So the more that we can produce per square foot or per square meter is absolutely useful for us. So why do we need to further automate is because we want to have a higher output with an in-line controlled quality check. We also want to make sure that if we automate further, we circumvent the limitations in the local labor pool, which I think labor across the world is an issue at the moment at all levels. It allows us to upgrade the skills of our teams and have them do more added value work than they're doing today in some cases. And it also makes us more flexible. So the more and more automated, the more I can scale up and scale down my manufacturing depending on demand. For us, it all starts with the molding, okay? You saw in the video, we've actually upgraded 1/3 of our overall machine park, not just in where you saw the example, but also in West we started to use the different molding machines, saving enormous amount of energy which obviously was already very useful previously. But given where we are today, is obviously giving us even a higher return than what we anticipated. It is also important for us that we continue to increase our output. Just to put it in perspective, on the molding side, we mold every single day between 1 and 1.5 million collets per day. That's just one piece of a fitting. So the fast amount of parts that we have to get through our facility is huge in order to support our customer demand. And after the molding, we have the assembly. If you look at the machine on the middle of the page, it's for our product line. And actually, that replaces 2 manual assembly lines with 12 operators on there. And that allows us to redeploy those 12 people somewhere else and allows us to produce much more on the same floor space. Dixon talked about the fact that we are making molds for the U.S. We're now also starting and we are commissioning the first assembly machine actually for our Australian colleagues. So we're also starting to export that knowledge into the rest of the organization. We've been and we'll continue to invest in our business. We invest approximately 10 million every year on additional equipment where it's molding, whether it's assembly, whether it's tools, and that's something that we continue to do. And as you can see from the page, we've also been able to kind of create some real headspace that allows us to further grow our business.

Very good. Great. We'll break here for a few minutes to take any questions related to the topics we just covered before moving on.

How far do you think you're through the kind of the automation journey, particularly in Europe because I guess when we -- when you first bought John Guest and we went over there, there was clearly some upside from automation. I'm just trying to work out how much longer you've got? And how far you are through that?

Good question. Edwin, do you want to grab that?

Yes. I think obviously, there is -- we still have some work to do. As you saw on the page, we have a much higher percentage of automation in our range than we have in our Fluid Tech range still today. On the other hand, the amount of SKUs that you see on the Fluid Tech range is much larger than on the Speed Tech range. And obviously, you need a certain throughput in order for the automation to be effective. So I think we still have I'd say probably another 4 or 5 machines that we've got to put in place in order to optimize that. So I'd say another 2 years of that journey, we definitely have ahead of us.

This is probably going to be a very difficult question to answer from the perspective that I'm curious around supply chain in a normalized world, in the context of EZ-FLO having been added to the mix and your Ningbo position particularly. Whether you think it's a dramatically more complex environment that you have to invest more heavily to manage from a systems and capability perspective? Or whether Ningbo was a bit of a plug-and-play for you? Now -- and I'm really thinking about a normalized world as opposed to -- as opposed to the current context?

Sure. No. I mean I think we're working through the integration still and part of that is systems, like we're integrating our system so that we have 1 platform that both the legacy RWC and the EZ-FLO so that we all see and speak the same language. And so there's opportunity to continue to make that better and we'll continue to improve on that. But we do have the capability. I feel like after that is complete to bring it in and let it enable us for a more efficient supply chain and sourcing capability from a logistics perspective.

And is there a different risk profile that you think about? And how you think about mitigation of that risk profile?

In terms of the current supply chain?

Yes, the current network and setup?

Yes, I mean, we're constantly evaluating that within our network given the current supply chain.

Yes. Sorry, I'm thinking...

Longer term?

Yes. The bigger picture. Is it a different risk profile for you?

I think it's a really good question. It's a really good tool at our disposal. It doesn't fundamentally change the proportion of our cost of goods that's coming from China. It's moved it a bit, but it hasn't doubled it by any the imagination. It's a single-digit change in the percentage exposure. I think it's going to allow us to look more closely at some of the things we're sourcing from China and making in that facility to assess whether we can bring it back in. Sometimes it's really hard to make that assessment if you're not actually making it yourself. So I think there could be a transition from current vendors to their ultimately back to our own facility. I think there's certainly some of the higher volume stuff in Ningbo that I can really see coming to either like a Brisbane or a West or a facility. But I suspect there'll also be some things that we're currently manually assembling in, say, West or Brisbane that will probably end up there. So it's -- that's a long-term view. I think it gives us more flexibility as given us, to your point, I think a little more exposure to China, but it hasn't fundamentally changed our profile by any stretch of imagination. The short term is we've got to get our arms around it. We've had 2 people now get to that facility. So 2 of our people dealt with the quarantine in China, which is a serious lockdown, you don't even have a key to your room, quarantine. So they did that and got in that facility, and we're really welcomed, but also they like what they've seen. We had -- we've been working with some consultancies, consulting organizations over there to get in to look at it, first of all, from a health and safety point of view and then from a lean manufacturing point of view. So we kind of knew what we were walking into. But when we got there, as Andrea said, pretty good facility, but there's also opportunities to improve. And I think if you go 2, 3, 4, 5 years down the track, how we're splitting the manufacturing around the world will be different based on it.

Just a question for Kevin on your shelf space in the retail channel, so in 12 days in Home Depot. Can you comment, are there any -- in either Home Depot or Lowe's, is there any like major initiatives that you'd care to call out anything like a range, a trial of a whole new range or something like that, kind of any major wins or losses in terms of shelf space?

Yes. I don't think I'd comment on share. The space kind of speaks for itself. And again, going to get a little bit more drill down on that this afternoon we get into the retail laboratory. Yes, what's being worked on. Gosh, we it really never stops. So that is a constant process of what I'm just going to refer to as optimization because one of the things that we focus on -- one of our primary focuses is how do we better ourselves. One way to look at it is think about those days as just real estate. And that's real estate that we have a good degree of control over because we have all of it. So with the partnerships and the way that we work with the big customers is we're able to more easily bring our ideas to them and say, here's what we want to do as opposed to maybe not being at a bay or not having complete control over that, maybe the merchant has to say, this is my vision. So we have a good degree of control, which means that we just never stop that thought process of optimization of that real estate. We are pretty well assessed with it. So yes. And that leads into the SKU counts as well. Thank you.

Andrea, maybe a question for you. There's a bullet point on the slide, which you'll have to pardon my ignorance, but it said consideration for additional consolidation center to include or RWC suppliers in China. Can you give us a bit more detail and understanding of what that means?

Sure. So today, we buy product in that region from many different suppliers. And to what today, the way the EZ-FLO facility, the NRM facility, Ningbo facility is set up is that their purchases are consolidated into containers, full container loads versus an LTL container that comes into the United States. Does that make sense? And so today, that's already existing for all of the business from Eastman EZ-FLO. So we now have an opportunity since they're in that free trade zone area that we can additional purchases from the legacy RWC side, we can explore the opportunity to consolidate those as well. And so it's a benefit from a logistics transportation perspective, inbound into the United States. So those are some of the things that we're going to continue to explore as we move into the next year.

Okay. Understood. And then just a follow-on, just relating to some of the lean initiatives you're putting into the factory in Ningbo. It sounds like you've had some good early progress. Has it exceeded your expectations so far as to how the teams responded there from a lean manufacturing perspective?

I think absolutely. Yes. I mean just after the last visit a few weeks ago, just seeing the progress they've made in the short amount of time with the direction that we're giving them. Like I said, it's a good facility, and we're making it better. So applying those operational excellence, lean manufacturing all of those things, given the empowering our people there in the facility is going to be a win for us.

Okay. And extension of that, do you -- based on what you've seen so far, do you think the benefits Reliance expected at the time of the acquisition, do you think you're tracking to the goals that was set? Or do you think there may be some additional benefits maybe a couple of years down the track relative to...

To expectations.

It's a good interjection.

It looks like that wraps up -- just we have one more.

Yes. Just interested in what percentage of your SKUs you make versus outsourced? And then manufacturing more, has that been a material driver of margin in the past? And is there an opportunity to make more going forward?

So say again saying, what is the opportunity for us to in-source as opposed to outsourcing? Look, I can't put a number on it or a percentage on it, but I think there's a lot of things that we're looking at a little bit more differently now than what we would have 3 years ago. And if you think about what the organizations had to deal with, the implementation of tariffs out of China, then the COVID impact, then short supply chain and then a unilateral decision by one person ends up in a war in Europe, which none of us expected. That makes you look at your supply chain really differently. So things that in the past, we probably would have just said, leave -- fine, leave it alone. I think we're looking at it afresh now given that environment. And I think the one, Dixon, that you talked about the crimp fittings is a really good example. And then when you get into it, you actually see the benefit that we can bring and some of the capabilities that we've got from now an acquisition that gives us skills that we didn't have built tools, capabilities we didn't have before. So I think that the nature of our business in a some of that more available to us and the environment we're in probably brings it into focus more than previously.

Okay. Yes, we'll wrap up this section. Now we'll hand it off to Will to talk about our opportunity. I'll start looking a little bit forward and why we think we're really well positioned for the future.

Good morning, everyone. For those I have not met, my name is Will Kilpatrick, and I'll be stepping in as the role of interim President here for the Americas. As Christopher mentioned, we're going to shift gears a bit from the growth playbook strategy of the business and a bit more focus on the opportunity ahead of us and how with -- in each of the key regions we operate, we're going to capitalize on that opportunity. Let's see here. I guess I can go to the next slide, which I'll just open up fully. So this is probably one of my favorite slides in this section in the sense that I think it encompasses a lot of what the business has ahead of it. The first piece there around a large, fragmented landscape. This is critical. We operate and call it a $20-plus billion market globally in our key markets. That's primarily -- if you kind of go back to the analogy of the plumber a majority of that $20 billion is that plumber type spend. There's obviously some fluid tech type markets that hit in that, but the bulk majority of that is our core plumbing and heating business, which is fantastic. If you think about where we sit today, call it, 5%. I'd also argue probably less than 5% of that share. We own a very small portion of that truck. Now there are some things in that truck that we're probably not going to get into that Heath mentioned the capital type markets. That's primarily -- if you kind of go back to the analogy of the plumber truck, a majority of that $20 million is that lumber truck type spend. There's obviously some FluidTech type markets that hit in that, but the bulk majority of that is our core plumbing and heating business, which is fantastic. If you think about where we sit today, call it, 5%, I'd also argue probably less than 5% of that share. We own a very small portion of that truck. Now there are some things in that truck that we're probably not going to get into that Heath mentioned the capital type items like a big water boiler, but there's a lot of opportunity within that broader truck for which we're not touching today. You then couple that with this idea of a few large players. For us, that's exciting for 2 primary reasons. On the organic side, we believe there's a ton of opportunity for us to continue to take share from other competitors out there. It's a highly fragmented space. We've demonstrated our ability to operate and execute well for our distributors and our customers. We expect that we can continue to do that and take share from the fragmented players that exist out there. And I think the flip of that then exists on the inorganic side. As we think about growth and taking more share, there's this fantastic opportunity to go out and acquire businesses like EZ-FLO, Eastman, HoldRite, John Guest as we move forward. That's something that we're actively looking at. And it just helps us capture that broader piece of the $20 billion share. Sitting underneath that idea of this large fragmented market is the enduring tailwinds. One of the items that we've discussed with you guys a lot previously is this idea of labor shortage. Obviously, it's a hot topic in today's broader macroeconomic environment, but this idea of labor shortage for us really applies to this idea that you have a large number of plumbers that are getting older, that are highly skilled, that are retiring and there's a less inflow of new plumbers that are taking spots for those existing plumbers that are retiring. That has been exacerbated in the recent environment with just labor shortages, making it even more difficult. How that plays well for us is this idea of having a really innovative product that makes their life easier, that's simple for them to do. It makes their job faster so they can be more efficient and move forward. That's something that will continue to be a tailwind for us as we move forward, just given broader expectations of the trade within plumbing. The next item is on the aging homes. This is something I'll get into in a couple of slides. But very basic and simple concept here. We are an 80%, call it, repair and remodel business. And as homes become older, there's needs for repairs and there's needs for remodel. So we believe that that's something that in our key markets that will obviously continue to help support our business and the growth moving forward. And the last point in tailwinds is something that we're seeing globally around sustainability investments. We made a good mention earlier around in the U.K., this idea of moving away from gas boilers to, call it, other sources of energy. That exists, whether it's in the U.K., the U.S., a general push for more sustainable homes, more sustainable buildings. And from our view, where we sit today, plumbing will have to be a key part of that in terms of just spend as these structures are essentially retrofitted for more sustainable living moving forward. This bottom section around differentiated proposition. This is something we've been hopefully hitting on a good bit today. And at the end of the day, it's around creating that value through product leadership that we've hit on. It's having the right brands and the right products that those plumbers need that help them save time. We believe that with our differentiated proposition, you think about the 2 items on top around the large fragmented landscape and the enduring tailwinds, we're very well positioned to continue to grow in the markets that we're competing in today. So that's a nice little summary of this slide. I'm going to shift to a couple 3 slides that gets back to an earlier point that Heath made in terms of a key takeaway for today. So the resilience of our business in the face of short-term uncertainty, given our broad exposure on the repair and remodel side. We believe we're very well positioned just based on macro trends that are occurring there. This first slide is a U.S.-based slide that compares to call it the new starts from the housing perspective and the light blue line, the dark blue, which is the expenditure for R&R. Key takeaways here. Obviously, you see the new starts from a new construction perspective, is quite volatile compared to the solid blue. Of note, when you look at what's charted here, it's roughly 26 years of data. Of those 26 years in the R&R side, you see, I think it's just 4 years where you have called a flat to down type cycle. At the end of the day, it's a very steady growth rate through the cycle, and that's something from a steady, stable growth perspective, that's something our business will be well positioned to capitalize on. The next slide jumps a bit into the U.S., and you'll see 2 slides that look very similar, U.S. and a U.K. view here coming up. A couple of key points that will apply to both pages. One is this idea, and it will kind of relate more to the remodel side of our business that we operate in. As home prices appreciate, you see a correlation over time that as people feel more comfortable with the price of their home, they're more comfortable spending money doing remodels on it. So that's something that we're seeing has been very true over the last -- very much over the last 2 years and it has been true for quite a bit of time, and we're still seeing strength in that moving forward. So that's obviously helping the remodel side of the equation. The right side of the equation, which applies both the U.S. and the U.K. is this idea of aging homes. Here in the U.S., we've got roughly 140 million homes. Over half of those homes are over 40 years old. What does that mean for us? One, those homes have issues that require repair. Sometimes those repairs turn into remodels when folks decide they might as well spend money to do remodel. But for us, it's something that is clearly driving the repair and remodel side, and then you couple that with this idea of just home shortages in both the U.S. and the U.K., people are investing in their homes to make them nicer, because it's hard to go out and find and have at an affordable price that they can move into. This same story applies on the U.K. side in terms of just the remodel in the repair side. And I think even on the U.K. side, you're seeing a bit greater, if you call it, the 30-plus million homes in the U.K., roughly 55% are over 50 years old. And having been just a resident in the U.K. before moving back to the U.S., I live firsthand what some of those older homes mean and the problems that they run into particularly given not only in the U.K., you've got potable water, but you also have a lot of the heating systems are supported by water and through Radiant or under floor heating so. Let's see here. I think that covers those 2 slides on that. This is a nice summary slide, and we'll do a bit, and I'll hand off to Bart and Chris from a U.K. perspective or EMEA perspective. summarizing just where we're thinking about growth, how we take care advantage of these opportunities. I'm not going to rehash. Ultimately, what we said around this idea of product leadership, focusing on solutions for the job site, focusing on creating value for the distributor and operational excellence. That's key underpinning this. But what does that mean for us here in the U.S. I'll look at it in 2 big buckets. On the residential side, where we're very strong in the repair and remodel side. It's about what can we do to have more products in that truck. It's as simple as that, products not only that they need but products and brands that they want. And we'll do that both organically and inorganically. The other side of the equation is on the commercial side, which Kevin mentioned earlier, which is, call it, primarily, for the most part, multiresidential low-rise type buildings. That's an area where, through the HoldRite acquisition, we've done a great job of having kind of that entry point with HoldRite with both fire stopping with TestRite. It gives us access to the job site. The idea there is how do we continue to push the rest of the products, the pipes, the fittings, the valves, the water heater accessories into those markets and really grow. It's obviously a bit more -- it's less penetrated than our kind of residential side on the repair and remodel piece, but it represents a great opportunity, where there's a massive amount of focus for us as an Americas business moving forward. So I'll actually hand off now to Kevin to cover a bit of putting it into action on the gas connector side.

Thank you, Will. So going to be fairly brief to the case study I've mentioned this a little bit. We've talked about gas connectors quite a bit as we've gone through the presentation. So a little bit of background. Gas connectors -- the category -- the product category comes to us from the EZ-FLO acquisition. EZ-FLO purchased the Eastman Company back in 2000. And so EZ-FLO International, when they were a stand-alone company, have been in this product category for give -- kind of sort of 20 years, key with sourced product for most of that time. So one of the key sort of sea changes started in 2018 is that they brought that manufacturing in-house into the Ningbo facility and now are a prime manufacturer for gas connectors. So in order to really make a serious run at this category, that's what you have to do. And so they took that step in 2018. The other key element to win in this category is to have an excess flow valve that is required for a number of applications. It is required by a number of customers and a number of end-user plumbers. So the EZ-FLO RWC now has a patented excess flow valve and that's pictured up here referred to as armor boost. And so you put all those elements together, in-house manufacturing having the right product, being able to have capacity, being able to have the elements such as the patented excess flow valve all makes a big difference. Where does RWC come in, in terms of this? So right there in the middle, you could see the sort of under penetration in the markets and in particular, on the bottom on wholesale. And not that EZ-FLO wasn't doing a wonderful job and it wasn't really building out this category really well, but they just did not historically have strength in the wholesale plumbing channel. RWC, it's in our DNA. So we have a lot of opportunity, and it's not to ignore retail either, but we have a lot of opportunity in front of us. So I'll talk about retail, which is inclusive of the hardware channel. So in -- there are in-store opportunities to be able to place product on the shelf in the big customers. Inside of sort of the retail envelope, there's also the appliance installation piece. So the major appliances that get sold through Lowe's and The Home Depot, 2 of the top 3 major appliance sellers in the United States has a lot of EZ-FLO product riding along with us to get to make that installation, and that can be expanded and is being expanded. And gas connectors go back to sort of when EZ-FLO prior to acquisition. In that sort of installation route to market, they already had water connections, they had electrical cords, there was drier venting, there was a suite of product. And so gas connectors participated through the source product, but not to the extent that it can now. So it kind of builds out that catalog of product. I mentioned wholesale plumbing. One thing you're going to see when you go across the street this afternoon is these merchandisers that we place inside of small wholesale distributors, we have the ability that's kind of -- talk about the retail real shelf real estate. That's kind of our wholesale shelf real estate that we have control over. And so we have the ability to drive EZ-FLO product onto our own merchandisers. Last thing I'll say, and then I hand it over to Bart is that we see here next year, we'll have some very different looking pie charts for you. So this is a really exciting area for us.

Thank you, Kevin. So EMEA growth priorities. We differentiate between plumbing and heating and FluidTech. And within plumbing and heating, the U.K. and the Continental Europe are in different stages of maturity. In RMI, in the biggest part of our U.K. plumbing and heating, our brands matters -- matter to the end user and to our distributors. We offer them the strongest support, and some examples. To support their growing e-commerce and we provide them with the best set of digital assets coming from our new websites or centralized in our product information database. We about 1,000 tons, 500 tons per month, we refer -- we have to buy requests to our distributors. We cooperate with their marketing for best-in-class brand exposure and driving demand back to the distributors. Screwfix, for example, recognized this by displaying exclusively Speedfit fittings in their front of store displays. And in Europe, we are expanding our range of SharkBite fittings in the retail following the example of SharkBite in the U.S. and Speedfit in the U.K. The picture shows SharkBite day at Hornbach. We are spending time at the job site listening to customers and end users and developing products that drive value. Recent examples and they have been mentioned before, are LowFit for the underfloor heating range and brand-new controls for the underfloor heating. That shows how we deliver smart solutions that are the first choice for plumbers. In the commercial space, our specification pipeline continues to grow rapidly. And to leverage this we are preparing a launch for commercial large commercial range into the U.K. market. And finally, in New Builds, we benefit from our strength in underfloor heating, and we continue to expand our share and focus to unlock new build potential preferable via M&A. FluidTech, and FluidTech has a similar approach in the U.K. and in Continental Europe. We focus and continue to take share in 5 key applications: compressed air, drinks dispense, pure water, leisure and telecom, and product development there is incremental. And Chris will explain more about the FluidTech case in the next slide.

Thank you, Bart. Okay, folks, I wanted to really zone in now when it comes to the -- what we refer to as FluidTech. So it's more of a case study, talking you through one of the key elements why we're strong and why we're going to continue to win within these broader sectors that we see in front of us. Now largely FluidTech, to us, means push-to-connect technology not within the traditional plumbing sector. So we have taken our tried and trusted Push to Connect technology and applied through diversified sectors. So what are we talking about specifically? Now we're talking about componentry right through from the very small, what we call cartridges. So the elements that grab on to the pipe and form a very quick installation. So again, it makes the life of the installer that much easier. And that grows -- so it goes beyond the small and then gets into the larger connectors and then it's supported by pipe also. So we're talking about, again, a broad spectrum of product, which supports those end markets. So specifically on those end markets, let's give you some examples. We're talking about connectors that go into OEM water heaters. We're talking about water dispensers and we work with large brands globally in terms of applying our technology into the OEM applications to support the end user. We're talking about fiber telecoms, and we've talked about our blown fiber connectors previously. And then we get into pneumatics. In fact, over 60 years ago, this is a very start of the John Guest business. We didn't actually start with plumbing fittings. We started with pneumatic fittings. So that application kind of led the way to actually to expand the business to where we are today. So it goes beyond that. And again, so we're focusing on the pneumatics, and you might have call it glimpse folks in some of the slides, especially when we looked at the Launceston plant in the U.K. of the machinery, which utilizes those small components, the PushFit connectors, which aid the air supply lines going to our machines. So not only are we kind of -- have we got the kind of circular process when we kind of develop our own fittings for use in our own machines, that then is exported globally. So we are supporting manufacturing on a global basis through again what we deem as FluidTech technology. Again, some more examples. Think vending machines, think manufacturing automation, and it's not just within kind of extended markets. If you look at the plumbing sector as well, we are again supporting plumbing manufacturers from an OEM basis. So magnetic filters like of the brands such as Adey, for example. We supply all the cartridges that go into their magnetic filters. So the installer has a super easy installation process, again, just straight into the pipe and the connection is made. So why do the -- okay, so in terms of FluidTech, why do we win? We've got that sign of trust and quality. We've got the same technology that's being used through our leading plumbing brands being used across the board. So the same technology made in the same factory and that drives our operational efficiency also. So just give some kind of figures to what we're looking at here. So the U.K. mix, as we've touched on, is largely geared towards plumbing and heating, whereas in Continental Europe, about 80% now is FluidTech. So in terms of what -- so in terms of like here we are as an organization, we are first to market with new technologies. And this is a space where we do concentrate on. So we've got teams dedicated to developing new FluidTech technology, and we will continue to innovate the space and be first to market and great brands, great quality, trust in that product across those sectors. And we've got a great team to kind of support in this. So a lot of history, highly established teams who've collaborate with end users. We're in the field kind of discovering new technologies, new applications, how do we again be first to market and grow our FluidTech market going forward? So I think it's pretty clear, guys that we are not just a plumbing business. We're in markets beyond water movement. So if you take the blown fiber connectors again, we are not kind of -- we are not working with water, we're working to keep that water out. So we are kind of expanding our reach and bringing you -- we are bringing those new products to market, and we will continue to do so in that FluidTech space.

Very nice. Thank you, Chris. I think for now we're going to open up to Q&A for the opportunity section.

Any one who [indiscernible] through. So we talked -- Kevin talked about EZ-Flo. Chris talked about FluidTech. They're parts of our business. Okay? But we wanted to highlight them as case studies because I think they're parts of our business that are either newer or not as familiar. But importantly, the playbook for those parts of the business are the same as the playbook for the whole business. So don't walk away from the last slide, thinking all our futures based on FluidTech. It's an important part of the business. We've got some real opportunities there based on the technology and the capability. It's really the takeaway is the playbook the same and trying to give you a little bit more understanding of FluidTech, which is not our core plumbing and heating business or not a history at least. So that's my comment. Excuse me.

Very nice.

I was one of the company [indiscernible]

Questions?

Will, I just wanted to ask you about the sort of brand strategy. I know you've got the RWC umbrella, but you're obviously keeping EZ-Flo, Eastman, Cash Acme, et cetera, et cetera. Is that a conscious decision? Or is that something that phases over time, everything moves to sort of an RWC?

The short answer is with the recent acquisition of EZ-Flo, Eastman, it's something that we're kind of revisiting constantly. We think about the strong brands that we have in SharkBite. How do we continue to leverage that? SharkBite obviously is not going anywhere, but then you think about Eastman and EZ-Flo, very strong brands that resonate with that plumber -- picking up some slight feedback just for -- there you go. There is no plans at this moment to change the brands. We're going to leverage them and move them forward. And as we go out and acquire other businesses to have strong brands, we're going to continue to move those forward as well under the RWC umbrella. So.

Will, just like your thinking around the age of the house in the U.S. given 60% repair like when I think repair, I'd just assume low to mid-single-digit irrespective of the age of a house. Is there something there where as a house ages you do more repair work in plumbing? Or is it -- or is there some sort of conversion like a [indiscernible] conversion of repair into remodel? And maybe if you've done some work around that will be kind of interesting to hear?

Yes, the spectrum is it varies. I mean it can be the simple small repairs, but then it could be as large as a full repipe of a home as call it, copper pipes get older. There's the opportunity to repipe the whole tire house with plastic. So that's something that you do see across the spectrum. It is typically speaking, smaller. But as I think we've iterated throughout, as soon as something happens, you have a leak in your house, it's your most immediate issue that you're going to solve right then and there. And that's been what's -- that type of job and the average size of that job is what has historically booed us, and we think it will continue to boo us going forward from that perspective.

Yes. Look, I think it's actually -- it -- as [indiscernible] questions, It's really hard to answer. I think, again, back to the chart that Andrew presented on what drives our growth, there's market growth and that's above market growth. I think aging housing plays a little bit in both because the whole industry, which is what we're trying to track there and lives with the same thing. I think the nature of our products, though, probably supports the above-market growth aspect that gives us a bit of an advantage. So it started to get granular, though, to split that out gets a bit tough.

I just had a question on FluidTech actually. And this might not be sort of a fair way to categorize all of the markets within FluidTech, but just keen to understand how much of the business is driven by installation of, I guess, new capital versus servicing and maintaining things that are already installed?

Okay. So I think a lot of FluidTech is actually driven through new installation. Okay. These are markets where you've got OEM technology kind of say you've got kind of appliances being built, and then you get those appliances into the market. So it's not so much about repair those products. It's about driving the new products going forwards. And that's not just applicable to appliances, but then applies to a lot of the FluidTech categories themselves. So again, it's more about the new okay, rather than the repair. So...

Thanks. Another one on FluidTech, and the opportunity in the Americas, have we called on the growth opportunity in the Americas? I don't know the question for you or for Heath?

No.

Can you give us, I guess, an update or any idea of how FluidTech is growing versus the broader Americas business? Is it one of the high-growing categories or...

Look, it was, I think it's -- absolutely agree with Chris, is it primarily driven by new installations and new equipment. But we've certainly seen the proportion of that business in repair and maintenance tick up recently. So we had a whole period. It was really impacted by COVID, particularly in U.K. and Europe or Europe particularly, almost shut down because all the bars and restaurants were shut. But when they open up, there was just a burst of repair and maintenance up. So in Europe, and in the U.S., there was a big uptick. That's now feels like it's settling back to the normal rate. And that's this is a sector once you're in the fluid -- water filtration and so on, it's sort of a high single-digit growth rate category. I think, long term, that's about where it settles out to, but there's just a lot of noise at the moment. So...

Perfect. Okay. And then to the section on the growth priorities, it was said they want to complete the offer for New Builds, and I think preferably through M&A. To the extent you can, can you give us an idea of where the gaps are, like what you need in terms of that portfolio for the new build?

Yes. We want to have a stronger offer for the new builds. That is -- that will strengthen our position, and we are thinking about solutions like drains, like ventilation. There are several options within the new build that are close to our business.

Heath, maybe just following on Pete's question. Your thoughts on broader M&A strategy. I know the discussions we've had sometimes we talk about North America is a key focus. Bart just talked about EMEA and new build. So it seems like the strategy is broader than just one region. But can you just give us an update on your thinking at the moment...

For sure. I think back to the whole idea of the plumbs track or everything in the aisle, there's more stuff we don't have than we do. And not all of it makes sense to develop ourselves. We -- I think acquisition is a real opportunity there. And that's valid in U.K. It's certainly valid in the U.S. I think it's even valid in Australia. So our view hasn't really changed there in terms of trying to sort of continue to fill out that product range, give us better distribution and so on. And look, some of it definitely goes beyond R&R into new construction. And I think there's -- Bart was pointing out, that is an interesting one for us in the U.K. to have a broader suite of product if you've got that relationship with the builder, then take more products through the door. So I think that's part of it. And then Europe, we've talked about a little bit as well. And that really, for us, in the plumbing areas about getting the platform. So acquiring John Guest some years ago gave us a really solid platform in the U.K. If there was an opportunity like that in Europe, I think that would make sense. The FluidTech, really important part of our business, but it's not the platform in Europe. It's -- as we've seen, it's OEM, specialist distribution. It doesn't give us that platform for the plumbing and heating business. So...

Just a question on the Air pneumatics potential within FluidTech. I mean we've been talking about sort of more housing, residential related or commercial. I mean, pneumatics sort of can be much broader industrial automation or air transport. Are we looking at that? Is that a potential? Or are we still looking at sort of probably more like air conditioning unit then [indiscernible].

That -- and that particular and that's more the industrial application, Chris, which has been a part of the business for a long time. I think the smaller John Guest fittings and we've always sold into air, but I think the SharkBite technology that we bought to that party has then given us a bigger, broader range to product -- a product to take to that same marketplace. So...

You had a bullet point up there on the continent talking about getting to RMI via hardware. Is that anything that could move the dial in the short to medium term? Or do you need that sort of M&A platform to drive that?

Can you repeat the question?

That's the Hornbach opportunity.

Yes. Yes, so we started with the SharkBite as it is the most requested solution that can be extended to plastic fittings that can be expanded in -- to the whole range, but we need to have an entry point. And Germany as well, Italy and France are the next ones.

And look, it's a trial. We're not going to be talking about revenue in European retail next year or probably the year after. But the interesting thing, and this was mentioned before, is the knowledge we've gained here in the U.S., which is -- it's -- we've done a lot. We know a bit about it. We've failed many times, and we've worked it out. I think we've taken that to Europe. So the trial we're doing there really matches the sorts of trials we still do here today, which is 1 store or 5 stores, [ trial out ] if it works, then roll it out. If it doesn't, then you pull -- you pull it back. So we're using that capability and swapping it. So we thought it was worth calling out. I won't be retiring next year on the back of that volume. Okay. Very good. Time stretch.

I don't know why I always seem to get the graveyard shift between now and launch. But listen, thanks for your patience. You've been sitting for nearly 3 hours now. So I promise you, we only have another 37 slides to go. So look, I've got the pleasure of introducing some of the other aspects of our operation here. Our environmental goals, which you'll see up here already driven to create lasting impact, and I'll talk about some of our people-related activities. You know we're already working on our Scope 1 and 2 targets. And specifically, we're really looking at our GHG emissions reduction targets and those plans by the end of 2022. So in a moment, you'll hear examples of that from Edwin and Dixon on how we're bringing those to life. And not only are we driving the environmental target, we're also making commitments around gender diversity and reducing injuries. So I'll cover some of those more social impacts from an employee perspective a little later on. Edwin?

All right. You saw on the slide from Gill by the end of this year, what you can map with the targets that we're going to set ourselves on the ESG side. But that obviously doesn't stop us from starting and do actions already about how do we save energy around our facilities. So I'm going to take you through a couple of examples of what we're doing in the U.K. You saw the video about what we're doing in Launceston already. I talked about the whole replenishment of the machine park and that is actually significant utilization savage that we're doing. We've got the solar panels on the roof there. And we also set ourselves a target to purchase 100% of green energy. If I look around my region at the moment, actually in the U.K., all electricity that we purchase is green. We are trying to do the same with gas, but you can understand that in the current situation, changing gas supplier is not the easiest than getting a green source. So that's definitely something we've got to do, and we are doing the same for the continent. The other thing that we're really trying to do is to see what type of resources that we use. And with that, I mean we've looked at what do we do with our packaging. We started out with bringing a more uniform packaging to the market. And whilst we do that, we've also said, okay, what can we do to improve the ESG footprint of that packaging. And we've got about that with what we call the 4Rs, okay? And it starts with refuse. That means, we looked at every single packaging that we use and do we actually need it. Sometimes we have a box, which then has bags with 5 and then it has a central bag around it. Do you still need that? Yes, I know. So we are significantly looking at, can we reduce the amount of plastic packaging that we're actually using. The second one is reduce. And what we mean with that is can we use [indiscernible] plastic than we've done before? And can we actually use bags that are fit for size? If you looked in history, we'd buy the similar sized bags for a lot of applications, and in some cases, you could actually do with half of that size. So where we would have that uniformity of size a couple of years ago, we are now going more to how can I make the bag as small as possible so my uses becomes as small as possible. The other R is what we call reprocess, and that means we do not buy any plastic material that doesn't have recycle content. That's also been a big initiative from a sourcing point of view, not the easiest thing to do, but it's something we've got to drive if we want to become part of that circular world that we want to do. And I think one of the biggest things that we've done is to redesign all of our cardboard boxes. We've basically gone through all of them and gone to corrugated sheet. And as you can see on the page, that is greater for us, a huge amount of reduction in weight that we actually have in cardboard, and we have up to 70% of recycled content in them. Again, this is what we're trying to drive across the business. This program next to reducing 30% of our carbon dioxide footprint on our packaging is also actually saving us $0.5 million a year. We fully realize that in all the ESG programs, we can do some savings, but we also know that for some of them, it will just be an investment in order to reduce our footprint. So we started our journey, and this is a journey that will definitely take more than the 2 years in order to get to the targets we want to get to by 2030.

So I've probably never felt as much pressure on a single slide is this one because Heath told me yesterday that this is his favorite slide in the entire deck. So hopefully, I'll do a justice. So as you've seen throughout today, we use a ton of brass in our products. You've seen in all the slides and the different products that we have, we use a ton of brass. Brass uses a ton of copper. So depending on the alloy, you can have 60% to 70% of the brass is made up of copper, okay? And so copper being such a critical piece of the manufacturing process, it's incredibly important that we maintain a float. And so to get a ton of copper you have to go through 150 tons of dirt to get a ton of copper. Well, what do you do? You go out into the wilds of Canada. Deer and Elk running all around in the fields in this mountain, and you dynamize them out. And then you pour a whole bunch of diesel fuel into the biggest front-end loader you've ever seen in your life, and you load that 150 tons of dirt into the biggest dump truck you've ever seen in your life, also filled with diesel fuel. You then take that dump truck, drive it into town, take a whole thousands and thousands of gallons of potable water, wash it over the dirt to pull out the copper, throw it into a massive machine with the biggest electric motor you've ever seen in your entire life and pours much more electricity to spin out the copper from that. So I've taken this 150,000 tons of dirt to my 1 ton of copper, or I could just walk in my backyard and pull it up out of the ground. So this is, I don't know, but most of you all are my age, you remember, everybody used to have home phones. And so we ran hundreds and hundreds and hundreds of miles of telecommunication cable, all under the ground. What we can do now is we can go and we can pull this cable up out of the ground, and we can transform it into copper. This cable right here is 60% copper. We've got a great display outside, and I'll have this, but you look at it, you can see the copper. Problem is it's in about 1 million different pieces all with plastic sheeting. And so we've developed a very special process to be able to take this cable, strip out the copper and then -- so we're able to strip out of copper, we're able to recycle. So of the 60% copper and get tripped everywhere. 60% of the copper. Of the remaining 40%, we can take 60% of that waste and recycle. So if this piece of cable that comes out of the ground, we take 84% and keep it from the landfill. So we avoid all the mining activity on the copper, and then we take this and we reuse 84% of it. We take the copper into our LCL bar manufacturing plant in Australia and 100% of the copper that we use in that factory comes from this cable. So we're not having to depend on dynamite and the side of the mountain and all the diesel and all the environmental impact that's done from that. And so we take this copper, turn it into brass bar and then turn it into every product that we make in brass right out of our backyard.

Good job.

So not only did Dickson get to present Heath's favorite slide, It's also Dickson birthday today. And -- so we thought that would be a great birthday gift for him. So look, I'll promise 2 slides, and then we'll get you to lunch. So here's some of the achievements we've made around the social impact activities. I'll let you read the slide, but we've made impact from volunteering to our employee resource groups to growing diversity in our pipeline. And it's not just about the impact that we leave on the people and the communities around us. It's really increasingly how we create an inspiring workplace to attract and retain the talent we need to grow. And as you know in the world today, that's a much more competitive environment. So in addition to a really highly engaged workforce, and you can see the top left, 74% overall engagement, which would be classed as pretty top quartile employee engagement. And we're currently in the middle of our next annual survey. Ans we've improved gender diversity, not only in our leadership team, but in the wider business. And since the end of June, of course, we've added a new leader in the Asia Pacific business. So we've improved our gender diversity on our leadership team as well. But look, to me, gender diversity isn't just about gender. We've made significant roads to improving our talent pipeline through new sources of talent. Like in the Americas, we're posting opportunities to more diverse job boards like disabled and military or veterans. In EMEA, we've partnered with women in engineering, and we've just been able to garner some incredible talent as a result of that partnership. One of whom won the U.K.'s top 50 women in engineering during the summer. So another great program here that you can see is our partnership with a local school in the U.K. So not only are we impacting the community around us, but we're sowing the seeds to what Will alluded to, which is attracting talents. Either one, into the trades and plumbing; or two, into manufacturing, which for us is just critical in terms of keeping this talent supply going. So before I hand back to Heath, you've heard from all of our presenters so far whether they've referred to it specifically at the start of Andrew's presentation, or they've been referred to it more safely. They talk about our culture and they talk about our people. And over the last 24 hours, and of course, many of you have had much longer-term relationships with RWC, you've had an opportunity to meet our people who are driving the business day in and day out. So we believe we've got something pretty special here, not just in what we do, but in who we are. We're not afraid to try new things. We punch way above our weight, and we move with speed. We really embrace governance, but we'll reject bureaucracy if it slows us down. So we've got the right strategy. We've got the right products and we've got the right talent and culture to drive growth. So in a new role to RWC, my remit is about building on those things and really leveraging it to make sure we're even more successful in the future. And whether that's through identifying the niche skills that are going to be critical for us to build that pipeline, whether it's molding or product leadership or engineering, or the commercial acumen we need to enter new verticals and new markets. We're really looking at whether it's talent management practices, whether it's succession planning or strategic workforce planning. Over the next 3 years, we're going to be putting in place the building blocks, the plumbing infrastructure for ourselves to continue attracting and retaining the people that we need for the future to grow. Heath, over to you.

Okay. Thanks, Gillian. So I can't believe Andrew got to present the plumbing matters slide at the beginning. So this is my consolation prize. So before we jump into the wrap up, are there any questions for the ESG session. Okay. So let's wrap up. So we had this slide at the beginning. These are the takeaways. So Andrew's slide showed that our growth has accelerated post the IPO. That's our aspiration going forward is to continue that sort of trajectory. And I think we've got the playbook and the strategy to achieve that, first thing. Second thing the opportunity and our position is tremendous. We will continue to outperform the market regardless of what the macro environment is. And the third thing we've worked on the business. There's a lot of effort that's gone into increasing the capacity and the capability and the talent and the people in our business over the last few years. I really like where we're positioned and the outlook, quite frankly. So that's it. Lunch time.

Q&A.

I thought we just did Q&A.

Any final questions.

Okay. Final Q&A.

Heath, it's oftentimes of extremes that sort of prompt change, just interested in a world of where we've seen $10,000 copper, et cetera. Are there any opportunities you've been investigating sort of inter material shifts change around that new product innovation from that perspective?

Sure. Sure, lot. So you're not going to get to walk around engineering, but if you could walk around engineering, you'd see lots of weird and wonderful stuff on desks. A lot of it that uses less brass and less copper than the prior design. So yes, that's absolutely impacted our thinking. But you can see it's not just in product design, It flows through to the way we operate the business, getting control of that copper recycling and so on. So it's -- it's what I said before about supply chain. Our thinking on a lot of stuff is a bit different now to what it was in the past for sure. So...

Heath, just a follow on to that question actually. The business has been focused on continuous improvement from a product operational and financial perspective. But do you think given the challenges over the last, say, 12 to 18 months, whether it's supply chain, whether it's labor, do you think that's accelerated the way that the company and the management team will more broadly is approaching that continuous improvement?

Yes, a really good question. Look, it certainly has forced us to be more agile. I mean, every day brings new challenges. I don't think we're unique there. I think it's actually -- it's hard to actually sometimes pull yourself out of the day to day. And I'd like to think that when we get halfway down the track. Is it 6 months, is it 12 months, is it 18 months down the track when there's a bit more normal the supply chain, we stopped talking about supply chain. It hasn't stopped being a problem, okay? Just stop talking about it. I'd like to think that the 6, 12, 18 must down the track, we will find that we're actually a better business and better able to operate on a daily basis than what we were beforehand, kind of because we had to. I think that continuous improvement back to your specific point is built in a little bit. Sometimes you're not consciously aware of that's what you're working on perhaps. But look, one example there, and I think we were talking about this last night with Peter is, we had -- with Andrea and her team, we had a regular review of where the overall sort of working capital inventory is at in the Americas business. And our days of inventory right now is lower than what it was in 2019, okay? Because the days take the inflation to count. You take that out and it's like, we are not already too badly. You dig further into that, the average transit time back then was 30 days. It's now 45 days. Okay? So we've had to absorb 40 -- an extra 15 days that stuff is on the water. That's more than 10% of our total inventory on hand. So essentially, we are operating the business today with less inventory than what we were operating in the business in 2019. If you had to ask me that beforehand, it would have been like, I don't know it's about the same. And that's just one of those things incrementally, you get better as you go on. So I hope that answers the question or...

Yes, it does. Just on NPD, I suppose you're launching 1,000 SKUs this year across the whole business. What's the value rate of /average product life across the business? And how has that changed since IPO? So have you got better at launching products? And do they kind of tick the box better than they did?

My goodness. Absolutely. I like years better. And I think you'll sort of see that this afternoon when we get into that facility is sort of that process we go through of thinking about the product and what the end user wants. It's really easy to sit at a desk, I mean, I've done this as an engineer years ago. You said this, you think you got the best idea and it's a solution that works, and you design it and you get there and no one wants it. I think our whole mindset has changed over the last 10 or 20 years and really, really accelerated in the last few years, I think, whether it be in all parts of the world. So yes, there's no question we've got better at it. So do we still fail? Absolutely. What the trials are for. And you judge that based on -- or that impacts how broad the trial is. I mean, trial -- this in 1 store or with 1 end user or are we going to go 10 stores or that's absolutely this is going to work because we've done the research and we just roll it out completely. So -- but we still mess up, for sure, but we've got better.

And what's your key return metric on that? Is it a return on capital, or do you look at 10 things and kind of weight average?

Look, I mean, ultimately, the return on capital at that point of a big new product initiatives. Some of the small ones, it is doesn't make -- you can't really do the calculation. And then the overall business, obviously, we track that on an ongoing basis. We also track our vitality index by region on what's the revenue in this period for the things we've launched over the last ex years based on the product category and so on. So yes, we keep track of that.

Heath, could you comment on whether or not any considerations given to selling directly to plumbers and your trade off between [indiscernible]

Zero consideration -- because the trade-off, sorry to interrupt you.

Yes. Really just trying to understand how you obviously -- how retailers would respond, but the margin uplift associated with it?

Yes. And look, there's no way we can duplicate the 23,000 outlets. So if you take in the U.S., giving our end users access to the product via that platform is just immensely, immensely Powerful. Our real customers is the contractor [indiscernible]. So we have to know them and their needs and we spend time with them on site, which is what sort of this afternoon is all about demonstrating, I think. But we need that mechanism via the distribution to get maximum access for our product to the marketplace. So... Okay. I think we're there.

We are done.

We're now -- that's it for the presentation. Sorry, we didn't have 270 slides, but this was the best we could do. So enjoy lunch, and we'll all gather together in the training center later on. Thanks to everyone.