00:02 Greetings, and welcome to the GMS Second Quarter Fiscal twenty twenty two Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. 00:24 I would now like to turn the conference over to your host, Carey Phelps, Vice President, Investor Relations for GMS. Thank you. You may begin.

00:33 Thank you, Melissa. Good morning and thank you for joining us for the GMS earnings conference call for the second quarter of fiscal twenty twenty two. 00:42 I'm joined today by John Turner, President and Chief Executive Officer; and Scott Deakin, Vice President and Chief Financial Officer. In addition to the press release issued this morning, we have posted PowerPoint slides to accompany this call in the Investors section of our website at www.gms.com. 01:03 Turning to Slide two. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of nineteen ninety five. Forward-looking statements address matters that are subject to risk and uncertainties, many of which are beyond our control and may cause actual results to differ from those discussed today. 01:28 As a reminder, forward-looking statements represent management's current estimates and expectations. The company assumes no obligation to update any forward-looking statements in the future. Listeners are encouraged to review the more detailed discussions related to these forward-looking statements contained in the company's filings with the SEC, including the Risk Factors section in the company's 10-K and other periodic reports. 01:53 Today's presentation also includes a discussion of certain non-GAAP measures. The definitions and reconciliations of these non-GAAP measures are provided in the press release and presentation slides. Please note that references on this call for the second quarter of fiscal twenty twenty two relate to the quarter ended October thirty one, twenty twenty one. Finally, once we begin the question-and-answer session of the call, in the interest of time, we kindly request that you limit yourself to one question and one follow-up. 02:25 With that, I'll turn the call over to John Turner. JT?

02:29 Thank you, Carey. Good morning and thank you all for joining us today. We're going to start on Slide three. We are pleased to share with you today results from another record setting quarter with net sales of one point one five billion dollars, net income of seventy four point four million dollars, and adjusted EBITDA of one forty nine point five million dollars. An inflationary pricing environment and continued strength in the residential market coupled with our focus on customer service and execution drove another quarter of strong performance in profitability. 03:06 A few specific highlights from the quarter include: record levels of net sales, net income, and adjusted EBITDA with sales growth in each of our four reporting product categories. All core product line sales were up at least twenty five percent with steel remaining a standout with a greater than one forty percent increase for the quarter. Gross margin was thirty two point three percent, which was slightly higher than expected. SG&A and adjusted SG&A as a percentage of sales improved year-over-year for the sixth quarter in a row. 03:40 And finally, adjusted EBITDA margin improved two hundred and eight basis points to thirteen percent for the quarter compared with ten point two percent a year ago. Within the context of high product inflation, supply chain constraints, and strength in residential demand, our focus on serving the needs of our customers and executing on our strategic priorities were instrumental in our ability to deliver this level of performance. I'd like to share a few examples. 04:10 First on Slide four. We remain focused on expanding share in our core products as our sales force works diligently to earn a greater share of our customers' business. While many home builders pulled back their activity levels during the quarter due to supply chain concerns, our channel checks with suppliers provide confidence that we are maintaining or growing share in each of our key product categories with notable growth in steel framing. 04:35 Second, we are growing our complementary products to continue to diversify and profitably expand our offerings. This quarter sales grew twenty four point eight percent, marking the sixth consecutive quarter of year-over-year growth for this category. And as you saw in last night's release, we just completed our latest and largest acquisition in this product category, AMES, the nation's foremost provider of automatic taping tools. I will discuss this acquisition in more detail momentarily, but we are excited about this margin accretive transaction and its growth potential. 05:11 Regarding platform expansion. Beyond the AMES and Kimco transactions that we completed this week, during the second quarter we completed the purchase of the EIFS division of DK&B Construction Specialties, expanding our complementary product offerings and expertise in the Greater Nebraska market. And we opened a new greenfield facility in Tennessee, enhancing our ability to service our customers in that growing market. 05:38 And finally, we continue to execute against the fourth pillar of our strategic priorities, to leverage our scale and employ technology and best practices across the business to drive improved productivity and profitability. Arming our team with the tools and data to make better informed decisions is helping to drive additional operational efficiency and we are advancing our levels of customer service by working to automate our transaction processes from order through dispatch to delivery, providing online capabilities to enhance the customer experience, while lowering our cost to serve. 06:13 Before turning the call over to Scott, I'd like to spend a few minutes discussing our acquisition of AMES Taping Tools, which is highlighted on Slide five. AMES pioneered the development of automatic taping and finishing tool technology in the nineteen thirties, dramatically improving the speed, quality, and efficiency of the professional interior finisher. 06:33 Today, AMES is the premier supplier of high quality automatic taping tools and brings to us the industry leading ATF brand TapeTech and the industry's most widely used e-commerce platform all-wall.com. The company, which will continue to operate under its well-known brands utilizes three channels of distribution. First, AMES' network of more than eighty five stores sells products for residential and commercial interior finishing applications and provides an unparalleled fleet of one hundred thousand ATF tools available for rent. The second distribution channel is the sales of TapeTech branded ATF tools and related products through dealers and distributors, including GMS. 07:20 And the third channel is online sales of drywall finishing and related products through the all-wash.com e-commerce platform. With trailing twelve month revenue of approximately one hundred million dollars and margins in excess of our company average, AMES should serve not only as a complement to our product offerings, but to our long-term profitability as well. 07:43 With that, I'll now turn it over to Scott to provide more perspective on our financial results for our second quarter. Scott?

07:52 Thanks, JT, and good morning. The buoyant inflationary environment and healthy demand in residential construction were the principal drivers of our solid results this quarter serving to offset lingering relative volume weakness in commercial. 08:07 Looking at Slide six. Net sales, which benefited from a full quarter of contribution from our Westside acquisition, increased forty one point five percent for the quarter to one point one five billion dollars. Organically sales rose thirty one point two percent driven by pricing gains across many of our product lines coupled with continued strength in the residential market. The number of selling days for the quarter was the same year-over-year. 08:38 From an end market perspective, both residential and commercial sales in the US were up more than thirty five percent organically year-over-year again principally due to price inflation. Wallboard sales of four hundred and fourteen point five million dollars increased twenty five point four percent comprised of a twenty two point five percent increase in price and mix and a two point nine percent increase in volume. 09:04 Organically wallboard sales grew nineteen point seven percent comprised of a twenty point eight percent increase in price and mix, partially offset by a slight one point one percent decrease in volume. Commercial volumes continue to lag the residential market and given the supply chain issues that builders are facing in other products, new single-family residential volumes have now dropped to high single-digit growth. 09:30 Given pervasive supplier pricing actions, our average realized wallboard price has increased sequentially each quarter for the past year. For the second quarter of fiscal twenty twenty two, the average realized wallboard price was three seventy six dollars per one thousand square feet, up five point four percent from the first quarter and up twenty one point nine percent from the second quarter of last year. 09:55 While the pace of price increase is tempered late in the quarter, we anticipate further price escalation to resume in the new calendar year. Ceiling tile and grid sales of one hundred and forty point nine million dollars increased twenty five point six percent year-over-year comprised of a twenty four point six percent benefit from price and mix and a one percent increase in volume. 10:22 Organic sales in ceilings grew seventeen point four percent with twenty point four percent of price and mix, partially offset by a three percent decline in volume. Steel framing sales of two hundred and seventy two million dollars increased one hundred and forty four point four percent as steel price and mix increased one hundred and thirty two point two percent and volume grew twelve point two percent. On an organic basis, steel framing was up one hundred and twenty two point two percent comprised of a nearly one hundred and twenty point one percent benefit from price and two point one percent on increased volume. 11:01 Sales growth of our complementary products was twenty four point eight percent for the quarter as we benefited from positive contribution from acquisitions and strong pricing in most product categories. On an organic basis, sales of complementary products were up twelve point six percent with the majority of the increase coming from price. 11:22 Gross profit of three hundred and seventy one point nine million dollars increased forty point three percent over a year ago as gross margin performed slightly better than expected coming in at thirty two point three percent or thirty basis points behind last year's level. 11:40 Pressures on wallboard margins due to the timing of our pass-through of supplier pricing actions moderated slightly sequentially and were partially offset by year-over-year increases in ceilings, steel framing, and complementary products. While it typically takes three to six months to fully pass through a price increase in wallboard, our teams have made clear progress narrowing the gap and driving sequentially improved gross margins in that product category. 12:09 Turning to Slide seven. Adjusted SG&A expense as a percentage of net sales improved three ten basis points year-over-year to nineteen point four percent as significant product inflation outpaced increases in operating costs. While this improved leverage was driven by the inflation that positively impacted our net sales dollars, we are pleased with the cost disciplines our teams have achieved against the backdrop of a difficult COVID era account and inflationary and activity based operational increases in several areas, most notably in fuel and employee comp and benefits as driven by our higher levels of sales and profitability. 12:49 All in all, second quarter adjusted EBITDA of one hundred and forty nine point five million dollars was eight one point two percent higher than a year ago and adjusted EBITDA margin improved two eight basis points year-over-year to thirteen percent for the quarter representing an incremental margin of nineteen point eight percent at the upper end of our expectations. 13:16 Slide eight references our cash flow dynamics during the quarter as well as our balance sheet and liquidity position. Given continued inflation, extended lead times, and certain instances of tight product availability; our commitment to ensure product availability for our customers across our portfolio of offerings has required a higher use of cash again this quarter, principally associated with inventory. We recorded a use of cash from operating activities and free cash of two million dollars and eleven point three million dollars, respectively. 13:49 The inflationary increases we had in our revenues during the quarter also drove use of cash related to accounts receivable. Looking at the back half of fiscal twenty twenty two, we expect to generate improved level of free cash flow as we draw down some of our inventory levels as is typical when we enter the winter months and as other supply chain inefficiencies are hopefully relieved. 14:12 On a longer-term basis, we continue to maintain our through the cycle objective of generating free cash flow in a range of forty percent to forty five percent of adjusted EBITDA. Capital expenditures of nine point three million dollars compared to seven point one million dollars in the prior quarter -- excuse me, prior year quarter. Given our recent acquisitions, we now expect full year fiscal twenty twenty two cash capital expenditures to be in the range of forty million dollars to forty five million dollars. 14:43 As of October thirty one, twenty twenty one we had cash on hand of fifty nine point three million dollars and three hundred and two point two million dollars of available liquidity under our revolving credit facilities. Our net debt leverage at the end of the quarter improved to two point four times, down from three times a year ago. 15:03 The closing of our AMES Taping Tools transaction yesterday, this leverage ratio is now moved closer to two point seven times, still within our target range of two point five times to three point zero times as we continue to maintain a healthy balance sheet and liquidity position to support our strategic growth priorities. 15:22 With that, now let me turn the call back over to JT before we open the line for questions.

15:28 Thank you, Scott. Turning to Slide nine. We are pleased with our results this quarter and feel confident about our business as we head into the next calendar year. As Scott highlighted during his remarks, the residential market remains healthy with favorable fundamentals in both single family and multifamily to support growth in demand for our products. 15:48 Recent existing home sales figures exceeded expectations and indicate continuing interest among consumers. And while some bottlenecks in other parts of the supply chain have caused delays for builders this fall, there remains a gap between housing starts and housing completions that is expected to drive sustained levels of demand as the supply chain recovers. 16:09 In commercial, the Architectural Billings Index, which is generally considered to be one of the best external leading indicators available, has remained above fifty since February and the Dodge Momentum Index, which provides a measure of the non-residential building projects in planning, recently hit a fourteen year high. 16:27 Importantly, the improvement in our own bidding activity and backlog that we saw at the end of the summer has continued and order activity has begun to slowly follow suit as projects that were previously on hold are being approved to move forward. So while it is too early to know with certainty when we will see a true commercial construction recovery, given these positive indicators and expectations for continued year-over-year price inflation through the balance of our fiscal year, we have reason to be cautiously optimistic as we head into calendar year twenty twenty two. 17:00 Given that backdrop, let me turn to our expectations for the third quarter. We currently expect to generate year-over-year organic sales growth of approximately forty percent or nearly fifty percent total net sales growth inclusive of acquisitions. With pressured price cost dynamics and favorable operating expense coverage expected to continue, gross margin for the third quarter should be consistent with the prior year at thirty two point four percent yielding an incremental adjusted EBITDA margin of between fifteen percent to twenty percent. 17:34 Looking into calendar twenty twenty two and our fiscal twenty twenty three, we are optimistic about the demand outlook for our products. We are confident that our scale and commitment to delivering outstanding customer service will continue to enable us to successfully execute our strategic priorities. Our balance sheet is strong, we have a solid pipeline of M&A opportunities, and we remain focused on driving value for all of our stakeholders. 18:01 Thank you for joining us today. And with that, I will turn the call back over to Melissa to begin questions and answers.

18:10 Thank you. [Operator Instructions] Our first question comes from the line of Keith Hughes with Truist Securities. Please proceed with your question.

18:27 Thank you. I have two questions. I guess, first, your total -- your total revenue growth and organic revenue growth that you're talking about for the third quarter is greater than what you just -- you just reported. What's -- it's something at least getting sequentially better with a volume increasing price. Any kind of guidance would be helpful?

19:01 Sure. I think that we are expecting volume to be a little bit better in the quarter. We're seeing a little bit of a bounce off the bottom commercially. You saw that our steel volumes up twelve percent and two percent organically, that generally perceived better wallboard sales on the commercial side. Steel usually is a leading indicator of wallboard sales on the commercial side. So we're expecting a little bit of a rebound there and continuing inflation on a year-over-year basis. 19:28 So we continue to see our wallboard prices, ceilings prices, steel prices inflate somewhat, although the degree of that inflation on a sequential basis is flattening out a little bit. And what happens in the first quarter -- calendar quarter with wallboard pricing is really yet to be seen, although we don't see any reason for that to slide backwards for sure.

19:51 Okay. And I guess, question on inventory, up a lot year-over-year, obviously, a lot of price in there. Could you just talk about where your unit inventory is specifically in wallboard? How much is it up and just maybe a subjective comment on how readily available are you able to meet customer orders here in the near-term?

20:13 I mean, we basically increased the inventory to meet the customer order. So, we feel like we're in a good service position. The reality of our inventory is that as lead times have extended, that's the driver of having to carry more inventory on a unit basis. So turns have been impacted. If you look at on a weeks on hand basis coming into the year, steel was one to two week type lead time, extended all the way to eight to ten, in some cases twelve. So you can imagine, when your lead time extends by ten weeks, that's five times the historical lead time that's going to drive a lot of inventory requirements. 20:50 Now as Scott mentioned, as we expect the supply chain issues to kind of come back into some sort of normal range over the course of the next calendar year, we'll be bringing inventory back in line to our normal weeks on hand. So today, I think, we're probably at least a one to one point five turn lower than we were coming into this calendar year, and that's really the key drivers. Just the extended lead times. 21:18 And then, of course, the higher costs of the products obviously makes it -- with the price inflation every quarter, every time we add a new unit, we're adding twenty pervent more dollars in some cases. So that's an issue as well on a year-over-year basis, Keith.

21:33 Keith, if you look at sort of where we were last year in Q2, our DIO was sort of in the fifty range. We're up to sixty four in Q2, and probably a good half of that is related to the extra stocking levels on a volume basis. So the rest of it really is more driven by inflation.

21:57 So in terms of getting supply from your manufacturing partners, is steel where you're out the longest right now or how would you -- how would you kind of raise the products?

22:08 Yeah. Steel is still -- and extended lead time situation is improving for sure, but it's nowhere near where it was back prior to the pandemic or even just in the early stages of the pandemic. And wallboard has recovered as well, although wallboard fits and starts based upon what's going on with plant maintenance, what's going on with seasonality, et cetera. So wallboard is also not as easy as it was a few years ago, and that probably won't change, which I think is one of the key drivers to sustain pricing in the market as that demand is probably going to be reasonable and after where you're going to see some situations around the country where lead times are slightly extended for wallboard as well.

22:50 Okay. Thank you very much.

22:53 Thank you, Keith.

22:56 Thank you. Our next question comes from the line of David Manthey with Baird. Please proceed with your question.

23:04 Hi. Good morning guys.

23:06 Good morning.

23:08 Yeah. So first question, contribution margin really strong at twenty percent in the second quarter here. I'm just wondering as we look to the third quarter, you're guiding to fifteen percent to twenty percent, and I'm wondering what would lead to that rather than twenty percent plus as volume and price accelerate sequentially? Are there January one resets or other SG&A items we should be considering here?

23:38 I think the reality, as volume increases they'll have to be some additional cost of delivery. So you can see right now in an environment where volume is flattish to up slightly, we're not really having to put a lot of extra cost into the business, we're not going to have to put a lot of extra cost into the business, we're not expecting to have ten percent growth next quarter, but there'll be some of that cost that comes back for sure as we have to do some delivery. 24:06 And then, I guess, on top of that, we're basically kind of forecasting flat gross margins as we go forward versus the prior year. So that's not really going to contribute from a flow-through perspective, a lot -- a lot of extra.

24:23 Okay. That's helpful. Thank you. And then the second, I didn't see in the release or the slides or hear you on the model I'm going to talk about internal sort of labor or logistics issues as the volumes picked up, should we read that as conditions are improving or stabilizing or are you just tired talking about at this point?

24:45 Yeah, I think there it is the same, it's difficult. There are certain types and categories of labor that are very difficult to get and it's somewhat inflationary, but no different than it was in the first quarter for us and we don't expect it to get any more difficult, it's just difficult. So maybe the -- your last point, we're just tired of talking about it, but the reality is, it's pretty much the same. It's still difficult and it's still in somewhat inflationary, but I think we're doing a good job with it. As Scott mentioned, when you get into the details of our cost structure, we're doing what we think is a pretty good job in this environment of maintaining our costs.

25:29 All right. Thanks, JT. Appreciate it.

25:32 Absolutely. Thanks, David.

25:35 Thank you. Our next question comes from the line of Steven Ramsey with Thompson Research Group. Please proceed with your question.

25:42 Hey, good morning. This is actually Brian Biros on for Steven. Thanks for taking my questions. On the gross margins, I guess, just in general looking forward, are we kind of stuck in this thirty two percent range until inflation passes by or until I guess pass-through dynamics change? And I guess, how does commercial coming back factor into gross margins maybe stepping up going forward?

26:04 Yes is the answer to your first question. I think that the level that we're at today is probably pretty strong considering what's happening in the -- on the pricing side and the continued input costs going up and our ability to pass those through in a timely manner with the real drag comes still being wallboard, that's the one that takes the longest amount of time for us to push through as we've talked about at nauseam at this point. 26:36 And commercial gross margins will be a little bit stronger, but again, we're not expecting to see commercial volumes jump ten percent or anything like that. We're talking about being less bad, you know end of the quarter. So commercial volumes were -- in wallboard were bottoming out in that mid-teens level of decline, maybe they'll decline five percent or eight percent or ten percent in the next quarter. So we're not talking about anything that would be meaningful enough yet to get excited about.

27:09 That's helpful. Thank you. And then a follow-up, maybe just on the acquisition landscape in general. You guys have done a just of those recently, is it becoming incrementally more attractive to close deals now or maybe more challenging in the environment we're operating in? Some thoughts around that would be helpful.

27:29 I mean, our pipeline is strong. Our view of how we like to be -- we like to be, let's say, we're fair how we buy companies, right, and we think that that's important for our stakeholders to make sure that we buy companies intelligently. So I think there is more work that has to be done in this environment to understand exactly what the financial performance in the past means, but also what is the financial performance in the future going to look like and what is the opportunity in this environment. So I don't think there is any less pipeline activity. I just feel like we have to continue to be smarter and work harder and have a better feel for what we're doing as we go forward .

28:11 Thank you.

28:14 Thank you.

28:16 Thank you. Our next question comes from the line of Kevin Hocevar with Northcoast Research. Please proceed with your question.

28:23 Hey, good morning everybody. On the gross margin side, so expectation of thirty two point four percent in this upcoming -- in this quarter, and that's flattish year-over-year up ten basis points sequentially. It seems like the biggest drag has been the price cost on wallboard, and it seems like that the October price increase stalled, meaning, that will be kind of several months removed from the last successful price increase. So given that there is some extra time in there for you guys to kind of push through pricing, is it possible that you could see better improvement if you're able to continue to successfully push through price increases and narrow that gap on the price cost? 28:23 I'm just thinking that if there is some more time between manufacturers and planning -- pricing going up that, you could have some time to catch up there? I guess, I'm just kind of curious your thoughts on that?

29:16 I think that's what you saw this quarter actually, I think the five dollar increase, right, that's the improvement. You've seen in gross -- in gross profit because things have stalled out a little bit. So our wallboard margins improved slightly as we got that pricing. 29:28 The timing of next year's price increases, I'm hoping that it feels like a much more normal year, maybe we have something early in the year, and then maybe there's nothing or there is something in the middle of the year. We have to wait and see. If that's the case then that gives us some time to catch up, and I think we could see a little bit of improvement. 29:49 All that being said, with these input costs and the selling prices at some point in time, you know you bump up against environment from a competitive perspective where there is that much gross margin dollar out there that people don't always act rationally. So I don't know where the ceiling is. I think -- what we're doing is reasonable and obviously it's delivering reasonable results.

30:18 Yeah, okay. And then on the -- so the wallboard price increases, at least, that I've seen that have been announced for January or thirty percent. I know wallboard manufacturers tend to be around twenty percent. So thirty percent seems to be a bit of a statement there. I guess, I'm curious your thoughts on the potential for success there just because, again, it seems like the October 1 stalled out. You mentioned earlier that you felt that based on your channel checks that you're maintaining share across the product categories and your volumes were down a one percent in wallboard in the quarter. So curious your thoughts on, you know, again, just the ability for that to stick?

31:05 Again I think the headline number is larger than it normally would be, because what happened in October didn't come to fruition, and I think everybody would like to go back and try to get that. So that's just going to be another negotiation that we all go through. It's all going to be dependent upon demand in my opinion. I think there are some inflationary input issues now for the manufacturer. So I do think that there is some need in some respects for some pricing, I don't know the degree of that need. I doubt it's thirty percent, but there is certainly some input cost inflation. The manufacturers and freight is continuing to inflate as well, so that's an issue. Availability of freight remains a problem. 31:50 And there are parts of the country that are pretty tight from a supply and demand perspective already, and if the balance of the supply chain frees up a little bit and builders are putting and completing these houses faster, if the starts catch up -- or excuse me, completions catch up the starts, and it's a mild winter, you could see an environment in which there was certainly a demand dynamic that would support pricing. But there is still a lot of unknowns, just put it do that way.

32:20 Yeah. Okay, perfect. All right. Thank you very much.

32:22 Thanks.

32:25 Thank you. Our next question comes from the line of Trey Grooms with Stephens, Inc. Please proceed with your question.

32:31 Thanks and good morning. This is actually Noah Merkousko on for Trey.

32:35 Hi, Noah.

32:38 Hi. I was -- I was hoping that you go into a little bit more detail on the AMES acquisition. I think you said the margins were better than GMS overall. Maybe you can give a little bit more detail there? And just, will sales from that business be classified under complementary products?

32:56 Second question, yes. First question, I guess, what I would give you guidance on is that, from a multiples perspective, we paid a one to one point five turn depending on how you look at our valuation today less for that company, and I think we've published the sell price and the revenue. So I think you can kind of back into a range of margins, but it won't be anything that we'll talk about from a public perspective in the near term. But that will give you an idea of what the profitability was.

33:35 Yep. That's helpful. Thank you. And then just another quick one. Steel price inflation obviously contributing strongly to the top line here. What's baked into the 3Q guide for steel price inflation?

33:49 I'll let Scott get out to that.

33:53 So generally I would say, we don't really break it out sort of component by component. But if you look at the overall increase we've talked about, I'd guide you to roughly seventy five percent of that is driven by price, because of the acquisition impact and then the rest is volume.

34:11 All right. Thank you. I'll leave it there.

34:14 Thank you, Noah.

34:17 Thank you. Our next question comes from the line of Matthew Bouley with Barclays. Please proceed with your question.

34:23 Hey, good morning everyone. Congrats on the results, and then closing those deals last night. So back on AMES. I'm curious to ask a little bit -- a little about revenue synergies. It sounds like some of their TapeTech tools you're already selling through your locations. I'm just curious if you could broaden maybe any of their additional products to your own locations or perhaps take any of GMS products to their locations, has the kind of scale up work in terms of revenue synergies and investing in growth there? Thanks.

34:58 Yes, Matthew, you're exactly right that we have the opportunity to distribute their products more aggressively than we have in the past, and we will definitely get to that. We also have a large product offering today that we can expand into the all-wall.com e-commerce platform, that's currently not being sold there. Their focus has really been on finishing, and we have a lot of product safety and other products. It's -- and install products and fasteners and all kinds of things that we can expand that business from a revenue perspective fairly quickly. 35:31 I will tell you, their business model works and their business model is to do stores for the finisher, focused on the finisher, and be the expert in the market for finishing contractors. In some markets, that's the painter, and other markets, that's actually a drywall finisher. And so, we will continue to support that effort and they have a very nice strategic plan. It's a really good organization with smart people, long tenured people that understand what they're doing and we're going to be executing -- continuing to execute the plan that they -- that they had in place, but certainly there is some synergies that we'll get after on an immediate basis.

36:11 Got it. Thanks for that color there, JT. The second one on wallboard price. Given the tapering you're speaking to and what happened with the October increase, I'm curious if that's -- if the pushback -- is there any pushback coming from the commercial side. These projects are getting approved and these longer-term projects and folks are thinking about their own budgeting and presumably you guys are quoting escalators and all that. Is the pushback coming from that type of situation or is it more from the smaller residential customers?

36:45 It's the -- mostly, the large residential is the biggest push back. Now on the commercial side, you're absolutely right. We're quoting with escalators, but at the end -- and we're encouraging all of the -- all of the contracting community to bid that way. But at the end of the day, those contracts aren't let until five, six weeks, seven weeks in some cases before the project. And so, whatever the market price is five, six, seven weeks before the project in many cases is what ends up being -- what ends up being used. And there is a negotiation between us, the subcontractor, general contractor, et cetera, as far as the original number, but there's definitely pushback. There is always pushback commercially when you're bidding out a year or two, because there's just too much noise in that number regardless and nobody understands where the market is going to be in eighteen months. 37:34 So for sure, you're absolutely right there. There is a lot of pushback, but the big residential customers have to rely on a number for some length of time, because they're trying to sell houses and they're trying to sell houses with a six to nine month construction cycle. So that's really -- the issue is we're trying to be out in front of after them. And that's a hard thing for a builder in an inflationary environment and you've heard them all talk about it until they're blue in the face. That's really, really difficult thing for them. So that pushback is pretty significant.

38:07 Okay. Well, understood. Thanks everyone. Good luck, and happy holidays.

38:11 Hey, thanks. I appreciate it.

38:15 Thank you. Our final question this morning comes from the line of Mike Dahl with RBC Capital Markets. Please proceed with your question.

38:22 It's actually Chris calling on for Mike. Thanks for taking my questions. I'm just going back to the pricing comments, I know you said the wallboard is flattening out, but how does the sequential pricing looked like in your other segments?

38:37 I wanted to clarify, when we say words flattening out, if you actually look at where we were end of quarter for wallboard is actually three point eight two percent against an average of three point seven six percent. So most of what we talk about there with regard to wallboard is what we're seeing in the market and the fact that the overall inflationary dynamics from the suppliers took a bit of a pause, but actually in the quarter our last -- we ended the quarter a little bit higher than where we were on average. And that's a similar dynamic to steel which ended higher at the end of the quarter versus where we were on average basis as well. As to sort of key indicators of the core product lines we do.

39:27 Got it. And any way you could help quantify that steel sequential improvement in price.

39:35 Yes. Twenty four percent -- roughly twenty five percent sequentially up versus where it was previously

39:47 Got it. Appreciate that. And then just last question, going back to the steel price, trying to get a better sense of sustainability of these gains, obviously a lot of it's based on commodity price fluctuations. But mix was also tailwind as it was last quarter. And I guess, may be if you could help us parse out how much of these of the robust pricing we've seen so far this year kind of ultimately reverts and a normalized steel environment and how much is going to more structural. Thank you.

40:17 Yeah. I wish I could give you a better answers to what is structural. Depending on who you listen to you. There are some people that are saying that steel market has changed forever with the retirement of old technology and old furnaces and new furnaces. Most of the US production is using scrap metal, there's not a lot of scrap metal out there as there is not a lot of activity going on in remodel. And so scrap prices has stayed very high. And so if you've got a new production unit that uses scrap, we expect that still to still be fairly high. Import quotas and import tariffs are still there, and so we expect that to be somewhat protective of price in the US and a lot of the new capacity expansions that are coming online. They're actually ask slated to come online until late twenty twenty two and twenty twenty three and beyond. So those would all say the steel should be high for some length of time. 41:15 On the other hand, it is a commodity, and there is all kinds of things that can change, and we're already seeing steel flatten from a commodity perspective, right, declined slightly from a [Technical Difficulty], but as it's making its way through the supply chain and making its way to the farmers and making its way to us. We haven't seen a lot of deflation yet. So, we're certainly not passing on any kind of pricing declines yet into the market, and we're not seeing them yet. 41:42 And then there is the demand side, which everybody says, well, as soon as the supply chain frees up in their computer chips available, you're going to see the appliance companies and the car companies, auto manufacturing, all pick up and filled their backlogs. All those are huge steel consumers. So we don't really know quite frankly we're watching the same numbers you guys watch when it comes to the commodity pricing. We don't see anything out there yet that would indicate any kind of drastic reductions. So that's kind of our view of what's happening. In the very near term still somewhat inflationary on our selling prices in the very, very near term.

42:20 Got it. I appreciate the color.

42:25 I don't know if I really helped you, but thank you.

42:31 Thank you. Ladies and gentlemen, this concludes our Q&A session and thus our call today. We thank you for your interest in participation. You may now disconnect your lines.