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00:23 Thank you, Paula and good morning to those joining today to discuss HDI's financial results for the third quarter of 2021. My name is Ian Tharp, Investor Relations for HDI.

And joining me on the call today are Rob Brown, HDI's President and Chief Executive Officer; and Faiz Karmally, Vice President and Chief Financial Officer. HDI's Q3 earnings release, financial statements and MD&A are available on the investors section of HDI's website at www.hdidist.com.

These statements have also been filed on HDI's profile on SEDAR at www.sedar.com. 01:05 Before we start today, I want to remind listeners that during this call, management may make forward-looking statements.

These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements.

01:27 Please refer to the text in HDI's earnings press release and financial filings issued today for a discussion of the risks and uncertainties associated with such forward-looking statements. Also note that all dollar figures referred to today are in U.S.

dollars unless stated otherwise. 01:44 I'd now like to turn the call over to Rob Brown.

Rob?

01:50 Thanks and good morning, everyone. It's great you could join us this morning as we report another quarter of record results for HDI.

As on our past calls, I'll start today with some key highlights from the third quarter of 2021. Our CFO, Faiz Karmally will then provide a financial review.

I'll finish off our prepared remarks with our outlook going forward. 02:13 Let's start with a quick recap of Q3.

The combination of continued favorable market conditions and very strong execution on the operating and strategic fronts contributed to record results in the third quarter. We achieved our best ever quarterly results in revenue, gross margin percentage, adjusted EBITDA and profit.

I'll speak about each of these in more detail in a moment. 02:39 On the market front, we benefited from a strong construction environment which delivered robust demand and prices for our products.

In both the U.S. and Canada, we demonstrated our ability to capitalize on these positive market dynamics in the quarter.

In the face of global supply challenges that are currently impacting many industries, our strong and diverse supply chain allowed us consistent access to products for our customers. This access helps us win market share as our competitors may not have the same product availability that we've been able to offer.

So demand has been high, our ability to supply this demand while improving margins has been strong, and our record results demonstrate these capabilities. 03:23 Another important factor is our continued ability to respond to elevated levels of demand while controlling our operating expenses.

Our price pass-through model keeps our selling prices aligned with product costs during inflationary conditions. Further contributing to our record quarterly results is our latest acquisition Novo Building Products, which we successfully closed on July thirty.

I'll talk more about Novo, in a moment. 03:53 The end result was record sales of four hundred and seventy two million dollars compared with twenty four point six percent gross margin percentage to deliver an outstanding level of profitability for Q3.

Our Q3 adjusted EBITDA grew two hundred and twenty six percent to sixty three point eight million dollars, profit per share climbed by three hundred and twenty seven percent to one point fifty eight dollars per share. And our Q3 results set new high watermarks for our key financial performance metrics.

04:29 As it relates to the Novo acquisition, the early returns are very promising. Our work with the Novo team during the last two months of Q3, and since that time has clarified our positive view of both the people and the operations and our outlook for this business is even stronger than before.

04:48 As a quick recap, Novo is respected, large scale supplier of specialty building products to the professional dealer and home center retail markets. The acquisition added fourteen new facilities and fourteen hundred employees serving over seven thousand customer locations in twenty nine U.S.

states. 05:10 Novo was closely aligned with HDI's core business from a strategic perspective.

It adds further size and scale to our platform, expands our market share and deepens our roster of specialty building products. Novo's operations are also highly complementary to our own, with no significant customer overlap.

05:30 One important area we now have stronger ties to through Novo comes from obtaining turnkey access to the pro-dealer and home center segments. Selling into these high performing customer segments with well-established brands builds HDI's presence in the residential and repair and remodel end markets where conditions support a multi-year runway for growth.

05:58 Novo's potential as a financial contributor is also better than we first anticipated. At the time, we last discussed Novo during our Q2 results call, we were forecasting annualized twenty twenty one Novo related sales of over six hundred forty million dollar and EBITDA of over fifty five million dollars.

We've now revised those values upward to sales of over six hundred and seventy million dollars and EBITDA of over sixty million dollars. 06:25 As a reminder, the Novo acquisition is still expected to be over thirty percent accretive to earnings per share on a pro forma basis.

I'll remind those on this call that to complete the transaction we made efficient use of our capital structure and finance the full transaction's price of three hundred and six million dollars with senior secured debt at very attractive borrowing rates while still maintaining a strong balance sheet post close. 06:54 Based on our success to date in twenty twenty one, I'm pleased to report that HDI's Board of Directors approved twenty percent increase to our dividend to an annualized payout rate of zero point forty eight CAD per share and quarterly payments of zero point twelve dollars per share.

07:14 With that, I'll now pass the call back to Faiz to review our Q3 financial results in some more detail. Faiz?

07:23 Thanks Rob and good morning, everyone. I'm going to provide an overview of our results for the third quarter of twenty twenty one.

I'll also outline our financial position and capital allocation plans through the end of twenty twenty one and into calendar twenty twenty two. Again I'll remind those listening that all dollar figures Rob and I use today are in U.S.

dollars unless we've stated otherwise. 07:48 Starting with consolidated revenue, we generated very strong sales of four hundred and seventy one point seven million dollars in Q3.

This was up ninety nine percent or two hundred and thirty four point seven million dollars from Q3 in twenty twenty. Of this, organic sales accounted for one hundred and one million dollars or forty two point six percent of the sales growth.

08:12 Acquired businesses accounted for one hundred and thirty seven point seven million dollars or fifty eight point one percent of the sales growth. Novo accounted for one hundred and eighteen million dollars of the increased sales through acquisitions in Q3.

In our U.S. operations, sales increased by two hundred and seventeen point two million dollars or one hundred and four percent year-over-year.

8:35 Of this organic sales accounted for eighty five point nine million dollars or forty one percent of the sales growth. Acquired businesses accounted for one hundred and thirty seven point seven million dollars or sixty five point seven percent of the total sales growth.

08:52 In Canada, our sales increased by twenty million dollars or fifty five percent year-over-year entirely on organic growth. Our organic sales increases in both the U.S.

and Canada reflect our ability to source product in tight supply conditions and capture market share. We also benefited from higher product prices and increased demand on the back of strong market dynamics.

09:20 Turning to gross profit. This climbed one hundred and fifty eight percent to one hundred and sixteen point two million dollars in the third quarter.

The significant improvement reflects our record sales results, the addition of Novo and another best ever gross profit margin of twenty four point six percent surpassing the high watermark for gross margin percentage that we previously set last quarter and the nineteen percent profit margin percentage in Q3 of twenty twenty. 09:54 Product selling prices increased without a corresponding increase in costs and regained margin benefits inherent in certain parts of the Novo business.

We expect these benefits to be part of Novo's profit profile going forward. Our operating expenses for Q3 were sixty seven point three million dollars and these were thirty three point seven million dollars higher than the third quarter of twenty twenty.

10:20 Similar to Q2, these expense levels reflect a return to more normal business operations following reduced expense level in Q3 of twenty twenty as we responded to the pandemic. The increase also include expenses related to the operations of Novo and other acquired businesses, and Novo transaction costs.

10:42 Our operating expenses were consistent as a percentage of sales at fourteen point three percent for Q3 twenty twenty one as compared to fourteen point two percent in the third quarter of last year. This reflects our focus on expense management throughout the business.

Rob mentioned earlier, our record growth on the bottom line with Q3 adjusted EBITDA climbing two hundred and twenty six point two percent year-over-year to sixty three point eight million. 11:15 Similar to the dynamics in Q2, our record sales performance improved gross margin percentage and strong operating leverage have each played important parts in delivering this excellent result.

Profit grew at an even faster pace. Q3 profit of thirty three point seven million dollars represented a three hundred and thirty percent year-over-year growth rate and profit per share climbed to one point fifty eight dollars from zero point thirty seven dollars, an increase of three hundred and twenty seven percent.

These are new records for HDI over the ones we set in our most recent quarter and reflects the success of our focus on both organic and acquisitions related growth and careful financial management across our operations. 12:02 Turning now to our balance sheet, we ended the third quarter in good financial position.

We financed the Novo acquisition with attractively priced senior secured debt, our balance sheet remains in very good shape. However, and we remain on track for our pro forma leverage to be below three times by the end of this year.

We're focused on efficient use of our capital structure and our ability to support new growth initiatives that create further value for shareholders remains strong. 12:34 Our priorities are focused on responsible management of our balance sheet, growth both organically and through accretive acquisitions and providing incremental total returns to shareholders through our dividends.

On this latter point, I'll echo Rob's positive comments on the Board's decision to increase the dividend by twenty percent to a new annual level of zero point forty eight dollars per share on the back of excellent financial results and our continued positive outlook for the future of HDI. 13:07 Now I'll turn the call back over to you Rob.

Rob?

13:12 Right. Thanks, Faiz.

I'll finish off with our outlook for end markets and our strategy to continue to build the long-term value of HDI. Focusing on overall demand and pricing dynamics, we expect both to remain strong through the end of twenty twenty one and into twenty twenty two supported by solid end market fundamentals.

13:36 We continue to see favorable conditions in the residential repair and remodel and commercial markets in which our customers operate. I mentioned supply earlier.

The supply challenges that exist globally and we do expect supply conditions to remain tight which may disrupt availability for some of our products. 13:57 HDI maintains close relationships and good access to supply from its vendors, given we are often the largest customer for our suppliers.

One important pinch point in the supply chain worth mentioning is the availability of freight. As a significant importer, we have the ability to cost effectively pursue multiple freight options.

And our internal freight logistics team combined with our strong balance sheet have allowed us to secure product in freight options in advance. This adds an important measure of resilience to our business and is also an important competitive advantage.

14:35 Turning now to some of the specific drivers on the demand side. Our outlook remains very positive focusing on new residential construction, housing permits and starts are robust and strong market fundamentals continue to point to favorable multi-year conditions.

These market fundamentals include the need to increase housing stock in the U.S., given the significant under-building that has occurred in the past decade. 15:07 Interest rates continue to be near historic lows and millennials who are now the largest population demographic in the U.S., and increasingly looking to purchase their first home.

Looking at the repair and remodel market, there are additional market drivers at work. North Americans continue to press ahead with plans to spend disposable income on home improvements.

This is supported by rising home equity values and the availability of low-cost consumer capital. As well, the US housing stock continues to age.

15:40 These important factors are supporting that favorable multiyear outlook for the R&R market. With Novo on board, we have added new access points to the R&R customer base so we are better positioned than ever to capitalize on these conditions.

The demand outlook for U.S. commercial markets remains mixed certain sectors expected to grow in twenty twenty two, commercial markets are large and diverse and its drivers are more varied.

16:10 For HDI, commercial includes construction activity in healthcare, education, infrastructure, public buildings, hospitality, office space, retail facilities and recreational vehicles. As always, the broad nature of our participation gives us access to many different parts of this market, which works to our benefit.

16:33 As I noted earlier, HDI is strongly positioned from a supply perspective and we expect to have consistent and predictable access to the products we need. Our outlook is positive and the Novo acquisition has only improved our prospects.

With this transaction, we have significantly increased our size and scale while diversifying our business from a supply chain product category, geographic and customer segment perspective. 17:02 And we've achieved this at a time when our markets are enjoying conditions for demand that look to extend out for several years.

We're proud not only of this acquisition but our track record of successful results and the current positioning of our overall business. 17:17 I want to conclude my comments by emphasizing the growth our business has achieved and expects to continue to deliver.

The Novo acquisition marks HDI's tenth acquisition in the past five years. We've more than tripled the size of our business during this time, diversifying into an array of specialty, higher margin building products.

And we've done it profitably. 17:41 We continue to see new avenues to gain market share with organic growth options across our expanded business base and through future acquisitions.

We've proven our ability to successfully secure and integrate acquisitions and our fragmented industry holds further potential on the M&A front. I hope Faiz and I have expressed today are the momentum in our business and our markets and that the future for HDI looks very promising.

18:09 With that, thank you for your attention. I now ask our operator for today, Paula to please provide instructions for the Q&A period.

Paula?

18:51 Good morning, guys, and congrats on a very strong quarter.

18:57 Good morning, Yuri.

18:58 Hi, Yuri.

18:59 Rob, when we think about the forty three percent organic growth. Any way you can help us think about price versus volume in terms of main contributors to that number, it's a big number.

So just trying to get, is it more volume driven, price driven?

19:19 Yeah, so I mean, yes and we've had this question before and I think we've described that the price versus volume is not transparently trackable in the way that it would be with the commodity business because of the different way that we sell our product to the number of categories that we're in, but I would say this, Yuri that there is -- it's a combination of the two, we're certainly in twenty twenty one. We have enjoyed price inflation across substantially all product groups.

Something that we didn't really have in twenty twenty that's been a contributor in the current year, but it is not been all that. Certainly when we meet with key vendors and review volume -- shipping volumes from their perspective and again, there is very numerous metrics for that, we are up on a volume base as well.

And a significant factor in that volume piece has just been our shopping perfect, but overall, ability to get supply in tight markets and that's really positioned us well with our customers. So it is a big organic number, it's a mix between the two factors.

We don't have a percentage breakdown, we don't provide it.

20:38 Okay. Faiz just in the same line of thinking, I think Faiz mentioned in his prepared remarks that product selling prices have increased without a commensurate increase in costs.

Can you just expand on that and how long do you expect that situation to last?

20:59 Yeah, sure, no problem, Yuri. So that was really a comment, those costs that reference was really to the gross margin line.

The operating cost, just so we're talking about the same thing and what we've seen this year, as Rob mentioned, we've seen price inflation across most product categories. And that's been happening fairly quickly, a little bit ahead of your average costing so the product costs are moving up as well, but there's a bit of a lag there between prices moving up in the market versus prices moving up on your average cost, which leads to a little better margin over time.

So that's mixed into that -- into the margin as prices maybe start to -- when they do normalize and your cost catch up something of -- some of that benefit is in the margin line. You won't have any longer term sailing that necessary because as we talked about in our MD&A.

The business is still performing really well. And prices are still strong and we're abling to access product and as you would expect, as we've talked about with our ability to source globally in some of our competitive advantages on the supply chain side.

I think, we're still doing well from a cost of product perspective relative to the market as well.

22:21 Okay. That's helpful.

I'll turn it over there. Thanks.

22:33 Yeah. Good morning.

Rob, are you able to kind of indicate what level of sales and maybe EBITDA, the guidance for Novo implies for Q4?

22:50 Yeah. I can take that one, Hamir.

So if you were to -- and I maybe just tell you how to think about it rather than doing the math on the phone with you. But I think if you took that annualized guidance that we just put out in the MD&A for Novo, the top line and the EBITDA.

And what I would say Q4 for Novo is similar to the HDI business, and typically -- in terms of the typical seasonality where our Q4 is typically our slowest quarter. So if you look back in our history maybe not twenty nineteen because that was the pandemic, but if you looked at twenty eighteen and Q4 sales and EBITDA might be on an -- of the annual amount, it might be more like twenty percent to twenty two percent of the total annual amount falls into Q4.

So you could think about the Novo business in a similar way, Hamir.

23:47 Okay. Great.

Thank you.

23:49 You will have an extra month as well for Novo in Q4, if we just add the two months in Q3.

23:57 Right. Okay.

All right. Thanks, Rob.

That's helpful. And I just wanted to turn to the M&A pipeline.

I just wanted to -- anything you could share there on how it's looking, and when you look at the scale of the opportunities that you're seeing, are there potential transactions of similar scale as Novo or are we -- is there -- is it looking more like some of the smaller tuck-ins that you've transacted on previously?

24:26 Yeah. So activity levels are high.

We're having lots of conversations. The market is active.

In terms of the types of transactions we're looking at, we've been executing on our pipeline of deals for a number of years now, they're generally more small to medium sized, they're very accretive, we tuck those in and we'll continue to carry on with those. Complementing that would be larger scale acquisitions and I would say that, yes, there is opportunity for those out there today, as well as we've expanded the business and diversified it from a kind of product participation perspective, it's opened up the playing field in terms of acquisition targets that we would look at and that we've got comfort with and by opening up the field, it's proportionately increased the number of larger transactions that you get to have a look at than we made -- may have had traditionally in the past.

So shorter answer to your question is, it's active and it's of both types, both the ones in your custom queue but also looking at scale transactions again for future.

25:45 Okay. Great.

Thanks, Rob. And so, the last question I had for Faiz, can you.

I don't know if you have a preliminary indication yet us to what CapEx might look like for the whole company in twenty twenty two?

26:02 Yeah. I think it's going to be if I think about what our run rate has been annually.

It's typically been, obviously it’s done plus or minus four million dollars let's say, I think it's going to be a little more than that. Novo with that as we've talked about a manufacturing component as well, they got some more equipment.

It's not a majority of their business. But as we work through our synergies with here over the next few months there is some really investments that will make sense for us to do on that side of the business.

So I would say, it's probably the four million dollars, the legacy business, plus or minus, plus another four million dollars to six million dollars potentially next year with that maybe normalizing a bit after that in future years.

26:52 Okay. Great.

Thanks. That's all I had.

I'll turn it over.

26:57 Thanks, Hamir.

27:04 Hi. Good morning, everybody.

Rob, I just. I want to just turn back to the margin discussion again.

And I think, it's more a matter of the rate of change that we've seen such a positive benefit come through over really the last two or three quarters, and what are your expectations about, can it change back down at that sort of rate as well or is it just some of the macro demand right now that even if we get some more supplies let's say, coming into the markets to ease some of the demand pressures, does that trajectory on the margin normalizing look a little less steep than it was on the way up, how should we think about that?

27:47 Yeah. Very good question.

On the margin, I would say a few things. So you heard what we said about kind of supply, demand, pricing conditions through Q4 into early twenty twenty two.

So at this point, our expectation is that margin is tracking fairly steady, which is encouraging. That of course can change and some of the things that have driven the margin increase and to your point, yeah, it's been a significant up shift.

Our access to supply, our global sourcing reach, which gives us more product options to bring to your customers, the discipline that we've used in passing through product cost increases. And then frankly just better tools we have in our business now internally in terms of being on a single ERP really getting our arms around that, some things that we're doing with respect to pricing science, if I can say it that way.

So in that list I just gave you, there is embedded some things that are maybe transitory and some that are permanent. So, my comment would be, it's steady as she goes right now.

Could some of this come off in future because we're in an unusual market situation? Sure.

Supply demand conditions change. But I don't anticipate going back to where we were.

I think that we've made some structural changes that should be helpful in defending if we have margin compression or pressures that come up in the future.

29:21 Great. That's [Multiple Speakers]

29:24 I would also add Jeff that certain of our acquisitions can have a higher gross margin percentage. Novo was an example.

So that's a big business, that's got a slightly higher gross margin percentage profile then the rest of the business. And we expect that's a systematic thing, that's not a one-off quarter thing, so that is also going to help in terms of how you think about the gross margin percentage going forward.

29:51 Excellent. Great.

And maybe just one other question here on your supply management that you were speaking to. How are you tackling it in terms of working capital here?

Do we -- do you think you're going to carry maybe a little higher level of inventory than you might owe in and of otherwise normal environment and how do we think about the movement in working capital through the end of the year and into next year?

30:17 Yeah. No, good question, Jeff.

So with our forty plus percent organic growth here, the working capital requirements are higher just to support that pace of sales. And when I think about our working capital.

I'll maybe just focus on the asset side I mean the payables are where they should be, but if I think about our receivables balance, which is higher. And if you look at that from a -- on a turns basis, that I think is right where it needs to be in terms of matching our sales pace today.

You would have seen year-to-date, but even in the quarter, I mean bad debts nominal relative to the overall balance. And so where the receivables are today, I feel good that they're kind of pace to support where our sales are today.

31:03 I'll talk about Q4 in a moment. Maybe just commenting right now on where we're at today at the end of Q3.

In terms of the inventory that if you look at that balance that's also a big number that you would -- maybe use to seeing. But when you look at it and break it down a little bit there is some color there.

So if you look at what's in our warehouse and how that's turning, my comments for receivables hold true there as well. It's matched to sales case, the inventory we got in our warehouse is what it should be, where we seeing more inventory is that in-transit that direct to import supply line.

And we disclosed in our MD&A, the reasons for that and those would be, one, we're just taking certain positions in advance because we've got the balance sheet to do it and we're getting paid in terms of the margin that you've seen. And right now, and this market is still having product means you're getting sales or not, and so we want to continue to get those sales.

32:03 We're also -- there has also been as we mentioned on the supply side, I mean global supply lanes are kind of a mess right now. So there has been some delays there.

It does not inhibited our ability to get product, but it's just taking longer to get it onto North American shores. And that products whip more.

We've all read the news around how much freight can add to a container of goods and in some cases, the value of the goods. So for all those reasons that import supply chain piece that inventory balance is going to be higher than maybe when you look at it and you think, those are the reasons why -- but we're doing it for the reason you'd expect, which is in this market having product mean sales and we're getting paid at very good margin to have that product, as you've noted in our financial statements.

32:46 In terms of where that goes in Q4, I would say, it's little tougher to predict right now, but if you really think about and take it back to sales pace, our sales pace has been very good and into the first couple of weeks of Q4, it's continued to be good. So we've not really seen a big fall-off as you would expect in sales pace.

So a little tougher to predict where it ends up in Q4. In Q4, typically we have a big release of working capital.

I'm not sure we have that this Q4, but if we don't, it's because our sales cases matching the working capital would be my comment.

33:23 Yeah. That's very helpful.

And I guess, interesting commentary on what you're seeing in the market there where some of the seasonality isn't quite playing through at this point. So it's just the sense that there's been so much latent demand there.

People are pushing projects and work a little more [Technical Difficulty] Q4 than you might normally see?

33:44 I think that's fair. Basically, it's generally been full gas for customers.

33:51 Okay. Great.

Thank you. That's all I had.

I'll re-queue.

34:05 Thank you. Good morning and congrats on the quarter.

34:10 Hi Zac.

34:12 Hi. The rising product prices that we're seeing.

We've talked about it from a few different angles already but at the risk of beating a dead horse here, I'll jump on the topic. In terms of the current pricing, how much do you view as a temporary spike due to the supply crunch and how much is a catch-up of hardwood products to general inflation levels?

34:35 Well, I'm going to hop on my dead horse -- whip a dead horse and just remind everybody. It's not all hardwood products by any sense.

It's a very diversified architectural building products portfolio with no category over twenty percent today, none of our product major. So if anybody kind of has traditionally thought of the business in a certain way associated with lumber, hardwood lumber, I just challenge you, they kind of shift your view a little bit on that.

35:09 In terms of the pricing itself, the color I would just maybe point to from earlier as what I said it in my prepared remarks around freight and Faiz just referenced it in his answer on working capital. That's a significant component of the price of products today.

So, if you get a more normalized freight market that will contribute to a more normalized pricing environment as well. Don't see that in the short term.

35:44 Personally, if you look at things that are going to be traveling by ocean freight and we've all seen pictures of ports as parking lots, oceans as parking lots. That's going to be well into twenty twenty two and some even predict it into twenty twenty three and if you look at freight pressures from an inland freight perspective and trucking specifically, there is a perspective that the United States anyway is structurally short of eighty thousand truck drivers relative to goods that need to be moved around North America.

So I don't see the pressure coming off at any time soon. But that would be a component that obviously would have a significant impact on pricing if the freight environment change from where at are at today.

36:30 That's really helpful color. Thank you.

And then you're winning market share on your better product availability, how sticky do you think those volumes or relationships are once the competition's fill rates recover?

36:47 Yeah. So I mean, this is not new.

We battle day to day with very good regional competitors in all of our markets and our job is to create permanent relationships when given the opportunity. Right now we've been given a very good opportunity, because of our supply availability.

So, we will absolutely hang on to some of that. We believe once there is more normalization in availability amongst competitors.

How much of it, I can't give you a percentage, but we view this as kind of a step change advantage that we're trying to take advantage of.

37:24 Excellent. And one last one from me, looking at the macro picture.

How are you thinking about the impact of rising interest rates on both new residential construction, as well as repair and remodel spending?

37:41 Yeah. And of course, we have a -- everybody is keeping a tight eye on that as well.

And inflation translates to higher interest rates generally from a policy response perspective. So that's to be expected.

But what -- the way we look at it is it's still historically extremely cheap when you're looking at twenty five, thirty year fixed mortgage rates in the U.S. at sub four percent.

Sure, there's others on this call that could harp it back to a different times. That's still very, very affordable and I would hitch that to the demand side, which is at the same time you have this big bulge coming through demographically, the system in millennials who are looking to enter the housing market in a meaningful way.

So I think, it's something we definitely keep our eye on and we've enjoyed a very, very low interest rate environment for a long time, but the reminder here is it's, even if it goes up, it's still on a very low base.

38:44 Appreciate the insight. Thanks.

I'll turn it over.

38:56 Thanks. Faiz, just a modeling question or two.

How should we think about the depreciation and amortization line, it was almost four point five million dollars, assuming a little bit higher than that is a good quarterly run rate? And is there any amortization of intangibles in there that might run off a little quicker than we would expect?

39:25 Yeah. No problem.

Yuri. So, I maybe just describe it this way, if you.

What HDI does, and Novo and again because of the rents they're in there now, because of the accounting standards. So their depreciation includes a significant amount of rent so that might be another -- Novo is going to add to the consolidated piece another potentially one million dollars a quarter.

I mean, one million dollars a month. Sorry.

Just in amortization and a lot of that is related to the IFRS standard. 40:01 And then to your point about intangible asset amortization, we did book some of that in Q2, even though our purchase price allocation is provisional but it's close.

So in the third quarter, we booked one point five million dollars related to intangible asset amortization related to the Novo transaction. So that's running at about seven hundred and fifty thousand a month.

That might change a little bit as we finalize the purchase price allocation, but for now that's how you could think about the total going forward for Q4 as an example.

40:40 Okay. That's helpful.

And how about the tax rate for next year?

40:49 Yeah. I think, our tax rate year-to-date is about twenty five percent plus or minus.

I think, you could think about it the same way, Yuri, there's nothing significant there I would disclose to you on the call in terms of that's going to change that materially, so.

41:06 Okay. Very good.

Thanks, guys.

41:19 Yeah. Thanks everyone for joining us today.

We appreciate the interest. Faiz and I are available to you if you've got follow-up questions or comments, please do reach out, but with that, over to you, Paula.

That's a wrap.