Matrix Service Company

Ladies and gentlemen, thank you for standing by, and welcome to the Matrix Service Company conference call to discuss results for the third quarter fiscal 2022. At this time, all participants are on the listen-only mode. After this speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press the star, then the one key on your touch-tone telephone. If you require offer assistance, please press star, then zero. I would now like to hand the conference over to your speaker host, Kelly Smythe.

Good morning and welcome to Matrix Service Company's third quarter of fiscal 2022 earnings call. Participants on today's call will include John Hewitt, President and Chief Executive Officer, and Kevin Cavanaugh, Vice President and Chief Financial Officer. The presentation materials we will be referring to during the webcast today can be found under Events and Presentations on the Investor Relations section of MatrixServiceCompany.com. Before we begin, please let me remind you that on today's call, we may make various remarks about future expectations, plans, and prospects for major service companies that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. including those discussed in our annual report on Form 10-K for our fiscal year ended June 30, 2021, and in subsequent filings made by the company with the SEC. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. I will now turn the call over to John Hewitt, President and CEO of Matrix Service Companies.

Thank you, Kelly, and good morning, everyone, and thank you for joining us. I've been reflecting on the business challenges our customers and Matrix have experienced over the last couple of years and how important it is in times like these not to lose focus on the safety of our workforce. With our end markets improving comes increasing workloads and project activity. Our focus, leadership, and expectations in driving a zero-incident safety outcome must be even greater as activity increases. I want to remind all of us at Matrix that zero-incident performance is possible. and it is a level of performance that we have demonstrated can be delivered on for our employees and ourselves. If we act, or better said, are accountable for our outcomes, communicate the expectations, and train with passion, I am confident we can achieve our safety vision. Now, before I turn the call to Kevin to discuss results, I want to briefly comment on our performance during the quarter, which is not yet reflective of the strong momentum growing in our end markets or the organizational changes that are underway at Matrix. Our revenues grew by nearly 20% in a quarter compared to the same quarter last year. Revenues are clearly trending up, but at a slower pace than we anticipated, impacted in part by delayed starts on previously awarded work. Our revenue in a quarter was driven by smaller project activity, a higher percentage of lower margin reimbursable work, and the execution of low-margin projects won during the competitive market environment which we have experienced over the last few years. This growth in revenue is an encouraging indicator of returning market strength, but it currently does not fulfill our historical gross margin expectations. Limits complete recovery of overheads and leave little room for error. While this growing revenue environment has not yet created the bottom line improvement we expect, we are optimistic that given the significant tailwinds across all our markets, the award strength we are experiencing, and the near-term booking opportunities, bottom line improvement is on the horizon. I do want to highlight that this was our third consecutive quarter with a book-to-bill greater than one. And through the first nine months of the year, we have achieved a book-to-bill of 1.3 on awards of nearly 640 million. To put this in context, year-to-date awards are 81 percent higher than awards in the first nine months of fiscal 2021. Our backlog now stands at 594 million, 20 percent higher than our backlog at the start of the fiscal year. This acceleration in awards has primarily come from projects with individual values of less than 25 million. So while we expect the volume of smaller awards to continue, there is a clear path to larger project awards beginning in the next two quarters. We therefore anticipate a material increase in the size of our backlog as we move through the remainder of the calendar year. During the quarter, we also continue to work on organizational improvements that will result in a company that is more competitive, efficient, and produces better bottom line results. Let me hand the call over to Kevin to discuss our segment and consolidated results, and I'll be back to share our outlook and give you some of the organizational improvements taking place within Matrix.

Thanks, John. I'll start with the consolidated results. Revenue was $177 million for the third quarter, which is a sequential increase of 10% over the second quarter and a 19% increase over the third quarter of the prior fiscal year. While we are expecting larger capital project awards to accelerate in the next couple of quarters, revenue volumes have increased along with backlog on smaller project activity. The company was just below break even from a gross margin perspective as performance was impacted by three issues. First, the competitive environment the last couple of years has resulted in a temporary reduction in the margin opportunity of awarded work. Second, our revenue volume has not been sufficient to fully recover construction overhead, which negatively impacted gross margins by 400 basis points in the quarter. Third, we incurred increases in forecasted costs on two projects, one in the very competitive environment during the height of the pandemic, one in the process and industrial facilities segment, and the other in the utility and power infrastructure segment. These two projects impacted gross margins by over 400 basis points in the third quarter. Consolidated SG&A expenses were in line with expectations at $17 million for the quarter. We also incurred non-cash items that impacted earnings in the quarter. The first item was an impairment charge to Goodwill. While we normally perform our annual impairment test during the fourth quarter of each year, during the third quarter we concluded that Goodwill impairment indicators existed. The decline in the price of our stock was a significant indicator as were operating results that have underperformed our forecast during the year. Accordingly, we performed an interim impairment test as of March 31, 2022, and concluded that an impairment of $18.3 million should be recorded. The economic environment the past couple of years has impacted our entire business, and as a result, the charge impacted all three segments. We should be clear here that the impairment charge is not indicative of our view of the future. As John discussed, project awards and our backlog have increased significantly this fiscal year, and we expect that trend to continue as larger capital projects are awarded. We also believe the lower gross margins we have experienced this year will return to our historical range of 10 to 12 percent as higher quality work is booked and recovery of critically important construction overheads improved. The second item was the reversal of $1.6 million of restructuring costs due to a favorable settlement on a previously recorded restructuring obligation. The third item relates to income taxes. Our effective tax rate was 0.4% for the quarter as the tax benefit generated in the quarter was largely offset by additional valuation allowances of $7.7 million. Although most of these assets do not expire, and the company expects to utilize these federal and state NOLs when we return to profitability, the valuation allowance was required. Utilizing these NOLs as well as previously reserved NOLs will have a positive impact on future earnings by significantly lowering our effective tax rate. As a result, we now expect our effective tax rate to be in the single digits until we utilize the deferred tax assets. For the three months ended March 31, 2022, we had an adjusted net loss of $13.4 million and an adjusted loss per share of $0.50. Including the impact of the impairment, tax asset valuation allowance, and restructuring costs, the quarterly net loss was $34.9 million, and the loss per share was $1.30. Moving to segment results, revenue for the utility and power infrastructure segment was $59 million in the third quarter, which is an increase of 8% over the second quarter. The segment gross margin of negative 0.8% was impacted by the following. First, low volumes led to under-recovery of construction overhead costs and impacted gross margins by 380 basis points. Second, we reported a $2.5 million adjustment to the forecasted outcome of a capital project which is nearing completion. And third, we are also working through competitively bid projects and projects that were marked down in previous periods and therefore present lower margin opportunities. Moving to the process and industrial facilities segment, third quarter revenue of $69 million represents a 37 percent increase over the second quarter and the highest quarterly revenue since the third quarter of fiscal 2020. While the revenue increase primarily relates to improved refinery maintenance activity, year to date we have also booked over $315 million of awards including a number of capital projects, resulting in a book-to-bill of 1.9. We expect to see continued revenue growth in the fourth quarter due to these strong project awards. The quarterly segment gross margin was just below break-even as the segment was negatively impacted by a $4.8 million increase in forecasted costs to complete a midstream gas processing project. The mix of work, which was impacted by increased reimbursable maintenance activity, also contributed to lower margins. The higher revenue led to improvement in recovery of overhead, but the segment still had some under recovery that impacted margins in excess of 100 basis points. The storage internal solutions segment produced $49 million of revenue in the third quarter. Storage revenue volume has been impacted by both delays in construction starts of awarded projects as well as delays in the award of larger projects. We expect the quarterly revenue to improve based on recent awards and our pipeline of opportunities. Awards have produced a quarterly book-to-bill of 1.1 and a year-to-date book-to-bill of 1.2. The segment gross margin was a negative 0.9 percent in the third quarter due to under recovery of construction overhead costs, which impacted margins almost 740 basis points. In addition, segment gross margin was impacted by competitively bid smaller projects which present a lower margin opportunity. Moving on to the balance sheet and cash flow. At the start of the quarter, the company had $93 million of cash, which decreased to $59 million during the quarter. The $34 million decrease was primarily the result of a cash invested in working capital to support the mix of work in the quarter, which saw an increase in reimbursable work. The net loss in the quarter adjusted for non-cash items also contributed to cash usage. Regarding liquidity, as of the end of the quarter, the company has not drawn on its revolving credit facility, which has a borrowing base of $77 million. We have utilized $24 million for letters of credit, so we have availability of $53 million. Excluding restricted cash of $25 million, our liquidity is $87 million, which is adequate to support our needs. I will now turn the call back to John.

Thank you, Kevin. In prior quarters, we spoke about delays in capital project spending and reduced maintenance activity. In this fiscal year, we are seeing maintenance volume begin to expand and the award of smaller projects gain momentum. As energy markets have stabilized and with the onset of current global events, the sentiment has absolutely turned for energy infrastructure investment. As such, we expect larger capital project award activity to accelerate over the next couple of quarters. Concerns about energy security globally and reliability domestically has created a transformation in the opportunity set and its timing. In addition, the call to action for cleaner forms of energy and renewables is creating significant business opportunities for Matrix. Finally, the supply chain disruption and demand for commodity assurance is building what many in our industry believe will be an industrial investment renaissance here at home. It is indisputable that natural gas has an extremely important role to play in the clean energy transition. Until other solutions are commercially viable and broadly available, natural gas will be needed as a bridging fuel. At the same time, the need for energy security has put natural gas, and more specifically LNG, under the global spotlight. This will likely lead to an increasing number of long-term supply agreements backed by a regulatory environment that will almost certainly support decisions to move forward with new LNG projects, and support the continued growth of the LNG market. It is important to note that LNG has relevance in both domestic and international markets. Extreme temperature conditions in some parts of North America, limited pipeline capacity, and volatile natural gas prices over the last 12 months has driven further interest in LNG peak shaving facilities by most utilities. These facilities offer our utility clients significant flexibility to meet peak demand for electricity and consumer gas supply while managing their exposure to fluctuations in natural gas spot prices. We are actively performing, supporting, and pricing multiple feed studies for the maintenance, repair, and upgrade to existing facilities, as well as the construction of new infrastructure. As I mentioned last quarter, There has also been a significant uptick in bidding in midstream gas processing, and we expect to see capital investment in natural gas infrastructure to continue based on the growth in global demand and recent increases in gas prices. In addition, many of our clients are planning capital expenditures to upgrade their compression and processing stations to minimize the carbon footprints of those facilities while increasing capacity. The midstream natural gas and LNG markets have certainly been catalyzed in the last several months, but these are not the only areas we are seeing strong momentum. The bidding environment is extremely active across all of our segments, and we have added resources to handle the increase in activity. We've been tactically building our operational and tactical teams to support the pursuit and execution of these opportunities and recently awarded projects. Among these awards are thermal vacuum chambers used for satellite testing, electrical infrastructure projects, the construction of a borate mining facility, as well as early engineering for a new mid-scale LNG export terminal. The distribution of projects in our opportunity pipeline highlights not just the growing demand for traditional and renewable energy-related projects, but also a sharp increase in planned capital spending across our diverse end markets. Our market position supports both our short- and long-term opportunity pipelines. We have a very strong brand in storage and terminals for all things energy. LNG, including peak shaving facilities, bunkering and export terminals, as well as NGLs and renewable fuels, are just starting a strong growth cycle, driven by a favorable energy macro. The door is also open for international opportunities across the Americas. Investment in hydrogen infrastructure will increase over time. Our global reputation in cryogenic storage capabilities, as well as our relationship with chart industries, will lead to opportunities for us to play a major role in hydrogen infrastructure expansion. For example, the FEED study currently underway on a small-scale hydrogen liquefaction and storage supply facility when sanctioned will lead to multiple project installations. Our brand-leading cryogenic storage capabilities are attracting several global energy and utility companies interested in the creation of large-scale hydrogen storage solutions. We are continuing to build our brand in midstream gas by strengthening our existing client relationships and capabilities as well as expanding our technical knowledge platform in this critical low carbon gas supply market. We continue to support our refining clients as they ramp up maintenance and capital spending to support traditional operations and continue to retrofit their facilities to process lower carbon fuels. Awards and bidding opportunities continue to be strong in aerospace where Matrix has a niche position in the design and construction of thermal vacuum chambers used for satellite and other equipment testing destined for space. In the mining and mineral sector, copper, precious metals, and rare earth mineral prices are sustaining at higher levels, and our customers are moving forward with capital spending and delayed maintenance programs to meet the long-term demand for these commodities and more. Finally, the interconnected world of electrical and renewable generation, along with an aging infrastructure system, creates significant growth potential for our electrical business currently operating in the Northeast, Ohio Valley, and Mid-Atlantic. Long term, we remain strategically focused on growing a coast-to-coast delivery offering. Activity that is happening today has potential to dramatically increase backlog in the near term. Larger energy infrastructure projects progressing through our pipeline combined with a normalized cadence of smaller capital projects and maintenance activity, could conceivably put us in a position to exit Q1 of fiscal 2023 with the highest level of backlog in several years. These expected awards will provide a strong foundation for the future, as we expect the next heavy awards cycle in LNG peak shaving terminals and other large projects to continue into calendar 2023 and beyond. With this improving backlog position will come better margins, full recovery of overhead, SG&A leverage, scale, and positive bottom line results. It is critically important that Matrix is appropriately positioned to capitalize on the opportunity ahead of us by ensuring that we have the correct resources in place and an organizational structure that supports business efficiency and then is centered around delivering high quality solutions and services to our clients. We continue to strengthen the company through the consolidation of all finance, accounting, and human resource functions into our shared services model. We have also created a center of operational excellence to initially optimize procurement, quality, health, and safety with the ultimate goal of providing various internal project management and proposal services across the organizations. Long-range planning of our fabrication facilities and resources has been completed, which will lead to investments to improve efficiency, quality, and markets served. Also, given changes in the current commercial office market, we are reviewing our fixed office environment for size, location, and capital efficiency in context to our strategic growth plans. We have been on a multi-year mission to not just enhance our cost structure, but also to create an optimized and efficient organization prepared to support the company's growth plan, aligned with the market opportunity, and ultimately delivering better and consistent bottom-line results. In short, we are highly confident in the market backdrop and continue to take proactive steps to ensure Matrix is optimally positioned to deliver against it. With that, I'll open the call for questions.

Please send Tom and Fleck us a question at this time. Please press the start and the 1 key on your touch-tone dial phone. Please stand by while we compile the Q&A question. Now, first question coming from the lineup. John with Siddoti. Your line is open.

Good morning, John and Kevin. Thanks for taking the questions. Good morning, John. John, I'd like to start with the revenue that was deferred. I remember you specifically mentioned in the storage. But how much company-wide was deferred? And give me a magnitude of when it's been deferred to.

So Kevin made me count on the numbers. So we had a number of projects that were awarded in Q1, Q2, and early part of Q3 that we had anticipated starting to burn dollars on both engineering and procurement that got delayed in some cases upwards of five months while our clients worked through some re-scoping. In some cases, they had supply of critical pieces of equipment that, you know, they had to make choices on that affected our design and our ability to move on with design and ordering of materials. And so, you know, the amount of that, I'm not sure I can quantify. Kevin might have a number in his head. But, you know, in each of those cases, you know, it pushed You know, it pushed, you know, revenues that we thought we were going to start to burn in 3Q. We didn't start, in some cases, didn't start actually burning those revenues until a couple weeks ago. And so all of that had an impact against the organization, you know, of diminishing the revenues that we had anticipated specifically in the fourth quarter.

Yeah, so, John, on the awarded projects, I'd say it primarily impacted the process and industrial facilities segment. and the storage internal solution segment. You know, the exact amount is probably about a 10 percent impact plus 10 to 15 percent impact on each of those segments in the quarters, my best estimate.

Male Speaker Okay. Okay, fair enough. And the two problematic projects that you had in the quarter in utility and process, can you talk a little bit about what the issues were, and are they fully resolved? Is there something to worry about in coming quarters?

So one project, the issue there, so I want to put both projects in perspective. Both those projects were fundamentally won during the height of the pandemic. So, you know, we were, we, like, our competition was very aggressive on winning that work to maintain our resources. And as we moved through the however long this pandemic-inspired downturn was going to last. So that's kind of an overall statement, too. The project in the process and industrial, we had, in that case, were not self-performing to work. We had subcontracted the majority of the work to a general contractor. That general contractor did not do their job, and so we had to make a replacement of that contractor fundamentally in the middle of the job. And as a result of that, there were issues around the quality of work that was in place that we had to fix, the supply of materials that weren't paid for, and so a variety of issues there that we had to deal with that caused excess cost on the project. We think we have that captured. We understand what that is. We've moved our own construction forces into the job to finish it. And the job itself is probably 50% complete, round numbers. But we think we've captured what the pain is associated with the direct cost on the job. We still have to have fisticuffs with the general contractor on the job, but that's coming a later day. The second job in the utilities and power infrastructure, That project, in general, I think is being challenged a little bit with supply chain issues. We've said on previous calls that we really hadn't had material impact from inflationary escalations. We were starting to see that as we're rounding that job out. That job continues to be operating at a profit, although at a lower profit than and what we had anticipated. It's on schedule, on track for mechanical completion this summer. Our client is extremely happy with us. In fact, they were talking to us about some other projects. We're working through that and we're fairly comfortable that we think we've got most of the risks managed there.

Okay. Just thinking about how you referenced that you're still working through older, lower-priced bookings, when does the scale tip that you're going to have more repriced jobs that are more favorable margin and less of the low-priced, unfavorable margin that causes you to have underabsorption? Just a general timeline when you think that's going to materialize.

Yeah, so John, that's not a bright line, right? So I could tell you that we've put projects into backlog over the last quarter that have margins that are in our normal expected range. But we've got some projects and some segments that are still at these sort of depressed margins. So it's going to be a transition. I think that transition will occur as we move through the balance of this calendar year. And so I would think by the time we get to the, probably get into the second quarter of next fiscal year, we'll see a higher percentage of the projects that we've got in backlog, new projects that we've got in backlog at getting back to more of our traditional gross margin rates.

Okay. Thanks, guys. I'm going to get back to you.

Okay.

Now, our next question coming from the line of Gene Ramirez with DA Davidson. Your line is open.

Good morning. This is John Ramirez for Brent Hillman.

Good morning.

My first question is, given the inflationary environment, is $200 million to $220 million in revenue still the right ballpark to get to break-evens? or is it higher today?

So our cost structure is still basically where we had planned it to be, but the margin opportunity, as we talked, is a bit lower. So for every percent of direct margin opportunity that decreases, that means we've got to do an additional $10 million of revenue to kind of cover that. cover that issue to get to breakeven. So it has increased a bit in this environment. As John said, as we move back toward the more normal margins, that'll come back down closer toward that 200 million breakeven level.

And just to follow up to that, what is the timeline for that breakeven or, you know, as you mentioned, to the normal margins? When do you expect to hit that point?

So throughout this fiscal year, it's hard to predict the timing of awards and the delays we've had on capital projects. And so it's been hard for us to predict exactly what the revenue level is going to be in the future quarters. But we did have good growth in 3Q. I think that will continue in 4Q. So there's still the potential that we could reach break-even in 4Q, but if we don't in 4Q, then I would expect it at some point in the first half of the fiscal 23-year. Great.

And if you don't mind, one more question. Regarding your bid opportunities, could you give us some more color on the LNG and the hydrogen market as well?

So we've got a fair amount of projects in the LNG sector that we are either proposing on. In some cases, like I said, we've started engineering on a mid-scale LNG export terminal where we see our greatest role in the future here will be really associated with LNG peak shaving terminals that we see that there is a significant amount of interest across the U.S. utility market. And so we have several new clients there that we're in the early stages of discussing some pre-feed with. You've also got a significant amount of the utilities across the U.S. already have some form of LNG storage or peak shaving facility in place that was built probably in the 70s and 80s that needs upgraded, reviewed, and studies done. And so, you know, we have spent some time and are doing some work for utilities on that. And, in fact, have had a couple projects that have run through the system with some small repairs and some upgrades on them. So on a large-scale LNG export facilities, which we think there will be several more come to market. Our role on those will be principally around the storage and the construction, the engineering, design, and fabrication of the storage facilities, if they get added to those facilities. And then there's opportunities for us on the import side in the Caribbean and other Americas markets that we're tracking. On the hydrogen side, You know, we see that, again, as a long-term growth opportunity. The hydrogen will play a major part in the energy environment across the globe, but specifically in the U.S. And so, as we said in our prepared remarks, you know, we have a feed study that we're executing on right now. We'll come to a close here this summer that we expect could get sanctioned into a project And they're a smaller level capital project, but there could be a few of them built by this one client. And so that creates opportunity. Plus, you know, we've been approached by a number of global energy companies to find a solution for large-scale hydrogen storage, larger than what, you know, we've – that markets have traditionally designed and installed. And then kind of on top of that, to draw on to cryogenic topics, there's also – a lot of work around ethane and ethylenes and propanes, both for export and for domestic use. So overall, you know, we see a lot of growth in the cryogenic-related energy storage and terminal markets, and I feel we're very well positioned to take advantage of that growth.

Great. Thank you so much. I appreciate your time. I'll jump back in a few.

And we have a follow-up question from John Friendship with Sedoti. You'll let us open.

Yeah. John, you seem fairly confident about having a high-looking profile the next couple quarters. I mean, you clearly outlined some of the programs that you're bidding on. But if I look at it on a segment basis, given the different margin profiles, I'm curious which segments are going to have the best order intake over the next two quarters and what's going to drive those orders.

I would say it would be storage and PIF. And longer term, then it will be increased in UPI. OK. Because the big driver, the big backlog driver in UPI is LNG peak shaving terminals, because it's generally a utility-based project.

Right. And I guess I want to go back also to the hydrogen question a little bit. I would have thought we would have been farther along by now as far as the magnitude of project work. Could you talk a little bit about if you had the same anticipation and perception that you'd have more project work by now or is something changed in the marketplace that it's just not coming as quickly as you had hoped?

Well, I think, you know, when you talk about these sort of new energy transitional elements, they, you know, those things, you know, they take a little bit longer to get put in place to get, you know, from a technical standpoint and from a financing perspective. We bid and are bidding a few hydrogen storage projects and some developer-led projects that weren't able to get to a financial closed Some of the storage projects we were not successful in winning. You know, again, super competitive market. And, you know, the people that won those storage projects, you know, took them for a price that we weren't willing to go to. So there has been activity there. And so we've been, you know, in some cases have been cautioned about our aggressiveness And in other cases, it's just timing. You know, there's plenty of activity out there. It's just timing.

And maybe this one's for you, Kevin. Cash took a hit in the quarter. Working capital, I imagine, was the key indicator. I haven't seen the cash flow statement yet. I'm just curious, how does the cash position change in the fourth quarter? You know, a little bit of thoughts about what's going on in the puts and takes in cash.

Yeah, so I'll address fourth quarter, but let's talk about third quarter first. Sure. You know, if you look back at the start of the quarter, we started the quarter with, what, $92 million in cash. That was really high because we had got some upfront payments from some customers. And so during this quarter, when we think about the mix of work we've got going on, we're working off capital projects that have been prepaid effectively. And we have increased revenue volume in reimbursable work, which we've got to fund. So that's the combination that causes us to increase our investment in working capital in the quarter. Now, a lot of that reimbursable work, that increase continues on in the first two months of the fourth quarter because a lot of it's refinery-related, and that's the traditional turnaround season. So when we think about 4Q cash flows, I think we'll see some additional investment in working capital, but then that comes back toward the last month, month and a half of the quarter. And then we've also talked about before we've got $13 million of tax refunds due sometime in May or June. So that's still supposed to happen. And then I think John mentioned in his call, we're trying to make sure that we're doing the right thing with our facilities, and so there could be some cash flow that comes out of that activity. So I feel good about where we stand overall. I think you're going to see cash potentially increase significantly in the fourth quarter if everything goes as planned.

Okay, good. And you just touched on this a little bit on the tax line. I think I heard in the prepared remarks that we should be thinking about a high single-digit. Now, I'm not sure if you said for the balance of the year or did you say until you return to profitability? Just walk me through. You were trying to get out there, that message.

Yeah, so right now what you should expect on tax is, you know, any additional – tax assets that are generated right now, we're going to immediately put a valuation allowance on those. So effectively, our tax rate is going to be near zero. And then as we return to profitability, we'll get to utilize those NOLs at a high rate. And so as a result, we're probably going to have a tax rate in the mid-single digits until those NOLs are utilized. And we've got, you know, over 20 million of NOLs right now. So, you know, that's a lot of income that will basically have zero tax on it or minimal tax on it until those NOLs are utilized. Okay.

All right. Thanks for the clarity. I appreciate it, guys.

And I'm showing no further questions at this time. I would now like to turn the conference call back over to Mr. John Hughes for any closing remarks.

Thank you, everybody, for attending today's call. Appreciate your confidence and investment in Matrix, and wish everybody a great summer. Thank you.

Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.