Good day, and thank you for standing by. Welcome to the Matrix Service Company Conference Call to discuss Results for the Fourth Quarter and Full Year Fiscal 2022. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session.

[Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Kellie Smythe, Senior Director of Investor Relations. Please go ahead..

Thank you, Carmen. Good morning and welcome to Matrix Service Company’s fourth quarter and fiscal 2022 earnings call. Participants on today’s call will include John Hewitt, President and Chief Executive Officer; and Kevin Cavanah, 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 Matrix Service Company that constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995.

Actual results may vary materially from those indicated by these forward-looking statements as a result of various factors, including those discussed in our most recent annual report on Form 10-K and subsequent filings made by the company with the SEC.

To the extent, we utilized 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 Company..

Thank you, Kellie, and good morning, everyone, and thank you for joining us. I'd like to open with a brief comment on the delay in filing our 10-K.

As we stated in our press release on September 12, we believed the review of the misallocated project employee hours to construction overhead would be confirmed to be a material and isolated incident and that the company's internal controls environment would be in good shape. I am pleased to report this is the case.

As a result of the company's internal controls, the issue was previously identified and corrected within the fiscal year and the investigation did not result in any additional adjustments. We expect to file our 10-K early next week.

Beginning with the safety moment, as Florida and surrounding states recover from Hurricane Ian, I want to thank our Electrical Storm response teams who, along with so many others, answered the call for help to restore power as quickly as possible.

The safety of all involved remains top of mind and I encourage everyone to stay situationally aware, look out for one another and follow the direction provided by local authorities. I also want to briefly mention that we will be publishing our sustainability report in mid-October.

We have made great progress in establishing the framework we use to report on these efforts.

Our ESG strategy includes foundational principles, such as leading positive, blasting impacts in our community, implementing that action plan for reducing the carbon footprint of our facilities, promoting diversity, equity and inclusion and maintain high standards and governance, including the adoption of the task force on climate related financial disclosure recommendations.

I want to get started by acknowledging what we all know. These last couple of years for Matrix have been extremely challenging.

However, because of the resilience of our people and based on the strength of our opportunity pipeline, the strong award cycle that is occurring, the investment we have made in our resources and our organizational transformation, I am confident the business is at an inflection point where we will achieve better performance, bottom line results and long term sustainable value.

In today's earnings call, I will briefly review the positive trends, we're seeing in our end markets and the work we've been doing to ensure that Matrix is well positioned to support our clients and deliver long term value. Over fiscal 2022, we began to see positive trends emerging from each of our core energy and industrial markets.

From a macro perspective, this improvement is being driven by greater focus on global energy security, domestic energy supply assurance, supply chain security, the clean energy transition and demand for commodities supporting a low carbon economy and most recently the enactment of House Bill 5376 or the Inflation Reduction Act supporting federal infrastructure investment.

Effective in August 2022, the act provides $369 billion of investments to energy and climate programs with the goal to achieve 40% emissions reductions by 2030.

Of particular importance to Matrix, the act will drive funding to domestic energy production, manufacturing and clean energy technologies such as hydrogen, biofuels and sustainable aviation fuel.

Other programs included in the act combined with last year's infrastructure investment in Jobs Act will provide for investment in industrial manufacturing facilities, energy infrastructure and electric transmission projects.

Overall, the macro trends, energy demand growth, a move to a lower carbon economy and federal spending will positively impact Matrix by clearly aligning with our strategy, capabilities and growth ambitions in providing increased opportunities for project awards and improved bottom line results.

We are leaving fiscal 2022 with a few verbal awards in hand. And as contract details are finalized, we expect to report a significant uptick in project backlog. For example, we are finalizing negotiations on a contract to upgrade an existing LNG Peak Shaving facility with new gasification and liquefaction equipment.

Additionally, another verbal award has moved to formal contract in the first quarter of fiscal 2023 for a large-scale full containment ethane tank along the Gulf Coast from a longstanding client. This award represents our largest single award since the spring of 2020. We expect to announce both these projects by press release in the near term.

Today, the largest individual opportunities in our pipeline are in our storage and terminal solution space, where we enjoy a long-standing reputation as a leading solutions provider.

The specialty vessel market today where our brand is a leader is extremely active with large scale storage opportunities in LNG, ammonia, ethylene, ethane, propane, hydrogen and butane with in some cases the terminal or balance of plant work included.

While we will be strategic about the projects we take on, we expect the next few quarters to be very active in the storage bidding and award cycle.

With many individual project values greater than $75 million, these opportunities will use resources from our engineering, construction and fabrication business lines and will benefit from our newly streamlined support organization.

Even with this expected near term strong award cycle, our opportunity pipeline has and will continue to strengthen month over month.

The expertise and skill sets provided by our engineering and field personnel is applicable across all the end markets we serve and are transferable across an increasing number of clients whose operations are vertically integrated and geographically diverse.

The services we provide are integrated internally and interconnected throughout our client base. Through the application of our expertise and services, and relationships with leading technology providers, Matrix is well positioned to support our clients' low carbon objectives, which is reflected in our current mix of project opportunities.

73% of projects in our opportunity pipeline support our clients' objectives toward a low carbon economy.

These projects including infrastructure that supports the transition to lower carbon fuels such as LNG and natural gas, renewables including hydrogen and biofuels, low carbon chemicals such as ammonia, electrification investments and the commodities that support these initiatives such as copper, lithium and other mineral resources.

In the transition toward lower carbon fuels, we continue to see project opportunities from our clients for small to mid-size LNG Peak Shaving facilities to support utility and power infrastructure as well as terminals for LNG export and bunkering as a replacement for diesel and fuel oil.

Midstream gas has seen more investment to support the increasing demand growth for natural gas supply as international and domestic markets look to the U.S. for LNG. This demand is driving opportunities for greenfield construction, natural gas processing facilities as well as expansion of existing facilities.

It's also leading to the upgrade of facilities to improve efficiency and achieve carbon footprint reductions. Many of these projects are supported by federal tax credits. In no or low carbon infrastructure, we believe the world is on the cusp of substantial investments in hydrogen that we expect to drive fundamental change across the energy industry.

Matrix will play a major role in this evolution as demonstrated by the significant project opportunities we see in hydrogen.

Recognizing this coming wave, In addition to our longstanding expertise and leadership position in cryogenic infrastructure, we have continued to strengthen our position through an investments above people and relationships including Chart Technologies and the Hydrogen Council.

Most recently, supported by our office in South Korea, we signed an MOU with Korea Gas Corporation or KOGAS, South Korea's public natural gas company. This MOU is for the development of new technology for onshore, large scale liquid hydrogen storage to support South Korea's plans to achieve carbon neutrality by 2050.

This technology development activity can be further levered to support hydrogen initiatives anywhere in the world as demand for the development of large scale hydrogen storage continues to grow to support power generation and transportation fueling.

Domestically, achieving low carbon economy is dependent upon massive infrastructure investments being made to upgrade an efficient aging electrical infrastructure, address the interconnected world of electrical and renewable generation and ensure reliable and adequate power availability.

This creates significant growth potential for our Electrical business currently operating in the Northeast, the Ohio Valley and Mid Atlantic, which delivered nearly 20% of the company's revenue in fiscal 2022.

We expect to see an increase in project opportunities as our public and private utility customers take advantage of tax credits and other opportunities offered by the previously mentioned Federal Infrastructure Legislation.

Currently, our Contractor Choice position (ph) and existing Electrical business continues to be a reliable source of revenue for Matrix as utility substation work shifts from new substations and major rebuilds to equipment control, technology upgrades and security protections.

We also continue to pursue larger opportunities expanding our work in electrical transmission and distribution, electrical services and other energy applications that support industrial facilities. Our work for Talen Energy subsidiary Cumulus Data is one such example.

Matrix teams are currently at work on the greenfield construction of a substation as well as transmission and distribution to support Talen's investment. This center is used for data storage and cryptocurrency processing and is powered by a nearby nuclear facility, which provides reliable carbon free energy.

If technology adoption grows and demand for energy increases to support data storage and processing activities, we expect these types of industrial projects to increase. On long term, we remain strategically focused on growing our Electrical business in size, resources and footprint, which is further supported by the U.S. infrastructure demand.

Low carbon chemicals like ammonia also have a role to play in the clean energy transition as well as helping to address food scarcity as a feedstock for fertilizer. This is also an area where we are seeing significant increase in storage projects, many of which we are currently bidding.

In the mining and mineral sector, global demand for elements such as copper, lithium and rare earth minerals is increasing and direct response to the energy transition and infrastructure investment and is expected to continue following the recent enactment of H.R. 5376.

As a well-established in respect to contracted this end market, we are seeing and expect to see increasing opportunities here where we can apply our traditional construction capabilities. We are currently working with 5E advanced materials on the first phase of construction at this facility in Southern California.

This facility, which will be followed in subsequent phases with a large-scale boron and lithium complex, is home to one of the largest known new conventional boron deposits globally and the first new U.S.-based source of boron production in more than 50 years.

Boron, as you may know, is used in several critical applications that support electrical transportation, clean energy, food scarcity and domestic supply chain security.

As a reminder, in thermal vacuum chambers, our niche position is supported by our extensive specialty vessel cryogenic and steel plate structures experienced reinforced through our relationship with key technology provider Dynavac.

This relationship continues to create opportunities for new construction like our two recently announced projects with Northrop Grumman.

The use of satellites to monitor and track the effects of climate change, increased demand for data communications and aging space-based communication infrastructure are all reasons we expect to see continued spending on new and existing thermal vacuum chambers.

Finally, in traditional energy markets, storage opportunities in NGLs such as ethane and ethylene, have increased significantly for their benefit as chemical feedstocks to support high domestic demand and growing export volumes. The global need for propane and butane is also increasing, creating further demand for our storage solution services.

With strong relationships inside several North America refineries, we benefit from our embedded position providing turnaround and other plant services, including maintenance and repair, as well as small capital project work for new investments in decarbonization projects and retrofitting facilities to meet increasing demand for alternative fuels.

Before I turn the call over to Kevin, going to briefly comment on our award performance during the quarter and share a couple of data points to underscore the momentum in our business. The fourth quarter completed a year-long trend of significant project award activity, up 85% from last year to $835 million.

As a result, our backlog has increased 27% over the year. In addition, the quality and size of project opportunities in our pipeline support our key market strategies and competencies as well as the prospects of returning to historical margins. And now let me hand the call over to Kevin to discuss our results..

Thanks, John. I'll start with consolidated results. Revenue in the fourth quarter of fiscal 2022 was $201 million, an increase of $24 million or 13% compared to the third quarter revenue of $177 million.

Gross profit was $0.9 million in the quarter or 0.4% as our margins continue to be impacted by the execution of projects one in a highly competitive market. We expect to complete most of these projects by the end of the calendar year.

In addition, while our revenue volume improved, it is still not high enough to fully recover overheads which negatively impacted gross margins by over 300 basis points in the quarter.

This under recovery is primarily related to our capital construction businesses, as we balance the overhead cost structure with the anticipated future increased revenue volumes. We believe this investment is appropriate based upon our increasing backlog and project opportunity funnel.

On a segment basis, the Storage and Terminal Solutions segment had revenue of $60 million, which was a 24% increase over the third quarter driven by construction on previously awarded LNG and renewable storage projects. The gross margin was 0.8% for the quarter.

Overhead recovery improved during the quarter on higher revenue, but still impacted margins by 360 basis points as compared to 740 basis points in the third quarter. In addition, margins were impacted by the mix of work that includes smaller competitively priced capital projects.

In the process and industrial facility segment, revenue increased 33% to $92 million as compared to the third quarter. Increased refinery maintenance activity was the primary driver for the quarterly increase as refinery maintenance and turnaround activity has returned to pre-pandemic levels.

The quarter gross margin was 2.8% as margin was impacted by over 400 basis points due to an increase in forecasted cost to complete a midstream gas processing project.

The increase in forecasted cost was primarily due to the poor performance of an now terminated subcontractor, which required rework as well as supply chain and escalation issues in order to meet our client expectations. In addition, margins were impacted by a higher percentage of reimbursable work related to the increased maintenance activity.

In the Utility and Power Infrastructure segment, revenue decreased 18% to $49 million as compared to $59 million in the third quarter. The revenue decline relates to the near completion on two LNG Peak Shaving projects, which have not been placed -- not been replaced in the near term.

The quarter gross margin of a negative 3.1% reflects the impact of increased forecasted cost to complete one of these projects, which is now in start-up and commissioning, as well as work on other projects that we bid competitively. In addition, under recovered overheads impacted gross margin by over 400 basis points.

SG&A of $18.1 million was slightly higher than expected as we recorded a bad debt charge of $0.7 million in the fourth quarter. We also incurred restructuring costs of $0.9 million in the quarter.

Other income was $31.9 million and was primarily associated with a facility sale to take advantage of an elevated real estate market valuation and our current tax position we sold our fabrication and regional office facility located in Orange, California in the fourth quarter for net proceeds of $37.4 million.

The gain related to the sale was $32.4 million and resulted in minimal cash tax expense as a result of our current tax position. We remain fully committed to our operations in Southern California. And as such have entered into a leaseback agreement with the buyer for a period up to 24 months while we locate replacement facilities.

For the three months ended June 30, 2022, we had net income of $13.5 million or $0.50 per fully diluted share. Excluding the gain from the asset sale and other quarterly tax adjustments, the adjusted net loss for the quarter was $13.8 million resulting in an adjusted loss per share of $0.52.

As we discussed last quarter, the company's earnings have been impacted by three primary issues throughout fiscal 2022. First, the competitive environment the last couple of years has resulted in a temporary reduction in the margin opportunity of awarded work.

As John discussed, project opportunities are improving, which should result in overall improved margin opportunity within our portfolio. We expect to see continual improvement in gross margins as we progress through fiscal 2023 returning to our historical consolidate double-digit margins by the end of the fiscal year.

Second, our revenue volume has not been sufficient to fully recover construction overhead, which is negatively impacted gross margins. While we have significantly reduced our overhead cost structure, we have maintained an adequate level to support the project opportunities in our funnel, which will drive increased revenue.

This investment is important to the future success and performance of the company.

Higher revenue resulted in improved overhead recovery in the recently completed quarter and we expect that trend to continue as we move through fiscal 2023 as a result of the improved market opportunities that should generate higher revenue volume in the second half of fiscal 2023.

Third, we incurred increased forecasted costs on certain projects during fiscal 2022. These projects were competitively won and then executed during a very difficult environment created by the pandemic and its resulting disruption to supply chain and other business conditions. These projects are now completed or will be completed in early fiscal 2023.

Based on the current market trends, we expect each of these three issues to improve and drive our return to higher revenue volume, higher gross margins and profitable operating results in fiscal 2023. Moving on to the balance sheet and cash flow. During the quarter, cash increased $18 million to $77 million at June 30.

The company generated almost $39 million from asset sales and also borrowed $15 million under its credit facility. These increases were offset by $12 million used to fund the quarterly operating loss and $21 million invested in working capital.

The increase in working capital relates to the 13% quarterly revenue growth, which was driven by higher volume of reimbursable projects. Regarding liquidity, as of the end of the quarter, the borrowing base of the credit facility is $81 million and availability is $43 million combined with unrestricted cash of $52 million.

The company's liquidity is $95 million which is sufficient to support our needs. I'll now turn the call back over to John..

Thanks, Kevin. During the year, we committed to the investment in our people to support the market trends in front of us even when it affected our ability to recover all our overheads.

This investment, which is primarily related to our forward view of the Storage Solutions opportunity set will pay-off in the quarters to come with improving backlog, revenue and operating results. Our focus on quality, safety, people and communication will continue to be critical to the success of the business.

We remain focused on our core strengths and markets and are levering our consolidated business development services to build backlog, grow the business and expand the brand across our client portfolio. In fiscal 2022, we began an organizational transformation journey that is improving our cost structure, competitive position and quality of services.

Besides an enterprise wide shared services platform, our organizational transformation includes the creation of our center of excellence to ultimately provide consolidated enterprise wide expertise in key disciplines like quality, safety, procurement, project management estimating and project controls.

These changes will improve the gaps experience in some of the company's project outcomes as well as overall project execution capabilities and quality of project and service delivery across the enterprise.

As we continue to standardize our processes, and build further discipline into the organization around these processes, we will build our culture of quality and performance with the same emphasis as safety.

These changes will result in increased efficiency, continuous improvement in our performance, better outcomes for our clients, delivery on our growth objectives, more consistent bottom line results and achievement of long term sustainability for all of our stakeholders. With that, I'll now open the call for questions..

Thank you. [Operator Instructions] Our first question comes from the line of Jean Ramirez with D.A. Davidson. Please go ahead..

Good morning. This is Jean Ramirez on for Brent Thielman.

How are you?.

Good. Good morning..

Good morning..

My first question, what size or magnitude of potential opportunities are you seeing? Are they more than $50 million or $100 million opportunities?.

Yeah. I think there's got a pretty wide mix. And I would say the kind of the center of the project capital opportunities are in the $50 million to 150 million kind of range. There are a few projects that are larger than that. But I think this kind of sweet spot on the projects that we're looking at are in that range..

Thank you.

And just a follow-up, so on margins, to what extent is the inflationary environment impacting margins versus still some overhead of portions to go and competitively bids projects in general?.

Yeah. So, inflation is definitely an impact on margins. How significant? I can't really give a good estimate on that. It's definitely a piece of it. I would say that the overhead recovery issue has been pretty significant. It's probably been close to half of the issue on margins.

And we saw some improvement in fourth quarter with the increased revenue and I would expect that to continue..

Thank you.

And one more, are there any other updates on hydrogen business and potential opportunities here for next fiscal year or perhaps any coming sooner than that?.

No, I mean, I think we're -- right. It's part of our strategic focus in our storage business. Our ability to design and execute cryogenic specialty vessel storage is a foundational skill set in the business. Hydrogen fits into that. And so, I think where we see the hydrogen market going as there's an increased demand for hydrogen in the energy mix.

The size of the storage has got to be upscaled. And so, there is a -- I think we've seen a lot of energy and utility clients looking out into the industry storage experts on developing storage capabilities that can be 10 times to 20 times the size of what traditional storage is today.

And so that's the antithesis of the KOGAS discussion and there are other energy clients out there with the same related questions and thought processes of how they might invest in development of that technology and that storage..

Great. Thank you. I appreciate that so much. I'll hop back in the queue..

Thank you. One moment for our next question. Our next question is from John Franzreb with Sidoti. Please go ahead..

Hi, guys. Thanks for taking the questions.

Can you just start with the quick review of the fourth quarter? And how much of the revenue in that matter of the backlog is still associated with competitive priced projects that are largely unprofitable?.

Let me do a little math here real quick. So it's not a large percentage of the overall revenue. It's just that the impact that they've had has been pretty significant. We've had quite a few project awards with an average somewhere around $200 million a quarter of project awards recently.

And I think we've seen the margin profile on a combined basis each quarter kind of improve a little bit each quarter. And there's definitely projects within that those awards that are in our historical margins and there's some that still aren't in some select markets, but for the most part, it's moving back.

So I think we're seeing like a consolidated award margin profile that's closer to a 9% on average margin versus what we were seeing during the pandemic that was much lower. Now I think as far as the projects that we've had issues on in fiscal '22, there's not a lot of revenue left on those. I mean, they're in the final stages for the most part.

And those will be completed here in the first quarter and the second quarter, but it's done as higher revenue volume as it was in the prior year..

So Kevin, you are suggesting that if we kind of strip out the older less profitable projects that 4Q margin would have been in a high-single digit range?.

I'm suggesting that if I strip out the couple of projects we talked about that and the competitively priced projects, the direct margin on those -- on the rest of the work, is that beyond the higher-single digits. Of course, we start the overhead recovery issue, right? But the direct margins on those projects in that range, yes..

Okay. And the overhead recovery, if I heard correctly is largely associated with your expectations in the storage business.

Can you talk a little bit more and give us some more color about what's going on in storage that gives you such optimism that's worth obtaining or those people?.

Yes. So it's related -- first of all, it's related to, yes, in the storage business, we'll have a lot of large capital projects, but it's also impacted the other segments also. Probably storage number one secondly would be the utility and power infrastructure segments.

And then there's still been some impact in the Process and Industrial Facilities segment, but because it's primarily the more of a service work we haven't had as big of an impact there. Now as far as storage itself, I'll let John..

Yeah. I mean, the storage market and really we are not executing and/or bidding a significant amount of crude related new storage.

Our tank maintenance and repair business, which traditionally does quite a bit of work in that crude oil tank repair and maintenance has been pretty busy, but as it relates to new storage, it's mostly around either LNG tanks associated with larger project or wrapped into an overall project and some kind of peak shaving or small scale export seen a lot of activity in ethane tanks.

Yeah. We noted the recent award of a large scale ethane tank in the Gulf Coast, a lot of activity there, a lot of activity in large scale ammonia tanks, again used as either as a feedstock for fertilizer or for export in the global markets and as a potential carrier for hydrogen.

So it's -- there's been a significant uptick over the last six months in storage related projects even without the balance of plant work to go with it. In some cases, that is included. And in those projects where they're coming to award here, several of them over the next couple of months. So pretty excited about where that market is.

And you know that's always been a great driver or foundational driver for our business..

That's good news. And actually, John, I'm actually curious about your assessment of what's going on in the utility market. I know that you had two large projects wind down and the book-to-bill I think the quarter was 0.7%.

Can you give us like your overview of how that market plays out in the next year and what's driving it one way or the other?.

Yes. So in our utility segment, to be clear, is a mix of electrical infrastructure, pure infrastructure work that we do, substations, transmission, distribution, those kinds of things and then the LNG Peak Shaving.

And so we think which we have had expected, there was going to be kind of a -- there was sort of a pause on new awards over the period of the pandemic. But we're seeing a return from several utility clients looking to put contracts in place for new peak shaving facilities.

And so several of those that we've prequalified for that we expect to be bidding on here over the next couple of months for award in our third, fourth quarter. And so continue to be a lot of activity around just LNG for peak shaving for utility clients and also repair and upgrades to existing facilities.

There's still around 100 LNG Peak Shaving storage facilities for utility clients across the country and most of them were built in the 70s and 80s. And so while those projects in and other sales are not real big projects, but there's a lot of feed work, engineering, maintenance and repair work, associated with those that we're starting to pick up..

Okay. Perfect. And I guess just one other question, just for clarity. You talked about the project profile suggesting that you've returned to profitability in 2023. I'm assuming you mean on a quarterly basis in the second half of the year, not so much on a full year basis.

Is that a fair assessment?.

Yeah. I think that when you look at it, I think we'll see -- it results in the first couple of quarters be a little bit better than what -- or better than we've seen in the last two quarters because those projects are nearing completion. The revenue volume will still be kind of running at the $70 million a month range.

And so I don't think that we'll see a big step change in revenue in the first half of the year, but I do think we'll see margins improve. But when we return to profitability, it's probably not there in the first half of the year. There's a chance it gets there in the third quarter. We'll start to see higher revenue volume in the third quarter.

And then the fourth quarter, I see it returning to profitability. And so for the full year, well, it may even also be somewhere around breakeven and may be able to us some profit is what we're hoping to get to. But definitely a big improvement over fiscal ‘22..

Okay. That's great. Hopefully. Thanks, Kevin. Thanks, John..

Thank you. One moment for our next question please. We have a follow-up from Jean Ramirez with D.A. Davidson..

Sorry and thank you. So from everything that we talked about the environment, sounds pretty healthy for you. Is there a potential for you guys to get up to $1 billion plus in backlog over the next four quarters or couple of years? And if so, what kind of runway are you seeing right now and what rate do you think you'll get to there? Thank you..

I think we believe there is the potential to exit the year, if not sooner with the backlog at that kind of level. Based on what we're seeing in our opportunity pipeline of a wide variety of projects across all of our segments..

And by the year, you mean 2022 or fiscal year ‘23?.

Fiscal ‘23..

Thank you. I appreciate it..

All right. And I'm going to end the Q&A session for today and turn it back to John Hewitt for final remarks..

Thank you. Yeah. I want to thank all of our employees and all of our stakeholders for your continued commitment and support of Matrix Service Company. Wish everybody to be safe for the weekend and we look forward to talking to all of you soon. So thank you for joining us today..

And with that, we conclude today's conference call. Thank you for participating and you may now disconnect. Good day..