Good morning. My name is Grace, and I'll be your conference operator today. At this time, I would like to welcome everyone to the EMCOR Group First Quarter 2022 Earnings Call. [Operator Instructions]. Mr. Brad Newman with FTI Consulting, you may begin..

Thank you, Grace, and good morning, everyone. Welcome to the EMCOR Group conference call. We are here today to discuss the company's 2022 first quarter results, which were reported this morning. I would like to turn the call over to Kevin Matz, Executive Vice President of Shared Services, who will introduce management. Kevin, please go ahead..

Thanks, Brad, and good morning, everyone. Can you even believe it's May and almost Mother's Day. As always, thank you for your interest in EMCOR, and welcome to our earnings conference call for the first quarter of 2022. For those of you who are accessing the call via the Internet and our website, welcome to you as well.

We hope you have arrived at the beginning of our slide presentation that will accompany our remarks today. We are on Slide 2. This presentation and certain discussions contain forward-looking statements that may include certain non-GAAP financial information.

Page 2 describes in detail the forward-looking statements and the non-GAAP financial information disclosures. I encourage everyone to review both disclosures in conjunction with our discussion and accompanying slides. Slide 3 depicts the executives who are with me to discuss the quarter's results.

They are Tony Guzzi, Chairman, President and Chief Executive Officer; Mark Pompa, our Executive Vice President and Chief Financial Officer; and our Executive Vice President and General Counsel, Maxine Mauricio.

For call participants not accessing the conference call via the Internet, this presentation, including the slides, will be archived in the Investor Relations section of our website under Presentations. You can find us at emcorgroup.com. With that said, please let me turn the call over to Tony.

Tony?.

The continued rise in energy prices, especially for gasoline and diesel leads to margin compression, and that's most notably within Building Services but even more broadly as it impacts our project pricing as we develop overhead rates.

Despite the continued energy price inflation, we believe that we have, for the most part, appropriately adjusted our pricing models to reflect these costs.

Supply chain challenges were worse than we expected, and it's been in a difficult supply chain and it became even more challenging due to the impact of the Omicron surge and the conflict in Ukraine had on our suppliers. The Ukraine conflict has impacted not only the price of gasoline and natural gas and diesel.

It has also impacted the price and availability of certain metals like nickel, which is a key component of stainless steel and pig iron, which is a key component of cast-iron pipe.

While we understand how to price and contract our work in an environment of increasing lead times and prices, we also encountered missed deliveries and incomplete shipments during the quarter. These disruptions resulted in reduced labor efficiency on certain of our projects.

Such supply chain disruptions and the Omicron surge at the start of the quarter resulted in some very good project work being delayed and also prevented us from being able to close out some very successful projects.

As I turn the commentary to Mark, I remain confident in our segment and subsidiary leadership and our team skills and resourcefulness to mitigate these challenges and build on our strengths as we move forward in 2022. And with that, I'll turn it over to Mark..

Quarter 1 gross profit of $352.6 million is higher than the comparable prior year quarter by $11.5 million or 3.4%. However, gross margin of 13.6% is lower than the 14.8% in last year's first quarter, which set new first quarter records for both gross profit and gross margin.

Needless to say, with our growth in revenues during the quarter, we did eclipse 2021's first quarter gross profit and we established a new quarter 1 gross profit record. However, for the reasons covered in my segment operating income discussion, we are reporting a reduction in quarterly gross margin.

Diluted earnings per common share in the first quarter was $1.39 as compared to $1.54 per diluted share for the prior year period, despite the quarter-over-quarter reduction in EPS, the first quarter of 2022 represents our second best earnings per share performance in a first quarter.

Although we experienced an approximately 13% decline in quarter-over-quarter reported net income, our reduction in outstanding shares through our share repurchase program softened the earnings per share impact of such net income decrease. We are now on Slide 10. EMCOR's balance sheet maintains its strength in liquidity.

Cash on hand of over $500 million has decreased by $306.8 million from year-end 2021 and primarily as a result of cash used for financing activities of $193.5 million, inclusive of approximately $182 million of common stock repurchases made by us through March 31.

In addition, we utilized $95.8 million of operating cash during the quarter, partially as a result of our strong organic revenue growth during the period. Additionally, as has historically been the case, our working capital needs tend to be greater in the first quarter of each year, partially due to our funding of prior year's incentive awards.

Despite this use of cash during the first quarter, we anticipate the generation of positive operating cash flow as the year progresses.

Working capital has decreased by just over $109 million, largely as a result of the decrease in cash just referenced which was partially offset by an increase in accounts receivable, given the revenue growth during the period and a decrease in accrued payroll and benefits due to the incentive payments made during the quarter that I previously mentioned.

Goodwill remains relatively consistent with that as of December 2021. Net identifiable intangible assets have decreased by nearly $15 million during 2022 as amortization expense taken more than offset the additional intangible assets recognized in connection with the acquisition we completed in Q1.

Total debt, exclusive of operating lease liabilities remains nearly identical to that as of December, and EMCOR's debt to capitalization ratio has increased modestly from 10.4% at year-end 2021 to 10.9% at March 31, 2022, given the reduction in our shareholders' equity resulting from our share repurchase activity during the first quarter.

As we stated before, our balance sheet in conjunction with the borrowing capacity available to us under our credit agreement will continue to enable us to invest in our business, return capital to shareholders and execute against our strategic objectives as we progress through 2022 and future periods.

We remain committed to our capital allocation strategy as evidenced by both our share repurchase activity to date as well as today's announcement that our Board of Directors has increased the authorization under our share repurchase program. With my portion of this morning's slide presentation complete, I will now return the call to Tony.

Tony?.

Thanks, Mark, and we'll see you when we do questions. I'm going to be on Page 11, remaining performance obligations by segment and market sector. The first quarter was another strong bookings quarter for the company. As many of you know, our business is not a quarter-to-quarter business.

However, total company RPOs nonetheless have increased sequentially in 8 out of the last 9 quarters despite being selective in bidding activities given the uneven economic environment.

As mentioned earlier, total company RPOs at the end of the first quarter were $5.95 billion, up almost $1.2 billion or close to 25% over the March '21 total of $4.78 billion. First quarter project bookings revenues by RPOs increasing $354 million from December 2021. In fact, each of our segments grew RPOs in the first quarter from year-end 2021.

The organic RPO growth, as I stated earlier, was a very strong 21%. The first quarter saw a strong year-over-year quarterly RPO and revenue growth. Simply stated, this is the one-two punch highlights both the current and future top core demand in our business.

We continue to see an active bidding environment even during this time of supply chain disruptions and inflation challenges. Together, our 2 domestic construction segments experienced strong construction project growth in the quarter and RPOs increased by $865 million or 22.7% from March 2021.

The Mechanical Construction segments saw RPOs increase by $745 million or 28%, while the Electrical Construction segment saw an increase of $121 million or a solid 10%. U.S. Building Services RPO levels increased $306 million or almost 45% from the year ago quarter. All 3 business divisions under U.S.

Building Services, our commercial site-based services, government services and mobile mechanical services saw RPO increases from the year ago quarter with mobile mechanical services RPOs increasing $272 million. We continue to see significant opportunities to improve building wellness in the institutional and educational sectors.

Moving to the right side of the page, we saw RPOs broken down by market sector. We continue to see balanced year-over-year RPO growth in every sector, except in the transportation sector.

Continuing a trend we saw throughout 2021 RPO growth was broad-based in the first quarter across most market sectors with commercial RPOs, including hyperscale data centers and high-tech semiconductor projects increasing 28% year-over-year.

Our commercial RPOs total increased $582 million year-over-year and now stands at $2.7 billion, making up 45% of our total company RPOs. Finishing up on our RPO year-over-year growth, health care RPOs are up nice, institutional are up, industrial manufacturing are up and water and wastewater up as well as short duration projects.

From both a business segment and market perspective, I continue to like the balance and breadth of our RPOs. I'm going to switch to Page 12 because we have used this slide to talk about the underpinnings of our business. Look, I look at this slide, and this is the table that gets set for us to execute on.

And really, we're growing in every one of these areas I previously described. And we're all well positioned in these growing nonresidential markets and trades. The data center market is still very strong, and we're positioned well in the major data center geographic markets as well as type of data centers and as well as with the right customers.

Although we did see project delivery slowing down almost entirely related to supply chain, that even makes the demand stronger and the need for our services stronger that eventually, the data center is going to have to come online faster.

We're seeing that across our trades, electrical, mechanical and fire protection, and we're seeing it across the regions where we are very strong. And we're very strong in this business because we have the best labor in the market to do this business.

We execute very well with the trades that we have, and we have excellent prefabrication capabilities that we are looking to grow across all 3 trades to support this growth. Mark talked about the fire protection growth that we've had supporting the e-commerce buildup. Again, we see no slowing of that fire protection demand.

And I'm going to segue into the industrial manufacturing, where we also see strong fire protection demand, especially as it relates to 2 major trends. The build-out of the semiconductor plants, which we are well positioned, both fire protection-wise, mechanically and low voltage wise on our electrical trade and also with respect to fire protection.

Again, we are in most of the right markets to execute these trades, and we are really busy doing that work and planning that work. Some of that work is being delayed a little bit or the project delivery is being delayed, we're actually working on the sites because of some of the uncertainty with respect to stainless steel right now.

But this is a good long-term market.

The other good long-term markets that are very good with respect to industrial manufacturing, as always, is food processing, where we serve as an EPC or CM in many cases, but also beyond that, the reshoring of manufacturing, we see this as a long-term trend, especially with respect you see as the growing competition with China and all the political uncertainty there.

But also people are realizing now with the Omicron, it is not a dependable source of supply.

We're also seeing industrial manufacturing growth as it does with respect to growth to support electric vehicles and the build-out of not only charging stations, but the build-out of manufacturing plants to support people that are now building electric vehicles.

And we are well positioned, both mechanically, electrically as well as fire protection to do that work. Health care continues to be a strong market for us. Health care can be a little episodic.

We do see people seeking more flexibility with respect to their health care flexibility and their facility flexibility post COVID, both in a rehab mode, what I mean by rehabbing the building, but also with respect to new construction. Water and Wastewater is another strong market for us, especially in Florida.

And of course, now you take those next to, they're intertwined across our business, across all market sectors. We're seeing very strong demand for mechanical services. We wish we were getting more delivery equipment to put it in, but when we can't, we fix it. And indoor air quality. These projects have all become melded together.

You heard me talk about individual air quality projects. That's no longer what's happening. It gets presented as an overall mechanical retrofit package that drives down energy cost, but also brings in enhanced air quality into the building.

Now this has been a transition point for many owners as outside air was previously considered not a great thing to bring into the building. But now you have to balance the introduction of outside air versus energy efficiency, which then leads to equipment replacement. And eventually, all this will get squared away.

And we'll have very strong replacement markets as we do now. And I do think that's going to continue for a while.

And of course, our fire protection, we are the leading sprinkler construction contractor on a nationwide basis, and we have one heck of a service offering to do there, both on fire alarming and fire protection led by a great team out of 2 of our subsidiaries in the Midwest that work nationwide, both of them.

Now -- so if you look at those trends and you think about the revenue growth, if you look at our RPO growth, we have a pretty good table set for the long term here at EMCOR. We had some bumps in the first quarter, not totally unexpected, if you think about everything we had to contend with. Are we pleased with our suppliers right now? Absolutely not.

Is some of it their fault? No. I mean they're having the same challenges as many people have. And we can talk more in the Q&A about some of the challenges they have. So we looked at that and we said, you go to Page 13 and 14.

We came out with initial guidance at $10.4 billion to $10.7 billion of revenues and $715 million to $785 million in earnings per diluted share. We as a team see no reason to change that based upon our Q1 results. When we set our guidance, we expected the nonresidential market to grow in the low to mid-single digits.

We did expect more normalized demand from our refining and petrochemical customers, and we did expect a continued resumption in small project and service activity. You know what? The reality of all of these have proven to be true so far this year.

As with prior years, and I think what you're going to hear is actually a repeat of what I said in the first quarter with some updates on it. Where you move in that guidance range depends a lot on things that we think are in our control and things that are less in our control.

I don't think there's any doubt to anybody that's followed EMCOR over a long period of time that we know our costs, and we know how to control our costs. It's something we're really good at. I think we're as good as anybody in our industries.

However, we do expect continuing headwinds from fuel cost and supply chain issues, both of which, as you go through the first quarter, in that first quarter, proved to be worse than we expected coming out of the year-end 2021. A lot of reasons for that, right? We talked about those.

We're not going to go ad nauseam about Ukraine and Omicron and how that will impact the supply chain, I mean it was already a challenged supply chain. But you know what, we got the best team. Our folks in the field know how to adapt and overcome as does their segment leadership. And the challenges are there. They know how to work through them.

We'll continue to refine our process to mitigate these headwinds as best we can. And of course, we will be very aggressive seeking entitlement where it's available on our projects for changes. We're going to continue to be disciplined in our estimating pricing. As significant as our RPO growth has been for the year with a book-to-bill of over 1.1.

We actually could have booked more work with a little less discipline, but we remain very disciplined because we continue to see good opportunities in all the things I talked about on Page 12. And we're winning work in all the right places. And the table has been set.

We just got to continue to execute and get through some of the issues we've had here in the first quarter. We're never going to sacrifice safety at all levels of our organization. And underlying where we end up in the guidance range is we expect, as Mark said, a normal operating environment through the year for our Industrial Services business.

And sitting here today, we expect to have a normal fall turnaround season. But like in anything, there's a lot of things you don't completely control. As much as I'd like to and as much as our EMCOR team would love to, we don't control what happens in the supply chain to any significant way, especially as you go upstream.

We faced a tough supply chain in Q1, and we expect it to remain a challenge in the second quarter. This challenge specifically centers around major systems like applied HVAC, large electrical gear, panels, pumps and generators, things like that, things that are more system related.

And why is that even more challenged than the pipe in the commodities, in the wire and the conduit? Because each of them are smart pieces of equipment and all of them have chips. And this is when the -- this has been the biggest issue with on-time delivery and complete delivery.

Will COVID have another resurgence even beyond what we experienced in the first quarter? Look, none of us really have any idea of that. But what we do know is we will keep our employees as safe as possible, and we will keep our projects moving and our services will be delivered.

One of the questions we get is, will customer decision-making slow with all the uncertainties? Quite frankly, we have not seen customer decision-making slow, especially go back to Page 12 on all the areas where we really are excelling right now.

But we have seen some projects delivery slowed, not even delayed, they slowed delivery as a result of supply chain issues around a major OEM systems that we talked about. Will the Fed's announced an expected increase in interest rates slow down our customers' decision-making with respect to large capital projects? We have seen no impact to date.

Again, go back to the kind of areas we're really growing in. Most of those customers are flushed with cash. What will happen with inflation? I could give you an answer and say, you tell me. But to date, we have -- it is worse and not better than at the end of 2021.

As we move further into 2022, we will continue to be disciplined capital allocators in terms of our organic investments, acquisitions and the return of cash to shareholders, all of which we believe are important uses of our capital. Year-to-date, we have purchased over 250 million in shares through April 28, 2022.

As announced this morning, our Board has approved an increase of over $200 million under our share repurchase plan. And we continue to be active in the acquisition space, and we are funding our significant organic growth. As always, I'd like to thank you for your interest in EMCOR. I'll take questions and Grace, you can open the line..

[Operator Instructions]. And your first question comes from the line of Sean Eastman from KeyBanc Capital Markets..

Tony, first one, when you talk about being very disciplined on new bookings, what exactly does that mean? Is that just pricing like really nailing down the pricing? Or is it picking jobs where you think you have the supply chain on lock? Explain that to me on how you're approaching new work..

So it's part of the thing you talked. So let's think about what goes into an estimate and where you need to be disciplined. So in a normal environment, right, supply chain is really not that much of a variable, right? Because we have great relationships with our suppliers. We know how to scope and descope. We don't miss scope very often.

And so we can get pricing right, we can lock it in. In this environment, disciplined means you look -- you make sure that on your key components, that you really understand what delivery could look like. And then you benchmark that delivery versus what -- you benchmark what they've been telling you versus what they've actually been doing.

So it's no longer just saying, "Hey, you told me it would be this ridiculous 36 weeks. The last 3 times, you actually delivered it in 42 weeks". So when we make our estimate, we -- we're not telling everybody else, but we're making an estimate closer to the 42 weeks, and then we're going to do our resource planning around that.

You also try to lock in all the commodities that you can, and you actually let the purchase order. Where you were in a noninflationary environment, you're not as worried about that. You actually let the purchase order and you get the supplier to commit, and you have to be disciplined to hit those windows.

Typically, before a supplier would let their price out there for 30 to 60 days, sometimes now it's as quick as 7 or 8 days, and you have to be very on top of the process to make sure you're locking in that quote for that job if you get it. The other things you have to take a really hard look at your customers that you're going to work for.

And for us, that's multiple places in the channel. Who's the owner that ultimately is going to own this project, if we're not working directly for the owner. Who's the general contractor and construction manager and what their team looks like.

If the owner is purchasing the equipment, do we have clear line of sight on that equipment, and do we have the lines of communication open to make sure that, that owner is going to have the equipment delivered.

Do they have a good track record of delivering? So our information management and our experiential data is more important than ever around the pricing of that product. And then it's about labor availability, something we don't really have a lot of issues with.

Like when project is live, like we had some very good data center projects move in the first quarter to the second quarter and beyond. Again, we're doing work there, but then we have to sequence our work to make sure that we can have the right resources at the right time.

Because what we really worry about first is can we get the right labor with the right skills at the right place at the right time to deliver the project. And you put all that together, that's how you price your project.

And you got to do -- again, you can't just take things that are quoted to you, you have to recheck against what people have been doing in their recent history. On a small project, it's a little different. It's become very different. Typically, a small project being $200,000 to $300,000, that a lot of times will be executed in a quarter.

But with extended lead times, now you got to say, okay, customer, you want this done, you actually need to have this done. However, the window you planned on us doing, it looks a little different because here's what supply looks like right now.

And that supply is different than what it was going to be than you're used to us doing this replacement project. Therefore, this is how we have to price it. So that's how you think about project large and small.

Then you get into brake fix work, which is the repair service that Mark talked about, which is actually we expect to continue to grow through the year. There, you have to be really on top of what the variables going in, we know labor. We know labor cost. But this fuel spike, and we've seen it over the last year, we were very good at catching up.

But just to give you a backdrop of how things are different, Sean, I mean, I've been doing this a long time, all the way back to when I was a carrier with HVAC technicians. You typically would reset your standards right before summer, right? Because that was your busiest time of year from June till September. And so you would reset standards in.

Last year, we had reset them almost 3x, and I say, almost, because some of the northern cities we didn't have to do as much because they're not as busy towards the end of the year. And then this year, we've already reset them twice. And our customers have accepted it. They know what's going on in the world.

But in that, you're always behind, right? You can't charge customers for something that hasn't happened yet. But they also know there will be a month late taking it off because they understand of what happened upfront.

And of course, it helps to have very skilled technicians when you do that because when you have those very skilled technicians, people want them to be able to do their work. And so it all works together.

So yes, pricing has gotten more complex, but it's mostly got more complex on really not having the same level of trust in the supply chain for people to execute what they said they were going to execute..

Okay. Got it. And this one is a little more granular. So if I look at the midpoint of the earnings guidance for the full year, it implies that the first quarter will be a lower proportion of that full year outlook than we've seen over the past few years.

Can you just help me get comfortable with sort of that implied catch-up there? I can think of a few things that would make that make sense. But I just wanted to kind of give you guys the floor on that element..

Yes. And I'll kick it over to Mark. Well, the biggest variable, as you look at the back half of the year, that hasn't happened in '20 and '21 is we expect EIS to be profitable in the back half of the year. I mean that's the biggest variable. So that's one of the ways you catch up.

The other one is if you go to the midpoint, there's an obvious just math exercise, we have less outstanding shares, right? So as a result of that, the math works. We also believe that our project timing and execution is back half weighted this year.

We sort of knew that going into the year because of the scheduling of some of our larger projects and nothing's changed along those lines.

Mark?.

Yes, Sean, the only thing I would add to Tony's comment is we're presuming that revenue is going to continue to grow at the levels it did in the first quarter and presuming we're going to get some incremental improvement in margin contribution, which clearly we believe that or otherwise we would have changed guidance.

It's going to be disproportionate, right? I mean I think the problem with the quarter that we're announcing today or that we announced today is that we didn't get the same level of pull-through from the revenue activity for all the reasons that were discussed prior to your question.

We've done everything we can to make sure that for the things that I would define as self-inflicted are not going to recur in quarters 2, 3 or 4. If we get the external environment to stabilize at this point, we're comfortable with how it's going to shake out..

And your next question comes from the line of Noelle Dilts from Stifel..

My first question is pretty specific. But you mentioned the delay in telecommunications projects.

Can you expand on that at all? Is it wireless, wireline, how should we think about that?.

That is data centers for us..

Data centers, okay. I just wanted to make sure I got that think right. Okay. Perfect. And then second, you hear me almost every quarter ask about M&A and how you're thinking about the valuations in the market. I would think that multiples have come down a bit.

So could you comment just on how you're thinking about potentially getting more active on the M&A front and just what you're kind of seeing in the market in terms of opportunity?.

Yes. I mean we have a pretty good pipeline. I mean, we've made a couple of deals in the first quarter that we were tuck-in that we expect actually to feel really good because it gives us a labor force in markets that we want to grow. But what we're not going to do is inherent somebody else's problems. And it doesn't mean they're bad companies.

It means the trends we saw in the first quarter in our business, they have in spades because they don't have this level of process control and sophistication we have or connection in the supply chain. Where we can get comfortable or where we think we can help that acquisition close that gap, we'll make it.

But we think there's a gap in their execution, in their projects around those issues we will probably take a pause. That being said, we're active acquirers. We expect to continue to do deals like we have through our history and broadly defined it would be in any of our segments.

A little less so in EIS because we think we have the platform we need, especially on the oil and gas side, we would make the right renewable or sustainable energy acquisition there. We have a capability there that we would like to grow. But other than that, I mean, it's business as usual. We feel good.

People want to be owned by EMCOR, and we want to buy them..

And your next question comes from the line of Adam Thalhimer from Thompson Davis..

What did you say about the timing of project closeouts? I think you said there were some that got pushed from kind of late in Q1?.

Yes. So we typically, right, last year, we had a very good closeout portion in Q1 of last year, and we said that, right? I mean that was something we said on our first quarter call last year.

We had less of that happening mainly around supply chain issues, right? We need materials to come to us to finish the job so that we then can commission the job and get off the job. Because of the slowdown in the missed deliveries and the incomplete shipments, we had more of an issue with that in the first quarter.

Here's what I think is going to happen, right? A lot of these issues, we talked about it in the first quarter last year that we saw it coming. It really started to hit with lead times, especially mid-third quarter '21. We net -- we've adjusted those lead times.

We should start seeing a lot of that equipment come in here and those missed deliveries start to catch up here, May, June, July, August.

Mark, do you have anything to add there?.

Yes. I think Adam, once again, we don't control the timeline of our customers' projects. And when we entered into 2022, we definitely had different sequencing, especially in the data center space.

So even with the delays that both Tony and I have mentioned during the call today, the way that the RPOs were going to burn through revenue was actually more late 2022 weighted than 2021.

So when you look at our -- if you reflect back on 2021, our margin performance was actually stronger through the first 6 months than it was in the last 6 months of the year. And that was once again just because of the mix of work. That phenomenon is going to exist in 2022 as anticipated, except that it's the inverse.

It's more back half of the year than first half of the year. So putting aside the supply chain discussions that we have had....

It can happen anywhere..

Yes, the work is scheduled to happen later in the year. A couple of things that happened relative to the first quarter it certainly does not change the quantum of the year, but certainly did impact the first quarter..

We don't give quarterly guidance for a reason. But clearly, we anticipated would have some challenges around it just from project sequencing and timing. Regardless, I mean we could have a great supply chain right now, we would have some of those issues. They were a little more pronounced because of the supply chain and we're like whistling past that.

Omicron was a big deal for us in the first quarter. I mean there are parts of our company that had 20% of their workforce out on large jobs. That's a big deal. I mean -- and we got through it. It was tough and we will solder on..

Okay.

And then, Tony, if you look at your large projects or EPC jobs, what stage are you in, generally, if you look at that whole portfolio?.

Well, I think Mark talked about that. I mean that's part of what we talked about project sequencing and timing on '22. We knew that some of our larger jobs would be starting up in late '21. That's part of what you saw in late '21 as part of what you would have seen in the first quarter, even absent Omicron or supply chain.

Some of that's been shifted a month maybe as we wait for the sequence we're not fullest once, right? We're a little more reticent about how these jobs will start up. And so it may have moved things 30, 45 days to get to full ramp. But the stages are they're much earlier in their stages than they were in the first part of '21..

Okay.

And then just lastly, I'm trying to parse through your industrial commentary, are you -- I mean, vis-a-vis 3 months ago, are you -- it sounds like you're maybe a little less confident on the refinery outlook this year?.

No, I didn't want you to read into that. I'm always -- look, if you've gone through what we went through over the last 21 months, you're going to be a little cautious, right? Demand is strong, customers are healthy....

Refinery utilizations are high..

Refinery utilizations are high. I mean, crack spreads are good despite the price. Our customers are healthy. They're talking to us about all the right things. We're helping them with some of their biggest needs even outside of just turnarounds. What makes me cautious is just to be cautious with the customer base.

And the other thing that makes me cautious is they get a lot of pressure to keep running, right, because we need to supply in the market. But we've heard nothing that makes us less than confident what's going on in that space this year.

Is that it?.

Grace, is there anybody else?.

All right. Look, thank you all. Thanks for your time. Thanks for the thoughtful questions. We're going to work real hard to continue to produce. Like most things, we will get through this, too. And we will figure out how to manage the supply chain, and we will make it work. Thank you all very much..

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect..