Thank you for joining Mistras Group's Conference Call for its First Quarter Ended March 31, 2023. My name is Jada and I'll be your event manager today. We'll be accepting questions after management's prepared remarks.

Participating on the call for Mistras will be Dennis Bertolotti, the company's President and Chief Executive Officer; and Ed Prajzner, Senior Executive Vice President and Chief Financial Officer. I'd like to remind everyone that remarks made during this conference call will include forward-looking statements.

The company's actual results could differ materially from those projected. Some of those factors that can cause actual results to differ are discussed in the company's most recent annual report on Form 10-K and other reports filed with the SEC.

This discussion in this conference call will also include certain financial measures that were not prepared in accordance with US GAAP.

Reconciliation of these non-US GAAP financial measures to the most directly comparable US GAAP financial measures can be found in the tables contained in yesterday's press release and in the company's related current report on Form 8-K. These reports are available at the company's website in the Investors section and on the SEC's website.

I will now turn the conference over to Dennis Bertolotti..

Thank you, Jada. Good morning, everyone, and thanks for joining us today. We continue to make significant progress capitalizing on our strong market position and innovative new technologies to grow Mistras and improve profitability. As evidence of this, in the first quarter, our revenue grew 5.5% in constant currency.

Our gross margin expanded 270 basis points and we drove SG&A as a percentage of revenue down by over 40 basis points, resulting in an adjusted EBITDA of 88% increase. These financial results were in line with our most recent outlook for the full year, which we are reaffirming today.

And our overall financial condition also continued to improve, with our bank defined leverage ratio reduced to just under 3.25 as of quarter end, and we're well on our way to achieving our goal of being below 3.0 by year-end. We saw strength in our energy business in Q1, which is benefiting from the rapid growth of our data solution revenues.

The organic growth in our business, in addition to lower health care expenses in the quarter, helped boost our gross profit margin by 270 basis points from the year ago quarter.

While reported SG&A was up on an absolute basis due to a few infrequent items during the quarter, we are working hard in making progress in fundamentally lowering our overhead towards our longer-term aspirational target of 20% of revenue.

The first quarter represented a very solid start to a year in which we expect to drive growth, improve profitability and continue to invest across the organization to unlock the hidden value of our strong brand, products, service line capabilities and innovation.

I'm particularly pleased with the growth of data solutions, which you can now see in the supplemental schedules included in our earnings release. Data Solutions includes our flagship OneSuite, PCMS, New Century, online monitoring and the majority of our Onstream business, along with various other data monitoring services, including Sensoria.

We were early to invest in this exciting area and data solutions permeates throughout all Mistras' geographies and industries. Data Solutions revenue grew by over 35% in the quarter and now represents 10% of our total revenue as compared to about 7.7% of our total consolidated revenue for the first quarter of 2022.

We believe that Data Solutions will grow quicker than the other service offerings during '23 and over the longer term. Note that Data Solutions revenue is higher than we previously described it, which is due to the current inclusion of Onstream's customer reporting via its Streamview software within the data solutions roll-up.

Nevertheless, the growth level of data solutions add credence to and is a substantial reason why we are confident that we can achieve the significant bottom line increases we are expecting in our full year guidance. We are continuing to see customers recognize the need to integrate data more fully to optimize their performance.

Whether that involves getting data quicker or benefiting from the insights of data analytics, the markets have continued to increase their need to better capture and utilize the data generated by our facilities in order for them to stay competitive.

Expect to see us continuing our investment in this area, responding to market demand and creating new growth opportunities by expanding within customers as well as new and existing customers.

Similarly, our strategy to take on more of the machine, branding and other activities complementary to our testing and inspection services, particularly in Aerospace, is driving growth.

As we address online customer needs, supply chain issues continue to challenge the industry, forcing customers to seek new ways to move faster and to simplify their logistics.

For instance, in the Aerospace market, we are opening a new 20,000 square foot facility adjacent to our Heath, Ohio operations to accommodate the increased demand for our solutions.

In addition, other customers are supporting the installation of 4 new CNC machines in our Georgia location to expand capacity and increase the throughput for their products.

We believe our continued ability to provide unique solutions will help alleviate some of the supply chain issues that our customers face, enabling us to grow and expand our solutions in Aerospace as well as other end markets.

Note, there are still some isolated project delays in the Defense sector, which offset the progress being achieved in our overall Aerospace and Defense vertical.

Nevertheless, we believe Defense is a large and growing opportunity over the long term, and we are aggressively seeking market share gains in this industry via our established relationships, utilizing our technical solutions consultants.

Our Onstream in-line inspection testing business has continued its record growth of 2022 into the first quarter of '23. Onstream generates a considerable portion of its revenues from data solutions, and it serves both the upstream and Midstream markets.

This versatility is helping to generate robust growth and margins, which we expect to continue in '23. There was also a significant progress achieved during the quarter, preparing for future growth towards improving operating leverage and profitability, such as investing in technology to digitize and standardize our processes.

Finally, I would like to emphasize that our financial condition continues to improve with our leverage ratio at the lowest level since immediately prior to the Onstream acquisition in December of 2018. I would now like to turn the call over to Ed to give you more detail on our financial results for the first quarter..

Thank you, Dennis, and good morning, everyone. Results for the quarter met or exceeded our financial expectations.

We continue to string together a record of consistent growth despite operating markets that continue to closely approach but have not yet fully returned to prepandemic levels while also working through significant foreign currency headwinds. Revenue growth was 5.5% on a constant currency basis in the quarter.

This is a result of a combination of a stable and resilient oil and gas market, improving demand in commercial Aerospace and strong growth in private space in addition to significant growth of data solutions results across all markets.

We are also benefiting from pricing actions initiated last year, which are now balanced with employee wage rate increases whereas we had been lagging last year with a more pronounced inflationary pressure than we anticipate this year.

Gross profit margin for the quarter increased 270 basis points compared to the prior year, primarily due to lower health care expenses and an improved sales mix, specifically data solutions.

Selling, general and administrative expenses in the first quarter were up $900,000 as compared to the prior year period due to a few infrequent items, but more importantly, down 40 basis points as a percentage of revenue.

Cost containment remains a focus and is one of the main reasons we are confident that we can increase the operating leverage in our business model.

Our North American segment, which was formerly called Services, generated significant operating income in the first quarter of $9.4 million, up from $3.8 million a year ago, with the operating margin expanding 400 basis points.

As Dennis mentioned earlier, in addition to the absolute revenue growth, North America's operating margin is also benefiting from the rapid growth in data solutions.

Adjusted EBITDA for the quarter was $10.4 million compared to $5.5 million a year ago, an increase of 88% due to the aforementioned gross profit expansion, and this was consistent with our most recent expectations. Our effective income tax rate actually a benefit for the quarter was 15.6%.

For modeling purposes, we would anticipate an effective income tax rate of approximately 30% for the full year 2023. In an encouraging change from our historical trends, we saw a positive operating cash flow in the first quarter, primarily due to an improvement in DSO.

Free cash flow was essentially flat in Q1 compared to a negative $8.6 million in the prior year period, which was a significant improvement year-over-year, despite incremental CapEx spending of $1.5 million for new projects commencing in the year. For the full year, we still expect CapEx of less than $20 million.

We paid down almost $2 million of debt during the first quarter, lowering gross debt to $189.3 million with net debt of $172.6 million. As Dennis stated earlier, this is a milestone event as we haven't been operating cash flow positive or paid down debt in the first quarter since pre-pandemic levels, specifically back to Q1 of 2019.

Keep in mind as well that our bank group consists of some of the largest U.S. banks. This provides us comfort regarding both availability and access to liquidity, and we have ample access under our existing credit agreement, which does not mature until July of 2027.

Despite the recent increase in reference rates, we still expect total interest expense of around $13 million for the full year due to the recent step down in leverage and continuing deleveraging throughout the remainder of the year.

Given the solid results in the first quarter, we are reaffirming guidance for the full year 2023, that being revenue of between $710 million and $740 million, adjusted EBITDA between $70 million to $75 million and free cash flow between $30 million to $35 million.

Given stable and resilient energy markets, improving Aerospace demand and continued data solutions growth, we are confident in achieving our outlook projections.

Our business model is robust and sustainable through extremes of economic cycles, and we remain firmly committed to executing our plans, while maintaining our intense focus on cost containment while continuing to prudently invest in our business. That is our strategy, both today and over the long term.

And with that, I will now turn the call back over to Dennis for his wrap up before we move on to take your questions..

Okay. Thanks, Ed. To summarize, we had a strong first quarter to kick off the year, and we continue to be optimistic about Mistras' future in '23 and beyond. Data Solutions now represents 10% of our business, and this will continue to provide top and bottom line growth.

We're making tremendous progress preparing Mistras to improve productivity and efficiency to better leverage our inherent strength to capitalize in the sectors of our markets that are the fastest growing, so we can serve our customers in this ever-changing environment.

Before taking your questions, I would like to sincerely thank all the talented dedicated Mistras' employees out there for their continued focus on delivering a safe and superior service offering while meeting our customers' highest demands. And with that, Jada, please open up the lines for questions..

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from Chris Sakai of Singular Research..

Could you talk about the growth into 2023 of Onstream and data solutions, will we see something similar to this quarter?.

So we believe that both onstream itself, specifically in the larger data solutions are going to have a good growth year. We would think both of those should be in the double-digit range for the full year. Quarter-to-quarter, things will change obviously as projects move in and out.

But there's a lot wrapped up in data solutions, the PCMS and new Century and Onstream and all those other ones, the online monitoring. So we believe there's enough of different service line offerings that as one goes up and down, the other more than make up for it. So yes, we see a good year for everything in there.

Specific to Onstream, they had a great first quarter. Our growth as planned since the acquisition, they were a Canadian-based company and had a fairly strong representation in Canada before we acquired them. They're still doing well and growing in Canada. But the bulk of our growth has been in the U.S.

as we had anticipated by leveraging off of our customers and things that we have as far as connections that we just didn't have that service line offer..

Okay. Sounds good.

And can you talk about Sensoria this quarter? What would be -- what was the adoption rate there?.

The adoption rate hasn't been where we expected, but we've had as many, if not more, inquiries, and we're still doing tests. We still believe, for the full year, we'll be doing fine. It gets a little up and down on that quarter-by-quarter just because there's still some proof of concept out there.

But we're not only doing much better on the proof of concept on the on-shore facilities or a piece of equipment. We're also getting the questions and inquiries about offshore as well. So we believe it's still on a very good trajectory. The full year for that should be good..

And if I can add to that, Chris. Some of this just needs a little run time. Like we did -- as promised last year, we did the installations of Sensoria. It needs a little run time now. Some of these conditions that Sensoria can find on a blade, you need just some time to have that happen now in the field.

Remember, this was all installed on real working wind farms with real turbines where you have to just have the conditions happen, Mother Nature has to kind of just cause the event that we can now see on the blade and help the customer through. So we need some of that time. So yes, so that will happen. Lots of quotes are happening out there.

It's similar to OneSuite. We gave you last year lots of numbers on how many customers, how many sites, how many subscriptions. Same thing this year. We need some run time for all those eyeballs to see things and learn things and expand things and get user groups going and then we'll go on another full court press on expanding further.

But again, they're both -- Sensorium -- once we both rolled into data solutions now, the bigger envelope of the offering, which is moving forward in aggregate and by [gingival pieces] here.

But some of our -- it will be a little, as Dennis said, ebb and flow there where you need to kind of let the customer absorb what you just gave them, learn from it, work with them to figure out how they get to a higher use of that going forward. So we'll work through some of that this year.

But as Dennis said, Data Solutions will be growing in double digit. Please don't model 35% all year. It may modulate a little bit, but it will definitely be in a nice, solid double-digit territory, low double digits..

One moment, while we look for our next question. Our next question comes from Mitchell Pinheiro from Sturdivant & Company..

Just a clarification. So you talked about Onstream, I think, having a good quarter, but I'm looking at the overall Midstream revenue being down.

How does that fit?.

Yes. And the easy answer, Mitch, is that there's two parts to that. One is that Onstream participates with its customers, both in mid and upstream depending on the customer; if it's coming from the gathering or going into the larger diameter, it could be a mid or an upstream. So while their quarter was good, it doesn't always flow only into Midstream.

And the rest of Midstream for us is a lot of project-related things that just kind of vacillate with where to spend it. So for the rest of it, there's nothing really to be read there other than just capital projects coming in and out. But Onstream's revenue isn't just tied to one or the other of the two gas and oil, it is tied to the first two.

We really don't see Onstream in refining. It's only the other two..

Got it. And then so for -- as you look throughout the year, Midstream has been, I guess, down for a couple of quarters here in a row, 3 quarters.

What's the outlook for the year there? Is this -- do we see a return to growth in Q2? Or is there some -- something else happening?.

So no, I mean there was nothing on a macro level, there's nothing major that's happening. On the micro level, it's just the capital projects. I'm not sure I don't have the Q2 in front of me from last year to see if we would exceed that or not given where it's at. But I would say we're -- the projects that we have are normal.

There's a little bit less work in some areas and there's more in others. So on balance, we see that as just one market that's just moving up and down. Inside that, though, a lot of the growth from Onstream is going, like I say, to both. So you never know if they get more customers in Midstream next quarter, they could push a lot that way too..

There's a little bit of timing, Mitch, too in Q1. We had some permitting delays in the U.S. in Midstream, and we actually had -- we exited some Midstream in Canada at some lower margin in Midstream. So there's a few other timely matters there. But no, we feel confident for the full year in Midstream..

Yes, it looks like you have a tough comp. I mean, the second quarter in Midstream was -- last year was the highest quarter and you're coming up against that. So I guess we could see another down quarter in Midstream this for Q2..

Yes. It's the CapEx, as Dennis mentioned. You've got some lumpy CapEx on the new stuff that happens over time, that can distort any given quarter. But over the longer term, we like that Midstream ILI, in-line inspection testing in Midstream. We like that, Mitch, and it's a good one..

Okay. And then as you know, we're maybe 5 weeks into the quarter, what's the prognosis for the Downstream turnarounds and things.

What's the outlook for that for the upcoming quarter?.

So I guess where I'd put it is it's always the most volatile of the 3 segments of our gas and oil. But this year, we haven't seen any reason that they've really come off of anything planned that much. There's certainly people that are moving around. There's a couple that had changes from 2 to 3 weeks on start times and things like that.

But we haven't seen any major delays, nothing like if you go back to the years of '20, '21 or '22 or because of high price and barrel or because they didn't have access to folks, we don't see anything of that. So I think they're into a more normal gradual in planning. This span, we'll see how the full year goes.

But we don't see any disruptions that we've seen in the past..

Okay. And then another revenue question on Aerospace and Defense. I guess, Aerospace was up and Defense was down.

Is that what happened in the quarter?.

Yes, it is. Our Aerospace really has seen a lot of growth for us in a lot of the individual labs back in the COVID days and the year or two after that were still suppressed. I will say we're still seeing supply chain issues.

We've got customers who have tens of millions of dollars more of orders than they have capacity to get it done through the supply chain and materials and all these are things that the other customers that are always trying to get more through.

So I think the demand, especially in the commercial and the space side of Aerospace, I think the demand is really starting to climb. I think there's a lagging in what the industry can get out from forgings and castings through all the other processes that it takes to get you there.

But I think as far as the need for things to get done, yes, I think it's all there..

Okay. And then I guess final question is, as you look at margins, the gross margin, I just on the call, just a touch late, so I apologize if you Dennis or -- and if you talked about this, but in the gross margin side, you talked about your cost being -- or your pricing has now sort of matched your labor increases.

And so should we see the gross margin start to kind of normalize in that maybe 30% area for the rest of the year?.

I'll take that, Dennis. Mitch, yes that's about right, yes. It does vacillate a little bit with volume. I mean Q1 is normally a little lower than the other 3 quarters. Q2 and Q3 can be a little higher and then it might level back out in Q4. But 30 for the full year, yes, feels about right. You've got mix helping us now, data solution, strength of growth.

They're certainly helping. We had some lower health care costs in the quarter. It certainly helped as well. But yes, that bigger topic you just raised, though, this lagging effect. Last year, we saw inflationary pressure of the pay rates going up faster than the bill rates, that did kind of normalize, did kind of level off.

So thankfully, thus far and for the remainder of the year, we're not sensing that inflationary pressure we dealt with all last year. We kind of caught up and that kind of crossed over. So yes, it should be a very normal year and a solid year in gross profit margin.

We might not go up 100 bps here every year as we have done a couple of years ago, but we should definitely hold solid and maybe ever so slightly bring it up. But yes, we feel very confident that there's not any real headwinds there hitting us and maybe a little bit of tailwind helps us from balancing out pay rates and bill rates at this point.

So we feel pretty good on gross profit. And certainly, sales mix is going to help us too..

Is there anything -- one more question just on SG&A.

Is there anything unusual going on SG&A for the full year?.

No, there should be pretty much, again, same as gross profit, normal year, no real headwinds, no tailwinds, all of our cost outs were recovered last year, and we were pleased. So yes, you have a pretty comparable year, normal year year-over-year, nothing unusually good or bad, it should be very comparable.

And again, as we said earlier, in Q1 and Q4, we'll say it again, working very hard to keep overheads flat, if not lower. So we fully expect that for '23..

There's a little noise like in Europe, our energy costs are up. We budgeted for it, it's exceeding a little bit over what we budgeted for. For instance, in some countries, they went back to the previous year and charged [and added to] what happened in '22. So there is a little bit there, but it's not so much that we called it out per se..

One moment for our next question, please. Our next question comes from Brian Russo of Sidoti..

Sorry if I missed this because I got on the call a little late. But just on the oil and gas year-over-year revenue, Downstream and refining showed a nice, about $3 million pickup in revenue.

I mean, is that -- I'm trying to recall, I believe that sector was somewhat depressed in first quarter '22, but is that kind of a quarterly year-over-year revenue run rate increase we might expect? Because I assume the turnaround season probably didn't start until late in the first quarter, it doesn't pick up until -- didn't pick up until April and into May?.

So you may want to talk a little bit about the restatement of some of the....

Yes. There was just -- one quick note there, Brian. If you noticed on the press release, there's a footnote 1 on that table. We had a small -- a small reclass last year between Up and Downstream. We had an account that was misclassified there. So we did restate the prior year breakdown of those 3 subsectors.

So Downstream was not as down as we thought it was last year. The benefit went into Downstream from up. And you'll see that -- your comparison is right. It is up $3 million quarter-over-quarter. We did restate the prior year number there just to be comparative. So it wasn't down as much as we thought.

But yes, that rate it is at now is ordinary, that increase you're seeing there, just under 10%, 9.3% is a good comparison, and we're seeing a very kind of solid, stable market there in the Downstream with some good growth to it..

And to add a little color to that, Brian. There was more work in the January, February period this year than there was last. Again, typically, customers try to get a hold of a lot of the resources that are available in the market in the colder times because you don't have as many northern and colder facilities to try to take turnarounds then.

So there was a little bit more work this year in January and February, which also helped the quarter-over-quarter for the year..

Okay. Great. And then on Aerospace and Defense, it's down year-over-year, which you discussed. But if I recall, there was one single Defense project that was delayed in the fourth quarter of 2022, and it was supposed to resume in the first quarter of '23.

Did that actually occur?.

No. That's still vacillating, -- it's still -- we're still there. We're still working, but there's been changes and such. And we're still working on that. I'm leaving today, going to some conferences and such for the Defense sector.

So there's still a lot of activity in there, and we still believe it's right, but how it is with the materials and government spending, sometimes things go up and down. But overall, we still see a huge potential in there, but it's still kind of bouncing around lower than what we expected, while we're -- although we're still there..

Okay. So that might be a contributor in -- later in the year. I guess....

Yes, absolutely. I didn't do anything for us per se in this quarter, but we still believe it will come back up..

Okay. Great. And then we -- just trying to triangulate your top line revenue guidance, right, of a low end of 3 to maybe the high end of 7-plus percent.

Where do you see the kind of the end market mix? Will it be comparable to where it was at the year-end of '22? Or are you expecting, say, high single-digit growth in O&G slower growth in Aerospace and Defense.

Just trying to get a better feel for what that mix might look like? And then as it compares to say, pre-pandemic levels to kind of feel comfortable that things have normalized..

Yes. I would say the oil and gas probably is more of a solid mid-single digit, right? I would think the Aerospace and Aerospace Defense, we should be looking at from the Aerospace side alone, we should be looking at double-digit growth through most of the year.

The Aerospace and Defense is getting bounced around a little bit by that one side up always. But for us, the Aerospace itself is going to -- we believe that segment of it will grow by double. A lot of times when we're working on Aerospace components, we're not sure how much is military in that, so we throw it into that same bucket.

But the Aerospace itself will be double-digit growth and Data Solutions will be double-digit growth, which is PCMS Onstream. So will put those below the oil and gas one to all be in double digits in Aero and in Data. The three different segments, that's just customer dependent, you get a big project in mid or down or something like that.

I would say for us, while they're all going to have a chance of growing at different rates, you're probably seeing maybe a little bit more growth in the Upstream side than the other two this year, just depending on a lot of the contracts we have out now that will be come through. So all the three are probably a little bit more in the Upstream.

And those are nice because the Upstream is a lot more of a -- it's a less volatile revenue cycle. They really don't go up and down. The facilities are larger, and they try to keep on staff at a rate that is constant probably because of that space and incapabilities. They don't have a lot of room to go up and down anyway.

So growing in that sector is good for us because it becomes a lot more [baseload] type of sales..

Another important feature, Brian, is the balance we have there this year. Yes, oil and gas is strong. Yes, Aerospace will have another good year, not -- maybe not quite as good as last year, the growth it had. Data obviously is affecting all the end markets. That's a solid thing.

But the other good element here is that all the other end markets, putting aside a couple of larger ones, although mostly up this year, they were all mostly down last year. So I think this better balance we have across the bigger end market portfolio is a real good strong point for us this year, where all geographies are doing very well.

All service lines are doing well and all the markets and all the noncore markets are actually doing very well right now. That was not true last year. So that's why I think [indiscernible] this year has really the strength and balance across all the end markets, all the service offerings, all the geographies, all they're doing fairly well.

And that's a really good thing for us. Defense will pick back up. Commercial Aerospace is very good right now as is private space. The Defense is probably the only one little sub-industry subsector that's having some delays right now. But it will, as Dennis said, it will get back in sync.

But I think it's really a year of balance across any way you want to sort of bifurcate our revenue stream as we're giving you more ways to view it. I think they'll all be relatively balanced and robust this year, and that's -- we like that..

All right. Great. And then just one last question on SG&A. You said flat or down. I guess you mean flat or down on a full year basis relative to 2022, which was $166.5 million..

Yes. Pretty hard to keep it flat, yes..

Okay. So it's basically a $42 million or less run rate, regardless what the percentage it is of revenue. Is that how we should look at it? Or are you still targeting kind of low 20%..

20% is a longer-term aspiration. Yes, it'll -- it's not particularly sensitive to revenue volume, the SG&A. But yes, it will level back out. Q1 will be the high number for the year. It will level back up throughout the year. And yes, we have every intention, and I believe we will keep it flat to slightly down with last year's number, absolutely.

And it will be relatively flattish rest of the year. It's not particularly sensitive to revenue volumes..

Got it. And one last question, I apologize. But you're at 3.25x leverage now, well on your way to 3x. Maybe can you just remind us what the priorities and use of your sustainable excess cash might be once that 3x leverage is comfortably intact..

Sure. I'll start with that and Dennis can expand upon that. But obviously, job one right now is continue to knock back down the leverage below 3x. So we'll do that. That's where residual free cash flow is going to go until then. At that point, as we've said the last couple of quarters, we'll have some optionality. We'll consider other investment options.

One, as Dennis mentioned in his prepared remarks, is investing in some of our shop labs on the Aerospace side, additional additive mechanical things, expanded capabilities for customers, that's a place I'd like to put some more capital and that is [underground] shop labs. Other, direct returns to shareholders are clearly a capability as well.

We can visit down the road. Maybe at some point, we would contemplate a tuck-in acquisition on the data side perhaps. But yes, all of that's in front of us, and we'll have that optionality and consider that. But I like -- we wanted to keep driving organic growth.

We're really leaning into that now, keeping overheads calibrated, and we can invest selectively and our own capabilities organically is really where we're focused right now. But at some point, not in '23, but at some point out in the future, acquisitions may become relevant again.

But right now, we're really focusing internally on what we're building and investing on for future growth..

Yes, Brian, the things that we're doing in the data across all of our segments in shop where we're adding another smaller facility, we're adding more machining and all these -- they are really very good long-term [baseload] kind of investments that we're making now, and we'll continue to look at.

Inside gas and oil, we have some very strong connections with some of our customers and some of the things we want to do there in growing. So we're being a little selective in making sure what we're doing aren't the things that we've seen others get themselves in trouble with and all that.

But I don't see any reason -- I mean, we do want to get below 3x because we do believe there's a tranche of investors out there that believe that's a magic number, we need to get back into the 2s. So until we get below that, we're going to pretty much stay focused on getting and paying you back down.

But like you said, sometime this year, we'll go below that 3x is our belief. And then we'll have a lot more optionality. And it's going to make it a little bit more fun to see where the market is at and what else we can do within there..

I will now like to pass it back to Dennis Bertolotti for closing remarks..

All right. Thanks, Jada. I'd like to thank everyone for joining the call today and for your continued interest in Mistras. Everyone, please have a safe and prosperous day. Thank you..

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect..