Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Matrix Service Company conference call to discuss results for the third quarter fiscal 2022. At this time, all participants are on a listen only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star, then the one key on your touchtone telephone. If you require operator assistance, please press star then zero. I would now like to hand the conference over to your speaker host, Kellie Smythe.
Good morning, and welcome to Matrix Service Company's third quarter of fiscal 2022 earnings call. Participants on today's call will include John Hewitt, President and Chief Executive Officer, and Kevin 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. They constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors, including those discussed in our annual report on Form 10-K for our fiscal year ended June 30, 2021, and in subsequent filings made by the company with the SEC. To the extent we utilize non-GAAP measures, reconciliations will be provided in various press releases, periodic SEC filings, and on our website. I will now turn the call over to John Hewitt, President and CEO of Matrix Service Company.
Thank you, Kellie, and good morning, everyone, and thank you for joining us. I've been reflecting on the business challenges our customers and Matrix have experienced over the last couple of years, and how important it is in times like these, not to lose focus on the safety of our workforce. With our end markets improving comes increasing workloads and project activity. Our focus, leadership, and expectations in driving a zero incident safety outcome must be even greater as activity increases. I want to remind all of us at Matrix that zero incident performance is possible, and it is a level of performance that we have demonstrated can be delivered on for our employees and ourselves. If we act or better said, are accountable for our outcomes, communicate the expectations, and train with passion, I am confident we can achieve our safety vision.
Now, before I turn the call to Kevin to discuss results, I want to briefly comment on our performance during the quarter, which is not yet reflective of the strong momentum growing in our end markets or the organizational changes that are underway at Matrix. Our revenues grew by nearly 20% in the quarter compared to the same quarter last year. Revenues are clearly trending up, but at a slower pace than we anticipated, impacted in part by delayed starts on previously awarded work. Our revenue in the quarter was driven by smaller project activity, a higher percentage of lower margin reimbursable work, and the execution of low margin projects won during the competitive market environment, which we have experienced over the last few years.
This growth in revenue is an encouraging indicator of returning market strength, but it currently does not fulfill our historical gross margin expectations, limits complete recovery of overheads, and leaves little room for error. While this growing revenue environment has not yet created the bottom-line improvement we expect, we are optimistic that given the significant tailwinds across all our markets, the award strength we are experiencing and the near term booking opportunities, bottom line improvement is on the horizon. I do wanna highlight that this was our third consecutive quarter with a book-to-bill greater than 1. Through the first nine months of the year, we have achieved a book-to-bill of 1.3 on awards of nearly $640 million. To put this in context, year-to-date awards are 81% higher than awards in the first nine months of fiscal 2021.
Our backlog now stands at $594 million, 20% higher than our backlog at the start of the fiscal year. This acceleration in awards has primarily come from projects with individual values of less than $25 million. While we expect the volume of smaller awards to continue, there is a clear path to larger project awards beginning in the next two quarters. We therefore anticipate a material increase in the size of our backlog as we move through the remainder of the calendar year. During the quarter, we also continue to work on organizational improvements that will result in a company that is more competitive, efficient, and produces better bottom-line results. Let me hand the call over to Kevin to discuss our segment and consolidated results, and I'll be back to share our outlook and go through some of the organizational improvements taking place within Matrix.
Thanks, John. I'll start with consolidated results. Revenue was $177 million for the third quarter, which is a sequential increase of 10% over the second quarter and a 19% increase over the third quarter of the prior fiscal year. While we are expecting larger capital project awards to accelerate in the next couple of quarters, revenue volumes have increased along with backlog on smaller project activity. The company was just below breakeven from a gross margin perspective, as performance was impacted by three issues. First, the competitive environment the last couple of years has resulted in a temporary reduction in the margin opportunity of awarded work. Second, our revenue volume has not been sufficient to fully recover construction overhead, which negatively impacted gross margins by 400 basis points in the quarter.
Third, we incurred increases in forecasted costs on two projects, one in a very competitive environment during the height of the pandemic, one in the Process and Industrial Facilities segment, and the other in the Utility and Power Infrastructure segment. These two projects impacted gross margins by over 400 basis points in the third quarter. Consolidated SG&A expenses were in line with expectations at $17 million for the quarter. We also incurred non-cash items that impacted earnings in the quarter. The first item was an impairment charge to goodwill. While we normally perform our annual impairment test during the fourth quarter of each year, during the third quarter, we concluded that goodwill impairment indicators existed. The decline in the price of our stock was a significant indicator, as were operating results that have underperformed our forecast during the year.
Accordingly, we performed an interim impairment test as of March 31, 2022, and concluded that an impairment of $18.3 million should be recorded. The economic environment the past couple of years has impacted our entire business, and as a result, the charge impacted all three segments. We should be clear here that the impairment charge is not indicative of our view of the future. As John discussed, project awards and our backlog have increased significantly this fiscal year, and we expect that trend to continue as larger capital projects are awarded. We also believe the lower gross margins we have experienced this year will return to our historical range of 10%-12% as higher quality work is booked and recovery of critically important construction overheads improve.
The second item was the reversal of $1.6 million of restructuring costs due to a favorable settlement on a previously recorded restructuring obligation. The third item relates to income taxes. Our effective tax rate was 0.4% for the quarter as the tax benefit generated in the quarter was largely offset by additional valuation allowances of $7.7 million. Although most of these assets do not expire and the company expects to utilize these federal and state NOLs when we return to profitability, the valuation allowance was required. Utilizing these NOLs, as well as previously reserved NOLs, will have a positive impact on future earnings by significantly lowering our effective tax rate. As a result, we now expect our effective tax rate to be in the single digits until we utilize the deferred tax assets.
For the three months ended March 31, 2022, we had an adjusted net loss of $13.4 million and an adjusted loss per share of $0.50. Including the impact of the impairment, tax asset valuation allowance, and restructuring costs, the quarterly net loss was $34.9 million, and the loss per share was $1.30. Moving to segment results. Revenue for the Utility and Power Infrastructure segment was $59 million in the third quarter, which is an increase of 8% over the second quarter. The segment gross margin of -0.8% was impacted by the following. First, low volumes led to under-recovery of construction overhead costs and impacted gross margins by 380 basis points. Second, we recorded a $2.5 million adjustment to the forecasted outcome of a capital project, which is nearing completion.
Third, we are also working through competitively bid projects and projects that were marked down in previous periods and therefore present lower margin opportunities. Moving to the Process and Industrial Facilities segment. Third quarter revenue of $69 million represents a 37% increase over the second quarter and the highest quarterly revenue since the third quarter of fiscal 2020. While the revenue increase primarily relates to improved refinery maintenance activity, year-to-date, we have also booked over $315 million of awards, including a number of capital projects, resulting in a book-to-bill of 1.9. We expect to see continued revenue growth in the fourth quarter due to these strong project awards.
The quarterly segment gross margin was just below breakeven as the segment was negatively impacted by a $4.8 million increase in forecasted costs to complete a midstream gas processing project. The mix of work, which was impacted by increased reimbursable maintenance activity, also contributed to lower margins. The higher revenue led to improvement in recovery of overhead, but the segment still had some under-recovery that impacted margins in excess of 100 basis points. The Storage and Terminal Solutions segment produced $49 million of revenue in the third quarter. Storage revenue volume has been impacted by both delays in construction starts of awarded projects as well as delays in the award of larger projects. We expect the quarterly revenue to improve based on recent awards and our pipeline of opportunities.
Awards have produced a quarterly book-to-bill of 1.1 and a year-to-date book-to-bill of 1.2. The segment gross margin was -0.9% in the third quarter due to under-recovery of construction overhead costs, which impacted margins almost 740 basis points. In addition, segment gross margin was impacted by competitively bid smaller projects, which present a lower margin opportunity. Moving on to the balance sheet and cash flow. At the start of the quarter, the company had $93 million of cash, which decreased to $59 million during the quarter. The $34 million decrease was primarily the result of a cash invested in working capital to support the mix of work in the quarter, which saw an increase in reimbursable work. The net loss in the quarter, adjusted for non-cash items, also contributed to cash usage.
Regarding liquidity, as of the end of the quarter, the company has not drawn on its revolving credit facility, which has a borrowing base of $77 million. We have utilized $24 million for letters of credit, so we have availability of $53 million. Excluding restricted cash of $25 million, our liquidity is $87 million, which is adequate to support our needs. I will now turn the call back to John.
Thank you, Kevin. In prior quarters, we spoke about delays in capital project spending and reduced maintenance activity. In this fiscal year, we are seeing maintenance volume begin to expand and the award of smaller projects gain momentum. As energy markets have stabilized with the onset of current global events, the sentiment has absolutely turned for energy infrastructure investment. As such, we expect larger capital project award activity to accelerate over the next couple of quarters. Concerns about energy security globally and reliability domestically has created a transformation in the opportunity set and its timing. In addition, the call to action for cleaner forms of energy and renewables is creating significant business opportunities for Matrix. Finally, the supply chain disruption and demand for commodity assurance is building what many in our industry believe will be an industrial investment renaissance here at home.
It is indisputable that natural gas has an extremely important role to play in the clean energy transition. Until other solutions are commercially viable and broadly available, natural gas will be needed as a bridging fuel. At the same time, the need for energy security has put natural gas, and more specifically, LNG, under the global spotlight. This will likely lead to an increasing number of long-term supply agreements backed by a regulatory environment that will almost certainly support decisions to move forward with new LNG projects and support the continued growth of the LNG market. It is important to note that LNG has relevance in both domestic and international markets. Extreme temperature conditions in some parts of North America, limited pipeline capacity, and volatile natural gas prices over the last twelve months has driven further interest in LNG peak shaving facilities by most utilities.
These facilities offer our utility clients significant flexibility to meet peak demand for electricity and consumer gas supply while managing their exposure to fluctuations in natural gas spot prices. We are actively performing, supporting, and pricing multiple FEED studies for the maintenance, repair, and upgrade to existing facilities, as well as the construction of new infrastructure. As I mentioned last quarter, there has also been a significant uptick in bidding in midstream gas processing, and we expect to see capital investment in natural gas infrastructure to continue based on the growth in global demand and recent increases in gas prices. In addition, many of our clients are planning capital expenditures to upgrade their compression and processing stations to minimize the carbon footprints of those facilities while increasing capacity.
The midstream natural gas and LNG markets have certainly been catalyzed in the last several months, but these are not the only areas we are seeing strong momentum. The bidding environment is extremely active across all of our segments, and we have added resources to handle the increase in activity. We've been tactically building our operational and tactical teams to support the pursuit and execution of these opportunities and recently awarded projects. Among these awards are thermal vacuum chambers used for satellite testing, electrical infrastructure projects, the construction of a borate mining facility, as well as early engineering for a new mid-scale LNG export terminal. The distribution of projects in our opportunity pipeline highlights not just the growing demand for traditional and renewable energy-related projects, but also a sharp increase in planned capital spending across our diverse end markets. Our market position supports both our short and long-term opportunity pipeline.
We have a very strong brand in storage and terminals for all things energy. LNG, including peak shaving facilities, bunkering and export terminals, as well as NGLs and renewable fuels, are just starting a strong growth cycle driven by a favorable energy macro. The door is also open for international opportunities across the Americas. Investment in hydrogen infrastructure will increase over time. Our global reputation in cryogenic storage capabilities, as well as our relationship with Chart Industries, will lead to opportunities for us to play a major role in hydrogen infrastructure expansion. For example, the FEED study currently underway on a small scale hydrogen liquefaction and storage supply facility, when sanctioned, will lead to multiple project installations. Our brand leading cryogenic storage capabilities are attracting several global energy and utility companies interested in the creation of large-scale hydrogen storage solutions.
We are continuing to build our brand in midstream gas by strengthening our existing client relationships and capabilities, as well as expanding our technical knowledge platform in this critical low carbon gas supply market. We continue to support our refining clients as they ramp up maintenance and capital spending to support traditional operations and continue to retrofit their facilities to process lower carbon fuels. Awards and bidding opportunities continue to be strong in aerospace, where Matrix has a niche position in the design and construction of thermal vacuum chambers used for satellite and other equipment testing destined for space. In the mining and minerals sector, copper, precious metals and rare earth mineral prices are sustaining at higher levels, and our customers are moving forward with capital spending and delayed maintenance programs to meet the long-term demand for these commodities and more.
Finally, the interconnected world of electrical and renewable generation, along with an aging infrastructure system, creates significant growth potential for our electrical business currently operating in the Northeast, Ohio Valley and Mid-Atlantic. Long term, we remain strategically focused on growing a coast-to-coast delivery offering. Activity that is happening today has potential to dramatically increase backlogs in the near term. Larger energy infrastructure projects progressing through our pipeline, combined with a normalized cadence of smaller capital projects and maintenance activity, could conceivably put us in a position to exit Q1 of fiscal 2023 with the highest level of backlog in several years. These expected awards will provide a strong foundation for the future as we expect the next heavy award cycle in LNG peak shaving terminals and other large projects to continue into calendar 2023 and beyond.
With this improving backlog position will come better margins, full recovery of overhead, SG&A leverage, scale, and positive bottom line results. It is critically important that Matrix is appropriately positioned to capitalize on the opportunity ahead of us by ensuring that we have the correct resources in place and an organizational structure that supports business efficiency and that is centered around delivering high quality solutions and services to our clients. We continue to strengthen the company through the consolidation of all finance, accounting, and human resource functions into our shared services model. We have also created a center of operational excellence to initially optimize procurement, quality, health and safety, with the ultimate goal of providing various internal project management and proposal services across the organization. Long-range planning of our fabrication facilities and resources has been completed, which will lead to investments to improve efficiency, quality, and markets served.
Also, given changes in the current commercial office market, we are reviewing our fixed office environment for size, location, and capital efficiency in context to our strategic growth plans. We have been on a multiyear mission to not just enhance our cost structure, but also to create an optimized and efficient organization prepared to support the company's growth plan, aligned with the market opportunity and ultimately delivering better and consistent bottom-line results. In short, we are highly confident in the market backdrop and continue to take proactive steps to ensure Matrix is optimally positioned to deliver against it. With that, I'll open the call for questions.
Please send comments like this question at this time. Please press the star and the one key on your touchtone telephone. Please stand by while we compile the queue faster. Now first question coming from the lineup, John Franzreb with Sidoti & Company. Your line is open.
Good morning, John Hewitt and Kevin Cavanah. Thanks for taking the questions.
Morning, John.
John, I'd like to start with the revenue that was deferred. I remember you specifically mentioned it in the storage, but how much company-wide was deferred? Give me, like, a magnitude of when it's been deferred to.
Kevin may comment on the numbers. We had a number of projects that were awarded in Q1, Q2, and early part of Q3 that we had anticipated starting to burn dollars on both engineering and procurement that got delayed, in some cases, upwards of five months, while our clients worked through some re-scoping. In some cases, they had supply of critical pieces of equipment that, you know, they had to make choices on that affected our design and on our ability to move all the design and ordering the materials. You know, the amount of that, I'm not sure I can quantify. Kevin might have a number in his head. You know, in each of those cases, you know, it pushed revenues that we thought we were gonna start to burn in Q3.
We didn't start in some cases actually burning those revenues until a couple weeks ago. All of that had an impact against the organization, you know, of diminishing the revenues that we had anticipated, specifically in the fourth quarter.
Yeah. John, on the awarded projects, I'd say it primarily impacted the Process and Industrial Facilities segment and the Storage and Terminal Solutions segment. You know, the exact amount is probably about a 10% impact plus. 10%-15% impact on each of those segments in the quarter is my best estimate.
Okay. Okay, fair enough. The two problematic projects that you had in the quarter in Utility and Process, can you talk a little bit about what the issues were and are they fully resolved, or is it something they have to worry about in coming quarters?
One project, the issue there. I want to put both projects in perspective. Both those projects were fundamentally won during the height of the pandemic. You know, we were, like our competition, very aggressive on winning that work to maintain our resources and as we moved through however long this, the pandemic-inspired downturn was gonna last. That's kind of an overall statement. Two, the project in the Process and Industrial we had in that case were not self-performing the work. We had subcontracted the majority of the work to a general contractor. That general contractor did not do their job, and we had to make a replacement of that contractor in the fundamentally in the middle of the job.
As a result of that, there were issues around the quality of work that was in place that we had to fix, the supply materials that weren't paid for. A variety of issues there that we had to deal with that caused excess cost on the project. We think we have that captured. We understand what that is. We've moved our own construction forces into the job to finish it. Where the job itself is probably 50% complete round numbers. We think we've captured what the pain is associated with the direct cost on the job. We still have to have fisticuffs with the general contractor on the job, but that's coming at a later date.
The second job in the Utility and Power Infrastructure, that project in general, I think is being challenged a little bit with supply chain issues. You know, we've said on previous calls that we really hadn't had material impact from inflationary escalations. We're starting to see that as we're rounding that job out. You know, that job continues to be operating at a profit, although at a lower profit than what we had anticipated. It's on schedule, on track for mechanical completion this summer. Our client is extremely happy with us. In fact, they're talking to us about some other projects.
We're working through that, and we're you know fairly comfortable that we think we've got you know the most of those risks managed there.
Okay. Just thinking about how you referenced that you're still working through older, lower priced bookings. When does the scale tip that you're gonna have more repriced jobs that are more favorable margin and less of the low price unfavorable margin that causes you to have under absorption? Just a general timeline when you think that that's gonna materialize.
Yeah. John, that's not a bright line, right? I could tell you that we've put projects into backlog over the last quarter that have margins that are in our normal expected range. But we've got some projects and some segments that are still at these sort of depressed margins. It's gonna be a transition. I think that transition will occur as we move through the balance of this calendar year. I would think by the time we get to probably get into the second quarter of next fiscal year, we'll see a higher percentage of the projects that we've got in backlog, new projects that we've got in backlog at getting back to more of our traditional gross margin rates.
Okay. Thanks, guys. I'm gonna be back in queue.
Okay.
Now, to withdraw your question, please press star one. Now, next question coming from the line of Jean Ramirez with D.A. Davidson. Your line is open.
Good morning. This is Jean Ramirez for Brent Thielman.
Good morning.
Good morning.
My first question is, given the inflationary environment, is $200 million-$220 million in revenue still the right ballpark to get to break even, or is it higher today?
If our cost structure is still basically where we had planned it to be, but the margin opportunity, as we talked, is a bit lower. For every % of direct margin opportunity that decreases, that means we've got to do an additional $10 million of revenue to kinda cover that issue to get to breakeven. It has increased a bit in this environment. As John said, as we move back toward the more normal margins, that'll come back down closer towards that $200 million breakeven level.
Just a follow-up to that, what is the timeline for that breakeven, or, you know, the, as you mentioned, to the normal margins, when do you expect to hit that point?
Throughout this fiscal year, it's been hard to predict the timing of awards and the delays we've had on capital projects, and so it's been hard for us to predict exactly what the revenue level is gonna be in the future quarters. We did have good growth in 3Q. I think that'll continue in 4Q. There's still the potential that we could reach breakeven in 4Q. If we don't in 4Q, then I would expect it at some point in the first half of the fiscal 2023 year.
Great. If you don't mind, one more question. Regarding your bid opportunities, could you give us some more color on the LNG and then the hydrogen market as well?
You know, we've got a fair amount of projects in the LNG sector that we are either proposing on. In some cases, like I said, we've started engineering on a mid-scale LNG export terminal. You know, where we see our greatest role in the future here will be really associated with LNG peak shaving terminals that we see that there is a significant amount of interest across the U.S. utility market. We have several new clients there that we're in early stages of discussing some pre-FEED with.
You've also got a significant amount of the utilities across the U.S. already have some form of LNG storage or peak shaving facility in place that was built probably in the seventies and eighties that needs upgraded, reviewed, and studies done. We have spent some time and are doing some work for utilities on that. In fact, have had a couple projects that have run through the system with some small repairs and some upgrades on them. On a large scale LNG export facilities, which we think there will be several more come to market. Our role on those will be principally around the storage and the construction, the engineering design and fabrication of the storage facilities if they get added to those facilities.
There's opportunities for us on the import side in the Caribbean and other Americas markets that we're tracking. On the hydrogen side, you know, we see that again as a long-term growth opportunity, the hydrogen will play a major part in the energy environment across the globe. You know, specifically in the U.S. As we said in our prepared remarks, you know, we have a FEED study that we're executing on right now. We'll come to a close here this summer that we expect could get sanctioned into a project. They're a smaller level capital project, but there could be a few of them built by this one client. That creates opportunity.
Plus, you know, we've been approached by a number of global energy companies to find a solution for large scale hydrogen storage, larger than what the markets have traditionally designed and installed. Then kind of on top of that, to draw onto cryogenic topics, there's also a lot of work around ethane and ethylene and propane, both for export and for domestic use. Overall, you know, we see a lot of growth in sort of the cryogenic related energy storage and terminal markets, and feel we're very well positioned to take advantage of that growth.
Great. Thank you so much. I appreciate your time. I'll jump back in the queue.
We have a follow-up question from John Franzreb with Sidoti. Your line is open .
Yeah. John, you seem fairly confident about having a high booking profile the next couple quarters. I mean, you clearly outlined some of the programs that you're bidding on. If I look at it on a segment basis, given the different margin profiles, I'm curious which segments are gonna have the best order intake over the next two quarters, and what's gonna drive those orders?
I would say the storage and PIF. Longer term, then it'll be, they'll be increased in the UPI.
Okay.
Because the big backlog driver in UPI is LNG peak shaving terminals. 'Cause it's a utility, generally a utility-based project.
Right. I guess I wanna go back also to the hydrogen question a little bit. I would've thought we would've been farther along by now as far as the magnitude of project work. Could you talk a little bit about if you had the same anticipation and perception that you'd have more project work by now? Or has something changed in the marketplace that it's just not coming as quickly as you had hoped?
Well, I think, you know, when you talk about these sort of new energy transitional elements, those things, you know, they take a little bit longer to get put in place to get, you know, from a technical standpoint and from a financing perspective. We bid and are bidding a few hydrogen storage projects and some developer-led projects that weren't able to get to a financial close. Some of the storage projects we were not successful in winning. You know, again, super competitive market. You know, the people that won those storage projects took them for a price that we weren't willing to go to. There has been activity there. We've been, you know, in some cases cautious about our aggressiveness there.
In other cases, it's just timing. You know, there's plenty of activity out there. It's just timing.
Maybe this one's for you, Kevin. Maybe the next two. Cash took a hit in the quarter. Working capital, I imagine, was the key indicator. I haven't seen the cash flow statement yet. I'm just curious, how does the cash position change in the fourth quarter? You know, a little bit of thoughts about what's going on in the puts and takes in cash.
Yeah. I'll address fourth quarter, but let's talk about third quarter first. You know, if you look back at the start of the quarter, we started the quarter with what? $92 million in cash. That was really high because we had got some upfront payments from some customers. During this quarter, when we think about the mix of work we've got going on, we're working off capital projects that have been prepaid effectively, and we have increased revenue volume in reimbursable work, which we've got to fund. That's the combination that causes us to increase our investment in working capital in the quarter.
Now, a lot of that reimbursable work, that increase continues on in the first, let's say, the first 2 months of the fourth quarter because a lot of it's refinery related, and that's the traditional turnaround season. When we think about 4Q cash flows, I think we'll see some additional investment in working capital then. Then that comes back toward the last month and a half of the quarter. We've also talked about before. We've got $13 million of tax refunds due sometime in May or June. That's still supposed to happen.
I think John mentioned in his call, we're trying to make sure we're doing the right thing with our facilities, and so there could be some cash flow that comes out of that activity. I feel good about where we stand overall. I think you're gonna see cash potentially increase significantly in the fourth quarter, if everything goes as planned.
Okay, good. You just touched on this a little bit. On the tax line, I think I heard in the prepared remarks that we should be thinking about a high single digit. Now, I'm not sure if you said for the balance of the year or just say until you return to profitability. Just walk me through. You were trying to get that message out there.
Yeah. Right now, what you should expect on taxes, as you know, any additional tax assets that are generated right now, we're gonna immediately put a valuation allowance on those. Effectively, our tax rate is gonna be near zero. As we return to profitability, we'll get to utilize those NOLs at a high rate. As a result, we're probably gonna have a tax rate in the mid-single digits until those NOLs are utilized. We've got, you know, over $20 million of NOLs right now. You know, that's a lot of income that will basically have zero tax on it, or minimal tax on it until those NOLs are utilized.
Okay. All right. Thanks for the clarity. I appreciate it, guys.
Yep.
I'm showing no further questions at this time. I would now like to turn the conference call back over to Mr. John Hewitt for any closing remarks.
Thank you, everybody, for attending today's call. Appreciate your confidence and investment in Matrix. Wish everybody a great summer. Thank you.
Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.