Thank you for joining our Mistras Group's conference call for its first quarter ended March 31, 2024. My name is Briana, 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 Manny Stamatakis, the company's Chairman of the Board and Interim President, and Chief Executive Officer. I want to remind everyone that remarks made during this conference call will include forward-looking statements. The company's actual 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. The discussion in this conference call will also include certain financial measures that were not prepared in accordance with the U.S. GAAP. Reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. 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 Manny Stamatakis.

Good morning, everyone. Thank you for joining us today. The first quarter was a strong start to the year as we continue to execute on our key financial, operational and strategic initiatives. In particular, we achieved outstanding success in our Project Phoenix program with adjusted EBITDA up 55% compared to the prior year. Revenue was up nearly 10%, primarily due to the strong spring turnaround activity in the Oil & Gas industry and continued expansion in our Aerospace and Defense industry. Additionally, our improved commercial focus provided the benefit from the successful implementation of strategic price increases, which consequently contributed to improved gross margin. Selling, general, and administrative expenses were reduced on both a sequential and year-over-year basis, and we announced the hiring of a Chief Transformation Officer whose primary focus will be on sustaining the momentum generated by Project Phoenix to further improve operating leverage. Consequently, I am once again reiterating our expectation that fiscal 2024 adjusted EBITDA will be one of our all-time high-performance years. While still early in the process, this is our second consecutive quarter of strong top and bottom line growth. With each successive quarter, we are gaining increasing confidence that the strategy and direction that emerged from our refocus in 2023 has put us on a trajectory to achieve record results this year and to maintain steady growth into 2025 and beyond. Let me first share some of my thoughts on the quarter. Focusing on the objectives I have been outlining for you and the progress that we are making against those initiatives. I am very pleased with our top line up nearly 10%. With our two largest end markets, Oil & Gas and Aerospace and Defense, all up double digits year-over-year. This success thus far can be attributed to our new commercial focus, which we expected to drive organic growth this year and which has, in fact, materialized. In the Oil & Gas market, which was up 14.7%, we benefited from strong turnaround activity in the quarter, both domestically and internationally. This included growth in all three subsidiaries, sub-industries within Oil & Gas of up, mid and downstream. Last quarter, I mentioned how we have been working closely with our customers in obtaining needed price increases to offset cost increases we are seeing. And I can say that this initiative clearly contributed to our first quarter growth in both revenue and gross profit. I want to thank our customers for working with us to obtain these necessary increases. Oil & Gas will remain an important market for Mistras, and it is our intention to improve performance by making sure we are getting appropriate returns for the value we provide through both price increases and project selectivity. Aerospace and Defense revenue was up nearly 19%, reflecting strong end market demand. In particular, I would note that our commercial aerospace business continues to expand and is back to pre-COVID levels within North America. And our private space business is also growing. As we expand our breadth of services provided to our customers in this market, we plan to continue to make strategic capital expenditures in these higher-margin and most important businesses to accelerate their growth. Our Data Analytical Solution businesses experienced some project delays that pushed back some revenue out into later in the year. All of the underlying fundamentals are on track, and we expect Data Analytical Solutions to generate strong high-margin growth over the balance of the year in line with their 2024 targets. We will also continue to invest capital to grow this strategic area. As part of our goal to better leverage our growth, our first quarter bottom line grew significantly faster than the top line. Profitability benefited from a reduction in both direct costs and overhead expenses, mostly attributed to our Project Phoenix activities, therefore causing operating costs to fall and margins to rise. The net result was a significant improvement in operating leverage, leading to the company's best ever first quarter adjusted EBITDA. And while free cash flow lagged somewhat due to an increase in working capital related to timing of customer invoicing, we still expect at least $34 million of free cash flow in fiscal 2024. There have been other significant actions taken and progress made in the first quarter. First, we have brought on Hani Hammad as Executive Vice President and Chief Transformation Officer. Hani managed our Project Phoenix initiative when he worked at AlixPartners, and he previously worked for PwC Consulting, Baker Hughes, and GE. Hani will report directly to the CEO and is responsible for completing and improving upon the transformation plan arising from Project Phoenix, which initially identified a projected gross annual run rate of $47 million adjusted EBITDA benefit to be achieved by the end of 2025. With a seasoned executive of Hani's experience and accomplishments now dedicated full-time to this program, along with an invigorated senior leadership team, we are confident that we will achieve our Project Phoenix expectations and more. The search for a permanent CEO remains on track, and we are working with a preeminent leadership advisory firm to identify the best individual to lead the company into its next phase. Our goal is to have our next CEO in place by the end of our third quarter. And finally, we continue to make significant progress with the organizational and cultural changes that I had previously noted and which are important to our success. These changes have not only energized and motivated everyone throughout the organization but have also led to unprecedented collaboration and creativity, enabling us to deliver even greater value to both our customers and shareholders. I believe we are now more fully aligned and committed to our mission than at any time over the company's history. My focus and that of our next CEO for the company will be profitable growth.

Thank you, Manny, and good morning, everyone. I share Manny's enthusiasm for Mistras' immediate outlook and longer-range future. Our focus on transformative discipline will allow us to leverage our footprint and coupled with our new commercial focus will lead to improved results and profitable growth. First quarter results continue to demonstrate our commitment to unlocking significant value through the ongoing implementation of Project Phoenix. While we have already made significant progress, there is more work to do as we plan to achieve our target of an incremental SG&A reduction of $12 million in 2024 versus the prior year. This will not only generate an improved bottom line return, but will also provide funds to reinvest in our high-margin growth initiatives such as Data Analytical Solutions and the Aerospace and Defense industry. This is an exciting time for Mistras and the entire organization is focused on capitalizing on the unique growth opportunities in our markets. And our first quarter performance demonstrated this with a great start to what we anticipate will be one of our all-time high adjusted EBITDA performance shares in 2024. For the second consecutive quarter, we exceeded financial expectations while making significant organizational progress. The first quarter marked the second consecutive quarter where we generated significant organic revenue growth, actually increasing from 8.2% in the fourth quarter of last year to 9.8% this quarter. As Manny noted, we were up in our two largest end markets, in part due to contributions from our improved commercial focus, which has provided a benefit from the successful implementation of strategic price increases. The Oil & Gas industry was up nearly 15% on a strong spring turnaround season. Although turnaround activity remained robust as stated last quarter, we are anticipating this sector's growth to level out in the second half of the year due to a more moderate fall turnaround season compared to the robust spring turnaround, which continued into April 2024. Aerospace and Defense continued its expansion, continuing its bounce back from the fourth quarter with another quarter of solid growth, up nearly 19%. Our North American Aerospace and Defense business has recovered to pre-pandemic levels in the first quarter of 2024. The Aerospace and Defense market remains robust and was once again led by the strong performance in our West Penn business. For the third consecutive quarter, they had record results primarily as a result of the continued ramp-up of our new Georgia facility, as well as increased demand for our services, which are helping to debottleneck the industry supply chain. The International Aerospace business revenues were also up significantly in the quarter. Private space was also strong in the first quarter, and we expect this business to hold up well over the immediate term as the pace of space launches has not let up. As one of our primary growth initiatives, we are investing in our Aerospace and Defense business to accelerate growth. So we expect strong results from the Aerospace and Defense segment throughout the year. As Manny noted, Data Analytical Solutions had a slower start than anticipated due to project delays and implementation pushouts. However, we saw momentum build later in the quarter, which we believe will lead to continued growth during the second quarter and remainder of the year. Again, this is a focused growth area and we are investing in our capabilities by adding highly skilled data analysts and expanding our predictive solutions. Both gross profit and margin were up in the first quarter despite the slow start for Data Analytical Solutions, driven by overall revenue growth, the cost reduction benefit from Project Phoenix, and the previously mentioned positive pricing actions. This was somewhat offset by higher healthcare claims expense in the quarter. Selling, general and administrative expenses were down $1.6 million or nearly 4% from a year ago, primarily reflecting the effect of Project Phoenix on headcount. We remain committed to our goal of reducing SG&A to approximately 21% of full year 2024 revenue with $12 million of expected savings being the product of Project Phoenix. As we have mentioned, we are still working our way through a full implementation. For the quarter, we reported GAAP net income of $1 million or $0.03 per share. Excluding reorganization and other nonrecurring costs, net of tax, non-GAAP net income was $2.2 million or $0.07 per share for the quarter. Adjusted EBITDA was up 55% to $16.2 million, which was our best ever first quarter adjusted EBITDA performance. This follows the record fourth quarter adjusted EBITDA reported just last quarter. As a result of an increase in working capital and incremental strategic capital expenditures, we generated negative free cash flow in the first quarter, which is not unusual for the first quarter of the year. As it relates to 2024, this negative cash flow was related to an increase in working capital related to the timing of customer invoicing, which we are intently focused on improving in the second quarter and remainder of 2024. We still believe that we will generate at least $34 million in free cash flow for the year despite an increase in growth capital expenditures. Interest expense was $4.4 million for the quarter, increasing by $0.3 million from the prior year due to the higher interest rate environment and an increase in the average debt balance outstanding. Our trailing 12-month bank defined leverage ratio was 3.06x as of March 31, 2024, which is the lowest this ratio has been since the third quarter of 2028. Based on our current 2024 projections, we expect to be able to achieve a targeted 3x or lower ratio by midyear, primarily due to the anticipated increase in our trailing 12-month EBITDA, even if only a modest reduction in outstanding debt. We have articulated a strategy and continue to emphasize debt reduction as our primary use of free cash flow. However, based on current financial projections, we believe investments in capital expenditures and other resources that support our organic growth strategy, while providing superior returns also represent an excellent use of free cash flow. Longer term, we believe a 2.5x leverage ratio is achievable. And at that point, we would gain additional optionality as it relates to free cash flows. Actually, we believe a 2.5x leverage ratio can be achieved by the end of '24 and maintained over the longer term. So we will be balancing these two priorities to maximize shareholder value. While these are still early days, our results have been very encouraging, and we are confident in our outlook, but there is more work to be done and additional objectives to be achieved. 2024 is shaping up to be both a transformative and record year. Most importantly, we expect to set a new foundation on which to grow profitably, given our new commercial focus and its ability to drive profitable growth. We sincerely appreciate your continued support and expect to reward your patience with significantly improved results in 2024. At this time, I would like to turn the call back over to Manny for his closing remarks before we move on to take your questions.

Thanks, Ed. NDT is a large market that can reward innovative companies who can cost effectively and expeditiously help their customers keep their assets safe, compliant and efficiently operating. For 40 years, Mistras has been an industry leader with solutions that solve these increasingly complex challenges. Today, we are recommitted to those values. Mechanical integrity programs have been transitioning from a time-based to a risk-based methodology. Mistras has been a leader in this risk-based approach trend with our industry-leading asset integrity management software via our Data Analytical Solutions. We are also excited about furthering the development of the digitization of the field inspection process. This will help boost productivity by automating today's manual processes, reducing rework, and standardizing reporting with our cloud-based platform. All of this will reduce customers' downtime, saving millions of dollars. We will continue to invest in this growing part of our business, and it will become an ever-increasing focus for us in the future. After a year of intense analysis and introspection, we've developed this strategy to capitalize on the trends shaping our markets. This includes a keen focus on growing our high-margin businesses to provide a meaningful profitability improvement while also enhancing our sales and commercial functions. We will continue to put the right people in place that will execute on this strategy, and we are developing the systems and processes to assure that we remain on track. Everyone is engaged and committed to these strategic improvements. Consequently, for 2024, we are reaffirming our previously announced guidance of full year revenue between $725 million and $750 million, adjusted EBITDA between $84 million and $89 million. And we additionally expect to generate free cash flow of between $34 million and $38 million. This is an exciting time to be leading Mistras. I'm very proud of our nearly 5,000 employees that believe in our plan and are working hard every day to achieve our goals and objectives. You can feel that level of motivation throughout the organization. We are rebuilding a company that can deliver steady, stable growth over the long term with a bottom line that can increase significantly faster than the top. Much has been done, but much remains to be done. We appreciate you joining us for this journey. At this time, I would like to ask the operator to open the call to your questions.

At this time, we will conduct the question-and-answer session. Our first question comes from Chris Sakai of Singular Research.

I wanted to ask about your expectations for Oil & Gas and whether you think it will moderate in the second half of the year. Could you provide any additional insights on that?

Sure, Chris. This is Ed. I can take that question. Thanks for the question. Yes. So this first quarter was extremely strong. It was an early start spring turnaround that has had a long duration running into April. So we were very strong across the board, Gulf of Mexico, Alaska international, you name it. For the fall turnaround season, we're expecting just a normal cycle, back down a little moderation, back to a more routine regular cycle versus you had a little extra time and run time here in the spring turnaround season. So we don't expect to exactly repeat that, but that's what we're feeling an ordinary normal fall turnaround season versus an extra bit of time in this spring turnaround season, which is coming up to a wrap here shortly.

And then can you help me understand the capital expenditures, were they mainly for Aerospace? And how is that going to improve margins going forward?

Yes, that's a good question, Chris. Our capital expenditures are primarily focused on our shop labs, particularly in Aerospace. This is our main priority at the moment. It will take some time for this revenue to materialize, which will affect margins, but you can expect a modest increase. The margins in the shop are stronger than those in the field, although they aren't as robust as the data segment. While most of our capital expenditures are directed at the shop aspects of our business, the field division also requires some investment. The slight increase in gross profit margins we saw this quarter is a positive sign for what we anticipate moving forward—modest growth in that area. Though the shop represents a smaller portion of our business presently, it should gradually aid in improving margins. Our capital expenditures are aimed at our higher growth and higher margin segments, which will enhance margins over time.

And then last one for me. Can you talk about SG&A improvements? What are you seeing there? And how much more can they improve?

Yes. Great question. Sorry, Manny, you want to answer or I can add first?

No, go ahead. Go ahead and answer that.

We committed, Chris, due to our Project Phoenix initiatives that we would drop SG&A $12 million year-over-year. We have every intention of doing that. We got partially there more than halfway there in the first quarter. We intend to keep dropping that down. Our full year expectation is to be at 21% of revenue, our SG&A. We have every anticipation and expectation of getting there. Project Phoenix has done the hard work already. So we have a little more savings to achieve as the year goes along. But we're very confident that we're at that level now and we'll continue to perform towards that objective.

Our next question comes from Tim Moore of EF Hunton.

And it was nice to see the strong sales recovery in field services and shop labs growth in North America and the SG&A cost savings shining through, good work. I know there was a lot of time and effort and definitely paying off. I thought I would just start with Aerospace and Defense. It's nice it's bouncing back. I know you mentioned kind of only back to pre-pandemic levels, which lead me to believe there's ample upside here. And I know you're working on the Georgia facility. So I was wondering maybe if you can talk a little bit more about the shop labs and facilities expansion, if Georgia is all going to be Aerospace and Defense? And are there any other kind of shop labs and facilities that you're expanding? Where are you going to put in other types of customers besides Aerospace and Defense?

I can address that. Tim, that's a great question. Yes, we are very interested in the Aerospace and Defense sector. The Georgia facility is mainly focused on commercial Aerospace, an area that is growing significantly. We plan to enhance our service offerings in that supply chain. The private space sector is similar, and we are increasing our contributions there, too. Defense is the third component of Aerospace and Defense. We will keep adding product lines for our customers, including more additive manufacturing and mechanical processes beyond testing. It’s about technology and speed; the quicker we can deliver parts back to our customers, the faster they can turn extruded or stamped metal into components like turbine fan blades. Our goal is to accelerate the supply chain and support our customers in overcoming the challenges they face in supplying their markets. We will keep expanding as it is a highly profitable business. We are working directly with key customers, providing significant value and return on investment through each part and linear foot we process. This sector is crucial for us, as commercial aerospace is our second largest end market. We see many opportunities here and will continue to invest wisely, focusing on projects with quick turnarounds and paybacks, while ensuring customer commitment to volume. We conduct comprehensive reviews before taking on new projects. It’s a fulfilling area of work, and I believe it will remain strong. In North America, we have returned to pre-pandemic levels, and internationally we are also progressing towards that goal, though there's still some lag. The international market is on a growth path as well. This is a global business for us, and we aim for our Aerospace labs to work cohesively and grow together. Overall, it is a key focus area with significant market potential.

That's really helpful elaboration. Because I feel like when we met a year ago at our EF Hutton conference. It's just so interesting how you are adding more value to the chain, not just doing the inspection and the testing and we actually taking some of the work off their hands to the value chain and capturing more of that if it's something important investors maybe didn't know as much a year ago. But just switching to Data Analytical Solutions. I know it declined in the quarter from project pushouts. Revenue was very strong in the December quarter. I think it was up 18%. But it was only 5% growth in the September quarter. I'm just wondering maybe if you're quantified or ballparked, or nearly half of Data Analytical Solution revenues, are they really lumpy from big projects would you say? Like an implementation and kind of a conversion rather than kind of like ongoing, more smooth smaller projects?

Traditionally, we have experienced consistent revenue. However, this first quarter was an exception due to a couple of projects being delayed. We are still on track to meet our targets by year-end. We have exciting developments underway that we believe will significantly transform the way data is collected in the field. As I mentioned, we are focused on digitizing data collection, which is a goal shared by many. We have a solid plan in place, along with the necessary software and techniques. Our goal is to scale this effort so our customers can receive their inspection data digitally, fundamentally changing the entire process. This will enhance efficiency, allowing customers to utilize the data more effectively while saving time and energy.

I just want to switch gears to one other topic more of a low-hanging fruit topic, optimizing your pricing contracts. It seems like that could be maybe at least $5 million of potential there over a couple of years, as those contracts roll over for renewals. You've got that pass-through cost inflation clause that's starting to help. I'm just wondering for the non-pass-through cost inflation, where you're going to be reprice these contracts, add extra features and services. How has the initial reception and responsiveness been of the customers? And has it made you more aware, maybe which customers or projects to intentionally call and just cut out right now?

The customers have been very cooperative. This is a difficult time. Costs are going up, and we need to be able to offset those costs in order to remain profitable. Many of our customers understand that and have been very cooperative in working with us to improve the pricing. Sometimes customers aren't as cooperative, but our focus is to keep our business profitable and to focus on those customers that can work with us. We feel the value that we can add is significant. And our good customers understand and cooperate with us in that regard. So it's working out quite well, and we wanted to continue to improve in that area.

One last question for you. I believe you said the CEO search might be concluded by the end of this quarter, if I heard correctly. I'm just wondering how long you plan maybe to stay involved with onboarding afterwards? Or is that duration maybe not going to be too long because you added the Chief Transformational Officer?

When you say with onboarding, you mean onboarding the new CEO?

Definitely that, yes.

Yes, our goal is to have that person in place by the end of Q3. We're collaborating with a great firm that is diligently working to find the right candidate to take over. I will remain as Chairman of the Board, and we'll closely work with that individual. Much of the work we've undertaken in the past six months and will continue throughout the year is aimed at ensuring that the next CEO can concentrate on advancing the company and maintaining a focus on cost-effectiveness and efficiency. We are dedicated to continually reducing our costs, and we believe there are opportunities to achieve that. It’s not only about lowering costs but also about improving our processes and being more efficient. That's why we have the Chief Transformation Officer position; it’s a crucial role in the company. We feel fortunate to have Hani as our CTO, and we are excited about the future prospects.

Our next question comes from Mitchell Pinheiro from Sturdivant & Co.

A couple of questions for you. First, what did your price increases contribute to revenue in the quarter?

Mitch, good question. That's approximately 2.5% to 3% of that almost 10% gain. So a nice significant piece of that, a little less than one-third or so of the growth came from pure pricing is about the magnitude of it.

I understand that you're going through turnarounds and those don't happen consistently. But should we expect the contribution to remain at the 2.5% to 3% level for the next three quarters this year, or will it vary?

It will vary somewhat, but that's a solid indication of growth. I believe Q1 was likely a bit stronger than the average for the entire year. However, we are expecting a significant portion of our growth this year to come from price increases in addition to volume. So yes, a part of the growth will definitely be driven by pricing this year.

And was the pricing sort of equally distributed across all your subsegments, Oil & Gas, Aerospace and Industrials? Or was it concentrated in your largest Oil & Gas market?

Great question, Mitch. It was across the board industry-wise, but it was more focused on smaller accounts. We kind of went through Tier 1, 2, 3, 4, 5 and focused on smaller accounts initially for non-repeat work, then we moved up to more moderate size finally up to the larger accounts. So we're kind of cycling that through. The larger accounts have longer-term work that would have had more fixed pricing. So we're kind of structurally creating strategic pricing practices to kind of feather that through the whole population. So as we work through that, we're having that discussion, as Manny said, successfully with many, many customers that we started in smaller pockets and moving up more structurally building this as a process, as a strategy across the board. We're not fully there yet. We're still working through all of that, but it was an offshoot of Project Phoenix, this whole commercial pricing strategy that we're bringing into place. But it is across all industries, but we kind of went from smaller to larger customer as a process. And we're still kind of working through the complete process to have a true new strategic pricing plan in place across the board is the ultimate goal.

When you look at your gross margin, can you explain why you wouldn't see more leverage given the strong growth in your upstream and downstream revenue this quarter? I would have expected some type of leverage, but I'm curious about what I might be missing.

On the gross margin front, the mix benefit wasn't significantly advantageous for us. The Oil & Gas segment, which saw an uptick, typically operates with lower margins, particularly during turnarounds. While this sector grew, it didn't do so at especially favorable margins. Data Solutions, as we noted, underperformed this quarter, which usually yields higher margins, but contributed less to the total. Despite EBITDA increasing significantly—up five times the revenue growth—operating leverage at the EBITDA line was notably greater. However, the gross profit margin didn't reflect much improvement due to an unfavorable sales mix. Aerospace provided some support, as it outperformed average margins, contributing positively to the gross profit margin. Nonetheless, the overall mix remains sensitive, and this quarter's mix was not ideal, resulting in only marginal increases in gross profit margin, even though EBITDA surged significantly compared to top-line revenue.

It is good to see a strong quarter in Aerospace and Defense. Regarding the private space business, you've mentioned its growth before. Have you ever provided a specific size for this category? I would like to know how quickly private space is growing. How much did it grow in the last quarter, and what can we anticipate for the rest of this year?

Good question, Mitch. The commercial aerospace sector is larger and growing faster, while the private space segment is a smaller part of that, experiencing single-digit growth. It's a valuable part of the business, though not as large as commercial aerospace. We keep these segments aggregated as they are consistent and growing together, and they share the same facilities. Many of our Nadcap certified facilities focus on both commercial aerospace and private space, which allows for good leveraging. They both operate through the same footprint at our shop labs, which is beneficial. The private space market is attractive and continues to grow, but commercial aerospace is currently more prominent and is recovering well, returning to pre-COVID levels in North America and growing quickly. While private space may not be in the spotlight right now due to the success of commercial aerospace, both segments are appealing, and their interdependence through our shared shop lab resources supports our customers effectively.

And then in terms of visibility for the Aerospace and Defense segment, what are you seeing for the remainder of this year?

We have a positive outlook for the aerospace sector. The supply and demand dynamics are strong, and they are recovering well. Our customers have significant production needs, which in turn creates more demand from us. Therefore, we are very confident and comfortable that commercial aerospace had an excellent performance in 2023, and we anticipate more of the same for 2024. This market is among our high-growth areas, and as mentioned earlier, we are allocating capital expenditures to sustain this growth. We are enthusiastic about this sector and expect it to continue expanding this year similarly to how it did in 2023.

I have a couple more questions. First, regarding the Data Analytical Solutions business, I have always thought that it is mostly included within your broader range of services. Are you selling Data Analytical Solutions separately? Do you have clients that exclusively purchase your Data Analytical Solution software and programs?

That is a larger part of the business, Mitch. Most of our Data Analytical Solutions customers and business are outside of our inspection customers. We do offer that for our own customers, and one of our goals is to continue to expand that within our customer base, but the majority of our business focuses solely on those customers. We analyze their data using a risk-based process methodology and help them identify which assets to focus on and when. It saves them significant amounts of money, and that's why we've seen good growth in that area. However, I don't feel we've fully tapped into that potential yet. Our plan for the next couple of years is to scale that part of our business because it represents the future. The digitization of the data is also where everyone wants to be.

Doesn't the Data Analytical Solutions product become a sort of a source of new customer, new business for your full-service testing and things? Isn't that like a sort of a feeder or a potential feeder?

That's an interesting question. It can be a feeder. That business, however, focuses on looking at the data that's been collected. And sometimes it can help us get more inspection business of our own. Clearly, when we do the inspection and the analytics, it's much more efficient for the customer and it's much more effective in the long run. But we can still do analytics on no matter who has collected the data as long as we can get it in an electronic format. And that's what we've been doing for the past several years. A lot of our business is coming from customers that primarily provide us with their data, and we can collect that data for them electronically, which is the most efficient way to work in that space.

Just last question. I did notice that shares outstanding diluted shares were up about $1 million from the fourth quarter. What was driving that? Is that just option related or restricted stock vesting or?

I believe what you're missing is that in the fourth quarter, due to some charges from Project Phoenix, there was a net loss from a GAAP perspective before adding anything back. The shares are impacted, and this does not dilute your loss with the additional shares. There are certain factors not included in the denominator. It's just a mechanical change in GAAP without any real substantive change, mainly a shift in the GAAP numerator due to that.

And then so should we use the first quarter number for the remainder of the year?

Yes, the current quarter would be the correct number to use on a weighted basis going forward.

And I am showing no further questions at this time. I would now like to turn it back to Manny for closing remarks.

Thank you, operator, and thank you, everyone, for joining this important call today and also for your continued interest in Mistras. I look forward to providing you with an update on our business and progress achieved towards our ongoing initiatives on our next call. Everyone, please have a safe and prosperous day.

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