Energy Vault Holdings, Inc. Q3 FY2023 Earnings Call

Good day, and welcome to the Energy Vault Third Quarter 2023 Earnings Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Laurence Alexander. Please go ahead, sir.

Thank you. Hello, and welcome to Energy Vault's Third Quarter 2023 Earnings Conference Call. As a reminder, Energy Vault's third quarter earnings press release is available now on our Investor website. A replay of this call will be available later today on the Investor Relations website. This call is now being recorded. If you object in any way, please disconnect now. Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. We caution everyone to be guided in their own analysis of Energy Vault by referring to our 10-Q, which is a filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor disclaimer and the non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. As previously announced, I'm delighted to introduce Bernie Colson, our new VP of Investor Relations, who is on this call and will be hosting these calls in the future. Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer; and Jan van Gaalen, our Chief Financial Officer. At this time, I'd like to hand the call over to Robert Piconi.

Thank you, Laurence, and welcome everyone to our third quarter earnings call. I'm excited to share these results, as you may have seen, we reported record revenue exceeding $172 million due to our project execution, which I will discuss shortly. It's noteworthy that our revenue has ramped up significantly in the second half of the year; just to remind you, our largest quarter prior to this was $100 million in the fourth quarter of last year during our first year of revenue. I’m pleased with the results and how we are fulfilling customer needs, which is reflected in this revenue recognition and the tremendous efforts of our teams at various sites. This morning, we also announced the successful turnover of our hybrid battery system in Southern California, which is among the largest in the region at 275-megawatt hours. This represents another milestone for the company, demonstrating our ability to execute multiple large deals, as we announced last year in the multi-gigawatt range, and will continue to announce this year. I am currently speaking to you from Shanghai, China, where I will be giving a keynote speech later today at a conference focused on carbon neutrality, organized by local government and energy partners. I am thrilled to have visited our first site in Rudong this week, accompanied by our Board member, Larry Paulson. Larry brings his extensive experience from Qualcomm and Nokia, and it’s enlightening to witness the local excitement around our project and technology. China Tianying, our local partner, has provided exceptional support, particularly in engineering and construction and optimizing our technology for the local market. Despite facing COVID-related challenges, their focus and execution have been commendable. The technology we are implementing, based on gravity, is well understood here due to the established presence of gravity-based systems. Our local team and our partners are effectively collaborating on the project as we progress through the grid interconnection process. We have been successful in completing the installation of a 35-kilovolt overhead electric line connecting our system to the grid, which is a remarkable engineering achievement. We hope you will have the opportunity to see this in person when visiting Shanghai. Our EVx systems present a more economical and scalable alternative to traditional pumped hydroelectric plants, which dominate global energy storage capacity. We will keep you updated as we move closer to full integration within the state grid. As we've earlier communicated, new policies in China require energy storage for renewable power plant projects, which has created a significant expansion opportunity in our market. CNTY, our partner, has announced five additional projects totaling approximately 1.2 gigawatt hours, increasing our total projects in China to over 3.2 gigawatt hours in just 18 months. Furthermore, the unique model we offer aligns well with the needs of China’s energy infrastructure and market demands for storage while supporting net carbon neutrality commitments. We are witnessing significant growth potential here, which will bring high-margin recurring royalties for Energy Vault over the lifespan of these systems. Our projects underscore our ability to operate in a rapidly growing market that requires innovative and effective solutions, where we have distinguished ourselves from single-technology companies. Moving to other projects, we continue to prioritize customer execution, and I’m excited about our progress this year. We announced several projects last year, including a 1.7 gigawatt hours portfolio that is set to be implemented within aggressive timelines. Our first hybrid battery and peaker plant energy storage project in Stanton, California, has been completed and is already operational, illustrating our capability to manage complex projects and deliver outstanding results quickly. We look forward to the formal inauguration on December 6th, where we will celebrate this milestone. Notably, our collaboration with Wellhead has yielded a successful outcome, validating our technology and execution capabilities. As I mentioned, we are also progressing rapidly on numerous other projects, including a partnership with Pacific Gas & Electric for a green hydrogen project that will provide backup power for critical needs. In closing, our financials have shown promising results. Our sustainability score has improved significantly, ranking us among the top companies in the clean energy transition sector. I want to thank everyone at Energy Vault for their hard work and commitment to our mission. I'm excited to hand over to Jan Kees to further discuss our financial details.

Yes. Thank you, Rob, and good afternoon, everybody. Our financial results are highlighted by our record third quarter revenue of more than $172 million, more than three times sequential quarter-to-quarter growth after more than the prior four times sequential between Q1 and Q2. This revenue reflects continued construction progress and execution across our battery projects in the United States under a build, commission, and transfer model. As you can see from the earnings release, we maintain our full year revenue guidance of $325 million to $425 million and remain confident in achieving it. Our gross margin was 4.2% in the third quarter, impacted by some temporary unfavorable timing in two regards. First, we delivered a lot of hardware in Q3 that we will be realizing the value-add margin from in Q4 and the POC accounting. And second, some high-margin licensing transactions shifted out from the third quarter to the fourth quarter. However, as you can see from the earnings release, we maintain our full year gross margin guidance of 10% to 15% and remain confident we can achieve it. Our adjusted EBITDA is trending well as it has improved 43% sequentially to a negative $10.3 million. The key noncash items that we added back were $10.7 million of stock-based compensation and $1.9 million in net interest income. We continue to anticipate adjusted EBITDA and operating expenses to stay within our guidance range as we remain acutely focused on managing costs. We are driven to optimize our cost structure to realize profitability as soon as possible as the business continues to scale up, and we remain very optimistic regarding our progress towards positive adjusted EBITDA. Operating loss was $22.7 million, an improvement over the second quarter of 2023 of $5.7 million, driven by continued focus on operating expenses and business costs. As of September 30, 2023, we had $132.2 million in cash equivalents and restricted cash, leaving us well-positioned to continue our growth strategy and execute on our projects. The primary uses of cash are cash operating expenses and working capital needs associated with equipment purchases for our energy storage projects. As these projects achieve milestones that ultimately begin to generate revenue and gross margin. Some of that cash will return to our balance sheet. Considering these factors, for the year-end 2023, we expect our cash to remain at similar levels that we exited in Q3 or $132 million, given the expected project turnovers. In addition to the strong cash position, we expect to reduce the restricted cash portion significantly before the end of the fourth quarter. Please keep in mind that we maintain a bonding capacity in excess of $1 billion to facilitate additional growth projects as we desire. And with that, I'll hand the call back to Rob.

Yes. Thanks, Jan Kees. Just in closing here and before we get to some questions and just reflecting. As you do, I think, every quarter and look back and we're getting here to the end of our year, really just encouraging to see our strategy and how it's playing out. I think successfully across the world is something in light of some of the other newer energy storage companies and some of the things that are coming out here recently. But a few key points I want to highlight here for investors and for those that will be listening in. I guess the first one, and to remind everyone, we are the only and remain the only storage company that's executing and implementing a portfolio of short, long, and ultra-long duration technologies across some of the largest utilities and IPPs in the world. And I think that that point of our customer sets and who we're focused on and the people choosing us is fundamental and important. This is a manifestation of our strategy in the real world and expanding our ability to address the largest scope of this energy storage market opportunity, obviously participating in various segments because of our multi-technology, multi-duration focus given the strong capabilities we have on the team. And thus, in participating in those with a very resilient profitability as a portfolio of solutions that spans these most important durations right now. And some of the new applications that still need to have economical solutions that we're very, very focused on it very mission-critical. Second, we're being chosen not only for our technology differentiation economics, but for the deep industry experience of our people and our team. And really, as we saw even in this last quarter, moving heaven and earth to deliver for our customers, hence the large revenue rec we had in the quarter and taking delivery, as Jan Kees mentioned, a lot of the hardware that's going to front up all the execution we're in the middle of now for this quarter, which is significant. We're also thirdly, uniquely monetizing our technology in particular innovative gravity technology in ways no other energy storage company is doing in the market for long-duration, which as I mentioned earlier, is still developing with a few alternatives, I would say very few alternatives that are technology-ready in the market. We continue to need, I think as an industry, a lot of focus here in development, and I'm the biggest fan of all of our energy storage colleagues here that are working on new technologies to help with our clean energy transition around the world. Fourth, we are uniquely also playing on a global stage. No coincidence that I'm calling in here from China given everything we have going on and what's been recently announced. And in this case, participating in the largest market in the world with a long-term royalty structure here that we established over a year ago and a first-mover advantage as a government-approved technology to complement pumped hydro here and lithium-ion. And with the earlier investor base from the likes of Saudi Aramco, obviously, from the Middle East, BHP for Australia and Korea Zinc as well, Atlas Renewable, who partnered with us here also for the China market. I'm very excited by the upcoming regional developments that we're seeing and involved in and supported by the same investors. I'd also say from a FIB perspective, our energy solutions approach to solving customer problems is playing out as we did in providing the only sustainable solution for the multi-day application that Pacific Gas & Electric was trying to solve for the 48-hour backup system in the microgrid that was required. They did not want to continue to use diesel gen, not only for the GHGs but for the noise and just the disruption it caused. And are in process now of bringing them a unique green hydrogen hybrid solution enabled through our hardware and our software expertise and our energy management system. And then finally, and as I do here on these calls, our most important factor in differentiation that we now see manifesting itself as we turn over our first energy systems to customers on time and meeting or exceeding expectations is our people. The innovation, creativity, and the customer focus that passion really to deliver for our customers that can continue to come through. I continue to be impressed, but also with critical core values around our culture, which number one on our list is humility as we work as a team, work with our customers, understanding that there's a lot we can still learn, understanding a lot that we can bring in that maybe doesn't exist here and reflect as we improve and continuously improve ourselves. That is a core value of the company, as I mentioned, and one that we continue to leverage here as we get into the final stages of our Q4. In the end, these results with our customers will tell our story, which will reward our investors for larger and more predictable cash flows. I know we're all interested in those as we continue our growth in development as a global leader in energy storage. With that, operator, we are now ready for questions.

Thank you. We will now begin the question-and-answer session. Please note the first question will come from Stephen Gengaro with Stifel. Please go ahead.

Good evening or good morning maybe. Not sure. Thanks for taking the questions. So I think, first, what would be interesting from my perspective is when you think about the projects that you've announced and kind of what's in your backlog. I know some of these recent projects are royalty/licensing arrangements, right? But when we think about that, is there a way to sort of think about how the current backlog unfolds as far as the type of revenue you could see next year?

Yes. By the way, it is the question, as you look at our backlog, in particular, Stephen, that awards category. So I think our speed to convert those will shed more light if we've got the 800-megawatt hour there, but we have a lot of other awards in there that are in process, various phases of contracting. And some of those with CODs next year, some of them with CODs into 2025 that we'll have revenue recognition. So I think the first thing I would look at there is just the size of that bucket of awards. I think is an important one. We also saw, I think, a good conversion from our short listings bucket into awards. So we've added to that and as well as converting an additional project for Texas in to a booking as well. So I think that is a space to focus on in terms of awards. And then the timing of that conversion, we're in the process of putting that together for our 2024 budgeting process, which is internal, and then will be external. We'll be sharing and setting those expectations at our Q4 earnings, which will be in February.

Thanks. You mentioned on the call progress toward reaching EBITDA positive. Is that a full year 2024 goal? Or is it going to happen in a quarter?

We are indeed expecting to see some quarterly improvements in adjusted EBITDA. Our focus is on revenue recognition, particularly in terms of accounting for revenue and the timing of our projects, as we assess whether we can achieve adjusted EBITDA positivity for the entire year of 2024. We are actively working toward that goal. Regarding our operating expenses, I encourage you to take a closer look. We are not just passively waiting for growth to occur, and we never intended to simply rely on growth to become profitable. We are continuously examining our licensing and royalty model, especially in the context of gravity, and applying what we’ve learned over our first 18 months in operation while delivering our initial project. We are optimizing our processes to enhance efficiency, which is an essential part of our strategy to reach cash flow positivity sooner than initially anticipated. This reflects our commitment to our investors and the importance of generating positive cash flow. We are pleased with our current cash position, as we have no debt and are eliminating the final restrictions from our earlier projects, most of which should be resolved by the end of the year. This is due to the cash restrictions we imposed during those initial projects. We now have a strong model in place, and as Jan Kees mentioned, we've secured over $1 billion in non-collateralized project funding and bonding capabilities, allowing us to carry out our projects without needing to reserve cash for letters of credit or similar arrangements. I hope this information is helpful.

That's helpful. I have one more question if you don't mind. As the first EVx system approaches full operational status in China, are you having discussions with potential customers in other regions or in China? Is there any hesitation from them, like wanting to see one of these systems fully operational before committing? When you speak to customers, is it more about your existing success with new awards, or are you also engaging in discussions with potential customers regarding this technology?

Absolutely. I would say that despite these significant announcements, particularly over 3 gigawatt hours in China, there are customers eager to see Rudong operational and to receive some of the initial performance metrics. This interest is not limited to China; it's a global phenomenon. It's a great question, and many customers are currently planning their longer-duration needs. As you know, the long-duration market is still emerging at a different pace compared to the short-duration market, where most of the current economics lie. We have customers actively looking at the initial performance metrics that we expect to release. Additionally, we are making progress with customers in South Africa, India, and even in the U.S. Recently, we've been engaging in discussions and developing proposals for systems that I anticipate we will announce soon. This momentum on the gravity side is very encouraging. However, it's clear that there is a segment of customers who want us to provide performance metrics as they become available.

The next question will come from Chris Ellinghaus with Siebert Williams and Shank. Please go ahead.

Hey, everybody. How are you?

Hi, Chris.

The revenues were surprisingly good, but Jan was talking about the margins. Can you give us any more color on the shifting? And what does this tell us anything about the Wellhead margin, for instance?

Sure. Yes. Let me comment on that. And I think Jan Kees mentioned this. But in any quarter, we're going to be taking deliveries. And in particular, if you do the math on the second half ramp for us and the fact that we're reaffirming our guidance, we took deliveries of a lot of material in Q3 and under POC accounting and GAAP accounting until we add value to some of that material, some of the profit on it does not get recognized. So hence, there's some delay as we're going to be now in the middle of adding value as we're integrating equipment, for example, and doing more of the services onsite, which as you saw in some of the earlier quarters drove some of the higher double-digit margins. So it is a little bit lumpy, Chris, and as you can expect, in an EPC type of business for the shorter-duration type of solutions we're providing. But I also want to make sure you're aware that none of that quarter's gross margin has anything to do with anything on Wellhead. So Wellhead was a successful project that we implemented. We did it on time. There were no LDs impacting gross margin. And so, that's not a reflection on the Wellhead piece. It's more of a reflection of we have a 440-megawatt-hour project, of which there's a very large substantial component of that project, almost 70% of it is related to the battery portion alone, which that is going through the overall project because we're integrating the entire thing. So I’d look at this more on a timing of where we are in the second half ramp. And I think we can expect these things to smooth out a bit more as we go forward.

Okay. Great. I think the press release sort of suggests there are additional projects in Nevada. Can you give us any color on what you've added to the pipeline there?

I don't know how specific on Nevada we were in the release, but we've added more projects in the U.S. for sure as part of our bookings growth. And in addition, I mentioned this before, we're seeing a very interesting uptake in applying some of our gravity technology to some very specific customer needs and specifically in the utility space in the West. So we're going to be saying more about those things as we progress those through definitive agreements with customers. But suffice to say, I'm very encouraged by what I'm seeing in terms of market book development, adoption, and discussions around applying our various technologies. And that includes, by the way, the backup systems and approach that we started with in the first project with PG&E.

Okay. Just looking at the income statement, SG&A and R&D lines specifically, are either of those two sort of starting to hit their normalized run rate for the near term?

Yes. By the way, great question and observation. I would say that we're generally there, meaning if you take our Q4 times for last year, you'll see that we're quite a bit below that. Obviously, the Q4 has some onetime items, but even if you normalize it, we’re actually running flattish to slightly even down from the Q4 times for last year. Now we had initially had a growth investment plan even on OpEx this year, and we've adjusted that just by nature of where the markets are, obviously, given what we're seeing on both the macro and I think given investor requirements here in a higher inflation environment. So we got in front of that in the first half of the year. We're seeing some of those results now, and we're continuing to look at that as we look at next year because we're very focused on not only any one quarter of cash flow or adjusted EBITDA, I guess, positive. But doing that for the full year, and we'll be able to update that as we give guidance at the next quarterly earnings.

Your question will come from Thomas Boyes with TD Cowen. Please go ahead.

Thanks for taking my questions. I appreciate it. I was hoping if you could provide some insight on the company's Vault-Bidder solution that was introduced. What has customer feedback been like there? And then maybe what's kind of the time frame to have that solution deployed with customers?

It's great to talk to you, Thomas. This is really exciting as it represents a significant part of the development of our software platform and the investments we've been making over the last two years. This will provide customers with additional capabilities to optimize their economic charging and discharging of electricity in unique ways. Our team, although Energy Vault is a newer company, consists of professionals from leading software and integrator companies with experience dating back to 2012. We have leveraged that experience to assist customers in maximizing the efficiency of their systems, particularly regarding shorter duration charging and discharging, taking advantage of time-of-day pricing fluctuations. We’ve begun implementing this product with some customers, allowing us to evaluate our assistance in comparison to their past results. Looking ahead, this will serve as a module within our broader energy management system, which also includes asset management and other optimization capabilities. Regarding your second question, I would say this is currently in a live testing phase with some customers. I believe this can be a differentiator for those looking to activate certain capabilities over time as we enhance our hardware innovation with software solutions.

Appreciate the color there. And then just maybe one on some of the other partners that you have announced for kind of that licensing and royalty agreement in Europe and Cyprus. So just any kind of timing there? What do you think is maybe holding back some momentum in those markets?

Yes. Well, we just announced those just within, I guess, about nine months ago. So typically, just like with China that we announced right away as we went public. They're just now announcing development in projects and then there'll be royalty streams that would start to come as they get built out. So on those things, you can assume that from announcement that you would be looking at a minimum of 18 months to 24 months type of timeframe of when both first projects would be getting announced and some royalties would begin. And as I said, if you look at those announcements that were made, they're essentially about nine months to a year behind the China timeline. So I would say, we'd be looking at the impact of some of these things toward the second half of 2024, but more, I think, in better volume in 2025. And we're going to try to give you some good guidance on that as we work toward providing to investors in our Investor Day sort of a three-year plan on the various parts of our business. Because we, I think uniquely, I imagine create a challenge for some of you given the different streams of business we have in terms of the EPC side of the business, the licensing side of the business, and even some of the other unique solutions that we're doing and how we're monetizing gravity, for example, and other services. So we're going to provide, I think, some updated more segment type of guidance over a three-year period here as we get closer in the coming months also in providing guidance for our 2024 at our next earnings.

Thanks for taking a few more questions. So I guess a couple of things. One is, maybe it's easier to ask this way. When we think about your quarterly revenue, I know it's going to be lumpy and there's a lot of moving pieces. Is there any way to think about a baseline number? I mean, obviously, it went from 11 to 40 to 170, right? So trying to model it, it's really hard. I mean, is there any kind of baseline number from revenue recognition we can think about? I mean, even your fourth quarter guidance right theoretically, $100 million window there based on the full year guide. Is there anything you can add there, either specifically in the fourth quarter or just in general?

I would say generally on the shorter duration projects. So whether they're the hybrids and battery, Stephen, we're executing those. And if you look at Wellhead, which we announced, I think signed at the end of August last year, September and had it mechanically turned over in June. So I’d say on the shorter duration in terms of rev rec, it's anywhere from nine months to 15 months. It depends in some cases, on some customer control timing. And yes, I know it's difficult because these things are lumpy from a formal accounting rev rec perspective. As you look at the project and look at our rev rec this year, for example, we're rev receiving some of the initial services and value add the payment milestones to customers differ a little bit than the POC accounting. And then as we get closer to the CODs, that final six months is where most of a good chunk of the revenue will come because it's tied to larger deliveries at the site and things where we begin to add value to equipment. So I would say that what's important to pay attention to is the COD, the customer COD that we would share. And typically, we do share those unexpected timing of when we'll be turning over. And if you do the math on the rev rec and turning coming back between nine months to 15 months from that project, we typically like we've done for PG&E. We've given guidance because it's public information, PG&E on their hydrogen project, where it's publicly should be delivered in June of next year. So I think that's a way to do it. But one action that we'll take with you is we'll get offline and maybe into next week. I'll be happy to participate when I'm back in the U.S. and coming back on Friday. And let's get a call next week and we can provide a little better guidance to make it a potential a little easier for you on that in terms of assumptions.

Great. That’s helpful. And then just one more quick one. Just to triangulate your gross margin guidance for the year suggests something for the fourth quarter, which could get you pretty close to EBITDA breakeven if things go well. Am I thinking about that right?

You are.

Your next question will come from Noel Parks with Tuohy Brothers. Please go ahead.

Hi. Good afternoon.

Hi, Noel.

I have a couple of questions about China specifically. With the recent announcement detailing the five new plants in various regions of China, I'm curious if Tianying was planning these projects. Was this a centralized negotiation where everything came together at once, or were they developed independently and then announced together?

Yes, that's a great question considering the regulatory and government structure here. However, the situation is not as straightforward as it may seem. These developments are not primarily driven by a central plan that CNTY is simply plugging into. CNTY is actively leading the development in various provinces of China with this new technology. As I noted earlier, we have already received approval in China as a recognized technology. When you look at the current energy storage options, such as pumped hydro and lithium-ion, there's not much else available to meet the 20% mandate. This is why you see announcements regarding project signings with CNTY for multi-gigawatt hours, even though we haven't yet reached full capacity in Rudong. To directly answer your question, the initiatives aren't being orchestrated from a single office in Beijing; we're pursuing development province by province. While the overarching goals come from Beijing, the provinces have the decision-making power. CNTY is doing impressive development work, sharing and optimizing technology specifically for China, which is driving the advancements you're witnessing. Does that clarify things?

Totally. Great. It’s just what I was wondering. And as you look to the royalty revenue stream, I guess not taking anything for granted was revenue recognition. Is that pretty straightforward from an accounting perspective? Like you're just going to be booking a receivable over time is going to get sort of smoothly move over into cash?

Yes. Let me explain how that works. And under GAAP accounting and also specific SEC guidelines here on royalties, we don't really create a receivable for them just because until they actually start building projects, we don't have that exact visibility when it's coming in. Now once there's a project that's defined under if they're going to own it and operate it, which will mean a certain timing of the rev rec or if they're going to be building them and handing them over, that would be under a more accelerated type of recognition. So I think once those things are contracted in a way where we get timing visibility, we might create a receivable for that. And generally, we're rev receiving these as they come. So as the royalties will be paid and they will become more predictable and we can sort of build them in and share with you what we're seeing. As you've seen, you've got about 3.2 gigawatt hours of projects announced here. And those are going to be built out. Now over time and depending on the business model, we'll be receiving royalties on those projects, and we can build those into the timing. So that will get more predictable. But this is, I’d say, something from a modeling perspective, on the royalty side typically comes into the other income line item or the royalty revenue, just depending on the type of income it's going to hit and if it's recognized over time or in a lump sum. So we'll be able to provide some more guidance now as these projects are getting built out. I know it's a little frustrating as people look at is understanding, hey, what's the timing, what's the margin impact? Obviously, these are essentially 95% basically pure profit that comes in because we recognized the cost through the R&D or to the license already. So there are great streams to have and giving some guidance on the timing of those, we will be doing with investors as we get into our Q4 results. I will say that I think the good news is you look at it and as people look at us is we're going to have these streams coming for people that are hopefully long-term investors looking at Energy Vault the fact that we're monetizing this that will result in as these projects that were just announced, large and profitable streams or royalties that will become a larger percentage of our revenue. I think that is all a good thing. It's just a matter of timing. As we build these things out, we'll be able to shed more light on how that timing is going to work into the second half of 2024 and into 2025.

Terrific. Thanks a lot.

Yes. Thanks, Noel.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Robert Piconi for any closing remarks. Please go ahead.

Just to thank everyone for your time. We have a very intense quarter we're in the middle of here given multiple customer sites and supporting customers here. So a lot of focus continues there, as I mentioned. I think that is absolutely job one, as is our ability here on continuing to convert from our large awards bucket there in the bookings and as we go into 2024. So I appreciate everybody's time and support through this and your feedback. And we'll be back to you here and looking forward to more interactions in the coming months. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.