SHAPE Australia Corporation Limited (SHA) Earnings Call Transcript & Summary

Good afternoon, and welcome to SHAPE Australia's First Half FY '24 Results Webinar for the period ending 31 December 2023. Presenting today is SHAPE's CEO, Peter Marix-Evans; and CFO, Scott Jamieson. Today's format will begin with a run-through of the results, followed by a Q&A session. [Operator Instructions] I will now pass to Pete.

Thanks, Mel. Good afternoon, everyone, and thank you for taking the time to join us this afternoon. We've got a slide deck that we'll lead you through. We'll move through that efficiently, hopefully, with enough details for you. But please do remember that there is -- as Mel said, the Q&A function on the side or down the bottom of your screen, which, if it's appropriate to answer on that particular slide, we will, and if it's more appropriate, we'll pick it up at the end, but there'll be plenty of time at the end of the session for Q&A. So just a bit of a reminder, a lot of you would understand a little bit about the SHAPE business, but for anyone on the call today that doesn't, SHAPE's a national fitout and construction service specialist. We've got offices all over the country, so in all states and territories across Australia, and we've got over 600 dedicated staff. We've got a diverse set of capabilities across construction specialist, so fitout and refurbishment; facade remediation; aftercare and facilities maintenance; defense; modular; and new build. And you can see across there the various offices on the right-hand side and also the operating entities that we have within the group with SHAPE: DLG SHAPE, our indigenous majority-owned business; AFM by SHAPE, which is our Facilities Maintenance; and KLMS, our Modular business in Victoria. I'll hand over now to Scott just to take us through the overview of the financial highlights and then we do have another page on financial highlights later on in the deck as well. Scott?

Thank you, Peter. We've had a very strong first half for FY '24. As you can see there, we've got revenues of $412.2 million. It was marginally down on the prior corresponding period. A lot of that relates to the timing of secured works, the commencement thereof. But you'll see there in the middle of the screen, we've got record project wins of $526.8 million, which is up significantly to the prior corresponding period where we did $409 million. So that's a 29% increase, which then leads into the -- our record backlog orders of over $450 million, which again is up significantly, up 24% compared to the prior corresponding period. The results as far as EBITDA goes, we've gone $12.2 million, again, up significantly, up 31%. We'll talk a little bit more about that later in the slide deck. We've also produced a net profit after tax of $7.5 million, up 59%. And that's translated into an earnings per share based on 83-odd million shares on issue of $0.09 per share. And following on from that, we have declared an interim dividend of $0.08 per share, which is up 60% for the same time last year. That's a fully franked dividend, equating to circa 90% payout ratio. And I'll note that, that is the highest dividend that we have paid since listing. We move on to the liquidity position, which remains very strong. We've got cash and marketable securities. The marketable securities, that's something that's managed by JBWere, and they're primary corporate bonds with investment-grade credit ratings. This is to increase our yield on our strong liquidity position. The breakdown of that is we have circa $80 million in cash and [ $17.5 million ] in marketable securities. We continue to have a very, very strong identified pipeline. That being projects that we have a skill set to undertake on the right terms and conditions. That remains very robust at $3.6 billion.

Thanks, Scott. Moving on to operational highlights. And apologies on the screen of that wording is a little bit small, but I'll highlight them. I'll pick out any of the highlights for you, so there's no need to squint on your screen depending on how it looks. So just from an operational excellence point of view, as we sort of talk about from a SHAPE point of view, no incident is acceptable. And we'll continue to pursue 0 harm outcomes on all of our operations for all of our stakeholders, subcontractors and anyone that comes into contact with our operations. So our LTIFR and our TRIFR have increased slightly. So if you see the TRIFR, increased 17% compared to the pcp. I'd note on that, that the prior corresponding periods were very low. And I'm still pleased to say that if we compare our results to perhaps the Office of the Federal Safety Commissioner-accredited companies, we're still very much towards the upper end of our performance, caveat that with, again, no incident is acceptable. Pleasingly, total incidents are down by about 6.5%. That's important to note, particularly with the additional revenue and hours we've done throughout the year, which, obviously, from a total incident's point of view, would have an impact on that. Also pleasingly, 26,500 proactive safety, quality and environmental observations logged. It's not all about catching people doing the wrong things. It's about people -- catching people doing the right things and really promoting that safety culture. From a people point of view, people and culture. So as we mentioned earlier, we've got over 600 loyal and committed amazing people. You would have heard me say before that our only assets are our people. So we have a very strong commitment to both attracting the best talent in the industry, but also in retaining that talent. 6% increase in our total workforce, with 7% of our employees being promoted. And our unplanned churn is sitting still below 10%, which again is at the upper end of performance for the industry or well in excess of industry performance. From a partnership point of view, we've touched on before the -- our secured order backlog, a little under $527 million. That's supported by a very high client Net Promoter Score of plus 87. And one of the backbones to achieving that high Net Promoter Score is our perfect delivery program, which is an internal program, which looks at 0 defects, our operations and manuals on time within a week of handover, and achieving perfect delivery for our clients. So we're sitting at 89% of all of our projects are signed off by our clients of achieving that milestone, which is a fantastic support. Last one there on environmental and social impact. So SHAPE corporate actions, we've maintained our Climate Active certifications for our corporate operations. You'll see there -- I'll touch more later on about Green Star, with Brisbane office achieving 6 Star Green Star in the period. To note, we're currently delivering 10 Green Star projects as well around the country, with a combined value of $106 million-plus. And just the last note there is that we've done almost $600,000 in value of goods and services in donations through our Community+ program to give back to the community from an ESG point of view. Moving on to just revenue. So that's just -- I've got 2 pages on revenue here. Just to show a bit of the trend on the split. So some of the takeaways there, you can see from H1 or for H1. We've had strong revenue growth in WA Queensland and South Australia, slight reductions in Victoria and New South Wales, where we saw probably the first quarter have some plenty of activity, but we saw some of the actual sales delay from a client sort of final sign-off. We don't have any concerns with that when we look at the pipeline for both New South Wales and Victoria. And in fact, when we look at the number of decisions pending and tenders that are submitted where we're sort of either 1 or 2 or where we've been indicated that we're a single preferred contractor. We're very comfortable with the positions for both of those businesses. Mentioned there, a strong tender conversion rate, so at 52%. Again, that's at the upper end of performance for the industry. It means, as I've sort of always said, we don't price for practice. We identify the right opportunities with the right clients that suit our skill set and then the opportunities we pursue. So we have very little -- reduced costs in downtime and costs in awarded works through tendering works that are not going to be appropriate for SHAPE. Talk a little bit there on the right-hand side around origination. So we've got our bespoke CRM with some fairly sophisticated algorithms, which will give us a very strong indication of tenders as well -- opportunity or chance or opportunity of winning those. So that gives us a -- supports that strong conversion rate of 52%. And I'd also note there that certainly from a commercial office space, we've got some very good transparency across the market with that lease expiry register, which allows us to provide a level of accuracy on forward forecast for our sales. From an execution point of view, we've just -- a strong record there, both investment in system and processes across financial management, project delivery, environment, health and safety and HRIS. These systems and processes are all very much embedded in our operations and do focus on mitigating risk across the business. The last one there, aftercare and maintenance. So we do have a dedicated team focusing on maintaining those client relationships. So we like to nurture those relationships through the cycle, and that supports our 80%-plus of our work as being repeat business. Staying on revenue. I just wanted to provide a breakup there across the revenue streams as far as fitout and new builds, facades, modular. So you can see there, both those graphs are actually breaking up the same sectors in different ways. So we're looking at it from the percentage of our book on the left-hand side. So you can see the commercial markets maintain their buoyancy. Our core markets show stability and they're maintaining. But interestingly, on that left-hand side, you can see there that as part of our growth initiatives, the modular and new build sectors continue to gain traction in that area. If you look to the right-hand side, which breaks it up by value, and you can see -- I would note that the graph on the very right, you can no doubt read that it's the half year only, but that is half year compared to full year, hence why it looks smaller. But if you look at that total, that's $412 million pcp of $434 million in FY '23, which is really just a timing thing. When we look at the backlog and the number of project wins, it very much supports achieving greater results for the full year. So that's the revenue part. When I look forward to the future, and we just start to look at backlog and to pipeline. So the graph on the left is the backlog order by sector. So backlog position, you can see is quite reverse -- diverse across sectors. We maintain that strong capability and focus on the commercial office markets. When we compare that to the pipeline by sector, you can see our reliance on that commercial office market starts to diversify as we continue to blend our book with adjacent sectors and capabilities. So we're starting to see defense, specialty, hotels, health, education and retail. It's not to say that the office market is shrinking and the office market is not shrinking. We're seeing that continue to evolve. That's more looking at from a pipeline point of view as we continue to pursue our growth and diversification initiatives, we continue to diversify that book. Right-hand side, you can see there that backs up some numbers we've used previously. We've identified pipeline and how that flows through to tenders won. Just a little bit on the business, diversification of projects. So the left-hand side pies, you can see -- first of all, I'd make 4 points on this slide. The first one is that approximately 50% of our work is 6 months or less. That gives us some level of protection against cost of goods rising and those sort of inflationary measures. Then we go to interior versus exterior works and in regardless whether it's new build, facade or a fitout, almost 90% of our work is actually internal. So that, again, gives us a level of protection from -- not just from industrial relations, but weather exposure and the likes. The third pie there -- pie graph there is repeat work, which I mentioned earlier, that's in excess of 80%. So 87% of our work is actually with clients that we've worked with before that we know them and they know us, and we've pretty much cozied up to each other. So that just means that we're not learning new clients along the way and we start to develop those relationships. The right-hand side was just a diagram -- just I guess, put an underline and to talk about the commercial sector resilience. So as you would have seen in both our backlog and our pipeline, SHAPE remains heavily committed to the commercial office sector. But what I would note there is that the beauty of the commercial office sector is that it enjoys work across all aspects of the cycle. So if you look across from when buildings are starting and they get built, there's new build components, fitouts, then you've got ongoing leases, you've got tenant churn and then asset repositioning. So whether tenants are moving in or out, staying, going, increasing, decreasing, there's always work across those aspects of the cycle. And then what we're seeing in particular now as clients have a flight to quality per se is any of the assets that are B-grade, C-grade are definitely starting to get some -- a lot of focus on repositioning as building owners and landlords and employers entice employees back to the office, which we're seeing a continued increase, which I won't go into because you no doubt read about that in the paper on most given days. Moving on to safety leadership. So just -- that's a fairly busy slide. I won't go through the numbers necessary on the left. Suffice it to say that we continue to pursue an increase in our performance, and SHAPE remain committed to the pursuit of 0 harm. So safety performance metrics whilst positive, as I noted, there's been a small increase in the TRIFR and the LTIFR. I guess that comes down to there's a couple of parts to it: it's increased revenue and increased exposure. Also a lot of new labor coming into the market, which means that we need to be ever vigilant on our training and our onboarding and how we bring people into the business and on to our sites. As I noted before, we still sit above average of the OFSC, which is the Office of the Federal Station Commissioner-accredited companies, which we don't take that for granted. And we continue to invest in those safety leadership systems and process evolving, even down to developing project performance and reporting, looking at the potential benefits of AI through the exploration of how do we learn from our data and that sort of thing. I mentioned earlier the total incidents are down 6.5%, which is down from 237 to 222. And I've talked about the rest of the observations there on that page. On to sustainability. So we talked last year about measuring our carbon footprint. I'm pleased to say that despite an increase in revenue and our project hours, we continue to reduce our total emissions, down to 2.912 tonnes. So we'll continue to work towards that and to, yes, again, continue to reduce our carbon footprint. You can see there carbon neutral. So we mentioned earlier that our corporate operations have been certified Climate Active carbon neutral, which is an achievement we're very proud of. From a Green Star point of view, I mentioned earlier that we are currently working on 10 projects worth around $106 million. But also in the period, we completed 3 projects, Green Star-accredited, worth $24.2 million. From a GreenPower point of view, we continue to renew our offices to move towards Green Energy. 58% of all of our corporate electricity is provided through Green Energy. Looking at the moment, carbon accounting software embedded for our operations. So I mentioned I think the full year last year that we had introduced that accounting software. So that's now embedded in our operations and sets us well for the future as we start to report in more depth on sustainability. The last one there, 5 SHAPE offices have achieved Green Star or are in the process. So I mentioned Brisbane achieving that during the period. And Melbourne is still pending, although I can confirm that Melbourne has now achieved 6 as well. But that's outside of the first half. So that was a lot of my voice, so apologies for that. I'm going to move you on now to the financial overview, and Scott will just drill a little bit deeper into those numbers that he highlighted earlier.

Thanks, Peter. As we indicated before, there's been significant profitability uplift for the half. So we're just going into a little bit of detail. Some of those things on the slide there, we mentioned earlier in the presentation, is just something that we didn't talk about that we talk about now is just in relation to the gross margin. So we've had quite an uptick in gross margins. So they've increased by 22%. So they're up from 7.4% to 9.1% or thereabouts, because we have benefit from a higher-than-usual percentage of projects being closed out in the period and the way that the project cycle works as we're working our way through a project. And we're continuing to generate more margin on those projects as they near the end -- based on the amount of revenue that's turned over compared to the increased margin. We get a slight bias to an increased margin. So that has assisted us there. The other thing is that we're continuing to drive efficiencies on our projects to enhance the margin. And then moving further forward into the future, as we talk about the growth strategies a little bit more, but we will continue to blend a higher-margin work into our book to continue to look to improve on those gross margins. We'll also just talk about the cost side of things. Whilst it's not on the slide there just because it will make up more of the full story. So costs, if you look at that in absolute terms on our overheads, have gone from sort of 27.4 to 29.5. So they've risen a little bit, and that's a combination of a number of things. We have had increased head count. We've also got the inflation running pretty strongly over the last couple of years as we all know. But one of the main differences is we are continuing to invest in a number of those growth strategies, particularly for defense, modular and aftercare, and also the facilities. So we've just taken an additional facility in Adelaide to expand and grow our modular capabilities. And of course, there's costs that are going through there until we reach additional capacity or full capacity, there is a slight lag there. The other thing that's worth noting that we talked about before is that with that backlog of $457.2 million, that will support a continued strong revenues into H2. And we don't expect those costs to change. We expect them to remain relatively stable. So as a percentage of overheads, you should start to see a decrease as we work through the full year. And the other thing to note there is on that strong liquidity or cash management position, at 31 December, we had paid down the loan that we utilized for the KL Modular business. We paid that down. There was only $2.6 million remaining, and we have subsequently paid that off in full since the -- in the end of the half year. I'll pass back to Pete. Sorry. Next page, my apologies. So we do continue to maintain a strong liquidity position, which we've talked about. The purpose of this graph is to indicate for anyone that hasn't seen the monthly sort of life cycle, if you like, of cash or liquidity position. So this shows you throughout the course of the month, what a typical cycle looks like. And what you'll see there is we'll see a dip towards the start of the month, and that's when we make payment runs at the start of the month. Cash continues to build. And the payment terms are in line with the relevant security of payments legislations across the country in the different states. And you see a dip there around about the 20th of the month, and that's in relation to New South Wales. Their payment terms are 20 business days. So we make a fairly substantial payment there for New South Wales that obviously represent a fair component of our business and then the cash will then build back up. And then we make another payment run. So there's Queensland, WA, and then that depends on whether that's -- it is before the end of the month or after the end of the month, depending on how many weekends there are effectively in the months. But to note there that we continue to apply rigorous cash management to maximize our position on cash for obvious reasons. Obviously, we want to have a good strong liquidity position for the business. But given that the interest rates and the [ 13 ] interest rate rises over the last couple of years have obviously continued to help us and will benefit from those interest rate rises. We also obviously maintained strict capital management procedures because we do have a number of prequalification requirements and external financial assessments that are part of our tendering activity. And the next couple of points there, it just shows you that the average daily balance of cash and marketable securities for the last 6 months, although 6 months through to 31 December, was $78.5 million, and the lowest minimum balance of each of those months was $59 million. So very strong position. We also do have very strong operating cash flows of $7.5 million and strong EBITDA to cash flow conversion rates. Peter?

Thanks, Scott. So bear with us, we are on the home straight. Just a few more slides, and then we've got a few questions that have come in, and we will get across to them. So I just wanted to talk through I mentioned in our pipeline and earlier on in the deck, our growth strategy and focus on pretty much on 3 pillars. So I just wanted to just give you an update on where we're going on them. So the first one was the growth into noncore market sectors. So you can see there, again, there's a lot of numbers there, but hotels, health, retail, education and defense. So we call it the noncore markets as far as not commercial office sector. If you look across those, you can see the various results, noting that that's a half year compared to a full year. But if you look at hotels, we're quite stable in that growth area. Health, we're seeing a good increase. Retail, seeing a good increase, and this has increased for the half compared to the prior full year. Education, quite a strong increase there. And defense continues to increase. I would note on defense that whilst we're seeing an increase there, there was a small delay or a delay experience with defense in the defense strategic review, and we're still continuing to see the defense -- Department of Defence and Defence Primes reassess their pipelines for the work. We understand it's still there. And I think obviously, following the papers and that sort of stuff with the push for the Navy and that sort of stuff, we're going to continue to see that work come out. Albeit we did experience a small delay in that pipeline, but we're not anticipating that to impact how any forward forecast for our defense work. We still continue to see that as a key growth area going forward. The next one was our capability expansion, which covers facades, modular and new build. Again, on the right-hand side, you can see the half year as compared to a full year. And I guess I'd note there that new build, we're seeing a significant increase. Facade remains fairly stable. And we've noted before that the facade rollout is very organized and structural process as we roll through with building owners as they bring their buildings up to code and get them compliant. And then modular, obviously, a significant increase, particularly on the back of our ongoing investment there, noting that we've got the Victorian operations for modular and we have opened a facility in South Australia, which we have commenced producing modules down there on the back of, again, a sector that we see some good growth opportunities in. Finishing there on the third pillar, which was our geographic expansion. So apart from our offices across mainly in state territories that we've been in for some years, in the last sort of year, we've opened the Gold Coast, Newcastle, and also established a presence in Tasmania. You can see the growth there from the half year to the full year, and I suggest that the growth in each of those areas has been strong as we continue to target those markets, leveraging our existing relationships into those markets and certainly enjoying some success on the tender front. So that covers off our slide deck. Sorry, a slide behind for the geographic expansion. That covers up our slide deck there and just leaves us with questions at almost at the half past mark. So I'll hand back to you, Mel.

Thanks, Pete. Scott, we might start off with the question we received over e-mail in regards to the $97.9 million call-out on the financial highlights. Can you just tell us how is this made up, including what amount represents capital; what is the value of the marketable securities; and what other cash does this represent?

Yes. Thanks, Mel. So with the $97.9 million in -- we have as far as the cash -- actual cash balance goes, it's $80.1 million and the marketable securities is $17.8 million. So that's the breakdown of that. And as I indicated earlier, the marketable securities is managed by, primarily corporate bonds, managed by JBWere; invested in investment-grade securities to enhance the yield that we generate on our liquidity position.

Thanks, Scott. And so we've got the next question from [ Brad ]. Congratulations on the result. What sort of pricing power do you have? And is there a plan to achieving higher margins in the future?

I'll jump on that. Thanks, Brad. I guess when you talk about pricing power, if you look at -- there's a couple of aspects to our business, our core business, which is sort of the 34-year-old fitout refurbishment business. In each of our operations, we'd be #1 or 2 in our markets. And I guess if you look at that from a pricing power point of view, that translates and very much supports our win rates of in excess of 50%. So that's from the core business point of view. If we look at the pricing power as we move forward, part of our growth strategy or our growth strategy is centered around how do we continue to add to the SHAPE book, so revenue through our workbook with higher-margin areas. So we look at things like defense and health where there's higher barriers to entry. And certainly, we're looking at the modular business where there's higher barriers to entry. The pricing, I guess, power in each of those markets is -- it varies depending on where you are, but suffice to say, the win rates across all of those are included in the 52% by numbers. So I'd say that is still supported by a very strategic and sophisticated approach to our opportunity identification, all the way through to winning those opportunities. And I think, certainly, most of our operations, we've been outside of our new regional offices that we've opened recently, the youngest office is 15 years. So we've got a long track record of established relationships with supply chain and with the local communities there. So I think all of that goes together along with our Net Promoter Score and support that high level of tender success.

Thanks, Pete. And maybe we'll just continue. There's a couple of other questions on margins here. So how should we think about this cost performance going forward? Are margins at a level which can be held in the near term?

Yes, I'll answer that one. As far as the margins go, so what we were indicating before with -- so where the revenue position is and the closing out of some of those larger jobs and a number of the jobs finishing, that did assist in the gross margin rising. What will happen is through a project life cycle, we have what we call a go-in margin and an exit margin. So there's a tendering margin where you start a project at, and through the life cycle of that project, through subcontractor lettings, value engineering, finding efficiencies. Clients then undertaking changes to their project, which constitute variations, working all the way through to the closeout of the project and final negotiations both from a client perspective and a supplier perspective. And throughout that cycle as we progress all the way through, ideally and generally, you'll continue to generate more margin. So what happens now is we've got a significantly high -- a higher-than-usual backlog and we'll be starting a number of newer projects. So that bias will then tend more towards a go-in position as we go through H2. And then -- so then that will move around the subject to how much the revenue swings by. And so what we'll see is potentially a slight easing of margins into H2.

Thanks, Scott. And on that, I think we've answered a couple of questions in terms of EBITDA margin increase. But can you just say if there's any other elements which explain the gross margin increase of 160 basis points?

I mean, look, it's -- there's what we talked about before, there's providing further efficiencies on the project. Margins can move also through the mix of the projects as far as the size and the sector, the combination thereof. And what we also will see is the movement where we're going into the growth areas and blending our margin with additional revenue from those growth sectors that provide enhanced margins than we're currently generating on our business as usual.

Thanks, Scott. And then one of our next question is from [ Michael ], and do we still maintain a major defects liability financial provision within the accounts? And if so, what is the current provision?

Yes. So the short answer to that is, yes, we do have a defect liability provision. It's currently sitting in the accounts at about $4.1 million. We're currently in the process of assessing that from the last time that we assessed that there's been enough time that's transpired to review that, and we're continuing to assess that to come to a resolution on where that provision should be by the 30th of June.

Thanks, Scott. And one final question. We just wanted to get more detail on the cost performance, which looks strong. Can you talk more to the drivers there, please?

As far as the costs as in the overheads? Or the costs as in the -- running the projects? Just to be -- just to clarify that, if the questioner could put that through. I guess I'd, in the meantime, jumping on both. If we look at the cost point of view from an overhead, we continue to see efficiencies in overhead as we continue to increase revenue across the business, and you'll see that over the years as the percentages on that comes down. That is obviously highly related to both revenue but also into the investment. So at the moment, we're managing our cost base to ensure that we can partake and enjoy those efficiencies as we scale the business up from a revenue point of view. But at the same time, we continue to invest in those startup areas. So for instance, establishing a new footprint in South Australia with a factory there, manufacturing capability, investing in additional expertise with DfMA and modular capability. So we're balancing that efficiency of overhead with our investment in the future to continue to make sure that we can continue to achieve those growth aspirations that we have in the business. So that's from a cost point of view. If you look at the cost performance, I think we've covered a lot of it in the answers, but there's a number of aspects that go into that as into the type. Typically, again, from a defense point of view, there's barriers to entry. So as you increase your work in defense, you tend to get margins that are perhaps a bit bigger than margins where there's a lot more competition. Certainly, at the lower end of the commercial office market, there's a lot of players there that don't have the same level of overhead system commitment to quality and to repeat business that we have. So as we move into those noncore sectors, we start to open ourselves to the ability to achieve greater margins. And certainly, as we look into those capabilities from a new build and in particular, modular, which is why we're heavily investing in that area, we're starting to see the margins ticking up as well. So I can probably add a little bit more to that just from -- as we indicated, that the margins -- just because there'll be a slight bias towards the projects earlier on in their life cycle, and then that can be offset to some extent in relation to the overhead. So the overhead structure that we've currently got is scalable to the extent that we can perform additional revenues in H2, and therefore, the overhead percentage relevant to the revenue will then come off. So whilst margin may come off, overhead can come off, which you're looking at EBITDA or your net profit margin with one offsetting the other, we'll obviously be able to assist in maintaining or being in a similar level to what we're currently performing.

Thanks, Scott. And Patrick just has a few follow-up questions on the EBITDA margin. So one, do you expect more EBITDA margin increase during second half? And his understanding is gross margin will be weaker in the second half given lower cost ratio. And will the EBITDA margin in second half be like first half?

Yes. So as I was just saying in relation to the bias towards the newer projects revenue, there may be a weakening of margins in H2, which to some extent, can be offset against the stability of the overheads and the scalability of the current overheads. As revenues rise, overheads won't be rising to the same extent in H2, and therefore, has the benefit of keeping the EBITDA margin up relatively -- relative to the potential decrease of gross margin.

Yes. I guess there's no expectation that there will be a significant difference from an EBITDA margin because as Scott is saying, there'll probably be an evening out of gross margin and overhead. And again, depending on how much revenue we can pump through the business, we're certainly sitting on a very strong backlog. We're sitting on a very positive number of tenders with decisions pending. Depending on the month that they sell in and how quickly they go is just whether or not we can book and burn them before June 30. So there's a number of sort of moving factors, but we wouldn't anticipate or expect anything significantly different from an EBITDA-type margin.

Thanks, Pete. That looks to be the end of the questions. If anyone wants any further clarification, they can e-mail me directly. And so I might pass back to you, Pete, for closing sentiments.

No problems at all. So thank you. Thank you very much. Hopefully -- obviously, it's good to be sitting in front of you delivering some good positive results. I think the business is traveling well. The market is responding well to that. We continue to enjoy good success in our attraction and retention of our fantastic employees, again, continuing to really drive that constructive culture within our business, which is delivering some great outcomes for our clients. And I appreciate you all for joining the call and also thank our loyal shareholders, or shareholders that have been with us, and look forward to continuing on the journey with you. Thank you very much.