Allan Dicks: Yes. So, Jim, we don’t break out individual business line revenues. But again, you’ll see in the Q that in the third quarter acquisitions contributed $27.6 million to revenue. The majority of that was Matrix. Just to remind you, Matrix does about $75 million of revenue a year, but very seasonal right, so about 55% of that is in the back half of the year and large chunk of that is in Q3. Their margin profile follows that seasonality and again averages in the kind of low to mid-single-digits currently. So although seasonally the Matrix margins were better than average in Q3, it was still margin deteriorative to operating margins in the quarter.
Vijay Manthripragada: And Jim, so to wrap up, the last part of your question around range. This is the first time Montrose has had Matrix in our portfolio, which is Q4 in Q4 of a year. So that plus the CTEH variability is exactly why we’re keeping the range, why even though we’re feeling really good about how the business is performing so far.
Jim Ricchiuti: That makes sense. And you’ll be talking I guess about this early next year. But, yes, I’m just wondering as you look out over the next couple of quarters, how we should be thinking about the PFAS water treatment business, the biogas business, particularly on the biogas side where you’ve made some adjustments in terms of the way you’re pursuing that market.
Vijay Manthripragada: Yes, we’re bullish on it. We’re bullish on it Jim. So this goes back to some of the discussions we’ve had with you around organic. Other than the Remediation and Reuse segment, the rest of our business is seeing double-digit organic growth. And that a lot of what you’re alluding to is that — is the conscious pivot we made this year to focus on margins and cash flow, and to pivot away from some of the lower margin work in our biogas business following our investment in what we think is very compelling early stage technology. So next year, as we think about not only harvesting all the margin success we’ve had this year, but then getting back to our historical cadence of double-digit organic, we feel really good about that. And we think that will be part of our story next year, as it’s been so far.
Jim Ricchiuti: Good. Thanks very much guys.
Vijay Manthripragada: Thanks, Jim.
Operator: Thank you. The next question comes from Andrew Obin with Bank of America. Please go ahead.
David Ridley-Lane: Hi, this is David Ridley-Lane on for Andrew Obin.
Vijay Manthripragada: Hey, David.
Allan Dicks: Hi, David.
David Ridley-Lane: Good morning. So just to follow-up on that last comment on the Remediation and Reuse. So, is first quarter 2024 kind of when you’d fully lap those portfolio optimization efforts. Is that a good like-for-like comparison or does it some of lower margin projects have a bit of a longer tail.
Vijay Manthripragada: Yes, it’s really I would think of it more as a second, third quarter lap. The tail is coming off now.
David Ridley-Lane: Got it. And then just because your gross margin progression was quite strong, it looks like Matrix might have pretty good gross margins relative to the EBITDA margin. And I kind of I’m sort of leading into, into the results here. But is some of the margin improvement less about gross margin and more about sort of the cost structure.
Allan Dicks: The Matrix does have good gross margins, but they are less of a contributor to the year-over-year increase. Again the biogas pivot that was very low gross margins given the large equipment sale component. And then we’re seeing really strong utilization across the business and that’s certainly helping.
Vijay Manthripragada: Yes, David we, when we say pivot if you think about some of the advantages we have on the water technology side, right. So, intellectual property, high barriers to entry, strong moats we’ve effectively moved our renewable energy since the biogas side of the business more into that type of model, which means it’s more anchored on technology implementation and the engineering associated with it and less around the part that Allan just talked about. So that that’s really when we say pivot the margin flow through not only on the gross margin side but also on the EBITDA margin side and cash flow ultimately was heavily impacted by that pivot, which we did consciously, and you’re seeing it in the results.
