Additionally, there’s going to be some investments that we’re going to be making in Natur-Tec, where we can do some of the manufacturing of the resins and blending of the resin on our own. These are things that we’re strategically doing to specifically work on improving gross margin. And so the increase in gross margin we’ve seen over the past two quarters is exciting for us. I think 40% is a good target. We’re — I certainly think that’s sustainable for the next few quarters. But obviously, there is a lot going on from a global standpoint, energy prices, things like that, that could have an impact on some of the base materials and cost unit-based materials that we have. Does that make sense?
Gus Richard: Yes, that does. And then last one for me, and I’ll turn it over. China was strong, up for the first time in a very long time. Could you provide a little bit of color on is that the automotive sector in China, internal combustion engines? Is it industrial? What — sort of what is leading to the improvement in your China operations?
Matt Wolsfeld: I think there’s some new opportunities in new markets that we’ve been going after. I think there has been a slight — at least compared to what we’re seeing, we’re starting to see some of the signs of a — I don’t want to say a recovery because obviously not all macro environmental factors are pointing that way. But certainly, with the customers that we’re going after, we’re seeing some rebound in the volumes that they’re ordering from us. And so there’s been some positive signals that we’ve seen, specifically in our second quarter that give us a little bit more hope that third and fourth quarter, we’ll continue to see some improvements. Additionally, we’ve made some, let’s say, cost cutting. We’ve made some cost-cutting efforts in China to increase their profitability.
So there will be a contribution coming from China this year from our subsidiary in China this year compared to the contribution that we saw last year, which was basically breakeven, so with no contribution. And so I think as that economy recovers more and as the — we see some of the opportunities we’re going after come to fruition, I think we’re going to see a recovery in China. I don’t know when you get back to the kind of growth rates that we are expecting several years ago or if we do. But clearly, the market there, we continue to see a lot of opportunity there, both from an auto sector and from other new markets that we’re going after.
Operator: Our next question comes from Tim Clarkson with Van Clemens & Co.
Tim Clarkson: Obviously a great quarter. Just a couple of questions on the stuff that’s working here. What percentage of the oil and gas business at this point would you say is repeatable? So you did, what, $2.2 million. What percentage of that was kind of repeat stuff?
Matt Wolsfeld: Well, it’s kind of — I mean, technically, it’s all repeatable. It’s all business with customers that have larger opportunities. There’s certainly no markets in oil and gas that we’re in that are saturated. We’re still at a point where the customers that we’re dealing with, we are making up very small portions of their — typically, their repair and maintenance budgets that are utilizing VCI technology to protect their infrastructure. So the expectations are that specifically on a tank bottom, there’s certainly recurring revenue after a period of time when you need to recharge the tank bottom. But typically the field and where these installations are taking place, there’s usually hundreds of tanks. And we have single-digit number of tanks in different facilities.
So we feel that as the technology becomes more mainstream, as it becomes more accepted, has further standards that are passed in dealing with the API and other regulatory bodies, that it still continues to be a very, very big market opportunity for us.
Tim Clarkson: Right. So obviously, you guys have only exploited a small percentage of that market, like less than 2% or something like that.
Matt Wolsfeld: I’d say 0.2%. I mean, it’s a very big market compared to the revenues.
Tim Clarkson: Right. Well, let me ask you this. I mean, do these guys ever get excited about the fact they can take a tank and make it last 30 years versus having to replace it 10 years? To me, that would be pretty exciting, I mean, just as a technological feat, I mean, it’s really breakthrough technology. I mean, is there any kind of like, keywords this is wonderful stuff?
Matt Wolsfeld: Well, I mean, in general, people are really excited about rust in general, Tim. No. I get your point. It’s the kind of thing where when our salespeople are in the field and they’re meeting with people that are protecting the infrastructure and in charge or protecting the infrastructure, I think the wheels are starting to turn in people’s heads about potentially the cost savings that they would see on a long-term basis from the — using our products to protect the infrastructure. And you can see that with the people that we’re dealing with. You can see that as you go up the chain of command inside of the companies that we’re dealing with, that people are starting to understand the value added component to using these products.
