CEMATRIX reported Q2/22 financial results yesterday after market close that missed our expectations. The miss was due to the global cement shortage and other supply chain issues. The cement shortage led to project delays, higher input costs and lost opportunities for the Company. We remind readers that CVX’s revenue is seasonally weighted to the back half of the year, and that management is on track to deliver a record quarter in Q3. From our conversations with management, CVX is still confident with its $33M revenue guidance for 2022, thus pushing forward our revenue assumptions from this quarter. Additional highlights from the quarter include:

• Revenue of $4.0M vs. our expectations of $6.0M and $4.0M generated in Q2/21. The U.S. segment generated $2.7M in sales and the Canadian segment generated $1.4M in sales.

• Gross margin of -1% vs. our estimate of 15% and 5% in the same quarter last year.

• Adjusted EBITDA of -$1.3M vs. our expectations of $0.6M and -$0.9M in Q2/21.

• The Company ended the quarter with a cash balance of $13.8M.

Subsequent to the quarter, CVX announced that is has executed $22.5M in new contracts, $19.7M of which were converted from contracts in process. This includes a $20.3M contract with Balfour Beatty Infrastructure for the backfill of several new overpasses in North Carolina. The project was originally awarded 2.5 years ago but finally management expects to begin processing and placing material on site in early 2023. The backlog now stands at $87.9M, including $42.1M of contracted projects and $45.8M of contracts in process. We continue to be encouraged by the increased visibility (i.e., the introduction of formal guidance and additional clarity on the timing of new contracts) and improved outlook from management. As such, we are still confident that CVX will hit an inflection point later this year where the business can grow rapidly and profitably. We are maintaining our BUY recommendation and target price of $0.80/share based on 10.0x 2023E EBITDA.