Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Forum Energy Technologies, Inc. Q4 2016 earnings conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-and-answer session, and our instructions will follow at that time. As a reminder to our audience, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference over to Mr. Mark Traylor, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, Brian. Good morning and welcome to Forum Energy Technologies' fourth quarter and full-year 2016 earnings conference call. With us today to present formal remarks are Cris Gaut, Forum's Chairman and Chief Executive Officer; as well as Prady Iyyanki, President and Chief Operating Officer; and Jim Harris, our Chief Financial Officer. We issued our earnings release last night, and it is available on our website. The statements made during this conference call, including the answers to your questions, may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements involve risk and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. Those risks include, among other things, matters that we have described in our earnings release and in our filings with the Securities and Exchange Commission. We do not undertake any ongoing obligation other than that imposed by law to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after this call. In addition, this call contains time-sensitive information that reflects management's best judgment only as of the date of the live call. Management's statements may include non-GAAP financial measures. For a reconciliation of these measures, please refer to our earnings release. This call is being recorded. A replay of the call will be available on our website for two weeks following the call. I'm now pleased to turn the call over to Cris Gaut, our Chief Executive Officer.

Thanks, Mark. Good morning. I will begin with some observations about the current market conditions and outlook and talk about our plan for Forum going forward. And then I will turn it over to Jim, who will discuss our financial results and strong liquidity positions, and then Prady will address our preparedness for the recovery. As we know, U.S. land activity as measured by the rig count reached a trough in the second quarter of 2016 and has improved strongly since that time. We have seen a significant increase for two consecutive quarters in our inbound orders, which are a good indication of our near-term business prospects. And this confirms the alignment of our business with the key drivers of U.S. land, drilling and completion activity. With the recovery now underway, Forum is well positioned with improving results in each of our three segments, continued free cash flow generation, and a strong financial position. Forum's total inbound orders during the fourth quarter were $183 million. That's a 26% increase from the level in the third quarter and double the rate of increase we saw last quarter. The fourth quarter book-to-bill ratio was 124% for the company, and that's a new record for Forum since we've been public. The book-to-bill ratio was 118% for the Drilling & Subsea segment, 109% for the Completions segment, and 138% for the Production & Infrastructure segment. Our domestic Completions business is largely a build-to-stock, sell-from-stock business, so one should expect our book-to-bill ratio will not depart there much from 100%. However, the lead times for our production equipment are longer than for our consumable products, which can lead to higher book-to-bill ratios for the Production & Infrastructure segment. In the fourth quarter, five of our six product lines generated sequential revenue growth, led by North…

Thank you, Cris, and good morning, everyone. As we know, 2016 was a tough year for the industry, and the second consecutive year of decline in investment and capital spending by the exploration and production companies. Our revenue in 2016 was down 45% from 2015 and our net loss excluding special items were $69 million or $0.76 per share. Our fourth quarter revenue was $147 million, a 6% increase sequentially. This is the first sequential increase in our quarterly revenue since this severe downturn began more than two years ago. Our adjusted EBITDA increased $1 million and our net loss per share was $0.16 excluding special items and improvement from the third quarter as the industry began the transition to the upturn led by the momentum in U.S. land drilling activity. The EBITDA increase would have been higher in the quarter except that we incurred $2 million in incremental SG&A costs related to payroll. Our balance sheet and financial position remains strong. Our free cash flow continues to exceed our net income. We generated free cash flow after net capital expenditures of $58 million in 2016. Including the proceeds from our equity offering, we ended the year with $234 million of cash on hand and with no bank debt outstanding. We are well-positioned to execute our acquisition strategy and are pleased with the recent addition of the Cooper Valves product offering. I will now summarize our segment results for the quarter and provide additional details on the fourth quarter results. Our Drilling & Subsea segment revenue of $55 million was up 8% primarily due to the 27% improvement in sales of drilling consumable products and capital equipment led by the increase in U.S. land rig count, partially offset by lower demand for subsea equipment. The Completions segment revenue of $35…

Thanks, Jim. Good morning, everyone. The growth in orders for our products and equipment that Cris previously mentioned is leading to increased demand load on our manufacturing facilities. We are now ramping up production at many of our manufacturing plants. We have the requisite manufacturing roof line needed to meet this growing demand. We are reinstating regular work schedules and adding head count allowing for increased manufacturing hours. However, our Drilling & Subsea's segment capital equipment recovery will lag and hence we continue to focus on cost and efficiency in those areas. Our procurement team has secured capacity from our suppliers for long-lead items and shortened the delivery times of many critical items. Additionally, we are making some offensive bets on select inventory items, which we anticipate our customers will require as the recovery unfolds. With the operational efficiency initiatives carried out during the downturn, we are well-prepared for these high volumes. Our commercial strategy and Forum brand initiatives are progressing well. We have strengthened our sales and service teams in the Permian Basin, the Middle East and in other key basins to support our customers across product lines. Our sales and engineering teams continue to work with the customers to develop new products, to meet their needs and solve their evolving challenges. In that regard, we are developing a new composite frac plug which has newly designed slips, is shorter than current plugs and is easier to mill out that saves time and money for operators as they complete longer laterals and increases the stage count. We're getting good traction from customers on our pressure pumping tolerance due to the proven reliability and performance. For example, we recently received an order from a customer for 45,000 horsepower. Additionally, Forum's engineering team recently qualified our drilling tubular handling tools for…

Thank you, sir. Our first question will come from the line of Jacob Lundberg with the Credit Suisse. Please proceed. James Wicklund - Credit Suisse Securities (USA) LLC: Sorry, guys. It's Jim Wicklund standing in for Jake. I hope that's okay.

Hey, Jim. How are you?

Good morning, Jim. James Wicklund - Credit Suisse Securities (USA) LLC: Very good. In the Completions segment, I'm not scoffing at 18%. I noticed that Patterson, as an example, reported that their pressure pumping revenues were up 35%. You guys note that your business lags obviously the drilling area and all. Should we expect to see the ramp-up – I mean the rig counts up 70% since the bottom and 44% in the last three months? Should we see that 18% accelerate on a quarterly basis through 2017? And if so, can you just give us some general idea as to magnitude?

Yeah, Jim. So obviously, a lot of what we sell are the wear parts, the repetitive sale items that as more equipment is working and as the hours that it's working increases, so utilization rates go up. More of those aftermarket parts will be necessary. So we are beginning to see that acceleration, and we expect that that will continue for the flow equipment business for the pressure pumping consumables going forward and for some of our other downhole tools. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. They have to work a little bit before they wear something out, right?

Right, right. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. And you talked about you're making offensive bets on inventory items, considering the direction of the market that doesn't seem to be in itself a risk. But how big a bet are we making?

Jim, these are strategic bets, in the case of long-lead item, in the case of completions, or even on the drilling consumables side, and in high toning material. So even if we take the risk on this material, we may sit on it for some time, but eventually we're going to deplete the inventory. So we're not taking inventory bets across the board. It's strategic bets on material which we think will be depleted in 2017. And some of them are long-lead items and the others are high moving materials. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. So those are pretty – they're bets, but they're pretty low-risk bets from the sound of it?

Yes.

Yes.

And, Jim, I would add to Prady's comments that we're not losing sight also of moving, as activity picks up, other inventory items that we have. So there will be select places where we're increasing inventory, but we're still focused on improving those inventory turns through the year. So we'll see other offsets.

And of course, we are talking about cash investment in inventory here, right? We're not talking about this flowing through the income statement until it's sold and sold with good margins. James Wicklund - Credit Suisse Securities (USA) LLC: Exactly, sold, right. And considering your net cash position, again it's not a high-end bet. And my last one, if I could, you noted you sold pressure pumping fluid ends, 45,000 horsepower fluid ends. There's been a great deal of talk in the industry, especially with all the IPOs that are coming in pressure pumping in terms of wear and tear on fluid ends and different metallurgies and different lubricating technologies. Can you tell us what Forum is doing to take the lead in the provision of longer-life fluid ends?

So first, I'm going to get to your question, Jim. But first, Prady was talking about the very good reaction that we're getting to our power ends... James Wicklund - Credit Suisse Securities (USA) LLC: Power ends, yes.

...the getting 45,000 horsepower sale driven by the power ends side, right? So your question on the fluid ends side, yes, we are seeing that as experience and as the type of service changes that one needs to continue to be on top of that. And of course, there's the change not only from triplex to quintuplex, but more recently the change to stainless steel in many areas. And we're very much in line with that and spend a lot of engineering time, design time to make sure we're with customers and helping them come up with solutions that help their efficiency and help them on their cost side. But hey, with these slickwater fracs, with so much sand loading, it's hard on the equipment, no matter what you're using. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. Thanks, guys, very much. I appreciate it.

Good, Jim. Thanks.

Thank you. Our next question will come from the line of George O'Leary with Tudor, Pickering. Please proceed. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys.

Hey, George.

Hey, George. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Following onto one of Jim's questions, I just wanted to dig in on what you guys are seeing so far on the first quarter on the Completions side, given much of that is book and turn work, and it feels like what happened in the fourth quarter was spreads that were already marketed or working ramping up utilization. Does it feel like there's some steam gaining on the pressure pumping side within that Completions segment as guys are actively: A), Pulling spreads out of stack and having to spend on the consumable side; and B), to your point, you've seen an order for power ends in the order of magnitude of 45,000 horsepower. So, basically just we're two-thirds of the way through the quarter, what are you seeing on the Completions side in Q1 thus far?

George, a good question. We are seeing activity, George. In 3Q of last year our Completions bookings were up 16%. In 4Q, it was up 18%. And the activity continues to gain momentum on the Completions side, on the pressure pumping of the Completions side, and also on the downhole products, and also our Global Tubing product. But also, production equipment, which is not in the Completions segment, but as that gets completed, it's a long-lead items. And that's the reason why we saw a big increase in bookings in the fourth quarter. So, I think the momentum continues to gain, and we expect to see strong orders in first quarter too. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay, that's helpful.

Yeah. But we saw strong orders in fourth quarter for the production equipment, because of the long-lead time, so – and that's what one would expect. If you're going to complete wells in Q1, Q2, you need to get those orders in for your production equipment, and then get on with the completion, and then install that production equipment that's been built. So, it's all kind of consistent with our expectations in terms of how the flow of orders is matching up with what's happening with the recovery.

So, as a part of our ramp-up, George, I mean, we obviously reduced our inventory levels during the upturn. And now we are ramping up our manpower and also the material piece, so that we have enough buffer from an inventory standpoint. And customers are already asking for us to keep inventory on our side as they start executing on their front. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. That's very helpful color. And then on the drilling side, I know you guys have called for that segment to be a relative laggard versus maybe Completions and production, and I fully understand that subsea will be a laggard within the D&S segment as a whole. But it seems like in the press release, you guys called out both drilling consumables and drilling capital equipment. Did those orders in the fourth quarter surprise you to any magnitude? And maybe drilling down into that, I think in the most recent investor presentation, you put out or you highlighted in the ballpark of 200 fluid ends – sorry, 200 7,500 psi mud pump system upgrades through the end of the decade. Is there upside biased to that given how quickly we've seen rig count ramp in each over the last two quarters really, and how quickly it continues to ramp?

So, we have seen good growth in our drilling consumables consistent with more rigs going to work. And I wouldn't describe that as later stage. The later stage of our drilling business we expect it to be the capital equipment side of drilling, and without a lot of newbuilds, it's hard for that business to be hitting on all cylinders. However, with the upgrades that are going on with higher-spec drilling rigs, and it looks like that is really going to continue for some time, these land rig upgrades, we are benefiting from that both on the consumables side and on the capital equipment side with newer catwalks, handling tools and the mud pump upgrades. So, it's been a positive surprise, but I think those upgrades are going to be continuing for a while, picking up pace actually. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. Thanks for the color, guys.

Thanks, George.

Thank you. Our next question will come from the line of Chase Mulvehill with Wolfe Research. Please proceed.

Hey. Good morning.

Hi, Chase.

Hey. So, I guess I'm going to come back to Completions a little bit. You talked about, I guess, the orders in 3Q and 4Q were in the high-teens. 4Q revenue was up mid-single digits. So, I guess, help us kind of understand when we're going to start seeing the flow through of the increase in orders? Should we think about that as 1Q and kind of modeling 20% above – 20% growth in 1Q?

In 3Q, our book-to-bill ratio was 0.97%. So, pretty much everything we got, we could translate that into revenue. But in 4Q, our bookings were 18%, our book-to-bill ratio was 1.09%, our revenue was up 5%. So, primarily, it was because, at the tail end of the quarter, we got some orders, especially in our downhole products, which will go got in 1Q. So, that's the fourth quarter revenue 5% versus the 18% bookings. And as we said, I think the activity continues to gain momentum, so we do expect one quarter to be strong.

Yeah, strong growth Q1.

Okay. All right. That's helpful. And when we think about, I guess, your inventories, and potentially kind of still having some hot priced inventories, what's the difference in your average cost between the inventories running through the P&L today versus what you're buying and putting in inventory today?

So, Chase, as you know, we took a hard look at our inventories over the last year, and we've written down the values of inventory that was higher than what replacement cost would be. So, I'd say it should be relatively consistent what's coming through. As we start to buy more materials, we will see improvement, we've talked about what those dollars look like, but that's going to take some time still to flow through.

On an average cost basis.

Right.

Right. Right. Okay. Last one and then I'll turn it back over. Can you help us – maybe just for the fourth quarter, can you help us understand your fixed versus variable cost structure excluding kind of D&A? So, like what percentage of your cost of sales was more fixed, the fixed overhead and labor?

75% of our cost of sales on average would come from materials. And so, that would obviously be variable. And of the remaining 25%, it's a very small portion of that. Less than 10% would be fixed costs, so obviously a highly variable cost structure.

But as a manufacturing company, it's about cost of goods sold. So, when you sell something, you charge the labor and the material to it, and then the SG&A is more of a fixed nature, but it does change every time. And as we've described during the downturn, we cut back a lot on the SG&A as well, but there are elements of the SG&A now that we're seeing this increase in demand and needing to hire folks and get going again and be competitive, so we can bring folks back on. We need to put some of those reductions and things that were taken away back in place. And so, that's part of the cost adjustments that we were describing in the prepared remarks.

Okay, all right. That's very helpful. Thanks. I'll turn it back over.

Okay. Thank you, Chase.

Thank you. Our next question will come from the line of Rob MacKenzie with IBERIA Capital. Please proceed.

Thanks, guys. A question for you on how costs should play out throughout the year. I fully understand kind of ramping costs as you prepare to meet the surge in demand and that impacting incrementals near term, but how should we expect to see that reverse out, if you will, as the year plays out in 2017?

Yeah. So, sort of picking up on what I was just saying about SG&A, we'll get that back to kind of a normalized run rate in Q1. So, SG&A kind of will be at that level in Q1. And from that point forward, it's going to be about the operating leverage in the business, right? And some of the drivers that will help us from an operating leverage, from an incremental standpoint, are the manufacturing efficiencies that we've been driving for the past couple of years, the procurement savings that Jim described that will be coming in over time as we work through average cost. And with this pickup in demand, hopefully, there'll be some pricing opportunities as well. So, I think those were all good drivers for us once we get past the normalization of the SG&A.

And probably in the first half, we'll get some benefit on the manufacturing absorption too, but that's limited. Once the shops are fully absorbed which probably at the end of the second quarter, most of the shops will be fully absorbed, but we'll still see the other benefits which Cris just talked about.

So, Prady, when you say shops are fully absorbed, can you – is that mean you're at fairly full capacity for what you're doing or?

It's not capacity. I mean based on the utilization of the shop and the number of – and the kind of people we have, we're not utilizing the people completely. So, once the manufacturing volumes starts coming in, we start utilizing the people to the full extent and the absorption benefits is what we'll start seeing. But once the shop is fully absorbed, then we will not see the absorption benefits, but we will see the efficiency benefits, we will see the procurement benefits and we will also see the pricing benefits.

Got it. Okay. Where would you say you are right now in terms of shop capacity given your current shift structure?

From a capacity standpoint, Rob, we have got lot of capacity, right? We've got a lot of rooftops, so you can pretty much assume the same capacity we had in 2014, we still have it in spite of all the efficiency efforts we have done. So, it's pretty much getting the people on board and getting the material on board to execute the plan in 2017.

Yeah. Don't be confused by a full absorption and full capacity. Those are very different concepts. During a really slack time like we've had over the past two years, we have not – when we're selling a lot out of inventory, we've not been producing a lot, so we've not been able to charge our cost of our manufacturing facility to production and therefore the under absorbed manufacturing cost that we expense each quarter. But as we do have sufficient production running through the plant, we can absorb that manufacturing cost. Now, capacity, a very different concept, because we can ramp-up capacity by of course buying more material and increasing our labor hours, overtime, second shift, third shift, more employees. And so, as Prady said, we've got lot of different – a lot of levers still to pull on the capacity side, we're getting closer to full absorption, we are just obviously not there yet, but we have a lot of roofline capacity.

Okay. And then coming back to kind of a revenue driver question if I may, what do you guys see as the biggest potential from here? Is it continued growth in land rig, mud pump, and other upgrades, or do you expect to see frac fleet refurbishment and new orders take over as a bigger factor as we go forward?

I think the good thing about Forum is it's both of those, plus the production equipment as more of these wells are needed to be completed, and then building out more pipelines and using more valves. Man, the thing about Forum is we can participate in all those things, and they're all going to be good.

At the end of second half, we also expect the handling tools as the cannibalization and destocking takes its course on the drilling side, we'll start seeing some activity in the handling tools too.

Great. Thanks, guys. I'll turn it back.

Thank you. Our next question will come from the line of Blake Hutchinson with Howard Weil. Please proceed.

Good morning, guys.

Hi, Blake.

Hey, Blake.

I just wanted to circle back to the conversation around the Q4 result, broader strokes. Typically, even in an expansionary environment, the last couple weeks of the year may see some kind of deferred deliveries and some shutdown, perhaps in manufacturing. Was there any notable impact around that in the Q4 as we set our baseline here for your performance?

We saw some, Blake, in production equipment. We saw maybe a couple of million. On the Completions side, we saw maybe less than $1 million. But for the most part on the Completions side, especially in the downhole products, at the tail end of the quarter, we got some lumpy orders from customers which they didn't want in the fourth quarter, but they wanted in the first quarter. So that was the reason for the bookings variance versus the revenue guidance.

Got you.

There's a little bit of impact by the end of the year, not much.

Got you. So that 10% to 15% revenue guidance for Q1 is pretty pure rather than some holdover going out the door at the start of the quarter.

Correct. Almost positive.

Right. Yeah, great. And then sorry if I missed it, but you called it out in the release, Cris, as well as your commentary. Obviously, the mix of the order flow within Drilling & Subsea is probably a little different than other expansionary cycles as well, and you cautioned us with regard to delivery lead times. Can you help us just in broad strokes characterize what we should be thinking about in terms of gestation periods with your current mix, understanding it's consumable, but still may tend to have some longer lead times in there?

In the Drilling & Subsea segment, which I think is what you're asking about, Blake, they had a very good level of order increase on both sides. It was exceptionally high on the subsea side, first of all because we're coming off a really low level in the prior quarter. But also the orders for subsea equipment do have long delivery times. That will be over the course of the year. So we're talking about the segment Drilling & Subsea, it does have a longer waiting there. And also we had some orders on the drilling side of Drilling & Subsea for some of these catwalks and other capital equipment that we'll be delivering over the course of the next few quarters. The other area where we have some longer lead time, longer delivery items that were reflected in strong orders in Q4 was production equipment. We had some operators who are saying gosh, we want to complete a lot of wells. Pricing is pretty good right now. We're going to put in our orders early. And so we did – it's normal. Good business by them allows us to plan for a base load in our plants. And so we did see some higher orders in Q4 that were not reflective of just Q4 or Q1 activity, but the longer-term increase in completions that's expected for U.S. land.

Okay, that's great. Thanks for the help, guys. I'll turn it back.

Thank you. Our next question will come from the line of Will Thompson with Barclays. Please proceed.

Hey, good morning. Just to reconcile the model before you get the 10-K coming out, I wanted to make sure I understand this clearly, that the SG&A went up $2 million sequentially. And even assuming that, it looks gross margins were down sequentially. Is there anything unusual in the cost of goods sold?

I wouldn't say anything terribly unusual. As Prady described it, we have not seen a lot of change in the under-absorption, because the activity in the plants was still relatively slow in the fourth quarter as we were selling out of inventories. So that improvement that we will see over the course of 2017 will come as we put more work through the plants and more of those hours are applied towards the work on the inventories. So that's all that's really in the quarter.

It was, other than that, just mix, right? Production equipment ramping up is not our highest margin business, but as we said before, it's internally a mover business.

Yes.

And the $2 million of cost that Jim was talking about, that was both in SG&A and also on the variable cost side because we've got people obviously on flex schedules, which are on the SG&A side and also on the variable side.

Can you just tell us what the SG&A was in the quarter, maybe before you release the 10-K, if you have that readily available? I'll ask my next question.

Yes, it's $53 million.

$53 million.

Yes.

And then just on – Prady, I think you mentioned adding head count or just reconcile that with the ability to flex up hours, the underutilization of the manufacturing capacity. Just how do we think about, were those heads added for specific roles that you would maybe overcut in the downturn?

It's mostly variable cost, Will.

Okay.

So depending on how much volume we had in the manufacturing shop, we had to make the reductions. We're not making any significant increase on the SG&A with the exception of what Cris talked about with the benefits and the accrual of the bonuses and whatnot. So it's primarily in the variable cost as to get more manpower in the manufacturing plants to execute the increased volume, and probably on the other side is maybe a few more salespeople to make sure we can maximize the top line.

I think you guys put out soft guidance of 50% incrementals. And so, starting in the second quarter, once we start getting through these upfront costs, is that still the expectations? And if I recall correctly, that soft guidance didn't really affect any pricing. That was literally just throughput of the manufacturing capacity.

No, I would say the 50% incrementals Will is a combination of getting the benefit of the absorption cost, the efficiencies, the manufacturing efficiencies which whopped throughout the downturn, the procurement savings and a little bit of pricing. We need all of that to get to the 50% incrementals. And as we said, I think the efficiency gains and the procurement savings will be there throughout 2017. The pricing – and a little bit of pricing is what we need to maintain that 50% incrementals.

Okay. And just I'll sneak one more in, just some of the segments that don't get as much love. On the production side, it was really interesting the $60 million order from a large independent operator, can you just give us a sense of maybe how many wells that covers? And then, maybe if pad drilling or the higher IP rates, are there any implications for that business?

It is for some pad sites and certain basins, and for others, it's more of individual gas wells. So, it really is depending upon what the operator's plans are in the various basins.

In this particular order, it was a major operator, and it was five basins.

Five drill basins. Okay.

Yeah.

Thank you.

Yeah, I don't have an exact well count for you. Good.

But just a sense on what – on average, what a well requirement is, is it a couple of hundred thousand dollars?

Yeah. I mean, it varies if it's a gas well or an oil well or if it's a pad site, but yeah, typically a hundred to a few hundred per well.

Okay, that's helpful. Thank you.

Thank you. Our next question will come from the line of Marc Bianchi with Cowen. Please proceed. Marc Bianchi - Cowen & Co. LLC: Thank you. Perhaps following up on the last question about the soft incremental guidance. Is 50% the right number to be thinking about for companywide? Just curious if that's the baseline that we're talking about.

Marc, thank you for the follow-up question. We did want to make sure it was clear that we're talking about the North American growth businesses that are going to see those 50% incrementals. Obviously that is impacted by what's happening in subsea and some of the capital equipment businesses, in products and drilling which would not be growing at the same pace. Marc Bianchi - Cowen & Co. LLC: Okay. So, if we maybe think about it on a consolidated basis, is it something maybe closer to 40% or how would you clarify that?

I'd say more in the 35% to 40% kind of range on a consolidated basis. Marc Bianchi - Cowen & Co. LLC: Okay, thanks for that. Just one more switching over to the 45,000 horsepower order, very nice there. Is that replacement equipment or is this a new order here for new fleet?

I don't know if we want to get into too much specifics, but I think there is new equipment beginning to be built. We've also seen good power ends orders for other customers who are looking to rebuild their equipment. So, it's both. Marc Bianchi - Cowen & Co. LLC: Okay. This has been asked a few times already, but I just – I wanted to ask specifically on pressure pumping and horsepower here. How did the inquiry level look? And if we look at some of the other data points out there, we've seen I think 90,000 horsepower from one other companies that's planning to IPO. One of your competitors talked about 75,000 horsepower on their call. How are you sort of seeing the ramp here in new capacity orders for pressure pumping over the next couple of quarters?

I think again, activity level continues to gain momentum. The RFQs we are getting are pretty good, horsepower on some of the sizes which you just talked about. When they're going to materialize and how much of that do you need for core and all that, we don't know at this point of time. But I think our customers are planning for significant increase in horsepower and utilization on the pressure pumping side. Marc Bianchi - Cowen & Co. LLC: Yeah, that commentary certainly seems to be very positive. Well, thanks for that. I'll turn it back.

Thanks.

Thank you. Our next question will from the line of Brandon Dobell with William Blair. Please proceed. Brandon B. Dobell - William Blair & Co. LLC: Thanks. Just a couple of quick ones. I would anticipate at this point you don't see any issues with finding good people to come back in the manufacturing facilities. But how do you think about that becoming a potential issue or a constraint kind of business as you work through this year? And then kind of connected with that, how long or what's the trajectory on recovery in manufacturing you have to look like before you start to think about constraints on the throughput?

Yeah, no, I think it's a great question. Like the way we went through the downturn, I think it is a process. Brandon B. Dobell - William Blair & Co. LLC: Yeah.

And we're going through the upfront process of recruiting people, I mean, I would say, at an average 50% to 60% of the people we brought – I would say 40% to 50% of the people we brought into the manufacturing plant were the people we had to let go during the downturn. And then, the other 50% came from outside. So the second phase of the recovery as we start getting more people, I think we'll start getting more people from outside. But I think the team is all over it and being the first beneficiary, we do get the benefit to recruit the people first. Brandon B. Dobell - William Blair & Co. LLC: Okay.

But it's a process. It's a process. Brandon B. Dobell - William Blair & Co. LLC: Yeah. Yeah. It makes sense.

Like, I mean, we're trying to get as many people as we can on the Completions side. And the overtimes are very high right now, which is not sustainable. Brandon B. Dobell - William Blair & Co. LLC: Okay. And then, as you think about the inbound orders, maybe across Completions and production in particular, is it the same list of customers that you have previously dealt with primarily? A much different list? I guess what I'm trying to get to a different way to think about how much incremental share you think you're grabbing, and one way to think about that would be who you're talking to that, pre-2014, you weren't talking to?

We do plan to expand our customer base. That's part of the plan we had in 2017. Some of the new products which we have come up with in 2015, 2016 and 2017, they're in the process of being qualified and being tested in some cases. And as customers get more comfortable with those products, I think we'll start expanding to the new customer base than what we already have. But we do expect to improve our customer base and increase our market share. Brandon B. Dobell - William Blair & Co. LLC: Okay, thanks a lot. I appreciate it.

Thank you. Our next question will come from the line of John Watson with Simmons & Company. Please proceed. John Watson - Simmons & Company International: Good morning.

Good morning. John Watson - Simmons & Company International: Prady, are you receiving any orders for pressure pumping equipment that might be from new market entrants?

There are new players coming into the market and probably some will go, probably two, and we are seeing some activity from those customers, and we have secured some lumpy orders in the last, I would say 120 days.

The bigger orders that we're referring to are from established players, public and private, but not what you're asking about, John, is brand-new entrants. John Watson - Simmons & Company International: Okay. Okay, great, make sense. And then secondly, how would you characterize the quality or maybe the hours of the pressure pumping equipment that you're seeing now or that you saw in Q4? Is it in a worse condition in equipment you saw early in 2016 as the fleets further down the bench, if you will, are brought in for refurbishment?

We are seeing some cases where what's being brought in to our service facilities is very old iron. So, it's been sitting around a while, and that's not good, but we're going have to run through that. Clearly, the service companies – the pressure pumping service companies are putting their best stuff out first, and then they need to kind of work down the fence line and go with the next-best spread to come out is and see what needs to be done on that. So, yeah, I think that the cost per spread as they bring each additional unit out is probably likely to go up.

Yeah. John Watson - Simmons & Company International: Right. Right. That's what I'm getting at. Okay, great. I will turn it back. Thank you.

One more question?

Thank you. Yes, sir. Our last question will come from the line of Brad Handler with Jefferies. Please proceed.

Hi, Brad.

Thanks for squeezing me in, guys. Good morning. Good morning. I guess I'll come back to the line of inquiry around incrementals, maybe just because I want to make sure I understand an idea. As you talk about absorption of costs, it's a stair step because you need to hire in and add a shift here or something, right, and I guess there's lots of components or maybe for our purposes, it's more fluid in that. But what – I guess the question ultimately is what keeps – as you have this good problem of growth, what keeps you from hitting another 20% incremental order in 3Q, and then another in the first quarter of 2018 or something? What sustains you on more of that 40% kind of incremental path, I guess, if you do have to reabsorb these costs?

I think we are – I'm trying to describe the SG&A costs that we need to put back in to normalize.

Yeah. Yeah. Yeah.

From there, it's the operating leverage, right? So, the incremental margins are not the same in each business Brad, so there will be – one of the challenges here is the mix. Jim was describing that some of the businesses that are still going to be more challenged, they're going to have lower incrementals, right? And those businesses that just fundamentally have lower gross margins are going to have a harder time having those really high incrementals as well. So, there is a mixed element in there, and it makes it kind of hard. And I would also say, Brad, hey, I think we should all kind of agree that we're starting off from really low numbers here.

Yeah. Yeah.

And incrementals, from really low numbers, man, it's hard to be really precise, right.

Yeah. Fair. Fair. We've obviously struggled with that in our models too. Yeah. Sure. Okay. I guess, I understand the point. But it is – again, you've described it as a variable cost, and I guess the point, we just need to consider that it's not that chunky...

Right.

...once it gets passed the SG&A. It's just not – the costs out there are not that chunky. Okay. I guess that make sense. Can you at all size for us, even ballpark, how big Cooper Valves is? I know it's not really your style.

Well, from an acquisition price, not real big.

Okay.

From a potential, in terms of what we can do with it when we own it, we think it's going to be material for us.

Okay.

But like a lot of things we buy, Brad, the idea here is to take a good brand and put it through our distribution system on a global basis and expand their market. So, that means it'll start off small, but we're hopeful that fairly quickly, it'll be something where we can grow rapidly.

It's a valve which also is going to be applicable in Middle East and Far East and the markets where we would like to penetrate with the rest of the core business. So, as we start growing the Cooper line, it will also benefit the rest of the core.

Got it. I appreciate that color. Okay guys, thanks. I'll turn it back.

Well, thank you all. We appreciate your time and good interest and good questions, and we will do it again next quarter. Thank you all very much.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody, have a wonderful day.