Good morning, ladies and gentlemen. My name is Aaron and I will be your operator today. At this time, I would like to welcome everyone to the 2015 Q2 Earnings Call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker’s remarks, we will conduct a question-and-answer session. [Operator Instructions] We also like to please – allow you to limit your questions to one or two per queue and you are welcome to queue up again for additional questions. Now, I'd like to turn the call over to Mr. Jack Jurkoshek. Mr. Jurkoshek, you may begin your conference.

Good morning, everybody. I'd like to thank you for joining us on our second quarter earnings call. As usual, a webcast for this event is being made available through the Street Events Network service by Thomson Reuters. Joining me today are Kevin McEvoy, our Chief Executive Officer, who will be leading the call; Marvin Migura, our Executive Vice President; and Cardon Gerner, our Senior Vice President and Chief Financial Officer. Just as a reminder, remarks we make during the course of the call regarding our earnings guidance, business strategy, plans for future operations, and industry conditions are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. And I'm now going to turn the call over to Kevin.

[Technical Difficulty] the call and your interest in Oceaneering. Our reported EPS of $0.66 was within the guidance range we gave last quarter. However, these results included a couple of items that had not been considered in our guidance. Specifically $9 million or $0.06 a share inventory write down and $6 million or $0.04 a share of net foreign currency exchange losses. The inventory write-down reported in Subsea Products gross margin was a result of a decision to exit the business of manufacturing Subsea BOP control system. We intend to continue providing aftermarket parts for the installed base. The foreign exchange – our foreign currency exchange losses reported in other income and expense included $8.9 million of losses in Angola, attributable to its central bank's devaluation of the kwanza primarily in June. Therefore, operating results for the quarter of an adjusted EPS of $0.76 surpassed what we have anticipated. This was attributable to performances by our ROV and Subsea Projects segments. ROV benefited from better than expected revenue per day on hire due to more vessel based services and Subsea Projects profited from higher U.S. Gulf of Mexico demand for deepwater intervention and diving services. Year-over-year quarterly operating income declined on lower profit contributions from Remotely Operated Vehicles, Subsea Products, and Asset Integrity. Net income was down due to the operating income decline, the foreign currency exchange losses, and higher interest expense as a result of the debt we put on the balance sheet during the second half of 2014. Sequentially, quarterly operating income was about the same, but obviously would have been higher if not for the inventory write-down. Earnings declined due the foreign currency exchange losses. Our overall outlook for the second half of this year is down somewhat from the 2015 guidance we issued last quarter. This…

[Operator Instructions] And your first question comes from the line of Ian Macpherson from Simmons. Please go ahead.

Thanks, gentlemen. My first question, I was wondering if you would – if you might share with us the historical materiality of BOP control systems, just so we have an idea of what's being winding down there. And whether you're contemplating winding down any other segments within products to the demand situation?

The answer to the first question is – was it's not really material and the answer to the second question is not at this time.

Straightforward. Thanks. Follow-up question, it's – the midpoints of your Q3 guidance and your second half guidance with just Q4 higher than Q3 which is really atypical for your earnings seasonality. And I'm wondering if you might share, what leads you to that and what specifically looks like it'll be stronger in Q4 than Q3, which is to me a little bit counterintuitive at this point?

That's a good question. It really is in products, timing of projects and products and also advance technologies.

Got it.

I think what we've got Ian is timing of umbilical throughput. And the fourth quarter is greater than that as the third quarter and commercial theme park activity in ADTECH is expected to have a better fourth quarter than in third quarter.

Okay, fine.

It's not all sure activity unfortunately.

Yeah.

Okay. Got it. Thank you very much.

Yes.

Your next question comes from the line of Jim Wicklund from Credit Suisse. Please go ahead.

Good morning, guys.

Hi, Jim. Hey.

You talked about how future EPS are going to depend on IMR work and the rig counts. And you had said before that as long as there is one vessel operator, with that behavior it makes for a difficult market. You guys are in the boat business you are taking delivery of your new boat next year, you guys study it and much closer to it than we do. When – when should we kind of start to hit the equilibrium, when should the bad actors no longer be incentivized to be bad actors and when should we expect the vessel market to at least stabilize if not improve?

I'm sure that's a hard question to answer, given that it really is demand related and demand is so unpredictable right now. I mean the basic problem is there – there are too many out there and they are like the floating rig market trying to survive and so they are going to, you know cash neutral pricing as necessary to get enough utilization to – you know to survive. So you know until we get a more predictable demand trend, it's pretty hard to answer that question. But I think, I think you read in the – in the – you know the press the same things that we do about you know some of those folks are in trouble and they may not all survive and that will obviously have some positive impact if that's the case.

Okay, I appreciate, that's – so I won't ask you to tell me when the rig counts are going to bottom then.

Thank you. Thank you. And you are not going to ask when the oil prices are [indiscernible] either I guess.

Hey, no, well, that was going to be my third question, no.

Oh! you only get two sorry.

There you go. C & C, I'm assuming that the pick-up in projects in the quarter was at least partially contribution by C & C, can you talk about how that's working out?

C & C is working out well, Jim, I mean with the integration is really kind of just underway in the quarter. I would say that none of that better than expected performance and projects was associated with C & C. C & C is new to the earnings in 2015.

Okay. Well then the rest of your business did better than expected. That's good.

Right.

And my final one, if I could you guys have demonstrated your ability to control the CapEx just by not adding new equipment and buyback a chunk of stock. I'm assuming that, I won't ask questions, if you're going to raise your dividend, but it looks like the dividend is safe, for a long-term foreseeable future. And you'll still be generating a free cash flow, is that the bright side of this market?

I think the bright side is our liquidity and ability to generate cash flow. And I'll comment on the – the dividend and say that we think, it's safe until, we reconsider it and may at as we do annually. And on the treasury stock repurchases that we're going to report those after they occur.

Okay, gentlemen. All the best. I wish you luck.

All right. Thanks, Jim.

Your next question comes from the line of John Donnel from Howard Weil. Please go ahead.

Good morning, guys.

Hey, John.

Hey, John.

I had a question on the products bookings here, those are obviously being pretty lumpy over that the first half of the year, but still holding in that, book to bill ratio of about 1.0, I was wondering, if you had maybe some expectations here for the remainder of 2015, if you could hold that book to bill ratio or kind of how you see that part of the business unfolding as we go through to the remainder of the year?

Well as you noted, it is a lumpy business and I think particularly now with the – I mean, we do have line of sight of potential projects that are out there. But whether they actually go forward or move to the right is anybody's guess and so it's pretty hard to answer that question.

And we stop predicating the future backlog and jobs good for that very good reasons some time ago. But there is still considerable answers in our products, it's just whether or not they're going to pull the trigger.

Have you seen any change maybe in the kind of within the sub segments of that group either or it was maybe more umbilical projects or ROV tooling et cetera, or is it still just kind of – is these all of your comments more sort of broad base for the entire segment?

Broad base...

Pretty broad-based.

Okay. Fair enough.

You got the projects for umbilical's primarily in the connection systems and then you've got to call out work for the higher value subsea work systems and tooling part.

Okay. And then on the ROVs, I was wondering, if you might have any update on either the number of rigs that you guys are currently have vehicles on, maybe rolling of a contract here over the remainder of the year or and also maybe the new systems that you have scheduled to be coming on for the rigs that are still under construction?

John, we'll get to that maybe a real quick, Jack's looking up right now. But we've really stopped focusing on the number of uncontracted days, because we don't find much sanctity in the contracted days, right now. So when every time I read something about another rig, it was cancelled or idle prematurely or whatever it's counting days than they seem to have a lot of relevance anymore as we thought it once did. But at the end of June, we had 33, we had ROVs on 33 rigs that had contracts rolling over into the second half.

Okay.

But again, we're not – when Kevin's notes – introductory notes mentioned, we've got exposure on drilling rigs and on expected, but on booked callout work. So there is a lot of speculative days, in our forecast it need to materialize.

Okay. Fair enough, guys. Thanks a lot, I appreciate you for taking my questions.

All right.

Your next question comes from the line of Chase Mulvehill from SunTrust. Please go ahead.

Hey, good afternoon, I guess good morning, good afternoon. Let's see, I guess first on the ROVs, it – the margin held up in the second quarter you had some seasonality with the vessel base support being up, quarter-over-quarter. You're guiding utilization, lower in the second half versus the second quarter. So how should we be thinking about margin progression in the second half of the year?

We are trying to hold the line on – certainly on further discounts, we think that's behind us, although that's now starting to run through our – our operating to earnings, but we are doing everything, we can on the cost-side to mitigate that. And I think that's was reflected in maintenance for or the margins from the second quarter and we're going to do everything we can to try and continue to do that. We're focused on every areas that you would expect, in this kind of a market, in terms of costs, cost that can be eliminated or avoided.

And I think our margin is too directly tied to utilization percentages to – and we just got there discuss in all of the work we need to win in the spec base that we have in forecast. And as normal in the callout business. So it really depends upon level of activity out there that and utilization that will determine. I mean, I think there is a lot of effort trying to maintain it, and there's a lot of pressure to bring it down from external sources.

Okay, all right. And then – so moving on to the Subsea Projects business, you got a decent amount of contract coverage there. So could you just talk to you know – how you expect utilization to unfold over the next year or so here, and if your customers have come back to you about price concessions on these contracts?

Well in the projects business, I mean if you look at the two different places where we have that Angola and the Gulf of Mexico, Angola is a term contract. And we have made some concessions to BP there, those are, you know already beginning to roll through our financials. And as far as the Gulf of Mexico, I mean that market gets – gets priority market every day. And so, you know the – the term contract that we have with one customer, is I think is okay. But the balance of the fleet is subject to the daily fluctuations in that market, and you know it's hard to predict that, but I think it's going to be challenging for the remainder of this year.

Okay.

And utilization of our vessels really, I mean what – why we get call out work and others don't is because of the whole package of project management, tooling and ROV that we bring, but still utilization is so dependent on whether or not the phone is going to ring. Does somebody have a problem out there that they need fixed.

Okay. All right. Are there any vessels that are scheduled to be redelivered over the next 12 months to 18 months?

In 2016. In 2016, we have two – three vessels, one of them at the end of the year, but we've got one in the middle of the year, I guess in August is the first one, in July...

We had two in the fourth quarter.

Two in the fourth quarter. We are taking on as Jim indicated earlier, the new -- our newbuild owned vessel should be delivered in April and whether it goes to work in Q2 or Q3 after it gets -- it goes to the shakeout cruise and all that is yet to be determined.

And do you have a contract for that newbuild?

No, it's going to be participating in call-out market.

Got it. Okay. I'll squeeze one more in real quick. So on the Subsea Products, how should we be thinking about the progression of margin as you get the mixed shift kind of in fourth quarter you mentioned about umbilicals and then lower price backlogs starting to run through the P&L as we kind of get two or three quarters out?

We really don't give guidance on our margin. Again, we're doing everything we can to keep it up. We said that it would have been flat if we hadn't had the BOP controls inventory write-down. I don't see much degradation, but I mean I think it's going to be a challenge to hold it where it is.

Right. I mean I guess in 2014 you guys used to kind of give some guidance around 19% to 21%, would you consider that in a normal mix, normal margin way that's kind of where we should be thinking about normalized margins?

We think that was normal for 2014. I don't think this market is very comparable.

Then we had bigger umbilical backlog, which is the lower of the mix and the callout fees, which is the higher margin is what we can't really predict until we know what happened.

I think the most difficult to predict is the utilization of our Subsea work systems in our tooling group. And that when there is a well stem or a flow remediation problem, we get utilized and we have contribution from that, when it's – that equipments on the beach, not so.

Okay.

That will make some margin.

Variable...

Variable and difficult to predict, it's timing of offshore or callout work.

Got it. All right. Thanks for all the color. I'll turn it back over to...

All right.

Your next question comes from the line of Ole Slorer from Morgan Stanley. Please go ahead.

Thank you. And thanks for the update on the guidance. I'm impressed that you guys have the systems in place to be able to tweak it to 4% to 7% given the volatility of the current environment. And certainly appreciate that. One thing upon the strings in this last quarter in the ROV business little bit, not quite clear on how come that it was driven by a vessel work, because it's quite different, what we're hearing from some of the other companies that also you must be hearing from some of the other companies that also have vessels involved in Intervention work in particular has been quite weak for them. So what was it that delivered such a differentiated performance for you guys?

Well, we just have – I mean, we had reasonable utilization in our vessel fleet, where we have ROVs installed on those vessels, mostly two ROVs per unit. And that's a much higher day rate and profitabilities on the rig. So I guess for us maybe the difference was we had better utilization of our assets during that time. And as the rig market goes down, our percentage of vessels goes up.

But I think earlier we're comparing Intervention vessels to – across the board, I think our differentiated services in flow line remediation and wells in the second quarter helped us, it helped carry some vessel utilization, but otherwise wouldn't have been there on a call out basis. Does that [indiscernible]

Yeah, no [indiscernible] a difference in the type of services as you provide that give you access to a different parts of the market. I'm just not sure if I fully understand the differentiation?

A really big it is, integrated ROVs and the tooling services including, and particularly focusing on well stimulation and flow line or high-grade remediation [indiscernible]

And a fair amount of this is difficult to forecast given that it is a – as you say that you're responding to a problem, is there any reason to assume that the high market share that you must have enjoyed in this quarter will change going forward or do you think, it's a little more structural about product that you supply?

I think, it really it depends on the amount of the more complex intervention jobs that are arise during the quarter, as that really is a differentiator. So if there's a lower amount of that in going forward, then we loss some of our advantage against the other competitors, I mean after that's really that the differentiator.

Two comments, when we talk about intervention, we're talking about outside of the wellbore?

Yeah.

I mean, let's look, I mean, I know you know that, but I want to make sure everybody doesn't compare us to do any well intervention inside the wellbore. And secondly, I totally agree that it is – it's not difficult to predict, it's almost impossible to predict call out work. [indiscernible] Here it's pretty hard.

Yeah. No, I mean that the inside versus the outside of the wellbore. Yeah, it's a good point. So let me ask, as the business environment unfolds, which is of course closely impossible to predict somewhere to what it did, there's no recent to assume that you won't be able to maintain your shares. So...

Right.

If I understand correctly. Okay.

That's it, we...

That is what we would say – answer.

Thanks all for clarifying that.

Yep.

Your next question comes from the line of Waqar Syed from Goldman Sachs. Please go ahead.

Thank you. Yeah, thank you for taking my question. In Advance Technology with theme park work that you were mentioning, that could show up in the second half. Could we get the quarterly income up to that $10 million a quarter or $10 million number that we've seen in the past and kind of the higher number. Can we get in that kind of a ballpark?

On a run rate basis.

No just for one quarter, when you're doing all that theme park related work?

Well, Waqar, I don't know. I mean, it would be pretty serious step-up from the level that we're doing right now. So to go from 5 or 6 to 10, that's quite a leap. I don't know we have that much. But we're – I mean, there is – I mean it's a notable increase. So, but ...

But it's very project, timing related, and the number of projects and also where they are in the course of delivering those projects. So it's pretty lumpy, just like the umbilical business perhaps. And it is just fortunate that they're in a time right now where they do have some good projects that they're working through.

Okay. But could you get into that eight – that we have seen maybe even little bit more regular $8 million or so in a quarter?

Yeah. We're real happy with the progress that – we got the issues that we incurred last year, kind of look like they're totaling behind us and we are running at a substantially better operating income contribution rate than last year. And yeah, I think depending on timing, but I mean I don't see a problem with eight, nine maybe – maybe eight, [indiscernible] a little bit more re-stretch.

All right. I'll take my family to Disney, maybe that'll help.

There you go. I'll make sure you do that.

All right. Thank you, sir.

Thank you.

Your next question comes from the line of David Smith from Heikkinen Energy Advisors. Please go ahead.

Yeah, thank you and good morning.

Hi David.

Good morning.

So you mentioned the pricing concessions on the ROV drill support have gone into effect and I guess there is a mix shift impact that favors the vessel support. But could you talk about how pricing has moved on in apples-to-apples basis, whether those are rig-based apples or vessel-based apples?

No sir, we're – we're really trying to hold pricing concessions pretty close to our invest, because if we gave a number and somebody got less than that, that might won't come back and somebody got more than that, then might won't to comeback.

Yeah, that makes sense. Then I guess a lot of follow-ups, but just real quick, circling back to C & C. I wanted to ask how those EBIT margins compared to legacy business – legacy project business. And if it's safe to assume that the C & C margins should be more resilient, maybe then the legacy business going into the second half?

Right now, this depends upon what legacy business we would be – we would be tying it to. Again, if you look the level of our activity offshore, really helps determine the level of activity in the margins associated with the survey work. And then, we use the term lumpy for a lot of callout work, but we haven't really seeing lumpy until we looked at the AUV business. I mean if you've got an AUV job ongoing, your margins are very good. If your AUV is waiting for the next job, your margins are not so good. So over time, we think we can integrate that service offering into what we do and where we do it, and we think it's got a great fit within Oceaneering. Right now we think that everything we're doing offshore is challenged and it'd be hard for me to pick, I mean if you look at it compared to call out IWOCs and tooling, no, that legacy business is way better than CMC's offering. But if you look at it compared to some of the projects and other products work, it's right in line.

Okay, great. Thank you.

Your next question comes from the line of Ken Sill from Seaport Global. Please go ahead.

Good morning, guys. I wanted to go over the Asset Integrity business; inspection, maintenance, and repair. Do you guys say that you expect that to be flattish or down in Q3?

Wait, wait.

Asset Integrity.

Yeah, Asset Integrity. We said -- I think we said flattish.

So one of the things...

Hold a second out. We'll double check as it's – the answer to your question I think would be yes. We said it was flattish to downish, but I'm pretty sure we said it would be similar.

Okay. So that's similar. And that leads to my real question, which is that business obviously gets cut pretty sharply when CapEx cuts happen, but that seems like more of a deferral rather than revenues going away permanently. So how long can people defer, inspection, repair and maintenance before it becomes a problem. And I guess what I am leading up to is, should you see some bounce back or rebound in that business sometime next year?

Ken, let me – I'm going to – then I'll turn it over to Kevin there to add to answer. But I going to – want to start with, it really is not related to CapEx, it is – this is in most of our work is inspection and Asset Integrity, associated with existing facilities and its very much more associated with production. So we – the one surprise we have in 2015, that made it a surprise, because we didn't think production OpEx would be cut as quickly and as sharply as it was. Now some of this inspection has to occur and they're just deferring it. I have, like in this way more to having, your car needing an oil change and you don't have to do it today even though it's been the requisite number of miles. You think, you can keep running it for a while and you can. But then there is always more costs, if you don't get the oil change. Right now, they have – customers and the interest of cash flow have stop spending this discretionary timing money. And I think, we are expecting it to come back, but not in the second half of 2015, we're expecting similar results in 2015. Go ahead, Kevin.

I mean, I mean there are regulatory requirements, that we – it have to be adhere to, but these are all around individual plans that they lodge with the authorities in various countries, wherever they're operating. And so they could all be different timings whatnot, but we do certainly expect that this is going to come back, we just really don't know when, it really depends on when their drive to that be, would be to get the inspections done.

Yeah, I guess that's where I was trying to get a ballpark thought for this is that, so you deferred it. Does that start coming back within a year or can some of that be even longer. I just, I don't have a feel for that. I don't know if you can...

I mean, well, I will previs by saying that I really don't have any exact knowledge, but one would think that within a year that they would have to be getting back to business here.

Okay. Thank you.

[Operator Instructions] Your next question comes from the line of Stephen Gengaro from Sterne Agee. Please go ahead.

Thanks, good morning, guys.

Hi.

Just a one quick follow-on on the ROV front. Can you give us a sense for what the pricing looks like just even in general terms. And kind of how do you think about the supply demand right now?

A plenty of supply, not much demand. I can tell you that. And but as far as the pricing, I mean, I think, we don't want to go into that. I mean, we have we believe a stronger market position with respect to competitors because of our value offer and we really for obvious reasons don't want to explore that publicly.

When you look at the margins in that business, the margins have held up fairly well. So I would imagine there hasn't been too much price deterioration, but you've done some other things from an efficient perspective the whole margin. Right, I mean, is that a good way to think about it going forward that you are able to kind of compete or manage it in the face off some price headwinds to keep margins flattish?

Well, I mean that's certainly our intent and – but I would also point out that some of the not all of the reduced pricing has shown up in our results yet. And so that's going to still – that's going to continue to trickle through. But I mean this is – this is a about over challenged and we are continuing to look at ways to be more efficient, reduce cost, we're stopping to do things that we were doing, but eventually we'll restart when the market is better, but I mean we're just doing everything we can to maintain.

And it really is difficult to maintain margins with...

Declining utilization.

...utilization declining. I mean, that's the challenges, where our utilization second half going to be?

Right.

And maybe, because suddenly depreciation becomes a larger component on a day, on a per day worked basis, so we haven't turned that off yet.

And then just as a – as a quick follow-up, when you think about your value proposition, your liability, your uptime, et cetera on your VSAT, is that a more important or less important negotiating point in this kind of market or is it about the same?

I think, that kind of depends on the operator, but it is obviously of less importance to the person making the procurement decision at times like this. So there is a lot of factors involved the philosophy of the particular client, the geographic area that you might be going to work in. And so, there might be a lot more concern about it if you were headed to East Africa, then if you are going to be operating here in the Gulf of Mexico let's say.

Great. Thanks for your answers.

Sure.

Your next question comes from the line of Ed Muztafago from Société Générale. Please go ahead.

Hi, guys. We heard one of the subsea providers talk the other day about the small project work in the Gulf of Mexico actually, having an uptick in 2Q, and then sort of the – their expectation, they expected that portion of the business to perform quite well, given the better relative economics to the bigger projects. Just kind of wondering, how the small project work in the Gulf of Mexico plays into your thinking, do you all expect that business to be fairly robust or within your guidance, are you not really baking much of these small project work into your guidance at this year?

You're talking about new development work like a tie back?

Correct. Exactly.

Well I mean I think, when you compare the capital required to do something like that versus some other bigger project, I think the oil companies would much rather do those, they're quick, generally relatively easy, but I'm not aware that there is a – an overabundance of those things out there waiting to happen.

Okay.

I think what, and I don't know, that the products company was talking about particularly, but I think what we have seen is, with low day rate. Independence have plenty access to rigs and they are doing single well drillings and you know and those have always been right in the middle of – of our fairway, because our vessels can [indiscernible] short umbilicals and we can do the installation. And the lead time is very quick turnaround from the time they decide to – that they have a discovery, they need a umbilical. So usually, we see quicker turnaround and quicker from delivery, but I can't say that we've seen enough of a pickup, that we put that in our second half thinking.

Okay. So presumably, that could present some upside. I wanted to maybe harp just a little bit on the ROV margins a bit. If we kind of go back to 2009, when we saw utilization creep down into the 70s around where you're talking about. Margins eventually came down maybe 200 basis points to 300 basis points. Would it be inconceivable for us from kind of a modeling perspective to think about that type of margin compression in ROVs going forward here?

Well, [indiscernible] there is not a lot of comparison in our view between the 2008, 2009 issue with what's going on today. I mean that was really kind of a very quick and minor blip for us in our business...

Yeah.

As you could see from our financial results around that – around that period. So this is – way different. So I wouldn't make a comparison that because we had similar utilization perhaps that the margin compression will be the same.

If we move back far and we think about what happen in 2008, 2009. Look, what happened in 2008 and 2009 is the down platform work in the Gulf of Mexico got completed. And even though, it was in shallow water, there was a significant number of ROVs being utilized to assist in the rig removal of the down platform. And so Jack correct me if I'm off base here, but it was all vessel-based days that caused our utilization to do down and we had no compression in margin in drill support.

Right. Right.

And today it is a amazingly different market, right.

Yeah.

Okay. No, no. I was wondering that, it was down platform and the vessel days...

And we have the down platform , I think that..

Yeah.

But that's what caused our utilization a downtick, down there it wasn't the global financial crisis or anything else it caused, because that just didn't affect deepwater.

Yeah, oh that's fair. And so you in that period, you lost some of the, what would be the higher margin work for sake of lower margin work?

It was all about the mix ...

Yes.

At that point in time. Yes, it.

Okay. And so presumably that the mix issue that we're talking about this time around could ultimately be the reverse, where you see more loss in the mix on that the lower margin work, which is the drilling work?

Yeah, but I mean – let's make it sure that it's same thing about umbilicals. I mean, when you start losing that lower margin work, doesn't mean your margin is going up.

It – fair enough. Fair enough. But ...

You got a lot more fixed cost to cover with your higher margin work.

Yeah.

And it's just doesn't work out that way.

Okay. Fair enough. I appreciate that.

Your next question comes from the line of Daniel Burke from Johnson Rice. Please go ahead.

Good morning, guys. Thanks for squeezing me in. One last question on Subsea Products and I might have missed this. So I apologize. But the press release commentary noted that the moderate reductions, the guidance for this year reflected, reduce Subsea Products expectations, but that business is still expected to be up second half of the year. It sounds like there has been a decent amount of callout, workstation type activity, so can you – maybe I missed it. Can you address what part of that business you dialed back your expectations for the second half of the year?

Within the services related what you said. I think it was in tooling IWOCS and other manufactured products that we dialed down in the second half. And we basically said umbilicals are going to be up second half over first half and we didn't change our outlook from the first quarter outlook. Well that's been pretty steady, because that's mostly backlog.

Got it. Thanks Marvin. And then the last one, what – on the integrity side, what percent of integrity revenues are non-U.S. dollar denominated?

Way most.

Okay. Okay. So that's one thing to keep in mind, when we look at that top line year-over-year, is just the impact of that pushing through then. Correct?

Yes. I think it is, right now, I will say that we've always been Europe and West Africa centric, West Africa is or Africa is dollar denominated, but it is worth by UK and Norway. And but I'm not going to use the FX word too much, because level of activity in UK and Norway is down way more than the kroner or pound has weakened.

Okay, great. That's helpful guys. Thank you very much.

It's a demand issue, Daniel.

I understand. All right, I just wanted to explore that for a moment. I appreciate the – your time.

Okay.

And your final question comes from line of Jim Wicklund from Credit Suisse. Please go ahead.

Thanks for the follow-up and since I'm the last question I get to ask the fun one.

You stayed all this time for this.

All this time just for this.

Okay.

So you can imagine [indiscernible] Okay with everything we see today, you are not giving guidance for 2016, got that no problem. With everything you see today and nothing will hold you to – hope to which is a complete lag as well I remember it.

That's shifting on us. Check in the mail.

49% or 51%, that 2016 earnings are better than 2015. And you may all have different opinions. I'll poll each of you. Jack?

Let me ask you, what part of the offshore market do you see improving in 2016?

No, no, no, I'm not going to get into this. We have publish research, just whatever you think and I'm not even asking to qualify.

Okay.

49% or 51% on earnings up next year. Do you have your own opinions? You don't need mine?

And I think a different number?

All right. [indiscernible] .

I know the answer. The answer is...

First it start with a five.

The answer is yes.

Okay. the answer starts with a five?

I said it doesn't start with a five.

It doesn't start with a five? Or what?

It does not.

That was very helpful. Okay guys I appreciate it. Thanks so much.

Anyway. Thank you but what, hey look, when I look at the you very smart people that follow us and I could ask the same question and it is exactly or very likely to be half would pick 49.5 would pick 51, we're not going to give any comment on 2016 even directionally because we haven't – we got our own gut feel, but we have no numbers or no market intelligence to kind of give you an order of magnitude. But thanks for the fun last questions.

You just answered my question completely and thanks guys, I appreciate it.

And we've no further questions. I'll turn the call back over to the presenters.

Okay. Since there are no more questions, I'd like to wrap up by thanking everyone for joining the call. This concludes our second quarter 2015 conference call. Have a good day.