Welcome to the Fourth Quarter 2017 Frank's International NV Earnings Conference Call. My name is Jason, and I will be your operator. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. Also please note this conference is being recorded. I will now turn the call over to Blake Holcomb. Mr. Holcomb, you may begin.

Thanks, Jason. Good morning, everyone. Welcome to the Frank's International conference call to discuss the fourth quarter and full year 2017 earnings. I am Blake Holcomb, Director of Investor Relations and Communications. Joining me today on the call are Mike Kearney, Chairman and President and Chief Executive Officer; and Kyle McClure, Senior Vice President and Chief Financial Officer. We also have BJ Latiolais, Executive Vice President of Global of Operations; and Scott McCurdy, President of Blackhawk Specialty Tools to join in the Q&A portion of today's call. A presentation has been posted on our website that we will refer to throughout this call. If you'd like to view this presentation, please go to the Investors section of our website at franksinternational.com. Before we begin commenting on our 2017 results, there are a few legal items that we would like to cover beginning on slide 3. First, remarks and answers to questions by company representatives on today's call may refer to or contain forward-looking statements. Such remarks or answers are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such statements speak only as of today's date, or if different, as of the date specified. The company assumes no responsibility to update any forward-looking statements as of any future date. The company has included in its SEC filings cautionary language identifying important factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings, which may be accessed on the SEC's website or on our website at franksinternational.com. There you may also access both the fourth quarter and full year 2017 earnings press release, and a replay of this call. Frank's International uses its website as a channel for distribution of material company information. Such information is routinely posted and accessible in the Investor Relations section. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measure in the fourth quarter and full year 2017 earnings release which was issued by the company earlier today. I will now turn the call over to Mike for his comments.

Thanks, Blake. And good morning to everyone on the call. In 2018 we will celebrate our 80th year as a company and our fifth year as a public company. This is a great American success story coming from a one crew team operating out of a garage in Louisiana to 3,000 employees in 50 countries and six continents. We've gained a reputation as a respected brand around the world. Everyone in the upstream world knows of Frank's. Our customers acknowledge Frank's as a leader in safe reliable service. We provide value added technology that improves the cost efficiency and integrity of our customers' wells. Our employees have dedicated themselves to our customers' success and they take great pride in their accomplishments. Because everyone knows the markets we serve have been very weak for the last three years. As we look forward, it's clear we will have to continue to work hard to build on our history of success. Our markets have bottomed for the most part with some looking more optimistic than others in terms of a recovery. Last quarter I laid out the high level themes on which we will build the future of Frank's International. We will enable our employees, put the right people in the right positions with the right training to be successful and to win in the marketplace. We will be an organization with a high level of accountability and operational best practices that support a path to long-term profitability. We will high grade our portfolio that means we will make sure that the customers, the geographies and the products and services all make sense from a profitability standpoint. In my first 100 days on the job, I led a process to develop a strategic plan with the goal of maximizing our revenue and profitability.…

Thanks Mike. Turning to slide 7, I will discuss what we experienced during the fourth quarter in the offshore market. Please note any market share or financial comparisons in my commentary will be on a sequential basis. Overall market share in the total offshore rig count held steady during the fourth quarter. In the U.S. Gulf of Mexico market, activity was mostly flat after steady decline in the past eight quarters. While rig count remains almost 70% below June 2014 levels, this market is showing increased signs of stability. In the Middle East, we saw revenues again pick up as the shift in mix to more offshore shelf work continued. Revenues and share in Africa fell double digits as some rigs rolled off and work was completed ahead of schedule. Revenues in Europe fell 15% due to lower pricing and a discontinued drilling campaign. Asia Pacific and Latin America saw share increases as we ramped up work on new rigs that outpaced the broader market gains. And breaking down our segments, we will first look at International Services on slide 8. International Services revenue for the fourth quarter was down slightly to around $53 million. The results were primarily driven by the completion of work in Europe and Africa. These declines were partially offset by increases of more than 20% in the Middle East and Canada. The international market continues to be a mixed bag in different regions due to changing work mix and timing of projects. We're seeing indications of improvement heading into 2018, but expect to see volatility of activity and continue pricing headwind throughout the year. Adjusted EBITDA for the International Services in the fourth quarter was $5 million or 10% of revenue. The lower margins can be attributed to an above the line benefit of around…

Thanks, Kyle. Looking at slide 13, let me close our prepared comments with a summary of our initiatives and expectations for 2018. First, we will commercialize market-ready technology across our business segments and make investments in technology that will extend our time on the rig. We are well equipped with our strong balance sheet to invest in research and development. Next, we will continue the global expansion of Blackhawk. The rationale for the Blackhawk acquisition is playing out with a successful 2017 and we are now looking to meet our next target in 2018 of growing revenue 20% year-over-year. Third, we will continue to evaluate all of our product and service lines to determine if they meet our financial objectives and if not how we can modify them through ramped up cross-selling initiatives, cost containment, a strategic alliance or divestiture. We have the balance sheet to pursue acquisitions that fit our portfolio. We have the willingness and liquidity to grow inorganically if the right opportunity is available. Finally, we're charging our leaders to be accountable and hit their profit targets by growing the top and bottom lines of their businesses. Each business must be projected to operate at a full cycle return threshold that achieves our profit target. Our G&A and cost of revenue reductions will be important drivers of our 2018 success. The way we manage the business is quite simple. Value our most important asset our employees, listen to our customers and help them accomplish their objectives. Be cost conscious and efficient to increase our profitability. And as a result increase our shareholder value. We exist to grow shareholder value and we will relentlessly pursue this objective. Operator, we'll now open up the call for questions.

Thank you. Our first question comes from Harry Pollans from Wolfe Research.

Hey, guys. On the 4Q International Services' margins, was there any negative impact as far as extra costs would be abandoning – the abandonment of operations in Venezuela? Just looking at quarter-over-quarter and I know you said the non-recurrence of that tax benefit impacted it, but was there any other costs involved, any frictional costs there?

No. That would show up in the adjusted EBITDA margins that you're probably looking at here. There might have been some small restructuring costs that fell into the restructuring line as you go around.

So would that be – would 4Q be a good starting point as we look at modeling 1Q 2018?

Yeah. As you jump off from the Q4 International margins, I think that's effectively where we are running out right now based upon the current mix of business and then obviously that'll change as we go throughout 2018. But the current mix where it is with Africa and Europe being down the quarter and the Middle East, where it's at, that's the current run rate.

Got you. And then for the U.S. Services, you're starting up on the six rigs in the Gulf of Mexico in 1Q, are there going to be any extra start-up costs there at those rigs that we should anticipate?

No I think all the mobilization costs that there might be some minor repair and maintenance cost at this point. I think most of the equipment is ready to go and ready to be deployed. And I think we called out some of the mobilization costs in the segment in Q4 as we're getting the equipment ready to go.

Okay. Got it. Thanks guys.

Thank you. And next we have James Wicklund from Credit Suisse. James Wicklund - Credit Suisse Securities (USA) LLC: Good morning, guys.

Good morning, James. James Wicklund - Credit Suisse Securities (USA) LLC: Michael you talk about growing Blackhawk and clearly, the justification, the reason for buying Blackhawk has been confirmed and it's doing better than most. You're going to grow it by 20% year-over-year which is ambitious and I notice that you're put in growth CapEx in it. And the global expansion, where do you take Blackhawk first or where are the places that it isn't today that it will be by the end of the year?

Okay. I'll let Scott who is our Blackhawk expert to take that. We have had several – before I'll turn it over to Scott – several situations where the cross-selling opportunities are starting to bear fruit where TRS customers are interested and starting to use Blackhawk. And there's actually been some cross-pollination in the other way where some of the Blackhawk customers have decided to use us for some TRS services. It's fairly small the cross-selling at this point in time, but that's the big opportunity. So I'll let Scott take it from here.

Okay. Thanks, Mike. James Wicklund - Credit Suisse Securities (USA) LLC: Yeah. Thanks, Scott.

Sure. The – so I think there's opportunities everywhere. I mean we literally are bidding opportunities in every major region of the world. I would say places that we aren't today, but expect that we would be I think we'll have a broader presence in the Mediterranean, the offshore Canada market, the Far East and also the Middle East and that would be kind of on top of what we're currently doing which is heavily focused on the kind of Northern, Latin America, Caribbean region as well as some of West Africa and some Canada, but more onshore focus Canada work that we're doing today. James Wicklund - Credit Suisse Securities (USA) LLC: Does Blackhawk do any work with on jackups, is it just deepwater? I know you've got onshore. Can you talk about Blackhawk and the jack-up market or the shallower water market and where you are in that?

We do work on all types of rigs. We have a pretty broad suite of products. Our cement head, which is the largest product, the value proposition is highest on the floaters and the deepwater rigs. We do do some work on more of the shelf type rigs, but it is mostly focused on the floaters offshore. And then we do have a land-focused cement head which is a smaller footprint that has a pretty good presence in the U.S. land market and a lot of potential for some of the land markets around the world as well as some of the shallow water markets that those tools can be used in the shallow water markets. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. And Mike how much of your CapEx is going to go to Blackhawk this year, I mean out of the total for the year?

About – this is Kyle. It's about 25% this year of that - (28:17)

...of the range (28:18) towards Blackhawk. James Wicklund - Credit Suisse Securities (USA) LLC: Okay. Last question, if I can sneak one in, Mike, I was down with some Louisiana boat people a couple of weeks ago and they're laying off people for the first time in 75 years. You guys are getting ready to celebrate your 80th birthday, laying off people at Frank's has always been difficult and it didn't happen until a couple of years ago. Where are you in reducing the head count? Are you where you need to be? Are the improvements from here going to be more structural or do we have more head count reductions ahead?

Well, that's a good question. I'll tell you a little anecdote. There's some folklore that Frank's has never had a head count reductions until this downturn. When I started up, I went through some of the old employee magazines and in the 1980s, there actually were some pretty big layoffs at Frank's. So Frank's has not been immune to head count reductions. Let me start with this. Our global attrition rate is 15%. The last thing I want to do is lay people off. What we have to do is right-size the organization. My goal is to try to grow fast enough to where we can minimize any employee dislocation. I mean that's the goal. But to hit these G&A – SG&A reductions and other things, I can't say that there won't be some attrition other than involuntary, but we're certainly going to try to capitalize on the fact that all businesses go through attrition and try to retain our employees to the extent possible. James Wicklund - Credit Suisse Securities (USA) LLC: Okay, perfect. Mike, Scott, thanks guys, appreciate it.

Sure.

Sure.

Thank you. Our next question comes from Kurt Hallead from RBC Capital Markets.

Hey, good morning.

Good morning Kurt.

Good morning, Kurt.

And thanks for that update on the strategy and direction, and everything else, makes it – puts everything in a good perspective I think into the next year. I wanted to just get a general sense here as outlined give us with a couple of teasers on like revenue growth specifically for Blackhawk, being north of 20% in 2018. So you know if you were to kind of rank order revenue growth for your segments with Blackhawk at the top, how would it cascade down from there?

Yeah. So this is Kyle. So I think Blackhawk would obviously be the primary driver of sort of the top tiers, we talked about the 20% number. U.S. Services is probably and I'll go and (31:01) put Tubular in context where we have some stretched goals for the Tubular business here. This year, they are outside sort of entering some International markets they haven't been to in a while and they've got some leads on some interesting business out there in the marketplace, so that would be sort of the number two segment out there, pretty close to where Blackhawk was lining up at. Then you'd have the U.S. Services, I think we anticipate continued strong growth in U.S. land. I know BJ and the teams are out there and doing some price adjustments to various basins where we think we can pick it up at and we see some additional growth coming up there. And then, I think last would be International – I think International is the most challenging market we have right now. We talked about Europe and Africa kind of going Q3 to Q4, I think those challenges are manifesting themselves out as we look across the year right now, very competitive markets in the North Sea and then, Africa is what I'd just kind of call one-in one-out and there's no real general direction back up in that particular market. So Blackhawk, Tubular kind of at the top of the list followed by sort of the U.S. Services with both Gulf of Mexico and the onshore business seeing some decent growth and then, sort of the laggard of the group coming in with the International segment.

Got it. And it's a great color, really appreciate that. And maybe kind of dovetail on that, a number of different companies that have reported prior to you have kind of given some of their views on what they think they can achieve from incremental EBITDA or incremental operating margins on a year-on-year basis. So with that said, I wonder if you can give us your views on what you think your incremental EBITDA generation could be on your revenue growth in 2018.

Yeah. It's depending on the mix, right. The Blackhawk is going to have a little bit lower incremental margin profile than say, a Gulf of Mexico. Gulf of Mexico is going to have an incremental margin profile of – and this is at the variable line, if you will. I won't take into account kind of fixed cost basis, but on the gross margin level, deepwater work is going to have incremental margins in the 50% to 70% range. The Blackhawk business itself is going to have incrementals in, call it the 15% to 20% range. It just depends on the general profile of what's growing and what's not growing. So, as we talk about the mix, this has been on a number of calls now, the mix of the business continues to kind of deepwater pricing pressures, activities, sort of flattening out here, that mix is obviously making the margin profile challenged. As we think about the cost reductions that we've announced today, I think we would say, hey, look incremental is going forward, if we can execute these are going to be in the 50% range for the overall organization. But mix is important as we move about the year, not all markets are the same. So...

Okay, great. I'll keep at two. Thanks.

Yeah.

Thank you. And we have no further questions in the queue. I will now turn the call back to Mike Kearney for closing comments.

Okay. Well, thanks everybody for listening on the call here, participating. Looking at slide 13, we're going to commercialize our market-ready technology across our business segments, make investments in technology that will extend our time on the rig. We're well-equipped with our strong balance sheet to invest in research and development. Next, we'll continue to, the global expansion of Blackhawk. The rationale for the Blackhawk acquisition is playing out. Third, we'll continue to evaluate all of our product and service lines to determine if they meet our financial objectives – and not how we can modify them. And we're going to drive accountability and reduce our costs. So that's it, ladies and gentlemen, we appreciate you listening to the call and look forward to the next quarter. Thank you.

Thank you. Thank you, ladies and gentlemen, this concludes today's conference. Thank you for participating and you may now disconnect.