Welcome to the First Quarter 2016 Earnings Conference Call. My name is Christine, and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to Senior Vice President and Chief Financial Officer, Daniel Molinaro. Mr. Molinaro, you may begin. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: Thank you, Christine, and welcome everyone to the NOW Inc. first quarter 2016 earnings conference call. We appreciate you joining us this morning and thanks for your interest in NOW Inc. With me, this morning is Robert Workman, President and CEO of NOW Inc.; and Dave Cherechinsky, Corporate Controller and Chief Accounting Officer. NOW Inc. operates primarily under the DistributionNOW and Wilson Export brands, and you'll hear us refer to DistributionNOW and DNOW, which is the New York Stock Exchange ticker symbol throughout our conversations this morning. In addition to these brands, we're very excited about new brands added to the DNOW family during 2015, including MacLean Electrical, Machine Tools Supply, and Odessa Pumps and Equipment, among others. Before we begin this discussion on NOW Inc.'s financial results for the first quarter ended March 31, 2015, please note that some of the statements we make during this call may contain forecasts, projections and estimates, including but not limited to comments about our outlook for the company's business. These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of today, which is subject to change. They are subject to risk and uncertainties and actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. I refer you to…

Thank you. Our first question comes from Ryan Cieslak from KeyBanc Capital. Please go ahead. Robert R. Workman - President, Chief Executive Officer & Director: Hey, Ryan.

Hi, good morning everyone. Robert R. Workman - President, Chief Executive Officer & Director: Morning.

So I guess maybe the first question is, I want to get maybe a better sense of how to think about the recent Power Service's acquisition. Any color you can provide, maybe on the type of sales they had, the margin profile? I know that hasn't closed yet, but any additional information on that would be helpful. Robert R. Workman - President, Chief Executive Officer & Director: Yeah, so we haven't closed yet and it's impossible to forecast when it actually will close since it's now in the government's hands. But they run – I think in 2014 they published, they ran $270 million of revenue and they're selling to the same customers we are and so we're off by half so I would imagine they'll be off about half this year. And, obviously, their margins are pressured just like ours right now so right now, they're running low single-digit EBITDA but that will definitely improve, back to their historical levels whenever the market recovers.

And is there – the way to think about the geographic breakout, I mean I'm assuming that's concentrated in the U.S. but is there any Canadian exposure or how much directionally if they have any Canadian exposure would that be? Robert R. Workman - President, Chief Executive Officer & Director: So they've grown their business considerably over the last three or four years by focusing on most of the plays that are in the Rockies and the North Dakota Bakken. One of the exciting things about this is that by using our supply chain services customers' agreements, by leveraging our Canadian infrastructure which they don't have, we believe organically – and Odessa Pumps on top of that – we believe organically we can grow this thing pretty considerably.

Okay. And then thinking about the pricing environment, it sounded like things remained depressed but aren't getting any worse. You commented on the steel prices starting to tick up here. How do we think about maybe how, if we continue to see an uptick in steel prices, how that would actually flow through in terms of maybe starting to realize some price increases in terms of maybe just what the lag would be at the end of the day? David A. Cherechinsky - Chief Accounting Officer, VP & Controller: Hey, Ryan. This is Dave. I think we're excited about what looks like some uptick in pricing. What we're still seeing though is we're seeing a lot of enquiries and not a lot of orders, so the demand hasn't caught up with that. We're a little nervous that those price increases won't be permanent but if we start to see some improvement, we see the slack come out of the industry inventory and our inventory, then we would expect to see nice forward progression in pricing and gross margin and reduce inventory charges as we start to see that river of product flow expand. So, it really depends on the inventory that's in the market, customer demand and the timing of any kind of recovery in sales there.

And are you seeing anything on the initial price increases on the valve and fitting side or is it still too early at this point to see a price increase on that product line, at this point? David A. Cherechinsky - Chief Accounting Officer, VP & Controller: Generally, we're not seeing product increases on product lines except for you know steel producers trying to put a floor on the pricing they have. So, no, we're not seeing forward movement otherwise except in pipe and that has yet to stick in terms of pricing on actual orders delivered.

Okay. And then maybe just the last question and I'll hop back in the queue is I think there was some commentary in the prepared remarks about bad debt cost. I'd just be curious to know how incremental that was in the quarter relative to maybe in the fourth quarter even on a year-over-year basis. David A. Cherechinsky - Chief Accounting Officer, VP & Controller: Sequentially, it was about $1 million increase. Year-over-year I don't have that figure handy, but you know what we're seeing is our customers being more stressed financially, as you would expect. And customers are demanding longer terms and some simply can't pay their bills, so we're seeing an uptick in that expense. Again, as the market bottoms and that we see some recovery, hopefully that will abate but that would be sequential increase.

Okay. Thanks for the time guys. Robert R. Workman - President, Chief Executive Officer & Director: Thank you.

Thank you. Our next question comes from Sean Meakim from JPMorgan. Please go ahead.

Hey. Good morning. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: Hey, Sean. Robert R. Workman - President, Chief Executive Officer & Director: Good morning Sean.

So you guys had good working capital release and free cash in the quarter, but as you noted, we're still at 35% working capital-to-sales given the drop in the top line. So I just was curious, if you had a better sense of, as we go through 2016, how much working capital release do you think is still available. And then do you expect that ratio can improve pretty meaningfully if we even just get to a stabilization in activity? Robert R. Workman - President, Chief Executive Officer & Director: Yeah. So we still expect $150 million to $200 million of cash generation from operations for the full year, and yes we would expect the ratio to improve as revenue stopped dropping. Obviously, in the calculation, if revenue is headed downward, it exaggerates the working capital as a percent of revenue calculation.

Exactly, okay. And then just to touch on the Power Service deal, you noted some synergies in the prepared remarks with respect to some customer pull through demand on that side, just for some new offerings, specifically. Just curious, how does that competition look in that area in terms of how unique this offering set is relative to what else is in the marketplace? Robert R. Workman - President, Chief Executive Officer & Director: Yes, it's very unique. In fact, one of our top three customers came to me, specifically, about three years ago, asking us to come up with some solution, whereby we could prefab and speed up the time it takes to build a tank battery. So after the frac crew leaves the tank battery, typically what happens is that the operator will call somebody and order the tank and somebody order the heater treaters and oil water separators and power construction crews and then call DNOW or one of our competitors to deliver many, many trailer loads of pipe, valves and fittings and then they build a facility onsite. And so, they're not producing oil and gas that's available for 30 to 60 to 90 days depending on the size of the facility. What this company does is they prefab and modify these modulized units and have them ready to go. So whenever the frac crew leaves the site, they deliver several skids that do the same thing that this home-built system does and then they plumb it together with a control unit and you can drastically expedite the amount of time that the customer can get their oil and gas in the pipeline and start making money.

Yeah, that sounds like a pretty substantial savings. Okay, great. Thank you. Robert R. Workman - President, Chief Executive Officer & Director: Thank you.

Thank you. Our next question comes from David Manthey from Robert W. Baird. Please go ahead. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Hi, good morning guys. Robert R. Workman - President, Chief Executive Officer & Director: Hi, Dave. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Robert, you said you expect $5 million to $7 million lower costs ex-acquisitions, I believe. And is that a quarterly run rate from the first quarter levels and after you include costs related to acquisitions that have already been done, what is the net reduction that you would expect there? Robert R. Workman - President, Chief Executive Officer & Director: Well, Dave, it is $5 million to $7 million down or compared sequentially to Q1. That assumes that the charges we've been taking for inventory and for bad debt continue in Q2 so that would be upside if that doesn't repeat and then we would expect to continue to cut. So we're going to cut costs in Q2 so you'll see even more in Q3, but it all depends on what happens with some of our customers' accounts receivable with us. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. And I assume that $5 million to $7 million – you're saying that excludes acquisitions. Clearly that excludes the new Power Service acquisition as well. Will you readdress that at a later time? Robert R. Workman - President, Chief Executive Officer & Director: I definitely will. I'm not really addressing what you should consider for Power Service in the current quarter because the government's got at least a month that they'll be working on it. Then we have to get it closed and so we're only talking about a few weeks of impact,…

Thank you. Our next question comes from Matt Duncan from Stephens. Please go ahead.

Hey, good morning, guys. Robert R. Workman - President, Chief Executive Officer & Director: Hey, Matt. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: Hi, Matt.

Robert, you had a little commentary in your prepared remarks about sort of the challenges in 2Q versus 1Q and some of the benefits that you'll have there. I guess it sounds like net-net we should expect sales to be down. Do you have any thoughts on sort of the percentage decline sequentially in revenues that you would expect based on sort of where rig count is and what you're seeing in the business? Robert R. Workman - President, Chief Executive Officer & Director: Matt, that really depends on what rig count does for the next two months. We've been consistently putting out around $1.3 million of revenue per rig. So it's anybody's best guess what happens with the rig count. So if you make up your rig count forecast, you can apply the number and that should be pretty close.

Okay. And then in terms of oil price and where it would drive increased activity, just want to think through sort of how this impacts your business. So it sounds like mid-$40s are better. If we sustain that level, we'll see these DUCs start getting completed. That's going to result in tank battery work. Theoretically, the acquisition of Power Secure or Power Service rather, then becomes very, very well timed. So would you expect to see the revenue per rig go up from that $1.3 million level, given that rig count wouldn't yet be recovering but you would start to see some of that tank battery work come through? Robert R. Workman - President, Chief Executive Officer & Director: Yeah. My assumption would be and – there's a lot of variables in this, but if what happens is some of these companies in the $45 to $50 range start completing the DUCs, but no one picks up rigs, you might see a weird blip in our revenue per rig being exceptionally high because all that revenue would come in with no corresponding rig count.

Right. And then it sounds like it's sort of a $50-plus level before you're going to see any kind of movement in rig count, right? Robert R. Workman - President, Chief Executive Officer & Director: Yeah. I read all of our customers' reports and they tell us all the same thing publicly, but I haven't seen anyone say they're going to pick up rigs at less than $50. And some are saying, they won't pick up rigs until we get to $65. So in the $50 to $65 range if it's sustainable, I think you're going to see people start adding back rigs.

Okay. And then last thing, just back to the Power Service deal. So it sounds like there's maybe a pretty meaningful cross-sell opportunity there in this tank battery market. I'm assuming that we can, obviously, guess who the competitor would be for the PVF on those tank batteries that you'd be maybe able to take some business from. Talk about the competition in the pump/package market in that fabrication business. Who else is building those packages for tank batteries? Is anyone else really targeting that market or is there something that Power Service does really well that others aren't really targeting as much? Robert R. Workman - President, Chief Executive Officer & Director: I've visited lots of folks that are trying to pull this together. I've seen companies that are trying to form alliances so you have a fabricator and a tank manufacturer and a pump distributor all getting together, trying to pull together a joint venture per se. I haven't seen it come to fruition. I've only seen one other company that actually does what Power Service does and the quality isn't nearly as high and they're not nearly as successful in this space. So I think they really standout right now in the market around their position. They've almost invented this particular solution on their own back starting about seven years ago. And so there's a lot of good synergies because so Power Service, as you can imagine, when they fabricate a skid unit, they buy a lot of pipe, valves and fittings. I mean it's one of their biggest spend categories and currently that's going to one of my competitors, so that will be brought in house. They're paying resale price so their margins will improve as they utilize our vendors in our costing, that we will use our sales force that have all these operator relationships to grow their share organically. And then one of the most sexy parts about this is the fact that they have distributorships for some really important pump lines for all of the Western U.S. that will really benefit Odessa Pumps.

Okay. And then last question on this then, what is your revenue content right now in a typical tank battery and what is their revenue content in a typical tank battery? Just trying to gauge how much it's going to increase your average revenue in a tank battery? Robert R. Workman - President, Chief Executive Officer & Director: You know what, Matt, I don't know. I've never asked them what their typical revenue per tank battery is. I know ours ranges from 200 to 400 (48:29), depending on how many wells are on that tank battery and theirs will be substantially higher than that because that would include the pumps which I don't typically sell and that would include the elimination of the tanks and the treaters and the dehydrators and all that stuff and the control unit. So I really don't know, I don't mind sharing it with you when I get it or share it with everybody when I get it but I just don't have it.

Okay. All right, no worries, thanks guys.

Thank you. Our next question comes from Walter Liptak from Seaport Global. Please go ahead.

Hi, thanks. Good morning everyone. Robert R. Workman - President, Chief Executive Officer & Director: Good morning, Walt. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: Hey, Walt.

I want to ask about the – you started the commentary about the Fort McMurray fires and I just wondered if you're thinking that there's going to be disruption in the second quarter, what kind of impact that could have on revenue. Robert R. Workman - President, Chief Executive Officer & Director: But it's kind of early to forecast but I can't imagine that that fire is not going to create all sorts of troubles for everyone working in the oil sands. I mean there's one road in and there's one road out and a big part of that town has now been pretty much burnt. People have evacuated, so our branch is shutdown, operators have evacuated some of the camps that house the employees that work in the oil sands, those have been burned down. So it's really early to tell but I would be blown away if it didn't impact that particular region negatively for some time to come.

Okay. Could you help size it for us like in 2015 how much revenue came out of that region? Robert R. Workman - President, Chief Executive Officer & Director: I really don't know, Walter, what our revenue is for the oil sands standalone. We've never actually gotten. I've never had that data before. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: But if you look at total Canada, I mean Canada surely has been lagging though I mean it's a small number. It's a small piece of the total pie, all of Canada is a small piece. So then you get into this, I don't want to minimize the importance here and we certainly need to be conscious of our people and all the people there, but I don't think it's going to move the needle, Walt. Robert R. Workman - President, Chief Executive Officer & Director: Yeah. I would say Walt, our largest revenue in Canada is probably Saskatchewan and then BC and then the Alberta oil fields and then the oil sand.

Okay, okay, great, fair enough. On the acquisition, have you announced what the price is yet, that you negotiated? Robert R. Workman - President, Chief Executive Officer & Director: Yeah, we've not disclosed any of that.

Okay, great. Thank you. Robert R. Workman - President, Chief Executive Officer & Director: Thank you. Daniel L. Molinaro - Chief Financial Officer & Senior Vice President: Take care, Walt.

Thank you. I will now turn the call back over to Robert Workman, President and CEO for closing statements. Robert R. Workman - President, Chief Executive Officer & Director: Okay. I'd like to thank everyone for your interest in DNOW and we look forward to talking to you about our second quarter results for 2016.

Thank you. And thank you ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.