Welcome to the First Quarter Earnings Conference Call. My name is Sylvia, and I'll be your operator for today's call. At this time, all participants in a listen-only mode. Later, we will conduct a question-and-answer session. I'll now turn the call over to Senior Vice President and Chief Financial Officer, Dan Molinaro. Mr. Molinaro, you may begin.

Thank you, Sylvia, and welcome, everyone, to the NOW Inc. first quarter 2017 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 our New York Stock Exchange ticker symbol throughout our conversations this morning. Before we begin this discussion on NOW Inc.'s financial results for the first quarter ended March 31, 2017, 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're subject to risks 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 the latest Forms 10-K and 10-Q that NOW Inc. has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information regarding these as well as supplemental, financial and operating information may be found within our press release on our Investor Relations website at ir.distributionnow.com or in our filings with the SEC. In an effort to provide investors with additional information relative to our results as determined by GAAP, you'll note that we disclosed various non-GAAP financial measures in our quarterly press release, including EBITDA excluding other costs, net loss excluding other costs, and diluted loss per share excluding other costs. Each excludes the impact of certain other costs and therefore, has not been calculated in accordance with GAAP. A reconciliation of each is included in our press release. As of this morning, the Investor Relations section of our website contains the presentation covering our Q1 results and key takeaways, which should assist you in understanding our first quarter performance. A replay of today's call will be available on the site for the next 30 days. It also should be noted that we plan to file our first quarter 2017 Form 10-Q later today and it will also be available on our website. Later on this call, I'll discuss our financial performance, and we will then answer your questions. But first, let me turn the call over to Robert.

Thanks, Dan. Solid sequential revenue growth in Q1 2017 of $93 million was driven by rig count improvements from late Q3 and early Q4 of 2016, bolstered by recent contract awards. Due to seasonal breakup in Canada, we expected to reach breakeven EBITDA in the latter half of 2017. However, it appears that U.S. growth could be enough to offset Canadian breakup and we could reach those revenue levels sooner than we anticipated. For this reason, we might reach breakeven EBITDA, excluding other costs, in Q2 of 2017 if normal seasonal declines in Canada aren't more pronounced than in years past and product margin gains hold up. Looking at the quarter, Q1 2017 represents the third consecutive quarter of top-line improvements, driven primarily by the recovery in North America. Canada and the international segments are profitable in the period. All of our balance sheet metrics are tracking as planned. We have more cash than debt again, and we are nearing an important psychological segue into EBITDA profitability. Revenue per rig for the quarter, both with and without acquisitions, completed in the prior year, remained in line with quarterly measurements during the last two years. Our performance on a sequential revenue per rig basis indicates continued share gains, resulting from a revenue to rig count lag of several months that is dependent on the number of wells on a given pad as we wait for the construction of facilities or tank batteries. Further emphasizing this point is that we have held revenue per rig constant while the drilled but uncompleted well count or DUCs continues to grow in the Permian, Eagle Ford and Haynesville shale plays further delaying tank battery construction. And over 110 offshore rigs have been scrapped, permanently removing very large customers from the market and flooding shore bases…

Thanks, Robert. We are enthused about the rapid land drilling rig recovery that we are experiencing and are hopeful for its stability and sustainability, which give us confidence for the future. I appreciate the efforts of our dedicated workforce and I'm convinced we have the top people in the industry. I'm proud to be part of this wonderful team and I'm grateful for the hard work and perseverance of the DNOW family. Thanks for all you do. We will continue to concentrate on the needs of our customers, while focusing on producing long-term value for our stakeholders. Robert discussed our business and I'll say more about our financials. NOW Inc. reported a net loss of $23 million or $0.21 per fully diluted share on a U.S. GAAP basis for the first quarter of 2017 on $631 million in revenue. This compares with a net loss of $71 million or $0.66 per fully diluted share on $538 million in revenue in the fourth quarter of 2016. When looking at the year-ago quarter, we had a net loss of $63 million or $0.59 per fully diluted share on revenue of $548 million for the first quarter of 2016. The first quarter 2017 results included $7 million of after-tax charges for valuation allowances recorded against our deferred tax assets. After adjusting for these charges, our first quarter loss was $16 million or $0.15 per share, both non-GAAP measures. Gross margin rose to 18.1% in Q1 compared with 16.4% in Q4 2016 and 15.9% in the year-ago quarter. The company generated an operating loss of $21 million in the first quarter of this year compared with a loss of $47 million in Q4 and an operating loss of $65 million in the year-ago quarter. Fourth quarter EBITDA, excluding other costs, a non-GAAP measure, was…

Thank you. And the first question comes from Andrew Buscaglia from Credit Suisse.

Hi, Andrew. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Hey, guys. Congrats on a good quarter there.

Thank you. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Can you just touch on your incrementals in the quarter. They're definitely strong at 24%. I think you guys alluded to them being in that range last quarter. So now that you got a quarter into the year, what's your confidence in terms of the sustainability of that strong incremental going forward through the rest of the year? I know your long-term range is 15% and 20%, but I just kind of want to hear your thoughts now?

Andrew, this is Dave. Our long-term incremental is more of a 10% to 15% range. Over the last three quarters, we've seen flow-throughs in the 25% average range. So we've been pretty successful in that regard. The main drivers for gross margin – for gross margin appreciation in the quarter. We had our highest gross margin since Q1 2015. So we saw product pricing begin to improve, which drove a little more than a third of the benefit and we've seen a much more fluid movement in our inventory, which as demand increases, you'll see less obsolescence charges, fewer scrapping requirements that kind of thing. So real nice increase in gross margin, cost containment was solid in the quarter and into the second quarter, we think the flow throughs won't be as strong. We have Canada breakup, which will be a contra effect on the revenues in the period. But our challenge is to get into those premium flow-throughs we've talked about in the last few calls, which would be in the low 20s. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay.

But we don't expect that in the second quarter, but we expect to get back to that after that period. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay, got it. Yeah, and on that margin comment. I mean, it sounds like you got some pricing this quarter. You talked about the mills pushing up pricing. So, Dave, can you talk about more about that going forward? It sounds like that only gets better that should only reduce those gross margins. Is that correct?

Yeah, I think, we'll see pricing continue to improve as long as the market is as robust as it is. We saw price increases basically across most product lines, particularly in pipe as we expected. So we're seeing pipe shortages and higher demand for pipe, actual increases in pipe that are sticking in the market and we are benefiting from that in the short-term as our lower-cost inventory is moved up. So we do expect price appreciation that will be kind of lumpy, but still the trajectory will be positive. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay. And then just one last one on your breakeven it sounds like there is confidence in that occurring next quarter. Just talk about you kind of hedged it with assuming normal seasonality or things are a little bit better than normal. Just walk through as to how you are thinking about breakeven for next quarter?

I think we feel pretty confident about breakeven in the second quarter. We have a real strong market in Canada, in particular, which will be a headwind which we talked about, but in the U.S., week after week, rigs are being added, our order logs are increasing and we're seeing revenue gains higher than we expected. A big component of getting to breakeven like we talked about last two quarters has been price. We saw some of that, but frankly, our revenues grew faster than we expected and it takes a little bit of time for the mentality from a downturn psychology to shift to a strong growing market. So once we see our people and our competitors embrace the possibilities of price, then we'll see that breakeven and profitability come more naturally. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay, all right. Thanks guys.

Thanks, Andrew.

Our following question comes from Vebs Vaishnav from Cowen & Company.

Hey, Vebs.

Hey, Vebs. Vaibhav Vaishnav - Cowen & Co. LLC: Good morning and thanks for taking my question. First of all, just wanted to clarify, so what I understood from Dave's comment was as opposed to 24% incrementals in first quarter that you guys saw, we should be thinking low 20s in 2Q? Is that fair?

I don't know about that. Like we've said and I'd like to reiterate our flow-through is in the 10% to 15% range, right. But while the market is growing, we do – in the early part of recovery, expect the low 20s. Now we are going to see contraction in Canada, for the moment, our most profitable unit. We saw real strong revenue surge in Canada in the first quarter and this is going to be a big reel-in in the second quarter. So we don't necessarily know how to gauge that. Same with price. So those are kind of caveats to get in there. But we do believe it's possible and we can do everything we can to get to that number. And we are pretty highly confident about second quarter breakeven. Vaibhav Vaishnav - Cowen & Co. LLC: Okay. And if I heard correctly, the guidance for U.S. revenue, Dan you gave was the dollar amount increase would be similar. Did I get it right?

Yes, you did. We would expect the actual dollar amount that we enjoyed from Q4 to Q1 to possibly repeat in Q2 in the U.S. Vaibhav Vaishnav - Cowen & Co. LLC: That would imply like U.S. revenue growth of 14% versus 16% you saw in first quarter and if I look at the rig count, it grew, what, 16% in third quarter, 20%-plus in 4th quarter and first quarter is almost 27%. So the rate of growth has been increasing in the U.S. rig count. Just wanted to understand how should we reconcile that rig count growth that we have seen versus the guidance revenue growth could actually decline in 2Q for the U.S.?

The issue around revenue growth compared to the rig count growth is pretty straightforward. So you had probably what around 75% of the working horsepower fleet for doing frac job sitting in a yard somewhere. And so 25% of that fleet has been supporting the active rig counts in Q3, Q4. Now and most of those are working for cash breakeven. So now what you are seeing -- what you saw in 2015 and 2016 where people intentionally creating DUCs, right? They were drilling the wells and capping them and not fracing them to cut back on their CapEx. Now you are seeing the DUC not grow not intentional because now they are in the negotiations with their service providers about how much of a price increase they have to agree to convince the company that does the frac job to spend the money to reactivate their fleets, hire their employees, train their employees and put the frac fleet to work, which drives tank battery hookup. So our caveats on that one simply is we need the frac crews to be able to keep up with rigs and they can't do that yet and that's evident in the growing DUC count. Vaibhav Vaishnav - Cowen & Co. LLC: So basically DUCs okay just to offset. Can you just help us think about in the first quarter in the U.S. how much upstream revenues increased versus downstream?

Well, our downstream business grew almost double-digitish percent and – but that whole unit stayed flat quarter-to-quarter pretty much. And the reason for that is with OXY, Devon, Hess and Marathon, which are the three (sic) [four] (37:00) big operators we have in Supply Chain Services group, different than the U.S. Energy Centers, for Supply Chain Services customers, we do all their procurement and logistics management for large capital projects. And that's really really dependent upon their budgets, and so they wind down their budgets at the end of the year and try to use up their budget. So if you look at Supply Chain Services revenue in Q4, it was a nice growth. And in Q1, is typically their planning period. So we had a contraction in capital projects with those four large operators. So those four large operators basically offset all of our growth in our downstream industrial manufacturing supply chain businesses. Vaibhav Vaishnav - Cowen & Co. LLC: Okay. That would imply the upstream revenues actually grew faster than the overall U.S. revenues. Last question, if I may. International revenues, given they're lumpy, can you help us think about them in 2Q, how should we think about this?

Yeah. We're having some really exciting successes in the Middle East, North Africa on some new partnerships that are all land-centric. My concern is the growth that we will experience in that – in Q2 for International will be offset by further continued declines in the Offshore market. So until we can solve this Offshore decline problem it's going to be really tough for the U.S. – International Land segment to keep pace with the declines Offshore. So we're kind of hoping for a flat quarter. Vaibhav Vaishnav - Cowen & Co. LLC: All right. That's all. Thank you for taking my questions.

Thanks, Vebs.

Our next question comes from Chuck Minervino from Susquehanna.

Hi. Good morning, guys. Just another follow-up there on the International side. Nice strong growth in 1Q. It looks like you guys at least started to trend here. You bottomed maybe in third quarter and maybe even flattening out a little bit in 2Q. But do you think you kind of set a new baseline here in this mid-90s revenue level and then also, the operating profit positive this quarter, first time in a number of quarters that that's gone positive. Is that something you think you can sustain for the remainder of the year as well?

Yes, so let me put a little caveat on that one. If Offshore would stop declining, our International segment would continue to grow. We have a lot of really exciting things going on Land, I mean, really exciting stuff. And so the problem is as it grows and the Offshore declines it's been kind of washing each other out except for the fourth quarter. And the reason for that was Q3 had some unusual items in it. So as long as Offshore is declining, I'd expect probably flat revenue. When Offshore stops declining, it's going to grow.

And is the proxy there going to be Offshore active rig count? Or is there non-cold stacked fleets? What would you kind of highlight as the thing to watch there?

Yeah. So if you can imagine an Offshore rig, whether it's a jack-up or semisubmersible or drillship spends a lot of money with us for consumables to run those rigs than a land rig. So it's meaningful when one of those gets scrapped. So, yes, the rig count needs to stop declining Offshore and almost more importantly, even though they're going to continue to do it, we need to see those rigs stop being scrapped and sent to Blowtorch Beach in Turkey because when they do that, they take $10 million or $20 million or $30 million of inventory off these rigs before they ship it across to the Eastern Hemisphere, move it to the shore base like Maca Hay (40:39), Homa, Aberdeen or Singapore or Ciudad Del Carmen and that $10 million to $20 million to $30 million of inventory supports my current customers that are still drilling in the Offshore arena. So the scrapping actually hurts me worse than the decline in rig count.

Got it. And just one last one on that. I mean, are you able to help us understand how big is offshore within International at this point in time? I mean, is it getting it to the point where it's going to start to get small enough where that headwind can offset the tailwind over the land?

Yeah. I would say back in 2014 before all of this Offshore decline occurred, half of our International segment was Offshore-oriented. And only about 10% of our U.S. business in the Gulf of Mexico was Offshore-oriented and very little in Canada because we only really do Offshore in Nova Scotia and Newfoundland area. So there's not that much activity. Today, the percent of each of those buckets that's offshore oriented has probably cut by three-fourths.

All right. Thank you very much.

Thanks, Chuck.

Our next question comes from Matt Duncan from Stephens.

Hi, guys.

Hi, Matt.

Hi, Matt.

So first thing, just on Tank Battery Construction Process Solutions business and sort of what's going on there with Power Service. Can you talk about sort of share of wallet in Tank Battery Construction, and how you are seeing that changing due to that Power Service acquisition? How much is that adding to revenue that you're able to go sell a more complete package there?

We are in the very, very early days. We didn't buy Power Service that long ago, and so we've coupled them with Odessa Pumps, because Odessa Pumps has an army of people in the Eagle Ford, in the Permian, in the SCOOP/STACK, in the Delaware and the Midland. I mean, that's their bread and butter, has always been their bread and butter and they know rotating equipment, unlike our branches who have to be everything to everybody though as the pumps people, they know this type of stuff. So what our effort now is to get them all trained, which we have pretty much completed and start tackling the opportunities in the other place where Power Service originally did not participate. So Power Service grew from $30 million in 2003 when they started developing this model like to $230 million or $270 million in 2014 in the Rocky Mountain region predominantly. So that kind of tells you what the opportunity set is for all of the other plays. And I would say we're in early, early days. It's going to be easy to grow substantially as a percentage basis in those other plays because we are so small to start with.

How much did they add to revenue on a year-over-year basis in the quarter, Robert?

Who, Power Service?

Yes.

We are not disclosing an acquisition revenue.

Okay. I mean, wasn't that the only year-over-year acquisition, just trying to get a sense for how much M&A added in total, but we maybe get on that later. On the pricing front, how much is the impact from pricing specifically on gross margin, versus some of the other items like better freight recovery and all the other benefits you are getting as the business starts to grow again. Just trying to get a feel for how much price is actually helping right now? And then dovetailing on to that, how much of that benefit is from the pricing actions that you guys are taking sort of internally versus what's going on in the market?

Okay. As far as what's driving the gross margin improvements, price is less than half of that, closer to a third. And we're seeing, on a wide product category basis, we're seeing our pricing margins grow in almost all of those categories. So how much is attributable to us intentionally pushing price, the pricing software, the market, I don't think we know that.

Okay.

What I could say is our pipe margins are growing the most. So I would attribute most of that to the market and on our larger pipe orders, we have our experts involved in those transaction. So a portion will be attributable to we know the market, we know how to price the goods. Inventory is the lifeblood of a distributor. We had a lot of write-downs and a lot of liquidation efforts in the downturn. Now we're starting to see the fruits of a very solid inventory position and we're seeing less inventory write-downs, less scrapping requirements and that kind of thing. So that's actually another half of the gross margin gains.

Okay.

We do expect price lift in the coming quarters as well.

All right. And then last thing just on inventory. It sounds like you are starting to have to place orders for some of this longer lead time stuff and the inventory is probably going to continue to go up. Just any thoughts on what the pace of that inventory growth is going to look like through the year as you start to get some of these products you are ordering that do have those longer lead times start to come into inventory. So how do we need to think about inventory growth?

Well, it's hard to say. It's going to be a function of sales, of course, which we expect to increase. But I still expect our inventory turn rates will increase and like Robert said earlier on the call, our working capital as a percent of revenue less cash would be in that lower 20s range. So, while we will be adding inventory probably quarter-on-quarter throughout the year, those term rates should be flat or better throughout the year.

Okay.

We're still going to be very scrutinist about investment in inventory given where we are in the $45, $55 oil range. So not only will it go up, but it will improve in terms of utility.

Got it. Okay. Thanks guys. Appreciate it.

Thanks, Matt.

Our next question comes from David Manthey from Robert W. Baird.

Hey, Dave. David J. Manthey - Robert W. Baird & Co., Inc.: Hi, good morning, guys. First off, when the rig count accelerates dramatically like it has recently because of the lag in your business, the denominator gets overstated relative to the numerator. And if I just compare first quarter revenues to fourth quarter rig count, just fun with numbers, the ratio is somewhere in the $1.4 million to $1.5 million range. As the trajectory of rig count growth starts to level out assuming it will at some point here, does it not follow that your all-in revenues per rig should normalize at a higher level than you are seeing today?

That is correct, Dave. David J. Manthey - Robert W. Baird & Co., Inc.: Okay. Good. And then second, the expanded relationships with Marathon and Hess, where are you in the ramp up of those two expanded customer relationships? And do they have the potential to ultimately become as large as say OXY and Devon are for you today?

The answer to that question is yes they have the potential and unless something surprises me, they will be as big as those two accounts or close to. We are probably two-thirds, three-fourths away through the implementation with Hess. And we are in early, early days with Marathon, early days. David J. Manthey - Robert W. Baird & Co., Inc.: Right. Okay. And then final question on, back to the revenue side. You know, you hear the adage that 1,000 U.S. rigs is the new 2,000. If you use that as a base, maybe the global rig count gets into the low 2,000s over the next few years, and I don't know if you buy into that or not. But, second, if you use something in the $1.3 million revenues per rig that would get you to about the $3 billion level. I know in the past, Robert, you've expressed comfort with the fact you can get to 7%-plus EBITDA at $4 billion in revenues. I'm just wondering if you could help me understand those two variables, and what is the path as you see it to $4 billion in revenues for the company today? I mean, is it both of those? Is it one more than the other of those two metrics?

Yeah. So, like you said earlier or commented earlier, our revenue per rig, once the rig count flattens out will grow and so that will get you to a bigger number than using $1.3 million. And we have tremendous opportunity to grow our Process Solutions Group organically. I mean, well beyond market changes because. I mean, that whole offering was simply centered in one play. So as we expand to the other locations, we're going to continue to grow that revenue even at 1,000 rigs. So I think if the 1,000 rigs, if we were going to flat-line at a 1,000, you're going to see our business grow quarter-over-quarter-over-quarter for quite some time. David J. Manthey - Robert W. Baird & Co., Inc.: Great. Thank you.

Thanks, Dave.

Our next question comes from Sean Meakim from JPMorgan.

Hi, Sean.

Hey, Sean.

Hey, good morning. So, Robert, your comments on Power Service being at an early stage in a lot of these basins, obviously, that's very fair. So based on the energy branch growth rate in the quarter versus U.S. overall, it seems like Power Service is may be a drag on growth. And I think again given the lag in that business, that's not a surprise. Based on your comments, it sounds like you'd expect to see some catch up of that growth in 2Q. I guess, I'm just trying to think about with the business as it is today and that growth trajectory, what's the potential margin contribution for Power Service as you kind of ramp-up to a full run rate in terms of just that lag effect kind of wearing off?

Well, the Process Solutions Group, which is Odessa Pumps and Power Service predominantly, they grew, what, about $13 million on $57 million in the quarter. So they grew nicely in the quarter, but don't forget their lag is even longer than the energy branch lag because we have to design the equipment and we have to fabricate it in shop. So the lead time is a little longer for that. In fact, some of these big projects, like these big mainline pipeline skids we sold in Q1 to a midstream firm in the Eagle Ford, those pumps have a 36-week delivery. So we're dealing with that kind of thing that we don't deal with the energy branches. Regarding the 16% growth or whatever the number was, 17%, whatever, I forget the ratio. That was held back by supply chain services for those reasons I mentioned earlier around capital projects with the four big operators, because the Process Solutions Group and the Energy Centers grew nicely. And I would expect supply chain to get back in that group now that we're going into the capital projects period, which will be Q2, Q3 and Q4.

Right. I guess, the meat of my question was more around acknowledging the lag and then saying on a margin contribution basis, what's the potential there given that we assume that the margins are nicely accretive, especially as you get to a higher run rate?

Yeah. So, in 2014, and I believe EBITDA margins in that unit, which mainly again is Odessa Pumps and Process Solutions can get back to where they were at 2014 levels with our volume growth. They were both low-double digit EBITDA.

Right. Okay. That's helpful. And then just thought it would be great to get a little bit of sizing the potential of the Kimray agreement that you guys signed. It seemed pretty interesting. We'd like to get a sense for where the real opportunity is to leverage your footprint to help them grow that business?

Yeah. It's a privately owned firm. All of distributors in the energy space in Canada and U.S. probably every single branch you could walk into with DNOW or my competitors, you're going to find this product on the shelf. They've never really tackled the Eastern Hemisphere. So we agreed to partner up and tried to displace their competitors in the other hemisphere with their products. So it's going to be more difficult than simply signing, for example, the Cameron engineered valve line. We knew pretty much it was going to shift to us and one of the competitors, this particular product line; we have to go take share from other manufacturers. So, this will be growing.

Okay, fair enough. Thanks a lot.

Thank you.

And our final question comes from Walter Liptak from Seaport Global.

Hey Walt.

Hey Walt.

Hi. Congratulations, guys.

Thanks.

I wanted to ask about the cadence during the quarter and especially if you could talk a little bit about April, the price of oil has been volatile, has come down below $50. Do you see any change in tone from your customers? Are they reacting to that? Or what are they thinking about with projects?

So far we're hearing nothing that would change their outlook for activity in 2017. In fact, we get a little more insight to that with our supply chain services operator customers because we have to plan with them to support those activities and they're still all planning to add rigs now. Could they change their mind? Of course, but, so far all the indications we're getting is that no one is planning to pull back.

Okay. That's great. And then just to maybe get a little bit more clarity around pricing. Maybe some of your higher margin products, pumps, valves and things, are you seeing price increases from the suppliers? Are you able to pass those along?

No. So far, we're not seeing our manufacturing providers pushing pricing, but I fully expect it to happen. Really the only thing affecting us right now from a cost perspective that we love inflation. That's a great thing in a distribution business. And we're having inflation with anything that's heavy steel oriented. So you think a valve would be heavy steel oriented, but it's really not because when you break it down into patents, and labor, and machining, and steel, steel becomes a small component. So where we're seeing inflation right now is pretty much PFF, Pipe, Fittings and Flanges which is a big part of our spend, but that's the only place we're seeing inflation so far.

Okay. With that said, are you seeing the mix of more ERW or the seamless pipe is go around (55:06)?

It's staying pretty consistent. It moves around five points here and five points there, but generally around half of our pipe is ERW and around half of our pipe is seamless.

Great. Okay. And that's where inventory levels sound like they have to go up. Do you think you'll be able to continue to get margin on it?

I do, just generally because we're going to be going into an inflationary period. So by the time material arrives from the mills to our yards, it's probably already going to have another price increase by then.

All right. Okay, great. Thank you guys.

Thank you.

We have no further questions at this time. I'll now turn the call over to Robert Workman, CEO and President, for closing statements.

Thanks, everyone, for your interest in DistributionNOW. And we look forward to speaking to you in August regarding our Q2 performance.

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