Good morning, ladies and gentlemen, and welcome to the Forum Energy Technologies' Second Quarter 2018 Earnings Conference Call. My name is Hailey, and I will be your coordinator for today's call. As a reminder, this conference call is being recorded for replay purposes. After the speakers' remarks today, I will instruct you on the procedures for asking questions. I will now turn the conference over to Mark Traylor, Vice President of Investor Relations. Please proceed, sir.

Thank you, Hailey. Good morning, and welcome to Forum Energy Technologies' second quarter 2018 earnings conference call. With us today to present formal remarks are Prady Iyyanki, our Chief Executive Officer; Pablo Mercado, our Chief Financial Officer; and Lyle Williams, Senior Vice President of Operations. We issued our earnings release last night, and it is available on our website. The statements made during this conference call, including the answers to your questions, may include forward-looking statements. These statements involve risk and uncertainties that may cause actual results or events to differ materially from those expressed or implied in such statements. Those risks include, among other things, matters we have described in our earnings release and in our filings with the Securities and Exchange Commission. We do not undertake any ongoing obligation other than that imposed by law to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after this call. In addition, this conference call contains time-sensitive information that reflects management's best judgment only as of the date of the live call. Management statements may include non-GAAP financial measures. For a reconciliation of these measures, refer to our earnings release. This call is being recorded. A replay of the call will be available on our website for two weeks following the call. I'm now pleased to turn the call over to Prady Iyyanki, our Chief Executive Officer.

Thanks, Mark. Good morning, everyone. I'm going to start my comments this morning with an overview of our second quarter results and our assessment of current market conditions. We will also discuss our growth plan going forward. Pablo will provide details on the financial performance and strong liquidity position, and Lyle will discuss a few of our operating initiatives. Our financial performance was solid in the second quarter. Our team's execution and market share gains resulted in strong sequential growth in orders, revenue, EBITDA and margins. Orders increased 19%, revenue increased 10%, adjusted EBITDA increased 43% and margins improved 200 basis points to 10% of revenue. North American activity, new product introductions and market share gains drove our growth in the first half of 2018. Some of the highlights for the second quarter are as follows. We received orders for over 325,000 horsepower of our J-Mac hydraulic fracturing power ends. We continued to receive strong bookings of our Multilift and Cannon products, which extend the life of electrical submersible pumps. In addition, in July, we acquired certain assets of ESP Completions Technologies from C&J Energy Services to complement our rapidly growing artificial lift product offering. Orders for valves in the second quarter set another record as customers prepare for midstream and downstream projects and we continue to take market share. We received an order for a submarine rescue vehicle, plus a work-class ROV and the associated launch and recovery systems. And finally, our drillings pipeline began to receive orders from the Middle East for land rig equipment, including our latest-generation catwalks and iron roughnecks, as well as handling tools and drilling consumable products. Our balanced portfolio of consumable and capital equipment serving global markets across the well cycle positions us nicely to achieve continued growth. Looking ahead, our growth drivers…

Thank you, Prady. Good morning. Strong market conditions in North America in the early stages of the international recovery drove a broad-based improvement in our second quarter orders. Total orders for the company were $310 million, an increase of $49 million or 19% from the first quarter. The second quarter book-to-bill ratio was 113%. And once again, each of our three segments delivered sequential bookings growth. Our second quarter revenue was $274 million, an increase of $24 million or 10% sequentially. Net loss for the quarter was $15 million or $0.14 per diluted share. Results for the quarter included restructuring and other charges totaling $20 million on a pre-tax basis, offset by $6 million of foreign exchange gains. We provided a reconciliation table of these special items in our earnings release for you reference. Our adjusted EBITDA was $27 million or 10% of revenue, a sequential improvement of 240 basis points. Incremental EBITDA margins were 35%, driven by margin improvement in our Completions and Drilling & Subsea segments. Adjusted net loss was $0.01 per diluted share, excluding special items. For the first time since 2015, our adjusted profit before tax was positive. However, we were unable to recognize certain tax benefits accounting for $0.02 per diluted share, resulting in adjusted EPS falling below breakeven. I will now summarize our segment results on a sequential basis. In our Completions segment, orders increased 9% to $121 million. Segment revenue was $127 million, an increase of $14 million or 13%. This was due to higher completions activity in North America and market share gains. Included in our Completions segment results was a $900,000 gain from a property sale. Excluding this gain, adjusted EBITDA margins were 22%, an increase of 95 basis points due to improved absorption of manufacturing costs and favorable sales mix…

Thank you, Pablo. Good morning, everyone. As Prady mentioned, the Forum team executed well in the second quarter, increasing our output and combating material cost inflationary pressures. Our operational objectives include improving EBITDA margins to pre-downturn levels and generating free cash flow. I will talk through some of the drivers impacting our profitability and end with our progress on working capital management. We are seeing steel cost increases driven by tariffs and by industrial demand. Tariffs have been imposed on a variety of commercial steel products and more recently on finished and semi-finished equipment. We have been able to mitigate some of these cost increases through strategic sourcing initiatives and pricing. In terms of pricing more generally, our gains continue to be limited to new products that are generating efficiencies for our customers and to passing on some of these inflationary increases. As a result of the price and cost dynamics, we are seeing an impact on our profitability and our incremental margins. In response to these margin pressures, we have made considerable progress on further optimizing our cost structure. This progress includes leveraging our manufacturing capacity and further implementing our lean initiatives with the impact of reducing both lead times and unit cost of production. In the quarter, we have also initiated actions to consolidate or downsize a number of our non-U.S. manufacturing and distribution locations in the Drilling & Subsea segment. In each of these cases, we retained core expertise and capability to support our customers, while rightsizing our cost structure. Some of the savings for these initiatives will be realized in the second half of the year in a more significant amount in 2019. We anticipate completing these restructuring measures by the end of this year. Working capital management continues to be a key focus area for the team. Although we are building inventory to support new products and increase activity levels, we are also drawing down legacy inventory. Planning improvements, collaboration with supply chain partners and employee incentive programs are helping us to move this inventory and improve turns. These efforts have modestly improved our working capital efficiency in the quarter, and we expect further improvement this year. Let me turn the call back over to Prady for closing comments.

Thanks, Lyle. In closing, the outlook for Forum is the best we have seen since the downturn. The long-term outlook for North America drilling, completions and infrastructure activity is robust. In addition, the early signs of international recovery are underway. Our team remains focused on executing the following. Revenue growth across each of our segments, EBITDA margin improvement, free cash flow generation and maintaining the balance sheet discipline. We thank you for your interest. At this point, we'll open the lines for questions. Operator, please take the first question.

Thank you. Our first question is from Dave Anderson of Barclays. Your line is open.

Good morning. Thanks. So, I was interested in the tariff commentary you just made there. I was kind of curious how much of – how we can quantify what that headwind is. I mean, which segment is – does that impact the most? And can you just kind of help us understand maybe, kind of, how the margin progression should work as we kind of get through this restructuring?

Sure, Dave. This is Lyle. I'll talk to that one. The largest impact that we've seen on – due to the tariffs were for commercial steel items where we're both seeing tariff impact as well as opportunistic pricing increases by domestic steel suppliers. So, we've seen those flow through. And as mentioned in the call, we've been able to offset some of that through our ongoing strategic sourcing initiatives and through better sourcing and best cross-country sourcing programs. We've also been able to offset some of that by sharing – by passing those prices along to our customers, especially in places where the overall market is seeing the impacts of those tariffs. So, we've seen some impact come through. Our steel cost in total, I think we've mentioned this last quarter, about 20% to 30% of our total revenue. So, when you think about tariff impact on that, it's not overly substantial, but something that we are combating.

David, the other point is the 35% incrementals, which we talked about in the second quarter, had some of that impact in the second quarter. And the guidance we're giving you for the third quarter, which is about 30% incrementals not including the – including the – not including, I'm sorry, the...

The gain...

...the real estate gain also includes some of the impact of the tariffs, which gives you a pretty good idea of what the impact is. Now, there is a price lag between when we get the cost impact and when we can pass on the pricing to our customers, right? So, we're going through that. In the future quarters, we think we can offset some of that through the pricing to our customers.

Okay. That's helpful. And – I mean, just kind of – on a separate subject, just curious if you could kind of expand a little bit on your offshore portfolio. You talked about getting an order on the subsea part with one of those. I think it's like a submarine-type ROV. But could you also just kind of give us some overall data points of what you're seeing out there? I was wondering about any kind of green shoots you're seeing either in, kind of, the Davis-Lynch product line or in the subsea? Can you just kind of give us your outlook of kind of what the second half of the year holds for you?

Yeah, absolutely, David. What I would say is, on the offshore, our RFQ activity is up. And I will not be surprised if we announced another one or two sizable orders in the second half of 2018. And I think there are two levers for us, David. One is obviously the offshore oil and gas, early signs of some activity there, and we're also seeing pipeline building on the oil and gas side. But when they will materialize, I just don't know. But I will not be surprised if, at least, there's one order on the oil and gas front in the second half. But the other lever we also have on the offshore trends particular to subsea product line is the defense. The defense spend in North America and internationally is going up and we will benefit there because some of our products would be applied. Now, for example, the launch of recovery systems and some of the ROVs can also help the defense industry. For example, if you look at the Lockheed Martin and General Dynamics, the two biggest defense customers in North America, their activity is significantly up. And then, in general, in offshore, I mean, we just secured another order for the coiled line pipe in the offshore in Middle East, and it's a good reference because that will drive that product line to grow further in the offshore. And we're also seeing some activity on the offshore front on the drilling side, but more from some small upgrades at this point in time.

Great. Thanks, Prady.

Thank you. Our next question comes from George O'Leary of Tudor, Pickering, Holt. Your line is open. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Good morning, guys.

Hey, George. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Of the international order commentary, especially on the drilling side, it was very encouraging given how large of a portion of revenue that was and earnings that was for you guys historically. Wondered if – you mentioned the outlook is positive there in the back half of the year as well. I wondered if you could frame the opportunity in the back half versus the front half. Is momentum picking up in that business? Or did you get a really large slug already and maybe it slows a bit? Just curious how you'd frame that for us.

No, good question, George. Listen, I mean, if you go back to the 2014, 40% of our business was international, 40% of our business was capital equipment. So, it's good to see in this quarter, both capital equipment orders materializing and also some of the big projects of international materializing. So, our view is, I think we just scratched the surface here. It's an early signs of international recovery in capital equipment. There's a lot more to come. And in the second half, we expect a lot more orders to come. Specific to drilling, some of the orders we've been talking about from Kuwait have already materialized, but we're expecting significant more to come in the third and fourth quarter. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. That's very helpful color, Prady. Thanks. And then, the production business for you guys, I think of that as a – the order flow there as a good indicator of how activity is going to go. So, I guess, thinking about the North American onshore production business in particular, what has kind of the order cadence been? And does that give you any insight into how well count may progress in the second half of the year? Is it positive? Have we seen any slowing there? Everyone is concerned about these Permian infrastructure issues that look like they may emerge. And I'm just curious if you're seeing resilience there or if you're seeing any kind of ebb in the demand for production equipment at all.

Yeah, another good question, George. I would say we have not seen any slowdown yet, George. In fact, third quarter – for production equipment, third and fourth quarter, the customers start planning for next year, for 2019. And usually, we see a big chunk of orders coming in third and fourth quarter, and we don't see anything different happening in the second half on the production equipment. In fact, our orders will be pretty high. And more importantly, I think our backlog in production equipment is very strong, and it continues to build backlog going into 2019.

Yeah. I'd just add to that. As Prady said, the orders have been stronger there. They continue to be very strong. If anything, as we've talked about before, we're limiting our growth in the production equipment business to try to drive up the margins. We're really focused on working with customers that are paying for quality. So that may drive a change in the pace of bookings, but very, very strong expected still in the third quarter. George O’Leary - Tudor, Pickering, Holt & Co. Securities, Inc.: Great. Thanks. Thanks, Prady and Pablo.

Thank you. Our next question comes from Joe Gibney of Capital One. Your line is now open.

Thanks. Good morning. Just a question on the valve order side. I know we've been very second-half weighted in terms of project releases and some things kicking in there. Just curious of the valve mix within P&I order flow in the first half. Just trying to get a sense of how much of that order flow is valve-oriented versus PEQ. Prady, as you indicated, in the second half is when PEQ orders kick in more for 2019 planning, but just trying to get a sense of what's coming on the revenue side for valves a little bit more tightly.

Yeah, yeah. I would say, on the valves front, it's the second consecutive order record of all-time high. And the valves business, by design, we continue to grow significantly, it's all market share gains, and the contribution of Saudi has not kicked in yet. We expect that to kick in from an order standpoint in the second half with more revenue going into 2019. But if you look at sequentially the valves guys, from an order standpoint, they're breaking records. And they will continue to do that on a move forward basis. On the products and equipment side, as Pablo mentioned, I think our strategy on production equipment is not necessarily to grow that business but pick and choose customers where we could expand on margins, and that has been our focus on the production equipment side. The only exception being in the case of production equipment, just because of customers' behavior, in the second half of the year, they start planning for 2019 and we usually get an uptick, but they're also managing the margins very closely there in the case of PEQ.

Yeah. That's right. On the big increase in – I would say, in the first half taken as a whole has been in valves and it's really driven by the midstream build-out – infrastructure build-out, and we think we're taking market share in the valves product line as well.

Okay. On D&S margins, I know you guys were sort of careful to indicate you didn't want us to get out over our skis after the subsea awards that you guys pull up to (00:30:26) break-even EBITDA was sort of the orientation. You did say breakeven or better this time. So, is that predicated on some order flow in offshore oil and gas you talked about in the second half? Or is it just a function of better throughput, better absorption just enabling a slightly better profit line there within D&S?

Yeah. I'll follow up, and I'll give the lead to Pablo. I would say, on the Drilling & Subsea side, Joe, I think that business has been depressed for quite a while. So, we're coming from a very low level. As a result, any additional volume – the incrementals are going to be very high, and that's what we saw in the second quarter. And our pipeline, as we discussed earlier, is pretty strong on both sides on the drilling front and also on the subsea front. So, apart from the consumable activity, which has been pretty steady, in fact, going up with the rig count going up, the maintenance activity in subsea has been pretty stable. Just the capital equipment orders coming through both on the Drilling & subsea, we expect the D&S to be much stronger in second half than first half.

Yeah. So, just to add to that to clarify the comment that we made on the call on the – in the prepared remarks was regarding Subsea specifically. So, Subsea was breakeven in 2017. It was right around breakeven in the second quarter and we won't make up the first quarter shortfall, but it will be breakeven for the balance of the year. Now, D&S as a whole will have some contribution in the second half of the year and, as Prady said, stronger in the second half of the year.

Okay. I appreciate it, guys. I'll turn it back.

Thank you. Our next question comes from Sean Meakim of JPMorgan. Your line is now open.

Thanks. Hi. Good morning.

Good morning, Sean.

So, Prady, I was curious if we could get a little more detail about – you highlighted 325,000 horsepower. For the power ends booked in the quarter, could we maybe get a sense of how that compares to recent quarters from a magnitude perspective? And then, thinking about – if the outlook gets worse for your frac customers, do you have much concern that you'll need just – that there could end up being pricing concessions on your end? Or given the fact that so much of the work that you're doing is maintenance based, would you think that perhaps you're a bit more insulated?

No – Sean, great question. So, if we look at quarter-to-quarter trend over the last several quarters, what we see is the amount of volume we're getting just not on power ends across the portfolio on the frac side. On the maintenance side is, sequentially increasing quarter-after-quarter, which makes sense because the active horsepower in North America over the last several quarters have gone up. So, if we take 15 million to 17 million horsepower in that kind of range, which is active today, that means lot of equipment and consumable for maintenance. And I think it's a data point, not necessarily a trend. In the case of second quarter, what we saw is 75% of the power ends we received were for maintenance, not for capital equipment. But it doesn't necessarily mean it's going to be 80% in the third quarter or it could be 50/50 depending on how much capital equipment orders we get. But the trend is clearly more towards the maintenance just because of the amount of horsepower needed. And that's why we are confident that even there is – if there is a modest slowdown in Permian, I think the amount of activity is still significant on the horsepower side.

Got it. Okay.

And then, the other one...

Thank you for that...

Probably the other two points I could also make, Joe (sic) [Sean] (00:34:14), is the operators will move to other basins if there's any potential slowdown in Permian. And our customers will either remove the fleets or add new fleets since it's transitionary of nature. And either way, it's good for us.

Okay. Understood. And then, on the valves, it's interesting. I didn't hear much in the way of Permian takeaway constraints and to what extent that creates more urgency to get capacity online among your midstream customers. I was curious. And to what extent does that create incremental opportunities or even incremental pricing power? And it's great to hear a sense of lead time for you to deliver into those types of projects in the U.S.

So, Sean, the valves business is benefiting from the midstream build-out in North America, including the build-out on the Permian side. The – some of the orders that we've received in the recent quarters are indicative of that. And I will go for those midstream projects in the U.S. The long deliveries are really driven by the timing of the projects.

At a very high level, Sean, if you look at the valves business, it's 1/3, 1/3 and 1/3 – 1/3 upstream, 1/3 midstream, 1/3 downstream. So, very limited exposure to Permian, but significant growth coming from also on the international front. And then, the other big point is that Saudi will start kicking in from an order stand point in the second half and we'll start seeing the revenue in 2019, which will be significant.

Got it. Well, understood on the Saudi piece. Okay. Great. Thank you.

Thank you. Our next question comes from Jacob Lundberg of Credit Suisse. Your line is open. Jacob Lundberg - Credit Suisse Securities (USA) LLC: Hi. Good morning, guys.

Good morning, Jacob. Jacob Lundberg - Credit Suisse Securities (USA) LLC: Quick question – and I may have missed this earlier, but I was just wondering if there's any change to the previous guidance for year-on-year incremental margins of – I think, as of the last call, it was 35%-plus. Is that still the thinking today?

Yeah. Again, our guidance, Jacob, has been – is 35% to 40% if we get market pricing across the segments or else 30% without the market pricing. And we are very confident that for the year for sure will be 30% without any market pricing, including any potential impact of tariffs and inflation. So, that's already baked in into the 30% incrementals. Now, if we do get market pricing in the next few quarters – in the next two quarters, we will see incrementals higher. Jacob Lundberg - Credit Suisse Securities (USA) LLC: Okay. And do you expect that pricing, if it materializes, to be concentrated more in Completions? Or kind of how should we think about where that's going to flow through?

Yeah. Well, that's another good question. I would say we have seen the impact, first, in Completions just because most of the products are consumable related. So, the impact is a little immediate. And in fact, some of that was already baked in into the incrementals, which Pablo talked about in the Completions segment. That's on the longer cycle products, the capital equipment and production equipment. We will feel the impact, but we also have the time to pass on the pricing to our customers.

Yeah. Regarding pricing, we're also seeing good momentum on the new products side. And the biggest impact – new products, they're across the company. But the biggest impacts are in the Completions segment. So, that's where we could see a continued uptake.

And a few more things we're doing to rationalize the supply chain and (00:38:07) Lyle, do you want to add some color there?

Yeah, yeah. Thanks. So, as we mentioned – as I mentioned in the remarks, we've been focusing on working to get our EBITDA margins back to pre-downturn levels. That's one of our big operational levers and that's coming through. The cost reduction activities that we had going on that we launched in the second quarter will wrap up towards the end of this year. Some of that benefit is flowing through in the second half and the full value will be next year. But probably more importantly, as Pablo mentioned in his remarks, seeing better absorption in our manufacturing costs and therefore some better incrementals on incremental volumes as they flow through. So, we're definitely feeling the benefits of some of the cost out that we have taken for the second half of the year, offsetting some of the inflation in tariffs.

Then on the medium term, Jacob, I would say, if we know for sure that the pipes are going to stick, then we also have the opportunity to rationalize our supply chain and go to nontariff countries and whatnot. But we will make that decision once we know it's going to stick and a little bit of watch and monitor and take actions selectively to mitigate it at this point. Jacob Lundberg - Credit Suisse Securities (USA) LLC: Got it. Understood. That's it for me. I'll turn it back. Thanks, guys.

Thank you.

Thank you. Our next question comes from Martin Malloy of Johnson Rice. Your line is open. Martin W. Malloy - Johnson Rice & Co. LLC: Could you provide us with an update on discussions you're having with domestic rig companies regarding upgrades?

Yes. Sure, Marty. On the rig, we have been getting rig upgrades in North America, Marty, for the last several quarters and we continue to get that. I think the difference now versus probably I would say maybe 15 months ago is the scope of the upgrades is little larger than just the mud pump package upgrades, right? Also, we are seeing of the – on the offshore front and also internationally, but a very early start. Its more (00:40:21) coming through at this point, which probably will start materializing in early part of 2019. But the upgrade activity in North America has not stopped. It continues to grow at a pretty good pace. Martin W. Malloy - Johnson Rice & Co. LLC: Okay. Great. And then, could you provide us with an update? You mentioned gaining market share and I heard you mentioned midstream valves. Any other product lines that you would highlight as where you think you're gaining some market share?

Yes. I would say completions overall, in every segment, stimulation intervention and Global Tubing where the coiled line pipe is a new product that's gaining market share and also in the case of downhole, especially in the artificial lift front with the Multilift acquisition, the Cannon protectors, and now, we also have the ESP/PCP from C&J, which has got good products. We will gain good market share. But I would say the new products, Marty, has given us a very good lever for market share gain. We're taking the advantage of that and pulling through the new products, and we've also invested in several areas where we're not present, so a combination of new products, pulling through new products and, through the commercial presence, we're gaining market share. One thing we have told the investment community, Marty, is that three product lines we expect to go past the historic high. Valves is already there. The run rate has already passed the historic high. And from here, there's significant growth ahead of us. If you look at the stimulation and intervention, in the third quarter, they will go past the historic high. There's significant opportunity from here. And the third one is the Global Tubing and I think, second half, they'll get back to the historic high, primarily driven by the growth not only in the DURACOIL product downhole, but also the coiled line pipe momentum we've got. And in the valves business, we've already talked about. In production equipment by design, our strategy there is to grow the margins, not necessarily the top line. And Drilling & Subsea with international activity coming through, we'll give an update in future quarters. But I think we're well positioned there to gain market share through the new products. Martin W. Malloy - Johnson Rice & Co. LLC: Great. Thank you.

Thank you. Our next question comes from John Watson of Simmons & Company. Your line is open. John Watson - Simmons & Company International: Good morning, guys.

Hey, John. John Watson - Simmons & Company International: Prady, talking about the guidance for Q3, it looks like $16 million of sequential revenue growth to midpoint. Can you talk to us about the puts and takes to get to that number? Will the bulk of the growth come from completions?

So, look, I – this is Pablo. I expect growth across the portfolio in the third quarter, both in bookings and in revenue. What we won't see is such a big jump in subsea EBITDA, like we had in the second quarter, but it should be across-the-board growth.

To add to Pablo's comment, we expect growth in all segments, Completions, D&S and P&I. And again, going back to the growth levers, the new product development will increase the growth in Completions. The market share gains is another strong lever we talked about. The international recovery and capital equipment, I mean, that's a very good combination for us, and we have not seen that in the last several quarters and with the orders we've announced. And more importantly, the orders we're going to announce in the second half gives us very good momentum on the capital equipment and the international recovery and the valves business continue to take market share and the investments being made on the midstream and downstream front and the Completions service intensity, right? So, those are all our growth levers and we expect growth in all three segments. John Watson - Simmons & Company International: Okay. Thanks for that. And you mentioned product innovation. Can you talk to us about recent innovation on the fluid end and power end front? Do you have any insight into how much longer your pumps are lasting today versus, say, a year or two ago?

Yeah. Listen, we think we have the best power end in the marketplace. And as a result there, we continue to add customers and we continue to penetrate our existing customers. We just commercialized a fluid end, which is gaining pretty good traction in the marketplace. We also have the best tractor manifold in the marketplace, and we're gaining pretty good traction there. Also not connected to just the service intensity, but we also commercialized a hydraulic latch product, which helps the zipper fracs and it saves them 15 to 20 minutes per stage. And the competitive landscape there, we need some differentiated product, we're gaining pretty good traction there, gaining a significant market share in the case of the hydraulic latch. So, in general, I think the team on the product side have done a great job of differentiating the products. As a result, we're gaining market share. And as I said, we are past the historic high in third quarter and there's significant growth ahead of us on revenue front. And our margins will get back to the historic high. It will take a few quarters just because the pricing is still not yet at the historic high. And most of the margin expansion we've got with some pricing in third quarter of last quarter all has been through the operating leverage and some of the things we've done to reduce the cost structure. John Watson - Simmons & Company International: Great. Thanks, guys. I'll turn it back.

Thank you. Our next question comes from Marc Bianchi of Cowen. Your line is now open. Marc Bianchi - Cowen & Co. LLC: Thank you. Prady, you mentioned the new orders for pumps that about 75% of it was replacement. Can you talk to the Completions segment overall, thinking about the revenue run rate that you have right now? How much of that might be something to think about as recurring maintenance-type work versus delivery of capital equipment that might be for growth for your customers? I know it might be hard to parse, but just any estimate you can give would be helpful.

Yeah. I mean, if you look at – on the frac side, let's talk on the frac front which is probably your question is if we use power end as a data point and then once you go below power end, it becomes more maintenance than capital equipment by design because you need lot more fluid ends, you need lot more wire end, you need lot more kits, you need lot more consumables. But just in the case of power end, 75% of the power ends we received in the second quarter were for maintenance activity and 25% for the capital. Then, if you go below that, it's more maintenance than capital though. And listen, I mean, at this point of time, we are still talking to the customers in the second half of some capital bills and – but the maintenance activity of 15 million to 17 million of horsepower, that's a lot of consumables, lot of activity driven. Combine that with our new products and with the market share gains, I think there's significant growth ahead of us here. And then, if you look at the downhole, it's all consumables activity driven products. If you look at the Multilift, the competitive landscape is pretty much in our favor. When we got the acquisition, there were a handful of customers. And now, we have got 30, 40 customers and maybe even more. We continue to add more customers, and we just added some international customers in the last quarter. So, we just scratched the surface on the international front for the Multilift. And then, if we look at the Global Tubing, it's all predominantly activity driven business. And last quarter or in the second quarter, we had a record quarter internationally, the largest revenue we ever received internationally on Global Tubing and we'll continue to gain momentum there. Marc Bianchi - Cowen & Co. LLC: Okay. So, just trying to convert that into some numbers, if I took your flow equipment revenue this quarter was $60 million, if I just said conservatively half of that, which it sounds like it's probably even more than half, but half of that is a recurring kind of number and then everything else in downhole is recurring in terms of activity base, would that be the right approach? That kind of works out to, like, 75% of revenue for Completions.

Yeah. I'll say 75%, 80% maybe, but I think we could give you more details... Marc Bianchi - Cowen & Co. LLC: Sure – offline? Okay.

Marc, that's probably a little higher in your math just because on the S&I side, 75% in the quarter of the power ends which is the most capital equipment piece that we have was for maintenance so...

Yeah. It's been lower than that just because that's the – everything below that is consumable activities.

Correct. Marc Bianchi - Cowen & Co. LLC: Okay, okay. And then, on the international, it sounds like you guys are positive on the opportunity there. And certainly, we're hearing that from a lot of other companies that participate in international. If we were to think that the international market grows at some sort of low-double-digit number over the next couple of years, could you kind of walk us from sort of what proportion of your revenue is international today and where that could be in a couple of years?

Yeah. So, about 75% of our year-to-date revenue was in the U.S., okay, in the first half of the year. Only 25% was outside of the U.S. Historically, that number has been more in the 40% range. And then, of the – if you look at the U.S. activity and you remove subsea and valves, then you're looking at about 50% U.S. land as a remainder. So, I think we've got good opportunity with the diversified portfolio to continue to increase the international exposure and you should see that mix changing in the next few quarters.

And then, I would add – the thing I would add to that, Marc, is we have gained market share in North America with the levers we talked to you about. And I think the same phenomenon will happen on the international front. Marc Bianchi - Cowen & Co. LLC: Okay. Very good. Thanks for the comments.

Yeah. But 60/40 is a good place for us to land in a couple of years. Marc Bianchi - Cowen & Co. LLC: Got it.

Thank you. Our next question comes from Edward Muztafago of Société. Your line is open.

Hi, guys. Thanks for taking the question. I'm wondering if you can maybe help us just think through a little bit about the flow through the international, some of the other equipment companies, of course, that have reported here a little bit longer lead time in general when you think about their portfolios. So, could we see a similar pace of revenue growth out of your international business as we could for discrete services over the next one or two years? Or do you think it takes a little bit longer for that to flow through for your business?

Look, I think our longest lead time product on the Subsea or on the Drilling front is about six to nine months. Now, the submarine rescue order which we talked about, I mean, that's a two-year project, but that's not a typical project we normally get. Most of the projects we get on the Drilling & Subsea is about six to nine months, so that's the kind of lead time we would get. So, for example, some of these (00:53:02) orders which are materializing, we expect them to be delivered in the fourth quarter and also going to 2019. So, the lead time is again almost six to nine months. So – and the other front is, if we can look at on the international front, if we look at Drilling & Subsea business, we've got a significant exposure on the international front. If we look at our downhole business going back to 2014, 40% of that business was international. Today, it's pretty much more biased towards the North America. And then, some of the other products we've commercialized across the – across our product lines like the Multilift is a good example, the Cannon protectors on the artificial lift front, they're all international products, right? And valves business, we have focused – by design, it was a North American business and we're gaining pretty good traction on the international front. And we would like to gain significant market share on the international front in the valves business. So, they're all the opportunity for us on the international front.

Okay. That's helpful. But I guess generally speaking, it sounds like you shouldn't be more than about six months behind the major service providers in terms of where your – at least your current revenue drivers are.

I think that's a good assessment, yes.

Okay. That's the only question I had. Thanks, guys.

Thank you. And our last question will be from Brad Handler of Jefferies. Your line is open.

Thanks. Good morning, guys.

Hi, Brad.

Just a couple of questions for me or categories of questions, and it's probably more helping me understand the – give me a little more market context as you see it from your vantage point. So, I was curious about – with J-Mac, is there anything to read into power and rebuilds or useful lives or anything that you see related to that versus new orders of capital equipment that you're seeing in trends. Are useful lives – is there a slug of useful life that we're reaching ends of and you see signs of that because of new orders? Or is there something not – do you see some lower demand than you might have expected for power end rebuilds, for example, or anything that you might not participate in, but just some sign of it that you're seeing in the order trend?

Yeah. Well, I think it's a great point. Well, the first one I'll make is the service intensity, right? As – if you go back to the last several quarters in just the amount of sand being used, the amount of water being used, how hard the pumps are being run on more stages, right, longer laterals, all of that is service intensities. The pumps are running a little harder. On the equipment side, from a product standpoint, what we've done and some of our competitors have done the same but we do have the best pump in the marketplace is we have improved the life of the pump. And one of the reasons why we are gaining market share in the case of pumps is because of the life of our power end. But the service intensity is what is driving the maintenance activity on the frac side. It's just not power ends. They need a lot more fluid ends, they need a lot more wire ends, they need lot more consumable items, kits, bearings which all go with it. But we have maximum in particular trend in the case of power ends but the service intensity is going up. Now, on the capital build program, it's not every month. We don't see it every month. It comes in chunks. We saw that last quarter. We expect to see that this quarter. But it happens in chunks. It doesn't happen every month like the way it happens on the consumable front.

Sure, sure. Okay. I certainly understand the point about service intensity. I just didn't know whether – obviously, you have a choice between trying to rebuild the power end, but I suppose that you can only do that so many times and you're seeing – you're obviously seeing the growth and need for replacement. Let me try a different one then. Relative to artificial lift exposure, you've obviously just added that with the new acquisition. But can you give us some context as to what – I guess it's a proportion of revenue or what you expect it to be soon or something that's specifically related to artificial lift. And maybe you can give us your sense of what kind of market outlook you have for growth in that category.

Yeah, yeah. No – those are lots of good question. Well, the first response to that is it's a very – it's a sub-product line within downhole and it's the fastest – one of the fastest-growing sub-product line in Forum's portfolio, primarily driven by the Cannon protectors and Multilift acquisition. And the Multilift acquisition, as mentioned, we did that about 15, 18 months ago, handful of customers and the revenue has gone up significantly. The margin has improved, and we still have significant growth ahead of us. We have also added few more products with the ESP/PCP acquisition and – for example, a phase regulator is a good product. Early stages, as Pablo mentioned, at this point of time, there's revenue, there's cost, but there's no EBITDA. So, we'll make that profitable going into 2019. But there were also cast protectors, which complement our Cannon protector. So, we have good four or five products in the artificial lift space, and we can grow that sub-product line significantly from here going to 2019 and 2020. On the quantification piece, I mean, at the sub-product line, we normally don't do that. What I can tell you is it's the fastest growing sub-product line in the Forum's segment.

Fair enough. Okay. That's fine. I appreciate the color on that line. I'll turn it back. I can always follow up later. Thank you.

Thanks, Brad.

Thank you. Ladies and gentlemen, this concludes today's question-and-answer session. I would like to turn the call back to Mark Traylor, Vice President of Investor Relations, for any closing remarks.

Thank you for your attendance to Forum Energy Technologies' second quarter earnings conference call. Thank you once again, and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, and you may all disconnect. Everyone, have a great day.