Good morning, and welcome to National Oilwell Varco earnings call. My name is Kevin and I'll be your 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 with instructions given at that time. I will now turn the call over to Mr. Loren Singletary, Vice President, Investor & Industry Relations. Mr. Singletary, you may begin. Loren Singletary - Vice President-Investor & Industry Relations: Thank you, Kevin, and welcome everyone to the National Oilwell Varco Fourth Quarter and Full Year 2015 Earnings Conference Call. With me today is Clay Williams, President, CEO, and Chairman of National Oilwell Varco; and Jose Bayardo, Senior Vice President and Chief Financial Officer. Before we begin this discussion of National Oilwell Varco's financial results for its fourth quarter and fiscal year ended December 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 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 the latest forms 10-K and 10-Q National Oilwell Varco has on file with the Securities and Exchange Commission for more detailed discussions 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 website at www.nov.com, or in our filings with the SEC. Later, on this call we will answer…

Thank you. We're now beginning the question-and-answer session. We ask that you please limit yourself to one question and one follow-up. Our first question comes from Marshall Adkins with Raymond James. J. Marshall Adkins - Raymond James & Associates, Inc.: Morning, guys. Thanks, Clay. Obviously the industry, these oil prices coming to a screeching halt. I'm curious. How do you balance the massive cost cutting that you seem to be doing with the ability to meet a recovering market in 2017 and 2018? How much cutting is too much? Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. J. Marshall Adkins - Raymond James & Associates, Inc.: And I guess the corollary to that is, I presume we should expect margins to continue to decrease through the year. At what point in time do we stabilize? Clay C. Williams - Chairman, President & Chief Executive Officer: That's a great question, Marshall. We were hoping to find stability early 2016. And then oil headed down another $10. And all the E&Ps are coming out with sharply lower CapEx forecasts than we had been planning for. So things remain fluid. But to your original question, what's the right balance? I got to tell you, one of the really necessary skill sets in oilfield services for those of us that have been in it a while is the ability to flex up sharply when called upon and flex down sharply when called upon. And the good news for NOV is we have a very experienced management team running our business units around the globe. They know how to do this. We've been called on in the past to double and triple and quadruple production over a short period of time. And we successfully navigated that very well and maximized the profitability…

Our next question comes from Bill Sanchez with Howard Weil.

Thanks. Good morning. Clay C. Williams - Chairman, President & Chief Executive Officer: Hey, Bill. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Good morning, Bill.

Clay, I was curious – or perhaps, Jose, just given what appears to be kind of I guess accelerating deferrals here of Rig Systems orders, I get – both offshore and onshore. You've laid out a revenue range out of backlog for 2016. I know you fell short of your view in 4Q. Well just your level of confidence, Clay, right now, given what seems like the further deterioration in terms of being able to recognize that level of backlog revenue if you will. And if you have pretty high confidence on that and given the cost reductions you've continued to make in Rig Systems, do you have any visibility in terms of when possibly a margin trough level could occur? And at what level that could be? Clay C. Williams - Chairman, President & Chief Executive Officer: Well, Bill, I'm hesitant to give guidance beyond what we just did, given that the situation is pretty fluid like we mentioned in our comments. We were disappointed in the fourth quarter that the revenue out of backlog fell so sharply. It fell about $460 million sequentially out of Rig Systems, a couple hundred million short of what our expectations were for the fourth quarter. And that's due precisely to what you highlighted with regards to drilling contractors really getting more aggressive on trying to delay acceptance of rigs and pushing back. As you know the food chain that we work within, drilling contractors sign up for the construction of these new rigs. The shipyards are their customers. And then we work for the shipyards. We've been very diligent over the years about demanding very strong contracts, very strong down payments, progress billings, and the like. But given our focus on monetizing the profit in that backlog, we have slowed our progress on revenue out of backlog to sort of match – better match payments and to minimize our working capital exposure in those programs. So that's kind of what you saw in the fourth quarter, is we slowed down that revenue recognition out of backlog. But on the – ultimately it's really caused by a lot of drillers trying to delay acceptance of rigs. A couple of situations I think have been made public, and a couple of situations are – remain a little tense. Contributing to that was the one shipyard we continued working for in Brazil also slowed in the fourth quarter. I mentioned in my call that we only did $10 million in revenue out of Brazil. And so progress on that particular program slowed as well. So really across the board things have slowed down. It remains fluid. We've haircut our guidance for revenue out of backlog into Q1. And are working to respond to the market kind of week by week as we see things unfolding.

Okay. Thanks for that. Just curious on Rig Aftermarket, Clay. You had a very resilient 4Q on the top line. And I know we've got a pretty significant guide down for 1Q in terms of revenue expectations. Just where do we go from here in that business? I guess and what's a bogey you would tell us to kind of use to think about overall top lines when we think 2016 versus 2015 potential declines? Is there something we should be looking at that could help us gauge where that could go? And is there something in 1Q that would suggest, just given the significant decline, that 2Q actually could stabilize a bit from 1Q? Or how do we think about that? Jose A. Bayardo - Chief Financial Officer & Senior Vice President: I... Clay C. Williams - Chairman, President & Chief Executive Officer: Well... Jose A. Bayardo - Chief Financial Officer & Senior Vice President: I can jump in first. Clay C. Williams - Chairman, President & Chief Executive Officer: Okay. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Bill, on the guidance regarding Q1. Basically as we talked about on the last conference call, and I think has been mentioned before, Q4 often sees an uptick, a meaningful uptick in service and repair related revenue. And we certainly saw that during the year – during the quarter, offset by a continued decline in orders for higher margin spare parts. As we go into Q1, essentially during the course of Q4 we saw obviously a quick deterioration in a number of the product offerings, spare parts included. And so we're expecting a good fall off, not only in that sort of seasonal associated service and repair work, but also a continuing fall off in spares. As…

So, Clay, given that is there any reason that we should expect discounts to rise further from here? Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. I would say this isn't just Rig Aftermarket but across the board. The level of price pressure on all of our businesses rose to sort of new levels of intensity if you will. We saw that particularly late in the fourth quarter and certainly continuing into January. It's almost – in a lot of ways it almost felt like a second shoe dropped in the fourth quarter. I think you had hedges rolling off E&Ps. I think you had some term contracts expiring on rigs out there that were priced in a much – much higher day rates. I think you had sort of a new round of fiscal – or for financial pressure on our customers that came to bear in the fourth quarter. And it's just a – it's we sort of hit a whole new level of pain.

I appreciate the time. I'll turn it back. Clay C. Williams - Chairman, President & Chief Executive Officer: Thank you, Bill.

Our next question comes from Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Morning. Clay C. Williams - Chairman, President & Chief Executive Officer: Morning. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc.: Clay, trying to get a feel for any potential structural changes in the businesses as we progress through this downturn. And as I think about Wellbore Technologies, it seemed as though some of that work might be shifting from sales toward rentals. And so as I think about downhole tools, bits, are there any shift there in terms of how you think about the structural nature of that? And are you relatively agnostic between sales and rentals within that segment? Just curious as to your thoughts there. Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. Rentals carry a higher operating margin. And as I mentioned in my call, late in the quarter we had a lot of rental equipment returned, not just in downhole tools but in other rental businesses within Wellbore Technologies. With respect to our downhole tools business we've seen a steady progression in our business over the last few years of working more closely with the E&Ps. And across North America is mostly where I'm talking about, but also elsewhere around the globe, where they're more interested in being involved in the selection of the bottom hole assemblies that go into their complex directional drilling. And so our mix is sort of – our mix of customers let's say has shifted to work more directly with the exploration and production companies to help them sort of optimize their well pads. But that's been sort of a steady progression. I'm not sure we've seen a big change here lately that…

The next question comes from David Anderson with Barclays.

Hey, Clay, your balance sheet remains one of the best in the sector with a really healthy cash position, which really stands out in this downturn. Can you talk a bit about – obviously you're navigating through a pretty severe downturn, one of the worst we've seen. But can you talk about your priorities in terms of that? And maybe remind us in terms of capital allocation? And also remind us what types of leverage ratios you're comfortable of getting up to. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Hey, David. It's Jose. I'll jump in on that one. Now we're obviously very pleased to have the balance sheet that we have today. As Clay mentioned earlier, having optionality in the capital structure in this current environment is becoming more and more valuable day by day. And we're also seeing a narrowing of the nash (50:54) spreads on some compelling acquisition opportunities coming forward. So as we think about capital allocation, for us it's really all about ultimately driving maximum value to the shareholders. So obviously historically organic investment has been a very good use of capital that – current environment over-capacitized. M&A tends to be front and center in our minds. And everything is going to be opportunity specific, outlook dependent in terms of how we think about using the capital structure related to M&A and our other capital requirements. So I don't want to get into any sort of specifics on ratios, et cetera. But I think the company has historically maintained a fairly conservative balance sheet. And we intend to keep it that way. But again it really depends on the specific opportunity, cash flow it brings into the organization, as well as exactly where we feel we are in the cycle and the outlook for the combined businesses.

Okay. Thanks, Jose. And I heard all your guidance, and we have to kind of digest it off of the first quarter. But as I think about kind of decrementals for the full year, and if I use 2015 as a starting point, is there any kind of guide you can help us out with? Kind of say maybe which segments may be a little better, a little worse? Obviously with less revenue coming out of backlog and Rig Systems I'd have to think maybe decrementals look a little worse. On the other hand C&P and Wellbore I think have a pretty high level of amortization in there, so maybe that gets a little bit better. Can you just help us out with some of the trends that you're kind of thinking, kind of from a full-year basis on the decremental side? Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Yeah, yeah. This is Jose. (52:37) It's a really challenging question, David. And I think we gave – there are ebbs and flows. Every business has its own unique components, and things don't always cycle perfectly. And as an example, last quarter we saw decrementals that were sort of in the 18%, 20% range. This quarter we're at 35%. And so the costs and revenues unfortunately don't always sort of go hand in hand. But I think we gave some pretty detailed thoughts that will take some time I'm sure to digest regarding the first quarter. And beyond that visibility really is pretty murky, so... Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: ...I hesitate to give any specifics on that. Clay C. Williams - Chairman, President & Chief Executive Officer: I'd say -you got to add it gets a little tougher from here. As backlog kind of dwindles down, absorption becomes a little more challenging. And we're managing cost in response to that as closely as we can. But our backlog driven businesses that are mostly manufacturing, certainly their decrementals will be affected by that picture. On the other hand we do have a number of businesses that are exposed directly to the drill bit. So you finally find bottom on rig count and maybe have just a little bit of help on the – on rig count, we will immediately for instance get WellSite Services jobs. We will immediately see a turnaround on our downhole tools and bits business. We'll immediately see rig instrumentation work pick up. And those are three rental businesses that I mentioned earlier that come at high sort of variable margins. So just a little bit of activity help I think would help put up much better decrementals for Wellbore Technologies.

Okay. Thanks, Clay. Clay C. Williams - Chairman, President & Chief Executive Officer: You bet. Thanks, David.

Our next question comes from James West with Evercore ISI.

Hey, good morning, guys. Clay C. Williams - Chairman, President & Chief Executive Officer: Hey, James. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Morning.

Clay, as you think about – just another question on M&A. The – I guess the obligatory M&A question, or for Clay or Jose. Are there certain areas or product lines that you're looking at, maybe to diversify away from your core competencies where you dominate businesses, so you can become a more full cycle type player? Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. James, as you know, we operate through 15 business units. Two of those 15 build new rigs, one for land...

Right. Clay C. Williams - Chairman, President & Chief Executive Officer: ... one for offshore. But 13 of our business units do other things. So we do a lot across the oil field, probably more than we get credit for. And already have more sort of diverse exposure. What I would say is the thinking here with regards to M&A and corporate development, which I think the company has a lot of that in its DNA, really is focused on identifying opportunities to make money. What are the trends in the oil field? Where can we drive better industry structure? Where can we offer a better package of products and services for our customers? And it's really a little more granular than trying to globally arrive at some sort of diversified portfolio mix. I think we've ended up at a very diversified portfolio mix already.

Okay. Clay C. Williams - Chairman, President & Chief Executive Officer: But at the end of the day this is a – business is about making money. Right? So where can we put capital in into an opportunity, get that capital back as quickly as possible, i.e., get a quick payback and a good return. And really do something different to drive higher capital returns in an industry where we've all spent our careers and I think have a lot of insight into, which is global oil field services at large. So that's kind of our approach to M&A. And looking for those sorts of opportunities. And honestly Jose and Loren and I wish we could tell you more this morning. But as you understand these things are never a deal until they're a deal.

Of course, yeah. Yeah. Clay C. Williams - Chairman, President & Chief Executive Officer: We are enthusiastic about what we're starting to see out there. And again great to have a lot of balance sheet flexibility and capacity. And I think there's a lot of optionality right now embedded in NOV.

And has there been a significant change in kind of the sellers' asking prices here, as we've taken this I guess third dip down in oil prices? Clay C. Williams - Chairman, President & Chief Executive Officer: Yeah. There's a lot of shell shock out there.

Yeah. Clay C. Williams - Chairman, President & Chief Executive Officer: We're not the only one seeing this.

Sure. Clay C. Williams - Chairman, President & Chief Executive Officer: I would tell you on the – on down – in down cycles, having been through a few, it's really hard to get the bid and the ask to converge on the way down.

Right. Clay C. Williams - Chairman, President & Chief Executive Officer: Because the seller is looking backwards and seeing, hey, a quarter ago, two quarters ago, a year ago, we did much better financially. And as a buyer you're looking forward into a deteriorating P&L, wondering where's bottom and trying to discount appropriate. So the bid and the ask tend to widen early in a down cycle. I think if we're – I don't know. I'm not calling bottom. I don't know if we're there yet.

Sure. Clay C. Williams - Chairman, President & Chief Executive Officer: But as you start to get closer to bottom, time passes, reality sets in, folks recognize this may go – be lower for longer. And I think that's kind of where the industry is coming to now. I think it brings a much more sober, realistic outlook on the part of potential sellers. And I think we're starting to approach that kind of world.

Good. Good. Okay. We'll look forward to your next move. Thanks, Clay. Clay C. Williams - Chairman, President & Chief Executive Officer: Thank you, James. Jose A. Bayardo - Chief Financial Officer & Senior Vice President: Bye.

Ladies and gentlemen, this does conclude today's question-and-answer session. I would now like to turn the call back over to Mr. Williams for closing remarks. Clay C. Williams - Chairman, President & Chief Executive Officer: Thank you very much, Kevin. Appreciate everyone joining us this morning. And we look forward to sharing our first quarter results with you in April. Thank you.