Good day, ladies and gentlemen. And welcome to the National Oilwell Varco Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Loren Singletary, Chief Investor and Industry Relations Officer. Sir, you may begin.

Thank you, and welcome everyone to National Oilwell Varco's second quarter 2019 earnings conference call. With me today are Clay Williams, our Chairman, President and Chief Executive Officer; and Jose Bayardo, our Senior Vice President and Chief Financial Officer. Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the Federal Securities laws. They involve risk and uncertainty 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. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliation to the nearest corresponding GAAP measures are in our press release available on our website. On a U.S. GAAP basis for the second quarter of 2019, NOV reported revenues of $2.13 billion and a net loss of $5.39 billion, or $14.11 per share. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our press release. Later in the call, we will host a question and answer session. Please limit yourself to one question and one follow up to permit more participation. Now, let me turn the call over to Clay.

Thank you, Loren. I’ll begin by briefly summarizing our second quarter results then I’ll discuss working capital impairment charge and our cost savings progress before handing it over to Jose to deal with each of these topics in greater detail. As Loren mentioned in the second quarter 2019 NOV generated $2.132 billion in revenue, an increase of 10% sequentially and an increase of 1% year on year; adjusted EBITDA was $195 million, up $55 million sequentially, representing 29% incremental leverage to our first quarter 2019 results. EBITDA fell 14% year on year on mix and pricing pressure. Each of our three business segments improved sequentially, incremental demand for our capital equipment consumables and services from international markets drove sequential consolidated growth of 18% which listed our mix from international markets from 55% in the first quarter to 59% in the second quarter. Revenues from North America were held flat sequentially despite the second quarter pullback in activity in North America. Companywide bookings grew for the third consecutive quarter as international operators continued to steadily grow activity around projects that have been waiting on the sidelines over the past few years. So NOV put up better sequential growth at the top line, but we did a poor job managing working capital this quarter which was a use of cash due to slower payments from customers, declining payables balances and modest inventory bills related to new orders and delayed acceptance of completed equipment by customers. This was disappointing endue to the changes that we have made and discussed publicly around better working capital management. As a brief reminder, when NOV's revenues were declining in 2015, we implemented an economic value added compensation metrics to increase the organization's focus on capital returns including working capital. In late 2017, we observed our working capital…

Thank you, Clay. NOVs consolidated revenues improved 10% or $192 million sequentially as momentum continues to build in International and offshore markets, benefiting NOVs longer cycle capital equipment businesses. Revenues from International markets improved 18% sequentially with all three segments posting double digit growth outside North America. Consolidated company book-to-bill of 1.3 times also reflects the improvement in International and offshore markets. U.S revenues improved 2% sequentially, but were offset by the Canadian spring break up resulting in flat sequential revenues in North America. EBITDA increased $55 million sequentially to a $195 million on 29% incremental margins. As Clay mentioned, we began executing on our cost savings initiatives in late Q2, realizing $7 million of annualized savings, which translated into a $2 million direct benefit to the quarter. We anticipate our realization of cost savings will accelerate over the next couple quarters and expect to see an additional $7.5 million benefit to the third quarter or another $30 million in annualized savings. During the second quarter, SG&A increased by $113 million, the vast majority of the increase was due to the severance charges associated with our cost savings initiatives. We’re required to record the expense when the company commits to an action creating mismatches between when expenses are reported and when cost savings are realized. As Clay mentioned, during the second quarter, we took $5.8 billion in charges primarily against goodwill and intangible assets. The impairment will reduce our Q3 depreciation and amortization expense by approximately $45 million in comparison to the second quarter, which will result in total depreciation and amortization expense of approximately $110 million in the third quarter. While 10% sequential revenue growth and the impact from impairments resulted in a slight improvement to our working capital as a percentage of our annualized revenue run rate, we…

Thank you, Jose. Before we open it up for questions, I want to take the opportunity to thank our Chief Investor and Industry Relations Officer, Loren Singletary, as he transitions to a customer-facing sales role in Wellbore Technologies. Loren has guided our investor relations effort for the past decade and, Loren, our investors, Jose and I all appreciate the great job you’ve done here and wish you the best in your new role. Investor Relations responsibilities will be assumed by our Vice President of Corporate Development, Blake McCarthy, who will be joining us on future calls. With that, we’ll now open it up to questions.

Thank you. [Operator Instructions] Our first question comes from Byron Pope with Tudor, Pickering, Holt. Your line is now open.

Good morning, guys.

Good morning, Byron.

I appreciate the detail, color and commentary as always saying. Clay, I'd like to maybe take a step up and just think about the growth accelerators that you guys laid out last November, you guys have nicely laid the groundwork for those accelerators despite some of the near-term challenges in North America. And so, could you just frame the progress on those as you see it and the opportunity you see for those growth accelerators particularly as we see offshore and international activity start to turn higher?

Yes. We highlighted a number of initiatives that we've undertaken through the downturn, Byron. And what I'd point you to and our most recent results is the outperformance that we put up both in North America, as well as international vis-a-vis, the rig count. And I think that's we see sort of growing evidence of acceptance of some of the new products and technologies that we've been bringing to the marketplace. So specifically, rotary steerable systems, the SelectShift, adjustable Downhole motor that Jose referenced in his prepared remarks. The MWD tools that we now offer that help directional drillers, geo-steer these longer and longer laterals, to the sweet spot, so the reservoirs. We're seeing traction for all those products both in North America and in international markets. And that's to further better position NOV and to one of their critical and key technologies that sort of enable the share revolution, directional drilling. And so our investment there, I think is starting to pay dividends. Likewise, our closed loop automated drilling that we execute with a lot of drill pipe to help our customers improve drilling efficiency. We're getting good traction there right now where we will be supporting growing levels of activity in the North Sea and other international markets with that technology in the second half of 2019. So that's contributing -- keeping with the theme of pivoting towards unconditional shale technologies on the completion side of things continue to make headway with the new products that we have through our completion tools business. New products that we've introduced in well intervention and stimulation technologies group, which is part of caps, larger higher capacity, cool tubing units, higher diameter, coiled tubing that can reach out further down laterals. So all these things that we've been investing in over the past two, three years, quarter-by-quarter, we're seeing good traction and going in the right direction that's really kind of helping our top-line and I think continue to help position NOV for the future, near-term headwinds notwithstanding.

Thanks Clay. And then just one quick second question, just thinking about international broadly defined, you guys had double-digit growth there, I think last year, and just given the international growth you've seen in the first half of the year. It seems reasonable to think that -- I realize there's not any visibility on North America, but it seems reasonable to think that for your international business broadly defined that double-digit top-line growth isn't doesn't seem out of the realm of reason. Is that fair?

Well, we are pleased to see continued improvement in international markets, I'll probably pull up short on offering specific quantitative guidance on growth. But I feel like, we finally have international markets and offshore markets coming back to life. And NOV is really well positioned to help support whatever our customers in those regions want to do. So glad to see it, glad to see the stronger orders in Q2 that speak to the fact that their international offshore customers are going back to work.

Fair enough. Thanks Clay. And Loren, congrats but you won’t get out that easy, I will still bug you from time to time.

That’s great I look forward to it. I have always enjoyed the roundtable.

Thanks guys.

Thank you, Byron.

Thank you. And our next question comes from Marshall Adkins of Raymond James. Your line is now open.

Yeah. Loren one last question for you. Could you explain how monoethylene glycol regeneration module works to us all before you leave?

I will tell you what, we will do that in private. I will tell you that.

I bet, you will. Clay the big surprise here for me, obviously we've all been talking about the improving international market and you guys readily participated in that. But the strength you had in the US virtually everyone's misguiding lower and missing numbers in US, was to me the big surprise. So couple questions on that. It seems like through multiple product lines whether it's drill pipe or high flow or your flow line or your wire line, you have a list of products that is getting a lot of aftermarket sales and other things is holding those up in US. So give us a workout into the next six to nine months. How do you see the US holding up in light of those other things, and in light of the cost reductions that you've initiated here?

As we said many times, our customers are pretty good at deferring expenditures for a while as they destock. And I think that's underway. And thanks for pointing out that we really did have a pretty good revenue quarter in the US in spite of the 5% sequential decline in rig count here because I think we have the right products and we are gaining share in a number of key products in this market. But nevertheless we also see the US the operators in North America and operators trying to conserve cash and slowdown spending and that means that they are destocking their supplies in some of these things. When we hosted our Analyst Day in November, we really tried to highlight some analysis that we put together on the physical consumption of equipment and consumables that support the level of activity. So even though the rig count spinning over a little bit the machine is still consuming a lot of that stuff and consuming at a rate that's greater than the most recent replenishment. So that's a long way of saying that we expect this to the turnaround eventually as our customers destock and again is pretty well positioned to support that.

But it sounds like your US business again, as opposed to most, could it be flattish through the rest of the year?

Well Jose guided Wellbore Technologies, where we had the greatest level of exposure. But this getting that down a couple percent sequentially and that's a mixture of US and North America going down that's partly offset by growth internationally, Marshall, those are the components we go into. So I don’t think were off trend in terms of guidance, in terms of what's going to happen in the US and North America through the second half of the year and we would not disagree with others that other have guided down.

Okay, alright. And then one other one for me. It feels like this is a meaningful inflection point in offshore and international. Everyone's been talking about it, everyone starting to see the orders and whatnot come through. It feels like this is a multiyear sustainable deal outside of the US, it's going to last for a while. Is that the right feel? Is that the same feel you all have? Is that the way we should be thinking about it?

I think so and I it speaks to the long-term view that the operators have in the offshore, these are very long lived projects. And so our experience has been -- is the offshore operators are less reactive to near term commodity prices they've taken the time over the last for five years working down costs and reengineering these projects and getting comfort around the economic viability these things, because they are multiyear, sometimes multi-decade undertakings that they're embarking on. And given the rising level of increase in interest in the offshore that we hear from our drilling contractor customers, given the fact that the number of jack ups for instance, under contract, picked up 14, I think in Q2 over Q1. Yeah, there are some signs out there, that activity is continue -- is starting to march upward. And our belief is that the operators that are undertaking that activity will do so with conviction and commitment and follow through. So we're very hopeful that -- this market just moves more slowly, for instance, in North America, but it's good to see it going up into the right somewhat.

Good thing. Thanks, guys.

Thank you.

Thank you.

Thank you. And our next question comes from Scott Grubber of Citigroup. Your line is now open.

Yes. Good morning.

Good morning.

Hi, Scott.

Jose, I heard your comments on free cash and working capital by year end. As we think about working capital in the context of a rising percentage of international sales, and the percentage that probably likely above was most anticipated 12 months ago, is 35% still good target for working capital on a normalized basis going forward? Is that how we should think about it?

Yeah, it continues to be the target that we're striving for, it doesn't mean that doesn't require a lot of heavy lifting, which we knew that we were going to have to do during the course of the year. And, as we've talked about in prepared remarks, the rapid shift in the business to the international markets presents itself with some additional challenges. Some of those will be transitory, those are more related to some of the inventory movements and purchases that we needed to make during the quarter. But collection times in general tend to be a little bit longer overseas, but by focusing on all of the details associated with the cash conversion cycle across the organization, we're optimistic that we can make really good headway during the second half of the year. And really if you look at the history of the organization, and how our cash flow patterns tend to work, they're always more second half bias than first half. In the first half of the year, we have things that come up that require cash outflows, things such as tax payments and other benefits that come out the door. So, we feel much better about what we're expecting the second half of the year. I guess the other thing I’d point out is in addition to the challenges associated with the offshore, sorry, international component of the working capital. We also do have more cash outflows expected in the third quarter as a result of cash severance payments that we will be making. So the cash flow is second half weighted, and I will also guide us even more heavily weighted to the fourth quarter.

Got it. I appreciate all that color. And Clay one for you, given the strengthening recovery abroad, I’m curious to hear an update on your efforts to arms, smaller and regional oil service companies. There was another one of the growth drivers mentioned at the Analyst Day.

Yeah, yeah, great question. And as part of our strategy is providing equipment and technologies to enable smaller oil field service companies to compete. And what I would tell you is, again, a lot of the traction that we're getting in international markets comes right out of that strategy, newer and better tools and the blossoming of a little, excuse me, more customers in some of those markets drove demand for pressure pumping equipment overseas. Not surprisingly, that was down a lot in Q2 in North America. But we saw a lot offset in the Middle East and South America, few other regions around where the industry is continuing to build out kind of shale capabilities. And we're seeing investment by smaller local indigenous service companies that are becoming a bigger portion of our customer base.

Great. And Loren, congrats. It's been a real pleasure. Thanks, everyone.

I'm not going away. We'll stay in contact.

Definitely. Thank you.

Thanks, Scott.

Thank you. And our next question comes from Chase Mulvehill of Bank of America Merrill Lynch. Your line is now open.

Hey, good morning. And Loren again, congrats on the new position. I'm sure I'll be seeing you around town. Blake, you've got some big shoes to fill, so good luck with that. And I guess I'll start on caps here, obviously a real nice order number in 2Q followed up a real good order number in 1Q. Given the strength in offshore and international side, could we expect to kind of maintain this $500 million per quarter order rate in the back half of the year?

Yeah. I would say offshore to quantifying it, Chase, but I would tell you that there are lots of other opportunities that we’re tendering into. And so for instance, our Process Flow Technologies group, their pipeline of opportunities in our Wellstream processing portion of that, which is where a lot of our processing equipment resides going into some of these offshore developments. Their pipeline there's 50% bigger than it was this time last year. We're continuing to see lots of inquiries around FPSOs and some of our turret mooring systems and offloading equipment, as well. There's a lot out there. However, I'd also point out like our inquiries around conductor pipe connections which is an offshore product, it actually dipped down a little bit. But we have really strong orders in that business unit last year. And I think a lot of customers kind of built up their inventory of those things. But on the whole, it continues to be a more constructive picture. And I think it points to kind of steady growth and activity in the offshore.

Okay. And you've got over a billion dollars of orders in the first half in CAPS. And, when we think about that starting to flow through the top line and helping on the absorption, you've got some cost initiatives, obviously, kind of running through CAPS. What's the path towards kind of teens, low teens on the margin side? You think that it's kind of a first half of 2020 or is it kind of later than that, as we think about kind of hitting that that low teens margin for CAPS?

Yeah. Chase, here is a way to answer the question is more talk about sort of our expectations related to incremental margin performance. So, one of the things that we were really pleased about in Q1 that was affirmed in Q2 was that the belief that the offshore components of that CAPS segment had finally found bottom. In Q1, we were a little nervous coming into Q2, because obviously, that was somewhat contingent on the bookings that we would have -- that we would have received. And as you have pointed out, we had really strong bookings in the second quarter which helps support our belief that we're going to see those businesses start to recover. So, through the course of 2018, and in the first -- very first part of 2019, those offshore components were a huge drag on incremental margins. And with the offshore components, bottoming out, we believe pretty strongly that going forward, we will now generate incremental margins that are more consistent with what we've seen over longer stretches of time for that business, which is in the realm of call it 30% to 35% plus, we'll see a benefit beyond that from our cost savings initiative. So, depending on what your assumptions are related to the top line growth, you can sort of come to your own conclusion in terms of what the margin could be.

All right, that's helpful. I appreciate the color. Quick follow-up, if we think about M&A, and the strategy, as you move forward, and obviously, the cost of capital is getting a little bit more expensive for the private equity cost. So maybe, if you kind of talk to, Clay, your M&A strategy here, as we look over the medium term?

Yeah happy to. We went through an important inflection point, I think, with respect to that as we entered 2019. And basically, capital's more rare and more valuable in this world than it was this time last year, let's say. So when it comes to deploying that in M&A, I think kind of recognizing the market that we're in means that we dial back our models a bit and become more selective and try to be more judicious with respect to capital deployments M&A. We had a couple of small closings in the first quarter, nothing in the second quarter. Well, I think we'll have some in Q3, but we're just trying to, again, be more capital efficient, get better returns on capital, in our M&A strategy. And I know you're aware of this, but for everybody else's benefit, generally, our M&A strategy has been more targeted, more focused, smaller rifle shot type of transactions. And then we sought to boost the returns around these by co-investment of product development research, organic investment as some of the businesses and cultivation of these businesses that we brought in through M&A strategy. So it's a little different. And I'd say as we have gotten into 2019, we sought to be just more selective and careful and judicious with our application of capital into the strategy.

Alright. That makes sense. I'll turn it over. Thanks.

Thank you, Chase.

Thank you. And our next question comes from Bill Herbert of Simmons. Your line is now open.

Good morning. Jose back for cash flow. You said $300 million to $500 million in the second half off the year.

Yes. And Bill, we don't have the best connection with you. But yes, $300 million to $500 million in the second half of the year.

Mostly Q4. Q3 as I've mentioned we've got some severance obligations and alike, but we do expect to improve free cash flow generation to the second half of the year.

So you are clear with regard to the working capital aspirations, but beyond that, how should we think about free cash conversion? I mean, typically, one would think about that relative to net income, but you've got a goofy tax rate. So how should we think about your free cash flow conversion relative to in terms of what you're targeting?

Yeah, it's a fair question. We certainly do have a goofy tax rate. And unfortunately, as we continue to operate at relatively low levels of income, that will continue going forward. So I think the actual cash tax requirement will be relatively modest going forward in time. So, the way that I tend to think about it is more looking at EBITDA looking at some of the other cash requirements and sort of filtering through what happens via the balance sheet to get to that number.

Yeah, okay. And Clay, dovetailing with your comments on M&A, historically, your capital allocation or your allocation surplus cash flow has been, if memory serves, kind of organic reinvestments, M&A, buybacks. In [indiscernible] you've already talked about, I think correctly, that the cost of capital is increasing markedly across the board that you're more selective on M&A. Historically, favor buybacks and dividends all the way Central Banks are racing to zero, have you guys rethought the wisdom of buybacks versus dividends in terms of you're competing for investable dollars that are increasingly scarce for energy.

Yeah. Bill, we put a lot of thought and time in with our board around our capital allocation priorities that we presented late last year. And what I would say is that we don't plan to deviate from that path. The first and foremost is, and I'm not sure this was included on your list, but defending the balance sheet is real important to us. And so that's critical. And then, supporting our ongoing operations through CapEx and then deploying capital into product development and M&A that's attractive, and then excess capital in to share buybacks. And since that time our stock has moved down appreciably. And we've been asked by investors about accelerating share buybacks. But our plan thus far is to stick with our plan and do what we said, which is to achieve the leverage metrics that we talked about. And then look at deploying access capital, and share buyback. So that that's where we are on that question.

Okay. Thank you.

Thank you.

Thank you. And our next question comes from [Indiscernible] of Wells Fargo. Your line is now open.

Hi, thank you. Loren, congrats as well from our end.

Thank you.

On the additional cost savings you guys are targeting now 160 versus I believe the 120 preliminary target. What are some of the adds that you guys were able to target in on to boost that number?

Yeah, as I mentioned, it's about half administrative functions and overhead and about half operations at this point. So call it roughly $80 million in each. A lot of activity in the second quarter from both our corporate functions as well as operations around putting these steps together. And importantly, Cole [ph], they're on the heels of four years of cost reductions and very, very big cost reductions. So the easier steps have been executed. So what this involves is a lot of process redesign and changes. And there are literally hundreds of specific concrete steps that we've compiled, that the organization will be executing over the next 18 months or so to put these in place. And I would stress as well that this work is ongoing. We're continuing to look for opportunities to reduce costs. And our plan is to update you further on our next call around those initiatives, but very pleased with how people have rolled up their sleeves and kind of get the fact that in 2019, with the challenges that we face in our marketplace, we do need to become more efficient. And there are different ways to do things. And that's what we're working on accomplishing.

All right. Sounds good. On NOVOS, you guys have highlighted some good traction there, both in the commentary and in the press release. Is there any way to quantify the sort of equipment order opportunities associated with that pipeline growing there?

It's important, but difficult to quantify Cole, because, as Jose mentioned, what's really driving this is that the oil companies are getting pretty excited about it. And a number have written applications within their own organizations that work within the NOVOS environment, and they want to run those. And so this is becoming important box to check when it comes to putting rigs to work. So I think it will pull-through equipment in the future. And so in the long run, I think this is -- once again, a great way to enhance NOV's product offering into the drilling space, but very difficult to quantify that absolutely right now. But very pleased with the level of market acceptance and the interest level that we see at NOVOS to improve drilling operations.

All right. Thank you. I'll turn it back.

Thanks.

Thank you. And our next question comes from Sean Meakim of JP Morgan. Your line is now open.

Thank you. Good morning.

Good morning, Sean.

So I was hoping we could talk a little more about the segment margins. How should we look at those without the impact of the restructuring? I think, you touched on CAPS a little bit, a few questions back. But while more margins flat with cost savings and lower D&A, the Rig Tech incremental looks pretty healthy on a small revenue increases. Maybe just update us and how you're thinking about normalized incremental shape here once some of the noise in the near-term shakes out?

Sure. Thanks, Sean. So, a little -- I will sort of refer back to the Investor Day, we did last November. We provided our view in terms of both near-term and longer term expectations related to incremental margins. And the near-term was altered due to the fact that we still had some significant mixes that were shifting within our businesses. And as I have mentioned a little bit earlier, we've now sort of cleared that hurdle, so we expect more normalized incrementals going forward and really the ranges that we gave out at that time still what our expectations are today. And so for Wellbore, we think that sort of normalized instrumentals are between 33% and 40%; CAPS, as I mentioned, was between about 30% and 35%; and Rig should be more in the 25% to 30% range. And that's prior to any benefit from our cost savings initiative. So if you look at the guidance that we provided to the Q3 -- for Q3, that guidance reflects our expectations of the contribution of cost savings into those numbers.

Thank you for that clarity, it's very helpful. Can we also just get a little more granularity on some of the changes and working capital accounts in the quarter? There was kind of limited visibility in the release and I appreciate the comments here receivables are disappointing you call that out. Were there any write-downs and inventory in the quarter, was at a clean draw? Maybe you can -- there's also a big other accounts that drove the cash outflow, if you could elaborate on that it'd be helpful to walk through those moving pieces?

Yes, Sean. So yes, as you pointed out our receivables, we did have a build during the quarter. And despite the fact that we had a 10% sequential increase in revenue environment -- which you would expect to have a build and receivables, the build was more than what we would hope for based on the efforts that we're putting forth related to the management of working capital. Inventory was a very small use of cash which was $27 million. And as I mentioned previously as well, that was more than what we had expected due to the shift in the business and the need to sort of get additional materials into the company in order to be able to execute on the significant levels of bookings that we had in Q2. Specifically you asked the question about the charges and kind of what happened as it relates to inventory. We did have roughly $300 million charge or write-down related to inventory during the quarter. And so that's why, you'll see that the movements on the balance sheet won't reconcile perfectly with what you see on the cash flow statement. But obviously, as we're going through in restructuring operations, we've taken a very hard look at the entire asset base of the Company.

Got it. Anything else in terms of moving parts in cash from operations to call out or that should get us where we need to be?

I think those are the main components, we think we will see improvement -- we need we need to see improvement on all fronts going forward.

Understood. Thank you for that feedback. I appreciate it.

Thanks, Sean.

Thank you. And our next question comes from Marc Bianchi of Cowen. Your line is now open.

Hey, thank you. I wanted to ask a little bit on the cost cutting to start moving the target up to $160 million, you guys took about $400 million restructuring charge this quarter. So I'm just wondering if we could kind of bridge the total restructuring, which seems like a pretty big number, with the cost cutting only to 160. Is there potential more upside and when could we be kind of made aware of that?

There are Marc, but as Jose just mentioned, the charge includes for instance, I think it was $291 million inventory charge. So that's not included in the kind of the EBITDA pick up that we referenced. The $160 million cost savings is ongoing, structural changes to our cost structure around administrative functions and operational functions to run more efficiently, whereas the charge was partly inventory, partly PP&A and kind of a different animal [ph]. But, also within the charge our specific charges around our voluntary early retirement program and severance as well.

Okay, okay, that makes sense. Thanks. And then in terms of CapEx, just trying to do a little bit of the math here for the back half that you're talking about. I think we were targeting about $350 million of CapEx for 2019 and you did about $100 million in the first half. So just wondering if you're still planning on doing the $350 million for the year, and then kind of what the thought is, as we head into 2020 on that line.

Yeah, Marc. We think we’ll comment underneath that $350 million budget that we had set for the year and we should just be a bit north of $300 million.

Okay, comment on 2020, Jose?

Not at this point. So, I think you'll find we’ll continue to sort of have CapEx as a percent of revenue between 3% to 4% range.

Great. Thanks so much. We'll turn it back.

Thank you.

Thank you.

Thanks Marc.

Thank you. And ladies and gentlemen, this does conclude our question and answer session. I would now like to turn the call back over to Clay Williams for any closing remarks.

Thank you all for joining us this morning. And we look forward to sharing with you our third quarter results when we host a call in October.

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