Good morning, ladies and gentlemen, and welcome to the Dril-Quip Fireside Chat Webcast. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, George O'Leary and Taylor Zurcher. The floor is yours gentlemen.

Good morning and thank you for joining us today for our fireside web chat that covers the results of Dril-Quip reporting their Q3 2020 earnings results. I'll purposely keep this intro brief so we can press on into the more interesting portion of today's discussion. On the Tudor, Pickering, Holt & Company side of the table, we have Taylor Zurcher, Director of Oilfield Services Research, and myself George O'Leary, Managing Director of Oilfield Services Research. With us today on the main event, we're incredibly grateful and happy to have Dril-Quip's Chief Executive Officer, Blake DeBerry; and the company's Chief Financial Officer, Raj Kumar on the phone. Blake and Raj, thank you both very much for joining us.

Thank you, George, for having us.

Thanks for hosting, George.

Happy to do it and with that brief intro, I'll pass the mic over to my colleague, Taylor, to kick off the question and answer session.

All right. Thanks George, and thanks Blake and Raj for joining us this morning. We're hoping to cover a lot of ground today, but maybe a good place to start is on the Q3 results themselves. It looks like both EBITDA and top line came in a bit better than what we and the rest of the street were expecting and it is further evidence that you're making really good progress in the cost-out program you initiated earlier this year. So maybe give us a minute to share any other high-level takeaways as it relates to the Q3 numbers themselves and then any sort of initial outlook you could provide for Q4 of 2020 would be helpful as well.

Sure Taylor. Just first off, I'd say this market was challenging pretty early on in the year and continues to be challenging. We've had some customer delays and a lot of push-out requests as our customers move their operational programs out, but I'm extremely pleased with the results we were able to print today and I couldn't be more proud of the team, quite honestly. With respect to specific color, Raj is much more in the details as CFO and so I'm going to hand it over to him to let him share those details with you.

Thanks, Blake. So guys, I mean it was, it was a good quarter. We saw the impact of the cost out taking shape nicely in Q3 and in this market to Blake's point, right. If you look at bookings, our bookings number was $50 million, last quarter was $40 million. But in this market right now, one booking split could mean a $10 million move up or down, right. So we could plan anywhere between $40 million to $60 million. So if you look at that, that has a bearing on our revenue. So this quarter very similar in revenue from last quarter. The upside that we saw was, as I mentioned, the cost takeout. We also had some favorable mix that helped us this quarter. You mentioned talking about next quarter. I would say that, we're kind of, we think we're going to be flat next quarter given where we are right now. And having said that, I want to signal that with bookings moving up or down, it could be anywhere right. It could be anywhere in the $10 million range up or down. So we need to, we need to just, we just need to be in a position where we understand there is quite a binary environment that we're in, but we do know that the cost takeout is taking shape. We will see leverage going into Q4, that's cost leverage that is going to further help us, given if revenue is flat, we should see a better performance in EBITDA, all things being equal.

Okay and you noted a bit better mix on the product side in Q3. It looks like you booked in turn some subsea trees in Asia-Pacific in the last quarter. Are we reading that right and are you seeing any other signs of incremental short-cycle work that might come back to the market here in the near term?

So you're right. We did book some subsea trees, both in Europe and Asia-Pacific. It was a bit of a bright spot. We booked five trees actually in the quarter so that was a good win for our sales group and one of the interesting things that we've seen is those trees were booked because we had inventory or we had trees partially in inventory or through the manufacturing, so we were sitting in stock or we had bits that we could put together and make a quick delivery and that's really kind of what we're seeing in the market with some of the smaller players that we deal with, particularly in Asia-Pacific. The speed is very important to them and that's part of the strategy we have just looking at our inventory and what minimum level inventory can we hold a product at to give us signs of improved chance of bookings in that short cycle market.

Got it. That's a good segue into my next question which is on inventory. In the release, you talked about operators or customers continuing to delay and defer current projects into 2021 or at least push into the right for some period of time and you quantified a $10 million to $15 million number that represents a negative cash flow impact on a quarterly basis. Can you give us any more color as to how you get to that number and with the uncertainty in the market might be persisting here for at least the near-term future, is that negative cash flow impact likely to materialize in Q4 and in the early part of Q1 2021 as well?

So Raj, you want to, you want to take that question.

Yes, I'll take that question. So Taylor, these are related to specific customers delaying shipments, right. So it's not that the demand is not there, the demand is there. It's just that they have pushed out their drilling campaign and when that happens they come back to us and say, hey, we don't need it at a certain date, we now need it at a different date and that just drives everything through scheduling and everything else. So that has, you know, to Blake's point, we have, we will increase our WIP, and it has all of those headwinds. But I want to point out the good news here. The good news here is to Blake's point, we do have stocking inventory that we opportunistically can take advantage of in the market, right. I'll give you another example. We talked about the trees on the downhole tool side, we have a thoughtful stocking program for our downhole tools that is going to turn very quickly because the demand is there and all of this I deem it as a timing issue in terms of the inventory bill this quarter. Looking out into, let's say Q4. Again, it depends on how our customers start scheduling their work and it all depends on that. We're going to do our best to be as close to our customers as possible to manage the inventory as we can do, but we're also going to be, we also will be commercially astute and take some bets on stocking programs which have given us the results that we have been looking for.

That makes a lot of sense. And the final question we had around the Q3 numbers was on free cash flow. You generated roughly $12 million of free cash flow last quarter. You're still guiding to positive free cash flow for the full year 2020, which would imply somewhere in the neighborhood of, or at least at a minimum, $15 million of free cash flow next quarter. The only area where it looks like you're tempering expectation is that you might not get all the way back to the previous cash neutrality target for 2020 relative to where we sit today, it feels like you might not get all the way back there, but maybe pretty close. Can you, are we reading that comment correctly in the press release and is there any timeline you could give us of when you do expect to get back to that $400 million number, maybe in first half of 2021 perhaps?

Yes, Blake, I'll take that. So yes, cash neutrality. We entered the year to your point at $400 million. I think it's reasonable the expectations that you have right now, we are going to be close. We're not going to be there, but we are going to be close. What's happened is, if you recall back in 2019, we went for a company-wide transformation and that allowed us to reduce our roof line by about 30% and we set a path to go out and monetize this excess roof line and earlier part of the year we were quite encouraged by them and COVID hit. All things started to delay and we've been, we've not made as much progress in terms of monetizing the roof line now. That's the headwind that we are seeing in terms of the cash neutrality. But I'm very confident that as we enter 2021, we're going to see significant progress being made in terms of monetizing these excess roof line, real estate sales et cetera, that's going to help buffer us in terms of getting back to cash neutrality. So a slight delay here. But guys in this environment, $385 to $400, if we get to $385 to just $400, that's a good outcome for us.

Yes, no doubt. I mean, it's above balance sheet to begin with, but continuing to shore up that cash war chest is something that investors, I'm sure, would like to see and would be an impressive feat given the current macro backdrop. So maybe shifting gears just a little bit, COVID-19 remains an issue and seems to be flaring back up on a global basis. Today, we're seeing issues both in the US and abroad, but you guys have had time to put plans in place to try to mitigate those impacts. Now that we're seeing kind of a flaring back up, is that impacting business, manufacturing, any of that in any way? Have you had to put certain measures back in place that you were able to take off once upon a time, as COVID was impacting the business earlier today?

From an operating standpoint, we've really been able to manage pretty well since about the middle of the second quarter. There definitely were some challenges as we started up and those challenges were different all over the world; every place was a little bit different from having these challenges, but now we put some protocols in place to better manage how we deal with the reality of this virus in our lives and in actual fact, in Houston, we're actually beginning to bring people back on campus starting next month, in November, a couple of days a week just getting back into the rhythm. But quite honestly, the biggest impact from COVID at this point is really the impact on demand and the resulting commodity price declines that are just leading to lower bookings in a more challenging environment for our customers and then pushing out their deliveries.

And we talked earlier about some of the subsea trees in the bookings for Q3. The one area we don't get good insight into at least relative to the way you report the numbers is the mix of bookings and specifically as it relates to connectors, which is a product you're obviously of a rich history. Are you seeing an uptick in bookings for connectors, and the reason I ask is, in the past you framed that as being somewhat of a leading indicator as it relates to the offshore order and reorder cycle for you guys. And so just curious if that's an increasing component of the bookings that you've had over the past couple of quarters?

So we are now seeing orders/bookings come in in that $40 million to $50 million range, which is what we had pretty much been forecasting and projecting all year. So we believe we're near the trough, but as Raj had said earlier, one single order moving from booking at the end of September and most are the 1st of October can make an impact on the quarterly bookings. So with respect to pipe and connectors, honestly it just remains fairly steady, no material uptick, so that would simply suggest we're just operating at the trough and we're not seeing that recovery. As we said before, we got three really kind of positive highlights in the bookings quarter, the first being the trees. We did book five trees in the quarter, which was a pretty big win for us. The second and probably a little less obvious is really our downhole tools business which has been much more resilient in a bit of a shorter cycle nature; we often deliver liner hangers in about a 12-week time period and it's probably a part that's a little under-appreciated and less thought about piece of our business. And to be honest, looking forward in 2021 it's an area that we think we can actually expand. And then the last is, I just don't think we're going to have much customer property overhang or customer inventory as we did coming out of 2014 and 2015. So I think that just is going to give us a little bit better recovery profile when things do start to recover. I think we're going to ramp up pretty quickly because there's going to be some pressure on supply chain and that inventory is going to burn pretty quick.

It's very helpful, Blake. Thank you for that. And then forming new customer relationships and broadening existing customers' share of wallet, if you will, seemed to be keys to Dril-Quip's growth story as you guys look to reload that backlog hopper when it's time to get better and activity picks up a little bit. What have been the keys to success? It's clear from your investor presentations that you guys have picked up new customers in various markets, expanded share of wallet, started selling things you didn't sell them before. How do you convince a new customer to start using Dril-Quip or an existing wide customer to start buying trees from you? What's that process like and then how does it differ between getting a new customer versus expanding that share of wallet with pre-existing customers?

Well, first and foremost, our philosophy, which we've stated multiple times, is that the technology always wins at the end of the day. A better mousetrap that performs better and is more cost effective is going to win in the marketplace, and with the recent products we've released, we've been able to gain an audience with a lot of customers and probably even more so in this environment because the cost savings are much more meaningful to them and given that the technology just really adds value and reduces cost and time. Just as an example, if a customer were to drill or develop a well using our entire E-Series of products, we've estimated that saves about $5 million cost per well and reduces five days of rig time and eliminates about 40 tonnes of steel. So for those that are sensitive to the ESG side, that's a meaningful amount of CO2 that is removed from the atmosphere, just not having the manufacture of steel which is, it's kind of a 2-for-1: to get a ton of steel, you put 2 tons of carbon dioxide into the environment. So that's a positive on that side and probably a bit of an unexpected positive but a good one, because that is a sensitive point in the current environment. But really our approach has been with these new products is to just develop wells that structurally change the way our customers drill wells to give them permanent cost savings. When the downturn happened in 2015, the traditional response is totally understandable, is that, 'Hey, supply chain is going to jump in here and we're going to get some cost out and reduced pricing', but really there has been no uplift in pricing since that time period. So there's really not much more that can be squeezed out from a supply chain perspective and given that people are really starting to focus on technology and how that can benefit their programs and we're seeing our R&D efforts really pay off in a meaningful way and interest from our customers and we think that's going to translate into some significant bookings in the years to come. And one of the things that you're probably not aware of is, we're also a bit of a value-added reseller to some nontraditional customers that are not necessarily end users of the products, but they do use our products in conjunction with their own in certain areas of the world.

One of the more recent and certainly value added technologies that you've been in the process of introducing to the market would be the VXTe subsea tree system. So I was hoping you could just rehash for us what the primary differentiators for that piece of technology are relative to what's out there in the market today. And then secondarily, as we think about the potential path forward for monetization of that product, what are those paths, what do they look like today and what sort of commercial models do you think you might look to pursue as we look to commercialize that product moving forward?

Sure. Look, VXTe now in my view is probably, for me personally, one of the most disruptive technologies I've seen in our sector of the industry in my career. We've been getting an incredible amount of interest on this technology from current and prospective customers and what it really does, the short answer is, in the traditional development well scenario, you would drill the wells and then stop at some point and install a horizontal tree or install a tubing tool and then come back, re-run the BOP stack and then drill out or run the completion. What we've done with VXTe, we allow the operator to drill the well to completion and land the tubing hanger in the wellhead without regard to orientation and then land the tree which can be done from a wire from a workover at any orientation they want and the technology has all the self-orientation built in and it gives them all the same functionality that they've had in the past, but again eliminates a lot of operations in the field, eliminates a lot of hardware. Like I said, that has garnered a lot of interest from customers and some nontraditional customers that maybe we haven't been calling on before and from some customers that were buying wellheads, but now they want to talk to us about trees. So we're pretty excited about that. Just to be totally transparent, you've probably seen a competitor has brought an action against us. With respect to VXTe, we began developing this technology several years ago and we obviously plan to defend our position vigorously as we prepare for a trial, which is scheduled in early February. But it is important to note that we are not prevented from continuing to market, sell or manufacture this technology. With respect to the monetization, it includes everything from going direct to the end users, but also can include collaborating with the value-added resellers or with one of our peers. We could license the technology, that's probably a less favorable option for us simply because what is required with a license is somebody has got to do all the engineering work, do all the design, qualification testing and you're really a couple of years down the road before that product gets to market. And our view is if we do a more business-to-business supplier model, it's a win-win-win. It's a win for us, we're manufacturing the technology components of VXTe, it's a win for the supplier to the end user because they get that technology without having to spend a bunch of money and capital in R&D and the end-user gets the benefit of the savings. So we believe we can sell the complete kit or portions of the kit and also it gives us an opportunity to pull through some of our other products in that E-Series such as wellheads and expandable liner hangers and conductor connectors. So we view that as probably the best option to get this product to market quickly.

That was a very helpful overview.

Very intriguing technology. Nice to hear from someone who actually comes from the engineering side as well; that was a good explanation that even a dumb finance guy can understand.

Shifting gears to the competitive landscape, clearly the market turmoil we've seen since 2014 alongside the recent headwinds in offshore activity, those two items have coalesced to change the competitive landscape a bit. Do you view the subsea equipment market as taking on more of an integrated approach over time or do new customers still kind of want that à la carte option that they've historically wanted?

So our experience in talking with customers is there are some that like that model and they are exclusively going down the path of that model. There are some that say it applies here, but it doesn't apply there, and then there are some that say, I don't like that model and I'm going to continue in my existing structure that I've been doing. So it is a mixed bag. But again, I'd just repeat that our view is that the technology always wins and so if you just look at the broader market, we're selling liner hangers to one of our peers down in South America and they're putting it as part of an integrated package for them, which is not uncommon. So our view is we're willing to work and expand the relationship with these customers and we're agnostic to whether a customer likes the integration model or not. If they don't like the integrated model, then we'll sell direct. If they do like the integrated model, then we can partner up with somebody that can offer that particular structure for them.

Okay. And shifting gears a bit to 2021 as a whole. We've had one of your peers come out and frame the market in 2021 in terms of subsea inbound likely being flattish on a year-over-year basis, and I know this is an open market that is difficult to predict accurately over the next 12 months. But as we sit here today, could you at least give us some qualitative color on how you see orders progressing over the course of 2021 relative to 2020?

Sure. For 2021, I think we're not really expecting a big increase in orders. The best case scenario, we see some commodity price stabilization at a higher level that peaks the interest of our customer base such that we might get some order pickup in the second half of 2021. We would expect Europe to be one of the brighter spots and Brazil will be better positioned. US market, I think Gulf of Mexico is still going to be a little bit tough, but we are still optimistic that we'll have some first half 2021 tree orders and then get some new installations down there as well. Specifically in Europe, Norway remains a bright spot. There are some regulatory incentives that got put in place in Norway to help stimulate that market and things are quite active there. West Africa could see some increased activity in 2021, Asia-Pacific has slowed significantly, but national oil companies are still remaining active there and so that's really where we focus a lot in the Asia-Pacific market. And finally, really the Middle East jack-up market is beginning to trend up and we recently have qualified some of our mudline suspension products throughout there and we already have a pretty good downhole tools presence there, so we're feeling pretty good about getting a little bit of uptick in the Middle East from that market.

So good to hear with respect to the Middle East. You know this last quarter was a relatively painful quarter on the activity front, but they definitely want to keep their productive capacity up. So that's good to hear. Sticking with orders, should order levels remain depressed and then rolling costs into the equation, Raj or Blake, is there more that you all can do on the cost side? You've done so much heavy lifting already. If so, could you peel back the onion there a little bit and frame what buckets incremental costs could come from to the extent there is more to do on that front?

So Raj has been instrumental in these efforts on our cost-out program, so I think it's best to let him answer this one for you.

Thanks, Blake. So guys, I mean, first I want to thank you all for giving me the opportunity to address this. Our commitment to managing costs, right, especially in this environment. But before I get into this cost management topic, it's important to recognize that these cost reductions have been difficult for some of our employees who were impacted through redundancies and position eliminations. These decisions were not taken lightly, but unfortunately were necessary given where the market was. We have demonstrated our ability to manage costs and our commitment to run the business efficiently and I will say that we rely heavily on, I talked about the 2019 transformation and that basically gave us the playbook on how to execute on cost rationalization and we viewed it not simply as just a straight out cost takeout, but as a development of a platform. We've implemented lean management techniques; this helps us leverage every dollar of cost. I'll give you examples, right. We've done consolidation of manufacturing into centers of excellence. This enables us to scale and reduce manufacturing complexity. We've created a supply chain capability as well as we scaled SG&A through centralization of our business processes. So all of this, actually, if you look at it, it's not just going in and doing a headcount reduction, it's a very thoughtful exercise that we go through. Getting to specifics right now, I think you understand the sensitivity around this, but I want the market to understand that we are confident and we have the toolkit in place that we can manage our costs. You know that in 2019, we took out $50 million, this year we are on track to take out slightly over $20 million. We're way ahead of our plan and that's part of the reason why we saw in Q3 alluded to the fact that margins were held because we had cost takeout, a lot of which accelerated in the Q3 time frame.

We certainly agree there and the numbers reflect great work on the cost-out program. Shifting gears a bit, there have been a number of headlines made in recent months, if not quarters, that the energy transition is starting to take hold from the IOCs and most of them are starting to increase their exposure and their go-forward investment to a lot of these new energy and nontraditional oil and gas endeavors moving forward. Clearly that oil and gas piece of their business is going to have to finance and is being pushed into renewables moving forward. But I wonder if you could share your thoughts as you talk with your IOC customers as it relates to their commitment to ultra-deepwater maybe over a 3 to 5 year time horizon and as we think cycle-to-cycle, I was hoping you could share your thoughts on where ultra-deepwater in particular sits in the supply stack moving forward?

So I'd say it's an interesting question. We've seen a lot of announcements as you noted. Most recently, mid-October, I had the pleasure to sit on a much delayed OTC panel on sustainable deepwater economics that had a fair number of our customers and, in fact, I think they were all customers, and this question came up and BP representatives did provide some color on that, which I thought was quite interesting. The summary of that color was that while they are all in different ways investing in renewables, neither one of them noted any material reduction in capital going into that deepwater environment. Those plans were still ongoing, but their focus had shifted more to reducing their carbon footprint, which quite honestly that's one of the byproducts of our E-Series products. So we're pretty lock step with them in doing that. The reality is cheap, affordable energy is required to bring people out of poverty. I'm proud to be part of this industry that has done that and I think this industry still has a lot of legs left in it, and I think we'll be drilling deepwater for years to come. So I think this will continue on.

Thanks for that Blake. And then Dril-Quip, you guys always do a good job of rolling out new equipment products and technology offerings and that kind of engineering and design really is in your DNA. But more recently, M&A has also become part of the discussion really across the space. Given your balance sheet for Dril-Quip in particular, we certainly have discussions with clients about the potential for M&A involving Dril-Quip. How do you envision Dril-Quip playing offense and growing both the top line and bottom line going forward and how do you balance those organic and inorganic opportunities?

So you're right. We were in a pretty good spot from a balance sheet perspective. Raj has been heavily involved in really the corporate and capital structure side of the business and I think it's best that we hear from him in this regard.

And I think, guys, I think we can all agree this industry needs consolidation, right. But you see the levels of debt out there with a lot of these companies and that's making it difficult for consolidation to happen. We are very clear as Blake mentioned, we are going to maintain a very strong balance sheet. That is a key priority for us. Also, we've looked at things and we see bid-ask spreads that need to make sense. If I could describe it, I'll just say there needs to be a bit of self-actualization in the market, and I think it's taking some time to soak in. So we are very clear, we've got a framework in place and when we look at acquisitions, they need to be transformational in nature. To emphasize consolidation, there needs to be scale. We will be reticent to assume any debt just to make the transaction happen, especially in this market. Any opportunity will need to have meaningful market share and it also has to deliver ROIC — return on invested capital — which just means that it has to be cash flow accretive across the cycle. That's not to say that we are not looking at smaller tuck-in type acquisitions that will advance our technology road map. As Blake mentioned, technology is a key priority. It's a focus area for us; it's, for lack of a better word, our secret sauce. And we will look at these opportunities as they arise. We are confident that we'll be able to execute on an acquisition — we've developed the competency and the framework. When we did the recent transformation, it was basically us having to reintegrate Dril-Quip and through that, we developed the toolkit that's put us in a very good position for us to take in another company and optimize that operation within this industry. But I want to leave the key message: scale is the key to improving the business. We are also looking at, as Blake mentioned, how do we expand into certain product lines, but it's critical how we go about it. Very excited about deploying the VXTe technology. I think it's going to be critical for us in terms of capturing more market share and we are collaborating with a lot of customers as well as other players and we see them using this technology as they deploy their subsea production systems. So that's the view that we have right now on M&A.

Well, thanks for that Raj and you guys have certainly been very clear with respect to the framework and the approach you use in M&A moving forward. One follow-up question as it relates to M&A: when you think about potential target companies out there or just M&A activity in general, are we talking mainly offshore-oriented companies that you'd be most interested in or does adding some exposure to the onshore side of things make some sense for you guys moving forward?

So we continue to believe that offshore is the best place for us, that's where our DNA is, that's where we're focused. That said, we would not exclude an acquisition that had some land component if it helped us along with our technology road map, and that offshore space, you can look at TIW where we've taken the expandable hanger from TIW and developed it into the XPAK system which is really an offshore related product. But to be honest we're really more focused on differentiated technology with high barriers to entry that is what you typically find with an onshore business.

Basically, are you looking to leapfrog the technology value chain?

Yes, yes. Good, good way to say it.

Alright. That's helpful color. And the TIW balance sheet is a good blueprint; that's definitely helpful. We've mentioned the balance sheet a few times and it is a bulletproof position given the net cash position that you guys have. What level of net cash do you believe you need to maintain on the balance sheet given the current macro backdrop and the 2021 maybe even 2022 outlook because I know you guys are more long-term focused? And then given the free cash flow that you guys are generating now, married up with the current stock price, has your thought process around share buybacks changed at all?

No. Yes, jump in here Raj.

Yes, thanks Blake. So cash on the balance sheet, there are a couple of things that I'd like to just go through here. One thing we do use our cash flow for is to signal to our customers and it gives our customers confidence in our ability to be there. As in, they have assurance that we are not going anywhere, and we're going to be around to support them through their projects. As you know, we have larger competitors in our space and it's important for our customers to know that we can weather the storm and we're well positioned to do so because we've got what I call a fortress balance sheet. I've mentioned that we keep cash on hand for working capital needs, especially when an upturn happens. We have a projects component in our business, which initially will consume some working capital, but as we go through the project, it starts to return cash and if you look, I mentioned that we are not looking to have debt on our balance sheet. So we do want to have some dry powder in hand, that's to support some of the earlier comments I made on tuck-in type technology acquisitions and how that helps with R&D roadmaps. So these are the key areas and then if you look on a yearly basis, we have maintenance level CapEx that we need to meet, anywhere from $10 to $15 million. So if you look at all of that, you talk about the upturn, you talk about having some dry powder. I think the levels that we have right now are quite fair in terms of our cash balance.

Got it.

Now to address your point on the stock buyback, our thinking has only changed insofar that we want to maintain some level of dry powder and also maintain cash to provide customer confidence that I was addressing earlier.

Okay, very helpful review Raj. With that, we've really ticked through our list of questions. I just wanted to open the floor up to either of you for any concluding remarks that you might have or anything that you want to make sure to message to investors that we didn't touch upon to the extent there is anything.

Just a close out Taylor and George. Number one, I appreciate you guys taking the time to put us on. First off, I have to thank globally the employees of Dril-Quip for their resilience during this downturn. It has been an incredibly volatile year, a lot of challenges, particularly our essential workers. A large portion of our workforce has been coming in and working every day, those who work in our manufacturing organization whether it's machining, welding, material handling, inspecting, all our aftermarket assembly people and then our offshore service personnel that have been going offshore on rigs throughout the downturn. They've done a fantastic job of just continuing on. I'm really proud of the efforts we've done in restructuring the company and repositioning the company to be much more flexible. I think we're in a position that we can respond to the market whichever way it moves. Obviously, I hope it moves up and I'm confident in the longer term that it is going to move up. But to put it short, I just really like our position, I like where we are, I like the balance sheet we have, I like the structure we have. I think we've got a strong management team that is prepared to run this business and I think brighter days are ahead for us.

Thank you Raj and thank you Blake, both very much for your time. With that, I will turn the call back over to Paul.

Thanks, George, Taylor. Good talking to you all.

Yes. Thank you, guys.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.