Patricia Gil - IR Cindy Taylor - President & CEO Lloyd Hajdik - EVP, CFO & Treasurer Chris Cragg - EVP, Operations.

Jim Wicklund - Credit Suisse Sean Meakim - JPMorgan Stephen Gengaro - Loop Capital George O'Leary - TPH & Company Ken Sill - SunTrust Vaibhav Vaishnav - Cowen Harris Pollans - Wolfe Research.

Welcome to the Oil States International Third Quarter 2017 Earnings Conference Call. My name is Victoria and I will be your operator for today's call. At this time, all participants are in a listen-only mode and later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

And I’ll turn the call over to Patricia Gil, Investor Relations for Oil States. Patricia, you may begin..

Thank you, Victoria. And good morning and welcome to Oil State’s Third Quarter 2017 Earnings Conference Call. Our call today will be led by Cindy Taylor, Oil State’s President and Chief Executive Officer; Lloyd Hajdik, Oil State’s Executive Vice President and Chief Financial Officer; and Chris Cragg, Oil State’s Executive Vice President, Operations.

Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain information other than historical information, please note that we are relying on the Safe Harbor protections afforded by federal law.

Any such remarks should be weighed in the context of the many factors that affect our business, including those risks disclosed in our Form 10-K along with other SEC filings. I’ll now turn the call over to Cindy..

Thank you, Patricia. Good morning and thank you for joining us today for our third quarter 2017 earnings conference call. Last week, we issued a press release updating our earnings guidance due to impacts from hurricane Harvey.

Hurricane Harvey and historically low levels of global deep-water spending impacted our offshore manufactured product segment during the third quarter. However, we were able to report a 16% EBITDA margin in the quarter and maintained a quarterly book-to-bill ratio of 0.99 times. This act despites some transitory impacts from the hurricane, our U.S.

land completion services revenues increased 6% sequentially, in line with growth in the third quarter average U.S. rig count and represented 78% of our third quarter completion services revenues.

As further described in our press release, we’ve reported a net loss of $0.27 per share during the quarter after adjusting for $0.01 of severance and other downsizing charges and $0.02 related to a discrete tax items. Lloyd will take you through more details of our consolidated results and also provide highlights of our financial position.

I will follow with more details by segment and provide additional comments on our market outlook..

Thanks Cindy any good morning, everyone.

During the third quarter, we generated revenues of $164 million while reporting an adjusted net loss of $13.7 million or $0.27 per share, which excluded $0.01 per share of severance and other downsizing charges and $1 million of additional tax expense or $0.02 per share due to our decision to carry back our 2016 net operating losses against taxable income reported in 2014, which resulted in a loss of certain of the deductions that we had claimed previously.

Third quarter adjusted EBITDA totaled $9.2 million and our adjusted EBITDA margin was 5.6%. We generated $31 million of cash flow from operations during the third quarter and invested $7 million in capital expenditures.

For the first nine months of 2017 we invested $20 million in CapEx and we estimate that our 2017 capital expenditures will range between $30 million and $35 million.

We utilized our third quarter free cash flow, which is after CapEx to pay down our revolving credit facility by $31 million net of borrowings and for the first nine months of 2017, we generated a total of $56 million of free cash flow utilizing $13 million for M&A activities, $16 million for share repurchases and $27 million for revolving credit facility repayments net of borrowings.

As of September 30, our total debt to total $20 million while our cash on hand exceeded our total debt by $46 million. We ended the third quarter of 2017 with total liquidity of $213 million which is comprised of $147 million available under our revolving credit facility, plus cash on hand of $66 million.

In terms of our fourth quarter 2017 consolidated guidance, we expect depreciation and amortization expense to total $26.2 million, net interest expense to total $1.1 million and corporate cost to total $12.6 million.

Our fourth quarter 2017 consolidated effective tax rate benefit is expected to average approximately 28% resulting in a full year effective tax rate benefit of approximately 26%. And at this time, I would like to turn the call back over to Cindy who will take you through the details of each of our business segments..

Thank you, Lloyd. In the following segment comments, the term adjusted EBITDA excludes severance and other downsizing charges. In our well site services segment, we generated another quarter of sequentially improved results with revenues up 11% quarter-over-quarter totaling $77 million and adjusted segment EBITDA up 31% totaling $7 million.

These sequential improvements were driven by a 2% increase in the number of completion services jobs performed, a 3% increase in revenue prior our completion services job and improved utilization for our drilling services business, which averaged 34% utilization for the quarter.

Our well site services segment benefited from ongoing well completion activity as evidenced by a 6% sequential increase in U.S. land based completion services revenue in line with the increase in the average U.S. rig count for the third quarter.

Our third quarter results in this segment were moderated somewhat by lower international results, partially offset by improvement in Gulf of Mexico, despite some storm-related interruptions during the quarter from hurricane Harvey and Irma.

Our well site services segment incremental adjusted EBITDA margins were 22% in the third quarter, but averaged 47% after severance impacts for our completion services business.

Lower segment incremental resulted from our drilling services business, which incurred higher than normal mobilization revenue totaling $2.1 million, which contributed essentially no margin in the quarter. Our year-to-date 2017 completion services incremental adjusted EBITDA margin averaged 43%.

Our fourth quarter 2017 results will be dependent on seasonality and customer drilling and well completion activity during the holiday, which can be difficult to predict. However, at this time, we believe U.S. land-based activity will remain steady at current levels.

We estimate that revenues for our well site services segment should range between $76 million and $80 million after factoring out the unusually high mobilization revenue and our drilling services business in the third quarter with segment EBITDA margins of 9% to 11%.

This implies about 6% sequential revenue growth in completion services at the midpoint of our guidance. In our offshore manufactured product segment, we generated revenues of $87 million and adjusted EBITDA of $14 million during the third quarter of 2017.

We reported an adjusted EBITDA margin percentage of 16%, which came in at the low-end of our guided range despite impacts from hurricane Harvey.

The 15% sequential decrease in total segment revenues was driven predominantly by a decrease in sales of our standard connector drilling products, coupled with decreases in our production and subsea product lines, which are largely manufactured in our Houston facilities. Our shorter cycle product sales, which are largely driven by U.S.

land-based activities comprised 43% of the segment's revenues during the third quarter. Sales of our short cycle products decreased 6% sequentially as order inflow was temporarily affected by customer delays and logistical issues, which have now returned to previous levels.

Orders booked for the quarter totaled $86 million resulting in a book-to-bill ratio of 0.99 times. Backlog totaled $198 million at September 30, essentially unchanged over the last four quarters. Our third quarter bookings included a larger backlog addition involving a multiyear services contract for a customer in Latin America.

We continue to believe that our backlog at trough level and expect to receive additional awards associated with major projects sanctions over the next couple of quarters. Demand for our shorter cycle products is expected to remain steady given the outlook for U.S. land completions activity for the remainder of the year.

Major project-driven revenues are expected to improve in the fourth quarter as we returned to post-hurricane production levels in Houston with fourth quarter revenues in this segment estimated to increase sequentially and range between $90 million and $100 million while EBITDA margins are expected to average 15% to 16%.

In conclusion, despite impacts from hurricane Harvey, our total company results still came in near the low end of our previous guidance. Fourth quarter results for our U.S. land centric services and manufactured products are expected to remain steady barring any significant seasonality or holiday downtime.

We continue to anticipate improved major project order flow for our offshore manufactured product segment over the next quarter and into 2018. That completes our prepared comments.

Victoria, would you open up the call for questions and answers at this time?.

Thank you. [Operator instructions] Our first question comes from Jim Wicklund from Credit Suisse. Please go ahead..

Good morning, guys..

Hi Jim..

Cindy, you talk about customer delays and logistical issues, can you build more detail or granular on what the logistical issues were and if the customer delays was that due to weather or other issues?.

Well if you're talking about Houston region broadly, I would kind of focus on two things, number one, we had our own issues obviously for roughly 10 days in our five manufacturing facilities, one of which was flooded with work relocated to other one.

So, most of that I really focus on is very quantifiable cost or workman type issues that virtually anybody that manufacturers in the city had if you think of pictures and I think understand that.

But if you talk about certain things like supply chain was disrupted that also impacted some of our ongoing major project work, the one that's harder to define is shorter cycle meaning we had a lot of distribution centers in Houston where we ship our short cycle products.

I can't conclusively tell you exactly how much of the deferred revenue related to hurricane but I live here and so, common sense tells you if you can't drive in a street of Houston they're not going to be receiving a lot of product in the distribution facilities.

And that's why we've been reluctant to specifically quantify a number, the direct impacts are pretty clear when you pay people for work when they're not at work.

The indirect effects are a lot harder to quantify and again, that's kind of why we hadn’t put a precise number, but that gives you a little color on major project impact in our facilities as well as some of the shorter cycle impacts..

And this is way you think the major projects revenues will improve in Q4 and into '18 it's not because of an increased activity your business is just you won't have those issues in Q4?.

Yeah, there is two things going on in Q4. We're guiding to improved revenues, one is going back to normal operation in our Houston-based manufacturing operations where we know we had revenue deferrals for about 10 days.

And so, we see improvement in those Houston-based operations, just recovering roughly to 10 days that were lost and catching up on some of the major product work. We also had unrelated timing delays and our standard connectors, which can be lumpy quarter-to-quarter but we see some of the shipment from Q3 and Q4 that we expect.

Those are the two major things that resolved in our revenue forecast improving fairly considerably from Q3 to Q4..

Okay. You guys have spent $13 million on acquisitions so far, the complaint everybody has is the structure back where they were when oil was $26 which is ridiculous.

I was just wondering if the valuation out there on potential acquisitions is seen as improving, I know that we talked a couple quarters ago about how private equity in the IPO market was pricing things out of reasonable reach. Now the IPO market appears to be somewhat more and the stock's evaluations have come down.

Is the M&A market improving in at all or do you expect it to?.

We're seeing what I would call a higher rate of inbounds and some of these we probably had ongoing discussions and we do believe that valuation discussions are more reasonable and I would put this more in line with what we recall normal M&A value discussions and I know you know that I thought we got almost irrational valuation discussions early this year but I think a sense of normalcy has returned.

That doesn’t mean you're going to buy a really high-quality operation at basement pricing, that's not the case, but I think the valuation discussions have come into a much more minimal range..

Okay. And my last if I could, you put several rigs back to work this quarter and we've been hearing for some while that only rigs that are going back to work are super spec high-end top-of-the-line rigs and you put three back to work.

Can you talk to us just a little bit about what the rig market seems to look like?.

Well and we're very versatile. We do have lower spec rig fleet if you want to call that's geared more toward vertical drilling, but they do have high end brand-new equipment on there which allows them to do things by top hole drilling very efficiently at a much lower cost for even some of the horizontal wells.

We're just doing the early work and so I think a lot of people in this low crude oil price environment getting very smart on how to optimize their all-in AFE cost and so we've got some demand while we don't have the high spec horizontal rigs. We got some demand and support from two things. Number one is a little bit of top-hole horizontal work.

We also do salt water disposal wells which are facilitating horizontal work and we've been in business a long time and are a good operator at a low cost and we have legacy customers that tend to take us with them when the work justifies it. And I would just join and say, that's kind of three things I would point to in terms of improved utilization.

I did want to point out that mobilization revenue because that much mold revenue and it is indicative as you say of incremental rigs going to work and it can’t be positioning at a greater distance and while we know make a profit on that it incrementally get reimbursed by our cost and allows us to improve that utilization.

It can’t just get any significance in this quarter however, margins are little bit in the quarter and I don’t wanted to scare everybody in thinking we're not guiding to much of an improvement in Q4 because we don’t expect the same rate of mold revenue in Q4 that we had in Q3..

Okay.

I am on sheet and throw in one more if I play on the back of an envelope your EBITDA guidance for next quarter appears to be a little bit below consensus without discussing complete number, does that sound rational?.

Well, it does and I would almost challenge it on the call to tell me what market guide a point will lend it also about 10% revenue growth and materially expanded margins from what we had in 3Q. And so, we're progressing well. It's a difficult environment.

I look every day at my incremental but our incremental and completions services have been at or above what we guided the market to. We have met or exceeded rig count metrics in the U.S. and acknowledging that while fairly small international has drug us down a bit this year, our book-to-bill we guided to one or better.

We're at one to date in our offshore manufactured products we expect improved bookings in Q4 and I think the resilience of our offshore manufactured products in a very difficult environment has been acceptable and so again….

I think it's exceptional more than acceptable. I think it's guess more exceptional than acceptable considering the business..

Yeah, I appreciate that so very much, but I am well aware that at the mid-point and I'll also point out we tightened our guidance range for well side services. There has been a tendency for everybody to go at the tight end of a fairly wide range, which may be part of what's leading to first call getting a little bit ahead of us.

And so again we're trying to respond to that, tighten the range, but nonetheless I always study my business and we've shown sequential revenue improvement and completion services every quarter since the second quarter of last year, which as you point out was a low crude oil price environment.

So, I think we're getting there, but I am also very cognizant of the fact that our shareholders need to see some year-over-year improvement in ’18 and we are highly focused on that..

Cindy guys, thank you all very much. Appreciate it..

Thank you. Jim..

Our next question comes from Sean Meakim from JPMorgan. Please go ahead..

Thank you. Good morning.

Cindy, I was just hoping to maybe get a little bit more detail on the completion services business, just how product mix within the segment is tracking? How that may be influencing pricing mix and then the other part of that equation is how the Gulf of Mexico outlook would be for fourth quarter and into next year, just all those pieces put together?.

Yeah, I appreciate the comments. We are continually seeing some migration to our more proprietary product line the things that’s why you're continually seeing our average price per ticket increase because there are some modest I'll call it mix improvement at that time.

As it relates specifically to isolation in our frac stack work both of them saw some improvement in the third quarter and so I think those trends are occurring. It can always be a little bit what company is active in the quarter and what is their preferred completion method.

Again, a lot of the conversations this quarter, are we doing the high-end pad drilling and multi stage completions, frags are regarding and so we all experienced a little bit of give and take, but the macro trend for higher end equipment I think is continuing..

Okay. Good. Okay. That makes sense.

And then just on the product business, just thinking about larger project, just putting aside from the catchup that you expect this quarter as new customers are getting the budget season for 2018, what are the main factors that you're looking forward to get a sense of getting orders in the bank here in the first half of next year? Is it oil prices, like kind of where Brent is today, is sufficient because obviously you got year-over-year improvement at bookings.

Just what are the keys that you're looking for as we get into 2018?.

Well we're very granular in our product business and these are very specific projects, specific geographies that at this point in time, if I got it in my bookings forecast is probably based on lower Brent pricing than what we're seeing today.

So, the movement and again I am global with my offshore manufactured products how we tend to look more towards global pricing, Brent pricing as a driver there and so I would say the recent improvement in price is a little bit of an upside.

The things that are in our near-term forecast were largely predicated probably on $50 Brent would be my guess at this point of time. But I really think a lot these have come down to re-engineering, re-designs with a lower long-term price point.

We can all guess as to what that is because the reality this production doesn’t come on for four, five year and so, it's not these projects are really not dependent on near term spot pricing for Brent.

However, I think optically the micro environment as inventory continues to trend down and we see a little bit of improvement not only in Brent but also in WTI prices I think that will be helpful as we move through what is now becoming deep in our customer's budget cycle..

That all makes sense. Thank you, Cindy. .

Thank you, Sean..

Our next question from Stephen Gengaro from Loop Capital. Please go ahead..

Thanks. Good morning..

Good morning, Stephen..

Can you just clarify, you talked about the mobilization reviews in the third quarter that had an impact that helped the number, did you quantify them or did you not want to specifically?.

The mobilization revenue in Q3 was $2.1 million at zero margin or roughly zero margin. I would say a more level is 800,000 or 900,000 in a given quarter. Sometime you make a few thousand dollars, sometime you lose a few thousand on those modes, but that's a point of reference for drilling services modes. .

Okay. That’s helpful. Thank you.

And as you look from here, obviously the down is in very good shape, where do you stand on potential repurchases at these levels?.

Well, there is two major capital allocation opportunities that we have that we routinely look at which are both share repurchases and M&A and I'll tag into my comments with Jim, we're seeing more M&A in-bounds and we think valuation are coming in at least a reasonable level.

As I've said consistently for two years that with our totally reduced size, through this downturn, we need scale. And so right now if we can get a reasonable M&A valuation, our focus is clearly on trying to close some transaction.

That doesn’t mean we're opting out of share repurchases, but there is a limited amount of liquidity available again at trough level of activity and so we have to be selective in terms of which way we go. So, I still favor share repurchases at certain points, but heavily, heavily focused on growth and scale..

Thank Cindy, just one final one, as we think about the completion services side well side, how would you think about growth relative to rig count growth in the next several quarters given there is backlog of uncompleted wells, some of which probably don’t ever get completed.

But it would seem to maybe give you a little bit of a boost relative to the rig count in the next couple of quarters, is that fair or we're you backing up of that?.

No Stephen I think it's very clear and you know I forget the statistic I read the other day, the rig count is flat to down in lower 48 for 10 of last 16 rigs. It's not a great micro. However, in the process we threw the first nine months we build quite a lot of drilled but uncompleted wells.

The estimate I was provided was about 7300 drilled but uncompleted wells. I am not sure why you said some of those may never be completed. I don’t think that’s the case, but what that can do is sustain activity to that flattening of the rig count we've seen over the last 16 or 17 weeks, that would be my view..

Great, Thank you..

Thank you, Stephen..

Our next question comes from George O’Leary from TPH & Company. Please go ahead..

Good morning, Cindy. Good morning, Lloyd..

Hi, George..

Hi, George..

Just curious to expand on Jim's question a little bit on the M&A front, I guess maybe you could characterize the deals you've done so far to Jim's point have been a little bit smaller in nature, if the deals you're looking at now are maybe a little bit larger and then what end markets those transactions would fall into and then where you would most like to execute M&A, if it's matching up what’s potentially on the table?.

No, I will not tip my hand all those seller that do that things, but I am joking of course. So, your first question, you're right, we've done I think $13 million these are really very small product line enhancements within our obscure manufacturing products that we think help -- they're not game changers by any means.

We do like tuck-ins in both businesses and there are some tuck-ins that we're looking in and Chris' business and completion services space. Broadly speaking as I've said before, we will look at both our major segments for additions there.

I would say that the more visible near-term opportunity is going to be in completion services or in towards shell activities. The visibility there is obviously fairly clear. We're very experienced in deep water markets and in our own product lines and so we cannot think selectively, identify opportunities there as well.

But we're standing by our criteria in terms of high technology, invincible product lines that generates fairly immediate contribution and I think today that I am being intellectually honest we're seeing more opportunities geared towards completion services at this point in time..

Great. That’s very helpful color. And then you mentioned and you can see it in the size of the job tickets that mix is a little bit of a tailwind for the completion services business.

I get a sense that pricing is still kind of stuck in neutral, any green shoots on the pricing front or any thoughts around if this momentum continues at what point or how long the run way is before pricing make a gain in that business?.

Obviously, this is totally an obvious comment, but where we have a tightness of equipment and where our people are stretched in those are areas where we are going to push for some selective price increases which we are doing.

It’s not broad based at this point time, but I would say generally speaking the market is tightening or had been again kind of rig count flattening from here we got to evaluate that just a little bit, but there is going to be opportunities that it would be a mistake to assume that broad based significant double-digit type pricing is going to occur in the near term, I just don’t see that..

Sure, that makes sense. And maybe if I could sneak one more and I thought the multi-year services contract in Latin America comment was interesting. Could you provide a little bit more color on the nature of that work that’s offshore versus onshore just any incremental color you could provide there will be helpful..

Well, it's absolutely offshore that’s in our offshore manufacture product business, which is leveraged to offshore activities and I'll just generally say, we've made some investments particularly in Brazil and we're looking to get a return on those investments and with lot of service work its lower risk in service work and generally good margins there.

So, we're really trying to enhance our global operations and that is not hugely material, but it's greater than $10 million or we wouldn’t be highlighting it and so we're pleased to have it. .

Thanks very much for the color guys..

Thanks George..

Our next question comes from Ken Sill from SunTrust. Please go ahead..

Good morning. Thanks for getting me in. Jim asked most of the good questions early on. But we've talked about M&A, you're talking about trying to move up the value chain or into higher value-added products on the well sites completion production services.

But the job tickets only being up 2%, I guess you're looking for rig count plus growth, should we be inferring that the job ticket number should be going up little faster Q4 versus Q3 because of hurricanes or I don't want to get ahead of reality here..

Well, our overall guidance was I believe up 6% Q3 to Q4 in total and that is mostly weighted to lower 48 and so I would say part of that, in well site there wasn't broad based hurricane impacts but the Gulf of Mexico and the Eagle Ford plus just personal dislocations.

We had probably 9% to 10% of our workforce that have flooded homes, some of which rotate obviously even into the Permian and so a little bit of an impact there but I think more or so it's activity based and it's generally what we're seeing at the trend right now in the market..

Yeah. And then I don't want you to get out of your crystal ball, there is a lot of calls that deep water is where you want to be now because it's going to get better I think some people maybe more optimistic than I am. But you look out several years, it seems like you're going to need more deep water.

Do you have an opinion I am looking at you got at least sell in Brazil where Exon has been in before, majors are there, Mexico opening up, the Gulf of Mexico is got a lot of people? What international offshore regions do you think have the prospects of improving sooner than others if you were to wait probabilities?.

Well that's an interesting question, if I said on earlier calls, if we're looking at our major project award opportunity, while smaller and longer-term history it's up a lot from where we've been the last two or three years. That it's been no single customer or no single geographic basin that's driving the near-term award opportunities.

I've always said that if the Gulf of Mexico can get a tailwind, it moves faster because of the operator, the breath of operators that are there and the infrastructure that is there. There is a lot of interest in Mexico. I think that's going to tight a little while but there is certainly a lot of interest there.

Brazil is a unique market because they got great rocks and the operators had good success there. As you mentioned, the lease sale there and they come in with better economic terms for the operators and they’ve reduced or eliminated some of the local country content requirement.

So, it's very clear that they're trying to accelerate activity after probably three years of the turmoil that they’ve been in. So, it's hard for me not to favor activity in Brazil other than longer-term just because of recent actions and quality rock.

But I don't think that's immediate, although there will be incremental work relative to the levels we've seen before. That's not to penalize any other market, but I would say it's more in the America there are certainly things in Asia, but they're more project-specific, but no secrete everybody is watching award activity for quite a lot..

All right. Thank you. I appreciate your comments..

Thanks Ken..

Our next question comes from Vebs Vaishnav from Cowen. Please go ahead..

Hey good morning, Cindy and thanks for taking the questions.

Just in terms of offshore orders so let's say that Latin American order was $10 million so base orders was $75 million, is this a good number or base line number to think of going forward?.

So, I think what I heard you say was is or I think what was the order, is that a good run rate order flow and I think I'll only comment there we're expecting improved bookings in Q4 from that level and even the order the booking of this quarter i.e.

third quarter we felt like there was some hurricane impact in order delays there as well part of which we think will pick up in Q4. So, it's hard, you never know what order you though would come in Q3 not come in yet, but we think that's a lot of the disruptions may have caused part of that, but we're clearly forecasting improved order flow in Q4..

Okay. And I guess if we go back to earlier comments like few last callers comments, there were like a couple of awards that you guys are expecting I'm guessing that's the award you are directing to in the fourth quarter..

I am not sure I understood the question..

If we go back to last quarter's call I think there were like two awards that you guys were hoping to get in the second half and I just want to confirm that when you speak about fourth quarter orders being higher those are the two awards that you were talking about or are there any more in the pipeline?.

One of the awards that was forecasted by us came in, in Q3 that it the service order we were talking about. There are one, possibly two that we're looking for in Q4. However, timing is uncertain but we're counting on at least one..

Okay.

And one last question if I may, hurricane impacts, any lingering impact going forward or is that all outset at one facility which is still underwater?.

We don't really embedded in our guidance is the thought that we responded to the activities that manufacturing facility is still down because we're testing and in some cases replacing machinery that was damaged there.

We have the luxury if you want to call it of having multiple facilities and in this case, it's subsea product offering that we've been able to shift into our other facility temporarily.

We got the machining capability, the assembly and testing capability in our South Houston operations that we believe that we're not going to have lingering impacts even though one of the facilities is still down at this point, and I don't have a targeted reopening date, but it not far off. It should be in Q4..

Okay. That's very helpful. Thanks for taking the questions..

Our last question comes from Chase Mulvehill from Wolfe Research. Please go ahead..

Hey this is Harris Pollans stepping in for Chase..

Hey Harry..

Hey how is it going.

So, for the 15% to 16% offshore margins, it sounds like the mix is going to have a negative impact in 4Q, is that fair to say?.

Yeah, I would say that's it, plus one of our larger facility is just -- different facilities have different work at given points in time and one specific facility is a little bit slow right now that's having a bit of a drag on the margin, but there is no trim line issue there at this point in time.

If we get the bookings that we're hoping for, I think our margins will be very resilient and going into 2018..

Okay.

And will that mean 4Q's bottom of the margins here in the offshore manufactured products?.

Well, the margin percentage possibly, but again we are predicting improved revenue as well, so little bit of an offset there..

Okay. So, on a percentage basis..

Percentage, yes..

Okay. And then any offshore color you can provide on '18 topline or margins I think you're not ready to do that..

No, not ready to do that. We're already going in our budget cycle. We had a history of really giving quarterly guidance simply because so much of our well site services business is a spot business dependent upon the rig count. I wish I was good as all you guys in predicting a rig count and second half next year, but I am not quite there yet.

But we are in the process of formalizing our budget and plans and we'll give you an update on the next call?.

All right. Just one more, for completions you said you're seeing a migration towards higher end products, proprietary products.

Are you seeing a meaningful improvement in pricing in completion services because of this?.

I think we spoke to that. Right now, it's more selected basis whether tied it's not necessarily broad-based, but there is some ability to improve pricing in selected markets..

Okay. Great. Thanks, so much guys..

Thanks Harry..

There are no further questions at this time..

All right. Thank you very much to all of you that dialed into the call. Victoria, thank you for hosting it and just on a more positive note. beautiful weather in Houston, October is great, and go Astro..

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