Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fortune Brands Third Quarter 2018 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Mr. Brian Lantz, Senior Vice President of Communications and Corporate Administration. You may begin your conference call. Brian C. Lantz - Fortune Brands Home & Security, Inc.: Good afternoon, everyone, and welcome to the Fortune Brands Home & Security Quarterly Investor Conference Call and Webcast. We're pleased to be here today to provide an update on our progress during the third quarter of 2018. Hopefully, everyone has had a chance to review the news release issued earlier. The news release and the audio replay of the webcast of this call can be found in the Investors section of our fbhs.com website. I want to remind everyone that the forward-looking statements we make on the call today, either in our prepared remarks or in the associated question-and-answer session, are based on current expectations and our market outlook and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. These risks are detailed in our various filing with the SEC such as our Annual Report on 10-K. The company does not undertake to update or revise any forward-looking statements, which speak only to the time at which they are made. Any references to operating profit, earnings per share or cash flow on today's call will focus on our results on a before charges and gains basis for continuing operations with the exception of cash flow unless…

Thank you. And your first question comes from the line of Dennis McGill from Zelman & Associates. Your line is open.

Hi guys. Thanks for taking the question. First one for you, Pat, I think you touched on all of these, but I just wanted to clarify, to make sure we've got the moving pieces correctly. When you look at the $0.22 reduction in guidance, can you just walk through the pieces again? I think you hit almost all of them there, but it'd be helpful to have them all at one time. Patrick D. Hallinan - Fortune Brands Home & Security, Inc.: Yeah, I would say, there's some the smaller pieces to get those out of the way first, I'd say, $0.01 hurricane, $0.01 tariffs, $0.03 Fiberon, so that's $0.05. And then the balance is market and security with about 75%, 80% of that being market and the rest being security inefficiencies.

Okay. Got it. That's helpful. And then, Chris, big picture when you thought about how the outlook for the rest of this year and how you're setting plans for 2019, I think you said most of the reduction in the outlook was on the new residential side. Can you just talk through what you're seeing now, whether that's in backlog or conversations with customers or what's just anticipated on your behalf versus from things that you're seeing in the marketplace? Christopher J. Klein - Fortune Brands Home & Security, Inc.: Yeah. I think sitting here 90 days ago in August, you're ahead of the fall season, and really starting later August and into September, we saw some builder weakness coming through on wholesale, and a little bit of R&R. R&R held up pretty well. But it wasn't as robust on the bigger ticket side of that market. So, as we look at the balance of the year, 5% R&R still feels good and I think looking into 2019 that's a pretty stable number. The real volatility is more on the new construction side, single-family new construction. We had assumed beginning of the year that that was high single-digit up to 10%, now it feels more like mid. And I'd say going into next year, that's probably about what we'll have. We'll have better look by the end of the year and we'll see where orders start to build. But I don't think that based on just around the country market-by-market, the discussions that we're having they're certainly price-pressure, interest rate pressure, in parts of the country, and I think it's easy to call out those parts of the country, but there are a lot of other places where the affordability level, in general, is still pretty good. Entry level, in…

And your next question comes from the line of Susan Maklari from Credit Suisse. Your line is open. Susan Maklari - Credit Suisse Securities (USA) LLC: Thank you. My first question is around some of the pricing initiatives. Obviously, it sounds like you're continuing to see success there, but I guess have you seen anything change, as you think about some of your more recent initiatives relative to the ones you've put in maybe more at the beginning of this year or last year? And how are you thinking about the trade-off between some of the price versus the volume, just given what we are seeing in the market? Christopher J. Klein - Fortune Brands Home & Security, Inc.: So, I think, philosophically, we've been consistent in taking bites out of it over time. So rather than wait and take bigger increases, we've been more frequent in taking smaller increases more regularly. So, we started this time last year as we saw on the Cabinet side, plywood tariffs come in, as steel and aluminum came in beginning of this year. We initiated pricing actions. And really through the year, I mean, we took pricing actions in August. And we took recent pricing actions that are going to kick in in several of our businesses in November. And so, being deliberate and not shocking the system has worked quite well for us. As we're trying to offset initially commodities, and now as we look at tariffs, it's a combination of pricing and the supply chain actions we can take and working our supply chain so that we're moving out of where tariffs are going to hit and being pretty aggressive in thinking about how to leverage our own capabilities. And we've got big operation in Mexico across all of our businesses,…

And your next question comes from the line of Mike Dahl from RBC Capital Markets. Your line is open.

Good afternoon. Thanks for taking my questions. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Hi.

Hi. My first question, just going back to the two questions on cost. The first one on tariffs and Pat I think you mentioned in your remarks that part of the free cash flow guide coming in is due to some working cap adjustments as you build inventory ahead of that. I think Chris has alluded to tariffs being roughly a $45 million impact, if the full $25 million goes into effect. I was hoping you could give us a little more color on what you were doing on the inventory side, and is that something that helps to offset some of the $45 million early in the year, or is that $45 million net of some of the adjustments you guys are making between that and other internal initiatives? Patrick D. Hallinan - Fortune Brands Home & Security, Inc.: The inventory stuff we're doing is very modest, single-digit millions, most of the free cash flow adjustment was driven by our income adjustment that you saw on the EPS, probably 85%, 90% or more of it. And that $45 million is roughly, a net of those inventory actions. That's kind of what we're sitting at.

Okay. Thanks. And my second question is kind of related, but just overall context of costs, when we think about those tariffs, I think some comments saying that some commodities may stabilize, and we've seen that as well, but just as you're planning your 2019, and what you're doing around pricing, what is the kind of net effect cumulatively of raw material inflation and tariffs that you're planning for in 2019? Patrick D. Hallinan - Fortune Brands Home & Security, Inc.: Well, we're not giving 2019 guidance yet, but I'll put some things into some context. One is, this year, 2018, our total cost of goods sold will be around $3.5 billion. So, if you had took our COGS base this year and you put it up against a worst case scenario of tariffs, the full-year at 25%, you're talking something that's barely over 1% of our total COGS base or something that's under 100 basis points of our net sales. So, certainly nothing we trivialize, because we're very returns and margin-focused, but something that is very, very manageable. As we look into 2019, most of our major commodity buckets, especially things relating to brass and steel have stabilized or declined. So for most of our major commodity-spend we're feeling like, unless there's some environmental change we're at tailwinds, about what we're expecting for next year, we'll focus on whatever plays out with tariffs, which we're preparing to deal with whatever comes our way. And we'll do it with supply chain and price, not just price. And then, we do expect ground freight inflation in the U.S. to persist, but that was something on the order of, call it, less than $10 million this year. So, these are things again we don't trivialize them, because we pride ourselves on being margin leaders. But we certainly feel that these are manageable relative to the 90-ish-million-dollar of commodity and freight and inflation we managed in 2018.

And your next question comes from the line of Steven Kim from Evercore ISI. Your line is open.

Hey guys. This is actually Trey on for Steve. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Hi.

I want to touch on your comment on Doors and Security first. You mentioned how you expect operating margins for the year to be 14% to 15%, and it really sounds like at that point your expecting margins in the fourth quarter to be below where they were in the third quarter and maybe even flattish year-over-year, which sounds like the headwind from Security is going to linger. So, I was wondering, if you could talk a little bit about how long you expect that those issues to kind of linger through the system? Patrick D. Hallinan - Fortune Brands Home & Security, Inc.: We expect to be through the operational inefficiencies by the end of this year. The leadership team there has gotten their arms around the problem. We have some new ops leaders in that business, and we'll finish the year with some of the inefficiencies lingering into the fourth quarter, as you're pointing out, but we should be through them as we go into next year. And that's a business that we still expect to take to 17%-plus over our strap planning horizon. Both of those businesses, Doors and Securities were on that trajectory before we combine them, and we certainly expect to keep them on that trajectory. Christopher J. Klein - Fortune Brands Home & Security, Inc.: And Fiberon is in that same profile, Fiberon will bring sales in the fourth quarter, but not a lot of margin addition because it's a softer period, it's a seasonal business, but Fiberon will be a part of that mix that'll drive it from mid-teens to high-teens or in margins that'll be a nice addition.

And then looking at the Cabinets business, I know you said you're adjusting for the exit of some of your home center in Canada. You expect the year to be flattish to slightly up. What confidence do you have or what leverage do you think you can pull to expect volume growth to resume next year, is that something that you're not really looking for at this point? Christopher J. Klein - Fortune Brands Home & Security, Inc.: No, we're looking for mid single-digit growth in Cabinets next year. Full stop. Absolutely. So, we reposition that business around the growing parts of the market, which are already performing at a mid to high single-digits lever, and we backed out of parts of the market that we're performing on a negative side and then we're launching new products into the market, that are at the values and the custom side of the marketplace through our, a lot of that sort of dealer channels and some through home centers. So, the combination of all those things, we will have the confidence against the exit will be out, so the business exits will be out by year-end. And then the underlying growth that we've already seen across our businesses, where we have in-stock and vanity growing double-digits. We've got the stock business growing mid to high single digits on the builders' side. The dealer channel was up this quarter, across the board, so the underlying strength of the business is already performing in there, and by calling out the poor performing parts of the business you're going to see both the margin and the sales side come through. So, we've got a high degree of confidence, because of the plan. We started working this plan summer fall of 2017, we started talking about it in February, and detailing the actions that we're going to take. We've taken out two semi-custom plants, which is not insignificant from a cost standpoint leverage point, to balance capacity there. We exited the third home center, we've got strong relationships with the largest too, but the third home center was not performing to the place that we would have liked to see that. We exited business in Canada. And so, we're actually really excited about the progress we've made this year on the Cabinet side. We're going to be very clear about our outlook in 2019. And our Investor Day in February, we're going to highlight, here's the new platform, here's where the growth has already been coming from, and here's where we're going to see more growth, and this will return to a predictable business with attractive margins.

And your next question comes from the line of Matthew Bouley from Barclays. Your line is open.

Hi. Thanks for taking my questions. Just wanted to follow-up on some of the Fiberon commentary. Just now that the deal is closed, have you found any kind of potential further areas of synergy, whether on the cost or revenue side now that you've been able to kind of take a closer look at it? Thank you. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Yeah. So, it's only been like four or five weeks, but we got in there quick, on the cost side, we talked a bit about the fact that the input into composite decking requires wood flour, sawdust, and we happen to own a large cabinet operation that throws off a lot of that. And so that is going to progress pretty quickly. Those are the cost synergies that we've got across the business that we're pursuing as well. On the revenue side, we've talked about the opportunity to leverage the Therma-Tru distribution and a lot of those discussions are going well, we're kind of out of the gates on pretty quickly on that. And so, as we've gotten together it's been everything we thought it would be. It's really an extension of Therma-Tru, I think that's the way you're going to see it play-through, we've been in advanced materials, composite materials for a long time with Therma-Tru, and a lot of this is kind of engineered product, and as those teams come together, they're all talking same language. Similar on the distribution side, both home center and through and our broader Therma-Tru distribution lumberyards, two-step, there's a high degree of overlap there, so it's a very comfortable integration. I think about it as an extension of what we've been in within Therma-Tru, so it doesn't feel like a fourth or fifth leg, it feels like a natural, those two businesses come together. Operationally, outstanding, great team, and the teams are working really well together, speak the same language. So when you do an acquisition, you walk in and you're like, I think I know what I'm getting into and you hope that it's exactly what you hoped for. It's actually turned out early on to be even better than what we thought and the teams are working well together.

That's helpful. Thank you for that. And then just following up on Cabinets, beyond the next couple quarters, when you're talking about repositioning to the growthier categories here, how do you think about balancing that versus the potential for different categories to be more attractive at different points through cycle. Thinking longer term. I guess, really how nimble can you be going forward post this repositioning around adapting to different areas of different kind of growthier areas of the market? Thank you. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Growth areas of the market within cabinets, or growth areas of the market within building products in general?

I'm speaking specifically about Cabinets. Thank you. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Yeah. We've got a broad portfolio. So, if you look at where we participate in the Cabinets industry, we touch everything from the bottom end of in-stock it might be an $80 or $70 cabinet or vanity, all the way up to luxury at the top end a couple thousand dollars and you could build yourself $150,000 with our premium cabinets. And so what we really try to focus on is where there's some more sustained weakness in the semi-custom part of the market and where the market has moved either to the value side or continues to stay up in the premium side. So that middle part of the market is where that weakness has been. And so, we've taken capacity out. We still participate in that part of the market, and so we've – I'd say right-sized it and are pushing more in the parts of the market that are growing. But we can move to where the demand moves over time. I'd say where we sit today you've got a lot of consumer appetite for painted product, for simple color schemes, white, gray, neutral tones. We saw that that was the trend five years ago in the premium end of the market and that has moved more into the main market. What is the price or the style palette today up in the premium market is not simple whites and grays painted. There's a lot more exotic looks, textured patterns, and more sophisticated cabinets. That will move its way into the main market. We'll probably achieve that five years from now through a lot of laminate product and take our (49:55) product and make it replicate a lot of those…

Your next question comes from the line of Doug Clark from Goldman Sachs. Your line is open. Doug Clark - Goldman Sachs & Co. LLC: Hey. Thanks a lot for taking my question. I do want to come back to the tariff piece, just because I want to understand the decomposition of the pricing pieces versus the supply chain management piece. So first of all is your expectation that if 25% tariffs go into effect at the beginning of 2019, you would immediately offset that or there would be a time lag between the remedies taken and the cost burden? Christopher J. Klein - Fortune Brands Home & Security, Inc.: So, we're already working on actions on the supply chain to move out even more significantly out of things that would be impacted by tariffs. We were quite successful in working with the Commerce Department on the Plumbing side, on Plumbing components that come into our assembly facility. We assemble more faucets than anybody else in the market. We retain a large North American assembly operation, so we work the Commerce Department to say you want to keep U.S. jobs? You should advantage guys like us, who do all that assembly work here in the U.S. and it worked. So, they eliminated a lot of those components out of there. We had already worked hard on the Cabinet side, as I just addressed to move stuff out of China. We continue to work on that. To the extent we had door components, we're moving more of that into Mexico and our own operation. So, that has all started and has been underway really in earnest starting this summer and into the fall. On the pricing side, we've also started targeted actions. And so, we're already trying to work through that,…

And your last question comes from the line of Keith Hughes from SunTrust. Your line is open.

Yeah. I'm sorry. Just one more question on the tariffs. So, you said a lot of things on tariffs in the call. The amount that you could be impacted is 25%, is it primarily on cabinet to components, or are there other areas of the business where that's going to be impacted. Sounds like Plumbing is not nearly as much. Christopher J. Klein - Fortune Brands Home & Security, Inc.: Cabinet and Plumbing obviously are two biggest businesses, most of that proportionally, and so there's the other things we've done already within Plumbing to get things excluded so then what remains we're working with a supply chains. Some of our suppliers actually have facilities outside of China, so we can move with them into other markets that won't be impacted by tariffs and then we're looking at other suppliers. Similar to cabinetry, we've moved stuff out already, we continue to move things out, and then there's a little bit in our other businesses as well. So, there's a little bit in Security componentry that's coming out for our locks business, some componentry in Doors, so we're just working all sides of that. But the two big ones would be our two biggest businesses.

Thank you.

Thank you for joining today's the Fortune Brands third quarter 2018 results. Good-bye. That concludes our conference call for today. You may now disconnect.