Newell Brands Inc. (NWL) Q3 2015 Earnings Report, Transcript and Summary

Good morning and welcome to the Newell Rubbermaid third quarter 2015 earnings conference call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open up the call for questions. As a reminder, today's conference is being recorded. A live webcast of this call is available at newellrubbermaid.com on the Investor Relations home page under Events & Presentations. A slide presentation is also available for download. I will now turn the call over to Nancy O'Donnell, Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Great. Thanks, Laurie. Welcome, everyone. Thank you for joining us for Newell's third quarter 2015 conference call. On the call today, in addition to myself, are Mike Polk, President and Chief Executive Officer; and John Stipancich, our Chief Financial Officer. Let me remind you that on today's call we will be referring to certain non-GAAP financial measures. Please note that Newell has provided reconciliations to these non-GAAP measures to comparable GAAP financial measures. Our comments today also include forward-looking statements. Such statements are based on assumptions and actual results could differ materially from management's expectations. We direct you to the cautionary statement in the 8-K that we filed with our earnings release and on our website. And now, I'd like to turn the call over to Mike. Go ahead. Michael B. Polk - President, Chief Executive Officer & Director: Thank you, Nancy. Good morning, everyone, and thanks for joining our call. Building on very good first half results, we delivered another strong performance in the third quarter. In that context, we've reaffirmed our 2015 full year normalized EPS guidance and raised our core sales growth guidance. Before we get into the results, let me briefly address two strategic changes to our portfolio. First, as we've announced, we will divest our Décor business. And consistent with our practice on businesses held for sale that do not qualify for discontinued operations, we will exclude Décor from core sales from the beginning of Q3 2015 through the completion of the sales process. I want to acknowledge our Décor associates for their many contributions to Newell and also thank them in advance for their continued focus through the process. Second, last week we completed the acquisition of Elmer's Products Incorporated. We're delighted to welcome the Elmer's team and Elmer's three leading brands, Elmer's, Krazy Glue, and X-ACTO, to our company. These brands provide terrific drive period synergies at back-to-school, great cross-sell potential across our channels and together with our Prismacolor, Rotring, Paper Mate Flair, and Mr. Sketch brands strengthened our position in crafts. Consistent with our practice on acquired businesses, Elmer's sales will not contribute to core sales until the first anniversary of the completion of the acquisition. So let's get into our third quarter performance. In Q3, core sales grew 5.9%; the strongest quarterly core sales growth in years. Net sales grew 3.1% with acquisitions and planned and completed divestitures contributing 340 basis points to growth, offset by a 620-basis point negative impact due to foreign currency. Normalized gross margin increased 30 basis points to 39.5%, driven by productivity, pricing and mix partially offset by the negative impact of foreign currency. We sustained high levels of investment in advertising and promotion at 5.2% of sales. And we delivered strong normalized operating margin of 15.2%, a 90-basis point increase compared to prior year. Normalized EPS was $0.62, $0.01 ahead of consensus and 6.9% ahead of prior year, despite having to overcome a $0.14 negative impact from foreign currency. Our third quarter core sales growth was broad-based with growth in all five segments and all four regions. Combined, our Win Bigger businesses grew core sales 8.8% with standout growth in our Writing & Creative Expression and Food & Beverage businesses. Our Writing segment grew core sales 11%, Commercial Products, 3.7%, Tools, 3.1%, Home Solutions, 0.8% and Baby, 8.1%. Our nine month results are really strong as well. Core sales increased 5.2% with growth in all five regions and all four – all four regions and all five segments. Our Win Bigger businesses grew 8.7%, with strong double digit growth in our Writing & Creative Expression and Food & Beverage businesses. We've returned our Baby business to growth, delivering 5% growth over the first nine months. And our acquisitions, when combined with our core growth, have offset the negative impact of currency and divestitures to yield 3.7% net sales growth year-to-date. Despite unprecedented currency pressure on our cost, we've expanded normalized gross margins 30 basis points to 39.5%. And importantly, year-to-date, we've increased advertising and promotion investment by over 17%. Despite spending more behind our brands, we simultaneously increased normalized operating margins 60 basis points, enabled by the work we're doing to make Newell leaner and more efficient through Project Renewal, all this together, yielding 7.3% normalized EPS growth despite having to absorb a negative $0.33 impact of foreign currency. We are obviously very pleased with the first nine months of 2015. We have clear momentum in our business and view our results as evidence of the progress we are making transforming Newell into a leading performer in our industry. Let me hand the call over to John to go through our results in more detail. And then I'll return to provide perspective on the balance of 2015 and our initial outlook for 2016. John K. Stipancich - Chief Financial Officer & Executive Vice President: Thanks, Mike, and good morning. Third quarter reported net sales were $1.53 billion, a 3.1% increase versus last year. Core sales, which exclude acquisitions, divestitures, foreign currency, and the planned disposal of our Décor business, increased 5.9%. The net impact of acquisitions, divestitures and Décor contributed 340 basis points to reported net sales. Foreign currency had a negative impact of 620 basis points. All five of our segments and all four of our regions delivered core sales growth with Writing and Baby leading the pack. Strong volume growth and pricing in Venezuela contributed 150 basis points to our Q3 core sales, a decline from last quarter's contribution. And we expect the contribution to further decline in Q4. We now anticipate the full year contribution from Venezuela will be around 130 basis points of core sales growth. Reported gross margin was 39.1%, up 30 basis points to last year. Normalized gross margin was 39.5%, also up 30 basis points over last year. This improvement was driven by productivity, lower input costs, pricing and favorable business mix, which more than offset unfavorable currency and the negative mix impact from the gross margin structure of our 2014 acquisitions. Normalized SG&A expense was $372 million or 24.3% of sales, down 60 basis points versus prior year. And we reduced overhead by 20 basis points versus prior year. We continued to invest in advertising and promotions, spending 5.2% of sales in the third quarter. Our year-to-date A&P investment is up 60 basis points at about 4.7% of sales, and we still anticipate spending at around 5% of sales for the full year. We increased advertising and promotion investment dollars in Writing and Baby, where we launched marketing campaign to support Paper Mate InkJoy, Sharpie Extreme and Sharpie Clear View, Mr. Sketch, Graco Pack 'n Play, the Graco 4Ever Car Seat in North America, and Aprica's Hero Innovation in Japan. Normalized operating margin was 15.2%, up 90 basis points, reflecting the benefit of Project Renewal, gross margin expansion, and other cost savings initiatives, partially offset by significant FX headwinds. Reported operating margin was 12.2% compared with 11.7% in the prior year. Interest expense of $17.5 million increased $3.2 million year-over-year, reflecting the impact of our late 2014 debt refinancing and higher overall borrowings related to our acquisitions in the back half of last year. Our normalized tax rate was 20% compared with 19.5% a year ago. We still expect our full year normalized 2015 tax rate to increase versus last year, but now land under 24%. Normalized EPS which excludes restructuring and other project costs and other items was $0.62, a 6.9% increase to last year despite about $0.14 of FX headwinds. On a reported basis, third quarter EPS was $0.50 compared with $0.44 last year. I'll now move on to our segment results, and starting with Writing, reported third quarter net sales grew 1.4% to $459.5 million. Core sales increased 11% with strong mid-single digit growth in North America and low single digit growth in EMEA driven by strengthened innovation, core distribution gains, strong Back-to-School marketing and merchandising, and pricing. These results were achieved despite having a comp of strong Back-to-School a year ago period of over 8% growth. We continue to drive impressive POS in the U.S., thanks to the combined impact of increased A&P and more robust merchandising efforts. Our emerging markets Writing business in Latin America continues to perform well with pricing and strong sell-out fueling great results. Q3 normalized operating margin in our Writing segment was 25.3%, a 120-basis point increase over the prior year due to strong productivity, pricing, favorable mix and cost management which more than offset foreign currency impacts. Net sales in our Home Solutions segment grew 10.2% to $459.4 million with acquisitions contributing $47.7 million. Core sales increased 80 basis points due to the sustained high single digit growth in Food & Beverage, which includes one month of Contigo sales, having now lapped the 2014 acquisition. This more than offset our continued exit of portions of the low margin Consumer Storage business, as well as a reduced amount of retailer promotions in the quarter. Home Solutions normalized operating margin was 16.7%, up 140 basis points, reflecting the favorable mix, productivity and lower input costs. Our Tools segment delivered net sales of $196.7 million, an 8.4% decrease, all of which and then some was driven by FX. Core sales grew 3.1% with all four geographies delivering growth. Our Irwin Construction Tools & Accessories business continues to perform well with our Irwin Brazil business recovering in mid-single digit growth, though our Lenox Industrial Tools business is showing signs of being impacted by the global slowdown of heavy manufacturing. Normalized operating margin in the Tools segment was 10.4%, a 50-basis point decline versus last year driven mostly by negative FX partially offset by pricing and productivity. Reported net sales in our Commercial Products segment decreased 5.1% to $206.8 million, reflecting the sale of our medical carts business in August. Core sales increased 3.7% lapping over 11% growth on the third quarter of last year, reflecting strong distributor growth, pricing and solid growth in North America and EMEA. Both regions showed good underlying sell-out trends enabled by strong innovation and sales execution. Commercial Products normalized operating margin was 15.2%, a 260-basis point increase to last year due to pricing, productivity and input cost benefits partially offset by negative FX. And our Baby segment reported $207.6 million in net sales, a 14.4% increase compared to last year. The Baby Jogger acquisition contributed $19.6 million in net sales during the quarter. Core sales grew 8.1% with mid-single-digit growth in North America and double-digit growth in Asia, as well as good growth in the emerging markets portion of our EMEA business, despite continued weakness in Russia. We continue to experience very good POS growth, fueled by new innovative products, like our Graco 4Ever car seat and increased advertising and promotion in both the U.S. and Japan. Baby's normalized operating margin was 4.9%, down 90 basis points to last year, largely due to increased advertising and promotion spend and pricing actions on the value end of our product line at a key U.S. retailer to defend our core, as well as negative FX, partially offset by mix. Now if we look at Q3 core sales by geography, North America grew core sales 3.4%. We had strong results from Writing, Baby, and our Food & Beverage business, with all five of our segments contributing to growth. In EMEA, core sales grew 4.7% due to strong growth in Tools and Commercial Products as well as Baby's return to growth in the region. In Latin America core sales grew 26.5%, reflecting volume gains in Writing and pricing across the region to cover FX. And finally, Asia-Pacific core sales grew 8.2%, with dramatic improvement in our Baby business and strong growth in Writing. Moving on to cash and our balance sheet, in Q3 we generated $339.9 million in operating cash compared with $339.2 million in the prior year. Year to date we've generated $288.1 million compared with $343.3 million last year, but recall we made a $70 million voluntary contribution to our U.S. pension plan earlier this year. Adjusting for this, our year-to-date operating cash flow is up about 4.3% compared to last year. We returned $93.3 million to shareholders in the quarter, including $51 million in dividends and $42.3 million to repurchase a little over 1 million of our shares. And as of the end of Q3, we have $270 million available under our authorized open market repurchase plan. And finally, our balance sheet remains healthy with $266 million of cash on hand and about $588 million in liquidity. Our balance sheet metrics continue to be strong, giving us continued financial flexibility to support Project Renewal and for other acquisitions beyond Elmer's should we choose to pursue them. And with that, I'll turn the call back over to Mike. Michael B. Polk - President, Chief Executive Officer & Director: Thanks, John. Let's now turn to the balance of 2015. This morning we reaffirmed our 2015 full-year normalized EPS guidance and raised our core sales guidance. Our revised core sales guidance range is now 5% to 5.5%. And our normalized EPS guidance range remains $2.14 to $2.20. Our best estimate for delivery is at the midpoints of each component in this full-year guidance. We've held our normalized EPS guidance despite our expectation that the full-year negative foreign currency impact will now be $0.41 to $0.44, about $0.05 worse than previously communicated, as a result of the further weakening of currencies in Latin America and Canada. We've taken broad-based actions to deal with the currency impact and have made good progress covering the exposure. The expansion of Project Renewal has helped, and we will take further action through Q4 to cover the full impact. In 2015, we expect A&P investment to increase by over 16% and A&P as a percentage of sales to be about 5%. Despite the unprecedented ForEx challenge, we remain firm in our conviction to steadily increase brand support given the core growth acceleration and market share increases we're experiencing. Year to date, we've increased value market share in the U.S. in 10 of 13 product categories that IRI measures, and dollar sell-out has increased over 5% in 11 of those 13 product categories. Our innovation, brand investment, and drive for broadened core distribution are working. In 2015, on a currency-neutral basis, the $2.17 midpoint of our normalized EPS guidance range represents very strong double-digit EPS growth of nearly 30%. If circumstances develop that give us flexibility to deliver beyond the $2.17 normalized EPS guidance midpoint, we will prioritize investing back into the business rather than strengthen already highly competitive earnings growth any further in 2015. Our 2015 guidance now assumes Venezuela will contribute about 130 basis points to our core sales growth, an increase of 60 basis points versus last year's contribution. Excluding the contribution to growth of our Venezuelan operations, the midpoint of our full-year 2015 core sales guidance range would be 4%. Our 2015 guidance now estimates Venezuela will contribute $0.12 to our 2015 normalized EPS. Excluding the contribution of our Venezuelan operations to normalized EPS, the midpoint of our revised 2015 normalized EPS guidance range would be $2.05. Our initial outlook for 2016 calls for continued growth acceleration and sustained strong normalized earnings per share growth, in line with the Growth Game Plan acceleration stage guidance. Our initial 2016 full-year guidance is core sales growth of 5% to 6% and normalized EPS of $2.35 to $2.44. Our guidance assumes another double-digit increase in A&P investment in 2016. The 2016 guidance also assumes that foreign exchange negatively impacts normalized EPS by an additional $0.21 to $0.23 beyond the $0.41 to $0.44 experienced in 2015. On a currency-neutral basis, our 2016 full-year guidance represents strong double-digit earnings per share growth of over 20%. In order to provide more visibility into our initial 2016 full-year guidance, we have provided a view excluding the contribution of our Venezuelan operations. Excluding the contribution of our Venezuelan operations, our initial 2016 full-year guidance is core sales growth of 4% to 5% and normalized EPS of $2.21 to $2.30, an increase of 8% to 12% compared with our 2015 Venezuela adjusted base of $2.05. We will provide more perspective on the factors that could influence delivery in 2016 with our fourth quarter earnings. So let me close now by reiterating that we've had a very good first nine months of the year, delivering strong competitive results. Growth continues to accelerate. And despite unprecedented foreign currency pressure, we're delivering very strong normalized EPS results. Our initial 2016 full-year guidance aligns with our long-term outlook of 4% or greater core sales growth and double-digit normalized EPS growth. Our building momentum is a function of the sharp choices we've made. We're investing to create advantaged brand development and innovation capabilities and are backing them up with category-leading marketing investment. Our innovation funnel has nearly doubled since 2013, with value per project up over 150%. These bigger projects have moved steadily from concept to market and are now launching, like: Graco's 4Ever car seat, offering four seats in one, so that your car seat grows with your child; or Dymo's XTL Industrial Labeling System, which is outfitted with time-saving features to make complex labeling jobs simple for tradesmen; or Paper Mate InkJoy Gel Pens, which dry three times faster for reduced smearing; or Rubbermaid's FRESHWORKS Produce Preservation System, which keeps produce and berries fresher for up to 80% longer. These innovations leverage strengthened execution capabilities in R&D and the new product design capability we've invested to create at our purpose-built design center. Our growth ideas are being supported with industry-leading investment and the near doubling of our advertising and promotion spending. This investment has been enabled by our determination to make Newell leaner and more efficient and to unlock the craft capacity for growth. Coupled with the actions we've taken to strengthen our portfolio like last week's acquisition of Elmer's, Krazy Glue, and X-ACTO, these choices to build and then invest behind industry-leading brands and innovation are yielding some of the strongest growth results Newell has experienced, record normalized operating margin and record normalized earnings per share. We're on a path to completely transform Newell, delivering highly competitive and differentiated results. Growth is the engine that powers us. That's the Growth Game Plan into action. That is the new Newell Rubbermaid. Let me now pass the line to the operator for questions.

Thank you. Your first question comes from Dara Mohsenian with Morgan Stanley. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Hey, guys. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Dara. How are you? Dara W. Mohsenian - Morgan Stanley & Co. LLC: Good. How are you? Michael B. Polk - President, Chief Executive Officer & Director: Great. Dara W. Mohsenian - Morgan Stanley & Co. LLC: So, Mike or Stip, just one clarification. As you think about 2016, if you did decide to deconsolidate Venezuela at some point, do you think you'd look to offset that negative impact through other areas in the P&L? Or with the FX pressure even before Venezuela and the planned investment behind the business, is it unrealistic to expect any significant mitigating actions versus that potential Venezuela impact in 2016? And then, the real question, Mike, ex-currency, you're expecting local currency earnings to be up about 30% this year, next year as you mentioned 20%-plus. It's heroic you were able to offset the FX through other areas in the P&L, and certainly better than peers. But do you worry at all that you're stretching the organization to hit these numbers and to fully offset FX? Michael B. Polk - President, Chief Executive Officer & Director: Thanks, Dara, great questions. It's awfully early to know or speculate about what we would do if we were to deconsolidate the Venezuelan business. We actually have a ton of flexibility with all the work we're doing on cost and with the significant investments. We've got incremental investments we've got planned for next year as I said. Our base plan assumes we deliver double digit increases in A&P investments next year on top of the increases we delivered this year, and on top of the increases we made last year on our way to this goal of getting to 7% A&P ratio in the business by the end of the first – the end of the Growth Game Plan window, five-year window. And so, we have lots of flexibility to deal with all kinds of different circumstances going into next year. I wouldn't want to speculate on exactly what we would do. I think strategically, our commitment is to continue to invest in these brands, because we see the phenomenal results and the growth acceleration, and more importantly, the sheer gains we're garnering in our core businesses and our home markets. And so, while we'll have flexibility to do any number of different things in 2016 and beyond, we want to keep our eye on the ball of the strategic agenda we have for growth acceleration, and the strengthening of our brands. We feel we're really in a terrific position right now having started to prove out the effectiveness of this operating model, and we want to see that all the way through. That said, we've demonstrated this capability to flex and find the right balance between both the top line growth in margin development and earnings development, and you should expect us to continue to apply that principled approach and balanced approach going forward. Our guidance, we've given you visibility into what our guidance would look like ex-Venezuela that our guidance really is the 5% to 6% core growth and what effectively is 8% to 12% growth off of our midpoint of $2.17 this year – or next, and we'll see how the whole year plays out as we get a little bit closer. Obviously, lots of moving parts in currency, and we've made a set of assumptions about next year, but we'll have to flex and adapt in what has been a pretty volatile and changing environment. With respect to stretching the organization, one of the great assets of Newell, and I've learned to respect and appreciate it as I've been here for a little bit over closing in on four-and-a-half years now, this team just has this tenacity for delivery, and it's a great asset. It's one of the things you can't teach. And it's such a core in asset of what we've got here. So, I think our team is unwavering in their commitment to try to achieve everything we've been leaning our shoulders into. And there are moments, when that gets tiresome and people are weary, but we've got a strong focused team committed to changing the perception of our company in the marketplace in making Newell into a leading industry performer. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Okay, great. That's helpful. Thanks.

Your next question comes from Lauren Lieberman with Barclays. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Lauren.

Thanks. Hi. Good morning. Michael B. Polk - President, Chief Executive Officer & Director: Good morning.

I wanted to talk a little bit about Home Solutions. So you mentioned Food & Beverage doing high single-digit growth. How much longer is there on the storage tote exits really left? And then I was curious about the timing of the innovation launch on the FRESH deal, if that's a fourth quarter initiative because I feel like that could drive another leg of growth beyond the hydration that you're already seeing. Michael B. Polk - President, Chief Executive Officer & Director: Yes, it's a great question. So, Lauren, we still have more work to do and we're pacing that work against our need to deliver the results in aggregate. You see this playing out actually in our Canadian results right now, where we have even a bigger Rubbermaid Consumer Storage business than we do on a U.S. on a per capita basis. And so we've got more work to do there. We will manage it deliberately and planfully against the upside potential of our Food Storage business. But we will continue to work that issue right through 2016 and maybe even into 2017. But you should expect and understand that that's captured in our plan and it's captured in our guidance. And so, don't expect us to really kind of spring any surprises on you about that. That's baked into our logic and the algorithm for Home Solutions growth. On Food Storage, you're right. We've got this great innovation, called FRESHWORKS, which goes towards the end of this year and really kind of picks up momentum in next year. We're extending the concept behind LunchBlox, which has been a terrific success, as households become more durable and less focused on consumable storage. And school systems and regulatory bodies and municipalities get concerned about waste in landfill cost. We're extending that concept which is kid-focused to adults with an idea, called Rubbermaid FASTEN + GO, which is a terrific application of lunch to work for adults that I think is going to really be interesting to watch play out over next year that comes a little bit later in the year than FRESHWORKS. And then we've got more activity in the back end of the year that is – it's probably more of a 2017 idea on Rubbermaid core Food Storage. I'm not going to go into it too much now. You should expect that we end up with this nice rhythm and sequence of sustained innovation coming on Rubbermaid that effectively creates a renaissance for that brand, with its core in the kitchen and in Food Storage Preservation and Food on-the-go. And so, it's very exciting next few years on Rubbermaid, I think. Combine that with the Beverage work we're doing on all three brands, bubba, Contigo and the Rubbermaid brand and you get some exciting stuff that should more than offset the down elevators on the less profitable portions of the Consumer, Rubbermaid Consumer business. And importantly, you should see some growth acceleration on Home Solutions next year as a consequence of that profile of performance.

Okay. That's great. Thank you. And then on Baby, you mentioned that you have adjusted pricing on the value end of the portfolio. How far into the quarter did that flow through retail? Are you seeing any indication of competitive response? Do you think pricing will be sort of stable there for the next couple of quarters? Michael B. Polk - President, Chief Executive Officer & Director: No, we implemented that through the third quarter. And we've – it's on certain items on our flank at a couple of mass merchants where we've done that. So it's not across the board. It's really a defensive tactic that we do not want any of the lower end players to grab too much share and then be able to over time, leverage that scale to do more strategic work or directly competing with Graco. So, we're always prepared to kind of take the defensive posture and the competitive posture that gives us to degrees our freedom to do what we want to do with the brand itself. I was very pleased with the Graco growth at 8.1% – actually Baby growth at 8.1%. We had strong recovery in Japan, and as importantly, really good Graco momentum in the U.S. despite the valuing down in certain mass merchants to protect our flank against some of our competitors. So, I think we're striking the right balance. We continue to invest in advertising. In fact, we're investing heavily in advertising in Baby and accepting the margin contraction for the sake of catalyzing the growth. And I think you should expect us to continue with that algorithm forward into next year. And if we can, eventually we'll back off but we're going to block and flank – we're going to block any flanking activity on our competitors' part, because we believe that's the strategically right thing to do to enable us to have the degrees of freedom to invest in the core and in the premium end of our portfolio.

Okay, great. Thank you so much. Michael B. Polk - President, Chief Executive Officer & Director: Yes.

Your next question comes from Bill Schmitz with Deutsche Bank. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Bill.

Hey, guys. Good morning. Michael B. Polk - President, Chief Executive Officer & Director: Good morning.

Hey. Can you just talk broadly about the retail conversations you're having right now. Obviously, they're facing quite a bit of wage inflation. They're paranoid justifiably so on some of the e-commerce growth, and then in obviously emerging markets given the currency moves, my guess is cash is at a premium right now. So, can you just like broadly talk about what you see on the pricing side and things like that? Michael B. Polk - President, Chief Executive Officer & Director: Sure. All of our partners are moving – all of our bricks and mortar partners are aggressively moving into the e-commerce space. So, they're all benefiting as they get there with the kind of the growth surge that comes from reaching consumers where they want to shop. And we've made a significant investment to strengthen our capabilities here a few years back and we're, I think, on the front of that curve in partnership with our retailers to help unlock the upside for them and for us. So, on the e-commerce side, I think we're all moving aggressively. And, of course, the strategic motivation for us, Bill, is that we need to have greater than our fair share position in that channel in order to mix up our overall share position as consumers increasingly shift through that medium to do their shopping. So, this is a critical strategic thrust for us as important as broadening our geographic footprint into the emerging markets, and you should expect us to be prepared to talk about that pretty steadily for the next four years or five years to be honest with you because that's going to take that kind of investment and energy in pivoting of our talent base to that space in partnership with our retailers. That's one aspect of the question you asked. The other relates to some of the pressures that retailers are feeling as a result of wage inflation that they're doing to help their associates live better lives in the context of what's still a tough macro environment for the middle class and, in particular, the lower end of the middle class. And so, I respect all those choices. Those are strategic choices. They're the right choices, that puts pressure into their P&L and as strategic partners with our retailers, we need to work with them as they deal with those issues. And there are very constructive ways to do this that benefit both us and – can benefit both us and them through growth acceleration. Our growth in the mass channel is very strong relative to the mass channels growth right now. Our POS momentum adds most of the big names. Mass retailers is quite strong relative to their comp store growth. And the reason it is, is because we built a capability in selling that's committed to a collaborative approach to growth. Not always do we agree. We have some tough wrestling matches over terms at times but it's constructive. And when you think about how we approach moments in time like what many of the retailers are facing right now, you should think about it in that context that we will sit down and strategically work through how to make this a win-win scenario. And that's what the teams are doing and have been doing for a few months, right, probably since July and August as we got closer to operationalizing our commercial plans for the first half of 2016. And I sit here today feeling quite confident that we won't be talking about those types of issues with you, that we'll deal with it within our operations and we'll end up in a place where we are supporting our retailers' strategic agenda while being uncompromising in our strategic agenda. And there are always creative paths to the proper resolution in moments of time like this. So, I know that's vague and not too specific, but that quite frankly is strategically how I've encouraged the team to deal with it and that's how they're dealing with it.

Okay, great. That's super-helpful. And then just, Stip, can you just tell me what the overhead ratio – SG&A overhead ratio was down for the year, and then maybe when it starts to accelerate because I know you have some pretty ambitious targets to try to get that number below 15% or 14% over time. I'm just curious what you think the duration is and when we're going to kind of see that step change because I think that's 20 bps this quarter which is fine, but it's not huge either. John K. Stipancich - Chief Financial Officer & Executive Vice President: So with respect to the year, we're down noticeably. And we continue to make progress. Part of our big step-up where you'll see probably next year as we tackle some of the support functions coming up. We have some work to do, but it's been well played out and well planned in terms of the delivery overall. So, I think you'll see a better step-up in terms of SG&A. I think Mike's consistently talked about where we try to benchmark ourselves on what's realistic and where we want to ultimately get to. The good news is we see the benefit of the SG&A reductions going into the increased advertising and promotion. And so it, obviously, gives us more incentive to push harder on the overheads within reason in order to fund the A&P agenda overall. Michael B. Polk - President, Chief Executive Officer & Director: So the only build I would make on that is that I think on the full year, we'll see our overhead below 20%. And on our way to another step change down in 2016, we've focused a lot of energy up until now on resetting the organization to the new operating model, and we've deferred on a lot of the back office work until this point in time. And that's where the next round of savings will come through playing for a more efficient back office overhead structures. Part of that is the choice we've made to get out of this beautiful corporate headquarters building, beautiful but expensive, and play for a different type of environment that is more in sync with the kind of the virtual nature of how management today has to operate. We're on the road all the time, so you don't need these huge edifices anymore. We want our money focused not on infrastructure but on brands. And so, you will see the benefits of those choices, which we've made now start to flow through in 2016. And the other thing you should recognize in our numbers this year is actually, relative to our expectations, we're having a very good year. So, and despite making progress on overheads, we're covering what should be a good year from a management incentive perspective this year for our people, which I'm very happy for, I'm proud of because I do think it reflects the extraordinary work that they've done, but in bed within our overhead numbers that you see or you can back into are those costs.

Okay, great. That's super helpful. Thank you.

Your next question comes from John Faucher with JPMorgan.

Thanks. Good morning. Mike, you talk a lot about incremental investments sort of continuing to put money back into the business. And I guess at some point when do you reach the point of diminishing marginal returns? And how are you thinking about allocating that incremental spending sort of way down the line? And I guess this leads to a second question which is, is that one of the things that's sort of feeding your appetite from an acquisition standpoint in terms of the ability to invest more behind these brands maybe than what their current owners can do? And then to add another thing on to that, how are you feeling about divestitures on the other side in terms of – you're obviously dealing with Décor. Is this something where we should expect a modest change from a divestiture standpoint every year, every two years, something like that? Thanks. Michael B. Polk - President, Chief Executive Officer & Director: John, great questions. We continue to believe that the right destination for us in order to be able to afford to deploy our portfolio into white space geographies is about 7% of revenue in A&P. We don't expect to get there overnight. We expect to get there over the next couple of years. And we can always adjust the cadence by which we play that story out. So, there's no rush to get there and we're not going to spend any money on things that don't justify spending money on. So, every dollar is valuable to us and we are looking at the investment profile in certain businesses and asking the questions you would want us to ask on growth yield. And also to your point, the next dollar, how do you deploy the next dollar? Should you put the next dollar into Writing? Are you sure you're going to be able to get the growth yields you've gotten so far out of that investment? So we have an ambition for geographic deployment of the portfolio, particularly in Writing and Tools, increasingly in Food and in Beverage, and those will come with costs. We look at some of the acquisitions like Contigo as a brand. And we look at the acquisitions that we've just made on Elmer's and say man, I wonder if you could accelerate the growth even further on a brand like Contigo with an investment in communication, which is a possibility. We're exploring that. We don't default to an assumption that in fact that can yield. We really don't. We're pretty objective about this. But we will go explore that. So what does branded communication look like in a brand like Contigo? The Elmer's business, we love these brands. They're great brands. We think we can apply our operating model to these brands. And because of the breadth of resources we have relative to their prior owners, we do believe that a brand like Elmer's and maybe a brand like Krazy Glue and probably someday a brand like X-ACTO could benefit from brand support in a way that the prior owners couldn't generate. And so that's clearly another opportunity for us going forward. But all that said, we're not going to spend money unless it generates a yield. There's plenty of investment we need to make in e-commerce, for example. And I'd just gladly put some of that money back to capability development to set up a more strategic future for our business as put it into brand support. These are very specific choices that our leadership team sits around the table and discusses. We continue to manage resource deployment both human capital and money very – in not such a democratic way. We sit around the room and we make those choices based on where we think the most strategic value can be created. If there isn't a place to spend it on, we'll just let it flow through to margin. And like I said, when we announced the third phase of Project Renewal that was related to overheads, about 50% of the savings we expect to generate from that restructuring extension is going to flow to margin, and you're starting to see some of that. We delivered operating margin of 15.2%, which is a 90 basis point increase despite delivering 5.9% core sales growth with 5.2% A&P investment. That's a really cool algorithm. And so we're not in a hurry to get to 7%, but we're going to – and we're going to be very thoughtful about where we deploy the money, but it's money deployed to extend the growth trajectory in the business. We've taken our guidance for next year to 5% to 6% core growth. That's above what we envisioned being able to do at this stage in the Growth Game Plan, and it's a testament to the algorithm working. So I truly appreciate the fact that our investors want us to strike a balance, and I actually want us to strike a balance too. And I never want to spend money on things that don't yield some either strategic benefit or commercial benefit, and we won't do that. That said, we'll make mistakes. We'll learn through our experiences as we go, and we'll process that learning. And if that yields an acceleration in margin versus an acceleration in investment, great. We're as interested in sustained strong growth and simultaneously delivering margin and EPS growth at leadership levels as we are just simply growth as a standalone metric. So the beauty of our algorithm is I think we're going to be one of the unique companies over the next few years that can deliver strong growth through increased investment in A&P while simultaneously delivering margin expansion and generating free cash flow yield as a result of the restructuring waning through that timeframe. I'm hard-pressed to see too many companies that will be in a position to do that. And I think that is what makes us unique in this environment that we're all managing through. But you have our assurance that we'll be thoughtful and deliberate and disciplined in how we spend your money. John K. Stipancich - Chief Financial Officer & Executive Vice President: Hey, John, and on your question on divestitures, I don't think you should anticipate we'll be divesting a business every year. I think we've gotten the portfolio pretty close to where we want it. Overall, there may be some small pieces that we would still consider whether we'd be in that business or not. But right now, I wouldn't anticipate anything significant on the horizon in the short term.

Okay, great. Thanks, guys. Michael B. Polk - President, Chief Executive Officer & Director: Yes.

Your next question comes from Kevin Grundy with Jefferies. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Kevin.

Hey, good morning, guys. Just to build upon some of the other line of questioning here because we talked a lot about some of this at least at a high level. So, Mike, so the top line accelerates to 5% to 6% including Venezuela from the guidance this year, which is 5% to 5.5%. But the EPS growth guidance on an FX-neutral basis slowed. So I guess a couple; could you bridge those two things? What gets better? What accelerates within the portfolio? We talked (47:18) spending, Baby Jogger, Contigo, other accretive M&A goes into organic. Maybe you could talk a little bit about the acceleration, bridge that for us. And then secondarily, the deceleration in EPS growth, particularly given as Project Renewal starts to flow through here seemingly at what should be an accelerated pace? So if you could bridge those two gaps for us, that would be helpful. Michael B. Polk - President, Chief Executive Officer & Director: No problem. So I think the thing to look at, if you do the math on our growth on a currency-neutral basis, this year will be nearly 30%. Next year, if you look at our numbers with Venezuela and adjust for the $0.22 of negative FX that we expect to see, there's somewhere north of 25% normalized EPS growth on a currency-neutral basis with Venezuela included in our numbers. And so yes, it does slow from 30% to 25%. But in the context of the strategic environment we've got where we're continuing to invest in brands and we expect to increase A&P double digit next year, I think that's one that we would accept as a smart and balanced approach. On the growth acceleration, we talked a little bit about innovation, and the innovation is quite strong as we head into next year. And so you've got this convergence of all this work we started in 2013 working its way through our innovation funnel to market at the same time as the cost work has enabled this increased investment in A&P. So you have the convergence of these two events, more, bigger innovation coupled with more spending to be able to build awareness on these ideas and interrupt the shopping experience with the brand experience to drive commercial conversion. And so that's the event that leads us into next year, and that's why we believe we see growth acceleration. When we did the Growth Game Plan, we first put the Growth Game Plan in front of investors in February 2012. We did so and promised, excluding capital allocation, 4% or greater core sales growth in the acceleration stage and 6% to 9% EPS growth in the acceleration stage. We are well beyond that. We've been well beyond that all the way through. And so we feel like we've struck the right balance. I think that leaning into further EPS growth on a currency-neutral basis, it's a choice we can make if we don't have ideas to invest behind. But I'd rather play for the annuity of revenue expansion and scaling of the company over multiple years than to mortgage that for a short-term benefit beyond 25% EPS growth on a currency-neutral basis.

Understood. If I could, just one follow-up, Mike, on Venezuela. I know you're probably sick of talking about it, but just a quick update there because the environment is still very difficult if not worsening. It seems like most CPG peers have all decided to deconsolidate at this point. It's going to be 6% of your profit based on what you've disclosed, and even Pepsi recently has deconsolidated this quarter. So could you comment on how you weigh the distraction versus the contribution? And maybe just give us an update on the business. Thank you. Michael B. Polk - President, Chief Executive Officer & Director: Yes, just one comment on Venezuela. If you deconsolidate it, it doesn't mean you stop operations in countries. So the distraction is no different from a management perspective. But it certainly helps in our conversations with investors to take Venezuela off the table. But the reality is we're not going to walk away. We don't want to walk away from a 50%-plus share of the Writing market in Venezuela because it's a callout. What we're doing is preserving – taking a call option on the different geopolitical future there. And so it would be extremely difficult to ever create a 50% share of market in a country like Venezuela with all the resources it has. Of course, the environment is very difficult and it's going to be volatile. So taking it off the table would certainly help in our conservations with investors. We've tried to bring great transparency to the dynamics in Venezuela so that people don't have the opportunity to second guess the core momentum in our business. You're right. There's a lot of things that happened. John and I are both very, very connected to what's going on in Venezuela. Pretty much every day there's something new. Monday – or over the weekend, 350 companies in to see the Finance Minister and the VP to hear about new margin laws that they're considering implementing. And there are consequences back into our operations. We're deeply connected to what's happening there. And we've been quite strategic in our approach here. And I'm not too bothered by what other people do because I don't understand their circumstances. We're making the choices we believe are right for us and trying to provide as much visibility for investors such that that they can choose whether to invest in us with full knowledge and exposure. But the real headline here is we've got a 50%-plus share of the Writing market with great brands in Venezuela. We have a factory with 350 people that work in it on the ground in Venezuela. We are very disciplined about managing the cash in so that we don't let the exposure build too dramatically over time, and we're looking for all kinds of creative ways to be able to source raw materials locally, to be able to someday produce without having to import our raw materials in, particularly in our Woodcase Pencil business. So, I don't think that I would do anything differently. There's no catalyst at the moment for us to deconsolidate. I'm not sure what other people's logic is for the choices they make. We took a long position on inventory connected to the October 2014 SICAD auction and that's covered us all the way through this year, and will cover us through the end of this year. It'll come to an inflection point at that point in time, and we'll have to see what kind of rate the government offers up for us to access that point because we'll need to be bringing raw materials into the country either late Q4 or early Q1. Our intention is to be incredibly transparent about this. It's an awful lot of inside baseball kind of detail for you guys, but I don't like some of the narratives out there that I hear occasionally that talk about Newell in the context of Venezuela. I think they're factually flawed. And so, I'm prepared to give you every bit of detail you need to see what's going on, and we'll take a very strategic approach to building our brands over time in the countries as we think is appropriate, balancing the cash exposure against the strategic value.

That's very helpful. Thank you.

Your next question comes from Steve Powers with UBS. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Steve.

Thanks. Hey, thanks. Mike, just to be 100% clear on Venezuela following on from those comments; is your base case now that you are leaning more towards full deconsolidation of the potential next step versus a simple deval to SIMADI, maybe with some offsets, which I think – offsets, which I think was your base case previously? I'm just trying to determine if we're truly in a binary situation here or whether there is still maybe a middle ground? John K. Stipancich - Chief Financial Officer & Executive Vice President: Hey, Steve, this is John. We're still evaluating the situation. We're in a little bit of unique position because we're guaranteed a certain amount of margin there. And actually, we've accessed dollars at the CENCOEX rate this year, a couple million dollars worth at CENCOEX. So you have to throw that into the equation as well for us. Right now, I think our anticipation is to continue to evaluate it. I'm not sure whether going to SIMADI is a likely outcome or not for us. But again, as Mike said, it's a very dynamic situation for us. It literally changes every other day and we'll continue to evaluate it together with our auditors in terms of what the right decision is for us going forward.

Perfect, thank you. Switching gears, so I think on the last call you guys mentioned that the team was on the ground in China working through route-to-market assumptions on Writing. And I'm just wondering if you could talk more now with that work behind you in 2016 guidance set, what the plan is there? How broad, how fast, when do we start that kind of stuff? Thank you. Michael B. Polk - President, Chief Executive Officer & Director: Yes, so good question, Steve. Kristie Juster has been in China for the last week working with the team on this. And we've built an assumption into our plans that has a very modest contribution coming from China in our Writing business in 2016. So, the way to think about this is that very late 2016 entry into China and a very modest revenue contribution this year, more pipeline than consumption, and then 2017 a more material contribution. However, our algorithm for growth in China is going to be slow and deliberate. So, it'll be a multicity entry and then we'll learn as we go and broaden the number of cities as our capacity to do so increases. And when I say capacity, I mean our capacity within the P&L to be able to support the investment. Our first priority for growth is building market share at home. And our second priority for growth is to extend the footprint of our business to the faster growing emerging markets in a disciplined and systematic way on a select portion of our portfolio. That's the logic and the algorithm is supported by the Growth Game Plan and that's what's built into our guidance, both are a short-term and a long-term guidance. And so, China is not a big contributor to our overall performance next year in Writing but will be more material in 2017, late 2016 shipment for 2017 Back-to-School, which happens in the first part of the year and then we'll see how that goes. And we'll learn from our experience in a couple of cities and then we'll decide how to proceed from there.

Great, that's very helpful. If I could squeeze in one last question; switching gears again to Baby. The rebound there continues to be great, I'm just wondering as you look at 2016, should we think about that as another year of sort of rebound and prioritized growth or you start to flip back and focus more on margin or are we somewhere in between? Michael B. Polk - President, Chief Executive Officer & Director: Yes, you're right. We've spent a lot of money on Baby, invested a lot to catalyze growth this year. We've put a lot of money into A&P. The A&P ratio is higher than what we believe it will be on a run rate basis. So, likely, Baby, some money comes off the table. That said, we've got amazing innovation coming to market. I just can't bring myself to not spend trial to build awareness on this stuff. So we're really excited about what's coming. We've got some really cool stuff at Baby Jogger that starts to ship at the end of this year, into the first part of next year that they never would've been able to do on their own. So we obviously want to communicate around that. So I think probably we'll spend lower amounts as a percent of revenue next year on Baby, but I wouldn't expect this massive margin recovery. We didn't build that into our algorithm. We'll probably spend a little bit less on Tools. We'll probably hold what is a relatively low investment level on Commercial Products and then we'll post more investment in behind Rubbermaid, clearly, with the new items that are coming and probably a little bit behind Contigo. And that will be some of the shift. So, it's where the incremental money goes as opposed to too many pullbacks. I wouldn't expect incremental money though to go into Baby and go into Writing, Food Storage & Preservation, Beverages, and perhaps, a bit into Baby Jogger. And so it will follow our Win Bigger investments with perhaps the exclusion of Tools and Commercial Products given that we've got growth occurring in both places without huge investment.

Okay. Great. Thank you.

Your next question comes from Chris Ferrara with Wells Fargo. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Chris.

Hey. I guess first, the $0.21 to $0.23 FX, drag is that with or without Venezuela? Because if Venezuela is going to be an FX drag, is it included in there? Michael B. Polk - President, Chief Executive Officer & Director: It's included in there, Chris. So, we've made assumptions about what happens with the SICAD rate, not based on anything we know. But then we did the same thing this year as we made some judgments at the beginning of the year about what happens through the year. So, it's baked in. That's why I connected in my script that comment to the full year guidance, including Venezuela.

Got it. Okay. And, I guess, Michael, just for clarification on the whole topic, right? Because I think, if you go back to last quarter, I think, Stip, you'd said for the back half of 2015 Venezuela might be $0.02 and you guys would scramble if you have to offset it. There've been various disclosures, but I think the K might have implied an annualized rate of something like $0.10. But I think that – it seems that you guys were leaning towards trying to muscle through that and offset it. And now, today, with the guidance, Venezuela's $0.14 for 2016 and you're not going to try to offset it. So, I guess, one, did something change there like how'd you made that comment to try to offset that I just misunderstand that? Did something change like FX elsewhere maybe that makes it harder? And then the concept of mitigating actions in Venezuela on that $0.14, maybe you go back to SIMADI versus deconsolidation. But what is there that you can do? Michael B. Polk - President, Chief Executive Officer & Director: Right, so let's step back to what we've said. So, we've said $0.10 was the Venezuelan impact. What's happened is because we can't get the bolivars out in U.S. dollars, we invest those bolivars into what have become increasingly high-yield bonds that generate interest income. So what's happened here is a blend of us pushing and selling more in Venezuela and then also having higher interest income in Venezuela related to those high-yield bonds. So, that's what's happened. And we've seen through the year that interest income accelerate pretty dramatically from Q3 into what we expect to generate in Q4. So, that's part of the underlying movement from $0.10 to $0.12. All we've done in providing a framework, ex-Venezuela for you, is apply the same growth rates off of the midpoint $2.05 ratio. So, if you look at 8% to 12%, which is what we've guided to with Venezuela, ex-Venezuela we've applied 8% to 12% across that $2.05 midpoint number. That was because you're taking a fixed number and you're applying a ratio to it and you've got a higher fixed number that you're applying a ratio to, to get expansion in the numbers, in the GAAP. That is a data point. That is not necessarily how the whole year will play out but it was meant to dimensionalize for the Street the contribution currently and the dynamics that would play out at the same growth rate occurred across with and without. As I said, we have a lot of flexibility. I'm reluctant to compromise the strategic investment posture that we've taken. But as John asked earlier about are you getting a yield for the next dollar, that's similar to the yield you've gotten for the last dollar, it's a fair question. And how we play that will be a matter of how the year sort of unfolds. Another variable that could influence delivery next year within the EPS range, with and without Venezuela, is the timing by which the Décor business gets sold. We've made assumption about when that occurs, but to the degree that takes longer, that's a positive. To the degree that takes shorter, it's a negative. And we'll have to figure all of those things out as we get closer to the year. The thing that I think you guys can count on is that we're going to strike the right balance here. We want to be one of the leading performers in our industry from both a top line and bottom line perspective, not just the top line perspective. And as we get closer and get into this and get a clear line of sight to what currency really looks like next year, we'll be able to make the right judgments about how to strike that balance. John K. Stipancich - Chief Financial Officer & Executive Vice President: Hey, Chris, to add on, you answered your own question about scrambling to cover this year. We do have, as Mike mentioned during the script, $0.05 more of FX headwind that has gotten worse since the last earnings call, and that's obviously part of what we're scrambling to cover, to still deliver within the midrange of the guidance.

Got it. Thanks, guys.

Your next question comes from Wendy Nicholson with Citi. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Wendy.

Hi, good morning. My first question is just kind of a follow-up; if you exclude Venezuela, dear God, can you look at the core business and just comment on pricing generally? I know you don't break it out numbers-wise but qualitatively, kind of the role of pricing in 2016 top line growth as opposed to 2015 top line growth? Michael B. Polk - President, Chief Executive Officer & Director: Right. So, we won't give you a percentage but here are some facts that we'll need to confront next year that while the ForEx impact will be in part influenced by Venezuela, it's certainly much broader than that particularly in the first half of the year related to the Canadian dollar, related to a bunch of Latin currencies. So, you should expect us to have a rollover benefit from pricing next year to cover that transaction effect and probably incremental pricing to cover the transaction impact related to first half currency issues. We continue to be able to cover with those moves. This will be most pronounced in places like Brazil. It'll be an issue, and something we'll have to do, in Mexico, we'll have to do it in Canada, we'll have to do it in Colombia. So, you should expect us to continue to price next year to deal with and to obviously work hard on productivity to deal with the currency-related – the transaction portion of the currency-related challenge. And we've done a lot of work this year to stay in front of it. I wouldn't expect us to, in a market like the U.S., compensate for transaction issues occurring in other geographies. So, responsibility of our leaders in their – on the ground in country to deal with their transaction issues. So, we're not going to price in the U.S. for the sake of covering a transaction ForEx issue in Brazil. That's just not how – that's not smart strategically to do. That said, we have pricing opportunities in the U.S. connected to the new go-to-market program that we've rolled out in 2015 and the new Trade Promotion Management tool that we're putting in place that will give us great visibility to how our sales teams are spending the money they spend between gross price and net price. And if our salespeople are more effective at driving volume with that fund of money, it's effectively a net price realization benefit that will flow through in the U.S. For the first time ever in our company, we will be able to track net sales by salesperson, and they will be bonused on net sales by salesperson. So, they will have skin in the game to spend that money wisely. In the past, it's been – they've been bonused based on invoice sales because we didn't have visibility. So, there is leverage through that improved operating capability to capture net price realization through the way we spend our money in the marketplace, and that's another variable that will contribute to price delivery next year.

And given the pricing you took in the Writing segment earlier this year and yet you continue to gain market share there, with the sort of commodity deflation we've seen in some areas, have you seen a spike up at all in competitive activity on the pricing front or the promotional front that would lead you to potentially have to take back some of that pricing? Michael B. Polk - President, Chief Executive Officer & Director: No. We're going to put – I don't envision us pricing down the Writing business next year. I want to continue to innovate and invest behind the Writing business in a way that creates more consumer involvement with this category which would benefit both the retailer and us in terms of penny profit and margin development for the category. And so, that's the algorithm for us. If we need to, just like in Baby, we'll protect our flank. As you say, next year is going to be a modest year in terms of net inflation between sourced finished goods, wage-driven inflation and commodity-driven inflation. So, there'll be another quite temperate year in that respect. So, there may be a couple of folks that choose to play the price game, I doubt it, though, in Writing. The place where we're more vulnerable to that, quite frankly, is in the less differentiated portion of the Rubbermaid Consumer Storage business, which is why we don't want to be in it because there's no material path of differentiation there that would justify premium pricing, and that's the portion of our portfolio that tends to get whipsawed in environments where commodities are going in the other direction, which is why we don't like it, which is why we're steadily and progressively getting out of that, and focusing on the portions of our portfolio that are more value-added.

Got it, okay, and then just one last one. On the recent management changes, I feel like Mark's [Tarchetti] change was probably fairly well telegraphed in advance. But on the Bill Burke side, I mean, I know he's been obviously very important in the organization. He played a big role in recruiting other people to come over the years. How much transition do you expect? Do you expect other people to be following him out the door? How much risk is there associated with his departure? Michael B. Polk - President, Chief Executive Officer & Director: Let me just say about both people, they've been unbelievable business partners for me; playing different roles but playing absolutely critical roles in affecting the change that we've driven here over the last few years. And they've been great partners to each other, which has been really important as we've established our new operating model of development and delivery. They were the two leaders of those two portions of our organization, and they partnered in a way that was terrific to amplify this model of these two activity systems being independent but interdependent. One group focused on the strategic. The other focused on commercialization of the ideas. And so I want to thank them for everything that they've done to breathe life into that model. Bill is an extraordinary leader. He's helped the organization understand the context for change, and he's helped great Newell legacy employees understand how they can succeed in this new model. Bill's got immense capacity. Bill can be the CEO of a company. Bill and I – Bill had the same issue I had at Unilever, which is an age compression issue. Bill and I are the same age. Paul [Polman] and I were a few years apart but not enough to make enough of a difference. And so Bill wants to lead big, and he's got a tremendous opportunity to do that, and this is probably the right time. We're both 54 or 55 years old. If he's going to swing for something big like that, this is the time to do it. So I totally understand why he'd want to go give it a shot. Bill will be with us right through the first quarter and into the second quarter of next year. The baton pass on the business will happen on 1/1 to Joe Arcuri. We're really happy he has joined us and he's really well prepared to take the baton pass from Bill. I'm just very pleased that we actually have two internal successors. We didn't have to go to the outside to effect this change. And Bill and Mark are in charge of delivering the results in 2015, and then they'll pass the batons to Joe and Richard [Davies]. And I think that will happen quite seamlessly. Richard and Joe are already engaging in the same way that Mark and Bill did. So I think that we'll continue to be able to breathe life into the model and accelerate its impact. And I think everybody will be proud to have been part of building out this story. And Bill is going to help me in the first half of next year with a bunch of different things that we're working on in the supply chain. As you know, we're out looking for a supply chain leader externally, but we continue to want to drive the transformation of the supply chain. We're not waiting for that supply chain leader to come in to do that. Joe will be involved with a number of big projects that we've got going on there. And he'll also help activate with me the broader transformation agenda that we've got going on in the overheads area. And so Joe and Richard will be driving the business. Bill and I will be working the strategic transformation, work with Stip. And then when Bill signs off, we'll celebrate his impact and we'll wish him the best in landing the big job he deserves to garner.

Terrific, that's very helpful color. Thank you.

Your next question comes from Olivia Tong with Bank of America Merrill Lynch.

Great, thank you. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Olivia.

Hi. How are you? Michael B. Polk - President, Chief Executive Officer & Director: Good.

Good. First on Baby margins, should this essentially go back to becoming a double-digit margin business, not necessarily in fiscal 2016 obviously? But is that your expectation over time, or is there still a need for incremental investment or things to do on the lower end of value price point? Michael B. Polk - President, Chief Executive Officer & Director: Olivia, it's important to remember what's unique about our Baby business. First of all, we've demonstrated the ability to grow this business quite fast. In 2012 – 2013, compound growth globally of just about 10%. And as you see us investing now into this business, we've got the growth going towards 8%, 5% year to date. The thing to remember is, of course it's a lower margin business, so it's dilutive to us at gross margin and also at operating margin given the investment profile we've got on it right now. But the thing to remember is we don't own many fixed assets and we don't have title for the inventory beyond its port of departure and a good chunk of this business from China. And so as a result, it has a very high return on net assets ratio despite having low gross margin and operating margin. So as you think about it from a value creation perspective, if we grow this business, we create a lot of value. Now all that said, I don't expect this business to be a single digit operating income margin business. This business will get back to a double-digit operating margin business as the revenue continues to scale and as we moderate the investment we've made in this business to catalyze growth.

Got it, that's very helpful. And then just on M&A, as you look at your existing portfolio, are there areas you think you can continue to bolster with incremental M&A, particularly in the Win Bigger businesses? And how important is M&A relative to growing the core organically as you think about the out years? Michael B. Polk - President, Chief Executive Officer & Director: As we mentioned at a recent conference, we end up with tremendous amount of flexibility and capacity building over time. Our market cap today is what, about $11.5 billion maybe, somewhere between $11.5 billion and $12 billion. And the kind of total capacity cumulative we end up having with today's capital structure is somewhere around $5.5 billion by 2020. That's the model we exposed at a recent conference. So, we end up with tremendous amount of flexibility beyond the fundamental improvements in our performance. And we're going to put that to work in a way that creates value for shareholders and also scales and strategically enhances our company. Up until now, we've been focused on organic growth until late 2014, and then we began to complement that organic agenda with bolt-ons in the core. Elmer's is a bit of an extension of the shoulders of one of those cores into crafts, which I think is exciting and we're going to learn whether the model extends. I think it does, and I think it will be really interesting to see how we do over the next couple of years in accelerating that business's growth with new capabilities deployed and more money deployed against the brands. So that's going to be an exciting thing to watch. The other opportunity for the company long-term is to scale the company. And the question becomes if this model is working, which it clearly appears to be working, can you apply the model across a sixth or a seventh or a tenth segment? And my theory would be yes, it could be applied. And so there will be options at some point in the future where we'll have to decide whether we want to do something more transformational than the bolt-and-build approach. I think that's going to be an option that's in front of us, and that will be something very exciting if it ever were to transpire. Our goal is to build the preeminent consumer durables company in the world. That's our strategic long-term goal. That's the ambition we have for our company. In order to do that, we've got to continue to do what we're doing but also scale the company. And we'll have to see how that all plays out. That may be a dream more than a reality. But I think it's important for you to understand that that's the scope of our ambition.

Great. Thanks, Mike. I appreciate it.

Your next question comes from Jason Gere with KeyBanc Capital Markets.

You know what, I think all my questions are exhausted at this point, so I will pass on to the next caller. Michael B. Polk - President, Chief Executive Officer & Director: Thanks, Jason.

Sure.

Your next question comes from Linda Bolton Weiser with B. Riley. Linda B. Weiser - B. Riley & Co. LLC: Hi, thanks for fitting me in. So, Mike, can you just comment on – was the Tools growth of 3% in the quarter, you said it was improved in the second half. Was the 3% in line with your planning? And you said that some macro issues are still impacting, but you said Brazil improved and EMEA was actually good Tools growth. So what's so weak? And then on top of that, is the overall macro regarding Tools, is it stronger or weaker than, say, compared when you first took over as CEO, just when you take all of those different parts of the world together? Are you feeling macro good, good or just medium, or it's very weak? Just give us some more color on that. And then for next year, is that a low single digit or a mid-single digit grower in Tools? Thanks. Michael B. Polk - President, Chief Executive Officer & Director: Sure, great question. Clearly in the second quarter, I think Brazil has been an issue for virtually everybody. We have a big tools business in Brazil. We had a tough second quarter in Brazil. We had a strong third quarter in Brazil. So some of the issues there have been a little bit more spiky. The more strategic question mark is in the industrial sector of our Tools business, and that has been softer than what we expected. So the brand that plays there is our Lenox band saw business, not the Lenox tools or accessories business but the Band Saw business, and that represents about 10% to 15% of the total Tools business. We grew 3.1% in the quarter. We expected stronger growth on Tools. And the thing that fell a little bit short was the Lenox band saw business connected to Industrial sector softness. It's going to be something we need to watch. That business was on fire last year and it's had more tempered growth this year. And that hasn't gotten better through the back half as we had expected. We had good Irwin growth in virtually every geography in the third quarter, but Lenox fell short of our expectations. And that was covered by Baby momentum, more than covered by Baby momentum and Writing momentum. So the thing to watch going into 2016 is what happens with the Industrial segment – sector and I think your assumption about how to build the model for 2016 is mid-single digit is probably a good number to have, 4% to 6%. Linda B. Weiser - B. Riley & Co. LLC: Thank you. Michael B. Polk - President, Chief Executive Officer & Director: Yes.

Your next question comes from Bill Chappell with SunTrust Bank.

Good morning and thanks. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Bill.

A simple one; outlook for resin and kind of how that plays into your gross margin outlook for this year and next year? John K. Stipancich - Chief Financial Officer & Executive Vice President: Yes. Hey, Bill, we see resin most likely, as Mike said, probably a favorable commodities environment next year, maybe coming down just a little bit, not as much as you may think, and we've had this conversation before about resin not moving as much as, and being as volatile as actually the feedstocks are. But probably it'd be down just a little bit in 2016 would be our anticipation right now. Now, that being said, again, the caution for us is there's a pretty high demand still on in the number of resins that we use. So, resin guys have done a fairly good job keeping pricing up despite the drop in their feedstock price.

So, it's not a meaningful kind of impact on the gross margin expansion? John K. Stipancich - Chief Financial Officer & Executive Vice President: No, I wouldn't say it's meaningful next year.

Okay. And then second, Mike, just going back to Elmer's. Michael B. Polk - President, Chief Executive Officer & Director: Yes.

Other than citing my favorite Lloyd Bridges quote from the movie, Airplane, are there other uses for glue? I'm trying to understand the revenue synergy potential. And when I say that, is it a different take? Contigo and Baby Jogger was kind of we're buying growth businesses so we can grow even faster. This is a kind of a slow growth where you're – I mean, I know that the historical Newell models that utilize it and turn it around, but are you going to look at it a little bit of everything going forward for bolt-ons or is this kind of a one-off? Michael B. Polk - President, Chief Executive Officer & Director: This is an interesting business because of its adjacency and the buyer synergy between Writing in this business. So, if you were to walk at Walmart, the aisle right next to Writing would be where you'd find Mr. Sketch, you'd find Crayola, you'd find crafts, and that's where the Glue business tends to live. You could have made the same argument, Bill, on Writing. When we started, it was a low, slow growth business. And here we are, four years later, growing through innovation and through brand support. I think there's all kinds of different applications for Glue that would drive – and crafts that would drive more consumer involvement in the category. And we'll see how that plays out over time. Our teams need to connect with the Elmer's team to think about what's in their funnel of ideas, and then we got to investment in insights to kind of chart that path forward. You should count on growth acceleration on the core Elmer's business. And there's all kinds of really interesting ideas on Krazy that you could embrace, doings that we would need to discuss with our new JV partner, a Japanese company. And so, I think this is going to be about money and it's going to be about concept developments around the application of the Elmer's brand in the core Glue business and maybe the expansion beyond.

So, do you think it can be growing by the time you lap it for organic growth a year from now where it doesn't dilute kind of your organic growth? Michael B. Polk - President, Chief Executive Officer & Director: We hope so. That will be the goal.

Okay, great. Thanks so much. Michael B. Polk - President, Chief Executive Officer & Director: Yes.

Your final question comes from Stephanie Wissink with Piper Jaffray. Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Thanks. Good morning, everyone. Thanks for sneaking us in. We'd like to go one level deeper on the A&P spend, if we could. So, two parts to the question; the first is, just if you look at that spend, can you break it down between brand spend and maybe product-attributed spend or new products that you're introducing and whether that spend need to be attached to a new product innovation? And then secondly, do you have any cases where you have been in a stretch investment position and maybe you pulled back where you've seen sales persist at above average rate? Thank you. Michael B. Polk - President, Chief Executive Officer & Director: So, Stephanie, you're looking for the split of our A&P by new products versus core. Is that what you're looking for? Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Yes, if you're willing to break it out that way. Michael B. Polk - President, Chief Executive Officer & Director: Right, what we've learned over the last couple of years is that our investment generates the most growth yield when it's connected to innovation. So the vast majority of our investment is behind product news. And there are a couple of exceptions to that. We've done some work on Sharpie, on the core brand of Sharpie, that have worked to expand consumption, but most of the investment is focused on new news. And that's what you should expect going forward. That's certainly true on the advertising line. On consumer promotion, it's a more balanced approach; on trade promotion, more balanced approach because that's the part of A&P that's focused on activating our brands in key drive periods. So it's a balance of core and new items. So all the display materials we use to get off shelf during key merchandising windows are clearly both on the core and on the new news. So advertising's skewed very dramatically towards new news and promotions skewed – and promotion, more balanced across the whole portfolio. That's the logic you should have in place. I've seen plenty of ideas and businesses grow without major A&P investment. You establish a new idea and you get great distribution on it and you continue to activate it with great display activity and punctuate A&P investment or advertising investment, you can deliver a sustained growth. There are many, many examples that I can point to in my career where you seed an idea with significant investment upfront and then you pull back over time and did great, and continue to innovate in it, you get great year two, year three momentum. We're seeing that on InkJoy right now. If you look back at our spending a year ago, two years ago, the vast majority of our Writing investment went – a good chunk of it went against Paper Mate InkJoy. Today, our spending is focused on InkJoy new items and not on the core proposition. So, we established InkJoy, it continues to grow and now we're punctuating spend on new items. And so, that is one of the kind of, the keys to sustained growth, to be able to play the game the way you just described, and there are many, many examples that I could point to across all the categories I've worked in with that has held up. Stephanie Schiller Wissink - Piper Jaffray & Co (Broker): Thank you. Michael B. Polk - President, Chief Executive Officer & Director: Thanks.

This concludes our question-and-answer session. I will now turn the call back to Mr. Polk for closing remarks. Michael B. Polk - President, Chief Executive Officer & Director: Thank you very much, Laurie. Thank you to all of you on the call for your interest in our company, and most importantly, thanks to all the Newell people who work tirelessly to make these results happen. We'll talk to you soon. Thanks.

A replay of today's call will be available later today on our website, newellrubbermaid.com. This concludes our conference. You may now disconnect.