Newell Brands Inc. (NWL) Q4 2015 Earnings Report, Transcript and Summary

Please stand by. Good morning, and welcome to the Newell Rubbermaid Fourth 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 and 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.

Thank you. Welcome, everyone. Thank you for joining Newell's Fourth Quarter Results Conference Call. Before we begin, please take note of Newell's cautionary statements regarding forward-looking statements and our most recent SEC filings and in the 8-K that we filed with our press release this morning. Such forward-looking statements are based on assumptions, and actual results could differ materially from management's predictions. Newell undertakes no obligation to update any statements made today. Let me also remind you that on today's call, we will refer to certain non-GAAP financial measures. Please note that Newell has provided reconciliations to comparable GAAP financial measures in our earnings release, in our current 8-K and on our website. Our presenters today are Mike Polk, our President and Chief Executive Officer; and John Stipancich, our Chief Financial Officer. And I'll now turn the call over to Mike. Michael B. Polk - President, Chief Executive Officer & Director: Thank you, Nancy. Good morning, everyone, and thanks for joining our call. We delivered another strong quarter of results and have terrific momentum on our business. In that context, this morning, we reaffirmed the 2016 full year guidance we provided on our last earnings call. Before we get into the results, let me comment on three strategic initiatives. First, in late October, we completed the acquisition of Elmer's Products. Elmer's, Krazy Glue and X-ACTO represent terrific additions to our great portfolio, and will provide dry period synergies at back to school, great cross-sell potential across our channels, and together with our very fast growing Prismacolor, Paper Mate Flair and Mr. Sketch brands, strengthen our position in drawing and crafts. Elmer's sales will not contribute to core sales until the first anniversary of the completion of the acquisition. This morning, we shared our decision to deconsolidate Venezuela. We took this decision after significant deliberation. We've concluded that the increasingly restrictive nature of regulations in Venezuela and the limited and infrequent access to U.S. dollars has resulted in the loss of the company's ability to make key operational decisions. We've taken a charge to reported earnings in Q4, and starting in Q1, we will no longer consolidate the performance of our Venezuelan operations. We've been doing business in Venezuela for many decades, and we expect to continue to manufacture and sell our products to Venezuelan consumers despite this accounting change. Lastly, in December, we announced a definitive agreement to combine Newell Rubbermaid and Jarden Corporation. We secured committed financing to ensure deal closure, begun the process with the regulatory agencies, and have a clear and deliberate path to secure permanent financing. The process will play out over the next few months, and we expect the transaction to be completed in Q2. We've taken these actions from a position of strength, having just finished one of the best years in our history with outstanding growth, margin and earnings delivery. So with that, let's get into our fourth quarter and full year results. In Q4, core sales grew 6.2%, the strongest quarterly core sales growth in years. Excluding Venezuela, core sales grew 4.4%. Normalized gross margin increased 80 basis points to 38.5% driven by pricing, productivity and lower input costs, which were partially offset by the negative impact of foreign currency. The increase in gross margin enabled a 70 basis point increase in advertising and promotion investment to 5.5% of sales. And when coupled with a 10 basis point reduction in overheads, resulted in a normalized operating margin increase of 30 basis points to 13.7%. Normalized EPS was $0.56, 14.3% ahead of prior year despite having to overcome a $0.06 negative impact from foreign currency. Our fourth quarter core sales growth was broad based, with growth in all five segments. Combined, our Win Bigger businesses grew core sales 11.3%. Our full year results were strong as well. Core sales increased 5.5%, and excluding Venezuela, core sales grew 3.9%. Our Win Bigger businesses grew 9.4%, and our acquisitions when coupled with the core sales growth have offset the negative impact of currency and divestitures to yield 3.3% net sales growth. Despite currency pressure on cost, we expanded normalized gross margin 40 basis points to 39.2%. Importantly, for the full year, we increased A&P investment by over 17% to 4.9% of sales. And while spending more behind our brands, we simultaneously increased normalized operating margin 50 basis points, enabled by our efforts to make Newell leaner and more efficient through Project Renewal. All this together yielded 9% normalized EPS growth despite having to absorb a negative $0.39 impact from foreign currency. Obviously, we're pleased with our results in 2015, and we have clear momentum in our business and our operating model is working. Let me hand the call over to John to go through our results in more detail. John will also walk through the next steps in the Jarden transaction. I'll return to provide perspective on our latest view of 2016 and some thoughts on the creation of Newell Brands. John K. Stipancich - Chief Financial Officer & Executive Vice President: Thanks, Mike, and good morning. Fourth quarter reported net sales were $1.56 billion, a 2.3% increase versus last year. The bubba, Baby Jogger and Elmer's acquisitions contributed 350 basis points to reported net sales. Core sales, which exclude the net impact of acquisitions and divestitures, and the 540 basis point negative impact of foreign currency, increased 6.2%, and all five of our segments grew in the quarter. Reported gross margin was 38.3%, up 70 basis points to last year, and normalized gross margin was 38.5%, up 80 basis points. This improvement was driven by pricing, productivity and favorable commodities, which more than offset unfavorable currency. Normalized SG&A expense was $387.3 million or 24.8% of sales, up 50 basis points versus the prior year. We continued our progress on overheads, but significantly increased our investment in advertising and promotion by 70 basis points as a percentage of sales. We invested in major campaigns for writing, including our Fine Writing business and Mr. Sketch, as well as Calphalon's SharpIN self-sharpening cutlery sets. We also invested in advertising for our food storage business and across a number of commercial products platforms. It's worth noting that for the full year, we reduced overheads by 70 basis points as a percentage of sales, plowing those savings into the 60 basis point increased investment in A&P. Normalized operating margin was 13.7%, up 30 basis points, reflecting the benefits of Project Renewal and other cost savings initiatives, pricing and productivity, partially offset by a significant increase in strategic investment. Reported operating margin was 6.5%, down from 7.4% in the prior year due in part to higher restructuring charges, and acquisition and integration costs. Interest expense increased $8.4 million year-over-year including expenses associated with the Elmer's and pending Jarden transactions. During the fourth quarter, we issued $600 million in medium-term notes, the proceeds of which were used to provide permanent financing for Elmer's. Our normalized tax rate was 23.2% compared with 26.5% a year ago, and our full-year normalized 2015 tax rate landed at 23.4%, about 10 basis points down from prior year. Normalized EPS, which excludes restructuring, restructuring related and other project costs and certain other one-time items, was $0.56, a 14.3% increase to last year. On a reported basis, fourth quarter EPS was $0.05 compared with $0.19 last year, mostly driven by the gain on the sale of the Endicia business being more than offset by the noncash charge associated with deconsolidating Venezuela. I'll now move on to our segment results, and starting with Writing, reported Q4 net sales were $466.3 million, up 11.5%, with Elmer's contributing about $37 million. Core sales were up 12.5%. Our North American Writing business delivered high single digit growth, again, fueled by strong innovation, marketing and merchandising. In Latin America, Writing core sales showed significant growth in part due to volume and pricing in Venezuela. For the full year, core sales grew 10.9% led by a great back to school pricing and new product launches. Core sales growth in Drawing and Coloring, which includes Mr. Sketch, Prismacolor and Flair, were up over 40% in 2015. Q4 normalized operating margin in our Writing segment was 22.7%, a 200 basis point decline versus prior year as significant increased anti-investment and challenging foreign exchange more than offset productivity, pricing and cost management. Net sales in our Home Solutions segment declined 3.7% to $441.8 million. Core sales increased 0.1% driven primarily by growth in our food storage and beverage ware business, offsetting our continued exodus in low-margin Rubbermaid consumer storage business, as well as transition of product lines in culinary. For the full year, Home Solutions core sales grew 0.8%. The segment's normalized operating margin was 12.9% for the quarter, a 30 basis point decrease, reflecting significantly increased advertising, funded in part by productivity and input cost deflation. Our Tools segment delivered net sales of $207.7 million, an 8.6% decline. Core sales grew 1.4%. Tools delivered high single digit growth in EMEA with modest growth in North America, while Latin America declined mid-single-digits, reflecting challenges in Brazil macros and the impact on volumes as a result of pricing to cover foreign exchange. For the full year, core sales grew 2.2% in the Tools segment. Q4 normalized operating margin in this segment was 9.4%, a 10 basis point decline versus last year. The decline was driven by foreign exchange challenges in Europe and inflation in Brazil, more than offsetting productivity and disciplined overhead management. Reported net sales in our Commercial Products segment declined 2.8% to $207.1 million driven by foreign exchange and the sale of our medical cards business earlier in the year. Core sales increased 5.8% driven by pricing and strong volume growth in North America, as well as growth in Latin America. For the full year, Commercial Products grew core sales 4.8%. Normalized operating margin in the fourth quarter was 13.3%, a 190 basis point increase to last year, thanks to pricing, productivity and input cost benefits, partially offset by higher investment in A&P. Our Baby segment reported $237.9 million in net sales, a 13.9% increase compared to 2014. Core sales grew a very strong 10.2%. Double digit growth from Graco North America driven by strong innovation and previous advertising and promotional investments more than offset declines in EMEA and APAC. For the full year, the segment's core sales grew 6.4%. Baby's Q4 normalized operating margin was 11.7%, up 340 basis points to last year largely due to contributions from Baby Jogger and new product development, as well as the comparison against the A&P investment we made last year to stimulate growth. Looking at Q4 sales by geography, North America core sales grew 5.7% with strong results from Writing, Commercial Products and Baby. EMEA declined 0.3% with growth from – in Tools offset by modest declines in our other EMEA businesses. In Latin America, core sales grew 29.7%, with pricing and volume gains in Writing and Commercial Products more than offsetting challenges in Tools related primarily to the Brazilian economy. And finally, Asia Pacific core sales grew 0.2% with growth from Writing and Tools offset by declines in Baby. Operating cash flow for the full year 2015 came in at $565.8 million compared to $634.1 million prior year. Though recall in 2015, we made a $70 million voluntary contribution to our U.S. pension plan and we incurred higher restructuring and Project Renewal-related cash payments in 2015. Adjusting for these, our operating cash flow was up about 2% year-over-year. You'll note also that we recognized a significant gain associated with the sale of Endicia in the fourth quarter, and we have about $60 million in taxes we'll need to pay on the gain, which we'll do in the first quarter and which will be reflected in our first quarter operating cash flow. We returned $65 million to shareholders in Q4, including $50.9 million in dividends and $14.1 million to repurchase 337,000 shares. For the full year 2015, we distributed $206.3 million in dividends and $180.4 million to buy back 4.53 million shares. We suspended the repurchase of shares midway through the fourth quarter in light of the Jarden transaction. With respect to the transaction, we continue to make great progress towards the closing of the combination. This week, we finalized our $1.5 billion three-year term loan, which will fund a portion of the purchase price. We also finalized the amendment of our revolving credit facility, including increasing the facility from $800 million to $1.25 billion to accommodate the increased seasonal working capital needs associated with adding Jarden to the family. We continue to work in the mechanics for assuming two tranches of Jarden notes, the 3.75% coupon notes and the 5% coupon notes, which we plan to retain after the merger. We're well underway and the work seems to go to the public debt markets as we get closer to the anticipated closing in order to secure the balance of funds for the transaction, and we don't anticipate any challenges associated with the upcoming debt offer or with maintaining our committed investment grade rating. Over the past several weeks we've executed Treasury rate locks for a little over $2 billion of anticipated debt offering. And in addition, recall that we have a fully committed bridge loan facility in place, which is available for us to utilize, if we encounter any unforeseen challenges with issuing debt at attractive rates. 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 a quick discussion of 2016, and then to some comments on the Jarden combination. This morning, we reaffirmed our 2016 full year guidance for core sales growth and normalized EPS, excluding our Venezuelan operations. Our 2016 full year guidance is for core sales growth of 4% to 5% and normalized EPS of $2.21 to $2.30. Our best estimate for delivery is at the midpoints of these ranges. Excluding Venezuela, for both 2016 and 2015 results, the midpoint of the normalized EPS range represents double-digit growth. While we do not provide quarterly guidance, the exclusion of Venezuela will negatively impact our Q1 2016 normalized EPS by about $0.03 to $0.04. There are two key factors that will influence where we fall in the 2016 full year guidance ranges: the first being the performance of our Tools business; and the second, the impact of foreign currency. Our Tools segment had a challenging 2015, as the industrial products and services business slowed from high single-digit growth in 2014 to slight growth in the 2015. This contraction in our growth rate was most pronounced in Brazil and China. Our 2016 outlook assumes better performance driven by building IP&S momentum in the U.S. and Europe, partially offset by continued sluggishness in Brazil. Our 2016 full year core sales guidance assumes low to mid single-digit growth in our Tools segment. The second factor influencing our results will be foreign currency. Our 2016 full year guidance assumes a $0.26 to $0.28 negative impact of foreign exchange, $0.04 to $0.05 worse than our last estimate, driven by the late Q4 strengthening of the U.S. dollar. We've taken broad-based actions to deal with the expected negative forex impact with the most pricing actions already in the market. We expect that the combination of pricing, gross to net optimization, productivity, and Project Renewal-driven overhead reductions could cover the forex headwinds, while simultaneously enabling increased investment and capabilities in brand support. In 2016, we're planning to increase A&P funding by about 20% to 5.5% of sales and continue to strengthen our Insights and eCommerce capabilities with further investments. These investments are yielding strong growth dividends. In the U.S., in 2015, we've increased value market share in 10 of the 13 product categories that IRI measures. In nine of those product categories, our IRI dollar sellout or POS grew by over 8%. These strong U.S. market share increases drove U.S. core sales growth of 4.1%, and when coupled with acquisitions, drove net sales growth of 8.8%. The strategic choice to reposition the company from a holding company to an operating company, releasing costs through Project Renewal, such that we increase spending behind our brands and invest in an advanced set of capabilities, is clearly working. Our track record of delivery and the value-creation story derived from our accelerating growth and margin development sets the stage for the next very exciting period of transformation, as we combine our company with Jarden to create Newell Brands. This combination will create a $16 billion consumer goods company of leading brands that compete in large, growing, unconsolidated global markets. The combination scales the company in key geographies, customers and channels, more than doubling the business in the U.S., Canada, U.K., France, Germany, Mexico, Brazil, Japan and China. The combined portfolio is complementary and quite focused, with over 80% of revenue concentrated in just 30 brands. And there are a number of intuitive combinations of brands and categories like Graco and NUK, as well as Rubbermaid food storage and food saver that will yield greater consumer and customer impact for accelerated growth in category development. The combined portfolio is quite profitable, with 80% of the combined revenue having a gross margin over 39% and operating margin over 15% before synergies. So, there is plenty of gross margin to work with, and with overheads focused, and in some cases, reoriented to the activities that drive growth, there will be significant potential for margin development and growth beyond what we expect to deliver through the synergies already identified. Our ambition is to bring together and leverage the best talent and capabilities from both companies to drive strong growth, increase margins and increase cash flow through superior insights and product design, leading innovation and brand development, strategic category management and selling, delivery of the cost synergies to margin, achievement of savings beyond those assumed in the acquisition model to fund increased brand investment and enterprise-wide capabilities for growth, and after paying down debt to our target leverage ratio of 3 times to 3.5 times, active portfolio management that strengthens our positions in key categories. We will deploy the best aspects of the playbooks from both companies to drive a highly competitive set of outcomes. We'll respect the differences in each category, channel and business model, yet simultaneously establish a set of enterprise-wide capabilities. We will scale and strengthen our selling capabilities to provide broadened access and reach for our categories and brands into new channels and customers. We will quickly adapt both companies' rapidly developing eCommerce strengths to establish a leading capability in direct-to-consumer eCom, which is a differentiated Jarden capability, and-bricks-and-mortar and pure-play eCom, where both companies have excellent momentum. We will immediately play for procurement savings, as the combined companies buy over $9 billion in source finished goods, commodities and other services. We will leverage our scale for distribution savings in areas like ocean freight, where combined we ship over 65,000 40-foot ocean containers a year from Asia. And of course we'll quickly convert the savings associated with bringing two public companies together, establishing a lean and agile corporate infrastructure very similar to what's in place today at Jarden. So we'll deliver these outcomes in a structured way, extending the scope of the Newell transformation office, which is in place to ensure the delivery of Project Renewal savings to the total enterprise, including the work of integration. We're roughly 30 days into planning, and we expect to find far more opportunities once the two teams are able to fully engage with each other. We've been conservative in our assumptions, but we'll pursue every opportunity we uncover. We have no revenue synergies, no working capital benefits, and no tax synergies in our deal economics and have a very clear line of sight to at a minimum $500 million of cost synergies. The first $500 million of synergies is expected to create a company with EBITDA margins of over 20% and annual EBITDA of over $3 billion, giving us the firepower to reduce the leverage ratio to 3 time to 3.5 times within two years to three years and then, subsequently, to deploy capital to create further value beyond our organic agenda. As John stated in his comments, we've secured committed financing to enable deal closure and expect to maintain our investment grade rating. We're in the process of seeking the necessary regulatory approvals and expect to secure permanent financing sometime after both companies file their 10-Ks. With the current assumptions and despite widened credit spreads, we expect the deal will deliver high single-digit accretion in year one, mid to high-teens accretion by year two, and strong double-digit accretion by year three. So, let me close now by reiterating that we've had an outstanding 2015, delivering strong competitive results. Growth continues to accelerate and, despite unprecedented foreign currency pressure, we've increased margins and delivered very strong 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, as a result, our innovation funnel has more than doubled since 2013, with project value up 160%. These innovations leverage a new product design capability we've invested to create at our purpose-built design center, and we are backing our growth ideas with industry-leading marketing investment. This investment has been enabled by our determination to make Newell leaner and more efficient and to unlock the trapped capacity for growth. Coupled with the actions we've taken to strengthen our portfolio, these choices are yielding some of the strongest results Newell has ever experienced. We're on a path to completely transform Newell Rubbermaid, delivering highly competitive and differentiated results. Our operating model is extendible to more categories, more brands, and more geographies. This is the core logic that underpins the Jarden combination. The creation of Newell Brands will now allow the best talent at both companies to apply the best of what is working at both companies across a broader, more compelling and more diversified landscape of opportunity and brands. We will build one of the most exciting companies in our industry, a destination for talent, while simultaneously unlocking an incredible amount of value for our shareholders. That is the Growth Game Plan into action. That is the future Newell Brands. Let me now pass the line to the operator for questions.

Thank you. Your first question comes from Chris Ferrara with Wells Fargo.

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

Hey. Mike, I guess on the top line, right, obviously, the 4.4% pace you guys did this quarter, excluding Venezuela is strong, right, and it's in a tough environment. Your guide – and you talked a little bit about it, but your guide is 4% to 5% for next year. But if the comps get a little bit tougher – obviously, we talked about Brazil and China a little bit, but can you just go through your confidence for maintaining that growth rate in a tougher environment on tougher comps? And I know part of it is the increase in A&P, but if you can go through that a little bit and express it, that would be great. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, well, it's the combination of the increase in spending, Chris, but also we've got the strongest innovation plan we've had since I've been here. If you remember, we changed our whole model back in the middle of 2013, and I've said that the gestation period on new ideas that were coming through our brand development organization was 18 months to 24 months. And the way these projects work is they sort of layer into the market. And so as we progress through 2016 and into 2017, we've got some of the strongest innovation ideas we've really ever had hitting the marketplace. An example of that is in the first quarter, we'll launch new PaperMate InkJoy Gels with three times faster drying ink versus the leading gel pen for an advantaged performance. Less smearing. We'll launch Rubbermaid FRESHWORKS, which leverages our food storage business but applies a filtration, a membrane, to prevent oxidation from occurring on fresh fruits and vegetables, which should extend the produce life by – we expect to extend the produce life by nearly 80%. So you've got a whole series of innovations. John mentioned the SharpIN knives where Calphalon's got these ceramic sharpeners in the butcher block. So every time you withdraw the knife, you have the perfectly honed blade. And so these are the examples of the kind of innovation that has started to filter into our business in late 2015 and really hits its stride in 2016. So you've got the combination of increased spending. We've really sequentially increased spending since we've been here. We've tripled the amount of advertising we're spending on these brands. If you look at the number of GRPs we're delivering, we've actually increased it by five times since we started because we've gotten so much efficiency in buying by going to one buying agency. So we've got all of these things converging in the marketplace, which gives us the confidence that when coupled with what's a building selling system with respect to commercial execution and strengthened selling execution, those things all converge to give us confidence that 4% to 5% is deliverable, and Q4 is good evidence of that at 4.4% growth excluding Venezuela.

And then just I guess two quick ones. Number one, does the Jarden acquisition at all affect the timing of the planned Writing launch in China? And then you talked about financing. Do you still think that 4% is a decent way to look at financing rates or has that crept up, you think? Michael B. Polk - President, Chief Executive Officer & Director: Yeah, let me answer the first question. The answer simply is no. But we didn't have a lot built into our plans in 2016 for China. Remember, we'll launch late in Q4 to get to market in maybe one or two big cities. The team is presenting their final plans to me shortly. But one or two big cities for back to school 2017, which is in February-ish in China. So we don't get a lot of benefit in the revenue line from China this year, but we will get some nice growth in Writing in 2017. But, no, it should not impact anything we're doing on Newell Rubbermaid. In fact, one of the most important things that both companies can do in the transition is to execute their 2016 plans flawlessly. And while there will be a lot of work going on in the center to organize the delivery of the synergies, it's really critical that each set of operating unit stays focused on the plans they've built for 2016. So I wouldn't envision really anything materially changing for either company in terms of their core plans. On financing, yeah, credit spreads have widened since we announced the deal in December. But there's all kinds of levers we can pull to mitigate that issue. And quite frankly, the interest rate sensitivity in the overall deal is the least meaningful variable as we've looked at sensitivities. So we don't know where it will all end. I think it'll come down to the difference in tenure we could choose to place on the new debt. And we'll make that decision based on the best economic choice for the company. And if we have to accept slightly higher interest rates for the sake of making the right economic choice, we'll do that. We'll cover it someplace else in the algorithm. And obviously, one of the big levers we have is the balance of fixed to floating rate debt we choose to deploy. But, look, we're relatively relaxed. Of course, we would have preferred to not see credit spreads widen, the widening of credit spreads for BBB- debt is – our spreads don't look any different than the market at this point. So we're moving – while we may have moved a little earlier than the market, we're in line with the market today, and we'll just have to see how that plays out. We're not going to compromise the right long-term choice for the sake of managing to an interest rate assumption because we have so many other levers in the P&L to compensate for that in the very near term.

Thank you.

Your next question comes from Bill Chappell with SunTrust.

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

Morning. Just the first question on SG&A in the quarter. Just trying to understand how that came in versus expectations. And when I say that, I mean typically, in the past few years, you've kind of stepped up advertising promotion in the fourth quarter just to kind of get a head start on the next year. I didn't know if that happened again. And also if there were some kind of step-up of incentive comp since you look like you outperformed kind of your core projections. John K. Stipancich - Chief Financial Officer & Executive Vice President: Hey, Bill. It's John. You're absolutely correct. We did step up A&P. We made also some step-ups in strategic SG&A investment as well. So, for example, e-commerce, which has been a fantastic result for us, we're plowing more resources into. And you're right on the incentive comp. That also drove up the SG&A number in light of the strengthened performance and the good finish to the year. Michael B. Polk - President, Chief Executive Officer & Director: Also, John, just to build on that, we also placed a marker in Q4 on shopper insights. Well, we've made a lot of progress. We've doubled the amount of insight work we've done. And actually, the size of the team's up by 50% since we started in 2011. But where we haven't done as much research is in the area of shopper insights, and – because we wanted to get the fundamental consumer insight work done to support the innovation and brand agenda. In Q4, we made the first in a series of investments we'll make in shopper insights to ensure that we're driving leading levels of category management. Joe Arcuri and his team are really focused on taking our selling capabilities sort of to the next level, bringing the best of what fast-moving consumer goods have in category management capabilities to the consumer durables space. And part of putting the fundamentals in place is establishing a good foundation of shopper insights. So we made an investment in Q4 in that as well. We had the flexibility to do that. And as you know, with the – on the Q3 call, I mentioned that if we had the room to do more, we would invest more. And that's, in fact, what we did. It's strategic investment in A&P. It's strategic investment in structural cost and e-comm and insights, coupled with, as John said, we had a really terrific year from a performance standpoint in truing up a bonus.

That's – no, thanks for the color. And then just second on the Jarden transaction, is there any way you could kind of give us an idea or a rough guess on – not a guess – on how fourth quarter numbers kind of came in for them? And there's a – seems to be a bit of consternation about their organic growth, I'm assuming it was the 2% to 3% rate just with the weather being warm, but maybe some color there. And then also, Mike, as you look forward, any kind of idea of how this works in terms of number of divisions? I mean, Jarden has three divisions but kind of 25 different key divisions, and you have five. I didn't know if you have that kind of architecture of how it would break out and how you see it splitting up. Michael B. Polk - President, Chief Executive Officer & Director: Let me first comment on your question regarding Q4. Obviously, I – we don't own Jarden, and I actually don't have access to their performance data as they – they are the ones that have to communicate that. All I would say, though, is if you looked at their numbers through the middle – through the third quarter, their organic growth year to date was 5.9%. So they have terrific momentum in their business. They have an incredibly strong year ago performance in Q4 that they need to lap, and I know – I'm sure you all know this, but their organic growth in Q4 of 2014 was 11.4%. So a big hurdle to cross. No matter what way you cut it, with 5.9% banked through the end of Q3, they're going to have a very good year. And if you look at the combination of the two companies and look at their performance once you get their data, the combination's going to be pretty darn strong relative to anybody else in our industry. With them having 5.9% growth banked through Q3 and us having now 5.5% banked on the full year, that's a strong set of numbers. And so I think our eyes are set on the future. As I've said before, I don't get kind of locked in on any kind of 90-day performance cycles. Our view is set on what's going to happen over the next three years and how to unlock the value in this combination. So, hopefully, I expressed that in a compelling way in my script. But obviously, we're very, very excited about leveraging what is terrific momentum in their business and terrific momentum in ours to bring the best of both companies together to build a set of assets and businesses that perform better than either of us would have been able to do on our own. With respect to the design of the company, what I need our teams to do and what I know Jim Lillie at Jarden is encouraging his team to do is to just focus on delivery in 2016. Our energy and our synergies will be focused on the things I spoke about previously and not on big sweeping org design changes. Really important to keep our eye on the ball with respect to the demand creation activities in both businesses to preserve the momentum that I was referring to earlier. We'll figure out as we get to know the business over time, we'll figure out what the right model is for the overall company. We'll do that quickly as we did when we joined Newell Rubbermaid. It's important to articulate a set of portfolio of priorities and resources, human capital, and money needs to flow to the businesses with the greatest opportunities. And so we will do all of that work, but we're not going to walk in with a preconceived notion of that. We will do that work over time, and that will help shape our approach to how we organize. What is clear is that we will build a set of enterprise-wide capabilities that cut across both businesses, that in the areas of insight and design and innovation, that our businesses can tap into, and e-commerce, for example. So, those are really obvious opportunities, and we will obviously combine two public companies into one, and there will be changes associated with that reality. But in the operating units, we want to have everybody's head down, focused on execution of the plans that they've got in place. Both companies have a very compelling set of plans for 2016. It's really important that we execute those with excellence.

Perfect. Thanks so much.

And your next question comes from John Faucher with JPMorgan.

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

Good morning, Mike. Can you talk a little bit about, aside from Brazil, maybe how some of your more economically sensitive categories are doing right now? Obviously, there are some concerns in terms of discretionary exposure particularly as we look at the combination of the two businesses. So any thoughts just in terms of economic sensitivity and how that's impacting things right now? Michael B. Polk - President, Chief Executive Officer & Director: Yeah, it's really interesting. I read a lot about it. I see – I hear a lot about it. I quoted some numbers on our U.S. POS as measured by IRI. Ten of 13 categories, increasing market share, sell-out up over 8% in nine of those 13 categories. So I've always had this point of view that ideas trump the macros, that it's our responsibility as a consumer brand company to bring ideas to market and leverage our brands with the right kind of support behind them to trump whatever environment we're in. And our growth of 4.1% in the U.S. and 8.8% in the U.S. including acquisitions should be good testimony to that. I don't see any impact in – from a consumer perspective, in the growth of our categories, where we can measure that through IRI. I just don't see an impact at this point. The only business in our portfolio that had been sensitive to this has been the industrial products and services business, where, as I said, we went from high single digit growth in 2014 to essentially slight growth in 2015. And I previously commented that, that trend began in about October of 2014. And so we see, that's probably the only piece of our portfolio that is cyclical as our businesses evolved over the last number of years. We are far less cyclical than we were when we started, and we're more consumer-driven than we were then. And we have way more brand support behind our brands such that they can absorb the macro cycles a lot better than they could in the past. But at the moment, I don't see the slowdown in markets or in the macros, and I don't see our customers really behaving in a particularly defensive way like they did in 2009 during the recession. So you don't hear us talking about the – a macro issue with the exception of Brazil where it's a combination of GDP slowdown and the currency impact on the business, and the need for us to price to protect margins, and cover the transaction forex effect and the intersection of that with a slower economy, creating pressure on volumes. So that's most important to our Tools business. It's certainly a factor that's influenced our Tools performance in 2015, and the most sensitive portion of our Tools business to that type of environment is the industrial products and services segment of that business.

Great. And then just a quick follow-up. You guys tweaked the language a little bit on synergies, but it doesn't appear that you're adding in, like you said, you're not adding in the revenue synergies, et cetera. So just any color in terms of the little tweak in language in terms of saying at least $500 million? And that's it for me. Thanks. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, I mean, the way I'd answer that is when we look at Project Renewal and what's that – what that will generate by the end of 2017, we'll be somewhere around $700 million of annualized savings from Project Renewal. We've delivered those savings on a base revenue stream that started at $5.5 billion. So, do the math on $700 million divided by $5.5 billion, and then ask yourself whether $500 million on the base of $10 billion, which is the pro forma size of Jarden, is conservative or not conservative. So we've made a commitment to $500 million. We believe there probably is more. If we find more, which I expect we will likely do over time, as we did with Project Renewal. Remember, it was a sequential series of unpacking of the cost structure at Newell Rubbermaid. But if we do find more, a portion of that money will be invested back into the business for accelerated performance either in capabilities or in brand support on the Jarden businesses, and some will flow to margin beyond the $500 million committed to as part of the deal. The first $500 million is going to flow to margin. What happens after that, we will leverage any cost savings beyond that, that we can find to put the work to set up a different strategic future for the company, while also passing some back to investors so that you come along for the ride.

Great. Thank you.

And your next question comes from Kevin Grundy with Jefferies.

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

Good morning. First, if I could just start with a housekeeping question. On the Project Renewal, the $350 million, can you give us an update where we are with that and then what's sort of the expectation for fiscal 2016 in terms of how much flexibility you have? That's the first part. And then the second part, on the Jarden transaction, Mike, it sounds like you see very little risk with respect to regulatory approval, shareholder approval, financing. I want to know if that was a fair sort of characterization. And then just the second part on the Jarden question. Have your conversations with retailers begun to change now given the added scale, particularly that's really a U.S. mass retailer sort of comment? Have those conversations already started to change? Do you feel like you're going to see some sort of benefit there from the added scale? Thanks. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, on your first question regarding Project Renewal, cumulatively, so the annualized savings through the end of 2015 is $360 million. So that's banked, and that's in the bank. We have articulated a range of $625 million to $675 million in cumulative savings, but I just sort of shared with you my ambition and hope is that we get closer to $700 million when it's all said and done at the end of 2017 or into early 2018. 2016 is a big year of renewal savings delivery. We've got a lot of work that was initiated last year that flows into the P&L in 2016. We set up the transformation office in order to really establish a set of very disciplined project management capabilities. We've got teams organized along and across many different work streams. So we expect 2016 to be a banner year with respect to savings, and it's important to the overall algorithm. With respect to the Jarden transaction, I'll pass that over to John to answer. John K. Stipancich - Chief Financial Officer & Executive Vice President: Sure. Hi, Kevin. The – with respect to Jarden, we don't anticipate any challenges from a regulatory standpoint or anything else. We made good progress. Obviously, both teams have been working hard together with their outside advisors. So we don't anticipate any challenges. We're still marching towards closing sometime in Q2, and no red flags. So we're in good shape. Michael B. Polk - President, Chief Executive Officer & Director: With respect to your question on customers, it's a little early. We're not engaging customers with one voice at this point because that would be inappropriate as two separate companies. But the general feedback on the day the deal was announced, and I know Martin got some of this feedback as well from customers from – on the announcement date, and we subsequently had them in our conversations with retailers, has been very, very positive. As you know, the combination significantly scales our presence in a number of retailers in the U.S. We put that into the web deck that we put together when we announced the deal. We'll have over $2 billion of revenue at Walmart, and I think we'll end up being probably a top – in the 8th or 9th position in terms of their overall suppliers. And on the general merchandise side, we'll be at the top, if not near the top. I think that's very exciting. That'll lead to a really strategic set of conversations with all of our retailers where we scale. And the other thing about the combination of the companies is it opens up access to new channels for some categories. So Jarden has real strength in mass sporting goods with the Coleman brand and with some of their Action Sports businesses, that opens up opportunities for brands like Contigo and Avex where we probably never would have gotten to investing the SG&A and selling expense to access those markets, which we can now access. And the reverse is true for Jarden. We have tremendous scale in home centers and in hardware, and in the distributive trade in the U.S. through Commercial Products and Tools, which can provide the Jarden businesses access to channels. And so it's going to be very exciting to unlock all those opportunities. I don't view scale at customer as being a leverage point with respect to negotiating. Some people think, oh, we're going to be able to yield a bigger stick at these customers. That's not how we think about engagement with our retail partners. We think about building our business collaboratively. We have a responsibility as leaders in our categories to own the development of those categories at those retailers, and of course, we leverage our branded assets to do that. So we build share when we do that effectively. But we – share accountability with our retail partners for developing the size of the pie, the size of the categories. And that's how we approach our relationships, and we expect the combination to now be able to do that across a broader landscape of categories for our retail partners, and through that, become more of a strategic supplier to them. So unbelievable set of opportunities connected to the selling and the potential for strengthened strategic capabilities in that space.

That's helpful color. Thanks, guys. Good luck. Michael B. Polk - President, Chief Executive Officer & Director: Thanks.

Your next question comes from Bill Schmitz with Deutsche Bank.

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

Can you just first talk about January sell-in and sell-through trends? And then usually, you give us sort of like some color on the quarterly cadence of earnings. Is there anything funky to pay attention to this year? And then I have a follow-up on the deal. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, I gave you some color on quarterly flow in Q1 and that I gave you the Venezuelan impact. If we had not deconsolidated Venezuela in 2016, would have been worth $0.03 to $0.04 in Q1. So that's some color on flow. I didn't give you the numbers for year ago, but that's slightly more than what Venezuela contributed in the year-ago period. So there's a little bit of color. We're pretty bullish on what the first half of the year has to offer because a lot of our new items ship in the first half of the year. So Rubbermaid FRESHWORKS goes, InkJoy Gels go in the first quarter. We had good performance last year; very, very good sellout performance. So we don't enter the year – you can see it in our receivables numbers. You didn't see tremendous movement in our receivables numbers year-over-year. So that's a good sign that inventories have come down in the fourth quarter, retail inventories have come down in the fourth quarter. That's true in a number of places, I suspect. And the kind of POS and sellout that we've got going on is really encouraging. We should have very good – with good sell-through comes good sell-in, and that's set up well. We will spend more in Q1 than we did year-ago from an A&P perspective with stronger innovation, and so we're set up for a good first quarter, I think. And obviously, the proof of the pudding is in the eating and it's not even really the end of January yet, but the green light's in the engine room. So there are always things that you've got challenges that you've got to overcome, and undoubtedly we will have those to deal with this year.

Great. Thanks. And then just on the Jarden deal, can you just – just housekeeping items like what your assumption is on the interest rate on the debt. I think before you said it was plus or minus 3.5%. And then would you ever consider doing like an incremental equity deal to sort of accelerate the deleveraging? How long you think it's going to take to get to 3.5 turns of leverage? Maybe like the broader macro assumptions as you kind of did your deal math. And then lastly – I know there's a lot of questions here, but what the tax rate we should use for the pro forma company? John K. Stipancich - Chief Financial Officer & Executive Vice President: Hey, Bill. It's John. So with respect to the debt, there's a couple of moving pieces, but overall, the term loan is locked. And that rate's roughly, for your modeling, 2% to 2.2%, it's a variable rate instrument. The public debt that Mike was talking about earlier, right now, we originally said yes where we modeled 4%. Credit spreads have moved, but there's still a lot of moving pieces. So we don't know where the tenor will be or how much will go with variable rate debt overall. So there's still a lot of work to do. But we're not too worried about the creep off of the 4% on the public portion of the debt. So that part is, again, work in process. And there is, as you know, a lot of market volatility between now and the time that we ultimately go to market.

Great. And then how about like the timing to get to the 3.5 leverage ratio and the macro assumptions underlying the deal, and then just the pro forma tax rate, if you have it? John K. Stipancich - Chief Financial Officer & Executive Vice President: Yeah, so we can – we get to that ratio, we're committed. So part of the reason why we structured the deal we did is a term loan's a three-year instrument that we have to pay down, the $1.5 billion that I mentioned earlier in my script. And so part of that is a commitment. So we get down to that 3 times to 3.5 times, two years to three years. Right now, we've modeled in a number of sensitivities. So we're very comfortable that 2.5 years from now, we'll be back in that range, give or take, absent some massive change in the underlying economic culture of the world overall. So we have good shape in terms of that. With respect to tax right now, obviously, I think the easiest thing to do is model just the blended tax rate between the two companies, but there is opportunity. Now none of that's reflected, as Mike said, in the synergy numbers that he's talked about and so forth, and we're excited about bringing Jarden in together with us in terms of what we can do with some of our tax structures and so forth. So we definitely see upside on that. But it will take some time obviously to get the two companies together and into one tax system. Michael B. Polk - President, Chief Executive Officer & Director: So we're going to push to get to delever as quickly as we can. If you look at our numbers, and you probably haven't had time to kind of plow through them all, we've got EBITDA of around $900 million in for Newell and Jarden is – you can figure out what Jarden is. And with synergies coming perhaps a little bit quicker than what was modeled, we'll be very quickly approaching $3 billion of EBITDA. And so we're going to have lots of flexibility to pay down the debt quickly, and we will want to do that. That's the commitment we've made to get back into the range of 3 times to 3.5 times within two years to three years, but I'm hoping we can do that closer to the two years than to the three years. With respect to the other issues on potential derailers that could undermine that, I really don't see them because we've been so conservative in the assumptions we've made on the timing of synergies, the growth rate that we built into the model. So the tax opportunities, the working capital opportunities, we should have some quick wins there that are not built into the deal economics. And it's just going to take a little bit of time to get our arms around that once we're able to more openly engage with each other, but not much time. We'll want to go for that type of stuff quite quickly. The other thing to recognize is that the leverage ratios look high at the beginning, in part because of the timing of the year we're doing this deal. Right? So Q1 is probably the worst moment to try to convert a deal like this with – given the flow of cash flow for both companies. So the optics of our leverage ratios are pretty high, probably half a click high, at the end of the first quarter versus what they will quickly be over the next few quarters. So there's all those dynamics in place. We've made a commitment to get down to 3 times to 3.5 times. We're going to do that in a focused way. We are prioritizing capital allocation to that outcome. And the only exception to that is the CapEx assumptions we've got in the business, which we have not compromised on CapEx investment on either business. We've blended the base plans and we won't pull back on that front. And you should expect on the Newell Rubbermaid side for us to be spending around $200 million in CapEx this year, maybe slightly above that. And then on the dividend, we have assumed that we maintain Newell's current dividend of $0.76 per share, obviously across a higher share count, which means more cash out for that in the combination, but we believe that's an important element of our capital allocation strategy that will be and should be preserved.

Okay. And then just on the equity raise, would you maybe think about raising equity if it'd accelerate the deleveraging process? Michael B. Polk - President, Chief Executive Officer & Director: That's not in our line of sight right now. And doing an equity deal, not in our line of sight right now. We're going to be really focused on executing both companies' plans. Obviously, there's – if we get good momentum in the core of the business, we can think of different options as we come into 2017. But our focus right now will be on execution. For the deal execution of the individual business plans, delivery of the EBITDA progression that's built into those two plans and it's in the deal economics and playing for more EBITDA if we can find it, either through acceleration of the synergies or through accelerated growth in the businesses, or through other means of influencing gross margin development which are also available to us.

Great. Thanks so much, guys.

And your next question comes from Jason Gere with KeyBanc Capital Markets.

Okay. Thanks. Good morning, guys. Just a couple of questions. One, just in the six weeks since you've announced the deal, Mike, maybe can you talk a little bit about what has surprised you more on the upside of this deal? Obviously, I know it came together over the fall kind of quickly. But – and within that, what should we anticipate when you guys talk at CAGNY? Will some of the – maybe the integration team members be with you just to get a better sense of the deal and investors getting more comfortable with it? That's the first question. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, I don't think you should expect us to go deep into the integration at CAGNY because again, we will not be combined at that point, the two companies. We will lay out where we see the opportunities, and those opportunities will be articulated based on the thinking that went on in the fall and conversations that have happened with senior management since that time. But the planning stages are early on. It's a little premature for us to be doing a deep dive on exactly what we're going to do when in a couple of weeks. That said, I'll lay it out. I'll visually present what I just described to you in the earnings call in a little bit more detail to give you some evidence of where the opportunities are and talk about the ambition we have for the business. But I would expect the more detailed discussion to happen after the shareholder votes and after the transaction is consummated. That's when we'll get into some far more detail. Our focus, though, will be on engaging both sides of the house in understanding where their business opportunities are, learning the Jarden businesses, and then after a period of work and thinking about those, bringing that back together into an integrated approach and strategy for the company.

Okay. Michael B. Polk - President, Chief Executive Officer & Director: Of course, we'd provide guidance for 2016, revised guidance for 2016, and we will provide perspective on the out years, once the transaction's completed.

Okay. That's fair enough. And then, I guess, the other question. I was just wondering if you could talk a little bit about the competitive landscape maybe in the U.S. Yeah, especially as I think the economy is a little bit more skid-ish, you're seeing a little bit of commodity deflation coming through. I know it may not affect you directly as it does other staple companies, but I'm just wondering if you could talk about any categories where you might be seeing a little bit more pressure or competitors trying to this thwart the innovation that you're bringing out. And within that point, I know you kind of gave us the outlook for Tools for 2016, but I was just wondering if maybe you can kind of give us a framework for core sales in the other segments too. Thanks. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, we typically don't guide core sales by segment, but I think you should expect Writing to have another very good year albeit without the benefit of Venezuela. You should expect Baby to have a very good year as well. We've got terrific momentum there, with great innovation coming. Commercial products, I think you should expect another year of good progress. And you'll see probably the most change in Home Solutions, where Rubbermaid has a whole series of innovations that are coming to market like, FRESHWORKS, like Fasten+Go, which is effectively taking our LunchBlox concept and executing an adult version of a lunchbox for work. And so that'll come. And then in the back half of the year, we've got another exciting food storage innovation that I won't disclose now that, really, will be very, very cool and fun to see how consumers respond to. So, we've got three big innovations in Rubbermaid coming this year. We've got a big year on beverages, as we continue to develop and build the Contigo, Avex, bubba and Rubbermaid brands in this space, so – and Calphalon is going – Calphalon and Goody will go through complete relaunches. We saw some weakness in Calphalon in the fourth quarter as we're transitioning out of product lines and into new product lines, which start flowing in here in the middle of Q1. So, we've got a full facelift going on, on Calphalon, and we've got the Goody brand relaunch, which is set for the second quarter of this year. So, I think Home Solutions will probably be the place where you see the most change. We will continue in the – to continue to optimized Rubbermaid consumer business by continuing to pull back on consumer storage, the less profitable end of that business. So, some of the positives that I was just referring to will be partially offset by continued contraction in that portion of the business, as we look to reposition the Rubbermaid brand to play in areas where the brand can be differentiated. And through differentiation comes higher gross margins. Through margins, comes higher affordability to invest and really create the renaissance in Rubbermaid that we hope to deliver over the next couple of years.

Great. Thanks for taking my questions.

And your next question comes from Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Thanks. Hey, guys. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Joe. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hey. Good morning. Just a couple of quick ones. I guess, first, and, Mike, you sort of touched on this earlier. In terms of the need to invest behind the Jarden brand, it sounds like you don't see a big catch-up period here, given that the first $500 million of cost save will drop to the bottom line effectively. But how do you think about your need to invest behind the Jarden brands? And secondly, how does the acquisition impact your goal of getting to A&P spend of about 7% of sales? Michael B. Polk - President, Chief Executive Officer & Director: Yeah. So, yeah, let me take the second part of the question first. The acquisition will not impact our drive to get the Newell Rubbermaid portfolio to 7% of sales. As I said in 2016, we'll get that ratio up to 5% – probably around 5.5%. And so, we continue on that journey to the 7% threshold. And we think that happens in 2018, maybe a little bit of a bleed over into 2019, depending on how the renewal cost savings flow through to the P&L. So we don't see any interruption in that drive. On the Jarden businesses, we're just getting to know these businesses. I will tell you, all you have to do to understand the Jarden businesses and whether they have the algorithm right is look at 5.9% core sales growth through the nine-month period in 2015. That would suggest that there are a lot of things going right in these businesses. Of course, we believe in brands. And if we can find the flexibility beyond the first $500 million to find savings, we're going to want to invest back into brands. We believe that our design capability, which is enabling the step-up in innovation on the Newell Rubbermaid side of the family, is applicable more broadly across more categories. In order to fund that, we'll have to invest some money to extend the shoulders of that capability, to be able to potentially help some of the Jarden businesses, but – and, of course, if we're going to – if we can strengthen innovation in these businesses through that design capability, we're going to want to put advertising and promotion money behind it to stimulate awareness and trial of the new ideas. But I think if there was a place where you could or should expect us to explore investing, it's in that area. And we, of course, across the total landscape are going to continue to invest in eCommerce. For Newell Rubbermaid in the fourth – in the full year, our eCommerce contribution in the U.S. to our POS growth was something close to 14%, which if you go all the way back to our Analyst Day in May of 2012, you can look at what we quoted there as the contribution to revenue. And you see this big step up. That's, in part, a function of the investments we've made. We expect to make investments across the total enterprise in eCommerce. We'll fund that through any savings that comes beyond the $500 million. Now, unlike what we did with Project Renewal, where the first couple of tranches of savings went fully back into the business, you should not expect us to do that with anything beyond the $500 million that we find. Some of this is going to flow back to investors for margin development beyond what we've committed to with the first $500 million, and some of it will flow back into the business. How that ratio breaks down, yet to be determined. We have a lot of work to do to understand the opportunities. I had the opportunity to meet Hope Margala and her team up at Yankee last week just to say hello and get to know them. They've got all kinds of really interesting things going on there. And so, I suspect, as we get into these businesses, we will see and find all kinds of opportunities that, hopefully, by bringing the companies together, we'll be able to plus up, just like Jarden has historically done, as it has bought businesses and integrated into the company. And look at the progress on Yankee. I used to be on the board there in 2005, 2006. They've got a big dynamic business in Europe that didn't exist when I was there. And that's happened since the Jarden acquisition. So, there's plenty of evidence that, that work is already underway, and the question is can you overlay more funds to really unlock the upside in any of those areas that are particularly attractive? And, again, too early to say where you'd place those bets or whether you can find the money beyond the $500 million, although our judgment tells us there's more to be found there. And we should go get that money, so we can put it back into the business for growth acceleration. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Great. Very helpful. Thanks, Mike.

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

Hi. Good morning. So, could you talk a little bit about Writing and the operating margins there? I know you talked about both foreign exchange and a higher investment spending pressuring the op margin in the fourth quarter. But it's been a while since we've seen op margins go down to the tune of 200 bps, so, – and I know it's only one quarter and, still, for the year, they were up, but I'm just wondering kind of where we are with your commitment to higher spending going forward, with the China launch, and all that kind of good stuff. Just on that business, specifically, do you think 25% is kind of the right/peak operating margin, or do you still think there's room for margin expansion ahead? Michael B. Polk - President, Chief Executive Officer & Director: Look, in any given quarter, the margin will flow depending on how much investment we've put in. Yeah, we said we spent more money in A&P than we were planning on spending in the quarter, and Writing was the beneficiary of that which should almost always is. The – but we don't have a target margin for businesses. I mean, anything over 20%, in my experience, is a really exciting place to be, because if you grow, you really create a ton of value. So I don't – but I don't envision us drifting down to that level. But I also don't want to target and peg 25% operating income margin as a target margin for the Writing business, because I feel like we might constrain the opportunities for growth. As we move Writing into new geographies, there's sort of an SG&A bubble you have to accept in front of the – ahead of the revenue stream. And our ambition is to deploy this portfolio as broadly as it is relevant to deploy it over the next five to ten years. So, there will be periods where there's a cost of growth associated with that choice that'll be covered by some other business, just like you saw some of the businesses cover Tools investment in 2014. You see other businesses covered Baby investment at the beginning of this year. We'll now see Baby margins come back to fund other investments in Home Solutions. And so we manage this money very dynamically, and we don't let it get trapped in any particular segment. The leadership team allocates resource, and in any given period, operating – you should expect the operating income margins to flex up and down, depending on what investment plans we're making.

Got it. Got it. And to the point of sort of your ability to, I don't know, reallocate resources and manage it all, I think you've talked in the past how SAP has helped to a certain extent, and how you expect SAP will help more going forward. But, specifically, to the Jarden transaction, I think one of the concerns that I've heard from investors is just the complexity of that business and the scope, and the breadth, and all of that. So can you tell us, are they on SAP? How quickly do you think it will take to bring them onto your systems, so that you can preserve that great sense of management of the numbers and management of the business? And then just the last thing on that transaction, specifically, obviously, investors have kind of shown that there's a fair amount of concern about the transaction and all of that. Can you address, internally, within Newell, what the response among the employees has been to the transaction? Obviously, Tarchetti's excited about it, but what about everybody else? Do they feel like you're going down a different path than they thought you were? Thanks. Michael B. Polk - President, Chief Executive Officer & Director: Yeah. That's a great question. Let me answer that one last, then maybe John can provide some perspectives, so that it's not biased by me, because I'm obviously very excited about it too. I think people are really energized by this, because they've seen what's happened here and they now, – most people are probably thinking, gosh, there's all kinds of opportunity for me personally to go work in different types of businesses over time. And I get the sense there's a lot of excitement about this. The group's been through a ton of change, so they understand how to – and they're resilient as all heck to be able to absorb the rhythm of change that we've had over the last number of years. But there's a lot of excitement. There's pride in the fact that we're creating something big and special that could really be very, very exciting. But maybe, John, you should answer that last part rather than me. John K. Stipancich - Chief Financial Officer & Executive Vice President: Sure. So, Wendy, I'll add some color in a second. With respect to the systems, so part of Jarden is on a version of SAP, but we're fairly comfortable that we'll be able to get them and get our arms around their systems relatively quickly. Obviously, they have a great business, and they've run their business extremely well, so they certainly understand their numbers. And we're encouraged coming in that we can kind of get to a common nomenclature and common vocabulary relatively quickly. Our IT guys are really excited to work with them. And, certainly, I think we can give them some perspective on things that have worked well for us. As Mike said, it's really consistent with taking the best of both companies. So, we also have some things I'm sure we can learn about them and get a little more leverage out of our systems overall. So, comfortable to get our arms around the business fairly quickly, and certainly, in our meetings with them, they clearly have their arms around the business, so we're very comfortable with that. In terms of the excitement, certainly, it's not something I think that many of the employees expected, but we're excited. We're excited about the progress that certainly Mike and the team has made over the past five years to put us in this position, to be able to rewrite the future for this company. And that's what people are mostly excited about now. We look at the opportunity now with Jarden and things that we think we can do as we broadened our set of capabilities across a number of different new categories and new brands. And as Mike said, as well as the synergies, places where Jarden has been very successful, and we haven't been as successful in certain channels. So, there's a lot of excitement. We know it's going to be a lot of work. It's been a lot of work for a number of people for the past three months to four months, but it's going to be a great combination, overall. So it's – we're a little bit disappointed. Maybe some people don't see it that way, but for us, we only see upside. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, I think the market's reaction, I'm not even going to focus on it, to be honest with you, because the opportunity is in front of us. It's not in the moment. And so, the opportunity is to bring this combination together and create the value release that will naturally occur, but more importantly, strategically, to create one of the leading consumer-branded companies in the world, and certainly, a leader in the durable space, where nobody's going to be able to have the capabilities we have. We'll have the affordability to invest in a really advantaged set of branded development capabilities that should enable us to trump the competition. We'll compete in category. Country sales against lesser competition is quite small. So if we want – if we – as we set this company up to be managed the way we manage things today, where we – a senior group of people, leaders from each of the business has come together every year to allocate resource, as we allocate those against the businesses with the greatest right to win, we should see really tremendous release of value and growth. And that will create a very, very exciting story going forward. We're on a risk-on scenario and a risk-off environment at the moment because of the leverage that we need to raise to bring these two companies together. And that is why we have the clarity, the security and the sense of what will happen next to give us the confidence that what we've said about maintaining investment grade, getting the deal financed, getting the deal – having the deal deliver a high single-digit accretion year one and mid-teens to high-teens in year two, and strong double-digit accretion in year three, we have the confidence and line of sight to all the moving parts in that algorithm to give us the security that the risk-on increase is appropriate for our company. The market doesn't have access to everything that we've got access to if we don't have the opportunity to talk as explicitly as we'd like to, to the market until the transaction's consummated. So, we're in that period where there's uncertainty in a risk-off environment. And I'm sure that's creating pressure. We will, over time, in a very deliberate way, articulate our vision for the company, what we believe is going to be possible through the combination. And I am certain we will find more opportunity the more time we have to engage with the partners, and we – on the Jarden side. And we intend to bring the best of both together to bear on this collection of categories that are really quite strategic. The opportunity is quite strategic. These are large growing categories with unconsolidated markets. And the brand portfolio is powerful, because we have leading positions in those categories. And so, there's so much roll-up potential, either organically or through a combination of organic and external development, that you just sort of feel like a kid in a candy store in terms of the potential opportunities ahead. We're going to do this deliberately, we're going to do this with putting the best people on the field that we can to unlock the upside, and we couldn't be more excited by what's ahead. But our line of sight goes beyond the next 90 days or 30 days, it's the next three years. And it's putting in motion the set of choices that I think we will illuminate over time for the market, but we are certain, we'll unlock the value we have represented to you, if not more.

Terrific. Thank you very much.

And your next question comes from Steph Wissink with Piper Jaffray. Lauren M. Wolff - Piper Jaffray & Co (Broker): Hi. This is Lauren Wolff. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Steph. Lauren M. Wolff - Piper Jaffray & Co (Broker): Hi. This is actually Lauren Wolff calling in for Steph. Switching gears a little bit, we've seen some significant momentum over the past year within the Baby business in particular. Michael B. Polk - President, Chief Executive Officer & Director: Yup. Lauren M. Wolff - Piper Jaffray & Co (Broker): Do you think this level of growth is sustainable into 2016 and beyond? And would you be able to provide any additional color about the innovations that you mentioned earlier? Michael B. Polk - President, Chief Executive Officer & Director: Yeah, I wouldn't count on the 10% type of growth levels as being something that's sustainable every quarter, but we've got a lot of innovation coming in Baby. We're excited about Baby. The combination actually potentially brings together some really exciting opportunities, particularly, with NUK and Baby Jogger. And there are a couple of European soothing businesses, as well, that Jarden has. So, we've got some tremendous opportunity here. We love our Baby business. It's a different business than the rest, in that, on our side of the family, we've outsourced the manufacturing to a strategic partner. So, our gross margins are dilutive to the total company performance. But because we don't own the assets, our return on invested capital is quite high. It's just next to Writing in terms of its value-creation potential if we grow. So when you grow Writing – when you grow Baby, you create a ton of value for investors, to the ROIC and RONA, return on net assets, is so high, just shy of Writing's levels. And Writing's levels are margin-driven, Baby's levels are driven by the absence of fixed assets in a very short value chain, because most of our retail partners, many of them DI, direct import, from the point of departure in Asia. So, we have a very short value chain, inventory chain. So, this is a great business. We expect to grow it. I think if I were building a model for the next number of years, I'd be building sort of mid-single digit growth. There will be a moment in time when China opens up as a huge market. There is now car seat legislation in place, not yet being enforced, but that will create a car seat market over time. And when that happens, we want to be right in the middle of the growth that will come with Baby gear. Our business is sourced from China, so we've got great presence there. So that if and when that market opens, we will be in a position to participate in a more material way than we do today. But that will – when that moment comes, that will trigger a different level of growth for the company in that segment. So, I think the right planning stance is mid-singles. Lauren M. Wolff - Piper Jaffray & Co (Broker): Thanks. That's helpful.

And your next question comes from Linda Bolton Weiser with B. Riley. Michael B. Polk - President, Chief Executive Officer & Director: Hey, Linda. Linda B. Weiser - B. Riley & Co. LLC: Hi. Can you just comment? You named a few things about why operating cash flow was down year-over-year? Can you remind us, how did the $566 million do relative to your original guidance range? And then do you have some guidance on that for 2016, excluding Jarden? And to meet those leverage ratio targets, do you think you're going to have to step up initiatives like on working capital? Or do you think you can just get to those leverage ratios kind of status, just kind of operating cash flow without any special efforts in the working capital area? John K. Stipancich - Chief Financial Officer & Executive Vice President: Sure. Good morning, Linda. So, we generally don't guide with respect to operating cash flow overall. So, we won't give you any guidance numbers for 2016 or 2015. I will give you an explanation where we landed for 2015 versus 2014. Essentially, we were up about 2% if you take out the $70 million pension payment that we made in 2015 to get our pension plan up to about a 93% funded status. And then we had a little more cash spend on Project Renewal and some other restructuring costs overall. In terms of focus on cash going forward, the model was built without any working capital improvements, but there are plenty of working capital improvements for the transaction as well as on our side. As we've talked about before, our inventories, we can do a little better job on. Overall, we've built some inventories this year for growth and so forth, but we know we can do a better job managing inventories as well as managing the other pieces of working capital. So, that will be a focus. It'll be part of our incentive plan next year that we talked about because of the importance of delivering on cash. Overall, for us, in terms of getting down our leverage ratio down, as Mike said, as quickly as we reasonably can to the 3 times to 3.5 times ratio. But again, good focus on cash. So, we made good progress in Q4 as well on inventory, so I'm relatively comfortable that we have line of sight to a another strong year for 2016. Michael B. Polk - President, Chief Executive Officer & Director: Just to punctuate the point John made, we've recommended to the board that our 2016 – the Newell Rubbermaid 2016 bonus program, the short-term incentive program, include a component on operating cash flow. And so, obviously, cash flow matters a lot, and operating cash flow matters a lot in the context of this deal. So, we will put some skin in the game for our employees with respect to really moving the needle on operating cash flow. Like John said, we don't guide, but you can be assured it's going to be a focal point for us. There's a lot of opportunity in working capital, as I've said, over time, and this is the time to go get it. We have not assumed any benefit, we've just blended the programs that existed from both companies in our geoeconomic assumptions. So you can rest assured cash is king in the coming years and really ought to be all the time. And you should expect us to really move the needle on this over time. And again, I think we've got a very clear line of sight to being able to get down into the leverage ratio range that we've committed to. And I'm hopeful that we can do that closer to the two-year horizon than the three-year horizon. But our commitment is to do that within two years to three years. Linda B. Weiser - B. Riley & Co. LLC: Great. Thanks very much. Michael B. Polk - President, Chief Executive Officer & Director: Yep.

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

Hey. Great. Thanks. Maybe just carry on the cash theme. Can you talk a little bit about how the deconsolidation of Venezuela impacts the operating cash flow sources and uses outlook that you'd communicated back in September? I mean, obviously, FX has shifted as well, but you had said about $5 billion between 2016 and 2020, with about $2.4 billion sort of uncommitted after CapEx and dividends and base-level repurchases. I'm just curious, obviously, before considering Jarden, if the outlook is materially different now with Venezuela carved out? John K. Stipancich - Chief Financial Officer & Executive Vice President: Yeah. So, with respect to the cash generation, the sources and uses, the cash flow write-off for us going forward, the difference will be about $50 million on an annual basis. So, it doesn't materially change the numbers that we've put together in terms of the sources and uses of cash overall. Michael B. Polk - President, Chief Executive Officer & Director: And the other thing I'd say is that all the modeling we did with the rating agencies, all the modeling we did on the geoeconomics assumed Venezuela out. So, everything that we've articulated externally excludes Venezuela.

All right. That's great. Thank you very much. And then just, I guess, one clean-up on Writing, if I could. So, I think growth in the segment was about 6% this quarter ex Venezuela, you can correct me if that's wrong, and I think you said high single digits in North America, which implies that growth kind of internationally ex Venezuela was very modest. And just any commentary on that, and how you expect sort of North America versus international to trend in 2016, that'd be helpful. Michael B. Polk - President, Chief Executive Officer & Director: Yeah, so we have three different Writing businesses. We have a Fine Writing business, we have the DYMO business, which gets consolidated in our Writing segment, and then what we call Writing & Creative Expression. Writing & Creative Expression is growing very, very well. This is where Sharpie and Paper Mate and Expo and Prismacolor, they all live in that cluster. Fine Writing has been less positive, the growth rate. And your observation is accurate. Growth in Europe was not as strong as we believe it can be over time, in part, because WACE growth, or Writing & Creative Expression growth, was offset by Fine Writing declines. And so we're in the midst of repositioning our Fine Writing portfolio in Europe, pulling back on some of the low-end portions of that portfolio, so that we focus brands like Parker and Waterman on the high-end portions of that portfolio. So, that is what contributed to Europe's sort of modest Writing results. Terrific growth on Writing & Creative Expression in markets like the UK and in France offset by Fine Writing contraction in the same geographies. Over time, you should expect our Writing business to become more dominant and present in the core, which is Writing & Creative Expression. We've got a terrific plan in place for our Writing business in 2016. I think you should plan for like performance in your models for 2016 as we delivered in 2015, ex Venezuela. And while we haven't quoted a specific number for Writing ex Venezuela, and you shouldn't expect us to, you're in the general ballpark with your analysis.

Okay. Great. Thank you very much. Helpful.

And your final question comes from Rupesh Parikh with Oppenheimer. Michael B. Polk - President, Chief Executive Officer & Director: Hi, Rupesh. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): Good morning. Thanks for fitting me in. So, my first question, Mike, has to do with innovation. Throughout the call, you made a lot of commentary about all the innovation you expect this year. Is there any way to quantify the impact of innovation this year maybe versus a prior year? And a follow-up question, as consumers continue to migrate more online to buy their products, how does your delivery of innovation change with that dynamic of consumers buying more online? Michael B. Polk - President, Chief Executive Officer & Director: Yeah. So, great questions. I'll give you some perspective on innovation. So, when we evaluate the impact that innovation's having in our business, we look at what we call the vitality rate or the innovation rate and we measure innovation rate as the percentage of our revenue that's been touched by innovation launched in the last three years. And when we started in 2013 with the new model, our innovation rates were quite low, in the low teens type of level. And as we enter 2016, we're getting very close to what we have as our long-term objective for the innovation rate, which is 30%. And so this is a vitality rate or an innovation rate that the best consumer goods companies would consider the gold standard. And we're well on our way to getting there. We will get there in 2016 with the pipeline of ideas that are coming to market. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): Okay. Great. And then maybe just one housekeeping question. Is it possible to get the 2015 gross margin rate and SG&A margin rate, excluding Venezuela? Michael B. Polk - President, Chief Executive Officer & Director: We don't typically communicate that, but I'll let Nancy – and you guys try to triangulate around what that would be. But the way you should think about it, it's not that big of a deal, with respect to its impact on overall margins. It may be slightly – it may hurt us a bit on operating margin but not at gross margin. So, I think it actually may help us with VZ out of gross and hurt us with the operating income margin, because we don't spend a ton of money in A&P there. But just modestly, not as much as you might think. Rupesh D. Parikh - Oppenheimer & Co., Inc. (Broker): Okay. Great. Thank you.

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: Well, thanks very much, LeeAnn, and thank you to all on the call for your interest in our company. And most important thank – importantly, thank you to all the Newell people who work tirelessly to make these results happen. And to our future colleagues at Jarden, who have worked tirelessly as well over the last few months with our team to pull this transaction together, I think together we're going to make a great team. Thank you very much.

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