Newell Brands Inc. (NWL) Q2 2017 Earnings Report, Transcript and Summary

Good morning and welcome to the Newell Brands Second Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open the call for questions. As a reminder, today's conference is being recorded. A live webcast of this call is available at newellbrands.com on the Investor Relations home page under Events & Presentations. A slide presentation is also available for download. I would now like to turn the call over to Nancy O'Donnell, Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Great. Thank you. Welcome, everyone. Thank you for joining Newell Brands Q2 call. With me today are Mike Polk, our CEO; and Ralph Nicoletti, our CFO. As usual, before we begin today, let me quickly go over the customary Safe Harbor language. Forward-looking statements made during the call reflect our current view. Actual results or outcomes could differ materially from management's expectations due to risks and uncertainties. Please refer to the cautionary statements in our press release and in our filings with the SEC that are available on our website. I'd also like to point out that we will refer to certain non-GAAP financial measures including, but not limited to, core sales and normalized EPS. Management believes that providing insights from these measures enables investors to better understand and analyze our ongoing results of operations. You can find the GAAP to non-GAAP reconciliations on our website and in our press release and 8-K that was filed this morning. Thank you. And I'll now turn it over to Mike.

Thank you, Nancy. Good morning, everyone, and thanks for joining our call. We've delivered a solid set of second quarter results. Consistent, competitive top line growth, coupled with strong double-digit earnings growth has enabled us to reaffirm our 2017 full year core sales growth and normalized EPS guidance and increased our 2017 net sales guidance to reflect our latest view on held-for-sale timing and foreign exchange. Net sales grew just over 5% compared to prior year, and we delivered 2.5% core sales growth against our toughest quarterly prior year comparator. These results represent a competitive outcome, enabled by our multi-year focus on brands, innovation and e-commerce and our ability to play our strengthened portfolio across more geographies. We delivered over $80 million of savings and synergies in the second quarter, which contributed to strong normalized operating margin growth of 130 basis points and normalized EPS growth of 11.5%. Operating cash flow is $48 million compared to $597 million in the prior year. The prior year results reflect substantial benefits related to the timing of the Jarden transaction that do not repeat in 2017. Since the transaction completed last April, we've made excellent progress deleveraging the balance sheet and are well on our way to achieve our leverage ratio target of 3 times to 3.5 times. In the second half of 2018, we begin to accumulate a surplus of cash and our borrowing capacity, which will be available to be put to work. We're particularly encouraged by the breadth of performance. We delivered core sales growth in all four regions: North America grew 2%; Europe, 2.5%; Latin America, over 9%; and Asia Pacific, nearly 5%. E-commerce, which represents about 10% of our global sales, once again, grew strong double digits. Our brand and innovation program when coupled with our strong e-commerce and brick-and-mortar selling capability had the expected impact on our market shares. In our large U.S. market, we increased market share by nearly 60 basis points, with market shares increasing in product categories that generated over 70% of our U.S. sales. This represents an acceleration in share growth from the first quarter, led by Writing, Baby, Food Storage, Fishing, Coolers and Team Sports, which all delivered greater than 100 basis points of share growth versus prior year. Correspondingly, many of these businesses had standout core sales growth, five businesses: Writing, Baby, Waddington, Team Sports and Safety & Security grew core sales greater than 6%, with Writing and Waddington both delivering double-digit core sales growth. For Writing, the second quarter of 2017 represented the fifth consecutive quarter of core sales growth and the third consecutive second quarter of double-digit core sales growth. The strong Q2 selling in most formats at advanced back-to-school bodes well for a strong back-to-school sellout in Q3. Encouragingly, Home Fragrance, which struggled towards the end of 2016, delivered another solid quarter, driven by strong growth in Europe and U.S. retail comp store sales growth of nearly 3%, associated with the Mother's Day personalized candle program in our retail stores. We plan to scale and replicate this program in Yankee's fourth quarter. Additionally, the repositioning of the Yankee Candle brand in our wholesale markets has begun. We are transitioning the Yankee Candle brand across all formats and geographies to one global treatment, priced consistently in the better tier across all channels. We're also establishing one global sub-brand under Yankee Candle called Home Inspiration, which will be priced at a value to the Yankee Candle master brand in the good tier. In the context of this new brand architecture, we have gained distribution across several key retailers in the U.S. So positive changes are underway at Yankee Candle. More broadly, the fundamentals are good across the business and are improving as we head into the second half of the year. That said, like most others in our industry, we continue to face pressure from retailer inventory reductions and retailer consolidation in the U.S. And sometimes the impact can be pretty sharp, and that was certainly the case for our Fishing and Fresh Preserving businesses in the second quarter. Combined, Fishing and Fresh Preserving core sales declined about $30 million in the U.S. despite market share increases in both categories. There's no doubt that this event took a bit of the bloom off the rose in the quarter for us. In general, though, I'm encouraged by how well our businesses are performing in the context of the ongoing turbulence in the marketplace. Our ability to deliver quite good results has been enabled by our agility and responsiveness to changing conditions, our leverage in the scale and diversity of our category, channel and geographic footprint and our hands-on entrepreneurial approach that gives us visibility to issues and opportunities in real-time. So a solid first half of the year. We're making very good progress in the transformation, and I'm proud of our people in their performance. Let me hand the call over to Ralph for a deeper dive into the results. I'll then return to provide perspective on the balance of the year and some reflections on the path forward. Ralph, over to you.

Thanks, Mike, and good morning, everyone. As Mike said, we are pleased with our second quarter results. In a challenging environment, we achieved 2.5% core sales growth. We delivered over $8 million in synergies and Project Renewal savings, which is having a meaningful positive impact on margins. Operating cash flow remains on track for the full year, and importantly, we are well-positioned to deliver our full year forecast on both P&L and leverage metrics. Let's turn to the details. Second quarter reported net sales were $4.1 billion, a 5.1% increase versus last year, which was partially driven by the benefit of acquisitions, including an extra two weeks of contribution from the Jarden business as well as contribution from held-for-sale businesses for longer than we had originally assumed. Foreign exchange was 70 basis point headwind and core sales increased 2.5% with notable growth drivers being Baby, Appliances, Writing and Waddington. Core sales growth was broad-based with growth in all geographies. Reported gross margin was 36.4% compared with 28.4% in the prior year, which reflected the absence of last year's inventory step-up impact from the Jarden acquisition. Normalized gross margin was 37%, compared with 37.2% last year. This slight decline reflects the negative mix effects of the Jarden's stub period and the Tools divestiture. We also spent roughly $10 million or 30 basis points this quarter related to repositioning of the Yankee Candle brand in our wholesale markets, partially offset by the benefits of cost synergies and other savings. We reported SG&A expense of $955 million or 23.6% of sales, a 90 basis point decline versus last year. Normalized SG&A expense was $807 million or 19. 9% of sales, 150 basis point decline. The improvement in SG&A ratios is partially driven by cost synergies and other savings. We also saw a benefit from the positive mix impact of the comparison with last year's two weeks stub period in which Jarden, which historically had a lower SG&A ratio was not included in the prior year results. These benefits more than offset the impact of the incremental investments we are making in e-commerce, brand development and insights. Reported operating margin was 10.4% of sales compared with 3.6% in the prior year. Normalized operating margin was 17.1% compared with 15.8% in the prior year. Interest expense of $115 million compares with $127 million last year, which included some onetime impacts from the Jarden transaction. We anticipate 2017 interest expense of around $470 million. Our reported tax rate was 17.6% compared with last year's 20.3%. The normalized tax rate was 26% compared with 29.2% in the previous year. We now expect the full year tax rate to be between 22% and 23%, slightly favorable to our previous guidance. We continue to anticipate discrete tax benefits in the third quarter, which will drive a normalized tax rate in the high single-digit, low double-digit range. We ended the quarter with 486 million diluted shares outstanding, up from 450 million in the prior year, reflecting a full quarter of outstanding shares issued for the Jarden acquisition. We continue to expect the full year share count to be at or around 490 million shares, including the 6.6 million shares recently issued in the settlement of four dissenter lawsuits. Reported EPS was $0.36 compared with $0.30 last year. Normalized EPS, which excludes transaction-related expenses and certain other charges, was $0.87 compared with $0.78 last year. Turning now to our segment results, our Live segment generated net sales of $1.3 billion compared with $1.1 billion in the prior year. Core sales increased 0.2%, reflecting strong results from Baby, particularly in North American car seats and solid contributions from Appliances and from Home Fragrance's retail and international growth, partially offset by softness in Cookware and Fresh Preserving. Net sales in the Learn segment were $1 billion compared with $912 million in the prior year. Core sales increased 6.6%, driven by strong results in – with strong results from Writing, with good international growth on Paper Mate in both Latin America and Europe. U.S. growth from Sharpie, EXPO and Dymo, and most notably, very strong growth from Elmer's, driven by slime. This growth was partially offset by inventory destocking at key retailers, particularly the office superstore channel. In the Work segment, net sales were $738 million compared with $707 million in the prior year. Core sales grew 6.3%. All operating divisions grew in the quarter led by Waddington's continued strong results. The Play segment generated net sales of $782 million compared with $685 million in the prior year. Core sales declined 1.2% as growth from Team Sports, Beverages and Coolers was offset by challenging conditions for Fishing, including inventory destocking and a key fishing retailer bankruptcy. The Other segment contributed net sales of $246 million compared with $533 million in the prior year, reflecting a number of divestitures completed in the last 12 months, including Winter Sports, Tools, Décor, Teutonia, Lehigh and the Fire building business. Core sales declined 2.1%, with growth on Process Solutions, offset by weakness in Home & Family. We generated $48 million of operating cash flow in the quarter compared to $597 million in the second quarter of last year. Cash flow in the second quarter of 2016 was unusually high, benefiting from a couple of onetime impacts related to the close of the Jarden transaction. First, there were substantial cash outflows in the stub period from April 1 to April 15 prior to the acquisition that we did not have to fund. Secondly, there was a benefit on cash interest since no interest payment was due in the quarter related to the acquisition debt. The total cash interest benefit was around $175 million. Cash flow in the second quarter of 2017 of $48 million was affected by higher inventories in support of back half growth initiatives, particularly where we are tight on capacity, such as in slime demand and in our Waddington business. And to a lesser extent, excess inventory in areas where we experienced trade inventory liquidation such as in pure Fishing and Fresh Preserving. We also paid an incremental cash taxes of $50 million principally related to the Tools divestiture. There will be an additional Tools related cash tax payments of approximately $225 million in the third quarter and an $85 million payment in fourth quarter, all of which are contemplated in our cash flow outlook. Importantly, looking at the balance of the year, we are on track to achieve our cash flow and leverage goals. As a result, we expect to have leverage at or near the target EBITDA range and by the middle of next year, ahead of schedule. I'll now turn the call back to Mike.

Thanks, Ralph. This morning, as I mentioned earlier, we reaffirmed our full year core sales growth guidance and normalized EPS guidance and raised our net sales guidance. The increase in net sales guidance reflects the positive impact of foreign exchange and the fact that we kept our held-for-sale Tools and Winter Sports businesses longer than we originally anticipated when we provided our initial net sales guidance at the beginning of the year. We're tracking towards the middle – towards the midpoint of the new net sales guidance range. As you will recall, we increased our normalized EPS guidance range by $0.05 in May, with first quarter results, to reflect the benefit of holding tools longer and the benefit of foreign exchange versus our initial guidance. Today, we have not raised earnings guidance further because the favorable foreign exchange rate differential between May and now is largely offset by the negative earnings impact of holding the Winter Sports business through the first half of the year. Our former Winter Sports business lost over $25 million in operating income in the first half of the year. As a result, our normalized EPS guidance range remains $3 to $3.20. We continue to track to the midpoint of that range, which is $0.05 above our original normalized EPS guidance for 2017. There are three factors that could influence where we fall in our 2017 full year guidance ranges: the delivery of our synergies and savings commitments, our ability to sustain double-digit growth on our e-commerce businesses, and the consumer response to our planned brand activities and innovations. With respect to cost savings in our synergy programs, we are right on track. We delivered over $80 million of incremental cost savings in the second quarter. This brings our 2017 year-to-date savings to $198 million against our full year commitment of greater than $300 million. Cumulative savings since the beginning of 2016 are now $410 million. We have actioned but not yet realized another $270 million that we expect to flow into the P&L over the next 18 months. We expect about half of these actioned but not yet realized savings and synergies to be delivered in the second half of 2017, consistent with our current guidance. So we're right where we expected to be and the disciplined execution of the Transformation Office gives us full confidence in our 2017 delivery. With respect to sustaining our strong e-commerce momentum, our guidance assumes we deliver strong double-digit growth in both the third and fourth quarters. Today, e-commerce represents about 10% of our global business or about $1.5 billion of revenue. Through the first half of 2017, our global e-commerce business has grown strong double digits. We've increased our rate of investment in e-commerce beyond what we originally contemplated at the early stages in the combination and are well on our way to reach our near-term design of 500 dedicated e-commerce employees by the end of the year. We've opened e-commerce offices in Seattle and Hoboken in close proximity to our largest e-commerce retail partners and will open a third office in London later this year as we extend our capability to Europe. The velocity with which we've scaled this team has been extraordinary, and the team is doing a terrific job of transforming our capability while simultaneously delivering the strong growth we expect. These new resources and our strengthening capability positions us to deliver the strong double digit growth we've assumed in our 2017 guidance. The third factor that could influence where in the range we deliver relates to the impact of our brand activities in the second half of the year. We have good underlying momentum, driven by our strong and building brands in innovation activities and our double-barreled selling capability in e-commerce and brick-and-mortar. As mentioned earlier, we see this playing out in our market share growth of nearly 60 basis points in the U.S. with that increase accelerating from the first quarter results. In the second quarter, we saw good traction from the activities we layered into the market, with personalized kiosk in Yankee Candle stores driving comp stores sales growth of about 3%, a roughly 10-point reversal in comps from the first quarter. In slime activation, our numbers resulting in a 14 share point share gain with our investment in advertising activity, driving glue market growth of nearly 40%. The deployment of our portfolio is also working with more focused selling approaches into new geographies. This activity has started to yield strong results, with excellent growth on Baby Gear in Canada of over 30% related to the launch of a new direct selling model and double-digit growth on Waddington as a result of deploying more selling resource against more vertical channels and good momentum on Writing in India and in the Shanghai test market where both initiatives contributed to nearly 40% growth on markers and pens in the Asia-Pacific region. These are early wins. New products, new distribution, more focused selling resource and stronger brand activity builds into the second half of 2017 with exciting growth programs on Baby Gear, Appliances, Cookware, Home Fragrance, Waddington, Commercial Products, Beverages and Writing. Brand investment also increases in the second half of the year, with strength in merchandising frequency and increased advertising and promotion support. So with this strong back half, we expect to deliver core sales growth acceleration into the second half of the year in the upper half of our full year core sales growth guidance range with sequential acceleration in our growth rate from Q3 to Q4. We have assumed no further major U.S. retailer-driven disruptions in the second half of 2017 as we lap the step-up in activity that started in the fourth quarter of 2016. While we are mindful of the tough environment, our confidence is strong and grounded in the knowledge that we have a leading portfolio of brands, advantaged capabilities in innovation and design with the best still yet to come, a peer group leading e-commerce organization, a long list of opportunities for core distribution and international deployment, a world-class team working on realizing world-class levels of savings and the scale to outspend in the determination to out execute our competition. This is a proven model and playbook that we've executed before and are now in the midst of executing again. I have the privilege of leading the development of one of the most exciting household goods brand portfolios in the world, brands that hundreds of millions of times every day help make life better for consumers where they live, learn, work and play. We expect Newell Brands to be one of the most transformative value creation stories in the consumer goods industry. We have a clear path forward and could not be more committed and driven to deliver. That is the unique opportunity that's Newell Brands. With that, let me turn it back over to the operator to help facilitate questions.

Thank you, sir. And we will take our first question from Olivia Tong with Bank of America Merrill Lynch.

Hey, good morning.

Hi, Olivia.

How are you?

Great. How are you?

Good. Thank you. First, in terms of the second half core sales uptick, is more of the new products coming more from the Jarden side or the legacy Newell side? From what you talked about it, it sounded like it was a fairly good balance. And then where is the new distribution coming from? Is it existing retailers taking on more, or are you starting to be able to leverage sort of the legacy Newell footprint for Jarden and vice versa?

So great, great questions, Olivia. It's a pretty good balance, although I want to be clear, the things that we're launching are things that don't really tie to the big investment we've made in insights. Those – that work to fill the innovation funnel really will yield in the middle of 2018. So that upside is still in front of us. But we actually have some very strong and exciting things going on across a number of different businesses. We've got a very big launch on cookware. I don't know whether you have Calphalon at home, but we do. And the way our pots and pans are designed, and most cookware is designed the same way, they tend to take over the drawers in your kitchen. And so, one of our really bright clever designers has figured out a way to design a Calphalon set of cookware that's stackable. And so we launched stackable Calphalon in the fourth quarter. That's going to be a big launch. Some of that may ship in Q3, but the big merchandising events will happen around the fourth quarter. We have a big launch connected to what we call our Crocktober drive period on Crock-Pot. I really don't want to describe what the innovation is, it's just a little bit early even though the sell-in has happened to retailers, the shipments haven't yet occurred and I just assume keep our competitors in the dark as long as possible, but it's going to be a really exciting event come October across the landscape, so we're really looking forward to that. We've got Baby Gear launches in Canada and the U.S. We got a really cool new stroller launching that we call UNO2DUO, which is a stroller that really conveniently extends from a single stroller to a double stroller without really much effort at all in a part of moms. We've got some exciting new stuff coming on Writing connected to coloring and gifting in the fourth quarter. So we've got a broad cross-section of activity coming, plus we have tremendous amount of marketing and merchandising activity set up around back-to-school, of course, and around Black Friday. So the back half was always going to be the more loaded half of the year for us for two reasons. It's natural; so it matches the natural flow of our business, but also in the first half of the year, we've been changing basically everything; the entire organization, new people, new roles, consolidating structures. So this wasn't the period of time to be launching a lot of new items into the market. So it's the natural phasing in our business and the natural phasing of our – in connection to the natural phasing of our change program. Olivia, what was the second question? I got lost in the innovation. I am so excited about them.

Yeah, more about – no, that was great, I'm glad to hear that. And then just in terms of where the new distribution is coming from, is it existing retailer, is it more or...?

Yeah. It's a blend of two things. I mean, we've got – I described what we're doing on Yankee Candle and we've got some big wins in North American wholesale coming on Yankee in the back half of the year. Some distribution regained other reposition distribution at some very big retailers, so that's terrific. We're pressing assortment into our pureplay.com partners and our retail.com partners, so when you think about availability and assortment that that to me is core distribution as well. And there were some businesses that were not available on some of the biggest dotcom platforms that we've got, whether they're retail.com or whether they're pureplay.com. And we've got plenty of room just to optimize our assortment on virtually every one of our categories. We pushed BRILLIANCE and FreshWorks and Rubbermaid into distribution last year. We're working to figure out how to capture more physical shelf space for all the innovations that are coming on Rubbermaid. And so that work has been underway, that's contributing to the Food Storage growth that you see and I mentioned in the market share data. And that will accelerate in the back half of the year with the launches – further launches on BRILLIANCE and FreshWorks in the cutting end of those distribution items into retail and the optimization of our Food Storage assortments. So I could go category-by-category. Beyond the core distribution, we're pressing now with the check factory on Yankee up and running in Europe. We've got opportunity in France, in Germany, in Italy to press the shoulders of our portfolio out from our U.K. anchor and our Italian anchor. And as we talk about earlier, we're continuing to develop our Baby Gear business in Canada as a result of the change in our selling structures. And the Waddington and Commercial Products stories will really be about distribution expansion to more verticals, where we, in the second quarter, I described it is more focused selling resources. We've extended the coverage of the sales force in Waddington, and we will be doing the same thing on Rubbermaid Commercial Products in the third quarter to be able to cover more verticals. And the whole point there is broadened distribution. So we're – the stage is set, of course, the environment is not easy right now, but the stage is set. And we'll see how well we execute.

Great. Thanks. And then if I can just follow up on the cost saves, nice continued progress in Q2 relative to your $300 million target for the year. Retail environment is challenging. You touched a little bit on the commercial environment too. Any change in terms of your view on how much may need to be reinvested over time relative to the one-third, two-third breakout that you referenced in the past?

Yeah. We have to stay flexible on this. I mean, we want to spend into our strategic agenda. That said, we don't see our investment profile changing versus what's been assumed all along in our guidance. We have a step-up in A&P, first half to second half of about 40 basis points. Our back out spending is certainly planned ahead a year ago. I think that's great. We're investing in overheads, in insights and in e-commerce, obviously, with the scaling of that organization. I think we've got the investment profile right for now. But to your point, we don't live in a static environment, so the environment unfolds in a different way than we may end up adjusting our thinking on some of that. But at the moment, I wouldn't suggest that, that's top of mind.

Great. Thanks, Mike.

Yeah.

And we will take our next question from Stephen Powers with UBS.

Great. Hey, thanks.

Hello.

So inventory destocking, it's clearly been a theme there throughout the year and it clearly had an impact in Q2. Can you frame for us a little more detail how those impacts compare with your going in expectations? In the quarter that just closed, it sounds like they're a bit more severe than expected. And then how you expect the impacts to flow over the back half. Any outsize to watch out for Q3 or Q4?

Sure. So, I mean, the impacts are pretty sharp when they occur. We won't talk to you guys about the normal ebb and flow of inventories, but I'll just give you a sound bite. First half, point-of-sale growth on Fresh Preserving, plus 2.4% in U.S., so good POS sellout. As I mentioned, share growth in the second quarter. Invoice sales in the U.S. on Fresh Preserving down 21% in the first half. So that's a sharp stick in the eye. We didn't call that severe a change and it was most acute in Q2. In Fishing, there are two things going on. It's inventory step-down to the Walmart and a couple of other places, but one of our top six customers declared bankruptcy, right, as the season was turning into high seasonality. So these are things you – certainly you have to prepare for as best you can, but when they occur, you're oftentimes not precise in how you manage those things. And so, these events are – we're in the middle of what has been a structural change in retailer attitude that started in the fourth quarter of last year. As you'll recall, we missed a replenishment order on Appliances after Black Friday. There was a $24 million order at Walmart. And the good news is, as we come through Q3, we lapped the vast majority of that step-change in the environment, which means that all of these changes are now in the base. And so the environment would have to get materially worse than last year's environment for us to face headwinds from Q4 onward. And – so that's our view of the view forward. We may not be precise or right. There're certainly some structural things out there that we've been living with for years, office superstore contraction, the rebalancing of that retail landscape. We've done very, very well in our Writing business in the context of that. So I say when I say recognizing that there is certainly more to come in this space, but I don't think it has as profound an impact on the business as the last three quarters and a month or two through Q4 of the last year is at. This will go down as one of those cycles that the industry goes through. And once we get through the fourth innings, into the fourth quarter, I think the degree of impact lessens.

Okay, that's great. And then in your prepared remarks, you talked about how Yankees were gaining momentum at the core, which is great as we approach that Q4.

Yeah.

But we've also talked in the past about rationalizing the store footprint and some door closings potentially as we go forward. So can you remind us where we are in that process? And then, if there's any way to size any potential top line headwinds associated with those door closings, particularly as we get to Q4, where is the big Yankee quarter?

Yeah. There are a bunch of leases coming due in the middle of this year, but no more than 15 stores, 20 stores out of 600 stores. We're not going to go – at this point, we don't envision going proactive on store closures. But there is unproductive stores and then leases expire, we look at those things. We also don't envision opening new stores because we believe the future of this brand is going to be a function of – on this business a function of our core route-to-market. But we don't see a radical change in the retail store footprint other than as leases expire. We may change that point of view in the future, but that's not built into our plans right now. We're intrigued by the impact we had in Q2, flipping the comp store sales growth as profoundly as we did with the personalized platform launch around Mother's Day. In the month of May, comps were actually up plus 7% on the quarter, plus a 3%. So the real question is, with this renewed activity in store whether – what is the effect going to be in Q4, which is, to your point, is the high seasonality for that brand. And obviously, the real quarter that matters. Last year, we didn't have the kind of ammunition in store that we will have this year. We'll see how that plays out. That's probably one of the points of uncertainty. The good news is we will have much broader wholesale availability in the fourth quarter with all of these wins that I was describing in the North American wholesale markets, U.S. wholesale markets, and we have broader presence in both pure play and dotcom. So I think we're much better positioned on Yankee Candle as we come into the back half of this year than we were a year ago. But there's always a point of uncertainty as to whether this program that really worked well in May can be replicated in the high seasonality window and have the same effect. We've assumed improvement, for sure, in our numbers versus the experience we had prior year, but we haven't been quite as bullish on our Q4 assumptions as our outcomes were in Q2.

That's great. I've got more, but I don't want to hung time. So I'll pass it on. Thanks.

Okay.

And we will take our next question from Lauren Lieberman with Barclays.

Great. Thanks. Good morning.

Hi, Lauren.

Just to follow up on Yankee. So the repositioning also looks like it comes with a price adjustment. You mentioned it but we've seen it on new lower price on Bed Bath & Beyond, it's not yet reflected on the Yankee website. So if you could just walk through the rationale of lowering the price point on that core piece, if there is a plan to have a higher end product maybe with one of the other brands in the Home Fragrance portfolio. And then how you're sort of matching and thinking about the gap the lower end product and will the core Yankee be available in some of these new wholesale accounts or regain wholesale accounts that you've suggested?

Yes, so our focal point is on the Yankee Candle brand. So the big mass wins are all Yankee Candle brand-related. It's interesting, Lauren, when you look at the average retail price paid by the consumer for our products, they pay a lower price in our own stores than they were paying in the wholesale markets because of the frequency of promotion. So what we're doing with the price changes is making sure that the consumer is paying roughly the same price irrespective of whether she buys it in our store or whether she buys it in a Walmart or Target or Kohl's or a Bed Bath. And so that's what we're doing, we're leveling the playing field. So the price adjustments aren't really happening in retail, they're happening – they'll be happening in the wholesale market. And the way we look at it is we look at the average retail price, not the everyday selling price. So beyond the average price adjusted for the frequency and depth of promotion. And so that's what we've done with Yankee. At the same time, as we launch Home Inspiration as a second tier good positioned brand, we're going to eliminate all the other trademarks that we had out there goes away – Simply Home goes away and there is a couple of different trademarks that were in the U.K., they all go away, so we have a two-tiered structure, good and better. Your question about best is a great question. We've got a really wonderful brands in Italy called Millefiori. We have a whole bunch of concepts in test that go super-premium. Again, we'll see how they go through the development process, but you can envision going way up from a pricing perspective. I don't know that will be Yankee branded, we'll learn more over the coming quarters, and we'll decide whether that's something for next year, whether that's something for years beyond. But yes, this is an important aspect of what we're doing, and we end up with really good gross margins vastly accretive to fleet average in a much bigger business.

Okay, great. And then on Calphalon, I know you were clear on the – given some parameters on Fresh Preserving. But it sounds like cookware Calphalon was also a little bit soft in the quarter. Was any of that – I don't think it's typically an important quarter for Calphalon, but any kind of strategic managing down of inventories or trimming shipments ahead of the fourth quarter launch? And how broad is the stackables? Is it going to be across all of the lines of Calphalon? Is it a new product line within Calphalon? Just curious about the dynamics of that?

Yes. So stackables will live primarily at this point in our main price tier. So it's not going down, we're keeping the benefit up. You're right to notice that the change year-over-year in Calphalon business as we call Calphalon, we called it out in order to point out that Appliances has been doing reasonably well within Appliances and Cookware. Calphalon in the year ago period was in a period of liquidation of a whole bunch of sub-brands. If you recall, we went through a multi-tiered structure and fixed the brand architecture on Calphalon in 2016 first quarter and into the second quarter. And it's lapping all the liquidation that was associated with all of the changes we made in that window. So that's the primary issue, but it's a very competitive market. I think of all of our competitors, I think when I look out there, I always mention Pilot and Writing, I think SEB in Cookware is actually quite a good competitor. They've done a nice job with ALL-CLAD and a couple of other brands. So that's not an easy competitive marketplace for us. And so we need to continue to innovate, we need to advertise, that's why we are more excited about the prospects for Calphalon in the back half of the year.

Okay, great. And then final thing was just Elmer's, you've called out supply constraints. So anything you can share on that part of those plans to increase capacity if you, just say, will absorb the higher cost and I guess it's contact manufacturing because it's unclear fun – the degree to which it's a fad that runs its course.

Yes, we think certainly there's a surge in slime making that's going on now, but I think this has a much longer half-life than most of these types of activities because of mom and child consumer – I mean, mom and child involvement. There's incentive on both sides to continue to do this sort of thing. But there certainly were costs associated with being able to serve the demand. And we also took advantage of the surge in growth on Elmer's to deal with what were going to be in a proactive way, what were inevitably going to be conversations with some of the distributive trade on the balance of our Writing portfolio. So we were able to do some interesting things with respect to inventory positions on everyday writing pens and pencils in Q2 and get those things behind us with some of the distributive trade with the benefit of the surge in demand on Elmer's, which is good for the long haul. But there's some – there's both a mix effect negative in our margins associated with that. And we mortgaged a little bit of growth on Writing that we could have gotten. All that said, still strong double-digit growth. So your point about whether you self-manufacture versus you handle the surge through third party, we did both. We added a shift. We added a couple lines into our North Carolina factory, but in no way was that going to be enough to cover the upside impact, a 14 share point increase in the context of a 40% increase in the market so it's a meaningful impact. And so you're right, we've chosen to take the margin hits associated with that in order to serve the demand and also to do some underlying things within the business that I think serve us well for the long haul on the balance of the Writing portfolio.

Okay, great. Thank you so much.

And we will take our next question from Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Thanks. Hey, guys, good morning. So first question I want to go back to cash flow for a second. Sounds like, obviously, the second quarter of last year was a pretty tough compare. But just curious, did the first half play out as you expected? And how should we think about the full year? I think last year you guys generated about $1.5 billion in operating cash flow in the second half. I would imagine you guys would expect it to be a little bit better than that this year.

Joe, it's Ralph. Regarding your question, first, we did – as we planned the year, we did expect to have full year cash flow below a year ago because last year, you heard from our remarks, was elevated a little bit by the fact that we had the stub period of Jarden, which really was a cash outflow period now coming into the full year in 2017. As we got to the first half of this year, we build inventory at this point in time, and we've been doing that and then we've – and the seasonal flow into the back half of the year will be consistent with a year ago. We're on track to hit our leverage targets at the end of the year and essentially, everything we saw in the second quarter doesn't make us feel any different about our full year view on cash flow. We expect to be in and around the $1 billion range on the full year.

And the only build, Ralph, that I'd make is that because of the cash tax payments on Tools, the year-over-year comparator will look a little bit different. And Ralph laid out the flow of those Q3, Q4. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Got it. Okay, that's helpful. And then just shifting to e-commerce and the assortment expansion you guys mentioned this morning, which brands do you think are underdeveloped in e-commerce? And where specifically are you adding those – are you adding in terms of your assortment? And what do you have to do to sort of fix that and get those brands online?

Listen, in general, I think everything is underdeveloped despite the fact that in our Baby Gear business, 40% of the revenue globally – 40% of the revenue in the U.S. is e-based. So I think consumers are shifting in this direction. You need a multi-channel solution in all of these categories. And every brick-and-mortar we chose trying to figure out how to create a closed system where if somebody comes into the physical space, they convert within the digital space, within the banner. And we want to work with everybody on all that. So what do we have to do? We're running as fast as we can possibly run. We entered the year with about 200-plus people. We'll exit the year with about 500 people that are dedicated; the vast majority of these folks coming from the outside. We're building an organization that's unique and differentiated versus what I think most other people in the space have because it's a closed system and represents the channel across the entire enterprise, including selling resources and trade marketing resources and supply chain resources. So I think we're doing everything we can to capture the opportunity. I believe we're growing off a much bigger base where 10% of our revenue globally is e-commerce. When I look at some of the numbers that folks have reported off much smaller basis, our growth rates off of that 10% base are pretty much in line with what other people are reporting off of much smaller businesses. And so we're running and gunning. There's a whole bunch to learn, both in our camp and in the retailers' camps. In consumer durables and discretionary products, you have a two-step process to purchase. You have to prompt consideration, which is in a 3D environment, you do that by getting off shelf and into the aisle. And then you have to drive conversion with the product proposition at a value. In 2D environment, the learning is all around how do you prompt consideration and because the conversion part is relatively straightforward. And so we're stepping up our investment in page search. We're working hard on advocacy and every one of these businesses have different paths to the triggers that prompt consideration. And so we're excited by the progress we're making, but we believe we have a lot of work still to do. And well, we, obviously, have focused for now U.S.-centric but this organization contemplates a global footprint. So I've mentioned the London office that's going to be a very important trigger for European development. And at the same time, we have a big opportunity in both the retailer.com and pureplay.com. And then we got a big opportunity in our own brand stores to we're growing double digits there, but we want to grow profitably so figuring out how to do that and doing it in a disciplined way and creating scale of architecture in the backroom in support of that really quite important. So a lot of work to do. This is a multi-year journey for us. There's no flip the switch moment. Obviously, we're capturing a lot of benefit right now, but we expect to sustain that kind of growth into the future. And we got a lot of work to do to deliver that. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Understood. Okay. Thank you, guys.

And we will take our next question from Faiza Alwy with Deutsche Bank.

Yes, hi, good morning. So Mike, I think this is the second quarter in a row where Appliances has seen a pretty strong growth. And it's sort of trending opposite with what we're hearing from others in terms of the category. So could you just talk a little bit about what you're seeing in the category and where your growth is coming from, whether it's U.S.-based, international, sort of which channels or specific products it might be coming from and whether you think it's sustainable? Thanks.

Yeah. I think our Appliance business is doing well where we've got solid innovations, and we have a monster business, terrific business in Latin America that's just absolutely one of the best Latin businesses. I've had the privilege to work with, build around the Oster brand. So the Appliance business, its strength is Latin America and U.S., we got a pocket of strength in Europe in the U.K. with the Breville brand, which we have the rights to in the U.K. and then we've got a nice business in Australia and New Zealand around, believe it or not, the Sunbeam brand, which borrows a lot of the product offerings from Breville and brings it to market across multiple appliances. So it looks like Oster in Latin America. So we have these pockets. These geographic markets, and the opportunity, of course, is to build out a much bigger appliance and much more consistent appliance brand across – a set of brands across the world. In the second quarter, we had good growth in slow cooking and in our coffee business, but not as much growth in home products in Q2 as we had in Q1. And so we got pockets of growth is the best way to describe it. On balance, we're pretty happy with the growth rate, but it's still very early days. Remember, Appliances and Cookware is a developed for growth business. So this is a business where we're investing a lot of time and energy in building a pipeline of ideas to strengthen these brands. And the real value from that investment doesn't yield in growth until middle of next year and beyond. So in the interim, we've got an excellent brand with an excellent pipeline in Latin America. We've got pockets of ideas in the U.S. and we got a nice business in the U.K. And we play the levers that we've got to play until we get to a more substantive pipeline of ideas in the back half of 2018. In terms of market growth, I hear the numbers that people are quoting. I guess, we define the market differently in-depth. I don't want to – it's not helpful for me to contrast versus what other people say. We see low single digit market growth across how we define the category, which is across all the categories that we compete in, so – in the U.S. And that's the only push we really have a good measurement of it, but that's, obviously, by far, our biggest market. So I don't know if that's helpful.

No, that is. Thank you.

And we will take our next question from Dara Mohsenian with Morgan Stanley.

Hey, Dara. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Hey, good morning. So Mike, you touched on your e-commerce success in your prepared remarks and in response to Joe's question. Obviously, you've got a big advantage today in terms of the sales mix exposure versus peers. Is that mainly in your mind because you've set up the e-commerce as a separate function and closed system, different than a lot of your peers and resourced it more in terms of head count and spending? I am just trying to get at what you think are kind of the key sources of competitive advantage so far that have allowed you to prosper. And more importantly, going forward, do you think you can sustain that competitive advantage as you look out longer term?

Yeah. So great question. Part of our strength in our momentum in these businesses has to do with the development of a few of our categories. And the fact that those categories, which naturally developed online earlier through us as a leadership team, on both sides of the company into the channel earlier than I think other consumer goods have been drawn in. So our experience curve is longer than most fast moving consumer goods companies. And through that learning, we came to the point of view that the right way to structure the organization for maximum impact is the one that we've pivoted towards – at the beginning of this year. I think we're getting terrific yield on that, but it's very, very early days, Dara. So, I think the upside in the structure is ahead of us as opposed to behind us. Do I think we stay ahead versus others? So I'm sure that some of our blue chip peers, which we don't compete with directly, have the resourcing if they were to choose to go into the space to do what we're doing as effectively as we are if they were to organize the way we're organized. I don't know whether they have the institutional flexibility to do what we've done. We're effectively a start-up, so we start from a white sheet of paper a year ago, and we're able to design the structure without a lot of organizational challenges we're shifting from something to something. So I do think it serves us well. I think creating a community of practice and a close set of accountability is really, really important. And then holding them accountable – the team accountable for managing the channel conflict issues that can arise from such a structure effectively is also really, really important. But I don't think we've seen the upside yet from the bet we've made. We got an incredibly talented group of people, mostly who have come from the outside. And I think that's going to really serve us well relative to our direct competitors. I think other than in the odd circumstance, where somebody hits one out of the park and an idea, we ought to be able to beat our direct competitors in the space with the capability we're building. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Okay, that's very helpful. And then separately, your commentary on top-line growth in the back half of the year really sounds pretty positive on this call, particularly with the ramping innovation and distribution, you've got much easier comparison. So is a 4% core sales results in the back half of the year potentially in your line of sight? I would argue some of the commentary would suggest it's possible. I know it sounds crazy in this environment, but it seems like it's possible. So just kind of curious and how much slacks do you think you have in the back half of the year with some of the internal initiatives you have if there continues to be more external volatility?

Yeah. So in my guidance, what I said was that in the back half of the year, we'll be in the top half of our range, which top half of the range is 3.25% to 4%. So in order to average somewhere in the top half of the range, you have to have pretty good and then I also said sequential improvement from Q3 to Q4. So in order to deliver that outcome, you need to be in one of those quarters. Either of those two quarters are both pretty strong and balanced or one of those quarters has to be right up against the top of the range. And I think it's possible that we could get there or even beyond depending on what happens with the retail environment in one of those quarters. I don't think that quarter will be the third quarter, because we have the uncertainty of what we're up against with respect to inventory and retailer changes in Q3 still. Q4, on the other hand, we lapped the big appliance change from a year ago and the real wildcard will be what happens with Yankee and retail and whether all the other changes we've made more than offset any potential risk in that area. So the upside associated with the changes we made offset any potential risk in Yankee retail. I think that's the – those are the question marks that are out there. And the flow that I think we've considered and the activity's certainly set to deliver that, the question becomes landscape and our execution. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Okay. That's helpful. Thanks.

And we will take our next question from Bonnie Herzog with Wells Fargo.

All right. Thanks. Good morning, Mike.

Good morning.

I just wanted to clarify something that you just mentioned in terms of how you expect organic sales to sort of ramp. You did just mention that Q4, you expected to be the strongest organic sales. So trying to get a sense of your innovation pipeline...

Yeah.

...and if most of the stepped up innovation will be in the market during third quarter, so you're going to benefit from that during Q4? Or is it going to be more evenly spread in the second half in terms of innovation?

Yes. Yeah. So pipeline fill will happen in Q3 on many of these innovations. There's a bit of a question mark in the month of September as to whether retailers will take their Black Friday inventory late September or whether they're going to take it in October. That's to be determined still. That could influence the flow between Q3, Q4. The bulk of the consumer experience with our new products in the back half of the year will happen in Q4, but the shipment and revenue flow partially will occur in Q3. So we get the pipeline in many cases in Q3 and then we get the sellout and the replenishment in Q4, depending on retailer behavior in September, October. So those are the – that's the inside baseball sort of view of what we're dealing with and we'll see how that plays out.

Okay. Then just a couple of other quick questions, if I may. First, on your stepped up spending on e-com. Could you quantify the increase in the quarter and then how much spending is expected to ramp in the second half? And then secondly, on back-to-school, I know it's early days, but just would love to get your initial read on how that's been trending, and I know you touched on it a bit, but how does it compare to higher...

Yes. The thing that I would – the way I would deal with the math on that is and I'm not going to give you a specific number; I'll help you kind of form your own. If you think about the big spend in e-com, it's really relates to people. And so as I said, we entered it with around $250 million, we're going to exit with around $500 million, making assumption about what total comp looks like to those people, and you can back into sort of annualized investment. There's also programming costs, but the thing to be careful of here is, obviously, a big part of this is funded by the movement of resource from our traditional design or old structure to this structure. So it doesn't mean that it's all incremental. In fact, most of it's not. So I think that's the way to think about it. Does that make sense?

Yeah. It does.

And rather than quote a number and then have a competitor have a number they can react to I'll let you sort of back into it.

Okay, fair. And then what's your initial read on back-to-school just in terms of how it compares to prior years? I know it's a bit early. I'm just trying to get a sense if there is any revenue shift that you're expecting from the second quarter into Q3?

No. This is actually the most favorable July 4th treatment you could have for a Q2 sell-in. So I've read some of the commentary, I don't quite get that. I think the – what people are referring to, I think, in some of their commentary is that it's sort of a shortcut to an explanation. I think there's been a fair amount of inventory rebalancing in the distributive trade in an office superstore channel that's gone on in the first half of the year in the stationery categories. So I think that's the primary thing. I don't think back-to-school timing. This is about the most favorable structure you could have for a Q2 sell-in for back-to-school because of the fact that July 4 in the – was a Tuesday and the merchandise for July 4 was on the floor, so there was room in our retailer warehouses for us to sell-in inventory at the end of the quarter. So we don't see any timing-related shift. That said, there's always different behaviors on the part of retailers with respect to their merchandising activity. So I was referring to sell-in timing. There's certain retailers that have gone early this year and one retailer, in particular, that's gone later than they went last year in the office superstore channel. And we'll see how that all plays out over time. And to your point, that's – while school's open in many states in the Midwest now this week and I think in some of the Southern states it starts to open next week, so back-to-school has happened in the Northeast and then out West, it's still – we're still ramping into that window. But our early numbers look pretty good. And based on the aggregate sell-in in Q2 on Writing, we would expect a really good sell-out, and we'll look and watch order patterns in September, presuming that our share momentum continues, and we get the sell-out, which we should. That we'll watch that order pattern dynamic at the end of September into October, again, to see whether there's any rebalancing. We think we've made a prudent assumption in our guidance for Q3, but you really don't know until the very, very end.

Thank you.

Yeah.

And we will take our next question from Nik Modi with RBC Capital Markets.

Yeah. Thanks. Good morning, everyone. Hey, Mike. Just a quick one for me. The market share gains look pretty impressive. Can you just kind of help us understand what was kind of underpinning the game? So is this distribution versus innovation versus just better execution, A&P? Just trying to get the underlying drivers of the market share gains.

Yeah, I mean, on the legacy Newell Rubbermaid businesses, we have a very full innovation funnel. We've profiled some of them in Q1 and Q2, and those innovations are really doing very, very well. Believe it or not, some of the businesses that hurt us the most with respect to top line in Q2 have the strongest market shares. Our Fishing shares are well over 300 basis points versus prior year. So ironically, one of the strongest performing categories. So sellout's happening well, we've got good distribution, we've got good merchandising activity in that category. So we've got a pretty broad swath of increased market shares across both platforms, innovation driven, and like you see, Newell Rubbermaid, core distribution driven and merchandising-driven on legacy Jarden for the most part. So as I said, we tracked 75 different product, well, I didn't say this, but here's a tidbit, we tracked 75 different product families in the U.S. and both their market growth, market share, POS and of those product families, over 70% of – categories accounting for over 70% of our revenue experienced increased market shares, which means very broad-based share growth, which is great. This is, by far, the most important metric that we look at to get a sense for whether our ideas and our execution is happening. And this is what you want us to focus on. You don't really want us focusing only on sell-in, you want us focusing on sell-out. And if we're able to sustain this kind of share growth and by the way, our markets in the U.S. grew over 2% in the second quarter. So while they're down a little bit versus prior year, they're growing in line with GDP growth. And that's good. So these are the things that are the live indicators that give you a sense of your forward momentum, and it's a balance of execution and innovation, less so investment in the first half of the year. We kept our powder dry for the back half where we have more activity. So I wouldn't point that out as a key contributor to blend of e-commerce, core distribution and innovation on legacy Newell Rubbermaid that's driving this. When we quote market shares and market growth, we have the ability to include e-commerce in those numbers, whereas you guys, I think, you're buying syndicated data have a tougher time seeing the true underlying performance of both the categories and the brands. So the numbers I'm quoting reflect our tailored database.

Great. And then just one more quick one, Mike. In the past, you've talked about opportunities to kind of cross leverage the Jarden renewal, kind of retail channels and distribution channels. Are you seeing that evolve already? Or is that still something that has yet to kind of transpire?

Well, no. We're getting leverage out of each other's selling structures. So when you create a focus selling capability around Commercial and Consumer solutions, for example, as a division, you've got the power of a Rubbermaid Commercial Products sales structure that is now being leveraged on Quickie on the MAPA, Spontex businesses. And the reverse is true in Europe where you've got a MAPA, Spontex business with both professional and the consumer-facing portfolio. It's doing quite well. You've got the opportunity to piggyback from the Commercial Products on the back of that. So we're doing that work right now. And then from a product perspective, we began to do that work. So Comb and Beverages, for example, launches in the back half of this year. We'll see how well that does. I think that's an interesting potential platform for us. It goes up against the Yetis of this world. And so the store is playing out as we expected it to, but the bulk of the product-based ideas come later – later in the cycle, later next year. The opportunities to leverage selling system happen now.

Thank you.

And ladies and gentlemen, due to time constraints, we will take our final question from Kevin Grundy with Jefferies.

Thanks. Good morning, everyone. A couple housekeeping questions, I guess, on the guidance. First, it looks like you get about $0.03 benefit from a lower tax rate. Can you just confirm, I want to make sure I heard this correctly that the timing of the divestitures and FX, you're supposed to completely offset and there's no benefit there. I just want to make sure I understand there's no sort of moving parts within the range, where there's higher level of investment, et cetera. So that would be the first question. And then, Mike, for you, the second question is just more how the core sales outlook has evolved over the past few months. And I guess, I ask that in the context on the first quarter call, you saw unlikely that the company could deliver 4% sales growth in any quarter in the current environment. And it doesn't seem like the environment has gotten much better. And now, the guidance sort of implies in your commentary suggest that you could do north of 4%, maybe even like close to a 5% number and one of the quarters in the back half of the year. So I am just trying to reconcile, I guess, and maybe this is the function of your better visibility on distribution sort of – have more sort of visibility on the lift you're going to get from innovation. Just trying to reconcile the more bullish view, particularly within the context that the quarter was fine, albeit even a little bit light versus what you had guided to with the 2.5%, you'd expected some sequential acceleration there. So any commentary there would be helpful. Thank you.

Kevin, thanks for the question. I will take the core sales one. And Ralph can handle the tax question and forex question. So, Kevin, I don't recall ever mentioning 5%, but thank you for asking them, and letting me clarify. I said nudging up against the higher end of our range for this year, which is the high end of our range is 4%. So I don't like to provide quarterly guidance. I think it's possible that we get to that level in the fourth quarter. But I'm not guiding specifically to it. I think with respect to the profile in the year, Q2, clearly, was a little bit below what we expected. I had called slightly better than Q1 basically is what I said, in line with maybe a little bit better is basically the language I used in – for Q2 in Fishing and Fresh Preserving, the issues there certainly undermined a potential to deliver that. So that was a little soft. Our outlook for the back half of the year hasn't really changed, so we're always calling acceleration and performance. We never got quite as specific to say sequential improvement between Q3 and Q4, but that was always the profile, the plan as you would expect because of the flow of activity. But in the time between the changes we've made in the first half. So I think that would be my answer on core sales growth. And we'll see maybe someday in the future, we have a 5%. But I think that doesn't happen until we get into the thick of our innovation activity on the legacy Jarden businesses. But more to come on 2018 and beyond when we get a little bit closer to that timeframe. The other thing that I said in the speech – in the script was that this presumed no major retail-driven disruptions in the back half of the year. And I think that's a good assumption to make. We've experienced many of them. I think other than a surprise bankruptcy; I think we are well aware of where the issues are. And I think we've contemplated particularly given the things we've been able to do in Q2 on Writing, we contemplated the risk profile that could emerge from office superstores in the back half of the year. So I think we have well in hand, but again, our guidance would be disrupted by a major bankruptcy. But again, I don't see that. The profile of our retailer base is such that that doesn't look like there's anybody in our top 15 for sure that would ever be in that circumstance.

And Kevin, on the housekeeping items you mentioned upfront, you had it right on the divestiture timing changes relative to the FX Mike had in his remarks that was still neutral and no effect on the EPS. On tax, I think it was just a little high at $0.03. It's probably a little closer to $0.02 benefit, but as we guided the tax rate down to 22% to 23%.

Yes. And Kevin, just a little bit on the FX, the thing that I was trying to communicate, I don't know if I was clear about it is when we guided up to $0.05 in the first – with the first quarter results, a portion of that was Tools held-for-sale longer and a portion of that was the FX benefit from January 1 through when we were sharing. In the first quarter, we told you we had about $40 million of inflation that was in the business. Some of that was anticipated, some of that wasn't. So that was out there as well. So they're always moving parts underneath the numbers. And then the Ski's business loses a lot of money in the first half of that year. It's a bipolar business. You lose big money in the first half, and you make money in the second half. And the timing was what the timing was. We got good value for that asset, but we had to hold it longer than we anticipated, and that I quoted $25 million, most of – a big chunk of that is Q2-related. So those things sort of washed out and materially offset each other. My language I use was largely offset, not precisely offset, so to be clear.

Okay. Thank you, guys. Good luck.

Yes, thanks.

And this concludes our question-and-answer session. I will now turn the call back to Mr. Polk for closing remarks.

I would just say this to my team, which is probably the only group left on the phone call. I'm really proud of your results, it's an incredibly challenging environment and to deliver this kind of performance in the context of our changed agenda and the landscape we're living with is really pretty extraordinary, so thank you.

And ladies and gentlemen, that does conclude today's conference. A replay of today's call will be available later today on our website, newellbrands.com. This concludes our conference. You may now disconnect.