Ladies and gentlemen, good morning and welcome to Newell Brands Second Quarter 2019 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. [Operator Instructions] In order to stay within the time scheduled for the call, please limit yourself to one question during the Q&A section. As a reminder, today's conference is being recorded. A live webcast of this call is available at newellbrands.com on the Investor Relations’ homepage under Events and Presentations. I will now turn the call over to Nancy O'Donnell, Senior Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Thank you. Good morning, and welcome to Newell Brands 2019 second quarter conference call. Chris Peterson, our Interim CEO and CFO will be hosting the call today. Before we begin, let me remind you that this conference call will include forward-looking statements. These forward-looking statements involve risks and uncertainties, and actual results may differ materially from our expectations. I refer you to cautionary language available in our press release and in our SEC filings that describe these risks. During the call, we will also use certain non-GAAP financial measures, which we refer to as normalized measures. We believe this supplementary information is useful to investors, although it should not be considered superior to the measures presented in accordance with GAAP. You will find reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures in today's earnings release tables as well as on the Investor Relations website and of course, in the company's SEC filings. I'll now turn our call over to Chris.

Thanks, Nancy and good morning, everyone. The second quarter results we announced this morning reflect strong progress across all key metrics. We are making decisive and strategic choices to turn the company around and drive shareholder value, as we work to transform Newell Brands into the leading next-generation consumer products company. Results were in line or ahead of our expectations on all key metrics. Four out of seven continuing divisions delivered core sales growth in the quarter. We were ahead of plan on operating margins, driven by better than expected gross margins and lower overhead costs. Productivity and cost controls are taking firm hold and tracking ahead of schedule. Normalized earnings per share benefited from pricing, productivity and mix in addition to disciplined cost management. Operating cash flow improved $180 million versus the year ago quarter to positive $191 million, reflecting strong execution on working capital initiatives. While it's still early in the year, the progress we've made to-date on the working capital side as well as tax planning initiatives, give us the confidence to raise our full year outlook on cash flow from operations. Before going through the results, I want to provide some context on the progress we're making on the turnaround plan. Over the last few months, we've developed a bold and aggressive turnaround plan focused on five priorities: returning the company to profitable core sales growth; improving operating margins through productivity and overhead cost savings; accelerating cash conversion cycle through working capital transformation; strengthening the portfolio of brands and businesses in which we compete; and building a winning team by significantly improving employee engagement. On the first, focused profitable growth, we are starting to see green shoots across the divisions. We returned to core sales growth in four of our seven divisions this quarter. POS is…

Thank you. [Operator Instructions] And your first question comes from Bill Chappell with SunTrust.

Thanks. Good morning.

Good morning, Bill.

First, welcome back to Atlanta. I’m not sure New Jersey has been great for your stock price, so I think much better coming back to Georgia.

Thanks.

Second, just a little bit more around Rubbermaid Commercial decision. And just trying to understand, I thought over the past, I guess a year, a year and a half part of the reason why that was taking longer to actually sell, was, it had to be split off, you had to do a lot of work to kind of carve it out and so didn't know if there, you now have to reverse engineer, bring it back within the organization and then also a little bit more thoughts on, was it just you weren't seeing offers that were of the right value or you really felt like this was an integrated part of the rest of which is more a consumer-facing business?

Yeah. Let me try to provide a little bit more perspective on the decision. So, the Rubbermaid Commercial Products division, as I mentioned, is one of our strongest businesses. If you look at the brand equity scores, the Rubbermaid brand is in the top three of the company's brands relative to the perception quality scores with consumers. It was always slated as part of the ATP plan to be one of the last divestitures that the company marketed. And in fact, the company never started really the marketing effort for the RCP business, so we didn't take it to market. The good news about it is, as we got into it, because it's a strong business that generates strong operating margins, strong cash flow, we believe that keeping it in the portfolio is going to drive significant value creation and let me just provide a couple of statistics. So what you can see from our updated guidance is that, keeping the RCP business improves the operating margin of the company for 2019 by 110 basis points, which is driving the improvement in our operating margin guidance. Additionally, if you look at the implied guidance for continuing operations, keeping the RCP business in the portfolio drives our earnings per share from continuing operations for 2019 up by almost 40%. So it is a huge improvement in the underlying earnings per share from continuing operations to keep the business versus sell the business. We never got fully started on the separation activities. And so we believe that the - just that the now that we made the decision to keep the business, we think there is some opportunity to drive additional cost savings in the -- primarily in the supply chain of that business. But it will eliminate the need for us to do a lot of separation work that we would have had to do, if we continue down the path of selling the business.

Got it. Thanks for the color.

Your next question is from Andrea Teixeira with JPMorgan.

Thank you. Good morning. So my question just following out to Bill’s question on Rubbermaid Commercial. So what is the run rate? I'm assuming that obviously the top line was not attractive and besides the fact that it's not consumer-facing. I get the point about margins obviously. But what is the top line growth as we stand right now, and where you think you can take it? And if you can give us like you gave – Chris you gave a good sense of what's happening at the Appliances business, but where you're going to think that you can reinvest part of this margin into the business and where you think we can see stabilization of the trends on the top line for that one? Thank you.

Yeah, so moving the Rubbermaid Commercial business back into continuing operations, we kept our guidance for core sales growth for 2019 the same, so it doesn't really have an impact on the core sales growth guidance for the company. Our guidance at the beginning of the year was for core sales to be down low single-digits. Now that we're including it in core sales, we’re maintaining that guidance of down low single-digits. So we don't see the decision to include Rubbermaid Commercial back into continuing operations having a material impact. That being said, within the Rubbermaid Commercial Products business, there's really two different businesses. There's a commercial business, which represents about two-thirds of the business that has been growing over the last number of years at or above the rate of GDP, and that's the business that is very strong, very profitable and we see strong growth prospects going forward for. There's also a smaller part of the business that's a consumer-facing business focused on Outdoor and Garage and Refuse, and that part of the business is a lower profit margin business that we've been focusing on rightsizing. And I think we've made very good progress there. And so I think that as we look forward, we think that there's still some optimization work on the consumer part of the business. But I think we feel like we can drive that business back to growth in the relatively short timeframe here once we get through that rightsizing activity on RCP. Relative to reinvesting back in the business, I think I mentioned in the prepared remarks that, we're guiding the third quarter margin down versus year ago by 100 basis points to 130 basis points for the total company and that really is entirely due to an increase that we're planning in the third quarter in advertising and promotion spending. And the third quarter, as you know, is a big quarter for us from a seasonality perspective, because you still have the businesses that are summer seasonal in the third quarter, you have the back-to-school period in the third quarter. And so the ramp up that we have versus year ago in advertising and promotion spending is focused on our strongest businesses. We're planning to increase the advertising and promotion spending in the third quarter against our Writing business, against our Outdoor and Rec business and against a number of our other businesses where we have strong innovation momentum and to keep the core sales growth trend going in those businesses.

And just to be clear, Chris, this is very helpful. The 100 bps increase over a year ago is relative to the base that is so right, including – so it’s fully comparable including Commercial RCP back, right?

Correct. So, if you look at the guidance chart that we've put in the press release, what you can see is that, we've increased the guidance range for the full year of 2019 versus 2018 by a 110 basis points, and that 110 basis point increase is entirely due to including the RCP business, and what we've done is, we've included it fully in both years, including and the normalized impact of the annual depreciation expense in both years. So it's an apples-to-apples comparison.

Okay, perfect. Thank you very much.

Your next question is from Lauren Lieberman with Barclays.

Thanks. Good morning. I'm sorry to go back to the Commercial Product question. But I - one other things that was cited in the decision to include that business in the divestitures had been the notion of complexity of the portfolio. And that what – and of course, when that was said, it was certainly a change in course so I just wanted to know if you could comment on how you're thinking about portfolio complexity and having this sort of standalone industrial-facing business versus the rest of it so solidly consumer-facing? Thanks.

Yep. So we've looked at the complexity reduction and interestingly, keeping the Rubbermaid Commercial Products business doesn't significantly change the complexity reduction metrics that were previously shared. And part of the reason for that is, because the Rubbermaid Commercial business is already relatively integrated from a supply chain standpoint with the Rubbermaid Consumer business that the company was planning to keep. And so, selling the Rubbermaid Commercial business would actually have required a separation activity that would have, in some cases, added more complexity during that period. So, if you look at the premise of the original ATP plan in terms of SKU count reduction, manufacturing footprint reduction, exposure to resin, the decision to keep the Rubbermaid Commercial business really doesn't change the picture with regard to any of the complexity reduction metrics. Relative to the question on the commercial-facing part of the business. I think, as I've gotten into it and looked at the business, the thing that I was looking at was the Rubbermaid brand plays across both commercial and consumer-facing businesses and if you include our Food business in that, the Rubbermaid brand is probably 50:50 between commercial and consumer-facing businesses. And the Rubbermaid brand is in driving branding and innovation applies equally and as a critical skill that's required in both the commercial business and the consumer business. So, we think that the fit with our core competencies is very strong across the entire Rubbermaid businesses.

Okay, thank you. And, if I can squeeze in one more, just the retail closures. There's obviously a lot of ongoing movement in the brick-and-mortar landscape and so questions around Bed Bath and JC Penney. So, how are you thinking about that in terms of an impact on whether it's your building and things for this year as you're planning ahead for 2020 and maybe in particular, how you might be approaching the planning cycle differently today than what might have been done at the company previously, given this sort of let’s call it ongoing the changes in the landscape?

Yeah, it's a good question. And it's something that we are very focused on. And so, I think one of the things that's very encouraging about the results in the second quarter is that, if you look at the company's top four customers, we're back to point of sale growth in the second quarter and year-to-date in all four of those customers, which we believe are winning customers in the retail environment that is being radically disrupted with digital and e-commerce shopping trends. We also are excited that we're back to high single-digit growth in the e-commerce business, and that we're back to core sales growth in the international business. And so, the way we're thinking about the business is very much planning for the retail disruption to continue. My view is that, we need to be thinking about where the retail environment is going to be over the next three to five years, and then making our investment choices so that we're playing to win where the market is going to be. And so, our strategy is to invest in winning customers, to invest in digital and e-commerce, to invest in growing the international business and to manage appropriately the decline in retailers that unfortunately are being disrupted and losing share in the marketplace.

Okay, thanks so much, Chris. I appreciate it.

Thanks, Lauren.

Your next question is from Steve Powers with Deutsche Bank.

Hey, thanks. Good morning, Chris.

Good morning, Steve.

Maybe just to round out the RCP discussion. When you parse out all the moving parts, are you able to isolate it all, what portion of the updated $600 million to $800 million in operating cash flow, you can now attribute to continuing ops inclusive of RCP? I know you've historically been reluctant to provide that information, but I'm just hoping we can revisit it, because I do think it's important to understand that go for the cash earnings power?

Sure. So –

Okay.

Yeah, so first of all –

Sorry, I have a second question as well –

All right, let me answer the –

Okay.

Let me answer the first and then we'll come back to the second. So first of all, the increase in the cash flow guidance of $300 million is not impacted at all by the decision to keep the RCP business, because the operating cash flow guidance for the company is a total company operating cash flow. So really what's driving the $300 million increase in the guidance range from what was $300 million to $500 million to now $600 million to $800 million in operating cash flow is strong results on working capital management which is much stronger than what we anticipated as we've gotten into it and started to drive the strategic actions that I've talked about and better tax planning. So the guidance increase is really based on underlying performance of the business is the first point. Secondly, the decision to keep the RCP business will significantly [Technical Difficulty] the cash, because the RCP business is a very strong cash generating business and a very strong operating margin business. So, I mentioned earlier that keeping the RCP business in the -- if you do the implied guidance, increases the earnings per share from continuing operations in 2019 by almost 40%, and that flows through to cash flow. So I'm expecting that our 2020 cash flow will be significantly enhanced by the decision to keep the RCP business. It's hard to parse out exactly what the operating cash flow in 2019 is from continuing operations versus discontinued operations. But now that we've made the decision to keep the RCP business, I think the discontinued operation impact on operating cash flow for the businesses that are being sold this year is not as significant as what it was planning to be before the decision to sell the RCP business.

Okay, that's great color. Thank you. And then the second question was just on the move, the headquarter move. Could you comment at a high level about how many people and what functions you have today in New Jersey and other locations that will be impacted and consolidated into Atlanta? And then just a feel for how confident you are that you can retain key personnel as you make that transition?

Yeah, so the company has about 1,100 professional employees in Atlanta today, including most of the corporate employees are already based in Atlanta. In New Jersey, the company has about - just under a 100 corporate employees that will be affected by the move. So there's about a little less than a 100 roles that will be moving from New Jersey to Atlanta. Additionally, in New Jersey, we have about 200 roles in the e-commerce division. And the plan is to keep the e-commerce employees in Hoboken, because we believe this is a good market for e-commerce and digital talent. And so really, it's less than a 100 people that will be moving to Atlanta or 100 roles that will be moving to Atlanta. We've gone through as you might imagine a very specific exercise, looking at the roles that will be impacted, the people in the roles and we believe we've got a strong plan to manage the transition without any disruption to the business.

Okay, perfect. Thank you.

Your next question is from Priya Ohri-Gupta with Barclays.

Okay, thank you so much for taking the call. Chris, really appreciate the commentary around your desire to maintain IG ratings and the focus on debt pay down. As you've spoken with the rating agencies, would you be able to share sort of their perspective on the plan and whether they're onboard with this being commensurate with the current ratings? And if they're not, how could that potentially affect, if at all, plans for future debt pay down and shareholder return? Thank you.

Sure. Yeah, so I mentioned that we've – I met with both S&P and Moody's last week to take them through the revised plan on keeping the RCP business and the revised projections for the company. And effectively what we talked about was, the strong cash generation that we're having in the core business and the fact that we're taking our cash guidance up for the year. The fact that we're keeping the RCP business which has a short-term increase in the gross debt to EBITDA, where I mentioned that, we expect to be at or below 4 times at the end of this year, but we're – but we believe we've got a plan to be below 3.5 times by the end of next year. And we talked about how the company is better positioned and strengthened going forward by keeping the RCP business. I'm not going to speak for where they came out. But I’m expecting that both of them will publish an update note either today or Monday with their conclusion from it, but I will say that, we had very good meetings and the meetings were very productive.

That's helpful. And I guess just one housekeeping item on the cash flow benefit from better tax planning. Would you be able to quantify how much of the $300 million increase is contributed to that and whether we should anticipate that is something that gets built into the base going forward? Or is it a one-time benefit? Thank you.

Yeah, so of the $300 million increase, it's about half that's coming from tax planning and about half that's coming from working capital management improvement. And so, one other things that you'll see in our guidance is, we've also taken down the guidance that we had given previously, where we said we expected to pay about $200 million in cash taxes and divestiture related fees this year to a number that's more like $50 million, and so that's driving about half of the benefit is tax planning and about half is working capital management.

Thank you.

Your next question is from Joe Altobello with Raymond James.

Great, thanks. Good morning. So I guess the first question on RCP, it looks like that business did about $1 billion in sales last year. You raised the sales guidance this year by $900 million. So, our sales down in that business is 10% and if that's the case, and two-thirds of the business is growing, that seems to imply the consumer piece is declining pretty rapidly, if my math is correct?

Yeah, so sales in that business are not down 10%, I think that when we did our guidance range, we only guide the year to a single decimal point, not the two decimal points. So, some of that is in the rounding. So, the business is down slightly this year. But as you can see from our core sales growth guidance, we're not changing our core sales growth guidance for the year by including the RCP business. So it's pretty much in-line with the balance of the portfolio.

Okay, that's helpful. And then in terms of the third quarter guide, core sales trends are implied to get worse down 2% to 4% versus down 1% call it in the second quarter and despite the fact that A&P is ramping up, so maybe give us a little more color on, why do you think core sales trends to decelerate in the third quarter?

Yeah, so I look at it as core sales trends are accelerating in the third quarter. And the way I look at it is on a two-year stacked basis. And if you look at the core sales growth trends on a two-year stack basis, the third quarter is improving versus the second quarter by 400 basis points in terms of core sales growth trends on a two-year stack basis. It's also very much in-line with our plan for the year. So, the minus 2% to 4% that we're planning in Q3 fits very well in our guidance range, which we're not changing for the year of down low single-digits. So, I think we're being appropriately prudent in our planning, but this is very much in-line with our plan and we think that it represents a sequential improvement in terms of the underlying performance given the base period dynamics.

Got you. Okay. Thank you.

Your next question is from Kevin Grundy with Jefferies.

Hey. Good morning, Chris.

Good morning. Kevin.

First a housekeeping question then a broader question on the incoming CEO. So, the housekeeping question is in the Learning & Development segment. Was there any timing benefit with respect to back-to-school there cycling and equally as easy comp, I guess. So that looked a lot better and then sort of tying that in with the core sales guidance that probably looks a little bit worse than then folks had expected? Was there any back-to-school shift there that ended up in Q2 and instead of Q3? So that that's the housekeeping question. And the broader question, Chris would just be with respect to Ravi coming in, how involved, if at all, were you in the interview process? What do you think Ravi will bring? And why do you think the Board believes he's the right leader for the company at this point in time? And then I think what will be helpful just maybe to put some context on a timeline for investors? As he starts in the fall, can we expect sort of a long-term strategy to be detailed for the company on the fourth quarter call or perhaps down in CAGNY in February, so any contexts with those questions would help? Thank you.

Very good. So let me start with the housekeeping question. So on the back-to-school, ship in from on Writing, we did ship in slightly better than what we expected in Q2 versus when we gave the original guidance for Q2, slightly earlier, but not significantly. And so, it round up being about in-line with what we did in the year ago period. So there was not a significant impact of Q2 this year versus last year. But it was a little bit better than we had expected when we entered the second quarter. As a result of that, there's not really a material difference in Q3. So, we – I mentioned on the call that we had turned the quarter in four of our seven continuing divisions, with Baby, Writing, Connected Home and Home Fragrances, all delivering core sales growth in the quarter, and I think we feel good about those four businesses continuing on a positive trajectory going forward on the housekeeping question. With regard to Ravi, I've met Ravi and I've talked with him a couple of times, since meeting him. Obviously the decision to hire the CEO was the Board's decision. But I'm very much looking forward to partnering and working with Ravi when he starts in October. And in the meantime, I've talked with both the Board and with Ravi about the five priorities as part of our turnaround plan. And the Board and Ravi are both very supportive of continuing the effort and moving full speed ahead with our five priority efforts.

That’s very helpful. Thanks, Chris.

Thanks.

Your next question is from Bonnie Herzog with Wells Fargo.

All right, thank you. Good morning, Chris.

Good morning, Bonnie.

I wanted to ask you about Yankee specifically, same-store sales trends, did –and then did the results in Home Fragrance sequentially improved in Q2 or as you expected. And then on the store closures, how has that been progressing in terms of your expectations and wondering what you're seeing in terms of the conversion there? And then finally, just loved to get your long-term outlook for that business and if it's changed at all?

Yeah. Okay, so the Home Fragrance business, I feel like we've made an important change in the inflection of that business for the positive. And so let me try to provide a little bit about what's happening and what – and where we're headed in that business. So we continue down the path of closing unprofitable retail stores so that we right size the retail portfolio and generally we're closing stores as their leases expire. We don't expect to fully get out of the retail business, but we expect to downsize the retail footprint over time, and you see year-to-date we've closed I think 78 stores in the first half of the year. The comp sales trends at those retail stores continue to decline broadly. But the rate of decline has slowed down, because we put aggressive effort at trying to drive better traffic driving initiatives, better conversion and an effort at driving increase in average unit retail prices at the retail outlets that starting to gain some traction. That being said, the more important part of the business is what we're doing relative to the part of the business that we're selling through retail customers, which is going very well. And so we've partnered with Walmart and launched the WoodWick brand in Walmart. Our business at Walmart is up strong double-digits. The category is growing strong double-digits. The WoodWick brand in Walmart is leading an overall trade up in the category. And what's happening is, as we've made – as we're pivoting to more of a wholesale business, the wholesale growth is outstripping and outpacing the decline we're seeing in the retail business. And the retail business as we're closing the unprofitable stores is becoming a smaller part of the business. So we're very encouraged by the trends we're seeing. And we think we see a bright future for that business as we pivot back to offering some great products where the consumer shops. The other important thing in that business is that, we've gotten our European business back to growth. And so the European business went through a period where it needed to reset and I think we're on a good trajectory in that business, driving growth broadly across the international markets.

All right, that was helpful. And if I may, I just wanted to ask about your Nielsen trends, which really appeared to have fallen off a cliff in the last couple of months. So I certainly understand that Nielsen doesn't capture big part of your business. But what's going on in these track channels, especially in categories that are weakening like Appliances, Writing and then Food favorite - beverage storage containers? Thanks.

Yeah, so Nielsen only covers about 20% of our business. So 80% of our business is not captured by Nielsen. And I think what's important to understand about Nielsen is, Nielsen misses a lot of the parts of our business that are growing disproportionately fast. So, I mentioned that we're growing our e-commerce business high single-digits in the second quarter and within that we've got some customers that are growing strong double-digits that are not picked up by Nielsen. So I think part of what's happening is, as the consumer is shifting to purchase more online, and as we are disproportionately investing in winning customers and winning channels, I think that the Nielsen results are less predictive of the company's total results than perhaps what they were in the past. So we certainly look at the Nielsen results. But I think, given that it's only 20% of the business; we're focused on the broader part of the business that is in the winning customers and channels.

All right, thank you.

Your next question is from Rupesh Parikh with Oppenheimer.

Good morning, and thanks for taking my question. So just given some of the – I guess some of the tariff news yesterday, I'm just curious if you have any initial thoughts on the impact of Newell whether any of this has been incorporated and you’re thinking for this year?

Yeah so, it's a little bit hard to react to a tweet. And we don't know a lot about it yet, because the USTR office hasn't come out unless that's happened while we're on the call here this morning with a specificity and just to give a little bit of color, we don't know is it based on when the products are exported from China or when they're imported from China, and that has a difference of about a month in terms of when the effective date goes in? We don't know which categories are covered and which categories are not covered and are there any things that are excluded, and we've had lots of discussions with Congress about excluding parts of our portfolio from tariffs, particularly the Baby products where it's a child safety issue. That being said, under almost any scenario, we don't see the tariffs is having a material impact to this year's numbers, because of the timing of what that would be – when that will be into effect. So even if it was the worst case scenario from a timing standpoint, and it covered all of the company's categories, and at the 10% level, given the amount of inventory we have in the US and the focus we've got on mitigating actions, including asking suppliers to help cover some of the costs and taking pricing, we don't believe it's a material impact to the company this year.

Okay, great. And then I mean, if it does go into the fact any sense in terms of how to think about the exposure next year, or if there's any color you can provide in terms of your current exposure?

Yeah, I think it's premature to do that. Just because we, given the amount of uncertainty with which categories that would cover; what the amounts are; how it would be implemented. I think it's premature. So, we certainly will provide that as the rules get clear. We also are starting our budgeting process shortly here in the next month or so for the planning process for next year. And so, anything that gets put into place, we would incorporate into that planning process. But it's premature to speculate on the impact for next year and going forward.

Okay, my last question on tariffs, so I know you've taken some actions on pricing year-to-date so just curious how those actions are played out versus your expectations?

Yeah so generally, pretty well. So you can see from the results in the second quarter that pricing and productivity more than offset the impact of tariffs, inflation and FX and allowed us to grow our gross margin by 50 basis points versus year ago. The most recent set of tariffs that went into effect in May took the list three product tariffs from 10% to 25%. We've taken pricing actions now across all of the businesses that were affected from that and generally, the discussions with the retailers have gone well, in terms of getting price acceptance from the retailers. It's a little bit premature to say what the consumer reaction is, because many of those price increases didn't go into effect until the end of the second quarter. But what we are seeing is, generally where we're impacted by pricing, it’s not in every case, but in most cases, our competitors were also impacted by the tariffs. And so there's a desire for the industry to price recover for that, so it doesn't create a competitive advantage or disadvantage for anybody over the medium-term.

Great, thank you for all the color.

And we have time for one last question, which will be from Olivia Tong with Bank of America.

Great, thank you. Want to talk a little bit more about margins. You explained the SG&A with all the incremental advertising, but gross margin was a big swing negative to positive this quarter. Can you unpack that a little bit? And then sort of give a little bit of color into what the second half looks like on gross margin? Thank you.

Yeah, on gross margin we've put a very concerted effort in improving our gross margins and the things that we're working on are reducing the company's SKU count. We've now reduced when I presented at CAGNY, I said that at the beginning of the year, we had 90,000 SKUs in the continuing operations business. We’ve already taken 12,000 SKUs out and we're down to 78,000 SKUs. And so we've made a big improvement there. We also have announced that we're closing three manufacturing plants and 10 distribution centers. And so we're starting to make effort – progress on our consolidation of our supply chain footprint, and we're focused on gross productivity. And the productivity work that the company has done and is doing is really starting to pay dividends. And so, if you look at productivity as a percent of our cost of goods sold, the productivity results for this year, I expect will be the best that the company has had in recent history. And if you look at the productivity funnel, this year - at this point for next year versus where we were last year at this time, our productivity funnel for next year is up 33% versus where our productivity funnel was last year at this time for this year. So, I think we're making very strong progress there. I think that the underlying operating progress that we're making on driving gross margin higher is being somewhat masked by the impact of foreign exchange and tariffs and commodity inflation and that – those impacts will be variable by quarter. But the trajectory on the underlying operating progress on gross margin is very strong and I expect it to continue.

Got it. [indiscernible] portfolio decisions that you've made, was it just a look at Rubbermaid Commercial? Or did you have a look at the rest of your business or the entire portfolio and I realized it's not just one person's decision and we got a new CEO coming. But as you think about the portfolio going forward, what's the potential for even more change or a greater assessment relative to what you've already done?

Yeah, I think that I did look at the whole portfolio. And I think that we expect to complete the ATP plan with the remaining three divestitures, the USPC which we've already signed a deal that we expect to close. Mapa/Spontex and Quickie are the two remaining businesses to be sold. And once we do that, I don't anticipate that we're going to have another big program like an ATP type effort. That being said, we're always going to evaluate the portfolio for improvement opportunities. And that could both be a divestiture related or it could be tuck-in acquisition related, but I don't think you'll see us do a major effort like the ATP plan anytime in the foreseeable future.

Great, thank you so much.

Okay.

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

Thank you. I would like to thank everybody for participating in today's call and for your interest in Newell Brands. I also want to commend all my colleagues for executing well through a time of uncertainty and transition. While it's still early days in the company's transformation, there's lots to be proud of and a much more compelling future ahead of us. Thank you and we hope you enjoy the rest of your day.

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