Good day, ladies and gentlemen and welcome to the Second Quarter 2016 Sealed Air Earnings Conference Call. My name is Chantilly and I will be your facilitator for today’s call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Lori Chaitman, Vice President of Investor Relations. Please proceed.

Thank you and good morning everyone. Before we begin our call today, I would like to note that we have provided a slide presentation to help guide discussion. This presentation can be found on today’s webcast and can be downloaded from our IR website at sealedair.com. I would like to remind you that statements made during this call stating management’s outlook or predictions for the future are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the information in the section entitled Forward-Looking Statements in our earnings release, which applies in this call. Additionally, our future performance may differ due to a number of factors. Many of these factors are listed in our most recent annual report on Form 10-K and as revised and updated on quarterly reports on Form 10-Q, which you can also find on our website at sealedair.com. We also discuss financial measures that do not conform to U.S. GAAP. You may find important information on our use of these measures and their reconciliations to U.S. GAAP in the financial tables that we have included in our earnings release. Included in today’s presentation on Slide 3, you will find U.S. GAAP financial results that complement some of the non-U.S. GAAP measures used throughout the presentation. Now, I will turn the call over to Jerome Peribere, our President and CEO. Jerome?

Thank you, Lori and good morning everyone. I am sure that you have the time to review our second quarter earnings results and I will keep my comments brief and then pass the call on to Carol Lowe, our CFO; and Dr. Ilham Kadri, President of our Diversey Care division to provide a more detailed review of our second quarter performance and full year outlook. Our second quarter results were in line with our expectations in each of our three divisions. We knew from the onset of the year that our growth in the first half would be muted. Food Care, Diversey Care and Product Care capitalized on growth opportunities in targeted countries and end markets, which offset other areas challenged by economic uncertainties, political unrest and a weak industrial environment. Overall, I am pleased with our adjusted EBITDA results of $306 million or 17.7% of net sales, which includes about $7 million of reimbursement related to environmental expenses on a slight increase in organic net sales. Excluding this reimbursement, we had a very solid adjusted EBITDA margin performance of over 17% of sales. Product Care delivered over 21% margin, Food Care over 20%, and for the first time Diversey Care delivered 15% margin, excluding the environmental reimbursements. As we look to the second half and as previously communicated, we expect stronger performance primarily driven by volume acceleration. In Food Care, the operation rate continues to penetrate the market in Europe and we are in successful trials with two large retailers in North America. Diversey Care is enjoying new customer wins across its portfolio and our robotics startup, Intellibot, delivered record sales in May and June. In Product Care, our innovation pipeline and customer inflows are building as we prepare for a seasonally strong year end. This momentum, coupled with…

Thank you, Jerome. On Slide 5 of our presentation, you can see our performance by region for the second quarter. Let me start with EMEA, where we had 2.5% organic growth and positive sales across our three divisions. Food Care sales increased 3%, Diversey Care increased 1% and Product Care increased 5%. On a by-country basis, EMEA was led by double-digit growth in Russia and high single-digit growth in Spain and Holland. We also experienced positive sales in Germany and Sweden. Asia-Pacific was up 1% in constant dollars. India was up 12% led by double-digit growth in Diversey Care and Product Care. In China, Diversey Care delivered high single-digit growth and Product Care’s business returned to growth in the quarter. Our largest markets in Asia-Pacific are Australia and New Zealand. And combined, they account for 6% of our total net sales and just over 10% of Food Care sales. In Food Care, sales in Australia and New Zealand were essentially flat compared to last year. In Australia, adoption of our advanced product portfolio and new customer wins are helping to offset the double-digit declines in slaughter rate and the export of live animals. In New Zealand, our business continues to be impacted by the ongoing weakness in the global dairy market. Latin America was hit the hardest by currency devaluations and socio and political instability. On a reported basis, Latin America was down 11%, which translates into constant dollar growth of 8%. Despite the current environment in Latin America, Food Care experienced positive sales growth in Brazil and Mexico on an as-reported basis. This translates into nearly 20% growth in both countries on a constant dollar basis. Brazil and Mexico each accounted for approximately 4% of Food Care sales. Let’s move to Slide 6 and look at trends in North…

Thank you, Carol. Slide 9 highlights the results of our Diversey Care division. Diversey Care net sales on a constant dollar basis were at 2.4% in the second quarter. We had positive sales growth in constant dollars in all regions. Asia Pacific was our fastest growing region with 7% constant dollar sales growth. In North America and Europe, constant dollar sales were at 3% and 2.4%, respectively. If you look at our adjusted EBITDA excluding the environmental reimbursement, we delivered $80 million or 15% of net sales. Volume, pricing and cost management all contributed to our strong EBITDA performance. It’s worth noting that in the last 2.5 years, with the exception of one quarter, we delivered positive constant dollar sales and adjusted EBITDA growth every quarter. I am particularly proud of the performance in North America and Europe over this time period. Remember that when we reorganized this business back in 2013, both Europe and North America had many years of declining sales and deteriorating margins, whereas Middle East, Africa and Latin America increased sales on a constant dollar basis this quarter, we are seeing a slowdown in our business due to political unrest in the Middle East and economic weakness in Argentina. Middle East, Africa and Latin America combined represents 15% of our sales. Looking ahead, we are confident the momentum in North America, Europe and Asia Pacific will continue. We are rolling out new customers and adding to our list of strategic wins across all sectors, including facility management, retail and healthcare sectors. Customer feedback on our robotics and Internet of Things platform has been extremely positive and as a result we are accelerating our go-to-market strategy. For the full year, we expect constant dollar adjusted EBITDA growth and margin expansion. The third quarter will experience a decline…

Thank you, Ilham. Turning to Slide 12, free cash flow was a source of cash of $68 million in the first half of the year. CapEx increased to $114 million as compared to $58 million during the same period a year ago, of which $40 million was related to our Charlotte campus. Working capital and other assets and liabilities were a use of cash of $165 million. Operating working capital as a percent of net sales based on a 13-month average is relatively the same since year end at 14.3%. As compared to June 30 last year, we improved 130 basis points. Now turning to outlook on Slide 13, net sales are expected to be approximately $6.85 billion. The impact from the Food Care divestitures on 2016 net sales is $102 million, of which $82 million impacted the first half of the year. Currency is expected to have an unfavorable impact on sales of approximately $275 million. Our outlook for adjusted EBITDA is now at $1.17 billion to $1.18 billion. The impact from the Food Care divestitures on 2016 EBITDA is $21 million, of which $17 million impacted the first half of the year. Currency is expected to have an unfavorable impact on EBITDA of approximately $45 million. As Jerome mentioned earlier, we are expecting accelerated EBITDA growth in the second half of the year and anticipate that the fourth quarter will be our strongest quarter of the year. Strength in the fourth quarter will be driven by higher Food Care volumes, our customer rollout schedule in Diversey Care, and seasonal strength in Product Care. Our medical and corporate expenses are expected to be a net expense of $90 million for the full year 2016. Our interest expense for 2016 is estimated at $225 million. Depreciation and amortization is forecast…

[Operator Instructions] Your first question comes from the line of Scott Gaffner of Barclays. Please proceed.

Thanks. Good morning.

Good morning.

Hey, Jerome, Carol, Ilham.

I just wanted to look at the EBITDA guidance. So, it comes down to $1.17 billion to $1.18 billion, looks like down $10 million and yet currency is better. You had a better than expected first half and you are talking about accelerating EBITDA growth in the second half. What is it that’s maybe below expectations for the full year now that’s caused that reduction in the EBITDA guidance?

So, let me first say that really counting on the acceleration that I talked about back in February, I said from the very beginning that the first half was going to be re-reviewed and that we were going to see business acceleration. What I also said was that this was going to grow mostly with volume. What I didn’t think was going to happen to the – was the assumptions that I have – that we have put on resin prices and they have been lower than what we thought. That is having an impact on our formula pricing. You know how important they are. And we were thinking at the time that those formula pricing in Food Care in North America were mostly going to be in the first half and not in the second half. Well, because of what resin prices are and we anticipate they are going to be, we are going to have negative formula pricing in the second half and that’s basically how we are seeing the situation today. Having said that, our global price mix in Food Care and price mix versus cost price will be positive for the full year, but not as positive as we had originally forecasted. So, that’s basically the slight difference. This is impacting sales growth because of the net sales as a result of the lower resin prices. But what we are doing here is that we are narrowing the range that we are having and that’s mostly what we are doing here. And keep in mind that pricing dropped straight to the bottom line. So, that’s great. The important thing to remember here is the volume trend. And the volume trend is really as per what we were expecting. And why are we seeing good volume trends? It is very clearly the impact of our innovation is kicking in.

Operator, next question please.

Your next question comes from the line of George Staphos of Bank of America. Please proceed.

Hi, everyone. Good morning. Thanks for the details and discussion. I guess I wanted to ask a two-part question. One, just tying maybe a bow on Scott’s question and then I had a question on volumes relative to case-ready and the new products. So, with EBITDA coming down, your – relative to your prior guidance and we understand the reasons why, your EPS guidance is towards the higher end of the range. Is there some sort of non-cash driver of that or what reconciles that? And then on Optidur, what’s the risk of cannibalization around existing sales? And with Darfresh on Tray, what’s so positive about that now versus prior case-ready offerings? Thank you, guys.

Okay. So, I will answer the third question. The EPS is going to go to Carol. Let me just talk about Optidur and Darfresh on Tray. Optidur, when it is fully launched, which means as it is – as it will have ramped up, we have cannibalization effects, but it will also have strong margin improvements effect, but this is going to be, call it a full year program. We had several generations of Optidur product. And the first one right here that we are introducing for obvious reasons is mostly new business. And this is at this point in time in Europe we have run trials implants in North America, all extraordinarily successful, between you and me, highly, highly compelling product – products actually. And therefore, overall, in time, it’s going to be a quarter of sales cannibalization but dramatically improved margin expansion for all kind of reasons that we already have talked about and stuff. With regards to Darfresh on Tray, the value selling proposition in several fronts. Number one, you have vacuum skin packaging, which is improving shelf life and this has value for the retailer. It also has value for the producer because of the shipping time, etcetera and it has value for the consumer, because he can keep the product freezer-ready keep the product logger in his fridge, etcetera, etcetera. Then in the production, the equipment runs extremely fast. And also for the production, the producer, you also have no human waste on the top lid because of the way the machine works versus about 20% to 40% waste on the lid. On the EPS, Carol, any comments?

Yes. George, with EPS, one of the changes is the slight decrease in depreciation and amortization of about $5 million. Also our share count as we are exiting Q2, were at approximately 197 million shares outstanding. We are seeing benefit from share repurchases going into the weighted average calculation from the first quarter where we spent about $32 million to buy almost 700,000 shares back in Q2. We spent approximately $20 million to buy an additional 435 shares back. So, year-to-date, we are at 1.13 million shares with the spend of $52 million. I will remind everyone we still have $832 million available under our July 2015 Board authorization. And managing within our targeted leverage range of 3.5x to 4x, we would expect to return value to shareholders as we consistently messaged as we move forward throughout the year, again maintaining within our leverage.

Operator, next question please.

Your next question comes from the line of Ghansham Panjabi of Baird. Please proceed.

Good morning Ghansham.

Hi Ghansham.

Yes. Good morning guys. I guess sticking on the growth question, can you just give us your view on second half end market growth for your three segments across the various regions, obviously it’s a very complicated backdrop. And then also, how much in total do you think your new growth initiatives will add to that growth rate? Thanks so much.

Okay. So I can detail you the – what the growth initiatives are going to give right away. But as I said, starting with Food Care, our growth is led by innovation. We are in trials with Darfresh on Tray with two large retailers. Things are going extremely well. It takes time to all of this and then to have the full adoption, etcetera, because of all of these requires investments. But – what I would say if you just go back to our Investor Day of exactly a year ago, it’s all happening and better. When you look at Product Care, and I would let then Ilham comment on Diversey Care, you absolutely need to come to Pack Expo this autumn as I mentioned in my prepared remarks. You will see in there as the booth with the highest innovation and that is what is driving our growth. Our e-commerce business is growing extremely well. What is the issue in Product Care, it’s one and simple, is that industrial GDP is not good. Well, if you look at the CAS index, which is truck and rail freight index, it is at the lowest since 2010 right now. So you can’t pretend that the economy, the industrial economy is doing really well because it doesn’t. But when you look at e-commerce and when you look at how we are doing in that environment, actually we clearly are partnering with our customers fulfillment companies 3PLs to join them in the growth they are expecting and in the growth map. We have multiplied by 2.5 the installs of our small equipment in North America. We have done the same, but we have increased by 15% the install of our small equipment in EMEA and almost 30% in Asia. So this tells you that the consumer was going to come during the year. Some comments on Diversey Care, Ilham?

Yes. So Ghansham on Diversey Care, I think you have seen the numbers. I am extremely proud of the hard work done by the Diversey Care team and all the important fractions we delivered to report EBITDA. I will give you some colors on regional performance, Europe was extremely strong showing continued momentum since we start transforming this business back in 2013. This was nice growth to raise both markets in South Europe, in Germany. We are winning customers like in the UK where we are rolling out and we will start picking in by the end of the year. In North America, North America returns to growth as we told you in quarter two. Thanks to our healthcare business doing extremely great, with our unique sustainability – technologies there, as well as we are rolling out the large customers in facility management. We are rolling out as we speak. And we have implemented and kudos to the team help of the 50,000 sites in the report timing and we are tracking ahead of time. And last but the least, in APAC, we have good momentum there as well. We are growing above the industries we serve, with 4% out of the ’16. Diversey Care coming from volume level, as we told you China is growing high single-digits and India mid double-digitS, just to highlight few leading and strategic economies for our Sealed Air economy.

What should made Diversey Care full in the second half is what you and I read in the newspapers, which means that in Diversey Care for example, you have tourism which is strongly impacted in Europe. You have tourism down and some hotel chains have published some results. And you can see that tourism is down in France, tourism down in Belgium, down in Morocco, dramatically down in Turkey, somewhat down in the Middle East. In Egypt, capacity – hotel capacity utilization is at 55% and is at 50% in Turkey. So you just can’t dream of a perfect world because it’s not. That is going to – two things are going to impact a little bit Diversey Care in the third quarter and be favorable in the fourth. One is what I just talked about. In the first quarter, remember that tourism is, right now, its big season right now. And the second one is that because of our customer wins, we have a lot, a lot, a lot of installs. And that requires resources, which are being deployed exactly now and we are going to benefit from those sometime next year. And generally speaking, overall on the net sales growth, it is the pricing and the formula pricing of resins which is impacting the dollar sales growth, but definitely not the momentum.

Operator next question please.

Your next question comes from the line of Arun Viswanathan of RBC Capital Markets. Please proceed.

Alright. Thank you. Could you just discuss your outlook on the resin price environment and I guess maybe some of the actions that you take to mitigate volatility that you see there?

Okay. So I am not going to go in details, not to signal too much to our competition, but on what we are doing, but we are a large buyer and you should rest assure that we do what it takes to stay very highly competitive. With regards to the resin, actually that’s what I said before. Entering the year, I said in the February call that we were seeing the resin being weak and staying weak for the year. And they haven’t been that weak, because you have had these price increases in March and you had these price increases in April. And whereas one could anticipate that they wouldn’t hold for a long time, so far, so good for the producers. They have helped quite a lot. So therefore this has happened and we will have in the second half a negative impact, which is in fact eliminating the positive impact from lower – from better currency movements that we were anticipating. So we are going to have a negative formula pricing there. And I just don’t know what to tell you because I don’t think that resin prices would be where they are as I wouldn’t ask that they would be at the beginning of the year where they are right now. So yes, capacity is going to come in next year and so on. And the whole thing will very much depend on hurricane. We are entering the hurricane season. So some people are wishing for lots of hurricane and some wish for nothing, etcetera. So it’s very difficult to predict one. If you have one or two hurricanes hitting Texas, I tell you this is going to change the game.

Operator, next question please.

Your next question comes from the line of Philip Ng of Jefferies. Please proceed.

Hi guys. Should we expect the product rationalization on Product Care largely behind you at this point and will that help firm up demand despite some of the weakness you are calling in the industry economy and stabilize or kind firm up price in the back half, I would have thought given some of the mix improvements you are doing on e-commerce, that would have kind of helps down pricing? Thanks.

Hi, Phil, good questions – so some comments on the economy. Our industrial parts is today moving forward than the e-commerce parts. The e-commerce and 3PL is growing and it’s growing very nicely, but it is still at the 30% and. And this is where our growth is going to be. We anticipate that we can take full advantage of our equipment and our consumables in that market sector. We are completely reinventing this division and it is growing absolutely fabulous. I told you, I told you at the very beginning of this year, I told you at the end of last year that you will be surprised with our innovation momentum and customer pickup over time and starting in the second half. We have all the time to confirm that this is going on. So, now rationalization, I told you also in January that we have just divested from historic line in the U.S., which is $15 million of sales. I told you that we were going to be closing in the second quarter on the plant and the product line in France. And I think I told you that was about $12 million. So to your question, yes, we believe that this is basically over in terms of product rationalization there. We have and you are going to look at Brexit. And the Brexit is having an impact on our translation cost. We have a strong business in Product Care, in Food Care also, in Diversey Care also in the UK. So, what we have been clearly doing here is that we have announced for a 6% to 8% price increase effective September 1 later, sometimes earlier, in order to capture the transaction costs that we are suffering from the UK pound. And that is what I would say embedded in our culture now, which is don’t take those kind of things and absorb it, because we are not in that business. So, we have communicated that to our customers, we are moving on. And actually between you and me, we have been a little bit surprised by how easy this is going through, because everybody understands that this is the way it’s supposed to be.

Yes. And so I think it’s also important and it’s on our slides that just to highlight four products here, the continued strong improvement in margins. So, for the second quarter an improvement of 40 basis points over a year ago on our adjusted EBITDA and for the full half, a 60 basis point improvement and when you look at the challenges with the industrial market that Jerome has highlighted, I think that’s just very, very strong performance by the team.

Operator, next question please.

Your next question comes from the line of Adam Josephson of KeyBanc. Please proceed.

Thanks. Good morning. Jerome or Carol, just one clarification on organic sales growth, I think last quarter you stopped disclosing a growth target and there was some weakness in Brazil and Venezuela that you called out. Now, I think Jerome you are saying that the impact of lower resin prices is having a profound impact on your organic net sales, dollar sales. You are also talking about global economic weakness as evident in industrial conditions, tourism etcetera. So, I am just trying to understand exactly what the puts and takes are in terms of your organic sales forecast now compared to where it was 6 months ago. It would really be helpful. Thank you.

Yes, good question. So, what did I say at the beginning of the year, I said about 2.5%. And what you are seeing is that it’s going to be slightly less than 3%. And that is not because of volume, it is because of resin prices and a little bit of weakness in the sectors on hospitality that I just talked about, but those kinds of things and situations are happening every single day. Every single day we have positives and we have negatives. So, if resin prices have – would have gone up another 10%, you would have seen our sales growth go up more than what I would have said at the beginning of the year and 3.5%. And there is a lag on those kind of things because of the pricing. So, the real question to say is that, so you were saying 3.5%, you are saying slightly less than 3%, is there a problem? Well, no, it’s basically when you have a raw material, which is a part of your cost base and when you have formulas, which in time correct for your overall pricing without impacting your margin, you have – you booked slightly less dollar sales. If we have resin prices going up or doubling in the next 5 years was you are going to see proportional improvements from Sealed Air, which was not necessarily the case under a few years ago, you are going to see a proportional increase in our top levered sales. So, that separates what is an external environment, which impacts potentially your net sales, but not your margins with internal issues. Let me confirm to you point blank very clearly, we are ahead of everything we said we would be doing in our Investor Day. Our innovation is kicking in better. And this is what is going to fuel our margin and our business in the future.

Operator, next question please.

Your next question comes from the line of Chris Manuel of Wells Fargo. Please proceed.

Good morning. And I guess I want to kind of follow-up here, because I am still a little bit confused on a couple of topics. Look I think coming into the year to kind of come back to Adam’s point, you guys were anticipating a pointer I think it was 3%ish plus growth with 2% of it being organic and one being priced. And now as material costs are falling, I mean, my understanding was for a lot of your formulaic pass-throughs that it’s basically passing through and then it doesn’t have a dollar impact to Sealed Air. It sounds now like maybe Jerome what you are saying is that while you are still on track to get volume growth to the back half of the year to make up that piece that the revenue growth might not be there because some of the mechanisms are lowering price. Is there something perhaps different in the competitive landscape today that’s not enabling you to – or that’s cutting price perhaps more than just what the formulas are moving that’s impeding your ability to kind of work on the net price side? What’s changed perhaps from a quarter or so ago to today or this has progressed?

Okay. Well, Chris I don’t know how to say that. I told you nothing. I told you that we had 3% growth in Food Care in North America in the second quarter, not bad actually. We had, in the second quarter, 3% growth. I told you that we had slightly less than 6% negative growth in Latin America. If you take out Venezuela, again in Food Care, if you take out Venezuela, we would have had volume growth in Latin America. So, things are stabilizing. We are very happy with what’s going on in Brazil. The way our management, local management, has turned things around and very key. We are doing very well in EMEA and this is all about Food Care and we have about the same in Product Care and Diversey Care. So, what I am telling you here, we have given you a guidance of about 6850 for the total year in total sales. We have benefit some on currency on the one side. And what I have just talked about a few minutes ago is giving you the answer on the net selling price, which is impacted by the resin cost and the formula pricing. So, you were referring to competition. Well, look at our competition and look at how we are growing our volumes compared to how our competition is growing volume. Product Care is growing fabulous. Food Care is growing fabulous. And we are doing very well. We had a bumper year, record year in Diversey Care at the very same time.

Operator, next question please.

Your next question comes from the line of Chip Dillon of Vertical Research Partners. Please proceed.

Yes, good morning. Jerome, could you give us a quick view of how the beef business is looking for you guys in Food Care around the world and how things may have changed since the last call?

Okay. So, let me start with the good news, which is that Australia beef cycle is stabilizing. It’s only down 0.5%, which is better than originally anticipated. Remember that it was exactly 12 months ago going gangbusters with a 10% growth in the slaughter rates, which was clearly unsustainable and then it went down over the fourth quarter and first quarter. Now, it seems that it is stabilizing there. You have the volumes in North America and which have been going up. And now you are going to see this have been nicely going up in the second quarter. It seems to be a sign for a very slight pause in the third quarter, but that’s going to be because of the very heavy second quarter harvest. But overall, it is anticipated to increase by over 3.5%. So that trend is on and it’s moving. And you know that over the cycle, we are going to move from about 22 million had slaughtered to 27 million, 28 million by the end of the decade. That is on its way. When – then, in – you look at the situation in Russia, which is developing its herd, etcetera, things are positive. By the way, our business down there is doing absolutely wonderful. And when you look at how our local business is going, Russia is up by 15%. Spain is up by 8%. And the exports of meat in – out of Brazil have started to improve and things are going better. So I would say that what we were anticipating is really happening. And I can once again assure you that we have a high share in that business and we continue to gain share. Thanks to our bags business, and thanks to our Darfresh on Tray and to OptiDure.

Operator, next question please.

Your next question comes from the line of Mark Wilde of BMO Capital Markets. Please proceed.

Good morning Jerome. Good morning Carol. Just to follow on Chip’s question there, Jerome, is it possible for you to give us some sense of the size of your North American beef business versus the size of your beef business in all of those offshore markets?

No, we don’t publish. We don’t give that. But we have given indication of the overall market impact. Our – globally, our fresh red meat market is about 30% of our total sale. And that’s as much as we give. But I have given indications in the previous earnings call about how to size this kind of business.

Operator, I think we have time for one or two more questions please.

Your next question comes on the line of Jason Freuchtel of SunTrust. Please proceed. Jeff D’Angelo: Hi, good morning. This is just Jeff D’Angelo sitting in for Jason Freuchtel. My first question is when do you expect to be able to quit making restructuring payments, are you still anticipating generating $775 million in free cash flow by 2018. And on top of that, how should we see CapEx trending over the next few years?

Okay. Good morning Jeff. I will take that. With respect to the guidance that we provided, just as a reminder, the expense that we will see this year to hit the P&L is estimated – the cash related to that at approximately $110 million. And we also within CapEx activities for our new campus and other restructuring investment of around $140 million. If we look at the cash flow as we move forward that approximately, restructuring cash payments for 2017, we have previously stated around $95 million. And then some will trail into 2018. But we should be substantially done in 2017. We always remind everyone though, that it’s not as easy to forecast as it relates to certain actions we have take in various countries. And some of our restructuring is also related to our footprint optimization for supply chain. And the timing of some of that spend, capital and related expense can be very lumpy.

Operator, next question please.

Your next question comes from the line of Anthony Pettinari of Citi. Please proceed.

Good morning. Just going back to the discussion of weaker hospitality demand in Middle East and I think you mentioned Europe as well, is it possible to size how much of a hit that was in the second quarter or maybe how much of a hit you might have baked into the second half guidance or maybe what percentage of your hospitality demand in Diversey is in these regions where you have seen some impact from macro events?

So I can take it. On Diversey Care, as you know Q2 is our strongest quarter historically and the results are in line with that. Quarter three is a hospitality quarter, right, its seasonal business, although hospitality is only 10% to 12% of our business globally through the year. And as you know, trends are weakening in Europe, Middle East and Africa because of the political unrest, you heard me say it’s tough, but in fact, we did okay in quarter two and you are all familiar with what’s going on. So tourism is suffering and we suffer from all of this. Therefore, we will experience a slowdown. And that’s why in quarter three you will see a slowdown of the pace of the growth in Diversey Care. I remain confident longer term about the regional promise and the sector promise as we went through this several times in our life, right. And the business is extremely resilient. We have very good people there. They have been through turbulences several times and the fundamentals longer term are extremely good. Anything to add, Jerome?

I would say that it explains – no, we like to be very transparent on all of those things. It doesn’t mean that it has a huge impact. What we are saying is that we have as a result of all the good initiatives that we have taken, we have a fabulous quarter in the second quarter in Diversey Care and it’s not going to be another record quarter ever in the third quarter. But we are pretty confident on our growth. We have had a companion annual growth rate in the last few years in our line of about 12% in constant currency. And we are going to be optimistic that this is going to continue.

And before we go to last question, Lori cut me off before I give an answer to Jeff’s question on the 2018 target. So just to go quickly back to that with respect to free cash flow, we are continuing to drive towards the targets that we shared in June 2015 at our Analyst Day, focusing on profitable growth and remain confident in the business’ ability to deliver on the growth rate and profitability improvement. We have always been a strong free cash flow generator and expect to be as we move forward. Obviously, the risk relates to currency. And that’s something that’s out of our control, but we always do our best to mitigate that. And Jerome talked about our actions from a pricing standpoint when we see devaluation.

Thank you. Operator, I am not sure if there is one more person in the queue, but otherwise I think we actually have hit our time.

Yes, you do have one final question from Brian Maguire of Goldman Sachs. Please proceed.

Thank you.

Thanks for squeezing me in. Jerome, I just wanted to ask you about dimensional pricing for a minute, just curious how the customer adoption on that has gone so far. And I know you signed some strategic partnerships during the quarter, just wondering if you could expand upon what those will allow you to do that you couldn’t do on your own. And then just finally, when do you think we will start to see this kind of moves the needle on the volume or price numbers for the Product Care segment? Thanks.

So, as I mentioned, weight and pricing is a big booster to our business. Thanks to our B+ and FloWrap technologies, etcetera, our new Korrvu innovation also providing all of the sales. Just to answer very short your question. You are going to see all of this in the third – and especially in the fourth quarter, because Q4 is an e-commerce quarter. And all the cards are set for a bumper quarter there. And I can’t be more pleased with the transformation of that division. I have made no mystery that we are just completely revolutionizing this industry. Our customers are responding. And not only they are responding to [indiscernible], but they are responding to something, which is very, very new, which is that they will now start to understand that the packaging look, how you present your products through e-commerce packaging is very important. We have all kinds of studies and we are continuing them and we are going to publish them at Pack Expo are showing that the image of the retailer or of the e-commerce company is dramatically conveyed through the packaging, which is by the way something that you could very instinctively understand. And as a result of this, our new Korrvu line is actually getting a lot of traction. So, come to Pack Expo, you will be very positive.

Operator, I believe there is one question in the follow-up queue. It looks like George Staphos is trying to ask a follow-up question. If you see him in the queue, can you please open his lines?

Yes. Mr. Staphos, your line is now open. And Mr. Staphos has just disconnected his line.

Okay. Alright, thank you very much for everybody joining us today. And if you have any follow-up additional calls, please reach out to myself and I will be happy to follow-up. Thank you.

Thank you.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a wonderful day.