Good morning everyone and welcome to the Sensient Technologies Corporation 2016 Fourth Quarter and Year-End Conference Call. Today's call is being recorded. At this time for opening remarks, I would now like to turn the call over to Mr. Steve Rolfs. Please go ahead, sir.

Good morning, I’m Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation. I would like to welcome all of you to Sensient's conference call to discuss 2016 fourth quarter and full-year financial results. I'm joined this morning by Paul Manning, Sensient's Chairman, President, and Chief Executive Officer. Yesterday, we released our 2016 fourth quarter financial results. A copy of the release is now available on our website at sensient.com. During our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods. These non-GAAP financial measures remove the impact of restructuring costs, currency movements, and other costs as noted in the company's filings. Non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is available on the Investor Information section of our website at sensient.com and in our press release. We encourage investors to review these reconciliations in connection with the comments we make this morning. I would also like to remind everyone that comments made this morning, including responses to your questions may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Our statements may be affected by certain factors, including risks and uncertainties, which are discussed in detail in the company's filings with the Securities and Exchange Commission. We urge you to read Sensient's filings for a description of these factors. Please bear these factors in mind when you analyze our comments today. Now, we'll hear from Paul Manning.

Thanks Steve, good morning. Sensient reported adjusted earnings per share of $0.80 in the quarter compared to $0.71 last year. The impact of exchange rates reduced the adjusted EPS results by $0.02. In local currency adjusted EPS grew by 15.5%. Revenue was up slightly in the quarter due to lower revenue in flavors and fragrances. Adjusted operating income increased by 9% in local currency as each of the Groups reported strong results. Colors operating income was up almost 9% despite a challenging comparison from last year's fourth quarter. Flavors and fragrances operating income was up 5% and Asia Pacific was up 3%. The full year results were also very strong. Adjusted earnings per share were $3.21 in 2016 up 8% in local currency from the 2015 result of $3.05. In local currency, revenue increased by 2.5% with both color and Asia Pacific reporting strong growth. Adjusted operating income increased 3% excluding the impact of currency. As I’ve noted throughout the year, corporate costs were unusually low in 2015 due to lower performance based compensation which normalized in 2016. Adjusted operating income excluding these corporate costs increased by 7% in local currency for the year. Cash flow from operations was 222 million in 2016 compared to 128 million in 2015. Excluding the impact of a onetime securitization transaction, operating cash flows were up more than 40% for the year and free cash flow was up more than 70%. Color had another great performance in the fourth quarter and the group had an outstanding year. In local currency revenue increased 4% and operating income increased by 8.5% in the fourth quarter. The cosmetics and food color businesses continue their strong performances in the quarter and the inks business improved solidly over last year's results. Cosmetics reported double-digit growth for both revenue and…

Thank you, Paul. Sensient reported revenue of $330.2 million in the quarter compared to $339.2 million in the fourth quarter of 2015. Operating income was $43.3 million in the quarter compared to $31.6 million in last year's fourth quarter. The operating income results include restructuring and other costs of $6.2 million in the quarter and $15.1 million in the capital period last year. Excluding the restructuring and other costs adjusted operating income was $49.5 million and $46.7 million in the fourth quarters of 2016 and 2015 respectively. Foreign currency translation reduced revenue by approximately 2% and adjusted operating income by approximately 3% in the quarter. Diluted earnings per share from continuing operations were $0.70 in the quarter compared to $0.43 in the comparable period of last year. Restructuring and other costs reduced earnings per share by $0.09 in this year's fourth quarter and by $0.28 in last year's fourth quarter. Adjusted earnings per share were $0.80 in the quarter and $0.71 in the comparable period last year. Foreign currency translation reduced adjusted EPS by approximately 3% or $0.02 per share in the fourth quarter. In local currency adjusted earnings per share grew by 15.5%. For the full year revenue was approximately 1.4 billion in both 2016 and 2015. Operating income was 185.6 million in 2016 and 166.3 million last year. Restructuring and other costs reduced operating income by 26.1 million this year and by 43.6 million in 2015. Excluding restructuring and other costs adjusted operating income was 211.7 million in 2016 and 210 million in 2015. Foreign currency translation reduced both revenue and adjusted operating income by approximately 2% for the year. Diluted earnings per share from continuing operations were $2.74 in 2016 and $2.32 in 2015. Restructuring and other costs reduced earnings per share by $0.47 and $0.73 in…

[Operator Instructions]. The first question comes from the line of Mike Sison with KeyBanc.

Hey guys, nice end to 2016 there. Paul, when you think about flavors and fragrances in 2016, you talked about flattish top line growth largely because of the restructuring and recent plant reduction. But can you walk through some of the other pieces that should grow and maybe highlight areas where the growth should look better than the actual full year.

Okay, now 2016 or 2017.

2017, heading into 2018.

Yes, so I think as I mentioned in my notes and it has been our approach with flavors, this is a really a combination of several key things going on in the group right now. Number one, it's a fundamental and continued strategic shift and strategy is all about how we are creating value in the context of competition to our customer. I think we spent a lot of time with that concept in the flavors group and I think a lot of the execution of that we're going to continue to see improvements on that in 2017. That is going to be key to really selling the most differentiated, the most sophisticated of products which as you could imagine versus the kind of classical ingredients business tends to be more sticky, tends to be more dispensable. It is better from a pricing standpoint. And certainly at a fundamental level just makes us more competitive. So I think that is going to continue to be the fundamental drive in flavors and fragrances. Not unlike that was a fundamental drive and continues to be a fundamental drive for the color group. But as you can appreciate this is an evolving story but I think one that we've made some nice progress in. I think we have pointed out a couple of businesses throughout the year that continue to execute on this very well. So we have a number of benchmarks and data points that suggest that we are doing this, that we've made a lot of progress here. And I think that one piece will continue. With respect to the restructuring, as I noted in the prepared comments, restructuring is a tremendous impact on an organization. It's a tremendous burden and we think that that's key to our future. Not only…

Great and then you know I was intrigued with your comment that in natural colors outside the U.S. where you are seeing some traction in Europe that maybe that it's starting to become a little bit more of a trend over in other areas. Can you maybe flesh that out and talk about what the opportunity there is?

So I think -- it's a good question. As we talk a lot about natural color conversions in the U.S. and certainly that is an essential market. It's our biggest market for colors today. There's a lot of interest although I don't believe it will be driven by regulatory factors or the government imposing such restrictions on synthetic colors. I believe it will be a market driven, consumer driven trend which will go for many, many years. Now given the influence of the U.S. market has on many other parts of the world, we have seen how this has impacted other regions. For instance Latin America and Brazil we had outstanding growth rates in natural colors in those regions for the year. We see it in the Middle East, we see it in South Africa where here again we had very good growth. And then we're also seeing it in parts of Asia Pacific. We had fairly good growth in a number of the regions of Asia Pacific as it pertains to natural colors. But there's certainly a lot more we think we can do. But on the other end of the spectrum to some degree is Europe. Now Europe is, from a continental standpoint, they essentially legislate the conversion to natural colors. It became a de facto ban on synthetic colors when they instituted labeling requirements suggesting that the presence of these synthetic colors was not in the consumers' best interest. That was the outcome there. And so a lot of that conversion had already taken place such that probably about 80% of that market has converted. But we still had nearly high single-digit growth in Europe in the quarter because I think there continues to be benefits in innovation in terms of how these products are performing, the vividness of these colors, how well they perform in various storage and production type operations. So there's still growth even to be had in Europe which on the natural color spectrum would be viewed as a more mature market. We still see opportunities in Europe on the standpoint of natural colors or I don't want to get into a regulatory discussion but what they call coloring foodstuffs, still a fairly good market for us.

Great, thank you.

Okay, thanks Mike.

Your next question comes from the line of Brett Hundley from The Vertical Group.

Good morning. This is Brandon Groeger on the line here for Brett Hundley.

Hey Brandon.

Hey, how are you guys doing. As we think about cash flows relative to the income statement going forward, does the company expect to continue to deliver these elevated cash flow margins and with that in mind do you think in coming years it's going to be time to up the dividend or would you prefer to allocate capital towards growth potentially including acquisitions?

Okay, so let me start with the cash flow question. So the answer to that question is yes, there is more that can be done to continue to improve our cash flow. We certainly have a lot more that we can do on working capital. I have certainly mentioned this over the years to a number of our folks about the opportunities we have there to improve our inventory management and even how we manage receivables and payables, fairly fundamental aspects of our business. So, a lot of opportunity still exists in terms of bringing that working capital level down to a more efficient level. With respect to free cash flow, certainly in cash flow as well operating profit growth is always the first input there. And so to that end we have strong expectations for 2017. I think that's going to figure into the cash flow discussion as well. We talk in terms of and this is now getting into the capital allocation piece of your question. Our CAPEX will not be as high this year as it was last year. Last year and the year before that, certainly for the flavor group it was a bit artificially high because we had a lot of restructuring activities which we see as hopefully a once in a lifetime event for any particular business. But we had to put a lot of capital into the flavor group to accommodate those moves in those consolidations. That is moving down to a more normalized level and to Steve's question or to Steve's commentary you noted that we would be spending about 60 million to 70 million which is still well above our depreciation and amortization level which is between about 50 million to 55 million. So I think that's a pretty good level…

Thank you. That's very helpful. Looking at the color segment again growth was solid during this quarter. If we strip out the currency effects we’re looking about 7%. We're hoping for a little bit more in growth given the conversion to natural ingredients that's happening in food and beverage, solid cosmetics color industry trends, and what sounds like an attractive category dynamics in specialty inks, what do you think is the right growth rate to think about given these factors in place?

I think the right growth rate as I’ll say for 2017 and beyond is mid single possibly even high single-digit revenue growth but I think mid singles is a good level to begin at. I think in terms of operating profit high single is where you ought to be thinking. For the year we did 7.5% top line growth in the color group. We did 11% operating profit growth in the color group and this is in the context of what some would describe as a lot of challenges in the market. And so it's the culmination of picking good acquisitions 20 years ago, spending a lot of time on new product development developing those businesses, investing in the sales and technical forces, and I think that's culminating enough having a very strong position in the natural color conversion that you see today. Now as you look at the fourth quarter, yeah, we were up probably more like mid single-digit top line and 8.5% bottom line. I wouldn't -- it's hard to predict what it's going to turn out to be at any 90 day increment of time. So when I give you those estimates for the year it may not be a straight line on any given quarter, could be above, could be below. But I think as you take sort of an average run rate what I forecasted in the prepared comments and share with you here is pretty much where we think we can be for colors longer term.

Okay, that makes sense and then if we look at the color segment margins in Q4 we know that the segments usually see a sequential decline for the quarter and we were down at 19%. We kind of expected a little bit higher but across the years as to remove quarterly volatility, can the company's color business stay above that 20% margin level?

Yes. So for the year we were 20 -- now call it 21 if you're okay with me rounding up 10 basis points.

Sure.

We think that's a pretty good indication of where the business is right now. Could there be some opportunity to grow that, sure. But I think that's running at a pretty good level all things considered. Yeah, to the point you raised there is certainly some seasonality in this business. Not every quarter is equal. We tend to have stronger Q2s and Q3s than we do Q1s and Q4s in many of these businesses. Some of that is just simply the fact that you don't see as many launches in Q4 as you would in a different quarter. So I think it's just something to keep in mind. Kind of going back to your previous question each quarter maybe a little bit unique and in a 90 day period if colors is up by 4% instead of 7% I wouldn't necessarily get too concerned about it. I think what we look at here is longer-term trends. If a customer -- you know hey, I'm going to order next week instead of this week, that could be worth a percentage point in growth right there if it's a big enough opportunity that we're talking about. So those ins and outs that can happen at a quarter-end, that can really have an impact and this is why I always encourage everyone to look at the year in totality and kind of take a year-to-date view of things. It makes it very helpful in terms of how you look at these businesses.

Thank you, that is helpful and one more quick question from a large beauty products company reported results yesterday and it was talking about its own portfolio seeing some challenges amidst smaller competitors doing well. Can you discuss the customer mix you're seeing in cosmetic colors and visibility on sales trends going forward?

Well, I think we've got a pretty good coverage of the customer base. Of course it's not where we want it to be. There's always opportunity to identify new customers, up and coming ones or even grow within many of your existing ones. You should probably know we tend to have very good access to customers in the world of personal care and cosmetics. And so I think we will continue to emphasize thoughtful growth. I think we'll continue to emphasize customers that would value our approach to this market. And we see, yes, it's not universal growth. There are some larger multinationals that perhaps may have some challenges right now but then there are others that are doing quite well and ditto for many of these local and regional customers. So, I think overall as I look at that market it's one that's very good. It's one that is constantly looking for innovative products. Products that have multi functional benefits, you can ever, you know, as I'm looking over here at Steve Rolfs you can ever look as young as Steve. I mean Steve has been using this stuff for years. But right here you are going to take it up a notch though and I think what happens with cosmetics, you always want the dye to last a little bit longer in your hair, can the lipstick go a little bit longer, can it also have this attribute. That's the key part why we are continuing to see a lot of growth in this market because we've invested heavily in R&D and development work in that business. And a lot of our new sales are coming from those types of customers that are emphasizing new launches and new products.

Makes sense, thank you.

Okay.

Your next question comes from the line of Francesco Pellegrino with Sidoti & Company.

Good morning guys. First up looking forward to working with the restated figures for the Asia Pacific group and the color group so I appreciate that. Going forward, I want to talk about your guidance. So, I think you said in local currency you're guiding for 10% growth ex currency, it comes out to like 4% to 7%. You did 700,000, you repurchased 700,000 shares in 2016. Does 2017 guidance incorporate any share repurchases at all?

Well, since we do it on an opportunistic basis nothing explicitly for 2017 but certainly there is benefits that you realize from 2016 buybacks. That would obviously be in the baseline for 2017. So in other words we bought in Q4, we would expect there be some nominal benefit in Q1 through Q3 for the reduced share count stemming from those purchases. But that we have factored into the budget.

So would you guys -- right now what's being factored in is just the ending share count at Q4 2016 and no repurchases in Q1 through Q4 of the 2017?

Yes.

Okay, and then I -- it was either Steve or you Paul that mentioned something about normalized compensation in 2016, what is the compensation I guess outlook that's being incorporated into guidance for 2017?

So it would be it would be similar to what we had in 2016. So just to step back and give the details on that, in 2015 for a number of reasons our performance based cap was extremely low and in 2016 we are at a more normalized level. So most of that is -- you'll see that flowing through the corporate line, the corporate expense line and that accounts for most of the increase you saw from 2015 to 2016. In 2017 I would expect more of just an inflationary increase in that line.

Okay, I guess going back to the Asia Pacific Group and the restated figures. I know the rule of thumb on that lease maybe when looking at 2016 numbers or where they were restated with Asia Pacific business was like one third colors, two thirds flavors and fragrances. Is now what's -- what's left in Asia Pacific right now, just all flavors and fragrance business?

Well no, it's still a that was a smaller piece that was transferred to the color group. As we effectively globalize that food colors business to incorporate North Asia that's only a small chunk of it. So the remaining part of Asia Pacific is it's a combination of flavor and color and probably pretty close to that ratio you just quoted.

Okay, the guidance that you had given for each group I think you said flat revenue for flavors and fragrances and flat and what you said for operating profit?

Mid to high single digit OP growth.

Okay and then, I was a little bit taken aback by the color group when you gave high single revenue growth but only high single operating profit growth. Given how well the segment performed in 2016, I thought we could possibly be seeing some low double-digit teen growth possibly for the color group and I'm not sure maybe it's because you had such a standout -- that the group had such a standout performance in 2016 but I'm wondering if maybe the operating profit growth might be viewed as a little bit conservative or maybe if there is upside?

Yeah, I think that's a fair comment.

Okay, and then you said that in the flavors and fragrances group you got rid of $10 million of some savory business, you sold that business right?

We sold the facility.

Okay, so you still have about like $100 million of savory exposure because I think savory represents like 20% of the flavors and fragrances group?

That's right. It's just a little under 20%. So this is just one facility.

Right, just one facility. So it seems as if you're trying to sort of maximize the efficiencies of each of the groups and I know you guys are excited about the color group. I know you see the inkjet market as something that could really accelerate growth for the color group. But, at the end of day are there any maybe additional subcategories within each group to sell and when I ask that question, only because I look at like fragrances in the flavors and fragrances group and when I think about your market shares each are a different subcategories. Fragrances you have some nice exposure, it's probably one of the smaller items within the flavors and fragrances product platform but then at the end of the day the market share is really low. I'm just -- maybe the question is like what type of benefit you get within flavors and fragrances to having this fragrance exposure?

Yeah and that’s a good question. So we see a lot of growth opportunity in fragrance. We have traditionally really emphasized aroma chemicals and just for everybody's benefit if you think of it many of the aroma chemicals that are sold in the market are building blocks to what we would describe as a fragrance compound. And so some of the aroma chemicals are quite commoditized, some of them are quite sophisticated, protected by IP and other trade secrets. So there's a whole range of aroma chemicals. Our business had historically focused on aroma chemicals that more and more had become somewhat commoditized. And so to that end we set about to not only to develop some new aroma chemicals but also emphasize the fragrance compound portion of the business where we saw a lot of opportunities, a lot of opportunities for growth. Many of these geographies that we sell into are quite fragmented, and so there's very good opportunities for a company like us that has a lot of resources and technology. But perhaps we're not the premier name in fragrances. These types of local and regional companies perhaps afford us an opportunity to grow in a very competitive way. So I think fragrances is a good opportunity for us. We've got a lot of work that we've been doing in that business. There's certainly some overlap with our cosmetic business that could potentially afford us some new growth opportunities. But in general I think that's an important piece to the future. Perhaps it's not as linked to our flavors group and maybe over time that becomes more linked to the color group, hard to say. But yes, I think that's a good business, but you're right, it is a low market share, smaller piece of the pie right now.

Okay, so I threw you the fragrance subcategory just as an example, is there any subcategory out there that maybe you want to start reducing your exposure to a little bit more?

Well I think that's what we're doing in this culling exercise where it's not so much a segment like savory or beverage as it is a group of products. And those group of products could span any number of segments. We can do as a company conceptualize the business according to a chemistry. And let's say in end market what is the chemistry and where could the chemistry be applied as opposed to here's my end market and what chemistries or technologies do I have. And so to that end it gives us a lot of flexibility in terms of how we think about growing the business.

Shifting to and I always appreciate the industry color commentary that you provide us with especially within food and beverages given your industry leading market share for that category. When I think about the category and I think you said one third of products shelves use natural colors but then in 2015 or 2016 75% of all new product launches we are incorporating natural colors. I know that customer relationships tend to be very sticky in the industry and I was just wondering if your customer base is becoming more fragmented and if instead of large multinationals really coming to you with purchases you're seeing some more smaller companies popping up that I think would sort of provide a little bit more stability to the top line in case you would lose a customer here or a customer there. It's just more smaller customers as compared to larger multinational customers that you would really rely on for a significant part of your business within the color group?

Yeah, so let me answer it this way, people would say, boy it is kind of a flat food market in many of these countries you guys serve and you're pretty well aligned with these multinationals. And despite that your color group was still at 7.5%. What's the secret here and I think the secret is you go after the right customers. And the customers maybe big, they maybe small but you have to have a business that is flexible enough to accommodate both when we're talking about natural colors here. The movement depending on this segment in the market may not be driven by a large multinational. It may be driven by a local or regional account that is very influential and could potentially even influence that large multinational to convert or to do something else in the form of a natural color conversion. So those are some of the dynamics that we look at. We spend a lot of time finding the right customers, finding the right opportunities to grow. And I guess it's working because like I said the color group is up well in excess of any of the markets that they're currently operating in.

Okay, and just one last question for you and new administration in the White House, when I think about just where the FDA rules had been for like color additive it can be interpreted by some as being very vague, very loose. Where do you see this administration going with rules and regulations regarding the color group, opportunities that this could present for Sensient, it could present for the market, and maybe some restrictions that it could present for you going forward?

I would say we are very adaptable as a company. Whether something is going to be legislated or it's just going to be consumer driven you have to accept the outcome of whatever political environment that you're in. So I would not anticipate the FDA, this is in my opinion, I would not anticipate the FDA legislating in a similar fashion has occurred in Europe. But if they were we're prepared to meet that particular approach to the market. We don't fight City Hall. We don't make political donations. So we are very ambivalent, agnostic to whatever political parties may be in office in any country that we're in.

Is there anything specific that the industry or you guys are closely monitoring within the FDA that is up for debate?

Well, I think what you're hinting at here is with respect to natural colors, what could be the legislation governing what natural colors are permitted for use in the U.S. This is something that is being discussed in committee perhaps even as we speak. And so yeah, we always watch the FDA and other government bodies, Health Canada and any number of these bodies throughout the world and we're prepared to operate within whatever constraints that they provide to the market. So that said I can't begin to predict where any one of these government bodies may come out but I think we're prepared to be successful in any eventuality.

So there's like no concern that maybe, I know right now there's like seven FDA certified color additives that it might go from seven to six or seven to eight, that the industry is just like chomping at the bit to see what happens, like there's nothing that you can hone in on to provide us with a little bit more insight or things to monitor is there?

I'll keep you posted.

Okay, I appreciate it. Thanks again guys.

Okay, thanks Francesco.

We have approximately five minutes remaining in the conference call and we will try to handle one more call, one more question. If anyone has a follow-up question that we are unable to get to please contact the company. Your next question comes from the line of Andrew Lane with Morningstar.

Hi Paul and Steve, congrats on a strong quarter.

Thank you.

To start with a more of a high level question, you indicated that the shift from synthetic to natural colors in the later innings in Europe, I think you said something along the lines of 80% of the way there. What inning would you say the U.S. market is in on the shift towards natural colors and then more importantly is the rate of change in the U.S. steady or accelerating in recent quarters?

To bat in the third inning maybe we start at the second quarter for the football fans out there. I don't want to disenfranchise them. Try about a third of the way through. In terms of what we're seeing now versus perhaps what we've seen in previous years, we're seeing more of a push towards converting existing brands. But, the momentum previously was about incorporating natural colors into new products. So the real potential change here that we think could be rather profound is existing legacy brands converting to natural colors. So I would tell you that there's been an acceleration of interest and certainly an acceleration of public declarations by many of those companies suggesting that they wanted to move in this direction.

Okay, great. And then you'd previously laid out a long-term target of 20% operating margins for the flavors and fragrances segment, a couple questions on that front. First, is that a target you're expecting to hit by the end the decade and then additionally you made a distinction earlier between the restructuring process and then the optimization process. Could you give us a sense for how much of this margin expansion would you expect to come from restructuring versus the subsequent optimization once your new footprint is established and static?

So yes, the long-term goal is 20% operating profit margin which I think is a symptom of the types of products and the types of customers that we're pursuing. So that is our goal as an organization. We have done and we moved on that by continuing pretty well in the last three quarters. I continued to see momentum on the operating profit margin moving into 2017 and 2018. So I think that's a very achievable goal. Many of our businesses are already at that level, some in excess of that level. So again we've got a lot of good benchmarks which would suggest that this is achievable. This is not just simply a pipe dream that we hope would come true. And so I think that would be my comment about the first part. Now with respect to restructuring versus post restructuring optimization, we had an overall savings target for restructuring. We expect to get the balance of those benefits in 2017. But the kind of this other optimization -- so that will be the bulk of it certainly in 2017. And as we get into 2018 you would see the savings or optimization in that post restructuring world we would expect there to be some improvement 2018 even perhaps beyond that. So for 2017 purposes it's really going to be about restructuring some post optimization out of the plants that have completed most of their restructuring activities. So, but it would be hard for me to quantify that at this point because I think it's a matter of completing the restructuring in these plants and then seeing where the economics are versus where you wanted them to be and then defining your improvement program for there. But I think where we've begun this process already we have seen, we're going to start to see some benefits here in a small way in 2017 but perhaps even into 2018 we'll start seeing the bigger benefits.

Great, thank you very much.

We can take one more question. I know we're probably up, getting close to limit but go ahead. Whoever's got the next question.

Your next question comes from the line of Christopher Perrella with Bloomberg Intelligence.

Hi, good morning, thanks for taking the question. What are your thoughts around FX hedging and ways to reduce the volatility on earnings with the strong dollar that seems to be in place for the foreseeable future?

Sure, so our best plan to hedge would be to have a natural hedge and as a general statement, a lot of our businesses if they're selling in a currency they're also going to have a lot other costs in the currency. Now there are exceptions where we are selling across currencies and in that case we try to hedge those transactions. But of course the big impact we've been seeing the last couple years, the $0.08 last year, the $0.10 we are predicting this year there we’re referring to translation and we do not attempt really in any big way to hedge translation. So what we try to do as we try to base our businesses in the markets in which we operate match our costs and our revenues. And when we are buying our raw material in another currency we do try to hedge that.

Alright, so the bulk of the -- primarily all of the FX headwind is translational?

The $0.08 and $0.10 we spoke of, yes.

Okay, that's it for me. Thank you very much.

Okay let me just make one other comment for everybody. Since we're on a public conference call this makes this very easy. Let me just talk about the guidance for 2017 in terms of maybe some of the timing. There are a number of questions about assumptions around individual quarters and the like and again I would just, it's certainly much easier for me and others to predict these trends on a year basis rather than any 90 day increment of time. However, just as you're building out these models for 2017 please keep in mind in Q2 of 2016 we did have a onetime $0.04 positive benefit in those results. Onetime meaning it will not repeat in Q2 of 2017. We've got the overall $3.35 to $3.45. So as you're building your model I ask you to keep that in mind. And one other note with respect to FX we anticipated a $0.10 impact as was our custom in 2016, 2015, 2014 and seemingly every year I've been talking on these calls. We will update you on the impact. Is it $0.10, is it above it, is it below it, so we will provide that guidance to you as we go. But as we're sitting here today $0.10 would appear to be the annual impact. Now, that will be more heavily weighted to the first half because most of that FX change took place in the second half of last year. So just two factors, I'd ask you to consider as you're building your platforms, your models, your guidance, etc. for the year. But otherwise I think the growth rates that we described are what we expect to achieve for the year. We didn’t get to everybody possibly. If you do have call as you all know we're very happy to speak with anybody. You can reach us and Steve as a more formal way of saying this.