Good morning, and welcome to Whirlpool Corporation’s Second Quarter 2015 Earnings Release Call. Today’s call is being recorded. For opening remarks and introductions, I would like to turn the call over to Senior Director of Investor Relations, Chris Conley. Please go ahead, sir.

Thank you and good morning. Welcome to the Whirlpool Corporation’s second quarter 2015 conference call. Joining me today are Jeff Fettig, our Chairman and CEO; Vice Chairmen, Mike Todman and Marc Bitzer; as well as Larry Venturelli, our Chief Financial Officer. Our remarks today track with the presentation available on the Investors section of our website at whirlpoolcorp.com. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Whirlpool Corporation’s future expectations. Our actual results could differ materially from those statements due to many factors discussed in our latest 10-K and our other periodic reports as well as on slide one and in the appendix of this presentation. Turning to slide two, we want to remind you, that today’s presentation includes non-GAAP measures. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of or unrelated to results from our ongoing business operations. We also think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations. Listeners are directed to the appendix section of our presentation, beginning on Slide 37, for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. With that, let me turn the call over to Jeff.

Well good morning everyone and thanks for joining us. In our press release this morning, we reported record revenue and ongoing earnings for the second quarter. As expected, the global economic environment continue to be challenging with currency volatility and weak emerging market demand, primarily in three core countries for us in emerging markets. First in Brazil, we saw a decline in demand of about 12%, Russia was down about 25% and China was down about 3%. At the same time, our integration activities in Europe and Asia are progressing well, and we will continue to accelerate these integrations as we move into the second part of the year. As we outlined in April, we’ve deployed actions to deliver second half margin expansion and those plans are on track to deliver record revenue and ongoing earnings performance for the year. Our ability to deliver these results in this environment reflects the strength and focus of our execution and the benefits of our expanded global operating platform. I’ll now turn to Slide 5 to briefly review the financials. You’ll see here that we had strong revenue growth year-over-year in the quarter. Excluding the impact of currency, our revenues were up 25% versus last year. Our ongoing business earnings per diluted share were a second quarter record at $2.70, compared to $2.62 last year and this was primarily driven by strong earnings growth in Europe and Asia. Our free cash flow was slightly higher compared to last year, primarily due to the stronger – strong working capital management, partially offset by the impact of our acquisitions. On Slide 6ix, you see that we’re reaffirming our ongoing business EPS guidance with ongoing EPS forecast for the year of $12 to $13 a share and we expect to generate approximately $700 million of free…

Thanks Jeff and good morning everyone. Let me begin on Slide 10 by reviewing North America’s performance in the second quarter, starting with the top line. Net sales of $2.7 billion for North America were up slightly compared to the prior-year period and nearly 1.5% excluding currency. Our second quarter ongoing business operating profit was a record $290 million, or 10.8% of sales, compared to $285 million in the second quarter of 2014. We continue to expand our operating margins behind the strong ongoing cost productivity and fixed cost leverage. While we’re pleased with our second quarter margins, we did experience a few challenges. One, Canadian currency continued to be unfavorable with roughly 14% year-over-year devaluation and we have already executed cost base price increase to offset that impact. Two, due to very strong demand for our newly launched products, including our new KitchenAid line, we experienced some short-term capacity constraints. We have made several investments to improve our capacity for these new products and expect to meet demand in the second half. Three, we also adjusted our production levels to appropriately match inventory risk demand. These challenges had an unfavorable impact of approximately $40 million on our second quarter margins. As you might recall on our fourth quarter conference call, we provided operating margin expectations of 10.5% to 11.5%. After a strong first half, we are already at the lower end of that range. And turning to Slide 11, we layout our second half actions to continue improving margins. We believe the industry is on track to grow by 4%, consistent with our expectations for multi-year recovery. If our new products fully floored, we expect to continue leveraging consumer demands to drive improved price mix and volume growth in the second half. And our previously announced Canadian cost-based pricing…

Thanks, Marc. Let me begin with our Latin America results on Slide 18. Compared to what we shared on our first quarter call, the macro environment in Brazil has weakened further and currency has remained significantly devalued. As a result, sales for the quarter were $854 million, down approximately 22% from the same period of prior year period. Excluding the impact of currency, sales increased 1% from the prior year period. Our ongoing business operating profit for the quarter totaled $36 million or 4.2% of sales compared to $87 million and 8% in the prior year period. These results included an unfavorable operating profit impact of $25 million due to currency and another $10 million due to reduced production levels. These impacts were partially offset by previously announced cost-based pricing, the benefits of cost and capacity reduction initiatives, and strong results in our appliance business outside of Brazil. On Slide 19, we layout our actions to improve margins and return to run rates more reflective of our expectations. We now expect 2015 industry for Latin America to be down approximately 15%, reflecting the further deterioration in Brazil. As mentioned earlier, currency continues to be a challenge for us, as we expect the reais to U.S. dollar exchange rate to be between $3 and $3.25. As discussed on our previous call, we have executed strong and decisive actions to offset the impact of the demand decline and currency devaluation. These actions include previously announced cost-based pricing, new product launches and fixed cost reductions. And in the weaker demand environment, we are taking additional actions targeting fixed cost reduction to improve margins. Additionally, in the first half, we rebalanced production levels to match reduced demand, and we will continue to monitor and adjust if needed for the remainder of the year. It…

Thanks Mike and good morning everyone. Let me start with our second quarter results on Slides 26 and 27. As Jeff mentioned, we have record net sales and ongoing operating profit during the quarter. Our revenues were $5.2 billion compared to $4.7 billion last year, an increase of over 11%. Currencies impacted our revenues by nearly $650 million, EBIT margins by 1.75 points and net earnings by approximately $1 per share. The diversification of our regional profit contribution, cost and capacity reductions, ongoing cost productivity, and benefits from our acquisitions, more than offset the headwinds we’ve discussed. And as expected, the company delivered record ongoing earnings of $2.70 per share up from the $2.62 reported last year. Allow me to make a few more detail points on our financial results. First, SG&A as a percentage of sales on a GAAP basis increased by one 1 point, approximately half of this increase is due to acquisition related costs with the remainder primarily associated with the deleveraging effect of a weaker demand environment in Brazil. We do expect the SG&A margins to return to prior year levels, as we realized integration synergies, additional fixed cost reductions and higher volumes in the second half. Additionally, the interest in sundry line improved year-over-year, driven by a gain from a business investment in Brazil, which had no impact on ongoing earnings. Finally as shown on Slide 27, on a GAAP basis, our effective tax rate for the second quarter was 32% and year-to-date is approximately 20%. We continue to expect our full-year tax rate to be between 22% to 25% for both GAAP and ongoing earnings. On Slide 28, we reaffirm our guidance for ongoing business earnings of $12 to $13 per share here, as well as our expectations of approximately $700 million for free…

Thanks, Larry. Well, just to sum up our priorities, as you’ve heard throughout the call, have remained focused on the successful integrations in both Europe and Asia and we have very strong operational plans to deliver the expanded margins we’ve discussed for the year. These actions do include cost-based pricing and – already communicated the key markets as well as cost productivity programs. Overall, we expect these actions to move us towards the run rates more representative of what we outlined in our long-term planning. Our strategy is progressing well and we continue to execute many actions on the three paths I described earlier, in terms of providing opportunities for both revenue growth and margin expansion. And we continue to believe that these plans provide us with an outstanding opportunity to not only have another record year this year, but also to deliver significant shareholder returns. So, with that, I’m going to close our formal remarks and I would like to open it up to Q&A.

Thank you. [Operator Instructions] We’ll take our first question from Megan McGrath [MKM Partners]. Please go ahead. Your line is open.

Good morning. Thanks for taking my call. I wanted to start on North America – pardon me. First on the demand environment, it does look as if you may have underperformed the overall market a little bit in the quarter, I know that there are some differences between your numbers and AHAM, but was that part do you think of the inventory adjustment or was there sort of more aggressive pricing happening in the quarter that you decided not to participate in?

Good morning, Megan, it’s Marc Bitzer. I’m going to take your questions. First of all, let me just reiterate what I said in the couple of previous calls also. First off all, our reported unit shipments versus a T6 market share what you typically see were not fully comparable. We sell more of just T6 major appliances. We also report non-T6 major appliances as well as Canada and Mexico units. We’ve also have extended – expand business made of many products, like small domestic appliances. So, obviously, you should focus on revenue growth and margins. And as you know, we delivered strong margins and we did deliver growth in Q2. Admittedly, that growth lacked industry and it’s important to keep a few issues and I will get to your question in mind with regard to our second quarter unit performance. One, we completed one of our larger product transitions in the middle of the quarter with a rollout of a KitchenAid suite of kitchen products, which is a side note. The last time we did that was 10 years ago. So, this is a very significant product launch. Because we have been transitioned in large product lines for much of the past few quarters, we haven’t yet seen the full capability of our new product lines in the market. Obviously, going forward, we expect that the healthy growth from these new products in the markets. Second, during the quarter, we saw stronger than expected demand for our recently launched new products, while our production capacity is still ramping up. We’ve made investments to improve our capacity, and we also expect to see marked improvements in the third quarter and fourth quarter as a result. And thirdly, yes, during the quarter, we did see some moderately aggressive promotional activities from a few competitors, which we choose not to participate in. As an example, we saw validate strong promotions in front-load laundry, where we sustained dumping by certain imports or top-mount refrigerator and we’ve seen promotions in spite of cost increases due to the energy efficiency investments. So, whenever there is a promotional activity in the market, we evaluate whether or not, we can create value for our shareholders and rank [ph] by participating. When we see value, we participate. When we don’t see value, we do not participate.

Great, thanks for that. And I just wanted to clarify. You mentioned in your opening remarks, a $40 million negative impact, was that just from the inventory adjustment or was that all three things that you mentioned, the Canada, the product transition and the inventory adjustment?

Megan, it’s Marc again. It’s all three things combined.

All three things, okay.

So, and of course that is a rough estimate, but that gives you a sense in terms of probably what our potential in Q2 was.

And can you give us any sort of breakdown of what was the biggest impact of that 40?

No, I mean, we took it – first of all, the 40 is already a rough estimate. So, it’s kind of difficult to really break it down to components. But the inventory adjustment was a big part. Back to you other question, Megan, just trying to bring our working capital levels in line before we saw as a top-line growth from the first half of the year.

Great, thanks. I’ll get back in the queue.

Thank you. Our next question will come from David MacGregor [Longbow Research]. Please go ahead. Your line is open.

Yeah. Congratulations on some of this progress. I wonder if you could talk a little bit about Latin America and specifically you’ve referenced pricing initiatives aimed at offsetting FX. Can you talk about your level of confidence in the Latin American price increases for holding and what’s obviously difficult macro-environment? And then secondly, if you could just maybe provide a little bit of color on your non-Brazilian Latin American business, you said it was doing better, if you can maybe give us a little more elaboration that would be helpful? Thanks.

Yes, David, it’s Mike Todman. With respect to the price increase in Brazil, in fact, we held as well as holding our market share. So we had sequentially flat market share and the pricing has held and that’s what’s allowed us frankly to offset the huge currency impact, as well as the demand – the market demand environment, but pricing is absolutely held. In terms of the business outside of Latin America, actually we saw a growth of around 12% in that business. So that business continues to perform very well and we saw a significant as well improvement double-digit in operating profit from that business. So, we feel very good about that in the markets outside of Latin America.

David, this is Jeff. I just add to that, in Brazil in particular, when we say – there is really three impacts. There is obviously the demand environment, which is negative. We have the devaluation year-over-year of about over 40%, so you have the translation impact. And when we talk about pricing offsetting currency, it’s really offsetting the inflation consequences of the currency in the Whirlpool market. Well, we will not offset translation currency.

Okay, thanks. And then if I could squeeze one more in. And just if you could comment on raw material deflation and you know your competitor adjusted their guidance for the year, any thoughts on how you’re tracking versus that $100 million target, is it possible that you might have ultimately outperformed that number in the second half?

Yeah, David, it’s Larry. As we stated in our prepared remarks, we do expect a higher second half contribution of about $0.50 per share versus the first half from net productivity, which would include materials versus our first half performance. During our last call, we did say that materials would be approximately $100 million lower this year and you know I’d say if current commodity rates hold, it could be better than that. We’ll see how the rates continue to evolve, but we’re confident in $100 million and we are – if rates continue to improve, we should potentially have some upside. I would mention that, it’s important to remind – remember that we are experiencing headwinds in currency, which in currency outside of the U.S. and from when you’re purchasing U.S. denominated current commodities.

Okay. And if you are to revise the raw material guidance, would that also imply that you’d be revising your cost synergy guidance on Indesit, given that a large portion of the early stages in the synergies are raw material related?

David, it’s Marc Bitzer, I can take it. No, in a nutshell, we wouldn’t because, when in the particular – Indesit in particularly applies what Larry just outlined. You still have a large amount of purchases in U.S. dollar denominated. So, even while you may see increase in tailwind from a raw material side, it’s pretty much eaten up by currency a bit, because you buy still in the U.S. dollars.

Got it, thanks very much.

Yes.

Thank you. Our next question will come from Denise Chai [Bank of America Merrill Lynch]. Please go ahead. Your line is open.

Okay, thank you. Just going back to Latin America, could you talk about how Brazil performed during the quarter? I mean even just over the course of the quarter, do they continue to deteriorate, and how are you looking at the back half? And could you be a little bit more specific in terms of where you expect second half margins to come in?

Yeah. Denise, it’s Mike Todman. During the quarter, what we saw was just a continued deterioration of the overall market environment. So and as you all know, it’s kind of the political crisis that’s been led to an economic environment and challenging environment. And, the fact of the matter is, what we’ve said is, we’ve adjusted our outlook for the year to now minus 15%, which implies that the second half will be slightly worse, if you will than the first half. The first half was about minus 14%. So, we continue to see a fairly challenging environment. What we’ve done is obviously adjust our business to that particular market demand environment. And so, the actions that we’ve taken, including the cost-based price increases, which we’ve already announced, but we’ve taken some significant fixed-cost reductions and are taking more just to make sure that we can improve the margins. I’m not going to give you an exact margin number for the second half, but we do expect for it to improve significantly, substantially over the first half.

Denise, I would – it’s Jeff. I would add that I mean clear of the two variables are – right now are demanding currency and they moved quite radically. Our assumption, we’ve kind of laid down is that it’s pretty much stays the same as where we see it today. But if you accept that, I would just say as I said in my comments, we expect over time our Latin American business to deliver double-digit operating profits. We clearly didn’t with all this in the first half. We won’t get there in the second half, but we will be – if those assumptions stay the same, we will have significant improvement from what we see in Q1 and Q2.

Okay, got it. Thank you. And then, just in North America – sorry, you have the $40 million negative impact in the second quarter. Will there be anymore of that to come in the third quarter from Canada’s upon transition et cetera?

Hey, Denise, it’s Marc Bitzer. I would say, on the capacity constraints, we’re slowly working our way out and again that’s just normal ramp up as we launched brand new product line. And capacity in this case not only our own production capacity, it’s also applied capacities. So that’s been a normal ramp-up coupled with strong demand. So, I would say it’s largely behind us. The inventory adjustment is completely behind us. And the Canadian currency unfortunately not actually – this week it got worse. So, I think it would – it’s a mix bag, but I would still characterize the majority of issues are behind us.

Okay, got it. And just really fast, the value of the strong promotions that you saw in the second quarter, have those continued as well?

First of all, Denise, you’ve got to bear in mind that there’s certain promotion of [indiscernible] throughout the year, and obviously July 4 is a key element. So, right now, we’re kind of end of July or mid July, there’s no active big promotion out there. And it’s too early to speculate on what might be happening on Labor Day or on Black Friday. But what I would like to emphasize is the promotions were not across all categories. With our certain categories, it is just our choice when to participate or not to participate.

Understood, thank you.

You’re welcome.

Thank you. Our next question will come from Ken Zener [KeyBanc Capital Markets]. Please go ahead. Your line is open.

Good morning, gentlemen.

Good morning, Ken.

Good morning, Ken.

I might have more than two questions. So, if we look at Brazil LatAm, Jeff, I think – and Mike, please jump in. 1Q was down 20, the mark was down 15. You said LatAm net overall you now expect to be down 15 versus 10 to 12. But your comments seem to be that Brazil is getting weaker, but with all that decline, your 10 to 12, down to 15. Is that all Brazil and what does that mean about the second half comp? Is it seems like you have kind of stabilized in May. So, did it get worse since May and how much was attributable to Brazil versus other markets? First question.

When we refer to the market data, Ken, we’re only talking about Brazil. And I don’t know that it got worse, it’s just been consistently bad kind of since the first quarter and it’s still bad. We thought – when we talked in April that it might not be as bad in the second quarter given we’re comping against a weak prior year World Cup driven type of thing, but it just stayed double-digit negative. And so, our view is – given the environment there right now is that we don’t see anything that’s going to change that in the very near-term.

Okay. And again respectfully, but it seems like it got worse from where you had kind of talked about and I think Mike you alluded to the margins being second half better than first half. It’s specifically they are being a big ramp in 4Q versus 3Q, where I think before the baseline was kind of at the back half would it be 9% to 10% margin? Could you give a little granularity there to the extent your pricing in the quarter was very strong at 2015 price mix versus your down volume 2014, so what’s causing that I guess delay in that margin expansion that what Mike referred to a significant in 4Q versus 3Q in the second half versus first half?

Hey, Ken. I think – it’s Larry. I think what’s important to remember is Brazil has had to take out a lot of production in the second quarter to meet that demand. So while we are – well Mike is absolutely right. We are getting the price mix of some very strong price mix. You have two things happen. One is productivity from taking inventories down and with the lower sales base right now, you’re not getting as much leverage on SG&A. We expect that actions we’ve taken, the right-size inventories are largely behind us now. The price increases we’re taking are now in full effect, which should continue into the second half of the year. And then I think the combination of those in the fixed cost reductions we’re taking, the exit rate for Latin America will exit at a nice strong margin.

And there is also the normal – even there depressed demand levels are still the normal seasonality. Q4 is going to be a much higher volume, although lower, much higher volume than Q3 as Q3 is traditionally one of the weakest seasonal demands.

Okay. And then how much does currency plays into not only in terms of how it translates, but in terms of how you’re bringing right inventory to be then priced in. It sounds like you gave a currency of 3 to 3.25 for the reais, which would be I think it was kind of just above 3 when you guys reported in April. So you kind of had another 4% or 5% deterioration there, it seems in that currency, does that play into that delay of EBIT?

Well. You know actually, I mean it’s been all over the management I think even in April, it’s 335.

335.

So, we again, we got two critical assumptions on the Latin America, and Brazil forecast. And, that’s currency levels, which we’re just saying that we’re basing our – of our discussion around where our planning is that it’s going to be between 3% and 3.25%, and it’s kind of right in the middle now. And the demand will remain basically negative by about 15% for the full year. Now, those can change, but that’s what we base things on. And, that – and, based on that environment, we know our pricing actions and our cost actions, taking into count those negatives will improve as we go throughout the year.

Okay. And, I guess this last one for North America. Mark, you referred to seasonality being stronger in the second half versus the first half. Just looking at them out, I mean there is a lot of different variance, but it generally seems like you’re on the order of 100 basis points higher than the second half, because that volume leverage. Would that be a fair characterization? Thank you.

Yes, Ken, it’s Mark. So, first of all, on the margins particularly, as you recall, we gave a guidance or expectation of 10.5% to 11.5% full year. We finished Q2 with 10.8%. We still firmly believe that we’re in that range on a full-year base, which also tell us in the back half clearly margins, on the average or to the high-end of that range. Back to your point, [indiscernible] versus certain amount of volume leverage in part of Q3, there is also certain seasonality, in particular, of a small domestic, which lifts typically out Q4. So, it’s a combination of both volume leverage and the seasonality of certain products.

Thank you.

Thank you. Next, we’ll move to [indiscernible]. Please go ahead. Your line is open.

Hey, good morning, and thanks for taking my question. I wanted to inquire, what was the organic volume growth in EMEA and the Asian businesses? And your margin performance was a lot better than we were expecting. Now, I was just wondering to ask you, how much in the back half, can we see further expansion?

Bob, it’s Marc. I maybe start with the Europe piece. So, I’m glad to hear that the margins meet your expectation, but it didn’t meet our expectation very exactly in the range of what we guided towards. On a full year basis, we guided European margins 4% to 5%. We finished Q2 with 4.2%, which is encouraging that we’re already in Q2 in that range. We do see a further margin expansion and probably more to the high end of that range and that is largely coming from a build of synergies and restructuring activity. There is some top line growth. On your question about the top line growth, I understand, obviously, in particular, when you look at revenues, it’s a little bit confusing that’s exchange rate. In local currency, i.e., in euro, we had a very healthy growth, pretty much across all base business despite our now much stronger exposure in Eastern Europe.

Okay. And Bob, let me just talk about China. We had a strong growth in China. I think it was slightly over 80%. If you look at both businesses combined in fact, we picked up market share. But, it’s a lower demand environment in China than we had originally thought it was going to be. So, we’re on a minus 3% or so market. So, that obviously, impacted the total volume, but the growth was about in line with what we thought it was going to be. In terms of our margins, we were at 8.1% margins for Asia and we guided at the beginning of the year to be between 7% and 8%. So, we’re already at kind of top end of that range and that’s what we expect.

And there is some seasonality in emerging markets in Asia as well. Second quarter – first and second quarter were good, third quarter is usually weak and then fourth quarter it recovered. So, there is some seasonality effort. To Mike’s point, we’re pretty much in track in the way we want to be.

That’s good and I just want to get a little clarification on your North American volume outlook for 4% growth. I was just hoping, you could slice a little bit, is the benefit by your implied guidance would point towards mid single-digit unit volume growth. And is that a function of working through the inventory destocking or is that a sign of better organic demand and sustained consumer spending on appliances. And if you get that, if the second piece of that’s right, it is better consumer demand, would you expect to see firmer pricing. Thanks a lot and good luck.

Bob, it’s Marc Bitzer, again, let me just comment on the volume outlook. As you may recall, the very beginning of the year we guide towards 4% to 6% than we kind of – a little bit more [indiscernible] that’s what we technically still have today. And that’s all based on Q1 being a little bit softer, Q2 actually being in a reasonably healthy shape, and if you basically do the math that would imply a back half volume growth in the market of 4% to 5% just to get to the math. I would see – I would say, first of all, we have seen as of the second quarter pretty sustained healthy sell-in and also increasing sell-out trends. So from today’s perspective, we absolutely firm behind this one, and we’re also firm behind our – what we said long-term positive prospect and the growth in the U.S. markets.

Just to add to Marc’s comments, if you just look at last three months AHAM, would have probably been – we’ve been averaging about 4.5% growth.

Right. And just if I could speak one, if you capture that kind of growth, do you think you’re going to get a pricing boost as well?

No. Bob, we can’t really comment about what we think others are going to do. We know what we’re doing. We said very clearly, we think we’ll amp up our growth rate with the full availability of our new products, and that we fully expect to expand margins.

Got it, thanks.

Thank you. Our next question will come from Sam Darkatsh [Raymond James and Associates]. Please go ahead. Your line is open.

Good morning, Jeff, Larry, Mike, Marc. How are you?

Very good, Sam.

Very good.

Two questions if I could. One a clarification question, Larry. On Slide 42, I think you’re mentioning interest in sundry expense of $100 million for the year. I think that was $150 million targeted last quarter, what’s the reasoning behind that variance?

The interest in sundry and the GAAP, if you look at the GAAP financials, that Sam I believe, the favorable delta is the one-time gain, this in GAAP results, this on a business gain in Brazil investment – business investment in Brazil. That’s in GAAP, but not in ongoing results, okay. It’s just in GAAP. Visibly, we have right now on an ongoing basis for interest in sundry, you’re probably looking at about $130 million for the year.

Make sure I’m understanding that because the non-GAAP and GAAP gets a little confusing for me. So, back half of the year, what should interest in sundry be then on average?

Yeah, $52 million in the first half and figure is going to be $130 million for the full-year and then you got your second half.

Got you. Thank you. And then, the other question and if I – and if you mentioned this, Mike I apologize. In Latin America, I think you were trying to stabilize or rationalize retailer inventories in the quarter. Where are you in that process, where are retail inventories? Have they stabilized? And would you imagine that sell-it and sell-through look like each other in the second half?

You know, well, Right now, we did make the adjustments that I talked about in terms of overall demand. We think we’re about where they need to be, but it does all depends now on demand going forward. So, we made all the adjustments that we thought. We think the inventories are more in line, but all depending on demand in the second half, we’ll see. But right now, we’re comfortable with where we are.

And we’re comfortable with where we are and assuming that the market is down by 15%, but we’re comfortable. If it changes radically either direction and obviously we’ll adjust.

Very helpful, thank you gentlemen, I appreciate it.

Thank you.

Thanks, Sam.

Thank you. Next we’ll move to Michael Rehaut [JPMorgan Securities]. Please go ahead. Your line is open.

Thanks for taking my question. Good morning, everyone. First question, just going back to the capacity constraints in the quarter in North America with the product transitions. Do you have any sense of what that might have impacted the top line volume in that segment?

Okay. Mike, it’s Marc Bitzer again. I would say on a total revenue base but it’s just rough estimate, it’s a low single-digit percentages, but very low. It’s up 2% or 3% in that ballpark. And that’s just because A, KitchenAid suite launch, it’s a fairly complex and taking it’s an entire kitchen set of products across multiple factories, and you just need to get them all ready to ship it. And two, we’re still in the tail-end, but now have a very tail-end of this huge laundering refrigeration change. But as we know, we’re pretty much started Q3 last year, now we’re at the tail end and we have huge demands against certain products like Mimix where we’re just still ramping up our production capacity. And the...

Okay. So that 2% to 3% you’re referring, that’s the impact on the North American segment.

That’s on the North American. And again that’s roughly – that’s a rough indication.

And the mix – margin mix on that kind of product is substantially higher than the line average.

That’s helpful. Also can you just describe quickly the acquisition you mentioned at the end of the prepared remarks, I believe you said the American Dryer Corporation closed in July?

Yes and Michael, it’s Marc Bitzer. Again, the American Dryer Corporation is active in the professional commercial laundry segments. It used to be a supplier of our, so we know them for many years and it’s what we would describe as a nice tuck-in acquisition in our non-core business. The reason why we like commercial laundry, it’s inherently – it’s a healthy margin business, cash accretive; it fits perfectly in our – grow beyond and then expand beyond the core business, so it’s a nice tug-on. We didn’t reveal or communicate because we have an agreement with the seller any purchase price. Obviously, it’s only a fraction of previous acquisition, so it’s a much smaller one and then we now stopped our integration activities.

And just a sense of rough size of revenue and when you say healthy margins below or above the line average in North America?

We should be don’t get into the details, but American Dryer Corporation is kind of – I think it’s a largely published, it’s a $40 million, $50 million revenue business. It’s not a huge one, that’s why we call it a tug-in acquisition.

Perfect. One quick last one if I could, just the Asia margins. I think you referred to continued expectations for continued healthy margins in the back half and you’ve already done pretty well in the first half. Does that imply margins in the back half similar to the first half or should it drift higher perhaps with the acceleration of integration benefits.

No, I think, Michael, you can expect – there’ll be plus or minus within the range that we gave 7% to 8%, so similar, we don’t see any expansion. And as Jeff mentioned, there’s seasonal business in Asia and third quarter is generally the lowest quarter in terms of volumes and sales and then in the fourth quarter it kind of ramps backup. So the margins will be kind of commensurate with that.

Perfect, thanks for your help.

Yeah.

Thank you. Next we’ll move to Eric Bosshard [Cleveland Research Company]. Please go ahead. Your line is open.

Two things, first of all in North America, I understand the difference between that AHAM and your units, so curious on how you view your market share performance in the second quarter and also what your expectation is in the second half of the year?

Eric, its Marc Bitzer. I mentioned before, our top line revenue even though growing, admittedly lack industry demands, which also implies our market share just in Q2, is slightly down year-over-year. That’s the fact. Okay. It is, if you read in between my lines from my previous comment, it’s not across all products. This is certain categories where we saw high promotional activities or where we ran into some capacity constraints. So, is that our expectation going forward? No, it’s not. But we will also, you know we basically add value principles as we’ve done in the past.

Okay. And then the, just to clarify a little bit, the KitchenAid, you’re missing 2% to 3% of revenue, is a pretty material number, what was that, what you expected, was there something that was different than expected that didn’t allow you to come through with the capacity? I would just love to understand that? A little bit more especially considering that you also were taking extended downtime, it sounded like elsewhere in the business to balance inventories? Can you just help explain that a little bit?

Yeah. Eric, it’s Marc again. With 2% to 3% applied to KitchenAid and the capacity constraints on the laundry transition in particular. So, it’s – and a little bit to refrigeration, but it’s largely laundry, a little bit of front-door bottom mount and the kitchen. So, it’s all three businesses. So, it’s not KitchenAid on its own. Particularly, the laundry one that is very frankly, it’s much stronger demand coupled with a shift of inventory back into the top loader and that’s where we’re just ramping up in terms of overall capacity. On the KitchenAid, to some extent that’s you could say as expected, because you know, the kitchen suite, you don’t launch every year. As I mentioned before, we – the last KitchenAid suite was launched 10 years ago. So, this is a pretty complex undertaking, the flooring and retailer. So, it’s just, we knew it would drag a little bit for one quarter or two quarters and that’s just what it is. The good news is the reception [indiscernible] very, very strong.

Okay. Your participation and promotions in the back half of the year is the discipline similar to 2Q, such that you could still like the industry, is that how we should be thinking about you strategically?

Eric, as you know, we typically don’t comment on forward promotions et cetera, but, I think we – you see in the last three years to four years that we had a very good discipline around how we manage our margins, how we expand our margins and how we drive certain promotions and you should expect that going forward.

Eric, I just – I mean, we feel pretty good, pretty confident about our ability to win share through our new product innovations by creating demand for them as opposed to buying share, and that’s a discipline. Every quarter, it may go up or down, but we think there’s a value creating way to do it, and that’s the way we’re doing it.

And then secondly, in terms of Europe, the margin progress there has been impressive. And I know that there are announcements that come out over there about your capacity efforts there. I’m just wondering, if you could give us a little bit more color on what you’ve accomplished to date and what else is coming here in 2015? It sounds like there is an expectation, there is more synergy benefit there, but if you could expand a little bit on what you’re doing with the Indesit and what’s your core capacity in Europe?

Eric, it’s Marc Bitzer again. So, first of all, yes, the Indesit acquisition in Europe is a fairly complex and frankly, of a challenging task. But so far, it’s – I mean it’s very, very well on track. It’s almost like a clock work, which was not [indiscernible]. In terms of the major restructuring announcements, so far in the press and in our filings, we basically had referred to three ones, one was kind of a high level SG&A, which is largely a leadership team; two, what we call the Italian industrial plan, which is a significant undertaking across our Italian factories, in terms of capacity rationalization; and three, was a relocation of an R&D center, and goes up in R&D center in Germany. So, these were the three ones which we announced. Throughout the first half, there are obviously, big elements and big blocks, but we’re well on track and we signed these agreements already. In a broader scheme of things, we’re exactly consistent with the framework which we’ve made at the beginning of the year about the full-year restructuring expenses and benefits to expect that. So, I would say, yes, it’s fully on track, but it also tells you, just by the fact that we just signed some of these agreements now. You obviously, don’t yet see the benefits in the first half and you will only see a fraction of it in third quarter, but now it’s starts building every quarter, because we know it signs. It’s now needs to be implemented and that just takes a certain time.

Okay. Thank you.

Thank you. Next, we’ll move to Jay McCanless [Sterne, Agee and Leach]. Please go ahead. Your line is open.

Thanks for taking my question. I just wanted to ask on North America, could you give us some color about what you’re expecting for the back half of the year in terms of currency translation effects, or is that – and how much of that would you guys contemplate with the recent move, higher in both the Mexican peso and the Canadian dollar?

Jay, it’s Marc Bitzer again. As you pointed out, obviously, for North America, it’s the peso and the Canadian dollar. The peso has weakened, yes, but keep in mind, we have a certain element of natural hedge because we also produce in Mexico. So, when the peso moves, it hurts us on the top line, it does not necessarily hurt us on the bottom line. So, margin-wise, causes less concerns. Top-line, of course, they will always hurt you, okay. And that’s also embedded in already our Q2 numbers. Canadian dollars were different, because we [indiscernible] from the U.S., where year-over-year, we have a dramatic change, it’s fully impacting margin. We had now a number of cost base price increases in Canada, which we implemented. But as you can tell also, right now, Canadian dollar went down, weakened to $1.29, which is an average deterioration versus Q2. So, yes, that impact will be with us throughout the back half, both on top line, which is fairly significant on the North America level, but also on the bottom line, as we are catching up on the cost base price increases.

But there will be a drag at today’s level in the second half.

Okay. But it – but that potential drag you think is already captured in the guidance that you provided?

Yes, it should be....

Yes, it’s embedded in the guidance....

And it should be less assuming the currency range that we have forecasted remains there, as our pricing catches up with that.

Got it, okay. And then, just I missed some of the comments you made about SG&A. Did you – I would assume that SG&A should deleverage in the back half of the year. Did you guys give specific targets for that?

We said we will return to prior year levels for the full year. So yes, you’re right, we will have leverage.

Great, thank you.

Thank you. Yes, we have one more question.

Thank you. We’ll take that question from David MacGregor [Longbow Research]. Please go ahead. Your line is open.

Yes, thanks for taking the question. Can you just talk a little bit about your North American builder channel business, and what you’re seeing in terms of demand conditions in growth and to the extent, which your share their maybe be improving? And then secondly, maybe if you could just talk a little bit about share repurchase program, you’re active in the quarter. Is it your intent at this point to maintain a fairly regular cadence or are you trying to purchase a little more opportunistically? Thank you.

So, David, you just sneaked in two questions, I’ll take the first one. So, first one, the North American builder two components the demand and I know there has been some noise about the demand. We continued to see strong sustained demand on U.S. housing. I wouldn’t see any sign, which makes us change our opinion compared to what we’ve said several quarters ago. To put back clearly housing starts, we still expect $1.1 million for this year and next year you can probably put it somewhere between $1.3 million, $1.4 million in the ballpark. So, we see sustained or even stronger demand, driven by household formation and increased consumer confidence.

Okay, Marc. Could you remind us just what that represents as a percentage of your North American business?

Yes again, it’s careful – I’m careful about dotting down number, because you have two parts of the bill-to-business you have a direct bill-to-business, which we do have a national contracts and then of course you have a lot of small bill-to-business which typically flews for Home Depot and Lowes. So, you have two components, it’s kind of – but it’s a healthy component of our North American business. So having said that in that channel, as you know, we made over last three years or four years, I would say substantial market share improvements and we are certainly from direct bill-to-business where we know the contracts that are stable to slightly increasing. So, we’re very satisfied and very bullish going forward in the North American bill-to-business.

Share repurchase from capital allocation David, we’re going to continue to apply same methodology we have over the last several years as far as funding the business. We do have a debt-to-cap ratio, which we stated one to one and a half times, we’re at well above that with the acquisitions. We have repurchased over $1 billion of stock over the last several years. We’ve recently increased the dividend and as we shown again we have opportunistically take advantage of M&A. So, we’re not going to give you a target or what we will be repurchasing, but we’ll balance all of those elements going forward.

Great. Thanks very much.

Thank you, David, and thank you everyone. We look forward to talking to you in October. Thank you very much.

Thank you. This does conclude today’s conference. You may disconnect at anytime and have a great day.