Good morning and welcome to Whirlpool Corporation’s Fourth Quarter 2016 Earnings Release Call. As a reminder, 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, Mr. Chris Conley. Please go ahead.

Thank you and good morning. Welcome to the Whirlpool Corporation fourth quarter 2016 conference call. Joining me today are Jeff Fettig, our Chairman and Chief Executive Officer; Marc Bitzer, our President and Chief Operating Officer; and Jim Peters, our Chief Financial Officer. Our remarks today track with a 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 these statements due to many factors discussed in our latest 10-K and our other periodic reports as well as on Slide 1 of this presentation. Turning to Slide 2, 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 supplemental information package posted on the Investor Relations section of our website for a reconciliation of non-GAAP items to the most directly comparable GAAP measures. At this time, all participants are in listen-only mode. Following our prepared remarks, the call will be opened for analyst questions. As a reminder, we ask that participants ask no more than two questions in the first round and then time permitting we will address any follow-up questions after everyone has had a turn. With that, let me turn the call over to Jeff.

Well, good morning to everyone and thank you for joining us today. As you saw in our press release this morning, we delivered our fifth consecutive year of record ongoing earnings, with a 14% growth in our earnings per share. This was done through focused execution and strong operational actions and we were able to more than offset the impact of global volatility to deliver good earnings growth. Our restructuring and integration activities remain on track and we delivered over $200 million of benefits during the year. Additionally, we continue to invest on our innovation pipeline. And last year, we launched more than 100 innovative new products throughout the world. We continue to execute our balanced approach to capital allocation, increasing our dividend by 11% and repurchasing $525 million of common stock. In total, we distributed more than $800 million of cash to shareholders, which was up by $300 million versus the previous year. As a result of these collective actions, we did – we are able to deliver total shareholder returns in the top quartile of the S&P 500. Turning to Slide 5 to look at our full year results, our full year revenues grew by 2% excluding the impact of currency. We grew ongoing business earnings to a record level at $14.06 per share as we realized substantial acquisition synergies, delivered unit volume growth and drove strong productivity to expand our margins. We also improved our free cash flow versus the prior year. Turning to Slide 6, you will see our 2017 priorities. We continue to see multiple paths for profitable growth and margin expansion. The demand trends we see in the U.S., India and many parts of Europe are positive and we expect currency to have a more moderate impact than we have seen during the last…

Thanks, Jeff and good morning everyone. Turning to Slide 9, we will review our fourth quarter performance in North America. Net sales were over $3.1 billion, an increase of more than 8% excluding currency. From an industry standpoint, we stated previously what we expect of the industry to rebound in the fourth quarter. It rebounded strongly in the fourth quarter to deliver a 6% growth rate for the second half, consistent with our 2017 guidance. The industry had a strong Black Friday period, especially in the mass and value segments as the benefits of real wage growth most significantly impacted low and middle income consumers. Consistent with the prior three quarters, we leveraged investments in our new products to drive very strong growth in the quarter. Additionally, our sell-through outpaced our shipment volumes, indicating continued solid and consumer demand for our product and brands. Our operating margins were 11.1%, down from the prior year. This was largely driven by price mix and the impact of the Mexican peso. As many of you are aware, the Mexican peso has now devalued nearly 15% since mid-October and our margins were negatively impacted by approximately $20 million. While we have already responded with previously announced cost-based price increases in Mexico, it will take some time for them to fully be implemented. In the U.S., price mix was negatively impacted by the growth of value in mass segments of the industry as well as the elevated level of promotions by certain competitors in the fourth quarter, most prominently in washers. We have recently won an antidumping case against those competitors. But obviously, their activity has still impacted our fourth quarter results. Turning to Slide 10, we have outlined our 2017 expectations and operational priorities for the North America region. We expect that the industry…

Thanks Marc and good morning everyone. As Jeff mentioned, we delivered our fifth consecutive year of record ongoing results in 2016. We achieved this effectively – by effectively managing currency headwinds and demand weakness in our businesses outside the U.S. Turning to our fourth quarter results on Slide 19. Net sales were $5.7 billion and grew by more than 2%, excluding the impact of currency. We achieved all-time record ongoing earnings of $4.33 per share, driven by strong cost productivity, volume and revenue growth and acquisition related synergies, despite approximately $30 million of negative currency impact to our quarterly earnings. Our effective tax rate for the year was just under 17% due to the timing of our tax planning activities. Our guidance assumes a rate of approximately 22% in 2017. Consistent with what we have done in prior years, we will continue to evaluate our tax planning strategies throughout the year and it is possible that we may have some favorability to that number. We also increased free cash flow above the prior year. On Slide 20, we provide an update on the progress of our restructuring and acquisition integration activities. We incurred restructuring expenses of $173 million and delivered $216 million in benefits. For 2017, we expect $200 million in expense and $75 million in benefits. These benefits are included in our total cost takeout guidance. Our 2017 guidance is shown on Slide 21. I will walk through the key drivers and assumptions behind these numbers on the next few slides. On Slide 22, you will see our expectations for 2017 ongoing EBIT margin expansion. Our strong plans position us well for another year of EBIT margin expansion. We plan to deliver improved product/price mix by leveraging the mix benefits of new product introductions. We expect approximately $300 million…

Thanks Jim. I will turn to Slide 28 and I would like to provide an update on our long-range goals and our value creation framework. Since we first provided our 2018 goals over 2 years ago, we have experienced significant changes in the global economic environment. As we talked about previously, we believe that we are in a strong dollar era, which is not likely to change soon. Since early 2015, we have seen significant devaluations in many currencies and companies, where we operate, have a big position. These devaluations have had a significant impact on our results, causing $6.50 a share of earnings and reducing our revenues by $3.5 billion. Additionally, we have had demand shocks in several emerging markets. For us, that’s most prominently in Brazil, China and many Eastern European countries. These demand shocks have impacted us by another $2 a share in earnings and reduced our revenues by $1 billion. We have responded to these changes with cost-based price increases and substantial fixed cost reductions, while at the same time, continuing to invest in our innovative products and strong brands. We do believe that emerging markets will be a catalyst for growth in the years to come. But the translational impact of currency is something that we expect that we will not be able to fully offset by 2018. Although the environment which we operate has changed, our commitment and our path to create long-term value for our shareholders has not. We remain very confident in our long-term value creation framework, which we again show on Slide 29. We are the number one appliance manufacturer in the world, with a leading global market share position along with leading key positions in key countries around the world. Our unmatched scale gives us substantial opportunities to reduce cost…

[Operator Instructions] We can take our first question from Michael Rehaut with JPMorgan. Please go ahead.

Thanks. Good morning, everyone. Mike Rehaut, JPMorgan. First question, and I think this is on a lot of people’s minds with looking into the North American margins, is – and this is something Marc, I think, you alluded to in your prepared remarks earlier, was the pricing and promotion environment. And you mentioned Marc that promotions, I guess, particularly in washers continued in the fourth quarter despite the initial positive ruling and the subsequent final ruling in January. So just curious, since that final ruling, have you witnessed any change in the pricing or promotional environment? And do you expect – was there some type of perhaps flurry of activity in the fourth quarter before that? And have you seen any change in the marketplace since then? And then I have a follow-up.

Michael, so it’s Marc. Obviously, your question probably backed a little bit of long answer – implied many questions. Let me first comment on the North America volume and price environment and kind of the impact in our margin, of which what you alluded to the activities by certain competitors is the only one part of that. First of all, the volume, as to some extent expected, but came out even stronger when we originally forecasted. The Q4 industry was very strong. It came, as I pointed out before, largely at the mass and value segments, which is not surprising if you look at all the consumer confidence data on the lower, middle-income buckets. So I would say, finally, the consumer is entering stores. Now, that doesn’t help your price mix to be honest and I will come back to this one later on. The back half, i.e., the second half of 2016 was 6% volume growth, which is exactly what we pretty much forecast for ‘17 if you take the higher end of our 2017 forecast. So yes, the volume was strong. I would also argue that industry sell-in may have been a little bit stronger than the industry sellout, which is different from our own numbers, but we had a very strong sellout. The pricing environment, I would say, was impacted by two factors. One was, as I mentioned before, the growth of the mass and value segments. And two, yes, there were still very intense promotional activity by certain competitors as we alluded – particularly in washers segment. In Q4, it did not come as a complete surprise because as we know we always talked about they stockpiled a lot of inventory from a summer and that has not completely sold in Q3. So, that was kind of a hangover from this massive stockpiling prior to the summer initial ruling. And particularly, one of them continued an extremely aggressive promotional cadence throughout the entire Q4. Now obviously, the final ruling, as you know, was not in Q4. That was in January. And I would say it’s too early to say, doesn’t really change their behaviors and we are obviously actively monitoring. Of course, our expectation will be that finally, a fair trade environment is reestablished, but the history of the past tells us we have a couple of question marks. But we are obviously actively monitoring and take actions whenever necessary.

Yes, Michael. This is Jeff. I would just add to Marc’s comments, couple of things. One as you look at the total North America margin, we did have a fairly impactful currency hit during the quarter. Two, we have – as you step back and think about it, Marc said it absolutely correctly is we basically had demand for the year of 6%, very steady in the first half, first half is up 5%. We talked last time about the unexpected stop in demand where it was basically flat, which was very strange and we all speculated as to why and then it doubled the run-rate in the fourth quarter. And so – but for the year it was 6%. I think the reality is that’s pretty much what the markets ran at for the year. That’s not the most efficient way for us to run our business with zero demand increase in Q3 and double-digit increase in Q4. So you obviously run – have a few inefficiencies in that kind of cycle, if you will. And we did and we have them behind us. And then the third thing, to Marc’s point on margin, yes, we have said all along, we have been very clear publicly with investors, with the government, this illegal dumping that’s been going on for a long period of time has had a negative impact on our margins, but it’s already in our baseline. And we did have a situation in the second half of the year where one particular competitor had stockpiled massive amount of washers and that probably just added to that, but it’s not new. We have been dealing with it. And that’s all reflected in the fourth quarter.

And Michael, it’s Marc again. Just to maybe add one last comment and also as we turn the page to 2017 and obviously, the North America margins which is the center of many questions. Our Q4 margins in North America were at the low end of our guidance. They were within the guidance, but the low end. Now you have also seen, we have given the guidance for next year, which is the above for 2016 actuals. And we are strongly convinced we can drive volume growth above market growth and expand our margins. It’s obviously at a more modest pace compared to a couple of years ago, but it is a margin expansion. I also want to emphasize, this is not based on some irrational hopes about certain competitors becoming all of a sudden completely different. We do believe we have opportunities on cost productivity. We have a number of product introductions, which help us on price mix and we took certain other actions. So we are strongly convinced we can expand margins and drive above market growth.

I appreciate that guys and it’s a comprehensive answer. Secondly, you also alluded to pricing in the UK and some of the challenges there and the price increases that I believe you enacted last quarter and I believe you said you expect it to be fully enacted by mid-’17, along with maybe not just price but also cost actions, just wanted to get a sense of where that price traction with price stands today, do you feel like you are a third of the way in or is it – in terms of the amount that’s stuck or how you see that in the marketplace. And then just the technical question on the ‘17 guidance if that includes any share repurchase or not for the EPS line? Thanks.

Mike, let me maybe first take the UK pricing question and Jim is probably going to talk about share repurchase or Jeff. First of all, again, to put for everyone on the phone UK business in context, historically that represented about 20% to 25% of our new Europe, Middle East and Africa revenues, but also historically represented a higher percentage on our profit, so it was an above average profit market, which also explains why our UK concerns weigh heavily on our European overall margins. On UK pricing, the honest answer is we have been slow in getting traction with pricing. Now, to give a little bit more color on this one. We went out with two price increases and what we have seen in Q4 and obviously, I cannot comment on competitors pricing. What I do can comment on is consumer pricing in the marketplace, okay. If you look at the consumer pricing in the marketplace, you would see that Whirlpool or Hotpoint, i.e., our brand, our branded products have high single-digits consumer price increase, in the ballpark of 7% to 9%. If you would look at the broader market, you would also see that in the second half of 2016, we were largely on our own with that price increase, which probably explains why in a very price elastic market like UK, we had a fairly significant volume impact. So yes, we got a high single-digit price impact, which came with a massive volume loss, but it also tells you that pricing is not yet enough to fully recover what we lost in the currency. It’s just a simple reality. We have further pricing actions and obviously, given the nature of UK market, we have a fairly big mail order business and long-standing consumer pricing. It will be interesting to see in the month of January, which is particularly critical for UK, how the overall consumer pricing landscape is going to be impacted. But we remain confident we will, every month, month by month, find more traction with pricing.

We talked about this on the last two calls. And in July when the Brexit decision first came out, we basically said we did not know what the impact would be. In the end of the third quarter, we said it cost us $40 million in the third quarter. And now it’s cost us $40 million year-over-year in the fourth quarter. We think that will lessen somewhat in Q1 and hopefully some more in Q2 and then – but we won’t see recovery on our business until Q3 when we start anniversarying this whole thing. So all-in-all, it’s cost us just last year probably $0.80 a share. In the second half of last year, we have put a lot of pressure on the rest of our business. But it’s a – we believe it’s a matter of time. Unfortunately, we think it will be a full year before we see the full positive benefit.

And Michael, to your second question, this is Jim. We – in the supplementary materials, we said that we modeled 76.3 million shares from a guidance perspective. And that includes any buybacks we have done up-to-date. And as we have said, there could be future buybacks, but also there are compensation plans where shares are issued. So none of that is incorporated at this point, but 76.3 million is what you should be using.

Thank you. Our next question comes from Ken Zener with KeyBanc Capital. Please go ahead.

Good morning gentlemen.

Good morning Ken.

Two compound questions here to address these issues, it seems that 300 basis points in EMEA tied to Brexit is the differential between the guidance you are giving this year and where we started out FY ‘16 as I look at your guidance there, so that’s I guess kind of understandable. My – and I think investors’ key concern is given that you also have to prove your success, Whirlpool that is, your guidance for North America margins this year of 11.5% to 12% compares to last year at this point, where you are 11.5% to 12.5%, yet the unit growth is the same, so can you put that in context for – is it just the peso and the Canadian currency, which seems to be about 60 bps drag year-over-year in the fourth quarter because you had good volume. Marc, you talked about the mass product price mix drawing you down, if you could really be a lot clear about that, because that always happens in the fourth quarter, all of your other businesses, which historically are higher margins, so can you talk about the margin pressure we are seeing in the U.S., isolate currency, isolate the product mix as it relates to these core issues of washers, which are now coming out of Vietnam and Thailand? Thank you.

Hi Ken, let me try to answer it. First of all, because you started on the Europe margin progression, yes you are right, the kind of 1 to 2 full points of margin expansion in Europe, which we expect is partially driven by the UK pricing or currency recovery. There is also a significant part of synergies and restructuring carryover. We always allude to this one, so it’s not just baked on pricing. There is also quite a bit of sustained cost productivity benefits and synergy benefits, which lead to that 50 mark progression. Now, more specific on the North America margin, first of all, I would argue that you can’t compare with starting point of ‘17 with the starting point of ‘16 because the overall environment based on currency, raw materials, etcetera, is just not comparable. So I think you should always compare to where you would exit the year and where the exit run rates are, okay. I would say right now kind of first of all, there is ongoing cost productivity we have also in North America, which is more than what we expect as a raw material cost increase, which by the way, is a big difference to ‘16. You had entering ‘16 still raw material tailwinds and we now have raw material headwinds. That is the fundamental massive difference. Of course, there is a fundamental currency reset. Entering ‘16, you had the Canadian dollar reset and now we have a massive Mexico reset, which is from a magnitude kind of not even comparable to what we have seen before and it seems to be getting worse day-by-day. So these are the big differences. But again, the margin expansion is driven by cost productivity, and two we still have a whole bunch of product introductions, which will allow us to drive mix in this still fairly aggressive market environment.

I guess, the second question, I think Whirlpool is one of these [indiscernible], if you will and there is a really interesting article in Cleveland.com highlighting the fact that production just stopped from China and immediately went to Vietnam and Thailand for LG and Samsung, by and large for their products and Jeff, I believe I know you don’t want to talk about politics, but I believe your travel schedule last week involved DC, how – can you kind of put this in context, because clearly these firms went from Mexico to China and now to other parts of Southeast Asia and we do have a different environment, not only is it more fiscal oriented versus monetary, but we have a President that’s a bit more focused on the imports, can you talk about how perhaps that impacts U.S. producers like Whirlpool and GE? Thank you.

Yes. Ken, I mean the high level, I mean let’s start with Whirlpool. We are a global company. We have a global operating platform. And for the most part, our production is local for local. 82% of what we sell in the United States, we make in the United States. We never left the U.S. from manufacturing. We spent probably $1.5 billion over the last 6 years upgrading all of our U.S. – nine U.S. facilities, not only to the state-of-the-art manufacturing, training of our people, product innovation and so on. So we are hugely committed to successful U.S. manufacturing. We manufacture more in the U.S. than everyone else put together in our category. Now – so we also have been a victim, if you will, of illegal dumping for a long period of time in the U.S. appliance business. And so as it relates to the – I can’t comment on any particulars, because I don’t know them, but in terms of the new administration asking input from U.S. manufacturers, the things really are about, how do we ensure that American manufacturer is competitive? How do we create good new jobs in manufacturing? And what kind of inputs could – in terms of specific, whether it’s around regulations or trade or taxes, would help American manufacturers not only be competitive, but also be able to add new jobs. And so that’s – we have been part of that as there are many industries and there is obviously no conclusions yet, but given our footprint in the U.S., our position in the U.S., absolutely, we want to both have great manufacturing competitiveness in the U.S. and we want territory.

Thank you. We will go next to Bob Wetenhall with RBC Capital Markets. Please go ahead.

Hey, good morning. I don’t know who the question is for, but your volume was like 12%, which is awesome and you had a little bit of a pricing headwind yet you saw margin contract by 130 basis points. So, I just thought with given the fixed cost nature of the business, it would offset the price decline. Can you step me through – I didn’t think the currency impact, in particular in 4Q specifically was like the driver of negative margin compression. What’s going on specifically just for the fourth quarter in North America in terms of profitability?

Hey, Bob, it’s Marc. So let me try to take this one. First of all, yes, our volume growth was significant. As usual, that’s the total volume growth, which we published in North America, which also includes Mexico and Canada and which also includes KitchenAid small domestic, so it’s not fully comparable to whatever is the published market on T6 or T7. Having said all that, as I have mentioned before, the margin impact was largely driven by three elements: one, yes, the Mexican peso weighs heavily, ballpark $20 million and particular as we exited the year, so that is a pretty heavy weight on this one; two, lot of the market growth, it’s hard to exactly tell you for 12% how much loss, but I would say the majority came in mass and value segments, which are profitable, but not as profitable as the high-end products. So, they don’t have – they are profitable and you make money on them, but they don’t help you lift the average profitability. And thirdly, yes, in particular in washer, we were impacted by the aggressive promotion environment and that was probably the most painful one, because there was a lot of growth in washers in the markets and we simply could either not participate, because it was not value-creating or it was not very attractive promotional environment for washer. So, these were the three big elements which really impacted the Q4 margins.

Got it. That’s exactly where I was trying to get. Thanks for the clarity there. Your segment margin targets for EMEA and LatAm, just trying to get some context, obviously, some FX headwinds with Brazil, softer demand in the UK, you guys have done a great job stepping us through that. Are you confident that as you cycle through in next year, that you can get to this range, because it looks like an aggressive range to get that margin uplift? And by the same token, it sounds like the Brazilian economy is turning pretty dramatically. And is your Brazilian outlook in terms of margin performance and targets potentially conservative given the fact that economic growth seems to be reasserting itself?

Bob, it’s Marc again. So, let me maybe first start with Latin America and Brazil and this is maybe one of the most overlooked gems which we had in our Q4 results. Because if you look at the Brazil margins in Q4, despite a really soft market environment of double-digit down, it’s actually fairly impressive. What it really means, we brought the cost in our pricing into a situation where even with low volumes we have actually fairly attractive margins. What we have modeled for full year is flat with some cost in the first half as I indicated and probably modest growth in the second half. So I would say yes, on surface, the Latin America margin target is 7.5% to 8.5%, they may seem aggressive, but you can imagine this is not too dissimilar from what we had in North America several years ago. We have now the right structure from fixed cost and pricing, you load a little bit of volume on this one or you start not losing volume, you have very attractive margins and we are highly confident in Latin America. On Europe, yes, it is quite a bit of growth versus last year. I would also argue 2016 was impacted by – was an extraordinary event, which we are anniversarying through and where we had certain mitigating actions. And on top of that, our cost takeout is and has been fully on track. So, we have no reason to slowdown our perspective integration activities. We know how much is coming through. We have so far fully delivered on the integration cost takeouts. Actually, local currency and over-delivered and so take the two things, working through the UK issues, getting the integration benefits better how we get to these margin targets. And that does not yet fully factoring any stronger growth for Russia, which as you know is highly impactful in our margins in Europe. The one thing which you didn’t ask, but I guess you implied it, we also want to be clear, we have not walked away from our long-term margin targets in Europe. Whatever we communicated around the acquisition, we still think it’s fully achievable, because the UK impact has probably been delayed by a year, but we fully stand behind these long-term targets.

Thank you. We will take our next question from Denise Chai with Bank of America/Merrill Lynch. Please go ahead.

Right, thank you. Can you hear me?

Yes.

Okay, great. Just going back to Slide 28, could you please breakout the drag from currency and emerging market macro in each year?

In each year. So, if we go back and look at in – we were $200 million of a drag this year. And then last year, I believe we were $400 million drag from an EPS perspective from currency.

How about emerging markets?

Then emerging market demand, if you really look at, I would say approximately – that’s approximately half and half, maybe a little bit more heavily weighted to the prior year, within that ballpark now, yes.

And for ‘17, what are you assuming?

So for ‘17, we are assuming currency has an impact of $0.50 right now. And then for demand, as Marc alluded to on the demand, we assume flat.

Okay, got it. Thanks. And just looking at sundry and some which tends to swing around a bit, what are some of the swing factors for ‘16 and what’s baked into your expectations for ‘17?

Sorry, I didn’t hear the sundry. We expect it to be flat year-over-year.

Okay, flat, got it. Thank you. And so just one last one, just looking at your restructuring cash outlays, do you think that ‘17 will be the peak or how are you thinking about this going forward?

Well, I think what you will see at ‘17 and ‘18 are the two heaviest years. And then once we get beyond ‘18, it drops off dramatically. So our expectations right now would be ‘17 and ‘18 are the peaks.

Thank you. Our next question is from David MacGregor with Longbow Research.

Yes, good morning. I guess I had two questions. Jeff, first of all, in your prepared remarks, you made reference to some inefficiencies that you incurred on the, I guess, on the manufacturing side and the laundry given the strength in the quarter. And I am just thinking about that Western Ohio laundry complex, where I believe you are still running two shifts and not yet running a third shift. And I guess my first question is given the strength we have seen in laundry and your success in winning some share back there in 2016, are you beginning to bump up against some manufacturing constraints with the two shift model there that’s creating marginal cost that was a factor in the margin performance in the quarter? And does this mean you have to bring on a third shift in ‘17 and what the economics of that might reflect?

David, no, really what I was referring to was we did have a strained second half from a demand and shipment standpoint. Things were – as you know our industry well, I mean, it’s fairly predictable going up or down or whichever direction. And the first half was pretty solid throughout the quarter, 5% growth. And then all of a sudden, we saw zero, actually, negative growth in July and August and September. And as you know, we don’t wait very long to start digesting our inventories and production and so on and so forth. So we were surprised in the Q3 with 2 months of negative demand and shipments. And then it came roaring back even much more than we expected in the fourth quarter. And so my only point was is that we have kind of a plus 5% first half, flat third quarter and a plus, whatever it was 12% fourth quarter. There is a lot of gyrations in your supply chain and manufacturing adjustments and inventory and so on and it just cause inefficiencies. It has nothing to do with capacity. We can handle – I mean, you are right I mean we have a lot of options on capacity. We got installed capacity. We got shifts, little bottlenecks we can resolve in a fairly short period of time. So it was really just about the unusual nature of Q3 demand or lack thereof and then roaring back in Q4.

Okay. Thanks for that. And then my second question, I guess with respect to again, you are talking about the recovery of demand and value price points, I am not sure if everyone on the call understands that in those price points, you play with some different brands Roper at Lowe’s and Amana at Home Depot, but in our price checks over Black Friday, you were a full $100 below where the Koreans were playing and I am just wondering if maybe you got yourself a little overly aggressive on value pricing in the quarter and that may have been a factor in the margin performance as well?

David, it’s Marc. We saw what you wrote in your pre-call. Long story short, I am not quite sure I would concur with your observation. At one point, we may want to do store check. If you compare a high capacity top loader from certain competitors, which is brought down from a regular MSRP from $999 to $499 and you compare that with a lower capacity agitator model, it’s – you may have $100 difference, but it’s not remote to comparison. Bit line structure entire point, which we always made about price compression throughout the range. So you are comparing apples-to-oranges. And if you would have seen at some of the frontload pricing and high-end top-load pricing of certain competitors, it’s being, by a long shot, the most aggressive in many years so completely different from apparently what you observe.

And I would only add to that Dave, I think that’s – the price point thing, you are probably right. But in terms of the apples-to-oranges is the issue. In fact that’s what we proved decisively with the Department of Commerce and ITC was that it’s not price points, it’s like comparisons. And we are – I doubt that we are the lowest in the marketplace.

Thank you. The next question is from Sam Eisner with Goldman Sachs. Please go ahead.

Yes. Good morning everyone.

Good morning.

So, just going to your total cost takeout number that you cited of about 1.5 point, which includes the $150 million of raw material headwinds, I think if you add that on top of the roughly $300 million, you have to drive about $450 million of cost takeout this year, can you just bucket where that’s coming from, I think you called about $75 million from restructuring, but still is a pretty sizable chunk, if you can just highlight where that’s coming from on a dollar basis that would be great?

Sam, it’s Marc. First of all, your math is correct, $150 million raw material headwind, that’s what we see at this point. Obviously, associated with some uncertainty, but that’s what we see from today’s perspective between $450 million on all the other cost buckets. So yes, we have $75 million restructuring. There is also quite a bit, as I alluded earlier, of synergies from the acquisitions and our ongoing cost productivity, which basically means targeted cost takeout on certain existing products, etcetera. And also fixed cost actions, which we are taking. So we typically don’t break it down in buckets in terms of what is fixed cost, what is cost takeout and what our synergy is, because and particularly between synergies and cost takeouts, 3 years of integration is kind of hard to split it out. We will split out of course, the restructuring going forward. But again, the total is $450 million in terms of cost takeout absent of raw material and we are - also if you look at historical run rates, I think that’s a level which we absolutely are confident we can achieve.

Got it. And then just maybe going back to the North America pricing, if you look at the retailer comps, you think Home Depot as a proxy, right, they have seen basically double-digit comp in their appliances throughout the course of the first nine months of the year and so I was wondering if you can just opine on kind of how your customers are thinking about the promotional environment, how accepting are they of getting actually price increases into next year. And then ultimately, is there any kind of commentary that you would like to provide on how any announced price increases are looking through January? Thanks.

Sam, it’s Marc again. First of all, when you look at the numbers, which were communicated or published by Home Depot or Lowe’s, yes, their appliance business was very strong. Keep that in mind that it was on the back of some fairly significant distribution shifts in the overall landscape, which has been going on for some time and probably was accelerated in particular back end of ‘16 and is not yet over. So I would see underneath was strong North America market, there is some fairly massive distribution changes, which I would say right now play in favor of both Lowe’s and Home Depot. And we don’t see that this is going to slowing down immediately. In that environment again, it’s obviously – we don’t comment on how certain retailers respond to our promotion offers or whatever we plan on price increases. It’s – retailers compete against each other and usually there is not always a receptiveness to drive pricing up, but that’s our day-to-day work and that’s what we have done in the past.

Thank you. We’ll go next to Alvaro Lacayo with Gabelli & Company.

Good morning. I guess my first question just on the sort of unique nature of the way that the demand for shipments worked out in the back half of the year, maybe if you can provide some more context or perspective on what drove the strength and if there is any sort of one-time items that made this number look stronger, I mean I don’t know whether it’s destocking from competitors or if there is some pull forward in demand, but any commentary around that would be great. And then with the 4% to 6% growth that you are predicting for North America going into ‘17, what is the primary driver of that growth in terms of that mass and value segment, is that going to be the predominant driver and does that sort of weigh down on mix through ‘17?

Let me take the first one since I brought it up. No. Like I said, I mean we were perplexed in July and August when we saw negative shipments from the industry after a very consistent plus 5%. And if you remember in the third quarter call, we said that didn’t make a lot of sense to us. Candidly, all the underlying – our drivers of appliance demand were good, in fact very good. And the – anecdotally, the only thing we could really assess at that point in time with our retail customers was that that was the height of the political election campaign, a lot of negative stuff out there and that makes consumers cautious and for a period of time quit buying. We also said we think that would continue. And I think when we gave kind of our full year guidance in October, it assumed that we kind of popped back to 5% or so demand. Well, the fact of the matter is again, anecdotally, it looks like that was pretty much spot-on and that the pent-up – the delayed purchases in Q3 came back on full force in Q4. And I frankly think it’s as simple as that. The full year was 6%. We always talked about 4% to 6%. So I think that’s the natural run rate. And I would go back in Marc’s comments for this year. The underlying demand drivers are all good. Replacement is good, new construction is good. Just the home sales is good and discretionary, which is largely remodeling, is good. So that’s why we expect to see that kind of demand.

Alvaro, it’s Marc. Maybe just adding particularly for the ‘17 outlook again, we guide 4% to 6%, which will be kind of at the pretty much where the back half was. That is based on we still see strong housing environment, so we basically see 1.3 million housing starts, around 5.5 million existing home sales, low unemployment and consumer confidence above 90. And we – for today’s perspective, we just don’t see any reason why this would slowdown in ‘17. Now what you need to be careful as in the past is whenever you see monthly industry shipment data, always don’t lose that these are sell in shipment data, which may be impacted by when certain competitors bring products into the country, how they manage, recall the units and shipment data so there is noise in the monthly shipment data. Unfortunately, there is no reliable public information of sell-out data, but from the data which we have, consumer sell-out is much more stable than you would expect from these sell-in data, which also is probably explanation between the strange Q3 versus Q4 numbers. Consumers act more stable from a sell-out perspective and what we see – what we saw on December, that’s what we have seen in January so far. Now specifically answering your question on the mass and value, yes, we do and that’s probably a positive perspective from a macroeconomic. The wage growth arriving finally in the middle and lower income levels, which drives them back in the stores and then drives some demand. Our job is through cost productivity and mix management to make us very profitable also in these segments.

Thank you. Our next question is from Megan McGrath with MKM Partners.

Good morning. Most of my questions have been answered, just a couple of clarification, on your EBIT walk at the end of your presentation, in terms of price mix, you are expecting zero, I think zero to 2.5 this year, what was it in ‘16?

So if we go back in ‘16, we would have been about a negative point of price mix as we look at for the full year. And then the 0.5, the zero to 0.5 we expect is based on our previously announced price increases going into 2017 as well as our new product launches.

Thank you. We will take our last question from Sam Darkatsh with Raymond James.

Good morning Jeff, Marc, Jim, how are you and happy New Year too.

Thank you.

I understand we are up against it on the clock. I just have clarification questions, if I could. Of the $450 million in total cost takeout and $150 million in raw material inflation, how much of that is North America specific for both those line items?

Sam, it’s Marc. And as usual, we don’t breakdown exact details. Now, what I can tell you first of all, $150 million, but $150 million raw material headwind is largely North America and largely globally on steel. And steel particularly see on North America and China. So if you want to say so, I would say of $150 million, North America and China sees a disproportioned amount, but we see a somewhat unfavorable environment pretty much throughout the globe. As I said before, there is some uncertainty around these numbers. We don’t believe always raw material trends are demand-driven, so there are there factors coming to play and that drives some uncertainty. But that’s what we see today. The $450 million, on the other hand yes, there is a North America portion. Keep in mind, there is still, I would say disproportionate amount off in Europe and that’s just a result of restructuring and still remainder of integration benefit.

Okay. Well, with that, we have hit the hour. I would like to just close again. Appreciate everybody being online. We finished a record year ‘16 and we are going to a record year in ‘17. There is a lot of volatility but hopefully as we have talked, we have got the plans in place to be able to deal with this. So we look forward to – thanks or joining us. And we look forward to talking to you next time. Thank you.

And this will conclude today’s program. Thanks for your participation. You may now disconnect.