Good morning, and welcome to Whirlpool Corporation's First Quarter 2017 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.

Thank you, and good morning. Welcome to the Whirlpool Corporation first quarter 2017 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 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 these statements due to many factors discussed in our latest 10-K and our other periodic reports as well as on slide 2 of this presentation. Turning to slide 3, 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 the reconciliation of non-GAAP items to the most directly comparable GAAP measures. At this time, all participants are in a listen-only mode. Following our prepared remarks, the call will be open 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.

Good morning, everyone, and thank you for joining us today. As you saw in our press release from last night, we delivered strong revenue growth for the quarter of about 4% with substantial growth and margin expansion in both North America and our Latin America regions. We also had significant free cash flow improvement of more than $240 million, an increase of more than 30% versus last year. These results represent good progress towards our long-term goals. We also continued to execute our balanced capital allocation strategy during the quarter. During the quarter, we repurchased about $150 million of common stock, and last week, we announced a 10% increase to our quarterly dividend. During the quarter, we did experience challenges with integration complexity in our European business, which negatively impacted our quarterly results, but we have plans in place to deliver significant improvements to grow our margins, which Marc will discuss later on in this call. Overall, the fundamentals of our business are strong. We are confident in our ability to deliver revenue, earnings per share, and free cash flow growth this year. We plan to continue deploying cash to our balanced capital allocation strategy, including the increased dividend I just mentioned and also continued share repurchases throughout the year. On slide 6, we show our first quarter financial results, which I have already discussed. I'll now turn to slide 7, where we show our 2017 financial guidance. Our free cash flow guidance of approximately $1 billion has not changed. We continue to expect to drive free cash flow improvement through both working capital optimization and increased earnings. We have updated our 2017 earnings per share guidance, primarily to reflect the impact of the challenges we had in Europe during the first quarter. Again, we do believe we have the right actions in place to drive improvements to our European margins as we progress through the rest of the year. So overall, we now expect to deliver ongoing earnings of $14.75 to $15.50 per share for the year, which represents a 5% to 10% improvement year-over-year. Next, I'll turn to slide 8, where you see our 2017 priorities, which are unchanged. As we discussed earlier, we do expect to complete key elements of our integration activities in Europe, driving several points of margin improvement in the second quarter and continuing to subsequently improve margins as we progress throughout the second half of the year. Also, as we have done over the last several quarters, we expect to continue to drive growth above industry levels, especially in key markets like the U.S. and Brazil. And we remain focused on driving substantial free cash flow improvements through working capital initiatives and earnings growth. So with that as an overview, I'd like to turn it over to Marc Bitzer to review our global operations.

Thanks, Jeff, and good morning, everyone. Turning to slide 10, we will review our first quarter performance in North America. Net sales were $2.6 billion, an increase of more than 6% versus the prior year. Excluding the impact of currency, revenues grew 7%. We continued to deliver profitable growth above industry levels through our leading brand and product portfolio. We gained more than a point of market share as consumer demand for our strong brands and new product has continued to outpace the industry. We also expanded margins through cost productivity and unit volume growth, despite $40 million of higher raw material inflation and about $10 million of unfavorable currency from Mexican peso. As a result, our margins expanded by more than 70 basis points to 11.2% for the quarter. As demonstrated by these strong results, we believe that we have the right plans in place to deliver our full-year margin goals of 11.5% to 12%, while growing at or above industry levels. Turning to slide 11, you will see our expectations and operational priorities for North America. We continue to expect industry growth of 4% to 6% for full year, behind strong macroeconomic and housing trends. The industry grew approximately 2.5% in the first quarter, in line with our expectations. We continue to expect to grow at or above industry levels, while expanding our margins through cost productivity, adjacent business growth and leveraging the benefits of unit volume growth as we did in the first quarter. And we expect to drive improved mix through a strong cadence of new product launches throughout the year. Beginning on slide 12, we will review the first quarter results for our Europe, Middle East and Africa region. Sales were approximately $1 billion, down 9% versus the prior year, excluding the impact of currency.…

Thanks, Marc, and good morning, everyone. Turning to our first quarter results on slide 23. Net sales were $4.8 billion and grew 4% versus the prior year, which is in line with our full-year revenue growth expectations. We delivered strong free cash flow improvement of more than $240 million versus the prior year through focused working capital optimization. We delivered ongoing earnings of $2.50 per share. A strong cost take-out and revenue growth were more than offset by $90 million of raw material inflation, as well as the negative impact of integration complexity in Europe. Finally, as indicated on the prior call, due to our tax planning activities, we now expect a full-year effective tax rate of 20%. Turning to slide 24, I will update our expectations for the 2017 EBIT margin drivers. We are experiencing raw material inflation at higher levels than we expected in January. However, our exceptionally strong cost productivity and restructuring programs will more than offset these levels of raw material cost inflation, while still delivering benefits to the bottom line. We are also seeing less impact from currency and expect the full-year impact of currency on EBIT margins to be approximately flat. On slide 25, we update our expectations for total cost take-out in 2017. As you can see, we now expect $300 million of raw material cost inflation. However, we remain confident in our ability to deliver substantial levels of cost productivity. We now expect to deliver approximately $475 million of gross cost take-out for the year. We have a strong track record of dealing with raw material cost inflation through cost productivity, while expanding our margins. This year will be no different. On slide 26, we show our updated full-year guidance for 2017. We continue to expect to deliver approximately $1 billion of…

Thanks, Jim. I'll turn to slide 32 where I wanted to update you on our progress towards our long-term value creation goals, which we laid out at the beginning of the year. Our first quarter revenue growth of 4% has us fully on track towards our annual growth target for the year in revenue. We remain committed to achieving our long-term EBIT margin goals of 10%-plus by executing all the elements of the strategies that we described. We've also delivered significant improvements in free cash flow in the first quarter. We expect to deliver again for the year, and we are on track to deliver cash generation of 5% to 6% of revenues, in lines with our 2018 goal. So overall, we're confident that we will make meaningful progress towards each of our value-creating goals this year. Lastly, on slide 33, let me summarize kind of the key points we wanted to communicate in this call. Again, first, good revenue growth in the first quarter; really good revenue growth and margin expansion in both North America and Latin America. Cash flow, very strong, and we are on track for the year. We do have actions in place to complete the key elements of our European integration as we go through the year, and we do expect strong improvement from the first quarter to the second quarter and the balance of the year in our European business. So overall, we remain confident in the strong underlying fundamentals of the business, and we're fully committed to delivering our long term goals. Finally, we do look forward to providing all of you more detail about our long-term strategy for shareholder value creation at our Investor Day which is scheduled to be held next week, May 4, at the New York Stock Exchange. So with that, I'd like to end our formal remarks and open up for questions.

We'll take our first question from Robert Wetenhall of RBC Capital Markets. Your line is open.

Hey, Jeff and everybody, good morning, and thanks for the extra detail on today's call. It sounds like you made a lot of progress in North America, and LatAm is rebounding nicely, and then we get to EMEA, and it seems like there's some hardship in place. And I really was hoping you'd give everybody a little bit more comfort, is this kind of a transitory margin shortfall, an air pocket in the first quarter we saw? How confident are you that you can return to profitability in the second quarter based on that chart you had, chart 14? And where can this business go in terms of longer term margin performance once you finish with the platform integration and get the headquarters system integration complete? How should we think about this going forward?

Yeah. Bob, I'm going to turn it over to Marc to give you a little bit more detail, but big picture, our expectations for Europe are unchanged. We think with the integration complete, this is going to be a highly value creating business. First quarter was a big challenge, and it had a material impact on our earnings. We do very much believe it's transitory, and again, I'm going to turn it over to Marc, let him give you a little color on it.

Hey, Bob. It's Marc. First of all, as you outlined, we're very pleased to have three of our four regions fully on track, probably even on the high end of the margin. Europe was a miss. There's no questioning around this one. To Jeff's point, what is important is we strongly consider this of being a temporary nature and not structural, this is nothing and also if you look at the issues, there's nothing structural. We had a blip, if you want to say so, which was particularly concentrated on January and February. And as you have seen on the slide before, March, I would say we stabilized the situation and we exited the quarter with a much stronger performance compared to January, February. What ultimately drove it is, call it, the cumulative effect of a complexive (21:04) integration. So as we came to the tail end of a factory and product platform integration and as we did the entire SAP system go live from the headquarter in Italy and all the factories in Italy, that led to a major supply chain disruption in January, February. It happens. The situation is stable, but it doesn't mean that it's yet a good supply chain situation. We expect it to be stable in Q2 and then turn back to, kind of call it, normal operations in Q3. It is also as we are progressing in April, we see a similar trend as we've seen in March, a fairly stable system environment; not yet good, but stable. And also we see then the subsequent positive effect on order and shipments. So again, we had an issue, particularly focused in January and February. March, exit was much better. As I indicated in my prepared remarks, Q2, we will see several points of margin improvement compared to Q1 and we expect that positive trend to continue in the second half.

And straight up on that question, do you think you're going to be in positive margin performance for the second quarter in EMEA?

We do expect so.

Got it, that's great. And then obviously, you show some good progress working through these issues. North America, it's your big engine driver of profitability. I was just wanting to get a little bit more depth. Sounds like there's some input cost inflation on the steel side, but you're making good progress of the productivity improvement. And how do we think about the pace and cadence kind of profitability? You reaffirmed your long-term margin target this year for North America. Does the productivity improvements outstrip cost inflation? And could you talk a little bit about the pricing environment? It seems like you're gaining some share. How should we be thinking about competitive dynamics?

Hey, Bob, it's Marc again. So let me break it up in several points. First of all, top line. As I indicated before, we're highly confident the industry will grow 4% to 6%. That 2.5% in Q1 was more driven by inventory adjustments related to a trade partner bankruptcy. In that environment, we picked up approximately one point of share. What we haven't referred to in detail is actually if you look at the underlying driver of that one point of share growth particularly came from KitchenAid and where we launched the new Kitchen Suite last year and Maytag laundry. Right now if you look at the industry, these are probably the strongest growing brands in the entire industry. So, we feel very good about the mix we achieved in Q1. Despite some reports out there, we were not very promotionally aggressive; otherwise we would have never achieved these kind of margins. So, I think we were very balanced in deciding which promotion to go in, we drove the mix very well and that helped, very strong in the top line. On the cost side, yes, we see globally, and we refer to that significantly higher raw material than we expected just 90 days ago. The good news both globally and in North America, a big part is already behind us. We ate through a big part of raw material increases in Q1, both in North America and the global level, which is largely related – you mentioned steel – call it, the surprise came particularly from resins. Steel prices are higher, but resins were substantially higher throughout the quarter, but started coming down in late March. So, yes, we faced some raw material increase in North America. We dealt with them through additional cost productivity and we're very confident that we can deal with them throughout the year.

Thank you. Our next question is from Sam Darkatsh of Raymond James. Your line is open. Sam J. Darkatsh - Raymond James & Associates, Inc.: Good morning, Jeff, Marc, Jim. How are you?

Good morning, Sam.

Good morning. Sam J. Darkatsh - Raymond James & Associates, Inc.: And thank you also for the additional time for us to process all the moving parts by reporting last night. That was much appreciated. Thank you. Two questions. First, I think you mentioned that the systems integration milepost in Europe is still ongoing and probably doesn't end at least comfortably until late Q2, so why specifically do you feel comfortable that your visibility is better now than it was in late January? And how do you get improved working capital for the year, knowing that you have to raise safety stock inventory? That would be my first question.

Hey, Sam. It's Marc. I'm going to take this one. First of all on the system integration, the Q1 of January-February was the combination of system integration and the remaining piece of some factory moves. We particularly moved some hops which was confined up in (25:57) January. So the combination of this one led to a supply chain disruption. In particular also, the system introduction in January was not a normal one. This is not one of a normal market interruption. It impacted Italy, the entire headquarter operations, and linked with all Italian factories. So even while we're not done with the system integration, that was the single biggest piece, and it's kind of – yes, and we had some issues in particular on the electronic orders, which we addressed, but it took us some time to address it. So yes, we will have system go-lives going forward. But I would say these are more kind of normal market go-lives, which on its own are challenges, but we know how to deal with them. But as a single piece, they're not comparable to anything which we had in January-February, and that gives us a certain confidence behind this one. To your question on the working capital and again, as you know, we don't show regional working capital levels. But we actually addressed the inventory overhang in Europe, which may sound contradictory to the late orders, but we had a lot of inventory coming from kind of phased out products as a result of a product transition. And if you want to say so, we flushed them out. and so the inventory reduction is largely related to phase out obsolete product, which helped us significantly improve our working capital in Europe, and we've basically dealt with that, so we don't have to deal with that going forward. Sam J. Darkatsh - Raymond James & Associates, Inc.: Last question, if I could, and if you mentioned this in the prepared remarks and I missed it, I apologize. But where specifically is the extra productivity and cost take-out coming from? I think you called out $25 million or so. Are there specific areas where you highlighted that that you could talk to, if you could?

Yes. Sam, let me maybe give you an answer on a global level, and Jim showed it also in his overall chart. First of all, in terms of headwinds, we so far assumed $150 million-plus raw material headwinds. We now expect this to be about $300 million. At the same time, we think we can increase our gross productivity to roughly $475 million, so the net of this one being roughly $150 million to $200 million positive. The increased gross productivity comes back to basically the playbook which we use in these kind of situations. We ramp up our engineering activities on normal cost take-outs. We take very tight controls of SG&A measures, and that basically leads to the increased results. And that is pretty much true for all the respective regions. So, the kinds of measures which we are looking at are true for North America, Europe and all the other regions.

And, Sam, the only thing I'd add to that, in addition to that, the other side of the equation is what we've done in some markets with price. We have gotten in markets like Brazil and some other markets where we have an even higher level of inflation. It requires us to take cost based price increases and everywhere, and Marc told you the example in North America with our brand portfolio of how we're driving mix. So, cost productivity has always got to be on, particularly in these kind of environments, but we give the same attention to the price margin realization side.

We'll move next to Megan McGrath of MKM Partners. Your line is open.

Good morning. I guess a couple updates on your operations in the UK. I know you said last quarter you had initiated some cost based price increases there over the last six months, and it was a little slow going in terms of getting competitors to follow. So, if you could give us an update on that, that would be great.

Megan, it's Marc again. So, I'm going to take this one. So, first of all, UK was not a surprise for us. It's basically the kind of issues which we expected which impacted the quarter by roughly $20 million year-over-year. So, the price increases which we referred to already in our last earnings call, we had a July and September price increase of which year-to-date, given the competitive intensity and given the trade partner situation, we realized about 6% or 7%. So we realized quite a bit of a price increase, but not yet to the full level which is required to offset the currency impact. It's difficult to comment on the entire competitive environment that we focus in our operations, so we realized something, but it's also important to note that our exit market share in the UK after two or three rough quarters has now stabilized. So, we're basically back to kind of pre-Brexit market share level, which is an important measure, and we continue to stabilize that. Keep also in mind pretty much with June of this year, we kind of annualized the Brexit impact. So from then on shouldn't be a headwind anymore.

Great. And then moving on to Latin America, good stable results there on the top line and an improvement in margin. What's your level of confidence there in terms of the overall market having bottomed?

Megan, this is Marc. I'm not quite sure I would call the results stable. We're actually very pleased with these kind of results in a very tough environment. So, first of all, there's two aspects to this one; so the markets remains tough, I mean, the Q1 was down, and Q2 as we indicated earlier will probably not see a lot of recovery. We're still fairly confident in the back half. So on a full year basis, we expect the market to be flat, but we're not putting a lot of hopes behind a too fast market recovery. But again, for the second half we're a little bit more confident. I think the team has done an excellent job in rightsizing fixed cost structure and also the variable cost. If we look at our variable product margins, despite not having a lot of volume, we have a very healthy business in there. And we had a similar experience in North America three years ago. If you have strong variable product margins without volume in a down market, then you know you can exit very strongly once the market recovers.

We'll take our next question from Michael Rehaut of JPMorgan. Your line is open.

Thanks. Good morning, everyone. First question I had was just going back to the European margins, and sorry to beat a dead horse, but just obviously, want to gain a little bit of incremental clarity. So I guess just going back to the end of January, kind of two parts on this. Going back to the end of January, when you put out your 4Q release and held the conference call, you were obviously already going through a pretty tough January, but at the same time expected it seems like perhaps better improvement within the quarter than ultimately played out. So just kind of curious what kind of turned in February? Or where was the enthusiasm that you could pull it out maybe a little sooner than ultimately occurred? And then conversely, looking forward, it seems like you're kind of expecting a back half margin perhaps similar to original expectations to get to the 3% to 4% for the full year. So does that point to by the end of 2Q most of all of this drag essentially ending?

Yes, Michael. Again, big picture, Marc kind of went through it very specifically in detail, but the first quarter, whatever word you want to – it was operationally not a surprise, but it was operationally challenging to us. We had very negative shipments in January, still pretty negative in February. Turned around slightly positive in March. We've shown that progression. So, yes, we didn't plan an operational shortfall, no. We had one. We got I think our arms around it by the end of the first quarter. As Marc said, we still have challenges going into the second quarter. We will improve our margins to profitable levels in the second quarter, and then we expect to kind of get back to an improving margin structure in Q3 and Q4 which leads to 3% to 4%. So what gives us confidence? Well, again, Marc said, we saw improvement in March. It was just too late for the quarter. It looks like we're going to have similar in April, and every day, every week we get further past the peak execution point in the integration. And that's our job, and that's what we intend to do.

I appreciate that, Jeff. And I guess I was just kind of looking for – again, it seems like by the time you're looking at the back half, it seems like you're expecting more business to return to normal or so. The expectation is to return to what you had at the beginning of the year. So I just wanted to try and confirm that, but...

You figure out the math. I mean yeah, with a almost minus 2% margin in the first quarter, yeah, we do expect much better margins in the second half.

Right. And, I guess, just switching gears to North America. If you guys could kind of comment on the competitive backdrop. You noted very positively you gained a point of share and you did that without being aggressive on the promotional side. I was wondering if you could give an update on just the overall competitive backdrop. Has anything changed in 2017 versus the back half of 2016? And maybe also talk about some of the ongoing changes in the different distribution channels, the different retail partners to the extent you're able.

Hey, Michael, it's Marc. First of all, the competitive level in North America remains – in U.S. remains highly competitive I mean, as it always does. Now I think a small change from Q1 versus the back half of last year. As you know, back half last year, we had a significant impact on our P&L coming from excess inventory by certain Asian competitors who kind of loaded the trade with laundry products in anticipation of an antidumping cost. And that was a reality, and we paid a big price for that as a company in the second half. That effect has moderated in Q1, but it doesn't mean that it's quiet out there. So there's always promotional pressure. I would say not the same kind of inventory overhang as we saw in the second half last year. It's hard to predict, and I can't comment on our competitors what would happen in Q2 and Q3. But right now, as you know, there's certain antidumping measures in place which we are confident will lead to a fair level playing field in the overall markets. And that's what we right now continue to expect to see. From a trade environment it's kind of, as always, we don't comment on specific trade partners. I would say overall, we're still very confident first of all on the entire builder segment. That continues to show strong growth where we're well positioned. The home improvement channel is overall growing very strongly where we have a very strong market position. So I wouldn't call out any specific retailer. You all read the headlines out there, and we're experiencing similar things.

And I'd only add to that, Michael. Demand was solid the first three or four months – or has been in the first three or four months of the year. Again, we get into this sellout data versus shipment data, and plus we had a major bankruptcy of a retailer and all that kind of stuff. But as we look at it, we feel really good about the 4% to 6%.

Our next question is from Samuel Eisner of Goldman Sachs. Your line is open. Samuel H. Eisner - Goldman Sachs & Co.: Yes. Good morning, everyone.

Good morning.

Good morning. Samuel H. Eisner - Goldman Sachs & Co.: Just wanted to double-check on some of the EBIT walk numbers here. And so I just wanted to confirm. So of the $300 million of raw material inflation for this year, how much has been recognized in the first quarter? And then in addition to the $475 million of gross cost out, again, how much has been recognized in the first quarter? If you can give us either by segment or in aggregate, that'd be great.

Yeah. So, Sam, this is Jim. And I think the one thing I mentioned is that $90 million of the raw material inflation has already been realized in the first quarter. So you could think about a quarter of it has already come in. And then for the first quarter, as we said, cost was slightly positive. So you should think of it for the full year, we've got about a fourth of our cost also improvement that's come in at this point in the year. So it's about ratably in the first quarter. We do expect it to accelerate somewhat in the back half of the year, but that's where we are and that's what you should assume. Samuel H. Eisner - Goldman Sachs & Co.: Understood. And then if I just think about the North America margin, it certainly seems a surprise to the upside. The incremental margin strictly on volume in the quarter or even going forward, how should we think about that? Is that a 25% incremental margin? Is that a 40%? Just how should we think about it given that presumably you're reaching pretty decent levels of utilization on that fixed asset base? Thanks.

Hey, Samuel, it's Marc. So first of all, as you know, we guided North America to 11.5% to 12% margin. And right now obviously with the strength in Q1, you could probably make the case where we're more on the high side of this one, but we got to see how the year plays out. Right now I would say we're confident we can deal, as Jim said, with all the raw material increases through cost productivity and even more than offset this one. And then a lot depends also on how we can drive our product mix going forward. Q1 was very strong, KitchenAid and Maytag laundry (40:21), that gives us a lot of upside on the price mix. The volume impact, we had 6% in Q1, so that's solid, but it doesn't drive a massive P&L impact. Yes, you have some volume leverage on this one. But right now from a pure margin expansion, we're still more focused on product mix and cost take-out.

Thank you. We'll take our next question from David MacGregor of Longbow Research. Your line is open.

Yes. Good morning, everyone, and congratulations on the North American share gains. And I know you talked about that five or six quarters ago as being sort of a rising priority for you. It's nice to see that playing out. Two questions. First of all, on the Indesit integration, you had originally at the time of the acquisition laid out some ultimate cost synergy numbers, and I was just wondering if this morning you could update us on the cost synergy expectation now for Indesit in 2018?

Hey, David. It's Marc. First of all, as we said at the very beginning of the Indesit integration, we expect to deliver roughly $350 million of overall synergies. As of today, we're fully on track to deliver these ones. We delivered them in 2015 and 2016, and in 2017 we expect another $75 million of incremental synergies to come through the bottom-line. And we're fully on track on this one. Unfortunately, so far these have been masked by currency and demand effects. That's been obviously very painful, but versus the original $350 million of synergy targets, we're fully on track. And we will also give further update on this one at the Investor Day, but that part of the equation is fully on track.

Okay. Thank you. And then secondly just on the raw materials, I guess, you raised the guide on raw materials to $300 million from $150 million three months ago. Is there any way to achieve a little more forward visibility on these costs and management of some of the quarter-to-quarter volatility, and I guess, as well, how exposed are you to further upwards revisions to these numbers as the year goes on?

David, it's Marc again. So first of all, as you know, the two biggest components of raw materials in our case is steel and resins, okay, these are the two single biggest items, and there's of course a number of other raw materials. Steel and resins are the big ones. What made the change in Q1 and what makes also the forecast very difficult is, yes, you have some element of steel prices, which are on the high side of what we even expected, but the resins had a massive move in Q1. What makes the forecasting so difficult, and more difficult than usual times, that in both steel and resins, we can't relate these increases to either input costs or demand levels. They're more driven by, what I would call, capacity management. So there's a lot of factors which are right now hard to explain and hard to forecast because, again, it's not input driven and we do not see the demand side on either steel or resins to justify these kind of price increases. So that also makes the rest of the year a little bit difficult to forecast, but right now I think the $300 million, which Jim referred to, that's probably right now our most likely assumption for raw material cost increase for the full year.

Thank you. We'll take our next question from Denise Chai of Bank of America. Your line is open.

Great. Thank you. So my questions are still around EMEA as well. You gave guidance in late January. You said that January was the toughest month for the integration. So, I guess, what was your thinking when you provided that guidance? And what was kind of most out of expectations in terms of the complexity of integration? And then secondly, how should we think about margins as you exit the year with all this integration now under your belt? And related to that, when you think about the impact to long term margins, should we think of that as being a 2018 thing? 2019? Just kind of any sort of color around the timeline. Thank you.

Denise, it's Marc. First of all, when we gave the last earnings call that was kind of late January. So frankly, we expected the operations to stabilize faster. So the fact that it also took us way into March to stabilize it, took longer than expected. The reason for this one plentiful, but it's largely systems and the complexity of managing through supply chain challenge. Having said that, March was better, and April is better, so we're confident on the improvement sequentially. As Jeff indicated before, the two aspects are, if you just do the math, there's a 3% to 4% full year guidance. The exit run rates of Q3 and Q4 are very similar to our original expectations. And by the same token, again, we will talk at the Investor meeting. We stand behind our 8%-plus long term operating margins for the full year, and we're fully convinced that's the right structural run rate. That Q1 was a blip, but we're fully confident we can be on that track.

Yeah. And Denise, this is Jim. One of the things, too, is some of the increased raw material inflation we saw came in EMEA. And we were able to offset it globally as we said, but with some of the integration issues we weren't able to offset it necessarily in EMEA. So they saw a more significant impact within the first quarter. But, again, we believe we're going to be able to offset it globally on a full year basis.

Okay. Thanks. And just one more. Looking at slide 14, you had eight straight months of negative volumes in Europe, which has now turned positive. But do you see any obstacles to regaining market share, and if we could perhaps size on maybe the aggregate production shortfall that you've seen.

So overall, Denise, I mean obviously with kind of this seven or eight months of volume decline, we lost the market share in Europe. It was largely focused initially on UK where we took some strong pricing action and we lost the market share. But this integration complexity we also lost in Q1 and Q4, we lost market share in a number of countries. We're country-by-country regaining the market share and actually see positive momentum. The first country which came around was Russia where we had solid market share gains in Q1. UK is only in March we now saw good exit market share similar to kind of going into Brexit. Italy, we had some challenges in Q1, so piece-by-piece we're finding our way back to market share. What is I think important to realize is, the market reaction on our new product as a result of these product integration has been very positive. So we know the products are working. We had availability issues, and Europe and all the other global markets are so competitive, if you have availability issues you will have competitors being able to quickly fill in.

But again, what has been a headwind we would expect to be a tailwind as we go forward.

Our next question is from Ken Zener of KeyBanc Capital. Your line is open.

Good morning, gentlemen.

Good morning, Ken.

Not sure if it was intentional, but it was nice that you had Johnny Cash singing, You Are My Sunshine precall, first time for me. So once again, the bear case in the U.S. wasn't realized and that's really the permanent shadow that you guys are under. But Europe missed, and I'm not diminishing the difficulty of what you guys are doing in Europe, but I think part of the bigger issue here is, if you could respond to that "temporary" that you referred to Marc, and it's not the first time, from an operational perspective we did have several years ago, as you recall, the complexity of the product rollout in the U.S. which impacted you. So, I guess, if I could have you respond to the complexity issue of these operations. If we think about Europe, there's a lot going on, but also in the U.S. we had this issue a while ago. And why that miss-results and reduced guidance, perhaps? That's my first question.

Ken, it's Marc. So, yes, I would say we had a supply chain issue in North America and it was two or three years ago. However, I would not compare these two things (48:35). I mean, the U.S. was around the product introduction and it's a massive demand increase against what was still limited capacity in the system. Europe is – the amount of complexity is probably difficult to explain on a conference call. We have about...

You can try.

We have about 9,000 SKUs in Europe which compares to about 2,000 in U.S. We changed last year about 80% of these SKUs. As you've seen on this little chart, literally almost every single factory was impacted by all the combination transition that's behind us. At the same time, we introduced several new product platforms and we changed to SAP system. So we've combination of these factors, I don't think it's in any way comparable to what we had in North America. Now having said that, as Jeff said before, Europe was a miss. I'm not trying to put it any differently. I think we got our arms around it very quickly. We have the entire company focused on this one. We stabilized it in March, but we also recognize it doesn't mean that it's yet good from a supply chain situation. But we're confident we can keep it stabilized in Q2 and then kind of month-by-month get better on this one.

Okay.

Ken, the only other thing I'd add, sometimes you have – and you pointed at two operational things, they do happen. But I would also point to North America, we had the best quarter ever in North America. Part of that benefit is from the new product transitions that we had some challenges with, and we're growing revenue above market. We're expanding margins in a difficult market, and we're improving our mix. And a lot of it has to do with getting massive product transitions in the marketplace, and I think hopefully we'll see the same thing going forward there.

No, that's why I tied the two together because it is complex and you do have to create a foundation. Marc, I'm going to go back to, I guess, slide 14 – no, 13, Wave 3. For us that haven't worked in the industry, I think this conference call and obviously next week, I think this will be a topic too, but ramp-up industrialization, you mentioned SAP electronic orders. That is not unique to you, all that an SAP system can – Hershey did it on Easter. Can you get into a little more detail though on this? Because there's a lot of questions in my e-mail just saying, what does it mean? I mean I hear the words, but is it that you turned on a computer, basically system and all of a sudden orders weren't coming from 50% of your customers through the system into the factories? Because I do think, Jeff, realizing – and Marc – that the U.S. and Europe were different, in many ways they're the same because you're executing well in the U.S. but it's these hiccups that kind of undermine the longer-term slope that people can expect from your margins. I think if you could just go into that a little more Marc that would be helpful? Thank you.

Ken, it's Marc again. Obviously, I think that is a good topic for our investor meeting in a couple days from now. Having said that, in kind of one sentence, it's not just the SAP introduction. We changed all our SKUs in pretty much most of the factories, and on top of that have an SAP introduction. And by the way, it's not the first SAP introduction. We had the SAP introductions before in Europe and North America. We know how that normally works. Right now as you go for integration you have two legacy systems converging into a new system. So you basically have in simple terms three systems talking to each other, which drives a lot of the complexity. No, the electronic orders are not everywhere (52:24) detail, Italian kitchen manufacturers and electronic orders are something fundamentally different than a normal EDI order from other trade partners. But again, these are probably way too much detail for the conference call. We know what's behind us. We know we're still not done with all the SAP introductions, but now they will not come on top of a factory integration which is a big difference. But again, I would recommend that we spend a lot more time on this one at our investor meeting in a couple of days from now.

We have a follow-up...

Looks like we do have one more question.

We do. We have a follow up from David MacGregor of Longbow Research.

Yeah. Good morning again, and thanks for taking the follow-up. I guess certainly good performance on the North American margins this quarter, and clearly the productivity initiatives you talked about are coming through here and helping you on the raw material offset. I guess, could you talk about how important you feel it is, I guess in the face of these higher raw material costs, and I guess given the revision from $150 million to $300 million from the beginning of the year to hear there's still risk of upside to that $300 million number for this year, but wonder if you could just talk about how important you feel it is in the face of that higher raw material cost to get a price increase this summer that would give you more gross margins to take into the Black Friday discounting?

David, obviously we don't talk about future price increases. I would just say that in our business, whether it be North America or anywhere else, we believe it's fundamentally critical to maintain and preserve margins in any environment. And if you look at our track record, there's different levers to pull. You heard Marc and Jim describe in great detail the cost productivity actions that we are driving. We are in fact in some apparently big markets around the world we have announced and continue to announce cost based price increases. So we've got to do all of that, but we've not communicated anything specifically on a go forward basis in the U.S. market. I'm not saying we won't. I'm just saying we haven't done it yet.

And, David, maybe to Jeff's point also, again, we will never comment on forward-looking pricing, et cetera, but our playbook and we've shown that in the past repeatedly is, when you're faced with raw material, we first of all double down the cost take-out actions including fixed cost. Two, we drive product mix very hard, and three, as an ultimate resort, we have like-for-like. We've done the cost take-out, the price mix successfully in most regions. To Jeff's point, we have driven like-for-like increases already in China in the face of raw material, and we will make decisions on a go forward basis.

So with that, we're going to wrap up. I want to thank everyone for joining us today, and we look forward to seeing most of you next week at our Investors Day on May 4 in New York. So thank you very much.

Thank you. This does conclude today's Whirlpool Corporation's first quarter 2017 earnings release call. You may now disconnect your lines. And, everyone, have a great day.