Operator: Good morning and welcome to Whirlpool Corporation's Second Quarter 2013 Earnings Release Call. Today's call is being recorded.
For opening remarks and introduction, I would like to turn the call over to Senior Director of Investor Relations, Joe Lovechio.
Joe Lovechio - Senior Director, IR: Thank you and good morning. Welcome to the Whirlpool Corporation's second quarter 2013 conference call. Joining me today are Jeff Fettig, our Chairman and CEO; Presidents 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 these statements due to many factors discussed in our latest 8-K, 10-K and 10-Q as well as in the appendix of the presentation.
Turning to Slide 3, we want to remind you that today's presentation includes non-GAAP measures. We believe that these measures are important indicators of our operations as they exclude items that may not be indicative of or are unrelated to results from our ongoing business operations.
We also think that 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 29 for the reconciliation of non-GAAP items to the most directly comparable GAAP measures.
With that, let me turn the call over to Jeff.
Jeff M. Fettig - Chairman and CEO: Good morning everyone and thank you again for joining us today. As you saw in our earning release from earlier this morning, our second quarter results reflect strong revenue growth in every region around the world. As I have outlined in the last several quarters we continue to manage all the drivers that impact our margins and once again had significant margin expansion during the quarter. These results mark the sixth consecutive quarter of year-over-year ongoing business operations margin expansion.
Given the strong underlying trends that we see in our business we are raising our whole year ongoing business operations EPS outlook to $9.50 to $10 per share up $0.25 from our previous guidance and our free cash flow to between $650 million and $700 million up $50 million from our previous guidance.
Our second quarter results are summarized on Slide 6. Excluding the impact of foreign currency and BEFIEX our revenues were up approximately 6% versus last year. Our diluted earnings per share from ongoing business operations improved 53%, up $0.82 to $2.37, compared to $1.55 last year. As we continue to drive higher revenue growth and expand margins our expectations for cash generation are firmly on track. All of our actions regarding our use of cash are aligned with our previously committed priorities which are appropriately funding the business particularly focused on new product innovation, which we are doing, refinancing our long-term debt. We did increase our dividend in April by 25% and recently during the second quarter we resumed our share repurchase program.
Turning to Slide 7, you will see our industry assumptions have changed within the regions as compared to our previous outlook. In North America, we are increasing our industry demand assumptions to be up 6% to 8% for the year as we continue to see very positive trends in U.S. housing as well as pickup in really all segments of the market from a demand perspective. In Europe, we expect now to see flat to minus 2% industry demand for the full year as weak demand environment continues across the euro zone. And for Brazil and other Latin American countries, we are forecasting a lower but still positive industry growth for the year. Now we see it ranging from up 1% to 3%.
And finally, we're forecasting the industry to be flat from the prior year in our Asia regions. But in total, given these changes, our overall global industry demand assumption has increased for the year. One last note before we get into our regional and financial results, during the second quarter, we realigned our senior leadership structure here at Whirlpool. Marc Bitzer now has responsibility for our developed markets which are North America and Europe, while Mike Todman's focus is on accelerating our growth and emerging markets of Latin America and Asia. These changes reflect the similar nature of the opportunities that we see in different part of the world and we are providing the appropriate leadership focus to realize these opportunities.
So, at this point in time, I'd like to turn it over to Marc for his review of North America and European operations.
Marc Bitzer - President, North America: Thanks Jeff, and good morning everyone. Let me begin on Slide 9 by reviewing North America performance in the second quarter, starting with the top line. Net sales of $2.6 billion for North American were up 5% for the quarter driven by higher volume. Ongoing business operating margin were 10.1% for the quarter with operating profit of $262 million compared to $186 in 2012.
Higher sales, ongoing cost productivity and cost and capacity reduction benefits continued to be positive drivers in the second quarter offsetting higher material costs. Overall, our ongoing business operating margins expanded by 2.5 points year-over-year. The consistent and disciplined execution of our actions resulted in the seventh quarter of year-over-year ongoing business operations margin improvement and we continue to be pleased with our structural improvement in margins and the market response for our innovative new products. We are comfortable with our structural market share in channels and products that clearly create value as we are able to grow our sales and expand our margins in this quarter. As in the previous quarter, we did not aggressively participate in non-value creating promotion.
Now let me take a moment to talk about our expectations for the rest of the year as shown on Slide 10. As Jeff indicated earlier, we are increasing our full year industry guidance to up 6% to 8%. Positive trends in U.S. housing continue, including both new constructions and existing home sales. In addition, we see demand for replacement purchases as well as improving consumer confidence. Therefore, we expect continued growth as we progress throughout the year and we continue to invest in innovative new products. We are seeing the benefits of our cost and capacity reduction initiatives as well as our ongoing cost productivity programs and we are focused on growing beyond our core business.
I will now talk to the second quarter results for our Europe, Middle East and Africa regions as shown on Slide 11. As you can see, our results continue to reflect a very challenging market environment in the Eurozone. However, our second quarter sales increased 6% year-over-year to $731 million driven by high volumes and our operating profit improved by $21 million, higher sales benefit from cost and capacity reduction initiatives and ongoing cost productivity more than offset higher material costs and foreign currency.
Operating margins improved 310 basis points compared to the prior year period. We will continue to evaluate and take all actions necessary to ensure profitable positions in Europe despite the weak market demand.
Turning to Slide 12, you can see just a few examples of our leading innovative product in these two regions, with the Whirlpool brand's 6th Sense induction oven, KitchenAid brand's Pro Line Series 16-cup food processor and the top-rated Maytag Maxima front-loader.
Now I would like to turn it over to Mike for his review of our Latin America and Asia operations.
Michael A. Todman - President, Whirlpool International: Thanks, Marc. If you turn to Slide 14, you will see our Latin America second quarter results. Sales excluding currency BEFIEX increased approximately 8% on higher volumes. GAAP operating profit for the quarter totaled $135 million compared to $103 million in the prior year. On an adjusted basis, excluding Brazilian tax credits, our operating profit for the quarter totaled $111 million up 10% over the prior year. Higher sales and ongoing cost productivity more than offset higher material costs and foreign currency. We continue to drive margin expansion as our ongoing business operating margin increased 0.5 point to 9.3%.
On Slide 15, we saw a slowdown in the industry, particularly at the end of June with the unrest in Brazil. So we have slightly lowered our full year industry demand assumption for the region. However, July demand seems to have returned to normal levels. Despite this volatile external environment we continue to gain market share and expect our business to outperform resulting in continued strong revenue and earnings growth. We continue to leverage innovative new product launches, execute ongoing cost productivity programs and grow beyond our core businesses.
Our second quarter results in the Asia region are shown on Slide 16. Net sales increased during the quarter to $246 million, up from $241 million in the prior year period. Excluding the impact of currency, sales increased approximately 4% on higher volume. The region's operating profit was $14 million, flat from the prior year with higher sales, mainly due to market share gains and ongoing cost productivity, offset by raw material costs and foreign currency.
Slide 17 shows the few examples of how we continue to capitalize on the opportunities for growth with product leadership in Latin America and Asia. For this quarter, we've highlighted the Brastemp brand Ative! Smart Cook range, the Whirlpool Agitronic washing machine and the Whirlpool Ares Combo washer and dryer.
Now, I'd like to turn it over to Larry Venturelli.
Larry Venturelli - EVP and CFO: Thanks Mike, and good morning everybody. Our first half results with higher sales and higher margins have us tracking ahead of internal expectations and as a result, we are raising our full-year guidance today. The Company continues to manage well to short-term volatility in demand and currencies across the globe. Importantly, the underlying fundamentals of the business remain very strong.
Turning to Slide 19, you can see we now expect to deliver annual GAAP EPS in the range of $10.05 to $10.55 per share and annual ongoing business operations EPS of $9.50 to $10 per share. Our 2013 free cash flow is now expected to be in the range of $650 million to $700 million.
Before I move on, as a reminder Slide 29 to 36 in the appendix provides you with a reconciliation of a reported GAAP operating profit and EPS to ongoing business operations for 2013 and 2012.
On Slide 20, you will note that we continue to drive our margin expansion actions for the first half, driving a 180 basis point improvement in ongoing business operating profit margin.
Price/mix was positive for the first half of the year and we expect to realize 0.5 points for the full year. Our cost and capacity reduction initiatives contributed 1point, consistent with our full-year guidance. That cost productivity was positive for the first half as our actions more than offset first half material cost inflation of approximately $75 million.
Cost productivity is on track to ramp up throughout the year as we continue to deliver higher volumes, fully offsetting $150 million to $200 million of year-over-year material cost inflation. We expect net cost productivity to deliver up to 1 point in margin for 2013. Our increases in marketing, technology and product investments are expected to reduce margins by approximately 1 point for the full year.
As we manage all of these margins expansion drivers, we continue to expect to deliver an ongoing business operating profit margin towards the high end of our previous guidance of 6.8% to 7.2%. The combination of revenue growth and margin expansion will lead to a strong second-half performance.
Moving to the financial summary on Slide 21, overall, our second quarter revenues increased across all regions driven by higher volumes. Reported net sales were $4.7 billion, compared with $4.5 billion last year. Excluding the impact of both currency and BEFIEX, sales were up approximately 6% compared to the prior year.
We expect profitable revenue growth to continue throughout the year with increasing demand. Second quarter ongoing business operating profit increased over 50% to $335 million up from $222 million in the prior year, driven by higher sales, ongoing costs productivity with volume leverage and cost and capacity reductions, more than offsetting higher material cost and an unfavorable currency.
The graph on Slide 23, illustrates expenses associated with the cost and capacity reduction program. The program continues to do very well. For the full year, we still expect our program expense to be approximately $185 million and the program remains on track to deliver $175 million of benefit this year. We remain firmly on track to deliver the full $400 million of benefits we had previously communicated through 2013.
On Slide 24 you can see that our actions are aligned with our cash priorities. We continue to fund the business, which includes capital expenditures. We refinanced our long-term debt and are contributing to our pension. We are returning to shareholders as evidenced by the 25% increase in our annual dividend announced in April. Now given the strong underlying trends in our business, we recently resumed our share repurchase program and have $320 million remaining under our existing Board authorization. Given our free cash flow outlook and strong balance sheet we are growing our investment capacity and will continue balancing funding for all aspects of our business to ensure the best long term value creation for our shareholders.
Now, I'll turn it back over to Jeff.
Jeff M. Fettig - Chairman and CEO: Thanks, Larry. Let me be brief in the summary turning to Slide 26. We are very pleased with where we are at mid-year. For the quarter we grew both unit revenues – units and revenues in every region around the world and we have strong momentum throughout our business operations. Our margin expansion actions continue to drive strong benefits. We continue to invest in consumer relevant innovation for our leading global brands. As you saw, we increased our full year EPS and free cash flow guidance. We also again increased our dividend by 25% in April and as Larry mentioned, we have now reinitiated our share repurchase program.
Going forward, we will continue to take strong actions to do three things. One, grow our business. Secondly, continue expanding our margins and third action is to create value for our shareholders as we deliver on our roadmap for both growth and value creation.
So, with that, I'd like to stop and open this up for questions.
Operator: Sam Darkatsh, Raymond James.
Sam Darkatsh - Raymond James & Associates, Inc.: Two primary questions. I'll make them brief. First, it would appear, at least, in the second quarter, Jeff, that your price mix specifically in North America and Latin America was down a few percentage points. Could you talk about that specifically in terms of how much was price and how much was mix and then in the second half, it looks like expecting price mix to be up about 0.5 point, which suggest that it's going to sequentially improve pretty meaningfully. Could you talk about that, if you could, and then I have a quick follow-up?
Jeff M. Fettig - Chairman and CEO: Yeah. Sam. We would be happy to on some of their reports. I think there is some confusion out there on that. Let's first off, let Larry talk about globally and then Marc and Mike specifically talk about (LAR) and we're very pleased with where we are especially.
Larry Venturelli - EVP and CFO: Let me talk about the margin improvement in the Company. So, both, we have both revenue and margin expansions in Q2 very important. If you look at the drivers at the margin for the profit improvement, we were up 2 points, restructuring was about 1 point, productivity was about 2 points and that was offset by about 0.5 point of material cost inflation expect. Price/mix at the margin held up very well globally.
Sam Darkatsh - Raymond James & Associates, Inc.: North America?
Marc Bitzer - President, North America: First of all, also le met start, we've demonstrated over the past seven quarter that we balanced price/mix and volume in a very value creating ways and we will continue to do so. When I look at some of the reports this morning, to Echo what Jeff was saying, we have to structurally differentiate between ASCs to pay for the ticket value and the price/mix impact on margins. Now ASVs are impacted by number of factors such as the industry mix, how much we're rolling our non-core business, etcetera. That is different from impact of price/mix on margin. And actually impact of price/mix on margins is way, way lower than what was reported this morning in terms of reports. So, otherwise we could not have lifted our operating margins by 2.5 points. So, again the price mix impact from the margin side is significant less as it would be impacted by the ASV.
Michael A. Todman - President, Whirlpool International: Sam, this is Mike Todman. For Latin America we actually have – it's very similar if you look to North America in that. The ASV change is very different from the price/mix impact on margins. And so we actually gained share in every category, but we gained share in some of the lower ASV categories more than some of the others. And so that had an impact on the ASV. However, we actually had a year-over-year increase in our price/mix on the margins, so again just distinguishing between the two.
Jeff M. Fettig - Chairman and CEO: Let me begin, because I think this was a big point of understanding that's important. We are pleased with where we are on price mix as it impacts the margin. We got to distinguish between ASVs and price mix. They are two different things. For the quarter we had about a minus 0.5 point price mix as we define it and we feel good about our forecast for the year being up 0.5 point. I'd only had to cover on two other points in our – parts of the world like Brazil and India, our high inflationary areas, we have already announced second half price increases, so we will benefit from that. I think the general theme of growing mix through innovated new product launches continues. So hopefully that clears that up.
Sam Darkatsh - Raymond James & Associates, Inc.: My follow-up question – thank you for that color by the way was helpful. I noticed that – this might be a nuance that doesn’t really matter. But I noticed that you didn’t change the expectation for U.S. energy tax credits for the year, yet you did take the U.S. industry expectations and theoretically your own also higher. How – what – why is that?
Marc Bitzer - President, North America: Yes. I think we said for the program be about $120 million for the year. Obviously, we took into consideration with that the production that would generate that. That category continues to do well, so I would say we are still in that range, but could potentially be a little bit higher but at this point in time I wouldn't raise it about that, but it could be a little bit higher than that by the end of the year.
Jeff M. Fettig - Chairman and CEO: (It's always been our theory) production for the balance of the year and year end inventories as well.
Sam Darkatsh - Raymond James & Associates, Inc.: So theoretically the incremental sales volumes that you would be selling would largely be coming out of inventory as opposed to incremental production?
Jeff M. Fettig - Chairman and CEO: Well we always deplete inventory in the second half of the year. So yes, and again it's not – again it will be based on what we produce by year end.
Larry Venturelli - EVP and CFO: Just one other comment on that, Sam, the realization is that those credits – our tax assets on the balance sheet, they are non-cash this year.
Operator: David MacGregor, Longbow Research.
David MacGregor - Longbow Research, LLC: I wonder, if you could just talk a little Brazil. There has obviously been a lot going on down there. You have the civil unrest that was disruptive to June, if you could talk a little bit about whether we are really clear of that now and business has normalized. You have got the (indiscernible) bankruptcy. In terms of a, your Latin American industry guidance down, but presumably your share goes up as you pick up those things from that event. Then you got the renewed stimulus down there, which if you could talk a little bit, the impacts of those three and with respect to the stimulus there is a perk in by driving volumes to the console brand as opposed to (indiscernible). If you could just talk about those moving parts to give us a sense of how Brazil plays in the second half. I would appreciate?
Michael A. Todman - President, Whirlpool International: Sure. Well, David, as you've mentioned, there was a little bit of unrest, the unrest in Brazil that had an impact, but primarily that that's been in June and we saw in the first several weeks of July, we've actually seen a return to a more normal industry demand environment. Actually, I would say, first to just kind of step back, we feel very good about both the medium and long-term prospects in Brazil because we think the fundamentals are right and frankly the penetration levels are still low. In terms of the impact of them, some of the other items that you talk about, the stimulus we are yet to see, what impact that that's going to have. Obviously, we assume that it would be positive and it is likely to be more in the Consul brand than Brastemp. But we also know that a lot of consumers, even in that range will want to be able to go buy in the forward in the Brastemp brands, so we do expect some positive out of that. In terms of our ability to pick up market share, we've show in the second quarter that we were able to with some of the problems in Mabe and we expect that trend to continue throughout the remainder of the year as we continue to launch some new innovative products into the marketplace. So, we're feeling pretty good about our position in Brazil and our ability to grow that business.
David MacGregor - Longbow Research, LLC: So when you talk about the stimulus, you sound relatively tentative, you are saying you have really seen much evidence of that yet. Here like your industry guidance of 1% to 3%, do you not have any of the stimulus in that 1% to 3% for '13 (LatAm)?
Michael A. Todman - President, Whirlpool International: At this point we don't because if there is in some of the other stimuluses, it's difficult to predict what the impact is going to be on the total industry. So, you know our perspective is right now, we've revived it down just based on the activity that just happened. And at this juncture, we feel good about where we've got it.
David MacGregor - Longbow Research, LLC: Okay, and then do you have any growth in your Latin American listings from the Mabe developments in your guidance?
Michael A. Todman - President, Whirlpool International: We have seen some pickup in both listings, and as you can see we've also seen some pickup in our market share.
David MacGregor - Longbow Research, LLC: Then just to be clear, the upwards revisions to your earnings guidance $9.50 to $10, does that include any of the share repurchase activity, the interest rate.
Larry Venturelli - EVP and CFO: David, this is Larry. The increase in our guidance is entirely operationally driven. What we did include in there was the repurchase activity we had in the second quarter. This was about $30 million. So that is what's included within the guidance revision. So again, very largely driven by the revision in industry assumptions and growth, the higher end of our margin and then we are offsetting some unfavorable currency also.
David MacGregor - Longbow Research, LLC: Last question just Canada, Mexico, within the North American numbers, is there any way you can give us some sense of the delta there culture there sequentially?
Marc Bitzer - President, North America: As you know we are not breaking down the kind of the Mexico piece. I can make as an overall comment is, right now Mexico and Canada follow a slightly different dynamics than U.S. The Mexican market is still down actually surprisingly to a large extent which obviously impacts us and because we report Mexican and North American regions. Canada as a market is holding up but does not yet show (indiscernible) momentum of U.S.
David MacGregor - Longbow Research, LLC: So can you compare that 8.2% growth in units to North America to AHAM-6 and just give us what the apples-to-apples comparison would be?
Marc Bitzer - President, North America: David there is too much other element flows (improved), because first of all that's T6. We also have a lot of business between what we call T6 and T12, a non-core business (indiscernible) which we typically don’t break down.
David MacGregor - Longbow Research, LLC: Yes. I think people are just trying to make some sense this morning of what the (indiscernible) would be from AHAM-6 to that number?
Marc Bitzer - President, North America: What I can tell you is our overall market share also market share in T6, I mean as we have said before, we are at structurally – comfortable with our structural market share position. If so, if you look at kind of the everyday market share, we are very comfortable. I would be lying if I don’t tell you, but our market share did not a little bit over promotion periods, but we are not overly nervous about it. The market share dipped for two or three weeks that was exactly around July 4th. We did not feel that it would be any value creating if we would (indiscernible) and now it's bouncing back.
Operator: Eric Bosshard, Cleveland Research.
Eric Bosshard - Cleveland Research Company: Two questions. First of all, a little bit of color on the full year guidance. You obviously had a great first half and adding the repurchase, it looks like you've increased your productivity assumption from the good progress you are making there in the outside U.S. volumes and then the increased guide of $0.25. I'm just wondering, if you can give a little color on the puts and takes beyond the $0.25 for what looks like is shaping up to be a very good year?
Larry Venturelli - EVP and CFO: Yeah. Sure. I mean, it's really three components. If you do the math on, our industry assumptions from last time to this time, we would say that we would expect growth in the industry and some of our growth to be 1% higher than we originally expected. The second piece of that is, if you've seen our first half margin is very strong. We normally have a seasonality build and we would expect to show higher revenue growth in the second half of the year with the higher margin in the second half and so we are guiding now towards the higher end of that range. Then partially offsetting that quite frankly is the unfavorable currency that we've seen. We have, for instance, we had $25 million or $0.25 of share of currency hit year-over-year in the second quarter. So, we've incorporated that end, and as I mentioned before we have initiated share repurchase, the only thing we put into the guidance has been what we had repurchases so far which is $30 million, so, largely driven by the strength in the operational performance of the business for the first half. So we've earned about 45% of our annual earnings. This is very consistent with what we would expect the Company to earn based on the guidance in the first half relative to the second half.
Eric Bosshard - Cleveland Research Company: Then secondly, I love the ASV dynamic. I would love to just understand a little bit more if you this is a change from what we've seen for the last four or six quarter especially in North America. And my question is, is this something that should be sustained, is this something that we're going to see continue and then related to that why is this a different dynamic than what we've seen previously?
Marc Bitzer - President, North America: Let me just refer to the ASV dynamics as they happened so far and over to the content from the future ASV trend. What you see right now, first what was an industry part, as the industry has been shown much more growth momentum than we saw before, the different segments in the industry picked up at different paces. And if you would rule down the details of the T6, but then you even go through certain price segments, there have been quite a bit of different dynamics across the different price segments. And that space is just logging to our system. In addition, our – what we call the non-core business is a fairly significant portion of our business and we're driving there higher growth in the other businesses, that particularly comes with – lower ASVs but higher margins. So, you see also that dynamic flowing through here. To what extent that expense is in future, we don't know and we can't comment on this one. I want to reiterate what we said before. We're laser-sharply focused on price/mix impact in the margin and we've managed that very well so far in combination with volume and we will not change the course here.
Larry Venturelli - EVP and CFO: And again just to build on what Marc said, I mean the focus here is on growth which we showed in the first half and margin expansion at the same time. So, hopefully that answers your questions.
Jeff M. Fettig - Chairman and CEO: The only other comment I'd make is, again we fully anniversaried all of our last year price increases, so there has been no new like-for-like price increases so far this year. So, the real dynamic is mix. Mix I think as the market expands, you are going to see growth at every price point, and that can shift a little one way, a little bit another. We are – we think this is not abnormal. Then in a quarter like this quarter where you had all the last three weeks of June shipments for those promoted 50% off over 4th of July and things like that, that's (the sort of) things a little bit. Again as Marc said, as we have in other activity, normal promotional activities we were very stable, share of mix through middle of June fell off with all these import shipments and then July it's quickly rebounded back. So it's I think it's pretty much consistent with what we have been seeing.
Eric Bosshard - Cleveland Research Company: So your reduction and your full year price mix guidance if I am interpreting it right is just reflective of what happened in June, that's not a go-forward thing so different as the guidance goes?
Jeff M. Fettig - Chairman and CEO: I think it’s a 0.5 point on $19 billion business. So I mean, it's – it could go three-tenths one way, yes, it could move right. I mean last year was so – we had such positive, we were up 4.5 points price mix from full year in a year where we took significant price increases around the world. In the developed markets this year we have not taken price increases. In inflationary markets we have taken price increases. But the mix dynamic I don’t think it's changing at all.
Larry Venturelli - EVP and CFO: Yes. The other important thing that Jeff said is with the volume growth we start to see the leverage which is also a very positive margin.
Jeff M. Fettig - Chairman and CEO: The other side of this is with a little volume growth in North America you start to see the power of all the productivity and the lowering of our fixed costs that would have taken place over the last three years and so on. So the productivity lever is delivering very strong.
Larry Venturelli - EVP and CFO: Yes. The only other thing I had mention on the top line, keep in mind that there is 1 point to 1.5 point o negative currency in the top line. We are looking at the ASVs.
Operator: Michael Rehaut, JPMorgan.
Michael Rehaut - JPMorgan Securities, Inc.: First question I had was about Europe, Marc, with your expanded responsibilities for that region. Obviously, it's been an area where you guys have done a lot of work to get back to profitability and the region remains very challenging. Is there anything that we should expect in terms of how you are going to approach that region, in terms, I know you kind of said earlier, you continue to look and fix the cost structure. Is that something that we should be expecting in terms of additional actions over the next two, three, four quarters to get that back to perhaps the mid-single digit operating margin? And is that kind of your goal over the next year or two?
Marc Bitzer - President, North America: Let me first start on the tail end of your question. As you know, we don't give the regional guidance on the quarter-by-quarter basis, but we do expect Europe to come to breakeven. We can't tell you exactly which quarter, but I mean, that's of course our, I would say short-term objective as we get Europe as quickly as possible to breakeven or above. Overall, I would say for European markets, it is still very challenging, what impacts us in particular, is that our exposure is particular strong in countries which are now impacted the most, and it hurts us right now. Having said that, it also means that even in the current environment you can make money in Europe and that's where we are focused on. When it comes to how we deal with that, it's I would say by and large not too distant of what we have been trying to do in North America last couple of years. We have to address the fixed cost as the market demand is not there, and probably not rebounding in the short term. We will address fixed cost. We have announced actions already previously. We have announced some actions already previously and we announced some additional actions to calculate unit fixed cost. And as we said early, we've continued to evaluate all actions necessary and profitable to address the fixed cost. That's just one part and of course we will also manage with price/mix equation very carefully in that equating manner. So, long story short, despite the market environment, it is our firm expectation to bring Europe back to breakeven as quickly as possible and above breakeven.
Michael Rehaut - JPMorgan Securities, Inc.: Larry, a question for you on the share buyback. You know we noticed that year-to-date you guys have issued about $60 million worth of shares, I assume through different employee option and other type of programs and then you repurchased $30 million. How do you think about the share repurchase relative to your overall account? Is this going to be something more to just combat creep or would you expect of course on an opportunistic basis maybe to get back to the share count that you had in 2012 plus or minus?
Larry Venturelli - EVP and CFO: I think with the current authorization Michael, mathematically right now you'd probably get back to the dilution. So the way we look at this, we are generating much more cash in the second half of the year and along with other priorities, we will continue the repurchase program. And then we will update everyone quarterly as far we're adding.
Michael Rehaut - JPMorgan Securities, Inc.: When you mean get back to where you were against the dilution, do you mean like in the fourth quarter, you were at roughly $80 million, so maybe something back in that neighborhood?
Larry Venturelli - EVP and CFO: I think we had about 2.3 million shares of dilution versus the year ago, and again if you do the math on the 3.50, you would probably be able to get back there, but I'm not going to give an update on when we will exhaust that authorization, but we will give you and update each quarter.
Michael Rehaut - JPMorgan Securities, Inc.: One last one if I could, going back to the North America the promotional activity which you guys have been appropriately tried to stay out of and been able to hold onto your margin. Can you give us a sense of any more color around that in terms of if that's something that maybe is going to give any (sense of) – it's going to continue in the back half of the year and what the drivers are of that?
Marc Bitzer - President, North America: We can only comment on the promotions which happens, I cannot and will not give comment on future promotions. First of all stepping back just, there have always been promotions in these industries, so there is nothing new about it. The 4th of July promotion environment was actually as we expected and we early on decided not to participate in a very aggressive manner. I think if you look back at July 4th, it's been very evident there has been two players who went very aggressive. That didn’t completely surprise us. We decided to not participate because simply it does not create value. So our strategy of promotions has not changed at all and obviously I cannot comment on what out competitor will be doing. We will – I mean, (indiscernible) in the past how aggressive we go, remember we will probably do that also going forward.
Operator: Denise Chai, Bank of America.
Denise Chai - Bank of America Merrill Lynch: I just want to know when we think about your North America pricing was there – was the fact that maybe you are making more sales to homebuilders possibly a contributor to the ASV pressure and actually how much of your sales went through this channel compared with the first quarter of last year?
Marc Bitzer - President, North America: It's actually a very good question. The homebuilder has a pretty big impact on the ASVs, and if you would go in the homebuilders, a big difference across different builders in terms of who sells more to premium segment and who is more the mass segment and yes that has an impact on ASVs among many other factors. So, for example, if you an industry growth, which is stronger on a mass front loaders or even dishwashers, you should see an ASV impact. So, there is a lot of factors floating through here. However, I don't want to repeat what I said before even with (references) that I just mentioned, they are margin attractive. So, homebuilder segment for us is margin attractive, this part maybe a different ASV.
Denise Chai - Bank of America Merrill Lynch: Also you mentioned that you are now contributing to your pension. So, can you give us perhaps some sort of run-rate or maybe how long you think it will take to close the gap there?
Larry Venturelli - EVP and CFO: Pension is the question.
Denise Chai - Bank of America Merrill Lynch: Yeah.
Larry Venturelli - EVP and CFO: In the U.S. we are about – at year end, we had $1.4 billion net liability. Your question is a good question. We are contributing, I believe $138 million this year, but there is another thing you have also factor in is that interest rates as you know have increased. They are probably up closed to 80 basis points from when we closed at year end. So, if you would expect that rates would maintain at this level, that would probably be could be $300 million to $400 million benefit on our net liability and I say going forward, right now, given the current pension legislation that $138 million is a good estimate going forward.
Denise Chai - Bank of America Merrill Lynch: Just one last thing you mentioned that you are putting a prices in Latin America and Asia due to inflation there. Can you give us a sense of the magnitude?
Michael A. Todman - President, Whirlpool International: Yeah. We've announced price increases in both regions of 3% to 5% for the second half of the year, and that does has an average. I mean we evaluate this every month, every quarter based on inflation and currency.
Operator: Ken Zener, KeyBanc Capital Markets.
Ken Zener - KeyBanc Capital Markets: What – big inflection in U.S. demands, so that's the big picture I think. People are obviously very focused on AHAM versus your units. I think it would for the broad investment community to the extent you guys could create an index let say make it a 100 in some point in time and just give us a up or down, I think that would be constructive for you guys in terms of getting rid of some of the noise. That's the one suggestion I would have. Second, when your AHAM guidance is 6 to 8, in the first quarter there was a difference between AHAM and demand. Can you give us your view of what that means for demand in both the quarter as well as for the year, or is there a lot of load-in?
Marc Bitzer - President, North America: Ken, it's Mark Bitzer. So, what you are highlight, the point which you referred to I think in the Q1 earnings call to talk about the inventory both of retailers. And yes we did see in the Q1, we saw a slight impact of inventory building the overall AHAM number. It's of course difficult to quantify the exact rate, but it was probably to the tune of 1 to 1.5 points of overall market growth. There has also been in the periods leading up to July 4, some inventory builds which is normal as retailers load for their big promotion. So, on the year-to-date base, I would say the two effects combined in the ballpark of the (indiscernible). So it has an impact. We have a pretty good handle on it. We factored all these inventory moves into our full year guidance.
Jeff M. Fettig - Chairman and CEO: Ken I would just add to your point. There is a lot of news coming from different sources about the market place that I think your first comment is right that, the headline is we are seeing we think sustainable profound demand recovery in the U.S. market place. Over the last year and a half, we have talked about being down 28% from the peak that we were much more well under the curve, 30 year growth curve and never above it and that someday this market would recover and particularly housing becoming solid on a solid foundation and growing and that we might see double digit demand growth sometime in the next three years. Well it started sooner than we thought. It is recovering. We think it's sustainable and we think it's a multi-year recovery. So to your point that's the big picture. I guess to be candid all the other stuff for us is, there is a lot of information. Some retailers give their view of what's going onto people covering our stock. There is industry shipment data coming every month and so there is a lot of short term reactions on these things. But at the end of the day, we give our guidance for the year and not for the quarter. This is the clearest picture we see of the year and we will continue to update you on what I will call the fundamental growth but we are not going to get into the nitty-gritty market share by product, et cetera, et cetera, given that it changes we will tell you the trends. But again I would just maybe try to put that all together. We are very positive about demand. We are very positive about our ability to grow in this improving demand market, while expanding margins. That is what we think is value creating to do it and for us, the rest of it is just noise.
Ken Zener - KeyBanc Capital Markets: That's good because I think the – to extent there is load in, I mean if market share, there will be some variance there, but it does get to the fact of 6% to 8%, it looks like 9%, 9.5% volume, North America, 3, 4Q on average is what's required to get to the low end of your 6%, if that's your volume and it does relate to the margin question to the extent that, certainly, it surprise to see the negative price mix, but you're discounting what we see and putting it in that 50 basis point range is not necessarily the 300 price/ mix, which gets to the question, how we really should think about the profitability of your business because if I do 9% growth, 3, 4Q, we see effectively very similar volume 3Q from 4Q excuse, me 3Q from 2Q and the big spike in 4Q. I mean, is it reasonable to think about quarter-over-quarter volumes driving your operating leverage in that 15% leverage?
Marc Bitzer - President, North America: Yeah. Ken, I'll answer this way. I mean, Ken, we've had five years of mostly negative volatility and we now have two quarters of positive upside on demand. You're actually right though. I mean Q3 is the same as Q2 or is it accelerating? I don't know, but it could be higher and as I said before if demand is higher, we'll do more, and we are – that the fundamental proposition is really three things. One, higher demand is clearly developing. Two, certainly for most of our businesses, but certainly our North America business, more demand volume on a very lean fixed cost base is very good leverage, which you saw on the productivity level in the second quarter. Third, that our price/mix is going to continue to be very good due to our investment in new product innovations. So, your basis thinking, I don't argue with at all. It's just you know late. For five years it's been hard to forecast and so we've just given you a – what I call a sound baseline that we based our earnings on.
Marc Bitzer - President, North America: Just in addition to echoing what Jeff was saying is I think, in a lot of discussion, we need to differentiate between structural demand drivers, structural market position versus promotional noise, and I would call really promotion noise. We are – and of course we are not giving 2014 guidance, but we are very bullish on the structural demand drivers in North America, that's housings, that is replacement, that is consumer confidence, and that I have seen the housing starts in June. Yes, they were a little bit softer, but they have not changed at all, a very bullish view on the structural demand drivers in North America. Second, our structural market position particularly in the contract channels in several of the high end segments is a very good one. So, for example, see a very strong growth in our Jenn-Air and KitchenAid business and we're very bullish about it. In that context sometimes with year around promotions is little bit overblown frankly. It does not impact the structural drivers or positions and we will always make (indiscernible) we participate or not.
Ken Zener - KeyBanc Capital Markets: Excellent, and I guess, if I could ask my next term question around cash flow, you know if we just say do 4% to 5% of sales, which would be roughly $1 billion at $20 billion in rev. My understanding is while you talked about buybacks today and the net benefit of that, it was discussed earlier. But my understanding is roughly 30% of your business. Cash is coming in the U.S. pre-pension which obviously reduces the overall amount available for dividends and buybacks. So, can you address the bulk of this cash, how you are thinking about the deployment of it, joint venture, buying a company and more where you can't be so specific, talk about a pipeline if you will because this is potentially as a major driver of earnings that is not in people's estimates?
Larry Venturelli - EVP and CFO: I think we have kind of laid out our cash priorities and return to shareholder. Certainly one of those M&A we said before is another one of them. So those are things that we consider and certainly that and funding the business are the things that we look at as we deploy cash through the Company. As far as cash generating, you are right, at the end of last year, we had a little under 30% of our cash in the U.S. and what's outside the U.S. we look forward at effective ways to bring that back. So I would say we are – our balance sheet is in good shape. Our forecast of free cash flow is in good shape and we will update you as we go along as far as how we are deploying that.
Jeff M. Fettig - Chairman and CEO: Well thank you. Listen everyone again just to sum up. We are pleased so far through the midpoint of this year. We look forward to deliver a record year of operating results and look forward to talking to you next time. Thank you very much.
Operator: This concludes today's program. Have a great day. You may disconnect at this time.