Whirlpool Corporation (WHR)

Investor Day 2019

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May 23, 2019

Good morning and welcome everyone to Whirlpool Corporation's 2019 Investor Day. Thank you for coming to the New York Stock Exchange. And for those of you online, thank you for joining our webcast. With us today are Mark Bitzer, our Chairman and Chief Executive Officer and Jim Peters, our Chief Financial Officer, along with members of our global executive team. Our remarks today track with the presentation available on our website at whirlpoolcorp.com. Before we begin, I just want to remind you that we will be making forward looking statements, including non GAAP measures. You can look in the appendix of the presentation for important information about those items. As we look at the agenda, we will spend about an hour and 45 minutes on the presentation, followed by a question and answer session with our executive team. And we ask that you hold questions until that time. With that, I will turn the presentation over to Mark. Good morning, everyone. First of all, thanks for coming here. I know it's a rainy day outside. I understand there's some New Jersey turnpike issues. So we're glad you made it. Really great to be back here. It was a great institution, so really fascinating building also. Before we actually get started, I actually want to take the opportunity to actually introduce our Global Executive Committee. I know day by day you typically interact with Jim or myself. And while you appreciate it, you probably appreciate even more to get to know the rest of the team, which will actually do the lion's share of our presentation also today. And we have the entire team here also for Q and A. So let me just actually, we'll probably just go here in the sequence of a slide. So, Rego, you want to start? Good morning. My name is Jean Rego. I'm President of Latin America and working for 24 years in the world. Good morning. Roberto Campos, Global Product Organization, 3rd years in the company. Good morning. My name is Liz Dorr, and I run the Global Strategic Sourcing Organization. I've been with the company 8 years. Good morning. I'm Kirsten Hewitt, the Chief Legal Officer at Whirlpool, and I've been at Whirlpool for 23 years. Sure. Good morning. Julie Ochini. I lead our North American business. I've been with the company for 15 years. Good morning. I'm Carrie Martin, and I am the CHRO for Whirlpool, and I've been with the company for 6 years. Good morning. Jul Morrell. I lead the EMEA region, and I've been in the business for the last 7 weeks. Good morning, Sam Wu. I lead the Asia Pacific region. I joined Whirlpool 2.5 years ago. Before that, I run Siemens Ostrom for Asia Pacific. So with that in mind, let's just get started. Now and you've seen the agenda. Let me first talk about what we will not talk about today. This meeting of this Investor Day is not meant to give you an update on our guidance. This is not a quarterly earnings call. And very straightforward on guidance, we issued the guidance end of January. You all know we had actually a very strong Q1. We feel very confident about where we are from a business, from a guidance perspective. I know there has been some rumbling around tariffs, but we said in January, it's already factored in, and that's the same statement today. So we feel very good about where the business is, where the guidance is. So there is no update. So if you came for just an update on guidance, I have to disappoint you because we're on track, period. The second thing, which is not about, we're not going to comment or speculate about mergers, acquisitions or divestitures. Of course, you can ask us and we can comment about things which we have already announced where we are in the process. But I think you appreciate we will not engage in speculation about what could be there down there a couple of years down the road. So what this meeting is about is actually we want to tell you as an executive committee why we strongly believe Whirlpool is a good long term investment. That's basically what this meeting is about. And the essence of that is actually captured in that slide. The reason why we feel very strongly about our long term future as a company and as an investment is basically built on 3 main pillars. One is our sound or very solid or super strong structural position, however you want to put it, which is around global leading scale. I think we have, by a long shot, the best brand portfolio in the industry. It is our legacy, our track record of innovation and our best cost, which is not just scale, but also the tools which are available to us in terms of taking costs out. That's a structural element, and I will just explain that a little bit more. But equally important, we believe by region, but also from strategic transformation, there are some very big value creation opportunities. And from a region perspective, we do believe North America, as you've seen in webs, very strong margin over the last 2 quarters even in a somewhat down market. But frankly, on the market, we are actually reasonably positive and bullish about the long term market perspective. We believe there's still a lot of runway left in this market. And you've seen our margin generation even in a somewhat soft environment. Europe, now that the Innosid integration is behind us, we do see significant opportunities to expand our margins through cost measures, but also go to market measures, and we're going to talk about that. In Latin America, you know we had for decades a very strong business, in particular in Brazil, which is the biggest market out there. And we finally see the Brazilian market coming around, which obviously helps us significantly. So we're actually very upbeat about the Latin America perspective. And lastly, Asia, where we have a very strong India business in a growing market. And we have a China business, where we have a very strong cost base, product platform, product factory opportunities for kind of not only for China, but also for export. Couple that with what we have on the right side, the strategic transformation. And this is something which frankly we don't typically talk about in an earnings call. But we as a team embarked actually last year on a fairly long strategic journey which call it transformation is. And it's essentially about 3 major pieces. One is how the nature of a product which we sell changes going forward. It is about Connected Appliance, but it's not only about Connected Appliance because Connected Appliance is just technology. It is about what kind of product and service we sell in the future. The second part is about the consumer journey, which has seen throughout the world, we've seen some pretty dramatic changes over the last 10 years in that space. And the third element is what that all means for our value chain, how our value chain changes going forward, and also how we can use many of the same tools, be it data analytics or everything else, on getting more productivity in the value chain. And then we're going to talk about all these aspects. To put the same perspective in numbers, and this is on this slide where you see our commitment to long term value creation, and let me just take you a little bit through the numbers. EBIT, our long term value creation target is a 10% EBIT. On free cash flow, it's a 6% plus And on ROIC, it's a 12% to 14%. Now let me give you a little bit more color, and Jim will later on cover a lot more detail behind this. I'm going to show you also the margin walk. The 10% is a number which we had out there 2 years ago also. We do firmly believe and we will confirm that today that this business is absolutely capable of delivering 10%. Frankly, we lost probably 2 years. Lost 2 years because macroeconomic challenges, cost inflation, and yes, we also lost time with the European integration. But the business as such is absolutely capable of delivering 10% EBIT. Free cash flow for those of you who follow us for many years, previously we had 5% to 6%. We believe this business through earnings power plus also for sustained opportunities to reduce working capital, we can drive 6% plus free cash flow on a sustained base. And the 3rd element is ROIC. ROIC is a measure which, of course, we look at very closely internally. We have externally not given commitments of firm numbers in terms of where we want to take the business. You see on the left side, in our definition of RIC, it's 9.4% last year. To make a little side note on this one, as you know, there's many definitions on RIC out there. We take a fairly conservative definition of the RIC, and we can give you all the detail later on. But in that conservative assumption, we do believe we can expand RIC by 3 to 5 points through a combination of the R, the earnings power, but we also believe there's opportunities to reduce our fixed asset base. So RRC is a key measure for us. You will some of you know, and Jim will also show that later on. It is also half of our long term compensation. So it's something which we focus on very strongly. On the right side, you see how we plan to use the cash. And the one thing which is reasonable predictable Whirlpool is the funding of a business. CapEx, we typically invest around 3%. Also, if you look at the last 10 years, there have not been a lot of spikes up and down. And I think you should expect that also going forward. Dividends, historically, our guideline our guidance was 25% to 30% trailing 12 months earnings. We kind of updated that to around 30%. You've also seen that we kind of raised yet again the 7th year in a row dividend, and that's just a reflection of around 30% trailing next 12 months. Share repurchases, we had last year a fairly elevated level of share buybacks, and we stated here continued. What do we mean with that specifically? We, of course, we will buy back shares. But we also will take close consideration of our debt metrics. We said publicly, we want to get to around the 2 gross debt leverage. Right now, it's still 3.6. As some of you know, there's still a temporary loan related to the Enbruco sale and the Nidec purchase in there. Once that reverses, we should get a lot closer to the 2s by the back half of the year. And Jim, again, will show a lot more detail later. So while we balance the debt metrics, that's also how we look at the share buybacks. What it specifically means, you should expect probably moderate level of buybacks until we reach that debt leverage, and then we can have a different discussion about that or can expand it also. Put that all together, both the earnings and cash flow and our capital allocation, yes, we do aspire and aim for a top quartile TSR. And put the math together, yes, that translates into roughly 10% EPS growth. Put it all together, and of course, with certain parameters and resumption. So with that in mind, let me and actually also Jolietini will join me here. Let me for the first 30 minutes spend some time a little bit our structural position. I'll get a little bit of recap. But then more importantly, let's start talking about what we're doing in the company, around the company, kind of which sets us up for a great future going forward and how we transform the company. And again, in a restructured position, most of you are very familiar with our story. I still believe it's a very important element because whenever you buy a Vopo share, you get the structural element. And it is a unique asset which we have in our company. And it essentially is ground on 4 main pieces. 1 is global leading scale. You will see later on scale on many dimensions, be it in the factories or be it in the countries, which is still a key driver of our overall profitability. We pride ourselves with the strongest brand portfolio in the industry. We have 6 brands above $1,000,000,000 revenues. We have a strong track record of innovation and we're funding innovation. Even in bad times, we did not take our funding down. So we invest roughly about €1,000,000,000 every year between CapEx and Engineering. And we pride ourselves on having best cost position, not only because of scale, but also how we work and approach certain tools and how we drive productivity going forward. So if you take a little bit closer look at this one, the first one on leading scale. And again, this is just the scale in the countries. And I think that's actually a very important chart for us, which is probably one of the strongest assets we have from a structural position perspective. These are top 10 countries in order of revenue size. So these are top 10 as we kind of internally look at them. And 7 of these ones, we are the number 1, in some cases by a long shot. The reason why that's so relevant is country scale matters. Or put it differently, if you would plot our profitability by country versus our relative scale position, there's a strong correlation. So country position, country scale matters big time. And having 7 out of the top 10 countries on the number one position is a big deal. So that is probably maybe one of our strongest assets as a company. 2nd one is a brand portfolio. In the past, I sometimes have been asked about, well, wouldn't you want to have just 1 or 2 brands? That's interesting. But if you aspire in a country to, let's say, more than 50% or 20% market share, it's hard to serve that kind of market share or business with just one brand. Actually, our brand portfolio allows us to target a very diverse consumer spectrum, allows us to target very different consumer needs. I would say our brand portfolio is pretty much one of our really key assets in this industry. And without going through a lot of details, it is also a nice spectrum between value, mass and premium. So we can play the entire ladder fairly well with our brand portfolio. The 3rd element without going too much into the details, there's a lot of talk about innovation. We've been 108 years in the innovation business. And if you look at a lot of the pictures out there, you could argue the majority of innovation in this industry came from Whirlpool. So we take a lot of pride. But we also recognize having 108 year of track record is not a guarantee of the future. That's why we invest significant amounts. And as I mentioned before, it's roughly about $1,000,000,000 every year between R and D and CapEx. So we have around 4,000 engineers who do nothing else but think about kitchen and laundry innovation and product development. So that's a commitment also for future. And you also know for those of you who follow us closer, even in economic difficult times, we never scale back on our investments in innovation. The 4th element, the best cost position. And what I want to highlight here, it's not just a scale reflection. The scale is what you see a little bit on the left side, and this is just showing the factories. Factories. It is scale plus tools and capabilities. First, let me start actually on the left side of the factories. And again, you have similar pictures, not just for factories, you have the same thing also in logistics and some other elements. In our industry, most people would consider a 1,000,000 to 3,000,000 unit factory a very large factory by any definition. And we're talking about factories which are close to mile long. We have 17 large factories. We have 6 what we call mega factories. These are 3,000,000 to 5,000,000 unit factories. Believe me, across the entire world, the entire industry, there are not that many mega factories. And we have 12 factories still with less than 1,000,000, which are either specialized or we have a service specific country. So we have 12 smaller factories. If you do the math between all these ones, you can say basically pretty much 80% of our entire production volume comes from fairly large factory. So scale is a big element. And again, this just shows the factory scale. But the other element is the productivity tool. 2 years ago, we started as a company where we engaged in what we call a global global production system, which in essence is world class manufacturing tools, which actually helped as a really key catalyst to drive sustained 4 wall productivity in a way where, frankly, we have not reached in the past. The second piece, and there's a lot of talk and there's a lot of opportunity around this, is product architecture. We serve many countries. We serve many markets. We serve many categories, many brands. By definition, we have complexity. But what we've embarked on a journey kind of pretty much 2 or 3 years ago, a journey towards simplifying that with a smart way in how to approach product architecture and modularity, I. E, find a way to not only manage the complexity in a more cost efficient manner, but also overall reducing particular parts and component complexity and the architecture complexity. So that is a key element, a catalyst for our sustained productivity. And we also have a number of very good tools, in particular, indirect spend, which is in our industry also fairly significant. So put that all together, and this is again, that's just for the factories and the conversion. We strongly believe and we know it, we can get to 4% sustained net conversion productivity. So that is after all salary inflation, everything else, that is the in for wall productivity, which we know we can get and which we actually achieve. So again, that's just some cost position. We can show you a similar chart in service costs, logistic costs, but of course, conversion costs is a big element. So let me shift gears and actually talk about how we're changing the company. And the way you got to look at this is not a 2019 initiative. That is a multi year initiative, which we started as an executive committee. So we're kind of in year 2 of this one. And in essence, it's about 3 major elements. 1 is being the leader in connected appliances and services. And let me just emphasize this one. It's not necessarily about just connected. Connected is a technology, okay, which frankly is not rocket science. It's a little bit more difficult to make safe Connected Appliance, but you can do that. It is about how you translate that technology into relevant consumer benefits. And that is easier said than done, I. E, how do you make it in a way which provides true value to consumers, the consumer paid for, which ultimately even redefines or shapes what is it we're selling in the future. Because today what we're selling is pretty straightforward. It's an appliance. But what kind of bundle of services are you going to sell in the future? How does it look like? So that is a fundamental change in terms of how we look about the next 3 to 5 years. To be also very clear, it is not a big element of a P and L today, but it's very obvious the change is happening and the change will stay here. And it will certainly impact how business looks like in 3 to 5 years from now. The second part is this what we call the winning the digital consumer journey. And sometimes you don't really appreciate how much has they already changed and what it means for our company. And to give you a perspective, you actually only have to go back 10 years ago. 10 years ago, the number one source for consumers, which they looked at when they were about to buy an appliance, were newspapers. It was the ad on the weekends, and you probably all still remember that. I know when you think today about this newspaper ad, it feels like medieval times, it's 10 years ago. It was the number one source. Today, by long shot, it's digital. About 80% to 90% of consumers around the world, it's not just U. S, go pre informed in a purchase process, I. E, they have a digital research before. So it's a race to consumer ratings. It is what you do in the pre buy digitally where we invested a lot of assets, where I think we made huge progress, but that's really a big battlefield. The second part related to this one is also what happens on the actual e commerce transaction. The actual U. S. As a global market is almost a little bit behind. It's around 14%. Other parts of the world are quite a bit ahead, particularly China, some parts in Europe, where you see a 30%, 40% e commerce penetration. That offers a whole different set of opportunities either working with e commerce partners or in some parts of our business also going direct, because you have different tools and different abilities where you can go electronically direct, which is, of course, a very attractive opportunity in terms of our future and how we directly interact with consumers. The third part is this value chain, what it all means for value chain, which has actually two aspects. One is what do streams number 1 and 2 mean for our Valley Chain because all of a sudden you look differently at elements like home delivery, You look differently at service and how you repair appliances. You just look different in the value chain, and you come to different conclusions where do we want to be strong and where we don't have need to have assets. But it's equally a lot of the tools which we use, in particular around consumer journey, etcetera, a lot of digital tools, be it data analytics, AI, have a big impact on how we drive productivity across our value chain. So in essence, these are the 3 major transformation streams which we work on very hard, which will create a very different business going forward and offers a lot of opportunities. So now actually we'll have Joe going a little bit more in the detail of these work streams. Joe is running our North America business maybe as a side note. I know other companies have a Chief Transformation Officer, a Chief Digital Officer. We don't. And it comes out of conviction because I think deep transformational change happens in the business and through the business. That's why all these streams are carried and driven by our executive committee. And I think that drives the most profound change and also the most successful change. With that, Joe? Great. Thank you, Mark. Good morning. So I'm going to go a little deeper on some of the topics that Mark just highlighted. The very first thing I want to show you is a video of where we're going with our laundry products in particular. These are a front load launch. Some of this is in market today. Some of this stuff is coming in the future. But it gives you an idea of what the combination of great products, great brands and great technology with a purpose can do, the friction points it can remove for consumers and really highlights the value we could bring to consumers. So please play the video. Worldhold's revolutionary laundry with the brand's most innovative features to date. The Worldhold's smart laundry pair is designed to streamline the process, starting with the very first step. The Load and Go Dispenser lets you skip adding detergent. Simply fill once and wash up to 40 loads. The Whirlpool app takes an even more innovative approach to the mundane task of laundry with loads of smart features. Tell Whirlpool when you'll be home so it starts and ends the cycle on your schedule. Set the wash cycle once. When it's done, get a notification that lets you send the matching dry cycle straight to the dryer. Eliminate guesswork with the in app stain guide. Pick your stain, get fabric pretreat instructions, and send a recommended wash cycle straight to the washer. You can even assign tasks like transferring a load to family members right from the app. The smart laundry features continue to impress after the last load. Simply sync the Whirlpool app with your Amazon account to automatically reorder detergent when you're running low. By staying ahead of trends, Whirlpool continues to shape the future of care. We're leading today's smartest, most purposeful innovations, and we're not slowing down. So this is just an example of kind of what's coming. And when you think about the friction points, the technology and the products kind of all working together, building business partners, ecosystems to really help each other with Amazon Fresh or Instacart or whoever it might be. We can really help consumers in their everyday life get a lot more done the way they want to in a very smart way, efficient way. So again, these products just launched earlier this year. More of it is coming later in the year and in the subsequent years, but it really gives you a good idea of kind of what we're going to do to the market and how that's helpful to consumers. The next example is really kind of not in the laundry room, more in the kitchen side. And what you'll see is, we're launching different things and experimenting. The countertop oven on the left, we unveiled that at CES. That's a countertop oven that has all the performance benefits of a typical oven. In addition, it has image recognition. It has app integration, really just kind of bringing us forward in terms of what's important to consumers and making their lives easier, faster, more efficient. And all of these all three of these products actually work with Yum! Link. The middle picture is a Whirlpool Connected Suite that we've launched in the last, let's say, 12 months. It's out market today, variety of different products, microwave, freestanding range, built in oven, all connected, all working with one another, machine to machine, app to machine, into the cloud and with partners. And all this data is helping us really serve the consumer to do a lot of things better. And the last one, which is the most exciting probably as it's the newest, is just launching right now. And that's a typical KitchenAid oven that has all these powered accessories that go inside the oven into a proprietary port that can help you grill, steam or have a heated baking stone. So you have all the performance benefits of a fantastic KitchenAid oven plus all of these things. And this again, elevating the experience to consumers to the next level. No one else is doing anything like this. They all sit on top of Yumly. And Yumly is not just a recipe app company for us. It really is a lot more than that. It can do recipes. It can do guided meal prep. It can do app to machine interface. And it can sequence and set algorithms in advance of when the consumer needs it. So we can preheat your oven for you based on the recipe that it knows you're cooking. It can sequence the temperatures in the oven based on the type of food you're cooking and the recipe at hand. So really kind of taking the experience to the next level, letting consumers get a lot more out of our machines and really have an experience that I think is helpful. They can spend their time the way they want to with their family or doing other tasks, maybe not spending as much time in these transfer processes that they get no utility out of. So we're very excited about this. More to kind of come, but all three of these are in market. And we've won quite a bit of attention and awards for these early on. Yum!ly! I mean, again, Yum!ly! Is going to do a lot for us. Again, it's going to be the operating system, the platform for how we engage. We've been making hardware for a long time. The way we've talked about it is we made cubes that either made things hot, cold or wet for 100 years. But we're certainly going to make these cubes in the future. They're the anchor point of the reason why we have permission in the kitchen and the laundry room to help consumers. But in addition, Yum! Is going to be an agnostic portal where consumers can enter. They don't have to have our products or they may have our products. And the benefits of having both our hardware and our Yumly app and really working with that in concert across the entire kitchen or laundry room will be tremendous in terms of taking away friction, in terms of making them more successful at whatever they're doing, in terms of really the supply chain and knowing what's important to them and making sure they have the right ingredients and or detergents or whatever it is at the right time. So this next video just shows maybe one more performance aspect of Yumly that we've already launched ZenMarket today on the app, and it shows how we can do image recognition either on your counter or in your refrigerator or in your pantry to know, hey, what ingredients you have. And as a consequence, do you want to cook this recipe? We can offer recipes based on the ingredients you have. We can understand your preferences, dietary or allergies or whatever they might be and offer suggestions based on that combined with the ingredients you have at hand. And that really starts to solve things for consumers. What's for dinner? Well, it starts with what do I have. So this next video will kind of give you a little bit of insight there. Whirlpool's smart appliances just got even smarter. Select appliances now work with the Yumly app to deliver one of the most innovative mealtime experiences in existence. The app connected features assist in every step of the process. 1st, set up your taste profile. Find recipes that match recipes that match your tastes, allergies, and preferences. Yumlee's proprietary food genome and food intelligence technology understands recipes at a deeper level, so you'll only see the ones you want. Yumly can also recommend recipes based on ingredients you have on hand. See something you need? Add ingredients to a shopping list and Instacart will deliver right to your door. Yummy lets you schedule when you want to eat and notifies you when it's time to cook. The app guides you through select recipes with step by step video tutorials, syncs with Whirlpool to send cooking instructions to your oven and alerts when your food is ready. Whirlpool continues to be what's next for home appliances. We're breaking boundaries in the category with leading edge innovations that set us apart. So again, just another small glimpse on what's coming in. We've been very consistent focused on use cases and focused on what's important to consumers. So purposeful innovation. So you'll see that in these performance and features that we're offering. It's very clear, we're solving needs, not just adding technology for technology's sake. A little bit more about Yum!ly! Kind of more the characteristics. It's got 26,000,000 plus registered users, 10,000,000 e mail subscribers, 9,000,000 monthly active and 3,000,000 visitors per week. It is the leading recipe app out there today. It has a fantastic 4.8 star rating on iOS. So it really is well received. We've taken all the great things they did. And over the last, let's say, 18 months, really kind of ingested it and began to integrate it with our hardware and our overall partners in our ecosystem. And consumers will now start to feel that in market as they buy new products, really in 2019 for the first time in a material way. So we're very excited about what this platform as an operating system does for us and really what it does for consumers and how that works and really kind of builds overall in this kind of impact in the ecosystem of the kitchen. And again, it's not just recipes, it's not just image recognition, it's not just machine to app dialogue. We're actually making Yum! Even more compelling to go into. So we're adding premium features with chefs, Richard Blaise and Carla Hall and even Andrew Zimmern. They're a part of our process. They're adding content. They're adding videos. They're adding how tos. They're partnering with us to make sure the content itself is super enriching. And then how we use the technology should be also very enriching and engaging to consumers. So this is also now in market today, very new. So we're still kind of growing it, but in market today. And then in terms of our leadership, and Mark touched on this, this is an important element to our strategy. We've been recognized externally very consistently for what we're bringing. The approach the thoughtfulness around really friction points or engagement points or really utility for the consumer. And we've won all kinds of awards. If you take some moment to look and read at what they've said about us, those aren't the things people would have expected or talked about for Whirlpool 5 years ago, 10 years ago. But they are the things we expect people to say about us 5 years from now, 10 years from now. So we're very committed to making sure this aspect of our business grows in a very structured fundamental way to enable our other businesses to grow as a consequence. And then kind of the ramp up. So how fast is this going to happen? What does this really mean in terms of in market? And so you'll see, these are the products for just the U. S. We've sold lots of other connected products across the globe. But specifically for the U. S, this is the amount of units we've sold in a cumulative fashion and what we expect for both 2019 2020. So you can see the scaling aspect here is very, very quick. And the installed base matters because it sets up how much engagement, how much density we have with engagement and the pathways in the data. And so with scale, with installed base, there are lots of benefits as a consequence of that, that really can enrich our partnership ecosystem as well as our own machine to app and digital ecosystem. And so 2019 is a pretty significant increase. And 2020, I would say, is when we really enter, I would say, the new material world in terms of how much is connected in a very big way. And then maybe one last video. And this video is more to talk about around the globe. All of the different regions are working on innovation. Innovation isn't solely related to IoT or technology. As a company, we've been innovating to the slide Mark presented earlier for 108 years. So innovation needs to come organically across all dimensions. Some of that is in our traditional products, some of that is in technology, some of that is just in feature benefits that consumers are really asking for and desiring. So this video will kind of detail a bit of that. So as you can see, our innovation really is coming from all across the globe and in all kinds of different fashions in terms of product technology design. We're really excited about what this brings as a portfolio to the company. And each of us regional leads will also share more about our business going forward. So kind of moving more into the digital consumer journey side of things. I mean, data really is at the center of really everyone's business. But what we're also doing to really drive the right information at the right time for the right consumer. And we're understanding all the different connection points and we're doing a better and better job of taking data and moving it to the right places and using it for the right decisions. And so really, all across the consumer decision journey, that data brings to life our decision making and really helps point us to be more effective, more efficient and more impactful as we talk and engage with consumers. If you think about it just from a structure standpoint, this slide is a little dense, but just more meant to illustrate, we have lots of different data inputs across a variety of different things from brand properties to service, call center, industrial. Then we have our technology stack that we think is best in class that does the processing, cleansing, organizing of it. And then we disperse it, run it through the pipes to the right places. And we're doing a much better job taking that data, being a lot more sophisticated and advanced with analytics and really targeting consumers better, using it from an industrial standpoint better. And I'll kind of give a little bit of detail in the upcoming slides on what that means. But the point here is that it really is kind of a thoughtful process for us to make sure we're getting the most out of everything we know, every place we can, which really has helped us, I think, grow quickly from a marketing standpoint, from a consumer engagement standpoint and from an industrial standpoint. What we know about the consumer has changed quite a bit in the last 5 years. We used to know certain things based on general population research. We used to know certain things based on if consumers registered their product, But that frankly happened a little infrequently. We used to know certain things we could buy certain data from certain places, but it's hard to put it all together. It was hard to build a profile in a very clean way, in a very high accuracy based way. Today, that's not true anymore. We can do that. We know a lot about Jane Doe in the pre buy experience. And we know a lot about Jane Doe in the post buy experience. And we're putting that together to make sure we're anticipating the needs of the consumer in advance of when they need it. And that's really helping us become more sharp, more effective with everything we do because we're not running the averages as much. We're a lot more targeted. And so one to one marketing, one to one engagement, really CRM throughout the loyalty loop. When one group knows what the other group has done, it kind of builds off that, is a lot more realistic and a lot more developed than it was just 5 years ago. And as a consequence, we can send very targeted e mails. We know how long you've had a product, maybe how many service calls you had or haven't had or maybe the fact that you have 2 products, but a third might not be our brands and we can engage the consumer that way. We can set up our website based on measuring high value tasks and dwell and all these technical things to make sure we're actually putting content on our sites for what they're looking for in advance of them telling us. We can do a lot better job with our SEO, our search, and making sure we're targeting the right things and using the right words and setting up the right content from a video or advertising standpoint. And lastly, we can make sure our products are what they need based on what they're looking for, what they're asking for and what they're searching. And so all that comes together to be a much more meaningful engagement with consumers. From a digitization standpoint in the industrial side of things, I mean, it's not unique to the upfront marketing and CRM side solely. There are lots of advantages for a company like ours. It's a big industrial company to really take data through the system and get us a little bit sharper, a little bit more accurate in everything we do. So from a machine learning standpoint and automation and robotics, we're moving down that path, industrial robots, collaborative robots and really driving that, getting them smarter and smarter in our big industrial footprints, which is really exciting, the one on the right, augmented reality. I mean, it's amazing how we train our employees today in our plants. We use light guided systems. Their very first day, they're on a mock assembly line and lights are showing them what to do. And they're building dexterity and experience in a very safe environment, in a very quick way to learn. A green light means you did it right. A red light means you didn't do it right. And so we're training our employees in very, I think, sophisticated and frankly engaging ways. It's a much better way to learn for our employees. And so light guided, visual inspection, image recognition are becoming commonplace in our industrial footprint. And it really is helping us take out costs, be more efficient, really get the performance out of machines that we're looking for. From a value chain standpoint in quality, it's also helping us in a couple of different dimensions. We're designing products better. If consumers don't ever use a feature or have a lot of, I'll say, issues with a feature, we can redesign that. We can get ahead of what they're looking for. In manufacturing, our test coverage, our ability to measure performance, our ability to measure variation or supplier quality, whatever it might be, goes up. Step function changes in the moment, real time in the factory, not after the event as an audit or some problem solving. And then lastly, in homes, if products are connected and we're getting data with high frequency, high volume, we know what's working. We can maybe measure tolerances. We can measure performance and calibration of different components in the machines. As a consequence, we can get ahead of things. So we can reduce service visits. We can identify parts that need to be replaced. That guest will bring 3 parts, just bring the one part that's correct. We can sometimes engage with the consumer via chat or web or whatever it is to solve a problem without having to visit, which is usually the best case scenario for everyone because we don't waste time and we don't interrupt their day. And then lastly, every time we go to a consumer's home, we should be able to solve things at a higher and higher rate so that we go there once and we solve the problem with high satisfaction, and we maybe even solve or some opportunities they didn't know they had. And so we can really, I think, be a lot more knowledgeable as we enter those discussions than we have in the past. And then logistics and kind of the final mile, this one gets a lot of attention today given how we shop and how we deliver products. And so an online purchase comes with an opportunity to engage the consumer and know what they want. What time do they want a delivery? Is it an afternoon? Is it a morning? What day do they prefer? Once we get that information with a lot of specificity about qualifying them, is it an old house? Is it a new house? Are we removing something? Are we not removing something? Are we running water? We can ask a lot of questions and become much more informed before we get there in a structured way. We can then optimize our routing, making sure we have the most efficient delivery systems, the most anticipatory of traffic or weather or pinch points. And then we can really kind of see it real time and so can the consumer. Is this delivery coming on time? Or is it late? Did something happen? And really engage the consumer in a way where there's no surprises and customer satisfaction is at a really, really high level. And if we do that well, we think that builds loyalty long term. This is a very big opportunity to start that discussion with the consumer. So these are kind of the big areas of what we want to talk about within each of the regions. We're really excited about our innovation, really excited about technology, really excited about the Yumly operating system as a platform. And it kind of manifests itself in each of our kind of regional roll ups. So this first slide is kind of a summary of all the regions and then we'll go across each of the leaders and share where we are. I'll obviously talk about North America. And from a revenue standpoint, in 2018, we were $11,400,000,000 Our EBIT margin was $11,800,000 Our share was approximately $36,000,000 And the industry size is about $50,000,000 So our long term expectations and goals are 2% to 3% revenue growth, 13 plus percent EBIT margin and then 2% to 3% industry size growth over the long term. And I'll kind of detail a little bit more about kind of the drivers to how we're going to get there. If you we get this question a lot on industry and kind of what's happening. And certainly, if you take a long term view, there's a pretty clear line across how it's performed. We think that pretty clear line is generally the right story. Yes, we've had a little bit of disruption in Q4 and Q1 in terms of a little bit softer industry, a little bit more volatile. So that's certainly true. But generally speaking, if you look at the components of demand, you'll see that we still feel pretty good about its long term trend. So the preceding 70 years, 80 years was approximately 3%. 2019 forecast that we've published and have talked about is a minus 2% to a 0% for the industry. And then 2020 to approximately 2023 forecast is about 2% to 3%. If we break down the demand buckets, because it's important to understand, I think, that the bigger drivers and is more ways to segment this, but generally speaking, these are the bigger buckets between replacement, new construction and discretionary. Generally, those buckets have been kind of the same in terms of its structure, but its sizing has changed quite a bit. So replacement has grown quite a bit over the last, let's say, few years. And that's a function that we'll kind of elaborate on in the upcoming slides. So appliances in a replacement fashion get replaced approximately every 10 years, plus or minus different categories performs a little different. The increase in installed base kind of helps add stability to the overall industry kind of characteristics or dynamics. New construction has historically been, let's say, 15%, 20 some percent. It's at 15% now. And we think there's opportunities there that it will outpace a little bit what it has done recently, and I'll detail that out in some upcoming slides. And then discretionary is about 30%. And that really has some elements around remodel and just discretionary purchases that consumers can pick and choose. And we think, generally speaking, that the factors that go in discretionary spend, employment rate, consumer confidence, household remodel spends, broadly are all kind of favorable as well. So if we just go a little deeper on replacement and you look at the chart on the right, you'll see kind of the replacement market over the industry over the last couple of years and replacement is kind of a little bit of an explode. And if you look at 2,008, 2012, that was the kind of trough period in the industry. And if you look forward at the box to the right, that's kind of highlighted between 2018 2022, that's the 10 year kind of window. Assuming generally, it performs the same, we're kind of in the trough today. We're not through the trough, but we're definitely in it. And we think, generally speaking, and the data supports that it's not going to have a lot of variability from where we are today. It's certainly not going to be a big area of growth from a replacement standpoint. But generally speaking, we're kind of in it today, we're experiencing today. This may be some of the erosion or depressed industry that we've seen in Q4 and Q1 certainly contribute to it. There are other factors that we'll lay out as well. And so we're watching this. But generally speaking, this feels like it's as we expected. If you look at the next bucket, which is really more on kind of discretionary in the 30% of the industry, if you look at consumer confidence, it's upward sloping, upward trending. We expect that to continue. If you look at homeowner improvement and repair expenditures, again, upward sloping and also contributor. Those are going to build or feed into the propensity or likelihood of someone to have a discretionary spend. So again, we think that should outpace and grow versus where it was. And so we think that's a positive for us certainly. And then the last one is really on kind of new construction and what we expect. There's lots of arguments to be made. But generally speaking, the gray area on the chart indicates kind of a normal amount of starts. We think we've been below that normal level for quite a few years now. There's a lot of reasons for that. The trough put a lot of pressure on builders. A few years back, they were very sensitive. The labor market is extremely tight. And so it's hard to get labor. So there's reasons for that. Regardless, we believe the housing stock, has not kept up pace with the needs. We think household formations kind of say the same story. There's certainly discussion about will households form the same way they always have with millennials and things like that. But I think the data shows maybe a slower or later but not a dramatically different in aggregate composition. So again, we think this is going to be a positive factor in the future. We think prices have also maybe depressed some of the new housing. As supply comes a little bit stronger and prices moderate a little bit, we think that's a bit of a boost to this segment of the overall demand creation. And then if we talk about maybe our brands, over the last, let's say, 6 years, we've been around 33% branded share. So our portfolio of brands, what Mark alluded to earlier, is really is an asset for us. We believe we cover 97 plus percent of the U. S. Market, as an example, with these brands. And you can look at demographic, geographic or attitudinal, we think we cover. And so that's a really good position to be in. So no matter what kind of happens from a consumer preference standpoint, we believe our brands can occupy really all those needs from a consumer standpoint, either in price point or in technologies or in equities. It really doesn't matter. And frankly, the data has kind of supported that. Our Q1 is at a similar level at 33. So we expect that to kind of continue and help us grow in a market irrespective of things changing. The trade landscape has also changed quite a bit. There's been a lot of discussion about how it's going to change in the future and how it has changed in the past. This goes back 18 years, and there's big changes here. Significantly, independent retail, Sears, Home Depot, Lowe's growth have been very big. We've managed to stay fairly ahead of most of these changes proactively, in the example of Sears being one clear one here lately. But frankly, just in generally, we want to be positioned to be very successful irrespective of channel or customer. And if we do that well, whatever grows or shrinks, we're generally going to be competitive in that environment, and we've demonstrated that. And so irrespective of a Sears change, our performance has been very strong. Irrespective of the Lowe's or Depot growth, our performance has been very strong. So we're trying to stay ahead of those things. The one that comes up quite a bit is the direct to consumer kind of e commerce marketplaces. And we're also doing things to stay ahead of all those landscape type changes to make sure, again, we're very good at what we do and very successful in those channels. So if they grow, we're ready to grow in those channels as well. From a value creation standpoint, if you look at kind of a 10, 11 year window, ongoing EBIT and net sales on the bottom left, you'll see we generally have grown our EBIT rate over post-twenty 11 on. And really, back in 2010, 2011, the company took some very difficult structural changes to make sure we were going to be healthy from a structural standpoint with people, with plants, with infrastructure generally. So that positioned us to be a lot more nimble and a lot more healthy. Then we could move as necessary to accommodate and anticipate the market. And we've done a good job of that, generally speaking. And we've generated both growth and EBIT appreciation. We have lots of tools to do that. We can do that with product launches and mix. We can do that with trade landscape anticipation and frankly, execution. We can do that with growing D2C as that continues to grow. Our consumer service in home delivery really is best in class. And we think that is a differentiator for the company. We have great service, great home delivery and others don't. Consumers will have a better experience. Retailers want to have business go our way because it will actually be a better easier sell for them. We've invested quite a bit in these areas. Our competitive advantage on factory scale, I mean, we have to Mark's earlier comment, we have mega factories. We have large plant facilities that are highly scaled, highly efficient and getting more and more sophisticated with every step. And then lastly, disciplined fixed cost management to the learnings we had back in 2010 2011. Having a very lean infrastructure really does help us kind of be ready to anticipate whatever it might be that changes before us. So with that, I want to turn things over to Gilles. Thank you, Joe. Good morning and good afternoon to the investors in our European region. Before talking about the future of Europe, I want to start with a recap of our Ingezit acquisition, its completion and its impact. At the end of 2014, we acquired Indesit to expand our product offering in the laundry category, to increase our presence in Russia and in the U. K, to also enhance our brand portfolio with brands like Hotpoint and Indesit and also to combine our technology leadership in 1 company to offer the most innovative products throughout our region. It has been an ambitious and a very complex integration. But we can say as of now that it's complete. We have significantly reduced the complexity of our business by combining and reducing the number of architectures and platform we have, by reducing the number of SKUs we produce. We have also reduced significantly and optimized the footprint. We have consolidated across manufacturing facilities, warehouses and offices. So an important consolidation of our footprint. For complexity reduction, we have also worked intensively on our system, on our legal entities, and we have reduced the number of employees. So you also know that if basically we have delivered the case that we said at the start of the process, and that's the green dot here, In the same time, we have faced some challenges during the integration and a more complex time with systems and logistics. And this has resulted in product availability issues, in loss of floor space and in loss of sales. Internal challenges, which has been in parallel with external challenges, especially with the rubber and the pound and putting really our business under pressure in EMEA and also mask many benefits of the integration that had been completed. And as a result, the last 2 years, we ended up with operating losses. The end of it integration is complete and has given this, but also has put us in a position that is, from a structural point of view, strong. Out of the top 5 markets in EMEA, we have leadership position on 4. The U. K. And Russian, we have country position number 1, and this came through the integration. In France and Italy, we have also strengthened our leadership through the integration. So even if we lost shares in the last 2 years, these are the 2018 ranking. We have, from a market, a country position point of view, a very strong structural position. From a product point of view as well, the laundry category, we are leading through the progress we make in cooking. And you saw from the EMEA region, the beautiful W collection that is being launched now in Europe. And I'm installing my new kitchen in Milan. We also we have seen as well great progress with balconieshed. And this has been recognized and particularly and we're very proud of this through some of the design awards, one of the most prestigious we have in Europe. 6 of our we received 6 awards this year, 11 products through brand like KitchenAid, Whirlpool, balconies, Indesit have been recognized. We have a strong product position. And we see also going in all the categories good expansion. So this give us post acquisition, post integration, a strong structural position in Europe. And from this strong structural position, together with what we have, and Joe has showed some of these in the past in the past few minutes ago, coupled with strong action, and I'm going to detail this a minute, we believe we can regain leadership of categories and restore margin not only to the past level but also to the competitive level. So this is the work of our earnings for the from the 20 sixteen-twenty 18 to the longer term. We believe that through the short term and medium term action that we are taking and also some of the longer term action that take a bit more time to implement and will create also value over time, we can reach approximately 8% earnings in EMEA. I'm going to describe in the next slide the action that are critical to support this development. As we announced in the quarter 3 earnings call, we want to refocus our business. So we announced we will exit from the commercial operation in Turkey. We will exit as well the HOT POINT small appliances. And as today, I can tell you, we are on a good track to have this completed by the end of this quarter. We also continue to explore the potential sales of the South African operation, all these to refocus our business. We also announced an effort on the fixed costs and the $50,000,000 and this is on track as we speak. We're not going to stop there. This is critical to deliver the first green element you saw in the previous chart, but this is definitely we will continue evaluating further cost opportunities. And what was very critical and where we are on track is when I was talking about the lost fall of space, renegotiate our contract, regain the momentum with our customers. And as we speak, this is happening. And we, since quarter 1, have a volume growth of about 6% when the industry is basically flat in Europe. So this is something that needs to be strengthened, continued for the year to come. But definitely, it's also, from the short term, essential to bring Europe back to profitability. And then of course, we look at optimizing our asset base. We look at our return on invested capital. The assets that are not performing, yes, we will evaluate and we'll further assess our factory footprint. That's clear. So that brings us, when we do all this, to a level of profitability that was at least a historical level, if not higher. But we want definitely to go further. And we believe we can go to the next level to hit the benchmark of the industry in Europe. And this, we want to accelerate our margin generation through the built in business and our premium business. Built in is critical. It's a bit less than half of the industry volume in Europe, but it's a vast majority of the profit in Europe. Here, we have strong growth opportunity. They take a bit more time to catch because this is long term contract. This is customers that you need to gain and gain confidence. And when you had service issues in the past, you need to rebuild this confidence. But as we speak today, we have good traction in regaining long term customers and in expanding in our business, which is not only to the customer relationship, but also with all the product innovation that we bring. I do believe that with the brand portfolio that we have, we have also opportunities to invest and support the more premium side of our brands. The Whirlpool really expand with KitchenAid in Europe as well. So this will bring us in the longer term to approximately 8% earnings level. After 2 months in the business, I can ensure you of 3 things. I've met people in Europe who want to succeed, who want to deliver this turnaround and be in an area where they can be proud and deliver a successful 4 Whirlpool. People who have the capabilities and we have also the capacity to attract new capabilities. So I'm confident about the people we have in Whirlpool Globally and in Europe to deliver these plans. About the brand portfolio. Honestly, I'm excited about the brand portfolio. We have not yet untapped all the possibility we have in this brand portfolio. I'm coming from an industry where we're investing and leveraging a lot of the brand. With what Mark has shown, the KitchenAid, the Whirlpool Hot and Valknese in Desit, we can really bring and create value to our brands. And finally, the product, we have exciting product. We have connected appliances to the service, a lot of things that are in our pipeline. So as I speak today, I know I need to be humble. It's only 7 weeks, as I said, in the business. I spent time in the factories, in the market, engaging with the team. We are convinced, and I am committed to this strategy and this action plan that will lead Europe to a level of earnings, which is in the competitive benchmark and will be approximately 8%. With this, hand over to Prega for Latin America. Thank you, Giulio. Good morning to all. We are going to talk about Latin America. And before we go into more details, I'd like to emphasize that different from the last 60 years, from now on, Latin America is going to be a poor appliance players because we are not going to have Embraco managed and consolidating our numbers in the future. So talking about the region and from give you a perspective about the territory and the countries that we are operating, I'd like to emphasize the largest 5 ones. And you can see that even though we are, as a region, not an upside economic scenario, we still have a very robust market. And Brazil is the 2nd largest country that WERPA operates. And I'd like to give you more color about Brazil. When you look at this picture, I have to tell you that if you are a Brazilian, you realize that you are a survivor. But also, you can see the flip side in a positive way that the potential that we have in front of us. Without a doubt, Brazil, in terms of demand, touched the bottom. And what we are looking for and what we are going to see from now on is a takeoff. I'm not saying that we are going to have a cruise flight. We are going still to see some bumps because Brazil is a young democracy and we're still facing some issues. But without a doubt, we are going to see Brazil growing as a country economy. And as a result of that, our appliances is going demand is going to be higher. And you can see that we are being conservative in the best of our knowledge that we are seeing, but the potential is there. And we are without a doubt, we're seeing a much higher upsides than downsides in terms of Brazil demand. And how we are preparing to face that and to enjoy this growth. I'd like to just to make a comparison to show you the power of our brands. When you talk about brass stamp, you're talking about KitchenAid stand mixer. So that's the power for our brand, brass Tan. We have among the top 3, 2 brands, the most powerful awareness and preference in Brazil. And also, as Joe Lutini showed before, the way that we are seeing the consumer journey in the future is we are leveraging that debt. There is one fact that we cannot dispute is the consumer has the autonomy to buy wherever they want to buy. If they want to buy in a store, they go to the store, the offline. If they want to buy in a website, they go to website. If they go to buy direct from the manufacturer, they go or they go to the marketplace. The consumer has this autonomy. And our job is to put our brand and our products always in front of the consumer. By doing that, in 2018, we were in a poor website home appliance players. We are the 3rd one, the 3rd largest one. And we sell only 3 brands. The other ones sell the remaining competitors as well. And how we are doing that? We are not operating on our own websites, but we also more and more growing in the marketplace. And why we are doing that, besides the power of our brands, we have one capability that's very important to emphasize. Brazil has 5,400 cities, and Wurpo has the ability to deliver door to door in 5.1 out of this 5.4. And we are seeing that as a tremendous leverage and competitive advantage for us continues to grow in this area. In 2018, direct to sales for us was accountable for more or less 15% of our Brazilian sales, and we continue to grow in that path. That's all that I have for Latin America and Brazil. I'm going to turn to Sam. Thank you, Braga. Good morning, everyone. Turning to Page 53. Let me give you a quick introduction about Asia Apprentices Industry. China is the largest country from the industrial size perspective. Is about 65,000,000 units. However, given the slower economy and also very high penetration level, we see little or no growth for the next few years to come. India is the 2nd largest market in Asia with about 20,000,000 units. And as you can see, India still have a very low appliances penetration level. With a very strong economy, we do see India for the next few years will enjoy a very nice growth rate from the industry perspective. For other part of Asia, we are talking about Southeast Asia, Hong Kong, Taiwan, Oceania, Australia, New Zealand, so on and so forth. We see total size of the market is about 30,000,000 units. So zooming into our India business, which we have a very, very strong business in India. And over the last several years, this business has been creating significant value for the shareholders. And we own 75% of this business. It's a public traded company in India. And today, this company itself, Whirlpool India, is RMB 2,300,000,000 market cap, by because of the investors really value the business momentum. In the last few years, this business has been able to generate 14% year over year growth at above company average EBIT margin. For 2019, we feel pretty good about the business will continue to generate 15% top line growth at about 10% EBIT margin. Going forward, we see the key drivers for this business continue to prosper. One is a positive industry demand trend, particularly outside the laundry and refrigeration, which we normally refers to T2. And also, we have a very strong Whirlpool brand awareness in India. And currently, our brand preference remains above currently our share position. So we still have a ways to get additional growth from this business. And we expect strong future growth to continue drive channel distribution expansion, new product launches, including some of the product Joe showed you earlier, connected devices and also maximizing mix opportunities. Last, not least, is a rapid expansion into new product categories such as cooking and a few other areas. So next is our China business. On the one hand, we are very happy we bought China business back on track after a very disappointing 2017 results. However, our short term expectation on China on the margin expansion remain limited. 1 is the industrial demand is very soft, especially in Q1. And the other one is we are investing heavily in the brand transition from Sanyoung brand, which we acquired, Suhefe acquisition into Whirlpool brand. So that transition will continue for the next few years. However, after saying that, I also want to talk about another aspect of the China business, what is important for Wolfu Corporation. China continue to provide a cost efficient manufacturing base for the corporation. Our smart factory in Hefei by the way, this is a real picture. We built from a no man's land by full operation in 18 months. That's the speed in China. This is fast this smart factory to deliver the best in class manufacturing capabilities for the corporation. In this side, we utilize Industrial 4.0 practices as part of our Global Manufacturing 2020 initiatives. Because of this, we are able to continue to drive operational excellence and also cost efficient installed capacity. We continue to invest heavily in smart robotics, augmented reality and IoT to enable real time production planning and feedback. While at the same time, today from this side, we are exporting 25% of the refrigeration, laundry, microwave oven, dishwasher products to Europe and to other countries within Asia. So to summarize for Asia, given the strong momentum of India for the next few years and also best in class manufacturing base in China, we strongly believe we can deliver the long term goal of 3% to 4% revenue growth and approximately 8% EBIT level from Asia Pacific region. With that, I will turn over to Jim to talk about capital allocation. Thank you, Sam, and good morning, everybody. Real quick here. What I'm going to do is I'm going to walk you through, as Mark mentioned earlier, drill into some of the numbers that we shared, some of the financial goals and metrics, hopefully, summarize a lot of what the different regional presidents have talked to you about and see how that comes together on a global basis. And again, if you look at our long term value creation goals, which are very similar to what we've shared in the past here is, 1 of revenue growth on an annual basis of approximately 3%, eventually coming to a 10% global EBIT margin, which I'll drill into a little bit deeper in one of the upcoming slides. And then as Mark mentioned earlier, our focus on return on invested capital as we look at a goal of 12% to 14% further out and then our free cash flow goals, which we feel we're very on track to right now of a 6% plus. And I think the one key thing you've also got to look at here is our annual expectation is for margin expansion. We expect to expand by about 0.5 point to 1 point every year. And again, as we look forward, we know there's going to be some volatility we need to deal with in other things and timing of many of the actions we've described, but we do believe that's the pace that you will see it at. Also, if you look at return on invested capital, obviously, there's a large correlation with that to our returns or to our EBIT margins. But also as we look at some of the actions around asset optimization and asset use, we'll as the timing of those rolls out, you'll see how that impacts our return on invested capital. So if I look at our drivers of our ongoing EBIT margins, and we've broken it down by what are the drivers on a global basis, but also what impact will the individual regions have to this. And if you really look at the first piece on a global basis is just a recovery of demand. And a big part of that is recovering the volumes we lost within EMEA. But also, as you've heard from many of the different regional presidents, especially in markets like Brazil and that and India, where we expect the demand to continue to increase at a significant rate. That will help drive that there. The second piece is new product introductions. And a lot of that comes, as you've heard from the regional presidents, but also as Joe talked about earlier, in our connected appliances and the new products we're launching in that space. You really see that the products that we're bringing out and these will drive an improvement to our mix, but also an improvement over time to our margins. And then net cost inflation or cost net of inflation. And really what we look at is, as Mark talked about earlier, the different things we're doing in the manufacturing space and the product design space and how those things add up. Joe talked about some of the benefits of the digital work we're doing and how it will help us from a total cost of quality. Those things begin to come into there and set the basis for how we continue to drive ongoing productivity. Obviously, we do assume within there, we'll also have to offset some inflation in many of the markets, whether it be labor inflation, logistics inflation, etcetera. So we do have a we do believe we have a path to that. And then if you've heard everybody talk about Joe talk about the technology investments we're making, Sam talk about some of the brand investments we're making in China and other places, you see that we do also assume that we will have to up our level of investment in certain areas of the business to deliver on this strategy go forward. You take it on a regional basis and you look there, as Joe talked about in North America, we really believe we have a strong business within North America. We expect to see continued strong margins with slight expansion within there as we launch new products, as we take advantage of the things that we have in the marketplace today. But then you move to EMEA. And as Gilles talked about, with the turnaround of EMEA, that can have a significant effect on our margins globally. And we do expect to see that over the next few years, that turnaround beginning to come to the bottom line here. Latin America, with the recovery of Brazil and now that it is a pure play appliance business, we do expect to see a benefit to our global margins from that. And then as you look at Asia, with our strong India business and as Sam talked about, expanding the Whirlpool brand within China, we do believe that also will add cumulatively to our bottom line and our EBIT margins. Cash flow to get to 6%. Big driver of this is the margin expansion, obviously, and that's the biggest piece when you start off. The next thing is a focus on working capital. And at the end of last year, our working capital levels were relatively low compared to historical levels. We've targeted ourselves to try and get to a working capital 0% of sales in the future. And that's really what it but to do it on a structural basis so that we see this as what we call everyday lower working capital. How do we manage our inventories better? How do we make sure we're managing our payables and receivables? On the inventory side, it's a lot about demand planning. But there's also going to be some benefits that come from some of the things Mark talked about earlier as we make improvements in our production environment and how we design products. The fewer architectures we have, the fewer number of parts we need to go into many of our products, the fewer number of SKUs we have all lead to lower inventory levels over time. So there are many structural things that we look at in there. The other thing is that as we look at it, there have been a lot of what I'll call significant one time or non recurring type cash impacts we've had in recent years, whether they be the level of restructuring that we had to do around the Indusit integration. And as you heard Jill say, we are at the end of that now. We've got most of that behind us terms of the integration is done, and most of the payments are now getting behind us for that. The pension contribution we made last year of 350,000,000 dollars that eliminated 5 years of future pension contributions for us. So we'll see that benefit coming over time. Within this year, we had some the settlement of some antitrust issues within France that we've had to pay. Obviously, that's a onetime item. So again, a lot of those things are getting behind us, and we anticipate to begin to see the benefit in the next few years in getting to that 6% plus. Step change in our ROIC through, as it says, margin expansion but also our focus on invested capital. As we look at parts of our business, whether within EMEA, some of the actions we've taken to reduce our business there, but some of the assets that really weren't creating value, and we've taken them out of the business. With the sale of the Umbraco business, that actually was a good business. But again, as we looked at it go forward, and Brega talked about that earlier, we felt that, that was an appropriate thing to move out of our portfolio. Lower working capital, obviously, impacts this, but also I'll talk about in a little bit here on terms of capital expenditures. Our capital expenditures right now are about 3% of sales. With the work we're doing around product architectures in that, it allows us to get more out of our capital spending than we did in the past. Fewer architectures mean that you don't have to invest in as much in tooling and machinery as you did in the past, but you can still launch as many new products as you had or more in the past. So again, a lot of different focuses there. The other thing is, is when you look at how we calculate ROIC, we include everything. We use a very simple metric where we take the total assets on the balance sheet, all intangibles, everything in. We subtract the non interest bearing current liabilities, and that's what we say as our investors. So there's we don't try and manage it around and pull things out. And we also use a constant tax rate, because we know that our tax rate fluctuates from time to time. But if we look at it over an extended period of time, it gives us a good comparable number. So as Mark mentioned, externally, you may see people calculating it differently. This is how we do it, and we think it really represents it's a best representation of the assets we have in use in our business today. Our capital allocation strategy. Not a lot of change here from what you've seen in the past, but I do want to highlight a few things as we walk through. As I said, in terms of CapEx and R and D, they're both about 3% on an annual basis, so about 6%, very similar to the past. Mergers and acquisitions, we look at opportunistic things that come up in opportunities. We've got I'll go into it in a second. We have certain ROIC thresholds for different types of acquisitions that we look at, and I'll kind of walk you through that. Dividends. Historically, we have always said that we would be about 25 percent to 30% of our trailing earnings on dividends. Right now, we've probably been trending to the 30% level if we look at recent years. We are very confident in our ability to expand margins, very confident in our ability to generate free cash flow. And so we've really wanted to say we're going to stay right around that 30% as we look more go forward. Share repurchase. Obviously, Mark said earlier, we will continue to repurchase shares, but maybe not at the levels we had in some of the recent years as we focus on things such as our capital structure. And again, Mark talked about getting our debt to EBITDA down to about 2x is where we really feel is the right level for us to be at in order to execute on certain opportunities that may come up in the marketplace as we look forward. So again, talked about our different threshold on acquisitions. And if you look at we look at strategic acquisitions, which have a much longer time frame to them, and we do believe that they should deliver at slightly above what our targeted ROIC levels are. But they're going to have a period of time that it takes to integrate them and to get them to get take advantage of the synergies that they generate. We also look at some bolt on M and A opportunities. And with those, we have a much higher threshold because we believe and we expect the benefits to occur almost immediately as we do that acquisition. So we want to make sure that when we do those, we've got the right threshold, and we do believe it will be earnings accretive from the beginning of the acquisition. Again, I talked about the dividend earlier in here, and you can just see the pattern of dividend increases that we've had. And as I said, we expect to keep that at about 30% of our trailing earnings go forward. Very confident in our ability to generate free cash flow. We've consistently even as you look back through some of the more difficult economic times and if you would have gone back before this, we've always held our dividend or raised it. And it's been something that I think, go forward, we do believe that, that's the right thing to do. Continue to repurchase shares. As you can see, going back to 2015 to now, we've done significant share repurchases. Right now, as I said, with the focus we have on trying to get our debt and our capital structure to the level that we believe is optimal for us, we are still repurchasing shares, but maybe a slower pace than we had in the last few years. And we expect to do that at about $200,000,000 to $300,000,000 annually over time. Now obviously, with the free cash flow targets that I talked about earlier, as we move on, we will continue to look at once our debt metrics are in place, what is the best use, whether it be acquisitions, share repurchases, etcetera. But in the medium term, this is what you should expect to see. Targeting our gross debt to EBITDA of 2 times. Mark mentioned this earlier. Really, there's 3 simple pieces that come to this. It's 1, when we receive the Embraco proceeds, we pay down the term loan we have. 2, what we with the expansion of our EBIT margins, it will expand our EBITDA, obviously. And then 3, as we look at some of our debt that's maturing over time, we will make decision whether to refinance or pay some of it down using free cash flow. So again, those are the 3 big drivers, and I'd say that gets us to around 2.5. Then we look at that last half there, and we say, okay, that's going to be looking at whether there's opportunistic M and A opportunities or whatever out there. Let's make sure we balance that with the overall needs of the company. And then whether that comes through EBITDA expansion or it comes through debt pay down, we do we are going to get there, but we just can't pinpoint today exactly how we'll get there. The other thing is just to talk about some of these metrics, you can see how these tie into the compensation of the leadership of our company. And this is not just with this leadership team here, but throughout our entire vice presidents and many of our senior directors in our company have compensation and all of our employees on the short term compensation have compensation that's tied to the performance metrics. And you look at from a short term annual bonus perspective, it's ongoing EBIT and it's free cash flow, and they are weighted evenly because we do believe that, obviously, as we look at the value creation for this company, those are the 2 biggest drivers. And I think we talked about that the last time we had an Investor Day. And we really looked at what's driven our valuation over time, and these have had the greatest effect on it. But then we look at long term compensation. And we say, okay, our ongoing EPS in terms of over a 3 year period of time, that also then incorporates in things such as our tax rate and our capital structure and other things and how that impacts our earnings. And then what's our return on invested capital? And again, we believe return on invested capital is a very good long term metric to look at for our company. And it talks about the health of our business overall. And that's why we've really targeted our leaders with their long term compensation to have that as a key component of it. The other thing if you look at here is for our overall our top executives, more than 80% of the compensation is pay at risk, whether it be through our short term bonus pools in that or through our long term equity compensation that we receive. So again, we do believe very strongly in pay for performance, and we do believe that we should tie the pay, especially of our executives and senior leaders in our company, to our performance against these metrics over time. So with that, I think I've brought us to the end here, Max. All right. Thank you, Jim. That ends our presentation and takes us into the question and answer session. So if you have a question in the room, I just ask you to do a few things. When you raise your hand and wait, we'll deliver a mic to you so that those online can hear your question. 2, please state your name and your company before you ask your question. And then last, let's do one question each to start. And then time permitting, we can circle back. So with that, David, I think we'll take a question right here. Okay, go ahead. Go and stand up, Mike. Please. Earlier point in the slides because it seems like the productivity side is a pretty core part of the strategy and how to drive margin. And there were a couple of slides around the integration of automation and technology, automation in the production side, technology and some of the logistics. Can you just give us a little more detail around where are we in that process? Can you help quantify how much does that represent of your productivity goals? Thanks. Maybe I can take it. So, Mike, so first of all, I mean, this is a competitive industry and you have to be cost competitive. I think we also demonstrated over the last couple of years, we are able to drive significant levels of productivity. The point which we were trying to bring across, you don't get that going forward with just squeezing every year a little bit tighter. Of course, we have scale, which I always think is a benefit. But there are significant other tools, which I mentioned. One was this world class manufacturing, product architecture modularity, indirect spend. What we showed on the augmented reality, these are just tools and how we drive, in this case, in particular, in 4 walls, what we call the conversion productivity, I. E. The pieces, the cost generated in the factory, not necessarily for material, but in the factory. So all these data analytics, the smart robots, human assisted robots, they are all tools on how we to that productivity. That's why we all stayed there with the number. We do believe, because we're seeing it, we can drive sustained net productivity of 4%. And again, that's net because you always will have salary inflation, all kind of other elements. So to tell you now how much of a 4% falls in augmented reality in data analytics, I don't know. Well, because it's so interwoven, but it's certainly a key element in terms of how we overall drive to net productivity. David MacGregor at Longbow Research. I guess I had a question, but also a clarification. And just a clarification is on Page 43, where you talk about the margin progression over time in Europe. Are you essentially guiding to a 3% to 3.5% margin in 2020 as it would appear from the timeline you lay on that slide? And then the question, I guess, is how should we be thinking about normal operating leverage in Europe now that this is complete? What's the kind of margin progression we should be seeing in terms of incremental margin versus an incremental revenue growth? Thank you. So I'm trying to not put Juliet on the spot. But what you should have taken away from that slide is not necessarily a 2020 guidance or 2021 guidance. What we should have taken away is, there are certain actions and levers in particular cost and the asset side, which we consider being in our control, which we can drive in the shorter term. And with these actions in mind, you get to what you call the historic levels or certainly the 2%, 3%, 4% margin within a reasonable time frame, because we know that. And we are fixed assets, we have fixed cost reduction, and we're also on progress to regain the volume. So see it more in terms of these are the actions in our control, which also means, yes, we are highly confident in the next 2 years we can fully utilize and leverage these opportunities. What Gilles told you earlier about the built in and the premium freestanding growth, of course, we're already working on this one, but that's a pretty long journey because it's product range, it's long term supply trade partner contract, it just takes longer. It doesn't mean that we wait until the outer years. We start already now, but the full benefit you get in the outer years. To your question about the volume leverage, as we said several times in earnings call, the volume leverage is completely different by product, by factory because it depends on capacity utilization, etcetera, etcetera. As a rough rule of thumb, in Europe right now in particular, yes, you are talking about $20 to $30 volume leverage per unit. So it is significant. It is significant in particular in a phase where we've been last year where you underutilized because that's what we refer to what we descaled. We had several factories which were significantly descaled and that's of course when you have a negative volume leverage. That's why we put a lot of emphasis on we have to restabilize and regain the volume to stop that deleveraging. But again, be careful about that number because it's very different factor by because it just depends on the capacity utilization, the fixed asset intensity by product types. It's a blend average what I just gave you. Okay. We'll stay in the middle here. Go ahead, Sam. Thank you. Sam Darkach, Raymond James. Mark, I respect that you mentioned that you don't want to talk about prospective M and A or divestiture speculation. So I'll make sure that I frame this delicately. You have, I'll call it, a stretch goal of 8% operating margin in Europe. Even if you get to 8% though, you've got $10,000,000,000 of tangible gross assets right now in Europe. So even if you get to 8, that's still a low single digit pretax ROA. So my first question would be, how much of the asset base can you extract over the next 3, 4, 5 years to make the ROA more attractive in Europe beyond just the margin exercise? And then I guess holistically and however you want to answer this question, obviously feel free, but just help educate us or remind us what the strategic importance is of Europe just to begin with for the company. You don't have I don't believe any platforms that you're making there any material platforms that you're making there for other regions. Help us understand the strategic imperative or at least the importance of being in the theater for the company as a whole? Thanks. So Sam, let me maybe start pretty much at the outset of your question. So there is no question and again, I'm not going to speculate on M and A and whatever else, but there is no question and we show that on the slide that Europe is the most significant upside value creation opportunity for the company, period. I mean, that's why we just showed it in the margin book, if you just do the math. But if you also do the math correctly and include all parameters, everything inside, you also come to a conclusion the most attractive way to do that is to fix it. Now it's also very clear and I would be lying to you, but I would say anything different. There is a limited timeline, okay. What I'm saying is we have to fix it within a reasonable timeframe. And if we don't do it, then we have another set of questions on the table. But again, believe me, it's our job to look at all these parameters on the math. The most attractive math is to fix it and you drive an adequate TSR, which comes with that. So that is our journey. To your question about the assets utilization, a big part of already what we've decided on SDA Hotpoint, what we're doing in South Africa, and some other pieces, we do believe we can put Europe in a more, I wouldn't call it asset light, but certainly in lighter model. Because post integration, we see opportunities even now we're going to go forward base, we can further reduce the invested asset base in Europe. So what we announced that may not be the end of a journey because that's what Gilles told earlier. We do believe there are some further opportunities to further reduce the asset base and to kind of clearly get away from this €10,000,000,000 what you mentioned before. To your other question about the global benefit, we could now have a 2 hour discussion about the global model and more benefit you get out of this one. But first of all, I mean, we've mentioned that several times, our global technology organization, which Roberto, a global organization. So you have cooking experts doing whatever induction cooking for rest of the world, or you have laundry experts pretty much throughout the world. Keep also in mind, in the 50s or 60s, a lot of the technologies were born in the U. S. And went east. You have now more and more technologies, be it lawn or be it in cooking, which either were born in Europe and go west or are born in Asia. So there are certain technology trends. I'm afraid you would miss the boat if you just sit on an island on one continent. All right. Any questions in the middle? We'll kind of stick to the middle for a minute here. Anything else? Go ahead, please. Thank you guys for your efficient presentation. Breaks are always good though. So if you look at the margin and Giles, I'm not going to focus on the regional piece, but and Joe, if you could answer this one or focus on some of the response. If we have a flat U. S, it's obviously today the way the market is going, who knows, that's your guys' estimate, everybody else can have their own. But could you describe how you get kind of that without volume gains, can you get the volume walk for the leverage? And if you think about this year how North America guidance played out, right, following material costs, but you guys didn't get as much volume productivity, kind of the corollary to that. So my focus question is, how do you get the new product margin expansion? If you kind of have this world where you have falling material costs, but you can't get the deleveraging. I mean, where does that conviction for the longer term guidance come from in terms of how that works through the income statement? Thank you. So I mean, in terms of volume, obviously, there's different expectations, but and that's fine. We think we have a certain thinking behind it. But I would say, even in recent times, the last couple of years, we've demonstrated the ability to both get growth and generate incremental margin in that same kind of volatile suppressed market. In terms of product launch, I mean, we're constantly looking at launching new products and we flashed quite a few of them earlier. And so that generally can be incremental mix, that can be incremental segments we're not in, that can be incremental segments we create, like the smart oven, powered accessories and things like that. So those are all, I think, opportunities. If you take that one step further and you say, well, with Connected, Mark talked about what we want to drive in terms of product there, that's certainly going to be a revenue generator. But so are services. As we do more and more home delivery, more and more service, more and more partnerships that are enabled by connected products or otherwise, those are all revenue drivers for us that are maybe early right now, but should mature in. And if you look at our ramp scale that we showed in the presentation, we're kind of just starting that journey. So we don't know and we haven't necessarily experienced all the benefit of that. But those should all come in parallel, not in sequence of one another. So that gives us some more assets, some more ability to drive revenue in the forward years. Ken, maybe just adding to this one. And I know some of you, not necessarily you, in the past, obviously used the P word, peak margin word in the context of North America. And frankly, I've heard that question about peak margins, our way peak margins for the last 5 years, for 5 years. And for 5 years, we've been beaten what was previously considered peak margin. So we continue to expand it. And I know many of you had questions, can you get North America to 8%. Then can you get it to 10%, can you get it to 11%. We had solid 12% with a volume decline when we even took out inventory took out production. So I think that speaks already volume. But the other part, and I can't emphasize that enough, what Joe said is, part of the reason I want to show you a little bit what we do on this connected products, what we do on winning purchase. Our job is to create a different business model. And honestly, our job is to create a business model with different margin potential than the past. So if you would have just continued selling appliances through all the channels which we know in an analog world and we deal with the way it is, yes, you have a question about what's the volume leverage, etcetera. But part of that is also when you think about Connected Appliances and the services, if just an example, what you saw in the integrated detergent delivery, You get a commission by the detergent supplier on the detergent delivered to home front, that is a margin which we never had in the business, just as an example. Not necessarily in North America, but also in other parts of the world. Going direct is a different margin potential than the other business. So part of the strategic transformation is to create a business which has a completely different margin potential than we may have had in the past. So that's why I'm saying, yes, beyond product mix and what we can do there, the beginning pieces of what we see on both products and the purchase transformation, that starts showing just very different results, but it takes time to build it also. Yes. And I think the one thing is just to add at the very end is not to forget, within North America, we still have significant ongoing cost opportunities. As we talked about the world class manufacturing, we're very at the very early stages of that with many of our U. S. Factories. So we do see on top of the product launches, the margin expansion mix opportunities there. Cost within the U. S. And North America, we still have significant opportunities over the coming 3 to 5 years around manufacturing costs, logistics costs, product development costs, etcetera, that will continue to help expand the margins within that business. All right. Over to the side, right side of the room, please. Good morning very much. Good morning. Thanks for taking my question. Kurt Nagel from Bank of America. I guess a question for you, Joe. Just hoping we could walk through the math of replacement in the U. S. Just so 10 years replacement on average. We're now cycling recession years where we saw pretty big drops in volume. So if we're cycling those years on lower volumes, I guess, why would we expect to see stable volumes? Shouldn't they go down, given that we're replacing lower volumes? Or I guess, is there another way to think about it? And then just as a secondary question, right? So past couple of quarters, volume has been pretty light, right, for a variety of reasons, I guess, we can all speculate on. But rest of the year, I guess, is what gives you confidence that we will see a reasonable ramp up this year and into next? Yes. In terms of the replacement, so we depicted a few slides in the deck to kind of show the trough in the recession years of 'eight, let's say, 2012, Play that for 10 years, that's 'eighteen through 'twenty two. We're kind of in it right now. We have seen some depression as a consequence and volatility. So I think that's accurate. But again, that's one of the drivers, right? The other 2 buckets, we think, have upside and continue to show strong fundamentals in terms of either employment, our consumer confidence, remodel spend. So that should help mitigate some of that negativity that we see there. We're watching it very closely, obviously. The other part that we see is our sell through with our customers. We think also gives some support to what that looks like going forward. That's not shipments. That's sell through at the register. And that's incomplete. It's not the full industry, but that also seems to be progressing kind of as we had anticipated. So those combined events make us look at it. And yes, we obviously have a range of 0 to negative 2 for 2019 for the industry. So it's not exactly a very overly positive number to begin with. We're saying it's kind of going to be a little bit depressed as a consequence to what you highlighted. Curtis, maybe just to add a little bit more color to this one because I think there's also clarification. On that chart which you referred to with replacement, that shows the total market. It does not show the replacement volume on that one because we want to show where the trough of the industry was and what you should expect going forward. Now to also give you a little bit more color, this 10 year average appliance lifecycle, think about a bell curve. It's a spread. And it's also very different by product categories. So typically we see shorter replacement cycles in laundry, a little bit long on refrigeration and cooking. But on average, you can basically do the math of 10 years. Right now, the way we look at it, replacement, yes, it's about 50%, 54%, 55% of the total market. Given that, if you just apply the 10 years, you're pretty much into year 2 of a trough, which you're now replacing. So we know already how it feels, but also if you know because you know what 'twenty what I meant, 'twenty nine, 'twenty 10, 'twenty 11 was, you know from going forward, it's not going to come down. It's going to be stable. So in a positive way, I say, I know I have a floor in the market because we know that is the product volume which is replaced. So 55% of my market is pretty reliable because of the stable NIM. Now once you get in the outer years, you get much more momentum from replacement because when you go against the growth rate. So to Joe's point is what we see right now, yes, there's not a lot of momentum coming out of replacement. We expected that because we're already in year 2 of a trough. What we saw in Q4 and Q1 was the other elements, the discretionary and the home related one, they were much softer than most people would have expected, particularly driven by the home sector, which was sluggish. Megan, please. Good morning. Megan McGrath from Buckingham Research. Mark, I'm going to push you a little on Europe. I appreciate the 8% walk and that you said you need to fix it and there's a time line. But what does it mean to be fixed? Can you give us a little bit more detail in your view what that means? Is that a margin number? Is that a return number? And have you given Gilles a timeline on when he needs to reach that number? And I'd love to hear it if you haven't. Did I give you a timeline? No, Megan. And first of all, fixing again, I start out with the 8% target. We know there's at least 2 of our competitors will publish their numbers at their own level. So it's not like and you know you have a fairly solid market position. Historically, never been at 8%, but we've been pretty close to 7% as a stand alone company. But we're in it as a stand alone company was also Med Level. So we know it's possible in this industry. So it's not some new number which is out there. It is possible. To really get to the full 8%, I believe it requires a lot of this built in growth because that's where the vast majority of profit is. I would put the fix it in 2 pieces. 1 is, obviously, we got to stop the bleeding, get to a breakeven and north of a breakeven. That largely comes from the actions which we announced in Q4. And as you'll show them, we are on track, okay? But there's a stop for bleeding and kind of stabilizing the business. But one which takes longer is rebuilding the build in and the premium business. So that by definition, you won't get that done in 1 or 2 years. In terms of our patience as a company, I'm not going to publicly talk about the timeline. But as you can also imagine, it's kind of because we get questions every quarter, our patience is not infinite. It is not. Not to put you under pressure, but All right. Other questions in the room? Anyone has not asked a question yet. Please, in the back corner. Mike Finichiro, PG and Fixed Income. On the Embraco sale proceeds, first off, on the Embraco sale, are there any regulatory hurdles remaining on closing the sale? And then a quick follow-up to that, could you provide a little more color on when those proceeds are expected to come in? Yes. I would say right now, again, as we've said, we expect the closure of the Braco deal to come in the near future. At this point in time, we have what we'd say is the final step is to get it through the European Commission, and we have a preliminary approval that's based on certain steps being taken by the buyer and being fulfilled. So we're waiting for that to happen. Once it's to that point of closing, the proceeds will come in a relatively short time thereafter depending on timing of the actual closure. And so it's within we expect to within less than a month receive proceeds and pay down the debt. So again, it will all happen relatively quickly once it goes forward. It's Peter Lawrence here from JPMorgan Asset Management. Sorry, it's another question on Europe and the road map to 8%. Firstly, Agile, on the volume uplift of 300 basis points, what assumptions are you making there on recovery in end markets like the UK and also any market share gains on your side? And secondly, on the built in uplift of 2 50 basis points, it's a big number. And I'm wondering, fine, it's going to take time, but what is your confidence in actually achieving that because your main competitor now has a well entrenched position in that market? As you say, it's long dated contracts. And also, you just don't have the brand recognition that they have, particularly in the German speaking world with AEG? So on the first bit, this has started. And this is basically we started the quarter for last year regaining contract, and this has been some major customers across Europe. And as we speak, we have made really significant progress. So in increasing the floor space, including in the UK, but also in across in the German countries or German speaking countries, we have in Central Europe. We had so as we speak, the main thing is recover the volume and the floor space we had, and this is happening. I do believe we need to strengthen this on the longer term to have a long term business plan with those customers. But honestly, with both the product pipeline we have and this work, I'm pretty confident. And the numbers we have seen so far, we are gaining share. In Q1 versus Q4, we are regaining share. It's visible in the numbers. So I'm confident in this one. The build it number is ambitious. I agree with you. However, the opportunity is there. And the number is not either completely out of the moon. It is definitely more growth than the rest of the portfolio, but that's still in a growth rate of our business that is in a high single digit number. So this is something I really believe we can achieve. We need the product and we're working on this, where this is the go to market, the logistic and this and we're putting in place. And I met in my 1st week a lot of those customers and they're impatient that we can grow with them. And this is in the UK, this is in Italy, this is in France. And of course, we have still a bigger party in Germany, which is the biggest market. We have back back, Bouknecht has a strong brand heritage. And in the past years, we have not always been able to leverage this as well as we could. So the 1st bucket, we'll get there. We'll get there with good sales, operational discipline and customer engagement. The second one, we'll get there as well. This is more a company enterprise initiative, but it's not a number that is totally in race. I repeat, it's a high single digit every year. It's we need to deliver year on year. But once the engine has started, we will get there and we'll accelerate. Peter, maybe just give a little bit more color on these two questions. One is on the short term volume regaining. Again, keep in mind, because the public number we lost last year close to 20% of our volume. So we are on track towards our 6%, and we would be standing here if we are not confident about that's the run rate. But it also tells you we're not done with 6% volume. To fully recover that volume, which you lost in the deleveraging, we have to it's going to be a 1 or 2 year progress. Or put it differently, if you don't see from JIRA mid single or high single digit number of growth, then we're not on track to regaining the volume. And again, it's not done with 1 or 2 quarters, and we have to get better on sustained pace. But I would say as you said, so far so good. And it's kind of 5 months behind us, we're in good shape from that perspective. But it's not done, to be very clear. But built in, 1st of all, also as I know you have to go a little bit back in history. In 2 0 7, Whirlpool, a standalone company, was the number 2 player in built in. So it's not a market which is alien to us. It's not a market where brands don't have pull. We know how to do it. But as you know very well, it takes a certain time because it's built in part of the reason why it's very profitable in Europe, it has many elements of a system business because it's a set of appliance which are delivered at the same time to a customer home. We have to design fits. We need to have a logistics perfect set up. These are trade partners. We have long time lines. So it's not just getting a flooring. You need to have an entire system business ready. But again, we've done that in past. It's not an easy one. I'm not minimizing that. But I would say there's still a lot of capabilities within our organization who remember that and know how to get it done. But it's not a Q1, Q2 fix it issue. David? Okay. Let's go back this way to Nel. Yes. David MacGregor at Longbow. A follow-up. One of the interesting developments that's occurring right now in the industry is this whole potentially transformational change to direct sale to the consumer. I'd be interested in, I think Mr. Brega talked about it on his slide with respect to the Brazilian business as being a major growth driver for him down there. But Mark, could you talk about direct to the consumer sales in North America? And just if you could dimension that for us now in terms of just how big it is and the size? And then when is the inflection point? And how do you deal with retailer opposition? Thanks. And let me maybe make first comment, and then I would also ask Joe to add a comment. So first of all, Inance, I start with the consumer. Consumers throughout the world, as Gregor pointed out, it's their choice in terms of where we want to buy. Do I want to buy traditional retail? Do I want to buy an e commerce player? Do I buy with OEM manufacturer direct? Just think about yourself as a consumer, there are many categories where you just look up a manufacturer website. In some cases, you expect it's your expectation that you sell direct. And by the way, it's already very present in the U. S. If you would go to a typical electronic retail in U. S, take a Best Buy. You will go through the entire floor. You would recognize that about 70% of that floor, not appliance Best Buy floor, you can also buy direct with a manufacturer. And again, I see that as a reflection of responding to consumer needs. To now tell you exactly how much we want to grow the business in North America and where, that is a little bit premature. But we have communicated 2 weeks ago, we're starting it. And by the way, we have done it for many years in KitchenAid's small domestic appliances. Now there are certain parts of the world where we think we can grow a bit faster, where it makes more sense. And there are certain areas of the world where we will take a more conservative approach. I would say back to Breger's presentation, you should expect Latin America will be one of our fastest countries or regions. I think we will see a business where we will have about 20% of our business direct to consumer. So that's where we see more dynamics. And there may be other parts of the world where we see different opportunities. I don't think North America will be leading that charge. But we've had a communication 2 weeks ago, we said we want to build the capabilities. We want to go direct because ultimately it's also we want to respond to what the consumer asks us for. Maybe the only add is people use the words direct to consumer and e commerce almost interchangeably. And to Braga's comments earlier, the e commerce side of things can be a marketplace, can be a pure play, can be a retailer, bricks and clicks. And then direct to consumer really from the manufacturer standpoint is also nuanced. Our goal is to be very successful in all channels, irrespective of what they are. Direct to consumer is a channel that consumers expect us to be in, based on the feedback they've given us. And so home delivery, service, technology are all assets to make sure we can do that very well. So that's kind of our goal there. And consumers then will choose based on their preferences and needs what's best for them. Mike Dahl from RBC again. I had 2 follow-up questions or a 2 part follow-up to Kurt and Ken's earlier questions. Just to circle back on the industry chart that was asked about with respect to replacement side. Yes, Mark, to be clear, within the other drivers, what is the assumption for new construction over that time period? That's question 1. And then in terms of the second question, there's a lot of uplift that's expected from mix, but in the broader kind of housing trends that we're seeing to the extent that volumes coming back, it's increasingly focused on the low end. You may not necessarily lose an appliance sale as that shift occurs, but certainly there could be a mix impact. So to what extent are you factoring in negative mix shift within housing towards entry level in your overall mix bucket? Thanks. Do you want to start? I mean, I can start. Just Mike, just maybe on the broader construction is probably a longer answer. And again, 1st of all, keeping in mind that is today a small part of a market, which is directly housing related. But of course, you have always indirect effects. As we've stated repeatedly, and if you look at the housing market total in U. S, from day 1 of a recovery recession, it was supply constraints. 1st, there were not lots, then there was no builders, then you didn't have lumber at one point, and you certainly didn't have over the last 6 years workers skilled workers to actually do the building. So it was massively supply constrained, coupled with tighter landing standards. What it led to is against still positive demographic trends and everything else, it led to an appreciation of home prices, which are faster than you would expect in the cycle. And that's just a reality. I mean, you saw a 5% increase last year in prior years. So you saw supply constrained markets with a price appreciation, which was more than you probably want to see for a healthy market. What we think we saw last year is the mortgage rate increase until Q3, which is still low in absolute terms, but it still came up 1.5 points, coupled with broader uncertainty led to kind of a softness of kind of in buyers coming to the market. We do see that coming back because the fundamental demographic trends are intact, okay, and more than intact. If you look at it in terms of population growth, household formation is still kind of a 40 year low. It's now slowly, slowly coming back. It comes back in the segments which you referred to is more of a mass and the low end of the entry buyer. But it is intact. I mean, from whatever angle you look at, you cannot come to another conclusion. The housing market still has quite a bit of runway. Keep also in mind, what most people don't even talk about, look at the age of rental stock and owned housing stock in U. S. Rental stock is now 40 years old. You all know, I mean, 40 year old rental stock, I mean, there is you can't just keep it forever. Or if you keep it very long either, it then drives the home improvement market or it will drive a new construction market. But rental and owned housing stock in U. S. Is at a historic high. So whereas put all facts together, that's why we said, with confidence, you cannot come to another conclusion that the U. S. Just to give them a demographic trend and the housing stock, you have to see a mark with €1,500,000 to €1,700,000 new housing. And we all know we're far away right now. It's still 1,200,000. But we're not planning for 1,500,000. We would love to see it. But it's if you just put all the parameters together, that is still what we would consider a healthy run rate for U. S. So to see right now 1.2%, what is it 1.2% or something, existing home sales of 5.19 is below where anybody would expect. But we also see it is going to recover, not only in the back half of this year, but also over time, from every angle we look at it. To your point, yes, we see and that's a positive. We see it as a positive, where entry buyer starts coming back. The household formation comes back in the market. Now that's the strength of our brand portfolio. We're not only selling generic KitchenAid. With Amana, what we have also in the entry segment of Vopul, that is a market we serve very well. And actually, you see now more and more of a national build is we have multiple portfolios. We have the right brand portfolio and we can mix up very nicely within the brand portfolio. So we are of course, we take that into account the mix, but we see it also with smiling face because we have a brand portfolio to serve all these segments. Other questions? On your right. Just one second. Kurt Angle, Making America. Go ahead. You both have time. Do a microphone. Megan McGrath, Buckingham. Just as a follow-up to that, we haven't really talked a lot about the competitive pricing environment in the U. S. You have your market share chart there. Can you talk to us a little bit about the importance of maintaining that market share in light of your 13% plus margin goal? Would you be willing to give up some share to reach that margin goal? Are you assuming that everyone continues to play nicely in the sandbox on pricing over the next couple of years? Joe, you want to start? Yes. From a pricing competition standpoint, I mean, the environment has been very competitive for a long period of time. So we expect that to continue. There's no real reason to expect otherwise, and we've not experienced really a different world in a decade. So everything we're doing in terms of launch, pricing analytics, things like that, expect that. And so we've been very successful in the last, let's say, 5 years or so, managing that and generating EBIT growth. So our plans are, I would say, more of the same and expect more of the same going forward. Maybe some of the discussion around new launches and different products in terms of services and things like that are a little different. But everything else, we expect to have a very disciplined system to how we manage price and how we look at analytics. That will continue. Maggie, maybe just to add into this one. As you know, we don't give forward looking statements on pricing. I think the way you need to look at market share and pricing. First of all, the last couple of years, I mean, you saw that we have for 6 years a very stable and very sound branded business. We also stated for the last 6 years is we when we look at particular more short term promotional and tactical opportunities, we look at value creation. Can we create value? And we're certainly not chasing what we would call a quick stand market share, which you quickly gain and quickly lose. We're looking for the sound structural market share business in our branded side. And that's what we've been doing very consistently. And I think that's our strategy. So we're and also take into account the chart which I showed at the very beginning of leading country scale, market share is a strategic asset, but you also need to be very smart about which strategic assets you want to build and protect, and you're not going to go for any short term wins, which may never create some value. So yes, it's a key focus, but if we consider it a strategic asset, it needs to be earned over time. And we've done that very well in the last 5 years. On the competitive pricing, now this is a highly competitive environment. It just has been, will be and as such you need to be of course smart in how you operate it. And we've demonstrated the last 6 years. So I don't think the competitive intensity will anyway go down. The flip side is also you need to keep in mind, current round of pricing was driven by massive material cost increases. And I know some of you are speculating how quickly our material costs coming down. We had €650,000,000 inflation. And all we talk about right now is that the increase, the further increase may slow down. So the rationale for why we had to do pricing is intact, and that is not going to go away very quickly. Yes. Curt Nagel, Thank You For America. What is your current share or I guess the sales penetration in the U. S. For builders? I guess how does that compare peak to trough? And clearly, it's a business that requires a lot of scale and is defendable. But have any of your competitors tried to make inroads, I guess, the guys ex GE? I mean, probably can't get into a lot of details in terms of what we expect for competitors and what to happen in the future. But I would say that channel of distribution builder is equally as competitive and has been, has some different characteristics in terms of how you fulfill the channel. And generally speaking, we want to be successful in all channels. So we've over the last 5, 10 years made a concerted effort to had good balance across all the channels so that we can win as the channel grows or frankly mitigate it when it doesn't. And so we're pleased with our business there, but it's a lot of work to continue to maintain it. And so we're always looking to get better there. But generally speaking, that channel behaves just like retail in terms of its competitiveness, Slightly different assets required, but competitiveness would be the same. Kurt, maybe just additional color. So the builders market or segment, as people refer to, you got to think about 2 pieces. The one piece is more of a smaller, medium sized builders, which very often go through the Pro Business or ProDesk of home improvement channel or Ferguson, whatever. So there's a pro business, which we don't serve directly. It goes through our other channels where we it's hard to calibrate, but we have a pretty good understanding. And these are very much similar competitors as we see in our spaces. Of the big national builders, I would say overall there are less players in the field. And that's very strongly driven because it is as much as the product requirements, it's a significant logistics capability because you need to deliver an entire set of appliances, very often in a 2 or 3 hour time window to the construction site. You don't do that on a spot by spot base. So very often these national builders are multiyear contracts. These multiyear contracts are typically either with 1 exclusive supplier or 2. So it's a much more concentrated business. And as such, you would see less players. And you mentioned GE. GE and us, we are the largest player in that segment. Frankly, we have not seen, despite a lot of talk, a lot of dramatic moves in that segment in terms of new entrants or whatever. In the middle please. Go ahead Ken. Ken Zener, KeyBanc. I'm looking at Slide 12, which says unique structural position, best cost position seems important. Could you not pass up this opportunity and really talk about these mega factories, which you have 6 in the 2017. Just kind of talk about what we should be assuming is the margin dispersion? And guess it's good news, no one's talked about tariffs today and new plants in the U. S. I think that makes sense in light of your recent margins. But Clyde has, I believe, a 5,000,000 capacity. Other new plants in the U. S. That have opened from competitors have had 1,000,000. I mean, can you please flush out to the extent you can what scale means specifically or just some details that you haven't shared yet from that Slide 12? Thank you. Ken, you successfully embedded 2 or 3 questions So let me in particular let's talk about laundry as one example. So yes, our Clyde factory is about 4000000 to 5000000 capacity. That's just washers. We have as you know, Marion is similar sized dryer, so this is just washers, which is by a long shot the largest. And if you compare it to the 2nd in the U. S, it's about twice to more than 3 times the size of the number 2 in U. S. So we have a significant scale advantage. I would say when we talk about these large mega factories or in client in particular, there's a hard scale dimension. And rule of thumb has been always just the hard scale, typically doubling the volume, we have about 3 point benefits or advantage. But it's much more than pure scale. I mean, it's just a bill it takes some time to build a capable workforce. I mean, particularly when we talk about deploying some of the tools like world class manufacturing, etcetera, it's not anymore that you evolve. I train you for 2 hours and you get them aligned and done. Having a capable workforce, which also not an ongoing production, which can introduce new products, which can launch new products is a non trivial matter. So it's more than just the scale, it's also the experience curve. And don't underestimate this one. That's why people just look at the numbers. But having an experienced workforce, having a training system in place is a big deal. And that provides benefits way beyond the pure the hardcore scale benefit. All right. One final question from David MacGregor. Yes, thanks. David MacGregor, Longbow. Question for Joe, I guess. On Page 39, you had talked about the levers to expand margins to 13% -plus in North America. And at various points through the discussion here this morning, we've touched on a few of these. But I wonder if you could just make reference to that slide and just rank order for us maybe the 2 or 3 largest or most impactful that you would expect to play out from that list. And maybe you have already, if that's the case, say so. But just help us understand, as we look at 6 or 7 different points here, what are the 3 that are most impactful? Thank you. Yes. I mean, obviously, that slide is important to us. That's kind of the growth levers as we've detailed them. Product mix, we buy and large sell products, right? So when we launch innovation, when we launch new feature sets, that's always going to be a big contributor to our margin. So that's always going to be primary for us. And so things like the KitchenAid oven, things like the laundry front load machines that we talked about, you have differences there. You have some things that are high end on the KitchenAid brand that generate, obviously, a good business for us. And then you have laundry, which is a big category for the industry, as well as for Whirlpool. And so that generates quite a bit of value there. Our ability to be effective on our pricing and merchandising is always going to be a sensitive one for us. We have a lot of units that we sell annually. So the sharper we are, can always increase incremental value. That's a big one. And then I think some of these areas that we've talked about that are new and growing along with Yumly connected products, some services that we touched on, maybe in a little bit of a more diverse bucket, but they're all immature and growing. That should all be incremental for us as we're not in those businesses or those categories today. Those are probably the bigger ones. From a cost standpoint, we're certainly a big company, an industrial company that has a lot of opportunity. Mark touched on the manufacturing side of things. In the slides preceding that showed the quality and the productivity side of things. So that's going to be a very big bucket, hard to dimensionalize here in this discussion. But obviously, given the amount of things we touch, number of units we touch in dollars associated, if we can become sharper there, that's going to be a big contributor going forward. All right. We'll pass it over to Mark for closing remarks, and then I'll wrap the presentation. First of all, again, thanks for coming here. Thanks also for these questions here. I'm not going to cover a number of slides. I just want to come back to where we started out this discussion. First of all, this meeting is not about updating our guidance. I want to repeat, we are on track. I think Ken mentioned the tariffs. Whatever noise was around tariffs, first of all, I think there's maybe too much noise about tariffs. But we were very, very clear in our Q1 earnings call, we factored that possibility already into our original guidance. So by definition, it has not changed. So we're well on track. We're confident about business, and that confidence has not changed in the last 4 weeks since we have the earnings call. So that's the good news. We really want to spend the time here, and that's what you had at the beginning of the slide is talking about why we believe Whirlpool is a great long term investment and why we can bring the company to a different level. It starts over a structured position. And again, Metz just in a certain way, I inherited for 108 years. It took a long time to build it, but it's an incredible asset. But the real big part is what you saw what Joe presented is this the broad transformation for our company, not only on products, on services, how we go to market, how we talk to consumers down to the factors. That is a fairly massive undertaking. And to what we alluded to earlier, it will lead to a different business model. And of course, a business model where we expect high margins. And that's why we do this whole strategic transformation. You also saw on the other side, if you go region by region, there are a lot of opportunities to further create value in the respective regions. In some cases, it comes on the back of market growth. In some other cases, it comes on our own improvement like in Europe. So I think there's plenty of opportunities kind of region we're not relying on just one region across all regions to further expand the margins. So that's why we gave the targets which we gave, and that's why we're committed to these targets. So with that in mind, again, thank you very much for coming. Great pleasure, good questions and safe travels back home. Thanks a lot. On your way out, please grab lunch. It will be set in just about 3 minutes. Also, we have a small gift for you. And once again, on behalf of the entire Whirlpool team, we do thank you. Safe travels.

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