Chris Conley - Senior Director, IR Jeff Fettig - Chairman and CEO Marc Bitzer - President and COO Mike Todman - Vice Chairman Larry Venturelli - EVP and CFO.

Denise Chai - Bank of America Merrill Lynch Robert Wetenhall - RBC Capital Markets Sam Darkatsh - Raymond James Michael Rehaut - JP Morgan Securities David MacGregor - Longbow Research Megan McGrath - MKM Partners Ken Zener - KeyBanc Capital Eric Bosshard - Cleveland Research.

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

Thank you and good morning. Welcome to the Whirlpool Corporation third quarter 2015 conference call. Joining me today are Jeff Fettig, our Chairman and CEO; Vice Chairman, Mike Todman; President and Chief Operating Officer, Marc Bitzer; as well as Larry Venturelli, our Chief Financial Officer.

Our remarks today track with the presentation available on the Investors section of our web site at whirlpoolcorp.com. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Whirlpool Corporation's future expectations.

Our actual results could differ materially from those statements due to many factors discussed in our latest 10-K and our other periodic reports as well as on slide one and in the appendix of this presentation. Turning to slide two, we want to remind you, that today's presentation includes non-GAAP measures.

We believe these measures are important indicators of our operations, as they exclude items that may not be indicative of or unrelated to results from our ongoing business operations. We also think these adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations.

Listeners are directed to the appendix section of our presentation, beginning on slide 37, for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. With that, let me turn the call over to Jeff..

Well good morning everyone and thank you for joining us today. As you saw on our press release this morning, we reported record revenue, ongoing operating profit and earnings per share for the third quarter.

Our integration activities in both Europe and Asia continue to progress well, and we expect to continue to deliver significant integration benefits during the fourth quarter. And during the quarter, our larger global operating platform, enable us to offset continued volatility in the global economic environment.

If you'd now turn to slide 5, we will look at our third quarter results; you will see where we delivered strong revenue growth in the third quarter with the revenues up 9% versus last year, and up nearly 25% if you exclude the impact of currency.

Ongoing business earnings were a record $3.45 a share and additionally our free cash flow improved compared to the prior year. On slide 6, you can see an update to our current year regional margin expectations versus last year. Here we expect substantial operating margin improvement and record performance in three out of our four regional businesses.

Those three being North America, Europe and Asia. These regions are clearly on track for the year, and we are making meaningful progress towards our 2018 goals.

In Latin America and in Brazil specifically, we have taken actions to address the current market challenges, and we expect to continue to adjust as appropriate, to deliver margin improvements in this very challenging environment during the fourth quarter. Turning to slide 7, we are outlining our current industry demand expectations for the full year.

Based on recent demand trends, we are revising upward our North America business to a 5% growth. We are lowering our Latin America forecast to a minus 20% decline, and we are lowering Asia to a 2% decline, primarily coming from China.

Turning to slide 8, we are affirming the lower range of our previous guidance, which reflects the current currency in emerging market demand levels. We now expect to deliver record ongoing earnings of $12 to $12.50 per share and free cash flow of $600 million to $700 million for the year.

Globally, we continue to pursue opportunities for both growth and margin expansion. Including leveraging our newly introduced innovative products in many markets around the world, executing on ongoing cost productivity programs and delivering on our acquisition synergies.

So in summary, we are making significant progress towards our long range goals this year, despite a very challenging global economic environment with negative impacts of currency in emerging market demand.

But having said that, we do expect to deliver a record year of revenues and ongoing earnings and earnings per share, along with strong free cash flow in 2015. Before I move on to the regional sections, I would like to make a few comments on the leadership announcements we made earlier this week.

On Wednesday, our Vice Chairman, Mike Todman has announced his planned retirement at the end of the year. We also announced that Marc Bitzer has been promoted to President and Chief Operating Officer for our company.

First of all, I'd like to take the opportunity to thank Mike for his more than 20 years of service to the company, serving in a wide variety of global leadership roles. Mike is leaving us with a strong legacy within our company as an enabler of our global expansion, and he has had a very positive impact on our entire global enterprise.

Although Mike will be greatly missed, we all want to wish him the very best for he and his family in his retirement. At the same time, I am also very pleased to have Marc move in to his new role, and I am confident that under his leadership, we will have a very positive impact, as we continue to execute our long term strategy.

So at this point, I am going to turn it over to Marc Bitzer..

Thanks Jeff and good morning everyone. Let me begin on slide 10 by reviewing North America's performance in the third quarter. Overall, we are pleased that our third quarter performance, which included record ongoing operating margins of 12%.

As you might recall, at the beginning of the year, we provided ongoing operating margin expectations of 10.5% to 11.5% for the year, and in this quarter, we have [indiscernible] deliver at the top end of that range.

Very strong operating margins in the third quarter, but primarily driven by our ongoing cost productivity programs and new product introductions, which more than offset nearly $30 million in unfavorable currency impacts.

Our net sales of $2.8 billion for North America were unchanged compared to the prior year period and up nearly 3% excluding currency. While we are pleased with our margins, we are obviously not satisfied with our top line performance, which has been trailing the market for several quarters.

Up until now, our priority has been on the expansion of operating margins and we are very pleased with the result of that execution. Our focus in the fourth quarter and beyond will be on delivering strong margins, while clearly accelerating plans to achieve our expected revenue growth targets.

Turning to slide 11, we outline our actions taken to continue delivering strong results in the region. We believe the industry is in a middle of a multiyear growth cycle, which in combination, has historically strong seasonal demand in the fourth quarter, positions us for a record performance this year.

As mentioned previously, we expect to accelerate our plan to leverage the increase in consumer demand for our new products, drive improved price mix and volume growth in the fourth quarter. And finally, we will continue to deploy strong cost productivity plans, as well as focus on growing outside the core.

On slide 12, as an example of our product leadership, you can see our new multi-door Whirlpool branded refrigerator. This award winning product has nine storage zones and is designed to keep food organized to each family's preference.

I will now share the third quarter results for our Europe, Middle East and Africa region, as shown on slide 14; sales were $1.5 billion compared to $0.8 billion in the prior year, driven by the acquisition and continued recovery in the Western European demand.

Ongoing operating profit was a third quarter record of $71 million, with ongoing operating margins at 4.9% compared to $9 million and 1.2% in the third quarter of 2014.

During the third quarter, strong execution of our integration plans and ongoing cost productivity more than offset approximately $45 million in unfavorable currency impact, primarily from the Euro and Ruble, that delivered yet another quarter of significantly expanded operating margins.

Slide 15, as we look toward the full year 2015, our priorities remain unchanged. There is a strong focus on integration activities, ongoing cost productivity and growth from new products, both within and beyond the core.

Slide 16, as an example of product leadership in region, you can see our new Whirlpool branded washing machine and dryer, with products combining Precision Cleaning, the Eco-Friendly Drying and have recently won the prestigious European iF design awards. And now, I would like to turn it over to Mike..

Thanks Marc. Let me begin with our Latin America results on slide 18; as you may recall on our Q2 call, we expected demand to be down 15% and their AI to be between 3 and 3.25. During the quarter, the macro environment in Brazil further deteriorated with increased inflation, volatile currency and lower demand.

As a result, sales for the quarter were $751 million, down 34% from the same prior year period. Excluding the impact of currency, sales decreased 7%. Our operating profit for the quarter totaled $31 million or 4.2% of sales, which represents operating margin consistent with our second quarter results.

These results included a year-over-year unfavorable operating profit impact of nearly $40 million due to currency, and another $55 million due to reduced demand and lower production levels compared to prior year.

These were partially offset by favorability from our previously announced cost based price increases and mix improvements from new product introductions. On slides 19 and 20, we want to put our Latin America business in context, by providing additional detail about Latin America and Brazil specifically.

Brazil's currency is experiencing the most volatile period in the last 10 years. In the third quarter, compared to the prior year, the reais devalued 55% versus the U.S. dollar, which had an approximately $300 million negative impact on our regional net sales, and as I mentioned earlier, a $40 million negative impact on operating profit.

Additionally, the deepening political crisis, increased inflation and falling global commodity prices has had a profound impact on Brazil's economy, and as a result, overall GDP is in the steepest decline since the global financial crisis. On slide 20, we put Brazil's performance further into the context of the region.

It is important to note that our LAR international Extend and Expand businesses, as well as the global compressor business are delivering solid performance this year, and with the impact of this year's currency devaluation and demand reductions, Brazil now represents less than 10% of our global sales.

To improve our performance in Brazil, we have fully deployed previously announced actions, and those actions have ally offset the impacts of currency and demand in the third quarter. We are prepared to take additional actions as necessary, targeting fixed cost reductions in the near future.

While, we will be lower than our long term margin expectations for Latin America, we believe we have the right actions to address the operating environment and expect improved operating margin in the fourth quarter. On slide 21, we summarize our current priorities in Latin America.

We are managing short term challenges through previously announced and executed cost base price increases. We have fully deployed previously announced actions to reduce fixed costs and have plans to deploy additional actions in the fourth quarter as necessary.

Finally, its important to remember, that while we are experiencing some short term issues in Brazil, long term fundamentals that will facilitate future growth in the country are still intact. We continue to invest in new products and will be well positioned to capitalized on growth, when demand returns.

Turning to slide 22, we are showcasing the new console refrigerator, that is designed with flexibility in mind. It offers adjustable shelving, and built-in containers that fit the needs of even the most demanding consumers.

Now I will turn to our third quarter results in the Asia region, which are shown on slide 24; net sales were $346 million, in comparison to $157 million in the prior year period, driven largely by the strength of our integration actions, we have delivered a record third quarter ongoing operating profit of $27 million.

Ongoing operating margins were 7.7%, up significantly compared to the prior period, behind the benefits of those integration actions and record gross margins in India.

Turning to slide 25, we will continue to focus on our integration activities in China, with a special emphasis on continued distribution expansion and ongoing cost productivity programs. As a result, we will expect strong margin performance, driven by our larger growth platform.

Slide 26, we highlight our new Whirlpool refrigerator, that recently won the good design award for excellence in form and function. It offers food preservation with some of our most advanced moisture control and precision cooling technologies. Now I'd like to turn it over to Larry..

Thanks Mike and good morning everyone. Let me start with our third quarter results on slides 28 and 29. As Jeff mentioned, we had record net sales and ongoing operating profit during the quarter. Our revenues were $5.3 billion compared to $4.8 billion during the same prior year period, an increase of over 9%.

Currencies impacted our revenues by over $700 million, EBIT margins by two points, and net earnings by over $1 per share. As a result of the actions we took in the first half of the year, to mitigate currency and emerging market demand headwinds, we saw solid sequential improvement, in both our margins and earnings during the quarter.

Our recent acquisitions have strengthened our global footprint, and provide greater diversification of our regional profit contribution.

This combined with cost and capacity reductions, ongoing cost productivity and an active cost base pricing actions, enabled us to deliver all time record ongoing earnings of $3.45 per share, despite weaknesses in emerging markets.

Allow me to make a few more detailed points on our financial results; we adjusted our third quarter ongoing earnings for $42 million, primarily to account for product warranty and liability expenses on heritage Indesit products.

In addition, we adjusted our opening balance sheet for the Indesit acquisition, to reflect the warranty liability of approximately $275 million, with after-tax impact of about $220 million. We expect to substantially complete any actions related to these products by the end of 2017. SG&A as a percentage of sales on a GAAP basis increased slightly.

This increase is due to higher brand investment, acquisition related costs and the deleveraging effect of weaker demand in Brazil. We do however expect SG&A margins to return to prior year levels, as we realized integration synergies to additional fixed reductions and higher volumes in the fourth quarter.

Interest and sundry expense was better than a year ago, primarily due to higher acquisition and legal costs in the prior year. Finally, as shown on slide 29, and consistent with the range we previously provided, our effective tax rate year-to-date is now approximately 22%. This adjustment was made during the quarter.

On slide 30, we are narrowing the range of our previous guidance to incorporate incremental currency and emerging market demand risk. We now expect to deliver ongoing earnings of $12 to $12.50 per share.

As Jeff mentioned, we are now forecasting approximately $600 million to $700 million in free cash flow, which includes $75 million to $100 million in working capital investments to support international product transitions.

Turning to slide 31, let me make some additional comments regarding our ongoing EBIT margin; the solid sequential margin improvement delivered during the third quarter is expected to continue into the fourth quarter as we exit the year.

We expect continued improvement in price mix, driven by the actions we have taken throughout the year and our new product launches, and we are firmly on track with our cost and productivity reduction initiatives, and expect continued improvement in ongoing productivity during the fourth quarter.

In summary, we expect margins to improve sequentially and for the full year, despite currency and emerging market demand headwinds. On slide 32, you can see an update on the progress of our restructuring and integration activities in both Europe and Asia.

We incurred $145 million in restructuring expense and realized $135 million in benefits year-to-date, which was consistent with our expectations. For the full year, we now expect $230 million in expense, and $200 million in benefits. It is important to note that the reduced expense forecast has had no impact on our synergy benefits that we expect.

As we continue to grow revenues and improve margins, we have clear priorities to deploy the cash generated from our business as shown on slide 33.

Given our profitable growth trends, increased investment capacity and strong balance sheet, we continue to balance funding from all aspects of our business, to ensure the best long term value creation for our shareholders. I'd like to turn it back over to Jeff..

Thank you, Larry. Let me add a few final comments about our view of the business and expectations for the year. This month, it has actually only been a year ago, where we closed on the acquisition of Hefei Sanyo in China and Indesit in Europe, what I believe are two historic acquisitions that is helping to transform our global footprint.

Throughout this year and 2015, we have seen emerging market demand significantly decline and the U.S. dollar rapidly strengthen against most of the currencies where we have significant exposure to. Most notably, the Brazilian reai, the Euro, the Canadian dollar and the Russian ruble.

Given the significant economic shocks this year, we believe that currencies have experienced a global reset, and we are prepared to operate this changed environment going forward.

Let me try to put this reset in perspective for you; currency alone is expect to impact us by reducing our revenues by over $2.5 billion versus the last year, and have a negative $4 per share and earnings per share compared to last year. And the impact from declining emerging market demand will cost us additional $1.75 per share.

In total, currency in emerging market demands fundamentally versus last year, has cost us $5.75. But because of our larger global platform and our rapid responses to market change, we have been able to absorb both of these impacts and are on track to deliver record revenues in earnings along with free cash flow this year.

Putting a longer term perspective actually to turn to slide 36, where we outlined the actions which we introduced late last year, which we believe are key to deliver our long term growth value creation strategy, and they really, in our view, remain unchanged.

And today, we continue to see multiple paths for profitable growth going forward, and today, we also have very high confidence, that our growth plan is giving us an outstanding opportunity to continue to deliver significant shareholder returns, as we continue to execute these long range plans.

We will update all investors in detail on our 2016 expectations, as well as our progress towards our 2018 goals on our next earnings call in late January. That ends our formal remarks, and I'd like to open this up for questions..

[Operator Instructions]. And we can take our first question from Denise Chai with Bank of America. Please go ahead..

Okay. Thanks for taking my question, and congratulations Marc and all the best to you Mike..

Thank you, Denise..

Thanks. So I know you have always been more focused on margins that on market share, and when we look at North America, you had such a tough comparison last year. But this quarter, the variance with AHAM was really outsized, and you also listed your industry guidance for the year.

So what was behind the variance with AHAM and as you -- you said you are going to be shifting your focus a little bit more back to, I guess market share.

Are you looking to maintain share or to regain lost share?.

Denise, it's Marc. So let me maybe expand a little bit. I will talk about margin, and our balance of margin versus revenues. Obviously, and I have stated that before, we are very pleased with the margins that we have achieved.

12% operating margins, that means we are pretty much now the twice the level of our key competitors, [indiscernible] profit, and I also would like to emphasize that 12% without any volume leverage. So it just gives you a good indication of how strong the underlying business is from a gross margin and the entire cost structure.

As much as I am pleased with the margin progress, we would be lying if we say we are satisfied with the revenue. We are not, okay, and we -- so far folks have been strong in margin expansion, and going forward, we will find a good balance between margin, a healthy margin profile and revenue growth.

So to be more specific on revenue growth, us trading Q3 versus market, its not what we intend. There are a number of reasons, and I am not going to get into all the reasons, but more important thing is, any constraint which we had so far is behind us, and we are right now, operating what I would call in a normal constrained environment.

I.e., we have normal availability of products, normal capacity, that's behind us. It should not give us any reason why we don't achieve a revenue growth which we have in mind for Q4..

Denise, this is Jeff, I'd just add to that. And again, as Marc clearly outlined, our priority to create value was first to fix the margins. We are on a great track to having done that, then grow, and I would say in supporting Marc's point, we have the tools to grow.

We believe in earning market share, not buying market share and I think we are in a great position to do that going forward..

Okay, great. Thank you. And just one more on LatAm, you have taken so much price, but volumes were a lot worse than we were expecting.

So are you losing share in that market, and how much are your competitor's raising price? And also at some point, do you focus on market share in Brazil?.

Denise, let me address that. First of all, the market in Brazil was down by 27% in the quarter, so the market was fairly negative. And the fact of the matter is, that's just -- there is an impact on consumer demand, and so -- less consumers alike. Having said that, we are focused on both margin and share.

We did lose couple of points a share in the quarter, but not significant, and we think we had the right plans in place with some of our product launches and the work that we are doing in order to recover that share. So we see that as a very short term item.

So I can't comment on what the competitors are doing, but we continue to do what we think is necessary from a pricing perspective and taking out costs to make sure that we maintain our margins..

Denise, I'd say our profile in the total Latin America country wise is different than others, so it really depends on your country profile. I'd say, without a question, I think in Brazil, we are relative to our competitive Brazil market, where despite the difficulties, we are in a strong as a position as we have ever been..

Denise Chai:.

I would just add Denise, keep in mind that in Brazil, we have been leading pricing increases and there is always a lag related to that..

Got it. Thank you..

And we will take our next question from Robert Wetenhall with RBC Capital Markets..

Hey. Good morning..

Good morning..

Hey, just wanted to focus on North America.

It looks like unit volumes were flat year-over-year, and it seems like industry shipments are kind of mid-single digit growth; and I think that would suggest that, you guys would have very strong volumes going into fourth quarter, and I just wanted to see if I am thinking about that right; do you see a good spike in volumes, both on a sequential and on a year-over-year basis in North America?.

So Robert its Marc, let me first come to Q3 and then we can talk about Q4. In Q3, our volumes have been flat to very slightly down, which also implies that despite Canada and everything else, we had stable to slightly positive price mix, which is, I would say good achievement in a very competitive environment.

But ultimately in Q3, we lost market share, even though as always and as we made comments in previous times, our units aren't exactly comparable to T6 or T7 market share, because there is more in our volumes than just T6 and T7. There is also Canada, Mexico, small domestic, etcetera.

Anyhow, having said about Q3, we lost market share -- there are certain elements of different shipment patterns between Q3 and Q4 last year, so that gives a little bit of a tailwind in Q4. But above and beyond, and more importantly, it’s the -- final but fully effective for new product launches, which give us momentum in Q4..

Got it. And then, taking from that, you had a very strong third quarter margin performance in North America, 12% plus, and that's also at the -- above your full year guidance, top of the range for 11 to 11.5.

So should we expect to see very robust margin performance in the fourth quarter ast well?.

Robert, as I stated in the previous comments, we expect to be at the top end of that range. Again in context, we gave 10.5 to 11.5. If you just do the arithmetic math, yes, we are at the very top end of that range. I think from a structure margin run rate, we do not expect any surprise, but the question is, how much volume leverage can be captured..

Got it. And if I could just sneak one more in, can you give a little color in terms of what you are seeing on industry growth trends in Europe and Asia year-to-date, and how kind of organic volumes are trending versus your expectations? Thanks very much..

So Robert, it's Marc again. I am going to give a comment on Europe and then Mike will give a comment on Asia. On Europe, again it’s a split market, if you want to say. But Eastern European market demand continues to be very slow and very much down, which is driven by Russia and Ukraine.

As we know, these markets are also historically very volatile markets, so its always difficult to predict how long they will be down.

Historically, we didn't see these markets to be down on an extended timing, but right now, year-to-date, they are down significantly, and keep also in mind that the acquisition we have a much higher footprint and exposure in these Eastern European countries, compared to previous years.

The western side, on the other side, I would say its stronger than anticipated. The most markets are in a very healthy and robust phase.

But totally, if you add the two numbers together, that's basically 0% to 2% forecast and I would say right now, if Western Europe sustains, then we would be probably at the high side of that range, and that's what we would expect it from today's perspective..

Okay, Robert. Just to give a little perspective on Asia. As you know, we took the Asia forecast down to about minus two, and that's largely driven by China. China has been slower in terms of market events than we expected, kind of coming into the year.

Its at around minus 4% right now, and for that market, it’s a big decline, although in general terms its not and we don't think that it should have a significant impact on our business. India is a little bit different.

We have had a couple of quarters of fairly strong market demand and then the third quarter more, because of seasonal issues it reduced. But we think India will stabilize at a small growth, and that's why we have about a minus two for the year..

And we will take our next question from Sam Darkatsh with Raymond James. Please go ahead..

Good morning Jeff, Marc, Larry and Mike how are you?.

Good morning..

Good, Sam..

And Marc, congratulations and Mike congratulations to you as well, and it was a pleasure working with you over the years..

Thank you..

Thank you, Sam..

Couple of questions.

First clarification, Marc, if I could peg you on this, what specifically were core shipments in the U.S., as it relates to AHAM comparable?.

Sam, its Marc. The key seven, as we look at it, is a plus 8.1% in Q3. That's basically -- and given our guidance of 5%, then you can make the math what it basically implies for Q4, i.e., 4% to 5% in that ballpark. That's what we -- again referring to the key seven units that's consistent with what we previously communicated..

That's the industry. I was looking for your units in the third quarter..

Our units in the third quarter were almost minus 0.6%. All in, keep in mind, that's more than T7 versus significant impact for Canada in -- their Canadian market is very soft, and there is also impact for Mexico in there..

Well, I was specifically looking for T7, when you guys were doing in T7 in the quarter?.

Sam as you know, we don't typically drill down by U.S. T7 numbers. Directionally flat, slightly -- very-very slightly up, but its not to a level of a market..

Got you. And two more quick questions if I could, can you give an update, Marc, in terms of the $170 million in acquisition integration savings that you had originally planned for 2016 over 2015.

What is that number now, based on currencies and volumes and what have you and how much of that actually do you expect to translate down to the bottom line?.

This is Larry. Let's first talk 2015, even with weaknesses in the Euro, we will exceed our 2015 synergy target. At Investor Day we did show 2016 our expectations between 2015 and 2016 would be approximately $170 million.

We will update that, but we continue to believe we are going to have some really strong synergies in 2016, consistent with what we have talked about in the past..

And Sam, it's Marc again. Just to add to that response; first of all, we will hit or even exceed the dollar synergy target, which means in local currency, we are actually quite a bit ahead of the original communicated plan. Given that synergies build over time, it shows -- gives you a lot of confidence going into 2016.

So far, our integration is running very well and we remain fully committed and confident behind the numbers that we showed at Investor Day and communicate subsequently..

Thank you. Last question if I could, Larry; you took the free cash flow expectations lower for the year, but you took your CapEx and restructuring cash outlays lower also.

I imagine as some of that might be slightly lower net income, but what is the other variable that I am missing in terms of -- like free cash flow is going down now versus prior expectations?.

Yeah I think the point I made in my remarks Sam was, we are going to carry a little bit higher inventory than originally expected, and that's primarily due to international product transitions, and that's obviously a timing issue..

That's already on the books, or that's planned into 4Q also?.

Well in the fourth quarter, a little bit higher in inventory than we previously said..

Got it. Thank you very much gentlemen..

We will take our next question from Michael Rehaut with JP Morgan. Please go ahead..

Thanks. Good morning everyone and congrats also to Marc and best of luck to you Mike..

Thank you..

The first question, I just -- I guess you [indiscernible] in a couple questions on this already, but I think its going to be -- one of the big focuses coming out of the call and I am referring to North America margins versus volume, and Marc, you kind of mentioned that.

You still expect to generate healthy margins, and you have done a lot of heavy lifting in terms of really strong improvement over the last two years.

But at this point, it kind of sounds like you are shifting the pendulum a little bit back in the other direction, where you are still going to -- like you said, have healthy margins, but try and achieve some better revenue growth and it sounds like you were maybe a little disappointed with 3Q.

Is that the right way to think about it? In other words, the 12% that you have got into 3Q, should we kind of think about that as more or less a high water mark, and maybe when you say, still healthy margins, maybe that could be something a little less than that for next year?.

Michael, its Marc. These are obviously several questions embedded in one question, and obviously we don't give guidance at this point for next year. So first of all, on high watermark on peak margins. Keep in minds, the number that are floating around half a year ago, I presume peak margins, we have already proven.

And I don't want to nail down whatever is the peak margin. But the only thing which I want to reemphasize, we achieved 12% in Q3 without any volume leverage, which is a big deal.

Having said that, and you mentioned that its not margin versus volume its margin and volume, and I think ultimately for us, it means a better balance between margin expansion and volume growth.

Its not margin versus revenue, its margin expansion versus volume growth, and to be very honest, yeah, we will put a strong emphasis on revenue growth without diluting our strong margin profile..

Okay. So in other words, I guess embedded in my first question, what was lacking there was that -- you can't necessarily think about giving up margin, because you are kind of ignoring the leverage benefits from the better volume and as you said, you are still hoping to hold on to the margin levels and maybe just dial back the expansion from here.

Did I understand that right?.

First of all, again, we are not going to give a 2016 margin guidance, and I am not going to try to say we will hold the margin. [Indiscernible] our emphasis on margin expansion versus revenue growth, and that's what we will kind of carefully balance going forward..

Okay. Appreciate it..

Michael, just keep in mind, the longer term goals for North America, back in December were 12 plus. We are at -- as Marc mentioned, we will be at the higher end of this year in the range of 10.5 to 11.5. So we are very much on track with the longer term perspective of the company, and to Marc's point, we will balance that with revenue growth..

That's there. Appreciate it. Just a few technical questions I guess; you mentioned about the progress with Indesit and at this year, you're exceeding your synergy target. I believe you'd called for $80 million and as you said, $170 million, which will be updated.

If you are exceeding this year, and you still remain on track for the full amount of $350 million over the next three years, does that mean that -- maybe you could give us a sense of where you are in 2015 versus the 80 originally expected, and in effect, we should think that perhaps you are holding on to the full $350 million, but some of 2016 is coming into 2015?.

Michael, its Marc. Let me try to answer. So first of all on the $80 million, you are correct, that's mostly anticipated restructuring benefit in U.S. dollars. We are in U.S. dollars at the $80 million or slightly above, which means also, compared to our original euro assumption, we are actually trading quite a bit ahead from operating synergies.

And again keep in mind, euro is our operating currency in Europe. So I mean, from an -- everyday, what we deliver from synergies, it looks very good. Which also means yes, we are confident on the previously stated $170 million and we are confident on the previously stated $350 million.

The other thing that you got to bear in mind, what we did not anticipate coming in the year, but we have been able to mitigate it for additional actions, there are significant currency issues in Europe, that comes from a weaker euro, because you have a lot of dollar buy in Europe, largely from China, and other Asian areas, and particularly with Ruble and from [indiscernible].

So we have massive currency headwinds. Again I am very pleased that through better synergies and better ongoing cost productivity, we have been fully able to mitigate kind of any currency headwinds.

And if you drill down the European number, what I am particularly pleased with is, the massive margin progress year-over-year is very healthy between gross margin benefits and SG&A improvements. So we are kind of fitting in on both sides..

And Michael to be clear, because you have talked about in both markets. In terms of our direction, that's why we put the margin chart in this. North America, Europe and Asia are falling on track, and I would say also falling on track on our 2018 long range goals.

The outlier this year from a regional business, has been Latin America, because of -- again I won't repeat, the currency and the decline in the market, we are dealing with that.

But in terms of the expectations, we maybe getting there a slightly different way in Europe, more synergies offset by current transactional currency costs and things like that, but directionally, all three of these regional businesses are on track for a record year and are on track for our 2018 long range goals..

All right. One last one if I could, the tax rate, I believe and then I believe I will hop off. The tax rate guidance at 22%, I guess that's now at the low end of the prior range of 22% to 25% if I have that right.

Is that a number, that 22 now for 2015 that we can use for 2016 all else equal, or there are other some one time things and we should think of a tax rate of 22% to 25% long term for the company?.

Again Michael, its kind of hard to forecast really long term tax rates. But I would say, going into next year, we would expect our range to be what we stated at the beginning of this year, a similar range..

Okay. Thank you..

We will take our next question from David MacGregor with Longbow Research. David, please check the mute function on your phone..

Yeah, there we go. Sorry about that. Good morning everyone..

Good morning David..

I guess, I think Michael had the right point, this is truly -- North America is going to be the focal point of the call, wanted to better understand, just some of the moving parts here.

It seems as though you don't want to break out Canada and Mexico, maybe just this one point, you may want to make an exception on that, just because it seems to be such a core concern for investors today. But I want to understand kind of the price mix being up 350 basis points and I think gross margins in North America, about 200 basis points.

It looks like maybe you are walking away from some unprofitable business, but maybe you could just peel back a little bit and give us a little more color on the moving parts there..

David, its Marc Bitzer. Again in terms of the specific breakdown on Canada, Mexico, we won't provide details, but however I will you a couple of hints, which we will also present at the investor conference.

Canada historically has been a $1 billion business for us roughly, that's what we showed -- depending on the currency, that's what we showed all semester day. If you look at the exchange rates, you basically had to do about 25% or almost 30% devaluation over last 18 months.

So just do a math on the entire year North America business, it gives you a sense about how much of revenues we are losing in Canada. To a much smaller extent, but still to an extent, you have Mexico also, but our Mexican business is not the same size as Canada.

So yes that has been impacting, but the reality is, we don't have sufficient growth -- didn't have sufficient growth in Q3 on our U.S. core business, and that's what we will change going forward..

So are you walking away from a profitable business and maybe just talk a little bit about U.S.

or domestic market share?.

I mean, David, I wouldn't say we are walking from unprofitable business. I would say, it’s a combination of two things; one, we have not yet found a full leverage of all our new products, as we talked a lot about the massive amount of product introductions, the Kitchen Aids, the new VBL.

So we don't yet have the full leverage of all different products in the market. And yes, there is also elements -- as always, there are certain promotions which are non-value creating. We only participate in what value creating promotions, and there has been a slightly higher promotion pressure by certain competitors, more imports in the markets..

So how much of the apparent share losses occurring on long weekend sales of that is versus day-to-day business?.

David, we don't drill it down by promotional times and regular business. But if you connect it back to my previous comments, yes, there has been a slightly higher promotional pressure by certain imports, and that typically comes with extended promotion periods and deeper discounts from promotions..

I just noticed, that upon the expiration of these retail sales events, MSRPs are popping right back into map line, which would suggest that most of this promotion is happening on sales events.

So I am just wondering if that's where your share vulnerability lies?.

Not entirely David. Again, typically, yes you would expect during certain promotions, our share may not be exactly the same as during non-promotion periods..

And David, I would say that pattern has not changed on the heavily promoted, particularly the ones that -- the major holidays. We would typically lose share and we bounce right back afterwards.

And that pattern hasn't really changed, but I would just say to Marc's point is that certain competitors turn weekend promotions into month long promotions, and that has been a little bit more problematic and we are figuring out ways to deal with it, and we will, and I'd also like to point out that our -- again, I feel very good about the tools we have available.

We had some issues to get them all available in the marketplace. As you know, this time of the year, you don't change [indiscernible] everyday, so we are working customer-by-customer and again, I believe we are in a great position to grow and candidly with our good margin structure, its very value creating for us to grow..

And we will take our next question from Megan McGrath with MKM Partners. Please go ahead..

Good morning. Thanks. I guess, just to drill down on this a little bit more, and then I am going to move to Brazil.

But one of the things, Marc, you just said is obviously on the promotions, and then you sort of mentioned you haven't found full leverage of the new products, and you have had a pretty robust slate of new products, let's say for the past 10 months or so.

Can you point to any reasons why you think those new products haven't taken off as fast as you thought? Is it just because the promotional environment has been higher, or have there been execution issues with getting them out? Can you dig deeper a little bit into that one for us?.

So Megan, let me try to address the two points, promotion and the new products. Just to be very clear, our new products, the way how we look at the new products, when we floor and do a turn, I do a sell-through, and that is going very well.

I think the uplift, which we get, whenever we have our new products floored, is we are very pleased, to a point where, we sometimes even have capacity constraints.

When I talk about the leverage, yes, I mean, as we refer to all the previous calls, there has been a slight delay on how we ramped up the new product, how we get the full production capacity. That impacts the pace at which you can flow the product and subsequently the sell through.

But the important thing is, whenever we have a flow, it sells very well and we are very pleased and that's what gives us a lot of confidence going forward. On the promotions, it’s the same comments as before.

We are participating than we believe we can create value with certain promotions, and in Q3, there have probably been a slightly higher share of promotions, which we would consider clearly non-value creating..

And then, can you then walk us through why you think 4Q is going to be different?.

First of all, we know what is our ramp up pace of the new product. We know how many were floored and this retail concentration which we have in North America is pretty -- you can't predict pretty well -- depending on the floored units, what rotation you get, and we have a good indication rotation.

Obviously, we also have a certain order pipeline that we know and have a pretty good sense, October-November, that gives us a lot of confidence, and we are certain, as I hinted before. There are certain seasonality elements between Q3, Q4 last year, which are slightly different this year.

So a combination of these three factors give us the confidence we have for revenue growth in Q4..

Okay. Thank you. That's helpful. And then shifting really quickly to Brazil, I guess one of the things I am trying to get a handle on here is -- I know, I think last quarter, the quarter before you presented the chart around GDP and how it usually bounces back and obviously we are not seeing a bounce back.

So what's different in your strategy now, as you look at Brazil versus your strategy three months ago?.

Well Megan, I'd say, our strategy is unchanged. We are essentially executing what we said we were, which is new product introductions and innovations. But we are having to -- and managing our brands in the marketplace, the way we have talked about it. What we have had to do though, is react to a volatile environment.

And so, when currency changes, then we have to react to that, when demand goes down, we have to react to that, and our ability to react to that has been very quick. And so we have managed that. The difference in the Brazil environment right now than I think in some of the past, is you have a political crisis going on now as well.

And so, that has just introduced kind of another factor, which has driven some volatility. What I can tell you is, I feel really good about our ability to respond to that, our ability to -- if you will, change our business profile quickly, but continue to execute our long term strategy.

That hasn't changed at all, and I am confident that as we manage through this, we will see improvements in our margins, and when growth returns, we will really like the answer..

Okay. Thank you..

We will take our next question from Ken Zener with KeyBanc Capital..

Good morning gentlemen..

Good morning Ken..

Apologize if there is background noise. Look, I think in America, you guys are going to be focused on profitable growth that you are talking about. So Marc, if you could just say, you ran some degree short of your metric [indiscernible].

What percent of that was -- if you don't want to give us market share, how much of that was self-inflicted? Self-inflicted meaning you had products ramping up, etcetera, as opposed to the promotional.

Would you say half of it was self-inflicted half of it was promotional?.

Ken its Marc. We don't break down how much of a market share was self-inflicted that you call versus promotional environment. At the end of the year, it was market share in a competitive environment, by definition you do 100% in a competitive environment.

However I would say, directionally about half of it has been driven by certain constraints, which are under our control, but the other half is particularly focused on certain product categories, where we had a slightly higher promotional pressure intensity by certain imports..

Okay. And then what would you say, relative to that competitive import pressure; because I believe the tariff review for a large residential loss, which is one of the two effective complaint you guys filed, was actually reduced.

Could you comment on that?.

So first of all, Ken, and without getting into the details of a dumping discussion, the previous dumping cases which we won, there is a very important aspect; the tariff, referring to certain countries and reductions, some of the imports have shifted their production source.

What is in our view, a certain mention on efforts of trying to circumvent the existing tariff, we have been, I think on the investor conference, we have been talking about it that we monitored very closely.

And yes, there is a strong correlation between the promotion intensity and where this production has been shifting to, and we are observing it very closely, monitoring very closely. But I don't want to, at this point, reveal what we have or might have as an anti-dumping strategy going forward..

Understood. Jeff, if we look at LatAm, so your margins as we enter the year, when you guys took guidance from 2014 to 2015, down to 12 to 13. [Indiscernible] to Brazil about currency and demands continue to fall.

If we were to sit in that April quarter, your view was that you were going to be ramping up in the second half, towards the longer term 8% to 9% of EBIT. That was deferred obviously in 2Q as reported, because demand is fading. You thought it would be exiting the year, at 8 or 9.

And now it says that, you guys, while not giving 2016 guidance, talk about it being below that long term growth rates.

Could you give us an understanding of how that long term growth EBIT margin is actually impacted by the contraction we had within that core market being Brazil? Is it possible to hit that 8 to 9 if you just don't have the volume? Because you are not going to go in and restructure your whole footprint, like you have done in various regions.

So are we really shooting at -- if volume is down 30%, let's just say it is [indiscernible] are we going to be sitting more at a 6% to 7% from the total segment?.

Ken, to your point and particularly in Brazil; but there is a few other countries also, I would -- to Latin America.

We have literally seen three waves so far this year of currency devaluation, which there is a first quarter wave, and then it stabilized for a while, and then there is a second quarter wave and now the third quarter wave, and we have seen the currency from last year go from an average of about 2.30 to 2.35 to now almost 4, and obviously no one forecasted that and nor did the financial markets forecast that.

Now with that, then came an accelerated decline of demand, and those comped, as you can, in a rapidly changing economy like that, you know right now, and all of our forecasts are updated to 20% down in Brazil and about a 4.0 reais and based on that, we are very confident about increasing our margins and forecasting and so on and so forth.

What we really need to see is stability, whether in currency and demand, whatever levels they are; because we adjust, and we have adjusted very rapidly every quarter to these exchanges, but we are chasing a down market right now.

Is it going to stabilize in the fourth quarter, I don't know, but to your bigger question, maybe your medium term question is, whatever the reais is and whatever demand levels are, its down 20% or 30%, once it stabilizes, I absolutely believe, given our market position, given our brand equity, we will, number one, continue to have a very strong share position of their share and we will be able to drive at least 8% plus margins, because that's a choice and that's what we would choose to do.

The key is, it’s the rapid profound volatility that you have to adjust to, and it doesn't take us years to adjust, we adjust now within months. We just still -- but we'd have to adjust several times. And so what we really need to do is just wherever the bottom is, see stability, we will start building margins back up from there..

I appreciate that. And I am going to ask another follow-up question related to LatAm, and if you could -- comfortable to expand on it. Marc, you highlighted Canada at your investor day was $1 billion, there is currency that has changed.

Jeff, Marc or Mike, do you guys do the same for LatAm in terms of -- you had Brazil at the same point in December 2014.

Could you tell us what percent of LatAm it is today, and if you would, directionally, talk about margins I guess within that segment being brought outside of Brazil, and Brazil, if you would -- because I think on the increment, people are really trying to understand is, if you are looking for stability in Brazil, you haven't found it yet, but we also want to understand how Brazil is different than those two other pockets that I just mentioned, because that's also going to point to the stability, if those businesses exchange table, and are deteriorating.

Thank you very much..

Ken, maybe let me just take a quick shot at that. If you go back to our presentation, we kind of gave you a view, 2014 and then to 2015, what sales look like if you broke them down in LatAm and what the percentages were.

What it showed is the compressor business went from 32% to 37% of our LatAm business, that are -- Extend and Expand in international went from 15 to 22, and then it showed that Brazil core went from 53 to 41. So you can see kind of what the rebalancing in sales have been.

I can tell you that our compressor business continue to perform, and the margins in our compressor business are exactly where we thought they would be. And remember, this is a global compressor business.

So yes, it has some impact in LatAm and it has an impact in some other regions of the world, but there is some balance, because it also provides product in North America and Europe, etcetera, etcetera. So the margins in that, we have been able to manage, and they are very good.

Our LAR international and Extend and Expand businesses have also performed very well in this environment, and are delivering increases in both sales and we are taking market share in LAR International as well as maintaining a very high margin level.

So the reality is, as we look at the rebalancing, the impact of Brazil core has become less and less on the total. And so we are pretty confident that we are continue to perform in those other businesses, and that's going to allow us to perform in Latin America..

And we will take our next question from Eric Bosshard with Cleveland Research..

Thank you.

Two things, first of all, in terms of material cost savings, input savings, if you could update us on 2015 and some thoughts on 2016, and also curious on how you think about those savings relative to the investments that you are considering within the North American business?.

Yeah Eric, this is Larry, we have said in the last call that we expect raw material benefits of around $100 million and if trends were to continue, we'd expect it to be north of that, and certainly we would say would be north of that. Its also important for 2015. Its also important to note that, many of the currencies around the world are U.S.

dollar based. So when you are in emerging markets, there is a partial currency offset to that. But based on rates we are seeing right now, we'd say north of $100 million for 2015..

And Eric, going into next year, if current trends hold, we will see some further improvement. Based on today's rate, wouldn't be as much next year as this year, because we are already accruing some of those benefits this year. But we have activities.

We have productivity activities, we have continued -- the way we look at it is called total cost productivity, which includes not all raw materials, but productivity programs as well as our restructuring synergy. So we are very positive about our ability to generate those next year.

We have not -- again, I don't necessarily buy the question, leading to the -- we are going to spend margin money in the marketplace. We are going to be competitive in the marketplace. We have got the right tools, we have got great innovation, great brands, and I fully expect that we will do it in a value creating way..

With that, we will wrap up the call for today. We would like to thank everybody for your participation, and we will talk to you again..

Thank you everyone for joining us and we will look forward to talking to you next time..

And this does conclude today's program. We thank you for your participation. You may now disconnect. Have a great day..