Max Tunnicliff - Senior Director of Investor Relations Marc Bitzer - Chief Executive Officer James Peters - Chief Financial Officer.

Michael Rehaut - JPMorgan Securities Samuel Eisner - Goldman Sachs & Co. Robert Wetenhall - RBC Capital Markets Susan Maklari - Credit Suisse Securities Sam Darkatsh - Raymond James & Associates Curtis Nagle - Bank of America Merrill Lynch David MacGregor - Longbow Research Kenneth Zener - KeyBanc Capital Markets.

Good morning, and welcome to the Whirlpool Corporation's Third Quarter 2017 Earnings Release Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Senior Director of Investor Relations, Max Tunnicliff..

Thank you and good morning. Welcome to our third quarter 2017 conference call. Joining me today are Marc Bitzer, our Chief Executive Officer, and Jim Peters, our Chief Financial Officer. Our remarks today track with the presentation available on the Investors section of our website at whirlpool.com.

Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Whirlpool Corporation's future expectations.

Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and our other periodic reports as well as on Slide 2 of the presentation. Turning to Slide 3, we want to remind you that today's presentation includes non-GAAP measures.

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

Listeners are directed to the supplemental information package posted on the Investor Relations section of our website for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. At this time, all participants are in listen-only mode. Following our prepared remarks, the call will be opened for analyst questions.

As a reminder, we ask that participants ask no more than two questions. With that, let me turn the call over to Marc..

Well thanks, and good morning everyone. On Slide 5 you will see the highlights of this quarter. As we noted in our press release, in the third quarter we delivered revenue growth in line with our long-term goals and delivered free cash flow improvements versus the prior year, primarily driven by strong working capital improvements.

Our GAAP earnings increased $0.62 above last year and our ongoing earnings per share of a $3.83 compared to $3.66 in the prior year an increase of 5%. Our global operating margins were negatively impacted by two items, significant raw material inflation and price mix weakness including a slow progress on our European integration.

In response to these challenges, we are announcing strong actions to put us back on track to deliver our long-term goals. We will be executing a series of recently announced Global cost based price increases throughout the fourth quarter and the first quarter of 2018 to fully offset the impact of the sustained global raw material inflation.

The price increases are expected to impact more than half of our business. We are also announcing a new cost takeout initiatives which will further streamline our global fixed cost base. This initiative primarily impact our overhead costs including salary headcount and third-party services and is an addition to our ongoing cost productivity programs.

Finally, we remain confident in the strength of our free cash flow and repurchased $200 million of common stock this quarter, which brings our year-to-date repurchases to $550 million or $125 million above sustained prior year period. Turning to Slide 6, we show our third quarter financial results as they relate to our long-term goals.

We delivered revenue growth of more than 3% during the quarter and in consistent with our prior expectations we expect to deliver full-year revenue growth in line with our long-term target of 3% to 5%. EBIT margins were 6.6%, a decline of 80 basis points compared to the same prior year period driven by raw material inflation and price mixed weakness.

We now expected to deliver EBIT margin of 6.5% both full-year due to slight increased raw material cost expectation and second half price mix challenges. Free cash flow improved by approximately 120 million throughout the third quarter as we continue to focus on inventory optimization.

We now expect to deliver free cash flow of approximately $900 million this year due to lower earnings than previously anticipated. On Slide 7, we show drivers of third quarter margin performance.

Price mix negatively impacted margins by approximately 150 basis points compared to the prior year and was partially offset by approximately 100 basis points of margin contribution from cost takeout. I will provide more detail on these items on the next two slides.

Finally, currency was a slight headwind during this quarter due to British pound weakness versus the euro. Turning to Slide 8, we will provide more detail on our price mix performance and expectation. In total, third quarter price mix was unfavorable by 150 basis points.

Our North America region delivered flat price mix during the quarter and we continued to expect the full-year impact to be slightly negative in that region.

Price mix in Europe was unfavorable during the quarter, as we continued reducing our obsolete inventory related to brand transition, which was compounded by currency related pricing pressure in the UK. We continue to expect that price mix in Europe will be unfavorable for full-year due to these challenges.

In Latin America, the investor in Brazil shifted toward washer and away from refrigeration in the quarter, which had an unfavorable impact of price mix. However, we believe it represents a very temporary shift primarily impacting the third quarter and we continue to expect favorable full-year price mix in Latin America.

We also continue to experience significant price mix pressure in China, primarily due to investor weakness and related promotion intensity. We expect this pressure from China to negatively impact our full-year marks in Asia, despite very strong performance in India.

Overall, price mix has been a challenge for us this year and we have initiated strong actions to reverse that trend in 2018. We recently announced new global cost base pricing to offset the continuous impact of raw material inflation.

This initiative effect our major appliance business across all regions and is expected to impacting more than half of our total company revenue. We have already announced price increase in a number of key countries including United States, Brazil, most of Europe, and China.

These price increases do not impact our laundry business in U.S., but we will continue to monitor the pending trade action covering washers and take appropriate steps to manage the business. Turning to Slide 9, we provide more details on our cost takeout performance and expectation.

During the third quarter, we delivered approximately $100 million of cost productivity and approximately 25 million of restructuring benefit. These benefit offset approximately 75 million of raw material inflation.

Net cost takeout contributed approximately 100 basis points for our EBIT margin for the quarter as productivity was slightly lower than initially anticipated.

Going forward, we expect to deliver approximately 350 million of cost productivity in 2017 as slow progress in Europe and volume weakness in China result in 50 million less productivity for full-year.

We now expect that approximately $375 million of raw material inflation this year and approximately $600 million of combined raw material inflation of 2017 and 2018. As a result, in addition to our pricing action, we have announced a new $150 million fixed cost reduction initiative.

This initiative primarily impact our overhead cost including salary headcount and third-party services. This is set separate from and in addition to our ongoing cost productivity program which we will continue to utilize going forward as a catalyst for margin expansion.

With that, I would like to turn it over to Jim Peters to review our region and financial results..

Thanks, Marc and good morning everyone. Turning to Slide 11, we review the third quarter results for our North America region. Net sales were $3 billion an increase of 5% versus the prior year. This growth was driven by continued market share gain and industry growth in the U.S. as well as strong performance in Canada.

We reported solid margins of 11.7% for the quarter in line with our full-year guidance of 11.5% to 12%. Compared to the prior year, margins were impacted by elevated raw material inflation of approximately $30 million which resulted in an unfavorable margin impact of approximately 90 basis points.

We were able to offset the majority of that impact through a continued focus on cost productivity and unit volume growth. Through the third quarter, the U.S. industry is growing 3.5% compared to the prior year, which is in line with our expectation and we expect strong fourth quarter industry growth.

We continue to expect 4% to 6% growth for the full-year and currently see the industry trending to the lower end of that range. We are pleased with our North America performance in the third quarter and we are confident in the underlying strength of our business. We expect to deliver the lower end of our full-year margin goals to 11.5% to 12%.

On Slide 12, we review the third quarter results for our Europe, Middle East and Africa region. Net sales were $1.3 billion down 4% versus the prior year. We delivered sequential operating profit improvement of $11 million as product availability and overall system stabilization continue to improve.

Compared to the prior year, our operating margins were negatively impacted by approximately $20 million of raw material inflation which impacted margins by approximately 150 basis points. We also experienced unfavorable currency of approximately $10 million. Our [indiscernible] integration efforts are progressing slowly.

In particular, we continue to focus on reducing our inventory levels, which continues to be elevated as a result of product transition. For the full-year, we now expect to deliver 0.5% operating margin due to larger than expected currency and raw material headwind and the impact of the ongoing integration.

We have taken steps this year to ensure that the vast majority of our brand transition and supply chain challenges are behind us as we enter 2018. Turning to Slide 13, we have reviewed the third quarter results for our Latin America region. Net sales were $849 million, an increase of 6% versus the prior year.

Operating profit was $53 million and margins increased 50 basis points versus the prior year. For the first time in more than a year we saw industry growth in Brazil in line with our expectations. this growth was primarily in washers which created price mix pressure on our margin.

We also experienced $15 million of raw material inflation which impacted our margins by 175 basis points. Despite these challenges we expanded margins to strong operational performance.

We continue to expect the industry to be flat for the full-year as the industry is starting to show signs of growth in Brazil and we remain confident that we are well positioned to benefit from manufacturing leverage and drive further margin improvement as the industry volumes begins to return.

We now expect to deliver 7% operating margin for the full-year reflecting the impact of unfavorable price mix in the second half. We now turn to the third quarter results of our Asia region, which are shown on Slide 14. Net sales were $357 million versus $338 million in the prior year period.

Operating profit of $2 million and operating margins were 0.6%. We delivered record performance in India with very strong levels of growth, continued market share gain and market expansion. We continue to benefit from demand growth and favorable demographic and we are well positioned for continued success in India.

Raw material inflation of approximately $10 million negatively impacted margins by approximately 275 basis points in the quarter. Majority of that impact was on our Chinese business. Price mix remain challenging directly related to continued demand weakness in China.

We continue to expect flat to 2% industry growth for full-year with favorable demand in India offset by significant weakness in China. We continue to expect margins to improve sequentially in the fourth quarter, but our exit rate in Asia will be below our prior expectation. We now expect to deliver 2.5% ongoing operating margin for the year.

Turning to Slide 16, we review our updated guidance assumption. We are revising our ongoing EBIT margin guidance for approximately 6.5%. We now expect our full-year effective tax rate to be approximately 15%. Overall, we now expect to deliver ongoing earnings of $13.60 to $13.90 per share.

We are also adjusting our full-year free cash flow guidance to approximately $900 million driven by lower earnings than previously expected. Turning to Slide 17, we detailed drivers of our updated free cash flow guidance.

We are making progress as expected on working capital and we now expect to generate approximately $300 million in free cash flow through our working capital initiative. On Slide 18, we provide an update on our cash flow and capital allocation priority.

We continued our share purchase program in year-to-date of repurchase $550 million, a $125 million increase over the same prior year period.

The strength of our balance sheet and more than $2 billion share we purchased authorization has provided ample of flexibility to execute share buyback and we intend to continue repurchasing shares in the fourth quarter at a similar rate for recent quarter while remaining committed to our balanced approach to capital allocation.

Now, I would like to turn it back over to Marc..

Thanks Jim. Turning to Slide 20. I would like to recap our progress towards each of our 2017 business priority.

Our year-to-date revenue growth is in line with our long-term goal; however our margins have been below our expectations this year and we continued to deliver significant free cash flow improvement remain full impact to deliver 90% free cash flow conversion.

This is my first earnings call as CEO and in light of this quarter’s results, I want to take a moment to step back and discuss my cooperating principles. I’m proud to have been part of this management team for several years and while I don’t expect to make radical changes, I’m not satisfied of our performance or predictability this year.

As a global company, there are macro factors which impact our business that we can’t control, we will prepare for them while ensuring to remained focus on within our control, [indiscernible] cost, productivity and price mix plus innovation remains core of our company.

We will continue to make great products that consumers want to buy, and will continue to fully invest in our strong brands and products. And we strive for increased accountability and speed as we execute our priorities.

And as a management team, we will execute the strategic and tactical actions necessary to create long-term value remain firmly committed to achieve our long-term goals, and in particular of our long-term value creation goals we presented to you in April. Now, I would like to end our formal remarks and open it up for questions..

[Operator Instructions]. We will take our first question from Michael Rehaut of JPMorgan. Your line is open..

Thanks, good morning everyone, and quite a first quarter conference call for you Marc. It's going to be little rocky I guess near-term.

First question, you might have seen there is news out this morning that Sears discontinuing to sell Whirlpool appliances, and it appears through the press it's related to pricing dispute which intern appears to perhaps being to be related to the price increases that you have just announced I'm assuming.

I was wondering if you could discuss couple of things on this. Number one, there is a lot of questions out there around roughly what Whirlpool's branded exposure is to Sears? And secondly.

maybe if you take a on a broader basis, the confidence that you have in your ability to implement and realize these price increases over the next couple of quarters?.

Michael, let me give the answer in two sections, Sears and the broad pricing one. Obviously we have seen the article in Wallstreet Journal and we don't get into the details of the reasons why. What we can say is that in line with our contractual obligations, we did inform Sears in May that we would no longer supply Whirlpool branded products.

As we simply we could not reach terms that were acceptable to both parties. Now just to avoid any confusion, we are continue to supply 10 more branded products to Sears and this applies fully to our branded business.

To give you a perspective of magnitude, the entire Sears business has declined overtime and now represents about 3% of our global business, of which the branded portion is only the small fraction and I will give you a little bit perspective on this one. Now let me make a broader comment on the price increases.

As I said in the prepared remarks, it is our intention to fully recover raw material cost increases over two years with the price increase which was just announced. The reason why we are confident behind this one, we have done in the past cost based price increases whenever we are faced with the significant material headwinds.

Particularly in market like U.S. and Brazil, we have been very successful and the sustained commitment, the sustained drive we are executing now what we have just recently announced.

We have full confidence in the price increase we have experienced and we have experienced team in both U.S., Brazil and other markets which can drive that makes us more confident..

Thank you, Marc I appreciate that. I'm going to shift to another area and I'm sure there will be other follow-ups on Sears. Just shifting to Europe for a moment, obviously another area of challenge for the company and very slight improvement sequentially over the last few quarters, but obviously well below what you are looking for.

I noticed that you raised your working capital cash flow and I'm curious if part of the near-term pain in turning this around is due to perhaps an acceleration of some of the excess inventory in the channel that you referred to last quarter in terms of skew rationalization et cetera and how to think about where you are in this process and if this is a one or two quarter fix or is this a one or two year fix?.

Yes, Michael and this is Jim. I think first off your assumption is correct that in Q3, we still did feel the impact of our product transitions and our reduction of inventory as we have moved through those.

Additionally, within the third quarter obviously we had weak demand in the UK and currency impact as well as inflated of raw material prices you know we talk about.

So if you look at the actions we have implemented, again we will be through the inventory reduction by the end of this year within - we are implementing price increases there right now that we have talked about and then we are driving fixed cost takeout.

So I think in the near next couple of quarters, near-term that will begin to improve the margin and continue the margin expansion quarter-over-quarter rate that we have seen in fact accelerate that rate..

And Michael, it’s Marc. Maybe in addition to Jim’s comment. First of all, we did sequentially improve our margins in Europe, and we will also going forward. Having said that, we are not pleased with the pace of our progress and we would have expected more. You are absolutely right that the obsolete inventory is a key factor.

To put then in perspective, a year ago, we had roughly 12000 different SPUs in Europe, today we have 7000 and in that process we pretty much changed 80% of all SPUs which were sold. So of course, we want to sell the obsolete inventory as quick as possible and don’t want to carry that inventory, that has a significant impact.

The other impact is still we are not pleased with the progress of our UK pricing execution and that is something which we are addressing this different intensity, but these are the key drivers, the progress is there, but slow than we anticipated..

We will take our next question from Samuel Eisner from Goldman Sachs..

Yes, thanks. Good morning, everyone.

So maybe sticking with the UK pricing story, I mean [indiscernible] certainly continued to the value fear and so perhaps you can talk about the competitive dynamics with our [indiscernible] in that marking, how positive you are and actually getting these price increase, I know you guys try to kind of reduce the regain mechanism, but how intense is the competition, is it as fierce as it is in North America with the Korea just maybe an overall kind of update on what you are seeing in that market?.

Sam, its Marc. So I’m obviously not trying to speculate about what the competitive might do or will do. I can comment on what we have been doing, what we are seeing from a marketplace. Obviously this British pound now sliding, there is some up and down over 50 [months] (Ph).

Whatever we first put out as price increase clearly what not sufficient, because the pound has sort of deteriorated and we can speculate about British pound may do going forward. But it is clear that the first increases were not remote enough to cover this at the same slide of British pound.

That’s why we have announced additional price increases, so that is already out in the announcement. What makes for UK market is somewhat challenging is a very concentrated trade environment and that makes price increase a little bit more challenging.

The flip side is we have a very strong brand positioning and that these are [indiscernible] where we can drive it, but of course it needs more effort, competitive dynamic are different than in U.S. we are just a different player. They may have different currency exposures and again I don’t want to speculate about what they might to be doing or not..

Alright. And then perhaps transitioning to the tax rate a pretty large delta there of 400 that I think its saving you about $50 million of cash flow for this year. Long-term tax rate for the company is over 20%, so how should we think about the medium term implications of or medium term cash flow for you guys as it relates to taxes. Thanks..

Yes, and Sam this is Jim. In terms of the tax rate and obviously it's been driven by some of our strategic tax planning things in that.

Right now we don't comment on any of the future of that, but we still believe that our longer term rate is in the low 20 some percent around 22% as we have said before and I think from a cash flow perspective that's the best way to think about it, because that's pretty close to what our cash tax rate is..

We will take our next question from Bob Wetenhall of RBC Capital Markets..

Hey good morning and thanks for the detail. I wanted to ask about pricing. The last time, Whirlpool got a lot of price whereas in 2012 which coincided with a lot of raw material inflation and since then price has been flat to negative on a consistent basis.

And so it sounds like going forward, pricing is going to be lynched in towards restoring profitability and margin strength.

I wanted to ask on the pricing specifically, if you raise prices, why do you think competitors will follow given the competitive landscape and if they don't how do you intend to protect volumes and market share?.

Bob, it's Marc. And again obviously we don't want to give any speculations about what competitors might do or will be doing. Let me maybe just step a little bit broader context with a size increase and a first off its raw material increases.

As we all know coming into the year we were expecting raw material headwinds of $100 million to $150 million which would return to $150 million then $300 million. And then we saw that [indiscernible] is not showing any relief it will be around 350 and not 375.

What has more changed is our outlook for next year, coming into this year we hinted would have expected significantly less raw material increase for the next year. And by now, we are talking about $600 million for two years, i.e. more than $200 million for next year.

So what has really changed is our view of raw material are going to change to a positive in the short-term, and at one point we just got a face reality.

Now you could argue while it took us a long time to get to this conclusion, but frankly some of the outlook for 2018 has only changed for the last six to eight weeks in particular investments in steels, but also in some other raw materials which are important for us like zinc which has just gone through the roof.

So we are going up off price increases. I can just judge from the past and again I'm not trying to speculate what is going forward, you referred from a 2011-2012 price increases which were also cost based. It ultimately starts with us [indiscernible] do the right things for us based on our cost situation and that's what we are trying to recover.

Judging from the past, you need to be prepared to lose some volume from some time. But usually it is not over an extended time period. Again, that is just judging from the past, we got to be seeing what is happening this time, [indiscernible] it was a raw material, it's inescapable to some extent for everybody..

And Bob, judging from the past too, typically in most cases our margin improvements through these cost based price increases has more than offset any potential volume loss..

Got it. And you guys you have reaffirmed your 2020 financial target. And obviously you have had three consecutive quarters where you have cut guidance. Can you give us some margin walk into 2018 given the fact that recent performance has fallen short of company expectations.

What gives you confident both going into 2018 from a margin walk perspective and your long-term objective to 2020 that you can get there given the fact that there is a lot of environmental challenges like RMI and kind of a difficulty integration in Europe whereas this confident coming from given recent performance. Thanks to good luck..

Yes and thanks Bob and this is Jim. I would say to begin with the first thing that is different from the last time we talked about our margin walk from now until 2020 is that we have announced significant cost based pricing and since then we had deterioration in materials.

We now announced the cost based pricing to offset that, which we were planning on offsetting it before just with ongoing cost productivity. Additionally, we have announced 150 million of fixed cost takeout on top of our ongoing cost productivity.

o these are both new levers that we would include in our walk from where are today to our 2020 10% plus EBIT goal.

Outside of that, we are confident in the other measures that we have in there and including ongoing cost productivity, our ability to realize margins through pricing mix outside of the price increase and our volume growth that we still believe demand is healthy in many of the markets around the world and there is potential for demand recovery in emerging market..

Bob, its Marc. Let me maybe just add all to given that you mentioned our 2020 long-term value creation goals. Jim and myself were both of communicating that in January and then in April when we all met in [Europe] (Ph) that we are fully staying behind this. We have been part of developing this target and we are not going to back off.

I know given that it’s my first the old call on earnings call, probably will be an easy one put some question marks behind this one, but we don’t. We are fully behind it, we are committed which also means we for next without getting any 2018 guidance. Our entire focus will be on margin expansion and we need to catch up what we lost this year..

We will take our next question from Susan Maklari of Credit Suisse. Your line is open..

Thank you. Good morning. Going back to the Sears topic for a bit.

Can you just give us some sense, I know that you said branded is a small portion of the total there and given that they had several months to prepare, but what is the inventory position in that? How quickly shall we think about that actually moving through and how do you think about shifting that volume to your other customers?.

Susan, its Marc and again as you know we usually don’t want to give too many specific details on our trade relation of trade strategy. Having said that, I said early in the first question from Michael, I said entire Sears business is about 3% of our global revenue base, the branded business is a very small portion of that.

So in terms of the impact what it means to shifting it, to be honest it’s not a whole up, and that’s the honest answer, relative to our North American business volume, these are volumes which are not a major issue.

In terms of your inventory question, again these are Sears specific questions which only Sears can answer, but I think the common known fact that Sears does not hold lot of inventory..

Okay. And then thinking about 2018 and perhaps some of the changes that could come in terms of the competitive environment, given some other reasons ruling from the government and that that proceeding on.

Can you talk to perhaps how quickly do you think you could ramp production in 2018 if demand shifts or if we get contingence there? And what is your ability perhaps as some of the retail side of this shift and granted its very small, but still it is kind of shifting a bit? How do you think about perhaps regaining some of that share and what it could mean for you next year?.

Susan, its Marc and I presume you are referring to the base competition..

Yes..

And first of all also in broader context, we are pleased this year with the overall North American share gain. We are gaining share, we all expect we will probably on a full-year base gain half a point to full point and we are on track on this one.

We have a specific issue where it was being harmed on large residential boxes and that is not a new story we had two dumping cases and we have now a safe guard petition. Just to put them in context, and I know many of you are fully aware of this one.

It is basically three step process, so the ITC needs the first confirm that there has been a injury and then the ITC devolves or recommends a remedy and finally this is up to the president to determine what the find remedy is. We kind of won the very first step which is the determination of injury, what is important is what the four to zero vote.

So that is I would say a strong confirmation of we have been injured and it's real. So we are waiting for the recommendation of remedies which will become two steps public, but we will expect this December 4 and then it up to the president to decide.

So I would say sometime late December or more realistic in January we will know what the final outcome of this one is. And to your question, yes, we are prepared to [indiscernible] volumes on our measures. Obviously if we had injury, [indiscernible] we have ideal capacity and we can expand the capacity and hire people there..

We will take our next question from Sam Darkatsh of Raymond James..

Good morning, Marc, Jim, Max how are you? Just got three very quick housekeeping questions.

First off, how much price realization is embedded within the fourth quarter guidance?.

Well right now I would say for the full-year, you should assume that our price mix realization is going to be about minus 1%. So again that's about half a point worse than we were when we did the last earnings call. So that's what you should assume for the full-year..

I'm trying to isolate the price increase announcements that are going into the fourth quarter.

How much of a benefit is that anticipated to be specifically in the fourth quarter?.

Okay I'm sorry, I took the question the other direction. Right now as we said most of the price increases have been announced and are implemented late within the fourth quarter and early in the first quarter. So it's going to be a very minimal impact on the fourth quarter..

Got you. And then second question, the raw material look that you gave into 2018, have you already determined your steel contracts for next year, or is that pending or you have decent visibility on that.

I'm just trying to get a sense of this sensitivity around the numbers that you gave for next year?.

Sam it's Marc. No, we have not finalized the contract for next year on steel. This is an early look into 2018. But given what we have seen this year, we spend a little bit more time really trying to get understanding what is been most likely scenario for 2018. It's also ultimately cost based pricing decision.

In late January or the earnings call from Q4 that's when we give you all the details the formal raw material outlook. But right now I think we highly likely to assume it will be north of $200 million as a raw material cost increase next year..

We will take our next question from Curtis Nagle of Bank of America. Your line is open..

Thanks very much for taking the call. So just wanted to quickly focus on volumes in the U.S. So just as a first question, would you guys be able to comment on what drove weakness in the past couple of months of year so for August and September.

And looking forward to 4Q, so you are going to be at the - obviously industry is going to be at the lower end of four to six, that still implies I think something like 6% increase at the low end of this year and [indiscernible] was around 10%.

I guess what gives you the confidence that you should see such a big acceleration in the fourth quarter?.

Yes, it’s Marc. Maybe first of all 4% to 6% guidance, yes but it still intact. Having said that, it will be clearly the lower end of that spectrum, probably more trending towards the 4% as appose to the 6%.

The reason why we are confident in that industry forecast is simply to sell out, keeping in mind that the number we referred to in the 4% to 6% that to sell in all the AM statistic, but sellout has been pretty steady also over last couple of weeks and give us confidence to pursue within that range..

Okay, fair enough. And then just a quick one on Latin America margin.

It looks like in terms of the guide that you given for the year there will be a decline in 4Q, what is behind that?.

Yes, Curtis this is Jim. There is a couple of things, one, obviously we have stated that materials has had a continued pressure there.

But the new thing is that the mix within the business in the back half of the year has shifted we think temporarily to more washing and less for refrigeration, which our market share is stronger in refrigeration as well as our margins are stronger in refrigeration. So it’s mainly what we believe is a temporary shift in mix within the industry there..

So it’s actually continuation of trend you saw on 3Q, is what you are saying?.

Yes..

Okay. Thanks very much..

We will take our next question from David MacGregor of Longbow Research. Your line is open..

Yes, good morning everyone. Marc, I wonder as part of you trade case filings you indicated that you were losing money in washers and I guess interested in your though process now that this is starting to take shape and I think starting to look like this may ultimately work in your favor.

How should we think about how the outcome here if it’s favorable to your interest would impact washer business and what that could mean to North American margins?.

Yes. Dave, of course it’s probably too early to speculate about the final outcome, because of course also of magnitude for remedies will have a big impact on that question. Having said that and this has been documented in the ITC hearing we had damages and injuries that we lost money in large residential washers.

The question is depending on remedy how much volume we can pick up and how much can we improve our margin. So it’s entirely driven by the amount of revenues which we get, I would say let’s wait until January and then in the earnings call we can give you a better forecast about what would it really means for our washer business..

Does it imply that - I mean if you are losing money there, it’s hard to believe the kind of volume that comes into play here could restore a sufficient level of profitability of that business.

It would seem to imply the pricing is necessary, is an outcome of this, is that fair to say?.

David, we will take the right business actually going through we know we will have a remedy. But even to your point, if you are invest in your product and you put a lot of capital, in fact where you don’t get the right leverage on these capitals that means you lose a lot of margin.

So volume leverage depending on the kind of product has a significant impact all from a margin here. But yes, I mean it is true also that extreme promotion intensity by [indiscernible] has created significant damage..

We will take our next question from Ken Zener of KeyBanc. Your line is open..

Good morning, gentleman. So I think the dominant sentiment around your stock has been related to North America yet. Your margin guidance at the lower end this year doesn't really support that. So Europe and execution I think are actually the key determinants of your earnings revisions this year as well as concern certainly in my focus for next year.

So to that extent, when you are talking about material inflation, A, I mean is that disproportionate in Europe what we are facing this year in terms of the impact on margins, how would you break that out by region I guess. Can we just assume sales weighted or is there extra headwinds you are facing in Europe related to material cost..

Well, and Ken this is Jim. I think if you were to look at what we saw within the third quarter here, it's about equal or about relative for EMEA compared to the rest of the globe. The only region that we have seen maybe what is a disproportionate share has been within Asia and within China. So I would say materials has been a same proportion.

As you mentioned, our bigger steps to improving the margin here begin with the exit - the integration activities and the finalization of many of those activities stabilizing our supply chain which will be in much better shape by the end of 2018 and that's probably are bigger, will drive a bigger expansion of our margin within 2018..

Okay. That's obviously the bulk of my questions is going to be around this execution Marc and Jim. The 7% 8% goal you guys gave for 2020 originally and I was just looking at your Analyst Day from 2014, that was supposed to be an 2018 goal. I'm sure you guys recall that.

That kind of reminds me [indiscernible] they had this $6 target and they missed it by multiple years and now the company is doing quite well. What is happening over in Europe, I mean you knew there was 12,000 components SKUs, 7000 was your goals.

Can you just perhaps walk us through, and may be very respectfully just how has the landscape changed today given the results versus let's say six months ago and nine months ago. I mean you must have had a roadmap and where did we take a turn to leave us that 50 basis points margins because that's a biggest driver for next year's earnings.

And it's difficult to have a clear view on how that's going to slope up right now in my opinion..

Let me maybe take me this one. First of all if you asking today, we are reconfirming that our long-term target for Europe was 7% to 8%. And our European team would exactly give you the same answer. And obviously we are kind of not happy with where we are this year.

The reason for this one and Jim alluded to this one is we knew about the integration complexity. And that is a very huge complex undertaking. The good thing is I would say 90% of a product platform factory move and brand transition are behind us. From the system side, we have now pretty much 70% behind us.

So yes, to some extent, we knew about it, it's I would say the compounding effect of several integrations which make it very difficult. Once you add on this one, the challenges which came in particular with UK and Russia which were currency related that just made it too much for the thing.

And that's why we have a performance which we have and we are committed to turn it around. I would also want to point to is again we are not getting to give a guide for 2018 and the components. But it's clear that Europe will be an important but certainly not the only live of an improved performance next year..

And we will take a follow-up question from Samuel Eisner, Goldman Sachs..

Yes, thanks so much for letting me get back on.

Looking into next year and free cash flow, I think you guys have a couple of different things that are impacting, I was hoping to get some color on I think last quarter you talked about moving some investments spending without benefit this year presumably that’s a little bit of a headwind for next year as you roll out the new products suite.

I don’t know if CapEx would go up if you actually get the right remedy on the ITC ruling and I think you talked about that in the individual ITC ruling that you have projects that you could ultimately do from day one, tax rate implications and then also investments to drive the $150 million of cost out.

So I’m curious if you can give any kind of color of how you think about free cash flow to next year given those moving pieces?.

Sam, this is Jim. I think the first thing on free cash flow when we talk about CapEx, we still expect to stay within our longer-term capital allocation guidance range of 3% to 3.5% reinvesting within our business.

So even with any projects that spending may have moved on we continue to look for opportunities to be more efficient in our capital spend and we are confident that we will be within that range on a go forward basis.

Working capital is we have talked about, we believe for next year there is continued opportunities within working capital especially within inventory. As we look around the globe we believe that will be a continuing source not to the level that it was this year, but it will be a continuing source of improved free cash flow.

And then on the tax rate as I mentioned while our GAAP tax rate for the full-year we expect to be in the 16% range. Our cash tax rate is actually closer to the low 20s at many of times. So I think next year there is not a significant change in terms of the tax rate impact on our free cash flow..

And we have a follow-up question from Sam Darkatsh of Raymond James..

Yes, hi. Thank you. Two follow-up questions first off, are you still anticipated the $100 million in marketing and brand support spending to come back next year? And then my final question is, productivity looks like it was cut from $400 million to $350 million this year.

Was that a timing issue, does that get pushed into 2018, what is the really read on productivity next year? Thanks..

So Sam, on the marketing and technology spend, again we intend to continue to invest in that area and we will obviously look at the new product launches that we have coming for next year and then we will set the appropriate levels of spend in that area, but we do intend to continue to increase our investments especially in our brands and key market.

And then what is the second?.

Let me first Sam on to clarify the $150 million fixed cost reduction that does not include brand investments and brand support. We keep these eyes separate so this is explicitly related to infrastructure cost. So just to avoid any confusions so this is a our declaration..

And then on the ongoing cost productivity, right now in the back half of the year that’s we talked about.

We did have some increased material headwinds, but then on the ongoing cost productivity as our volumes have been less than we expected in certain markets and we have had to adjust our inventory levels that has had an impact on the volume leverage benefits that we get and additionally there are some opportunities for some of the cost takeout programs that we have that will continue to your question.

There are some that we will be ramping up now as Marc mentioned, but these were on top of our ongoing cost productivity and you will start to see the benefits of those more into next year..

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

Yes, thanks for taking a follow-up question.

Marc, can you talk about share gains in North America and I just wonder if you could elaborate where within the price point, where within the line structure do you think you are winning the bulk of that share?.

David, it’s Marc. I mean first of all it's pretty much across the business, but we are particularly pleased with the progress which we have on [indiscernible] which as you know is largely in the laundry space. We are very pleased with the progress on the KitchenAid where we have a new kitchen suite out there.

So from a branded perspective, that's probably where you see today by long shop of bigger share growth. It also implies from where it's sitting giving of a [indiscernible] brand in the world and the kitchen branded fitting. That is I would say mass premium and premium segment.

So we are actually very pleased that what we would call internally these are good share gains, that don't come at the low end. These are I mean one of our best branded business which we have and we are very pleased with that..

If I could just quick follow-up. I wanted to just ask you for your question on promotional environment we are seven days away from the beginning of Black Friday, and how do you think that's going to play out versus last year.

And then, just when we are talking about promotions, as the Korean manufactures relocates to the North American market with their manufacturing in due course however how long that might ultimately end up being. Does this create a less promotional environment, or more promotional environment.

Or if you can just talk about your latest thoughts on in terms of how that shift is likely to impact kind of the competitive environment in U.S.

market?.

So David first of all, I can't speculate about what is happening around the Black Friday period. What we can refer to is Labor Day and Columbus Day that has been a promotional tense periods, but not unlike what we have seen in the last 12 months. So it is kind of the same promotional ups and downs. It doesn't change our stands and promotional actions.

We participate when it creates value for us and we go into production, so that hasn't changed. But I would say it's the same level of fairly intense promotional environment which we can face and I don't know what that means for the rest of the year.

With regard to your question about the relocation of - announced relocations, because there is not yet any effect [indiscernible]. And again that's difficult for me to speculate. I would argue given that this obviously has not been their first choice, because their first move to Mexico then to China and then to Vietnam and Thailand.

I would assume that the cost base is not as attractive for them as it's been in other places, because now where it kind of there will be force to play on a level plain field, that's what it means. So I would say the cost based is probably not as aggressive, but I wouldn't conclude from that that they will change their promotion activities.

We got to see that how it all spares out..

This concludes today's Question-and-Answer Session. I would be happy to return the call to Mr. Marc Bitzer for any concluding remarks..

Yes. So let me just summarize the key message from this call, and we are back on Slide 22. First of all, we remain on track to our long-term goals for revenue growth and cash flow conversion and we remain committed to return to strong levels of cash to shareholders.

Second, we are taking strong actions across all regions to offset the impact of sustained raw material inflation. And finally and most importantly, we remain firmly committed to our 2020 value creation goal which is growth margin, expansion and cash conversion despite a challenging 2017.

Thank you for joining us today and we look forward to speaking with you again in January..

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