Newell Brands Inc. (NWL) Q4 2018 Earnings Conference Call Transcript

NWL earnings call for the period ending December 31, 2018.

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Newell Brands Inc.  (NASDAQ:NWL)
Q4 2018 Earnings Conference Call
Feb. 15, 2019, 9:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Ladies and gentlemen, good morning, and welcome to Newell Brands Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After a brief discussion by management, we will open up the call for questions. In order to stay within the time scheduled for the call, please limit yourself to one question during the Q&A section. As a reminder, today's conference is being recorded. A live webcast of this call is available at newellbrands.com on the Investor Relations homepage under Events and Presentations.

I will now turn the call over to Nancy O'Donnell, Senior Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Nancy O'Donnell -- Senior Vice President of Investor Relations and Communications

Thank you. Welcome everyone to Newell Brands Foruth Quarter Conference Call. I'm Nancy O'Donnell. And with me today are Mike Polk, our President and Chief Executive Officer; and Chris Peterson, in his debut call as our new Chief Financial Officer.

Please recognize that this conference call includes forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially from management's current expectations and plans. The Company undertakes no obligation to update any such statements made today. If you review our most recent 10-Q filing and our other SEC filings, you will find a more detailed explanation of the risks, uncertainties and inherent limitations in such forward-looking statements.

During the call today, we will focus our discussion on non-GAAP financial measures, including those which we refer to as normalized measures. Management believes providing insights on these measures enables investors to better understand and analyze our ongoing results of operations. The comparable GAAP measures and a reconciliation between the two measures can be found in our earnings release tables, as well as on the Investor Relations area of our website and our filings with the SEC.

With that, I'll turn the call over to Mike.

Michael B. Polk -- President & Chief Executive Officer

Thanks, Nancy. Good morning, everyone, and thanks for joining the call.

I want to start by welcoming Chris Peterson, our new CFO, to his first Newell Brands earning call. Welcome, Chris, and thanks for joining the team. I hope you felt in your first nine weeks here, a warm welcome from all of us at Newell. I'm personally very pleased to have Chris on Board, and I look forward to working together to strengthen our operating and financial performance, while simultaneously shaping the future of the Company.

Today, I'll offer a brief perspective on our fourth quarter results, as well as the progress we're making on our key strategic priorities. Chris will then provide a detailed review of our financial performance and our outlook for 2019 before we open it up for your questions.

Let me start by saying that our performance is beginning to turn the corner. And for the second consecutive quarter, we've made good progress. We made a series of organization, leadership changes starting in May, that have served us well, been right for the organization. And with strong leadership increasingly in key positions and investable teams in place, our progress should accelerate through 2019.

Some of our leaders are own grown, like Laurel Hurd in Writing; Rich Wuerthele, in Home Fragrance; Tom Russo, in Connected Home; and David Hammer, in Appliances & Cookware. In some who have come to us from the outside, like Chris Peterson, our new CFO, and Mike Donohoe, who runs Outdoor & Rec, having joined us from Kraft Heinz, where he led the flagship, cheese and meat business. And Russ Torres, who has driven the cost work over the last couple of years, establishing our new supply chain organization, while simultaneously leading our Baby business through the turbulence of the Toys"R"Us bankruptcy. And Dennis Senovich, our Company's new -- supply chain transformation leader, who has recruited and built a team of professionals, who will in partnership with our talented leaders in the division, transform our supply chain over the coming years. This blend of owned grown and new talent are driving our transformation. And they and their teams have exhibited the grade and determination to deliver results through adversity over the last six months. They believe in our capacity to transform, while simultaneously we igniting our growth and performance, and are busy driving that commitment into action.

Their work is focused in five core areas. First, we are turning the business to a consistent pattern of delivery. This means setting appropriate milestones and delivering against them, and strengthening our operating discipline to make the business more predictable and efficient.

Second, they're working hard to optimize our cost structure by delivering on our ongoing savings programs and extracting the retained corporate costs, related to the Accelerated Transformation Plan divestitures. We've made good progress on costs over the summer and into the fall, with more actions to follow in 2019.

Third, they are focused on increasing cash flow, by driving profitable growth in transforming our working capital by reducing complexity across our business system. Over the next two years we expect to reduce our continuing operations SKU count by over 35%. This effort, coupled with other working capital initiatives, should yield significantly improved working capital ratios and free cash flow productivity.

Fourth, they are shaping and focusing our portfolio on the most attractive businesses. Executing the divestitures as described in the Accelerated Transformation Plan, and perhaps more importantly, they're making sharp choices, allocating the most resource to the most attractive businesses, deploying more A&P and innovation activity to those businesses with the greatest potential for accelerated growth and performance.

And fifth, they are repositioning the organization for more consistent and sustained operating performance, restructuring division and function designs, while simultaneously strengthening and upgrading talent. In the fourth quarter, we made progress in all five of these areas. Specifically, we delivered sequential improvement in core sales growth in all segments.

Learning & Development growth strengthened in the fourth quarter, driven by Writing. Excellent holiday merchandising of Sharpie and Elmer's gift sets, the launch of glow in the dark line from Elmer's and new metallic colors from Sharpie, coupled with the expansion of Slime around the world, and good growth on fine Writing in the US and Asia yielded strong core sales growth.

Baby continue to make progress against year ago competitors that include Toys"R"Us, delivering innovation and distribution led share growth on Graco's swings and high chairs, and NUK Sippy cups and bottles. Food & Appliances results also improved substantially, driven by the launch of new -- a new line of Calphalon appliances, year two (ph) support on Calphalon Space Saving Cookware, distribution driven share gains on Rubbermaid TakeAlongs, and Oster growth in blending in the US and Brazil.

New Crock-Pot innovations in express cooking solidified our number two share position in the express cooking segment. However, we were late to this segment, and face formidable competition, more progress is needed here. Home & Outdoor Living made good progress in the fourth quarter, as a result of strong share growth on Yankee Candle, Chesapeake and WoodWick in the US FTM channels, our return to growth on Home Fragrance in Europe, excellent innovation-driven growth in Contigo behind the launch of Couture, thermal beverage containers, and continued strong growth on First Alert. These gains were offset by the impact of lost distribution on coolers and air beds, which we will continue to face into through the second quarter of 2019. And Home Fragrance was also burdened by Yankee Candle's mall-based retail store footprint, which continues to be a drag on growth and margins. We intend to exit unprofitable mall-based retail stores as their leases expire, and expect to end 2019 with just over 400 stores.

Beyond our sequential progress on growth, we delivered increased normalized gross margins and operating margin percentages versus prior year in the fourth quarter, despite higher inflation related to resins and transportation, the imposition of tariffs on many of our businesses, and the increasingly negative impact of foreign exchange. The operating margin increase was delivered in the context of our highest A&P investment levels of the year at nearly 5% of revenue.

Pricing and productivity were positive contributors in the quarter, with particularly good progress in securing sourced finished goods, cost concessions in the face of tariffs, and strong value engineering cost reduction impact, particularly in packaging materials. We also made substantial progress on overheads. We were pleased with this outcome, but our progress needs to continue as we expect the headwinds we faced in Q4 to step-in in the first half of 2019.

On cash, we delivered about $500 million of operating cash flow, bringing our second half operating cash flow to nearly $1.1 billion. This result was less than what we forecast, driven in part by the completion -- the completion timing of the Jostens and Pure Fishing yields, higher cash taxes and transaction related costs, as well as lower accounts payable balance. We expect to deliver more sustainable performance on payables going forward as we're making very good progress, integrating extended payment terms into our sourced finished goods contracts. This work began in earnest in late 2017 through our procurement organization, with measurable progress in 2018 and more to come over the next two years. With respect to portfolio changes in the quarter, we completed the divestitures of Jostens Inc., passing back over $1 billion to shareholders through repurchases and dividends, while reducing debt and exiting the year at our targeted leverage ratio of 3.5 times.

On our fifth priority, we've action the difficult, but necessary decision to restructure the organization, and those changes contributed to our professional headcount on the continuing businesses being down by about 14% compared to prior year at the end of 2018. There is more work to do, particularly in our back office operations were global business services implementation should drive significant cost reduction in the transactional areas of Finance, IT and HR over the next few years. Chris and his team will lead this work on behalf of the Company.

We are laser focused on strengthening the operational performance and financial flexibility of the Company. While we know we have much more work to do, the fourth quarter was another quarter of sequential progress.

Let me pass the call now to Chris to walk through a deeper review of our financial results and our outlook for 2019. Then I'll return for some closing comments. Chris?

Christopher Peterson -- Chief Financial Officer

Thanks, Mike, and good morning, everyone. I'm pleased to have joined Newell Brands as the Company's CFO and look forward to connecting with many of you over the coming weeks.

Over the past 2.5 months I've taken a very aggressive onboarding approach, which included meetings with each of the seven continuing divisions, in Atlanta, Boca Raton and Deerfield, Massachusetts. Visiting key manufacturing plants in Merrillville, Wichita, Mogadore and Juarez, Mexico; visiting distribution centers in Broomfield, Shelbyville, and El Paso, Texas; visiting stores for each of the companies our top 10 retail customers; Investor meetings with the number of both buy and sell-side analysts. Meeting with each member of the Company's Board of Directors, and finalizing the 2019 budgeting process with each business unit and corporate function. While it's still early days for me, I come to quickly appreciate both the complexity of the organization as well as the opportunity for significant shareholder value creation overtime.

At a high level, my initial observations are as follows. The continuing business comprises a leading group of brands with strong market share positions and brand equities in their respective categories, with the right to win relative to subscale competition. A disruptive external business environment in combination with significant organization change within the Company have weighed on the underlying performance with the full potential of the Company yet to be seen. There is an opportunity for operational discipline improvements in areas, including: sales and operations planning, working capital management and IT infrastructure, to name a few. The ultimate goal is to return the Company to consistent and sustainable core sales growth, accompanied by operating margin expansion and improved cash conversion cycle. I'm committed to partnering with Mike and the team to drive improvements in these areas.

Moving on to financial results. Net sales from continuing operations in the fourth quarter were down 6% year-over-year to $2.3 billion, driven by headwinds from foreign currency, the adoption of the 2018 revenue recognition standard, and a decline in core sales. For the year, net sales came in at $8.6 billion, modestly below the Company's expectations due to a stronger than anticipated dollar. In Q4, core sales from continuing operations declined 1.2% year-over-year, in line with the outlook with sequential progress made in each of the Company's three segments.

Normalized gross margin increased 170 basis points versus last year to 34.7% as the benefits from the Company's productivity efforts, pricing actions, and the impact of the revenue recognition standard more than offset inflationary pressures including the effect of tariffs. Normalized operating margin improved 70 basis points versus last year, to 11.4%, reflecting the improvement in gross margin as well as the benefits of ongoing cost management. These benefits were partially offset by increased levels of incentive compensation, as well as currency headwinds. Consistent with the plans to drive consumption, A&P spending moved up sequentially in Q4, both on an absolute basis and as a percent of sales. In the second half of 2018, the Company delivered normalized operating margin at the midpoint of the guidance range.

Net interest expense of $104 million was down from $116 million a year ago as we ended the year with a net debt balance of $6.5 billion as compared to approximately $10.1 billion a year ago. In 2018, we made significant progress strengthening the balance sheet by deleveraging. The normalized tax rate was negative 30%, favorable relative to the year-ago rate of 3.7%, reflecting discrete tax items. Normalized net income from discontinued operations was $107 million, down from $196 million in the year-ago quarter, largely due to the loss of contribution from businesses that have been divested throughout the year, including Waddington, Rawlings, Goody, Pure Fishing and Jostens.

We purchased 44 million shares during the fourth quarter. The weighted average diluted share count for the quarter was 452 million, down 7.6% year-over-year. At the end of the year, the Company's share count approximated 423 million shares. Normalized diluted earnings per share were $0.71 versus $0.68 a year-ago. Normalized diluted earnings per share from continuing operations were $0.47, up from $0.28 last year. Normalized diluted earnings per share from discontinued operations were $0.24 versus $0.40 last year.

Let's now switch gears to segment results. Net sales for the Learning & Development segment decreased 3.2% versus the prior year to $707 million. Core sales inflected back into positive territory and grew 1.7%, driven by healthy growth in Writing, which cycled against significant retailer inventory de-stocking in the office superstore and distributive trade channels in the year-ago period. The Baby business remained under pressure, reflecting continued headwind from the TRU bankruptcy.

Net sales for Food & Appliances declined 7.2% year-over-year to $824 million as core sales contracted 1.7%, largely reflecting reduced promotional activity in Food, partially offset by Appliances growth in Latin America, and the early impact from new appliance innovation in the US.

Revenues for the Home & Outdoor Living segment were down 7.2% versus last year to $809 million, with core sales falling 3%. Continued strength in the Connected Home & Security business and a return to growth in Home Fragrance in Europe were more than offset by the ongoing headwind from Yankee retail stores and distribution losses on coolers and air beds in the US.

In Q4, the business generated operating cash flow of $498 million compared to $990 million a year ago, largely due to loss of cash flow from businesses that have already been divested, higher cash taxes in transaction related costs, as well as the lower accounts payable balance. During the fourth quarter, we announced and closed on two transactions, Jostens and Pure Fishing, and applied the proceeds to share buyback as well as deleveraging. We successfully completed tender offers for over $2.6 billion of debt, and reached the Company's targeted leverage ratio of 3.5 times in 2018. During Q4, we also returned $1.1 billion to shareholders through share repurchases and dividends with the full year figure at over $1.9 billion.

Before moving on to the outlook for 2019, I wanted to briefly discuss two new practices that we are adopting this year. First, in order to offer more visibility, particularly in light of the moving parts associated with the divestiture program, during 2019 we will provide guidance both for the full-year, as well as the upcoming quarter. Once we complete the asset sales, we will revisit whether to continue quarterly guidance. Second, we are updating the Company's normalization practice effect of first quarter 2019. Thus far, the Company has excluded from normalized results, the cost of its Transformation Office, consisting of employees fully dedicated to executing the integration of the merger of Newell Rubbermaid and Jarden, and other costs associated with the integration and start-up of the combined entity, such as advisory costs for process transformation and optimization initiatives.

Now that nearly three years have passed since the transaction, beginning in 2019, the Company will no longer exclude these expenses from its normalized results. Please note that, for ease of comparability, our commentary for 2019 will refer to the year-over-year metrics, adjusting the reported normalized 2018 figures for the new methodology. In 2018, for the continuing operations, these expenses amounted to $96 million or approximately 110 basis points as a percentage of sales. The discontinued operations included additional $12 million of such expenses. You can find the quarterly split in the press release tables issued today.

As we look out to 2019, we expect to stabilize and then reignite core business, executing on an aggressive cost savings agenda and improving the Company's working capital metrics. Although we generally see healthy macros in the US, they are accompanied by continued disruption in the retail landscape, headwinds from currency, uncertainty stemming from tariffs and related price increases, as well as continuation of commodity and transportation inflation. We are planning the business prudently for the year to account for these factors.

This morning we issued an initial outlook for 2019, which calls for net sales of $8.2 billion to $8.4 billion, which represents a decline of 3% to 5%, underpinned by a low single-digit decrease in core sales as well as an approximately 150 basis point headwind from foreign exchange. We expect normalized operating margin to expand 20 basis points to 60 basis points year-over-year versus the adjusted normalized operating margin of 9.1% from 2018, despite higher investment in the business and significant headwinds from inflation, currency, as well as bonus true up. This forecast assumes that the inflationary pressures from tariffs, commodity and transportation cost, as well as unfavorable foreign exchange amount to approximately $200 million. We plan to mitigate this by pricing actions, productivity, and reduced overhead cost as we optimize the Company's cost structure.

Normalized effective tax rate for the continuing operations is anticipated to be in the high single-digit range in 2019. Normalized diluted earnings per share for the total Company are expected to be between $1.50 and $1.65 for the year. The earnings per share outlook also reflects an updated timeline from asset sales. We've made considerable progress on the divestiture front throughout 2018, and have completed transactions that have generated over $5 billion of after-tax proceeds. As we embark upon the final wave of divestitures, we have decided to split up the Consumer and Commercial Solutions business and sell the MAPA and Spontex businesses in a separate transaction from the remainder of Consumer and Commercial Solutions, which is largely Rubbermaid Commercial Products along with Rubbermaid Outdoor, Closet and Garage and Quickie. As a result of this decision, we now expect the divestiture timeline to extend until the end of 2019, and our guidance assumes these two businesses are sold in the second half of the year.

Current plans assume that the remaining transactions, which include US Playing Cards, Rexair and Process Solutions are completed by the end of the second quarter. We've also modified assumptions surrounding the total expected proceeds to reflect recent market movements and valuations for commercial assets and other conditions. We now expect the combined after-tax proceeds from all of the ATP divestitures to be approximately $9 billion.

The earnings per share outlook that we shared reflects the aforementioned timing of asset sales and the expected deployment of the proceeds toward further debt pay down and share repurchases. Given the expected timing of the transactions, we currently anticipate a modest reduction in diluted shares outstanding in 2019 relative to the year-end position of 423 million shares in 2018.

We currently forecast $300 million to $500 million in cash flow from operations for the total Company for 2019. Within this outlook, we are accounting for a meaningful year-over-year loss of cash flow from the assets that have been sold or will be sold throughout 2019, approximately $200 million in cash taxes and transaction costs related to divestitures, and over $200 million of restructuring and related cash costs. One of our key priorities is to make significant progress on working capital by improving the cash conversion cycle.

Turning to Q1 2019. It is important to keep in mind that it is a seasonally the smallest quarter of the year, both from the top line and profitability perspectives, and the business typically uses cash during the quarter.

Company's guidance contemplates the following assumptions for Q1. Net sales of $1.66 billion to $1.7 billion, which represents a decline of 6% to 8%, with core sales down 2% to 4%, and an approximately 300 basis point drag from foreign exchange. Recall that Toys"R"Us announced the complete liquidation of its stores in the US in late March 2018, which means the Company will not fully lap this disruptive event until the second quarter.

Normalized operating margin is expected to improve 10 basis points to 50 basis points, relative to the adjusted normalized operating margin of 2.5% from Q1 2018. Normalized effective tax rate for the continuing operations is anticipated to be around 10%. Normalized diluted earnings per share for the total Company are expected to be within a $0.04 to $0.08 range with share count similar to the year-end position. We are assuming full quarter contribution from the businesses that have not been sold yet.

Given the reshaping of the portfolio and significant changes in the external environment, we have started a category and Company strategy update process, which we expect to complete later this year. As such, we believe it is premature for us to provide specific long-term financial goals.

Our long-term goal remains to drive shareholder value improvement through our return to consistent and sustainable core sales growth, operating margin expansion, and improved cash conversion cycle as we reshape the portfolio and create a more focused Company.

While 2018 was a challenging year for Newell Brands, we are encouraged and energized by early signs of a turnaround. As the organizations continues to execute the Accelerated Transformation Plan, I am excited about the opportunity to help Mike and the team create a simpler, faster and stronger Newell Brands. We expect to make further progress in 2019 through completing the divestiture program, deliver -- delivering sequentially improved core sales and operating margin results versus 2018, while continuing to support the Company's brands and innovation in the marketplace, and overcoming significant external headwinds, strengthening the Company's working capital metrics and driving operational discipline across the organization.

I'll now turn the call back to Mike for closing remarks.

Michael B. Polk -- President & Chief Executive Officer

Thanks, Chris. We entered 2019 with building confidence, but also a pragmatic view of the complexity of executing such a broad transformation agenda in the turbulent environment. As Chris laid out in his comments, our outlook for 2019 contemplates a couple of key challenges. The tariff impact on margins in the Toys"R"Us impact on our top line. On tariffs, we priced in taking actions through procurement to mitigate some of the negative margin impacts of tariffs, and will complement this with further work on overheads and aggressive complexity reduction.

On top line, we prudently guided core sales growth with the negative consequence of Toys"R"Us bankruptcy to our top line in Q1 2019, embed in our outlook. TRU creates an unavoidable 250 basis point headwind for our total company core sales growth in Q1 2019. Despite these challenges, we're confident in our agenda and our vision for the Company. We have leading brands in large global in growing categories that positively impact hundreds of millions of consumers lives every day where they live, learn, work and play. We've invested to build advantaged capabilities and innovation design in e-commerce to further strengthen these brands. We've funded strategic research and done the product development work to significantly strengthen our innovation bundle and our ideas for growth. We've proven that our brand and innovation-led strategy coupled with strong commercial selling capabilities that reach consumers where they shop can yield further market share growth in our home markets.

We have much more opportunity to release the trapped capacity for investment in our brands and margin development that's tied up in overheads in working capital, and we have a massive opportunity to deploy our portfolio outside our home markets, and the development of new channels of distribution make the cost of deployment much lower than it's ever been in my time in this industry. And we're strengthening our leadership team at Newell, so that we successfully operationalize this broad agenda and unlock the value creation potential of the Company.

My underlining -- underlying optimism is grounded in the power of our brands, in the green shoots of growth we see in many of our businesses, the strength of our innovation funnel and the increasing capacity to spend behind these ideas. Our leading e-commerce footprint relative to our competition and others in the consumer goods space, which should mix our growth rates up relative to others. Our strengthening supply chain capability with their very aggressive cost and cash agenda, which should fuel investment while simultaneously driving margin and cash flow improvements, and the unwavering determination and desire to win of our people. This is a powerful formula for growth and performance. While we play for that future, our focus today is on doing what we say we're going to do. Both the third and fourth quarters of 2018 were good examples of this commitment in action. We are confident we're on the right path to reigniting growth in driving operating performance.

With that, I'll turn it back to Nancy to set up the Q&A.

Nancy O'Donnell -- Senior Vice President of Investor Relations and Communications

Thanks, Mike. (Technical Difficulty) turn it over to the operator, I'd like to remind you that we're asking each caller to limit yourself to just one question. We're going to try to manage our time to get you out in approximately an hour, and at the same time to fit in as many callers as possible within that time limit. So we appreciate your cooperation. Thanks. And at this time, operator, we're ready to take questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) And your first question comes from Bill Chappell with SunTrust.

William Chappell -- SunTrust Robinson Humphrey -- Analyst

Thanks. Good morning.

Michael B. Polk -- President & Chief Executive Officer

Good morning, Bill.

William Chappell -- SunTrust Robinson Humphrey -- Analyst

Hi, just a question around kind of your top line outlook for '19 on the core business. I just want to understand what's baked in in terms of pricing, in terms of SKU rationalization, how that impact the outlook and does that carry on for beyond this year? And with tariffs and kind of pricing related tariffs you anticipated -- I'm not saying it's going to happen, but if there is any rollback of tariff, but you have the roll back pricing or there is just still -- in general, what do you expect on price versus volume for this year, and what is new rationalization impact on that top line outlook?

Michael B. Polk -- President & Chief Executive Officer

I'll answer part of that question and then Chris can build. On pricing, we are pricing to cover the absolute tariff impact, dollar for dollar. And we've had reasonably good success in landing -- in landing that. And so, well, that will create an issue for us from a margin percentage standpoint -- from a dollar for dollar standpoint, I think we're going to be OK, and that pricing is built in to the plan. Right now we've got the 10% tariff rate on category three tariffs in place for January through March, and we're currently planning to increase again on March 1st. Our customers are aware of that. We've communicated that. If the tariffs get delayed, we will push that price increase out in double price -- we'll price appropriately when the tariff increase occurs if it occurs. We've built into our modeling for top line, the volume impact as best we can of what is a substantial amount of pricing, that's a bit of uncertainty that we have because the kinds of price increases we are talking about typically go beyond the model tolerances for predictability, but we've done our best job of estimating that. On SKU rat, I'd pass this -- that onto to Chris maybe to kind of build on my comments.

Christopher Peterson -- Chief Financial Officer

Yeah. I guess the thing I would add to Mike's comments are, in the prepared remarks I mentioned that we have $200 million of headwind from FX, commodities and tariffs combined. And so in addition to the pricing that Mike's talking about on tariffs, we're also pricing for commodity inflation and transactional FX. So when you put the three of those factors together, we've got a fairly significant amount of pricing built into the guidance. We're not pricing for margin on top of that, so there is a bit of a margin headwind from the pricing baked in, but that's included in the guidance. If the tariffs did get roll back, I think it would be a benefit to us as a company, but hard to say how that would flow through, because we probably -- we wouldn't take the pricing for the tariff, but the tariff gets rolls back, as Mike said.

On SKU rationalization, we're working very hard from a sales and operations planning standpoint. We think there's a big opportunity to unlock cash conversion, productivity and the supply chain through this SKU rationalization opportunity, and we're working very hard to manage the phase-in and phase-out of that SKU rationalization effort. And I think that'll be a theme that we'll be talking about for the next 18 months to two years or so.

Michael B. Polk -- President & Chief Executive Officer

Thanks, Bill.

Operator

Your next question comes from Wendy Nicholson with Citigroup.

Wendy Nicholson -- Citigroup -- Analyst

Hi, good morning. Just following on that exact line of questioning, one of the pressures I know that you've seen on the top line has been choices that you have made to leave some distribution, either unprofitable distribution or channels that you didn't thing represented good partners for the future. So can you talk about the impact of those choices? From a distribution perspective, how much distribution -- forget about Toys"R"Us, but ongoing other retailers -- you've left than retail on the appliance side, how much of a headwind is that? Because I guess, just looking at the guidance I totally get the first quarter guidance for core sales, but I'm a little bit surprised that you're not expecting more of a ramp up in core sales growth in the back half when you lab some of that. Thanks.

Michael B. Polk -- President & Chief Executive Officer

Well, let me just give you some of the details on the things that are in the base that we need to lab. There is two -- there is two areas where we've got lost distribution, and that's business that we didn't pursue aggressively through line reviews because of the margin structure in our need to cover inflation and price -- and price the businesses, but there really are a few areas. One is, in the Outdoor category, where in coolers and in air beds, we chose not to price down those businesses because of the margin consequences, they would have been nearly unprofitable gross margin, had we chosen to do that, so we took the hit on top line. We have lap -- that it -- those choices in particular have turned out to be good ones as we come into 2019, because the alternatives that our customers chose to pursue haven't worked out for them. And so there is likely to be some benefits flowing back to us later in the year, but we have the lap those who losses through the second quarter. The way the Outdoor category works is the seasonal selling will happen in that March-April time frame, and until we get to that, you don't get to the resets of the aisles, and so we've got that that issue to lap into the second quarter.

On Appliances, we continue to look at the tail of that business and ask questions about whether these are businesses we should be in at the margins they currently have, and we certainly stepped away from some of the lower-end opening price point offerings that existed in non-strategic product families last year. Again, the timing of that is, those choices were Q2. We will continue to prune this business. There just are -- portions of that portfolio that don't make sense from either a cash generative standpoint or from a margin perspective, and that will be an ongoing headwind that's contemplated in our guidance. But the big changes we made last year, we lap in the second quarter and we'll have a little bit longer-tail that drags on through the back half of the year.

Our goal -- our long-term goal is to drive profitable core sales growth ahead of our markets and build market share, and we think we can do that. We want to simultaneously increase our margins and also significantly improve the cash flow productivity in the business. Some of these choices that we've made on distributions are designed to enable those outcomes. And so, yes, we've been prudent on our guidance, and we think that's the right posture to take, and where we will do everything we can to do better than that. But for now, given the uncertainty regarding tariff pricing impact on volumes, we think this is the right posture to take.

Wendy Nicholson -- Citigroup -- Analyst

Got it. Thank you very much.

Michael B. Polk -- President & Chief Executive Officer

Thanks, Wendy.

Operator

Your next question comes from Steve Powers with Deutsche Bank.

Steve Powers -- Deutsche Bank -- Analyst

Good morning, everybody. Welcome aboard, Chris.

Christopher Peterson -- Chief Financial Officer

Thank you.

Steve Powers -- Deutsche Bank -- Analyst

So I don't -- I'm not sure how far you can go here on the fly. But I guess I'm wondering if there's any way for you to break out the anticipated cash flow guidance continued versus discontinued ops, maybe allocating the pro forma interest expense you expect to pay down through the divestiture program to the discontinued bucket. I mean, even some directional commentary will help you, because just, it's really hard to unpack it all and contemplate the cash earnings power of the RemainCo business without having that detail. So any further transparency there whether today or just going forward would be really helpful. Thanks.

Christopher Peterson -- Chief Financial Officer

Yeah. Let me try to provide a little bit of help in this regard. So the operating cash flow guidance that we issued of $300 million to $500 million for the year is the total company operating cash flow. Within that guidance, there's $200 million of costs that are related to divestitures, which are basically the tax and deal costs related to the divestitures, and there's over $200 million of restructuring costs. So those two things are effectively one time-ish a nature. So if you were to back those out, that would give you the operating cash flow to the Company, excluding those two things of $700 million to $900 million.

If you look at what's embedded in that guidance, we expect operating cash flow from continuing operations in 2019 to be significantly better than operating cash flow from the continuing operations was in 2018, and that's because we see an opportunity for cash conversion improvement. When we look at the cash conversion cycle, our benchmark versus our competitors, our days sales outstanding are relatively high, our days of inventory are relatively high, and our days payable are relatively low. And so we are putting -- and have put, but are putting a aggressive push on each of those areas. And we think that there is opportunity to go after each of them.

We think we can do better at resolving deductions with customers and ensuring that customers comply better with our terms, which will drive our days sales outstanding improvement. We think on inventory, the SKU rationalization program that we've talked about, and cutting some of the tail can drive significant improvement in days inventory. And on payables, we think that we've got an opportunity to negotiate extended payment terms that are more in line with what the competitive set has been able to do. And when you put that together, I think we've got a multi-year cash opportunity on working capital. So...

Michael B. Polk -- President & Chief Executive Officer

Steve, the only thing I'd build is, I think Chris brings a real energy to the space and his partnership with Russ in the supply chain leadership teams on strengthening our working capital metrics, I think it's going to make a huge difference for us going forward. So it's -- I think the disciplines around these three areas of the things that Chris will drive into the organization, and I'm really excited about the possibilities for progress here.

Operator

Your next question comes from Kevin Grundy with Jefferies.

Kevin Grundy -- Jefferies -- Analyst

Thanks. Good morning, everyone. Hey, good morning, Mike. I hope I can sneak in just two, but the first one is just a data point. Mike, what do you think the category growth rate is for the business at this point in time, understanding the core business declining, we had destocking issues, et cetera, et cetera, but I think that's really important for folks in terms of when you can get back to sort of the normal rhythm here. And then, but the broader question is, really how you'd like investors to think about productivity and the cost savings opportunity, because, Mike, as you're well aware, I mean, it was the key reason to own the stock once upon a time with the $500 million synergies going up to $1 billion, but given the challenges, it's frankly it's been loss and really there's nothing just to count in the stock, I would argue for any sort of material upside from it. And if I'm not mistaken the number now is like $750 million, that is like $600 million from synergies and renewal $150 million stranded overhead, which is a huge number, it's greater than 8% of sales, but it also doesn't seem like there's much commitment in terms of getting after it in any sort of flow through for investors that they can rely upon in a meaningful way. So after being a bit for both, but maybe if you can kind of help us think about that, that'd be helpful. Thank you.

Michael B. Polk -- President & Chief Executive Officer

Sure, Kevin. I'll start and then I think it would be helpful for you to get to hear Chris's perspective on what's going on in this area. So just on your first question on category growth. As you know, we only measure category growth in the US, we really don't have a good way to measure it outside the US. Historically, you know these categories have grown in line with the GDP growth, but there are things that can happen in a market that create catalytic events that drive either expansion or decline. We -- it's interesting in our numbers in the US in 2018. We see the sort of bifurcated profile where we got some categories with really excellent category growth and that's generally connected to broaden category distribution for flagship brands or it's driven by provocative innovation that drives consumer interest in a product family or segment. Best example for that on us is, if you look at the Calphalon appliances launch in the fourth quarter, and you look at the category growth in the toaster oven product family, you see massive shifts in category growth because of the power of that hero item. And we're getting share growth on top of that, coupled with that category expansion. That sort of the model in this space. When you bring news and it's an exciting consumer idea, you can create market growth, and we see that on Home Fragrance as we make Yankee and WoodWick and Chesapeake more broadly available. We see that when we nail an innovation like we have on the toaster oven platform between what we're doing on Oster and what we're doing on Calphalon. And so the key in most of our businesses is for us to accept -- because of our leadership position from a brand perspective, we have to accept our responsibility to drive market expansion. And where we've done that well with good ideas executed well in the marketplace, we can do really interesting things. And so I think that's in our hands when we've had a sort of a bifurcated year where in Baby gear you've got market contraction because of the shifts going on with Toys"R"Us bankruptcy. And then on the other side, you have really vibrant market growth in some categories like Home Fragrance where there's a lot of activity going on. But I think the way to plan the business is to think about our category growth globally weighted for our sales based on GDP growth, and that's historically how this is -- how this has played out. As we come through next year and as we continue to work on margin development, we'll have more capacity to spend and that shouldn't enhance our category growth dynamics as well.

On cost, I'll pass it to Chris to give you his impressions. I personally think there's an awful lot of stuff going on here, and you see it in the way we've overcome some of the headwinds on FX and on inflation, but Chris's fresh eyes in the -- I think you benefit from his perspective.

Christopher Peterson -- Chief Financial Officer

Yeah, I think the -- I think the Company has a very aggressive focus on productivity in the cost of goods area, as well as overhead cost reduction. And let me take them sort of each in turn. From the productivity in the supply chain, we think we've got opportunities that we're actioning on manufacturing plant consolidation, distribution center consolidation, we have opportunities to increase forecast accuracy of the SKU level, which will allow us to plan better and take cost out of the system. We've got opportunities in automation of lines that drive cost savings. We've got opportunities through the SKU rationalization work that we've talked about. And I think that embedded in our guidance is a fairly significant help from that already in 2019. It's being masked, as Mike mentioned, by the inflationary pressure of commodities, foreign exchange and tariffs. But I think as we -- as those items get behind us, I think you'll start to see the gross productivity work come through in a much more meaningful way.

On overheads, the Company likewise has a very aggressive plan at cost reduction and right-sizing the organization for the size of the Company post the ATP plan, and that really is looking at a lot of different areas. We mentioned in the prepared remarks, some of the opportunities of the Company has on implementing things like GBS, rationalizing our IT system, for example, when Newell bought Jarden, the Company went from one to, I think 43 ERP systems. We have a plan to get from the 43 ERP systems down to three by the middle of next year. And so that drives significant opportunity. And the three that we're going to -- that we're going to have our SAP across the majority of the business, Oracle for the Home Fragrance business, and SAP retail for Marmot, because it's a retail oriented business. So I think we'll be in a much better place to drive scale, synergies through a lot of the activities that we're moving on across the organization.

Michael B. Polk -- President & Chief Executive Officer

And the only thing that I would build is to call your attention to the guidance, which if you look at the operating margin guidance that we provided on the continuing operations and reflect on Chris' comments in the script, where he laid out the fact that we have $200 million of headwind connected to tariffs, FX and inflation, you see us committing through guidance to operating margin progression in that context. And so I think that's sort of the lead indicator of progress from my perspective. But I think it's an important question, Kevin, and it is really going to be one of the centerpiece of what we have to focus on not just in '19, but in '20 and '21 as we continue to take the retained costs out of the business, but more importantly give ourselves room in the P&L to invest at higher levels for growth. And that -- I think we're on the right track, but I think it's right to continue to challenge us with those types of questions.

Operator

Your next question comes from Bonnie Herzog with Wells Fargo.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Thank you. Good morning.

Michael B. Polk -- President & Chief Executive Officer

Hi, Bonnie.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Hi. I wanted to ask about divestiture proceeds. You extended the timing and the total proceeds now you're expecting to be slightly lower, but I guess help me understand, if your priorities for debt paydown versus buybacks have changed at all. And then, just wanted to clarify that your EPS guidance does consider both of these, and how we should think about maybe the phasing first half versus second half? Thanks.

Christopher Peterson -- Chief Financial Officer

Sure. So we have updated our guidance on the total proceeds from $10 billion previously to $9 billion is what we're expecting in total. To-date, our after-tax proceeds that the Company has received has been 5.2% (ph) through the end of last year. And our EPS guidance does contemplate the update of the divestiture timing. And as I mentioned in my prepared remarks, because we're separating out the MAPA-Spontex business from the CCS business, we're expecting those two deals to happen in the back half of the year. So the guidance reflects that. The US Playing Cards, Rexair and Process Solutions business effectively we're expecting to happen by the end of the second quarter. And as a result, that changes the timing of when the proceeds are coming in versus what the original plan assumed, which is why we are guiding the share count to be only modestly lower this year, because we're expecting a significant amount of the proceeds from CCS and MAPA-Spontex toward the end of the calendar year. So all of that is embedded in the guidance, but that's -- that's the update on where we are on the divestiture program.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

And then just quickly to clarify the split between the proceeds, is it still 45-55 in terms of debt paydown versus buybacks?

Christopher Peterson -- Chief Financial Officer

Yeah. So on that, if you look at what we've done through 2018, I think we've used about 30% of the proceeds for share repurchase. We're committed to investing in the business and we're committed to returning excess cash to shareholders and maintaining a strong balance sheet. I think we're continually looking at the Company's capital structure, and I think we will make progress on both debt paydown and share repurchase, but given the moving parts here, it may not be a straight line as what it was previously.

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Your next question comes from Lauren Lieberman with Barclays.

Lauren Lieberman -- Barclays Capital -- Analyst

Oh, great. Thank you. Good morning.

Michael B. Polk -- President & Chief Executive Officer

Hi, Lauren.

Lauren Lieberman -- Barclays Capital -- Analyst

Hi. So you guys mentioned that you are kind of starting this strategic review process. So two questions off of that, recognizing it's early days. One is, to what degree you thinking through geography, I feel like when you'd acquired Jarden, part of the conversation was around the geographic opportunities, it opened up for some scaling of entry in some markets. So to what degree geography still sort of an interesting vector, if there is a likelihood of kind of scaling some of that back?

And then the second piece is just to think about the longer-term margin profile of the continuing businesses, because I understand there's the big headwind that you've called out for 2019 on -- in commodity costs and so on and then lower share count, but it also, if you like, there's implication that there is now a view that the margin structure of the continuing businesses is probably lower than you might have thought previously. So if you could just comment on that or maybe my math is kind of often and it's too early to pass judgment on that. Thanks.

Michael B. Polk -- President & Chief Executive Officer

Great question, Lauren. So with respect to the future development of our business, there are really three things that we're focused on. One is, continuing to build out our brand and innovate brand building and innovation agenda for each one of these -- each one of the product families that has the best potential to contribute to both our growth in our margin development. And we are obviously investing to shift our selling capabilities to reach consumers where they shop, and then clearly, there is a huge market product deployment or category deployment opportunity for some of our categories around the world. And so if you think about this, the three drivers of growth going forward, it's brands and innovation, it's leveraging our selling capabilities both in brick and mortar but also increasingly in e-commerce as a result of the scale we have there and the capability we've invested to create, and then deploying the portfolio. In my comments, I mentioned that, that's a huge opportunity, and that the cost of deployment is coming down as a result of the emergence of new ways to deploy your portfolio, and its a function also of consumers ability to get to know brands prior to them arriving onshore. And so, we are committed to deploying the portions of our portfolio that make the most sense to deploy into the markets where the people in the economic development of the world is going to occur. And so we've begun that process, particularly with the focus on Writing, we will do that with Baby over time, and there's opportunity in the balance of our portfolio is, well, to look -- to look forward and make some of those choices. Chris referred to the category strategy work that we're doing, we call it Cat-Strat activity in the divisions, that's a process that we've launched, that will culminate with the Board in the summer that will help us make a series of choices that is below the division level, that product family level on which categories are most attractive and offer the greatest potential in which categories deserve disproportionate resourcing. And so that work is under way. It's going to be division-led with insight and help from some of our corporate resources, but it's essential to road mapping the next thee to five years of the Company. And it cuts across, it's not just a growth-oriented discussion, it's what kind of supply change you need to be able to support the ambition. What kind of capabilities you're going to need to be able to strengthen the potential outcomes that come through some of those choices.

And so Chris, Rich Mathews, Russ Torres, the division leaders will really drive that process through the summer, and I think it's going to be really exciting for our people to begin to do this kind of thinking and work an important work for us as we define the roadmap forward.

Christopher Peterson -- Chief Financial Officer

Yeah, I guess what I would add, Lauren, just on the numbers is, the Company reported, I think, in 2018 an operating margin for the year of 10.2%. When you adjust that for the normalization Practice Change, that becomes 9.1% because of the 110 basis point differential in the normalization practice, and we're guiding to 20 basis points to 60 basis points up from the 9.1% for 2019.

Given the work that we're doing on the category strategy work, as Mike mentioned, and how that ladders into the Company strategy work, we think it's premature for us to issue long-term guidance. So we are not issuing margin guidance for 2020 or beyond at this point, because we think that that work will help us have better visibility into that.

That being said, we see a clear opportunity to take the operating margin on the continuing business higher over time. The pace and path of that, I think is what will be informed by the strategy update work that we're doing.

Michael B. Polk -- President & Chief Executive Officer

And the two levers for that will be in overheads, which are still quite high for the Company as a percent of revenue, some of that due to the retained costs associated with the disposals. And the other being gross margin development, which in today's environment is pretty tough, although I was pleased with what we saw in Q4, and we will work hard next year to overcome the headwinds we've talked about. But if you look backwards, Lauren, at the period between 2011 and 2015 for Newell Rubbermaid, and look at that story, you saw really meaningful gross margin improvement in that window through innovation and through smarter deployment of our programming against the businesses with the best potential for growth, which tended to be the higher margin businesses. You should be looking for us to demonstrate that same dynamic, which has been difficult over the last two years to do as a result of the negative mix effect of the Writing reset that occurred in '18, and because of the challenges now that the business has with the retained costs associated with the divestitures, but our orientation is going to be to drive those very similar sets of outcomes.

Operator

Your next question comes from Olivia Tong with Bank of America Merrill Lynch.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Great, thanks.

Michael B. Polk -- President & Chief Executive Officer

Hi, Olivia.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Hi, good morning. One, to talk a little bit more about cash flow, and first in terms of investors, how you're feeling even with the amended $9 billion expected after-tax proceeds? And I guess, if you don't end up seeing offers at what you believe are fair prices, what would you consider in terms of other levers to cash, especially given that the dividend is well above market, first goal still 30 to 35 payout. And then just as you think about cash longer term after fiscal '19, where do you think sort of the right level to get that?

Michael B. Polk -- President & Chief Executive Officer

Yeah. So thanks, Olivia. So I think our focus is on driving shareholder value. And so to your question, if we don't get a deal value that we believe drive shareholder value for the Company, we're not going to sell the assets at fire sale prices. So we've done the analysis to look at what the keep value is for the assets, and our $9 billion assumes that we get valuations that exceed that keep value -- valuation, is the first point there. So that could change if we get offers that are below what we think the value of the enterprises, because we're focused on shareholder value creation.

Relative to how we deploy the proceeds for our debt repayment versus share repurchase, I think it's the same answer, which is we're focused on shareholder value creation, we continue to be committed to having a sustainable balance sheet and leverage ratio and returning excess cash to shareholders, and we'll make those decisions as we go along through the process here.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

And then just on the dividend?

Michael B. Polk -- President & Chief Executive Officer

We have no plans to change the dividend.

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you.

Operator

Your next question comes from Nik Modi with RBC Capital Markets.

Michael B. Polk -- President & Chief Executive Officer

Hi, Nik.

Russell Miller -- RBC Capital Markets -- Analyst

Hey, good morning, Mike. This is Russ Miller on for Nick. We just want to ask on Writing, and specifically now with the Staples and Essendant deal closed, is there any more perspective you can provide on the impact that may have to the Writing business? Thank you.

Michael B. Polk -- President & Chief Executive Officer

We are very pleased with the progress in Writing, Laurel Hurd and her team have done a remarkable job, Russ Torres on the sidelines sort of providing some guidance and input to them as they've come through a very, very turbulent period of time. As you know, that whole landscape reset in the middle of -- started in the middle of 2017 and through the first half of 2018 -- under new leadership and new ownership, the traditional channels within Writing established a new set of inventory targets for themselves, which we have worked with them to make progress on achieving. And we have a little bit more work to do there in 2019. But the real pain of that transition is behind us, and we start to see the kind of opportunity you would hope to see in this business. Businesses made very good margin progression, recovering the step down from '17, and the team is mobilized now on reigniting growth, and you start to see some of that occurring over the last two quarters. So we're quite optimistic about where the Writing business is. Very proud of the team for fighting through that adversity, and delivering very, very good 2018 in that context, and are excited about the future. They've got some great innovations coming in the back half of 2019 that will serve us well into '20, and we've got very good momentum on Slime now around the world. So if you want to create Slime in Europe, you can. If you want to do it in Australia, you can, and we're looking at new markets every day for that opportunity. So look, I love this business. I think it's a great business. I think it's an important business in terms of the role it plays in social and economic development in the emerging markets, and we're very committed to making this business bigger, and does -- and building the equities of these brands around the world.

Russell Miller -- RBC Capital Markets -- Analyst

Thank you.

Operator

Your final question comes from Joe Altobello with Raymond James.

Michael B. Polk -- President & Chief Executive Officer

Hi, Joe.

Joe Altobello -- Raymond James & Associates -- Analyst

Good morning. So welcome, Chris. Welcome aboard.

Christopher Peterson -- Chief Financial Officer

Thank you.

Joe Altobello -- Raymond James & Associates -- Analyst

Looking forward to working with you. I suppose to go back to earlier line of question. And I know Mike you mentioned that Newell earlier was turning the corner, but the core sales outlook for '19 obviously doesn't really show that at least on the top line. I would think that if I can ask you that question six or even three months ago, what your 2019 core sales guys would be? It wouldn't be down low singles and I'm guessing that delta's probably, call four points from where we are today versus where we would have been maybe six months ago. How much of the change is macro, and how much of the change is the decision you guys have made? I know you've mentioned lapping QRQ and the lost distribution in Appliances and Outdoor, but you know knows for a couple of quarters now. So I'm just trying to figure out what's changed from a macro level, and what are you guys doing differently that has caused that outlook to come down? Thanks.

Michael B. Polk -- President & Chief Executive Officer

Yeah. We don't have a different view on the macros. I mean there is some slowdown in Europe and in parts of Asia, but we don't have a big footprint in those geographies that would cause me to have that factor into our guidance on core sales. We've got the realities of what we described, which is Toys"R"Us, in the first half of the year and we've got the realities of the distribution issues which will continue to govern the upside. We felt -- coming into this year, this was the right way to plan the year. It will enable the continued progress on margin development and set the stage for grocery ignition on this business going forward. The year will be a little different in terms of its flow. Q1 obviously steps down from the sequential result improvement in Q4 and Q3 before it, and we've guided 2% to 4%, that is an art-to-fact of Toys"R"Us, there's really nothing we can do around overcoming 250 basis points of top line headwind. But from that point forward, once we lapped the distribution, you should see sort of the normal progression you would expect to see in our business. We will always ask questions about relative attractiveness of businesses, and we're going to give ourselves the room in our guidance to be able to make choices around some of those activities. An example of a choice we've made that impacts top line, not really core sales but impacts top line, that is the right choice to make, it's the choice to exit about 100 stores on Yankee -- out of mall-based retail from Yankee Candle. That's -- those are not attractive stores, they lose money, as the leases expire there's an efficient way to get out of those businesses, that will help us in our margin development going forward. And it's the right choice to make irrespective of the consequences of the top line. And so we're going to do the right thing.

Our long-term goal is to drive profitable core sales growth ahead of our markets. To build market share, to increase our margins and to significantly improve the cash flow productivity in the business, and we have a tremendous opportunity on all of these fronts.

Joe Altobello -- Raymond James & Associates -- Analyst

That's helpful. Thank you guys.

Operator

We have reached the end of the time allotted for our question-and-answer session. I will now turn the call back to Mr. Polk for closing remarks.

Michael B. Polk -- President & Chief Executive Officer

Well, thank you everyone for all the questions and for sticking with us through the call. Chris and I look forward to seeing many of you next week at CAGNY. And to our team, thank you as always for your drive, your determination, and your commitment to Newell Brands. Chris and I couldn't be prouder of the energy and effort you put into this business and are very gratified with the progress we're making in a dealt environment, and we see the green shoots we've been talking about, and we're optimistic and excited about the prospects going forward. Thanks so much. Talk soon.

Operator

Ladies and gentlemen, a replay of today's call will be available later today on our website, newellbrands.com. This concludes our conference. You may now disconnect.

Duration: 61 minutes

Call participants:

Nancy O'Donnell -- Senior Vice President of Investor Relations and Communications

Michael B. Polk -- President & Chief Executive Officer

Christopher Peterson -- Chief Financial Officer

William Chappell -- SunTrust Robinson Humphrey -- Analyst

Wendy Nicholson -- Citigroup -- Analyst

Steve Powers -- Deutsche Bank -- Analyst

Kevin Grundy -- Jefferies -- Analyst

Bonnie Herzog -- Wells Fargo Securities -- Analyst

Lauren Lieberman -- Barclays Capital -- Analyst

Olivia Tong -- Bank of America Merrill Lynch -- Analyst

Russell Miller -- RBC Capital Markets -- Analyst

Joe Altobello -- Raymond James & Associates -- Analyst

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