Good morning, and welcome to Newell Brands Third Quarter 2016 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. As a reminder, today's conference is being recorded. A live webcast of this call is available at newellbrands.com on the Investor Relations home page under Events & Presentations. A slide presentation is also available for download. I will now turn the call over to Nancy O'Donnell, Vice President of Investor Relations. Ms. O'Donnell, you may begin.

Thank you. Good morning, everyone. Welcome today's Newell Brands' third quarter conference call. On the call with me today are Mike Polk, Newell Brands' CEO; and Ralph Nicoletti, our CFO who will discuss the company's financial results and management's outlook for the full year and for 2017. We'll also be discussing our new Growth Game Plan. In the web deck, that's posted on our IR website, we provided a lot of good detailed information about the Growth Game Plan, including specifics of portfolio roles and other information that will not be covered in our prepared remarks today. So, I encourage you to spend some time with that deck. I think you will find it helpful. Before we begin, I'd like to point out that we will refer to certain non-GAAP financial measures, including, but not limited to, core sales and normalized EPS. We provide a reconciliation of non-GAAP financial measures, with the most directly comparable financial measures determined in accordance with GAAP in today's press release and in the slide presentation on the Investor Relations section of our website at newellbrands.com. Let me remind you also, that we will include forward-looking statements in today's discussion. Actual results could differ materially due to a number of risks and uncertainties, which are described in our press release and in the risk factors section of our filings with the SEC. The company undertakes no responsibility to update any forward-looking statements. Thank you. And now I'll turn it over to Mike.

Thank you, Nancy. Good morning, everyone, and thanks for joining the Newell Brands third quarter earnings call. I'm pleased this morning to report a solid set of third quarter results, with good progress on many fronts. Third quarter was planned as an income-driven quarter. We delivered results that were well ahead of our plan, enabled by strong cost synergies and Project Renewal savings, initial tax synergies, and competitive levels of growth in the context of an intense period of organization and portfolio change. Our momentum businesses of Writing, Baby, Food, and Appliances continue to deliver strong growth, which was partially offset by expected declines on outdoor solutions and commercial products. Cash flow was quite strong, enabling us to pay down over $230 million of debt or about $1.3 billion since the completion of the Jarden transaction only 26 weeks ago. We delivered these results while also completing a comprehensive review of the business, aligning the organization around a new strategic framework called the Growth Game Plan. The new Growth Game Plan establishes a new set of investment priorities, makes sharp portfolio choices, resets, and streamlines the organization from a holding company to an operating company, consolidating 32 business units to 16 divisions, while simultaneously scaling our innovation, design, insight, brand development, and e-commerce capabilities across much of our new portfolio with the intention to deliver steady growth acceleration with rapid earnings accretion, and strong cash flow generation over the next few years. We've driven this new strategy into action in the third quarter, announcing a series of organization and portfolio changes. We've chosen to move decisively and with speed because we have the benefit of lessons learned from the Newell Rubbermaid transformation and confidence in our team's ability to perform while we simultaneously transform. Our third quarter and year-to-date results…

Thanks, Mike, and good morning, everyone. As Mike noted, our Q3 financial results were solid and on-plan across all key metrics; core sales, gross and operating margin, and operating cash flow. We're also on track with capturing cost savings through synergies and Project Renewal and on track with our deleveraging plan. Third quarter reported net sales were $3.95 billion, a 159% increase versus last year, which was largely attributable to the Jarden transaction. Core sales increased 3%. Recorded gross margin -- reported gross margin was 32.2%, compared with 39.1% last year, largely due to the Jarden transaction-related inventory step-up charges in the amount of $146 million. This completes the turn of Jarden acquired inventory and the related step-up charges. Normalized gross margin was 36% compared with 39.5% last year. The decline is due to the negative mix effect from the Jarden acquisition and the deconsolidation of Venezuela, which more than offset positive impacts from synergies, productivity, and pricing. We reported SG&A expense of $938 million or 23.7% of net sales, a190 basis point improvement versus last year, despite the impacts of higher integration costs. Normalized SG&A expense was $817 million or 20.6% of sales, a 360 basis point improvement. Both reported and normalized improvements were driven by the mix impact from the Jarden legacy businesses, which have historically carried a lower SG&A spend rate, as well as benefits from Project Renewal savings and transaction-related synergies. Reported operating margin was 8.2% of sales compared with 12.2% in the prior year. This decrease was largely attributable to the inventory step-up, acquisition-related amortization costs, and certain other transaction-related expenses. Normalized operating margin improved 20 basis points to 15.4% of sales when compared to the prior year. Interest expense of $125 million rose $107 million year-over-year, reflecting higher debt balance incurred in the financing…

Thanks, Ralph. If you no doubt know, we've been hard at work, laying the ground work for accelerated performance and value creation. The creation of Newell Brands strengthens our presence in existing geographies and customers and enhances our reach through an extended international footprint, and access to new channels of distribution. This new scale gives us the opportunity to make life better for hundreds of millions of consumers every day, where they live, learn, work, and play. This new Growth Game Plan has at its core this bold ambition and vision, and a new set of investment priorities and portfolio choices that will shape our growth ambitions and resource allocation. The strategy is designed to unlock the unique opportunity that's inherent in the categories of both legacy companies. Across the Newell Brands portfolio, we have leading brands that compete in large growing categories that are responsive to activity. These are categories that are unconsolidated and as a result, have a low cost of growth. These unique conditions create a unique potential for the company prepared to make the investments necessary to capture the market share consolidation opportunity. Over the last five years, we've invested to build advantaged capabilities in insight, design; innovation, brand marketing, e-commerce, and collaborative selling that differentiate us versus our sub scaled competitive set. We've reshaped the company from a holding company to an operating company; releasing costs that have been reinvested to both build these scaled competitive advantages in our core growth capabilities and to more than double the A&P investment on the legacy Newell Rubbermaid brands. This operating model has worked as is evident in the company's performance. Capturing the transformative value creation opportunity inherent in the Newell Rubbermaid combination with Jarden will be a function of our success applying this model more broadly. The…

Thank you. [Operator Instructions] And your first question comes from Lauren Lieberman with Barclays.

Hi Lauren.

Hi, good morning. I have so many questions; I don't know where to start. Let me first ask just a modeling question, Ralph. If we're assuming -- or you're assuming that all the divestitures close on January 1st, but that's probably not actually way it will play out, unless I'm missing something, how do we possibly model this? We don't really have those pieces, so is it best to plug for it, to get to the EPS you're talking about?

Yes, Lauren I think your point is right because we can't predict the exact date of when these transactions will close. So, we thought it would be helpful to have an anchor point with an assumption. And that assumption would be that it all gets transacted at the beginning of the year. And if that occurred, it would equate, on all of the divestitures it would equate to about $0.20 of dilution. So, from that, as the actual timetables unfold as we move through the year, now we'll share that with you, you'll see that, and we'll adjust accordingly. I'd say also that which -- and Mike alluded to in his remarks, the slope of the curve of the dilution is something you also have to be mindful of because while the dilution is assumed to be the full year, starting on January 1st, some of the savings offsets that we're going to be pursuing will take a little bit more time to evolve throughout the year. So, the curve is a little bit skewed to the first and second quarters of the year. Mike said $0.06 to $0.07 in the first quarter, that's who you should be factoring in. And if the timing of closings adjust, obviously that will get -- we'll give you some guidance on that as it materializes.

Lauren it's an excellent question, and yes, we could have played it one of two ways. We could have held on guidance until we had more clarity or we could give you a starting point. We chose to give you a starting point. Now, we have a couple of opportunities to communicate, at least one opportunity to communicate publicly between now and earnings at the end of January and we'll take the opportunity to provide clarity at that moment -- any incremental clarity that we can provide with those -- as those opportunities present themselves. We could have played it one of two ways. We chose to play it this way, so that you can start thinking about this. There's probably very few companies that are as complex to model right now as us, given the assets going out, given the changes we're making in the business, and given some of the unique dynamics under way in some of our categories. Obviously, some businesses that are performing well, other businesses that are dealing with consequences of things -- of outcomes that happened earlier in the year, or external events like weather. And we'll try to help provide as much visibility to all of that as possible, without getting stuck in sort of too many inside baseball type of discussions.

Okay. I mean, the decision to share this much early is great. I just, my head is swirling a little on how to make it fit into Excel. Let me ask just more of a revenue question. The Safety and Security business, the international business that you talked about being weak, it's actually one I'm not familiar with, even in my coverage of Jarden, so if you could tell me a little bit about what that business is, what the outlook for it is? Is that possibly a piece that's [Indiscernible] in the slide deck, there's still going to be exits, the small number, but there's still exist in the divestitures? So, any color on both of those pieces would be great. Thanks.

So, First Alert has the relationship with publicly-traded company in the U.K., called Sprue. And we source and provide one of the most important ingredients that they use, and we us together in the creation in First Alert finished products for Europe out of Asia. And you've got -- if you look at the complexion of our results, you see good growth in North America, good growth in Latin America, good growth in Europe, and then you see a down elevator in Asia. The down elevator in Asia relates largely to this business. And this has been an issue that the Jarden business has been dealing with all year long, related to an assumption that was made in 2015 about a regulatory shift that would require all households in -- all new households in France and Germany to have carbon monoxide protection and carbon -- and smoke alarms. And that legislation has been not fully enforced in 2016, but there was a lot of growth in 2015 on that business related to the impending change. And so, the business -- the Branded Consumables business, the First Alert business has actually had a great year in the U.S., but it's been offset in many ways by significant year-over-year down elevators. And if we don't, the First Alert business for the full year, the impact would have been about $50 million in the full year to core sales. So, this is not a surprise, this was a known issue and we've been dealing with it all along, but that's what that comment relates to. It relates to the fact we're working through this 2015 big bubble, positive event in 2016. And both by the end of the year, we've lapped all of that noise and we're back to steady-state and we can…

That's great. The transparency you guys always provide is incredibly helpful. So, thanks so much.

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

Yes, good morning, everyone. Just two quick questions for me. Mike, maybe you can provide some kind of state of the union on category growth? It looks like generally speaking, looking at all of the other consumer companies out there and the retailers, things seemed to have slowed down sequentially. So, just want to get your thought on that? And then just coupled with that, if you can give us some progress on market share development across some of the key businesses? And then I have a follow-up.

Yes, so we don't see major shifts in category growth right now in the markets that we can measure. So, for example, in the third quarter Writing had -- as a category as a market had very good growth, we had tremendous growth from a PoS standpoint. And if you adjust our 7.6% growth for the $15 million, we end up near double-digit type of growth on a core sales basis as well. We increased market share in the U.S., where we have good measurements, by over 100 basis points in the third quarter on our Writing business, connected to an excellent story around back-to-school. And so, we've come through that period with the right replenishment orders and we actually come down into our lower seasonality period now in Writing, with the opportunity to reset and set up momentum for the future. And so, we felt great about that. Baby, obviously, we're consolidating market share. We're growing unbelievably well in Baby Gear, largely U.S. driven related to innovation. You know that we launched the 4Ever Car Seat in 2015. That's now $100 million item for us within the Baby Gear business, which is by far our biggest innovation ever. And we've now followed that up with the Extend2Fit Car Seat on Graco, which allows your child to sit rear-facing longer but comfortably, because of the extension that we built into the car seat, which is as you know the safest way to ride as a small child. And so these innovations are driving really good growth. And in Baby Gear, we've consolidated share -- again as best we can measure it, but with over 10% growth and with the kind of PoS numbers we see, through our transactional database, very good progress. On Yankee Candle, continue to see very good…

Great. Mike and just on the Jarden innovation pipeline, I mean, obviously, a lot of the Newell growth acceleration over the last two years or so has really been from innovation that you guys started to fund several years ago.

Right.

If you were to rate the Jarden innovation pipeline today, on a scale of 1 to 10, 1 being the worst, 10 being the best, how would you benchmark it right now and what would you characterize the Newell pipeline just too kind of give a compare/contrast?

So, to all my Jarden friends on the phone listening, I'm not going to rate. I'm going to do the Russian Judge, give the U.S. a score of -- but I will tell you that I'm really pleased and impressed with the Appliance business and we've got good things going on there. I do think we -- as we build out these new design hubs, that I just described in the prepared remarks that we can do some things to even make that funnel stronger, relating to fit, form and finish, the design aspects of the product. So, I think there's things we can do to strengthen the funnel, but I do think there's some interesting ideas coming through the funnel out of JCS. I think there's good innovation in a lot of places. The thing that I would say, is that the innovation is not art, its science. And the discipline of innovation development is what we've built a capability in and this is where we can bring know-how to some of our Jarden businesses. And that should increase the probability of success and the increase the size of some of these projects -- the incrementality of some of these projects. And so you're right, there's a lead/lag kind of effect on when that work will yield. As if you flip through the web deck that we put out there, you'll see how we categorize different categories with respect to portfolio roles. And for the businesses that are in the develop for growth category or in win bigger, we will be able to shape and sharpen some of the work that's going on there, with added resources that will be co-located with those teams. But I don't think the impact of those actions really yields growth in 2017. I…

Thanks Mike.

Your next question comes from Bill Chappell with SunTrust.

Hey Bill.

Thanks. Good morning. First, just quickly on the M&A standpoint. Ralph, if all the deals are postponed past January 1, is it more or less dilutive than the $0.20 outlook?

If they get diluted, I mean, depending on the mix of them, let's take tools and then I'll deal with everything else. Tools would be less dilutive if the closing goes past January 1st. I think the one that's a little more tricky to model was skis, because of the slope of the way the earnings flow. In the first half of the year on that business, we lose money and then the back half of the year is where the profits come in. So, obviously, from an M&A standpoint, all that is equalized in the value, but in terms of the pacing and the dilution, we actually would get hurt a little bit ironically, if it went early in the year. And then obviously towards the end of the year, we'd be picking up the profit. So, that's the one that's a little tricky in this.

Yes, I think I'll just jump in on skis. I think it will be tough for us to close that deal by the end of the year. So, we'll probably have to deal with the loss in Q1 that's baked into the Jarden base that happens every Q1 associated with the ski business, but I think it will be tough to get it done by the end of the year. I'm sort of hopeful on Tools, although if Tools were to take longer that's actually a positive. But I think that it's best for the Tools business, for the Tools team, and for us to get the net proceeds in hand, so that we can work on the debt and the leverage ratio more aggressively. Because if we do that, Bill, if we get the proceeds in hand early, pay down the debt more aggressively, we find ourselves in a position, having reset the organization to potentially get back into bolt-on M&A in the core, complementing our organic agenda. And we think we'll have the capacity to do that -- organizational capacity to do that type of thing, because of the experience and leadership team and the speed with which we're moving through Q3 and Q4. So, I do think Q3 and Q4 are set up quarters for 2017 and we're going to be uncompromising in finishing things we've started or getting the bad cholesterol out of the system in 2016, so that we have a clean comparator. But you're right; certain businesses lose money in certain quarters and make money in others. Skis happens to be a one that the perfect scenario on skis, is to sell it by the end of the year, but we focused on getting Tools done first. We're in the midst of ramping on skis, and there's a lot of interest. So, I'm hopeful we get a good value and we get -- we set these businesses up for success in the context of their new owner. But there are those dynamics again inside baseball dynamics of timing and impact on dilution and modeling, that we'll do our best to help you with as we get more clarity.

Okay. Thanks. And then one question on just kind of core sales outlook. I know there's a lot of moving parts, but just trying to look at -- you maintained the 3% to 4% next year, but you're taking out tools which is flat at best right now and winter sports which is probably the same. I've got to think that adds at least 100 basis points to your growth algorithm. And so, it's certainly below what core Newell has been growing over the past three or four years or so. Do you still look at next year as a transition year as we take some of the slower growing businesses out or are you just trying to be conservative as we're still in 2016?

So, there's a lot of uncertainty so we are being prudent, but there's also a reality probably to the first half of the year. Remember, we're going to go through -- we have already redesigned the organization, and we're repopulating the organization in the fourth quarter in the U.S. We'll have touched over 10,000 jobs in the U.S. between Q3 and Q4. Obviously, now those people aren't leaving, but they are moving into different roles and different configuration. And we're working as fast as I've ever worked in my career to get to the organization reset. That organization will come up to speed and get into a rhythm of working in the first quarter that has a natural sort of startup curve to it. So, I do think that the first half of 2017 is a transition half. But I think you're right, I think we'll get through this very, very quickly and get know a rhythm of working, because the cultures are more similar than different, I think we'll get through that transition period really well. But I do think that you have to accept that when you're making that kind of broad change, that there is some distraction potential in the business and there's always execution risk connected to that, which is why we've guided the way we've guided. You're right; the businesses we're selling have lower aggregated growth rates than the total company, so we should get a positive mix effect in core on growth. And we will get a positive mix effect when this is all said and done on margin. The issue for all of you, because of the new rules that don't allow us to disc ops treatment on these things, is that you're going to be comparing -- you won't see the margin…

Got it. Thanks.

Your next question comes from Steve Powers with UBS.

Hey Steve.

Hey Mike. Good morning. So, first question, does running the two separate operating models that you've described today, limit the synergy upside to the $500 million that you've at least talked about as potentially residing in the business? Because it seems like the magnitude of synergies available on the entrepreneurial model businesses would be materially less than the development and delivery businesses if that makes sense?

Yes, it's a great question. Did you have a second question too Steve?

Well, as you're answering that, I do have a longer term question I want to follow-up. But as you're answering that, if you could just also help us, how much of the business in terms of sales and profits today is going to fall under each operating model?

Yes, we didn't disclose. I thought about putting that into the web deck. I think I'll hold on that and let us get through 2017 planning, so I can provide a forward-looking view. We'll probably give you that at CAGNY, so you have a little bit more specificity. We also have to get into the reporting segments, as we resolve that through the fourth quarter because we're not going to report 16 divisions obviously. So, but you should think about that in the context of this strategic ambition I laid out around live, learn, work, play. And there's probably maybe a fifth segment out there -- who knows, but we need to work through all that over time. With respect to your question on synergies. The devil is in the details. So, for example, we're going to play for synergies everywhere we can get them. So, from a -- to deliver entrepreneurially positioned businesses, we're going to clearly go after synergies and corporate functions. And we're going to go after synergies, where we said procurement, IT, legal, and eventually as we build out a shared services model on IT transactions, financial transactions, HR transactions, doesn't matter whether you're entrepreneurial or whether you're develop and deliver kind of model, you're going to leverage that system, so you really don't get a choice. That's not up for discussion, it's not a vote. It's not a democracy when it comes to capturing those synergies. There's certain other synergies that are going to be available for certain businesses. So, a business like Pure Fishing which is a great example, where it has a big part of its business in a channel that specific to it. You're not going to capture synergies there. You may be able to scale home and selling with Pure Fishing,…

Okay, that's helpful. And so my longer term question and maybe a bit too early, but you'd mentioned April. I think back in April you'd also described yourself kind of looking out aspirationally to 2018 with annual EBITDA of about $3.5 billion, EBITDA margins 20% plus and cumulative operating cash flow between 2016 and 2018 as somewhere between $5.5 billion to $6 billion. I'm just curious as given all of the evolution and strategies that occurred since then, is there a way to revisit and reframe that, in terms of what your longer term objectives are, as you stand today?

Steve, its Ralph. Those goals still are in place. I would say with the steps we've taken thus far particularly on the portfolio, the deleveraging will be ahead of plan within that. And that will give us as Mike mentioned in his remarks, some flexibility to achieve our leverage goals, and then also, have the capability to bring in some bolt-on M&A in our core categories. So, that will change the completion over that period of time. So, we'll get the benefit on the organic side from all of the things that Mike had alluded to. But I would say this repositioning also strengthens us overall, because we're going to be moving categories out that frankly would have been more of a challenge in our minds to develop and grow within that model. And then have the opportunity to bring in some different businesses in our core capability -- in our core categories and capabilities, that we could leverage and create more. So, I think now nothings in macro sense-changed with that, but if you sort of think about the pieces underlying it, the leverage program is enabled, and the M&A program is enabled to complement the organic agenda.

Yes, I think we're going to get right back on the glide path, if not ahead of it, because think about this, you're divesting businesses that are non-core, that don't really play in the same space as the balance of your portfolio. They don't have route-to-market synergies, or they don't have -- they don't or can't leverage your core operating model. And so we're going to get margin development from that, we're going to get the net proceeds in from that, we'll pay down the debt, it'll give us access to M&A faster. But the real story in the M&A is that we have the breadth of products and categories that we want now. The whole theory of the combination is grounded in this opportunity to consolidate unconsolidated categories. So, we complete in large growing unconsolidated categories with leading brands. And so, we're going to apply the model for growth to build market share in those anchor categories. But then we're going to complement it with M&A in the core. And the M&A in the core is by far the most interesting value creation path we could take, because we will plug brands into existing operating units and best example of this is Elmer's. Within six months, we had plugged that brand into the writing creative expressions group, and delivered $20 million plus of run rate synergies, think about the value creation connected to that. So, as we get back into bolt-on activity in the core, we will be able to bridge back to the original glide path and I actually think ahead of the original glide path. It may not all work out, the timing may not all work out in 2017. But once we get into 2018 and beyond, we should be really motoring, and hopefully ahead of some -- obviously the numbers I communicated in that $5.5 billion to $6 billion excluded any disposals, but also excluded any acquisitions. And I think that we get right back to the glide path. It's just that we live through this transitional window. And I think we might actually get ahead of the glide path that we originally laid out driven by synergies connected to the acquisitions.

Okay, cool. And you expect to be ready to be more proactive from a bolt-on acquisition point, sort to middle of next year, is that the right way to think about it?

Yes, that's clearly in 2017, we'll be able to principally because of the divestitures. So, the timing not exact, but in 2017, you should expect us to be active.

Okay, very good. Thank you.

Steve, we just need to get the transition organizationally behind us. We need to get a quarter under our belts, operating as a new team. But of course you can't control timing on these things. So, I don't know whether it will be first half, second half, early, late. We don't know, but job one is to get the transition behind us, and start operating in the new context, and delivering in the new context and the M&A will present itself when it does.

Thanks a lot.

Your next question comes from Kevin Grundy with Jefferies.

Hey Kevin.

Thanks. Good morning guys. Mike, I wanted to come back to the topic of core sales and I guess how it sort of informs our view with underlying trends. So, you reported 3% in the quarter and Bill Chappell touched on this sort of dynamic as well. You printed 3%, the guide was for the lower end of 3% to 4%, but that was prior to the decision to exclude the divestitures that you announced. And the hurt from that is probably in, rough math probably in the ballpark of like 50 to100 basis points. So, my sense is market expectations and ours were closer to 4% for the quarter, given that dynamic. And presumably I guess, even probably I suspect lower than your expectations also given this dynamic. So, is that accurate number one? And I guess number two, if so, what sort of came in worse in the quarter than you anticipated than when you gave the guidance of lower end of 3% to 4%? And then I have a follow-up.

Yes, I mean, it's a fair question, Kevin. So, the thing that I'm looking at is I'm looking at the net sales numbers, relative to what you had in your model and we were off by a bit. I think part of that is driven by underperformance in the held-for-sale business relative to what you'd expected. And to be fair, some of those businesses underperformed our expectations as well. If you followed the Stanley discussion, when they were talking about the deal, they talked about distribution center transition issue in tool -- our Tools business that they were aware of and we disclosed. And so we had -- the held-for-sale businesses underperforming slightly. The balance of the business came in pretty much where we thought it was going to be. I debated back with Q2 earnings, giving you guys some of these moving parts that I've now disclosed. Like I didn't think I would be ever talking about our Sprue relationship in the U.K., but I think that it's worth talking about. So, you have a whole series -- and I didn't talk to you about the Beverage D.C. transition, because I didn't think it was worth talking about. But I was kind of hoping that maybe we would have gotten 20, 30, 40 basis points more, but that's $12 million in a quarter. So, it's not something that I spend a lot of time worrying about. But Beverages, they're a whole series of one-time things that we just chose to motor right on through that the Beverages D.C., the Sprue event, continuing to see the Commercial Products transitional the way through. These are choices that are the right choices for the long haul, but they compromise yearned type of delivery and we just is accepted that risk associated with…

All right. I appreciate the transparency on that Mike. Thank you. And then one more follow-up for me, just as it pertains to underlying business trends. So, you edged up the organic sales guidance, like rough math now to 3.5% to 4%.You've done 4.2% if I'm not mistaking year-to-date for core sales. So the rough math suggests a high end, you do 3.5% core sales in 4Q, where the low end would be like a sub 2% kind of number.

Yes.

But given the comment you just made, like 3.5% probably would have been what you would have like what you've done. But you've made some longer term decisions for the business, which are sensible. Should we be thinking about higher end that feels like a reasonable place to be, correct me if I'm wrong?

Well, here is in the script, what I said was, that within the core sales guidance range, we're trending toward the higher end. And so back at back-to-school, I guided Q3 to the low end and I even said in some of the Q&A that I'd be fine if we drifted below. In Q4, I said midpoint of the range and at mid-point of the range you end up at 3.8% to 3.9% on the full year. There are things happening in the fourth quarter and I've tried to be transparent about it in some of the answers I gave earlier. We will have softer Baby momentum in the fourth quarter connected to this distributer transition in Canada. We will have slower Writing growth, sort of the low end -- very low end of the range connected to the complexity reduction of manufacturing transition and the distribution transition in the fourth quarter. And that's all driven by the choices we're making to get the complexity out of that business. This is the right time of year to do it, so that when we come up into Q1 and into Q2 ramping for back-to-school 2017, we're in full flight.

With better margins.

With better margins, like we saw on the Commercial Products numbers that we reported, 250 basis point improved margins. Now, in the case of Writing, we'll likely spend that money back. But in the case of Commercial Products, we banked that. And so, we're going to have really strong Home Solutions growth in the fourth quarter connected to the recovery of Beverages, after the distribution center transition, related to the launch of Brilliance on Rubbermaid and related to a shift in timing on Cookware out of Q3 to Q4, which again we don't talk about -- shouldn't talk about because it's just too much inside baseball information. But we're going to have a really strong topline quarter in the fourth quarter. So, we'll have very strong Home Solutions, weak Writing, low end of the range of what you'd be comfortable with, connected to the Writing complexity work. We'll have the Baby transition that will cost us $5 million to $10 million of revenue in the fourth quarter, but set up great growth next year on Baby. We'll have strong performance in Appliances. We'll have -- should have very good Yankee performance in the fourth quarter, given that we're spending more. So, the complexion of our growth in the fourth quarter will change versus what has been driving us up until now. But again, 2016 is a reset year to be able to set up -- or set up year this movement forward in 2017 and we're going to see all of that through. I think midpoint of the range is the right place to peg yourself and I've given very specific perspective on what I think the earnings per share will look like in the fourth quarter, because we're going to spend significantly more A&P behind the growth agenda in the fourth quarter.

Okay. Thanks for the transparency, Mike. Good luck, guys.

Thanks.

Thanks.

Your next question comes from Dara Mohsenian with Morgan Stanley.

Hey Dara.

Hey good morning. So, we're a few years into higher advertising spending on the heritage Newell business, and obviously seems to have worked in terms of driving sustainable higher organic sales growth, along with I guess, the innovation you discussed earlier in Q&A. But any initial thoughts on how responsive the Jarden side of the portfolio might be to higher marketing spending, versus heritage Newell, maybe some early reads on businesses where you boosted marketing? Or if you haven't done that, you have on the Jarden side, at least some of the analytics, you've run through post deal to determine where to spend, that'd be helpful?

Yes. So, we're going to learn there, really quickly here, because we're putting material money behind Yankee in the fourth quarter. We've got new advertising that the team has worked on together. And we're going to try to stimulate more demand around the customization promise that Yankee can make through broad based television advertising, as we come through the holidays. Because of Yankee's retail footprint, we'll be able to measure that really quickly. So, I'm actually excited to be able to see -- pull a lever and get a response that is tangible hopefully. We'll learn quickly, because as you know, we don't want to put money into businesses that aren't going to have that kind of responsiveness and we haven't done that up until now. We've been quite commercial through Q2 and Q3 on Jarden investment, but the money is now being shifted over to Yankee as part of our portfolio and prioritization work. And we should learn very, very quickly, fourth quarter into Q1 as to whether that worked or didn't work. And we're kind of hopeful that it will. So, time will tell. It's right around the corner. We've got all eyes on this, because obviously we would love to grow, without having to make big investments in A&P. But we believe actually that A&P is sort of an essential part of the algorithm for Newell Rubbermaid and the categories look very, very similar. So, we think that one of the things that the scale and the combination affords us, is to be able to put this type of A&P behind some of the higher priority businesses, with the goal of trying to dwarf from a resourcing standpoint our sub scaled competition. And we'll learn in the fourth quarter, its right around the corner.

Okay. And then on the heritage Newell side, I guess, Writing instruments, very strong results. Are you seeing competitive response out there, in terms of advertising or promotional spending that as we look out to 2017 could slow the momentum?

No, not right now, not really. We've seen mostly commercial responses, not big investments. It's going to be very hard for sub scale competition to be able to afford to put money into the brands the way we are. That's part of the -- this is why scale matters in these categories. So, we haven't seen material shifts in the investment profiles or material shifts in the quality of the innovations that are coming to market.

Okay. And then last, are there other pieces of the portfolio, either in the Jarden or Newell side which could be a candidate for divestiture post what you've already announced? Are they sizeable or are you pretty comfortable with the portfolio at this point, obviously assuming these divestitures occur?

Yes, I never like to make it black and white, that we'll never do it. But we took a big swing here, with the choices we've made in August and we're going to see all those through. There may be other assets over time that we'd swap for some other items in the core, but we're not active in that regard. We've got a lot on our plate right now, executing what we said we were going to go do. And I think I wouldn't envision anything material happening in --over the next two or three quarters and beyond that I'd hesitate to get too specific. But we actively manage the portfolio, and we have on Newell Rubbermaid. We'll continue to on the combination. Our energy now is focused on disposals that is going to shift to bolt-on M&A in the core. There may be some other things we choose to do later on. But for now, we're really happy with what we've chosen to do and we think it will enable management and leadership to focus on the businesses with the greatest opportunity.

Great. Thanks.

Your next question comes from Wendy Nicholson with Citi.

Hi. Just a quick question on the tax rate. The 26% to 27% for fiscal 2017, thereafter, do you think the tax rate stays at that level, or does it jump back up? And then I have a question on e-commerce?

Hi Wendy. On the tax rate for 26%, 27% for 2017, what that reflects is our -- some of the tax planning work that we started actually and started to realize some benefit from as early as this quarter in the balance of the year. So that, we think is sustainable. Those are tax planning things that are structural, that we're taking advantage of, with the combined footprint of Jarden and Newell on a global basis, so sustainable. There are things that we're going to be -- I'll call it, attacking in terms of more tax optimization over time. And I think as we evolve the company and the M&A agenda as well, that presents additional opportunities. So, I think that's the right range to model beyond. I don't see it lifting materially from 2017.

Yes, I certainly don't think in 2018 it will, because there's going to be more tax synergies. Now, one of the beautiful things about this is. And there are discreet items obviously, because of the -- I mentioned discreet items in Q3. We've assumed that we're able to repeat some of these discrete items, that there will be different discrete items, but we'll be able to cover that in the base. But the going tax benefits will -- should as Ralph just said, increase over time. That said, I mean, if you look out a few years beyond that, there's some potential that tax rate could drift up. But I've been saying that the whole time I've been at Newell Rubbermaid and it hasn't actually played out that way. So, I always worry about the discrete items, not being able to lap them, but there always seems to be more discrete items available.

Terrific, sounds good. And then, on the e-commerce thing, my question -- I guess, two things, sort of, conceptually the idea of pulling together an e-commerce division. They are going to focus on everything from e-commerce sales to digital marketing on -- all that kind of stuff I assume, correct me if I'm wrong. But the $1 billion of sales through e-commerce channels, how much of that do you expect will be through your own website direct-to-consumer? Or is that all going to be through independent retail websites and is that going to be margin accretive or dilutive to the exiting margin? Thanks.

So, let me be clear about that. This is a commercial organization, so this is a selling and demand conversion organization. So, they will not be spending the vast majority of their time on digital marketing. That will be the brand development organization, those are people that will be creating the digital assets and thinking about the digital media strategy. So, the brand owners will own that work. This is a group of people that will be focused. And it will be a sizeable group of people who will be focused on taking the demand created by the brand teams and converting it to purchase in these channels. And their focus is going to be largely bricksandmortar.com and pureplay.com. We do not envision a huge movement forward on direct-to-consumer, except in the Yankee business and in selected other businesses, like Marmot, and potentially Coleman and Baby. But the reality is that the vast majority of that growth is going to come from bricksandmortar.com and pureplay.com. And so the selling aspects around Amazon as a Pure Play, or Alibaba as a Pure Play, or walmart.com as a Pure Play that will be led by this team, and they will be working in partnership with the bricks-and-mortar teams to drive conversion of demand, to purchase in the channel. It's going to be really exciting. The $1 billion of growth I think is conservative, in terms of what's possible by 2020. But we're ramping that capability now and the hub of that organization will be one floor below the Executive team in Hoboken. So, we're going to keep that team right next to us, because of the importance of its delivery against our growth agenda.

And the margin profile of that $1 billion of sales?

It's actually just depends on what happens going forward. Today dot com margins are generally better than brick-and-mortar margins, because you have lower selling expense connected to it. If you think most companies have about 4% selling expense in consumer goods space to be able to reach bricks-and-mortar, you've got far less intensity, because you don't have retail selling expense either brokered or direct retail selling expense connected to it. So, it can be -- it's about parity at gross, but it's more profitable through the below the line aspects of it.

Terrific. Thank you.

Your next question comes from Bill Schmitz of Deutsche Bank.

Hey, Mike good morning.

Hey, Bill, you still with us?

I am, listening to every single word. So, why is organic growth in the fourth quarter going to be better? Because if you look at the puts and takes, it sounds Ike AeroBed is going back into Wal-Mart. Yankee is not liking -- lapping the pipeline, and selling more advertising, the pen business is shipping to China. And then you look at Jarden's comp, and it goes from a plus 6% this quarter to plus 2% and yours is roughly the same. So, am I missing something there? And I know you have a little bit of headwind on the SKU reduction on the Writing side, the Baby stuff but--

Yes, I think that's the thing to look at Bill, in your model. So, first of all, Baby is real, but that will be a material down shift, because we have to take the inventory back in Canada and then we can turn it around and sell it back in, but that won't happen until Q1. So, it's a timing-related dynamic. Although Baby has tremendous momentum right now, so maybe you're right. But Writing is going to go through this transition period, much like commercial products had. So I think the right thing to think about on Writing is low single-digit growth in the fourth quarter. Now, that will be an event-based kind of transition, and then we're back in gear as we move through Q1. And certainly, Q1 should be strong, and then particularly after that and Q2 really ramps up to support back-to-school. So, yes, there's some value in pipeline in China, but we're going to really pull the throttle back, as we go through this complexity reduction period in Writing. And then in aggregate, that gets you to 3.5%. And to be clear, you know what, the confidence is there in the $0.80, but because we are stepping up A&P, so much we have a pressure release valve, that if in fact, that there's any risk on growth connected to what I've just shared with you. So, 3.5% is probably the right place to be and it would be great if we delivered more, but I'd want to be transparent, that we won't press for more in the fourth quarter, because we want to get 2017 off to a fast start.

Okay. I mean, but how about that Jarden comp, because it goes from 6% to 2%?

Yes, it does. Jarden comps get a lot easier here on out. You're right, they're 2.2, even 2.2will be a little bit tougher, but Q1 and Q4 should be nice quarters for us. I think Appliances and Yankee that helps, Coleman continues as a negative. You don't get the AeroBed; you don't get the distribution back on Coleman until 2017, so we'll continue to suffer there. And Marmot is dealing with what everybody else in apparel is dealing with right now, which I was glad to see it's been a cold, wet and white last week in the North East, so that's good. But everybody is dealing with the same dynamics in apparel. So that's not going to flip to a positive on us But you may be right, it may be that we get better momentum in Appliances, and we get to a higher number than 3.5%. We think that's the right place to plant it for now, given what I shared with you on Baby and Writing.

Plus we're at probably at the peak of some the transition on the organization in that period of time.

I sometimes discount that, but we're changing everything basically. But I'm convinced that people need through change really well, when it's this profound a set of changes, but that's a possible governor to Ralph's point as well. But we'll know it soon enough, whether it's better than 3.5 or not. I'd be disappointed if it was worse. But again, these are reset quarters, these are income-driven quarters as we get the organization remodeled and retooled for the future.

Okay. And then what's driving the growth in the Appliance business? Because we get the Wal-Mart scanner data effectively, which I guess, picks up most of -- or should pick up most of the brands in Wal-Mart, so where is all that great growth coming from?

Yes, we have phenomenal growth in Latin America right now on the Oster brand, and Sunbeam is growing in channels you may or may not be measuring. And sometimes when we launch new SKUs, the syndicated guys don't pick it up, because we're not using Nielsen, we're using IR. But their growth is in slow cooking in the U.S., and in pain care which is heating pads in Sunbeam, and tremendous growth on Oster in Latin America. And so that's been a sustained story. Part of that's pricing driven in Latin America gets transaction ForEx issues, but good momentum. And FoodSaver, of course, which has been double-digit growth since I've been looking at it, back in October of 2015. And with the launch of the new item on FoodSaver, which we call FoodSaver Flow within the company, which is a whole new system that should continue right through Q4.

Okay, great. Thanks so much.

Yes.

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

Great. Thanks. Just wanted to touch back on e-commerce, because how does the e-commerce division work with the two operating models, like where does the decision-making lie? Does the e-commerce team look at the entirety of the portfolio in terms of the innovation and products, and decide what to market to various brickandmortar.com or online.com? Or is it more of a team effort between the both operating models and e-com division?

Strategic intent will be driven by the brand, but choices about what to sell where and how to sell it will be led by the e-commerce division and they will be empowered to make that choice. They'll be fully resourced with a standalone P&L and will drive the growth agenda for the company, leveraging digital assets that are created by the brand teams. The points of connection to the operating divisions will come through pricing strategy and pricing execution. So, obviously, you have channel conflict dynamics that can arise with this model. So that's where the point to connectedness needs to happen. It's in what we would call trade marketing or business development, where those conversations really need to be very, very clear, such that we don't get into pricing dislocating dynamics between the bricksandmortar.com and the bricks-and-mortar, or the pureplay.com and the bricks-and-mortar. So, that's where the complexity is. I don't believe in shared accountability on things like this, nothing ever gets done. It's like begging for resources. We're going to structure this team, which will be fully resourced, with cross-functional resources. They'll have their own P&L, they'll have their own budgets, they'll have their own set of targets to deliver. The sales relationships will be connected to the division associated with the dot-com work. And all of the directtoconsumer.com work will connect through that P&L. Now, of course, we're going to have shadow P&Ls in the division, so the divisions get the benefit of e-commerce as well. And when we report externally, you won't see us reporting an e-commerce division, you'll see us reporting a category-based models that likely ladders up to something more strategic, than what I'm describing -- what we've described today. But that's how it will work. And the point of complexity will be around pricing and pricing strategy across all channels.

Got it. That's helpful. And I know this is a long ways away, but as you think longer term about further divestitures, is it fair to assume that potential exits could come from both the develop for growth and deliver entrepreneurially divisions?

Yes, I'm agnostic on portfolio, but I think our strategy will drive those choices. So, as we continue to build our platforms out, we'll learn more. And -- but I don't think our focus will be -- after we get through this first $1.5 billion, I think we're going to be looking to rebuild our focus within the core, and grow and deliver, and get back to the glide path that we originally described. And I'm hopeful we get beyond that glide path, with some of the deals that we could potentially do in our core categories. So, I won't be anxious to reset more, but that's not to say we won't. We might at some point in the future, if we think that a business might be better valued as part of somebody else's architecture. The things we're keeping are the things we want to keep and we believe in. But we'll learn more as we go and our focus is growth after we get through this period of resetting the portfolio, both organic and externally developed and delivered growth.

Thanks Mike. Appreciate it.

Your next question comes from Joe Altobello with Raymond James.

Hey Joe.

Hey guys, good morning. I'll be very brief here, in terms of one question. I think looking at next year and the drag from currencies and commodities. You look at currencies, getting a little bit worse -- or I'm sorry, a little better, commodities getting a little bit worse. So, how are you guys thinking about the combined drag on earnings next year, versus what you're seeing in 2016?

Yes. We'll have more commodity inflation next year, resin costs will be higher, not -- it's nothing like what we've experienced in prior year periods. But we'll have to do a little bit more pricing and we'll have to watch that very carefully. FX is actually -- we'll have more of a headwind next year potentially, slightly more. Nothing like what we saw in 2014, 2015. It really depends on relative moves in interest rates, but we've built a modest increase in FX impact. If you look at the FX impact -- the translation impact in the third quarter relative to the second quarter, we had 105 basis points of headwind in the third quarter versus 75 year-to-date. So, it's gotten a little bit worse, but it's not a massive shift.

Yes. Essentially, we've assumed the markets today as they are or what we're going to see into next year. And as Mike said, that's net -- a drag on the results for next year. Principally where we saw the sharpest move is in the pound recently and that's the biggest driver.

But all that's reflected in the guidance we provided. And we'll see how it -- obviously, we don't know how this will play out, and we have to adapt to it. So, if we get more FX, and more transaction impacts, we're going to have to price to recover.

They both get a little worse, but nothing to get overly concerned about at this point?

Yes.

Okay, great. Thanks guys.

Your next question comes from Jason Gere with KeyBanc Capital Markets.

Okay. Thanks and I'll be very brief as well. I guess my question is just, with what we've seen in the Consumer landscape over the last couple of quarters, both Consumer and on the Commercial side, we've seen some softness. I was just -- I guess, Mike, I just wanted to get your outlook, maybe your state of the union, just on maybe more on the Commercial side? So think Consumer side, you have a lot of good innovation coming through, and there's a lot of investments going through. But I was wondering maybe about the Commercial side, and any concerns that you have, over maybe the next six to nine months in terms of a slowing down?

Look, we've made a move, a series of moves with portfolio now that makes our company far more consumer-centric than we historically have been. And the Tools decision was the last in a series of choices, the decision to sell Lehigh Rope and Cordage and another aspect of the business that is more cyclically-oriented. So, we're not as vulnerable. In the new portfolio, we'll not be at all as vulnerable. We'll look more like a consumer goods company than we've historically looked like as a blended company. So, far less cyclically exposed with the Decor business hardware business, tools business, Lehigh Rope and Cordage business out of the portfolio. So, I'm not -- I'm actually more bullish, that we'll be able to ride the macro-driven waves that inevitably will be in front of us at some point in time. The other aspect of your question was what, Jason?

Yes, just in terms of the investments that you're making. Now and I understand obviously with all of the portfolio changes, it was just really more focused on the Commercial side, the exposure there. But we've just seen I think the backdrop both on Consumer and Commercial it's been a little bit softer. And just kind of wanted to get your view, versus maybe where it was three, six months ago?

Yes, it's -- look, I think consumer confidence, certainly sort of less positive. But again that's a measure of attitudes, and not necessarily behavior. So, I don't over react to that. I think a lot of that has to do with the negativity and headlines related to the election in the U.S. So, hopefully, that's get -- well, we know it will get behind us by 8th of November, thank goodness. But -- so hopefully, consumer confidence whatever impact that's had on confidence certainly lessens, but we don't see it in the market data. Like what I look to is whether we're seeing foot traffic down in key retailers, or whether you're seeing consumption patterns change in your PoS data. And I don't see a material shift. Usually, a move in confidence as low as it's gone, does eventually correlate to behavioral shifts, but we're not seeing that right now. So, we don't know how things will evolve obviously. As the Fed moves on interest rates, which they will inevitably do, that could create further confidence issues. You never know or not and we'll watch this very, very carefully. What I've said historically though, is that ideas trump the macros that you can't really wait for the macros to help you. And if they're going to hurt you, you better figure out how you're going to compensate for that. And that would be -- that's the way we tend to look at things.

And in fairness, and then, just you brought up one question, so I have a counter question. In terms of pricing for next year, so if you think about the pricing that's come through in 2016 and I think you mentioned with just some of the commodities, I think that was on Joe's question, maybe there will be some pricing there too. Can you just talk about the magnitude of maybe pricing coming through next year, versus what you're seeing this year?

Yes, Jason with the slight increase we probably see resins, coupled with what we talked about in FX, I would expect to see more pricing in next year, than what we have this year. We haven't articulated a specific number on that, but you'd expect to see more pricing coming into play next year than we had this year.

Is that going to be related to -- is that going to be taken with new innovation, or is that going to be price increases on the existing SKUs?

Well, I think it's on existing and with innovation you price to value, so we'll price right with our new innovation, which we think is -- modeled into what the expected -- the size of those businesses could be. So, it should be -- you'd see it more on the base business, for the reasons we said on cost change. And on innovation, we'll always look to price-to-value.

Okay. Thanks.

Jason, the pricing will be focused -- we have to recover transaction ForEx, so we have to price to recover. And I think, over time, we're going to figure out how to price more strategically to, as we get the reset done, as we get better information, visibility, we'll be able to really get into more explicit conversations, with the business units around strategic pricing. And we need more price in the business, I'd like to see more pricing in our business. It's got to be a healthy part of any year's algorithm. Of course, we do the bare minimum which is to cover transaction and costs net of productivity benefit. But there's a strategic lever available to us to pull, that I think -- Ralph and I spent a lot of time together at Kraft, and they did a good job through the 1990s. And we need to think about how to reapply some of those approaches and techniques to this business.

Okay, great. Thanks for the color.

Your next question comes from Steph Wissink with Piper Jaffrey.

Hi Steph.

Hi good morning. Just a couple quick ones for us as well. Mike, I'm wondering if you can just size up the e-commerce business today and give us some sense of a rate of growth, versus what you've seen in bricks-and-mortar. And then maybe a little bit more context on the scope of that investment around that key initiative? And then, I have a derivative question just related to that commitment to e-commerce. Is there a derivative benefit beyond commercialization, really around analytics and measurement, specifically as you think about simplifying your SKU assortments, really bringing to market what you think are going to be your strongest and best SKUs? Thank you.

Yes, excellent question. So, about 11%, 12% of our revenue is e-com based, whether it's direct-to-consumer, whether that is bricksandmortar.com or pureplay.com. So, you can back into what roughly what that will be, post disposals and come up with a revenue base that this growth is off of. We can't measure e-com growth everywhere in the world, but where we have transaction data and PoS data, we actually break down all of our retailer trends, brick-and-mortar and dot-com. So we look at every product family in the U.S., for example, by retailer, in bricks-and-mortar and then dot-com, so we're looking at trends separately, since we can get access to their data in that way. Our -- just for reference, our U.S. businesses are growing double-digit, have nice double-digit growth and I won't quote a specific number in the channel. And this is after two or three years of that type of momentum. And so we continue to grow really, really nicely here with particularly big platforms existing in camping, and in baby gear, a rapidly growing writing instrument business. And we expect to be able to build some big platforms around Yankee, beyond their direct-to-consumer work that they do themselves. So, we got a lot of interesting things happening here and obviously this is a global opportunity to the organization that we're building -- we'll have a -- we'll be a global organization, like all of our operating divisions. I won't quote, Steph, an exact investment amount, but it's sizeable. The savings that we generate on the other work we're doing will fund the investment necessary to populate that organization. The analytics question is actually an excellent question. And it's really, really important to both us and the retailers that we're doing business within the space, because nobody has quite…

Thanks, guys. Best of luck.

Thanks.

Your next question comes from Linda Bolton Weiser with B. Riley.

Hi Linda.

Hi. Can you just briefly give some color on whether it received any -- whether Jostens received any consideration for divestiture and why that would be -- why that's logical to keep in the portfolio? Thanks.

Nope, we actually really like our Jostens business. We like the Jostens -- the potential for Jostens to continue to develop. It's a very, very profitable business; spins off a lot of cash. Grown nicely year-to-date close to 3%. It's not in our core numbers at this point. We've got a whole bunch of innovation that kicks in towards the end of the fourth quarter. No, we're really happy with the Jostens business. We don't envision taking Jostens around the world and that's why we think of it as an entrepreneurial-led business. But we think we can do a number of things to strengthen the value creation that's occurring there, by leveraging the scale of the company. But we've got a really focused team that loves what they do and we believe they do it well.

Okay. Thanks.

Your next question comes from Joe Lachky with Wells Fargo Securities.

Hey Joe.

Hi. I feel like it's 10 o'clock at night, instead of 10 in the morning.

Imagine how we feel.

Anyway, just real quick, on the cost synergies, I think you gave a total amount for 2017. Can you break that down maybe between the Project Renewal savings and then the synergies for Jarden? And then also, along those lines the tax synergies, it sounds like some of those are starting to kick in. And is that now -- our tax synergies now included in the $500 million or have those gone up?

We're still targeting $500 million overall. Tax synergies are included in that number. And we did -- as you point out, we did begin to get some of the benefits of that -- actually in the third quarter, and close to the balance of the year and into next year. As far as overall synergies go, in Mike's remarks he had said just over $300 million is what we're -- reflected and assuming in next year's guidance. And roughly about two-thirds of that is synergies and one-third from renewal. We're going to -- kind of moving forward, talk about this in a more combined way. Obviously, we're tracking it internally a little bit more discretely. But I think more as a combined way -- and just will facilitate overall communications. So think of it as -- we're right on track in both programs. In aggregate $300 million, a little over that is assumed in the guidance.

Okay.

And remember, just to remember, when renewal ends, the costs associated with Project Renewal really winds down in 2017. But the benefits roll over into 2018. So, 2017 saw another big year, good year, a third of the $300 million and a little less than that maybe, and a similar amount in 2018. But no costs associated with that, because you're just getting the rollover benefit. And then we'll be talking about synergies only from that point forward.

Great. And then last one on the dilution from the divestitures, so any effort to really offset that? I think you mentioned some savings offset and I'm curious what that includes outside of interest expense. But any potential here to address the stranded overhead, especially on the tools business?

Well, clearly, that's the challenge here. These businesses are run with shared services, and as we own them, they covered some of that overhead. That's all reflected in the value that we received for the business. So, there are stranded overheads. We are working towards minimizing those. But clearly out of the gate, we have those overheads with us. That's part of why Mike had said that in the first quarter, we're looking at some of that dilution to be more in the 6% to 7% range, and we'll abate it over time, as we work against some of the savings that we could do to mitigate it. And then as you pointed out we have the -- and once we have the proceeds in hand from the divestiture, then we could proceed to do some of the deleveraging as well.

Yes, and just to be clear, within the -- we said over $300 million in gross synergies. That covers just some small things on routine costs we will do, but it does not include anything more material. And you should feel comfortable that obviously, Ralph and I are very accepting of that. But that is what it is, and we think it's the prudent thing to do from a planning perspective. If we were to deliver less dilution, it would require us to deliver more gross synergies or savings from renewal. And so if you were talking to Russ Torres, the Head of the Synergies Task team that's in the Transformation office, he would tell you, that we're all over him like a wet rag, to get more than $300 million, because we obviously don't want that dilution. But it's not prudent at this point to call it, and because of the scope of what we're driving already. And but he's -- you can be confident that he's thinking about it, he's looking at whether there are other paths that we can mine. And we have some very specific ideas that we could go execute that eventually we will go execute. It's just a question of the capacity of the organization to do more in 2017 than it already is. But we know how we will cover this over time. The question is just about sequencing in the context of everything else.

All right. That makes sense. Thanks.

Your final question comes from Rupesh Parikh with Oppenheimer.

Hey Rupesh.

Hi, Mike, how is it going? Thanks for fitting me in. I'm going to be really quick, since most of my questions have been answered. Just on the Stanley transaction, is there any initial thoughts in terms of the after-tax proceeds associated with that transaction?

The after-tax proceeds will primarily be used for debt reduction. Principally, the proceeds that will fall in the U.S. especially, we'll act on that. We'll be a little bit more cautious on timing and how we think about the proceeds that will remain outside the U.S., because frankly, there we might have the ability to deploy some of that cash towards M&A outside the U.S., which is highly efficient to do that because then the monies get permanently reinvested. So, priority one is to deleverage and using the proceeds. The majority of the money is -- will be in the U.S., so we'll have that opportunity. But it is something that obviously, we're trying to balance and optimize across the strategic agenda as well and hit the leverage goals.

And Ralph, I was hoping more maybe just to get the tax impact on the transaction? Just try to get a sense for the after-tax proceeds?

The net which we've disclosed already is about after-tax is proceeds is about $1.5 billion. Just a little over $1.5 billion.

Okay. Thank you.

Okay.

Well, thank you very much, Hannah for orchestrating that comprehensive call and set of questions. I'd love to leave with just a message to my team which is, I couldn't be prouder of my team's unwavering commitment to deliver through change. This is a really important aspect of what we do. It's the thing that gives us permission to take on risk, is to consistently do what we say we're going to do. I feel like the third quarter was a second pearl on the chain, in the combination of Newell Brands. And I'm confident based on the drive, determination, and intensity of focus that we're going to weave together a really exciting story over the next couple of years. Thanks again for all of your support. To anybody that's still on the phone, thanks for all of the questions. Look forward to connecting to you at our next opportunity.

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