MAS
#Yes, <UNK>, so you may recall on our third-quarter call, we talked about the fact that we're going to slow down the rollout of the ERP.
So roughly, we spent approximately $15 million, roughly $3 million to $4 million a quarter that we've been spending on that.
We'll continue to roll out the ERP over the course of 2017 and we don't expect that $15 million to increase at all.
I think it will be a very similar spend level going into 2017 and beyond.
A couple of things, <UNK>, that should be driving.
One, obviously the big one is we incurred $31 million of warranty expense in 2016, which we don't think ---+ we know it won't recur in 2017.
So that's a big mover.
The other thing is, recall when we got into the issues in the second and third quarter, we were running a fair amount of labor inefficiencies.
There's one thing that Joe Gross is really good at doing is going into a facility and identifying those inefficiencies and streamlining processes to make them better.
So, while they won't go to zero, I think Joe and the team have got a really good view as to how to improve the underlying efficiency of the operation.
I think it's the way you characterize it as a balanced approach, that continues.
I would put mergers and acquisitions up a little bit in terms of how we're looking at it.
But we haven't changed our approach to those, to mergers and acquisitions, that being our focus is on bolt-ons and paint and plumbing.
And we are looking at other areas.
We have ---+ the pipeline is growing and our velocity through that pipeline is faster than it was a year ago.
So I like how the team is looking at it.
But we're going to be patient.
We're going to be careful that we don't overpay.
And our focus is on return on invested capital and we need to be able to bring value to a business that we buy and the business that we buy needs to fit in to our portfolio.
And for us, as I said, our focus is on bolt-on paint and plumbing as the center of the target of the bull's-eye, if you will.
But we're looking at other areas.
In terms of the relative size and if we would make a big one, we would, if it made sense.
That's not our focus.
But if we were able to find a bigger, call it, transformative deal that added shareholder value, that was a solid return for us above our cost of capital and where we had a real no kidding ability to add value to the business in terms of both top line and profitability, then we would look at it.
In term of the overall macros, as I said in my prepared remarks, we really do think that fundamentals are strong.
We're 80% plus ---+ 83%, I think, is accurate in terms of our R&R as a percent of our mix.
We think that's stable and growing.
On the new construction side, the demographics of those millennials as the average age gets up to 30 over the next five years is very positive with regards to the increase in families and the need for moving out of the basement and starting to form households, which then starts the move-up cycle.
So we think the macros are very solid.
While interest rates are going up and could maybe put a potential bit of a drag on new home construction, we still think it's going to grow in that 8% range.
That's our call on that.
And we see a pivot to a faster growth in single familiarly than multi-familiarly.
In single family, we have a greater take per home than in multi-family.
With regards to how we see exceeding our $1.80, mainly in margin expansion.
We're off, as you know, in our estimates in how we called the market, particularly in the coatings market.
We thought the coatings market would grow a little faster than it did.
We're taking share, we believe, call the market flat to down a little bit last year.
So we're off a little bit in that.
But we're making it up in better margin performance and better conversion costs.
With regard to specifically how much we think we're going to beat it by.
<UNK>, that's why you've got to come to New York in May and we'll talk about it.
Yes, <UNK>, I think that's right.
Because if you recall, when we set that $1.80 target, we assumed constant currency from May of 2015, which you know currency has moved against us pretty significantly.
So the fact that we're expressing the fact we're going to beat the $1.80 just goes to the confidence we have if the operations of our business.
Thank you.
Yes, I'll take the first part of that, <UNK>.
You're right, we did have a pretty tough comp in the fourth quarter of 2015.
In my prepared remarks, I said we grew 14% in the plumbing segment in Q4 of 2015.
So what we posted in Q4 of 2016 is a really good result coming against that tough comp.
You're right that we have a slightly easier comp going into Q1.
I think we were up 5% ex-currency in Q1 of last ---+ of 2016, so I think we do have a slightly easier comp than we did in the fourth quarter.
With respect to the second part of your question, I'll let <UNK> take that one.
Yes, our market expense particularly as we think about Hansgrohe, we think that will continue and we're going to drive leverage across Central Europe as we continue those investments.
So yes, I would anticipate that we're going to continue these kind of investments because they're working for us.
And these are strong brands and we have, as we've talked about in the past, particularly with Hansgrohe, we have outstanding coverage across the globe doing business in over 135 countries, but we have relatively thin market share in most of those countries but we're able to make money because of our strong gross margin.
So we have nice white space in those spaces.
So yes, I would anticipate that investment to continue.
With regards to state side here with Delta, there is some lumpiness to the spend, right.
So there's sometimes we have new product introductions or we have displays that we change, so quarter-to-quarter there will be some lumpiness.
But with regards to this overall plumbing platform and the business, I think it's a smart move to continue to invest it.
We're going to continue to grow this business and we're going to keep those margins up in the high teens.
One of the things, Steven, just to call out for Q1 of 2017 is we do have our large biannual trade show, ISH in Frankfurt, that there may be some incremental spend in Q1 in the plumbing segment on that one, several million dollars.
So just you might want to factor that into your thinking about Q1.
Promotions at retail that play a factor in the growth, no question about it.
And we do that because it works.
It drives profitable growth in our cabinet segment.
And when you have the advantage that we have of having fewer brands and stronger brands, this is the type of thing that happens.
The retailer comes to us and says they want to do exclusive promotions and we do that together with them.
So it makes good business sense to drive profitable growth in this fashion.
Think about it, we've got leading market share in both big boxes and when you think about the mix of retail in our cabinet business versus our competition and then you look at our overall margin, we're rights there.
So, the numbers don't lie.
That tells the story about us being able to leverage this competitive advantage with our brands and do it in a very profitable way.
And interestingly enough, we did it with the same calendar we've been using for the last 2,000 years.
We didn't change anything on our calendar and we're driving this business profitably.
