Whirlpool Corporation Q2 FY2025 earnings call

• Navigated a challenging second quarter amidst macroeconomic uncertainties like elevated interest rates and evolving trade policies, with consumer sentiment weakness impacting demand and mix.
• Asian competitors preloaded imports ahead of tariff implementation, creating promotional intensity, but Whirlpool is well-positioned long-term.
• Delivered sequential net sales growth across segments, with strong results in SDA Global due to new products.
• Updated full-year guidance due to prolonged tariff impacts, but remains confident in long-term improvement driven by new products, trade policy shifts, and U.S. housing market potential.
• Successfully implemented pricing actions and cost takeout, and strengthened the balance sheet via debt refinancing.
• Launched extensive new products, leveraging U.S. manufacturing footprint and strong relationship with U.S. homebuilders.

MDA North America: Net sales were down 5% year-over-year, with an EBIT margin of approximately 6%, where strong cost takeout was offset by lower volume and unfavorable product/mix. MDA Latin America: Experienced a 1% year-over-year net sales decline excluding currency, delivering a solid EBIT margin of 6% due to favorable price/mix and cost actions driving approximately 20 basis points of expansion year-over-year. MDA Asia: Net sales dropped 4% year-over-year excluding currency, with an EBIT margin over 7% and 90 basis points of year-over-year margin expansion from continued cost takeout. SDA Global: Delivered net sales growth of 8% year-over-year driven by direct-to-consumer sales growth and new products, and is expected to see an increase in EBIT margin to 15.5%.

• 2025 guidance updated to reflect macro uncertainties: flat net sales at ~$15.8 billion, flat ongoing EBIT margin of 5.7%, free cash flow expected to be approximately $400 million, and full-year ongoing earnings per share of $6 to $8.
• Segment expectations adjusted: MDA North America industry flat to down 3%, MDA Latin America industry flat to down 5%, MDA Asia industry flat to up 3%, SDA Global industry flat to down 3%.
• MDA North America margin expected 6% to 6.5%, MDA Latin America EBIT margin ~7%, MDA Asia EBIT margin ~5%, and SDA Global EBIT margin increasing to 15.5%.

• Macroeconomic uncertainties including elevated interest rates and trade policy shifts negatively impacting consumer sentiment and demand.
• Asian competitors preloading imports delaying tariff impact, prolonging promotional intensity.
• Currency headwinds, particularly from the weakening Brazilian real.
• Geopolitical tensions and weather impacts affecting MDA Asia's performance.
• Volatile consumer confidence and housing market recovery timing.

Q: What's your best estimate of the quantity of pull-forward tariff-free imported product currently on the ground?

A: Difficult to precisely estimate, but as of end of May, there was likely 60 to 90 days of inventory from excess Asian imports, expected to flow through the system gradually.

Q: How is the promotional calendar looking for the second half?

A: Q2 saw reduced promotional efforts, expects a more muted environment post July 4, but hard to predict Labor Day/Black Friday promotions precisely.

Q: Can you break down the change in North America major margins?

A: Adjustment due to delayed tariff impacts, but fundamentals remain strong with new products and U.S. housing market potential, though delays affect short-term margins.

Q: Update on India sale timing and proceeds?

A: Anticipated proceeds in the $550 million to $600 million range, expected to close by end of 2025, process ongoing with potential purchasers being narrowed down.

Q: Confidence in offsetting tariff impacts with price?

A: Already implemented pricing actions, partially masked by unfavorable mix, but actions in place to offset tariff impacts through cost-based pricing and supply sourcing.

Q: SDA direct-to-consumer and margin profile?

A: Direct-to-consumer makes up a significant portion of SDA, with a margin structure attractive due to higher revenue base and strong brand performance