Whirlpool Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Organic Growth: KitchenAid small domestic appliance business had double-digit revenue growth, and North American major appliance business saw market share gains from new product launches despite intense promotion. Over 30% of North American products transitioned to new products in 2025.
• Tariffs Impact: North American operating margins affected by tariff preloading, but domestic manufacturing (over 80% of U.S. sales produced in U.S.) positions as net winner of tariffs. Tariffs ramped up in Q3, with full reciprocal tariffs effective October 5.
• New Product Launches: KitchenAid French door refrigerators, dishwasher, and Whirlpool top load laundry launched with strong flooring and sellout trends. KitchenAid suite shipped to trade customers in September with high market share potential.
• Investments: $300 million investment in U.S. laundry facilities to enhance capacity and innovation.
• Housing Market: U.S. housing market undersupplied by 3-4 million homes with pent-up demand expected to unlock as interest rates ease; strong builder channel position with contracts with 8 out of top 10 U.S. builders.

Segment Performance

• MDA North America: Achieved sequential and year-over-year revenue growth due to new product introductions, but impacted by tariff preloading and promotional environment.
• MDA Latin America: Net sales declined 6% year-over-year excluding currency due to volume decline, with an EBIT margin of 5.7%.
• MDA Asia: Net sales declined 4% year-over-year excluding currency due to volume decline, with an EBIT margin of approximately 2%.
• SDA Global: Achieved 10% year-over-year net sales growth driven by new product launches, with a strong EBIT margin of 16.5%.

Guidance

• Net Sales: Unchanged at $15.8 billion.
• EBIT Margin: Revised full year ongoing EBIT margin to approximately 5% due to promotional intensity from foreign competitor inventory preloading.
• EPS: Narrowed full year ongoing EPS to approximately $7, supported by improved adjusted effective tax rate of ~8% due to tax law changes.
• Free Cash Flow: Updated to approximately $200 million reflecting EBIT margin and tariff cash payments.

Risks

• Tariffs: Ramping up leading to inventory preloading and prolonged promotional environment.
• Macroeconomics: Housing market recovery dependent on interest rate easing; retail demand affected by consumer volatility.
• Currency: Depreciation of Argentinian peso and Indian rupee impacting margins.

Question and Answer

• Q: Share gains in North America majors driven by new products vs promotions?

A: Share gains came from new products, with promotional line held consciously.

• Q: SDA business strength despite housing weakness?

A: SDA is less driven by housing, with new products, D2C growth, and earlier tariff impact in SDA contributing to strength.

• Q: Tariff recovery in 2026?

A: Tariffs create relative advantage, expected margin improvement as tariffs subside, with North America expected to deliver over 10% EBIT margins long term.

• Q: Balance sheet and debt paydown?

A: Debt paydown delayed to 2026 due to India transaction, but long-term goal to reduce debt remains.

• Q: Free cash flow and dividend?

A: Free cash flow affected by working capital and tariff payments, dividend continued with free cash flow roughly in line with dividend.