Whirlpool Corporation Q4 FY2025 earnings call

• Leadership promotions: Recently made three leadership promotions with over seventy years of combined experience. • 2025 results: Global organic revenues flat, MDA North America market share gains, operating margins slightly below 5% due to intense promotions and tariffs, Latin America business strong, KitchenAid SDA business had double-digit growth. • 2026 expectations: Confident in sustaining growth of KitchenAid SDA and Latin America business, North America has catalysts for margin improvement including over $150 million cost actions, record new product launches, normalized promotion intensity, and potential improvement in existing home sales. • Business segments: MDA North America well-positioned for organic growth and margin expansion with strong new product lineup, unique domestic manufacturing position in tariff environment, and housing market recovery prospects; MDA Latin America has growth potential with low market penetration, strong brand positions, and infrastructure; SDA Global continues to perform well with new product launches and direct-to-consumer growth. • New products: Whirlpool laundry tower, Brastemp refrigerators in Brazil, KitchenAid compact grain and rice cooker, Artisan Plus stand mixer are examples of upcoming innovations

MDA North America: Full-year net sales excluding currency largely flat year over year, strong share gains in Q4 from new product launches, promotional activity intense, EBIT margin 2.8% in Q4 and ~5% full-year. MDA Latin America: Full-year net sales excluding currency declined ~2% due to volume decline, economic instability in Argentina and aggressive promo in Brazil impacted revenue and margins, full-year EBIT margin 6.2%. MDA Asia: Full-year net sales excluding impacts of India and currency increased ~1%, full-year EBIT margin ~5% with 120 basis points expansion year over year. SDA Global: Fourth-quarter net sales growth ~10% year over year, full-year ~9% driven by new product launches and direct-to-consumer business, fourth-quarter EBIT margins expanded 130 basis points, full-year EBIT margin 16% with 170 basis points expansion year over year

• Revenue: On a like-for-like basis, expect ~5% revenue growth in 2026. • EBIT margin: Expect 80 to 110 basis points of ongoing EBIT margin expansion, 2026 EBIT margin ~5.5 to 5.8%. • Free cash flow: Expected to be $400 to $500 million or ~3% of net sales. • Earnings per share: Full-year ongoing earnings per share ~$7. • Segment guidance: Global industry flat in 2025, US industry similar to 2025 with emphasis on replacement demand, MDA Latin America industry ~0-3%, SDA global industry flat; MDA North America expected EBIT margin ~6%, MDA Latin America ~7%, SDA Global ~15.5%

• Tariffs: Currently announced tariffs could impact EBIT margin, and no factoring of future trade policy changes. • Housing market: Existing home sales recovery not factored into guidance, and uncertainty in consumer sentiment affecting discretionary demand. • Raw materials: Potential impact from base metals like copper, aluminum, nickel, zinc if hedges don't fully offset

Q: Good morning, everyone. And Roxanne, it's David speaking with you again. Good morning. I guess, Marc, I wanted to start by just unpacking the 26 flat industry units number. And you referenced no expectations for an increase in discretionary or builder, which would I guess, imply a flat replacement demand outlook. But you also, at the same time, talked about seeing strength in replacement demand. So I guess我 just wanted to better understand that. And maybe within the context of that answer, could just talk about the extent to which you're pent up demand, as you had referenced. And then I have a follow-up.

A: Yeah. So so so, David, again, you as you well know, there's two main components of replacement demand, discretionary demand. The replacement demand what we base that is continues to stay on a very, very healthy structural level. And that is still on the tail end of post-COVID. We saw a significant higher use of appliance and that just drives a lot of healthy ongoing replacement demand. As a reminder, as everybody knows, while we like that part of our business, it's not necessarily the most margin accretive part of the business. The discretionary side and to be also very clear, again, we have not factored in upside in the discretionary side. The discretionary side would have to largely come from increased remodeling activities and, in particular, faster or uptick of existing home sales. So that is not factored in even though I think there's a certain chance that, you know, depending on what the mortgage rate environment will do, that we will start a slow unfreezing of existing home sales. But, again, as a reminder, it's not factored in our numbers, in our guidance. And as such, could potentially provide an upside. But, again, let's just see how that evolves. So far, as you look in the rearview mirror on 2025, the existing home sales were just on a very low level and got stuck there pretty much.

Q: And you had mentioned pent-up demand. I guess just what your assessment is at this point. Of where that stands, and then I have a follow-up.

A: I mean, I think, David, there's a very significant pent-up demand tied towards the housing. And then I'm not gonna repeat I think everybody knows. I mean, this the entire housing market is in terms of new home sales, is undersupplied in the tune of 3 million homes. Now that will not happen overnight, but it just means just the new homes will spill a multiyear uptick on demand. The other side is and this is and, again, that could potentially materialize earlier. The discretionary side, which comes with remodeling or existing home sales, I think, could accelerate faster than the new homes. And very significant potential out there, as you know, but the consumer has equity. Equity in particular in the form of housing stock. So the perceived equity the consumer has is there, it will take an uptick also in consumer sentiment to unleash that. That, in my view, could happen faster than the new home sites. But again, it's right now, we're you all know, we're in a very uncertain global environment, I would say if consumer sentiment changes, I think you could see an uptick already this year on the discretionary side. But, certainly, it's just it's only a question of when it's not if there's a multiyear pent-up demand still waiting out there.

Q: Okay. Great. And then second is follow-up. I guess, you had a very substantial product refresh 2025, and along with that, of course, comes elevated flooring costs. What's the benefit in '26 from the relief on the flooring costs?

A: To North American market? David, you're highlighting a very important point. Just as a recap, and I think many of you listening understand that know that when you have a lot of new product introductions, and we as we highlighted in particular North America, we had the highest amount of product introductions in more than a decade, and it's been massive. You have, of course, it starts acting with factories. You have phase-in and phase-out costs. Of course, you don't run the factory in the most efficient way if you at one point, take down production and you ramp it up, you have inefficiencies in there. You have inefficiencies in warehousing inventory because for some period, and you saw that all in Q4, you hold inventory pretty much on phase-out and phase-in. And then lastly, you have very significant flooring costs. Which just come with flooring with products now. Ultimately, it's like a return investment. You get your return on these flooring costs, but it all hit our P&L large in '25. So in particular, in the back half, and I'm not trying to take it as infused. It's just there. And it was it's an investment against the future. So as we turn the page into '26, first of all, you have the absence of these introduction costs, which is an uplift. And second of all, now I have a full benefit of a higher flooring. We know because, of course, we get weekly sellout numbers. We know when new products are not just floored, best selling. So we're very pleased with the sellout. And so not only do you have the absence of a cost, but you also have tailwinds in form of a demand of new products. So I don't wanna give a precise number how much that means, but, of course, that is a very beyond a normalization promotion environment, that's a key driver of where we see the improvement in North America.

Q: Great. No. Appreciate that. I guess, secondly, you know, the sales growth like for like of 5%, and it looks like that's against a volume outlook of flat. If I'm understanding the segment regional segment guidance you know, by and large, I guess that that results in a balance of price and mix driving the growth. I wanted to make sure我'm understanding that right and how much exactly you're anticipating to come from price versus mix? And lastly, if that 5% also I would assume applies broadly to the North American segment as well?

A: Michael, it's Marc. First of all, the 5% in North America or globally, but directionally also reflective of what we have in mind in North America. Also, on a global level, we showed 1.75 percentage points coming from price mix, there is a healthy mix portion because we have a lot of new products and premium products. But there is also pricing comes with a more normalized environment. So what we showed on a global level is also true on a direction on North America level. So, yes, there is also in our organic, in North America, call it a two to three points of unit growth in there because we we know these new products have been picking up market share, and we expect them to carry over into next year. So short answer is there's a portion of price mix. The price mix also has a good content element of mix in there. But there is also some unit growth into our North America assumptions.

Q: Good morning. Thanks for taking my questions. Marc, I was hoping you could touch on or your team could touch on just more specifically the comments around the promotional cadence then also your own actions around your promotional pricing plans. Can you be more specific or quantitative about what you've seen in recent weeks and how that gives you the better confidence ahead of Presidents' Day, think quantification would help if you can.

A: Yeah. So, Michael, so let me maybe give you a lot more color on what we've seen in North America up until Presidents' Day. Obviously, I can't comment on the go forward. So first of all, in Q4, in some ways, we've seen two parts of a market in Q4. One was the nonpromotional period where we had the new product in there, where we actually like what we saw and we picked up market share. The promotional period itself was intense. By any definition, and think once the competitors announce their numbers, you would see it was intense. We made a conscious decision to hold our ground during this promotion. Period. We did not pick up share during the promotion period. But, frankly, it was a very costly investment. I mean, there's no denial, and you see that in our number. What difference we saw after a particular backfiring is an event well, the meaningful difference is post-Black Friday, the prices, the promotion prices immediately recovered, pretty much exactly what we got after. And that is, for those of you following the steel different from prior years. Very often, saw that either retails or competitors did not sell all the products they want. Like, Friday, prices were extended well in some cases to January. We did not see that last year. So as intense as the promotional period was, it also ended pretty abruptly. And these higher prices held now for pretty much six weeks, now we all know it's six weeks. It's not fifty-two weeks, but it's six weeks. And that is very different from prior year. We saw a meaningful price change already on MLK. We have, of course, already announced our prices with trade towards Presidents' Day, and what we see is these call it, this normalized promotional environment certainly held for Presidents' Day. So we saw a big difference the last six weeks. Again, is that a full extrapolation for the full year? No. We all don't know. This is a competitive environment. But at least we saw over the last six weeks that the industry's finally starting to reflect the full cost of tariff in the prices.

Q: Okay. Got it. Thanks for that, Marc. And just to dovetail on that, can you give us a sense then of within your margin guidance? And I'm thinking specifically the 6% for North America how you envision the cadence between first half and second half?

A: I mean, there's several elements coming in that cadence. First of all, you will not see the 6% throughout the full year. And there's Q1, in particular, will be still impacted by a number of factors. First of all, we just see now the pricing, a more positive pricing coming through. So it's starting to build, and that is still a good guy. A negative side, we will curtail production. We said we will control inventories, and we're correct, but we had too much of inventories. That will be a burden on our Q1 numbers in North America because we will adjust inventory. As Roxanne highlighted before, cash is a key priority, and we take that very seriously. So你 will have the inventory reduction going against us in Q1. But prior starts moving our favor. And on top of that, you have now in Q1, contrary to last year, you had the full cost of tariffs in there. So there's a number of factors. So Q1 will still be clearly below that 6%. And as of Q2, we expect this low and gradual buildup.

Q: Hi. Good morning. Thanks for taking my questions. I wanted to ask on the capital allocation for the year. This free cash flow guidance of $400 million to $500 million the $200 million dividend and then, I think, $400 million of debt pay down. Is a bit of a funding gap there. So can you just help us understand how we get to the full, like, debt paydown and dividend relative to the free cash flow guidance?

A: Rafe, good morning. One of the things that we touched on in the script earlier as well is that we are pleased with the India transaction that we have executed, which turned our majority stake from 51% to 40%. As of this time, we will retain that position, but we will continue to evaluate all options to further reduce our debt in line with the debt pay down guidance of $400 million.

Q: Got it. So are there additional India sales, like, you can better than the in the guidance, or is that just an option that's sort of on the table? There are other things outside of India that could be done to generate cash.

A: Yeah. So so, Rafe, you know, it's Marc. And so Roxanne said, right now, we feel very comfortable with where we are in India. We're not gonna make a statement about what if. As you know, first of all, we have a number of minority stakes throughout the world. And India is now one of these, but we've continued to evaluate all the time where we are. We also still have some smaller asset sale opportunity. They're smaller and which could be part of closing that element. And so我们're the ideas which we have in mind, we're pretty confident that we can close that gap. Or, I mean, specify it very soon. But we feel right now with that pay down, as we then point out before, we will get going.

Q: Okay. That's really helpful. And then on the promotional cadence, that you're seeing from competitors, it's encouraging to see sort of the improvement at the end of 4Q and into 1Q. Are you seeing like actual price announcements from competitors. Either on resale or wholesale retail or wholesale. Or do you think they've sort of just worked through that inventory? What's driving this improvement in the promotional cadence that's out there?

A: Yeah. So so, Rafe so first of all, our perspective, it's pure outside incumbent on competitors. We don't know what's going through ahead or whatever. So what we observe, just more from a dataset, is we have a fairly sophisticated price scraping tool where every week, we see we get thousands of in-car pricing for every competitor, every product, every SKU. We have a fairly sophisticated in-house tool, so we pretty much weekly observe everything which was going on the marketplace. So our comments in terms of promotion depth from what we see is based on this pricing scripting tool which would say is very accurate. And also my comments on recovery afterward are based on this price scripting tool. The actual mechanism which competitors use it's their decision. I would say, it's partially like we also do. Sometimes it's a like-for-like price change. Sometimes it's just a reduction of promotional depth. But we don't know ultimately what matter of price what consumer prices are basic in the card, and that's what we look at. But I would assume every competitor chooses slightly different tools.

Q: I wanted to ask about the negative price mix variance in 4Q. And how it changed so much from kind of the 3Q guidance I wanted to ask is that, you know, number one, did all I think you said at one point that you didn't participate in promotion. But it's obviously a more promotional environment. Was there anything to this about clearing activity? I you had a lot of innovation. You also had a weaker, market. Therefore, the old analogs didn't move as quick. So anything you can help us on, you know, that big delta and kind of the speed at which it improves to 26.

A: So, Andrew, I think what has changed versus what we had in mind Q3 coming into Q4, we knew there's still some preloaded inventory of the markets. Obviously, because we don't have exact competitor data, I think what we may have underestimated how much first deal is out there. So we promotion MedBev will be an aggressive promotion environment. We anticipated it but it was deeper than we expected in all transparency. And now at the same time, and我made that comment in the script already, is the fact that the price is corrected pretty immediately after Black Friday I would read as an indication that this preloaded inventory is out of the system. Because if it would still be there, we would have seen Black Friday pricing continuing longer. So I think the big change is probably there was more inventory out there than we assumed. And right now, we assume that is normalized. And we're kind of that is behind us. And, again, what我said before, but last six weeks would indicate we're now in a more, what I would consider, normal competitive environment.

Q: Thank you for that. And I think at one point, you mentioned你get sellout data on a weekly basis. We could obviously see the AHAM data guess it gets cut monthly but released quarterly. We could see how both how far below the discretionary units are relative to 19. Are you seeing a quicker reversion in sellout? And I guess where我'm going with this is, like, could there be a massive catch-up in discretionary unit shipments relative to nondiscretionary. They're higher mix. You know, if the turn has happened quicker, about what我'm asking. And I know just to be clear, your guidance is pretty much for 2026 more of the same on the discretionary nondiscretionary mix. Thanks.

A: Yeah. So so so, Andrew, I mean, first of all, to your question, we get sellout data, iCasel registered data for about 70% of our trade partners. So我们have a pretty good sense about how we are doing from a sellout. And coupled with that, we typically also get comparable house sales. I e, we know how we're doing in the store in terms of picking up balance of sale or not. So we have a very good sense, and that is, of course, critical in particular when we're trying to assess the success of our new product launches. Lot of confidence you heard before comes exactly from looking at we sellout data on a weekly base. To your question about the discretionary demand, again, reemphasizing it's not baked in the guidance. Is there a certain chance? Yes. But you also we've been waiting for this uptick in discretionary demand for a long time, and that's why we're a little bit cautious at this point. What really and, again, it's the big driver will be ultimately consumer sentiment. The broader perception. Consumer sentiment, and we've seen that before, changes a lot faster than other indicators. And right now, it's low. And if you just take January, consumer sentiment is low by any definition. So reading that, you wouldn't have a lot of confidence. But, again, we have seen this coming around faster. And to your point, yes, that could unlock quite a bit of pent-up discretionary demand. But it's not factored in.

Q: Good morning. Thank you. Question for Just two housekeeping questions for Roxanne. First of all, a lot of talk about the last six weeks on price mix. Has price mix been positive in this one and a half, 2% range over these six weeks? Is that what you've seen in your business?

A: Hi. Good morning, Eric. A couple of things to keep into consideration. One of the time periods where we saw the improvement is Black Friday. And so as you'd expect, during the Black Friday period, we are all paying out for the depth of the Black Friday holiday. So the majority of the benefit as it relates to price mix for the six weeks would really come in 2026. As Marc mentioned, from a Q1 perspective, though, keep in mind that there are other items that we will be doing, such as reducing production, which would therefore impact the Q1 results. And so we expect price mix to build up as we go throughout the year.

Q: Okay. And then the second is, the assumption in '26 on outgrowing the flat market by two or three points. Similar question, Roxanne, is that what you're seeing now that your business is outgrowing the industry? By two or three points is that what's happening now, or is that a ramp in '26?

A: So so, Eric, I can comment on this one. That is almost entirely built on the success of a new product, and that is not just the last six weeks. As I mentioned before, ever since again, they didn't all launch at the same time. There was a big KitchenAid launch '3, but we have other products. And by the way, we continue to have new products also in '26. So we see from these new products on the flooring. Gains, and we also see the sellout gains. So that's pickup in volume is, I would say, almost entirely driven by what we see from the new products.

Q: Good morning, everyone. And Roxanne, JC, Ludo, again again, congratulations, and Roxanne in particular. I know you well. Very, very well deserved. And I think it made us all smile when we saw your the announcement.

A: Thank you.

Q: Couple of quick questions. I know we've been dancing around the pricing question. Quite a bit this morning. The 1.75 guide for the year, what's the inherent assumption for industry like-for-like net pricing in order for you to achieve the one seven five?

A: So, Sam, again, we're not publishing what we assume as an industry pricing, and a lot depends on what competitors will do. Having said that, you saw earlier, and that's why we had this slide with the three components of pricing pitch, a better promotion environment, added new products, and mix overall. So, yes, there's a in the one seventy-five, there is a component about what我们just think from a less promotional environment. Again, we to be honest, but assume it's roughly a third probably of that overall assumption or maybe half of a less promotional environment. But in all transparency, yes, we like what我们saw over the last six weeks, but, of course, we're just cautious in terms of extrapolating the last six weeks for the full year. And I think right now, this assumption is kind of a little bit of middle ground.

Q: So to paraphrase, if there is announced increase industry pricing from competitors that would be additive to your price guide theoretically? I've got a follow-up, but I just wanted to clarify that.

A: And then there's obviously a lot of ifs and whens and forward-looking statements, but let's if the price the promotion environment, which was seen in the last six weeks holds on a full year, we will like the outcome.

Q: Okay. My follow-up question noticed that the RMI guide remains flat for '26. We recognize that steel is set but there have been moves of late in things like resins and base metals. Since the October call. I'm guessing the resins are getting offset by lower oil prices, so我think that's pretty understandable. But on the base metal side, can you help us as to how the hedges work from a timing standpoint as to when that might flow through or if you are exposed to higher copper, aluminum, nickel, zinc, that kind of stuff in '26 potentially?

A: Sam, you know our business very well, and you pretty much already gave the answer. So steel, because we have multiyear contract, is flat. In our assumption. There's still a couple moving pieces. On resins, it's directionally a good guy versus our assumption, but as you point out, aluminum, copper, in particular, a little bit of net a bad guy. A little bit buffered because, as you know, we go out with edges. With certain hedging corridors. And that's why我们're saying right now the sum of it all is we basically assume a flat or not a major surprise. And, again, it's a wash of ins and outs. But we feel pretty comfortable about that RMI assumption.

Q: Hi. Good morning, everyone. This is Charles Perron in for Susan. Thanks for taking my question. First, I just wanna go back on the cost action, the 150 plus tailwind for 2026. Can you talk about some of the what is the new actions, that are gonna be implemented this year versus the carryover impact from 2025 action. Can you elaborate on some of these measures put in place in terms of automation, strategic sourcing, and footprint of rationalization? And what factors are you considering before determining whether additional action would be necessary?

A: Yeah. So, Charles, it's Marc. First of all, there is some carryover, but, frankly, it's not that much. It's obvious overall. It's $150 million plus. It's probably less than a third is carryover. And that largely comes from the actions which we initiated about the cost they got last year, but just carried through, and there's the additional actions. The vertical integration is actually a new angle which我们're pursuing. We've made good experience with vertically integrating some components actually in our Mexico factories. And we will aggressively go after that also in North America, where we expect quite a sizable saving on the respective components and frankly, also just more stability in our supply chain. That's one element. Automation is an ongoing effort and will accelerate. That will also drive benefits. What we refer to as a strategic sourcing initiative. It's a fairly elaborate and sophisticated process which we don't do every year because it's way too complex. The last time we've done that six years ago, and we got a lot of savings out of this one. It basically goes down to you take a book, take apart every single component. You weigh it. You do a global complete clean sheet assessment, what should cost be, we're putting it out for bidding across the world. It's just a very elaborate thorough process. And, again, just for complexity, you can't do whatever you're but given that it's six years ago, I think it's right. And we know我们know the tool. We've done it before, and we expect, probably in the overall context, almost a third of cost savings coming out of this one.

Q: Got it. That's super helpful color, Marc. And then second,我just wanna ask on the continued progress here seeing in small domestic appliances. It's good to see the 10% sales growth this quarter. When considering the business, how do you balance the growth momentum that you're seeing here versus holding to your 16% EBIT margin as you to maximize your returns over time?

A: Yeah. This is Ludo. So I'll take this one. So as you said, we're very happy with the performance of the SDA business. We grew at 10% in Q3 and again in Q4, and we have similar projections for 2026 going forward. A margin standpoint, what我们believe is most of the highest value we can create, frankly, is through growth given the level of accretiveness we have on the margins already. So我们're very focused on delivering that growth, and we're effectively reinvesting the margin that我们create in excess of this 15 to 16% margin range into further acceleration.

Q: Hi. Thanks for taking my questions today. You reported healthy share gains in the third quarter from your new product introductions, which offset your first half share losses. But I was wondering if you could comment on your fourth quarter share gains and whether heavier competitor discounting and a soft underlying R and R demand environment prevented similar levels of share gains during the quarter?

A: So, Jeffrey, based on what我们report in Q3, we picked up quite a bit of share with the new product, and that off what我们lost in the entire first half. In Q4, the positive momentum when new products continued, so we continue to gain share with the new product. But, of course, by definition, the overall promotional period in Q4 is just a bigger portion of a quarter than in our prior quarter. During the promotional period, and that's what我indicated before, we did not pick up share. We just decided to hold our ground, and that's what we've done. So你have continued gains of share with a new product, in the promotion period, we didn't pick up a lot more. So overall, it ended with a full year, but we have a small market share gain for the entire year in North America. And almost entirely driven by the back half. Almost entirely driven by new products.

Q: Understood. Thank you. Then I wanted to go back to, you know, comments earlier on a replacement demand. And this was tracking to roughly two-thirds of North America MDA sales last year, which is well above normalized levels. And just so I'm clear and your guidance are you not expecting, you know, any moderation in the percentage of replacement demand in 2026 unless we see some improvement in existing housing turnover or And then over the midterm, do you believe the percentage of replacements sales could move closer to, you know, 50% once the industry returns to a more normalized repair and remodel demand environment.

A: So, Jeffrey, there's two components. The absolute number of replacement volume we get, we expect to stay stable. And we've seen that pretty stable now for an extended time period. And then, again, it just comes with simple math. It's installed base, and we know that. And the overall usage in terms of here has come down a little bit because people are more using it more intensively. MET has now been stable for, I would say, two, almost three years on a pure replacement side. So the volume will stay the same. But, of course, then by definition, if it finally the discretionary demand picks up, the percentage of a total market replacement, will come down. Right now, it's well above 60%. And in I would even wouldn't even call it peak cycle. I would call it early or mid-cycle, discretionary cycle easily cover 50%. Not easy, but we had years where it would the discretionary side was up to 60%. So it's so the percentage is all driven by how much we would see on the discretionary demand going forward. With that, I think that was the last question I'm which sorry. We went a little bit overtime today, but there's new faces, new voices, and then I think a lot of good questions. Again, as you heard before from us, you know, 2025 is behind us. It's in real video. We right now look just forward '26. There are some encouraging signs already happening now in '26, and我think we laid out the catalyst why we believe we are confident and it's in our execution control to deliver on them. And gives us the confidence behind '26. So thanks for joining me today, and looking forward to talking to you again next quarter.