WHIRLPOOL CORP /DE/ Q1 FY2025 earnings call

Management Statement and Operational Highlights

• First Quarter Performance: Delivered 2% organic growth and almost 6% EBIT margins despite a challenging macro environment. Reiterated annual guidance and reconfirmed dividend.
• Tariff Landscape: Tariffs represent a manageable headwind in the short term with Asian competitors preloading inventory. Once tariffs fully kick in, will be a tailwind for Whirlpool as a domestic producer. Preexisting loopholes in tariffs created a disadvantage for domestic production, but new trade policies aim to close them.
• Mitigation Actions: Taken pricing actions, evaluating supply base and manufacturing footprint, and proactively monitoring trade landscape.
• New Products: Exciting market response to new products launched, expected to expand ongoing EBIT margins in the second half of 2025. Highlights include KitchenAid induction cooktop, JennAir built-in wall oven, etc. Showcased strong booth at KBIS with multiple awards won.

Segment Performance

• MDA North America: Net sales were flat year over year. Delivered an EBIT margin of 6.2%. Expect to turn over more than 30% of product portfolio this year.
• MDA Latin America: Net sales growth of 2% year over year (excluding currency) driven by pricing actions. Segment delivered a solid EBIT margin of 6.6% in the quarter.
• MDA Asia: Net sales growth of 16% year over year (excluding currency) driven by strong volumes from share gains and industry growth. Segment delivered a 7% EBIT margin in the quarter with 240 basis points year over year of margin expansion from cost takeout and fixed cost leverage.
• SDA global: Achieved significant net sales growth of 10% year over year (excluding currency) with strong direct-to-consumer sales. Delivered a very strong EBIT margin of 18.5% in the quarter.

Guidance

• Reiterated 2025 annual guidance. Organic growth of approximately 3% to $15.8 billion in net sales. Ongoing EBIT margin expected to expand 100 basis points to approximately 6.8%. Free cash flow expected to be $500 to $600 million. Adjusted effective tax rate expected to be 25% in 2025, impacting ongoing earnings per share by approximately $7. Full-year ongoing earnings per share expected to be approximately $10.
• Expect to offset approximately 250 basis points tariff impact through cost-based pricing actions and supply sourcing changes.

Risks

• Asian appliance producers significantly increased imports into the US ahead of tariffs in Q1 and Q4, causing market disruption likely to continue into Q2.
• Trade landscape is very fluid with additional trade policy actions possibly resulting in materially different outcomes.
• In March, a tornado impacted Whirlpool's Tulsa Oklahoma factory with 1,600 employees, though no injuries were reported.

Question and Answer

Q: If tariffs currently stated rate of 145% fall to 10 or 20%, how much would it impact outlook?

A: Marc Bitzer stated speculating on China tariffs is pure speculation, but 20% likely won't move factories and the administration is aware of the need to close loopholes.

Q: Is the impact on business from Asian competitors' preshipping appliances cooked or will continue in Q2 and Q3?

A: Marc Bitzer said Q4 and Q1 had industry flat with Asian imports up 30%, expects similar market dynamics in Q2, but can manage it.

Q: Can you break down roughly what you expect to do from price versus cost to offset $250 tariff cost headwind?

A: Marc Bitzer said more than half or almost two-thirds of the offset will come from pricing, with additional cost actions and supply chain rewiring.

Q: How to think about North America MDA margins sequential moves over next couple of quarters?

A: Jim Peters said Q2 likely similar to Q1, with build in back half of year from price mix, net cost, volume leverage, and potential market share increase.

Q: What about the development of the direct-to-consumer business in SDA and its impact on major appliance line?

A: Marc Bitzer said SDA business has strong direct-to-consumer business which drives follow-on business and customer loyalty, augmenting traditional retail.