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F500-2021-154-Whirlpool

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F500-2020-162-Whirlpool

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Whirlpool Corporation designs, manufactures, and markets home appliances including refrigerators, washing machines, ovens, and dishwashers. Its product lineup is offered under several well-known brand names and serves both residential and commercial customers. The company distributes its products globally through retailers and direct-to-consumer channels. Whirlpool also provides parts and customer service support for its appliance lines.

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Whirlpool (WHR): Company Profile, Stock Price, News, Rankings

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Whirlpool

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Good morning, and welcome to Whirlpool Corporation's first quarter 2026 earnings call. Today's call is being recorded. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer, Roxanne Warner, our Chief Financial Officer, Juan Carlos Puente, our Executive President of North America and Global Strategic Sourcing, and Ludovic Beaufils, our Executive President of KitchenAid Small Appliances in Latin America. Our remarks track with a presentation available on the investor section of our website at whirlpoolcorp.com. Before we begin, I want to remind you that as we conduct this call, we will be making forward-looking statements to assist you in better understanding Whirlpool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K, 10-Q, and other periodic reports.

We also want to remind you that today's presentation includes non-GAAP measures outlined in further detail at the beginning of our earnings presentation. We believe these measures are important indicators in our operations as they exclude items that may not be indicative of our results from ongoing business operations. We also think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations. Listeners are directed to the supplemental information package posted on the investor relations section of our website for reconciliations of non-GAAP items to the most directly comparable GAAP measures. At this time, all participants are in listen-only mode. Following our prepared remarks, the call will be open for analyst questions. As a reminder, we ask that no analyst asks more than two questions. With that, I'll turn the call over to Marc.

Thanks, Scott, and good morning, everyone. During today's call, you will hear three messages from us. First, we finished a tough quarter in our North American business. The month of March, which typically carries the quarter in North America, was exceptionally weak due to these four drivers, which I will discuss in further detail in the following slides. Second, we are taking decisive and bold actions to restore North American margins back to healthy levels. We have issued the largest price increase in more than a decade that raised prices by more than 10%, and we're doubling down and accelerating our cost actions despite higher inflationary headwinds. Third, our equity offering and a renewed revolver credit line, which we expect to finalize in Q2, puts our balance sheet in a strong position to weather this difficult industry cycle.

Before we get into the numbers, I want to provide a bit of background about the macro environment in North America, not as an excuse, but as context for what happened in the second half of the 1st quarter. Turning to slide seven, we can see that consumer sentiment has dropped to its lowest level in 50 years. The consumer sentiment was already on a very low level by any historical standard, the war in Iran amplified consumer concerns about the cost of living. As a direct result, the consumer sentiment index in the U.S. plunged, reaching the lowest level on record in March. While our view is that consumer sentiment is unsustainably low and should rebound from here, these events clearly pressured our industry and particularly discretionary demand. Turning to slide eight, you can see the resulting impact on the U.S. appliance industry.

The U.S. appliance industry demand declined 7.4% in the first quarter, with March being down 10%. This level of industry decline is similar to what we have observed during the global financial crisis and even higher than during other recessionary periods. Keep in mind that we're operating in an environment where duress replacement demand drives more than 60% of the industry, and this part of the demand is relatively stable. This gives you a sense about how dramatic the impact on discretionary demand was. While we do believe that the negative industry demand in March was somewhat of an outlier, we do not anticipate a full recovery and are now forecasting U.S. industry demand being down by 5% on a full-year base. Turning to slide nine, I want to share a snapshot of industry pricing over the past 15 months.

This picture represents an aggregate view of literally thousands of price points which we collect weekly. It is based on publicly available retail sellout data. While it may not be a 100% accurate, it is, in our view, directionally correct. In 2025, the multiple changes in tariff policy, delays, and on-the-world exemptions, as well as the effect of inventory preloading by Asian competitors, created significant volatility in promotional behavior. However, immediately after Black Friday, pricing improved slightly above pre-Black Friday levels. While the price changes were still below the level needed to fully offset the accumulated inflation and cost of tariffs, it was a positive development in line with our expectation coming into the year. As you can clearly see in the small chart on the top right of the page, after the IEEPA ruling by the Supreme Court, promotion pricing reverted back in the following weeks.

We believe the Supreme Court ruling, the broader skepticism about the durability of tariffs, and the anticipation of refunds related to the tariffs resulted in the resumption of an aggressive promotion environment. It is also obvious that price changes of 1%-2%, as we've seen in February and March by the competition, do not even remotely cover the cost of inflation tariffs. You can also see that after the price changes which we announced on April 17th, Whirlpool set our prices as determined by our retail customers have moved up by 10% compared to January 2025. At the same time, the behavior from our competitors has shifted more favorably. The key development for U.S. appliance industry this quarter was the change in Section 232 tariffs, which brought clarity and predictability to the tariff landscape.

We will later discuss these changes in detail. What might appear as a small change in the 232 tariffs has significant and lasting ramifications on the entire industry. Essentially, every imported appliance into this country, irrespective of where it comes from, would have to pay a tariff of 25% on full product value, and in the case of China, even more. The combination of dropping consumer sentiment, decline of consumer demand, and the irrational industry pricing created an almost perfect storm during this first quarter but we are taking decisive and bold pricing and cost actions that we expect will bring our North American business back on its path towards healthy margins. With that, let me hand it over to Roxanne, who will discuss the first quarter results in more detail.

Thanks, Marc. Turning to slide 10, I will provide an overview of our first quarter results. As Marc mentioned, our results in the first quarter were negatively impacted by the ongoing macroeconomic and geopolitical events that have developed since late February. We delivered an ongoing EBIT margin of 1.3% and an ongoing earnings per share of -$0.56. Our earnings per share in particular was negatively impacted by approximately $0.32 from the non-cash loss associated with our minority interest in Beko Europe B.V. Looking at our segment performance, MDA North America was severely impacted by a sharp decline in consumer sentiment and the costs associated with our inventory reduction actions. MDA Latin America margin was pressured by the intense promotional environment. This was partially offset by the gains associated with the DIFAL tax ruling in Brazil.

Conversely, the SDA Global segment continues to perform exceptionally well. Our free cash flow was negative $896 million, as the benefit from our inventory reduction efforts was more than offset by lower earnings. We returned cash to shareholders and paid a $0.90 dividend per share in the first quarter. Turning to slide 11, I will provide an overview of our first quarter margin walk. Price mix unfavorably impacted margin by 275 basis points. This was driven by two key drivers. One, collapsing consumer sentiment further reduced discretionary demand and negatively impacted mix. Two, the encouraging industry pricing progress we observed in the first few weeks of the year was heavily disrupted by the Supreme Court's IEEPA tariff ruling and the anticipation of refunds, which created further external volatility and the return of an intense promotional environment.

Our net cost was negatively impacted by volume decline and one-time costs associated with the planned inventory reduction, resulting in 175 basis points of margin contraction year-over-year. We executed our originally planned inventory reductions and executed incremental reductions due to the unexpected industry decline. Overall, we drove 20% year-over-year volume reduction. Raw materials unfavorably impacted margins by 50 basis points, driven by inflation of steel, base metals, and resins. The current and projected steel costs are now putting us at the maximum pricing of our long-term steel agreements. We experienced a neutral impact from tariffs in the first quarter as the incremental cost from changes to Section 232 implemented in the second half of 2025 were offset by tariff recovery and mitigation actions.

Marketing and technology was favorable 50 basis points versus prior year, driven by reduced transition costs and a pullback in spending as we saw consumer sentiment shifts. Currency was also favorable by 50 basis points, driven by the appreciation of the Mexican peso and Brazilian real. Lastly, transaction impacts were an unfavorable 50 basis points due to the non-cash loss associated with our minority interest in Beko Europe B.V. It is important to note that based on the current carrying value of this investment, Whirlpool will no longer recognize any further losses from Beko Europe B.V. Now I will turn the call over to Juan Carlos to review our MDA North America results.

Thanks, Roxanne. Turning to slide 12, I will provide an overview of our first quarter results of our MDA North America segment. In the first quarter, net sales decreased 8% year-over-year to $2.2 billion. Consumer sentiment collapsing to record lows due to the war in Iran prevented the recovery of the volume loss during the winter storms and resulted in recession-level industry contractions, with discretionary demand down approximately 15%. The segment delivered break-even performance, with EBIT margins negatively impacted by the sharp decline in demand, higher than expected cost to reduce inventory, and the return of an intense promotional environment after the Supreme Court IEEPA rule. While we experienced high costs from the actions to reduce inventory levels and higher tariff costs year-over-year, these were partially offset by tariff recovery and mitigation actions.

As over three years of accumulated inflation continues to pressure our business, we have announced the largest price increase in a decade in conjunction with acceleration of critical initiatives to drive cost reduction. We expect these aggressive actions to put MDA North America profitability back on track. We'll share more details of those actions shortly. I'll turn over to Ludo to review the MDA Latin America and SDA Global results.

Thanks, Juan Carlos. Turning to slide 13, I'll review the results for our MDA Latin America business. Excluding currency, net sales decreased approximately 4% year-over-year. This is the net impact of an aggressive promotional environment in the region and volume increases from a growing industry and share gains. Due to the promotional pressure, the segment's EBIT margin was 6%. This margin was supported by a favorable Brazil tax ruling and our ongoing cost takeout initiatives, which partially offset the unfavorable price mix. Turning to slide 14, I'll review the results for our SDA Global business. This business continues to perform exceptionally well, delivering approximately 10% net sales growth year-over-year, excluding currency.

EBIT margins expanded an impressive 250 basis points year-over-year to 21%, driven by continued growth in our direct-to-consumer business, solid execution of cost takeout initiatives, and some marketing investment timing changes versus prior year. We are proud to celebrate the 6th consecutive quarter of year-over-year revenue growth, clearly underscoring the strength of our product portfolio and of our value creation strategy. On slide 15, we showcase a few exciting new products that we're bringing to the market this year. We're proud to bring meaningful consumer-centric innovation to the stand mixer while maintaining our iconic design and heritage. The new Artisan Plus stand mixer is now featuring an integrated bowl light and precise speed control. Our compact fully automatic espresso machine with iced coffee gives consumers the option to brew at a lower temperature while also delivering a space-saving design that fits effortlessly into many kitchens.

I will turn the call back over to Juan Carlos to review the critical actions we are accelerating to recover profitability in MDA North America.

Thanks, Ludo. Turning to slide 17, I'll review some of our bold actions to restore MDA North America margins. On April 17, we announced the largest price increase in more than a decade. This price change is being executed in two steps. First, we executed a promotional price increase, which is already in effect of more than 10% relative to the first quarter prices. This is the most impactful change and is expected to start driving price mix improvements in Q2, ramping up throughout the year. Secondly, we announced a list price increase effective on July 9. This second wave represents an additional price increase of approximately 4%. This multi-step plan is designed to offset the cost inflation accumulated over the last 3 years that has not yet been reflected in prices, the anticipated cost inflation in 2026, and some residual impact of tariffs.

In addition to these pricing actions, we will continue to deliver product innovation and expand our mass premium and premium product offerings. The 30% incremental floor gain on the back of the record year of product launches in 2025 is largely installed, and we are seeing the results of KitchenAid major appliances continue to deliver strong sell-through performance year-over-year despite the softer industry. Our robust innovation pipeline was further validated by the outstanding award-winning performance at KBIS, where Whirlpool Corporation secured an impressive 23 awards. Turning to slide 18, I will highlight the successful launch of our Whirlpool-branded Whirlpool UV Laundry Tower, which we presented in our last earnings call. The national rollout of this product, featuring the industry-first UV Clean technology that reduces bacteria in the wash while keeping fabric care in mind, has been exceptionally well-received and is exceeding expectations.

This innovation is driving rapid share gains, capturing approximately 5 points within weeks and increasing our balance of sales with trade partners who have floored the unit. This confirms the competitive advantage of our game-changer UV Clean technology. Turning to slide 19, I am pleased to showcase a new KitchenAid intelligent wall oven, which earned the prestigious Best of Show award, the highest honor at KBIS. This new wall oven is one of the many products available in our new KitchenAid suite, which began shipping late last year. This product allows consumers to experience cooking through a new lens with the intelligent cooking camera that identifies food, monitors doneness, and remembers your preference for your favorite recipes. We continue to see strong sell-out through our KitchenAid market share gains to trend towards the highest level in over a decade.

Turning to slide 20, I will highlight exciting innovation coming to our InSinkErator business. The new LEDefense odor-fighting sink flange features a UV-free LED light that kills 99% of common germs, including odor-causing bacteria. This innovation feature addresses one of the biggest consumer pain points of bacteria odor. This is yet another product that received recognitions at KBIS this year, and as the next-door neighbor to the dishwasher, continues to position us well for the eventual housing recovery. Turning to slide 21, let me provide an update of the initiatives we are accelerating to bring our business back on track. As we navigate the current macro pressures, we maintain our commitment to deliver our $150 million in cost takeout in 2026, which will be fundamental supported by our ongoing design-to-value engineering efforts.

Given our current EBIT margins, we're taking decisive structural actions across several key levers to accelerate our cost actions. First, we're heavily leaning into the vertical integration, automation, and the optimization of our manufacturing and logistic footprint. As part of these initiatives, we announced three key projects. One, our new strategic investment in Perrysburg, Ohio. Two, the ongoing modernization of our Amana, Iowa plant. Three, shifting production from Pilar, Argentina to Rio Claro, Brazil. Together, these footprint and integration moves are expected to unlock approximately $45 million in savings in 2026, while significantly improving our product quality, speed of innovation, and overall supply chain resiliency. Additionally, as we shared previously, we are renewing our strategic sourcing initiatives. We have already completed the first phase of this project, and we're making good progress on the second phase. We expect to capture roughly $15 million in savings in 2026.

Finally, we're introducing a new measure which encompass targeted fixed cost actions within our corporate center. We expect to generate approximately $20 million in savings, which we will plan to share more details about it in the near future. Collectively, these actions will have a carryover in benefit into 2027, ensuring that we are actively managing the elements with our control to offset external headwinds and restore our profitability. Turning to slide 22, let me detail the accelerating of our vertical integration and how we significantly strengthen our U.S. manufacturing footprint. We recently announced that we are making a $60 million investment in our new state-of-the-art production facility in Perrysburg, Ohio. This represents our 11th factory in the U.S. and our 6th in the state of Ohio, reinforcing a legacy that we have incredibly proud of.

We started in America, and we stayed in America for over 100 years. This strategic investment will drive greater efficiency and is expected to deliver approximately $30 million in annualized EBIT benefits. Turning to slide 23, we are executing critical factory footprint changes to unlock greater operations efficiencies within our regional manufacturing network. First, in our Amana, Iowa, we are undergoing a multi-year modernization effort. This modernization will refocus our manufacturing of bottom mount refrigeration and optimize our part production and sub-assemblies, generating an expected annualized EBIT benefit of approximately $70 million. We're also optimizing our Latin America operations by shifting our front load washer production from Argentina to our Rio Claro facility in Brazil. This strategic shift drives valuable manufacturing cost efficiencies and logistic cost optimization, which we expect to deliver an additional $20 million in annualized EBIT benefits.

Turning to slide 24, let me provide an update on Section 232 tariffs. While the Supreme Court overturned IEEPA tariffs in late February, the administration took significant actions in early April to strengthen Section 232 steel tariffs on home appliances. The updated 232 framework represents a significant win for the U.S. manufacturing and lasting structural advantage for Whirlpool. As a reminder, Section 232 steel tariffs were first implemented in 2018 and have proven their durability by remaining in effect throughout multiple administrations. While home appliances were officially covered under the framework in the mid-2025, the recent updates in April have increased the overall tariff rate on home appliances and greatly simplify both compliance and enforcement. Because we proudly manufacture the vast majority of our products domestically and continue to invest in domestic manufacturing, this trade policy strongly supports our position.

We estimate that the 25% tariff impact on our competitors will now be between 10% to 15% of our competitors' total U.S. major appliance net sales. By contrast, the impact of our MDA North America business is estimated to only be about 5%. Ultimately, these changes bring much needed predictability to the industry and deeply strength our competitive advantage as, by far, the largest domestic appliance producer. I will turn the call back over to Roxanne to review our revised expectations for 2026.

Thanks, Juan Carlos. Turning to slide 26, I will review our updated guidance for 2026. Given the rapid deterioration of the macro environment since late February, we have revised our expectations for our 2026 results. On a like-for-like basis, we expect revenue growth of approximately 1.5% in 2026 due to our revised expectations for the North American industry. Even though the industry has seen substantial degradation, our new product launches are expected to continue delivering growth in MDA North America. We expect our MDA Latin America business to regain momentum and expect continued strength in our SDA Global business. On a like-for-like basis, we expect approximately 70 basis points of ongoing EBIT margin contraction to a full-year EBIT margin of approximately 4%.

Free cash flow is expected to deliver more than $300 million or approximately 2% of net sales, driven by significant structural inventory optimization. We expect full-year ongoing earnings per share of $3.00-$3.50. This includes approximately $1 impact due to the recent equity offering, alongside an additional $1 impact due to an adjusted effective tax rate of approximately 25%, which is an increase compared to 2025. Turning to slide 27, we show the drivers supporting our 2026 ongoing EBIT margin guidance. We have updated our expectation of price mix to 150 basis points, reflecting the current impact of collapsed consumer sentiment, offset by the impact of our bold pricing actions announced in April.

We expect to substantially improve price mix as we progress through the year with the benefits starting in May and ramping throughout the year. Net cost takeout reflects the expectation of delivering more than $150 million, supported by our accelerated cost actions. While we have long-term steel contracts in place, the current and projected costs are putting us essentially at the maximum pricing of those contracts. This has a minor impact to our full year RMI expectations. However, combined with the inflation of base metals and resins, we have updated our expectations to approximately 75 basis points of negative impact from raw materials. We expect approximately 175 basis points of negative impact from the tariff announced in 2025 and updated in April 2026.

We expect the benefits seen in Q1 from the tariff recovery and mitigation actions to be more than offset by additional tariff costs due to the Section 232 tariff changes announced in April. It is important to note that these impacts represent currently announced tariffs and do not factor in any future or potential changes in trade policy. Our expectations for marketing and technology, currency, and transaction impacts remain unchanged. Turning to slide 28, I will review our segment guidance. Starting with industry demand, we expect the global industry to be down approximately 3% in 2026. In North America, given the drastic decline already seen in Q1 and the anticipated prolonged inflationary environment, we now expect full-year industry demand to decline by approximately 5%. Our industry expectations for MDA Latin America and SDA Global remain unchanged.

For MDA North America, we now expect to deliver a full-year EBIT margin of approximately 4%. The bold pricing actions we've taken and accelerated cost takeout initiatives are expected to drive profitability recovery in MDA North America. Margin expectations for MDA Latin America and SDA Global remain unchanged. Turning to slide 29, I will provide the drivers of our free cash flow guidance. We have updated our cash earnings and other operating accounts consistent with full-year EBIT guidance. We have not changed our expectations for capital expenditures and continue to focus on delivering product excellence and investing in our U.S. manufacturing footprint. We have taken necessary actions to optimize our inventory and are updating our expectations to improve working capital by approximately $150 million to support cash generation in 2026.

As seen in our 1st quarter results, our working capital initiatives are off to a very strong start, and we expect these structural changes to improve our day-to-day inventory levels. Our expectations for restructuring cash outlays related to our manufacturing and logistics footprint optimization efforts are unchanged. Overall, we expect to deliver free cash flow of more than $300 million or approximately 2% of net sales. Turning to slide 30, I will review our capital allocation priorities, which have been updated to reflect the current business environment. Investing in organic growth through product innovation remains critical to our business, and this will continue to be one of our top priorities. We will continue to invest in product innovation, digital transformation, and cost efficiency projects with approximately $400 million of capital expenditure expected this year.

Secondly, we are committed to reducing our debt levels now more than ever. We expect to pay down more than $900 million of debt in 2026, continuing our commitment to deleverage. Lastly, after careful consideration with a focus on ensuring financial flexibility during this challenging operating environment, we have made the prudent decision to pause our quarterly dividend starting in the second quarter. This decision is critical to ensure we create the capacity on our balance sheet to pay down debt and fund organic growth. Turning to slide 31, I will review how we are taking additional actions to manage our debt maturities and ensure liquidity in an uncertain macro environment. We recently executed a strategic equity offering that successfully raised approximately $1.1 billion in capital. The use of these proceeds was focused on debt paydown and accelerating our vertical integration and automation efforts.

The proceeds were used as expected. We paid down more than $900 million in debt and began to invest in vertical integration with the acquisition of our Perrysburg, Ohio, facility. We are in the process of moving to an asset-based lending facility. As we transition, we entered into an amendment to our existing credit facility, reducing our available line of credit from $3.5 billion to approximately $2.25 billion effective in May. This amendment provides us with the valuable near-term flexibility and ample borrowing capacity. We have strong lender support on the asset-based lending facility and are tracking well to closing the next credit facility over the coming weeks. These decisive actions demonstrate our continued focus on debt paydown as we work to drive our long-term debt below $5 billion. Now I will turn the call back to Marc for closing remarks.

Thanks, Roxanne. Turning to slide 32, let me summarize what you heard today. As we discussed, our first quarter results were heavily impacted by severe external volatility and one-time events. The sudden macro pressures from a war in Iran, the resulting plunge in consumer sentiment, and the disruptions to industry demand and pricing all masked the underlying operational progress we have made. However, we're actively managing what is within our control. We have announced significant pricing and structural cost actions that are firmly in place to restore profitability to our MDA North America business. By driving over $150 million in cost takeout initiatives and executing our largest price increase in a decade, we're aggressively addressing our margin pressures. More importantly, our ongoing U.S. footprint optimization and the recent Section 232 tariff updates meaningfully strengthen our competitive advantage as a domestic producer.

Because we proudly build approximately 80% of our products we sell in the U.S. here in America, we're structurally positioned to win in this new tariff landscape. Additionally, our SDA Global business continues to perform exceptionally well, remaining a bright spot in our portfolio, consistently delivering revenue growth and margin expansion. Whether it is in small appliances or our major domestic categories, we continue to hold a leading position supported by a portfolio of iconic brands and innovative products. Looking further ahead, we know the U.S. housing market trough will be over at 1 point, and the March read of housing starts may be an early indication of a more positive trend. The eventual tailwinds from an inevitable recovery will be strongly catalyzed by our leading established position in the builder channel, as well as the strength of our InSinkErator business.

Now, we will end our formal remarks and open it up for questions.

Your first question comes from the line of Michael Rehaut from JPMorgan. Your line is open.

Thanks. Good morning, everyone. Thanks for taking my questions. I wanted to take a step back.

Good morning. My question is really just on the consumer, and you highlighted the all-time low in confidence impacting results. You know, so far this earnings season, we've heard from other, you know, building product companies where volumes are down, but not to the extent that we're seeing in appliances. Many have reported that while the consumer confidence is shaky, demand trends have been somewhat more stable perhaps than what you've seen in your own industry. I was wondering if you could contrast what the drivers are that maybe has created that greater amount of volatility in appliances as you see it from the consumer's perspective compared to other products like power tools, flooring, paint, plumbing, et cetera.

So Michael, obviously, just to repeat the numbers, we saw -7.4% industry demand in Q1, of which March was -10%. That is, even in our industry, as we pointed out, a very unusual low level. I mean, that's why we pointed the last time you've seen -10% was during the global financial crisis. I think one of the key elements which makes our category maybe slightly different to our other categories, at the end of the day, for the majority of U.S. households, appliances or the purchase of an appliance are a significant portion of their disposable income. Ultimately, it's a decision against the confidence the consumer has about the financial future. It's just a big-ticket item. It's not a $50 purchase.

That I think explains a little bit what being seen right now in Q1. By the way, just a little bit more anecdotes. One of the strongest businesses which we had in Q1 was actually our spare parts and repair business, which just is an indicator that even consumers are holding back replacing product and rather repairing it. We've seen that often to aid. Now, the flip side is consumer confidence is on a 50-year low, but we've seen in other phases, consumer confidence actually moves pretty fast. I wouldn't expect that level of confidence, but also that level of industry demand being that much down for rest of the year.

We do anticipate a recovery, but you know, I mean, the first three months already took industry so much down, no matter how you do the math, if you anticipate kind of a more flattish environment going forward, that's why you ended at a -5. I do consider, and I agree with you, March was probably an exceptionally low outlier, which we didn't expect. Will that be the same going forward? No, but it's not gonna be an immediate recovery for consumer environment.

Great. No, no. Thank you for that, Marc. I guess secondly, obviously big price increases by yourself, and it looks like from slide 9, the industry as well, in the most recent couple of weeks. How are you thinking about second quarter EBIT margins for North America? You know, if your assumptions hold, what are you thinking about the trajectory for the back half as well?

Mike, as you know, we're not giving specific Q2 margin guides, but let me give you a little bit of broader perspective on this pricing and what we're seeing and how it flows through our bottom line. First of all, and I wanna refer to a slide which we presented. This is the biggest price increase I think we referred to in a decade. Honestly, three decades in the company, I've not seen that level of price increase. Keep in mind, there's essentially three components of that price increase. One, a very significant promotional price map or PMAP increase of more than 10%. That's already out there, and you see that already reflected in the retailer pricing towards the consumer. Two, we significantly reduce our participation in promotions.

For example, July 4th, we're going two weeks as opposed to three weeks, and we're not participating in all house promotions. Three, we have a list price increase also kicking in in July on vast majority of products. It's kind of a multi-tiered approach. I would say the first two weeks of what we've seen in consumer visible prices have been very encouraging. You could use the term first two weeks, yeah, the pricing is sticking. Needless to say, that is key to everything going forward on the EBIT margin. If that holds, then we will be in a good place. Now keep in mind also, and this explains a little bit Q1, and then you should also anticipate in Q2, but the chart shows you consumer pricing.

That is not exactly how it exactly immediately flows to our bottom line. What I'm referring to, for example, take Q1. In Q1, you still pay the former promotion investments on Q4 because it's a, it's a delayed or trailing effect. Even though the April pricing consumer starts, you're still partially paying for the March promotions out there. There's a little bit of delay effect which also will flow through Q2. Again, if the pricing holds as we've seen in the two weeks, I think you will absolutely see the gradual recovery of our EBIT margin as we kind of pretty much laid it out.

Your next question comes from the line of David MacGregor from Longbow Research. Your line is open.

Yes. Good morning, everyone, and thanks for taking my questions.

I guess my first question. Good morning, Marc Bitzer. My first question was just on the guidance and, I guess a few parts to this, but can you explain why you're calling out the improving price environment at the same time taking down your full-year price mix guidance? Would you tell us how much of the price improvement you're including in the revised guidance? It looks like you've got kind of partial inclusion with the reduced PMAPs, but maybe none of the July increase, and then how much are you specifically assuming for mix? I have a follow-up.

Yeah. David, first of all, you know, the full year number which you've seen on this page 27, keep in mind, we basically have 3 months of negative pricing. You saw that in the earlier pricing margin walk. You first have to overcompensate on a full year base what you already lost in Q1. Put it differently, yes, on a full year base, it looks like it's kind of 25 points down. Actually, on the Q2 to Q4 point, it's significantly up. Did we factor in the full amount of a price increase? No. Which also means, you know, the success of a stickiness of price will determine a lot. Of course, there's a certain assumption which we took into account here, but maybe not the full amount.

You know, let's see how these things develop. The big uncertainty, and this is why we're still a little bit cautious, and you alluded to this one, is mix. Let me explain that a little bit because that's probably on everybody's mind. I know some people will ask or may ask about what happens to price elasticity. Actually, in all previous years, we've not seen so much an impact on consumer price elasticity for simple reason. Last time consumer bought an appliance was 10 years ago. By and large, the prices are very similar, we don't see the big elasticity from a pure demand, particularly in the replacement market. What you do see, however, that in particular in a distressed environment, that consumers enter the store with a budget in mind.

What I mean is they have a budget, let's say $600, and they basically gonna stick with that price point. What you see as opposed to a product which used to cost $599 is now $649, they stick to the $599 price point. What it means is for us, a mix down to kind of an SKU. We saw in our circumstances, not necessarily impact on volume of demand, but you gotta manage the mix very carefully. That's what we. Obviously, that's the kind of biggest uncertainty. That's why we didn't fully factor in what happens to mix, how much can we compensate, how much can we mitigate. We have tools in place, in particular with our new products, to manage the mix in the right direction.

That is really the consumer uncertainty about what happens to mix, when you go out in an environment which from consumer perspective is distressed.

Got it. Okay. Thank you for that detail. Just as a follow-up, I guess this is maybe a higher level question, but can you just update us on the path from where we are now to your 9% target for EBIT margins longer term? How does that 500 basis point bridge look in terms of price mix, net cost, you know, volume leverage, RMI, you the framework you typically employ?

Yeah. David, the first big step is actually what will need to happen in 2026. As you can obviously, and I know you probably already did the math, that guidance which we've given on 4% this year implies that basically you have an exit rate which is very different from where we are today. Without getting into the details of quarter-by-quarter margin, you're basically talking about an exit rate of whatever, 6%+ for North America. That is the fundamental step on everything. The question on your 9% starts with exit rate of Q4 this year.

The pricing actions together with the cost actions will put us on the right trajectory. On the cost actions, a lot of things which we talked today about, obviously, as you can imagine, have a lot of carryover benefits. All the manufacturing footprints, the vertical integration, the numbers for 2026, as you could tell, are, they're okay, they give some benefits, but the real benefits start 2027 going forward. That's when you see a lot of these benefits. We carry the exit rate into next year. We have additional cost actions. That puts us on the path towards the 9%. I'm not saying that's a 2027 number, but it puts us on the right path.

Your next question comes from a line of Sam Darkatsh from Raymond James. Your line is open.

Good morning, Marc. Good morning, Roxanne.

Two questions. First off, around the RMI guide, I think you raised it by about $100 million versus prior. Does that contemplate current market prices for PVC and resin and base metals, or does that contemplate some giveback from current market prices in the second half of the year? Then I've got a follow-up.

Sam, the short answer, it does. Let me give you a little bit context. As you know, you know it very well, our number one purchase product is steel. Steel, to Roxanne's earlier point, we're kind of getting to a cap of our long-term agreements. We were hoping maybe a little bit below the cap, but that's fully factored in, it's not volatile going forward for us. On the resins, it does not reflect the current spot because the current spot and the way how we buy it is still reasonably okay, but it anticipates that Q3 and Q4 we have some headwinds on all plastic components. It just ultimately results of what we're seeing on oil prices. There's another element which may be on a relative case may be a little bit more favorable for North America as opposed to Asia.

I think there might be also some supply constraints in plastics, in particular for Asia, which ultimately will also drive prices on plastics.

The second half does contemplate like current market prices for resin and oil throughout the year, and then it just hits you in the back half. Just clarifying that.

Yeah. It implies an increase of plastic prices in Q3, Q4 versus where we are today.

Gotcha. My follow-up, you cut a lot of production, obviously. You get the inventories in better shape during the first quarter. The rest of the year, are you anticipating production and shipments to largely match, or are there more production cuts to come?

Yeah. Sam, first of all, to clarify Q1, we already planned, and we alluded to this one in January, that we want to bring down inventory to the right levels. Obviously, with industry demand being what it is, we had to cut even more production than we ever had in mind. That cost us in the quarter around $60 million. It was massive. The good news is right now, inventories in North America are what I would call on a really good level. They're on a healthy, sustainable level. Now, having said that, we are anticipating also on a full year basis that the industry demand will not fully recover. Also going forward, we will produce less than we, for example, produced last year. We know that now we can adjust accordingly.

There's not gonna be a big one-time reduction in inventory, but it's just more we wanna keep production in line with what we're seeing on the industry demands.

Your next question comes from a line of Mike Dahl from RBC Capital Markets. Your line is open.

Good morning. Thanks for taking my questions. I wanted to ask 1st about tariff dynamics. Two parts. First is you didn't record a material tariff impact in 1st quarter, and you're still lapping the tariffs from last year. Curious if there was any booking of refunds or anything, another one-time in nature there. When you think about then the net tariff impact going up for the full year, kind of despite that, can you just help us parse out like what, obviously, your competitors are more impacted by 232, but what your net puts and takes are around kind of the current guide and what's contemplated and how much is specific to 232?

Yeah. Michael, let me first talk about how it impacts us and then maybe broaden this 232 tariff, and I'll read into this one. First of all, as you know, we as a company, we pay three different types of tariff. That's a 232, the 301, in the past it was the IEEPA, and now to some extent 122. There's always gonna be a stacked layer of this one. In Q1, we had a number of favorable tariff mitigation actions. That's a combination of Post-Summary Correction. It's on tariff claim sales and tariff refunds. On the IEEPA piece, not on the 301 and 232. In Q1, that was actually a pretty neutral guide, or put it differently, pretty much helped offsetting the cost of inventory reduction. It's a wash.

On a full year basis, we do anticipate, and that's now the effect of a 232 and also with 122 changes, that the tariff cost on a full year basis go up 0.5 points. That's fully factored in. Now again, that's from today's environment. If something changes, then something will change, but that's pretty much what we expect on a full year basis. Keep in mind, on every given quarter, you may have ins and outs. That depends on shipment patterns. That depends on what happens on the three different tariffs. On, at the current state, if a tariff now stays stable, I think the 1.275% is pretty, that's pretty much what you should expect.

Now, the broader comment I wanna make on 232, Juan Carlos in his comments earlier already alluded to this one. I know it may feel to the outside like this is a small change of 232. It is actually big in the ramifications of our industry. Let me just explain it once again. Before it was fairly complicated, but the appliances for the first time were included in 232 last year in April. The way how it was set up with declared steel value and declared weight was very complicated, and I would say left many doors open for maybe not a full declaration of real cost. What changed now is a flat rate of 25% against the full declared product value.

That brings a lot of stability and clarity to the equation because the border authorities, which are very competent, they have a lot of history and understanding of full product declaration. The ability to kind of circumvent that are very limited, and 25% on every single imported appliance into the country is massive. Nobody can escape that. With our domestic production footprint, that what I would call is finally the environment which allows a level playing field. Honestly, we've been waiting for this one essentially for a year. It is now as of April 6th finally in place, and I personally believe it will drive a lot of positive changes for us.

Thanks for that, Marc. That's helpful. My second question is more demand related and specific to North America MDA. You know, the understanding March was kind of an acute weakness. What are the trends that you've seen kind of since March and April and midway through May, especially as you and others have tried to implement price? 'Cause I know you're saying that you're not assuming full recovery from a demand standpoint, but it still seems like to get to your full year revenue guide, volume trends in addition to price mix have to improve through the year. It also seems to imply still some share gain while your own charts kind of show you trying to take, at least at this point in time, more price than your peers.

I'm just hoping to get a better walk for kind of the more recent dynamics you've seen and then how you're envisioning the balance for the year.

Mike, obviously Q1 was really rough from an industry demand in March in particular. That March was just a fall off the cliff from demand. April slightly improved, but still on a negative trajectory. Honestly, that's pretty much what we expect. It's, you know, as long as the consumer sentiment is that much down, I don't think you will see strong market demand patterns, but not to the level of what we've seen in March. March was just a shock to the system. April is slightly improving. What we do see, again, the basic trends of business replacement market continues. What we do see is still mix being under pressure. Consumers are budget constrained. It doesn't impact necessarily the volume of appliance sales sold, but it impact the mix.

That's what we've seen in Q1, and that's what we're also seeing in April. That relates back to my comments is we go very aggressively on the overall pricing, but we got to manage mix in the meantime. That's a market trend which I think you will see pretty much Q2 and Q3, i.e. volumes being soft to slightly negative, and mix being under pressure.

Your next question comes from a line of Eric Bosshard from Cleveland Research Company. Your line is open.

Good morning. Thank you. Good morning. Clarification on two things. One, the March and April, the demand, this is industry shipments. Is that correct?

Maybe to elaborate on this. Keep on going.

Yeah, I was just gonna ask, I'm just curious on sell-through. Is the sell-through what you're seeing at retail down 10% in March and a similar level in April, or is this just a shipment issue?

Yeah. Eric, you're pointing out a good point. What I'm referring to is industry shipment into the trade. In Q1, and of course, we don't have industry inventory levels. We know our own product inventory levels with retailers. I would say estimate in the 7.4% down, but probably was 0.5 point to 1 point of inventory reduction of trade included in there. Not more. That's just an estimate from our side. I think I would say on our products, because we don't have industry sellout data, our products in Q1 actually held reasonably good ground. I would say the last 13 weeks what we've seen is pretty much a flat to slightly down sellout, so a little bit better than the sell in. That's what we continue to see.

Again, that relates back to we feel good about our product range. Our products are selling. To what even Juan Carlos showed earlier, the KitchenAid product in that market is still growing at double-digit rates. We know our new products are selling, but the sentiment is just weak overall.

Okay. The dramatic change, the impact from the war is on the sell in. The sellout has not changed meaningfully. Is that your point?

Just I need to clarify. On our products, even in March, the sellout was there were one or two weeks in the overall sellout which were really down. Our products right now overall in the sellout are a little bit better than what we see from sell in from a broader market. We now need to see what's going forward. I mean, again, March also in sellout was not the strongest.

Okay. Secondly, just to make sure I understand that you talked through the strategy with promotions and less weeks that you're gonna participate, and all of that is then reflected in the industry down 5. I know elasticity, this is not an industry that responds a lot to price, so price is not that important, is what I've heard you say. In terms of your expectation on volume, that's all captured in this industry now down 5 versus 0. That's the expectation of these changes. Is that correct?

That is correct. Just again, it's in a market which is strong replacement driven, again, more than 60%, it just does not make sense to have promotions on July 4th, which are 3-week long. You're not gonna increase market demand. You pull forward at best, but you're not gonna change market demand. That's but our decision, that retailers make their own decision, our decision is we will only support on July 4th two weeks and not three weeks. We're also not gonna promote or participate in every single house promotion. Again, retailers may make their own independent decision. That's what I'm referring to is what we are supporting. In such a market, you will not increase demand by excessive promotions.

Your next question comes from a line of Rafe Jadrosich from Bank of America. Your line is open.

Hi, guys. This is Shaun Calnan on for Rafe. Just first one, you guys are raising price a little more than your competitors despite the higher tariff impact for them. Are you expecting them to have to catch up on the price increases? With that in mind, what are you guys expecting for share gains this year?

Shaun, first of all, I really wanna be clear also to the audience, we're raising price not just because of tariffs. We have three years of pent-up inflation, which we have never reflected. The entire industry has not reflected that. Many people could argue that you have 20 years of inflation which have never been passed on to consumers. We're passing on three  years of pent-up inflation, which at one point we just have to pass on to consumers in addition to tariffs. Now that mix of inflation and tariff may be different for every competitors, they make their own decision. We know what we have to do because of our cost base.

We will reflect the cost of our products in the consumer prices. Your question about are we slightly higher than competitors, it's more, yeah, we also have a lot of new products which I think deserve a higher value.

Okay, that makes sense. On the 10% to 15% impact, from 232 to competitors, how does that compare to what, you guys thought the IEEPA impact was?

You know, first of all, the IEEPA impact, I think there was a lot of uncertainty in terms of how much was really paid and how much flowed through. For me, the more relevant point is it's very stable. It's hard to circumvent and bypass. There is no country hopping which will happen because of different rates. Nominally, it's probably slightly higher. In terms of real effect, I think you could call that tariff as good. And I think that's a very, very different landscape than what we've seen a year ago. Very different.

Your next question comes from a line of Susan Maklari from Goldman Sachs. Your line is open.

Whirlpool (WHR) Q1 2026 Earnings Call Transcript

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