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F500-2021-154-Whirlpool

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F500-2020-162-Whirlpool

The global manufacturer of washers, dryers, refrigerators, stoves, mixers, air conditioners, and other home appliances under brand names like Maytag and KitchenAid is headquartered in Benton Harbor, Mich.

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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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Q4 2024

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

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Whirlpool

whirlpool

Good morning, and welcome to Whirlpool Corporation's Fourth Quarter twenty twenty four Earnings Call. Today's call is being recorded. Joining me today are Mark Bitzer, our Chairman and Chief Executive Officer and Jim Peters, our Chief Financial and Administrative Officer. Our remarks today track with a presentation available on the Investors 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 ks, 10 q, and other periodic reports. We also want to remind you that today's presentation includes 9 GAAP measures outlined in further detail at the beginning of our earnings presentation. We believe the measures are important indicators of our operations as they exclude items that may not be indicative of results from ongoing business operations. We also see 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 reconciliation 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 participants ask no more than 2 questions. With that, I'll turn the call over to Mark.

Thanks, Scott, and good morning, everyone. As we look back at 2024, we have to acknowledge that our financial performance has not yet been at the level where we all expect it to be. At the same time, we are pleased with the progress we made throughout the year in improving our operational performance and accelerating our portfolio transformation.

The completion of a Europe transaction was a key milestone in our ongoing portfolio transformation, unlocking significant value creation opportunities. Operationally, we delivered substantial cost reduction initiatives of approximately $300,000,000 while at the same time stabilizing and in some cases reversing the negative input cost trends we had experienced before. We also simplified our organization and enabled business unit autonomy delivering structural cost savings of more than $100,000,000 As a result, since the we have sequentially increased ongoing EBIT margin by 170 basis points, achieving 3 consecutive quarters of margin expansion. This sequential margin expansion in combination with a favorable tax rate allowed us to deliver over $12 of ongoing earnings per share. We executed our capital allocation priorities and returned approximately $400,000,000 of cash to shareholders in dividends, while paying down $500,000,000 of debt, reinforcing our commitment to reducing our debt levels.

We achieved significant working capital efficiency resulting in $3.85,000,000 dollars in free cash flow. As we look into 2025, we do not anticipate a sudden improvement of what has been a very challenging macro environment in particular in The U. S. We are highly optimistic about mid and long term prospects of U. S.

Housing market, at the same time realistic about the pace of recovery and expect only a slow and gradual improvement in 2025. We are following the various initiatives and ideas coming from the new administration. While some of these might be favorable for our business, we have not factored them into our outlook and instead we remain focused on what is within our control. As you will hear later in more detail, we will stay very disciplined in our cost controls. While we're not assuming significant raw material cost savings, we have already lined up cost actions amounting to $200,000,000 and have started to develop additional opportunities to exceed this target.

In The U. S, we have just recently announced a further reduction in the depth of our promotional pricing program. This in combination with compelling lineup of new and innovative products is expected to help drive favorable price and mix in 2025. I'm confident that our expected 2025 margin expansion and free cash flow improvement puts us firmly on our path to a higher growth, higher margin company. Turning to Slide 6, I will provide an overview of our results.

We had a with 2% organic growth, which as a reminder excludes currency and the Europe transaction, driven by strength in our FDA, global and international business. Global EBIT margins expand both sequentially and year over year driven by previously announced promotional program and pricing actions in MDA North America and MDA Latin America. We delivered ongoing earnings per share of $4,.57 and maintained our dividend of $1,.75 Turning to Slide 7, I will provide an overview of our ongoing EBIT margin drivers. Price and mix unfavorable impacted margin by 100 basis points, slightly falling short of our initial expectation. Price and mix was negatively impacted by a retailer destocking in our MDA North American business, coupled with very strong sellout as consumer confidence rebounded following the U.

S. Presidential election. Aside from this 1 time impact, our price and mix saw the expected benefit from the pricing actions in MDA North America and MDA Latin America. Our cost takeout actions delivered 175 basis points year over year, led by our continued manufacturing supply chain efficiency and our organizational simplification actions. Raw materials were essentially flat as expected.

Marketing and technology had an unfavorable 50 basis point impact as we increased investments in our new products. Currency reduced margin by 25 basis points year over year as the Brazilian RAL weakened relative to U. S. Dollar. The European transaction positively impacted the fourth quarter by 75 basis points as expected.

Ultimately, we're pleased to have expanded margins year over year by 80 basis points. And I will turn it over to Jim to review our and full year segment results and our perspective on 2025, including our capital allocation priorities.

Thanks, Mark. Good morning, everyone. Turning to Slide 8, I'll review and full year results for our MDA North America business. Net sales declined 1% in the driven by negative price mix. This was primarily driven by the impact of the structural retailer destocking previously mentioned.

In addition, following the U. S. Presidential election, we saw consumer sentiment improve with strong sellout. With many trade customer incentives tied to sellout volume during the Black Friday period, we saw a negative price mix impact within the quarter, resulting in EBIT margins of 6.7, which was below our expectations for the quarter. Overall, the segment delivered a full year EBIT margin of approximately 6.5%, largely in line with our most recent full year guidance.

Turning to Slide 9, I'll review the results for our MDA Latin America business. In the the segment had strong net sales growth of 7% year over year excluding currency, driven by industry growth in Brazil and Mexico along with pricing actions implemented in the quarter. EBIT margin of 7.6% expanded by two forty basis points year over year, driven by pricing, cost actions and fixed cost leverage. Overall, we are pleased with the 140 basis points of margin expansion to deliver a 7% full year EBIT margin meeting guidance expectations. Turning to Slide 10, I'll review the results of our MDA Asia business.

In the the segment saw net sales growth of 9% year over year excluding currency, as share gains and strong industry drove volume growth. The segment delivered a 1.2% EBIT margin in the quarter with 170 basis points of margin expansion year over year from fixed cost leverage. Overall, MDA Asia delivered a 3.9% EBIT margin for the full year with 160 basis points of expansion year over year. Turning to Slide 11, I'll review the results of our SDA Global business. The segment had multiple exciting launches in 2024 with new products introduced in high potential growth categories for our business.

These new products along with strong direct to consumer sales delivered year over year net sales growth of 6% for the quarter. The segment delivered an EBIT margin of 12.5 in the quarter, impacted by increased marketing investments in our new products. Overall, SDA Global delivered a strong EBIT margin of 14.3% for the full year. Turning to Slide 12, I will review our guidance for 2025. We have provided a reset baseline for 2024 results excluding both the European major domestic appliance business from and India's July through December 2024 consolidated results from the anticipated Whirlpool of India market sale transaction that I will review in more detail shortly.

The reset baseline excludes approximately $120,000,000,0.0 in net sales and approximately $6,000,000 of EBIT creating a like for like comparison for 2025 guidance. On a like for like basis, 2024 net sales were approximately $1,540,000,000,0.0 with an ongoing EBIT margin of approximately 5.8%. We expect growth of approximately 3% to $1,580,000,000,0.0 in net sales in 2025, driven by a strong product launch pipeline expected to deliver share growth in MDA North America and continued strength in our SDA Global and International businesses. On a like for like basis, we expect 100 basis point ongoing EBIT margin expansion to be approximately 6.8%. Free cash flow is expected to deliver $500,000,000 to $600,000,000 a 3.5% cash conversion of net sales, driven by improved earnings while sustaining lower working capital levels.

We expect full year ongoing earnings per share of approximately $10 This includes an adjusted effective tax rate of 20% to 25%, which is an increase compared to 2024 and impacts 2025 ongoing earnings per share by approximately $7 Turning to Slide 13, we show the drivers of our 2025 ongoing EBIT margin guidance. We expect a positive impact of 75 basis points from price mix from previously announced pricing actions in The Americas and new product launches. In North America, this reflects recently announced promotional pricing actions and the carryover pricing actions from as well as the carryover pricing actions implemented in Latin America from We also have a very exciting lineup of higher mix products and over 100 new products launching this year. In MDA North America, we expect to transition over 30% of our products, the largest one year transition in over a decade. We do not expect a material catalyst for existing home sales in 2025 and as a result, we expect stable demand year over year.

Therefore, we are not factoring in an improvement in the mix from a discretionary demand rebound. We will drive further reductions to our fixed cost structure and expect 125 basis points of net cost margin benefit from more than $200,000,000 of cost takeout actions. Based on previously executed supply agreements, we expect minimal to no impact on EBIT margin from raw materials this year. With a strong cadence of new product introductions this year, we plan to increase investments in marketing and technology, which will impact margin by approximately 50 basis points. Currency is expected to negatively impact margin by approximately 50 basis points as the Brazilian reais has weakened relative to the U.

S. Dollar. Finally, we expect our portfolio transformation to provide approximately 50 basis points of margin expansion due to the closure of the Europe transaction and anticipated India market sale transaction. Turning to Slide 14, I will review our segment guidance. Starting with industry demand, we expect the global industry to be approximately flat in 2025.

In The U. S, we expect to see similar demand trends that we saw throughout 2024. Resilient replacement demand creates a solid foundation for industry volumes, while consumer discretionary demand continues to be negatively impacted by elevated mortgage rates, resulting in weak existing home sales. Overall, we expect the MDA North America industry to be approximately flat. 2024 saw a significant industry improvement in Latin America with the strength decelerating later in the year.

We expect the MDA Latin America industry to be up slightly between 03%. India has 1 of the fastest growth rates globally and we expect MDA Asia industry volumes to continue accelerating at 3% to 5% in 2025. Finally, we expect the SDA global industry to be approximately flat with our volume growth driven by new products and continued investments in our direct to consumer business. For MDA North America, we expect to deliver a full year margin of approximately 7.5%. Previously announced pricing actions are expected to positively impact the margin and additional cost actions are expected to ramp up throughout the year.

For MDA Latin America, we expect EBIT expansion and a strong margin of approximately 7.5% from previously announced pricing actions and continued cost takeout. For MDA Asia, we expect approximately 6% EBIT margin. As a reminder, the Asia guidance excludes Whirlpool of India in the as the minority stake will no longer be consolidated. And for SDA Global, we expect a strong EBIT margin of approximately 15%. Overall, we expect 150 basis point margin expansion year over year with an ongoing EBIT margin of approximately 6.8%.

On Slide 15, let me review how we are well positioned and expect to deliver growth and margin expansion in 2025. Our organic growth of approximately 3% will be fueled by our new product introductions. As mentioned, we have a very strong lineup of launches this year with MDA North America transitioning over 30% of its products. Our refrigeration category will see a significant impact with approximately 40% turnover of our current products across all of our brands. With the new refrigeration products, we will not only appeal to a wide range of consumers, but also reduce manufacturing complexity.

Launching in the new Maytag top load laundry pair improves functionality with an innovative deep fill option and adds efficiency and ease to consumers with a wrinkle prevent drying option. Finally, we recently launched our Whirlpool Spin and Load dishwasher rack, a revolutionary accessory built with inclusivity in mind. With an easy to use three sixty degree spinning rack, this product increases accessibility for a wide range of our consumers. These products are just a few examples of how Whirlpool is improving life at home for our consumers. Our new product launches and best in class logistics capabilities support direct to consumer and builder channel growth, which we expect will deliver value creating share gains in 2025.

Turning to cost, as we look back at 2021 and 2022, we had unprecedented inflation of approximately $250,000,000,0.0 However, we have not seen cost deflation to this magnitude yet, making our cost takeout priorities critical for our continued margin expansion. We've demonstrated our ability to deliver on our priorities by eliminating approximately $800,000,000 of net cost over the past two years. We will continue to deliver cost actions of over $200,000,000 this year, driven by our ongoing portfolio transformation that enables us to take additional cost actions to simplify our organization, product design changes that optimize cost while delivering innovative solutions and further manufacturing efficiencies through our world class manufacturing and automation solutions. To further highlight how we are investing in product leadership, on Slide 16, I'm excited to review the new launches in our premium brands. The upcoming KitchenAid launch is the first full product redesign in a decade.

Not only does this launch unlock a world of possibilities with customizable touch points such as knobs and handles to better integrate the appliance into consumers' homes, but it also will include new features and solutions that speak to consumer needs and creativity. 2025 also marks a very exciting launch in JennAir. The innovative induction downdraft cooktops not only enable infinite design potential, but also flexible induction cooking zones and a powerful and effective extraction that is quieter than a hood. The downdraft ventilation liberates your kitchen space from bulky updraft hoods, clearing the view for windows and open concept designs. Turning to Slide 17, I will provide the drivers of our free cash flow guidance.

We expect cash earnings of $1,000,000,000 to $110,000,000,0.0 driven by earnings improvement and the closure of the Europe transaction, which as a reminder consumed $2.75,000,000 dollars of cash in 2024. We expect approximately $4.50,000,000 dollars of capital expenditures as we continue to invest in our products and fund organic growth. We plan to sustain the efficient working capital levels we achieved in 2024 and do not expect a material change in 2025. We expect approximately $75,000,000 of restructuring cash outlays related to previously executed actions and further complexity reduction with our simplified organizational model. Overall, we expect to deliver free cash flow of $500,000,000 to $600,000,000 or approximately 3.5% of net sales.

Turning to Slide 18, I will review our refreshed capital allocation priorities. Funding our organic growth is critical to delivering innovative products that meet our consumer needs. We will continue to invest in new products with approximately $4.50,000,000 dollars of CapEx expected this year. Secondly, we are strongly committed to maintaining our investment grade credit rating and reducing debt levels. We expect to pay down $700,000,000 of debt in 2025, taking a significant step on our path to our 2 times net debt leverage target.

Thirdly, we are committed to returning cash to shareholders and last year marked the sixty ninth year of steady or increasing dividends. We will continue to evaluate our dividend funding and ensure it aligns with our progress towards our long term goals. As a reminder, dividend is approved quarterly by the Board of Directors. Lastly, share buybacks and M and A are not a priority for 2025. Turning to Slide 19, let me review our commitment to improving our net debt leverage.

Since 2022, we have paid down $1,000,000,000 of the In Syncroator term loan debt and are strongly committed to further reducing our debt. We expect to pay down another $700,000,000 in 2025 and expect to improve our net debt leverage to approximately 3.4 times. We are confident in our ability to further reduce our net debt leverage beyond 2025. Turning to Slide 20, we have clear actions to address the upcoming debt maturities. $1,850,000,000,.00 of debt is maturing in 2025, of which $3.50,000,000 dollars is a senior note due in May 0 and $150,000,000,0.0 is the remaining term loan from the InSinkErator acquisition due in Oct.

0. With the meaningful debt repayment of approximately $700,000,000 expected in 2025, we expect to refinance the remaining $110,000,000,0.0 to $120,000,000,0.0 As we look ahead, we have ample space in our flexible debt ladder to optimize our refinancing plans. In addition to our free cash flow generation of 500000000 to $600,000,000 in 2025, we expect to generate cash from the anticipated India market sale transaction. Turning to Slide 21, let me review the benefits of this potential India transaction. We currently hold a 51% stake in Whirlpool of India and intend to reduce our ownership stake to approximately 20%.

This transaction subject to Board approval aligns with our ongoing portfolio transformation. We hold number 1 positions in all our business segments outside of MDA Asia and this will allow us to focus on our leading share and brand portfolio positions. However, we continue to believe Whirlpool of India has a strong long term trajectory for growth. This transaction will enable Whirlpool of India to focus on growth acceleration as an independent business, along with utilizing their well funded business to invest further in products and innovation. We believe these actions will also deliver value to Whirlpool of India shareholders.

This transaction is expected to not only accelerate growth in Whirlpool of India, but also allow us to utilize the $5.50,000,000 dollars to $600,000,000 of net cash generation towards our debt repayment. We would also have continued revenue from our Whirlpool brand license in India. This transaction is expected to close Now I will turn the call over to Mark.

Thanks, Jim. Turning to Slide 22, let me review what you heard today. I'm proud of what the team has accomplished in 2024 through a very challenging macro environment. The European transaction was a major milestone delivering value to shareholders. We anticipate the transaction to reduce our stake in Whirlpool of India that we announced today also unlocked additional shareholder value and further strengthens our balance sheet.

We delivered approximately $300,000,000 of cost savings and see further opportunities to deliver more than $200,000,000 in 2025. We are excited about our very strong pipeline of new products that will launch in 2025, helping us to drive sustained growth and margin progression. Our Latin American business remains a bright spot delivering strong top line growth and substantial margin expansion. We expect our global SDA business to continue to accelerate growth in high potential categories as venue products resonate with consumers. And overall, I'm confident that we have right strategy and operational priorities in place to deliver our guides of 3% organic net sales growth and 150 basis points of margin expansion.

And now we will end our formal remarks and open it up for questions.

Your first question comes from the line of Susan Maclury from Goldman Sachs. Your line is open.

Mark, my first question is taking a little bit about the shift that you saw in volumes this quarter. You mentioned that there was a significant destock at 1 of the retailers. Can you talk a bit about was that Whirlpool specific? And then with that, how should we also think of the move in industry volumes perhaps in your volumes relative to AHAM and perhaps relative to some of the geopolitical trade actions that could be coming through with the new administration?

Susan, so let me split the answer 2 pieces. 1, the AHAM, but other 1 and then first about the retail destocking. Retail destocking ultimately is a I would call it reflection supply chain efficiency. Post I know it was a couple of years ago now post COVID inventory levels at retail were high and because supply chain was not very stable and I think we have a stable supply chain. We jointly took out a lot of inefficiency in supply chain, have much more efficient supply chain to secure availability.

So it is a reduction of inventory. It's a 1 time reduction because you just take it down to the levels where it is, but it's not more. Would we have wished to happen that sort of grow many quarters? No, but it's now behind us. So, again, not too much to read into this 1 apart from, yes, it's an efficient supply chain and you don't need the inventory levels as you may have needed it two or three years ago.

But it was sizable and of course that impacts our On AM and again this is a little bit of similar comment as we made in the early calls. The AM numbers this year had I would say an unusual amount of distortion and re reporting. And as such I'm a little bit careful reading too much into the monthly or sometimes even quarterly EAM numbers. Overall, I think on our 25 or 24 market share, it's been stable to slightly down. It improved after our promotional price changes in April 0 sequentially improved and we feel pretty good.

And of course even though we don't have industry data, but we have our specific sell out data, which actually we pay more attention to and but particularly following the election was very strong. So we feel very good about the momentum which builds towards the end of the quarter, which didn't translate to sell in, but the sell out was very, very strong. Now to your question with regards to geopolitical, if we expect or anticipate some call it more Asia imports coming in Nov. 0, Dec. 0 into U.

S. Yes, and we continue to expect that. I mean not all the customs data are available, but I would expect once you see all the custom data that you will see an increase of people trying to load inventory prior to potential policy changes. Again, we don't have final data, but based on if you look at container tariffs and everything else, I think it's very fair to assume that you saw a temporary increase of shipments from Asia. But again, we don't have a final data on this 1.

Okay. That's very helpful color. And then, turning to price, you mentioned that you have another promotional price increase that is out there. Can you give us your thoughts on the ability to realize that effort in there given the operating backdrop and the demand environment that you outlined on the call? And how we should be thinking about the potential for mix as those new products that you talked about gain some momentum?

Yes. Good question. So let me maybe just split in 2 pieces. 1 is more of a promotional investments or promotional depth and the other 1 is more of a mix element. And again, stepping back even what we communicated in last year when we did the first reduction of promotional depth.

And then ultimately it's reflective of marketplace. And again I'm zooming out here a little bit, but it's last year we saw a thirty year low of existing home sales. Existing home sales drive discretionary demand. The market right now is strongly driven by replacement demand. And in that environment, it just does not make economic sense to go very deep on promotional investments.

That's what we corrected last year in April 0 and frankly we found traction. We're very pleased with the progress which we saw and and it also largely was sustained in So the decision which we made last year was absolutely the right 1. Given that the environment around it has not structurally changed, we continue to see the same opportunity going forward. It just does not make sense to go that deep and that long on promotional periods and that's what we communicated already through our trade environment and based on what we've done last year, we're very confident in Medi will find traction. Now we have a part and this is I think Jim alluded to this 1 earlier and that is big for us in particular North America.

Again, I want to reemphasize, in the last ten years we've never launched as many new products in North America as in 2025. And you know and you followed our industry for a long time, our industry mix is the name of the game and mix comes with new product introduction. So what we showed earlier, an entire new KitchenAid line, we have launched for ten years. We have with JennAir a fantastic new downdraft and we basically renew the entire refrigeration range in North America. So that we're very confident with the drive mix.

So the combination of promotional lack or reduced promotional depth and product mix come from new product introductions gives us the confidence while we kind of communicate now 1 or minimum 1 of positive pricing in 2025.

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

Thanks. Good morning, everyone. Thanks for taking my questions. First, I wanted to hit on the new product launches that you've described and it seems pretty extensive. Just if you can kind of give us a sense of how those product launches are expected to impact the financials throughout the year, perhaps on a quarterly basis or half, second half in terms of impact on revenues, price mix, perhaps even margin.

I'm particularly interested in what you anticipate the impact will have on mix for the year? And also if there's any sort of above average, let's say, I don't want to say 1 time costs in a new products are always kind of a constant part of your efforts every year. But if it's an outsized level, if that's kind of a, let's say a particular headwind this year relative to perhaps next year?

So Michael, again, overall we communicate 1 of positive pricing. Now that is a combination of what I mentioned earlier, but promotional and the mix. To your point, and you know that also mix has multiple components. 1, of course, there's just a positive mix from getting the new products at an attractive price or margin point. But yes, we also invest in product transitions.

That is fully factored in. You could call these transitions where also some extent 1 time expenses, but they're factored in. So it's a kind of a combination of all these elements. In terms of a timing, these launches are spread throughout the year. So there is a number of refrigeration products which we introduced in March 0.

We will display and show kind of a Gena product at the KBIS that will be largely and the launch is later in So it's pretty much spread throughout the year. So there's not 1 quarter where everything comes through, but it's pretty much spread throughout the year. The reason why we're actually very bullish on the positive impact of mix is also keep in mind KitchenAid in general are premium brands. And to have new attractive products in particular premium brand typically gives you a good lift in the margin. And the other side of the equation refrigeration tends to be below our average margin to have now new products with frankly better cost base will also help on that side.

So that's why these products matter a lot and based just on our margin profile, I think we will get a good lift.

And Michael, just to add to what Mark said, as you think about the KitchenAid transition throughout the year and it will help our mix, help our margins, increase our share in that space. But also remember, we anticipate this year the discretionary segment will still be under pressure. So this gets amplified as a benefit as you go forward and that segment begins to improve. So that's why we're really excited about this launch kind of ahead of improvement in the discretionary segment because I think then you'll just see even more significant benefits as that starts to come back.

Great. No, thanks for that. Secondly, I wanted to hit on a couple of areas that, 1, just a clarification on the inventory reduction that hit you in the Curious if you could kind of quantify perhaps what you estimate the impact was that on both sales and the lost incremental leverage of that if you sold that your sell through rate, if you have any estimate on how that impacted 4Q North American sales? Secondly, any comments on if you've been able to kind of quantify tariff exposure if we have 25 tariffs, let's say on China, Mexico and Canada.

So Michael, obviously, you made an impact to retail. We're not exactly we cannot give you the size of that impact of a destocking, but we refer to sizable and we don't use that term easily. Directly you can say, but the delta between run rate and versus what we had in mind is largely almost entirely driven by this 1 time. But it's a 1 time, it's behind us, so that's why, but that's directionally to size. So it was meaningful, but again it's behind us and ultimately, yes, it comes with a much better supply chain efficiency.

The second part on tariffs, and we alluded to this 1 in your earlier remarks, any impact of additional tariffs are not included in our guidance because as you all know, we wouldn't know at this point what to plan for. For. As we all know, there's a lot of speculation. The important thing is and again remind everybody more than 80% of the products which we sell in The U. S.

Are produced in The U. S. That is very different for our competitors. We are U. S.

Producer and we're highly dependent on The U. S. And we're proud to be in The U. S. So most people read that you should be beneficiary from tariff.

As you also know tariff has have positive consequences and sometimes there are also unintended negative consequences. So once we know, what might be communicated, then we can give you a proper dimension on this 1. But right now, it's not factored in, but ultimately we're U. S. Producer.

Your next question comes from the line of Laura Champine from Loop Capital. Your line is open.

Thanks for taking my question. The small appliances business was a little bit light of what we were looking for in sales, but especially margins. Some I know you're making marketing investments in new products there. How do you get comfort that your marketing investments are targeted correctly and that the product is strong enough to support those investments?

Yes. So Laura, again, put it in context. The overall SDA market, similar to the major markets, is moving sideways. So you hadn't seen a lot of growth in the SDA market. Actually most sub segments are actually negative from the SDA market.

So we achieved a solid single digit growth in But yes, we would like to see this business at double digit sales growth and that's our clear expectation. The marketing investments you saw we broke it down for the company overall, but not for business segment. But we showed them in the presentation that the marketing investments in were up almost 0.5 of overall company margin. A big portion of that was for the SDA business. We launched CoffeeMaker, we launched KitchenAid Gold, the Evergreen.

So there's a lot of investments and their investments in our future. In particular when you enter largely a new category like for us fully automatic coffee maker. You have to I mean you have a wonderful product and by way it gets very high remarks from consumers and trade, but of course you need to tell the market that you have a new product. So and we're very pleased with the momentum which we see on these sub segments, but it will take some time to build these segments and to build awareness in this segment. But that's the margin in was entirely impacted by, yes, we invested a lot in these new product launches and talking about these new product launches.

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

Yes. Good morning, everyone. Thanks for taking the question.

When we think back to the call and you had talked about margin expansion, you talked about pricing, cost actions, the recovery in production rates and then reduced EMEA joint venture drag. I just wanted to focus in on that recovery in production rates for a moment and just talk about the extent to which you were able to achieve that or how it factored into the numbers. And then should we be thinking about that as a potential benefit in 2025? Is there an opportunity to realize some productivity off of absorption there?

Yes, David. So David, your observation is correct. In short, basically what we when we realized the destocking of a trade in we of course adjusted our production volumes. We did not produce as much as we originally anticipated in as evidenced by the inventory levels. Our inventory levels are pretty low, because we didn't want to keep the factors just running and building inventory.

So we enter a year with actually fairly low inventories. While we have side note, that's why we also cash flow don't factor in that we can get additional working capital efficiencies, because if at all we probably slightly have to expand inventory. So we're starting the year not with, hey, we got to reduce inventory, we actually versus what we think is sell out, I think we will have healthy and steady production volumes. To what extent that drives some leverage or volume leverage, it could, but let's see how the quarter and the year progresses. But you're absolutely right, we certainly did not get a volume leverage in quite the opposite.

Yes, David. I mean just to reiterate as Mark said, I mean we really came out of the year with what we would say are lower, but more appropriate inventories. And I think throughout this year depending where the market goes and all that, we'll continue to try and obviously keep our production and our inventory levels matched to our sales. And so while there could be some upside because of some of the little bit of upside in the production, We're still going to keep that match throughout this year. So it's not a significant amount of upside in production.

And then I just want to go back to the price mix and the new product introductions. It seems with so comprehensive a rollout of new products or reinvention of basically of the refrigeration line, all the design for manufacturing opportunities that come with initiatives like that. It strikes me that there should be a little more in the way of pricing benefit in there than what you've got in the mix. I'm just wondering if there's offsets or I mean you talked already about some of the promotional effort that needs to be done to support that initiative. But it struck me as a bit of a light number and I'm just wondering if you could open that up and talk a little more about that.

David, on my new product introduction, there's 2 factors. First of all, there's just timing. I mean, as I said, it takes for pretty much an entire year to launch all these products. And in particular, KitchenAid line comes in So there's a timing element and the offsetting element that I think, Michael Rehaut was referring to his 1 earlier. All the new product launch come with transition expenses.

So they're fully factored in, and I think Jim alluded to this 1 earlier. Of course, that will not then be a factor in '26, but we factored that in '25. You launch your products, you get a good mix, you have to pay for product transitions in the markets, and that's the element in there. But inherently, I mean, I miss you. These new products in particular premium side, they will drive upside for us.

Your next question comes from the line of Sam Darkash from Raymond James. Your line is open.

Good morning, Mark. Good morning, Jim. How are you?

Two quick questions. First, these are pretty straightforward, but what's the expected North American margin progression that you're expecting this year?

So Sam, overall, we've guided for 7.5%. We don't break it down quarterly. I would expect you would see more balanced seasonality throughout the year. So if you so we're not planning for hockey sticks. So we continue to work on all the dimensions and we know we have some carryover benefits.

So I think it will be more balanced from seasonal perspective.

lot of the cost actions we put in place in 2024 will continue and strengthen throughout 2025 and And then with the promotional pricing that we announced in Dec. 0, obviously you start to get the benefits earlier in the year for that. So I mean that's why Mark said it will probably be less of a progression throughout the year and more steady.

Got you. And then, and I apologize if you've mentioned this before I missed it, but could you quantify what the sell through was your own and perhaps the industry as well in the and then what you're seeing thus far in Jan. 0?

So Sam, again sell through, I can refer to our numbers because of course we don't know about broader industry numbers. We have some indication. First of all, in general, just for clarification, I'm referring to the North American market or U. S. Market in particular.

The sell through in the industry and with us was pretty soft coming into the election, very soft. I mean, we used to election cycles, but it was softer than before and picked up strongly post election. So again, it's not completely different from previous election cycles, but just the magnitude of swings were more pronounced. And so we saw very strong sell out kind of in Dec. 0.

I mean it was very strong. So that's to some extent has slowed down a little bit in Jan. 0, but of course we're not releasing Jan. 0 numbers and you can say is that weather related whatever else, but we certainly saw very good momentum in the market, towards the back half of And we feel very good about how we did in that markets, based on qualitative feedbacks which we get from our trade customers in terms of balance of sale which we've either maintained or in some cases even strengthened. I would certainly for our numbers, you should strongly assume that our sell out in was quite a bit of ahead of a sell in which we had in the quarter.

I mean, that's consistent with prior comments. So we know pretty much where the sell out is very precisely and was well ahead of what we shipped into the industry.

Your next question comes from the line of Harif Jadrosich from Bank of America. Your line is open.

Hi, good morning. Thanks for taking my questions. On the first one, just the 75 basis points of price mix that you're assuming in the '25 guidance. Can you give us a very good help us understand how much of that is carryover from 2024 versus mix versus the price related to the product launches and maybe what's sort of the realization that you're seeing on the '25 price so far?

Whirlpool (WHR) Q4 2024 Earnings Call Transcript

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