The paragraph introduces the Whirlpool Corporation's First Quarter 2024 Earnings Call and its participants. It also mentions that the call is being recorded and directs listeners to a presentation on the company's website. The speaker reminds listeners that they will be making forward-looking statements and outlines the factors that could affect the company's actual results. They also mention the use of non-GAAP measures and direct listeners to the website for more information. Finally, the CEO reports on the company's solid first quarter and the completion of a transaction in the EMEA region.

Whirlpool has made significant progress in their portfolio transformation initiative, focusing on higher-growth and higher-margin businesses. Despite soft industry volumes in North America, the company maintained their market share position by being selective with promotions and achieving cost reductions. Their small domestic appliance business saw top-line and margin expansion, and their international businesses performed well. Whirlpool also announced the sale of their stake in Whirlpool of India and remains committed to returning value to shareholders through dividends and derisking their balance sheet. They expect free cash flow to increase throughout the year and view 2024 as a tale of two halves.

The company expects the promotional environment in the U.S. to remain high in the first half of the year due to carryover impact from last year, but they anticipate comping high promotions in the second half. They have implemented a price increase to offset inflation and expect it to positively impact the second half of the year. They are optimistic about the U.S. housing market and their strong position with builders. They have a strong product pipeline for 2024 and are focused on cost discipline and taking actions to increase cost savings. The company is confident in their long-term strategic plans outlined at Investor Day.

The company is confident in their full-year guidance and has seen a decline in net sales in the first quarter due to the carryover of a normalized promotion environment. They have maintained their market share in North America and have seen strong growth in MDA Latin America. The company has delivered ongoing earnings per share of $1.78 and ongoing EBIT margins of 4.3%, with expectations of structural improvement in margins due to a recent transaction. Free cash flow was negatively impacted by non-recurring expenses related to the transaction.

The fifth paragraph discusses the company's first quarter financial results, including their 69th consecutive year of dividends and ongoing EBIT margin drivers. Price/mix and raw material costs had a negative impact on margin, but cost takeout actions and favorable currency exchange rates helped offset this. The company expects margin to improve in the future with the implementation of promotional programs. The following paragraph will review the segment results and full-year guidance for the MDA North America business.

The speaker discusses the cost environment and how inflation has affected the company's cost benefits. Despite cost takeout actions in 2023, inflation has persisted in 2024. The company has executed global actions and organizational simplification efforts to improve margins, and will see the full impact in the second and third quarters. In North America, the company is working to expand margins by reevaluating their promotional investments.

The company has taken steps to address both inflation and promotional intensity by implementing a 5% promotional program price increase. This is in line with their strategy of participating in promotions that reflect the value of their products. These changes, along with company-wide cost-cutting measures, are expected to lead to margin expansion in North America. In Europe, revenue was down due to weak demand, and in Latin America and Asia, revenue was up due to share gains and cost-cutting actions.

In the paragraph, the speaker discusses the strong results of the SDA Global business, with 7 points of net sales growth driven by key countries and direct-to-consumer sales. They also mention the seasonality of the segment and expect continued momentum throughout the year. EBIT margins were at 18%, and the first half of the year is expected to be in line with or slightly better than previously communicated. The speaker then highlights some exciting new product launches, including KitchenAid espresso machines and a Grain and Rice Cooker, both of which have won design awards. They anticipate strong growth in margins from these new products.

Whirlpool has launched new products in North America and Latin America, such as a dishwasher for pet bowls and a powerful freestanding range. The company has also completed a transaction in Europe, acquiring a minority stake in a new appliance company called Beko Europe B.V. This partnership is expected to generate significant efficiencies and long-term value for Whirlpool, with the potential for future cash flows and increased free cash flow. The company is excited about this milestone in their portfolio transformation and is looking forward to achieving their full-year 2024 guidance.

The company is reaffirming their earnings per share, free cash flow, and net sales guidance for the year. They expect margins to expand in the second half of the year and have a full-year adjusted tax rate of 0%. However, their GAAP tax rate may be impacted by non-cash charges related to a recent transaction. Their free cash flow guidance remains unchanged, but working capital consumption in the first quarter was higher due to seasonal and industry demand factors. The company will continue to optimize their working capital in the challenging macro environment in North America.

The paragraph discusses Whirlpool's first quarter results and their expectations for the rest of the year. They mention challenges in the macroeconomic environment but highlight strong performances in certain regions. They also mention actions they are taking to address the challenges, such as implementing a promotional program and price increase. They expect margin expansion to begin in the second quarter and fully ramp up by the third quarter.

The company has delivered $100 million in cost savings in the first quarter and is focused on achieving $300 million to $400 million in total for the year. They have taken steps to simplify their organization and expect a significant increase in cash flow from a recent transaction. They have clear priorities for capital allocation and are confident in their ability to navigate the current environment and deliver returns to shareholders. In the North America MDA segment, they expect to see a 1% increase in price every quarter and believe they will achieve a 10% to 11% margin by the end of the year.

The pricing structure in North America is typically set by retailers, with a suggested retail price and promotional price programs. A 5% increase in promotional prices has been announced, which will have a gradual impact on the market starting in May and building from there. This increase is expected to have a 2-3% net price realization over time, and the company is confident in their product launches despite the competitive market environment.

The company has experienced solid share gains over the past 15 months and has a strong product pipeline. They believe their promotional pricing reflects the value for consumers and will moderate the impact on volume. The small domestic appliance business had impressive results and strong cost progress, with new product introductions contributing to the momentum. However, the full-year guidance was not changed in the first quarter due to the seasonality of the business and a significant product launch in the second quarter.

The speaker addresses a question about the movement in North American industry shipments and explains that the numbers have been restated due to a smaller import player. They express concerns about the validity of the restatements and mention that their own data typically aligns with AHAM data.

The speaker discusses the market share gains in Q1 and explains that they were mostly maintained rather than significantly increased. They also mention that the overall industry was down 2% and that their full-year outlook remains at 0% to 2%. They discuss consumer sentiment and the impact of mortgage rates on home sales. They also mention the potential for an increase in home improvements and remodeling. The speaker concludes by discussing their approach to promotions and pricing in a competitive market.

The speaker discusses the company's strong product pipeline and distribution gains, which they believe will help moderate the impact of a price increase on volume. They also mention the unchanged components in the EBIT margin bridge, but note that the price/mix may see some upside due to the promotional price increase being rolled out in Q2. They expect this to potentially bring them to the higher end of their range for the year.

The company believes they are currently at the low end of their projected net costs, but there is potential for upside in price/mix. They are expecting some inflation that was not accounted for, but they believe it will balance out with their cost actions. Three of their businesses are performing above EBIT guidance, but it is too early to make any changes. The total company bridge does not necessarily reflect North America. They feel confident about their margin guidance for the full year.

During a Q&A session, the speakers discussed U.S. retail inventories and the impact on the upcoming refrigeration season. There was a destock in January followed by a slight rebuild in March, leaving inventory levels slightly elevated. This is not a major concern and is expected. The Arçelik transaction will result in a 25% stake moving to a different line in the P&L, which will have a smaller impact on the company's finances.

The company has seen positive trends in their corporate expenses due to the sale of a business and cost takeout and organization simplification actions. They do not anticipate significant stranded costs this year and expect margin improvement in 2025 due to the absence of a dilutive business. There may be a carryover effect of cost actions into the following year.

At Investor Day, it was discussed that there will be continuing cost benefits over several years. The minority interest and royalty income from Whirlpool brand will benefit North America. The majority of existing costs were passed on in the transaction and stranded costs have been largely dealt with. The company plans to take out $100 million in infrastructure and organizational costs. The outlook for revenues remains the same and the price increase has been announced. The company expects to see a 1% increase in Q2 and 2-3% in the back half. The price increase in North America does not affect the company's goal to gain market share this year.

The speaker congratulates the Whirlpool team on their recent changes and asks for more details about the price increase in North America. They want to know if it is a widespread issue in the industry or specific to Whirlpool.

The company's rationale for increasing prices is due to sticky inflation and limited discretionary demand. The company is also facing cost inflation in components and logistics. The cash flow for the first quarter was higher than expected, and the company is projecting a cash flow of $2 billion for the next three quarters, which is $400-500 million higher than expected.

In paragraph 24, Jim Peters explains that the elevated level of promotions in the second half of the year will result in a significant swing in cash flow in the first quarter. This is similar to what was seen in 2017-2019 when first quarter cash flow was in the negative range. The company builds up earnings throughout the year and pays out promotional programs early in the year for the prior year. This leads to a buildup of accruals on the balance sheet and little cash flowing out, which helps throughout the year. The biggest driver of this is promotional programs, but there are also other programs that operate similarly. Taking this into account, the company expects to reach the $2 billion cash flow number. In response to a question about North American margins, Peters clarifies that the elevated level of promotions in the second half of the year is the main reason for the expected decrease in margins.

Analyst Michael asks about the change in the company's margin guidance for the second half of the year. He notes that the previous expectation was for a slower ramp up, but the new guidance indicates a better ramp. Jim Peters, the company's representative, explains that the change is due to the company's decision to take pricing in North America, which was not assumed at the beginning of the year. This will result in a 1.5 to 2.5 point margin improvement for the back half of the year.

The speaker discusses the company's efforts to reduce costs and offset inflation, as well as potential industry stabilization in the future. They also mention the impact of reduced promotional activity on cash flow, with higher accruals expected at the end of the year due to seasonal promotions.

The speaker discusses the implementation of a price increase and its impact on the company's cash flow and working capital. They clarify that the increase covers about 70% of the North America business and will contribute to an improvement in working capital throughout the year. The speaker also mentions that the increase is factored into the company's guidance for the remainder of the year.

The speaker explains that the promotion excludes certain builder-related programs and will result in a 70% increase in prices across the board. They expect a 2-3% impact on the bottom line and clarify that they are not intentionally giving up market share. The speaker believes their product pipeline and distribution expansion will help them maintain or potentially increase market share. The next question is from Eric Bosshard.

The North American margin for Whirlpool in the first quarter was lower than expected, with volume, costs, and the promotional environment all contributing to the decrease. Sticky inflation was a major factor, and the company is taking additional actions to address it. The North American margin was 8% in the first quarter, which is 1-1.5 points lower than internal expectations. The intense promotion environment and sticky inflation were the main reasons for the slower start, along with building production inventory in the first and second quarters.

The speaker discusses the cautious approach to inventory and lack of volume leverage in production. They mention plans to address this through promotion price increases and cost actions. The speaker also mentions a 5% price increase for Memorial Day and expresses confidence in its success. They decline to comment on specific retailer reactions. Overall, they are satisfied with the first quarter earnings.

The speaker acknowledges that three of their business units are performing well, but the North American unit is off to a slower start. They mention taking action to improve margins and reaffirm their full-year guidance. The speaker thanks the listeners for joining the call and the operator ends the call.

This summary was generated with AI and may contain some inaccuracies.