Whirlpool (US:WHR)2023-07-25 13:58PART I - FINANCIAL INFORMATION This section provides a comprehensive overview of Whirlpool Corporation's financial performance and position for the period Financial Statements Presents unaudited consolidated financial statements for Q2 2023, including income, balance, and cash flow, with notes on policies and corporate activities Consolidated Condensed Statements of Comprehensive Income (Loss) Net sales decreased to $4.79 billion in Q2 2023, with a net profit of $85 million, a turnaround from a $371 million loss in Q2 2022 Consolidated Income Statement Highlights (Unaudited) | (Millions of dollars, except per share data) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $4,792 | $5,097 | $9,441 | $10,017 | | Gross margin | $816 | $897 | $1,579 | $1,748 | | Operating profit (loss) | $303 | $(306) | $346 | $155 | | Net earnings (loss) available to Whirlpool | $85 | $(371) | $(94) | $(58) | | Diluted net earnings (loss) per share | $1.55 | $(6.62) | $(1.71) | $(1.00) | Consolidated Condensed Balance Sheets Total assets decreased to $16.98 billion, while total liabilities increased to $14.79 billion, leading to a decrease in stockholders' equity Balance Sheet Summary (Unaudited) | (Millions of dollars) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current assets | $6,194 | $6,394 | | Total assets | $16,981 | $17,124 | | Total current liabilities | $7,087 | $5,931 | | Total liabilities | $14,788 | $14,618 | | Total stockholders' equity | $2,193 | $2,506 | Consolidated Condensed Statements of Cash Flows Cash used in operating activities increased to $370 million, while financing activities significantly reduced cash usage, resulting in a $649 million decrease in cash Cash Flow Summary (Unaudited) | (Millions of dollars) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $(370) | $(180) | | Cash provided by (used in) investing activities | $(222) | $(142) | | Cash provided by (used in) financing activities | $(110) | $(1,022) | | Increase (decrease) in cash | $(649) | $(1,402) | | Cash, cash equivalents and restricted cash at end of period | $1,309 | $1,642 | Notes to the Consolidated Condensed Financial Statements Detailed notes cover accounting policies, revenue breakdown by product, financing arrangements, contingencies, and strategic transactions including acquisitions and divestitures - Refrigeration is the largest product category by revenue, generating $1.48 billion in Q2 2023, followed by Laundry ($1.29 billion) and Cooking ($1.10 billion)46 - The company has ongoing supply chain financing arrangements where suppliers can sell receivables. As of June 30, 2023, approximately $1.2 billion had been issued to financial institutions under these programs37 - The company entered into a contribution agreement with Arçelik A.Ş. to contribute its European major domestic appliance business into a new entity, of which Whirlpool will own 25%. This business is now classified as held for sale, and a total loss of $1.761 billion has been recorded for the transaction as of June 30, 2023109140144 - The acquisition of InSinkErator was completed on October 31, 2022, for a purchase price of $3 billion. The preliminary purchase price allocation includes $1.15 billion in goodwill and $1.63 billion in other intangible assets150151154 - In Q2 2022, the company recorded a goodwill impairment charge of $278 million for the EMEA reporting unit and a $106 million impairment for the Indesit and Hotpoint trademarks due to adverse macroeconomic impacts and the Russia/Ukraine conflict161164167 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2023 financial results, highlighting sales decline, portfolio transformation, strong liquidity, and providing a full-year 2023 outlook Overview Q2 2023 GAAP net earnings improved to $85 million, driven by share gains and cost reductions, despite unfavorable price/mix and weak EMEA demand Q2 2023 Key Performance Indicators | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | GAAP Net Earnings (loss) available to Whirlpool | $85 million | $(371) million | | GAAP Diluted EPS | $1.55 | $(6.62) | | Ongoing (non-GAAP) Diluted EPS | $4.21 | $5.97 | | Ongoing (non-GAAP) EBIT Margin | 7.3% | 9.0% | - The company is advancing its portfolio transformation through the integration of InSinkErator and progressing towards the completion of the European major domestic appliance transaction, expected in Q4 2023176 Results of Operations Consolidated net sales declined 6.0% to $4.79 billion, with varied regional performance and a significant loss from the European business divestiture Q2 2023 Net Sales and EBIT by Segment | Segment | Net Sales (in millions) | % Change YoY | EBIT (in millions) | EBIT Margin | | :--- | :--- | :--- | :--- | :--- | | North America | $2,824 | (4.7)% | $290 | 10.3% | | EMEA | $854 | (15.3)% | $17 | 2.0% | | Latin America | $819 | 4.1% | $53 | 6.5% | | Asia | $295 | (12.7)% | $11 | 3.7% | - Consolidated net sales decreased 6.0% in Q2 2023, driven by unfavorable product price/mix and weak demand in EMEA, partially offset by share gains in North America and Latin America and the InSinkErator acquisition180 - A loss of $240 million was recorded for the six months ended June 30, 2023, related to the planned divestiture of the European major domestic appliance business202 Financial Condition and Liquidity The company maintains strong liquidity with $1.3 billion in cash and access to credit facilities, despite increased cash usage in operating activities - Cash and cash equivalents stood at $1.3 billion at June 30, 2023214 - The company has total committed credit facilities of approximately $6.2 billion, including a $3.5 billion revolving credit facility and a $2.5 billion term loan216228 - Cash used in operating activities increased to $370 million for the first half of 2023, up from $180 million in the same period of 2022223224 Forward-Looking Perspective The company projects full-year 2023 GAAP EPS between $13.00 and $15.00, with anticipated cash from operations and free cash flow, and varied regional demand outlook Full-Year 2023 Outlook | Metric | Current Outlook | | :--- | :--- | | Estimated GAAP EPS | $13.00 - $15.00 | | Cash from Operating Activities | ~$1,400 million | | Free Cash Flow | ~$800 million | | Capital Expenditures | ~$600 million | 2023 Industry Demand Outlook | Region | Expected Demand Change | | :--- | :--- | | North America | (6)% - (4)% | | EMEA | (6)% - (4)% | | Latin America | (3)% - (1)% | | Asia | 2% - 4% | Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk exposures have occurred since December 31, 2022 - There have been no material changes to the company's market risk exposures since the end of the previous fiscal year250 Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023251 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls251 PART II - OTHER INFORMATION This section covers additional disclosures including legal proceedings, risk factors, and equity security sales Legal Proceedings Detailed information on legal proceedings is referenced in Note 6 and Note 11 of the financial statements - Information on legal proceedings is detailed in Note 6 and Note 11 of the financial statements253 Risk Factors No material changes to risk factors were reported compared to the 2022 Annual Report on Form 10-K - No material changes to risk factors were reported compared to the 2022 Annual Report254 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased in the first half of 2023, with $2.6 billion remaining authorized for future repurchases - No shares were repurchased in the first six months of 2023255 - Approximately $2.6 billion remains authorized for share repurchases as of June 30, 2023128255