Whirlpool (WHR) - 2024 Q1 - Quarterly Results

First-Quarter 2024 Financial Highlights The company reported a net loss in Q1 2024, with declines in sales and EBIT, while reaffirming full-year guidance - The company announced the closing of its Europe transaction on April 1st, a significant milestone in its portfolio transformation This is expected to deliver over $750 million in net present value of future cash flows and an incremental $250-$300 million in cash flow in 2025[3] - The company declared a $1.75 dividend per share in both Q1 and Q2 and repaid a $500 million term loan in April, demonstrating commitment to its capital allocation priorities[3] - Full-year 2024 guidance is reaffirmed, with ongoing earnings per diluted share expected to be between $13.00 and $15.00, and free cash flow between $550 million and $650 million[3] Q1 2024 Key Financial Results | First-Quarter Results | 2024 | 2023 | Change | | --- | --- | --- | --- | | Net sales ($M) | $4,490 | $4,649 | (3.4)% | | GAAP net earnings (loss) available to Whirlpool ($M) | $(259) | $(179) | (44.7)% | | Ongoing EBIT ($M) | $195 | $251 | (22.3)% | | GAAP earnings (loss) per diluted share | $(4.72) | $(3.27) | (44.3)% | | Ongoing earnings per diluted share | $1.78 | $2.66 | (33.1)% | Q1 2024 Free Cash Flow | Free Cash Flow | 2024 | 2023 | Change | | --- | --- | --- | --- | | Cash provided by (used in) operating activities ($M) | $(873) | $(477) | $(396) | | Free cash flow ($M) | $(988) | $(573) | $(415) | Segment Performance Review Q1 2024 segment performance showed strength in Latin America, Asia, and SDA Global, counteracting weakness in North America and Europe MDA North America MDA North America net sales declined by 8.1% and EBIT margin fell to 5.6% due to unfavorable price/mix and a challenging promotional environment - The decline in sales and EBIT margin was attributed to an unfavorable price/mix and a challenging promotional environment, alongside a 2% decline in the overall industry[6] MDA North America Q1 Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($M) | $2,428 | $2,641 | (8.1)% | | EBIT ($M) | $135 | $266 | (49.2)% | | EBIT Margin | 5.6% | 10.1% | (4.5pts) | MDA Europe MDA Europe net sales decreased by 5.0% and EBIT margin worsened to -1.1% due to persistent weak demand and unfavorable price/mix - The sales decline was primarily due to continued demand weakness in the European market[6] MDA Europe Q1 Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($M) | $804 | $846 | (5.0)% | | EBIT ($M) | $(9) | $(5) | (80.0)% | | EBIT Margin | (1.1)% | (0.6)% | (0.5pts) | MDA Latin America MDA Latin America delivered strong performance with 12.0% net sales growth and EBIT margin improving to 7.8%, driven by market share gains and cost actions - Strong share gains in the region more than offset unfavorable price/mix, leading to sales growth[6] - EBIT margin expansion was driven by volume, cost actions, and a tax benefit[6] MDA Latin America Q1 Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($M) | $837 | $747 | 12.0% | | EBIT ($M) | $65 | $36 | 80.6% | | EBIT Margin | 7.8% | 4.8% | 3.0pts | MDA Asia MDA Asia net sales declined slightly by 2.4%, but EBIT margin improved to 4.6% due to effective cost take-out actions offsetting unfavorable price/mix - EBIT margin increased due to cost take-out actions, which successfully offset negative price/mix impacts[6] MDA Asia Q1 Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($M) | $239 | $245 | (2.4)% | | EBIT ($M) | $11 | $8 | 37.5% | | EBIT Margin | 4.6% | 3.3% | 1.3pts | SDA Global SDA Global reported robust growth with 7.1% net sales increase and EBIT margin expanding to 18.1%, driven by cost actions and volume growth - Growth was observed throughout key countries and the direct-to-consumer business, with EBIT margin expansion driven by cost actions and higher volumes[6] SDA Global Q1 Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($M) | $182 | $170 | 7.1% | | EBIT ($M) | $33 | $19 | 73.7% | | EBIT Margin | 18.1% | 11.2% | 6.9pts | Full-Year 2024 Outlook The company reaffirms its full-year 2024 guidance for net sales, ongoing EPS, and free cash flow, with specific tax rate expectations - The company reaffirms its full-year 2024 net sales expectation of approximately $16.9 billion[8] - Full-year ongoing EPS is reaffirmed at $13.00 to $15.00, which includes $300-$400 million of cost actions[8] - GAAP EPS is expected to be $5.00 to $7.00, impacted by a non-cash charge from the Europe transaction[8] - The company reaffirms full-year free cash flow guidance of approximately $550 million to $650 million[8] - The expected full-year 2024 adjusted (non-GAAP) tax rate is approximately 0 percent, while the GAAP tax rate is expected to be approximately 25 percent[8] Full-Year 2024 Guidance Summary | Guidance Summary | 2023 Reported | 2023 Like for Like | 2024 Guidance | | --- | --- | --- | --- | | Net sales ($M) | $19,455 | ~$16,900 | ~$16,900 | | Cash provided by operating activities ($M) | $915 | N/A | $1,150 - $1,250 | | Free cash flow ($M) | $366 | N/A | $550 - $650 | | GAAP net earnings margin (%) | 2.5% | N/A | ~2.0% | | Ongoing EBIT margin (%) | 6.1% | ~6.9% | ~6.8% | | GAAP earnings per diluted share | $8.72 | N/A | $5.00 - $7.00 | | Ongoing earnings per diluted share | $16.16 | N/A | $13.00 - $15.00 | Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2024, including Income Statements, Balance Sheets, and Cash Flows Consolidated Condensed Statements of Income (Loss) Q1 2024 net sales were $4.49 billion, down from $4.65 billion in Q1 2023, resulting in a net loss of $259 million or $(4.72) per diluted share Q1 2024 Consolidated Condensed Statement of Income (Loss) | (Millions of dollars, except per share data) | Three Months Ended 2024 | Three Months Ended 2023 | | :--- | :--- | :--- | | Net sales | $4,490 | $4,649 | | Gross margin | $642 | $763 | | Operating (loss) profit | $(116) | $43 | | Net earnings (loss) available to Whirlpool | $(259) | $(179) | | Diluted net earnings (loss) available to Whirlpool | $(4.72) | $(3.27) | Consolidated Condensed Balance Sheets As of March 31, 2024, total assets were $17.37 billion, with total liabilities at $14.76 billion and stockholders' equity at $2.61 billion Consolidated Condensed Balance Sheet Highlights | (Millions of dollars) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,231 | $1,570 | | Total current assets | $6,192 | $6,207 | | Total assets | $17,370 | $17,312 | | Total current liabilities | $6,550 | $6,948 | | Long-term debt | $6,674 | $6,414 | | Total stockholders' equity | $2,610 | $2,537 | Consolidated Condensed Statements of Cash Flows Q1 2024 cash used in operating activities was $873 million, resulting in a $988 million free cash outflow after capital expenditures, with $818 million from financing activities Q1 2024 Consolidated Condensed Statement of Cash Flows | (Millions of dollars) | Three Months Ended 2024 | Three Months Ended 2023 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $(873) | $(477) | | Cash provided by (used in) investing activities | $(115) | $(110) | | Cash provided by (used in) financing activities | $818 | $(38) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(339) | $(599) | Reconciliation of GAAP to Non-GAAP Financial Measures This section details reconciliations of non-GAAP financial measures, including ongoing EBIT and free cash flow, to their GAAP equivalents for Q1 2024 and full-year outlook Definition of Non-GAAP Measures The company utilizes non-GAAP "ongoing" measures like EBIT, EPS, organic net sales, and free cash flow to analyze core operational performance trends - Key non-GAAP measures used by management include: - Ongoing EBIT/EPS: Excludes items not indicative of ongoing operations[19] - Organic net sales: Excludes impacts from M&A and foreign currency[22] - Free cash flow: Cash from operating activities less capital expenditures, used as a measure of liquidity[28] Q1 2024 Reconciliation Q1 2024 GAAP net loss per share of $(4.72) was reconciled to an ongoing EPS of $1.78, primarily adjusted for restructuring and M&A impacts Q1 2024 GAAP to Ongoing EPS Reconciliation | | Earnings before interest & taxes ($M) | Earnings per diluted share | | :--- | :--- | :--- | | Reported measure (GAAP) | $(87) | $(4.72) | | Restructuring expense | $23 | $0.41 | | Impact of M&A transactions | $259 | $4.72 | | Normalized tax rate adjustment | - | $1.37 | | Ongoing measure (Non-GAAP) | $195 | $1.78 | Full-Year 2024 Outlook Reconciliation The full-year 2024 outlook reconciles GAAP EPS of $5.00 - $7.00 to ongoing EPS of $13.00 - $15.00, adjusted for restructuring and M&A impacts FY 2024 Outlook GAAP to Ongoing EPS Reconciliation | | Earnings before interest & taxes ($M) | Earnings per diluted share | | :--- | :--- | :--- | | Reported measure (GAAP) | ~$820 | $5.00 - $7.00 | | Restructuring Expense | ~$50 | ~1.00 | | Impact of M&A transactions | ~$275 | ~5.00 | | Normalized tax rate adjustment | - | ~2.00 | | Ongoing measure (Non-GAAP) | ~$1,150 | $13.00 - $15.00 | Free Cash Flow Reconciliation Free cash flow is reconciled from operating activities by subtracting capital expenditures, showing a $988 million Q1 2024 outflow and a $550-$650 million full-year 2024 projected inflow Free Cash Flow Reconciliation (Q1 and FY 2024 Outlook) | (millions of dollars) | Three Months Ended March 31, 2024 | 2024 Outlook | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $(873) | $1,150 - $1,250 | | Capital expenditures | (115) | (600) | | Free cash flow | $(988) | $550 - $650 | Company Information and Disclosures This section provides corporate information, including a company overview, investor website disclosure, and a safe harbor statement for forward-looking statements About Whirlpool Corporation Whirlpool Corporation is a leading kitchen and laundry appliance company with iconic brands, reporting approximately $19 billion in 2023 annual net sales - Whirlpool is a leading appliance company with brands such as Whirlpool, KitchenAid, JennAir, Maytag, and InSinkErator[9] - In 2023, the company generated approximately $19 billion in annual net sales and employed 59,000 people[9] Forward-Looking Statements This document contains forward-looking statements on financial performance and future expectations, subject to risks and uncertainties detailed in SEC filings - The report includes forward-looking statements concerning 2024 financial performance, cost take-out, portfolio transformation, and future cash flow expectations[11] - Key risks include intense industry competition, reliance on significant trade customers, ability to innovate, supply chain disruptions, geopolitical events, cybersecurity threats, and fluctuations in material costs[11][12]