Whirlpool (US:WHR)2024-04-25 14:01PART I. FINANCIAL INFORMATION Financial Statements This section presents Whirlpool's unaudited Consolidated Condensed Financial Statements for the three months ended March 31, 2024 Consolidated Condensed Statements of Comprehensive Income (Loss) Whirlpool reported a net loss of $259 million for Q1 2024, a wider loss than the prior year, driven by decreased net sales and a significant loss on business sales Q1 2024 vs Q1 2023 Income Statement Highlights | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,490 | $4,649 | -3.4% | | Gross Margin | $642 | $763 | -15.9% | | Operating (Loss) Profit | $(116) | $43 | Negative Swing | | Loss on Sale of Businesses | $247 | $222 | +11.3% | | Net Loss Available to Whirlpool | $(259) | $(179) | +44.7% | | Diluted EPS | $(4.72) | $(3.27) | +44.3% | Consolidated Condensed Balance Sheets As of March 31, 2024, total assets increased slightly to $17.37 billion, with cash decreasing to $1.23 billion and long-term debt rising to $6.67 billion Balance Sheet Summary (as of March 31, 2024) | Account | March 31, 2024 (Millions) | Dec 31, 2023 (Millions) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,231 | $1,570 | | Total current assets | $6,192 | $6,207 | | Total assets | $17,370 | $17,312 | | Liabilities & Equity | | | | Total current liabilities | $6,550 | $6,948 | | Long-term debt | $6,674 | $6,414 | | Total liabilities | $14,760 | $14,775 | | Total stockholders' equity | $2,610 | $2,537 | Consolidated Condensed Statements of Cash Flows Cash used in operating activities significantly increased to $873 million in Q1 2024 due to a larger net loss and unfavorable working capital changes Q1 2024 vs Q1 2023 Cash Flow Summary | Cash Flow Activity (Millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(873) | $(477) | | Net cash used in investing activities | $(115) | $(110) | | Net cash provided by (used in) financing activities | $818 | $(38) | | Net decrease in cash | $(339) | $(599) | Notes to the Consolidated Condensed Financial Statements These notes detail accounting policies, financial figures, and significant events including macroeconomic risks, revenue, debt, and the European business divestiture - The company's Maytag and InSinkErator trademarks continue to be at risk for impairment as of March 31, 2024, due to global economic uncertainty, though no triggering events were identified in Q130 - The company reorganized its operating segments effective January 1, 2024, into: MDA North America, MDA Europe, MDA Latin America, MDA Asia, and SDA Global; all prior period amounts have been reclassified129 - The transaction to contribute the European major domestic appliance business to a new entity with Arçelik closed on April 1, 2024, with a loss of $247 million recorded in Q1 2024, bringing the cumulative loss to approximately $1.9 billion127140 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The MD&A provides management's perspective on Q1 2024 financial performance, highlighting a GAAP net loss, segment results, liquidity, and the full-year 2024 outlook Overview Whirlpool reported a GAAP net loss of $259 million in Q1 2024, impacted by the EMEA transaction charge and negative price/mix, partially offset by cost actions Q1 2024 Key Performance Indicators | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Net Loss Available to Whirlpool | $(259)M | $(179)M | | GAAP Diluted EPS | $(4.72) | $(3.27) | | Ongoing (Non-GAAP) EPS | $1.78 | $2.66 | | Cash Used in Operating Activities | $(873)M | $(477)M | | Free Cash Flow (Non-GAAP) | $(988)M | $(573)M | - The company is implementing $300 to $400 million in cost takeout actions for 2024 and increased promotional program prices in MDA North America to navigate the challenging macroeconomic environment155 Results of Operations Consolidated net sales decreased by 3.4% to $4.49 billion in Q1 2024 due to unfavorable price/mix, with varied segment performance and $23 million in restructuring charges Segment Performance Summary - Q1 2024 vs Q1 2023 | Segment | Net Sales Change | EBIT Margin Q1 2024 | EBIT Margin Q1 2023 | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | MDA North America | -8.1% | 5.6% | 10.1% | Unfavorable price/mix, lower demand | | MDA Latin America | +12.0% | 7.8% | 4.8% | Increased volume, cost actions | | MDA Asia | -2.4% | 4.6% | 3.3% | Unfavorable price/mix, offset by cost actions | | MDA Europe | -5.0% | (1.1)% | (0.6)% | Lower volume, increased costs | | SDA Global | +7.1% | 18.1% | 11.2% | Higher volumes, cost actions | - The company incurred a loss on sale of businesses of $247 million in Q1 2024, related to the divestiture of the European major domestic appliance business181 - Restructuring charges of $23 million were recorded in Q1 2024 for workforce reduction plans aimed at simplifying the organization post-Europe transaction179 Financial Condition and Liquidity The company's liquidity strategy relies on operating cash flow and debt, with $1.2 billion in cash and $462 million from the Whirlpool India share sale used for debt reduction - On February 20, 2024, the company sold a portion of its shares in Whirlpool of India, reducing its ownership from 75% to 51% and generating proceeds of approximately $462 million, which were used for debt reduction191 - The company had total committed credit facilities of approximately $5.7 billion at March 31, 2024, with $2.0 billion drawn on the term loan facility206 - During Q1 2024, the company repurchased 456 thousand shares for approximately $50 million under its share repurchase program119 Non-GAAP Financial Measures This section explains non-GAAP measures like ongoing EBIT and EPS, providing a reconciliation to GAAP figures to offer a clearer view of ongoing operations Reconciliation of GAAP to Ongoing (Non-GAAP) EBIT | Metric (Millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Earnings (loss) before interest & taxes (GAAP) | $(87) | $(33) | | Restructuring expense | $23 | — | | Impact of M&A transactions | $259 | $222 | | Legacy MDA Europe legal matters | — | $62 | | Ongoing EBIT (Non-GAAP) | $195 | $251 | Reconciliation of GAAP to Ongoing (Non-GAAP) EPS | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Earnings (loss) per diluted share (GAAP) | $(4.72) | $(3.27) | | Adjustments (M&A, Restructuring, Tax, etc.) | $6.50 | $5.93 | | Ongoing earnings per diluted share (Non-GAAP) | $1.78 | $2.66 | Forward-Looking Perspective Whirlpool's full-year 2024 outlook projects GAAP EPS between $5.00 and $7.00, with anticipated cash from operating activities of $1.15 to $1.25 billion Full-Year 2024 Outlook | Metric | 2024 Current Outlook | | :--- | :--- | | Estimated GAAP EPS | $5.00 - $7.00 | | Cash from Operating Activities | ~$1,150M - $1,250M | | Free Cash Flow | ~$550M - $650M | | Capital Expenditures | ~$600M | | Industry Demand Growth | | | MDA North America | 0% - 2% | | MDA Latin America | 0% - 3% | | MDA Asia | 4% - 6% | | SDA Global | 2% - 4% | Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk exposures have occurred since December 31, 2023 - There have been no material changes to the company's market risk exposures since December 31, 2023226 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, 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 March 31, 2024227 - No material changes to internal control over financial reporting were identified during the first quarter of 2024228 PART II. OTHER INFORMATION Legal Proceedings Detailed information on legal proceedings is referenced in Note 6 of the financial statements, with a $1 million disclosure threshold for environmental matters - Detailed information on legal proceedings is located in Note 6 to the Consolidated Condensed Financial Statements231 Risk Factors No material changes to the company's risk factors have been reported since the 2023 Annual Report on Form 10-K - No material changes to risk factors were reported from the company's 2023 Form 10-K232 Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2024, Whirlpool repurchased 455,952 shares for approximately $50 million, with $2.5 billion remaining authorized for future repurchases Q1 2024 Share Repurchase Activity | Period | Shares Purchased | Average Price Paid | Total Cost (Approx.) | | :--- | :--- | :--- | :--- | | Jan 2024 | 0 | N/A | $0M | | Feb 2024 | 455,952 | $109.66 | $50M | | Mar 2024 | 0 | N/A | $0M | | Total Q1 | 455,952 | $109.66 | $50M | - Approximately $2.5 billion remained available for share repurchases under the authorized program as of March 31, 2024233 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None235 Mine Safety Disclosures This item is not applicable to the company - Not applicable236 Other Information The company reported no other information for this item - None236 Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to agreements, officer certifications as required by the Sarbanes-Oxley Act, and XBRL data files