Whirlpool (WHR) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited consolidated financial statements detail comprehensive income, balance sheets, and cash flows - The unaudited Consolidated Condensed Financial Statements are prepared in accordance with GAAP for interim financial information and should be read in conjunction with the 2023 Form 10-K[26] - Management makes estimates and assumptions that affect reported amounts, and actual results may differ materially[27] Consolidated Condensed Statements of Comprehensive Income (Loss) Consolidated Condensed Statements of Comprehensive Income (Loss) | Metric (Millions of dollars, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net sales | $3,989 | $4,792 | $8,478 | $9,441 | | Cost of products sold | 3,363 | 3,976 | 7,211 | 7,862 | | Gross margin | 626 | 816 | 1,267 | 1,579 | | Operating profit | 130 | 303 | 14 | 346 | | Earnings (loss) before income taxes | 30 | 204 | (148) | 95 | | Income tax expense (benefit) | (206) | 114 | (130) | 182 | | Net earnings (loss) available to Whirlpool | $219 | $85 | $(40) | $(94) | | Basic net earnings (loss) available to Whirlpool per share | $3.96 | $1.56 | $(0.75) | $(1.71) | | Diluted net earnings (loss) available to Whirlpool per share | $3.96 | $1.55 | $(0.75) | $(1.71) | | Dividends declared per share | $1.75 | $1.75 | $3.50 | $3.50 | | Comprehensive income (loss) | $242 | $48 | $(9) | $(129) | Consolidated Condensed Balance Sheets Consolidated Condensed Balance Sheets | Asset/Liability (Millions of dollars) | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Assets | | | | Cash and cash equivalents | $1,179 | $1,570 | | Accounts receivable, net | 1,595 | 1,529 | | Inventories | 2,309 | 2,247 | | Total current assets | 5,860 | 6,207 | | Property, net | 2,254 | 2,234 | | Goodwill | 3,328 | 3,330 | | Total assets | $17,343 | $17,312 | | Liabilities and Stockholders' Equity | | | | Accounts payable | $3,420 | $3,598 | | Notes payable | 778 | 17 | | Current maturities of long-term debt | 350 | 800 | | Total current liabilities | 6,129 | 6,948 | | Long-term debt | 6,313 | 6,414 | | Total liabilities | 13,984 | 14,775 | | Total stockholders' equity | 3,359 | 2,537 | | Total liabilities and stockholders' equity | $17,343 | $17,312 | Consolidated Condensed Statements of Cash Flows Consolidated Condensed Statements of Cash Flows | Cash Flow Activity (Millions of dollars) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Net earnings (loss) | $(29) | $(89) | | Cash provided by (used in) operating activities | $(485) | $(370) | | Cash provided by (used in) investing activities | $(432) | $(222) | | Cash provided by (used in) financing activities | $501 | $(110) | | Effect of exchange rate changes | $(72) | $55 | | Increase (decrease) in cash and cash equivalents | $(488) | $(649) | | Cash and cash equivalents at end of period | $1,179 | $1,309 | Notes to the Consolidated Condensed Financial Statements (Unaudited) Note 1. Basis of Presentation - Macroeconomic volatility and international conflicts continue to create unpredictable business impacts[29] - The Maytag and InSinkErator trademarks face risks from potential disruptions, though management remains committed to long-term strategic goals[31][32] - No impairment triggers for goodwill or indefinite-lived intangible assets were identified in Q2 2024[34] - Synthetic lease arrangements for non-core properties carry residual value guarantees of approximately $378 million, but material payments are not expected[38] - The company is evaluating the impact of new FASB updates on Income Taxes (Topic 740) and Segment Reporting (Topic 280)[50][58] Supply Chain Financing Obligations (Millions of dollars) | Supply Chain Financing Obligations (Millions of dollars) | Amount | |:---|:---| | Confirmed obligations outstanding as of December 31, 2023 | $843 | | Invoices confirmed during the period | 1,233 | | Confirmed invoices paid during the period | (1,286)| | Impact of foreign currency | (34) | | Confirmed obligations outstanding as of June 30, 2024 | $756 | Equity Method Investments (Millions of dollars) | Equity Method Investments (Millions of dollars) | June 30, 2024 Percentage Ownership | June 30, 2024 Carrying Amount | December 31, 2023 Percentage Ownership | December 31, 2023 Carrying Amount | |:---|:---|:---|:---|:---| | Beko Europe B.V. | 25% | $174 | 25% | N/A | | Whirlpool China | 20% | $188 | 20% | $187 | Note 2. Revenue Recognition Revenue Source (Millions of dollars) | Revenue Source (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Laundry | $1,087 | $1,294 | $2,351 | $2,590 | | Refrigeration | 1,299 | 1,478 | 2,553 | 2,850 | | Cooking | 907 | 1,101 | 1,969 | 2,193 | | Dishwashing | 272 | 445 | 701 | 876 | | Total major product category net sales | $3,565 | $4,318 | $7,574 | $8,509 | | Spare parts and warranties | 141 | 239 | 380 | 475 | | Other | 283 | 235 | 524 | 457 | | Total net sales | $3,989 | $4,792 | $8,478 | $9,441 | Allowance for Expected Credit Losses (Millions of dollars) | Allowance for Expected Credit Losses (Millions of dollars) | December 31, 2023 | Charged to Earnings | Write-offs | Foreign Currency | June 30, 2024 | |:---|:---|:---|:---|:---|:---| | MDA North America | $4 | $1 | $— | $— | $5 | | MDA Latin America | 38 | 3 | — | (3) | 38 | | MDA Asia | 3 | — | — | — | 3 | | SDA Global | 2 | — | — | — | 2 | | Consolidated Accounts Receivable Allowance | $47 | $4 | $— | $(3) | $48 | | Consolidated Financing Receivable Allowance | $29 | $— | $— | $(4) | $25 | | Total Consolidated Allowance | $76 | $4 | $— | $(7) | $73 | Note 3. Inventories Inventories (Millions of dollars) | Inventories (Millions of dollars) | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Finished products | $1,775 | $1,732 | | Raw materials and work in process | 534 | 515 | | Total Inventories | $2,309 | $2,247 | Note 4. Property, Plant and Equipment Property, Plant and Equipment (Millions of dollars) | Property, Plant and Equipment (Millions of dollars) | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Land | $29 | $29 | | Buildings | 949 | 893 | | Machinery and equipment | 6,631 | 6,571 | | Accumulated depreciation | (5,355) | (5,259) | | Property, plant and equipment, net | $2,254 | $2,234 | Note 5. Financing Arrangements - In February 2024, the Company issued $300 million of 5.750% Senior Notes due 2034 to repay maturing 4.000% Notes[66][68] - The outstanding amount for the term loan facility is $1.5 billion at June 30, 2024, with a maturity date of October 31, 2025, after repaying $500 million in April 2024[71] - The Company maintains a $3.5 billion Amended Long-Term Credit Facility maturing May 3, 2027, and committed credit facilities in Brazil and India totaling approximately $192 million[75][78] - The Company transferred $138 million of accounts receivable without recourse as of June 30, 2024, receiving $269 million in cash proceeds for the six months ended June 30, 2024[82][83] Notes Payable (Millions of dollars) | Notes Payable (Millions of dollars) | June 30, 2024 | December 31, 2023 | |:---|:---|:---| | Commercial paper | $755 | $— | | Short-term borrowings due to banks | 23 | 17 | | Total notes payable | $778 | $17 | Note 6. Commitments and Contingencies - Brazilian operations face tax assessments totaling approximately $419 million for BEFIEX credits, $52 million for IPI tax credits, and $70 million for PIS/COFINS input credits, which the Company is vigorously disputing[85][86][87][93] - Lawsuits related to the Grenfell Tower fire, involving a Hotpoint-branded refrigerator manufactured prior to Whirlpool's acquisition of Indesit, are ongoing in the U.K., with an immaterial amount accrued in financial statements[90] - The Company accrued an immaterial amount in Q1 2023 for prior-period VAT remittances in Latin America, with certain aspects resolved in Q2 2023[95] - A preliminary settlement range has been agreed with the French Competition Authority for an ongoing investigation, with a charge of approximately $69 million recorded in H1 2023, and $68 million provided to Beko for payment[97] - Guarantees for a Brazilian subsidiary's customer lines of credit totaled approximately $183 million at June 30, 2024, and corporate guarantees for consolidated subsidiaries totaled approximately $2.6 billion[100][101] Product Warranty Liability (Millions of dollars) | Product Warranty Liability (Millions of dollars) | 2024 | 2023 | |:---|:---|:---| | Balance at January 1 | $206 | $190 | | Issuances/accruals during the period | 105 | 109 | | Settlements made during the period/other | (114)| (106)| | Balance at June 30 | $197 | $193 | | Current portion | $137 | $129 | | Non-current portion | 60 | 64 | | Total | $197 | $193 | Note 7. Pension and Other Postretirement Benefit Plans - Beginning March 2024, Company matching contributions for the 401(k) defined contribution plan are contributed in company stock, up to 7% of eligible compensation[104] Net Periodic Benefit Cost (Credit) (Millions of dollars) | Net Periodic Benefit Cost (Credit) (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | United States Pension Benefits | $(1) | $4 | $(1) | $7 | | Foreign Pension Benefits | $2 | $3 | $4 | $6 | | Other Postretirement Benefits | $2 | $(8) | $3 | $(18) | Note 8. Hedges and Derivative Financial Instruments - Whirlpool uses derivative instruments (commodity, foreign exchange, interest rate) to manage risks associated with commodity prices, foreign exchange rates, and interest rates, not for trading or speculative purposes[108] Derivative Contracts (Millions of dollars) | Derivative Contracts (Millions of dollars) | Notional Amount June 30, 2024 | Notional Amount December 31, 2023 | Fair Value Assets June 30, 2024 | Fair Value Assets December 31, 2023 | Fair Value Liabilities June 30, 2024 | Fair Value Liabilities December 31, 2023 | |:---|:---|:---|:---|:---|:---|:---| | Commodity swaps/options (hedges) | $178 | $193 | $14 | $4 | $2 | $9 | | Foreign exchange forwards/options (hedges) | 1,015 | 952 | 28 | 1 | 3 | 31 | | Cross-currency swaps (hedges) | 618 | 618 | 5 | 5 | 60 | 79 | | Total derivatives accounted for as hedges | | | $47 | $10 | $65 | $119 | | Foreign exchange forwards/options (non-hedges) | 452 | 1,569 | 1 | 13 | — | 9 | | Total derivatives | | | $48 | $23 | $65 | $128 | Effects of Derivative Instruments on Income (Loss) (Millions of dollars) | Effects of Derivative Instruments on Income (Loss) (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Gain (Loss) Recognized in OCI (Effective Portion) | $52 | $(83) | $85 | $(105) | | Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) | $7 | $(8) | $9 | $(14) | | Gain (Loss) Recognized on Derivatives not Accounted for as Hedges | $10 | $14 | $8 | $27 | Note 9. Fair Value Measurements - Fair value is measured based on an exit price using a three-tiered hierarchy: Level 1 (observable inputs), Level 2 (indirectly observable inputs), and Level 3 (unobservable inputs)[124] - The European major domestic appliance business was classified as held for sale, with the 25% retained interest in Beko valued at $186 million based on discounted cash flow analysis (Level 3 input)[127][128] - A loss of $45 million and $292 million was recorded for the three and six months ended June 30, 2024, respectively, related to the sale and disposal of businesses, reflecting fair value reassessment and transaction costs[134] - The fair value of long-term debt was $6.3 billion at June 30, 2024, estimated using discounted cash flow analysis (Level 2 input)[129] Assets Measured at Fair Value (Millions of dollars) | Assets Measured at Fair Value (Millions of dollars) | June 30, 2024 Total Cost Basis | December 31, 2023 Total Cost Basis | June 30, 2024 Level 1 | December 31, 2023 Level 1 | June 30, 2024 Level 2 | December 31, 2023 Level 2 | June 30, 2024 Total Fair Value | December 31, 2023 Total Fair Value | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Short-term investments | $784 | $1,126 | $456 | $867 | $328 | $259 | $784 | $1,126 | | Net derivative contracts | — | — | — | — | $(17) | $(105) | $(17) | $(105) | Note 10. Stockholders' Equity - The Board authorized a share repurchase program of up to $4 billion, with approximately $2.5 billion remaining at June 30, 2024. During the six months ended June 30, 2024, 455,952 shares were repurchased for approximately $50 million[143] Stockholders' Equity (Millions of dollars) | Stockholders' Equity (Millions of dollars) | December 31, 2023 | March 31, 2024 | June 30, 2024 | |:---|:---|:---|:---| | Total Whirlpool Stockholders' Equity | $2,362 | $2,354 | $3,097 | | Noncontrolling Interests | 175 | 256 | 262 | | Total Stockholders' Equity | $2,537 | $2,610 | $3,359 | | Net earnings (loss) available to Whirlpool | $(259) | $219 | | | Other comprehensive income (loss) | $3 | $17 | | | Dividends declared | $(95) | $(96) | | | Stock issued (repurchased) | $(45) | $26 | | | Sale of minority interest in subsidiary | — | $462 | | | Divestitures | — | $577 | | Other Comprehensive Income (Loss) (Millions of dollars) | Other Comprehensive Income (Loss) (Millions of dollars) | Three Months Ended June 30, 2024 Net | Three Months Ended June 30, 2023 Net | Six Months Ended June 30, 2024 Net | Six Months Ended June 30, 2023 Net | |:---|:---|:---|:---|:---| | Currency translation adjustments | $(23) | $27 | $(51) | $26 | | Cash flow hedges | 30 | (57) | 53 | (68) | | Pension and other postretirement benefits plans | 10 | (9) | 18 | 2 | | Other comprehensive income (loss) available to Whirlpool | $17 | $(39) | $20 | $(40) | Net Earnings (Loss) Per Share (Millions of dollars and shares) | Net Earnings (Loss) Per Share (Millions of dollars and shares) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net earnings (loss) available to Whirlpool | $219 | $85 | $(40) | $(94) | | Denominator for basic EPS (weighted-average shares) | 54.9 | 55.0 | 54.9 | 54.9 | | Diluted net earnings (loss) per share | $3.96 | $1.55 | $(0.75) | $(1.71) | Note 11. Restructuring Charges - In March 2024, the Company committed to workforce reduction plans globally, incurring $23 million in Q1 2024. Additional restructuring actions in Q2 2024 incurred $50 million, primarily for employee termination costs[146][147] Restructuring Liability (Millions of Dollars) | Restructuring Liability (Millions of Dollars) | December 31, 2023 | Charge to Earnings | Cash Paid | Non-Cash and Other | June 30, 2024 | |:---|:---|:---|:---|:---|:---| | Employee Termination | $10 | $62 | $(54) | $(7) | $11 | | Other exit costs | — | 11 | (2) | — | 9 | | Total | $10 | $73 | $(56) | $(7) | $20 | Restructuring Charges by Segment (Millions of dollars) | Restructuring Charges by Segment (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | MDA North America | $22 | $— | $27 | $— | | MDA Latin America | 18 | — | 21 | — | | MDA Asia | 5 | — | 6 | — | | SDA Global | 4 | — | 4 | — | | Corporate/Other | 1 | 9 | 15 | 9 | | Total | $50 | $9 | $73 | $9 | Note 12. Income Taxes - Income tax benefit was $(206) million and $(130) million for the three and six months ended June 30, 2024, respectively, compared to expense in prior periods, primarily due to lower earnings and tax benefits from legal entity restructuring related to the European major appliance business disposal[151] Income Tax Expense (Benefit) Reconciliation (Millions of dollars) | Income Tax Expense (Benefit) Reconciliation (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Earnings (loss) before income taxes | $30 | $204 | $(148) | $95 | | Tax expense (benefit) computed at U.S. statutory rate (21%) | $6 | $43 | $(31) | $20 | | Income tax expense (benefit) computed at effective worldwide tax rates | $(206) | $114 | $(130) | $182 | Note 13. Segment Information - Effective January 1, 2024, Whirlpool reorganized its operating segments to align with portfolio transformation, focusing on MDA North America, MDA Latin America, MDA Asia, and SDA Global, with MDA Europe deconsolidated[154][155] - The Chief Operating Decision Maker evaluates performance based on each segment's Earnings (Loss) Before Interest and Taxes (EBIT), which excludes restructuring costs, asset impairment charges, and certain other items[156] Segment Performance (Millions of dollars) | Segment Performance (Millions of dollars) | Net Sales Q2 2024 | Net Sales Q2 2023 | EBIT Q2 2024 | EBIT Q2 2023 | Net Sales H1 2024 | Net Sales H1 2023 | EBIT H1 2024 | EBIT H1 2023 | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | MDA North America | $2,567 | $2,722 | $163 | $275 | $4,994 | $5,362 | $298 | $542 | | MDA Latin America | 895 | 804 | 52 | 49 | 1,732 | 1,551 | 116 | 85 | | MDA Asia | 340 | 284 | 21 | 10 | 579 | 529 | 31 | 17 | | MDA Europe | — | 814 | — | 14 | 804 | 1,661 | (9) | 10 | | SDA Global | 187 | 168 | 26 | 21 | 369 | 338 | 60 | 39 | | Total Whirlpool | $3,989 | $4,792 | $112 | $290 | $8,478 | $9,441 | $24 | $257 | Reconciliation of Other/Eliminations to Total EBIT (Millions of dollars) | Reconciliation of Other/Eliminations to Total EBIT (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Restructuring charges | $(50) | $(9) | $(73) | $(9) | | (Loss) gain on sale and disposal of businesses | (45) | (18) | (292) | (240) | | Corporate expenses and other | (55) | (16) | (107) | (89) | | Total other/eliminations | $(150) | $(79) | $(472) | $(436) | | Operating profit | $130 | $303 | $14 | $346 | | Total EBIT | $112 | $290 | $24 | $257 | Note 14. Acquisitions and Divestitures - On April 1, 2024, Whirlpool closed the contribution of its European major domestic appliance business and the sale of its MENA business to Arcelik, resulting in the deconsolidation of these businesses. Whirlpool now owns approximately 25% of the newly formed European appliance company, Beko[162][167] - The transaction resulted in a total loss on disposal of $1.9 billion, including a $1.2 billion write-down of net assets and $393 million of cumulative currency translation adjustments[162] - On February 20, 2024, Whirlpool sold 30.4 million equity shares of Whirlpool India, reducing its ownership from 75% to 51% and generating $462 million in proceeds, which were used to reduce debt[173][210] - On January 16, 2024, the Company entered into an agreement to sell its Brastemp-branded water filtration subscription business in Latin America, which closed on July 1, 2024, for approximately $52 million, expecting a gain of $32 million in Q3 2024[174] MDA Europe Earnings (Loss) (Millions) | MDA Europe Earnings (Loss) (Millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Earnings (loss) before income taxes | $(9) | $12 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, condition, and outlook, analyzing results, liquidity, and strategic impacts About Whirlpool - Whirlpool Corporation is a leading kitchen and laundry appliance company, with iconic brands including Whirlpool, KitchenAid, JennAir, Maytag, Amana, Brastemp, Consul, and InSinkErator[177] - In 2023, the Company reported approximately $19 billion in annual sales, 59,000 employees, and 55 manufacturing and technology research centers[177] - As of January 1, 2024, the business operates through five segments: MDA North America, MDA Europe (deconsolidated April 1, 2024), MDA Latin America, MDA Asia, and SDA Global[177] Overview - GAAP net earnings margins were impacted by adjustments from the sale and disposal of businesses and restructuring expenses, while quarterly results were affected by negative price/mix, partially offset by cost takeout actions[181] - Whirlpool expects to deliver $300-$400 million in cost takeout and continued sequential margin progression through 2024[182] Key Metrics | Metric (Millions of dollars, except per share data) | Q2 2024 | Q2 2023 | |:---|:---|:---| | GAAP Net earnings (loss) available to Whirlpool | $219 | $85 | | GAAP Net earnings margin | 5.5% | 1.8% | | GAAP Diluted EPS | $3.96 | $1.55 | | Ongoing (non-GAAP) diluted EPS | $2.39 | $4.21 | | Ongoing (non-GAAP) EBIT margin | 5.3% | 7.3% | Cash Flow | Cash Flow (Millions of dollars) | H1 2024 | H1 2023 | |:---|:---|:---| | Cash provided by (used in) operating activities | $(485) | $(370) | | Free cash flow (non-GAAP) | $(713) | $(587) | Results of Operations (Consolidated) - Consolidated net sales decreased by 16.8% for the three months and 10.2% for the six months ended June 30, 2024, primarily due to the divestiture of the European major domestic appliances business[185] - The consolidated gross margin percentage decreased to 15.7% (Q2 2024) and 14.9% (H1 2024) from 17.0% and 16.7% in the prior-year periods, driven by volume and unfavorable product price/mix, partially offset by cost productivity[186] Consolidated Financials (Millions of dollars, except per share data) | Consolidated Financials (Millions of dollars, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Net sales | $3,989 | $4,792 | $8,478 | $9,441 | | Gross margin | 626 | 816 | 1,267 | 1,579 | | Selling, general and administrative | 394 | 476 | 871 | 963 | | Restructuring costs | 50 | 9 | 73 | 9 | | Loss (gain) on sale and disposal of businesses | 45 | 18 | 292 | 240 | | Net earnings (loss) available to Whirlpool | $219 | $85 | $(40) | $(94) | | Diluted net earnings (loss) available to Whirlpool per share | $3.96 | $1.55 | $(0.75) | $(1.71) | Segment Results Financial performance of operating segments, including net sales and EBIT, is detailed by region MDA North America - Net sales decreased by 5.7% (Q2) and 6.9% (H1) due to unfavorable product price/mix[192] - EBIT decreased for both periods, primarily due to unfavorable product price/mix, with EBIT margin falling to 6.3% (Q2) and 6.0% (H1) from 10.1% in prior periods[193] MDA North America (Millions of dollars) | MDA North America (Millions of dollars) | Net Sales Q2 2024 | Net Sales Q2 2023 | EBIT Q2 2024 | EBIT Q2 2023 | Net Sales H1 2024 | Net Sales H1 2023 | EBIT H1 2024 | EBIT H1 2023 | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Net Sales | $2,567 | $2,722 | | | $4,994 | $5,362 | | | | EBIT | | | $163 | $275 | | | $298 | $542 | MDA Latin America - Net sales increased by 11.3% (Q2) and 11.7% (H1), primarily driven by increased volume, partially offset by unfavorable foreign currency and product price/mix[223] - EBIT increased for both periods, primarily due to increased volume, partially offset by unfavorable product price/mix. EBIT margin was 5.8% (Q2) and 6.7% (H1)[232] MDA Latin America (Millions of dollars) | MDA Latin America (Millions of dollars) | Net Sales Q2 2024 | Net Sales Q2 2023 | EBIT Q2 2024 | EBIT Q2 2023 | Net Sales H1 2024 | Net Sales H1 2023 | EBIT H1 2024 | EBIT H1 2023 | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Net Sales | $895 | $804 | | | $1,732 | $1,551 | | | | EBIT | | | $52 | $49 | | | $116 | $85 | MDA Asia - Net sales increased by 19.7% (Q2) and 9.5% (H1), primarily driven by increased volume, partially offset by foreign currency impact[234] - EBIT increased for both periods, primarily due to increased volume and cost takeout actions, partially offset by unfavorable product price/mix. EBIT margin was 6.2% (Q2) and 5.4% (H1)[235] MDA Asia (Millions of dollars) | MDA Asia (Millions of dollars) | Net Sales Q2 2024 | Net Sales Q2 2023 | EBIT Q2 2024 | EBIT Q2 2023 | Net Sales H1 2024 | Net Sales H1 2023 | EBIT H1 2024 | EBIT H1 2023 | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Net Sales | $340 | $284 | | | $579 | $529 | | | | EBIT | | | $21 | $10 | | | $31 | $17 | SDA Global - Net sales increased by 11.3% (Q2) and 9.2% (H1), primarily driven by increased volumes, partially offset by unfavorable product price/mix[238] - EBIT increased for both periods, driven by increased volume, partially offset by unfavorable product price/mix and increased marketing spend. EBIT margin was 13.9% (Q2) and 16.3% (H1)[239] SDA Global (Millions of dollars) | SDA Global (Millions of dollars) | Net Sales Q2 2024 | Net Sales Q2 2023 | EBIT Q2 2024 | EBIT Q2 2023 | Net Sales H1 2024 | Net Sales H1 2023 | EBIT H1 2024 | EBIT H1 2023 | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Net Sales | $187 | $168 | | | $369 | $338 | | | | EBIT | | | $26 | $21 | | | $60 | $39 | MDA Europe - The MDA Europe business was deconsolidated as of April 1, 2024, resulting in no net sales or EBIT for this segment during the second quarter of 2024[224] Key Financial Items Discussion Specific financial line items are discussed, including SG&A, restructuring, disposals, interest, and taxes Selling, General and Administrative - Consolidated selling, general and administrative expenses decreased for the three and six months ended June 30, 2024, primarily due to the disposal of the European major domestic appliance business[225] Restructuring - Restructuring charges increased to $50 million (Q2 2024) and $73 million (H1 2024) from $9 million in prior periods, driven by organizational simplification efforts[195] - For the full year 2024, the Company expects to incur approximately $75-80 million in restructuring charges, with substantially all resulting in cash settlement[196] (Gain) Loss on Sale and Disposal of Businesses - The Company recorded an adjustment of $45 million (Q2 2024) and $247 million (H1 2024) related to the deconsolidation of the European disposal group, resulting in a total loss of $1.9 billion for the transaction[198] - These adjustments reflect the reassessment of fair value less costs to sell, transaction costs, and provisions for tax-related indemnities[198] Interest and Sundry (Income) Expense - Net interest and sundry expense decreased for both the three and six months ended June 30, 2024, primarily due to lower reserves for legacy EMEA legal matters recorded in the prior year[201] Interest Expense - The increase in interest expense is primarily due to higher interest rates[202] Interest Expense (Millions of dollars) | Interest Expense (Millions of dollars) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---|:---|:---| | Interest expense | $93 | $89 | $183 | $164 | Income Taxes - Income tax benefit was $(206) million (Q2 2024) and $(130) million (H1 2024), compared to expense in prior periods, driven by lower earnings and tax benefits from legal entity restructuring related to the European major appliance business disposal[203] Other Information (Goodwill and Indefinite-lived Intangibles) - The Company continues to monitor global economic uncertainty, with Maytag and InSinkErator trademarks remaining at risk, but no reporting units or indefinite-lived intangible assets are currently at risk for future impairment[205] Financial Condition and Liquidity The company's financial strategy, liquidity sources, cash usage, and debt management are outlined Background - Whirlpool aims to finance its business through operating cash flow and a balanced mix of long-term and short-term debt to reduce liquidity risk[207] - The Company leverages strong free cash flow generation to fund operations, debt servicing, capital reinvestment, share repurchases, and dividend payments[209] - As of June 30, 2024, $350 million of debt matures within the next twelve months, expected to be paid through refinancing, free cash flow, or cash on hand[211] Cash and Cash Equivalents - The Company had approximately $1.2 billion in cash and cash equivalents at June 30, 2024[213] - Cash held by foreign subsidiaries is generally for permanent reinvestment, and repatriation to the U.S. is not currently planned[213] - Cash or cash equivalents in Brazil and India each exceeded 1% of consolidated assets at June 30, 2024[214] Revolving Credit Facility and Other Committed Credit Facilities - Whirlpool maintains a $3.5 billion revolving credit facility and a committed $1.5 billion term loan, along with approximately $192 million in committed credit facilities in Brazil and India[215] - The Company was in compliance with its interest coverage ratio under these facilities as of June 30, 2024[216] Notes Payable - At June 30, 2024, $778 million in notes payable were outstanding, primarily under the revolving credit facility or commercial paper programs, used to fund working capital[217] Trade Customers - No material impacts from customer insolvencies occurred during Q2 2024, and no immediate material insolvency situations are foreseen[218] Guarantees - For additional information on guarantees, refer to Note 6 to the Consolidated Condensed Financial Statements[220] Share Repurchase Program - For additional information about the share repurchase program, refer to Note 10 to the Consolidated Condensed Financial Statements[221] Sources and Uses of Cash - Cash used in operating activities increased in H1 2024 due to working capital fluctuations, lower inventory, and increases in accrued expenses and deferred taxes from the MDA Europe deconsolidation[227] - Cash used in investing activities increased in H1 2024 primarily due to a $245 million decrease from divestitures, representing cash held in MDA Europe[229] - Cash provided by financing activities increased in H1 2024 due to increased short-term borrowings and the sale of minority interest shares in Whirlpool India[230] Cash Flow (Millions of dollars) | Cash Flow (Millions of dollars) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Cash provided by (used in) operating activities | $(485) | $(370) | | Cash provided by (used in) investing activities | $(432) | $(222) | | Cash provided by (used in) financing activities | $501 | $(110) | | Net change in cash and cash equivalents | $(488) | $(649) | Financing Arrangements - The Company had total committed credit facilities of approximately $5.2 billion at June 30, 2024, with $1.5 billion drawn on the term loan facility[231] Dividends - On April 15, 2024, the Board of Directors approved a quarterly dividend of $1.75 per share on common stock[244] Off-Balance Sheet Arrangements - Approximately $361 million was outstanding under bank guarantees, letters of credit, and surety bonds at June 30, 2024, primarily for Brazilian tax matters and other governmental obligations[245] Non-GAAP Financial Measures - Whirlpool supplements GAAP reporting with non-GAAP measures like EBIT, ongoing EBIT, ongoing EPS, sales excluding foreign currency, and free cash flow to provide a clearer understanding of ongoing operations and underlying business trends[247][250] Non-GAAP Reconciliation (Millions of dollars, except per share data) | Non-GAAP Reconciliation (Millions of dollars, except per share data) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | |:---|:---|:---| | Net earnings (loss) available to Whirlpool | $219 | $85 | | Earnings (loss) before interest & taxes | $112 | $290 | | Restructuring expense | 50 | — | | Impact of M&A transactions | 50 | 26 | | Legacy MDA Europe legal matters | — | 36 | | Ongoing EBIT | $212 | $352 | | Earnings (loss) per diluted share | $3.96 | $1.55 | | Impact of M&A transactions (per share) | 0.90 | 0.47 | | Legacy MDA Europe legal matters (per share) | — | 0.65 | | Restructuring expense (per share) | 0.91 | — | | Income tax impact (per share) | 0.26 | (0.12) | | Normalized tax rate adjustment (per share) | (3.64) | 1.66 | | Ongoing earnings per diluted share | $2.39 | $4.21 | Free Cash Flow (FCF) Reconciliation (Millions of dollars) | Free Cash Flow (FCF) Reconciliation (Millions of dollars) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |:---|:---|:---| | Cash provided by (used in) operating activities | $(485) | $(370) | | Capital expenditures | $(228) | $(217) | | Free cash flow | $(713) | $(587) | Forward-Looking Perspective - The Company estimates a full-year 2024 GAAP tax rate of approximately 25% and an adjusted tax rate of approximately (8)%[262] 2024 Current Outlook | 2024 Current Outlook | Estimated GAAP earnings per diluted share | Industry Demand MDA North America | Industry Demand MDA Latin America | Industry Demand MDA Asia | Industry Demand SDA Global | Industry Demand MDA Europe (Q1 Actuals) | |:---|:---|:---|:---|:---|:---|:---| | Outlook | ~$3.00 | Flat | 5 - 7% | 4 - 6% | Flat | (1)% | 2024 Current Outlook (Millions of dollars) | 2024 Current Outlook (Millions of dollars) | Cash provided by (used in) operating activities | Capital expenditures | Free cash flow | |:---|:---|:---|:---| | Outlook | ~$1,050 | ~$550 | ~$500 | Other Matters - Whirlpool continues to be impacted by global economic uncertainty, including raw material inflation, component shortages, and fluctuations in logistics due to international conflicts and government actions[272] - Antidumping duties on large residential washers from South Korea, Mexico, and China remain in effect, with extension proceedings ongoing for Mexico[267] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk exposures since the last annual report - There have been no material changes to Whirlpool's exposures to market risk since December 31, 2023[273] Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2024 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024[275] - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the most recent quarter[276] PART II. OTHER INFORMATION Item 1. Legal Proceedings Note 6 of the financial statements details legal proceedings, with a $1 million disclosure threshold for environmental issues - Information regarding legal proceedings is detailed under 'Commitments and Contingencies' in Note 6 to the Consolidated Condensed Financial Statements[279] - A threshold of $1 million is used for determining disclosure of certain environmental proceedings[279] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K - There have been no material changes in risk factors from those disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[280] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company's share repurchase program details include authorized amount, shares repurchased, and remaining authorization - The Board of Directors authorized a share repurchase program of up to $4 billion, with approximately $2.5 billion remaining authorized at June 30, 2024[281] - During the six months ended June 30, 2024, 455,952 shares were repurchased under the program at an aggregate price of approximately $50 million[281] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[283] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to Whirlpool Corporation[284] Item 5. Other Information There is no other information to report for the period - No other information is reported in this section[285] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL documents - Exhibits include certifications from the Chief Executive Officer (31.1) and Chief Financial Officer (31.2) pursuant to the Sarbanes-Oxley Act of 2002[287] - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents are filed as exhibits[287] SIGNATURES The report is duly authorized and signed by the company's Executive Vice President and Chief Financial Officer - The report was signed on behalf of Whirlpool Corporation by James W. Peters, Executive Vice President and Chief Financial and Administrative Officer, on July 25, 2024[290]