Whirlpool (WHR) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Whirlpool's unaudited consolidated financial statements, including income, balance sheets, cash flows, and detailed accounting notes Consolidated Condensed Statements of Comprehensive Income (Loss) Net earnings available to Whirlpool significantly increased for both three and nine months ended September 30, 2024, despite decreased net sales Consolidated Condensed Statements of Comprehensive Income (Loss) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $3,993 million | $4,926 million | $12,471 million | $14,367 million | | Operating profit | $265 million | $257 million | $279 million | $603 million | | Net earnings (loss) available to Whirlpool | $109 million | $83 million | $69 million | $(10) million | | Diluted EPS available to Whirlpool | $2.00 | $1.53 | $1.26 | $(0.18) | | Comprehensive income (loss) | $25 million | $140 million | $16 million | $12 million | Consolidated Condensed Balance Sheets Total assets slightly decreased, total liabilities decreased, and total stockholders' equity significantly increased as of September 30, 2024 Consolidated Condensed Balance Sheets Highlights | Metric | September 30, 2024 | December 31, 2023 | Change | | :-------------------------------- | :----------------- | :---------------- | :----- | | Total assets | $17,160 million | $17,312 million | $(152) million | | Total liabilities | $13,867 million | $14,775 million | $(908) million | | Total stockholders' equity | $3,293 million | $2,537 million | $756 million | | Cash and cash equivalents | $1,084 million | $1,570 million | $(486) million | | Assets held for sale | $0 | $144 million | $(144) million | | Liabilities held for sale | $0 | $587 million | $(587) million | Consolidated Condensed Statements of Cash Flows Cash used in operating activities decreased, investing activities increased, and financing activities turned positive, leading to a smaller net cash decrease Consolidated Condensed Statements of Cash Flows Highlights | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Cash provided by (used in) operating activities | $(271) million | $(322) million | $51 million (less used) | | Cash provided by (used in) investing activities | $(466) million | $(343) million | $(123) million (more used) | | Cash provided by (used in) financing activities | $222 million | $(203) million | $425 million (swing to positive) | | Net change in cash and cash equivalents | $(583) million | $(835) million | $252 million (less decrease) | Notes to the Consolidated Condensed Financial Statements (Unaudited) These notes detail Whirlpool's accounting policies, estimates, and significant transactions, from revenue recognition to acquisitions and divestitures 1. Basis of Presentation This note outlines accounting principles, estimates, and assumptions for interim financial statements, addressing risks, goodwill, and new accounting pronouncements - Macroeconomic volatility and ongoing international conflicts continue to impact global economies, affecting estimates and assumptions in financial statements[20][21] - Maytag and InSinkErator trademarks are at risk, but no impairment triggering events were identified in Q3 2024[22][23] Supply Chain Financing Obligations | Metric | December 31, 2023 | September 30, 2024 | | :-------------------------------- | :---------------- | :----------------- | | Confirmed obligations outstanding | $843 million | $789 million | Equity Method Investments | Investment | Ownership % (Sep 30, 2024) | Carrying Amount (Sep 30, 2024) | Carrying Amount (Dec 31, 2023) | | :---------------- | :------------------------- | :----------------------------- | :----------------------------- | | Beko Europe B.V. | 25% | $156 million | N/A | | Whirlpool China | 20% | $188 million | $187 million | - Whirlpool India increased its controlling equity ownership in Elica PB India to 97% during Q3 2024[36] - The company is evaluating the impact of FASB Updates 2023-07 (Segment Reporting) and 2023-09 (Income Tax Disclosures), effective for fiscal years beginning after December 15, 2023, and 2024, respectively[39][40] 2. Revenue Recognition This note disaggregates revenue by major product categories and other sources, and details the allowance for expected credit losses and bad debt expense by operating segment Disaggregated Revenue by Product Category | Product Category | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Laundry | $1,131 million | $1,360 million | $3,482 million | $3,949 million | | Refrigeration | $1,297 million | $1,484 million | $3,850 million | $4,334 million | | Cooking | $921 million | $1,199 million | $2,891 million | $3,392 million | | Dishwashing | $282 million | $423 million | $983 million | $1,300 million | | Total major product category net sales | $3,631 million | $4,466 million | $11,206 million | $12,975 million | | Spare parts and warranties | $135 million | $243 million | $515 million | $718 million | | Other | $227 million | $217 million | $750 million | $674 million | | Total net sales | $3,993 million | $4,926 million | $12,471 million | $14,367 million | Allowance for Expected Credit Losses and Bad Debt Expense (9 Months Ended Sep 30, 2024) | Segment | December 31, 2023 | Charged to Earnings | Write-offs | Foreign Currency | September 30, 2024 | | :-------------------------------- | :---------------- | :------------------ | :--------- | :--------------- | :----------------- | | MDA North America | $4 | $1 | $0 | $0 | $5 | | MDA Latin America | $38 | $9 | $(2) | $(5) | $40 | | MDA Asia | $3 | $0 | $0 | $0 | $3 | | SDA Global | $2 | $0 | $0 | $0 | $2 | | Consolidated Accounts Receivable Allowance | $47 | $10 | $(2) | $(5) | $50 | | MDA Latin America (Financing) | $29 | $0 | $0 | $(3) | $26 | | Consolidated Financing Receivable Allowance | $29 | $0 | $0 | $(3) | $26 | 3. Inventories The company's total inventories slightly increased to $2,277 million as of September 30, 2024, from $2,247 million at December 31, 2023, with a shift towards higher raw materials and work in process Inventories | Inventory Type | September 30, 2024 | December 31, 2023 | | :-------------------------------- | :----------------- | :---------------- | | Finished products | $1,702 million | $1,732 million | | Raw materials and work in process | $575 million | $515 million | | Total Inventories | $2,277 million | $2,247 million | 4. Property, Plant and Equipment Net property, plant, and equipment increased slightly to $2,254 million as of September 30, 2024, from $2,234 million at December 31, 2023 Property, Plant and Equipment, Net | Asset Category | September 30, 2024 | December 31, 2023 | | :-------------------------------- | :----------------- | :---------------- | | Land | $29 million | $29 million | | Buildings | $951 million | $893 million | | Machinery and equipment | $6,700 million | $6,571 million | | Accumulated depreciation | $(5,426) million | $(5,259) million | | Property, plant and equipment, net | $2,254 million | $2,234 million | 5. Financing Arrangements Whirlpool issued $300 million in Senior Notes to repay debt, maintains $5.2 billion in credit facilities, and saw increased short-term notes payable - Issued $300 million of 5.750% Senior Notes due 2034 in February 2024, using proceeds to repay $300 million of 4.000% Notes due March 1, 2024[49][50] - The Term Loan Agreement has $1.5 billion outstanding as of September 30, 2024, with the remaining tranche maturing on October 31, 2025[53] - Maintains a $3.5 billion revolving credit facility (maturity May 3, 2027) and committed credit facilities in Brazil and India totaling approximately $195 million[56][58] Notes Payable | Type | September 30, 2024 | December 31, 2023 | | :-------------------------------- | :----------------- | :---------------- | | Commercial paper | $580 million | $0 | | Short-term borrowings due to banks | $29 million | $17 million | | Total notes payable | $609 million | $17 million | - Outstanding accounts receivable transferred with servicing were $121 million as of September 30, 2024, with $391 million cash proceeds received for the nine months ended September 30, 2024[61] 6. Commitments and Contingencies Whirlpool faces legal and tax disputes, primarily in Brazil, actively defending its positions, while product warranty reserves remain stable and guarantees are provided - Outstanding tax assessments for BEFIEX credits are approximately $432 million, IPI tax credits approximately $54 million, and PIS/COFINS inputs approximately $72 million as of September 30, 2024[63][64][65] - Actively defending class action lawsuits and Grenfell Tower-related lawsuits, with management believing outcomes should not have a material adverse effect[70][72] Product Warranty Reserves | Metric | September 30, 2024 | September 30, 2023 | | :-------------------------------- | :----------------- | :----------------- | | Balance at September 30 | $198 million | $200 million | | Issuances/accruals during the period (9M) | $159 million | $170 million | | Settlements made during the period/other (9M) | $(167) million | $(160) million | - Guaranteed amounts for a Brazilian subsidiary totaled approximately $150 million at September 30, 2024. Maximum contractual amount of indebtedness and lines of credit available under guarantees for consolidated subsidiaries totaled approximately $2.7 billion[75][76] 7. Pension and Other Postretirement Benefit Plans The net periodic benefit cost for pension and other postretirement plans showed a credit for United States pension benefits for the nine months ended September 30, 2024, compared to a cost in the prior year Net Periodic Benefit Cost (Credit) (9 Months Ended Sep 30) | Benefit Type | 2024 | 2023 | | :-------------------------------- | :----------------- | :----------------- | | United States Pension Benefits | $(2) million | $10 million | | Foreign Pension Benefits | $5 million | $9 million | | Other Postretirement Benefits | $4 million | $(26) million | - Company matching contributions for the 401(k) defined contribution plan are now made in company stock, effective March 2024[80] 8. Hedges and Derivative Financial Instruments Whirlpool uses derivatives to manage commodity, foreign exchange, and interest rate risks, with fair value of outstanding contracts decreasing to a net liability - Uses commodity derivative contracts, foreign exchange contracts, and cross-currency interest rate swaps to manage price, currency, and interest rate risks, not for speculative purposes[84][85][86][87] Outstanding Derivative Contracts (Fair Value) | Type | Notional Amount (Sep 30, 2024) | Notional Amount (Dec 31, 2023) | Fair Value Assets (Sep 30, 2024) | Fair Value Liabilities (Sep 30, 2024) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :------------------------------ | | Commodity swaps/options | $168 million | $193 million | $13 million | $6 million | | Foreign exchange forwards/options (hedges) | $963 million | $952 million | $17 million | $7 million | | Cross-currency swaps | $618 million | $618 million | $5 million | $82 million | | Foreign exchange forwards/options (non-hedges) | $437 million | $1,569 million | $0 | $1 million | | Total derivatives | N/A | N/A | $35 million | $96 million | Effects on Comprehensive Income (Loss) (9 Months Ended Sep 30) | Type | Gain (Loss) Recognized in OCI (2024) | Gain (Loss) Recognized in OCI (2023) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | | Commodity swaps/options | $14 million | $(5) million | | Foreign exchange forwards/options | $34 million | $(38) million | | Cross-currency swaps | $(1) million | $12 million | | Total Cash Flow Hedges | $47 million | $(31) million | 9. Fair Value Measurements This note describes the fair value hierarchy and summarizes the valuation of assets and liabilities measured at fair value on a recurring basis Valuation of Assets and Liabilities at Fair Value (Sep 30, 2024) | Asset/Liability | Total Cost Basis | Fair Value Level 1 | Fair Value Level 2 | Total Fair Value | | :-------------------------------- | :----------------- | :----------------- | :----------------- | :--------------- | | Short-term investments | $822 million | $526 million | $296 million | $822 million | | Net derivative contracts | $0 | $0 | $(61) million | $(61) million | - The fair value of the retained 25% interest in Beko Europe B.V. was $186 million at deconsolidation (April 1, 2024), based on Level 3 inputs[103] - A loss of $294 million was recorded for the nine months ended September 30, 2024, related to the European MDA business divestiture, reflecting fair value reassessment, tax indemnities, and transaction costs[104] - The fair value of long-term debt (including current maturities) was $6.5 billion at September 30, 2024, estimated using discounted cash flow analysis (Level 2 input)[105] 10. Stockholders' Equity Total stockholders' equity increased to $3,293 million, influenced by net earnings and other comprehensive income, with $50 million in stock repurchases Changes in Stockholders' Equity (Dec 31, 2023 to Sep 30, 2024) | Metric | December 31, 2023 | September 30, 2024 | Change | | :-------------------------------- | :---------------- | :----------------- | :----- | | Total Stockholders' Equity | $2,537 million | $3,293 million | $756 million | | Retained Earnings | $8,358 million | $8,140 million | $(218) million | | Accumulated Other Comprehensive Loss | $(2,178) million | $(1,652) million | $526 million | | Treasury Stock | $(3,932) million | $(3,561) million | $371 million | | Noncontrolling Interests | $175 million | $251 million | $76 million | Other Comprehensive Income (Loss) (9 Months Ended Sep 30) | Component | Pre-tax (2024) | Tax Effect (2024) | Net (2024) | Pre-tax (2023) | Tax Effect (2023) | Net (2023) | | :-------------------------------- | :------------- | :---------------- | :--------- | :------------- | :---------------- | :--------- | | Currency translation adjustments | $(135) million | $0 | $(135) million | $43 million | $0 | $43 million | | Cash flow hedges | $55 million | $(17) million | $38 million | $(39) million | $9 million | $(30) million | | Pension and other postretirement benefits plans | $32 million | $(4) million | $28 million | $2 million | $0 | $2 million | | Total Other Comprehensive Income (Loss) | $(48) million | $(21) million | $(69) million | $6 million | $9 million | $15 million | Net Earnings (Loss) per Share (9 Months Ended Sep 30) | Metric | 2024 | 2023 | | :-------------------------------- | :----- | :----- | | Basic net earnings (loss) available to Whirlpool | $1.27 | $(0.18) | | Diluted net earnings (loss) available to Whirlpool | $1.26 | $(0.18) | - Repurchased 455,952 shares for approximately $50 million during the nine months ended September 30, 2024, with approximately $2.5 billion remaining authorized under the share repurchase program[116] 11. Restructuring Charges Whirlpool incurred $81 million in restructuring charges for the nine months ended September 30, 2024, mainly from workforce reductions for organizational simplification Restructuring Charges | Period | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $8 million | $5 million | | Nine Months Ended Sep 30 | $81 million | $14 million | - Workforce reduction plans initiated in March 2024 had expected costs of $23 million ($14 million employee termination, $9 million other); additional Q2 2024 actions had total costs of $58 million ($8 million recorded in Q3 2024)[117][118] Restructuring Liability (Nine Months Ended Sep 30, 2024) | Category | December 31, 2023 | Charge to Earnings | Cash Paid | Non-Cash and Other | September 30, 2024 | | :-------------------------------- | :---------------- | :----------------- | :-------- | :----------------- | :----------------- | | Employee Termination | $10 million | $66 million | $(59) million | $(7) million | $10 million | | Other exit costs | $0 | $15 million | $(11) million | $0 | $4 million | | Total | $10 million | $81 million | $(70) million | $(7) million | $14 million | 12. Income Taxes Income tax expense decreased for the three months and became a benefit for the nine-month period, driven by lower earnings and tax benefits from restructuring Income Tax Expense (Benefit) | Period | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $45 million | $86 million | | Nine Months Ended Sep 30 | $(85) million | $268 million | - The decrease in tax expense (benefit) is primarily due to an overall lower level of earnings and tax benefits related to the completion of legal entity restructuring projects in connection with the disposal of the European major appliance business, partially offset by associated valuation allowances[121] 13. Segment Information Effective January 1, 2024, Whirlpool reorganized its operating segments, with MDA Europe deconsolidated, and performance evaluated based on varied EBIT results - Effective January 1, 2024, operating segments were reorganized to MDA North America, MDA Latin America, MDA Asia, and SDA Global. MDA Europe was deconsolidated as of April 1, 2024[123] Segment Performance (3 Months Ended Sep 30) | Segment | Net Sales (2024) | Net Sales (2023) | EBIT (2024) | EBIT (2023) | | :-------------------------------- | :--------------- | :--------------- | :---------- | :---------- | | MDA North America | $2,647 million | $2,766 million | $194 million | $254 million | | MDA Latin America | $846 million | $843 million | $58 million | $52 million | | MDA Asia | $239 million | $219 million | $7 million | $5 million | | MDA Europe | $0 | $829 million | $0 | $2 million | | SDA Global | $261 million | $269 million | $37 million | $49 million | Segment Performance (9 Months Ended Sep 30) | Segment | Net Sales (2024) | Net Sales (2023) | EBIT (2024) | EBIT (2023) | | :-------------------------------- | :--------------- | :--------------- | :---------- | :---------- | | MDA North America | $7,642 million | $8,130 million | $491 million | $795 million | | MDA Latin America | $2,578 million | $2,395 million | $175 million | $137 million | | MDA Asia | $818 million | $748 million | $38 million | $23 million | | MDA Europe | $804 million | $2,487 million | $(9) million | $11 million | | SDA Global | $629 million | $607 million | $97 million | $89 million | 14. Acquisitions and Divestitures Whirlpool divested its European MDA and MENA businesses, resulting in a $1.9 billion loss, and sold its Brastemp water filtration business for a $34 million gain - Completed the divestiture of its European major domestic appliance business and MENA business on April 1, 2024, resulting in deconsolidation. Whirlpool now owns 25% of the newly formed entity, Beko[133] - A total loss on disposal of $1.9 billion was recorded for the European MDA transaction, including a $294 million adjustment for the nine months ended September 30, 2024[133][134] - Sold 24% of Whirlpool India shares for $462 million on February 20, 2024, reducing ownership from 75% to 51%[140] - Sold its Brastemp-branded water filtration subscription business in Latin America on July 1, 2024, for approximately $52 million, recording a gain of $34 million in Q3 2024[141] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Whirlpool's financial performance, condition, and liquidity for the three and nine months ended September 30, 2024, including non-GAAP measures and outlook About Whirlpool Whirlpool Corporation is a leading global kitchen and laundry appliance company, with $19 billion in 2023 sales and reorganized operating segments as of 2024 - Whirlpool Corporation is a leading kitchen and laundry appliance company[143] - Reported approximately $19 billion in annual sales in 2023[143] - Had 59,000 employees in 2023[143] - Operates through five segments as of January 1, 2024: MDA North America, MDA Latin America, MDA Asia, and SDA Global (MDA Europe deconsolidated April 1, 2024)[143] Overview Whirlpool reported increased GAAP net earnings and improved cash flow, despite decreased non-GAAP metrics, with results impacted by divestitures and restructuring Q3 2024 GAAP Performance | Metric | Q3 2024 | Q3 2023 | | :-------------------------------- | :------ | :------ | | Net earnings available to Whirlpool | $109 million | $83 million | | Net earnings margin | 2.7% | 1.7% | | Diluted EPS | $2.00 | $1.53 | YTD 2024 Cash Flow | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash provided by (used in) operating activities | $(271) million | $(322) million | | Free cash flow (non-GAAP) | $(586) million | $(660) million | Q3 2024 Non-GAAP Performance | Metric | Q3 2024 | Q3 2023 | | :-------------------------------- | :------ | :------ | | Ongoing EPS | $3.43 | $5.45 | | Ongoing EBIT margin | 5.8% | 6.5% | - GAAP net earnings were impacted by the gain on sale and disposal of businesses, restructuring expenses, and lower income tax expense (due to lower earnings and tax benefits from the European business disposal). Both GAAP and ongoing results were impacted by negative price/mix and foreign currency[146] - The company remains confident in delivering $300-$400 million of cost take out and continued sequential margin progression through 2024[147] Results of Operations Consolidated net sales decreased due to the European business divestiture, with varied segment performance, increased restructuring, and a net loss on business sales year-to-date Consolidated Results of Operations | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Net sales | $3,993 million | $4,926 million | (18.9)% | $12,471 million | $14,367 million | (13.2)% | | Gross margin | $643 million | $799 million | (19.5)% | $1,910 million | $2,378 million | (19.7)% | | Gross margin percentage | 16.1% | 16.2% | (0.1) pp | 15.3% | 16.6% | (1.3) pp | | Selling, general and administrative | $395 million | $473 million | 16.5% | $1,266 million | $1,436 million | 11.8% | | Restructuring costs | $8 million | $5 million | (60.0)% | $81 million | $14 million | (478.6)% | | Loss (gain) on sale and disposal of businesses | $(32) million | $46 million | nm | $260 million | $286 million | (9.1)% | | Net earnings (loss) available to Whirlpool | $109 million | $83 million | 31.3% | $69 million | $(10) million | nm | - Consolidated net sales decreased primarily due to the divestiture of the European major domestic appliances business[149] - The decrease in consolidated gross margin percentage was primarily driven by volume and unfavorable product price/mix, partially offset by cost productivity[150] MDA North America MDA North America experienced a decrease in net sales and EBIT for both the three and nine months ended September 30, 2024, primarily due to unfavorable product price/mix - Net sales decreased 4.3% for the three months and 6.0% for the nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to unfavorable product price/mix[153] - EBIT decreased for both the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to unfavorable product price/mix[154] - EBIT margin was 7.3% (3M 2024) vs 9.2% (3M 2023) and 6.4% (9M 2024) vs 9.8% (9M 2023)[154] MDA Latin America MDA Latin America reported increased net sales and EBIT for both the three and nine months ended September 30, 2024, driven by increased volume, despite unfavorable foreign currency and product price/mix impacts - Net sales increased 0.4% for the three months and 7.6% for the nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by increased volume[155] - EBIT increased for both the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by increased volume[156] - EBIT margin was 6.9% (3M 2024) vs 6.2% (3M 2023) and 6.8% (9M 2024) vs 5.7% (9M 2023)[156] MDA Asia MDA Asia achieved increased net sales and EBIT for both the three and nine months ended September 30, 2024, primarily due to increased volume and favorable product price/mix - Net sales increased 9.1% for the three months and 9.4% for the nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by increased volume and favorable product price/mix[157] - EBIT increased for both the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by increased volume and favorable product price/mix[158] - EBIT margin was 2.9% (3M 2024) vs 2.3% (3M 2023) and 4.6% (9M 2024) vs 3.1% (9M 2023)[158] SDA Global SDA Global's net sales decreased for the three months but increased for the nine months ended September 30, 2024 - Net sales decreased 3.0% for the three months but increased 3.6% for the nine months ended September 30, 2024, compared to the same periods in 2023[160] - EBIT decreased for the three months but increased for the nine months ended September 30, 2024, compared to the same periods in 2023[161] - EBIT margin was 14.2% (3M 2024) vs 18.2% (3M 2023) and 15.4% (9M 2024) vs 14.7% (9M 2023)[161] MDA Europe The MDA Europe business was deconsolidated as of April 1, 2024, following its contribution to Beko Europe - MDA Europe business was deconsolidated as of April 1, 2024[164] - No net sales or EBIT were reported for MDA Europe during the second or third quarter of 2024[164] Selling, General and Administrative Consolidated SG&A expenses decreased for both three and nine months ended September 30, 2024, primarily due to the European business disposal - Consolidated selling, general and administrative expenses decreased for the three and nine months ended September 30, 2024, compared to the same periods in 2023[165] - The decrease was primarily due to the disposal of the European major domestic appliance business on April 1, 2024[165] SG&A as % of Net Sales by Segment | Segment | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | MDA North America | 7.2% | 6.8% | 7.5% | 7.3% | | MDA Latin America | 8.9% | 9.0% | 8.9% | 9.5% | | MDA Asia | 12.0% | 10.5% | 10.2% | 10.0% | | MDA Europe | nm | 10.6% | 11.1% | 10.0% | | SDA Global | 17.7% | 16.3% | 21.6% | 21.6% | | Consolidated | 9.9% | 9.6% | 10.2% | 10.0% | Restructuring Restructuring charges significantly increased for both the three and nine months ended September 30, 2024, compared to the prior year Restructuring Charges | Period | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $8 million | $5 million | | Nine Months Ended Sep 30 | $81 million | $14 million | - For the full year 2024, the company expects to incur approximately $85 million of restructuring charges, substantially all of which will result in cash settlement[167] (Gain) Loss on Sale and Disposal of Businesses Whirlpool recorded a $32 million gain on business sales for Q3, but a $260 million loss year-to-date, mainly from European MDA divestiture adjustments (Gain) Loss on Sale and Disposal of Businesses | Period | 2024 | 2023 | | :-------------------------------- | :------------- | :------------- | | Three Months Ended Sep 30 | $(32) million (gain) | $46 million (loss) | | Nine Months Ended Sep 30 | $260 million (loss) | $286 million (loss) | - Recorded an adjustment of $2 million (3M) and $294 million (9M) related to the European disposal group, contributing to a total loss of $1.9 billion for the transaction[168] - Recorded a gain of approximately $34 million during the third quarter of 2024 related to the sale of the Brastemp-branded water filtration subscription business[169] Interest and Sundry (Income) Expense Net interest and sundry expense decreased for both three and nine months ended September 30, 2024, primarily due to lower reserves for legacy EMEA legal matters - Net interest and sundry expense decreased for the three and nine months ended September 30, 2024, compared to the same prior year periods[170] - The decrease for the nine months ended is primarily due to reserves for legacy EMEA legal matters recorded in the prior year[170] Interest Expense Interest expense remained relatively stable for the three months ended September 30, 2024, but increased for the nine-month period compared to the prior year Interest Expense | Period | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $92 million | $95 million | | Nine Months Ended Sep 30 | $275 million | $259 million | Income Taxes Income tax expense decreased for the three months and became a benefit for the nine-month period, mainly due to lower earnings and tax benefits from legal entity restructuring Income Tax Expense (Benefit) | Period | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Three Months Ended Sep 30 | $45 million | $86 million | | Nine Months Ended Sep 30 | $(85) million | $268 million | - The decrease in tax expense (benefit) is primarily due to an overall lower level of earnings and tax benefits related to the completion of legal entity restructuring projects in connection with the disposal of the European major appliance business, partially offset by associated valuation allowances[172] Other Information Whirlpool continues to monitor global economic uncertainty and its impact on demand and financial performance - The company continues to monitor significant global economic uncertainty to assess the outlook for demand for its products and the impact on its business and overall financial performance[173] - Maytag and InSinkErator trademarks continue to be at risk, but none of the reporting units or other indefinite-lived intangible assets are presently at risk for future impairment[173] Financial Condition and Liquidity Whirlpool aims to finance its business through operating cash flow and a mix of long-term and short-term debt, maintaining strong liquidity - Objective is to finance the business through operating cash flow and an appropriate mix of long-term and short-term debt, diversifying maturity structure to reduce liquidity risk[174] - Short-term potential uses of liquidity include funding business operations, ongoing capital spending, debt repayment, and returns to shareholders[176] - Cash and cash equivalents totaled approximately $1.1 billion at September 30, 2024[177] - Cash held by foreign subsidiaries is generally intended for permanent reinvestment to finance operational activities and future foreign investments[177] - Total committed credit facilities were approximately $5.2 billion at September 30, 2024, including a $3.5 billion revolving credit facility and a $1.5 billion term loan[187] - Notes payable outstanding were $609 million at September 30, 2024, primarily commercial paper[179] Sources and Uses of Cash (9 Months Ended Sep 30) | Metric | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Cash provided by (used in) operating activities | $(271) million | $(322) million | | Cash provided by (used in) investing activities | $(466) million | $(343) million | | Cash provided by (used in) financing activities | $222 million | $(203) million | | Net change in cash and cash equivalents | $(583) million | $(835) million | - Quarterly dividend of $1.75 per share on common stock was approved for August 19, 2024, and October 15, 2024[189] - Approximately $363 million outstanding under off-balance sheet arrangements (bank guarantees, letters of credit, surety bonds) at September 30, 2024[190] Non-GAAP Financial Measures Whirlpool uses non-GAAP measures like ongoing EBIT and free cash flow to clarify underlying business performance, with reconciliations provided - Non-GAAP measures include Earnings before interest and taxes (EBIT), EBIT margin, Ongoing EBIT, Ongoing earnings per diluted share, Ongoing EBIT margin, Sales excluding foreign currency, Free cash flow, and Adjusted effective tax rate[191] - These measures provide meaningful information to assist investors in understanding financial results and assessing future performance by excluding items not indicative of ongoing operations[194] Ongoing Earnings Before Interest & Taxes (EBIT) Reconciliation (3 Months Ended Sep 30) | Metric | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Earnings (loss) before interest & taxes | $251 million | $266 million | | Restructuring expense | $8 million | $0 | | Impact of M&A transactions | $(26) million | $56 million | | Ongoing EBIT | $233 million | $322 million | Ongoing Earnings Per Diluted Share Reconciliation (3 Months Ended Sep 30) | Metric | 2024 | 2023 | | :-------------------------------- | :----- | :----- | | Earnings (loss) per diluted share | $2.00 | $1.53 | | Impact of M&A transactions | $(0.47) | $1.02 | | Restructuring expense | $0.14 | $0 | | Income tax impact | $(0.10) | $0.34 | | Normalized tax rate adjustment | $1.86 | $2.56 | | Ongoing earnings per diluted share | $3.43 | $5.45 | Free Cash Flow Reconciliation (9 Months Ended Sep 30) | Metric | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Cash provided by (used in) operating activities | $(271) million | $(322) million | | Capital expenditures | $(315) million | $(338) million | | Free cash flow | $(586) million | $(660) million | - The Q3 2024 adjusted tax rate was (32)% (vs GAAP 25%), and the full-year 2024 expected adjusted tax rate is (18)-(22)% (vs GAAP 65%), primarily due to updated legal entity restructuring impacts[204] Forward-Looking Perspective Whirlpool's 2024 full-year outlook projects GAAP EPS of ~$0.50, an adjusted tax rate of (18)-(22)%, and $500 million in free cash flow 2024 Full-Year Outlook | Metric | 2024 Current Outlook | | :-------------------------------- | :------------------- | | Estimated GAAP earnings per diluted share | ~$0.50 | | Estimated GAAP tax rate | ~65% | | Estimated adjusted tax rate (non-GAAP) | (18)-(22)% | Industry Demand Outlook by Segment (2024) | Segment | 2024 Outlook | | :-------------------------------- | :----------- | | MDA North America | Flat | | MDA Latin America | 5-7% | | MDA Asia | 4-6% | | SDA Global | Flat | | MDA Europe (Q1 Actuals) | (1)% | Cash Flow Projections (2024) | Metric | 2024 Current Outlook | | :-------------------------------- | :------------------- | | Cash from operating activities | ~$1,050 million | | Free cash flow | ~$500 million | | Restructuring cash outlays | ~$80 million | | Capital expenditures | ~$550 million | Other Matters Whirlpool highlights ongoing legal contingencies, extended antidumping duties, and continued raw material inflation and supply chain volatility impacts - Unfavorable outcomes in legal proceedings could have a material adverse effect on financial statements[212] - The antidumping order covering certain large residential washers from Mexico was extended for an additional five years in September 2024[213] - Expects continued impact from raw material and input cost inflation, and fluctuations in logistics availability, timing, and costs due to global economic uncertainty and conflicts (e.g., Israel-Palestinian, Red Sea)[214] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to Whirlpool's exposures to market risk since December 31, 2023 - No material changes to market risk exposures since December 31, 2023[215] Item 4. Controls and Procedures Whirlpool's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024 - Disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2024[217] - There were no material changes in internal control over financial reporting during the most recent quarter[217] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is cross-referenced to Note 6 of the Consolidated Condensed Financial Statements - Information with respect to legal proceedings can be found under the heading "Commitments and Contingencies" in Note 6 to the Consolidated Condensed Financial Statements[219] Item 1A. Risk Factors No material changes in risk factors have occurred since those disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been no material changes in risk factors from those disclosed in Part I, Item 1A to the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[220] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Whirlpool repurchased 455,952 shares for approximately $50 million during the nine months ended September 30, 2024, with $2.5 billion remaining authorized - The Board of Directors authorized a share repurchase program of up to $2 billion on April 19, 2021, with an additional $2 billion authorized on February 14, 2022[221] - During the nine months ended September 30, 2024, 455,952 shares were repurchased at an aggregate price of approximately $50 million[221] - Approximately $2.5 billion in remaining funds were authorized under this program at September 30, 2024[221] - No shares were repurchased in July, August, or September 2024[221] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[222] Item 4. Mine Safety Disclosures This item is not applicable to Whirlpool Corporation - Not applicable[223] Item 5. Other Information The company reported no other information for this item - None[223] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and XBRL-related documents - Includes Certifications of Chief Executive Officer (Exhibit 31.1) and Chief Financial Officer (Exhibit 31.2) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Certifications pursuant to 18 U.S.C. Section 1350 (Exhibit 32.1)[225] - Includes various Inline XBRL Taxonomy Extension Documents (Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase)[225] SIGNATURES Signatures The report was duly signed on behalf of Whirlpool Corporation by James W. Peters, Executive Vice President and Chief Financial and Administrative Officer, on October 24, 2024 - The report was signed by James W. Peters, Executive Vice President and Chief Financial and Administrative Officer, on October 24, 2024[228]