Yahoo Finance Whirlpool Corp (WHR) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...
Net Sales: Declined approximately 3% in the quarter.
Ongoing Earnings Per Share (EPS): Reported at $1.78.
Ongoing EBIT Margins: Stood at 4.3%, with a non-inclusive Europe margin of approximately 5.5%.
Free Cash Flow: Negatively impacted by nonrecurring cash outflows of approximately $250 million to $300 million related to the MDA Europe business.
Dividends: Continued with a dividend of $1.75 per share paid in the first quarter, marking the 69th consecutive year of dividends.
Cost Takeouts: Achieved $100 million of year-over-year cost takeout in the first quarter, trending towards the lower end of a $300 million to $400 million range for the year.
MDA North America EBIT Margins: Delivered 5.6% for the quarter.
MDA Latin America Net Sales Growth: 8% excluding currency, with EBIT margins expanding to nearly 8%.
MDA Asia Revenue: Down 2% excluding currency, with margin expansion to 4.6%.
SDA Global Net Sales Growth: Approximately 7 points excluding currency, with 18% EBIT margins.
Full Year Guidance: Reaffirmed ongoing EPS of $13 to $15 and free cash flow of $550 million to $650 million.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the impact of the 5% promotional price increase in North America on market share and volume? A: Marc Robert Bitzer, Whirlpool Corporation - Chairman, President & CEO, explained that the price increase affects about 70% of their North American business, excluding builder-related programs. He anticipates a 2% to 3% net P&L impact from the increase, building throughout the quarters. Bitzer expressed confidence in maintaining market share, attributing this to their strong product pipeline and distribution expansion.
Q: What are the main factors contributing to the slower start in North America, and how do you plan to address them? A: James W. Peters, Whirlpool Corporation - Executive VP, CFO, and President of Whirlpool Asia, noted that volume was slightly weaker than expected, costs were higher due to sticky inflation, and the promotional environment was intense. To address these issues, Whirlpool plans to implement incremental cost actions and has already announced a promotional price increase.
Q: How will the Arcelik transaction impact Whirlpool's financials, specifically regarding stranded costs and future margins? A: James W. Peters mentioned that most costs associated with the Arcelik transaction were transferred with the business, minimizing stranded costs. The transaction is expected to remove the dilutive EMEA business from Whirlpool's portfolio, which should structurally improve margins starting in 2025.
Q: What is the expected impact of the promotional price increase on Whirlpool's revenue and earnings in Q2 and the second half of the year? A: Marc Robert Bitzer stated that the price increase should lead to a 1 point net P&L impact in Q2 and similar increments subsequently, with an overall expectation of 2% to 3% net P&L impact. This adjustment is part of Whirlpool's strategy to manage promotional investments more effectively, given the limited discretionary demand.
Q: Can you provide more details on the specific elements of supply chain-related inflation that are considered sticky and how widespread these are in the industry? A: Marc Robert Bitzer described the sticky inflation as relating to logistics costs and certain strategic components, which are common across the industry. He noted that these costs are remnants of broader cost inflation experienced in the previous year.
Q: How does Whirlpool plan to manage its promotional strategies in light of the new price increases and market conditions? A: Marc Robert Bitzer emphasized that Whirlpool's promotional pricing adjustments reflect the value of their products and are aligned with their strategy to participate in value-creating promotions. He expressed confidence in the effectiveness of these adjustments, even in a competitive market environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
