Q2 2025 Whirlpool Corp Earnings Call

Scott Cartwright: Joining me today are Mark Bitzer, our Chairman and Chief Executive Officer, and Jim Peters, our Chief Financial and Administrative Officer.

Scott Cartwright: Our remarks today track with a presentation available on the investor section of our website at WhirlpoolCorp.com.

Good morning, and welcome to Whirlpool Corporation's second quarter 2025 earnings call. Today's call is being recorded. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer, and Jim Peters, our Chief Financial and Administrative Officer.

Scott Cartwright: Before we begin, I want to remind you that as we conduct this call, we will be making forward-looking statements to assist you in better understanding Whirlpool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K, 10-Q, and other periodic reports. We also want to remind you that today's presentation includes the non-GAAP measures outlined in further detail at the beginning of our earnings presentation. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from our ongoing business operation.

Our remarks today track with a presentation available on the Investor section of our website at whirlpoolcorp.com.

Before we begin, I want to remind you that as we conduct this call, we will be making forward-looking statements to assist you in better understanding Whirlpool Corporation's future expectations.

Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K, 10-Q, and other periodic reports.

Scott Cartwright: We also think the adjusted measures will provide you with a better baseline for analyzing trends and our ongoing business operations.

We also want to remind you that today's presentation includes the non-gaap measures outlined in further. Detail, at the beginning of our earnings presentation, we believe these measures are important indicators of our operations. As they exclude items that may not be indicative of results from our ongoing business operations.

Scott Cartwright: Listeners are directed to the Supplemental Information Package posted on the Investor Relations section of our website for the reconciliation of non-GAAP items to the most directly comparable GAAP measure.

We also think the adjusted measures will provide you with a better baseline for analyzing trends and our ongoing business operations.

Scott Cartwright: At this time, all participants are in listen-only mode. Following our prepared remarks, the call will be open for analyst questions. As a reminder, we ask that participants ask no more than two questions.

Listeners are directed to the supplemental information package posted on the investor relations section of our website for the reconciliation of non-gaap items to the most directly comparable, gaap measures.

At this time, all participants are in listen-only mode.

Marc Bitzer: With that, I'll turn the call over to Mark. Thanks Scott, and good morning everyone. As expected, we navigated the challenging second quarter and continue to operate in an increasingly complex external environment. The macroeconomic uncertainty, marked by elevated interest rates and evolving trade policies, negatively impacted consumers. In particular, the weakness of consumer sentiment not only suppressed demand, but also impacted itself as we continue to see consumers choosing to mix into low-end Furthermore, with the recent delays in tariff implementation, Asian competitors are not yet experiencing the full cost of tariffs and have continued to increase their imports ahead of a tariff.

Following our prepared remarks, the call will be open for analyst questions. As a reminder, we ask that participants ask no more than 2 questions.

With that, I'll turn the call over to Mark.

Thanks God and good morning everyone. As expected, we navigated the challenging second quarter and continue to operate in an increasingly complex external environment.

The macroeconomic uncertainty marked by elevated, interest rates and evolving trade policies, negatively impacted consumer sentiment.

In particular weakness of consumer sentiment, not only suppressed demand but also impacted itself. As we continue to see consumers, choosing to mix into lower end products,

Marc Bitzer: In fact, we estimate that during the first half of this year, the amount of Asian appliance imports will approach the highest level on record. Needless to say, that this preloading has created significant short-term disruption, adding to the promotional intensity throughout the second quarter. We are well positioned to win over time, and are confident these effects are temporary in nature. However, it has become clear that they will extend well into the third quarter, putting pressure on short-term margin expansion. Despite these macro challenges, we still delivered sequential net sales growth across all segments in the second quarter and very strong results in our SDA global business driven by our exciting new product.

Furthermore, with recent delays in tariff implementation, Asian competitors are not yet experiencing the full cost of tariffs and have continued to increase imports ahead of the tariffs.

In fact, we estimate that during the first half of this year, the amount of Asian appliance imports will approach the highest level on record.

Needless to say that this pre-loading has created significant short-term disruption adding to the promotional intensity throughout the second quarter.

We are well positioned to win over time and are confident. We affect our temporary nature.

Marc Bitzer: Given the prolonged loading impact by competitors and the lack of consumer confidence in the marketplace, we are updating our four-year guide.

However, it has become clear that the pressures will extend well into the third quarter, putting pressure on short-term margin expansion. Despite these macro challenges, we still delivered sequential net sales growth across all segments in the second quarter and very strong results in our SDA Global business, driven by our exciting new products.

Marc Bitzer: As we expect the full impact of tariffs to kick in later this year and these temporary negative effects to subside, we are confident that we will see meaningful improvement in the MDA North American business heading into next year. Our perspective has not changed that Whirlpool will be a net beneficiary from this new tariff policy. We're structurally positioned to win in this environment and believe we're operating from a position of strength driven by a strong domestic footprint.

Given the prolonged loading impact by competitors and the lack of consumer confidence in the marketplace, we are updating our 40 year guidance.

As we expect the full impact of tariffs to kick in later this year and these temporary negative effects to subside, we are confident that we will see meaningful improvement in the MDA in North American business heading into next year.

Our prospective has not changed that whoo will be a net beneficiary from these new tariff policies.

Marc Bitzer: Irrespective of the external challenges, we will stay focused on what we control. We successfully implemented pricing actions, we structurally drove cost out of our business, and we strengthened our boundaries with our recent debt refinement.

Where structurally positioned to win in this environment and believe we're operating from a position of strength driven by a strong domestic footprint.

Marc Bitzer: Putting it all together, our investment case remains as strong as ever, and we see a credible pathway for improvement in our results. One, we are excited about the extensive portfolio of new products we're introducing this year, the largest number in more than a decade. Two, we are a clear beneficiary of structural shifts in trade policy. And three, our leadership position with U.S. homebuilders and our deep relationship with national accounts position us to benefit from eventual recovery in the U.S. housing market.

Irrespective of the external challenges, we will stay focused on what we control, which successfully implemented pricing actions. We structurally drove costs out of our business, and we strengthened our boundary with our recent debt refinancing.

Putting it all together. Our investment case remains as strong as ever. And we see a credible pathway for improvement in our results 1. We are excited about the extensive portfolio of new products. We introducing this year, the largest number in more than a decade.

Marc Bitzer: Whirlpool is well-positioned to deliver sustained long-term value, and we have every confidence we will do so.

if you ask home builders and now deep relationship with national account position as to benefit from eventual recovery in the US housing market,

Marc Bitzer: Turning to slide six, I will provide an overview of our second quarter results. Negative consumer sentiment that impacted global industry demand in the second quarter led to a 3% decline in net sales excluding currency. Despite the challenging demand environment, we continue to see strong growth in our SDA global market. Global EBIT margins held steady year-over-year at 5.3%, despite significant currency headwinds primarily from a weakening Brazilian real. Our free cash flow was unfavorable versus prior year by approximately $140 million, driven by the seasonal inventory bill. Ultimately, we delivered ongoing earnings per share of $1.34, which was negatively impacted by approximately $0.35 from a non-cash loss associated with our minority interest in Betco Europe CDB.

is well, positioned to deliver sustained long-term value and we have every confidence we will do so

Turning to slide 6, I will provide an overview of our second quarter results.

Negative consumer sentiment that impacted Global industry demand in the second quarter led to a 3% decline in net sales excluding currency.

Despite the challenging demand environment, we continue to see strong growth in our SDA global business.

Global e bit. Margins held steady year-over-year at 5.3% despite significant currency headwinds primarily from a weakened in Brazilian rail.

Our free cash flow was unfavorable versus prior year by approximately 140 million dollars driven by the seasonal inventory bills.

Marc Bitzer: Turning to slide 7, I will provide an overview of our second quarter ongoing EBIT margin Price mix favorably impacted margin by 25 basis. This was slightly below our expectations as a preloading of Asian imports sustained an intense promotional environment. Additionally, weakened consumer confidence pushed Mixdown further in an environment that was already largely replacement. As expected, our cost takeout actions delivered margin expansion of 100 basis points year over year, led by our continued manufacturing and supply chain efficiencies and our organizational simplification. As expected, raw materials were essentially flat. In the second quarter, we began to experience the increased costs associated with tariffs at approximately 50 basis points.

Ultimately, we delivered ongoing earnings per share of $1.34, which was negatively impacted by approximately $0.35 from a non-cash loss associated with our minority interest in Becco Europe's CD.

Turning to slide 7, I will provide an overview of our second quarter: ongoing EBIT margin drivers.

Price, mix favorably impacted margin by 25 basis points.

This was slightly below our expectations as a preloading of Asian imports, sustained and intense promotional environments.

Additionally, we can consumer confidence push mixed down further. In an environment that was already larger replacement driven.

As expected, our cost takeout actions delivered margin expansion of 100 basis points year-over-year led by our continued manufacturing and supply chain efficiencies and our organizational simplification actions.

As expected raw materials were essentially flat.

Marc Bitzer: While overall marketing and technology was flat versus prior year, we have continued to invest in our new product. In the second quarter, Brazilian Real and Mexican Peso depreciated compared to prior year, resulting in an unfavorable margin impact of 50 pesos. We also experienced approximately $90 million of unfavorable non-cash impact from our minority stake in Beko Europe. Ultimately, we maintain flat margins year-over-year despite the challenging global macroenvironment.

In the second quarter, we began to experience the increased costs associated with tariffs at approximately 50 basis points.

While overall marketing and Technology was flat versus prior year, we have continued to invest in our new products.

And the second quarter, with the Brazilian real and Mexican peso depreciating compared to prior periods, resulted in an unfavorable margin impact of 50 basis points.

We also experienced approximately 90 million dollars of unfavorable non-cash impact from our minority stake in beco Europe, BV,

Jim Peters: And now I will turn it over to Jim to review the second quarter's segment. Thanks, Mark. Good morning, everyone. Turning to slide eight, I'll review the second quarter results for our MDA North America Net sales were down 5% year over year as we continue to experience a challenging macro environment in the U.S. Consumer sentiment remains weak as a result of the economic uncertainty and evolving tariff policy. As Mark stated, the significant preloading of Asian imports from foreign competitors due to the delay in tariff implementation caused the promotional intensity to persist. In the first half, we saw Asian imports up over 20% while the industry was down despite being propped up by the inventory loading.

Ultimately, we maintain flat margins year-over-year despite the challenging Global macro environment.

And now I will turn it over to Jim to review the second quarter segment results.

Thanks, Mark. Good morning everyone. Turning to slide. 8, I'll review the second quarter results for our MDA, North America business.

Net sales were down 5% year-over-year as we continue to experience a challenging macro environment. In the U.S., consumer sentiment remains weak as a result of economic uncertainty and evolving tariff policies.

As Mark stated the significant pre-loading of Asian, imports from foreign competitors, due to the delay in tariff, implementation caused the promotional intensity to persist.

Jim Peters: All this is effectively delaying the impact of tariffs on appliances being imported by our foreign competitors well into the second half of this year. Despite these challenges, MDA North America delivered an EBIT margin of approximately 6%, with strong cost takeout offset by lower volume and unfavorable product mix.

In the first half, we saw Asian Imports up over 20%, while the industry was down, despite being propped up by the inventory, loading.

Jim Peters: While we continue to experience a choppy macro environment, we are confident in our growth potential for North America.

All this is effectively delaying the impact of tariffs on appliances being imported by our foreign competitors. Well, into the second half of this year, despite these challenges MDA, North America delivered. An ebit margin of approximately 6% with strong cost takeout offset by lower volume, and unfavorable product mix.

Jim Peters: Turning to slide 9, I'll review the results for our MDA Latin America business. In the second quarter, MDA Latin America experienced a net sales decline of 1% year over year, excluding currency, with implemented pricing actions offset by double-digit negative consumer demand in Mexico. The segment delivered a solid EBIT margin of 6% with favorable price mix and cost actions driving approximately 20 basis points of expansion year over year.

While we continue to experience a choppy macro environment, we are confident in our growth potential for North America.

Turning to slide 9, I'll review the results for our MDA Latin America business.

Jim Peters: Turning to slide 10, I'll review the results for our MDA Asia business. In the second quarter, MDA Asia saw a net sales decline of 4% year-over-year excluding currency. driven by industry decline, partially offset by continued strong share gates.

In the second quarter MDA, Latin America experienced a net sales decline of 1% year-over-year, excluding currency. Implemented pricing actions were offset by double-digit negative consumer demand in Mexico. The segment delivered a solid EBIT margin of 6%, with a favorable price mix and cost actions driving approximately 20 basis points of expansion year-over-year.

To slide 10, I'll review the results for our MDA Asia business.

In the second quarter. MDA Asia saw a net sales decline of 4% year-over-year, excluding currency.

Jim Peters: The segment delivered over 7% EBIT margin in the quarter with 90 basis points of year over year margin expansion from continued cost taken. Our Asia business continues to operate well, overcoming the geopolitical tensions in the second quarter and delivering substantial margin expansion and share gain.

Driven by industry decline. Partially offset by continued strong. Share Gates the segment delivered over 7%. Ebit margin in the quarter with 90 basis points of year-over-year, margin expansion from continued cost takeout

Jim Peters: Turning to slide 11, I'll review the results of our SDA Global Biz. The segment delivered another strong quarter with net sales growth of 8% year-over-year, driven by direct-to-consumer sales growth despite a declining industry in North America. We continue to see growth and margin expansion from our recent product launches in high-growth categories, including our semi- and fully-automatic espresso machines.

Tensions in the second quarter and delivering substantial margin expansion and share gains.

Jim Peters: The SDA global business is well-positioned to continue to deliver significant growth in the second half of the year, which typically accounts for two-thirds of annual demand.

Marc Bitzer: Now I will turn the call over to Mark to provide an overview of North America's growth catalyst. Thanks, Jim. Turning to slide 13, we outline why North America is well positioned to unlock significant value creation. As mentioned before, there are three fundamental components that serve as catalysts for growth of our North America business. First, we strengthen our leading brand and product portfolio with over 30% of our North American products transitioning to new products in 2025. For context, this is our largest product portfolio refresh in over a decade. Our trade customers have responded very positively to the new product innovations we are launching this year, resulting in gaining a significant number of new floors.

Turning to slide 11, I'll review the results of our SDA Global business. The segment delivered, another strong quarter with net sales, growth of 8% year-over-year driven by direct to Consumer sales growth, despite a declining industry in North America, we continue to see growth and margin expansion from our recent product. Launches in high growth categories including our semi and fully automatic espresso machines. The SDA Global business is well positioned to continue to deliver significant growth in the second half of the year, which typically accounts for 2/3 of annual demand. Now, I will turn the call over to Mark to provide an overview of North America's growth catalysts.

Thanks Jim turning to slide 13. We outline why North America is, well, positioned to unlock significant value creation.

As mentioned before, there are three fundamental components that serve as catalysts for the growth of our North America business.

First, we strengthen our leading brand and product portfolio with over 30% of our North American Products transitioning to new products in 2025.

For context, this is our largest product portfolio refresh in over decades.

Marc Bitzer: While the new product launches are taking place throughout 2025, we expect to see the biggest impact from our new KitchenAid Suite launch, which starts shipping late September. Secondly, our strong U.S.-based manufacturing footprint positions us as net winners of a new tariff and trade policy. In an industry where most competitors are largely importers of major domestic appliances, 8 in 10 products Whirlpool sells in the U.S. are made in the U.S. Furthermore, the majority of our raw materials and components are also domestically sourced, with over 96% of the steel used in our U.S. factories sourced from the U.S.

Our trade customers have responded, very positively to the new product Innovations. We're launching this year. Resulting in gaining a significant number of new floor spots.

We have new product launches taking place throughout 2025. We expect to see the biggest impact from our new KitchenAid Sweet launch, which starts shipping in late September.

Secondly, our strong U.S.-based manufacturing footprint positions us as net winners of the new tariff and trade policies.

In an industry where most competitors are largely importers of major domestic appliances, 8 and 10 products will sell them. Us are made in the US.

Marc Bitzer: With our large domestic production footprint, we are uniquely positioned in the appliance industry and the current economic landscape. Based on the announcement, in effect as of today, we expect that foreign competitors will begin to experience the full implications of tariffs on appliances as they sell down their preloaded inventory in the back half of 2025. Lastly, turning to the US housing market, we continue to see strong underlying fundamentals that point to a likely multi-year recovery. The industry has been experiencing multi-decade lows in existing home sales as mortgage rates have remained elevated. This is also shaping the profile of major appliance demand, which has seen discretionary demand contract by 10 points as existing home sales tend to be the primary driver of discretionary demand.

Furthermore, the majority of our raw materials and components are also domestically sourced if over 96% of a steel use in our us factories, sourced from us,

Before our largest domestic production footprint, we are uniquely positioned in the appliance industry and the current economic landscape.

Based on the announcements in effect as of today. We expect that foreign competitors will begin to experience the full implications of tariffs and appliances as they sell down, their preloaded inventory. In the back, half of 2025,

Lastly, turning to the U.S. housing market, we continue to see strong underlying fundamentals that point to a likely multi-year recovery.

The industry has been experiencing multi-decade lows in existing home sales, as mortgage rates have remained elevated.

Marc Bitzer: While we're not assuming a housing market recovery in 2025, we believe in the midst to long-term fundamentals and our position to capitalize on this opportunity.

This is also shaping the profile of Major Appliance demand which has seen discretionary demand contract by 10 points. As existing home sales, tend to be the primary driver of discretionary demand,

Marc Bitzer: Simply put, there is no company better positioned to benefit from eventual housing market recovery than Whirlpool.

Marc Bitzer: Now turning to slide 14, I would like to highlight some of the exciting new products. Let me start with our innovative downdraft induction cooktops from JennAir. As you might know, the downdraft cooktop is the heritage product of a JennAir Super Premium. What is new is the unique combination of induction technology with the most advanced and most powerful downdraft system, which we developed jointly with a leading European downdraft company. Apart from the obvious benefits of a downdraft, like faster, more effective extraction, and an unobstructed view, this product can be installed without a duct.

Why we're not assuming a housing market recovery in 2025, we believe in the mid to long-term fundamentals and our position to capitalize on this opportunity. Simply put there is no company. Better position to benefit from eventual housing market recovery than warpoole

now, turning to slide 14, I would like to highlight some of the exciting new product launches

Let me start with our innovative downdraft induction cooktops from January.

As you might know, the downdraft cooktop is the heritage product of a JennAir, a super premium brand. What is new is the unique combination of induction technology with the most advanced and most powerful downdraft system, which we developed jointly with a leading European downdraft company.

Marc Bitzer: offers a great replacement demand. Based on what we learned from Europe that this product is leading in the marketplace by value, we believe there's significant growth opportunity in the U.S. as well.

Apart from your office benefits of a downdraft like faster, more effective extraction and an unobstructed view, this product can be installed without a duct which offers a great replacement demand opportunity.

Marc Bitzer: On slide 15, you see a picture of our all-new KitchenAid suite, which starts shipping end of September.

Based on what we learned from Europe, this product is leading in the marketplace by value. We believe there's a significant growth opportunity in the U.S. as well.

Marc Bitzer: To put this in context, the last time we introduced an all-new KitchenAid suite was in 2015, and this line of products represents over $1 billion of business. Beyond the modern and advanced design, this line will be unique in its personalization opportunities. The personalization comes from a combination of interchangeable colors, handles, and knobs, which actually can be changed at the customer's home. We introduced this new line to the design and builder community a few months ago, and the response has been remarkably strong, with hundreds of new floor spots.

On slide 15. You see a picture of our all new KitchenAid Suite which starts shipping end of September.

To put this in context. The last time we introduced an all new kitchen Suite was in 2015 and this line of products represents a 1 billion dollars of business.

Beyond the modern and advanced design, this line will be unique in its personalization opportunity.

The personalization comes from a combination of interchangeable colors. Handles and knobs, which actually can be changed at the customer's home.

Marc Bitzer: Lastly, on slide 16, we'll show you our new Maytag Pets Top Load Laundry. You might recall that our PET-PRO technology has been hugely successful in the top-load agitator. We're now bringing this innovation also to the impeller top-load machines, which tend to be more in the premium segment of a market. It is an industry first technology and the Maytag brand has all the credibility in getting the tough job done to launch this innovation.

We introduced this new line to the design and built a community a few months ago, and the response has been remarkably strong, with hundreds of new floor spots gained.

Upload agitator segments. We're now bringing this Innovation also to the impeller top load machines which tend to be more in the premium segment of a Marketplace.

Marc Bitzer: Turning to slide 17, we'll discuss the tariff landscape for appliance importers into the U.S. This slide summarizes the relevant tariff actions taken by the administration and illustrates the estimated tariff rates as a percentage of total product value, assuming rates as of today, and the August 1 reciprocal tariff. You can see in the table how the various tariffs, including Section 232 in steel content, Section 301 in specific components and finished goods, and the reciprocal IEPA tariffs from various countries, impact appliance imports. While the overall tariff picture is still fluid, a 44% tariff on Chinese products and a 16% tariff on Finnish goods from other Asian countries should substantially impact competitors and in turn benefit American manufacturers.

It is an industry-first technology, and the Mate brand has all the credibility in getting the top job done to launch this innovation.

Turning to slide 17, will discuss the Tariff landscape for appliance importers into the US.

This slide summarizes the relevant tariff actions taken by the administration and illustrates the estimated tariff rates, as a percent of total product value, assuming rates, as of today, and the August 1st will tariffs.

You can see in the table, however, various tariffs, including section, 232 and steal content section, 301 and specific components and finished goods and the reciprocal iipa tariffs from various countries impact. Appliance Imports.

Marc Bitzer: Slide 18 clearly shows why we believe that no matter how you look at the U.S. appliance industry, there is no other company better positioned than Whirlpool with our U.S. manufacturing footprint to navigate the straight line. As you can see, 80% of our MDMA North American products, sodium use, are produced in the U.S. This compares to the rest of the industry, excluding Whirlpool, which has only about 25% domestic product.

But the overall tariff picture still fluids of 44% tariff on Chinese products, and a 16% tariff on finished goods. From other Asian countries, should substantially impact competitors. And in turn benefit American manufacturers,

Slide 18 clearly shows why we believe that, no matter how you look at the U.S. appliance industry, there is no other company better positioned than us, with our manufacturing footprint, to navigate the straight landscape.

As you can see, 80% of our MDA North American product sodium. Our sodium products are produced in the U.S.

Marc Bitzer: We are proud to be investing in U.S. manufacturing, and we will continue to invest in the U.S., as we have for over a century. As we are only primarily domestic producers compared to our major competitors who are largely importers, we're confident that this is a new competitive advantage for Whirlpool in the new tariff landscape.

This compares to the rest of the industry. Excluding world food, which has only about 25% domestic production. We're proud to be invested in US manufacturing, and we will continue to invest in the us as we have for over a century.

Marc Bitzer: Turning to slide 19, let me review how a North American business is well positioned to benefit from an overdue housing market recovery in the U.S. Appliance demand is broken down into three main drivers. Discretionary demand, which is highly correlated to existing home sales, new home construction, and replacement demand driven by the rest purchase. The U.S. housing industry has slowed in recent years as interest rates have risen sharply, drastically impacting discretionary debt. Notably, the size of these demand drivers has shifted significantly with time frame, with replacement demand becoming a bigger portion of overall demand. While replacement demand has continued to be strong, this comes with a weaker mix relative to discretionary demand.

As we are primarily domestic producers compared to our major competitors, who are largely importers, we are competent. This is a new competitive advantage for wool in the new tariff landscape.

Turning to slide 19. Let me review how a North American Business is well, positioned to benefit from an overdue housing market recovery in the US

Appliance demand is broken down into 3. Main drivers discretionary demand which is highly correlated to existing home sales new home construction.

And replacement demand driven by the rest purchases.

The U.S. housing industry has slowed in recent years as interest rates have risen sharply, drastically impacting discretionary demand.

Notably the size of each demand drivers has shifted significantly with time frame with replacement demand, becoming a bigger portion of overall demands.

Marc Bitzer: Return of discretion and demand will bring a much stronger climate. Turning to slide 20, we show how discretion and demand is impacted by existing homes. As mentioned earlier, there is a strong correlation between discretionary demand and existing home. 2022, a rapid increase in mortgage rates slowed home sales significantly to the lowest level in 30 years. As mortgage rates begin to moderate off fatigue, we expect existing home sales to improve. Discretionary Demand has a richer mix with more built-in products and full kitchen suite sales. We expect existing home sales to be unlocked in the midterm and improve discretionary demand.

While replacement demand has continued to be strong, this comes with a weaker mix relative to discretionary demands.

The return of discretionary demand will bring a much stronger appliance mix.

Turning to slide 20 will show how discretionary demand is impacted by existing home sales.

As mentioned earlier, there is a strong correlation between discretionary demand and existing home sales in 2022. The rapid increase in mortgage rates, slowed home sales significantly to the lowest level in 30 years

As mortgage rates begin to moderate off the peak, we expect existing home sales to improve.

Marc Bitzer: On slide 21, we discuss U.S. new home construction, which has been undersupplied since the financial crisis and creates long-term upside potential for Whirlpool. There is an undersupply of U.S.

Discretionary demand has a richer mix with more built-in products and full kitchen. Suite sales, we expect existing home sales when unlocked in the midterm and improved discretionary demands,

On slide 21. We discussed us new home construction which has been under Supply since the financial crisis and creates long-term upside potential for warpoole

Marc Bitzer: housing of approximately 3 to 4 million homes. along with the rising median age of U.S. homes to over 40 years, which is the oldest housing stock in U.S. history.

There is an undersupply of US housing of approximately 3 to 4 million homes.

Marc Bitzer: Given the favorable demographics in the U.S., a multi-year improvement in new housing starts is needed to address the undersupply gap.

Along with the rising median age of U.S. homes to over 40 years, which is the oldest housing stock in U.S. history.

Marc Bitzer: Turning to slide 22, we highlight how our leading builder business is positioned to benefit from the overdue housing recovery.

Given the favorable demographics in the US, a multi-year Improvement in new housing starts is needed to address the undersupply gap.

Marc Bitzer: A few years ago, we made the conscious choice to invest in the U.S. builder business and significantly strengthen our position in this part of the sector. As a result, today we're proud to hold the number one position with national builders approaching 60% share. We also do business with eight of the top 10 builders in the U.S. Our final mile delivery capabilities, along with a breadth of our product and brand portfolio, allow us to directly serve our builders and meet their needs, a truly differentiated capability. Putting it all together, you see that we are at an inflection point in terms of our performance and our position to win in this environment.

Turning to slide 22. We highlight how our leading Builder business is positioned to benefit from the overdue housing recovery.

A few years ago, we made the conscious choice to invest in the US Builder business and significantly, strengthen our position in this part of a segment.

As a result today, we're proud to hold the number 1 position with national Builders approaching 60% share.

We also do business with 8 of the top 10 builds in the US. Our final mile delivery capabilities along with a breadth of our products and brand portfolio allows to directly serve our Builders and meet their needs. A truly differentiated capability.

Marc Bitzer: To wrap up this section, let me repeat our three catalysts for structural long-term growth in our North American business with new products, strengthening our leading brand portfolio, a unique domestic footprint, which positions us as a winner in the new trade policy. and our number one position among builders, which will provide sizable upside in the eventual housing market recovery.

Putting it all together. You see that we are at an inflection point in terms of our performance and our position to win Investments.

Our leading brand portfolio.

A unique, domestic footprint with position cells, as a winner in the new trade policy.

Jim Peters: And now I will turn it over to Jim to review our 2025 Guidance and Capital Allocation Priorities. Thanks, Mark. Turning to slide 24, I will review our updated guidance for 2025. As Mark highlighted, there continues to be considerable uncertainty in the macro environment along with short-term headwinds from the preloading of Asian appliance imports. As a result, we are updating our full year guidance to reflect this uncertainty and the timing in which we expect some of these headwinds to subside. We now target the India transaction to close around year end and therefore have included the India results from July through December 2024 back into the baseline for comparison purposes.

And our number 1 position among Builders, which will provide sizable upside in the eventual housing market recovery.

And now, I will turn it over to Jim to review our 2025 guidance and capital allocation priorities.

Thanks, Mark. Turning to slide 24, I will review our updated guidance for 2025.

As Mark highlighted there, continue to be considerable uncertainty in the macro environment along with short-term headwinds from the pre-loading of Asian Appliance Imports.

As a result, we are updating our full-year guidance to reflect this uncertainty and the timing in which we expect some of these headwinds to subside.

Jim Peters: The reset baseline excludes approximately $800 million in net sales and an approximately $9 million EBIT loss, creating a like-for-like comparison for 2025 guidance. On a like-for-like basis, 2024 net sales were approximately $15.8 billion, with an ongoing EBIT margin of approximately 5.7 percent. We expect approximately flat net sales of $15.8 billion in 2025, reflecting our strong pipeline of new products, offset by the worsening global consumer sentiment impacting demand and unfavorable currents. On a like-for-like basis, we expect an approximately flat ongoing EBIT margin of 5.7%. Pre-cash flow is expected to deliver approximately $400 million. As a reminder, the adjusted effective tax rate is expected to be 20 to 25 percent in 2025.

We now Target the India transaction to close around year end and therefore have included the India results from July through December 2024 back into the Baseline for comparison purposes.

The reset Baseline excludes approximately 800 million in net sales and an approximately 9 million ebit loss creating a like-for-like comparison for 2025 guidance.

On a like-for-like basis, in 2024, net sales were approximately $15.8 billion, with an ongoing EBIT margin of approximately 5.7%.

We expect approximately flat net sales of $15.8 billion in 2025, reflecting our strong pipeline of new products offset by the worsening global consumer sentiment impacting demand and unfavorable currency.

On a like-for-like basis, we expect an approximately flat ongoing EBIT margin of 5.7%.

Free cash flow is expected to deliver approximately $400 million.

Jim Peters: We still expect the cash tax rate to be significantly lower. We expect full year ongoing earnings per share of $6 to $8.

As a reminder, the adjusted effective tax rate is expected to be 20 to 25% in 2025, we still expect the cash tax rate to be significantly lower.

Jim Peters: Turning to slide 25, we show the drivers of our updated full year ongoing EBIT margin guide. We have updated our expectation of price mix to 25 basis points to reflect the weakening consumer sentiment impacting mix and the delays in tariffs prolonging the promotional pressure beyond what we previously anticipated. Net cost takeout reflects the expectation of delivering approximately $200 million. Transaction impacts reflects our most recent expectations on the non-cash impact of equity from affiliates related to BAYCO Europe, lowered by 25 basis points. We lowered the expected impact of incremental tariffs from 250 to 150 basis points to reflect the most current proposed tariff rate.

We expect full-year ongoing earnings per share of $6 to $8.

Turning to slide 25. We showed the drivers of our updated full year. Ongoing ebit margin guidance.

We have updated our expectation of price mix to 25 basis points. To reflect the weakening consumer, sentiment impacting mix and the delays in tariffs prolonging the promotional pressure beyond what we previously anticipated.

Net cost takeout reflects the expectation of delivering approximately 100 million transactions. Impacts reflect our most recent expectations on the non-cash impact of equity from affiliates related to beco Europe, lowered by 25 basis points.

Jim Peters: The biggest adjustment from previous expectations is most notably from China's tariff rate. We expect to offset these impacts through the cost-based pricing actions announced in the second quarter and by continuing to assess our supply sourcing strategy.

We lowered the expected impact of incremental, tariffs, from 250 to 150 basis points to reflect the most current proposed tariff rates.

The biggest adjustment from previous expectations is most notably from China's tariff rates.

Jim Peters: It is important to reiterate that these impacts represent currently announced tariffs and do not factor in any future or potential changes in trade policy.

We expect to offset these impacts through the cost-based pricing actions announced in the second quarter and by continuing to assess our supply sourcing strategy.

Jim Peters: Turning to slide 26, I will review our updated segment expectations. Globally, we now expect the total industry to be approximately flat to down 3%. In MDA North America, with the worsening consumer sentiment and pressure on discretionary demand, we expect the industry to be flat to down 3%.

It is important to reiterate that these impacts represent currently announced tariffs and do not factor in any future or potential changes in trade policy.

Turning to slide 26. I will review our updated segment expectations globally. We now expect the total industry to be approximately flat to down 3%.

Jim Peters: MDA Latin America has seen significant deterioration in Mexico and a deceleration in Brazil. Therefore, we now expect industry to be flat to down 5%.

In MDA North America, with the worsening consumer sentiment and pressure on discretionary demand, we expect the industry to be flat to down 3%.

Jim Peters: We continue to see demand improvement in India, however, behind initial expectations due to geopolitical tensions and an unusually cool summer selling season in the second quarter. We have adjusted the MBA Asia industry flat to up three percent.

MDA Latin, America has seen significant deterioration in Mexico and a deceleration in Brazil. Therefore, we now expect industry to be flat to down 5%.

We continue to see demand Improvement in India, however, behind initial expectations due to geopolitical tensions, and an unusually cool. Summer selling season in the second quarter.

Jim Peters: Finally, SDA Global continues to be impacted by discretionary demand weakness in the U.S. and Europe, resulting in the expected industry for the year to be flat to down 3%.

We have adjusted the MBA, Asia industry flat to up 3%.

Jim Peters: It is important to note that we continue to expect to deliver incremental sales growth through our new product introductions, despite the unfavorable industry. We have adjusted EBIT margin in North America to reflect the prolonged effect of tariff uncertainty and the competitor preloading negatively impacting the promotional intensity. We expect a full-year MDA North America margin of 6 to 6.5%. With unfavorable currency impacts and weakening consumer demand in Latin America, we now expect EBIT margin of approximately 7%. We now expect MDA Asia EBIT margin of approximately 5% driven by India consolidated results now being included in the full year guidance.

Finally, SDA Global continues to be impacted by discretionary, demand weakness in the US and Europe. Resulting in the expected industry for the year to be flat to down, 3%.

It is important to note that we continue to expect to deliver incremental sales growth through our new product introductions, despite the unfavorable industry.

We have adjusted ebit margin in North America, to reflect the prolonged effect of tariff uncertainty and the competitor pre-loading negatively impacting, the promotional intensity.

We expect a full year MDA. North America, margin of 6 to 6.5%.

Jim Peters: With the strength of SDA Global's direct-to-consumer growth and previous new product introductions, we now expect an increase in EBIT margin to 15.5%.

Jim Peters: Turning to slide 27, I will review our free cash flow guide. We've updated our cash earnings and other operating accounts consistent with full-year EBIT guidance. We have not changed our expectations for capital expenditures and continue to focus on delivering product excellence and investing in our U.S. manufacturing footprint. We expect to sustain our low working capital levels and do not expect a material impact.

We now expect MDA Asia EBIT margin of approximately 5%, driven by India consolidated results. Now, being included in the full year guidance, with the strength of SDA, Global's direct-to-consumer growth, and previous new product introductions, we now expect an increase in EBIT margin to 15.5%.

Turning to slide 27, I will review our free cash flow guidance.

We've updated our cash earnings and other operating accounts consistent with full-year EBIT guidance.

We have not changed our expectations for Capital expenditures and continue to focus on delivering product excellence and investing in our us, manufacturing footprint.

Jim Peters: Finally, we've updated the restructuring expectations of the previously announced organizational simplification actions to approximately $50 million. Overall, we expect free cash flow of approximately $400 million for the year.

We expect to sustain our low working capital levels and do not expect a material impact.

Finally, we've updated the restructuring expectations of the previously announced organizational simplification actions to approximately 50 million dollars.

Jim Peters: Turning to slide 28, I will review our capital allocation priority. Investing in innovative products that meet our consumers' needs is critical to driving our organic growth. We are very excited about the 100 plus new products we are launching this year. Secondly, we are committed to reducing debt levels. We continue to expect to pay down $700 million of debt in 2025, taking a significant step towards our long-term target of two times net debt leverage. Lastly, we are committed to returning cash to shareholders by funding a healthy dividend. We are confident our business is well-positioned for growth.

Overall, we expect free cash flow of approximately 400 million dollars for the year.

Turning to slide 28. I will review our Capital allocation priorities.

Investing in innovative products that meet our consumers' needs is critical to driving our organic growth.

We are very excited about the 100 plus new products we are launching this year.

Secondly, we are committed to reducing debt levels.

We continue to expect to pay down $700 million of debt in 2025, taking a significant step towards our long-term target of 2 times net debt leverage. Lastly, we are committed to returning cash to shareholders by funding a healthy dividend.

Jim Peters: However, the volatile macro environment and prolonged suppressed housing cycle have impacted our short-term results. After careful consideration with focus on our long-term value creation, we are recommending to adjust the annual dividend rate to $3.60 per share starting in the third quarter. While this decision was not taken lightly, it is critical to ensure we create the capacity on our balance sheet for future investments in the U.S. and continued focus on debt repayment. As a reminder, the dividend is approved quarterly by the Board of Directors.

We are confident our business is, well, positioned for growth. However, the volatile macro environment and prolonged suppress housing cycle have impacted our short-term results.

After careful consideration with focus on our long-term value creation, we are recommending to adjust the annual dividend rate to 3.600 cents per share, starting in the third quarter.

While this decision was not taken lightly, it is critical to ensure we create the capacity on our balance sheet for future investments in the US and continued focus on debt repayment.

Jim Peters: Turning to slide 29, we continue to strengthen our balance sheet and operate with ample liquidity. We proactively refinanced $1.2 billion of debt with five and eight-year notes at very favorable rates, with a weighted average rate of 6.3 percent.

As a reminder, the dividend is approved quarterly by the board of directors.

Turning to slide 29, we continue to strengthen our balance sheet and operate with ample liquidity.

Jim Peters: We still expect to pay down approximately $700 million of debt this year, and the cash generation from the anticipated India transaction, which has generated significant interest from large third-party investors, is targeted to close around the end of 2025. As a reminder, we have ample liquidity for our operations and financing needs as we have access to a $3.5 billion revolving credit facility.

We proactively refinanced $1.2 billion of debt with 5- and 8-year notes at very favorable rates, with a weighted average rate of 6.3%. We still expect to pay down approximately $700 million of debt this year, and the cash generation from the anticipated India transaction has generated significant.

Significant interest from large third-party investors is targeted to close around the end of 2025.

Marc Bitzer: Turning to slide 30, let me review what you heard today. While we are operating in a challenging macro cycle, we are encouraged by our progress. We continue to reduce costs from our business, launch record numbers of new products, and execute previously announced pricing actions. In North America, we're very well positioned for growth, driven by our new product innovation, significant domestic manufacturing footprint, and housing demand fundamentals that suggest a multi-year recovery is on the horizon. We continue to expect the administration's tariff policies will help level the playing field for U.S.-based producers and, in effect, make Whirlpool a net winner.

As a reminder, we have ample liquidity for our operations and financing needs, as we have access to a $3.5 billion revolving credit facility.

Turning to slide 30, let me review what you heard today.

While we are operating in a challenging macro cycle, we are encouraged by our progress. We continue to reduce costs from our business, launch record numbers of new products, and execute previously announced pricing actions.

In North America, we're very well. Positioned, for growth driven by our new product Innovation, significant domestic manufacturing footprint and housing demand fundamentals. That suggests. A multi-year recovery is on the horizon.

Marc Bitzer: Our SDA global segment delivers strong value creation as it delivers continued top line and margin expansion.

Marc Bitzer: As we move into the second half, we remain focused on the execution of what is within our control, driving structural cost takeout, implementing previously announced pricing actions, and executing on our capital allocation priorities, including organic growth, debt reduction, and funding a healthy dividend. With the right operational priorities in place, we are confident in our strategy and our ability to create long-term value.

We continue to expect the administration's tariff. Policies will help level the playing field for us-based producers and in effect make Whirlpool a net winner, our SDA, Global segment delivers, strong value creation, as it delivers continued, Topline and margin expansion

As we move into the second half, we remain focused on the execution of what is within our control.

Scott Cartwright: Now we will end our formal remarks and open it up for questions.

Driving structural cost takeout implementing. Previously announced pricing actions and executing on our Capital allocation priorities, including organic growth debt reduction and funding a healthy dividend with the right. Operational priorities in place. We are confident in our strategy and our ability to create long-term value.

Now, we will end our formal remarks and open it up for questions.

Scott Cartwright: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad.

To remind everyone in order to ask a question.

David Macgregor: Your first question comes from the line of David MacGregor from Longbow Research. Your line is open. Yes. Good morning, everyone. Good morning, David.

Press star, then the number 1 on your telephone keypad. Your first question comes from the line of David McGregor from Longbow research, your line is open,

David Macgregor: Mark, what's your best estimate of the quantity of pulled forward tariff free imported product currently on the ground and how long will it take to move that through retail? David, first of all, I admit it's difficult to exactly give an estimate, but let me give you a couple of data points. As you've seen, the market overall on a sell-in base, on a registered sell-in base, was slightly down in Q2. while at the same time, the appliance imports from Asia, if you take the year-to-date numbers, and they are significantly up. I mean, we're talking, particularly if we exclude China, more than 20% up.

Yes, good morning everyone. Thank you, David. Mark, what's your best estimate of the quantity of pulled-forward, tear-free, imported product currently on the ground, and how long will it take to move that through retail?

Seen the market overall on a sell in base, on registered selling base was slightly down in Q2.

David Macgregor: So there's a significant imbalance between the officially declared sell-in and what has been shipped from Asia. I would argue, even with declared sell-in is slightly above the actual sell-out. And we also, and we referred to this one earlier, what has been AM shipment may include some consignment stock from competitors. So it's very difficult to calibrate, but I would, and of course we don't have a June official import date, as I'm referring to the May one. As of end of May, I would have expected there's probably easily 60 to 90 days of inventory for me, for me, excess Asian imports.

While at the same time, the appliance imports from Asia. If you take the year to date numbers and they are significantly up, I mean we're talking particularly if we exclude China more than 20% up. So there's a significant imbalance between the officially declared sale in and what has been shipped from Asia. I would argue even with declared sale in is slightly above the actual sellout. Um, and we also, and we refer to this 1 earlier be, um, what has been declared is ahm shipment, may include some Consignment stock from competitors. So it's very difficult to calibrate, but I would. Um, and of course we don't have a June official import data. So I'm referring to the May 1

David Macgregor: that hopefully will flow through a system and I think hopefully will become every month less as the tariffs are taking really effect. But it has been a significant additional loading happening throughout, throughout Okay, thanks for that.

As of end of May, I would have expected. There's probably easily 6 to 90 days of inventory from a, for me excess Asian, um, Imports in there. Um, but hopefully we flow through a system, um, and I think hopefully it will become every month less as a tariffs are taking really affect. Um, but it has been a significant, um, additional loading happening throughout throughout me.

David Macgregor: I guess as a follow-up, I just wanted to ask you about the promotional calendar. And I guess at this point, you know, all the manufacturers are out with their promotional plans for the second half. What are you hearing in the way of how second half might look different from the first half?

David Macgregor: It seems as though manufacturers are backing off PMAP, support for house offers, shifting to more kind of buy more, save more type of promotional programs. Is the problem that your competitor's promotional focus has shifted to more premium products and that's cutting more into your margins? Just talk about how the second half should play out.

Okay, thanks for that. Um, I guess it's a follow-up. I just wanted to ask you about the promotional calendar and I guess at this point, you know, all the manufacturers are out with their promotional plans for the second half. What are you hearing in the way of how second half might look different from the first half? It seems, as though manufacturers are backing off, pmaps support for house offers shifting to more kind of buy more, save, more type of promotional programs.

David Macgregor: Yeah, and David, as you know, we're kind of, we typically don't give a forward-looking statement on promotion and pricing. So let me just more kind of this kind of wisdom of hindsight, including July 4th, and then you can try to read whatever. First of all, as you've seen in Q2, we significantly reduced our promotional efforts, both in duration and depth of promotion. Frankly, in Q2, we're probably quite a bit ahead of our competitors in terms of being a little bit more or less aggressive, if you want to say so. And that was simply a result that we saw.

Is is the problem that your competitors. Promotional focus is shifted to more premium products and that's cutting more into your margins. Just talk about how the second half should play out.

David Macgregor: Also, we were impacted by tariff costs and we had to adjust it. But more importantly, simply in a strong replacement-driven market, the lift you get from these promotional investments is just very little. And if you really look at the math of some of these promotions, the lift you get is to some extent even pulled forward. So you start wondering, does it purely economically make sense to have these deep investment promotion periods when the lift is just very little? And that's ultimately why we curtailed our promotional depth and duration in Q2.

Yeah. And and David as you know, we're kind of um, we typically don't give forward-looking statement on promotion on pricing. Um, so let me just more kind of the kind of wisdom of hindsight including July 4th and then you can you can try to read whatever, um, individual, first of all. Um, as you've seen in Q2, we significantly reduced our promotional efforts, both in duration and depth of promotion. Um, frankly in Q2 will probably quite a bit of ahead of a competitor in terms of being a little bit more or less aggressive if you want to say so, um, and that was simply resulted. Yeah, we, we saw, um, also, we are impacted by tariffs cost, and we had to adjust it, but more importantly, but simply, um, in a strong replacement driven Market, the lift you get from these promotional Investments is just very little, okay? Um, and if you really look at the map of some of these promotions, the lift you get is to some extent even pull forward. So

David Macgregor: And right now, again, we don't give forward-looking statements, but right now we don't expect a completely different behavior. We saw in the industry, July 4th was still deep for the industry. That is a large result. Yeah, there's excess inventory buildup in the system and probably people had to sell it off and that's just what it is. We saw post-July 4th, call it a normalization post-promotion. So there was a move up, but it's hard to yet predict what it really means for what you probably refer to Labor Day and Black Friday. I would overall expect. Probably a more muted environment than in the past, but that's right now pure speculation from us.

You start wondering, does it purely economically make sense to have these deep investments and promotion periods when the lift is just very little. And that's ultimately why we curtailed our promotional depth and duration in Q2. Right now, and again, we don't give forward-looking statements, but I can say that we're not expecting some completely different behavior from us.

Um we saw in the industry. July 4th was um still deep for me for the industry. That is large result. Yeah, there's excess inventory build up in the system and and probably people had to sell it off and that's just what it is. We saw a post July 4th, call it a normalization post promotional. So there was a move up but it's hard to get predict what it really means for what you probably refer to Labor Day in Black Friday. I would overall expect um probably a more muted environment than in the past. But that's right now, pure speculation from my side.

Mike Dahl: Your next question comes from a line of Mike Dahl from RBC Capital Markets. Your line is open. All right, thanks for taking my questions. Mark, I just want to follow up on the import dynamic, because I think, you know, on the last call, The inventory was characterized as maybe a number of weeks. Now, it's extending through 3Q, which is kind of many, many months going back to kind of the April comments, now through September. So, understanding that some of the data that we can all see is lagged, how much visibility do you actually have to make those kind of calculations around?

You are our next question, comes from a line of Mike doll from RBC Capital markets. Your line is open.

All right, thanks for taking my questions. Um Mark I just want to follow up on the import dynamic because I think um you know, on the last call the the inventory was characterized as maybe a number of weeks. Now it's extending through 32 which is kind of many many months going back to kind of the April comments now through September. So, uh, understanding that some of the data that we can all see is lagged. How much visibility do you actually have to, to make?

Mike Dahl: How much is in warehouses or how much is at, you know, whether it's warehouses at ports or warehouses from your retailers, just trying to figure out, like, especially as China seems to be on the verge of, you know, those tariffs getting delayed again, how you gauge the visibility of that level of imports.

Those kind of calculations around how much is in warehouses, or how much is that.

Mike Dahl: Yeah, Michael, let me maybe give you a little bit longer answer to your question. And of course, it's more calibration as opposed to absolute facts because you don't, obviously, we don't have precise inventory data by our competitors. But let me context first of all. When we had our last earnings call, that was April, that was pretty much post or just a few weeks post the Liberation Day announcements. And I also want to be very clear, of course, we 100% support what the administration is trying to do, and we ultimately will be a net beneficiary of that.

Um you know so whether its warehouses that ports or warehouses from your retailers uh just trying to figure out like the especially as China seems to be on the verge of, you know, those tariffs getting delayed again how you gauge the visibility of of that level of imports.

Yeah, Michael. And let me maybe give you a little bit longer answer to your question. I and, and of course, it's more calibration as opposed to absolute facts because you don't, we obviously, we don't have precise inventory data about competitors but let me context. First of all.

Mike Dahl: But you also have seen that since then, there have been a number of delays, and frankly, we're still operating in an environment where there's uncertainty about what happens around August 1, what happens with country tariffs. So as much as we strongly applaud what the administration is doing, of course, we all live in an environment where tariffs are being delayed or postponed. Now, you can always imagine when you send a message to our competitors that tariffs are delayed, it's like an invitation to ship a little bit more the next day. And that's what we've seen throughout the entire second quarter.

Mike Dahl: And by the way, the interesting data point you just need to look at is if you look at the container rates in terms of how they spike up, that's always a signal, okay, there's more demand. So we've seen that with every tariff delay, there's another round of additional. Now, to calibrate it, yes, we know what the official sell-in data is. We know what the appliance imports are as of end of May, but June Wonders numbers will come out mid-August. What you've seen, and this may be a little bit of a sign of encouragement, but China shipments started leveling out a little bit.

And I also want to be very clear. Of course, we're 100% support. What we Administration is trying to do and we ultimately will be a net beneficiary of this 1, but you also have seen that since then, there have been a number of delays and frankly we're still operating in environment where there's uncertainty about what happens around August 1. What happens if a country tariffs so so as much as we strongly applaud but the administration is doing, of course, we all live in an environment where tariffs are being delayed or postponed. Now, you can also Imagine um, when you send a message to our competitors that the tariffs are delayed, so I can imitation ship a little bit more of the next couple of weeks and that's what we what we've seen throughout the entire second quarter. And by the way, my interesting data point, you just need to look at is the if you look at the container rates in terms of how I Spike up and that's always a signal, okay, there's more demand for shipments. Um, so we've seen that with every tariff delay, whereas another round of additional loading now to calibrate it. Um, yes. We know what the official spell in data, is we know what the

Mike Dahl: So we saw already a little bit of a moderation in May, and that's probably a logical result of the China tariffs, you know, kicked in fairly significantly. But the other Asian countries were just significantly Now, I would expect with the 242 coming into effect and the additional country tariffs coming into effect, we would expect to see the same development also in the non-China area. But again, we expect and of course, there's a lot of decision making happening by the administration and we've got to see what's happening in the next couple of weeks. So with the data points of sell-in data, industry sell-in, and we have a pretty good understanding about overall sell-outs.

Appliance Imports are as of end of May, but doing wonders numbers will come out mid August. What you've seen in, this may be a little bit of a sign of encouragement, but, China, shipment started or leveling out a little bit. So, we saw already a little bit of a moderation in me. And and that's probably a logical result of a China tariffs, you know, kicked in Fairly significantly. Um, but the other Asian countries were just um, significantly increased. Now I would expect with um, with a 2 for

32 coming to affect, um, and the additional country, tariffs coming to affect, we would expect to see the same development, also Manon, China, Asian countries. But again, we expect and of course, um, there's a lot of decision-making Happening by the administration, um, and we got to see what's happening in the next couple weeks.

Mike Dahl: We expect that, that's why I said earlier, we would expect a significant amount of preloaded inventory, certainly as of early June. We think there's quite a bit of inventory which was sold through July 4th. But of course, by definition, there's still quite a bit of inventory sitting out there. So, and that's why we all said in Q3, we expect similar but gradually improving environment and dynamics when we're experiencing Q2. Again, similar from starting point, but of course, with every month passing by and the tariffs becoming in effect, we will see more of a normalization happening around.

So, with with a data points of sale in data, um, industry selling, and when we have a pretty good understanding about overall, sellouts, um, we expect that we that's why I said that earlier, we would expect a significant amount of pre-loaded, um, inventory. Certainly as of early June, we think there's quite a bit of inventory, which which was sold through July 4th, but of course, by definition, there's still quite a bit of inventory sitting up there, so and that's why we all said in Q3. We expect similar.

But gradually improving environment and Dynamics when we've experiencing Q2 again, similar from starting point. But of course, with every month passing by in the Terrace becoming in effect, we will see more of a normalization happening around us.

Mike Dahl: Okay, yeah, that's really helpful, Colorado. Thank you, Mark.

Mike Dahl: And the second question I have is related in terms of the North America major margins. It seems like the new guide is kind of flatter. I think, I don't know if your comment about similar in 3Q just referenced. The margin cadence, I think the prior guide was, you know, for a step up in the back half. I'm assuming the new guide is largely a function of of this kind of preloading effect, but maybe you can.

Okay. Yeah, that's really helpful, Ka. Thank you, Mark. And the second question I have is a is related in terms of the North America, major, um, margins. It seems like the new guide is, is kind of flattered. I, I think, I don't know if your comment about similar in 3Q, just referenced.

Mike Dahl: break down that change in the margin guidance and the implied back half cadence in North America, that would be great. So Michael, first of all, what you described is spot on. Yes, ultimately, the adjustment of a guidance is a direct reflection of continued delay for tariffs. Nothing has changed on fundamentals, we will be a net winner for tariffs, we'll introduce the largest amount of new products ever. And in the mid to long term, we'll win on the housing environment. So that has not changed. It's just all the positive effects from these free catalysts are delayed or slightly.

The market and cadence. Um, I think the prior guide was, you know, for a step up in the back half. I'm assuming the new guide is largely a function of this kind of pre-loading effects, but maybe you can just, um, break down that change and in the margin guidance, uh, in the implied back half cadence in North America. That would be great. Thanks.

Mike Dahl: And of course, that is a drag on our margins, certainly Q3 and Q4, we got to see. And that's why you also seen is we've given what I would call an unusual wide range of outcomes in the guidance. That's exactly because we can't right now foresee how rational the competitors will behave based on these tariff costs. And I think even though Q3 is pretty, I mean, we have a pretty good sense about where it's coming out, but the tell sign will be really, what do we see in the market in September, October, and how Q4 turns out.

Mike Dahl: But again, I want to reemphasize, it's a delay. It's not a change of a fundamental investment story. The three reasons which I mentioned earlier, I strongly, more passionately than ever before, believe in them.

Yeah. So Michael first of all, I'm what you described is spot on. Yes, ultimately, the adjustment of a guidance is a direct reflection of continued delay for tariffs. Nothing has changed in fundamentals. We will be a net winner for terrorists. We introduced, uh, a large amount of new products ever. And in the mid to long term, we will win on the housing environment so that has not changed it. Just all the positive effects from these free catalysts are delayed or slightly delayed and of course, that is a drag on our margins, certainly in Q3. And Q4, we got to see. That's why you also seen is. We've given what I would call an unusual wide range, um, of outcomes in the guidance. That's exactly. Because we can't right now foresee, how rational, the competitors will behave based on these these tariff costs? Um, and I think even though Q3 is pretty, I mean, we have a pretty good sense about where it's coming out, but, you know, but but tell sign will be really, what do we see in the market in September October, and how Q4 turns out?

Mike Dahl: And there are three fundamental critical catalysts for our growth in North America, but unfortunately, we're delayed more than we had originally in mind.

Mike Dahl: Yeah, just to add to that, Michael, I think, obviously, as we've talked about with the additional imported inventory, it obviously has had an impact on the promotional environment. But also what that's impacted from our volume perspective is the leverage we get in our factories. And again, as that eventually makes its way through the system and subsides, it allows us then to get better leverage in our factories. I'd say today, the cost actions we're taking, we're seeing the benefits of. We're seeing benefits of many of the pricing actions we've taken. But again, we're operating in an environment where the volumes are just under pressure with all the product that's been imported into the US resources.

Besides it allows us then to get better leverage in our factories I'd say today. The cost actions we're taking we're seeing the benefits of um, you know, we're seeing benefits of many of, the pricing actions we've taken. But again, we're we're operating in an environment where the volumes are just under pressure. Um, with all the product that's been imported into the US recently,

Susan Maklari: Your next question comes from a line of Susan Maklari from Goldman Sachs. Your line is open. Thank you. Good morning, everyone. Morning. Bye. Good morning.

your next question comes from a line of Susan McClary from Goldman Sachs. Your line is open.

Thank you. Good morning everyone.

Susan Maklari: My first question is looking at the SDA business, which had some really nice performance this quarter, despite all the headwinds that you're facing there. Can you talk a bit about what has driven that and how you're thinking about the back half performance there, especially in terms of that segment margin?

Morning.

Susan Maklari: Yeah, Susan, it's Mark. First of all, obviously, we're very pleased with the SDA performance year-to-date. They had a very strong Q1, they had a very strong Q2, and right now it looks like they will also have a very strong Q3. So we feel very good about it. We have good momentum in the business, but two fundamental drivers are twofold. One is we're really benefiting from a new product, which we talked quite a bit here about Q4 last year and Q1, be it have really, really good momentum coming from a new product. But frankly, even our, call it bread and butter, stand mixer business is doing well, despite market pitches not really growing.

Good morning. My first question is um looking at the SDA business which had some really nice performances quarter despite all the headwinds that you're facing there, can you talk a bit about what is driven that and how you're thinking about the back half performance there? Especially in terms of that segment margin?

Yes Susan. It's Mark. So I mean first of all, obviously we're very pleased with the SDA performance here today, but had a very strong q1. We had a very strong Q2 and right now, it looks like we will also have a very strong Q3. So we we feel very good about it. Um, we have good momentum on the business. With 2 fundamental drivers are 2-fold 1 is, um, we're really benefiting from a new product, which we talked quite a bit here about, um, 2 4 last year and q1. Um, the coffee maker Speed, The Rise and grain cooker. Um, be a portable appliances. So we have really, really good momentum come from a new product. But frankly, even our, um, call it bread and butter stand mixer business is doing, but

Susan Maklari: So with new colors, new accessories. new boats. I mean, it's a good business and we drive very strong product. The second part is, our direct-to-consumer business has been growing really nicely. So this is, I would say, a business which is, because everybody knows us then, makes many other products, which is almost geared towards a direct-consumer business. And we've seen very strong growth, in particular North America, but also in Europe, where we already have a very significant portion of our business is direct-to-consumer. So these were the two fundamental catalysts for the strong first half. Now, the reason why we're still, you know, it's the SDA nature is SDA is very back half loaded.

Well, despite you know, Market, which is not really growing. So with new colors, new accessories, um,

New BS. I mean it's a good business and we drive very strong product mixture. The second part is our direct to Consumer business. Had been growing really nicely. Um, so this is a, I would say a business, which is because everybody knows a stand mixer many other products which is almost geared towards, you know, a direct consumer business. Um, and we we've seen, um, very strong growth in particular North America. Um, but also in Europe, but we already have a very significant portion of our business is direct to Consumer business.

Susan Maklari: By definition, there's a significant amount of revenues just concentrated on Q3 and Q4, more so than a majors business. That's why right now I take these first two quarters with a smile and let's see how the rest turns out because we still know we still have a big mountain to climb just given the situation. I mean, I think, Susan, also, just the margins that we have in that business right now really speak to the strength of the brand and the products. And obviously, we're very excited about it. But they've also had an impact of tariffs, whether it's exporting to other countries outside the U.S.

Susan Maklari: stand mixers or products that they've brought in from Asia. And again, despite that, you look at that business and the margins are completely on track. So, again, I think that just goes back to tell you how strong that business really is. Yeah, okay, that's very helpful, Caller.

So we is where we're at 2 Fundy seasonality? Yeah, I mean, I think Susan also just the the margins that we have in that business right now, really speak to the strength of the brand and the products. Um, and and obviously, we're very excited about it, but they've also had an impact of tariffs whether it's exporting to other countries. Outside. The US stand, mixers are products that they've brought in from, from Asia. And again, despite that, um, you look at that business in the margins.

Are completely on track. So I again, I think that just goes back to tell you how strong that business really is,

Yeah. Okay.

Susan Maklari: And then maybe turning to capital allocation and the decision to recommend the board, reduce the dividend.

Susan Maklari: Can you just talk about how you're thinking of shareholder returns in this environment, how that factors into your priorities, and maybe the path from here as you do start to de-lever the balance sheet further? Yeah. Yeah, Susan, I'll start off with that. And first off, we remain committed to return cash to shareholders, and we remain committed to, you know, our dividend. And we also remain confident in our business. And I think that's critical to really say. And this, as you heard in the prepared remarks, you know, this was a deliberate action. We didn't take this, you know, in terms of, you know, a short-term decision.

We'll call her and then maybe turn to capital allocation and the decision to recommend to the board to reduce the dividend. Can you just talk about how you're thinking of shareholder returns in this environment? How that factors into your priorities and maybe the path from here as you do start to develop the balance sheet further.

Susan Maklari: We really looked at where we are, what our capital allocation priorities are, where we want to invest, that we want to continue to deleverage, but we also want to invest in our U.S. business. Because as you heard from Mark's comments, we really believe strongly, you know, in the U.S. housing market, and that there will be a recovery here. And so, you know, part of what we had to do is we had to look at not just the short-term, but also what we want to invest for the long-term. And we felt at this time that reducing the dividend down to, you know, $3.60 on an annual basis is the right level.

Susan Maklari: And that's also very comparable to where we were in a pre-COVID environment on similar type of, you know, types of earnings. So, we feel it's the right level of return, and we want to continue to return cash to shareholders. But we also feel it fits best with where the business is right now and where our priorities are.

Yeah, yeah, Susan, I'll start off with that. Um, and, and first off, we remain committed to return cash to shareholders, and we remain committed to, uh, you know, our dividend and, and we also remain confident in our business. Um, and I think that's critical to really say. And this, as you heard in the prepared remarks, you know, this was a deliberate action, um, we didn't take this, you know, in terms of of, you know, a short-term decision. We really looked at at where we are, what our Capital allocation priorities are where we want to invest that. We want to continue to de-lever, but we also want to invest in our us business because as you heard from Mark's comments, we really believe strongly, um, you know, in the US housing market and that there, there will be a recovery here. And so, you know, part of what what we had to do is we had to look at at not just the short term but also what we want to invest for the long term and we felt that this time that reducing the dividend down to to you know, 3.60 cents on an annual basis, is the right level. And that's also very

Susan Maklari: Yeah, Susan, maybe just, Mark, from my perspective, you know, obviously, whenever you make the recommendation of a board to take the dividend back to pre-COVID level, it's not an easy decision. But ultimately, it comes down to, we see a clear path to pre-COVID margins on the respective views, and that's what we're going to reflect it. Keep in mind, the existing dividend was set at the peak of COVID. Right now, we don't see a short-term path to COVID type of peak margins. But even more important, ultimately it's a decision for, it's not because the funding, as you heard from Jim before, we are well-funded and I'm very pleased that we have this 1.2 billion funding behind us.

Preco level, it's not an easy decision. Um, but ultimately it comes down to, we see a clear path to preco margins on the respectively use and that's what we're going to reflect it. Um, keep in mind, the existing dividend was set that the peak of Co right now we don't see a short-term path to co type of peak margins. Um,

Susan Maklari: It's ultimately about, we want to create the financial capacity going forward. We're very confident about a business, but I want to have, frankly, I want to have capacity paying down debt, but frankly, also with the US market shaping up the way we described earlier, next year will be very attractive to invest in the US and we just want to create the capacity in our balance sheet. That is ultimately the key driver.

But even more important, ultimately, it's a decision for. It's not because of the funding, as you heard from Jim before; we are well funded, and I'm very pleased that we have this $1.2 billion funding behind us. It is ultimately about wanting to create the financial capacity going forward. We're very confident about the business, but I want to have, frankly, the capacity to pay down debt. Um, but frankly, also, with the U.S. market shaping up the way we described earlier, next year will be very attractive to invest in the U.S. Um, and we just want to create the capacity in our balance sheet; that is ultimately the key driver of a decision.

Rafe Jadrosich: Your next question comes from a line of Rafe Jadrosich from Bank of America. Your line is open. Thank you. Good morning. Thanks for taking my question. Warner Rationing. Right.

Your next question comes from the line of R.A. Jed, Rasage, from Bank of America. Your line is open.

Thank you. Good morning. Thanks for taking my question.

Rafe Jadrosich: Can you talk about the sell-out that you saw in North America, MDA, in the second quarter and 3Q today, and maybe talk about Whirlpool versus the broader industry? It's Mark. So let me just, and of course, as you know, there is no one data source and sellout. We have sellout data from our customers and we have a pretty good sense for our balance of sales. That's how we try to calibrate it.

Morning. Great.

can you talk about the, um, the sellout that you saw in North America MDA in the second quarter and, and 3 Q today and maybe talk about, um,

Whirlpool versus the the the broader industry.

Rafe Jadrosich: In Q2, I would describe a sellout to be at best flat, but it's probably more like minus two, minus We, in particular, we lost some share in April, May, then we went ahead of promotional price adjustments, probably ahead of our competitors, and we picked it up a little bit more towards the end of the quarter. Coming into July, we feel pretty good about where we are. The sellout in July, and again, it's too early to say, so far is a positive one for us. We don't know exactly where the rest of the competition sits, but right now it's in a market where certainly from a volume perspective, it's probably best to still assume zero to minus three.

Yeah. I mean it's it's Mark so let me just um and of course maybe as you know there's no 1 data, source, and sellout, we have sellout data from our customers, and we have a pretty good sense for our balance of sale. That's how we try to calibrate it.

Rafe Jadrosich: That's how we also adjusted the industry guide. There's one big caveat. Keep in mind, the market may look reasonably okay from a unit perspective. The mix in the market is not a healthy one. It's a very strongly replacement driven demand. And consumer sentiment just weighs on the health of a mix of a product.

In Q2, I would describe a sellout to be a best flat, but it's probably more like, minus 2, minus 3%. Um, we in particular, we lost some share in April, May, but we went ahead of promotional price adjustments. Probably ahead of our competitor competitors, and we picked it up a little bit more towards the end of the quarter. Um, coming into July, we feel pretty good about where we are, um, the sellout in July. And again, it's too early to say, so far as a positive 1 for us, um, we don't know exactly where the rest of competition sits. Um, but right now, it's, it's in the market where certain from boarding perspective, it's probably best to still assume zero to mind free. And that's how we also adjusted the industry guidance.

Rafe Jadrosich: And that's why it's so critical that we launch all these new products, because that's the ultimate lever how, despite a negative market mix trend, we can make a difference with a mix in our new product. For more information visit www.FEMA.gov But again, it's volume is one side, the mix which comes with the volume is just not where we want to have it. And that's ultimately a reflection of a broader consumer sentiment and the existing home sales, which are just very low. Thank you. That's helpful.

There's 1 big caveat, keep in mind the market may look reasonably. Okay. From a unit perspective, the mix in the market is not a healthy 1. Um it's a very strongly replacement driven demand, um, and consumer sentiment just weighs on the health of a mix of a product and that's why it's so critical that we launched all these new products because that we ultimately leave her how despite the negative Market mix Trend. Um, we can make a difference with a mix in our new product.

Um, but again, its volume is one side; the mix that comes with the volume is just not where we want to have it. And this is ultimately a reflection of broader consumer sentiment and the existing home sales, which are just very low.

Rafe Jadrosich: And then can you just give an update on the India sale in terms of what the potential timing is? Proceeds? Has the structure of it changed? Just what you guys are exploring. Yeah, and Rafe, this is Jim, and I'd say, listen, from the last call till now, there's been no significant change. We still anticipate the proceeds to be in the $550 to $600 million type of range. We still expect to close, you know, by or around the end of this year. We're in the middle of the process, and we continue to narrow down the number of participants in the process, just as a normal process would work, and work with those potential purchasers.

Thank you that that that's helpful. Um, and then you can you just give an update on the India sale in terms of, um, the what the potential timing is proceeds, has the structure of a change is what you guys are exploring their

Rafe Jadrosich: And so, you know, right now, we believe it's on track and nothing's really changed. We just continue to execute the process, and, you know, hopefully by the next call, we'll be able to give a further update around where that is and talking more about, you know, the possible closure.

Rafe Jadrosich: I think just one additional point is on this one. So the change has been about the expected closing of a transaction. So the transaction as such, we're highly confident that it will materialize. Right now, in the updated guidance, we assume that the close would likely not technically happen in 25, but would fall into 26. But we expect kind of getting clarity on the transaction a lot earlier.

Yeah, and, and Rex. This is Jim and, and I'd say listen from, from the last call till now, there's been no significant change. We still anticipate the proceeds to be in the 550 to 600 million dollar type of um Range. Um, we still expect to close, you know, by around the end of of this year. Um, we're in the middle of the process and we continue to um, narrow down the number of participants in the process just as, as a normal process would work and work with those uh, potential uh purchasers. And so, you know, right now we believe it's on track and nothing's really changed. We just continue to execute the process and and, you know, hopefully by the next call, we'll be able to give a further update, uh, around where that is and and talking more about, you know, the possible closure. I think, just for 1 additional point is on this 1. So the change has been about the expected closing of a transaction. So the transaction as such we, we're highly confident and and that it will materialize. Um, right now in the update,

Data guidance, we assume that the clothes would likely not technically happen in 25 but would fall into 26 but we expect kind of getting Clarity on the transaction a lot earlier.

Eric Bosshard: Your next question comes from the line of Eric Bosshard from Cleveland Research. Your line is open. Thanks. Two things, if I could. The first one... In the deck, you include a data point where the impact of tariffs you expect to offset with, I think, mostly price. I'm curious what you're seeing so far that gives you confidence that you'll be able to get the level of price that you're outlining to offset those tariffs. So Eric, so basically we largely already implemented the necessary pricing action with our promotion price increase and some list price increases in Q2.

You are next question comes from Alina of Eric bussard from Cleveland research. Your line is open.

That you'll be able to get an the level of price that you're outlining to offset those tariffs.

Eric Bosshard: That's what I was referring to earlier. So what needed to be done to offset the tariffs, we technically put in place. Right now it is somewhat mashed by positive impact because we lost some mix in Q2. The mix has been very unhealthy. So you have two offsetting items. One, we see a positive impact from all the actions, which we've done in promotional price adjustments and list price increases. And the negative is a little bit of a downside mix. But again, in terms of the actions need to be done, we largely factored in and basically executed or are executing what needs to be done in Q2.

Eric Bosshard: But again, this is also in the context of still a globally uncertain final tariff outcome. So this does not mean that we might not have taken action down the road, but right now we feel good about where we are from. I think, though, on top of that, too, is to highlight is it's not just pricing that we're taking to offset that. We're taking cost actions. We're looking at supply sourcing and other things, and again, we're going back to our suppliers with an expectation to be able to find solutions to these increased tariff costs.

Yeah, so so Eric, um, so basically, we largely already implemented the necessary pricing action with our promotion price, increase in some list, price increases in Q2. That's what I was referring to earlier. So what needed to be done to offset the tariffs with technically put in place right now. It is somewhat mashed but positive impact because we lost some mix in. Q2, the mix has been very unhelpful. So you have 2, offsetting items. 1. We see a positive impact from all the actions which we've done on promotion prices, promotional price, adjustments and list price increases. And the negative is a little bit but downside mix. Um, but again, in terms of the actions that need to be done, we largely factored in and and basically executed or I executed um, what needs to be done in Q2. And, but again, this is also in the context of still a globally uncertain final tip outcome. So, um, if that's not mean that we might not have taken action down the road, but right now we feel good about where we are from pricing actions.

I think though on top of that too is to highlight is it's not just pricing that we're taking to offset that we're taking cost actions. We're looking at Supply sourcing and other things. And and again we're we're going back to our suppliers um, with an expectation to, you know, be able to find solutions to these these increased tariff costs.

Eric Bosshard: And then secondly, I understand there, you've talked a lot about the noise of preloading. and the impact that has. I guess, excluding the impact of tariffs, which seems like it's not really in place right now, your North American share is contracting. And so I guess, you know, the protection of the tariffs is coming, but excluding that or in advance of that, why is your share not performing better? Why is your share performing like? So Eric, first of all, as I alluded to earlier, we lost in Q2, in April, May, some share, just to put it in context.

Okay, and then secondly, I understand their you've talked a lot about the noise of pre-loading.

And the impact that has um, I guess excluding the impact of tariffs which seems like it's not really in place right now. Your North American Share is uh, is Contracting. And so I guess, you know, the, the protection of the tariffs is coming but excluding that or an advance of that, why is your share not performing better or why is your share of Performing? Like it is

Eric Bosshard: That's less than a point of share, which we lost. And end of June, we kind of rebalanced and we're stabilizing. But of course, no, we absolutely do not want to lose share and we will not lose share on a four-year-based period. So we're very confident that largely, but confidence also comes not only because of tariffs, because of all the new products. So we feel very good about the tools which we have in place. But of course, by definition, you have a huge amount of preloaded inventory, which puts a lot of promotion pressure. As we said before, we will not participate in every promotion.

So Eric, just the first of all, I say, alluded to earlier, we lost in Q2, in April May, some share, um, just to put in context, that's less than a point of share, which we lost okay and end of June, we kind of rebalance and we're stabilizing. So, um, but of course, no, we absolutely do not want to lose share and we will not lose share on a full year based period. Okay? So we're very confident that largely but companies also comes not only because of tariffs because of all the new products

Eric Bosshard: And there have been a number of promotions out there that there's no question in my mind that did not create value for the retailer or the respective competitor, period. And we will not participate in that. So if somebody wins a little bit of temporary share, for lack of a better expression, I look at more, yeah, but build on quicksand. I don't need quicksand. We need structural market share, which comes with good and healthy brands and products. And that's what we focus.

Um, so we feel very good about, um, the tools which we have in place, but of course, by definition, you have a huge amount of pre-loaded inventory which puts a lot of promotion pressure. As we said before, we will not participate in any on every promotion. And there have been a number of promotions out there. That there's no question in my mind that did not create value for the retailer or the respective competitor period. Okay. And we will not participate in that. So if somebody wins a little bit of temporary share, I look at more like, um, for like

A better expression. I look at more. Yeah, but build on quicksands, um, I don't need quicksand. We need structural market share which comes with good and healthy Brands and products and that's what we focus on.

Michael Rehaut: Your next question comes from the line of Michael Rehaut from J.P. Morgan. Your line is open.

Michael Rehaut: Good morning, this is Alex Isaacson from Mike. Thanks for taking my questions.

Your next question comes from a line of Michael rehold from JP Morgan. Your line is open.

Michael Rehaut: First thing, you know, on the demand side, with the revision downward of your demand expectations, can you sort of give some more granular details into what's driving those across regions? And how should we see this trending into the rest of the year and into 2060? Should this be more transitory? Or are these more longer term demand headwinds? Yeah, Alex, our revision on the industry guidance, which My views have different reasons. I would say in North America, it's largely driven by consumer sentiments. And if you look at any data source out there, consumer sentiment is just not in a good place.

Hi, good morning. This is Alice icon from Mike, thanks for taking my question. My question is, uh, first thing, you know, on the demand side, uh, you with the revision downward of your demand expectations, can you sort of give some more granular uh, details into what's what's driving those across regions and how should we see this trending into the rest of the year and into 2016? Do you feel this will be more transitory or are these more longer term demand uh headwinds

Michael Rehaut: Consumers like investors, don't like uncertainty, unpredictability, and various possible outcomes. And that is right now weighing heavily on the consumer mind. The good thing is, and that's why this could change, is we've seen in other periods, consumer sentiment moves a lot faster than many other dynamics. Consumer sentiment can move in two or three months significantly. So a lot will depend on the macro news which people will see. We should not lose sight of consumers sit on a lot of home equity. So that's a fact, the home equity, which still makes up a lot of a consumer wealth is in a good state.

Yeah. Alex um our vision on the industry guidance, which ibus has different reasons, I would say North America, its larger driven by consumer sentiments um and and you look at any data source out their consumers and is just not in a good place. Um consumers like investors don't like uncertainty unpredictability and and various possible outcomes. Um and that is right now weighing heavily on consumer Minds. The good thing is, and that's why this could change is we've seen a number of periods consumer sentiment moves a lot faster than many other Dynamics. Um, consumer consumer sentiment can move in 2 or 3 months, um, significantly. So a lot will depend on

Michael Rehaut: So consumers would have the wealth and the equity to invest more in the home. But right now we're holding a little bit back. And again, I'm not trying to be overly optimistic, but these things change faster than many other macroeconomic elements.

Michael Rehaut: We have a region that's slightly different. I think we'd say in LAR, in Latin America, we've seen a more broader slowdown in the economy, both in Brazil, but to some extent Mexico, so that it's not just consumers, I mean, it's just a broader slowdown. Not a bad environment, it's just slowing down.

Michael Rehaut: And Asia, to Jim's earlier point, you know, particularly India is so much driven by the seasonal patterns of weather. And you had last year a very strong Q2, I mean, from a pure weather perspective. And this year turned out very differently. And that's why we're kind of a little bit cautious more on the Asia outlook. So, it's more completely different dynamics. It's just, I know it sounds trivial, but it's weather related and how hot it gets. That has a big impact on that outlook.

Michael Rehaut: Small domestic appliance are a little bit on their own in terms of a macroeconomic perspective. I would say in general terms, more than any other category are strongly driven by consumption. ultimately, yes, there's some replacement demand, but it's a very strongly discretionary demand driven cycle. And here, we're a little bit more cautious. But also here, the same applies to what I said before earlier. The big season on SDA is coming, and it will be very important to see how the consumer sentiment does around the September-October timeline, because that will shape the industry perspective to a very large extent.

You ever reached a slightly different? I think would say in L in Latin America we've seen more broader slowdown in economy, both in Brazil but to some extent Mexico so that it's not just consumers and it's just a broader slowdown, not a bad environment. It's just slowing down and Asia to, to Jim's earlier Point. Um, you know, particularly in, there's so much driven by the seasonal patterns of of weather and you had last year, very strong Q2, I mean, from a pure weather perspective, um, and this year turned out very differently, um, and that's why we're kind of a little bit cautious, more on the Asia Outlook. It's so it's more completely different Dynamics. It's just, I know it sounds trivial, but it's never related and, and how hot it gets, um, that has a big impact on on my Outlook, small domestic. Appliance are a little bit on their own, in terms of a macroeconomic perspective. I would say in general terms more than any other category, are strongly driven by consumer sentiments. And because it's ultimately, yes, there are some replacement demand, but it's a very strongly discretionary demand.

Driven cycle. Um, and here we also we're a little bit more cautious, um, but also here the same applies what I said before earlier. Um,

The big season on SDA is coming, and it will be very important to see how consumers will send them in. This will occur around the September-October timeline, as it will shape the industry perspective to a very large extent.

Michael Rehaut: Thanks. I appreciate all the color on that.

Michael Rehaut: To dig in on SBA, I just wanted to know if you could share some more details on direct-to-consumer and what percentage of that made up of SBA and then also how the margin profile varies between direct-to-consumer sales versus the overall segment. Yeah, so Alex, we typically don't publish or communicate the details of a D2C business versus REST, but let me help you calibrate a little bit. You know, as a company, our direct consumer business is in the mid to high single digits, but with big differences across the different segments. By a long shot, the highest direct consumer business we have in our Latin America business and small domestic appliances.

Yes, appreciate all the color on that uh, to dig in on honestly, I was wanting to know if you could share some more details on direct to Consumer and what percentage of that made up of SDA and then also, you know how the margin profile varies between direct to Consumer sales versus the overall segment.

Yeah so Alex we we typically don't publish or communicate the details of a d2c business versus rest. Um let me help you calibrate a little bit. Um,

Michael Rehaut: So you should ballpark getting probably close to a quarter of a business. So it's very healthy. It will never replace our business with good and established retailers. But frankly, we know there's a segment of consumers who just like to buy directly from a manufacturer. And so this is not in competition to our retailers. We respect our retailers. We need our retailers. It is a complement and a supplement, in particular on products where most people know a stand mixer. So it's perfect for this one. The margin structure is not completely different, but let me put it this way, it's an attractive business for us.

You know, it's as a company, our direct consumer business is is in the mid to high single digits. But with big differences across the different segments, by Longshot, the highest direct consumer business. We have in our Latin America business and small domestic appliances. So, um, you should ballpark getting probably close to a quarter of a business. So it's a very healthy, it will never replace, um, our business with good and established retailers. But frankly, we know where the second consumers, who just like to buy directly from a manufacturer. Um, and so this is not in competition to our retailers. We respect our retailers, we need our retailers, it is a compliment and a supplement in particular on the products where

Michael Rehaut: Largely also, yeah, it comes by definition with a high revenue base and it's still pretty healthy margin level. As you all understand the mechanics of a direct consumer business, you have quite a bit of fixed costs, which comes with consumer search and buying from search. So a higher revenue base, the more profit it would be.

Most people know a stand mixer. Um, so it's perfect for this, but the margin structure is not completely different. But let me put this: it's an attractive business for us, largely also because it comes, by definition, with a higher revenue base and is still at a pretty healthy margin level. As you all understand the mechanics of a direct-to-consumer business, you have quite a bit of fixed costs, which comes with um, consumer surge and buying from research. So, for a higher revenue base, the more profit it will become.

Josh Wilson: Your final question comes from a line of Josh Wilson from Raymond James, your line is open. Good morning. Filling in for Samuel Darkatsh. Thanks for taking my question and squeezing in. Morning, Josh.

Your final question comes from a line of Josh Wilson from Raymond James, your line is open.

Josh Wilson: For my first question, could you talk a little more about your assumptions for North American market share and how that's changed from a quarter ago? I know you were expecting to gain share in the second half, but now with the Delays in channel inventory headwinds, does that mean like flattish here in the third quarter and bigger gains in the fourth quarter? How are you calibrating the cadence there? Josh, in general terms, we expect the same, i.e. we expect a healthy share level in the second half, driven largely by the new product introductions, and keep in mind every quarter we have more products, new products being floored.

Good morning, filling in, for Sam Park. Cash. Thanks for taking my questions. Squeezing me in.

Good morning, Josh. Good morning.

Uh, for my first question, uh, could you talk a little more about your assumptions for North American market, share, and how that's changed from a quarter ago? I know you were expecting to gain. Share on the second half but now

Delays in, uh, channel inventory. Headwinds? Does that mean like flattish share in the third quarter and bigger gains in the fourth quarter? Or how are you calibrating the cadence there?

Josh Wilson: The second point is, as I mentioned earlier, we took the necessary pricing action promotion levels in Q2. Some competitors didn't do it. They will have to catch up at one point to deal with the cost, and I think that will create then more level playing fields and allows us to kind of pick up some market share. So we feel good about plans for second half market share, and we have no intention whatsoever to concede market share.

Josh, in general terms, we expect the same IE. We expect a healthy share level in the second half, driven largely by the new product introductions. And keep in mind, every quarter we have more new products being floored. The second point is, as I mentioned earlier, we took the necessary pricing action and promotion levels in Q2. Some competitors didn't do it; they will have to catch up at one point to deal.

For cost, and I think that will create when more a Level Playing Fields and allows us to kind of pick up some market share. So, we, we feel good about plans for a second to have market share. Um, and we have no intention whatsoever to concede market share easily.

Josh Wilson: And then as it relates to the dividend change, could you talk about what has changed either in your plans or the environment that catalyzed you to make the decision now versus three, six months ago? Yeah, and this is Jim. And I would say, you know, Josh, again, you know, probably three, six months ago, we really looked at the environment. We said, you know, there was a lot to it that we still wanted to see and understand better. We wanted to see how the tariffs rolled out. We wanted to see the impact it would have on volumes.

And then as it relates to the the dividend change, could you talk about what has changed either in your plans or the environment that catalyzed you to make the decision now versus 3 6 months ago.

Josh Wilson: Again, as I said, we remain confident in the business, remain committed to the dividend, but we just thought it was very prudent to really understand the environment better, and then kind of make the right, appropriate, deliberate capital allocation decision. And so, again, as we said, you know, this is as much about us looking at wanting to increase the capacity within our balance sheet, but also to create the ability to invest further in our U.S. manufacturing footprint, because we really do believe, based on what Mark said earlier in the actions that the administration is taking, this can set us up to win.

Josh Wilson: And so, we wanted to create that additional capacity, and we felt this was the right time.

Marc Bitzer: I think with that, we come to the end of the Q&A session. And first of all, I want to thank you all for joining us today. I mean, obviously you heard a lot of details today. I think the important thing really is the key takeaways. Of course, a company like ours, we don't take an adjustment of our guide. first one to admit it. At the same time, hopefully you heard all today, we are very confident and nothing has changed about the investment. And it's not just relying on the fact that we will be net winners of a terrorist environment.

Remain committed to the dividend, but we just thought it was very prudent to really understand the environment better, and then kind of make the right appropriate, deliberate capital allocation decision. And so again, as we said, you know, this is as much about us looking at wanting to increase the capacity within our balance sheet, but also to create the ability to invest further in our U.S. manufacturing footprint, because we really do believe, based on what Mark said earlier and the actions that the administration is taking, this can set us up to win. So we wanted to create that additional capacity; we felt this was the right time.

Marc Bitzer: It is largely coming from the confidence and feedback we get on our new products. And nothing has changed in our mid- to long-term perspective on the housing market. If you want to say so, the investment fees is as strong as ever, but we felt it appropriate and prudent to adjust the guidance to reflect the delays of certain effects, which positive.

Scott Cartwright: So with that, again, thank you all and we will talk to each other during the next earnings call. Thanks a lot.

I think the fact we come to the end of a Q&A session, and first of all, I want to thank you all for joining us today. I mean, obviously you heard a lot of details today. Um, I think the important thing really is the key takeaways. Of course, a company like ours, we don't take an adjustment of our guidance easily. Um, I'm the first one to admit it. At the same time, hopefully you heard all today we are very confident and nothing has changed about the investment thesis. Um, and it's not just relying on the fact that we will be net winners of this environment; it is largely coming from the confidence and feedback we get on our new products, and nothing has changed in our mid to long-term perspective on housing markets. So, if you want to stay, the investment thesis is as strong as ever. Um, but we felt it appropriate and prudent to adjust the guidance to reflect the delays of certain effects, which positively impact our business.

Scott Cartwright: Ladies and gentlemen, that concludes today's conference call. You may now disconnect.

So, with that again, thank you all. And we will talk to each other, um, during the next earnings call. Thanks a lot.

Ladies and gentlemen, that concludes today's conference call, you may now disconnect