Q3 2026 Whirlpool Corp Earnings Call

October 27, 2026

[Company Representative] (Whirlpool Corporation): Good morning, and welcome to Whirlpool Corporation's Q3 2026 earnings call. Today's call is being recorded. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer, Roxanne Warner, our Chief Financial Officer, Juan Carlos Puente, our Executive President of North America and Global Strategic Sourcing, and Ludovic Beaufils, our Executive President of KitchenAid Small Appliances and Latin America.

Speaker #1: Good morning, and welcome to Whirlpool Corporation's third quarter 2026 earnings call. Today's call is being recorded. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer; Roxanne Warner, our Chief Financial Officer; Juan Carlos Puente, our Executive President of North America; and Global Strategic Sourcing.

Speaker #1: And Ludovic Buffis, our Executive President of KitchenAid Small Appliances in Latin America. Our remarks today track with the presentation available on the investor section of our website at whirlpoolcorp.com.

[Company Representative] (Whirlpool Corporation): Our remarks today track with the presentation available on the Investor section of our website at whirlpoolcorp.com.

[Company Representative] (Whirlpool Corporation): 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 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. We also think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations.

Speaker #1: 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.

Speaker #1: Our actual results could differ materially from this statement 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 non-GAAP measures outlining further detail at the beginning of our earnings presentation.

[Company Representative] (Whirlpool Corporation): 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. We also think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations.

Speaker #1: 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.

Speaker #1: We also think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations. Listeners are directed to this 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.

[Company Representative] (Whirlpool Corporation): 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. 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. With that, I will turn the call over to Marc.

Speaker #1: 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.

Speaker #1: With that, I'll turn the call over to Marc.

Marc Bitzer: Thanks, Viv, and good morning, everyone. During the quarter, our execution focused on two core imperatives, protecting and expanding our margins in a tough macro environment and disciplined cash management. These imperatives not only shaped our Q3 results, but are also driving our actions as we move towards the end of 2026 and into 2027. What you will hear today are essentially four key messages. First, we delivered another quarter of sequential margin improvement against macroeconomic challenges that undoubtedly intensified over the last three months. Second, we made good progress on our pricing actions, in particular in North America. This progress was partially offset by incremental inflationary costs, and as a result, we did not deliver the margin step-up we had expected. In line with a slower pace of margin recovery in Q3, we are updating our full-year margin guidance.

Speaker #2: Thanks, Viv, and good morning, everyone. During the quarter, our execution focused on two core imperatives. Protecting and expanding our margins in a tough macro environment, and disciplined cash management.

Speaker #2: These imperatives not only shaped our third quarter results, but are also driving our actions as we move towards the end of 2026 and into 2027.

Speaker #2: What you will hear today are essentially four key messages. First, we delivered another quarter of sequential margin improvement against macroeconomic challenges that undoubtedly intensified over the last three months.

Marc Bitzer: First, we delivered another quarter of sequential margin improvement against macroeconomic challenges that undoubtedly intensified over the last three months. Second, we made good progress on our pricing actions, in particular in North America. This progress was partially offset by incremental inflationary costs, and as a result, we did not deliver the margin step-up we had expected. In line with a slower pace of margin recovery in Q3, we are updating our full-year margin guidance.

Speaker #2: Second, we made good progress on our pricing actions in particular North America. This progress was partially offset by incremental inflationary costs and, as a result, we did not deliver the margin step-up we had expected.

Speaker #2: In line with a slower pace of margin recovery in the third quarter, we are updating our full-year margin guidance. Third, we have implemented further pricing actions of 7 to 10 percent in North America and in Latin America.

Marc Bitzer: Third, we have implemented further pricing actions of 7% to 10% in North America and in Latin America. We expect the impact of these new actions to be somewhat limited in Q4 and fully ramping up in January. Our structural cost initiatives around strategic sourcing, manufacturing optimization, and warehouse footprint consolidation are on track. But as mentioned in prior calls, the majority of the cost benefits will impact 2027. These structural cost initiatives, together with the additional pricing actions, set up a strong foundation for margin expansion in 2027. Fourth, we are prioritizing highly disciplined working capital management that positions us to deliver on our full-year free cash flow goal. Turning to slide 7, let me cover our Q3 results. We delivered net sales of $3.7 billion, which was impacted by softer industry demand in North America.

Speaker #2: We expect the impact of these new actions to be somewhat limited in Q4 and fully ramping up in January. Our structural cost initiatives around strategic sourcing, manufacturing optimization, and warehouse footprint consolidation are on track.

Speaker #2: But as mentioned in prior calls, the majority of the cost benefits will impact 2027. These structural cost initiatives, together with the additional pricing actions set up a strong foundation for margin expansion in 2027.

Marc Bitzer: These structural cost initiatives, together with the additional pricing actions, set up a strong foundation for margin expansion in 2027. Fourth, we are prioritizing highly disciplined working capital management that positions us to deliver on our full-year free cash flow goal. Turning to slide 7, let me cover our Q3 results. We delivered net sales of $3.7 billion, which was impacted by softer industry demand in North America.

Speaker #2: And fourth, we are prioritizing highly disciplined working capital management that positions us to deliver on our full-year free cash flow goals. Turning to slide 7, let me cover our third quarter results.

Speaker #2: We delivered net sales of 3.7 billion dollars, which was impacted by softer industry demand in North America. We saw a sequential margin improvement of 80 basis points to 2.6 percent, resulting in an ongoing earnings per share of negative 21 cents.

Marc Bitzer: We saw a sequential margin improvement of 80 basis points to 2.6%, resulting in ongoing earnings per share of -$0.21. While we made progress on our pricing and cost takeout actions, this progress was partially offset by higher raw material, fuel, and logistic costs. During the quarter, we maintained strict working capital discipline to prioritize balance sheet strength. Our free cash flow was a consumption of approximately $1.1 billion, which was negatively impacted by the timing of our recovery of insurance claims related to Grupo Casas Bahia. This is a major retailer in Brazil which filed for bankruptcy reorganization, the equivalent of Chapter 11 in the US, in August. We expect to receive a majority of insurance claim payments related to this event in Q4. Turning to slide 8, I will walk through our sequential ongoing EBIT margin drivers.

Speaker #2: While we made progress on our pricing and cost takeout actions, this progress was partially offset by higher raw materials, fuel, and logistic costs. During the quarter, we maintained strict working capital discipline to prioritize balance sheet strength.

Marc Bitzer: Our free cash flow was a consumption of approximately $1.1 billion, which was negatively impacted by the timing of our recovery of insurance claims related to Grupo Casas Bahia. This is a major retailer in Brazil which filed for bankruptcy reorganization, the equivalent of Chapter 11 in the US, in August. We expect to receive a majority of insurance claim payments related to this event in Q4. Turning to slide 8, I will walk through our sequential ongoing EBIT margin drivers.

Speaker #2: Our free cash flow was a consumption of approximately 1.1 billion dollars, which was negatively impacted by the timing of our recovery of insurance claims related to Grupo Casas Bahia.

Speaker #2: This is a major retail in Brazil, which filed for bankruptcy reorganization, the equivalent of Chapter 11 in the US, in August. We expect to receive a majority of insurance claim payments related to this event in the fourth quarter.

Speaker #2: Turning to slide 8, I will walk through our sequential ongoing EBIT margin drivers. We delivered sequential margin improvement of approximately 80 basis points. Our pricing actions in North America and Latin America fully offset the mixed headwinds across the business and result in 250 basis points of improvement.

Marc Bitzer: We delivered sequential margin improvement of approximately 80 basis points. Our pricing actions in North America and Latin America fully offset the mix headwinds across the business and result in 250 basis points of improvement. Net cost was a tailwind of 100 basis points as we continue to make progress on structural cost takeout and ongoing cost productivity, with the benefits being partially offset by the impact of fuel and logistic costs. Raw material inflation unfavorably impacted margin by 75 basis points, primarily driven by higher steel, resin, and base metal costs. Net tariff impact was an unfavorable 225 basis points, driven by incremental Section 232 tariffs in the US. Marketing and technology investments increased by 25 basis points, offset by a favorable currency impact of 25 basis points, primarily from a Mexican peso and Brazilian real, and favorable transaction impact of approximately 25 basis points.

Speaker #2: Net cost was a tailwind of 100 basis points, as we continued to make progress on structural cost takeout and the ongoing cost productivity, with the benefits being partially offset by the impact of fuel and logistic costs.

Marc Bitzer: Raw material inflation unfavorably impacted margin by 75 basis points, primarily driven by higher steel, resin, and base metal costs. Net tariff impact was an unfavorable 225 basis points, driven by incremental Section 232 tariffs in the US. Marketing and technology investments increased by 25 basis points, offset by a favorable currency impact of 25 basis points, primarily from a Mexican peso and Brazilian real, and favorable transaction impact of approximately 25 basis points.

Speaker #2: Raw material inflation unfavorably impacted margin by 75 basis points, primarily driven by higher steel resin and base metal costs. Net tariff impact was an unfavorable 225 basis points, driven by incremental Section 242 tariffs in the US.

Speaker #2: Marketing and technology investments increased by 25 basis points, offset by a favorable currency impact of 25 basis points, primarily from a Mexican peso and Brazilian real, and favorable transaction impacts of approximately 25 basis points.

Marc Bitzer: Now I will turn the call over to Juan Carlos to review our MDA North America results.

Speaker #2: Now we'll turn the call over to Juan Carlos to review our MDA North America results.

Juan Carlos Puente: Thanks, Marc. Turning to slide 10, I will provide an overview of our MDA North America segment. In Q3, net sales were $2.5 billion, negatively impacted by the persistence of industry demand. In Q3, the industry was down 3.3%, which is in line with our full year guidance of down approximately 5%. The solid execution of our price increase implemented in April and July, combined with our new product launches, drove approximately 230 basis points of sequential margin expansion. This improvement was masked by the inflationary headwinds, resulting in 30 basis points of net sequential EBIT margin benefit. More recently, we announced an additional 7% price increase, effective 1 November in Canada and 3 December in the US. While the impact of Q4 results will be limited, we expect this action, combined with our structural cost takeout actions, to further expand margin in 2027.

Speaker #3: Thanks, Marc. Turning to slide 10, I will provide an overview of our MDA North America segment. In the third quarter, net sales were 2.5 billion, negatively impacted by the persistence of industry demand.

Speaker #3: In Q3, the industry was down 3.3 percent, which is in line with our full-year guidance of down approximately 5 percent. The solid execution of our price increase implemented in April and July combined with our new product launches drove approximately 230 basis points of sequential margin expansion.

Juan Carlos Puente: This improvement was masked by the inflationary headwinds, resulting in 30 basis points of net sequential EBIT margin benefit. More recently, we announced an additional 7% price increase, effective 1 November in Canada and 3 December in the US. While the impact of Q4 results will be limited, we expect this action, combined with our structural cost takeout actions, to further expand margin in 2027.

Speaker #3: This improvement was masked by the inflationary headwinds resulted in 30 basis points of net sequential EBIT margin benefit. More recently, we announced an additional 7 percent price increase, effective.

Speaker #3: November 1st in Canada, and December 3rd in the US. While the impact of Q4 results will be limited, we expect this action combined with our structural cost takeout actions to 2027.

Juan Carlos Puente: Turning to slide 11, let's review the positive impact of this price increase in our retail sell-out price data. As a reminder, this chart represents the aggregated view of thousands of price data points collected every week from public sources. The yellow line shows that our price realization progressed strongly through Q3, maintaining 8% to 9% gains over the January 2025 baseline prices. The blue line shows that competitors' average pricing has also meaningfully moved upwards since the beginning of 2026. This trend is consistent with the full burden of tariffs and increased transportation costs, ultimately reinforcing our confidence in the long-term value of our domestic footprint. Another element that is centered to our strategy is delivering meaningful product innovation that delights our consumers. Turning to slide 12, you can see our latest industry-first product innovation in our refrigeration lineup.

Speaker #3: slide 11, let's review the positive impact of this price increase in our retail sell-out price data. As a reminder, this chart represents the aggregated view of thousands of price data points collected every week from public sources.

Speaker #3: price realization progressed strongly through Q3, maintaining 8 to 9 percent gains over the January 2025 baseline prices. The blue line shows that competitors average The yellow line shows that our pricing has also meaningfully moved upward since the beginning of 2026.

Juan Carlos Puente: This trend is consistent with the full burden of tariffs and increased transportation costs, ultimately reinforcing our confidence in the long-term value of our domestic footprint. Another element that is centered to our strategy is delivering meaningful product innovation that delights our consumers. Turning to slide 12, you can see our latest industry-first product innovation in our refrigeration lineup.

Speaker #3: This trend is consistent with the full burden of tariffs and increased transportation costs, ultimately reinforcing our confidence in a long-term value of our domestic footprint.

Speaker #3: Another element that is centered to our strategy is delivering meaningful product innovation that it lights our consumers. Turning to slide 12, you can see our latest industry-first product innovation in our refrigeration lineup.

Juan Carlos Puente: We recently launched the industry-first refrigerator with an in-door nugget ice maker under the Whirlpool brand. This true counter-depth French door refrigerator is a great addition to our portfolio. It hits the marketplace as consumer demand for nugget ice accelerates across North America, setting a new benchmark for consumer innovation. By combining highly value features with premium design, this product serves as a standout differentiator that directly supports our premium growth strategy. Turning to slide 13, we're bringing another industry-first innovation to our core laundry category. Our top-load washer now features a removable delicate basket, which addresses a long-standing consumer pain point by allowing delicate items to be gently washed at the same time as the everyday laundry load. By combining delicate care with daily laundry capacity in a single cycle, this unique offering drives premium mix and reinforces our product leadership in MDA North America.

Speaker #3: We recently launched the industry-first refrigerator with an indoor nugget ice maker under the Whirlpool brand. This true counter-depth French door refrigerator is a great addition to our portfolio.

Speaker #3: It hits the marketplace as a consumer demand for nugget ice accelerates across North America, setting a new benchmark for consumer innovation. By combining highly value features with premium design, these products serve as a standout differentiator that directly supports our premium growth strategy.

Juan Carlos Puente: Turning to slide 13, we're bringing another industry-first innovation to our core laundry category. Our top-load washer now features a removable delicate basket, which addresses a long-standing consumer pain point by allowing delicate items to be gently washed at the same time as the everyday laundry load. By combining delicate care with daily laundry capacity in a single cycle, this unique offering drives premium mix and reinforces our product leadership in MDA North America.

Speaker #3: Turning to slide 13, we're bringing another industry-first innovation to our core laundry category. Our top-blow washer now features a removable delicate basket, which addresses a longstanding consumer pain point by allowing delicate items to be gently washed at the same time as the everyday laundry load.

Speaker #3: By combining delicate care with daily laundry capacity in a single cycle, this unique offering drives premium mix and reinforces our product leadership in MDA North America.

Juan Carlos Puente: On slide 14, we are maximizing benefits from our manufacturing and supply chain footprint to optimize our structural competitive advantage. In our last earnings call, we discussed three key manufacturing footprint initiatives that we announced in Q1. A multi-year modernization and operational optimization of our plant in Amana, Iowa. Unlocking supply chain efficiencies through vertical integration in our facility in Perrysburg, Ohio, and shifting refrigeration production between Supsa and Ramos Arizpe, Mexico to leverage scale and lower conversion costs. We have hit key milestones across all three initiatives, and our progress year to date gives us confidence in our operational trajectory. In US Logistics, we have completed 25% reduction in our local distribution center count and continue to advance with the consolidation of regional distributions and return centers. Importantly, we are maintaining reach and proximity with 97% of our customers remaining within 100 miles of our distribution centers.

Speaker #3: On slide 14, we're maximizing benefits from our manufacturing and supply chain footprint to optimize our structural competitive advantage. In our last earnings call, we discussed three key manufacturing footprint initiatives that we announced in Q1.

Speaker #3: A multi-year modernization and operational optimization of our plant in Amana, Iowa. Unlocking supply chain efficiencies through vertical integration in our facility in Perrisburg, Ohio.

Juan Carlos Puente: Unlocking supply chain efficiencies through vertical integration in our facility in Perrysburg, Ohio, and shifting refrigeration production between Supsa and Ramos Arizpe, Mexico to leverage scale and lower conversion costs. We have hit key milestones across all three initiatives, and our progress year to date gives us confidence in our operational trajectory.

Speaker #3: And shifting refrigeration production between Subsa and Ramos, Mexico, to leverage scale and lower conversion costs. We have hit key milestones across all three initiatives and are progress year to date gives us confidence in our operational trajectory.

Juan Carlos Puente: In US Logistics, we have completed 25% reduction in our local distribution center count and continue to advance with the consolidation of regional distributions and return centers. Importantly, we are maintaining reach and proximity with 97% of our customers remaining within 100 miles of our distribution centers.

Speaker #3: In US logistics, we have completed 25 percent reduction in our local distribution center count and continue to advance with a consolidation of regional distributions and return centers.

Speaker #3: Importantly, we are maintaining reach and proximity with 97 percent of our customers remaining within 100 miles of our distribution centers. In total, this manufacturing supply chain actions represent 290 million in structural cost benefits.

Juan Carlos Puente: In total, these manufacturing supply chain actions represent $290 million in structural cost benefits. While these benefits are largely expected into 2027, our cost initiatives continue to progress, contributing to our sequential margin progress and offsetting incremental fuel logistic cost. Now I will turn the call over to Ludo to review our MDA Latin America and SDA global results.

Speaker #3: While these benefits are largely expected into 2027, our cost initiatives continue to progress, contributing to our sequential margin progress and offsetting incremental fuel logistic costs.

Speaker #3: Now I'll turn the call over to Lulu to review our MDA Latin America and SDA global results.

Ludovic Beaufils: Thanks, Juan Carlos. Turning to slide 15, I will review the results for our MDA Latin America business. Excluding currency, net sales increased 2.5%, driven by higher volume, partially offset by price mix. We experienced temporary margin pressure as our mix shifted out of Grupo Casas Bahia's more premium portfolio, resulting in an EBIT margin of 2%. As retail inventories adjust and our volume redistribution settles, we expect the mix to normalize over time. We have announced incremental price increases across the segment of up to 10%, effective in Q4, which alongside our key new product launches, are expected to increase profitability in 2027. Turning to slide 16, you can see two key product launches that are driving premium growth in MDA Latin America. First, a new lineup of induction cooktops in Brazil, featuring a fresh design that aligns with the premium Brastemp aesthetic.

Speaker #2: Thanks, Juan Carlos. Turning to slide 15, I'll review the results for our MDA Latin America business. Excluding currency, net sales increased 2.5 percent, driven by higher volume, partially offset by price mix.

Speaker #2: We experienced temporary margin pressure as our mix shifted out of Whirlpool Casas Bella's more premium portfolio, resulting in an EBIT margin of 2 percent.

We experience temporary margin pressure as our, mixed shifted out of groupo cases by as more premium portfolio. Resulting in an ebit margin of 2%.

As retail inventories, adjust and our volume redistribution, settles, we expect the mix to normalize over time.

Ludovic Beaufils: We have announced incremental price increases across the segment of up to 10%, effective in Q4, which alongside our key new product launches, are expected to increase profitability in 2027. Turning to slide 16, you can see two key product launches that are driving premium growth in MDA Latin America. First, a new lineup of induction cooktops in Brazil, featuring a fresh design that aligns with the premium Brastemp aesthetic.

We have announced incremental price increases across the segments of up to 10% effective in Q4.

Which alongside our key new product launches are expected to increase profitability in 2027.

Turning to slide 16. You can see 2 key product launches that are driving premium growth in MDA Latin America

First, a new lineup of induction cooktops in Brazil.

Featuring a fresh design that aligns with the premium brush, Tempest static.

Ludovic Beaufils: Second, the new Whirlpool and Brastemp French door refrigeration line with its stunning black liner combining sophisticated design with versatile functionality. These are just two examples of how we are expanding our premium product pipeline in Latin America with high-margin products as we continue to focus on margin expansion. Turning to slide 17, let us review our SDA global business. New product launches in our direct-to-consumer channel continue to support share gains globally and help deliver a healthy EBIT margin of 18.6% in the third quarter. We had another quarter of strong sell-out globally, while seasonal order shifts pushed the top line growth into Q4, as evidenced by the approximately 40% increase year over year in our October US orders. We continue to take actions to grow our business beyond our core categories and have recently bolstered our portfolio of licensed products by expanding our kitchen accessories sales through our direct-to-consumer channel.

Second the new whirlpool and brast and French door Refrigeration line with its stunning. Black liner combining sophisticated design reversal functionality,

These are just 2 examples of how we're expanding our premium product pipeline in Latin America. We have high margin products as we continue to focus on margin expansion

Turning to slight 7, that's review, our SDA Global business.

Ludovic Beaufils: New product launches in our direct-to-consumer channel continue to support share gains globally and help deliver a healthy EBIT margin of 18.6% in the third quarter. We had another quarter of strong sell-out globally, while seasonal order shifts pushed the top line growth into Q4, as evidenced by the approximately 40% increase year over year in our October US orders.

New product launches and our direct to Consumer Channel, continue to support, share gains globally, and help deliver a healthy ebit margin of 18.6% in the third quarter.

We had another quarter of strong sellout globally while seasonal order shifts, push the Top Line growth into Q4. As evidenced by the approximately 40% increase year-over-year in our October us orders,

Ludovic Beaufils: We continue to take actions to grow our business beyond our core categories and have recently bolstered our portfolio of licensed products by expanding our kitchen accessories sales through our direct-to-consumer channel.

we continue to take actions to grow our business, beyond our core categories and have recently bolstered our portfolio of licensed products by expanding our kitchen accessory cells, through our direct to Consumer Channel.

Ludovic Beaufils: We are also introducing KitchenAid Kids, a new line of role-play toys with lights, sounds, and motion to captivate aspiring young chefs. KitchenAid toys can already be found in key retailers globally. On slide 18, let me showcase two of our newest product innovations. On the left is our KitchenAid 2026 Design Series Stand Mixer, the Luminaire. It combines the built-in light of our new Artisan Plus with a new fluted glass bowl, and the result is a striking new visual expression for this iconic kitchen appliance. The Luminaire complements our successful Artisan Plus lineup, which has generated strong interest from trade customers and enabled us to capture high-value incremental flooring and a high-mix POS. On the right, we are highlighting the expansion of our KitchenAid Go cordless line.

Roleplay toys with light sounds and motion to Captivate aspiring young chefs.

Kitchen at toys can already be found in key resellers globally.

On slide 18. Let me showcase 2 of our newest product Innovations. On the left is our KitchenAid 2026 design series stand, mixer the luminere

It combines the built-in light of our new Artisan plus with a new fluted glass bowl.

and the result is a striking new visual expression for this iconic kitchen, appliance

Ludovic Beaufils: The Luminaire complements our successful Artisan Plus lineup, which has generated strong interest from trade customers and enabled us to capture high-value incremental flooring and a high-mix POS. On the right, we are highlighting the expansion of our KitchenAid Go cordless line.

The luminary Compliments are successful Artisan plus lineup which has generated strong interest from trade. Customers and enabled us to capture high value incremental, flooring and high mix posos.

On the right, we're highlighting the expansion of our KitchenAid. Go cordless line.

Ludovic Beaufils: We have added a grater, slicer, shredder, and a vacuum sealer, which means a single rechargeable battery can now power 10 different appliances across the KitchenAid Go collection. To summarize, we have had a strong performance in the first three quarters and now enter Q4 highly confident in our ability to deliver double-digit growth for the year.

We've added a grater slicer Shredder and a vacuum sealer, which means a single rechargeable battery, cannot power, 10 different appliances across the kitchen at go collection.

To summarize. We've had a strong performance in the first 3 quarters, and now enter Q4 highly confident. In our ability to deliver double digit growth for the year at highly accretive margins in line with our full year guidance.

Marc Bitzer: Highly accretive margins in line with our full year guidance. Let me now turn the call over to Roxanne to review our updated guidance and capital allocation priorities.

Ludovic Beaufils: Highly accretive margins in line with our full year guidance. Let me now turn the call over to Roxanne to review our updated guidance and capital allocation priorities.

Let me now, turn on the call over to roxand to review. Our updated guidance and capital allocation priorities.

Roxanne Warner: Thanks, Ludo. Turning to slide 20, we are updating our full year guidance across organic net sales, ongoing EBIT, and ongoing EBIT margin to reflect the current pace of our margin recovery. On a like-for-like basis, we now expect revenue decline of approximately 1.5% in 2026. This reflects softer demand in the US, along with price and mix pressures, particularly in Latin America. We anticipate a full year ongoing EBIT margin between 2% and 2.2%, driven by continued momentum from our new product launches, strategic pricing, and sustained structural cost takeout. We are being extremely aggressive around what we can control. On a full year basis, we expect to deliver approximately $250 million of gross cost savings driven by design to value cost reductions and strategic cost initiatives.

Thanks Ludo, turning to slide 20. We are updating our full year guidance across organic meals ongoing ebit and ongoing ebit margin to reflect the current pace of our margin recovery.

On a like, for like basis. We now expect Revenue decline of approximately 1.5% in 2026.

This reflects softer, demand in the US along with price and mixed pressures particularly in Latin America.

Roxanne Warner: We anticipate a full year ongoing EBIT margin between 2% and 2.2%, driven by continued momentum from our new product launches, strategic pricing, and sustained structural cost takeout. We are being extremely aggressive around what we can control. On a full year basis, we expect to deliver approximately $250 million of gross cost savings driven by design to value cost reductions and strategic cost initiatives.

We anticipate a full year, ongoing Eve with margin between 2% and 2.2% driven by continued momentum from our new product. Launches strategic pricing and sustained structural cost takers.

We are being extremely aggressive around what we can control.

On a full year basis. We expect to deliver approximately 250 million dollars of gross cost. Savings driven by Design to value cost reductions and strategic cost initiatives.

Roxanne Warner: These positive drivers are being offset by the negative impact of volume deleveraging tied to softer demand and fuel and logistics costs, resulting in net cost takeout below $150 million. Despite these external headwinds, our cash generation is resilient. We expect to deliver free cash flow of approximately $300 million or approximately 2% of net sales driven by rigorous working capital discipline, including proactive inventory reductions and stronger cash collection. Turning to slide 21, let me walk you through our updated EBIT margin guidance for the year. We are now expecting a benefit of 25 basis points in 2026 from price mix, with the benefits of our multiple pricing actions extending into 2027. We expect a 125 basis point headwind from our cost actions being more than offset by inflation and volume deleverage.

These positive drivers are being offset by the negative impact of volume, delivering tight to softer, demand and Fuel and Logistics costs resulting in net cost, takeout below 150 million.

Despite these external headwinds our cash generation is resilient.

We expect to deliver free cash flow of approximately 300 million or approximately 2% of net sales driven by rigorous working capital discipline, including proactive inventory, reductions and stronger, cash collection.

Roxanne Warner: Turning to slide 21, let me walk you through our updated EBIT margin guidance for the year. We are now expecting a benefit of 25 basis points in 2026 from price mix, with the benefits of our multiple pricing actions extending into 2027. We expect a 125 basis point headwind from our cost actions being more than offset by inflation and volume deleverage.

Turning to slide 21. Let me walk you through our updated. Ebit margin guidance for the year.

We expect a 125 basis. Point headwind from our cost actions being more than offset by inflation and volume delivery.

Roxanne Warner: We now expect a 100 basis point headwind from raw material inflation driven by elevated resin and base metal costs. We expect a lowered 75 basis point headwind from the impact of tariffs, net of tariff mitigation actions. It is important to note that these impacts represent currently announced tariffs and do not factor in any future or potential changes in trade policy. We also now expect no material impact for marketing and technology and a favorable currency impact of 25 basis points driven by the MXN and BRL. Turning to slide 22, I will review our updated segment guidance. Starting with industry demand, we now expect MDA Latin America to increase 5% to 7% with our expectations for MDA North America and SDA global unchanged. For MDA North America, we now expect to deliver a full year EBIT margin of more than 2%.

We now expect a 100 basis point headwind from raw material inflation. Driven by elevated resin and base metal costs.

We expect a lowered 75 basis point headwind from the impact of tariffs. Net of tariff mitigation actions.

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

We also know expect no material impact for marketing and technology and a favorable currency impact of 25 basis points driven by the Mexican, peso and Brazilian real.

Roxanne Warner: Turning to slide 22, I will review our updated segment guidance. Starting with industry demand, we now expect MDA Latin America to increase 5% to 7% with our expectations for MDA North America and SDA global unchanged. For MDA North America, we now expect to deliver a full year EBIT margin of more than 2%.

Turning to slide 22. I will review our updated segment guidance.

Starting with industry demand. We now expect MDA Latin America to increase 5 to 7% with our expectation for MDA North America and SDA Global unchanged.

For MDA, North America. We now expect to deliver a full year. Ebit margin of more than 2%.

Roxanne Warner: For MDA Latin America, we now expect to deliver a full year EBIT margin of approximately 3%. Our full year EBIT margin expectations for our SDA global business remain unchanged. Turning to slide 23, I will outline the components of our free cash flow guidance. As I mentioned, we expect to deliver approximately $300 million in free cash flow in 2026. We expect our lower earnings contribution to be fully offset by robust working capital management, including stronger cash collection and inventory optimization, which are expected to protect our cash flow generation and maintain our balance sheet resilience to navigate challenging market conditions. Turning to slide 24, let me reiterate our capital allocation priorities. Investing in organic growth through product innovation is critical to our business. We will continue to invest in product innovation, digital transformation, and cost efficiency projects with approximately $400 million of CapEx expected this year.

For MDA Latin America. We now expect to deliver a full year ebit margin of approximately 3%.

Our full year, ebit margin expectations for our FDA Global business remain unchanged.

Turning to slide 23, I will outline the components of our free cash flow guidance.

As I mentioned, we expect to deliver approximately 300 million dollars in free cash flow in 2026.

Roxanne Warner: We expect our lower earnings contribution to be fully offset by robust working capital management, including stronger cash collection and inventory optimization, which are expected to protect our cash flow generation and maintain our balance sheet resilience to navigate challenging market conditions. Turning to slide 24, let me reiterate our capital allocation priorities. Investing in organic growth through product innovation is critical to our business.

Our lower earnings contribution to be fully offset by robust, working Capital Management, including stronger cash collection, and inventory optimization, which are expected to protect our cash flow generation and maintain our balance sheet, resilience to navigate challenging market conditions.

Turning to slide 24. Let me reiterate our Capital allocation priorities.

Investing in organic growth, through product, Innovation is critical to our business.

Roxanne Warner: We will continue to invest in product innovation, digital transformation, and cost efficiency projects with approximately $400 million of CapEx expected this year.

Roxanne Warner: Turning to our balance sheet and capital allocation, we are very pleased with the proactive steps we have taken to secure long-term financial flexibility in what remains a challenging operating environment. As part of our commitment to optimizing our portfolio, we fully exited our stake in Beko Europe during Q2. In tandem, our strategic capital structure actions have successfully extended our debt maturity profile, leaving us with no major maturities until 2028. Furthermore, we are raising our year-end net debt outlook. We now expect to close the year below $4.5 billion, improving on our prior target of net debt of less than $5 billion. Now I will turn the call back over to Marc for closing remarks.

Turning to our balance sheet and capital allocation.

Are very pleased with the proactive steps. We've taken to secure long-term Financial flexibility in what Remains the challenging operating environment.

As part of our commitment to optimizing our portfolio, we fully exited our stake in beco Europe during the second quarter.

In tandem our strategic capital structure actions have successfully extended our debt maturity profile leaving us with no major maturities until 2028.

Roxanne Warner: Furthermore, we are raising our year-end net debt outlook. We now expect to close the year below $4.5 billion, improving on our prior target of net debt of less than $5 billion. Now I will turn the call back over to Marc for closing remarks.

Furthermore, we are raising our year end. Net debt Outlook.

We now expect to close the year below 4.5 billion improving on our prior Target of net, debt of less than 5 billion dollars.

Now, I will turn the call back over to mark for closing remarks.

Marc Bitzer: Thanks, Roxanne. Turning to slide 25, let me wrap up before we take questions. Despite the persistent macroeconomic headwinds, we are focused on what we can control. Driving margin expansion through pricing realization and disciplined execution of our structural cost takeout actions are front and center. Our rigorous working capital management is protecting our free cash flow, reinforcing our balance sheet, and maintaining our financial flexibility. Beyond our core major appliances, our business units continue to deliver exceptional value. InSinkErator delivered its second consecutive quarter of year-over-year revenue growth, and SDA Global is on track to deliver very strong performance in 2026. As we look forward to 2027, we are cautiously optimistic. A combination of, one, a very strong pipeline of new product launches. Two, the benefits from pricing actions we have already taken and announced.

Thanks again turning to slide 25. Let me wrap up before we take questions.

Despite the persistent macroeconomic headwinds, we are focused on what we can control.

Driving margin expansion through pricing realization and disciplined execution of our structural cost. Takeout actions are front and center.

Our rigorous work in Capital Management is protecting our free cash flow reinforcing, our balance sheet and maintaining our financial flexibility.

Marc Bitzer: Beyond our core major appliances, our business units continue to deliver exceptional value. InSinkErator delivered its second consecutive quarter of year-over-year revenue growth, and SDA Global is on track to deliver very strong performance in 2026. As we look forward to 2027, we are cautiously optimistic. A combination of, one, a very strong pipeline of new product launches. Two, the benefits from pricing actions we have already taken and announced.

Beyond our core. Major appliances our business units. Continue to deliver exceptional value.

Insecurity delivered its second consecutive quarter of year-over-year Revenue growth and SDA Global is on track to deliver very strong performance in 2026.

As we look forward to 2027, we are cautiously optimistic.

A combination of 1, a very strong pipeline of new product launches to the benefits. From a pricing actions, we have already taken and announced and 3, the structural cost reduction initiatives that are fully underway to together create a solid foundation for margin expansion and this is absent of a change in the macro environment.

Marc Bitzer: The structural cost reduction initiatives that are fully underway together create a solid foundation for margin expansion, and this is absent of a change in the macro environment. Most importantly, we are fully committed to creating shareholder value. Strategic investments in our US domestic manufacturing footprint are deepening our competitive advantage, and our portfolio of iconic brands and leading position in the builder channel will catalyze the tailwinds from eventual US housing market recovery. Now we will end our formal remarks and open it up for questions.

Most importantly, we are fully committed to creating shareholder value, strategic investments in our us domestic. Manufacturing. Footprint are deepening our competitive advantage and our portfolio of iconic Brands and leading position in the build, the channel will capitalize the Tailwind from eventual US housing market recovery.

Marc Bitzer: Now we will end our formal remarks and open it up for questions.

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

Operator: 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. Your first question comes from the line of Sam Darkatsh from Raymond James. Your line is open.

Sam Darkatsh: Yes. Good morning, Marc, Roxanne, Juan Carlos, Ludo. How are you?

Yes, uh, good morning, Mark Roxanne. Juan Carlos Ludo, how are you?

Marc Bitzer: Good morning.

Operator: Morning.

Juan Carlos Puente: Morning.

Marc Bitzer: Good morning.

Ludovic Beaufils: Good morning.

Sam Darkatsh: First question. A lot of moving parts. We are starting to get a little bit more visibility into 2027. As it stands right now, I know things are fluid, but as it stands right now, what does RMI and tariff and cost takeouts look like for 2027? I have a quick follow-up.

Um good morning, good morning. For for first question. Um a lot of moving parts were starting to get a little bit more, visibility into 2027 um as it stands right now. I mean, I know things are fluid but as it stands right now what what is RMI and tariff and cost takeouts look like for for 2027 and and then I got a quick follow-up.

Marc Bitzer: Well, Sam, look, obviously, as you know, we give a guidance and everything else in more detail in our January call. Having said that, let me give you a little bit of perspective. As you may have heard in my remarks earlier, we are cautiously optimistic for 2027. On the cost side specifically, and again, these are, call it the external cost elements and the internal ones. Let me first start with the internal ones. What we call our gross productivity from design changes, et cetera, is actually also this year pretty well on track. You also need to understand that, and you know it, these are massive engineering efforts, which very often have quite a bit of sizable carryover benefit. So we know pretty much today what we will get next year from these cost changes, and they are on track.

Yes, it's Sam that, I mean, obviously, as as you know, it's, um, we give a guidance and everything else in more detail in, in, in our general call, having said that, let me give you a little bit of perspective. And as you may have heard in my, um, remarks earlier, with cautiously optimistic for 2027 now, on the cost side specifically and again, these are call it. The external cost elements and the internal ones. Let me first start my internal ones. Um, what we call our gross productivity from design changes. Etc, is actually also this year pretty well on track.

Marc Bitzer: Let me first start with the internal ones. What we call our gross productivity from design changes, et cetera, is actually also this year pretty well on track. You also need to understand that, and you know it, these are massive engineering efforts, which very often have quite a bit of sizable carryover benefit. So we know pretty much today what we will get next year from these cost changes, and they are on track.

You always need to understand that. And, you know, it, um, is these are massive engineering efforts, which very often have a quite a bit of sizable carryover benefit. So we know pretty much today. What we will get next year for me is um, cost changes and we're on track. The second part is what I what we really highlight is we structural cost changes with what we've been doing in a manner, what we're doing in Superstars what we're doing. Um, in Brazil also between Argentina and Brazil and lastly, the purrysburg, these are all massive structural cost changes frankly which cost us money this year. So they didn't give us that much benefit this year, but they will carry over. So we feel very good about call it the cost which we can control. And I would argue from today's perspective, we probably heading towards 1 of the highest gross productivity numbers in a number of years.

Marc Bitzer: The second part is what we earlier highlight is the structural cost changes with what we have been doing in Amana, what we are doing in Supsa, what we are doing in Brazil also between Argentina and Brazil, and lastly, with Perrysburg. These are all massive structural cost changes, frankly, which cost us money this year. They did not give us that much benefit this year, but they will carry over. We feel very good about, call it the cost which we can control. I would argue from today's perspective, we are probably heading towards one of the highest gross productivity numbers in a number of years. The flip side is, as you point out, RMI and tariff. The tariff, we all know that we do not know. Right now, we are assuming it is a more stable tariff environment. Obviously, there is a little bit of uncertainty on the Canadian tariff.

Marc Bitzer: I would argue from today's perspective, we are probably heading towards one of the highest gross productivity numbers in a number of years. The flip side is, as you point out, RMI and tariff. The tariff, we all know that we do not know. Right now, we are assuming it is a more stable tariff environment. Obviously, there is a little bit of uncertainty on the Canadian tariff.

The flip side is um as you point out, RMI and tariff so tariff. I mean,

Marc Bitzer: That is probably the only one. Right now, we factor in that is just staying. Hopefully, at one point will go away. Again, we just do not know right now. We just assume it is stable. On the raw material, as you know, the two biggest raw materials which we have is steel and resins. Steel is, in particular for North America, has seen a massive price increase over the last 12 months, actually of 50%, which I think in many ways you could argue is a little bit disconnected from reality because iron ore went down and the international steel price are now on a completely different level. Having said that, we locked in two out of three contracts, which are long-term contracts. I would call them they are at fair prices, not spectacular, but they are fair.

But right now we factor in match just, um, staying hopefully at 1 point will go away. Um, but again, we just don't know right now we just assume it's stable, Omar, raw material as, you know, with with 2 biggest raw materials that you have a steel and, um, resins, um, steel is

Marc Bitzer: Steel is, in particular for North America, has seen a massive price increase over the last 12 months, actually of 50%, which I think in many ways you could argue is a little bit disconnected from reality because iron ore went down and the international steel price are now on a completely different level. Having said that, we locked in two out of three contracts, which are long-term contracts. I would call them they are at fair prices, not spectacular, but they are fair.

I'm particular for North America has seen a massive price increase over the last 12 months actually of 50%.

Which I think in many ways you could argue, it's a bit disconnected from reality, because iron ore, and down and international Duty price are on a completely different level. Having said that, we, we locked in 2 out of 3 contracts, which are long-term contracts, um, and I would call them where at fair prices, not spectacular, but they're Fair. Um, so to some extent, we're we have a certain buffer and we have a certain protection, not yet entirely, um, but it's going to be a hit versus a fully, a run rate. Having said that that is largely baked in our rate in the back half of this year so sequentially, it's not that much of a dramatic change. And then you have a plastic side of a resin side which in the long term typically follows oil, as you've all seen all just in, Q3 we went up 20% for for the reasons which we are all aware of. Um and right now, the only thing which we can do right now if if all stays are, let's say around 100 dollars. Um, yes that would largely be reflected with our run rate of Q3 and Q4, but we all know there's a certain color.

Marc Bitzer: To some extent, we have a certain buffer, and we have a certain protection, not yet entirely. It is going to be a hit versus the full year run rate. Having said that is largely baked in already in the back half of this year. Sequentially, it is not that much of a dramatic change. Then you have a plastic side of a resin side, which in the long term, typically follows oil. As you have all seen, oil just in Q3 went up 20% for reasons which we are all aware of. Right now, the only thing which we can do right now, if oil stays at, let us say, around $100, yes, that would largely be reflected with our run rate of Q3 and Q4.

Marc Bitzer: Right now, the only thing which we can do right now, if oil stays at, let us say, around $100, yes, that would largely be reflected with our run rate of Q3 and Q4.

Marc Bitzer: But we all know there is a certain, call it volatility risk, which by the way, could go in both ways on the oil side heading into 2027. On the raw material, I think oil is right now the biggest factor which we cannot fully foresee. Steel a little bit better because we have these contracts. Then, of course, you have a large tail end on raw materials, which for the entire 2026 were not necessarily favorable, but I would say they are largely reflected in the Q3 and Q4 run rate. Sam, it was a long answer to a short question, but I just want to give you a little bit of color.

Volatility risk, which by the way, could go in both ways on the oil side heading into 2027. So, Omar raw material, I think oil is right now our biggest

Factor which we can't fully foresee still a little bit better because we have these contracts.

And then, of course, you have a large tail end on raw materials, which will the entire 26 were not necessarily favorable, but I would say a large reflected in the Q3 and Q4 Runway.

The Samuel was a long answer to a short question but I just want to give you a little bit of color.

Marc Bitzer: Sam, it was a long answer to a short question, but I just want to give you a little bit of color.

Sam Darkatsh: Thank you for that. The second question, the 7% North American pricing effective in December, I am guessing that is mostly PMAP, but is that PMAP? Is that list? What is the 2027 price rollover at this point? Understanding that almost everything is really to 2027, not to Q4. Thanks.

Thank you for that. The second question. Um, the 7% North American pricing the effective in December. I'm I'm guessing that's mostly pmap. But um, is, is that, is that pmap? Is that list and then what is the 2027 price rollover? At this point? Um, understanding that almost everything is is is really to, to 27, not to, to 42. Thanks. Yeah. And and salmon. Let me start and maybe I will have 1 cause later on to give some additional color. And then, let me combine your question which probably likely question which we might get on page 11. Anyhow on the web price price development, which again is price chart and price 11 shows pretty much the price development since January 25th US versus a competitor. You clearly saw in Q3 we were June July. We were aiming very high. We had course correct a little bit in Q3 and right now, we're kind of call it boosting another

Marc Bitzer: Yeah, Sam, let me start, and maybe I will have Juan Carlos later on to give some additional color. Let me combine your question, which probably like the question which we might get on page 11 anyhow on the price development. Again, this chart on price 11 shows pretty much the price development since January 2025, us versus competitor. You clearly saw in Q3, June, July, we were aiming very high. We had to course-correct a little bit in Q3, and right now we are kind of call it boosting another price element in Q4. That is what has already been announced to the trade.

Marc Bitzer: We had to course-correct a little bit in Q3, and right now we are kind of call it boosting another price element in Q4. That is what has already been announced to the trade.

Number um, price element in Q4. Um, and that that's what's already been announced to the trade. Um, so the trade is fully aware of what we're doing. Which in reality, there's some call it, more smaller, tactical moves throughout October November, and then there's a significant move effective kind of a first week or end of a first week in December, um, which fully carries over into next year. That's significant move which again is more Parker 7% is actually combination of map pmap in some cases. Also, first call, so it's it's a mixed bag of elements. Um, but it's largely on the map, where we ALS gave Ms where we gave trade visibility for quite some months out. So if it's a, it's not just a kind of a 1 week, um, it's a fairly predictable 1 again that has already been communicated to the trades, um, but it's a it's a combination of different tools.

Marc Bitzer: The trade is fully aware of what we are doing, which in reality, there is some, call it more smaller tactical moves throughout October, November, and then there is a significant move effective kind of a first week or end of the first week in December, which fully carries over into next year. That significant move, which again is in the ballpark of 7%, is actually a combination of MAP, PMAP, in some cases also first cost. So it is a mixed bag of elements, but it is largely on the MAP where we also gave and the PMAP where we gave trade visibility for quite some months out. So it is not just a kind of a one week, it is a fairly predictable one. Again, that has already been communicated with trades, but it is a combination of different tools. Carlos?

Marc Bitzer: So it is a mixed bag of elements, but it is largely on the MAP where we also gave and the PMAP where we gave trade visibility for quite some months out. So it is not just a kind of a one week, it is a fairly predictable one. Again, that has already been communicated with trades, but it is a combination of different tools. Carlos?

Juan Carlos Puente: Yep. Obviously, the focus is in the US. In the US, it is 7% starting 3 December, and in Canada it is 1 November. But it is basically we provide to our trade partners 90-day lead time on all the promotional pricing moving forward, and that is what has been communicated with the trade.

Different colors. Yeah so obviously the the the focus is in the US in the US is 7% starting, December 3rd and in Canada is November 1st but it is basically we provide to our trade Partners 90 Day lead time on all the promotional pricing moving forward and that's what has been communicated with the trade.

Marc Bitzer: Maybe just the last comment I want to make, Sam, on your carryover question. Needless to say, with the price increases and knowing that this is a holiday quarter, you cannot impact that much anymore of a Black Friday in a promotion period. Course correct a little bit, but you cannot impact it. So yes, whereas in the month of December, we expect a sizable lift, and that is already baked in. Of course, that lift will carry over into next year. That is part of the reason why we are cautiously optimistic. Again, this is a competitive environment, but this is what we communicated. Obviously, Q4's exit run rates, we have, I would say several points of positive pricing carrying into 2027.

Maybe just the last comment. I want to make Sam on your carry over question needless to say, when you kind of, um, with a price increases and knowing that this is a, a holiday quarter, you can't impact that much anymore of a Black Friday and a promotion period. Of course. Correct a little bit but you can't impact it. So yes. There's in the month of December. We expect the sizable lift, um, and that's already baked in, um, and of course, that lifts will carry over into next year. Um, that's part of the reason why we're causing the optimistic. Again, this is a competitive environment, um, but this is what we communicated and obviously, we these exit run rates. We have um, I would say several points of positive pricing carrying into 27.

Marc Bitzer: Again, this is a competitive environment, but this is what we communicated. Obviously, Q4's exit run rates, we have, I would say several points of positive pricing carrying into 2027.

Operator: Your next question comes from the line of David MacGregor from Longbow Research. Your line is open.

Longbow, research, your line is open.

David MacGregor: Yes, good morning, everyone.

Yes, good morning everyone. Um, Mark, I want good morning. I wanted to ask you about the fourth quarter, free cash flow. That's implied in your 300 million for the year and and you specifically around working capital, because you've talked about, you know, reducing inventories, increasing collections. Um, maybe you could provide some examples of exactly what what is your plan to do differently. There, that gives you confidence in that number. And then also, you know, you've got your casa Bahia recovery coming through in 42 and how much of that, uh, should we be at modeling?

Marc Bitzer: Morning, David.

David MacGregor: Marc, good morning. I wanted to ask you about the Q4 free cash flow that is implied in your $300 million for the year, and specifically around working capital, because you talked about reducing inventories, increasing collections. Maybe you could provide some examples of exactly what it is you are planning to do differently there that gives you confidence in that number. Also, you have your Casas Bahia recovery coming through in Q4, and how much of that should we be modeling?

So, so David, let, let me make you give you a high level and then I would ask roxan to give you a little bit more color and details. Um, so first of all, as you know, I mean in Q4, that's typical of a quality of our cash flow flips from negative or low, to, to positive. So that's not unusual at all. This is typical seasonality Q3 is, and for example, give only a bit more color is heavily impact. Because, of course, we had to receivable from Kaza. Bayas are out or buy a negative in Q3 of which we collect a big portion back into Q4. Um, if you look at our full year, cash flow, guidance in the bridge, of course we kind of softer on the earnings side and we basically make it up on the working capital. You also saw on the working capital initially, um so it's now showing a 300 million. Um, if you compare it to last year last year, you would consume work in capital of 150. So the first 150 is basically just the flip back to normal working capital, but yes,

Marc Bitzer: David, let me maybe give you a high level, and then I would ask Roxanne to give you a little bit more color and details. First of all, as you know, in Q4, that is typically the quarter where our cash flow flips from negative or low to positive. That is not unusual. That follows us, use typical seasonality. Q3 is, and Roxanne will give a little bit more color, is heavily impact because of course we had to. The receivable from Casas Bahia are out of a negative in Q3, of which we collect a big portion back into Q4. If you look at our full-year cash flow guidance in the bridge, of course, we are kind of softer on the earnings side, and we basically make it up on the working capital. You also saw on the working capital initially, so it is now showing a $300 million.

Marc Bitzer: The receivable from Casas Bahia are out of a negative in Q3, of which we collect a big portion back into Q4. If you look at our full-year cash flow guidance in the bridge, of course, we are kind of softer on the earnings side, and we basically make it up on the working capital. You also saw on the working capital initially, so it is now showing a $300 million.

Marc Bitzer: If you compare it to last year, last year, we consumed working capital of $150 million. So the first $150 million is basically just the flip back to normal working capital. But yes, we challenge ourself with an additional $150 million of working capital, which requires work, and I am the first one to admit it. The reason why we are positive about it is our inventories, which is typically the most difficult piece to kind of adjust in the short term, are on a very low level. I would even argue to some extent, too low level. So typically, when you have a lot of work in Q4 to take it down, we are already at that level. So we know that is on a pretty good level. In fact, we may even produce more, which gives us a little bit of a boost on the payable side. But yes, we are collecting.

Um, we challenge ourselves with an additional 150 million, working capital, um, which requires work and and I first want to admit it, the reason why we're um, positive about it is our inventories which is typically the most difficult piece to kind of adjust them. A short-term r on a very low level. I would even argue to some extent too low level. Um, so typically, when you have a lot of work in Q4 to take it down, we're already at that level. So we know that's on a pretty good level. In fact, we may even produce more which gives us a little bit of a boost on the payable side. So, um, but yes. Um, we're collecting, we challenged ourselves with an additional 150 million working capital B on what we had in mind to offset the earnings shortfall and right now we have plans in place, um, um, to go after that work then.

Marc Bitzer: I would even argue to some extent, too low level. So typically, when you have a lot of work in Q4 to take it down, we are already at that level. So we know that is on a pretty good level. In fact, we may even produce more, which gives us a little bit of a boost on the payable side. But yes, we are collecting.

Marc Bitzer: We challenge ourself with an additional $150 million working capital beyond what we had in mind to offset the earnings shortfall. Right now, we have plans in place to go after that. Roxanne?

Roxanne Warner: Thanks, Marc. Hi, David. To put some numbers, particularly on the Casas Bahia portion, in Q3, there was approximately $150 million of the receivable that we wrote off, and that has an impact on the Q3 free cash flow. Our expectation is to then collect approximately $100 million of that in Q4. So you see that timing shift. As Marc said, to be very specific, we came into this year saying that we are going to go after working capital with everything we have, and that is exactly what we did. We did in the H1 execute the inventory actions precisely as we mentioned in the call that we would do. In the Q4, we are very, very focused on cash collections, reducing overdues to levels that we have not had before.

Thanks, Matt. Hi, David. So just to put some some numbers particularly on the casa portion in Q3, there's a approximately 150 million dollars of the receivable that we wrote off and that has an impact on the Q3 free cash flow. Our expectation is to then collect approximately 100 million dollars of that in Q4. So you see that timing shift and then as Mark said to be you know very specific. We came into this year saying that we're going to go after our working capital with everything we have. And that's exactly what we did. We did in the first half, execute the inventory actions, precisely as we mentioned in the call that we would do. And then now in the Q4, we're very, very focused on cash collections.

Roxanne Warner: We did in the H1 execute the inventory actions precisely as we mentioned in the call that we would do. In the Q4, we are very, very focused on cash collections, reducing overdues to levels that we have not had before.

Reducing overdose to levels that we haven't had before and then similarly on accounts payable uh, working very closely with our suppliers to get those terms that we need to ensure that we deliver the working capital of approximately million dollars for the year.

Roxanne Warner: Similarly on accounts payable, working very closely with our suppliers to get those terms that we need to ensure that we deliver the working capital of approximately $300 million for the year.

Okay, yeah, thank you for that. Uh, Second question. I I guess I just wanted Mark to get your impression on replacement demand and, uh, I think we can all track. What's going on in the Builder Channel and discretionary, but, um, the replacement demand, we've always thought of as being kind of the, The Rock, right? That was the, the 55 60% of demand that we knew we could count on. Um, it, it seems as though that's easing up a little bit. People are, maybe finding it a little easier on the household, cash flow to repair rather than replace. What are you seeing the numbers right now? When you, when you look at replacement demand and how are you thinking about that for 2027?

David MacGregor: Okay. Yeah, thank you for that. Second question, I guess I just wanted, Marc, to get your impression on replacement demand. I think we can all track what is going on in the builder channel and discretionary, but the replacement demand we have always thought of as being kind of the rock, right? That was the 55% to 60% demand that we knew we could count on. It seems as though that is easing up a little bit. People are maybe finding it a little easier on the household cash flow to repair rather than replace. What are you seeing in the numbers right now when you look at replacement demand, and how are you thinking about that for 2027?

David MacGregor: What are you seeing in the numbers right now when you look at replacement demand, and how are you thinking about that for 2027?

Marc Bitzer: Yeah. So David, I would say there is a long-term perspective on replacement and kind of more temporary one. First of all, the long-term one is, reality is we are living right now in a replacement market. You also know as well as anybody else that the -5% of the industry, which we are forecasting, is largely coming off discretionary. That is the painful part because the discretionary, you all know, is the more margin-rich and mix-rich part of a business. So replacement is right now a dominant factor. Now come to a temporary one, which you probably alluded to. We have seen in situations in the past where you had a very negative consumer confidence or other elements, that people even hold back some replacement decisions. For example, on dishwashers, or on a second appliance.

Yeah, so David, I would say there's a, a long-term perspective on the replacement and kind of more temporarily 1. Uh, first of all, the long-term 1 is

Reality is we're living right now in a replacement markets. Um, you also, you know as well as anybody else at the minus 5%. Don't mean this to be a forecasting is largely coming off discretionary. Um, it's that's essentially what, um, met so painful part because of discretionary, as you all know, is a more margin risks and margin rich, and and mixed Rich part of a business. So replacement is right now, with dominant Factor now come to a temporary 1, which you probably alluded to, um, we've seen in situations in the past, where you had a very

Marc Bitzer: So replacement is right now a dominant factor. Now come to a temporary one, which you probably alluded to. We have seen in situations in the past where you had a very negative consumer confidence or other elements, that people even hold back some replacement decisions. For example, on dishwashers, or on a second appliance.

Marc Bitzer: We have seen these kind of situations before where people temporarily shift into, "Oh, I am going to repair another time," or, "I am going to hold off." In the past, and again, we have a reference to the global financial crisis in 2008, other elements, that temporary situation didn't last very long. I mean, at one point, people will replace it. But yes, we have seen these kind of temporary moves before and they will course correct. It doesn't change the fact that we are, in the broader context, living in a replacement market, which with our supply chain, et cetera, we are well set up to deal with it, but right now it doesn't help you on the mix side.

Didn't last very long, I mean, at 1 Point, people will replace it. But yes, we've seen these kind of temporary moves before and and they will cause correct. It doesn't change the fact that we're in a broader context living in a replacement Market um, which with with our supply chain Etc. We're well well, set up to to deal with it but right now it doesn't help you on the mix side.

Marc Bitzer: It doesn't change the fact that we are, in the broader context, living in a replacement market, which with our supply chain, et cetera, we are well set up to deal with it, but right now it doesn't help you on the mix side.

Operator: Your next question comes from the line of Mike Dahl from RBC Capital Markets. Your line is open.

Your next question.

Comes from the line of Mike doll from RBC Capital markets. Your line is open.

Mike Dahl: Morning. Thanks for taking my questions. Just want to start out on the price increase in North America. I mean, Marc, you mentioned having to course correct a little in Q3. When you think about the additional price actions, it doesn't seem like, at least at this point, your competitors didn't follow on the summer increases, and I don't believe they have announced similar ones, the way you have incrementally. Is this going to represent kind of a shift in how you are viewing margin preservation or progress versus share in the near term, or how would you describe that?

Morning. Thanks for taking my question. Um,

just wanted to start out on the price increase and in North America. I mean, Mark, you mentioned having a course. Correct. A little in in 3Q and when you think about the additional price actions, it doesn't seem like at least at this point. You know your competitors didn't follow on the summer increases and I don't believe they've announced similar ones uh the way you have incrementally. So is this is this going to represent? Kind of a shift in how you're viewing um margin preservation or progress versus share in the near term or how how would you describe that?

Mike Dahl: Is this going to represent kind of a shift in how you are viewing margin preservation or progress versus share in the near term, or how would you describe that?

Yeah, Michael. So first of all and obviously as you know I can't comment on my competitor price move or what they plan or not plan. I can refer to what is not on the slide that what we've seen in October, and we've seen price moves by the competitors. So, that's just what we see in icon speculate and going forward.

Marc Bitzer: Yeah. Michael, first of all, obviously, as you know, I can't comment on a competitor price move or what they plan or not plan. I can refer to what is not in the slide, that what we have seen in October, and we have seen price moves by the competitors. That is just what we see and I can't speculate in going forward. As we have shown in Q3, we will take the leads and that is what we are doing, because it reflects real cost, it reflects real material cost and real tariff cost. Yes, we take a very rational approach. But it is in the context of what you alluded to, is our focus is on margin expansion. That is our focus in Q4, that is our focus in 2027, and you will see that also when we talk about it.

As we've shown in Q3, we will take the leads and that's what we're doing. Um, because it reflects real cost, it reflects real material, cost, and real tariff cost.

Marc Bitzer: Yes, we take a very rational approach. But it is in the context of what you alluded to, is our focus is on margin expansion. That is our focus in Q4, that is our focus in 2027, and you will see that also when we talk about it.

um, so yes, we take a very rational approach and

But it's in a context of what you alluded to is. Our focus is on margin expansion. Um, and that is our focusing Q4. That's our focus in 27 and you will see that. Also, when we talk about it, um, and if sometimes you go a little bit ahead and you take a certain risk, um, on the share, that's what we will do and what we've been doing. But I all in the context of margin expansion. And and frankly, even if I look year to date, our overall year to date market share is pretty stable that comes from very strong new products and

Marc Bitzer: And if sometimes you go a little bit ahead and you take a certain risk on the share, that is what we will do and what we have been doing, but all in the context of margin expansion. Frankly, even if I look year to date, our overall year to date market share is pretty stable. That comes from very strong new products and today partially you saw already something, but in particular, when you look at our Q1, what we will show where we have a lot of strong products coming. That is why I think we can take a certain risk on pricing because we have good products.

Today parties is already something. Um, but in particular when you look at our q1, what we will show where we have a lot of strong products coming, and that's why I think it's also, um, I think we can take a certain risk comprising, because we have good products.

Marc Bitzer: That is why I think we can take a certain risk on pricing because we have good products.

Mike Dahl: Got it. Okay. Just shifting gears, I want to make sure we understand your comments about steel dynamics. I think we all appreciate as a large volume buyer, you are not paying anywhere close to what the spot rates would have done. But I think conceptually, you guys, your steel buy is multi-billions in the US alone, I believe, correct me if I am wrong. So even if it is not 50%, even if it is 20%, 10%, I mean, that could be theoretically hundreds of millions of dollars in terms of incremental steel costs to you. When I look at your bridge in the H2 of this year on raw mats in total, raw mats in total are not that bad.

Got it. Got it. Okay. And then just shifting gears. I want to make sure we understand your comments about Steel Dynamics. Um, so I think we all appreciate it as of our following buyer and not paying anywhere close to what the spot rates would have would have done, but I I think conceptually you. You guys are, you know, your steel buyers multi-billions in in the us alone? I believe, correct me if I'm wrong. So even if it's not 50%, even if

20% 10%. I mean, that that could be theoretically hundreds of millions of dollars in in terms of incremental steel costs,

Mike Dahl: When I look at your bridge in the H2 of this year on raw mats in total, raw mats in total are not that bad.

To you. And when I look at your bridge and the second half of this year on Raw, mats in total, you know, raw math in total aren't aren't that bad. So so your comment about that being largely reflected in the second half. Can you just press that out a little and, and maybe

Mike Dahl: So your comment about that being largely reflected in the H2, can you just flesh that out a little and maybe, again, correct us if we are wrong on kind of ballpark there, but help us understand what you are really trying to say on steel into 2027.

Again like correct us if we're wrong on kind of ballpark there, but help help us understand what you're really trying to say to say on steel into 27.

Yeah, Michael. I'm just as a caveat is, of course, I don't want to tell every overall my competitors. What I'm doing on steel. Second of all, we have steel Partners out there and and we're trying to respectful and not revealing too much detail.

Marc Bitzer: Yeah, Michael, just as a caveat is, of course, I do not want to tell every overall my competitors what I am doing on steel. Second of all, we have steel partners out there and we are trying to be respectful and not revealing too much detail. To give you a little bit broader context, and some of you followed that very closely. A couple of years ago, we changed our steel contracts from annual steel contracts to multi-year steel contracts. That was actually pre-election, pre-tariffs because we just want to be secured and we did not want to have big surprises. These steel contracts in their nature are a little bit like a hedging contract. So you basically typically define certain floors, you define a certain cap and you typically agree on a trailing price versus a spot rate. So it is a combination of this one.

Um, to give you a little bit broader context. Um and and some of you followed by very closely, a couple of years ago, we changed our steel contracts from annual steel, contracts, to multi-year Steel contracts. Um, that was actually pre-election pre-term. We just want to be secured and we didn't want to have big surprises. We still contracts in their nature are

Marc Bitzer: That was actually pre-election, pre-tariffs because we just want to be secured and we did not want to have big surprises. These steel contracts in their nature are a little bit like a hedging contract. So you basically typically define certain floors, you define a certain cap and you typically agree on a trailing price versus a spot rate. So it is a combination of this one.

Marc Bitzer: What it basically does is it gives you clearly a certain buffer. It gives you typically a discount versus spot rate, but ultimately it does not completely disconnect you from a long-term steel price trend. That is the reality. We felt that also in 2026. Yes, we had multi-year contracts, but given that the steel prices went pretty much through the roof, we also felt it. I really want to emphasize, a big part of that cost is sitting in our Q3 and Q4 margin. A big element of why Q3 is not in line with our expectation was actually raw materials, steel being very prominent in this one. In that context, Mike, we have secured two of these long-term contracts already, because they pretty much expired, or are about to expire, and we renewed them.

Marc Bitzer: A big element of why Q3 is not in line with our expectation was actually raw materials, steel being very prominent in this one. In that context, Mike, we have secured two of these long-term contracts already, because they pretty much expired, or are about to expire, and we renewed them.

Ation was actually raw materials still being very prominent in this 1.

In that context, I might we have secured.

2 of these long-term contracts already, um, because they pretty much expired, um, or are about to expire and we renew them. And, as I really want to emphasize, I would call them at fair prices, um, not hugely positive or negative, um, but it gives us a certain predictability, um, and we know pretty much what we carry into next year, which again is not too different from our Q3 Q4 as 1 contract, which is still open. Um, but I'm confident that we can close but also pretty soon. Um, of course, there's always a question, what happens to steel price in the long term. Um, and we all seen this, massive run up in the last year of basically, almost 50% which I want to emphasize is disconnected from Iron Ore prices. Um, so there is not a big rational element behind this 1 and, you know, ultimately, we also know, um, thankfully, some of us still producers are putting in capital Investments to improve productivity because as you know, Americans still today is not cost, competitive versus China or Europe.

Marc Bitzer: As I really want to emphasize, I would call them at fair prices, not usually positive or negative, but it gives us a certain predictability, and we know pretty much what we carry into next year, which again, is not too different from our Q3 and Q4. There is one contract which is still open, but I am confident we can close that also pretty soon. Of course, there is always a question what happens to steel price in the long term, and we have all seen this massive run-up in the last year of basically almost 50%, which I want to emphasize is disconnected from iron ore prices. There is not a big rational element behind this one.

Marc Bitzer: Of course, there is always a question what happens to steel price in the long term, and we have all seen this massive run-up in the last year of basically almost 50%, which I want to emphasize is disconnected from iron ore prices. There is not a big rational element behind this one.

Marc Bitzer: Ultimately, we also know, thankfully, some of the steel producers are putting in capital investments to improve productivity, because as you know, American steel today is not cost competitive versus China or Europe by a wide margin. We welcome these investments to make it more productive and competitive because we all believe in a strong American steel industry, but it only works if they are competitive. There are capital investments that are going the right direction. You also know there are capacity investments planned, which may not immediately help before 2027, but over time will bring a, what I would call a much healthier, much stronger USD market.

By a wide margin. And we welcome these Investments to make it more productive and competitive because we all believe in a strong American steel industry. But it only works if our competitive, um, and various Capital Investments, we're going the right direction. You also know where our capacity Investments plans which may not immediately help you for 27. But over time, we'll bring a what I would call a much healthier much stronger.

Marc Bitzer: You also know there are capacity investments planned, which may not immediately help before 2027, but over time will bring a, what I would call a much healthier, much stronger USD market.

Stronger USD Market.

Operator: Your next question comes from the line of Susan Maklari from Goldman Sachs. Your line is open.

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

Susan Maklari: Thank you. Good morning, everyone.

Thank you. Good morning everyone.

Marc Bitzer: Good morning.

Susan Maklari: Good morning. My first question is going back to your comments, Marc Bitzer, on the channel inventories. It sounds like they are running fairly lean despite the deceleration in demand that we saw this quarter. Can you just give a little more color on where things are, what that implies for Q4, and as we think about going into next year? Within that, as you mentioned that your market share was stable, is there any mix shift in terms of the floor space that you have that could also be a benefit as we think about next year as those new products continue to come through?

My first question.

Good morning. My first question is going back to your comments, mark on the channel inventories, it sounds like they are running fairly lean despite the deceleration and demand that we saw this quarter. Can you just give a little more color on where things are, what that implies for the fourth quarter and as we think about going into next year and within that, as you mentioned, that your market share was stable. Is there any mix shift in terms of the floor space that you're that you have that could also be a benefit as we think about next year as those new products continue to come through.

Susan Maklari: Within that, as you mentioned that your market share was stable, is there any mix shift in terms of the floor space that you have that could also be a benefit as we think about next year as those new products continue to come through?

Marc Bitzer: Susan Maklari, let me start, and maybe also Carlos can give some additional color on this one. First of all, I would say trade inventories and our inventories are low, and I am talking about North America particular. I think there is a certain cautious side both with the trade and frankly, also with us. I think the combination, if you would look at an aggregate number of inventory between us and our retailers, is probably one of the lowest in multi years. Again, that is probably more reflection of people, very cautious about the current market. Which for Q4 means also we certainly do not have to lower production any further. All the volume deleveraging, which we talked about, is largely behind us.

Yeah, so it was nice. Let me start maybe also 1 call, it's going to give some additional color on this 1. Um, so first of all, I would say trade inventors and our inventors are low. And I'm talking about North America particular. Um, so I think there's a certain cautious side both of the trades and Frankie also with us. Um, so I think the combination, um, if you would look at an aggregate number of inventory between us and our retailers is 41 of the lowest in multi years. Um, again, that's about more reflection of people, um, their cautious about the current market, which 424 means also, we certainly don't have to lower production any further. So both of the volume deleveraging, which we talked about is large larger behind us.

Marc Bitzer: Again, that is probably more reflection of people, very cautious about the current market. Which for Q4 means also we certainly do not have to lower production any further. All the volume deleveraging, which we talked about, is largely behind us.

Marc Bitzer: We are sitting right now on low inventories, and we are actually carefully, because we do not want to overshoot, kind of ramping up production also to be in a right inventory position as we head into 2027. Right now, trade inventories are low, which by the way, is also part of the reason why industries and our revenues were also down in Q3, because we know specifically where some of our retail partners reduced inventories. But again, it is right now, it is certainly not elevated. It is quite the opposite. And we have work also in front of us to kind of rebalance everything.

Um so we're sitting right now in low inventories and we're actually carefully. Um, because we don't want to overshoot kind of ramping up production also to be in the right inventory position as we head into 27. So right now, trade inventories are low. Um, which by the way, is also part of a reason, why Industries. And and our revenues were also down in Q3 because we know specifically where where some of our Retail Partners reduced inventories. Um, but again it's right now it's it's certainly not elevated but the opposite and we will um we have work also in front of us to kind of rebalance everything

Marc Bitzer: But again, it is right now, it is certainly not elevated. It is quite the opposite. And we have work also in front of us to kind of rebalance everything.

I do, I would just add so consumer confidence and Market, volatility is what is translating into trade and also being a little bit more cautious on the supply chain and being more effective. Uh like Marcos commenting, we we will build a little bit more of inventories so we can get that 1 back on track and we can capitalize on growth opportunities moving forward.

Juan Carlos Puente: Yeah. I would just add, consumer confidence and market volatility is what is translating into trade and also being a little bit more cautious on the supply chain and being more effective. As Marc was commenting, we will build a little bit more of inventory so we can get that one back on track, and we can capitalize on growth opportunities moving forward.

Marc Bitzer: Susan, the only other comment I want to make relates to your mix question. As we talked about, and we did not reiterate it today, we feel despite the softness of a discretionary demand side, we feel very good about the premium products we brought to the market this year. So, the kind of volumes which we have seen on the KitchenAid build-in line, some of the French door bottom mounts which we brought to market, we feel very good. So it works even though the discretionary environment is just very soft, but even giving that into context, I am really pleased. And again, we will talk a lot more in our January call.

Susan. The only other comment I want to make relates to your mixed question. Um, I mean, as we talked about and we didn't reiterate it today, we feel despite the softness of a discretionary, demand side. We feel very good about the premium products. We brought to the market this year. So, um, kind of volumes which we've seen on on the kitchenet. Um, built-in line, um, some of the French door bottom mounts, which we brought the market, we feel very good. So so that it works even more with discretionary environment is just very soft but even I'm giving that into context I'm really pleased. Um and and again we will talk a lot more in in

Marc Bitzer: So it works even though the discretionary environment is just very soft, but even giving that into context, I am really pleased. And again, we will talk a lot more in our January call.

Marc Bitzer: We are now bringing a major push on our premium laundry space, which has not yet launched, but will launch throughout Q1 and Q2, where we have another strong element to help on our mix despite a discretionary poor or discretionary soft environment, which probably will be around us for some time.

Then we call. We're now bringing a major push on our premium laundry space, um, which has not yet launched but we launched route q1 and Q2, um, where we have another strong element to help on our mixed. Despite a discretionary, um, poor or discretionary solved environment, which probably will be around us for some time.

Susan Maklari: Okay. That is great color. Then maybe shifting to the balance sheet. You have obviously done a lot in the last couple of quarters to restore your liquidity, and you are guiding to having less than $4.5 billion of debt by the end of the year. At a high level, do you feel like you have enough liquidity to operate in this kind of an environment? Can you just talk about the ranges, and what happens if things continue to stay more challenging versus perhaps an incremental recovery next year?

A lot in the last couple of quarters to restore your liquidity and your guiding to having less than 4 and a half billion of debt, by the end of the year, at a high level, do you feel like you have enough liquidity to operate in this kind of an environment? And can you just talk about the ranges and, and what happens if things continue to stay more challenging versus perhaps an incremental recovery next year?

Roxanne Warner: Thanks, Sue. A very short answer to your question would be yes, we absolutely have the liquidity and the financial flexibility that is needed to operate in this challenging environment. The longer portion of the question is, as I mentioned in my earlier remarks, I am very happy that we very early on took the proactive steps that were needed to have the liquidity for us to operate in an environment that at that time we saw was challenging.

Roxanne Warner: What that has led to us is a situation where now we have over $3 billion of available liquidity in a combination of cash as well as our asset-backed lending credit facility. We are now in a position based on the strong work that we have been doing in working capital to adjust the guide for the net debt, to say that it is one that will be lower to a number that is below $4.5 billion. But then the other thing, Sue, as you know I have touched on before, is based on these proactive actions that we have taken, we have cleared the runway in terms of the next time we have a huge debt maturity, it is not until 2028.

Roxanne Warner: But then the other thing, Sue, as you know I have touched on before, is based on these proactive actions that we have taken, we have cleared the runway in terms of the next time we have a huge debt maturity, it is not until 2028.

Roxanne Warner: Which gives us the opportunity with the proactive, bold actions we have taken in terms of cost and pricing going into 2027 to bring us to a position where we can expand margins, and that also would then contribute overall to the free cash flow and contribute to our priority, which is paying down our debt.

28, which gives us the opportunity with the proactive, bold actions. We've taken in terms of cost and pricing going into 2027 to bring us to a position where we can expand margins. And that also would then contribute overall to the free cash flow and the contribute to our priority which is paying down our debt.

Marc Bitzer: Susan, let me maybe add some additional comments on the balance sheets. Because everybody knows we have done a lot of actions in Q1 and Q2, be it between equity offering, renewal of a revolver credit, and some bonds. Some people probably accuse us, "Well, you went too far." But in reality, if we would do the same action, first of all, keep in mind, it would cost us 1 to 1.5 points more than it did H1 ago. So we are actually, in hindsight, very pleased with the timing of when we took the actions. Two, to give a little bit color on liquidity. Yes, we took a lot of time to renegotiate revolver credit. We have not used the revolver since August. It is zero. We have not even tapped into this one.

Let Me Maybe add some additional comments on the balance sheets. Um,

because obviously everybody knows we've tuned, we've done a lot of actions in q1 in Q2 um between equity offering renewal of a revolver credit and and and and some bonds. Um, some people probably accused as well. You went too far but in reality if we would do the same action. First of all, keep in mind, it would cost us a point to 1 and a half points more, um, when it did have a year ago, so we're actually in hindsight, very pleased with the timing of them. We took reactions to to give a little bit of column liquidity. Um yes we took a lot of time to renegotiate. Revolve a credit, we have not used the revolver since August, it's zero. Um, I we haven't even tapped into this 1. Um, as for example, we have a lot of liquidity in the year. Some people might even argue too much liquidity but I think um, seeing what has happened around our industry for the last 2 or 3 years. We want to be in the safe side. I'm a first 1 to admit. We successfully liquidity costs us interests. And that's why, you know, big part by by Epps was disappointing. Also.

Marc Bitzer: Two, to give a little bit color on liquidity. Yes, we took a lot of time to renegotiate revolver credit. We have not used the revolver since August. It is zero. We have not even tapped into this one.

Marc Bitzer: As Roxanne Warner pointed out, we have a lot of liquidity end of the year. Some people might even argue too much liquidity. But I think, seeing what has happened around our industry for the last 2 or 3 years, we want to be on the safe side. I am the first one to admit with success, liquidity costs us interest, and that is why, big part why the EPS was disappointing also. But right now I am prepared to carry a little bit too much liquidity around us because we are living in a very uncertain environment. But we feel very good about the strength of liquidity, the balance sheet, the maturities where we are. So I feel much better from this side, despite all the negative news in the industry.

Um, but right now, I'm I'm prepared to carry a little bit too much in liquidity around us, because we're living in a very uncertain environment, but we feel very good about the strength of liquidity, but the balance sheet. Um, the maturities where we are, so I I feel much better from this side, despite all the negative news in the industry,

Marc Bitzer: But we feel very good about the strength of liquidity, the balance sheet, the maturities where we are. So I feel much better from this side, despite all the negative news in the industry.

Operator: Your next question comes from the line of Rafe Jadrosich from Bank of America. Your line is open.

Your next question comes from the line of reef. Chad, rosich from Bank of America. Your line is open.

Rafe Jadrosich: Hi, good morning. Thanks for taking my questions.

Hi, good morning. Thanks for taking my my questions.

Marc Bitzer: Morning.

Roxanne Warner: Morning, Rafe.

Morning.

Rafe Jadrosich: Just on the working capital improvement that you are talking about for Q4 and the full year, can you talk about how much of that is structural versus one time? And how do we think about that going forward? Is there any specific metrics around AR, AP that we should be thinking about in terms of a target?

I'm just on the the working capital Improvement that that you're talking about for the fourth quarter and the 4 year. Can you talk about um how much of that is is sort of structural versus 1 time? And how do we think about that? You know, going forward? Is there any specific metrics around? Um like our AP that that that we should be thinking about in terms of a Target.

So rapidly I I would say let me split in 2 pieces um or 3 or working capital, I think on inventory levels, I don't think with a current system, constraints. I don't think we can go a whole lot lower. I mean, we and we're testing these limits every day, but we're now over time, can we? I, I would say over time being over 1 or 2 years, can we further improve our system? Become better in how we manage inventory? Yes, but within the current constraints, there's not a whole lot, we can do more.

Marc Bitzer: Well, Rafe, I would say, let me split it in 2 pieces, or 3 of working capital. I think on inventory levels, I do not think with the current system constraints, I do not think we can go a whole lot lower. And we are testing these limits every day. Now, over time, can we, I would say over time, meaning over 1 or 2 years, can we further improve our system, become better in how we manage inventory? Yes. But within the current constraints, there is not a whole lot we can do more. But payables, as you all know, largely follow what we do on our inventory, because it is basically just production. Having said that, we have made some good structural progress on extending some terms, not only with overseas suppliers, but also some other suppliers.

Marc Bitzer: But payables, as you all know, largely follow what we do on our inventory, because it is basically just production. Having said that, we have made some good structural progress on extending some terms, not only with overseas suppliers, but also some other suppliers.

For payables, as you all know, largely follow. What we are what we do on our inventory, because it basically just production having said that we've made some some good structural progress on, extending some terms, um, not only with overseas suppliers but also some other suppliers. So we feel good about what will work which has been done over. Actually the last 1 and 2 years on structurally, expanding payment terms.

Marc Bitzer: We feel good about what work which has been done over actually the last 1 or 2 years on structurally expanding payment terms. On receivable, I would say going forward, there is still some opportunities on addressing some of the terms, because I think some of the terms do not necessarily reflect inherent logic that they should cover the inventory, i.e., we give more terms than they carry inventory. And that will be a discussion which we will have with our partners on the retail side. But one big element you guys should also all keep in mind is, a part of a working capital improvement comes also, yes, our Q3 revenues were down. Revenues are down, but working capital requirements, in particular receivables, also come down.

On receivable. Um, I would say there's going forward, there's still some opportunities on addressing some of the terms, because I think some of the terms do not necessarily reflect the inherent logic that they should cover with inventory. I, we give more terms when they carry inventory and that will be a discussion which we will have with our partners and more retail sites. But 1 big element, you guys should also all keep in mind is um a part of a work Capital Improvement comes also yes. Our Q3 revenues were down revenues are down. But working capital requirements are particularly receivable but also come down. So there's also an element of just reflection reflecting to you breathe in, or breathe out on your top line, which ultimately, um, comes through in the working capital.

Marc Bitzer: But one big element you guys should also all keep in mind is, a part of a working capital improvement comes also, yes, our Q3 revenues were down. Revenues are down, but working capital requirements, in particular receivables, also come down.

Marc Bitzer: So there is also an element of just reflecting, do you breathe in or breathe out on the top line, which ultimately comes through in the working capital.

Rafe Jadrosich: Thank you. That is very helpful. The second question, just when we think about the outlook in LATAM, specifically just Brazil, two things. Can you remind us what the FX assumption is, just because it has changed really materially in the last 48 hours or so. What is baked into guidance? What is the timeline for recovery, and what is the process right now with Casas Bahia? I am understanding that you have the insurance recovery, but on the fundamental standpoint, in terms of the inventory clearance, where are we in that process?

Thank you. That's that's very helpful. Um and then the the second question, just when we we think about the Outlook in uh, the flats and specifically just Brazil uh 2 things just can you uh remind us like what the FX assumption is just because it's changed really materially in the last like 48 hours or so. Um

What's baked into into guidance? Uh, and then, you know, what's the sort of timeline for recovery and like, what's the process right now with Kasa Baja? Like, I understanding you have the insurance recovery, but like on the fundamental standpoint in terms of the inventory clearance, like like where are we in that process?

Marc Bitzer: Raf, let me maybe address the overall currency and then I will allude or, Roxanne, if you can address the Casas Bahia recoveries. On the FX, first of all, we typically do not publish our currency assumption. Having said that, keep in mind when we talk about the Brazilian real, and obviously you followed it, but the day after the election moved by 10%, which by the way is pretty close to where it was at the beginning of the year, just to put in context. Yes, we have seen that massive currency move. There are two elements, which call it soften it a little bit. One is, of course, we have hedging in place. In a strong real environment, the hedging costs you, and now we will see the hedging benefits.

So Rafi, Let, Let Me Maybe address the overall currency and then Ira Ludo represent you. If you can address for kazbar here recovery. Um, so on, on the FX, first of all,

Of Brazilian real, um, and obviously you followed it, but but day after election, moved by 10%, um, which by the way, is pretty close to where it was at the beginning of the year just to put in context. Um, so yes, we've seen that. Massive currency move. There's 2 elements um, which which call it soft Med a little bit. 1 is, of course, we have hedging in place, um, and in a, in a strong rail environment, we're having hedging cost. You now, we will see the hedging benefits. So we're, we will see only a fraction of these moves in our action pnl. Once you net up the hedging. Um, the second thing is we also need to keep in mind more operational. I'm not. Um, is yes, some of the components over time because some of them are important and cost you more at the same time. It makes the good the Imports of finished goods. A little bit more expensive and keep in mind, we're a local producer. So from a competitive environment, um,

Marc Bitzer: Yes, we have seen that massive currency move. There are two elements, which call it soften it a little bit. One is, of course, we have hedging in place. In a strong real environment, the hedging costs you, and now we will see the hedging benefits.

Marc Bitzer: We will see only a fraction of these moves in our actual P&L once you net out the hedging. The second thing is, which you all need to keep in mind, more operational, is yes, some of the components over time, because some of them are imported, then it costs you more. At the same time, it makes the imports of finished goods a little bit more expensive. Keep in mind, we are a local producer. From a competitive environment, that is not necessarily all bad news for us because, again, we are the local producer in Brazil, much like we are the local producer in the US. It is not all bad. Given that it is fresh, very transparency, we are now going through all the potential ramifications which come with the election outcome in Brazil.

Marc Bitzer: From a competitive environment, that is not necessarily all bad news for us because, again, we are the local producer in Brazil, much like we are the local producer in the US. It is not all bad. Given that it is fresh, very transparency, we are now going through all the potential ramifications which come with the election outcome in Brazil.

I that's not necessarily all bad news for us because again we of local producer in in Brazil much like we have a local producer in the US so it's not all bad um but given that it's fresh very transparently. We're now going through all the potential ramifications which come with the the election outcome in Brazil.

Ludovic Beaufils: Yeah. In regards to the GCB recovery, there is a lot of uncertainty out there. The decisions from the judge on the bankruptcy proceedings happened just last week, which starts the 60-day clock on the restructuring plan. We are watching that intently. Obviously, we are a very big supplier to GCB, a very big player in Brazil, so we have a seat at that table, and we will be watching how these guys proceed in terms of recapitalizing the business. This is going to take a little bit of time. We will have more visibility as we exit Q4. Sequentially, there is not going to be a whole lot of change from Q3 to Q4, but we expect things to normalize going into 2027 as the volume gets redistributed to other players, or GCB re-emerges with a much better structure.

Yeah, in regards to the, uh, the GCB recovery. Um, there's a lot of uncertainty out there. The the, um, decisions from the judge on the bankruptcy proceedings happen just last week, which starts the clock, uh, 60-day clock on the restructuring plan. So we're watching that, um, intently obviously. We're a very big supplier to, uh, GCV a very big player in Brazil. So we have a seat at that table and we'll be watching how um, these guys proceed in terms of recycling, the business, uh, this is going to take a little bit of time. We'll have more visibility as we exit Q4. Um, sequentially. Therefore, there's not going to be a whole lot of change from Q3 to Q4, but we expect things to normalize. Uh, going into 27 as the volume gets redistributed to other players and or uh, GCB re-emerges with a much better structure.

Ludovic Beaufils: We will have more visibility as we exit Q4. Sequentially, there is not going to be a whole lot of change from Q3 to Q4, but we expect things to normalize going into 2027 as the volume gets redistributed to other players, or GCB re-emerges with a much better structure.

Operator: Your next question comes from the line of Jeffrey Stevenson from Loop Capital Markets. Your line is open.

You. Our next question comes from a line of Jeffrey Stevenson from loop capital markets. Your line is open.

Jeffrey Stevenson: Hi. Thanks for taking my questions today. I wanted to follow up on Latin America and wondered whether the 10% price increase across the region was incremental to the August 5% increase you announced last quarter for Brazil, or was the timing pushed back on that? Could you also talk about any sequential change in promotional intensity in the region as we move through the back half of the year?

Hey, thanks for taking my questions today. I wanted to follow up on Latin America and you know, wondered whether the 10% price increase across the, you know, region was incremental to the August 5th percent increase. You announced last quarter for Brazil or was the timing pushed back on that. And then could you also talk about you know, any sequential change and promotional intensity in the region as we move through the back half of the year.

Ludovic Beaufils: Yeah. The pricing we took in August, this was specifically Brazil pricing to the extent of about 5%. We have actually been fairly pleased with the fact that our volumes held as we went through that price increase. Obviously, we were also dealing with the Casas Bahia situation at the time. That led to a little bit of erosion in that pricing realization, but it is still there and being realized. The up to 10% price is across the entire segment. There is a wide range across the various markets that we deal with. Some of that is going in markets very shortly. You will see limited impact in Q4 when it is all said and done, given that we are unwinding, and some of that will hit mostly December, but not have a whole lot of impact to the quarter.

Yeah, so the uh, the pricing where we took in uh, in August this was specifically, Brazil pricing to the extent of about uh 5%. So we've actually been fairly pleased with the fact that our volumes held as we went through that, uh, price increase. Um, obviously we were also dealing with the cases by a situation at the time. Um, so that led to a little bit of of that of erosion in that pricing realization but it's still, uh, they are being realized, um, the the up to 10% price is is across the entire segment. So it's, uh, there's a wide range of across the various markets that we deal with. Um, some of that, uh, is is going in markets, very, very shortly. You'll see limited impact in, uh, Q4 when it's all said and done, uh, given that we're sort of unwinding in some of that, we'll hit mostly December, but not a whole, have a whole lot of impact to the quarter with that. We're also to the second part of your question. We're moderating, um, to some extent the promotional activity around Black Friday, uh, again, in a variety of markets.

Ludovic Beaufils: There is a wide range across the various markets that we deal with. Some of that is going in markets very shortly. You will see limited impact in Q4 when it is all said and done, given that we are unwinding, and some of that will hit mostly December, but not have a whole lot of impact to the quarter.

Ludovic Beaufils: With that, we are also, to the second part of your question, we are moderating, to some extent, the promotional activity around Black Friday. Again, in a variety of markets. In particular, I would say in Mexico at this point, into some areas while in Brazil.

Uh, in particular, I would say in Mexico at this point, and to some degree as well in in Brazil.

Jeffrey Stevenson: No, that is very helpful. No, thanks for that. Then I was hoping you could provide more color on the meaningful demand shift in your SDA global business from Q3 to Q4 where you are seeing orders up 40% in October. Just any more color there would be helpful.

Oh, that's very helpful although thanks for that. And then I was hoping you could provide more color on the meaningful domain shift in your SDA Global business. From the third to fourth quarter, where you're seeing orders of 40.7, um, in October. Just any more color there would be helpful.

Ludovic Beaufils: Yeah. So maybe I will take a quick step back on the sort of how this business works, specifically in the US. You have large trade partners that buy in what we call bulk orders for the season to get ready for the major activity happens around Black Friday in particular. These bulk orders will sometimes concentrate more so in Q3, sometimes more so in Q4, and this year is a year where they have shifted from Q3 to Q4, which led to this more muted top line in Q3 for the business. The result of that is visible and tangible at this point in our hands. That is the 40% increase in our order position as of this point in the month of October. Going into the quarter, we also had an extremely strong year-over-year comp in terms of orders on hand for the entire quarter.

Yeah, so maybe it'll take a quick step back on the sort of how this business works specifically in the US. Um, you have large trade partners that buy in, uh, what we call Bulk orders for the season to get ready for the meter. Activity, happens around Black Friday in particular,

These bulk orders, will sometimes concentrate more. So in Q3 sometimes more. So, in Q4, and this year is a year where they have shifted from Q3 to Q4, which led to this more muted, uh, TopLine in in the third quarter, uh, for the business.

Ludovic Beaufils: The result of that is visible and tangible at this point in our hands. That is the 40% increase in our order position as of this point in the month of October. Going into the quarter, we also had an extremely strong year-over-year comp in terms of orders on hand for the entire quarter.

Ludovic Beaufils: Because the good news is, while these bulk orders are lumpy, they are known, and so we are readying ourselves from a production standpoint as well as from a shipment standpoint. They are on our hands, in our books, and they are being shipped as we speak, which again, gives us really strong confidence we can have a fantastic Q4 and exit the year at double-digit growth, consistent with the guidance we have given.

Bulky or or lumpy, I'm sorry. Um they're known and so we we're readying ourselves from a production standpoint as well as from a shipment standpoint, they are on our hands in our books and they're being shipped as we speak, which again gives us really strong confidence. We can have a, a, a fantastic Q4 and, and exit the year at Double Digit growth, uh, consistent with the guidance we've given,

Marc Bitzer: Geoffrey, it is Marc again. I know this is a Q3 call, not necessarily an October business review, but obviously just to echo what Ludo was saying, October for SDA, because it is almost done, is a very strong month, which exactly confirms in actuals what Ludo right now pointing towards. So we feel very good about the SDA run rate, and the overall Q4. So we feel very good and exactly confirms what Ludo was highlighting.

And and and Jeffrey, it's Mark again. I um, I know this is a queue free call, not necessarily in October Business Review, but, you know, obviously, just to Echo what was saying October on for SDA? Because it's almost done is a very, very strong month, which is exactly confirms an actual, what do the right now pointing towards. So, so we feel very good about the SDA run rate, um, and the overall Q4. So we feel very good and exactly confirms what, dude, it was highlighting.

Operator: Your next question comes from the line of Sam Reid from Wells Fargo. Your line is open.

Your next question comes from the line of Sam Reed from Wells, Fargo. Your line is open.

Sam Reid: Thanks, everyone. Wanted to touch on the builder channel here. I believe your pricing in the channel is already in place. Just want to discuss realization, any benefits that you got from that in Q3, or whether that is supposed to ramp into Q4 in 2027.

Thanks everyone. Uh, wanted to touch on the Builder channel here. Um, I believe your pricing and the channel is already in place. Uh, just wanted to discuss, you know, realization, uh, any benefits that you got from that in the third quarter or whether that's supposed to ramp into the fourth quarter in 2027.

Marc Bitzer: Sam, it is Marc, and maybe I will have Juan Carlos to add on this one. I think what you are pointing out is a very important aspect. The builder segment, as you know, is a very big part of our business. Unfortunately, not that big as it could be because of market environment, but it is a big part. The pricing in the build is not as straightforward as with retailers. Very simply because builders give out quotes, and we give quotes to builders quite a bit in advance. In many cases, we have annual or national contracts. Of course, we are trying to find, with our build partners, the right balance between not breaking quotes which we have already given, but at the same time, not dragging our price increase forever. That is a careful balancing act, which we have, I think, done in partnership with our builder partners.

At Sam's Market. Maybe I will have Hong kongers to to atom with 1. Um, I think what you're pointing out is very important aspect but the Builder segment, as, you know, is a very big part of our business. Unfortunately, not that big as it could be because of Market environment, but it's a big part, but pricing Mobility is not as straightforward, um, as with retailers, um, very simply because Builders give out quotes, and we give quotes to, to builders quite a bit in advance. And, in many cases we have we have annual or national contracts. So, and of course, we're trying to find with our Builder Partners right balance between not breaking quotes which we've already given, but at the same time not dragging our price increase forever. Um and that's a careful Balancing Act which we've I think done in partnership with our Builder Partners. So I would say in Q3 um, we've gotten

Marc Bitzer: In many cases, we have annual or national contracts. Of course, we are trying to find, with our build partners, the right balance between not breaking quotes which we have already given, but at the same time, not dragging our price increase forever. That is a careful balancing act, which we have, I think, done in partnership with our builder partners.

Marc Bitzer: I would say in Q3, we've gotten some pricing, in particular towards the end of the quarter, more and more of the pricing, maybe not fully to the level of retail, but we'll continue to work with our builder partners to kind of make sure we reflect the real cost. Keep always in mind, in particular builder segment, you have cost increases coming from final mile delivery to construction sites, which are significant. We are getting it, we're pursuing it. I think there's a good discussion with our builder partners because they understand these costs, but of course, nobody wants to surprise the final consumer with a cost increase.

Some dump pricing in particular, towards the end of the quarter, more and more of the pricing, maybe not fully to a level of retail. Um, but we'll continue to work for our, um, Builder Partners to kind of, make sure, um, we reflect the real costs and keep all this. In mind, in particular Builder segments, you have cost increases coming from final mile, delivery to construction sites, which are significant. Um, so we are getting it, we're pursuing it. I think there's a, a good discussion with our Builder partners because we understand these costs, but of course, nobody wants to surprise the final consumer with a cost increase.

Marc Bitzer: I think there's a good discussion with our builder partners because they understand these costs, but of course, nobody wants to surprise the final consumer with a cost increase.

Juan Carlos Puente: Yeah. What I will add, so it is consumer pricing plus support that we give to the channel. In Q3, we saw a significant improvement between Q2 to Q3, more tended to Q3. We will see some of that also coming in Q4. But it is pricing in the quotes plus the attitude that we have on serving the customer, especially on the final mile, like Marc was commenting. But that comes with a little bit of lag and we saw in Q3, and we will see more in Q4.

Yeah. What I what I would add so it is it is consumer pricing plus support that we give to the to the channel. And Q3 we saw uh, significant Improvement between q22 Q3 uh more than more more tended to Q3. And we will see some of that also coming in in Q4, but it is pricing in the quotes. Plus the adits that we have on serving the customer, especially on the final mile like Mark was commenting but that comes uh you know with a little bit of lag and um we saw in Q3 and we will see more in Q4

That's helpful and then maybe let's switch gears and talk Commodities a little bit. So um, I understand you you've locked in. I think 2 of your major scale contracts but there is that third 1? That's still out there. I think you mentioned that you, you have some visibility into that soon. Uh, maybe just contextualize, you know, the timing there and then perhaps the magnitude of, you know, how large that contract? Hypothetically would be. So we have rough sentences to implications for 2027. Thanks.

Sam Reid: That's helpful. Then maybe let's switch gears and talk commodities a little bit. I understand you've locked in, I think, 2 of your major steel contracts, but there is that third one that's still out there. I think you mentioned that you'd have some visibility into that soon. Maybe just contextualize the timing there and then perhaps the magnitude of how large that contract hypothetically would be, just so we have a rough sense as to implications for 2027. Thanks.

Marc Bitzer: Yeah. Sam, we're now getting really into the details of our steel contract. Again, that's why I'm not quite sure I want to share with our competitors everything we're doing. Again, we have locked in 2 of the contracts, and they're fair terms. The third one is, I would call in advanced stages. I'm confident we can close it. Keeping also in mind, we have flexibility on shifting volumes between different partners. Between all this one, I'm very confident we can close it very soon. Again, from today's perspective, assuming steel prices at least stay on this super elevated level which we are right now, I think we will not have a huge surprise coming into 2027.

Yeah, it's 7 now getting really into the details of of our steel contract and again that's why I'm not quite sure I want to share with our competitors, everything we're doing again. We're we have locked in 2 of a contracts and we're a fair terms. The third 1 is, I would call an advanced stages, um, and I'm I'm confident we can close it. Um, keeping all this in mind, we have flexibility, on shifting, volumes between different partners. Um, and between all of this 1 I'm a very confident we can close it very soon. And um, and again, I from today.

Marc Bitzer: Again, from today's perspective, assuming steel prices at least stay on this super elevated level which we are right now, I think we will not have a huge surprise coming into 2027.

Case perspective. Assuming steel prices, stay on this, at least stay on the super elevated level, which we are right now. I think we will not have a huge surprise coming to 27.

Operator: Your next question comes from the line of Eric Bosshard from Cleveland Research. Your line is open.

Your next question comes from a line of Eric bussard from Cleveland research. Your line is open.

Eric Bosshard: Good morning.

Uh, good morning.

Marc Bitzer: Hey, Eric.

Hi. Hi to to follow up. I heard the comment about making uh, good progress with price on Builders. And I thought the chart was super helpful of uh progress on retail prices in the, the yellow line was helpful. Um, it must be Apple's and oranges the flow through of that, I think you reduced your price mixed number and so, can you just help me square? Like, lots of progress, except that the realized price mix is less than what was targeted, 90 days ago. What's the difference between those 2?

Eric Bosshard: To follow up, I heard the comment about making good progress with price on builders, and I thought the chart was super helpful of progress on retail pricing. The yellow line was helpful. It must be apples and oranges. The flow through of that, I think you reduced your price mix number. Can you just help me square lots of progress, except that the realized price mix is less than what was targeted 90 days ago. What's the difference between those two?

Marc Bitzer: So, Eric, again, first of all, just to clarify, this chart which you see on page 11, given that this is a price scraping tool which we get every week, basically from websites, literally 10,000 of data pretty much on a monthly base. That by definition is retail. It is not necessarily the builder price. Okay? So unless the indirect builder pricing, which would come through some of our home improvement channels. But it is largely a retail pricing. So the builder pricing, of course, is a whole lot less covered and tracked through for the real data. Again, having said, and I want to repeat what I said before, is we got significant progress in Q3 on the builder pricing. It is divorced clearly and is delayed versus the retail pricing.

Page 11 given that this is a price scraping tool, which we get every week basically from from websites. Um, literally 10 thousands of data, pretty much on a monthly basis led by definition is retail it's not necessarily build a price, okay? So that's well, unless the indirect Builder pricing, which would come through some of our, um, Home Improvement channels. So but it's largely a retail pricing. Um, so we build a pricing. Of course, is a whole lot less covered than track for for a real data. Um, again having said, and I want to repeat what I said before is we got significant progress in Q3 on the Builder pricing it is, it was clearly and is delayed versus the retail pricing and that is simply driven by the fact that neither build is not just want to kind of give a huge surprise to Consumer who are already agreed on a certain overall price and that's what we're kind of managing through. But right now, I would say, overall, um, the moves on the Builder pricing are just happening the same way, just a little bit later.

Marc Bitzer: So the builder pricing, of course, is a whole lot less covered and tracked through for the real data. Again, having said, and I want to repeat what I said before, is we got significant progress in Q3 on the builder pricing. It is divorced clearly and is delayed versus the retail pricing.

Marc Bitzer: And that is simply driven by the fact that neither builders nor us want to give a huge surprise to the consumer who already agreed on a certain overall price, and that is what we are managing through. But right now, I would say overall, the moves on the builder pricing are just happening the same way, just a little bit later. Juan Carlos?

Juan Carlos Puente: I would just say that it is magnified with a lower mix, basically because of the replacement market. So that is also impacting the PMX.

On call us. I would just say that it it's magnifier with a lower mix uh basically because of the replacement market. So that's kind of also impacted in the PMI.

Roxanne Warner: Okay. In terms of the global price mix, the two things to keep into consideration is one, it does not only reflect the US. So the decline that you are seeing is also us reflecting the GCB bankruptcy reorganization impact that Ludo just touched on from a mix standpoint. And then the second element is the element exactly that Marc and JC just touched on, which is the mix related to the replacement demand and us just reflecting that in the overall price mix number. The pricing itself is absolutely on track.

Hey, in terms of the global price, mix, the 2 things to keep into consideration is 1, it does not only reflect the US. So the decline that you're seeing is also us reflecting the GCB bankruptcy reorganization impact that Ludo just touched on from a mixed standpoint and then the second element is the element. Exactly that

Mark and JC just touched on which is the mix related to the replacement demand and us just reflecting that in the overall price. Mix number, the pricing itself is absolutely on track.

Eric Bosshard: Okay, great. Secondly, the progress you have made on price and the additional price, this is a North American retail question. In aggregate, it is like 15%, almost 20% price into North American retail, North American consumer. How are your thoughts about making that level stick, and does that have any impact on demand or mix, or does that just basically flow through?

Okay, perfect, great. And then and then secondly um the progress we've made on price and the additional price. This is a North American retail question. Um in aggregate. It's it's like 15% almost 20% price into North American retail, North American Consumer. Uh, how are your thoughts about making that level stick? And does that have any impact on demand or mix or does that just basically flow through?

Marc Bitzer: So Eric, again, specifically in North America, again, when we talk about this very big increase number, that always relates to January 2025. As you saw last year, we already took some prices, so year-over-year is a little bit less than this since January overall. Having said that, and this is what you saw since Q3, I think by and large it is sticking. Whenever we see certain elements where we have to course correct, we slightly course correct, but by and large, it is sticking. I absolutely today do not see an impact on the overall category demand from consumer perspective. Again, it is a replacement market. Consumers know they have to replace a product. Typically, the awareness of consumer going into a store about the expected price is limited. So the elasticity, if you want to say so, is very limited.

And so Eric. Um, again specifically in North America again, man. We talk about these very big, um, increase Number bed, always relates to the January 2025 of. Um, and as you saw last, we already took some prices so year over year is a little bit less than this since January overall, having said that, um, and this is

What you saw us in Q3, I think by and large, it's thinking. Um, and whenever we see certain elements where we have to course. Correct, we we Slide the course. Correct. But by and large, it's sticking I absolutely today. Do not see an impact on the overall category demand from consumer perspective. Again, it's a replacement Market, um, consumers know, have to replace a product um to be awareness of consumer going into a store but the expected price is limited. Um, so by elasticity if you want to say, so it's very limited. Having said that you do,

Marc Bitzer: I absolutely today do not see an impact on the overall category demand from consumer perspective. Again, it is a replacement market. Consumers know they have to replace a product. Typically, the awareness of consumer going into a store about the expected price is limited. So the elasticity, if you want to say so, is very limited.

Marc Bitzer: Having said that, you do see sometimes that a consumer wants to just stick a certain budget, i.e., consumer goes in the store and say, "I don't want to spend more than $600 on a top loader." What it basically means for us, it could be the consumer mixed down one price point or one SKU from our perspective. That is exactly what we are trying to balance between what is the benefit of raising prices versus how much you lose on the mix side. I think over years we have gotten a pretty good experience in how we fine-tune that, and that is what we will do also going forward.

Who see sometimes but a consumer wants to just stick at a certain budget. I, a consumer goes in the stores, I don't want to spend more than hundred dollars on the top loader. So what what the Basin means for us? It could be the consumer mixed down, 1 price point or 1 SQ, from our perspective. And that's exactly what we're kind of trying to balance between what is the benefit of raising prices versus how much you lose. Um, on the mix side, I think over years, we've gotten a pretty good experience in how we fine-tune that um and that's what we do also going forward.

Marc Bitzer: I think over years we have gotten a pretty good experience in how we fine-tune that, and that is what we will do also going forward.

Juan Carlos Puente: What I will add, Eric, is our new product launches, and we described two of them in the presentation, but we have been talking about them throughout the different earnings release. That is supporting and enhancing our margin expansion and top line growth. We will continue leveraging our product launches to be able to drive innovation, pricing, and margin expansion.

But I will add Eric is our new product launches and we describe 2 of them in the presentation, but we've been talking about them throughout the, the different earnings release that is supporting and enhancing our margin expansion on Topline growth. So we will continue leveraging our product, uh, product launches to be able to drive, uh, Innovation, pricing and margin expansion.

Operator: Your next question comes from the line of Andrew Carter from Stifel. Your line is open.

Your next question.

comes from the line of Andrew, Carter from

Hey, thank you. Good morning. Uh, wanted to ask and I know what I'm kind of thinking through on your on your actual pricing is kind of is is difficult but I think you would be probably from what you're saying at retail and what's flowing through somewhere in the kind of mid to high single digit range. Your organic growth in in the fourth quarter. Our third quarter was down 8% in North America. That puts your kind of shipment volume whatever. In the minus 12 I realized there's some mix in there that's probably unfavorable

Your line is open.

Andrew Carter: Hey, thank you. Good morning. I wanted to ask, and I know what I am thinking through on your actual pricing is difficult, but I think you would be probably, from what you are saying at retail and what is flowing through, somewhere in the mid to high single-digit range. Your organic growth in Q4 or Q3 was down 8% in North America. That puts your shipment volume, whatever, in the minus 12. I realize there is some mix in there that is probably unfavorable. But that compares to AHAM shipments down in the minus 3 range. So I guess, first off, you said you were holding market share earlier, so how do those two square? And anything you can give us on POS, where you have visibility of your brands relative to the overall category? Thanks.

Andrew Carter: But that compares to AHAM shipments down in the minus 3 range. So I guess, first off, you said you were holding market share earlier, so how do those two square? And anything you can give us on POS, where you have visibility of your brands relative to the overall category? Thanks.

But that compares to ahem shipments down in the minus 3 range. So I guess, first off, like you said, you were holding market share earlier. So how do those 2 square? And anything, you can give us on POS where you have visibility of your Brand's relative to the overall category. Thanks?

Marc Bitzer: Andrew, there is a very simple answer to this one. Our market share this year is very steady throughout all three quarters. You had last year, following our price increase, you had in Q2 a very soft market share and in Q3, a much higher market share. So it is a pure baseline comparison. Actually, if I look at our market share Q1, Q2, and Q3, it is very, very stable, and I feel very good about it. Having said that, we monitor our POS trends every week and see exactly what we need to be doing and what we do not need to be doing. But of course, we saw in the month of September, and also October, the industry was soft, and of course we see that also reflected in our POS trends.

Much higher market share. So it's a pure Baseline comparison, um, actually, if I look at our Market check you want you to and Q3 um it is very, very stable and I feel very good about it. Um having said that we monitor our POS Trends every week and see exactly what we need to be doing and what we don't need to be doing. Um but you know it's of course we saw in the month of September um and also October the industry was soft and of course we see that also reflected in our PS trend.

Marc Bitzer: But of course, we saw in the month of September, and also October, the industry was soft, and of course we see that also reflected in our POS trends.

Marc Bitzer: There is one big element which I want to also add, which is a point of strength for us increasingly, is we typically have POS data from our big trade partners, but there is still a very significant independent retail or builders, and particularly independent retail, where we actually have strengthened our position over last year. And that is a little bit richer from a mix perspective channel. It is not fully captured in POS data. So I would say whatever we might lose on some POS accounts, we have right now good compensating elements on the independent retail.

There's 1 big element, which I want to also add which is a point of strength for our increasingly is um we typically have PS data from our big trade Partners but there's still a very significant independent retail um or Builders and particularly independent retailer where we actually have strengthened our position over the last year. And that is a um, a little bit of richer from a mixed perspective channel. It's not fully captured in PS data. So I would say, whatever we might lose on some PS accounts. Um, we have right now good compensating elements on the, on the independent retail.

Marc Bitzer: So I would say whatever we might lose on some POS accounts, we have right now good compensating elements on the independent retail.

Andrew Carter: Thanks. Next question. I guess, in terms of, you said at the top of the call you wanted to expand margins in 2027. I guess simply put, at this point, with the cost savings you have in hand, the known inflation, what kind of pricing do you have to execute next year? Could you hold margins in a flat volume environment with your savings, pricing, et cetera, next year? Thanks.

Thanks. Next question. I guess in terms of you said at the top of the call you wanted to expand margins in 2027 I guess simply put at this point with the cost savings. You have in hand, the kind of known inflation. What kind of pricing do you have to execute next year and could you do it? Could you hold margins in a flat flat volume environment with your savings pricing, Etc? Next year? Thanks.

Yes. Sir Andrew. Um of course we're not yet giving 2027 guys having said that our clear Focus um full Q4. And also for next year is margin expansion period and we as some of you followed us a little bit longer every once in a while or every couple of years we have a clear focus of margin expansion and we tend to be doing what we talk about and that is the number 1 priority across the entire company. Of course, if you right now add up what we're doing in the structural cost increases and if you add on top of that, we carry over pricing, you would feel very good against that objective but we all experience in 26. Um, the macro environment, turned out very different than we assumed in January. Okay. That's the reality. It's not that, we like it, but that's reality. So, as you would expect from us, we're kind of right now having plans on the margin expansion, which might go well, beyond what we actually end up communicating. Um, but again, that's a decision which will make in January once we see the year unfolding, but from our underlying work, which has been done by structural cost,

Marc Bitzer: Yeah. So Andrew, of course, we are not yet giving 2027 guidance. Having said that, our clear focus for Q4 and also next year is margin expansion, period. As some of you who followed us a little bit longer, every once in a while, every couple of years, we have a clear focus on margin expansion, and we tend to be doing what we talk about. That is the number one priority across the entire company. Of course, if you right now add up what we are doing with structural cost increases, and if you add on top of that the carryover pricing, you would feel very good against that objective. But we all experienced in 2026, the macro environment turned out very different than we assumed in January. Okay? That is the reality. It is not that we like it, but that is reality.

Marc Bitzer: Of course, if you right now add up what we are doing with structural cost increases, and if you add on top of that the carryover pricing, you would feel very good against that objective. But we all experienced in 2026, the macro environment turned out very different than we assumed in January. Okay? That is the reality. It is not that we like it, but that is reality.

Marc Bitzer: As you would expect from us, we are right now having plans on the margin expansion, which might go well beyond what we actually end up communicating. But again, that is a decision which we will make in January once we see the year unfolding. But from an underlying work, which has been done with structural cost takeout and the pricing action, I think we set ourselves up for what I would call a very solid foundation for margin expansion. With that in mind, I think that was the last question. I am not even quite sure I should repeat what I just commented, but again, I want to reiterate, of course, 2026 was full of challenges, and I am not blaming the external environment. We focus on what we can control, and that is cost takeout and pricing. You heard us talking quite a bit about it.

To take out and the pricing action. I think we, we set ourselves up for what I would call a very solid foundation for margin expansion.

So with that in mind, I think that was the last question. I'm not even quite sure I should repeat, what I just commented but I again it's I want to reiterate is you know?

Marc Bitzer: With that in mind, I think that was the last question. I am not even quite sure I should repeat what I just commented, but again, I want to reiterate, of course, 2026 was full of challenges, and I am not blaming the external environment. We focus on what we can control, and that is cost takeout and pricing. You heard us talking quite a bit about it.

Of course, 26 was full of challenges and I'm not blaming Maxon environment. We focus on what we can control and that is Caustic out and pricing. Um, you heard us talking quite a bit about it. Um, we are, I would say beginning to be cautious of the optimistic about 27, but we also recognize we have work to be done and we're still living in a very volatile overall macro environment. Um, with that in mind, I want to thank you for listening to us and hope to talk to you sometime soon. Thanks a lot.

Marc Bitzer: We are, I would say, beginning to be cautiously optimistic about 2027. But we also recognize we have work to be done, and we are still living in a very volatile overall macro environment. With that in mind, I want to thank you for listening to us and hope to talk to you sometime soon. Thanks a lot.

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

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