Whirlpool Corporation

Good morning and welcome to Whirlpool Corporation's third quarter 2020 earnings release call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Senior Director of Investor Relations, Roxanne Warner.

Thank you and welcome to our third quarter 2020 conference call. Joining me today are Matt Bitzer, our Chairman and Chief Executive Officer, and Jim Peters, our Chief Financial Officer. Our remarks today track with a presentation available on the investor section of our website at www.wopoolcoop.com. Before we begin, I remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Wopool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10Q. and other periodic reports. We also want to remind you that today's presentation includes non-GAAP measures. 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 a better baseline for analyzing trends in our ongoing business operations. 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. Also, as we highlight on slide two, there is significant uncertainty about the duration and potential impact of the COVID-19 pandemic. Our discussion of the potential impact of COVID-19 on the company's business results reflects our best estimate based on what we know today. At this time, all participants are in a 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'll turn the call over to Mark.

Thanks, Roxanne, and good morning, everyone. Now turning to slide four, we discuss our third quarter 2020 highlights. We delivered organic net sales growth of 7% driven by industry demand improvement across the globe. While pent-up demand and low inventory levels with our trade customers partially drove demand within the quarter, increasingly we are seeing the benefit from home nesting and a recovering housing market. Additionally, the flawless execution of our early and decisive COVID-19 response actions to protect our business and ensure our continued ability to meet the needs of our customers resulted in ongoing EPS of $6.91, $2.94 improvement year-over-year, ongoing EBIT margin of 12%, a year-over-year improvement of 480 basis points, significant margin expansion in our North America, Latin America, and EMEA region, and a positive year-to-date free cash flow of $170 million, a $1 billion improvement driven by strong net earnings and disciplined working capital management. Due to these strong results, the confidence we have in our business, and reasonable year-end visibility, we are reinstating our full year 2020 guidance. We now expect to deliver Net sales decline of 5% to 7% and organic net sales decline of 1% to flat. Improvement from our previous four-year perspective. Ongoing EPS of $70, $50 to $18 above our original guidance of $16 to $17. And finally, free cash flow of approximately $900 million at the high end of our original guidance range. Additionally, as a reflection of our strong liquidity position, We announced an increase in our quarterly dividend, resulting in the eighth consecutive year of dividend increases. Further, we intend to repay all COVID-19 related short-term borrowings by year-end as we continue to progress towards our long-term leverage target of two times. Turning to slide five, we show the drivers of third quarter margin. Price mix positively impacted margins by 275 basis points, primarily driven by reduced promotional investments given our supply chain constraints. Also, sequentially, we continue to see improving mixed trends as consumers slowly shift from duress and prices purchases to upgrading and investing in their homes. Our cost takeout actions delivered approximately 200 basis points of margin expansion as a result of structural actions we took in the second and third quarter, as well as ongoing cost productivity initiatives. Additionally, favorable raw material trends positively benefited margins by approximately 150 basis points. Lastly, the impact of continued investments in marketing and technology initiatives along with unfavorable currency negatively impacted margins by approximately 150 basis points. Overall, we believe our third quarter results highlight the strength and resiliency of our underlying business in the effectiveness of our COVID-19 response plan. Now I'll turn it over to Jim to review our regional results.