Whirlpool Corporation

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

Thank you and welcome to our fourth 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.wopucoop.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 Wopu Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K 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 presentation appendix and 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 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. In difficult times like the ones we're living through today, it is important that we remain true to our guiding principles. WOPO's 110-year history is rooted in our value-driven commitment to our shareholders, employees, consumers, and communities in which we operate. In 2020, we faced unprecedented challenges due to the ongoing COVID-19 pandemic. Yet, we remained firm in our commitment to all of our stakeholders. The health and well-being of our employees was and remains our top priority. We increased safety measures at all manufacturing plants and provided additional resources to care for families and those who fell ill. We established business continuity plans to ensure our consumers received our products to improve life at home with their families. And we continue to support our global communities by procuring medical supplies, making donations, and engineering critical equipment for frontline workers. In parallel, we made significant advancements towards our sustainability targets, resulting in ratings improvements and external recognition. Most notably, we received a low risk rating from Sustainalytics, a year-over-year improvement driven by our outstanding energy and water efficiency programs and our strong global product safety systems. And we were named to the Dow Jones Sustainability North America Index in recognition of our longstanding sustainable business practices. 2020 marked our 14th time on the list in the last 15 years. I'm very proud of the way our employees have managed through this pandemic. It is ultimately the agility of our organization and the resilience of our employees that allowed us to deliver record results in 2020. Now turning to our fourth quarter 2020 highlights on slide four, we delivered strong organic net sales growth of over 10% driven by solid industry demand across the globe. Additionally, we delivered ongoing EBIT margin of over 11% a second consecutive quarter of double-digit margins, and a year-over-year expansion of 410 basis points. Lastly, we successfully executed our go-to-market initiatives and drove strong cost takeout across the globe, leading to positive EBIT and EBIT margin expansion in all regions. Now turning to slide 5, we will discuss our full-year highlights. We took immediate and decisive action as we announced and executed our 500 million plus cost takeout program. Further, we realigned our go-to-market strategy to effectively operate within a supply-constrained environment. Structural and sustained positive demand trends and the exceptional execution of our COVID-19 response strategy resulted in record ongoing earnings per share of $18.55, a 16% improvement compared to the prior year, above our previous guidance. Record ongoing EBIT margins of 9.1%, a 220 basis point improvement, and a 25% increase in total EBIT compared to the prior year. And record free cash flow of approximately $1.25 billion, with positive free cash flow in North America, Latin America, and Europe. Despite significant macroeconomic uncertainty, we strengthened our balance sheet and drove significant shareholder value. we reduced our gross debt leverage to 2.3 times, making progress towards our long-term target of two times. We delivered a return on invested capital of approximately 11%, representing the fourth consecutive year of improvement, as we realized the benefits of continued EBIT margin expansion at an optimized asset base in our Europe region. Lastly, we returned strong levels of cash to shareholders through share repurchases, and increased our dividends for eight consecutive years. Overall, results we delivered in 2020 reflect the structural improvements we have made not just in 2020, but also those made during the years before. We are a fundamentally different company with an improved margin and cash flow profile. 2020 could have been a setback for us. Instead, we were able to significantly accelerate our progress towards our long-term financial goals. Turning to slide six, we show the drivers of our fourth quarter and four-year EBIT margin. In the fourth quarter, price mix delivered 375 base points of margin expansion, driven by reduced promotional investment and mixed benefits as consumers invest in their homes. Additionally, we delivered on our cost takeout program, positively impacting margins by 125 base points. Further, reduced steel and resin costs resulted in a favorable impact of 125 base points. These margin benefits were partially offset by continued marketing and technology investments and the unfavorable impact of currency. For a full year, very strong margin expansion from price mix and our cost takeout program were partially offset by increased brand investments and currency. Overall, we're very pleased to be delivering on our long-term EBIT margin commitment and are confident this positive momentum will continue to drive very strong results in 2021. Now I'll turn it over to Jim to review our regional results.