Whirlpool Corporation

Good morning and welcome to Whirlpool Corporation's second quarter 2021 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, Corey Thomas.

Thank you and welcome to our second quarter 2021 conference call. Joining me today are Mark 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 whirlpoolcourt.com. Before we begin, I want to remind you that as we conduct this call, we'll 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 TANQ and other peer ad 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. 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, Corey, and good morning, everyone. Before we discuss our second quarter results, I'd like to acknowledge that we're comparing to a period in which the world was experiencing the greatest depth of disruption from COVID-19. While lessened, disruptions from dynamics do in fact remain along with volatile industry dynamics and numerous global supply chain constraints. Having said that, our impressive results throughout this entire period and again in Q2, demonstrate the strong execution of our global teams and the resiliency of our business model. Now turning to our second quarter highlights on slide four. We delivered very strong revenue growth of 32% year-over-year, which also represents growth above 2019 levels, driven by robust and sustained consumer demand and the execution of our pricing actions. Next, our decisive response plan to address volatile industry dynamics and broad supply constraints delivered ongoing EPS of $6.64, a $4.57 improvement year-over-year, ongoing EBIT margin of 11.4%, a year-over-year improvement of 640 basis points, overcoming 400 basis points of cost inflation. Additionally, we generated positive free cash flow of $769 million, led by strong earnings and the successful completion of a partial tender offer of our Guopo China business and the divestiture of our Turkey subsidiary. These global results were driven by substantial EBIT growth and margin expansion across every region. The execution of these actions and the sustained consumer demand delivered very strong Q2 results and give us the confidence to significantly raise our guidance to approximately $26 per share. Turning to slide five, we show the drivers of our second quarter EBIT margin. Price and Mix delivered 600 basis points of margin expansion driven by reduced promotions and the further implementation of a previously announced cost-based pricing actions. Additionally, structural cost takeout actions, higher volumes, and ongoing cost productivity initiatives delivered 550 basis points of net cost margin improvement. These margin benefits were partially offset by raw material inflation, particularly steel and resins, which resulted in an unfavorable impact of 400 basis points. Lastly, increased investment in marketing and technology and the continued impact from currency in Latin America impacted margin by a combined 100 basis points. Overall, we're very pleased to be delivering even above our long-term EBIT margin commitment and are confident this positive momentum will continue to drive outstanding results throughout 2021 and beyond.