Whirlpool Corporation

Good morning, and welcome to Whirlpool Corporation's second quarter 2023 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 2023 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 in the investor section of our website at whirlpoolcorp.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 10-K, 10-Q, and other periodic reports. We also want to remind you that today's presentation includes the non-GAAP measures outlined in further detail on slide 3 of the 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. 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. As you will have noted in our earnings release, we did post another quarter of solid sequential improvement. And it was a quarter which puts us firmly on track towards our full year guidance. If you look at the drivers of this improved performance, we did not get a lot of help from a macro environment. Our global industry demand was down, but frankly, that is exactly what we expected. It was instead our consistent and disciplined execution of our operational priorities that drove this improvement. We were able to achieve meaningful cost reductions, we improved our supply chain, our product innovations drove strong consumer demand, and we gained market share. In short, we did what we told you we would do. As we are looking towards the second half of 2023, we are leaving our industry demand outlook unchanged. Even though we are starting to see early but clear signs of a strengthening US housing market, which will benefit us disproportionately, the broader consumer sentiment is still cautious and not yet pointing towards more discretionary purchases. We are also seeing the operating environment essentially return to pre-pandemic conditions with stabilized supply chains, improved inventories, and a promotion environment which is similar to pre-pandemic levels. Frankly, this is an environment we have demonstrated that we can successfully operate and create value in. Turning to slide six, I will provide an overview of our second quarter results. The world we are operating in today is very different from the first half of 2022, where supply chains were fragile, inventories were historically low, promotions were largely absent, and inflation was at historically unprecedented levels. In the second half of 2022, we saw a global demand shift with industry declines in key countries. We continue to experience this trend into the first half of 2023 with global demand declines in the mid-single digits. Second quarter, year-over-year revenue declined 6% versus the prior year in line with expectations. The promotional landscape is normalizing at pre-pandemic levels, negatively impacting price and mix. Yet, we continue to gain momentum with year-over-year share gains in the Americas through improved supply chains and our strong product lineup. In Q2, we delivered a strong operating margin of 7.3%. This represents a 200 basis points expansion from the first quarter driven by our strong cost takeout actions. These actions delivered $150 million of year-over-year benefit and are on track to our full-year target of $800 to $900 million of cost takeout, and delivered strong second quarter ongoing earnings per share of $4.21, in line with expectations. Now, turning to slide 7, I will share more details on our second quarter EBIT margin. The second quarter was unfavorably impacted by the normalization of promotions, which reemerged in the second half of 2022, and are now following historical seasonal trends. Sequentially, price mixed negatively impacted margins by 50 base points with a year-over-year impact of 350 basis points. Our strong cost takeout actions delivered 275 basis points, both sequentially and year-over-year. And as expected, marketing technology and foreign currency negatively impacted margins. Overall, we are pleased with our second quarter performance, delivering ongoing EBIT margin of 7.3%. Turning to slide eight, you can see we are on track to deliver $800 to $900 million of the year-over-year cost takeout benefits, including $300 to $400 million of reduced raw material costs and $500 million of additional cost takeout actions driven by enhanced supply chain resiliency, reduced parts complexity with approximately 50% fewer parts since 2021, and improved transportation rates and reduced premium freight costs. Additionally, in aggregate, we have reduced our salaried workforce by 7% and remain disciplined with discretionary spending and other indirect costs. With the cost actions we took over past quarters, we are fully on track towards delivering our cost takeout targets. While the chart shows high year-over-year cost reduction in Q3 and Q4, it is important to note that this is entirely driven by the baseline effects in the second half of 2022 and will not require additional new cost takeout actions. Now I will turn it over to Jim to review our regional results. Thanks, Mark.