WHR - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to Whirlpool Corporation’s Second Quarter 2018 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, Max Tunnicliff.

Max Tunnicliff

Welcome to our second quarter 2018 conference call.

Joining me today are Marc Bitzer, our Chief Executive Officer and Jim Peters, our Chief Financial Officer.

with website available at track section the today our of whirlpool.com. remarks the on presentation Investors Our

Before we forward-looking begin, expectations. we you conduct let understanding me remind call, in will you we be Corporation’s making Whirlpool statements assist this to future that as

as actual reports. from statements We presentation remind that many differ want due XX-K and important includes non-GAAP unrelated materially items they measures. our ongoing operations today’s believe of We discussed to indicative in latest could to our are results our exclude to are may Our or indicators be these measures from not business factors that other periodic you operations. our these of results

our the provide section in are measures comparable will Listeners reconciliation GAAP measures. think information better directed participants the you to also this items mode. the baseline all website directly posted our adjusted of Relations business trends are Investor ongoing non-GAAP on listen-only the to time, supplemental operations. a We the in for package of with for At analyzing most

analyst prepared for will remarks, call be the opened our Following questions.

to a we As ask With over that, that no let reminder, me participants call the two than turn more ask questions. Marc.

Marc Bitzer

we morning show good Slide second everyone. and On quarter highlights. Thanks our X,

of a Since we environment macro and saw in $X.XX. cost margin elements our quarter ongoing significantly. our As of challenging you margins of earnings share mid-May, press expanded X.X% a second in EBIT EBIT worsened ongoing very release, per in ongoing environment. number delivered the We

as currency America. Russia trucker headwinds related Latin significant in we well a tariffs but demand in material and decline U.S. inflation, raw continued U.S. Brazilian fluctuations industry strike as the to experienced addition In and to temporary,

the to margins increases expand our targeted in cost the throughout macro results these have price few us past reductions challenges largely year-over-year. actions these ongoing put While world and EBIT quarters, including offset cost-based and impacted we challenges over enabled place negatively,

significant unable we driving expected slower on volumes price basis region. pleased headwinds in Europe, to macro are as global spot overcome very positive strong year-over-year and work were a improvement to and the than we in In We recover to mix with progress due sequential regions. all

strong As delivering and region, the demand, actions detail the margin I over call. later EBIT in rising restore are and profitability raw taking X% in growth quarter will we a freight industry to XX% which North We our performance decline second material strong further region American result, discuss inflation despite a in in continued costs. drove

agreed from the business related Europe in we sell of and asset and which we As the $X as the disclosed a million not quarter stock. our French previously common approximately compressor tender GAAP Competition second executed improve offer results and anticipated anticipation previously by due should quarter, during quarter charges our to Embraco impacted and negatively during to announced repurchased in of approximately to were proceeds primarily the Mitigation. preliminary that impairment $XXX billion a results, sale, a on Authority settlement

guidance. would Slide second quarter XXXX to results X, I our and Turning discuss

in during the were industry strike. Ongoing driven flow volumes. trucker slow significant related X% production impacted Brazilian lower Europe time recovery the approximately quarter. year as offset year declined and prior margins the were Year-to-date, weaker XX primarily declines above inflation. volume prior price by cost than below points and expected strong capital the working than more revenues in cash the Our demand global unit mix Sales free X.X%, EBIT by to volume basis on progress U.S.,

and which full in second previously more our year to significantly the our guidance expected expect reduced forecast, results half, now headwinds than increasing second weaker components Regarding we be to forecasted. than we due cost quarter

the our call. more discuss in will in later detail guidance We

expect to the expansion encouraged additional This mix by due While our and end we the at original same we confidence the the margin quarter, significant of X, that to second and price quarter headwinds the deliver quarters. of value shareholder drivers progress margin results the strong underlying in year-over-year. Slide coming fundamentals are second of time our to business On are our us towards the gives continue performance. quarter we global expectations therefore show were the our below strong

slide. both will was and as Our four discuss cost global on I price fixed the sequentially year-over-year positive price mix cost mix restructuring and gross take-out regions. reduction in continue to as all next improved progress. well We positive delivered curve our as actions

primarily as the well offset by points. margins to and a freight regions. be impact Raw weakness headwind continued to the multiple by in due Brazil year-over-year quarter oil partially and rising price significant volume in inflation material impacting of basis conversion were second benefits U.S. these shortages inflation cost, However, fleet XXX short-term

the cost-based improvement North we America. second in and basis price Average a basis we double-digit Europe and significant points prior commitment per XXX Turning price X% This the quarter. by compared to delivering implemented on to in price in late global the X, continue of total, to to quarter year Slide realize mix a benefits price delivered mix and demonstrate into improved all price unit a points including regions. improvement mix improved of we basis, our represents performance. XXX improvement second year increases approximately global X% as positive over sequential last In

Finally, the Canada we additional recently cost-based which and price Latin third are quarter. during announced effective in America, increases

the in in I second the on weak performance X. detail business Europe Europe, more Given discuss to would Slide like quarter

in business environment execution issues Over the changes to performance. related to challenges past several weak integration, quarters, macroeconomic have led Indesit the the continued and

completed we availability integration, we platform product and factory, issues experienced as system the integration. During

the well volume, for with in volatility by raw for of and to price customer region. negotiations which cost-based continues a impact the future combined us of the XXXX positioned During a time, implementation half our inflation increases. our when first same be in At had significant business material currency especially impacted

in have to activities challenges expectations, position integration below Indesit now have our well complete. The our in Europe. these While led are continued results structural we confidence to

are our many systems leading are upon structural streamlined well-positioned our by progress platforms slower-than-expected volumes in to made European we are and we to build factories region. Our countries, integrated in encouraged while positions our regain position brand optimized, is and the have portfolio

actions address identified result, As and disappointing have a necessary drive execution strong to we value creation.

recovering we our improvement actions are balance including price quarter, improving through While we on around unit mix, pleased the our will a stabilizing progress price country-by-country in per second targeted and with double-digit now average and basis. volume efforts in

redefining the value our portfolio overall and also on additional a for drive stronger the to including regions cost reduction of focused are creation, We opportunities the focus strategy business optimization. a kitchen business, implementation in profitable

Finally, Europe leadership President. a change region, are in changes broad we implementing Norwegian in the the including

half long-term, restoring to in the X% is deliver expect we our in to we that, While roughly results. to our to expect in short-term second and over to regional breakeven X% margin to Jim Europe. X% continued now like XXXX focus the on business, would it I margins the review With by turn

Jim Peters

Thanks, good Marc morning and everyone.

driven were of believe Slide demand to and the delivered X, we reviewed impacted America quarters the first quarter strong competitor Net in strength primarily sales expected safeguard $X.X between unit the billion overcoming to business, region. of North while weaknesses in related of headwinds. and inventory the than Turning second avoid quarter current to fundamental We significant the remedy based by laundry. by price soft shipped external volumes the We U.S. stockpiling largely industry on increases second demonstrating cost weaker the this volumes represents washers our North results margins our for America

as As underlying into to which XX.X% margins normalized significant the U.S. industry cost will we weakness, move the conversion industry drivers shipments inflation. reductions more half, the mix of offset demand believe we through unfavorable price Overall, remain delivered favorable. levels from impact that second $XX industry and significant million we a due volume return to improvement strong

previously our We as second and expect to in new strong programs. as actions takeout the mix well half continue announced launches price benefiting product innovative cost from

headwinds. results declined Turning down prior versus sales positive Africa Slide prior and we currency region. as by inflation East was raw points. the more volume the by than and raw results declines, or of offset year. approximately total $XX basis versus million reviewed Ongoing unfavorable year combination second material Middle our material currency to Europe, quarter for In margin inflation EBIT XXX mix Net and XX, impacted were unit significant X% price the the

volume double improvement our satisfied actions with negotiations private pleased during digit trade per strong average price recovering in and with the we and are label are we took the quarter. we price volume on following unit our While not mix, first progress

on strong As our taking business are track a our us steps are to strong for Marc the goals right region. get will enable and earlier. actions we long-term actions, back for mix actions result the the to These discussed

down second Net the reviewed and America we year. the versus sales our prior were XX, EBIT results Slide to Latin Turning both quarter region. for

cost actions positive continued mix in Our pricing based quarter. price delivered progress we to the as

However, prior and the unit strike volumes Brazil. impacted unfavorably volumes impacted expect Due million. of trucker home year businesses quarter, the declined we versus primarily the timing second total approximately and due appliance in by year. units to in some $XX the of strike strike, trucker compressor In approximately the which the volumes the our do both we unable to Brazilian in XXX,XXX to by EBIT but the half recover scope were recovery and the

a $XX continued impact, decline. million the led In weak addition EBIT demand trucker strike to compressor to global

June, in announced new Mexico As based July a and cost of pressures increases cost Brazil, we effective in X. result continued price Argentina

the to We improve and profitability. managing price, costs on in focus region mix balancing volume to aggressively will continue while

for the of quarter X% Slide we year. improvement Ongoing million, net EBIT shown delivered the Now to results versus will year. on Asia which turn prior We second a significant versus region prior the our ongoing sales XX. $XX were increased

by material impacted totaling mix. delivered Our approximately second $XX and double-digit were despite strong inflation growth results million. volume price results We raw quarter positive unit currency positively and impacts

mix GAAP impacted by India strong unit of by in gains deliver incentives. relative to mix. China, and continue results and price EBIT driven In volume delivered ongoing we and price $XX favorably approximately share net impact We growth, discrete positive double-digit both million, government positive items the with primarily

in focus profitability mix cost improving through China disciplined We price on management. continue and to

Now, I’d to Marc it guidance. like review turn over our to to back

Marc Bitzer

turning And to Jim. our Thanks, review we updated guidance Slide XX, assumption.

revenue second our mentioned in strong XXXX for as offset primarily flat guidance of As have a macro expected by global We weaker be stronger now the than our we earlier, is to and revised price the year Europe. volume result expected as headwinds expect performance in quarter. weakness, mix I

the global ongoing drivers but reducing of are U.S. growth in North We our expect the America EBIT We updated expect deliver half. for year. contribute now slide. I industry next margin would second EBIT our we and on the of recover margin approximately X.X% to expectations, the growth the in to discuss to guidance

cash our guidance $XXX million. to reduced a result ongoing record deliver to share. have flow of earnings of As now lower per expect $XX.XX expectations, we earnings Overall, we approximately $XX.XX to

now growth EBIT XX, to show strong mix for drivers impacted from in conversion has We approximately volume our price of regions, or price the Turning freight expectations We million cost-based increases certain Slide fuel in cost margin our have our takeout expect price X and points results. $XXX countries and impacted global deliver delivered reduced have of to net we weakness improved our updated inflation as benefit guidance. multiple cost.

fixed this cost to track million remain reduction on benefit our year. deliver However, actions $XXX for

expect XXXX. million now $XXX in material be inflation Finally, raw approximately to we

steel and across costs U.S. We substantially items, and commodities with continue have unexplainable inflation purchase to our number steel global biggest see in in of the that reached particular levels. particular resins. and have in risen a The significant

the steel XX% While is the most priced U.S. simply rest premium more expensive input world and a at cannot to costs. steel of be has world the historically than the explained recently, the by the rest also U.S. of

Our we us recently, annual trends. increases insulate contracts capacity steel material cost rising also metals but contract base with do us our and supply from inflation and experienced U.S. some constraints. protection, due these to hedging more not chain give prices oil And

As we exposed mentioned in inflation. resins the prior earnings to was quarterly hedge price and it calls, we cannot

and and components to cost trade global actions tariffs goods increased related imports all uncertainty exports. of to certain Finally, have finished strategic and led

increases, also to ability these price our for will path so. While significant, and a do improvement these of types cost continue headwinds we increased the we material cost-based demonstrated efficiency have reductions of raw variety to are means, challenges and overcome in including

and guidance cover priorities. will Jim our Now, recent cash

Jim Peters

On margin Slide we EBIT and industry show regional Marc. our Thanks, guidance. XX,

a the We of expectations well-positioned expect for demand. weakness approximately growth Latin with approximately In EMEA, the including Despite the are America to a approximately margin XXXX. margin in the U.S. Brazil softness. full industry growth soft U.S. result and EBIT industry for volumes deliver now margin we of of as portion North growth expect the as the quarter. North impact second In believe headwinds. unemployment in second is half year the America, second healthy approximately external inflation, to half expected deliver in we X% encouraged economy, of significant America, low have our be continued XX% in to X%. expect deliver EBIT and given industry housing material recover We reduced we to by expect trucker X% now QX In slightly to and raw in X% ongoing the the result now to strike of a and we strength of of the negative

margin to in continue Asia. X% we approximately deliver Finally, expect EBIT to

XX, to flow updated we cash XXXX. for Slide review our Turning free guidance

the asset inflation result unfavorable The Marc discussed have slower expectations on cost now a as In of and earnings to million. earlier, in free expected cash cash settlement increased deliver does for in guidance Authority our flow an reduced Europe, we fluctuation. of and preliminary cash recovery French total, impairment, to currency is Competition impact have impact approximately not cash expect We XXXX. $XXX

our we are to allocation for which unchanged. show priorities capital Turning XX, Slide XXXX,

repurchasing the of and announced to in business second and the entered proceeds, into business repurchased of our in anticipation and we common quarter and early billion second to $X of the the we stock expect term continued loan compressor of half. receipt Embraco the facility in our the we quarter, deal to continue the of expect close the sale During of sale XXXX. closing sale the a In shares

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

Operator

We from will [Operator Instructions] Curtis America/Merrill Bank take Nagle a of question of Lynch.

Curtis Nagle

Thanks question. so the much for taking

can given just that that the take you talk aggressive aren’t bit and being is to first and how actions specifically strong you are quite gap will between what think guess volumes that and it more you about little plan appears my to that just I as a guys So pricing? you narrow the pricing balancing achieve on competitors

Marc Bitzer

Curtis, Marc. it’s

and the what’s presume you of of increase on global I our specific not situation So particularly competitive region environment is asked the by from course, and And the different price question region. the region timing though. on

North went out both know kitchen second America So from let into as Europe you me maybe if which or Asia. can the and and we first the America increase try for go increase, to address quarter also effective wish quarter. and it Latin – North more price you when In the longer America, so was price we the of in

the are in their we strong you on remarks sequentially, As competitors We executed not from we year-over-year and I stand go had around target firm our Obviously price can also tell period the promotion comment our very July pricing what doing, increases decided and into X. from doing cannot and or it’s to accordingly. numbers we decision.

am again a environment. until Europe environment would on not we seen again country-by-country different, on with going different. to everybody similar no kind period, standing and very October that’s this is them country-by-country thing is have generic we would but would February, one. increases promotional and X I inflation again fragmented and lot we comment. our I I much a normal price We into this reaffirm the only executed On say environment July into committed the here increases of and there some Again, but highly are was started say can but in and very up reading country-by-country, increases, only basis, in cost competitive not do firm I price because right such have price to a the We over sticking too

and our these of and But second the rebound have price it wouldn’t price volume in pricing. only the also at tie on before, because we put volume wouldn’t is to back were we what time and impact, saw think partners, same half. hold the volumes increases increase, certain address is terms this but losses on it of trade or to some job contractors we again trying all firm and to the our certain some trade I I I here communicated now unfavorable

Curtis Nagle

Maybe from disappointing segue Okay. perspective next earnings guess like in just a EBIT that quarter, an lot we just EMEA, still are another dragged and XQ, so my sounds of the there. same I on question it issues to

is it a specific the of change So about I as take has plan changes some guess you to leadership been retain mentioned what in and or more is why sounds strategic you so slots actions like those direction? slots little those happening, be there difficult to a can you from what have aside some regain and

Marc Bitzer

that Europe before, better. yet and by have in are what’s QX we obviously we not said any Curtis So disappointed

putting that numbers, had First an some also have inflationary our rest burden seen we all so you have as in world the challenges global of in of one. context that’s the of which numbers have the the same European throughout impacted additional this we

side On also and are frankly these us you it but resolve overnight. large quickly time last easy contracts to regain it’s long the know spots trade a the that by X which over lost to environment, not we just competitive of results, months volumes some not which a very took in floor as

Europe regained business. spots, our the in a price we one re-focused and QX very again the what progress month now making giving in that’s month got but kitchen the profitable second disappointed over are have priority the month, time floor on particularly in without up number same even the for better over rebalanced strategy we the half and our as increases We in right is

Operator

is question of Our David Longbow next from Research. MacGregor

David MacGregor

Yes.

morning. good So

Marc Bitzer

Good morning Greg.

David MacGregor

reflect to the XXX, time XXX posted inflation rather start the might question where you it has thought it you materials was on a eventually but with guidance, that raw get where off guess at to. material that to supposed raw been not guidance Just was I

some the they So now? see have incremental there, upwards presumably can XXX, increased the inflation in just in adjustment much which or did materials cushion about world where you for which you cushion do you to now the responsible segments geographic and talk how is

Jim Peters

David. Yes,

Jim basis, and up have this on U.S. has back pushed in more continued risen the So globally. have seen our previous times prices – especially is Resin some the as we in is concentrated a have to costs, go right market also primarily U.S. field recent on what we global the cost, then think we pressure if increase I guidance but since we oil now. in that of that some an and it oil within last have seen but seen

even look we our of metals, those assumptions earlier across Additionally, many base all the year. in as up gone the have from

rather significant steel hitting and in with been U.S. in it’s this So, broad-based point time. concentration disproportionate the the at amount a us in

Marc Bitzer

maybe David, this I on also will So one. add

you market said call we purchase. give of this material our particularly when material before, size guidance, forward-looking almost across our raw also in basically respective it four are increased. a spot assumption of not I biggest raw forward-looking for buckets, changed if of to The have it assumptions past, so in First all, a put steel, and is back but the steel different correct what the coming world, we the follow reflecting structurally U.S. year it’s Jim the you is tells which concern and it’s have

pay we is have it’s before just X we for the we resins, not indicated X not our kind risen resins, our And substantially same are risen a we come order that down. completely some are substantially technically, forward we and in Now, and either resins we are hedge is have which by said know quarter – sitting to or when but But quarterly but but ongoing it’s only the QX, freight few, our of and so it’s cost are basically it Two, the protection And of by in we who the not then kind inflation impacted I materials, on via freights, has due basis, but shortage basically our almost some impacted have productivity, raw the of to element. that that again second exposed in not tariffs. the records cannot as impact, but and annual an and the limited by have import has has also you as insulated. lastly sits suppliers impact before, to contracts. tariffs, not

going second So quarter. that but an extent to the forward, is impact lesser a in

David MacGregor

raised price one small competitors been prices the of second for effective this which here you for half August, benefit? feel talk has in your just about extent you you when gone has can There already to summer again increase have

Marc Bitzer

world, we that’s in said all And done And you from are prepared past, the inflation, inflation so. we increases based I price of supplier very material a is and at we closely. not cost go comment I price you U.S. saw one David of situation have to the we reduction I whenever the always as prior decide set obviously course would and so will need judge U.S. it, what as when the programs, we you as cost with of there and monitoring faced in to negotiations to know increases, remarks, of on info, first intend do and them consistent and Yes. our probable raw options and significant cannot future us but multiple my look that’s also across in particularly increases price cost sign say, forward business, with the throughout you

David MacGregor

remedy that and the maybe that? if could as just aggregate you was deconstruct about talk to sort just that planning of which a question how problems of you are Second and countries results moment about strikes are particular can consolidation was of you and contributor problem just a just are for Europe, to proportionately the European you UK facing, of it talked markets me different sort negative on I there of the lot

Marc Bitzer

volatility UK. a out profits more David used in X Historically, a detail, just I last quarter. as the UK I true years over demand we X currency again for opposed the the exposure and mean, in of say, quarter in is slow years. impacted a in the down not Russia the on markets some markets. also but some extent, got would necessarily that To this to challenges have, lot Russia, just in but same have us, that Indesit perspective had is the them, very of to I significant particular factor. make downward the realize there. that would in because European stabilize a where currency is is it started as Yes. France don’t say second the but we thing to same being our also like lot had obviously all demand without was we call you top because Both business burden currency positive breaking still think I other weaker, UK. Germany, structurally significant decisive business to encouraging some know, some and Italy products our historically imported and markets, to core UK, like and see Russia margins to extent signs

Operator

Darkatsh James. Sam our from Raymond of question We will next take

Sam Darkatsh

are you? Jim, morning, how Good Marc.

Marc Bitzer

Good morning.

Sam Darkatsh

with. I to clear A few questions wanted I sure make am

saying, that in from here you commentary? subsequent Marc to would and is if were the what how be so to pricing take not is to So it understand incremental pricing you your are that is guidance guidance from here

Marc Bitzer

guidance we want communicate which competitive to Sam, material from our increases it obviously, price future of have reality Apart margins, our price cards cost course on you put Having price X.XX of upon that, a raw our assume continued is assumption from X.X. includes don’t I number and table. as current the there includes based on again, now seen the the for all also we X.XX benefit and year full on cannot discipline of Well, upped increases. we reasons to right assumption said what all,

in in the beyond. because already included announced increase, and them, the So we but we we technically also price have America anything not included Canada Latin the guidance have

Sam Darkatsh

you materials, machine be then do real margins, wash this America? right are based laundry my you would here raw you mark-to-market question off, I forward year know question, present? and you now, insulated would when margins purchasing, to contracts said average at And secondly for then look twofold, inflation And expect first for on seeing approximate you what approach were what or but my and that XXXX like to hedging specifically fleet North Okay. if are

Marc Bitzer

are these questions. Sam, two

So they clear we guidance talk earlier because we in I me there be XXXX be about given point annual it’s also us. remarks. and to are contracts, On to is giving important extent, us first raw is this my that element material, still raw some think not some obviously on don’t indexing, There materials protect have let steel, completely at elements. some of to – but insulate steel they

of have Second contracts like you steel of what where are steels buy steel, there short. all, but not necessarily all cold-rolled certain duct we parts stainless steel some annual contracts. and specialty don’t of not Certainly, them parts, steel, the we have annual

item resins, on because steel are contract base. ever The are not the resins, in by simply get can’t current annual prices we you we impacted our contract. are big ticket So on resins annual

inflation, So, hedges we but earlier, ever market. fully on have XXX% exposed And in hedges run this we of base any quarterly and the to at see inflation of point we also place, out as in mentioned have we metals which course given one the you Jim time. are where what are all not the hedged you at

said certain how the we evolve. we are that, also that convinced there see which now prices to see trends spot exposures have we right So got Having price and future also certain input and because they are are rest on not the particular from in disconnected world. of steel also costs sustainable believe the they are markets, the external simply from we in disconnected do

as that, we relate market balanced, demand as to don’t more impacted again said demand in washers you were which by we from reveal back know margins Now in so coming and but the soft back you in was platform. probably very price product slow and probably QX, increases. the a was have Having region by first to strong demand half QX we very cost-based by QX can benefit QX, a in washer such the – margins washer or business

we have loan reached improved, not So, margins I have on would but say average. our yet EBIT fleet they

Operator

from is Maklari question Suisse. next of Credit Our Susan

Susan Maklari

morning. Good

Marc Bitzer

Good morning.

Susan Maklari

I little things wanted first that you know you color guess, on get North expect more to a recover. said to bit America I you

see of So, have quarter, the broadly do together you that of coming either and in industry coming the about half for volumes how to back business think improved or the year? you started out for your the

Jim Peters

Yes, Jim. Susan, this is

laundry before it back the load-in, which some we as out way first balanced to and in we itself products second think at of believe I that was was some significantly the look mentioned QX quarter, of strong especially that we during is due quarter. that

look at quarter, the are point time. quarter third we in this at we very early As in the

at And back make what and we the look as believe the underlying within QX will year, and where had our have to year, so to other industry closer but was we in half realizing as for of the at be down the up. of from the believe the made expected that of things, just are we we expect flat said that we not a little first U.S. to and up softness guidance that reflected year of normalize won’t X% we to probably to full we demand really in sell-through have demand that taken least X%, levels and the X% what drivers do X% we as

Marc Bitzer

Susan, add it’s also maybe me Marc, so color. additional let some

QX by So indicated QX X%. industry was as down solid, very it Jim was

the expect rebalancing which in to inventory it we half Frankly increase of first some the the pre-buy. flat. was the in approximately also price was So related did

May. rebalancing expected in April, We some

surprising but if years. I demand element period the want which an – think July as but usual overall was indication was you X, softer say slow than of is an the the to June

Having are observing guidance particularly missed and of we all the in healthy of full to to and are course we X housing believe half first June X% data if the that’s parameters. the we softness U.S. first but of I wanted everything market think else, out structure half. of But you still to despite down that confidence that look place we the took impacting X%. year at in fundamentals So say said market the course

Susan Maklari

result any a pricing, that, of there? terms you see positions of have shift is changing And do guess of thinking market Okay. I consumer a you the mix then sort out of the broader that in down about share in moving as pricing seen

Marc Bitzer

I did Susan you and go by different mix this on have course in these base impact of we have region. lost cost entire that massive the you it’s product again volume you around driven for low most the so see cost But because obviously shift promotion promotion we mix from some particular focused on didn’t ASU. one, I North increases price elements. so, product that typically sometimes if mix used if to what it’s region a price Marc ends stay when in it’s range, heavily Having we and advertising our say said sometime want active vis-à-vis the base, it – and America have so a down. increase you typically period

volume. mix, So yes the it’s not have necessary, lost lost but basis from end we periods, the ongoing low an some we we but promotion on

Operator

KeyBanc Capital. of question is Ken from Zehner Our next

Ken Zehner

Good morning gentlemen.

Marc Bitzer

Good morning.

Ken Zehner

to good, pricing back America, to pricing in going and X% I North this to If step then looking attain the try was XXXX obviously are a can trying XXXX, you because to you elasticity and are margin targets, now your thought context, ‘XX, normalizing so focusing on I elasticity like July get as think margin there clarify your which of your first in back, talking right all? I macro demand X% ultimately to just really the of just opposed to going kind XX% promotional you talked on margins softening could X% your as in XXXX so cost about want want am price your take half you to to fell to weakness talk you if so Thank I a the were XXXX, pursue I about when you. and to outlook you thoughts in implied just X quarter cyclical put year, that to second of appliance discern

Jim Peters

just of also there amount me to and takeout. there multiple you price take into and fixed significant XXXX there, time. And that was with of elasticity, you goes talked kind of Ken pricing before during there The the But a cost Marc some increases margin was significant expansion about. that yes ‘XX cost let were based the

are results necessarily expansion you multiple X% margin compare of we have correct on So the But you now. can’t drivers. there to to were X% but the pricing what there,

Ken Zehner

Okay.

Marc Bitzer

a maybe couple me So also Ken, of comments. add let

weather it actions got quarter take in the with and despite all we expectation, encouraged will bit challenging we really a that to also because the can First these am your at historical you cost taken extend of actions extreme can us give in an margin. in of price we environment, cost reduction course context, which end price margin of I should showed can extremely first fixed of get have broad in ongoing before day our the And expanded and increase quite in have recognized the line the were also not the and we momentum the expectation half. we the around a in elasticity, we it environment QX numbers by or also October back just with even our

and kind as So which in encouraged total are we versus price is separate obviously lot has category the i.e. by very call environment. a versus our lot of a point. specifically such moving keep elasticity to again thing this margin short-term, is competitor by is there The the how the need are elasticity as category. Not kind written is about is and to different able elasticity been was i.e., price industry is cost-price this you and by this price what disappointed category parts much on expand we business of the of get fundamental it to

to just elasticity given The think high end it’s low high have of particular elasticity, past, that’s yield. we And the category in you points, very substantial in – environment. that reality price points. the come when that’s the course not cross-price laundry end price don’t the I necessary competitive you the a price said Of repeatedly

developed but basis, a year price may full innovation on you it’s not on you its there much, a not particularly category. course is but the the on on year of don’t short-term of full it, related, a Kind Of the in the typically laundry U.S. basis. we side, see replacement the like elasticity pieces, related, some see big mature related, so entire markets moving in might necessarily all months-to-months housing see massive

Jim Peters

that out the material middle end I expand pricing that’s of to I back referred we taking have historically this think too the if the inflation that continued. margins cost more had really here raw price out, price you Ken these pointed the – that increases and one the to point we the cost taken based that’s you fact commodity in other out thing earlier of point Right to inflation in that it’s tail have Marc think we look as period. the based increases the now And we with commodity period are have we had taken that quarter process. allowed positive the significant us headwinds. And our dealing much despite year-over-year we are taken earlier at

Susan Maklari

as there is UK margin shortfall you it there getting of regarding structural well, Thank seems just heard you. isolate much but is kind something back My that to we are farther to think acquisition, so some that situations the if away, it’s in XXXX, could say you something the or X% how in second long-term there of like the I question – X% the so seems I Indesit is important, you retailers quickly away was is within considering it that margin talk the you. was the the change but that’s which that far you or think so weakened about relationships, why – lost Thank IT really now, different within you countries your recoverable? the seems obviously changed that – UK your transition space, share market structural watch as as what’s led not could so X% floor very is to country competitive

Marc Bitzer

probably to X% you And not point the [ph] the we you competitive let’s story, try come had even me a obviously this it’s in conference when posted is analyst of more are but sight X%, also about sets, of at we acquisition. X.X%, it’s one already – ‘XX talk the in it got not in but margins X% looking number, to business full X% so it let first our at we lose not ‘XX, one short we would we all Actually Ken are achievable. also give environment address the not – easily new we to it’s in had to this X% have kind

in is losses to currency the that’s just I blame of will question half the short-term. we your of trying the on not approximately we the sources Now about and at the and have all think to am losses, that don’t recover UK say which I Russia, which that would

broader is some elements. also internal would call other The chain to are and which related half issues I other what execution supply

X Russia your because to us take it question to now a Yes, X%, to X period. longer we to recover in don’t UK So year get why expect does A. or the year and

come I think it bit longer. will little ultimately but will back, it take a

and kitchen called integration a focus as external aside The We business, but business other to just profitable the key bit little floor profitable typically of a to most Europe, and because opposed are regain But internal the in contracts of spot. These this which more our longer. that lost element focus. will that’s a bit you business reflection little and takes with take long annual to annual it’s that regain to a than a contracts this that us get is of to longer X%. some structurally is just element have

Operator

Dahl Our Markets. question Mike is RBC next from Capital of

Mike Dahl

whether cost your kind shift focus there businesses more us give expect first questions. some back Thanks of sounded kind some the little the on as morning. Marc, and resources Good a there discussion you you to around retrenchment detail taking plan in should is of there some reallocation underlying and EMEA as want well, here? non-kitchen my related some around you we it rebalancing and is whether of and an the I of but for could like the of talked question follow-up kitchen, back the about pull

Marc Bitzer

takes as I Mike, kitchen the get it. spaces free all is before specific a let The short-term which and mentioned there I trade typically rebalancing actions volume a which try of a address me floor to where of mean more little more of longer. bit just stand. we to can it is is related first

portfolio what you deeper asset. trends cost we right by it’s dig have market different to integration of think remarks over and call acquisition. market But was focus in some but specific last to of specific and results, in are And the the has it the to volume shareholder European take just certain track, we to of is need bit the get effort we of does I these make the back assets. you where way in say very of that’s That are structurally my we is product very generated assets have unfortunate at. back in very paths comes Europe an from the what by on course with of asset is terms countries optimization sense business out line loss perspective which given from the referred the and we and looking actually had in part alternative in Coupled prepared this not reductions, of cost but across at basically a now. or that’s Europe looking out an do it way further kind value which for and out had of effort you expect step should of XX one alternative obviously categories terms to which little months we value with undertaking are some mind it

Mike Dahl

given and lower doing more across of portfolio are other little just what I just raw think our rising a in there it to it, you cost guys the takeouts of costs, actions whereas other bit are help can if companies cost some just that and a inflation gross some EMEA, these I I the rising to broader materials okay. this? Got typically takeout are the think now environment, recapture cost cost what the what offsets mentioned figure the bridge look against envisioned seeing we you can the ability talked note targets volumes, a there that take if And you your about around are some on are outside takeout coverage and originally across into us lean to deeper digging down around in come we obtain is anything rising actions but face freight

Jim Peters

Yes.

half So takeout of cost let this and Michael there. here. start about last halfway then program and we year have the fixed the with got To Jim through on expect see year kind it Marc for late which to this benefits begin track we of year and the can million fill in are achieve in me we $XXX is to announced we

talked see material of our The with we seeing that in is bucket. that and oil some kind are we productivity that and and we this progress on about cost ongoing we we second thing earlier costs offset the put increased with are have while freight what seeing our raw warehousing don’t and

So I right now But with talked flow cash some about free that second is and this outlook. here an offset. quarter third the within especially the the thing is

working our of in a within levels, are the and primarily in and bringing incur caused us but within levels with line year. hit to take reducing demand factories. in the our costs And where inventories some been bringing half conversion first have of that’s sales been has conversion a we our line to As by inventory our our capital that’s

as with produce within of year were of we to within at the of unable truck that goods as costs that. the with Brazilian we the half look most and Additionally deliver first sitting the is strike

more type a the of productivity. year half picture ongoing So of positive we do expect second the to cost from see

Marc Bitzer

what saying. echo will Jim I again, was Michael Yes.

impacted got you cost metals. they parts or is on of look is to you literally all companies steel, showed us. all only an you What have which analyst our put First business. because we productivity as for what some cost productivity, have aspects sits and inflationary reduce ongoing costs And our direct number of resins shortages important if when inflation hits we base in elements in a that higher really talk mind labor freight the and of course these inflation perspective across of ongoing from by technically all, if we keep at you raw inflation, of the large material about the it, this so

on elevated exited And levels alluding levels decided was down and second very in take We part as had was that productivity. course shifting ongoing costs cost important. doubling cost are gets what some your on we all inventory on year was with aggressive the was can to material Jim is a The that inventory do a initiatives forward we and that manner. in reducing and have course back to is we really what What of our seen question, of our and volume reduce reductions are as On you down QX. down last conversion and or flat and into the actions a our you cost resources additional in the QX basically de-leveraging significant production basis and year end decline beyond took versus inventories to are also further either go we fixed variable of costs. to such to costs even

Operator

question Alvaro Gabelli our of We from will & next take Lacayo Company.

Alvaro Lacayo

guidance around go the Good just from over the that to incorporate morning, and months second I quarter the seems rebound just comment seems if and declining confidence to wanted to that can dynamics last some particularly? be improve in consumer you on touch in Latin few that second America, a confidence able over QX full what will maybe make you the maybe given impacted the half, to you year Brazil be gives the

Marc Bitzer

Brazil. i.e. and by mean Mexico a the there impacted first consider our things Marc, we despite of before were was lower also all had in that it’s results structurally we forward. very temporary North trucker healthy and I business one. [ph] Alvaro, down remarks that actually strike What state do we we expect Brazil from said We that QX and the have was good going out, in all call

that Now quite to talking from still am it us, appliance just a be in the industry recover more that to sales May substantial. while so trucker not because the etcetera. specific us the the slow And availability and get industry it’s Brazil broad and back was was of in I to XX% almost cost about one etcetera,

until will see and from from the said July a back trended expect same is in normal that’s QX we So not Brazil consumer what are that, I big to just June considered all in should because probably of there think at trend. time Having the temporary, we the loss elections boost confidence. over but you

on be full about I consider so again we to I solid the still year then would had and base, that you got QX flat think until to no Brazil Brazil industry impact QX. we echo to elections. the temporary do probably the mind But major a momentum expect in keep want

you full take would the If out what trucker solid expect and have strike year on it been a QX basis. that’s we a

Alvaro Lacayo

regards EMEA can with are taken in when maybe additional the that of discuss to and begin and begin a how timing terms if see will business show on? X benefits the see reset you. Thank you meaningful X improvements it. bit to these goes you the actions how you you XXXX, when color little Got a see but taken will And being you give sort manner and that you being flowing can you by if to the additional then actions maybe more now to from in of as through benefits of time

Marc Bitzer

guidance margin we that’s to of that’s you what into want to adjusted our see come first have now based all X%, back numbers I what in is guidance minus there. XXXX, the we the to right and European Alvaro,

you it levers in which short-term, the expect the that second actions above You top tells half, put on our in that based can we half would we be second is a to of breakeven. pull on And current half. basically first

half give is this would region guided X% in between. also I it’s X% second the with towards to expect be in too XXXX numbers to about we again So expect breakeven XXXX to specific and somewhat we early midpoint and

Operator

from next JPMorgan. is of Michael Our Rehaut question

Michael Rehaut

Thanks. Good morning everyone.

some around be kind just the in breakeven space specific couple better floor are and little with that cost, give that it in may back half half, to meantime, to this you as down opposed I I what little you have to same and the particularly business X% have of bit bit confidence understand the the also other of because space guess leadership are getting of actions half, in kitchen have a to back to going mentioned of you you like back the getting breakeven in X% the to comments had how businesses a the just so it you time in already you poor of you just strategy, the the kind and does leadership First hard putting promotions, a wanted at first have maybe of had changes, on or mentioned implement understand of are to strategy Europe question in Marc just place changes you interact regain expecting and seems to pushing the be that? of that personnel leadership elements will already is kind on, already trying in I was do commented new movement kind the different some in some forward it you internal you the have of and closer are putting

Marc Bitzer

So me it. address Mike let just

can an typically which standing moving the also regain there certain is to longer. certain annual bit shorter. are There do margin again the the because there are kitchen on trade in certain are implied there have tied are certain breakeven of in annual we is to again What certain is and in or take what to other guiding typically In that and around things regain are spaces spaces kitchen markets. either free takes particularly and So business for that Europe. it’s business, business a are basis, something which negotiated just short-term than full floor any short-term, things before the said – above little markets you also floor contracts the in the very structural to like entire faster as we short-term, the and not longer the that businesses you can year amidst regain in things profitable

of So a freestanding bit would also take in I in faster business the Eastern some European spaces extent, we and bit little can again floor longer. but the parts little regain markets, a some other to particular say

a for slowly operational reset little that the and So ‘XX. one got in in every back can benefit half volume which of ‘XX. every at we taken are the are is got is take we that a completing in QX. not of and and getting the is in our we on also that’s less measures action strategy counting now seen have least this towards place. which Europe encouraging out in quarter the month half and something is QX, end carry the that loss some but things of What back bit much is what cost pretty quarter The so also additional will into of we element have QX there

for some back breakeven. cost to us regain we half that have So added the which actions further will help

Michael Rehaut

next is in that just inventory in kind much is impact there of optimization of place, as mentioned question be in months? a few XQ kind how leadership on follow-up of or that much stable reduces that color line. versus get over terms narrative trying some levels we more us had just there? And across in changes, you I kind will And in then had how margins could Does you any give you a and the of second the place on board a have rationalization reduction factory further XQ the in to expect can of inventory

Jim Peters

with got year or of where inventories end our better. the end even year, than higher to bring the QX I of take we the take think one took us once we let will we were line inventory I QX most that – of at to is – prior me here the prior QX, will within the to the that in say Michael, were believe I just as mentioned they this actions first they Jim, and we

continue back we we reduce inventories, So that year, than the higher higher throughout have saw it on markets expect year. within we to the half the of to what of certain expect demand level then and slightly will be worked of level half be but first inventory to a we out the in

the of don’t inventories. significant half the due within reducing back impacts we to expect year So,

Marc Bitzer

but solution, change run expect announce one of until but the the have I we President that’s not us these market year very So Mike, so permanent a week, we the course long-term before, next have I short successor, two interim know answer Europe last are to I you, it. changes of the or run well, and will in announced, at the name to we a but former quarters. in successor internally

Operator

question-and-answer conclude for And the this any call return our does our session. to closing to I’d be comments. host happy

Marc Bitzer

some wrap up call, messages let the here is of me on which call, also key try this we XX. to summarize also Page As on the

the global front, significant all, the margin we strong First despite of delivered margins we delivered challenges. macro global on expansion solid but

to take and those price with actions to mix. are strong mitigate continue sequential to We headwinds will global pleased improvement

taking profitability and finding expansion Europe EPS this all-time an ongoing soft delivered we XXXX. believe North confident our of in industry well-positioned cost strong inflation we highlights actions to margin also region the in in a ongoing performance what margins business have improved in and restore is temporary to and deliver is U.S. we record strength business remain fundamental are and global that America We despite our strong

and for speaking we our So XX. joining quarter with you earnings thank today third again on to October call us forward look in you

Operator

conclude our call. does conference This Thank you.

lines a have your You everyone may now day. great disconnect and

Whirlpool (WHR) 24 Jul 182018 Q2 Earnings call transcript