Whirlpool (WHR) 1 May 202020 Q1 Earnings call transcript

Company Profile

Participants

Roxanne Warner	Senior Director, Investor Relations
Marc Bitzer	Chief Executive Officer
Jim Peters	Chief Financial Officer
Michael Rehaut	JPMorgan
Mike Dahl	RBC Capital Markets
Susan Maklari	Goldman Sachs
Sam Darkatsh	Raymond James
Curtis Nagle	Bank of America
David MacGregor	Longbow Research
Eric Bosshard	Cleveland Research
Ken Zener	KeyBanc
Seldon Clarke	Deutsche Bank

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Whirlpool Corporation Q1 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]

to conference like speaker to now Ms. today, would hand over the your I of Investor Head Warner, Roxanne Relations. you. Thank go Please ahead.

Roxanne Warner

Thank you, and conference XXXX welcome to our first quarter call.

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

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

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

many from Our in factors actual to differ statements other discussed materially latest reports. these results and XX-Q our due could periodic

business includes also measures. important remind We as may from to you operations. want our ongoing indicative of believe that they are today’s measures be presentation items that results not non-GAAP these exclude operations We of indicators our

measures you for provide think We a ongoing operations. adjusted also trends analyzing the baseline business our in better will

information GAAP the reconciliation for on Listeners comparable directly items supplemental Investor directed non-GAAP website of package are our section the Relations measures. posted most of the to the to

highlight we discussion duration our and business our based Also, as of the the uncertainty impact COVID-XX Therefore, impact pandemic. what on best on significant is we reflects of COVID-XX on company's the the potential know about potential of today. results there X, estimate slide

participants this listen-only At all are mode. time, a in

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

we that reminder, than participants ask a two As ask no questions. more

to over the Marc. that, call turn With I'll

Marc Bitzer

good everyone. and morning, Roxanne, Thanks,

communities. to a an and people, discuss results, the and our the take as have like moment circumstances acknowledge we support organization undertaken we we're Before first our business currently efforts quarter unprecedented consumers to to all experiencing I'd

decisive efforts crisis. to like we in of to for and early with ongoing creation took February, by a be hard domestic international our thank navigate the state of and and and work local, during aligned the safety cross-functional time. guidelines to action our employees take action employee safety plans. and January and around health also aid through to abided top measures. XX,XXX all our continues These we and communications while globally moment driving challenging banning The priority developing this of locations employees all task ensuring them efforts and to began cross-regional manufacturing travel the the in In a ensure including force our as I'd federal this and safety corporate world,

office Additionally, our being performed of shutdowns we arise. to resulting Also, through operate and they slowdowns XX% remotely. manage we roles implemented in plants our as policy work-from-home safely and continue periodic now

in with across inventory to and were late relates supplying able products critical we focused our it key These and ample categories. continue actions product As supply business of on January we decisive actions detailed review ensuring components to took to ensure consumers continuity, our essential services. of

post-purchase to reliable service We allow call our also that centers enabled us maintain have to consumers. remote

kitchen for across than while to take homes storage of ever, are on in globe families. They them and on proper their medicine and cook, a Now, our families a the our care place come in depending providing as to more clean, relying products products and also family. their the services food together provide to to are

and PPE a took as local number well in we as providing businesses. the small and support COVID-XX number to donations including our organizations, of globe. to local to our bank, give limit strong to to of to donations significantly food teams, we around we've research additional Overall, which providing cases Finally, efforts communities companies been operate, of hospitals, actions thanks local actions the funding of hospitals the in able appliances shelters, and back in to and

to margins protect times, to right manage have in and place operating actions protect highly these liquidity believe through confident throughout the I'm strongly the to our Turning financial in position that our to slide XXXX. I ability strength uncertain five, our we and

Thanks strong delivering delivered our on results, consumers, on to our we resilience commitments demonstrating work employees hard to focus of our QX relentless our as and the an organization.

taking As impact this deleveraging and strong sustain to of actions are the remains the crisis our volume mitigate depth unknown, the anticipated we and duration operating of margins.

have positioned flexibility Further, ourselves with ample we the well this weather and current liquidity to required crisis. financial

committed in remain during we rebound. Lastly, taking our to eventual future to also while now economic the win investing actions

over Now, review I'd to quarter like to Jim to results. first turn our it

Jim Peters

We X.X% our sales and year with impact On and line our slide with given seven, in throughout quarter COVID-XX the of the ongoing delivered the Mark XXXX highlighting respectively, good everyone. an operations $X.XX, EBIT and net global resilience EPS morning show highlights. growing of of Thanks first we prior organic quarter. margin the

Africa Latin agility, Our Middle East, and operational year-over-year America, disruptions their to delivering regions COVID-XX. margin America, and results strength Europe, related demonstrated despite solid North

Lastly, we cash in of particularly capital management and approximately accounts $XXX strong free working due delivered flow improvement million to inventory. receivable

margin. EBIT by to impacted product related to product Turning we margins expenses the COVID-XX eight, due of points basis shifts Price/mix our transition and drivers unfavorable slide purchases. XXX consumer mix first one-time to negatively quarter due show

our in a we expense transition of one-time new XXXX and lines approximately XX QX on launched dish QX points. driving highlighted we As basis of call, laundry products

microwaves, due Furthermore, resulting in as price/mix. consumer guidelines, we low-end COVID-XX saw refrigerators, behaviors and change increased safety negative for to demand freezers

these leading normal we a accelerated by be margin headwind unfavorable favorable expect expect takeout cost and to points. in we materials raw XXX changes fully expenses consumer a crisis. to impact margin the transition purchases to offset return the levels actions second in impact during to basis product This of was quarter, Although

This of cost discipline we are in offset margins with Lastly, of currency. strong deliver the cost prior and line actions our sustain strong our continue these margins. discipline Overall, is across the are will related we technology partially indicative year. to globe impact marketing XXXX confident to and investments, to pleased the

year. with we X, Turning stable a in review prior industry America, Slide our the delivered North the results. regional quarter and In sales to quarter I'll net for first saw line

discipline and lower COVID-XX XX% expenses transition to increased delivered related purchases. margins related of mix we partially cost to EBIT negative consumer Additionally, product as price/mix strong nearly offset

our Africa region, we through In mid-February. East Middle Europe, demand positive industry across countries and experienced key

demand COVID-XX in impact in operational the resulted and of and growing of However, February declines March, end Italy disruptions and the France. particularly throughout towards

We are momentum the see reduction of strategic from consecutive which operational expanding our XX demand improvement disruptions. quarter and continued delivered margins points with significant EBIT pleased fifth and cost initiatives, COVID-XX to basis despite

underlying Although in to our to continues remain pressure in confident make intensified we profitability. progress that we expect demand second return see business the strong to quarter, our

demand along compared year to with as XX%. strong over prior sales we approximately Mexico, America, Latin saw Brazil, growth organic margins in were discipline solid the cost currency flat devaluation driving of Brazil In net across industry in share gains offset and strong Brazil. EBIT

business a has in to America's been results quarter related early region, our reminder, disruptions. as results. Embraco quarter declined by India the in enforced COVID-XX now This XXXX shutdown Finally, revenue of a the May. our over impact extended Asia sharply as into was government due the Latin followed first XX% China declined include In which demand compressor in

the China, we manufacturing as seen demand returned reenter normal operating and rebound Overall, very have indications In slowly results consumers basis XXX COVID-XX. quarter and first some of agility global facilities the to results clearly These stabilize our initial resiliency levels our a pleased of with EBIT demonstrate approximately marketplace. EBIT with of point are we impact margin the margin operations. given X.X%, our have from

I now begin. will discuss it Marc to I and our will current Marc on XX, perspective Slide turn to over Turning XXXX. to

Marc Bitzer

answers guidance Jim. year to unable the questions, on at a impact COVID-XX full business evolve, want provide to meaningful this highly environment uncertain full broader we're go macroeconomic That fundamental more the Thanks, following results we The which continuing I'll detail into three on to of time. said, slides. the rapidly provide remain our to and

recovery overview the countries, of I'll and our current sell-through a provide XX% full year a sales this XXXX, to throughout in organic expectations. sales resulting update full an We First, year the an of decline XX%. key trends In what's a net shape anticipate of net on section, recovery? in U-type

will the Second, crisis actions additional the drive margin we XXXX our to our profile XXXX will margins. in cost operating the recession to operating and we Here, sustain difference the can fundamental I our discuss highlight also help entering sustain COVID-XX compared throughout margin?

and will face us the economic strong allow to liquidity across our Finally, cash will which position? continue position, what's cope we uncertainty the Thirdly, Jim globe. with liquidity to discuss our

Turning the to provide COVID-XX. that do supports Please that note we the intend XX, points perspective felt, of XXXX. proof valuable all that assess throughout preliminary data recovery highlight data of will share I'll this we U-shaped slide this given uncertainty as our the to forward, of situation, not impact but a current we the going data

signs clear slightly within patterns with cases. a similar we've the development we and As on recovery begun lagging emerge. Italy related appliance its to cases of linked, see China, COVID-XX demand although impact demand monitor demand U-shape COVID-XX U-shaped new we and reduction closely the China, see U.S., the to pattern, of of

Italy's while as XX, are not slide to patterns trends the China's, line. well Turning in demand mature are as

China Italy, as decline of in we’ve U.S. to similar the to trend at XX%, Turning demand China in which XX% U-shape battling seen even of demand markets. declines half is are pronounced currently XX, clearly United to though point is as and It what not obviously an Italy. around COVID-XX, earlier States important signs sellout stage that less and experiencing see than the other in to the we is is and early slide of as note, the in however,

channel We for sales fundamental purchasing XX% consumers One, two, portion of this this reasons U.S. than crisis, more industry; total has significant of home and the allowing improvement two see very open replacement the patterns. demand a during in to difference appliances. the continue stores kept of

our a by Based of are organic are slow XX%, quarter, of expecting on we seeing XX% in full to at sales we of decline a quarter. of the decline recovery demand occurring XXXX in the a each consistent fourth slight third year three different countries, growth crisis, the in second as followed quarter, and net majority the phases across trends key

compared or XX, slide the the the XXXX, around the at of financial of in COVID-XX delivered basis and fourth greater EBIT quarter of XXX X% before quarter the this Upon drop bottoming margins In X% crisis, impact starting XXXX. EBIT about Turning XXXX preceding our which clear sharply XXXX, chart the over EBIT entering difference point quarter with quarters margin from saw in highlights on to negative a financial margins entering in first starting in X% delivered second crisis. we X.X% points EBIT financial inclusive Contrast crisis, XXXX the COVID-XX. of X%. current of we crisis recently ongoing of to to margin positions we margins XXXX a out

optimizations plant the be necessary of but actions margin discipline took difficult the management. fundamentally Since segments, took structurally of related next a post this to XXXX that we product business, place the from our in we Fixed the ensuring including restructuring able remain fixed profile has would many our We decisive in improved approach our actions, strength. cost We actions cost we to are to withstand and starting structure disciplined a due crisis. cost stronger that us crisis fixed allowing exit of non-profitable to certain recession. enter position to time,

slide term. the near place to Turning the XX, strong our put to additional in actions over discuss sustain I'll margins

First, operational of levels teams meant matched teams base spread from COVID-XX inventory we and our acted the beyond, and appropriately to ensure demand. to as and early -- to U.S. decisively Asia to supply Europe our monitored our I

and expenses headcount in reductions among process put costs, strict In we a target and going as marketing other implemented across promotion discretionary unpaid structural actions. Second, both including in guidelines leave, as and rigorous aggressively spend and we to parallel, furloughs, discretionary place reduction forward. our control a all trial significant regions, manage well controlled in

to focus deflationary market. continue on raw capitalize the we Third, on materials we ensuring

Finally, managing management, appropriately we've and the on place mitigation enacted levels our focus ensuring through in have maintained proper sourcing a across our inventory working we globe. plan risk strategies capital strict are

guidance. $XXX cost With in over from these place, we previous and XXXX, targeting up material million in actions our $XXX million in over raw are additional now net savings

current ability and slide our turn it to now weather highlight this to Moving crisis. to overall financial I over to position XX, Jim

Jim Peters

Thanks, Marc.

leading crisis, this to the a actions the As a with we entered balance sheet. result took crisis strong up of strategic we

of cash facility. position credit First, strong current credit in facilities. is remaining billion, short-term inclusive a million approximately a executed $X we This recently $X.X as our have liquidity $XXX very position committed billion of with by evidenced available

reduction in Second, anchored maintain debt withstand tripping by our balance sheet, we ample increased to a without buffer strong or our earnings covenants.

is capitalization X.XX Our debt currently to and at we approximately are limit X.X.

requires While three interest minimum times our above times. are XX ratio coverage and a of we currently

to unlock to we Third, additional cash. levers access have

operational an capital. working We effectively evaluate options. And continue from our liquidity we standpoint, additional manage will to continue to

of this we Fourth, maturities million debt I'd and bond like to the February of until no highlight quarter in additional XXXX. €XXX have second year of long-term that refinanced

remind Furthermore, which until need our effectively further pension or XXXX, investment is to make continued grade we our our I'd actions to credit like U.S. that in strive position rating. payments we pre-funded and beyond. financial that our our through everyone XXXX It suspended to maintain strong

capital Lastly, situation. our in current I'd which allocation like plans, light to on touch of our temporarily changed have

Although we become $XXX in the suspending will repurchases repurchased future our clear. liquidity shares approximately in additional we first million share needs quarter, be until

our remain needed focused quarterly dividend to debt-to-EBITDA confident economic long-term remain times. our returning Overall, we shareholders support and gross That two this the times. our we committed said, to we through are to value declare these of during commitment strongly did on our operations have and that liquidity goal to crisis difficult

slide we're well-positioned discuss over win the I'll XX, recovery. back turn Marc why in on Now it to economic to to

Marc Bitzer

appliance layouts rapidly like adjusting to Thanks, we crisis, where operations, government dramatic ramp now take to necessary us respond normal in changes Throughout future and short-term, to on safety in slowed new eventual to discuss to while positive orders, well-positioned allow to our how have this line are Jim. up to for to guidelines I'd growth over moment demand and and operations. This economic the long-term. a level the speed quickly will adapt of shifts well-positioned capitalize simultaneously the operating demand. we rebound

discretionary largely have delayed. as been pent-up demand the Additionally, short-term we in be purchases will there anticipate

As a chain remaining globe, return. in supply capture further agile in well-positioned and this manufacturing clear demand approach we extremely our to upon we are of advantage To appliances home the our across inventory are management. best-in-class operations, to its leader take recovery, production leveraging

uniquely post-crisis we structured of term, demand we take advantage we look that are longer As believe to changes.

of we remain changes living. is center expect One the to home a the of the of as rediscovery and the kitchen

will our head clearly be start a Needless pipeline brand to capitalizing and this this industry catalyst unmatched our say, trend. entire us innovation for a portfolio and in positive give on

we Additionally, online appliances crisis. anticipating of adoption purchasing large acceleration an in home post are for the

the of investments growth. and we levers have part make in sales and are ecommerce in transformation to our digital such, long-term key of continue direct-to-consumer our As journey as

Lastly, committed we remain to priorities. our ESG

operations of and sustainability environmental home. report, our have our we long-standing our investing safety and employees the in communities call of of and in highlighted of the released a the history efficiency in As recently well-being we support and products

We In closing, continue globe as I'd committed of safety continues health with and to procedures unfold. like around to summarize will situation the employees our adapt key policies messages to COVID-XX on and our our the slide remain XX. and the to

on the health actions and highlight of and crisis. the results business, continue our we focus will business to ensure the QX take strength Our resilience continued the decisive cost to the with and a margin of viability throughout sustaining for our strong long-term

and driving long-term. our towards fully demand ample remain liquidity the weather committed Additionally, recovery Xx leverage goal business of our scenario over any have we to to

shareholder operations because well-prepared up Further, leadership economic our in position swiftly global strong are to these the actions leverage recovery. and we of win management of and It experience our eventual the to team is ramp business driving returns. confident in We to our remain our a this and firmly we're to executing weather fully on strong emerge that are focused committed position and strength. of priorities crisis ability in

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

Operator

first with Instructions] question of Your Michael [Operator line Rehaut the JPMorgan. comes from

Your line open. is

Michael Rehaut

and safe out the for and across organization. there Good all hope Thanks. morning everyone healthy your Thanks everyone's comments.

have I and I But opening lot almost sense sales in have a for none what particularly I get kind that laid the think year of them to their comments. if decrementals of a done hoping was of by out way of full and some impact. apologize of I companies the missed a First, thoughts

that the about one of to speaking decrementals a that improve think So, as that kick helpful very other outlined shutdown to which the you've is how in quarter, second I occur cost think year much appreciate are of those and has that abrupt generally But throughout might sense some perspective. inefficiencies how extreme and that been most areas the given of the savings try the in? certainly, decrementals the get

Marc Bitzer

are good hope and good safe. also you Michael, all all. shape morning I all healthy first of and in

take in and Let question just it me maybe your two up split pieces.

which the everything occur assumptions. perspective First with have a now a information think which expect a and where demand to And of in the all, amount recovery. there's majority of pattern, negative U-shape but of recognize And on obviously, I we revenue depends overall the demand is our demand we today QX. very all significant the we development, means uncertainty. Or –

expect a recovery. QX I do still QX and in drag slight

gives biggest from means demand quarter. a elements you and a that the what of That broad sense perspective. on being little a the also of have operations quarter also So effect bit deleveraging in some we the we in that said, anticipate second third maybe

– mentioned we and think previous call. As that earnings in some I we

effect by factor, every But production underline a the factory, deleveraging. you dollar lose to XX% very different I production cetera. XX% rule is leverage think leverage you e., course, our thumb, of extremely you $X.XX level, is on type, rough, have et of a about is can as about i. assume obviously rough, and Of occupational I

net think cost deleveraging. from to which it's however takeout, highlight we factored in in negative important very significant the our of have I we that increase our will effect the already

all is on the factored that side. in So cost

different margin is the a side one. Of course,

be it, So take net we of which top our easy can is that to anticipate out. cost absorb going not increase we on that and

Michael Rehaut

in leads of me And correctly, that, if into it so understand the I guess I case. appreciate Okay, – I question second kind any and Mark. comments your

XXX a decrementals the would worse would where decrementals to off to on impact response, to So you're that due the negate – than or abrupt XQ of what's the nature period, clarify that million saying XQ? going negate would higher of expected are that level have inefficiency in going just you the in on

heart if million different if And a that you in, the could question of in with of us cost really might then back is, breakdown across that of XXX be demand? that of for timeframe, those could any manage, commensurate sense then layer of my you give the buckets you takeouts in the XXXX question second a the net improvement temporary,

Marc Bitzer

Yes.

a haven't as is can But QX. we the of XXX Michael, it up. to and is much after the year, takes all, QX to XXX you first comes how specification to clear, So in and be a million the clarify, it full imagine, ramp these about little inefficiencies. all given already But

is net-net of that everything. So

it's So clean a number. pretty

negative the impact after of it's So deleveraging.

of this earnings and roughly year, XXX recall, about of opening composition indicated terms of In you million. XXX may a call a as the in we

mean, first currency have as also Brazil, negative you And we you between, the of what for So buy, you the materials I are we – that's which indicated, you we currency a before. inefficiencies, have impact of a example, impact. in lot you take a gave some. because lose And all in which have you number negative

you people is good control, which have a addition, also expense On very to have also SG&A temporary we both, structural side, cost. slightly in efforts of And But have combination of that and the your factored expense better point, but actions. kind management, then in. a actions raw material, we significant

actions. temporary only not it's So

to emphasize, have re out, is cost all So take in again, I of after want bit negative factored which deleveraging these effects. structural there million. $XXX a we But quite

Operator

RBC Your line Dahl next with Markets. of the question comes Mike from Capital

is line open. Your

Mike Dahl

would then guide, back sales the and to takeout, safe would only seems to guess, up. year that on I guys math also bridge my for hope Good suggest that it I'm line for just follow-up year cost well. full questions. some about be taking last XX% percentage questions, and thinking on all if and a get decrementals the down margin applying morning. you EBIT I that's and the and Thanks you your adding are Marc, I modestly think actually of

Xx little, that normal. maybe to a other So like of after a then normal. getting back decrementals, a And takeout, I talked I'm guess bridge have towards just cost XX% about companies struggling because more number

I but that some seems guys we're with little others. what hearing a just it seems So – around are of appreciate from you tailwinds, it out sync

that, little on a maybe more please? So color

Marc Bitzer

one. So Michael, is start maybe let answer Jim me going to this also first and

losses. all, mentioned positive from yes, materials, tailwind specifically that half keep of as of up the raw is raw additional question, on in I materials. First tailwind mind, already we currency – a more on But before, eaten see about slightly with

So But because largely on more to had steel to compared you raw what from maybe annual point contracts. before, it's locked these a not because year you takeout give as pure quarter may half as a are base dramatic in are materials. a we full prices assume

incremental resins, a have You little bit on it. that's and benefit of plastic but about

yes, that, all that lever, big operating our have to is XXX so million said protect which net we takeout Having margins. our cost our

you have a only tool should margin even that the But We of also crisis – margins. line, but which not into our untypical mix because guideline, But recession, growth, is on the mind yeah, very revenue negative. that's from the have give the other but is parameters you coming prior a top overall throughout slightly expect given and not in lot year not and will full not to place. protect there's a keep our mix,

crisis not as you two anticipate be necessarily effect get margin positive seen years. environment So Because in price huge one mix. the or can't positive economic we've a the where same you last in is

So you have a negative assumption. mix year a also full in

Jim Peters

year. about And mean, Mike is, material expect That's kind to reduction just Marc you of be. of in costs. as we what see raw -- where QX, benefits I mean, seeing extrapolate Jim. we the of already is And we're said, reemphasize the can to that across said this some in we the Yeah. I

highly at in things beyond the cost such just really currency continue the but to unpredictable further very predict macroeconomic there to other that, savings due that we're guidance build are factors right and any now. things giving there that additional are year, throughout can't will as The not time. this we And

Mike Dahl

helpful. weekly helpful, depicting really charts and really trends these are then beginning of and That’s recovery And some the question, of the especially Italy. China second in again, thanks. showing Okay,

So that. for you thank

think I XX high to or Marc, tracking was teens. down it it chart, the was seems you in mid- sell-in said XX U.S. the in like to sell-out more and that

dollar if wanted including sell-in your please? comment on I the sell-out XX And So, on like maybe negative XX; you versus now terms chart what in in or to relative in mix right the America U.S. looks specific, or to North ask that then is comment your could to units?

Marc Bitzer

of Michael, our as trying I so ones, Yes, mean read I these will shape usually include our least we're up, still for given sellout recovery just we're demand in and of see see we happening for it on kind into mentioned products the best indicator And wouldn't us, but at is and sell-out charts. to what early that Italy we the have to remarks, likely in prepared all the how we U.S. what

you at with share on basis. weekly just look I every to information -- We once, give we want kind same to for have We you, it it also as a of day.

With that these kind in particular of not you mix. slight highlighted, XX because of U.S. related again, -- revenue you on that's top atypical volume, as recessions. And in negative question, XX have that's the a is for mind,

that's reemphasize news we said it's think think I to and relative to earlier well, I good and relatively -- -- speaking, what some want news, other markets. I what I is good all

because or retailers that improvement, replacement a much in of France, but home have degree or as we've We as open also independent seen still we simple percentage high right do and high not Italy, Very demand U.S. the dropping now. the some of fact market China. see

and which we of the difference And fundamental markets So, throughout a see need. that the compared place consumer has to other many U.S. replacement go a in fulfill world. that's the the to

Operator

comes next the question Susan Sachs. Goldman of line from Your with Maklari

line Your is open.

Susan Maklari

Good Thank morning you, everyone.

Marc Bitzer

morning. Good

Susan Maklari

last question about the that thinking cost first the also years, in just terms also then but margin, just decremental And done thinking of done but the just just you've margin. several all the with structure, you've is about XXX incremental business. not million, the the with the what My benefits

How to higher, especially about should the be that? And came you normalize come has bit? it and out as thinking past? demand in maybe been it about scenario to we and incremental of Should starts than think better XXXX a when margin XXXX, the the back

Jim Peters

start back, Well, with. you would to of I as volume the quoted earlier, Susan, the that's the XX% here's assume begin would kind back, what XX% goes at build with, incremental will that should I begins volume that come back. how say we to and to that it

now, things seen in to Now, over XXXX able the continue to stabilize. we will run. the long as be benefits level, same and be begin to will will we're beyond in that of the till back and look we and and then, and more if you keep running it thing our again, margins see to And in XXXX time, out will will fixed our XXXX as help the reduce cost it that what with but those back be did costs, takeout cost benefits we

line currency on an have we fluctuation think other at year could near-term. the this do about there. as I That also bottom least have our in the a is of talk unknown impact I lot within

year, start think about the So, for the should incremental volume of in type just I XX% the this you remainder of think to to range. XX%

Susan Maklari

Okay. little lot of All there's right. That's helpful. a then can Obviously, Europe? bit And now. to parts there talk moving you a

starts about the there you Europe done reemerge again? can we that obviously, relative all on the how to producing trend start do cost to, think as and work Just side you've And current that conditions? maybe how the

Marc Bitzer

on Susan, so just Yes, Europe.

you we markets. mean, been other has mind than crisis. more numbers, right COVID the similar, and U.S. to France now Italy be if drop at the see I from saw they So first again, like QX, of in example, severe And of depth all, you a we for look Europe some of in or the will keep U.S. a need was than, impacted earlier markets very you demand

has So impact the been earlier even and stronger.

a was But you still we a absolute though look certain terms, way, QX numbers at even in it better made the Now loss. can in year-over-year.

you run Because normal tells volume imagine, that in you getting you impact the structural can how year-over-year. much have these a in progress under certain even negative much in a takeout this drops would a cost circumstances, better very, as business way, kind of rate. in we've done So with very

get still storm But as So track structurally, severe which I be confirmation, obviously see they takeout were a right the would will how business, got pure We on in because refocus cost also through really right I – QX. track. a got on right I on from track believe our would we see were and to here. QX a we in very a we're a on way,

Operator

James. question line next Sam Darkatsh with the Raymond from comes of Your

Your line open. is

Sam Darkatsh

Good morning, obviously. health your well good as both I morning, wish Jim Marc, as organization you and good entire

Marc Bitzer

you. Thank

Sam Darkatsh

couple might. geography? that to A questions, add well as of of Latin America terms help trends April as seeing seen you're really talk both Mexican at either demand, and/or we've other in Didn't what some some about if in shutdowns of of the forced Could the that in geography you color all production I terms in areas.

Jim Peters

QX. it. in Maybe talked off Sure, start growth with What QX saw we sales within we actually we about, saw I'll America, within Sam. Latin organic

effective least even So probably of regions the Latin heading America was March. into one

the downturn of we're so see the Brazil beginning other and we've some seen just shut there retailers And to places. in as

a seeing, different go in curve now don't that's we're not anything which little really just say from that, initial it's America will right what going. because world that show I'd of much level different from curve what is that the And bit further And behind. rate an parts terms is but the we much on at isn't to that Latin why other least sign of it's it

and to have we supply chain haven't. been continue situation certain products obviously, and we see issues certain there we products that. monitor essential, The second don't the monitor is, continue thing as to our But due within any also, deemed significant to Mexico, yet

Marc Bitzer

Sam, it's Yes, Marc.

do on two Let from me terms, two, expand up question at Mexico. maybe on go to And keep look factories simple One, how your stability the into factories. and got you the very little chain perspectives. components running? beyond supply sure coming you make supply your how a keep can you bit and the In

the and factories in better conscious even inefficiently a even our them supply than and certain a on – And chain go. stop that lower but much lower keep is basically a because decision we early assumption we slow made we a factories, the very running to though On at ran volume. pace steady is much our

still Now or running. to XX% over time obviously, had of sanitize we in our sometimes and last lockdowns given had at any we the factories follow some clean we XX% government certain cases, had to weeks, a factory, to but

a So situation. the pretty and factories stable in good are

experience related an as was That to Now of our in And first on control. our we extraordinary not was we shortages get situation did supply but components you was our in imagine, any effort not of amount did can concern. to challenges, – China. would steady and able I the say in and China area focus work first And supply with chain team out components, component China. not significant our of how coming

the guidelines Mexico of bit Right to, now, because with have the a focus, U.S. Mexico, guidelines as alluded Canada is of and our you been not synchronized little

had of and certain some stop we So go issues players. of

they confident remain completely not we're resolved, we will been but through, they I coming being the in think worked have be next but resolved weeks.

Jim Peters

I'd deemed up big that the of of that's the look bring thing, mix as just U.S., Mexico, a part there, from we out Yeah. at into mix Sam, too, of we product the refrigerators have especially other the essential Mexico. comes that say and been

And so no supply in that chain there's at time. disruption this

Sam Darkatsh

questioners, pretty it's if make this The to material question, to understand. for I – numbers. and rehashing apologize but I just I second important other I want My might. from sure

us have call add everybody's to make want be math you. accurate, sure is you specific? and XX% would just to cost of the you extra Thank could takeout? that, and $XXX then if So that it, million I take decrementals

Jim Peters

margin Sam, I million volume more comes side. Yeah, to of top. you've think piece the that take got because about you're that's we within that takeout way, thinking out increase but $XXX have out cost volume we'll of the – And the on that said right

cost. around alluded said, partially – there to fully those with will lower cost other our In of due those we've we already that will production, the offset we savings are earlier into company. but As costs to Mark many the net incorporated

Operator

Curtis line Your Nagle America. from of with of comes next question Bank the

open. line Your is

Curtis Nagle

thanks question, for the everyone details morning, Good and thanks provided. the for and all

what little a And to I the go understand it more think a you and sounded are of in here. wanted showed the really in like sequential I gives I again, improvement So bit confidence you guess, what just into path, XQ, growth recovery I nature charts helpful.

United guess, But look unemployment still region, you you're is at XQ? reason that? but premature say where assume the demand, confidence, States, comes growth I will guess, in, back I it expecting to given any call in to the be think is that it perhaps consumer that, pent-up probably reasonable bit a but I I particularly in

Marc Bitzer

Yeah.

don't exactly of of shape I So we admit, first a knows luck. to were mean, Curtis, then first if we recovery, the good know, ones all, okay. anybody

As that's we letters recovery, seeing you recovery. the believe the of not been right describe form a what is a used to we're scenario know, U-shape And has most being all of likely is there certainty. now, but potential alphabet a

would of I think exclude an point, cannot exclude you now, before it. happening. again, also – would say, I know don't folks But what it. would I about love some see U-shape, recovery. of talking It very U-shape. now, own L-shape the in would which it's there be low I we get just I are development add prices. V-shaped right What this to kind are the at probability, I its we would arguably – I right And see paper

the before, but clearly the what U-shape. patterns, why some is because crisis, toward the point is it of say crisis appears that is, financial mentioned the the market, from duration demand from the European of early than from different which recession reason out severe China very depth again, the forward The we it's as see of two these see kind we more markets that financial And crisis reasons. I for markets One us. coming we of is

sight did institutions macroeconomic, a financial not coronavirus again, we much The environment than different falls more on XXXX. in and the that's are bubble. it no lose housing this also of reason, shape other The we probably were stronger Quite should than in in a XXXX. opposite. is There

the that's assumption. context But again, I likely think most a right happened. now where coronavirus different it's macroeconomic our

immediate Is will believe tell. think a recovery a U? U, it Is it We time before but QX. it's an I not an L?

Curtis Nagle

wanted to then go into mix more a Okay, on And pressure. fair enough. little detail just

Jim, But appliance the think products product. So volumes lower I margin of -- likes-for-likes, you you'd guess, some mentioned I you trade you're about guys down core what of of in large kind seeing seeing are sell? higher some

Jim Peters

I and we had as have broke say, product about of going saw you some what in I'd that those -- talked our quarter in the margins. the a But first point that was as we that's Curt, see past stated, quarter do things we Well, impact some it something did new down, if three and on away. about were we having introductions,

carry down kind we typically was more refrigerators within see mix the of a we more up things. that bulk which those and is people their stock The to it selling end that goods on saw, microwaves and are freezers, home lower sign of as preparing

crisis obviously, of forward a mix we bit there call look type as of mix. the I'd we of still that throughout the say, what be due rest impact to a type little will a year,

-- don't is in will overall, rest continue. little of the of purchases some be think year. economic depending duress situations, you'll of lot bit. on we the the times, significant see many But difficult times, purchases that what duress will a on Additionally, mix impact the more do of a a And down

Marc Bitzer

going that's maybe to attracted not that were the customers I forward. periods, with also just very because environment, nature I would you demand may And rest just Curt, compared addition, promotional not the the say, it's intense. and have alluded to of think just an And other replacement by deals

not from slightly different is is right there sold perspective, yes, but a very which that intense it's so promotional periods. through crisis a fundamental, mix, now, and -- So, product environment being

Operator

question from with next David MacGregor Research. Longbow Your the line comes of

Your line is open.

David MacGregor

everybody. Hey, good morning

Marc Bitzer

Hey David.

David MacGregor

listening listening the to things on the help was as waiting tape to to that of around lead just the were And pretty world we out, and all it call get top you're all impressive. doing the at

Warren's you what doing I for guys are listening. thanks there. So, Elizabeth hope

lay that see I wanted you about step could it that by how million with a segments allocating us just does ask you if out? roughly proportions or of about to map we should and out and the think in revenue give just $XXX sense

Jim Peters

costs, David. are. to typically ratable of all because in it's would the what safest right typically do world. But you material globe take across the regions pretty it now, on that's if the Yes, impacts just way we're I say the costs attacking raw

to region, best if a those currency, things Latin that's at Obviously, think significant you you especially seeing it. way would more they're there. the about look to think America heavily, impact like weight where the probably very I But

David MacGregor

guess, And top then a and guess ask up work Okay, where wanted respect just you on costs. I previous question European to your to the I leave rebuild just listings? you I Europe. as more following with in this Europe line to in about does

or does come whole the I kind guess, of to this thing, the share? this the you accelerate, as on recovery before you pick your market scale leverage up out an you're and virus advantage And do provide of trajectory opportunity with you of the with

Marc Bitzer

sellout evolved and this showed Italy, or now how we But in sell QX see our for comments. course, it's of charge, two that smaller even need Europe. patterns David, we to in one the Even demand out. is which

picked year. So you also the nicely actually volume hit. saw even the up beginning the We virus until of

we that's other So we pretty actually say confident in similar But seen I Italy. and markets. developments felt just would have

where So hit pick well being confident now can that a else, different we, of QX. pretty the pretty we got virus. probably in with But year actually listings, we we But like good course, everybody with is started indication up which a we which on our I'm started of retailers.

because would to strong really closures be very supply factory very, argue, number the where I of chain limited management minimum. also we of a Europe bare in

stability the pretty and base Our supply is inventory of actually supply situation a base one. good

So good. pretty of a gate we out get we're can confident

in We availability a but the have always crisis limitations, to to some given everybody, good did out with this come good overall what one. of pretty we're shape

Operator

Your next Research. question the line of Cleveland from Bosshard comes Eric with

Your line is open.

Eric Bosshard

Two you. Thank about. morning. curious Good things

channels? between things about bit are you're remaining help could seeing to a talk relative about I you in the home you that's what in all, U.S., little U.S. performing the commented open, think But U.S.? of sustain bit centers the you parse sales channel could a and countries. First helped how other by earlier the in

you price/mix that, could relative comfort And margin XXXX? on a be the outcomes mix to ranges has positive could then margin of what be in revenue XX secondly, of the about a mix contributor. could mix, the or could in just frame Marc, XX price/mix or impact? a about been comment and in Obviously, little you give units what talking to the either bit just bit us down XXXX scale a your

Marc Bitzer

of Yes, all, open that the so is heavily by the are fact channel, are simply course, on of first open. not U.S. which stores impacted so Eric, and which ones

has in of markets, broader shopping As in-store crisis, the all, which, you still of quite compared to on still from but with a in environment, the store-based U.S. very a is U.S. heavy market, the buys ecommerce the international to first now, other purchase side e-commerce the course, know, right it's bit, as market a the opposed increased

definition, in how And by the you And saw in home right which scheme, reality. store now heavy lot again, is will on such, there in at the now, read shift channels stores in are in driven March a we broader think closed that's come driven just what So I reopening. of that's But open. improvement And were pace what terms online QX the April, by right depend the and that's is entirely what a yes, do as by back we should it. And stores heavily towards saw channel and U.S. openings.

a of mix saw fridge, a there about point heavy XXXX. the and not freezer, second a Particularly bought this people so in they and and your when don't they To outset now mix. crisis, was versus the down. see what these it's bought were we And with atypical you again, particularly high XXXX come mix, holding, –

purchase, what already couple that's stabilizing for and pick to wait an which surprising you still a also see driven a entirely purchase to as starts quarters. Typically, think discretionary that's is crisis premium premium and I remodel. of by up, But we again, the not progresses. entire will often in China, kitchen the super because that then happening then have And

So quarters. I a of coming really think a rich of couple talk see part back, I mix the we we think will until

Jim Peters

Yeah.

think And of kind what had to that due of said anticipated a we mix we'll that more to level. that. to due new product add saw our see more Marc is point the a into will we that was at to come three-quarters the QX built just the just I the of when And in beginning shift back and QX the the introductions, normal year. is estimate But to then eventually crisis.

Operator

next of Your Zener Ken question from the KeyBanc. comes line with

Your line is open.

Ken Zener

everybody. morning Good

Marc Bitzer

Ken. morning, Good

Ken Zener

to razors. you talked mix could – lower Just the about of in on want volatility. is I large U.S. supporting the guess replacement follow-up terms – the for points But negative less believe, price talk so cycle, about you and – you mix, we're talking

discretionary large confidence, could consumer be a like you've – probably which the you that, comments remodel. talk that's which are I impacted So probably could kitchen component, by made know suite, about about

of could appliances. delivery then you're with given talk involved And your new about you home construction view,

into go how of has kind actual those to the give and shelter just sense lines? place a could seem us you If of those you. Thank in affected didn't

Marc Bitzer

Yeah.

replacement the entire as we of first -- for XXXX, XX%. we demand replacement, that on conference of all, the in Ken, earlier is said So right now calls, than more industry assume part

XX% what gave as a we XX%, number. or I you think what

we a XXXX. clearly we're almost pretty because comping side positioned market a in now a percentage, terms, that but even higher, it's business, see we steady against of replacement. a XXXX, the So of non-replacement that's And absolute comes is floor a if still as market so a replacement side XXXX, low out decline, number a from as that also of of years

feel pretty will not floor, we drop lot So a good. and whole further. it That's the

side. steady a So that's

and your what of will to is, think, four I see mind surprising, you we very the say, The the last some very, very the and you Particularly way, short-term, high the of and in XXXX. one channel, come one end and build. would homes still the at and similar question in house where that's negative, not end discretionary Blinds about by quarters, keep two to I any products, the XXXX any we've completion. which in tail into new in builder are are seen

with all March, you and builders, order have builders a intake much mid-March. strong had as And very starts early the pretty seen the until

have the there will drops has and March I builders houses, started in they projects complete. now the the April. been think and some But late which

QX do certainly stream new very we do QX in with we see there what steady side the of So from appliances. and a homes and our still

builder below course, made key develop. confidence factor. I will think how rates a demand to course, consumer does mortgage play of key markets is The of now And there's grow, continue when broader it question, like the will still. But, why fundamental and arguments

long recession this right don't overall As is uncertain of we limited confidence. as will consumer the see a think I major now. on duration, of impact course, in lasting But, elements big that's one

Ken Zener

of you XXX in base the sales your point about for But about terms you basis in we different astounding Thank degradation. back at keep looking in go rather XX%, into a I to margins – because North fell you've to margin, a this. again specifically, of decline margin couple times, just were Jim, America, it's I'm But had mean, going going that. the realizing level. XXXX, asked your for its been implication

are lower. your costs So, fixed

cycle. last cost fixed of lot a removed guys You

With XX% costs. have so lot -- the your cost you obviously, -- of lot of a variable a

material in in U.S. single-digits sales versus being costs material is what fixed fixed can different that really but you is because math is just high the the labor saw down the cost the really you. the in $XXX the with million, declines it XXXX? If supporting that following, So, so the you're that that different expect is is cost were Thank it -- you XXXX? -- we

Jim Peters

those say, Ken, say out. improved took those the when what we lot what margins is fixed time in fixed let's fixed back is the about XXXX to with beyond out kept grow of a in Yes. began they costs is I'd our XXXX costs here's cost period talked we we've XXXX as and and to

what impact bottom as low because not across we we seeing significant volumes it's and our kept within revenues grew back of you were as and it fixed grew is starting so decline, to an especially And now that base the the cost as cost U.S. the had we're as the we've on. that fixed already was globe and line then as

to and Then as taking costs talked in we take is we about will will additional out that, addition out target here. we

just some variable Now, fixed go be some of those and that's you've how will to be look forward. will got it at

Marc Bitzer

why And included we Ken, let is that's this one and me crisis. add current on maybe we the an compared and comment where this XXXX off additional chart also

all, to our in a you've XXXX a the the had my in First profit. base. were point basically compare if made as you North chart, in on Actually, quarter, EBIT XXXX the small crisis as coming current first lower. on the margins America, one, we company seen total, into a the of of starting And we loss barely

and that's drop right is now volume forecasted the crisis. financial one, current we the to forward more fast what a Now than

So, significantly lower all will under breakeven to XXXX us. normal circumstances, yes, differently factories cost painful that very Jim's is it that in put our to be for we picture, manage the fixed point was if would take out amidst before. But than point, you

over be will XXXX. been work we the absorb couple the years. much than that a we did So, able of way last better in in to loss And volume that's

working measures. yes with the on comment we've is not complete over been call want other preannouncement. it event, a coronavirus to cost yes, as balance black swan additional take-out The recession I came year make such the also you The is our can which such, sheet as on already shock. And last

just cost so compared XXXX. now up So, -- and take-out to us that allowed to even more ramp a

some in we started just up that in ago ramped started addition. now. and it time that's not We And just -- pretty much and we

So, different. I is think very the situation

different. our breakeven point Our in is different. preparedness is very fundamental And bit point factories and a little starting

Operator

Bank. Your Deutsche of final from comes the Seldon line with question Clarke

Your line open. is

Seldon Clarke

realize and and I a savings Can the you takeout different I targets the just cost quarter did net this, you regions, us missed those? cost apologize of in if thanks. just across any sense you could but give quantify so first Hey

Jim Peters

was in about is first net and then material to had deflation. within point takeout what earlier net just terms three we Yes, a we that a of quarter. quarters first positive that realize And our on of savings additional of just the it about cost of the cost saw we quarter margin did materials, talked kind in about point raw we

strict we technology controls also our we then as marketing And reduced of and discretionary put just our of on spending. expenses some some

that rate being pretty as revenues up year. think globe that will for about you the I see this obviously, out to And globe, as it the throughout the it you just ramp of across it you across think we ratably rest would the look kind use spread year, similar way. of at if the

But about the right different this. taking the think in offset now, that are think to world. to every every in world measures seeing we we best part part way that's cost As have we're of I of impacts and the

Seldon Clarke

willingness Just a is some bit the trying but between back purchase? obviously, Okay, to that do purchase questions replacement do purchases how on things longer for replacing? kind these consumers? versus off, of appliance a that you ability a you through of are on for or the actually think and decipher just tighter how state of a switching consumers' if determine what's And consumer to new gears, delay little

Marc Bitzer

some which and purchase different the have an as from strict of of all, different know which kitchen. tools, one replacement, part you comes Seldon, markets as is a rest an particularly multiple upgrade we entire which consumer or for is discretionary excellence internally, first know tracking

pretty that's So set, and comparable. there's a all pretty good data

give for bit a also data and behind one. the provide we little you we multiple more detail And years can this

feel we about pretty good that number. So

delayed? asked I very replacement I the think which would be say, you a extent. earlier, can purchases to point limited

again, have And XXXX from helps. XXXX, some you where experience that's

or But don't can that need which We've see to even delayed XXXX, XXXX, see washer dishwasher A or be things then these of refrigerator didn't delayed. quarters. replaced, or replacement yes, one be than it right in and XXXX not we can seen a now. and be be and two more kind So replaced delayed. XXXX not we will

So hard experience majority of that and replacement be the we consumers. not are far. vast delay And didn't delayed to by will so purchases

Jim Peters

see even less step-up time that would saw wherein you XXXX in it's someone business impacts which to think their if parts have at times I and in a likely what XXXX, at our and probably Yes, saw during time and we is today, look an someone did say increase at period, we we in that look repairs, period, is this going as home now to that that I repair. we

So them to purchasing downturns. similar more like it repair, would than maybe lean in to seen some lead rather we've new

Marc Bitzer

of already here. So given me are that session we end five wrap and at up Q&A minutes let just a time, over the

to appreciate all all, I your all yours. Stay of in. safe. Appreciate want good dialing healthy, echo you First And wishes. stay also

kind but you've As environment where seen for, it's of before, none – it's of it's an planned we which really us are. have fully

a would about really demonstration difficult. really operations. know will company. I underlying good of QX as a And we where in was results as environment QX feel I pretty as our painful be – is, resilience a an We are as strong all and characterize

a as we not where and perspective full of on winner will we're to this come this but also a convinced have company, I out year, as only we you but think we're We committed heard prepared weather a crisis. crisis, out we're

the call that you next and to in or stay forward healthy. at with latest looking next before call either mind, to talk So earnings earnings

Operator

gentlemen, this your for Thank you concludes conference participation. today's and Ladies call.

disconnect. now You may

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