Whirlpool at J.P. Morgan Conference: Strategic Moves Amid Tariff Talks

On Tuesday, 20 May 2025, Whirlpool Corporation (NYSE:WHR) participated in the J.P. Morgan 18th Annual Homebuilding & Building Products Conference, where CFO Jim Peters outlined the company’s strategic plans amid a challenging market environment. While the company faces hurdles such as high mortgage rates and tariffs, it also sees opportunities for market share growth and margin improvement through cost control and domestic production.

Key Takeaways

• Whirlpool expects flat North American industry growth in 2025 due to high mortgage rates.
• The company plans to pay down $700 million in debt using proceeds from the India business sale.
• Domestic production covers 80% of U.S. sales, positioning Whirlpool to benefit from tariff changes.
• New product launches and a KitchenAid refresh are expected to drive market share gains.
• Tariffs from China are anticipated to be at a 30% level, impacting margins less due to U.S. production.

Financial Results

• North American Growth: Whirlpool forecasts flat shipment growth in 2025, aligning with initial guidance.
• Debt Reduction: Aiming to reduce debt by $700 million in 2025, following a $500 million reduction last year.
• India Business Sale: Expected proceeds range from $5 billion to $5.5 billion, aiding in debt reduction.
• Leverage Goals: Targeting leverage below three times by year-end 2025, improving to about two times by 2026.
• Tariff Impact: Prepared for a 30% tariff from China, with potential margin benefits due to domestic production.

Operational Updates

• Domestic Production: 80% of products sold in the U.S. are manufactured domestically, reducing tariff impact.
• Product Launches: New products are set for release in the latter half of the year, focusing on market share growth.
• KitchenAid Refresh: A major update includes customizable handles and colors, marking the biggest refresh in a decade.
• Promotional Spending: Efforts are underway to cut promotional spending to enhance margins.

Future Outlook

• Tariff Strategy: Leveraging U.S. production to minimize tariff impacts and capture market share.
• Market Share Goals: Aiming to increase market share from 26-27% to near 30%.
• Cost Reduction: Ongoing efforts to reduce costs and improve operational efficiencies.
• Brand Investment: Continued investment in brand strength and product innovation.

Q&A Highlights

• Market Share Gains: Focused on capturing market share across all price points, with new product launches at the premium end.
• Retail Price Increases: Confident in maintaining pricing power despite the tariff situation.

For more detailed insights, readers can refer to the full transcript of the conference call.

Full transcript - J.P. Morgan 18th Annual Homebuilding & Building Products Conference:

Mike Rehart, Analyst, JPMorgan: You’re on. Alright. Hello, everyone. We’re gonna continue. Thanks for sticking around.

We’re I’m pleased to have with us Whirlpool Corporation. To my left, Jim Peters, CFO, and to Jim’s left, Scott Cartwright, VP of Investor Relations. I remain Mike Rehart, at JPMorgan. We’ll do a fireside chat, as always, and there’ll be some time left over for q and a. So, Jim, Scott, thanks for joining me.

Jim Peters, CFO, Whirlpool Corporation: Appreciate it. Happy to be here, Mike, and good afternoon to everybody.

Mike Rehart, Analyst, JPMorgan: So we’ll start off I guess, I usually like to start off on the top line and kind of work our way down. You know, demand trends versus guidance. So your ’25 guidance that you reiterated most recently on your on your first quarter earnings call assumes flat North American shipment growth. So the question here is, you know, how have the year to date trends as they progress so far compared to your expectations, and what needs to occur during the rest of the year for for the outlook to be achieved?

Jim Peters, CFO, Whirlpool Corporation: Yeah. So I I I’d say a couple things here is, one, the the trend is, you know, played out the way we thought it would. We said at the beginning of the year, we thought the industry would be be flat. We didn’t see any real catalysts in terms of, you know, mortgage rate changes or anything that might drive the industry in a different or a more positive direction. You know?

Also, the mix of the industry has been still relatively heavy from a replacement perspective, so that’s been in line with what we thought. We continue and and, you know, it’s it’s been close to there. Throughout the back half of the year, we continue to also expect it to be relatively flat. We don’t see any big drivers that could could necessarily push it up, but we also don’t think it because it’s such a replacement industry right now. We don’t necessarily see some things that’ll push it down.

You know? So if I I step back from that a little bit, I think where the opportunity though comes from us in some volume in the back half of the year even if the industry is flat, still is around as we look at how the tariff and trade environment unfolds. And us being the largest domestic producer producing 80% of what we sell in The US here in The US really gives us an opportunity to begin to look for share further market share in this type of environment, especially some of our competitors who are producing outside The US now all of a sudden have higher product cost that they have to deal with. And even if it’s only a 10% tariff, it still has a significant impact in terms of product cost overall for them. So I’d say that’s at least how we see the overall industry evolving, but also the potential for our volume evolving in the back half of the year.

Mike Rehart, Analyst, JPMorgan: And so, you know, you kind of referenced the discretionary repair model element of the demand picture remaining constrained or depressed. I assume, well, does so the the this year kind of assumes a continuation of that dynamic into the back half as well. Is that fair to say? Or

Jim Peters, CFO, Whirlpool Corporation: Yeah. I would say right now, if you look at where the overall housing market is, where mortgage rates are, etcetera, I think it’s still a very heavy replacement industry at this this point in time. There’s no real catalyst. I mean, even if you’ve seen some of the latest information out of the the overall real estate market net and, you know, many of the realtors coming out and saying the spring selling seasons had a really slow start to it. And so I don’t think there’s a a catalyst out there or anything out there that will drive incremental existing home sales, which is really what the driver is for discretionary segment for us.

And, you know, the reason we say that and and just to kinda highlight that again is when somebody buys an existing home, one of the big things they do is they replace all the appliances in the home. And so they go and they replace an entire suite of kitchen appliances, which then tends to drive the mix or improve the mix because those are more profitable for us. They’re also a less price sensitive consumer because it’s a planned purchase. And when you’re looking at a duress purchase or a replacement purchase, that tends to be unplanned, and it tends to drive the consumer to mix down some.

Mike Rehart, Analyst, JPMorgan: So, you know, you you referenced tariffs as as a potential opportunity, you know, perhaps for your own business in the back half. But I’m I’m curious, you know, more from an end consumer standpoint, the impact of tariffs as they’ve been announced over the past couple of months. And, you know, I know that, you know, obviously, during your last earnings call, you referenced some of the importers kind of, you know, preloading the channel or or, you know, getting, you know, high levels of imports, you know, ahead of the tariff phenomenon. But I’m more curious about, you know, how the the the consumer has acted in the last couple of months, and and if the actions of those imports those higher levels of imports, if that’s kind of played out, you know, one way or the other in the in the end purchase?

Jim Peters, CFO, Whirlpool Corporation: Yeah. So here’s what I I would say is I think, you know, right now, as we’ve all seen, is consumer sentiment is relatively low, and the consumer has had, you know, some anxiety. That’s come along with, obviously, all the news in the marketplace and and the uncertainty. Now, you know, to eliminate that’s probably had a very limited impact on our business because it’s back to what I said earlier and all that being a large replacement industry right now, and that the majority of the consumers, about two thirds of them in the market, because they need to replace something that’s broken, they’re almost forced to be out there. Then you get another 1015% that is more around new home construction and all that.

So it it leaves the already, the the appliance industry was under pressure and the discretionary part was under pressure before consumer sentiment dropped. And so I would say that that is probably, you know, one of the things that we look at and say, yes, that that you would hear from a lot of different retailers, the consumer is hesitant to make large purchases right now. They may be buying other things, but they’re hesitant to make large purchases. But we’re primarily a replacement industry at this point anyway. You know, then to the second part of kind of the loading in of the product that’s come from outside The US, and you can look at import data and all that and see, you know, how much really got shipped in in a short period of time.

I I do think that that has probably had an effect at least at a retail level in terms of, you know, what products are available and all that. Now most of that is low end entry product or typically a good portion of that is, and that’s what the consumer in a replacement environment has been out there looking for too. So you’ve probably seen a fair amount of that begin to flow through already and through at a retail level, but I don’t have perfect visibility into what retailer inventories are, our competitors’ inventories are, obviously. But I do think that that at least, you know, has been one of the impacts we’ve seen from a sell in perspective. And, obviously, from a sell out at a retail perspective, you would be seeing some of that flowing out right now.

Mike Rehart, Analyst, JPMorgan: K. You know, also just, you know, basic tariff question. Obviously, with the most recent reset of the China tariffs to 30% from a hundred and forty five. You know, how does that impact, you know, your own estimated headwind that was recently stated about 400,000,000? And moreover, I guess second part of that is if the April price increase was already implemented to begin to offset some of that, do you now actually have a positive spread, or or how how might that play out in the back half?

Jim Peters, CFO, Whirlpool Corporation: Yeah. And that’s a good question. I think the thing I always have to preface any of this with is we don’t know where the tariffs are going to land in the end, the full level of tariffs. And there’s obviously the the China tariffs that have moved from from point 45 to 30, and we’ll hopefully eventually get a number where we we kinda know. But we always said we thought it would be somewhere definitely be somewhere below a 45%.

That just was not sustainable. And then you’ve got the 10% tariffs on all the other countries right now. And, again, we don’t know where some of all those are going to to land. And while that impacts us a little bit less, we do have some components that come out of there, but it’s more impacting our competitors. So that kind of puts some uncertainty, but I would say, yes.

If if the tariffs wound up at a 30% level from China, then we definitely would have a lower cost impact in terms of what we would see in our p and l. Now to that extent, we would either have an opportunity there to leverage some of the actions if we could to to drive incremental margin, or we’ll continue to look at those actions and say what makes sense. And what makes sense is in line with what competitors might be doing, what makes sense from the mitigation actions that aren’t actually pricing, such as us moving production or having our suppliers move production. But what I can say at a minimum, we’re confident that we have the actions in place to offset the tariffs at where they are right now. And then the question, you know, Mike, to your point becomes, as we look forward on that, is there an opportunity there from a margin perspective, or even more importantly, is there an opportunity there from a market share perspective that we can continue to leverage that and and, you know, leverage the lower tariffs to make to actually go after some market share.

Mike Rehart, Analyst, JPMorgan: Right. That’s great. You know, so maybe, you know, on the topic of market share, you know, maybe you could kind of give us kind of an overview of where the competitive landscape is today in terms of, you know, the the market share winners and losers over the past five years. Let’s say, I know you’ve kind of walked through your own share objectives at your, you know, Analyst Day about a year little more than a year and a half ago I’m sorry, little more than a year and a quarter ago. But, you know, try and give us a sense, I guess, first off, just, you know, where is the so I guess it’s a two part question.

I don’t wanna put too many into one question here. But, you know, just on the, you know, current competitive backdrop, you know, how would you characterize, you know, pricing and promotional activity over the last few years, and how has that impacted? And how has this year’s volatility impacted some of those dynamics?

Jim Peters, CFO, Whirlpool Corporation: Yeah. I’d say the good thing to start off with or maybe the the neutral thing is our market share from, you know, when we did the investor day is is relatively flat. And, you know, now we do expect and we had expected to build some market share in the back half of this year with the new product launches that we have, and we do believe that those are on track right now. So I’d say that’s the first thing to kinda to talk about. And then, you know, as you asked about where some of the market share gains and losses are coming, what I what I would say is what I would expect to see in the, at least, upcoming months is that, you know, the biggest impact to market share will be dependent on producers who are producing in China.

And, obviously, with even with 30% tariffs, that’s going to put a headwind on there that will obviously have an impact on products that are coming out of there and the ability to continue to to be profitable in The US marketplace. And so I think that’s where you could see some shifting, especially, you know, out at the retail level on whether these products are, you know, branded or private label or whatever, but being produced in China that they’ll have to look for alternative sources or alternative products to put on the floor. Then, you know, I’d so I’d say that’s where I think at least some of the bigger shifts are coming. And then as the further tariff environment plays out, that’ll also have an impact on on, you know, market share and all that. And so I highlighted before, I think with 80% of our product produced in The US, we’re best suited to go after market share in this this type of environment.

Now your question more around the competitive dynamics of the market out there as we talked about, you know, last year, we really saw throughout ’23 and ’24 a build in the promotional spending, and we saw competition probably getting, you know, back to the levels of promotional spend they did before. With that, we did increase our promotional spending, but then we took began to reduce our promotional spending last year and said, you know, at this point with a replacement industry, it just doesn’t make sense. And you’re you’re not driving any incremental volume in the industry. You’re just lowering the overall price. So I’d say that was more how how we looked at it.

Now as you come into 2025 with the tariff environment and other things going on, I think you will begin to see obviously, we’ve taken promotional some promotional pricing. But then, additionally, I think you’re going to see some of our competition doing it as you go through Memorial Day and into the fourth of July holiday, because that’s the logical progression of how these things occur as you go through the big promotional period. So, you know, I just expect to see probably, you know, in the marketplace, all of that evolving in the the near future. And as I said, it’s still a largely replacement industry. So from an overall promotional perspective, I don’t think that’s gonna change the dynamics of the overall industry demand.

Unidentified speaker: Right.

Mike Rehart, Analyst, JPMorgan: Maybe shifting to to margins for a moment. You know, you had, again, from your Investor Day last year, a goal of 11 to 12% North American margins by 2026. Right now, your your guidance for this year is seven and a half percent. I know, obviously, there’s been a few differences the market composition, some other drivers that have resulted in where margins are today or for this year. Maybe just kind of walk through how we should think about margin progression over the next two or three years, the primary drivers of of of ostensible, hopefully, margin improvement over that time, you know, and and, you know, how those pieces might just come together and emerge.

So

Jim Peters, CFO, Whirlpool Corporation: I think if you look at the the guidance that we gave or, you know, the goals that we gave for North America in our last investor day, those were really based on what we saw in a a pre COVID environment in terms of where the overall margin profile of our North America business would be and and should be. Now at that time, we were assuming that you would begin to see the Fed cutting interest rates. We had assumed that you’d begin to see a reduction in mortgage rates, and we had assumed that you’d begin to see just a stabilization in the appliance industry and a healthy mix. Didn’t need to be a significant growth in the industry, but the mix of the industry would go back closer to where only 50% was replacement, and about a third to 35% was discretionary, which is the most profitable part of the industry. Unfortunately, what we saw then unfold throughout 2024 was an environment where mortgage rates didn’t go down.

Replacement became an even bigger part of of the industry. Obviously, it drove the mix of business down, which was different from what we would have assumed going in and is significantly different from what we saw in a pre COVID environment where you at least had a healthy existing home sales, you know, type of picture, and so all of those assumptions became significantly different. So what needs to happen now to get from where we are here to get to, you know, to where we we thought we could be? As I mentioned, I don’t know that we need to see significant growth in the industry, but we do need to begin to see the the housing market get healthy and the mix at least shift back to less replacement and a more balanced part of discretionary. Second thing is is I think you’ll see with a lot of the actions we’ve been talking about, we continue to take more and more cost actions, And our goal is additionally to reduce the amount of cost we have within our products because we see that as an opportunity to further drive cost reduction.

The third piece that we see is an opportunity, again, with all the promotional price increases that that we’ve taken leading up to this is to really just put, as we’ve always said, is our approach to promotions is to be disciplined and only do it when it creates value, and we see that as as a further opportunity there. And then the last piece is really driving that market share and driving it. And we did see in the say in that meeting that we really wanted to go from a 26, 20 seven to closer to a 30 market share. And as I mentioned, I think the opportunity because with the tariff environment and our US production base should make us a winner in this type of environment and gives us a chance to go take market share and increase our production, which gives us further leverage in our factories, which will then help our margins pretty significantly. That’s one of the biggest things we can get from a margin lift perspective.

And we’ve always talked about that incremental margin within our business tends to drive around 20% type of benefit on that incremental margin. Now in a highly replacement, it’s obviously gonna be a little bit lower than that historical average, but when you get back to a typical mix, that’s about what incremental volume will drive in terms of what it brings to our bottom line.

Mike Rehart, Analyst, JPMorgan: Great. Wanted to also shift towards marketing and technology spend. You know, I noticed that in the last few years, marketing and technology has been a margin headwind of anywhere from fifty, seventy five bps annually, I wanna say. So just kinda curious about where marketing and technologies is is today as a percent of revenue, and when might this number stabilize or even become tailwind from a a leverage standpoint?

Jim Peters, CFO, Whirlpool Corporation: Yeah. I I would say we’re getting closer to the stabilization. And the reason I say that there’s a couple things in here right now that I would say is one, we have continued to invest in engineering around our products and innovation around our products and development, but we’re constantly pushing ourselves to get more efficient in how we do that, and that’s a big part of the technology spend there. Additionally, in some of the technology spend, we’ve invested in our platforms for more of our direct to consumer sales, and we’re really getting closer to a point where our platforms are are at the right place there. But then the biggest component of that is brand spending.

And, you know, as we came out of COVID and we started to look at the market where it wasn’t a market that, you know, where the appliance demand was at every piece you produced, you could sell right away. We got much more focused on our brands on a go forward basis and really looking at what we need to do for the long term health of our brands. And so we began to invest incremental funding in our brands. Now at some point, we’ll be to that right level soon, and that’s where it’ll begin to level off, and then we’ll just maintain that on a go forward basis. The opportunity then there for it to become a little bit less in terms of the margin impact is as we get volume back in the business and pick up some market share, we get the leverage off of that.

But I would expect it in the coming years to become to to become less of a headwind. Right. Right.

Mike Rehart, Analyst, JPMorgan: Okay. One more question for me, and I know there probably is a couple of questions in the audience. But, you know, obviously, the topic of leverage comes up, you know, quite frequently. You know, maybe if you could just comment where you are today with regards to your, you know, Investor Day goals of being under three times by the end of this year, roughly two times by the end of next year, and

Jim Peters, CFO, Whirlpool Corporation: and the path towards that? Yeah. So we’ll probably be closer to the mid threes by the end of this year. What we did is we paid down 500,000,000 of debt last year. We still intend to pay down 700,000,000 of debt this year using the proceeds from our sale of our India business or further dilution of our India business, and then the remaining coming out of free cash flow, which will allow us to get into to that type of neighborhood.

We will have a continued focus on reducing our debt levels down as we head into 2026 also. That still remains a priority for us. And, you know, maybe just to step back on the India sale too is it is progressing forward very well, and we’ve had numerous interested parties. And we’re evaluating different forms of transactions in terms of all the parties that we’ve had where we’ve had a very high level of interest, and we do believe we’re on track to complete that within this year and in the back half of the year. And so we we do see that as a positive step in bringing our leverage down, but also a positive step for that overall business where we do believe we’re setting it up for success in the future.

Mike Rehart, Analyst, JPMorgan: And, I mean, I appreciate the the the the comments there on the progression with the India sale. You know, maybe if you could just remind us, you know, what the expectations were when you announced it in terms of the proceeds from that, and if that is still, you know, kind of a reasonable way to think about it.

Jim Peters, CFO, Whirlpool Corporation: Yeah. So, you know, when we announced it, we expected proceeds in the in the range of, let’s say, $5,550,000,000. Right. And I would say today, we still feel that’s a very good number as we look at the different types of transactions and forms of transactions in front of us. And so there’s no change to what we think the the cash flow impact will be from that.

You know, the other positive aspect of it that we’ve always said is you have to keep in mind that we have certain tax assets and other things that allow us to optimize that from a tax perspective and maximize the amount of cash that we can realize off of the the sale. Great.

Mike Rehart, Analyst, JPMorgan: Perfect. With that, I’ll open it up to questions from the audience. Yep.

Unidentified speaker: Hi. Just talk about your goals to have a share gain from 26 to 27% up to 30%. Can you talk about which levels of the price point? Are you going after the lower end share?

Mike Rehart, Analyst, JPMorgan: Do think that’s more available on

Unidentified speaker: the premium side? Where do you you where is she she got coming

Jim Peters, CFO, Whirlpool Corporation: Yep. So and and I’ll since we’re doing the webcast too, I’ll kinda repeat the question, but it was around, you know, as as we look to gain share, what are the the different price points and areas that we’re looking to gain share? And I think it’s across the full spectrum of price points, to be honest, because I think there is some opportunity on some of the entry level product that will be with the tariff environment that will make ours much more competitive in that space and take away some of the cost competitiveness that comes through some of the loopholes that we’re already in, some of the existing tariff structures, and other things. So I think we’ll be able to pick up some there, I think, in the mass part of the market. As I talked about before, many of our competitors, even if they’re producing in somewhere like Thailand or in Vietnam or somewhere like that, a 10% tariff can still have a pretty significant impact on their product, and it could be somewhere in the range of, let’s just say, 30 to $40 per unit.

So, again, there’s an opportunity for us to to take share there. And at the premium side, I think more of that is going to come with the new product launches that we’re doing. And to be honest, we’re we’re doing probably the biggest refresh of our KitchenAid major domestic appliance lineup that we’ve done in the last decade. We’re completely relaunching the entire suite of KitchenAid products. You’ll be able to customize handles, colors, all sorts of things.

It was very well received at the KBIS event in in Vegas earlier this year. So I think it’s a blend of across all areas of the portfolio, but some of it’s going to be more cost driven, and that will be low opening price point to mass. Premium is going to be more based on new product launches.

Mike Rehart, Analyst, JPMorgan: Any other questions? Well, let me just throw out one as well. You know, there there’s obviously with with the a lot of the the back and forth on the tariff situation and and, you know, you have different retailers talking about, you know, price increases, and then there’s been some pushback from above, so to speak. You know, I think Home Depot came out and said that they’re not going today, they’re not going to raise prices, so they might drop some product lines. You know, to the extent that, you know, you you see yourself obviously as a beneficiary of the tariff back backdrop.

Any thoughts around, you know, perhaps, you know, on a retail level, not seeing the extent of those price increases that you’d expect all else equal, and specifically, I’m thinking in, you know, at a Home Depot or a Lowe’s.

Jim Peters, CFO, Whirlpool Corporation: Yeah. And, again, I haven’t had a chance to listen to the entire Home Depot call, obviously, because I’ve been talking to many of you today that are in the room here. But but you know? So I I don’t have the full context of of what it was said in, but I have seen some of the headlines. What I would say is that, you know, from an overall more broad retail perspective, while you typically whenever you do any type of pricing or reduction in promotions, you’re always going to feel some resistance.

What we have seen is still a ability to drive these promotional price increases through, And we have seen it pretty consistently out there, and we have been able to maintain our market share while we do it. So it’s hard for me to get into some of the specifics of, you know, what a specific retailer may or may not be doing on their floor and what they may be considering, how they’re taking pricing, or how they’re adjusting to this environment. Because I do believe a lot of what they said also, what I at least read briefly, is they were looking to get more and more of their product that they get away from certain countries and make no other, you know, country have more than 10% of the volume, which would say that, okay, then they’re gonna force more on domestic producers. Anybody who does that force, you know, look more at domestic producers, and that may be an opportunity to pick up some volume for somebody who is a large domestic producer. Right.

But, again, I don’t have any specifics, as I said, because it’s all pretty fresh off the press.

Mike Rehart, Analyst, JPMorgan: Yeah. Appreciate that. Thanks for thanks for taking the audible. No problem. Carla, sure.

Unidentified speaker: Hi. Do you have some debt maturities coming due later

Jim Peters, CFO, Whirlpool Corporation: this year?

Unidentified speaker: Just wondering if you could in terms of how you’d like to be financed on what

Jim Peters, CFO, Whirlpool Corporation: Yeah. So and and the question was around our debt maturities coming due. And and as we look at the the different things, you know, what we’ve said is right now, we intend to, you know, most likely go into the market at some point in the future. We haven’t given a specific date or anything. You know, we do believe we’ll probably most likely go with senior unsecured type of debt like we have in the past.

And that with paying down about 700,000,000 of debt and then refinancing the term loan that we have, our interest cost should, in aggregate, probably go down because, you know, we’re gonna make that big pay down on the debt, and the debt that we are refinancing is already at a higher cost. So, you know, as we look at it, I think we highlighted in our earnings call presentation that we do believe we believe we have good windows within our debt ladder go forward of where to place some of this debt and that we, you know, intend to refinance about 1.1 to 1,200,000,000.0 sometime in the upcoming future. The biggest part of all that that’s maturing for us is more out in October. So, I mean, that’s what we’ve said so far.

Mike Rehart, Analyst, JPMorgan: Thanks. Any other questions? All right. We’ll keep it to there.

Jim Peters, CFO, Whirlpool Corporation: Thank you. Appreciate it. Much, Joe

Mike Rehart, Analyst, JPMorgan: and Scott. Appreciate the time.

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