Whirlpool's Q3 2025 Earnings Call: Contradictions on Tariff Impact, Promotional Strategies, and Inventory Management Emerge

Date of Call: October 28, 2025

Financials Results

• Revenue: Net sales guidance unchanged at $15.8B; Q3 revenue grew ~1% YOY (100 bps)
• EPS: Q3 ongoing EPS $2.09; full-year ongoing EPS guidance narrowed to approximately $7
• Operating Margin: Global ongoing EBIT margin 4.5% in Q3 (unfavorably impacted by tariff preloading); full-year ongoing EBIT margin guidance ~5%

Guidance:

• Net sales guidance unchanged at $15.8B for 2025
• Full-year ongoing EBIT margin expected ~5%
• Full-year ongoing EPS narrowed to ~ $7 with adjusted tax rate ~8%
• Free cash flow guidance ~ $200M; capex ~ $400M
• Expect ~$100M working capital build (tariff-driven inventory)
• Segment margin expectations: MDA North America 5%–5.5%; MDA LatAm ~6%; MDA Asia ~5%; SDA Global ~15.5%
• $700M debt paydown delayed into 2026; Q4 dividend $0.90 per share

Business Commentary:

* Organic Revenue Growth in North America: - Whirlpool reported 2% revenue growth in its North American major appliances business, offsetting losses in the first half of the year. - This growth was driven by new product launches, particularly in KitchenAid and French door refrigerators, and gains in market share.

• Tariff Impact and Inventories:
• Whirlpool experienced 250 basis points of incremental tariff costs and preloading of Asian-produced products, affecting operating margins.

• High levels of promotional activity and continued preloading of Asian imports resulted in a highly competitive environment, preventing Whirlpool from realizing its competitive advantage.

• SDA Global Business Strength:

• The SDA Global business achieved double-digit net sales growth of 10% year-on-year, driven by new product launches and a strong direct-to-consumer strategy.

• The segment maintained a strong EBIT margin of 16.5% due to favorable price/mix and direct-to-consumer sales.

• Housing Market and U.S. Manufacturing:

• Whirlpool is positioned to benefit from a multiyear recovery in the U.S. housing market, supported by its U.S.-based manufacturing footprint and strong product portfolio.
• The company's $300 million investment in U.S. laundry facilities is expected to enhance capacity and innovation, further supporting its strategic positioning in North America.

Sentiment Analysis:

Overall Tone: Neutral

• Management emphasized organic growth and strong SDA/KitchenAid momentum but repeatedly noted margins pressured by tariff preloading and elevated promotional intensity ("Q3 results demonstrate organic growth, while our margins are still impacted by tariff preloading"). Guidance narrowed (EPS) and FCF cut to ~$200M, while long‑term optimism tied to tariffs and housing recovery was reiterated.

Q&A:

• Question from Susan Maklari (Goldman Sachs): My first question is around the share gains that you have seen this quarter. Can you talk a bit about how much of that is driven by the new product launch and the momentum that you're seeing there relative to promotions? And any changes that you saw company specific in that during the quarter?
  Response: Share gains were driven primarily by new product launches; promotions were largely held steady—KitchenAid delivered record market share and strong sell-through.

• Question from Susan Maklari (Goldman Sachs): It's nice to see the continued strength in the SDA business. Can you talk about what is driving that? Especially given housing weakness and consumer volatility?
  Response: SDA momentum stems from extensive new products, strong D2C growth (higher profitability), and earlier tariff impacts in SDA that shifted industry dynamics; management expects momentum to persist into next year.

• Question from David S. MacGregor (Longbow Research): You talked about the gains in retail flooring. Under current demand conditions, what would those incremental listings represent in terms of 2026 unit growth?
  Response: Management declined to quantify units but noted ~30% of SKUs refreshed in 2025 and ~29% more flooring versus prior SKUs, supporting meaningful organic growth heading into 2026.

• Question from David S. MacGregor (Longbow Research): You're expecting the flooring costs, the upfront flooring costs to be fully realized by the end of the calendar year?
  Response: Yes — upfront flooring/display costs from 2025 product launches are expected to be largely absorbed by the end of Q4.

• Question from David S. MacGregor (Longbow Research): On the $225M of expected unrecovered 2025 tariff expense, how much do you expect to recover in 2026 once you have tariff protection?
  Response: The $225M paid in 2025 could rise to ~$300M–$350M gross in 2026; however Whirlpool expects a relative cost advantage (~3% vs competitors' ~5%–15%), yielding volume and margin benefits.

• Question from Michael Rehaut (JPMorgan): How does the current promotional environment compare to pre‑COVID norms and are there metrics to judge normalization?
  Response: No precise metric comparison; promotions are abnormally elevated due to preloaded imports and should normalize as excess pre‑tariff inventory flushes (expected toward end of Q4 into 2026).

• Question from Michael Rehaut (JPMorgan): How will you manage the revolver and financing needs as items come due over the next two years? Will funding be refinanced or will there be additional debt paydown?
  Response: Long‑term target (2x net debt/EBITDA) unchanged; refinancing completed earlier ($1.2B term loan), India proceeds planned for 2026 debt paydown, liquidity and financing access remain solid.

• Question from Michael Dahl (RBC): The free cash flow guide implies a meaningful Q4 ramp despite higher product costs—what are the moving pieces, and how are you thinking about the dividend?
  Response: Working capital unwind (inventory built for launches and tariff‑in‑inventory) should drive a >$600M benefit into year‑end; tariffs' one‑time payment timing depressed FCF in 2025 but FCF should be higher in 2026; dividend maintained at $0.90.

• Question from Michael Dahl (RBC): The implied Q4 revenue to hit full‑year $15.8B seems to require a step‑up—what underlies that assumption?
  Response: Q4 strength is expected from SDA seasonality and ongoing majors momentum from new product launches—particularly KitchenAid—rather than increased promotional participation.

• Question from Jeffrey Stevenson (Loop Capital): Historically, how has demand trended the year after elevated new product introductions and incremental floor space wins?
  Response: Historically the year after launch is often stronger as launch costs fall away and retail familiarity/sell‑through improves; management expects similar multi‑year upside.

• Question from Jeffrey Stevenson (Loop Capital): Why now invest $300M in Ohio laundry capacity?
  Response: Investment expands Clyde/Marion capacity to meet strong demand (top‑load constraints), staged over 1–2 years; tariffs improve ROI on U.S. manufacturing investments.

• Question from Sam Darkatsh (Raymond James): Any ballpark thought on 2026 tax rate?
  Response: Not providing 2026 guidance yet; long‑term normalized tax rate believed to be ~20%–25%; 2025 benefited from a lower ~8% adjusted rate due to legislation.

• Question from Sam Darkatsh (Raymond James): You locked steel costs through multiyear contracts—what relative cost advantage does that give you for 2026?
  Response: Multiyear steel contracts provide price predictability and a modest discount versus spot market today (buying slightly below market); Whirlpool expects steel costs to be predictable and raw materials broadly normalized in 2026.

• Question from W. Andrew Carter (Stifel): Why did free cash flow guidance change materially and do you have visibility into tariff costs?
  Response: Tariff complexity and evolving dollar amounts plus short government payment terms temporarily increased working capital and reduced near‑term FCF; management now has clearer estimates and views the tariff environment as moving to a more stable, predictable phase.

• Question from W. Andrew Carter (Stifel): How do you get back to long‑term MDA North America margins (~>10% EBIT)?
  Response: Management expects to reach >10% via internal levers—new products and additional cost takeouts—plus tailwinds from tariffs (near‑term) and housing recovery (medium‑term).

• Question from Eric Bosshard (Cleveland Research): What are you seeing on retail sell‑through in 3Q and trend into 4Q?
  Response: Sell‑through data (~65% of retail) shows industry sell‑through roughly 0%–+1% YTD (low single digits), with variability by retailer; Q3 remained low single‑digit and similar into Q4.

• Question from Eric Bosshard (Cleveland Research): Are preloaded imports crowding out volume or merely delaying pricing normalization?
  Response: Preloaded imports increased promotional intensity but Whirlpool's volume growth came from new products; management expects promotions to normalize once pre‑tariff inventory clears.

• Question from Rafe Jadrosich (BofA Securities): Unmitigated tariff impact unchanged at ~150 bps—what about mitigated impact and assumptions changed?
  Response: Unmitigated tariff impact in guidance remains as modeled, but preloaded competitor inventory intensified promotions more than expected; mitigation relies on inventory tapering and is expected to improve next year.

Contradiction Point 1

Promotional Environment and Share Gains

It involves differing perspectives on the promotional environment and its impact on share gains, which are crucial for understanding market dynamics and competitive positioning.

How does the current promotional environment compare to pre-COVID norms, and what benchmarks indicate normalization? - Michael Rehaut (JPMorgan Chase & Co)

2025Q3: We held promotional pressure well.We held promotional depth and duration very well through the quarter. - Marc Bitzer(CEO)

How are manufacturers adjusting promotional plans for the second half? - David Sutherland MacGregor (Longbow Research LLC)

2025Q2: We reduced promotional efforts in Q2 due to tariff costs and weak consumer sentiment. We curbed promotional depth and duration. - Marc Robert Bitzer(CEO)

Contradiction Point 2

Tariff Impact and Inventory Levels

It deals with the impact of tariffs on inventory levels and the company's ability to manage them, which affects supply chain and financial strategies.

What caused the change in cash flow guidance, and what visibility do you have on tariffs and other dynamics? - W. Andrew Carter (Stifel, Nicolaus & Company, Incorporated)

2025Q3: We took actions to increase inventory levels in certain categories in early Q3. We pulled forward some margin-intensive product. - James Peters(CFO)

What's your best estimate of the quantity of tariff-free imported inventory currently in inventory? And how long will it take to sell this inventory through retail channels? - David Sutherland MacGregor (Longbow Research LLC)

2025Q2: This inventory will gradually normalize as tariffs take effect.We expect market share strength to return in Q4. - Marc Robert Bitzer(CEO)

Contradiction Point 3

Tariff Impact on Asian Competitors

It highlights differing perspectives on the impact of tariffs on Asian competitors and the subsequent market dynamics, which could affect Whirlpool's competitive positioning and market share.

How does the current promotional environment compare to pre-COVID norms, and what metrics indicate normalization? - Michael Rehaut (JPMorgan Chase & Co, Research Division)

2025Q3: We are continuing to work very closely with the industry and the administration. And we are very supportive of the actions that have been announced and the actions that will continue to be announced. - Marc Bitzer(CEO)

Is the impact of Asian competitors pre-shipping appliances to avoid tariffs continuing into Q2 and Q3? - Sam Darkatsh (Raymond James & Associates, Inc., Research Division)

2025Q1: The U.S. industry saw a 30% increase in imports from Asian producers in Q4 and January-February. Preloading is significant, impacting market dynamics. Whirlpool expects similar market conditions in Q2, but managed well in Q1. - Marc Bitzer(CEO)

Contradiction Point 4

Tariff Mitigation Strategy and Impact

It involves differing perspectives on the tariff mitigation strategy and its impact, which could influence financial performance and investor expectations.

How will new product listings impact 2026 unit growth under current demand conditions? - David S. MacGregor (Longbow Research LLC)

2025Q3: We are starting to realize as we move into the fourth quarter that the U.S. industry was significantly overstocked with imports from Asian producers. - Marc Bitzer(CEO)

Can you break down the $250 million tariff cost mitigation strategy between pricing and cost actions? - Michael Rehaut (JPMorgan)

2025Q1: We will continue working with the administration and the industry, and we will implement whatever actions that are necessary to mitigate the tariff headwind. - Marc Bitzer(CEO)

Contradiction Point 5

Promotional Environment and Normalization

It involves differing views on the promotional environment and its normalization, which could impact Whirlpool's pricing strategy and profitability.

How does the current promotional environment compare to pre-COVID norms, and what metrics indicate normalization? - Michael Rehaut (JPMorgan Chase & Co, Research Division)

2025Q3: The promotional environment is higher than pre-COVID norms due to increased preloading of inventory. Normalization would occur when industry volumes reflect underlying costs, which is expected in Q4. - Marc Bitzer(CEO)

Can you discuss assumptions about industry demand elasticity and market share gains? - Rafe Jadrosich (Bank of America)

2025Q1: In the U.S., promotional intensity has increased, especially in May and June. In Q2, we expect a further increase in promotional pressure. - Marc Bitzer(CEO)