Whirlpool Corporation — Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone fourth-quarter filing; fourth-quarter information is included within the full-year results. Whirlpool manufactures and markets major and small domestic appliances globally, with approximately $19.5 billion of 2023 sales and 59,000 employees. Its 2023 reportable segments were North America, EMEA, Latin America and Asia. Effective January 1, 2024, the Company reorganized into five segments, including a separate Small Domestic Appliances Global segment.
Financial Performance and Position
| Metric | 2023 | 2022 | Change / commentary |
|---|
| Net sales | $19.455 billion | $19.724 billion | Down 1.4% |
| Gross margin | $3.170 billion; 16.3% | $3.073 billion; 15.6% | Margin improved 70 basis points |
| Operating profit | $1.015 billion | $(1.056) billion | Improved primarily because 2022 included major impairment and divestiture charges |
| Net earnings available to Whirlpool | $481 million; $8.72 diluted EPS | $(1.519) billion; $(27.18) diluted EPS | Returned to profitability |
| Ongoing EBIT | $1.191 billion; 6.1% margin | $1.360 billion; 6.9% margin | Down $169 million; margin declined 80 basis points |
| Operating cash flow | $915 million | $1.390 billion | Down $475 million |
| Free cash flow | $366 million | $820 million | Down $454 million |
| Dividends paid | $384 million | $390 million | Quarterly dividend approved at $1.75 per share |
- Sales were pressured by unfavorable price/mix and increased promotional activity as industry conditions normalized, partly offset by higher volume, North America share gains and the InSinkErator acquisition.
- Gross margin benefited from lower raw-material costs and productivity initiatives, partly offset by unfavorable price/mix.
- Interest expense increased to $351 million from $190 million, primarily because of higher debt associated with InSinkErator and higher interest rates.
- Income tax expense was $77 million, including a $172 million net benefit from legal-entity restructuring, partially offset by higher valuation allowances.
- Cash and cash equivalents were $1.570 billion at year-end, compared with $1.958 billion in 2022. Approximately 72% of cash was held by foreign subsidiaries.
- Total debt, including current maturities, was $7.214 billion, consisting of $800 million due in 2024 and $1.850 billion due in 2025. The Company repaid approximately $450 million of net debt in 2023 and $500 million in the fourth quarter.
- Whirlpool had approximately $5.7 billion of committed credit facilities and $17 million of notes payable at year-end. It was in compliance with applicable interest-coverage covenants.
- Working-capital items included $2.247 billion of inventory, $1.529 billion of receivables and $3.598 billion of accounts payable.
Segment Results and Changes Versus Prior Period
| Segment | 2023 sales change | 2023 EBIT margin | Prior-year EBIT margin |
|---|
| North America | Down 0.4% | 9.7% | 11.5% |
| EMEA | Down 10.5% | 1.6% | (1.4)% |
| Latin America | Up 9.0% | 6.0% | 6.4% |
| Asia | Down 7.5% | 2.7% | 4.9% |
- North America benefited from volume, share gains and InSinkErator, but price/mix pressure reduced EBIT margin.
- EMEA profitability improved as raw-material inflation moderated and held-for-sale accounting benefits were recognized, but volume declined.
- Latin America delivered higher volume and currency-related sales growth, while margin declined because of cost inflation.
- Asia sales and margin declined because of unfavorable price/mix and currency effects, partly offset by higher volume and productivity.
- Major product-category sales were $5.794 billion for refrigeration, $5.333 billion for laundry, $4.721 billion for cooking and $1.729 billion for dishwashing.
Portfolio Transformation, Outlook and Unusual Items
- Whirlpool expects to contribute its European major domestic appliance business to a newly formed entity with Arcelik, retaining approximately 25% ownership while Arcelik owns approximately 75%. Whirlpool separately agreed to sell its Middle East and North Africa business to Arcelik.
- The transactions were expected to close by April 2024, subject to remaining closing conditions. The U.K. Competition and Markets Authority provisionally cleared the transaction on February 8, 2024; final clearance was expected by March 26, 2024. The transaction will deconsolidate MDA Europe and is not reported as discontinued operations.
- Whirlpool recorded a $106 million 2023 loss related to the planned European transaction, including a $180 million fourth-quarter gain. The cumulative loss related to the transaction was approximately $1.6 billion, following the substantial 2022 loss.
- 2023 ongoing results excluded $181 million of M&A-related items and $94 million related to legacy EMEA legal matters. Investors should distinguish these non-GAAP adjustments from GAAP earnings.
- Management's 2024 outlook calls for GAAP diluted EPS of $8.50 to $10.50, operating cash flow of approximately $1.150 billion to $1.250 billion and free cash flow of approximately $550 million to $650 million.
- The outlook assumes subdued demand with gradual improvement, $300 million to $400 million of net cost-takeout benefits, approximately $600 million of capital expenditures, approximately $50 million of restructuring cash outlays and an estimated tax rate of approximately 24%.
- Management expects 2024 industry demand of 0% to 2% in MDA North America, 0% to 3% in MDA Latin America, 4% to 6% in MDA Asia, 2% to 4% in SDA Global and negative 8% to negative 6% for MDA Europe in the first quarter.
Risks, Contingencies and Unusual Exposures
- Demand remains sensitive to consumer confidence, housing activity, interest rates, inflation, promotional intensity and the broader global economy.
- Whirlpool faces intense competition, retailer concentration and customer purchasing leverage. Lowe's represented approximately 13% of 2023 sales and 38% of year-end accounts receivable.
- Supply-chain, commodity, logistics, labor, tariff, geopolitical and foreign-exchange risks remain material, despite moderation in certain cost pressures during 2023.
- Maytag and InSinkErator indefinite-lived trademarks were identified as at risk for impairment. Their fair values exceeded carrying values by approximately 9% and 3%, respectively. Further demand deterioration or unfavorable valuation assumptions could produce impairment charges.
- Brazilian tax assessments remain significant: approximately $470 million related to BEFIEX credits, $59 million related to IPI matters and $69 million related to PIS/COFINS input credits. The Company has not accrued amounts for these assessments and is contesting them.
- The French Competition Authority investigation remains unresolved; Whirlpool accrued approximately $69 million in 2023 and expected the settlement to be finalized and paid in 2024.
- The Company is investigating potential product quality and safety issues globally. Product warranty reserves were $206 million at December 31, 2023, and additional recall, repair or litigation costs could be material.
- Aggregate pension and postretirement obligations exceeded plan assets by approximately $0.3 billion at year-end, including $0.2 billion for pensions and $0.1 billion for postretirement healthcare.
- Cybersecurity, data privacy, product liability, environmental regulation, climate-related transition costs, labor relations and international conflicts could adversely affect operations and financial results. The Company reported no material cybersecurity impact to date.
Investor Verification Priorities
- Verify completion, final terms, regulatory approvals and accounting consequences of the Arcelik European and MENA transactions.
- Reconcile GAAP EPS of $8.72 with ongoing EPS of $16.16 and assess whether excluded M&A, legal, tax and restructuring items are recurring.
- Monitor debt maturities, refinancing plans, interest expense and the effect of any Whirlpool India stake sale on leverage.
- Test the achievability of the 2024 cost-takeout, margin, operating-cash-flow and free-cash-flow outlook against demand and promotional trends.
- Review impairment sensitivity for the Maytag and InSinkErator trademarks and the performance of the acquired InSinkErator business.
- Assess the potential cash and earnings impact of Brazilian tax disputes, the French competition matter and product-quality investigations.
- Evaluate liquidity after dividends, approximately $600 million of planned capital expenditures, restructuring payments and the $800 million of debt maturing in 2024.
- Review the forthcoming 2024 segment disclosures because the 2023 financial statements use the former geographic segment structure.
