Whirlpool (WHR) 26 Jul 222022 Q2 Earnings call transcript

Good morning. And welcome to Whirlpool Corporation’s Second Quarter 2022 Earnings Release Call. Today’s call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Senior Director of Investor Relations, Korey Thomas.

Thank you. second call. our to welcome quarter conference And

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

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

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

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

referenced Relations pricing comparable to are call Additionally, non-GAAP Investor the GAAP information actions are previously increases the this all supplemental in for website measures. items Listeners participants the throughout price increases. listen-only to a cost-based time, directly directed reconciliation most the announced section mode. our this of of on price posted At or reflect package

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

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

Thanks, Korey, and good morning, everyone.

are to into Before we the improving and structurally back step like with for results share I the the I’d the that making get quarter, better. Whirlpool you progress of

today We in remains business growing sight the We our shareholder growth and long-term stronger become have long-term markets has the versus operate unchanged. long-term then Whirlpool success a driving historically. clear outlook healthy and of entity value. a on line of a

high and daily businesses. temporary we that operating of consumers are even to portfolio taking, simplifying exceed will are transforming use and focused pruning use initiatives future. in and the Whirlpool by our industry are and brands underperforming performance. them Our the we Likewise, Based our on headwinds the business margin assets highest and will strong on in investing current more them

in sheet, we the are performance the perform work continues but see than our Today, highlight times, and results we the successfully past to long-term. a thanks medium-term. towards will while and Whirlpool to of the despite efforts to record quarter same we strong team, balance We over in goals hard will operating our better creation unprecedented our continue today on our time near-term focused and discuss business remaining second at how manage value pressures, delivering transformation over

world, as take a dynamic rapid again tensions, so sentiment. war uncertainty as past second on inflation, consumer needed demonstrated and have done the and subsequent early and actions that we geopolitical we negative a have in decisively, by marked operating the quarter. impact cost Throughout are we and well We in broader years, economic its

are working. We are initiatives only actions strong enhanced the cost-based on taken these operating mitigate reduction the margins our we cost including evidence confident in focus initiatives pricing strong that margins, to are and in broad have our And QX, industry not with world. global throughout headwinds,

long-term the for remain and of are over circumstances. prepared We on near-term delivering pressures focused regardless

Turning will results. to our second I slide quarter four, review

in delivered face currency. EPS Whirlpool and impressively a some of Even particular, the a we strengthening Our stable the second ongoing impact X%, America quarter, am EBIT X% and rapidly down margins, slowdown second In of have solid ongoing levels of future. over demand countries best of demonstrating EPS stronger quarter quarter delivered dollar even margins, I convinced our for and yet better that profit cost performance the we prepared the XXXX, that yet excluding a ever. levels region. revenue of with $X.XX the of better showed North structurally historic to of results inflation XX% higher slowdown. We XX% in key experienced built of this demand we the mid-single-digit and double-digit approximately alongside new delivered more in than again impressive, ongoing is relative

the strength we of the have confidence in we returning balance fund our in business growth, $XXX to with million continue approximately Next, quarter. and sheet, the to innovation shareholders while our

we $XXX charges. an for one-time agreement Additionally, of triggering of entirely Whirlpool business, signed non-cash the Russia divestiture million almost

action we Russia the and business. employees, shareholders quarter in it and best to course expect We be believe third overall close of the the for to sale our

Lastly, consumer us from sentiment led guidance year $XX revise EPS the near-term to from demand on ongoing $XX. impact to our full

into it highest context, headwinds second of history inflation additional highs put with despite that we and company, ongoing to EPS discussing. been represents guidance XX-year year running full the this have However, the in the at

Our flow Again, guidance billion to we focused pressures are in delivering in the of confident by we free cash unchanged. actions remains near-term remaining over long-term. manage $X.XX place with have on

price quarter cost-based margin Turning executed across operational largely globe, increased by inefficiencies drivers supply resulting the Led points, successfully impacted our Net EBIT XXX to logistics fully of margin. slide disruptions. price negatively by cost points margin driven we delivered costs our basis we basis positive second XXX expansion. five, of the and alongside from actions our energy mix show in by

a performance raw very delivering impacting operating and a inflation This points. solid expectations, our negatively of by with addressing line in basis headwind environment challenging continues margin be material significant and XXX margin a is Lastly to X%.

it turn to to results. our will over regional I Now, Joe review

good everyone. and Marc, morning, Thanks,

constrained expected. The the the was second seven, results continued greater In be supply consumer industry quarter than our Turning softening for to region. will slowdown the I American negatively chain. in alongside impacted industry experienced by slide North to quarter, we the review sentiment the

operational pressures, remain We implemented share to above the our offset believe the consumer appliance improved impact able our strong sequential over improvements, negative inefficiencies fundamental of X elevated ability environment. realized to confident remain of demand of times strength strong We We execution gains margins, as position XX.X% with were in pre-pandemic we cost-based industry throughout we alongside see of price largely despite quarter. intact, as the delivered continue share decline operational volume We we the deleveraging. deliver However, strength and the our of as and any usage levels. cooking impact the the business to increases. trends negative inflationary results in temporary EBIT

and to review including negatively slide excluding revenue was results in contraction the our eight, sequential was region. lower to I That near of East points margin approximately to in the reduced currency, inflation, in in war EBIT strong points decline Ukraine, by our Turning Middle Russia attributed execution by the of Europe, XXX The will more cost largely region’s was the X.X basis shutdown, resulting region’s revenue margin pricing expansion. offset by for and volume, declined Africa volumes drove which operations XX%. actions of flowing a quarter. The than impacted

production part standalone as strategic This localized business review with unique our positioning business. to of sales of Russia a it divestiture of is entity. Next, EMEA, as well be a our offices, announced we the and pending sold

the expect quarter. continue review of the the business strategic by EMEA our conclude to We of strategic to third conclude end the

Turning a our we sell business. business. additional Whirlpool to to Russia will purchase regarding into share of pending the sale detail Russia our slide agreement entered In June, provide nine, I

conditions. to sale closing the We third customary subject conclude in quarter to expect the

a with goodwill non-recurring we in recorded assets, intangible including million this the the which a of triggered assessment, in charges, asset result a non-cash comprehensive Russia of $XXX primarily of write-down $XXX $XXX impairment EMEA million As resulting transaction, associated region. and primarily million

employees for pleased and best our represents and with course team’s navigate has are action the solution our to our of We ability Russia. located furthers a find portfolio transformation in

sales to of which strong of results growth demonstrating X.X%, strong slide once I margins Net price consistency execution X%, region industry increases, for delivered region The review again region. fully softness. the by driven Turning XX, Latin environment. America of in delivers offsetting any cost-based results EBIT in this expected will our

growth cost-based I volumes The driven to Turning Asia delivered impacted and review of in the to by period. offsetting significant in actions India, XX, year volumes, shutdowns Revenue fully $XX slide in XX% margins the by largely a of EBIT resulting our EBIT prior cost attributed was X.X%, pricing region of will inflation. improvement higher region higher is million, as COVID-related region.

I year will full on turn over it our Jim guidance. discuss XX, to Now, XXXX slide to

morning, good and Joe, Thanks, everyone.

turning slide updated guidance our will XX, for review XXXX. I Now to

We including a growth, to while the slowdown, reflect is guidance industry than for we guidance demand multiyear current year expectation environment. reflect our there have expected appliance long-term larger our robust to outlook, full no our revised the change XXXX adjusted to have

ongoing X% and EPS now a X% X% we year. approximately for a $XX This of contraction year ongoing result, represents EBIT to a As $XX. to range margins of revenue of full approximately expect the

of billion net significant to Next, cash free generate expect around we flow or continue sales. X% of approximately $X.XX to

margin EBIT we full Turning the show guidance. our XX, ongoing drivers year of to slide

a our We points, additional net have points energy cost negative negative logistic basis XX and costs. from increased volumes resulting reflecting added basis the inefficiencies of XXX and temporarily by expectation reduced to

the with peak which primarily material XXX of our expect fully Including to and actions strengthening quarters. of of negative India, announced points, now basis Brazil the dollar, points of cost base expecting driven currency remain raw by unchanged. third the we basis other impact in price all expectations we XX drivers offsetting inflation, Next, and margin, previously driving second

ongoing actions deliver that right are X% margin. confident to We we EBIT place approximately the have in

year. show slide to for we Turning guidance XX, the our regional

America negative in with X%, quarter. negative reflecting our In industry North X% XXXX. reducing near-term X%, to expectations in line the America, are North a half with updated industry growth We global second are growth for negative to to our performance negative expectations second expectations X%

for of replacement supported undersupplied with by; three, remain confident a levels environment home market; XXXX, and appliances. consumer continued beyond four, cycle; two, we the Looking America, trends; fundamentals the strong one, engagement North elevated housing our of demand broader in an nesting

Regarding our in XX% approximately with region. margin, EBIT remains line long-term deliver expectations guidance, for America North EBIT which to the we our expect

Latin margin Asia EMEA, EBIT and industry expectations for remain Our unchanged. and America

of XX, Turning discuss will to XXXX we the flow. cash free drivers our slide

and Mixer. cash line inventory through to recovery, approximately of in our target earnings as this summer Ice level Stand innovation sales. continue time billion significant we We supports over investments. iconic in of of our net free cash investments XXX for to are $X.XX This billion, create approximately with new our ways while products of $X introduction X% of our Attachment expect our for with of modest These including capital flow engage new funding launched generate supply KitchenAid to newly our planned consumers a with Shave year,

related bringing second This year-to-date. strong us million minimal optionality flexibility. repurchased to completed. Lastly, outlays We to cash us positions of actions approximately $XXX restructuring been stock have in the these our our million significant we quarter, $XXX as performance with and with sheet along largely over anticipate balance

return track billion to XXXX. in and in buybacks on shareholders are to We $X.X dividends

our key summarize slide on will to it turn messages. over Now XX, I Marc to

what expect we Jim. recap you, the and have past material right global second inflation strong deliver a half, raw And remain quarter. the and quarter action Thank raw few unchanged, let we to me do minutes, heard you expectations our peak third second to in place inflation material over in

price Our executed. have previously fully announced increase cost-based been

pricing with offsetting inflation. the exit year to our expect We material existing actions fully raw

cost including been already increases have Additional initiated. higher actions,

prepared demand market. in consumer undersupplied in are Consumers strong to successfully We the use housing long-term to industry XXXX. navigate slowdown and near-term alongside strength demand the clients elevated continue and remains that The rate, in unchanged. our expect replacement fundamental

progressing high in high growth, focusing businesses. on are portfolio We transformation our margin

next very few of the to expect Europe and conclude our months. strategic review of pleased our are the with Russia divestiture within business We

our return shareholder to and cash confidence our Lastly, in to strong share shareholders and $X.X reduced XXXX XX% track These and in business our actions we outstanding the our demonstrate by are have billion high four the alone. over quarters in count on approximately we to of margin creating in generating cash sustainability value. last commitment

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

from line Rehaut [Operator question JPMorgan. from Instructions] your the And first comes of Michael

line open. is Your

forward, do of guidance, Thanks. driving that gain, the is sequential how hoping drop-off to to important, the obviously, decent everyone. also Marc. in my pretty was change also North in taking a well? the part America, share terms quarter see some to in more on for then going your you year mentioned progress in first and Thanks wanted in second -- months the the get full a it’s What your the share, big over little you part morning, expectation? driver think own prior how of, think is XX I in half. losses expectations? about you your Good terms relative granular encouragingly I of back but which given might as of questions, you that the obviously, the focus And past what and of

Michael, questions me and it’s basically, them, Marc. are America try should some Good color. North one call address also trends we let to same Michael, cycle, in add morning. which usage trend very probably of two we positive. There at it, Jim to, Joe demand So, going Multiple markets. is question, still The seeing on undersupplied positivity is see which time. the the by replacement trend, is long-term long-term as is structurally what a appliance, favorable, high housing driven alluded

XXXX, still elections remain fundamental But overriding have of end, consumer be and drop between consumer of now sentiment consumers don’t That April, impacting until May sentiment we to we changed war, mean, with cash in we in demand more positive denial consumer a means sentiment us. income, it’s these kind going away news you driven time consumers around much around factors But mid-term fundamental see not demand is bullish it’s Maybe ultimately pretty is all see year this can’t trend, remain is and a bad pretty that fundamentals led has the the war all and in intact of But is and a probably frame, short-term and outlook terms or which consumer upcoming now. So right do that I help drop year the the the drivers We long-term pretty disposable in again, sentiment to see that together did much what long-term on long-term not probably which end, it the available, trend. continue behind demand, positive. both for inflation, late our about consumer something of strong significant probably, dropped by inflation, versus demand. think, it’s consumer I for all November. because the off dropping no not pandemic, trends. driven we it, know -- there towards sentiment which XXXX

much alluded it remarks, year QX, gain increase in steady QX sequential share, Now, pretty a will over slight we you at it QX look end if as to put with towards of QX, last comes pretty small a when it’s slight, our QX. QX. QX the I saw and differently, prepared

constraints share, however So in pre-pandemic. regained transparency, becoming -- a of with supply all certain in the way, we less not we will and stabilize share, an the It’s but which have to compared chain issue.

can dimension that forward. confident We we this are make progress in going

excited Joe, is launches growth. some Marc. from just spur the that do to In maybe half will comments this we build some on back And have upcoming about that we help are

In is our But so very been, back addition the there and if we occurred. that we half still at period a remains it half. look remains and has the really the back in holiday in depression as light QX our the saw to the that the really increased positive where sentiment changing fundamentals outlook the factor made, but contributed sentiment outlook was the impact for the period, that to so Marc comments promotional

EBIT you your more referred and price non-structural to if the in for to is kind when the holding, just very if Joe, volume hit I appreciate part the or just a there on think, efficiencies today, I be would you I the XX%. love unpack that. in deleveraging? sense I of North of region guidance guidance -- get mentioned, reducing that’s promotions $X.XX to it drivers from of in as and about kind you And talked of know promotions But I’d that, XX% volume margin and are to you it Joe, the of in believe, maybe and that’s walk, remarks temporary billion, increasing American margin follow-on, a inefficiencies deleveraging. Okay. the promotions. reduction margin helpful, environment

Michael, wasn’t of track expect as for to Yeah. RMI, kind and to continue comment, have those period, mix, But we clarify that just maybe the shared know, I period, the as margin to rest less our the that offset fully on we holiday your year. the about of referring price all the themselves. of of promotional and kind you promotions

QX, the we is what So a a in promotion previously. to think, that new quarters were of inefficiencies occurred participate in volume that positive of is terms that, I of the standpoint, the margins really talking and the that consequence just deleveraging From company. as we we two. lower or impacting have a manage maybe stated of The so really kind ability news many that positive and that separating when and years also kind high as feel a of about ROI returns only price over demonstrated to space, some

a really mentality, company think standpoint. nothing’s from So I approach, changed there that that

We that the matter environment expect to what no is. and manage do that well,

just -- it’s Michael, Marc, Hey. again.

Just to North in page prior it XX corporation guidance comments. presentation And to show we current walk guidance of picture to add I is and and America. for Joe’s to basically margin the that definition our similar very would where refer it’s by

already what So in pricing there change question. did walk, assumptions the which not that margin the showed big probably we answers we our

promotions some the nothing prior we will go how because Of point, that course, demand always temporary that Joe’s a drop mix. of think which line we To is to a inventories just were outlook -- cost, there cost coming will market have certain but has we changed versus terms we largely in volume can from away with associated pretty and short-term. get adjust be with deleveraging deleveraging, slight in volume some and from convinced is our in much has margin price

that’s the difference So anyhow, so walk. in margin

North in inflation the context, down. again, had always an where and that margin health in think, to environment that and -- a business. being our was tells that of changes market QX, a demand this at America high put this should of see environment, to the the speaks XX% lot we and resilience the with about structural in in you business X% Now and That we XX-year of I positive,

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

line open. is Your

Good Marc, morning, are Jim, you? Joe. How

morning, good Sam. Very

Sam. Good morning,

So ask I are suppose listed have process. at was me the it’s disc know million least question you I the least that review expecting the will of the notable strategic in to to review regarding you dollar third mentioned that not It at yet EMEA I quarter. ops. by end conclude

idea in So markets get tightening a capital also the the weakening, a a sense and sale I of your and likelihood financing your if the are to the am trying an is -- European of of markets of to demand just light view is FX up that pressure. extent

So how your expectation terms sale a of is this consummate evolved liking? in would to be of that your

in is expect Jim, and Joe to will right the we as that through we this said further or quarter go and middle third then to could after Marc last I we of But start the are in. quarter, begin process. chime will the about with, and Sam, the we now it, talk process

And our mentioned the remarks a were environment was did business, considering so as we trying which in reached is along that Russia a here. necessary we assessment we and in of strategic of step past the least within in to our that agreement quarter this to an our the earlier, progression divest sanctions terms and at in operate

time. we not open. it many about terms at Russia sale in to the do But to did a the we Now into move have the wouldn’t held accounting yet give options appropriate of you situation are there. a in arrangement when an putting and answer It we we because definitive asked have are ops, point where for be discontinued for because

there’s third more the on don’t really are we any and we can past until where that’s quarter. we I share So this that know that today get

as just earnings to business all maybe we options anything to we in sale are keeping looking selling the adding be indicated are Sam, on Yeah. April call, and to table the the options one, clarified to from just this partial business. the

qualify see Jim’s Now a the table, a pure Whirlpool outcome the we not keeping quarter, be reduced change on it be this really to or point, the only likely had point, have Europe, pretty the what in and options would different option, the but speculation the much to the all footprint is business business would To at is. expect that to aware assumed the we keeping pretty would stated transaction the a decouple But earlier. are of part had originally QX much well on the environment, strategic our we and will to we review. before, review. by Russia of end be as that of, Russia conclusion we which given a broader of of come move kind we all But to do as

My by for be your like second year-on-year second first in in question, pricing about half it point going is or the looks better mathematically, than half two. guidance to the

get leakage? sense but timing incremental you there bit the sequential improvement Just of much of pricing know -- of pricing trying just any there is and that I the mentioned half a how Thanks. specifically of of promotional, how anticipated rollover, to much that first is on is a is promotional come little from

is Joe. this Sam, Hey.

was Just taken response over in. in actions the actions obviously, to kind in roll across pricing of multiple ramping things into kind going on. kind that. of in up come that factoring countries There There globe rolling of is they pricing There year earlier the also taken QX different on. as of additional is, in

what say, say, The the been is at, very bigger as year take factor is how of that, affect your at each standpoint, and of a that’s expect the touched muted that’s which or the has impact earlier, point, I on pricing will QX of the promotion that kind from levels final were obviously, where kind QX standpoint. promotion in first made of to or period. cumulative decisions to-date is and in a are we than, things are throughout will From of that So on years as different kind moderated seeing. I and we we essentially you pricing remain ago

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

open. is line Your

that attribute everyone. change channel the was drag the just XQ, and of could channel builder talk Good about what versus much if could you if you replacement and much of there? just seeing about are I demand Marc, how would you talk back morning, you the Yes. wonder the on drag to builder how on,

Yeah. David, add and Joe me let start color. should some maybe

all witness lot always housing U.S. think, there’s the structurally information the a market I experience, As long-term what’s on start best and -- going about a will I we undersupplied. housing with not market. housing an of noise

before We U.S. years need talked units then X housing about for housing and market have million housing years the several and of were said this million units. still starts many and X.X I more completion between

trends to re-stabilize and given of demographic Just give formation. that age stock household market them giving housing

needs. So nothing the changed has on long-term

Now, the combination which of were a obviously, short-term. well to the put I the in rate dent of home say, price cancellations, increase in housing mortgage big markets, slowdown ahead on and the led supply which extra affordability, would and

that market this XX would call will market. re-stabilized Doesn’t see we very that outlook next also necessary -- the have you forward, case, is a we going outlook, home XX I respect. So to prices be some say, and change it, and see correction I dynamic next the but positive the to which probably yes, think is long-term would months expect the the I in in housing, months, don’t

to pretty when Now you change specifically nutshell, our completions not understand appliances completions. the mind, dramatic need see a a of the the less. in see much Keep pace what builder we backlog, to coming on cancellations, we but it did order in also because typical a

QX. and see not in dramatic of Joe? also expect did we So QX, drop-off don’t growth but in by QX we a now a now lot

Yeah.

those see we which see the there and really home either on any area, from QX. new kind really drop didn’t all didn’t I a didn’t then QX see in starts. off new at any to on I remodel of what a build dramatic expecting material in Just builder is quasi information are area, the points. changes

information of our what’s terms there consumer one of was sentiment affecting results although of So not the that a QX. for is in in lot drivers

Okay.

seem follow-up a at repurchase guess, a I good clip here activity, running as you the share pretty mid-year. to be question, Just

above $X million have handle question got if coming of there your numbers guess, be, you I you capital billion likelihood how guidance? I correct. in would would the I think $XXX

David, Yeah. intend in in we forecasted beginning remarks, come year. we emphasize, at and I’d say, I right as now the still said the the we earlier to of where

change dividend turning And about up billion the we then the of that and about are half conditions of our were now. the the doesn’t the but our estimate right which all repurchase where majority that, in the year did in with so where shareholders, makes share full a position $XXX as first we the market year cash to million of as for $X.X was, that well

still level. tracking are We on that at

Your comes Suzuki the line of from Liz of next America. question Bank from

is open. Your line

guidance margin? Great. thinking look about getting and annual growth end from toward the goals value the is Thank EBIT net ongoing the then are you. creation goal you X% EBIT How XX% long-term to And organic your just what X%? path sales walk year your back of to to ultimate like margin of to XX%

there’s Marc Liz, and a couple Yeah. components. of obviously, it’s

see the doesn’t our but on current do indicated demand outlook. long-term earlier, we as is topline, all, the environment First we change temporary, of

needs, XXXX So we is would we usage not now higher markets we but healthy and do underling expect XXXX assume growth, and driven it’s, housing right of appliance. replacement a by by by and this or XXXX market obviously, guidance, see again would XXXX

solid, to America I assume particular Again, in want that still single-digit current the pre-COVID to reiterate, continue our to to probably, the we XXXX and mid So we In XXXX. that’s growth rebalance North market levels. back XXXX expect environment, that’s market right guidance, share not thinking. but now

some XXXX. over course So level to share you and XXXX a extent beyond have the the certain probably of demand, of will gain market

the a is driver topline. of that big So

several to dynamics market India. share markets, and In addition, have globally, market like we underlying strong -- continue which growth in between the combination

the strong on the We more growth, have topline. single-digit, organic on that’s high

right had Liz, were a will X%. X% much shipments and significant side, which to typically related volume which of Keep margin includes you constraint, mind because go kind supply also a all in the costs, which still not On pretty obviously extra the expressed deleveraging. are cycle, guiding costs we kinds to away it has this now, several again, in year of that are

lot closer a margin of with that to high will additional just more action focus that we believe equation, cost and So getting out XX%. to it businesses XX% and more on start taking XX% coupled that the then be you

and businesses is review invest have even said to Liz is, is even structure go then it the Marc higher the strategic maybe would to in turnaround And forward Yeah. so as to scenario Marc focus as about as just we there. business on a today you in Jim. not our we what and talked top of the on and what is where we this. alluded will we add that a this there a and talked fundamentally and And about that’s be different margin no to EMEA it situation, matter keep have same

all of that XX% get future. in us the of are these to kind from to So, XX% the factors X% the that contributing

very much. Thanks Great.

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

Your line is open.

first the morning, more on bit everyone. Thank Good you. My production things. side little is question of focusing a

You mentioned moderates? today chain, are this gain those facing key a about are you easing that you about and the quarter. the what the that supply of share how as you bit Can of you headwinds are did talk just state the demand thinking

we supply QX than early probably, disruption, but still saw fully basis, reflective globally. better we seen America is better the and quite until fully what normalized don’t of little This that say, Susan. much, situation still have significant forward until May. going see a we expect chain environment, it’s pretty to We as what I North April, last impacted, bit focused, supply would significantly a April more a got year, still but chain Hi, but progressed. May On

before. have number have a same level So a we would but or to reasons, as sports the elements, but of will not still you for disruption

chain supply year. in away term, to were ease, constraints continue not going So the but completely throughout to go simplistic

forward and with Specifically we drop-off we year continue adjusting volume, we inventory production April, and inventory, see frankly higher the did our so a or not do are it inventory from because we and slightly from what and wait as level. had in until we production, will correcting production then we right minds, we in on the put line elevated you are June going assumed to market forecast, now are going end. to towards expect us, But we in already would what differently, levels industry June with to of demand May probably is

Can Okay. that helpful. as little to as relates goals do to your see think that Marc that about taking about in macro you changing. actions question and the other environment mentioned consumer and the a macro is, maybe in is the talk of My thinking you America? more that North you especially it follow-up you weaker are bit the the especially the commentary have balancing extent playbook a you what decisive thinking That’s responding to you within you relative are have, things, to about business promotional side that about how as you

starts mean, now think, a XXXX. and I many macro -- I all, true XXXX are you I The July it January different companies. it’s Yeah. first we Susan, have mean, have from it’s of assumption obviously in assumptions with macro for very that part

we around one, this different us. know there’s I in around scenario, our opinions a environment So, recessionary assume do and

clear can a -- You but now view, depth scenario very our our June, right probably, about of and is in the that that around became main July. duration argue we

starts do and are said and aggressive I why So, in taking but turning accordingly, actions it which do inflation actions. we have think favorable, we that’s which material as notable favorable, XXXX, we more earlier, QX, but and very we raw additional on believe We extend QX side. cost we in will taken being playbook, above beyond, peaked focused have market the like the are largely recession turn our on cost in

logistics with inefficiencies, many associated managing headcount in costs. but and cost material we disciplined express be facing side, where the and would the were we all also side on very On

side, taking actions it, we cost on are call from playbook. recessionary our strong So

in recession got eye past every addition, have an In the has on cash flow. you proven keep to

very should pleased very we we flow. the we context, on are So that -- to -- capital cash net flow that a are and us capital also cash on guidance working in in expect scenario keep to manage I net the working able disciplined and our how am our and are we be the you accordingly,

question RBC comes line of Kalata Markets. Capital next the Your Chris from from

is line Your open.

taking Hi. Thanks questions. my for

help increased points kind seasonal the you how are in similar assuming in hoping a decline be of activity XXX magnitude promotional do basis that or helpful? of came I much margin you America of from Just going dynamics, to the if back North expect back year-over-year would the there quantify half, was promotional EBIT and the how you to any promotions trend could color

price talked of very Chris, mix Joe which Yeah. earlier, half in of company, start with this America, here. for about for the at the about that of But business. I year, total because can look is is Jim. North as it’s chime And we when our kind maybe we reflective and will

said see promotions have margins year, really benefits now coming, back still that that that back on that whether We we price big expect overall. are our to or impact half of don’t so being the still would it’s the year, of half in the have in we imply the a mix

come that’s impact the deleveraging one, we come or now the freight to warehousing more level reduce have logistics managed right lower is or from; which production a or materials been just again; or business from driven and costs perspective, we a on whether and to cost As volume as talked levels. had demand about, of has our inflation margins it be labor have

big company that. reflect two if there those So the what overall drivers within you at margins, look and gross even are our that’s

this So a it higher where there is costs just assuming a is of not are. that mainly is or environment promotional reflection anything,

else. to a a anything we news elevated deleveraging much kind standpoint, are price didn’t on Jim’s new impacting promotion QX build That in the what’s in pretty QX, was just the that’s levels more Maybe to that expectations that so From referenced bit. did the the and so Yeah. occur in remain, see static those earlier points, call had cost. than really of

the kind of And just into North drill to Understood. sequential for margins. America cadence

Your second year half a EBIT up. XX% guidance step for for implies the

that assuming way can cost help provide you same, there some us outlined another you pricing a you help the incremental in quantifications on assuming then if drivers key how the program, much cutting of promotional out other that is any and announcements taking? driving up actions you the are stay sequential yeah, break to addition the -- step could guys dynamics to of So,

we know what drivers so Yeah. I quantified and hit say broken I those the can don’t really haven’t specifically, out and there. is, that you

price As in we increases the Joe in QX talked fully about are took of running that back year. earlier, half the there

have the about cost that saving and programs Marc we we ourselves a doing this, You are have things prepare different now to kicked recession. for talked off

half we you half year. the the begin then year peak in about are savings too, that, larger become the look now. at of the as we hitting material And back those talked seeing maybe within as are of is to the So, we stable back being cost that

drivers margins. bigger the terms when in QX into are those look and QX America of from we QX North So

be if And And that in Marc. missing you all, I North to being What to QX and we in direct, Chris, think, for QX. QX I with mean very it’s and first XX% QX is, apologize close XX% at here. with look are the pretty -- margins, you America, of are XX% point on

and at inflation much on rate, peak just and volume despite in pretty environment. are run despite will the be QX we QX So negative the

strong. are with I would spectacularly this given environment margin, North So, American the say,

how and business deleveraging are and strong historic volume levels. with again, above all is with demonstrate pressure. clearly They that underlying any that’s We the the all inflationary well

competitive you you don’t find close North these the at competitors to who I if American also margins. So think look even will any environment, are

are the North that American is concerned margins going think I So price, and forward. a others

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

Your line open. is

questions. follow-up Two Thanks.

is more promotions driven that participate competitors market promotions up promotions all, or your market inventories a intent an what lost not volume to of either in half I -- seems rebalancing it a if through year, retailers normalizing understand if industry period back at pre-COVID try comment just you some share and that and that of environment is is not share the your intent from the suggest intention coming certainly of or to to the to volumes some it’s levels softer are your wanted consumers, for make right year made outlook clarity, back softer by so of in the about participate First what for in are and bit heavy, does time? to it

Eric, this is Joe.

Just environment. at look setting a kind what question, if even transpired of a slightly in response up you QX, share QX in to QX, that did grow we in to depressed

those it’s that’s think -- creating. share and promotions, is continue improve they in there a case of market. that’s from. to are we to pre-COVID in terms and back I beginning frankly factors are rebalance different and that will look we going We levels review value back make XXXX, into sure in So to the We for kind where always to are the the opportunities mean, of always half

a more I so at a look constant. that And is bit of

the that think disruptions are I now chains. I we some supply past, say, on will of

kind XXXX, into and to constant we slightly excuse also bit how is constant a a to the we we we is want inventory in to said, as the that promotions levels want QX think of participate and of we a We most into we creating. a go I way are back me, it And right value expect able grew, XXXX able and market get continue of that. into where of bit put are half we the the production then is in where it, to

rigid a creates into have what approach We what very approach that will back transpire half. and doesn’t you rigid formal on or the -- I see and think value -- that

Okay. related cost the just And productivity. other then follow-up to

in business second of volume guidance you I hear spoken to I like It the implies it think cautious but the the say delever or on the again, first in half half the volume, a does similar. half, in have it’s just is was roughly consumer? sounds similar you assumption less this, more the why a but half headwind. back the guess the

it is Yeah. in cost, to year-over-year and cost year, that a you Eric, this back especially imply looking less the of year-over-year, are I half the would year-over-year an the at impact. is here that is And think Jim. bit little you take of when what

last so is that a on thing pressures Now a beginning the of lot the back because saw we ramp a year-over-year. and throughout to of year that’s these of part inflationary half up lot of

that of comping see against first pressures was inflationary part That’s half back the much in the it. of last the as half year did The half. first we didn’t year a

areas. second volume the cost of as offset as about as actions such here, things of back when the such are at for in helps year-over-year, to half other looking headwinds back year reduction of why the deleveraging hiring, be some at the and of it talked that we talk you we cost the are about, look still year the points. The implies thing about would are slightly but back that That the seeing discretionary our the some an expenses offset XXX year half we much is, full we but better earlier, things it’s not those that’s our we that in basis the net the some half at with of getting and reducing

of guess the I end we to Q&A are a So, coming session.

moving parts. first of It’s you today, heard all you all, a thank today. as to a there I want for of lot So, joining us Obviously, is dynamic.

business changed by we talk be to pretty second ever guidance, like, frankly, QX year, a to it’s going half year XXXX of the continue don’t think our environment close demonstrate guidance going Yes, environment the the in line all challenging we history. will can now but You we have call back in can But like a and do so. it think about well would and towards it actions but best up XXXX we to for forward. which the are make but I will tough in definition. any a perform very we our we the another for very I best we well and We

joining day. thank wonderful again, a have and for So, all today us you

Ladies and conference gentlemen call. concludes that today’s

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