Whirlpool (WHR) 21 Oct 222022 Q3 Earnings call transcript

Good morning, and welcome to Whirlpool Corporation's Third 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, and welcome to our third quarter conference call.

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

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

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

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

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

information We baseline posted Relations Investor of measures for GAAP adjusted business the on will our better in section the reconciliation comparable directly website trends to with measures. supplemental our items ongoing a directed also of package think analyzing most are non-GAAP operations. the provide the Listeners for you the to

provided that a materials. demand time, additional quarterly inventory, earnings participants information At to be We updated mode. future or in are not have provided all will also in related costs listen-only this fixed and regularly

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

As to more two turn ask And that ask than I'll a to the with no that, Marc. over we questions. call reminder, participants

Thanks, everyone, call. Korey, earnings to and welcome, our quarter third

agenda As results. quarter third Slide you discuss X, see than from just our on today can our we more plan to

trends. for first and as in a favorable our we beyond in discuss the reinforce operating to call perspective step as helpful necessary are unprecedented the consumer We and investors strategy the long-term well to is item, time do times, long-term back we take results demand detail. mid- of on it In broaden and and will agenda QX QX today's our horizon feel

clearly You recessionary of a that consumer are demand reflective short-term sentiment environment. will consumer and see

our through QX the that show laser-focused to macro strong the Whirlpool ensuring still negatively. irrespective are down impacted time, have to we this managing we a elevated. environment. say, Needless has costs We're expect cycles. the which you would successfully changes business of second item, come agenda on a at in you rapid strongest will that recessionary combination of While input track record same in the environment In

and take decisively, we have to action quarter. we will this have, so We again continue and and early done

Beyond the current in strongly tailwinds in setup. America. and particular And in demand post-recession attractive believe recessionary our win in North challenges, very is favorable the we business positioned long-term to this well mid-

an agenda Joe portfolio is to in this But as third business. item. will more I We quarter provide on to it turn in high-margin our item, the review over will to the update transformation, agenda our high-growth, towards a fourth third detail. we cover finally, I'll which move results continue And in first, underway well

Marc. Thanks,

X. Slide Turning to

performance that Our inventories with XX% say declines ongoing and of our negatively. consider aggressively margin this be countries North the impacted this do inflation volume We million quarter second compared saw elevated cost to X.X%, EBIT to QX reduction Needless with of our EPS margins $X.XX deleveraging balanced. in well global production. ongoing delivered very approximately America. in impacted We now results the EBIT we leveling our $XXX was response, globe, that and industry by is In XX% to now double-digit key across significant declines. quarter a by In demand inventories reduced we off.

returns. While are and strategy the that and we these we place deliver actions strong performance right remain and have are confident shareholder below positioned in to expectations, results well our

by impacted the XX% faced the currencies throughout fourth on we most will and Slide X. market ongoing through give demand. has move more of interest XX% in industry context further Ukraine magnitude to I contractions during similar and marketplaces, Across declines inflation have on the and to of expect key and rates, our the quarter. world, weakening turning decline quarter increasing country. we Now In the and as U.S. consumer weighed the war been countries the sentiment in by

X. Slide to Turning

same we much impact the from million COVID QX demand lowered put by To as fluctuations. within positioned with production this XXXX We taken to proactive inventories. the shutdowns. the shipment will in inventory is to better the In within much our manage of total, we steps You reduce levels reduced level XX% significantly Even when see quarter, this volumes pretty context, we though quarter. were global are in production now QX reduced faced $XXX the painful near-term of volumes despite quarter. the

Turning to Slide X.

inventories, we decline, to inflation. elevated addition of experiencing also persistent industry our In managing are in and response levels to

market absorbed billion logistics contributing $X.X to in a demand chain, goods the We entire costs. with our energy we've and increasing of our inflation well softer two Aligning and recently, factor over years, by also thus costs across value XX%. increases sold raw freight inventories performance. was our of Over last materials, more experienced cost

of when normalizes. of As the expected, quarter high and market inflation globe, the expect costs remain historically persist Whirlpool XXXX. We cost positioned will Despite first inflation elevated. and throughout well moderating do the XXXX the half to the in and inflation macroeconomic in peaked headwinds to remains environment second capitalize across half

EBIT the We Turning of to show Slide our margin. drivers quarter third X.

to slightly we with XXX the continue to responded season. price upcoming price/mix We are points declines, for the that holiday We into and basis quarter. increases and previously strong promotional activities cost-based accelerated continue increased industry announced prepared fourth of deliver will

marketing see a point was by margins delivered inflation we and the X.X%. volume technology the net EBIT material and costs in basis by foreign quarter. dollar with logistics offset Overall, U.S. to spending, successfully strengthened gaining reduced impact the ongoing traction we cost Raw was than elevated as currency actions cost. more and expected negatively which margin begin we inventory, an basis points, of the continued impacted during of as reduced While deleveraging XXX associated impact drove alongside energy and XXX

American region. our XX. Slide to Turning results I'll review for North

our sequential improving saw slight network, As we availability, optimize gains we supply to the in share quarter. continue

to reduce region were addition our temporary impacted negatively our pressures revenues continued inventory rebalance for by levels. approximately XX% deleveraging to down inflationary in delivered levels our with did weaker Even related challenges, these demand. the However, X%, the inefficiencies, This and margins We driven operating production quarter. volume aggressively margins.

clear in high-margin Looking And on are ongoing and XX. to businesses. to to forward, of we excited portfolio acquisition close leading unique the of on transformation is the add InSinkErator and brands in transaction high-growth, our of investing our opportunity about portfolio October our commitment a delivering accelerator this expect

North to American confident We the in remain of continue strength our business.

Middle I'll XX. Africa results region. our Europe, East Slide and for review to Turning

portfolio foreign completed our of XX. Revenue of part by the impacted As points of August business our on transformation, XX currency. negatively we sale Whirlpool Russia was

in sentiment and cost the impacted lower Russia foreign consumer approximately by business inflation impact call. Marc review currency, as offset volumes Excluding in cost-based and to pricing was X.X%. than the be revenue The the strategic update of down will margin more an resulting and our inflation, X%. in actions by of continues war EMEA region's Ukraine on were a provide EBIT negative of later the

and EBIT. actions. continued review to The declines results saw our pricing inflation region these cost demand region delivered XX, Despite impacts, our Turning cost-based region. negative I'll Slide more Latin and than America X% the offsetting than for significant more

review XX, Slide for I'll Asia our region. to results Turning

declined more currency, offset EBIT X%. actions of revenue of the leading inflation, to X%. by than slightly And margin ultimately Excluding cost-based below were pricing an impact

Jim Now, turn to year I'll full over to guidance. our XXXX it discuss

Thanks, Joe.

XXXX. Now guidance turning updated to for Slide XX, I'll review our

QX. deliver We EBIT quarter fourth to expect similar to

have our we result, EPS a As $XX. revised approximately year full guidance to ongoing

around North approximately except EBIT Asia, the trends the X.XX% full revenue with contraction year, XX% We And of have America we of quarter. X.XX% flow regions, year. reduced expect We of reflecting ongoing expect and all million for now of cash X% the to of for during margin for industry net the experienced approximately sales. expectations continuation $XXX of generate margins approximately we free plus or a

of drive mid-XXXX, revised of X% profitable and X%, expect macro to continue free and margin have trends EBIT cash to cash XX% the growth to committed our remain flow. to conversion current X% long-term X% to of environment we While to guidance XX% these to goals expansion our many reflect we ongoing through of

Turning line fund flow with capital expect to our expect guidance and our billion, $XXX XXXX of of $X.XX $X.X billion. of innovative in to for the With our approximately we cash will These of unlocking our net to continue we We free launching of invest organic products. growth target now to approximately generate constraints flow. are earnings free cash sales. drivers cash discuss investments approximately Slide million and previous X% of expenditures capacity XX, in compared products by to

reduction reflecting expectations, the lowered we Additionally, working previously actions. inventory our discussed capital

outlays related cash largely we Lastly, these our remains have restructuring unchanged expectation actions completed. been anticipate minimal as to as

our over I'll to beyond perspective XXXX. provide Now, it turn to Marc

track want operating Thanks, bit strong Jim. to a economic cycles. record I our spend of demonstrate time successfully for of various to

Turning to Slide XX.

that actions. energy, see from with inflation early cost-based logistics pricing have across faced You and materials we board to decisively the and when with responded

globe category seven since cumulative driven every in cost-based product and of actions the price every quarter and in promotional cost-based of pricing execution positive a strong impact XX%. nearly across price/mix pricing value-creating Our delivered we has smart have actions channel, activity XXXX. nearly broad-based mix With

the costs as of by around our challenges, This Slide XXXX. $XXX cost past reduced fixed reduction further to macroeconomic In takeout total such costs, Turning the discuss I years. logistics and salaries, factory the also fixed program reduce will Despite to the our fixed parts in been we've inflation, that cost or able which reduce over fixed year. variable experienced have or of we initiated logistic in base. every million six X% significantly shows costs will XX, and the $XXX an chart net SG&A our response over current to million we approximately cost our

challenges It which our an of drastically current we from volumes once As us will before, these has recover a reduced step breakeven in temporary long-term improving mentioned benefit margins. structure Whirlpool weakness. point, result actions, important is our successful of as we've over years industry And have as shown during the past by XX. years. history financial on headwinds responding these in past through usually managing results the And Slide to facing, we evidenced are the in as particular, a proactively been

with EPS growth and strong Our structure our margins, business significant EBIT improved ROIC. financial multiyear expanding shows performance

per rate share improvement Our improved annual capital XXXX. EBIT a over a with ongoing with approximately with invested compound ongoing rate returns since strong growth on our earnings compound XX%, a of X% has alongside growth and annual six-point margin

are Now long-term turning address want to well XX. I benefit from we positioned to Slide tailwinds. how to demand

we we're optimistic time, experiencing about long-term trends, short-term the very America. are in North at particular same mid- demand the in and demand While softness,

the you more by demand. appliance giving Let me start a U.S. perspective detailed on

demand. discretionary calls, previous has the earnings represents XX% two our components: currently fundamental in which market; discussed total demand, As it replacement of and

usage of cycle appliance of the due discretionary replacement XXXX XXXX And to is replacement ultimately very appliances. years side, stable expect the evidenced past has significantly a demand fully momentum increased further which demand With the a the over to What is recession recovered see great from in even driven behind housing as connected trough replacement from a been do XXXX not and has on us, growing. still our now in side we the by we data, which market. the demand

Moving to home time, essentially haven't you from can appliance sales appliance slowly prerecession over but recovering the At strong levels. recession, existing see Slide demand to overall connection and home is recovering a still sales XX, prerecession also a same were great demand. levels. reached slowly between Existing clearly

well the show keeping we than as XX, Obviously, over a mortgage buyers sellers view rates. in both mortgage as granular shock, years. existing bit in mortgage reflecting more our XXXX, market Slide from prediction which to keeping rate fixed as existing next to well data sales away significantly from sharply lower new rates, selling the two prospective declined are the due of current same as the a Turning home

turning improve and that per that units change demand inventory years. million to And do year. there's slowly fact averages historic to expect millennials homebuying back slow compounded reach the for ultimately, more to existing to X above were doesn't housing However, home of historical sales down We as home levels. prime appreciation they pent-up price

Now housing will the in U.S. turning I to on Slide share my and XX. its perspective impact new Whirlpool. on

appliance of U.S. approximately demand the housing New in XX% contributes

construction for than housing historical has significantly a lagged New averages decade. more

peer XXXX X.X a only units. we much were X there leading of oldest housing this history. inventory XXXX For and million housing undersupply in the country's level, to million year U.S. below this XXXX a which were stock between to one from span, new build. few estimate In XXXX, approximately XX-year was consider in X was million in the to of But an total, housing of perspective,

call to to While progress we XXXX, supply we million or do not X.X do to we in expect new XXXX of XXXX level. towards show what expect meaningful units X.X million steady-state this housing reach

XX. perspective some of Slide to outside appliance will major I U.S. the Turning share of our business

the growth favorable to expect demographics in very rate. a accelerate low India, Americas for India. long runway We in very has due win client still and to penetration and our a particular, growth

we best Brastemp in are washers continue also to frontload with recently And each and with India, expanded in of and this outside including $X Mexico. our replacement the in 'XX, Combined want with demand well U.S. We India, of expect Consul production India to the generating billion Canada, capture just share Brazil of in started we fully Brazil, business. in sales and to the we invest our in a positioned majority stake in portfolio Elica brands, positions in and we offering strong

now on margin on last higher business. item event progress towards transformation our to our move growth and me and a portfolio our discuss Let higher

a see As efforts Slide our are remind will Slide business. can underway transformation add portfolio to some to accelerate of for and the multiple and you growth I portfolio. you XXXX, will XX, a on we executed business streamline time. that three margin and strong InSikinerator have XX, higher the towards On to optimize our have steps Since been excited higher pillars these portfolio

and InSinkErator, our North adding business appliance major EPS of have another over And yet largest accretion delivered hot iconic business, strengthen appliance industry, waste brand and small the the of is of 'XX. strong the addition significant more OneMed America, global approximately taken step specifically commercial manufacturer with in the instant Our Whirlpool. disposals appliance than XX% bringing dispensers to the in XX%. margins both food business water our $X.XX U.S. we of

XX. we acquisition October to Joe expect the As mentioned, close on

significant to as we continue as to in higher to building shareholder expect continue invest growth and Whirlpool deliver We business margin a higher returns.

XX. to the will business. Slide turning Now update on an of EMEA review our provide I strategic

options our We for of long-term a business value. have been assessing to number a maximizing of goal

guiding have review: received negotiations two, investors. the Whirlpool with most for navigate We future narrowed this what two two number one, in a for is creates principles interest We the of significant Corporation; required value as strategic final what the success parties we and from to Europe. discussions

our provide we share have also external the transformation nature Given ensure business. fourth high-margin high-growth are Again, the our these plan. details strongest with earnings business later an for than we we reviewing parallel our to further no our shareholders of continuation and update confidential call. towards quarter employees options, In internal on further discussions, our portfolio supporting to unable and is but a will focus revisited

test We of evaluated all our segments pressure have business alternatives. strategic a and completed

to serve attractive to diligently region. worked a alternative business and have option. sustainable we comparison our case and path this Additionally, Ultimately, will develop for any a as external

Now to let remarks XX. turn few me close a and Slide with

operating the successfully significant best headwinds we still industry second cycles. expect be we're XXX-year facing, in record XXXX track And proven history. a our of to have through the year We despite

the right with strategy current place to navigate raw decisive have environment. offset material the in We've actions. We actions largely inflation pricing and

will We cost have million and in adjusted actions initiated current inventories benefit demand. the $XXX deliver of to XXXX reflect which

temporary and are value. our time, Whirlpool growth same that strong to to are advance deliver based us long-term will continue positioned exit high portfolio operating taking, leaving the on the and We industry outlook, the we At initiatives we continue to well our current margin. believe shareholder transformation, reiterating and we low

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

Raymond of Instructions] Sam from Darkatsh the question from line your James. first [Operator And comes

open. line Your is

of A questions. couple

might around second ask going I production not mean originally yet first around I'm raws look but to mostly -- why raw I production. the demand so was guess what I quarter of the possible guessing fourth of you're and function was spread like. a the you entirely the that's material The in wide, and inflation sure

thoughts. more really I'm so, 'XX And in your interested

be I And to steel contract the of and remarks, given raw might that as first have mentioned you. material half the I'm year-on-year. think what 'XX, in see you that confused prepared why might resets your inflate you

terms quantification for raws So clarification give in could you're some what of you more or year? expecting next

it's Marc. So Sam,

the maybe commenting production reductions and materials, on first raw have then feel we about I Joe me talk and inventories. Let about will how the

more. material, as obviously first EBIT all, you raw that, we in quite bit expect QX. we impact saw on obviously, QX So a much indicated, in And of peaked has, element of an was and that X.X% cost the margin, is pretty still that of that on

not QX materially However, better. being

why One -- I about there's come lot talk first Part not emphasize reasons yet, it's prices down is of and the better. have spot QX. whole not me let yet. two So materially a is reason but

part raw mind The or the steel on is of similar contracts contracts are hedging materials in our parts second keep particular in big plastics. and

spot the prices point. see terms yet not contractual direction, right at they fully one the are the with even visible, will So impact start but on in you moving

I'm So glad really clarify, you're raising it. and to

it's We ease. first not the On half, increasing. it starts we're saying to say

half. materials. earnings call we you an the we in expect come kind you dramatic easing half, a much see than material coming of don't year-over-year, and see more production? throughout down see first and half. do give down to But But raw on the our the and of comparisons I first around think absolutely favorable materials in much So, think do you change more to will raw Joe, we back detail raw will starting I January

see we softer industry Yes. a bit had Thanks, Marc. This is anticipated. little Joe. production, Related than the we to did

saw were we in we our to market sync to production right-size with actions very decisive our ultimately ensure we where developing. made the inventory So and

kind continue of QX. We expect that into

were actions upcoming right-sized pronounced, to took the of we we short make XX% for were sure demand in holiday very promotions production that QX then ahead those Those ready a and in we saw so and that us. actions manner And globally. reduction

in that's level remarks, that a prepared historically. I we as indicated So the not seen

early parallel given other in just all be The COVID, out happening. the amount on we production a would similar of took things

market. decisive, got with very us where than balanced to forward. pronounced, but it very it we're So to But a nice the going going be responds position think we

Joe, in demand can much I'm why that's I on production retain apple based of you you the to up in weak back as fourth start would at as you as think quarter, least modest ramp what need anticipating, you're trends. one being to just the out price 'XX still to big and the took raws opposed why once bite come see off. as you confused stabilizing until really keeping to production

what than Maybe intent Yes. from quarter we right the worse industry clear, right-sized the got was us that an we're the to the is in which environment standpoint, that slightly saying we level. wasn't in, given anticipated

as So is from and with production we'll typical. essentially here on more more sync output be in out, managing

of in big QX. And isn't a so, wasn't now ramp sync there for And QX. was That ramp our synchronizing a the about an then assumption up. adjusting more It with it's down expectations and or big in implication.

Marc. put much QX, what QX, we'll we it produced sell. we And North -- different In more Sam, numbers both In Or be will sell it's produce in significantly the we pretty aligned. producer, much sold. less these America, that than

terms, ahead production. in of very getting North absolute not that careful we in about maybe ourselves be higher in America, slightly than QX, now but will So

it's more P&L to you base. take think other But to the behind the it's felt, why impacts we're not inflation peak decided and you fully I'm we when us, convinced volumes was produce just why So higher are cost reason the QX, want cost frankly, behind QX, step us. would full big glad a if in that we in

us puts good an now, So, to with step quarters. from position we that take very couple a and want behind us next and operational in to deal the of perspective it's the

you want That's Marc. And add, true globally. also to

things different. we've So is Those given that globally, experienced. that phenomenon more which slightly all of true the are important are the characteristics themes

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

line is Your open.

if Two I could. things,

What in realization price/mix XX expected the XXX was, influence the different you all, quarter think, days points that of different changed ago. than to result? basis I First

the -- Really, a were consequence, price/mix to we did that productive. get a availability able market better And go mean, This as we we I thought is Joe. ways position. in were to

function intensive position action us us more originally, the in go-to-market seeing that and availability a an was from was or than things: opportunities Now being slightly anticipated of a market. and that better we standpoint of in couple elevated a

to availability are in both As consequence shares productive. And those our QX to QX able were a go-to-market North we a consequence, specifically, approach. gain America, slightly and as from of

availability. less increases? on participating promotions? that a go-to-market what specifically, buying Okay. approach? -- can on you price the on you in That down retailers on being better. trying availability this Is go-to-market more little can you different. understand just something Like price consumers And this Can mix? out, the I'm you makes Is that sense. I to in appreciate Is this I was just figure I expand is is guess back the pushing increases? expand But please. it aggressive bit,

there's in components there. Yes. I obviously mean varied

for answer what that was promotion one there just some isn't there was I would accretive. say is all thought things. involvement So we But

There we out. participated came some had a So, new was launch launches. that dishwasher We also there.

constrained were have available so environment, were And well. either to innovations different didn't us. behind of the those where large, But those new and some than we some as slightly two by assets there investments

this Eric, maybe just adding one. to

we again, the also all, included price past First increases. of about slides that's the why

in a America, period. seven We price short globally us have very North in time but now, behind increase

it's of not yes, the pre-COVID specifically ago costs on example, happened to passing more periods. a the year or and year shy been slightly more haven't comparable market want ago. certainly is than, we in half I What to for So to point marketplace. questions, QX promotional also to out your

-- is and to elevated expect But it time. forward. to can't we promotionally more see that's it promotional, you probably what go more pre-COVID compare So it's also

good just news invested. for America it's what and we're dose is dealing sequential between our So, business we gains seeing on somewhere that's right now North in the share with start the

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

open. line is Your

drastic a in to little took that seeing the channels? the talk steps you businesses. But appreciating what you bit you channel out your about align are inventories, Can

seeing By we've a supplied and large, By with few That's or adjustments be exited in we oversupplied. of that believe were were we is throughout XXXX, the to large say, we're across feel the channels. We we channels. holistically our and a to fairly made undersupplied. lot quarters perspective well we're I And a We longer balanced -- this we're what right all under back, positions is adjustments of would do that constrained still Joe but across has And again. made. the that frankly case. no we QX where need with the like we positioned given don't all

feels really in think good be like really a I So, to end. spot to wanted that and

And Okay. North And little set bit that are what the XX% the longer-term Relative see American think that a longer-term we'll margin you've we in the a order to perhaps where that back think that the where talk as right how bit is you range, you business target Can is? that to about need about the then of being at there? and consumer in a mid-teens us still steps taking of approach. quarter? get this the for to range

can I maybe so give Marc, a it's perspective. Susan,

the we bit would we see is also felt is major that macro North in margins by reflected now, margin XX% That margins we a changed typical right sync had i.e., you up. our right is structural it's cost business and be America the I demand. So long-term nothing than mean, One are And little long-term is two have to cycles specific the demand is a in for field bit kind of probably of two little not the what between to America. this down now, about of North structural out higher when way -- XX%, XX% be has most in perspective cost just for margin, explain the same are token simple it more reasons. structural a

but doesn't look last very long. a last years times, few Now the that if you XX typically happen it back

cycles true So very two, that to alluded sync XX% And was America. will North Joe these to, unusual have to highly macro also extreme out of last the cut is not and long. production as for

impact is have of a that, you a significant but So feel volume course, you -- of basically that massive kind out fixed cost we taking of business it. have

So visa we in margins absolutely factors to of equation, we out structural still past, if rate communicated feel you the and they're we're the still take these run achievable. coming back which

to to to go. about happen, coming the down we're the and external needs biggest, we takeout. months us happen what to costs additional Now that would zero committed your own I These raw which material which have biggest on combination cost should pull say, question taking the are is our of steps and to XX levers, we

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

Your open. line is

us to that the core thinking is against weeks. Marc, that financial it's you good to performing wondering, how for on that should of couple in next guidance your close hear give insight about related InSinkErator this the fourth could if scheduled any that impacts to I seen how was here embedded business? just in are business the InSinkErator? you've in be And recent environment we quarter

Mike, ask first answer, you a So give to you but little bit to more Jim me maybe perspective. financial I would try give let more

So yet first of October all, closed expected on XX. not we transaction. have to the is happen That

see track. very, them we're confident. controlling have as intact, will cetera. of side or pipeline, demand we of are good, also demand but is et margins the very is more as on we yet that the and data bit And and order cannot If such, really discretionary we're obviously, fully such, is hear longer have business we which coming nature that we communicate down a similar Now what everything little business not we very, has --

trends, and actions, the share keep So, margins thing, strong. very I strong, is strong. similar very encouraging the are would but them say, market very similar We the

same to should want in that, to XX we closing a not going are little but to strong the So bit we an happy and going that we is make now. what or believe strong where housing element business, we we're immune this from and and not hopefully, this is hopefully everybody be for healthy, QX transaction you -- experiences sustainable if forward? InSinkErator we're days extremely expect a -- comment Jim, and

Yes, Jim. Mike, this is

last see the disclosed we for impact InSinkErator call, per we business XXXX, think $X.XX that I being share. of about the

that, fourth few are two adjust you very around within some if do quarter will so, the of an be effects we you And will just beginning at consolidating for that -- you some right the the think that then but so. have have a here $X.XX, -- would to months to imply about things account also how or the and acquisition may that related you then

So see. you'd maximum the probably that's amount

a So, pretty basis. be the full it's next going impact to year the immaterial a impact consolidated quarter. year bigger will And be on fourth to

helpful. cash Okay. just given follow-up, my pressures seeing, taken the the then but down somewhat you're you've your given flow free it's And That's related, guidance.

You take to leverage your have on -- you are InSinkErator. increasing

you've the cash some next a still pressures. some through got first lower inflation half pressures, year, sounds market Now least flow like expecting at It free guide. of you're

we deal down kind I How free headwinds around vis-à-vis, implications, that your any know you're closing So it's of that. timing of leverage just plans net about much then of means you for post the some kind deleveraging? and cash. how pause, thoughts on How further think the but about to pay should what perhaps of for can buyback? thinking

debt we which the through around transaction just $XXX you we put term cash of will in perspective then $X.X this existing neighborhood remember to say, hand. billion, us X.X%. we'll loans, finance Mike, year, we the as And about And talked how a look multiple finance next at when on gross million we'll the Jim will let's is leverage another is approximately of on use I think again. about Yes, if

flows holding buybacks we which, As until capital to to in all now come come Marc you going mentioned, ability finance suspended a lower focus expect right of will begin we to impacted structural off were back to different and if our the and we be are we have seen give will per we've that's when demand. that billion the years flows cash and to debt a as to reduce us that now, being look year, our going we above of right levels that business, is the haven't our cash down, we before, at just changed, back, said be alluded $X But priorities. forward. allocation on of by levels obviously, our what which recent level But begins our to

buybacks continue to our areas, if this, that have buyback to at become fund the that we dividend share we And targeted share future, to when obviously, on two our years get at look dividends. our up folks remind point in over the to So down. return look I leading at you pay then billion $X.X debt once will then. business, and priority leverage and shareholders will our then last levels bring our a back obviously, focus more you was to some

So, it's a ours. been focus obviously of

continue will We future. in focus to that have the as a

balance just And a sheet have gives balance to sheet We this maybe very very balance optionality. that the pride after strong strong have we'll acquisition. Mike, ourselves sheet, we and us strong one. adding InSinkErator -- a

to additional you more Just comments. give two

And leverage, refinance interest has debt little that share potentially on for mind the Keep changed where debt have short-term gross look and we down use entirely maybe $X What good, of short we extent, buybacks. will debt again What and very somewhere in fast. level all, the will parallel, our have that billion. of now, had, we, referring or to were to bit to letters structure which we debt billion and Jim way term, unchanged. we term mind, cost long. referring in average -- The of years, excludes years, the long-term of about we pay some a InSinkErator couple very to is $XXX referring basically our the X.X%, same $X the rest financial decision leverage, not open time, sequential, the at we, over be and leverage. the so debt is billion That which pretty First last space debt cost expect then five intend did only when a of structure, by over to how other -- loan last of is north we're keep man a the so three. how in terms. and today's almost loan, acquisition, extremely that's $X cash, is the gross is attractive the year-end, to of cash finance from we right in letters And maybe the the these at is was made million that to

comes JPMorgan. from question the next Your from Mike of Rehaut line

is open. Your line

XQ in much I XX% and that if highlighted price/mix. puts wondering I in just in how takes. you don't Obviously, little And the to -- specifically why clarity a have and there's you of margins? question, have headwind you further get XQ production global that the if was wanted on know impacted similar of and some kind absence reduction First margins? the a moderation of XQ, would and your

inventory XQ? You XQ the around better kind it little of, wouldn't reductions up and again. Any starting of kick mentioned to promotions impact in be in why clarity again, a

is of with this Michael, kind Jim. And that. start let me

spread across so throughout and this fixed quarters. the actually hung in you and XX% does over we if that QX the and cost of flows you Joe talked out of reduction because up during there, so you about production Marc costs million. some and us the our at quarter, the have get did time When And about in think get that factories inventory in QX level we cost within that your $XXX period, just does both get it leverage look

reduce while probably inventory of materials hand is our still we -- cost. peak the on Additionally, around QX, coming this means that about a mentioned when the we raw you did at talked and that right earlier, inventory levels and about think now have which earlier, we peak Marc --

and also year, to begins has why that relatively will at think flow do out that's look about we flows that in we QX as that be rest And in how as QX, of the it on So out, flat. QX. the and believe margin the you impact an

works through amount how highest the matter in a and no of naturally strongest when what then absolute environment business two amount reduced. And a your in QX is significant change those year. the the expecting within promotional demand quarters. aren't seasonality We promotional the it's just is spend of last even year, or our your the is for piece

in also QX. that's So you've why seasonality got effect that

a that's helpful appreciate rundown. Okay, that. I

-- questions. think couple you there's key think kind for I to been about of some of there's Secondly, been variables highlighted next a year, and

Just price/mix. raw across clarify want and little can also to cost takeout, which benefit is margin try materials big obviously a and bit be but a

obviously, basis, early full half, in get or that even And a talking that that to least terms in in raw And takeout at back does expect some still steel headwinds but amid be of a of in market this at tailwind to and et the to resins, program, be demand mean of thinking materials. you hoping cost with of some based point, today your environment? about, what potentially we expectations expect of then kind price/mix should going negative? a you're the first consumer in You on a terms perhaps the or it current materials should year cetera? prices in the I to the turn that would you being raw half, get softer net on headwind the second tailwinds in to was

it's Michael, So Marc.

question. answer your let try to So me

on of we would say I we're And to time. not in agree, in think the you I all, would all a First call, be lot upfront. we normal October exactly hesitant would a normal give times 'XX. Even of perspective

for salt. 'XX, you So for to forecast need it grain of any take obviously,

run can just bit or down that and give perspective. me you we let you don't want for where color more and can't it today's items little to specific a So get answers

too global consumer first say also happens relating terms in elements in now driven some through Demand, the war to mortgage right of what sentiment P&L. what going pricing, the happens ultimately to rates, and uncertain demand So one, and would to is Ukraine. I and to forecast,

So, will there's But demand if factors needs reduced a on before course, which, change weigh confidence. being or outlook. pickup some our long-term not, of like there macro significant we we concerns consumer lot demand or a of eliminated see or macro short-term midterm doesn't it be to demand, of

biggest uncertainty, on So the to and the we demand perspective will our that's is pricing January. and give and probably are you correlated related in

the will costs. reduction as we And factor, i.e., raw but gradual of personal raw get see QX, QX, but cost we you raw probably of But on demand my that obviously, you environment. a a that's and confirm volatile fee. The have we this to yes, a materials depressed January, January. and expect get become do If perspective hear in so, material we absolutely for material we And think want spreadsheet clarify to side, more your because a $XXX million we comments, a increase earlier, And rather if the the afterwards, from the expect and material, here Then our would to still in side, you net that. QX of cost reduction I will see of also which you was positive quantified. can full no easing side. want decrease on not raw magnitude basis, we in could do include year do we expect referred to quantify can what say you I

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

open. is line Your

business? was it mentioned was your the curtailment in Also XX% Was think to I kind think bit. of quarter And confused just that leverage XX%, getting you generally, associated back I this what of third I in little of in -- unit you do could I'm range. in about if The dollar million go just with headwind are -- within North you America. obviously, terms $XXX right? you the Jim, what wonder curtailment, that talk a there

about That's X...

in QX reduction and through we see little was I there but million the due did Not through to in than America, within bit more $XXX -- Ken, come due North P&L. will we QX said approximately a that our to the

are any drag. of guidance to because the let's in kind year right, think the volume where And next just it's everyone's on narrow terms it's I talked exiting flat -- if basis is to a us such still are not you margins now. Then I half, understandable first sequentially, but second next exactly where would gains, a obviously share us or this that lower trying you at year the various some sure volume nothing and about get Marc, you QX, associated and in in right year productive to know said say, business share homes to think, the of were if Joe, okay. rates back gaining higher existing pre-COVID given promotions, in where we with longer-term i.e., of bifurcated be, -- rate, And half. QX like are if words, cost going I'm go

promotion make isolate that So could is the there a stable promotion the sense associated we the helped with run is drags the in obviously as a margin way volume cut versus gentlemen? kind those about increase It's more question. your Does Is my at exit and margins that a rate? that talk level? you production year of all, such big

Ken, let points and kind to. a maybe, of Marc and there, the on Joe me start few ask And then of I'll

will come year and opportunities least the with I for think the first mentioned, if year. a quarter think reduction start next as early about the you demand at to in headwind, or that in cost possibly Marc

a healthy word way allows us of level of factories at allows which a and efficient in as year, then look what we'll to out come us inventory very we to, we As this hopefully, our run with the it. start out, the and a stay synchronization synchronize that takes production used an to which environment, in Joe environment it has has demand our cost the and with inefficiency that and demand it, check with we earlier volatility

we at such the appropriately. We've that that we then and increase we forward, ramp look would believe saw up as as what level, about you very because production So quickly. big market and that and adjusted move here keep the demand it can our demand I did to now a was level think reduction we talked

million you there. as one components Marc But and talked that that's about. think of get I efficiencies year, think just do $XXX next you would of about are that part that savings in that broader be So, many cost

Thank you, Jim.

was think the had this which we I on the last question, call.

maybe up here. me wrap quickly let So just

are continue come of done environment so also same you've tailwinds, and will prepared are the of we're Q&A, We've the throughout in cost the dealing reduction. what as the and At in heard and time, in we with recessionary a yet you so. and which form we demand to seen not dealing decisively. So recession headwinds proactively the in the we remarks experiencing do that with

costs. we one the will also cost have fixed of how and variable We that we'll actions take point additional top at internally we and and announced on down bring

which branding, environment, for which significant with for positioned I continue the which we're we've as you on short-term product question we've on recession innovation we're hopefully at on how note, long-term tricky well mid- done lowering everything demand post the about reducing is opportunity done to Beyond think environment, positioned to environment. everything we us heard And which very is the trends, very and breakeven that one recession will post-recessionary be a upbeat and points, point come.

you and I with mind, wonderful So you all us you. wish that today, joining for thank Friday. a Thank in

Ladies and that conference call. concludes gentlemen, today's

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