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Whirlpool's (WHR +1%) in-line Q2 results and lowered FY24 adjusted EPS outlook may not be making much of a splash today. However, with so much on the household appliance manufacturer's plate, from sticky headwinds like inflation and interest rates to structural changes like divesting its EMEA business, investors feared worse.

A depressed housing market, with existing homeowners hesitant to move and potential homebuyers priced out, combined with tightened budgets and expensive financing terms, has created a whirlwind of issues for WHR over the past several quarters. These conditions have created a heightened promotional environment, one that WHR has been selective about. In fact, with WHR lapping peak promotional activity, it introduced a price hike of 5% last quarter to better offset inflationary pressures and boost its top line.

• On a yr/yr basis, its price hikes have yet to result in a meaningful lift to quarterly numbers. WHR posted adjusted EPS of $2.39 in Q2, a 43.2% plunge, on $3.99 bln in revs, a 16.8% drop. MDA North America, WHR's largest market, continued to see losses, posting a 5.7% decrease in net sales and a 380 bp decline in EBIT margins.
• However, on a sequential basis, the pricing program displayed some success. WHR posted a 70 bp bump in EBIT margins to 6.3%, alongside a 5.7% improvement in net sales in its MDA North America segment. This bright spot was encouraging enough to give investors confidence that there are still levers WHR can pull to spur growth despite such a challenging market.
• Meanwhile, every other segment delivered yr/yr and sequential improvements in net sales, including MDA Latin America, which registered an 11.3% increase yr/yr, sustaining its outsized strength. At the same time, MDA Asia bounced back to positive growth following a 2.4% decline last quarter, recording a 19.7% leap yr/yr in Q2. Management noted that it continued to take market share across key countries in Latin America and Asia. Finally, SDA Global (WHR's small appliances segment) experienced an 11.3% uptick in net sales.
• The pricing actions WHR implemented, alongside exceptional international growth, supported its reiterated FY24 revenue outlook of $16.9 bln. However, macroeconomic headwinds proved too intense for WHR to maintain its previous FY24 adjusted EPS forecast of $13.00-15.00. Instead, WHR lowered its ongoing EBIT margins to 6.0% from 6.8%, leading to its updated FY24 adjusted earnings estimate of approximately $12.00.
• Still, WHR's cost takeout actions, working toward $300-400 mln in FY24, are positioning it strongly to end the year on a high note, projecting EBIT margins of 7.5%. This is a promising development, as it could provide the upward momentum needed to reenergize growth in 2025.

It has been a rough past couple of years for WHR. Its strong ties to the housing market, specifically the builder channel, disproportionately affect its quarterly results. However, by the same token, WHR can experience pronounced gains once the housing market rebounds. While the timing of interest rate cuts remains a significant variable, we believe the bulk of WHR's headwinds are likely behind it, especially after delivering sequential improvements in Q2.