Tariff and Trade Environment Impact and Mitigation Strategies
The company expects around $10 million in tariff-related costs for the full year, with most impact in Q4, due to inventory pre-exposure and sourcing adjustments.
Central has reduced China purchases by nearly 50% in Q3, shifting sourcing to mitigate tariff impacts, and is working on pricing strategies to offset cost increases.
Management highlighted ongoing efforts to work with customers and suppliers to limit margin erosion, with a cautious outlook on future tariff developments.
Industry Disruption Due to Global Trade and Tariffs
The company observed a surge in imports across key markets, contrary to expectations of import redirection due to tariffs.
Tariffs began to be collected in early May, but import surges persisted into the second quarter, driven by speculation and supply chain delays.
Management expects import levels to decline in the third quarter as the discourse around tariffs stabilizes, but potential new tariffs in Europe remain a concern.
Impact of Tariff Delays and Preloading on Asian Imports
Asian appliance imports increased over 20% in the first half of 2025 due to delays in tariff implementation, creating significant short-term disruption.
Estimated 60 to 90 days of excess Asian inventory in the system as of May, with a gradual flow-through expected as tariffs take full effect.
Tariff delays have extended the preloading period, impacting promotional intensity and margins into Q3 and Q4.
Management believes the full impact of tariffs will benefit Whirlpool long-term, as the company is structurally positioned to capitalize on trade policy shifts.
Adjusted EBITDA loss widened to $26 million (minus 34.7% of net revenues) from $23 million (minus 24.7%) year-over-year.
Cash and cash equivalents were $117.3 million with total debt approximately $1.2 billion as of June 28, 2025.
Gross margin declined to 11.5% from 14.7% a year ago, impacted by lower volumes, unfavorable product mix, higher trade spend, and $1.7 million in expenses related to suspension of China operations.
Net cash used in operating activities increased to $59.4 million for the first half of 2025 compared to $47.8 million in the prior year period.
Net loss was $33.2 million or $0.43 per share, slightly improved from $34.5 million or $0.53 per share in the prior year period.
Net revenue for Q2 2025 was $75 million, down 20% year-over-year, primarily due to softness in the U.S. retail channel and international foodservice segments.
Operating expenses were $47.4 million, slightly lower than $47.6 million in the prior year, but included $7.5 million in nonrecurring expenses; excluding these, operating expenses showed meaningful reduction.
Adjusted EBITDA for Q2 2025 exceeded $1 billion, beating expectations despite a modestly negative system-wide RevPAR decline of 50 basis points year-over-year.
Adjusted EPS also exceeded expectations, with adjusted diluted EPS of $2.20 for the quarter.
Adjusted EPS also exceeded expectations, with diluted EPS adjusted for special items at $2.20 for the quarter.
Full year 2025 guidance includes system-wide RevPAR growth of 0% to 2%, adjusted EBITDA between $3.65 billion and $3.71 billion, and adjusted diluted EPS between $7.83 and $8.00.
Management franchise fees grew 8% year-over-year.
Q3 2025 guidance expects flat to modestly down system-wide RevPAR, adjusted EBITDA between $935 million and $955 million, and adjusted diluted EPS between $1.98 and $2.04.
Regional RevPAR performance varied: U.S. down 1.5%, Americas ex-U.S. up 3.8%, Europe up 2%, Middle East and Africa up 10.3%, Asia Pacific up 0.3% with China down 3.4%.
Year-to-date, Hilton returned $1.7 billion to shareholders and expects to return approximately $3.3 billion for the full year.
Dafinchi
