Good morning and welcome to Whirlpool Corporation's Third Quarter 2025 Earnings Call. Today's call is being recorded. Joining me today are Marc Bitzer, our Chairman and Chief Executive Officer; and Jim Peters, our Chief Financial and Administrative Officer. Our remarks today track with a presentation available on the Investors section of our website at whirlpoolcorp.com. Before we begin, I want to remind you that as we conduct this call, we will be making forward-looking statements to assist you in better understanding Whirlpool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K, 10-Q and other periodic reports. We also want to remind you that today's presentation includes the non-GAAP measures outlined in further detail at the beginning of our earnings presentation. We believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from ongoing business operations. We think the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operations. Listeners are directed to the supplemental information package posted on the Investor Relations section of our website for reconciliations of non-GAAP items to the most directly comparable GAAP measures. [Operator Instructions] With that, I'll turn the call over to Marc.

Good morning, everyone. Over the next hour, we will discuss our Q3 results, and we will provide you with plenty of data in detail. However, if you ask me to summarize the Q3 message in just one sentence, it is, our Q3 results demonstrate organic growth, while our margins are still impacted by tariff preloading in the industry. Let me first talk about our organic growth. We had 2 sources of growth in our business. One, our KitchenAid small domestic appliance business, which achieved a double-digit revenue growth; two, market share gains in our North American major appliance business on the back of our new product launches despite an intense promotional environment. As discussed in prior earnings calls, we have the largest number of new product launches in North America in over a decade. These new products have already secured strong flooring gains, and we are beginning to see very encouraging sell-out performance. Now let me address our operating margins. Our North American operating margins are point below our expectations, which is not where we want to have them. So why is that? During our last earnings call, we presented 3 catalysts for value creation and margin improvement in North America. One, our new product launches, they are fully on track. Two, the housing cycle, which will undoubtedly benefit us, but not in 2025, which leaves the tariffs as a third catalyst for margin improvement. Tariffs come in various forms and have been slowly ramping up during Q3. In fact, the full burden of reciprocal tariffs which were announced on August 7 only became effective as of October 5 and are now finally fully in place. This ramp-up brought extensive preloading of inventories ahead of tariffs, and while this is not a surprise, it lasted longer than we anticipated. Regardless of these temporary impacts, the fundamental perspective on tariff remains the same. We are the domestic producer with more than 80% of our U.S. sales produced in the U.S., while our competitors are largely importers. Tariffs by definition, support the domestic producer. The question is not if, but when. And we do believe we are close to a turning point. Container import volumes suggest a deceleration of imports in August and September following the peak in July. This is also supported by 17 consecutive weeks of container rate declines from mid-June. We do strongly believe in our value creation upside, in particular in our North American business, not only because of our promising new products, but also because of our U.S.-based manufacturing footprint, which will, without any question, emerge as a competitive advantage. And our recent announcement of a $300 million investment in our U.S. laundry facilities is evidence of our confidence in our North American business. With this, let me hand it over to Jim, who will discuss the Q3 results as well as our full year guidance.

Thanks, Marc. Good morning, everyone. Turning to Slide 6. I will provide an overview of our third quarter results. We delivered 100 basis points of revenue growth year-over-year, driven by our new product launches in MDA North America and a strong double-digit growth of our SDA global business. Global ongoing EBIT margins of 4.5% were unfavorably impacted by the ramp-up effects of tariffs and foreign competitors preloading of Asian-produced inventory. This resulted in a continued highly promotional environment through the third quarter of 2025. Ultimately, we delivered ongoing earnings per share of $2.09, which was also supported by an updated adjusted effective tax rate of 8%, resulting in approximately $1 of favorability. Our free cash flow was unfavorable versus prior year by approximately $320 million, driven by the timing impact of tariff payments and the inventory build to support both new product launches and the incremental cost of tariffs. Turning to Slide 7. I will provide an overview of our third quarter ongoing EBIT margin drivers. Price/mix favorably impacted margin by 50 basis points. We are seeing positive momentum from the cumulative effect of our new product launches and benefits of previously announced pricing actions. At the same time, these benefits have been dampened by the effects of inventory preloading, resulting in continued promotional intensity. Our cost takeout actions delivered as expected, resulting in margin expansion of 100 basis points year-over-year, led by our manufacturing and supply chain efficiencies. Raw materials were essentially flat as expected. In the third quarter, we experienced incremental cost of tariffs of approximately 250 basis points. While marketing and technology was flat versus prior year, we have continued to invest in our products and brands. Lastly, currency depreciation associated with the Argentinian peso and Indian rupee resulted in an unfavorable margin impact of 25 basis…

Thanks, Jim. And turning to Slide 22, let me revisit why North America is well positioned to create significant value in the mid and long term. As mentioned earlier, there are 3 fundamental components that serve as catalysts for growth for our North America MDA business. First, we are strengthening our product portfolio with over 30% of our North American products transitioning to new products in 2025. This compares to less than 10% product renewal in a normal year. Secondly, our strong U.S.-based manufacturing footprint positions us as the net winner of new tariff and trade policies. Thirdly, turning to the U.S. housing market, we continue to see strong underlying fundamentals that point to a likely multiyear recovery. It is a well-established fact that the U.S. housing market is significantly undersupplied by approximately 3 million to 4 million homes, which is compounded by an aging housing stock with a median age of 40 years. Additionally, the elevated mortgage rates have created pent-up demand that we expect to unlock once interest rates start to ease. Turning to Slide 23. I'm pleased to showcase the new KitchenAid suite, which we began shipping to our trade customers in September. To put this in perspective, this is the first full KitchenAid redesign in a decade, and this line of products represent over $1 billion of annual business with strong margins. We've seen both strong flooring gains as well as very promising sellout trends over the past weeks, and our KitchenAid market share is now trending towards its highest level in over a decade. Beyond the exciting new colors, the modern design is aesthetic. This line is unique in its personalization opportunities. The personalization comes from a combination of interchangeable colors of handles and knobs, which can be easily changed at the consumer's home. Turning…

[Operator Instructions] Your first question comes from the line of Susan Maklari from Goldman Sachs.

My first question is around the share gains that you have seen this quarter. Can you talk a bit about how much of that is driven by the new product launch and the momentum that you're seeing there relative to promotions? And any changes that you saw company specific in that during the quarter?

Yes. Susan, so obviously, your share gains refer to our majors business in North America, where we had a 2.8% revenue growth, which is obviously very encouraging, promising sign, and it's the first growth which we had in quite a while so. The share gains, which we had in Q3 essentially completely offset anything which we lost in the first half. So we're right now, we feel good about the share position. To your question about where it's coming from, in very simple terms, the share gains came from new products. And on the promotional side of the business, we pretty much held our line. So it's a combination of both factors. So we held our line in promotions despite the pressure, but the share gains came with all the new products. I think you heard in my previous remarks that we're particularly good about the KitchenAid business. KitchenAid had pretty much an all-time record market share in majors. And obviously, that is not the promotional part of the business. That is really new product launches. But we feel also very good about we launched a new French door for both [indiscernible]. We have an entire mid-layer of top load laundry, which came out. So we feel very, very good about where we are with these new products, not only the flooring, but you now with a couple of weeks in the market, we have also some pretty good sellout data, which is lining up very well for what's about to come.

Okay. That's helpful. And then it's nice to see the continued strength in the SDA business. Can you talk about what is driving that? And especially, it seems to be coming despite the weakness that we're seeing in housing and even with the consumer volatility out there. So can you just talk about the momentum there and how you're thinking about that business going forward?

Yes, Susan, in short, we feel very good about where we are from an SDA perspective and the momentum which we have, which we also think bodes very well also for next year. I think there's a couple of factors here at play. First of all, because you mentioned the housing, the small domestic appliance market is less driven by the housing than the majors. It's just a fundamental difference. So it's much more of a discretionary sale, less a replacement market than discretionary sale. What helped us? I would say, is essentially 3 factors coming together. 2 internally one macro. The first one, we have a lot of new products already launched in the last year. We have a lot of new products in the pipeline. And I think we also -- we've demonstrated and you've seen that on our advertising investments, we supported these new product launches with significant investments. So all these new products help us building the business, particularly outside the stand mixer also, but also inside the stand mixer, that's one. Two, we continue to see great growth and strength in our D2C business, which, as you know, this is the kind of business, the more volume we get from the D2C business, the more profitable becomes just because of the search and traffic costs are spread over in a much more favorable way. So we feel very good about the D2C progress. And thirdly, and this is -- and it may feel like SDA is not so much of a tariff story. It's a different one because almost the entire production of SDA, call it, outside our Ohio Greenville, Ohio factory is largely China-based production. So you had an earlier impact of tariffs in the SDA market because the China tariffs came into effect a little bit earlier than the rest of Asia. So that drove already a lot of industry changes and behaviors in the SDA segment. So I would say, in some ways, you could say the tariffs have found their way in the marketplace earlier in the SDA than we have seen it in the major business.

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

Marc, you talked about the gains in retail flooring. And I'm just wondering, I realize each of these listings would have a different velocity. But in total, under current demand conditions, what would those incremental listings represent in terms of 2026 unit growth?

David, that's a very specific question. So -- and I'm obviously shying a little bit away from giving the '26 unit growth perspective. But again, first of all, there's 2 parameters, which we already referred to. We replaced about 30% of the SKUs in North America in '25. Now that's not all completed, but now with the KitchenAid VBL that, I would say, 90% of our products which we want to launch in 2025 have been launched. As a little reminder, and I know it's only footnote, the launching product comes with a cost because we typically pay for display costs, et cetera, which, of course, you see reflected in the margins. So we don't immediately give you value accretion because you pay for the floor. Now typically, when you launch with new products, you have, first of all, the flooring discussions, where we feel exceptionally good about where we are. We -- with 30% of our new products, which again compares to typically slightly less than 10% in a normal year, we gained about 29% more floors than we had in a pre-succession SKU. So that's very encouraging. Now everybody in the retail industry knows getting flooring is one thing, then you need to get the sellout. The sellout data is, of course, in some elements already a little bit more mature and some elements less mature. But I would say across the board, in particular the KitchenAid launch, but also on the Top load launch, which I mentioned before in the French door, we feel very, very good. So put this all together, David, I would say we feel very good about the organic growth opportunities heading into '26 in North America, irrespective of what the market does. We feel really good about the momentum which we have. Then the flooring cost will be behind us. So we feel -- and I know it may not fully reflect in Q3 margins, but trust me, we feel we have a good tailwind in our back coming from these new product launches.

And just to be clear on this, and I have a follow-up question. But just to be clear, you're expecting the flooring costs, the upfront flooring costs to be fully realized by the end of the calendar year.

Yes, there will be -- by the end of Q4, we will have pretty much fully absorbed it. Now you also -- next year, we will also have some product launches, but it will be just, of course, a lot less than this year. This year has been the peak of all the product launches.

Right, right. Okay. And the second question is regarding the tariffs and the $225 million of expected unrecovered 2025 tariff expense. How much of this do you expect to recover in 2026, presumably once you have the benefit of tariff protection?

Well, again, David, the tariff is -- there's a gross on the net component. On the gross side, we pay tariffs. So right now, the $225 million, which we pay this year, assuming the tariffs are now stable. That is, of course, a big assumption because as we all experience, there's a lot of moving pieces. you basically -- the same amount next year probably will be in the ballpark of $300 million to $350 million. And just this is an early number. So of course, when you need to look at the delta of the gross tariffs. But the year-over-year comparison basically happen the Q1 and apart from Q2, which you basically have to kind of transition into. Now the real benefit comes to us is, as we mentioned before, for us, this represents about 3% of our North America sales. If you calibrate the country of production of our competitors with respective tariff rate, you would come to the conclusion that their respective headwind is about 5% to 15%. So of course, it puts us on a relative competitive advantage, which we ultimately should see in volume growth and overall margin appreciation in North America.

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

First, I just wanted to kind of take a step back and look at -- obviously, the continued promotional environment is the culprit here, and you expect it to continue through the end of the year. Just wanted to understand how this promotional environment compares to pre-COVID norms. And if there are certain metrics that you could kind of point to that would say this is 5% more intense from a net pricing standpoint than prior periods or certain metrics that can -- we can kind of grab on to, to understand maybe if things normalize and inventory -- excess inventory or excess promotions come out of the channel or so forth, we can kind of get a better yardstick of what to expect as things kind of calm down, let's say?

Yes, Michael, it's Marc. Obviously, that's a big question, and there's no precise answer to it, to be very transparent. So first of all, on a multiyear perspective, as you all remember, we had, I would say, pre-COVID more or less a normal promotional environment. And it's just a consumer market, which everyone in a while needs to be stimulated with some promotion around the holidays. That's nothing new, nothing anormal. Now post-COVID, in particular in the context of supply chain crisis, there was essentially a no promotional environment. And then these promotions quickly ramped back up again into the market in late '23, but in particular in '24. So these were the big cycles. Now this year, on top of this massive swing, you have a very rapid change and volatile environment because, of course, when everybody started the year, we didn't anticipate tariffs to that extent. We didn't anticipate the preloading. So you have right now a lot of industry volumes shifting in the market, which is just not comparable to any normal year. So your question around normal or not normal, I would more refer to the volumes which were shipped into the country, which is just outside a normal pattern. The consumer will always need some stimulation around some holidays, but that is nothing new. So the real normalization effect comes from just industry shipments balancing and reflecting both the normal trends, but even more important, reflecting real underlying costs. The volumes which were shipped into the country and to give you a little bit more expansion is we have a July import data, but we do not have the August and September data because of the government shutdown. So the July shipment data still showed elevated shipments into the country despite the flat market, which we all know. And as Jim showed earlier or mentioned earlier, the first half of '25 pretty much was close to an all-time record on applying shipments from Asia. So it's very, very high and certainly above the market demand. So we know there's quite a bit of inventory overhang. Inventory, which was at pre-tariff cost, that's an important one. Of course, by definition, as you go through Q3 and Q4, with the anticipation that import volumes come down, that excess inventory at one point will flush through the system. We would expect that to be happening kind of towards the end of Q4. We assume Black Friday volumes are pretty much set and prices are being determined already. So I would strongly believe that by Q4, any pre-tariff inventory is more or less gone out of the system. So with that in mind, I would expect in '26 to see industry behavior, which is more reflective of the normal shipment patterns and particularly more important, the underlying cost base.

I mean, Michael, just to highlight, as Marc kind of discussed earlier in some of his remarks, I mean, next year in the industry, the tariffs will create an unprecedented level of cost increases for many of the participants. And so it's very hard to predict, but obviously, that should have an impact.

Right. No, I appreciate that. I know it's obviously a very fluid environment to say the least. Secondly, I wanted to shift focus a little bit to the balance sheet. And you've kind of outlined that you've delayed the $700 million debt paydown into, I guess, the first half of next year. I was wondering if you could also just kind of address with -- over the next couple of years, how you're going to manage the revolver and financing needs as certain elements of the revolver come due over the next 2 years? And if the remainder of those financing needs are going to be simply refinanced and pushed out or if there's going to be additional debt paydown? Any other kind of details around that front would be helpful.

Yes. And Michael, this is Jim. And I'd probably start with that our long-term goals haven't changed. And our long-term goals to get to a 2x net debt to EBITDA have not changed. As you highlighted, I think the timing of some of that has changed. And maybe we start with the beginning of the year where we were able to refinance $1.2 billion of the term loan that we had, and we feel very good about that, setting us up very well. As you mentioned, the India transaction, which we feel we're progressing very well with, and we've just announced that we've got all the major agreements in place that we need to, to get that transaction done now. That's delayed into 2026, at least from a closing perspective, but we still feel good about getting the proceeds of that and using that to pay down debt. And so as you look at that, again, from an overall liquidity perspective, we feel good. Obviously, with the revolver that we utilize right now, that's always a cycle, and we've gone through that years -- for many, many years that we go out, we renew it, we continue it forward. So we believe we're in a good position there right now. So as I said, really from an overall capital allocation and debt perspective, nothing has changed other than pushing the timing out. From a liquidity perspective, we feel good about where we are and what we have access to. And then in terms of the actions that we're taking to reduce our debt levels, we also feel good about how we've positioned ourselves to complete those in the not-so-distant future. So again, as we go forward, we never talk about what our intentions are in terms of different things and all that, but the overarching strategy has not changed, and our intention to continue to pay down debt has not changed.

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

I wanted to follow up on effectively a balance sheet and cash flow dynamic. The free cash flow guide, while reduced still implies a pretty meaningful ramp in the fourth quarter, and that's kind of despite what you've articulated in terms of the higher product costs. So can you help us understand the moving pieces on free cash that you can drive that? And then if tariff payments, the second part of this are step up again in next year, obviously, there's going to be moving pieces on other lines. But your free cash at $200 million is roughly in line with your reduced dividend. So it doesn't exactly drive incremental deleveraging. So how are you thinking about -- how are you thinking about the dividend? And any other color you can provide on kind of maybe the path of free cash beyond '25?

Yes, Mike, this is Jim, and I'll kind of take this here. What I would say is, first off, the path to get to our free cash flow at the end of the year, right now, we are sitting on a higher level of working capital than even we typically are at this point in time. And if you really look at it, one, we've -- with all the new product launches that we've done and everything, the amount of inventory that we've built ahead of time to position ourselves well through that as well as the cost of the tariffs that goes into inventory. And so you've got an elevated level of inventory there. Also, our receivables are at a typical level that they are before year-end, which they come down as we ship a lot of product and then collect the cash before year-end. So just working capital alone is probably a $600 million-plus benefit to us as we head towards the back half of the year. Additionally, what you've got is with the promotional payments that we make. A lot of those happen early in the year for the prior year, and then we build up the accrual as it goes. So that's another thing that benefits us late in the year because we then don't pay a lot of that out until next year. So from a free cash flow perspective, at least for this year, there's a lot of big moving parts. But the piece that I alluded to earlier that is unusual for many other years that the tariffs are such a significant amount and that we had to pay those within 30 days, and that was a onetime effect right now that we've now fully absorbed into there. And so for next year, it's not a negative effect anymore. It's just an ongoing type of thing that occurs. Now your point on the dividend there and then our free cash flow matches about at the dividend level, we do believe, obviously, our free cash flow will be higher next year. And like I said, to begin with, you don't have the one-off impact of the tariffs coming in, which automatically gives you a benefit going into next year. I would say as we look towards next year, and we're not giving guidance or anything right now, but I think we get back to a more normalized level and get some of these working capital effects out, especially the timing of some of them and kind of return to what is a more earnings-driven free cash flow type of profile.

Okay. Yes, that's helpful color, Jim. The second question, I guess, is on the implied fourth quarter guidance and the margin dynamics seem pretty clear. It seems like the revenue guidance implies that there's a healthy step-up in year-on-year growth in the fourth quarter despite this competitive environment and soft macro. Can you just talk a little bit more about what's underlying that fourth quarter assumption to get to the 15.8% for the full year?

Yes, Mike, it's Marc. So actually, ultimately, the Q4 revenue or implicit revenue guidance for the fourth quarter is largely driven by what I mentioned before, our Q3 itself from a growth perspective, the organic growth perspective was very good. And in particular, on the 2 components, SDA, which by definition, even Q4 is bigger than Q3. So you have this SDA component where you carry a lot of momentum into Q4, and we feel very good. But the same is true for majors, North American majors. The new products are working and particularly the KitchenAid suite, which I presented earlier, that is only flowing now. So we start now seeing the full revenue benefit. So we feel really strengthened by these product launches in majors and with SDA, and that ultimately drives that. So we do not assume a higher-than-usual participation in promotional environment. We do what is right for our business and what creates value. So it's really coming from new products.

Your next question comes from the line of Jeffrey Stevenson from Loop Capital.

How has demand historically trended the following year after elevated levels of new product introductions and incremental floor space wins like we've seen this year? And have you typically seen an acceleration in demand in the following year for new products benefiting from areas such as brand and marketing investments and then a full year of in-store floor displays?

Yes. So I'm smiling. There's an old thing in the appliance industry that the best year for product launch is the year after. And there's some truth to it. And the truth comes -- when you have a phase in and phase out, it cost you quite a bit of money industrially because you have a factory ramp down with all spare parts, which might be obsolete and we have to ramp up, which typically is expensive. And the same, of course, on trade floor. So you basically need to take care of the old products, the new products, there's physical flooring costs, there's margin expectations of retailers, et cetera. So a new product introduction as exciting as it is, it costs, okay? And the year after, you just have a benefit of a full year product available and you don't carry the cost. But there's also the dynamics on the retail side. Sales associates may also need to get accustomed to the new product. They need to know which features to sell, what sells. And I think with every month after launch passing by the sales associates to get more confident in selling the product and particularly if they see the right rotation. So very often, Jeffrey, to your point, the year after is actually a stronger year. We certainly assume it's true in our case as well, but that's historically been the norm.

But the KitchenAid product, the KitchenAid major products that we've launched, there will be a multiplier effect as the housing market recovers eventually because this is the segment that's probably been hit the hardest, the discretionary segment and the premium segment. And so to Marc's point, you get the benefit of the launch into next year. But then as the housing market recovers, this is the segment that will benefit the most. And so we kind of see this as a multiyear opportunity.

Okay. Great. No, that's very helpful. And then I wanted to shift to the $300 million capital investment to add new capacity to your Ohio laundry manufacturing facilities. Can you just walk me through what went into that decision and why now was the right time to move forward with both projects?

Yes. So basically, what you're referring to is a $300 million investment decision, which we did, in particular, focus on our Clyde and Marion laundry factories. First of all, our laundry business is doing very well. In some cases, in particular, in the top load the new products, we're almost running out of capacity. So it's going really well, not across the board, but there are some constraints here. Whenever you do a capital investment of that size, first of all, it's not an investment in 1 quarter. This is extended over 1 or 2 years. It's never an investment against the past. It's an investment against the future. And we are ultimately -- based on everything which we said before about the macro cycles, we are convinced right now that the investments, in particular U.S. manufacturing U.S.-made products drive very attractive returns. And frankly, I mean, in very simplistic ways, the tariffs make just the return on investment of the payback cycle just much more attractive. That's what it does. So yes, that is an investment done consciously against the perspective of a very promising future with U.S. manufacturing.

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

So a couple of just clarification questions. First obvious one would be, any view yet, Jim, on what a ballpark '26 tax rate might be?

Yes. Sam, we -- obviously, we aren't giving guidance yet and all that. But I think if you go back to the beginning of this year, as we kind of said where we think our rate eventually normalizes could be in the 20% to 25%. But again, we've had numerous years here where we've been well below that. I think as we continue to evaluate what has happened with the environment and the different things that we've been able to take advantage of with recent changes, we'll obviously update that at year-end, but I think that's a good thought to at least continue to use as a long-term type of rate.

Sam, it's Marc. Just as a reminder also, a big part of a favorable tax rate came on the back of a Big and Beautiful Bill, which we didn't know at the beginning of the year. So I'm not -- well, of course, we can always wish I don't think there will be a similar tax bill change next year. And with that in mind, I think we should expect a more normalized tax rate. But we will, of course, give more details in January.

And my second question, and I respect that you're being hesitant to talk too much granularity about '26, but you do have a bit of an unusual situation with steel costs in that you've locked in a lot of your costs in '26, whereas your peers have not. What's your sense as to -- as it stands right now, what that relative cost advantage might be versus your -- for next year specific to steel? And then if there's typically this time of year around the third quarter, you do at least give us a sense of what raw materials might look like on a year-on-year basis for the following year? Any kind of color you can give on that would be helpful.

Yes. Sam, I appreciate your question. And as in every year, we've not yet giving the exact guidance on raw materials. But first of all, on steel, as you rightfully pointed out, pretty much 1 year ago, we went from typically 1-year contracts to multiyear contracts. We're largely locked and they're not all the same, but they pretty much operate within certain parameters. So in some ways, you couldn't consider our 2- to 3-year steel contracts pretty much as hedge kind of setup from a contract. So they give us a very predictable and stable steel cost base. Bearing all to mind, 96% of the steel which we purchased for our U.S. products are U.S. Steel made so in U.S. made. So that gives us a very good predictive base. Typically, when we set up these contracts, we expect a certain discount versus the public available market data. And right now, we're well within that range. So we buy on average better than the market. Now sometimes you have spot rate fluctuations. But we're right now buying, I would say, slightly below market, and that's what we expect for next year. Keep also in mind, we still pay a lot more than for any China steel, hence, the whole discussion about the tariffs. So we're still about 2.5x as much as China steel, never forget that. So it's still a very significant cost burden. But to put it in a positive context, we do not expect any surprise on the steel side. And I would also, at this point, do not expect major, major negative or positive surprises on the raw material side in next year. I would say on the raw material, there's a couple of pluses and minuses. We all see the copper trends, but then there's other offsetting elements. So by and large, I would expect a normalized raw material environment for '26.

Your next question comes from the line of Andrew Carter from Stifel.

First question I wanted to ask, getting back to kind of the cash flow for the year. It went from a neutral to $100 million since the last quarter. I realize things changed, but the tariff has changed a little bit. So I'd ask why such a significant change? And also, what does that say kind of in terms of your visibility into all the tariffs and all the dynamics? And do you have complete visibility into what the actual cost should be, what your buy should be, et cetera?

Yes. I'll start this off, and this is Jim, and then Marc can kind of comment if he wants. But I think to begin with on the tariff environment, obviously, it's been evolving throughout the year. And for everybody, it's been -- you've had to understand what the tariffs are, how they should be calculated. You're working with -- it's not just internal. You're working with third-party brokers and other folks and all that. So it's a more complex process than probably all of us anticipated at the very beginning. With that said, I feel that now we have a very good understanding of it, and that's why we've kind of updated our numbers to reflect what they show. Now from a cash flow perspective, again, the thing is that as you go through that and as we talked about earlier, the payment terms being relatively short was something that we obviously knew, but the dollar amount has continued to change. We feel we've got that revised right now. Then you look at how that just flows through your cash conversion cycle. And unfortunately, it doesn't change on the other side, your ability to collect the cash further. And so that became very apparent throughout the process. And that's why when you look at -- I think you were referring to the $100 million change is really with working capital as that reflects, obviously, the cost of the tariffs, but also as we talked about in there, with all the new product launches and all the other things we've had going on, obviously, we've built to certain levels of inventory, which on a normal year, you can have some variability there. But on a year like this with this much product, new product introduction, you have a little bit more variability that comes into it. And we believe that, that will normalize itself as we continue to stock up the retailers with this inventory because, as Marc also talked about earlier, the flooring has done very, very well. And so we want to make sure now that we have enough product to support the sell-through that goes with that flooring.

Maybe, Andrew, just adding a fundamental question on tariffs. First of all, we -- of course, we -- you read a lot and we are a very good and constructive dialogue with various parts of the administration, very transparent, very supportive. But of course, the appliance industry is not the only tariff element. So there's a lot going on right now. But again, I really want to emphasize a very good constructive way. I would, right now -- there are certain parts of the tariff landscape, which I would consider absolutely stable and will stay. That's in particular about the 232 tariffs because we have been in place since 2016. So these parts are very stable. We also know there's other parts which are challenged. I still would ultimately believe, but that's purely my guesstimate that the Supreme Court will confirm in one way or another. But again, that's just me. So from today's perspective, I would consider the tariff environment entering a more stable phase, but we should still be -- there could still be moving elements. Obviously, the biggest question mark is what happens about the China negotiation, but also here, I would assume there will be some form of a solution, a smaller one, which may have gone unnoticed, but it's a good thing for us. We were heavily impacted by the tariffs from U.S. into Canada. That was about $20 million to $25 million every quarter, and there -- that has been pretty much gone now. So that is a good news, but that pretty much only impacted us in a negative way. So moves off a similar fashion, I still expect going forward, but compared to where we were 2 quarters ago, I think you have a much more stable and, to some extent, more predictable tariff environment.

And the second question I have on MDA North America, margin for the year, 5.5%. I believe the guidance from a couple of years ago for '26 was kind of 11% to 12%, correct me if I'm wrong, in the long term. I guess how much of that do you think you can recover? How much of that is tariff impacted? And I know you talked a lot about discretionary being below trend line, if you will, that would be the dishes and cooking. Any estimation of if those revert back to trend line, what margin tailwind would that be? Just any kind of helping blocks to get back to that long term?

Yes. So Andrew, so again, to repeat what I said before, we're very pleased with the growth which we have in North America, but our margins are not where we want to have them. I just don't want to mislead in any way. No, we do not like where the margins are. The reason why we probably talk a little bit different today about the margin than usually is because we know there's such a big promotional impact coming from these inventories. And that's -- we consider that a temporary effect, which is unfortunately. But of course, we also know the fundamental drivers for the change. So that's why you hear us maybe talking with more optimism about it than you would usually expect on these margin levels. Our expectation in North America remains crystal clear. North America is a business where you can and we should be able to deliver more than 10% EBIT margins. There are certain elements, call it, which is in our control, which we can do irrespective of the market environment, such as new products, which I think we've demonstrated we can do. But the other element, we will continue and will double down even more so on cost, and you will hear more in the earnings call in January. We do believe we still have ample of cost opportunities ahead of us. But then, of course, in addition, you have the 2 big macro cycles, the one, the tariff cycle and the housing cycle, which at one point will swing in our favor. I think the tariff cycle will clearly swing in our favor in '26. The housing cycle, I think, is more back half or more '27 related, but then will be a multiyear trend. So what I'm trying to say is we have ample opportunities in our own control to get much closer with double digits. But of course, ultimately, you will also need the housing cycle to be clearly on the double digits or above.

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

Two things. First of all, I would love a little bit of color on what you're seeing regarding retail sell-through. You've given some sense of retail pricing. But just curious what you're seeing on retail sell-through and retail pricing in 3Q and then the trend in the 4Q?

Yes. So Eric, so -- and I think I mentioned this in the earlier earnings call, we have our sell-through data on about 65% of the retail landscape. There is unfortunately no data source which reports across the board for all retailers. But I would say 65% of our retailers, of course, excluding the builder space, gives you a pretty good perspective. And then you always calibrate against what we know is our respective balance of sale or "market share" with the respective retailers. You calibrate these numbers that gives you a reasonably good perspective about where industry is likely to be. I would say, on a year-to-date basis, the overall industry sell-through in appliances is very close to what we communicated at the beginning of the overall market demand. So I would say it's somewhere between 0% and plus 1%, not a whole lot strong with a lot of ups and downs. So whatever you see is industry shipment data, which fluctuates, that's more driven by just imports, et cetera. The actual sell-through is, I would say, best in low single digits. We also see that continuing through Q3. So it's not negative. But keep in mind that slightly maybe 1% or 2% plus sell-through is more driven still by the replacement market and less by the discretionary. That hasn't changed, but it's not a negative market. Now in all transparency, and obviously, we can't get into too much detail, it differs pretty strongly by retailer. There are some retailers more on the winning side and some retailers more on the losing side. But overall, across the market, it is I would say, a very low single-digit growth rate.

Okay. And then secondly, just to clarify, the preloaded imports, obviously, you've talked a lot about this. Is this crowding out volume? Your revenue growth in North America was better-than-expected number. Is this just facilitating or delaying an increase in pricing a reduction in promotion? Or is it having a negative impact on your volumes? I'm just trying to square where this -- where you're implying that this is having an impact?

Yes. So Eric, I would say, in simple terms, the volume growth for us, and that I referred to is on came largely back -- but real growth came on the back of a new product. And on the promotional side of business, we held the line, and that was a conscious decision. I don't want to scale our factors, we held our line. So going forward, of course, it's impossible to say what our competitors might do. I would say once the inventory overhang is reduced or diminished then you will see a more, what we would call, normalization promotion environment, i.e., promotions reflecting the true, including tariffs cost base.

Your next question comes from the line of Rafe Jadrosich from Bank of America.

It looks like the unmitigated tariff impact is unchanged at like 150 basis points. Can you talk about the mitigated impact, like what you're planning for this year and if some of that's going to carry into next year? And what's like changed on the assumptions there?

Yes. I think, Rafe, the biggest thing is -- and more if you go through -- and this is Jim. If you go through the margin walk, what you can see is that the tariff cost is in line with where we thought. But to Marc's point and what he was just talking about earlier, with the amount of preloaded inventory that's been in the marketplace, the level of intensity in the promotional environment has been higher than we really anticipated throughout the year-end. And so I think that's the biggest thing right now is that, as Marc said, we really held the line in terms of our promotional spend and all that, but we really thought that at some point, you would see it taper off later in the year. And right now, with the amount of just inventory that was preloaded, it's continued, but we do expect now that tapering off to probably come more next year.

I guess that brings us to the end of the questions. But first of all, we're already a little bit over time. Thank you all for joining us today. I don't want to recap everything we said, but I just want to come back to what I said at the very beginning. We feel really good about our growth, the underlying organic growth in particularly North America, new products and small domestic. We don't like where our margins are right now. At the same time, and I think you heard that, we strongly believe this is a temporary effect. And in the meantime, we do what is in our control, namely with new products and cost launches. And I think the 2 macro cycles, which we talk about, they will turn in our favor. It's not a question of if, it's entirely question about when. But again, we also have a lot of opportunities with our internal growth levers and cost levers, and we will remain focused on these ones. So again, thanks for joining us, and we will talk to each other again in late January. Thanks a lot.

Ladies and gentlemen, that concludes today's conference call. You may now disconnect.