Whirlpool Corp.

Our stable outlook reflects our forecast that Whirlpool will benefit from recent cost-takeout initiatives, price increases, and innovation to offset continued inflation (partly driven by tariffs) and weaker housing conditions. We also assume that Whirlpool sells the Embraco business over the next few months and uses the net cash proceeds for debt reduction, reducing adjusted leverage below 3x at year-end 2019. We could lower the rating if the global macroeconomic environment worsens significantly or commodity costs increase substantially such that profitability weakens materially, resulting in leverage sustained over 3x. Rating pressure could also result if we believe the company will face significant hurdles or delays closing the Embraco transaction and reducing adjusted leverage to below 3x, or if Whirlpool makes

...Financial policy has at least temporarily become more aggressive over the past two years, potentially leading to a negative rating action in 2019 if, in our view, the probability for meaningful near-term deleveraging declines. Whirlpool repurchased $1.15 billion of stock in 2018, including via a $1 billion modified Dutch auction tender offer. This follows $750 million repurchased in 2017. We believe the tender offer, initially funded with the net proceeds from a $1 billion term loan, was driven by Whirlpool's agreement to sell its Embraco compressor business to Nidec Corp. for $1.08 billion, which has yet to close. The Embraco disposal proceeds will be used for debt repayment, resulting in pro forma S&P Global Ratings-adjusted leverage slightly below 3x, compared to around 3.5x as of Dec. 31, 2018. Whirlpool stated on its fourth quarter earnings call that it expects to reduce leverage close to its 2x gross debt-to-EBITDA target by the end of 2019, which we view as optimistic, but nevertheless...

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