Whirlpool Corp.

The negative outlook reflects the potential for a lower rating over the next few quarters if sales and EBITDA decline materially without prospects for a significant rebound in 2021, most likely due to an adverse economic impact from the pandemic. We could lower the rating if we forecast that Whirlpool will sustain adjusted leverage over 3.0x as of the end of 2021 due to a protracted economic downturn, including substantially weaker demand or significant supply chain disruptions. Rating pressure could also result if Whirlpool makes large, debt-financed acquisitions or share repurchases, though we believe this is unlikely over at least the next year. We could revise our outlook to stable if the risk of a sustained economic downturn recedes and

...We expect Whirlpool's credit ratios to weaken considerably in 2020 though significant improvement is forecasted for 2021-2022 because of its initiatives and our economists' recovery expectations Assuming the economy begins to recover in the second half of 2020, we project Whirlpool should be able to restore credit ratios to near pre-coronavirus levels by around the end of 2021. Our economists expect a 5.2% drop in 2020 U.S. real GDP followed by 6.2% growth in 2021. We assume 2020 sales and adjusted EBITDA will decline by about 20% and 30%, respectively, with adjusted leverage approaching 4.5x, compared to 2.9x as of Dec. 31, 2019. The substantial reduction in economic activity associated with the coronavirus will hurt housing turnover and discretionary spending on remodeling, which combined drive about 45% of sales. Replacement-driven demand (which is less cyclical and drives about 55% of sales) and the recent increase in lower margin product sales (such as freezers and microwaves attributable...

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