Whirlpool Corp: Form 10-Q for the period ended Jun 30, 2025

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition of the Company and generally discusses the results of operations for the current three and six months ended periods compared to the same prior-year periods. MD&A is provided as a supplement to, and should be read in connection with, the Consolidated Condensed Financial Statements and Notes to the Consolidated Condensed Financial Statements included in this Form 10-Q.

Certain references to particular information in the Notes to the Consolidated Condensed Financial Statements are made to assist readers.

ABOUT WHIRLPOOL

Whirlpool Corporation ("Whirlpool") is a leading kitchen and laundry appliance company, in constant pursuit of improving life at home and inspiring generations with our brands. The company is driving meaningful innovation to meet the evolving needs of consumers through its iconic brand portfolio, including Whirlpool, KitchenAid, JennAir, Maytag, Amana, Brastemp, Consul, and InSinkErator. In 2024, the Company reported approximately $17 billion in annual sales, 44,000 employees, and 40 manufacturing and technology research centers. We conduct our business through four operating segments, which consist of Major Domestic Appliances ("MDA") North America; MDA Latin America; MDA Asia; and Small Domestic Appliances ("SDA") Global. The MDA Europe segment was deconsolidated as of April 1, 2024.

OVERVIEW

Whirlpool delivered second-quarter net earnings (loss) available to Whirlpool of $65 million (net earnings margin of 1.7%), or $1.17 per share, compared to net earnings (loss) available to Whirlpool of $219 million (net earnings margin of 5.5%), or $3.96 per share in the same prior-year period. Whirlpool delivered cash provided by (used in) operating activities of $(702) million for the six months ended June 30, 2025, compared to $(485) million in the same prior year period and had capital expenditures of $154 million and $228 million, respectively.

Net earnings margins were favorably impacted by cost take out and product price/mix more than offset by negative currency impacts primarily in Latin America and higher income tax. The higher income tax rate compared to the same prior-year period was primarily due to tax benefits related to the completion of legal entity restructuring projects in connection with the disposal of our European major appliances business in the prior period.

We continue to take actions to deliver shareholder value as we navigate through a challenging macro environment in North America. We remain confident in delivering approximately $200 million of cost take out, implementing previously announced pricing actions, introducing over 100 new products, and expanding margins in 2025.

RESULTS OF OPERATIONS

The following table summarizes the consolidated results of operations for the periods presented:

Consolidated - Millions of dollars, except per share data

(1) Not meaningful ("nm")

(2) As a result of the GAAP earnings loss for the six months ended June 30, 2024 the impact of antidilutive shares was excluded from the loss per share calculation on a GAAP basis.

Consolidated net sales decreased 5.4% and 12.8% for the three and six months ended June 30, 2025 compared to the same periods in 2024. The decrease for the three and six months ended June 30, 2025 was primarily driven by lower volume and the unfavorable impact of foreign currency, partially offset by favorable product price/mix. Excluding the impact of foreign currency, net sales decreased 3.2% and 10.1% for the three and six months ended June 30, 2025, compared to the same periods in 2024. The decrease for the six months ended was primarily driven by the deconsolidation of our European major domestic appliances business, which had approximately $800 million of sales for the six months ended June 30, 2024 (representing 9.5% of total net sales for the period).

The consolidated gross margin percentage for the three and six months ended June 30, 2025 increased to 16.2% and 16.5% compared to 15.7% and 14.9% in the same prior-year period. The increase was primarily driven by cost take out and favorable product price/mix, partially offset by lower volume.

The following is a discussion of results for each of our operating segments, which consist of MDA North America; MDA Latin America; MDA Asia; and SDA Global. For additional information, see Note 13 to the Consolidated Condensed Financial Statements.

MDA NORTH AMERICA

Net Sales

Net sales decreased 4.7% and 2.6% for the three and six months ended June 30, 2025 compared to the same periods in 2024. The decrease was primarily driven by unfavorable volume partially offset by favorable product price/mix. Excluding the impact from foreign currency, net sales decreased 4.6% and 2.3% for the three and six months ended June 30, 2025, compared to the same periods in 2024.

Cost of Products Sold

Cost of products sold for the three and six months ended June 30, 2025 decreased 5.3% and 4.0% compared to the same periods in 2024. The decrease was primarily driven by lower volume and cost take out.

EBIT

EBIT decreased for the three and six months ended June 30, 2025 compared to the same periods in 2024. The decrease for the three and six months ended was primarily due to lower volume partially offset by cost take out. EBIT margin was 5.9% and 6.0% for the three and six months ended June 30, 2025, compared to 6.3% and 6.0% for the same periods in 2024.

MDA LATIN AMERICA

Net Sales

Net sales decreased 10.0% and 10.9% for the three and six months ended June 30, 2025, compared to the same periods in 2024. The decrease was primarily driven by unfavorable impacts of foreign currency partially offset by favorable product price/mix. Excluding the impact from foreign currency, net sales decreased 0.9% and increased 0.7% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024.

Cost of Products Sold

Cost of products sold for the three and six months ended June 30, 2025 decreased 9.2% and 10.0% compared to the same periods in 2024. The decrease was primarily driven by lower volume and cost take out.

EBIT

EBIT decreased for the three and six months ended months ended June 30, 2025 compared to the same periods in 2024. The decrease for the three and six months ended was primarily driven by unfavorable currency partially offset by favorable cost take out and product price/mix. In addition, the decrease for the six months ended was also unfavorably impacted by an indirect tax benefit in the same period in 2024. EBIT margin was 6.0% and 6.3% for the three and six months ended June 30, 2025, compared to 5.8% and 6.7% for the same periods in 2024.

MDA ASIA

Net Sales

Net sales decreased 5.9% and increased 1.6% for the three and six months ended June 30, 2025 compared to the same periods in 2024. The decrease for the three months ended was primarily driven by lower volume partially offset by favorable product price/mix. The increase for the six months ended was primarily driven by favorable product price/mix and increased volume. Excluding the impact from foreign currency, net sales decreased 3.7% and increased 4.6% for the three and six months ended June 30, 2025 compared to the same periods in 2024.

Cost of Products Sold

Cost of products sold for the three and six months ended June 30, 2025 decreased 7.2% and 0.8% compared to the same periods in 2024. The decrease for the three months ended was primarily driven by lower volume and cost take out. The decrease for the six months ended was primarily driven by cost take out partially offset by increased volume.

EBIT

EBIT increased for the three and six months ended June 30, 2025 compared to the same periods in 2024. The increase was primarily driven by cost take out. EBIT margin was 7.1% for both three and six months ended June 30, 2025 compared to 6.2% and 5.4% for the same periods in 2024.

SDA GLOBAL

Net Sales

Net sales increased 7.5% and 7.7% for the three and six months ended June 30, 2025 compared to the same periods in 2024. The increase was primarily driven by favorable product price/mix. Excluding the impact from foreign currency, net sales increased 6.8% and 8.3% for the three and six months ended June 30, 2025 compared to the same periods in 2024.

Cost of Products Sold

Cost of products sold for the three and six months ended June 30, 2025 increased 12.0% and 8.7% compared to the same periods in 2024. The increase was primarily driven by product mix.

EBIT

EBIT increased for the three and six months ended June 30, 2025 compared to the same periods in 2024. The increase was primarily driven by favorable product price/mix. EBIT margin was 17.3% and 17.9% for the three and six months ended June 30, 2025 compared to 13.9% and 16.3% for the same periods in 2024.

MDA EUROPE

Net Sales, Cost of Products Sold, and EBIT

MDA Europe consisted of our European major domestic appliance business which was contributed to Beko Europe as of April 1, 2024. Therefore, the Company had no net sales, cost of products sold, or EBIT for MDA Europe after the first quarter of 2024. For additional information on the financial performance of MDA Europe for the three months ended March 31, 2024, see our Form 10-Q for the quarter then ended.

Selling, General and Administrative

The following table summarizes selling, general and administrative expenses as a percentage of net sales by region for the periods presented:

Consolidated selling, general and administrative expenses decreased for the six months ended June 30, 2025, compared to the same period in 2024 primarily due to the disposal of our European major domestic appliance business on April 1, 2024.

For additional information, see Notes 1 and 14 to the Consolidated Condensed Financial Statements.

Restructuring

We incurred restructuring charges of $2 million and $11 million for the three and six months ended June 30, 2025 compared to $50 million and $73 million for the same periods in 2024. For additional information, see Note 11 to the Consolidated Condensed Financial Statements.

For the full year 2025, we expect to incur approximately $50 million of restructuring charges, inclusive of the restructuring charges recorded for the six months ended June 30, 2025. Substantially all will result in cash settlement.

(Gain) Loss on Sale and Disposal of Businesses

There were no amounts recorded to (Gain) loss on sale and disposal of businesses for the three and six months ended June 30, 2025, compared to $45 million and $292 million for the same periods of 2024. The amounts recorded in 2024 were related to the divestiture of our European major domestic appliance business and were primarily due to fair value fluctuations driven by seasonality of net working capital, and transaction costs.

For additional information, see Note 14 to the Consolidated Condensed Financial Statements.

Interest and Sundry (Income) Expense

Net interest and sundry (income) expense was $(4) million and $(36) million for the three and six months ended June 30, 2025 compared to $7 million and $(21) million in the same prior year periods in 2024.

For additional information, see Note 8 to the Consolidated Condensed Financial Statements.

Interest Expense

Interest expense was $86 million and $164 million for the three and six months ended June 30, 2025 compared to $93 million and $183 million in the same prior year periods of 2024.

Income Taxes

Income tax expense was $29 million and $72 million for the three and six months ended June 30, 2025 compared to income tax benefit of $206 million and $130 million in the same prior year periods of 2024. The tax benefits recognized in 2024 were related to the completion of legal entity restructuring projects in connection with the disposal of our European major appliance business, partially offset by associated valuation allowances. For more information, see Note 12 to the Consolidated Condensed Financial Statements.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

Other Information

Our Critical Accounting Policies and Estimates for goodwill and other indefinite-lived intangibles are disclosed in Note 1 to the Consolidated Financial Statements and in Management's Discussion and Analysis of our annual report on Form 10-K for the fiscal year ended December 31, 2024.

We continue to monitor the significant global economic uncertainty to assess the outlook for demand for our products and the impact on our business and our overall financial performance. Our Maytag and InSinkErator trademarks continue to be at risk at June 30, 2025. None of our reporting units or other indefinite-lived intangible assets are presently at risk for future impairment.

For additional information, see Note 1 to the Consolidated Condensed Financial Statements.

FINANCIAL CONDITION AND LIQUIDITY

Background

Our objective is to finance our business through operating cash flow and the appropriate mix of long-term and short-term debt. By diversifying the maturity structure, we avoid concentrations of debt, reducing liquidity risk. We have varying needs for short-term working capital financing as a result of the nature of our business. We regularly review our capital structure and liquidity priorities, which include funding innovation and growth through capital expenditures and research and development expenditures as well as opportunistic mergers and acquisitions; and providing returns to shareholders through dividends, share repurchases and debt repayment.

The Company believes that free cash flow provides stockholders with a relevant measure of liquidity and a useful basis for assessing Whirlpool's ability to fund its activities and obligations. Whirlpool has historically been able to leverage its free cash flow generation to fund our operations, pay for any debt servicing costs and allocate capital for reinvestment in our business, funding share repurchases and dividend payments.

On February 20, 2024, Whirlpool’s wholly-owned subsidiary, Whirlpool Mauritius Limited, executed the sale of 30.4 million equity shares of Whirlpool India via an on-market trade. The transaction reduced Whirlpool’s ownership in Whirlpool India from 75% to 51%, and generated sales proceeds of approximately $462 million on settlement. The Company used transaction proceeds to reduce debt. We have announced our intent to reduce our ownership stake in Whirlpool India and continue to evaluate various transaction structures, including via market sale and negotiated transaction. We are targeting transaction completion around the end of 2025. Transaction proceeds are expected to further reduce debt. Sale of Whirlpool India shares is subject to Company board approval, and we have not recorded any impact relating to this announcement as of June 30, 2025.

During the second quarter, our senior unsecured debt was downgraded to a non-investment grade rating from Moody’s Investors Service, Inc. (to Ba1, with negative outlook), S&P Global Ratings (to BB+, with stable outlook), and Fitch Ratings, Inc. (to BB+, with negative outlook). As a result of these downgrades, our debt currently has a non-investment grade rating from these rating agencies, which has partially reduced access to and increased costs associated with accessing certain types of financing that are typically reserved for investment-grade companies (e.g. commercial paper). Please see Part II, Item 1A “Risk Factors” for a discussion of impacts related to potential further developments or downgrades to our credit ratings.

Our short-term potential uses of liquidity include funding our business operations, ongoing capital spending, debt repayment, and returns to shareholders. As of June 30, 2025, we had $1.5 billion of debt maturing within the next twelve months (primarily composed of $950 million of Amended Long-Term Facility debt and $300 million of maturing term loan debt), which we expect to pay through refinancing, free cash flow generation, cash on hand and potential transaction proceeds.

Cash and cash equivalents

The Company had cash and cash equivalents of approximately $1.1 billion at June 30, 2025. For cash in each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and expected future foreign investments. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with the repatriation of cash due to the complexity of its hypothetical calculation.

At June 30, 2025, we had cash or cash equivalents greater than 1% of our consolidated assets in Brazil (2.6%) and India (2.1%). In addition, we had third-party accounts receivable outside of the United States greater than 1% of our consolidated assets in Mexico, which represented 1.0%. We continue to monitor general financial instability and uncertainty globally.

Revolving credit facility and other committed credit facilities

At June 30, 2025, we had $950 million outstanding under the Amended Long-Term Facility and $300 million outstanding under the Term Loan Agreement. In addition to the committed $3.5 billion Amended Long-Term Facility and the committed $1.5 billion Term Loan Agreement (of which $1.2 billion has been repaid as of June 30, 2025), we have committed credit facilities in Brazil and India. These committed credit facilities provide borrowings up to approximately $195 million at June 30, 2025

We were in compliance with our interest coverage ratio covenant under the Amended Long-Term Facility and Term Loan Agreement for all fiscal quarters through June 30, 2025. For additional information, see Note 5 to the Consolidated Condensed Financial Statements.

Notes payable

As of June 30, 2025, we have $1.2 billion of notes payable outstanding. This includes the current portion of the outstanding amount under the Amended Long-Term Facility that is expected to be repaid in the next twelve months, commercial paper, and short-term borrowings payable to banks, which are generally used to fund working capital requirements. For additional information, see Note 5 to the Consolidated Condensed Financial Statements.

Trade customers

We continue to review customer conditions globally. We had no material impacts from customer insolvencies during the three months ended June 30, 2025, nor do we have immediate visibility into material customer insolvency situations occurring in the future. We continue to monitor these situations, considering each geographic region, the unique credit risk specific to the country, marketplace and economic environment, and take appropriate risk mitigation steps.

For additional information on guarantees, see Note 6 to the Consolidated Condensed Financial Statements.

Share Repurchase Program

For additional information about our share repurchase program, see Note 10 to the Consolidated Condensed Financial Statements.

Sources and Uses of Cash

The following table summarizes the net increase (decrease) in cash and cash equivalents for the periods presented:

Cash Flows from Operating Activities

Cash used in operating activities increased during the six months ended June 30, 2025 compared to the same prior year period. The increase in cash used in operating activities was primarily driven by fluctuations in working capital.

The timing of cash flows from operations varies significantly throughout the year primarily due to changes in production levels, sales patterns, promotional programs, funding requirements, credit management, as well as receivable and payment terms. Depending on the timing of cash flows, the location of cash balances, as well as the liquidity requirements of each country, external sources of funding are used to support working capital requirements.

Cash Flows from Investing Activities

Cash used in investing activities during the six months ended June 30, 2025 decreased compared to the same period in 2024, primarily driven by lower capital expenditures.

Cash Flows from Financing Activities

Cash provided by financing activities during the six months ended June 30, 2025 increased compared to the same period in 2024, primarily driven by the drawdown of a portion of our Amended Long-Term Facility in the current period and the sale of minority interest shares in Whirlpool India in the prior-year period. For additional information, see Note 5 to the Consolidated Condensed Financial Statements.

Financing Arrangements

The Company had total committed credit facilities of approximately $4.0 billion at June 30, 2025. These facilities are geographically reflective of the Company's global operations. The Company is confident that the committed credit facilities are sufficient to support its global operations. At June 30, 2025, we had $1.25 billion drawn on the committed facilities, which includes $950 million outstanding under the Amended Long-Term Facility and $300 million outstanding under the Term Loan Agreement. We had no borrowings outstanding under the Amended Long-Term Facility and $1.5 billion outstanding under the Term Loan Agreement at December 31, 2024, respectively.

For additional information about our financing arrangements, see Note 5 to the Consolidated Condensed Financial Statements.

Dividends

On April 14, 2025, our Board of Directors approved a quarterly dividend on our common stock of $1.75 per share.

Off-Balance Sheet Arrangements

In the ordinary course of business, we enter into agreements with financial institutions to issue bank guarantees, letters of credit, and surety bonds. These agreements are primarily associated with unresolved tax matters in Brazil, as is customary under local regulations, and other governmental obligations and debt agreements. At June 30, 2025, we had approximately $334 million outstanding under these agreements.

For additional information about our off-balance sheet arrangements, see Notes 5 and 6 to the Consolidated Condensed Financial Statements.

FORWARD-LOOKING PERSPECTIVE

Earnings per diluted share presented below are net of tax. We currently estimate our anticipated 2025 full-year GAAP tax rate between 20 and 25%. We currently estimate earnings per diluted share for 2025 as follows:

For the full-year 2025, we expect to generate cash from operating activities of approximately $850 million and capital expenditures of approximately $450 million.

OTHER MATTERS

For additional information regarding certain of our loss contingencies/litigation, see Note 6 to the Consolidated Condensed Financial Statements. Unfavorable outcomes in these proceedings could have a material adverse effect on our financial statements in any particular reporting period.

Antidumping

As previously reported, Whirlpool filed petitions in 2011 and 2015 alleging that Samsung, LG and Electrolux violated U.S. and international trade laws by dumping large residential washers into the U.S. Those petitions resulted in orders imposing antidumping duties on certain large residential washers imported from South Korea, Mexico, and China, and countervailing duties on certain large residential washers from South Korea. In August 2022, the order covering certain large residential washers from China was extended for an additional five years. In September 2024, the order covering certain large residential washers from Mexico was extended for an additional five years.

Raw Materials and Global Economy

The current domestic and international political environment have contributed to uncertainty surrounding the future state of the global economy. We have experienced raw material inflation in certain prior years based on the impact of U.S. tariffs and other global macroeconomic factors.

The recent imposition of significant trade policy and tariff actions by the U.S. government, including but not limited to tariffs on imported steel and aluminum products, multiple tariffs on certain imports from China, tariffs on certain imports from Canada and Mexico, and baseline tariffs on most imports from most other countries, are creating significant uncertainty and potential risks for our business. These actions have increased the cost of certain raw materials and components, impacting our cost of products sold, and have led to "pre-loading" of finished product inventories by foreign competitors. Pre-loading by competitors can delay expected positive impacts of tariffs on appliances and impact competitors’ go-to-market actions. These actions have also created significant uncertainty and potential risks for our business.

During the second quarter, home appliance imports were added as derivative steel products under Section 232, effective June 23, 2025. This action, coupled with other tariff and trade policy actions taken by the U.S. government, is expected to help close long-standing loopholes and help support a level playing field for domestic producers.

While we continue to actively explore opportunities to mitigate certain increased costs, there can be no guarantee that we will be able to fully offset the impact of these tariffs. Furthermore, the imposition of retaliatory tariffs from other countries on our exported products could negatively affect our sales and marketplace access in those countries. The long-term effects of these tariffs and any future trade policy changes on the global economy and our industry remain uncertain and could have a material adverse effect on our financial statements in any particular reporting period.

In addition to existing and potential additional tariff actions by the U.S. government and retaliatory actions by others, and certain additional factors beyond our control, including the conflict in Ukraine and related sanctions, the Israel-Palestinian conflict, the Red Sea conflict and its impact on shipping and logistics, and government actions in China, among other factors, we expect to continue to experience the following impacts: a global shortage of certain components, such as semiconductors, raw material and input cost inflation, and fluctuations in logistics availability, timing and costs. This could require us to modify our current business practices, and could have a material adverse effect on our financial statements in any particular reporting period.

(a) Evaluation of disclosure controls and procedures

Prior to filing this report, we completed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of June 30, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025.

(b) Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, other than as set forth below.

Changes in foreign trade policies and other factors beyond our control may adversely impact our business and financial performance.

The current domestic and international political environment, including changes in administrations, government shutdowns and changes to trade laws, regulations and policies, including tariffs, sanctions, and import/export controls, has resulted in uncertainty surrounding the future state of the global economy. Many of our most significant competitors are foreign companies with varying global production footprints, and in an escalating global trade conflict, tariffs, sanctions or other trade policy actions by various governments could be favorable to our competitors.

The U.S. government recently implemented significant trade policy and tariff actions, including but not limited to tariffs on imported steel and aluminum products, multiple tariffs on certain imports from China, tariffs on certain imports from Canada and Mexico, and baseline tariffs on most imports from most other countries. These actions have increased the cost of certain raw materials and components, have led to "pre-loading" of finished product inventories by foreign competitors in advance of tariff implementation, and created significant uncertainty and potential risks for our business, including potential additional pre-loading by competitors if tariff implementation is delayed. Pre-loading by competitors can delay expected positive impacts of tariffs on finished appliances and impact competitors’ go-to-market actions. Certain countries have announced retaliatory tariffs in response to such actions. The U.S. government may in the future propose and implement additional changes to international trade agreements, tariffs, taxes, and other government rules and regulations and, if initiated, retaliatory tariffs or other actions may be taken by certain governments. While the future financial impact of these actions and potential additional U.S. tariff actions and retaliatory actions by other countries remains unknown, the impacts could have a material adverse effect on our financial statements in any particular reporting period.

Our credit ratings were recently downgraded below investment grade and our access to certain types of financing and borrowing costs have been and may continue to be negatively impacted.

Our costs of borrowing and ability to access the capital markets are affected not only by market conditions but also by the short- and long-term credit ratings assigned to our debt by the major credit rating agencies. These ratings are based, in significant part, on our financial performance as measured by metrics such as profitability, interest coverage and leverage ratios, as well as economic conditions in the geographies in which we operate.

During the second quarter of 2025, Moody’s downgraded our senior unsecured debt rating to Ba1, with a negative outlook; S&P downgraded our unsecured debt rating to BB+, with a stable outlook; and Fitch downgraded our unsecured debt rating to BB+, with a negative outlook. As a result of these downgrades, our debt currently carries a non-investment-grade rating from each of Moody’s, S&P, and Fitch, which has partially reduced access to and increased the costs associated with accessing certain types of financing typically reserved for investment-grade companies (e.g. commercial paper).

Our credit ratings are subject to periodic review by Moody’s, S&P, and Fitch, and may be subject to rating and periodic review by additional independent credit rating agencies in the future. Further developments or downgrades to our credit ratings, including any announcement that our ratings are under further review for an additional downgrade by any of the major credit rating agencies, could result in additional increased borrowing costs, and could adversely affect our liquidity, competitive position and access to the capital markets, which could have an adverse effect on our cash flow, results of operations and financial condition. In addition, further increased borrowing costs and/or reduced EBITDA performance could result in non-compliance with the interest coverage ratio in our credit facilities, which could further restrict our access to capital and increase costs associated with our financing activities.

Please see Note 5 to the Consolidated Condensed Financial Statements for a summary of the ratings downgrade and recent financing activities.