The FINANCIAL — Whirlpool Corporation announced on October 24 third-quarter GAAP net earnings of $238 million, or $3.10 per diluted share, compared to $235 million, or $2.95 per diluted share, reported for the same prior-year period. Ongoing business earnings per diluted share totaled $3.66 compared to $3.45 in the same prior-year period.
“In a challenging external environment, we delivered record third-quarter ongoing earnings per share by leveraging our portfolio of leading brands, innovative new products and a continued focus on cost productivity. The fundamentals of our business are strong, and as a result of our operational execution we have delivered earnings per share growth of 18 percent year-to-date,” said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. “We remain focused on creating value for our shareholders and returning cash through our share repurchase and dividend programs.”
Third-quarter net sales were $5.2 billion, compared to $5.3 billion in the same prior-year period. Excluding the impact of currency, sales increased slightly.
Third-quarter GAAP operating profit totaled $370 million, or 7.0 percent of sales, compared to $329 million, or 6.2 percent of sales, in the same prior-year period. Third-quarter ongoing business operating profit totaled $413 million, or 7.9 percent of sales, compared to $418 million, or 7.9 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, ongoing cost productivity, unit volume growth, benefits from cost and capacity reduction initiatives and acquisition synergies offset unfavorable impacts from product price/mix and foreign currency; on a GAAP basis, results were positively impacted by lower restructuring expenses and legacy product warranty and liability expenses recognized in the prior year, according to Whirlpool Corporation.
For the nine months ended September 30, 2016, the company reported cash used in operating activities of $(175) million compared to $(157) million in the same prior-year period. Whirlpool Corporation reported free cash flow of $(466) million for the first nine months of 2016 compared to $(492) million in the same prior-year period.
THIRD-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported third-quarter net sales of $2.9 billion, compared to $2.8 billion in the same prior-year period. Excluding the impact of currency, sales increased 3 percent.
The region reported third-quarter GAAP operating profit of $346 million, or 12.1 percent of sales, compared to $349 million, or 12.5 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $346 million, or 12.1 percent of sales, compared to $336 million, or 12.0 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, unit volume growth and ongoing cost productivity more than offset unfavorable impacts from product price/mix and foreign currency; on a GAAP basis, prior-year results were positively impacted by the recognition of a post-retirement benefit curtailment gain.
The company now expects full-year 2016 industry unit shipments in the U.S. to increase by 3 to 4 percent.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported third-quarter net sales of $1.3 billion, compared to $1.5 billion in the same prior-year period. Excluding the impact of currency, sales decreased by 6 percent.
The region reported third-quarter GAAP operating profit of $40 million, or 3.0 percent of sales, compared to $32 million, or 2.2 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $48 million, or 3.7 percent of sales, compared to $71 million, or 4.9 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, cost and capacity reductions and acquisition synergies were more than offset by foreign currency and product price/mix; on a GAAP basis, current period results were negatively impacted by acquisition integration costs and prior-year period results were negatively impacted by legacy product warranty and liability expenses.
The company continues to expect full-year 2016 industry unit shipments to be flat to up 2 percent.
Whirlpool Latin America
Whirlpool Latin America reported third-quarter net sales of $800 million, compared to $751 million in the same prior-year period. Excluding the impact of currency, sales increased by 2 percent.
The region reported third-quarter operating profit of $45 million, or 5.7 percent of sales, compared to $31 million, or 4.2 percent of sales, in the same prior-year period, driven by favorable product price/mix and benefits from cost and capacity reduction initiatives partially offset by unit volume declines.
The company now expects full-year 2016 industry unit shipments in Brazil to decrease by 10 to 12 percent.
Whirlpool Asia
Whirlpool Asia reported third-quarter net sales of $338 million compared to $346 million in the same prior-year period. Excluding the impact of currency, sales increased 2 percent.
The region reported third-quarter GAAP operating profit of $15 million, or 4.4 percent of sales, compared to $24 million, or 6.7 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $17 million, or 4.9 percent of sales, compared to $27 million, or 7.7 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, favorable ongoing cost productivity was more than offset by product price/mix and increased investments in marketing, technology and products.
The company continues to expect full-year 2016 industry unit shipments to be flat to down 2 percent.
Regional Summary
“We are pleased with strong revenue growth, market share gains and ongoing margin expansion in North America and Latin America that overcame industry softness and currency volatility,” said Marc Bitzer, president and chief operating officer of Whirlpool Corporation. “In Europe, the U.K. environment remains challenging, but we continue to execute brand and product transitions while adjusting our production levels to right-size our inventory. In Asia, we remain focused on deploying our products across our new, larger distribution network.”
OUTLOOK
For the full-year 2016, Whirlpool Corporation now expects GAAP earnings per diluted share of $11.50 to $11.75 and ongoing business earnings per diluted share of $14.00 to $14.25. These changes are primarily related to demand softness in the U.S. and the U.K., along with the continued devaluation of the British Pound.
For the full-year 2016, the company expects to generate cash from operating activities of $1,350 to $1,400 million and free cash flow of approximately $700 million. Included in this guidance are primarily acquisition-related restructuring cash outlays of up to $150 million, legacy product warranty and liability costs of $155 million and, with respect to free cash flow, capital spending of $650 to $700 million.
“We are confident that our previously deployed plans will deliver a record year of performance with strong revenue growth and margin expansion as we manage through continued challenges in a volatile global environment,” said Fettig. “Our long-term strategic priorities remain unchanged and we will continue to deliver shareholder value through the execution of our priorities and a balanced approach to capital allocation.”
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