Whirlpool Corporation Reports Strong Third-Quarter 2019 Results

BENTON HARBOR, Mich., Oct. 22, 2019 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR) announced today third-quarter GAAP net earnings of $358 million (7.0 percent of sales), or $5.57 per diluted share, compared to $210 million (3.9 percent of sales), or $3.22 per diluted share, reported for the same prior-year period. On a GAAP basis, net earnings margin, or earnings as a percent of sales, was favorably impacted by a gain on the sale of the Embraco compressor business of approximately $511 million, partially offset by product warranty and liability expense of $119 million. GAAP net earnings margin and ongoing EBIT⁽²⁾ margin were favorably impacted by price/mix and focused cost discipline. Third-quarter ongoing earnings per diluted share⁽¹⁾ were $3.97, compared to $4.55 in the same prior-year period. The Company's prior-year period GAAP and ongoing earnings per diluted share were favorably impacted by a lower effective tax rate, primarily related to pre-funding of its U.S. pension and other tax planning strategies.

"We have sustained momentum towards achieving our long-term financial goals despite global economic volatility and remain committed to our robust strategy for creating shareholder value," said Marc Bitzer, chairman and chief executive officer of Whirlpool Corporation. "Our fundamentals remain strong, and we made solid progress against our stated priorities with near-break even performance in EMEA and strong results in North America."

Third-quarter net sales were $5.1 billion, compared to $5.3 billion in the same prior-year period, a decrease of 4.4 percent. Organic net sales (non-GAAP)⁽⁶⁾ increased 1.6 percent.

Third-quarter EBIT⁽²⁾ was $722 million, or 14.2 percent of sales, compared to $275 million, or 5.2 percent of sales, in the same prior-year period. Third-quarter ongoing EBIT⁽²⁾ was $364 million, or 7.2 percent of sales, compared to $332 million, or 6.2 percent of sales, in the same prior-year period. The Company's third-quarter 2018 results include $21 million of EBIT⁽³⁾ related to the Embraco compressor business.

Third-quarter interest and sundry income was $29 million, compared to $24 million expense in the prior year, primarily driven by currency related hedging gains which were offset by an unfavorable foreign currency impact in gross margin.

For the nine months ended September 30, 2019, the Company reported cash used in operating activities of $(566) million, compared to $(615) million in the prior year; the $49 million improvement was primarily driven by higher net earnings. The Company reported free cash flow⁽⁴⁾ of $(805) million for the first nine months of 2019, compared to $(874) million for the first nine months of 2018, primarily driven by higher net earnings and lower capital expenditures.

THIRD-QUARTER REGIONAL REVIEW

Whirlpool North America

Whirlpool North America reported third-quarter net sales of $3.0 billion, compared to $3.0 billion in the same prior-year period, an increase of 0.5 percent. Excluding the impact of currency, sales increased 0.6 percent.

The region reported third-quarter EBIT⁽³⁾ of $387 million, or 12.8 percent of sales, compared to EBIT of $343 million, or 11.5 percent of sales, in the same prior-year period. Third-quarter prior year ongoing EBIT⁽³⁾ was $360 million, or 12.0 percent. During the quarter, the favorable impact of product price/mix and cost productivity benefits were partially offset by lower unit volumes and continued cost inflation.

Whirlpool Europe, Middle East and Africa

Whirlpool Europe, Middle East and Africa reported third-quarter net sales of $1.1 billion, compared to $1.1 billion in the same prior-year period, a decrease of 3.8 percent. Excluding the impact of currency, sales decreased 0.4 percent.

The region reported third-quarter EBIT⁽³⁾ of $(18) million, or (1.7) percent of sales, compared to $(39) million, or (3.4) percent of sales, in the same prior-year period. Ongoing EBIT⁽³⁾ was $(4) million, or (0.4) percent of sales, compared to $(39) million, or (3.4) percent of sales, in the same prior-year period. During the quarter, EBIT⁽³⁾ and ongoing EBIT⁽³⁾ were favorably impacted by cost reduction initiatives and lower raw material inflation.

Whirlpool Latin America

Whirlpool Latin America reported third-quarter net sales of $632 million, compared to $878 million in the same prior-year period, a decrease of 27.9 percent. Organic net sales (non-GAAP)⁽⁶⁾ increased by 4.1 percent.

The region reported third-quarter EBIT⁽³⁾ of $29 million, or 4.6 percent of sales, compared to EBIT of $49 million, or 5.6 percent of sales, in the same prior-year period. Third-quarter prior year ongoing EBIT⁽³⁾ was $61 million, or 7.0 percent. During the quarter, the favorable impact of product price/mix and lower raw material inflation was more than offset by unfavorable currency and lower unit volumes related to temporary trade inventory timing. The Latin America region's third-quarter 2018 results include $21 million of EBIT⁽³⁾ related to the Embraco compressor business.

Whirlpool Asia

Whirlpool Asia reported third-quarter net sales of $358 million, compared to $339 million in the same prior-year period, an increase of 5.7 percent. Excluding the impact of currency, sales increased 7.1 percent.

The region reported third-quarter EBIT⁽³⁾ of $9 million, or 2.4 percent of sales, compared to $13 million, or 3.8 percent of sales, in the same prior-year period. During the quarter, the favorable impact of higher unit volumes, lower raw material inflation and cost takeout initiatives were more than offset by continued brand transition investments in China.

OUTLOOK

For the full-year 2019, the Company decreased its GAAP earnings per diluted share guidance to $16.80 to $17.55, as additional product warranty and liability expense was partially offset by adjustments to the Embraco gain on sale calculation. The Company has reaffirmed its ongoing earnings per diluted share⁽¹⁾ guidance of $14.75 to $15.50, and is trending towards the high end of the range.

For the full-year 2019⁽⁵⁾, the Company continues to expect to generate cash provided by operating activities of approximately $1.4 billion and free cash flow⁽⁴⁾ of approximately $800 million. Included in GAAP cash flow and free cash flow⁽⁴⁾ guidance are restructuring cash outlays of approximately $200 million and, with respect to free cash flow⁽⁴⁾, capital spending of approximately $625 million.

"We once again demonstrated the fundamental strength of our global business as we execute on our strategic initiatives, leading to margin expansion and improved cash generation," said Jim Peters, chief financial officer of Whirlpool Corporation. "Additionally, we strengthened our balance sheet and made significant progress towards our long-term debt leverage target with the repayment of our $1 billion term loan."

(1)  A reconciliation of ongoing earnings per diluted share, a non-GAAP financial measure, to reported net earnings per diluted share available to Whirlpool and other important information, appears below.

(2) A reconciliation of earnings before interest and taxes (EBIT) and ongoing EBIT, non-GAAP financial measures, to reported net earnings available to Whirlpool, and a reconciliation of EBIT margin and ongoing EBIT margin, non-GAAP financial measures, to net earnings margin and other important information, appears below.

(3) Segment EBIT and Ongoing Segment EBIT represents our consolidated EBIT broken down by the Company's reportable segments and are metrics used by the chief operating decision maker in accordance with ASC 280. Consolidated EBIT also includes corporate "Other/Eliminations" of $301 million and $(120) million for the third quarters of 2019 and 2018, respectively. Ongoing segment EBIT includes certain adjustments to segment EBIT, and a reconciliation and other important information, appears below.

(4) A reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by (used in) operating activities and other important information, appears below.

(5) Full-year 2019 free cash flow guidance reflects the net proceeds from the sale of the Embraco compressor business of approximately $1 billion and the associated term loan repayment of $1 billion.

(6) Organic net sales does not reflect the impact of exchange rate fluctuations and the Embraco divestiture.

About Whirlpool Corporation
Whirlpool Corporation (NYSE: WHR) is the leading major appliance manufacturer in the world, with approximately $21 billion in annual sales, 92,000 employees and 65 manufacturing and technology research centers in 2018. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir, Indesit and other major brand names in nearly every country throughout the world. Additional information about the company can be found at whirlpoolcorp.com, or find us on Twitter at @WhirlpoolCorp.

Website Disclosure
We routinely post important information for investors on our website, whirlpoolcorp.com, in the "Investors" section. We also intend to update the Hot Topics Q&A portion of this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.

Whirlpool Additional Information:
This document contains forward-looking statements about Whirlpool Corporation and its consolidated subsidiaries ("Whirlpool") that speak only as of this date. Whirlpool disclaims any obligation to update these statements. Forward-looking statements in this document may include, but are not limited to, statements regarding expected earnings per share, cash flow, productivity and raw material prices. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool's forward-looking statements. Among these factors are: (1) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers, and the impact of the changing retail environment; (2) Whirlpool's ability to maintain or increase sales to significant trade customers and the ability of these trade customers to maintain or increase market share; (3) Whirlpool's ability to maintain its reputation and brand image; (4) the ability of Whirlpool to achieve its business plans, productivity improvements, and cost control objectives, and to leverage its global operating platform, and accelerate the rate of innovation; (5) Whirlpool's ability to obtain and protect intellectual property rights; (6) acquisition and investment-related risks, including risks associated with our past acquisitions, and risks associated with our increased presence in emerging markets; (7) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from political, legal and economic instability; (8) information technology system failures, data security breaches, network disruptions, and cybersecurity attacks; (9) product liability and product recall costs; (10) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (11) our ability to attract, develop and retain executives and other qualified employees; (12) the impact of labor relations; (13) fluctuations in the cost of key materials (including steel, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (14) Whirlpool's ability to manage foreign currency fluctuations; (15) impacts from goodwill impairment and related charges; (16) triggering events or circumstances impacting the carrying value of our long-lived assets; (17) inventory and other asset risk; (18) the uncertain global economy and changes in economic conditions which affect demand for our products; (19) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans; (20) litigation, tax, and legal compliance risk and costs, especially if materially different from the amount we expect to incur or have accrued for, and any disruptions caused by the same; (21) the effects and costs of governmental investigations or related actions by third parties; and (22) changes in the legal and regulatory environment including environmental, health and safety regulations, and taxes and tariffs.

Additional information concerning these and other factors can be found in Whirlpool's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The number one major appliance manufacturer in the world claim is based on most recently available publicly reported annual revenues among leading appliance manufacturers.

SUPPLEMENTAL INFORMATION - CONSOLIDATED FINANCIAL STATEMENTS RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Millions of dollars except per share data)
(Unaudited)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, some of which we refer to as "ongoing" measures, including earnings before interest and taxes (EBIT), EBIT margin, ongoing EBIT, ongoing EBIT margin, ongoing earnings, ongoing earnings per diluted share, organic net sales, sales excluding currency and free cash flow. Ongoing measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing operations and provide a better baseline for analyzing trends in our underlying businesses. Sales excluding foreign currency is calculated by translating the current period net sales, in functional currency, to U.S. dollars using the prior-year period's exchange rate compared to the prior-year period net sales. Management believes that sales excluding foreign currency provides stockholders with a clearer basis to assess our results over time, excluding the impact of exchange rate fluctuations. Management believes that organic net sales provides stockholders with a clearer basis to assess our results over time, excluding the impact of exchange rate fluctuations and divestitures. Management believes that free cash flow provides investors and stockholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations.The Company provides free cash flow related metrics, such as free cash flow as a percentage of net sales, as long-term management goals, not an element of its annual financial guidance, and as such does not provide a reconciliation of free cash flow to cash provided by (used in) operating activities, the most directly comparable GAAP measure, for these long-term goal metrics. Any such reconciliation would rely on market factors and certain other conditions and assumptions that are outside of the company's control. We believe that these non-GAAP measures provide meaningful information to assist investors and stockholders in understanding our financial results and assessing our prospects for future performance, and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP financial measures, provide a more complete understanding of our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These ongoing financial measures should not be considered in isolation or as a substitute for reported net earnings available to Whirlpool per diluted share, net earnings, net earnings available to Whirlpool, net earnings margin, net sales, and cash provided by (used in) operating activities, the most directly comparable GAAP financial measures. We also disclose segment EBIT and ongoing segment EBIT as important financial metrics used by the Company's Chief Operating Decision Maker to evaluate performance and allocate resources in accordance with ASC 280 - Segment Reporting. GAAP net earnings available to Whirlpool per diluted share and ongoing earnings per diluted share are presented net of tax, while individual adjustments in each reconciliation are presented on a pre-tax basis; the income tax impact line item aggregates the tax impact for these adjustments. The tax impact of individual line item adjustments may not foot precisely to the aggregate income tax impact amount, as each line item adjustment may include non-taxable components. Historical quarterly earnings per share amounts are presented based on a normalized tax rate adjustment to reconcile quarterly tax rates to full-year tax rate expectations. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Third-Quarter 2019 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the three months ended September 30, 2019. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our third-quarter adjusted effective tax rate of 17.5%.

Third-Quarter 2018 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the three months ended September 30, 2018. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our third-quarter adjusted effective tax rate of (8.7)%.

Ongoing Segment Earnings Before Interest and Taxes

The reconciliation provided below reconciles ongoing segment EBIT with segment EBIT, for the three months ended September 30, 2019. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales. Segment EBIT margin is calculated by dividing segment EBIT by segment net sales.

The reconciliation provided below reconciles ongoing segment EBIT with segment EBIT, for the three months ended September 30, 2018. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales. Segment EBIT margin is calculated by dividing segment EBIT by segment net sales.

Full-Year 2019 Outlook For Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the twelve months ending December 31, 2019. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our anticipated full-year GAAP tax rate of approximately 25% includes the impact of the gain on sale of Embraco. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our anticipated full-year tax rate between 15% and 20%.

Full-Year 2018 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the twelve months ended December 31, 2018. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our full-year GAAP tax rate includes the nondeductible earnings impact of the impairment of goodwill and intangibles of $747 million and the France antitrust settlement charge of $103 million. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our full-year adjusted tax rate of approximately 6.6%.

Organic Net Sales

The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended September 30, 2019 and September 30, 2018 for the Company.

The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended September 30, 2019 and September 30, 2018 for Whirlpool Latin America.

Free Cash Flow

As defined by the Company, free cash flow is cash provided by (used in) operating activities after capital expenditures, proceeds from the sale of assets and businesses and changes in restricted cash. The reconciliation provided below reconciles nine months ended September 30, 2019 and 2018 and projected 2019 full-year free cash flow with cash provided by (used in) operating activities, the most directly comparable GAAP financial measure. Free cash flow as a percentage of net sales is calculated by dividing free cash flow by net sales.

View original content to download multimedia:http://www.prnewswire.com/news-releases/whirlpool-corporation-reports-strong-third-quarter-2019-results-300943321.html

SOURCE Whirlpool Corporation