Whirlpool posts big 3rd quarter

Whirlpool Corp.’s Riverview Campus is pictured March 29. The Benton Harbor company announced it produced $358 million in net earnings for its third quarter of 2019.

BENTON HARBOR — Whirlpool Corp. smashed Wall Street’s third-quarter projections in large part to the sale of a compressor manufacturer that specializes in refrigeration systems.

On Tuesday, the Benton Harbor appliance maker announced third-quarter GAAP net earnings of $358 million, or $5.57 per diluted share, compared to $210 million, or $3.22 per diluted share, reported for the same quarter last year.

Whirlpool came out with quarterly earnings of $3.97 per share, beating analysts estimates of $3.89 per share. This was low compared to earnings of $4.55 per share that the company reported a year ago.

“We have sustained momentum toward achieving our long-term financial goals despite global economic volatility, and remain committed to our robust strategy for creating shareholder value,” Whirlpool Chairman and CEO Marc Bitzer said in a news release. “Our fundamentals remain strong, and we made solid progress against our stated priorities with (a) near break-even performance in EMEA and strong results in North America.”

On a GAAP basis, the net earnings margin was boosted through the July sale of the Embraco compressor business by about $511 million – and partially offset by a product warranty and liability expense of $119 million.

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 increased by 1.6 percent.

Third-quarter EBIT (earnings before interest and taxes) was $722 million, or 14.2 percent of sales, compared to $275 million in last year’s third quarter. Third-quarter ongoing EBIT was $364 million, or 7.2 percent of sales, compared to $332 million in the same prior-year period.

From Jan. 1 through Sept. 30, Whirlpool reported cash used in operating activities of minus $566 million, compared to minus $615 million in the prior year. The $49 million improvement was primarily driven by higher net earnings.

Whirlpool reported free cash flow of minus $805 million for the first nine months of 2019, compared to minus $874 million for the first nine months of 2018.

Whirlpool’s shares began at $161.41 on the New York Stock Exchange, but closed Tuesday at $160.62 – marking a 0.04 percent decrease.

Regional review

• Whirlpool North America reported third-quarter net sales of $3 billion, compared to $3 billion in the same prior-year period.

The region reported third-quarter EBIT of $387 million, or 12.8 percent of sales, compared to an EBIT of $343 million in the same prior-year period. Third-quarter prior year ongoing EBIT was $360 million, or 12 percent.

During the quarter, the favorable impact of product price/mix and cost productivity benefits were partially offset by lower unit volumes and cost inflation.

• 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.

The region reported third-quarter EBIT of minus $18 million, or -1.7 percent of sales, compared to minus $39 million in the same prior-year period.

Ongoing EBIT was minus $4 million, or -0.4 percent of sales, compared to minus $39 million in the same prior-year period. During the quarter, EBIT was affected by cost reduction initiatives and lower raw material inflation.

• 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 increased by 4.1 percent.

The region reported third-quarter EBIT of $29 million, or 4.6 percent of sales, compared to EBIT of $49 million in the same prior-year period. Third-quarter prior year ongoing EBIT was $61 million, or 7 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 related to the Embraco compressor business.

• 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 by 7.1 percent.

The region reported third-quarter EBIT of $9 million, or 2.4 percent of sales, compared to $13 million in the same prior-year period.

Full-year outlook

For the full-year 2019, Whirlpool decreased its GAAP earnings per diluted share guidance from $17.55 to $16.80.

The decision was made as additional product warranty and liability expense was partially offset by adjustments to the Embraco gain on sale calculation.

Whirlpool reaffirmed its ongoing earnings per diluted share guidance of $14.75 to $15.50, and is trending toward the high end of the range.

For the full-year outlook, Whirlpool executives expect to generate cash provided by operating activities of about $1.4 billion and free cash flow of $800 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,” Whirlpool CFO Jim Peters said in the release. “…We strengthened our balance sheet and made significant progress toward our long-term debt leverage target with the repayment of our $1 billion term loan.”

Contact: twittkowski@TheHP.com, 932-0358, Twitter: @TonyWittkowski