Whirlpool reports Q1 net earnings of US$160M, down 36.5% from year-ago period; net sales up 4.8% to US$4.4B
Nevin Barich
BENTON HARBOR, Michigan
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April 25, 2014
(press release)
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Record First-Quarter Operating Profit Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.
Sales Growth and Margin Expansion Continues
Whirlpool Corporation (NYSE: WHR) announced today first-quarter GAAP net earnings of $160 million, or $2.02 per diluted share, compared to $252 million, or $3.12 per diluted share, reported for the same prior-year period. Prior-year GAAP net earnings included $1.04 per diluted share of benefits from U.S. energy tax credits. Ongoing business earnings per diluted share(1) increased to $2.20, compared to $1.97 in the prior-year period, mainly driven by higher sales, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives.
Net sales in the quarter were $4.4 billion compared to $4.2 billion during the same prior-year period. Excluding the impact of both foreign currency and Brazilian (BEFIEX) tax credits, sales increased approximately 6 percent.
"We are very pleased with the progress we made in the first-quarter driving revenue growth, expanding margins and investing in our business," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "We remain committed to delivering our operating profit margin, earnings per share and free cash flow guidance for the year."
Record first-quarter GAAP operating profit totaled $281 million, compared to $254 million in the same prior-year period. Ongoing business operating profit(2) totaled a record $302 million, 6.9 percent of sales, compared to $280 million, 6.6 percent of sales, in the same prior-year period. Higher sales, favorable product price and mix, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives more than offset higher material costs, foreign currency and increased investments in marketing, technology and products.
During the three months ended March 31, 2014, the company reported cash used in operating activities of $(339) million compared to $(305) million in the prior-year period. On a year-to-date basis, Whirlpool Corporation reported free cash flow(3) use of $(456) million, compared to free cash flow(3) use of $(376) million in the same prior-year period.
OUTLOOK
Whirlpool Corporation reaffirms its expectation for full-year net earnings per diluted share available to Whirlpool of $11.05 to $11.55. The company continues to expect to report full-year ongoing business earnings per diluted share of $12.00 to $12.50.
For the full-year 2014, the company expects to generate free cash flow(3) of approximately $700 million. Included in this guidance are restructuring cash outlays of up to $150 million, capital spending of $625 million to $675 million and U.S. pension contributions of approximately $160 million.
"We remain confident in our ability to deliver a record year of performance in 2014 and in our long-term growth strategy," said Fettig. "We are increasing investments in our business and continuing to enhance returns to our shareholders as evidenced by our recently announced dividend increase and share repurchase program."
FIRST-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported first-quarter net sales of $2.3 billion compared to $2.2 billion in the same prior-year period, an increase of over 4 percent.
The region reported first-quarter operating profit of $228 million, 9.8 percent of sales, compared to $218 million, 9.7 percent of sales, in the same prior-year period. Higher sales and ongoing cost productivity offset higher material costs and increased investments in marketing, technology and products.
The company expects full-year 2014 industry unit shipments to increase in the range of 5 to 7 percent.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported first-quarter net sales of $720 million compared to $668 million in the same prior-year period. Excluding the impact of currency, sales increased approximately 4 percent.
The region reported first-quarter operating profit of $7 million, 1.0 percent of sales, compared to an operating loss of $(8) million in the same prior-year period. The improvement was driven by higher sales, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives.
The company expects full-year 2014 industry unit shipments to be flat to up 2 percent.
Whirlpool Latin America
Whirlpool Latin America reported first-quarter net sales of $1.2 billion, compared to $1.2 billion in the same prior-year period. Excluding the impact of currency and BEFIEX tax credits, sales increased approximately 11 percent.
The region reported first-quarter operating profit of $123 million, compared to $130 million in the same prior-year period. First-quarter ongoing business segment operating profit(4) totaled $109 million, 9.2 percent of sales, compared to $114 million, 9.6 percent of sales, in the same prior-year period. Higher sales, improved product price and mix and ongoing cost productivity were offset by higher material costs and foreign currency.
The company expects full-year 2014 industry unit shipments to be flat.
Whirlpool Asia
Whirlpool Asia reported first-quarter net sales of $166 million compared to $187 million in the same prior-year period. Excluding the impact of currency, sales decreased approximately 4 percent.
The region reported first-quarter operating profit of $5 million, 2.9 percent of sales, compared to $3 million, 1.7 percent of sales, in the same prior-year period. Improved product price and mix and ongoing cost productivity offset lower unit volumes, higher material costs and foreign currency.
The company expects full-year 2014 industry unit shipments to be flat to up 3 percent.
(1) A reconciliation of ongoing business 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 ongoing business operating profit, a non-GAAP financial measure, to reported operating profit and other important information, appears below.
(3) A reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by operating activities and other important information, appears below.
(4) A reconciliation of ongoing business segment operating profit, a non-GAAP financial measure, to reported segment operating profit and other important information, appears below.
FIRST-QUARTER 2014 PRODUCT LEADERSHIP, INNOVATION AND AWARDS
Whirlpool Corporation is at the forefront of the home appliance industry - with deep consumer insights and the strongest portfolio of brands worldwide. Our products stand out from the crowd because they are as sleek and inventive as they are practical and efficient, and we offer compelling home solutions that expand beyond our core appliance business. Across our company and around the world, we are strengthening our corporate reputation, delivering innovation that matters to consumers and positioning our company for continued growth and profitability.
Awards and Recognition
Whirlpool Corporation has once again been named as one of Fortune Magazine's World's Most Admired Companies. Whirlpool Corporation has ranked No. 1 in its category for four consecutive years.
Whirlpool and Maytag brand products took four of the top five spots in a leading U.S. consumer publication's March rating of electric wall ovens. Two Maytag models also made the top five electric cooktops listing, and Whirlpool brand scored an additional win as one of the top five induction cooktops.
The Maytag Maxima XL and two Whirlpool models were featured in the top five washing machines in a leading U.S. consumer publication in March.
Brastemp brand was voted one of the Most Beloved Brands of Brazil, according to a survey by Consumidor Moderno magazine and Officina Sophia market research firm.
Strong consumer preference for the Bauknecht PowerDry dishwasher's ease of use and innovation earned it the 2014 KitchenInnovation of the Year Award.
The Bauknecht brand beat out all competitors in the German news network n-tv's customer service study of 10 appliance manufacturers. The brand received high marks for its expert advice and speed in processing consumer requests.
Designers and experts awarded the Whirlpool Neo iChill refrigerator and Whirlpool 360 Bloomwash washer with the prestigious India Design Mark 2014 for their aesthetic appeal.
The Whirlpool 360H Bloomwash, a favorite among consumers, was voted India's Best Washing Machine during the first Croma Consumer Choice Awards.
Product Innovation
In North America, the Whirlpool brand microwave-hood combination with TimeSavor Plus True Convection circulates preheated air over, under and around food for moist cakes and juicy meats. In addition, the exclusive AccuPop cycle uses sound sensors to adjust cooking time automatically for perfectly popped popcorn every time.
Whirlpool Europe, Middle East and Africa's new line of gas cooktops features a sleek, glass surface in three designs to complement a variety of kitchen styles. High-efficiency burners give consumers extra power to fuel their creativity and maximum flexibility for cooking meals large and small.
Whirlpool brand introduced the Whirlpool FridgeFreezer, the only refrigerator in Europe that lets consumers limit the frequency of freezer defrost. The 6th Sense FreshControl technology and the innovative StopFrost function reduce the formation of ice within the freezer cavity for better use of space and drawer functionality.
Whirlpool Latin America launched the Brastemp Side Inverse, the first wi-fi connected refrigerator made in Brazil. Its Intelligent Central technology empowers anyone in the home to manage the purchase, storage and preparation of food using the appliance's touch-screen panel or a smart device.
Consul brand offers the only microwave in the Brazilian market with a unique toaster function for crispy and tasty sandwiches in minutes. The Consul Mais microwave quickly defrosts meat and meals and makes it easy to prepare popular snacks.
The Whirlpool Icemagic refrigerator can stand up to long power outages common in India thanks to its Powercool zone, which keeps its contents cool for up to 12 hours. The large-capacity, single-door refrigerator features best-in-class ice-making and bottle-cooling time, innovative space-management solutions for spices and medicine, and the country's first tri-
sectioned fruit and vegetable crisper.
Revolutionary 6th Sense ActiveFresh technology keeps fruits and vegetables fresher for longer in the Asia Region's Whirlpool Protton three-door premium refrigerator and gives Indian consumers the space they desire in its separate vegetable drawer - the largest in the market.
Growth Beyond Core Appliances
KitchenAid brand extended its line of ExactSlice food processors in the United States to include seven-, nine-, 11- and 14-cup models. The revolutionary ExactSlice system uses an external lever to adjust slicing from thick to thin without changing blades.
The Consul brand expanded its category offerings with the introduction of the Consul Mais compact beer cooler. Brazilian consumers can enjoy one of the nation's most highly consumed beverages in the comfort of their own homes, with a professional cooling system that eliminates the risk of freezing as well as a spacious interior that holds up to 75 cans.
About Whirlpool Corporation
Whirlpool Corporation is the world's leading global manufacturer and marketer of major home appliances, with annual sales of approximately $19 billion in 2013, 69,000 employees and 59 manufacturing and technology research centers around the world. The company markets Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, Bauknecht and other major brand names. Additional information about the company can be found at http://www.whirlpoolcorp.com.
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