One financial analyst called it “a quarter to forget,” and others in the investment community will get a chance to query top corporate leaders first thing tomorrow morning after Benton Harbor-based Whirlpool Corporation posted first-quarter net earnings for 2018 of $94-million, or $1.30 per diluted share, as compared to $153-million, or $2.01 per diluted share in the same period a year ago. First-quarter ongoing earnings per diluted share clocked in at $2.81 per share, as compared to $2.50 in the same prior-year period. That’s 19-cents below the consensus Wall Street estimates of $3-per share.
Whirlpool CEO Marc Bitzer says, “We are pleased with the progress on our previously-announced global cost-based price increases and fixed cost reduction initiatives, which resulted in expansion of both ongoing EBIT and ongoing earnings per share.” He adds, “Our first-quarter results give us further confidence in our long-term value creation strategy, and we remain focused on delivering strong levels of margin expansion and improved cash conversion this year.”
The company rolled out updated guidance with a target range of $14.50 to $15.50 per share, while Wall Street consensus earnings range on the higher end of that prediction at around $15.20 per share. After the market closed for the day, the stock was trending from 2.2-to 3-percent lower in after hours trading. The company will hold a conference call on the earnings report at 8am ET tomorrow morning, Tuesday, April 24, 2018.
First-quarter net sales were $4.9 billion, compared to $4.8 billion in the same prior-year period. However, when you exclude the impact of currency, sales decreased 0.7-percent.
First-quarter earnings before interest and taxes (EBIT) were $151 million, or 3.1-percent of sales, compared to $239 million, or 5.0-percent of sales, in the same prior-year period. First-quarter ongoing EBIT was $295 million, or 6.0-percent of sales, compared to $285 million, or 6.0-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix and restructuring benefits more than offset raw material inflation, unit volume declines and foreign currency impacts.
For the three months ended March 31, 2018, the Company reported cash used in operating activities of $(713) million, compared to $(435) million in the same prior-year period. The Company reported free cash flow of $(756) million for the first three months of 2018, compared to $(497) million in the same prior-year period, primarily driven by the timing of certain payments and accruals.
Here are the company’s region-by-region reviews for the first quarter of 2018:
FIRST-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported first-quarter net sales of $2.5 billion, compared to $2.4 billion in the same prior-year period. Excluding the impact of currency, sales increased 2.5-percent.
The region reported first-quarter EBIT of $288 million, or 11.4-percent of sales, compared to $275 million, or 11.2-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix and unit volume growth more than offset raw material inflation.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported first-quarter net sales of $1.1 billion, compared to $1.0 billion in the same prior-year period. Excluding the impact of currency, sales decreased 8.1-percent.
The region reported first-quarter EBIT of $(27) million, or (2.5)-percent of sales, compared to $(23) million, or (2.3)-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix and cost productivity were more than offset by raw material inflation, unit volume declines and foreign currency impacts.
Whirlpool Latin America
Whirlpool Latin America reported first-quarter net sales of $898 million, compared to $921 million in the same prior-year period. Excluding the impact of currency, sales decreased 3.2-percent.
The region reported first-quarter EBIT of $57 million, or 6.3-percent of sales, compared to $66 million, or 7.2-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix and restructuring benefits were more than offset by unfavorable cost productivity and raw material inflation.
Whirlpool Asia
Whirlpool Asia reported first-quarter net sales of $448 million, compared to $435 million in the same prior-year period. Excluding the impact of currency, sales decreased 1.9-percent.
The region reported first-quarter EBIT of $19 million, or 4.2-percent of sales, compared to $24 million, or 5.6-percent of sales, in the same prior-year period. During the quarter, the favorable impact of cost productivity was more than offset by raw material inflation and foreign currency impacts.
OUTLOOK
For the full-year 2018, Whirlpool expects GAAP earnings per diluted share of $12.30 to $13.30 and continues to expect ongoing earnings per diluted share of $14.50 to $15.50, as the company’s updated full-year expected tax rate of approximately 20-percent and favorable product price/mix is expected to be partially offset by lower global revenue growth and increased raw material inflation.
For the full-year 2018, the Company continues to expect to generate cash from operating activities of approximately $1.7 billion to $1.8 billion and free cash flow of approximately $1.0 billion to $1.1 billion. Included in this guidance are restructuring cash outlays of up to $300 million, pension contributions of $35 million and, with respect to free cash flow, capital spending of approximately $675 million.
Jim Peters is Chief Financial Officer at Whirlpool. He says, “We remain focused on maintaining appropriate flexibility to manage external volatility and continue executing our balanced approach to capital allocation.” Peters adds, “This flexibility will enable us to return strong levels of cash to shareholders this year through share repurchases and our increased quarterly dividend.”
Whirlpool Corporation is the number one major appliance manufacturer in the world, with approximately $21 billion in annual sales, 92,000 employees and 70 manufacturing and technology research centers in 2017. They market Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Jenn-Air, Indesit and other major brand names in nearly every country throughout the world.
