Wall Street certainly liked what they saw late this afternoon when Benton Harbor-based Whirlpool Corporation posted record first quarter earnings results for 2019 with after hours trading sending the company’s stock on a rapid rise up by nearly 8.5-percent before dropping into an 8-percent range within the first 60-minutes or so after the market’s close on the day.
The appliance giant topped first quarter profit estimates and backed up their prior guidance reports thanks to improving sales numbers and beyond. The company beat street estimates on earnings per share by $0.26, but missed on their revenue estimates.
It was a marked change from recent street response following the last several quarterly reports when the stock was punished in after hours trading. The more than 8-percent rise after hours comes following a 0.2-percent gain during regular trading today when the stock closed at $139.36. It quickly soared to more than $149 per share before settling in above $150 a share after the market closed for the day, up by $11+ per share.
Whirlpool reports first quarter net income of $471-million, or $7.31 a share, compared to $94-million, or $1.30 a share in the same period a year ago, gaining substantially largely thanks to tightly reined-in cost controls and price increases implemented in recent months.
Chairman of the Board & CEO Marc Bitzer says, “We delivered another strong quarter with margin expansion and record first-quarter earnings per share despite a soft demand environment in several countries.” Bitzer adds, “Successful execution of price increases and sustained focus on cost discipline drove very positive results in the first quarter, and provide confidence in our ability to deliver our full-year financial goals.”
First-quarter net sales were $4.8 billion, compared to $4.9 billion in the same prior-year period. Excluding the impact of currency, sales increased 1.0-percent.
First-quarter earnings before interest and taxes were $393 million, or 8.3-percent of sales, compared to $151 million, or 3.1-percent of sales, in the same prior-year period, primarily driven by a Brazil indirect tax credit and lower restructuring costs. First-quarter ongoing EBIT was $298 million, or 6.3-percent of sales, compared to $295 million, or 6.0-percent of sales, in the same prior-year period. On a GAAP and ongoing basis, EBIT margin was favorably impacted by product price/mix and restructuring benefits, which were partially offset by higher cost inflation, unfavorable productivity related to lower unit volumes and currency.
For the three months ended March 31, 2019, the company reported cash used by operating activities of $(895) million, compared to $(713) million in the prior year. The Company reported free cash flow of $(969) million for the first three months of 2019, compared to $(756) million for the first three months of 2018, primarily driven by temporarily higher inventory in North America and the timing of certain payments.
FIRST-QUARTER REGIONAL REVIEW
Whirlpool North America
Whirlpool North America reported first-quarter net sales of $2.5-billion, compared to $2.5-billion in the same prior-year period. Excluding the impact of currency, sales increased 1.1-percent.
The region reported first-quarter EBIT of $312 million, or 12.3-percent of sales, compared to $288 million, or 11.4-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix were partially offset by cost inflation and lower unit volumes.
Whirlpool Europe, Middle East and Africa
Whirlpool Europe, Middle East and Africa reported first-quarter net sales of $1.0-billion, compared to $1.1-billion in the same prior-year period. Excluding the impact of currency, sales increased 1.6-percent.
The region reported first-quarter EBIT of $(21) million, or (2.1)-percent of sales, compared to $(27) million, or (2.5)- percent of sales, in the same prior-year period. During the quarter, the favorable impacts of restructuring benefits and unit volume growth were partially offset by lower production levels and inventory liquidation costs in Turkey.
Whirlpool Latin America
Whirlpool Latin America reported first-quarter net sales of $875 million, compared to $898 million in the same prior-year period. Excluding the impact of currency, sales increased 6.7-percent.
The region reported first-quarter EBIT of $45-million, or 5.1-percent of sales, compared to $57-million, or 6.3-percent of sales, in the same prior-year period. During the quarter, the favorable impacts of product price/mix and unit volume growth offset unfavorable currency; prior-period results were positively impacted by the monetization of approximately $22-million in certain tax credits.
Whirlpool Asia
Whirlpool Asia reported first-quarter net sales of $371-million, compared to $448-million in the same prior-year period. Excluding the impact of currency, sales decreased 11.5-percent.
The region reported first-quarter EBIT of $7-million, or 1.9-percent of sales, compared to $19-million, or 4.2-percent of sales, in the same prior-year period. During the quarter, the favorable impact of product price/mix was more than offset by lower unit volumes and related unfavorable productivity in China.
OUTLOOK
For the full-year 2019, the company now expects GAAP earnings per diluted share of $14.05 to $15.05 and continues to expect ongoing earnings per diluted share of $14.00 to $15.00. On a GAAP basis, earnings per diluted share includes restructuring expense of approximately $100-million, divestiture related transition costs of approximately $23-million and the favorable impact of a Brazil indirect tax credit of $127-million.
For the full-year 2019, the company continues to expect to generate cash provided by operating activities of $1.4- billion to $1.5-billion and free cash flow of $800-million to $900-million. Included in this guidance are restructuring cash outlays of approximately $100-million and, with respect to free cash flow, capital spending of approximately $625-million.
Jim Peters, Chief Financial Officer at Whirlpool says, “In addition to our seasonal cash usage in the first quarter, we increased our quarterly dividend for the seventh consecutive year and repurchased additional common stock,” and adds, “We are on track to meet our strong earnings and cash flow guidance for the year, which will allow us to fully invest in our business, strengthen our balance sheet and return strong levels of cash to shareholders.”
