BENTON HARBOR, Mich.,
Oct. 23, 2017 /PRNewswire/ --
Whirlpool Corporation (NYSE: WHR) announced today third-quarter
GAAP net earnings of $276 million, or
$3.72 per diluted share, compared to
$238 million, or $3.10 per diluted share, reported for the same
prior-year period. GAAP net earnings were positively impacted by
lower income tax expense of approximately $65 million, compared to the same prior-year
period, driven by the timing of tax planning activities in the
current-year period. Third-quarter ongoing earnings per diluted
share(1) totaled $3.83
compared to $3.66 in the same
prior-year period.
"We are pleased with our revenue growth and free cash flow
improvement but are not satisfied with our operating margins, which
were impacted by raw material inflation, unfavorable price/mix and
slow progress on our European integration," said Marc Bitzer, chief executive officer of
Whirlpool Corporation. "Thus, we are implementing strong actions to
deliver our long-term goals, including recently-announced global
cost-based price increases and a fixed cost reduction
initiative."
Third-quarter net sales were $5.4
billion, compared to $5.2
billion in the same prior-year period, an increase of more
than 3 percent. Excluding the impact of currency, sales increased 2
percent.
Third-quarter GAAP operating profit totaled $331 million, or 6.1 percent of sales, compared
to $374 million, or 7.1 percent of
sales, in the same prior-year period. Third-quarter ongoing
operating profit(2) totaled $376
million, or 6.9 percent of sales, compared to $417 million, or 7.9 percent of sales, in the
same prior-year period. On a GAAP and ongoing basis, cost
productivity and unit volume growth were more than offset by the
unfavorable impacts of raw material inflation and product
price/mix.
For the nine months ended September 30, 2017, Whirlpool
Corporation reported cash used in operating activities of
$(33) million compared to
$(175) million in the same prior-year
period. The Company reported free cash flow(3) of
$(348) million for the first nine
months of 2017 compared to $(466)
million in the same prior-year period, driven by the
Company's focus on working capital optimization.
THIRD-QUARTER REGIONAL REVIEW
Whirlpool North
America
Whirlpool North America
reported third-quarter net sales of $3.0
billion, compared to $2.9
billion in the same prior-year period. Excluding the impact
of currency, sales increased 4 percent.
The region reported third-quarter operating profit of
$350 million, or 11.7 percent of
sales, compared to $346 million, or
12.1 percent of sales, in the same prior-year period. The operating
profit increase was driven by strong unit volume growth and cost
productivity, which offset raw material inflation and foreign
currency impacts; the operating margin decrease was primarily
driven by raw material inflation.
The Company continues to expect full-year 2017 industry unit
shipments in the U.S. to increase by 4 to 6 percent.
Whirlpool Europe,
Middle East and Africa
Whirlpool Europe, Middle East and Africa reported third-quarter net sales of
$1.3 billion, compared to
$1.3 billion in the same prior-year
period. Excluding the impact of currency, sales decreased 8
percent.
The region reported third-quarter GAAP operating profit of
$11 million, or 0.8 percent of sales,
compared to GAAP operating profit of $40
million, or 3.0 percent of sales, in the same prior-year
period. Ongoing segment operating profit(4) totaled
$11 million, or 0.8 percent of sales,
compared to $48 million, or 3.7
percent of sales, in the same prior-year period. During the
quarter, unfavorable product price/mix, raw material inflation and
unit volume declines more than offset favorable cost productivity
and restructuring benefits.
The Company continues to expect full-year 2017 industry unit
shipments to be flat to up 2 percent.
Whirlpool Latin
America
Whirlpool Latin America
reported third-quarter net sales of $849
million, compared to $800
million in the same prior-year period. Excluding the impact
of currency, sales increased 5 percent.
The region reported third-quarter operating profit of
$53 million, or 6.3 percent of sales,
compared to $46 million, or 5.8
percent of sales, in the same prior-year period, driven by cost
productivity and unit volume growth, which more than offset raw
material inflation and unfavorable product price/mix.
The Company continues to expect full-year 2017 industry unit
shipments in Brazil to be
flat.
Whirlpool Asia
Whirlpool Asia reported
third-quarter net sales of $357
million, compared to $338
million in the same prior-year period. Excluding the impact
of currency, sales increased 4 percent.
The region reported third-quarter GAAP operating profit of
$2 million, or 0.6 percent of sales,
compared to GAAP operating profit of $15
million, or 4.4 percent of sales, in the same prior-year
period. Ongoing segment operating profit(4) totaled
$2 million, or 0.6 percent of sales,
compared to $17 million, or 4.9
percent of sales, in the same prior-year period. On a GAAP and
ongoing basis, favorable impacts from cost productivity were more
than offset by raw material inflation and unfavorable product
price/mix in China.
The Company continues to expect full-year 2017 industry unit
shipments to be flat to up 2 percent.
Global Cost-Based Pricing and Fixed Cost Reduction
Actions
In 2017, the Company experienced significantly elevated raw
material prices which are now expected to further increase through
2018.
As a result, in October the Company announced to its trade
customers global cost-based price increases expected to cover a
majority of its business, to be implemented during the fourth
quarter of 2017 and the first quarter of 2018.
Additionally, the Company announced an initiative to reduce
fixed overhead costs by $150 million,
which will be implemented in early 2018. This initiative is in
addition to the Company's ongoing cost productivity efforts.
The impact of these actions on 2018 guidance will be discussed
during the year-end earnings call.
OUTLOOK
For the full-year 2017, the Company now expects to generate cash
from operating activities of $1.55 to $1.6
billion and free cash flow(3) of approximately
$900 million. Included in this
guidance are primarily acquisition-related restructuring cash
outlays of up to $175 million, legacy
product warranty and liability costs of $70
million, pension contributions of $45
million and, with respect to free cash flow(3),
capital spending of $650 to $700
million.
For the full-year 2017, Whirlpool Corporation now expects GAAP
earnings per diluted share of $11.10 to
$11.40 and ongoing earnings per diluted share(1)
of $13.60 to $13.90.
"We reaffirm our 2020 goals and are confident that our existing
and newly-announced actions will put us firmly back on track to
deliver our commitments," said Jim
Peters, executive vice president and chief financial officer
of Whirlpool Corporation. "As we continue to execute our plans for
value creation, we will continue returning strong levels of cash to
our shareholders."
(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 ongoing 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 (used in) operating activities and
other important information, appears below.
(4) A reconciliation of ongoing segment operating profit
(loss), a non-GAAP financial measure, to reported segment operating
profit (loss) and other important information, appears
below.
About Whirlpool Corporation
Whirlpool Corporation (NYSE: WHR) is the number one major
appliance manufacturer in the world, with approximately
$21 billion in annual sales, 93,000
employees and 70 manufacturing and technology research centers
throughout the world in 2016. The company
markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp,
Amana, Bauknecht, Jenn-Air, Indesit and other major brand
names in nearly every country around the world. Additional
information about the company can be found
at whirlpoolcorp.com, or find us on Twitter at
@WhirlpoolCorp.
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; (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)
inventory and other asset risk; (16) the uncertain
global economy and changes in economic conditions which affect
demand for our products; (17) health care cost trends,
regulatory changes and variations between results and estimates
that could increase future funding obligations for pension and
postretirement benefit plans; (18) 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; (19) the effects and costs of
governmental investigations or related actions by third parties;
and (20) changes in the legal and regulatory environment including
environmental, health and safety regulations.
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.
WHIRLPOOL
CORPORATION
|
CONSOLIDATED
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
FOR THE PERIODS
ENDED SEPTEMBER 30
|
(Millions of
dollars, except share data)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
sales
|
$
|
5,418
|
|
|
$
|
5,248
|
|
|
$
|
15,551
|
|
|
$
|
15,062
|
|
Expenses
|
|
|
|
|
|
|
|
Cost of products
sold
|
4,503
|
|
|
4,308
|
|
|
12,934
|
|
|
12,330
|
|
Gross
margin
|
915
|
|
|
940
|
|
|
2,617
|
|
|
2,732
|
|
Selling, general and
administrative
|
521
|
|
|
519
|
|
|
1,546
|
|
|
1,535
|
|
Intangible
amortization
|
18
|
|
|
18
|
|
|
52
|
|
|
54
|
|
Restructuring
costs
|
45
|
|
|
29
|
|
|
150
|
|
|
116
|
|
Operating
profit
|
331
|
|
|
374
|
|
|
869
|
|
|
1,027
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest and sundry
(income) expense
|
21
|
|
|
30
|
|
|
69
|
|
|
103
|
|
Interest
expense
|
42
|
|
|
39
|
|
|
122
|
|
|
118
|
|
Earnings before
income taxes
|
268
|
|
|
305
|
|
|
678
|
|
|
806
|
|
Income tax (benefit)
expense
|
(4)
|
|
|
61
|
|
|
69
|
|
|
64
|
|
Net
earnings
|
272
|
|
|
244
|
|
|
609
|
|
|
742
|
|
Less: Net earnings
(loss) available to noncontrolling interests
|
(4)
|
|
|
6
|
|
|
(9)
|
|
|
34
|
|
Net earnings
available to Whirlpool
|
$
|
276
|
|
|
$
|
238
|
|
|
$
|
618
|
|
|
$
|
708
|
|
Per share of
common stock
|
|
|
|
|
|
|
|
Basic net earnings
available to Whirlpool
|
$
|
3.78
|
|
|
$
|
3.14
|
|
|
$
|
8.36
|
|
|
$
|
9.26
|
|
Diluted net earnings
available to Whirlpool
|
$
|
3.72
|
|
|
$
|
3.10
|
|
|
$
|
8.23
|
|
|
$
|
9.16
|
|
Dividends
declared
|
$
|
1.10
|
|
|
$
|
1.00
|
|
|
$
|
3.20
|
|
|
$
|
2.90
|
|
Weighted-average
shares outstanding (in millions)
|
|
|
|
|
|
|
|
Basic
|
72.9
|
|
|
75.7
|
|
|
73.9
|
|
|
76.4
|
|
Diluted
|
74.0
|
|
|
76.9
|
|
|
75.1
|
|
|
77.5
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
286
|
|
|
$
|
289
|
|
|
$
|
694
|
|
|
$
|
900
|
|
WHIRLPOOL
CORPORATION
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Millions of
dollars, except share data)
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,087
|
|
|
$
|
1,085
|
|
Accounts receivable,
net of allowance of $171 and $185, respectively
|
3,102
|
|
|
2,711
|
|
Inventories
|
3,345
|
|
|
2,623
|
|
Prepaid and other
current assets
|
1,115
|
|
|
920
|
|
Total current
assets
|
8,649
|
|
|
7,339
|
|
Property, net of
accumulated depreciation of $6,741 and $6,055,
respectively
|
3,865
|
|
|
3,810
|
|
Goodwill
|
3,093
|
|
|
2,956
|
|
Other intangibles,
net of accumulated amortization of $455 and $387,
respectively
|
2,604
|
|
|
2,552
|
|
Deferred income
taxes
|
2,322
|
|
|
2,154
|
|
Other noncurrent
assets
|
305
|
|
|
342
|
|
Total
assets
|
$
|
20,838
|
|
|
$
|
19,153
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
|
4,728
|
|
|
$
|
4,416
|
|
Accrued
expenses
|
677
|
|
|
649
|
|
Accrued advertising
and promotions
|
792
|
|
|
742
|
|
Employee
compensation
|
428
|
|
|
390
|
|
Notes
payable
|
1,442
|
|
|
34
|
|
Current maturities of
long-term debt
|
671
|
|
|
560
|
|
Other current
liabilities
|
898
|
|
|
871
|
|
Total current
liabilities
|
9,636
|
|
|
7,662
|
|
Noncurrent
liabilities
|
|
|
|
Long-term
debt
|
3,669
|
|
|
3,876
|
|
Pension
benefits
|
1,015
|
|
|
1,074
|
|
Postretirement
benefits
|
346
|
|
|
334
|
|
Other noncurrent
liabilities
|
485
|
|
|
479
|
|
Total noncurrent
liabilities
|
5,515
|
|
|
5,763
|
|
Stockholders'
equity
|
|
|
|
Common stock, $1 par
value, 250 million shares authorized, 112 million and 111
million shares issued, and 72 million and 74 million shares
outstanding, respectively
|
112
|
|
|
111
|
|
Additional paid-in
capital
|
2,733
|
|
|
2,672
|
|
Retained
earnings
|
7,697
|
|
|
7,314
|
|
Accumulated other
comprehensive loss
|
(2,316)
|
|
|
(2,400)
|
|
Treasury stock, 40
million and 37 million shares, respectively
|
(3,474)
|
|
|
(2,924)
|
|
Total Whirlpool
stockholders' equity
|
4,752
|
|
|
4,773
|
|
Noncontrolling
interests
|
935
|
|
|
955
|
|
Total stockholders'
equity
|
5,687
|
|
|
5,728
|
|
Total liabilities and
stockholders' equity
|
$
|
20,838
|
|
|
$
|
19,153
|
|
WHIRLPOOL
CORPORATION
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
FOR THE PERIODS
ENDED SEPTEMBER 30
|
(Millions of
dollars)
|
|
|
|
Nine Months
Ended
|
|
2017
|
|
2016
|
Operating
activities
|
|
|
|
Net
earnings
|
$
|
609
|
|
|
$
|
742
|
|
Adjustments to
reconcile net earnings to cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization
|
487
|
|
|
496
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(259)
|
|
|
(438)
|
|
Inventories
|
(589)
|
|
|
(518)
|
|
Accounts
payable
|
107
|
|
|
(187)
|
|
Accrued advertising
and promotions
|
18
|
|
|
(38)
|
|
Accrued expenses and
current liabilities
|
(154)
|
|
|
72
|
|
Taxes deferred and
payable, net
|
(144)
|
|
|
(149)
|
|
Accrued pension and
postretirement benefits
|
(85)
|
|
|
(53)
|
|
Employee
compensation
|
49
|
|
|
(30)
|
|
Other
|
(72)
|
|
|
(72)
|
|
Cash used in
operating activities
|
(33)
|
|
|
(175)
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(371)
|
|
|
(360)
|
|
Proceeds from sale of
assets and business
|
5
|
|
|
55
|
|
Change in restricted
cash
|
51
|
|
|
14
|
|
Investment in related
businesses
|
(35)
|
|
|
(10)
|
|
Other
|
1
|
|
|
(2)
|
|
Cash used in
investing activities
|
(349)
|
|
|
(303)
|
|
Financing
activities
|
|
|
|
Proceeds from
borrowings of long-term debt
|
—
|
|
|
491
|
|
Repayments of
long-term debt
|
(261)
|
|
|
(507)
|
|
Net proceeds from
short-term borrowings
|
1,365
|
|
|
1,369
|
|
Dividends
paid
|
(235)
|
|
|
(221)
|
|
Repurchase of common
stock
|
(550)
|
|
|
(425)
|
|
Common stock
issued
|
33
|
|
|
24
|
|
Other
|
(17)
|
|
|
(2)
|
|
Cash provided by
financing activities
|
335
|
|
|
729
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
49
|
|
|
2
|
|
Increase in cash and
cash equivalents
|
2
|
|
|
253
|
|
Cash and cash
equivalents at beginning of period
|
1,085
|
|
|
772
|
|
Cash and cash
equivalents at end of period
|
$
|
1,087
|
|
|
$
|
1,025
|
|
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 ongoing operating profit
(loss), ongoing operating margin, earnings before interest and
taxes (EBIT), EBIT margin, ongoing EBIT, ongoing EBIT margin,
ongoing earnings, ongoing earnings per diluted share, ongoing
segment operating profit (loss), ongoing segment operating margin,
sales excluding currency, ongoing net sales 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 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 operating profit (loss), net earnings available to
Whirlpool per diluted share, net earnings, net earnings available
to Whirlpool, net sales, reported operating profit (loss) by
segment, and cash provided by (used in) operating activities, the
most directly comparable GAAP financial measures. 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. Prior-period comparisons have been recast to reflect
the tax impact of adjustments as a single adjustment. 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 2017 Ongoing Operating Profit, Ongoing Earnings
Before Interest and Taxes and Ongoing Earnings per Diluted
Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing operating profit, ongoing earnings
before interest and taxes and ongoing earnings per diluted share,
with the most directly comparable GAAP financial measures,
operating profit, net earnings available to Whirlpool and net
earnings per diluted share available to Whirlpool, for the three
months ended September 30, 2017. Ongoing operating margin is
calculated by dividing ongoing operating profit (loss) by net
sales. Ongoing EBIT margin is calculated by dividing ongoing 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 9.7%.
|
Three Months
Ended
|
|
September 30,
2017
|
|
Operating
profit
|
|
Earnings before
interest & taxes(5)
|
|
Earnings
per diluted
share
|
Reported GAAP
measure
|
$
|
331
|
|
|
$
|
310
|
|
|
$
|
3.72
|
|
Restructuring
expense(a)
|
45
|
|
|
45
|
|
|
0.61
|
|
Income tax
impact
|
—
|
|
|
—
|
|
|
(0.06)
|
|
Normalized tax rate
adjustment(b)
|
—
|
|
|
—
|
|
|
(0.44)
|
|
Ongoing
measure
|
$
|
376
|
|
|
$
|
355
|
|
|
$
|
3.83
|
|
Earnings Before Interest & Taxes Reconciliation:
Net earnings
available to Whirlpool
|
$
|
276
|
|
Net earnings (loss)
available to noncontrolling interests
|
(4)
|
|
Income tax expense
(benefit)
|
(4)
|
|
Interest
expense
|
42
|
|
Earnings before
interest & taxes(5)
|
$
|
310
|
|
|
Note: Numbers may not
reconcile due to rounding
|
Third-Quarter 2016 Ongoing Operating Profit, Ongoing Earnings
Before Interest and Taxes and Ongoing Earnings per Diluted
Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing operating profit, ongoing earnings
before interest and taxes and ongoing earnings per diluted share,
with the most directly comparable GAAP financial measures,
operating profit, net earnings available to Whirlpool and net
earnings per diluted share available to Whirlpool, for the three
months ended September 30, 2016. Ongoing operating margin is
calculated by dividing ongoing operating profit by net sales.
Ongoing EBIT margin is calculated by dividing ongoing 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 16.0%.
|
Three Months
Ended
|
|
September 30,
2016
|
|
Operating
profit
|
|
Earnings before
interest & taxes(5)
|
|
Earnings
per diluted
share
|
Reported GAAP
measure(c)
|
$374
|
|
$344
|
|
$3.10
|
Restructuring
expense(a)
|
29
|
|
29
|
|
0.37
|
Acquisition related
transition costs
|
14
|
|
14
|
|
0.19
|
Legacy product
warranty and liability expense
|
—
|
|
1
|
|
0.01
|
Income tax
impact
|
—
|
|
—
|
|
(0.09)
|
Normalized tax rate
adjustment(b)
|
—
|
|
—
|
|
0.08
|
Ongoing
measure
|
$417
|
|
$388
|
|
$3.66
|
Earnings Before Interest & Taxes Reconciliation:
Net earnings
available to Whirlpool
|
$
|
238
|
|
Net earnings
available to noncontrolling interests
|
6
|
|
Income tax expense
(benefit)
|
61
|
|
Interest
expense
|
39
|
|
Earnings before
interest & taxes(5)
|
$
|
344
|
|
|
|
|
|
Note: Numbers may not
reconcile due to rounding
|
Ongoing Segment Operating Profit (Loss)
The reconciliation provided below reconciles the non-GAAP
financial measure ongoing segment operating profit (loss) with the
most directly comparable GAAP financial measure, reported segment
operating profit (loss), for the three months ended
September 30, 2017. Ongoing segment operating margin is
calculated by dividing ongoing segment operating profit (loss) by
segment net sales.
|
Three Months
Ended
|
|
September 30,
2017
|
|
Segment
operating
profit (loss)
|
|
Restructuring
expense(a)
|
|
Ongoing segment
operating profit (loss)
|
North
America
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
350
|
|
EMEA
|
11
|
|
|
—
|
|
|
11
|
|
Latin
America
|
53
|
|
|
—
|
|
|
53
|
|
Asia
|
2
|
|
|
—
|
|
|
2
|
|
Other/Eliminations
|
(85)
|
|
|
45
|
|
|
(40)
|
|
Total Whirlpool
Corporation
|
$
|
331
|
|
|
$
|
45
|
|
|
$
|
376
|
|
The reconciliation provided below reconciles the non-GAAP
financial measure ongoing segment operating profit (loss) with the
most directly comparable GAAP financial measure, reported segment
operating profit (loss), for the three months ended
September 30, 2016. Ongoing segment operating margin is
calculated by dividing ongoing segment operating profit (loss) by
segment net sales.
|
Three Months
Ended
|
|
September 30,
2016
|
|
Segment
operating
profit (loss)(c)
|
|
Restructuring
expense(a)
|
|
Acquisition
related transition
costs
|
|
Ongoing segment
operating profit
(loss)
|
North
America
|
$
|
346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
346
|
|
EMEA
|
40
|
|
|
—
|
|
|
8
|
|
|
48
|
|
Latin
America(c)
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
Asia
|
15
|
|
|
—
|
|
|
2
|
|
|
17
|
|
Other/Eliminations(c)
|
(73)
|
|
|
29
|
|
|
4
|
|
|
(40)
|
|
Total Whirlpool
Corporation
|
$
|
374
|
|
|
$
|
29
|
|
|
$
|
14
|
|
|
$
|
417
|
|
|
Note: Numbers may not
reconcile due to rounding
|
Full-Year 2017 Ongoing Operating Profit, Ongoing Earnings
Before Interest and Taxes and Ongoing Earnings per Diluted
Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing operating profit, ongoing earnings
before interest and taxes and ongoing earnings per diluted share,
with the most directly comparable GAAP financial measures,
operating profit, net earnings available to Whirlpool and net
earnings per diluted share available to Whirlpool, for the twelve
months ending December 31, 2017. Ongoing operating margin is
calculated by dividing ongoing operating profit (loss) by ongoing
net sales. Ongoing EBIT margin is calculated by dividing ongoing
EBIT by ongoing net sales. Ongoing net sales excludes $(32) million primarily related to an adjustment
for trade promotion accruals in prior periods. 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
anticipated full-year tax rate of approximately 16%.
|
Twelve Months
Ending
|
|
December 31,
2017
|
|
Operating
profit
|
|
Earnings before
interest & taxes(5)
|
|
Earnings per
diluted share
|
Reported GAAP
measure
|
$1,255 -
1,285
|
|
$1,145 -
1,175
|
|
$11.10 -
11.40
|
Restructuring
expense(a)
|
200
|
|
200
|
|
2.66
|
Out-of-period
adjustment(d)
|
40
|
|
40
|
|
0.27
|
Income tax
impact
|
—
|
|
—
|
|
(0.45)
|
Ongoing
measure
|
$1,495 -
1,525
|
|
$1,385 -
1,415
|
|
13.60 -
13.90
|
(5) Earnings Before Interest & Taxes (EBIT) is a non-GAAP
measure. Whirlpool does not provide a forward-looking
quantitative reconciliation of EBIT to the most directly comparable
GAAP financial measure, net earnings available to Whirlpool,
because the net earnings available to noncontrolling interests item
of such reconciliation -- which has historically represented a
relatively insignificant amount of Whirlpool's overall net earnings
-- implicates Whirlpool's projections regarding the earnings
of Whirlpool's non wholly-owned subsidiaries and joint ventures
that cannot be quantified precisely or without unreasonable
efforts.
Note: Numbers may not reconcile due to rounding
Full-Year 2016 Ongoing Operating Profit, Ongoing Earnings
Before Interest and Taxes and Ongoing Earnings per Diluted
Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing operating profit, ongoing earnings
before interest and taxes and ongoing earnings per diluted share,
with the most directly comparable GAAP financial measures,
operating profit, net earnings available to Whirlpool and net
earnings per diluted share available to Whirlpool, for the twelve
months ended December 31, 2016. Ongoing operating margin is
calculated by dividing ongoing operating profit by net sales.
Ongoing EBIT margin is calculated by dividing ongoing 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 full-year tax rate of 16.6%.
|
Twelve Months
Ended
|
|
December 31,
2016
|
|
Operating
profit
|
|
Earnings before
interest & taxes(5)
|
|
Earnings per
diluted share
|
Reported GAAP
measure(c)
|
$1,368
|
|
$1,275
|
|
$11.50
|
Restructuring
expense(a)
|
173
|
|
173
|
|
2.24
|
Acquisition related
transition costs
|
82
|
|
86
|
|
1.11
|
Legacy product
warranty and liability expense
|
3
|
|
(23)
|
|
(0.30)
|
Income tax
impact
|
—
|
|
—
|
|
(0.49)
|
Ongoing
measure
|
$1,626
|
|
$1,511
|
|
14.06
|
Earnings Before Interest & Taxes Reconciliation:
Net earnings
available to Whirlpool
|
$
|
888
|
|
Net earnings (loss)
available to noncontrolling interests
|
40
|
|
Income tax expense
(benefit)
|
186
|
|
Interest
expense
|
161
|
|
Earnings before
interest & taxes(5)
|
$
|
1,275
|
|
Footnotes:
a. RESTRUCTURING EXPENSE - During the fourth quarter
of 2014, we completed the acquisition of Indesit S.p.A., which, due
to its size, materially changed our European footprint. These costs
are primarily related to Indesit restructuring and creating a more
streamlined and efficient European operation, and also relate to
certain other unique restructuring events.
b. NORMALIZED TAX RATE ADJUSTMENT - During the third
quarter of 2017, we calculated ongoing diluted EPS using an
adjusted tax rate of 9.7%. We anticipate a 2017 full-year effective
tax rate of approximately 16%. During the third quarter of 2016, we
made an adjustment to ongoing diluted EPS to reconcile specific
items reported to our anticipated full-year effective tax rate of
19%.
c. ADOPTION OF NEW ACCOUNTING STANDARDS - In 2017,
the FASB issued ASU No. 2017-07, "Compensation - Retirement
Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost". The
guidance in ASU 2017-07 requires that the service cost component of
net periodic benefit cost for pension and postretirement benefits
is recorded in the same income statement line items as other
employee compensation costs arising from services rendered during
the period. Service cost is included in cost of products sold and
selling, general and administrative expense. The other components
of net periodic pension cost and postretirement benefits cost
(other components of net periodic cost) are recorded in interest
and sundry (income) expense in 2017. We retrospectively
adopted the new accounting standard. As of September 30, 2017 the reclassification of other
components of net periodic cost, from cost of products sold and
selling, general and administrative expense to interest and sundry
(income) expense was immaterial. For the full year ended
December 31, 2016, the reclassification of other components of
net periodic cost, from cost of products sold and selling, general
and administrative expense to interest and sundry (income) expense
was approximately $14 million. For
the three months ended September 30,
2016, the reclassification of other components of net
periodic cost, from cost of products sold and selling, general and
administrative expense to interest and sundry (income) expense was
approximately $4 million.
d. OUT-OF-PERIOD ADJUSTMENT - During the third
quarter of 2017, we finalized our prior period recorded adjustments
in our Asia operating segment
primarily related to trade promotions, and increased accruals by
$3 million. We determined this impact
to be immaterial and have made no further adjustments to ongoing
earnings. The 2017 total impact of these out-of-period
adjustments was a decrease to net sales of approximately
$35 million and an increase to other
operating expenses of approximately $8
million, before tax. These adjustments resulted in a
decrease to net earnings available to Whirlpool of approximately
$16 million and a decrease of
$0.22 in diluted earnings per
share.
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, 2017 and 2016 and projected 2017 full-year
free cash flow with cash provided by (used in) operating
activities, the most directly comparable GAAP financial
measure.
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
(millions of
dollars)
|
2017
|
2016
|
|
2017
Outlook
|
Cash provided by
(used in) operating activities
|
$(33)
|
$(175)
|
|
$1,550 -
$1,600
|
Capital expenditures,
proceeds from sale of assets/businesses and change in restricted
cash*
|
(315)
|
(291)
|
|
(650) -
(700)
|
Free cash
flow
|
$(348)
|
$(466)
|
|
~$900
|
|
|
|
|
|
Cash used in
investing activities**
|
$(349)
|
$(303)
|
|
|
Cash provided by
financing activities**
|
$335
|
$729
|
|
|
|
|
|
|
|
*The change in
restricted cash relates to the private placement funds paid by
Whirlpool to acquire majority control of Whirlpool China (formerly
Hefei Sanyo) and which are used to fund capital and technical
resources to enhance Whirlpool China's research and development and
working capital, as required by the terms of the Hefei Sanyo
acquisition completed in October 2014.
|
|
|
|
|
|
**Financial guidance
on a GAAP basis for cash provided by (used in) financing
activities and cash provided by (used in) investing
activities has not been provided because in order to
prepare any such estimate or projection, the company would need to
rely on market factors and certain other conditions and assumptions
that are outside of its control.
|
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SOURCE Whirlpool Corporation