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Whirlpool Beats on Earnings, Rev Lags - Analyst Blog

Posted
4/24/2013 11:14:00 AM
By: Zacks.com
Referenced Stocks:ELUXY;GE;HRELY;WHR

Whirlpool Corporation 's ( WHR ) adjusted earnings came in at $1.97 per share in the first quarter of 2013, substantially higher than $1.41 in the year-ago period. It also surpassed the Zacks Consensus Estimate of $1.95.

The robust quarterly performance was primarily driven by the company's sustained focus on cost and capacity reduction initiatives and favorable price and product mix. Moreover, reported earnings jumped over twofold to $3.12 per share in the quarter from $1.17 in the year-ago period.

Revenues in the quarter declined approximately 2.3% year over year to $4,248.0 million, missing the Zacks Consensus Estimate of $4,358.0 million. Despite a strong product price/mix, foreign currency translation and lower monetization of Brazilian (BEFIEX) tax credits weighed on the top line.

Gross profit improved 11.7% year over year to $726.0 million from $650.0 million a year ago. Gross margin expanded 220 basis points (bps) to 17.1% from 14.9% in the year-ago quarter. Adjusted operating profit grew 21.2% to $280.0 million from $231.0 million in the year-ago quarter. Consequently, adjusted operating margin expanded 130 bps to 6.6% versus 5.3% in the first quarter of 2012.

Regional Performance

Revenues from North America were flat year over year at $2.2 billion. However, adjusted operating profit jumped 44.4% to $218.0 million in the quarter from $151.0 million in first-quarter 2012. The year-over-year growth in operating profit was due to better product price mix along with cost and capacity reduction measures. Further, in view of the current economic scenario, the company expects its U.S. industry shipments to increase in the range of 2% - 3% in 2013.

Revenues from Latin America declined 7.7% to $1.2 billion on a year-over-year basis. However, excluding the effects of currency translation and Brazilian tax credits, revenues grew 2.0% as a result of favorable product and price mix and increased volumes. Adjusted operating income was flat year over year at $114.0 million, as the benefits from favorable product price/mix were fully offset by higher material costs. Further, the company now expects appliance industry shipments in Latin America to grow in the range of 3%-5% in 2013.

Revenues from Europe, Middle East and Africa dipped 2.8% to $668.0 million in the quarter due to the challenging economic environment in Europe. The region reported an operating loss of $8.0 million compared with an income of $4.0 million in the year-ago quarter. Whirlpool expects industry unit shipments to remain flat in 2013.

Revenues from Asia went down 7.4% to $187.0 million from $202.0 million in first-quarter 2012. However, excluding the negative impact of currency translation, revenues increased 4%. Operating income plunged 66.7% to $3.0 million from $9.0 million in the year-ago quarter as the benefit from favorable product and price mix were fully offset by unfavorable foreign currency translation, lower volumes and increased raw material costs. The company now expects industry shipments in the region to increase 3%-5% in 2013.

Financial Position

Whirlpool had cash and cash equivalents of $750 million as of Mar 31, 2013 compared with $1,168.0 million as of Dec 31, 2012. Long-term debt was $2,441.0 million as of Mar 31, 2013 compared with $1,944.0 million as of Dec 31, 2012.

The largest home-appliances manufacturer in the world, which comes ahead of ElectroluxAB ( ELUXY ), LG, Samsung, General Electric Co. ( GE ) and Haier Electronics Group Company, Ltd . ( HRELY ), has a negative cash flow of $305.0 million from operations in Mar 31, 2013 compared with $423.0 million in the prior-year period. Meanwhile, capital expenditures decreased to $74.0 million from $92.0 million in 2012. Currently, Whirlpool has a negative free cash flow of $376.0 million and anticipates having free cash flow in the range of $600.0 million-$650.0 million for 2013.

Outlook
For full-year 2013, Whirlpool continues to expect earnings in the range of $9.80 to $10.30 per share. However, excluding restructuring charges and Brazilian tax credits, the company anticipates earnings per share of $9.25 to $9.75.

Currently, Whirlpool carries a Zacks Rank #2 (Buy).



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