After hours trading saw the stock of Benton Harbor-based Whirlpool Corporation advance this evening shortly after the company posted strong fourth quarter earnings and full year 2019 results along with the companies 2020 guidance statements. After closing the market day at $148.23 per share, after hours trading had the stock rising by 2.45-percent to $151.86 within 40-minutes of the market close.
Today’s results beat Wall Street estimates for earnings per share, beating both the 4th quarter GAAP and Non-GAAP numbers, by 81-cents and 64-cents respectively. However, the company’s revenues missed market estimates by $140-million over all.
Whirlpool Corporation provided these highlights of the report:
- Very strong Q4 GAAP net earnings margin (5.4-percent, up 240 basis points) and ongoing (non-GAAP) EBIT margin (7.2-percent, up 100 basis points), slightly ahead of our operational guidance.
- All-time record full-year GAAP and ongoing earnings per diluted share of $18.45 and $16.00, respectively; ahead of our guidance.
- All regions profitable during Q4, with the North America region demonstrating sustained strong EBIT margins of approximately 13-percent.
- Strong cash generation for full-year 2019; cash provided by operating activities of $1.2 billion and free cash flow of $912 million.
- Solid outlook for 2020, forecasting earnings per diluted share of $14.80 to $15.80 on a GAAP basis and $16.00 to $17.00 on an ongoing basis. Cash provided by operating activities in 2020 of $1.3 billion to $1.4 billion and free cash flow of approximately $800 million to $900 million.
Whirlpool Chairman & CEO Marc Bitzer says, “2019 was a very strong year for Whirlpool as we successfully delivered against our commitments and reported results that outperformed our guidance expectations despite a continued challenging macro-environment.” Bitzer went on to say, “The underlying drivers of our global business are favorable, including demand for our innovative products and a moderation of inflationary cost pressures. We exited the year with solid momentum and we are confident in our guidance for 2020 and our ability to execute on our long-term strategy.”
FULL YEAR FINANCIAL HIGHLIGHTS
- GAAP net earnings and net earnings per share were $1.2 billion (5.8-percent of sales) and $18.45 in 2019 compared to $(183) million ((0.9)-percent of sales) and $(2.72) in the prior year, driven by the gain on the sale of the Embraco compressor business of approximately $511 million, partially offset by product warranty and liability expense of approximately $131 million.
- Ongoing EBIT and ongoing earnings per diluted share were $1.4 billion (6.9-percent of sales) and $16.00 in 2019, compared to $1.3 billion (6.3-percent of sales) and $15.16 in the prior year, primarily driven by strong product price/mix and reduced share count, partially offset by a higher effective tax rate.
- Full-year GAAP effective tax rate (ETR) of 22.8-percent, primarily driven by gain on the sale of Embraco.
- Full-year adjusted ETR of 15.3-percent, near the low end of guidance, primarily due to a favorable European tax law change in December 2019 (~2.2 points tax rate improvement or ~$0.40 favorable earnings per share impact).
- Net sales were $20.4 billion compared to $21.0 billion in 2018, a decrease of 2.9-percent. Organic net sales (non-GAAP) increased 1.6-percent.
Chief Financial Officer Jim Peters says, “We executed against our financial goals in 2019, including expanding our margins, enhancing our free cash flow generation and strengthening our balance sheet – all while delivering record earnings per share and continuing to invest in the business.” Peters adds, “As momentum continues in 2020 and we progress towards our long-term financial goals, we expect to deliver further value to our shareholders.”
FULL-YEAR 2020 OUTLOOK
- GAAP earnings per diluted share of $14.80 to $15.80
- Ongoing earnings per diluted share of $16.00 to $17.00
- Effective tax rate of 20- to 25-percent
- Cash provided by operating activities of $1.3 billion to $1.4 billion
- Free cash flow of $800 million to $900 million
FOURTH-QUARTER FINANCIAL HIGHLIGHTS
- GAAP net earnings of $288 million (5.4-percent of sales), or $4.52 per diluted share, compared to $170 million (3.0 percent of sales), or $2.64 per diluted share, reported for the same prior-year period.
- Ongoing EBIT was $389 million, or 7.2-percent of sales, compared to $348 million, or 6.2- percent of sales, in the same prior-year period.
- GAAP net earnings margin and ongoing EBIT margin were favorably impacted by price/mix and focused cost discipline; GAAP net earnings also positively impacted by one-time real-estate transactions.
- Ongoing earnings per diluted share were $4.91, compared to $4.75 in the same prior-year period.
- Net sales were $5.4 billion, compared to $5.7 billion in the same prior-year period, a decrease of 4.9-percent. Organic net sales (non-GAAP) increased 1.2-percent.
- The Company’s 2018 results include $17 million of EBIT related to the Embraco compressor business.
FOURTH-QUARTER REGIONAL REVIEW
Whirlpool North America
- Strong sustained financial performance despite soft industry demand.
- Whirlpool North America reported fourth-quarter net sales of $3.1 billion, compared to $3.1 billion in the same prior-year period, a decrease of 0.3-percent.
- The region reported fourth-quarter EBIT of $410 million, or 13.3-percent of sales, compared to EBIT of $376 million, or 12.2-percent of sales, in the same prior-year period. Fourth-quarter prior year ongoing EBIT was $362 million, or 11.8-percent. During the quarter, the favorable impact of product price/mix and disciplined cost takeout were partially offset by lower fixed cost leverage and continued cost inflation.
Whirlpool Europe, Middle East and Africa
- Profitable during the fourth-quarter, making it the second consecutive quarter of sequential EBIT improvement.
- Whirlpool Europe, Middle East and Africa reported fourth-quarter net sales of $1.2 billion, compared to $1.2 billion in the same prior-year period, a decrease of 5.5-percent. Excluding the impact of currency, sales decreased 4.2-percent.
- The region reported fourth-quarter EBIT of $11 million, or 0.9-percent of sales, compared to $(15) million, or (1.2)-percent of sales, in the same prior-year period, driven by the favorable impact of cost takeout actions.
Whirlpool Latin America
- Whirlpool Latin America reported fourth-quarter net sales of $782 million, compared to $990 million in the same prior-year period, a decrease of 21.0-percent. Organic net sales (non-GAAP) increased 16.7-percent, despite industry softness in Mexico.
- The region reported fourth-quarter EBIT of $42 million, or 5.3-percent of sales, compared to EBIT of $45 million, or 4.5-percent of sales, in the same prior-year period. Fourth-quarter prior year ongoing EBIT was $59 million, or 5.9-percent. During the quarter, the favorable impact of higher unit volumes and lower raw material inflation was more than offset by unfavorable currency in Brazil and Argentina. The Latin America region’s fourth-quarter 2018 results include $17 million of EBIT related to the Embraco compressor business.
Whirlpool Asia
- India continues to deliver strong growth in a healthy demand environment.
- China brand transition investments and soft demand environment resulting in another quarter with operating losses in China.
- Whirlpool Asia reported fourth-quarter net sales of $356 million, compared to $372 million in the same prior-year period, a decrease of 4.3-percent.
- The region reported fourth-quarter EBIT of $2 million, or 0.6-percent of sales, compared to $8 million, or 1.9-percent of sales, in the same prior-year period. During the quarter, the favorable impact of cost takeout initiatives and lower raw material inflation were more than offset by continued brand transition investments in China.
