Whirlpool Corporation (NYSE: WHR) announced Monday second-quarter GAAP net earnings of $67 million, or $1.04 per diluted share, compared to $(657) million, or $(9.50) per diluted share, reported for the same prior-year period. Non-cash items negatively impacted prior-year results by approximately $860 million. Second-quarter ongoing earnings per diluted(1) share were $4.01, compared to $3.20 in the same prior-year period.
“At our recent Investor Day, we laid out a robust strategy for creating shareholder value and our excellent second-quarter results impressively demonstrate that we are on track,” said Marc Bitzer, chairman and chief executive officer of Whirlpool Corporation. “Our strong momentum allows us to raise our full-year guidance despite continued global macro uncertainties.”
Second-quarter net sales were $5.2 billion, compared to $5.1 billion in the same prior-year period. Excluding the impact of currency, sales increased 3.5 percent.
Second-quarter EBIT(2) was $254 million, or 4.9 percent of sales, compared to $(562) million, or (10.9) percent of sales, in the same prior-year period. Second-quarter ongoing EBIT(2) was $363 million, or 7.0 percent of sales, compared to $343 million, or 6.7 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 cost inflation and unfavorable currency. On a GAAP basis, prior-year results were negatively impacted by approximately $860 million due to an asset impairment charge related to the EMEA region and a settlement agreement with the French Competition Authority (FCA).
For the six months ended June 30, 2019, the Company reported cash used by operating activities of $(821) million, compared to $(584) million in the prior year. The Company reported free cash flow(4) of $(997) million for the first six months of 2019, compared to $(725) million for the first six months of 2018, primarily driven by the approximately $100 million FCA payment and temporarily higher working capital.
For the full-year 2019, the Company raises guidance and now expects GAAP earnings per diluted share of $17.80 to $18.55 and ongoing earnings per diluted share(1) of $14.75 to $15.50. On a GAAP basis, earnings per diluted share includes the gain on sale of the Embraco business of approximately $400 million, restructuring expense of approximately $200 million, the favorable impact of a Brazil indirect tax credit of $180 million and a $79 million charge related to the sale of our South Africa operations and exit of our domestic sales operations in Turkey.
For the full-year 2019(5), the Company now expects to generate cash provided by operating activities of approximately $1.4 billion and free cash flow(4) of approximately $800 million. Included in this guidance are restructuring cash outlays of approximately $200 million and, with respect to free cash flow(4), capital spending of approximately $625 million.
“We are pleased to have completed the sale of our Embraco compressor business and expect to repay a $1 billion term loan with those net proceeds,” said Jim Peters, chief financial officer of Whirlpool Corporation. “As we strengthen our balance sheet, drive margin expansion and generate cash, we will maintain our disciplined approach to capital allocation with continued investments in our business and solid returns 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 earnings before interest and taxes (EBIT) and ongoing EBIT, non-GAAP financial measures, to reported net earnings available to Whirlpool and other important information, appears below.
(3) Segment EBIT represents our consolidated EBIT broken down by the Company’s reportable segments. Consolidated EBIT also includes corporate “Other/Eliminations” of $(142) million and $(944) million for the second quarters of 2019 and 2018, respectively. Ongoing segment EBIT includes certain adjustments to segment EBIT, and a reconciliation and other important information, appears below.
(4) 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.
(5) Full-year 2019 free cash flow guidance does not reflect the expected impact from the sale of the Embraco business.
Whirlpool Corporation (NYSE: WHR) is the leading major appliance manufacturer in the world, with approximately $21 billion in annual sales, 92,000 employees and 65 manufacturing and technology research centers in 2018. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir, Indesit and other major brand names in nearly every country throughout the world. Additional information about the company can be found at whirlpoolcorp.com, or find us on Twitter at @WhirlpoolCorp.
