BENTON HARBOR, Mich.,
July 26, 2017 /PRNewswire/ -- Whirlpool Corporation
(NYSE: WHR) announced today second-quarter GAAP net earnings of
$189 million, or $2.52 per diluted share, compared to $320 million, or $4.15 per diluted share, reported for the same
prior-year period. GAAP net earnings were negatively impacted
primarily by higher income tax expenses of approximately
$90 million, compared to the same
prior-year period, driven by the timing of tax planning activities
in the same prior-year period. Second-quarter ongoing business
earnings per diluted share(1) totaled $3.35 compared to $3.50 in the same prior-year period.
"We delivered very strong results in North America and Latin America and improved EMEA operating
margins," said Jeff M. Fettig,
chairman and chief executive officer of Whirlpool Corporation. "We
also continued to deliver significant improvements in our free cash
flow generation and remain confident in our full-year free cash
flow goals."
Second-quarter net sales were $5.3
billion, compared to $5.2
billion in the same prior-year period. Excluding the impact
of currency, sales increased more than 3 percent.
Second-quarter GAAP operating profit totaled $274 million, or 5.1 percent of sales, compared
to $368 million, or 7.1 percent of
sales, in the same prior-year period. Second-quarter ongoing
business operating profit(2) totaled $373 million, or 6.9 percent of sales, compared
to $437 million, or 8.4 percent of
sales, in the same prior-year period. On a GAAP and ongoing basis,
cost productivity and unit volume growth partially offset
unfavorable impacts from raw material inflation and product
price/mix.
For the six months ended June 30, 2017, Whirlpool
Corporation reported cash used in operating activities of
$(191) million compared to
$(404) million in the same prior-year
period. The Company reported free cash flow(3) of
$(356) million for the first six
months of 2017 compared to $(547)
million in the same prior-year period, driven by the
Company's focus on working capital optimization.
SECOND-QUARTER REGIONAL REVIEW
Whirlpool North
America
Whirlpool North America
reported second-quarter net sales of $3.0
billion, compared to $2.8
billion in the same prior-year period. Excluding the impact
of currency, sales increased 9 percent.
The region reported second-quarter operating profit of
$354 million, or 11.8 percent of
sales, compared to $340 million, or
12.3 percent of sales, in the same prior-year period. The operating
profit increase was driven by very strong unit volume growth in its
core and adjacent businesses, while operating margin declined due
to unfavorable impacts from raw material inflation and foreign
currency.
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 second-quarter net sales of
$1.2 billion, compared to
$1.3 billion in the same prior-year
period. Excluding the impact of currency, sales decreased 5
percent.
The region reported breakeven second-quarter GAAP operating
profit compared to GAAP operating profit of $46 million, or 3.5 percent of sales, in the same
prior-year period. Ongoing business segment operating
profit(4) was breakeven compared to ongoing business
segment operating profit(4) of $60 million, or 4.6 percent of sales, in the same
prior-year period.
Compared to the prior-quarter period, the region reported
sequential quarter operating profit improvement of $17 million, driven by improved product
availability compared to the first quarter.
The Company continues to anticipate solid second-half operating
profit recovery driven by its simplified brand structure,
additional product availability improvements and the deployment of
marketing actions to support new product launches.
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 second-quarter net sales of $848
million, compared to $826
million in the same prior-year period. Excluding the impact
of currency, sales decreased 1 percent.
The region reported second-quarter operating profit of
$59 million, or 7.0 percent of sales,
compared to $50 million, or 6.1
percent of sales, in the same prior-year period, driven by
favorable product price/mix and cost productivity which more than
offset raw material inflation and unit volume declines.
The Company continues to expect full-year 2017 industry unit
shipments in Brazil to be
flat.
Whirlpool Asia
Whirlpool Asia reported
second-quarter net sales of $358
million, compared to $363
million in the same prior-year period. Excluding the impact
of currency, sales were flat.
The region reported a second-quarter GAAP operating loss of
$(32) million, or (9.1) percent of
sales, compared to GAAP operating profit of $16 million, or 4.4 percent of sales, in the same
prior-year period. Ongoing business segment operating
profit(4) totaled $8
million, or approximately 2 percent of sales, compared to
$29 million, or 8.1 percent of sales,
in the same prior-year period. On a GAAP and ongoing basis,
favorable impacts from cost productivity, unit volume growth and
foreign currency were more than offset by raw material inflation
and unfavorable product price/mix. Additionally, on a GAAP basis,
the Company made an adjustment in its China business of $(40)
million, primarily to align trade promotion accruals from
prior periods to the Company's global standards.
The Company expects that cost mitigation efforts and product
price/mix, driven by innovative product launches and
previously-announced cost-based price increases, will improve
operating margins in the second half of the year.
The Company continues to expect full-year 2017 industry unit
shipments to be flat to up 2 percent.
Regional Summary
"We are pleased with double digit unit volume growth, continued
market share gains and strong operating margins in North America, as our industry-leading brands
and innovative products continue to deliver significant value,
despite the impact of raw material inflation during the quarter,"
said Marc Bitzer, president and
chief operating officer of Whirlpool Corporation. "We expect
profitable growth in EMEA during the second half of this year, and
remain confident in our ability to manage through volatility in
emerging markets."
OUTLOOK
For the full-year 2017, the Company now expects to generate cash
from operating activities of $1.65 to $1.7
billion and continues to expect to generate free cash
flow(3) of approximately $1
billion. Included in this guidance are primarily
acquisition-related restructuring cash outlays of up to
$165 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 $12.40 to
$12.90 and ongoing business earnings per diluted
share(1) of $14.50 to
$15.00.
"Our strong free cash flow generation gives us ample flexibility
to effectively execute our balanced capital allocation strategy,"
said Fettig. "We plan to continue returning strong levels of cash
to our shareholders through our increased dividend and $2.35 billion share repurchase
authorization."
(1) A reconciliation of ongoing business 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 business 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 business 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 JUNE 30
|
(Millions of
dollars, except share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net
sales
|
$
|
5,347
|
|
|
$
|
5,198
|
|
|
$
|
10,133
|
|
|
$
|
9,814
|
|
Expenses
|
|
|
|
|
|
|
|
Cost of products
sold
|
4,471
|
|
|
4,229
|
|
|
8,431
|
|
|
8,022
|
|
Gross
margin
|
876
|
|
|
969
|
|
|
1,702
|
|
|
1,792
|
|
Selling, general and
administrative
|
526
|
|
|
543
|
|
|
1,025
|
|
|
1,016
|
|
Intangible
amortization
|
17
|
|
|
18
|
|
|
34
|
|
|
36
|
|
Restructuring
costs
|
59
|
|
|
40
|
|
|
105
|
|
|
87
|
|
Operating
profit
|
274
|
|
|
368
|
|
|
538
|
|
|
653
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest and sundry
(income) expense
|
23
|
|
|
41
|
|
|
48
|
|
|
73
|
|
Interest
expense
|
39
|
|
|
41
|
|
|
80
|
|
|
79
|
|
Earnings before
income taxes
|
212
|
|
|
286
|
|
|
410
|
|
|
501
|
|
Income tax (benefit)
expense
|
33
|
|
|
(56)
|
|
|
73
|
|
|
3
|
|
Net
earnings
|
179
|
|
|
342
|
|
|
337
|
|
|
498
|
|
Less: Net earnings
(loss) available to noncontrolling interests
|
(10)
|
|
|
22
|
|
|
(5)
|
|
|
28
|
|
Net earnings
available to Whirlpool
|
$
|
189
|
|
|
$
|
320
|
|
|
$
|
342
|
|
|
$
|
470
|
|
Per share of
common stock
|
|
|
|
|
|
|
|
Basic net earnings
available to Whirlpool
|
$
|
2.55
|
|
|
$
|
4.20
|
|
|
$
|
4.60
|
|
|
$
|
6.13
|
|
Diluted net earnings
available to Whirlpool
|
$
|
2.52
|
|
|
$
|
4.15
|
|
|
$
|
4.53
|
|
|
$
|
6.06
|
|
Dividends
declared
|
$
|
1.10
|
|
|
$
|
1.00
|
|
|
$
|
2.10
|
|
|
$
|
1.90
|
|
Weighted-average
shares outstanding (in millions)
|
|
|
|
|
|
|
|
Basic
|
74.0
|
|
|
76.2
|
|
|
74.4
|
|
|
76.7
|
|
Diluted
|
75.1
|
|
|
77.4
|
|
|
75.6
|
|
|
77.8
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
$
|
170
|
|
|
$
|
299
|
|
|
$
|
408
|
|
|
$
|
611
|
|
WHIRLPOOL
CORPORATION
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Millions of
dollars, except share data)
|
|
|
June
30, 2017
|
|
December
31, 2016
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,041
|
|
|
$
|
1,085
|
|
Accounts receivable,
net of allowance of $161 and $185, respectively
|
2,974
|
|
|
2,711
|
|
Inventories
|
3,230
|
|
|
2,623
|
|
Prepaid and other
current assets
|
984
|
|
|
920
|
|
Total current
assets
|
8,229
|
|
|
7,339
|
|
Property, net of
accumulated depreciation of $6,542 and $6,055,
respectively
|
3,811
|
|
|
3,810
|
|
Goodwill
|
3,053
|
|
|
2,956
|
|
Other intangibles,
net of accumulated amortization of $429 and $387,
respectively
|
2,602
|
|
|
2,552
|
|
Deferred income
taxes
|
2,214
|
|
|
2,154
|
|
Other noncurrent
assets
|
297
|
|
|
342
|
|
Total
assets
|
$
|
20,206
|
|
|
$
|
19,153
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts
payable
|
$
|
4,733
|
|
|
$
|
4,416
|
|
Accrued
expenses
|
695
|
|
|
649
|
|
Accrued advertising
and promotions
|
655
|
|
|
742
|
|
Employee
compensation
|
381
|
|
|
390
|
|
Notes
payable
|
1,111
|
|
|
34
|
|
Current maturities of
long-term debt
|
659
|
|
|
560
|
|
Other current
liabilities
|
822
|
|
|
871
|
|
Total current
liabilities
|
9,056
|
|
|
7,662
|
|
Noncurrent
liabilities
|
|
|
|
Long-term
debt
|
3,631
|
|
|
3,876
|
|
Pension
benefits
|
1,052
|
|
|
1,074
|
|
Postretirement
benefits
|
324
|
|
|
334
|
|
Other noncurrent
liabilities
|
463
|
|
|
479
|
|
Total noncurrent
liabilities
|
5,470
|
|
|
5,763
|
|
Stockholders'
equity
|
|
|
|
Common stock, $1 par
value, 250 million shares authorized, 111 million shares
issued, and 73 million and 74 million shares outstanding,
respectively
|
111
|
|
|
111
|
|
Additional paid-in
capital
|
2,721
|
|
|
2,672
|
|
Retained
earnings
|
7,501
|
|
|
7,314
|
|
Accumulated other
comprehensive loss
|
(2,328)
|
|
|
(2,400)
|
|
Treasury stock, 38
million and 37 million shares, respectively
|
(3,274)
|
|
|
(2,924)
|
|
Total Whirlpool
stockholders' equity
|
4,731
|
|
|
4,773
|
|
Noncontrolling
interests
|
949
|
|
|
955
|
|
Total stockholders'
equity
|
5,680
|
|
|
5,728
|
|
Total liabilities and
stockholders' equity
|
$
|
20,206
|
|
|
$
|
19,153
|
|
WHIRLPOOL
CORPORATION
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
FOR THE PERIODS
ENDED JUNE 30
|
(Millions of
dollars)
|
|
|
Six Months
Ended
|
|
2017
|
|
2016
|
Operating
activities
|
|
|
|
Net
earnings
|
$
|
337
|
|
|
$
|
498
|
|
Adjustments to
reconcile net earnings to cash provided by (used in) operating
activities:
|
|
|
|
Depreciation and
amortization
|
319
|
|
|
332
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(179)
|
|
|
(248)
|
|
Inventories
|
(522)
|
|
|
(528)
|
|
Accounts
payable
|
175
|
|
|
(98)
|
|
Accrued advertising
and promotions
|
(108)
|
|
|
(112)
|
|
Accrued expenses and
current liabilities
|
(78)
|
|
|
(9)
|
|
Taxes deferred and
payable, net
|
(84)
|
|
|
(132)
|
|
Accrued pension and
postretirement benefits
|
(35)
|
|
|
(32)
|
|
Employee
compensation
|
(2)
|
|
|
(48)
|
|
Other
|
(14)
|
|
|
(27)
|
|
Cash used in
operating activities
|
(191)
|
|
|
(404)
|
|
Investing
activities
|
|
|
|
Capital
expenditures
|
(210)
|
|
|
(206)
|
|
Proceeds from sale of
assets and business
|
4
|
|
|
51
|
|
Change in restricted
cash
|
41
|
|
|
12
|
|
Investment in related
businesses
|
(32)
|
|
|
(8)
|
|
Other
|
(5)
|
|
|
(1)
|
|
Cash used in
investing activities
|
(202)
|
|
|
(152)
|
|
Financing
activities
|
|
|
|
Proceeds from
borrowings of long-term debt
|
—
|
|
|
491
|
|
Repayments of
long-term debt
|
(260)
|
|
|
(257)
|
|
Net proceeds from
short-term borrowings
|
1,052
|
|
|
968
|
|
Dividends
paid
|
(155)
|
|
|
(145)
|
|
Repurchase of common
stock
|
(350)
|
|
|
(325)
|
|
Common stock
issued
|
32
|
|
|
10
|
|
Other
|
(6)
|
|
|
—
|
|
Cash provided by
financing activities
|
313
|
|
|
742
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
36
|
|
|
1
|
|
Increase (decrease)
in cash and cash equivalents
|
(44)
|
|
|
187
|
|
Cash and cash
equivalents at beginning of period
|
1,085
|
|
|
772
|
|
Cash and cash
equivalents at end of period
|
$
|
1,041
|
|
|
$
|
959
|
|
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 business" measures, including ongoing business
operating profit (loss), ongoing business operating margin,
earnings before interest and taxes (EBIT), EBIT margin, ongoing
business EBIT, ongoing business EBIT margin, ongoing business
earnings, ongoing business earnings per diluted share, ongoing
business segment operating profit (loss), ongoing business segment
operating margin, sales excluding currency, ongoing business net
sales and free cash flow. Ongoing business measures exclude items
that may not be indicative of, or are unrelated to, results from
our ongoing business 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 business
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 business 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.
Second-Quarter 2017 Ongoing Business Operating Profit,
Ongoing Business Earnings Before Interest and Taxes and Ongoing
Business Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing business operating profit, ongoing
business earnings before interest and taxes and ongoing business
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 June 30, 2017. Ongoing
business operating margin is calculated by dividing ongoing
business operating profit (loss) by ongoing business net sales.
Ongoing business EBIT margin is calculated by dividing ongoing
business EBIT by ongoing business net sales. Ongoing business 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 business 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 second-quarter
adjusted effective tax rate of 19.1%.
|
|
Three Months
Ended
|
|
|
June 30,
2017
|
|
|
Operating
Profit
|
|
Earnings Before
Interest & Taxes(5)
|
|
Earnings
per Diluted
Share
|
|
Reported GAAP
measure
|
$
|
274
|
|
|
$
|
251
|
|
|
$
|
2.52
|
|
|
Restructuring
expense(a)
|
59
|
|
|
59
|
|
|
0.78
|
|
|
Out-of-period
adjustment(d)
|
40
|
|
|
40
|
|
|
0.27
|
|
|
Income tax
impact
|
—
|
|
|
—
|
|
|
(0.20)
|
|
|
Normalized tax rate
adjustment(b)
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
Ongoing business
measure
|
$
|
373
|
|
|
$
|
350
|
|
|
$
|
3.35
|
|
|
|
|
|
|
|
Earnings Before
Interest & Taxes Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
available to Whirlpool
|
$
|
189
|
|
|
|
|
|
|
Net earnings (loss)
available to noncontrolling interests
|
(10)
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
33
|
|
|
|
|
|
|
Interest
expense
|
39
|
|
|
|
|
|
|
Earnings before
interest & taxes(5)
|
$
|
251
|
|
|
|
|
|
Note: Numbers may not reconcile due to rounding
Second-Quarter 2016 Ongoing Business Operating Profit,
Ongoing Business Earnings Before Interest and Taxes and Ongoing
Business Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing business operating profit, ongoing
business earnings before interest and taxes and ongoing business
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 June 30, 2016. Ongoing
business operating margin is calculated by dividing ongoing
business operating profit by net sales. Ongoing business EBIT
margin is calculated by dividing ongoing business EBIT by net
sales. The earnings per diluted share GAAP measure and ongoing
business 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 22.0%.
|
|
Three Months
Ended
|
|
|
June 30,
2016
|
|
|
Operating
Profit
|
|
Earnings Before
Interest & Taxes(5)
|
|
Earnings
per Diluted
Share
|
|
Reported GAAP
measure(c)
|
$
|
368
|
|
|
$
|
327
|
|
|
$
|
4.15
|
|
|
Restructuring
expense(a)
|
40
|
|
|
40
|
|
|
0.52
|
|
|
Acquisition related
transition costs
|
30
|
|
|
30
|
|
|
0.39
|
|
|
Legacy product
warranty and liability expense
|
(1)
|
|
|
1
|
|
|
0.01
|
|
|
Income tax
impact
|
—
|
|
|
—
|
|
|
(0.17)
|
|
|
Normalized tax rate
adjustment(b)
|
—
|
|
|
—
|
|
|
(1.40)
|
|
|
Ongoing business
measure
|
$
|
437
|
|
|
$
|
398
|
|
|
$
|
3.50
|
|
|
|
Earnings Before
Interest & Taxes Reconciliation:
|
|
|
Net earnings available
to Whirlpool
|
$
|
320
|
|
|
|
|
|
|
Net earnings (loss)
available to noncontrolling interests
|
22
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
(56)
|
|
|
|
|
|
|
Interest
expense
|
41
|
|
|
|
|
|
|
Earnings before
interest & taxes(5)
|
$
|
327
|
|
|
|
|
|
Ongoing Business Segment Operating Profit (Loss)
The reconciliation provided below reconciles the non-GAAP
financial measure ongoing business segment operating profit (loss)
with the most directly comparable GAAP financial measure, reported
segment operating profit (loss), for the three months ended
June 30, 2017. Ongoing business segment operating margin is
calculated by dividing ongoing business segment operating profit
(loss) by segment net sales. Ongoing business segment net sales
excludes $(32) million primarily
related to an adjustment for trade promotion accruals in prior
periods.
|
Three Months
Ended
|
|
June 30,
2017
|
|
Segment Operating
Profit (Loss)
|
|
Restructuring
Expense(a)
|
|
Out-of-Period
Adjustment(d)
|
|
Ongoing Business
Segment Operating Profit (Loss)
|
North
America
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
354
|
|
EMEA
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Latin
America
|
59
|
|
|
—
|
|
|
—
|
|
|
59
|
|
Asia
|
(32)
|
|
|
—
|
|
|
40
|
|
|
8
|
|
Other/Eliminations
|
(107)
|
|
|
59
|
|
|
—
|
|
|
(48)
|
|
Total Whirlpool
Corporation
|
$
|
274
|
|
|
$
|
59
|
|
|
$
|
40
|
|
|
$
|
373
|
|
The reconciliation provided below reconciles the non-GAAP
financial measure ongoing business segment operating profit (loss)
with the most directly comparable GAAP financial measure, reported
segment operating profit (loss), for the three months ended
June 30, 2016. Ongoing business segment operating margin is
calculated by dividing ongoing business segment operating profit
(loss) by segment net sales.
|
Three Months
Ended
|
|
June 30,
2016
|
|
Segment Operating
Profit (Loss)(c)
|
|
Restructuring
Expense(a)
|
|
Acquisition Related
Transition Costs
|
|
Legacy Product
Warranty and Liability Expense
|
|
Ongoing Business
Segment Operating Profit (Loss)
|
North
America
|
$
|
340
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
340
|
|
EMEA
|
46
|
|
|
—
|
|
|
15
|
|
|
(1)
|
|
|
60
|
|
Latin
America
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50
|
|
Asia
|
16
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
29
|
|
Other/Eliminations(c)
|
(84)
|
|
|
40
|
|
|
2
|
|
|
—
|
|
|
(42)
|
|
Total Whirlpool
Corporation
|
$
|
368
|
|
|
$
|
40
|
|
|
$
|
30
|
|
|
$
|
(1)
|
|
|
$
|
437
|
|
Note: Numbers may not reconcile due to rounding
Full-Year 2017 Ongoing Business Operating Profit, Ongoing
Business Earnings Before Interest and Taxes and Ongoing Business
Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing business operating profit, ongoing
business earnings before interest and taxes and ongoing business
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 business operating margin is calculated by dividing ongoing
business operating profit (loss) by ongoing business net sales.
Ongoing business EBIT margin is calculated by dividing ongoing
business EBIT by ongoing business net sales. Ongoing business 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 business 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 20%.
|
Twelve Months
Ending
|
|
December 31,
2017
|
|
Operating
Profit
|
|
Earnings Before
Interest & Taxes(5)
|
|
Earnings per
Diluted Share
|
Reported GAAP
measure
|
$1,445 -
1,495
|
|
$1,335 -
1,385
|
|
$12.40 -
12.90
|
Restructuring
expense(a)
|
175
|
|
175
|
|
2.32
|
Out-of-period
adjustment(d)
|
40
|
|
40
|
|
0.27
|
Income tax
impact
|
—
|
|
—
|
|
(0.49)
|
Ongoing business
measure
|
$1,660 -
1,710
|
|
$1,550 -
1,600
|
|
$ 14.50 -
15.00
|
(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 Business Operating Profit, Ongoing
Business Earnings Before Interest and Taxes and Ongoing Business
Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP
financial measures ongoing business operating profit, ongoing
business earnings before interest and taxes and ongoing business
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 business operating margin is calculated by dividing ongoing
business operating profit by net sales. Ongoing business EBIT
margin is calculated by dividing ongoing business EBIT by net
sales. The earnings per diluted share GAAP measure and ongoing
business 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 business
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 second quarter of 2017, we
calculated ongoing business diluted EPS using an adjusted tax rate
of 19.1%. We anticipate a 2017 full-year effective tax rate of
approximately 20%. During the second quarter of 2016, we made an
adjustment to ongoing business diluted EPS to reconcile specific
items reported to our anticipated full-year effective tax rate of
22.0%.
|
|
|
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 June 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 June 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
$2 million.
|
|
|
d.
|
OUT-OF-PERIOD
ADJUSTMENT - During the second quarter of 2017, we recorded
out-of-period adjustments in our China business primarily related
to trade promotion accruals in prior periods. The impacts to net
sales and operating profit were $(32) million and $(40) million,
respectively. These impacts are not material to Whirlpool
Corporation's financial statements in this or any prior reporting
period.
|
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 six months ended
June 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.
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
(millions of
dollars)
|
2017
|
2016
|
|
2017
Outlook
|
Cash provided by
(used in) operating activities
|
$(191)
|
$(404)
|
|
$1,650 -
$1,700
|
Capital expenditures,
proceeds from sale of
assets/businesses and change in restricted cash*
|
(165)
|
(143)
|
|
(650) -
(700)
|
Free cash
flow
|
$(356)
|
$(547)
|
|
~$1,000
|
|
|
|
|
|
Cash used in
investing activities**
|
$(202)
|
$(152)
|
|
|
Cash provided by
financing activities**
|
$313
|
$742
|
|
|
*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