Whirlpool Corporation
Oct 25, 2016

Whirlpool Corporation Reports Third-Quarter 2016 Results

- GAAP earnings per diluted share were $3.10; ongoing (non-GAAP) earnings per diluted share were $3.66. On a year-to-date basis(5), GAAP earnings per diluted share have increased 21 percent and ongoing earnings per diluted share have increased 18 percent.
- On a full-year basis the Company expects revenue growth and margin expansion driven by strong cost reduction programs and innovative new product launches across the Company's industry-leading brand portfolio.
- The Company updates its full-year earnings per share guidance range of $11.50 to $11.75 on a GAAP basis and $14.00 to $14.25 on an ongoing basis due to temporary U.S. demand softness as well as Brexit-related currency volatility and demand weakness in the U.K.
- The Company continued to execute its share repurchase program, repurchasing $100 million in common stock in the third quarter; consistent with prior statements, the Company intends to repurchase stock in the fourth quarter of 2016.

BENTON HARBOR, Mich., Oct. 25, 2016 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR) announced today third-quarter GAAP net earnings of $238 million, or $3.10 per diluted share, compared to $235 million, or $2.95 per diluted share, reported for the same prior-year period. Ongoing business earnings per diluted share(1) totaled $3.66 compared to $3.45 in the same prior-year period.

Whirlpool Corporation Logo.(PRNewsFoto/Whirlpool Corporation)

"In a challenging external environment, we delivered record third-quarter ongoing earnings per share by leveraging our portfolio of leading brands, innovative new products and a continued focus on cost productivity. The fundamentals of our business are strong, and as a result of our operational execution we have delivered earnings per share growth of 18 percent year-to-date," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "We remain focused on creating value for our shareholders and returning cash through our share repurchase and dividend programs."

Third-quarter net sales were $5.2 billion, compared to $5.3 billion in the same prior-year period. Excluding the impact of currency, sales increased slightly.

Third-quarter GAAP operating profit totaled $370 million, or 7.0 percent of sales, compared to $329 million, or 6.2 percent of sales, in the same prior-year period. Third-quarter ongoing business operating profit(2) totaled $413 million, or 7.9 percent of sales, compared to $418 million, or 7.9 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, ongoing cost productivity, unit volume growth, benefits from cost and capacity reduction initiatives and acquisition synergies offset unfavorable impacts from product price/mix and foreign currency; on a GAAP basis, results were positively impacted by lower restructuring expenses and legacy product warranty and liability expenses recognized in the prior year.

For the nine months ended September 30, 2016, the company reported cash used in operating activities of $(175) million compared to $(157) million in the same prior-year period. Whirlpool Corporation reported free cash flow(3) of $(466) million for the first nine months of 2016 compared to $(492) million in the same prior-year period.

THIRD-QUARTER REGIONAL REVIEW

Whirlpool North America

Whirlpool North America reported third-quarter net sales of $2.9 billion, compared to $2.8 billion in the same prior-year period. Excluding the impact of currency, sales increased 3 percent.

The region reported third-quarter GAAP operating profit of $346 million, or 12.1 percent of sales, compared to $349 million, or 12.5 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $346 million, or 12.1 percent of sales, compared to $336 million, or 12.0 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, unit volume growth and ongoing cost productivity more than offset unfavorable impacts from product price/mix and foreign currency; on a GAAP basis, prior-year results were positively impacted by the recognition of a post-retirement benefit curtailment gain.

The company now expects full-year 2016 industry unit shipments in the U.S. to increase by 3 to 4 percent.

Whirlpool Europe, Middle East and Africa

Whirlpool Europe, Middle East and Africa reported third-quarter net sales of $1.3 billion, compared to $1.5 billion in the same prior-year period. Excluding the impact of currency, sales decreased by 6 percent.

The region reported third-quarter GAAP operating profit of $40 million, or 3.0 percent of sales, compared to $32 million, or 2.2 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $48 million, or 3.7 percent of sales, compared to $71 million, or 4.9 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, cost and capacity reductions and acquisition synergies were more than offset by foreign currency and product price/mix; on a GAAP basis, current period results were negatively impacted by acquisition integration costs and prior-year period results were negatively impacted by legacy product warranty and liability expenses.

The company continues to expect full-year 2016 industry unit shipments to be flat to up 2 percent.

Whirlpool Latin America

Whirlpool Latin America reported third-quarter net sales of $800 million, compared to $751 million in the same prior-year period. Excluding the impact of currency, sales increased by 2 percent.

The region reported third-quarter operating profit of $45 million, or 5.7 percent of sales, compared to $31 million, or 4.2 percent of sales, in the same prior-year period, driven by favorable product price/mix and benefits from cost and capacity reduction initiatives partially offset by unit volume declines.

The company now expects full-year 2016 industry unit shipments in Brazil to decrease by 10 to 12 percent.

Whirlpool Asia

Whirlpool Asia reported third-quarter net sales of $338 million compared to $346 million in the same prior-year period. Excluding the impact of currency, sales increased 2 percent.

The region reported third-quarter GAAP operating profit of $15 million, or 4.4 percent of sales, compared to $24 million, or 6.7 percent of sales, in the same prior-year period. Ongoing business segment operating profit(4) totaled $17 million, or 4.9 percent of sales, compared to $27 million, or 7.7 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, favorable ongoing cost productivity was more than offset by product price/mix and increased investments in marketing, technology and products.

The company continues to expect full-year 2016 industry unit shipments to be flat to down 2 percent.

Regional Summary

"We are pleased with strong revenue growth, market share gains and ongoing margin expansion in North America and Latin America that overcame industry softness and currency volatility," said Marc Bitzer, president and chief operating officer of Whirlpool Corporation. "In Europe, the U.K. environment remains challenging, but we continue to execute brand and product transitions while adjusting our production levels to right-size our inventory. In Asia, we remain focused on deploying our products across our new, larger distribution network."

OUTLOOK

For the full-year 2016, Whirlpool Corporation now expects GAAP earnings per diluted share of $11.50 to $11.75 and ongoing business earnings per diluted share(1) of $14.00 to $14.25. These changes are primarily related to demand softness in the U.S. and the U.K., along with the continued devaluation of the British Pound.

For the full-year 2016, the company expects to generate cash from operating activities of $1,350 to $1,400 million and free cash flow(3) of approximately $700 million. Included in this guidance are primarily acquisition-related restructuring cash outlays of up to $150 million, legacy product warranty and liability costs of $155 million and, with respect to free cash flow(3), capital spending of $650 to $700 million.

"We are confident that our previously deployed plans will deliver a record year of performance with strong revenue growth and margin expansion as we manage through continued challenges in a volatile global environment," said Fettig. "Our long-term strategic priorities remain unchanged and we will continue to deliver shareholder value through the execution of our priorities and a balanced approach to capital allocation."

(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.

(5) Our nine-month ending ongoing earnings per share represents the aggregate of first, second and third quarter 2016 compared to the same prior-year periods in 2015. The GAAP to ongoing reconciliation for each of these quarters is available in the earnings release for each quarter.

About Whirlpool Corporation
Whirlpool Corporation (NYSE: WHR) is the number one major appliance manufacturer in the world, with approximately $21 billion in annual sales, 97,000 employees and 70 manufacturing and technology research centers throughout the world in 2015. 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, industry unit shipments, 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) acquisition and investment-related risk, including risk associated with our acquisitions of Hefei Sanyo and Indesit, and risk associated with our increased presence in emerging markets; (3) Whirlpool's ability to continue its relationship with significant trade customers and the ability of these trade customers to maintain or increase market share; (4) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from natural disasters or terrorist attacks; (5) fluctuations in the cost of key materials (including steel, plastic, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (6) the ability of Whirlpool to manage foreign currency fluctuations; (7) litigation, tax, and legal compliance risk and costs, especially costs which may be materially different from the amount we expect to incur or have accrued for; (8) the effects and costs of governmental investigations or related actions by third parties; (9) changes in the legal and regulatory environment including environmental and health and safety regulations; (10) Whirlpool's ability to maintain its reputation and brand image; (11) the ability of Whirlpool to achieve its business plans, productivity improvements, cost control, price increases, leveraging of its global operating platform, and acceleration of the rate of innovation; (12) information technology system failures and data security breaches; (13) product liability and product recall costs; (14) inventory and other asset risk; (15) the uncertain global economy and changes in economic conditions which affect demand for our products; (16) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (17) our ability to attract, develop and retain executives and other qualified employees; (18) the impact of labor relations; (19) Whirlpool's ability to obtain and protect intellectual property rights; and (20) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans.

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


2016


2015


2016


2015

Net sales

$

5,248



$

5,277



$

15,062



$

15,331


Expenses








Cost of products sold

4,310



4,347



12,335



12,643


Gross margin

938



930



2,727



2,688


Selling, general and administrative

521



529



1,538



1,583


Intangible amortization

18



18



54



55


Restructuring costs

29



54



116



145


Operating profit

370



329



1,019



905


Other (income) expense








Interest and sundry (income) expense

26



21



95



32


Interest expense

39



41



118



124


Earnings before income taxes

305



267



806



749


Income tax expense

61



17



64



116


Net earnings

244



250



742



633


Less: Net earnings available to noncontrolling interests

6



15



34



30


Net earnings available to Whirlpool

$

238



$

235



$

708



$

603


Per share of common stock








Basic net earnings available to Whirlpool

$

3.14



$

2.98



$

9.26



$

7.64


Diluted net earnings available to Whirlpool

$

3.10



$

2.95



$

9.16



$

7.54


Dividends declared

$

1.00



$

0.90



$

2.90



$

2.55


Weighted-average shares outstanding (in millions)








Basic

75.7



78.8



76.4



78.9


Diluted

76.6



79.7



77.3



79.9










Comprehensive income

$

289



$

45



$

900



$

254


 

WHIRLPOOL CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Millions of dollars, except share data)






(Unaudited)




September 30,
 2016


December 31,
 2015

Assets




Current assets




Cash and cash equivalents

$

1,025



$

772


Accounts receivable, net of allowance of $192 and $160, respectively

2,982



2,530


Inventories

3,208



2,619


Deferred income taxes

398



451


Prepaid and other current assets

974



953


Total current assets

8,587



7,325


Property, net of accumulated depreciation of $6,267 and $5,953, respectively

3,768



3,774


Goodwill

3,027



3,006


Other intangibles, net of accumulated amortization of $376 and $327, respectively

2,622



2,678


Deferred income taxes

1,853



1,850


Other noncurrent assets

333



377


Total assets

$

20,190



$

19,010


Liabilities and stockholders' equity




Current liabilities




Accounts payable

$

4,312



$

4,403


Accrued expenses

709



675


Accrued advertising and promotions

677



706


Employee compensation

415



452


Notes payable

1,408



20


Current maturities of long-term debt

263



508


Other current liabilities

917



980


Total current liabilities

8,701



7,744


Noncurrent liabilities




Long-term debt

3,718



3,470


Pension benefits

960



1,025


Postretirement benefits

338



390


Other noncurrent liabilities

506



707


Total noncurrent liabilities

5,522



5,592


Stockholders' equity




Common stock, $1 par value, 250 million shares authorized, 111 million shares issued, and 75 million and 77 million shares outstanding, respectively

111



111


Additional paid-in capital

2,684



2,641


Retained earnings

7,209



6,722


Accumulated other comprehensive loss

(2,176)



(2,332)


Treasury stock, 36 million and 33 million shares, respectively

(2,824)



(2,399)


Total Whirlpool stockholders' equity

5,004



4,743


Noncontrolling interests

963



931


Total stockholders' equity

5,967



5,674


Total liabilities and stockholders' equity

$

20,190



$

19,010


 


WHIRLPOOL CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE PERIODS ENDED SEPTEMBER 30

(Millions of dollars)



Nine Months Ended


2016


2015

Operating activities




Net earnings

$

742



$

633


Adjustments to reconcile net earnings to cash provided by (used in) operating activities:




Depreciation and amortization

496



496


Curtailment gain



(63)


Changes in assets and liabilities:




Accounts receivable

(438)



(405)


Inventories

(518)



(397)


Accounts payable

(187)



(288)


Accrued advertising and promotions

(38)



(34)


Accrued expenses and current liabilities

72



(26)


Taxes deferred and payable, net

(149)



(44)


Accrued pension and postretirement benefits

(53)



(109)


Employee compensation

(30)



(31)


Other

(72)



111


Cash used in operating activities

(175)



(157)


Investing activities




Capital expenditures

(360)



(391)


Proceeds from sale of assets and business

55



35


Change in restricted cash

14



21


Investment in related businesses

(10)



(72)


Other

(2)




Cash used in investing activities

(303)



(407)


Financing activities




Proceeds from borrowings of long-term debt

491



531


Repayments of long-term debt

(507)



(278)


Net proceeds from short-term borrowings

1,369



307


Dividends paid

(221)



(200)


Repurchase of common stock

(425)



(95)


Common stock issued

24



36


Other

(2)



(5)


Cash provided by financing activities

729



296


Effect of exchange rate changes on cash and cash equivalents

2



(60)


Increase (decrease) in cash and cash equivalents

253



(328)


Cash and cash equivalents at beginning of period

772



1,026


Cash and cash equivalents at end of period

$

1,025



$

698


 

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 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. 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.

Third-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 September 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 third-quarter adjusted effective tax rate of 16%.

 


Three Months Ended


September 30, 2016


Operating
Profit


Earnings Before
Interest & Taxes(6)


Earnings per
Diluted
Share

Reported GAAP Measure

$

370



$

344



$

3.10


Restructuring Expense(d)

29



29



0.37


Acquisition Related Transition Costs

14



14



0.19


Legacy Product Warranty and Liability Expense(c)



1



0.01


Income Tax Impact





(0.09)


Normalized Tax Rate Adjustment(b)





0.08


Ongoing Business Measure

$

413



$

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(6)

$

344


 

Third-Quarter 2015 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 September 30, 2015. 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 third-quarter adjusted effective tax rate of 19%.

 


Three Months Ended


September 30, 2015


Operating
Profit


Earnings
Before Interest
& Taxes(6)


Earnings per
Diluted
Share

Reported GAAP Measure

$

329



$

308



$

2.95


Restructuring Expense(d)

54



54



0.68


Acquisition Related Transition Costs

9



9



0.11


Benefit Plan Curtailment Gain

(16)



(16)



(0.20)


Gain/Expenses Related to a Business Investment



1



0.01


Legacy Product Warranty and Liability Expense(c)

42



42



0.52


Income Tax Impact





(0.20)


Normalized Tax Rate Adjustment(b)





(0.42)


Ongoing Business Measure

$

418



$

398



$

3.45


 

Earnings Before Interest & Taxes Reconciliation:

Net earnings available to Whirlpool

$

235


Net earnings available to noncontrolling interests

15


Income tax expense (benefit)

17


Interest expense

41


Earnings Before Interest & Taxes(6)

$

308



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 September 30, 2016. Ongoing business segment operating margin is calculated by dividing ongoing business segment operating profit (loss) by segment net sales.

 


Three Months Ended


September 30, 2016


Segment
Operating
Profit (Loss)


Restructuring
Expense(d)


Acquisition
Related
Transition
Costs


Ongoing Business
Segment
Operating Profit
(Loss)

North America

$

346



$



$



$

346


EMEA

40





8



48


Latin America

45







45


Asia

15





2



17


Other/Eliminations

(76)



29



4



(43)


Total Whirlpool Corporation

$

370



$

29



$

14



$

413


 

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 September 30, 2015. Ongoing business segment operating margin is calculated by dividing ongoing business segment operating profit (loss) by segment net sales.

 


Three Months Ended


September 30, 2015


Segment
Operating
Profit (Loss)


Restructuring
Expense(d)


Acquisition
Related
Transition
Costs


Benefit
Plan
Curtailment
Gain


Legacy Product
Warranty and
Liability
Expense(c)


Ongoing Business
Segment
Operating Profit
(Loss)

North America

$

349



$



$



$

(16)



$

3



$

336


EMEA

32









39



71


Latin America

31











31


Asia

24





3







27


Other/Eliminations

(107)



54



6







(47)


Total Whirlpool Corporation

$

329



$

54



$

9



$

(16)



$

42



$

418


 

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 ending 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 anticipated full-year tax rate of 19%.

 


Twelve Months Ending


December 31, 2016


Operating
Profit


Earnings Before
Interest & Taxes(6)


Earnings per
Diluted Share

Reported GAAP Measure

$ 1,440 - 1,470


$ 1,300 - 1,330


$ 11.50 - 11.75

Restructuring Expense(d)

200


200


2.60

Acquisition Related Transition Costs

32


32


0.42

Legacy Product Warranty and Liability Expense(c)

3


7


0.09

Income Tax Impact



(0.59)

Ongoing Business Measure

$ 1,675 - 1,705


$ 1,540 - 1,570


$ 14.00 - 14.25

 

(6) 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 item 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 2015 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, 2015. 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 20.3%.

 


Twelve Months Ended


December 31, 2015


Operating
Profit


Earnings
Before Interest
& Taxes(6)


Earnings
per Diluted
Share

Reported GAAP Measure

$

1,285



$

1,196



$

9.83


Restructuring Expense(d)

201



201



2.52


Acquisition Related Transition Costs

57



64



0.80


Benefit Plan Curtailment Gain

(62)



(62)



(0.78)


Gain/Expenses Related to a Business Investment



(46)



(0.58)


Legacy Product Warranty and Liability Expense(c)

42



42



0.53


Pension Settlement Charges(a)

15



15



0.19


Antitrust and Dispute Resolutions

21



35



0.44


Income Tax Impact





(0.57)


Ongoing Business Measure

$

1,559



$

1,445



$

12.38


 

Earnings Before Interest & Taxes Reconciliation:

Net earnings available to Whirlpool

$

783


Net earnings available to noncontrolling interests

39


Income tax expense (benefit)

209


Interest expense

165


Earnings Before Interest & Taxes(6)

$

1,196


 


Footnotes:    


a.

PENSION SETTLEMENT CHARGES - During the full year 2015, we recognized expenses of $3 million and $12 million related to Canadian and EMEA pension settlements, respectively.



b.

NORMALIZED TAX RATE ADJUSTMENT - During the third quarters of 2016 and 2015, we calculated ongoing business diluted EPS using adjusted tax rates of 16% and 19%, respectively. We anticipate a full-year effective tax of 19% for 2016 and had anticipated 22% for 2015.



c.

LEGACY PRODUCT WARRANTY AND LIABILITY EXPENSE - During the full year 2015, we recognized expenses of $39 million related to legacy product warranty and liability actions on heritage Indesit product in Europe and a $3 million charge associated with a separate product recall in North America.



d.

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.

 

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, 2016 and 2015 and projected 2016 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)

2016

2015


2016 Outlook

Cash provided by (used in) operating activities

$(175)

$(157)


$1,350 - $1,400

Capital expenditures, proceeds from sale of assets/businesses and change in restricted cash*

(291)

(335)


(650) - (700)

Free Cash Flow

$(466)

$(492)


~$700






Cash used in investing activities**

$(303)

$(407)



Cash provided by financing activities**

$729

$296



 

*The change in restricted cash relates to the private placement funds paid by Whirlpool to acquire majority control of Hefei Sanyo and which are used to fund capital and technical resources to enhance Whirlpool China's research and development and working capital. 

**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

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