Whirlpool Surpasses 4th-Quarter Earnings and Revenue Projections
- By Mayank Marwah
Whirlpool Corp. (NYSE:WHR) released its fourth-quarter results on Jan. 27 after the market closed. The company beat Zacks' consensus estimates for earnings and revenue courtesy of robust demand for kitchen and home appliances.
The Benton Harbor, Michigan-based manufacturer of home appliances posted adjusted earnings per share of $6.64, which was higher than EPS of $4.91 recorded in the year-ago period. Revenue rose from $5.38 billion in the prior-year quarter to $5.8 billion in the fourth quarter of 2020. Analysts had predicted EPS of $6.39 on $5.58 billion in revenue. This quarter marked the company's tenth consecutive quarter of earnings beats.
Segment performance
At Whirlpool North America, revenue surged 4.4% to $3.21 billion, driven by positive consumer trends and partially offset by Covid-related supply constraints. The operating profit came in at $581 million, up from $410 million reported in the year-ago quarter. Ebit margins surged to 2.8% from 0.9% reported last year, courtesy of cost reduction initiatives as well as reduced marketing investments.
Sales in the Latin America division soared 5% on a year-over-year basis to $821 million. Industry growth and share gains in Brazil and Mexico fuelled revenue growth. The company registered an operating profit of $100 million, up from $42 million reported in the prior three-month period.
Sales in Europe, the Middle East and Africa spiked a combined 21% to $1.42 billion (17.8% barring currency translations). The company attributed the growth to a solid volume increase on a year-over-year basis, led by demand recovery in key countries. The company posted an operating profit of $40 million, which was higher than the operating profit of $11 million reported in last year.
At Whirlpool Asia, sales slumped 0.7% to $354 million. By contrast, the operating profit came in at $21 million, up 950% year on year. The company did benefit from strong cost discipline during the quarter. Additionally, robust demand in India and demand recovery in China helped.
Covid-19 response plan and financial position
The company's Covid-19 response plan, which it hopes can generate cost savings of more than $500 million, has stayed on track. In the third quarter, the company trimmed costs to the extent of $175 million, which helped boost free cash flow. Year-to-date cost savings amounted to $350 million.
At the quarter's end, the company's balance of total cash and cash equivalents stood at $2.92 billion. Long-term debt totalled $5.06 billion.
Chairman and CEO Marc Bitzer commented the following:
"Despite a challenging environment in 2020, we continued to deliver against our long-term strategy and reported our third consecutive year of record ongoing earnings per share. As we enter into 2021, we continue to see signs of economic recovery - such as positive demand and encouraging structural housing trends - and remain well-positioned to drive sustained shareholder value over the long term."
Guidance
For full-year 2021, Whirlpool projects revenue to grow 6%. Adjusted earnings per share for the same period is projected to range from $17.80 to $18.80. Free cash flow guidance is about $1 billion, while cash flow from operating activities is anticipated to be roughly $1.55 billion. Chief Financial Officer Jim Peters said:
"We significantly strengthened our balance sheet and continued to return cash to our shareholders, while delivering record ongoing earnings per share, ongoing EBIT margins and free cash flow. Looking ahead, we are confident that we will continue to deliver on our long-term financial goals and create further value for our shareholders."
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.
