Whirlpool Corporation WHR posted mixed third-quarter 2021 results with the top line missing the Zacks Consensus Estimate and earnings beating the same. Sales increased year on year, while earnings took a dive.
Performance during the quarter gained from strong demand and efficient cost-based pricing efforts. However, supply chain constrains and raw material inflation were a drag on performance across most regions.
Management is on track with efforts to navigate through the industry’s challenges and deliver strong performance in the forthcoming periods. The company raised its bottom-line expectation for 2021 and increased the long-term value creation targets.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation price-consensus-eps-surprise-chart | Whirlpool Corporation Quote
Results in Detail
The appliance maker delivered adjusted earnings of $6.68 per share compared with $6.83 a share earned in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $6.15. This marks the company’s 13th straight earnings beat. The bottom line was supported by revenue growth and cost-based pricing actions.
Net sales came in at $5,488 million that advanced 3.7% from the year-ago quarter’s levels. Sustained consumer demand and cost-based pricing efforts drove the top line. However, the top line missed the Zacks Consensus Estimate of $5,648 million. Excluding the impacts of foreign exchange, net sales amounted to $5,444 million that rose 2.9% year on year.
Gross profit for third-quarter 2021 were $1,108 million, down from $1,148 million reported in the year-ago quarter.
Adjusted EBIT of $608 million declined 3.2% from $628 million in the year-ago quarter. Adjusted EBIT margin of 11.1% fell 80 basis points (bps). The metric was adversely impacted by raw material inflation of nearly 650 bps.
Net sales from North America increased 5.1% year over year to $3,113 million, driven by strong execution of cost-based pricing actions partly offset by elevated supply constraints. Excluding the currency impact, sales in the region rose 4.9%. The segment’s EBIT declined 1.3% year on year to $553 million, while the EBIT margin contracted 120 bps to 17.7% due to inflation, partly offset by gains from price/mix.
Net sales from EMEA inched down 0.2% year on year to $1,256 million. Excluding currency impacts, sales in the region declined 1.6%. Revenues were affected by supply chain constraints partly mitigated by cost-based pricing actions. The segment’s EBIT of $28 million plunged 35.4% from the year-ago period’s levels. EBIT margin was 2.2%, down 120 bps due to inflation, partially offset by cost-based pricing actions.
Net sales from Latin America increased 17% year on year to $841 million, driven by cost-based pricing actions and strong industry growth in Mexico. Excluding the currency impacts, sales in the region advanced 14.5%. The segment’s EBIT of $73 million declined 5.2% from the year-ago period’s levels. EBIT margin contracted 200 basis points to 8.7%, owing to inflation and supply chain headwinds, somewhat offset by cost-based pricing actions.
Net sales in Asia declined 21.3% year on year to $278 million, owing to the partial divestiture of Whirlpool China. Excluding the currency impacts, sales for the region were down 21.5%. The segment’s EBIT of $24 million reflected substantial increase from $6 million reported in the year-ago quarter. The segment’s EBIT margin came in at 8.6%, up from 1.8% in the prior-year quarter. The expansion was led by cost-based price actions and the partial divestiture of Whirlpool China.
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Other Financial Details
As of Sep 30, 2021, Whirlpool had cash and cash equivalents of $2,875 million, long-term debt of $4,961 million, and stockholders’ equity of $4,964 million, excluding non-controlling interest of $165 million.
As of the end of the third quarter, Whirlpool generated cash of $1,294 million from operating activities, while delivering adjusted free cash flow of $1,296 million. Free cash flow benefited from earnings growth as well as the divestiture of Whirlpool China and the Turkey subsidiary. Capital expenditure was $306 million for the nine months ended Sep 30, 2021.
Management informed that the company repurchased $441 million of shares during the third quarter.
2021 View & Long-Term Goals
Whirlpool now envisions net sales growth of 13% for 2021. GAAP earnings per share are now forecast in the range of $27.80-$26.95 compared with $26.95 projected earlier. The bottom line is expected to gain from additional investment in Elica PB India and lower restructuring charges. It also raised the adjusted earnings per share outlook to $26.25 versus $26 mentioned previously. The Zacks Consensus Estimate for adjusted earnings is currently pegged at $26.15.
The company continues to expect cash provided by operating activities at $1.95 billion and adjusted free cash flow at $1.70 billion.
As part of its long-term value creation goals, the company expects annual organic net sales (excluding currency) growth of 5-6%, up from the prior expectation of a growth of 3%. Annual Adjusted EBIT margin is expected to be 11-12% compared with 10% anticipated earlier. Adjusted free cash flow, as a percentage of net sales, is expected to be 7-8% annually. Return on invested capital is expected in the range of 15-16% yearly.
Shares of this Zacks Rank #4 (Sell) company have declined 3.1% in the past three months compared with the industry’s plunge of 69.8%.
Stocks to Consider
Best Buy Co., Inc. BBY has a long-term earnings growth rate of 7.6%. The company flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation TGT has a Zacks Rank #2 (Buy) and a long-term earnings growth rate of 13.9%.
Walmart Inc. WMT currently has an impressive long-term earnings growth rate of 5.5% and a Zacks Rank #2.
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