Whirlpool Corporation Reports Resilient Second-Quarter 2020 Results, Despite Impact of COVID-19 Crisis
BENTON HARBOR, Mich., July 22, 2020 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR) today reported financial results for the second-quarter of 2020.
"Delivering a solid Q2 performance
despite the far reaching impact of
COVID-19 on our business is the
result of the decisive actions we
took throughout the quarter and
ultimately demonstrates the
resilience of our business model,"
said Marc Bitzer, chairman and
chief executive officer of
Whirlpool Corporation. "While we
recognize the uncertainty and
volatility which lies ahead of us,
we are proud of the way in which
we managed through the most
difficult quarter of this global
crisis."
-Marc Bitzer, Chairman and Chief
Executive Officer
KEY RESULTS
Second-Quarter
Results 2020 2019 Change
---
Net sales ($M) $4,042 $5,186 $(1,144) (22.1)%
Organic net
sales(5) ($M) $4,191 $4,863 $(672) (13.8)%
GAAP net earnings
available to
Whirlpool ($M) $35 $67 $(32) (48.2)%
Ongoing EBIT(2)
($M) $210 $363 $(153) (42.1)%
GAAP earnings per
diluted share $0.55 $1.04 $(0.49) (46.9)%
Ongoing earnings
per diluted
share(1) $2.15 $4.01 $(1.86) (46.4)%
---
CASH FLOW
Year-to-Date Cash Flow 2020 2019 Change
YTD YTD
---
Cash provided by (used
in) operating activities
($M) $(745) $(821) 9.3%
Free Cash Flow(4) ($M) $(873) $(997) 12.4%
---
QUARTERLY HIGHLIGHTS
-- Q2 GAAP net earnings margin was 0.9 percent, compared to 1.3 percent in
the same prior-year period. Prior-year results were unfavorably impacted
by a $79 million loss primarily related to the sale of our South Africa
business, partially offset by a $53 million gain related to a Brazil
indirect tax credit and certain favorable tax items.
-- Ongoing EBIT margin((2)) was 5.2 percent, compared to 7.0 percent in the
same prior-year period as COVID-19 related disruptions of nearly 300
basis points were mitigated by significant and decisive cost actions.
-- Strong liquidity position with a cash balance of $2.5 billion as of June
30, 2020 and approximately $2.5 billion available under committed credit
facilities.
"Our strong second-quarter results
are a testament to our operational
strength and the perseverance of
our global team," said Jim Peters,
chief financial officer of
Whirlpool Corporation. "In the
quarter, we delivered solid cost
takeout globally and strong cash
flow improvement through
disciplined working capital
management. The actions we took
earlier this year to sustain our
margins and protect our liquidity
strengthened our ability to
succeed through the ongoing COVID-
19 pandemic and have prepared us
to withstand current economic
uncertainty."
-Jim Peters, Chief Financial
Officer
REGIONAL REVIEW
North America Q2 2020 Q2 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $2,501 $2,858 (12.5)% (12.3)%
EBIT(3) ($M) $316 $353 (10.6)%
---
-- COVID-19 related sales impact less than other regions, with early signs
of demand recovery in June.
-- Second-quarter EBIT margin((3)) was 12.6 percent, compared to 12.4
percent in the same prior-year period, as strong cost discipline and
reduced marketing investments offset negative demand.
Europe,
Middle
East
and
Africa Q2 2020 Q2 2019 Change Change
excluding
currency
impact
---
Net
sales
($M) $836 $1,032 (19.0)% (17.0)%
EBIT(3)
($M) $(66) $(16) (313.1)%
---
-- Demand recovery in June resulted in net sales growth and positive EBIT
for the month.
-- Second-quarter EBIT margin((3)) was (7.9) percent, compared to (1.6)
percent in the same prior-year period, driven by the unfavorable impact
of lower volumes.
Latin America Q2 2020 Q2 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $434 $888 (51.1)% (39.0)%
EBIT(3) ($M) $11 $56 (80.5)%
---
-- Organic net sales((5)) decreased 4.1 percent as share gains were offset
by negative Mexico demand.
-- Second-quarter EBIT margin((3)) was 2.5 percent, compared to 6.3 percent
in the same prior-year period, as strong cost actions were offset by
lower volumes and unfavorable currency. The Latin America region's
second-quarter 2019 results include $23 million of EBIT((3)) related to
the Embraco compressor business.
Asia Q2 2020 Q2 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $271 $430 (37.1)% (33.7)%
EBIT(3) ($M) $(18) $15
nm
---
-- Net sales significantly impacted by India shutdown in April/May with
recovery across the region in June.
-- EBIT((3)) declined as cost takeout actions were offset by significant
demand weakness across the region.
2020 PERSPECTIVE
While the full impact of COVID-19 on future business results remains uncertain, the Company is updating its perspective on 2020:
-- Expects full-year 2020 net sales decline of approximately 10 percent to
15 percent (previously 13 percent to 18 percent) and organic net
sales((5)) decline of 7 percent to 12 percent (previously 10 percent to
15 percent)
-- Our COVID-19 response plan is on track to deliver over $500 million in
cost takeout (including raw materials savings) in 2020 through the
following actions:
-- Capturing raw material deflation opportunities
-- Significantly reducing structural and discretionary costs
-- Continue to effectively and efficiently manage working capital
-- Adjust supply chain and labor levels to match demand environment
(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 a reconciliation of
EBIT margin and ongoing EBIT margin, non-GAAP
financial measures, to net earnings margin and
other important information, appears below.
(3) Segment EBIT and Ongoing Segment EBIT represents
our consolidated EBIT broken down by the
Company's reportable segments and are metrics
used by the chief operating decision maker in
accordance with ASC 280. Consolidated EBIT also
includes corporate "Other/Eliminations" of
$(151) million and $(154) million for the second
quarters of 2020 and 2019, respectively. Ongoing
segment EBIT includes certain adjustments to
segment EBIT, and a reconciliation and other
important information, appears below. EMEA Q2
2019 EBIT and EBIT margin reflects ongoing
results, which excludes $12 million in legacy
product warranty expense.
(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) Organic net sales reflects net sales excluding
the impact of foreign currency and the Embraco
divestiture.
About Whirlpool Corporation
Whirlpool Corporation (NYSE: WHR) is the leading kitchen and laundry appliance company in the world, with approximately $20 billion in annual sales, 77,000 employees and 59 manufacturing and technology research centers in 2019. 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.
Website Disclosure
We routinely post important information for investors on our website, whirlpoolcorp.com, in the "Investors" section. We also intend to update the Hot Topics Q&A portion of this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.
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 net sales and organic net sales, earnings, regional profitability, restructuring charges, cash flow, order pipeline, and raw material prices, and the impact of the COVID-19 pandemic on our operations and financial condition, our ability to weather COVID-19 related economic uncertainty, sustain margins and protect liquidity, achieve net cost and raw material savings, manage working capital, capture raw material deflation opportunities, mitigate volume deleveraging, maintain credit ratings, the adequacy of our liquidity resources and financial covenant buffers during the crisis, and our recovery timing expectations, belief that Q2 2020 represents the trough of the crisis, rebound actions and growth opportunities and ability to win in the economic recovery following the crisis. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool's forward-looking statements. Among these factors are: (1) COVID-19 pandemic-related business disruption and economic uncertainty; (2) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers, and the impact of the changing retail environment, including direct-to-consumer sales; (3) 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; (4) Whirlpool's ability to maintain its reputation and brand image; (5) 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; (6) Whirlpool's ability to obtain and protect intellectual property rights; (7) acquisition and investment-related risks, including risks associated with our past acquisitions, and risks associated with our increased presence in emerging markets; (8) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from political, legal and economic instability; (9) information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks; (10) product liability and product recall costs; (11) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (12) our ability to attract, develop and retain executives and other qualified employees; (13) the impact of labor relations; (14) fluctuations in the cost of key materials (including steel, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (15) Whirlpool's ability to manage foreign currency fluctuations; (16) impacts from goodwill impairment and related charges; (17) triggering events or circumstances impacting the carrying value of our long-lived assets; (18) inventory and other asset risk; (19) the uncertain global economy and changes in economic conditions which affect demand for our products; (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; (21) changes in LIBOR, or replacement of LIBOR with an alternative reference rate; (22) 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; (23) the effects and costs of governmental investigations or related actions by third parties; and (24) changes in the legal and regulatory environment including environmental, health and safety regulations, and taxes and tariffs. 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.
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. The number one major appliance manufacturer in the world claim is based on most recently available publicly reported annual revenues among leading appliance manufacturers.
WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE PERIODS ENDED JUNE 30
(Millions of dollars, except per share data)
Three Months Ended Six Months Ended
2020 2019 2020 2019
Net sales $
4,042 $
5,186 $
8,367 $
9,946
Expenses
Cost of products sold 3,411 4,254 7,036 8,202
Gross margin 631 932 1,331 1,744
Selling, general and
administrative 421 584 841 1,089
Intangible amortization 15 18 30 36
Restructuring costs 118 60 123 86
(Gain) loss on sale and
disposal of businesses - 79 79
Operating profit 77 191 337 454
Other (income) expense
Interest and sundry
(income) expense (15) (63) (16) (193)
Interest expense 49 52 92 103
Earnings before income
taxes 43 202 261 544
Income tax expense
(benefit) 18 130 89 (2)
Net earnings 25 72 172 546
Less: Net earnings (loss)
available to
noncontrolling interests (10) 5 (15) 8
Net earnings available to
Whirlpool $
35 $
67 $
187 $
538
Per share of common stock
Basic net earnings
available to Whirlpool $
0.55 $
1.04 $
2.98 $
8.42
Diluted net earnings
available to Whirlpool $
0.55 $
1.04 $
2.97 $
8.35
Dividends declared $
1.20 $
1.20 $
2.40 $
2.35
Weighted-average shares outstanding (in
millions)
Basic 62.4 63.8 62.6 63.9
Diluted 62.7 64.3 63.0 64.4
Comprehensive income $
9 $
16 $
61 $
583
WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Millions of dollars, except share data)
(Unaudited)
June 30, 2020 December 31, 2019
Assets
Current assets
Cash and cash equivalents $
2,546 $
1,952
Accounts receivable, net of
allowance of $135 and $132,
respectively 1,998 2,198
Inventories 2,129 2,438
Prepaid and other current assets 906 810
Total current assets 7,579 7,398
Property, net of accumulated
depreciation of $6,497 and $6,444,
respectively 3,132 3,301
Right of use assets 905 921
Goodwill 2,433 2,440
Other intangibles, net of
accumulated amortization of $618
and $593, respectively 2,178 2,225
Deferred income taxes 2,172 2,238
Other noncurrent assets 277 358
Total assets $
18,676 $
18,881
Liabilities and stockholders' equity
Current liabilities
Accounts payable $
3,328 4,547
Accrued expenses 633 652
Accrued advertising and promotions 510 949
Employee compensation 343 450
Notes payable 1,712 294
Current maturities of long-term
debt 298 559
Other current liabilities 901 918
Total current liabilities 7,725 8,369
Noncurrent liabilities
Long-term debt 4,886 4,140
Pension benefits 485 542
Postretirement benefits 279 322
Lease liabilities 741 778
Other noncurrent liabilities 635 612
Total noncurrent liabilities 7,026 6,394
Stockholders' equity
Common stock, $1 par value, 250
million shares authorized, 112
million shares issued, and 62
million and 63 million shares
outstanding, respectively 112 112
Additional paid-in capital 2,822 2,806
Retained earnings 7,902 7,870
Accumulated other comprehensive loss (2,731) (2,618)
Treasury stock, 50 million and 49
million shares, respectively (5,087) (4,975)
Total Whirlpool stockholders' equity 3,018 3,195
Noncontrolling interests 907 923
Total stockholders' equity 3,925 4,118
Total liabilities and stockholders'
equity $
18,676 $
18,881
WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIODS ENDED JUNE 30
(Millions of dollars)
Six Months Ended
2020 2019
Operating activities
Net earnings $
172 $
546
Adjustments to reconcile net earnings to
cash provided by (used in) operating
activities:
Depreciation and amortization 268 302
(Gain) loss on sale and
disposal of businesses - 79
Changes in assets and liabilities:
Accounts receivable 56 (251)
Inventories 223 (574)
Accounts payable (982) (182)
Accrued advertising and
promotions (414) (180)
Accrued expenses and current
liabilities (135) (41)
Taxes deferred and payable,
net 33 (179)
Accrued pension and
postretirement benefits (27) (39)
Employee compensation (70) 7
Other 131 (309)
Cash provided by (used in)
operating activities (745) (821)
Investing activities
Capital expenditures (155) (197)
Proceeds from sale of assets
and business 27 5
Other - (3)
Cash provided by (used in)
investing activities (128) (195)
Financing activities
Net proceeds from borrowings
of long-term debt 1,029 697
Repayments of long-term debt (568) (943)
Net proceeds (repayments)
from short-term borrowings 1,417 1,119
Dividends paid (155) (149)
Repurchase of common stock (121) (50)
Common stock issued 3 4
Cash provided by (used in)
financing activities 1,605 678
Effect of exchange rate
changes on cash, cash
equivalents and restricted
cash (138) 9
Increase (decrease) in cash,
cash equivalents and
restricted cash 594 (329)
Cash, cash equivalents and
restricted cash at beginning
of year 1,952 1,538
Cash, cash equivalents and
restricted cash at end of
year $
2,546 $
1,209
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" measures, including earnings before interest and taxes (EBIT), EBIT margin, ongoing EBIT, ongoing EBIT margin, ongoing earnings per diluted share, organic net sales, adjusted effective tax rate, sales excluding currency and free cash flow. Ongoing measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing 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 organic net sales provides stockholders with a clearer basis to assess our results over time, excluding the impact of exchange rate fluctuations and the Embraco divestiture. Management believes that adjusted tax rate provides investors with a meaningful, consistent comparison of the Company's effective tax rate, excluding the pre-tax income and tax effect of certain unique items. 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. Whirlpool does not provide a Non-GAAP reconciliation for its other forward-looking long-term value creation and other goals, such as organic net sales, EBIT, and gross debt/EBITDA, as 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 financial measures should not be considered in isolation or as a substitute for reported net earnings available to Whirlpool per diluted share, net earnings, net earnings available to Whirlpool, net earnings margin, net sales, effective tax rate and cash provided by (used in) operating activities, the most directly comparable GAAP financial measures. We also disclose segment EBIT and ongoing segment EBIT as important financial metrics used by the Company's Chief Operating Decision Maker to evaluate performance and allocate resources in accordance with ASC 280 - Segment Reporting. GAAP net earnings available to Whirlpool per diluted share and ongoing 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. 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 2020 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the three months ended June 30, 2020. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our second-quarter GAAP tax rate was 41.9%. 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 tax rate (non-GAAP) of 22.5%.
Three Months Ended
Earnings Before Interest & Taxes
Reconciliation: June 30, 2020
Net earnings (loss) available to
Whirlpool $
35
Net earnings (loss) available to
noncontrolling interests (10)
Income tax expense (benefit) 18
Interest expense 49
Earnings before interest & taxes $
92
Net sales $
4,042
Net earnings margin 0.9
%
Results classification Earnings before
interest Earnings per
& taxes diluted share
Reported measure $
92 $
0.55
Restructuring
costs(a)
Restructuring costs 118 1.89
Income tax impact (0.42)
Normalized tax
rate
adjustment(b) 0.13
Ongoing measure $
210 $
2.15
Net sales $
4,042
Ongoing EBIT
margin 5.2
%
Note: Numbers may not
reconcile due to
rounding
Second-Quarter 2019 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share
The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the three months ended June 30, 2019. Net earnings margin is calculated by dividing net earnings available to Whirlpool by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our second-quarter GAAP tax rate was 64.5%. 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 tax rate (non-GAAP) of 17.5%.
Three Months Ended
Earnings Before Interest & Taxes
Reconciliation: June 30, 2019
Net earnings (loss) available to
Whirlpool $
67
Net earnings (loss) available to
noncontrolling interests 5
Income tax expense (benefit) 130
Interest expense 52
Earnings (loss) before interest &
taxes $
254
Net sales $
5,186
Net earnings margin 1.3
%
Results classification Earnings before Earnings per
interest & taxes diluted share
Reported measure $
254 $
1.04
Restructuring
costs(a)
Restructuring costs 60 0.93
Brazil indirect
tax credit(c)
Interest and sundry (income) expense (53) (0.82)
Divestiture
related
transition
costs(d)
Selling, general and administrative 11 0.18
Loss on disposal
of businesses(e) Gain (loss) on sale and disposal of businesses 79 1.24
Product warranty
and liability
expense(f)
Cost of goods sold 12 0.19
Income tax impact (0.30)
Normalized tax
rate
adjustment(b) 1.56
Ongoing measure $
363 $
4.01
Net sales $
5,186
Ongoing EBIT 7.0
margin %
Note: Numbers may not
reconcile due to
rounding
Ongoing Segment Earnings Before Interest and Taxes
The reconciliation provided below reconciles ongoing segment EBIT with segment EBIT, for the three months ended June 30, 2020. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales. Segment EBIT margin is calculated by dividing segment EBIT by segment net sales.
Three Months Ended
June 30, 2020
Segment earnings (loss) Restructuring
costs(a) Ongoing segment
before interest and earnings (loss)
taxes before
interest and taxes
North America $
316
$ $
316
EMEA (66) (66)
Latin America 11 11
Asia (18) (18)
Other/Eliminations (151) 118 (33)
Total Whirlpool Corporation $
92 $
118 $
210
The reconciliation provided below reconciles ongoing segment EBIT with segment EBIT, for the three months ended June 30, 2019. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales. Segment EBIT margin is calculated by dividing segment EBIT by segment net sales.
Three Months Ended
June 30, 2019
Segment Restructuring Brazil Divestiture Loss on Product Ongoing
earnings costs(a) indirect related disposal of warranty segment
(loss) tax transition businesses(e) and earnings
before credit(c) costs(d) liability (loss)
interest and expense(f) before
taxes interest and
taxes
North America $
353
$
$
$
$
$ $
353
EMEA (28) 12 (16)
Latin America 56 56
Asia 15 15
Other/Eliminations (142) 60 (53) 11 79 (45)
Total Whirlpool Corporation $
254 $
60 $
(53) $
11 $
79 $
12 $
363
Note: Numbers may not
reconcile due to
rounding
Organic Net Sales
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the twelve months ending December 31, 2020 for the Company.
Twelve Months Ending
December 31, 2020
GAAP net sales (%
decline) 10% - 15%
Less: Embraco net sales ~(3)%
Organic net sales (%
decline) 7% - 12%
Note: the impact of
currency on net sales
for future periods is
not included.
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended June 30, 2020 and June 30, 2019 for the Company.
Three Months Ended
June 30,
2020 2019 Change
Net sales $
4,042 $
5,186 (22.1)
%
Less:
Embraco
net sales (323)
Add-Back:
currency 149
Organic net $
4,191 $
4,863 (13.8)
sales %
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended June 30, 2020 and June 30, 2019 for Whirlpool Latin America.
Three Months Ended
June 30,
2020 2019 Change
Net sales $
434 $
888 (51.1)
%
Less: Embraco
net sales (323)
Add-Back:
currency 108
Organic net $
542 $
565 (4.1)
sales
%
Note: Numbers may not
reconcile due to
rounding
Footnotes:
a. RESTRUCTURING COSTS - In 2019, these costs
are primarily related to actions that right-
size our EMEA business and certain other
unique restructuring events, including
restructuring of the Naples, Italy
manufacturing plant. In 2020, these costs are
primarily related to actions that right-size
and reduce the fixed cost structure of our
North America business and other centralized
functions, attributable primarily to the
current macroeconomic uncertainties caused by
COVID-19.
b. NORMALIZED TAX RATE ADJUSTMENT - During the
second quarter of 2020, the Company
calculated ongoing earnings per share using
an adjusted tax rate of 22.5%, to reconcile
to our anticipated full-year effective tax
rate between 20% and 25%. During the second
quarter of 2019, the Company calculated
ongoing earnings per share using an adjusted
tax rate of 17.5%, to reconcile to our
anticipated full-year 2019 effective tax
rate between 15% and 20%, which excludes the
gain on sales of the Embraco compressor
business, the Brazil indirect tax credit, and
the sale and disposal of businesses.
c. BRAZIL INDIRECT TAX CREDIT - During the first
half of 2019, the Company received favorable,
non-appealable decisions related to the
recovery of certain taxes previously paid
over gross sales. As a result, the Company
recorded a gain in interest and sundry
(income) expense during the first and second
quarter of 2019 in the amount of $127 million
and $53 million, respectively, in connection
with these decisions.
d. DIVESTITURE RELATED TRANSITION COSTS -During
the first and second quarter of 2019, the
Company recognized transition costs of
approximately $6 million and $11 million,
respectively, associated with the sale of its
Embraco compressor business.
e. LOSS ON DISPOSAL OF BUSINESSES - During the
second quarter of 2019, the Company entered
into an agreement to sell its South Africa
operations. As a result, the Company recorded
a charge of $35 million for the write-down
of the assets of the disposal group to fair
value and $33 million of cumulative foreign
currency translation adjustments included in
the carrying amount of the disposal group to
calculate the impairment. The Company also
incurred charges of approximately $11
million, primarily inventory liquidation
costs, related to the exit of our domestic
sales operations in Turkey. Total charges
recorded in the second quarter of 2019 were
approximately $79 million.
f. PRODUCT WARRANTY AND LIABILITY EXPENSE -In
September 2015, the Company recorded a
liability related to a corrective action
affecting certain legacy Indesit products.
During the second quarter of 2019, the
Company incurred approximately $12 million of
additional product warranty expense related
to our previously disclosed legacy Indesit
dryer corrective action campaign in the UK.
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, 2020 and 2019 free cash flow with cash provided by (used in) operating activities, the most directly comparable GAAP financial measure. Free cash flow as a percentage of net sales is calculated by dividing free cash flow by net sales.
Six Months Ended
June 30,
(millions of dollars) 2020 2019
Cash provided by (used in)
operating activities $(745) $(821)
Capital expenditures,
proceeds from sale of (128) (176)
assets/businesses and
change in restricted cash*
Free cash flow $(873) $(997)
Cash provided by (used in)
investing activities (128) (195)
Cash provided by (used in)
financing activities 1,605 678
*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.
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SOURCE Whirlpool Corporation
