Whirlpool Corporation Delivering on Long-Term Value Creation Targets with Very Strong Fourth-Quarter and Full-Year Results
BENTON HARBOR, Mich., Jan. 27, 2021 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR), the leading kitchen and laundry appliance company in the world, today reported financial results for the fourth-quarter of 2020.
"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," said Marc Bitzer,
chairman and chief executive
officer of Whirlpool
Corporation. "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."
MARC BITZER
---
KEY RESULTS
Fourth-Quarter Results 2020 2019 Change
---
Net sales ($M) $5,798 $5,382 $416 7.7%
Organic net sales(5) ($M) $5,937 $5,382 $555 10.3%
GAAP net earnings
available to Whirlpool
($M) $497 $288 $209 71.9%
Ongoing EBIT(2) ($M) $657 $389 $268 68.9%
GAAP earnings per diluted
share $7.77 $4.52 $3.25 72.0%
Ongoing earnings per
diluted share(1) $6.64 $4.91 $1.73 35.2%
---
Full-Year Results 2020 2019 Change
---
Net sales ($M) $19,456 $20,419 $(963) (4.7)%
Organic net sales(5) ($M) $20,007 $19,784 $223 1.1%
GAAP net earnings
available to Whirlpool
($M) $1,081 $1,184 $(103) (8.8)%
Ongoing EBIT(2) ($M) $1,768 $1,414 $354 25.0%
GAAP earnings per diluted
share $17.07 $18.45 $(1.38) (7.5)%
Ongoing earnings per
diluted share(1) $18.55 $16.00 $2.55 15.9%
---
CASH FLOW
Full-Year Cash Flow 2020 2019 Change
---
Cash provided by (used
in) operating activities
($M) $1,500 $1,230 $270
Free cash flow(4) ($M) $1,246 $912 $334
---
QUARTERLY & FULL-YEAR HIGHLIGHTS
1. Delivered Q4 GAAP and ongoing (non-GAAP) earnings per diluted share((1))
of $7.77 and $6.64, respectively, driven by exceptional execution of
go-to-market and cost takeout actions
2. Solid full-year GAAP net earnings margin of 5.6% (down 20 basis points)
driven by increased restructuring costs
3. Record full-year ongoing (non-GAAP) EBIT margin((2)) of 9.1% (up 220
basis points), driven by very strong execution of go-to-market
initiatives and $500 million cost takeout program
4. Full-year EBIT((3)) positive in EMEA as strategic actions continue to
drive progress towards long-term goals
5. Strong liquidity position with a cash balance of $2.9 billion as of
December 31, 2020; repayment of approximately $1.7 billion of outstanding
short-term debt resulting in gross debt leverage((6)) of 2.3x
"We ended 2020 in a position of
strength due to the early, decisive
actions we took at the onset of the
year to sustain operating margins
and protect liquidity," said Jim
Peters, chief financial officer of
Whirlpool Corporation. "We
significantly strengthened our
balance sheet and continued to
return cash to our shareholders,
while delivering record ongoing
earnings per share, ongoing EBIT
margins and free cash flow. Looking
ahead, we are confident that we
will continue to deliver on our
long-term financial goals and
create further value for our
shareholders."
JIM PETERS
---
REGIONAL REVIEW
North America Q4 2020 Q4 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $3,208 $3,074 4.4% 4.3%
EBIT(3) ($M) $581 $410 41.7%
---
1. Solid revenue performance driven by positive consumer trends
2. Record fourth-quarter EBIT, with EBIT margin((3)) of 18.1 percent,
compared to 13.3 percent in the same prior-year period, driven by
go-to-market actions and strong cost discipline
Europe, Middle East and Africa Q4 2020 Q4 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $1,416 $1,170 21.0% 17.8%
EBIT(3) ($M) $40 $11 263.6%
---
1. Demand strength drove solid volume growth year-over-year, with
double-digit growth in key countries
2. Fourth-quarter EBIT margin((3)) of 2.8 percent, compared to 0.9 percent
in the same prior-year period, as cost takeout actions and increased
demand offset unfavorable currency
Latin America Q4 2020 Q4 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $821 $782 5.0% 27.9%
EBIT(3) ($M) $100 $42 138.1%
---
1. Organic net sales((5)) growth of 28 percent driven by Brazil industry
growth
2. Fourth-quarter EBIT margin((3)) of 12.1 percent, compared to 5.3 percent
in the same prior-year period, as positive price/mix and increased demand
offset unfavorable currency
Asia Q4 2020 Q4 2019 Change Change
excluding
currency
impact
---
Net sales ($M) $354 $356 (0.7)% (0.7)%
EBIT(3) ($M) $21 $2 950.0%
---
1. Solid India results led by demand recovery
2. China delivered strong EBIT improvement driven through cost productivity
actions and Whirlpool branded share gains
FULL-YEAR 2021 OUTLOOK
Strong 2021 outlook delivering on long-term financial goals:
1. Full-year 2021 net sales increase of ~6 percent (the impact of currency
on net sales for future periods is not included)
2. GAAP earnings per diluted share of $17.80 to $18.80
3. Ongoing earnings per diluted share((1)) of $19.00 to $20.00
4. GAAP and adjusted tax rate (non-GAAP) of 24 to 26 percent
5. Cash provided by operating activities of approximately $1.55 billion
6. Free cash flow of $1 billion or more
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
$(43) million and $(95) million for the fourth
quarters of 2020 and 2019, respectively.
Ongoing segment EBIT includes certain
adjustments to segment EBIT, and a
reconciliation and other important information,
appears below.
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 and a reconciliation and other
important information appears below.
6. Gross debt leverage represents Gross Debt/
Ongoing EBITDA. A reconciliation of ongoing
EBITDA to net earnings available to Whirlpool
and other important information appears below.
ABOUT WHIRLPOOL CORPORATION
Whirlpool Corporation (NYSE: WHR) is the leading kitchen and laundry appliance company in the world, with approximately $19 billion in annual sales, 78,000 employees and 57 manufacturing and technology research centers in 2020. 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 financial results for 2021 and the key drivers for such results, industry expectations, supply-chain improvements, COVID-related supply chain impacts, delivery of long-term financial goals, and progress on ESG commitments. 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. World's leading kitchen and laundry appliance company claim is based on the most recently available publicly reported annual product sales, parts, and support revenues.
WHIRLPOOL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE PERIODS ENDED DECEMBER 31
(Millions of dollars, except per share data)
Three Months Ended Twelve Months Ended
2020 2019 2020 2019
(Unaudited) (Unaudited) (Unaudited)
Net sales $
5,798 $
5,382 $
19,456 $
20,419
Expenses
Cost of products sold 4,434 4,334 15,606 16,886
Gross margin 1,364 1,048 3,850 3,533
Selling, general and administrative 523 562 1,877 2,142
Intangible amortization 16 16 62 69
Restructuring costs 102 46 288 188
Impairment of goodwill and other intangibles 7 7
(Gain) loss on sale and disposal of businesses - (7) (437)
Operating profit 716 424 1,623 1,571
Other (income) expense
Interest and sundry (income) expense 17 54 (21) (168)
Interest expense 46 39 189 187
Earnings before income taxes 653 331 1,455 1,552
Income tax expense (benefit) 152 43 384 354
Net earnings 501 288 1,071 1,198
Less: Net earnings (loss) available to noncontrolling interests 4 (10) 14
Net earnings available to Whirlpool $
497 $
288 $
1,081 $
1,184
Per share of common stock
Basic net earnings available to Whirlpool $
7.90 $
4.56 $
17.24 $
18.60
Diluted net earnings available to Whirlpool $
7.77 $
4.52 $
17.07 $
18.45
Dividends declared $
1.25 $
1.20 $
4.85 $
4.75
Weighted-average shares outstanding (in millions)
Basic 62.9 63.3 62.7 63.7
Diluted 63.9 63.9 63.3 64.2
WHIRLPOOL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except share data)
December 31, December 31,
2020 2019
(Unaudited)
Assets
Current assets
Cash and cash equivalents $
2,924 $
1,952
Accounts receivable, net of allowance of $132 and $132, respectively 3,109 2,198
Inventories 2,187 2,438
Prepaid and other current assets 795 810
Total current assets 9,015 7,398
Property, net of accumulated depreciation of $6,780 and $6,444, respectively 3,199 3,301
Right of use assets 989 921
Goodwill 2,496 2,440
Other intangibles, net of accumulated amortization of $673 and $593, respectively 2,194 2,225
Deferred income taxes 2,217 2,238
Other noncurrent assets 240 358
Total assets $
20,350 $
18,881
Liabilities and stockholders' equity
Current liabilities
Accounts payable $
4,834 4,547
Accrued expenses 637 652
Accrued advertising and promotions 831 949
Employee compensation 648 450
Notes payable 12 294
Current maturities of long-term debt 298 559
Other current liabilities 1,070 918
Total current liabilities 8,330 8,369
Noncurrent liabilities
Long-term debt 5,059 4,140
Pension benefits 516 542
Postretirement benefits 166 322
Lease liabilities 838 778
Other noncurrent liabilities 732 612
Total noncurrent liabilities 7,311 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 113 112
Additional paid-in capital 2,923 2,806
Retained earnings 8,639 7,870
Accumulated other comprehensive loss (2,811) (2,618)
Treasury stock, 50 million and 49 million shares, respectively (5,065) (4,975)
Total Whirlpool stockholders' equity 3,799 3,195
Noncontrolling interests 910 923
Total stockholders' equity 4,709 4,118
Total liabilities and stockholders' equity $
20,350 $
18,881
WHIRLPOOL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED DECEMBER 31
(Millions of dollars)
Twelve Months Ended
2020 2019
(Unaudited)
Operating activities
Net earnings $
1,071 $
1,198
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization 568 587
Impairment of goodwill and other intangibles 7
(Gain) loss on sale and disposal of businesses (7) (437)
Changes in assets and liabilities:
Accounts receivable (940) (87)
Inventories 241 (39)
Accounts payable 341 140
Accrued advertising and promotions (123) 118
Accrued expenses and current liabilities (287) 22
Taxes deferred and payable, net 156 (116)
Accrued pension and postretirement benefits (30) (81)
Employee compensation 303 106
Other 200 (181)
Cash provided by (used in) operating activities 1,500 1,230
Investing activities
Capital expenditures (410) (532)
Proceeds from sale of assets and business 166 1,174
Other 7 (6)
Cash provided by (used in) investing activities (237) 636
Financing activities
Net proceeds from borrowings of long-term debt 1,033 700
Repayments of long-term debt (569) (949)
Net proceeds (repayments) from short-term borrowings (330) (723)
Dividends paid (311) (305)
Repurchase of common stock (121) (148)
Common stock issued 44 8
Other 1 (7)
Cash provided by (used in) financing activities (253) (1,424)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (28) (28)
Increase (decrease) in cash, cash equivalents and restricted cash 982 414
Cash, cash equivalents and restricted cash at beginning of year 1,952 1,538
Cash, cash equivalents and restricted cash at end of year $
2,934 $
1,952
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.
FOURTH-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 December 31, 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 fourth-quarter GAAP tax rate was 23.4%. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our fourth-quarter adjusted tax rate (non-GAAP) of 30.0%.
Three Months Ended
Earnings Before Interest & Taxes Reconciliation: December 31, 2020
Net earnings (loss) available to Whirlpool $
497
Net earnings (loss) available to noncontrolling interests 4
Income tax expense (benefit) 152
Interest expense 46
Earnings before interest & taxes $
699
Net sales $
5,798
Net earnings margin 8.6
%
Results classification Earnings before Earnings per
interest & taxes diluted share
Reported measure $
699 $
7.77
Restructuring costs(a)
Restructuring costs 102 1.60
Product warranty and liability (income) expense(c)
Cost of products sold (30) (0.46)
Sale leaseback, real estate and receivable adjustments(d)
Cost of products sold (74) (1.16)
Sale leaseback, real estate and receivable adjustments(d)
Selling, general and administrative (39) (0.62)
Corrective action recovery(e)
Cost of products sold (1) (0.02)
Income tax impact 0.20
Normalized tax rate adjustment(b) (0.67)
Ongoing measure $
657 $
6.64
Net sales $
5,798
Ongoing EBIT margin 11.3
%
Note: Numbers may not reconcile due to rounding
FOURTH-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 December 31, 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 fourth-quarter GAAP tax rate was 12.8%. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our fourth-quarter adjusted tax rate (non-GAAP) of 9.6%.
Three Months Ended
Earnings Before Interest & Taxes Reconciliation: December 31, 2019
Net earnings (loss) available to Whirlpool $
288
Net earnings (loss) available to noncontrolling interests
Income tax expense (benefit) 43
Interest expense 39
Earnings (loss) before interest & taxes $
370
Net sales $
5,382
Net earnings margin 5.4
%
Results classification Earnings before Earnings per
interest & taxes diluted share
Reported measure $
370 $
4.52
Restructuring costs(a)
Restructuring costs 46 0.72
Sale leaseback, real estate and receivable adjustments(d)
Cost of products sold (95) (1.49)
Sale leaseback, real estate and receivable adjustments(d)
Selling, general and administrative 9 0.14
Trade customer insolvency settlement(f)
Interest and sundry (income) expense 59 0.93
Income tax impact (0.02)
Normalized tax rate adjustment(b) 0.11
Ongoing measure $
389 $
4.91
Net sales $
5,382
Ongoing EBIT margin 7.2
%
Note: Numbers may not reconcile due to rounding
FULL-YEAR 2020 ONGOING EARNINGS BEFORE INTEREST AND TAXES, 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 (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the twelve months ended December 31, 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 full-year GAAP tax rate is approximately 26.5%. 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 adjusted tax rate of approximately 26.3%.
Twelve Months Ended
Earnings Before Interest & Taxes Reconciliation: December 31, 2020
Net earnings (loss) available to Whirlpool $
1,081
Net earnings (loss) available to noncontrolling interests (10)
Income tax expense (benefit) 384
Interest expense 189
Earnings before interest & taxes $
1,644
Net sales $
19,456
Net earnings margin 5.6
%
Twelve Months Ended
December 31, 2020
Results classification Earnings before Earnings (loss)
per
interest & taxes diluted share
Reported measure $
1,644 $
17.07
Restructuring costs(a)
Restructuring costs 288 4.54
Product warranty and liability (income) expense(c)
Cost of products sold (30) (0.47)
Sale leaseback, real estate and receivable adjustments(d)
Cost of products sold (74) (1.16)
Sale leaseback, real estate and receivable adjustments(d)
Selling, general and administrative (39) (0.61)
Corrective action recovery(e)
Cost of products sold (14) (0.22)
(Gain) loss on sale and disposal of businesses(g) (Gain) loss on sale and disposal of businesses (7) (0.10)
Income tax impact (0.53)
Normalized tax rate adjustment(b) 0.03
Ongoing measure $
1,768 $
18.55
Net sales $
19,456
Ongoing EBIT margin 9.1
%
Note: Numbers may not reconcile due to rounding
FULL-YEAR 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 twelve months ended December 31, 2019. 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 full-year GAAP tax rate of approximately 22.8% includes the impact of the gain on sale of Embraco. 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 adjusted tax rate of approximately 15.3%.
Twelve Months Ended
Earnings Before Interest & Taxes Reconciliation: December 31, 2019
Net earnings (loss) available to Whirlpool $
1,184
Net earnings (loss) available to noncontrolling interests 14
Income tax expense (benefit) 354
Interest expense 187
Earnings before interest & taxes $
1,739
Net sales $
20,419
Net earnings margin 5.8
%
Twelve Months Ended
December 31, 2019
Results classification Earnings before Earnings (loss)
per
interest & taxes diluted share
Reported measure $
1,739 $
18.45
Restructuring costs(a)
Restructuring costs 188 2.93
Brazil indirect tax credit(h)
Interest and sundry (income) expense (180) (2.80)
(Gain) loss on sale and disposal of businesses(g) (Gain) loss on sale and disposal of businesses (437) (6.79)
Product warranty and liability (income) expense(c)
Cost of products sold 126 1.96
Product warranty and liability (income) expense(c)
Interest and sundry (income) expense 5 0.08
Sale leaseback, real estate and receivable adjustments(d)
Cost of products sold (95) (1.48)
Sale leaseback, real estate and receivable adjustments(d)
Selling, general and administrative 9 0.14
Trade customer insolvency claim settlement(f)
Interest and sundry (income) expense 59 0.92
Income tax impact 0.75
Normalized tax rate adjustment(b) 1.84
Ongoing measure $
1,414 $
16.00
Net sales $
20,419
Ongoing EBIT margin 6.9
%
Note: Numbers may not reconcile due to rounding
FULL-YEAR 2021 OUTLOOK FOR 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 twelve months ending December 31, 2021. 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. 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 adjusted tax rate between 24.0% and 26.0%.
Twelve Months Ending
December 31, 2021
Results classification
Earnings before
Earnings (loss) per
interest & taxes* diluted share
Reported measure* $1,775
$17.80-$18.80
Restructuring costs(a)
Restructuring costs 100 1.59
Income tax impact
Interest and sundry (0.39)
(income) expense
Ongoing measure $1,875
$19.00-$20.00
Note: Numbers may not reconcile due
to rounding
*Earnings Before Interest & Taxes
(EBIT) is a non-GAAP measure. The
Company 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
the Company's overall net earnings -
- implicates the
Company's projections regarding the
earnings of the Company's non
wholly-owned subsidiaries and joint
ventures that
cannot be
quantified precisely or without
unreasonable efforts.
ORGANIC NET SALES
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended December 31, 2020 and December 31, 2019 for the Company.
Three Months Ended
December 31,
2020 2019 Change
Net sales $
5,798 $
5,382 7.7
%
Less: Embraco
net sales
Add-Back:
currency 138
Organic net $
5,937 $
5,382 10.3
sales
%
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the twelve months ended December 31, 2020 and December 31, 2019 for the Company.
Twelve Months Ended
December 31,
2020 2019 Change
Net sales $
19,456 $
20,419 (4.7)
%
Less:
Embraco
net sales (635)
Add-Back:
currency 551
Organic net $
20,007 $
19,784 1.1
sales
%
The reconciliation provided below reconciles the non-GAAP financial measure organic net sales with reported net sales, for the three months ended December 31, 2020 and December 31, 2019 for Whirlpool Latin America.
Three Months Ended
December 31,
2020 2019 Change
Net sales $
821 $
782 5.0
%
Less:
Embraco
net
sales -
Add-
Back:
currency 179
Organic $
1,000 $
782 27.9
net
sales %
Note: Numbers may not reconcile due to rounding
FULL-YEAR 2020 GROSS DEBT TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION & AMORTIZATION RATIO
The reconciliation provided below reconciles the non-GAAP financial measure ongoing EBITDA to net earnings available to Whirlpool, for the twelve months ended December 31, 2020.
Twelve Months Ended
Ongoing earnings before interest, taxes, depreciation & amortization: December 31, 2020
Net earnings (loss) available to Whirlpool $
1,081
Net earnings (loss) available to noncontrolling interests (10)
Income tax expense (benefit) 384
Interest expense 189
Earnings before interest & taxes $
1,644
Restructuring costs(a) 288
Product warranty and liability expense(c) (30)
Sale leaseback, real estate and receivable adjustments(d) (114)
Corrective action recovery(e) (14)
(Gain) loss on sale and disposal of businesses(g) (7)
Ongoing earnings before interest & taxes $
1,768
Depreciation and amortization 568
Ongoing earnings before interest, taxes, depreciation & amortization $
2,336
The reconciliation provided below reconciles Whirlpool's Gross Debt outstanding, for the twelve months ended December 31, 2020.
Twelve Months Ended
Gross debt outstanding: December 31, 2020
Long-term debt $
5,059
Current maturities of long-term debt 298
Notes payable 12
Gross debt outstanding $
5,369
The reconciliation provided below calculates Whirlpool's Gross Debt to ongoing EBITDA ratio, for the twelve months ended December 31, 2020.
Twelve Months
Ended
Gross debt to EBITDA ratio: December 31,
2020
Gross debt outstanding $
5,369
Ongoing earnings before
interest, taxes, depreciation
and amortization $
2,336
Gross debt to EBITDA ratio: 2.3
Note: Numbers may not reconcile due to rounding
FOOTNOTES
1. RESTRUCTURING COSTS
- In 2019,
these costs were 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
were primarily related to actions that right-
size and reduce the fixed cost structure of
our global business, attributable primarily
to the current macroeconomic uncertainties
caused by COVID-19. This includes costs of
approximately $100 million related to
restructuring in the United States and
approximately $188 million related to
restructuring outside of the United States,
including the exit of our Naples, Italy
facility. In 2021, these costs are primarily
related to actions taken by the Company in
response to the current macroeconomic
uncertainties caused by COVID-19 within our
EMEA region.
2. NORMALIZED TAX RATE ADJUSTMENT
-
During the fourth quarter of 2019, the
Company calculated ongoing earnings per share
using an adjusted tax rate of 9.6%, to
reconcile to our full-year 2019 effective
tax rate of 15.3%, which excludes the tax
impact of the gain on sale of the Embraco
business, a valuation allowance release and
the Brazil indirect tax credit. During the
fourth quarter of 2020, the Company
calculated ongoing earnings per share using
an adjusted tax rate of 30.0%, to reconcile
to our full-year effective tax rate of
26.3%.
3. PRODUCT WARRANTY AND LIABILITY (INCOME)
EXPENSE - In September 2015, the Company
recorded a liability related to a corrective
action affecting certain legacy Indesit
products. During the second and third
quarters of 2019, the Company incurred
additional product warranty expense related
to this previously disclosed legacy Indesit
dryer corrective action campaign in the UK
for approximately $12 million and $14
million, respectively. In the third quarter
of 2019, the Company recorded a charge of
approximately $105 million for estimated
product warranty expense related to certain
EMEA-produced washers for which the Company
commenced a recall in January 2020.
During the fourth quarter of 2020, the Company
released an accrual of approximately $30
million related to this EMEA-produced washer
recall campaign, based on our revised
expectations regarding future period cash
expenditures for the campaign.
4. SALE LEASEBACK, REAL ESTATE AND RECEIVABLE
ADJUSTMENTS - In the fourth quarter of 2019,
the Company sold certain owned properties,
primarily warehouses, while agreeing to lease
these same properties from the purchaser. As
part of the sale, the Company recognized a
pre-tax gain on sale of the group of
properties of approximately $111 million and
a cash benefit of approximately $140 million.
In addition, the Company wrote off the full
loan receivable amount outstanding of
approximately $18 million related to a
previous loan between the Company and a not-
for-profit entity in connection with a
community and economic development project.
The Company also wrote-down the book value
of certain real estate properties,
recognizing a loss of approximately $7
million.
In the fourth quarter of 2020, the Company
sold and leased back a group of properties
for net proceeds of approximately $139
million. The transaction met the requirements
for the sale leaseback accounting. In the
fourth quarter of 2020, the Company recorded
the sale of the properties, which resulted in
a pre-tax gain of approximately $113 million
($89 million, net of tax) recorded in cost of
products sold ($74 million) and selling,
general and administrative expense ($39
million) in the Consolidated Statements of
Comprehensive Income (Loss).
5. CORRECTIVE ACTION RECOVERY - The Company
recorded a benefit of $13 million in the
third quarter of 2020 and $1 million in the
fourth quarter of 2020 related to a vendor
recovery in our ongoing EMEA-produced washer
corrective action. The Company anticipates
recording additional immaterial vendor
recovery benefits in one or more future
quarters.
6. TRADE CUSTOMER INSOLVENCY SETTLEMENT - In
January 2020, the Company entered into an
agreement with the insolvency trustee for
Alno AG, a former trade customer of a Company
subsidiary in which the Company subsidiary
held a minority equity interest, to settle
all potential claims that the insolvency
trustee may have against the Company
subsidiary related to the Alno insolvency,
resulting in a one-time charge of EUR52.75
million ($59 million as of December 31,
2019).
7. (GAIN) LOSS ON SALE AND 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. During the third quarter of 2019,
changes in working capital accounts and
currency translation adjustments resulted in
the Company reducing the amount of loss by
approximately $5 million.
On July 1, 2019 the Company closed the sale of
the Embraco compressor business. As a result,
the Company recorded a gain, before taxes, of
approximately $511 million.
During the third quarter of 2019, the Company
reserved approximately $7 million for an
expected change in purchase price for the
sale of the Embraco compressor business.
Adjustments to the final purchase price were
finalized as of the third quarter of 2020,
with no resulting change to the final
purchase price, and the reserve was released
and recognized as a gain during the quarter.
8. 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 quarter and
second quarter of 2019 in the amount of $127
million and $53 million, respectively, in
connection with these decisions.
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 twelve months ended December 31, 2020 and 2019 and projected 2021 full-year 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.
Twelve Months Ended
December 31,
(millions of dollars) 2020 2019
2021 Outlook
Cash provided by (used in) operating activities $1,500 $1,230 $1,550
Capital expenditures, proceeds from sale of assets/businesses and change in restricted
cash* (254) 682 (550)
Repayment of term loan (1,000)
Free cash flow $1,246 $912 $1,000+
Cash provided by (used in) investing activities** (237) 636
Cash provided by (used in) financing activities** (253) (1,424)
Note: 2019 free cash flow includes
the net proceeds and the term loan
repayment related to the sale of
the Embraco business of
approximately $1 billion.
*In 2018 and 2019, restricted cash
was used to fund capital
expenditures and technical
resources to enhance Whirlpool
China's research and development
and working capital, as required
by the terms of the Whirlpool
China (formerly Hefei Sanyo)
acquisition. In 2020, restricted
cash represents contributions held
as part of the Company's
Charitable Foundation which was
consolidated as of September 30,
2020.
**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
