Whirlpool (WHR) Beats on Q1 Earnings, Cuts 2022 EPS View
Whirlpool Corporation WHR posted mixed first-quarter 2022 results, wherein earnings beat the Zacks Consensus Estimate, while the top line missed the same. The appliance maker delivered adjusted earnings of $5.31 per share, down 26.3% from $7.20 earned in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $4.90. This marks WHR’s 15th straight earnings beat.
Both metrics declined year over year. Management trimmed earnings view for 2022. Shares of this currently Zacks Rank #4 (Sell) player have declined 15.1% in the past three months compared with the industry’s 6.2% decrease.
An Insight Into Q1
Net sales of $4,920 million dropped 8.2% from the year-ago quarter’s levels. The top line missed the Zacks Consensus Estimate of $5,402 million. Excluding the unfavorable impacts of foreign exchange, net sales amounted to $4,988 million, down 6.9% year over year. However, net sales improved 13.8% and adjusted organic net sales grew 17.3% from the respective 2020 levels on gains from healthy underlying demand for products.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation price-consensus-eps-surprise-chart | Whirlpool Corporation Quote
Go-to-market actions generated 600 basis points of price/mix along with a positive contribution from each region around the globe. Management is focused on accelerating the portfolio transformation with a major focus on higher-margin businesses.
The gross profit for first-quarter 2022 was $851 million, down 25.9% from $1,148 million reported in the year-ago quarter.
Adjusted EBIT of $463 million declined 30.3% from $664 million in the year-ago quarter. Adjusted EBIT margin of 9.4% fell 300 basis points (bps) year over year in spite of higher inflation of above $400 million.
Regional Performances
Net sales for the North America segment decreased 8.3% year over year to $2,791 million. Excluding the currency impact, sales in the region dropped 8.3%. The segment’s EBIT fell 25.1% year over year to $454 million, while the EBIT margin contracted 360 bps to 16.3%, driven by operating headwinds and inflation, partly offset by higher cost-based prices.
Net sales for the EMEA segment were down 7.4% year over year to $1,084 million. Excluding currency impacts, sales in the region dipped 0.5%. The segment reported an EBIT loss of $27 million against an EBIT of $21 million.
Net sales from Latin America increased 3.8% year over year to $760 million, driven by cost-based pricing increases. Excluding the currency impacts, sales in the region rose 0.8%. The segment’s EBIT of $54 million declined 12.9% from the year-ago period’s levels. The EBIT margin contracted 140 basis points to 7.1%, mainly affected by inflation, somewhat offset by higher sales.
Net sales in Asia declined 30.7% year over year to $285 million, mainly due to the divestiture of Whirlpool China. Excluding the currency impacts, sales for the region were down 28.8%. The segment’s EBIT of $14 million reflected a 36.6% decline from $21 million reported in the year-ago quarter. The segment’s EBIT margin of 4.8% decreased 30 basis points from the prior-year quarter’s level, affected by inflation and partly offset by cost-based price increases.
Other Financial Details
As of Mar 31, 2022, Whirlpool had cash and cash equivalents of $2,114 million, a long-term debt of $4,631 million and a stockholders’ equity of $4,575 million, excluding non-controlling interests of $170 million.
During the first three months of 2022, Whirlpool used cash of $328 million from operating activities, while reported an adjusted free cash flow of a negative $415 million. WHR incurred a capital expenditure of $87 million in the same period.
In the reported quarter, management bought back $533 million of shares and raised the share repurchase authorization $2 billion. Whirlpool had $2.9 billion available for buybacks. Also, WHR hiked the quarterly dividend 25% to $1.75 per share, delivering 10 straight years of dividend increase.
Outlook
For 2022, Whirlpool envisions net sales growth of 2-3%, down from the previous guidance of 5-6%. On a GAAP and ongoing basis, Whirlpool expects earnings per share of $24-$26, lower than $27-$29 anticipated earlier. Management anticipates a tax rate of 24-26% for 2022 on both GAAP and adjusted basis.
Whirlpool expects cash provided by operating activities of $1.95 billion compared with the earlier projection of $2.2 billion, and a free cash flow of $1.25 billion compared with the previous forecast of $1.5 billion for 2022.
Eye These Solid Picks
Some better-ranked stocks in the Consumer Discretionary space are Oxford Industries OXM, Gildan Activewear GIL and G-III Apparel GIII.
Oxford Industries currently sports a Zacks Rank # 1 (Strong Buy). OXM has a trailing four-quarter earnings surprise of 112.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and EPS suggests growth of 10.2% and 13%, respectively, from the corresponding year-ago reported numbers.
Gildan Activewear has a Zacks Rank #2 (Buy) at present. GIL has an expected long-term earnings growth rate of 8%.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the corresponding year-ago reported figures. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.
G-III Apparel currently has a Zacks Rank of 2. GIII has a trailing four-quarter earnings surprise of 160.6%, on average.
The Zacks Consensus Estimate for G-III Apparel 's current financial-year sales suggests growth of 8.7% while the same for EPS indicates a rise of 5.2% from the respective year-ago reported figures.
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Whirlpool Corporation (WHR) : Free Stock Analysis Report
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