Whirlpool Corp. (
Q3 2010 Earnings Call
October 27, 2010 10:00 am ET
Greg Fritz - Director, IR
Jeff Fettig - Chairman and CEO
Michael Todman - President of Whirlpool International
Marc Bitzer - President, North America
Roy Templin - EVP and Chief Financial Officer
Eric Bosshard - Cleveland Research
Sam Darkatsh Raymond James
Joshua Pollard - Goldman Sachs
Laura Champine - Cowen and Company
David MacGregor - Longbow Research
Michael Rehaut - JPMorgan
Jeffrey Sprague - Vertical Research Partners
Robert Kelly - Sidoti & Company
Previous Statements by WHR
» Whirlpool Corporation Q2 2010 Earnings Call Transcript
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» Whirlpool Corporation Q3 2009 Earnings Call Transcript
Good morning and welcome to Whirlpool Corporation’s Third quarter 2010 Earnings Call. Today’s call is bring recorded. For opening remarks and introductions, I would like to turn the call over to the Director of Investor Relations, Greg Fritz. Please go ahead.
Welcome to the Whirlpool Third Quarter Conference Call. Joining me today Jeff Fettig, our Chairman and CEO; Michael Todman, President of Whirlpool International; Marc Bitzer, President of Whirlpool North America; and Roy Templin, our Chief Financial Officer.
Before we began let me remind you that we conduct this call we will be making forward looking statements to assist you in understanding Whirlpool Corporation’s future expectations. Our actual results could differ maturely from these statements due to many factors discussed in our latest 10K and 10Q.
Turning to slide 2, we want to remind you that today’s presentation includes non-GAAP measures. We believe that these measures are important indicators of our operations as the exclude items that may not be indicative of our core operating results. We also think that the adjusted measures will provide you with the better baseline for understanding trends in our underlying business.
Listeners are directed to the pending section of our presentation on slight 28 for the reconciliation of non-GAAP items the most directly comparable gap measures. Our remarks track with the presentation available on the investor section of our website at Whirlpoolcorp.com.
With that let me turn over the call over the Jeff.
As you saw earlier this morning, we released our third quarter financial results and you can find these results summarized on slide 4.
During the quarter, as we expected, we faced the challenge in environment in some markets which resulted in slowing the sales growth compared to the first half of the year. We were able to quickly adapt to these economic changes due to our ongoing focus on cost reductions, productivity, and our innovative new product launches.
Revenues for the quarter came in $4.5 billion and that is flat versus last year. On an adjusted basis, our EPS was $2.22 per share compared to $1.67 in prior year. Our productivity results were very positive during the quarter enabled us to meet the challenges related to volume in some markets, price mix and higher material cost. On a year-to-date basis free cash flow was flat which was an improvement from the first half usage of $80 million.
Turning to slide 5, I would like to provide you with an update for the full year on our regional demand outlook. In the US, we now expect our full year demand in shipments to be up approximately 3% versus the 5% that we had discussed early this year. We did see some softness in demand here in the third quarter. In spite of this weakening demand environment, overall we performed very well from a brand and share perspective.
In Europe, we continue to see industry growth improvement during the quarter. We increased our full year outlook to a demand growth of 1 to 3% as we now see demand growth for three consecutive quarters across the region.
In Latin America, we saw appliance demand rebound after some moderation in demand late in the second quarter. As you may recall, we had some significant events and results during the second quarter related to the expiration of the IPI tax holiday and the effects of the World Cup. We see the underlying economic fundamentals there remaining very strong and we continue to see full year growth in demand in the range of 10%.
Finally, we saw healthy growth again in Asia. Our businesses there continued to grow at a strong double digit rate during the quarter. We have increased our full year industry outlook for Asia to 8% to 10% for the full year.
I will now turn to slide 6, where you see the key drivers which are impacting our business for the year. We expect our cost reduction and productivity initiatives will continue to be the main driver behind our overall improvement as they have throughout the year. We managed our cost reductions efforts effectively and we expect to continue to benefit from these actions for the balance of this year.
As you know, we have seen foreign currency exchange become very volatile during the quarter but we’ve been able to contain and mitigate these risks and expect foreign currency impacts will be manageable at today’s (inaudible).
Finally, as we expected, we continue to see unfavorability in the area of material cost for the third quarter. For the full year we now see material cost trailing towards the lower end of the $200 million to $300 million estimate that we gave you throughout the year.
Finally, given the trends that we saw in the third quarter, we now expect price mix to have an unfavorable impact on our full year results, and while we have had a very positive consumer receptions to our new product innovation launch during the third quarter, the overall price mix environment was more challenging than our previous expectations particularly in North America.