Whirlpool Corporation (WHR)
Q1 2010 Earnings Call
April 26, 2010 10:00 am ET
Gregory A. Fritz – Director of Investor Relations
Jeff M. Fettig – Chairman of the Board & Chief Executive Officer
Michael A. Todman – President Whirlpool International & Director
Marc R. Bitzer, Ph. D. – President Whirlpool North America
Roy W. Templin – Chief Financial Officer & Executive Vice President
Josh Pollard – Goldman Sachs
Eric Bosshard – Cleveland Research
David MacGregor – Longbow Research, LLC.
Jeff Sprague – Vertical Research Partners
Laura Champine – Cowen & Company
Michael Rehaut – JP Morgan
Sam Darkatsh – Raymond James & Associates, Inc.
Todd Schwartzman – Sidoti & Company
Previous Statements by WHR
» Whirlpool Corporation Q4 2009 Earnings Call Transcript
» Whirlpool Corporation Q3 2009 Earnings Call Transcript
» Whirlpool Corp. Q2 2009 Earnings Call Transcript
Welcome to Whirlpool Corporation’s first quarter 2010 earnings call. Today’s call is being recorded. For opening remarks and introductions I would like to turn the call over to the Director of Investor Relations, Greg Fritz.
Gregory A. Fritz
Welcome to the Whirlpool Corporation first quarter conference call. Joining me today are Jeff Fettig, our Chairman and CEO; Mike Todman, President of Whirlpool International; Mark Bitzer, President of Whirlpool North America; and Roy Templin, our Chief Financial Officer. Before we begin, let me remind you that as we conduct this call we will be making forward-looking statements to assist you in understanding Whirlpool’s future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10K and 10Q.
Turning to Slide Two, we want to remind you that today’s presentation includes non-GAAP measures. As many of you will note, we’ve added some additional non-GAAP disclosures this quarter. We believe that these measures are important indicators of our operations as they exclude items that may not be indicative of our core operating results. We also think that the adjusted measures will provide you with a better base line for analyzing trends in our underlying business.
Listeners are directed to the appendix section of our presentation beginning on Slide 27 for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. Our remarks today track with the presentation available on the investor’s section of our website at
. With that, let me turn the call over to Jeff.
Jeff M. Fettig
As you saw, earlier this morning we released our first quarter financial results. These results are summarized and you can see them on Slide Four. Overall, I believe we had a very strong quarter with sales reaching $4.3 billion which represents a 20% increase versus last year. If you exclude the impact of foreign exchange translation revenues increased approximately 11%. Our earnings per share was $2.13 per diluted share compared to $0.91 in the prior year.
Overall, I think we saw strong operational performance in each of our regions and I’m very encouraged by the 18% increase in our global unit volumes that we had during the quarter. Our adjusted operating margin improvement was 3.2 points over the same quarter last year. Also for the quarter, free cash flow improved by approximately $300 million year-over-year. Our overall results reflect our lower breakeven point, our continued investment in innovation and our ability to expand our global product offerings. By continuing to drive our operating priorities throughout the business, we’ve been able to expand our operating margins at the same time we’re accelerating growth.
Now, turning to Slide Five, I’d like to provide you with an update on our regional demand outlook revisions for 2010. While there is still some degree of uncertainty in many facets of the global economy, we continue to expect growth throughout this year in almost all the markets around the world. In the United States, we saw much stronger demand in the first quarter and we now expect major appliance demand to increase between 3% and 5% versus the previous guidance of 2% to 4%.
Assuming this will occur, which we believe it will, this would mark the first full year of positive growth in consumer demand that we’ve seen in the US market in over four years. In Europe we continue to expect conditions will remain relatively challenging compared to other parts of the world and while our overall demand appears now to be stabilizing and we did post a modest increase in unit volume during the quarter, we continue to expect flat demand for the balance of the year.
In Latin America, the underlying fundamentals remain very strong and we’re now forecasting industry growth of approximately 10% versus the previous estimate of 5% to 10%. We expect industry growth to remain positive as the year progresses though our outlook does imply a slowing of the rate of growth in the region over the balance of the year compared to what we saw in the first quarter and of course, the year-over-year comps start to change after the first quarter as we saw growth in the later part of last year.
Finally, we now expect our served markets in Asia to grow in the 5% to 8% range versus our previous guidance of 3% to 5%. We continue to expect India to show strong growth trends during 2010, somewhat offset by lower growth rates in some of the other markets.
Turning to Slide Six, you’ll see the key factors impacting our business for the year which we showed previously. We believe our cost reduction and productivity will continue to drive improved earnings while higher unit volumes will contribute overall to both the improvement of our overall revenue growth and help the expansion of our margins. We continue to anticipate price mix and foreign currency impacts will generally be neutral to our operating results for the year.