Whirlpool (WHR)

Q1 2011 Earnings Call

April 27, 2011 10:00 am ET

Executives

Jeff Fettig - Chairman and Chief Executive Officer

Marc Bitzer - President of Whirlpool - North America

Gregory A. Fritz -

Larry Venturelli - Principal Accounting Officer, Senior Vice President, Corporate Controller and Chief Financial Officer of Whirlpool International

Michael Todman - Director and President of Whirlpool International

Analysts

Todd Duvick - BofA Merrill Lynch

Michael Rehaut - JP Morgan Chase & Co

Kenneth Zener - KeyBanc Capital Markets Inc.

Sam Darkatsh - Raymond James & Associates, Inc.

Robert Kelly - Sidoti & Company, LLC

David S. MacGregor

Joshua Pollard - Goldman Sachs Group Inc.

Tom Nikic

Presentation

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Operator

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» Whirlpool Corporation Q1 2010 Earnings Call Transcript

Good morning, and welcome to Whirlpool Corporation's First Quarter 2011 Earnings Release 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. Please go ahead.

Gregory A. Fritz

Thank you, Misty, and good morning, everyone. 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; Marc Bitzer, President of Whirlpool North America; and Larry Venturelli, Corporate Controller and Chief Financial Officer for Whirlpool International; Roy Templin, our Chief Financial Officer, is unable to join the call today because of a family medical emergency that requires his attention.

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 the many factors discussed in our latest 10-K and 10-Q.

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 they exclude items that may not be indicative of, or are unrelated to, our core operating results. We also think that the adjusted measures will provide you with a better baseline for analyzing trends in our underlying business.

Listeners are directed to the Appendix section of our presentation on Slide 26 for a reconciliation of the non-GAAP items to the most directly comparable GAAP measures. Our remarks today track with the presentation available on the Investors section of our website at whirlpoolcorp.com.

With that, let me turn the call over to Jeff.

Jeff Fettig

Well, good morning, everyone, and thank you for joining us today. As you saw earlier this morning, we released our first quarter financial results and these results can be seen on Slide 4.

For the quarter, sales grew to $4.4 billion in revenues which was a 3% increase from last year. Our earnings per share were $2.17 versus $2.13 a year ago. Our first quarter results do reflect a number of factors impacting our business operations, and I would like to summarize those factors. First is demand. Overall, global demand was largely in line with our expectations, with our shipments being impacted by a very positive response by consumers to our new product innovations.

Second, material and oil-related increases were significantly higher and had a negative impact on our margins. And lastly, our Price Margin Realization was down 2.3 points versus last year but did improve by 0.9 of a point to the fourth quarter of 2010. Overall, our margins and sales were largely in line with our expectations for the quarter.

Our ongoing cost reduction efforts and continued innovation investments during the quarter did positively impact our results. These actions helped to mitigate the significant material cost inflation that we saw. I think it's important to note that on a sequential basis, as I mentioned, our price/mix was positive and our margins expanded by 1.2 points versus the fourth quarter last year. And we clearly expect to build upon this trend throughout the balance of the year.

I'll now turn to Slide 5, where I'd like to review our industry demand expectations and our key markets around the world. In the U.S., first quarter demand was slightly negative with industry shipments declining about 1%. This is essentially in line with our previous expectation of negative demand in the first half of the year followed by positive demand in the second half of the year. And as we mentioned on the last call, this was largely due to the first half 2010 comparisons, which had higher demand driven by both the cash for appliances program and the housing credit program.

We will be comping against the strongest months versus last year, in April and May. And as such, we expect to see negative U.S. industry shipment trends during the second quarter followed by year-over-year growth improvement in demand in the second half of the year. And for the full year, we still keep the same growth forecast that we talked about before.

Turning to Europe. We continue to see steady industry demand growth from the 2% to 4% range. In Latin America, the first quarter demand was flat versus last year. We, here, too, have some challenging comparables, particularly in Brazil as the appliance tax holiday ended during the first quarter of 2010. We continue to expect full year industry demand to increase in the 5% to 10% range.

And in Asia we saw a continued growth, although we did see some slowing in the growth rate of demand during the first quarter as we saw unseasonably cold-weather in India, which is the largest market for us in Asia which impacted our shipments during the quarter. Overall, however, we continue to see good demand fundamental across the region and we expect this will result of full year bond [ph] increase in the 6% to 8% range.

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