Whirlpool's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Whirlpool (WHR)

Q4 2011 Earnings Call

February 01, 2012 10:00 am ET

Executives

Unknown Executive -

Jeff M. Fettig - Chairman and Chief Executive Officer

Marc Bitzer - President of Whirlpool - North America

Michael A. Todman - Director and President of Whirlpool International

Compare to:
Previous Statements by WHR
» Whirlpool's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Whirlpool's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Whirlpool's CEO Discusses Q1 2011 Results - Earnings Call Transcript

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

Analysts

Kenneth R. Zener - KeyBanc Capital Markets Inc., Research Division

Eric Bosshard - Cleveland Research Company

Sam Darkatsh - Raymond James & Associates, Inc., Research Division

Joshua Pollard - Goldman Sachs Group Inc., Research Division

David S. MacGregor - Longbow Research LLC

Michael Rehaut - JP Morgan Chase & Co, Research Division

Presentation

Operator

Good morning, and welcome to Whirlpool Corp's. Fourth Quarter and Year End 2011 Earnings Release Call. Today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Senior Director of Investor Relations, Jel[ph]

Unknown Executive

Thank you, and good morning. Welcome to the Whirlpool Corp. Fourth Quarter and Year End 2011 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, our Chief Financial Officer. Our remarks today track with the presentation available on the Investor section of our website at whirlpoolcorp.com. 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 Corp's. future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and 10-Q as well as in the appendix of the presentation.

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 unrelated to results from our ongoing business operations. We also think that the adjusted measures will provide you with a better baseline for analyzing trends in our ongoing business operation. Listeners are directed to the Appendix section of our presentation beginning on Slide 37 for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. With that let me turn the call over to Jeff.

Jeff M. Fettig

Well, good morning, everyone, and thank you for joining us on the call today. Earlier this morning as you saw, we released our fourth quarter and year end financial results. And I'd say to sum up Q4, we did exit the year with good momentum coming from improving price/mix, significantly lower inventory levels and a continued strong cadence of new product introductions. With these positive trends, we are well-positioned for margin expansion, earnings growth in the coming year. Turning to Slide 4 we'll talk about our full year results.

In 2011 we reported annual net sales of $18.7 billion, up 2%. Our GAAP net earnings per share were $4.99 compared to $7.97 in 2010. And as we discussed quite a bit last year, we did have higher material and oil-related cost which came in at approximately $450 million and that significantly impacted our results last year.

Turning to Slide 5, you'll see a recap of the actions we previously discussed that we're focusing on to improve our operating results. As we expected, the global conditions remain challenging particularly driven by Europe, which is driven by the Euro debt concerns. However, we have made substantial progress on the actions, which we outlined last October. And those were to improve our operating profitability, to reduce our fixed cost structure, to realize previously announced price increases and to continue to deliver a very strong cadence of new product introductions. And these actions already have began to yield results that you see in the fourth quarter. During the quarter, our North American region delivered a 2x margin improvement year-over-year despite a 3% industry unit decline. We see the strength of our global brand portfolio is evident as we continue to see strong consumer preference for innovative new product offerings, and this is driving a positive mix and margins.

Our cost reduction and capacity reduction actions which we announced last October are on track, and as we said then, we expect them to yield $200 million in fixed cost savings in 2012 and another $200 million in 2013. We also continue to drive strong cash flow from our ongoing business operation, which has enabled us to fund a number of legacy liabilities in 2011. As a reminder, this included over $300 million related to Brazilian collection dispute, $44 million related to antitrust resolutions and $298 million in pension contributions. In total, these legacy items were funded by almost $650 million, but even with these items, we ended the year in a very strong financial position and with $1.1 billion cash at year end.

Also, while we have benefited historically from both U.S. energy tax credits and Brazilian BEFIEX tax credits, we do recognize that this has created some difficulties in evaluating our ongoing business operations. Due to this, we have clearly defined our ongoing business operational performance by showing our baseline operating results without x items which are restructuring, U.S. energy tax credits and the monetization of BEFIEX tax credits.

So then turning to Slide 6, looking at just our ongoing business operations, last year our net earnings per share were $2.05 compared to $4.47 in 2010. Our cash from ongoing business operations without legacy liabilities was approximately $400 million last year.

Read the rest of this transcript for free on seekingalpha.com