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» Whirlpool Corporation Q1 2010 Earnings Call Transcript
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Listeners are directed to the Appendix section of our presentation on Slide 29 for the reconciliation of 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. I think as you saw, earlier this morning, we released our second quarter financial results. You can find these results on Slide 4. Overall, we had another solid quarter of top line growth with sales reaching $4.5 billion, which was a 9% increase versus last year. Excluding the impact of foreign exchange, revenues increased by about 6%. Our earnings per share were $2.64 per share compared with $1.04 in the prior year. We are very happy to see strong improvement in operating performance in each of our regions during the quarter, which was primarily a result of the successful execution of our cost and productivity initiatives. Our adjusted operating margin improved to 6.6% during the second quarter, making good progress towards our mid-term target of 8%. Overall, I feel very good about the progress we made in margin improvement during the first half of the year. Also during the first half of the year, free cash flow improved by about $100 million. This year-over-year improvement in free cash flow is a result of our continued focus on cash generation, which is being driven by earnings improvement and strong working capital management. Turning now to Slide 5, I would like to provide an update on our global and regional demand outlook for the year. While overall our demand outlook is essentially unchanged from our previous outlook, I would like to highlight a few key trends we are seeing across the globe.
Overall for the quarter, we did see better-than-expected unit shipments on a global basis. In many of our global regions, you will note that we are expecting positive growth in the second half of the year, but at a lower rate than we had in the first half of the year.In the U.S., you have to go back to 2004 to find three consecutive quarters of industry growth and a comparable growth rate to what we've seen over the last nine months. There are several factors that have impacted this industry growth that Marc Bitzer will cover in detail in a moment. Overall, we continue to anticipate positive industry growth for the remainder of the year. In the U.S., we do expect the rate of growth to be in the 1% to 2% versus what we saw in the first half. In Europe, we continue to expect conditions will remain relatively stable. The industry produced a modest rate of growth through the first half of the year and we continue to anticipate full-year industry demand to be about equal to last year. In Latin America, the underlying economic fundamentals remain strong and we continue to see full-year growth in the range of 10%. And as we expected, we did see moderation in the Brazilian demand as we are now comparing against significant unit gains that we saw a year ago. We do expect industry growth there as well to remain positive as the year progresses, but our outlook does imply a slowing of growth as we comp against very strong results and demand reported in the second half of last year. And finally, we continue to expect our markets in Asia to grow in the 5% to 8% range. India continues to see the strongest growth rate and – but we are also – we are experiencing growth in China as well.
Turning to Slide 6, you will see the key drivers which are impacting our business for the year really are unchanged. We do expect our cost reduction and productivity initiatives will continue to drive improved earnings. And while our unit volumes will be positive, that will be less of a contributor to margins in the second of the year as they were in the first half of the year. We continue to anticipate that currency impacts for the year will generally be neutral to our operating results and given some first half trends, we do expect price mix to have a flat to modestly unfavorable impact on our full-year results.Read the rest of this transcript for free on seekingalpha.com