Whirlpool Looks Attractive After the Recent Earnings

Whirlpool Corporation (WHR, Financial) is the number one major appliance manufacturer in the world, with approximately $20 billion in annual sales, 100,000 employees and 70 manufacturing and technology research centers throughout the world in 2014. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Jenn-Air, Indesit and other major brand names in more than 170 countries.

Quarter Results

WHR announced fourth-quarter GAAP net earnings of $81 million, or $1.02 per diluted share, compared to $181 million, or $2.26 per diluted share, reported for the same prior-year period. GAAP results reflect $1.71 per diluted share in costs associated with the two recent acquisitions. Ongoing business earnings per diluted share increased to a record $3.52, compared to $2.97 in the same prior-year period, mainly driven by revenue growth, ongoing cost productivity, the benefit of cost and capacity-reduction initiatives and the impact of the acquisitions.

Net sales in the quarter were a record $6.0 billion, compared to $5.1 billion during the same prior-year period, an increase of 18 percent. Excluding the impact of both foreign currency and Brazilian (BEFIEX) tax credits, sales increased approximately 22%. During the fourth-quarter, the acquisitions contributed approximately $1 billion of net sales.

"We delivered another record year of earnings while building an exceptional platform for profitable growth and margin expansion for 2015 and beyond," said Jeff M. Fettig, chairman and chief executive officer of Whirlpool Corporation. "Our integration activities remain on track to drive synergies and we will continue investing in our leading brands and the next generation of consumer relevant products."

Fourth-quarter GAAP operating profit totaled $281 million, which includes over $135 million of costs related to the acquisitions, compared to $354 million in the same prior-year period. Record fourth quarter ongoing business operating profit totaled $456 million, or 7.6% of sales, compared to $386 million, or 7.7% of sales, in the same prior-year period. The benefits of the acquisitions, higher sales, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives were partially offset by higher material costs, unfavorable currency and the impact of product transitions.

For the full year, GAAP net sales for 2014 were $19.9 billion, compared to $18.8 billion in 2013. Excluding the impact of both foreign currency and BEFIEX tax credits, sales increased over 8%. GAAP operating profit for the year totaled approximately $1.2 billion, compared to $1.2 billion in 2013. Full-year ongoing business operating profit totaled $1.5 billion, or 7.4% of sales, compared to $1.4 billion, or 7.3% of sales, in 2013. The benefits of the acquisitions, higher sales, ongoing cost productivity and cost and capacity-reduction initiatives more than offset higher material costs and foreign currency. GAAP net earnings for the year declined to $8.17 per diluted share, compared to $10.24 per diluted share for 2013, primarily due to costs related to the acquisitions. Ongoing business diluted earnings per share for the year increased to a full-year record $11.39 per share compared to $10.02 per share for 2013.

During the twelve months ended December 31, 2014, the company reported cash provided by operating activities of $1.5 billion, compared to cash provided by operating activities of $1.3 billion in the prior year. Whirlpool Corporation reported free cash flow of $854 million in 2014 compared to free cash flow of $690 million in the prior year.

FOURTH-QUARTER REGIONAL REVIEW

Whirlpool North America

Whirlpool North America reported fourth-quarter net sales of $2.8 billion, compared to $2.7 billion in the same prior-year period, an increase of over 4%. Excluding the impact of currency, sales increased over 5 percent.

The region reported a fourth-quarter operating profit of $255 million, or 9% of sales, compared to $301 million, or 11% of sales, in the same prior-year period. As expected, ongoing cost productivity and higher unit volumes were more than offset by the impact of product transitions, higher material costs and unfavorable currency.

The company expects full-year 2015 industry unit shipments to increase by approximately 4 to 6%.

Whirlpool Europe, Middle East, and Africa

Whirlpool Europe, Middle East and Africa reported fourth-quarter net sales of $1.7 billion, compared to $0.8 billion in the same prior-year period. Over $800 million of this revenue growth was provided by the acquisition of Indesit Company S.P.A.

The region reported fourth-quarter operating profit of $41 million, compared to $10 million in the same prior-year period. Ongoing business segment operating profit totaled $101 million, or 6.1% of sales, compared to $10 million, or 1.2% of sales, in the same prior year period. The benefits of the acquisition, higher unit volumes, ongoing cost productivity and the benefit of cost and capacity-reduction initiatives more than offset unfavorable currency and unfavorable product price/mix.

The company expects full-year 2015 industry unit shipments to be flat to up 2 percent.

Whirlpool Latin America

Whirlpool Latin America reported fourth-quarter net sales of $1.3 billion, compared to $1.4 billion in the same prior-year period. Excluding the impact of currency and BEFIEX tax credits, sales increased over 1%.

The region reported fourth-quarter GAAP operating profit of $147 million, compared to $159 million in the same prior-year period. During the fourth quarter of 2013, the company monetized $40 million of BEFIEX tax credits. Ongoing business segment operating profit totaled $149 million, or 11.7% of sales, compared to $130 million, or 9.7 percent of sales, in the same prior year period. Improved product price/mix and ongoing cost productivity more than offset lower unit volumes, higher material costs and unfavorable currency.

The company now expects full-year 2015 industry unit shipments to be flat to down 3%.

Whirlpool Asia

Whirlpool Asia reported fourth-quarter net sales of $282 million compared to $177 million in the same prior-year period. Over $160 million of this revenue growth was provided by the acquisition in China.

The region reported a fourth-quarter GAAP operating loss of $(22) million, compared to an operating profit of $10 million in the same prior-year period. Ongoing business segment operating profit totaled $17 million, or 5.6 percent of sales, compared to $10 million, or 5.4% of sales, in the same prior year period. The benefits of the acquisition, positive price/mix, lower material costs and the benefits of cost and capacity reductions were partially offset by increased investment in brands and new products and unfavorable currency.

The company now expects full-year 2015 industry unit shipments to be up 1 to 3%

To End

WHR is in a good position after the recent earnings release. It has been named as one of Fortune Magazine's World's Most Admired Companies for the fifth consecutive year. The company's ranking included recognition for attributes including: innovation, use of corporate assets, social responsibility, quality of management, financial soundness, long-term investment value and quality of products and services.

"Whirlpool is honored to once again be named to Fortune Magazine's annual list of the World's Most Admired Companies," said Jeff M. Fettig, chairman and CEO of Whirlpool Corporation. "For over a century Whirlpool has had a commitment to growth by focusing on product innovations that matter to our consumers. Our talented employees around the world create exceptional products that continue to be at the forefront of the industry. We are proud to see our on-going social responsibility initiatives recognized and we are committed to continued success in 2015."

It is going to create shareholder returns in near future. According to me, this company should be a buy. Investors may benefit from adding this company to their portfolio.