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Whirlpool Corporation’s (WHR - Analyst Report) adjusted earnings per share came in at $2.72 in the third quarter of 2013, which was higher than $1.80 earned in the year-ago quarter and the Zacks Consensus Estimate of $2.64.

The robust quarterly performance was primarily driven by the company’s sustained focus on cost and capacity reduction initiatives and revenue growth. Moreover, reported earnings rose over twofold to $2.42 per share from 94 cents in the year-ago period.

Revenues in the quarter increased 4.2% year over year to $4,683.0 million. The rise in the top line was primarily driven by increased demand for the company’s innovative products. Moreover, Whirlpool registered year-over-year sale growth of over 5%, after excluding the impact of foreign currency translation and lower monetization of Brazilian (BEFIEX) tax credits. However, the company’s revenues missed the Zacks Consensus Estimate of $4,749.0 million.

Gross profit improved 20.3% year over year to $846.0 million from $703.0 million a year ago. Gross margin expanded 250 basis points (bps) to 18.1% from 15.6% in the year-ago quarter. Adjusted operating profit rose 34.7% to $353.0 million from $262.0 million in the year-ago quarter. Consequently, adjusted operating margin expanded 170 bps to 7.5% versus 5.8% in the third quarter of 2012.

Regional Performance

Revenues from North America grew 8% year over year at $2.6 billion. Adjusted operating profit increased 27.3% to $289.0 million in the quarter from $227.0 million in third-quarter 2012. The year-over-year growth in operating profit was due to higher sales, better product price mix along with cost and capacity reduction measures, partially offset by increased material costs and investments in marketing, technology and products. Further, given the current economic scenario, the company expects its U.S. industry shipments to increase by 9% in the remainder of 2013, up from 6%–8% forecasted earlier.

Revenues from Latin America dropped 0.8% to $1.1 billion on a year-over-year basis. Moreover, excluding the effects of currency translation and Brazilian tax credits, revenues were down less than 1%. Adjusted operating income were almost flat at $104.0 million, as higher sales and ongoing productivity initiatives were fully offset by increased material costs and unfavorable foreign currency exchange rate. Further, the company now expects appliance industry shipments in Latin America to increase by 1% in the remainder of 2013.

Revenues from Europe, Middle East and Africa grew 10.8% to $778.0 million in the quarter. The region reported breakeven operating results in comparison to an operating loss of $36.0 million in the year-ago quarter. The year-over-year improvement in operating results were primarily driven by higher sales as well as cost and capacity reduction measures, partially offset by increased material costs. Whirlpool expects industry unit shipments in 2013 to be flat year over year.

Revenues from Asia fell 2.0% to $197.0 million from $201.0 million in third-quarter 2012. However, excluding the negative impact of currency translation, revenues increased 2%. Operating income remained flat year over year at $7.0 million as the benefit from improved product price mix and ongoing productivity initiatives were fully offset by higher material costs and unfavorable foreign currency translation. The company now expects industry shipments in the region to decline by 2% in 2013 due to weak performance in India.

Financial Position

Whirlpool had cash and cash equivalents of $826 million as of Sep 30, 2013, compared with $1,168.0 million as of Dec 31, 2012. Long-term debt was $1,834.0 million as of Sep 30, 2013, compared with $1,944.0 million as of Dec 31, 2012.

The largest home-appliances manufacturer in the world, which comes ahead of ElectroluxAB, LG, Samsung, General Electric Co. (GE - Analyst Report) and Haier Electronics Group Company, Ltd., has generated a cash flow of $242.0 million from operations in the first three quarters of 2013. Meanwhile, during the first nine months of 2013, the company spent $317.0 million toward capital expenditure. Currently, Whirlpool has a negative free cash flow of $72.0 million and anticipates free cash flow in the range of $690.0 million–$710.0 million for 2013.

Outlook

Buoyed by better-than-expected quarterly results, Whirlpool raised its earnings guidance for 2013. For full-year 2013, Whirlpool now expects earnings per share in the range of $10.45–$10.65, up from the prior projection of $10.05–$10.30. However, considering the impact of restructuring charges, Brazilian tax credits and U.S. Energy Tax Credit, the company now anticipates earnings per share of $9.90–$10.10, up from the previous forecast of $9.50–$10.00.

Other Stocks Worth Considering

Currently, Whirlpool carries a Zacks Rank #3 (Hold). Other stocks that are worth a look include Dillard’s Inc. (DDS - Analyst Report) and Best Buy Co., Inc. (BBY - Analyst Report). Both of these carry a Zacks Rank #2 (Buy).

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