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Shares of Whirlpool Corporation (WHR - Free Report) fell more than 4% in the after-market trading session on Oct 20, following the drab third-quarter 2022 results.
Both earnings and sales missed the Zacks Consensus Estimate and declined year over year. Results were hurt by the ongoing challenging environment and sluggish demand from rising inflation. The headwinds are likely to linger in the first half of fiscal 2023. Consequently, management trimmed the 2022 view.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 21.3% in the past three months compared with the industry’s 20.4% decline.
Image Source: Zacks Investment Research
However, management is undertaking portfolio transformation efforts. It also noted that it is in the final stages of the strategic review of EMEA with two potential strategic investors. The company announced the buyout of InSinkErator and the divestiture completion of its Russia business.
Insight Into Q3
The appliance maker delivered adjusted earnings of $4.49 per share, declining 32.8% from $6.68 in the year-ago quarter. Also, the bottom line missed the Zacks Consensus Estimate of $5.59.
Net sales of $4,784 million dropped 12.8% from the year-ago quarter. The top line lagged the Zacks Consensus Estimate of $5,235 million. Excluding the unfavorable impacts of foreign exchange, net sales amounted to $4,957 million, down 9.7% year over year. Lower volumes stemming from weak demand hurt sales, partly offset by a favorable product price/mix.
Go-to-market actions generated 550 basis points (bps) of price/mix, along with cost-based pricing actions.
The gross profit for third-quarter 2022 was $680 million, down 38.6% from $1,108 million reported in the year-ago quarter.
Adjusted EBIT of $265 million declined 56.4% from $608 million in the year-ago quarter. The adjusted EBIT margin of 5.5% contracted 560 bps year over year.
Regional Performances
Net sales for the North America segment decreased 7.7% year over year to $2,873 million. Excluding the currency impact, sales in the region dropped 7.4%. The segment’s EBIT plunged 49% year over year to $282 million, while the EBIT margin contracted 790 bps to 9.8% due to aggressive inventory reduction.
Net sales for the EMEA segment were down 28.1% year over year to $903 million. Excluding currency impacts, sales in the region dipped 16.7%. The metric was hurt by a drab demand in key countries. The segment’s EBIT was at a loss of $28 million compared with the year-ago quarter’s earnings of $28 million due to lower volume and cost inflation.
Net sales from Latin America decreased 10.8% year over year to $750 million, owing to a double-digit decline in demand in Mexico and Brazil, which offset cost-based pricing efforts. Excluding the currency impacts, sales in the region fell 10.4%. The segment’s EBIT of $40 million declined 45.2% from the year-ago period’s $73 million. The EBIT margin contracted 340 bps to 5.3%, mainly affected by inflation, somewhat offset by cost-saving efforts.
Net sales in Asia fell 7.2% year over year to $258 million mainly due to the divestiture of Whirlpool China. Excluding the currency impacts, sales for the region were down 1.2%. The segment’s EBIT of $12 million reflected a 50% plunge from the $24 million reported in the year-ago quarter. The segment’s EBIT margin of 4.7% contracted 390 bps from the prior-year quarter, driven by cost inflation and a top-line decline.
Other Financial Details
As of Sep 30, 2022, Whirlpool had cash and cash equivalents of $1,790 million, long-term debt of $4,722 million, and a stockholders’ equity of $4,351 million, excluding non-controlling interests of $173 million.
In the first nine months of 2022, Whirlpool used cash of $310 million from operating activities. It reported an adjusted negative free cash flow of $24 million. WHR incurred a capital expenditure of $334 million in the same period. Notably, capital expenditure is likely to be $550 million for 2022.
Whirlpool Corporation Price, Consensus and EPS Surprise
For 2022, Whirlpool envisions a net sales decline of 9% to $20.1 billion, which compares unfavorably with the earlier stated $20.7 billion. On a GAAP basis, Whirlpool expects earnings per share of $5, down from $9.50-$11.50 mentioned earlier. On an ongoing basis, the metric is likely to be $19, down from the prior stated $22-$24. Management anticipates a tax rate of 31-33% on a GAAP basis (compared with the previously mentioned 34-36%) and 14-16% on an adjusted basis (compared with the earlier stated 21-23%).
For 2022, Whirlpool expects cash provided by operating activities to be $1.5 billion (compared with the earlier stated $1.85 billion) and a free cash flow of $950 million, down from the prior mentioned $1.25 billion.
lululemon presently flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Toro currently sports a Zacks Rank #1. TTC has a trailing four-quarter earnings surprise of 1.4%, on average.
The Zacks Consensus Estimate for Toro’s current financial year’s sales and earnings suggests growth of 14.4% and 16%, respectively, from the year-ago period's reported numbers.
Crocs currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.9% on average. CROX has an expected long-term earnings growth rate of 15%.
The Zacks Consensus Estimate for Crocs’ current financial year’s sales and earnings per share suggests growth of 49.7% and 20.7%, respectively, from the year-ago period's reported numbers.
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Whirlpool (WHR) Dips on Q3 Earnings & Sales Miss, View Cut
Shares of Whirlpool Corporation (WHR - Free Report) fell more than 4% in the after-market trading session on Oct 20, following the drab third-quarter 2022 results.
Both earnings and sales missed the Zacks Consensus Estimate and declined year over year. Results were hurt by the ongoing challenging environment and sluggish demand from rising inflation. The headwinds are likely to linger in the first half of fiscal 2023. Consequently, management trimmed the 2022 view.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 21.3% in the past three months compared with the industry’s 20.4% decline.
Image Source: Zacks Investment Research
However, management is undertaking portfolio transformation efforts. It also noted that it is in the final stages of the strategic review of EMEA with two potential strategic investors. The company announced the buyout of InSinkErator and the divestiture completion of its Russia business.
Insight Into Q3
The appliance maker delivered adjusted earnings of $4.49 per share, declining 32.8% from $6.68 in the year-ago quarter. Also, the bottom line missed the Zacks Consensus Estimate of $5.59.
Net sales of $4,784 million dropped 12.8% from the year-ago quarter. The top line lagged the Zacks Consensus Estimate of $5,235 million. Excluding the unfavorable impacts of foreign exchange, net sales amounted to $4,957 million, down 9.7% year over year. Lower volumes stemming from weak demand hurt sales, partly offset by a favorable product price/mix.
Go-to-market actions generated 550 basis points (bps) of price/mix, along with cost-based pricing actions.
The gross profit for third-quarter 2022 was $680 million, down 38.6% from $1,108 million reported in the year-ago quarter.
Adjusted EBIT of $265 million declined 56.4% from $608 million in the year-ago quarter. The adjusted EBIT margin of 5.5% contracted 560 bps year over year.
Regional Performances
Net sales for the North America segment decreased 7.7% year over year to $2,873 million. Excluding the currency impact, sales in the region dropped 7.4%. The segment’s EBIT plunged 49% year over year to $282 million, while the EBIT margin contracted 790 bps to 9.8% due to aggressive inventory reduction.
Net sales for the EMEA segment were down 28.1% year over year to $903 million. Excluding currency impacts, sales in the region dipped 16.7%. The metric was hurt by a drab demand in key countries. The segment’s EBIT was at a loss of $28 million compared with the year-ago quarter’s earnings of $28 million due to lower volume and cost inflation.
Net sales from Latin America decreased 10.8% year over year to $750 million, owing to a double-digit decline in demand in Mexico and Brazil, which offset cost-based pricing efforts. Excluding the currency impacts, sales in the region fell 10.4%. The segment’s EBIT of $40 million declined 45.2% from the year-ago period’s $73 million. The EBIT margin contracted 340 bps to 5.3%, mainly affected by inflation, somewhat offset by cost-saving efforts.
Net sales in Asia fell 7.2% year over year to $258 million mainly due to the divestiture of Whirlpool China. Excluding the currency impacts, sales for the region were down 1.2%. The segment’s EBIT of $12 million reflected a 50% plunge from the $24 million reported in the year-ago quarter. The segment’s EBIT margin of 4.7% contracted 390 bps from the prior-year quarter, driven by cost inflation and a top-line decline.
Other Financial Details
As of Sep 30, 2022, Whirlpool had cash and cash equivalents of $1,790 million, long-term debt of $4,722 million, and a stockholders’ equity of $4,351 million, excluding non-controlling interests of $173 million.
In the first nine months of 2022, Whirlpool used cash of $310 million from operating activities. It reported an adjusted negative free cash flow of $24 million. WHR incurred a capital expenditure of $334 million in the same period. Notably, capital expenditure is likely to be $550 million for 2022.
Whirlpool Corporation Price, Consensus and EPS Surprise
Whirlpool Corporation price-consensus-eps-surprise-chart | Whirlpool Corporation Quote
Outlook
For 2022, Whirlpool envisions a net sales decline of 9% to $20.1 billion, which compares unfavorably with the earlier stated $20.7 billion. On a GAAP basis, Whirlpool expects earnings per share of $5, down from $9.50-$11.50 mentioned earlier. On an ongoing basis, the metric is likely to be $19, down from the prior stated $22-$24. Management anticipates a tax rate of 31-33% on a GAAP basis (compared with the previously mentioned 34-36%) and 14-16% on an adjusted basis (compared with the earlier stated 21-23%).
For 2022, Whirlpool expects cash provided by operating activities to be $1.5 billion (compared with the earlier stated $1.85 billion) and a free cash flow of $950 million, down from the prior mentioned $1.25 billion.
Stocks to Consider
Some better-ranked companies from the Consumer Discretionary sector are lululemon athletica (LULU - Free Report) , Toro (TTC - Free Report) and Crocs (CROX - Free Report) .
lululemon presently flaunts a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 10.4%, on average. LULU has an expected long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for lululemon’s current financial-year sales and earnings suggests growth of 26.7% and 26.8% from the year-ago period’s reported numbers, respectively.
Toro currently sports a Zacks Rank #1. TTC has a trailing four-quarter earnings surprise of 1.4%, on average.
The Zacks Consensus Estimate for Toro’s current financial year’s sales and earnings suggests growth of 14.4% and 16%, respectively, from the year-ago period's reported numbers.
Crocs currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 21.9% on average. CROX has an expected long-term earnings growth rate of 15%.
The Zacks Consensus Estimate for Crocs’ current financial year’s sales and earnings per share suggests growth of 49.7% and 20.7%, respectively, from the year-ago period's reported numbers.