Whirlpool Corporation Reports Strong Second-Quarter 2019 Results And Raises Full-Year Guidance

- GAAP net earnings were $67 million, or $1.04 per diluted share, compared to $(657) million, or $(9.50) in the same prior-year period. Non-cash items negatively impacted prior-year results.

- Record second-quarter ongoing earnings per diluted share (non-GAAP)(1) of $4.01, a 25 percent increase compared to $3.20 in the same prior-year period.

- The Company delivered solid ongoing earnings before interest and taxes (EBIT)(2) margin expansion to 7 percent, driven by previously-announced global cost-based pricing benefits and sustained fixed cost discipline.

- The North America region delivered strong EBIT(3) margin of 12.4 percent, a 50 basis point improvement compared to the same prior-year period.

- On a full-year basis, the Company raises guidance and now expects to deliver earnings per diluted share of $17.80 to $18.55 on a GAAP basis and $14.75 to $15.50 on an ongoing basis(1).

- The Company updates its full-year guidance(5) and now expects to generate cash provided by operating activities of approximately $1.4 billion and free cash flow(4) of approximately $800 million.

- Consistent with its disciplined approach to capital allocation, the Company intends to repay its outstanding $1 billion term loan with the net cash proceeds received from the closing of the Embraco sale, and intends to continue repurchasing stock throughout the remainder of 2019.

News provided by

Whirlpool Corporation

Jul 22, 2019, 16:10 ET

BENTON HARBOR, Mich., July 22, 2019 /PRNewswire/ -- Whirlpool Corporation (NYSE: WHR) announced today second-quarter GAAP net earnings of $67 million, or $1.04 per diluted share, compared to $(657) million, or $(9.50) per diluted share, reported for the same prior-year period. Non-cash items negatively impacted prior-year results by approximately $860 million. Second-quarter ongoing earnings per diluted share⁽¹⁾were $4.01, compared to $3.20 in the same prior-year period.

"At our recent Investor Day, we laid out a robust strategy for creating shareholder value and our excellent second-quarter results impressively demonstrate that we are on track," said Marc Bitzer, chairman and chief executive officer of Whirlpool Corporation. "Our strong momentum allows us to raise our full-year guidance despite continued global macro uncertainties."

Second-quarter net sales were $5.2 billion, compared to $5.1 billion in the same prior-year period. Excluding the impact of currency, sales increased 3.5 percent.

Second-quarter EBIT⁽²⁾ was $254 million, or 4.9 percent of sales, compared to $(562) million, or (10.9) percent of sales, in the same prior-year period. Second-quarter ongoing EBIT⁽²⁾ was $363 million, or 7.0 percent of sales, compared to $343 million, or 6.7 percent of sales, in the same prior-year period. On a GAAP and ongoing basis, EBIT margin was favorably impacted by product price/mix and restructuring benefits, which were partially offset by cost inflation and unfavorable currency. On a GAAP basis, prior-year results were negatively impacted by approximately $860 million due to an asset impairment charge related to the EMEA region and a settlement agreement with the French Competition Authority (FCA).

For the six months ended June 30, 2019, the Company reported cash used by operating activities of $(821) million, compared to $(584) million in the prior year. The Company reported free cash flow⁽⁴⁾ of $(997) million for the first six months of 2019, compared to $(725) million for the first six months of 2018, primarily driven by the approximately $100 million FCA payment and temporarily higher working capital.

SECOND-QUARTER REGIONAL REVIEW

Whirlpool North America

Whirlpool North America reported second-quarter net sales of $2.9 billion, compared to $2.8 billion in the same prior-year period. Excluding the impact of currency, sales increased 3 percent.

The region reported second-quarter EBIT⁽³⁾ of $353 million, or 12.4 percent of sales, compared to $331 million, or 11.9 percent of sales, in the same prior-year period. During the quarter, the favorable impact of product price/mix was partially offset by lower unit volumes and cost inflation.

Whirlpool Europe, Middle East and Africa

Whirlpool Europe, Middle East and Africa reported second-quarter net sales of $1.0 billion, compared to $1.1 billion in the same prior-year period. Excluding the impact of currency, sales decreased (0.2) percent.

The region reported second-quarter EBIT⁽³⁾ of $(28) million, or (2.7) percent of sales, compared to $(25) million, or (2.3) percent of sales, in the same prior-year period. Ongoing EBIT⁽³⁾was $(16) million, or (1.6) percent of sales, compared to $(25) million, or (2.3) percent of sales, in the same prior-year period. During the quarter, EBIT⁽³⁾ was favorably impacted by restructuring benefits and continued volume recovery in key countries.

Whirlpool Latin America

Whirlpool Latin America reported second-quarter net sales of $888 million, compared to $852 million in the same prior-year period. Excluding the impact of currency, sales increased 9.6 percent.

The region reported second-quarter EBIT⁽³⁾ of $56 million, or 6.3 percent of sales, compared to $33 million, or 3.8 percent of sales, in the same prior-year period. During the quarter, the favorable impact of product price/mix was partially offset by unfavorable currency. Prior-year results were negatively impacted by approximately $20 million related to the Brazil trucker strike, partially offset by favorable tax credits of $8 million.

Whirlpool Asia

Whirlpool Asia reported second-quarter net sales of $430 million, compared to $428 million in the same prior-year period. Excluding the impact of currency, sales increased 4.7 percent.

The region reported second-quarter EBIT⁽³⁾ of $15 million, or 3.6 percent of sales, compared to $43 million, or 10.1 percent of sales, in the same prior-year period. During the quarter, the favorable impact of product price/mix was more than offset by increased brand transition investments in China. In addition, acquisition-related government incentives of approximately $15 million favorably impacted prior-year results.

OUTLOOK

For the full-year 2019, the Company raises guidance and now expects GAAP earnings per diluted share of $17.80 to $18.55 and ongoing earnings per diluted share⁽¹⁾of $14.75 to $15.50. On a GAAP basis, earnings per diluted share includes the gain on sale of the Embraco business of approximately $400 million, restructuring expense of approximately $200 million, the favorable impact of a Brazil indirect tax credit of $180 million and a $79 million charge related to the sale of our South Africa operations and exit of our domestic sales operations in Turkey.

For the full-year 2019⁽⁵⁾, the Company now expects to generate cash provided by operating activities of approximately $1.4 billion and free cash flow⁽⁴⁾ of approximately $800 million. Included in this guidance are restructuring cash outlays of approximately $200 million and, with respect to free cash flow⁽⁴⁾, capital spending of approximately $625 million.

"We are pleased to have completed the sale of our Embraco compressor business and expect to repay a $1 billion term loan with those net proceeds," said Jim Peters, chief financial officer of Whirlpool Corporation. "As we strengthen our balance sheet, drive margin expansion and generate cash, we will maintain our disciplined approach to capital allocation with continued investments in our business and solid returns to our shareholders."

(1) A reconciliation of ongoing earnings per diluted share, a non-GAAP financial measure, to reported net earnings per diluted share available to Whirlpool and other important information, appears below.

(2) A reconciliation of earnings before interest and taxes (EBIT) and ongoing EBIT, non-GAAP financial measures, to reported net earnings available to Whirlpool and other important information, appears below.

(3) Segment EBIT represents our consolidated EBIT broken down by the Company's reportable segments. Consolidated EBIT also includes corporate "Other/Eliminations" of $(142) million and $(944) million for the second quarters of 2019 and 2018, respectively. Ongoing segment EBIT includes certain adjustments to segment EBIT, and a reconciliation and other important information, appears below.

(4) A reconciliation of free cash flow, a non-GAAP financial measure, to cash provided by (used in) operating activities and other important information, appears below.

(5) Full-year 2019 free cash flow guidance does not reflect the expected impact from the sale of the Embraco business.

About Whirlpool Corporation
Whirlpool Corporation (NYSE: WHR) is the leading major appliance manufacturer in the world, with approximately $21 billion in annual sales, 92,000 employees and 65 manufacturing and technology research centers in 2018. The company markets Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir, Indesit and other major brand names in nearly every country throughout the world. Additional information about the company can be found at whirlpoolcorp.com, or find us on Twitter at @WhirlpoolCorp.

Website Disclosure
We routinely post important information for investors on our website, whirlpoolcorp.com, in the "Investors" section. We also intend to update the Hot Topics Q&A portion of this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.

Whirlpool Additional Information:
This document contains forward-looking statements about Whirlpool Corporation and its consolidated subsidiaries ("Whirlpool") that speak only as of this date. Whirlpool disclaims any obligation to update these statements. Forward-looking statements in this document may include, but are not limited to, statements regarding expected earnings per share, cash flow, productivity and raw material prices. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool's forward-looking statements. Among these factors are: (1) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers, and the impact of the changing retail environment; (2) Whirlpool's ability to maintain or increase sales to significant trade customers and the ability of these trade customers to maintain or increase market share; (3) Whirlpool's ability to maintain its reputation and brand image; (4) the ability of Whirlpool to achieve its business plans, productivity improvements, and cost control objectives, and to leverage its global operating platform, and accelerate the rate of innovation; (5) Whirlpool's ability to obtain and protect intellectual property rights; (6) acquisition and investment-related risks, including risks associated with our past acquisitions, and risks associated with our increased presence in emerging markets; (7) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from political, legal and economic instability; (8) information technology system failures, data security breaches, network disruptions, and cybersecurity attacks; (9) product liability and product recall costs; (10) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (11) our ability to attract, develop and retain executives and other qualified employees; (12) the impact of labor relations; (13) fluctuations in the cost of key materials (including steel, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (14) Whirlpool's ability to manage foreign currency fluctuations; (15) impacts from goodwill impairment and related charges; (16) triggering events or circumstances impacting the carrying value of our long-lived assets; (17) inventory and other asset risk; (18) the uncertain global economy and changes in economic conditions which affect demand for our products; (19) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans; (20) litigation, tax, and legal compliance risk and costs, especially if materially different from the amount we expect to incur or have accrued for, and any disruptions caused by the same; (21) the effects and costs of governmental investigations or related actions by third parties; and (22) changes in the legal and regulatory environment including environmental, health and safety regulations, and taxes and tariffs.

Additional information concerning these and other factors can be found in Whirlpool's filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The number one major appliance manufacturer in the world claim is based on most recently available publicly reported annual revenues among leading appliance manufacturers.

WHIRLPOOL CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE PERIODS ENDED JUNE 30 (Millions of dollars, except per share data)


	Three Months Ended				Six Months Ended
	2019		2018		2019		2018
Net sales	$	5,186	$	5,140	$	9,946	$	10,051
Expenses
Cost of products sold	4,254		4,260		8,202		8,359
Gross margin	932		880		1,744		1,692
Selling, general and administrative	584		541		1,089		1,046
Intangible amortization	18		20		36		40
Restructuring costs	60		44		86		188
Impairment of goodwill and other intangibles	—		747		—		747
Loss on disposal of businesses	79		—		79		—
Operating profit (loss)	191		(472)		454		(329)
Other (income) expense
Interest and sundry (income) expense	(63)		90		(193)		82
Interest expense	52		47		103		89
Earnings (loss) before income taxes	202		(609)		544		(500)
Income tax expense (benefit)	130		30		(2)		45
Net earnings (loss)	72		(639)		546		(545)
Less: Net earnings available to noncontrolling interests	5		18		8		18
Net earnings (loss) available to Whirlpool	$	67	$	(657)	$	538	$	(563)
Per share of common stock
Basic net earnings (loss) available to Whirlpool	$	1.04	$	(9.50)	$	8.42	$	(8.03)
Diluted net earnings (loss) available to Whirlpool	$	1.04	$	(9.50)	$	8.35	$	(8.03)
Dividends declared	$	1.20	$	1.15	$	2.35	$	2.25
Weighted-average shares outstanding (in millions)
Basic	63.8		69.1		63.9		70.1
Diluted	64.3		69.1		64.4		70.1

Comprehensive income (loss)	$	16	$	(802)	$	583	$	(703)

WHIRLPOOL CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Millions of dollars, except share data)


	June 30, 2019		December 31, 2018
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	1,178	$	1,498
Accounts receivable, net of allowance of $145 and $136, respectively	2,387		2,210
Inventories	3,008		2,533
Prepaid and other current assets	961		839
Assets held for sale	969		818
Total current assets	8,503		7,898
Property, net of accumulated depreciation of $6,361 and $6,190, respectively	3,318		3,414
Right of use assets	788		—
Goodwill	2,450		2,451
Other intangibles, net of accumulated amortization of $565 and $527, respectively	2,260		2,296
Deferred income taxes	2,147		1,989
Other noncurrent assets	389		299
Total assets	$	19,855	$	18,347
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	4,270	$	4,487
Accrued expenses	634		690
Accrued advertising and promotions	652		827
Employee compensation	372		393
Notes payable	2,157		1,034
Current maturities of long-term debt	573		947
Other current liabilities	878		811
Liabilities held for sale	558		489
Total current liabilities	10,094		9,678
Noncurrent liabilities
Long-term debt	4,155		4,046
Pension benefits	586		637
Postretirement benefits	314		318
Lease liabilities	660		—
Other noncurrent liabilities	379		463
Total noncurrent liabilities	6,094		5,464
Stockholders' equity
Common stock, $1 par value, 250 million shares authorized, 112 million shares issued, and 63 million and 64 million shares outstanding, respectively	112		112
Additional paid-in capital	2,790		2,768
Retained earnings	7,380		6,933
Accumulated other comprehensive loss	(2,657)		(2,695)
Treasury stock, 49 million and 48 million shares, respectively	(4,876)		(4,827)
Total Whirlpool stockholders' equity	2,749		2,291
Noncontrolling interests	918		914
Total stockholders' equity	3,667		3,205
Total liabilities and stockholders' equity	$	19,855	$	18,347

WHIRLPOOL CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE PERIODS ENDED JUNE 30 (Millions of dollars)


	Six Months Ended
	2019		2018
Operating activities
Net earnings (loss)	$	546	$	(545)
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:
Depreciation and amortization	302		339
Impairment of goodwill and other intangibles	—		747
Loss on disposal of businesses	79		—
Changes in assets and liabilities:
Accounts receivable	(251)		(103)
Inventories	(574)		(399)
Accounts payable	(182)		(287)
Accrued advertising and promotions	(180)		(226)
Accrued expenses and current liabilities	(41)		191
Taxes deferred and payable, net	(179)		(66)
Accrued pension and postretirement benefits	(39)		(46)
Employee compensation	7		(31)
Other	(309)		(158)
Cash used in operating activities	(821)		(584)
Investing activities
Capital expenditures	(197)		(194)
Proceeds from sale of assets and business	5		27
Proceeds from held-to-maturity securities	—		60
Investment in related businesses	—		(2)
Other	(3)		—
Cash used in investing activities	(195)		(109)
Financing activities
Net proceeds from borrowings of long-term debt	697		700
Repayments of long-term debt	(943)		(376)
Net proceeds from short-term borrowings	1,119		1,398
Dividends paid	(149)		(159)
Repurchase of common stock	(50)		(1,001)
Common stock issued	4		7
Cash provided by financing activities	678		569
Effect of exchange rate changes on cash, cash equivalents and restricted cash	9		(42)
Decrease in cash, cash equivalents and restricted cash	(329)		(166)
Cash, cash equivalents and restricted cash at beginning of period	1,538		1,293
Cash, cash equivalents and restricted cash at end of period	$	1,209	$	1,127

SUPPLEMENTAL INFORMATION - CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Millions of dollars except per share data)
(Unaudited)

We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, some of which we refer to as "ongoing" measures, including earnings before interest and taxes (EBIT), EBIT margin, ongoing EBIT, ongoing EBIT margin, ongoing earnings, ongoing earnings per diluted share, ongoing segment EBIT, ongoing segment EBIT margin, sales excluding currency and free cash flow. Ongoing measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing operations and provide a better baseline for analyzing trends in our underlying businesses. Sales excluding foreign currency is calculated by translating the current period net sales, in functional currency, to U.S. dollars using the prior-year period's exchange rate compared to the prior-year period net sales. Management believes that sales excluding foreign currency provides stockholders with a clearer basis to assess our results over time, excluding the impact of exchange rate fluctuations. Management believes that free cash flow provides investors and stockholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. The Company provides free cash flow related metrics, such as free cash flow as a percentage of net sales, as long-term management goals, not an element of its annual financial guidance, and as such does not provide a reconciliation of free cash flow to cash provided by (used in) operating activities, the most directly comparable GAAP measure, for these long-term goal metrics. Any such reconciliation would rely on market factors and certain other conditions and assumptions that are outside of the company's control. We believe that these non-GAAP measures provide meaningful information to assist investors and stockholders in understanding our financial results and assessing our prospects for future performance, and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP financial measures, provide a more complete understanding of our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These ongoing financial measures should not be considered in isolation or as a substitute for reported net earnings available to Whirlpool per diluted share, net earnings, net earnings available to Whirlpool, net sales, and cash provided by (used in) operating activities, the most directly comparable GAAP financial measures. We also disclose segment EBIT and ongoing segment EBIT as important financial metrics used by the Company's Chief Operating Decision Maker to evaluate performance and allocate resources in accordance with ASC 280 - Segment Reporting. GAAP net earnings available to Whirlpool per diluted share and ongoing earnings per diluted share are presented net of tax, while individual adjustments in each reconciliation are presented on a pre-tax basis; the income tax impact line item aggregates the tax impact for these adjustments. The tax impact of individual line item adjustments may not foot precisely to the aggregate income tax impact amount, as each line item adjustment may include non-taxable components. Historical quarterly earnings per share amounts are presented based on a normalized tax rate adjustment to reconcile quarterly tax rates to full-year tax rate expectations. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Second-Quarter 2019 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the three months ended June 30, 2019. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our second-quarter adjusted effective tax rate of 17.5%.

	Three Months Ended
	June 30, 2019
	Earnings before interest & taxes⁽⁶⁾		Earnings per diluted share
Reported measure	$	254	$	1.04
Restructuring costs^(a)	60		0.93
Brazil indirect tax credit^(c)	(53)		(0.82)
Divestiture related transition costs^(d)	11		0.18
Loss on disposal of businesses^(f)	79		1.24
Legacy product warranty and liability expense^(g)	12		0.19
Income tax impact	—		(0.30)
Normalized tax rate adjustment^(b)	—		1.56
Ongoing measure	$	363	$	4.01


Earnings Before Interest & Taxes Reconciliation:

Net earnings (loss) available to Whirlpool	$	67
Net earnings (loss) available to noncontrolling interests	5
Income tax expense (benefit)	130
Interest expense	52
Earnings before interest & taxes⁽⁶⁾	$	254

Note: Numbers may not reconcile due to rounding

Second-Quarter 2018 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the three months ended June 30, 2018. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our second-quarter adjusted effective tax rate of 20%.

	Three Months Ended
	June 30, 2018
	Earnings (loss) before interest & taxes⁽⁶⁾		Earnings (loss) per diluted share
Reported measure	$	(562)	$	(9.50)
Restructuring costs^(a)	44		0.64
France antitrust settlement ⁽ⁱ⁾	114		1.65
Impairment of goodwill and intangibles ^(j)	747		10.81
Income tax impact	—		(0.13)
Normalized tax rate adjustment^(b)	—		(0.23)
Share adjustment*	—		(0.04)
Ongoing measure	$	343	$	3.20


Earnings Before Interest & Taxes Reconciliation:

Net earnings (loss) available to Whirlpool	$	(657)
Net earnings (loss) available to noncontrolling interests	18
Income tax expense (benefit)	30
Interest expense	47
Earnings (loss) before interest & taxes⁽⁶⁾	$	(562)

Note: Numbers may not reconcile due to rounding

* As a result of our current period GAAP earnings loss, the impact of antidilutive shares was excluded from the loss per share calculation on a GAAP basis. The share count adjustment used in the calculation of the second-quarter ongoing earnings per diluted share includes basic shares outstanding of 69.1 million plus the impact of antidilutive shares of 0.9 million which were excluded on a GAAP basis.

Ongoing Segment Earnings Before Interest and Taxes

The reconciliation provided below reconciles the non-GAAP financial measure ongoing segment EBIT with segment EBIT, for the three months ended June 30, 2019. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales.

	Three Months Ended
	June 30, 2019
	Segment earnings before interest and taxes		Restructuring costs^(a)		Brazil indirect tax credit^(c)		Divestiture related transition costs^(d)		Loss on disposal of businesses^(f)		Legacy product warranty and liability expense^(g)		Ongoing segment earnings (loss) before interest and taxes
North America	$	353	$	—	$	—	$	—	$	—	$	—	$	353
EMEA	(28)		—		—		—		—		12		(16)
Latin America	56		—		—		—		—		—		56
Asia	15		—		—		—		—		—		15
Other/Eliminations	(142)		60		(53)		11		79		—		(45)
Total Whirlpool Corporation	$	254	$	60	$	(53)	$	11	$	79	$	12	$	363

The reconciliation provided below reconciles the non-GAAP financial measure ongoing segment EBIT with segment EBIT, for the three months ended June 30, 2018. Ongoing segment EBIT margin is calculated by dividing ongoing segment EBIT by segment net sales.

	Three Months Ended
	June 30, 2018
	Segment earnings before interest and taxes		Restructuring costs^(a)		France antitrust settlement⁽ⁱ⁾		Impairment of goodwill and intangibles^(j)		Ongoing segment earnings (loss) before interest and taxes
North America	$	331	$	—	$	—	$	—	$	331
EMEA	(25)		—		—		—		(25)
Latin America	33		—		—		—		33
Asia	43		—		—		—		43
Other/Eliminations	(944)		44		114		747		(39)
Total Whirlpool Corporation	$	(562)	$	44	$	114	$	747	$	343

Note: Numbers may not reconcile due to rounding

Full-Year 2019 Outlook For Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings available to Whirlpool and net earnings per diluted share available to Whirlpool, for the twelve months ending December 31, 2019. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our anticipated full-year GAAP tax rate of approximately 24% includes the impact of the gain on sale of Embraco. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our anticipated full-year tax rate between 15% and 20%.

	Twelve Months Ending
	December 31, 2019
	Earnings before interest & taxes⁽⁶⁾	Earnings per diluted share
Reported measure*	$1,757	$17.80 - $18.55
Restructuring costs^(a)	200	3.11
Brazil indirect tax credit^(c)	(180)	(2.79)
Divestiture related transition costs^(d)	31	0.49
Loss on disposal of businesses^(f)	79	1.23
Legacy product warranty and liability expense^(g)	12	0.19
Gain on sale of business^(h)	(500)	(7.76)
Income tax impact	—	0.97
Normalized tax rate adjustment^(b)	—	1.52
Ongoing measure	$1,400	$14.75 - $15.50

Note: Numbers may not reconcile due to rounding

(6) Earnings Before Interest & Taxes (EBIT) is a non-GAAP measure. The Company does not provide a forward-looking quantitative reconciliation of EBIT to the most directly comparable GAAP financial measure, net earnings available to Whirlpool, because the net earnings available to noncontrolling interests item of such reconciliation -- which has historically represented a relatively insignificant amount of the Company's overall net earnings -- implicates the Company's projections regarding the earnings of the Company's non wholly-owned subsidiaries and joint ventures that cannot be quantified precisely or without unreasonable efforts.

Full-Year 2018 Ongoing Earnings Before Interest and Taxes and Ongoing Earnings per Diluted Share

The reconciliation provided below reconciles the non-GAAP financial measures ongoing earnings before interest and taxes and ongoing earnings per diluted share, with the most directly comparable GAAP financial measures, net earnings (loss) available to Whirlpool and net earnings (loss) per diluted share available to Whirlpool, for the twelve months ended December 31, 2018. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. EBIT margin is calculated by dividing EBIT by net sales. The earnings per diluted share GAAP measure and ongoing measure are presented net of tax, while each adjustment is presented on a pre-tax basis. Our full-year GAAP tax rate includes the nondeductible earnings impact of the impairment of goodwill and intangibles of $747 million and the France antitrust settlement charge of $103 million. The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our full-year adjusted tax rate of approximately 6.6%.

	Twelve Months Ended
	December 31, 2018
	Earnings before interest & taxes⁽⁶⁾		Earnings (loss) per diluted share
Reported measure	$	171	$	(2.72)
Restructuring costs^(a)	247		3.68
France antitrust settlement ⁽ⁱ⁾	103		1.53
Impairment of goodwill and intangibles ^(j)	747		11.11
Trade customer insolvency^(e)	30		0.45
Divestiture related transition costs ^(d)	21		0.32
Income tax impact	—		(0.29)
Normalized tax rate adjustment^(b)	—		1.25
Share adjustment*	—		(0.17)
Ongoing measure	$	1,319	$	15.16


Earnings Before Interest & Taxes Reconciliation:

Net earnings (loss) available to Whirlpool	$	(183)
Net earnings (loss) available to noncontrolling interests	24
Income tax expense (benefit)	138
Interest expense	192
Earnings before interest & taxes⁽⁶⁾	$	171

Note: Numbers may not reconcile due to rounding

*As a result of our full-year GAAP earnings loss, the impact of antidilutive shares was excluded from the loss per share calculation on a GAAP basis. The share count adjustment used in the calculation of the full year ongoing earnings per diluted share includes the full-year weighted average basic shares outstanding of 67.2 million plus the impact of antidilutive shares of 0.7 million which were excluded on a GAAP basis.

Footnotes:

a.	RESTRUCTURING COSTS - In 2014, the Company completed the acquisition of Indesit S.p.A., which, due to its size, materially changed our European footprint. In 2018, these costs are primarily related to Indesit restructuring, an Embraco plant closure in Italy, and certain other unique restructuring events. In 2019, these costs are primarily related to actions that right-size our EMEA business and certain other unique restructuring events.

b.	NORMALIZED TAX RATE ADJUSTMENT - During the second quarter of 2019, the Company calculated ongoing earnings per share using an adjusted tax rate of 17.5%, to reconcile to our anticipated full-year effective tax rate between 15% and 20%, which includes the tax impact of the gain on sale of the Embraco business, a valuation allowance release and the Brazil indirect tax credit. The Company's 2018 normalized tax rate excludes the tax impact of impairment of goodwill and intangibles of $747 million, the France antitrust settlement charge of $103 million and the impact of U.S. tax reform of $95 million.

c.	BRAZIL INDIRECT TAX CREDIT - During the first half of 2019, the Company received favorable, non-appealable decisions related to the recovery of certain taxes previously paid over gross sales. As a result, the Company recorded a gain in interest and sundry (income) expense during the first and second quarter of 2019 in the amount of $127 million and $53 million, respectively, in connection with these decisions.

d.	DIVESTITURE RELATED TRANSITION COSTS - In the fourth quarter of 2018, the Company recognized transition costs of approximately $21 million associated with the sale of its Embraco compressor business. During the first and second quarter of 2019, the Company recognized additional transition costs of $6 million and $11 million, respectively.

e.	TRADE CUSTOMER INSOLVENCY - During the third quarter of 2018, the Company recognized bad debt expense related to trade customer insolvency of a U.S. retailer and a Brazilian retailer, in the amount of approximately $17 million and $12 million, respectively. During the fourth quarter of 2018, the Company recognized an additional bad debt expense related to the Brazilian retailer in the amount of approximately $14 million, and a reduced bad debt expense related to the U.S. retailer in the amount of approximately $13 million.

f.	LOSS ON DISPOSAL OF BUSINESSES - During the second quarter of 2019, the Company entered into an agreement to sell its South Africa operations. As a result, the Company recorded a charge of $35 million for the write-down of the assets of the disposal group to fair value and $33 million of cumulative foreign currency translation adjustments included in the carrying amount of the disposal group to calculate the impairment. The Company also incurred charges of approximately $11 million, primarily inventory liquidation costs, related to the exit of our domestic sales operations in Turkey. Total charges recorded in the second quarter of 2019 were approximately $79 million.

g.	LEGACY PRODUCT WARRANTY AND LIABILITY EXPENSE - In September 2015, the Company recorded a liability related to a corrective action affecting certain legacy Indesit products. During the second quarter of 2019, the Company incurred approximately $12 million of additional product warranty expense related to our previously disclosed legacy Indesit dryer corrective action campaign in the UK.

h.	GAIN ON SALE OF BUSINESS - On July 1, 2019 we closed the sale of Embraco. Based on the cash purchase price, we estimate a gain, net of taxes, in the range of $375 to $425 million. The recognition of the gain and repayment of the outstanding term loan will occur in the third-quarter of 2019. The estimated gain is subject to change based on the final transaction amounts, including the net book value of the held for sale assets at the closing date and the finalization of the amounts for closing costs, taxes and customary adjustments for indebtedness, cash and working capital.

i.	FRANCE ANTITRUST SETTLEMENT - In 2013, the French Competition Authority ("FCA") commenced an investigation of appliance manufacturers and retailers, including Whirlpool and Indesit operations in France. With respect to the first part of the investigation, the Company agreed to a preliminary settlement with the FCA staff in the second quarter of 2018 and accrued $114 million. In the fourth quarter of 2018, the final settlement was approved by the FCA's college of commissioners in the amount of approximately $122 million, with approximately $19 million of the total settlement to be paid by the previous owner of Indesit to the Company. The Company paid $52 million in the first quarter of 2019 and the remainder in the second quarter of 2019.

j.	IMPAIRMENT OF GOODWILL AND INTANGIBLES - During the second quarter of 2018, the Company performed a quantitative assessment of the EMEA region's goodwill and intangible assets for impairment. Based on a third-party valuation, the Company concluded that fair value of equity did not exceed its carrying value and therefore goodwill and intangible assets were impaired. The impact of this impairment was $168 million to intangible assets and $579 million to goodwill in the second quarter of 2018.

Free Cash Flow

As defined by the Company, free cash flow is cash provided by (used in) operating activities after capital expenditures, proceeds from the sale of assets and businesses and changes in restricted cash. The reconciliation provided below reconciles six months ended June 30, 2019 and 2018 and projected 2019 full-year free cash flow with cash provided by (used in) operating activities, the most directly comparable GAAP financial measure. Free cash flow as a percentage of net sales is calculated by dividing free cash flow by net sales.


	Six Months Ended June 30,
(millions of dollars)	2019	2018	2019 Outlook
Cash provided by (used in) operating activities	$(821)	$(584)	~$1,425
Capital expenditures, proceeds from sale of assets/businesses and change in restricted cash*	(176)	(141)	(625)
Free cash flow	$(997)	$(725)	~$800

Cash provided by (used in) investing activities**	$(195)	$(109)
Cash provided by (used in) financing activities**	$678	$569

Note: 2019 free cash flow outlook excludes the net proceeds from the sale of the Embraco business of approximately $1 billion.

*The change in restricted cash relates to the private placement funds paid by Whirlpool to acquire majority control of Whirlpool China (formerly Hefei Sanyo) and which are used to fund capital and technical resources to enhance Whirlpool China's research and development and working capital, as required by the terms of the Hefei Sanyo acquisition completed in October 2014.

**Financial guidance on a GAAP basis for cash provided by (used in) financing activities and cash provided by (used in) investing activities has not been provided because in order to prepare any such estimate or projection, the Company would need to rely on market factors and certain other conditions and assumptions that are outside of its control.

SOURCE Whirlpool Corporation