Whirlpool (WHR) Finds A Pool Of Buyers Today On Better-Than-Feared Q2 Results
2:45 pm Tuesday, July 26th, 2022
Household appliance manufacturer Whirlpool (WHR) looks clean today despite dealing with numerous adversities in Q2, including cost inflation, currency headwinds, and cooling demand. The challenges culminated in a top-line miss and trimmed FY22 guidance. However, despite all the woes in Q2, WHR’s results were better than many feared, leading to a pool of buyers today.
WHR’s adjusted EPS decline of 10.5% yr/yr to $5.94 was one such number that was far better than many expected, including analysts, as WHR extended its double-digit earnings streak to 11 consecutive quarters.
Operating margins still fell yr/yr in Q2, compressing by 240 bps to 9.0%. However, the situation would have been significantly worse if not for WHR’s success in implementing cost-based price actions globally, which lifted margins by 675 bps.
In North America, WHR’s largest region by revs, operating margins fell 420 bps yr/yr to 14.1%. However, on a two-year stack, margins actually improved by 170 bps despite considerably higher cost inflation since that period.
The challenging environment forced WHR to reduce its FY22 outlook, expecting adjusted EPS of $22.00-24.00, down from $24.00-26.00, and revs of $20.7 bln, implying a 6% drop yr/yr, down from prior guidance of positive +2-3% growth. However, the company’s long-term goals remain intact, including organic net sales growth of +5-6%, which was raised from roughly +3% in October.
WHR also remains confident that long-term demand will be robust, supported by broader home nesting trends, an undersupplied housing market, and a strong replacement cycle fueled by a rise in remote work. The company is also aggressively buying back stock, reducing its share count by over 10% in the past four quarters. WHR is also expected to conclude its strategic review of its struggling EMEA business by the end of Q3 on its path toward transforming itself into a high-growth, high-margin business. Nevertheless, it is important to note that persistent short-run macroeconomic challenges could negatively affect WHR’s upbeat long-term goals.
