Whirlpool Corporation’s (WHR - Analyst Report) third-quarter 2015 adjusted earnings per share of $3.45 surpassed the Zacks Consensus Estimate of $3.22 and also rose 13.5% year over year.

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The improvement in earnings was mainly driven by the company’s sustained focus on cost and capacity reduction initiatives, encouraging price/mix and gains from the integration of acquired assets.  

On a reported basis, the company’s earnings rose 2.4% to $2.95 per share from $2.88 per share earned in the prior-year quarter.

Revenues came in at $5,277 million, up 9.4% from the comparable year-ago quarter but below the Zacks Consensus Estimate of $5,320 million. On a currency-neutral basis, Whirlpool registered year-over-year sales growth of nearly 25%, mainly on the back of contribution from acquisitions.

Adjusted operating profit for the quarter rose 7.9% to $418 million from $387 million in the year-ago quarter, while operating margin contracted 10 bps year over year to 7.9%. Operating results improved due to gains from acquisition integration activities, ongoing cost and capacity reduction initiatives, favorable price-mix and cost productivity, slightly offset by negative impact of unfavorable foreign exchange rates, lower demand in emerging markets and higher marketing, technology and products related investments.

Regional Performance

Revenues from North America were flat year over year at $2.8 billion, while it grew about 3% on currency-neutral basis. Adjusted operating profit increased 10.5% year over year to $336 million, while operating margin expanded 110 bps to 12%. During the quarter, gains from ongoing cost productivity and lower raw material costs counteracted the currency headwinds and higher investments related to marketing, technology and products. The company expects its North American industry shipments to increase by 5% in 2015.

Revenues from Latin America fell 27.3% year over year to $0.8 billion. Excluding the negative effects of currency translation, revenues declined 7%. Adjusted operating income of $31 million declined substantially from $118 million reported last year, as better product price/mix and gains from cost and capacity reductions were more than offset by adverse currency impact and lower unit volumes due to weak demand in Brazil. The company expects industry unit shipments in Latin America to be down by nearly 20% in 2015.

Revenues from EMEA grew 85% to $1.5 billion from $0.8 billion reported in the prior-year quarter. On a currency-neutral basis revenue for the segment rose more than 127%. Third-quarter adjusted operating income was $71 million, compared with $9 million in the year-ago quarter, benefiting from acquisition integration activities, favorable price-mix, enhanced cost productivity as well as gains from cost and capacity reduction measures, slightly offset by negative currency impact and increased marketing, technology and products related investments. Whirlpool expects industry unit shipments in 2015 to range from flat to a 2% increase.

Revenues from Asia grew 120% to $346 million in third-quarter 2015 from $157 million in the prior-year quarter. Excluding currency effects, revenue increased 127%. Adjusted operating profit was $27 million, as against an operating loss of $8 million reported a year ago, driven by synergies from acquisition integration activities, lower raw material costs, and benefits from cost and capacity reductions. The company expects industry shipments in the region to decline nearly 2% in 2015.

Financial Position
 

Whirlpool had cash and cash equivalents of $698 million as of Sep 30, 2015 and long-term debt of $3,502 million.

This largest home-appliances manufacturer in the world used $157 million of cash in operating activities during the first nine months of 2015. Meanwhile, the company’s capital expenditure for the period was $391 million. As of Sep 30, 2015, Whirlpool had negative free cash flow of $492 million.

Guidance

Driven by gains from the company’s actions to improve margins and taking into account the effects of ongoing weakness in emerging market demand and negative currency impacts, the company revised its earnings forecast for 2015. Whirlpool adjusted its GAAP earnings forecast for 2015 to $9.75–$10.25 per share, from $9.50–$10.50 guided earlier. It now projects adjusted earnings in the range of $12.00–$12.50 per share versus the previous guidance of $12.00–$13.00 per share.

The company also revised its free cash flow guidance to the range of $600 to $700 million for 2015, compared with earlier forecast of nearly $700 million. This guidance includes restructured cash outlays of up to $200 million, capital expenditures in the range of $700–$750 million and U.S. pension contributions of nearly $72 million.

Currently, Whirlpool carries a Zacks Rank #3 (Hold).

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