Following dismal guidance from a chip company (Nvidia), and poor earnings and guidance from an industrial bellwether (Caterpillar), the latest company to surprise investors with its Q4 report was consumer products giant Whirlpool, which is tumbling after hours after reporting Q4 revenue which missed expectations, and projecting full year EPS some 9% below the sellside consensus.
WHR reported Q4 revenue of $5.66BN, missing estimates of $5.76BN, and unchanged from a year prior (the company blamed FX for the revenue drop) and even though non-GAAP EPS of $4.75 beat expectations of $4.23 (with GAAP EPS nearly 50% less, at $2.64) it was the company's guidance that shocked investors, as Whirlpool forecast non-GAAP FY EPS of $14-$15.00, the midpoint coming 9% below the consensus estimate of $15.98.
Looking at historical data, the company made the following disclosures for various geographical regions:
- Whirpool North America: the favorable impacts of product price/mix and fixed cost reduction were partially offset by raw material inflation, tariffs and higher freight costs.
- Whirlpool Europe, Middle East and Africa: the favorable impacts of product price/mix and restructuring benefits were more than offset by raw material inflation, unfavorable productivity due to unit volume declines and currency.
- Whirlpool Latin America: the favorable impacts of product price/mix and higher productivity were partially offset by raw material inflation and unfavorable currency.
- Whirlpool Asia: the favorable impacts of product price/mix and restructuring benefits were more than offset by raw material inflation and increased bad debt provision.
The common themes: rising raw material prices, tariffs, declining volumes, volume declines, and unfavorable currency movements.
As for the key reason why the stock is getting hit after hours, the company now forecasts non-GAAP EPS of $14.00 to $15.00, far below the $15.98 consensus estimate, as "favorable product price/mix, restructuring benefits and reduced share count are offset by a higher tax rate and cost and currency increases."
In other words, not even the company's buybacks, and Whirlpool announced it repurchased $1.2 billion in stock in 2018, up from $750MM in 2017, will be enough to offset rising input costs, the stronger dollar, and the company's higher (?) tax rate. For investors this was just the latest disappointing earnings report and guidance cut, and WHR stock tumbled as much as 6% after hour, dropping to levels last seen in early January, before rebounding modestly.