Shares of Whirlpool Corporation (NYSE:WHR) closed down 10.8% on Tuesday after the home appliance manufacturer released weaker-than-expected third-quarter 2016 results.
Quarterly revenue declined 0.5% year over year, to $5.25 billion, and translated to 6.1% growth in adjusted earnings of $3.66 per diluted share. The latter, in particular, was bolstered by Whirlpool's cost-saving initiatives and repurchases over the past year, including $100 million in common stock bought back in the third quarter alone. Analysts, on average, were anticipating adjusted earnings of $3.86 per share on higher revenue of $5.32 billion.
More specifically, Whirlpool continued to gain market share and expand margins in both North America and Latin America. But the environment in Europe continues to be challenging, with weak demand and currency volatility following Brexit. In Asia, Whirlpool is focused on deploying products across its recently increased distribution network.
Whirlpool CEO Jeff Fettig elaborated:
In a challenging external environment, we delivered record third-quarter ongoing earnings per share by leveraging our portfolio of leading brands, innovative new products and a continued focus on cost productivity. The fundamentals of our business are strong, and as a result of our operational execution we have delivered earnings-per-share growth of 18 percent year-to-date. We remain focused on creating value for our shareholders and returning cash through our share repurchase and dividend programs.
For the full year, however, Whirlpool now expects adjusted earnings per diluted share in the range of $14.00 to $14.25, driven by "temporary demand weakness" in the U.S., and ongoing demand weakness and currency pressure related to Brexit in the U.K. Whirlpool also expects cash from operations for the year to be in the range of $1.35 billion to $1.4 billion, with free cash flow of $700 million.
By comparison, last quarter Whirlpool told investors to expect adjusted earnings per share of $14.25 to $14.75, with free cash flow from operations of $1.40 billion to $1.55 billion, and free cash flow of $700 million to $800 million.
In the end, this might well prove temporary, as Whirlpool management asserts. But it's also a cut-and-dry case in which Whirlpool fell short of expectations and offered an underwhelming look ahead, so it's no surprise to see shares traded significantly lower today.