Slide 1: Third-Quarter 2022 Results, Portfolio Transformation Update & Long-Term Perspective
Third-Quarter 2022 Results, Portfolio Transformation Update & Long-Term Perspective FRIDAY, OCTOBER 21, 2022
Slide 2: Cautionary Statement
Cautionary Statement 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,
Slide 3: Third Quarter Results, Long-Term Perspective, Portfolio Transformation
Third Quarter Results Long-Term Perspective Portfolio Transformation Whirlpool Corporation Confidential Marc Bitzer Jim Peters Joe Liotine CHAIRMAN AND EXECUTIVE VICE PRESIDENT AND CHIEF EXECUTIVE PRESIDENT AND CHIEF CHIEF OPERATING OFFICER FINANCIAL OFFICER OFFICER
Slide 4: Agenda
Agenda Q3 Results impacted by double digit market contraction and still elevated cost inflation Whirlpool with strong track record of successfully operating through cycles Our business is well positioned to benefit from mid to long term tailwinds Our portfolio transformation towards a high growth, hig
Slide 5: 2022 Third-Quarter Results Impacted by Double Digit Market Contraction and Still Elevated Cost Inflation
2022 Third-Quarter Results Impacted by Double Digit Market Contraction and Still Elevated Cost Inflation PROFITABLE GROWTH Net Sales YoY Change ▪ Q3 results impacted by double digit industry declines and elevated cost $4.8B (12.8)% inflation (9.7)% ex-currency ○ Most major marketplaces down 10% - 25%
Slide 6: Most Key Marketplaces with Double Digit Declines
Most Key Marketplaces with Double Digit Declines USA Germany UK France Italy Brazil Mexico Industry Growth/Decline (%) 6 Q3 2022 vs. Q3 2021 Source: Euromonitor, internal research
Slide 7: We Have Taken Proactive Steps to Reduce Inventories
We Have Taken Proactive Steps to Reduce Inventories Inventory Units Inventory Units (M) Inventory ($M) Inventory $ Jun 2021 Sep 2021 Dec 2021 Mar 2022 Jun 2022 Sep 2022 Reduced Inventory Units by 10% vs. Last Year 7
Slide 8: Cost Inflation Peaked In Q3, but Not Expected to Significantly Improve in Q4
Cost Inflation Peaked In Q3, but Not Expected to Significantly Improve in Q4 Net Cost & Raw Material Inflation % of COGS Net Cost & RMI ($M) 8
Slide 9: Q3 Ongoing EBIT Margin Impacted by Cost Inflation
Q3 Ongoing EBIT Margin(1) Impacted by Cost Inflation (Approximate impact) Q3 2021 Ongoing EBIT Margin 11.1% Price/Mix +5.50 Net Cost* -3.25 Raw Material Inflation -7.50 Marketing & Technology Investments +0.25 Currency -0.50 2022 Ongoing EBIT Margin 5.5% *Inclusive of Fixed Cost Takeout, Ongoing Cost
Slide 10: North America Delivering ~10% EBIT Margin
North America Delivering ~10% EBIT Margin ▪ Slight sequential share gains from Q2 ▪ EBIT performance of 9.8% impacted by aggressive production cut of ~35% in order to reduce inventories ▪ InSinkErator acquisition is expected to close in Q4 10
Slide 11: EMEA Revenue Decline Driven by Russia Divestiture
EMEA Revenue Decline Driven by Russia Divestiture ▪ Continued demand weakness across key countries; revenue decline, excluding currency & Russia, ~8%(5) ▪ EBIT impacted by lower volumes and cost inflation, partially offset by cost-based pricing actions ▪ Completed Russia business divestiture 11
Slide 12: Latin America with 5%+ EBIT Margin Despite 20%+ Industry Decline
Latin America with 5%+ EBIT Margin Despite 20%+ Industry Decline ▪ Double digit demand contraction in Mexico and Brazil offsetting cost-based pricing actions ▪ EBIT impacted by cost inflation ▪ Strong cost actions gaining traction 12
Slide 13: Asia with ~5% EBIT Margin
Asia with ~5% EBIT Margin ▪ Demand negatively impacted by consumer sentiment, partially offset by cost-based pricing actions ▪ Revenue decline, excluding the impact of currency, of 1.2% ▪ EBIT impacted by cost inflation 13
Slide 14: Given Q4 Run Rate Similar to Q3, Full-Year Ongoing EPS Expected to be ~$19.00
Given Q4 Run Rate Similar to Q3, Full-Year Ongoing(1) EPS Expected to be ~$19.00 PROFITABLE GROWTH MARGIN EXPANSION CASH CONVERSION LONG-TERM GOALS 5-6% 11-12% 7-8% ONGOING EARNINGS BEFORE INTEREST FREE CASH FLOW ANNUAL ORGANIC NET SALES GROWTH AND TAX, % OF NET SALES AS % OF NET SALES Net Sales YoY
Slide 15: 2022 Free Cash Flow Guidance
2022 Free Cash Flow(2) Guidance (Approximate impact in millions) 2021 2022 Comments Previous Current Cash Earnings and Other $2,254 $2,000 $1,600 Operating Items • Innovation, digital transformation and Capital Expenditures $(525) $(600) $(550) capacity investments • Inventory reduction actions part
Slide 16: Table of Contents
Table of Contents Q3 Results impacted by double digit market contraction and still elevated cost inflation Whirlpool with strong track record of successfully operating through cycles Our business is well positioned to benefit from mid to long term tailwinds Our portfolio transformation towards a high
Slide 17: Faced with Inflation We Took Early and Decisive Action
Faced with Inflation We Took Early and Decisive Action 7 global price increases 5-18% 13% range of fully executed cumulative price/mix executed since Q3’20 price increases increase impact since Q3’20 ACTIONS PRICING Price Price Price Price Price Price Price 2018 Pricing Carryover Increase Increase In
Slide 18: We Have Significantly Reduced Our Fixed Cost Base
We Have Significantly Reduced Our Fixed Cost Base ~3% CAGR As Reported; Includes Factory, Logistics, and SG&A Fixed Costs ~$700M Fixed Cost Reduction Since 2017 18
Slide 19: As A Result, We Have Successfully Managed Through The Challenges Of The Past Years
As A Result, We Have Successfully Managed Through The Challenges Of The Past Years Structurally Improved EBIT Margins Significant EPS Growth Strong ROIC Delivery (1) (1) (4) 4%+ ~6pts CAGR ~13% CAGR Past Five Years: The Best Results in Our 111 Year History 19
Slide 20: Table of Contents
Table of Contents Q3 Results impacted by double digit market contraction and still elevated cost inflation Whirlpool with strong track record of successfully operating through cycles Our business is well positioned to benefit from mid to long term tailwinds Our portfolio transformation towards a high
Slide 21: U.S. Replacement Demand is Solid and Expected to Further Increase
U.S. Replacement Demand is Solid and Expected to Further Increase Replacement cycle will further boost appliance sales ● Replacement cycle is shrinking (-2yrs vs Discretionary 2010) Industry volume (‘000) ● Replacement demand will further grow due to increased appliance usage over the past 54% 55% 5
Slide 22: U.S. Discretionary Appliance Demand Driven by Existing Home Sales
U.S. Discretionary Appliance Demand Driven by Existing Home Sales Existing Home Existing home sales (M) Sales (SAAR) Appliance demand (M) T5 Appliance Demand Source: AHAM Sell-In, Federal Reserve Economic Data (FRED), Mortgage news daily 22
Slide 23: Existing Home Sales Expected To Go Back To Long Term Average of > 6M Units
Existing Home Sales Expected To Go Back To Long Term Average of > 6M Units… Tech Bubble Great Recession Covid-19 Recession Forecast Housing units (000) Actual Aug’22 2000 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022F 2024F Source: National Association of Realtors (NAR), Statista 23
Slide 24: U.S. New Housing has been Undersupplied for More Than A Decade
U.S. New Housing has been Undersupplied for More Than A Decade Thus Creating Long Term Upside Tech Bubble Great Recession Covid-19 Recession New privately owned housing unit started (M) Steady state supply 1.7-1.9M 2000 2002 2004 2006 2008 2010 2012 2014 2016 2016 2018 2020 2022 Source: Fortune; US
Slide 25: Beyond the U.S. Our Business Has a Strong Position In Key Global Growth Marketplaces
Beyond the U.S. Our Business Has a Strong Position In Key Global Growth Marketplaces Canada Brazil Mexico India Appliance Penetration: 83% 68% 83% 25% Share Position: #1 #1 #2 #3 Best Brand Portfolio: 25
Slide 26: Table of Contents
Table of Contents Q3 Results impacted by double digit market contraction and still elevated cost inflation Whirlpool with strong track record of successfully operating through cycles Our business is well positioned to benefit from mid to long term tailwinds Our portfolio transformation towards a high
Slide 27: Over the Past Years We Have Taken Steps Towards Streamlining Our Portfolio
Over the Past Years We Have Taken Steps Towards Streamlining Our Portfolio 2018 South Africa Divestiture 2019 Embraco Divestiture China Divestiture 2021 Turkey Divestiture Acquisition of Elica India Majority Stake Russia Divestiture 2022 Announced InSinkErator Acquisition 27
Slide 28: We Will Continue Investing In High Growth And High Margin Businesses
We Will Continue Investing In High Growth And High Margin Businesses THREE STRONG PILLARS SMALL APPLIANCES MAJOR APPLIANCES COMMERCIAL APPLIANCES (GROW, ALSO INORGANICALLY) (STRENGTHEN + REFOCUS) (GROW, ALSO INORGANICALLY) ● More global in nature ● Invest in ‘Win Americas’ (#1 position) ● Structural
Slide 29: EMEA Strategic Review Nears Completion
EMEA Strategic Review Nears Completion External Options Internal Continuation Plan APR ‘22 10+ Interested Parties Strategic “pressure test” of all [Financial Sponsors / Strategic business segments Players] IOI Round 1 Evaluation of Strategic Down Selection Alternatives IOI Round 2 2 Strategic Busine
Slide 30: Executive Summary
Executive Summary ▪ Proven Track Record of Financial Success ○ Strong multi-year financial performance ▪ Navigating the Current Environment ○ Fully executed cost-based price increases largely offsetting raw material inflation ○ Strong cost actions in place ○ Supply and demand alignment complete ▪ Well
Slide 31: Closing Remarks and Q&A
and Q&A Closing Remarks Whirlpool Corporation Confidential
Slide 32: Full-Year 2022 Ongoing EBIT Margin Guidance
Full-Year 2022 Ongoing EBIT Margin(1) Guidance (Approximate impact) Previous Current Comments 2021 Ongoing EBIT Margin 10.8% 10.8% Price/Mix +7.25 +5.75 • Previously announced cost-based price increases in place • Accelerated cost reduction initiatives • Increased logistics and energy cost; ~$0.5B o
Slide 33: 2022 Regional Guidance
2022 Regional Guidance Industry EBIT % Previous Current Previous Current North (7) - (5)% (9) - (7)% ~15% 12%+ America Europe, Middle East (5) - (3)% (7) - (5)% ~0% ~(1.5)% & Africa Latin (4) - (2)% (5) - (3)% ~7% 6%+ America Asia 5 - 6% unchanged ~6% ~5% Total (6) - (4)% (7) - (5)% ~9.0% ~7.25% 33
Slide 34: 2022 Capital Allocation Strategy
2022 Capital Allocation Strategy 1. Fund Innovation and Growth Target/Update Capital Expenditure Invest ~3% of net sales Research and Development Invest ~3% of net sales Mergers & Acquisitions Value creating M&A to support portfolio strategy 2. Return to Shareholders Target/Update Dividends ~30% of
Slide 35: Key Assumptions - Guidance
Key Assumptions - Guidance Income Statement FY2021A FY2022E Previous Current Raw Material (Inflation) / Deflation $(1.0)B ~$(1.5) - (1.75)B ~$(1.5) - (1.75)B *** *** Restructuring Costs $38M Interest Expense $176M ~$175M ~$175M Adjusted Effective Tax Rate 23.5% 21 - 23% 14 - 16% Weighted-Average Dilute
Slide 36: Interest and Sundry (Income) Expense
Interest and Sundry (Income) Expense Q3 (Approximate impact in millions) 2021 2022 Comments • Includes foreign exchange and hedge Net Foreign Exchange $(7) $6 (gain)/loss Interest (Income)/Other (70) (26) • Elica PB India* and LAR tax credit Equity Method Investment Income (Loss)** 0 2 Interest and
Slide 37: Restructuring Cash Outlays
Restructuring Cash Outlays (Approximate impact in millions) 2021 2022E Comments COVID-19 Related Actions $61 $15 Naples Closure 69 10 • Naples, Italy manufacturing facility Other Initiatives 16 25 • Primarily previous executed actions Total $146 ~$50 Note: Numbers may not reconcile due to rounding 3
Slide 38: Organic Net Sales | Whirlpool EMEA
Organic Net Sales | Whirlpool EMEA Q3 (Approximate impact in millions) 2021 2022 Change Net Sales $1,256 $903 (28.1%) Less: Russia Divestiture 146 24 Less: Currency - (142) Total $1,110 ~$1,021 (8.0%) Note: Numbers may not reconcile due to rounding 38
Slide 39: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures, some of which we refer to as “ongoing” (1) measures: Ongoing earnings per diluted share, earnings before interest and taxes (EBIT), EBIT margin, ongoing EBIT, and ongoing EBIT margin Other non-GAAP finan
Slide 40: Hotpoint brand ownership note
* Whirlpool Corporation ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas 40