Whirlpool Corporation · NYSE:WHR
Whirlpool — Investor Day (May 2017)
93 slides from Whirlpool's investor day presentation, May 4, 2017
Slide 1: 2017 Investor Day
2017 Investor Day New York Stock Exchange – May 4, 2017 Whirlpool Corporation Investor Day – May 4, 2017
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation 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 inclu
Slide 3: Use of Non-GAAP Financial Measures
USE OF NON-GAAP FINANCIAL MEASURES This presentation includes certain non-GAAP financial measures, which we refer to as “ongoing business” measures: Ongoing business operating profit (loss), ongoing business operating margin, ongoing business earnings per diluted share, earnings before interest and
Slide 4: Overview
OVERVIEW Welcome, Introductions and Overview C. Conley 10:00 a.m. E.T. Commitment to Shareholder Value Creation J. Fettig 10:05 A Unique Global Strategic Position to Create Value M. Bitzer 10:25 Compelling Regional Catalysts to Grow Our Global Position M. Bitzer 10:45 Our Approach to Value Creation
Slide 5: Management Team
MANAGEMENT TEAM Jeff Fettig Marc Bitzer Jim Peters Chairman and President and Executive Vice President Chief Executive Officer Chief Operating Officer and Chief Financial Officer Whirlpool Corporation Welcome, Introductions and Overview Investor Day – May 4, 2017 5
Slide 6: Management Team
MANAGEMENT TEAM Esther Joe Liotine Joȃo Brega Sam Wu Dave Szczupak Berrozpe Galindo EVP and President, EVP and President, EVP and President, President, EVP, Global Whirlpool North America Whirlpool Europe, Whirlpool Latin America Whirlpool Asia Product Organization Middle East & Africa Whirlpool Cor
Slide 7: 2017 Investor Day – Agenda
2017 INVESTOR DAY – AGENDA 1. A Commitment to Shareholder Value Creation 2. A Unique Global Strategic Position to Create Value 3. Compelling Regional Catalysts to Grow Our Global Position 4. Our Approach to Shareholder Value Creation 5. Closing Remarks, Q&A Whirlpool Corporation A Commitment to Shar
Slide 8: Achieving the Vision: The Best Branded Consumer Products Company
ACHIEVING THE VISION: THE BEST BRANDED CONSUMER PRODUCTS COMPANY 2010 – 2014 2015 – 2018 Beyond 2018 • Growth • 30% Larger Global Platform • Unique Global Strategic Position • Margin Expansion • Product & Brand Innovation • Compelling Regional Catalysts • Cash Generation • Best Cost Structure • Impr
Slide 9: A Commitment to Shareholder Value Creation
A COMMITMENT TO SHAREHOLDER VALUE CREATION A Unique Global Strategic Position Compelling Regional Catalysts • #1 Globally and #1 or #2 in almost all parts of the world • North America: Strong value creation in a healthy marketplace • Best brand portfolio in industry • EMEA: Fully realizing benefits
Slide 10: Long-Term Historical Value Creation
LONG-TERM HISTORICAL VALUE CREATION 2014 TSR index: 1968 = 100 acquired 1997 acquired 1986 acquired Average annual TSR 10,000 WHR: 9.7% S&P 500: 9.9% 1,000 2006 100 acquired 10 1968 1975 1980 1985 1990 1995 2000 2005 2010 2016 Whirlpool Corporation A Commitment to Shareholder Value Creation Investor
Slide 11: A Strong Track Record of Shareholder Returns
A STRONG TRACK RECORD OF SHAREHOLDER RETURNS 10-Year 5-Year 1-Year Whirlpool 34% 1st Quartile Whirlpool 27% 1st Quartile 1st Quartile Whirlpool 11% Median Median Median 3rd Quartile 3rd Quartile 3rd Quartile Annualized TSR of S&P 500 Whirlpool Corporation A Commitment to Shareholder Value Creation I
Slide 12: TSR Is Driven by Margin Expansion and FCF Yield
TSR IS DRIVEN BY MARGIN EXPANSION AND FCF YIELD Profit growth Return on capital Economic profit Value creation EBIT Growth & FCF Yield 5y EBIT growth, % ann. 5y avg. ROIC, % 5y avg. EVA, % 5y iTSR, % ann. R2 = 0.31 R2 = .24 R2 = 0.25 R2 = 0.67 5y TSR, % ann. 5y TSR, % 5y TSR, % ann. 5y TSR, % ann. 5
Slide 13: We Have Delivered Structural Margin Expansion
WE HAVE DELIVERED STRUCTURAL MARGIN EXPANSION Ongoing EBIT Margin 7.4 – 8.0% 7.3% 6.8% 6.9% 6.9% 5.3% 4.5% 2.6% 2010 2011 2012 2013 2014 2015 2016 2017F Whirlpool Corporation A Commitment to Shareholder Value Creation Investor Day – May 4, 2017 13
Slide 14: FCF Growth Masked by Non-Structural Impacts
FCF GROWTH MASKED BY NON-STRUCTURAL IMPACTS $1,280 $1,235 Restructuring, Pension Funding, $928 $940 $956 Legal Payments $911 $674 $1,000 Free Cash Flow $854 $690 $620 $630 $230 -$55 2011 2012 2013 2014 2015 2016 2017F FCF Conversion -34% 41% 85% 94% 63% 58% ~85% Whirlpool Corporation A Commitment to
Slide 15: Our Long-Term Value Creation Framework
OUR LONG-TERM VALUE CREATION FRAMEWORK Profitable Growth Margin Expansion Cash Conversion Innovation fueled Asset efficiency Drive cost and mix growth at or above converts profitable to grow profitably the market growth to cash 3-5% 10%+ 5-6% Annual Organic EBIT Margin FCF as % of Net Sales Net Sale
Slide 16: 2017 Investor Day – Agenda
2017 INVESTOR DAY – AGENDA 1. A Commitment to Shareholder Value Creation 2. A Unique Global Strategic Position to Create Value 3. Compelling Regional Catalysts to Grow Our Global Position 4. Our Approach to Shareholder Value Creation 5. Closing Remarks, Q&A Whirlpool Corporation A Unique Global Stra
Slide 17: A Unique Global Position to Create Value
A UNIQUE GLOBAL POSITION TO CREATE VALUE Global Leading Best Brand Legacy of Best Cost Market Position Portfolio Innovation Position Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 17
Slide 18: Global Leading Share Position
GLOBAL LEADING SHARE POSITION 2016 Actual U.S. Brazil China Canada U.K. WHR Revenue $9.9B $1.9B $0.9B $0.8B $0.8B Market Share #3 #2 #4 WHR WHR #2 #3 #4 #3 #2 #3 #4 #2 #3 #4 #1 #2 #4 WHR WHR WHR Italy France India Mexico Russia WHR Revenue $0.6B $0.6B $0.5B $0.5B $0.4B Market Share #1 #2 #3 #4 #4 WH
Slide 19: A Balance of Developed and Emerging Markets
A BALANCE OF DEVELOPED AND EMERGING MARKETS Developed Markets Emerging Markets 2013 Emerging Markets (Pro forma) 2016 Sales 78% 22% 27% 2016 Op. Profit 81% 19% 40% Pre-2015 Slowdown, Emerging Markets Contributed an Additional ~$300M in Operating Profit Whirlpool Corporation A Unique Global Strategic
Slide 20: Best Global Brand Portfolio
BEST GLOBAL BRAND PORTFOLIO % of Net Sales Premium (15%) Mass (75%) Value (10%) Brand Portfolio Targets Over 90% of Consumers, and Includes 7 with More Than $1B in Sales Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 20
Slide 21: A Legacy of Innovation
A LEGACY OF INNOVATION… 1911 1949 1967 1999 2006 2008 1st Electric 1st Side-by-Side 1st Countertop 1st Large Capacity 1st FDBM with Ice 1st Top-Load Pair Wringer Washer Refrigerator Microwave Front-Load Washer and Water on Door with Steam Cycle 1920 1940 1960 1980 2000 1910 1930 1950 1970 1990 2010
Slide 22: …And an Increasing Cadence of Innovation
…AND AN INCREASING CADENCE OF INNOVATION 2013 2014 2015 2016 Annual New Product Introductions 50 70 100 100+ Our World-Class Innovation Pipeline Continues to Accelerate Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 22
Slide 23: Consistent Innovation Funding
CONSISTENT INNOVATION FUNDING % of Net Sales 6.4% 6.2% 6.4% 5.9% 6.1% 6.1% 6.1% 5.6% 5.6% 5.2% 5.0% R&D CAPEX 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 23
Slide 24: Introducing Whirlpool Global Design
INNOVATION EXPRESSED IN LEADING GLOBAL DESIGN INTRODUCING WHIRLPOOL GLOBAL DESIGN A new line of Whirlpool brand appliances offering an array of innovative features, designs and finishes to fit the style of your family, culture and home. Delivered through our global innovation and design programs. Wh
Slide 25: Innovation in Connected Appliances
INNOVATION IN CONNECTED APPLIANCES Connected Appliances Winning Collaborations Unit Volume 2M 150K 3K 2015 2017F 2020F Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 25
Slide 26: Delivering Better Care Through Smart Appliances
DELIVERING BETTER CARE THROUGH SMART APPLIANCES • Consistent Navigation Across Products Touchscreen • Automatic Updates and Upgrades Learns & Adapts • Proximity Sensor • Interact with Appliances from Mobile Devices Remote Connectivity • Two Way Service Communication Smart App & Scan-to-Cook • Scan B
Slide 27: Operational Excellence Is the Backbone of Our Best-Cost Platform
OPERATIONAL EXCELLENCE IS THE BACKBONE OF OUR BEST-COST PLATFORM Global Scale: 42 Manufacturing Locations – 75% Producing 1M+ Units Annually Whirlpool Corporation A Unique Global Strategic Position to Create Value Investor Day – May 4, 2017 27
Slide 28: Relentless Focus on Cost Takeout
RELENTLESS FOCUS ON COST TAKEOUT USD Millions $675 $650 $600 $600 • Fundamentally lower $475 $450 $475 breakeven point $375 $375 $350 • Generational restructuring $200 programs nearing completion • Strong track record of cost productivity over time -$75 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 29: Many Cost Optimization Opportunities Remain
MANY COST OPTIMIZATION OPPORTUNITES REMAIN Key Drivers Focus Areas Raw materials (60%) • Long-term supplier contracts and selective hedging • Design to value optimization • Automation and world class manufacturing Manufacturing / Quality (25%) COGS: $17B • Improved assembly yields ~80% variable • Re
Slide 30: 2017 Investor Day – Agenda
2017 INVESTOR DAY – AGENDA 1. A Commitment to Shareholder Value Creation 2. A Unique Global Strategic Position to Create Value 3. Compelling Regional Catalysts to Grow Our Global Position 4. Our Approach to Shareholder Value Creation 5. Closing Remarks, Q&A Whirlpool Corporation Compelling Regional
Slide 31: A Global Leader…With Strong Regional Positions
A GLOBAL LEADER…WITH STRONG REGIONAL POSITIONS NAR 2016 Goal Revenue $11.1B 3-5% (annually) EMEA 2016 Goal Op. Margin 11.5% 12%+ (ongoing) Revenue $5.1B 1-3% (annually) 4.1% ASIA 2016 Goal Op. Margin (ongoing) 8%+ Revenue $1.4B 5-7% (annually) Op. Margin 6.4% 8%+ (ongoing) LAR 2016 Goal Revenue $3.2
Slide 32: North America… Strong Value Creation in a Healthy Marketplace
NORTH AMERICA… STRONG VALUE CREATION IN A HEALTHY MARKETPLACE Healthy marketplace with a lot of runway left Industry-leading brand portfolio NAR 2016 Goal and strong innovation pipeline Revenue $11.1B 3-5% (annually) Op. Margin 11.5% 12%+ Well-positioned to win in a (ongoing) changing retail environ
Slide 33: Long-Term U.S. Demand Trends Remain Positive
LONG-TERM U.S. DEMAND TRENDS REMAIN POSITIVE Industry Volume (Thousands) +3% 54,000 +3% +3% 50,000 +4-6% +5.6% 46,000 +5.5% +6.0% 42,000 +9.4% 38,000 34,000 2,000 0 2002 2004 2006 2008 2010 2012 2014 2016 2018F 2020F Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Inv
Slide 34: U.S. Housing Recovery Strong and Far from Peak
U.S. HOUSING RECOVERY STRONG AND FAR FROM PEAK 350M 8,000 2,500 6,000 2,000 300M 4,000 1,500 250M 2,000 1,000 200M 500 1980 1992 2004 2016 1980 1992 2004 2016 U.S. Population Existing Home Sales Housing Starts Structural Requirement Significant Levels of Pent-Up Demand Due to Constrained Supply of H
Slide 35: U.S. Household Formation Yet to Recover
U.S. HOUSEHOLD FORMATION YET TO RECOVER 350M 45% 42% 300M 39% 250M 36% 100M 33% 50M 1980 1992 2004 2016 1994 1997 2000 2003 2006 2009 2012 2015 U.S. Population U.S. Households Under 35 Home Ownership Rate Historical Avg Delayed Under-35 Home Ownership Expected to Rebound in Coming Years Whirlpool Co
Slide 36: Strong Brands and Connected Innovation
STRONG BRANDS AND CONNECTED INNOVATION Brand Strength Product Innovation Target Price Index 300 PREMIUM LAUNDRY 165 110 MASS KITCHEN 100 VALUE 80 ADJACENT Brands Target >90% of Consumers More Than 100 with ~40% Balance of Sale New Product Launches in 2016 Whirlpool Corporation Compelling Regional Ca
Slide 37: Positioned for a Changing Retail Environment…
POSITIONED FOR A CHANGING RETAIL ENVIRONMENT… Retail Outlet Share 100% 80% 60% 40% Independent 20% Retailers All Other 2000 2002 2004 2006 2008 2010 2012 2014 2016 Our Branded Balance of Sale is Consistent Across Outlets Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position
Slide 38: …With Our Industry-Leading Brand Portfolio
…WITH OUR INDUSTRY-LEADING BRAND PORTFOLIO Quarterly Branded Share of U.S. Retail Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Gained 2+ Points of Branded Share in 2016, Primarily Maytag and KitchenAid Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position
Slide 39: At the Forefront of Redefining What "Product" Is
AT THE FOREFRONT OF REDEFINING WHAT “PRODUCT” IS Areas of Focus Winning Collaborations Supply Replenishment Connected Kitchen Home Energy Management Post-Purchase Experience Digitally Enabled Services Increasingly Enhance Appliance Experience Whirlpool Corporation Compelling Regional Catalysts to Gr
Slide 40: "Connected Kitchen" Is a Seamless Experience
“CONNECTED KITCHEN” IS A SEAMLESS EXPERIENCE Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 40
Slide 41: EMEA… Moving Towards Fully Realizing Acquisition Benefits
EUROPE, MIDDLE EAST AND AFRICA (EMEA)… MOVING TOWARDS FULLY REALIZING ACQUISITION BENEFITS Indesit acquisition gives us a strong structural position EMEA 2016 Goal In the final, but most complex and 1-3% challenging phase of integration Revenue $5.1B (annually) Op. Margin 4.1% 8%+ (ongoing) Long-ter
Slide 42: A Winning Country Portfolio
A WINNING COUNTRY PORTFOLIO Country by Industry Size Germany U.K. France Russia Turkey Italy Spain Poland Whirlpool Corp Share Position Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 42
Slide 43: A Complete "Best of Best" Product Portfolio
A COMPLETE “BEST OF BEST” PRODUCT PORTFOLIO Laundry Kitchen Built-In Front-Load Cooking Laundry Freestanding Range Top-Load Laundry Microwaves Refrigeration Washer/Dryer Combo Small Domestic Appliances Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May
Slide 44: Delivering Cost Benefits of Indesit Acquisition
DELIVERING COST BENEFITS OF INDESIT ACQUISITION Restructuring Expenses Cumulative Acquisition Benefits Millions of USD 390 365 350 350 350 310 300 255 250 200 155 150 140 110 80 80 80 45 15 15 2014 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2014 Investor Day Targets Current Expectations Deliv
Slide 45: Changes in Environment Masked Synergy Benefits
CHANGES IN ENVIRONMENT MASKED SYNERGY BENEFITS Revenue in USD Billions $6.4 Demand Impact • ~20% decline in Russia (2015) U.K. / Russia $5.1 • ~25% decline in U.K. post-Brexit (2016) Currency Impact • ~20% devaluation of British Pound (2015, 2016) • ~40% devaluation of Russian Ruble (2015, 2016) All
Slide 46: 2017 Is the Most Complex Year of Integration
2017 IS THE MOST COMPLEX YEAR OF INTEGRATION Phase 1 Phase 2 Phase 3 Purchasing Brand / Product Integration Platform / Footprint Rationalization Legal Entity Mergers / System Integration (SG&A) 2015 2016 2017 2018+ Focus • Governance / management systems • Footprint consolidation plan • Execute fact
Slide 47: Halfway Through the Most Complex, Final Phase
HALFWAY THROUGH THE MOST COMPLEX, FINAL PHASE Execution of Completion of Product Completion of Factory Optimization Platform Integrations Process / System Integration 70% Complete 90% Complete 30% Complete as of May 2017 as of May 2017 as of May 2017 Whirlpool Corporation Compelling Regional Catalys
Slide 48: Product Availability Impacted Our Volumes
PRODUCT AVAILABILITY IMPACTED OUR VOLUMES Units (Thousands) Headquarters 200 System Integration Platform / Footprint Rationalization Begins 160 120 Late Orders Baseline 80 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Major Appliance Volume Change +3.1% -6.7% -6.5% -4.9% -11.
Slide 49: A Simplified and Winning Brand Portfolio
A SIMPLIFIED AND WINNING BRAND PORTFOLIO Pre-Integration Focus Post-Integration Focus (12 Brands) (6 Brands) PREMIUM MASS VALUE Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 49
Slide 50: …With Many Additional Growth Opportunities
…WITH MANY ADDITIONAL GROWTH OPPORTUNITIES Geographic Expansion KitchenAid SDA - EMEA New U.K. Model % of Net Sales Units Direct delivery to MEA 7% 9% final consumer E. Europe 10% 24% +20% CAGR Add-on services offered during delivery Service agreements W. Europe 83% and post-sales activity 67% “No s
Slide 51: Structurally Positioned for 8%+ Long-Term Operating Margins
STRUCTURALLY POSITIONED FOR 8%+ LONG-TERM OPERATING MARGINS (Approximate impact) 0.5% 0.5% 1.5% 1.5% 8%+ 4.1% 2016 U.K. / Russia Total Cost Adjacent Business / Price / Mix 2020F (ongoing) Recovery Takeout MEA Growth Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Inve
Slide 52: Latin America… Fully Leveraging Optimized Cost Structure
LATIN AMERICA…FULLY LEVERAGING OPTIMIZED COST STRUCTURE AS THE MARKET BEGINS TO RECOVER Long-term demand fundamentals are beginning to re-emerge LAR 2016 Goal Leading brands and product innovation Revenue $3.2B 5% (annually) Op. Margin 6.6% 10%+ New business models in Water and Direct-to-Consumer Gr
Slide 53: A Historic Drop in Brazil Appliance Demand
A HISTORIC DROP IN BRAZIL APPLIANCE DEMAND Brazil T9 Industry Volumes -31% Industry at 2007-2008 levels 2000 2005 2010 2015 Industry Demand Has Declined More Than 30% Since 2012 Peak Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 53
Slide 54: Beginning to See Signs of Demand Rebounding
BEGINNING TO SEE SIGNS OF DEMAND REBOUNDING Brazil Inflation Brazil Consumer Confidence Sep-14 Jan-16 May-17 Sep-14 Jan-16 May-17 A Three-Year Slowdown is on the Cusp of a Recovery Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 54
Slide 55: Our Business Remains Structurally Healthy
OUR BUSINESS REMAINS STRUCTURALLY HEALTHY Latin America Operating Margin 8.3% 8.3% 6.8% 6.1% 6.1% 5.8% 4.4% 4.2% 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Through Strong Actions, Our Margins Have Rebounded Despite the Economic Downturn Whirlpool Corporation Compelling Regional Catalysts to Grow Our Gl
Slide 56: Our Leading Brands Are Well-Positioned
OUR LEADING BRANDS ARE WELL-POSITIONED SUPER PREMIUM (~1%) PREMIUM (2%) Most Preferred MASS Most preferred appliance brand in PREMIUM Brazil, recognized for iconic design (15%) #1 in Brazilian Homes MASS Second most preferred appliance (45%) brand in Brazil, found in nearly 60 percent of Brazilian h
Slide 57: New Adjacent Business Models
NEW ADJACENT BUSINESS MODELS Water Purifier Subscription Model B.Blend Subscriber Base (Thousands) Subscriber Base (Thousands) Capsule Volume (Millions) 378 55 25 268 32 197 190 13 169 137 90 14 6 3 1 2008 2012 2015 2016 2017F 2018F 2019F 2016 2017F 2018F 2019F 2016 2017F 2018F 2019F Whirlpool Corpo
Slide 58: New Business Models in Direct to Consumer
NEW BUSINESS MODELS IN DIRECT TO CONSUMER Units (Millions) 1.0 0.9 0.8 0.8 B2B Marketplace 0.7 0.7 • Retail agency model 0.6 0.6 Brand Store 0.5 • Brastemp / Consul 0.3 0.4 e-commerce site • 3rd largest in Brazil 0.2 • 77% net promoter score 0.1 Compra Certa • Member based buying club 2008 2010 2012
Slide 59: Strong Growth Potential Beyond Brazil
STRONG GROWTH POTENTIAL BEYOND BRAZIL LAR International Brazil Industry size: 27M units Industry size: 20M units <20% market share ~40% market share Growth through: • Appliance penetration • Joint Ventures • Alliances • Strong organic growth Whirlpool Corporation Compelling Regional Catalysts to Gro
Slide 60: Asia… Well-Positioned for India / China Growth
ASIA…WELL-POSITIONED FOR INDIA / CHINA GROWTH Appliance demand in China has been suffering ASIA 2016 Goal China growth opportunity Revenue $1.4B 5-7% from distribution expansion (annually) Op. Margin 6.4% 8%+ (ongoing) Robust long-term demand in India Our brand in India is well-positioned to benefit
Slide 61: Our Asia Region Is Largely China and India
OUR ASIA REGION IS LARGELY CHINA AND INDIA China ~$900M India ~$500M All other ~$50M Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May 4, 2017 61
Slide 62: Strong Demographic Growth Opportunity
STRONG DEMOGRAPHIC GROWTH OPPORTUNITY Industry T2 Volumes Demographics Appliance Penetration (middle / upper class growth rate) 63.7 42% 8% China CAGR through 2021 12% 19% 14.6 India CAGR through 2021 Well-Positioned to Capitalize on Future Growth Whirlpool Corporation Compelling Regional Catalysts
Slide 63: China Demand Down More Than 15% Since 2011…
CHINA DEMAND DOWN MORE THAN 15% SINCE 2011… T2 Industry Unit Demand Growth 7% 5% -4% -4% -3% -6% -11% 2011 2012 2013 2014 2015 2016 2017F …Yet Chinese Appliance Industry is Three Times Larger Than U.S. Whirlpool Corporation Compelling Regional Catalysts to Grow Our Global Position Investor Day – May
Slide 64: …But Growth Opportunities in China Are Strong
…BUT GROWTH OPPORTUNITIES IN CHINA ARE STRONG Whirlpool Brand Growth Distribution Expansion Growth Outside Tier 1 Revenue by Brand Number of Outlets Revenue by City Tiers ~30K 8% 15% 37% Tier 1 52% 72% 70% 63% Tier 2+ 48% ~3K 20% 15% 2014 2016 2014 2016 2014 2016 Growth Through Distribution Expansio
Slide 65: Strong Growth Opportunities in India
STRONG GROWTH OPPORTUNITIES IN INDIA Robust Demand Trends Brand Preference Exceeds Share T2 Industry Unit Demand Growth 21% 23% 12% 11% 15% 10% 2% -4% 2016 Market 2016 Brand 2012 2013 2014 2015 2016 2017F Share Preference Whirlpool Brand is Well-Positioned for Growth Whirlpool Corporation Compelling
Slide 66: 2017 Investor Day – Agenda
2017 INVESTOR DAY – AGENDA 1. A Commitment to Shareholder Value Creation 2. A Unique Global Strategic Position to Create Value 3. Compelling Regional Catalysts to Grow Our Global Position 4. Our Approach to Shareholder Value Creation 5. Closing Remarks, Q&A Whirlpool Corporation Our Approach to Shar
Slide 67: Our Long-Term Value Creation Framework
OUR LONG-TERM VALUE CREATION FRAMEWORK Profitable Growth Margin Expansion Cash Conversion Innovation fueled Asset efficiency Drive cost and mix growth at or above converts profitable to grow profitably the market growth to cash 3-5% 10%+ 5-6% Annual Organic EBIT Margin FCF as % of Net Sales Net Sale
Slide 68: Ongoing EBIT Margin Expansion
ONGOING EBIT MARGIN EXPANSION (Approximate Impact) Impact Performance Drivers 2016 Ongoing Business EBIT Margin 7.3% Total Cost Take Out (inclusive of raw material inflation) 2–3 • Ongoing Cost Productivity Volume Leverage 1 • Emerging Market Growth • U.S. Household Formation Price / Mix 0.5 – 1 • N
Slide 69: Focus on Improving FCF Conversion
FOCUS ON IMPROVING FCF CONVERSION FCF Conversion Key Drivers 3-5% 10%+ Cash Annual Organic EBIT Margin Net Sales Growth (by 2020) Earnings 3-4% +2-3pts Asset Working Capital Return on ~90% % of Net Sales Invested Capital Efficiency ~85% 58% Reduction of Non-structural Items • Restructuring • Legacy
Slide 70: TSR Drivers Built into Our Management Systems
TSR DRIVERS BUILT INTO OUR MANAGEMENT SYSTEMS Regional & Executive Pay At Risk Decision Making Process Key Drivers of Shareholder Return Measures ROIC Attractiveness are Anchors of Compensation Measures EBIT FCF ROIC Payback Risk Executive Compensation and Project Decisions are Focused on Delivering
Slide 71: FCF Growth Masked by Non-Structural Impacts
FCF GROWTH MASKED BY NON-STRUCTURAL IMPACTS $1,280 $1,235 Restructuring, Pension Funding, $928 $940 $956 Legal Payments $911 $674 $1,000 Free Cash Flow $854 $690 $620 $630 $230 -$55 2011 2012 2013 2014 2015 2016 2017F FCF Conversion -34% 41% 85% 94% 63% 58% ~85% Whirlpool Corporation Our Approach to
Slide 72: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION 1 2 Fund the Targeted Business Capital Structure 3 4 Return Cash M&A to Shareholders Whirlpool Corporation Our Approach to Shareholder Value Creation Investor Day – May 4, 2017 72
Slide 73: Funding the Business for Growth
1 FUNDING THE BUSINESS FOR GROWTH Priorities Status • Innovation focused capex Capex: 3.5% of sales Fund the Business • R&D for innovation and cost R&D: 3% of sales • Cash on hand to meet operational needs $1B cash on hand as of 3/31/2017 Liquidity • Corporate funding needs are USD denominated $3B i
Slide 74: Targeted Capital Structure
2 TARGETED CAPITAL STRUCTURE Priorities Status • Debt levels that target strong credit rating Capital • Roll-over when interest rates favorable Strong Investment Structure Grade Rating • Flexibility to pursue strategic options • Fully-fund on tax-efficient U.S. GAAP basis ~80% funded Pension as of 1
Slide 75: Consistent Dividend Growth
3 CONSISTENT DIVIDEND GROWTH $4.30 +14% $3.90 CAGR $3.45 $2.88 $2.38 $1.93 $2.00 $1.72 $1.72 $1.72 $1.72 $1.72 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F • Dividend target is 25-30% of trailing twelve months of earnings • Consistent annual dividend payments since we were listed in
Slide 76: Consistent Share Repurchase
3 CONSISTENT SHARE REPURCHASE Diluted Average Weighted Shares (Millions) 80.8 79.6 79.7 • Repurchases primarily targeted to 77.2 offset dilution at a minimum • Strong return (+76%) on completed share buyback authorizations • Repurchased $150M of shares in Q1 2017 2013 2014 2015 2016 • $550M authoriz
Slide 77: Disciplined Approach to M&A
4 DISCIPLINED APPROACH TO M&A Criteria Hurdles Standalone Attractiveness Time Horizon: 5 to 10 years 12 - 15% ROIC Strategic Fit Strategic M&A: Long-term Payback 15 - 25% ROIC Value Creation Opportunity Bolt-on M&A: Short-term Payback Capacity to Execute and Integrate EPS Accretive: Year 1, excludin
Slide 78: Major Acquisition History
4 MAJOR ACQUISITION HISTORY Price Rationale Value Premium brands, small 1986 $150M domestic appliances Mass and premium brands, 2006 $2.8B manufacturing scale Value brands, manufacturing 2014 $2.3B scale, distribution scale In progress Terms Product platforms and technology 2015 in commercial laundr
Slide 79: 2017 Investor Day – Agenda
2017 INVESTOR DAY – AGENDA 1. A Commitment to Shareholder Value Creation 2. A Unique Global Strategic Position to Create Value 3. Compelling Regional Catalysts to Grow Our Global Position 4. Our Approach to Shareholder Value Creation 5. Closing Remarks, Q&A Whirlpool Corporation Closing Remarks, Q&A
Slide 80: A Commitment to Shareholder Value Creation
A COMMITMENT TO SHAREHOLDER VALUE CREATION A Unique Global Strategic Position Compelling Regional Catalysts • #1 Globally and #1 or #2 in almost all parts of the world • North America: Strong value creation in a healthy marketplace • Best brand portfolio in industry • EMEA: Fully realizing benefits
Slide 81: Closing Remarks, Q&A
Whirlpool Corporation Closing Remarks, Q&A Investor Day – May 4, 2017 81
Slide 82: Index of Supporting Information
INDEX OF SUPPORTING INFORMATION Slide # Slide Title & Description Source / Notes 9 A COMMITMENT TO SHAREHOLDER VALUE •AHAM, Traqline, Euromonitor, Internal research CREATION •EBIT margin, FCF as a percentage of net sales and organic net sales growth are non-GAAP measures. Reconciliation information
Slide 83: Index of Supporting Information
INDEX OF SUPPORTING INFORMATION Slide # Slide Title & Description Source / Notes 20 BEST GLOBAL BRAND PORTFOLIO •Whirlpool ownership of the Hotpoint brand in the EMEA and Asia regions is not affiliated with the Hotpoint brand sold in the Americas. •Our leading portfolio of brands includes Whirlpool,
Slide 84: Index of Supporting Information: Continued
INDEX OF SUPPORTING INFORMATION: CONTINUED Slide # Slide Title & Description Source / Notes 42 A WINNING COUNTRY PORTFOLIO… •Euromonitor, Internal research 49 A SIMPLIFIED AND WINNING BRAND PORTFOLIO •Whirlpool ownership of the Hotpoint brand in the EMEA and Asia regions is not affiliated with the H
Slide 85: Index of Supporting Information: Continued
INDEX OF SUPPORTING INFORMATION: CONTINUED Slide # Slide Title & Description Source / Notes 65 STRONG GROWTH OPPORTUNITIES IN INDIA •Internal Research 67 OUR LONG-TERM VALUE CREATION •EBIT margin, organic net sales and FCF are non-GAAP measures. Reconciliation information is located in the supportin
Slide 86: Reconciliation of GAAP to Non-GAAP Financial Measures
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES: We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, some of which we refer to as "ongoing business" measures, including ongoing
Slide 87: Ongoing Business Operating Profit and Ongoing Business EBIT
ONGOING BUSINESS OPERATING PROFIT AND ONGOING BUSINESS EARNINGS BEFORE INTEREST AND TAXES: The reconciliation provided below reconciles the non-GAAP financial measures ongoing business operating profit and ongoing business earnings before interest and taxes with the most directly comparable GAAP fin
Slide 88: Continued: EBIT Reconciliation
CONTINUED: Earnings Before Interest & Taxes Reconciliation: Twelve Months Ended December 31, 2016 2015 2014 2013 2012 2011 2010 Net earnings available to Whirlpool $888 $783 $650 $827 $401 $390 $619 Net earnings available to noncontrolling interests 40 39 42 22 24 18 31 Income tax expense (benefit)
Slide 89: Ongoing Business Earnings per Diluted Share
ONGOING BUSINESS EARNINGS PER DILUTED SHARE: The reconciliation provided below reconciles the non-GAAP financial measure ongoing business earnings per diluted share, with the most directly comparable GAAP financial measure, net earnings per diluted share available to Whirlpool, for 2017 (forecast) a
Slide 90: Ongoing Business Segment Operating Profit (Loss)
ONGOING BUSINESS SEGMENT OPERATING PROFIT (LOSS): The reconciliation provided below reconciles the non-GAAP financial measure ongoing business segment operating profit (loss) with the most directly comparable GAAP financial measure, reported segment operating profit (loss), for the twelve months end
Slide 91: Free Cash Flow
FREE CASH FLOW: As defined by the company, free cash flow is cash provided by (used in) operating activities after capital expenditures, proceeds from the sale of assets and businesses and changes in restricted cash. The reconciliation provided below reconciles free cash flow with the most directly
Slide 92: Other Information
OTHER INFORMATION: Reported Net Sales: (millions of dollars) Twelve Months Ended December 31, 2016 2015 2014 2013 2012 2011 2010 $20,718 $20,891 $19,872 $18,769 $18,143 $18,666 $18,366 Weighted -Average Diluted Shares Outstanding: (millions ) Twelve Months Ended December 31, 2017* 2016 2015 2014 201
Slide 93: Footnotes
FOOTNOTES: a) LEGACY PRODUCT WARRANTY AND LIABILITY EXPENSE - During the full year 2015, we recognized expenses of $39 million related to legacy product warranty and liability actions on heritage Indesit product in Europe and a $3 million charge associated with a separate product recall in North Ame