Slide 1: 2016 Fourth-Quarter Earnings Review
2016 FOURTH-QUARTER EARNINGS REVIEW January 26, 2017 0 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 2: Whirlpool Corporation Additional Information
WHIRLPOOL CORPORATION ADDITIONAL INFORMATION 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
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”(1) measures: Ongoing business operating profit (loss), ongoing business operating margin, ongoing business earnings per diluted share, ongoing business EBIT, ong
Slide 4: Overview
OVERVIEW Jeff M. Fettig Chairman and Chief Executive Officer 3 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 5: 2016 Full-Year Highlights
2016 FULL-YEAR HIGHLIGHTS • Operational execution more than offset global volatility: ongoing EPS +14% vs. 2015 • Restructuring and acquisition integrations on track: delivered $216M in benefits • Strong levels of investment in our innovation pipeline • Increased our dividend by 11% and repurchased
Slide 6: 2016 Full-Year Results
2016 FULL-YEAR RESULTS Net Sales Ongoing Diluted EPS Free Cash Net Sales (Excluding Business (GAAP) Flow(2) Currency) Diluted EPS(1) 2016 $20.7B $21.2B $11.50 $14.06 $630M 2015 $20.9B $20.9B $9.83 $12.38 $620M $(0.2)B $0.3B $1.67 $1.68 $10M Change $(0.8)% $1.6% $17% $14% STRONG EXECUTION DELIVERED 1
Slide 7: 2017 Business Priorities
2017 BUSINESS PRIORITIES • Drive above industry growth while expanding margins • Robust cost productivity programs • Capture integration benefits in EMEA • Innovative new product launches and strong adjacent business growth • Execute previously-announced cost-based price increases • Significant work
Slide 8: 2017 Financial Guidance
2017 FINANCIAL GUIDANCE Year-Over-Year Growth GAAP Diluted EPS $13.25 – $14.25 + 15-24% Ongoing Business Diluted EPS(1) $15.25 – $16.25 + 9-16% Free Cash Flow(2) ~$1 billion + 59% ACTIONS IN PLACE TO DELIVER SIXTH CONSECUTIVE YEAR OF RECORD PERFORMANCE 7 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | W
Slide 9: Regional Operations Overview
REGIONAL OPERATIONS OVERVIEW Marc Bitzer President and Chief Operating Officer 8 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 10: North America Fourth-Quarter Results
NORTH AMERICA FOURTH-QUARTER RESULTS FOURTH QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 3,127 $ 2,913 $ 214 7% Operating Profit (GAAP) $ 348 $ 340 $ 8 2% Operating Margin (GAAP) 11.1% 11.7% (0.6) pts Ongoing Business Operating Profit(1) $ 348 $ 361 $ (13) (4)% Ongoing Busin
Slide 11: North America 2017 Operations
NORTH AMERICA 2017 OPERATIONS Business Priorities Drive above industry growth while expanding margins through innovation Focused cost takeout to more than offset moderate raw material increases Execute previously-announced cost-based price increases Factors Impacting 2017 Operating Margins + I
Slide 12: EMEA Fourth-Quarter Results
EMEA FOURTH-QUARTER RESULTS FOURTH QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 1,360 $ 1,542 $ (182) (12)% Operating Profit (GAAP) $ 17 $ 88 $ (71) (80)% Operating Margin (GAAP) 1.3% 5.7% (4.4) pts Ongoing Business Operating Profit(1) $ 45 $ 88 $ (43) (49)% Ongoing Business
Slide 13: EMEA 2017 Operations
EMEA 2017 OPERATIONS Business Priorities Realize benefits of previously-announced cost-based price increases Restore growth and margin expansion with targeted investments Complete brand and product transitions by mid-year Robust working capital improvement through inventory management Factor
Slide 14: Latin America Fourth-Quarter Results
LATIN AMERICA FOURTH-QUARTER RESULTS FOURTH QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 860 $ 845 $ 15 2% Operating Profit $ 70 $ 58 $ 12 22% Operating Margin 8.1% 6.8% 1.3 pts DRIVERS + Price / mix − Brazil industry demand + New product launches + Market share gains STRONG
Slide 15: Latin America 2017 Operations
LATIN AMERICA 2017 OPERATIONS Business Priorities Continued revenue growth and margin expansion in and outside Brazil Continue acceleration of new product innovation Drive cost productivity / leverage right-sized fixed cost structure Factors Impacting 2017 Operating Margins + Cost productivity
Slide 16: Asia Fourth-Quarter Results
ASIA FOURTH-QUARTER RESULTS FOURTH QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 352 $ 312 $ 40 13% Operating Profit (GAAP) $ 18 $ 5 $ 13 nm Operating Margin (GAAP) 4.9% 1.8% 3.1 pts Ongoing Business Operating Profit(1) $ 19 $ 11 $ 8 73% Ongoing Business Operating Margin(1) 5
Slide 17: Asia 2017 Operations
ASIA 2017 OPERATIONS Business Priorities Continue to drive growth through distribution expansion in China Innovative new product launches Strong cost productivity Factors Impacting 2017 Operating Margins + Industry guidance of flat to up 2% – Raw material trends (China) + Favorable demand tren
Slide 18: 2017 Regional Margin Guidance Summary
2017 REGIONAL MARGIN GUIDANCE SUMMARY North America Ongoing Operating Margin EMEA Ongoing Operating Margin 53% 2016A 2017 Forecast 25% 2016A 2017 Forecast net sales net sales 11.5% 11.5 – 12.0% 4.1% 5.0 – 6.0% Latin America Ongoing Operating Margin Asia Ongoing Operating Margin 15% 2016A 2017 Foreca
Slide 19: Financial Review
FINANCIAL REVIEW JIM PETERS Executive Vice President and Chief Financial Officer 18 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 20: Fourth-Quarter Key Financial Metrics
FOURTH-QUARTER KEY FINANCIAL METRICS FOURTH QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 5,656 $ 5,560 $ 96 2% Gross Margin 16.9% 18.0% (1.1) pts SG&A % 9.6% 9.9% 0.3 pts Restructuring $ 57 $ 56 $ 1 2% Ongoing Business Operating Margin(1) 7.5% 8.4% (0.9) pts Interest & Sundr
Slide 21: Acquisition / Restructuring Update
ACQUISITION / RESTRUCTURING UPDATE $216M $200M $173M $75M 2016 2017 2016 2017 Expenses* Benefits * Of the $173M expense in 2016, cash impact of $119M Of the $200M expense in 2017, cash impact up to $165M ON TRACK: FOCUSED ON COMPLETING FOOTPRINT OPTIMIZATION IN EMEA 20 FOURTH-QUARTER EARNINGS PRESEN
Slide 22: 2017 Financial Guidance
2017 FINANCIAL GUIDANCE Year-Over-Year Growth GAAP Diluted EPS $13.25 – $14.25 + 15-24% Ongoing Business Diluted EPS(1) $15.25 – $16.25 + 9-16% Free Cash Flow(2) ~$1 billion + 59% ACTIONS IN PLACE TO DELIVER SIXTH CONSECUTIVE YEAR OF RECORD PERFORMANCE 21 FOURTH-QUARTER EARNINGS PRESENTATION 2017 |
Slide 23: 2017 Ongoing Business EBIT Margin Drivers
2017 ONGOING BUSINESS(1) EBIT MARGIN DRIVERS (APPROXIMATE IMPACT) Full-Year Forecast 2016 Ongoing Business EBIT Margin 7.3% Price / Mix 0 – 0.5 Total Cost Take Out (inclusive of raw material inflation) 1.5 Marketing, Technology and Product Investments (0.75) Currency (0.25) 2017 Ongoing Business EBI
Slide 24: 2017 Timing of Earnings
2017 TIMING OF EARNINGS Full-year Ongoing EPS: $15.25 - $16.25 H1 (40%) H2 (60%) Volume Seasonality Total Cost Takeout Currency Price / Mix 23 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 25: Free Cash Flow Detail
FREE CASH FLOW(2) DETAIL Cash Flow Generation (USD in Millions) 2016 2017 F Free Cash Flow $630 $1,000 Inclusive of one-time items: Restructuring cash outlays $(119) $(165) EMEA legacy product warranty $(162) $(70) Pension Contributions - $(45) Capital Allocation Capital Expenditures $660 $700 - $75
Slide 26: 2017 Free Cash Flow Drivers
2017 FREE CASH FLOW(2) DRIVERS (APPROXIMATE IMPACT IN USD MILLIONS) Full-Year Forecast 2016 Free Cash Flow $630 Cash Earnings $200 – $300 Working Capital $200 Capital Expenditures $(50) – $(100) 2017 Free Cash Flow ~$1,000 25 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 27: 2017 Capital Allocation Strategy
2017 CAPITAL ALLOCATION STRATEGY Priorities Guidelines Fund the Business • Capital investment: 3.5% of sales Targeted Capital Structure • Approximately 1.5x Debt / EBITDA target Dividends • 25 – 30% trailing 12 month earnings (guideline) Share Repurchase • $700M authorization remaining; repurchasing
Slide 28: Closing Remarks
CLOSING REMARKS 27 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 29: 2015-2017 Macro Environment Changes
2015-2017 MACRO ENVIRONMENT CHANGES Substantial Currency Devaluation Emerging Market Demand • Brazilian Real • Euro • Brazil • British Pound • China • Russian Ruble • Canadian Dollar • Eastern Europe • Mexican Peso 2015-2017 $(6.50) EPS 2015-2017 $(2.00) EPS Impact $(3.5)B Sales Impact $(1.0)B Sales
Slide 30: Long-Term Value Creation Opportunity Intact
LONG-TERM VALUE CREATION OPPORTUNITY INTACT Global leading market share position Winning brand and product portfolio Best cost global operating platform Emerging markets opportunity Strong underlying cash generation PROVEN ABILITY TO DELIVER SHAREHOLDER RETURNS IN ANY ENVIRONMENT 29 FOURTH-QUARTER E
Slide 31: Long-Term Value Creation Framework
LONG-TERM VALUE CREATION FRAMEWORK Annual organic net sales growth 3-5% EBIT % (by 2020) 10%+ Annual EPS growth 10-15% Free Cash Flow (by 2018) 5-6% of net sales STRONG TRACK RECORD OF MANAGING THROUGH VOLATILITY AND CREATING LONG-TERM SHAREHOLDER VALUE 30 FOURTH-QUARTER EARNINGS PRESENTATION 2017 |
Slide 32: Summary of Key Messages
SUMMARY OF KEY MESSAGES • 2016 represents a fifth consecutive record year of ongoing earnings per share • Strong investments in innovation while returning $800 million to shareholders • Actions in place to drive significant revenue and margin expansion progress in EMEA • Focus on free cash flow thro
Slide 33: 32 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
32 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 34: Appendix
APPENDIX 33 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION
Slide 35: Index of Supporting Data
INDEX OF SUPPORTING DATA Slide # Slide Title & Description Source 19 Fourth-Quarter Key Financial Metrics •Adjusted quarterly tax rate to normalize to full-year rate of 16.6% 34 FOURTH-QUARTER EARNINGS PRESENTATION 2017 | WHIRLPOOL CORPORATION