Slide 1: 2016 Third-Quarter Earnings Review
2016 THIRD-QUARTER EARNINGS REVIEW October 25, 2016 0 THIRD-QUARTER EARNINGS PRESENTATION 2016 | 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 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 5: 2016 Third-Quarter Highlights
2016 THIRD-QUARTER HIGHLIGHTS • Operational execution continues to offset global volatility: ongoing earnings up 18% YTD • Restructuring benefits and acquisition synergies firmly on track: $165M delivered YTD • Expanded margins and gained market share in NAR and LAR • Repurchased $100M in common sto
Slide 6: 2016 Third-Quarter Results
2016 THIRD-QUARTER RESULTS Net Sales Ongoing Diluted EPS Free Cash Net Sales (Excluding Business (GAAP) Flow(2) Currency) Diluted EPS(1) 2016 $5.2B $5.3B $3.10 $3.66 $(466)M 2015 $5.3B $5.3B $2.95 $3.45 $(492)M $(0.1)B $0.0B $0.15 $0.21 $26M Change $(0.5)% $0.2% $5% $6% STRONG EXECUTION HAS DELIVERE
Slide 7: Managing Through Volatility
MANAGING THROUGH VOLATILITY Operating environment challenges remain… Softness in U.S. industry demand Elevated promotional environment in the U.S. (primarily in washers) Continued currency and demand volatility in the U.K. impacting margin recovery in EMEA …and with strong actions in place we
Slide 8: 2016 Financial Guidance
2016 FINANCIAL GUIDANCE GAAP Diluted EPS $11.50 – $11.75 Ongoing Business Diluted EPS(1) $14.00 – $14.25 Free Cash Flow(2) ~$700 million UPDATING GUIDANCE WITH STRONG ACTION PLANS IN PLACE TO MANAGE THROUGH VOLATILITY 7 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 9: 2016 Capital Allocation Strategy
2016 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) • 11% increase in quarterly dividend in 2016 Share Repurchase
Slide 10: Regional Operations Overview
REGIONAL OPERATIONS OVERVIEW Marc Bitzer President and Chief Operating Officer 9 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 11: North America Third-Quarter Results
NORTH AMERICA THIRD-QUARTER RESULTS THIRD QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 2,850 $ 2,791 $ 59 2% Operating Profit (GAAP) $ 346 $ 349 $ (3) (1)% Operating Margin (GAAP) 12.1% 12.5% (0.4) pts Ongoing Business Operating Profit(1) $ 346 $ 336 $ 10 3% Ongoing Business
Slide 12: North America Performance and Actions
NORTH AMERICA PERFORMANCE AND ACTIONS Performance Drivers Actions To Offset Temporary U.S. appliance demand slowdown Actions in place to continue gaining • Consumer confidence impacted by U.S. elections profitable market share with leading brands and a robust product innovation pipeline • Fundamenta
Slide 13: U.S. Appliance Industry Drivers Are Healthy
U.S. APPLIANCE INDUSTRY DRIVERS ARE HEALTHY Housing Starts Existing Home Sales Unemployment Rate Consumer Sentiment POSITIVE TRENDS ACROSS KEY MACRO INDICATORS: CONTINUED LONG-TERM DEMAND RECOVERY 12 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 14: North America Operational Overview
NORTH AMERICA OPERATIONAL OVERVIEW Business Priorities Revenue growth and margin expansion Drive growth through innovative new products Continued ongoing cost productivity programs Growth in adjacent businesses Factors Impacting 2016 Operating Margins + Industry guidance of 3-4% – Currency i
Slide 15: EMEA Third-Quarter Results
EMEA THIRD-QUARTER RESULTS THIRD QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 1,319 $ 1,452 $ (133) (9)% Operating Profit (GAAP) $ 40 $ 32 $ 8 24% Operating Margin (GAAP) 3.0% 2.2% 0.8 pts Ongoing Business Operating Profit(1) $ 48 $ 71 $ (23) (32)% Ongoing Business Operating
Slide 16: Europe Performance and Actions
EUROPE PERFORMANCE AND ACTIONS Performance Drivers Actions To Offset + Integration on track: fully expect to Deliver 2016 planned synergies deliver synergy targets • Ahead of plan − Negative currency impact primarily Execute previously-announced in the U.K. cost-based price increases • In progress =
Slide 17: EMEA Operational Overview
EMEA OPERATIONAL OVERVIEW Business Priorities Continued focus on integration activities to deliver synergy benefits Ongoing cost productivity programs Growth in adjacent businesses Realize benefits of previously-announced cost-based price increases Managing inventory / production levels do
Slide 18: Latin America Third-Quarter Results
LATIN AMERICA THIRD-QUARTER RESULTS THIRD QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 800 $ 751 $ 49 7% Operating Profit $ 45 $ 31 $ 14 44% Operating Margin 5.7% 4.2% 1.5 pts DRIVERS + Product price / mix − Brazil industry demand + Benefit of cost and capacity reductions +
Slide 19: Latin America Operational Overview
LATIN AMERICA OPERATIONAL OVERVIEW Business Priorities Execute previously-announced cost-based price increases Drive ongoing cost productivity / leverage right-size fixed cost structure Continued acceleration of new product innovation Factors Impacting 2016 Operating Margins + Ongoing cost pro
Slide 20: Asia Third-Quarter Results
ASIA THIRD-QUARTER RESULTS THIRD QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 338 $ 346 $ (8) (2)% Operating Profit (GAAP) $ 15 $ 24 $ (9) (36)% Operating Margin (GAAP) 4.4% 6.7% (2.3) pts Ongoing Business Operating Profit(1) $ 17 $ 27 $ (10) (37)% Ongoing Business Operating
Slide 21: Asia Operational Overview
ASIA OPERATIONAL OVERVIEW Business Priorities Continue to drive growth through distribution expansion Innovative new product launches Ongoing cost productivity Factors Impacting 2016 Operating Margins + Favorable demand trends in India – Industry guidance flat to -2% + Distribution growth EXPE
Slide 22: Financial Review
FINANCIAL REVIEW JIM PETERS Executive Vice President and Chief Financial Officer 21 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 23: Third-Quarter Key Financial Metrics
THIRD-QUARTER KEY FINANCIAL METRICS THIRD QUARTER BETTER/(WORSE) (USD in millions) 2016 2015 2015 % Net Sales $ 5,248 $ 5,277 $ (29) (1)% Gross Margin 17.9% 17.6% 0.3 pts SG&A % 10.0% 10.0% 0.0 pts Restructuring $ 29 $ 54 $ 25 46% Ongoing Business Operating Margin(1) 7.9% 7.9% 0.0 pts Interest & Sun
Slide 24: 2016 Acquisition / Restructuring Update
2016 ACQUISITION / RESTRUCTURING UPDATE $200M* $200M $165M $116M YTD FY 2016 YTD FY 2016 Expenses Benefits * Of the $200M expense, cash impact up to $150M INTEGRATION CONTINUES TO BE ON TRACK 23 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 25: 2016 Ongoing Business EBIT Margin Expansion Drivers
2016 ONGOING BUSINESS(1) EBIT MARGIN EXPANSION DRIVERS (APPROXIMATE IMPACT) Full-Year Forecast 2015 Ongoing Business EBIT Margin 6.9% Price / Mix (½) – 0 Cost and Capacity Reductions 1 Ongoing Cost Productivity 1½ Marketing, Technology and Product Investments (½) Currency (1) 2016 Ongoing Business E
Slide 26: Free Cash Flow Detail
FREE CASH FLOW DETAIL (USD in Millions) YTD FY Forecast Free Cash Flow(2) $(466) ~$700 Inclusive of one-time items: Restructuring cash outlays $(88) $(150) EMEA legacy product warranty $(124) $(155) Capital Allocation YTD Capital Expenditures $360 Dividends Paid $221 Share Repurchases $425 STRONG AN
Slide 27: 2016 Financial Guidance
2016 FINANCIAL GUIDANCE GAAP Diluted EPS $11.50 – $11.75 Ongoing Business Diluted EPS(1) $14.00 – $14.25 Free Cash Flow(2) ~$700 million UPDATING GUIDANCE WITH STRONG ACTION PLANS IN PLACE TO MANAGE THROUGH VOLATILITY 26 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 28: Closing Remarks
CLOSING REMARKS 27 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 29: Managing Through Volatility
MANAGING THROUGH VOLATILITY Operating environment challenges remain… Softness in U.S. industry demand Elevated promotional environment in the U.S. (primarily in washers) Continued currency and demand volatility in the U.K. impacting margin recovery in EMEA …and with strong actions in place we
Slide 30: Achieving the Vision
ACHIEVING THE VISION • Very strong EPS and FCF growth through 2018 and beyond The Best • Strong global footprint • World class employee engagement • #1 in 3 of 4 regions Global • #1 western company in Asia • #1 in 13 large appliance countries • Brands targeting >90% of consumers Branded • #1 global
Slide 31: Long-Term Value Creation Opportunity
LONG-TERM VALUE CREATION OPPORTUNITY • Global scale with right-sized cost structure provides capacity to manage global volatility • Strong market position with leading global brands and innovative new products • Record ongoing EPS for 5 years in a row represents nearly a 20% CAGR, even in a challeng
Slide 32: 31 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
31 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 33: Appendix
APPENDIX 32 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIRLPOOL CORPORATION
Slide 34: Index of Supporting Data
INDEX OF SUPPORTING DATA Slide # Slide Title & Description Source 22 Third-Quarter Key Financial Metrics •Adjusted quarterly tax rate to normalize year-to-date tax rate to anticipated full-year rate of 19% 29 Achieving The Vision •Based on 2015 data 33 THIRD-QUARTER EARNINGS PRESENTATION 2016 | WHIR