Slide 1: Second-Quarter Earnings Review
2017 SECOND-QUARTER EARNINGS REVIEW July 26, 2017 2017 | Whirlpool Corporation Second-Quarter Earnings Review
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”(1) measures: Ongoing business operating profit (loss), ongoing business operating margin, ongoing business earnings per diluted share, earnings before interest a
Slide 4: Overview
OVERVIEW INSERT PHOTO HERE Jeff Fettig Chairman and Chief Executive Officer 2017 | Whirlpool Corporation Second-Quarter Earnings Review 4
Slide 5: Second-Quarter Highlights
2017 SECOND-QUARTER HIGHLIGHTS Very strong revenue and margin performance in North America and Latin America Operating margin and product availability improvements in EMEA Strong free cash flow(2) improvement of $191M driven by working capital optimization Repurchased $200M in common stock a
Slide 6: Second-Quarter Results
2017 SECOND-QUARTER RESULTS Net Sales Ongoing Diluted EPS Free Cash Net Sales (Excluding Business (GAAP) Flow(2) Currency) Diluted EPS(1) 2017 $5.3B $5.4B $2.52 $3.35 $(356)M 2016 $5.2B $5.2B $4.15 $3.50 $(547)M $0.1B $0.2B $(1.63) $(0.15) $191M Change 2.9% 3.3% (39)% (4)% Significant Free Cash Flow
Slide 7: Financial Guidance
2017 FINANCIAL GUIDANCE GAAP Diluted EPS $12.40 – $12.90 Ongoing Business Diluted EPS(1) $14.50 – $15.00 Free Cash Flow(2) ~$1 billion Continue to Expect Record Earnings per Share and Strong Free Cash Flow 2017 | Whirlpool Corporation Second-Quarter Earnings Review 7
Slide 8: Business Priorities
2017 BUSINESS PRIORITIES • Drive above-industry growth while expanding margins • Realize integration benefits in EMEA • Innovative new product launches and strong adjacent business growth • Execute previously-announced cost-based price increases • Accelerate free cash flow growth through focus on wo
Slide 9: Regional Operations Review
REGIONAL OPERATIONS REVIEW INSERT PHOTO HERE Marc Bitzer President and Chief Operating Officer 2017 | Whirlpool Corporation Second-Quarter Earnings Review 9
Slide 10: North America Second-Quarter Results
NORTH AMERICA SECOND-QUARTER RESULTS SECOND QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 2,986 $ 2,760 $ 226 8% Operating Profit $ 354 $ 340 $ 14 4% Operating Margin 11.8% 12.3% (0.5) pts DRIVERS + Unit volume growth − Raw material inflation + Market share gains − Currency impa
Slide 11: North America 2017 Operations
NORTH AMERICA 2017 OPERATIONS Business Priorities Drive above-industry growth while expanding margins Focused cost takeout to more than offset raw material inflation Improve mix through strong cadence of innovative new product launches Factors Impacting 2017 Operating Margins + Industry guidan
Slide 12: EMEA Second-Quarter Results
EMEA SECOND-QUARTER RESULTS SECOND QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 1,200 $ 1,296 $ (96) (7)% Operating Profit (GAAP) $ - $ 46 $ (46) nm Operating Margin (GAAP) 0.0% 3.5% (3.5) pts Ongoing Business Operating Profit(1) $ - $ 60 $ (60) nm Ongoing Business Operating Ma
Slide 13: EMEA 2017 Operations
EMEA 2017 OPERATIONS Business Priorities Finalize systems integration across the region Complete supply chain initiatives to continue improving product availability Realize benefits of simplified brand and product portfolio Factors Impacting 2017 Operating Margins =/+ Industry guidance of flat
Slide 14: Latin America Second-Quarter Results
LATIN AMERICA SECOND-QUARTER RESULTS SECOND QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 848 $ 826 $ 22 3% Operating Profit $ 59 $ 50 $ 9 18% Operating Margin 7.0% 6.1% 0.9 pts DRIVERS + Cost productivity − Raw material inflation + Price / mix − Brazil industry demand Strong Pe
Slide 15: Latin America 2017 Operations
LATIN AMERICA 2017 OPERATIONS Business Priorities Continue revenue growth and margin expansion in and outside of Brazil Continue acceleration of new product innovation Drive cost productivity / leverage right-sized fixed cost structure Factors Impacting 2017 Operating Margins + Cost productivi
Slide 16: Asia Second-Quarter Results
ASIA SECOND-QUARTER RESULTS SECOND QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 358 $ 363 $ (5) (1)% Operating Profit (Loss) (GAAP) $ (32) $ 16 $ (48) nm Operating Margin (GAAP) (9.1)% 4.4% (13.5) pts Ongoing Business Operating Profit(1) $ 8 $ 29 $ (21) (72)% Ongoing Business O
Slide 17: Asia 2017 Operations
ASIA 2017 OPERATIONS Business Priorities Continue to drive growth through distribution expansion in China Drive mix through innovative new product launches Execute strong actions to mitigate raw material inflation Factors Impacting 2017 Ongoing Business Operating Margins(1) =/+ Industry guidan
Slide 18: Second-Half Regional Margin Guidance
2017 SECOND-HALF REGIONAL MARGIN GUIDANCE Operating Margin H1 H2 Drivers • Cost productivity / volume leverage All Regions • Declining raw materials cost inflation • Continued adjacent business growth North America 11.5% ~12% • Whirlpool brand launch • Further product availablity improvements EMEA (
Slide 19: Regional Margin Guidance Summary
2017 REGIONAL MARGIN GUIDANCE SUMMARY North America Operating Margin 2016(1) 2017 Guidance EMEA Operating Margin 11.5% 11.5 – 12.0% 2016(1) 2017 Guidance 4.1% ~2% Asia Ongoing Operating Margin 2016(1) 2017 Guidance(1) 6.4% 3.0 – 4.0% Latin America Operating Margin 2016 2017 Guidance 6.6% 8.0 – 9.0%
Slide 20: Financial Review
FINANCIAL REVIEW INSERT PHOTO HERE Jim Peters Executive Vice President and Chief Financial Officer 2017 | Whirlpool Corporation Second-Quarter Earnings Review 20
Slide 21: Second-Quarter Key Financial Metrics
SECOND-QUARTER KEY FINANCIAL METRICS SECOND QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 5,347 $ 5,198 $ 149 3% Gross Margin % 16.4% 18.6% (2.2) pts SG&A % 9.8% 10.4% 0.6 pts Restructuring $ 59 $ 40 $ (19) (47)% Ongoing Business Operating Margin(1) 6.9%** 8.4% (1.5) pts Interes
Slide 22: Ongoing Business EBIT Margin Drivers
2017 ONGOING BUSINESS(1) EBIT MARGIN DRIVERS Full-Year (Approximate Impact) Forecast 2016 Ongoing Business EBIT Margin 7.3% Price / Mix ~(0.5) Total Cost Take Out (inclusive of raw material inflation) ~0.75 Marketing, Technology and Product Investments ~(0.25) Currency ~0 2017 Ongoing Business EBIT
Slide 23: Cost Productivity Update
COST PRODUCTIVITY UPDATE Net Cost Takeout (USD in millions) of $125M Focus Areas $475 • Ongoing actions to minimize raw material $350 volatility • Complexity reduction to deliver procurement $237 $238 $200 and capital spend benefits $150 • Supply chain initiatives to optimize inventory levels H1’17
Slide 24: Financial Guidance
2017 FINANCIAL GUIDANCE GAAP Diluted EPS $12.40 – $12.90 Ongoing Business Diluted EPS(1) $14.50 – $15.00 Free Cash Flow(2) ~$1 billion Continue to Expect Record Earnings per Share and Strong Free Cash Flow 2017 | Whirlpool Corporation Second-Quarter Earnings Review 24
Slide 25: Free Cash Flow Detail
FREE CASH FLOW(2) DETAIL Full-Year Cash Flow Generation (USD in millions) Q2 YTD Forecast Free Cash Flow $(356) $1,000 Inclusive of one-time items: Restructuring Cash Outlays $(72) $(165) EMEA Legacy Product Warranty $(46) $(70) Pension Contributions $(6) $(45) Capital Allocation Capital Expenditure
Slide 26: Free Cash Flow Drivers
2017 FREE CASH FLOW(2) DRIVERS Full-Year (Approximate Impact in USD millions) Forecast 2016 Free Cash Flow $630 Cash Earnings ~$150 Working Capital ~$250 Capital Expenditures ~$(25) 2017 Free Cash Flow ~$1,000 2017 | Whirlpool Corporation Second-Quarter Earnings Review 26
Slide 27: Capital Allocation Strategy
2017 CAPITAL ALLOCATION STRATEGY Priorities Second-Quarter Update Fund the Business • On track Targeted Capital Structure • On track Dividends • 10% increase in quarterly dividend in 2017 Share Repurchases • $350M repurchased YTD • Increased overall authorization to $2.35B • Intend to continue repur
Slide 28: Closing Remarks
CLOSING REMARKS INSERT PHOTO HERE Jeff Fettig Chairman and Chief Executive Officer 2017 | Whirlpool Corporation Second-Quarter Earnings Review 28
Slide 29: 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 to growth at or above converts profitable grow profitably the market growth to cash 3-5% 10%+ 5-6% Annual Organic EBIT Margin FCF as % of Net Sales Net Sale
Slide 30: Summary of Key Messages
SUMMARY OF KEY MESSAGES Very strong revenue and margin performance in North America and Latin America Sequential operating improvements in EMEA with actions in place to deliver solid profitable growth in the second half Strong free cash flow improvement and on-track to deliver $1B for the full
Slide 31: Whirlpool Corporation Second-Quarter Earnings Review
2017 | Whirlpool Corporation Second-Quarter Earnings Review 31
Slide 32: Appendix
APPENDIX 2017 | Whirlpool Corporation Second-Quarter Earnings Review 32
Slide 33: Index of Supporting Information
INDEX OF SUPPORTING INFORMATION Slide # Slide Title & Description Source 16 ASIA SECOND-QUARTER (*) Ongoing business segment operating margin is calculated by dividing ongoing business segment RESULTS operating profit (loss) by ongoing business segment net sales. Ongoing business net sales excludes
Slide 34: Guidance Components
2017 GUIDANCE COMPONENTS (USD in millions) 2017E 2016A Restructuring Expense $175 $173 Interest and Sundry (Income) Expense $110 $93 Capital Expenditures $650-$700 $660 Interest Expense $160 $161 Tax Rate ~20% 16.6% Amount of Stock Repurchased $350* $525 Weighted-Average Diluted Shares Outstanding*