Slide 1: 2017 First-Quarter Earnings Review
2017 FIRST-QUARTER EARNINGS REVIEW April 25, 2017 2017 | Whirlpool Corporation First-Quarter Earnings Presentation
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, ongoing business EBIT, ong
Slide 4: Overview
OVERVIEW INSERT PHOTO HERE Jeff Fettig Chairman and Chief Executive Officer 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 4
Slide 5: 2017 First-Quarter Highlights
2017 FIRST-QUARTER HIGHLIGHTS Revenue growth of 4% driven by industry-leading brands and innovative new products Very strong revenue growth and margin expansion in North America and Latin America Short-term challenges with European integration; continued focus on completing key elements of the
Slide 6: 2017 First-Quarter Results
2017 FIRST-QUARTER RESULTS Net Sales Ongoing Diluted EPS Free Cash Net Sales (Excluding Business (GAAP) Flow(2) Currency) Diluted EPS(1) 2017 $4.8B $4.8B $2.01 $2.50 $(497)M 2016 $4.6B $4.6B $1.92 $2.63 $(739)M $0.2B $0.2B $0.09 $(0.13) $242M Change 3.7% 3.0% 5% (5)% Disciplined Working Capital Mana
Slide 7: 2017 Financial Guidance Revision
2017 FINANCIAL GUIDANCE REVISION GAAP Diluted EPS $12.65 – $13.40 Ongoing Business Diluted EPS(1) $14.75 – $15.50 Free Cash Flow(2) ~$1 billion Continue to Expect Record Earnings per Share and Strong Free Cash Flow 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 7
Slide 8: 2017 Business Priorities
2017 BUSINESS PRIORITIES • Drive above industry growth while expanding margins • Capture 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 First-Quarter Earnings Presentation 9
Slide 10: North America First-Quarter Results
NORTH AMERICA FIRST-QUARTER RESULTS FIRST QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 2,565 $ 2,410 $ 155 6% Operating Profit (GAAP) $ 287 $ 250 $ 37 15% Operating Margin (GAAP) 11.2% 10.4% 0.8 pts Ongoing Business Operating Profit(1) $ 287 $ 253 $ 34 13% Ongoing Business Oper
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 First-Quarter Results
EMEA FIRST-QUARTER RESULTS FIRST QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 1,033 $ 1,173 $ (140) (12)% Operating Profit (GAAP) $ (17) $ 55 $ (72) nm Operating Margin (GAAP) (1.7)% 4.7% (6.4) pts Ongoing Business Operating Profit(1) $ (17) $ 58 $ (75) nm Ongoing Business Oper
Slide 13: Halfway Through the Most Complex, Final Phase of Integration
HALFWAY THROUGH THE MOST COMPLEX, FINAL PHASE OF INTEGRATION 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 2017 | Whirlpool Corporation First
Slide 14: 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 15: Key Drivers of Improvements in EMEA
KEY DRIVERS OF IMPROVEMENTS IN EMEA 1 Normalize systems environment across the region Electronic order management fully operational in Italy Integrated systems to improve order to cash, master data and reporting processes 2 Supply chain initiatives to improve product availability Harmonizing o
Slide 16: EMEA 2017 Operations
EMEA 2017 OPERATIONS Business Priorities Normalize systems environment across the region Supply chain initiatives to improve product availability Realize benefits of simplified brand and product portfolio Factors Impacting 2017 Operating Margins =/+ Industry guidance of flat to up 2% – Raw mat
Slide 17: Latin America First-Quarter Results
LATIN AMERICA FIRST-QUARTER RESULTS FIRST QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 818 $ 705 $ 113 16% Operating Profit $ 68 $ 43 $ 25 58% Operating Margin 8.3% 6.1% 2.2 pts DRIVERS + Price / mix − Brazil industry demand + New product launches − Raw material inflation + Mar
Slide 18: 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 19: Asia First-Quarter Results
ASIA FIRST-QUARTER RESULTS FIRST QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 419 $ 371 $ 48 13% Operating Profit (GAAP) $ 23 $ 25 $ (2) (9)% Operating Margin (GAAP) 5.5% 6.9% (1.4) pts Ongoing Business Operating Profit(1) $ 23 $ 27 $ (4) (15)% Ongoing Business Operating Margin
Slide 20: Asia 2017 Operations
ASIA 2017 OPERATIONS Business Priorities Continue to drive growth through distribution expansion in China Innovative new product launches Execute strong actions to mitigate raw material inflation Factors Impacting 2017 Operating Margins =/+ Industry guidance of flat to up 2% – Raw material tre
Slide 21: 2017 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% 3.0 – 4.0% Asia Operating Margin 2016(1) 2017 Guidance 6.4% 7.0 – 8.0% Latin America Operating Margin 2016 2017 Guidance 6.5% 8.0 – 9.0% 2017
Slide 22: Financial Review
FINANCIAL REVIEW INSERT PHOTO HERE Jim Peters Executive Vice President and Chief Financial Officer 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 22
Slide 23: First-Quarter Key Financial Metrics
FIRST-QUARTER KEY FINANCIAL METRICS FIRST QUARTER BETTER/(WORSE) (USD in millions) 2017 2016 $ % Net Sales $ 4,786 $ 4,616 $ 170 4% Gross Margin 17.2% 17.8% (0.6) pts SG&A % 10.4% 10.3% (0.1) pts Restructuring $ 46 $ 47 $ 1 2% Ongoing Business Operating Margin(1) 6.5% 7.4% (0.9) pts Interest & Sundr
Slide 24: 2017 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 – 0.5 Total Cost Take Out (inclusive of raw material inflation) 0.75 – 1 Marketing, Technology and Product Investments (0.75) Currency 0 2017 Ongoing Business EBIT
Slide 25: Relentless Focus on Cost Takeout
RELENTLESS FOCUS ON COST TAKEOUT USD in Millions $600 $600 $475 • Fundamentally lower breakeven point $450 $375 $375 • Strong demonstration of ongoing cost $300 $300 productivity over time to offset raw material inflation $180 $175 • ~$475M of cost productivity now expected in 2017 • ~$300M of raw m
Slide 26: 2017 Financial Guidance Revision
2017 FINANCIAL GUIDANCE REVISION Prior Revised GAAP Diluted EPS $13.25 – $14.25 $12.65 – $13.40 Ongoing Business Diluted EPS(1) $15.25 – $16.25 $14.75 – $15.50 Free Cash Flow(2) ~$1 billion ~$1 billion Continue to Expect Record Earnings per Share and Strong Free Cash Flow 2017 | Whirlpool Corporatio
Slide 27: 2017 Timing of Earnings
2017 TIMING OF EARNINGS Full-Year Ongoing EPS: $14.75 - $15.50 H1 (40%) H2 (60%) Volume Seasonality Total Cost Takeout Currency Price / Mix 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 27
Slide 28: Free Cash Flow Detail
FREE CASH FLOW(2) DETAIL Full-Year Cash Flow Generation (USD in Millions) Q1 Forecast Free Cash Flow $(497) $1,000 Inclusive of one-time items: Restructuring Cash Outlays $(31) $(165) EMEA Legacy Product Warranty $(23) $(70) Pension Contributions - $(45) Capital Allocation Capital Expenditures $88 $
Slide 29: 2017 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 ~$200 Working Capital ~$250 Capital Expenditures $(50) -$(100) 2017 Free Cash Flow ~$1,000 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 29
Slide 30: 2017 Capital Allocation Strategy
2017 CAPITAL ALLOCATION STRATEGY Priorities Guidelines Fund the Business • Capital investment: 3.5% of sales Targeted Capital Structure • Maintain strong investment grade rating • 25 – 30% trailing 12 month earnings (guideline) Dividends • 10% increase in quarterly dividend in 2017 • $150M repurchas
Slide 31: Closing Remarks
CLOSING REMARKS INSERT PHOTO HERE Jeff Fettig Chairman and Chief Executive Officer 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 31
Slide 32: 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 33: Summary of Key Messages
SUMMARY OF KEY MESSAGES Revenue growth of 4% with margin expansion in North America and Latin America regions Strong free cash flow improvement of more than $240M Actions in place to complete key elements of the integration in EMEA Long-term value creation opportunity compelling Investor D
Slide 34: 2017 | Whirlpool Corporation First-Quarter Earnings Presentation
2017 | Whirlpool Corporation First-Quarter Earnings Presentation 34
Slide 35: Appendix
APPENDIX 2017 | Whirlpool Corporation First-Quarter Earnings Presentation 35
Slide 36: Index of Supporting Information
INDEX OF SUPPORTING INFORMATION Slide # Slide Title & Description Source 21 2017 REGIONAL MARGIN GUIDANCE SUMMARY •2016 operating margins shown for North America, EMEA and Asia are ongoing operating margins. Ongoing operating margin is a non-GAAP measure. Please refer to the supplemental information