Slide 1: Fourth-Quarter 2017 Earnings Review
FOURTH-QUARTER 2017 EARNINGS REVIEW January 25, 2018 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review
Slide 2: Global Overview
GLOBAL OVERVIEW INSERT PHOTO HERE Marc Bitzer Chief Executive Officer 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 2
Slide 3: 2017 Fourth-Quarter Highlights
2017 FOURTH-QUARTER HIGHLIGHTS Ongoing EPS of $4.10 in Q4 and $13.74 for the full year, in-line with expectations Delivered positive global price/mix for the first time since Q4 2015 Strong North America margin of 11.8 percent, a 60 basis point improvement Global price/mix and fixed cost red
Slide 4: Progress Toward Long-Term Goals
PROGRESS TOWARD LONG-TERM GOALS Profitable Growth Margin Expansion Cash Conversion 3-5% 10% 5-6% Annual Organic Net Sales Growth EBIT Margin (by 2020) FCF as % of Net Sales (by 2018) YoY Ongoing YoY Free FCF as % Net Sales Change EBIT Margin(1) Change Cash Flow(2) of Net Sales Q4 2017 $5.7B 0.8% 6.6
Slide 5: Ongoing EBIT Margin Drivers
ONGOING EBIT MARGIN(1) DRIVERS Q4 FY 2016 Ongoing EBIT Margin 7.3% 7.3% Price / Mix +0.5 -1.0 Ongoing Cost Productivity & Restructuring Benefits +1.25 +2.0 Raw Material Inflation -1.50 -1.75 Marketing, Technology & Infrastructure -1.0 -0.25 Currency - - 2017 Ongoing EBIT Margin 6.6% 6.4% Approximate
Slide 6: Key Performance Driver: Product Price/Mix
KEY PERFORMANCE DRIVER: PRODUCT PRICE/MIX Region Q4’17 FY’17 FY’17 Drivers Total Company +0.5% -1.0% • Positive price/mix driven by cooking North America Up Flat category growth and KitchenAid brand • Sequential improvement in Q4, but below last EMEA Down Down year due to remaining obsolete inventor
Slide 7: Regional Overview
REGIONAL OVERVIEW INSERT PHOTO HERE Jim Peters Executive Vice President and Chief Financial Officer 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 7
Slide 8: North America Fourth-Quarter Results
NORTH AMERICA FOURTH-QUARTER RESULTS Net Sales ($B) Operating Profit ($M) Operating Margin 0% +5% +0.6pts $3.1 $3.1 $349 $368 11.2% 11.8% Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Strong margin improvement in-line with guidance, primarily driven by positive price/mix Raw material inflation
Slide 9: EMEA Fourth-Quarter Results
EMEA FOURTH-QUARTER RESULTS Ongoing Operating Ongoing Operating Net Sales ($B) Profit(1) ($M) Margin(1) +1.5% -91% -3.0pts $1.4 $1.4 $45 3.3% $4 0.3% Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Margin below expectations, primarily driven by unfavorable price/mix Raw material inflation of ~$2
Slide 10: Latin America Fourth-Quarter Results
LATIN AMERICA FOURTH-QUARTER RESULTS Net Sales ($M) Operating Profit ($M) Operating Margin +5% -10% -1.2pts $860 $905 $71 8.3% $64 7.1% Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Solid margins in a soft industry demand environment Price/mix sequentially improved as industry demand began to
Slide 11: Asia Fourth-Quarter Results
ASIA FOURTH-QUARTER RESULTS Net Sales ($M) Ongoing Operating Ongoing Operating Profit(1) ($M) Margin(1) -5% $352 $333 $19 5.3% -$1 -0.4% Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Strong performance in India with unit volume growth, share gains and margin expansion Volume decline in China p
Slide 12: 2018 Guidance
2018 GUIDANCE INSERT INSERT PHOTO PHOTO HERE HERE Marc Bitzer Jim Peters Chief Executive Officer Executive Vice President and Chief Financial Officer 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 12
Slide 13: 2018 Guidance Overview
2018 GUIDANCE OVERVIEW Profitable Growth Margin Expansion Cash Conversion 3-5% 10% 5-6% Annual Organic Net Sales Growth EBIT Margin (by 2020) FCF as % of Net Sales (by 2018) YoY Ongoing YoY Free FCF as % Net Sales Change EBIT Margin(1) Change Cash Flow(2) of Net Sales ~$21.9B ~3% ~7.5% ~1.1pts $1.0-
Slide 14: 2018 Ongoing EBIT Margin Progression
2018 ONGOING EBIT MARGIN(1) PROGRESSION Full-Year Comments 2017 Ongoing EBIT Margin 6.4% • Innovative new product launches Price / Mix +1.0 • Previously-announced cost-based pricing Fixed Cost Takeout +0.75 • Already 80% implemented • $175M benefit from cost productivity Ongoing Cost Productivity &
Slide 15: 2018 Regional Guidance
2018 REGIONAL GUIDANCE NAR 2018F EMEA 2018F EBIT% ~12%+ EBIT% ~2% Industry 2 – 3% Industry 1 – 2% ASIA 2018F EBIT% ~5% Industry 2 – 4% LAR 2018F EBIT% ~7% Industry 1 – 2% 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 15
Slide 16: 2018 Free Cash Flow Drivers
2018 FREE CASH FLOW(2) DRIVERS Full-Year Comments 2017 Free Cash Flow $707M Cash Earnings ~$350M • Inclusive of improved price/mix and cost takeout actions Working Capital ~$125M • Significant inventory reduction in North America and EMEA • Higher cash outlays related to Embraco plant closure in Ita
Slide 17: 2018 Capital Allocation Strategy
2018 CAPITAL ALLOCATION STRATEGY Fund the Business Target Status Capex: ~3.5% of net sales • On-track Capex / R&D R&D: ~3% of net sales • On-track Explore value-creating M&A Mergers & Acquisitions to accelerate strategy • Continue to be opportunistic Return to Shareholders Target Status 25-30% of tr
Slide 18: 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 Sales
Slide 19: Q&A and Closing Remarks
Q&A AND CLOSING REMARKS 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 19
Slide 20: Summary of Key Messages
SUMMARY OF KEY MESSAGES Global price/mix and fixed cost reduction progressing ahead of expectations Fourth-quarter price/mix exit rate and strong North America margins are encouraging Focused 2018 plans to expand margins across all regions Expect to fully achieve revenue growth and cash conv
Slide 21: 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review
2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 21
Slide 22: Appendix
APPENDIX 2018 | Whirlpool Corporation Fourth-Quarter Earnings Review 22
Slide 23: 2018 Guidance Components (Approximate Impact)
2018 GUIDANCE COMPONENTS (APPROXIMATE IMPACT) Income Statement FY2018E FY2017A Net Cost Takeout (inclusive of raw materials) $200M $100M Cost Productivity (inclusive of $150M net fixed cost reduction) $325M $350M Restructuring Benefits $100M $100M Raw Material Inflation $(200) - (250)M $(350)M Restr
Slide 24: 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 25: 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”(1) measures: Ongoing operating profit (loss), ongoing operating margin, ongoing earnings per diluted share, earnings before interest and taxes (EBIT), EBIT margin, ongoin