BANK OF AMERICA MERRILL LYNCH CONSUMER & RETAIL CONFERENCE. March 4, 2015

Transcription

1 2015 BANK OF AMERICA MERRILL LYNCH CONSUMER & RETAIL CONFERENCE March 4, 2015

2 Whirlpool Corporation Additional Information This document 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 include, but are not limited to, statements regarding expected earnings per share, cash flow, productivity and raw material prices. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool s forward-looking statements. Among these factors are: (1) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers; (2) acquisition and investment-related risk, including risk associated with our acquisitions of Hefei Sanyo and Indesit, and risk associated with our increased presence in emerging markets; (3) Whirlpool s ability to continue its relationship with significant trade customers and the ability of these trade customers to maintain or increase market share; (4) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from natural disasters or terrorist attacks; (5) fluctuations in the cost of key materials (including steel, plastic, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (6) the ability of Whirlpool to manage foreign currency fluctuations; (7) litigation, tax, and legal compliance risk and costs, especially costs which may be materially different from the amount we expect to incur or have accrued for; (8) the effects and costs of governmental investigations or related actions by third parties; (9) changes in the legal and regulatory environment including environmental and health and safety regulations; (10) Whirlpool s ability to maintain its reputation and brand image; (11) the ability of Whirlpool to achieve its business plans, productivity improvements, cost control, price increases, leveraging of its global operating platform, and acceleration of the rate of innovation; (12) information technology system failures and data security breaches; (13) product liability and product recall costs; (14) inventory and other asset risk; (15) changes in economic conditions which affect demand for our products, including the strength of the building industry and the level of interest rates; (16) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (17) the uncertain global economy; (18) our ability to attract, develop and retain executives and other qualified employees; (19) the impact of labor relations; (20) Whirlpool s ability to obtain and protect intellectual property rights; and (21) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans. We undertake no obligation to update any forward-looking statement, and investors are advised to review disclosures in our filings with the SEC. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historic results. Therefore, investors should not consider the foregoing factors to be an exhaustive statement of all risks, uncertainties, or factors that could potentially cause actual results to differ from forward-looking statements. Additional information concerning these and other factors can be found in Whirlpool Corporation s filings with the Securities and Exchange Commission, including the most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K This presentation includes references to 2015 through 2018 financial measures and assumptions that should be considered as forward-looking statements. All references to pro forma include the impact of Hefei Sanyo and Indesit financial results as presented at Investor Day in December References to 2018 should be viewed as management goals, given the timeframes involved. Whirlpool Corporation 2

3 Our Strategy For Value Creation Growth Margin Expansion Cash Generation % Larger Global Platform Product and Brand Innovation Best Cost Structure Whirlpool Corporation 3

4 A Fundamentally Different Company 2000 (Actual) 2014 (pro forma) Doubled in Size Net Sales $10B $24B Balanced Geographic Mix N America Sales # of $2B+ regions 60% 44% 2 4 A Branded Company OEM revenue # of $1B+ brands ~20% ~5% 1 7 Global Scale Plants Whirlpool Corporation 4

5 Whirlpool Corporation: #1 In Home Appliances #1 #1 #1 Western Company #1 EVERY HOME EVERYWHERE Whirlpool Corporation 5

6 WHR #2 #3 #4 WHR #2 #3 #4 WHR #2 #3 #4 #1 WHR #3 #4 #1 #2 WHR #4 WHR #2 #3 #4 WHR #2 #3 #4 #1 #2 #3 WHR WHR #2 #3 #4 WHR #2 #3 #4 Leading Consumer Position In Key Countries WHR Revenue (2013 Proforma) U.S. $8.6B Brazil $3.0B China $1.1B UK $0.9B Canada $0.9B Market Share WHR Revenue (2013 Proforma) France Russia Italy Mexico India $0.9B $0.8B $0.7B $0.5B $0.4B Market Share Whirlpool Corporation 6

7 Strongest Brand Portfolio Premium Mass * Value * Whirlpool ownership of the Hotpoint brand in the EMEA and Asia regions is not affiliated with the Hotpoint brand sold in the Americas ** Our leading portfolio of brands includes Whirlpool, Maytag, KitchenAid, Embraco, Brastemp, Consul, and Indesit, each of which generates annual revenues in excess of $1 billion. WHIRLPOOL CORPORATION HAS SEVEN ** $1 BILLION+ BRANDS Whirlpool Corporation 7

8 VALUE CREATION DRIVERS KitchenAid brand helps home chefs around the globe make each dish better than the last with bestin-class appliances that can take on everything from avocado-corn salsa to zabaglione. Whirlpool Corporation 8

9 Comprehensive Strategy For Growth Geographic Expansion U.S. industry recovery Transformed European business China growth platform Emerging market growth Product & Brand Innovation Accelerating global innovation Cadence of new products Margin expansion Adjacent businesses growth Best Cost Structure Ongoing cost productivity Leverage right-sized fixed cost structure Complexity reduction through global platforms EMPHASIS ON PROACTIVE MANAGEMENT CREATING OPPORTUNITIES Whirlpool Corporation 9

10 Multi-year Demand Growth in the U.S. US T7 Industry Units (in thousands) 50,000 ~ +4% ~ +3% ~ +4% 45,000 ~ +5% +6% 40,000 +9% 35, Source: AHAM Whirlpool Corporation 10

11 Doubling Scale in Europe Business position in Europe (By Unit Volume, 2013 Pro Forma) Before Indesit Acquisition After Indesit Acquisition Source: MDA-9, EU-25, internal research Whirlpool Corporation 11

12 With Winning Country Portfolio Position in Top 7 Countries Country by Size Whirlpool s Position Russia Germany United Kingdom France Italy Spain Poland Source: 2012 Euromonitor, Internal research Whirlpool Corporation 12

13 Europe: $350M in Synergies through 2017 Indesit Acquisition Costs and Benefits Acquisition Costs Cumulative Acquisition Benefits $350 $ M $300 $250 $100 $100 SG&A / Engineering Synergies $200 $130 Product and Operational Platform $80 $110 $130 $ $ $120 $120 Procurement Synergies Whirlpool Corporation 13

14 Whirlpool And Hefei Sanyo A Growth Platform In China Hefei Sanyo Strong growth engine Exceptional distribution capability Market penetration Installed manufacturing capacity Whirlpool Global technology leadership Global management Global scale Broad product portfolio #1 Western Company in Asia Strong profitable growth Deep market penetration Complete brand portfolio Strong product offerings Low cost manufacturing footprint Whirlpool Corporation 14

15 Hefei Sanyo Financial Impact: China Business 2014 Proforma EBIT Margin ~3% + Hefei Historically performed with 7-8% EBIT + Opportunity to grow revenues additional 50% + Leveraging existing capacity to facilitate growth + Synergies of ~$35M - Incremental Brand / Product Investments - Impact of PPA Adjustments 2018 EBIT Goals ~8% FUNDAMENTALLY TRANSFORMS VALUE CREATION OPPORTUNITY IN CHINA Whirlpool Corporation 15

16 Percentage of Households* Significant International Growth Opportunities 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% United States Western Europe Eastern Europe Mexico Latin America China Middle East & Africa India EMERGING MARKET PENETRATION REPRESENTS MULTI-MILLION DOLLAR OPPORTUNITY *Refers to the percent of total households with T6 appliances based upon global appliance trade sources and national statistics as estimated for full year T6 includes the following appliance categories: washers, dryers, refrigerators, dishwashers, cookers, and freezers. Whirlpool Corporation 16

17 Levers To Profitable Growth By Region NAR EMEA LAR Asia Demand growth Emerging market penetration Game changing acquisitions Adjacent business growth Scale & cost productivity gains Whirlpool Corporation 17

18 Strong Product Leadership Around the World Core Extend / Expand Whirlpool Corporation 18

19 Growing Adjacent Businesses Grow the Core Extend the Core Expand Beyond the Core % Net Sales (2014 Actuals) 80% 13% 7% Top 12 major appliances Directly related to the sale of the core Top 12 appliances New product categories that leverage our unique core competencies, brands, and infrastructure Whirlpool Corporation 19

20 2015 OVERVIEW Jenn-Air Accolade downdraft ventilation system serves as an impressive design focal point that places ventilation power even closer to the cooking source than traditional systems while powerfully and quietly clearing the air. Whirlpool Corporation 20

21 2015 Business Priorities Successful integrations in Europe and Asia Continue effectively managing through volatility Innovative new product launches Grow beyond the core Ongoing cost productivity programs Leading to revenue growth and margin expansion Whirlpool Corporation 21

22 2015 Timing Impacts H1 H2 Normal Seasonality Volume Seasonality Cost Productivity Macro Variables Currency RMI Internal Plans Acquisition / Restructuring Benefits Price / Mix Whirlpool Corporation 22

23 2015 Financial Guidance GAAP Diluted EPS $10.75 $11.75 Ongoing Business Diluted EPS (1) $14.00 $15.00 Free Cash Flow (2) $700 - $800 million (1) Ongoing business operations measures are non-gaap measures. See appendix slides 28 and 29. (2) Free cash flow is a non-gaap measure. See appendix slide 30. Whirlpool Corporation 23

24 2015 Acquisition Update ~$300M ~$175M China Integration Europe Integration Existing Restructuring Acquisition / Restructuring Expenses Acquisition / Restructuring Benefits PLANS FOR 2015 EXPENSES & BENEFITS ON TRACK Whirlpool Corporation 24

25 Cash Flow Priorities Allocation Considerations Fund the Business Targeted Capital Structure Dividends Outcome Capital Investment: 3.5% of Sales x Debt / EBITDA target 25 30% Trailing 12 month earnings (guideline) Share Repurchase $375M repurchased since beginning of Q $475M authorization remaining M&A Strategic Fit Strong Value Creation Confidence to Execute BALANCING FUNDING FOR ALL ASPECTS TO ENSURE THE BEST LONG-TERM VALUE CREATION FOR OUR SHAREHOLDERS Whirlpool Corporation 25

26 Whirlpool Corporation 26

27 APPENDIX The Bauknecht GreenKitchen refrigerator and dishwasher work together to save water and energy by reusing waste heat from the refrigerator to preheat water in the dishwasher. Whirlpool Corporation 27

28 Reconciliation Of GAAP To Non-GAAP Financial Measures We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-gaap financial measures, some of which we refer to as "ongoing business" measures, including ongoing business operating profit, ongoing business operating margin, ongoing business earnings (loss) before income taxes, ongoing business Earnings before Interest and Taxes (EBIT), ongoing business EBIT margin, ongoing business earnings per diluted share, ongoing business segment operating profit, ongoing business segment operating margin, net sales excluding foreign currency and BEFIEX, and free cash flow. Ongoing business measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing business operations and provide a better baseline for analyzing trends in our underlying businesses. Net sales excluding foreign currency and BEFIEX is calculated by translating the current period net sales excluding BEFIEX, in functional currency, to U.S. dollars using the prior-year period s exchange rate compared to the prior-year period net sales excluding BEFIEX. Management believes that net sales excluding foreign currency and BEFIEX provides stockholders with a clearer basis to assess our results over time. Management believes that free cash flow provides investors and stockholders with a relevant measure of liquidity and a useful basis for assessing the company's ability to fund its activities and obligations. We believe that these non-gaap measures provide meaningful information to assist investors and stockholders in understanding our financial results and assessing our prospects for future performance. Because non-gaap financial measures are not standardized, it may not be possible to compare these financial measures with other companies non-gaap financial measures having the same or similar names. These ongoing business financial measures should not be considered in isolation or as a substitute for reported operating profit, earnings (loss) before income taxes, net earnings per diluted share available to Whirlpool, reported operating profit by segment, net sales, and cash provided by (used in) operating activities, the most directly comparable GAAP financial measures. These non-gaap financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the following reconciliations to corresponding GAAP financial measures, provide a more complete understanding of our business. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Whirlpool Corporation 28

29 2015 Forecast Full Year Ongoing Business Operations Measures The reconciliation provided below reconciles the non-gaap financial measures ongoing business operating profit, ongoing business earnings before interest and taxes (EBIT) and ongoing business earnings per diluted share, with the most directly comparable GAAP financial measures, operating profit and net earnings per diluted share available to Whirlpool, for the projected full-year 2015 forecast. Ongoing business operating margin is calculated by dividing ongoing business operating profit by net sales. Ongoing business EBIT margin is calculated by dividing ongoing business EBIT by net sales. Operating Profit 2015 Full-Year Outlook Earnings Before Interest & Taxes (3) Earnings per Diluted Share Reported GAAP measure $1,586 - $1,686 $1,436 - $1,536 $ $11.75 Restructuring Expense (a) Inventory Purchase Price Allocation (d) Acquisition Related Transition Cost (c) EMEA Pension Settlement (j) Ongoing business measure $1,925 $2,025 $1,775 $1,875 $ $15.00 (3) Earnings Before Interest & Taxes is a non-gaap measure calculated by adding Interest and sundry income (expense) [approximately ($150 million)] and Operating Profit 2015 full year GAAP and ongoing business tax rate assumptions remain 24 percent Whirlpool Corporation 29

30 Free Cash Flow Guidance As defined by the company, free cash flow is cash provided by operating activities after capital expenditures, proceeds from the sale of assets and businesses and changes in restricted cash. The reconciliation provided below reconciles the projected 2015 full year free cash flow with cash provided by (used in) operating activities, the most directly comparable GAAP financial measure. (millions of dollars) Cash Provided by (Used In) Operating Activities Capital expenditures, proceeds from sale of assets/businesses 2015 Outlook $1,500 - $1,650 (800) - (850) Change in restricted cash* - Free Cash Flow $700 - $800 *Change in restricted cash relates to the private placement funds paid by Whirlpool to acquire majority control of Hefei Sanyo and which are released to fund approved capital expenditures and working capital. Whirlpool Corporation 30