Q3 2013 earnings_presentation

2013 THIRD-QUARTER EARNINGS REVIEW October 22, 2013

Third-Quarter Earnings Review —

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 material and oil-related 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) Whirlpool's ability to continue its relationship with significant trade customers and the ability of these trade customers to maintain or increase market share; (3) changes in economic conditions which affect demand for our products, including the strength of the building industry and the level of interest rates; (4) inventory and other asset risk; (5) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from natural disasters or terrorist attacks; (6) the uncertain global economy; (7) 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; (8) Whirlpool's ability to maintain its reputation and brand image; (9) fluctuations in the cost of key materials (including steel, oil, plastic, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (10) 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; (11) product liability and product recall costs; (12) the effects and costs of governmental investigations or related actions by third parties; (13) Whirlpool's ability to obtain and protect intellectual property rights; (14) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (15) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and post retirement benefit plans; (16) information technology system failures and data security breaches; (17) the impact of labor relations; (18) our ability to attract, develop and retain executives and other qualified employees; (19) changes in the legal and regulatory environment including environmental and health and safety regulations; and (20) the ability of Whirlpool to manage foreign currency fluctuations.

Additional information concerning these and other factors can be found in Whirlpool'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.

10/22/2013 2 Whirlpool Corporation


This presentation includes certain non-GAAP financial measures, which we refer to as “ongoing business operations”(1) measures:

adjusted operating profit, adjusted operating margin, adjusted earnings (loss) before income taxes, adjusted diluted earnings per share, adjusted segment operating profit and adjusted segment operating margin

Another non-GAAP financial measure included in this presentation is free cash flow(2).

Please refer to the appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

10/22/2013

(1) Ongoing business operations measures are non-GAAP measures. See appendix slides 33-39 (2) Free cash flow is a non-GAAP measure. See appendix slides 33 and 40

USE OF NON-GAAP FINANCIAL MEASURES

3 Whirlpool Corporation


OVERVIEW

10/22/2013

Whirlpool brand White Ice Collection



2013 THIRD-QUARTER HIGHLIGHTS

Record third-quarter earnings

Continued margin expansion and sales growth

Raising full-year guidance:


Diluted EPS $10.45–$10.65

Ongoing Business Operations EPS(1) $9.90–$10.10

Free Cash Flow(2) $690–$710 million


2013 THIRD-QUARTER RESULTS

10/22/2013

Net Sales Diluted EPS

(GAAP) Ongoing Business Operations EPS(1)

Free Cash Flow(2)

2013 $4.7B $2.42 $2.72 $(0.1)B

2012 $4.5B $0.94 $1.80 $(0.4)B

Change $0.2B $1.48 $0.92 $0.3B


SALES EX CURRENCY AND BEFIEX INCREASED OVER 5%


Region Previous

Outlook

Current

Outlook

North America +6 to +8% +9%

Europe, Middle

East & Africa Flat to -2% Flat

Latin America +1 to +3% +1%

Asia Flat -2%

FULL-YEAR 2013 INDUSTRY DEMAND ASSUMPTIONS



NORTH AMERICA OPERATIONS

10/22/2013

Jenn-Air Lakefront Kitchen in Euro-Style stainless and Custom Panel Overlay design



NORTH AMERICA THIRD-QUARTER RESULTS

SALES GROWTH AND MARGIN EXPANSION

10/22/2013

Third Quarter Better/(Worse)

(USD in millions) 2013 2012 2012 %

Net Sales $ 2,627 $ 2,424 $ 203 8%

Operating Profit (GAAP) $ 289 $ 227 $ 62 28%

Operating Margin % (GAAP) 11.0% 9.3% 1.7 pts

Ongoing Business Operating Profit(1) $ 289 $ 227 $ 62 28%

Ongoing Business Operating Margin %(1) 11.0% 9.3% 1.7 pts

+ Sales growth

+ Ongoing cost productivity

+ Cost and capacity-reductions


− Raw Materials


2013 NORTH AMERICA OPERATIONS

Strong industry growth from housing, replacement and discretionary demand

Expect continued sustainable growth

Innovative new product launches

Cost and capacity-reduction initiatives

Ongoing cost productivity programs

Grow beyond the core


Third-Quarter Earnings Review — 10/22/2013 11 Whirlpool Corporation

NORTH AMERICA PRODUCT LEADERSHIP

The KitchenAid brand’s new five-speed diamond

blenders can handle any kitchen task.

Whirlpool brand leads the way in cooking with

the industry’s first induction double-oven

freestanding range.


EUROPE, MIDDLE EAST AND AFRICA (EMEA) OPERATIONS


Whirlpool brand Fusion kitchen suite in Europe


EUROPE, MIDDLE EAST AND AFRICA (EMEA) THIRD-QUARTER RESULTS

BREAK-EVEN RESULTS IN A WEAK BUT STABILIZING ENVIRONMENT

10/22/2013

+ Sales growth


+ Cost and capacity-reductions

− Raw materials


(USD in millions) 2013 2012 2012 %

Net Sales $ 778 $ 702 $ 76 11%

Operating Profit (Loss) (GAAP) $ 0 $ (36) $ 36 nm

Operating Margin % (GAAP) 0.1% (5.1)% 5.2 pts

Ongoing Business Operating Profit (Loss)(1) $ 0 $ (36) $ 36 nm

Ongoing Business Operating Margin %(1) 0.1% (5.1)% 5.2 pts


nm = not meaningful


EUROPE PRODUCT LEADERSHIP

The Bauknecht UltimateCare washer delivers perfect, economical results with reliability and quality.

Bauknecht dishwashers with PowerClean+ offer

consumers the best cleaning and drying in just one hour.


LATIN AMERICA OPERATIONS


Consul brand kitchen in Brazil


LATIN AMERICA THIRD-QUARTER RESULTS

CONTINUED MARGIN EXPANSION

10/22/2013

+ Market share in appliances


− Raw materials

− Foreign currency

− Compressor shipments


(USD in millions) 2013 2012 2012 %

Net Sales $ 1,128 $ 1,206 $ (78) (6)%


Operating Margin % (GAAP) 11.8% 9.8% 2.0 pts

Ongoing Business Operating Profit(1) $ 104 $ 105 $ (1) (1)%

Ongoing Business Operating Margin %(1) 9.4% 8.8% 0.6 pts



2013 LATIN AMERICA OPERATIONS

Market share gains

Innovative new product launches

Grow beyond the core

Long-term fundamentals remain strong



LATIN AMERICA PRODUCT LEADERSHIP


The Consul Bem Estar refrigerators do more than store vegetables;

it keeps them fresh for twice as long.


ASIA OPERATIONS


Whirlpool brand Mini ACE Wash Station


ASIA THIRD-QUARTER RESULTS

PRODUCT INNOVATION DRIVING SALES GROWTH OF 2% EX CURRENCY

10/22/2013

+ Market share

+ Favorable price/mix


− Industry demand

− Raw materials

− Foreign currency


(USD in millions) 2013 2012 2012 %

Net Sales $ 197 $ 201 $ (4) (2)%

Operating Profit (GAAP) $ 7 $ 7 $ 0 (3)%

Operating Margin % (GAAP) 3.8% 3.8% 0 pts

Ongoing Business Operating Profit(1) $ 7 $ 7 $ 0 (3)%

Ongoing Business Operating Margin %(1) 3.8% 3.8% 0 pts



ASIA PRODUCT LEADERSHIP


The revamped Whirlpool Neo iChill portfolio caters to

variety of consumer preferences and needs.

The Whirlpool Beijing Opera refrigerator

offers iconic design, extra-large capacity and

innovative features.


FINANCIAL REVIEW



2013 FINANCIAL OUTLOOK

10/22/2013 Whirlpool Corporation 23

Metric Prior 2013 Guidance

Current 2013 Guidance

Diluted EPS $10.05–$10.55 $10.45–$10.65

Ongoing Business Operations EPS(1)

$9.50–$10.00 $9.90–$10.10

Free Cash Flow(2) $650–$700 million $690–$710 million

Third-Quarter Earnings Review — 10/22/2013

YTD Full-Year Estimate

2012 5.4% 5.7%

Price / Mix ~½ ~½

Cost and Capacity Reductions

~1 ~1

Ongoing Cost Productivity and Material Costs

~½ ~½

Marketing, Technology and Product Investments

~(½) ~(½)

2013 7.1% >7.0%


ONGOING BUSINESS OPERATIONS(1) MARGIN EXPANSION DRIVERS


THIRD-QUARTER FINANCIAL SUMMARY


(USD in millions) 2013 2012 2012 %

Net Sales $ 4,683 $ 4,494 $ 189 4%

Gross Margin % 18.1% 15.6% 2.5 pts

SG&A % 9.8% 9.3% (0.5) pts

Restructuring $ 68 $ 62 $ (6) (10)%



Operating Profit % (GAAP) 6.7% 4.7% 2.0 pts

Ongoing Business Operating Profit %(1) 7.6% 5.9% 1.7 pts



THIRD-QUARTER FINANCIAL SUMMARY

10/22/2013


(USD in millions) 2013 2012 2012 %



Interest & Sundry Income (Expense) (16) (38) 22 60%

Interest Expense (43) (48) 5 10%

Earnings Before Income Taxes (GAAP) $ 254 $ 127 $ 127 100%

Ongoing Business Operations Earnings Before Income Tax(1) $ 295 $ 198 $ 97 48%

Income Tax Expense (Benefit) 55 47 (8) (19)%

Net Earnings Available to Whirlpool 196 74 122 164%

EPS – Diluted (GAAP) $ 2.42 $ 0.94 $ 1.48 158%

Ongoing Business Operations EPS(1) $ 2.72 $ 1.80 $ 0.92 51%



COST AND CAPACITY-REDUCTION CHARGES

10/22/2013

Ch

arge

s (i

n m

illio

ns)

ON TRACK TO DELIVER ~$175M BENEFITS IN 2013

$-

$50

$100

$150

$200

$250

Q4 2011 2012 2013

Projected Charges

Actual Charges

$78M

$237M

~$185M FY

$141M YTD


Third-Quarter Earnings Review — 10/22/2013

COMMITTED TO EXECUTING OUR LONG-TERM GROWTH STRATEGY

CASH FLOW PRIORITIES

Fund the Business

Debt Maturities and Pension Contributions

Return to Shareholders

- Dividends

- Share Repurchases

M&A



CLOSING REMARKS


In Europe, the Whirlpool brand iXelium Supreme Design cooktop


2013 CLOSING REMARKS

Demand trends improving

Robust pipeline of new, innovative products

Continued growth and margin expansion

Material costs stabilizing

Strong momentum offsetting currency fluctuations

Generating cash and investment capacity


REMAIN FOCUSED ON DELIVERING OUR SHAREHOLDER VALUE CREATION TARGETS


ROADMAP FOR GROWTH AND VALUE CREATION

GROWTH

Geographic expansion Product line extension Adjacent revenue streams

MARGIN EXPANSION

Leading brands and innovation Extend cost leadership Extend quality leadership

9

CASH GENERATION

Disciplined capital investment Increased asset turnover

SHAREHOLDER VALUE CREATION TARGETS

+5–7% REVENUE GROWTH

8% OPERATING MARGIN +10–15% EPS GROWTH

4–5% FCF% OF SALES



APPENDIX



RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES:

10/22/2013

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 operations" measures, including adjusted operating profit, adjusted earnings (loss) before income taxes (hereafter referred to as “adjusted earnings (loss) before tax”), adjusted diluted earnings per share (hereafter referred to as “adjusted diluted earnings per share”), adjusted operating profit by segment (hereafter referred to as “adjusted segment operating profit”), adjusted segment operating margin; and sales excluding foreign currency and BEFIEX and free cash flow. Ongoing business operations 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. 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 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 adjusted financial measures should not be considered in isolation or as a substitute for reported operating profit, earnings before income taxes, diluted net earnings per share, reported operating profit by segment, and cash provided by 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.



ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT, ADJUSTED EARNINGS BEFORE TAX, ADJUSTED DILUTED EARNINGS PER SHARE:

10/22/2013

The reconciliation provided below reconciles the non-GAAP financial measures adjusted operating profit, adjusted earnings before tax and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, reported operating profit, earnings before income taxes, diluted earnings per share available to Whirlpool common stockholders, for the three-months ended September 30, 2013. Adjusted operating margin is calculated by dividing adjusted operating profit by adjusted net sales. Adjusted net sales excludes Brazilian (BEFIEX) tax credits from reported net sales.


Reported GAAP Measure $ 313 $ 254 $ 2.42

Restructuring Expense(a)68 0.64

Brazilian Tax Credits (BEFIEX)(b)(0.36)

U.S. Energy Tax Credits(c)— — (0.18)

Antitrust and Contract Resolutions (d) — (3) (0.03)

Investment Expenses(e) 1 5 0.04

Normalized Tax Rate Adjustment(f )— — 0.19

Adjusted Non-GAAP measure $ 353 $ 295 $ 2.72

Three Months Ended

September 30, 2013

Operating

Profit

Earnings Before

Tax

Diluted Earnings

Per Share

(29) (29)

68


ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT, ADJUSTED EARNINGS BEFORE TAX, ADJUSTED DILUTED EARNINGS PER SHARE:

10/22/2013

The reconciliation provided below reconciles the non-GAAP financial measures adjusted operating profit, adjusted earnings before tax and adjusted diluted earnings per share, with the most directly comparable GAAP financial measures, reported operating profit, earnings before income taxes, diluted earnings per share available to Whirlpool common stockholders, for the three-months ended September 30, 2012. Adjusted operating margin is calculated by dividing adjusted operating profit by adjusted net sales. Adjusted net sales excludes Brazilian (BEFIEX) tax credits from reported net sales.


Reported GAAP Measure $ 213 $ 127 $ 0.94

Restructuring Expense(a)

Brazilian Tax Credits (BEFIEX)(b) (13) (13) (0.16)

Contract and Patent Resolutions (g) — 22 0.17

Normalized Tax Rate Adjustment(f )

Adjusted Non-GAAP measure $ 262 $ 198 $ 1.80

Three Months Ended

September 30, 2012

Operating

Profit

Earnings Before

Tax

Diluted Earnings

Per Share

— — 0.28

62 62 0.57


ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED SEGMENT OPERATING PROFIT:

10/22/2013

The reconciliation provided below reconciles the non-GAAP financial measures adjusted segment operating profit with the most directly comparable GAAP financial measures, reported segment operating profit, for the three-months ended September 30, 2013. Adjusted segment operating margin is calculated by dividing adjusted segment operating profit by adjusted net sales. Adjusted net sales excludes Brazilian (BEFIEX) tax credits from reported net sales.


North America $ 289 $ — $ — $ — $ 289

Latin America

EMEA

Asia

Other/Eliminations

Total Whirlpool Corporation $ 313 $ 68 $ (29) $ 1 $ 353

Three Months Ended

September 30, 2013

133 — (29) 104

Segment

Operating Profit

Restructuring

Expense(a)

Brazilian Tax

Credits

(BEFIEX)(b)

Adjusted

Segment

Operating Profit

Investment

Expenses(e)

—

— — — —

7 — — 7

—

—

(116) 68 — (47) 1


ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED SEGMENT OPERATING PROFIT:

10/22/2013

The reconciliation provided below reconciles the non-GAAP financial measures adjusted segment operating profit with the most directly comparable GAAP financial measures, reported segment operating profit, for the three-months ended September 30, 2012. Adjusted segment operating margin is calculated by dividing adjusted segment operating profit by adjusted net sales. Adjusted net sales excludes Brazilian (BEFIEX) tax credits from reported net sales.


North America $ 227 $ — $ — $ 227

Latin America 105

EMEA (36)

Asia 7

Other/Eliminations (41)

Total Whirlpool Corporation $ 213 $ 62 $ (13) $ 262

Segment

Operating Profit

(Loss)

Restructuring

Expense(a)

Brazilian Tax

Credits

(BEFIEX)(b)

Adjusted

Segment

Operating Profit

(Loss)

Three Months Ended

September 30, 2012

118 — (13)

(36) — —

7 — —

(103) 62 —


FOOTNOTES:

10/22/2013

a) During the third quarters of 2013 and 2012, we recorded restructuring charges of $68 million and $62 million, respectively. The diluted earnings per share impacts are calculated based on income tax impacts of $17 million and $18 million, respectively.

b) During the third quarters of 2013 and 2012, we monetized Brazilian (BEFIEX) tax credits of $29 million and $13 million, respectively. The diluted earnings per share impact is calculated based on an income tax impact of $0 million.

c) In the third quarter of 2013, we recognized $15 million of U.S. energy tax credits. The diluted earnings per share impact is calculated based on an income tax benefit of $15 million.

d) During the third quarter of 2013, we reduced the expected costs related to antitrust and long-standing contract resolutions by $3 million. The diluted earnings per share impact is calculated based on an income tax impact of $1 million.

e) During the third quarter of 2013, we recognized investment expenses of $5 million related to the pending acquisition of Hefei Sanyo. The diluted earnings per share impact is calculated based on an income tax impact of $1 million.

f) During the third quarters of 2013 and 2012, we made adjustments to ongoing business operations EPS to reconcile specific items reported to an estimated full-year effective tax rate of 24% for Q3 2013 and 25% for Q3 2012.

g) In the third quarter of 2012, we recorded net expenses of $22 million primarily due to the conclusion of long-standing U.S. contract and patent litigation. The diluted earnings per share impact is calculated based on income tax impact of approximately $8 million.



ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT:

10/22/2013 Whirlpool Corporation 39

The reconciliation provided below reconciles the non-GAAP financial measure, ongoing business operations operating profit, with the most directly comparable GAAP financial measure, reported operating profit, for the nine-months ended September 30, 2013 and September 30, 2012. Adjusted operating margin is calculated by dividing adjusted operating profit by adjusted net sales. Adjusted net sales excludes Brazilian (BEFIEX) tax credits from reported net sales.

a) During the first nine months of 2013 and 2012, we recorded restructuring charges of $141 million and $175 million, respectively.

b) During the first nine months of 2013 and 2012, we monetized Brazilian (BEFIEX) tax credits of $69 million and $22 million, respectively.

c) During the first nine months of 2013, we recognized investment expenses of $1 million related to the Hefei Sanyo acquisition.

d) During the first nine months of 2012, we recognized curtailment gains of $49 million related to a retiree health care plan.

Reported Operating Profit 895$ 611$

Restructuring Expense(a) 141 175

Brazilian Tax Credits (BEFIEX)(b) (69) (22)

Investment Expenses(c) 1 —

Benefit Plan Curtailment Gain(d) — (49)

Adjusted Non-GAAP Measure 968$ 715$

Nine Months Ended

September 30,

2013 2012


As defined by the company, free cash flow is cash provided by operating activities after capital expenditures and proceeds from the sale of assets. The reconciliation provided below reconciles nine-month actual 2013 and 2012 and projected 2013 full-year free cash flow with actual and projected cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.

FREE CASH FLOW:


(millions of dollars)

Cash Provided by (Used in) Operating

Activities $ 242 $ (161)

$ 1,290 –

$ 1,360

Capital Expenditures and Proceeds

from Sale of Assets (314) (274) (600) – (650)

Free Cash Flow $ (72) $ (435)

$ 690 –

$ 710

2013 Outlook

Nine Months Ended

September 30,

2013 2012


2013 ONGOING BUSINESS(1) EPS GUIDANCE

10/22/2013

Earnings Per Share

EPS – Diluted (GAAP) $10.45–$10.65

Restructuring 1.75

Brazilian (BEFIEX) Tax Credits ($70M–$80M) (0.91)

U.S. Energy Tax Credits (1.50)

Antitrust and Contract Expenses (0.02)

Investment Expenses 0.14

Ongoing Business Operations EPS(1) $9.90–$10.10


2013 full year GAAP tax rate assumption remains 9 percent and our ongoing tax rate assumption remains 24 percent, adjusted primarily for $120 million of expected benefit from U.S. energy tax credits.


HEFEI SANYO

• Strong and growing presence in China

• 2012 Sales USD $636M • Large established distribution

network • Scaled manufacturing

presence with opportunity for growth

• Record of growth and profitability

• Strong management team • Whirlpool to acquire 51%

equity stake for RMB 3.4 billion (USD $553M based on the

exchange rate as of September 30,

2013)

42

• Accelerates Whirlpool’s emerging market growth strategy

• Platform for domestic and export growth

• Significant manufacturing and distribution footprint

• Expect this transaction will be accretive in the first full year of integration

HEFEI SANYO* TIMING OPPORTUNITY

* Hefei RONGSHIDA SANYO Electric Co., Ltd [600983: Shanghai]

• Agreement announced 8/13/13

• Subject to regulatory approvals

• Transaction expected to close by end of 2014

Whirlpool Corporation 10/22/2013

Q3 2013 earnings_presentation

Business

Transcript of Q3 2013 earnings_presentation