2014 FIRST-QUARTER EARNINGS REVIEW April 25, 2014 WHIRLPOOL - - PowerPoint PPT Presentation

2014

FIRST-QUARTER EARNINGS REVIEW

April 25, 2014

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

• f these trade customers to maintain or increase market share; (3) acquisition and investment-related risk; (4) changes in

economic conditions which affect demand for our products, including the strength of the building industry and the level of interest rates; (5) product liability and product recall costs; (6) inventory and other asset risk; (7) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from natural disasters or terrorist attacks; (8) the uncertain global economy; (9) the ability of Whirlpool to achieve its business plans, productivity improvements, cost control, price increases, leveraging of its global operating platform, and acceleration

• f the rate of innovation; (10) Whirlpool's ability to maintain its reputation and brand image; (11) 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; (12) 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; (13) the effects and costs of governmental investigations or related actions by third parties; (14) Whirlpool's ability to obtain and protect intellectual property rights; (15) the ability of suppliers

• f critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-

effective manner; (16) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans; (17) information technology system failures and data security breaches; (18) the impact of labor relations; (19) our ability to attract, develop and retain executives and other qualified employees; (20) changes in the legal and regulatory environment including environmental and health and safety regulations; and (21) 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.

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

• perating margin

Other non-GAAP financial measures included in this presentation are free cash flow(2) and sales (excluding currency and BEFIEX). Please refer to the appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

(1) Ongoing business measures are non-GAAP measures. See appendix slides 35-41 (2) Free cash flow is a non-GAAP measure. See appendix slides 35 and 42

OVERVIEW

2014

FIRST-QUARTER HIGHLIGHTS

• Continued revenue growth and margin expansion
• Record first-quarter operating profit
• Four quarters of revenue growth and nine quarters of year-
• ver-year ongoing business(1) margin expansion
• Increasing investments in brands and new products, with

robust innovation pipeline

• Firmly on track to deliver operating profit margin, earnings

per share and free cash flow guidance for the year

2014 FIRST-QUARTER RESULTS

Net Sales Net Sales (Excluding Currency and BEFIEX) Diluted EPS (GAAP) Ongoing Business Diluted EPS(1) Free Cash Flow(2)

2014

$4.4B $4.5B $2.02 $2.20 $(0.5)B

2013

$4.2B $4.2B $3.12 $1.97 $(0.4)B

Change

$0.2B $0.3B $(1.10) $0.23 $(0.1)B

NET SALES EXCLUDING CURRENCY AND BEFIEX UP ~6%

Region Outlook North America +5% to +7% Europe, Middle East & Africa Flat to +2% Latin America Flat Asia Flat to +3%

FULL-YEAR 2014 INDUSTRY DEMAND ASSUMPTIONS

NORTH AMERICA OPERATIONS

NORTH AMERICA FIRST-QUARTER RESULTS

SALES GROWTH AND REINVESTMENT IN THE BUSINESS + Sales growth / market share + Ongoing cost productivity

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Net Sales $ 2,331 $ 2,235 $ 96 4% Operating Profit (GAAP) $ 228 $ 218 $ 10 5% Operating Margin % (GAAP) 9.8% 9.7% 0.1 pts Ongoing Business Operating Profit(1) $ 228 $ 218 $ 10 5% Ongoing Business Operating Margin %(1) 9.8% 9.7% 0.1 pts

− Raw Materials

NORTH AMERICA OPERATIONS

• Positive recent trends in industry growth
• Remain optimistic about full-year industry growth from

housing, replacement and discretionary demand

• Ongoing cost productivity programs
• Innovative new product launches, particularly during

second and third quarters

• Investments in marketing, technology and products
• Grow beyond the core

NORTH AMERICA PRODUCT LEADERSHIP

MAYTAG PRODUCTS … DURABLE, RELIABLE, POWERFUL

EUROPE, MIDDLE EAST AND AFRICA

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

STRONG EXECUTION OF ACTIONS TO EXPAND MARGINS + Sales growth / market share + Ongoing cost productivity + Cost and capacity-reductions

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Net Sales $ 720 $ 668 $ 52 8% Operating Profit (GAAP) $ 7 $ (8) $ 15 nm Operating Margin % (GAAP) 1.0% (1.2)% 2.2 pts Ongoing Business Operating Profit(1) $ 7 $ (8) $ 15 nm Ongoing Business Operating Margin %(1) 1.0% (1.2)% 2.2 pts

nm = not meaningful

EUROPE, MIDDLE EAST AND AFRICA (EMEA) OPERATIONS

• Industry demand recovery
• Ongoing cost productivity programs
• Cost and capacity-reduction initiatives
• Innovative new product launches
• Grow beyond the core

EUROPE, MIDDLE EAST AND AFRICA (EMEA) PRODUCT LEADERSHIP

NEW LINE OF GAS COOKTOPS WITH GLASS SURFACES

High-power, high-efficiency burners Maximum flexibility with twin and full-coverage grids Multiple designs to complement a variety of kitchen styles

LATIN AMERICA

LATIN AMERICA FIRST-QUARTER RESULTS

SALES GROWTH WITH SHARE GAINS + Sales growth of ~11% (ex BEFIEX & currency) + Market share gains + Favorable price/mix + Ongoing cost productivity − Raw materials − Foreign currency

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Net Sales $ 1,187 $ 1,197 $ (10) (1)% Operating Profit (GAAP) $ 123 $ 130 $ (7) (6)% Operating Margin % (GAAP) 10.3% 10.9% (0.6) pts Ongoing Business Operating Profit(1) $ 109 $ 114 $ (5) (5)% Ongoing Business Operating Margin %(1) 9.2% 9.6% (0.4) pts

LATIN AMERICA OPERATIONS

• Market share gains
• Price increases to offset inflation and currency
• Innovative new product launches
• Grow beyond the core

LATIN AMERICA PRODUCT LEADERSHIP

CONSUL BRAND ENTERS NEW CATEGORY WITH BEER COOLER

• Professional cooling

system eliminates the risk of freezing

• Compact design but

spacious interior – holds up to 75 cans

ASIA

ASIA FIRST-QUARTER RESULTS

MARGIN EXPANSION CONTINUES + Favorable price/mix + Ongoing cost productivity − Raw materials − Foreign currency

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Net Sales $ 166 $ 187 $ (21) (11)% Operating Profit (GAAP) $ 5 $ 3 $ 2 53% Operating Margin % (GAAP) 2.9% 1.7% 1.2 pts Ongoing Business Operating Profit(1) $ 5 $ 3 $ 2 53% Ongoing Business Operating Margin %(1) 2.9% 1.7% 1.2 pts

ASIA OPERATIONS

• Margin expansion continues
• Innovative new product launches
• Ongoing cost productivity
• Acquisition of majority stake in Hefei Rongshida Sanyo

expected to close anytime between the end of the second quarter and the end of 2014

ASIA PRODUCT LEADERSHIP

WHIRLPOOL ICEMAGIC BEST-IN-CLASS ICE-MAKING, BOTTLE-COOLING

Powercool zone keeps content cool for up to 12 hours Innovative storage solutions for produce, medicine and spices

FINANCIAL REVIEW

2014

FINANCIAL GUIDANCE

GAAP Diluted EPS $11.05–$11.55 Ongoing Business Diluted EPS(1) $12.00–$12.50 Free Cash Flow(2) $700 million

ONGOING BUSINESS(1) MARGIN EXPANSION DRIVERS (APPROXIMATE IMPACT)

Q1 Full-Year 2013 Actual 6.6% 7.3% Price / Mix ½ ½ - 1 Cost and Capacity Reductions ½ ½ Ongoing Cost Productivity and Material Costs ¼ ½ Marketing, Technology and Product Investments, Foreign Currency (¾) (½) - (1) 2014 6.9% 8%+

FIRST-QUARTER FINANCIAL SUMMARY

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Net Sales $ 4,363 $ 4,248 $ 115 3% Gross Margin % 17.3% 17.1% 0.2 pts SG&A % 10.1% 9.9% (0.2) pts Restructuring $ 29 $ 42 $ 13 31% Operating Profit (GAAP) $ 281 $ 254 $ 27 11% Ongoing Business Operating Profit(1) $ 302 $ 280 $ 22 8% Operating Profit % (GAAP) 6.5% 6.0% 0.5 pts Ongoing Business Operating Profit %(1) 6.9% 6.6% 0.3 pts

FIRST-QUARTER FINANCIAL SUMMARY

First Quarter Better/(Worse)

(USD in millions)

2014 2013 2013 % Operating Profit (GAAP) $ 281 $ 254 $ 27 11% Ongoing Business Operating Profit(1) $ 302 $ 280 $ 22 8% Interest & Sundry Income (Expense) (23) (18) (5) (32)% Interest Expense (44) (46) 2 4% Earnings Before Income Taxes (GAAP) $ 214 $ 190 $ 24 13% Ongoing Business Earnings Before Income Taxes(1) $ 237 $ 216 $ 21 10% Income Tax Expense (Benefit) 50 (67) (117) nm Net Earnings Available to Whirlpool 160 252 (92) (36)% Diluted EPS (GAAP) $ 2.02 $ 3.12 $ (1.10) (35)% Ongoing Business Diluted EPS(1) $ 2.20 $ 1.97 $ 0.23 12%

nm = not meaningful

$0 $20 $40 $60 $80 $100 $120 Q1 Q2-Q4 Full-Year 2014 Projected Charges Actual Charges

COST AND CAPACITY REDUCTION CHARGES

$100M OF CHARGES AND $80M IN EXPECTED ONGOING BENEFITS IN 2014

Charges (in millions) $80M in Expected Ongoing Benefits

$100M $71M $29M

CASH FLOW PRIORITIES

• Fund the Business
• Debt Maturities and Pension Contributions
• Return to Shareholders
• M&A

BALANCING FUNDING FOR ALL ASPECTS TO ENSURE THE BEST LONG-TERM VALUE CREATION FOR OUR SHAREHOLDERS

CLOSING REMARKS

2014

CLOSING REMARKS

• Revenue growth and margin expansion
• Investments in brands and new products, with robust

innovation pipeline

• Well-positioned for positive global demand
• Hefei Sanyo acquisition
• Grow beyond the core

CONFIDENT IN DELIVERING 2014 RECORD PERFORMANCE

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

• pportunities of tomorrow with 6th Sense Live

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 per diluted share, ongoing business segment operating profit, ongoing business segment operating margin, 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. 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 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.

2014 ONGOING BUSINESS MEASURES

The reconciliation provided below reconciles the non-GAAP financial measures ongoing business operating profit,

• ngoing business earnings before income taxes and ongoing business earnings per diluted share, with the most

directly comparable GAAP financial measures, operating profit, earnings before income taxes and net earnings per diluted share available to Whirlpool, for the three months ended March 31, 2014. Ongoing business operating margin is calculated by dividing ongoing business operating profit by net sales excluding BEFIEX.

Reported GAAP Measure $ 281 $ 214 $ 2.02 Restructuring Expense(a) 29 29 0.27 Brazilian (BEFIEX) Tax Credits(b) (14) (0.18) Investment Expense(c) 6 8 0.08 Antitrust Resolutions(d) — 1 0.01 Normalized Tax Rate Adjustment(e) — — 0.00 Ongoing Business Measure $ 316 $ 238 $ 2.20 Three Months Ended March 31, 2014 Operating Profit Earnings Before Income Taxes Earnings Per Diluted Share

2013 ONGOING BUSINESS MEASURES

Reported GAAP Measure $ 254 $ 190 $ 3.12 Restructuring Expense(a) Brazilian (BEFIEX) Tax Credits(b) (16) (16) (0.20) U.S. Energy Tax Credits(f ) — — (1.04) Normalized Tax Rate Adjustment(e) Ongoing Business Measure $ 280 $ 216 $ 1.97 Three Months Ended March 31, 2013 Operating Profit Earnings Before Income Taxes Earnings Per Diluted Share — — (0.31) 42 42 0.40

The reconciliation provided below reconciles the non-GAAP financial measures ongoing business operating profit,

• ngoing business earnings before income taxes and ongoing business earnings per diluted share, with the most

directly comparable GAAP financial measures, operating profit, earnings before income taxes and net earnings per diluted share available to Whirlpool, for the three months ended March 31, 2013. Ongoing business operating margin is calculated by dividing ongoing business operating profit by net sales excluding BEFIEX.

2014 ONGOING BUSINESS SEGMENT OPERATING PROFIT

The reconciliation provided below reconciles the non-GAAP financial measure ongoing business segment

• perating profit with the most directly comparable GAAP financial measure, segment operating profit, for the

three months ended March 31, 2014. Ongoing business segment operating margin is calculated by dividing

• ngoing business segment operating profit by net sales excluding BEFIEX.

North America $ 228 $ — $ — $ — $ 228 Latin America 123 — (14) — 109 EMEA 7 — — — 7 Asia 5 — — — 5 Other/Eliminations (82) 29 — 6 (47) Total Whirlpool Corporation $ 281 $ 29 $ (14) $ 6 $ 302 Three Months Ended March 31, 2014 Segment Operating Profit Restructuring Expense(a) Brazilian (BEFIEX) Tax Credits(b) Investment Expense(c) Ongoing Business Segment Operating Profit

2013 ONGOING BUSINESS SEGMENT OPERATING PROFIT

The reconciliation provided below reconciles the non-GAAP financial measure ongoing business segment

• perating profit (loss) with the most directly comparable GAAP financial measure, reported segment operating

profit (loss), for the three months ended March 31, 2013. Ongoing business segment operating margin is calculated by dividing ongoing business segment operating profit by net sales excluding BEFIEX.

North America $ 218 $ — $ — $ 218 Latin America 114 EMEA (8) Asia 3 Other/Eliminations (47) Total Whirlpool Corporation $ 254 $ 42 $ (16) $ 280 Segment Operating Profit (Loss) Restructuring Expense(a) Brazilian (BEFIEX) Tax Credits(b) Ongoing Business Segment Operating Profit (Loss) Three Months Ended March 31, 2013 130 — (16) (8) — — 3 — — (89) 42 —

FOOTNOTES

a) During the first quarters of 2014 and 2013, we recorded restructuring charges of $29 million and $42 million, respectively. The earnings per diluted share impacts are calculated based on income tax impacts

• f $7 million and $10 million, respectively.

b) During the first quarters of 2014 and 2013, we monetized Brazilian (BEFIEX) tax credits of $14 million and $16 million, respectively. The earnings per diluted share impact is calculated based on income tax impacts

• f $0 million.

c) During the first quarter of 2014, we recognized investment expense of $8 million primarily related to the pending acquisition of Hefei Sanyo. The earnings per diluted share impact is calculated based on an income tax impact of $2 million. d) During the first quarter of 2014, we recognized expenses of approximately $1 million related to antitrust

• resolutions. The earnings per diluted share impact is calculated based on an income tax impact of $0

million. e) During the first quarters of 2014 and 2013, we made adjustments to ongoing business diluted EPS to reconcile specific items reported to a full-year effective tax rate of 24%. f) In the first quarter of 2013, we recognized $84 million of U.S. energy tax credits earned in 2012 and the first quarter of 2013. The earnings per diluted share impact is calculated based on an income tax benefit

• f $84 million.

2014 ONGOING BUSINESS EPS GUIDANCE

Earnings Per Share GAAP Diluted EPS $11.05–$11.55 Restructuring Expenses 0.95 Brazilian (BEFIEX) Tax Credits (0.18) Investment Expense 0.21 Antitrust Resolutions 0.01 Ongoing Business Diluted EPS(1) $12.00–$12.50

2014 full year GAAP and ongoing business tax rate assumptions remain 24 percent.

As defined by the company, free cash flow is cash provided by (used in) operating activities after capital expenditures and proceeds from the sale of assets and businesses. The reconciliation provided below reconciles three-month actual 2014 and 2013 and projected full-year free cash flow with cash provided by (used in)

• perating activities, the most directly comparable GAAP financial measure.

FREE CASH FLOW

(millions of dollars)

Cash Provided by (Used In) Operating Activities $ (339) $ (305) $ 1,325 – $ 1,375 Capital Expenditures and Proceeds from Sale of Assets/Businesses (117) (71) (625) – (675) Free Cash Flow $ (456) $ (376) $ 700 2014 Outlook Three Months Ended March 31, 2014 2013