Q3 2013 earnings_presentation

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Q3 2013 earnings_presentation

  1. 1. 2013 THIRD-QUARTER EARNINGS REVIEW October 22, 2013
  2. 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 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. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 2
  3. 3. USE OF NON-GAAP FINANCIAL MEASURES 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. (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 Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 3
  4. 4. OVERVIEW Whirlpool brand White Ice Collection Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 4
  5. 5. 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) Whirlpool Corporation 10/22/2013 $690–$710 million Third-Quarter Earnings Review — 5
  6. 6. 2013 THIRD-QUARTER RESULTS 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% Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 6
  7. 7. FULL-YEAR 2013 INDUSTRY DEMAND ASSUMPTIONS 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% Flat -2% Asia Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 7
  8. 8. NORTH AMERICA OPERATIONS Jenn-Air Lakefront Kitchen in Euro-Style stainless and Custom Panel Overlay design Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 8
  9. 9. NORTH AMERICA THIRD-QUARTER RESULTS Third Quarter 2013 2012 (USD in millions) Better/(Worse) 2012 % Net Sales $ 2,627 $ 2,424 $ 203 8% Operating Profit (GAAP) $ $ $ 62 28% Operating Margin % (GAAP) 289 11.0% Ongoing Business Operating Profit(1) $ Ongoing Business Operating Margin %(1) + Sales growth + Ongoing cost productivity + Cost and capacity-reductions 289 11.0% 227 9.3% $ 227 9.3% 1.7 pts $ 62 28% 1.7 pts − Raw Materials SALES GROWTH AND MARGIN EXPANSION Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 9
  10. 10. 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 Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 10
  11. 11. NORTH AMERICA PRODUCT LEADERSHIP Whirlpool brand leads the way in cooking with the industry’s first induction double-oven freestanding range. Whirlpool Corporation The KitchenAid brand’s new fivespeed diamond blenders can handle any kitchen task. 10/22/2013 Third-Quarter Earnings Review — 11
  12. 12. EUROPE, MIDDLE EAST AND AFRICA (EMEA) OPERATIONS Whirlpool brand Fusion kitchen suite in Europe Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 12
  13. 13. EUROPE, MIDDLE EAST AND AFRICA (EMEA) THIRD-QUARTER RESULTS Third Quarter 2013 2012 (USD in millions) Net Sales $ 778 Operating Profit (Loss) (GAAP) $ 0 0.1% Operating Margin % (GAAP) Ongoing Business Operating Profit (Loss)(1) $ Ongoing Business Operating Margin %(1) 0 0.1% Better/(Worse) 2012 % $ 702 $ 76 11% $ (36) $ 36 nm (5.1)% $ (36) (5.1)% 5.2 pts $ 36 nm 5.2 pts − Raw materials + Sales growth + Ongoing cost productivity + Cost and capacity-reductions BREAK-EVEN RESULTS IN A WEAK BUT STABILIZING ENVIRONMENT nm = not meaningful Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 13
  14. 14. EUROPE PRODUCT LEADERSHIP Bauknecht dishwashers with PowerClean+ offer consumers the best cleaning and drying in just one hour. The Bauknecht UltimateCare washer delivers perfect, economical results with reliability and quality. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 14
  15. 15. LATIN AMERICA OPERATIONS Consul brand kitchen in Brazil Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 15
  16. 16. LATIN AMERICA THIRD-QUARTER RESULTS Third Quarter 2013 2012 (USD in millions) Better/(Worse) 2012 % Net Sales $ 1,128 $ 1,206 $ (78) (6)% Operating Profit (GAAP) $ $ $ 15 13% Operating Margin % (GAAP) 133 11.8% Ongoing Business Operating Profit(1) $ Ongoing Business Operating Margin %(1) + Market share in appliances + Ongoing cost productivity 104 9.4% 118 9.8% $ 105 8.8% 2.0 pts $ (1) (1)% 0.6 pts − Raw materials − Foreign currency − Compressor shipments CONTINUED MARGIN EXPANSION Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 16
  17. 17. 2013 LATIN AMERICA OPERATIONS  Market share gains  Innovative new product launches  Grow beyond the core  Long-term fundamentals remain strong Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 17
  18. 18. LATIN AMERICA PRODUCT LEADERSHIP The Consul Bem Estar refrigerators do more than store vegetables; it keeps them fresh for twice as long. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 18
  19. 19. ASIA OPERATIONS Whirlpool brand Mini ACE Wash Station Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 19
  20. 20. ASIA THIRD-QUARTER RESULTS Third Quarter 2013 2012 (USD in millions) Net Sales $ 197 Operating Profit (GAAP) $ 7 Operating Margin % (GAAP) $ 201 $ (4) (2)% $ $ 0 (3)% 3.8% Ongoing Business Operating Profit(1) $ Ongoing Business Operating Margin %(1) + Market share + Favorable price/mix + Ongoing cost productivity 7 3.8% Better/(Worse) 2012 % 7 3.8% $ 7 0 pts $ 0 3.8% (3)% 0 pts − Industry demand − Raw materials − Foreign currency PRODUCT INNOVATION DRIVING SALES GROWTH OF 2% EX CURRENCY Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 20
  21. 21. ASIA PRODUCT LEADERSHIP The Whirlpool Beijing Opera refrigerator offers iconic design, extra-large capacity and innovative features. The revamped Whirlpool Neo iChill portfolio caters to variety of consumer preferences and needs. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 21
  22. 22. FINANCIAL REVIEW Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 22
  23. 23. 2013 FINANCIAL OUTLOOK 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 Metric Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 23
  24. 24. ONGOING BUSINESS OPERATIONS(1) MARGIN EXPANSION DRIVERS YTD Full-Year Estimate 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) 7.1% >7.0% 2012 2013 Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 24
  25. 25. THIRD-QUARTER FINANCIAL SUMMARY (USD in millions) Third Quarter 2013 2012 Better/(Worse) 2012 % Net Sales Gross Margin % $ 4,683 $ 4,494 $ 18.1% 15.6% 189 4% 2.5 pts SG&A % 9.8% 9.3% (0.5) pts Restructuring $ 68 $ 62 $ Operating Profit (GAAP) $ 313 $ 213 $ 100 47% $ 353 $ 262 $ 91 34% Ongoing Business Operating Profit(1) Operating Profit % (GAAP) (10)% 6.7% Ongoing Business Operating Profit %(1) Whirlpool Corporation (6) 10/22/2013 4.7% 2.0 pts 7.6% 5.9% 1.7 pts Third-Quarter Earnings Review — 25
  26. 26. THIRD-QUARTER FINANCIAL SUMMARY Third Quarter 2013 2012 (USD in millions) Operating Profit (GAAP) Better/(Worse) 2012 % $ 313 $ 213 $ 100 47% Ongoing Business Operating Profit(1) $ 353 $ 262 $ 91 34% Interest & Sundry Income (Expense) (16) (38) 22 60% Interest Expense (43) (48) 5 10% 100% Earnings Before Income Taxes (GAAP) Ongoing Business Operations Earnings Before Income Tax(1) Income Tax Expense (Benefit) Ongoing Business Operations EPS(1) Whirlpool Corporation 10/22/2013 $ 127 $ 295 $ 198 $ 55 47 74 122 164% $ 2.42 EPS – Diluted (GAAP) $ 127 196 Net Earnings Available to Whirlpool $ 254 $ 0.94 $ 1.48 158% $ 2.72 $ 1.80 $ 0.92 51% 97 48% (8) (19)% Third-Quarter Earnings Review — 26
  27. 27. COST AND CAPACITY-REDUCTION CHARGES $237M $250 Charges (in millions) $200 Projected Charges Actual Charges ~$185M FY $150 $100 $78M $141M YTD $50 $Q4 2011 2012 2013 ON TRACK TO DELIVER ~$175M BENEFITS IN 2013 Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 27
  28. 28. CASH FLOW PRIORITIES  Fund the Business  Debt Maturities and Pension Contributions  Return to Shareholders - Dividends - Share Repurchases  M&A COMMITTED TO EXECUTING OUR LONG-TERM GROWTH STRATEGY Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 28
  29. 29. CLOSING REMARKS In Europe, the Whirlpool brand iXelium Supreme Design cooktop Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 29
  30. 30. 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 Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 30
  31. 31. ROADMAP FOR GROWTH AND VALUE CREATION SHAREHOLDER VALUE CREATION TARGETS GROWTH  Geographic expansion  Product line extension  Adjacent revenue streams +5–7% REVENUE GROWTH MARGIN EXPANSION  Leading brands and innovation  Extend cost leadership  Extend quality leadership 8% OPERATING MARGIN +10–15% EPS GROWTH CASH GENERATION 9  Disciplined capital investment  Increased asset turnover Whirlpool Corporation 4–5% FCF% OF SALES 10/22/2013 Third-Quarter Earnings Review — 31
  32. 32. APPENDIX Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 32
  33. 33. 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 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. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 33
  34. 34. ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT, ADJUSTED EARNINGS BEFORE TAX, ADJUSTED DILUTED EARNINGS PER SHARE: 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. Three Months Ended September 30, 2013 Operating Profit Reported GAAP Measure Restructuring Expense $ 313 (a) Brazilian Tax Credits (BEFIEX) U.S. Energy Tax Credits Antitrust and Contract Resolutions Investment Expenses (e) $ $ 254 2.42 68 0.64 (29) (29) (0.36) — — 1 — (3) 5 (0.18) (0.03) 0.04 — — 0.19 (d) Normalized Tax Rate Adjustment (f ) Whirlpool Corporation Diluted Earnings Per Share 68 (b) (c) Adjusted Non-GAAP measure Earnings Before Tax $ 353 10/22/2013 $ 295 $ 2.72 Third-Quarter Earnings Review — 34
  35. 35. ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT, ADJUSTED EARNINGS BEFORE TAX, ADJUSTED DILUTED EARNINGS PER SHARE: 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. Three Months Ended September 30, 2012 Operating Profit Reported GAAP Measure Restructuring Expense $ Brazilian Tax Credits (BEFIEX) Diluted Earnings Per Share $ $ 127 0.94 62 62 0.57 (13) (13) (0.16) — (b) Contract and Patent Resolutions 22 0.17 (g) Normalized Tax Rate Adjustment Adjusted Non-GAAP measure Whirlpool Corporation 213 (a) Earnings Before Tax (f ) — $ 262 10/22/2013 — $ 198 0.28 $ 1.80 Third-Quarter Earnings Review — 35
  36. 36. ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED SEGMENT OPERATING PROFIT: 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 threemonths 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. Three Months Ended September 30, 2013 Segment Operating Profit North America $ — $ — Investment Expenses (e) $ — Adjusted Segment Operating Profit $ 289 Other/Eliminations (29) — 104 — — — — 7 Asia — — EMEA Whirlpool Corporation $ Brazilian Tax Credits (BEFIEX)(b) 133 Latin America Total Whirlpool Corporation 289 Restructuring Expense(a) — — — 7 68 — 1 (47) (116) $ 313 $ 68 10/22/2013 $ (29) $ 1 $ 353 Third-Quarter Earnings Review — 36
  37. 37. ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED SEGMENT OPERATING PROFIT: 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 threemonths 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. Three Months Ended September 30, 2012 Segment Operating Profit (Loss) North America $ 227 Restructuring Expense(a) $ — Brazilian Tax Credits (BEFIEX)(b) $ — Adjusted Segment Operating Profit (Loss) $ 227 Latin America 118 — (13) 105 EMEA (36) — — (36) 7 — — 7 62 — (41) Asia Other/Eliminations Total Whirlpool Corporation Whirlpool Corporation (103) $ 213 $ 10/22/2013 62 $ (13) $ 262 Third-Quarter Earnings Review — 37
  38. 38. FOOTNOTES: 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. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 38
  39. 39. ONGOING BUSINESS OPERATIONS MEASURES−ADJUSTED OPERATING PROFIT: 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. Nine Months Ended September 30, 2013 Reported Operating Profit $ (a) Restructuring Expense Brazilian Tax Credits (BEFIEX)(b) Investment Expenses(c) (d) 2012 895 141 (69) 1 $ — — Benefit Plan Curtailment Gain Adjusted Non-GAAP Measure $ 968 611 175 (22) $ (49) 715 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. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 39
  40. 40. FREE CASH FLOW: 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. Nine Months Ended September 30, 2013 (millions of dollars) Cash Provided by (Used in) Operating Activities $ Capital Expenditures and Proceeds from Sale of Assets Free Cash Flow Whirlpool Corporation 242 2012 $ (314) $ (72) 10/22/2013 (161) 2013 Outlook (274) $ (435) $ 1,290 – (600) $ – 690 – $ 1,360 (650) $ 710 Third-Quarter Earnings Review — 40
  41. 41. 2013 ONGOING BUSINESS(1) EPS GUIDANCE 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. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 41
  42. 42. HEFEI SANYO 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 TIMING • Agreement announced 8/13/13 • Subject to regulatory approvals • Transaction expected to close by end of 2014 OPPORTUNITY • 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 exchange rate as of September 30, 2013) * Hefei RONGSHIDA SANYO Electric Co., Ltd [600983: Shanghai] Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 42
  43. 43. Whirlpool Corporation 10/22/2013 Third-Quarter Earnings Review — 43

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