WHIRLPOOL CORPORATION CONFIDENTIAL
INDIANA UNIVERSITY INSTITUTE OF BUSINESS ANALYTICS
NOVEMBER 2014
21 November 2014 1Justin Hanig
WHIRLPOOL CORPORATION CONFIDENTIAL
• Short Biography
• Whirlpool Corporation
• About
• Analytical Organization of Whirlpool
• My Team
• Opportunities at Whirlpool for Individuals with an Analytical Background
• Analytical Business Application Demonstration
• Analytically Solved Problem at Whirlpool
• Industry Forecasting
• Presentation Examples
ROADMAP FOR TODAY
21 November 2014 2
GO HOOSIERS!
WHIRLPOOL CORPORATION CONFIDENTIAL
•Born & Currently Live in South Bend, IN
• Married since 2011; Father since 2013 (Griffin)
•BS in Biology from Indiana University (2005)
• Minors: English, Economics, & Chemistry
•MA in Applied Economics from Western Michigan University (2010)
•Currently – finishing dissertation for PhD in Applied Economics from Western Michigan University
• Dissertation Topic: International Finance (Integrated vs. Segmented Equity Markets)
•Whirlpool since 6/2012
• Insights & Strategy Manager
21 November 2014 3
ABOUT JUSTIN
WHIRLPOOL CORPORATION CONFIDENTIAL
WHIRLPOOL CORPORATION
21 November 2014 4
WHIRLPOOL CORPORATION CONFIDENTIAL
Founded in 1911 – Over a Century of Success
Leader of $150B Global Industry
#1 Global Manufacturer & Marketer of Home Appliances
~$20B revenue annually
ABOUT WHIRLPOOL CORPORATION
Where Moments Matter™
WHIRLPOOL CORPORATION CONFIDENTIAL 6
1911-1948 1948-1980 1980’s 1990’s 2013
+
OUR HISTORY PROPELS US WITHOUT BEING AN ANCHOR
WHIRLPOOL CORPORATION CONFIDENTIAL
STRATEGIC DIRECTION: GLOBAL CONSUMER PRODUCTS
Today Future“Leading Global Appliance
Manufacturer”“Leading Global Innovative
Products Company”“Leading Global ConsumerBrand/Products Company”
GROW THE CORE EXTEND THE CORE+ +
GROWTH OPPORTUNITIES IDENTIFIED IN EVERY CATEGORY
T-12 major appliancesProducts or services which are
dependent on and related to core business
High-margin, stand-alone businesses that leverage core
competencies and infrastructure
EXPAND BEYOND THE CORE
WHIRLPOOL CORPORATION CONFIDENTIAL
WORLD’S MOST ADMIRED COMPANIES
TOP 25 MOST REPUTABLE COMPANIES IN THE U.S.
100 BEST CORPORATE CITIZENS
50 MOST INNOVATIVE COMPANIES
TOP COMPANIES FOR DIVERSITY
100 SCORE ON HUMAN RIGHTS CAMPAIGN SINCE 2004
WE WORK LIKE THERE IS SOMETHING TO PROVE, BUT PERFORM LIKE WE’VE WON THE GAME
WHIRLPOOL CORPORATION CONFIDENTIAL
•Analytics Organizations are in Every Region in the World• North America; Europe, Middle East, & Africa (EMEA); Latin America; Asia
•In the North American Region (NAR):
•Global Product Organization• Engineering - Big Data Analytics & Competitive Insights
• Connected Appliances
• Competitive Intelligence• Analyzing competitors on the global scale
•Quality• Analyzing service incidence & reviews
921 November 2014
ANALYTICS ORGANIZATION OF WHIRLPOOL – PART 1
WHIRLPOOL CORPORATION CONFIDENTIAL
• Supply Chain• Forecasting product demands
• Sales• Analyzing & promoting proper selling techniques (i.e. – product profitability mix)
• Finance• Profitability & promotional effectiveness
• Database management
•Global Information Systems• Traditional IT Organization
• Developing Business Objects Application
•Marketing• Insights & Strategy
• Marketplace Strategy
• Digital Center of Excellence
1021 November 2014
ANALYTICS ORGANIZATION OF WHIRLPOOL – PART 2
WHIRLPOOL CORPORATION CONFIDENTIAL
•Reside in Marketing
• Service Marketing, Supply Chain, Finance,
&, especially, Sales
•Two Sections of our team:
• Consumer Insights
• Focus group testing of products; Consumer based research
• Marketplace Strategy
• Business Intelligence Application Managers (Oracle – S.M.A.R.T.)
• Analytics Managers
•Overall Goal: Promote Fact Based Decision Making
• How do we accomplish this:
• Data management, embedment, proliferation, self-servicing (e.g. – SMART)
• Analytics partnership & service with consumers
• Advanced analytic projects
1121 November 2014
MARKETPLACE INSIGHTS & STRATEGY TEAM
WHIRLPOOL CORPORATION CONFIDENTIAL 1221 November 2014
BI BUSINESS MODEL
Trusted Data
Enabling Insights & Foresights
Business AcumenRight Tool & People
• Merch & Product• Brand Marketing• Sales (Top 5 Accounts)• Business Critical
(case by case)
WHIRLPOOL CORPORATION CONFIDENTIAL
BUSINESS INTELLIGENCE APPLICATION
SMART
21 November 2014 13
WHIRLPOOL CORPORATION CONFIDENTIAL
FORECAST EXAMPLE
Non-Official
21 November 2014 14
WHIRLPOOL CORPORATION CONFIDENTIAL
•Autoregressive Integrated Moving Average (ARIMA)
• Basics:
• Only looks at one variable (i.e. – industry shipments)
• Estimates a trend of the data (moving average piece)
• Uses past history (autoregressive piece)
• Takes into account structural changes (integrated piece)
• Brings all of it together to form expectation
•Added Transfer Function Modeling
• Allows for outside variables to influence what you want to forecast
• Otherwise known as ARIMAX
•Three different forecasts were produced at three different confidence levels
• Individual products forecasted in three different levels (low, mid-range, high)
• Confidence level different for each product
• Levels chosen based on current 2014 YTD performance
• T5 Forecast produced by summing all product forecasts
1521 November 2014
METHODOLOGY USED
Source: Enders, Walters. Applied Econometric Time Series. Hoboken: John Wiley & Sons, Inc., 2004. Print.
WHIRLPOOL CORPORATION CONFIDENTIAL
•Forecasted Variable: AHAM Industry Shipments
• All T5 Products Forecasted
•Variables Used in Model:• Existing Home Sales
• Housing Starts
• Industrial Production Index – Monthly Measure for GDP
• Employment
• Mortgage Rates (30 yr)
• Whirlpool Point of Sale data (POS)
1621 November 2014
VARIABLES INCLUDED
Variables suggested by Joe Liotine
WHIRLPOOL CORPORATION CONFIDENTIAL 1721 November 2014
FORECAST
AHAM Shipments
**Y^Y % Chg = 2014 Forecasted Units over 2013 Actuals (2014 Forecast includes first months of actuals in 2014)****2014 YTD Y^Y % Chg = First six months of 2014 actuals over first six months of 2013 actuals**
Revised Model 1 2014 YTD 2014 2ndH 2014 FY 2015 2016
FL -1.2% 1.5% -0.1% 6.5% 3.8%
TL 7.9% 3.6% 6.0% 10.3% 9.1%
DR 2.9% 1.6% 2.4% 6.8% 5.9%
TM 0.7% -0.3% 0.3% 4.2% 1.2%
BM2 2.4% 1.7% 2.1% 6.0% 2.8%
BM3 12.2% 6.2% 9.4% 23.0% 15.3%
SS 0.1% 4.0% 1.7% 5.3% 4.3%
BW 8.8% 9.1% 9.0% 12.2% 10.8%
FS 7.3% 6.0% 6.7% 10.0% 9.0%
BI 7.6% 1.7% 4.9% 12.2% 10.5%
T5 5.4% 4.2% 4.9% 9.6% 7.9%
WHIRLPOOL CORPORATION CONFIDENTIAL
Actual Y^Y % Chg 2009 2010 2011 2012 2013 Average
Front Load -2.8% 0.0% -18.4% -19.7% 7.5% -6.7%
Top Load -6.5% 2.8% 2.4% 3.8% 13.4% 3.2%
Dryer -7.0% 1.0% -6.2% -5.5% 12.0% -1.1%
2DBM -35.6% 4.5% 10.1% -11.0% 0.4% -6.3%
French Door 9.8% 50.6% 6.5% -3.5% 24.8% 17.6%
Top Mount -6.8% 4.5% -3.7% -2.7% 3.4% -1.1%
Side-by-Side -17.5% 6.5% -15.3% -3.2% 3.7% -5.2%
DI/SI Range -11.6% 4.5% -4.1% 0.2% 10.2% -0.1%
Wall Oven -20.7% 9.2% -5.4% 1.3% 14.6% -0.2%
Free Standing Range -10.5% 4.0% -3.9% 0.1% 9.7% -0.1%
Dishwasher -9.7% 5.8% -3.1% 3.4% 11.6% 1.6%
T5 -9.0% 5.1% -4.5% -1.7% 10.4% 0.1%
1821 November 2014
ACTUAL Y^Y % CHANGE BY YEAR SINCE 2009
AHAM Shipments
WHIRLPOOL CORPORATION CONFIDENTIAL
Avg of Absolute Accuracies of
Forecast0+7 1+6 2+5 3+4 4+3 5+2 6+1 Avg
FL 9.6% 8.5% 9.7% 11.7% 8.0% 10.4% 3.2% 8.7%
TL 11.0% 14.4% 13.2% 2.6% 3.4% 8.8% 8.8% 8.9%
DR 8.7% 9.7% 10.2% 4.2% 4.4% 15.7% 7.2% 8.6%
TM 17.5% 15.1% 18.4% 10.2% 10.0% 2.5% 3.8% 11.1%
BM2 10.8% 10.4% 13.0% 7.3% 9.4% 5.0% 2.2% 8.3%
BM3 23.8% 19.0% 14.7% 16.9% 23.0% 8.9% 12.7% 17.0%
SS 15.4% 14.3% 16.8% 8.2% 9.7% 3.6% 7.0% 10.7%
BW 9.3% 11.1% 12.5% 6.1% 5.7% 4.9% 1.9% 7.4%
FS 17.6% 7.0% 4.2% 1.9% 1.7% 4.0% 6.7% 6.2%
BI 16.1% 7.6% 6.9% 4.3% 5.2% 5.6% 9.0% 7.8%
T5 8.4% 10.6% 11.6% 5.4% 4.7% 6.7% 4.8% 7.5%
1921 November 2014
AVERAGE ABSOLUTE ACCURACIES
WHIRLPOOL CORPORATION CONFIDENTIAL
Front Load Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low 423 550 461 490 452 578 522 517 445 572 563 528
Mid-Range 423 550 461 490 452 578 522 517 445 584 583 548
High 423 550 461 490 452 578 522 517 445 584 583 548
Y^Y - Low 6.9% 5.1% 13.4% 5.4% -1.7% -1.0% 7.9% 2.3%
Y^Y – Mid 6.9% 5.1% 13.4% 5.4% -1.7% 4.3% 11.6% 6.0%
Y^Y – High 6.9% 5.1% 13.4% 5.4% -1.7% 4.3% 11.6% 6.0%
400
420
440
460
480
500
520
540
560
580
600
Q1 2012 Q2 2012 Q3 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low Mid-Range High
2021 November 2014
FRONT LOAD
AHAM ShipmentsUnits in Thousands
**Red highlights indicate forecasted numbers**
WHIRLPOOL CORPORATION CONFIDENTIAL
Top Load Q1 2012 Q2 2012 Q3 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low 1309 1352 1332 1393 1411 1618 1551 1527 1482 1681 1643 1670
Mid 1309 1352 1332 1393 1411 1618 1551 1527 1482 1701 1672 1699
High 1309 1352 1332 1393 1411 1618 1551 1527 1482 1729 1715 1742
Y^Y - Low 7.8% 19.7% 16.4% 9.6% 5.0% 3.9% 6.0% 9.4%
Y^Y - Mid 7.8% 19.7% 16.4% 9.6% 5.0% 5.1% 7.8% 11.3%
Y^Y - High 7.8% 19.7% 16.4% 9.6% 5.0% 6.9% 10.6% 14.1%
1300
1350
1400
1450
1500
1550
1600
1650
1700
1750
Q1 2012 Q2 2012 Q3 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low Mid High
2121 November 2014
TOP LOAD
AHAM ShipmentsUnits in Thousands
**Red highlights indicate forecasted numbers**
WHIRLPOOL CORPORATION CONFIDENTIAL
Q1 2012 Q2 2012 Q3 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low 1378 1480 1399 1554 1506 1758 1611 1632 1524 1826 1710 1713
Mid 1378 1480 1399 1554 1506 1758 1611 1632 1524 1848 1743 1746
High 1378 1480 1399 1554 1506 1758 1611 1632 1524 1880 1791 1794
Y^Y - Low 9.3% 18.8% 15.1% 5.0% 1.1% 3.9% 6.2% 5.0%
Y^Y - Mid 9.3% 18.8% 15.1% 5.0% 1.1% 5.1% 8.2% 7.0%
Y^Y - High 9.3% 18.8% 15.1% 5.0% 1.1% 6.9% 11.2% 9.9%
1350
1450
1550
1650
1750
1850
Q1 2012 Q2 2012 Q3 2013 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Low Mid High
2221 November 2014
DRYER
AHAM ShipmentsUnits in Thousands
**Red highlights indicate forecasted numbers**
WHIRLPOOL CORPORATION CONFIDENTIAL
PRESENTATION EXAMPLES
21 November 2014 23
WHIRLPOOL CORPORATION CONFIDENTIAL
161.98
47.72
174.98
143.87
68.26
163.11
0
20
40
60
80
100
120
140
160
180
200
4/1/2002 4/1/2003 4/1/2004 4/1/2005 4/1/2006 4/1/2007 4/1/2008 4/1/2009 4/1/2010 4/1/2011 4/1/2012 4/1/2013
(In
de
xed
to
10
0)
S&P 500 vs. Appliance Manufacturing Index
Manufacturers Index S&P 500
2421 November 2014
MANUFACTURING STOCK PERFORMS GREATER THAN THE MARKET DURING HOUSING GROWTH
MARKET EXPECTS APPLIANCE MANUFACTURERS’ TO PROFIT ABOVE THE MARKETSource: Yahoo! Finance
Manufactures: WHR, GE, Samsung, LG, & ElectroluxContact Justin Hanig for index creation methodology
Appliance Manufacturers Index > S&P 500
Appliance Manufacturers Index > S&P 500
WHIRLPOOL CORPORATION CONFIDENTIAL
58.0%
55.7%
56.1%
57.6%
54.0%
54.5%
55.0%
55.5%
56.0%
56.5%
57.0%
57.5%
58.0%
58.5%
Q1 Q2 Q3 Q4
Du
ress
% o
f P
urc
has
es
Duress Purchasing Seasonality
2521 November 2014
DURESS PURCHASING OCCURS MORE IN COLDER MONTHS THAN WARMER TIMES
REMODELING & NEW HOUSING PURCHASING OCCURS IN SPRING/SUMMER MONTHSSource: Stevenson TraQline
T5+MHC+Cooktops2004 - 2013
WHIRLPOOL CORPORATION CONFIDENTIAL
51.8%
43.3%
22.5%
25.2%25.7%
31.5%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4
Balance of Sale by Shopper Gender - T5+MHC+Cooktop
Couples Women only Men only
2621 November 2014
OVER HALF OF APPLIANCE PURCHASES ARE MADE BY SOLO SHOPPERS
THIS IS THE FASTEST GROWING GENDER SHOPPING SEGMENT151.4M MALES IN THE MARKETPLACE
Stevenson TraQline
Nearly 50% of solo shoppers were married
WHIRLPOOL CORPORATION CONFIDENTIAL
$283,734
$433,937
$1,264,065
$30,997
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
Avg
. In
com
e
Average Income Including Capital Gains
Top 10% Top 5% Top 1% Bottom 90%
2721 November 2014
INCOME GROWTH OCCURRING MAINLY IN HIGHER INCOME SEGMENTS
http://topincomes.g-mond.parisschoolofeconomics.eu/
WHIRLPOOL CORPORATION CONFIDENTIAL
28.1%
57.4%
14.5%
27.4%
58.2%
14.4%
25.3%
57.2%
17.4%
24.5%
57.4%
18.1%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Low End Mid Range High End
% o
f A
pp
lian
ce P
urc
has
es
Industry Growth at the High End
2010 2011 2012 2013
2821 November 2014
HIGH-END PRODUCT GROWTH SEEN IN APPLIANCES
OPPORTUNITIES AVAILABLE FOR CONTINUING TO DRIVE HIGH-END SALES
Source: Stevenson TraQlineT5+MHC+Cooktops
WHIRLPOOL CORPORATION CONFIDENTIAL
7.4%
Non-Polar Vortex States
5.4%
Polar Vortex States
21 November 2014 29
COLD TEMPERATURES AND HEAVY SNOW FALL COULD BE IMPEDING SALES GROWTH
POS GROWTH LESS IN STATES AFFECTED BY THE POLAR VORTEX
POS – T5+MHC+Cooktops
Polar Vortex States: ME, NH, VT, MA, RI, CT, NY, PA, OH, IN, IL, MI, WI, & MNNon-Polar Vortex States: AL, AR, AZ, CA, CO, FL, LA, MS, NM, NV, OK, TX, & UT
WHIRLPOOL CORPORATION CONFIDENTIAL
14.9
12.5
7.2
4.9
15.5
12
9.7
7.7
Sears Lowe's Best Buy HomeDepot
2013 Q3 2013 Q4
HHGREGGQ4 2013 DRAW
HHGREGGQ4 2013 CLOSE
WHERE HHGREGGWALKERS PURCHASED
11.0
HHGREGG WALKERS INCREASINGLY SHOPPING ATBEST BUY & HOME DEPOT
Stevenson Traqline
57.9
42.1
Walkers
Closed
- 0.3 pts Q^Q
30
+ 0.1 pts Q^Q
WHIRLPOOL CORPORATION CONFIDENTIAL
-5.0%
-13.5%
-11.5%
-6.5%
-0.2%
0.8%
11.7%
14.5%
28.7%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Y^Y % Change in Whirlpool POS
Industry hhgregg
3121 November 2014
Y^Y, MARKETPLACE POS GREW ~-5%
GROWTH WAS STRONGER IN THE 2ND HALF OF THE YEAR Sell-Through of Whirlpool Corp Brand Portfolio AHAM
Class T5+MHC+Cooktop Product Months Aligned to 445 Calendar
Marketplace
Retailer
Retailer
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