AGM 2020

Apr 21, 2020

Good morning, ladies and gentlemen. I'm Mark Bitzer, Chairman of the Board and Chief Executive Officer of Whirlpool Corporation. Joining me here today is Jim Peters, Chief Financial Officer of Wolpow Corporation. Welcome to our 2020 Annual Meeting of Stockholders. Before we begin the business of today's meeting, as you may know, this is the first time in our history that we're holding our annual meeting in a virtual meeting format. Our Board decided to hold the annual meeting virtually for this year only in light of public health concerns regarding the COVID-nineteen outbreak. As we navigate through this unprecedented time in our history, our commitment to our employees, customers and communities is unwavering. We remain focused on ensuring the safety of our employees as well as delivering the critical goods and services that consumers across the world need to stay home and stay safe. While we have made adjustments in areas like this Annual Meeting, we will continue to deliver on our commitments to our stakeholders. Now I would like to review the process for the question and answer period, which will follow my remarks about the 2019 financial performance later in the meeting. We want to ensure stockholders are afforded the same rights and opportunities to participate in today's meeting as they would if it were in an in person meeting, including the opportunity to ask questions. If you are a stockholder and have a question, you may submit your question at any time during the meeting by typing into the Ask a Question field at the bottom of your screen and clicking submit. Please submit your questions as early as possible so that they are in the queue when we're ready to start the Q and A session. Please note that we have not yet released earnings for Q1 and we will therefore not be answering any questions about our Q1 financial performance today. All of the nominees for election to the VOCO Board of Directors have joined the meeting today, including Sam Alm, Rick Fried, Gary DiCamillo, Diane Dietz, Gary Elliott, Jen LaClaire, John Liu, Jim Lawrie, Arish Manvani, Patti Pop, Larry Spencer, Mike White and myself, Mark Bitzer. Representatives from our auditors, Ernst and Young and our inspectors of elections, Broadridge Financial Solutions are also joining our meeting today. Today's meeting agenda is located on your screen and the rules of conduct are located with our meeting materials at the bottom of your screen and are available for download or viewing at any time during the meeting. The rules of conduct set forth the procedures we will follow during the meeting. We will conduct the business portion of our annual meeting first. I will then make a few remarks about our 2019 financial performance and then begin the question and answer session. Notice of this meeting was first mailed to our stockholders on March 11, 2020, and this meeting is being held in accordance with the company's bylaws. The polls have been open for voting since March 11, 2020, and will remain open online until we have concluded the official portion of this meeting. Stockholders who have already voted your proxies may choose to do nothing and your shares will be voted as you instructed. If you wish, stockholders of record and beneficial owners with a valid legal proxy may still revoke your proxy and vote online by clicking the Vote Here button at the bottom of your screen. Our inspectors of elections Broadridge Financial Solutions have determined they are present in person or by proxy at this meeting holders of at least 57,000,000 shares of approximately 60 2,677,753 shares outstanding on the record date February 24, 2020. They have determined the voting power of each and have verified that a quorum is present. They will also determine the validity of all proxies and ballots, tabulate and certify the vote, and if needed, perform arbitrators required by law. Because stockholders holding a majority of shares outstanding and eligible to vote are represented at the meeting, a quorum is present and the meeting is lawfully constituted and will proceed. At this meeting, we plan to take action on the election of 13 directors and 2 upper management proposals, all as outlined in the agenda for this meeting and described in more detail in the company's proxy statement. The proxy statement lists the slate of 13 nominees for directors proposed by the Board of Directors. You can read a short biography of each of the Board nominees in the company's proxy statement. If elected, each nominee would serve for 1 year term. I hereby declare them duly nominated. As no other nominations have been properly submitted to the Corporate Secretary, I declare the nominations closed and formally place the Board nominees before this meeting for stockholder approval. Next, we'll consider the 2 management proposals outlined in the agenda and described in more detail in the company's proxy statement. The proposals are an advisory vote on executive compensation and ratification of appointment of Ernst and Young as the company's auditors. I now formally submit these 2 management proposals for stockholder approval. As no other proposals have been submitted to the Corporate Secretary, we will now proceed with election of directors and the vote on the 2 management proposals. If you are a registered stockholder or beneficial owner with a valid legal proxy and have not yet voted or if you want to change a previously cast vote, please do so now by clicking the Vote Here button at the bottom of your screen. Before we adjourn the official business portion of this meeting, I would like to provide a preliminary voting report based on the proxies by the Inspector of Elections received prior to today's meeting. Inspectors have certified that each of the nominees named in the company's proxy materials was elected and the 2 management proposals were approved. The advisory vote to approve Vocus Corporation executive compensation was approved with approximately 93% in favor and the appointment of Ernst and Young was ratified with approximately 92% in favor. The final tabulation of these votes will appear in a Form 8 ks to be filed by the company with the SEC within 4 business days. This concludes the formal portion of our annual meeting of stockholders. I now declare that the polls are closed. Now I will make a few comments about our 2019 performance, and we will address any questions you may have at the end of my remarks. In 2019, we took decisive actions in a challenging environment and are pleased with the results. Volvo Corporation delivered record ongoing earnings per share $16 and ongoing EBIT margin of 6.9 percent, a 60 basis point improvement. Our North American region delivered margin expansion of 90 basis points overcoming significant cost and tariff inflation, while our Europe, Middle East and Africa region made solid progress towards restoring profitability. Additionally, we generated strong free cash flow of $912,000,000 primarily through capital spend efficiencies and disciplined working capital management. Lastly, we completed the sale of Embraco compressor business unit and repaid an associated $1,000,000,000 term loan, making significant progress towards our long term gross debt to EBITDA goal of 2.0. Our capital allocation strategy remains unchanged. Fund the business and our strategic investments while returning cash to shareholders. In 2019, we invested over $1,000,000,000 in research and development and capital expenditures, fully funding our business operation, ensuring we continue to deliver great innovative products to our consumers. We returned approximately $450,000,000 to shareholders in 2019, and we increased our quarterly dividend for the 7th consecutive year and repurchased approximately $150,000,000 of common stock. In line with our balanced approach to capital allocation, we remain committed to delivering strong returns for our shareholders. In delivering these record results, we made considerable progress towards our long term value creation goals and exited 2019 in a strong financial position to withstand these volatile and uncertain economic conditions. As we look forward, we believe we're uniquely positioned to continue to deliver long term value for our shareholders, while effectively balancing our short term operating priorities. In closing, thank you for your ongoing support of our company. And we will now address any questions that the stockholders might have. Richard Quinn, our Corporate Secretary, will read the questions received from stockholders. And in the interest of time and in consideration of others, we will follow the procedures outlined in the rules of conduct. So now we're ready for your first question. Two questions have been submitted to be answered by our Chairman and CEO, Mark Bitzer and our Chief Financial Officer, Jim Peters. The first question is from the Carpenter Union Pension Funds with combined assets of $70,000,000,000 that have a collective ownership position of 138,970 shares of Whirlpool Corporation common stock. They appreciate the work of the Board to address the needs of the company's employees during this difficult period. Presently, the company has approximately 20,400 U. S. Employees 57,300 non U. S. Employees. The question is, do you believe there will be a need to examine supply chain issues following the pandemic? So first of all, thank you for submitting this question. It's a very good question. And let me maybe give you a broader context. First of all, and that may be different from many of our competitors. Our supply chain is largely a region by region supply chain. What it means of products which we sell in the U. S, about 80% are being produced in the U. S. And that makes us uniquely positioned to also withstand such a volatile environment. So we are much more local than many other players in the industry. And also a lot a big part of our suppliers for the North American business are based in the U. S. Or Canada. We do have some imports either from overseas or from Mexico, where we experienced some minor disruptions, but I would say by and large we're managing fairly well. But having said that, I think once this crisis is being behind us, which might be still some time, I think we may reevaluate some dual sourcing versus single sourcing strategies. But fundamentally, our commitment to produce significant BOS is certainly unchanged if at all it has been strengthened. Okay. The second question is also from the Carpenter Funds. The recent growth in the size of passive mutual funds corporate ownership interests in U. S. Corporations has been dramatic. The Carpenter Funds believe the growing concentration of ownership raises important public policy and corporate governance issues. Currently, BlackRock holds 7.3% and Vanguard holds 13.2% of the company's outstanding shares. Our review indicates that BlackRock and Vanguard are investment managers to the company's 401 and defined benefit pension plans. Does the Board see this growing ownership concentration as a positive or negative development as regards long term corporate planning and performance? And also are there potential conflicts of interest when a 5% holder is managing company retirement plan assets? We believe there is no conflict of interest. Vanguard is a record keeper for our 401 plan in which our employees can hold shares of Whirlpool stock. Our 401 plan has an external independent fiduciary managing it. Additionally, our defined pension plan also has an independent investment advisor. Thank you, Jim. So I'm just asking Bridget, do we have any other questions? No other questions have been submitted. So there being no further questions, I declare the meeting adjourned. Thank you all for joining us today. And thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.