Fourth Quarter Fiscal Year 2014€¦ · to shareholders over past five years • Paid dividends without interruption for over 40 years • Board of directors recently declared quarterly

Q1 FY15Earnings Presentation

January 7, 2015

Forward-Looking Statements

2

Except for the historical information contained herein, this presentation contains forward-looking statements

concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results. These statements are

based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40

Company. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ

materially from the forward-looking statements, including impacts of commodity prices, promotional programs, impacts

of product line extensions and fluctuating market conditions, including foreign currency exchange rates, both in the

United States and internationally. The Company's expectations, beliefs and projections are expressed in good faith

and are believed by the Company to have a reasonable basis, but there can be no assurance that the Company's

expectations, beliefs or projections will be achieved or accomplished.

This presentation also contains forecasts and projections which are based upon financial and operational information

available to the Company on the date hereof. These forecasts and projections speak only as of January 7, 2015, and

we undertake no obligation to publicly update or revise these forecasts or projections, whether as a result of new

information, future events or otherwise.

The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including

Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents.

The information in this presentation includes a review of the Company’s results for the fiscal quarter ended November

30, 2014. We urge investors to stay informed and updated on the Company’s developments by reviewing the

Company’s quarterly press releases and conference calls as they are posted on our website at

http://investor.wd40company.com.

Q1 FY15 EARNINGS PRESENTATION

http://http/investor.wd40company.com

Q1 FY15 Highlights

3

• Net sales for the first quarter were $96.4 million, an increase of 1 percent

compared to the prior year fiscal quarter

• Net income for the first quarter was $10.8 million, an decrease of 6 percent

compared to the prior year fiscal quarter

• Diluted earnings per share were $0.73 in the first quarter, compared to $0.74

per share for the prior year fiscal quarter

• Gross margin was 51.6 percent in the first quarter compared to 52.0 percent

in the prior year fiscal quarter

• Selling, general and administrative expenses increased 3 percent in the first

quarter to $27.4 million compared to the prior year fiscal quarter

• Advertising and sales promotion expenses were up 5 percent in the first

quarter to $5.9 million compared to prior year fiscal quarter


Strategic Initiatives

4

1. Grow WD-40 Multi-Use

Product

Maximize the WD-40 product line through geographic

expansion and increased market penetration. More places,

more people, more uses, more frequently.

2. Grow the WD-40 Specialist

Product Line

Leverage the WD-40 brand to grow specialist by

developing new products and product categories within

identified geographies and platforms.

3. Broaden Product and Revenue

Base

Leverage the recognized strengths of WD-40 Company to

derive revenue from new sources and brands.

4. Attract, Develop and Retain

Outstanding Tribe Members

Succeed as a tribe while excelling as individuals.

5. Operational Excellence Continuous improvement by optimizing resources, systems

and processes.


Q1 FY15 SALES

5Q1 FY15 EARNINGS PRESENTATION

$11.6 $11.5

$83.9 $84.9

Q1 FY14 Q1 FY15

Q1 FY15 Net Sales

6

Sales by Product Group

Multi-Purpose

Maintenance

Homecare and

Cleaning

Sales by Segment

Americas EMEA Asia-Pacific

$15.0 $17.0

$36.5 $34.6

$44.0 $44.8

Q1 FY14 Q1 FY15


Q1 FY15 Net Sales by Product Category

7

(1) The Company markets multi-purpose maintenance products under the WD-40®, 3-IN-ONE® and GT85® brand names. Currently included in the WD-40 brand are the

WD-40 Multi-Use Product and the WD-40 Specialist® and WD-40 BIKETM product lines.

(2) The Company markets the following homecare and cleaning brands: X-14® mildew stain remover and automatic toilet bowl cleaners, 2000 Flushes® automatic toilet bowl

cleaners, Carpet Fresh® and no vac® rug and room deodorizers, Spot Shot® aerosol and liquid carpet stain removers, 1001® household cleaners and rug and room

deodorizers and Lava® and Solvol® heavy-duty hand cleaners.

Global Product Group Sales

Multi-purpose maintenance

product sales88%

Homecare and cleaning product

sales12%

Multi-Purpose Maintenance Product Sales

Homecare and Cleaning Product Sales

Consolidated MPMP ↑ 1%

Americas ↑ 3%

EMEA ↓ 5%

Asia-Pacific ↑ 14%

Consolidated HCCP ↓ 1%

Americas ↓ 3%

EMEA ↓ 6%

Asia-Pacific ↑ 13%


Q1 FY15 Net Sales by Segment

8

Global Segment Sales

Americas

EMEA

(1) The Americas segment consists of the U.S., Canada and Latin America.

(2) The EMEA segment consists of countries in Europe, the Middle East, Africa and India.

(3) The Asia-Pacific segment consists of Australia, China and other countries in the Asia region.

Asia-Pacific

Americas46%

EMEA36%

Asia-Pacific18%

Consolidated Americas ↑ 2%

MPMP ↑ 3%

HCCP ↓ 3%

United States ↔ 0%

Latin America ↑ 19%

Canada ↓ 13%

Consolidated EMEA ↓ 5%MPMP ↓ 5%HCCP ↓ 6%

Direct Markets ↓ 7%

Marketing Distributors ↓ 4%

Consolidated Asia-Pacific ↑ 14%

MPMP ↑ 14%

HCCP ↑ 13%

Australia ↔ 0%

China ↓ 14%

Asian Marketing Distributors ↑ 36%


50/30/20 RULE


The 50/30/20 Rule

10

Gross Margin

Above 50% of net sales50

Cost of Doing Business(1)

At or below 30% of net sales- 30Maintenance CAPES & Regular Dividends

Maintenance CAPEX of between $2M to $4M per fiscal year

Annual dividends targeted at ~50% of earnings or ~$20M= 20 EBITDA(1)

Above 20% of net sales

1) See appendix for descriptions and reconciliations of these non-GAAP measures.

WD-40 Company’s business is guided by the 50/30/20 Rule – if gross margin is above 50% of net sales

and cost of doing business is 30% or less, EBITDA will be above 20%


The “50” - Gross Margin

11

Gross margin can be impacted positively and negatively by things not under the Company’s

control like changes in foreign currency exchange rates and changes in input costs

FY14

52%

FY13

51%

FY12

49%


Gross Margin – 51.6% vs. 52.0% (-0.4pp)

• Changes in foreign currency exchange rates in

EMEA (-0.6pp)

• Changes in petroleum-based specialty chemicals

and aerosol cans (+0.8pp)

• Price increases in Asia-Pacific and EMEA (+0.3pp)

• Higher promotional discounts (-0.5pp)

• Sales mix and miscellaneous costs (-0.4pp)

The “30” – Cost of Doing Business

• Q1 FY15 cost of doing business was at 34% of

net sales compared to 33% in Q1 FY14

• Cost of doing business came from three primary

areas:

– People

– Marketing, advertising and promotion

– Freight costs to get products to customers

• Additional investments in brand protection, new

product development, and regulatory and

quality assurance remain a high priority

12

Revenue growth is the most important factor in achieving the “30” target

46%

18%

12%

24%

Cost of Doing Business

People A&P Investment Freight Other

1) Included in “people” costs is variable incentive compensation which we had previously classified as “other.”


50/30/20 Results

13

* See appendix for descriptions and reconciliations of these non-GAAP measures.

Note: Percentages may not aggregate to EBITDA percentage due to rounding

50/30/20 Business Model Target Q1 FY15 Q1 FY14 Q1 FY13

Gross Margin 50% 52% 52% 50%

Cost of Doing Business 30% 34% 33% 33%

EBITDA 20% 18% 19% 18%


Crude Oil Trends

14

Our

considered

range in the

planning

process for

the cost of a

crude oil is

$85-$110 per

barrel

Source: New York Mercantile Exchange - WTI Oil Futures CLF5 (1/1/11 – 1/1/15)


$50

$60

$70

$80

$90

$100

$110

$120

$130

$140

$150

1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015

4-Year Crude Oil Price Trend

11%

27%

19%2%

41%

What Makes Up the Cost of a Can?

15

Approximate Cost Breakdown of a Typical Can of

WD-40 MUP Manufactured in the United States

Data represents average input costs over 6-month period (6/14-11/14) of a typical 12 ounce can of WD-40 Multi-Use Purpose manufactured in the United States.

We

estimate

only a

small

amount of

the total

cost to

produce a

can of MUP

directly

correlates

to the price

of a barrel

of crude oil

Manufacturing fees Petroleum-based specialty chemicals

Plastic Can

Corrugate

Portion of

petroleum-

based

specialty

chemicals

not directly

indexed to

crude oil

Portion of

petroleum-

based

specialty

chemicals

directly

indexed to

crude oil

85%

15%


Q1 FY15 FINANCIAL

RESULTS


Selected Financial Results


Q1 FY15 Q1 FY14 Change

Selling, general and administrative $27.4 $26.7 3%

Advertising and sales promotion $5.9 $5.6 5%

Amortization $0.8 $0.6 30%

Total operating expenses $34.1 $32.9 4%

Other expenses $58.0 $298 -81%

Provision for income taxes $4.7 $5.0 -5%

Net Income $10.8 $11.5 -6%

EPS (Diluted) $0.73 $0.74 -1%


Cash and cash equivalents $46.4 $57.8 -20%

Short-term investments $42.6 $45.1 -5%

Other assets $242.2 $244.8 -1%

Total assets $331.3 $347.7 -5%

Revolving credit facility $98.0 $98.0 -

Other liabilities $73.3 $80.3 -9%

Total liabilities $171.3 $178.3 -4%

Total Shareholders' equity $160.1 $169.4 -6%

Total liabilities and shareholder's equity $331.3 $347.7 -5%

Condensed Balance Sheet

18

Cash Returns to Stockholders

19

• Over $92.3 million in cash dividends paid

to shareholders over past five years

• Paid dividends without interruption for over

40 years

• Board of directors recently declared

quarterly dividend of $0.38. reflecting a

12% increase over previous quarter’s

dividend

• Two share repurchase plans in place

through August 31, 2016

• Under current $60 million plan Company

repurchased 144K shares at a total cost of

$9.9 million during Q1 FY15

• $75 million share repurchase plan recently

authorized becomes effective when

current $60 million plan is exhausted

$41,399 $39,840

$31,437

$42,773

FY11 FY12 FY13 FY14

Share Repurchases

Share Repurchases

$1.00 $1.08 $1.14

$1.22 $1.34

48%

50%52%

48% 47%

FY10 FY11 FY12 FY13 FY14

FY Dividend per Share Dividend Payout Ratio

Dividends


GUIDANCE


Fiscal Year 2015 Guidance*

21

Diluted EPS

Net Income

A&P Investment

Gross Margin

Net Sales

Sales Growth Between 4% and 8%

Between $398 and $413 million

Better than 52%

In the range of 6.0% to 7.0% of net sales

Between $45.1 and $46.4 million

Between $3.07 and $3.16 based on 14.7

million shares outstanding

* As of 1/7/15. This guidance does not include any future acquisitions or divestitures.


QUESTIONS?


APPENDIX



Net Sales $96.4 $95.5 1%

Gross Profit (%) 51.6% 52.0% -40 bps

Operating Income $15.6 $16.8 -7%

Net Income $10.8 $11.5 -6%

EPS (Diluted) $0.73 $0.74 -1%

Q1 FY15 CC* Q1 FY14 Change

Net Sales $95.8 $95.5 0%

Operating Income $15.5 $16.8 -7%

Net Income $10.7 $11.5 -6%

EPS (Diluted) $0.73 $0.74 -1%

Q1 FY15 Financial Results

24

Financial Results(As reported)

Financial Results(Constant currency basis)

*Q1 FY15 results translated at Q1 FY14 foreign currency exchange rates


Non-GAAP Reconciliation

25

(1) This presentation contains certain non-GAAP (accounting principles generally accepted in the United States of America) measures, that our

management believes provide our stockholders with additional insights into WD-40 Company’s results of operations and how it runs its business. Our

management uses these non-GAAP financial measures in order to establish financial goals and to gain an understanding of the comparative performance

of the Company from year to year or quarter to quarter. The non-GAAP measures referenced in this presentation, which include EBITDA (earnings before

interest, income taxes, depreciation and amortization) and the cost of doing business, are supplemental in nature and should not be considered in isolation

or as alternatives to net income, income from operations or other financial information prepared in accordance with GAAP as indicators of the Company’s

performance or operations. Reconciliations of these non-GAAP financial measures to the WD-40 Company financials as prepared under GAAP are as

follows:


Cost of doing business:

Total operating expenses - GAAP $ 34,108 $ 32,906

Amortization of definite-lived intangible assets (769) (592)

Depreciation (in operating departments) (203) (485)

Cost of doing business $ 33,136 $ 31,829

Net sales $ 96,353 $ 95,541

Cost of doing business as a percentage of net sales 34% 33%

EBITDA:

Net income - GAAP $ 10,786 $ 11,482

Provision for income taxes 4,749 4,987

Interest income (134) (131)

Interest expense 294 215

Amortization of definite-lived intangible assets 769 592

Depreciation 864 786

EBITDA $ 17,328 $ 17,931

Net sales $ 96,353 $ 95,541

EBITDA as a percentage of net sales 18% 19%

Three Months Ended

11/30/2014 11/30/2013

Documents

Fourth Quarter Fiscal Year 2014€¦ · to shareholders over past five years • Paid dividends without interruption for over 40 years • Board of directors recently declared quarterly