1. automotive and vehicles
2. vehicle brands
3. fiat

Q2 FY15
Earnings Results
April 8, 2015
Forward-Looking Statements
Historical financial and operating data in this presentation reflect the consolidated results of WD-40 Company, its subsidiaries and its legal
entities. WD-40 Company markets multi-purpose maintenance products (“MPMP”) 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. WD40 Company markets the following homecare and cleaning (”HCCP”) 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.
Except for the historical information contained herein, this presentation contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements reflect the Company’s current expectations with respect to currently available
operating, financial and economic information. These forward-looking statements are subject to certain risks, uncertainties and assumptions
that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements.
Our forward-looking statements include, but are not limited to, discussions about future financial and operating results, including: growth
expectations for multi-purpose maintenance products; expected levels of promotional and advertising spending; plans for and success of
product innovation, the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; and
forecasted foreign currency exchange rates and commodity prices. Our forward-looking statements are generally identified with words such
as “believe,” “expect,” “intend,” “plan,” “could,” “may,” “aim,” “anticipate,” “estimate” and similar expressions.
The Company's expectations, beliefs and forecasts 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 forecasts will be achieved or accomplished.
Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not
limited to, those identified in Part I―Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended August
31, 2014, and in the Company’s Quarterly Report on Form 10-Q for the period ended February 28, 2015 which the Company expects to file
with the SEC on April 9, 2015.
All forward-looking statements included in this press release should be considered in the context of these risks. All forward-looking statements
speak only as of April 8, 2015, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on our forward-looking
statements.
Q2 FY15 EARNINGS PRESENTATION
2
Q2 FY15 Highlights
“We are pleased
•
Net sales for the second quarter were $97.3 million, an increase of 3
percent compared to the prior year fiscal quarter
•
Net income for the second quarter was $11.3 million, an increase of 10
percent compared to the prior year fiscal quarter
•
Diluted earnings per share were $0.76 in the second quarter, compared to
$0.67 per share for the prior year fiscal quarter
•
Gross margin was 52.6 percent in the second quarter compared to 51.6
percent in the prior year fiscal quarter
•
All repurchases under the $60 million share buy-back plan completed during
the second quarter
with the solid
performance of
our underlying
business this
quarter and are
more confident
than ever that our
strategic initiatives
–
are well
positioned to carry
us into the future.”
- Garry Ridge
•
From August 1, 2013 through February 28, 2015 Company repurchased 848K
shares at a total cost of $60 million
New repurchase plan is now effective which authorizes the Company to
acquire up to $75 million of its outstanding shares through August 31, 2016
–
As of February 28, 2015 no repurchases had been made under this new plan
Q2 FY15 EARNINGS PRESENTATION
3
SALES
RESULTS
Q2 FY15 EARNINGS PRESENTATION
4
Foreign Currency Landscape
Transaction currency
Functional currency
Currency in which sales,
costs, expenses are
transacted; typically the
same as that of the country in
which the sales transaction
takes place
Main currency in which
subsidiaries conduct
business; typically the same
as that of the country in
which the subsidiary is
headquartered
Conversion
from transaction
currency to
subsidiaries’
functional
currency
Reporting currency
Translation
from
functional
currency to
WD-40
Company’s
reporting
currency
(U.S. dollar)
As a U.S. based company
the reporting currency of WD40 Company is the
U.S. dollar
Q2 FY15 EARNINGS PRESENTATION
5
Translation Impacts
Transaction currency
Functional currency
Currency in which sales,
costs, expenses are
transacted; typically the
same as that of the country in
which the sales transaction
takes place
Main currency in which
subsidiaries conduct
business, typically the same
as that of the country in
which the subsidiary is
headquartered
Conversion
from transaction
currency to
subsidiaries’
functional
currency
In Q2 FY15 the Company
experienced negative
impacts from the translation
of all of the results of its
foreign subsidiaries into the
U.S. dollar
WD-40 Company has the
following foreign operating
subsidiaries that generate
sales and which have a
functional currency other
than the U.S. dollar:
Reporting currency
Translation
from
functional
currency to
WD-40
Company’s
reporting
currency
(U.S. dollar)
As a U.S. based company
the reporting currency of WD40 Company is the
U.S. dollar
•
The results of all of the
Company’s foreign
subsidiaries must be
translated into U.S.
dollars
•
Depending on current
foreign currency trends,
translation can have
positive or negative
impacts on reported results
•
We frequently report our
results in constant
currency which means we
compare current period
results to the prior periods
results at the prior period’s
exchange rates
• United Kingdom (EMEA)
• Canada (Americas)
• Australia (Asia-Pac)
• China (Asia-Pac)
Q2 FY15 EARNINGS PRESENTATION
6
Conversion Impacts
Transaction currency
Functional currency
Currency in which sales,
costs, expenses are
transacted; typically the
same as that of the country in
which the sales transaction
takes place
Main currency in which
subsidiaries conduct
business; typically the same
as that of the country in
which the subsidiary is
headquartered
•
The Company’s U.K.
subsidiary (EMEA), records
transactions in currencies
other than its functional
currency, including the
euro and the U.S. dollar
•
Therefore these euro and
U.S. dollar transactions
must be converted to the
U.K. subsidiary functional
currency (pound sterling)
•
Depending on current
foreign currency trends, this
conversion can have
positive or negative impacts
on pound sterling reported
results
Conversion
from transaction
currency to
subsidiaries’
functional
currency
Reporting currency
Translation
from
functional
currency to
WD-40
Company’s
reporting
currency
(U.S. dollar)
As a U.S. based company
the reporting currency of WD40 Company is the
U.S. dollar
U.K. Subsidiary (EMEA) Transaction Currency Impacts - Sales
Country/Region
of Sale
Transaction
Currency
% of EMEA
Segment Sales
Q2 FY15 Foreign
Currency
Conversion
Impact
United Kingdom
Direct Markets
Pound sterling
~20%
None
European Direct
Markets
Euro
~45%
Unfavorable
US dollar
Pound sterling
~25%
~10%
Favorable
None
European Marketing
Distributors
Q2 FY15 EARNINGS PRESENTATION
7
Net Sales by Product Group
Second Quarter Sales by Product Group ($M)
$94.2
$97.3
$83.8
$86.6
$10.4
$10.7
Q2 FY14
Q2 FY15
Second Quarter Global Product Group Sales Mix
Homecare and
cleaning
product sales
11%
Multi-purpose
maintenance
product sales
89%
Multi-Purpose Maintenance Product Sales
Year-to-Date Sales by Segment ($M)
$189.7
$193.7
$167.8
$171.5
$21.9
$22.2
YTD FY14
YTD FY15
Second Quarter
MPMP (Total)
Americas
EMEA
Asia-Pacific
↑
↓
↑
↑
Homecare and Cleaning
Products
↑
↑
↓
↑
3%
-1%
1%
32%
2%
1%
-2%
21%
Homecare and Cleaning Product Sales
Second Quarter
Multi-Purpose Maintenance
Products
Year-to-Date
HCCP (Total)
Americas
EMEA
Asia-Pacific
↑
↔
↑
↑
3%
0%
8%
11%
Q2 FY15 EARNINGS PRESENTATION
Year-to-Date
↑
↓
↑
↑
1%
-1%
1%
12%
8
Net Sales by Segment
Second Quarter Sales by Segment ($M)
$94.2
$97.3
$45.2
$44.7
$38.1
$38.7
$10.9
$13.9
Q2 FY14
Q2 FY15
Americas
Second Quarter
Americas (Total)
United States
Latin America
Canada
EMEA
↓
↓
↓
↓
-1%
-1%
-6%
-1%
Second Quarter
EMEA (Total)
Direct Markets
Marketing Distributors
↑ 1%
↓ -3%
↑ 9%
Year-to-Date
↔
↓
↑
↓
0%
-1%
7%
-7%
Year-to-Date
↓ -2%
↓ -5%
↑ 2%
Year-to-Date Sales by Segment ($M)
$189.7
$193.7
$89.3
$89.5
$74.6
$73.3
$25.8
$30.9
YTD FY14
YTD FY15
Americas
EMEA
Asia-Pacific
Second Quarter
Asia-Pacific (Total)
Australia
China
Asian Marketing Distributors
↑
↓
↑
↑
28%
-2%
57%
44%
Year-to-Date
↑
↓
↑
↑
20%
-1%
12%
39%
Asia-Pacific
Q2 FY15 EARNINGS PRESENTATION
9
FINANCIAL
RESULTS
Q2 FY15 EARNINGS PRESENTATION
10
Gross Margin Results
Q2 Gross Margin up 1.00 pp
Q2 FY15 GM of 52.6% vs. Q2 FY14 GM of 51.6%
• Changes in petroleum-based specialty chemicals
and aerosol cans (+1.3pp)
• Lower promotional discounts (+0.5pp)
• Price increases, primarily in Asia-Pacific (+0.2pp)
• Changes in foreign currency exchange rates in
EMEA (-0.2pp)
• Sales mix and miscellaneous costs (-0.8pp)
YTD Gross Margin up 0.3 pp
YTD FY15 GM of 52.1% vs. YTD FY14 GM of 51.8%
• Changes in petroleum-based specialty chemicals
and aerosol cans (+1.0pp)
• Price increases, primarily in Asia-Pacific (+0.2pp)
• Sales mix and miscellaneous costs (-0.5pp)
• Changes in foreign currency exchange rates in
EMEA (-0.4pp)
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
Q2 FY15 EARNINGS PRESENTATION
11
What Makes Up the Cost of a Can?
Approximate Cost Breakdown of a Typical Can of
WD-40 MUP Manufactured in the United States
3%
Corrugate
21%
Plastic
30%
Can
12%
Manufacturing Fees
35%
Petroleum-Based
Specialty Chemicals
We estimate only
a small portion of
the input costs
associated with
petroleumbased specialty
chemicals
directly correlate
to the price of a
barrel of crude oil
Data as of February 2015. Represents average input costs over 6-month period of a typical 12 ounce can of WD-40 Multi-Use Product manufactured in the United States.
Q2 FY15 EARNINGS PRESENTATION
12
50/30/20 Results
50/30/20 Business Model
Gross Margin
Cost of Doing Business
EBITDA
Target
50%
30%
20%
Q2 FY15
53%
34%
18%
Q2 FY14
52%
34%
18%
Q2 FY13
51%
33%
19%
* See appendix for descriptions and reconciliations of these non-GAAP measures.
Note: Percentages may not aggregate to EBITDA percentage due to rounding
Q2 FY15 EARNINGS PRESENTATION
13
Selected Financial Results
Second quarter
(1)
Q2 FY15
Q2 FY14
Selling, general and administrative
$27.4
$26.7
3%
Advertising and sales promotion
$5.5
$6.0
-9%
Amortization
$0.8
$0.7
16%
Total operating expenses
$33.6
$33.3
1%
$1.5
$0.3
419%
Provision for income taxes
$4.8
$4.6
3%
Net Income
$11.3
$10.3
10%
EPS (Diluted)
$0.76
$0.67
13%
($ in millions; except % change and EPS)
Other expenses
1)
2)
(2)
% Change
Percentage change is based on whole numbers and not the rounded amounts as presented above. There will be minor calculation differences in percentages
due to rounding.
Other expenses include interest income, interest expense and other expense. Other expense increased primarily due to higher foreign currency exchange
losses as a result of significant fluctuations in the foreign currency exchange rates for the euro against the pound sterling.
Q2 FY15 EARNINGS PRESENTATION
14
Selected Financial Results
Year to date
(1)
YTD FY15
YTD FY14
Selling, general and administrative
$54.8
$53.4
3%
Advertising and sales promotion
$11.4
$11.6
-2%
Amortization
$1.5
$1.2
22%
Total operating expenses
$67.7
$66.2
2%
$1.6
$0.6
169%
Provision for income taxes
$9.5
$9.6
-1%
Net Income
$22.1
$21.8
1%
EPS (Diluted)
$1.49
$1.41
6%
($ in millions; except % change and EPS)
Other expenses
1)
2)
(2)
% Change
Percentage change is based on whole numbers and not the rounded amounts as presented above. There will be minor calculation differences in percentages
due to rounding.
Other expenses include interest income, interest expense and other expense. Other expense increased primarily due to higher foreign currency exchange
losses as a result of significant fluctuations in the foreign currency exchange rates for the euro against the pound sterling.
Q2 FY15 EARNINGS PRESENTATION
15
Condensed Balance Sheet
(1)
Q2 FY15
Q4 FY14
Cash and cash equivalents
$43.7
$57.8
-24%
Short-term investments
$42.1
$45.1
-5%
Other assets
$252.0
$244.8
3%
$337.7
$347.7
-3%
Revolving credit facility
$103.0
$98.0
5%
Other liabilities
$74.2
$80.3
-8%
$177.2
$178.3
-1%
$160.6
$169.4
-5%
$337.7
$347.7
-3%
($ in millions; except % change)
Total assets
Total liabilities
Total Shareholders' equity
Total liabilities and shareholder's equity
1)
% Change
Percentage change is based on whole numbers and not the rounded amounts as presented above. There will be minor calculation differences in percentages
due to rounding.
Q2 FY15 EARNINGS PRESENTATION
16
GUIDANCE
Q2 FY15 EARNINGS PRESENTATION
17
Updated Fiscal Year 2015 Guidance*
Sales Growth
Between 1% and 4%
Net Sales
Between $387 and $400 million
Gross Margin
Better than 52%
A&P Investment
In the range of 6.0% to 7.0% of net sales
Net Income
Between $45.1 and $46.0 million
Diluted EPS
Between $3.07 and $3.13 based on 14.7
million shares outstanding
Changes to guidance indicated in BLUE.
* As of 4/8/15. This guidance does not include any future acquisitions or divestitures and is based on recent foreign currency exchange rates.
Q2 FY15 EARNINGS PRESENTATION
18
APPENDIX
Q2 FY15 EARNINGS PRESENTATION
19
Foreign Currency Translation Impact or
“Constant Currency” - Q2 FY15
($ in millions; except % change and EPS)
Financial Results
Q2 FY15
Q2 FY14
% Change
Net Sales
$97.3
$94.2
3%
Gross Profit (%)
52.6%
51.6%
100 bps
Operating Income
$17.6
$15.3
16%
Net Income
$11.3
$10.3
10%
EPS (Diluted)
$0.76
$0.67
13%
Q2 FY15 CC*
Q2 FY14
% Change
Net Sales
$100.6
$94.2
7%
Operating Income
$18.4
$15.3
21%
Net Income
$11.8
$10.3
15%
EPS (Diluted)
$0.80
$0.67
19%
As reported
Financial Results
Constant currency basis
*Q2 FY15 results translated at Q2 FY14 foreign currency exchange rates
Q2 FY15 EARNINGS PRESENTATION
20
Foreign Currency Translation Impact or
“Constant Currency” – YTD
($ in millions; except % change and EPS)
Financial Results
YTD FY15
YTD FY14
% Change
Net Sales
$193.7
$189.7
2%
Gross Profit (%)
52.1%
51.8%
30 bps
Operating Income
$33.2
$32.0
4%
Net Income
$22.1
$21.8
1%
EPS (Diluted)
$1.49
$1.41
6%
YTD FY15 CC*
YTD FY14
% Change
Net Sales
$196.4
$189.7
4%
Operating Income
$33.9
$32.0
6%
Net Income
$22.6
$21.8
4%
EPS (Diluted)
$1.52
$1.41
8%
(As reported)
Financial Results
(Constant currency basis)
*YTD FY15 results translated at YTD FY14 foreign currency exchange rates
Q2 FY15 EARNINGS PRESENTATION
21
Non-GAAP Reconciliation
(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
Amortization of definite-lived intangible assets
Depreciation (in operating departments)
Cost of doing business
Net sales
Cost of doing business as a percentage of net sales
EBITDA:
Net income - GAAP
Provision for income taxes
Interest income
Interest expense
Amortization of definite-lived intangible assets
Depreciation
EBITDA
Net sales
EBITDA as a percentage of net sales
Three Months Ended
2/28/2015
2/28/2014
$
33,602
$
33,306
(757)
(654)
(202)
(529)
$
32,643
$
32,123
$
97,331
$
94,184
34%
34%
$
$
$
11,333
4,758
(178)
275
757
857
17,802
97,331
18%
$
$
$
10,317
4,638
(158)
226
654
817
16,494
94,184
18%
Cost of doing business:
Total operating expenses - GAAP
Amortization of definite-lived intangible assets
Depreciation (in operating departments)
Cost of doing business
Net sales
Cost of doing business as a percentage of net sales
EBITDA:
Net income - GAAP
Provision for income taxes
Interest income
Interest expense
Amortization of definite-lived intangible assets
Depreciation
EBITDA
Net sales
EBITDA as a percentage of net sales
Six Months Ended
2/28/2015
2/28/2014
$
67,710
$
66,212
(1,526)
(1,246)
(405)
(1,014)
$
65,779
$
63,952
$
193,684
$
189,725
34%
34%
$
$
$
22,119
9,507
(312)
569
1,526
1,721
35,130
193,684
18%
Q2 FY15 EARNINGS PRESENTATION
$
$
$
21,799
9,625
(289)
441
1,246
1,603
34,425
189,725
18%
22