WD 40 Company We only see one market, and it s global.

Transcription

1 WD 40 Company We only see one market, and it s global.

2 Except for the historical information contained herein, this news release 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 cause actual results to differ materially from the forward looking statements, including impacts of promotional programs, impacts of line extensions and the uncertainty of market conditions, 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. 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 contained in this presentation is a review of the Company s fiscal 2008 results ending August 31, 2008 and first quarter fiscal 2009 results ending November 30, 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 the website: (Investor Relations).

3 WHO ARE WE?

4 Guiding Principles

5 A simple focus We are in the Squeak Smell & Dirt Business

6 WD 40 Company is A global innovation, marketing and distribution company. A company with values that focus on the long term growth of its people, brands and profits. A company of strong brands. A company of unique broad, distribution. A company with a strong financial platform.

7 Your FORTRESS of Brands! Created the spray lubricant market. 80% share of US consumer market. #1 brand. Created the aerosol carpet stain remover market. First Non toxic, biodegradable, VOC free trigger spray. Created the UK carpet stain remover market. 40% share of UK consumer market. #1 brand. Created the drip oil Market in the US. Strong presence in Europe & Latin America. Created the US heavy-duty hand cleaner market. #1 brand in Grocery. Created Australian heavy-duty hand cleaner market. #1 brand in Grocery. Created the long-duration ATBC market. #1 brand. Created rug deodorizer mkt. #2 brand, #1 in aerosol. Created the mildew stain remover market.

8 Core Strengths of WD 40 Company Its people, passion & products. Global reach & competency. Focused on core end users. Strong financial platform. Outsourcing business model strong free cash flow.

9 WHO S OUR CUSTOMER?

10 Continuum of End Users for Maintenance Products Class Industrial Trades Home Type Manufacturing & Assembly No Go Go Doers Enthusiast Doers Occasional Non Doers User On the Production Line Maintenance Repair Overhaul MRO Mechanic Farmer Fleet Construct Carpenter Electrician Plumbers Maintain Repair Auto, home Improve. DIY, Maintain, Outdoors, Hobbyist Maintain Repair, Overhaul, Maintain, factory, trade, home Use In Process or on finished goods In maintenance In Maintenance In Project or Maintenance Non User Decision Factor Specified Range Specific Knowledge Specific Application Buyer Central buyer / Facility Manager / Owner Owner / User User Buy Distributor / Pro Outlet Location Industrial/trade distributors / wholesalers, automotive, DIY, hardware retail Distributor / Pro Outlet As left + Auto, DIY, Farm, Hardware, distributor Retail Auto, DIY, hardware retail or departments wherever they are sold December 2008 Our playground

11 Hammers Levels Wrenches Hand Saws Stanley Hardware Pliers Screwdrivers Tapes Chisels One trade channel One brand

12 Sell the consumer & make it easy to buy! Dollar stores Mass Merchants Plumbing Home Improvement Auto Parts Farm Supply Hardware Sporting Goods Clubs Industrial Supply Drug Stores Electrical Grocery Discount Stores Military Office Supply

13 SOLID FINANCIAL PLATFORM

14 Investment Snapshot Global, diverse business WD 40 sold in more than 160 countries worldwide. More than half of revenues were outside the US. Brands sold in multiple channels: retail, industrial, institutional. Portfolio of 9 brands. Efficient Operation Sales per employee of $1.1 million. Net income per employee of $91,500. (at FY08) Small Market Cap ~$422 million* 16.9 million shares outstanding** Asset light strategy Average annual capex needs of $3.8mm past 3 years. Outsourced manufacturing and distribution. Current and long term return to shareholders... Dividend yield of ~3.9%.* Dividend increases of 14% in Dec. 06 and 10% in Mar mm shares repurchased over FY07 and FY08, total of $35mm. Focused on creating value ROIC emphasis. ROIC was 20.1% in FY07 and 15.5% in FY08. Employee bonuses tied to profit drivers. Priority in new product development (NPD) investment NPD touched every brand. NPD delivered more than $156 million in sales from FY06 FY08. Ownership Insiders: 6% Institutions: 76%* Top holders: Kayne Anderson Rudnick, Allianz Global, NWQ, Barclays Global, Champlain Investment *at ** FY08

15 Our Financial Foundation Strong Balance Sheet Strong free cash flow Minimal capex requirements Strong liquidity & access to capital Strong stakeholder relationships

16 RECENT RESULTS

17 Net Sales Trend $350,000 in US$ millions $300,000 $250,000 $200,000 $150,000 $100,000 HCP International HCP USA MPMP International MPMP USA CAGR Organic Growth 6.3% since FY05-7.2% since FY03 9.2% since FY98 1.3% since FY98 $50,000 $0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08

18 Sales by Product Category $Millions Multi Purpose Maintenance Products WD 40 and 3 IN ONE brands 74% of total sales Strong growth in developing markets and due to NPD Homecare & Cleaning Products Carpet Fresh, No Vac, X 14, 2000 Flushes, Spot Shot, 1001, Lava and Solvol brands 26% of total sales Dynamic business, reliant on NPD Lubricant sales CAGR 10.0% since 2002

19 Sales by Geographic Segment Sales $MM Asia Pacific Asia, Australia, Pacific Islands 9% of total business in FY08 Sales of WD 40, 3 IN ONE, Solvol, No Vac Direct market opened in China Europe Europe, Middle East, Africa 35% of total business in FY08 Sales of WD 40, 3 IN ONE, 1001 Organic sales CAGR of 18% since FY03 Americas North, Central & South America 56% of total business in FY08 Sales of all brands except 1001 and Solvol

20 Growth of WDFC $MM Sales +3.0% $MM Net Income +12.2% +7.3% -12.4%

21 Annual Results FY08 vs. FY07 ($MM) FY08 FY07 change Sales $ $ % Op Inc % Net Income % EPS $ 1.64 $ %

22 What Happened in FY08.. Sales Strong growth of multi purpose maintenance products Challenging environment for homecare & cleaning segment US sales down by 8% due to deteriorating economic conditions & supply constraints Continuing strong growth outside the US at 15% over prior year Other Impacts to Net Income SG&A up 6.7%, primarily due to freight and personnel costs Impairment charge of $1.3mm for X 14 Gross Margin Drop of 1.6pp in FY08 Sharp increases in components and raw materials costs Timing and amount of price increases did not fully offset the COGS increases Additional costs from sourcing changes and product conversions Loss on investment in related party manufacturer

23 Q1 Results FY09 vs. FY08 ($MM) FY09 FY08 change Sales $ 83.6 $ % Op Inc % Net Income % EPS $ 0.46 $ %

24 Q1 FY09 Compared to Q1 FY08 Sales $83.6mm, Up 5.6% Strong 15% growth of multi purpose maintenance products Homecare & cleaning segment down 18.8% In US dollars, the Americas is up 5%, Europe up 6%, and Asia Pacific is up 10% Operating Expense $26.7mm, Down 4.8% SG&A expense nearly flat; lower freight and FX offset higher people related costs A&P down $1.1mm due to timing of advertising activities Gross Margin 46.3% vs. 47.3% ( 1.0pp) Higher component and raw materials costs vs. Q1 FY08 Lower oil based material costs just starting to flow into finished goods Price increases partially offset higher COGS Greater % of sales were subject to promotional allowances Impact from sourcing changes, product conversions, and loss in related party manufacturer ( 0.5pp) Impact of Foreign Exchange FX Rates At Q1 FY08 FX rates, sales would have been $89.1mm (+13%) and net income would have been $8.6mm (+39%)

25 What makes up the cost of a can?

26 GUIDANCE AS OF JANUARY 2009

27 Fiscal Year 2009 Guidance* Net sales of $305 $315 million; at FY08 rates would be $338 $349 million. Positive sales growth in local currencies significantly impacted by changes in foreign exchange rates. A&P investment between 6.5% and 8.5% of sales (heavy in Q2 Q3). Net income of $26.5 $29.0 million, with EPS between $1.60 to $1.75 based on estimated 16.6 million shares outstanding. Estimated impact of foreign currency exchange rates is $4.5 million to net income or $0.27 per share. * Guidance as of Q1 FY09

28 Outlook for Q2 Net sales of $69 $73 million versus Q2 FY08 actual sales of $78.9 million. Expected reduction in net sales in Q2 is largely due to foreign exchange impact; FY08 results at current year rates would have been $70.9 million. A&P investment above the annual range of 6.5% and 8.5% of sales. Net income of $3.8 $4.6 million, with EPS between $0.23 to $0.28 based on estimated 16.6 million shares outstanding. Variance Drivers Net Income Higher promotional discounts and advertising investment impact of $4.1 million or $0.16 per share. Foreign currency exchange impact of $1.4 million or $0.08 per share.

29 What s troubling us? Unpredictable market conditions Cost of goods Lower cost of oil based components are expected to be offset by higher cost of aerosol cans Despite softening steel prices, the cost of tinplate for aerosol cans has risen substantially Homecare and cleaning brands in grocery Impact of foreign exchange rates

30 FORTRESS GROWTH FOUNDATIONS

31 The WDFC Value Fortress Creating Long-term Value Brand Portfolio Operational Excellence Financial Discipline Drive Profitable Growth Improve Margins Increase ROIC Exceptional People

32 The WDFC Value Fortress Creating Long-term Value Brand Portfolio Operational Excellence Financial Discipline Drive Profitable Growth Improve Margins Increase ROIC Exceptional People

33 Exceptional People are the foundation of WD 40 Company The WD 40 Company tribe is an investment not an expense. Culture of learning and coaching is embedded in organization. WD 40 Leadership Academy President s Path to Leadership annual scholarships Leaders Coaching Leaders mentor program Ongoing executive coaching program

34 People Products Passion Servant leadership with edge Learning Learning Moment Vision What mountain do we want to climb? Don t mark my paper help me get an A Values Values are principles that guide our behavior Planning Review Results in a tribal culture that values: Caring Candor Accountability Responsibility Execution Typhoon Zone 2006 The Learning Moment Inc. All rights reserved. Do not duplicate thelearningmoment.net

35 The WDFC Value Fortress Creating Long-term Value Brand Portfolio Operational Excellence Financial Discipline Drive Profitable Growth Improve Margins Increase ROIC Exceptional People

36 Brand Portfolio: Driving profitable growth Geographic Development Trade Channel Development New Product Development Acquisition

37 Geographic development: Europe Continued expansion in Europe Our long standing investment in Europe is paying off as our total European sales have grown at a CAGR of 19.5% since fiscal Direct operations in: Austria, Denmark, France, Germany, Italy, Netherlands, Portugal, Spain, UK. European Direct grew by 11% in FY08. Exclusive distributors in Eastern & Northern Europe and the Middle East. European Distributors grew by 22% in FY08. We continue to see substantial growth opportunities across Europe in the years ahead.

38 Geographic development: Latin America Continued expansion in Latin America Sales up 19% in FY2008. Continued development and significant sales in Mexico. Home Depot now there with 60+ stores. High growth in South America, with >20% sales increases in Argentina, Peru, and Venezuela in FY2008.

39 Geographic development: Asia Continued expansion in Asia Total Asia Sales (including China) were up 24% in FY2008. Sales are primarily WD 40 brand. China market grew 66% in the year. Sales growth of 12% in distributor markets, with strong performance in the Philippines, Japan, India, and Thailand. Managed through our offices in Kuala Lumpur, Malaysia and Shanghai, China.

40 Growing through new product development (NPD) Formation of Team Tomorrow in Enhanced investment in R&D since, including $3.6 million in fiscal Two aspects of our NPD: Innovation: creation in better form Renovation: improving an existing product Past NPD have touched every single brand. NPD introduced in past three years yielded close to $156 million in net sales during the same period.

41 Converted US market in April 2008 Permanently attached straw Sprays two ways Innovative, high tech design Solves the #1 consumer complaint Losing the straw!

42 Leveraging new product development (NPD) U.S. converted mid size cans to new Smart Straw delivery system in Q3 FY08. Full impact of conversion will be realized in fiscal Better margin opportunities for WD 40 as well as our customers, while delivering value to the consumer. Opportunity to optimize the WD 40 SKU portfolio, as well as discounts, allowances, and cost of goods. Significant investment in capital equipment in FY08 and FY09. New automation in FY09 will improve stock levels and economies of scale. Advertising and promotion in FY09 to support conversion.

43 3 IN ONE Professional: Garage Door Lube with Smart Straw technology Unique lubricant with built in straw Sprays two ways Waterproofs metal surfaces, preventing rust & corrosion Stops squeaks & prevents sticking

44 The News for Spot Shot Spot Shot Pet and Spot Shot Green Non toxic, biodegradable formulas

45 3 IN ONE NO RUST SHIELD

46 Acquisitions We will continue to actively search for acquisition opportunities that meet both our financial and strategic criteria. Brands that we can roll up into our business infrastructure and that would benefit from our marketing, innovation and distribution competencies. and can be acquired at the right price.

47 The WDFC Value Fortress Creating Long-term Value Brand Portfolio Operational Excellence Financial Discipline Drive Profitable Growth Improve Margins Increase ROIC Exceptional People

48 Operational Excellence Focus on improving margins Cost Reduction & Containment Team Global Sourcing & Supply Chain Evolution Innovation Price increases as necessary Acquisition

49 The WDFC Value Fortress Creating Long-term Value Brand Portfolio Operational Excellence Financial Discipline Drive Profitable Growth Improve Margins Increase ROIC Exceptional People

50 Financial Discipline Focus on increasing ROIC Utilizing an asset light strategy Sweating the assets to gain improved returns on existing investments Improving operating leverage is a priority Focus on total shareholder return Goal to increase the Return on Invested Capital (ROIC)

51 What matters to us Managing our business with rigor Paying close attention to the balance of sales and profit growth Helping our people get an A not marking their paper Being positive Being realistic Being responsive Being responsible Being accountable Being candid Living our values

52 Visit us at Wd40company.com