Q3 FY15 Earnings Results · Q3 FY15 EARNINGS PRESENTATION Q3 FY15 Financial Highlights 3 • Net sales for the third quarter were $92.5 million, a decrease of 3 percent compared to

Q3 FY15Earnings Results

July 8, 2015

Q3 FY15 EARNINGS PRESENTATION

Forward-Looking Statements

2

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. WD-

40 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 May 31, 2015 which the Company expects to file with

the SEC on July 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 July 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.


Q3 FY15 Financial Highlights

3

• Net sales for the third quarter were $92.5 million, a decrease of 3 percent

compared to the prior year fiscal quarter

– Translation of the Company’s foreign subsidiary results to U.S. dollars had an

unfavorable impact on sales for the current quarter

• Net income for the third quarter was $11.0 million, an increase of 5 percent

compared to the prior year fiscal quarter

• Diluted earnings per share were $0.75 in the third quarter, compared to

$0.69 per share for the prior year fiscal quarter

• Gross margin was 53.3 percent in the third quarter compared to 51.4

percent in the prior year fiscal quarter

• New repurchase plan is now effective which authorizes the Company to

acquire up to $75.0 million of its outstanding shares through August 31,

2016

– As of May 31, 2015 Company repurchased approximately 136K shares at a total

cost of $11.3 million

• Amended line of credit agreement to extend the maturity date to 2020,

increase credit line to $150.0 million and revise financial covenants

“Foreign currency

exchange

headwinds and

political and

economic

instability in

Eastern Europe

are distorting the

true strength of

our business.”

- Garry Ridge


Functional currencyMain currency in which

subsidiaries conduct

business; typically the same

as that of the country in

which the subsidiary is

headquartered

Transaction currencyCurrency in which sales,

costs, expenses are

transacted; typically the

same as that of the country in

which the sales transaction

takes place

Reporting currencyAs a U.S. based company

the reporting currency of WD-

40 Company is the

U.S. dollar

Conversion

from transaction

currency to

subsidiaries’

functional

currency

Translation

from

functional

currency to

WD-40

Company’s

reporting

currency

(U.S. dollar)

Foreign Currency Landscape

4




business, typically the same



headquartered


costs, expenses are




takes place



40 Company is the

U.S. dollar

Conversion

from transaction

currency to

subsidiaries’

functional

currency

Translation

from

functional

currency to

WD-40

Company’s

reporting

currency

(U.S. dollar)

Translation Impacts

WD-40 Company has the

following foreign operating

subsidiaries that generate

sales and which have a

functional currency other

than the U.S. dollar:

• United Kingdom (EMEA)

• Canada (Americas)

• Australia (Asia-Pac)

• China (Asia-Pac)

• 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

In Q3 FY15 the Company

experienced negative

impacts from the translation

of all of the results of its

foreign subsidiaries into the

U.S. dollar

5




business; typically the same



headquartered


costs, expenses are




takes place



40 Company is the

U.S. dollar

Conversion

from transaction

currency to

subsidiaries’

functional

currency

Translation

from

functional

currency to

WD-40

Company’s

reporting

currency

(U.S. dollar)

Conversion Impacts

• 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

Country/Region

of Sale

Transaction

Currency

% of EMEA

Segment Sales

Q3 FY15 Foreign

Currency

Conversion

Impact

United Kingdom

Direct Markets

Pound sterling ~20% None

European Direct

Markets

Euro ~45% Unfavorable

European Marketing

Distributors

US dollar

Pound sterling

~25%

~10%

Favorable

None

U.K. Subsidiary (EMEA) Transaction Currency Impacts - Sales

6


SALESRESULTS

7


HCCP (Total) ↑ 1% ↑ 1%

Americas ↑ 1% ↔ 0%

EMEA ↑ 6% ↑ 2%

Asia-Pacific ↓ -3% ↑ 7%

Third Quarter Year-to-Date

MPMP (Total) ↑ 4% ↔ 0%

Americas ↑ 12% ↑ 4%

EMEA ↓ -18% ↓ -7%

Asia-Pacific ↓ -12% ↑ 10%

Third Quarter Year-to-Date

$32.8 $33.2

$252.6 $253.0

YTD FY14 YTD FY15

$10.9 $11.0

$84.8 $81.5

Q3 FY14 Q3 FY15

Net Sales by Product Group

8

Multi-Purpose Maintenance

Products

Homecare and Cleaning

Products

$92.5$95.7

$286.2$285.4

Multi-Purpose Maintenance Product Sales

Homecare and Cleaning Product Sales

Multi-purpose maintenance

product sales88%

Homecare and cleaning

product sales12%

Third Quarter Sales by Product Group ($M) Third Quarter Global Product Group Sales Mix

Year-to-Date Sales by Product Group ($M)


Asia-Pacific (Total) ↓ -11% ↑ 9%

Australia ↔ 0% ↔ 0%

China ↑ 10% ↑ 11%

Asian Marketing Distributors ↓ -28% ↑ 15%

Year-to-DateThird Quarter

EMEA (Total) ↓ -17% ↓ -7%

Direct Markets ↓ -6% ↓ -5%

Marketing Distributors ↓ -33% ↓ -10%


Americas (Total) ↑ 10% ↑ 4%

United States ↑ 11% ↑ 4%

Latin America ↑ 7% ↑ 7%

Canada ↑ 7% ↓ -3%


$39.7 $43.4

$111.3 $103.6

$134.4 $139.2

YTD FY14 YTD FY15

$13.9 $12.4

$36.7 $30.3

$45.1 $49.7

Q3 FY14 Q3 FY15

Net Sales by Segment

9

Americas EMEA Asia-Pacific

Third Quarter Sales by Segment ($M) Americas

EMEA

Asia-Pacific

Year-to-Date Sales by Segment ($M)

$92.5$95.7

$286.2$285.4

Q3 FY15 EARNINGS PRESENTATION 10

WD-40 Multi-Use Product is Getting Flexible

• Patented new delivery system will be on select WD-40 Multi-Use Product SKUs

• Targeted at high volume end users - intended to make the product easier to use in

workshops and factories

• Expected to be on select store shelves by late July 2015

• View our teaser campaign: www.wd40.com/ez

http://www.wd40.com/ez


FINANCIAL RESULTS

11


Gross Margin Results

12

Q3 FY15 GM of 53.3% vs. Q3 FY14 GM of 51.4%

• Changes in petroleum-based specialty chemicals

and aerosol cans (+2.6pp)

• Warehousing, distribution & freight (+0.3pp)

• Price increases, primarily in Asia-Pacific and EMEA

(+0.3pp)

• Sales mix and miscellaneous costs (+0.3pp)

• Discount and allowances, primarily in the Americas

and Asia-Pacific (-1.1pp)

• Changes in foreign currency exchange rates in

EMEA (-0.5pp)

YTD FY15 GM of 52.5% vs. YTD FY14 GM of 51.6%

• Changes in petroleum-based specialty chemicals

and aerosol cans (+1.0pp)

• Warehousing, distribution & freight (+0.3pp)

• Price increases, primarily in Asia-Pacific and

EMEA (+0.3pp)

• Sales mix and miscellaneous costs (0.1pp)

• Changes in foreign currency exchange rates in

EMEA (-0.4pp)

• Discount and allowances, primarily in Asia-Pacific

(-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

YTD Gross Margin up 0.9 ppQ3 Gross Margin up 1.9 pp


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 Q3 FY15 Q3 FY14 Q3 FY13

Gross Margin 50% 53% 51% 51%

Cost of Doing Business 30% 35% 34% 34%

EBITDA 20% 19% 17% 17%


Selected Financial ResultsThird quarter

14

Q3 FY15 Q3 FY14 % Change(1)

Selling, general and administrative $26.6 $26.9 -1%

Advertising and sales promotion $5.5 $6.5 -15%

Amortization $0.8 $0.7 10%

Total operating expenses $32.9 $34.0 -3%

Other expenses(2) $6.7 $0.1 371%

Provision for income taxes $4.7 $4.6 4%

Net Income $11.0 $10.4 5%

EPS (Diluted) $0.75 $0.69 9%

($ in millions; except % change and EPS)

1) 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.

2) 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.


Selected Financial ResultsYear to date

15

YTD FY15 YTD FY14 % Change(1)

Selling, general and administrative $81.4 $80.2 1%

Advertising and sales promotion $16.9 $18.1 -6%

Amortization $2.3 $1.9 18%

Total operating expenses $100.6 $100.2 0%

Other expenses(2) $2.3 $0.7 208%

Provision for income taxes $14.2 $14.2 0%

Net Income $33.1 $32.2 3%

EPS (Diluted) $2.24 $2.10 7%


1) 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.

2) 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.


Q3 FY15 Q4 FY14 % Change(1)

Cash and cash equivalents $46.9 $57.8 -19%

Short-term investments $48.3 $45.1 7%

Other assets $239.9 $244.8 -2%

Total assets $335.0 $347.7 -4%

Revolving credit facility $108.0 $98.0 10%

Other liabilities $71.0 $80.3 -11%

Total liabilities $179.0 $178.3 0%

Total Shareholders' equity $156.0 $169.4 -8%

Total liabilities and shareholder's equity $335.0 $347.7 -4%

Condensed Balance Sheet

16

($ in millions; except % change)

1) 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.


GUIDANCE

17


Updated Fiscal Year 2015 Guidance*

18

Diluted EPS

Net Income

A&P Investment

Gross Margin

Net Sales

Sales Growth Between 0% and 2%

Between $383 and $390 million

Better than 52%

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

Between $44.5 and $45.4 million

Between $3.03 and $3.09 based on 14.7

million shares outstanding

* As of 7/8/15. This guidance does not include any future acquisitions or divestitures and is based on recent foreign currency exchange rates.

Changes to guidance indicated in BLUE.


APPENDIX

19

Q3 FY15 EARNINGS PRESENTATION 20

Foreign Currency Translation Impact or“Constant Currency” – Q3 FY15

Q3 FY15 Q3 FY14 % Change

Net Sales $92.5 $95.7 -3%

Gross Profit (%) 53.3% 51.4% 190 bps

Operating Income $16.4 $15.1 8%

Net Income $11.0 $10.4 5%

EPS (Diluted) $0.75 $0.69 9%

Q3 FY15 CC* Q3 FY14 % Change

Net Sales $96.5 $95.7 1%


Net Income $11.5 $10.4 10%

EPS (Diluted) $0.78 $0.69 13%

Financial ResultsAs reported

Financial ResultsConstant currency basis

*Q3 FY15 results translated at Q3 FY14 foreign currency exchange rates



YTD FY15 CC* YTD FY14 % Change

Net Sales $292.9 $285.4 3%


Net Income $33.9 $32.2 5%

EPS (Diluted) $2.30 $2.10 9%

YTD FY15 YTD FY14 % Change

Net Sales $286.2 $285.4 0%

Gross Profit (%) 52.5% 51.6% 90 bps


Net Income $33.1 $32.2 3%

EPS (Diluted) $2.24 $2.10 7%

Foreign Currency Translation Impact or“Constant Currency” – YTD

21

Financial Results(As reported)

Financial Results(Constant currency basis)

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



35%

12%

30%

21%

3%

What Makes Up the Cost of a Can?

22

Approximate Cost Breakdown of a Typical Can of

WD-40 MUP Manufactured in the United States

Data as of May 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. Current

manufacturing and input costs typically take approximately 90-120 days to be reflected in the Company’s consolidated statement of operations due to production and inventory

life cycles.

We estimate only

a small portion of

the input costs

associated with

petroleum-

based specialty

chemicals

directly correlate

to the price of a

barrel of crude oil

Petroleum-Based

Specialty Chemicals

Manufacturing Fees

Can

Plastic

Corrugate


Non-GAAP Reconciliation

23

(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 $ 32,900 $ 34,036

Amortization of definite-lived intangible assets (754) (684)

Depreciation (in operating departments) (174) (586)

Cost of doing business $ 31,972 $ 32,766

Net sales $ 92,485 $ 95,650

Cost of doing business as a percentage of net sales 35% 34%

EBITDA:

Net income - GAAP $ 10,965 $ 10,406

Provision for income taxes 4,733 4,554

Interest income (113) (136)

Interest expense 343 268

Amortization of definite-lived intangible assets 754 684

Depreciation 823 804

EBITDA $ 17,505 $ 16,580

Net sales $ 92,485 $ 95,650

EBITDA as a percentage of net sales 19% 17%

Three Months Ended

5/31/2015 5/31/2014 Cost of doing business:

Total operating expenses - GAAP $ 100,610 $ 100,248

Amortization of definite-lived intangible assets (2,280) (1,930)

Depreciation (in operating departments) (579) (1,600)

Cost of doing business $ 97,751 $ 96,718

Net sales $ 286,169 $ 285,375

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

EBITDA:

Net income - GAAP $ 33,084 $ 32,205

Provision for income taxes 14,240 14,179

Interest income (425) (425)

Interest expense 912 709

Amortization of definite-lived intangible assets 2,280 1,930

Depreciation 2,544 2,407

EBITDA $ 52,635 $ 51,005

Net sales $ 286,169 $ 285,375

EBITDA as a percentage of net sales 18% 18%

Nine Months Ended

5/31/2015 5/31/2014

Documents

Q3 FY15 Earnings Results · Q3 FY15 EARNINGS PRESENTATION Q3 FY15 Financial Highlights 3 • Net sales for the third quarter were $92.5 million, a decrease of 3 percent compared to