q3 fy16-earnings-presentation-final

Download Q3 fy16-earnings-presentation-final

Post on 10-Apr-2017

691 views

Category:

Investor Relations

0 download

Embed Size (px)

TRANSCRIPT

  • Q3 FY16

    July 7, 2016

    Earnings Results

  • 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 maintenance products (MP) 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 Companys 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 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 IItem 1A, Risk Factors, in the Companys Annual Report on Form 10-K for the fiscal year ended August

    31, 2015 which the Company filed with the SEC on October 22, 2015 and in the Companys Quarterly Report on Form 10-Q for the period

    ended May 31, 2016 which the Company expects to file with the SEC on July 7, 2016.

    All forward-looking statements included in this presentation should be considered in the context of these risks. All forward-looking statements

    speak only as of July 7, 2016 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.

    Forward-Looking Statements

  • 3

    Q3 FY16 Q3 FY15 % Change

    Net Sales $96.4 $92.5 4%

    Gross Profit (%) 56.8% 53.3% 350 bps

    Operating Income $18.7 $16.4 14%

    Net Income $12.7 $11.0 16%

    EPS (Diluted) $0.88 $0.75 17%

    Q3 FY16 Results

    Top-line sales growth was impacted by foreign currency exchange

    rates in Q3 FY16

    When you take both translation (or constant currency) and

    transaction exposure into consideration, the impacts of foreign

    currency exchange rates reduced our total net sales by approximately

    $1.2 million

  • 4

    STRATEGIC INITIATIVES

  • 5

    1. Grow WD-40 Multi-Use Product

    Maximize the product line through geographic expansion

    and increased market penetration. More places, more

    people, more uses, more frequently.

    Double our WD-40 Multi-Use Product

    net sales over the next 10 years

    2. Grow the WD-40 Specialist Product Line

    Leverage the WD-40 Specialist brand to grow specialist by

    developing new products and product categories within

    identified geographies and platforms.

    Grow WD-40 Specialist to $125 million

    in net sales over the next 10 years

    3. Broaden Product and Revenue Base

    Leverage the recognized strengths of WD-40 Company to

    derive revenue from new sources and brands.

    Continue to develop or acquire

    maintenance products that fit well with

    our unique multi-channel distribution

    network

    4. Attract, Develop and Retain Outstanding Tribe

    Members

    Succeed as a tribe while excelling as individuals.

    Grow employee engagement to greater

    than 95 percent

    5. Operational Excellence

    Continuous improvement by optimizing resources,

    systems and processes as well as applying rigorous

    commitment to quality assurance, regulatory compliance,

    and intellectual property protection.

    Execute the 55/30/25 business model

    while safeguarding the Power of the

    Shield

    Strategic InitiativesTarget

  • 6

    SALES UPDATE

  • 7

    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

    Companys

    reporting

    currency

    Foreign Currency Impact

    Translation

    Impact

    Transaction

    Impact

    Subsidiary

    (Functional Currency)

    UK GBP

    CANADA- CAD

    AUSTRALIA- AUD

    CHINA- CNY

    Subsidiary

    (Non-Functional Currency)

    UK USD & EUR

  • 8

    Q3 FY16 net sales at Q3 FY16 FX rates Q3 FY16 net sales at Q3 FY15 FX rates Q3 FY16 net sales at Q3 FY15 FX rates

    Foreign Currency Exchange Impact

    In total

    changes in FX

    rates reduced

    net sales by

    ~$1.2M in 3Q

    FY16

    $96.4

    $99.2

    $97.6

    Reported Net Sales Translation Impact Transaction Impact

    Translation Impact(Functional Currency)

    Translation and

    Transaction ImpactReporting Currency

    Q3 FY16 Net Sales(In millions)

    (constant currency) (constant currency plus transaction impacts)(as reported)

    $2.8$1.6

    $80

  • 9

    $43.3 $42.2

    $6.6 $7.6

    Q3 FY16 Q3 FY15

    Americas Net Sales(in millions)

    Maintenance Products Homecare and Cleaning Products

    Americas Segment

    Americas Q3 FY16 vs. Q3 FY15

    $49.9 $49.8

    Total reported segment sales flat

    Segment makes up 52% of global sales

    Maintenance product sales 3%

    HCCP sales 13%

    Maintenance product (MP) sales:

    U.S. MP sales 5%

    Represents 84% of segment sales

    Latin America MP sales flat

    Canadian MP sales 16%

    Due to timing of promotional programs

    and unstable market and economic

    conditions in Western Canada

    $0

  • 10

    $31.5 $28.8

    $1.4

    $1.5

    Q3 FY16 Q3 FY15

    EMEA Net Sales(in millions)

    Maintenance Products Homecare and Cleaning Products

    EMEA SegmentEMEA Q3 FY16 vs. Q3 FY15

    $30.3$32.9

    Total reported segment sales 9%

    Segment makes up 34% of global sales

    Changes in foreign currency exchange rates

    had an unfavorable impact on sales

    On a constant currency basis sales 16%

    Maintenance product sales 10%

    HCCP sales 12%

    EMEA direct market sales 9%

    68% of segment sales came from direct

    markets

    In GBP-based markets sales 1% in GBP

    In EUR-based markets sales 15% in EUR

    EMEA distributor market sales 7%

    32% of segment sales came from distributor

    markets

    Sales increase due to improving market

    conditions in Eastern Europe

    $0

  • 11

    $11.7 $10.6

    $1.9

    $1.8

    Q3 FY16 Q3 FY15

    Asia-Pacific Net Sales(in millions)

    Maintenance Products Homecare and Cleaning Products

    Asia-Pacific Segment

    Asia-Pacific Q3 FY16 vs. Q3 FY15

    $12.4$13.6

    Total reported Asia-Pacific sales 10%

    Segment makes up 14% of global sales

    Changes in foreign currency exchange

    rates had an unfavorable impact on sales

    On a constant currency basis sales 14%

    Maintenance product sales 11%

    HCCP sales 6%

    Australia sales flat

    In functional currency (AUD) sales 5%

    China sales 5%

    In functional currency (RMB) sales 1%

    Asia distributor market sales 32%

    Driven by successful promotional programs

    $0

  • 12

    THE 55/30/25 RULE

  • 13

    Gross Margin

    As the cost of crude oil continues to increase from the extremely low levels that flowed through our cost of goods

    in the third quarter, we expect to see pressure on gross margin in the coming quarters

    FY15

    53%

Recommended

View more >