2013 wd-40 company annual shareholder...

2013 WD-40 Company Annual Shareholder Meeting The more we learn about the world, the better the solutions we provide.

That’s the power of the shield.

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 may 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 fourth quarter and fiscal year results for the periods ended August 31, 2013 and 2012. 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: www.wd40company.com (Investor Relations).

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http://www.wd40company.com/

WHO ARE WE?

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What does a good business look like?

Simple and easy to understand business model. Dominant in its industry and has been through periods of recession and emerged stronger. Superior returns on capital achieved through high margins and relatively low capital reinvestment requirements. Sustainable competitive advantage protecting the business from competition through strong end user loyalty. Significant cash flow generation. Creates excess cash over and above the business’ annual capital requirements. Strong balance sheet with prudent leverage. High quality management with a proven track record of solid performance - with honesty, intelligence and integrity.

Guiding Principles

Vision

• Create positive lasting memories by solving problems in homes and factories around the world.

• (“Problem Solved, Job Done Right”)

Values

• We value doing the right thing. (Trust)

• We value creating positive lasting memories in all our relationships. (Relationships)

• We value making it better than it is today. (Creative Innovation)

• We value succeeding as a tribe while excelling as individuals. (Teamwork)

• We value owning it and passionately acting on it. (Action)

• We value sustaining the WD-40 Company economy. (Economic Value)

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STRATEGIC INITIATIVES

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Refreshed Strategic Initiatives

OUR PEOPLE

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People - Products - Passion

Typhoon Zone

Servant leadership with edge

Review

Values

Planning

Execution

Vision

Learning Moment

Learning Don’t mark my

paper help me get an “A”

Results in a tribal culture that values:

•Caring

•Candor

•Accountability

•Responsibility

What mountain do we want to climb?

Values are principles that guide our

behavior

© 2010 The Learning Moment Inc. All rights reserved. Do not duplicate.

thelearningmoment.net

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OUR BRANDS

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Celebrating 60 years

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Identify & establish geographic WD-40 MUP User Base

Channel development – multi trade channel distribution – execute “The Secret”

WD-40 MUP end user trust established with multi platform usage – “Memories” = EQUITY

General Maintenance

Products

Lawn & Garden

Landscaping Motor Bike New Category New Category New Category

Flanker & new category products – WD-40 Specialist product line

Bundle Bundle Bundle

Grow the core





Bundle Bundle Bundle 13

http://www.google.co.uk/url?sa=i&rct=j&q=world+map&source=images&cd=&cad=rja&docid=5JpheUdUFz_UiM&tbnid=3-cphsn26-jVfM:&ved=0CAUQjRw&url=http://www.worlddutyfreegroup.com/lang/en/our-stores/&ei=dLgTUdDOCJGb1AXNuYCACQ&bvm=bv.42080656,d.d2k&psig=AFQjCNH-dhf3XCln6KXx7354Ksondm36qA&ust=1360333243718530

Mental Awareness

Physical Awareness

Make the end user aware and make it easy to buy

The Power of the Shield Leveraging the trust of the brand

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Physical Awareness Make it easy to buy

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OUR END USERS

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Auto Pro MRO

At-Home – “Non-Enthusiast”

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INVESTMENT PERFORMANCE

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Five Year Comparison of Total Shareholder Return

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$40

$60

$80

$100

$120

$140

$160

$180

$200

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Value of $100 invested on August 31, 2008

WD-40 Company S&P 500 Russell 2000

What drove that PERFORMANCE?

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Success Factors for WD-40 Company

• Solid Financial Foundation

Strong Balance Sheet and predictable cash flow

• Efficient business model

Asset light strategy

• High ROIC

• Strong Brands with Global reach

Long runway of growth in front of us

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$- $20 $40 $60 $80

$100 $120 $140 $160 $180 $200 $220 $240 $260 $280 $300 $320 $340

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Global MPMP Revenue 10 Year View - All Years at FY13 FX Rates

Global MPMP

Strong Brands with a Global Reach

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$-

$20

$40

$60

$80

$100

$120

$140

$160

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

MPMP Revenue by Trade Bloc 10 Year View - All Years at FY13 FX Rates

Americas EMEA AsiaPac

Strong Brands with a Global Reach

50 / 30 / 20 RULE

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50 Gross margin–At or above 50% of net sales

- 30 Cost of doing business–At or below 30%

____ of net sales1

=20 EBITDA – At or above 20% of net sales1

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

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The 50 / 30 / 20 Rule

•The “50” or Gross margin improvement

• Product Development • New Product introductions

• Product reformulations

• Operational efficiencies

• Mix - Product mix and market mix

• Pricing – as needed to offset input cost increases

The 50 / 30 / 20 Rule

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FY14 >51%

FY13 51%

FY12 49%

•The “30” or Leveraging our global infrastructure

• 75% of the “30” in 3 areas

Our People – Investments in our tribe

Investments in marketing, advertising and promotion

Freight – the cost of getting our products to our customers

Advertising & Sales

Promotion

Freight

Personnel

Professional Services

Office Overhead

Travel & Meeting Expenses

R&D Project Expenses

Broker Commissions

Insurance

All Other

% COB

The 50 / 30 / 20 Rule

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Revenue growth is key to achieving the “30” target

RESULTS

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YTD FY13 vs. YTD FY12

($M) FY13 FY12 Change

Sales 368.5$ 342.8$ 8%

Gross Profit % 51.3% 49.2% 210 bp

Op Income 56.6$ 51.7$ 9%

Net Income 39.8$ 35.5$ 12%

EPS (Diluted) 2.54$ 2.20$ 15%

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YTD FY13 Compared to YTD FY12

Sales – $368.5M, Up 8%

•Multi-purpose maintenance products up 12%

•Homecare & cleaning products down 15%

•Americas up 2%, EMEA up 16%, and Asia Pacific up 7%

Operating Expenses - $132.5M, Up 14%

• SG&A up $15.5M driven by higher bonus and other employee-related costs, as well as travel and meeting expenses

• A&P investment down $0.9M driven by lower investment in homecare and cleaning products in the Americas

Gross Margin – 51.3% vs. 49.2% (+2.1pp)

• Price increases (+1.1pp)

• Lower discounts (+0.4pp)

• Changes in petroleum-based material costs

and aerosol can costs (+0.2pp)

• Changes in other raw material costs and

manufacturing costs (-0.1pp)

• COG areas impacted by the North American

supply chain architecture project (+0.3pp)

• Lower COGS in China due to local sourcing

(+0.2pp)

• Impact from changes in sales mix and other

misc was negligible

FX Impact – Constant Currency vs. Reported

• At FY12 FX rates, sales would have been higher by $2.0M

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A WORD ABOUT CAPITAL ALLOCATION

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Capital Allocation Strategy

Organic Growth Initiatives

Acquisitions Repurchase

Shares

Determine Liquidity Objectives & Debt/Cash Balance:

Liquidity: Adequate to support growth strategy. Supported by strong BS & available lines of credit Cash /Debt - Neutral Position

F

Excess Capital allocated to the Highest

Return Alternative

Long-term Growth and Return Targets:

Revenue and Earnings growth range: 6-8% ROIC : 20% +

STEP 1

STEP 2

STEP 3 Maintenance Cap Ex and Regular Dividends: Minimal Cap Ex: $2-4M per year Dividends: 50% of Earnings ≈ $20M per year

STEP 4

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FISCAL YEAR 2014 GUIDANCE AS OF OCTOBER 2013

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• Sales growth between 4% and 8%, with Net Sales of $383-$398 million

• Gross margin close to 51%

• A&P investment in the range of 6.5% and 7.5% of Net Sales • Net Income of $40.5-$42.8 million

• Diluted EPS of $2.65 to $2.80 based on estimated 15.3 million

shares outstanding

Fiscal Year 2014 guidance

Conditions that impact our outlook

•Continuing global economic recovery and expansion or ….at least stability

•Initiatives to maximize multi-purpose maintenance products • Continued geographic expansion of WD-40 Multi-Use Product

and WD-40 Specialist product lines

• Gross Margin • Maintain gross margin above 50% of net sales

• Stability in key input costs – petroleum-based spirits & steel

•Harvest Homecare & Cleaning product profits •Current foreign currency exchange rates

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Favorable

Uncertain

Unfavorable

LAST WORD

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What you heard from us today

You heard

… we celebrated our 60th year by growing sales by 8% in FY2013.

… that our three new innovation teams are actively developing new products and categories to fuel growth over the coming years.

… that our growth was fueled by both our WD-40 Multi-Use Product and new and increased distribution of our WD-40 Specialist Product line.

… we achieved a gross margin of 51.3% in part due to cost saving initiatives.

… we continued to return capital to shareholders through regular dividends and share buybacks.

… that WD-40 Company has been a good investment, yielding return on invested capital of over 20% for the last four years.

…that we expect sales growth of 4-8% for fiscal year 2014 and

You heard that we are excited about our future!

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WD-40 Company Business Score card

Simple and easy to understand business model

Dominant in its industry

Superior returns on capital

Sustainable competitive advantage

Significant cash flow generation

Strong Balance Sheet

Growth opportunities

Thank You

Questions ?

APPENDIX

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50 / 30 / 20 Rule

Measure of Net Sales Target FY13 FY12 FY11

Gross Margin 50% 51% 49% 50%

Cost of Doing Business* 30% 35% 33% 33%

EBITDA* 20% 17% 16% 17%

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

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(1) This presentation contains certain non-GAAP (accounting principles generally accepted in the United States of America) measures, that our management believes provide our shareholders 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 WD-40 Company’s financial statements as prepared under GAAP are as follows:

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Three Months Three Months

Cost of Doing Business Ended 8/31/13 Ended 8/31/12

Total Operating Expenses- GAAP $38,147 $28,339

Amortization of definite-lived intangible assets ($806) ($464)

Impairment of definite-lived intangible assets ($1,077)

Depreciation (in Operating Departments) ($497) ($408)

Cost of doing business $35,767 $27,467

Net Sales $93,469 $84,851

Cost of doing business as % of net sales 38% 32%

Three Months Three Months

EBITDA Ended 8/31/13 Ended 8/31/12

Net Income- GAAP $8,141 $8,973

Income Tax Expense $3,096 $4,435

Interest income ($144) ($79)

Interest expense $210 $245

Amortization of definite-lived intangible assets $806 $464

Depreciation $788 $714

EBITDA $12,897 $14,752

Net Sales $93,469 $84,851

EBITDA as % of net sales 14% 17%


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Twelve Months Twelve Months



Amortization of definite-lived intangible assets ($2,260) ($2,133)

Impairment of definite-lived intangible assets ($1,077)

Depreciation (in Operating Departments) ($1,851) ($1,597)


Net Sales $368,548 $342,748







Interest expense $693 $729

Amortization of definite-lived intangible assets $2,260 $2,133

Depreciation $3,099 $2,736

EBITDA $62,413 $56,250

Net Sales $368,548 $342,748






Amortization of definite-lived intangible assets ($2,133) ($1,537)

Depreciation (in Operating Departments) ($1,597) ($1,637)


Net Sales $342,748 $336,409







Interest expense $729 $1,076

Amortization of definite-lived intangible assets $2,133 $1,537

Depreciation $2,736 $2,849

EBITDA $56,250 $58,765

Net Sales $342,748 $336,409


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50 / 30 / 20 Rule

Measure of Net Sales Target FY13 FY12 FY11

Gross Margin 50% 51% 49% 50%

Cost of Doing Business* 30% 35% 33% 33%

EBITDA* 20% 17% 16% 17%

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

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2013 wd-40 company annual shareholder...

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