Wd-40 Company · NASDAQ:WDFC
Wd-40 — Q3 2022 Earnings Presentation
29 slides from Wd-40's earnings presentation, Jul 7, 2022
Slide 1: Q3 FY22 Earnings Results
Q3 FY22 EARNINGS RESULTS July 7, 2022
Slide 2: Forward-Looking Statements
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 maintenance products (“MP”) under the WD-40®, 3-IN-ONE® and GT85® brand names. Currently included
Slide 3: Strategic Initiatives
WD-40 COMPANY STRATERIP INTIATIVES
Slide 4: Strategic Initiatives
Strategic Initiatives Desired Outcome(1) 1. Build a Business for the Future Build an enduring business that we will be proud to pass onto the next generation. By Fully integrate ESG using our purpose and values as a decision-making filter, we will make infinite-minded factors into our business decis
Slide 5: Revenue Growth Aspirations
Revenue Growth Aspirations FY 2011 FY 2021 2025 Growth Aspirations Reported Revenue Reported Revenue Anticipated Revenue Target $336M $488M $650M – $700M(1) $259M $371M ~$525M $77M $51M $66M ~$125M ~$50M Revenue Generated by WD-40 Multi-Use Product Revenue Generated by WD-40 Specialist(2) Revenue Ge
Slide 6: Growth Ambition by Segment
Growth Ambition by Segment Americas EMEA Asia-Pacific Total Company 44% of global 43% of global 13% of global sales* sales* sales* Targeting a compound annual Targeting a Targeting a Targeting a growth in the compound annual compound annual compound annual mid-to-high growth rate of growth rate of g
Slide 7: Q3 FY22 Results
WD-40 COMPANY Q3FY22RESULTS =
Slide 8: Q3 FY22 Results
Q3 FY22 Results ($ in millions; except EPS, gross profit and % change) Q3 FY22 Q3 FY21 % Change Net Sales $123.7 $136.4 -9% Gross Profit (%) 47.7% 53.1% -540 bps Operating Income $19.0 $27.3 -31% Net Income $14.5 $21.0 -31% EPS (Diluted) $1.07 $1.52 -30% • Overall, changes in foreign currency exchan
Slide 9: Foreign Currency Impact
Foreign Currency Impact Transaction Translation Impact Impact Transaction currency Functional currency Currency in which sales, Main currency in which Reporting currency costs, expenses are subsidiaries conduct As a U.S. based company transacted; typically the business; typically the same the report
Slide 10: Q3 FY22 Foreign Currency Exchange Impact
Q3 FY22 Foreign Currency Exchange Impact Q3 FY22 Net Sales (In millions) -$0.1 -$4.2 In total changes in FX rates decreased net sales by ~$4.3M $128.0 $123.7 in Q3 FY22 Q3 FY22 Net Sales at Transaction Translation Q3 FY22 Net Sales Q3 FY21 FX Rates Impact Impact As Reported 10
Slide 11: Americas Segment
Americas Segment Americas – Q3 FY22 vs. Q3 FY21 $61.5 $60.0 • Total reported segment sales ▲ 2% • Segment made up 50% of global sales • Maintenance product sales ▲ 3% • WD-40 Specialist sales ▲ 63% • HCCP sales ▼ 11% • Maintenance Product (MP) sales: • U.S. MP sales flat • Latin America MP sales ▲ 1
Slide 12: EMEA Segment
EMEA Segment EMEA – Q3 FY22 vs. Q3 FY21 • Total reported segment sales ▼ 16% • Segment made up 40% of global sales $58.6 • Maintenance product sales ▼ 16% $49.5 • WD-40 Specialist sales ▼ 13% • HCCP sales ▼ 14% • In constant currency (GBP) sales ▼ 9% • EMEA direct market sales ▼ 13% • In transaction
Slide 13: Asia-Pacific Segment
Asia-Pacific Segment Asia-Pacific – Q3 FY22 vs. Q3 FY21 • Total reported Asia-Pacific sales ▼ 28% $17.8 • Segment made up 10% of global sales • Maintenance product sales ▼ 32% $12.8 • WD-40 Specialist sales ▼ 7% • HCCP sales ▼ 2% • Australia sales ▲ 4% • In functional currency (AUD) sales ▲ 12% • Ch
Slide 14: Must-Win Battles
MUST-WIN BATTLES
Slide 15: Our Must-Win Battles
Our Must-Win Battles Must-Win Battle Must-Win Battle #1 #2 Geographic Premiumization Expansion Must-Win Battle Must-Win Battle #3 #4 Drive WD-40 Digital Specialist Growth Commerce
Slide 16: Must-Win Battle #1 - Geographic Expansion
Must-Win Battle #1 - Geographic Expansion We estimate the potential global market opportunity for WD-40 Multi-Use Product to be ~$1.0B (1) $100 China Americas Indonesia EMEA India Asia-Pacific Saudi Germany Arabia Opportunity (in millions) Mexico South Korea Egypt Thailand Brazil Turkey Nigeria Ital
Slide 17: Must-Win Battle #2 - Premiumization
Must-Win Battle #2 - Premiumization • At the end of FY21, sales of premiumized products represented 49% WD-40 Multi-Use Product global sales • Our objective is to grow Smart Straw penetration to >60% of WD-40 Multi-Use Product global sales Next Generation EZ-Reach® Classic Can Smart Straw® Smart Str
Slide 18: Must-Win Battle #3 – WD-40 Specialist
Must-Win Battle #3 – WD-40 Specialist Our new WD-40 Specialist packaging creates a stronger brand presence for both WD-40 Multi-Use Product and WD-40 Specialist, aligning them as the blue and yellow brand with the little red top 18 18
Slide 19: Must-Win Battle #4 – Digital Commerce
Must-Win Battle #4 – Digital Commerce Our global digital ambition is to engage with end-users at scale, becoming the global leader in our category on the digital platforms they use, making it easy to access, learn about, and purchase our brands online. Creating positive lasting memories….ONLINE 19
Slide 20: 55/30/25 Business Model
55/30/25 BUSINESS MODEL
Slide 21: Q3 FY22 Gross Margin
Q3 FY22 Gross Margin Gross margin decreased by 540 basis points Gross Margin vs. Prior Year primarily due to the following unfavorable Q3 FY22 Q3 FY21 impacts: 47.7% 53.1% Change vs. Prior Gross Margin Drivers Year (basis points) Quarterly Gross Margin Trend Higher specialty chemical costs 400 bps H
Slide 22: Cost of Doing Business
Cost of Doing Business • Q3 FY22 cost of doing business was 31%, down from 32% compared to Q3 FY21 • Cost of doing business comes from three primary areas: • People costs, including earned incentive accruals • Marketing, advertising and promotion • Freight costs to get products to customers • Invest
Slide 23: 55/30/25 Results
55/30/25 Results Target Q3 FY22 Q3 FY21 Q3 FY20 55/30/25 Business Model Actuals Actuals Actuals Gross Margin 55% 48% 53% 54% Cost of Doing Business 30% 31% 32% 32% EBITDA 25% 17% 21% 22% * See appendix for descriptions and reconciliations of these non-GAAP measures. Note: Percentages may not aggrega
Slide 24: Guidance
GUIDANCE
Slide 25: Updated Fiscal Year 2022 Guidance
UPDATED Fiscal Year 2022 Guidance Sales Growth Between 6% and 9% Net Sales Between $519 and $532 million Gross Margin Around 50% A&P Investment Between 5.0% and 5.5% of net sales Provision for Income Tax Between 20% and 21% Net Income Between $69.0 and $70.1 million Diluted EPS Between $5.02 and $5.
Slide 26: Appendix
APPENDIX
Slide 27: Foreign Currency Translation Impact or Constant Currency
Foreign Currency Translation Impact or “Constant Currency” ($ in millions; except EPS, gross profit and % change) Financial Results As reported Q3 FY22 Q3 FY21 % Change Net Sales $123.7 $136.4 -9% Gross Profit (%) 47.7% 53.1% -540 bps Operating Income $19.0 $27.3 -31% Net Income $14.5 $21.0 -31% EPS
Slide 28: Non-GAAP Reconciliation
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 b
Slide 29: Slide 29