Wd-40 Company · NASDAQ:WDFC
Wd-40 — Q4 FY2023 Earnings Presentation
39 slides from Wd-40's earnings presentation, Oct 19, 2023
Slide 1: Q4 & FY23 Earnings Results
Q4 & FY23 Earnings Results OCTOBER 19, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Historical financial and operating data in this presentation reflect the consolidated results of WD-40 Company and its subsidiaries (collectively, the “Company”). The Company markets maintenance products (“MP”) under the WD-40®, 3-IN-ONE® and GT85® brand names. The WD-40 b
Slide 3: Q4 FY23 Results
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Slide 4: Q4 FY23 Results
Q4 FY23 Results ($M except EPS, gross margin and % change) Financial Results Q4 FY23 Q4 FY22 % Change As reported Net Sales $140.5 $130.4 8% Gross Margin 51.4% 47.4% +400 bps Operating Income $23.2 $19.5 19% Net Income $16.6 $14.8 12% EPS (Diluted) $1.21 $1.08 12% • Q4 FY23 changes in currency posit
Slide 5: Americas Segment
Americas Segment Americas – Q4 FY22 vs. Q4 FY23 $74.7 $68.0 • Total reported segment sales ▲ 10% • Segment = 53% of global net sales • Maintenance product sales ▲ 11% • WD-40 Specialist sales ▲ 10% • HCCP sales ▼ 4% • Maintenance Product (MP) sales: • U.S. MP sales ▲ 18% • Latin America MP sales ▼ 1
Slide 6: EMEA Segment
EMEA Segment EMEA – Q4 FY22 vs. Q4 FY23 $50.7 • Total reported segment sales ▲ 16% $43.6 • Segment = 36% of global net sales • Maintenance product sales ▲ 17% • WD-40 Specialist sales ▲ 28% • HCCP sales ▲ 5% • In constant currency sales ▲ 13% • EMEA direct market sales ▲ 19% • 73% sales from direct
Slide 7: Asia-Pacific Segment
Asia-Pacific Segment Asia-Pacific – Q4 FY22 vs. Q4 FY23 $18.8 • Total reported Asia-Pacific sales ▼ 20% $15.0 • Segment = 11% of global net sales • Maintenance product sales ▼ 24% • WD-40 Specialist sales ▼ 16% • HCCP sales ▲ 10% • Australia sales ▼ 1% • In constant currency sales ▲ 5% • China sales
Slide 8: FY23 Results
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Slide 9: FY23 Results
FY23 Results ($M except EPS, gross margin and % change) Financial Results FY23 FY22 % Change As reported Net Sales $537.3 $518.8 4% Gross Margin 51.0% 49.1% +190 bps Operating Income $89.7 $87.3 3% Net Income $66.0 $67.3 -2% EPS (Diluted) $4.83 $4.90 -1% • FY23 changes in currency negatively impacte
Slide 10: Americas Segment
Americas Segment Americas – FY22 vs. FY23 $266.8 $240.3 • Total reported segment sales ▲ 11% • Segment = 50% of global net sales • Maintenance product sales ▲ 12% • WD-40 Specialist sales ▲ 18% • HCCP sales ▼ 2% • Maintenance Product (MP) sales: • U.S. MP sales ▲ 19% • Latin America MP sales ▼ 8% •
Slide 11: EMEA Segment
EMEA Segment EMEA – FY22 vs. FY23 $204.7 $190.8 • Total reported segment sales ▼ 7% • Segment = 36% of global net sales • Maintenance product sales ▼ 8% • WD-40 Specialist sales ▲ 7% • HCCP sales ▲ 14% • In constant currency sales ▲ 1% • EMEA direct market sales ▼ 1% • 72% segment sales from direct
Slide 12: Asia-Pacific Segment
Asia-Pacific Segment Asia-Pacific – FY22 vs. FY23 $79.7 $73.9 • Total reported Asia-Pacific sales ▲ 8% • Segment = 15% of global net sales • Maintenance product sales ▲ 10% • WD-40 Specialist sales ▲ 3% • HCCP sales ▼ 7% • Australia sales ▼ 3% • In constant currency sales ▲ 5% • China sales ▲ 12% •
Slide 13: Growth Aspirations
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Slide 14: Strong Historical Growth with Clear Runway Ahead
Strong Historical Growth with Clear Runway Ahead Maintenance Product Net Sales1 Maintenance Products ($M, Non-GAAP Constant Currency) 504 10-year Sales CAGR 469 425 318 335 355 377 364 6.0% 294 300 EMEA 6.4% APAC 5.7% Americas FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Americas EMEA APAC 1) F
Slide 15: Long-Term Growth Targets for Maintenance Products
Long-Term Growth Targets for Maintenance Products Non-GAAP Constant Currency Long-Term Growth Ambition By Segment Americas EMEA APAC Total Company 50% 36% 14% CAGR Target of global net sales* of global net sales* of global net sales* mid-to-high CAGR Target CAGR Target CAGR Target single digits 5-8%
Slide 16: Our Business Model Enables Long-term Value Creation
Our Business Model Enables Long-term Value Creation Generate Mid-to-High-Single GDP+ Digit Revenue Growth 50→55% Achieve Gross Margin Target ROIC 25%+ 30←35% Manage Cost Of Doing Business Annual dividends targeted at >50% 20→25% Drive EBITDA Margin of earnings Low Capital Invest in Brands and People
Slide 17: Our Four-by-Four Strategic Framework
Our Four-by-Four Strategic Framework Four Must-Win Battles 01 02 03 04 Lead Geographic Accelerate Drive WD-40 Turbo-Charge Expansion Premiumization Specialist Growth Digital Commerce Four Strategic Enablers 01 Ensure a People-First Mindset 02 Build a Sustainable Business For the Future 03 Achieve Op
Slide 18: Lead Geographic Expansion
01 Lead Geographic Expansion | Utilize Proven Playbook to Extend Market Position Across Regions We estimate the long-term global growth opportunity for WD-40 Multi-Use Product to be >$1B (1) $100 Americas China EMEA Asia-Pacific India Japan Opportunity (in millions) Top Market Opportunities by Indon
Slide 19: Accelerate Premiumization
02 Accelerate Premiumization | Improve End User Experience, Drive Sales Growth, and Expand Margins Create global Accelerate Boost growth value Optimize product growth in Expand in developing proposition to sizes to maximize priority manufacturing market distributor better premium pricing growth mark
Slide 20: Drive WD-40 Specialist Growth
03 Drive WD-40 Specialist Growth | Attain Leading Global Position Among Multi-Purpose Maintenance Products Category Leadership by Leveraging the Core through Range Extension • WD-40 Specialist is geared towards one use rather than multi-use, and is incremental to revenue • Allows for additional mark
Slide 21: Turbo-Charge Digital Commerce
04 Turbo-Charge Digital Commerce | Leverage Digital as an Accelerant of All Must-Win Battles Accelerate Omnichannel Capability Building Turbo-Charge Digital Commerce Grow and Develop Digital Commerce Pureplay Build Our Brand Digitally by Evolving Expand digital brand building and maximize the Consum
Slide 22: Enabler #1 | Ensure a People-First Mindset
Enabler #1 | Ensure a People-First Mindset Attract, Develop, and Engage Outstanding Talent KEY TARGETS >90% >54% Employee Better Together Engagement1 Score2 >89% Employee Retention Rate By building and nurturing an inclusive and diverse, purpose-driven, learning and teaching organization, we will su
Slide 23: Enabler #2 | Build a Sustainable Business for the Future
Enabler #2 | Build a Sustainable Business for the Future NET ZERO EMISSIONS PRODUCT SAFETY Philosophically aligned Align our product with the with the vision to achieve safety of our end users without net zero GHG emissions compromising effectiveness by 20501 CARBON HANDPRINT CIRCULAR ECONOMY Develo
Slide 24: Enabler #3 | Achieve Operational Excellence in Supply Chain
Enabler #3 | Achieve Operational Excellence in Supply Chain BUILD BALANCED PROGRESS ESG IN INTEGRATED GROW WITH GLOBAL OUTSOURCED THE GLOBAL END-TO-END COMMERCIAL SUPPLY CHAIN SUPPLY CHAIN PLANNING INNOVATION • Support volume • Standardize suite of • Increase forecast • Support customer growth plans
Slide 25: Enabler #4 | Drive Productivity via Enhanced Systems
Enabler #4 | Drive Productivity via Enhanced Systems SYSTEMS PROJECT MANAGEMENT Drive global economies of scale Partner with the business within our overall infrastructure to (by Trading Bloc) to identify process ensure scalability of systems improvements and innovative while also streamlining and a
Slide 26: FY 2024 Guidance
FY 2024 Guidance 26
Slide 27: Fiscal Year 2024 Guidance
Fiscal Year 2024 Guidance Sales Growth Between 6% and 12% (Constant Currency Basis) Net Sales Between $570 and $600 million (Constant Currency Basis) Gross Margin Between 51% and 53% A&P Investment Between 5% and 6% of net sales Provision For Income Tax Between 24% and 25% Net Income Between $65 and
Slide 28: Appendix
Appendix 28
Slide 29: Sales Impact – Consolidated Net Sales Changes
Sales Impact – Consolidated Net Sales Changes Changes from Prior Year Fiscal Period ($ in millions) Price, Volume and FX Impact Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 FY23 Increase in average selling price (1) $ 26.2 $ 24.0 $ 21.3 $ 10.4 $ 81.9 (Decrease) in sales volume(1) – Russian markets $ (5.0) $ (3.3
Slide 30: Gross Margin Detail – Q4 FY23
Gross Margin Detail – Q4 FY23 Gross margin improved by 400 basis points over prior year primarily due to the following favorable impacts: Gross Margin Drivers Change vs. Prior Year Gross Margin Trend As reported (basis points) Price increases +460 Warehousing, distribution, +70 freight, misc. input
Slide 31: Gross Margin Detail – FY23
Gross Margin Detail – FY23 Gross margin improved by 190 basis points over prior year primarily due to the following favorable impacts: Gross Margin Drivers Change vs. Prior Year Gross Margin Trend As reported (basis points) Price increases +720 Changes in FX +60 These changes were significantly offs
Slide 32: Foreign Currency Translation Impact or “Constant Currency” – Q4 FY23
Foreign Currency Translation Impact or “Constant Currency” – Q4 FY23 ($ in millions; except EPS, gross margin and % change) Financial Results Q4 FY23 Q4 FY22 % Change As reported Net Sales $140.5 $130.4 8% Gross Margin 51.4% 47.4% +400 bps Operating Income $23.2 $19.5 19% Net Income $16.6 $14.8 12%
Slide 33: Foreign Currency Translation Impact or “Constant Currency” – FY23
Foreign Currency Translation Impact or “Constant Currency” – FY23 ($ in millions; except EPS, gross margin and % change) Financial Results FY23 FY22 % Change As reported Net Sales $537.3 $518.8 4% Gross Margin 51.0% 49.1% +190 bps Operating Income $89.7 $87.3 3% Net Income $66.0 $67.3 -2% EPS (Dilut
Slide 34: Foreign Currency Impact
Foreign Currency Impact Transaction Impact Translation Impact Conversion from transaction Translation from functional currency to subsidiaries’ functional currency to WD-40 Company’s currency reporting currency Transaction currency Functional currency Reporting currency Currency in which sales, Main
Slide 35: Additional Foreign Currency Exchange Impact – Q4 FY23
Additional Foreign Currency Exchange Impact – Q4 FY23 Q4 FY23 Net Sales (In millions) $1.2 $0.2 In total changes in FX rates increased net sales by ~$1.4M $139.0 $140.5 in Q4 FY23 Q4 FY23 Net Sales at Transaction Translation Q4 FY23 Net Sales Q4 FY22 FX Rates Impact Impact As Reported Non-GAAP 35
Slide 36: Additional Foreign Currency Exchange Impact – FY23
Additional Foreign Currency Exchange Impact – FY23 FY23 Net Sales (In millions) $5.2 -$17.7 In total, changes in FX rates decreased net sales by $549.8 $537.3 ~$12.5M in FY23 FY23 Net Sales at Transaction Translation FY23 Net Sales FY22 FX Rates Impact Impact As Reported Non-GAAP 36
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation This presentation contains certain non-GAAP (generally accepted accounting principles 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 busin
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation In order to show the impact of changes in foreign currency exchange rates on our results of operations, we have included constant currency disclosures, where necessary, in this presentation. Constant currency disclosures represent the translation of our current fiscal year re
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