Wd-40 Company · NASDAQ:WDFC
Wd-40 — Q3 FY23 Earnings Presentation
30 slides from Wd-40's earnings presentation, Jul 10, 2023
Slide 1: Q3 FY23 Earnings Results
Q3 FY23 Earnings Results July 10, 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: Q3 FY23 Results
Q3 FY23 Results 3
Slide 4: Q3 FY23 Results
Q3 FY23 Results ($ in millions; except EPS, gross profit and % change) Q3 FY23 Q3 FY22 % Change Net Sales $141.7 $123.7 15% Gross Profit (%) 50.6% 47.7% 290 bps Operating Income $25.7 $19.0 35% Net Income $18.9 $14.5 30% EPS (Diluted) $1.38 $1.07 29% • On a constant currency basis, Q3 FY23 net sales
Slide 5: 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 6: Additional Foreign Currency Exchange Impact
Additional Foreign Currency Exchange Impact Q3 FY23 Net Sales (In millions) $1.7 -$3.9 In total changes in FX rates decreased net sales by ~$2.2M $143.9 $141.7 in Q3 FY23 Q3 FY23 Net Sales at Transaction Translation Q3 FY23 Net Sales Q3 FY22 FX Rates Impact Impact As Reported Non-GAAP 6
Slide 7: Sales Impact – Consolidated Net Sales Changes
Sales Impact – Consolidated Net Sales Changes Changes from Prior Year Fiscal Period ($ in millions) Q1 FY23 Q2 FY23 Q3 FY23 Year to Date Increase in average selling price(1) $ 26.2 $ 24.0 $ 21.3 $ 71.5 Decrease in sales volume(1) – Russian markets $ (5.0) $ (3.3) $ - $ (8.3) (Decrease) increase in s
Slide 8: Americas Segment
Americas Segment Americas – Q3 FY23 vs. Q3 FY22 $71.1 • Total reported segment sales ▲ 16% $61.5 • Segment made up 50% of global sales • Maintenance product sales ▲ 17% • WD-40 Specialist sales ▲ 6% • HCCP sales ▲ 1% • Maintenance Product (MP) sales: • U.S. MP sales ▲ 21% • Latin America MP sales ▲
Slide 9: EMEA Segment
EMEA Segment EMEA – Q3 FY23 vs. Q3 FY22 • Total reported segment sales ▲ 6% • Segment made up 37% of global sales • Maintenance product sales ▲ 5% $52.5 $49.5 • WD-40 Specialist sales ▲ 6% • HCCP sales ▲ 30% • In constant currency (GBP) sales ▲ 13% • EMEA direct market sales ▲ 2% • 68% of segment sa
Slide 10: Asia-Pacific Segment
Asia-Pacific Segment Asia-Pacific – Q3 FY23 vs. Q3 FY22 • Total reported Asia-Pacific sales ▲ 42% $18.1 • Segment made up 13% of global sales • Maintenance product sales ▲ 55% • WD-40 Specialist sales ▲ 15% $12.8 • HCCP sales ▼ 19% • Australia sales ▼ 14% • In functional currency (AUD) sales ▼ 6% •
Slide 11: Growth Aspirations
‘ea Growth Aspirations
Slide 12: 10-Year Historic Growth CAGR
10-Year Historic Growth CAGR Non-GAAP Constant Currency Maintenance Products 10-Year CAGR $240 Maintenance Product Americas 5.3% Sales by Segment1 5.3% $220 EMEA 7.9% (In millions) 7.9% Asia-Pacific 6.2% $200 Global 6.4% $180 $160 $140 $120 $100 $80 6.2% $60 $40 $20 $- FY13 FY14 FY15 FY16 FY17 FY18
Slide 13: Long-Term Growth Targets by Segment
Long-Term Growth Targets by Segment Americas EMEA Asia-Pacific Total Company 47% of global 39% of global 14% 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
Slide 14: Must-Win Battles
Must-Win Battles 1 4
Slide 15: 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 ~$1B (1) $100 China Americas Indonesia EMEA India Asia-Pacific Saudi Japan Germany Arabia Opportunity (in millions) Turkey South United Korea States Egypt Thailand Brazil N
Slide 16: Must-Win Battle #2 - Premiumization
Must-Win Battle #2 - Premiumization • At the end of FY22, sales of premiumized products totaled $188M representing 47% of WD-40® Multi-Use Product global sales • Our objective is to grow premiumized products to >60% of WD-40® Multi- Use Product global sales Next Generation EZ-Reach® Classic Can Smar
Slide 17: 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 17
Slide 18: 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 18
Slide 19: Business Model
55/30/25 Business Model 1 9
Slide 20: Gross Margin
Gross Margin Gross Margin vs. Prior Year Q3 FY23 Q3 FY22 Gross margin improved by 290 basis points Y-O-Y 50.6% 47.7% primarily due to the following favorable impacts: Change vs. Prior Gross Margin Trend Gross Margin Drivers Year (basis points) Price Increases +740 bps 51.4% 50.8% 50.4% 50.6% Lower i
Slide 21: What Makes Up the Cost of a Can?
What Makes Up the Cost of a Can? Approximate Cost Breakdown of a Typical Can of WD-40 MUP Manufactured in the United States FY22 Corrugate Plastic Specialty Chemicals Manufacturing Fees Tin-Plate Can Data as of August 2022. Represents average input costs over 6-month period of a typical 12 ounce can
Slide 22: Cost of Doing Business
Cost of Doing Business • Q3 FY23 cost of doing business was 32%, up from 31% compared to Q3 FY22 • 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 • Investme
Slide 23: 55/30/25 Results
55/30/25 Results Target Q3 FY23 Q3 FY22 Q3 FY21 55/30/25 Business Model Actuals Actuals Actuals Gross Margin 55% 51% 48% 53% (1) Cost of Doing Business 30% 32% 31% 32% (1) EBITDA 25% 20% 17% 21% Our EBITDA target of 25% will be achieved primarily through leverage - once we are consistently back at h
Slide 24: Guidance
Guidance 2 4
Slide 25: Reiterated Fiscal Year 2023 Guidance
Reiterated Fiscal Year 2023 Guidance “While we are reiterating our guidance today, we do continue to operate in a volatile environment, and we will likely come in at the lower end of our guidance range.” – Sara Hyzer Sales Growth Between 3.5% and 7.5% Net Sales Between $535 and $560 million Gross Ma
Slide 26: Appendix
Appendix 2 6
Slide 27: Foreign Currency Translation Impact or “Constant Currency”
Foreign Currency Translation Impact or “Constant Currency” ($ in millions; except EPS, gross profit and % change) Financial Results As reported Q3 FY23 Q3 FY22 % Change Net Sales $141.7 $123.7 15% Gross Profit (%) 50.6% 47.7% 290 bps Operating Income $25.7 $19.0 35% Net Income $18.9 $14.5 30% EPS (D
Slide 28: 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 29: 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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