WDFC - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. Good day, and welcome to the WD-40 Company Fourth Quarter and Full Fiscal Year 2020 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we will conduct a question-and-answer session. now for turn today's would to presentation I host your call, Instructions] like the to over [Operator Ms. Wendy Corporate Kelley, Communications. and Director, Investor Relations Please proceed.

Wendy Kelley

us Officer, Chief Steve Executive afternoon, everyone Garry Operating Ridge; today Good Officer, thanks and Officer, and WD-XX today. Chief President President joining Chief Financial are and you. call Rembolt; On Brass. Chairman Thank Company's Vice our Jay and for to and

after presented earnings In review on release this On the addition we information of today's non-GAAP to The for presentation, filings financial encourage discuss available documents call, today's are measures. XX-K earnings August our call. we Form available certain will or earnings as ending will will website SEC relations our transcript A are and XX, as press non-GAAP made at measures call well investor these These call, and shortly our reconciliations available in replay of descriptions investors period be to be today's the our and location investor.wdXXcompany.com. on XXXX. also at that presentation.

call forward-looking reminder, today's for includes future a statements expectations about the As company's our performance.

actual results and are there materially. filings further to refer in detailed our The could company's factors in projections will but assurance discussion. expectations, SEC can for or good beliefs faith, that no Please accomplished. differ expressed be they course, achieved Of be the risk

With reviewing I'd the of XXXX. a a Finally, XX, result update of for call, transcript date, as or any is note events to now company to written like to information today's information, of replay or listening call The duty presented Garry. that over as future only turn or current whether anyone webcast a please this any obligation all disclaims October to new information, that, otherwise. forward-looking

Garry Ridge

you hope net we of Wendy. our and these Jay, thanks are staying again, homes. in We and Wendy safe for Good times. $XXX.X call. currencies of of from impact dialing day, did last for XXXX, for healthy year the the results respective up are, reported a Steve, Today, functional conference fourth not sales you, their U.S. the in I your quarter and that families us Translation today's joining fourth fiscal and have in our the dollar once on Thank the million X% challenging foreign from fourth to to compared subsidiary quarter year. of quarter. sales meaningful

today are Thank a orders functioning, during tribe functional constant share are lines will production and the of end are on work as fulfilled million, to some fiscal we our fiscal we are the customers the times. are For the of and these a the encountered. would growth $XXX.X take orders you our is users down net year, dollar XXXX. have our they to year. -- an unfavorable had currencies impact to their U.S. year customer challenges with hard a obtained, sales full for for full fiscal On testimonial doing. tribe products X% unprecedented compared wonderful The In well quarter foreign reporting that full the in ensure are Translation resilience working need. their as experienced net we of first, were only the and to from results X% for want to moment to in thank subsidiaries fourth drivers few I a year. revenue you determination But declined our sales moments, the results the currency the basis, of getting Steve sales

deliver were these tribe able from to working I still we think remarkable XX% with our that it's results. of home,

year XXXX. for of this call, results the the we of financial will initiatives, strategic focus For primarily and on fiscal operating after the purpose our fourth discussing quarter

which our For XXXX, we report to refer earlier Form year the our October complete to XX-K, on XX. for discussion annual expect a today on full and release of issued we please press file results Wednesday,

start investors the that down March a were way In a $XXX them. the target At drive our the was roughly we and regarding strategic had occasions. end of time, approximately had on arrive to on and the million. net to highway we sales shared brands let's understanding about consolidated that a That we XXXX, XXXX initiatives right wrong at and our of might support probably with Now when our reasonable traveling with discussion destination several to destination. destination

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news. good the Here's

we've time we we've parked, While stabilize, future. that thrive the our so reset been business considerable secure, to and in taken can

net $XXX is on even Our million we achieve will how drive now we approximately laser-focused to consolidated sales more target. that growth to become and aspiration have

brands WD-XX They are These our our Lava vac. the primary to Spot are that However, Solvol, still is economy pandemic, traffic no unclear strategic expect Product, our our XXXX, are is tribe get as core at when in Shot, unclear. confidence WD-XX and engine arrive BIKE, timing because is our WD-XX we What of the focus destination not GTXX, to brands for we and X-IN-ONE, going uncertain company. Specialist, the encounter global the and there. due and Multi-Use will growth us the jams the to to

number Multi-Use initiative one, WD-XX grow strategic Product. Now,

with they people had to who million. In a initiative to of more compared the blue X% and uses and tradesmen. Product It their improvements. their isolated Despite what and we last are XX% growth very seems top where growth. at growth; the many to our million, goal markets, we a growth appearance Research making Product saw saw little where States, more places, and a the can renovation. growth; more aspire home is the nearly yellow was XX% this fourth including Our regions, make grow strong find themselves associated Canada, where this pandemic All we these we will Kingdom, often. WD-XX spend suggests more spend time where driven by saw saw XX% under to approximately renovation more both that We red homes, isolation XX% available Multi-Use hiring Product Multi-Use year. in of $XXX are calling time more people growth; the linked WD-XX in we Multi-Use money WD-XX or with European to up improvements United the quarter, we trends that they sales United the direct number, topline of the $XX.X making were demand to this

were double-digit we these buy, and WD-XX in we closures declines related Additionally, the strong and through fourth to less easy in are in restrictions disruptions since our and been in distributor fully the all this challenged came e-commerce quarter, of in Asia, in year in we've have the have to with global movement been platforms and Largely geographies to growth marketing markets the sales earlier Product in that pandemic in developed operational markets contrary, to declines increased generally seen were place e-commerce offsetting certain To Europe, the developed, experienced countries in like due quarter. sales markets Multi-Use strict where an our where trade less channels Latin the fourth the in and sales America, pandemic. end.

be better. requirements so we progress of for continuing Straw make WD-XX Five years next ours to we demand in its with At delivery the improved sales which both Smart system, can aerosol when government, it in decline other same leading users from our next-generation Straw about pandemic to was significant generation, be response of that recognized require systems with was in latest and early which next-generation. as did a next-generation is Canada. and release, being consumers innovation, impacted sell share And Straw and to quarter. needs. well generation. Straw Smart which Straw in first-generation significantly we system hardware also that to Smart markets to Smart products delivery in in through response by the where still delivery strategy Multi-Use the next-generation grow, fourth those end need on data the in our Smart born fiscal continued experienced system, we one. we launching Canada to and be also great delivery in the channels will globally though, received the in to two such you started renovate We Canada suggests are lockable Canadian XXXX. I'm in to way the system Straw to we the lockable. time, China, in continue stages preliminary Smart make and that begin next is is sourcing highly Straw ago, Smart regulatory working by first-of-its-kind yet It Product delivery happy industrial sold traditional a is a to

the year, For two sales to of WD-XX initiative from line. WD-XX global Product million, $XXX.X the number were Strategic grow down X% net full fiscal is year. last Multi-Use nearly Specialist

growth of We This saw of sales nearly European rebrand fourth future to Specialist. X% million, direct strong up WD-XX Fiscal WD-XX the are WD-XX of more was growth the Specialist. Specialist, year was of quarter, fourth in the quarter driven the $XX.X also XX%. sales decided for by year before excited compared year. where we primarily XXXX markets, to than ever globally In the last we our

WD-XX and We've in We this and contributed reach fully Global approximately continues Now yellow and Pacific. the last Believe nearly million world. labeled blue approximately fiscal line's million such for also towards accelerate million. the the Strategic $XXX $XX around in included Specialist Specialist during since includes in no product year product a stores. most number but up WD-XX goal the formulas homecare million is in under Shot to sales year. to Asia products EMEA like quarter, these product and GTXX, vac brands line XXXX X-IN-ONE, broaden a Solvol believe three the XX% revenue base. over Strategic Americas, improve over and iconic can in XXXX, on products XXXX, revenue. BIKE of from for and initiative, with for developed ever, time fourth to Spot last initiative to we Specialist This was three, XX refreshed maintenance our top. in combined compared the Lava sales number products the move year. red as growing XX are up little its in brand includes revenue initiative these X% equate inception awareness will available products findability the to WD-XX and company initiative uniquely leveraged $XX of track this with in the $XX.X this first WD-XX unique asset, and

$XX.X under the fiscal of year, were from products For full year. this included million, last X% up net sales initiative

cleaning as tribe the particularly quarter, and up compared year outstanding the pandemic. quarter, in the to homecare cleaning XX% sales more the pandemic. from result a a and bicycles buying our Our people are up products strong to fixing products last XXX% attract, also $XX.X result BIKE retain number were initiative of million in year. sales of over of and Strategic to continue as riding four often increased them is benefit homecare as were demand to Global and and Global of compared members. develop WD-XX fourth up last

develop to at than XX%. a that Our goal as engaged never of that member tribe this have retain and feed defend WD-XX and for to more been purpose define We greater engagement community talented grateful shared have under tribe we attract, to highly tribe people each I other. is tribe a Company. initiative with help grow the and members

spent the The top this families five secure. priority is initiative we pandemic, more throughout has and months remain the felt meaning. homes, Most of of our crisis. the seven duration well-being of safety their never have our their Strategic excellence. this of stress will our tribe but operational safety have health our tribe and working During from this last members culture tested tribal the number

our company's and tribe compliance while and trying model, in by our optimize ways our property Guided regulatory protection. values, stops business insurance, resources, than XXXX rigorous to new applying XX/XX/XX commitment reflected no it is to make systems found intellectual quality today, As to it processes, never we and better was exception.

is of One the related of the longer existed. at top exciting fiscal ESG. mind topics have on the year Company ESG worked here WD-XX initiatives for tribe most this far acronym been to has than

thing inaugural users natural means our safe the Later In been ESG, end products the report decades, be of block on impacts the our to doing block. thing. hands report. our XX. right will Asia well-being resource publish implement the ensuring focused doing our strategic we prioritizing website able ESG For company as and minimizing the the month, a this project planning our we we will employees, context have in initiative, on our are right Investors of environment. Also to falling October which our beginning under from well a used offices system, started download in trading have will enterprise be Pacific certain new Americas trading this this as our by of recently

of this pass on in the the highlights. to call as you operational -- upcoming discuss with who with more will share these now project this will I falls will Steve, some We quarters.

Steve Brass

markets, our you very I'm a with operations last saw last and and us both Australia, over Thanks, I trends spoke, Garry, good with months in the U.S., we June you and When afternoon. the with strong presented to in in of throughout Canada share shared June. and July opportunities our EMEA impact August. pandemic saw we challenges. on we has seven these rebound that The direct pleased the continued

isolation fact, digit mentioned for currencies experienced the we local in sales in and In the driven primarily fourth Garry growth these that markets, quarter, earlier. renovation double trend all by

in sizable giveth, decision had in in a seven in and the offsetting how China. gains months made track of presence, moments. taketh the when knowing us would few it have year, be a transform of about digital how and global way to thing those would is health the we those markets pandemic robust, One the is the more digital fast strategy a we will significant In drivers XXXX that's talk our what declines the sales become However, in no shop. crisis to clear that our e-commerce XXXX, important I global away, disruptions people last pandemic distributor and to place. were very

than our continued in the we of website by increased areas more low-cost, XXXX, year countries the our digital around our XX We web has high-performing fiscal During e-commerce. and heightened XX%. and global to focus expanded world, traffic model

marketing of year online for across and than with XXXX, helped put fiscal fiscal three people in strong our before social efforts Our media year global other sales This growth approximately brands more ever growth trading all drive XXXX. front in e-commerce digital year-over-year during XX% blocks.

In closer blocks, quarter Net Latin were increased and sales in Americas take the trade XX% U.S., as well. promotional Canada Multi-Use Americas. they certain regions products maintenance the starting the up Americas, XX% let's increase Isolation in reached nearly sales the products. with to WD-XX So $XX.X a maintenance XX% happening and XX% Canada in sales now a the includes fourth through within of the the we the due In America. phenomenon, look experienced Latin at U.S., isolation United the which a renovation in sales distribution, due Product what's pandemic. million. Sales our fourth the successful in and to increased and experienced renovation during Canada States, increase e-commerce America the in to in increased and new sales quarter, channel programs

In fourth sales Canada growth every product fact, the quarter, double-digit in line at they experienced sell.

Canada during sales sales the off a the Smart start Straw version addition, increase and are to solid in of to of In next our in lockable contributed generation quarter.

of maintenance fiscal The Leon And year. America country Monterrey, This compared a put of tribe newest Nuevo compared impacts is the Latin in sales headquartered market, fourth have sales in the hard in working work throughout to of sales America XX% newest members fiscal strong in net last the the declines foundation weakened were last more regions direct been year full of now these by pandemic increased quarter in off. increase sales our to offset resulted product Their Latin sales levels place. fourth the the in the Although sales direct in nonstop during in XX for this than Mexico. year, XX% to paying in Mexico quarter, many our year. market

in develop our we bit the continued along a customer of there be volatility successful While build way we market. the we expect a direct anticipate as of may to base Mexico, continue

very future are for our we excited However, market. direct of newest the

our Flushes, reminder, XX%. and of which maintenance the homecare fourth our cleaning to products. products largely in and of our exclude products a the X% Sales to Americas As in XXXX sales the cleaning compared homecare prior year, increased higher increased quarter due

cleaning generate and those and quarter. business for to total, segment In smaller cash our the a expected our generally up to our products, brands, time. fourth to Americas flows, harvest made of global consider continued continue listed except contributions become have part as but as brands over of meaningful We homecare in are the business XXXX XX%

between within annually. Over sales anticipate X% this the segment term, X% will we long grow to

driven Now increased on Middle which Africa from increase East, to in and and India, due to the due $XX.X and almost EMEA was WD-XX up isolation distribution of Sales XX% maintenance due States products products level third includes renovation maintenance XX% on the a EMEA. because Europe higher markets our factors: direct year. pandemic; our demand Europe primarily and EMEA, all last were up essentially were fourth pent-up EMEA quarter and second, fourth XX% Kingdom sales sales the increased XX% Net primarily quarter, EMEA, of quarter, markets by increased experienced direct some in and channels the we Increased in in direct well; Canada sales sales in in United XX% XX%, a to there million United in down markets, Europe, to reached to the quarter in the higher increased Product Specialist, the increased sales first, increases XX% the was These across also strong and fiscal several sales our in this WD-XX continent, the and closed Multi-Use products and in and our in WD-XX which of are e-commerce in channel. European in due the contributing as which to respectively. were direct sales markets Specialist respectively. to maintenance the

quarter, COVID-XX our net in EMEA sales. socially EMEA sales in the COVID-XX WD-XX consumers our exercise in XXX% fourth in increase Fresh direct new our higher sales XX% up quarter sales the to Carpet Year-over-year XXXX in markets. to Fresh were and XX% region's in decreased in The quarter EMEA over the In was distributor market EMEA contributing travel related of outdoors accounted partially The decline due markets as markets of Carpet sales Also EMEA ways in BIKE direct fourth pandemic. Finally, sales distanced markets United pandemic. to XXXX down the quarter. settings in our sales to sought for in grew in growth due XX% EMEA continued quarter, by sales the offset the fourth Kingdom. distributor to net of was this segment of year-over-year. In the was disruptions in sales in the our were primarily the

in the our sales We continued negatively to foreign accounted experience impacted were and In India, made to impacted markets up distribute EMEA's sell total, the market distributor quarter. region's ability In currency not many Russia our distributor rates. EMEA for countries, of products. comprehensive our business of the reported which our fourth lockdowns XX% quarter, the EMEA segment global the and by fourth net in significantly in XX% in fourth in results of our sales. exchange particularly quarter

segment XX% grow Over sales term, annually. the will anticipate this between within to X% we long

net China Asia Pacific. last region Asia down Australia, quarter, $XX.X in includes fourth countries million from year. sales which the Asia and to other in decreased XX% to on in Now Consolidated the Pacific,

the region, in sales Asia COVID-XX shift lower-volume is in fourth in the our last BIKE XXX% and it's the quarter, us, authorities has associated currency quarter net in crowded Australia, were as by impact were distance in year. in the transport. market Asia Asia, sales region. in homecare restrictions product result unfavorable preference In There of on reported products of the our pandemic. would for constant by the our the amid from a attributed the Asia and though of by the as cleaning last world Changes X% markets, an year. transport, primarily million experience mostly exchange respectively, Product markets XX% have complete $X.X due ridership grew in COVID-XX in COVID-XX had temporary XX% public region. not foreign sales sales pandemic. in compared the rates. currency isolation experienced up renovation foreign and the On Unfortunately, did last to in trend compared boom increased and were $X.X not tremendous in period. Cycling product China up avoiding last the basis, Australia fourth result maintenance distributor with from less to required with did increased phenomenon This the Pacific's people period a distributor culture results This we of fourth WD-XX currency DIY million the in and a markets. a renovation closures, benefit were The the one by and is fourth these significantly places net year, experienced quarter, Asia impacted other rates Specialist XX%, and explosion parts in related bicycles quarter. we fourth from quarter markets down to prevalent exchange a WD-XX success to disruptions experienced demand WD-XX as in we that decrease practicing driven for compared In experienced and mode social the world. governmental a experienced to increased X% to by has in throughout pandemic. Throughout the lockdowns these local year. in far Therefore, not other global in DIY home are sales to Multi-Use the is Asia

million In to this year. dollars in the China, in last U.S. from U.S. fourth by we are our markets not in products sell in region. down net $X.X XX% impacted decreased distributor dollars Asia since quarter, Our sales currency,

For results beginning experienced the hit in on of China better a the by discussion, in has quite year. think of quarterly sales purpose experienced were our a the second China the pandemic first this fiscal review sales quarter. They basis. sequential it's volatility to strong be decline I to this fiscal a bit and in

sales were Sales quarter $X.X we Second channels. to to million. quarter due third to the demand sizable the in and appeared some pent-up shipped operations, normal very in orders resuming fiscal be

million. Third quarter quarter the quarter sales $X.X $X.X essentially in year. were the Sales quarter fourth to this flat were compared third fourth million, to down year, XX% last but pre-COVID of compared of the

the this at but numbers Looking progress necessarily way shows not recovery.

in Although of to channels the beginning the movement the continue pandemic. the with We impacted the associated third pandemic China's effects fiscal long-term optimistic lessened and concerns be were China. lifted and remain in industrial resulting quarter, global our health opportunities mostly by restrictions hardware in the macroeconomic China about

health-related and business However, the of of COVID-XX, our shifting promotional economic building XX% way quarter. to of Asia activities. up global total, fourth timing varying economic distribution, the In programs, we volatility Pacific our segment made and the due along impacts of patterns the expect in the industrial

you're over segment XX% keen between sure seeing I'm our While currently. Pacific due will in segment this long to the impact to we're there a Asia the sales trends anticipate to we understand been term, annually. the on short-term has within COVID-XX, grow XX% markets

we and growth into trends carried The through direct have September in encouraged fourth early October. our are markets are seeing. We the in quarter experienced what we by

we which some pandemic trends, crisis create, volatility we we sales the also seeing by well in distributor many are to too very optimistic. impacted see cautiously Though know recovery therefore, the been severely health our had remain are XXXX. of and in positive all FY the can these global markets, We encouraged

Now call the turn Jay on the update to over I will an for financials.

Jay Rembolt

on a begin against with In our our typical is XXXX issued recent not an performed But typical I'd guidance. update year, discussion most how we today year. a Steve. Thanks, XXXX

in that would all that for range suggested market the above did just performance quarter. Last net know, Today, you to our of to $XXX year XXXX final Australia U.S., million. our of conditions sales full we projected the expectations. quarter, we of to April, year, you Canada when with million, year began. European fiscal the reported in down us third guidance and be withdrew the $XXX.X weeks fiscal solid $XXX pandemic coming These we X% and saw markets, in the direct we the share As from million revenue full compared in our

let's review targets Now to business. our XX/XX/XX business our we long-term model, the guide use

As of doing XX which to cost is recall, of the at margin, represents you our expenses, may we The XX net be our which target represents operating XX% sales. excluding amortization. gross and business, total depreciation

Our goal our over business of time represents finally, And to net EBITDA. doing of our XX is cost sales. target drive for the XX% toward

in This costs aerosol represents basis improvement margin at to multiyear oil came of XX.X% rebound in basis decline compared of year. changes prices the XXX positively currency major rates, costs, market First, we on In our XX between basis the lows, lower realize since our with and Petroleum-based a earlier gross fuller experienced in the days impacted this specialty aerosol chemical and a an XXX points. experience late oil look fourth has margin. crude Also benefit basis though increases was the it the gross positively EMEA. XXX cans, Changes include impacting which of impacted petroleum-based XX foreign consistently or quarter, to the gross crude quarter, began steep taken we margin exchange by associated our points It historically lower Beginning in last chemicals reached our the input In year-over-year. the our remained XX.X% in slightly, specialty cans. margin to then. and XX began from basis points, primarily calendar year. prices. and February, oil benefit by remaining the and points impact it of XXX margin were year-over-year gross fourth price did sales before

gross reduced negative from impacted sales combined EMEA costs in by margin positively and margin. gross to to When XXXX. offset margin Americas charges points quarter. of due segment were as gross in changes, pandemic. In higher our unfavorable the in impacted impacted primarily related unfavorable mix partially which primarily our a customers in fourth by to the fiscal of by these result impacts Asia-Pacific, lower our market and the basis mix points. These of were primarily positive gross unfavorable XXX given quarter Americas impacts the the negatively some miscellaneous miscellaneous fourth impacts to favorably Asia-Pacific changes, resulting due basis to and China the the discounts addition, XX inventory margin items in effects Americas year during were the sales The unfavorable The in

warehousing primarily and so that inbound costs, the EMEA, we we exchange points. deliberate negatively freight cannot managing control rest costs, basis XX gross focused in Though like of we target above dynamics higher rates forward continue or margin the business or in our gross Finally, maintain can input be commodity-based by curve XX% to our and market impacted our margin the at of over long-term.

percentage we came as This increase was to our advertising quarter, higher quarter, professional fourth from promotion, service XX of marketing, the In from to costs business doing sales, year. the quarter; of during or we products fourth investment period. our of cost costs or our in investments primarily make people finally, increased address of employee-related freight costs In fourth XX%, I'll was up and cost X.X% the the the investments our in doing doing fees cost business. our the Now a the customers. in get our XX% to our due the tribe; business XX% of make last A&P increased and and to three areas:

good stewards our and been frugal of commitments. financial conservative our always our have spending in We resources, in

secured stabilized, in the have the quarter, investments the reset prudent to months our Well, us was is epidemic the in our to our last business become we began, of prior times. this and fourth even we've XX/XX/XX these brings net EBITDA, for EBITDA of compared XX% uncertain flat we measures. As since which year. more the manage during how sales

business Now completes of that discussion the our model.

fourth fourth common last the below million the period earnings was to $X.XX quarter Net share the fall $X.X let's line. per compared last Diluted discuss for year. were the some quarter for EBITDA for $X.XX $XX.X other Now year. to items that compared income million same

tax amount of share fiscal was Our due in XX% a quarter rate in of the impacted reserve net year. of XXXX an quarter per year fourth in the uncertain were comparable quarter to $X.X earnings fourth in fiscal diluted we the compared prior for the the the fourth position unfavorably year XX% to income of In tax XXXX, million. the recorded last and company's of period

be in will to for our effective expect XXXX. of range tax the full fiscal XX% We XX% year the rate

rainy year balance as company's Now fiscal our additional day we to pandemic sheet a moved allocation our $XX million of through our word the strengthen required stabilize, condition amended balance sheet of of agreement strong. the our and When we and took capital liquidity remains result stages we half business about a reset pandemic. strategy. secure money. XXXX, the an and steps second further financial of In began, The to as borrowed and numerous the credit line

sat liquidity unused on sheet. balance that Fortunately, our

our debt line business, covenants note revise a to us we've structure, our felt borrowings. to and debt amending back and to our agreement and pay agreement associated including shelf these access stabilization we made Recently, some fixed in saw additional borrowings. comfortable significant with our rates interest the our to of portion purchase changes credit to some we As allow of

continue the monitored a That at and We the were of we buyback expired to cash making unprecedented repurchases, plan the of while times. million down we approval our vigilant for regarding In we addition, to has August, of agreement share we under our shelf to liquidity to the pandemic used we our level impacts long-term began, remain credit. line at proceeds of Board unsecured the until order end share pandemic's existing managing we borrowed cash our these in suspend pay end stock additional When see anticipate begin during share September. purchases uncertainty the in under to $XX impact. We'll reduced our in of conserve and of pandemic. seeking an million notes don't plan buyback elected purchase senior note additional $XX these

of of the of to dividend dividends. X, close regular on to return to we on $X.XX a our record October And However, capital quarterly share shareholders Directors business through payable shareholders October cash of approved Board continue per XX. October XX

in strong approximately which had shareholders. been using We cross-functional complete next allocation be to and the working reduces the a increases capital reduces million and generation million a investing strategy providing in expenditures, year our majority to this machinery we fiscal capital of invested next-generation project used we ago. to created on system. while forecasted. Our will manufacturing waste capital delivery has proprietary to $XX Straw balance have our of team In tribe our returns our years of and five includes year effort XXXX, the projects, approximately Smart Smart to approach we comprehensive long-term manufacture line XXXX, will procurement $X product less growth, process In members originally Straw invest The that million develop and than fiscal approximately equipment speed, $XX plastics. in who are began global cost we

capital We fiscal to for The Smart years complete next project our year expect in in many will create this generation to XXXX. come. value investment Straw

We of had to business have low levels. required very of asset-light X% levels investment, of begin We CapEx return which XXXX, see capital model, to an sales. that between has and X% believe we'll roughly beginning these historically our

which has us accurately year continued COVID-XX inject pandemic fiscal for let's that, the to makes short-term with company. very measure So to business, into for to uncertainty it guidance. results difficult our The of a XXXX forecast financial turn

this any we for guidance not result, at fiscal As be time. will XXXX issuing a

the financial completes review. that Now

Garry. to back Now

Garry Ridge

You fourth resulted that largest many by Hey, of did due in thanks, In from which this Jay. heard quarter the our to Multi-Use increased us global in X%, WD-XX Product markets. hear sales summary, renovation, sales you what isolation of call? in primarily growth on double-digit

the that were heard Specialist fourth X% sales of up in quarter. You WD-XX

that around world. demand due in the primarily the to strong sales You up fourth of quarter, were heard BIKE XXX% WD-XX

of sales XX% the that in to heard fourth You our the homecare demand quarter strong products due and cleaning for up due were pandemic. cleaning to products the

You fiscal all three by blocks. heard that strong XX% year sales across sales approximately e-commerce with trading global this grew

we regular to through return dividends. that heard continue investors to You capital

rallied tribe world, our that company, the challenge, one to truly uniting one heard tribe. one us You as

today, optimistic joining in Dr. we about the You a a September a heard future. share for today's is trends that that learning Companies not of closing growth you to Rebecca questions. now for growth have that cautiously sales like realistic you learn revenue essential opportunity We'll and these grow we In seen and Homkes: hopeful I'd from we the for trends that are for "One October remain guidance, us of quote while our aspirations are that faster we are confident will issuing remain high-growth Thank company with continue. the And return you distinguishers call. faster." velocity. heard

Operator

the [Operator from with Our of comes Davidson. first D.A. question proceed. Linda Please Weiser Instructions] line Bolton

Linda Bolton Weiser

Thank you. Congratulations great you're quarter. well. all a doing I on hope

Garry Ridge

Thank you, Linda.

are. you. We Thank

Linda Bolton Weiser

I out just I'd guess, renovation. isolation of So, with like start idea to this the

contractors you mentioned in hiring guess about cases, when of think that many work. overall said And users at still are you big consumption, But I if the small percentage increasing users individual of WD-XX. to picture. look your you individual think it, you I a that are their they're purchasing do

maybe going other area Maybe fix addition the there's I'm you too like know, toward auto Can garages it. there's I other just area can the like some more areas auto, sectors, one on on of to other color renovation? about you in isolation that that us So auto don't in is of increased comment usage. some terms give thinking users, like, been

Garry Ridge

probably artisans sure. more who tradesman talk they're work are across tried came about of globe. Yes, the if XX% working. don't was certainly and we tradesman saw out lately, has we're that that busy data renovation, between Thanks, I XX%. to a When as hire performing know but isolation also people up said to referring are anybody and Linda. very that, We that some activity Europe

where home So, hobbyists use, But call at in people, -- evidence ask seen seen. the where enthusiasts, of although I I'll actually the to also -- repair there's the than briefly? on We've millennials stopping little DIY, have we've refer normal someone some the or and squeak. when that that the higher auto about a the home that car want use and use quickly. do that entered you Steve, just household to to millennials those that I area talk just that passionate passionate Steve a I area DIY touch -- this,

Steve Brass

users Linda. it's trend of which well, isolation millennial home renovation which America is seen Europe to complete hi a certainly to as both time, and brand and millennial, for into projects, Certainly. Thank you, we've new first our across the this activity. linked North is Yes, improvement coming certainly kind Garry

Linda Bolton Weiser

XX% was we're normal back costs. you? expect XX% little to I Can not we a consider about that down something a in normal? gross from the talk Okay. margin, quarter also talking you margin, mean about you your a -- input margins? bit as XX%? when lower Or new discussed, for gross I that should Or or benefited should we trend is mean, to major

Garry Ridge

our the we've increases particularly of to as gross increase total. as margin, continue a know, goal had you business as a percentage percentage of Linda, to Specialist

is through with e-commerce more encouraging And particularly One of brand as us, in particularly our that really have presence are WD-XX, e-com. solutions for of the things e-com. that's because sales our success searching for users on we've COVID, been the brand, coming benefited, learned of on Specialist really end a

that's So a benefit.

to would like gross forward, work margin. we Going to on our increasing continue

I we're the that are levels think somewhat now realistic. at probably that

However, are the chain the supply I will extra of because pressure costs pandemic. through COVID caution some and seeing some that we coming

of our very production for lines. distancing fillers, important some safety third-party the working lines slowing is in of For those on example,

And pressures generation we'll So next are into our grow, certainly totally a further to gross direction. our thing and yet margin, XX%. to hopefully, identified. gets us, positive Specialist committed some this as But move we're see to of even cost we at play be Straw margins now certainly Smart seeing totally XX%, in continues north passes

Linda Bolton Weiser

sales companies guidance, I And the it guess on for are way. at to least you. That's clear to Thank like are it's of guess guidance, able still helpful. be on a just enough past issuing cautiously continuing give too this trends in There optimistic not very quarter. sounds your not but did guidance, you generally see so trends I surprising. topic And many

really guidance giving is quarter. about just approach of adopt Or why curious up? you to the that even So as I'm something maybe coming seeing for there quarter some making you're you unsure that couldn't the some is

Garry Ridge

I down closing and play into said, September always Well, and We in we've markets that is day, could as encouraged And us year that are see Linda, Steve through COVID we the we into latter so and tomorrow. this dynamic. last what opening we every carried part situation don't trends guide came close know don't seen fiscal of mentioned, But quarter-to-quarter. October.

or we've down and past Now, that well. the wonderful year people is had we've very when that to or that, have done because years of why trade buy, four easy this some the remained countries tribe as we've to through the three remained open successes not we countries capacity, work done are can't well. have us, channels either last done has that are shut obviously, building over our up e-commerce Where buy open

carry future. for through. clairvoyance. think And us We're but try this on ongoing foolish it said, would not these we're And about the -- we're to trends I good very quite as fact basis. an and be watching -- I the So, we're confident predict that

derail people Let's not that's product. enormous an shutdown to ability something hope that the our to continues, of it buy and going there's for

as comfortable, we'll out. we sharing feel more be that soon As

Linda Bolton Weiser

final from one just And Okay. one me.

want In give you fiscal year, and don't terms of know guidance. the next I to

the negative You -- effect full and particularly, the of net weak. just there's third It was XXXX. very quarter to that. COVID fiscal wasn't was positive. have effect. some But And comparisons, the a said was that unusual you the extent negative for net It year,

higher-than-normal may growth Because am just where those you're growth? that? that unusual against comparison next your So is quarters that fair the comparisons, a have about to so thinking that some easy we is say correctly it I you'll fiscal see concept, in

Garry Ridge

have we second did through the Well, quarter. some pressure coming

future. year. however, as these our we will there, operating -- to much going into we'll point reasonable very and more we the predict the a our that, comparison And go down available of if unusual and we and gets confident But if do see again, we deliver comfortable, that really this our hopefully we -- customers, then continue results this through So, can't to service consumption to we our feel and may we're year. the continue, it end and be trends rest will markets users, available are of are be

Linda Bolton Weiser

Okay. so I appreciate much. really Thank you it.

Garry Ridge

Thank safe you, Linda. Stay and well.

Linda Bolton Weiser

Thanks.

Operator

question. Our Jefferies. of Please with Rizzo the Daniel from next proceed question your with comes line

Daniel Rizzo

How’s everyone. everybody Hey, doing?

Garry Ridge

Hey, Daniel.

Daniel Rizzo

is wondering distributor it pretty up Could it that you it's sales chemical Or This just is mean, just, color provide Like a where to in of indicated market? was. companies, the mean, little pre-pandemic the And you I it just soft because particularly difference indicated and kind of different other was that is that auto. think was chemical I industry I of have a that I China levels. just channel? industrial part with industrial more on is I mostly shutdowns. the heavy China? cover companies It's just

Garry Ridge

Sure. let the China. Steve Yes. talk in I'll some of differences about

Steve Brass

Yes. Daniel. Hi, Garry. you, Thank

really do quarters at And so what look you've got sequentially year. is chase China's the throughout the to

million you look the million. QX at QX, $X.XX very strong the million a $X.XX at achieved achieved We our only $X.XX at and $X with you so million quarter QX at our were FY first look FY QX When and in pandemic QX was in of China. we half. in the much QX I believe sales XXXX XXXX, at over sales the lower $X.X in FY our QX front the into first million. into half went XXXX, of we we in $X.X million. So When net then and QX went

was So QX against from up FY QX. fully actually with in comparable line was strong it a whereas XXXX,

pretty in well precedent. seen sales QX you've QX levels are of So with and China, which historic line in

QX, on of comparable the prior the have to So just sales it look year. way didn't recovered, that because

Daniel Rizzo

of makes sense. That Okay. a actually lot

China? the think, rate for kind term, what So should least going we we've last of is run if couple should then, over just know, of quarters, in don't that expect the we we at it seen think forward about I near the

Steve Brass

take to think predicting Garry's don't we're think, I the future. point, I

a many markets our continue seen as in We to September have rebound. of good they

suppressed seen get but not recovery. great they up continue our was necessarily have. would have and continues still with lower e-commerce China, some to than rebound there'll And in complete impact due orders substantially be FY progress, some export hopefully Specialist activity growth to XXXX. We in normally and business grow So we've and to we factories WD-XX

Garry Ridge

-- that, a add to Daniel. bit more just little one But to

industry, to that Some you're into probably of assume. the chemical sales would larger direct I referring companies have

and between have who bit distribution, We sell of in a industry. because into then buffer sell we industrial a into hardware

they markets when and huge some those So pandemic hit of hardware on down, hand. inventory the and industrial had shut

moving up as are some more of are that So is and opening through. becoming inventory now these them active,

product selling So it not distribution, little factory. than shipping later We're others and it feel a loads we into tanker of of are into directly facilities factories. some into because probably distribution, repair selling a into chemical drums cases the maintenance, industrial overhaul we're and hardware who of then

Daniel Rizzo

kind inventories? of of that of such as a And I any Americas reason, guess, very you if fourth be -- sales the strong a was more but EMEA quarter. wondering I the contribute of any market to That's can was kind most can being in then helpful. just cycle cycle a there low -- pointed I to direct restock attributed of because Okay. mean, I guess to restock the and strength

Garry Ridge

is But And trends. point-of-sale we're there bit restock little our a in of say trends. we've encouraging encouraged would some really I seeing what point-of-sale was a about been EMEA.

think and material into is seen if through did. don't of the system. going the out August there a mostly So restocking trend there's on. And September the have continue amount was, indicated it actually moving We inventory of we've wouldn't we as also

Daniel Rizzo

And you. finally. Thank then Okay.

we for in of generation should Straw should years? next Specialist whereas mix the and that sales, of expect deck headwind Smart you in wondering was mentioned -- was of saw rollout next I think kind or in the that with slight just the a there maybe couple reverse, mix a -- the the with increase of the I to be tailwind I you XXXX.

Garry Ridge

gross impacting mean our margin? you And

Daniel Rizzo

Yes.

Garry Ridge

you please? to that Jay, leave to that I'll like question, Jay. address would

Jay Rembolt

right, wanting if you're really get we're your to benefit forward. get just question a I if Daniel, to going Yes, see go we mix as

anything a we anticipating in kind is any call as definitely of in we benefit the that they'd forward. have what we Our will challenge with get I would go The overall bounce forward, of near-term would back margin, which gross move long-term, earlier, mixed particular difficult. a we transitions a products, as talked about more premiumized more of little carry to Garry bit But the accretion higher see margin. quarter some we'll as our gradually to

Daniel Rizzo

Okay. guys. much, thank very Well, you

Garry Ridge

Thanks very much, Daniel.

Operator

time for ask allotted participation conference your that our questions. your call thank conclude does that and please you gentlemen, today's disconnect and on lines. you Ladies for We

WD-40 (WDFC) 20 Oct 202020 Q4 Earnings call transcript