WD-40 Company (NASDAQ:WDFC) Q3 2019 Earnings Conference Call Transcript

Jul 09, 2019 • 05:00 pm ET

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WD-40 Company (NASDAQ:WDFC) Q3 2019 Earnings Conference Call Transcript

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Presentation
Executive
Garry O. Ridge

programs and initiatives that will help us successfully reach our 2025 aspirations.

As a reminder, we refer to the brands that are going to get us there as our 2025 brands. They are WD-40 Multi-Use Product, WD-40 Specialist, 3-IN-ONE, WD-40 BIKE, GT85, 1001, Spot Shot, Solvol, Lava and no vac. Our 2025 brands are our core strategic focus and the primary growth engine for our Company. Our strategic initiative number one is to grow WD-40 Multi-Use Product. Our goal under this initiative is to make the blue and yellow can with a little red top available to more people in more places who will find more uses more often.

We aspire to grow the WD-40 Multi-Use Product to approximately $530 million in revenue by the end of 2025. In the third quarter, sales of WD-40 Multi-Use Product were $88.4 million, up 7% compared to last year. The growth was driven by solid sales in both EMEA and Asia Pacific, as well as a reasonable growth in our largest market, the United States. In our developed markets, we continue to drive revenue growth through the innovation of our flagship product, which includes premiumization. As part of our premiumization strategy, we continue to successfully convert WD-40 Multi-Product end users to a more innovative Smart Straw and EZ-REACH delivery systems.

In our developing and emerging markets, we continue to build brand awareness and drive geographic expansion and higher availability around the globe. Year-to-date, net sales of products included under this initiative were up 4% compared to last year. Strategic initiative, number two is grow the WD-40 Specialist product line. In the third quarter, sales of WD-40 Specialist were $9.1 million, up 8% compared to the third quarter of last year. This continues to move the Company towards its goal for the initiative, growing the product line to approximately $100 million in revenue by the end of fiscal year 2025. We're optimistic about the long-term opportunities for WD-40 Specialist. However, there may be some volatility in sales levels along the way due to the timing of promotional programs, the building of distribution and the various other factors that come along with building out a new product line. Year-to-date net sales of products included under this initiative were up 10% compared to last year.

Strategic initiative number 3 is to broaden product and revenue base. Strategic initiative number 3 includes maintenance products like 3-IN-ONE, WD-40 BIKE and GT85, but also includes such brands as Spot Shot and Lava in the Americas, 1001 in EMEA and no vac and Solvol in Asia-Pacific. We believe we are on track to reach a combined revenue for these products of approximately $70 million by 2025. Global sales of products included under this initiative were $14.2 million in the third quarter compared to $13.7 million in the third quarter of last year, reflecting an increase of 4% period-over-period. Year-to-date net sales of products under this initiative were up 3% compared to last year, nearly all of the growth is attributed