Q4 2023 WD-40 Company Earnings Call
Speaker 1: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by.
Speaker 1: Good day and welcome to the WD40 Company fourth quarter 2023 earnings conference call.
Good day and welcome to the WD 40 company fourth quarter 2023 earnings Conference call.
Speaker 1: Today's call is being recorded. At this time, all participants are in a listen-only mode.
Today's call is being recorded at this time all participants are in a listen only mode.
Speaker 1: At the end of the prepared remarks, we will conduct a question and answer session.
At the end of the prepared remarks, we will conduct a question and answer session.
Speaker 1: To register a question at any time during this call, please press star 1 on your telephone keypad.
To register a question at any time during this call. Please press star one on your telephone keypad.
Speaker 1: Please make sure your mute function is turned off to allow your signal to reach our equipment.
Please make sure your mute function is turned off to allow your signal to reach our equipment.
Speaker 1: If at any time during the conference you need to reach an operator, please press star zero on your telephone keypad.
If at any time during the conference you need to reach an operator, Please press star zero on your telephone keypad.
I would now like to turn the presentation over to the host for todays call Ms. Wendy Kelley, Vice President of stakeholder and Investor engagement. Please proceed.
Speaker 1: I would now like to turn the presentation over to the host for today's call, Ms. Wendy Kelly, Vice President of Stakeholder and Investor Engagement.
Speaker 1: Thank you. Good afternoon and thanks to everyone for joining us today. On our call today are WD40 Company's President and Chief Executive Officer Steve Brass and Vice President and Chief Financial Officer Sarah Heidt.
Thank you good afternoon, and thanks to everyone for joining us today.
On our call today are WD 40, company's President and Chief Executive Officer, Steve Brass, and Vice President and Chief Financial Officer, Sarah either.
Speaker 2: In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release, and Form 10-K for the period ending August 31, 2023. These documents are available on our Investor Relations website at investor.wd40company.com.
In addition to the financial information presented on today's call. We encourage investors to review our earnings presentation earnings press release and Form 10-K for the period ending August 31st 2023.
These documents are available on our Investor Relations website at Investor <unk>, WD 40 company's dotcom.
Speaker 2: A replay and transcript of today's call will also be made available shortly after this call.
A replay and transcript of today's call will also be made available shortly after this call.
On today's call, we will discuss certain non-GAAP measures the descriptions and reconciliations of these non-GAAP measures are available in our SEC filings as well as the earnings documents posted on our Investor Relations website.
Speaker 2: On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings, as well as the earnings documents posted on our Investor Relations website.
Speaker 2: As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Continue adding the Schuylkill
As a reminder, today's call includes forward looking statements about our expectations for the company's future performance.
Actual results could differ materially.
Speaker 2: The company's expectations, beliefs, and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.
The company's expectations beliefs, and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished please refer to the risk factors detailed in our SEC filings for further discussion.
Speaker 2: Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, October 19, 2023. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events, or otherwise.
Finally for anyone listening to a webcast replay or reviewing a written transcript of this call. Please note that all information presented is current only as of today's date October 19th 2023.
The company disclaims any duty or obligation to update any forward looking information as a result of new information future events or otherwise.
Unknown Executive: Ladies and gentlemen, thank you for standing by.
Speaker 3: But that I'd now like to turn the call over to Steve. Thanks Wendy and thanks to all of you for joining us this afternoon.
Unknown Executive: Good day and welcome to the WD-40 Company fourth quarter 2023 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. To register a question at any time during this call, please press your signal to reach our equipment. If at any time during the conference you need to reach an operator, please press star zero on your telephone keypad.
With that I'd now like to turn the call over to Steve. Thanks.
Thanks, Wendy and thanks to all of you for joining us this afternoon.
It's been a privilege and honor to lead a great company over the last year and even a little special as my first year as CEO coincides with US 70 year anniversary.
Speaker 3: It's been a privilege and honor to lead our great company over the last year. And even more special as my first year as CEO coincides with our 70-year anniversary.
Speaker 3: I've taken time over the last year to meet with our employees across the business and around the world. And it was truly a pleasure to have the chance to listen to their personal stories.
I can tell him over the last year to meet with our employees across the business and around the world.
He was truly a pleasure to have the trends to listen to their personal stories.
Speaker 3: While it was not surprising to me, it's been exceptional to see and feel the depth of engagement and commitment across the organization.
Well it was not surprising to me, it's been exceptional to see and feel the depth of engagement and commitment across the organization.
Wendy Kelley: I would now like to turn the presentation over to the host for today's call, Ms. Wendy Kelley, vice president of stakeholder and investor engagement. Please proceed. Thank you.
Speaker 3: Witnessing their inspired energy reinforced my own commitment and responsibility to nurture and build on our unique culture.
Witness in there in spite energy reinforce my own commitment and responsibility to learn.
Sure and build on our unique culture.
Speaker 3: I want to thank each of them for their dedication to drive superior results and the execution of our strategy.
I want to thank each of them for their dedication to drive superior results and the execution of our strategy.
Wendy Kelley: Good afternoon and thanks to everyone for joining us today. On our call today are WD-40 Company's president and chief executive officer Steve Brass and vice president and chief financial officer Sara Hyzer. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release, and form 10K for the period ending August 31, 2023. These documents are available on our investor relations website at investor.wd40 companies.com.
Speaker 3: Looking at fiscal year 2023, for us, it was essentially a tale of two halves. Our first half for disruption resulting from general economic uncertainty, higher costs, the loss of our Russian business, and pricing increases that were imposed.
Looking at fiscal year 2023 heroes he was essentially a tale of two hubs.
First half saw disruption, resulting from general economic uncertainty it costs, the last of our Russian business and price increases that were implemented.
Speaker 3: In the second half of the year, we saw volumes recover, and we were also pleased with the recovery we experienced in Emea, where we delivered double digit constant currency growth for the last two quarters.
In the second half of the year, we saw volumes recover.
So pleased with the recovery, we experienced in EMEA, where we delivered double digit constant currency growth for the last two quarters.
Speaker 3: Despite a difficult first half and a negative impact of currency of nearly $18 million, we still grew revenue by 4% over the prior year.
Despite a difficult first half and the negative impact of currency of nearly $18 million, we still grew revenue by 4% over prior year.
Wendy Kelley: A replay and transcript of today's call will also be made available shortly after this call. On today's call, we will discuss certain non-gap measures. The descriptions and reconciliation of these non-gap measures are available in our SEC filings as well as the earnings documents posted on our investor relations website.
Speaker 3: excluding the impact of currency revenue grew 7%, which is in line with our long-term growth projects.
Excluding the impact of currency revenue grew 7%, which is in line with our long term growth projections. We are encouraged by the improvement in trends, we experienced through the second half of the fiscal year as we enter fiscal year 2020 cool.
Speaker 3: We are encouraged by the improvement in trains we experience through the second half of the fiscal year as we enter fiscal year 2024.
Wendy Kelley: As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Actual results could differ materially. The company's expectations, beliefs, and projections are expressed in good faith that there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.
Speaker 3: Now turning to our fourth quarter 2023 results, today I'll begin by discussing our 1000s. I'll then walk you through on new 4x4 strategic framework, including an update on our 40-year results and the progress we've made as it relates to our must-wing battle.
Now turning to our fourth quarter 2023 results today I'll begin by discussing our sales results and then walk you through our new four by four strategic framework, including an update on our full year results and the progress we've made as it relates to our must win battles.
Speaker 3: Sarah will provide further details on our full quarter results and update on our business model and our outlook for fiscal year 2024. And then we'll take your question.
We will provide further details on our fourth quarter results and update on our business model and our outlook for fiscal year 2024, and then we will take your questions.
Wendy Kelley: Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, October 19, 2023. The company disclains any duty or obligation to update any forward-looking information as a result of new information, future events, or otherwise.
Speaker 3: Turning to our fourth quarter-sales results. Today, I'm happy to share with you that we reported net sales of 140.5 million, quite nearly 8% over the fourth quarter of last fiscal year.
Turning to our fourth quarter sales results today I'm happy to share with you that we reported net sales of $145 million up nearly 8% over the fourth quarter of last fiscal year.
Speaker 3: translation of our subsidiaries results into the US dollar had a favorable impact on our consolidated net sales in the fourth quarter on a non-gap constant currency basis for quarter sales would have been 139.2 million up to 7% compared to the fourth quarter of last year.
Translation of our subsidiaries' results into the U S. Dollar had a favorable impact on our consolidated net sales in the fourth quarter on a non-GAAP constant currency basis fourth quarter sales would have been $139 2 million up 7% compared to the fourth quarter of last year.
Steve Brass: With that, I'd now like to turn the call over to Steve. Thanks Wendy, and thanks to all of you for joining us this afternoon.
Steve Brass: It's been a privilege and honour to lead our great company over the last year, and even more special as my first year as CEO coincides with our 70-year anniversary. I've taken time over the last year to meet with our employees across the business and around the world, and it was truly a pleasure to have the chance to listen to their personal stories. While it was not surprising to me, it has been exceptional to see and feel the depth of engagement and commitment across the organisation.
Speaker 3: Now let's take a closer look at the fourth quarter sound result and our trade blocks starting with the Americans.
Now, let's take a closer look at the fourth quarter, it sounds as though to not trade blocks, starting with the Americas.
Steve Brass: Witnessing their inspired energy, reinforce my own commitment and responsibility to nurture and build on our unique culture. I want to thank each of them for their dedication to drive superior results and the execution of our strategy.
Speaker 3: South and the Americas, which include the United States, that and America and Canada, were up 10% in the fourth quarter to 74.7 million. Maintenance products, South and the United States increased 18%. Driven by double digit growth of both the 40 multi-use product and the 40 specialist.
Sales in the Americas, which includes the United States, Latin America, and Canada were up 10% in the fourth quarter to $74 7 million.
Maintenance product sales in the United States increased 18% driven by double digit growth of both to be 40, multi use product center before the specialist.
Speaker 3: We're seeing solid improvements in volume now that we've lapped the impact of the price increases that we put into place last fiscal year. In a fourth quarter, we experienced double digit volume and sales increases in the US. As a reminder, the US was the first region to implement price increases and therefore have been the first region to recover from the related disrupt.
Seeing solid improvements in volume now that we've lapped the impact of the price increases that we put into place last fiscal year.
In the fourth quarter, we experienced double digit volume and sales increases in the U S. As a reminder, the U S was the first region to implement price increases and therefore have been the first region to recover from the related disruptions.
Steve Brass: Looking at fiscal year 2023, for us, it was essentially a tale of two halves. Our first half for disruption resulting from general economic uncertainty, higher costs, the loss of our Russian business and price increases that were implemented. In the second half of the year, we saw volumes recover and were also pleased with the recovery we experienced in Emea, where we delivered double-digit constant currency growth for the last two quarters. Despite a difficult first half and the negative impact of currency of nearly $18 million, we still grew revenue by 4% over the prior year.
Speaker 3: maintenance product sales in Latin America, but down 12% against a strong comparative period in the prior year. As you may recall, the fourth quarter of last year was the strongest sales quarter in the region's history, where sales grew 80% will largely as a result of many of our marketing distributed customers purchasing product in advance of price increases that went into effect near that time.
Maintenance product sales in Latin America, but down 12% against a strong comparative period in the prior year as you may recall, the fourth quarter of last fiscal year was the strongest sales quarter in the region's history, where sales grew 80%.
As a result of many of our marketing distributor customers purchasing product in advance of price increases that went into effect near that time.
Speaker 3: Charles in maintenance products in Canada decreased slightly down 3% period over period, but the favorable impact of Charles' price increases was completely offset by lower Charles volumes due to weaker economic conditions in the region.
<unk> thousand maintenance products in Canada decreased slightly down 3% period over period with the favorable impact of sales price increases was completely offset by lower sales volumes due to weaker economic conditions in the region.
Steve Brass: Excluding the impact of currency revenue grew 7%, which is in line with our long-term growth projections. We are encouraged by the improvement in trends we experienced through the second half of the fiscal year as we enter fiscal year 2024.
Speaker 3: We continue to experience positive momentum in our direct market in Mexico from the shift we made in 2020 from a distributor model.
We continue to experience positive momentum in our direct market in Mexico from the shift we made in 2020 from a distributor model.
Steve Brass: Now turning to our fourth quarter 2023 results, today I'll begin by discussing our thousand results. I'll then walk you through on new four by four strategic framework, including an update on our four year results and the progress we've made as it relates to our must win battles.
Speaker 3: Maintenance products sales in our direct market in Mexico decreased 19% in the fourth quarter as we continue to add new points of distribution Making our maintenance products available in more places for more people who find more uses more frequent
Maintenance product sales in our direct marketing Mexico decreased 19% in the fourth quarter as we continued to add new points of distribution, making our maintenance products available in more places for more people, who find more uses more frequently.
Steve Brass: Sarah will provide further details on our fourth quarter results and update on our business model and our outlook for fiscal year 2024 and then we'll take your questions. Turning to our fourth quarter sales results, today I'm happy to share with you that we reported net sales of 140.5 million, but nearly 8% over the fourth quarter of last fiscal year. Translation of our subsidiaries results into the US dollar had a favorable impact on our consolidated net sales in the fourth quarter on a non-gap constant currency basis for quarter sales would have been 139.2 million up to 7% compared to the fourth quarter of last year.
Speaker 3: Charles of our home care and cleaning products in the Americas were down 4% in the fourth quarter compared to the fourth quarter last year.
Sales of our homecare and cleaning products in the Americas were down 4% in the fourth quarter compared to the fourth quarter of last year.
Speaker 3: We consider our home care and cleaning products as harvest brands to continue to generate consistent contributions and cash flows that are generally expected to become a smaller part of the business over time.
We consider our homecare and cleaning products as harvest brands that continue to generate consistent contributions in cash flows but are generally expected to become a smaller part of the business overtime.
Speaker 3: We shared with investors last quarter that were currently exploring options to further deemphasize our home-caron cleaning brands. We were currently conducting a global strategic review about the future of our home-caron cleaning brands. The result of this strategic review could mean many things, but no decision has yet been made. We look forward to providing an update in the future.
We shared with investors last quarter that we're currently exploring options to further emphasize our hometown leading brands. We're currently conducting a global strategic review about the future of our homecare and cleaning brands.
<unk> of this strategic review could mean, many things, but no decision has yet been made we look forward to providing an update in the future.
Speaker 3: In total, our America's segment made up 53% of our global business in the fourth quarter.
Steve Brass: Now let's take a closer look at the fourth quarter sales results and our trade blocks starting with the Americas. Sales in the Americas, which include the United States, Latin America and Canada, were up 10% in the fourth quarter to 74.7 million. Maintenance products in the United States increased 18% driven by double digit growth of both the 40 multi-use product and the 40 specialist. We're seeing solid improvements in volume now that we've lapped the impact of the price increases that we put into place last fiscal year.
In total our Americas segment made up 53% of our global business in the fourth quarter.
Now, let's take a look at ourselves resulted in EMEA, which includes Europe , India, the middle East and Africa.
Speaker 3: Now let's take a look at our sales' Alcanimae which includes Europe , India, the Middle East, and Africa.
Speaker 3: I'm happy to share with you that the recovery will begin to experience any Mayer last quarter continued into the fourth quarter.
I'm happy to share with you that the recovery will begin to experience in EMEA last quarter continued into the fourth quarter.
Speaker 3: South and Emea were up 16% to 50.7 million. We saw strong South in the UK, Italy and Benelox, which are all turned in their best quarters performance for the year. Currency fluctuations positively impacted our South and Emea. On a constant currency basis, South would have increased 13% compared to the fall quarter last year. Marking the second consecutive quarter of double digit South's growth in constant currency.
In EMEA were up 16% to $50 7 million, we saw strong sales in the U K, Italy, and Benelux, which are all turned in their best quarters performance for the year currency.
Steve Brass: In a fourth quarter we experienced double digit volume and sales increases in the US. As a reminder, the US was the first region to implement price increases and therefore have been the first region to recover from the related disruptions.
<unk> positively impacted ourselves in EMEA.
Instant currency basis sales would have increased 13% compared to the fourth quarter of last year, marking the second consecutive quarter of double digit sales growth in constant currency.
Steve Brass: Maintenance products sales in Latin America put down 12% against a strong comparative period in the prior year. As you may recall, the fourth quarter of last fiscal year was the strongest sales quarter in the region's history. Where sales grew 80% will largely as a result of many of our marketing distributed customers purchasing products in advance of price increases that went into effect near that time. Sales in maintenance products in Canada decreased slightly down 3% period over period. But the favorable impact of sales price increases was completely offset by lower sales volumes due to weaker economic conditions in the region.
Speaker 3: As you know, we sell into a may after a combination of direct operations as well as through marketing distributes.
As you know we sell into EMEA through a combination of direct operations as well as through marketing distributors.
Speaker 3: sales in our remade direct markets, which accounted for 73% of the region's sales in the fourth quarter, increased by 19% compared to last year.
Sales in our EMEA direct markets, which accounted for 73% of the region sales in the fourth quarter increased by 19% compared to last year.
Speaker 3: Maintenance product sales in the MA Direct Markets, increased in the fourth quarter, driven primarily by double digit growth of both W-14 multi-use product and W-40 specialist in the United Kingdom, Italy and Spain, mainly due to the impact of price increases, which is partially upset, most likely lower demand, which resulted in decreased sales volume. The increase in sales is also driven by the timing of promotional programs, particularly in the wholesale and trade channels.
Maintenance product sales in the EMEA direct markets increased in the fourth quarter, driven primarily by double digit growth of both to be 14, multi use product and WD 40 specialist in the United Kingdom, Italy, and Spain, mainly due to the impact of price increases, which was partially offset by slightly lower demand which resulted in.
Decreased sales volume.
Steve Brass: We continue to experience positive momentum in our direct market in Mexico from the ship we made in 2020 from a distributor model. Maintenance product sales in our direct market in Mexico decreased 19% in the fourth quarter as we continue to add new points of distribution, making our maintenance products available in more places for more people who find more uses more frequently. Sales of our home care and cleaning products in the Americas were down 4% in the fourth quarter compared to the fourth quarter last year. We consider our home care and cleaning products as harvest brands continue to generate consistent contributions and cash flows that are generally expected to become a smaller part of the business over time.
Increase in sales is also driven by the timing of promotional programs, particularly in the wholesale and trade channels.
Speaker 3: Sales and RMA distributor markets, which accounted for 27% of the regional sales in the fourth quarter increased by 9% compared to last year. This increase in sales was primarily driven by higher sales and maintenance products in many distributor markets.
<unk> thousand our EMEA distributor markets, which accounted for 27% of the rigs themselves in the fourth quarter increased by 9% compared to last year. This increase in sales was primarily driven by higher sales of maintenance products and many distributor markets.
Speaker 3: The total orimer segment made up to 36% of our global business in the fourth quarter.
Total RMS segment made up 36% of our global business in the fourth quarter.
Speaker 3: They want to Asia Pacific, thousand Asia Pacific, which includes Australia, China, and other countries in the Asia region, but down 20% in the fourth quarter to 15 million. In Australia, sales are down 1% in the fourth quarter, primarily due to the impact of foreign currency exchange rates. On a constant currency basis, sales for Australia would have increased by 5% compared to last year, primarily due to higher sales of the home care and cleaning products, as a result of successful promotional growth.
I went to Asia Pacific sales in Asia Pacific, which includes Australia, China and other countries in the Asia region were down 20% in the fourth quarter to $68 million in Australia sales were down 1% in the fourth quarter, primarily due to the impact of foreign currency exchange rates on a constant currency basis.
Steve Brass: We shared with investors last quarter that were currently exploring options to further deemphasize our home care and cleaning brands. We're currently conducting a global strategic review about the future of our home care and cleaning brands. The result of this strategic review could mean many things but no decision has yet been made. We look forward to providing an update in the future.
Sales for Australia would have increased by 5% compared to last year, primarily due to higher sales of the homecare and cleaning products as a result of successful promotional programs.
Speaker 3: In our Asia Pacific distributor markets, sales with down 38% in the fourth quarter against a tough prior year comparison. As you may recall from last year, severe lockdown restrictions from earlier in the year were lifted and we resume shipping product to the area resulting in strong sales during the fourth quarter.
In our Asia Pacific distributor markets sales were down 38% in the fourth quarter against the tough prior year comparison as you may recall from last year severe lockdown restrictions from earlier in the year were lifted and we resumed shipping product to the area, resulting in strong sales during the fourth quarter.
Steve Brass: In total our America's segment made up 53% of our global business in the fourth quarter.
Steve Brass: Now let's take a look at our sales of the new mayor which includes Europe, India, the Middle East and Africa. I'm happy to share with you that the recovery will begin to experience in the mayor last quarter continued into the fourth quarter. Sales in the mayor were up 16% to 50.7 million. We saw strong sales in the UK, Italy and Benelox which are all turned in their best quarters performance for the year.
Speaker 3: In China, sales with down 4% in the fourth quarter, primarily due to the impact of foreign currency exchange rates. On a constant currency basis, sales for China would have increased by two.
In China sales were down 4% in the fourth quarter, primarily due to the impact of foreign currency exchange rates on a constant currency basis sales for China would have increased by 2%.
Speaker 3: And total or Asia Pacific segment may be 11% of our global business in the fourth quarter. Now let's talk about...
In total our Asia Pacific segment made up 11% of our global business in the fourth quarter.
Now, let's talk about our long term growth aspirations.
Steve Brass: Currency fluctuations positively impacted our sales in the mayor. Another constant currency basis sales would have increased 13% compared to the fourth quarter last year. Marking the second consecutive quarter at double digit sales growth in constant currency. As you know we sell into the mayor through a combination of direct operations as well as through marketing distributors. Sales in our mayor direct markets which accounted for 73% of the region sales in the fourth quarter increased by 19% compared to last year.
Speaker 3: The W40 company were privileged to have one of the world's best known and most iconic brands. We have a strong competitive mode that allows us to capture the tremendous runway of opportunity before us.
Adobe 40 company, we're privileged to have one of the world's best known and most iconic brands. We have a strong competitive moat that allows us to capture the tremendous runway of opportunity before us as.
Speaker 3: As we enter fiscal year 2024, I'm proud to introduce you to our new 4x4 strategic framework, which is tied to our purpose and values and will guide our future performance. Our 4x4 strategic framework has developed to drive profitable growth for sustainable value creation.
As we enter fiscal year 2024, I'm proud to introduce you to our new four by four strategic framework, which is tied to our purpose and values and will guide our future performance.
Four by four strategic framework was developed to drive profitable growth for sustainable value creation.
Speaker 3: There are two main elements of our strategic framework, the first element which we refer to as our Muslim battles, focuses on what we do to increase the hours of our maintenance product.
There are two main elements of our strategic framework, the first element, which we refer to as our must win battles focuses on what we do to increase sales of our maintenance products.
Steve Brass: Maintenance product sales in the mayor direct markets increased in the fourth quarter driven primarily by double digit growth of both W-14 multi-use product and W-40 specialist in the United Kingdom, Italy and Spain. Mainly due to the impact of price increases which is partially offset by slightly lower demand which resulted in decreased sales volume. The increase in sales is also driven by the timing of promotional programs particularly in the wholesale and trade channels.
Speaker 3: This is an area of focus we've discussed with investors for several years. I must also involve growing WD40 multi-use products sales through geographic expansion, growing sales and gross margin through the premiumisation of WD40 multi-use products, growing WD40 specialist product line through category leadership, and accelerating our capabilities in building our brand digitally and maximising our global digital commerce presence.
This is an area of focus we've discussed with investors for several years.
Must win battles include growing duty 40, multi use product sales through geographic expansion growing sales and gross margin through the premium amortization of WD 40, multi use product growing to be 40 specialist product line through category leadership and accelerating our capabilities in building our brand digitally and maximizing our global digital commerce.
Steve Brass: Sales in our mayor distributor markets which accounted for 27% of the regional sales in the fourth quarter increased by 9% compared to last year. This increase in sales was primarily driven by higher sales and maintenance products in many distributor markets. In total our mayor segment made up 36% of our global business in the fourth quarter.
Presence today.
Speaker 3: Today we're also introducing the second element of our strategic framework, which we refer to as our strategic enable.
Today, we're also introducing the second element of our strategic framework, which we refer to as our strategic enablers.
Speaker 3: These four strategic enablers focus on operational excellence and support how we would achieve almost some battles and include
Four strategic enablers focus on operational excellence and support how we will achieve almost win battles and include <unk>.
Steve Brass: They want to Asia Pacific. Thousand Asia Pacific which includes Australia, China and other countries in the Asia region were down 20% in the fourth quarter to 50 million. In Australia sales are down 1% in the fourth quarter primarily due to the impact of foreign currency exchange rates. On a constant currency basis sales for Australia would have increased by 5% compared to last year. Primarily due to higher sales of the home care and cleaning products as a result of successful promotional growth.
Speaker 3: ensuring that people first mindset where we can attract, develop and engage outstanding employees, building a sustainable
Ensuring our people first mindset, where we can attract develop and engage outstanding employees.
Building, a sustainable business for the future.
Speaker 3: achieving operational excellence in supply chain and driving productivity by our enhanced.
Achieving operational excellence and supply chain.
And driving productivity by our enhanced systems.
Speaker 3: These are the primary areas that make up our 4-by-4 strategic framework and where we will continue to focus our time, talent and treasure to be successful in achieving our long-term financial and operational goals. Let's reflect on the progress we made against the Mosswyn Battle of fiscal year 2023.
These are the primary areas that make up our four by four strategic framework and where we will continue to focus our time talent and treasure to be successful in achieving our long term financial and operational goals, let's reflect on the progress we made against our must win battles for fiscal year 2023.
Steve Brass: Williams. In our Asia Pacific distributor markets, sales were down 38% in the fourth quarter against the tough prior year comparison. As you may recall from last year, severe lockdown restrictions from earlier in the year were lifted and were resume shipping product to the area, resulting in strong sales during the fourth quarter. In China, sales were down 4% in the fourth quarter, primarily due to the impact of foreign currency exchange rates. On a constant currency basis, sales for China would have increased by 2%. In total, our Asia Pacific segment made up 11% of our global business in the fourth quarter.
Starting with must win Battle number one lead geographic expansion, our largest growth opportunity in first must win battle is the geographic expansion of the blue and yellow can little Red top we.
Speaker 3: Starting with Muslim battle number one, lead geographic expansion. A large-scale opportunity in first Muslim battle is a geographic expansion of the Blue and Yellow Count, the Little Red Top.
Speaker 3: We estimate the potential global growth opportunity for the 40 multi-use product to be approximately $1 billion and will laser focused on delivering long-term growth in our top 20 growth markets around the world.
We estimate the potential global growth opportunity for WD 40, multi use product to be approximately $1 billion.
We are laser focused on delivering long term growth in our top 20 growth markets around the world.
Speaker 3: In fiscal year 2023, global sales of W40 multi-use product grew 2% over the prior year. So this growth is not in line with our long-term expectations. We ended the year strong and expect to see growth return to historic levels.
In fiscal year 2023, global sales of WD 40, multi use product grew 2% over prior year.
Steve Brass: Now let's talk about our long-term growth aspirations. The WD-40 company were privileged to have one of the world's best known and most iconic brands. We have a strong competitive mode that allows us to capture the tremendous runway of opportunity before us.
So this growth is not in line with our long term expectations. We ended the year strong and expect to see growth return to historic levels.
Speaker 3: For the year, we made good progress in several key markets on this Muslim battle, with strong sales growth of 14% in the UK, 14% in Mexico, 10% in China, and 17% in the US.
For the year, we made good progress in several key markets on this must win battle with strong sales growth of 14% in the U K, 14% in Mexico, 10% in China, and 17% in the U S.
Steve Brass: As we enter fiscal year 2024, I'm proud to introduce you to our new 4x4 strategic framework which is tied to our purpose and values and will guide our future performance. Our 4x4 strategic framework was developed to drive profitable growth for sustainable value creation. There are two main elements of our strategic framework, the first element which we refer to as our Mossman Battles, focuses on what we do to increase sales of our maintenance products.
Next as must win battle number two accelerating premium amortization, our smart straw delivery system has been our most successful innovation in the company's 70 year history and is loved by end users around the world.
Speaker 3: Next is Muslim Battle Number 2, accelerating pre-humanization. A smart store delivery system has been our most successful innovation in the company's 70 year history, and is loved by end users around the world. Our easy reach delivery system provides our end users but even more options to solve problems in factories, workshops and homes.
EZ reach delivery system provides our end users with even more options to solve problems in factories workshops in homes.
Speaker 3: For us, minimisation is a major contributor to our revenue growth as well as gross margin expansion and also delights our end users.
First premium amortization as a major contributor to our revenue growth as well as gross margin expansion and also delight our end users.
Steve Brass: This is an area of focus we've discussed with investors for several years. Our Mossman Battles include growing WD-40 multi-use product sales through geographic expansion, growing sales and gross margin through the premiumization of WD-40 multi-use products, growing WD-40 specialists product line through category leadership and accelerating our capabilities in building our brand digitally and maximizing our global digital commerce presence.
Speaker 3: As the last five years, we've achieved the compound annual growth rate for next thousand premiumized products, at 7.3% in reported currency, and 8.2% on a constant currency
Five years, we've achieved a compound annual growth rate for net sales of premium alloys products of seven 3% in reported currency and eight 2% on a constant currency basis we.
Speaker 3: We are on track to fully implement the WD40 Smart Straught Next Generation capacity for the new America's new mayor in the first quarter of fiscal year 2024, which we expect to accelerate the sales of WD40 multi-use, pre-memised products.
We are on track to fully implement <unk> <unk> 40, smart straw next generation capacity within the Americas and EMEA are in the first quarter of fiscal year, 2024, which we expect to accelerate the sales of WD 40, multi use pre numerous products.
Steve Brass: Today we're also introducing the second element of our strategic framework which we refer to as our strategic enablers. These four strategic enablers focus on operational excellence and support how we will achieve our Mossman Battles and include ensuring that people first mindset where we can attract, develop and engage outstanding employees, building a sustainable business for the future, achieving operational excellence in supply chain and driving productivity via enhanced systems. These are the primary areas that make up our four-by-four strategic framework and where we will continue to focus our time, talent and treasure to be successful in achieving our long-term financial and operational goals.
Speaker 3: On a go forward basis, we'll be targeting a compound and your growth rate for net sales of premiumized products at greater than 10% in reported current.
On a go forward basis, we'll be targeting a compound annual growth rate for net sales of <unk> products are greater than 10% in reported currency.
Our third must win battle is to drive to be 40 specialist growth. However, we see this as much more than an incremental revenue opportunity driving WD 40 specialist growth focuses on achieving category leadership by leveraging our core brand equity and taking advantage of a strong moat. It's.
Speaker 3: Our third must be in battle is to drive to be 40 specialists grow. Whether we see this as much more than an incremental revenue opportunity, driving to be 40 specialists grow, focuses on achieving category leadership by leveraging our core brand equity and taking advantage of our strong modes.
Speaker 3: It's about taking competitors off the shelves and increasing our market share.
It's about taking competitors off the shelf and increasing our market share.
Speaker 3: On average, a report that our efforts to drive around awareness, maximize full placement and increase shelf space that paying off.
I'm happy to report that our efforts to drive brand awareness maximize store placement and increased shelf space of paying off the fiscal year 2023 sales of WD 40 specialist products, but just under $67 million up 11%.
Steve Brass: That reflects on the progress we made against the Mossman Battles of fiscal year 2023. Starting with Mossman Battles number one, lead geographic expansion, our largest growth opportunity in First Mossman Battles is a geographic expansion of the Blue and Yellow Count below the red top. We estimate the potential global growth opportunity for WD-40 multi-use product to be approximately $1 billion and will laser-focused on delivering long-term growth in our top 20 growth markets around the world.
Speaker 3: The fiscal year 2023, thousands of W40 specialist products for just under 67 million, top 11 percent.
Speaker 3: We saw growth in W40 specialist products across all three trade blocks with growth of 18% in the Americas, 7% in Emea and 3% in Asia Pacific.
We saw growth and to be fully specialist products across all three trade blocks with growth of 18% in the Americas, 7% in EMEA and 3% in Asia Pacific.
Speaker 3: Over the last five years, we've achieved a compound annual growth rate for net sales of W4 specialist for 14.4% in reported currency and 15.4% in the constant currency basis. On a go forward basis, we'll be targeting a compound annual growth rate for net sales of W4 specialist of greater than 15% in reported currency.
Over the last five years, we've achieved a compound annual growth rate for net sales of WD 40 specialist was 14, 4% in reported currency and 15, 4% in constant currency basis on a go forward basis, we'll be targeting a compound annual growth rate for net sales of WD 40 specialist of greater than 15%.
Steve Brass: In fiscal year 2023, global sales of WD-40 multi-use product grew 2% over the prior year. So this growth is not in line with our long-term expectations. We ended the year strong and expected to see growth returned to historic levels. For the year we made good progress in several key markets on this Mossman Battles with strong sales growth of 14% in the UK, 14% in Mexico, 10% in China and 17% in the US.
In reported currency.
Speaker 3: Our final must be in ban on the before is to turbo charge digital commerce. Our ambition here is to engage with end users, scale and become the global leader in our category within the digital commerce plan.
Our final must win battles before us to turbocharge digital commerce. Our ambition here is to engage with end users at scale and become the global leader in our category within the digital Commerce platform.
Speaker 3: must be on the floor is that much more than selling products online. We view it as the accelerator for all our other must be better.
Most of them barrel number for us that much more than selling products online we view it as the accelerator for all of our must win battles.
Steve Brass: Next is Muslim Battle No. 2, Accelerating Premiumization. A smart store delivery system has been our most successful innovation in the company's 70 year history and is loved by end users around the world. Our easy reach delivery system provides our end users with even more options to solve problems in factories, workshops and homes. For us, Premiumization is a major contributor to our revenue growth as well as gross margin expansion and also delights our end users.
Speaker 3: Digital commerce is about brand building. It drives awareness of our brands by leveraging digital media to teach and uses how to use our solutions in addition to driving online sales.
Digital Commerce is about brand building it drives awareness of our brands by leveraging digital media to teach and users have to use our solutions. In addition to driving online sales.
Speaker 3: For fiscal year 2023, e-commerce sales were up over 35% for the year, largely due to strong growth in the Americas. We believe the greatest benefit of this Muslim battle is to increase brand awareness and engagement online, which will lead to an improved shopping experience and higher sales across all channels, both in-store and...
For fiscal year 2023 E Commerce sales were up over 35% for the year largely due to strong growth in the Americas. We believe the greatest benefit of this must win battle is to increase brand awareness and engagement online, which will lead to an improved shopping experience and higher sales across all channels, both in store and online.
Steve Brass: As the last five years, we've achieved the compound annual growth rate for net thousands of premiumized products, at 7.3% in reported currency and 8.2% on a constant currency basis. We are on track to fully implement the WD-40 Smart, strong next generation capacity for the new Americas new mayor in the first quarter of fiscal year 2024, which we expect to accelerate the sales of WD-40 multi-use premiumized products. On a go forward basis we'll be targeting a compound annual growth rate for net sales of premiumized products at greater than 10% in reported currency.
As part of our digital Commerce strategy in 2023, we launched our first global online marketing campaign repair don't replace this campaign further expands our opportunity to inspire millions of tours makers fixes and builders to use our solutions not only to extend the lifespan of their tools are.
Speaker 3: As part of our digital commerce strategy in 2023, we launched our first global online marketing campaign, Repair, Don't Replace. This campaign further expands our opportunity to inspire millions of doers, makers, fixers and builders to use our solutions, not only to extend the lifespan of their tools or equipment, but also support global efforts to reduce waste, preserve resources, and leave a positive handprint for future generations.
Equipment, but also supports global efforts to reduce waste resources labor positive handprint for future generations.
Speaker 3: And now turning to the second element of our strategic framework, our four strategic enablers, with collectively underpin our most wind battles. We view these as the how we will achieve our drivers for success.
And now turning to the second element of our strategic framework of our four strategic enablers, which collectively underpin our must win battles. We view these as to how we will achieve our drivers for success.
Steve Brass: Our third Muslim Battle is to drive WD-40 specialist growth. However we see this as much more than an incremental revenue opportunity. Driving WD-40 specialist growth focuses on achieving category leadership by leveraging our core brand equity and taking advantage of our strong mode. It's about taking competitors off the shelf and increasing our market share. I'm happy to report that our efforts to drive brand awareness, maximize store placement, and increase shelf space that paying off the fiscal year 2023, thousands of WD-40 specialist products were just under 67 million top 11 percent.
Starting with strategic enabler number one ensuring a people first mindset Adobe fully company. We know our people make is great you will not find the greatest asset we have on our balance sheet. Because it's comprised about 613 employees, we strive to be an employer of choice, where all employees can bring their best and genuine selves to work.
Speaker 3: Starting with strategic enable number one, ensuring a people first mindset, a WD40 company, we know our people make us great. You will not find the greatest asset we have on our balance sheet because it's comprised of our 613 employees.
Speaker 3: We strive to be an employer of choice, where all employees can bring their best and genuine selves to work. We're committed to fostering a culture of belonging, recognition rewards and resiliency, while attracting, developing, and engaging talent, which will drive our sustainable forward in the men.
We're committed to fostering a culture of belonging recognition rewards and resiliency, while attracting developing and engaging talent, which will drive our sustainable forward momentum, we will measure ourselves against this enabler, but three quantitative metrics.
Steve Brass: We saw growth in WD-40 specialist products across all three trade blocks with growth of 18% in Americas, 7% in Emea and 3% in Asia Pacific. Over the last five years we've achieved the compound annual growth rate for net sales of WD-40 specialist of 14.4% in reported currency and 15.4% in the constant currency basis. On a go forward basis we'll be targeting a compound annual growth rate for net sales of WD-40 specialist of greater than 15% in reported currency.
Speaker 3: We'll measure ourselves again, this enabler, five, three quantitative metrics.
Speaker 3: Employee engagement, are better together scores, and are employee retention rates.
<unk> engagement are better together schools and our employee retention rates.
Speaker 3: Next is Strategic Enable Number 2, Building a Business for the Future. Simply put, we're committed to operating our business in a manner that will have a positive, environmental and societal impact, and one that will continue to create and protect long-term stakeholder value.
Next is strategic enabling number two building a business for the future simply put we are committed to operating our business in a manner that will have a positive environmental and societal impact and one that will continue to create and protect long term stakeholder value.
Speaker 3: We've shared with you in the past that we are philosophically aligned with a vision to reach net zero greenhouse gas emissions by 2050. The term sustainability is increasingly perceived as a climate related matter, but we see it as modern.
Share with you in the past that we are philosophically aligned with division to reach net zero greenhouse gas emissions by 2050. The term sustainability is increasingly perceived as a climate related matter, but we see it is more than that.
Steve Brass: Our final Muslim battle number four is to turbocharge digital commerce. Our ambition here is to engage with end users at scale and become the global leader in our category within the digital commerce platform. Muslim battle number four is about much more than selling products online. We view it as the accelerator for all our other Muslim battles. Digital commerce is about brand building. It drives awareness of our brands by leveraging digital media to teach end users how to use our solutions in addition to driving online sales.
Speaker 3: We define sustainability as the ability of a business to exist for a long period of time, perhaps in depth.
We define sustainability is the ability of our business to exist for a long period of time, perhaps indefinitely.
Speaker 3: A sustainable enterprise should ensure a balance between economic growth, environmental care and social well-being. We believe that taking an integrated approach to environmental, social and governance issues enhances the long term sustainability and resilience of our business and protects the long term interests of our stakeholders. We're in the process of setting further targets to reduce greenhouse gas emissions, which we will share in our 2024 ESG report.
Stable enterprise should ensure a balance between economic growth environmental care and social wellbeing, we believe that taking an integrated approach to environmental social and governance issues enhances the long term sustainability and resilience of our business and protects the long term interests of our stakeholders. We are in the process of setting.
Steve Brass: For fiscal year 2023, e-commerce sales were up over 35% for the year, largely due to strong growth in Americas. We believe the greatest benefit of this Muslim battle is to increase brand awareness and engagement online, which will lead to an improved shopping experience and higher sales across all channels, both in-store and online.
Further targets to reduce greenhouse gas emissions, which we will share in our 2020 full ESG report.
Strategic enabler and number three is achieving operational excellence and supply chain operational excellence has always been an important part of our strategy Adobe for a company our supply chain was tested during the pandemic and we learned a lot. The advances made by our employees to production capacity and product availability not only helped to recover.
Speaker 3: Strategic enabler number three is achieving operational excellence in supply chain.
Speaker 3: Operational excellence has always been an important part of our strategy at Doobie40 Company. Our supply chain was tested during the pandemic and we learned a lot. The advances made by our employees to production capacity and product availability not only helped to recover our supply chain, but also uncovered a myriad of ways to make it better than it is today.
Steve Brass: As part of our digital commerce strategy in 2023, we launched our first global online marketing campaign, Repair, Don't Replace.
Steve Brass: This campaign further expands our opportunity to inspire millions of doers, makers, fixers and builders to use our solutions not only to extend the lifespan of their tools or equipment, but also supports global efforts to reduce waste, preserve resources, leave a positive handprint for future generations, and now turning to the second element of our strategic framework, our four strategic enablers, which collectively underpin our Muslim battles. We view these as the how we will achieve our drivers for success.
Supply chain, but also uncovered a myriad of ways to make it better than it is today.
Speaker 3: This strategic enabler is meant to continue that quest for operational excellence.
This strategic enabler is meant to continue that quest for operational excellence, we believe that a resilient and high performing supply chain enabled by people capacity and capabilities will secure the long term success of our company.
Speaker 3: We believe that a resilient and high performing supply chain enabled by people, capacity and capabilities will secure the long term success of our company.
Speaker 3: I'll go on to this enable us to achieve on time delivery of greater than 95% and manage our inventory on hand to less than 90 days.
Our goal under this enabled us to achieve on time delivery have greater than 95% and manage our inventory on a hand to less than 90 days.
Steve Brass: Starting with strategic enabler number one, ensuring a people first mindset, at WD-40 Company, we know our people make us great. You will not find the greatest asset we have on our balance sheet because it's comprised of our 613 employees. We strive to be an employer of choice, where all employees can bring their best and genuine selves to work. We are committed to fostering a culture of belonging, recognition, rewards and resiliency, while attracting, developing and engaging talent which will drive our sustainable forward momentum. We will measure ourselves again this enabler by three quantitative metrics. Employee engagement, our better together scores, and our employee retention rates.
Speaker 3: Finally, strategic enable number four, driving productivity via enhanced systems. We will identify and implement productivity solutions by using secure technologies to improve processes, provide effective access to critical analytics, and deliver the highest value investments through effective projects and program management.
Finally, strategic enabler and before driving productivity via enhanced systems, we will identify and implement productivity solutions by using secure technologies to improve processes provide effective access to critical analytics and deliver the highest value investments through effective project and program management.
This will drive profitability improvements to enhance productivity controlled spending increased employee satisfaction as well as access to timely and accurate data to drive better decision, making.
Speaker 3: This will drive profitability improvements to enhance productivity, controlled IT spending, increased employee satisfaction, as well as access to timely and accurate data that drives better decision making.
Speaker 3: The first project identified under the Strategic Enabler is our new cloud-based enterprise resource planning system, which the company is in the process of implementing and several of the discuss with you in a moment.
<unk> projects identified on the strategic enabler is our new cloud based enterprise resource planning system, which the company is in the process of implementing and Sarah will discuss with you in a moment.
Steve Brass: Next is strategic enabler number two, building a business for the future. Simply put, we are committed to operating our business in a manner that will have a positive, environmental and societal impact, and one that will continue to create and protect long-term stakeholder value. We've shared with you in the past that we are philosophically aligned with the vision to reach net zero greenhouse gas emissions by 2050. The term sustainability is increasingly perceived as a climate-related matter, but we see it as more than that.
Speaker 3: To summarize our 4x4 strategic framework, it's designed to help us deliver an our long-term revenue compound and your growth rate for maintenance products in the mid to high single digits on a non-gap constant currency base.
To summarize our four by four strategic framework is designed to help us deliver on our long term revenue compound annual growth rate for maintenance products in the mid to high single digits on a non-GAAP constant currency basis. This is supported by the growth outlook for each trade block, while we anticipate the Americas to grow between 5% to 8%.
Speaker 3: This is supported by the growth outlook for each trade block. Oh, anticipate the rare marikas to grow between 5 to 8%. They may have to grow 8 to 11%. And Asia Pacific to grow 10 to 13.
We may have to grow 8% to 11% and Asia Pacific to grow 10% to 13% and.
Steve Brass: We define sustainability as the ability of a business to exist for a long period of time, perhaps indefinitely. A sustainable enterprise should ensure a balance between economic growth, environmental care and social well-being. We believe that taking an integrated approach to environmental, social and governance issues enhances the long-term sustainability and resilience of our business and protects the long-term interests of our stakeholders. We're in the process of setting further targets to reduce greenhouse gas emissions, which we will share in our 2024 ESG report.
Speaker 3: In addition, an awful by four strategic framework will drive EBITDA margin expansion as we improve our gross margins and invest across the business to gain efficiencies and productivity improvements. With that, I'll now...
In addition, our four by four strategic framework will drive EBITDA margin expansion as we improve our gross margins and invest across the business to gain efficiencies and productivity improvements.
With that I'll now turn it over to Sarah.
Thank you, Steve and thank you for that overview of our sales results.
Speaker 4: Thank you, Steve, and thank you for that overview of our sales results.
Speaker 4: As I approached my one year anniversary as CFO for WD-40 company, I reflect on the strong bench of leaders across this organization that have supported me in my transition, as well as all our global employees that I've had the pleasure of working with for the past two years.
As I approach my one year anniversary as CFO for WD 40 company I reflect on the strong bench of leaders across the organization that has supported me in my transition.
Steve Brass: Strategic enabler number three is achieving operational excellence in supply chain. Operational excellence has always been an important part of our strategy at WD40 Company. Our supply chain was tested during the pandemic, and we learned a lot. The advances made by our employees to production capacity and product availability only helped to recover our supply chain, but also uncovered a myriad of ways to make it better than it is today. This strategic enabler is meant to continue that quest for operational excellence.
Well as all our global employees that I've had the pleasure of working with for the past two years.
Speaker 4: This past year has been a year of transition, not just for me, but for the company. And as Steve noted, fiscal year 2023 has been somewhat a tale of two-haves, where the first half was met with volatility and uncertainty, especially as we worked through implementing price changes across markets, currency fluctuations, and cycle the exit of our rush of business.
This past year has been a year of transition not just for me, but for the company.
And as Steve noted fiscal year 2023 has been somewhat of a tale of two halves.
For the first half was met with volatility and uncertainty, especially as they worked their implementing price changes across market currency fluctuation and cycled the exit of our Russia business.
Steve Brass: We believe that a resilient and high-performing supply chain, enabled by people capacity and capabilities, will secure the long-term success of our company. I'll go on to this enable us to achieve on-time delivery of greater than 95% and manage our inventory on hand to less than 90 days.
Speaker 4: However, we started to see signs of recovery and demand and volumes in the second half of fiscal year 2023, giving us conviction as we head into fiscal year 2024.
However, we started to see signs of recovery in demand and volumes in the second half of fiscal year 2023, given us conviction as we head into fiscal year 2024.
Speaker 4: We turned in a strong performance in the fourth quarter, resulting in a solid fiscal year 2023. I am happy to report that we grew our top line for the year despite the headwinds we face due to-
We turned in a strong performance in the fourth quarter, resulting in a solid fiscal year 2023.
I am happy to report that we grew our top line for the year. Despite the headwinds we faced due to currency.
Steve Brass: Finally, strategic enabler number four, driving productivity via enhanced systems, will identify and implement productivity solutions by using secure technologies to improve processes, provide effective access to critical analytics and deliver the highest value investments through effective projects and program management. This will drive profitability improvements to enhance productivity, controlled IT spending, increased employee satisfaction, as well as access to timely and accurate data that drives better decision making. The first project identified under the strategic enabler is our new cloud-based enterprise resource planning system, which the company is in the process of implementing and Sara will discuss with you in a moment.
Speaker 4: Furthermore, each of our financial results performed within the targeted guidance ranges that we provided mid-year, even as we continue to invest across the booth.
Are there more each of our financial results performed within the targeted guidance ranges that we provided mid year, even as we continued to invest across the business.
Speaker 4: Now let me walk you through our fourth quarter results and provide an update on our capital deploying.
Now, let me walk you through our fourth quarter results and provide an update on our capital deployment I will close by providing an updated view on our 50 530, 25 business model and providing fiscal year 2020 for our guidance.
Speaker 4: I will close by providing an updated view on our 5530 25 business model and providing fiscal year 2024 guidance.
Turning first to our fourth quarter gross margin performance.
Speaker 4: Once again, we experience strong growth, margin growth over the prior year four.
Once again, we experienced strong gross margin growth over the prior year fourth quarter.
Speaker 4: Our fourth quarter gross margin of 51.4% performed within the expected range we communicated.
Our fourth quarter gross margin of 51, 4% performed within the expected range we communicated.
Steve Brass: To summarise our four-by-four strategic framework, it is designed to help us deliver an our long-term revenue compound and your growth rate for maintenance products in the mid-to-high single digits on a non-gap constant currency basis. This is supported by the growth adblock for each trade block. I will anticipate the rare Americas to grow between five to eight percent, be mayor to grow eight to eleven percent, and age are Pacific to grow ten to thirteen percent. In addition, an our four-by-four strategic framework will drive EBITDA margin expansion as we improve our gross margins and invest across the business to gain efficiencies and productivity improvements.
Speaker 4: This margin performance reflects a 400 basis point improvement compared to the prior year fourth quarter and a sequential improvement of 80 basis points compared to the third quarter of this fiscal year.
This margin performance reflects a 400 basis point improvement compared to the prior year fourth quarter and a sequential improvement of 80 basis points compared to the third quarter of this fiscal year.
Speaker 4: The 400 basis point improvement from prior year fourth quarter, which is driven by continued actions we have taken throughout the course of the year, including pricing increases across all our markets and geographies, which positively impacted growth margin by 460 base.
The 400 basis point improvement from prior year fourth quarter, driven by continued actions we have taken throughout the course of the year, including price increases across all our markets and geographies, which positively impacted gross margin by 460 basis points.
Speaker 4: These positive impacts are partially offset by changes in major inputs.
These positive impacts were partially offset by changes in major input costs.
Speaker 4: Higher costs associated with specialty chemical costs and aerosol cans when combined, negatively impacted our margin by 90 base.
Costs associated with specialty chemical costs in aerosol cans, when combined negatively impacted our margin by 90 basis points.
Sara Hyzer: With that, I will now turn it over to Sara. Thank you, Steve, and thank you for that overview of our sales results.
Speaker 4: Finally, we recognize marginal benefits from lower costs associated with warehouse scene distribution, freight and other miscellaneous input cost, which were offset.
Finally, we recognized marginal benefit from lower costs associated with warehousing distribution freight and other miscellaneous input costs.
Sara Hyzer: As I approach my one-year anniversary as CFO for WD-40 Company, I reflect on the strong bench of leaders across this organization that has supported me in my transition, as well as all our global employees that I've had the pleasure of working with for the past two years. This past year has been a year of transition, not just for me, but for the company, and as Steve noted, fiscal year 2023 has been somewhat a tale of two halves, where the first half was met with volatility and uncertainty, especially as we worked through implementing price changes across markets, currency fluctuations, and cycle the exit of our Russia business.
Were offset by higher affiliate fees.
Now, let's take a deeper dive into the margin for the fourth quarter by trade block as we continue to focus on our margin improvement plan.
Speaker 4: Now let's take a deeper dive into margin for the fourth quarter by trade lock as we continue to focus on our margin improvements.
Speaker 4: Each trading block is at a different stage in recovering their growth margins. And I'm happy to see improvements in all three trading blocks this quarter over the prior year fourth quarter.
Each trading bloc is at a different stage in recovery in their gross margin and I'm happy to see improvements in all three trading blocks this quarter over the prior year fourth quarter.
Within the Americas gross margin was 49% an improvement of 110 basis points.
Speaker 4: Within the Americas, gross margin was 49%, an improvement of 110 basis points. Amaze gross margin was 53.6%.
EMEA gross margin was 53, 6% an improvement of 860 basis points.
Sara Hyzer: However, we started to see signs of recovery and demand and volumes in the second half of fiscal year 2023, giving us conviction as we head into fiscal year 2024. We turned in a strong performance in the fourth quarter, resulting in a solid fiscal year 2023. I am happy to report that we grew our top line for the year, despite the headwinds we face due to currency. Furthermore, each of our financial results performed within the targeted guidance ranges that we provided mid-year, even as we continue to invest across the business. Now, let me walk you through our fourth quarter results and provide an update on our capital deployment.
Speaker 4: Finally, Asia Pax growth margin was 55.7% and improvement of 460 base.
Finally, Asia Pac's gross margin was 55, 7% an improvement of 460 basis points.
Speaker 4: We are incredibly pleased with the improvements we have made to growth margin over our fiscal year 2023.
We are incredibly pleased with the improvements we have made to gross margin of our fiscal year 2023.
Speaker 4: Recovery our margin continues to be a priority for us, but we continue to believe returning our growth margin to our 55% target will be a multi-year.
Recovering our margin continues to be a priority for us, but we continue to believe returning our gross margin to our 55% target will be a multiyear task.
Speaker 4: Turning to our cost of doing business, which we define as total operating expenses, excluding depreciation and amortization, and measure as a percentage of net sales.
Turning to our cost of doing business, which we define as total operating expenses, excluding depreciation and amortization and measure as a percentage of net sales.
Speaker 4: A WD-40 company cost of doing business is primarily comprised of three areas. Investments in our employees, investments in building our brand and freight expense to get our products to work.
At WD 40 company cost of doing business is primarily comprised of three areas investments in our employee investments in building, our brand and freight expense to get our products to our customer.
Sara Hyzer: I will close by providing an updated view on our 5530 25 business model and providing fiscal year 2024 guidance. Turning first to our fourth quarter growth margin performance. Once again, we experienced strong growth margin growth over the prior year fourth quarter. Our fourth quarter growth margin of 51.4% performed within the expected range we communicated. This margin performance reflects a 400 basis point improvement compared to the prior year fourth quarter and a sequential improvement of 80 basis points compared to the third quarter of this fiscal year.
For the fourth quarter, our cost of doing business of 34%, which increased from 31% in the comparable quarter of last year.
Speaker 4: For the fourth quarter, our cost of doing business is 34%, which increased from 31% in the comparable quarter of last year.
Speaker 4: This increase is largely due to higher employee related expenses associated with our earned incentive compensation.
This increase was largely due to higher employee related expenses associated with our earned incentive compensation.
Sara Hyzer: The 400 basis point improvement from prior year fourth quarter was driven by continued actions we have taken throughout the course of the year, including price increases across all our markets and geographies, which positively impacted growth margin by 460 basis points. These positive impacts were partially offset by changes in major inputs. Higher costs associated with specialty chemical costs and aerosol cans when combined negatively impacted our margin by 90 basis points. Finally, we recognize marginal benefits from lower costs associated with warehousing, distribution, freight, and other miscellaneous input costs, which were offset by higher filling fees.
Speaker 4: increased professional service fees and higher travel and meeting expenses as we continue to get back to our normal travel schedules in a post pandemic.
Increased professional service fees and higher travel and meeting expenses as we continue to get back to our normal travel schedules in a post pandemic world.
Speaker 4: We also continue to incur higher costs associated with the implementation and licensing of our new cloud-based enterprise resource planning software.
We also continue to incur higher costs associated with the implementation and licensing of our new cloud based enterprise resource planning software system.
Speaker 4: Net sales growth is the most important factor in managing our cost of business towards our long-term target of 30%.
Net sales growth is the most important factor in managing our cost of business towards our long term target of 30%.
Speaker 4: We are making deliberate investments in the business to support growth. So we expect to see improvements in the cost of doing business over time as net sales grow.
We are making deliberate investments in the business to support growth. So we expect to see improvements in the cost of doing business over time as net sales growth.
Turning now to EBITDA.
Speaker 4: For the fourth quarter, even a margin, which we measure as a percentage of net sales, was 18%, which improved from 16% in the comparable quarter of the previous year.
For the fourth quarter, EBITDA margin, which we measure as a percentage of net sales was 18%, which improved from 16% in the comparable quarter of the previous year.
Speaker 4: This is the result of the improvement in net sales as volumes recovered in the back half of the fiscal year and stronger growth margin performance, partially offset by an increase in our cost of doing business as I previously noted.
This is the result of the improvement in net sales and volumes recovered in the back half of the fiscal year and stronger gross margin performance, partially offset by an increase in our cost of doing business as I previously noted.
Sara Hyzer: Now let's take a deeper dive into margin for the fourth quarter by trade lock as we continue to focus on our margin improvement plan. Each trading block is at a different stage in recovering their gross margin, and I'm happy to see improvements in all three trading blocks this quarter over the prior year fourth quarter. Within the Americas, gross margin was 49% and improvement of 110 basis points. A means gross margin was 53.6% and improvement of 860 basis points. Finally, age-to-packed gross margin was 55.7% and improvement of 40%. We are incredibly pleased with the improvements we have made to gross margin over our fiscal year 2023.
Before fiscal year 2022, we consistently delivered EBIT margins of between 2022%.
Speaker 4: Before fiscal year 2022, we consistently delivered even a margin of between 2022 percent.
Speaker 4: However, even margins continue to be under pressure due to the current inflationary environment and the intentional investments we have made to support our new 4x4 strategic.
However, EBIT margins continue to be under pressure due to the current inflationary environment and the intentional investments we have made to support our new floor by floor, our strategic framework.
Speaker 4: These investments are in important growth accelerators for our future.
These investments are important growth accelerators for our future.
Speaker 4: Getting EBITDA above 20% remains a priority as we are laser focused on improving sales volume, rebuilding gross margins, and disciplined cost management.
Getting EBITDA above 20% remains a priority as we are laser focused on improving sales volume rebuilding gross margin and disciplined cost management.
Speaker 4: Once we are consistently back at our historic 20 to 22% level, then we will look to leverage scale and returns on our investments across the business as we target 25% even margins over the longer term. Now let me discuss some.
Once we are consistently back at our historic 20% to 22% level. Then we will look to leverage scale and returns on our investments across the business as we target, 25% EBITDA margins over the longer term.
Sara Hyzer: Recovering our margin continues to be a priority for us, but we continue to believe returning our gross margin to our 55% target will be a multi year task.
Sara Hyzer: Turning to our cost of doing business, which we define as total operating expenses, excluding depreciation and amortization and measure as a percentage of net sales. A WD40 company cost of doing business is primarily comprised of three areas, investments in our employees, investments in building our brand, and freight expense to get our products to our customers. For the fourth quarter, our cost of doing business is 34%, which increased from 31% in the comparable quarter of last year.
Now, let me discuss some items that fall below the EBITDA line.
Speaker 4: Net income improved to 16.6 million in the fourth quarter, which was an increase of 12% over the previous year's fourth quarter.
Net income improved to $16 6 million in the fourth quarter, which was an increase of 12% over the previous years fourth quarter.
Speaker 4: on a constant currency basis, net income would have improved 10% compared to the fourth quarter last year.
On a constant currency basis, net income would have improved 10% compared to the fourth quarter last year.
Speaker 4: Our net income reflects a rate of 25.4% for the provision of income time.
Our net income reflects a rate of 25, 4% for the provision of income taxes.
Diluted earnings per common share for the quarter were $1 21 compared to $1 eight for the fourth quarter last year, which reflects an increase of 12%.
Speaker 4: Deluted earnings per common share for the quarter were $1.21 compared to a dollar eight for the fourth quarter last year, which reflects an increase of 12.
Sara Hyzer: This increase is largely due to higher employee related expenses associated with our earned incentive compensation, increased professional services, and higher travel and meeting expenses as we continue to get back to our normal travel schedules in a post pandemic world. We also continue to incur higher costs associated with the implementation and licensing of our new cloud-based enterprise resource planning software system. Net sales growth is the most important factor in managing our cost of business towards our long-term target of 30%. We are making deliberate investments in the business to support gross, but we expect to see improvements in the cost of doing business over time as net sales growth.
Speaker 4: Our diluted EPS reflects 13.6 million weighted average shares of
Our diluted EPS reflects $13 6 million weighted average shares outstanding.
Now, let's look at our balance sheet and capital allocation strategy.
Speaker 4: Now let's look at our balance sheet and capital allocation strategy.
Speaker 4: Our resilient and asset light business model coupled with actions we have taken to grow our top line while improving growth margin are all contributors to maintaining a strong balance sheet and liquidity.
Our resilient and asset light business model, coupled with actions, we have taken to grow our top line, while improving gross margin are all contributor to maintaining a strong balance sheet and liquidity position.
Maintaining a disciplined and balanced capital allocation approach is a priority for us we will make the necessary near term investments to drive long term profitable growth, while also providing strong returns to our shareholders.
Speaker 4: Maintaining a disciplined and balanced capital allocation approach is a priority.
Speaker 4: We will make the necessary near-term investments to drive long-term profitable growth, while also providing strong return to our shareholders.
This year, we saw liquidity from operations and through as we made considerable progress in lowering our inventory levels, which we had invested in to stabilize our U S supply chain in prior year.
Speaker 4: This year we saw liquidity from operations and proof as we made considerable progress in lowering our inventory levels, which we had invested in to stabilize our U.S. supply chain in prior years.
Sara Hyzer: Turning now to EBITDA. For the fourth quarter, EBITDA margin, which we measure as a percentage of net sales, was 18%, which improved from 16% in the comparable quarter of the previous year. This is the result of the improvement in net sales as volumes recovered in the back half of the fiscal year and stronger gross margin performance, partially offset by an increase in our cost of doing business as I previously noted.
Speaker 4: Our inventory level peaked in the first quarter of fiscal year 2023. And since then, we have reduced inventory by $32.5 million for 27 members.
Our inventory levels peaked in the first quarter of fiscal year 2023, and since then we have reduced inventory by $32 $5 million or 27%.
Speaker 4: We will continue to make progress on our inventory level in conjunction with our strategic enable or number three that Steve shared with you earlier.
We will continue to make progress on our inventory levels in conjunction with our strategic enabler number three as Steve shared with you earlier.
Sara Hyzer: Before fiscal year 2022, we consistently delivered EBITDA margins of between 20% and 22%. However, EBITDA margins continue to be under pressure due to the current inflationary environment and the intentional investments we have made to support our new 4x4 strategic. Framework. These investments are important growth accelerators for our future. Getting EBITDA above 20% remains a priority as we are laser focused on improving sales volumes, rebuilding growth margins, and disciplined cost management.
Speaker 4: Our cash flow from operations in fiscal year 2023 was $98.4 million. And we elected to use $28.4 million of that cash to pay down a portion of our short term, higher interest rate bar.
Our cash flow from operations in fiscal year, 2023, with $98 $4 million.
And we elected to use $28 $4 million of that cash to pay down a portion of our short term higher interest rate borrowings.
During the fiscal year, we invested $6 6 million in capital projects, which is in line with our asset light strategy of investing between one and 2% of sales.
Speaker 4: During the fiscal year, we invested 6.6 million in capital projects, which is in line with our asset-like strategy of investing between one and two percent of sales.
Sara Hyzer: Once we are consistently back at our historic 20 to 22% levels, then we will look to leverage scale and returns on our investments across the business as we target 25% EBITDA margins over the longer term.
Speaker 4: In addition to investments made in capital projects, since fiscal year 2021, we have been investing in a new cloud-based enterprise resource planning.
In addition to investments made in capital projects since fiscal year 2021, we have been investing in a new cloud based enterprise resource planning system.
Speaker 4: which is expected to go live in the first half of fiscal year 2024.
<unk> is expected to go live in the first half of fiscal year 2024.
Speaker 4: Our investments to date include approximately $9 million dollars.
Our investments to date include approximately $9 million in Tau, which have been capitalized and will begin to amortize. Once we go live with the new system.
Sara Hyzer: Now let me discuss some items that fall below the EBITDA line. Net income improved to 16.6 million in the fourth quarter, which was an increase of 12% over the previous year's fourth quarter. On a constant currency basis, net income would have improved 10% compared to the fourth quarter last year. Our net income reflects the rate of 25.4% for the provision of income taxes. Deluted earnings per common share for the quarter were $1.21 compared to a $1.8 for the fourth quarter last year, which reflects an increase of 12%. Our deluded EPS reflects 13.6 million weighted average shares outstanding.
Speaker 4: which have been capitalized and will begin to amortize once we go live with the news.
Speaker 4: As part of this project, we have incurred and will continue to incur costs that need not qualify for capitalization.
As part of this project, we have incurred and will continue to incur costs that do not qualify for capitalization.
Speaker 4: We expect to incur these costs through the first and second ways of implementation over the upcoming year. This is a significant project for the company that is necessary as we continue to grow and support our business.
We expect to incur these costs through the first and second waves of implementation over the upcoming year.
This is a significant project for the company that is necessary as we continue to grow and support our business.
For the foreseeable future, we expect maintenance capex of between one and 2% of net sales per fiscal year, which is in line with our asset light strategy.
Speaker 4: For the foreseeable future, we expect maintenance capex of between one and two percent of net sales per fiscal year, which is in line with our asset light stretch.
In addition, we continue to return capital to our shareholders through regular dividends and buyback.
Speaker 4: In addition, we continue to return capital to our shareholders through regular dividends and buy-
Sara Hyzer: Now let's look at our balance sheet and capital allocation strategy. Our resilient and asset light business model coupled with actions we have taken to grow our top line while improving growth margin are all contributors to maintaining a strong balance sheet and liquidity position. Maintaining a discipline and balanced capital allocation approach is a priority for us. We will make the necessary near-term investments to drive long-term profitable growth while also providing strong return to our shareholders.
Speaker 4: On October 6, our Board of Directors declared a quarterly cash dividend of 83 cents per share. Payable on October 31 to stockholders of record at the close of business on October .
On October <unk>, our board of directors declared a quarterly cash dividend of <unk> 83 per share payable.
Payable on October 30, <unk> to stockholders of record at the close of business on October 20th.
During the fourth quarter, we repurchased approximately 14000 shares of our stock at a total cost of approximately $3 million under our current share repurchase plan.
Speaker 4: During the fourth quarter we purchased approximately 14,000 shares of our stock at a total cost of approximately $3 million under our current share repurchase plan. This concludes.
This concludes my discussion on our reported results.
Speaker 4: Before I share fiscal year 2024 guidance with you, I would like to discuss an updated view on our 55 30 25 business.
Before I share our fiscal year 2024 guidance with you I would like to discuss an updated view on our $55 30 25 business model.
Sara Hyzer: This year we saw liquidity from operations improve as we made considerable progress in lowering our inventory levels, which we had invested in to stabilize our U.S, supply chain in prior years. Our inventory levels peaked in the first quarter of fiscal year 2023 and since then we have reduced inventory by $32.5 million for 27%. We will continue to make progress on our inventory levels in conjunction with our strategic enableer number three that Steve shared with you earlier.
Speaker 4: As Steve shared earlier, today we introduce our new 4x4 strategic frame.
As Steve shared earlier today, we introduced our new four by four our strategic framework.
Speaker 4: which is designed to help us achieve our expected long-term revenue and profitability of JEC.
Which is designed to help us achieve our expected long term revenue and profitability objective.
Speaker 4: We see significant opportunities for sustainable growth, which over time will align with our 55, 30, 25 business model objectives.
We see significant opportunities for sustainable growth, which overtime will align with our 50 530 25 business model objective.
Speaker 4: So you've been I think about our 55 30 25 business model as a long term beacon that we will move forward and align with over.
Steven I think about our 50 530 25 business model as a long term beacon that we will move toward an aligned with overtime and.
Sara Hyzer: Our cash flow from operations in fiscal year 2023 was $98.4 million and we elected to use $28.4 million of that cash to pay down a portion of our short term higher interest rate borrowing. During the fiscal year we invested $6.6 million in capital projects which is in line with our asset-like strategy of investing between one and two percent of sales. In addition to investments made in capital projects since fiscal year 2021 we have been investing in a new cloud-based enterprise resource planning system which is expected to go live in the first half of fiscal year 2024.
Speaker 4: In the short to midterm, we think about each critical component of the model in a race.
In the short to mid term, we think about each critical component of the model in a range.
Speaker 4: Near term we're targeting a range of 50 to 55% for gross margin. 30 to 35% for cost of doing business.
Near term, we are targeting a range of 50% to 55% for gross margin.
30% to 35% for cost of doing business.
And 20% to 25% for EBITDA.
Speaker 4: We believe these ranges represent a more realistic short-term view of the business in the current economic environment. And they will also allow us to make the necessary investments to support our new 4x4 strategic group.
We believe these ranges represent a more realistic short term view of the business and the current economic environment and they will also allow us to make the necessary investments to support our new floor by floor, our strategic framework.
Speaker 4: Strategic investments were made this year around ESG, information technology, innovation, and organizational business.
Strategic investments remained this year around ESG information technology innovation and organizational design.
Sara Hyzer: Our investments to date include approximately $9 million in cost which have been capitalized and will begin to amortize once we go live with the new system. As part of this project we have incurred and will continue to incur costs that need not qualify for capitalization. We expect to incur these costs through the first and second ways of implementation over the upcoming year.
Speaker 4: These investments were significant year over year, but are not anticipated to grow at the same level going forward. Now that we have the right people in the right role to drive our strategy forward.
These investments were significant year over year, but are not anticipated to grow at the same level going forward now that we have the right people in the right roles to drive our strategy forward.
Speaker 4: We believe these investments were necessary to jump start our 4x4 stretch.
We believe these investments are necessary to jumpstart our far by far strategy.
Sara Hyzer: This is a significant project for the company that is necessary as we continue to grow and support our business, for the foreseeable future, we expect maintenance capex of between one and two percent of net sales per fiscal year, which is in line with our asset light strategy.
Speaker 4: As we move forward, we will use the myriad of strategic levers at our disposal to move each component in the correct direction over time. Ultimately, we are focused...
As we move forward, we will use the myriad of strategic levers at our disposal to move each component in the correct direction overtime.
Ultimately, we are focused on long term value creation.
Speaker 4: We know that when we consistently grow our top line, manage our 55, 30, 25 business models for EBITDA growth, and leverage our asset light model, we can continue to drive an ROIC of greater than 25.
We know that when we consistently grow our top line manage our 50 530 25 business model for EBITDA growth and leverage our asset light model. We can continue to drive in our ICEE of greater than 25%.
Sara Hyzer: In addition, we continue to return capital to our shareholders through regular dividends and buybacks. On October 6, our Board of Directors declared a quarterly cash dividend of 83 cents per share. Payable on October 31st to stockholders of record at the close of business on October 20th. During the fourth quarter, we repurchased approximately 14,000 shares of our stock at a total cost of approximately $3 million under our current share repurchased plan.
Speaker 4: That will generate continued strong and stable free cash flow, which we will continue to optimize for our best return on investment and to our
That will generate continued strong and stable free cash flow, which we will continue to optimize for our best return on investment and to our stockholders.
Speaker 4: Looking more closely at our outlook for fiscal year 2024.
Looking more closely at our outlook for fiscal year 2024.
Speaker 4: Net sales growth is projected to be between 6 and 12 percent, with net sales between $570 and $600 million in constant.
Net sales growth is projected to be between six and 12% with net sales between 570 and $600 million in constant currency.
Sara Hyzer: This concludes my discussion on our reported results.
Speaker 4: We also expect Gross Margin to be between 51 and 53%.
We also expect gross margin to be between 51 and 53%.
Sara Hyzer: Before I share fiscal year 2024 guidance with you, I would like to discuss an updated view on our 5530 25 business model. As Steve shared earlier, today we introduce our new 4x4 strategic framework, which is designed to help us achieve our expected long term revenue and profitability objective. We see significant opportunities for sustainable growth, which over time will align with our 55 30 25 business model objective. Steve and I think about our 55 30 25 business model as a long term beacon that we will move forward and align with over time.
Speaker 4: Advertising and promotion investment is projected to be between 5 and 6 percent of net sales.
Advertising and promotion investment is projected to be between five and 6% of net sales.
The provision for income taxes is expected to be between 24 and 25%.
Net income is expected to be between 65 and $70 million.
Speaker 4: And diluted earnings per share is expected to be between 478 and 515, which is based on an estimated 13.6 million weighted average shares outstanding.
And diluted earnings per share is expected to be between $4 78, and $5 15, which is based on an estimated $13 6 million weighted average shares outstanding.
Speaker 4: Also, as a reminder, this guidance assumes no major changes to the current economic environment. Unanticipated inflationary headwinds and other unforeseen events may affect our review of fiscal year 2024.
Also as a reminder, this guidance assumes no major changes to the current economic environment unanticipated inflationary headwinds and other unforeseen events may affect our fifth year of fiscal year 2024.
Sara Hyzer: In the short to midterm, we think about each critical component of the model in a range. Near term, we're targeting a range of 50 to 55% for growth margin 30 to 35% for cost of doing business and 20 to 25% for EBITF. We believe these ranges represent a more realistic short term view of the business in the current economic environment, and they will also allow us to make the necessary investments to support our new 4x4 strategic framework.
Speaker 4: That completes the financial overview. Now I would like to turn it back.
That completes the financial overview now I would like to turn it back to Steve.
Thank you Sarah if we've learned anything over the last 70 years. Its activity 40 company is a resilient business I'm proud of what we've accomplished over the last year. Once again I want to thank our employees as they are our most powerful assets and continue to be the real magic formula that drives our company.
Speaker 3: Thank you, Sarah. If we've learned anything over the last 70 years, it's that WD-40 Company is a resilient business. I'm proud of what we've accomplished over the last year. Once again, I want to thank our employees as they are our most powerful asset and continue to be the real magic formula that drives our company forward.
Yeah.
Sara Hyzer: Strategic investments remain this year around ESG, information technology, innovation, and organizational design. These investments were significant year over year, but are not anticipated to grow at the same level going forward now that we have the right people in the right role to drive our strategy forward. We believe these investments were necessary to jump start our 4x4 strategy. As we move forward, we will use the myriad of strategic levers at our disposal to move each component in the correct direction over time.
Speaker 3: In summary, what did you hear from us on this call? You heard that despite a difficult first half and a negative impact from currency of nearly $18 million, we grew revenue by 4% over prior year. Excluding the impact of currency, revenue grew 7%, which is in line with our long-term revenue growth time.
In summary, what did you hear from us on this call.
You heard the despite a difficult first half and a negative impact from currency of nearly $18 million, we grew revenue by 4% over prior year.
Excluding the impact of currency revenue grew 7%, which is in line with our long term revenue growth target.
Speaker 3: You heard that we saw improvements in volumes and sales in the second half of fiscal year 2023 and are encouraged by these trends as we enter fiscal year 2024.
You heard that we saw improvements in volumes and sales in the second half of fiscal year 2023 and are encouraged by these trends as we enter fiscal year 2024.
Speaker 3: You heard that we've introduced our new 4x4 strategic framework which is tied to our purpose and values and will guide our future performance, investments and drive long-term value creation.
You heard that we've introduced our new four by four strategic framework, which is tied to our purpose and values and will guide our future performance investments and drive long term value creation.
Sara Hyzer: Ultimately, we are focused on long term value creation. We know that when we consistently grow our top line, manage our 55 30 25 business model for EBITF growth and leverage our asset light model, we can continue to drive an ROIC of greater than 25%.
Speaker 3: You heard that we're making investments across our organization, in our people, products, processes, productivity, and the planet, and that we will continue to make the necessary investments to capture the tremendous runway for revenue growth and margin expansion in front of us.
You heard that we're making investments across our organization and our people products and processes productivity and the planet and we will continue to make the necessary investments to capture the tremendous runway for revenue growth and margin expansion in front of us.
Sara Hyzer: That will generate continued strong and stable free cash flow, which we will continue to optimize for our best returns on investments and to our stockholders.
Speaker 3: You heard that we saw liquidity from operations return as we made considerable progress in lowering our inventory levels over the fiscal year.
You heard that we saw liquidity from operations return as we've made considerable progress in lowering our inventory levels over the fiscal year.
Sara Hyzer: Looking more closely at our outlook for fiscal year 2024, net sales growth is projected to be between 6 and 12% with net sales between 570 and $600 million in constant currency. We also expect growth margin to be between 51 and 53%. Advertising and Promotion Investment is projected to be between 5 and 6% of net sales. The provision for income tax is expected to be between 24 and 25%. Net income is expected to be between $65 and $70 million. And deluded earnings per share is expected to be between $4.78 and $5.15, which is based on an estimated 13.6 million weighted average shares outstanding.
You heard that our asset light model provides the cash flow for us to invest in the business, while also providing returns to our stockholders.
Speaker 3: You heard that our asset light model provides a cash flow for us to invest in the business, whilst also providing returns to our stockholders.
You heard that we consider our 50 530 25 business model along term beacon, but we will move toward in the line with overtime.
Speaker 3: You heard that we consider our 55-30-25 business model a long-term beacon that we will move toward and align with over time, but that our short- to medium-term focus is on driving EBITDA margins back above 20%.
Our short to medium term focus is on driving EBITA margins back above 20%.
Speaker 3: And you heard that we issued guidance for fiscal year 2024 and that we expect revenue growth of 6% to 12% on a constant currency basis, which equates to net sales of $570 to $600 million.
And you heard that we issued guidance for fiscal year 2024, and that we expect revenue growth of 6% to 12% on a constant currency basis, which equates to net sales of $570 million to $600 million.
Speaker 3: Thank you for joining our call today. We'd now be pleased to end.
Thank you for joining our call today, we'd now be pleased to answer your questions.
Sara Hyzer: Also, as a reminder, this guidance assumes no major changes to the current economic environment. Unanticipated inflationary headwinds and other unforeseen events may affect our review of fiscal year 2024.
Speaker 1: Ladies and gentlemen, if you would like to register a question, please press star one on your telephone keypad.
Ladies and gentlemen, if you would like to register a question. Please press star one on your telephone keypad.
Sara Hyzer: That completes the financial overview.
Speaker 1: Please make sure your mute function is turned off to allow your signal to reach our equipment.
Please make sure your mute function is turned off to allow your signal to reach our equipment.
Steve Brass: Now I would like to turn it back to Steve. Thank you, Sara.
Speaker 1: If your question has been answered or you would like to withdraw your registration, please again press star one. One moment.
If your question has been answered or you would like to withdraw your registration. Please again press star one.
Steve Brass: If we've learned anything over the last 70 years, it's that WD-40 Company is a resilient business. I'm proud of what we've accomplished over the last year. Once again, I want to thank our employees as they are our most powerful asset and continue to be the real magic formula that drives our company forward.
One moment please for the first question.
Speaker 1: Our first question comes from the line of Daniel Rizzo with Jeffries. Please proceed.
Our first question comes from the line of Daniel Rizzo with Jefferies. Please proceed with your question.
Speaker 5: Hi guys, thank you for taking my questions. If we look out into 2024 with what you're expecting, are you assuming input and filling costs decrease or kind of flatten out from here? Just give them kind of the different dynamics within the environment.
Hi, guys. Thank you for taking my questions.
If we look out into 2024 with what you were expecting are you assuming input and filling cost decrease or kind of flatten out from here.
Steve Brass: In summary, what did you hear from us on this call? You heard that despite a difficult first half and a negative impact from currency of nearly $18 million, we grew revenue by 4% over the prior year, excluding the impact of currency revenue grew 7%, which is in line with our long-term revenue growth target. You heard that we saw improvements in volumes and sales in the second half of fiscal year 2023, and are encouraged by these trends as we enter fiscal year 2024.
Just give me kind of different dynamics within the environment.
Speaker 4: Hi, Daniel. This is Sarah. So from an input cost standpoint, when we're looking at the guidance that we put out there, we're not seeing significant pullback in the input costs or the filling fees. So they are the filling fees are slightly up over prior year. And I think that trend, you know, it's not substantial, but we are we are forecasting those to be a little higher going into next fiscal year than what we're sitting at right now.
Hi, Daniel this is Sarah so from an input cost standpoint, when we're looking at the guidance that we put out there we're not seeing significant pull back in and the input costs or the filling fees.
They are the filling fees are slightly up over prior year and I think that trend, it's not substantial but we are we are forecasting those to be a little higher going into next fiscal year than what we're sitting at right now.
Steve Brass: You heard that we've introduced our new 4x4 strategic framework, which is tied to our purpose and values and will guide our future performance, investments and drive long-term value creation. You heard that we're making investments across our organisation in our people, products, processes, productivity and planet, and that will continue to make the necessary investments to capture the tremendous runway for revenue growth and margin expansion in front of us. You heard that we saw liquidity from operations return as we made considerable progress in lowering our inventory levels over the fiscal year.
Speaker 5: Okay. And then I think you mentioned the 55, 30, 25 framework. That's not change, right? I mean, I'm just misremembering, I think, but I think that's kind of what you guys are always kind of pushing towards. Correct?
Okay, and then I think you mentioned the 50 530 25 framework.
<unk> not changed right I mean, I'm, just misremembering I think Brian I think thats kind of what you guys were always kind of pushing towards correct.
Speaker 4: The 55, 30, 25 framework is not changed and it continues to be our longer term beacon as to what we're striving for long term.
Yes. The 50 530 25 framework has not changed and it continues to be our longer term pecan is to what we're striving for long term.
Speaker 5: Okay, and then just in terms of revenue, I think for geographic expansion, you said I think a billion in sales opportunity, I think that's, I assume that the, the address will mark it, but that's, or, and maybe I'm just from that and remember the number, but that's like double what your, your, your, roughly double what your sales are now. I was just wondering how you're gonna attack that, and I mean how, how viable that is.
Okay, and then just in terms of revenue I think four for.
Geographic expansion, you said I think a billion in sales opportunity I think that's I assume that.
Steve Brass: You heard that our asset-light model provides a cash flow for us to invest in the business while also providing returns to our stockholders. You heard that we consider our 55, 30, 25 business model a long-term beacon that we will move toward in a line with over time, but that our short-term medium-term focus is on driving EBITDA margins back above 20%. And you heard that we issued guidance for fiscal year 2024, and that we expect revenue growth of 6-12 defend on a constant currency basis, which equates to net sales of $570 to $600 million.
The addressable market.
Or maybe I missed I remember the number.
Like double what what's your.
Sure sure roughly double what your sales are now I was just wondering how youre going to attack that and there's timing how viable that is kind of.
Yeah, Thanks, Daniel Steve So the $1 billion growth opportunity as a long term growth aspiration based upon our internal benchmark in terms of what's possible. So that's not a number we're going to put out there in terms of achieving within three or five years, it's a long term growth opportunities based on the benchmark opportune.
Speaker 3: Thanks Daniels, Steve. For the $1 billion growth opportunities are long-term growth aspirations based upon our internal benchmark in terms of what's possible.
Speaker 3: Now it's not a number we're going to put out there in terms of achieving within three or five years. It's a long-term growth opportunity based on a benchmark opportunity for countries who are operating at a similar level to the US. So it is aspirational. What it does do is give us a prioritized list of geographies for us to target and where to invest.
Unknown Executive: Thank you for joining our call today. We'd now be pleased to answer your questions. Ladies and gentlemen, if you would like to register a question, please press star 1 on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. If your question has been answered or you would like to withdraw your registration, please again press star one. One moment please for the first question.
84 countries, we're operating at a similar level to the U S. So it is aspirational, but what it does do is give us a prioritized list of geographies for us to target and where to investment.
Speaker 5: Okay, and final question. You mentioned getting inventories on hand, I think the goal is below 90 days. I just wonder where we are now and where we were historically speaking.
Okay.
And final question, you mentioned getting inventories on hand, I think below the goes below 90 days I was just wondering where we are now and where we were historically speaking.
So we currently.
Speaker 4: So we currently are a little over, just shy of four months actually globally. So the trading block, it does differ by trading block when you look at the between the Americas, Amia and Asia Pacific.
Or a little over just shy of four months actually globally. So the trading block. It does differ by trading Bloc. When you look at between the Americas, EMEA and Asia Pacific The place that we've had the biggest headwind from our inventory levels has been in the Americas and we are still just just shy of about six months of inventory there. So that's real.
Daniel Rizzo: Our first question comes from the line of Daniel Rizzo with Jeffries. Please proceed with your question. Hi guys, thank you for taking my questions. If we look out into 2024 with what you're expecting, are you assuming input and filling costs decrease or kind of flatten out from here? Just giving kind of the different dynamics within the environment. Hi Daniel, this is Sara. So from an input cost standpoint when we're looking at the guidance that we put out there, we're not seeing significant pullback in the input costs or the filling fees.
Speaker 4: The place that we've had the biggest headwinds from our inventory levels has been in the Americas, and we are still just shy of about six months of inventory there. So that's really where our opportunity is, is to continue to pull back our inventory levels and get that below, get that closer to our three month target.
Where our opportunity is to continue to pull back our inventory levels and get that below get that closer to our three months target.
Yeah.
Daniel Rizzo: So they are, the filling fees are slightly up over prior year and I think that trend, you know, it's not substantial, but we are, we are forecasting those to be a little higher going into next fiscal year than what we're sitting at right now. Okay, and then I think you mentioned the 55, 30, 25 framework. That's not change, right? I mean, I'm just misremembering I think, but I think that's kind of what you guys are always kind of pushing towards, correct?
Great. Thank you very much.
Thank you Daniel.
Speaker 1: Our next question comes from Linda Bolton-Wiser with BA Davidson. Please proceed with your question.
Our next question comes from Linda Bolton Weiser with D. A Davidson. Please proceed with your question.
Speaker 4: Yes, hi, thank you. So sorry if I missed this, but did you say what the volume and price change was respectively in the quarter?
Yes, hi, thank you.
So sorry, if I missed this but did you say.
What the volume and price change was respectively in the quarter.
For sales.
Speaker 4: I'm Linda, this is Sarah, so I can go through that. So in our, in our, in our deck, you will see it at the consolidated level. So from a fourth quarter perspective, the impact of price had an 8% impact globally, and the volume was slightly down just about 1%.
Daniel Rizzo: Yeah, the 55, 30, 25 framework is not changed and it continues to be our longer term beacon as to what we're striving for long term. Okay, and then just in terms of revenue, I think for geographic expansion, you said I think a billion in sales opportunity, I think that's, I assume that the, the address will mark it, but that's, or, and maybe I misremember the number, but that's like double what you're, you're, you're roughly double what your sales are now.
Hi, Linda this is Sarah so I can go through that so in our in our in our deck you will see it at the consolidated level. So from a fourth quarter perspective, the impact of price had an 8% impact globally and the volume was slightly down just just about 1%.
Okay, Great and then I'm, just curious a little bit about the sales guidance for the next fiscal year, it's a pretty wide range.
Speaker 6: Okay, great. And then I'm just curious a little bit about the sales guidance for the next fiscal year. It's a pretty wide range. Um.
Speaker 6: you know, I'm just wondering what represents the situation at the low and the high ends of the range.
No I'm just wondering what represents the situation at the low end the high ends of the range.
Speaker 6: What are the variables there that are making that range be that wide?
What are the variables there that are making that range be that wide.
Daniel Rizzo: I was just wondering how you're going to attack that, and I mean, how, how viable that is, kind of. Yeah, thanks Daniels, Steve. And so the $1 billion growth opportunities are long-term growth aspirations based upon our internal benchmark in terms of what's possible. So, yeah, it's not a number we're going to put out there in terms of achieving within three or five years. It's a long-term growth opportunity, it's based on a benchmark opportunity for countries we're operating at a similar level to the US.
Speaker 3: Thank you, Linda. So, you know, we're still facing as we recover our volume. So you've seen, we're just tracing back.
Thank you Linda so yes, we're still facing as we recover our volumes. So you've seen I mean, just taking back the.
Daniel Rizzo: So, it is aspirational, what it does do is give us a prioritized list of geographies for us to target and where to invest in. Okay, and the final question, you mentioned getting inventories on hand, I think below, I think the goal is below 90 days, I just wonder where we are now, and where we were historically speaking. So, we currently are a little over, just shy of four months actually globally. So, the trading block, it does differ by trading block when you look at the between the Americas, Amia, and Asia Pacific.
Speaker 3: The US has been the first market to execute the price increases. We saw the same kind of six months. This was back in May of the prior year.
ASP in the first market to execute the price increases we saw.
The same kind of six months. So this is back in may of the prior year.
Speaker 3: We saw six months of disruption, then we saw recovery. And now we're seeing double-digit volume growth in the US market in terms of our PLS sales for the fourth quarter. We were up 13% in units and up 19% in dollars in the US market. So we take a great deal of encouragement from the US market, which went first with the price increases and a strong volume recovery we've now got into double-digit.
We sold six months of disruption and we saw a recovery and now we're seeing double digit volume growth in the U S market in terms of our Pls sales for the fourth quarter, we were up 13% in units and up 19% in dollars in the U S market. So we take a great deal of encouragement from the U S market, which went first with the.
The price increases and a strong volume recovery, we've now got into double digits.
Speaker 3: So the next biggest piece of our business to recover is email. You saw some recovery in the second half in terms of volume.
So the next biggest piece of our business to recover as EMEA you saw some recovery in the second half in terms of volumes.
Speaker 3: but we now expect those in FY 24 to become positive. Maybe not out of the gates, but over time, they will build and we're already seeing patches in our September results from the New fiscal year where we have pockets of really outstanding volume recovery in Europe as well. So...
We now expect those in FY 'twenty four to become positive maybe not out of the gate, but over time, they will build and we're already seeing patches.
September results from the new fiscal year, where we have pockets of really outstanding volume recovery in Europe as well so.
Daniel Rizzo: The place that we've had the biggest headwind from our inventory levels has been in the Americas, and we are still just shy of about six months of inventory there. So, that's really where our opportunity is, is to continue to pull back our inventory levels and get that below, get that closer to our three-month target. Thank you very much. Thank you, Daniel.
Speaker 3: We, you know, as expected, the guidance range is really, you know, the between the low end and the high end Europe is quite a factor in terms of how strongly Europe can recover. The other region being Latin America, we expect a strong recovery in Latin America as well in volumes.
As expected.
The guidance range is really you know.
Between the low end and the high end Europe is quite a factor in terms of how strongly Europe can recover the other region in Latin America, we expect a strong recovery in Latin America, as well and volumes.
Linda Bolton: Our next question comes from Linda Bolton, Wyzer with B.A. David's in. Please proceed with your question. Yes, hi, thank you. So sorry if I missed this, but did you say what the volume and price change was respectively in the quarter? I? Linda, this is Sarah. So I can go through that. So in our in our in our deck, you will see it at the consolidated level. So from a fourth quarter perspective, the impact of price had an 8% impact globally.
Okay and then.
I think well lets see Cerro talks about these different factors that increased your SG&A expense the different investment areas in FY2023.
Speaker 6: Well, let's see. Sarah talked about these different
Speaker 6: factors that increase your FGNA expense, the different investment areas in FY 23.
Speaker 6: And I think Sarah, you said that it would be less growth of...
And and and I think Sarah you said that it would be less growth of SG&A. Maybe you could just clarify do you mean like in dollar grow the SG&A will grow less as a percentage growth rate or is the ratio expected to come down or be flat or I mean can you just give a little more color on the quantification of that.
Speaker 6: SGNA, maybe you could just clarify, do you mean like in dollar growth, the SGNA will grow less?
Speaker 6: as a percentage growth rate or is the ratio expected to come down or be flat? Or I mean, can you just give a little more color on the quantification of that?
Linda Bolton: And the volume was slightly down just just about 1% Okay, great. And then I'm just curious a little bit about the sales guidance for the next fiscal year. It's a pretty wide range, you know, I'm just wondering what represents the situation at the low and the high ends of the range, like what are the variables there that are making that range be that wide? Thank you, Linda. So, you know, we're still facing as we recover our volume.
Speaker 4: So, yes, we have been investing in those areas that I mentioned. And a lot of the investment outside of the IT investments relate to people, right? When we look at ESG and we look at innovation, a lot of those investments over FY23 were hiring. We have an ESG team that's now fully dedicated to looking at sustainable products, looking at different ways for us to ship our products holistically.
Sure Linda so so yes, we have been investing in those areas that I that I mentioned and a lot of the investment outside of the ITN investments relate to people right. When we look at ESG and we look at innovation a lot of those investments over FY 'twenty, three where we're hiring we have our ESG team that's now fully.
Dedicated to looking at sustainable products looking at different ways for us to ship our products Holistically. So there is investments that began in FY 'twenty two and now we're going to have a full year essentially of a lot of those individuals from.
Speaker 4: So there is investments that began in FY22, and now we're gonna have a full year, essentially, of a lot of those individuals from an SGA perspective. So my comment on it not continuing at the same pace.
Linda Bolton: So you've seen, we're just tracing back, you know, the US in the first market to execute the price increases. We saw, you know, the same kind of six months, you know, so this is back in May of the prior year. We saw six months of disruption. Then we saw recovery and now we're seeing double digit volume growth in the US market in terms of our PLS sales for the fourth quarter. We were up 13% in units and up 19% in dollars in the US market.
From an SG&A perspective, so my comment on it not continuing at the same pace is really around once we get through this fiscal year and I don't expect the percentage increase of our SG&A to be at the same pace that we've seen the last two years if that makes sense.
Speaker 4: is really around once we get through this fiscal year. And I don't expect the percentage increase of our SGNA to be at the same pace that we've seen the last two years if that makes sense.
Yeah.
Okay.
Yeah.
Speaker 7: And I was just wondering about
Linda Bolton: So we take a great deal of encouragement from the US market, which went first with the price increases and a strong volume recovery. We've now got into double digits. So the next biggest piece of our business to recover is in May, you saw some recovery in the second half in terms of volumes, but we now expect those in FY 24 to become positive. Maybe not out of the gates, but over time they will build and we're already seeing patches in our September results from the new fiscal year, where we have pockets of really outstanding volume recovery in Europe as well.
I was just wondering about.
Your well I mean, Sarah you usually have some quantification of like maybe the FX effect on the top line growth do you have a rough protection for that for FY 'twenty four.
Speaker 6: Well, I mean, Sarah, you usually have some quantification of maybe the effects on the top line growth. Do you have a rough projection for that for FY 24?
Speaker 4: So for FY 24, we are using the average rate that we had in FY 20.
So for FY 'twenty four we are using the average rates that we had in FY2023 and so right now it's apples to apples when we start to get out into the Q1 Q2, and we have currency that starts to impact the comparable period. This year, we are going to guide our revenue.
Speaker 4: three. And so right now it's apples to apples. When we start to get out into the Q1, Q2, and we have currency that starts to impact the comparable period, this year we are going to guide. Our revenue guidance is going to stick with a constant currency guidance.
Linda Bolton: So we, you know, as expected, the guidance range is really, you know, the between the low end and the high end Europe is quite a factor in terms of how strongly Europe can recover. The other region being Latin America, we expect a strong recovery in Latin America as well in volumes. Okay, and then I think, well, let's see, Sarah talked about these different factors that increased your SGNA expense, the different investment areas in FY 23.
Guidance is going to stick with our constant currency guidance. So we will probably starting in Q1, we will give both actuals and then our constant currency. So that number right now is apples to apples on an on an average FX rate and then going into the year, we will be updating that and guiding to our constant currency revenue number.
Speaker 7: So we'll probably starting in Q1, we will give both actuals and then a constant currency. So that number right now is apples to apples on an average FX rate and then going into the year, we will be updating that and guiding to a constant currency revenue number. So you mean your six to 12% growth at that time?
Okay.
So you mean, you're 6% to 12% growth that's in that's in constant currency, but yes, yes, okay.
Uh-huh, Okay and.
Linda Bolton: And I think Sarah, you said that it would be less growth of SGNA. Maybe you could just clarify, do you mean like in dollar growth, the SGNA will grow less as a percentage growth rate or is the ratio expected to come down or be flat? I mean, can you just give a little more color on the quantification of that? Sarah Linda, so yes, we have been investing in those areas that I mentioned.
Speaker 7: Maybe also you could you have an oil price assumption that is kind of built in for FY 20.
Maybe also you could do you have an oil price assumption that it's kind of built in for FY 'twenty four.
Speaker 4: We do and as our wear oil has been bouncing all over the place the last month or so, but we have an estimate in the plan of between 80 and $100.
We do and as you are aware oil has been bouncing all over the place the last month or so, but we have an estimate on the plan of between 80 and $100.
Okay.
And.
Linda Bolton: And a lot of the investment outside of the IT investments relate to people, right? When we look at ESG and we look at innovation, a lot of those investments over FY 23 were hiring. We have a ESG team that's now fully dedicated to looking at sustainable products, looking at different ways for us to ship our products holistically. So there is investments that began in FY 22 and now we're going to have a full year essentially of a lot of those individuals from an ESGNA perspective.
I guess this is more of a longer term question a big picture question. It seems like for all the years I've been following you that that.
Speaker 6: I guess this is more of a longer term question, a big picture question. It seems like for all the years I've been following you that the cost of doing business ratio has always been the struggle for you guys. I mean your growth margin has progressed upward and you've had sales growth and everything else, but it seems to be stubbornly high and you do need to invest. There's all these areas that you need investment to continue to grow. So...
The cost of doing business ratio has always been a struggle for you guys. I mean, your gross margin has progressed upward and you've had sales growth and everything else, but it seems to be separately high and you do need to invest there. There's all of these areas that you need investment to continue to grow so.
Speaker 6: that's understandable, but I just kind of wonder, is it as a small company with relatively small size that you're just more of a struggle to gain?
No that's understandable, but I just kind of wonder is it is a small company with relatively small size that you're just seeing it.
Linda Bolton: So my comment on it not continuing at the same pace is really around once we get through this fiscal year. And I don't expect the percentage increase of our SGNA to be at the same pace that we've seen the last two years, if that makes sense. Okay. And I was just wondering about your, well, I mean, Sara, you usually have some quantification of like maybe the effects effect on the top line growth.
It's more of a struggle to gain like scale economies or.
Speaker 6: I guess I'm wondering where's the beef so to speak in terms of that ratio ever coming down. I guess, do you have thoughts on that?
You know I, just I guess I'm wondering like you know where is the where's the beef so to speak in terms of that ratio ever coming down I guess do you have thoughts on that.
Speaker 3: So I think the, I mean, Terry, you can add to this. Yes, from my point of view, it's all about, you know, we are laser focused on these must-wing battles like Nether before. And I think, you know, we put out our historic rates in terms of what we've achieved. We put out our forward rates page of the battles in terms of what we wanna achieve with the big ones being geographic expansion, primamization and WD40 specialist.
So I think the.
Sorry, you can add to their skills and from my point of view, it's all about.
Our laser focused on these must win battles like never before and I think we put out our historic rates in terms of what we've achieved we put a forward rates by each of our battles in terms of what we want to achieve with the big ones being geographic expansion.
Linda Bolton: Do you have a rough projection for that for FY 24? So for FY 24, we are using the average rate that we had in FY 23. And so right now it's apples to apples. When we start to get out into the Q1, Q2 and we have currency that starts to impact the comparable period, this year we are going to guide our revenue guidance is going to stick with a constant currency guidance.
Premium amortization and WD 40 specialist and so it's really about accelerating revenue growth to gain scale and.
Speaker 3: And so it's really about accelerating revenue growth to gain scale.
Speaker 3: having a higher sales base to leverage the cost base over. So if you take things like RST investments, that's a team of three people. You know, in five years time, that team will still be a team of three people, but we had to put it in place for various reasons. So...
Having a higher sales base to leverage the cost space over so if you take things like our ESG investments. That's a team of three people in five years' time that team will still be a team of three people, but we had to put in place.
Various reasons so.
Speaker 3: You know, I think they're going forward. It's about, you know, driving faster revenue growth via laser focus execution on those battles and just accelerating the pace at which we execute our strategy.
I think going forward it's about.
Linda Bolton: So we'll probably, starting in Q1, we will give both actuals and then a constant currency. So that number right now is apples to apples on an average FX rate and then going into the year, we will be updating that and guiding to a constant currency revenue number. So you mean your 6 to 12% growth that's in that's in constant currency? Yes. Okay. And maybe also you could, do you have an oil price assumption that it's kind of built in for FY 24?
Driving faster revenue growth via laser focused execution on those battles and just accelerating the pace at which we execute our strategy.
Okay sounds good thank you very much.
Thanks Linda.
Speaker 1: Our next question comes from Rosemary Morebelly with Gabelli Fund. Please proceed with your question. Thank you. Good afternoon.
Our next question comes from Rosemarie <unk> with Gabelli funds. Please proceed with your question.
Good afternoon, everyone.
Hi, Rosemarie.
Linda Bolton: We do and as you, our where oil has been bouncing all over the place the last month or so but we have an estimate in the plan of between 80 and $100. Okay. And I guess this is more of a longer term question, a big picture question. It seems like for all the years I've been following you that the cost of doing business ratio has always been the struggle for you guys.
Speaker 8: Hi, I think that you and Sarah are kind of talked about what you are expecting for 2024. But I was wondering if you could give us a little more details. You are expecting top-line growth of 6 to 12%. You are expecting a higher...
Hi, I think that are you.
So these are kind of.
Talk to you about what you are expecting for 2024.
But I was wondering if you could give us a little more detail. So you are expecting top line growth of 6% to 12% like split expecting a higher my gross margin.
Speaker 8: growth margin, advertising and sales seems to be similar to what you have been experiencing on the percentage of sales.
Advertising and sales seems to be similar to what you have been experiencing.
Centers of sales so.
Speaker 8: So, but we are looking at the low end, at potentially lower EPS, you are.
But we are looking at the low end, a potentially lower EPS year over year.
Speaker 8: So I understand that you are spending more on that operating, the cost of operation, but what should we go wrong for you to have actually a down year? That is a part that I am struggling with. Why 478? Why not a flat year? What is the main factor that would create?
Linda Bolton: I mean your growth margin has progressed upward and you've had sales growth and everything else but it seems to be stubbornly high and you do need to invest there's all these areas that you need investment to continue to grow. So you know that's understandable but I just kind of wonder is it as a small company with relatively small size that you're just more of a struggle to gain like scale economies or you know I just, I guess I'm wondering like, you know, where's the, where's the beef so to speak in terms of that ratio ever coming down?
So I understand that you are spending more on that operating cost of operation.
But what.
Sure. We'll go wrong for you to have actually a down year that is a part that I am struggling with why 478, why not a flat year. What are what is the main factors that would create that.
Speaker 4: So there are a couple things happening below the operating line. So we've talked already about the increase in the SG&A costs.
So there are a couple of things happening below the operating line. So we've talked already about the the increase in SG&A cost. So yes, there is less leverage being dropped to the bottom line this year versus versus prior year, but below the operations line right. When we do go live in our new ERP system, we are going to have additional.
Speaker 4: So yes, there is less leverage being dropped to the bottom line this year versus versus prior year. But below the operations line, when we do go live in our new ERP system, we are going to have additional non-cash amortization expenses hitting. So that is going to be increasing. And then in addition, our tax rate is going up. So it is going up 200 basis points as a result of increased statutory rates in the UK. So essentially increased foreign taxes year over year with statutory rate increases along with increased interest rates on our uncertain tax positions in the US.
Linda Bolton: Do you have thoughts on that? So I think the, Sherry you can add to this. From my point of view it's all about, you know, we are laser focused on these must-wing battles like never before and I think, you know, we put out our historic rates in terms of what we've achieved. We put out our forward rates page of the battles in terms of what we want to achieve with the big ones being geographic expansion, primamization and WD40 specialist and so it's really about accelerating revenue growth to gain scale, you know, having a higher sales base to leverage the cost base over.
Noncash amortization expenses, hitting so that that is going to be increasing and then in addition, our tax rate is going up. So it is going up 200 basis points. As a result of increased statutory rates in the U K, so essentially increased foreign taxes year over year with statutory rate increases on.
Along with increased interest rates on our uncertain tax positions in the U S. So the impact on our tax line is not inconsequential, and obviously that is having a pretty decent impact on our EPS number.
Speaker 4: So the impact on our tax line is not inconsequential. And obviously that's having a pretty decent impact on our EPS number.
Linda Bolton: So if you take things like our ESG investments that's a team of three people you know in five years time that team will still be a team of three people but we had to put it in place for various reasons. So, you know, I think they're going forward it's about, you know, driving faster revenue growth via laser focused execution on those battles and just accelerating the pace at which we execute our strategy. Okay, sounds good. Thank you very much.
Speaker 3: And if I can just add in terms of the kind of the drivers of the business in terms of revenue, so this volume recovery, particularly in Europe , right? So for the fiscal year, $37 million of volume lost this year, you know, the big question is how much of that can we recover? We think we're likely to recover somewhere between 50 and 80% for the year of that, but that's dependent largely upon Europe and Latin America recovery.
And if I can just add in terms of the kind of the drivers of the business in terms of revenue. So this volume recovery, particularly in Europe right. So for the fiscal year $37 million of volume loss this year.
Linda Bolton: Thanks, Linda.
The Big question is how much of that can we recover we think we're likely to recover somewhere between 50 and 80% for the year of that but thats dependent largely upon Europe and Latin America recovery.
Speaker 3: And then on the gross margin, as Europe becomes a bigger part of our business, there are mixed benefits, right? Our gross margin in many of our continental European businesses in particular, which suffered last year, is very, very strong. And so as we do more business in Europe and Asia Pacific, that country makes on gross margin is positive.
Rosemarie Morbelli: Our next question comes from Rosemarie Morbelli with Gabelli Fund. Please proceed with your question. Thank you.
And then on the gross margin as Europe becomes a bigger part of our business. There is there a mix benefit right.
Gross margin in many of our continental European businesses in particular, which suffered last year is very very strong and so as we do more business in Europe , and Asia Pacific that country mix on gross margin is positive and then also just simply.
Rosemarie Morbelli: Good afternoon, everyone. Hey Rosemarie. Hi. I think that you and Sara are kind of talked about what you are expecting for 2024. But I was wondering if you could give us a little more details. You are expecting top-line growth of 62%, you are expecting a higher growth margin. Advertising in sales seems to be similar to what you have been experiencing on the percentage of sales. But we are looking at the low end at potentially lower EPS year-over-year.
Rosemarie Morbelli: So I understand that you are spending more on that operating cost of operation. But what should we go wrong for you to have actually a down year? That is the part that I am struggling with. Why 478? Why not a flat year? What is the main factor that would create that? So there are a couple of things happening below the operating line. So we have talked already about the increase in the SG&A costs.
Speaker 3: And then also just simply, you know, from a gross margin point of view, selling more products, more of our highest gross margin products. So, smart straw, easy reach, mock premium formats, WD40 specialist, and selling less about lowest gross margin products, household products is a big driver of our gross margin going forward.
From a gross margin point of view selling more products more of our highest gross margin products. So smart straw EZ reach more premium formats, typically 40 specialists and selling less of our lowest gross margin products household products is a big driver of our gross margin going forward as well.
Speaker 8: So there is, I am still confused about one thing. Wouldn't the cost of the ERRPC system that will now be expense instead of capitalized, wouldn't that be part of the SDNA? Why is it below the line? I am confused.
So there is I am still confused about one thing.
The cost of the ERP system that will now be expensed. Instead of capitalized will then that'd be part of the SG&A why is it below the line I am confused about that.
Speaker 4: So I look at, sorry, when I say below the line, I'm at below our EBITDA margin, but yes, amortization is sitting up in S-GNA. So apologies for that, comment.
So I look at sorry, when I say below the line I meant below our EBITDA margin, but yes amortization is.
<unk> is sitting up in SG&A, so apologies for that comment.
Oh, no, it's okay, I and listen.
Speaker 8: No, it's okay. I can use all of the different lines.
All of the different lines.
Yes.
Speaker 8: Okay. Then you are working on supply chain changes. What do you think you need to improve there? I mean, everyone was hit with an increasing...
Okay.
Then you are working on supply chain supply chain changes are.
Rosemarie Morbelli: So yes, there is less leverage being dropped to the bottom line this year versus prior year. But below the operations line, when we do go live in our new ERP system, we are going to have additional non-cash amortization expenses hitting. So that is going to be increasing. And then in addition, our tax rate is going up. So it is going up 200 basis points as a result of increased statutory rates in the U.K.
What do you think you need to improve there I mean, everyone was hit with an increasing.
Speaker 8: you know, inventory level after the pandemic and difficulties in getting raw materials, then it was the destalking. So what do you think needs to be changed for you to do better? Should this your consensus, which I hope is not the case, but come back.
Our inventory level after the pandemic and difficulties in getting raw materials.
Then it was the Destocking. So what do you think needs to be changed for us to do better. So these circumstances, which I hope, it's not the case, but come back.
Rosemarie Morbelli: So essentially increased foreign taxes year-over-year with statutory rate increases along with increased interest rates on our uncertain tax positions in the U.S. So the impact on our tax line is not in consequential. And obviously, that is having a pretty decent impact on our EPS number. And if I can just add in terms of the drivers of the business in terms of revenue, so this volume recovery, particularly in Europe, right? So for the fiscal year, $37 million of volume lost this year, the big question is how much of that can we recover?
So so we've we've spent a tremendous amount of time in the last year and a half stabilizing our supply chain, particularly in the U S.
Speaker 4: So we've spent a tremendous amount of time the last year to have stabilizing our supply chain, particularly in the US. And we are actually pretty much done.
And we are actually.
Pretty much done at this point with our expanding our fill our network in the U S. We've also expanded our filler network and in Europe . We also have expanded our supplier. So we have multiple suppliers now for our cans and have continued to expand our supplier base as well. So we're feeling very good about where we're at.
Speaker 4: expanding our filler network in the US. We've also expanded our filler network.
Speaker 4: in Europe . We also have expanded our suppliers. So we have multiple suppliers now for our can.
Speaker 4: and have continued to expand our supplier base as well. So we're feeling very good about where we're at from a supply chain standpoint. So from here, it's really about optimizing and volume sells a lot of those problems, right? As we start to have volume continues to come back.
Rosemarie Morbelli: We think we are likely to recover somewhere between 50 and 80 percent for the year of that. But that is dependent largely upon Europe and Latin America recovery. And then on the gross margin, as Europe becomes a bigger part of our business, there are mixed benefits, right? Our gross margin in many of our continental European businesses in particular, which suffered last year, is very, very strong. And so as we do more business in Europe and Asia-Pacific, that country makes on gross margin is positive.
From a supply chain standpoint, so from here, it's really about optimizing and volume solve a lot of those problems right. As we start to have volume continues to come back we're able to push more volume across a broader filler base and when we can push more volume into our fill our network, we get better unit pricing.
Speaker 4: We're able to push more volume across a broader filler base.
Speaker 3: pricing, we're able to turn inventory quicker. So there's a lot of things that we're looking at from an optimization standpoint. But at this point, we don't see any full scale changes to our supplier network. We are always looking at kind of what's the next, you know, longer term change for us. But in the near term, we feel very good about where we're at with our overall network on the supply chain side. See if anything to add or... No, I think that's it. I think it's about optimizing the next stage, in the Americas, right? So when you look at our gross margin by trading block, you can see that. So the Americas, because having, you know,
We're able to turn inventory quicker. So so theres a lot of things that we're looking at from an optimization standpoint, but at this point, we don't see any for full scale changes to our supplier network. We are always looking at kind of what's the next longer term.
Rosemarie Morbelli: And then also just simply, you know, from a gross margin point of view, selling more products, more of our highest gross margin products. So smart straw, easy reach, mock premium formats, WD40 specialist, and selling less about lowest gross margin products, household products is a big drive of our gross margin go forward. So there is, I am still confused about one thing, wouldn't the cost of the ERRPC stem that will now be expense instead of capitalized, wouldn't that be part of the SGA?
Change for us, but in the near term, we feel very good about where we're at with our with our overall network on the supply chain side, Steve anything to add or no I think thats. It I think it's about optimizing the next stage, particularly within the Americas right. So and when you look at our gross margin by trading Bloc.
Speaker 3: You can see that. So the Americas...
You can see that so the Americas, having reestablished their supply chain their optime optimization opportunities. There you look at our gross margin within the Asia Pacific region were already back up at 55, Europe's heading that way in terms of 50 to $52 53, it's really the Americas, where we need to extract those those optimizations.
Speaker 3: Having reestablished their supply chain, there are optimization opportunities there. You look at our gross margin within the Asia Pacific region, we're already back up at 55. Europe's heading that way in terms of 52, 53. It's really the Americas where we need to extract those optimizations.
Rosemarie Morbelli: Why is it below the line? I am confused about that. So I look at, sorry, when I say below the line, I meant below are even a margin, but yes, amortization is, is, is sitting up in SGA. So apologies for that comment. No, it's okay. I can use all of the different lines. Okay.
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Speaker 8: Isn't the recent fall the lower margin, the lower growth margin in the Americans? Well, no, I guess I am wrong. I was going to ask if it is because you have your headquarters here, but I guess that would affect the SGN8, it would not affect the growth margin.
Isn't the reason for the lower margin the lower gross margin in the Americas, Oh, well no I guess I am wrong I was going to ask you. If it is because you'll have your headquarters here, but I guess that would affect us.
Rosemarie Morbelli: Then you are working on supply chain, supply chain changes. What do you think you need to improve there? I mean, everyone was hit with an increasing, you know, inventory level after the pandemic and difficult changes. So what do you think you need to change for you to do better for this circumstances, which I hope is not the case, but come back. So, so we've, we've spent a tremendous amount of time the last year to have stabilizing our supply chain, particularly in the US.
The SG&A it should not affect the gross margin correct.
Speaker 3: No, and our US gross margins are pretty healthy. It's really been about Latin America gross margins and getting those back on track.
No in our U S. Gross margins are pretty healthy, it's really been about Latin America gross margins and getting those back on track.
Speaker 8: Okay, and if I, thank you. And if I may ask one last question. Any potential acquisitions you are looking at or that new product line, which would fit with your existing product line?
Okay, and if I can thank.
Thank you and if I may ask one last question any potential acquisitions you are looking at all for that new product line, which would fit with your existing product lines.
Speaker 3: So we spoke in terms of, you know, kind of M&A, in terms of last quarter we spoke about, you know, about the strategic review of the household brand. That's ongoing. We have had no further kind of decisions being made there. So watch this space for more information in future quarters.
So we spoke in terms of.
Rosemarie Morbelli: And we are actually pretty much done at this point with expanding our filler network in the US. We've also expanded our filler network in Europe. We also have expanded our suppliers. So we have multiple suppliers now for our cans and have continued to expand our, our supplier base as well. So we're feeling very good about where we're at from a supply chain standpoint. So from here, it's really about optimizing and volume cells, a lot of those problems, right?
Kind of M&A in terms of last quarter. We spoke about you know about the strategic review of the household brands. That's ongoing we've had no.
Are those kind of decisions being made there so what's this space for more information in future quarters.
Speaker 3: In terms of acquisitions, I mean, we say that we're in the business of acquiring new points of distribution and new users every day, and that's where our focus needs to be going forward.
In terms of acquisitions I mean, we say that we're in the business of acquiring new points of distribution and new users every day, and that's where our focus needs to be going forward, having said that there may be ways for us in future to accelerate the growth, particularly in geographic expansion.
Speaker 3: Having said that, there may be ways for us in future to accelerate the growth.
Speaker 3: particularly in geographic expansion by different ways of partnering or making moves that would accelerate geographic expansion. So that would be where, if anywhere, we might do something in the future, but nothing in the plans to report as of this.
Different ways of partnering or making moves that would accelerate geographic expansion. So that will be where if anywhere we might do something in the future, but nothing in the plans to report as of this quarter.
Rosemarie Morbelli: As we start to have volume continues to come back, we're able to push more volume across a broader filler base. And when we can push more volume into our filler network, we get better unit pricing. We're able to turn inventory quicker. So, so there's a lot of things that we're looking at from an optimization standpoint. But at this point, we don't see any full, full scale changes to our supplier network. We are always looking at kind of what's the next, you know, longer term change for us.
Speaker 8: Thank you very much. I really appreciate all the help. Good luck next school. Thank you, Rosalind.
Thank you very much I really appreciate all the help good luck next call. Thank you Ross.
Thank you.
Speaker 1: Ladies and gentlemen, that does conclude our allotted time for questions.
Ladies and gentlemen that does conclude our allotted time for questions.
Speaker 1: Thank you for your participation on today's conference call and ask that you please disconnect your
Thank you for your participation on today's conference call and ask that you. Please disconnect your line.
Yeah.
Yeah.
Yeah.
Rosemarie Morbelli: But in the near term, we feel very good about where we're at with our, with our overall network on the supply chain side. Do you have anything to add or? No, I think that's it. I think it's about optimizing the next stage, particularly within the Americas, right? So, and when you look at our gross margin by trading block, you can see that. So the Americas having, you know, reestablished their supply chain, there are optimisation opportunities there.
Rosemarie Morbelli: You look at our gross margin within the Asia Pacific region, we're already back up at 55 Europe's heading that way in terms of 50, 52, 53. It's really the Americas where we need to extract those optimisations now. Isn't the reason for the lower margin, the lower gross margin in the Americas? Well, no, I guess I am wrong. I was going to ask if it is because you have your headquarters here, but I guess that would affect the, the SGN 8 would not affect the gross margin. Correct. No, and our US gross margins are pretty healthy. It's really been about Latin America gross margins and getting those back on track. Okay, and if I, thank you.
Rosemarie Morbelli: And if I may ask one last question. Any potential acquisitions you are looking at offer that new product line which would fit with your existing product lines. So we spoke in terms of, you know, kind of M&A in terms of last quarter, we spoke about, you know, about strategic review of the health or brand that's ongoing. We have had no further kind of decisions being made there. So watch this space for more information in future quarters.
Rosemarie Morbelli: In terms of, you know, acquisitions, I mean, we say that we're in the business of acquiring new points of distribution and new uses every day. And that's where our focus needs to be going forward. Having said that, there may be ways for us in future to accelerate the growth, particularly in geographic expansion by, you know, different ways of partnering with or making moves that would accelerate geographic expansion. So that would be where, if anywhere, we might do something in the future, but nothing in the plans to report as of this. Thank you very much. I really appreciate all the help. Good luck. Thank you, Rosalind. Thank you.
Unknown Executive: Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation on today's conference call and ask that you please disconnect your.