Q4 2024 WD-40 Co Earnings Call
Speaker Change: I hope you enjoyed this video, and I hope you enjoyed this video, and I hope you enjoyed this video.
Speaker Change: Ladies and gentlemen, Interfer Standing by. Good day and welcome to the WD Forty Company for Quartar in full fiscal year 2024 earnings conference call.
Speaker Change: Today's call is being recorded. At this time, all participants are in this and only mode. At the end of the group report remarks, we will come back a question and answer session. To register a question at any time during this call, please press star 1 on your telephone keypad.
Speaker Change: Please to make sure your new function is turned off so allow your signal to recharge equipment. If at any time during the conference and you need to reach an operator, please press star 0 on your telephone keypad. I would now like to strengthen the presentation over to the host for today's call, Wendy Kelley, Vice President stakeholder and best friend engagement. Please proceed.
Wendy Kelley: Good afternoon, and thanks to everyone for joining us today. On our call today, our WD-40 company's President and Chief Executive Officer Steve Brass and Vice President and Chief Financial Officer Sara Hyzer.
Wendy Kelley: In addition to the financial information presented on today's call, we encourage investors to review our earnings presentations, earnings press release, and form 10K for the period ending August 31, 2024.
Wendy Kelley: These documents will be made available on our investor relations website at investor.wd40company.com A replay in transcript of today's call will also be made available shortly after this call
Wendy Kelley: On today's call, we will discuss certain non-gap measures. The descriptions and regulations of these non-gap measures are available in our SEC filings, as well as the earnings documents posted on our Investor Relations website.
Wendy Kelley: As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance.
Wendy Kelley: Actual results could differ materially, 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.
Wendy Kelley: Please refer to the risk factors details in our SEC filings for further discussion.
Wendy Kelley: Finally, Branny, when listening to a web task replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, October 17, 2024.
Speaker Change: A company disclaims any duty or obligation to update any forward-looking information as a result of new information future events or otherwise. With that, I'd now like to turn the call over to Steve.
Steve Brass: Thank you, Wendy and thanks to all of you for joining us this afternoon.
Steve Brass: To school year 24 as many year of exceptional strength resilience and strategic progress. We've navigated challenges, capitalised opportunities, and continued to build on the strong foundation, but has made W40 company a success for over seven decades.
Steve Brass: Today, I'll provide you and I will give ourselves as all for the fiscal quarter of 274 and the progress we've made against our 4x4 strategic framework.
Speaker Change: After that, Sara will provide you a brief update and the divest to cure of our home care and cleaning business and update an our business model and outlook for fiscal year 2025. We will then take your questions.
Speaker Change: And please to announce that our fourth quarter was our second consecutive record-breaking sales quarter. Today we reported four quarter net sales of 156 million representing an increase of over 11%, which sales of maintenance products experiencing double digits growth through both the fourth quarter and the fourth fiscal year.
Speaker Change: by the close of fiscal year 24, South of our signature products to be 40 Modes, which 453 million and 11% increase over prior year and a new annual record for our core brand.
Speaker Change: In addition, I'm very happy to report that Gross Margin continues to improve and his moving closer to our target of 55%.
Speaker Change: and a fourth court only for a gross margin of 54.1%, which is an improvement of 100 basis points sequentially from the third quarter and 270 basis points compared to the fourth court for a glass for school year.
Speaker Change: Now let me discuss four quarter-sales results by segment. From that to the way noted, old Discus sounds and a reported basis compared to the fourth quarter of last this school year.
Speaker Change: This quarter sales in America, which includes United States, Black and America and Canada, who are approximately 6% over the prior year to 79 million. The bulk of this growth is driven by higher sales volumes of W14 will use product, which includes 7% compared to the prior year.
Speaker Change: Much of this growth came from strong sales in Latin America, which increased by 63% over the prior period.
Speaker Change: These increased sales will pass you off said by lower sales in the United States and Canada. A Latin American market is comprised of our direct markets in Mexico and Brazil and all remaining Latin American countries, most of which are served by our marketing distributor partners in the region.
Speaker Change: Sales of W40 multi-use product in Latin America was favorably impacted by our transition to a direct market model in Brazil. In the third quarter of fiscal year, 24, we acquired our Brazilian distributor and shifted from an indirect distribution model to one where we sell directly to retail customers.
Speaker Change: The distribution model shifts favorably impacted net sales in Brazil, only $7 million for the full fiscal year.
Speaker Change: We also continue to experience positive momentum in our direct market in Mexico, from the shift we made in 2020 from a distributor model.
Speaker Change: Sales in Mexico, another Latin American market, increased 24% from 9% respectively, due to the timing of customer orders, successful brand building programs, increased distribution and expanded availability of the 40-smart strong.
Speaker Change: But I shared the view last quarter, our plan for fiscal year 24 in the Americas was always Britain primarily by strong Latin American growth and that has played out.
Speaker Change: and the United States, South of the 40 more years, product decreased by 4% compared to the prior period.
Speaker Change: The United States experienced solid points of South Amanda in the fall of quarter. However, compared to the same period last year, South Adam. We are comparing against an exceptionally strong performance in the fall of quarter of last year. But we saw double-digit increases in both volume and South in the United States.
Speaker Change: and Canada, South of W40 multitudes, product decreased 3% compared to the prior period.
Speaker Change: South and Canada were negatively impacted period over period due to facing the associated with discontinuation of our classic candle every system and the implementation and conversion of smart school next generation in Canada.
Speaker Change: The good news is that we're seeing positive trends at distribution points where we have fully converted our customers to smart, front-end generation and expect this conversion to drive significant long-term gains as we fully leverage our premium formats.
Speaker Change: and the Americas, South of difficulty for the specialist increase across most regions, and what are 6% compared to the prior year period, primarily due to strong sales in Canada and Latin America. In total, on maintenance products increased 7% in the Americas' quarter, the growth in maintenance products is part of the set by decline of 12% in home care and cleaning product brands.
Speaker Change: For the fall of fiscal year, make this product sales in the Americas total 267 million, reflecting as 7% increase compared to the prior year. This growth aligns with a long term target for the region which projects annual growth between 5 and 8%.
Speaker Change: In total, our America segment made up 51% of our global business in the fourth quarter.
Speaker Change: Now turning to ourselves and I'm out of it.
Speaker Change: The quarter sales in the IMAA, which includes Europe, India, the Middle East, and Africa, who are approximately 16% of the prior period to 59 million. Currents of fluctuations had a minimal impact in our sales in IMAA, and an accountant currency basis sells what have increased 15%.
Speaker Change: The strong growth in our mail is driven by higher volume sales of the V40 multi-use pot, which increased 16% compared to the prior period. This growth is primarily attributable to increased sales in our repair distributor markets, but are at 41% compared to the prior year.
Speaker Change: This quarter we saw double-digit growth in many of our amount of distributed markets, but particularly strong both in Northern Europe and India, which increased 52% and 206% respectively.
Speaker Change: In our amount, direct market, sales of W40 more to use products, but also a very strong in many markets. I'm very, really due to improve volume, as many of our customers have adjusted the impact of price increases implemented last fiscal year.
Speaker Change: 1,000 increase, 5% compared to the prior period, most significant being friends and the DAC region, where they were of 18% and 12% respectively. The DAC region comprises Germany, Austria and Switzerland.
Speaker Change: Charles W40 specialists increased across most regions of America and were up to 13% compared to the prior period due to the combined impact of higher sales volume due to increased distribution and stronger levels of demand after customers adjusted to price increases.
Speaker Change: In total, our maintenance products increased 15% in M.A. in the fourth fiscal quarter. In addition to the south of home-car and cleaning product brands sold in the UK, increased 25% in the fourth quarter.
Speaker Change: For the fall fiscal year, maintenance products sales and I'm air, 1224 million reflecting a 17% increase compared to the prior year. This growth surpasses our long-term growth targets for the region, which projects annual growth between 8% and 11%.
Speaker Change: In total, I am a segment made up 37% of our global business in the fourth quarter.
Speaker Change: Now turning to age of the civic.
Speaker Change: Thousands Asia Pacific, which includes Australia, China and other countries in the Asia region, who are approximately 21% of the prior year to 18 million.
Speaker Change: The growth has driven primarily by higher sales of the V40 more use products, which are of 26% compared to the prior period.
Speaker Change: The squad has driven in large part by higher sales of maintenance products in our age of Pacific distributor markets, which are up 51% compared to prior period due to successful brand-building programs in certain regions and the time you've custom-roaders.
Speaker Change: In China, cells of maintenance products were up 10% compared to the private period due to successful brand building programs and the timing of customer orders.
Speaker Change: China continues to cease strong growth of both WD40 and WD40 specialists with full fiscal years hours of maintenance products of 14% compared to the prior year.
Speaker Change: Australia sells the flat compared to the prior period, sales of no-back carpet, cleaning products, decrease 6% compared to the prior period due to the timing of promotion activities. However, the sales decline was almost entirely offset by high sales of dividends, especially
Speaker Change: which includes 15% compared to the private period primarily due to successful brand building and promotional programs.
Speaker Change: For the source of this school year, Maintenance Product Sales and Asia Pacific, total 79 million, reflecting a 10% increase compared to prior year. This growth aligns with our long-term growth target for the region, which projects annual growth between 10 and 13%.
Speaker Change: In total, our Asia Pacific segment made up 12% of our global business in the fourth quarter.
Speaker Change: Now let me discuss the progress we've made against our four-by-four strategic framework, which is your recall as comprised of our four Muslim battles and our four cities, Enemies.
Speaker Change: I must say in battles, focus on what we do to increase sales and profitability, who look at these as long-term growth drivers and therefore will focus on discussion on the full fiscal year results of those battles.
Speaker Change: Starting with most of them back on number one lead geographic expansion.
Speaker Change: Global sales of the B4-Gmd use product in fiscal year 24 for 453 million representing growth of 11% of a prior year. We experience strong sales of our signature multi-use product brand in all three trade blocks with 18% growth in our mayor, 7% growth in America's and 9% growth in Asia Pacific.
Speaker Change: People often ask Sara and I, what we believe investors misunderstand about W40 company as an investment.
Speaker Change: I tell them that investors sometimes have a lot of the significant global expansion opportunities, still available, even after 71 years, but a blue and yellow candle at the red top.
Speaker Change: We've made excellent progress as the school year in many key markets with strong sales growth of 40% in Latin America, 13% in our Asia Distribute of Markets, 25% in France and 21% in India. But what I want to emphasize today is that we have so much further to go.
Speaker Change: As I look around the world, all I see is opportunity. We estimate the global benchmark sales opportunity for double E40 multi-use product to be approximately 1.6 billion.
Speaker Change: We calculate that benchmark sales opportunity by using macro-economic data from World Bank market data and combining that data within the Internet and the developed algorithm.
Speaker Change: We've used these data sources combined with our algorithm for close to 30 years and they've proven to be remarkably accurate the data show that after 71 years, we've achieved only approximately 28 percent of the benchmark sales opportunity for WD40 multi-use product.
Speaker Change: Therefore, there remains approximately $1.2 billion of land and expand growth opportunity across the globe. Our strategy remains simple, yet affected to rigs this goal, make our product available to buy in more places, and put more cans in the hands of our target end users around the world.
Speaker Change: The success of our geographic expansion strategies, perhaps best exemplified by our progress in Brazil.
Speaker Change: Following our acquisition of our Brazilian distributor, we achieved South Growth of 97 million in the first six months of direct operations, exceeding our initial expectations.
Speaker Change: The success coupled with our experience in growing markets all around the world gives us confidence in our ability to unlock further game-changing opportunities in emerging markets and move the needle ever closer to the significant growth opportunity in front of us.
Speaker Change: Next is most from Battle Number 2, accelerating criminalization.
Speaker Change: Global thousands of WD-40 Smart, straw and easy reach in fiscal year 2024 when combined to 11% or approximately 20 million over the prior year. Uppremimization strategy was developed with our end users in mind, uppremimized products to light our end users and lead them with positive lasting memories. In addition, primimization continues to be a major contributor to our revenue growth and growth margin expansion.
Speaker Change: For the last five years, we've achieved a compound annual growth rate for net sales of premium products at 10.7%. On a go-forward basis, we'll be targeting a compound annual growth rate for net sales of premium products for net sales of greater than 10%.
Speaker Change: A third Muslim battle is to drive the 140 specialist growth. Global sales of the 140 specialist products in fiscal year 24 when nearly 74 million up in 11% to 7 million over the prior year.
Speaker Change: Throughout the B40 specs this product line, we aspire to achieve caspy leadership and increase our market share by leveraging our core brand equity.
Speaker Change: Once again, we saw growth of the before-espaced products across all three trade blocks that grow to 6% in the Americas, 14% in the EMAA, and 17% in Asia Pacific.
Speaker Change: In China, we continue to experience spectacular growth of the DIVIVI specialists, for sales grew up at 1.4 million or 45% due to expanded distribution, need a DIVIVI specialist product introduction to the region, as well as successful brand building programs.
Speaker Change: We estimate the benchmark sales opportunity for W40 specialists globally to be approximately $605 million and to date with a cheap only 12% of our benchmark growth opportunity.
Speaker Change: Of the last five years of achieved the compound annual growth rate, the net sales of the 40 specialist of 14%. On a go-for-with basis, we'll be targeting your compound annual growth rate, the net sales of the 40 specialist have greater than 15%.
Speaker Change: Our thoughts and find on us when badly succelerate digital commerce.
Speaker Change: Global South had in the pure play Ecommerce channel in fiscal year 24 will have 12% compared to the prior year.
Speaker Change: The strategy associated with this battle is not just about driving online sales, it's about accelerating all our other Muslim battles.
Speaker Change: Digital Commerce intersects with all our Muslim battles, much like the Central Overlapped in a Venn diagram.
Speaker Change: As part of our digital commerce strategy in 2024, we continued our global online marketing campaign, the repair challenge.
Speaker Change: We are now in the third year of this promotional effort which motivates millions of doers, makers, fixers and builders across more than 40 countries to expand the lifespan of their tools and equipment. In FY24, I repair challenge website to track it over two million visitors with more than 10,000 projects submitted. These projects seem to prolong the life tools, worn-down equipment, bicycles, cars and just about anything else helping to keep them in circulation longer.
Unknown Executive: Turning to the second element of our four by four strategic framework, our strategic enablers. Our strategic enablers focus on operational excellence and make collectively on the pain and drive the success of our muscle and battles. Strategic enablers number one is ensuring a people-first mindset, a delivery-fully company. Our most powerful, competitive advantage is a commitment of our 644 employees, spread across 16 countries, to our purpose values, and we strive to be an employee of choice where all employees can bring their best selves to work. Our people-first mindset is intended to create programs that inspire, motivate, and new-war employees, a contribution that are aligned with our four by four strategic framework, while maintaining a strong focus and growth and profitability.
Speaker Change: Turning to the second element of our four-by-four strategic framework, our strategic enablers. Our strategic enablers focus on operational excellence and make collectively on the pain and drive the success of our Muslim battles.
Speaker Change: strategic enable number one is ensuring a people first mindset, a delivery 40 company, our most powerful competitive advantage is a commitment of our 644 employees spread across 16 countries to our purpose values and strategy.
Speaker Change: We strive to be an employee of choice, where all employees can bring their best selves to work. Our people for as mindset is intended to create programs that inspire, motivate and reward employees, a contribution that are aligned with us for, by for, to teach you framework, while maintaining a strong focus and growth and profitability.
Unknown Executive: And very proud of our 93% employee engagement rate in FY24, a testament to our strong culture and the opportunities we provide for our people to learn, grow, and succeed.
Speaker Change: and very proud of our 93% employee engagement rate in FY24, the testament to our strong culture and the opportunity we provide for our people to learn, grow and succeed.
Unknown Executive: This year, we made significant strides and beginning to transform that we fully company into a world-class global learning organization. To gain insights into our progress, we conducted a volunteer learning survey, which received an impressive 82% response rate. The results show that 90% of our employees believe that continuous learning is key to driving the company's success, among other valuable findings.
Speaker Change: This year, we made significant strides and beginning to transform W40 company into a world-class global learning organization. To gain insights into our progress, we conducted a volunteer learning survey which received an impressive 82% response rate.
Speaker Change: The results show that 90% of our employees believe that continuous learning is key to driving the company's success among other valuable findings.
Unknown Executive: This brings us to strategic enable number two: build a sustainable business for the future. We define sustainability of a business to exist indefinitely. We are committed to operating our business in a manner that will have positive environmental and societal impacts, which will create value for all our stakeholders. For the last 12 to 18 months, we've taken significant steps to embed sustainability into our business strategy. Steps we believe will provide us with a competitive advantage in the global marketplace. Our efforts have been considerable. Some of the highlights include adding three dedicated ESG positions, completing an environmental assessment of our tier 1 suppliers, implementing a carbon accounting system, refining our sustainability lens of future innovation, and developing a science-based environmental impact roadmap with a priority to reduce DHG emissions.
Speaker Change: This brings us to see Jacob Nathan, the two builders sustainable business for the future. When he finds sustainability of the business to exist indefinitely, we're committed to operating our business in a manner that will have positive environmental and societal impacts, which will create value for all our stakeholders.
Speaker Change: For the last 12 to 18 months, we've taken significant steps to embed sustainability into our business strategy. Steps we believe will provide us with a competitive advantage in the global marketplace.
Speaker Change: Our efforts have been considerable. Some of the highlights include adding in three dedicated DST positions, completing an environmental assessment of our Tier 1 suppliers.
Speaker Change: and implementing a carbon accounting system, refining our sustainability lens of future innovation, and developing a science-based environmental impact roadmap with a priority to reduce GHG emissions.
Unknown Executive: We will be publishing our 2024 ESG report next month. In this report, we detail our ESG-related objectives, targets, and progress made during the last two-year period, and we establish objectives and targets for the future.
Speaker Change: We will be publishing our 2024 ESG report next month. In this report, we detail our ESG related objectives, targets, and progress made during the last two year period, and we establish objectives and targets for the future.
Unknown Executive: Strategic enable number three is achieving operational excellence in supply chain. Through this strategic enable, we continue to pursue operational excellence. This year, we adopted a truly global approach to our supply chain strategy for the first time, recognizing its pivotal role in driving economic value and advancing sustainability. We undertake in several key initiatives to support this approach. In net analysis, revealed significant opportunities for cost reduction in efficiency gains. By strengthening global partnerships with key suppliers, we've driven efficiency of the slate into cost savings. Additionally, we've completed an environmental audit of our top suppliers and published an updated supplier code of conduct.
Speaker Change: To teach you can aim at number three is achieving operational excellence in supply chain. Through this strategic enable, we continue to pursue operational excellence. So here we adopted a truly global approach to our supply chain strategy for the first time, recognising its pivotal role in driving economic value and advancing sustainability.
Speaker Change: We undertake in several key initiatives to support this approach.
Speaker Change: In their analyses, revealed significant opportunities for cost reduction in efficiency gains.
Speaker Change: By strengthening global partnerships with key suppliers, we've driven efficiency as a translate into cost savings. Additionally, we've completed an environmental audit of our top suppliers and published an updated supplier code convict. In fiscal year 2025, we'll publish a new responsible source in policy to more clearly communicate how the supply chain can positive impact environmental and social responsibility.
Unknown Executive: In fiscal year 2025, we'll publish a new responsible source in policy to more clearly communicate how the supply chain composite impact environmental and social responsibility. Motibly, we reduced our inventory by approximately $7 million and maintained an average on time in full delivery rate of 95% to Fiscal Year 2024. Our employees achieved all of this while simultaneously rolling out the first phase of our new ERP implementation across a substantial portion of our business.
Speaker Change: Notably, we reduced our inventory by approximately $7 million and maintained an average on time in full delivery rate of 95% to fiscal year 2024.
Speaker Change: Our employees at GDOL, this was Samuel Tangus, the first phase of our new ERP implementation across a substantial portion of our business.
Unknown Executive: And finally, strategic enable number four is to drive productivity by our enhanced systems. We've been laser-focused on identifying and implementing systems that streamline operations to deliver actionable insights and drive value. By leveraging automation and AI, we aim to optimize our processes, reduce manual labor, and ultimately enhance our bottom line. The key milestone this year was a successful rollout of our new ERP system across 50% of our business. While we encountered some initial challenges, we've swiftly adapted and learned from the experience, which we expect will result in smoother implementations going forward. For the milestones is past fiscal year, includes standardization and processes like project and portfolio management, along with streamlined approaches to solution-driven decision making.
Speaker Change: And finally, strategic enable number four is to drive productivity by our enhanced systems.
Speaker Change: We've been laser focused on identifying and implementing systems at streamlined operations to deliver actionable insights and drive value. By leveraging automation and AI, we aim to optimize our processes, produce manual labor, and ultimately enhance our bottom line.
Speaker Change: The key milestone this year was a successful rollout of our new ERP system across 50% of our business. While we encountered some initial challenges, which swiftly adapted and learned from the experience, which we expect will result in smoother implementations going forward.
Speaker Change: For the milestones is past fiscal year, includes standardisation and processes like project and portfolio management, along with streamlined approaches to solution driven decision making.
Unknown Executive: Lastly, we've established a foundation to move with more intent, more productivity improvement by establishing global centers of excellence along the areas of IT, to bring one's disparate teams together to harness their collected skills and capacity to focus on our long-term growth objectives.
Speaker Change: Lastly, we've established a foundation to move with more intent, who are productivity improvement by establishing global centres of excellence along the areas of IT, to bring one's disparate teams together to harness their collective skills and capacity to focus on our long-term growth objectives.
Unknown Executive: With that, I'm now turn the call over to Sarah.
Speaker Change: With that, I'm now turn the call over to Sara.
Sara Hyzer: Thanks, Steve, for that overview of our sales results and strategic framework. I'm pleased to announce that we delivered a strong performance in the fourth quarter, leading to a solid fiscal year 2024.
Sara Hyzer: Thanks Steve for that overview of our sales results and strategic framework. I'm pleased to announce that we delivered a strong performance in the fourth quarter, leading to a solid fiscal year 2024.
Sara Hyzer: Let's start with a discussion about how we performed our most recently issued Fiscal Year 2024 guidance. We expected net sales growth to be between 6% and 12% with net sales of between 570 and 600 million on a non-GAAP constant currency basis. Today, we reported fiscal year revenue of 583 million, of 8% compared to last fiscal year on a non-GAAP constant currency basis and in line with our expectations.
Sara Hyzer: Let's start with a discussion about how we perform as our most recently issued fiscal year 2024 guidance.
Sara Hyzer: We expected that sales growth to be between 6 and 12 percent with net sales of between 570 and 600 million on a non-gap, constant currency basis.
Sara Hyzer: Today, we reported fiscal year revenue of 583 million, up 8% compared to last fiscal year on a non-gap, constant currency basis, and in line with our expectations.
Sara Hyzer: We expected growth margin to be between 51.5% to 53%. Today, we reported a growth margin of 53.4%, slightly above our guidance expectations.
Sara Hyzer: We expected gross margin to be between 51.5 to 53%. Today we reported a gross margin of 53.4%. Finally above our guidance expectation.
Sara Hyzer: We expected our global advertising and promotion investment to be between 5 and 6% of net sales. Today, we reported an ANT investment of 5.7%.
Sara Hyzer: We expected our global advertising and promotion investment to be between five and six percent of net sales. Today, we report in an ANT investment of 5.7 percent.
Sara Hyzer: We expected net income to be between 67.7 and 71.8 million and a diluted EPS of between $5 and $5.37. Today, we reported net income of $69.6 million and diluted EPS of $5.11, in line with our expectations.
Sara Hyzer: We expected net income to be between 67.7 and 71.8 million and a diluted EPS of between $5 and $5.30.
Sara Hyzer: Today, we reported net income of $69.6 million and deluded EPS of $5.11 in line with our expectations.
Sara Hyzer: To better understand what is driving these results, let's begin with a review of our fourth quarter results against our 55-30-25 business model. As we've mentioned previously, if we successfully divest the home care and cleaning brands we are actively selling, we know that we will need some time to digest the impacts. However, we continue to believe we can move adjusted EBITDA margin back to our target range of 20 to 22% over the medium term.
Sara Hyzer: To better understand what is driving these results, let's begin with a review of our fourth quarter result against our 55-30-25 business model.
Sara Hyzer: I will then provide an update on our financial results, an update on the dipestature of the home care and cleaning brands in the Americas and the UK. And finished with providing a view towards fiscal year 2025.
Sara Hyzer: Our asset light and dynamic business model has helped the company maintain a healthy financial position and generate strong return for our stockholders for many years. And it continues to be our guiding light. Our 5530 25 business model has been a long term beacon for us that we aspire to over time.
Sara Hyzer: Recently, we have been thinking about each critical component of the model in a range.
Sara Hyzer: As we've mentioned previously, if we successfully dive out to the home care and cleaning brands in the Americas and the UK, we expect that progress on certain aspects of our business model will be temporarily impacted as we digest the impacts.
Sara Hyzer: However, in the longer term, we anticipate significant benefits as we shift our focus and investment towards our higher growth higher margin maintenance products. I'll share more details on our outlook when we provide guidance for fiscal year 2025.
Sara Hyzer: Let's look at our fourth quarter gross margin performance.
Sara Hyzer: We target a range of 50 to 55% for gross margins, and we have made significant progress this fiscal year to perform well within this range.
Sara Hyzer: In the fourth quarter, our growth margin was 54.1%, compared to 51.4% last year.
Sara Hyzer: This represents an improvement of 270 basis points, and was most significantly impacted by the following factors.
Sara Hyzer: Gross Margin benefited a hundred basis points from lower cost of our can.
Sara Hyzer: 70 basis points from favorable sales mix and other miscellaneous mix and 60 basis points from lower warehousing, distribution and freight cost.
Sara Hyzer: We are pleased to see that the inflationary environment has stabilized for now, and our growth margin has steadily improved throughout the fiscal year. This marks the third consecutive quarter of sequential growth margin growth.
Sara Hyzer: We are also happy to share with you that this quarter gross margin improved across all free trade blocks. Within the Americas, gross margin improved 350 basis points over prior periods to 52.5%.
Sara Hyzer: I may have continued to expand Gross Margin's improving 190-based points over the prior period to 55.5%.
Sara Hyzer: and Asia Pacific and Peruv's gross margins 70 basis points over the prior period to 56.4%.
Sara Hyzer: I am delighted to report that two of our trading blocks are already above our 55% gross margin target for the fourth quarter.
Sara Hyzer: Despite some of the headwins we anticipate to the business model from divesting of the home care and cleaning brands in the Americas and the UK. The divestiture will have an immediate positive impact on our growth margin.
Sara Hyzer: We forecast an annual boost to growth margin of approximately 60-based points post-digus share.
This strengthens our confidence in reaching our target of 55% gross margin.
Sara Hyzer: Considering our current trajectory, the current cost environment and macroeconomic factors, we continue to target achieving a growth margin of 55% by the end of fiscal year 2026 at the latest.
Sara Hyzer: However, depending on the cost landscape, we may achieve this goal even sooner, potentially by the end of fiscal year 2025 following a mid by the future. In fiscal year 2025, growth margin recovery is essential focus for senior leadership, who will be incentivized to recover growth margin to 55% and beyond.
Sara Hyzer: Now turning to our cost of doing business, which we define as total operating expenses, less adjustments for certain non-cash expenses.
Sara Hyzer: and is primarily comprised of investments in our employees, investments in our brand, great expense to get our products to our customers and investments in information technologies.
Sara Hyzer: As we continue to grow our top line, we remain committed to operating efficiently and maintaining the company's financial health. We'll also invest in areas to drive those future growth and future operating efficiencies.
Sara Hyzer: With increased operational leverage, after we have time to digest the anticipated impacts of the diverse mature. We expect that our cost of doing business will align with our targeted range of 30 to 35% over time.
Sara Hyzer: This quarter, our cost of doing business is 38% compared to 34% in the prior year. For the full fiscal year, our cost of doing business is 36% compared to 33% in the prior year.
Sara Hyzer: Both increases were primarily driven by higher employee-related costs, including the impact of accruing higher earned incentive compensation.
Sara Hyzer: In Fiscal Years 22 and 23, we had to navigate a dynamic macroeconomic landscape, marked by supply chain disruptions and higher than normal inflation levels.
Sara Hyzer: Our earned incentive program was developed to protect our bottom lines during difficult financial times and reward our employees during better financial times.
Sara Hyzer: Therefore, as the business has recovered, so has our incentive compensation program.
Sara Hyzer: To school year 2022, when the business was challenged with high inflation, our incentive program paid out approximately $3 million. And we were able to rebuild that to about $8 million by fiscal year 2023, and now $16.5 million for this fiscal year.
Sara Hyzer: This is an improvement of over 13 million over the course of two years. Our incentive plan applies to every employee at every level of the organization, and we can be more pleased to reward their outstanding individual and collective efforts this fiscal year.
Sara Hyzer: For the full year, the increase in our crude and census compensation program was 8.8 million. And in the fourth quarter, the increase was 4.6 million.
Sara Hyzer: We have seated our fourth quarter forecast and therefore the timing of our crude incentive compensation was larger in the fourth quarter than the previous three quarters this year.
Sara Hyzer: In addition to higher employee related costs, we have also been making strategic investments in the areas of information technologies, ESG and innovation and supply chain, which have led to some elevated SGNA expenses and therefore higher costs of doing business.
Sara Hyzer: Turning now to adjusted EBITDA margin.
Sara Hyzer: All these investments have put some pressure on our adjusted EBITDA margin, for both the full fiscal year and fourth quarter, our adjusted EBITDA margin was 17%, and remained relatively constant compared to the prior period.
Sara Hyzer: However, on a dollar basis, we grew EBITDA for the full fiscal year by 8% over the prior year, even after absorbing in these increased costs.
Sara Hyzer: As we've mentioned previously, if we successfully divest the home care and cleaning brands we are actively selling, we know that we will need some time to digest the impact.
Sara Hyzer: However, we continue to believe we can move adjusted EBITDA margins back to our target range of 20 to 22% over the medium term.
Sara Hyzer: Now let's discuss net income and EPS for the fourth quarter. Net income is 16.8 million this quarter, improved slightly by about 1% compared to the prior period. For the full year, which adjusts for the lumpiness of our incentive compensation program of rural this year, our net income grew by 3.6 million, or about 6% over the prior year. On a constant currency basis, net income for the full year would have increased 3% compared to the prior year. Deluded earnings per common share for the fourth quarter were a dollar 23 compared to a dollar 21 in the prior period.
Sara Hyzer: Now let's discuss that in common EPS for the fourth quarter.
Sara Hyzer: that in terms of 16.8 million this quarter improved slightly by about 1% compared to the prior period.
Sara Hyzer: For the full year, which is just for the lumpiness of our incentive compensation program of school this year, our net income grew by 3.6 million for about 6% over the prior year. On a constant currency basis, net income for the full year would have increased 3% compared to the prior year.
Sara Hyzer: Deluded earnings per common share for the fourth quarter were $1.23 compared to a $1.21 in the prior period. For the full year, Deluded EPS Group 28 cents per share are 6% over the prior year.
Sara Hyzer: For the full year, deluded EPS grew 28 cents per share, or 6% over the prior year. Deluded EPS reflects 13.6 million weighted average shares outstanding this quarter, which was essentially flat compared to the prior year.
Sara Hyzer: So, loaded EPS reflects 13.6 million weighted average shares outstanding this quarter, which was essentially flat compared to the prior year.
Sara Hyzer: Next we'll discuss a word about our balance sheet and capital allocation strategy. The company maintains the solid financial position and strong liquidity. Our capital allocation strategy takes a balanced approach, prioritizing long-term organic growth investments while delivering robust returns to our stockholders. We continue to return capital to our stockholders through regular dividends and buybacks. Annual dividends will continue to be our priority and are targeted at greater than 50% of earnings. On October 4th, our Board of Directors approved a quarterly cash dividend of 88 cents per share.
Sara Hyzer: Next, we'll discuss the word about our balance sheet and capital allocation strategy.
Sara Hyzer: The company maintains the solid financial position and strong liquidity. Our capital allocation strategy takes the balance to approach, prioritizing long-term, organic growth investments while delivering robust returns to our stockholders.
Sara Hyzer: We continue to return capital to our stockholders through regular dividends and buybacks.
Sara Hyzer: Annual dividends will continue to be our priority and are targeted at greater than 50% of earnings. On October 4th, our Board of Directors approved a quarterly cash dividend of 88 cents per share.
Sara Hyzer: We have continued to manage our inventory levels, which were impacted due to the investments we made 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 nearly 40 million dollars or 34%. At this point in time, our inventory levels are stable, with what we believe is the right balance from a risk management perspective. We continue to hold certain levels of componentry and camps, which have benefited us recently and will continue to do so into the foreseeable future.
Sara Hyzer: We have continued to manage our inventory levels, which were impacted due to the investments we made to stabilize our U.S. supply chain in prior years.
Sara Hyzer: Our inventory levels peaked in the 1st quarter of fiscal year 2023, and since then we have reduced inventory by nearly 40 million dollars or 34%.
Sara Hyzer: At this point in time, our inventory levels are stable, with what we believe is the right balance from a risk management perspective. We continue to hold certain levels of componentry and chants, which have benefited us recently and will continue to do so into the foreseeable future.
Sara Hyzer: Furthermore, diversity from our household brands will positively impact our working capital and inventory levels, as these brands typically require us to maintain higher inventory levels.
Sara Hyzer: Furthermore, diversity from our household brands with positively impact or working capital and inventory levels, as these brands typically require us to maintain higher inventory levels.
Sara Hyzer: Our cash flow from operations for fiscal year 2024 was approximately 92 million dollars, and we elected to use approximately 25 million of that cash to pay down a portion of our short-term higher interest rate borrowing. Our intent is to continue to pay down our higher interest rate borrowing under the current interest rate environment. This activity will likely be wrapping up in the first half of 2025.
Sara Hyzer: Our cash flow from operations for fiscal year 2024 was approximately $92 million. And we elected to use approximately $25 million of that cash to batown a portion of our short-term fire interest rate borrowing.
Sara Hyzer: Our intent is to continue to pay down our higher interest rate borrowings under the current interest rate environment. This activity will likely be wrapping up in the first half of 2025.
Sara Hyzer: In fiscal year 2024, our return on invested capital was 25.5%, improving from 23.7% last fiscal year, and in line with our targets of 25%.
Sara Hyzer: In fiscal year 2024, our return on invested capital was 25.5% improving from 23.7% last fiscal year and in line with our target of 25%.
Sara Hyzer: Now, a brief update on changes are making that will affect foreign currency impact since Fiscal Year 2025. The functional currency for our UK subsidiary, which consolidates the results for the IMAA trait block, has long been the pound sterling. We reassess this on an annual basis. As we look out to fiscal year 2025 and beyond, the shift in the operating landscape within the IMAA region, along with certain strategic actions we are taking, require a change in our functional currency. A few key factors influenced our decision, including a growing dependence on euro-denominated inventory within our supply chain, and an increase in sales and operational expenses tied to the euro.
Sara Hyzer: Now, a brief update on changes for making that will affect foreign currency impacts in fiscal year 2025.
Sara Hyzer: The functional currency for our UK subsidiary, which consolidates the results for the IMAA trade block, has long been the pound sterling.
Sara Hyzer: We reassessed this on an annual basis. As we've looked out to fiscal year 2025 and beyond, the shift in the operating landscape within the IMAA region, along with certain strategic actions we are taking, require a change in our functional currency.
Sara Hyzer: A few key factors influenced our decision, including a growing dependence on Europe, denominated inventory within our supply chain, and an increase in sales and operational expenses tied to the euro.
Sara Hyzer: As a result, beginning September 1, 2024, we will change the functional currency of our UK subsidiary from pound sterling to euro, with the change being applied prospectively.
Sara Hyzer: As a result, beginning September 1, 2024, we will change the functional currency of our UK subsidiary from to Europe with the change being applied prospectively.
Sara Hyzer: Now, a quick update on HCCP. We continue to make progress on the sale of our Americas and UK home care and cleaning product brands. Sales of home care and cleaning products in the Americas and UK this fiscal year 2024 were approximately 24 million, representing 4% of our global business. As I shared with the last quarter, we have engaged an investment bank, and they are currently in discussions with potential suitors on our behalf. While there are no certainties on identifying a buyer when going to the market, our expectation is that we will likely complete the divestiture of these brands during the first half of fiscal year 2025.
Sara Hyzer: Now we'll quick update on HCCP.
Sara Hyzer: We continue to make progress on the sale of our Americas and UK home care and cleaning product brands.
Sara Hyzer: Sales of Home Care and Cleaning Products in the Americas in UK, this fiscal year 2024 were approximately 24 million, representing 4% of our global business.
Sara Hyzer: As I shared with you last quarter, we have engagement investment bank and they are currently in discussions with potential suitors on our behalf.
Sara Hyzer: While there are no certainties on identifying a buyer when going to the market, our expectation is that we will likely complete the divest of sure these brands are in the first half of this earlier 2025.
Sara Hyzer: We will provide further updates on the divest mature process as appropriate.
Sara Hyzer: Given the expectation of these brands will soon be divested, we are providing this year guidance on a pro-forma basis, excluding the financial impact of the home care and cleaning brands in the Americas and the UK. We're also offering a pro-forma view of what fiscal year 2024 would have looked like without these brands to assist with modeling and comparing the business period over period. This fiscal year 2024 pro-forma net sales would have been approximately 567 million. This fiscal year 2024 pro-forma gross margin would have been approximately 53.9%. This fiscal year 2024 pro-forma operating income would have been approximately 89.3 million.
Sara Hyzer: We will provide further updates on the divestiture process as appropriate.
Sara Hyzer: Given the expectation of these brands will soon be divested, we are providing this year guidance on a pro-forma basis, excluding the financial impact of the home care and cleaning brands in the Americas and the UK.
Sara Hyzer: We're also offering a pro-form of you of what fiscal year 2024 would have looked like without these brands to assist with modeling and comparing the business period over period.
Sara Hyzer: This clear 20-24 Proforma Net Sales would have been approximately 567 million.
Sara Hyzer: This school year 2024, Proforma Gross Margin would have been approximately 53.9%.
Sara Hyzer: This clear 2024 Pro forma operating income would have been approximately 89.3 million.
Sara Hyzer: And fiscal year 2024 pro-forma EPS would have been approximately $4.76. Now, with that backdrop, let's take a closer look at our guidance for fiscal year 2025. We are excited for what is ahead for us in fiscal year 2025. We are committed to delivering long-term values to all our stakeholders, which requires balancing short-term results with strategic investments to drive long-term growth and enhance business efficiency. As I have mentioned before, this year's guidance excludes the financial impact of the home care and cleaning brands currently classified as also helped for sales as a September 1, 2024. While the exact timing of the transactions closing remains uncertain, we believe this approach will provide investors with clarity on the direction of the core business and help minimize the noise surrounding the transactions.
Sara Hyzer: and Fiscal Year 2024 Proformat EPS would have been approximately $4.76.
Sara Hyzer: Now with that backdrop, let's take a closer look at our guidance for fiscal year 2025.
Sara Hyzer: We are excited for what is ahead for us in fiscal year 2025. We are committed to delivering long-term values to all our stakeholders, which requires balancing short-term results with strategic investments to drive long-term growth and enhance business efficiency.
Sara Hyzer: As I have mentioned before, this year's guidance excludes the financial impact of the home care and cleaning brands currently classified as also helped for failed as of September 1, 2024.
Sara Hyzer: While the exact timing of the transactions closing remains uncertain, we believe this approach will provide investors with clarity on the direction of the core business and help minimize the noise surrounding the transaction.
Sara Hyzer: This year, we've also made a change by removing that income from our guidance and replacing it with operating income. We believe this provides a better measure for offering more insight into the business's operating performance. For fiscal year 2025, we are estimating net sales growth from the pro forma 2024 results is projected to be between six and 11% with net sales between 600 and 630 million dollars in constant currency. Growth Martian is expected to be between 54% to 55%. Advertising and promotion investment is projected to be around 6% of net sales. Operating income is expected to be between 95 and 100 million dollars, representing growth of between 6 to 12% over the pro forma 2024 results.
Sara Hyzer: This year we've also made a change by removing net income from our guidance and replacing it with operating income. We believe this provides a better measure for offering more insight into the business's operating performance.
Sara Hyzer: For fiscal year 2025, we are estimating net sales growth from the Proforma 2024 result is projected to be between 6 and 11%. With net sales between 600 and 630 million dollars in constant currency.
Sara Hyzer: Gross Martian is expected to be between 54 to 55%.
Sara Hyzer: Abvertising and promotion investment is projected to be around 6% of net sales.
Sara Hyzer: Operating income is expected to be between $95 and $100 million. Representing growth of between 6 to 12% over the pro-forma, 20-24 results.
Sara Hyzer: The provision for income tax is expected to be around 24%. And deluded earnings per share is expected to be between 520 and 545, which is based on an estimated 13.5 million weighted average shares outstanding. This range represents growth of between 9% and 14% over the pro forma 2024 results.
Sara Hyzer: The provision for income tax is expected to be around 24%.
Sara Hyzer: and diluted earnings for share is expected to be between 520 and 545, which is based on an estimated 13.5 million weighted average share of outstanding.
Sara Hyzer: This range represents growth of between 9 and 14% over the pro-form of 2024 results. The Skydens assumes no major changes to the current economic environment. On anticipated inflationary headwins and other unforeseen events may affect our view of fiscal year 2025.
Sara Hyzer: This guidance assumes no major changes to the current economic environment. Unanticipated inflationary headwinds and other unforeseen events may affect our view of fiscal year 2025. In the event we are unsuccessful in the divestiture of our home care and cleaning brands in the Americas and the United Kingdom. Our guidance would be positively impacted by approximately 23 million dollars in net sales, 6 million in operating income, and 33 cents in diluted EPS on a full year basis.
Sara Hyzer: In the event, we are unsuccessful in the divestiture of our home care and cleaning brands in the Americas and the United Kingdom.
Sara Hyzer: Our guidance would be positively impacted by approximately $23 million in net sales, $6 million in operating income, and 33 cents in diluted EPS on a full year basis.
Sara Hyzer: That completes the financial overview.
Unknown Executive: Now I would like to turn the call back to Steve.
Speaker Change: That completes the financial overview. Now I would like to turn the call back to Steve.
Unknown Executive: Thank you, Sarah, for that update. Our focus for fiscal year 2025 and beyond is clear. Stay true to our four by four strategic framework, continue to unlock value in high potential markets, and take care of our people who drive our success.
Steve Brass: Thank you, Sara for that update. I'll focus for fiscal year 2025 and beyond this clear. Stay true to our four by four strategic framework, continue to unlock value in high potential markets, and take care of our people who drive our success.
Unknown Executive: The key themes throughout the journey for the W40 company will be few things, many places, bigger impact. This approach will help us leverage global synergies and become more efficient as we expand.
Steve Brass: The key scene throughout the journey to the delivery footie company will be few things, many places, bigger impact. The approach will help us leverage global synergies and become more efficient as we expand.
Unknown Executive: In summary, what did you hear from us on this call? You heard that for the fourth quarter reported consolidated net sales of 156 million, an increase of over 11% over the prior year and a second consecutive record quarter for the company. You heard that all three of our trade blocks reported revenue growth that aligns with or exceeds our long-term growth targets for each region, both in the fourth quarter and the fourth fiscal year. You heard that our new historic market in Brazil continues to do well and that we believe the acquisition of the Brazil market was a game-changing opportunity for us.
Steve Brass: In summary, what did you hear from us on this call? You heard that for the fourth quarter reported consolidated net sales of $156 million an increase of 11% over the prior year and the second consecutive record quarter for the company.
Steve Brass: You heard that all three of our trade blocks reported revenue growth at aligns with our exceeds our long-term growth targets for each region, both in the fourth quarter and the fourth fiscal year.
Steve Brass: You heard that our new historic market in Brazil continues to do well, and that we believe in acquisition of the Brazil market was a game changing opportunity for us.
Unknown Executive: You heard that we estimate the benchmark sales opportunity for the W40 multi-use product to be approximately $1.6 billion, and it will have achieved only 28% of that benchmark opportunity. You heard that we estimate the benchmark sales opportunity for the W40 specialist to be approximately $605 million and that will have achieved only 12% of that benchmark opportunity. You heard that we're making good progress on the sale of our America's new gay home care and cleaning product brands. You heard the gross margin continue to improve and is moving closer to our long-term target of 55%.
Steve Brass: You heard that we estimate the benchmark sales opportunity for the 40-multi use products to be approximately $1.6 billion and that would have achieved only 28% of that benchmarked opportunity.
Steve Brass: You heard that we estimate the benchmark sales opportunity for W40 specialists to be at approximately $605 million, and that would have achieved only 12% of that benchmarked opportunity.
Steve Brass: You heard that we're making good progress in the sale of our America's new gay home care and cleaning product brands.
Steve Brass: You heard the gross margin continues to improve and is moving closer to our long term target of 55%. And you heard that we're issuing guidance of the school year 2025 on a pro-form of basis Explode in the brands we expect to do best this year.
Unknown Executive: And you heard that we're issuing guidance of fiscal year 2025 on a pro-former basis, expert in the brands we expect to do our best this year.
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 so that your signal can reach our equipment. If your question has been answered and you would like to withdraw your registration, please press the pound key. One moment, please, for the first question.
Speaker Change: Hey, this is Jelaman. If you would like to register a question, please press star one on your telephone keypad. Please make sure your mute function is thrown off, so all are your signal to reach our equipment. If you have a question as you can answer, and you would like to withdraw your registration, please press the pound key.
Daniel Rizzo: Our first question comes from the line of Daniel Rizzo with Jeffries. Daniel, please proceed with your question. Everyone, thanks for taking my question. I was going through the deck one day I noticed that I think in the second half of 24, there was some, I think pricing was a bit of a headwind. I think it's a two to one percent. I can't find right now. I was just wondering what that was, that that's just promotional activity or if it's something else. It's kind of interesting. So yeah, there was a little bit of flinging the back half of the year.
Speaker Change: One moment please for the first question.
Speaker Change: Our first question comes from the line of Daniel Ritzel, the chapter is Daniel, please proceed with your question.
Daniel Ritzel: Thanks for taking my question. I was too into the deck one thing I noticed is that I think in the second half of the 24 There was some, I think pricing was a bit of a headwind, I think to a 2 to 1% I can't find right now I was wondering what that was, that that's just promotional activity or if it's something else
Unknown Executive: Most of that is going to be mixed. It's hard right now for us to break out mix from that metric. And so there's nothing significant on a pricing that went backwards. It's going to be all be mixed related.
Speaker Change: So, yes, there was a little bit of sling in the back half of the year, most of that is going to be mixed. It's hard right now for us to break out mixed from that metric. And so there's nothing significant on a pricing that went backwards. It's going to all be mixed related.
Unknown Executive: Okay.
Unknown Executive: And then with, I mean, with the ongoing rollout of the ERP with everything is going on with the dress shirt, I would imagine that SGNA expenses remain relatively elevated for at least in next couple quarters and trying to, you know, modeling out is that something we should probably expect? Yeah, I think we're, we are obviously continuing, continuing to invest in the ERP. And we also are inheriting Brazil expenses in addition to that. So if you're looking at the upcoming year, we're not growing at the pace that we grew up last year, especially because we've rebuilt that GRP that I mentioned on the call.
Speaker Change: Okay, and then with the ongoing rollout of the ERP with everything that's going on with a dress shirt, I would imagine that SGA expenses are going to remain relatively elevated for, I'll at least in next couple of quarters and trying to, you know, modeling that as that's something we should probably expect.
Speaker Change: Yeah, I think we're we are obviously continuing continuing to invest in the ERP and we also are inheriting Brazil expenses in addition to that. So if you're looking at the upcoming year, we're not growing at the pace that we grew up last year, especially because we've rebuilt that GRP that I mentioned on the call. So it won't be as as large of an increase as last year, but it will continue to be more elevated than it has been in the past.
Unknown Executive: So it won't be as large an increase as last year, but it will continue to be more elevated than it has been in the past. Okay.
Unknown Executive: And then one final question. Then you had good success with moving to a direct business model in Brazil, Mexico, and elsewhere. I was wondering where the other opportunities to do that are. And if we expect more announcements like that within, I don't know, the next year or so, how should you think about it?
Speaker Change: Okay, and then one final question, then you've had good success with moving towards direct business model in Brazil, Mexico and elsewhere. I was wondering where the other opportunities to do that are, and if we expect more announcements like that within, I don't know, the next year or so, how should we think about it?
Unknown Executive: Hey Daniel, it's the Thanks for the question. So yeah, we're really delighted with the progress. Mexico continued to grow; grew by another 25% in last fiscal year. Brazil actually beat our expectations in terms of delivering an overall $8 million. There's $7 million of growth almost over prior year. And we expect for this next fiscal year for that to continue to grow and deliver a further $7 to $9 million on top of that base of $8 million for the first year. So yeah, these are game-changing opportunities. And so, as we look around the world, we are absolutely laser-focused on those top 20 growth opportunities that we have.
Speaker Change: Hey Daniel, it's the thanks for the question, so yeah we're really delighted with the progress. Mexico continue to grow grew by another 25% in last year's school year.
Speaker Change: Resil has been our expectations in terms of delivering over $8 million to $7 million of growth almost over prior year and we expect for this next fiscal year for that to continue to grow and deliver a further.
Speaker Change: 7 to $9 million on top of that basis at 8 million for the first year.
Speaker Change: So yeah, these are game-changing opportunities and so as we look around the world, we are absolutely laser focused on those top 20 growth opportunities that we have.
Unknown Executive: I mean, I look back at the last year: China, local currency, 17% growth; India, 21% growth; Indonesia, 17% growth; Turkey, 66% growth. On the top of phenomenal growth, of course, just about everywhere in Europe and Latin America. So phenomenal focus, I think, is delivering these really exceptional results. And yeah, you're going to see more of that.
Unknown Executive: We have no announcements that are imminent in terms of planned kind of direct markets. A lot of our growth internationally is achieved by excellent partnerships around the world with our marketing distributed partners as well.
Linda Bolton: Thank you very much.
Sara Hyzer: Our next question comes from the line of Linda Bolton, WD-80. Linda. Please put it into your question. Yes, hello. Thank you. Congratulations on a really strong quarter in New York. So just to make sure I understand that your guidance for the next fiscal, the dollar figure amounts, like operating profit of 95 to 100 million. Does that assume that the household cleaning business is not in for any of the year? Is that correct? You have that, yes, Linda, that's correct. We've excluded it for the full year, just given the uncertainty of the timing. And then provided you with some information of what the difference would be if it was included for the full year.
Speaker Change: Thank you very much.
Speaker Change: The End of Episode 2
Speaker Change: Our next question comes from the line of Linda Baldwin, Wester, with the A-Davisum Linda. Please put it with your question.
Linda Baldwin: Yes, hello. Thank you. Congratulations on a really strong quarter in year. So just to make sure I understand that your guidance for the next fiscal, the dollar figure amount, like operating profit of 95 to 100 million. Is that assumed that the household cleaning business is not in for any of the year? Is that correct?
Speaker Change: You have that, yes, Linda that's correct. We've excluded it for the full year just given the uncertainty of the timing. And then provided you with some information of what the difference would be if it was included for the full year. So you have it kind of both with and without.
Sara Hyzer: So you have it kind of both with and without. Yeah, thank you. Thank you for giving all that. But in reality, it's not going to be sold like it could be toward the end of the first half. So, in reality, the numbers will probably be a little toward the higher end of these ranges that you've given. Am I understanding that correctly? So, on a gap basis, yes, we will also be presenting the business on a non-gap basis starting in Q1, so that you can have apples or how we're measuring ourselves for the full year against that guidance that we've provided.
Speaker Change: Yeah, thank you for giving all that, but in reality, it's not going to be sold.
Linda Baldwin: Like it could be toward the end of the first half. So in reality, the numbers will probably be a little sort of the higher end of these ranges that you've given in my understanding that correctly.
Speaker Change: So on a gap basis, yes, we will also be presenting the business on a non-gap basis starting in Q1 so that you can have apples or how we're measuring ourselves for the full year against that guidance that we've provided.
Sara Hyzer: Okay, okay, great. And then I guess then was that, I mean, your growth margin in 2024 was 53.4%. So I guess we're wondering about the guidance of 54 to 55%. If you're getting a list of 60 basis points from the divestiture, why wouldn't that guidance be like higher? I guess I'm trying to understand that. Well, most of the move that we've had in the last couple of years has come from price with. So we've got the information and supply chain initiative being left there of an impact. We are starting to now see the efforts of some of those supply chain initiatives that we've implemented both this year.
Speaker Change: Hello, everyone.
Speaker Change: Okay, okay, great. And then...
Speaker Change: I guess then, with that, I mean your growth margin in 2024 was 53.4%, so I guess I'm wondering about the guidance of 54 to 55%. If you're getting a list of 60 basis points from the divestiture, why wouldn't that guidance be like higher? I guess I'm trying to understand that.
Sara Hyzer: And then also plan to implement next year. Those just have a smaller immediate impact to the margin. So we do intend to make improvements to the margin. It's just going to be at a left or scale than it was for this year. Okay, and then. So usually you have a like an oil price assumption that's baked in. Can you give what you're including in the guidance for oil price assumption? Sure, the range right now we have is between $70 and $90. Okay, and then. I guess I was wondering about just the cadence of your pro form of sales growth in the next fiscal.
Speaker Change: Okay, and then, um...
Speaker Change: So usually you have like an oil price assumption that's baked in, can you give what you're what you're including in the guidance for oil price assumption?
Speaker Change: Sure, the range right now we have is between 70 and 90 dollars.
Speaker Change: Okay, and then, um...
Speaker Change: I guess I was wondering about just the...
Sara Hyzer: I mean, first quarter in particular has a pretty hard comparison in first quarter, 24. Is there anything we should be cognizant of in terms of growth rates and how that all. Kind of go through the year and a pro form of basis for sales growth. It's a good question, Linda. We obviously, as you know, don't guide to the quarter, but I will comment that. Similar to last year, if you looked at the growth of the business, it was weighted towards the back half of the year. And as we're forecasting out this year, I would say it's going to be a similar.
Speaker Change: is the cadence of your pro form of sales growth in the next fiscal. I mean, first quarter in particular has a pretty hard comparison.
Speaker Change: and 1st quarter 24, is there anything we should be cognizant of in terms of growth rates and how that all kind of go through the year and a performa basis.
Speaker Change: Brass.
Steve Brass: Sales Growth. It's a good question, Linda. We obviously, as you know, don't guide to the quarter, but I will comment that similar to last year, if you looked at the growth of the business, it was weighted towards the back half of the year. And as we're forecasting out this year, I would say it's going to be a similar balance between that Q1 to Q1, Q2 compared to Q3 to Q4, kind of that first half to second half.
Sara Hyzer: A similar balance between that Q one to Q Q one Q two compared to Q three to Q four kind of that first half to second half. Balance in you can look at last year as a guide, and maybe it might just be a little bit spread a little bit wider than that, but not by much. If I could just answer that, Linda, as well as a little bit of phasing in Asia Pacific. The first quarter was so strong last year that that's going to be a challenge to work to exceed that in Asia Pacific. So Asia Pacific, in terms of growth.
Steve Brass: Valence and you can...
Steve Brass: Look at last year as a as a guide and maybe it might just be a little bit spread a little bit wider than that but not by much. If I could just add to that Linda as well as a little bit of phasing in Asia Pacific. The first quarter was so strong last year that that's going to be a challenge to to exceed that in Asia Pacific. So Asia Pacific in terms of growth will probably have a slower start and build up in the year. And then Brazil, obviously the impact of Brazil will mainly be felt in the first six months of the year. So that's $7 to $9 million of growth, a substantial part of that will be in the first half of the year.
Sara Hyzer: We'll probably have a slower start and build up in the year. And then Brazil obviously, the impact of Brazil will mainly be felt in the first six months of the year. So that's seven to nine million dollars of growth; a substantial part of that will be in the first half of the year. You mean in terms of the incremental growth versus prior. Exactly. Right. Correct. Okay. And just let me ask you a little bit about China. I mean, I can't quite remember what you said it was in the quarter. It seemed like it was pretty strong.
Speaker Change: You mean in terms of the incremental growth versus prior? Exactly, correct.
Speaker Change: Okay, um...
Speaker Change: And just tell me a little bit about China. I mean, I can't quite remember what you said it was in the quarter. It seemed like it was pretty strong. And I think you said 17% for the year. So, you know, the economy there is just so weak and that's all we hear about every day, but it doesn't seem to be affecting your business. Is it just that you have so much growth opportunity that you're immune from the back row or maybe to give a little more color?
Unknown Executive: And I think you said 17% for the year. So are you, you know, the economy there is just so weak. And all that's what we hear about every day. But it doesn't seem to be affecting your business. Is it just that you have so much growth opportunity that you're immune from the back row, or maybe to give a little more color? Yeah, we just continue to do our thing. Right. And so we talk often about our China sampling program, which is a very successful multi-year program where, you know, we're putting out I believe last year we sampled 33,000 factories and converted a substantial amount of those to WD-40 users.
Speaker Change: Yeah, we just continue to do our thing, right? And so we talk often about our China sampling program which is very successful multi-year program where you know we're putting out I believe last year we're we sample 33,000 factories and converted a substantial amount of those to the 40 users. And so that happens year in year out and so we're always bringing new users into the brand. Combined with that we were very successful last year also in expanding our distribution and making our product more available to buy to buy with several under new points of distribution. And so it's a very simple formula that just works and the Chinese team are doing a great job of turning up the heat even further. So 17% local currency growth last year, 13.5% in US dollars with spectacular.
Unknown Executive: And so that happens year in, year out. And so we're always bringing new users into the brand, combined with that. We were very successful last year. Also in expanding our distribution and making our product more available to buy, to buy with several under new points of distribution open across the country. And so it's a very simple formula that just works in the Chinese team and doing a great job of turning up the heat even further. So 17% local currency growth last year, 13.5% in U.S. dollars with spectacular growth also on WD-40 Specialists, around 45% in U.S.
Unknown Executive: dollars. Okay. Well, I guess that's all I have then for now. Thank you very much. Thank you.
Speaker Change: Rose also under the 40 specialist around 45% in US dollars.
Speaker Change: Okay, well I guess that's all I have done for now. Thank you very much.
Unknown Executive: It is in gentlemen that those concludes are a lot of time for questions.
Speaker Change: Thank you. Thank you, Lynn.
Unknown Executive: Thank you for your participation in today's conference call and ask that you please disconnect your line.
Speaker Change: Ladies and gentlemen, that those concludes our all-in-time for questions. Thank you for your participation in today's conference call. And ask that you please disconnect your line. Thank you.
Unknown Executive: Thank you.
Speaker Change: things well more