WD 40 FY 3Q15 Earnings Call Notes

You will hear…

“You will hear that we reported net sales of $92.5 million for the third quarter which is a 3% decline from the third quarter of last fiscal year. Year-to-date net sales were $286.2 million which is a slight increase year-over-year. You will hear that the Americas performed very well in the third quarter with a 10% increase in net sales.”

“You will hear that Asia-Pacific is on track for a great year despite a product quality challenge we encountered during the quarter. You will hear that EMEA’s base business is strong, but reported sales continue to be impacted by significant currency headwinds and political and economic instability in Eastern Europe.”

Currency having a big impact

“In the third quarter nearly 40% of our revenues were generated in currencies other than the U.S. dollar, which means we are experiencing significant foreign currency headwinds particularly in EMEA. However, if you peel back the onion, our underlying business is performing well and in local currencies, seeing growth in all but a fuel-bound markets globally.”

What is “constant currency” anyways

“Since our results fluctuate due to the changes in foreign currency exchange rates, we also discussed our sales in what we call constant currency. For that we translate the current period results from the foreign subsidiary functional currency in the U.S. dollars at the same period last year exchange rates. ”

“But wait, there is more.”

It takes 90-120 days for lower commodity prices to impact COGS

“As we’ve shared with you in the past it takes considerable time, approximately 90 to 120 days for change in commodity prices to impact our cost of goods sold. All three trading blocks are net positive impacts to gross margin due to lower crude oil prices one of the primary feedstock’s of our petroleum-based specialty chemicals.”

Tell em what you told em

“In summary what did you hear from us on this goal? You heard that the Americas performed very well in the third quarter with 10% growth rate overall in revenue. You heard that Asia-Pacific is on track for a great year despite minor hiccup in the quarter there are up 9% year-to-date.”

Let me close with a quote

“So in closing, I’d like to share a quote with you with you from Mike Gafka. To be successful, you must accept full challenges that come your way. You can’t just accept the ones you like. “