WD-40 Co (WDFC) 2013 Q2 法說會逐字稿

Good day and welcome to the WD-40 Company second-quarter 2013 earnings release conference call.

Today's call is being recorded.

At this time, I'd like to turn the call over to the Vice President of Corporate and Investor Relations for WD-40 Company, Ms. Maria Mitchell.

You may begin, ma'am.

Thank you.

Good afternoon, and thank you for joining us for our second-quarter fiscal 2013 earnings call.

Today we are pleased to have Garry Ridge, President and CEO; and Jay Rembolt, Vice President and Chief Financial Officer.

This conference call contains forward-looking statements concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results.

These statements are based on an assessment of a variety of factors, contingencies, and uncertainties considered relevant by WD-40 Company.

Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from forward-looking statements, including the impact of commodity prices; the impact of introducing new product lines; and fluctuating global market conditions, both in the United States and internationally.

The Company's expectations, beliefs and projections are expressed in good faith, and are believed by the Company to have a reasonable basis.

But there can be no assurance that the Company's expectations, beliefs or projections will be achieved or accomplished.

The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including Forms 8-K, 10-Q and 10-K.

And readers are urged to carefully review these and other documents and to stay up to date with our most recent Company developments provided in the Investor Relations section of our website at wd40company.com.

Our third-quarter fiscal year 2013 earnings call is scheduled for Thursday, July 8, 2013.

At this time, I'd like to pass the call onto Garry Ridge.

Thanks, Maria.

Good day, and thanks for joining us for today's conference call.

Today we reported net sales of $86.7 million for the second quarter of fiscal 2013, an increase of 1% over Q2 last fiscal year.

Year-to-date net sales were $182 million, an increase of 6% over the prior-year period, and within the range of our current annual revenue growth guidance of 4% to 8%.

Net income for the second quarter was $10.5 million compared to $10.6 million in Q2 last year.

And diluted earnings per share for the second quarter was $0.66 compared with $0.65 for the same period last year.

Year-to-date, net income was $21.4 million, an increase of 23% over the prior-year period.

And year-to-date, diluted earnings per share were $1.35, up from $1.07 for the same period last fiscal year.

Before we focus on more detail on the sales results, I'd like to provide an update on how we are doing against our strategic initiatives through the second quarter.

Strategic initiative number one is to maximize the WD-40 brand.

Sales of WD-40 multi-use product increased by 6% in the second quarter compared with Q2 of last fiscal year.

We grew sales over 20% in our Europe and Asia Pacific trading blocks, and from Q2 of last fiscal year; and Q2 of this year was primarily due to the ongoing growth of our base business.

Strategic driver number two, which is to be a global leader in the Company's categories and products within our prioritized platforms -- we were happy to celebrate WD-40 Specialist one-year anniversary this quarter.

If you haven't taken a look at WD-40 Specialist, page 15 on our IR PowerPoint presentation, which is currently posted on our website, will give you a view of the complete range of current Specialist products in the United States.

We celebrated our success, which was a launch of the US and the Europe direct markets in the second quarter of last year.

And WD-40 Specialist has contributed incremental sales, and is solidifying our leadership position in the marketplace.

Strategic driver number three, which is around strategic business relationships -- we continued working on the building blocks for our long-term sales growth during the second quarter.

We did not find any acquisition opportunities that met our criteria in the second quarter, but we continue to explore partnerships for our next generation of WD-40 and 3-IN-ONE products.

Strategic business relationships enable us to go to market faster with less -- with more expertise and less risk.

Our strategic driver number four, which is global innovation efforts -- within the US, we launched three new SKUs under the WD-40 Specialist product line, and made progress towards the development of the new WD-40 Specialist lawn and landscape product line, which will be launched and fiscal year 2004 (sic - see press release, 2014).

In the UK, we prepared our upcoming launch for WD-40 Specialist MOTORBIKE products, which are expected to ship in the third quarter of this fiscal year.

These products will meet maintenance and repair needs among motorcycle enthusiasts and mechanics for uses in their garages or in the workshop, or even at motorcycle racing events.

During the second quarter, we also continued to build our user trial base and awareness of WD-40 BIKE products.

We were invited to provide bike support at the world-renowned UCI Cyclocross World Championships, which were held in the US for the first time in January.

This event gave us exposure to bike enthusiasts and pro cyclists worldwide.

On that headwind, the largest bike products distributor in the US began marketing our products online directly to independent bike dealers.

We also prepared for additional SKU launches which are expected in this third quarter.

Our strategic initiative, number five, is about our people.

Last but not least, under our fifth strategic initiative, we continue to attract, develop, and retain tribe members to execute on our vision.

In the second quarter we announced our Think Big initiative, which entailed a re-aligning of our tribe to better achieve our specific strategic goals.

The re-alignment included creating innovation teams at the trade block level, and providing opportunities for our sales and marketing tribe, who are currently focused on home care and cleaning products, to be able to be available for support customer and customer initiatives under our multi-purpose maintenance product platforms.

That completes the update of our strategic initiatives, so let's move on to the details of our second-quarter results, starting with sales.

While sales only grew 1% in the quarter, due to decreases in sales in the Americas, they grew 6% year-to-date.

And we expect our sales growth for the full year to be in the 4% to 8% range, as per our prior guidance.

Sales of multi-purpose maintenance products categories accounted for 87% of our global sales in the second quarter, with the category up 6% in Q2, and up 11% year-to-date compared to the prior fiscal year periods.

Products under this category include WD-40 and the 3-IN-ONE brand, as well as immaterial sales from BLUE WORKS brand, which are being transitioned to the WD-40 Specialist product line.

By trade block, sales of multi-purpose maintenance products in Q2 were down 8% in the Americas; up 19% in Europe; and up 20% in Asia-Pacific compared to the prior year period.

Home care and cleaning products accounted for 13% of global net sales in Q2, with the category sales down 23% in Q2, and down 14% year-to-date.

Brands under these categories include Spot Shot, 2000 Flushes, Carpet Fresh, No Vac, 1001, X-14, Lava, and Solvol.

By trading block, sales of our home care and cleaning products in the second quarter were down 28% in the Americas; down 14% in Europe; and up 6% in Asia-Pacific.

Now on to our results by segment; and let's start off in the Americas.

Sales in the Americas segment decreased 30% in the second quarter, and are down 1% year-to-date versus the prior-year periods.

The segment accounted for 46% of global sales in Q2 compared to 53% in the prior-year period.

Multi-purpose maintenance product sales were down 8% in Q2, but they are up 5% year-to-date.

Home care and cleaning product sales were down 28% in Q2 and are down 19% year-to-date.

The decline in both categories was driven by lower sales, particularly in the United States.

Total US sales were down 17% in Q2 and down 3% year-to-date, driven by lower sales of home care and cleaning products.

In the second quarter, sales of Carpet Fresh, Spot Shot and 2000 Flushes declined 54%, 33% and 30%, respectively.

Some of these declines were due to our strategic roadmap to reduce business in low-margin products which require significant trade discounts; while others stem from decreased promotional or reduced programs; some competitive activity and category declines within the warehouse club and mass retail channels.

Lower sales in the US during the second quarter also stemmed from multi-purpose maintenance products, which declined 11% quarter-over-quarter.

This was driven by a change in promotional activity completely.

We conducted a significant promotional program with a key customer during the second quarter of fiscal 2012 that was not repeated in the second quarter of the fiscal year.

, multi-purpose maintenance product sales in the US are on a positive trajectory, with growth of 5%.

Sales in Latin America were up 5% in Q2 and are up 6% year-to-date, driven by higher WD-40 sales in distributor markets.

Sales in Canada increased 2% in both quarter and year-to-date, primarily due to higher sales of 2000 Flushes and 3-IN-ONE.

Changes in foreign currency exchange rates did not have a material impact on sales in this region.

Now let's fly over the pond to Europe.

Sales in the European segment were up 16% in both Q2 and are up 16% year-to-date as compared to the prior fiscal year periods.

Changes in foreign currency rates had a favorable impact on sales year-to-date.

On a constant currency basis, sales would have increased 13% in the second quarter, versus 16%.

The segment accounted for 38% of our global sales in Q2 compared to 33% in the prior fiscal year period.

We sold into Europe through a combination of both direct operations in certain countries, as well as through exclusive geographic marketing distributors in other countries.

Sales in our European direct markets were up 14% in Q2, and are up 18% year-to-date.

We attribute the increase to new distribution, a higher level of replenishment orders from improved economic stability, as well as some small price increases implemented during the quarter in certain markets.

We sold through these exclusive independent marketing distributors in Eastern and Northern and Middle Eastern and African geographies, with virtually all of the sales consisting of the WD-40 brand.

These markets, called our distributor markets, in total were up 20% in Q2, and are up 14% year-to-date.

The distributor markets accounted for 31% of Europe's sales in Q2, compared to 30% in the prior fiscal year period.

Sales increased in all three distributor markets due to the continued growth of our base business, as well as the introduction and sales of the WD-40 Specialist product line.

Let's hop over to Asia-Pacific.

Sales in the Asia-Pacific segment were up 18% in the second quarter, and up 10% year-to-date.

The segment accounted for 16% of global sales in Q2, up from 14% in the prior fiscal year period.

Changes in foreign currency exchange rates, period versus period, did not have a material impact on sales.

Sales in the Australian operation increased 6% in Q2 and 10% year-to-date compared to the prior fiscal year periods.

The sales growth was attributed to stable economic conditions and the ongoing growth of our base business.

Sales in China increased 10% in the second quarter, and remained relatively constant year-over-year.

The increase in the second quarter was driven by a high level of promotional activity, period versus period, as well as price increase implemented during the first quarter of fiscal 2013.

Our long-term execution approach is working well in China, as we make WD-40 multi-use product more aware and easier to buy for our end-users in our target market segments.

Sales throughout the rest of Asia increased 31% in Q2, and 15% year-to-date.

The increase was due to continued growth of WD-40 multi-use product throughout the distributor markets.

Some worth noting were good performances in Indonesia, the Philippines and Singapore.

That's it for the strategy and sales update.

Now over to Jay, who will continue the review with some of our financial details.

Thanks, Jay.

Garry, thank you.

In addition to the information that we'll present on the call today, we suggest that you review our 10-Q, which we'll file on Monday, April 8. As we quickly look to the rest of our financials, let's first stop at our 50/30/20 rule.

As you may recall, the 50 represents gross margin, which we target to be at or above 50% of net sales.

The 30 represents our cost of doing business, which is our total operating expenses, with the exclusion of depreciation and amortization.

Our target for that is 30% or less.

And, then finally, the 20 represents EBITDA.

If our gross margin is at or above the 50%, and our cost of business is 30% or less, our EBITDA will be at or above our target 20%.

EBITDA is earnings before interest, taxes, depreciation, and amortization.

The descriptions and reconciliations of these non-GAAP measures are available in our 10-Q and in our investor presentations.

Now, looking at the 50, our gross margin in the second quarter was 50.9% compared to the 49.0% in the prior fiscal year period.

The 190 basis point increase was primarily driven by price increases along with lower promotional discounts, along with benefits from supply chain-related initiatives.

These favorable impacts were partially offset by higher input costs and the unfavorable impact from foreign currency exchange rates.

Looking at the -- more detail, we experienced unfavorable impact of 20 basis points from our major input costs.

Impact from changes in the cost of petroleum-based products in our aerosol cans combined to unfavorably impact our margin by 10 basis points.

Much of the impact was related to the higher costs for aerosol cans.

Changes in other input costs, including raw materials related to our home care and cleaning products, as well as valves and other components across our product lines, unfavorably impacted our margin by 10 basis points, period versus period.

Price increases, which we consider and implement on a country-by-country basis to help offset the impact of input cost increases, we -- in the period versus period, our gross margin improved by 90 basis points as a result of price increases that we had implemented over the past 12 months.

Our lower advertising and promotional discounts positively impacted our gross margin in the quarter by 90 basis points.

A lower percentage of sales was subject to promotional discount compared to the prior-year quarter.

And this is primarily the result of lower sales mix in our home care and cleaning products, as well as lower promotional discounts on these products themselves.

The cost of our promotional activities, such as sales incentives, trade promotions, coupon offers, cash discounts, that we give to our customers are recorded as a reduction in sales.

The timing and the magnitude of these typically cause fluctuations in gross margin, period to period.

Now we'll look at the impact of our major initiatives on our cost of goods.

We achieved lower manufacturing costs from our local sourcing project in China, as well as the North American supply chain project.

The lower cost result from these initiatives resulted in a positive impact on gross margin of 40 basis points.

China transitioned to local sourcing partway through fiscal 2012.

The lower costs that we've been able to achieve from that transition had a positive benefit of 30 basis points in the current quarter.

We began our North American supply chain architecture project in the second quarter of fiscal 2012 with the goal of improving service delivery to our customers and reducing our overall cost of our network.

During the period of transition, we have incurred additional costs to implement the new network, as well as reduce the number of our third-party suppliers.

In the current quarter, transition costs were more than offset by the savings we realized from lower manufacturing costs.

The net savings related to the project positively impacted our gross margin 10 basis points in this period compared to the prior year.

We completed the majority of transition activities at the end of Q2.

And we are expecting that the lower the net costs under the new structure to begin resulting in a net positive impact on margin going forward.

We experienced an unfavorable impact on margin as a result of changes in foreign currency exchange rates within our European segment.

And the impact was a negative 20 basis points on gross margin.

Cost of goods are sourced in pounds sterling, while revenues in that segment are generated in euros, pounds sterling, and the dollar.

Period versus period, the value of the euro deteriorated, causing revenues from the euro-based countries to be worth less in pounds sterling, thus eroding the gross margin in parts of our European segment.

All other miscellaneous impacts, combined, positively impacted our gross margin by 10 basis points for the second quarter.

The themes that we just discussed for the quarter related to gross margin also apply to the year-to-date results, where gross margin year-to-date was 50.5% compared to the 48.8% in the prior fiscal year period.

The 170 basis point increase was driven by price increases, lower promotional discounts, along with benefits achieved from the supply chain initiatives.

That completes the gross margin discussion.

Now let's move on to the 30, our cost of doing business.

In the second quarter, the cost of doing business was 33% of net sales compared to 31% in Q2 of the prior fiscal year.

Our goal is to have the cost of doing business to be at or below 30%.

Period versus period, our sales increased by 1% in Q2, while our operating expenses increased by 8%, causing a decrease in our cost of doing business percentage.

, the cost of doing business was 33% of net sales, the same as the prior-year period.

Approximately 71% of the cost of doing business came from three areas -- our people; our investments in marketing and promotion; and freight costs -- of which people costs were 40%; 18% for our investments in marketing and promotion; and 13% to get our products to our customers.

Now, a little more detail on the SG&A expenses.

In the second quarter, our Q2 -- our SG&A was $24 million versus the $21.9 million in the prior fiscal year quarter.

As a percent of net sales, it was 27.6% in the current quarter versus 25.5% in the prior-year period.

We had a higher employee cost of $2.4 million due to higher bonus expense accruals and higher compensation costs associated with annual merit increases and higher staffing levels.

This was partially offset by lower freight costs and lower professional service costs, as well.

SG&A expense year-to-date was $49.3 million versus $44.5 million in the prior fiscal year period.

And as a percent of sales, it was 27.1% in the year-to-date period versus 26.1% in the prior-year period.

Advertising, sales, promotion expense in Q2 was $5.3 million compared to $4.9 million in the prior-year period.

As a percent of sales, A&P investment was 6.1% in Q2 from the 5.8% in the prior-year period.

The increase in advertising, sales, promotional expense was related to increased activity in Europe and the Asia-Pacific segments.

Year-to-date, our advertising and sales promotion expense was $11.3 million, and was $1.5 million lower than the prior-year period.

Advertising and sales promotion expense as a percent of sales decreased to 6.2% year-to-date, down from the 7.5% in the prior-year period.

The decrease in advertising and sales promotion expenses was primarily due to lower costs associated with promotional programs that had been conducted in the Americas in the last year's period.

Amortization of intangible assets remained relatively constant at $0.5 million in Q2 compared to $0.6 million in the prior-year period.

Year-to-date, amortization was $0.9 million compared to $1.2 million in the prior fiscal year period.

Our total operating expenses in the current quarter were $29.7 million, versus the $27.4 million in the Q2 of last year.

Operating income was $14.4 million compared to $14.7 million in the prior-year quarter.

Year-to-date, total operating expenses were $61.6 million versus $58.5 million last year.

Operating income year-to-date was $30.3 million compared to the $25 million achieved in the prior-year fiscal -- prior fiscal year.

EBITDA, the last of our 50/30/20 measures, was 19% of sales in Q2, the same as the prior-year period.

Year-to-date, EBITDA was 18% to net sales compared to 16% in the prior fiscal year.

We target EBITDA, again, at the 20% of net sales.

But we do expect variations from time to time as sales, A&P investment, and other expenses fluctuate with the timing of our activities, as well as the fact that we do make investments out of this for future growth.

Other income in Q2 was $0.5 million due to foreign currency exchange gains, compared to near $0 net gains and losses in the last year's period.

Year-to-date, other income was $0.6 million compared to other expense of $0.2 million in the prior-year period.

We experienced foreign currency exchange gains year-to-date compared to foreign currency exchange losses in the prior fiscal year period.

The provision for income taxes in Q2 was 30.2% versus 28% in the prior fiscal year quarter.

Year-to-date, the provision for income taxes was 30.6% versus the 29.5% in the prior fiscal year period.

The lower tax rate in the prior-year periods reflect benefits from the release of uncertain tax position reserves associated with expiring statutes in the second quarter of fiscal 2012.

We did not have a similar benefit in the current fiscal year.

Net income in Q2 was $10.5 million versus $10.6 million in the prior-year quarter.

Changes in foreign currency exchange rates had a $0.2 million favorable impact on net income.

Q2 fiscal year 2013 results on a constant currency basis would have produced net income of $10.3 million.

Diluted earnings per share was $0.66 in Q2 compared to $0.65 in the prior fiscal year quarter.

Diluted shares outstanding decreased from 16.1 million shares to 15.7 million shares in this period.

Year-to-date, net income was $21.4 million versus the $17.4 million in the prior-year period.

Changes in foreign currency exchange rates had a $0.2 million favorable impact on net income for the year-to-date period as well.

Year-to-date 2013 results, on a constant currency basis, would have produced net income of $21.2 million.

Diluted earnings per share were $1.35 year-to-date compared to $1.07 in the prior fiscal year period.

And, again, diluted shares outstanding decreased from 16.1 million to 15.7 million shares.

Regarding the dividend, on March 19 the Board of Directors declared a quarterly cash dividend of $0.31 per share, payable on April 30, 2013, to shareholders of record on April 12, 2013.

Based on today's closing price of $52.82, the annualized dividend yield would be 2.3%.

A look at our financial position at the end of February 28, 2013 -- we focused on maintaining a solid financial foundation that supports our strategic initiatives.

Our strong balance sheet has healthy cash and short-term investment balances; low debt; and we have available additional liquidity under our $125 million line of credit.

This enables us to pursue our key initiatives; market expansion; new product introductions.

As of February 28, 2013, our cash and cash equivalents were $45.6 million, a level that more than supports our working capital needs, and provides us the ability to weather uncertain uncertainties in the capital markets and global economy.

We also had $29.8 million in short-term investments, which consist of term deposits and callable time deposits held in money center banks.

Our line of credit balance increased slightly from $45 million at the end of 2012 to $50 million at the end of the current quarter.

In addition to our regular dividends, which we target at a payout ratio of 50% of net income, we also returned capital to shareholders through share repurchases.

And during the second quarter, we acquired nearly 82,000 shares of our stock, at a total cost of $4.4 million.

These shares were acquired under our latest share repurchase plan, which was approved by the Board of Directors on December 13, 2011.

It provides authorization to acquire up to $50 million of the Company's outstanding shares through the planned end date of December 12, 2013.

Through February 28, 2013, the Company has repurchased close to 716,000 shares, at a total cost of $33.7 million.

We expect to continue executing on this program throughout the remainder of the year.

And that completes the financial overview.

Much more information will be available in our 10-Q, which will be filed, again, on Monday.

Thanks to you, and now back to Garry.

Thanks, Jay.

Progress on our strategic initiatives, as well as several macroeconomic factors, have impacted our outlook over time.

We feel more prepared than ever to capitalize on the opportunities the global economy may present us.

We'll not only benefit from some economic recovery with instability, but from our global leadership position, which is now in place around the world.

We continue to focus our people and efforts on developing new multi-purpose product offerings, and with the home care and cleaning products category continuing to represent a smaller portion of our business over time.

While we have harvested our home care and cleaning products to date, including reducing sales in low-profit products and channels, we continue to experience volatility and category declines.

In March 2013, the Board of Directors authorized management to evaluate strategic alternatives for the home care and cleaning products in the Americas segment.

To date, this evaluation is in its early stages, and no decision has been made relative to future strategic plans for these brands.

We are cautiously optimistic about several macro factors which include stability in the global economy, the major input costs, and foreign exchange rates stabilizing.

As for input costs, we hope that the recent stability in petroleum-based materials and aerosol can costs will continue in the near-term, and that our initiatives will help us maintain, if not grow, our gross margin.

Our sales and net income guidance remains unchanged from October 2012.

However, we are updating our earnings per share guidance based on the projected share repurchases.

The following fiscal year 2013 guidance does not include acquisitions or divestitures, and assumes that foreign currency exchange rates will remain close to the recent levels.

We expect our fiscal year net sales results to be in the range of $356 million to $370 million, or a growth of between 4% and 8% versus fiscal year 2012.

We project our gross margin will be close to 50%.

We expect our global advertising and promotional investment to be in the range of 7% and 8% of net sales.

We expect net income of $36.5 million to $38 million, which would achieve a diluted EPS of between $2.32 and $2.42, assuming 15.7 million weighted average shares outstanding.

So, let's sum up a little bit.

What did you hear from us today?

You heard that sales grew 1% during Q2, and that our sales growth of 6% year-to-date is on course with our current sales guidance.

You heard that we celebrated the first anniversary of WD-40 Specialist product line, with additional SKU launches in the United States.

You heard that we continue our innovation efforts as we prepare for the launch of WD-40 Specialist MOTORBIKE in the United Kingdom in the next quarter, and WD-40 Specialist lawn and landscape in the US in the early part of fiscal 2014.

You heard we realigned our talent to focus on training block execution of the WD-40 Specialist category development and innovation program.

You heard that cost savings from our local sourcing initiative in China and North American supply chain architecture project help us exceed our 50% gross margin Target.

You heard that we continue to return capital to shareholders by executing on our share buyback program.

You heard that our outlook is cautiously optimistic, and that we are maintaining our guidance with sales growth of 4% to 8% for fiscal 2013.

And you heard that these are exciting times for tribe members and shareholders at WD-40 Company.

In closing, as I normally do, I'd like to share of quote with you today.

And this one's from Abraham Lincoln.

To believe in the things you can see and touch is no belief at all; but to believe in the unseen is a triumph and a blessing.

Thank you for joining us today.

We'll be pleased to now open the call -- the conference for any questions.

(Operator Instructions).

Joe Altobello, Oppenheimer.

Good afternoon, guys.

Just a few questions here, I guess.

First, on Europe, you guys had a very good quarter here in Europe, and you've had a few good quarters in Europe.

You mentioned that you quote-unquote turned a corner, if you will.

And it sounds like some of the growth you're seeing is from new market entry or new channel entry.

But also a lot of the growth is base business growth.

So could you give us a sense for what you're seeing on the ground in terms of overall macro activity in Europe?

Are things really getting better at this point?

Yes, Joe.

When they weren't so good in Europe, it wasn't really because our end users weren't buying our product.

It was because there was a scare mentality in the distribution systems in Europe, and our promotional activity was pared back as they were reducing inventories.

We've seen two solid quarters, now, that -- not reoccurring.

We've got -- our promotional programs are solid.

Our support of bicycling in Europe has been great.

We've launched Specialist in Europe and had a good lunch around that.

And so, God willing and the creek don't rise, we feel that we're back on to what has been our traditional double-digit growth pattern in Europe -- which is continuing to make the end user aware and make it easy to buy, and putting more product in front of people who use more product where they shop.

Got it, okay.

And you mentioned Specialist; I wanted to go there next.

You've obviously put out three new products this quarter.

Do you guys worry that the proliferation of new products, if you will, on that line complicates the category?

Or are the uses that differentiated and unique?

Because one of the things I think most consumers like about the base WD-40 product is how useful it is, and how it does go from one category to the other, in terms of its flexibility.

Absolutely.

If you look at the two areas -- first, if you look at retail, what it's doing on the retail shelves is giving us a much larger brand footprint.

And the retail customer, the guy who uses $0.41 of WD-40 of year because he's mainly sitting on his shelf drinking his beer on the weekend -- he's going to continue to buy WD-40 and use the MUP product just as he always has.

Our heavier end users, the trades guys, the people who have -- DIYers and heavy users -- are already either using something in this area that is not the multi-use product -- I'll give you a typical example, Joe.

Let's assume that you are a big-time automotive DIYer.

WD-40 is a great penetrant; but sometimes there are opportunities to penetrate, let's say, a manifold on an exhaust that's really pretty well stuck.

Now, the end result, or the big answer to that, might be hit it with a blue torch, or you can use a better penetrant.

And one of our product lines is now the best-in-class 50-state VOC-free penetrant on the market.

Other areas where we are going is, there are products that WD-40 multi-use product doesn't compete with at all at the moment.

One of those is our rust remover soap product, a product where you put rusty parts in a liquid and leave it for a couple of hours, overnight; take it out; and the rust is gone.

Another area is in the new lawn and landscaping area we're going into, which is a whole new range of products under the WD-40 brand that WD-40 MUP does not solve any of those problems.

So what we have looked at is, and in our investor presentation -- we've upgraded it a little bit -- you'll see we've added some new slides that show you the platforms that we believe, through research, the brand has permission to go.

And then from that, dropping down to categories, which are more the verticals of where we think we can go.

Okay.

Understood.

And just one last one -- on the strategic alternatives for home care and cleaning in the Americas, how should we think about that?

Actually, more importantly, how are you guys thinking about that in terms of how you are prioritizing, let's say, things like earnings dilution versus the boost to growth that you would get from either divesting that business or shutting it down, or what have you?

Well, really, our position hasn't changed.

We've said for a long time now that home care and cleaning products are not long-term parts of our business.

And we've been harvesting from that.

And when the time is right, and when we feel it's right, we'll make a move to make them less part of our business.

And what we hope to be able to do that by supplementing the revenues with the growth that we are getting, and we're going to get out of, our Specialist product line, or maybe an acquisition.

But we're just really saying that we mean what we say.

Home care and cleaning products have done their job for us, where we love the revenue and the profitability of them still, but that's not where we are spending one strategic dollar.

Our strategic dollars are being poured into our new platforms around the WD-40 brand.

And the reason we're doing that now is because we've now got the global infrastructure to be able to take more things to more people in more places, faster.

Okay, great.

Thanks, guys.

(Operator Instructions).

It appears there are no further questions at this time.

I'd like to turn the conference back to management for any additional or closing remarks.

Thank you everyone.

We'll remind you that our investor presentation is on our website, and that the 10-Q will be filed on Monday.

And until we see you in person, or on the next call, we wish you a pleasant afternoon.

Good afternoon.

That does conclude today's conference.

We appreciate your participation.