Good day, everyone, and welcome to this WD-40 Company Fourth Quarter 2012 Earnings Release Conference. Today's call is being recorded. At this time, I'd like to turn the call over to Vice President of Corporate and Investor Relations for the WD-40 Company, Ms. Maria Mitchell. Please go ahead.

Thank you. Good afternoon, and thank you for joining us for our Fourth Quarter and Fiscal Year 2012 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 risk and uncertainties, which may cause actual results to differ materially from forward-looking statements, including the impact of commodity prices, impact of changes in foreign currency exchange rates, the impact of introducing new products 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 First Quarter Fiscal Year 2013 Earnings Call is scheduled for Tuesday, January 8, 2013. I'd like to also let everyone know that we issued a correction press release moments ago, and it reads like this: WD-40 Company today reported fourth quarter fiscal year 2012 sales and earnings. The company has noted a typographical error in its fiscal year 2013 guidance. In the company's guidance, it referenced fiscal year 2012 instead of 2013. No other changes. Garry will talk about this a little bit later if you have questions. I will, now, am pleased to pass it on to Garry Ridge.

Thank you. Good afternoon, everyone. Thanks for joining us. Today, we reported net sales of $84.9 million for the fourth quarter of fiscal 2012, a decrease of 6% from Q4 last fiscal year. Year-to-date, net sales were $342.8 million, an increase of 2%, versus the full same period of fiscal year last year. Net income in the fourth quarter was $9 million, compared to $10.2 million in Q4 last fiscal year, a decrease of 12%. Diluted earnings per share for the third -- fourth quarter were $0.56, down from $0.61 from the same period last fiscal year. Year-to-date net income was $35.5 million, compared to $36.4 million in the same period last fiscal year, and year-to-date diluted earnings per share were $2.20, up from $2.14 for the same period last year. We're disappointed with our results. Our sales for the fourth quarter were down 6% and only up 2% for the fiscal year. We did see a shift in some of the sales expected in Q4 in fiscal 2012 into Q1 of fiscal year 2013 due to promotional timing of promotions in Asia and Europe. Our gross margin in Q4 was 49.4%, up 120 basis points from the prior period, but below our 50% target. With lower sales in the fourth quarter, our cost of doing business increased from our target of 30% in the prior year period, to 32% in the most recent quarter. In missing our 50/30 targets, we also missed our 20% EBITDA target, coming in at 17% for the current quarter. Initiatives to improve our results did not fully offset the volatile market conditions we faced. Growth from innovation did not offset the uncertainty and slowdown in Europe. Price increases and cost of goods reduction initiatives implemented later in the fiscal year did not fully offset…

Garry, thank you. Just a reminder, in addition to the information that we'll present in this call, we suggest that you review our Form 10-Q -- or 10-K, excuse me, which will be filed on Monday, October 22. Now let's look at the rest of the financials, but first we'll look at our 50/30/20 rule. That's the measures that we use to guide our business. As you may recall, the 50 represents gross margin, which we target to be at or above 50% of net sales. The 30 represents the cost of doing business, which is our total operating expenses excluding depreciation and amortization. Our target for that is 30% or less. Finally, the 20 represents EBITDA. If our gross margin is at or above 50% and our cost of business is 30% or less, our EBITDA will be at or above the 20% target. EBITDA is earnings before interest, taxes, depreciation and amortization, and the descriptions and reconciliations of these non-GAAP measures are available in our 10-K and our investor presentations. First, looking at our gross margin, or the 50 in our 50/30/20 rule. Our gross margin in the fourth quarter was 49.4% compared to 48.2% in the prior fiscal year period. The increase of 120 basis points in gross margin was primarily driven by price increases, some lower promotional discounts and lower cost of goods in China. The favorable impacts from these were partially offset by higher expenses related to our North America supply chain architecture project, as well as unfavorable impact from changes in foreign currency exchange rates, as well -- and along with shifts in sales mix. Looking at the higher input costs, overall, we experienced the net unfavorable impact of 20 basis points in the quarter from our major input costs. We had a favorable…

Thank you, Jay. While we are disappointed with the results that concluded fiscal year 2012, we are very excited about the initiatives we have in place to improve our results in fiscal year 2013 and beyond. We have never been better prepared to tackle new opportunities, grow our leadership position in our categories and defend our business in the new normal of market volatility. Our fiscal year 2013 guidance assumes sales and gross margin will benefit from our strategic initiatives, that we will experience some recovery and improvement in business conditions in Europe and that foreign currency exchange rates will remain close to recent levels. Our guidance does not assume material sales from our new WD-40 BIKE company, or from WD-40 Specialist Motorbike initiative in Europe. These specialty channels have a different sales model and customer base, and we recognize that the sales buildup may be slower compared to our traditional multi-use product. In fiscal year 2013, we expect our fiscal year net sales and result to be in the range of $356 million to $370 million, or growth between 4% and 8%, versus fiscal year 2012. We project gross margin, gross margin to be close to 50%. We expect our global advertising and promotion investment to be in the range of 7% to 8% of net sales. We expect net income to be between $36.5 million and $38 million, which will achieve a diluted EPS of between $2.31 and $2.40, assuming $15.8 million weighted average shares outstanding. So in summary, what did you hear from us on this call today? You heard we were disappointed with our fiscal year 2012 results. We grew sales globally by 2% and fell below our gross margin cost of business targets. Despite these subpar results, we managed to grow our earnings per share…

[Operator Instructions] We'll take our first question from Liam Burke with Janney Capital Markets.

Garry, can we talk a little bit more about Specialist? You talked about gaining some traction. Is it because you're in more countries? Or is it because your earlier markets like the North America are beginning to show -- to show some measurable results?

Thanks, Liam. Stage 1 of Specialist was specifically aimed at launching into the United States, and the majority of the growth that we got from Specialist in the first year came from our business in the U.S. We see fiscal year '13 adding to that as we grow -- gain momentum in the U.S. and then we launched into Europe. We didn't start shipping there until Q2, but we got some good traction there. So we are very pleased with the progress with Specialist. The power of the shield has proven what we thought it might provide us with, and it's exciting because we believe that with Specialist, we can move what were once -- what we used to call mature markets. And they are markets like the U.S. and to a lesser extent, Canada and Australia and the U.K., into now developing markets again with growth. So it's a combination of both.

And just sort of staying on that line, you talked about your BIKE segment and your plans for that. Do you see any other significant -- or do you see additional segments that you can penetrate like BIKE with a WD-40 specialized brand?

Well, yes, that's really the whole basis, Liam, of our Specialist strategy. One of the things we were concerned about a long time, and I think you and the others who follow us would know is, as we went out, and if you will, line extended the WD-40 brand, we had a big right concern about how it would affect our what we now call our multi-use product, the blue and yellow can. So we kind of tippy toed into this a little bit, which we went on a pilot and the great thing that we found in the first year is that it had very little or no impact on reduction of volume of the WD-40 MEP product, which gave us a renewed confidence of where we can take it. And part of our plan going forward is developing in platforms or categories. Our first category was rust and corrosion, which -- and lubrication, which were the 5 or 6 products that we launched; we'll be adding 2 or 3 SKUs to that in January. BIKE is another one. The Motorbike program that we're running in the U.K. is another one. And then we've got a number of categories lined up behind that, that we're going to dig into a little deeper. But we would think that as time goes on, there would be a number of meaningful categories or platforms that can proudly wear the power of the yellow shield.

And Jay, real quick, did you give any sense as to what the tax rate will be in 2013?

I didn't share on the call, but we're targeting around 31.5%.

And we'll move next to Joe Altobello with Oppenheimer.

This is Christina in for Joe tonight. I was just wondering if you could provide a little bit more color on the sale shift due to the promotions -- timing promotions?

As we were coming into the fourth quarter, particularly in Europe, we felt that there would be a stronger end to the year than we had, and we didn't see the year end as we felt. We did see some movement of some of our business out of Q4 into Q1 in 2 areas in Europe and in our distributor markets in Asia. So that is something that we weren't totally able to anticipate. We can't -- we're not going to quantify it, but certainly, we had, when we were talking to you 90 days ago, expected that we would have had finished a little stronger in Europe, although we were saying all along that the year's going to depend on how Europe finishes and they finished it a little softer than we would have liked it. Jay?

I think that's exactly right, Garry. We had seen Europe being a little soft in that fourth quarter, but not to the degree that we achieved.

Okay. And then I was also wondering if you could talk a little bit your guidance for gross margin next year and what you think the North American supply chain initiative will -- how that will impact it?

We were targeting the 50%, as we said, in our guidance. That's what we've identified as kind of the area of margin. Now internally, we've got a little bit higher target, and we'll see some savings begin throughout the year in FY '13 from that. We haven't quantified the impact of the North American supply chain, our expectations around that yet, or at least we haven't shared that.

[Operator Instructions] We'll move next to Eric Hollowaty with Stephens Inc.

Jay, on the gross margin guidance for a moment, what can you tell us about your assumptions regarding tinplate and petroleum-based chemicals that are embedded in your guidance?

We're expecting them to be in the ranges that aren't too different than where we see them today.

Okay, all right. And Garry, I wanted to go back to your reference...

I'm sorry, Eric, there's a little bit of, kind of an upside cushion, if we see a little bit of lift in the prices. But it's really kind of current ranges and a little higher.

Okay, great. Garry, I wanted to go back to your discussion about Specialist in a reference I believe you made during your prepared comments, regarding BLUE WORKS, and the -- I'm not sure if you were getting at the potential or the actual observance of cannibalization there. But at any rate, my takeaway from your comments was that you're reevaluating the place of BLUE WORKS within your portfolio. And I'm wondering if that's fair and if you could expand a little bit more on that.

Sure, thanks. Be happy to, Eric. When we were initially looking at extending the WD-40 brand, we took the BLUE WORKS brand, and we branded it with the corporate logo of WD-40. And it was one of the ways that we could test to see whether the power of the corporate branding would -- what sort of power that would have. What we've learned then as we've brought Specialist into line is that power of the shield is much greater than the power of the corporate logo. And as many of the end-users may be the same, then we believe that we may see that Specialist will be the ultimate choice of those end users. We also limited the distribution of BLUE WORKS, primarily into the wholesale industrial channel, where Specialist is now in not only the wholesale industrial channel, but it's in big-box, big-box hardware and home improvement and about 50% of our people who do repair maintenance and overhaul in factories buy product from that trade channel. We never took BLUE WORKS intently to that trade channel. So we believe that we may see the shield, the power of the yellow shield, be the winner and if it does go and end up cannibalizing BLUE WORKS, so be it, because it would be much wider spread.

Understood. And any sense you could give us about the relative margins of those products? Are they comparable? Or is one better or worse than the other?

BLUE WORKS and Specialist are a comparable margin. In some cases, there may be some variances SKU-by-SKU, basically, they're high-performing product. The other great thing about -- that we've learned too about Specialist, is Specialist carry smart store and one of the things we've proven through this experiment as well is that smart store is very desirable, particularly for the trade end-users.

[Operator Instructions] And that does conclude our question-and-answer session for today. I'll turn it back over to you, Mr. Ridge, for any final or additional remarks.

Okay, thank you very much. Thanks for joining us this afternoon. Appreciate your interest and we'll talk to you again early in the New Year. Good afternoon.

And everyone, that does conclude our conference call. Thank you, all, for your participation.