Ladies and gentlemen, thank you for standing by. Good day and welcome to the WD-40 Company Fourth Quarter and Full Fiscal Year 2014 Earnings Conference Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the presentation over to the host for today’s call, Ms. Wendy Kelley, Director of Investor Relations and Corporate Communications. Please proceed.

Thank you. Good afternoon and thanks to everyone for joining us today. On our call today are WD-40 Company’s President and Chief Executive Officer, Garry Ridge; and Vice President and Chief Financial Officer, Jay Rembolt. Following their prepared remarks, the operator will come back on the line for the Q&A portion of our call. Before we get started, let me remind you that our earnings press release and current quarter corporate presentation are available on our Investor Relations website at investor.wd40company.com. A replay of today’s webcast will also be made available at that location shortly after this call. As a reminder, today’s call includes forward-looking statements about our expectations for the company’s future performance. Of course, actual results could differ materially. The company’s expectations, beliefs and projections are expressed in good faith that there can be no assurance that they will be achieved or accomplished. Please refer to the Risk Factors detailed in our SEC filings for further discussion. Finally, for anyone listening to a taped or webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today’s date, October 16, 2014. The company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise. With that, I’d now like to turn the call over to Garry.

Thank you, Wendy. Good day and thanks for joining us for today’s conference call. Today, we reported net sales of $97.6 million for the fourth quarter of fiscal year 2014, an increase of 4% over last year. Full fiscal year net sales were $383 million, also an increase of 4% over the prior year. Net income for the fourth quarter was $11.5 million compared to $8.1 million last year. Diluted earnings per share for the fourth quarter was $0.77 compared to $0.53 last year. The full fiscal year net income was $43.7 million compared to $39.8 million last year. Diluted earnings per share for the full fiscal year were $2.87, up 13% from $2.54 in the prior fiscal year and a record high for the company. Before we focus on the sales results, let’s review the progress we have made towards our strategic initiatives. Strategic initiative number one is to grow WD-40 Multi-Use Product. Our goal under the first initiative is to take the WD-40 Multi-Use Product to more places for more people with more uses. In line with this initiative, global sales of WD-40 Multi-Use Product increased by about 5% in both the fourth quarter and full fiscal year driven by our geographic expansion, increased distribution and a high level of promotional activities. During the fiscal year, we grew multi-purpose product sales by 12% in EMEA segment and 1% in the Americas and Multi-Use Product sales decreased about 2% in the Asia-Pacific segment. Strategic initiative number two is to grow the WD-40 Specialist product line. Our goal under this initiative is to leverage the power of the shield to develop new products and categories within identified geographies and platforms. The WD-40 Specialist product line continued to perform well with double-digit growth across all segments and with global growth at…

Thanks so much, Garry. In addition to the information that we are presenting on the call today, we also suggest that you review our Form 10-K for the year which will be filed next Tuesday. First, we would like to start with the review of our 50/30/20 rule, which really are the measures we use to guide our business. As you may recall, the 50 represents gross margin, which we target to be above 50% of net sales. The 30 represents our cost of doing business which is our total operating expenses excluding depreciation and amortization. Our target is to be at or below 30% of net sales. And finally the 20 represents EBITDA. If our gross margin is above 50% and our cost of doing business is 30% or less, our EBITDA will be above 20%. EBITDA is earnings before interest, taxes, depreciation and amortization. The descriptions and reconciliations of these non-GAAP measures are available in our 10-K and in our investor presentation which is available on our Investor Relations website. Now, a look at our gross margin or the 50 in our 50/30/20 rule. Gross margin in the fourth quarter was 52.7% compared to 53% in the prior fiscal year period. The slight decrease in gross margin was driven by unfavorable impacts from foreign currency exchange rates in EMEA, which were partially offset by a decrease in input costs. Though we cannot control the impacts of foreign currency on our results, we continue to be focused and deliberate on managing the rest of our business for growth in our gross margin. A look at our input cost. We experienced a net favorable impact of 50 basis points from our major input costs. This was driven by changes in the cost of petroleum-based materials along with the lower cost…

Thank you, Jay. This was a good year and we are pleased that we have been able to maintain growth across our business globally despite some bumps that were hit along the way. Most of you know that I prefer to look at this business over the long-term. I have often said that our performance in particular quarter, in any particular quarter is not as important as the long-term trends of our business. Through the focused and deliberate efforts of our hard working Tribe members, we made solid and steady progress in the last 10 years where we have been able to double our global sales in multi-purpose maintenance products. While we expect to see fluctuations in sales and in our financial results from time to time, we anticipate seeing continued growth driven by our strategic initiatives, which we believe will enable us to continue to deliver strong returns to our shareholders. So with that let’s turn to fiscal year 2015 guidance. The following fiscal year 2015 guidance does not include any future acquisitions or divestitures and assumes that foreign currency exchange rates will remain close to recent levels. Full fiscal year 2015, we expect our net sales results to be in the range of $398 million to $413 million, a growth of between 4% and 8%. We project gross margins to be close to 52%. We expect our global advertising and promotional investment to be in the range of 6% to 7% of net sales. We expect net income of between $45.1 million and $46.4 million which would achieve a diluted EPS of between $3.07 and $3.16 assuming 14.7 million weighted average shares outstanding. So in summary, what did you hear from this call today. Well, you heard my croaky voice from a little bit of a cold, but…

(Operator Instructions) And we will go first to Liam Burke with Wunderlich Securities.

Thank you. Good afternoon Garry. Good afternoon Jay.

Hey Liam.

Hi, Liam.

Garry, you – I think you quoted 34% increase in Specialist?

That’s correct.

That’s – is that heavily weighted towards the more mature or the more – the markets where you have been in at the longest like North America and is the trend working, are you satisfied with the trend in some of the newer markets?

Again, of course the growth continues to gain momentum particularly where we launched early. We are very comfortable and very happy with Specialist. It will be a long-term growth engine. We continue now to develop new categories and platforms. And it’s not only benefiting our revenues, but it’s also – of Specialist, but it’s also helping us to further expand out MUP business or our blue and yellow can business, Liam. An example of that is through the development of WD-40 Specialist Motorbike in the United Kingdom, we gained 450 new distribution centers for our MUP product through the motorcycle industry. So, we are very pleased with the continued success of the Specialist strategy.

And same in Europe, you saw distribution increase or sales through the distribution or indirect channel increased 16%, have you been adding distributors or are you just seeing stronger end user demand, you mentioned Russia and Eastern Europe?

No, we are not adding distributors it’s just further development of current markets. We, Russia, for example, I think we are pushing through the 12 million can mark there now. That’s probably doubled in the past 5 to 6 years. And then as you may recall, Liam, a lot of these markets have a long runway yet to go. So, it’s just more development of the markets that we are in.

Great. And Jay, I know that you have had to step up inventory to support the new distribution infrastructure you have had. Has that ramp up in inventory been completed and can we just expect it to run at this level now or numbers of turns however you want to measure it?

Yes. I mean, I think that we see the current inventory levels as generally sustainable. Although as we look forward, we do see some – a couple of events that would cause us to full inventory and a little bit above this level. As we look forward next year there are couple of activities that we are envisioning, dealing with, one is the conversion of our car product that would require us to increase some inventory. So – but, the current levels for the longer term sustained level are generally appropriate.

Great. Thank you, Garry. Thank you, Jay.

Thanks, Liam.

Our next question comes from the line of Linda Bolton-Weiser with B. Riley. Please proceed with your question.

Hi. I was wondering if you could just explain a little bit more about the disruption in Canada. I know that the recall is over with, but can you explain is it a matter of the retailers kind of being reluctant to take your product back or is it a technicality about getting a different product actually out there, physically like you are having….

That would be the second point, Linda. What we did is in the retail channel we pulled the Smart Straw product out. It’s got to be – it’s then replaced with the classic product. The selling price of the two is lower. So, we had a mix match of taking product back, refilling that pipeline, so that’s basically the offset, but it’s not a – there has been no negative reaction to the product overall.

So, then it sounds like that’s something that you can anticipate or project when you would have this smooth, so that things are back to normal. Was that soon, I mean, I think to recall this being an issue now for several quarters so?

Yes. We will lap it in the fourth quarter. So, it’s – well, there is a couple of things in Canada. We had a couple of events in Canada. One was we had the Smart Straw recall. The second was we had a downturn in one of the quarters, because Canada just had a horrible, horrible winter. So, that’s behind us I hope. But we – as we said in the call, we would believe that we are going to see Canada back on a growth trajectory as we start to now move through the new fiscal year.

Okay, okay. And then I think to recall last quarter in the discussion on the call about actually promos in the U.S. business that would kind of kick in, that would return the whole Americas segment to growth in the August quarter. So, I was a little surprised to still see it down. I know that Canada is still an issue, but did that promo happen as you had talked about or am I remembering things incorrectly or what happened there?

Well, I can put a little more flavor on that. In the U.S. for the full year, year-over-year our multi-purpose maintenance products grew by 2.45% in actual revenue dollars. The quarters were a little flat up or little more regular this year than they were last year. So but overall our business grew 2.45% in the U.S. for our core business which is the multi-purpose maintenance products business. We grew 7.3% in Latin America, the Americas grew 1.7% in total. The difference was in the full year our business in Canada was off about 16%.

Okay. And then – and this little acquisition you did in the UK, can you – I know it’s really small and your total sales in the UK I think are about $25 million if I am not mistaken, so even if this thing has $2 million of annual sales it’s going to add 8% to your sales next year in the UK, so am I thinking of that correctly and how are the margins of this versus your margins of your existing products there?

The GT85 business is small and what we are doing with it is we will have some impact on overall revenue, but it’s only small, but it does generate a reasonable level of EBITDA. We will however be investing that in our continued growth opportunities for both our bike and motorcycle business. So we will see a little revenue kick. We won’t –we will feel the full effect of the GT85 acquisition probably a year from now as it helps us build out our business in the total Bike segment. It’s kind of like a Trojan Horse, if you will. It allowed us to ride into the category with a head start, a bit like we used 3-IN-ONE in Spain and France some 15, 16, 17 years ago to establish ourselves.

Okay. And then – and can I just switch to asking you about the outlook for you input cost, certainly we are seeing very low oil prices these days and your growth margin was very nice in the quarter, why would it be if your growth margin was 52.7% in the quarter, why would it not be actually higher like closer to 53% going forward as you realize the benefits of these lower petroleum based costs?

Well, if we were able to realize the benefits of these petroleum – the lower costs over the full year, your analysis isn’t too far off.

So then your comment about gross margin being close to 52% is just a little on the conservative side for next year?

While we have seen – we have seen we are not really sure if this is a complete trend or if this is an event, this recent reduction, dramatic reduction in the price of oil.

Okay, alright. And I guess just in terms of your little bit of an increase in your share repurchase from $60 million over two years to $75 million, is that just a function of your confidence in the business or is there something else behind it and do you still intend to add debt while cash builds up on the balance sheet, is that how it’s going to go?

Yes. Well, just to be clear we didn’t take the $60 million to $75 million. The Board authorized the new $75 million on top of the $60 million. So once this $60 million is used which will be within the next quarter or so, we will then enter – we will then start into the new $75 million buyback program.

Okay. So its still – I thought both programs were over two years though am I my wrong..?

Well one – the first one was over two years, but if – they had a completion date of 2015. We have actually – we will actually complete that about 9 months early, because we are nearly through that $60 million now, so the new one has another two years to run basically at an increase level – at a new amount of $75 million. So over a three and a half year period, we would had a total authorization of $135 million which at this time we have used around 40 some million in the total $45 million.

Okay, thanks very much. I appreciate it.

Okay. Thanks, Linda.

(Operator Instructions) And we have a follow-up question from Linda Bolton-Weiser with B. Riley.

Hi. I thought I would just follow up just to get all my questions answered, but going back to the input cost, I think that you normally review your can contracts about once a year. Is that coming up soon or have you just completed and what would be the outlook for your can cost?

January is when we have our annual can cycle pricing that takes place. We don’t at the moment envision anything other than some level of current stability.

Okay. And then on the pricing side, I mean most of what we have seen lately is price increases to offset rising input cost, but now we are going into this lower oil price time period. Do you expect to realize price decreases on your products and if so how long would it take for that to flow through your income statement?

Well, we will be as deliberate in considering that as we are as deliberate as considering increases. So, at this time, we will do what we normally do, which is we will sit and see whether this current lowering of oil is an event or is it a longer term event or a trend, but we are not anticipating any price decreases.

Okay, great. And then just turning to the Asia region, I know that there had been this disruption from the distributor change.

Yes.

I am assuming that’s done and over with now. You did have pretty strong results in Asia in the quarter, so that’s all completed?

That’s done and we are lapping that. And we expect our Asian region to show reasonable growth in the upcoming year.

Okay. And then just one more question on A&P spending, your A&P ratio. I know that you say it will be in the 6% to 7% range, but if you really look at a trend, it’s really been slightly declining in the last couple of years?

Yes.

Is that due to efficiencies of spending or why is it declining?

Well, number one is a deliberate shift out of the household products, which have a much higher cost of promotion than our normal product range. And number two as we develop and launch our specialist product range, we are able to use the high level effect of the brand. We are not launching a new brand we are launching products under our brand. So, we are able to see, I think get better efficiency out of our marketing investments.

Right, I got it. Okay. And then on Specialist, I know you said it was up 34% in the year, but have you said how big it is just in terms of percentage of sales or absolute dollars or?

Not yet, but you will be one of the first to know when we do.

So, are MP/MP product sales – were they up in the year, excluding Specialist?

Yes.

Okay. Okay, I guess that’s all from me. Thank you.

Okay, Linda.