Ladies and gentlemen, thank you for standing-by. Good day and welcome to the WD-40 Company First Quarter Fiscal Year 2017 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. In addition to the financial information presented on today’s call, we encourage investors to review our earnings presentation, earnings press release and Form 10-Q for the period ending November 30th, 2016. These documents are available on our Investor Relations Web site at investor.wd40company.com. A replay and transcript of today’s call will also be made available at that location shortly after this call. On today’s call, we will discuss certain non-GAAP measures. Descriptions and reconciliations of these non-GAAP measures are available in our SEC filings, as well as our earnings presentation. As a reminder, today’s call includes forward-looking statements about our expectation 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, but 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 discussions. Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today’s date, January 9th, 2017. 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 89.2 million for the first quarter of fiscal year 2017, which is a decrease of 4% from the first quarter of last year. Net income for the first quarter was 11.8 million compared to 12.1 million in the first quarter of last fiscal year, a decrease of 3% year-over-year. Diluted earnings per share for the first quarter were $0.82 compared to $0.83 for the same period last year. Now let’s start with a discussion about our strategic initiatives. Strategic initiative number one is to grow WD-40 Multi-Use Product. Our most important strategic initiative is to take the blue and yellow can with the little red top to more places, for more people, who will find more uses more frequently. We believe we can grow WD-40 Multi-Use Product to approximately 600 million in revenue by the end of fiscal year 2025. In the first quarter, global sales of Multi-Use Product were down 7% compared to the first quarter of last year. Despite the choppy start to the year we have many exciting things planned for the blue and yellow can with a little red top during fiscal year 2017. We will begin expanding distribution of our newest innovation, WD-40 EZ Reach Flexible Straw to other geographies beginning with Australia later this month. In EMEA, we will increase the rate of converting European end users to our more innovative Smart Straw delivery system. Strategic initiative number two is to grow the WD-40 Specialist line. Once we’ve build our brand equity and established the power of the Shield in a particular geography we can leverage that brand recognition to develop new product lines like WD-40 Specialist. We believe we can grow WD-40 Specialist…

Thank you, Garry. First, let's review the 55/30/25 business model. The long-term targets we use to guide our business. As you may recall, the 55 represents gross margin which we target to be at 55% of 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 30% of net sales and then finally the 25 represents EBITDA. First the 55 or our gross margin, in the first quarter our gross margin was 57.2% compared to the 55.6% in the first quarter of last year. For the first time in several quarters’ net changes in the cost of petroleum based specialty chemicals and aerosol cans did not have an overall impact on our gross margin. Although the net changes in the cost of petroleum based specialty chemicals did not have an impact, we did experience a net positive impacts on gross margin from costs in our Americas and Asia Pacific segments. However these were fully offset by unfavorable net impacts in our EMEA segment. While the cost of petroleum specialty chemicals for our EMEA segments are sourced in pound sterling, the underlying inputs are denominated in U.S. dollar and as a result of the strengthening of U.S. dollar against the sterling, we saw a significant increase in the cost of goods in pound sterling. Just changes in foreign currency exchange rates had a positive impact on our gross margin as well. This is because in EMEA our cost of goods are primarily sourced in pound sterling while approximately 45% of our revenues are generated in Euros, 30% in pound sterling and the remaining 25% in U.S. dollars, the combined effect of the strengthening of both the Euro and the U.S. dollar against the pound sterling caused…

Thanks Jay. So, let's sum up of what you heard on this call today. You heard that foreign currency exchange rates continue to be a headwind, and on the current constant currency basis reduced our net sales by about 5.9 million. And additionally you heard that that reduction in sales was significantly offset by 4.2 million in transaction related impacts in EMEA due to the strengthening of the Euro and the U.S. dollar against the pound. You heard that the global sales of WD-40 Specialist were 5.8 million in the quarter representing a 36% increase compared to last year. You heard that our EMEA direct markets are performing very well. You heard that our Australian market is performing well with 8% growth in functional currency, the Australian dollar. You heard that in China we recently added a 121 new accounts in an effort to make WD-40 Multi-Use Product even easy to buy. You heard that we increased our dividend 17% last month and we've been increasing that dividend for seven consecutive years resulting in a 96% increase over that period of time. You heard that we’ve reaffirmed our fiscal year 2017 guidance. In closing I'd like to share a quote from a British author, Neil Gaiman. I hope that in this year to come you make mistakes because if you're making mistakes then you're making new things, trying new things, learning, living, pushing yourself, changing yourself and you're going to change the world. Thank you for joining us on the call today. We'd be more than pleased to now open the conference call to your questions.

[Operator Instructions] Your first question comes from the line of Liam Burke with Wunderlich. Your line is open.

Garry, through the balance of the year do you have any major promotional activities scheduled or is it just going to be the usual ones that you have planned in the past?

Nothing outside of what our stated plan was, which include a number of different promotions with a number of different customers in a number of different geographies, Liam.

And on the Specialist side you mentioned that you introduced a grease product into the Americas. How does the pipeline on some of these -- some of those types of products of Specialist look?

We will be releasing out degrees of range later in the year and we now have distribution of that grease lines through Home Depot. If you’d like to go see it, you can go see it there. We’ll be progressively rolling that out. But the greases and our new degrees of line [ph] are the two biggest Specialist launches this year with the continuation of course of added distribution in the U.S. of our WD-40 Specialist spray and stick gel and then a number of other Specialist products in selected geographies around the world. You noted that Specialist grew 36% in the first quarter, so we’re pretty happy with our trajectory on that at this time.

Super. And then just quickly on China, you mentioned the 121 new accounts, I know you have a strong long term outlook for China, does these new accounts accelerate your expectations there or is it pretty much on plan?

I think what it will do is, it was a planned move, our initial move in China was to overtime build distribution to match consumption. Then as we continue to build consumption we can now add new distribution which eliminates the fear of actually demotivating the current distributers. So for 10 years now we have been building to the business that’s now at a run rate of several as you know million dollars having 15 million. So we are in the next year going to start to actually push out the distribution to now fill the gaps that we think of there. We will do another distribution drive and add more accounts again probably in the third or fourth quarter of this year.

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

So I just wanted to make sure I understood what you said about the petroleum based input cost, I think you said overall it was neutral effect on gross margin. But did you say it was positive in some regions and negative in others. Can you just repeat that?

Yes, that’s exactly right. What we had in the Americas and Asia Pacific is we actually continue to get a net benefit. But when we look to the impact in Europe and EMEA what we saw was their cost of goods were rising for these types of products the input cost associated with the petroleum base products. So that was primarily due to the fact that the sterling has weakened and so they have been seeing kind of an inflation in their cost base.

Okay, so you are saying there is some sort of a currency effect on the actual input cost?

Yes, exactly. Right. While the cost of dollars are the same because of the change in dollar and sterling their sterling acquisition of these inputs are much higher than they were a year ago.

Okay. So and can you just tell me what was the quantification of the other effect, the FX effect in the EMEA region that’s a separate number, what was that in the quarter?

It was the 160 basis points.

It's fairly significant, let me quickly flip to that. 160 basis points.

Okay, and I seem to recall that's a little more positive even than it was last quarter which makes sense, but my read of things, it actually will get less of a positive going forward after this, is that a correct projection of that sort of --?

Well as long as currency stays the same it would, but we don’t really know what's going to happen with currencies.

Right, yes I meant if the British pound were to stay where it was.

Right. Yes.

Okay, alright. So I mean there is lot of puts and takes obviously than in the gross margin, but I mean I guess I was originally projecting or thinking maybe the gross margin would start to be down year-over-year in the third quarter, is that something that's accurate or might we even see gross margin decline in the second quarter year-over-year. I know you don’t want to get into quarterly guidance, but maybe you could help us understand how the pieces move?

Well, I think what we've seen is, we're seeing gradual increase in the price of oil and as that gets into our supply chain and then gets into our inventories and into the customer base then we’ll start seeing that increase because of petroleum based input cost. The timing of that what we see as if -- we say about a 120 days, sometimes we see that comes though earlier, sometimes in the case of the kind of the recent declines over the last year or so we've seen that kind of lag quite a bit further than that, as we get the benefits. Now when it comes against us, we tend to see that quicker.

Okay, thank you that's helpful. So would you still say that your planning range, are you still just kind of thinking and your planning range for guidance is $45 to $60 roughly per barrel of oil?

Yes, that's what was in that planning range.

Okay, and the -- can I just say on the sales performance, granted it's hard to project quarter-by-quarter for you guys and sometimes it's strong against strong and weak against weak, but you did have your weak -- your easiest comparison in this quarter, so I was relatively optimistic. I guess the Russia piece was a lot weaker, but how can we have confidence that you are going to come through with stronger growth when the comps get harder in the second half?

Well, let's talk about the business without all of this static and noise for a minute, Linda, because that's really hard to look at. But I'm looking at a sheet of paper in front of me that lists all of our major geographies and it has green arrows and red arrows on it in relation to transactional currency sales. And if I look firstly in the United States, we had a softer first quarter in the U.S. versus last first quarter and we know why. I've often said that we don’t mix well with Barbie dolls and Barbeque sets at Christmas. Last Christmas, we had a compelling reason to have that floor space, we launched Easy Reach Flexible straw and we got it. So that last first quarter last year had that in it. In Latin America, we've got a whole mix going on with the political climate in Mexico which is causing the business climate down there to be uncertain. So for the rest of the year, and then in Canada we’re up about 2% in our transaction currency for the year. So the main market which the U.S. is we can see in quarters two, three and four significant opportunities that have revenue growth because of programs, promotions and activities that were going on. So our big mark at the U.S., we are going to see that growth. And we’ve got a little wash in this quarter. In EMEA, when I look down this list, in transactional currencies, we’re growing 7% in pounds in the UK, in Benelux 17, in France 9 in Euros, in Iberia 15, in Italy 18, across the whole EMEA market in transaction currencies we grew 10%. Unfortunately when it moves across and it goes through the two currency impacts it looks ugly like…

Okay thanks Garry, I appreciate that. That’s it from me. Thanks.

Your next question comes from the line of Daniel Rizzo with Jefferies. Please proceed with your question.

You mentioned increasing distribution in Asia, I was just wondering if I'm thinking about it rightly when would you shift to maybe doing direct sales in that region versus like as it's kind of progressing in EMEA and obviously in the U.S., I mean is there a timeframe in the future where we kind of do like a transition to doing to more of a direct model?

No, what I said Daniel is we are increasing distribution in China, and China is already a direct market and we increased distribution by adding 121 new accounts in China. At this time, we have no plan on converting any other marketing distributors in Asia to direct markets. Our only direct markets in Asia are Australia and China.

All right. Thank you for clarification. And then with the easy straw you said, I mean it was down year-over-year just because of the promotional activity in the initial launch last year. Is that something that kind of ticked into the next quarter, or is it just something just for this quarter and we’ll figure out as we go forward?

It was all in the first quarter of last quarter. That was the major launch. That was when we took floor space in most of the major home improvement and Big Box hardware store in the United State, easy reach flexible store is doing well, we just had that big selling in the first quarter of last year.

Okay, thanks. And then finally, I think you mentioned in the press release something about the stocking -- inventory destocking in Europe being kind of an issue in the quarter, but I didn't know if you followed up with that on the Conference Call here, so I was just wondering if that's something that's going to be something that maintains monitoring for the next couple of quarters as well?

What I said was in Russia only, our Marketing distributer in Russia is normalizing their inventory. Over the past 18 months or so Russia has been a basket case as we all know and we went through a period of time of very severe sales declines in market, our distributor had stock, we now feel that that has started to normalize, so we do know that distributor does have a confidence of what the forward looking output in the market is, which is actually output in the market from our distributor at the moment, is up on last year. So what that was doing is basically balancing their stock which means they bought less from us for a period, we should see that normalize as we enter this quarter and the next two quarters.

Alright, again thank you for the clarification.

Thank you, Daniel.

Your next question comes from Linda Bolton Weiser with B. Riley, please proceed with your question.

Hi again, so you know I was reviewing, you have so many initiatives for growth, I am reviewing the list of things you had talked about in the last call and can you just mention, are you still planning and did it launch yet, the expansion into the U.S. of the motorbike line and then secondly, the three-in-one recreational vehicle line, when does that launch?

Yes, the three-in-one recreational vehicle line, we’ve started our initial distribution of that, you should see it, if it’s not in some stores it should start to be soon. I can't remember exactly when and motorcycle has not yet gone into distribution. It will but we're waiting for shelf slotting in a major customer. We expect that to come soon.

Okay, thanks a lot.

Thanks Linda.

Ladies and gentlemen that does conclude our allotted time for questions, we thank you for participating on today's conference call and ask that you please disconnect your line.