Ladies and gentlemen, thank you for standing by. Good day and welcome to the WD-40 Company Third 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 your 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 May 31, 2017. These documents are available on our Investor Relations website 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. The 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 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, 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, July 10, 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.

Thanks, Wendy. Good day and thanks for joining us for today’s conference call. Today, we reported net sales of $98.2 million for the third quarter of fiscal year 2017, which was an increase of 2% from the third quarter of last fiscal year and a new company record. Net income for the third quarter was $14.4 million compared to $12.7 million in the third quarter of last fiscal year, an increase of 14% year-over-year. Diluted earnings per share for the third quarter were also a new company record at $1.02 compared to $0.88 for the same period last fiscal year. Now, let’s start with the discussion about our strategic initiatives. Strategic initiative number one is to grow the WD-40 Multi-Use Product. Our most important strategic initiative is to take the blue and yellow can with a little red top to more places for more people who will find more uses more frequently. In the third quarter, global sales of multi-use products were up slightly compared to the same period of last fiscal year. The softness came from the Americas segment and was offset by stronger sales in Asia-Pacific and the EMEA segment. I will discuss these fluctuations in more detail when I review the results by segment. Strategic initiative number two is to grow the WD-40 Specialist product line. Once we have built 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. In the third quarter, global sales of WD-40 Specialist, was $7.3 million, which represents a 30% increase over the third quarter of last year. In fact, we had double-digit growth of WD-40 Specialist across all three trading blocks in the third quarter. The initial acceptance of our new WD-40 Specialist Greases…

Thanks, Garry. First, let’s review our 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 a 55% 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 30% of net sales. And that leaves us finally with the 25, which represents EBITDA. First, the 55 our gross margin, in the third quarter, our gross margin was 55.3% compared to 56.8% in the third quarter of last year. Net changes in major input costs, which include petroleum-based specialty chemicals and aerosol cans, negatively impacted our gross margin by 180 basis points in the current quarter primarily due to the increased cost associated with petroleum-based products. As you know, crude oil was one of the primary feedstocks of our petroleum-based specialty chemicals. This impact is even more pronounced in our EMEA segment, where cost of petroleum-based specialty chemicals are sourced in pound sterling, yet the underlying inputs are denominated in U.S. dollars. The overall strengthening of the U.S. dollar against the pound sterling from period to period resulted in a significant increase in cost of goods in pound sterling. Sales mix and other miscellaneous costs also negatively impacted our gross margin by 50 basis points primarily due to product shifts in the Americas. Advertising, promotional and other discounts increased compared to last year in our Americas segments and negatively impacted our gross margin by 20 basis points. The gross margin was also negatively impacted by 10 basis points, due to higher warehousing and inbound freight costs primarily in the Americas and Asia-Pacific. These negative impacts to gross margin were partially offset by changes in foreign currency exchange rates,…

Thanks Jay. In closing, let’s summarize what you did hear from us on the call today. You heard that we reported net sales of $98.2 million, a new record for the company in the third quarter. You heard that reported diluted earnings per share of $1.02, another company record. You heard that globally maintenance product sales grew 3% in the third quarter. You heard that global sales of WD-40 Specialists grew 30% this quarter and that we had double digit growth of Specialist in all three trading blocks. You heard that foreign currency exchange rates continue to be a headwind and on a constant currency basis reduced that net sales by approximately $4.7 million. Additionally, you heard that this reduction in sales was significantly offset by $2.6 million in transaction related impacts in EMEA due to the strengthening of the euro and the U.S. dollar against the pound sterling. You heard that we are maintaining our net income and EPS guidance for fiscal year, but that we are lowering our revenue guidance. So historically in closing today which is the last conference call we will do from the facility here in Cudahy Place, I would like to share with you a quote from Simon Sinek, it’s better to go slow in the right direction than to go fast in the wrong direction. Thank you for joining us today. And we would be pleased now to open the conference call for your questions. Thank you.

[Operator Instructions] Our first question comes from the line of Daniel Rizzo from Jefferies. Please proceed with your question.

Hi everyone, how are you doing?

Good, Daniel.

Very good. Thank you.

Could you just provide some color on the – you mentioned inventory management in the U.S., I was wondering if that’s going to persist and potentially through third quarter. And also I was looking for color on that, I guess you said something about shifting buying patterns, I just kind of wondered kind of what that means?

Sure. Thanks Daniel. At the end of third quarter of last year, we had a number of our customers in the U.S. that helped us in the completion of our 50-state VOC transfer to get to the full U.S. 50-state compliance, so there were revenues in the third quarter of last year that included those purchases that aren’t there this year. So those are the shifting buying patterns that we see. So I would not suggest you that this is a systemic issue, it’s more of an event than a trend.

Okay. And then so that’s what you are talking about inventory overhang as well, then?

Correct.

Okay. And then it just seem like also that the Americas EBIT was up significantly sequentially year-over-year versus everything else, I was wondering I mean given some of the inventory de-stocking issues and some of the near-term headwinds you had while that is like I just was wondering why you have done so well with that?

Well, a couple of reasons. Number one is that our operating expenses, the leverage was greater in the quarter than before. So, I think that’s number one. Number two is that the U.S. is not going to maximize its GRP, which is our growth reward program this year, which is how a number of our pay-for-performance elements are established for our U.S. based employees. So, some of our employee costs and accruals are down for the year, but I think that given the state of the business, I think it’s because the tribe are managing through different waters, yes, pretty well. And if you look overall, our household products were down 5% and they continue to decline as part of our total revenue, which we have been talking about for many years now. Our core business is growing. And if you were to take out the currency fluctuations, our core business is growing at a reasonable rate. So, there is a lot of noise I think in the reporting, and if there has been particularly because of currency for a while, but our core business is doing well and we will continue to work towards our long-term goals, which we are still very comfortable with and intend on delivering on over time.

Alright, cool. Thank you for the color.

You’re welcome.

Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation on today’s conference call and ask that you please disconnect your lines.