Ladies and gentlemen, thank you for standing by. Good day and welcome to the WD-40 Company First Quarter Fiscal Year 2015 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’d 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 ma'am.

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 the call. Before we get started, let me remind you that supporting materials for this call are available on our Investor Relations Web site at investor.wd40company.com. In addition to our traditional disclosures, the Company has published an earnings presentation which can be downloaded from this Web site. We encourage investors to review this presentation in conjunction with today’s prepared remarks. 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, January 7, 2015. 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, and good day all and thanks for joining us for today’s conference call. Today, we reported net sales of $96.4 million for the first quarter of fiscal year 2015, which was a 1% increase from the first quarter of last fiscal year. Net income for the first quarter was $10.8 million compared to $11.5 million in Q1 last year and diluted earnings per share for the first quarter was $0.73 compared to $0.74 last year. Before we dive into the sales results, I’d like to take a moment to update you on the progress around our strategic initiatives. Strategic initiative number one is to grow WD-40 Multi-Use Product, affectionately known as MUP. Our goal under this first initiative is to take WD-40 MUP to more places for more people with more uses. Although global sales of WD-40 Multi-Use Product were nearly flat in the first quarter of this year’s compared to the first quarter of last year, we saw a growth of MUP sales in both of the Americas and Asia Pacific segments. In fact, we experienced double-digit growth in several markets within our Asia Pacific segment, primarily within our distributor markets in the Asian region. The sales growth of the WD-40 Multi-Use Product that we experienced in the Americas and Asia Pacific was entirely offset by a decline in EMEA, primarily due to the unfavorable impacts of foreign currency and a decline in orders following a heavy promotional period in the fourth quarter of last fiscal year. I’ll discuss this decline in EMEA in more detail when I review the results by segment. Finally, we look forward to sharing with you in the near future new initiatives we’ve planned for the WD-40 Multi Product -- Multi-Use Product line later in the year. Strategic initiative number two…

Thank you, Garry. In addition to the information that we are presenting in this call today, we suggest that you review our Form 10-Q for the quarter, which we will file tomorrow. First, a quick review of our 50/30/20 rule, that’s the measures that we use to guide our business. And as you may recall, 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 at or below 30% of net sales. And finally the 20 represents EBITDA. If our gross margin is above 50% and our cost of business is 30% or less, our EBITDA will be above 20%. EBITDA is earnings before interest, taxes, depreciation and amortization. And the descriptions and reconciliations of these non-GAAP measures are available in our 10-Q and in our investor presentation which is available on the Investor Relations Web site. Now a look at the 50 or our gross margin in the 50/30/20 rule. Gross margin in the first quarter was 51.6% compared to 52% in the prior fiscal year period. The slight decrease in gross margin was driven by the impacts from foreign currency exchange rates in EMEA, and costs associated with increased promotional activities in the Asia Pacific and the Americas regions. These unfavorable impacts were partially offset by decrease in input costs along with price increases. Though we cannot control the impacts of foreign currency on our results, we continue to be focused and deliberate in managing the rest of our business for maximum growth in our gross margin. We experienced a net favorable impact of 80 basis points from our major input costs. This was driven by changes in the cost of petroleum-based special…

Great. Thank you, Jay. Most of you have heard me say many times that I look at our business over the longer term, and that performance in a particular quarter isn’t not as important as the long-term trend of our business. Our progress in this quarter should be viewed with this perspective. Our global business and our results are subject to ebbs and flows of many things including changing foreign currency exchange rates, political un-risks, from the changes in input costs just to name a few. However well we expect to see fluctuations in our sales and in our financial results in particular quarters, we anticipate seeing continued growth driven by our strategic initiatives which we believe will enable us to continue to deliver strong returns to our stockholders over the longer period. Therefore, our fiscal year 2015 guidance is as follows. This guidance does not include any future acquisitions or divestiture activity. We expect our global fiscal year sales to be in the range of $398 million to $430 million, and that’s a growth of between 4% and 8%. We project our gross margin to be better than 52%, that’s a slight upward revision from our last quarter guidance. We expect our global advertising promotion investment to be in the range of 6% and to 7%. We expect net income 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. We are comfortable with our current guidance range for net income, but there are global market dynamics going on outside the company’s control that may have offsetting effects which could impact specific elements of our guidance. These include the recent decline in the price of crude oil and the present trends in foreign currency exchange…

[Operator Instructions] Our first question comes from the line of Liam Burke with Wunderlich Securities.

Good afternoon, Garry.

Hi, Liam.

Garry, part of the cost of doing business is, you talked about additional investments in brand protection and new product development. That’s right off the slide. In terms of new product development, which way you’re looking? Are you looking to develop another vertical like BIKE or something to leverage of the WD-40 brand?

Currently the majority of the -- well, let me put it -- divide it. There is longer term development which would include new specialist areas, but we’ve been doing a lot of work around WD-40 MUP. And as I mentioned in the call earlier, we’ll be sharing later on in the year a -- what we consider to be a new and an exciting development under the blue and yellow can. On top of that we’re also working on extensions of the specialist product line particularly in categories that we identified have some longer term growth opportunities.

Okay. You mentioned BIKE and that looks to be another developed product line here. You made the acquisition of the GT85. How is that progressing vis-à-vis your expectations?

We’re very encouraged with the initial launch in Europe with WD-40 BIKE. We are now selling our BIKE products in all three trading blocks, and that currently now during this slow season, this winter season in the northern hemisphere building distribution out for the summer season that will come. So, we’re in the BIKE business. We see it as being a meaningful and developing business over time, and we’re integrating GT85 into our network. So overall, I think we feel comfortable at the positioning of BIKE and we’ll look forward to continuing to build it to a meaningful part of our revenue, but it will take time.

Great. Thank you, Garry.

Thanks, Liam.

And our next question comes from the line of Linda Bolton-Weiser with B. Riley.

Hi. Happy New Year to you guys.

Happy New Year, Linda.

Happy New Year as well.

Could I just ask you to clarify on the currency impact elements? When you were talking about the EMEA region, can you just clarify once again the total FX impact on the sales in the EMEA region for the quarter, in millions of dollars?

Are you looking at the percent changes?

Well, either give it to me in dollar, what sales would have been in local currency versus in dollars or give me a percentage impact, yes.

Let me just take a quick look at this Linda. So we’ve got -- again the challenge in EMEA is that we have a currency impact on translation that is taking the sterling results and translating them back into U.S. dollars and that would have changed. So for example we ended up -- our current results were $34.6 million and had we not had the changes in currencies on translation we would have been at $33.8 million. Now again as Garry said, we also have changes in the sterling results that occur as the sterling changes against both the dollar and the euro and that had a -- in period to period, there was effectively an 8% change in the euro over that period and about 3% change in the dollar.

Okay. So, I guess what I’m trying to get at, as an analyst I’m trying to project for the year what that currency impact on your sales will be for the full year? And I guess I had been modeling maybe negative 1% to 1.5%, is that at the ballpark range? Or can you help us out with that in any way?

Well, if rates stay at the current levels it would be more than that.

Okay. Can you give some rough idea given where rates are now?

We haven’t provided an outlook that basically locks in current rates throughout the remainder of the year. We haven’t provided that.

All right. And then did the small acquisition even though it was very small in the UK, did it make any favorable effect on sales growth in the EMEA regions?

It was only small Linda, a few hundred thousand, that’s all.

Okay.

We’re still very much in integration mode of that. We haven’t started to expand its distribution yet. We have to tuck it into our system, and we would expect to start to ramp up that activity after February.

Okay, all right. And then, it seems that one of the difficulties a little bit with projecting everything for you guys quarter-by-quarter is just the timing of your promotions, and I know you’ve always cautioned that. So, if this was a -- I guess, I’d say with heavier promotion last quarter especially in EMEA you mentioned and that was lighter now. Is there any way to project, I mean you’re sort of in the midst of your next quarter. Is the next quarter going to be normal or is there any sort of shift that you can tell us about ahead of time to help us out?

We would expect that -- we would expect EMEA in the second quarter to show growth. We have a lot of activity. We would expect quarters two and three to be particularly active this year given what we know in EMEA given some launch of some new products that we have got planned. So, to be honest with you, Q1 was not a disappointment to us, but we haven’t got quarteritis and we don’t get quarteritis. So the things -- the two things that are confusing us at the moment is the impact of oil in foreign currencies. The underlying trading in the business, we have a very good handle on it Linda and feel really good.

Okay, all right. So, just the oil issue of course we’re all watching these, these low oil prices. I actually try, I don’t know if I’m looking at the right exact thing, but I try to monitor from Bloomberg a commodity that it might be similar to what you actually use and it looks like that’s down also, not down quite as much as oil, but it is starting to really be down quite a bit double digit year-over-year. So, is it just a matter of the lag before if the inventory that you have rolled off and it flows into you income statement. Is that kind of the timing lag that you referred to?

Well, two things. Firstly, if you think about the quarter we’ve just been in, although we’re talking about it. Oil prices started the quarter at $95 and ended the quarter around $80. So well really we’re looking at a quarter that was very similar to all the quarters we’ve had in the past, and in fact if you look at the last two quarters, if we started at a $100 and end it up at about $80. So finally and up it was right within our band and we had movement within the quarter. Then you saw oil drop from about mid October to now. So, again we are now watching the impacts of that, and its going to take time for A; the inventory that we have in the system to move through this make; the new inventory to come into the system and get into this make and then move through this make. And on the input, in the input cost not all of them, and as Jay shared there’s only a portion of them that react closely to oil, the others react at different times because they’re processed and manufactured. So, this is an interesting time for us. We have never really reflected at it going down like this. We know that whenever prices go up we feel them sooner and harder. And now we’re saying, where is the reduction for the price coming down? There is no doubt in our mind that lower oil prices are a good thing for gross margin going forward. We’re still working out how much, how long and that’s why we revised our guidance to say instead of close to greater than or better than the $52 that we have now. We hope to learn more on the way it flows into our business in the next 60 to 90 days.

Right. I understand totally. So, can you give us a feel Garry for how you think about, if you do -- if oil does stay down and you just start to experience these benefits; how do you think about like reinvesting some back into your growth initiatives in the company? Would you tend to do that? Or can you just think of like how you think about that in your business?

Well, I think the thing that we do think about is our end users a lot. And if oil stays at a low number for a long period of time and we don’t know that yet, because if I go back to 2008 and 2009, it was down around these numbers all over then but it bounced back again. But the thing we don’t want to do is we don’t want to unnaturally impact regular pricing because it just whiplashes the whole business. What we may do is increase the value proposition to our end users by running different or new promotions that would might get us new distribution, we really want to make sure that we continue to grow and to have a strong gross margin, but we also want to recognize the fact that we want to continue to deliver great value to our customers, into our end users. So we’ll be watching that closely. It’s a topic of constant conversation in the company right now because we don’t know, but we’ll decide going forward.

Great. That sounds good. And then just finally, I know you had tested this Lawn & Garden line I think in Australia. Do you have any further information on that? I mean could we see a launch more broadly come this spring?

We’re still waiting, its still summer time in Australia. They are not suffering the cold that we in some parts of the U.S. are as you know. And when we get that back we’ll let it know, we may -- but we also have other things. We’ve got some great new product development i.e. products or a product in the line under our MUP blue and yellow can that we will be bringing to market later in the year that we think is very exciting, that probably will have a greater impact on the U.S. market in a Lawn & Garden launch. But Lawn & Garden is certainly on the table and if it works we’ll be bringing it to the market.

Great. Thank you very much.

Thanks, Linda.

[Operator Instructions] And our next question comes from the line of Jeffrey Zekauskas with JPMorgan.

Hi. This is Ben Richardson stepping in for, Jeff.

Hello, Ben.

How are you, Garry?

Good.

So just wanted to say quickly, it’s touching on raw materials again, but just the timing of some of your negotiations and the duration of contracts you might have on steel cans or plastics or any of this. Is there anything that’s to be negotiated sooner or later and how long might these contracts be for these materials?

Well, typically the one that’s longest term is our can pricing. And that’s typically been an annual contract. We’ve had discussions and have -- we’re in that timeframe of renewal. We don’t see a negative impact from this year. And we will update you once they’re concluded.

Okay. And just for -- from previous drops in crude that we’ve seen fourth quarter 2008, fourth quarter of 2010, I look and it’s a multi quarter response in your gross margin. Would you expect it to be any faster or any slower, given the magnitude of the decline in crude, just on the gross margin end?

I mean we think it will take some time to fully embed as we said earlier that there are -- oil is at the foundation of a number of these costs, but the speed with which any price in the underlying gets translated into our -- the finished goods that we buy that become our input costs can take time and we’ve typically seen that delay on the downside much longer than on the upside.

Sure.

But I would expect that it would lay out over a couple of quarters as we say.

Okay. And then on the European weakness, I know some of its clearly currency, but what’s going on fundamentally in any of those channels that -- can you identify any specific regions or what might be the source of …?

Well, over the whole of Europe, we had a quarter that was impacted a little bit by some political unrest in the Ukraine, but it was insignificant in the big scheme of things. I think it was what I would call a sit down quarter. You can’t dance at the party all night. You have to sit down a little while and let the market absorb what’s in there. So I think it’s long-term. For the year, we see Europe as a growth market. We’ve got some major wins in the bag coming in the second and third quarter. The key markets like Germany, France, Italy, Spain and the U.K. look well. We’ve seen stabilization in Russia now. We didn’t -- we felt we may have got a little worst decline or even a little worse activity in Russia that didn’t come. In fact, our can sales, I believe are up in Russia. So I think its just a quarter where we didn’t have as much activity and -- but we think that two and three will be fine.

Okay, all right. Well, thank you very much.

Thanks very much, Ben.

[Operator Instructions] And ladies and gentlemen, our next question comes from the line of -- a follow-up question from Linda Bolton-Weiser with B. Riley.

Hi. Is there any way that you can quantify roughly how much the heavy promotional in EMEA in the last quarter, in the fourth quarter? How much that shifted from the first quarter into that -- into the fourth quarter of 2014?

Linda, it doesn’t shift, it just happened.

Okay. So you wouldn’t regard it as taking away -- I thought the way you worded it was took away from some of the sales in this quarter, no?

No, no it’s just that we had a heavier fourth quarter promotional quarter. The year -- its going to be a growth year. So as I just said to Ben, excuse the way I describe it, but you can’t dance at a party all night. Sometimes you situation down rest and I think in Europe they had a little sit down in the first quarter and the party will start in the second quarter again.

Okay. I look forward to the party.

Yes, and you know that a majority of our product is sold on impulse and it’s driven by display. So you have to sell in, let us go through the system and then sell out and sell in again. So majority of our volume doesn’t come off that shelf. It comes off what we call the playground which is driven by multiple location displays driven by promotional events and activities and you just -- and we don’t -- Linda, we don’t mix very well with Barbie dolls and barbecue sets. Christmas time is not a high -- the traffic aisles and the promotional aisles in stores are filled with gift items. So its not unnatural for us in that Christmas quarter, not to have as many promotions as we normally have.

Okay. Thank you very much.

Thanks, Linda.

And 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 line.