WD-40 Company (NASDAQ:WDFC) Q2 2024 Earnings Call Transcript

Steve Brass: Sure. So, if you look at the basic model that we had is we had a royalty model in Brazil and so that was a $2 million revenue stream and that was, I mean, it’s almost when you have a royalty model, it’s almost all gross margin minus a few costs, right? So it’s a different model. I mean you have to say that Brazil is one of our, in terms of units sold, it’s actually even bigger than Mexico was when we took over the Mexico market. And so, we’re very confident in our ability to be able to given the experience we’ve had in Mexico to be able to transform that and realize the incremental value as a direct market. And so in our first year as we said, so in the back half of this year that will be $5 million of increment on top of the $1 million we would have done last year.

And then for the first 6 months of next year, we’ll have a further $5 million plus then whatever we can put on top. And so in the medium-term, we see a $20 million plus market in Brazil, which is exactly what we achieved in Mexico over a 3.5-year period and opportunities for growth well beyond that in the long-term.

Linda Bolton Weiser: And then, I was just wondering, sorry, switching back for a minute to the Americas. I know it’s in your queue, but I was curious if you could give volume and pricing for the whole company and then what it was in the quarter for the Americas?

Sara Hyzer: Sure. Linda, I’ll start with the whole company. So volume, just for the quarter was up 2% and impact of price was an impact of 3% for the full year and then currency had an impact of 2%.

Linda Bolton Weiser: Okay. So sorry, that’s the pricing of 3% was for the quarter or for the half?

Sara Hyzer: For the quarter. And for the year-to-date, we’re right at 3% as well. So, for the halfway through the year, we’re at 3% for impact of selling price and then the increase in the sales volume is 4%. Yes, that’s based on the growth, a growth of 10%. So that’s how the 10% is being. If you look at halfway through the year, we’re up 10%. Of the 10%, 3% is related to selling price and 4% is related to volume.

Linda Bolton Weiser: Okay. And I guess so the 3% pricing in the quarter I mean, I just it’s a little bit more than I would have thought because your anniversaring I don’t know. I guess I just thought it would have kind of flattened out sooner. So I don’t know. Is there any way you can give us some color on how we should expect that cadence to go for the pricing line?

Sara Hyzer: Yes. So we do expect that to come down, not run at that rate for the second half of the year. We are continuing to lap price, so we’re predominantly through most of the larger price increases now in both the Americas and EIMEA markets. Asia-Pac, we are still lapping some more recent price increases related to Australia. The timing of the inflationary environment in Australia was a little bit later and so there’s some price activities that we implemented really the later half of last year and really even into this year in Australia through a couple of different price changes or price increases. So there’s still some lapping, but we’re through the most we’re through the biggest pieces of it.

Linda Bolton Weiser: And then, finally, just on Asia, I guess that was one region that kind of was a little bit lower growth than I thought. And then I noticed you said specialists was down. I know that’s small in that region. But is there any particular thing that was going on?

Steve Brass: So I think where overall in Asia is, if you look, it’s been masked a little bit by currency so constant currency rate, our growth overall, I believe, were up 5% year-to-date. China is up in local currency 12% year-to-date and so we maintained double digit growth in China and all the other regions are up, but perhaps not as high as we thought. So we see a very strong back half against prior year for Asia Pacific. So there’s nothing to be worried about. I think by the end of the year, we’ll have caught up and well, all 3 trading blocs we see operating within our guidance range. So 5% to 8% for the Americas, 10% to 13% for Asia Pac and 8% to 11% for EIMEA. So, we’re very optimistic about the second half of the year.