Zep Inc (ZEP) Q1 2015 Earnings Conference Call Transcript

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Turning now to our operational performance, it was broadly in-line with my expectations with growth proper margins, operating profit and even reflecting our revolving the business mix and investments in laying the ground work for future organic growth. Our recorded and adjusted earnings per share were 14 and 17 cents respectively. As we have suggested in the past, I expect inconsistencies from quarter to quarter especially as the timing of promotions and minutes getting packed our growth margins, not withstanding a mixed impact in the quarter, growth market grew within our anticipated range.

You might remember from our previous call that we were in the process of ruling out a transportation set of changes to our North American sales and share this business. The first phase of this work is largely completely with a new strategy taking effect last week. While it’s still too early to judge, the impact of these changes will have on our financial results. I am very pleased with the results of these responds from our ZEP brands and from our customers and particularly decided to focus more on organic growth in that business.

The next phase will include investment and adding additional sales rep, training and sales management.  Now turning to the fire recovery effort, we are making excellent progress and has previously communicated we expect to fully restore service capability to our customers by the end of second fiscal quarter. As you saw from our first quarter results, we continued to experience the residual effects from sales declines resulting from customers lost since the fire. All residual is great. Strong organic growth in other areas of the business is more than offsetting the residual loss sale due to the fire and contributing to our optimism for future revenue growth.

From an operational perspective, we received all of the necessary permits to resume aerosol manufacturing operations and in just the past few days, resumed the production. As in the past, we expect to utilize and use the mix of in source and outsource manufacturing capabilities with the ultimate percentage of it being dependent upon our negotiation with suppliers in the future.  Once again I want to extend my thanks and my congratulations to all of us involved into the recovery effort for their dedication to recover quickly and safely from this event. Your hard-work was instrumental to this strengthening customer relationships and returning our organization towards organic growth.

Before I turn the call over to Mark, I want to briefly mention upcoming actions that relate to my personal ownership of Zep Inc stuff. Today my personal beneficial ownership of ZEP Inc exceeds 65% including selective options which would expire in 2015. Some time ago I established a 10 B5 trading plan to exercise the solid options in advance of their inspiration. This trading plan will begin executing soon and will be completed before the end of calendar 2015. When this trading plan has been completely executed I will beneficially fold over 4% of the ZEP Inc stuff.

I will conclude by saying how pleased I am with the collective effort of all our associates particularly over the past six months. We are growing strategic in markets driving focus on our sales pipelines process and completing our recovery effort. Now Mark will discuss the financial performance with the quarter after which we will take the questions.

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