What changed in this filing

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Item 1. Business

2021-10-22 compared with 2020-10-21 · 115 added, 80 removed, 46 unchanged (81% of the section changed)

1 unchanged sentence

The Company was founded in 1953 and is headquartered in San Diego, California.

For more than four decades, the Company sold only one product, WD-40 ® Multi-Use Product, a maintenance product which acts as a lubricant, rust preventative, penetrant and moisture displacer.

Over the last two decades, the Company has evolved and expanded its product offerings through both research and development activities and through the acquisition of several brands worldwide.

As a result, the Company has built a family of brands and product lines that deliver high quality performance at a good value to its end users.

The Company currently markets and sells its products in more than 176 countries and territories worldwide primarily through warehouse club stores, hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, farm supply, sport retailers, and independent bike dealers.

The Company’s sales come from its two product groups – maintenance products and homecare and cleaning products.

For more than four decades, we sold only one product, WD-40 ® Multi-Use Product, a maintenance product which acts as a lubricant, rust preventative, penetrant and moisture displacer.

Over the last two decades, we have evolved and expanded our product offerings through both research and development activities and through the acquisition of several brands worldwide.

As a result, we have built a family of brands and product lines that deliver high quality performance at a good value to our end users.

We currently market and sell our products in more than 176 countries and territories worldwide primarily through warehouse club stores, hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, farm supply, sport retailers, and independent bike dealers.

Our sales come from two product groups – maintenance products and homecare and cleaning products.

Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, the Middle East and Africa.

Homecare and cleaning products are sold primarily in North America, the United Kingdom (“U.K.”) and Australia.

The Company’s strategic initiatives and the areas where it will continue to focus its time, talent and resources in future periods include:

(i) maximizing WD-40 Multi-Use Product sales through geographic expansion, increased market penetration and the development of new and unique delivery systems;

(ii) leveraging the WD-40 brand by growing the WD-40 Specialist product line;

(iii) leveraging the strengths of the Company through broadened product and revenue base;

(iv) attracting, developing and retaining talented people;

and (v) operating with excellence.

The principal driver of the Company’s growth continues to be taking the Company’s flagship product, WD-40 Multi-Use Product, the blue and yellow can with the red top, to new users in global markets.

The Company is focused on and committed to innovation and renovation of its products.

The Company sees innovation and renovation as important factors to the long-term growth of its brands and product lines, and it intends to continue to work on future products, product lines, product packaging, product delivery systems and promotional innovations and renovations.

The Company is also focused on expanding its current brands in existing markets with new product development.

The Company’s product development teams support new product development and current product improvement for the Company’s brands.

Over the years, the Company’s research and development team has made an innovation impact on most of the Company’s brands.

Key innovations for the Company’s products include, but are not

limited to, WD-40 EZ-Reach ® Flexible Straw, WD-40 Smart Straw ® , WD-40 Trigger Pro ® , WD-40 Specialist ® , WD-40 BIKE ® , 3-IN-ONE RVcare ® and 3-IN-ONE ® Professional Garage Door Lube.

The Company’s homecare and cleaning products, particularly those in the U.S., are considered harvest brands which continue to provide positive returns to the Company but are becoming a smaller part of the business as sales of the maintenance products grow with the execution of the Company’s strategic initiatives.

Although the Company has evaluated strategic alternatives for certain of its homecare and cleaning products, particularly those in the U.S., it has continued to sell products within these brands but with a reduced level of marketing investment.

Our strategic initiatives are the areas where we will continue to focus our time, talent and resources in future periods.

We have recently decided to refresh our strategic initiatives to more accurately and holistically reflect the top priorities of the Company as we look towards fiscal year 2022 and beyond.

These strategic initiatives include:

(i) building a business for the future;

(ii) attracting, developing and engaging outstanding tribe members;

(iii) striving for operational excellence;

(iv) growing WD-40 Multi-Use Product;

(v) growing WD-40 Specialist product line;

(vi) expanding and supporting portfolio opportunities that help us grow .

Our top priority is to build an enduring business that we will be proud to pass onto the next generation by using our purpose and values as a decision-making filter.

Our desired outcome for this top strategic initiative is to further align and integrate our business decisions with Environmental, Social, and Governance (“ESG”) factors and considerations.

We understand that we cannot achieve this without attracting, developing and engaging outstanding people, whom we refer to collectively as a tribe, that strive for operational excellence daily.

The principal driver of our growth continues to be taking the blue and yellow brand with the little red top, to new users in global markets.

We continue to be focused and committed to innovation and renovation of our

We see innovation and renovation as important factors to the long-term growth of our brands and product lines, and intend to continue to work on future products, product lines, product packaging, product delivery systems and promotional innovations and renovations in order to expand our product portfolio to help us grow.

We are also focused on expanding our current brands in existing markets with new product development.

Our product development teams support new product development and current product improvement for our brands.

Over the years, our research and development team has made an innovation impact on most of our brands.

Key innovations for our products include, but are not limited to, WD-40 EZ-Reach ® Flexible Straw, WD-40 Smart Straw ® , WD-40 Trigger Pro ® , WD-40 Specialist ® , WD-40 BIKE ® , 3-IN-ONE RVcare ® and 3-IN-ONE ® Professional Garage Door Lube.

Our homecare and cleaning products, particularly those in the U.S., are considered harvest brands which continue to provide positive returns, but are becoming a smaller part of the business as sales of the maintenance products grow with the execution of our strategic initiatives.

Although we have evaluated strategic alternatives for certain of our homecare and cleaning products, particularly those in the U.S., we have continued to sell products within these brands but with a reduced level of marketing investment.

Human Capital Resources

Our success is the result of the engagement and commitment of our people, whom we refer to as tribe members.

We believe that a tribe is a group of people who come together to feed and defend one another in order to fulfill a common purpose.

Our purpose can only be achieved with the efforts of our 540 tribe members who create positive lasting memories for our stakeholders, especially our end users as they work to ensure that our products solve problems in factories, workshops, and homes around the world.

Our workforce is distributed globally in 16 countries, with approximately 34% in the Americas, 43% in EMEA, 15% in Asia-Pacific, and 8% corporate employees.

Women make up approximately 46% of our global tribe.

The average tenure of our global tribe is 8 years.

One of our most important strategic initiatives is to attract, develop and engage outstanding tribe members.

We believe that our ability to attract, develop, engage, and retain outstanding tribe members is the result of our inclusive, purpose-driven, learning focused and values guided culture.

This strategic initiative guides our commitment to develop tribe members throughout the organization.

One of the primary responsibilities of our leaders, whom we refer to as coaches, is to tailor individual development plans to support the needs of our tribe members to achieve their performance goals.

We also offer various internal training programs to our tribe members and encourage attendance at external training programs that allow tribe members to grow from both a technical and leadership standpoint.

As a result of the culture we have nurtured and evolved, we have increased employee engagement over time while expanding the size of our tribe to support our growing business.

Our most recent biennial global employee engagement survey, which was conducted in January 2020 by an independent third-party, resulted in a very high employee engagement rating of 93%.

Consistently living our company values grants each of us the freedom and agility to make autonomous decisions yet remain aligned as we act in the best interest of all our stakeholders across the globe.

Our approach to diversity and inclusion focuses on what unites us rather than what separates us.

Our diverse global tribe, hired primarily within local markets, contain an array of talent and experiences, work in harmony to solve problems and bring purpose to our work life.

Our tribe is comprised of talented and dedicated members, many of whom collaborate with their international peers in the areas of :

marketing, sales, customer service, finance and accounting, legal, information technology, human resources, supply chain and logistics, innovation, R&D, quality, and other technical fields.

We believe our culture is a competitive advantage, and we prioritize it as such.

Understanding the views, perspectives and experiences of our end-users and tribe members are a foundational element in maintaining and growing the WD-40 Company brand and business.

Our language, norms, artifacts, and traditions result in psychological safety, learning, and goal achievement.

This includes a total rewards strategy that ensures each tribe member can sustain their well-being today and into the future.

The recent global pandemic reinforced the importance of our priority to maintain the safety, health, and well-being of every tribe member.

In response to the COVID-19 pandemic, most of our workforce worked remotely, in accordance with public health and safety guidance.

Requisite safety protocols were implemented to ensure the health and safety of our tribe members whose roles were essential to be onsite in support of ongoing operations.

The pandemic inspired us to launch what we call “Work from Where”, a philosophy to support the work-life integration of our global tribe members.

This “Work from Where” philosophy enables our coaches and tribe members to align on where work is completed.

The Compensation Committee of our Board of Directors provides oversight of our relevant people-management practices.

Our approach to compensation attempts to align the interests of every tribe member with the creation of company value over time.

We completed a study in February 2020 to examine gender pay differences to determine if there were occasions of compensation decisions not being based on job-related criteria.

This study identified no biased decision-making, as any differences were explainable by job-related criteria.

We will continue to conduct equitable pay studies going forward and will include results from

those studies in our future ESG reports.

We invite you to review our ESG Report (located on our Internet site at www.wd40company.com) for more information about corporate responsibility, our tribe, programs, and initiatives.

Nothing on our website shall be deemed incorporated by reference into this Annual Report on Form 10-K.

Maintenance Products

Included in the Company’s maintenance products are both multi-purpose maintenance products and specialty maintenance products.

Included in our maintenance products are both multi-purpose maintenance products and specialty maintenance products.

These maintenance products are sold worldwide and they provide end users with a variety of product and delivery system options.

The Company’s signature product is the WD-40 Multi-Use Product in the blue and yellow can with the red top, which is included within the maintenance product category and it accounts for a significant majority of the Company’s sales.

The Company has various products and product lines which it currently sells under the WD-40 brand and they are as follows:

Our signature product is WD-40 Multi-Use Product in the blue and yellow can with the little red top.

It is included within the maintenance product category and accounts for a significant majority of our sales.

We have various products and product lines which we currently sell under the WD-40 Brand and they are as follows:

WD-40 Multi-Use Product - The WD-40 Multi-Use Product is a market leader in many countries among multi-purpose maintenance products and is sold as an aerosol spray with various unique delivery systems, a non-aerosol trigger spray and in liquid-bulk form through mass retail stores, hardware stores, warehouse club stores, automotive parts outlets, online retailers and industrial distributors and suppliers.

The WD-40 Multi-Use Product is sold worldwide in North, Central and South America, Asia, Australia, Europe, the Middle East and Africa.

The WD-40 Multi-Use Product has a wide variety of consumer uses in, for example, household, marine, automotive, construction, repair, sporting goods and gardening applications, in addition to numerous industrial applications.

WD-40 Multi-Use Product has a wide variety of consumer uses in, for example, household, marine, automotive, construction, repair, sporting goods and gardening applications, in addition to numerous industrial applications.

WD-40 Specialist product line – WD-40 Specialist consists of a line of professional-grade specialty maintenance products that include penetrants, degreasers, corrosion inhibitors, greases, lubricants and rust removers that are aimed at professionals and consumer enthusiasts.

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and many countries in Europe, as well as parts of Canada, Latin America, Australia and Asia.

Within the WD-40 Specialist product line, the Company also sells bike-specific products across all of its segments, motorbike-specific products in Europe, lawn and garden specific products in Australia, and automotive specific products in Asia.

The Company also has the following additional brands which are included within its maintenance products group:

Within the WD-40 Specialist product line, we also sell bike-specific products across all our segments, motorbike-specific products in Europe, lawn and garden specific products in Australia, and automotive specific products in Asia.

We also have the following additional brands which are included within our maintenance products group:

3-IN-ONE ® - The 3-IN-ONE brand consists of multi-purpose drip oil, specialty drip oils, and spray lubricant products, as well as other specialty maintenance products.

The multi-purpose drip oil is a lubricant with unique spout options that allow for precise applications to small mechanisms and assemblies, tool maintenance and threads on screws and bolts.

3-IN-ONE Oil is the market share leader among drip oils for household consumers.

3-IN-ONE Oil is the market share leader among drip oils.

It also has wide industrial applications in such areas as locksmithing, HVAC, marine, farming and construction.

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The long legacy, brand awareness and high quality of the 3-IN-ONE brand and its established distribution network have enabled these products to gain international acceptance.

3-IN-ONE products are sold primarily in the U.S., Europe, Canada, Latin America, Australia and Asia.

GT85 ® - The GT85 brand is a multi-purpose bike maintenance product that consists of professional spray maintenance products and lubricants which are sold primarily in the bike market through the automotive and industrial channels in the U.K.

This brand was acquired by the Company’s U.K.

subsidiary in September 2014 and it has helped build upon the Company’s strategy to develop new product categories for WD-40 Specialist and WD-40 BIKE.

3-IN-ONE products are sold primarily in the U.S., Europe, Canada, Latin America and Australia.

GT85 ® - The GT85 brand is a multi-purpose bike maintenance product line that consists of professional spray maintenance products and lubricants which are sold primarily in the bike market through the automotive and industrial channels in the United Kingdom.

This brand was acquired by our U.K.

subsidiary in September 2014 and it has helped build upon our strategy to develop new product categories for WD-40 Specialist and WD-40 BIKE.

Homecare and Cleaning Products

The Company sells its homecare and cleaning products in certain locations worldwide and they include a portfolio of well-known brands as follows:

2000 Flushes ® - The 2000 Flushes brand is a line of long-lasting automatic toilet bowl cleaners which includes a variety of formulas.

We sell our homecare and cleaning products in certain locations worldwide and they include a portfolio of well-known brands as follows:

2000 Flushes ® - The 2000 Flushes brand is a line of long-lasting automatic toilet bowl cleaners.

It includes a variety of formulas , including the Bleach and Blue plus Bleach that has a unique EPA-approved “kills bacteria” claim .

2000 Flushes is sold primarily in the U.S.

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and Australia.

Although Carpet Fresh brand products are also sold in the U.S., they are sold by a third-party under a licensing agreement with the Company.

Although Carpet Fresh brand products are also sold in the U.S., they are sold by a third-party under a licensing agreement.

In the U.K., these products are sold under the 1001 brand name.

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Lava is sold primarily in the U.S., while Solvol is sold exclusively in Australia.

X-14 ® - The X-14 brand is a line of quality products designed for unique cleaning needs.

X-14 is sold as a liquid mildew stain remover and as an automatic toilet bowl cleaner.

X-14 ® - The X-14 brand is a line of quality automatic toilet bowl cleaners.

X-14 is sold primarily in the U.S.

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Sales and Marketing

The Company’s sales do not reflect any significant degree of seasonality.

However, it is common for the Company’s sales to fluctuate from period to period or year to year due to various factors including, but not limited to, new or lost distribution, the number of product offerings carried by a customer and the level of promotional activities and programs being run at customer locations.

New or lost distribution occurs when the Company gains or loses customers, when it gains or loses store count for a customer or when its products are added to new locations within a store or removed from existing locations.

From time to time, as part of new product offering launches, the Company may gain access to entirely new distribution channels.

The number of product offerings refers to the number of brands and/or the number of products within each of those brands that the Company’s customers offer for sale to end user customers.

Our sales do not reflect any significant degree of seasonality.

However, it is common for our sales to fluctuate from period to period or year to year due to various factors including, but not limited to, new or lost distribution, the number of product offerings carried by a customer and the level of promotional activities and programs being run at customer locations.

New or lost distribution occurs when we gain or lose customers, when we gain or lose store count for a customer or when our products are added to new locations within a store or removed from existing locations.

From time to time, as part of new product offering launches, we may gain access to entirely new distribution channels.

The number of product offerings refers to the number of brands and/or the number of products within each of those brands that our customers offer for sale to end user customers.

The level of promotional activities and programs relates to the number of events or volumes of purchases by customers in support of off-shelf or promotional display activities.

Changes in any one of these three factors or a combination of them can cause the Company’s sales levels to increase or decrease from period to period.

It is also common and/or possible that the Company could lose distribution or product offerings and experience a decrease in promotional activities and programs in one period and subsequently regain this business in a future period.

The Company is accustomed to such fluctuations and manages this as part of its normal business activities.

Changes in any one of these three factors or a combination of them can cause our sales levels to increase or decrease from period to period.

It is also common and/or possible that we could lose distribution or product offerings and experience a decrease in promotional activities and programs in one period and subsequently regain this business in a future period.

We are accustomed to such fluctuations and manage this as part of our normal business activities.

Manufacturing

The Company outsources directly or through its marketing distributors the manufacturing of its finished products to various third-party contract manufacturers.

The Company or its marketing distributors use contract manufacturers in the U.S., Canada, Mexico, Brazil, Argentina, Columbia, the U.K., Italy, Australia, China, South Korea and India.

Although the Company has definitive minimum purchase obligations included in the contract terms with certain of its contract manufacturers, when such obligations have been included, they have either been immaterial or the minimum amounts have been such that they are well below the volume of goods that the Company has historically purchased.

Supply needs are communicated by the Company to its contract manufacturers, and the Company is committed to purchase the products manufactured based on orders and short-term projections, ranging from two to five months, provided to the contract manufacturers.

The Company also formulates and manufactures concentrate used in its WD-40 products at its own facilities and at third-party contract manufacturers.

In addition to the commitments to purchase products from contract manufacturers described above, the Company may also enter into commitments with other manufacturers from time to time to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives.

We outsource directly or through our marketing distributors the manufacturing of our finished products to various third-party contract manufacturers.

The Company or its marketing distributors use contract manufacturers in the U.S., Canada, Mexico, Brazil, Argentina, Colombia, the U.K., Italy, Australia, China, South Korea and India.

Although we have definitive minimum purchase obligations included in the contract terms with certain contract manufacturers, when such obligations have been included, they have either been immaterial or the minimum amounts have been such that they are well below the volume of goods that we have historically purchased.

Supply needs are communicated by us to our contract manufacturers, and we are committed to purchase the products manufactured based on orders and short-term projections, ranging from two months to six months, provided to the contract manufacturers.

We also formulate and manufacture concentrate used in our WD-40 products at certain of our own facilities and at third-party contract manufacturers.

In addition to the commitments to purchase products from contract manufacturers described above, we may also enter into commitments with other manufacturers from time to time to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives.

Sources and Availability of Components and Raw Materials

The Company and its third-party contract manufacturers rely on a limited number of suppliers, including single or sole suppliers, for certain of its raw materials, packaging, product components and other necessary supplies.

The primary components and raw materials for the Company’s products include petroleum-based specialty chemicals and aerosol cans, which are manufactured from commodities that are subject to volatile price changes.

The availability of these components and raw materials is affected by a variety of supply and demand factors, including global market trends, plant capacity decisions and natural disasters.

The Company expects these components and raw materials to continue to be readily available in the future, although the Company will continue to be exposed to volatile price changes.

We rely on a limited number of third-party contract manufacturers and component suppliers, including single or sole-sourced suppliers, for certain of our raw materials, packaging, product components and other necessary supplies.

Where possible and where it makes business sense, we work with secondary or multiple suppliers to qualify additional supply and, historically, we have been able to obtain adequate capacity and raw materials.

However, during the COVID-19 pandemic, the Company has experienced certain constraints, particularly in its Americas supply chain.

These challenges include general aerosol-related production capacity constraints primarily due to increased demand at third-party manufacturers along with shortages of certain

other raw materials and freight services.

The primary components and raw materials for our products include petroleum-based specialty chemicals and aerosol cans, which are manufactured from commodities that are subject to market price fluctuations.

The availability of these components and raw materials is affected by a variety of supply and demand factors, including global market conditions, plant capacity utilization, and natural disasters.

Although we expect these components and raw materials to continue to be readily available in the future and we have developed resiliency and risk mitigation plans, we will continue to be exposed to some level of market risks, as described above.

Research and Development

The Company recognizes the importance of innovation and renovation to its long-term success and is focused on and committed to research and new product development activities, primarily in its maintenance product group.

The Company’s product development team engages in consumer research, product development, current product improvement and testing activities.

The product development team also leverages its development capabilities by partnering with a network of outside resources including the Company’s current and prospective outsource suppliers.

In addition, the research and development team engages in activities and product development efforts which are necessary to ensure that the Company meets all regulatory requirements for the formulation of its products.

Order Backlog

Order backlog is not a significant factor in the Company’s business.

The markets for the Company’s products, particularly those related to its homecare and cleaning products, are highly competitive.

The Company’s products compete both within their own product classes as well as within product distribution channels, competing with many other products for store placement and shelf space.

We recognize the importance of innovation and renovation to our long-term success and are focused on and committed to research and new product development activities, primarily in our maintenance product group.

Our product development team engages in consumer research, product development, current product improvement and testing activities.

The product development team also leverages its development capabilities by partnering with a network of outside resources including our current and prospective outsource suppliers.

In addition, the research and development team engages in activities and product development efforts which are necessary to ensure that we meet all regulatory requirements for the formulation of our products.

The markets for our products, particularly those related to our homecare and cleaning products, are highly competitive.

Our products compete both within their own product classes as well as within product distribution channels, competing with many other products for store placement and shelf space.

Competition in international markets varies by country.

The Company is aware of many competing products, some of which sell for lower prices or are produced and marketed by companies with greater financial resources than those of the Company.

The Company relies on the awareness of its brands among consumers, the value offered by those brands as perceived by consumers, product innovation and renovation and its multiple channel distributions as its primary strategies.

We are aware of many competing products, some of which sell for lower prices or are produced and marketed by companies with greater financial resources than those of our Company.

We rely on the awareness of our brands among consumers, the value offered by those brands as perceived by consumers, product innovation and renovation and our multiple channel distributions as our primary strategies.

New products typically encounter intense competition, which may require advertising and promotional support and activities.

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Trademarks and Patents

The Company owns a number of patents, but relies primarily upon its established trademarks, brand names and marketing efforts, including advertising and sales promotions, to compete effectively.

We own a number of patents, but rely primarily upon our established trademarks, brand names and marketing efforts, including advertising and sales promotions, to compete effectively.

The WD-40 brand, 3-IN-ONE, Lava, Solvol, X-14, 2000 Flushes, Carpet Fresh and no vac, Spot Shot, GT85, and 1001 trademarks are registered or have pending registrations in various countries throughout the world.

At August 31, 2020, the Company employed 522 people worldwide:

198 by the U.S.

parent corporation;

224 by the U.K.

58 by the China subsidiary;

20 by the Australia subsidiary;

15 by the Canada subsidiary;

and 7 by the Malaysia subsidiary.

Financial Information about Foreign and Domestic Operations

For detailed information about the Company’s foreign and domestic operations, including net sales by reportable segment and long-lived assets by geography, refer to Note 17 - Business Segments and Foreign Operations of the consolidated financial statements, included in Item 15 of this report.

For detailed information about our foreign and domestic operations, including net sales by reportable segment and long-lived assets by geography, refer to Note 16 - Business Segments and Foreign Operations of the consolidated financial statements, included in Item 15 of this report.

Access to SEC Filings

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available through the Investors section of the Company’s website at www.wd40company.com.

These reports can be accessed free of charge from the Company’s website as soon as reasonably practicable after the Company electronically files

such materials with, or furnishes them to, the Securities and Exchange Commission (“SEC”).

Information contained on the Company’s website is not included as a part of, or incorporated by reference into, this report.

The SEC also maintains an internet site (www.sec.gov) that contains the Company’s reports.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available through the Investors section of our website at www.wd40company.com.

These reports can be accessed free of charge from our website as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (“SEC”).

Information contained on our website is not included as a part of, or incorporated by reference into, this report.

The SEC also maintains an internet site (www.sec.gov) that contains our reports.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business