# DEAR FELLOW STOCKHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NASDAQ_WDFC_2020/NASDAQ_WDFC_2020.mmd` · pages 3-9_

---

DEAR FELLOW STOCKHOLDERS,

Fiscal year 2020 was an unprecedented year marked by the resilience of our brands, our business model, and our tribe. As Dr. Rebecca Homkes, a lecturer at London Business School, has stated, "One of the essential distinguishers of a high-growth company is learning velocity: companies that learn faster, grow faster." Fiscal year 2020 was certainly a year where we had to learn fast. We had to learn to use virtual tools to be productive and connected, we had to learn to be agile with our supply chains around the world, and we had to learn to pivot frequently as required in response to an unpredictable pandemic.

As a global business that sells products in more than 176 countries and territories around the world, each of our locations was impacted differently by the pandemic and therefore our sales results varied greatly between geographies. For the full fiscal year 2020, we delivered revenue of $408.5 million, down just 4% compared to last fiscal year.

We saw starkly contrasting results in markets around the world. In geographies where retail operations remained open and where we were able to leverage our strong digital presence, we saw sales growth. However, in markets with strict movement restrictions in place or less developed e-commerce adoption, our sales were challenged.

We had a solid year in the Americas, delivering 3% revenue growth primarily driven by solid sales in the United States and Canada. Much this growth came from a phenomenon we experienced in the last quarter of our fiscal year which we refer to as "isolation renovation." It seems that the more time people spend isolated in their homes due to the pandemic, the more time and money they spend making home improvements.
We were somewhat challenged in EMEA and revenue was down 3% overall in the fiscal year. Though we saw a strong rebound in sales in our EMEA direct markets in the last quarter of our fiscal year and sales in these markets increased 2% year over year, sales in the distributor markets in EMEA were significantly impacted by the pandemic and decreased 13% this year.

In Asia-Pacific we experienced extreme disruptions from the pandemic and revenue was down 25% in the fiscal year. This decline was driven by disruptions in our Asia distributor markets and in China where extended closures, lockdowns, and restrictions required by local governmental authorities to combat the pandemic negatively impacted our ability to sell in many channels and geographies. Our shining star in Asia-Pacific was Australia where we delivered 6% revenue growth in the fiscal year driven by isolation renovation trends down under as well as strong demand for homecare and cleaning products due to the pandemic.

Since we know that companies that learn faster will grow faster, we spent a considerable amount of time this year developing what we call our "Must-Win Battles." These are the primary tactics that will enable us to deliver against our revenue growth aspirations.

## MUST-WIN BATTLE #1: GEOGRAPHIC EXPANSION

Our largest opportunity, and first global Must-Win Battle, is the geographic expansion of the blue and yellow can with the little red top. WD-40 \( ^{®} \)  Multi-Use Product is one of the most recognizable brands in the world and we are proud that our products live in the hearts and minds of end-users everywhere. We estimate the potential long-term growth opportunity for WD-40 Multi-Use Product to be over 1 billion. In support of this Must-Win Battle we launched

<--- Page Split --->

our newest direct market in Mexico during fiscal year 2020, in the midst of a pandemic, and sales increased 10% compared to sales in the country last year. We will remain focused on our top 20 geographic growth opportunities in order to continue to drive us toward this sizable opportunity.

## MUST-WIN BATTLE #2: PREMIUMIZATION

The evolution of the blue and yellow can with the little red top began 15 years ago. We listen to our end-users. People in focus groups and ethnographies told us that losing the straw that comes with each can of WD-40 Multi-Use Product was a major pain point for them. To solve this problem, we introduced WD-40 Smart Straw®, a new delivery system that permanently attaches the red straw to the can. It is our most successful innovation and has paved the way for other premium products like WD-40 EZ-REACH® and Smart Straw Next Generation. Premiumization of our products creates opportunities for revenue growth and gross margin expansion. Our objective is to grow Smart Straw penetration to 60% of WD-40 Multi-Use Product global sales.

## MUST-WIN BATTLE #3: WD-40 SPECIALIST®

We debuted the global rebrand of WD-40 Specialist \( ^{®} \)  in fiscal year 2020. Now, for the first time ever, WD-40 Specialist is fully leveraging our most iconic asset, the blue and yellow can with the little red top. This alignment will help drive future revenue growth and leverage brand equity in the future. We believe that WD-40 Specialist represents a 100 million annual revenue opportunity. WD-40 Specialist contributed 36.8 million in sales during fiscal year 2020, up 4% from last year. This continues to move us towards our revenue target for this initiative.

## MUST-WIN BATTLE #4: DIGITAL COMMERCE

This was the year that a global health crisis would transform how people shop. In fiscal year 2020, we continued our heightened focus in the areas of digital and e-commerce. We expanded our low cost, high performing website model to more than 90 countries around the world and our social media and other digital marketing efforts put our brands in front of more people online than ever before. This helped to drive e-commerce sales growth of approximately 58%, including strong growth across all three trade blocs. We expect e-commerce will become an even more significant growth channel for us in the future.

As we look toward opportunities on the horizon, we intend to maintain our laser-like focus on our Must-Win Battles moving into fiscal year 2021 and beyond.

![](images/4_0.jpg)

Steve Brass
President and Chief Operating Officer