WDFC Equity Report SDSU

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CFA Institute Research Challenge
hosted by
Local Challenge CFA Society San Diego
San Diego State University

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San Diego State University – Student Research
Sector: Consumer Staples Industry: Specialty Chemicals WD-40 Company
Date: 02/21/2016 Current Price: $107.79 (02/19/2016) Recommendation: SELL
Ticker: NASDAQ: WDFC Headquarters: San Diego, CA Target Price: $87 USD
This report is published for educational purposes only by students competing in the CFA Institute Research Challenge.
We initiate coverage of WD-40 Company (WDFC) with a SELL recommendation and 12-month price target of
$87, representing a 19% downside from its closing price on February 19, 2016 based on the following analysis:
Investment Theses: Expensive Slow Growth
 Limited top-line growth: A 5-year Revenue CAGR of 3% has been
carried by 7% YoY growth in Asia-Pacific where GDP growth is
slowing, currency is weakening, and brand loyalty is unestablished. All
this takes place in a market that management is counting on for the
majority of long-term growth to fuel revenue and earnings.
 Intrinsic Values below Market Values: Based on our assumptions
and projections we determined an intrinsic share value of $74 for a
DCF model utilizing perpetuity growth of 2.5%, $86 for a DCF model
utilizing an EBITDA exit multiple of 19.4x, and an intrinsic value of $101
using a Modified Dividend Discount Model accounting for declining
treasury stock repurchases.
 Margin Expansion Risk: The decline in energy prices provides
opportunities for increased profit margins as the main raw materials
input cost for WD-40 lubricant is directly tied to crude prices. The rapid
18-month descent of crude prices has already reflected gross margin
improvements of 3% in the most recent quarter and remains a short
term profitability tailwind for FY16. These margin expansions are not
indicative of improved efficiency within operations and are therefore
susceptible to a reversal.
 Stock Price Inflated by Repurchases: A generous treasury stock
repurchase plan funded by a $150 million revolving credit facility
reaches its credit limit in 2017. The repurchase program initiated in
2012 has acted as a catalyst driving the stock to outperform the
broader S&P 500 as well as Specialty Chemicals and Household
Products benchmark indexes for a 5 year 150% geometric return.
Despite slowed growth, P/E and EV/EBITDA multiples are at all-time
highs, premium to the Company’s peer group, while revenue growth is
stagnant and earnings growth is being funded by unsustainable payout
ratios, suggesting the stock has become too expensive.
Geographic Sales & Annual Net Income
Source: Company Data, Team Estimates
170 177 181 181 187 192
125 117 136 151 137 130
41 49
52
51 54 57
36 35 40 44 45 50
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014 2015 2016E
MillionsofUSDollars
Americas EMEA Asia-Pacific Net income
Market Profile
Closing Price $107.79
52-Week Range $79.15 - $108.39
Common Shares Outstanding (M) 14.5
Market Cap (B) 1.55
Dividend Yield 1.56%
Trailing P/E 34.3x
Trailing EV/EBITDA 21.2x
52-Week Return 33.57%
52-Week Beta 0.78
Source: Bloomberg Data
WDFC 5-Year Total Returns
Historical EPS:
Valuation Summary:
Valuation Intrinsic Value/Share
DCF Perpetuity $73.93
DCF Terminal Multiple $86.17
Dividend Discount $100.77
Average Price $86.96
Downside Potential 19.33%
Source: Team Estimates

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Business Description
WD-40 Company (the “Company”) is a global marketing organization that
markets multi-purpose lubricant products and heavy-duty hand cleaners such
as WD-40, 3-IN-ONE Oil lubricants, Carpet Fresh, and others. The Company
focuses on core business operations, product development and marketing,
while outsourcing manufacturing and distribution to third-party vendors. The
Company was founded in 1953 in San Diego as Rocket Chemical Company.
Its WD-40 Multi-Use Product (“MUP”) became available through retail
distribution five years after its initial introduction to the aerospace industry.
WD-40 generates revenue from two segments - maintenance products and
homecare and cleaning products (Figure 1). More than 88% of the
Company’s total sales are generated from sales of maintenance products.
The homecare and cleaning segment is “not considered core strategic focus”
(2015 Annual Report). WD-40 still sells these products, but is doing so with
limited sales and marketing efforts. During fiscal years 2013-2015 sales of
this product group declined by 5.9%. Main competitors in homecare and
cleaning products market, Procter & Gamble (market cap $212.99B) and
Kimberly - Clark ($44.52B) have increasing market share and superior
economies of scale.
WD-40 has an extensive distribution network: mass retail and home center
stores, warehouse club stores, grocery stores, hardware stores, automotive
parts outlets, sport retailers, independent bike dealers and industrial
distributors and suppliers. The Company currently distributes its MUP in more
than 176 countries and territories worldwide. International sales in FY15
constituted 59.5% of total sales.
WD-40 divides its’ operations into three geographic segments: The Americas
(US, Canada and Latin America); EMEA (Europe, the Middle East, Africa and
India); Asia-Pacific (Australia, China and other countries in the Pacific region)
(Figure 2). The Company uses four functional services in its international
operations: UK – GBR, Canada – CAD, Australia – AUD, and China – CNY.
Business Strategies:
 Maximizing WD-40 MUP sales: The management sees significant
opportunity in high-growth emerging markets around the world, including
Asia-Pacific, Latin America, Eastern Europe, the Middle East and Africa.
Despite the Company’s efforts, sales of the flagship product that constitute
77% of the Company’s total sales fell by $11 million in FY15. The EMEA
segment experienced a large decline in sales of 14% due to fluctuations in
foreign currency exchange rates. The Americas and Asia-Pacific grew sales
by 3% and 7%, respectively.
 Growing the WD-40 Specialist product line: For FY15 sales of the
newly introduced Specialist product line in the Americas segment were up
$2.3 million, or 26%. Global growth rate is equal to 24% over the prior year.
Within the WD-40 Specialist product line, the Company also launched WD-
40 Specialist Motorbike in Europe and WD-40 Specialist Lawn and Garden
in Australia during fiscal year 2014.
 Extending product and revenue base: Innovation and renovation are
important factors contributing to the Company’s long-term growth. The latest
invention is WD-40 EZ Reach with an attached flexible straw that turns and
keeps its shape to allow for easy use of the product in hard to reach places.
This new product was introduced in August 2015 in the United States, and is
targeted at high volume end users.
 Attracting, developing and retaining talented people: The Company
believes in people being essential to its success as a global marketing
organization. The Company is systemically conducting employee
engagement surveys and strives to improve the results.
 Operating with excellence: The Company seeks to develop
operational efficiency by optimizing resources, systems and processes. WD-
40 is guided by the 55/30/25 rule, setting the expectations for gross margin
to be 55%, cost of doing business – 30%, and EBIT – 25%.
Figure 1: Portfolio of 11 brands
Source: Company Data
Figure 2: FY15 Rev by Geographic
Segment
Figure 3: Revenue by Product Group
(in millions)

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Industry Overview and Competitive Positioning
For the purpose of our industry analysis we will concentrate on WDFC’s
maintenance product category (88 POS) belonging to the Specialty
Chemicals sub-industry within the Materials Sector. Household cleaning
products (12 POS) are a sub-industry to the Consumer Staples Sector. A
comparison of recent stock performance is presented in Figure 4. WDFC has
historically outperformed the S&P 500 Index as well as the Household and
Personal Products sub-industry index while slightly underperforming the
Specialty Chemicals index until mid-2015.
 Overview: We have a neutral outlook on the Specialty Chemicals and
Household products sub-industries for FY16. Favorable macro trends
including low inflation and low interest rates provide discounted access to
capital and have historically fueled growth. Further, reductions in energy
prices present opportunities for margin expansion from reduced raw
materials and transportation costs. Lower retail fuel prices and declining
unemployment are contributing to growing consumer confidence. On the
other hand, low and slow GDP growth in mature markets, declines in
Purchasing Managers’ Index (PMI) levels, increases in volatility and
uncertainty in financial and emerging markets, as well as a strengthening US
dollar present challenging headwinds for the Company in the next 12 months.
The greater than 70% decline in crude oil, slowing global growth, and
financial market unrest have investors favoring less-risky, high-quality
companies with strong financials, high profitability, and sustainable growth in
dividends. Telecom and Utilities are the only sectors in positive territory for
calendar 2016, a common indication of the flight to quality phenomenon.
 Demand Drivers: While the many uses of WDFC’s MUP provide a
diversification hedge against macro slowdowns, there are still factors that
affect demand. WDFC end users can be divided into MRO companies,
construction & skilled trade users, and at home individual users. MRO
companies use on average $40-$70 of product per year while individual users
account for 40-70 cents of product per year. For MRO users, demand drivers
include PMI levels which show manufacturing contraction in China and the
U.S., with slight expansion in Europe (Figure 5). This indicates potentially
declining future demand for specialty chemical products.
Other drivers include vehicle and aircraft new orders, US vehicles miles on
public roads, and average US expenditures for vehicles. As displayed in
Figures 6 and 7 US citizens are driving more and spending less, albeit at near
peak levels, both positive indicators for specialty chemical domestic demand
in the near future. With MRO end users spending much more per year than
individual users, the concern for a slowdown in GDP growth, particularly in
manufacturing puts greater pressure on advertising and promotions, as well
as retention rates to that portion of the target market.
 Raw Materials: Figure 9 breaks down the raw materials expenses in
a typical can of WD-40. Plastics, steel, and the petroleum based chemical,
85% of the total cost, are each linked to the crude oil index (Figure 8). At
$90/barrel 18 months ago, crude was 3x more expensive than the $30/barrel
price today (Nasdaq.com). According to management, WDFC inventory
levels typically lag 3-6 months from the purchase of raw materials to realized
cost improvements. These improvements began to appear in Q3 FY15 and
have continued to trend lower contributing to a 3.35% reduction in Cost of
Goods Sold YoY for FY15 and an improvement of 1.78% in Gross Margin. In
Q1 FY16 WDFC reported a gross margin of 55.6%, a 4% increase from Q1
FY15 and 225 BP improvement QoQ.
Crude prices are expected to remain below previous levels in FY16 due to
oversupply paired with slowing demand continuing to pressure equilibrium
prices lower. Highly leveraged companies may be forced to default or
liquidate assets as the Energy sector is likely to see increased consolidation
and a significant slowdown in production before crude prices can turn around.
With reserve levels at all-time highs, the upside potential is limited compared
to the downside risk, likely to keep oil in the $30-$50/barrel range for FY16.
Figure 4: Benchmarked Returns
Source: Bloomberg Historical Prices
Figure 5: MFG Trends
Figure 6: US Vehicles Miles on Roads
Figure 7: AVG US Expenditure/Vehicle

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Reduced crude prices in the short term provide opportunity for significant
margin-line expansion for companies able to maintain top-line sales
numbers. WDFC has seen the benefit in its latest three quarters with
profitability ratios all improving while quarterly sales numbers have remained
flat. With the 3 to 6-month lag between inventory purchases and margin
expansion shown in financial reports, WDFC is expected to be able to
maintain its higher margin levels into FY17.
Porter’s Five Forces Analysis: Figure 10
 Buyer Power: Relatively High
Low switching costs to readily available substitutes, with a higher
concentration of buyers than sellers, increases buyer price sensitivity. This
pricing power is particularly pressured by large retailers where the majority of
specialty chemical and household cleaning products are sold. Often,
products are not highly differentiated by performance, but rather by brand
recognition and ease of availability, stemming directly from sales,
promotions, and distribution scope and efficiency.
Wal-Mart is the largest seller of WDFC’s products, generating 6.75% of
revenue, followed by Lowe’s at 3.7%, Walgreens at 1.9% and The Home
Depot at 1.47% (Figure 11). These large retailers command greater pricing
power and limit WD-40’s ability to grow Revenue through price increases,
placing greater reliance on product innovation and volume expansion. The
Company has been able to overcome strong buyer power through successful
advertising and promotion, a wide distribution network and strong brand
loyalty. This brand recognition is best summed up by the fact that 8 out of 10
US households own a bottle of WD-40 (2015 Annual Report).
In the US, WD-40 relies greater on pull marketing where buyers seek out the
brand; however, in international markets where brand recognition is not
nearly as strong, buyers are more likely to consider other factors such as
price and geographic origination for purchases. Execution of advertising and
promotion strategies to build the level of trust and recognition that exists in
the US is vital for WD-40 to grow in emerging markets where buyer power
remains a relatively high threat.
 Supplier Power: Very Low
The specialty chemicals and household cleaning products industries are
characterized by many suppliers which leads to low switching costs, less
reliance on heavy volume orders, and decreased risk associated with
geographic discrepancies such as labor costs, quality control and location
convenience.
WDFC independently contracts production, limiting the reliance on single
suppliers and enabling it to be more price-sensitive and selective. Unlike
many other specialty chemical market leaders, WD-40’s products are
relatively simple to produce giving the Company many options for suppliers.
The decline of energy costs has only further reduced the power suppliers
have over WDFC.
 Threat of New Entrants: Relatively High
The profitability margins and revenue per employee statistics that WDFC
continues to operate at are enviable of many potential new entrants.
Specialty chemicals often require large capital investments up front for the
industrial infrastructure required to mass produce and package products.
Beyond that, limited shelf space dominated by established brands further
escalate barriers to entry. On the other hand, a significant reduction of energy
costs has compressed some of those barriers, potentially allowing for an
increased threat of new entrants.
WDFC gained relevance in the industry through its initial proprietary multi-
use product, a simple but effective formula that was revolutionary at the time
and continues to be widely used today. As a “global marketing company”
WDFC’s differentiation lies in the success of its advertising and promotional
activities, the reach of its distribution channels, and its economies of scale in
place reducing per unit costs.
In the United States, longstanding mutually beneficial relationships are in
place with distributors and major retailer while a talented sales force, steady
Figure 8: WTI Crude Prices
Source: Nasdaq.com
Figure 9: WD-40 Can Costs
Source: Company FY15 Investor Presentation
Figure 10: Threats to WDFC
Source: Team Analysis
Figure 11: WD-40 Distributors

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cash flows, and overall financial stability keep WDFC well positioned to
defend itself vs new entrants. Internationally, where these advantages do not
merit the same respect and growth expectations are higher, new entrants
present much a much greater threat. WDFC will be challenged to replicate
its domestic success to the point that it can grow sales and revenue at levels
that investors can be pleased with.
 Substitute Products: Average
WDFC’s MUP, has been marketed by the Company as having over 2000
uses, ranging from lubrication to household cleaning to rust prevention.
Naturally, the many uses of its product increase the available amount of
substitutes. There are many competing lubricants, household cleaning
products, and rust-prevention products available, however, none are able to
market as a solution to all three areas as successfully as WDFC. There are
substitutes available that can compete on price, and in some markets
competitors attempt to steal WDFC’s brand recognition through counterfeit
products. WDFC continues to retain market share at a price premium due to
its strong brand and the loyalty it has developed with its customer base.
 Competitive Rivalry: Relatively High
Competitive Rivalry in the special chemicals industry differs by geographic
region. In the Americas segment with only 50% sales share, rivalry is low as
WDFC controls major market share for lubricant products, with low fixed
costs and high brand loyalty. In EMEA and Asia-Pacific regions, rivalry
among firms is much higher as levels of brand loyalty are not yet established
and a greater amount of counterfeit products exist in these less regulated
emerging markets. As management is anticipating most of the Company’s
future growth to come from emerging markets, WDFC should expect to see
increased rivalry in its highly profitable lubricant segment.
Investment Summary
We issue a Sell recommendation on WDFC based on a forward looking 12-
month price target of $87. To arrive at this price, we utilized several valuation
methodologies including a Discounted Cash Flow (DCF) analysis using both
a perpetual terminal growth value and an exit multiple (Appendix 18) and a
Dividend Discount Model (Appendix 20) based on our forward looking pro-
forma statements (Appendix 9). When developing our model assumptions,
we took into account macroeconomic factors and factors WDFC will face
internally that will contribute to the performance of the Company. The current
elevated stock price of $107.79 is priced 34x trailing earnings, a multiple
typically valued for high long run growth rate, i.e. greater than 4%. We believe
this growth rate is overly optimistic given the Company’s maturity level and
previous growth levels.
WDFC will continue to face currency headwinds as the US dollar strengthens
against foreign currencies, specifically the Euro (Figure 12). Europe is the
second largest market for the Company outside of the US, representing 36%
of sales in FY15. We expect the currency environment responsible for a loss
of $16 million in revenue in FY15 (WD-40 Corporation, 2015) to continue
through FY16.
We expect input costs to decrease and remain low for the Company, as we
project oil, the Company’s main cost, to remain at low levels for FY16. These
lower costs will help offset the minimal revenue growth and raise gross
margin, helping the Company achieve its stated goal of 55% gross margin
(WD-40 Corporation, 2015). However, we believe the Company may face
pricing issues as its main retailers are Walmart, Lowe’s, and Home Depot.
Those retailers could require some of the margin benefits be passed along
to them in the form of lower prices.
The expansion and growth into new markets the Company is expecting,
specifically China and eastern Europe, is threatened by increased
competition in those areas, as well as low brand recognition. When
comparing previous 10ks, counterfeit products are noted as posing a greater
difficulty to the Company in building its brand in these new markets (Figure
15). We expect growth to be difficult, especially since the Company has a
Figure 12: EUR/USD Exchange Rate
Source: www.usforex.com
Figure 13: Shareholder Structure
Figure 14: Institutional Ownership
Distribution
Figure 15: 10K Quotes
“In addition, from time to time the
Company discovers products in certain
markets that are counterfeit reproductions
of the Company’s products as well as
products otherwise bearing an infringing
trade dress.” (FY 14 10K)“
“In addition, the Company frequently
discovers products in certain markets that
are counterfeit reproductions of the
Company’s products as well as products
otherwise bearing an infringing trade
dress.” (FY 15 10K)

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heavy reliance upon its multi-use product to drive revenue. WDFC’s history
of struggles to expand its product line through acquisitions indicates growth
will most likely need to be organic.
WDFC’s stock price has benefited from a steadily growing dividend and an
aggressive share repurchase program for the past few years. The current
modified payout ratio, which takes into account the share repurchases, has
been well over 100% since it began buying back shares in 2012 (Appendix
20). The source of the funds used for the share repurchases has been a
revolving line of credit and the Company approaches the credit limit on that
loan (WD-40 Corporation, 2015). The share repurchases will have to decline,
if not stop completely, within the next 2 years. The Company can continue to
pay a steadily growing dividend, while the growth rate of that dividend will
marginally decline.
WDFC lowered guidance in the Q1 Earnings Report to $393-401M in total
revenue and $3.30-$3.37 diluted EPS. As mentioned, we expect favorable
margin expansion from the reduction of input costs combined with treasury
stock repurchases to reflect favorably on EPS turning in a FY16 diluted EPS
beat of $3.50. On the other hand, our $379M revenue estimate implies a 4%
miss. Priced for perfection at a 34 PE multiple while reporting further lack of
growth and carrying an unsustainable modified payout ratio signifies the
current share price of $107.79 is too expensive and downside risk outweighs
the upside potential, supporting our sell recommendation. The catalyst could
be further consecutive quarterly revenue misses or the slowing or stopping
of treasury repurchases which have driven the price much faster than growth.
Financial Analysis
Table 1: Forecasted Revenue Growth by Segment for Total Sales Growth Rate
Utilizing historic growth in each geographic segment and assuming continued 6% annual decline of the Household Products
Segment helped us to derive our Total Sales Growth projections shown above. These are the most important projections as
most other line items are calculated as a percentage of sales and are therefore the most sensitive to our recommendation.
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
PROFITABILITYRATIOS
ROA 12.81% 12.22% 12.76% 13.04% 13.05% 14.33% 14.20% 13.98% 13.72% 13.47%
ROE 18.32% 18.35% 21.82% 25.07% 27.38% 32.60% 32.88% 30.23% 27.98% 26.06%
Gross Margin 49.97% 49.15% 51.33% 51.92% 52.94% 55.00% 55.00% 55.00% 55.00% 55.00%
Operating Margin 16.09% 15.09% 15.37% 16.64% 17.29% 19.20% 19.24% 19.28% 19.37% 19.50%
Profit Margin 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
LIQUIDITYINDICATORS:
Current Ratio 3.29 3.74 3.52 4.00 4.28 4.35 4.61 4.87 5.15 5.43
Quick Ratio 2.65 2.84 2.71 3.09 3.36 3.53 3.80 4.07 4.35 4.64
ASSET MANAGEMENT:
Accounts Receivable Turnover 6.34 6.02 6.56 6.36 6.18 6.35 6.41 6.40 6.38 6.36
InventoryTurnover 10.98 7.35 5.77 5.46 5.31 5.47 5.77 5.76 5.74 5.73
Cash Turnover 5.08 5.44 5.99 6.89 6.77 5.93 4.74 3.97 3.41 2.99
DEBT MANAGEMENT:
Total Liabilities / Total Assets 0.28 0.38 0.44 0.51 0.53 0.58 0.55 0.52 0.50 0.47
Total Liabilities / Total Equity 0.39 0.62 0.80 1.05 1.15 1.41 1.24 1.10 0.99 0.89
LT Debt / LT Capital 0.05 0.20 0.26 0.37 0.41 0.47 0.44 0.40 0.38 0.35
LT Debt / Total Equity 0.05 0.24 0.35 0.58 0.68 0.89 0.77 0.68 0.60 0.54
Interest Coverage Ratio 50.31 70.96 81.73 63.61 54.27 40.34 42.54 44.75 46.86 48.95
Accounts Payable Turnover 9.02 9.18 8.89 9.90 9.96 9.36 9.31 9.30 9.25 9.22
DIVIDEND and STOCK MARKET-BASED RATIOS:
Common Dividends per Share $1.08 $1.14 $1.22 $1.33 $1.48 $1.77 $1.87 $1.97 $2.06 $2.16
Common Dividend Payout* 50.0% 51.4% 47.8% 46.1% 48.5% 50.0% 60.0% 60.0% 60.0% 60.0%
* Calculated as percent of Net Income
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 16-20 CAGR
Americas (6.00%) 4.41% 1.75% 0.17% 3.60% 2.50% 2.00% 1.50% 1.00% 1.00% 1.37%
EMEA 14.00% (6.78%) 16.34% 11.32% (9.64%) (5.00%) 7.00% 7.00% 6.00% 5.00% 6.25%
Asia-Pacific 31.00% 18.00% 7.22% (2.31%) 6.30% 6.00% 12.00% 12.00% 11.00% 10.00% 11.25%
Total 5.00% 1.90% 7.50% 3.93% (1.28%) 0.29% 5.24% 4.99% 4.24% 3.74% 4.55%
Figure 16: Net Sales & Gross Profit
Source: Company Data and Team Estimates
Figure 17: Revenues by Geographic
Segment 2011 -2020E (in millions $)
Figure 18: EZ-Reach New Product
Release 2015.

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 Overview: After posting 5-year CAGR of 2.5% in the Americas, 2.25%
in Europe and 7% in Asia-Pacific summing a Total Revenue CAGR of 3%.
Our forward projection is for a 5-year CAGR of 4.5% highlighted by future
double digit growth in Asia-Pacific and slowing growth in the Americas further
increasing international sales to a greater % of Total Sales.
 For the Americas we anticipate declining sales growth stemming
from mature saturated US and Canadian markets and economic and
currency exchange rates limiting reported sales in Latin and South America
for a forward 5 year CAGR below 1.5%. We expect slight volume growth led
by specialty products and the new EZ-REACH with prices remaining at the
mercy of large distributors and discounted input costs.
 In EMEA, recently reported Q1 FY16 sales declined 7% from Q1
FY15 attributed to unstable market conditions in Russia and Eastern Europe,
countries responsible for 35-40% of EMEA distributor markets. (Q116
Conference Call). After nearly 10% decline in FY15 we project stabilizing
macro conditions supported by QE throughout Europe, new Specialist
product rollouts and expanded distribution to offer single digit CAGR of 6-7%
moving forward.
 In the Asia-Pacific region, an increased number of employees,
greater proportion of Advertising and Promotion investments, and continued
expansion of distribution shows the company’s commitment to generating
increased revenue in these regions. Despite currency and counterfeiting
issues limiting reported volume sales, the growth stage of the market and
lack of a market leader present significant opportunity for WDFC to replicate
its formula for growth in these regions. We expect high single-digit to low
double digit growth sustainable for the next five years as aforementioned
operational and sales investments in these relatively untapped regions begin
to pay off.
Reduction in Oil Prices Boosts Margins
WD-40 margins have been stable from FY11-15, with an average gross
margin of 51%. We forecast a decrease in sales revenue in FY16E primarily
due to a continued strengthening US dollar, slowing economic growth in
emerging markets, the transfer of cost savings to selling prices, and
underwhelming payoff for advertising and promotions in EMEA and Asia-
Pacific regions. However, due to reduction in the price of oil, which is the
main component of WD-40 manufacturing costs, the reduction in sales
revenue is accompanied by a greater reduction in cost of goods sold which
boosts WDFC’s margin to 55%, a 2.1% increase from FY15. During FY16E-
20E, we anticipate gross margin will remain stable near 55% due to fading of
negative foreign currency effects and positive effects of reduced input prices.
 DuPont Analysis
Historically, WD-40 shows high return on equity. Figure 19 shows ROE
expanded from 18.32% to 27.38% from FY11 to FY15. Per our analysis, in
the next 5 years the Company’s ROE will decrease from 32.6% in FY16E to
26.06% in FY20E. Even though NPM improves, the decline is primarily driven
by a lower asset turnover as well as a decrease in financial leverage. We
expect a reduction in share repurchases and an average dividend payout rate
of 60%.
ThreeStep DuPont Analysis
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
NPM 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
Asset TO 1.18 1.18 1.18 1.14 1.10 1.08 1.07 1.05 1.03 1.00
Fin Lev 1.43 1.50 1.71 1.92 2.10 2.27 2.32 2.16 2.04 1.93
ROE 18.32% 18.35% 21.82% 25.07% 27.38% 32.60% 32.88% 30.23% 27.98% 26.06%
Figure 19: ROE Trend 2011 -2020E
Figure 20: CFO and Net Income Trends
2011 -2020E (in millions $)
Figure 21: LT Debt/LT Capital and LT
Debt/ Total Equity Trend

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 High Quality Earnings Supported by Steadily Increasing
Operating Cash Flow
In the past 5 years, WD-40 produced a positive CFO that was increasing at
a steady rate. We predict, that the Company will continue on strong cash
generating path in FY16. A good indicator of cash generating ability of the
Company is CAPEX financing through internally generated funds. According
to the Company’s 10-K, the revolving credit facility is used primarily for the
purpose of share repurchases. Therefore, CAPEX is mainly funded through
internally generated funds which is an indicator of positive CFO generating
ability. Figure 20 represents CFO and net income trends from FY11 to
FY20E. Net income numbers stay below CFO which suggests earnings of
high quality.
 Healthy Balance Sheet (But Cash trapped overseas)
The Company has a healthy balance sheet with high liquidity indicators.
Historically, from FY11-15, the current ratio and quick ratio averaged 3.76
and 2.73 respectfully. We predict that the Company will be able to maintain
similar current and quick ratios from FY16-20 due to its strong cash
generating ability and low portion of current debt. The Company has a strong
cash position; however, a significant portion of Cash and Cash Equivalents
is held outside of the U.S. Per Company’s 2015 10-K, $90.8 million out of
$102.5 million in cash and cash equivalents is held in Europe, Australia and
China as of end of FY15. The cash held overseas is subject to foreign
currency exchange rate risks and income taxes if the Company needs it for
domestic operations.
 Increase in Debt Structure of Financing
In previous years, the Company was primarily funding its operations with
internally generated funds and an insignificant amount of a revolving credit
facility. In FY14, the Company increased the use of revolving credit line for
the purpose of share repurchases and reclassified the debt to long-term debt.
The increased use of revolving credit line facility has a negative effect on the
Company’s solvency as indicated by an increase of LT Debt to LT Capital
and LT Debt to Total Equity ratios.
Valuation
Several valuation methods were used to derive a target price for WDFC of
$88, including two-stage discounted cash flow (DCF) model, dividend
discount model (DDM) and a relative model which is based on the Company’s
comparables. Our target price was derived by averaging the prices calculated
by the various models.
Our DDM model (Appendix 20) uses a modified payout ratio of dividends plus
share repurchases as a percentage of net income. When the share
repurchase program initiated in FY11, the payout ratio skyrocketed to 164%
in FY11. It has stayed over 100% due to the use of a line of credit to fund the
share repurchases. The line of credit will be maxed out in FY16 if it is
continued to be used for the share repurchases. After FY16 we project the
payout ratio to necessarily decline, as the line of credit will not be available.
These assumptions lead to a share price of $100.77.
While DDM is appropriate for a mature, well-developed Specialty Chemicals
industry, it might not be the best valuation model due to the inconsistency of
WDFC’s payout ratio. Therefore, in addition to looking at dividends, we
utilized the Company’s discounted cash flows for our valuation. WD-40 meets
the criteria for using DCF model due to its ability to generate predictable
positive free cash flows.
We used two methodologies to determine a terminal value of cash flows for
our DCF model (Appendix 18): perpetuity growth and an exit multiple. The
perpetuity value is based on the long-term historical GDP growth rate. For an
exit multiple we used the EBITDA multiple, particularly useful in our valuation
due to the different uses of leverage and capital utilization of the comparable
companies. When selecting an exit multiple, we reviewed past multiples of
the company and its peers (Appendix 15). WD-40 has been traditionally sold
at a premium to the average P/E and EBITDA multiples of its peers, and we
Figure 22: Modified Dividend Discount
Summary
Source: Company Data & Team Estimates
Figure 23: Historical Valuation
Multiples
Table 2: WACC Calculation
Table 3: DCF Calculations
Risk Free Rate 2.00%
S&P 500 Adjusted Beta 0.815
Market Risk Premium 7.50%
Cost Of Equity 8.11%
Interest Expense 1,205,000$
Debt Outstanding 133,000,000$
Pretax Cost of Debt 1.12%
Marginal Tax Rate 0.298
After Tax Cost of Debt 0.79%
Equity Financing 92.17%
Debt Financing 7.83%
WACC 7.5%
WACC Analysis
Perpetuity TerminalX
(+) Sum of PVs (Fair Value) 1133.67 1311.40
(-) Net Debt 108.00 108.00
(+) Excess Cash 48.60 48.60
(=) Equity Value 1074.27 1252.00
(/) Diluted Shares Outstanding 14.53 14.53
(=) Share Price $73.93 $86.17
Feb 19, 2016 Price
Estimated Upside -31.4% -20.1%
$107.79

10
expect WD-40 to continue to trade at the high-end of the multiple range due
to the differences in fundamentals. Assuming an exit multiple of 19.4x
(Appendix 18) and $90.61 million terminal year EBITDA, WD-40 is valued at
$86.17 per share. Assuming a perpetual growth rate of 2.5%, our model
produces a value of $73.93.
The DCF is impacted by free cash flow (FCF) projections, terminal value, and
weighted average cost of capital (WACC). Accordingly, Appendix 19 presents
a sensitivity analysis for a range of terminal EBITDA multiples and WACC
values. Over 90% of WDFC’s financing is from equity. Therefore, cost of
equity impacts the WACC more significantly than the cost of debt. A
breakdown of our WACC calculation is in Appendix 12 with a sensitivity
analysis for risk-free rates and market risk premiums is in Appendix 17. FCF
projections are based on lower input costs in the near-term, an improving
global economic outlook in the next five years, and increased penetration into
the EMEA and Asia-Pacific regions.
In addition to our DCF and DDM analysis, we utilized two multiples-based
alternatives for valuation: P/E and EBITDA multiples. Our comparison is
based on an analysis of 12 comparable companies of different sizes from
Specialty Chemicals (10), Non-Wood Building Materials (1), and Basic &
Diversified Chemicals Industries (1) (Appendix 16). The analysis suggests
that WD-40 is trading above the industry average. Therefore, it is relatively
overvalued compared to its peers. The difference in multiples can partially be
explained by differences in fundamentals. Both its gross margin and interest
coverage ratio greatly outperform the competitors and fall within three
standard deviations of the mean. Due to a lack of pure-play comparable
companies we didn’t attempt to find an intrinsic value of WD-40 stock using a
comparables method.
Investment Risk
 Economic Risk: Significant increase in cost of raw materials,
particularly crude oil -- An increase in material costs would have a negative
impact on gross margin. Since crude oil is the main ingredient in the
petroleum-based products offered by WD-40, as well as a main driver of
transportation costs, increases in crude oil would adversely affect WD-40’s
margin.
 Economic Risk: Currency exchange rates -- WD-40 has four
subsidiaries located outside of the United States. These are located in the
United Kingdom (UK), Canada, Australia, and China. These subsidiaries are
subject to transaction risk if the transaction currency is different than the
functional currency of the subsidiary. There is an additional translation risk to
convert the subsidiary’s functional currency to WD-40’s reporting currency,
the US dollar (USD). A stronger USD compared to the functional currencies
of the subsidiaries will have adverse effects on revenue. As shown in Figure
24 the US dollar has been gaining against the currencies of its main trading
partners. Additionally, if the functional currency of the subsidiary strengthens
against the transaction currency in the respective region, that will also have
an adverse effect on revenue.
 Business Risk: Competition -- WD-40 faces competition from similar
products, including counterfeit reproductions of WD-40’s products and it’s
branding used to identify the WD-40 products. These counterfeit products are
particularly in China, Russia, and emerging markets (WD-40 Corporation,
2015).
 Business Risk: Brand erosion -- There exists the possibility that a
WD-40 product could have a negative impact on the overall brand. If a WD-
40 product gets widespread negative publicity, it could negatively impact the
entire brand and negatively impact sales. WD-40 relies on the strength of the
brand to drive revenue. Any negativity related with the brand can have
negative impact on sales. The aforementioned counterfeit reproductions,
particularly in emerging markets, can create negative impressions of the WD-
40 brand.
 Market Risk: Retaining/hiring key employees. WD-40 references its
ability to retain and hire the right employees as essential to its growth. With
Figure 24: Real Trade Weighted US
Dollar Index – Last 5 Years
Source: Federal Reserve Bank of St. Louis
Figure 25: US Unemployment Rate
Source: US Dept of Labor Statistics
75
80
85
90
95
100
105
Jan-11 Dec-11 Nov-12 Oct-13 Sep-14 Aug-15
0
2
4
6
8
10
12
Jan-06
Nov-06
Sep-07
Jul-08
May-09
Mar-10
Jan-11
Nov-11
Sep-12
Jul-13
May-14
Mar-15
Jan-16

11
unemployment at the lowest levels since the Great Recession (Figure 25) it
will be costly to retain and hire the people required to reach growth and sales
goals.
 Political Risk: Legislation and Regulation -- Because WD-40 makes
chemical products, there is the possibility that a government could pass
regulations that would negatively impact WD-40. There already are many
regulations relating to production, storage, containers, etc. that affect WD-40.
There remains the possibility that future regulations could increase costs for
WD40 or otherwise restrict revenues, and have downward pressure on
margins.
 Political Risk: Political and/or Economic Instability -- Political
instability can have negative effects on sales of WD-40. In FY 15, the
instability in Russia and Ukraine led to significant decreases in sales from the
prior year. There is the potential for instability in any of the markets WD-40
does business, which could adversely affect business.
Management and Governance
The senior management of WD-40 led by CEO Garry O. Ridge is a robust and
experienced management team (Appendix 2). The entire management team
consists of seven executive officers, of which five have worked for WD-40
longer than 18 years, and four have served in a senior management role for
more than 13 years. Richard Clampitt joined WD-40 in 2014, serving as vice
president, general counsel and corporate secretary. Mr. Clampitt has
practiced law in San Diego for 32 years, and he is tasked with enhancing
compliance with laws, regulations and internal standards of WD-40. The
management team has developed a successful business model, clear
strategic initiatives, a strong tribal culture (Figure 27), and an effective
leadership structure (Figure 28).
With the competent senior management team, during the past ten years, WD-
40’s stock price has increased over 200%, and in 2008 and 2009, WD-40 was
listed on “The Forbes 200 Best Small Companies.”
WD-40 also has developed an effective Corporate Governance System,
which has a low overall risk according to Institutional Shareholder Service
Rating (ISS) Methodology (Appendix 8). The Board of Directors performs the
main duty of overseeing the major risk areas. The policies and procedures set
up demonstrate strong commitment to corporate governance. The good
practices in corporate governance are reflected in the following areas:
 The Board of Directors: Maintained independence and effectiveness
of the Board by the composition of directors (Appendix 3) the segregation of
the principal executive officers and the board chair positions, the nomination
procedure, the standing committees (the Audit Committee, the Compensation
Committee, the Corporate Governance Committee and the Finance
Committee) (Appendix 4) and other related Corporate Governance Policies
(Appendix 5)
 The Compensation Program of Senior Management Developed
rigid rules (Appendix 6) set up the Compensation Committee to oversee the
Compensation Program. The compensation (Appendix 7) for the Company’s
Named Executive Officers (the “NEOs”) is determined by three elements:
base salary, retention-related equity compensation and performance-related
cash and equity compensation. For FY15, the performance incentive program
was based on the target EBITDA for different regions. The policy and
execution of this compensation plan conform to the short and long-term goals
of WD-40.
Shareholder Rights WD-40 protects shareholder rights and controls the risk
associated with this area through a series of policies and rules, which include
One-Vote-Per-Share policy, Broker-Non-Vote policy, Say-On-Pay vote, the
right to elect the Board of Directors, the right to ratify the appointment of the
Company’s independent public accounting firm.
Figure 26: Shareholder Structure
Figure 27: Tribal Culture
Source: Corporate Overview Jan, 2016
Figure 28: Leadership Structure
Source: Corporate Overview Jan, 2016

12
Disclosures:
Ownership and material conflicts of interest:
The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company.
The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might
bias the content or publication of this report.
Receipt of compensation:
Compensation of the author(s) of this report is not based on investment banking revenue.
Position as an officer or director:
The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject
company.
Market making:
The author(s) does not act as a market maker in the subject company’s securities.
Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the
author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy
or completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity.
This information does not constitute investment advice, nor is it an offer or a solicitation of an offer to buy or sell any security.
This report should not be considered to be a recommendation by any individual affiliated with CFA Society San Diego, CFA
Institute or the CFA Institute Research Challenge with regard to this company’s stock.
CFA Institute Research Challenge

13
Appendix 1: Product Portfolio
WD-40 Multi-Use Product - The WD-40 multi -use product is a market leader among multi-purpose maintenance products and
is sold as an aerosol spray, a non-aerosol trigger spray and in liquid form through mass retail stores, hardware stores,
warehouse club stores, automotive parts outlets and industrial distributors and suppliers. The WD-40 multi-use product is sold
worldwide in North, Central and South America, Asia, Australia and the Pacific Rim, 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 Specialist product line – WD-40 Specialist, introduced in 2011, consists of a line of best-in-class specialty maintenance
products that include penetrants, degreasers, corrosion inhibitors, lubricants and rust removers that are aimed at an expanded
group of end users that currently use the WD-40 multi-use product. The Company initially launched the WD-40 Specialist
product line early in fiscal year 2012 and it currently sells these products in the U.S., Canada and select countries in Latin
America, Asia, Australia and Europe.
WD-40 Bike product line - The WD-40 Bike product line consists of a comprehensive line of bicycle maintenance products
that include wet and dry chain lubricants, heavy-duty degreasers, foaming wash and frame protectants that are designed
specifically for avid cyclists, bike enthusiasts and mechanics. The Company launched this product line in the U.S. early in
fiscal year 2013 and in Australia and Europe near the end of fiscal year 2014. Although the initial focus for such sales was on
smaller independent bike dealers, primarily those in the U.S., distribution of WD-40 Bike products has been expanded to
include certain distributors and retailers.
3-IN-ONE - The 3-IN-ONE brand consists of multi-purpose drip oil and spray lubricant products, as well as other specialty
maintenance products. The 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. It also has wide industrial applications in such areas as locksmithing, HVAC, marine,
farming, construction and jewelry manufacturing. In addition to the drip oil line of products, the 3-IN-ONE brand also includes
a professional line of products known as 3-IN-ONE Professional, which is a line of high quality, maintenance products. 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.,
with additional sales in foreign markets including those in Spain and other European countries. GT85 products are also
currently sold in the United States. This brand was acquired by the Company’s U.K. subsidiary in September 2014 and it will
help to build upon the Company’s strategy to develop new product categories for WD-40 Specialist and WD-40 BIKE.
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 is sold primarily in the U.S. through grocery and mass retail channels.
2000 Flushes - The 2000 Flushes brand is a line of long-lasting automatic toilet bowl cleaners which includes a variety of
formulas. 2000 Flushes is sold primarily in the U.S. and Canada through grocery and mass retail channels.
Carpet Fresh - The Carpet Fresh brand is a line of room and rug deodorizers sold as powder, aerosol quick-dry foam and
trigger spray products. Carpet Fresh is sold primarily through grocery and mass retail channels in the U.S., the U.K. and
Australia. In the U.K., these products are sold under the 1001 brand name and in Australia, they are sold under the No Vac
brand name.
Spot Shot - The Spot Shot brand is sold as an aerosol carpet stain remover and a liquid trigger carpet stain and odor eliminator.
The brand also includes environmentally friendly products such as Spot Shot Instant Carpet Stain & Odor Eliminator™ and
Spot Shot Pet Clean, which are non-toxic and biodegradable. Spot Shot products are sold primarily through grocery and mass
retail channels, warehouse club stores and hardware and home center stores in the U.S. and Canada. Spot Shot products are
also sold in the U.K. under the 1001 brand name.
1001 - The 1001 brand includes carpet and household cleaners and rug and room deodorizers which are sold primarily through
mass retail, grocery and home center stores in the U.K. The brand was acquired in order to introduce the Company’s other
homecare and cleaning product formulations under the 1001 brand and to expand the Company’s homecare and cleaning
products business into the U.K. market.
Lava - The Lava and Solvol brands consist of heavy-duty hand cleaner products which are sold in bar soap and liquid form
through hardware, grocery, industrial, automotive and mass retail channels. Lava is sold primarily in the U.S., while Solvol is
sold exclusively in Australia.
Source: 2015 Annual Report

14
Appendix 2: The Senior Management Team
Executives Title WD-40 Career History Description
Garry O.
Ridge
President, Chief
Executive
Officer and
Director
Joined in 1987
Managing Director, WD-40
Company (Australia) Pty.
Limited 1987-1994
Director International
Operations 1994-1995
Vice President, International
1995-1996
Executive Vice President/
Chief Operating Officer
1996-1997
President and CEO since
1997
Board member since 1997
Tenure with WD-40: 28
years
As chief executive officer and a member of the board of directors
of WD-40 Company, Garry Ridge is responsible for developing
and implementing high-level strategies, all operations, and the
oversight of all relationships and partnerships for the Company.
As the CEO of the Company, Mr. Ridge offers the Board an
important Company-based perspective. In addition, his particular
knowledge of the Company’s international markets and industry
position provides the Board with valuable insight.
Jay W.
Rembolt
Vice President,
Finance,
Treasurer and
Chief Financial
Officer
Joined in 1997
Manager, Financial Services
1997-2008
Chief Financial Officer since
2008
years
As vice president finance, treasurer and chief financial officer, Mr.
Rembolt is responsible for overseeing the Company's financial
operations including the management of accounting, treasury,
financial planning and reporting, investor relations and internal
audit. Prior to joining WD-40 Company, Mr. Rembolt served in a
variety of positions, including consulting roles in the tax practice
of the public accounting firm Price Waterhouse LLP, now known
as PricewaterhouseCoopers LLP, from 1991 to 1997.
Richard T.
Clampitt
Vice President,
General
Counsel and
Corporate
Secretary
Joined in 2014
Vice President, General
Counsel and Corporate
Secretary Since 2014
years
As vice president, general counsel and corporate secretary, Mr.
Clampitt has global responsibility for the Company’s legal affairs
and corporate governance. He also serves as the Company’s
chief compliance officer. Prior to joining WD-40 Company in 2014,
Mr. Clampitt practiced law in San Diego for 32 years. He provided
corporate and business counsel to the Company for all of those
years. In 1981 he joined Harmsen Carpenter Sidell & Olson, APC
which combined with Gordon & Rees LLP in 2000. At Gordon &
Rees, Mr. Clampitt served as co-chair of the firm's business
practice group.
Stanley A.
Sewitch
Vice President,
Global
Organization
Development
Joined in 2012
Vice President, Global
Organization Development
years
As vice president, global organization development, Mr. Sewitch
is responsible for global oversight of the human resources
function, with a primary mission to help prepare the Company for
its next sixty years of growth. Mr. Sewitch has more than 40 years
of experience as a line executive and business psychologist.
Additionally, he has a strong entrepreneurial background having
founded several companies including KI Investment Holdings,
LLC., HRG, Inc., Emlyn Systems, and Chromagen.
Geoffrey J.
Holdsworth
Managing
Director, Asia-
Pacific
Joined in 1996
Managing Director, Asia
Pacific since 1997
years
As the managing director of WD-40 Company’s Asia-Pacific
segment, Mr. Holdsworth is responsible for overseeing all
operations throughout the Pacific Rim, Asia and Australia. Mr.
Holdsworth also serves as a board member of WD-40 Company
(Australia) Pty. Ltd.
Prior to joining WD-40 Company, Mr. Holdsworth spent sixteen
years with Columbia Pelikan in various management positions
within the organization.

15
Executives Title WD-40 Career History Description
William B.
Noble
Managing
Director, EMEA
Joined in 1993
International Marketing
Manager for the Asia Region
1993-1996
Manager Director, EMEA
since 1996
years
As the managing director of WD-40 Company’s EMEA segment,
Mr. Noble is responsible for overseeing all operations throughout
Europe, the Middle East and Africa. Prior to joining WD-40
Company, Mr. Noble was with Dow Corning for almost ten years
in various sales and marketing management roles throughout
Asia.
Michael L.
Freeman
Division
President,
Americas
Joined in 1990
Director of Marketing 1990-
1994
Director of Operations 1994-
1996
Vice President,
Administration and Chief
Information Officer 1996-
2001
Senior Vice President,
Operations 2001-2002
Division President, Americas
since 2002
years
As the division president of WD-40 Company’s Americas
segment, Mr. Freeman is responsible for overseeing all operations
throughout the United States, Canada and Latin America. Prior to
joining WD-40 Company, Mr. Freeman worked in various
marketing roles. He owned and managed a graphic design
company and started his career as a systems analyst/programmer
at National Steel and Shipbuilding Company in San Diego,
California.
Source: WD-40 Website, Mergent Online, Reuters

16
Appendix 3: Board of Directors
Board of
Directors
Title Description Independent
Neal E.
Schmale
Board
Chair
Neal E. Schmale was elected to the Board of Directors in 2001. Mr. Schmale
was named Board Chair in 2004. Mr. Schmale’s past experience as director
on four public company boards and his extensive senior management
experience with a Fortune 300 company offers the Board valuable judgment
and management perspective.
Yes
Garry O.
Ridge
President,
Chief
Executive
Officer and
Director
Garry O. Ridge serves as the Board Member since 1997.
As the CEO of the Company, Mr. Ridge offers the Board an important
Company-based perspective. In addition, his particular knowledge of the
Company’s international markets and industry position provides the Board
with valuable insight.
No
Giles H.
Bateman
Board
Member
Giles H. Bateman was elected to the Board of Directors in 2003. Mr.
Bateman has been retired since 2000. Mr. Bateman’s financial expertise,
considerable public company board experience and knowledge of the retail
industry provide the Board with a breadth of relevant skill and experience.
Yes
Peter D.
Bewley
Board
Member
Peter D. Bewley was appointed to the Board of Directors in 2005. Mr.
Bewley’s experience at consumer packaged goods companies prepared him
to address strategic issues confronting the Company. In addition, his service
as general counsel and secretary of two public companies provides the
Board with a practical and in depth perspective on corporate governance
and legal matters.
Yes
Richard A.
Collato
Board
Member
Richard A. Collato was elected to the Board of Directors in 2003. He serves
on the board of the Corporate Directors Forum and is an adjunct professor
at the University of San Diego’s graduate program, teaching corporate
governance. His understanding of corporate governance and management
theory and practice makes him a contributing member of the Board.
Yes
Mario L.
Crivello
Board
Member
Mario L. Crivello was elected to the Board of Directors in 1994. Mr. Crivello
and members of his family have been investors in the Company since its
founding. His long-standing relationship with the Company and his insight
into its history and market position provide the Board with a valuable
shareowner perspective.
Yes
Linda A.
Lang
Board
Member
Linda A. Lang was elected to the Board of Directors in 2004. Ms. Lang has
extensive knowledge and expertise in the areas of brand management and
marketing, financial management and reporting, supply chain and
distribution management as well as strategic planning, executive
compensation and succession management. Her experience in these and
other areas of corporate management and governance offer complementary
experience to the Board.
Yes
Gregory
A.
Sandfort
Board
Member
Gregory A. Sandfort was elected to the Board of Directors in October 2011.
Mr. Sandfort brings a retail industry perspective to the board. The board also
values Mr. Sandfort’s extensive management experience in the retail
industry.
Yes
Melissa
Claassen
Board
Member
Melissa Claassen was elected to the Board of Directors in 2015. Ms.
Claassen has extensive knowledge and expertise in the areas of
collaboration, finance, accounting, and international business. Ms. Claassen
currently resides in southern Germany.
Yes
Note: The Board of Directors has determined that each director and nominee other than Garry O. Ridge is an independent director as defined in Rule
5605(a)(2) of the Marketplace Rules of The Nasdaq Stock Market LLC (the “Nasdaq Rules”). In considering the independence of directors, the Board
of Directors considered Gregory A. Sandfort’s indirect interest, as an executive officer of Tractor Supply Company, in purchases of the Company’s
products made by Tractor Supply Company in the ordinary course of business. The Company has concluded that Mr. Sandfort’s indirect interest in
such transactions is not material and does not require specific disclosure under Item 404(a) of Regulation S-K promulgated under the Securities
Exchange Act of 1934 (the “Exchange Act”).
Source: WD-40 Website

17
Appendix 4: The Composition of Standing Committees
Audit Committee Title
Giles H. Bateman Chairman
Richard A. Collato Member
Peter D. Bewley Member
Neal E. Schmale Member
Compensation Committee Title
Richard A. Collato Chairman
Peter D. Bewley Member
Mario L. Crivello Member
Linda Lang Member
Finance Committee Title
Linda Lang Chairman
Giles H. Bateman Member
Gregory A. Sandfort Member
Governance Committee Title
Peter D. Bewley Chairman
Gregory A. Sandfort Member
Melissa Claassen Member
Source: WD-40 Website
Appendix 5: Corporate Governance Policies
 Annual election of all directors
 Independent chair
 Eight of nine directors are independent
 Executive sessions of independent directors held at each regularly scheduled board meeting
 Company policy prohibits pledging and hedging of WD-40 Company stock by directors
 All equity grants received by directors since 2007 must be held until board service is ended
 Independent chair approves board meeting agenda
Appendix 6: Rules related to Executive Compensation Programs
 No Employment Agreements with Executive Officers
 Executive Officers are Subject to Stock Ownership Guidelines
 No Supplemental Executive Retirement Plans for Executive Officers
 Executives are Prohibited from Hedging or Pledging Company Stock
 Long-Term Incentive Awards are Subject to Double-Trigger Vesting upon Change of Control
 No Backdating or Re-pricing of Equity Awards
 Annual and Long-Term Incentive Programs Provide a Balanced Mix of Goals for Profitability and Total Stockholder
Return Performance
 Financial Goals for Performance Awards Never Reset

18
Appendix 7: The Compensation of Named Executive Officers for Fiscal Year 2015
Named Executive Officers Base
Salary
Stock
Awards
Non-Equity
Incentive Plan
Compensation
All
Other
Compensation
Total
Compensation
Garry O. Ridge $642,416 $1002,785 $261,407 $90,867 $1,997,475
President and CEO
Jay W. Rembolt $308,664 $249,467 $75,360 $84,973 $718,464
VP, Finance, Treasure and CFO
Michael L. Freeman $332,585 $256,605 $99,729 $81,392 $770,311
Division President, the Americas
William B. Noble $348,976 $224,690 - $115,984 $689,650
Managing Director, EMEA
Geoffrey J. Holdsworth $231,107 $155,807 $69,332 $80,043 $536,289
Managing Director, Asia-Pacific
Top 5 Insiders Position Market Value Ownership Report Date
Mario L Crivello 284,990 29,624,711 1.98% 12/8/2015
Garry O. Ridge 96,244 1,0004,564 0.67% 10/23/2015
Jay W. Rembolt 33,508 3,483,157 0.23% 2/10/2016
Michael L. Freeman 27,286 2,836,380 0.19% 11/16/2015
Neal Edwin Schmale 25,416 2,641,993 0.18% 12/8/2015
Source: 2015 Annual Report, Bloomberg

19
Appendix 8: Institutional Shareholder Service (ISS) Rating Methodology for WD-40 Corporate Governance
(1) Institutional Shareholder Service QuickScore 3.0 Methodology
The four major risk areas including Board Structure, Compensation/ Remuneration, Shareholder Right, and Audit & Risk
Oversight, and the overall risk of a company will be rated. For each item, the lowest score is 1, which indicates low
governance risk, and the highest score is 10, which indicates high governance risk.
(2)Utilize ISS QuickScore 3.0 Methodology to rate the governance risk of WD-40
Board Structure Risk: 1/10
The Board is comprised of nine directors, all directors other than Garry O. Ridge are independent directors. The Board Chair
is held by an independent director. The duties of the Board are carried by four outstanding committees, which are the Audit
Committee, the Compensation Committee, the Corporate Governance Committee, and the Finance Committee. All the
committees are composed of independent directors, Garry O. Ridge as the CEO provides assistance for the Board.
Compensation/ Remuneration Risk: 5/10
The compensation of the Company’s Named Executive Officers is composed of base salary, retention-related equity
compensation, and performance-related cash and equity compensation, which will be advised by the Company’s
shareholders with advisory votes. But WD-40 failed to set up specific requirements for the retention equity compensation,
such as the minimum equity awards, which may discourage the rendition rate of key executive officers.
Shareholder Rights Risk: 1/10
One-vote-per-share policy, Broker-Non-Vote policy, Say-on-Pay vote. In addition, the share buyback program would benefit
WD-40 minority shareholders.
Audit & Risk Oversight Risk: 2/10
Four standing committees carry out the specific risk oversight responsibility of the Board. Among them, the audit committee
mainly control the risk related to financial reporting, internal control, information technology, and the company’s insurance
and coverage. PricewaterhouseCoopers LLP has been appointed as the independent registered public accounting firm for
WD-40 by the Audit Committee, and shareholders will vote on the ratification of the appointment.
Overall Corporate Governance –Risk 4/10
WD-40 has a relatively low risk associated with the overall corporate governance.
Source: ISS QuickSocre 3.0, 2015 Annual Report

20
Appendix 9: Historical and Projected Financial Statements
1 Calculated as percent of Net Sales (AVG 16%)
3 Refer to PPE Schedule
4 Refer to Amortization Schedule
6 Calculated as percent of Total Operating Expenses (AVG 13%)
7 Calculated as percent of SG&A Expenses (AVG 12%)
8 Per Company’s 2015 10-K, additional 25$ million will be borrowed in 2016
9 Per Q1 2016 Earnings Call
11 Per Company’s 2015 10-K
($ In Millions )
As of August 31, 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Current assets: Cash GR 54.04272646 56.874565 59.714028 62.24590279 64.57078726
Cash and Short-tern investments 56.93 70.75 90.95 102.85 102.50 122.53 143.21 165.17 188.31 212.27
Accounts Receivable, net
58.32 55.49 56.88 63.62 58.75 60.67
(1)
63.85 67.04 69.88 72.49
Inventories 17.60 29.80 32.43 34.99 32.05 30.33 (2)
31.92 33.52 34.94 36.24
Current deferred tax assets, net 4.85 5.55 5.67 5.86 5.82 5.82 5.82 5.82 5.82 5.82
Other current assets 5.45 4.53 6.21 8.34 6.13 6.13 6.13 6.13 6.13 6.13
Total current assets 143.16 166.12 192.14 215.65 205.25 225.73 251.17 277.91 305.31 333.19
Property and equipment, net 8.48 9.06 8.54 9.70 11.38 14.44 (3)
17.33 20.03 22.58 24.97
Goodwill 95.45 95.32 95.24 95.50 96.41 96.41 96.41 96.41 96.41 96.41
Other intangible assets, net 29.93 27.69 24.29 23.67 22.96 19.93 (4)
16.91 13.89 11.13 8.87
Other assets 2.75 2.69 2.86 3.15 3.26 3.26 3.26 3.26 3.26 3.26
Total assets 279.78 300.87 323.06 347.68 339.26 359.77 385.08 411.50 438.69 466.71
Current liabilities:
Accounts payable 19.37 $ 21.24 $ 19.69 $ 18.03 $ 17.13 $ 18.96 (5) $ 19.95 $ 20.95 $ 21.84 $ 22.65
Accrued liabilities 15.26 16.49 16.56 18.38 15.20 17.65 (6)
18.55 19.46 20.23 20.91
Accrued payroll and related expenses 7.47 5.90 17.24 15.97 13.36 12.97 (7)
13.65 14.33 14.94 15.49
Income taxes payable 1.41 0.81 1.15 1.53 2.29 2.29 2.29 2.29 2.29 2.29
Total current liabilities 43.52 44.45 54.65 53.91 47.97 51.86 54.44 57.02 59.29 61.34
Revolving credit facility 10.72 45.00 63.00 98.00 108.00 133.00 (8)
133.00 133.00 133.00 133.00
Long-term deferred tax liabilities, net 21.81 24.01 24.01 24.25 23.15 23.15 23.15 23.15 23.15 23.15
Other long-term liabilities 2.51 1.96 1.90 2.10 2.28 2.28 2.28 2.28 2.28 2.28
Total liabilities $ 78.55 $ 115.41 $ 143.56 $ 178.27 $ 181.40 $ 210.29 $ 212.86 $ 215.45 $ 217.72 $ 219.77
Shareholders' equity:
Common stock 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02
Additional paid-in capital 117.02 126.21 133.24 136.21 141.65 143.23 144.81 146.38 147.96 149.54
Retained earnings 176.01 193.27 214.03 237.60 260.68 285.73 306.88 329.15 352.49 376.88
AOCI -0.36 (2.73) (5.04) 1.10 (8.72) (8.72) (8.72) (8.72) (8.72) (8.72)
Treasury Stock -91.47 (131.31) (162.74) (205.52) (235.77) (270.77) (270.77) (270.77) (270.77) (270.77)
Total shareholders' equity 201.23 $ 185.46 $ 179.51 $ 169.42 $ 157.86 $ 149.48 $ 172.21 $ 196.06 $ 220.97 $ 246.94
Total liabilities and shareholders' $ 280 $ 300.87 $ 323.06 $ 347.68 $ 339.26 $ 359.77 $ 385.08 $ 411.50 $ 438.69 $ 466.71
Historical Balance Sheet Projected Balance Sheet
PPE Schedule
2016E 2017E 2018E 2019E 2020E
Beginning, net 11.38 14.44 17.33 20.03 22.58
CAPEX 6.50 (9) 6.50 6.50 6.50 6.50
Depreciation (3.43) (10) (3.61) (3.79) (3.96) (4.10)
Ending 14.44 17.33 20.03 22.58 24.97
Amortization Schedule
2016E 2017E 2018E 2019E 2020E
Beginning 22.96 19.93 16.91 13.89 11.13
Amortization (3.03) (11) (3.02) (3.02) (2.76) (2.26)
Ending 19.93 16.91 13.89 11.13 8.87
Dividend Payout Schedule
2016E 2017E 2018E 2019E 2020E
Weighted average shares outstanding14.14 14.14 14.14 14.14 14.14
Dividend 25.05 31.73 33.40 35.00 36.58

21
($ In Millions )
Net sales 336.41 342.78 368.55 383.00 378.15 379.18 399.05 418.97 436.74 453.05
Sales Growth 1.9% 7.5% 3.9% -1.3% 0.3% 5.2% 5.0% 4.2% 3.7%
Cost of products sold 168.30 174.30 179.39 184.14 177.97 170.63 179.57 188.54 196.53 203.87
Gross profit (loss) 168.11 168.48 189.16 198.85 200.18 208.55 219.48 230.43 240.20 249.18
Margin 50.0% 49.2% 51.3% 51.9% 52.9% 55.0% 55.0% 55.0% 55.0% 55.0%
Selling, general & administrative expense 87.31 88.92 104.38 108.58 108.87 108.07 113.73 119.41 124.47 129.12
% of Sales 25.95% 25.94% 28.32% 28.35% 28.79% 28.5% 28.5% 28.5% 28.5% 28.5%
Advertising & sales promotion expense 25.13 25.70 24.81 23.92 22.88 24.65 25.94 27.23 28.39 29.45
% of Sales 7.47% 7.50% 6.73% 6.25% 6.05% 6.5% 6.5% 6.5% 6.5% 6.5%
Amortization of definite-lived intangible assets 1.54 2.13 2.26 2.62 3.04 3.03 3.02 3.02 2.76 2.26
% of Sales 0.46% 0.62% 0.61% 0.68% 0.80% 0.80% 0.76% 0.72% 0.63% 0.50%
Impairment of definite-lived intangible assets 1.08
Total operating expenses 113.98 116.75 132.53 135.12 134.79 135.74 142.69 149.66 155.62 160.83
Income (loss) from operations 54.13 51.73 56.64 63.74 65.39 72.81 76.79 80.77 84.59 88.35
Interest income 0.23 0.26 0.51 0.60 0.58 0.56 0.56 0.56 0.56 0.56
Interest expense 1.08 0.73 0.69 1.00 1.21 1.81 1.81 1.81 1.81 1.81
Interest Expense Increase 0.60 0.30 0.00 0.00 0.00
Other income (expense), net 0.25 -0.35 0.42 -0.37 -1.66
Income (loss) before income taxes - US 37.33 36.67 36.30 41.54 38.04
Income (loss) before income taxes - foreign 16.20 14.25 20.57 21.42 25.07
Income (loss) before income taxes 53.53 50.91 56.87 62.96 63.11 71.56 75.55 79.53 83.34 87.11
Pretax Margin 15.91% 14.85% 15.43% 16.44% 16.69% 18.87% 18.93% 18.98% 19.08% 19.23%
Income Tax Rate 31.9% 30.3% 30.0% 30.5% 29.0% 30.0% 30.0% 30.0% 30.0% 30.0%
Provision for income taxes 17.10 15.43 17.05 19.21 18.30 21.47 22.66 23.86 25.00 26.13
Net income (loss) 36.43 35.49 39.81 43.75 44.81 50.09 52.88 55.67 58.34 60.97
Income Growth -2.60% 12.20% 9.88% 2.43% 11.80% 5.57% 5.27% 4.79% 4.51%
Income Margin 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
Less: net income (loss) allocated to participating securities- - - - 0.27
Net income (loss) available to common shareholders- - - - 44.54
Weighted average shares outstanding - basic 16.80 15.91 15.52 15.07 14.58 14.14 14.14 14.14 14.14 14.14
Weighted average shares outstanding - diluted 16.98 16.05 15.62 15.15 14.65 14.21 14.21 14.21 14.21 14.21
Net earnings (loss) per share-basic 2.168243766 2.22 2.55 2.89 3.05 3.54 3.74 3.94 4.13 4.31
Net earnings (loss) per share-diluted 2.14 2.2 2.54 2.87 3.04 3.53 3.72 3.92 4.11 4.29
EPS Growth 2.80% 15.45% 12.99% 5.92% 15.97% 5.56% 5.27% 4.79% 4.51%
Dividends per share 1.08 1.14 1.22 1.33 1.48 1.77 1.87 1.97 2.06 2.16
Dividends/Share Growth 5.56% 7.02% 9.02% 11.28% 16.30% 5.60% 5.27% 4.79% 4.51%
Total number of employees 334 347 369 395 433
Historical Income Statement Projected Income Statement
Scenario 1
Date 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E CAGR
Net sales - MUP 278.76 286.48 320.88 337.83 333.31 337.07 359.47 381.77 401.77 420.18 15-'20 CAGR
Y/Y % Change 8.00% 2.77% 12.01% 5.28% -1.34% 1.13% 6.64% 6.20% 5.24% 4.58% 4.7%
Net sales - Homecare 57.65 56.30 47.67 45.17 44.84 42.15 39.62 37.25 35.01 32.91
Y/Y % Change -9.00% -2.3% -15.3% -5.2% -0.7% -6.0% -6.0% -6.0% -6.0% -6.0% -6.0%
Total Sales 336.41 342.78 368.55 383.00 378.15 379.23 399.09 419.01 436.78 453.09
Y/Y % Change 1.90% 7.52% 3.92% -1.27% 0.28% 5.24% 4.99% 4.24% 3.73% 3.7%
Cost of products sold 168.30 174.30 179.39 184.14 177.97 168.76 175.60 186.46 194.37 203.89
Gross profit (loss) 168.11 168.48 189.16 198.85 200.18 210.47 223.49 232.55 242.41 249.20
Gross Margin 49.97% 49.15% 51.33% 51.92% 52.94% 55.50% 56.00% 55.50% 55.50% 55.00%
Historical Sales by Geographic Segment
2011 2012 2013 2014 2015 CAGR 2016E 2017E 2018E 2019E 2020E 16-20 CAGR
Americas 169.9 177.4 180.5 180.8 187.3 2.47% 191.98 195.82 198.76 200.75 202.75 1.37%
EMEA 125.4 116.9 136 151.4 136.8 2.20% 129.96 139.06 148.79 157.72 165.60 6.25%
Asia-Pacific 41.1 48.5 52 50.8 54 7.06% 57.24 64.11 71.80 79.70 87.67 11.25%
Total 336.4 342.8 368.5 383 378.1 2.96% 379.18 399.05 418.97 436.74 453.05 4.55%
Historical % of Sales by Geographic Segment
2011 2012 2013 2014 2015 AVG 2016E 2017E 2018E 2019E 2020E
Americas 50.51% 51.75% 48.98% 47.21% 49.54% 49.60% 50.63% 49.07% 47.44% 45.97% 44.75%
EMEA 37.28% 34.10% 36.91% 39.53% 36.18% 36.80% 34.27% 34.85% 35.51% 36.11% 36.55%
Asia-Pacific 12.22% 14.15% 14.11% 13.26% 14.28% 13.60% 15.10% 16.07% 17.14% 18.25% 19.35%
Total 100.00% 100.00% 100.00% 100.00% 100.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00%

22
($ In Millions )
Operating activities:
Net income 36.43 35.49 39.81 43.75 44.81 50.09 52.88 55.67 58.34 60.97
Adjustments to net income:
Depreciation and amortization 4.39 4.87 5.36 5.86 6.46 6.22 6.63 6.81 6.72 6.36
Impairment of long-lived assets - - 1.08 - - - - - - -
Net (gains) losses on sales of PPE 0.15 0.07 0.00 (0.04) (0.07) - - - - -
Deferred income taxes 2.83 0.37 (1.00) (0.74) (1.33) - - - - -
Excess tax benefits from settlements of stock-
based equity awards (1.20) (0.67) (0.85) (0.83) (1.21) (1.21) (1.21) (1.21) (1.21) (1.21)
Stock-based compensation 3.03 2.77 2.45 2.26 2.78 2.78 2.78 2.78 2.78 2.78
Unrealized foreign currency exchange losses
(gains), net 0.47 2.11 1.11 (0.07) 2.09 - - - - -
Provision for bad debts 0.16 0.16 0.51 0.22 0.30 - - - - -
Changes in assets and liabilities: - - - - -
Trade accounts receivable (9.78) 0.23 (3.80) (5.82) (0.31) (1.92) (3.18) (3.19) (2.84) (2.61)
Inventories (2.65) (12.35) (2.83) (2.24) 2.04 1.72 (1.59) (1.59) (1.42) (1.30)
Other assets 2.80 (0.06) (2.00) (2.21) 1.73 - - - - -
Accounts payable and accrued liabilities 0.66 3.21 (0.89) (0.56) (2.46) 4.28 1.90 1.90 1.66 1.49
Accrued payroll and related expenses (7.80) (2.79) 10.36 (3.05) (2.72) (0.39) 0.68 0.68 0.61 0.56
Income taxes payable 2.66 1.41 2.28 2.00 2.74 - - - - -
Other long-term liabilities (2.15) (0.55) (0.04) 0.19 0.23 - - - - -
Net cash provided by operating activities 30.01 34.25 51.57 38.73 55.06 61.58 58.90 61.87 64.64 67.05
Investing activities:
Purchases of property and equipment (2.88) (3.77) (2.85) (4.09) (5.78) (6.50) (6.50) (6.50) (6.50) (6.50)
Proceeds from sales of property and equipment 0.17 1.17 0.16 0.33 0.33 - - - - -
Purchase of intangible assets - - - (1.80) - - - - - -
Acquisition of business - - - - (4.12) - - - - -
Purchases of short-term investments (0.52) (1.03) (38.84) (7.71) (10.58) - - - - -
Maturities of short-term investments - 0.51 2.00 2.76 3.19 - - - - -
Net cash used in investing activities (3.22) (3.11) (39.53) (10.50) (16.95) (6.50) (6.50) (6.50) (6.50) (6.50)
Financing activities:
TS purchases and Dividends Paid (59.62) (58.07) (50.48) (62.96) (51.98) (60.05) (31.73) (33.40) (35.00) (36.58)
Proceeds from issuance of common stock 20.22 7.03 4.79 1.28 2.11 - - - - -
Excess tax benefits from settlements of stock-
based equity awards - 0.67 0.85 0.83 1.21 - - - - -
Proceeds from revolving credit facility 5.00 114.55 18.00 35.00 10.00 25.00 - - - -
Repayments of revolving credit facility (5.00) (69.55) - - - - - - - -
Repayments of long-term debt (10.71) (10.72) - - - - - - - -
Net cash used in financing activities (48.93) (16.08) (26.84) (25.84) (38.66) (35.05) (31.73) (33.40) (35.00) (36.58)
Effect of exchange rate changes on cash and
cash equivalents 2.61 (1.73) (1.48) 1.98 (3.36) - - - - -
Net (decrease) increase in cash and cash
equivalents (19.54) 13.33 (16.29) 4.37 (3.91) 20.04 20.67 21.96 23.14 23.97
Cash and cash equivalents at beginning of
period 75.93 56.39 69.72 53.43 57.80 53.90 73.93 94.60 116.57 139.70
Cash and cash equivalents at end of
period 56.39 69.72 53.43 57.80 53.90 73.93 94.60 116.57 139.70 163.67
Cash paid for: - - - - -
Interest 0.99 0.64 0.70 0.92 1.17
Income taxes, net of tax refunds received 11.42 13.24 16.61 18.15 15.41
Historical Statement of Cash Flows Projected Statement of Cash Flows

23
($ In Millions )
Current assets:
Cash and cash equivalents 20.16% 23.17% 16.54% 16.63% 15.89% 20.55% 24.57% 28.33% 31.85% 35.07%
Short-term investments 0.19% 0.34% 11.61% 12.96% 14.33% 13.51% 12.62% 11.81% 11.08% 10.41%
Accounts Receivable, net 20.85% 18.44% 17.61% 18.30% 17.32% 16.86% 16.58% 16.29% 15.93% 15.53%
Inventories 6.29% 9.90% 10.04% 10.06% 9.45% 8.43% 8.29% 8.15% 7.96% 7.77%
Current deferred tax assets, net 6.29% 1.84% 1.76% 1.68% 1.72% 1.62% 1.51% 1.42% 1.33% 1.25%
Other current assets 1.73% 1.50% 1.92% 2.40% 1.81% 1.70% 1.59% 1.49% 1.40% 1.31%
Total current assets 51.17% 55.21% 59.48% 62.03% 60.50% 62.74% 65.23% 67.54% 69.60% 71.39%
Property and equipment, net 3.03% 3.01% 2.64% 2.79% 3.35% 4.01% 4.50% 4.87% 5.15% 5.35%
Goodwill 34.12% 31.68% 29.48% 27.47% 28.42% 26.80% 25.04% 23.43% 21.98% 20.66%
Other intangible assets, net 10.70% 9.20% 7.52% 6.81% 6.77% 5.54% 4.39% 3.38% 2.54% 1.90%
Other assets 0.98% 0.89% 0.88% 0.91% 0.96% 0.91% 0.85% 0.79% 0.74% 0.70%
Total assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current liabilities:
Accounts payable 6.92% 7.06% 6.10% 5.19% 5.05% 5.27% 5.18% 5.09% 4.98% 4.85%
Accrued liabilities 5.45% 5.48% 5.13% 5.29% 4.48% 4.90% 4.82% 4.73% 4.61% 4.48%
Accrued payroll and related expenses 2.67% 1.96% 5.34% 4.59% 3.94% 3.60% 3.54% 3.48% 3.40% 3.32%
Income taxes payable 0.51% 0.27% 0.35% 0.44% 0.67% 0.64% 0.59% 0.56% 0.52% 0.49%
Total current liabilities 15.55% 14.77% 16.91% 15.51% 14.14% 14.41% 14.14% 13.86% 13.52% 13.14%
Revolving credit facility 3.83% 14.96% 19.50% 28.19% 31.83% 36.97% 34.54% 32.32% 30.32% 28.50%
Long-term deferred tax liabilities, net 7.80% 7.98% 7.43% 6.98% 6.82% 6.43% 6.01% 5.62% 5.28% 4.96%
Other long-term liabilities 0.90% 0.65% 0.59% 0.60% 0.67% 0.63% 0.59% 0.55% 0.52% 0.49%
Total liabilities 28.08% 38.36% 44.44% 51.27% 53.47% 58.45% 55.28% 52.36% 49.63% 47.09%
Shareholders' equity:
Common stock 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.00% 0.00% 0.00%
Additional paid-in capital 41.83% 41.95% 41.24% 39.18% 41.75% 39.81% 37.60% 35.57% 33.73% 32.04%
Retained earnings 62.91% 64.24% 66.25% 68.34% 76.84% 79.42% 79.69% 79.99% 80.35% 80.75%
AOCI -0.13% -0.91% -1.56% 0.32% -2.57% -2.42% -2.27% -2.12% -1.99% -1.87%
Treasury Stock -32.69% -43.64% -50.37% -59.11% -69.50% -75.26% -70.32% -65.80% -61.72% -58.02%
Total shareholders' equity 71.92% 61.64% 55.56% 48.73% 46.53% 41.55% 44.72% 47.64% 50.37% 52.91%
Total liabilities and shareholders' 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Historical Balance Sheet Common Size Projected Balance Sheet Common Size
($ In Millions )
Net sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of products sold 50.03% 50.85% 48.67% 48.08% 47.06% 45.00% 45.00% 45.00% 45.00% 45.00%
Gross profit (loss) 49.97% 49.15% 51.33% 51.92% 52.94% 55.00% 55.00% 55.00% 55.00% 55.00%
Selling, general & administrative expense 25.95% 25.94% 28.32% 28.35% 28.79% 28.50% 28.50% 28.50% 28.50% 28.50%
Advertising & sales promotion expense 7.47% 7.50% 6.73% 6.25% 6.05% 6.50% 6.50% 6.50% 6.50% 6.50%
Amortization of definite-lived intangible assets 0.46% 0.62% 0.61% 0.68% 0.80% 0.80% 0.77% 0.74% 0.66% 0.52%
Impairment of definite-lived intangible assets 0.00% 0.00% 0.29% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total operating expenses 33.88% 34.06% 35.96% 35.28% 35.64% 35.80% 35.77% 35.74% 35.66% 35.52%
Income (loss) from operations 16.09% 15.09% 15.37% 16.64% 17.29% 19.20% 19.23% 19.26% 19.34% 19.48%
Interest income 0.07% 0.08% 0.14% 0.16% 0.15% 0.15% 0.14% 0.14% 0.13% 0.13%
Interest expense 0.32% 0.21% 0.19% 0.26% 0.32% 0.48% 0.54% 0.52% 0.50% 0.49%
Other income (expense), net 0.07% -0.10% 0.11% -0.10% -0.44% 0.00% 0.00% 0.00% 0.00% 0.00%
Income (loss) before income taxes - US 11.10% 10.70% 9.85% 10.85% 10.06% 0.00% 0.00% 0.00% 0.00% 0.00%
Income (loss) before income taxes - foreign 4.82% 4.16% 5.58% 5.59% 6.63% 0.00% 0.00% 0.00% 0.00% 0.00%
Income (loss) before income taxes 15.91% 14.85% 15.43% 16.44% 16.69% 18.86% 18.83% 18.88% 18.98% 19.12%
Provision for income taxes 5.08% 4.50% 4.63% 5.02% 4.84% 5.66% 5.65% 5.66% 5.69% 5.74%
Net income (loss) 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.18% 13.21% 13.28% 13.38%
Historical Income Statement Common Size Projected Income Statement Common Size

24
($ In Millions )
Operating activities:
Net income 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
Adjustments to net income:
Depreciation and amortization 1.30% 1.42% 1.45% 1.53% 1.71% 1.64% 1.66% 1.63% 1.54% 1.40%
Impairment of long-lived assets 0.00% 0.00% 0.29% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Net (gains) losses on sales and disposals of property and equipment0.05% 0.02% 0.00% -0.01% -0.02% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred income taxes 0.84% 0.11% -0.27% -0.19% -0.35% 0.00% 0.00% 0.00% 0.00% 0.00%
Excess tax benefits from settlements of stock-based equity awards-0.36% -0.20% -0.23% -0.22% -0.32% -0.32% -0.30% -0.29% -0.28% -0.27%
Stock-based compensation 0.90% 0.81% 0.67% 0.59% 0.74% 0.73% 0.70% 0.66% 0.64% 0.61%
Unrealized foreign currency exchange losses (gains), net0.14% 0.62% 0.30% -0.02% 0.55% 0.00% 0.00% 0.00% 0.00% 0.00%
Provision for bad debts 0.05% 0.05% 0.14% 0.06% 0.08% 0.00% 0.00% 0.00% 0.00% 0.00%
Changes in assets and liabilities:
Trade accounts receivable -2.91% 0.07% -1.03% -1.52% -0.08% -0.51% -0.80% -0.76% -0.65% -0.58%
Inventories -0.79% -3.60% -0.77% -0.58% 0.54% 0.45% -0.40% -0.38% -0.33% -0.29%
Other assets 0.83% -0.02% -0.54% -0.58% 0.46% 0.00% 0.00% 0.00% 0.00% 0.00%
Accounts payable and accrued liabilities 0.20% 0.94% -0.24% -0.15% -0.65% 1.13% 0.48% 0.45% 0.38% 0.33%
Accrued payroll and related expenses -2.32% -0.82% 2.81% -0.80% -0.72% -0.10% 0.17% 0.16% 0.14% 0.12%
Income taxes payable 0.79% 0.41% 0.62% 0.52% 0.72% 0.00% 0.00% 0.00% 0.00% 0.00%
Other long-term liabilities -0.64% -0.16% -0.01% 0.05% 0.06% 0.00% 0.00% 0.00% 0.00% 0.00%
Net cash provided by operating activities 8.92% 9.99% 13.99% 10.11% 14.56% 16.24% 14.76% 14.77% 14.80% 14.80%
Investing activities:
Purchases of property and equipment -0.85% -1.10% -0.77% -1.07% -1.53% -1.71% -1.63% -1.55% -1.49% -1.43%
Proceeds from sales of property and equipment 0.05% 0.34% 0.04% 0.09% 0.09% 0.00% 0.00% 0.00% 0.00% 0.00%
Purchase of intangible assets 0.00% 0.00% 0.00% -0.47% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Acquisition of business 0.00% 0.00% 0.00% -1.09% 0.00% 0.00% 0.00% 0.00% 0.00%
Purchases of short-term investments -0.15% -0.30% -10.54% -2.01% -2.80% 0.00% 0.00% 0.00% 0.00% 0.00%
Maturities of short-term investments 0.00% 0.15% 0.54% 0.72% 0.84% 0.00% 0.00% 0.00% 0.00% 0.00%
Net cash used in investing activities -0.96% -0.91% -10.73% -2.74% -4.48% -1.71% -1.63% -1.55% -1.49% -1.43%
Financing activities:
Treasury stock purchases -12.30% -11.62% -8.53% -11.17% -8.00% -9.23% 0.00% 0.00% 0.00% 0.00%
Dividends paid -5.42% -5.32% -5.17% -5.27% -5.74% -6.61% -7.95% -7.97% -8.02% -8.08%
Proceeds from issuance of common stock 6.01% 2.05% 1.30% 0.34% 0.56% 0.00% 0.00% 0.00% 0.00% 0.00%
Excess tax benefits from settlements of stock-based equity awards0.00% 0.20% 0.23% 0.22% 0.32% 0.00% 0.00% 0.00% 0.00% 0.00%
Proceeds from revolving credit facility 1.49% 33.42% 4.88% 9.14% 2.64% 6.59% 0.00% 0.00% 0.00% 0.00%
Repayments of revolving credit facility -1.49% -20.29% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Repayments of long-term debt -3.18% -3.13% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Net cash used in financing activities -14.55% -4.69% -7.28% -6.75% -10.22% -9.24% -7.95% -7.97% -8.02% -8.08%
Effect of exchange rate changes on cash and cash equivalents0.78% -0.50% -0.40% 0.52% -0.89% 0.00% 0.00% 0.00% 0.00% 0.00%
Net (decrease) increase in cash and cash equivalents-5.81% 3.89% -4.42% 1.14% -1.03% 5.28% 5.18% 5.24% 5.30% 5.29%
Cash and cash equivalents at beginning of period22.57% 16.45% 18.92% 13.95% 15.29% 14.21% 18.53% 22.58% 26.69% 30.84%
Cash and cash equivalents at end of period 16.76% 20.34% 14.50% 15.09% 14.25% 19.50% 23.71% 27.82% 31.99% 36.13%
Cash paid for:
Interest 0.29% 0.19% 0.19% 0.24% 0.31% 0.00% 0.00% 0.00% 0.00% 0.00%
Income taxes, net of tax refunds received 3.40% 3.86% 4.51% 4.74% 4.08% 0.00% 0.00% 0.00% 0.00% 0.00%
Historical Statement of Cash Flows Common Size Projected Statement of Cash Flows Common Size

25
Appendix 10: Financial Ratios
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
PROFITABILITY RATIOS
RETURN ON ASSETS
Profit Margin for ROA 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
x Asset Turnover 1.18 1.18 1.18 1.14 1.10 1.08 1.07 1.05 1.03 1.00
ROA 12.81% 12.22% 12.76% 13.04% 13.05% 14.33% 14.20% 13.98% 13.72% 13.47%
RETURN ON COMMON EQUITY
Profit Margin for ROCE 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
x Asset Turnover 1.18 1.18 1.18 1.14 1.10 1.08 1.07 1.05 1.03 1.00
x Capital Structure Leverage 1.43 1.50 1.71 1.92 2.10 2.27 2.32 2.16 2.04 1.93
ROE 18.32% 18.35% 21.82% 25.07% 27.38% 32.60% 32.88% 30.23% 27.98% 26.06%
PROFITABILITY RATIOS
Gross Margin 49.97% 49.15% 51.33% 51.92% 52.94% 55.00% 55.00% 55.00% 55.00% 55.00%
Profit Margin 10.83% 10.35% 10.80% 11.42% 11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
Comprehensive Income / Revenues
ROCE 18.32% 18.35% 21.82% 25.07% 27.38% 32.60% 32.88% 30.23% 27.98% 26.06%
RNOA 17.12% 16.40% 18.20% 20.78% 21.34% 22.59% 21.92% 21.06% 20.21% 19.43%
Leverage 7.95% 14.00% 19.03% 22.48% 34.33% 46.79% 52.47% 45.83% 40.48% 36.07%
Spread 15.04% 13.91% 19.02% 19.11% 17.60% 21.38% 20.89% 20.02% 19.18% 18.40%
RNOA as percentage of ROCE 93.47% 89.38% 83.41% 82.87% 77.93% 69.31% 66.67% 69.64% 72.25% 74.54%
LIQUIDITY INDICATORS:
Current Ratio 3.29 3.74 3.52 4.00 4.28 4.35 4.61 4.87 5.15 5.43
Quick Ratio 2.65 2.84 2.71 3.09 3.36 3.53 3.80 4.07 4.35 4.64
Operating Cash Flow to Current Liabilities0.69 0.77 0.94 0.72 1.15 1.19 1.08 1.08 1.09 1.09
ASSET MANAGEMENT:
Accounts Receivable Turnover 6.34 6.02 6.56 6.36 6.18 6.35 6.41 6.40 6.38 6.36
Days Receivables Held 58 61 56 57 59 57 57 57 57 57
Inventory Turnover 10.98 7.35 5.77 5.46 5.31 5.47 5.77 5.76 5.74 5.73
Days Inventory Held 33 50 63 67 69 67 63 63 64 64
Revenues / Average Net Fixed Assets37.79 39.07 41.89 42.00 35.88 29.37 25.12 22.43 20.50 19.06
Cash Turnover 5.08 5.44 5.99 6.89 6.77 5.93 4.74 3.97 3.41 2.99
Days Sales Held in Cash 72 67 61 53 54 62 77 92 107 122
DEBT MANAGEMENT:
Total Liabilities / Total Assets 0.28 0.38 0.44 0.51 0.53 0.58 0.55 0.52 0.50 0.47
Total Liabilities / Total Equity 0.39 0.62 0.80 1.05 1.15 1.41 1.24 1.10 0.99 0.89
LT Debt / LT Capital 0.05 0.20 0.26 0.37 0.41 0.47 0.44 0.40 0.38 0.35
LT Debt / Total Equity 0.05 0.24 0.35 0.58 0.68 0.89 0.77 0.68 0.60 0.54
Operating Cash Flow to Total Liabilities0.38 0.30 0.36 0.22 0.30 0.29 0.28 0.29 0.30 0.31
Interest Coverage Ratio 50.31 70.96 81.73 63.61 54.27 40.34 42.54 44.75 46.86 48.95
Accounts Payable Turnover 9.02 9.18 8.89 9.90 9.96 9.36 9.31 9.30 9.25 9.22
Days Payables Held 40 40 41 37 37 39 39 39 39 40
Net Working Capital Days 50 70 78 87 91 85 81 81 81 81
CASH FLOW RATIOS
Free Cash Flow (in millions) 27.13 30.48 48.72 34.65 49.28 55.08 52.40 55.37 58.14 60.55
Inverse Measure of Earnings Quality0.023 0.004 -0.038 0.015 -0.030 -0.033 -0.016 -0.016 -0.015 -0.013
Cash Realization Ratio 0.82 0.97 1.30 0.89 1.23 1.23 1.11 1.11 1.11 1.10
Captial Expenditures Ratio 10.44 9.10 18.07 9.48 9.52 9.47 9.06 9.52 9.94 10.32
Cash Debt Coverage Ratio 0.38 0.30 0.36 0.22 0.30 0.29 0.28 0.29 0.30 0.31
Cash Return on Sales 0.09 0.10 0.14 0.10 0.15 0.16 0.15 0.15 0.15 0.15
DIVIDEND and STOCK MARKET-BASED RATIOS:
Common Dividends per Share $1.08 $1.14 $1.22 $1.33 $1.48 $1.77 $1.87 $1.97 $2.06 $2.16
Common Dividend Payout* 50.0% 51.4% 47.8% 46.1% 48.5% 50.0% 60.0% 60.0% 60.0% 60.0%
* Calculated as percent of Net Income

26
Appendix 11: Fully Diluted Shares Outstanding Calculation (Treasury Method)
Share Price, 1-year Average $ 87.02
Stock Options Outstanding as of 08/31/15 62,620
Weighted-Average Exercise Price $ 34.97
Cash Proceeds $2,189,821
Shares Repurchased 25,165
Restricted Stock Units (RSU) Outstanding as of 08/31/15 136,895
Weighted-Average Grant Date Fair Value $ 47.19
Market Share Units (MSU) Outstanding as of 08/31/15 57,604
Deferred Performance Units (DPU) Outstanding as of 08/31/15 30,798
Basic Shares Outstanding as of 11/30/15 14,406,219
Plus: New Shares from Exercise of Options, Rights and Warrants 287,917
Less: Shares Repurchased 163,971
Fully Diluted Shares Outstanding 14,530,165
Assumption: options, rights and warrants are exercised at the end of the period, and cash proceeds are used to reacquire
shares as treasury stock at the average market price during the period.

27
Appendix 12: WACC Calculation and Assumptions
Cost of Debt - preferred method
Interest Expense $ 1,205,000
Debt Outstanding $ 108,000,000
Cost of Debt Calculations Using Current Credit Agreement Terms
Debt
USD LIBOR -
3mo* Margin LIBOR+Margin
Outstanding
Balance
Commitment
Fee**
Revolving Line of
Credit 0.62110% 0.85% 1.47% $108,000,000 0.13%
*Source: http://www.global-rates.com/
** applied to the portion of the total credit facility commitment that has not been borrowed
Risk-free rate is based on the 10 year US treasury note of 1.75% plus potential 0.25% rate increase.
We based our estimate of the market risk premium on historical years average differences between equity market returns
and government debt returns as an unbiased estimate that gives an objective quality. In addition, arithmetic mean was used
to estimate the required rate of return for CAPM, because the arithmetic mean best represents the mean return in a single
period, and CAPM is a single-period model. After that, we adjusted the historical estimate upward due to our forward-looking
estimate (the expected equity risk premium is countercyclical in the United States – that is, the expected premium is high
during bad times but low during good times (Fama and French 1989; Ferson and Harvey 1991).
Cost of debt was calculated by dividing interest expense by debt outstanding, which we believe to the best option for
revolver. As an alternative, before-tax required return on debt was estimated using the expected YTM of the company’s debt
based on current market values.
WACC Analysis
Risk-Free Rate 2.00%
S&P 500 Adjusted Beta 0.815
Market Risk Premium 7.50%
Cost of Equity 8.11%
Interest Expense $ 1,205,000
Debt Outstanding $ 108,000,000
Equity Financing 92.17%
Debt Financing 7.83%
WACC 7.54%

28
Appendix 13: Raw Beta Calculation
Raw beta was computed by regressing WD-40’s returns against the S&P 500 returns based on weekly observations for
three years. Since adjusted beta more accurately predicts a future beta, we calculated it utilizing the Blume adjustment to
use in cost of equity calculations: Adjusted beta = (2/3)(Unadjusted beta) + (1/3)(1.0)
Regression Statistics
Multiple R 0.482847352
R Square 0.233141565
Adjusted R Square 0.228161965
Standard Error 0.022187861
Observations 156
Raw Beta 0.722
Adjusted Beta 0.815
Alpha 0.003
Appendix 14: Net Working Capital Calculations
For the purpose of calculating net working capital, only cash required for sustaining the projected Company growth rate was
taken into calculation. Required cash was calculated by growing 2015 cash and cash equivalents ending balance at
projected revenue growth rate. For the purposes of valuation, any cash over that amount is deemed to be excess cash.
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Cash (Required) 56.39 69.72 53.43 57.80 53.90 54.04 56.87 59.71 62.25 64.57
Accounts Receivable, net 58.32 55.49 56.88 63.62 58.75 60.67 63.85 67.04 69.88 72.49
Inventories 17.60 29.80 32.43 34.99 32.05 30.33 31.92 33.52 34.94 36.24
Current deferred tax assets, net 4.85 5.55 5.67 5.86 5.82 5.82 5.82 5.82 5.82 5.82
Other current assets 5.45 4.53 6.21 8.34 6.13 6.13 6.13 6.13 6.13 6.13
Total current assets 142.62 165.08 154.63 170.60 156.65 157.00 164.60 172.22 179.01 185.25
Accounts payable 19.37 21.24 19.69 18.03 17.13 18.96 19.95 20.95 21.84 22.65
Accrued liabilities 15.26 16.49 16.56 18.38 15.20 17.65 18.55 19.46 20.23 20.91
Accrued payroll and related expenses 7.47 5.90 17.24 15.97 13.36 12.97 13.65 14.33 14.94 15.49
Income taxes payable 1.41 0.81 1.15 1.53 2.29 2.29 2.29 2.29 2.29 2.29
Total current liabilities 43.52 44.45 54.65 53.91 47.97 51.86 54.44 57.02 59.29 61.34
Net Working Capital (NWC) 99.11 120.64 99.98 116.69 108.68 105.14 110.16 115.20 119.72 123.91
Change in NWC 21.53 (20.66) 16.71 (8.02) (3.54) 5.02 5.04 4.53 4.19
y = 0.3005x + 0.0024
-0.10
-0.08
-0.06
-0.04
-0.02
0.00
0.02
0.04
0.06
0.08
0.10
-0.08 -0.06 -0.04 -0.02 0.00 0.02 0.04 0.06
WD-40returns
S&P 500 returns
Period 01/28/2013 - 01/28/2016

29
Appendix 15: Historical Multiples of WDFC and its Peers
Source: Bloomberg and Team Estimates
Appendix 16: Comparables Valuation
Source: Bloomberg and Team Estimates

30
Appendix 17: WACC Sensitivity to Risk Free Rate and Market Risk Premium
Sensitivity Analysis - WACC Calculation
Risk Free Rate
7.54% 0.50% 1% 1.50% 2% 2.50% 3.00% 3.50% 4%
Market Risk
Premium
3.0% 2.78% 3.24% 3.70% 4.16% 4.62% 5.08% 5.54% 6.00%
4.5% 3.90% 4.36% 4.82% 5.29% 5.75% 6.21% 6.67% 7.13%
6.0% 5.03% 5.49% 5.95% 6.41% 6.87% 7.33% 7.79% 8.26%
7.5% 6.16% 6.62% 7.08% 7.54% 8.00% 8.46% 8.92% 9.38%
9.0% 7.28% 7.74% 8.21% 8.67% 9.13% 9.59% 10.05% 10.51%
10.5% 8.41% 8.87% 9.33% 9.79% 10.25% 10.71% 11.18% 11.64%
12.0% 9.54% 10.00% 10.46% 10.92% 11.38% 11.84% 12.30% 12.76%
 The Sensitivity analysis performed above can be interpreted that WDFC’s cost of obtaining capital is not as sensitive
to changes in risk-free rates and changes in the market-risk premium as most companies due to the fact that they
have a low beta. A generous risk-free rate between 1% and 3% and market-risk premium between 4.5% and 10.5%
output WACCs between 4.36% and 10.71%, a range that in the sensitivity analysis for our DCF terminal values results
in a share price below 107.79, supporting our sell recommendation.

31
Appendix 18: Discounted Cash Flow Analysis
Period 0.5 1.5 2.5 3.5 4.5 5.5
Year 2016E 2017E 2018E 2019E 2020E
Terminal
Value
(+) Revenue 379.18 399.05 418.97 436.74 453.05
(-) COGS 170.63 179.57 188.54 196.53 203.87
(-) Operating Costs 135.74 142.69 149.66 155.62 160.83
(=) Operating Profit 51.11 53.91 56.70 59.38 62.02 62.021
(-) Change in NWC1
-3.54 5.02 5.04 4.53 4.19 0
(-) Investments in Fixed Capital -6.50 -6.50 -6.50 -6.50 -6.50 0
(-) Depreciation 6.22 6.63 6.81 6.72 6.36 0
(=) FCF 54.37 49.02 51.98 55.07 57.69 1261.58
(^) Present Value 52.43 43.96 43.34 42.70 41.60 909.64
Appendix 19: DCF Sensitivity Analysis
Sensitivity Analysis - Perpetuity Growth
Terminal Growth Rate
$73.93 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount
Rate
(WACC)
4.50% $142.00 $155.30 $171.56 $191.89 $218.03 $252.88 $301.66
5.50% $103.08 $109.82 $117.60 $126.68 $137.40 $150.27 $166.00
6.50% $ 80.57 $ 84.57 $ 89.05 $ 94.08 $ 99.79 $106.31 $113.84
7.50% $ 65.90 $ 68.51 $ 71.38 $ 74.54 $ 78.03 $ 81.90 $ 86.24
8.50% $ 55.58 $ 57.41 $ 59.38 $ 61.52 $ 63.85 $ 66.38 $ 69.16
9.50% $ 47.93 $ 49.27 $ 50.70 $ 52.23 $ 53.87 $ 55.64 $ 57.55
10.50% $ 42.04 $ 43.05 $ 44.13 $ 45.27 $ 46.48 $ 47.77 $ 49.16
Sensitivity Analysis - Estimated Upside
1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount
Rate
(WACC)
4.50% 31.7% 44.1% 59.2% 78.0% 102.3% 134.6% 179.9%
5.50% -4.4% 1.9% 9.1% 17.5% 27.5% 39.4% 54.0%
6.50% -25.3% -21.5% -17.4% -12.7% -7.4% -1.4% 5.6%
7.50% -38.9% -36.4% -33.8% -30.8% -27.6% -24.0% -20.0%
8.50% -48.4% -46.7% -44.9% -42.9% -40.8% -38.4% -35.8%
9.50% -55.5% -54.3% -53.0% -51.5% -50.0% -48.4% -46.6%
10.50% -61.0% -60.1% -59.1% -58.0% -56.9% -55.7% -54.4%
1
Refer to Appendix 11 for Change in NWC calculations
2
WDFC trades at a premium to the S&P 500 and its comp group so historical multiple approach is most appropriate. The 19.4
comes from their FY 15 EV/EBITDA trailing Multiple of 16.9 with a 15% premium per historical trend.
Perpetuity TerminalX
(+) Sum of PVs (Fair Value) 1133.67 1311.40
(-) Net Current Debt 108.00 108.00
(+) Excess Cash 48.60 48.60
(=) Equity Value 1074.27 1252.00
(/) Diluted Shares Outstanding 14.53 14.53
(=) Share Price $73.93 $86.17
Feb 19, 2016 Price $107.79
Estimated Upside -31.4% -20.1%
Terminal Value with Multiple
2020E EBITDA 90.61
(*) Exit Multiple2 19.4
(=) Terminal Value 1757.82
Discounted Terminal Value 1267.44

32
Sensitivity Analysis - Implied EV/EBITDA
1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount
Rate
(WACC)
4.50% 23.56 25.98 28.94 32.63 37.39 43.72 52.59
5.50% 17.28 18.56 20.03 21.76 23.79 26.23 29.22
6.50% 13.64 14.43 15.32 16.32 17.45 18.74 20.23
7.50% 11.27 11.81 12.40 13.05 13.77 14.57 15.47
8.50% 9.60 9.99 10.42 10.88 11.38 11.92 12.52
9.50% 8.36 8.66 8.98 9.32 9.69 10.09 10.52
10.50% 7.40 7.64 7.89 8.16 8.44 8.74 9.07
Sensitivity Analysis - Terminal EBITDA Multiple
EV/EBITDA
$89.88 13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount
Rate
(WACC)
4.50% $ 71.33 $ 81.56 $ 91.79 $102.02 $112.25 $122.48 $132.71
5.50% $ 68.41 $ 78.21 $ 88.01 $ 97.81 $107.61 $117.41 $127.22
6.50% $ 65.63 $ 75.03 $ 84.42 $ 93.82 $103.21 $112.60 $122.00
7.50% $ 63.00 $ 72.01 $ 81.01 $ 90.02 $ 99.03 $108.04 $117.04
8.50% $ 60.49 $ 69.13 $ 77.77 $ 86.41 $ 95.05 $103.69 $112.33
9.50% $ 58.11 $ 66.40 $ 74.69 $ 82.98 $ 91.27 $ 99.56 $107.85
10.50% $ 55.84 $ 63.80 $ 71.76 $ 79.72 $ 87.68 $ 95.64 $103.59
Sensitivity Analysis – Terminal Estimated Upside
EV/EBITDA
13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount
Rate
(WACC)
4.50% -37.3% -27.8% -18.3% -8.8% 0.7% 10.2% 19.7%
5.50% -40.0% -30.9% -21.8% -12.7% -3.6% 5.5% 14.6%
6.50% -42.6% -33.8% -25.1% -16.4% -7.7% 1.0% 9.7%
7.50% -45.0% -36.6% -28.3% -19.9% -11.6% -3.2% 5.1%
8.50% -47.3% -39.3% -31.3% -23.3% -15.3% -7.2% 0.8%
9.50% -49.5% -41.8% -34.1% -26.5% -18.8% -11.1% -3.4%
10.50% -51.6% -44.2% -36.9% -29.5% -22.1% -14.7% -7.3%
Sensitivity Analysis - Implied Perpetuity Growth
EV/EBITDA
13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount
Rate
(WACC)
4.50% 0.2% 0.7% 1.0% 1.3% 1.5% 1.7% 1.9%
5.50% 1.2% 1.6% 2.0% 2.2% 2.5% 2.7% 2.9%
6.50% 2.2% 2.6% 2.9% 3.2% 3.5% 3.7% 3.9%
7.50% 3.1% 3.5% 3.9% 4.2% 4.4% 4.6% 4.8%
8.50% 4.1% 4.5% 4.9% 5.2% 5.4% 5.6% 5.8%
9.50% 5.0% 5.5% 5.8% 6.1% 6.4% 6.6% 6.8%
10.50% 6.0% 6.4% 6.8% 7.1% 7.4% 7.6% 7.8%

33
Appendix 20: Modified Dividend Discount Model
2016E 2017E 2018E 2019E 2020E Terminal
Payout/Share 4.23 2.23 2.35 2.46 3.35 121.93
Discount Rate (WACC) 7.54% 7.54% 7.54% 7.54% 7.54%
Growth Rate 19.09% -47.14% 5.27% 4.79%
PV 3.93 1.93 1.89 93.01
Sum (Value/Share) 100.76
Gordon Growth Model
2020E Payout/Share 3.35
Discount Rate 7.54%
2019E Growth Rate 4.79%
Terminal Value 121.93
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Dividends + Repurchases 59.62 58.07 50.48 62.96 51.98 60.05 31.73 33.40 35.00 36.58
Net Income 36.43 35.49 39.81 43.75 44.81 50.09 52.88 55.67 58.34 60.97
Payout ratio 164% 164% 127% 144% 116% 120% 60% 60% 60% 60%
Payout/share 3.51 3.62 3.23 4.16 3.55 4.23 2.23 2.35 2.46 3.35

34
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