2016 CFA Institute Research Challenge: Expensive Slow-Grower

2016 CFA Institute Research
Challenge: San Diego
San Diego State University
Viktoriya Demina
Olga Grigorchuk
Paul Lamb
Ryan Neumann
Hongliao Xiong

Executive Summary – “Expensive Slow-Grower”
Summary Business Overview Financial Analysis Valuation Risks Recommendation
Recommendation:
Sell
2/19/2016 Closing
Price: $107.79
12-Month Price
Target: $87
Downside Potential:
19%
30
40
50
60
70
80
90
100
110
Price/Share($)
Target Price : $87
Current Price : 107
2

•Global Marketing Company
•Two product segments
oMaintenance Products
oHomecare Products
The
Americas
50%EMEA
36%
Asia-
Pacific
14%
Business Overview
3

Competitive Positioning
•Americas Segment
oStrong competitive positioning
oMature market
•EMEA and Asia-Pacific
oGrowth opportunities/challenges
0
1
2
3
4
5
Buyer Power
Supplier
Power
New Entrants
Substitute
Products
Competitive
Rivalry
0 = No Threat
1 = Minimal Threat
2 = Low Threat
3 = Moderate Threat
4 = Significant Threat
5 = High Threat
4

170 177 181 181 187 192 196 199 201 203
125 117
136 151 137 130 139 149 158 166
41 49
52
51 54 57
64
72
80
88
36 35 40 44 45
50 53 56 58 61
0
50
100
150
200
250
300
350
400
450
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
MillionsofUSDollars
Americas EMEA Asia-Pacific Net income
Financial Analysis – Revenue Projections
5

0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
ModifiedPayout%ofN.I.
Millionsof$
Dividends + Repurchases Net Income Payout ratio
Financial Analysis – Modified Payout Ratio
6

Financial Analysis – ROE
• Inflated ROE
• Cash trapped overseas
ThreeStep DuPont Analysis
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Net Profit Margin 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
Financial 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%
7

Valuation – Summary
$87
DCF
$73.93
DCF
$86.17
DDM
$100.77
8

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
Pre Tax 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 7.54%
Valuation – WACC Analysis
9

Terminal Value Methodology
Gordon
Growth
Terminal
Ratio
(+) 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 $107.79
Estimated Upside -31.4% -20.1%
Assumptions
• 2.5% Terminal Growth Rate
• 19.4x Terminal Multiple
• 2020 EBITDA = $90M
Valuation – Discounted Cash Flows
10

Valuation – DCF Sensitivity
Sensitivity Analysis - Terminal EBITDA Multiple
EV/EBITDA
13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount
Rate
(WACC)
4.5% $ 71.33 $ 81.56 $ 91.79 $102.02 $112.25 $122.48 $132.71
5.5% $ 68.41 $ 78.21 $ 88.01 $ 97.81 $107.61 $117.41 $127.22
6.5% $ 65.63 $ 75.03 $ 84.42 $ 93.82 $103.21 $112.60 $122.00
7.5% $ 63.00 $ 72.01 $ 81.01 $ 90.02 $ 99.03 $108.04 $117.04
8.5% $ 60.49 $ 69.13 $ 77.77 $ 86.41 $ 95.05 $103.69 $112.33
9.5% $ 58.11 $ 66.40 $ 74.69 $ 82.98 $ 91.27 $ 99.56 $107.85
10.5% $ 55.84 $ 63.80 $ 71.76 $ 79.72 $ 87.68 $ 95.64 $103.59
Sensitivity Analysis - Perpetuity Growth
Terminal Growth Rate
1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount
Rate
(WACC)
4.5% $142.00 $155.30 $171.56 $191.89 $218.03 $252.88 $301.66
5.5% $103.08 $109.82 $117.60 $126.68 $137.40 $150.27 $166.00
6.5% $ 80.57 $ 84.57 $ 89.05 $ 94.08 $ 99.79 $106.31 $113.84
7.5% $ 65.90 $ 68.51 $ 71.38 $ 74.54 $ 78.03 $ 81.90 $ 86.24
8.5% $ 55.58 $ 57.41 $ 59.38 $ 61.52 $ 63.85 $ 66.38 $ 69.16
9.5% $ 47.93 $ 49.27 $ 50.70 $ 52.23 $ 53.87 $ 55.64 $ 57.55
10.5% $ 42.04 $ 43.05 $ 44.13 $ 45.27 $ 46.48 $ 47.77 $ 49.16
11

Valuation – Modified Dividend Discount Model
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Dividends + Repurchases 59.63 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
2016E 2017E 2018E 2019E 2020E Terminal
Dividends + Repurchases 4.23 2.23 2.35 2.46 3.35 121.95
PV 3.93 1.93 1.89 93.02
Sum (Value/Share) 100.77
12

Strengthening Dollar
Counterfeit
Reproductions and
Competition
Increase in Oil Prices
Government
Regulations and
Political Instability
Attracting/Retaining
Quality Employees
Likelihood
LowMediumHigh
Low Medium High
Impact
Investment Risks
13

75
80
85
90
95
100
105
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Index(Mar1973=100)
Date
Trade Weighted US Dollar Index: Major Currencies
Investment Risks – Stronger US Dollar
14

Source: Nasdaq.com
Investment Risks – Price of Oil
15

• Unsustainable Payout Ratios
• Low Growth
• Intrinsic Values < Market Value
Recommendation
Recommendation:
Sell
2/19/2016 Closing
Price: $107.79
12-Month Price
Target: $87
Downside Potential:
19%
16

“You only need two things in
life: Duct Tape and WD-40. If it
moves and shouldn’t, use Duct
Tape, if it doesn’t move and
should, use WD-40.”
Thank you for your
attention
17

1. Cover Page
2. Executive Summary
3. Business Overview
4. Competitive Positioning
5. Revenue Projections
6. Modified Payout Ratio
7. ROE
8. Valuation Summary
9. WACC Analysis
10. DCF Analysis
11. DCF Sensitivity
12. Modified DDM
13. Investment Risks
14. Exchange Rates
15. Crude Prices
Appendices – Index
16. Recommendation
17. Questions
18. Appendix Index
19. Income Statement
20. Common Size I.S.
21. Revenue by Geography
22. Revenue by Product
23. Balance Sheet
24. Balance Sheet POS
25. Cash Flows
26. Cash Flows POS
27. Schedules
28. Beta Calculation
29. Treasury Method
30. WACC Sensitivity 18
31. DCF Calculations
32. NWC Calculations
33. DCF Sensitivity (perp)
34. DCF Sensitivity (EVx)
35. Historical Multiples
36. Multiples Comps
37. Comparables
38. DDM
39. Demand Drivers
40. Suppliers
41. Counterfeiting
42. Selected Ratios
43. Ratios
44. Ratios (cont.)
45. ROE Reversal
46. Solvency
47. Strategies
48. Brands
49. Brands
50. Shareholders
51. Can Costs
52. Performance

Appendices – Income Statement($ In Millions )
As of August 31, 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
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
Operating Margin 16.1% 15.1% 15.4% 16.6% 17.3% 19.2% 19.2% 19.3% 19.4% 19.5%
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: N.I. (loss) allocated to participating securities - - - - 0.27
N.I. (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 2.24 2.36 2.48 2.59
Dividends/Share Growth 5.56% 7.02% 9.02% 11.28% 16.30% 26.72% 5.27% 4.79% 4.51%
Total number of employees 334 347 369 395 433
Historical Income Statement Projected Income Statement
See Rev Breakdown (next slide)
Model to 55% Gross Margin
% of Sales
Q1 Conference Call
10K Report
Source: Company Data &
Team Estimates
19

Appendices – Common Size I.S.
20
($ In Millions ) Historical Income Statement Common Size Projected Income Statement Common Size
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%

Appendices – Revenue Breakdown
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%
Historical Sales Growth by Geographic Segment
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Americas (6.00%) 4.41% 1.75% 0.17% 3.60% 2.50% 2.00% 1.50% 1.00% 1.00%
EMEA 14.00% (6.78%) 16.34% 11.32% (9.64%) (5.00%) 7.00% 7.00% 6.00% 5.00%
Asia-Pacific 31.00% 18.00% 7.22% (2.31%) 6.30% 6.00% 12.00% 12.00% 11.00% 10.00%
Total 5.00% 1.90% 7.50% 3.93% (1.28%) 0.29% 5.24% 4.99% 4.24% 3.74%
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%
49.54
%
36.18
%
14.28
%
50.63%
34.27%
15.10%
Americas EMEA Asia-Pacific
44.75%
36.55%
19.35%
2015 2016E 2020E
21

Appendices – Revenue Breakdown
Date 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Net sales - MUP 278.76 286.48 320.88 337.83 333.31 337.07 359.47 381.77 401.77 420.18
Y/Y % Change 8.00% 2.77% 12.01% 5.28% -1.34% 1.13% 6.64% 6.20% 5.24% 4.58%
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%
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%
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 & Project Sales by Product Segment
Historical % of Sales by Product Segment
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Maintenance Products 82.88% 83.58% 87.06% 88.20% 88.15% 88.15% 88.89% 90.08% 91.12% 91.99%
Homecare and Cleaning 17.12% 16.42% 12.94% 11.80% 11.85% 11.85% 11.11% 9.92% 8.88% 8.01%
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
22

Appendices – Balance Sheet($ In Millions ) Historical Balance Sheet Projected Balance Sheet
Current assets: Cash GR 54.04272646 56.874565 59.714028 62.24590279 64.57078726
Cash and cash equivalents 56.39 69.72 53.43 57.80 53.90 73.93 94.60 116.57 139.70 163.67
Short-term investments 0.53 1.03 37.52 45.05 48.60 48.60 48.60 48.60 48.60 48.60
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(9) 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' equity $ 279.78 $ 300.87 $ 323.06 $ 347.68 $ 339.26 $ 359.77 $ 385.08 $ 411.50 $ 438.69 $ 466.71
23

Appendices – Balance Sheet % of Sales
($ In Millions ) Historical Balance Sheet Common Size Projected Balance Sheet Common Size
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' equity
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
24

Appendices – Cash Flow Statements
25
($ In Millions ) Historical Statement of Cash Flows Projected Statement of Cash Flows
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 0.00 0.00 0.00 0.00 0.00
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 0.00 0.00 0.00 0.00 0.00
Purchase of intangible assets - - - (1.80) - 0.00 0.00 0.00 0.00 0.00
Acquisition of business - - - - (4.12) 0.00 0.00 0.00 0.00 0.00
Purchases of short-term investments (0.52) (1.03) (38.84) (7.71) (10.58) 0.00 0.00 0.00 0.00 0.00
Maturities of short-term investments - 0.51 2.00 2.76 3.19 0.00 0.00 0.00 0.00 0.00
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 (59.63) (58.07) (50.48) (62.96) (51.98) (60.05) (31.73) (33.40) (35.00) (36.58)
Treasury stock purchases (41) (39.84) (31.44) (42.77) (30.26) -35.00 0.00 0.00 0.00 0.00
Dividends paid (18.23) (18.23) (19.04) (20.18) (21.72) -25.05 -31.73 -33.40 -35.00 -36.58
Proceeds from issuance of common stock (5.00) 7.03 4.79 1.28 2.11 0.00 0.00 0.00 0.00 0.00
awards (18.23) 0.67 0.85 0.83 1.21 0.00 0.00 0.00 0.00 0.00
Proceeds from revolving credit facility 20.22 114.55 18.00 35.00 10.00 25.00 - - - -
Repayments of revolving credit facility (41.40) (69.55) - - - 0.00 0.00 0.00 0.00 0.00
Repayments of long-term debt 1.20 (10.72) - - - 0.00 0.00 0.00 0.00 0.00
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) 0.00 0.00 0.00 0.00 0.00
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

Appendices – Cash Flow % of Sales
26
($ In Millions ) Historical Statement of Cash Flows Common Size Projected Statement of Cash Flows Common Size
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
equipment 0.05% 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%
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), net 0.14% 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 -12.31% -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 -1.49% 2.05% 1.30% 0.34% 0.56% 0.00% 0.00% 0.00% 0.00% 0.00%
awards -5.42% 0.20% 0.23% 0.22% 0.32% 0.00% 0.00% 0.00% 0.00% 0.00%
Proceeds from revolving credit facility 6.01% 33.42% 4.88% 9.14% 2.64% 6.59% 0.00% 0.00% 0.00% 0.00%
Repayments of revolving credit facility -12.31% -20.29% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Repayments of long-term debt 0.36% -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
equivalents 0.78% -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 period 22.57% 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%

Appendices – Schedules
PPE Schedule
2016E 2017E 2018E 2019E 2020E
Beginning, net 11.38 14.44 17.33 20.03 22.58
CAPEX 6.50 6.50 6.50 6.50 6.50
Depreciation (3.43) (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) (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 outstanding 14.14 14.14 14.14 14.14 14.14
Dividend 25.05 31.73 33.40 35.00 36.58
60.05 52.88 55.67 58.34 60.97
Dividend + TS 31.73 33.40 35.00 36.58
27

Appendices – Beta Calculation
28

Appendices – FDSO (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
29

Sensitivity Analysis - WACC Calculation
Risk Free Rate
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
Market Risk
Premium
3.0% 2.8% 3.2% 3.7% 4.2% 4.6% 5.1% 5.5% 6.0%
4.5% 3.9% 4.4% 4.8% 5.3% 5.7% 6.2% 6.7% 7.1%
6.0% 5.0% 5.5% 6.0% 6.4% 6.9% 7.3% 7.8% 8.3%
7.5% 6.2% 6.6% 7.1% 7.5% 8.0% 8.5% 8.9% 9.4%
9.0% 7.3% 7.7% 8.2% 8.7% 9.1% 9.6% 10.0% 10.5%
10.5% 8.4% 8.9% 9.3% 9.8% 10.3% 10.7% 11.2% 11.6%
12.0% 9.5% 10.0% 10.5% 10.9% 11.4% 11.8% 12.3% 12.8%
Appendices – WACC Sensitivity
WACC Analysis
Risk Free Rate 2.00%
S&P 500 Adjusted Beta 0.815
Market Risk Premium 7.50%
Cost Of Equity 8.11%
Pretax Cost of Debt 1.12%
Equity Financing 92.17%
Debt Financing 7.83%
WACC 7.54%
Cost of Debt - preferred method
30
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

Appendices – DCF Calculations
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 NWC -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
Terminal Value with Multiple
2020E EBITDA 90.61
(*)Exit Multiple 19.4
(=)Terminal Value 1757.82
Discounted Terminal Value 1267.44
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 $107.79
Estimated Upside -31.4% -20.1%
31

Appendices – NWC Calculations
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
32

Appendices – DCF Sensitivity
Sensitivity Analysis - Perpetuity Growth
$73.93 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount Rate
(WACC)
4.5% $142.00 $155.30 $171.56 $191.89 $218.03 $252.88 $301.66
5.5% $103.08 $109.82 $117.60 $126.68 $137.40 $150.27 $166.00
6.5% $ 80.57 $ 84.57 $ 89.05 $ 94.08 $ 99.79 $106.31 $113.84
7.5% $ 65.90 $ 68.51 $ 71.38 $ 74.54 $ 78.03 $ 81.90 $ 86.24
8.5% $ 55.58 $ 57.41 $ 59.38 $ 61.52 $ 63.85 $ 66.38 $ 69.16
9.5% $ 47.93 $ 49.27 $ 50.70 $ 52.23 $ 53.87 $ 55.64 $ 57.55
10.5% $ 42.04 $ 43.05 $ 44.13 $ 45.27 $ 46.48 $ 47.77 $ 49.16
Estimated Upside
1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount Rate
(WACC)
4.5% 31.7% 44.1% 59.2% 78.0% 102.3% 134.6% 179.9%
5.5% -4.4% 1.9% 9.1% 17.5% 27.5% 39.4% 54.0%
6.5% -25.3% -21.5% -17.4% -12.7% -7.4% -1.4% 5.6%
7.5% -38.9% -36.4% -33.8% -30.8% -27.6% -24.0% -20.0%
8.5% -48.4% -46.7% -44.9% -42.9% -40.8% -38.4% -35.8%
9.5% -55.5% -54.3% -53.0% -51.5% -50.0% -48.4% -46.6%
10.5% -61.0% -60.1% -59.1% -58.0% -56.9% -55.7% -54.4%
Implied EV/EBITDA
1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 3.25%
Discount Rate
(WACC)
4.5% 23.56 25.98 28.94 32.63 37.39 43.72 52.59
5.5% 17.28 18.56 20.03 21.76 23.79 26.23 29.22
6.5% 13.64 14.43 15.32 16.32 17.45 18.74 20.23
7.5% 11.27 11.81 12.40 13.05 13.77 14.57 15.47
8.5% 9.60 9.99 10.42 10.88 11.38 11.92 12.52
9.5% 8.36 8.66 8.98 9.32 9.69 10.09 10.52
10.5% 7.40 7.64 7.89 8.16 8.44 8.74 9.07 33

Appendices – DCF Sensitivity
Sensitivity Analysis - Terminal EBITDA Multiple
EV/EBITDA
$86.17 13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount Rate
(WACC)
4.5% $ 71.33 $ 81.56 $ 91.79 $102.02 $112.25 $122.48 $132.71
5.5% $ 68.41 $ 78.21 $ 88.01 $ 97.81 $107.61 $117.41 $127.22
6.5% $ 65.63 $ 75.03 $ 84.42 $ 93.82 $103.21 $112.60 $122.00
7.5% $ 63.00 $ 72.01 $ 81.01 $ 90.02 $ 99.03 $108.04 $117.04
8.5% $ 60.49 $ 69.13 $ 77.77 $ 86.41 $ 95.05 $103.69 $112.33
9.5% $ 58.11 $ 66.40 $ 74.69 $ 82.98 $ 91.27 $ 99.56 $107.85
10.5% $ 55.84 $ 63.80 $ 71.76 $ 79.72 $ 87.68 $ 95.64 $103.59
Estimated Upside
EV/EBITDA
13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount Rate
(WACC)
4.5% -37.3% -27.8% -18.3% -8.8% 0.7% 10.2% 19.7%
5.5% -40.0% -30.9% -21.8% -12.7% -3.6% 5.5% 14.6%
6.5% -42.6% -33.8% -25.1% -16.4% -7.7% 1.0% 9.7%
7.5% -45.0% -36.6% -28.3% -19.9% -11.6% -3.2% 5.1%
8.5% -47.3% -39.3% -31.3% -23.3% -15.3% -7.2% 0.8%
9.5% -49.5% -41.8% -34.1% -26.5% -18.8% -11.1% -3.4%
10.5% -51.6% -44.2% -36.9% -29.5% -22.1% -14.7% -7.3%
Implied Perpetuity Growth
EV/EBITDA
13.4 15.4 17.4 19.4 21.4 23.4 25.4
Discount Rate
(WACC)
4.5% 0.2% 0.7% 1.0% 1.3% 1.5% 1.7% 1.9%
5.5% 1.2% 1.6% 2.0% 2.2% 2.5% 2.7% 2.9%
6.5% 2.2% 2.6% 2.9% 3.2% 3.5% 3.7% 3.9%
7.5% 3.1% 3.5% 3.9% 4.2% 4.4% 4.6% 4.8%
8.5% 4.1% 4.5% 4.9% 5.2% 5.4% 5.6% 5.8%
9.5% 5.0% 5.5% 5.8% 6.1% 6.4% 6.6% 6.8%
10.5% 6.0% 6.4% 6.8% 7.1% 7.4% 7.6% 7.8%
34

Appendices – Multiples History
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Multiple
P/E
EV/EBITDA
WDFC Historical Valuation Multiples
Source: Bloomberg Data
35

Historical P/E Historical EV/EBITDA
2012 2013 2014 2015 2012 2013 2014 2015
WDFC US 22.2x 22.5x 23.9x 27.4x 13.1x 13.9x 14.5x 16.9x
NEU US 14.3x 18.7x 21.6x 19.4x 9.6x 11.3x 13.1x 12.4x
CHMT US 18.5x 54.2x 5.0x 13.1x 8.2x 13.8x 2.7x -
ASH US 35.0x 12.0x 41.0x 14.8x 11.9x 7.2x 20.8x 11.5x
ALB US 14.2x 12.4x 20.2x 14.4x 11.6x 8.5x 14.0x 14.3x
UNVR US - - - 52.5x - - - 8.3x
GCP US - - - 8.8x - - - 7.8x
CC US - - - 4.2x - - - 7.8x
PAH US - - - 10.5x - - 54.8x 8.7x
EMN US 12.7x 12.5x 11.1x 9.3x 13.0x 7.1x 11.6x -
DD US 13.9x 18.8x 23.2x 24.6x 10.4x 12.5x 12.9x 13.5x
MTX US 18.5x 24.9x 18.2x 10.5x 6.3x 9.6x 14.4x -
Min 12.7x 12.0x 5.0x 4.2x 6.3x 7.1x 2.7x 7.8x
Max 35.0x 54.2x 41.0x 52.5x 13.0x 13.8x 54.8x 14.3x
Mean 18.2x 21.9x 20.0x 16.6x 10.1x 10.0x 18.0x 10.5x
Appendices – Multiples Comparison
36

Company
Market
Cap (M)
Adj.
Beta
5Y Rev
Growth
6m
Return
Div.
Yield
Gross
Margin
EBITDA/
Int. Exp.
Current
EV (M) EV/Rev EV/EBITDA P/E
2016E 2017E 2016E 2017E
WDFC US $1,496.80 0.752 2.90% 17.80% 1.46% 55.60% 59.6x $1,502.00 3.2x 19.2x 18.6x 30.6x 28.3x
NEU US $3,988.10 0.842 1.10% -14.70% 1.72% 32.00% 27.2x $4,389.30 2.3x 11.6x 11.5x 17.9x 17.7x
CHMT US $1,733.70 1.252 -7.70% -9.60% 0.00% 26.40% 16.0x $1,934.70 0.9x 7.7x 6.6x 18.0x 14.1x
ASH US $5,812.30 0.954 -2.20% -19.60% 1.64% 33.70% 4.8x $8,810.30 1.7x 7.9x 7.6x 12.9x 11.5x
ALB US $5,765.00 1.541 10.80% 1.80% 2.23% 34.50% 8.6x $9,503.90 2.2x 10.5x 9.9x 14.0x 13.2x
UNVR US $1,654.10 - - -45.60% 0.00% 16.70% 1.7x $4,621.10 - 7.8x 7.9x 37.4x 10.7x
GCP US $1,115.40 - - - - - - $1,840.40 - 7.5x 7.4x 8.1x 11.0x
CC US $702.20 - - -63.30% 0.77% 17.80% - $4,453.20 - 7.6x 6.6x 5.5x 4.7x
PAH US $1,255.30 1.68 - -71.80% 0.00% 40.60% - $4,716.30 6.3x 8.5x 6.2x 9.5x 6.7x
EMN US $9,014.50 1.175 9.30% -19.70% 2.74% 28.40% - $16,064.50 - 7.3x 6.9x 8.7x 7.8x
DD US $50,906.20 0.897 -5.80% 9.80% 2.95% 35.70% 11.0x $53,951.20 2.4x 10.8x 9.5x 19.4x 16.7x
MTX US $1,540.40 1.532 18.00% -25.30% 0.45% 25.40% - $2,600.50 1.5x 7.1x 6.7x 10.0x 9.0x
Mean 1.181 3.30% -21.80% 1.27% 31.50% 18.4x 2.6x 9.4x 8.8x 16.0x 12.6x
St. Deviation 0.323 8.30% 27.20% 1.05% 10.30% 18.5x 1.6x 3.3x 3.3x 9.2x 6.0x
Median 1.175 2.00% -19.60% 1.46% 32.00% 11.0x 2.2x 7.8x 7.5x 13.4x 11.2x
Appendices – Comparables
37

Appendices – DDM
Gordon Growth Model
2020E Payout/Share 3.35
Discount Rate 7.54%
2019E Growth Rate 4.79%
Terminal Value 121.95
2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Dividends + Repurchases 59.63 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
2016E 2017E 2018E 2019E 2020E Terminal
Dividends + Repurchases 4.23 2.23 2.35 2.46 3.35 121.95
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 93.02
Sum (Value/Share) 100.77
38

47
48
49
50
51
52
53
54
55
56
PMILevel
Period
Eurozone PMI
China PMI
U.S. PMI
2,920
2,940
2,960
2,980
3,000
3,020
3,040
3,060
Miles(millions)
Date
22,500
23,000
23,500
24,000
24,500
25,000
25,500
26,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$/Vehicle
DateSource: Bloomberg Data
Historical PMI Levels
US vehicles Miles on Public Roads
AVG US Expenditure/Vehicle
Appendices – Demand Drivers
39

Appendices – WDFC Suppliers
6.78%
3.70%
1.91%
1.51%
0.85%
0.29% 0.22% 0.13%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
PercentageofTotalRevenue
Company
• Large Retailers Responsible for
15% of Sales
• Sacrifice Pricing Power
• Give-up Margin Expansion Potential
• Already sell at a Premium
• Difficult to grow sales from Price
Increases
• Further Pressure on performance
of MUP products
40

Appendices - Counterfeiting Issue
“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)
41

 Healthy Balance Sheet
 High Liquidity
 Strong Cash Position
 $90.8 million out of $102.5
million cash held outside of
the U.S. as the end of FY 15
Profitability
Ratios
2015 2016 2017 2018 2019 2020
ROA 13.05% 14.33% 14.20% 13.98% 13.72% 13.47%
ROE 27.38% 32.60% 32.88% 30.23% 27.98% 26.06%
Profit
Margin
11.85% 13.21% 13.25% 13.29% 13.36% 13.46%
Liquidity
Ratios
2015 2016 2017 2018 2019 2020
Current
Ratio
4.28 4.35 4.61 4.87 5.15 5.43
Quick Ratio 3.36 3.53 3.80 4.07 4.35 4.64
Appendices – Selected Ratios
42

We project that ROE
will decrease from
32.6% in FY16E to
20.06% in FY20E
ROE Trend 2011 -2020E
Appendices – ROE reversal
45

LT Debt/LT Capital and LT Debt/Total Equity Trend
Increasing the use of
revolving credit line for
share purchases has
negative effect on
solvency
Appendices – Solvency Trend
46

Appendices – Business Strategies
• Maximizing Sales of Flagship Product (WD-40 Multi-Use Product)
• Growing the WD-40 Specialist Product Line
• Extending Product and Revenue Base
• Attracting, Developing and Retaining Talented People
• Operating with Excellence
47

Appendices – Product Portfolio
48
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.

Appendices – Product Portfolio
49
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

Appendices – Shareholder Structure
50Source: Bloomberg Data

Appendices – Can Cost Components
51
Source: Company FY15 Investor Presentation

Appendices – WDFC vs. Benchmarks
Recommendation:
Sell
2/19/2016 Closing
Price: $107.79
12-Month Price
Target: $87
Downside Potential:
19%
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
14-Feb-2011 14-Feb-2012 14-Feb-2013 14-Feb-2014 14-Feb-2015 14-Feb-2016
$
Date
WDFC
S5SPCH
SPX
S5HOUS
$1 Invested in 2011
Source: Bloomberg Historical Prices
52

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Editor's Notes