{ "docId": "019dd923-622c-750b-8b98-e7fa892a99b5", "docSlug": "6ceec0b99264", "documentTitle": "WD-40 Company (WDFC)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-04-02 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 67, "pageCount": 68, "prevPage": 66, "nextPage": 68, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "Uses historical chart data and management quotes to argue that current inventory levels will delay margin benefits.", "elementsJson": [ "headline_text", "paragraph", "line_chart", "callout_box", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-e7fa892a99b5/67", "deckHref": "/decks/019dd923-622c-750b-8b98-e7fa892a99b5", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-e7fa892a99b5.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-e7fa892a99b5#slide-67", "components": [ { "bbox": null, "kind": "callout", "text": "As a result, we believe it will take even longer for it to realize the full benefit of lower oil.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0936-7173-ab24-1fe40d16faad", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.55, "w": 0.43, "x": 0.03, "y": 0.35 }, "kind": "chart", "text": "Oil price chart 2006-2010", "attrs": null, "subkind": "line", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5df5ec71-9620-4c1c-b2ce-c52946f516e9", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "gross margin: 200bps", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-0936-7173-ab24-268e60bc31f7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.94, "x": 0.03, "y": 0.19 }, "kind": "paragraph", "text": "The magnitude of oil's decline during the last crisis is comparable from a percentage decline of approximately 70%. We see that it took until Q3 for the Company to say that oil benefited gross margin by 200bps, and that was a full year after oil peaked over $140/bbl. in July 2008. What's also important to realize is that WD-40 had ~40 days of inventory outstanding then vs. ~80 today. As a result, we believe it will take even longer for it to realize the full benefit of lower oil.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "18380d1b-82ce-4019-825c-f1c05e65de7c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"We have recently started to see relief with declines in the cost of oil-related products, but those decreases are just now starting to make their way into our finished goods?\" — WD-40 CFO, Q1 Jan 2009. \"If oil stays down and we get the conversion, given that and the savings that we anticipate from the improved manufacturing process from the capital equipment we have invested on our package lines to improve line speed from smart straw, all of those things aligned, we should see some sort of at least stabilization and improvement in our gross margin, particularly in the second quarter.\" — WD-40 CEO, Q1 Jan 2009. \"We also began to see some relief from lower oil costs versus the first quarter although our oil costs in the second quarter were higher than they were in the same period last fiscal year.\" — WD-40 CEO, Q2 April 2009. \"The cost of oil based materials in our Q3 cost of goods reflected the lower pricing of Q2 and positively impacted our gross margin by two percentage points\" — WD-40 CFO, Q3 July 2009.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0936-7173-ab24-21867fd85598", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.2, "x": 0.48, "y": 0.95 }, "kind": "source-note", "text": "Source: WD-40 earnings transcripts", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c5be3f31-c24b-4f07-89f0-8c7394d6f344", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.1, "x": 0.03, "y": 0.95 }, "kind": "source-note", "text": "Source: Bloomberg", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c6b97d4d-9e24-4a30-8e21-9960ebcb7a1c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.55, "w": 0.49, "x": 0.48, "y": 0.35 }, "kind": "table", "text": "Management Comments On Oil", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2a028c03-7d55-4c1a-b781-74f840f4b1ff", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "Case Study: What Happened Last Time Oil Crashed To WD-40's Margins", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "473648a1-2439-47bc-93cf-279e76768700", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "expose_contradiction", "slug": null, "matchId": "29cef62b-294d-4fea-aecb-fcd6f32e5b4e", "evidence": "Contrasts historical oil price data with management's delayed recognition of margin benefits.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }