Zep Management Discusses F3Q 2013 Results - Earnings Call Transcript

Jul. 2.13 | About: Zep Inc. (ZEP)

Zep, Inc. (NYSE:ZEP)

F3Q 2013 Earnings Conference Call

July 02, 2013 8:30 am ET

Executives

Don De Laria - Vice President of Investor Relations & Communications

John K. Morgan - Chairman, Chief Executive Officer and President

Mark R. Bachmann - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Robert Labick - CJS Securities, Inc.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Matthew Schon McCall - BB&T Capital Markets, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Zep Inc. Third Quarter Fiscal 2013 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded.

I would now like to introduce your host, Don De Laria.

Don De Laria

Good morning, and thank you for joining Zep Inc. today for our third fiscal quarter 2013 conference call. Before I begin today's call, I'd like to remind participants that our earnings call format includes an online presentation to augment our comments. You can access this presentation, as well as this quarter's earnings press release, online at www.zepinc.com in our Investors section under Webcasts and Presentations. Included within this quarter's earnings press release is a reconciliation of any non-GAAP measures, that may have been referenced throughout this presentation, to their nearest GAAP measure.

This conference call contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical facts communicated during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's annual report on Form K -- Form 10-K dated November 8, 2012. All forward-looking statements are expressed and qualified in their entirety by such factors.

Here with us today are John Morgan, Chairman, President and Chief Executive Officer; Mark Bachmann, Executive Vice President and Chief Financial Officer; and other selected Zep officers. I would now like to turn the call over to Mr. John Morgan.

John K. Morgan

Thank you, Don, and welcome, everyone, to our third quarter earnings call. As I indicated in our press release earlier today, our third quarter results are mixed. On one hand, I am proud of how our team delivered on a number of key strategic initiatives, generated strong free cash flow and improved the balance sheet. On the other hand, our overall financial results in the current quarter are unacceptable. I hope you will find our prepared remarks helpful in understanding our current period results and also, in appreciating the short-, medium- and long-term strategy that causes us to still be confident about the future.

After Mark and I have had the opportunity to share our thoughts on the business, we will welcome your questions at the conclusion of today's call.

Let me begin by saying we remain confident in the strategy which previously produced several consecutive years of improved earnings per share and more importantly, has continued to deliver improved results in a number of other key financial metrics. This strategy has also contributed to strong free cash flow in the current quarter.

Today, I'll organize my comments into 3 main areas of discussion that may help you understand how we expect our current efforts will continue to lead to long-term success. First, I'll spend a few minutes highlighting the positive actions taken to develop our platform strategy. I'll then share my thoughts on the current period results and conclude with a discussion of our short- and medium-term expectations for our business and our strategy.

While I'm very disappointed in our sales volume declines in both our North American and European direct sales units, which are primarily a result of overall declines in sales force capacity, the combination of high-quality products and the Zep rep with specialized technical knowledge continues to be highly valued in select markets like food processing, industrial maintenance and repair operations and the oil and gas industry. Recruiting efforts going forward will concentrate on hiring specialists in these and other key vertical markets.

Now that we have expanded our access to market through several acquisitions, we have begun increasing our investments in organic growth. I'm pleased with the recent progress our teams are making in product innovations and market initiatives and specifically, our Zep Commercial products are now available in nearly 11,000 home improvement, mass and other specialty retailers. We are strengthening relationships with key retail partners by expanding our product line and by adding new retail locations.

I'm also pleased to report that the Zep Vehicle Care integration continues on schedule. In April, I joined the Zep Vehicle Care team at the International Carwash Association show and was very impressed with our showing. Our industry-leading brands, our solutions and our service offerings were the hit of the show. You can see from the photo taken at this important industry show, Zep Vehicle Care and all of its brands were well represented, and clients had the opportunity to experience the professionalism of a truly talented team of Vehicle Care professionals.

I'm also pleased to report that we've established a legal entity in China and have begun building a team to develop sales in that country. Our 76 years of brand equity precedes us as companies manufacturing in China are looking for products with consistent quality that get the job done effectively. We look forward to updating you on our progress in international expansion in the future.

We are making investments in a number of other areas, and I would like to highlight just a few of them. The most visible investments have been in our Vehicle Care, Retail, distribution and selected Sales & Service verticals, where we intend to drive growth. Perhaps some not-so-visible investments include a number of things we've done in the area of innovative new products, equipment and solutions, which are being introduced to the market in various industry trade shows this fall.

Our food processing team has developed a new line of chlorine dioxide products, called KEEPER Professional, covered by 9 different patents. It's the next generation in food antimicrobial intervention. As we serve the transportation markets, we focused on a number of market segments. For example, our automotive OEM group is focused on new brake wash dispensing technologies, and our Zep Vehicle Care team is focused on precise dispensing equipment for both car and truck tunnel wash operators. Our Retail group is in the late stage of developing a line of Zep automotive products for the automotive aftermarket retailers, something we expect will hit store shelves in early calendar 2014.

In the Jan/San market, we've invested in a new air care dispensing platform, which we will sell configured for all 3 channels. This is significant because with the sale of Waterbury and the integration into Zep Inc., this will be the first new air care technology from TimeMist in a number of years. Finally, we have supported a variety of brands with targeted investments in social media to grow awareness and demand over time, both domestically and abroad.

Despite the impact that such investments may have on short-term results, they are essential to the attainment of our strategic growth initiatives, and will continue to receive focus in the coming quarters. I believe it is important to understand that we only recently undertook many of these innovative opportunities and therefore, we have yet to realize the benefits.

And now I'd like to discuss current period results in more detail. As we've diversified our business over the past 3 years, occasional sales declines in selected markets have generally been more than offset by gains in areas where we've been investing. Once again, during the third quarter, we benefited from acquired revenue that more than offset volume declines in our legacy business. However, legacy declines in this quarter were greater than we had expected as decreases in our larger end markets like Jan/San and Europe outpaced gains in growing end markets like industrial/MRO and Vehicle Care.

Also, during the quarter, gross profit grew. This increase was driven by strong performance in the new Vehicle Care platform, which was, in part, offset by the effect of reducing inventory levels in the quarter. While I know we had signaled our intention to reduce inventory after our SAP go live, it should be noted that our inventory team exceeded expectations, which equated to a reduction in earnings per share by approximately $0.06 or more than half of the EPS decline in the quarter.

I'm very disappointed that we did not fully mitigate the effects of the third quarter organic volume declines on EBITDA and EPS, but I'm encouraged by how the team responded to our debt position coming out of the first half of the year. Specifically, upon completion of our Vehicle Care acquisition and our SAP go live, I asked our management teams to focus aggressively on our balance sheet, and they've delivered nicely. It was this discipline that allowed us to reduce net debt by $23.6 million during the quarter. Our team has continually demonstrated the ability to delever our balance sheet following important investments.

Now I want to turn to short- and medium-term expectations for the business and our strategy for the long term. Over the past few years, in order to serve our customers where and how they want to buy, we've made a number of acquisitions and expanded our product offering. While this has resulted in top line improvements over the past several years, it has also introduced significant complexity into our business. And perhaps, a few of those listening would agree that at times, our business can be difficult to fully grasp because of this complexity.

We've been taking steps to reduce complexity as we grow our key platforms and end markets. We plan to accelerate the pace of simplification over the next few quarters in an effort to better position our platforms for growth, align our supply chain and support functions and generate solid free cash flow. Stated simply, we now have sufficient access to market to focus on growth, but we must first turn our attention to simplifying the business to reduce costs and improve margins. This is key to preparing our balance sheet to later reenter an acquisitive growth period. When we consider all factors, including our current trends, our restructuring objectives, our simplification initiatives and actions already underway, we expect negative pressure on our top line. However, I do not anticipate reductions of the magnitude we experienced 5 years ago as we work to improve margins at that time.

For the next 2 quarters, I expect revenue to be essentially flat to last year as acquired revenue will serve to offset expected organic declines. My estimate is that we will see overall declines in run rate of revenue of 4% to 6% coming 3 to 4 quarters from now then begin to recover. As you can see from our revenue expectations, we will need to significantly restructure the business. Over the next quarter or so, we will detail more specific plans to bring our operating expenses in line with expected revenues. This will include a number of improvement initiatives, and as such, we expect this could have a negative effect on top line performance. However, we believe these initiatives will generate more free cash flow and improve margins as we position the platforms for future growth.

We expect that accelerating some of these actions will result in restructuring charges in the coming quarters, which we will detail on our next quarterly earnings call. I'm confident in the actions that we are taking to execute over both the short and the long term. While current results are short of expectations, our platform strategy is working, and we will continue to focus on driving free cash flow to reduce debt.

And with that, Mark, let me turn the call over to you to review the financial details.

Mark R. Bachmann

Thank you, John, and good morning, everyone. Net sales in the third quarter were $186 million, up $9.4 million or 5.3% compared to last year's results. Acquired revenues added $17.9 million, which was partially offset by organic revenue decline of $8.5 million. Price and foreign exchange were immaterial for the quarter.

Jan/San sales were down 6% overall, but more pronounced in the Sales & Service channel. The automotive aftermarket was off 3%, similarly affected with declines in Sales & Service and reduced promotional activity with our retail automotive customers. Vehicle wash continues to perform well due to Zep Vehicle Care, which grew organically almost 4% this quarter and added 90% to our category growth in total. Industrial/MRO grew 3%, led by nice gains from our Sales & Service team. Food processing was off slightly in the quarter, but this remains an important market segment for Zep. Finally, government and schools declined 13% due to significant slowdowns in government spending.

Turning to gross profit. Third quarter gross profit increased 6.3% or $5.2 million to $86.9 million compared to the same quarter of fiscal 2012. Our gross profit margin increased 40 basis points to 46.7%, a little lower than our previously stated range due to a larger-than-anticipated decrease in inventories this quarter, creating a 100-basis-point reduction in margin, primarily from lower manufacturing absorption. The inclusion of Zep Vehicle Care created a 170-basis-point improvement to our overall gross margin, partially offset by a 30-basis-point impact from channel mix in all of our other businesses. On a sequential basis, gross profit as a percentage of sales declined compared to second quarter as the effects of a slightly more favorable business mix were more than offset by unfavorable manufacturing absorption due to the previously discussed inventory reduction. We expect full year gross margin will be in a range of 47% to 48%.

Selling, distribution and administrative expense increased by $8.1 million, largely due to the inclusion of the Zep Vehicle Care organization and initial $1 million of intangible amortization expense. It should be noted that Zep Vehicle Care contributed positively to our operating profit in the quarter. During the quarter, we took steps to reduce fixed costs, but we're not able to fully offset the organic sales volume decline.

During our third quarter, we generated $18 million of EBITDA, representing a $700,000 decrease from the prior year. Our EBITDA was adversely impacted primarily by 2 drivers: first, lower revenue in our legacy business; and secondly, unfavorable manufacturing absorption as a result of reducing inventories by $5.7 million. These declines were partially offset by earnings accretion from recently acquired businesses. EPS for the third quarter was similarly impacted by these 2 drivers, which contributed to the reduction in EPS from $0.39 last year to $0.28 this year. We've been asked about cash EPS given the significant amount of amortization expense associated with our acquisition strategy. Our cash EPS will be $0.06 higher than GAAP EPS or $0.34 per share.

Free cash flow during the quarter, defined as cash flow from operations less net capital expenditures, increased $8.3 million to $16.3 million. The increase in cash flow generated in the current quarter was primarily driven by inventory improvements. Free cash flow per diluted share was $0.72 for the quarter. We have updated our expectation for total capital spending in fiscal 2013 and now expect it to range between $13 million and $14 million, representing a $1 million reduction to previous guidance. Based on results to date and expectations as we finish the fiscal year, we expect free cash flow generation will be approximately 3% to 4% of sales for the full year.

We reduced our net debt by $23.6 million this quarter, and our net debt position at the end of the quarter was approximately $237 million. We remained in compliance with our debt covenants during the period, finishing the quarter with a debt-to-EBITDA ratio of 3.76x and a fixed charge coverage ratio of 1.9x. We continue to believe that we will be able to generate free cash flow and delever our balance sheet. However, given our current forecast, we would anticipate our leverage ratio will be relatively unchanged through the first quarter of fiscal 2014, and we expect to operate this business within the current covenants.

As we have often discussed, this business will produce inconsistent financial results when looked at on a quarterly basis. This quarter is an example of that. That is why we are focused on creating value over the long term by achieving our long-term financial objectives. Over the past 3 years, we have achieved 3 of the 4 long-term financial objectives. During the quarter, we have updated our long-term financial goals to ensure consistency within a 5-year time frame in light of our views about revenues. Our targets for $1 billion in revenue, 50 basis points of annualized improvement in our EBITDA margin and 11% to 13% annualized EPS improvement are unchanged. While we place great emphasis on improving return on invested capital over time, we recognize that a finite target and time frame is inconsistent with our other objective, especially because of the role acquisitions will play to achieve our revenue objectives. Our fourth long-term goal has been revised, and it is to deliver a return on invested capital in the excess of our cost of capital.

In closing, let me highlight our 3 key near-term priorities. First, we will execute plans to simplify our business and bring our costs in line with top line expectations, while maintaining our increased focus on strategic investments. Second, we will continue to fully develop Zep Vehicle Care. Third, we will maintain a focus on generating free cash flow to reduce debt.

Now we'd like to open up the call to questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And the first question is from Bob Labick of CJS Securities.

Robert Labick - CJS Securities, Inc.

I wanted to start with the organic sales and the outlook you've outlined for us for the next 4 quarters or so. Could you talk a little bit about how much of the expected sales decline is a result of maybe you guys exiting some lines? I'm taking that to mean when you're simplifying your business, maybe you're calling back some SKUs or things like that. And how much is market related or maybe just expand on that just to clarify that point for us.

John K. Morgan

Right, an important point. So let me just say that very little of it is what I would call market related in terms of the general economy. The exception might be Europe. But we believe that, not only in the complexity we have brought into the business over the last 2 to 3 years, as we've acquired and integrated, that we have some products that don't necessarily make sense in the product line and some customers that don't necessarily make sense in the product line. So as I'm sure you've seen with us sometime ago, 4, 5 years ago and as I'm sure you've seen with other organizations, when you go through complexity reduction initiatives, you really work to try to understand the profitability of products and customers. And obviously, the first goal would be to bring the profitability of those to an acceptable level. But in so doing, I also believe that it will mean the elimination of some products and the discontinuation of working with some customers. And so, I think, Bob, we should -- we should think of it mostly as actions that we will take, and I think that the thing for us to do is to size the business with that expectation. It is entirely possible that we could have some top line results better than what I've described. But I think for our own internal planning and modeling purposes, our intentions are to focus on building a cost structure in line with the expectations I described.

Robert Labick - CJS Securities, Inc.

Okay. And then just -- I know you said you'd provide additional details on the restructuring in the upcoming quarter, but can you just broadly speak about the expectations, excluding the restructuring charges for next year, are they consistent with your goals of margin expansion despite they calling off certain products or is that going to impact next year and then the margin expansion should begin beyond this simplification process?

John K. Morgan

It's consistent with our goals of margin expansion. So the actions that are either underway, planned or being planned internally are -- have internal goals consistent with continuing market -- margin expansion.

Operator

The next question is from Liam Burke of Janney Capital Markets.

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

John, you talked about the organic growth. You highlighted some verticals that just didn't come through. Could you sort of turn it around and talk about how, a, the performance in the quarter looked in distribution in the retail side? And then how much of the distribution in retail be restructured when you look going forward?

John K. Morgan

So great question. In retail, and Mark is pulling the data, but let me say that this year, during this quarter, unlike last year, the expansion in retail and distribution was not sufficient to offset some of our direct and legacy declines. And in retail, that, specifically, is because we were comping against some nice buildup last year as we rolled out store sets with new customers. So we -- last year, we received -- you'll probably recall some significant benefits as we rolled out, with new customers, the store sets, put products on the shelves and so forth. This -- so this year, we were comping against this on a period-over-period basis, we did not have the rate of growth necessary to offset those organic declines in other areas. The -- I think I should note that for the most part, we have good opportunity to see sell-through data of the products we have been fortunate to get on those shelves over the last year, and we're encouraged by what we see there, but as I know you can appreciate, an initial buildup is, in a quarter, significantly greater than a continuous run rate of sales, even if the run rate is expanding, and it is. So we feel pretty good about that in the long run. In the distribution area, in particular, we are not performing well in the Jan/San vertical. There's -- I believe, there are a couple of reasons for that. I believe one is external, and it has to do with the continued centralization of purchasing and compression of a relatively commoditized product line, as the large industrial consumers, office complexes and so forth look to really manage spend in that category. But the other part of it is, I believe, that until recently, we, as a company, have put little emphasis on new product innovation as we were working to integrate the previous acquisitions, including Waterbury. And so those acquired platforms had a history of bringing new innovation to the market with a reasonable cadence, and we have not done a very good job of that over the last couple of years as we integrated that. So I'm pleased to see the investments folks have made in there, and I would expect that, as we get to the trade shows in the fall, that's when we will be introducing those. So I don't expect that situation to turn around immediately until we get those products marketed, and all of that is reflected in our revenue forecast that I highlighted. Does that help?

Liam D. Burke - Janney Montgomery Scott LLC, Research Division

Yes, it does. Mark, real quick on the gross margins. You talked about the reduction of inventory as the ERP implementation went through. You mentioned the selloff of that inventory resulted in lower manufacturing volume. That all made sense. Was that inventory higher cost -- or was that related to higher cost of goods, and would that have affected the margin as well, the gross margin as well?

Mark R. Bachmann

No. It didn't necessarily reflect higher cost of materials, and in fact, commodity costs in total have been relatively stable over the last several quarters.

Operator

[Operator Instructions] The next question is from Matt McCall of BB&T Capital Markets.

Matthew Schon McCall - BB&T Capital Markets, Research Division

So I guess hitting on the direct business a little bit. It seems a little reminiscent here, some of the references to recruiting changes, and you used the term sales force capacity. Could you go into a little more detail about, a, what has changed? It seems like we saw a little bit of a stabilization in the growth rates or I guess, the decline rates in the past year or so. What changed? And get into a little more detail about the new recruiting strategy and I guess, just expand there a little bit more.

John K. Morgan

Sure. Great question. What's changed? The -- I was pretty pleased with the way that volume have a -- direct channel had begun to stabilize, which was our focus and our goal. And listen, I don't want to lay everything at the feet of an SAP implementation, but I do recognize that our team on the North American Sales & Service side and supply chain side, over the last 18 months until the recent go live, were pretty darn focused on the work necessary to go from that old legacy system to the SAP implementation, and that's a pretty disruptive process. What I can now see in the data, looking back, is that we lost sales force capacity during that period of time, during the last 2 years. And in order to maintain sales force capacity, I think you've followed the business long enough to be aware that we need to continue a cadence of recruiting into that selling organization. And after considering the sales rep churn from the recruiting process and normal attrition from retirements and so forth, we end up with a net sales capacity of some output. Over the last couple of years, we have not recruited at a rate sufficient to deal with that churn and instead, focused on really stabilizing the business from an administrative standpoint, and I think we lost ground during that process. Now I would say there are a couple of verticals that have hurt that channel in particular. Things like government, as you know, is important to that organization, and we've been hurt there a good bit. And general janitorial product sales in that vertical have and I believe, will continue to decline with the demographic shift, as clients buy those more commoditized products through various other forms of distribution. So I would lay most of this, really, at our feet and our inability to maintain sales force capacity during those -- during the focus on those other initiatives. The shift is -- has mostly to do with our view that the direct model has the highest probability of success with verticals that value high-efficacy product and the technical expertise of our sales reps combined. And while that may not be up-and-down-the-street janitorial product sales, we believe it is, in fact, areas like food processing and the tougher industrial applications and the energy area, mining, oil and gas. And so the point that I was attempting to make is that as we reinitiate recruiting efforts, which we have done, we are doing so with an eye primarily on those verticals. Does that get at your question or can I follow up on that?

Matthew Schon McCall - BB&T Capital Markets, Research Division

No, it does. I think, I've heard you take -- I think, to a previous question, you referenced product development maybe had taken a backseat as you had integrated some of the acquisitions, and I think the answer there was that recruiting kind of took a backseat or got lost in the shuffle because of SAP. I know you've got a lot of balls in the air here. But as you -- and you also didn't give details of the restructuring, so I don't know exactly what you're planning to do. But are you concerned that restructuring is going to constrain resources further to the point where something else has to give? Or not knowing the details, I don't know exactly what could happen, but maybe talk about your confidence that the restructuring is not going to result in maybe another dropoff.

John K. Morgan

I am concerned about that. We've spent an awful lot of time, as you can imagine, looking at this internally. And my best estimate is what we've tried to reflect in my sort of previous guidance, if you will, about what we expect in the top line over the next year, and so that concern, frankly, is reflected in there. If my concerns are not well founded, who knows, it might be a little better than that. But I think it would be wise for us to plan at the concern level instead of at the open optimism level.

Matthew Schon McCall - BB&T Capital Markets, Research Division

Okay. And then understanding you're going to give more detail, but you've talked about customer and product rationalization. How much of the expected margin improvement -- if that's the way to look at the restructuring efforts or the target of the restructuring efforts, how much of the margin improvements is going to come from that calling off lower-margin products, lower-margin customers? And how much of it is going to be a broader restructuring effort?

John K. Morgan

Frankly, I'm not prepared to articulate the answer in that way. We -- I can't -- in the way we're thinking about the actions we need to take internally and are speaking with people about it internally, as we speak, I can't really de-bundle those. Those are going to be undertaken in a very, very consistent manner. It will be product but it will also be some of the footprint and support capabilities that we've put in place to support what is a more complex business than we had 3 years ago, need to be addressed by taking work out. And as you know, we know how to do that. We've been through that before, and although it's not all that pleasant, we're pretty good at it. And so I would prefer to think of it kind of altogether. And I'm really happy to articulate that in great specificity when we're together in October. I'm sure you can appreciate all the many reasons it would be unwise for us to do so now.

Matthew Schon McCall - BB&T Capital Markets, Research Division

Definitely. That's fair. Just one more on the customer product side. And again, the product rationalization is something you've done in the past, I recall, just post the spin. On the customer side, can you go in a little more detail maybe broadly about what is it -- because we've talked about some of the bigger customers that you've acquired through the years and the concern with a bigger customer is more bargaining power maybe on their side. Is that the issue? Are they buying the wrong products? I'm just -- I recall your matrix from years ago, and I'm trying to think of it in those terms. So maybe just reference the issues with those customers.

John K. Morgan

Yes, I think there's some at both ends of the spectrum. Generally speaking, scale matters in our business and this industry, and so the opportunity to sell considerably greater volume with fewer SKUs is something that can withstand an awful lot of that pressure that you've referred to because of the benefits of scale, as we think about how we grow. That said, however, there might be 1 or 2 larger customers that we need to be focusing on, a different product mix or not working with at all, and that could have some pressure on the top line, which is reflected in my earlier comments about our expectations. And then, at the other extreme, we know that while profits in corporate America have really looked awfully good over the last 3 or 4 years, that's true of large corporations but not small corporations and so there's a -- instead of the effect of 1 or 2 small corporations, as you know, we sell to a couple of hundred thousand small corporations, and some of them continue to come under pressure. And that will continue to bring us under pressure to the point that some products made available to them are not as profitable, in my view, as they should be. So I think it's sort of each end of the spectrum. I feel very little pressure about the middle, but I think there's a little bit on both sides. Does that characterize it in a way that's understandable?

Matthew Schon McCall - BB&T Capital Markets, Research Division

It does. And I'll just follow-up with one last one. The margin pressure, are there customers and/or products that are -- I assume, if you're going to evaluate them, they're a source of pressure on margins. Are there any of these that are actually losing money for the company?

John K. Morgan

I would suspect yes.

Operator

[Operator Instructions] Mr. Morgan, I'm not showing any further questions at this time. Please proceed with any further remarks.

John K. Morgan

Well, great. Thank you. I want to thank everybody for joining us on the call today. And I hope you have a wonderful holiday, and I look forward to reporting our progress and our plans when we're together again in October. Thank you.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference, and you may now disconnect. Everyone, have a wonderful day.

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Zep Inc. (ZEP): FQ3 EPS of $0.28 misses by $0.14. Revenue of $186M misses by $10.52M. (PR)