WD-40 (WDFC) is known mainly for its namesake product; a multi-purpose spray that the company touts has 2,000 uses and counting. It’s all the more impressive then that company has doubled its business in the last decade under CEO Garry Ridge. If that weren’t enough, the Australian-born chief expects to double it again in the next ten.
How is that possible given the narrow product range of the company? “I think it depends who the end-user is,” Ridge told Yahoo Finance. “The guy sitting at home on a Sunday afternoon on his balcony drinking a beer probably uses about $0.41 worth of WD-40 a year. The guy today who’s down at his workshop changing a muffler on a car probably uses between $40 and $70 worth of WD-40 a year. So, we’ve got a wide user base that uses a lot more than the average homeowner, if you will, that has that can under the sink.”
One key to doubling that business a second time, Ridge says, will be China.
“China is a great market for us,” he says. “There’s a lot of factories and workshops in China that need WD-40 to help run their factories, whether they’re making products for the home market or globally.”
But it’s not just China where WD-40 has room to run. Ridge notes that Germany is another untapped market. He points out that it is one of the largest DIY markets in the world, and WD-40 is “only at about 65% penetration there.”
Takeover? No way!
With just one signature product (the company does own brands like 3-in-1 oil and Lava Soap) and such rapid growth, how has Ridge avoided a takeover? “A high stock price is the best defense from a takeover,” Ridge said, “and we get up every day to create value for our shareholders. We generate a lot of cash. We’ve got 27% return on invested capital. We distribute that cash to our shareholders.”
The secret sauce
In the end though, it comes down to having a product people want to buy. Like Coca-Cola, the recipe for making WD-40 is a closely-guarded secret. So secret in fact that the company’s own CEO doesn’t really know it. “I know all of the ingredients. I don’t know how to make it. It’s actually locked in a safe in a bank in San Diego.”