Earnings Call Transcript - WDFC Q4 2021

Operator, Operator

Good day, and welcome to the WD-40 Company Fourth Quarter Fiscal Year 2021 Earnings Conference Call. This call is being recorded. I would now like to turn the presentation over to your host for today's call, Ms. Wendy Kelley, Vice President, Stakeholder and Investor Engagement. Please proceed.

Wendy Kelley, Vice President, Stakeholder and Investor Engagement

Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's Chairman and Chief Executive Officer, Garry Ridge; Vice President and Chief Financial Officer, Jay Rembolt; and President and Chief Operating Officer, Steve Brass. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release and Form 10-Q for the period ending August 31, 2021. These documents are or will be available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be made available at that location shortly after this call. On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings, as well as our earnings presentation. As a reminder today's call includes forward-looking statements about our expectations for the Company's future performance. Of course, actual results could differ materially. The Company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion. Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, October 19, 2021. The Company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise. With that, I'd now like to turn the call over to Garry.

Garry Ridge, Chairman and Chief Executive Officer

Thank you, Wendy, and thank you to everyone joining us on today's call. I'm pleased to report that we achieved record net sales of $488.1 million for the full fiscal year 2021, which marks a 19% increase compared to the previous year. Fluctuations in foreign currency exchange rates positively affected net sales by $19.7 million for the fiscal year. On a constant currency basis, net sales would have risen by 15%. Our net income for fiscal year 2021 was $70.2 million, reflecting a 16% increase. Diluted earnings per share were $5.09, up from $4.40 the year before. In the fourth quarter, net sales were $115.2 million, representing a 3% increase from the same quarter last year. Foreign currency exchange rates had a favorable impact of $6.5 million on fourth-quarter net sales. On a constant currency basis, net sales would have declined by 3% year-over-year. Our net income for the fourth quarter was $8.4 million, down from $19.7 million in the same quarter last year, which is a 57% decrease. Diluted earnings per share in the fourth quarter were $0.61 compared to $1.42 a year ago. Historically, fluctuations in quarter-to-quarter performance are not uncommon, and this trend has been particularly noticeable since the onset of the COVID-19 pandemic. Fiscal Year 2021 involved significant variances in net sales from period to period, with more variability than before the pandemic. While this quarter presents differently, we believe our results signify an exciting advancement in our long-term objectives. In the fourth quarter, we made a strategic decision to significantly invest in the sales momentum we’ve been experiencing and to boost our spending on brand awareness and market penetration. While this negatively impacted our net income in the fourth quarter, we are confident that these strategic investments will lead to robust growth moving forward. For those who view our business with a long-term perspective, we believe you'll find our performance this year encouraging. Our decisions aimed at long-term success have yielded a compounded annual growth rate of total shareholder return of 14% since 1998. This year has presented numerous unexpected challenges and opportunities. I am incredibly proud of our team and their accomplishments during these extraordinary times. The difficulties presented by the pandemic have often brought out the best in our team, enabling us to learn and adapt together through tough circumstances. Steve will discuss the specific sales trends we observed in the fourth quarter across our trading blocks shortly. First, I want to provide an update on our strategic initiatives. These initiatives are our ongoing plans to achieve the company's long-term goals. As many of you may recall, we recently adjusted our long-term revenue goals to target net sales between $650 million and $700 million by the end of fiscal year 2025, while adhering to our 55:30:25 business model. Although these financial objectives remain unchanged, we recently decided to refresh our strategic initiatives to better reflect the key priorities of our organization. Before outlining our refreshed strategies, I will first review the progress made against our current strategic initiatives during fiscal year 2021. Our first strategic initiative is to grow the WD-40 Multi-Use product, where we achieved a global sales increase of 22% to $371 million. The second initiative focuses on growing the WD-40 Specialist product line, which saw a 16% global sales increase to $42.5 million. For the third initiative, expanding our product and revenue base resulted in a global sales rise of 13% to $63.2 million. The fourth initiative is centered on attracting, developing, and retaining outstanding team members. Our global employee engagement score was 93% as of January 2022. The team has continued to adapt during the pandemic, with a check-in survey in January 2021 confirming sustained high engagement levels, where 98% of our team expressed excitement about the company's future. Our fifth initiative focuses on operational excellence, aiming for continuous improvement while measuring ourselves against the 55:30:25 business model. In fiscal year 2021, we reported a gross margin of 54%, a cost of doing business of 35%, and EBITDA of 20%. Now, in light of our strategic refresh, we have updated our initiatives to better align with the organization's top priorities moving forward. We believe that our long-term financial objectives can only be reached through infinite-minded decisions that foster and protect long-term value for our stakeholders. We have always identified as a purpose-driven organization, prioritizing our people. Our philosophy has been that if we care for our employees, they will, in turn, take care of our customers. While this philosophy remains unchanged, we wanted our strategic drivers to better embody this ideology. Therefore, I am pleased to share our refreshed strategic drivers, available in our quarterly earnings presentation. The first initiative is to build a business for the future, aiming to create an enduring enterprise we can proudly pass to the next generation. Using our purpose and values as a decision-making lens, we will make infinite-minded choices that secure long-term stakeholder value. As mentioned previously, we have significantly increased investments in brand building to support our critical goals, as we are committed to playing the infinite game. The desired outcome of this initiative is to fully integrate finite-minded decisions into our operational framework and incorporate our ESG initiatives into the core of our strategic planning process. The second initiative is to attract, develop, and engage outstanding team members, recognizing that our people are our greatest asset. By fostering an inclusive, diverse, and purpose-driven learning environment, our team members will thrive collectively while succeeding as individuals. This initiative has consistently been vital to our long-term success. We recognize that engagement, while not reflected on our balance sheet, encompasses morale, motivation, collaboration, commitment, and the willingness to go above and beyond. Rather than viewing human capital as a cost, we regard our team as an invaluable asset, understanding that our achievements stem from their commitment. The target outcome of this initiative is to elevate employee engagement to over 95%. The third initiative is to pursue operational excellence, fostering a culture of continuous improvement that emphasizes collaboration, resource optimization, and smart use of time and technology based on our 55:30:25 business model. The fourth initiative is centered on growing the WD-40 Multi-Use product. We aim to make our signature blue and yellow can with a red top more accessible to a wider audience, promoting diverse uses. We plan to expand the WD-40 Multi-Use product line through geographic and digital expansion, increased market penetration, and developing innovative delivery systems for easier use. Our goal for this initiative is to grow sales of the WD-40 Multi-Use product to around $525 million by 2025. The fifth initiative is to expand the WD-40 Specialist product line by leveraging the brand to develop new products and categories that enhance core brand positioning and stimulate growth via continued geographic and digital expansion. Following our brand architecture project completed in fiscal year 2020, we will now report WD-40 Bike as part of our Specialists results starting in the first quarter of fiscal year 2022. We aim for sales of WD-40 Specialists to reach approximately $125 million by 2025. The sixth initiative focuses on expanding and supporting brand opportunities that facilitate growth. We aim to develop brands like 3-IN-ONE and GT85, aligning them with our multi-channel distribution network. Furthermore, we will continue to support home care and cleaning brands that yield healthy profits, such as 1001, Spot Shot, and Carpet Fresh, among others. Our target for this category is to achieve sales of approximately $50 million by 2025. Our decision to include WD-40 in the Specialist results has led to a revised sales goal for this initiative compared to previous projections. Supporting our strategic initiatives are our must-win battles, which are targeted action plans that align with our strategic objectives. I will now pass the call to Steve, who will provide an overview of our sales results and update you on our must-win battles.

Steve Brass, President and Chief Operating Officer

Thanks, Garry and good afternoon. Today, we close out a spectacular year of incredible growth for our company. Globally, sales of the WD-40 brand products grew 22% in fiscal year 2021 compared to last year. We experienced very high end user demand for our maintenance products due to the higher level of renovation in multi standards, as well as an expanded brick and mortar distribution and continued success within the ecommerce channel. As Garry mentioned earlier, the pandemic continues to create abnormal swings in our net sales results from period to period, which is evidenced in our fourth quarter net sales results. Let's take a closer look at what happened in our trade bloc in the fourth quarter starting with the Americas. Net sales in the Americas, which includes the United States, Latin America and Canada, were down 5% in the fourth quarter to $54.2 million. Sales and maintenance products decreased 5% in the Americas due to decreased sales of WD-40 product in the US and Canada, which declined 5% and 17% respectively. These declines are driven by several factors. In the United States, we were up against a very strong comparable period while we continue to experience very strong end user demand for our maintenance products. We were unable to fully meet those demands due to the current state of the global supply chain, the implications of which were felt most significantly in the United States. The biggest challenge facing many consumer product companies today is the continued strain on the global supply chain. These supply chain issues are contributing to rising input costs, manufacturing fees, and higher warehousing and distribution expenses, which Jay will discuss in greater detail shortly. In Canada, net sales of maintenance products declined because of the timing of customer orders. In addition, we were up against a very strong year-over-year comparable period in Canada. In Latin America, we experienced strong sales of all our maintenance products during the fourth quarter, which increased 24% compared to the prior year. This growth was primarily due to strong sales in our newest direct market in Mexico. In addition, sales in Latin America in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic. As conditions continue to improve and restrictions in the region decrease, we continue to see increased end user demand in Latin America. Sales of our homecare and cleaning products in the Americas decreased 2% in the fourth quarter compared to the prior year. We continue to consider our home care and cleaning products as harvest brands that continue to generate meaningful contributions in cash flows, but are generally expected to become a smaller part of the business over time. For the full fiscal year, net sales in the Americas were up 7% to $214.6 million. In total, our American segment made up 47% of our global business in the fourth quarter. Over the long term we anticipate sales within this segment will grow between 5% to 8% annually. Now on to EMEA; net sales in EMEA, which includes Europe, the Middle East, Africa and India were up 6% in the fourth quarter to $45.1 million. Changes in foreign currency exchange rates had a favorable impact on some sales for the EMEA segment from period to period. On a constant currency basis, sales would have decreased by 6% compared to last year, primarily due to translation losses caused by unfavorable changes between the pound sterling and the US dollar. However, when also considering transactional impact caused by changes between the euro and pound sterling, sales were relatively constant, only down 1% compared to the prior year period. The 1% decrease in EMEA sales after all currency impacts were removed was primarily caused by decreased sales in the EMEA direct markets, which were mostly offset by increased sales of maintenance products in the EMEA distributed markets. Sales levels were higher in the fourth quarter of this year in the EMEA distributed markets due to the severe lockdown measures that occurred during the fourth quarter of fiscal year 2020. In the fourth quarter, net sales in our EMEA direct markets accounted for 74% of the region's sales. For the full fiscal year, net sales in EMEA were up 33% to $208.3 million, resulting in the most successful year in the history of the trade bloc. In total, our EMEA segment made up 39% of our global business in the fourth quarter. So the long term we anticipate sales within this segment will grow between 8% to 11% annually. Now on to Asia Pacific; net sales in Asia Pacific, which includes Australia, China, and other countries in the region were up 32% in the fourth quarter to $15.9 million. Changes in foreign currency exchange rates had a favorable impact on sales in most of the Asia Pacific segment from period to period. On a constant currency basis, sales would have increased by 24% compared to last year. In Australia, net sales of $5.3 million in the fourth quarter were up 2% compared to last year, with changes in foreign currency exchange rates having a favorable impact on sales in Australia. In local currency, net sales in Australia declined 7% compared to last year. Australia was up against a very strong year-over-year comparable for sales. In addition, some regions in Australia are under severe lockdown that were used during the fourth quarter of 2021. These have been much more severe than what the country has experienced in the past. This contributed to the decline in sales. In our Asia distributor markets, net sales of $5.8 million in the fourth quarter were up 172% compared to last year, primarily due to a nearly 200% increase in sales of WD-40 Multi-Use products in the region. These sales increases were primarily driven by the easing of COVID-19 lockdown measures and restrictions. These reduced lockdown measures positively impacted economic conditions during the fourth quarter of this year and resulted in increased demand and higher sales, particularly in South Korea and Indonesia. In China, net sales of $4.8 million in the fourth quarter were up 2% compared to last year. Changes in foreign currency exchange rates had a favorable impact on sales in China from period to period. In local currency, net sales in China declined 7% compared to last year. But overall, China is currently doing well and experiencing no major impacts from the pandemic. For the full fiscal year, net sales in Asia Pacific were up 26% to $65.3 million. In total, our Asia Pacific segment made up 14% of our global business in the fourth quarter. Over the long term, we anticipate sales in this segment will grow between 10% to 13% annually. As we begin our journey into fiscal year 2022 and seek to execute and deliver against our 2025 revenue growth aspirations to drive net sales to between $650 million and $700 million, we are more focused than ever before on our must-win battles. These hyper-focused actions support our overall strategy and are the key drivers of revenue growth. Our largest growth opportunity in our first must-win battle is a geographic expansion of the blue and yellow can with a little red top. As Gary shared with you earlier, sales of WD-40 Multi-Use product for the full fiscal year were $371 million, up 22% compared to last year. We are focused like never before on our Top 20 global growth markets. We never stopped investing during the pandemic; we increased our marketing investments by over $6 million this year, including nearly $4 million in the fourth quarter alone. These investments are focused on building brand awareness and market penetration in identified markets. We're doubling down on the future because of the tremendous growth we've seen in markets like France, the United Kingdom and Russia, with growth of 36%, 28%, and 43% respectively. In addition, we've seen tremendous growth in Mexico, which has been the fastest growing direct market we've ever launched in the history of the company. In fiscal year 2022, we will continue to invest in building flagship brand with end users around the world. Our second investment battle is to grow WD-40 Multi-Use product through premiumization. Premiumization creates opportunities for revenue growth, gross margin expansion, and most importantly, it delights our end users. For the full fiscal year, sales of WD-40 Smart Straw and EZ-Reach when combined were $180.7 million, up nearly 19% compared to last year, and representing nearly 49% of total global sales of WD-40 Multi-Use product. Our smart straw next-generation delivery system is currently available in Canada and is being rolled out in the United States. In fact, it will be available later in fiscal year 2022 in Europe. Smart straw next-generation supports our objective to grow premium delivery system penetration to greater than 60% of our WD-40 Multi-Use product sales by 2025. Our third must-win battle is to grow the WD-40 Specialist product line. For the full fiscal year, sales of WD-40 Specialist grew 16% compared to last year, and were up 21% if you include sales of WD-40 Bike as a rule we are doing going forward. Absent the supply chain disruptions and constraints we experienced in the United States, WD-40 Specialists would have grown even more. We recently completed some very interesting research that suggests the end users of WD-40 Specialist are some of our most loyal WD-40 Multi-Use product fans. As you might recall, in early fiscal year 2020, we debuted new packaging for WD-40 Specialists which gave us stronger brand promise for both WD-40 Multi-Use product and WD-40 Specialist, aligning them as a blue and yellow brand with a little red top. We believe we have yet to see the full benefit of this brand architecture project because of the pandemic and associated supply chain issues. Our final must-win battle is focused on driving digital commerce. For the full fiscal year global ecommerce sales are up 25% compared to last year, and we believe we are well positioned to benefit from a significant shift to online behaviors in the post pandemic world. We're focused on developing a data-driven marketing strategy that empowers us to engage directly with end users in meaningful ways online. That strategy has already delivered year-over-year increase of nearly 80% in website traffic, doubling the views of our digital content globally. And it's accelerated and deepened our engagement with end users on many digital platforms around the world. In closing, I want to share a few thoughts with you about the future. Fiscal Year 2021 was an exceptional year for the blue and yellow brand with a little red top. With increased end user demand across all our trade blocs. We remain optimistic that many of the new end users have been interacted with our brands during the pandemic will become permanent users of our maintenance solutions. However, it's also important to note we haven't spent the last 18 months twiddling our thumbs and naively thinking that pandemic-related windfalls will last forever. Rather, we've spent the time becoming laser focused on the areas where we believe future revenue growth will come from. We are investing our time, talent, treasure and technology to support specific growth objectives because we believe investments in these areas will drive our growth in the future. So how do you top your best year ever with a great start to the New Year? I am pleased to report the demand continues to be exceptionally strong, and September was the second largest sales month in the company's history. Now I will turn the call over to Jay who will provide you with a financial update on the business.

Jay Rembolt, Vice President and Chief Financial Officer

Thank you, Steve. We are pleased to report that in fiscal 2021, we experienced strong demand for our maintenance products, along with favorable book comparisons. To start, let’s review the limited fiscal year from last quarter. Due to the uncertainty surrounding the pandemic's short-term effects on our business, we refrained from providing detailed financial guidance for fiscal 2021. However, we anticipated that net sales for the full fiscal year would be between $475 million and $490 million. Today, we reported revenue for the fiscal year at $488.1 million, reflecting a 19% increase from fiscal 2020 and landing at the upper end of our expectations. Now, let’s discuss our 55:30:25 business model, which outlines our long-term targets. The 55 denotes our goal for gross margin, aimed at 55% of net sales. The 30 signifies our intended cost of doing business, targeting total operating expenses, excluding depreciation and amortization, to be 30% of net sales. Lastly, the 25 represents our EBITDA target. In the fourth quarter, our gross margin was 51.2%, down from 56.3% last year, marking a decline of 510 basis points year-over-year. This significant drop in gross margin was mainly due to inflationary pressures and ongoing issues with the global supply chain. Like many others, we are facing steep increases in input and transportation costs, along with higher fees from our third-party manufacturers. To address these economic factors, we’ve begun implementing price increases, although they will take time to reflect in our results. Key input cost changes, particularly in specialty chemicals and aerosol cans, were the main contributors to this margin decline, impacting our margin by 300 basis points. Specifically, specialty chemical costs decreased our margin by 240 basis points, and aerosol can costs accounted for an additional 60 basis points. We also experienced increased warehousing and freight costs, as well as higher discount charges mainly in the Americas, which collectively impacted our gross margin by 180 basis points. These rising costs reflect the current supply chain challenges, further complicated by labor and truck driver shortages in the U.S. and other regions. Fluctuations in foreign currency exchange rates, particularly in EMEA, also adversely affected our margin by 70 basis points, stemming from euro exchange rate changes. In EMEA, most goods sold are priced in pound sterling while about 65% of revenues come from other currencies. Some negative impacts on gross margin were offset by various influences and price increases, which together had a positive effect of 40 basis points on gross margin. For gross margin expectations, the environment continues to evolve with significant inflationary pressures and increased costs of goods. We expect to start recovering gross margin through strategic price increases in the short term. While this may take a few quarters, our goal is to restore gross margin to our targeted range by the end of the fiscal year. I am confident that in the long run, we will expand gross margin beyond our 55% target through product premiumization, an improved product mix, and ongoing geographic growth. Now, addressing our cost of doing business, in the fourth quarter, this cost rose to 39%. Our sales increased by 3%, while operating expenses grew by 22%, leading to the increased cost of doing business percentage. Our long-term aim is to reduce this percentage to 30% of net sales. In the fourth quarter, 79% of our costs came from three main areas: personnel costs, advertising and promotional investments, and freight costs for delivering products to customers. We are thrilled to reward our team for their exceptional efforts, reflected in our investments in their compensation. In this quarter, we made a conscious choice to significantly boost our advertising and promotional spending, which increased by 61% from the fourth quarter of last year, aiming to enhance long-term brand visibility and market presence. This accounted for over half of the rise in our cost of doing business. Additionally, higher freight costs continue to affect our expenses due to limitations in global distribution capabilities. Moving on to EBITDA, which is the final measure in our 55:30:25 framework, it constituted 12% of net sales in the fourth quarter, a notable decrease compared to the same period last year, largely due to our increased advertising and promotional investments and lower gross margin. We have always managed our resources prudently, maintaining a cautious approach to spending and financial commitments, and we expect to return to our historical EBITDA levels in the future. Now, transitioning to items below the EBITDA line, our provision for income taxes was 25.9% in the fourth quarter, up from 20.5% last year, primarily due to fluctuations in quarterly book income and a change in corporate tax rates in the UK. We anticipate our effective tax rate will be approximately 21% to 22% for the full fiscal 2022, higher than the previous year largely due to non-repeating and expiring tax benefits from fiscal 2021. In the fourth quarter, net income was $8.4 million, down from $19.7 million or $0.61 versus $1.42 from the same period last year. Our net income and diluted earnings per share were negatively affected in the fourth quarter compared to the previous year, although for the full fiscal year, our net income and earnings per share showed strong growth of 16%. As for our company's financial condition and liquidity, they remain robust. Our capital allocation strategy balances long-term growth investments with returning capital to shareholders. On October 4, our Board of Directors declared a quarterly cash dividend of $0.72 per share, payable on October 29 to stockholders of record as of October 15, 2021. Additionally, I’m pleased to announce that our Board of Directors has approved a new share repurchase plan. We had paused share purchases at the start of the pandemic to preserve cash while we assessed the long-term implications on our business and growth prospects. Under the new plan, effective November 1, the company can acquire up to $75 million of its shares until August 31, 2023. In fiscal year 2022, we plan to invest around $40 million in capital projects, mostly towards finalizing the procurement of the proprietary machinery and equipment for our next-generation Smart Straw delivery systems. This initiative, initially expected to conclude by fiscal 2021, will extend into FY22 due to pandemic-related impacts. Historically, our business model has been asset-light, requiring minimal capital investment, generally about 1% to 2% of sales. We anticipate that starting in fiscal 2023, our capital expenditures will revert to these typical levels. Now let’s discuss guidance for fiscal 2022. It is important to note that there are factors beyond our control that could influence our fiscal 2022 results, including changes in foreign currency exchange rates, ongoing inflationary pressures, and other unforeseen circumstances. This guidance does not account for future uncertainties. We expect net sales growth to range between 7% and 11%, with projected revenues between $522 million and $542 million. Gross margin for the full fiscal year is forecasted to be between 53% and 54%. Our advertising and promotion investment is expected to represent between 5.5% and 6% of net sales, and the provision for income tax is anticipated to be between 21% and 22%. We project net income to be between $71.7 million and $73.6 million, with diluted earnings per share expected to range from $5.24 to $5.38 based on an estimated $13.7 million. Now, back to Gary.

Garry Ridge, Chairman and Chief Executive Officer

Thanks Jay. In summary, what did you hear from us on this call? You heard that we have delivered a compound annual growth rate of total shareholder return of 14% since 1998. You heard that net sales were $488.1 million, up 19% compared to last fiscal year and a new record for the company. You heard that global sales of WD-40 brand products were up 22% compared to last fiscal year. You heard that we have refreshed our strategic initiatives to more accurately and holistically reflect the top priorities of our organization. You heard that for the full year, global e-commerce sales grew by 25%. You heard that we increased our A&P investment in the fourth quarter to support specific growth objectives because we believe these investments will drive our future growth. You heard that we expect to continue to see pressure on gross margin due to inflationary headwinds and a challenging supply chain environment. You heard that we have issued guidance for fiscal year 2022 and believe that net sales will grow between 7% and 11%. And that we are off to a very strong start in the new fiscal year. Finally, I'd like to share with you the biggest learning I have taken away from this fiscal year. One thing that the pandemic has proven to me is that the diversification across geographies and trade channels which we built into our business creates a protective mode, which allows us to succeed even in the most abnormal of times. In closing, I'd like to share with you a quote from my friend Simon Sinek: 'Courage, as it relates to leading with the infinite mindset, is the willingness to completely change; it is the courage to reject Milton Friedman's stated purpose of business and embrace an alternative definition.' Thank you, and now I will take your questions.

Operator, Operator

Our first question comes from Linda Bolton Weiser with D.A. Davidson.

Linda Bolton Weiser, Analyst

Thank you for the update on the long-term strategy and targets. It seems that the goal for growing the WD-40 core by 2025 is lower than before. Can you remind us what the previous target was compared to the new goal of $525 million? Also, could you explain the shift in thinking behind this adjustment in long-term targets despite the pandemic disruption and the benefits of isolation renovation? Thank you.

Garry Ridge, Chairman and Chief Executive Officer

Thanks Linda. They're substantially the same to be honest; the $530 million is substantially the same figure we had when we had our $700 million goal. We did put that range in of $650 million to $700 million. But the only real change to the long term goal was moving WD-40 Bike out of the strategic plan and including it with Specialist. In fact, the Specialist aspirational goal went up by $25 million from $100 million to $125 million. So the bottom line is things have remained and our aspirations are pretty much in line with what they were before.

Linda Bolton Weiser, Analyst

Okay, so then what's the takeaway then on the strategic refresh? I mean maybe I'm missing or are things pretty much in line across the board.

Garry Ridge, Chairman and Chief Executive Officer

Basically what we did is we wanted to kind of force rank them a little bit. So as you can see our attention to ESG and collaboration has moved to the top because it's become a big part of our strategic planning process. But as far as the aspirations for revenue growth of concern, they basically stayed the same. We've added in the focus that we've now brought on digital and ecommerce, as you know, that's been a big push for us. And it's been very successful. So in most cases, they were really bringing them up to date with holistically what we're thinking these days and including things that have come into our business and into our thinking that we wanted to make sure were headlines, not only to the outside world, but headlines to the leadership team internally as well.

Linda Bolton Weiser, Analyst

Okay, great. So it sounds like it's the order in which you talk about the goals that is the real difference, as you said, right?

Garry Ridge, Chairman and Chief Executive Officer

And some words that now bring out and put into play our intention around things like the future of the company in relation to ESG, DE&I, all those things that have become important, and rightly so, headlines for most companies, and to be honest with you, things that have been present in our company for a long, long time yet, we haven't really put them in print.

Linda Bolton Weiser, Analyst

Great, thank you. So can I just ask you about? I mean, in the quarter, you alluded to some conscious investment to support the business and the brands. And the A&P ratio, indeed, was quite high. I mean, there was a lot of spending. Can you talk about what you spent on term brand building? And then if you've spent so much, when will we see, like in the next couple quarters or is it more a longer-term thing that will benefit from all this spending? Thank you.

Garry Ridge, Chairman and Chief Executive Officer

Thank you, Linda. I'll address the latter part of your question and then hand it over to Steve to discuss our specific investments. Looking ahead, we expect our revenue growth to be between 7% and 11% next year. Some of our current initiatives may have short-term impacts as we move into the new fiscal year. I’ll let Steve elaborate on the significant investments we've made, which are somewhat unusual for us. We've been intentional in seizing opportunities and believe our efforts will strengthen future growth by investing in new areas. Now, I'll turn it over to Steve to share more details.

Steve Brass, President and Chief Operating Officer

Thank you, Gary. Hi, Linda. And three real areas of focus were kind of where the investments, so the first one was in sampling. So particularly with professional end users around the world, which drives faster end user penetration, especially with professional users. So that has the double whammy of long term because once we win new users, we tend to keep them. We've expanded our digital asset base globally, particularly a lot of video work, how to and also a global digital tracking system. And the effectiveness of our digital marketing efforts around the world, and then finally, investing in our Top 20 markets in terms of major research projects in places such as China and Brazil, and they will help us form our long-term future strategy for those key markets, but also just investments in places like India and Russia also, where we believe we have strong both short-term and long-term growth opportunities. So really investing in line with those Top 20 opportunities around the world.

Linda Bolton Weiser, Analyst

Okay, looking at the longer term, beyond even FY22, your goal remains to achieve 26% of revenue, which seems like a higher level than the average.

Steve Brass, President and Chief Operating Officer

No, Linda, in our current guidance that we just issued, we shared that we think that total A&P investment for this fiscal year will be between 5% and 6%, which is in the range normally; it's been about 5.6 to 5.7.

Linda Bolton Weiser, Analyst

Okay. And then, on the gross margin, can you just repeat what you said? Did you say that you hope that by the fourth quarter or fiscal fourth quarter, you can get to the long-term goal, which is the 55%. Am I understanding that correctly?

Garry Ridge, Chairman and Chief Executive Officer

I'll let Jay talk about gross margin, Jay?

Jay Rembolt, Vice President and Chief Financial Officer

Thank you, Gary. While it will take a few quarters to restore our gross margin to the guided range of 53% to 54% for the year, we anticipate that over time, we will achieve a margin exceeding 55% in the long run. Currently, we are facing several uncertainties, making it challenging to determine exactly when we will reach that point. However, we believe we will recover a significant portion of the lost margin and will be positioned to exceed 55% after this year.

Operator, Operator

Our next question comes from the line of Daniel Rizzo with Jefferies.

Daniel Rizzo, Analyst

Hi. Good afternoon, everyone. Thanks for taking my question. Just to get back to what we were just talking about with the A&P costs, so they were a bit higher in the fourth quarter, but the guidance isn't what your outlook is or what you want to achieve over the next five years; why it wouldn't be possibly a little bit higher for a longer period of time, as opposed to the 5.5% to 6% that usually guide to?

Garry Ridge, Chairman and Chief Executive Officer

Because we made specific investments in some areas that were one-time investments, for example, the research that Steve mentioned, the production of a large library of video assets, and our normal A&P investment that also has a lot of sampling embedded in it. So it's more range going forward.

Daniel Rizzo, Analyst

Thank you for your insights. You mentioned that ESG is a crucial aspect of your future strategy. I would like to know more about what specific actions you are taking or how ESG will be integrated into what we can expect moving forward. Any additional details would be helpful.

Garry Ridge, Chairman and Chief Executive Officer

As you know, Daniel, we released and published our first ESG report last year; we're currently having a large working group working on a lifecycle analysis and a number of different areas. So that we can really level set where we are, which will allow us in our next ESG report, which will be published next October to set our targets around, particularly the ESG as you know, we've got measurable targets and have had really great results around those over the years. So yeah, we'll be, Kelley is heading that program.

Daniel Rizzo, Analyst

Okay and then one final question is just with the strategic initiatives, it's a little different now. And then number six in particular, you mentioned expanding in supporting portfolio opportunities. I think I know what the answer is here. But would that mean that you're looking at, I guess, more inorganic opportunities where you might be shifting focus or divesting something or possibly seeing something out there that is actually possible to fit into the portfolio that wasn't there before.

Garry Ridge, Chairman and Chief Executive Officer

I'll give you an example of that internally. Last year or over the last year and a bit, we've taken the 3-IN-ONE brand and extended the portfolio of the 3-IN-ONE brand to include an impressive range of recreational vehicle maintenance products that are now with the 3-IN-ONE brand and are in wide distribution. So with the GT85 brand in the UK, we've done the same thing, expanding that in some areas where we see opportunities. In terms of other brands, with the exception of Carpet Fresh or No Vac in Australia, which is a very strong brand, we continue to support those areas, but there's nothing really magical or mystique in that area.

Operator, Operator

We have a follow-up question coming from Linda Bolton Weiser.

Linda Bolton Weiser, Analyst

Just tell us what your oil price planning assumption is price per barrel for the fiscal year.

Garry Ridge, Chairman and Chief Executive Officer

We have a range, Jay; you have a range that we've disclosed.

Jay Rembolt, Vice President and Chief Financial Officer

Oh, sorry. Yes, we're at the moment, we're in the high end of the range; we usually plan with about a $10 range. So yes, we’re comfortable with; I wouldn't say we're comfortable with the price of oil that we see today. But it is reflected in our forecasts and our outlook.

Linda Bolton Weiser, Analyst

So you're planning 70 to 80 or 80 to 90?

Jay Rembolt, Vice President and Chief Financial Officer

It's closer to the 70 to 80.

Linda Bolton Weiser, Analyst

Okay. And then can I just ask you to well the supply chain challenges, and I know you had some disruptions earlier in the pandemic, is there anything right now that you're seeing that would cause you some problems? Are you able to handle the various challenges? What are you kind of anticipating that you need to look out for the next year?

Garry Ridge, Chairman and Chief Executive Officer

Linda, it's whack a mole basically. I think and that's not trying to be funny, either. But every day, there's something that shows that head to us that we hadn't anticipated. That causes us to have to pivot in one way or do something differently. For the most part, if you look at the year that just went and the volume increases we had in a supply chain situation that was extremely stressed, our supply chain team did a remarkable job. And each day, we think we're getting better in areas of weakness. So I would say that there's not a huge threat today at this minute that we see. However, it's a challenging situation that continues to be managed day to day, not only because of the supply chain issues that are happening in the US and other parts of the world, but also because of the increased volume where in some places around the world, some countries are approaching the volumes we thought we would have achieved in '23, '24, '25, so substantial increases.

Operator, Operator

Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation in today's conference call and ask that you please disconnect your line.