Top Companies Report

26. Zep

July 11, 2011

Atlanta, GA

877.428.9937

www.zepinc.com

Sales: $568 million


Sales:

$568 million. Net income: $13 million for the year ended Aug. 31, 2010.


Key Personnel:

John K. Morgan, chairman, president and chief executive officer; Mark R. Bachmann, executive vice president and chief financial officer; Robert P. Collins, vice president and chief administrative officer; Jeffrey J. Sorensen, vice president and chief marketing officer; Philip A. Theodore, vice president, general counsel and corporate secretary; Jeffrey L. Fleck, vice president and chief supply chain officer.


Major Products:

Industrial and institutional cleaners. Brands include: Zep, Zep Commercial, Zep Professional, Enforcer, National Chemical and Selig; Misty, i-Chem, Next Dimension (acquisition), TimeMist, TimeWick, MicrobeMax, CountryVet and Niagara National.


New Products:

Zep Biofilm Drain Purge, Zep Peroxy-Serve, Zep ProVisions Foodservice Cleaning Line (range extension).


Comment:

Zep had a lot of zip this year. For the year ended Aug. 31, 2010, sales jumped 13.5% to $568 million, while net income rose 5% to more than $13 million.


Fiscal 2010 was a pivotal year for Zep. It marked the completion of a three-year makeover of the company. According to John K. Morgan, chairman, president and chief executive officer, “In virtually every way possible, our hard-working associates have transformed our business into a far more efficient, more focused and more forward-looking company.


“In the face of a challenging economic environment, our associates were able to increase the value we provide to our customers, expand our access to market, improve our profit margins, and acquire and integrate businesses while generating significant cash flow,” he added.


More specifically, Zep:


• Significantly broadened its go-to-market strategy, expanded the retail sales channel and network of distributors, and invested in acquisitive growth. Simultaneously, Zep added experienced sales reps using a new recruitment model designed to yield a faster return on investment and provided new price optimization tools that will further empower its sales reps.


• Completed three acquisitions, Amrep, Waterbury Companies and Niagara National. Each of these companies contributed to a broadened product line, provided access to additional markets, as well as increased top line growth and overall profitability, according to the company.


• Was strengthened financially. Since becoming a publicly traded company and prior to the acquisitions, it reduced debt by 53%, and, during the past two years, reduced the breakeven point of its legacy business by nearly 30%.


• Became more efficient by trimming its product line by more than 4,000 SKUs, which affected only 1% of sales, consolidated North American distribution network from 41 to 17 strategically-located facilities and reduced the non-sales headcount by more than 28%.


• Decentralized business to push decisions closer to the customers.


In retail, Zep Commercial and private-branded product lines with both existing and new customers announced new relationships with Advanced Auto Parts and AutoZone while also launching its refreshed Enforcer brand.


Zep also acquired Niagara National of Atlanta, GA, a manufacturer in automatic truck wash systems and products, for an undisclosed price. This acquisition is expected to be accretive to earnings during fiscal 2011. Ron Kirschner, president of Niagara, and the majority of its employees will remain with the company.


The Niagara brand of custom truck wash, pressure washers, water recovery systems and maintenance chemicals is expected to bulk up Zep’s transportation product portfolio.


Morgan addressed the company’s trio of acquisitions in the last nine months. “The first was Amrep, which was immediately accretive to earnings, expands our access to the retail and distributor channels, and provides significant private label capabilities. We recently completed our acquisition of certain brands and assets of Waterbury Companies, which we expect will enhance Amrep’s leading position as a provider of air care delivery systems and products for facilities maintenance. Our third acquisition, while much smaller than the first two, included the assets of Niagara National and complements our strength in our vehicle wash business, specifically in the high quality truck and fleet washing equipment markets.”


In February 2011, Zep Inc. unveiled a new corporate logo that celebrates decades of Zep brand leadership while providing an updated look for the future direction of the company.


For the six months ended Feb. 28, 2011, Zep’s sales jumped nearly 20% to more than $304 million. Net income rose more than 10% to $7 million.


In April, Zep renewed and expanded its contract to provide maintenance products to the US federal government. GSA Schedule 73, under Zep Sales & Service, will continue for five additional years. The renewed schedule covers a broad range of cleaning and maintenance products.


Zep Sales & Service offers more than 100 GreenLink products as part of this Schedule and has added the ProVisions line of dishwashing detergents, food service cleaners and sanitizers.

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