Top Companies Report

23. Zep

June 28, 2012

Atlanta, GA
Sales: $646 million.
Net income: $17.4 million for the year ended Aug. 31, 2011.

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 L. Fleck, vice president and chief supply chain officer.

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

Comments: Through a combination of acquisitions and improved customer mix, Zep’s sales rose more than 13% last year and net income was up more than 20%. The US accounted for 79% of sales, followed by Canada (12%) and Europe (9%).

During fiscal 2011, Zep completed the integration of the Amrep, Waterbury, and Niagara acquisitions. Without them, Zep’s sales actually declined about $23 million last year. The company noted that many of its customers are small business owners who have struggled during the prolonged economic downturn.
Those acquisitions have helped the company transform its sales channels to mirror the market. For example, back in 2007, 86% of corporate sales were direct, 13% came from retailers and just 1% was from distributors. By the end of fiscal 2011, the percentages had changed to direct (62%), distributors (22%) and retailers (16%). For comparison sake, the US cleaning maintenance chemicals market breaks out like this: direct (21%), distributors (44%) and retailer (35%). Zep’s retail business just keeps expanding. In January, the company announced that 50 Zep products will be sold in Lowe’s. Home Depot, however, remains Zep’s biggest retail customer.

Zep continues to expand internationally as well. Last month, it completed the acquisition of Mykal Industries Limited (UK) for an undisclosed price. Mykal is a leading manufacturer of a broad range of branded and private label cleaning and degreasing products for the European retail, do-it-yourself and professional distribution markets. The products and services offered by Mykal include De.Solv.It, a top-selling brand of stain removers in the UK as well as the Mykal branded portfolio of natural solvents and biodegradable cleaners used in engineering and manufacturing applications. Mykal sells its De.Solv.It, Mykal branded and private label products directly to major industrial companies and through some of the UK’s leading retail, DIY and trade-oriented stores and catalogues.

And in January, the company acquired Hale Group Limited of the UK. Zep has had a presence in Europe since 1992, but with this acquisition, the company is expanding its reach to a broad range of industrial, commercial and public sector customers in both the UK and additional export markets.
For the six months ended Feb. 29, sales rose less than 1% to about $305 million, but net income declined nearly 15% to $6 million.

Finally, Zep expects to implement SAP to give its team better visibility into real-time information.


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