Zep Inc. Reports Solid Second Quarter Results

Zep Inc. Reports Solid Second Quarter Results

Compared to the second quarter of last year,

• Revenue grew 7.7% to $163.4 million

• Gross profit margin grew by 260bps to 47.4%

• Earnings Per Share grew 9.1% to $0.12

• EBITDA increased $3.0 million or 34% to $11.8 million

• Zep Vehicle Care integration on-track

ATLANTA--(BUSINESS WIRE)-- Zep Inc. (NYS: ZEP) , a leading consumable packaged goods company that manufactures a wide variety of high-performance maintenance and cleaning chemicals, today reported financial results for the three-month period ended February 28, 2013.

Second quarter results reflected sales growth in retail, which were again driven by automotive aftermarket and by sales to new retailers, while our distribution channel again drove growth with industrial/MRO customers. In addition, acquisitions added approximately $17.4 million to net sales during the quarter.

• Revenue in the second fiscal quarter of 2013 was $163.4 million, a 7.7% increase from the second fiscal quarter of 2012.

• Net income for the second fiscal quarter of 2013 was $2.8 million, a 14.7% increase compared to net income of $2.4 million in the second fiscal quarter of 2012.

• Diluted earnings per share (EPS) for the second fiscal quarter of 2013 was $0.12 compared to EPS of $0.11 in the second fiscal quarter of 2012.

• EBITDA (earnings before interest, taxes, depreciation and amortization expenses) for the second quarter of 2013 was $11.8 million compared to $8.8 million in the second fiscal quarter of 2012.

• EBITDA margin increased approximately 140 basis points to 7.3% in the second fiscal quarter of 2013 compared to 5.8% during the second fiscal quarter of 2012.

"We are very pleased with our second quarter results," said John K. Morgan, Chairman, President and Chief Executive Officer of Zep Inc. "In the near term, we will continue to focus on the integration of Zep Vehicle Care, optimize our recent SAP implementation and utilize free cash flow to reduce debt."

A more detailed discussion of the Company's long-term objectives and financial goals may be found in our Forms 10-K and 10-Q filed with the Securities and Exchange Commission ("SEC"). The Forms 10-K and 10-Q are available via the Company's website at www.zepinc.com.

Conference Call

The Company will host a conference call to discuss first quarter operating results on Tuesday, April 9, 2013 at 8:30 a.m. ET. The call and accompanying presentation will be webcast and may be accessed through the Company's website at www.zepinc.com or by dialing in at 253-237-1190, conference ID: 81777174. A replay of the call will be posted to the website within two hours of completion of the conference call.

About Zep Inc.

Zep Inc., with fiscal year 2012 net sales of $654 million, is a leading consumable packaged goods company that manufactures a wide variety of high-performance maintenance and cleaning chemicals that help professionals and prosumers clean, maintain and protect their assets. We are focused on the attractive industry dynamics of the transportation market and the industrial maintenance and repair operation ("MRO") market which together now comprise approximately 61% of our revenue with the balance derived from sales into the facilities maintenance vertical. We market these products and services under well recognized and established brand names, such as Zep®, Zep Commercial®, Zep Professional®, Enforcer®, National Chemical™, Selig™, Misty®, Next Dimension™, Petro®, i-Chem®, TimeMist®, TimeWick™, MicrobeMax®, Country Vet®, Konk®, Blue Coral®, Black Magic®, Rain-X®, Niagara National™, FC Forward Chemicals®, Rexodan®, Mykal™, and a number of private labeled brands. Founded in 1937, some of Zep's brands have been in existence since 1896. Zep Inc. is headquartered in Atlanta, Georgia. Visit our website at www.zepinc.com.

Forward Looking Statements and use of Non-GAAP Information

This release contains, and other written or oral statements made by or on behalf of Zep may include, forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents that are filed with the SEC or in connection with oral statements made to the press, potential investors or others. Specifically, forward-looking statements may include, but are not limited to, statements relating to our future economic performance, business prospects, revenue, income, and financial condition; and statements preceded by, followed by, or that include the words "expects," "believes," "intends," "will," "anticipates," and similar terms that relate to future events, performance, or our results. Examples of forward-looking statements in this press release include but are not limited to: statements regarding our plans to focus on the integration of Zep Vehicle Care, optimize our recent SAP implementation and to utilize free cash flow to reduce debt.

Our forward-looking statements are subject to certain risks and uncertainties that could cause actual results, expectations, or outcomes to differ materially from our historical experience as well as management's present expectations or projections. These risks and uncertainties include, but are not limited to:

• economic conditions in general;

• customer and supplier relationships and prices;

• competition;

• ability to realize anticipated benefits from strategic planning initiatives and timing of benefits;

• market demand; and

• litigation and other contingent liabilities, such as environmental matters.

A variety of other risks and uncertainties could cause our actual results to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. A number of those risks are discussed in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended August 31, 2012. Management believes these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events.

The unaudited consolidated financial statements presented in accordance with accounting principles generally accepted in the United States ("GAAP") are supplemented by a table of adjusted operating results, which includes non-GAAP financial information that is referenced in this press release, which includes EBITDA. This non-GAAP financial information is provided to enhance the user's overall understanding of our financial performance. Specifically, management believes that EBITDA may provide additional information with respect to our performance or ability to meet our future debt service obligations, capital expenditures and working capital requirements.This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP. Moreover, this non-GAAP information may not be comparable to EBITDA reported by other companies because the items that affect net earnings that we exclude when calculating EBITDA may differ from the items excluded by other companies.The non-GAAP financial information included in this earnings release has been reconciled to the nearest GAAP measure in the tables at the end of this press release.