ZEP INC (ZEP) filed Annual Report for the period ended 2009-08-31.
Zep Inc. is a leading producer marketer and service provider of a wide range of cleaning and maintenance solutions for commercial industrial institutional and consumer end-markets. Zep's product portfolio includes anti-bacterial and industrial hand care products cleaners degreasers deodorizers disinfectants floor finishes sanitizers and pest and weed control products. The company markets these products and services under well recognized and established brand names such as Zep Zep Commercial Enforcer and Selig Zep is headquartered in Atlanta Georgia. Zep Inc has a market cap of $379.6 million; its shares were traded at around $17.6 with a P/E ratio of 32.7 and P/S ratio of 0.8. The dividend yield of Zep Inc stocks is 0.9%.
Highlight of Business Operations:
Based on the closing price of the registrant’s common stock of $7.91 as quoted on the New York Stock Exchange on February 28, 2009, the aggregate market value of the voting stock held by nonaffiliates of the registrant was $99,127,503.
We sell our products to customers primarily in the United States (78% of 2009 net sales), Canada (12% of 2009 net sales), and Western Europe (10% of 2009 net sales). For the fiscal year ended August 31, 2009, we generated net sales of $501.0 million and net income of $9.3 million.
According to market research that we utilize, the United States commercial, industrial, and institutional cleaning chemicals market is an estimated $10.5 billion market. We believe we are one of the top four market leaders, which together hold slightly less than 30% of the total market share. We estimate that our greater than 3% market share trails only that of Ecolab Inc. and JohnsonDiversey Holdings, Inc. The market is highly fragmented and is served by hundreds of regional and niche participants who sell either directly to end-users or through distributors. Approximately two-thirds of the market is currently served through distributors while one-third of the market is currently served through direct sales. We are a market leader in the direct sales channel and the significant majority of our historical revenues have come from this channel. In general, the commercial, industrial, and institutional end-market enjoys growth consistent with GDP due to favorable end-market demographics, increasing government regulations, health and safety concerns, and consumer demand for cleanliness. In October 2008, we announced our entrance into the industrial distribution channel through the forging of strategic alliances with several world-class distributors. We anticipate that significant revenue growth can be achieved as we execute on our long-term strategy of entering and penetrating the $7.2 billion industrial distribution channel. These efforts, we anticipate, could produce 10-15% of our revenues.
We employ approximately 20 chemists and technical support personnel who develop product systems that provide comprehensive solutions for broad-based customer applications and who work in our technical services area supporting both our sales representatives and customers. Efforts to enhance existing formulations by utilizing new raw materials or combinations of raw materials have resulted in both new and improved products. Special emphasis has been placed on the development of environmentally preferable products based on renewable and environmentally preferred raw materials, such as the continued expansion of our GreenLink™ product line, introduction of products for the automotive market under the EnviroEdge™ name, and the launch of the Provisions™ food service cleaning product line, which is composed of biodegradable detergents and cleansers ideally suited for the growing food segment. Technical expertise is employed to incorporate proven technologies into new applications. Our research and development expense for the three years ended August 31, 2009, has ranged between approximately $1.5 million and $2.5 million.
ZEP is in the portfolios of John Keeley of Keeley Fund Management.
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