Zep Inc (ZEP) Q1 2015 Earnings Conference Call Transcript

Bob Lavik – CJS Securities
Okay, great and then regarding the sales force compensation program in North America, I know it has been five days. So it’s certainly very new but you talked a little bit about the initial reaction from the sales force. Has there been any turnover or more than expected and talked a little bit about the higher efforts for a new sales reps.

John K. Morgan
There was a very modest amount of turnover. We had continued to highlight one of the risks was when you start making changes to a structure like that it can risk turnover. I was pleased with the fact that there wasn’t any material level of turnover in the North American sales and service business. The response was very good, very professional, very thoughtful. Especially on the part of our more experience ZEP reps who had been around this business for 20 and 30 years and really understand the marketplace. They understand the need to grow the business and had  been completely behind and supported of the changes. I am very pleased with that.

It’s a little early to declare victory and I am a little conservative that way. I would like to see the results of this over the next two or three quarters. But when I think about our worst fears and our most optimistic outcome, I am pretty pleased with what has ruled out. Likewise, on the higher sales reps, there wasn’t a lot that took place in our first quarter. The desire on the part of that team was to get the new structure and the new policies and the new growth and so many bonuses at place and that type of thing and then accelerate in hiring the sales reps as well as sales management trainers to go along with these sales reps.  So I would say that the next several quarters in that regards are far more important than the last couple.

Bob Lavic – CJS Securities
Okay. Last one and I will get back in queue. We are just continuing your net thought. Are you still expecting the roughly 6 million incremental expenses for this year, for this program to rule out? Are those kind of in the next three quarters or is there some of it? How should we think about that? Kind of incremental for a lack of better startup expanse to get this transformation jump started?

John K. Morgan
 I may have to Mark on the timing that …

Mark R. Bachman
Yeah, so Bob, we did began that spending in Q1 and will continue, in fact, accelerating it into Q2 and Q3 and as part of we gave this morning with regard to selling distribution and this ray of expense is being 200 to 300 basis point, higher in Q2, brought through by seasonality, we have what selling days and in the second quarter but we are increasing our rate of investment and that bring us in line with overall 41% to 43% of SG&A expense for the year.

Bob Lavik – CJS Securities
Okay, great, thanks very much.

Mark R. Bachman
Thanks Bob.