Zep presentation - august 2014 v.7

Zep Inc. Investor Presentation
August 2014

Safe Harbor
This presentation and our commentary contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Specifically, forward-looking statements 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 presentation and our commentary include but are not limited to: statements regarding the economic environment and the impact this environment has had or could have on our current and/or future financial results; statements regarding our expectations about the receipt of insurance proceeds; statements regarding our ability to minimize the disruption that our associates, customers and business partners will experience as a result of the fire at our aerosol plant; statements regarding the timing of the resumption of production at our aerosol plant and our return to full production capacity for our aerosol products; statements and related estimates concerning the exhaustion of our aerosol inventory and the amount of our aerosol volume that could be at risk; the statement that we intend to re-establish our own aerosol manufacturing capacity in the future; statements regarding future revenue and operating income reductions resulting from the fire at our aerosol facility; and statements regarding our capital structure following our expected refinancing.
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:
impact of the fire on financial results;
economic conditions in general;
the cost or availability of raw materials;
competition;
our ability to realize anticipated benefits from strategic planning and restructuring initiatives and the timing of the benefits of such actions;
market demand;
our ability to maintain our customer relationships; 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, 2013 and in Part II, “Item 1A Risk Factors” of our Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2014. We believe the 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 we undertake no obligation to update publicly any of them in light of new information or future events.
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© 2014 Zep Inc. - All rights reserved.

•Zep Inc. sells a wide-variety of highly-effective, consumable packaged chemicals that help professionals maintain, clean & protect their assets, facilities and environment.
•We market our products primarily to customers in the Transportation, Industrial/MRO and Jan/San & Institutional markets.
•Our multi-channel sales capability is valued by our customers and enhanced by an integrated supply chain and shared services structure, providing an additional competitive advantage.
Zep Inc. Value Proposition
3

© 2014 Zep Inc. - All rights reserved. 4
• Largest selection of
high-efficacy formulas
bundled with
application expertise
• Pro-focused line of
jan/san & plumbing
products for retail
• Broad product line
of specific use
chemicals for
distribution
Pro-Focused High Efficacy Formulas for Any Application
• Pro and DIY
auto care
products for
retail
• Finest house
of brands in
Do-it-for-me
auto care

Transportation $4.8B 38%
Industrial / MRO $2.7B 22% & Other
Jan / San $10.6B 40% & Institutional
$18B North American Market Opportunity
5
Target Strategic Markets
Drivers
•GDP
•Employment
•Trends in Acceptable Practices
•GDP
•New Vehicle Sales
•Miles Driven
•Average Vehicle Age
•Weather
•GDP
•Industrial Production
•Manufacturing Employment
Examples
% Zep Sales
Vehicle Maint. Wash & Polish, Parts Cleaners, Degreasers, Lubricants, Fleet Wash…
Lubricants, Penetrants, Greases, Parts Washers, Food Processing Cleaners/Sanitizers, Metal Working…
Air, hand & floor care, Cleaners, Degreasers, Carpet Care, Sanitizers Disinfectants, Laundry Dispensing Systems…
60%+ of Revenues from Transportation & Industrial/MRO

U.S. New Vehicle Sales
Vehicle Age
10
12
14
16
18
8
9
10
11
12
U.S. New Vehicle Sales (MM)
Vehicle Age (years)
Favorable Industry Trends
6
Transportation U.S. Vehicle Sales & Vehicle Age
Industrial/MRO GDP & Industrial Production
U.S. GDP
Seasonally Adj. Industrial Production
86
89
92
95
98
101
$13.5
$14.0
$14.5
$15.0
$15.5
$16.0
Seasonally Adj. U.S. Industrial Production (Index)
U.S. GDP (Trillions)

Zep Inc. Life Cycle
7
Complexity Reduction Will Drive Cash Flow
2007-2008
2009-2010
2010-2013
2014-2015
2015-2016
•Amrep
•Waterbury
•Niagara
•Washtronics
•Hale Group
•Mykal
•Ecolab Vehicle Care
•Focus on strategic end-markets
•Product line & customer rationalization
•Supply chain
•Facilities
•Logistics
•Align sales & support functions
Spin
Improve Business
Acquire Platforms
Complexity Reduction
Drive Organic Growth

8
Growing Sales, Profitably
$501.0
$568.5
$646.0
$653.5
$689.6
$0
$100
$200
$300
$400
$500
$600
$700
$800
FY09
FY10
FY11
FY12
FY13
($ Millions)
Strong Revenue Growth 8.3% CAGR
EBITDA Growth 22% CAGR EBITDA Margin 70 bps per year
$23.8
$33.9
$47.5
$53.7
$52.0
$0
$10
$20
$30
$40
$50
$60
FY09
FY10
FY11
FY12
FY13
EBITDA Margin:4.7% 6.0% 7.3% 8.2% 7.5%
Effect of acquisitions*
Effect of acquisitions*
($ Millions)
We estimate acquisitions since 2009 accounted for approximately 1/3 revenues and 1/2 of EBITDA during fiscal 2013
* Revenue and EBITDA excluding the effect of acquisitions based on company estimates.

Growing EPS and ROIC
9
$0.52
$0.95
$0.97
$0.98
$0.91
FY09
FY10
FY11
FY12
FY13
Fully diluted Earnings per Share, as adjusted
8.0%
9.3%
9.6%
8.8%
6.1%
FY09
FY10
FY11
FY12
FY13
Return on Invested Capital (ROIC) is calculated as after tax operating profit divided by Invested Capital.
Adj. EPS Growth 15% CAGR
ROIC Impacted by Acquisitions

Strong/Consistent Cash Flow Generation
1) 2011 Free Cash Flow includes $0.9 million proceeds from the sale of property, plant, and equipment
2) Free Cash Flow is defined as Net Cash Provided by Operating Activities less Capital Expenditures plus Proceeds from Sale of Property Plant and Equipment.
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$ Millions
•$118 million in cumulative free cash flow during the past five years
Strong FCF Important Characteristic of Zep Model
Capex
$7.5
$9.8
$8.9
•Fund normal operations
•Fund dividend
•Pay down long-term debt
Use-of-Cash Strategies
Noteworthy FCF Generation While Investing in Strategic Growth Initiatives
$22.9
$24.2
$29.0
$4.3
$38.0
$0
$5
$10
$15
$20
$25
$30
$35
$40
FY09
FY10
FY11
FY12
FY13
$18.4
SAP Capital spend and increased working capital
$12.1

3.76x
3.60x
3.59x
4.00x
3Q FY13
2Q FY14
3Q FY14
Covenant
$236.7
$213.4
$208.5
3Q FY13
2Q FY14
3Q FY14
1.90x
1.72x
1.67x
1.20x
3Q FY13
2Q FY14
3Q FY14
Covenant
Fixed Charge Coverage Ratio*
Debt to EBITDA*
Net Debt Position ($MM)
Covenants
Debt Position
11
Net debt decreased by $4.9MM during quarter
Credit facility matures in July 2015
Expect to refinance in 4Q FY14
* As defined by Zep Inc.’s Credit Facility
$28.2MM Reduction in Net Debt in Last 12 Months

Zep is a Solid Investment
•Focused on growing strategic end-markets with favorable demographics
•Developing a robust sales pipeline for 2014 and beyond
•Revenue growth produces 25-30% operating leverage
•Business produces consistent cash flow (4-6% Sales)
•Restructuring activities delivering results with $9 million of savings expected in fiscal 2014
12
Considerable Upside Margin Opportunities

Near-Term and Long-Term Expectations

Revenue Expectations
Fundamentals of the business are sound & economy is stable
Focused on Transportation & Industrial/MRO w/favorable demographics
Adapting to the channel shift in Jan/San
3rd Qtr. Organic growth more than offset impact of continuing complexity reduction – trend continuing Q4 to date
Expect fire-related disruption but magnitude is difficult to predict
Continue to bring capacity on-line, with plan to have greater capacity than prior to the incident, housed in multiple locations
14
Lost Aerosol Sales Could Exceed Core Growth for the Next 2-3 Quarters with Sales Flat to Down Somewhat

Near-Term Focus
Fiscal fourth quarter-to-date sales have grown mid-single digits
Expect difficulty serving some customers in the future
Implementation of Business Continuity Plan
Recovery from the fire
Minimize customer disruption
Regain production capacity as quickly as possible
Result in more capacity at more locations
15
Encouraged by Recent Top-Line Success

Fiscal 2015 Considerations
Revenue
Have now anniversaried complexity reduction activities from fiscal Q3 2013
$3.5-$5.0MM comparative headwind ending
Costs
Gross margins in fiscal 2015 expected to be 46-48%
Potential upward pressure on oil affects a portion of raw materials
Selling, distribution and administrative expenses expected to be ~16-18% of sales
Expect lower revenue will also lower variable costs
Uncertainty with respect to freight
Expect $2MM of costs associated with GHS compliance
16

Long-Term Financial Objectives
1.$1 billion in revenue within 5 years
2.Target of 50 bps annualized EBITDA margin improvement
3.11-13% annualized EPS improvement
4.Return on Invested Capital (ROIC) in excess of cost of capital
17

Conclusion
#1 Priority is our Business Continuity Effort
Continue successful strategies of:
1.Focusing on key end-markets like Transportation & Industrial/MRO
2.Continuing investments in North American Sales and Service specialization
3.Following Jan/San channel shift to expand availability of products
4.Continuing complexity reduction in our supply chain & products
18

20
3rd Quarter Revenue Growth
0.6%
2.1%
4.7%
1.5%
2.6%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Achieving Organic Sales Pipeline Success

Mass
Jan/San
3rd Quarter Revenue Highlights
21
Food Processing
Oil & Gas
Zep Vehicle Care
Hardware, Farm & Ag
Auto/OEM
Auto/Aftermarket
Industrial/MRO
Home Improvement
Increase
Stable
Decrease
Solid Top Line Execution Produced Sales Gworth and EBITDA Margin Expansion

3rd Quarter Financial Highlights
Q3 Growth
Adj. EBITDA(1) $19.3MM 13.6%
Adj. EBITDA Margin(1) 10.3% 110bps
Adjusted EPS(1) $0.30 20.0%
Adj. Cash EPS(2) $0.39 14.7%
22
(1) Excludes effects of acquisition and integration costs, provision for loan loss, fire related charges, restructuring charges, California legal matter, legal settlement and contingent consideration adjustment. Adjusted EPS adjustments are the same as Adjusted EBITDA adjustments and presented net of tax.
(2) Adjusted diluted earnings per share excluding effects of amortization.
Improvement Opportunities
•Price/Cost Relationship
•Freight Expense Management
•European Restructuring Activities
Solid Top Line Execution Produced Sales & Earnings Growth

$17.0
$19.3
$1.1
$1.0
$1.0
$0.4
$0.6
$3.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
($ millions)
23
3rd Quarter ‘14 EBITDA & Adjusted EBITDA
( )
( )
( )

24
3rd Quarter ‘14 EPS & Adjusted EPS
$0.25
$0.30
$0.03
$0.03
$0.03
$0.01
$0.01
$0.08
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
( )
( )
( )
2014 2013
Diluted EPS $0.09 $0.28
Adjustments $0.21 ($0.03)
Adjusted Diluted EPS $0.30 $0.25
Three Months Ended
May 31,
20% Increase in Adjusted Diluted Earnings Per Share

$0.30
$0.39
$0.09
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
25
Adjusted Diluted Cash Earnings Per Share
14.7% Increase in Adjusted Diluted Cash Earnings Per Share

Two Components Status
1.Realign & right-size headcount Complete
2.Supply chain changes
Rationalization of distribution facilities in U.S. Consolidated
4 Dist. Centers
Implementation of new TMS Behind Schedule
Consolidate selected operations in Europe Behind Schedule
Restructuring Update
26
On-Track to Achieve $9.0MM Savings in Fiscal 2014 Reinvested $3.5MM

Insurance Coverage
Casualty & business interruption $1.0MM deductible
Damage to facility
Increased costs to produce
Profit on lost revenue
General liability $1.5MM deductible
Damage to 3rd parties
Received $5MM in June as a pre-payment against the claim
Expect to file claims quarterly and a mismatch between spending and insurance settlements
Final resolution of claim not expected for at least a year
27

Business interruption insurance will cover lost profit on lost sales
Coverage period:
Based on when existing aerosol facility should return to normal operation
Benefit from extended coverage for an additional 365 days
Quarterly financial impact:
Potential to reduce reported profits for several quarters
Once claim is approved, realize income for lost profits
Effect of Lost Revenue
28

Higher manufacturing costs during the recovery period
Presented net of insurance proceeds
Expect higher manufacturing costs and general costs to be offset by insurance recoveries in the same period
Coverage period:
Based on when existing aerosol facility should return to normal operation
Effect of Higher Costs
29
Incident–Related Costs Should Have Little or No Net Effect on the Gross Margin or S, D & A Expense Lines

Annual Adj. EBITDA & Adj. EPS Reconciliation
30
Annual (Years Ended August 31) 2009 2010 2011 2012 2013
Net income $ 9.3 $ 13.5 $ 17.4 $ 21.9 $ 15.2
Interest expense 1.7 2.0 6.6 5.5 9.0
Provision for income taxes 5.9 8.2 9.3 11.9 7.9
Depreciation & amortization 7.0 10.3 14.2 14.3 19.9
EBITDA (unaudited) $ 23.8 $ 33.9 $ 47.5 $ 53.7 $ 52.0

Quarterly Adj. EBITDA & Adj. EPS Reconciliation
31
Quarterly (unaudited)
(millions) Q1 Q2 Q3 Q1 Q2 Q3
Net income $ 3.5 $ 2.8 $ 6.3 $ 3.1 $ (0.7) $ 2.2
Interest expense 1.2 2.3 3.0 2.3 3.4 2.5
Provision for income taxes 2.0 1.3 3.4 1.7 (0.3) 1.4
Depreciation & amortization 3.6 5.5 5.4 5.5 5.5 5.5
EBITDA (unaudited) $ 10.4 $ 11.8 $ 18.0 $ 12.7 $ 8.0 $ 11.6
Acquisition and integrations costs $ 1.2 $ 1.6 $ 0.1 $ 0.6 $ 0.4 $ 0.1
Provision for loan loss $ - $ - $ - $ - $ - $ 5.7
Fire related charges, net $ - $ - $ - $ - $ - $ 1.1
Restructuring charges $ - $ - $ - $ - $ - $ 0.1
Legal $ 0.4 $ 0.2 $ (1.0) $ 0.8 $ 2.8 $ 0.8
Other $ - $ (1.3) * $ - $ -
Adjusted EBITDA (unaudited) $ 12.0 $ 12.4 $ 17.0 $ 14.1 $ 11.2 $ 19.3
Quarterly (unaudited)
Q1 Q2 Q3 Q1 Q2 Q3
Diluted earnings (loss) per share $ 0.16 $ 0.12 $ 0.28 $ 0.14 $ (0.03) $ 0.09
Acquisition and integration costs, net of tax $ 0.03 $ 0.05 $ - $ 0.01 $ 0.01
Provision for loan loss, net of tax $ - $ - $ - $ - $ - $ 0.15
Fire related charges, net of tax $ - $ - $ - $ - $ - $ 0.03
Restructuring, net of tax $ - $ - $ - $ - $ - $ -
Legal, net of tax $ 0.01 $ 0.01 $ (0.03) $ 0.02 $ 0.11 $ 0.03
Other, net of tax $ - $ (0.04) $ - $ - $ -
Adjusted Diluted Earnings Per Share $ 0.20 $ 0.14 $ 0.25 $ 0.17 $ 0.09 $ 0.30
* Lancaster building writedown.
2013 2014
2013 2014

Zep Inc. Non-GAAP Disclosure
32
•This presentation contains a supplemental table of adjusted operating results, which includes non-GAAP financial information such as EBITDA, adjusted EBITDA, adjusted earnings per share, free cash flow and free cash flow per share. This non-GAAP financial information is provided to enhance the user's overall understanding of our financial performance. Specifically, management believes that EBITDA, adjusted EBITDA, adjusted earnings per share and free cash flow may provide additional information with respect to our performance or ability to meet our future debt service obligations, capital expenditures and working capital requirements. Free cash flow per share is provided to facilitate the comparison of our financial results to other companies on a per share basis. 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, adjusted EBITDA, adjusted earnings per share, free cash flow or free cash flow per share reported by other companies because the items that affect net earnings that we exclude when calculating EBITDA, adjusted EBITDA and adjusted earnings per share or because items that we add to reported net cash provided by operating activities in computing free cash flow and free cash flow per share may differ from the items taken into consideration 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 presentation
•Our management uses EBITDA and other non-GAAP financial information:
–as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis as they remove the impact of certain non-cash items as well as items not directly resulting from our core operations;
–to evaluate the effectiveness of our operational strategies; and
–to evaluate our capacity to fund capital expenditures and expand our business. EBITDA and the ratios derived from these measures as calculated by us are not necessarily comparable to similarly titled measures used by other companies. In addition, these measures: (a) do not represent net income or cash flows from operating activities as defined by GAAP; (b) are not necessarily indicative of cash available to fund our cash flow needs; and (c) should not be considered in isolation of, as alternatives to, or more meaningful measures than operating profit, net income, cash provided by operating activities, or our other financial information as determined under GAAP.

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Zep presentation - august 2014 v.7