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WD-40 Company Reports Second Quarter Earnings

04/06/05

SAN DIEGO, April 6, 2005 /PRNewswire-FirstCall via COMTEX/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 28, 2005 of $61.1 million, an increase of 4.4% over second quarter last year. Year-to-date net sales were $121.8 million, up 9.7% over the same period last year.

Net income for the second quarter was $5.3 million, down 15.5% compared to the prior year's quarter. Earnings per share were $0.31 in the second quarter, compared to $0.36 per share for the quarter last year. Year-to-date net income was $10.9 million, an increase of 2.6%. Through six months, earnings per share were $0.65 compared to $0.62 in the same period last year.

"We are on track with our performance for the first six months to meet our goals for the year," said Garry O. Ridge, WD-40 Company president and chief executive officer. "Although we've had challenges that we did not anticipate this year, our 'Fortress of Brands' business strategy has given us more ways to win and that is serving us well. We continue to be focused and committed to innovation," said Ridge.

"As expected in the second quarter, we were hit hard by higher cost in manufacturing and freight and our results reflect those higher costs. We are implementing price increases to offset a portion of those costs. At the same time, we are pleased to have our innovation program in place and delivering," Ridge added.

Fiscal Year Guidance

In fiscal year 2005, WD-40 Company still expects net income to increase 5.5% to $27 million, achieving earnings per share of $1.62 based on an estimated 16.7 million shares outstanding.

As previously announced on April 1, 2005, the board of directors of WD-40 Company declared a regular quarterly dividend on March 31, 2005 of $.22 per share, payable April 29, 2005 to stockholders of record on April 18, 2005.

"While we still expect to end the year right where we anticipated, there are several offsetting factors that have changed how we expect to get there," Ridge said. "We are seeing increases in the cost of some raw materials such as steel and oil beyond what we expected, and our costs for compliance related to Sarbanes-Oxley have gone up significantly.

"On the other side, we have also implemented a price increase that will begin to impact us in the third quarter and now expect to begin shipping two new WD-40 product innovations in the fourth quarter, both of which will help offset those increased costs," Ridge added.

Total sales for the quarter were 63% from the Americas, 29% from Europe and 8% from Asia/Pacific. In the Americas, sales for the second quarter were down 3% from a year ago.

"We had a solid quarter in both Latin America and Canada, with both seeing double digit growth over last year," Ridge said. "In the U.S., the lubricant business was strong, but was offset by declines in some of the household products."

In Europe, sales were up 23.6% for the second quarter.

"We continue to do well with the 1001 brand and are gaining distribution of the new 1001 items in the UK," Ridge said. "We also achieved strong results in Italy, Spain, Germany, and the Middle East."

In the Asia/Pacific region, sales for the quarter were up 8.4% from last year.

"Asia/Pacific has done well with new product innovations, and we are gaining distribution with these new products in Australia," Ridge said.

Global sales of the lubricants WD-40(R) and 3-IN-ONE Oil(R) were up 6.7% for the quarter.

"We had increased sales of WD-40 in all three trading blocs and are continuing to gain distribution for the new 3-IN-ONE Professional Line in a number of markets," Ridge said.

Sales of heavy-duty hand cleaners Lava(R) and Solvol(R) were up 6.7% for the quarter.

Sales of household products X-14(R), Carpet Fresh(R), 2000 Flushes(R), Spot Shot(R) and 1001 (R) were down 1.2% compared to the previous year's quarter.

"We are building distribution of the new X-14 products and are pleased with their performance as well as the success we have had with the 1001 brand," Ridge said. "However, we had declines in Spot Shot, Carpet Fresh and 2000 Flushes that offset those successes."

WD-40 Company, with headquarters in San Diego, is a global consumer products company dedicated to building brand equities that are first or second choice in their respective categories. The company will leverage and build the brand fortress of WD-40 Company by developing and acquiring brands that deliver a unique high value to end users and that can be distributed across multiple trade channels in one or more areas of the world. WD-40 Company produces multi-purpose lubricants, WD-40(R), and 3-IN-ONE(R), the Lava(R) and Solvol(R) brands of heavy-duty hand cleaners, and household products 2000 Flushes(R), X-14(R), Carpet Fresh(R), Spot Shot(R) and 1001(R). WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $242.5 million in fiscal 2004. Additional information about WD-40 Company can be obtained online at www.wd40.com.

Except for the historical information contained herein, this news release contains forward-looking statements concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results. These statements are based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40 Company. Forward-looking statements involve risks and uncertainties, which cause actual results to differ materially from the forward-looking statements, including impacts of new product introductions and innovations, increases in raw material costs, increases in the cost of compliance and the uncertainty of market conditions, both in the United States and internationally. The company's expectations, beliefs and projections are expressed in good faith and are believed by the company to have a reasonable basis, but there can be no assurance that the company's expectations, beliefs or projections will be achieved or accomplished.

The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents.

WD-40 Company
                   Consolidated Condensed Statements of Income
                                   (unaudited)

                           Three Months Ended         Six Months Ended
                           February 28 or 29,        February 28 or 29,
                           2005         2004         2005        2004

    Net sales          $61,076,000  $58,481,000 $121,764,000 $111,021,000
    Cost of products
     sold               31,429,000   28,152,000   61,548,000   52,758,000

        Gross profit    29,647,000   30,329,000   60,216,000   58,263,000

    Operating expenses:
      Selling, general
       and
       administrative   16,741,000   14,042,000   32,112,000   28,176,000
      Advertising and
       sales promotion   3,448,000    5,092,000    8,709,000   10,533,000
      Amortization of
       intangible
       assets              142,000           --      277,000           --

    Income from
     operations          9,316,000   11,195,000   19,118,000   19,554,000

    Other income
     (expense):
      Interest
       expense, net     (1,230,000)  (1,690,000)  (2,686,000)  (3,306,000)
      Other income
       (expense), net        7,000      (47,000)     331,000     (138,000)

    Income before
     income taxes        8,093,000    9,458,000   16,763,000   16,110,000

    Provision for
     income taxes        2,815,000    3,215,000    5,850,000    5,477,000

        Net income      $5,278,000   $6,243,000  $10,913,000  $10,633,000

    Earnings per
     common share:
      Basic                  $0.32        $0.37        $0.66        $0.63

      Diluted                $0.31        $0.36        $0.65        $0.62

    Weighted average
     common shares
     outstanding,
     basic              16,592,465   17,005,812   16,581,919   16,910,978

    Weighted average
     common shares
     outstanding,
     diluted            16,806,735   17,254,329   16,766,024   17,159,458

    Dividends
     declared
     per share               $0.20        $0.20        $0.40        $0.40



                                  WD-40 Company
                      Consolidated Condensed Balance Sheets
                                   (unaudited)

                                        February 28, 2005  August 31, 2004

                                      Assets
    Current assets:
      Cash and cash equivalents             $36,029,000      $29,433,000
      Trade accounts receivable, less
       allowance for cash discounts,
       returns and doubtful accounts
       of $1,654,000 and $1,440,000          39,093,000       40,643,000
      Product held at contract packagers      1,772,000        1,975,000
      Inventories                             8,150,000        6,322,000
      Current deferred tax assets, net        2,873,000        2,830,000
      Other current assets                    7,812,000        3,026,000

        Total current assets                 95,729,000       84,229,000

    Property, plant and equipment, net        7,778,000        7,081,000
    Goodwill                                 96,156,000       95,832,000
    Other intangibles, net                   43,646,000       43,428,000
    Other assets                              6,057,000        6,205,000

                                           $249,366,000     $236,775,000

                       Liabilities and Shareholders' Equity

    Current liabilities:
      Current portion of long-term debt     $20,714,000      $10,000,000
      Accounts payable                       14,522,000       13,836,000
      Accrued liabilities                    12,705,000       12,151,000
      Accrued payroll and related expenses    3,283,000        3,935,000
      Income taxes payable                      945,000        2,613,000

        Total current liabilities            52,169,000       42,535,000

    Long-term debt                           64,286,000       75,000,000
    Deferred employee benefits and
     other long-term liabilities              1,999,000        1,969,000
    Long-term deferred tax liabilities,
     net                                     10,165,000        4,853,000

        Total liabilities                   128,619,000      124,357,000

    Shareholders' equity:
      Common stock, $.001 par value,
       36,000,000 shares authorized --
       17,175,971 and 17,089,015 shares
       issued                                    17,000           17,000
      Paid-in capital                        51,787,000       49,616,000
      Retained earnings                      80,435,000       76,152,000
      Accumulated other comprehensive
       income                                 3,534,000        1,659,000
      Common stock held in treasury,
       at cost (534,698 shares)             (15,026,000)     (15,026,000)

        Total shareholders' equity          120,747,000      112,418,000

                                           $249,366,000     $236,775,000



                                  WD-40 Company
                 Consolidated Condensed Statements of Cash Flows
                                   (unaudited)

                                          Six Months Ended February 28 or 29,
                                                    2005           2004
    Cash flows from operating activities:
      Net income                                 $10,913,000    $10,633,000
      Adjustments to reconcile net income to
       net cash provided by operating
       activities:
        Depreciation and amortization              1,440,000      1,126,000
        Gains on sales and disposals of
         property and equipment                      (13,000)       (50,000)
        Deferred income tax expense                4,750,000      1,908,000
        Tax benefit from exercise of
         stock options                               272,000        742,000
        Equity earnings in joint venture in
         excess of distributions received            (22,000)      (162,000)
        Stock-based compensation                          --         23,000
        Changes in assets and liabilities:
          Trade accounts receivable                2,805,000      7,970,000
          Product held at contract packagers         202,000        147,000
          Inventories                             (1,566,000)      (826,000)
          Other assets                            (4,725,000)       276,000
          Accounts payable and accrued expenses       15,000     (2,269,000)
          Income taxes payable                    (1,704,000)    (2,434,000)
          Deferred employee benefits and other
           long-term liabilities                      37,000        156,000

            Net cash provided by operating
             activities                           12,404,000     17,240,000

    Cash flows from investing activities:
      Capital expenditures                        (1,231,000)    (1,325,000)
      Proceeds from sales of property and
       equipment                                      72,000        107,000

            Net cash used in investing
             activities                           (1,159,000)    (1,218,000)

    Cash flows from financing activities:
      Proceeds from issuance of common stock       1,899,000      6,548,000
      Dividends paid                              (6,630,000)    (6,767,000)

            Net cash used in financing
             activities                           (4,731,000)      (219,000)

    Effect of exchange rate changes on cash
     and cash equivalents                             82,000        180,000

    Increase in cash and cash equivalents          6,596,000     15,983,000

    Cash and cash equivalents at beginning
     of period                                    29,433,000     41,971,000

    Cash and cash equivalents at end
     of period                                   $36,029,000    $57,954,000



                                  WD-40 Company
            Consolidated Condensed Statements of Comprehensive Income
                                   (unaudited)

                            Three Months Ended        Six Months Ended
                            February 28 or 29,       February 28 or 29,
                            2005        2004        2005          2004

    Net income          $5,278,000   $6,243,000  $10,913,000  $10,633,000

    Other
     comprehensive
     income:
      Equity
       adjustment
       from foreign
       currency
       translation,
       net of tax          786,000      589,000    1,875,000    1,469,000

    Total comprehensive
     income             $6,064,000   $6,832,000  $12,788,000  $12,102,000

SOURCE WD-40 Company

Garry O. Ridge of WD-40 Company, +1-619-275-9324

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