SAN DIEGO, April 5, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 28, 2006 of $71.5 million, an increase of 17% over the second quarter last year. Year-to-date net sales were $138.7 million, up 13.9% from the same period last year.
Net income for the second quarter was $7.2 million, up 37.0% compared to the prior year's quarter. Earnings per share were $0.43 in the second quarter, compared to $0.31 per share for the same quarter last year. Year-to-date net income was $14.7 million, an increase of 35.1%. Through six months, earnings per share were $0.88 compared to $0.65 in the same period last year.
"We are pleased with the sales and profit growth we have generated across all of our trading blocs," said Garry O. Ridge, WD-40 Company president and chief executive officer. "We have also started to see success from our commitment to innovation and the recent introduction of new products that have resulted from that strategy."
Cost of goods during the second quarter was 52% of sales compared to 51.5% in the second quarter last year.
"We are still challenged by the continuing increases in cost of goods," Ridge said. "As a result, we plan to implement price increases on certain products during the third quarter of this year."
Updated Fiscal Year Guidance
In fiscal year 2006, WD-40 Company expects net sales to grow 9% to 14% to $288 to $299 million. WD-40 Company has updated the net income guidance and now expects net income for the year to be between $25.5 million and $28.0 million, achieving earnings per share of $1.50 to $1.65 based on an estimated 17 million shares outstanding. Fiscal year 2006 results include the expensing of stock options, which were not included in previous years. Stock options expense, after tax, in the second quarter was $0.4 million or 2.5 cents per share. Year to date stock options expense was $0.7 million or 4.3 cents per share.
"Based on our performance in the second quarter, we have narrowed our net income guidance by increasing our lower range estimate, narrowing the gap in what we expect for the year," Ridge said. "While our marketing expenses for the first six months are down from last year due to timing, we expect to increase our investment through the remainder of the year."
As previously announced, on March 28, 2006 the board of directors of WD-40 Company declared a regular quarterly dividend of $0.22 per share, payable April 28, 2006 to stockholders of record on April 17, 2006.
Total sales for the second quarter were 63.6% from the Americas, 28.6% from Europe and 7.8% from Asia/Pacific.
In the Americas, sales for the second quarter were up 18.9% from a year ago.
"During the quarter we had solid growth in the U.S., Canada and Latin America, with strong sales in the lubricant and household products business," Ridge said.
In Europe, sales were up 15.1% for the second quarter. In the Asia/Pacific region, sales for the quarter were up 10.2% from last year.
"We did well in both our European and Asia/Pacific regions during the quarter, but some of this growth was offset by changes in foreign currency exchange rates," Ridge said. "If we were still seeing the same rates we had last year, we would have seen an additional $1.7 million in sales and $0.2 million in net income."
Global sales of the lubricants WD-40(R) and 3-IN-ONE Oil(R) were up 13.8% for the quarter.
"We continue to see a positive impact from the new WD-40 delivery systems across the globe and are on target with the launch of these new products," Ridge said.
Sales of heavy-duty hand cleaners Lava(R) and Solvol(R) were down 3.4% for the quarter. Sales of household products X-14(R), Carpet Fresh(R), 2000 Flushes(R), Spot Shot(R) and 1001(R) were up 27.1% compared to the previous year's quarter.
"While we continue to face significant competition in the household products categories, we were able to achieve success in this area due to increased distribution, increases in promotions and the launch of new products," Ridge said.
WD-40 Company's 10-Q will be filed on April 10, 2006.
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 $263.2 million in fiscal 2005. 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 impact of cost of goods, the impact of new product innovations, the impact of foreign currency exchange rates and the timing of advertising and sales promotion activities. 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, February 28,
2006 2005 2006 2005
Net sales $71,480,000 $61,076,000 $138,695,000 $121,764,000
Cost of products
sold(1) 37,204,000 31,429,000 72,105,000 61,548,000
Gross profit 34,276,000 29,647,000 66,590,000 60,216,000
Operating
expenses:
Selling,
general and
administrative 17,267,000 16,741,000 33,624,000 32,112,000
Advertising and
sales promotion 4,829,000 3,448,000 8,174,000 8,709,000
Amortization of
intangible
assets 130,000 142,000 262,000 277,000
Income from
operations 12,050,000 9,316,000 24,530,000 19,118,000
Other income
(expense):
Interest
expense, net (853,000) (1,230,000) (1,858,000) (2,686,000)
Other income, net 82,000 7,000 223,000 331,000
Income before
income taxes 11,279,000 8,093,000 22,895,000 16,763,000
Provision for
income taxes 4,048,000 2,815,000 8,151,000 5,850,000
Net income $7,231,000 $5,278,000 $14,744,000 $10,913,000
Earnings per
common share:
Basic $0.43 $0.32 $0.88 $0.66
Diluted $0.43 $0.31 $0.88 $0.65
Weighted-average
common shares
outstanding,
basic 16,716,309 16,592,465 16,702,570 16,581,919
Weighted-average
common shares
outstanding,
diluted 16,825,560 16,806,735 16,801,018 16,766,024
Dividends
declared per
share $0.22 $0.20 $0.44 $0.40
(1) Includes cost of products acquired from related party of $9,696,000
and $8,380,000 for the three months ended February 28, 2006 and 2005,
respectively; and $20,446,000 and $17,952,000 for the six months
ended February 28, 2006 and 2005, respectively.
WD-40 Company
Consolidated Condensed Balance Sheets
(unaudited)
February 28, 2006 August 31, 2005
Assets
Current assets:
Cash and cash equivalents $33,589,000 $37,120,000
Trade accounts receivable, less
allowance for cash discounts,
returns and doubtful accounts
of $1,543,000 and $1,506,000 44,783,000 44,487,000
Product held at contract packagers 2,154,000 1,814,000
Inventories 12,501,000 8,041,000
Current deferred tax assets, net 2,944,000 2,946,000
Other current assets 6,390,000 6,784,000
Total current assets 102,361,000 101,192,000
Property, plant and equipment, net 8,916,000 8,355,000
Goodwill 95,740,000 95,858,000
Other intangibles, net 42,435,000 42,884,000
Investment in related party 934,000 1,112,000
Other assets 4,526,000 4,852,000
$254,912,000 $254,253,000
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $10,714,000 $10,714,000
Accounts payable 12,518,000 13,671,000
Accounts payable to related party 980,000 1,945,000
Accrued liabilities 14,065,000 14,058,000
Accrued payroll and related expenses 3,236,000 3,828,000
Income taxes payable 5,158,000 2,484,000
Total current liabilities 46,671,000 46,700,000
Long-term debt 53,571,000 64,286,000
Deferred employee benefits and other
long-term liabilities 1,914,000 1,838,000
Long-term deferred tax
liabilities, net 12,241,000 11,363,000
Total liabilities 114,397,000 124,187,000
Shareholders' equity:
Common stock, $.001 par value,
36,000,000 shares authorized --
17,322,722 and 17,222,410 shares
issued 17,000 17,000
Paid-in capital 56,380,000 52,990,000
Unearned stock-based compensation -- (136,000)
Retained earnings 97,383,000 89,983,000
Accumulated other comprehensive income 1,761,000 2,238,000
Common stock held in treasury, at cost
(534,698 shares) (15,026,000) (15,026,000)
Total shareholders' equity 140,515,000 130,066,000
$254,912,000 $254,253,000
WD-40 Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
Six Months Ended February 28,
2006 2005
Cash flows from operating activities:
Net income $14,744,000 $10,913,000
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,699,000 1,440,000
Gains on sales and disposals of
property and equipment (20,000) (13,000)
Deferred income tax expense 1,053,000 4,750,000
Tax benefit from exercise of
stock options -- 272,000
Excess tax benefits from
exercise of stock options (205,000) --
Distributions received and
equity losses (equity earnings)
from related party, net 178,000 (22,000)
Stock-based compensation 987,000 --
Changes in assets and
liabilities:
Trade accounts receivable (657,000) 2,805,000
Product held at contract
packagers (341,000) 202,000
Inventories (4,513,000) (1,566,000)
Other assets 274,000 (4,725,000)
Accounts payable and accrued
expenses (1,564,000) 423,000
Accounts payable to related
party (965,000) (408,000)
Income taxes payable 2,891,000 (1,704,000)
Deferred employee benefits
and other
long-term liabilities 52,000 37,000
Net cash provided by
operating activities 13,613,000 12,404,000
Cash flows from investing
activities:
Capital expenditures (1,878,000) (1,231,000)
Proceeds from sales of property
and equipment 163,000 72,000
Proceeds from collections on
notes receivable 50,000 --
Net cash used in investing
activities (1,665,000) (1,159,000)
Cash flows from financing
activities:
Repayments of long-term debt (10,714,000) --
Proceeds from issuance of common
stock 2,334,000 1,899,000
Excess tax benefits from exercise
of stock options 205,000 --
Dividends paid (7,344,000) (6,630,000)
Net cash used in financing
activities (15,519,000) (4,731,000)
Effect of exchange rate changes on
cash and cash equivalents 40,000 82,000
(Decrease) increase in cash and
cash equivalents (3,531,000) 6,596,000
Cash and cash equivalents at
beginning of period 37,120,000 29,433,000
Cash and cash equivalents at end of
period $33,589,000 $36,029,000
WD-40 Company
Consolidated Condensed Statements of Comprehensive Income
(unaudited)
Three Months Ended Six Months Ended
February 28, February 28,
2006 2005 2006 2005
Net income $7,231,000 $5,278,000 $14,744,000 $10,913,000
Other comprehensive
income:
Equity adjustment
from foreign currency
translation, net of
tax 400,000 786,000 (477,000) 1,875,000
Total comprehensive
income $7,631,000 $6,064,000 $14,267,000 $12,788,000
SOURCE WD-40 Company
Mike Irwin of WD-40 Company,
+1-619-275-9336