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WD-40 Company Reports Second Quarter Sales Up 17%, Net Income Up 37%

04/05/06

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

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