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WD-40 Company Reports First Quarter Sales Up 10%, Net Income Up 9.4%


SAN DIEGO, Jan. 9 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported results for the first quarter ended November 30, 2007.


-- Net sales increased 10.0% to $79.2 million for the first quarter compared to the prior year first quarter.
-- First quarter lubricant sales were $57.3 million, up 17.2% versus the same quarter last year. Household products quarter sales were $20.1 million, down 5.7%. First quarter hand cleaner sales were $1.7 million, flat with the prior year quarter.
-- Americas region first quarter sales were $43.6 million, down 3.5% compared to the first quarter last year. Europe sales in the first quarter were $28.4 million, up 29.7%. Asia-Pacific quarter sales were $7.2 million, up 46.1%.
-- Gross margin was 47.3% in the first quarter compared to 47.9% in the same quarter last year.
-- Net income for the first quarter was $6.2 million, up 9.4% over the prior year first quarter.
-- Earnings per share for the first quarter was 36 cents, up 10.4% versus the prior year quarter.

"We had a solid first quarter and are on track for the year," said Garry O. Ridge, WD-40 Company president and chief executive officer. "During the first quarter, our sales figures clearly represent the results of our on-going strategy to diversify the company across brands, borders and trade channels," Ridge said. "In fact, in the first quarter, 67% of WD-40(R) brand sales and 56% of our total sales were outside the United States, proving we are truly a global company."

"In the Americas, Latin America sales growth was offset by declines in the US and Canada," Ridge said.

"We were pleased with our progress in Europe which achieved double digit sales growth in all of our markets with the exception of the UK, which was off slightly from last year," Ridge said.

"We had a very strong quarter in Asia/Pacific and saw growth in our key markets, including Australia, Singapore, Malaysia and the Philippines," Ridge said. "We also had a good quarter in China -- early evidence that our shift to direct operations there was a sensible move."

Gross margin during the first quarter was 47.3% of sales compared to 47.9% in the first quarter last year.

"We continue to be concerned about the rising costs of oil, plastic, and steel. These factors affect us in our cost of goods across all our markets as well as in freight." Ridge said. "Our push to improve our margins through innovation, the evolution of our supply chain, and price increases where necessary have helped but have not yet been enough to mitigate the underlying cost increases."

In an effort to leverage innovation to deliver added value to customers as well as address gross margin concerns, WD-40 Company plans to convert many WD-40 can sizes in the United States to the WD-40 Smart Straw format. The WD-40 Smart Straw features a permanently attached straw that flips up to provide either a pinpoint stream or a wide spray that solves the number one complaint about WD-40 -- losing the little red straw. WD-40 Company will begin the U.S. Smart Straw conversion in the third quarter of fiscal 2008. As a result, WD-40 Company will not see the full impact of this change in fiscal 2008.

"The WD-40 Smart Straw has earned consumer acceptance in many countries around the world by delivering added convenience," Ridge said, "so we're optimistic about this logical next step in the progress of the brand."

Fiscal Year 2008 Guidance

As previously announced, WD-40 Company expects fiscal year 2008 net sales to grow 7%-10% to $329-$339 million. The company expects net income of $31.1-$32.8 million in 2008, achieving earnings per share of $1.83 to $1.93 based on an estimated 17.0 million shares outstanding.

Outlook through 2011

WD-40 Company also released its four-year outlook, and expects total sales to grow at a compound annual rate of 6.7% to 8.7% per year through fiscal year 2011.

The company expects net income to grow at a compound annual rate of 9.0% to 11.1% per year over that same period and earnings per share to increase between 9.4% and 11.5%. Investors can find a link to the company's four-year outlook on the home page of the investor relations website at http://www.wd40.com/ir/.


As previously announced, the board of directors declared on December 11, 2007 the regular quarterly dividend of $0.25 per share, payable January 31, 2008 to shareholders of record on January 8, 2008.

WD-40 Company's 10-Q will be filed on January 9, 2008.

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 $307.8 million in fiscal 2007. Additional information about WD-40 Company can be obtained online at http://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 the impact from cost of goods, the impact of new product innovations, foreign exchange rates and fluctuating 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 Operations

                                           Three Months Ended November 30,
                                                 2007              2006

    Net sales                                 $79,150,000     $71,956,000
    Cost of products sold (1)                  41,680,000      37,483,000

        Gross profit                           37,470,000      34,473,000

    Operating expenses:
      Selling, general and administrative      21,224,000      19,055,000
      Advertising and sales promotion           6,640,000       5,642,000
      Amortization of intangible asset            152,000         141,000

    Income from operations                      9,454,000       9,635,000

    Other (expense) income:
      Interest expense, net                      (406,000)       (681,000)
      Other income (expense), net                 312,000         (91,000)

    Income before income taxes                  9,360,000       8,863,000

    Provision for income taxes                  3,130,000       3,169,000

        Net income                             $6,230,000      $5,694,000

    Earnings per common share:
      Basic                                         $0.37           $0.33

      Diluted                                       $0.36           $0.33

    Weighted-average common shares
     outstanding, basic                        16,889,137      17,022,286

    Weighted-average common shares
     outstanding, diluted                      17,092,792      17,241,140

    Dividends declared per share                    $0.25           $0.22

    (1) Includes cost of products acquired from related party of $6,681,000
        and $5,191,000 for the three months ended November 30, 2007 and 2006,

                                WD-40 Company
                    Consolidated Condensed Balance Sheets

                                       November 30, 2007      August 31, 2007

    Current assets:
      Cash and cash equivalents            $50,364,000          $61,078,000
      Trade accounts receivable, less
       allowance for doubtful
       accounts of $352,000 and $369,000    47,377,000           47,204,000
      Product held at contract packagers     1,617,000            1,447,000
      Inventories                           15,673,000           13,208,000
      Current deferred tax assets, net       4,155,000            4,145,000
      Other current assets                   5,297,000            3,489,000

        Total current assets               124,483,000          130,571,000

    Property, plant and equipment, net       9,238,000            8,811,000
    Goodwill                                96,514,000           96,409,000
    Other intangibles, net                  42,527,000           42,543,000
    Investment in related party              1,056,000            1,015,000
    Other assets                             3,763,000            3,837,000

                                          $277,581,000         $283,186,000

                     Liabilities and Shareholders' Equity

    Current liabilities:
      Current portion of long-term debt    $10,714,000          $10,714,000
      Accounts payable                      18,825,000           21,854,000
      Accounts payable to related party      2,771,000            1,506,000
      Accrued liabilities                   13,271,000           12,780,000
      Accrued payroll and related
       expenses                              4,350,000            6,906,000
      Income taxes payable                     871,000               97,000

        Total current liabilities           50,802,000           53,857,000

    Long-term debt                          32,143,000           42,857,000
    Deferred employee benefits and other
     long-term liabilities                   4,778,000            2,195,000
    Long-term deferred tax liabilities,
     net                                    15,602,000           16,005,000

        Total liabilities                  103,325,000          114,914,000

    Shareholders' equity:
      Common stock, $.001 par value,
       36,000,000 shares authorized --
       17,986,430 and 17,883,299 shares
       issued; and 16,951,732 and
       16,848,601 shares outstanding            18,000               18,000
      Paid-in capital                       78,281,000           74,836,000
      Retained earnings                    119,711,000          118,260,000
      Accumulated other comprehensive
       income                                8,592,000            7,504,000
      Common stock held in treasury, at
       cost (1,034,698 shares)             (32,346,000)         (32,346,000)

        Total shareholders' equity         174,256,000          168,272,000

                                          $277,581,000         $283,186,000

                                WD-40 Company
               Consolidated Condensed Statements of Cash Flows

                                            Three Months Ended November 30,
                                              2007                   2006
    Cash flows from operating activities:
      Net income                           $6,230,000             $5,694,000
      Adjustments to reconcile net income
       to net cash provided by operating
        Depreciation and amortization         931,000                924,000
        (Gains) losses on sales and
         disposals of property and
         equipment                             (4,000)                 8,000
        Deferred income tax expense          (535,000)               550,000
        Excess tax benefits from exercise
         of stock options                    (147,000)               (71,000)
        Distributions received and equity
         (earnings) from related party,
         net                                  (41,000)                30,000
        Stock-based compensation              493,000                423,000
        Changes in assets and liabilities:
          Trade accounts receivable           508,000              4,517,000
          Product held at contract
           packagers                         (170,000)                80,000
          Inventories                      (2,317,000)              (241,000)
          Other assets                     (1,799,000)               720,000
          Accounts payable and accrued
           expenses                        (5,509,000)               497,000
          Accounts payable to related
           party                            1,265,000                407,000
          Income taxes payable                995,000                733,000
          Deferred employee benefits and
           other long-term liabilities      2,006,000                 27,000

             Net cash provided by
              operating activities          1,906,000             14,298,000

    Cash flows from investing activities:
      Purchases of short-term investments (51,325,000)           (59,075,000)
      Sales of short-term investments      51,325,000             59,075,000
      Capital expenditures                 (1,032,000)              (550,000)
      Proceeds from sales of property and
       equipment                               41,000                 39,000

             Net cash used in investing
              activities                     (991,000)              (511,000)

    Cash flows from financing activities:
      Repayments of long-term debt        (10,714,000)           (10,714,000)
      Proceeds from issuance of common
       stock                                2,784,000              1,633,000
      Excess tax benefits from exercise
       of stock options                       147,000                 71,000
      Dividends paid                       (4,215,000)            (3,747,000)

             Net cash used in financing
              activities                  (11,998,000)           (12,757,000)

    Effect of exchange rate changes on
     cash and cash equivalents                369,000                200,000

    (Decrease) increase in cash and cash
     equivalents                          (10,714,000)             1,230,000

    Cash and cash equivalents at
     beginning of period                   61,078,000             45,206,000

    Cash and cash equivalents at end of
     period                               $50,364,000            $46,436,000

                                WD-40 Company
          Consolidated Condensed Statements of Comprehensive Income

                                              Three Months Ended November 30,
                                                  2007               2006

    Net income                                  $6,230,000       $5,694,000

    Other comprehensive income:
      Equity adjustment from foreign currency
       translation, net of tax provision
       (benefit) of $45,000 and ($24,000) for
       the three months ended November 30, 2007
       and 2006, respectively                    1,088,000        1,316,000

    Total comprehensive income                  $7,318,000       $7,010,000
SOURCE WD-40 Company

/CONTACT: Garry O. Ridge of WD-40 Company, +1-619-275-9324/
/Web site: http://www.wd40.com /

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