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WD-40 Company Reports First Quarter Sales Increase of 5.6%; Net Income Rises 23.4%

01/07/09
SAN DIEGO, Jan 07, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- WD-40 Company (Nasdaq: WDFC) today reported sales for the first quarter ended November 30, 2008, of $83.6 million, an increase of 5.6% from the first quarter last year. Net income for the first quarter was $7.7 million, up 23.4% over the prior year first quarter.

Summary

    --  First quarter multi-purpose maintenance products sales, which include
        the WD-40(R) and 3-IN-ONE(R) brands, were $65.9 million, up 14.9% versus
        the same quarter last year. Home care and cleaning products sales, which
        include all other brands, were $17.7 million in the first quarter, down
        18.8%.
    --  Americas first quarter sales were $45.5 million, up 4.5% compared to the
        first quarter last year. Europe sales in the first quarter were $30.1
        million, up 6.1%. Asia-Pacific quarter sales were $7.9 million, up
        10.3%.
    --  Earnings per share for the first quarter were 46 cents versus 36 cents
        in the prior year.

"We are pleased we met our expectations for the first quarter and had solid growth across all of our international regions, but it did not come without challenges," said Garry O. Ridge, WD-40 Company president and chief executive officer. "We continue to be impacted by the changing global economy and costs of raw materials."

As difficult as they are to anticipate, we believe we are in a solid position to manage these challenges and we feel good about the future outlook of the company."

Gross margin was 46.3% in the first quarter compared to 47.3% in the same quarter last year.

"We continue to see fluctuations in our cost of raw products, and while the price of oil is down, we are just starting to see that flow into the costs of our finished goods," Ridge said. "We are also not seeing the benefits of the softening in overall steel prices because our primary cost is in the tinplate we use for aerosol cans, which has risen substantially."

Despite solid gains in local currencies in many of our international markets, sales grew only modestly due to the impact of foreign exchange rates, which negatively affected net sales by $5.5 million," Ridge added.

Advertising and sales promotion expenses were down 18.5% for the first quarter compared to the same period last year.

Selling, general and administrative expenses were down 0.5% in the first quarter to $21.1 million.

Updated Fiscal Year 2009 Guidance

WD-40 Company now expects fiscal year 2009 net sales of $305 million to $315 million. The company expects net income of $26.5 million to $29.0 million, which would achieve earnings per share of $1.60 to $1.75 based on an estimated 16.6 million shares outstanding.

"Due to the deteriorating global economy, the volatility in the costs of raw materials and the significant fluctuations in foreign exchange rates, we do not have the same degree of confidence in our ability to accurately predict the future," Ridge said. "Therefore, we will continue to provide ongoing annual and periodic quarterly guidance and will not be providing a longer-term outlook at this time."

WD-40 Company expects second quarter fiscal 2009 net sales of $69.0 million to $73.0 million. The company expects net income of $3.8 million to $4.6 million for second quarter of fiscal 2009, achieving earnings per share of $0.23 to $0.28 based on an estimated 16.6 million shares outstanding.

Dividend

As previously announced, the board of directors declared on Tuesday, December 9, 2008, the regular quarterly dividend of $.25 per share, payable January 30, 2009, to stockholders of record on January 8, 2009.

WD-40 Company also announced at its annual shareholder meeting on December 9, 2008, that Kenneth E. Olson, a company director since 2000, retired from the board effective as of the annual meeting. With Mr. Olson's retirement, the exact number of authorized directors is now fixed at 8.

More detailed information will be available in WD-40 Company's 10-Q that will be filed later this week.

WD-40 Company, with headquarters in San Diego, is a global consumer product company dedicated to delivering unique, high value and easy-to-use solutions for a wide variety of maintenance needs of "doer" and "on-the-job" users by leveraging and building the brand fortress of the Company. The Company markets two multi-purpose maintenance product brands, WD-40(R), and 3-IN-ONE(R), and eight homecare and cleaning product brands, X-14(R) hard surface cleaners and automatic toilet bowl cleaners, 2000 Flushes(R) automatic toilet bowl cleaners, Carpet Fresh(R ) and No Vac (R) rug and room deodorizers, Spot Shot(R) aerosol and liquid carpet stain removers, 1001(R) carpet and household cleaners and rug and room deodorizers, and Lava (R) and Solvol (R) heavy-duty hand cleaners.

WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $317.1 million in fiscal year 2008. Additional information about WD-40 Company can be obtained online at http://www.wd40company.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 of cost of goods, changes in 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
                 Condensed Consolidated Statements of Operations
                 -----------------------------------------------
          (Unaudited and in thousands, except share and per share amounts)
          ----------------------------------------------------------------

                                                       Three Months Ended
                                                           November 30,
                                                       ------------------
                                                         2008        2007
                                                         ----        ----

    Net sales                                         $83,597     $79,150
    Cost of products sold(1)                           44,860      41,680
                                                       ------      ------

        Gross profit                                   38,737      37,470

    Operating expenses:
      Selling, general and administrative              21,117      21,224
      Advertising and sales promotion                   5,413       6,640
      Amortization of intangible asset                    129         152
                                                          ---         ---

        Total operating expenses                       26,659      28,016

    Income from operations                             12,078       9,454


    Other (expense) income:
      Interest expense, net                              (440)       (406)
      Other income, net                                   221         312
                                                          ---         ---

    Income before income taxes                         11,859       9,360

    Provision for income taxes                          4,174       3,130
                                                        -----       -----

        Net income                                     $7,685      $6,230
                                                       ======      ======

    Earnings per common share:
      Basic                                             $0.47       $0.37
                                                        =====       =====


      Diluted                                           $0.46       $0.36
                                                        =====       =====

    Shares used in per share calculations:
      Basic                                        16,495,678  16,889,137
                                                   ==========  ==========

      Diluted                                      16,673,569  17,092,792
                                                   ==========  ==========

    Dividends declared per share                        $0.25       $0.25
                                                        =====       =====

    (1) Includes cost of products acquired from related party of $4,260 and
        $6,681 for the three months ended November 30, 2008 and 2007,
        respectively.



                                   WD-40 Company
                       Condensed Consolidated Balance Sheets
                       -------------------------------------
          (Unaudited and in thousands, except share and per share amounts)

                                                    November 30,  August 31,
                                                       2008          2008
                                                    -----------   ----------

                                              Assets
                                              ------

    Cash and cash equivalents                           $26,340     $41,983
    Trade accounts receivable, less allowance for
     doubtful accounts of $423 and $486 at November 30,
     2008 and August 31, 2008, respectively              46,377      49,271
    Product held at contract packagers                    3,675       2,453
    Inventories                                          20,332      18,280
    Current deferred tax assets, net                      4,012       4,045
    Other current assets                                  4,014       3,453
                                                          -----       -----

      Total current assets                              104,750     119,485

    Property, plant and equipment, net                   11,216      11,309
    Goodwill                                             95,182      95,909
    Other intangible assets, net                         38,998      39,992
    Investment in related party                             192         435
    Other assets                                          3,472       3,543
                                                          -----       -----

      Total Assets                                     $253,810    $270,673
                                                       ========    ========


                         Liabilities and Shareholders' Equity
                         ------------------------------------

    Accounts payable                                    $18,201     $22,985
    Accounts payable to related party                       164         547
    Accrued liabilities                                  13,977      13,143
    Current portion of long-term debt                    10,714      10,714
    Accrued payroll and related expenses                  4,919       6,084
    Income taxes payable                                  3,650       1,090
                                                          -----       -----

      Total current liabilities                          51,625      54,563

    Long-term debt                                       21,429      32,143
    Long-term deferred tax liabilities, net              17,144      16,876
    Deferred employee benefits and other long-term
     liabilities                                          3,032       3,099
                                                          -----       -----

      Total liabilities                                  93,230     106,681
                                                         ------     -------

    Shareholders' equity:
    Common stock -- authorized 36,000,000 shares,
     $0.001 par value; 18,063,802 and 18,041,715
     shares issued at November 30, 2008 and
     August 31, 2008, respectively; and 16,500,304 and
     16,478,217 shares outstanding at November 30, 2008
     and August 31, 2008, respectively                       18          18
    Additional paid-in capital                           83,934      82,647
    Retained earnings                                   132,178     128,627
    Accumulated other comprehensive income               (5,484)      2,766
    Common stock held in treasury, at cost --
     1,563,498 shares                                   (50,066)    (50,066)
                                                        -------     -------

      Total shareholders' equity                        160,580     163,992
                                                        -------   -------

      Total liabilities and shareholders' equity       $253,810    $270,673
                                                       ========    ========



                                        WD-40 Company
                      Condensed Consolidated Statements of Cash Flows
                      -----------------------------------------------
                               (Unaudited and in thousands)

                                             Three Months Ended November 30,
                                             -------------------------------
                                                   2008              2007
                                                   ----              ----
    Operating activities:
      Net income                                 $7,685            $6,230
      Adjustments to reconcile net income to
       net cash provided by operating activities:
        Depreciation and amortization               909               931
        Net gains on sales and disposals of
         property and equipment                      (3)               (4)
        Deferred income tax expense (benefit)       519              (535)
        Excess tax benefits from exercises of
         stock options                              (14)             (147)
        Equity losses (earnings) from related
         party                                      243               (41)
        Stock-based compensation                    625               493
        Changes in assets and liabilities:
            Trade accounts receivable            (1,569)              508
            Product held at contract packagers   (1,222)             (170)
            Inventories                          (2,903)           (2,317)
            Other assets                           (976)           (1,799)
            Accounts payable and accrued expenses
             and liabilities                     (2,806)           (5,509)
            Accounts payable to related party      (383)            1,265
            Income taxes payable                  2,874               995
            Deferred employee benefits and other
             long-term liabilities                  (33)            2,006
                                                    ---             -----

                Net cash provided by operating
                 activities                       2,946             1,906
                                                  -----             -----

    Investing activities:
      Capital expenditures                       (1,172)           (1,032)
      Proceeds from sales of property and
       equipment                                     60                41
      Purchases of marketable securities              -           (51,325)
      Proceeds from sales of marketable
       securities                                     -            51,325
                                                 ------            ------

                Net cash used in investing
                 activities                      (1,112)             (991)
                                                 ------              ----

    Financing activities:
      Repayments of long-term debt              (10,714)          (10,714)
      Proceeds from issuance of common stock        640             2,784
      Excess tax benefits from exercises of
       stock options                                 14               147
      Dividends paid                             (4,134)           (4,215)
                                                 ------            ------

                Net cash used in financing
                 activities                     (14,194)          (11,998)
                                                -------           -------

    Effect of exchange rate changes on cash and
     cash equivalents                            (3,283)              369
                                                 ------               ---

    Net decrease in cash and cash equivalents   (15,643)          (10,714)

    Cash and cash equivalents at beginning
     of period                                   41,983            61,078
                                                 ------            ------

    Cash and cash equivalents at end
     of period                                  $26,340           $50,364
                                                =======           =======



                                      WD-40 Company
                Condensed Consolidated Statements of Comprehensive Income
                ---------------------------------------------------------
                               (Unaudited and in thousands)

                                           Three Months Ended November 30,
                                           -------------------------------
                                                2008              2007
                                                ----              ----

    Net income                                $7,685            $6,230

    Other comprehensive (loss) income:
      Foreign currency translation
       adjustment,  net of tax                (8,250)            1,088
                                              ------             -----

    Total comprehensive (loss) income          $(565)           $7,318
                                               =====            ======

SOURCE WD-40

http://www.wd40company.com

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