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WD-40 Company Reports Second Quarter Results Meet Guidance

04/08/09

SAN DIEGO, April 8 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 28, 2009 of $61.8 million, a decrease of 21.7% from the second quarter last year. Year-to-date net sales were $145.4 million, down 8.0% from the same period last year.

Net income for the second quarter was $4.1 million, down 52.9% compared to the prior year's quarter. Year-to-date net income was $11.8 million, a decrease of 21.0%. Net income in the second quarter was impacted by a $2.8 million brand valuation charge against the Carpet Fresh(R) brand indefinite-lived intangible asset.

Summary

Second quarter multi-purpose maintenance products sales, which include the WD-40(R) and 3-IN-ONE(R) brands, were $47.1 million, down 20.6% versus the same quarter last year, and $113.0 million for the year-to-date, down 3.1%. Home care and cleaning products sales, which include all of our other brands, were $14.8 million for the second quarter, down 24.9%, and were $32.5 million year-to-date, down 21.7%.

Americas second quarter sales were $37.2 million, down 11.1% compared to the second quarter last year and were $82.8 million year-to-date, down 3.1%. Europe sales in the second quarter were $19.5 million, down 34.3% and were $49.7 million year-to-date, down 14.6%. Asia-Pacific sales were $5.1 million in the second quarter, down 30.9% and were $13.0 million year-to-date, down 10.4%.

Earnings per share were $0.25 in the second quarter, compared to $0.51 per share for the same quarter last year. Through six months, earnings per share were $0.71 compared to $0.87 in the same period last year.

"During the quarter, we were negatively impacted by the overall weakness in the global economy, the Carpet Fresh brand valuation charge as well as the negative impact of the foreign currency exchange rates," said Garry O. Ridge, WD-40 Company president and chief executive officer. "Even with these impacts, we ended the quarter within the range we guided, and we remain a resilient company with a strong balance sheet, good cash flows, limited debt and minimal capital requirements."

In the quarter, foreign exchange rates negatively affected net sales by $8.5 million and negatively affected net income by $1.6 million. Through six months, foreign exchange rates negatively impacted sales and net income by $14.0 million and $2.4 million, respectively.

"We are operating under turbulent times, but continue to see plenty of opportunity for growth in our international markets," Ridge said. "I recently returned from a three week trip around the globe visiting many of our international operations and I am excited by our tribe members' commitment to align around our global strategy."

Gross margin was 49.6% in the second quarter compared to 48.3% in the same quarter last year. For the year-to-date, gross margin was 47.7% of sales, compared to 47.8% in the same period last year.

"While we are still concerned about the high costs of tinplate, we are starting to see the flow through of lower oil prices," Ridge said.

Advertising and sales promotion expenses were up 8.5% for the second quarter compared to the same period last year and were down 8.0% for the year-to-date.

"We will continue to invest in our brands where we see opportunities to expand into new markets, where we can bring product innovation into our existing markets, and we can take advantage of new marketing techniques that leverage our loyal end-users affinity for our brands," Ridge added.

Selling, general and administrative expenses were down 12.3% in the second quarter to $17.8 million and were down 6.3% for the year-to-date to $39.0 million.

As previously announced, the WD-40 Company board of directors declared on Tuesday, March 24, 2009 the regular quarterly dividend of $.25 per share, payable April 30, 2009 to stockholders of record on April 16, 2009.

Updated Fiscal Year 2009 Guidance

WD-40 Company now expects fiscal year 2009 net sales of $279.0 million to $292.0 million. The company expects net income of $22.5 million to $25.8 million, which would achieve earnings per share of $1.35 to $1.55 based on an estimated 16.7 million shares outstanding. The net income range includes negative foreign currency exchange impact of $5.0 million or $0.30 per share.

WD-40 Company's 10-Q will be filed on April 9, 2009.

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 commodity prices, 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      Six Months Ended
                            February 28 or 29,      February 28 or 29,
                            -------------------     -------------------
                               2009        2008       2009         2008
                               ----        ----       ----         ----

    Net sales                $61,837     $78,948    $145,434    $158,098
    Cost of products
     sold(1)                  31,192      40,808      76,052      82,488
                              ------      ------      ------      ------

        Gross profit          30,645      38,140      69,382      75,610
                              ------      ------      ------      ------

    Operating expenses:
      Selling, general
       and administrative     17,836      20,344      38,953      41,568
      Advertising and
       sales promotion         4,604       4,243      10,017      10,883
      Amortization of
       intangible asset          110         150         239         302
      Impairment of
       indefinite-lived
       intangible assets       2,760           -       2,760           -
                               -----       -----       -----       -----

        Total operating
         expenses             25,310      24,737      51,969      52,753
                              ------      ------      ------      ------

    Income from
     operations                5,335      13,403      17,413      22,857


    Other (expense) income:
      Interest expense,
       net                      (510)       (390)       (950)       (796)
      Other income, net          480         229         701         541
                                 ---         ---         ---         ---

    Income before income
     taxes                     5,305      13,242      17,164      22,602

    Provision for income
     taxes                     1,222       4,576       5,396       7,706
                               -----       -----       -----       -----

        Net income            $4,083      $8,666     $11,768     $14,896
                              ======      ======     =======     =======

    Earnings per common
     share:
      Basic                    $0.25       $0.52       $0.71       $0.88
                               =====       =====       =====       =====


      Diluted                  $0.25       $0.51       $0.71       $0.87
                               =====       =====       =====       =====

    Shares used in per
     share calculations:
      Basic               16,500,749  16,784,469  16,498,200  16,836,803
                          ==========  ==========  ==========  ==========

      Diluted             16,649,840  16,971,502  16,661,691  17,032,147
                          ==========  ==========  ==========  ==========

    Dividends declared
     per share                 $0.25       $0.25       $0.50       $0.50
                               =====       =====       =====       =====


    (1) Includes cost of products acquired from related party of $3,460
        and $4,496 for the three months ended February 28, 2009 and
        February 29, 2008, respectively; and $7,720 and $11,177 for the
        six months ended February 28, 2009 and February 29, 2008,
        respectively



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



                                     February 28, 2009       August 31, 2008
                                     -----------------       ---------------

                                      Assets
                                      ------

    Cash and cash equivalents               $28,494              $41,983
    Trade accounts receivable, less
     allowance for doubtful accounts
     of $609 and $486 at
     February 28, 2009 and
     August 31, 2008, respectively           42,067               49,271
    Product held at contract packagers        3,960                2,453
    Inventories                              18,542               18,280
    Current deferred tax assets, net          4,006                4,045
    Other current assets                      4,118                3,453
                                              -----                -----

      Total current assets                  101,187              119,485

    Property, plant and equipment, net       11,177               11,309
    Goodwill                                 94,910               95,909
    Other intangible assets, net             35,807               39,992
    Other assets                              3,399                3,543
    Investment in related party                   -                  435
                                             ------               ------

      Total assets                         $246,480             $270,673
                                           ========             ========


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

    Accounts payable                        $14,915              $22,985
    Accounts payable to related party           285                  547
    Accrued liabilities                      14,380               13,143
    Current portion of long-term debt        10,714               10,714
    Accrued payroll and related expenses      3,687                6,084
    Income taxes payable                      1,893                1,090
                                              -----                -----

      Total current liabilities              45,874               54,563

    Long-term debt                           21,429               32,143
    Long-term deferred tax
     liabilities, net                        17,686               16,876
    Deferred employee benefits and
     other long-term liabilities              3,008                3,099
                                              -----                -----

      Total liabilities                      87,997              106,681
                                             ------              -------

    Shareholders' equity:
    Common stock -- authorized 36,000,000
     shares, $0.001 par value; 18,064,544
     and 18,041,715 shares issued at
     February 28, 2009 and August 31, 2008,
     respectively; and 16,501,046 and
     16,478,217 shares outstanding at
     February 28, 2009 and August 31, 2008,
     respectively                                18                   18
    Additional paid-in capital               84,882               82,647
    Retained earnings                       132,124              128,627
    Accumulated other comprehensive
     (loss) income                           (8,475)               2,766
    Common stock held in treasury,
     at cost -- 1,563,498 shares            (50,066)             (50,066)
                                            -------              -------

      Total shareholders' equity            158,483              163,992
                                            -------              -------

      Total liabilities and
       shareholders' equity                $246,480             $270,673
                                           ========             ========



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

                                       Six Months Ended February 28 or 29,
                                                2009             2008
                                                ----             ----
    Operating activities:
      Net income                              $11,768           $14,896
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation and amortization           1,780             1,862
        Impairment of indefinite-lived
         intangible assets                      2,760                 -
        Net gains on sales and
         disposals of property and
         equipment                                (21)               (2)
        Deferred income tax expense
         (benefit)                              1,113              (151)
        Excess tax benefits from
         exercises of stock options and
         conversions of restricted
         stock units to common shares             (14)             (149)
        Equity losses from related party          435                19
        Stock-based compensation                1,577             1,391
        Changes in assets and
         liabilities:
          Trade accounts receivable             1,544            (5,698)
          Product held at contract
           packagers                           (1,507)             (103)
          Inventories                          (1,324)           (3,727)
          Other assets                         (1,188)             (446)
          Accounts payable and accrued
           expenses and liabilities            (6,111)           (6,869)
          Accounts payable to
           related party                         (262)             (981)
          Income taxes payable                  1,214             2,690
          Deferred employee benefits
           and other long-term
           liabilities                            (57)            2,056
                                                -----             -----

            Net cash provided by
             operating activities              11,707             4,788
                                               ------             -----

    Investing activities:
      Capital expenditures                    (2,019)            (2,656)
      Proceeds from sales of
       property and equipment                    126                108
      Purchases of marketable
       securities                                  -            (76,175)
      Proceeds from sales of
       marketable securities                       -             70,100
                                              ------             ------

                Net cash used in investing
                 activities                   (1,893)            (8,623)
                                              ------             ------

    Financing activities:
      Repayments of long-term debt           (10,714)           (10,714)
      Proceeds from issuance of
       common stock                              640              2,906
      Excess tax benefits from
       exercises of stock options and
       conversions of restricted stock
       units to common shares                     14                149
      Dividends paid                          (8,271)            (8,453)
      Treasury stock purchases                     -            (17,720)
                                             -------            -------

                Net cash used in financing
                 activities                  (18,331)           (33,832)
                                             -------            -------

    Effect of exchange rate changes
     on cash and cash equivalents             (4,972)               (17)
                                              ------                ---

    Net decrease in cash and cash
     equivalents                             (13,489)           (37,684)

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

    Cash and cash equivalents at
     end of period                           $28,494            $23,394
                                             =======            =======



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


                                      Three Months Ended  Six Months Ended
                                      February 28 or 29,  February 28 or 29,
                                        ---------------  ----------------
                                         2009    2008      2009     2008
                                         ----    ----      ----     ----


    Net income                          $4,083  $8,666   $11,768  $14,896

    Other comprehensive loss:
      Foreign currency translation
       adjustment, net of tax           (2,991) (1,419)  (11,241)    (331)
                                        ------  ------   -------     ----

    Total comprehensive income          $1,092  $7,247      $527  $14,565
                                        ======  ======      ====  =======
SOURCE WD-40 Company

CONTACT: Garry O. Ridge of WD-40 Company, +1-619-275-9324
Web Site: http://www.wd40company.com
http://www.prnewswire.com

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