WD-40 COMPANY
Explore our global brands.

Press Release Details

View all Press Releases

WD-40 Company Reports Third Quarter Results In Line With Annual Guidance

07/08/09
SAN DIEGO, July 8, 2009 /PRNewswire-FirstCall via COMTEX/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the third quarter ended May 31, 2009 of $68.8 million, a decrease of 16.2% from the third quarter last year. Year-to-date net sales were $214.3 million, down 10.8% from the same period last year.

Net income for the third quarter was $6.9 million, down 14.6% compared to the prior year's quarter. Year-to-date net income was $18.7 million, a decrease of 18.7%.

"Although we have certainly seen the impact of the overall weakness in the global economy and have had significant negative impacts due to foreign currency exchange rates, we are pleased with our results given the environment and are confident about the future," said Garry O. Ridge, WD-40 Company president and chief executive officer. "In constant currency we have seen relatively flat sales and net income, we continue to have a strong balance sheet, limited debt, good cash flows and minimal capital requirements, and we are on track to end the year within the range of our estimates."

The Company's constant currency disclosures represent the translation of the Company's current fiscal year revenues and expenses from the functional currencies of WD-40 Company subsidiaries to U.S. dollars utilizing the exchange rates in effect for the corresponding period of the prior fiscal year.

Year-to-date net income was also impacted by a $2.8 million brand valuation charge against the Carpet Fresh(R) brand indefinite-lived intangible asset.

Third quarter multi-purpose maintenance products sales, which include the WD-40(R) and 3-IN-ONE(R) brands, were $52.6 million, down 14.1% versus the same quarter last year, and $165.5 million for the year-to-date, down 6.9%. Home care and cleaning products sales, which include all of our other brands, were $16.3 million for the third quarter, down 22.3%, and were $48.7 million year-to-date, down 21.9%.

Americas third quarter sales were $41.1 million, down 15.5% compared to the third quarter last year and were $123.8 million year-to-date, down 7.6%. Europe sales in the third quarter were $21.7 million, down 17.4% and were $71.4 million year-to-date, down 15.5%. Asia-Pacific sales were $6.1 million in the third quarter, down 16.0% and were $19.0 million year-to-date, down 12.3%.

"While we have seen declines across the globe, we still have a great number of opportunities in developing markets," Ridge said. "There are still lots of squeaks in China and rust in Russia and other problems our end-users face in many other markets that could benefit from a little WD-40 and our other brands."

Earnings per share were $0.41 in the third quarter, compared to $0.49 per share for the same quarter last year. Through nine months, earnings per share were $1.12 compared to $1.36 in the same period last year.

In the quarter, foreign exchange rates negatively affected net sales by $9.6 million and negatively affected net income by $0.7 million. Through nine months, foreign exchange rates negatively impacted sales by $23.5 million and net income by $3.3 million.

Gross margin was 50.9% in the third quarter compared to 46.5% in the same quarter last year, an increase of 4.4 percentage points. For the year-to-date, gross margin was 48.7%, compared to 47.4% in the same period last year.

"Our gross margin was positively impacted by a variety of factors, including price increases we have implemented over the past year to offset rising costs of components and raw materials, and benefits from changes and investments related to our supply chain," Ridge said. "While we also had a benefit from declining oil prices, this was offset by the higher cost of tinplate we use in our cans, which has gone up nearly 40% this year in the U.S. alone."

Advertising and sales promotion expenses were up 22.6% for the third quarter compared to the same period last year and were up 0.8% for the year-to-date.

"We recently launched WD-40 Trigger Pro(TM), a new, non-aerosol delivery system for the WD-40 brand to meet the needs of industrial users, and we are currently introducing a new line of specialty lubricant and maintenance products, developed specifically for industrial end-users as well," Ridge added. "We will also continue to invest in advertising and sales promotion for our brands and expect these expenses to be in the range of 6.5% to 7.5% of sales for the year."

Selling, general and administrative expenses were down 14.1% in the third quarter to $18.4 million and were down 9.0% for the year-to-date to $57.4 million.

As previously announced, the WD-40 Company board of directors declared on Tuesday, June 23, 2009 the regular quarterly dividend of $0.25 per share, payable July 31, 2009 to stockholders of record on July 17, 2009.

Updated Fiscal Year 2009 Guidance

WD-40 Company now expects fiscal year 2009 net sales of $283.0 million to $290.0 million. The company expects net income of $24.2 million to $25.9 million, which would achieve earnings per share of $1.45 to $1.55 based on an estimated 16.7 million shares outstanding. The net income range includes negative foreign currency exchange impact of $4.3 million or $0.25 per share.

WD-40 Company's 10-Q will be filed on July 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       Nine Months Ended
                                  May 31,                 May 31,
                          ----------------------  ----------------------
                             2009         2008       2009         2008
                          ----------  ----------  ----------  ----------

    Net sales                $68,816     $82,104    $214,250    $240,202
    Cost of products
     sold(1)                  33,821      43,921     109,873     126,409
                          ----------  ----------  ----------  ----------

        Gross profit          34,995      38,183     104,377     113,793
                          ----------  ----------  ----------  ----------

    Operating expenses:
      Selling, general
       and administrative     18,412      21,446      57,365      63,014
      Advertising and
       sales promotion         5,321       4,339      15,338      15,222
      Amortization of
       definite-lived
       intangible asset          107         147         346         449
      Impairment of
       indefinite-lived
       intangible asset            -           -       2,760           -
                          ----------  ----------  ----------  ----------

        Total operating
         expenses             23,840      25,932      75,809      78,685
                          ----------  ----------  ----------  ----------

    Income from operations    11,155      12,251      28,568      35,108


    Other (expense) income:
      Interest expense, net     (568)       (433)     (1,518)     (1,229)
      Other (expense)
       income, net              (157)        212         544         753
                          ----------  ----------  ----------  ----------

    Income before income
     taxes                    10,430      12,030      27,594      34,632

    Provision for income
     taxes                     3,533       3,957       8,929      11,663
                          ----------  ----------  ----------  ----------

        Net income            $6,897      $8,073     $18,665     $22,969
                          ==========  ==========  ==========  ==========

    Earnings per common share:
      Basic                    $0.42       $0.49       $1.13       $1.38
                          ==========  ==========  ==========  ==========

      Diluted                  $0.41       $0.49       $1.12       $1.36
                          ==========  ==========  ==========  ==========

    Shares used in per share
     calculations:
      Basic               16,501,046  16,430,730  16,499,159  16,700,457
                          ==========  ==========  ==========  ==========

      Diluted             16,646,416  16,580,339  16,656,610  16,880,556
                          ==========  ==========  ==========  ==========

    Dividends declared
     per share                 $0.25       $0.25       $0.75       $0.75
                          ==========  ==========  ==========  ==========


    (1) Includes cost of products acquired from related party of $3,830 and
        $5,927 for the three months ended May 31, 2009 and 2008, respectively;
        and $11,550 and $17,104 for the nine months ended May 31, 2009 and
        2008, respectively



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


                                                   May 31,  August 31,
                                                    2009       2008
                                                  --------  --------
                                  Assets
                                  ------
    Cash and cash equivalents                      $36,225   $41,983
    Trade accounts receivable, less allowance
     for doubtful accounts of $849 and
     $486 at May 31, 2009 and August 31,
     2008, respectively                             44,003    49,271
    Product held at contract packagers               2,095     2,453
    Inventories                                     17,299    18,280
    Current deferred tax assets, net                 4,026     4,045
    Other current assets                             3,571     3,453
                                                  --------  --------

      Total current assets                         107,219   119,485

    Property, plant and equipment, net              11,358    11,309
    Goodwill                                        95,338    95,909
    Other intangible assets, net                    36,180    39,992
    Other assets                                     3,873     3,543
    Investment in related party                          -       435
                                                  --------  --------

      Total assets                                $253,968  $270,673
                                                  ========  ========


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

    Accounts payable                               $10,948   $22,985
    Accounts payable to related party                  227       547
    Accrued liabilities                             14,897    13,143
    Current portion of long-term debt               10,714    10,714
    Accrued payroll and related expenses             4,812     6,084
    Income taxes payable                             2,409     1,090
                                                  --------  --------

      Total current liabilities                     44,007    54,563

    Long-term debt                                  21,429    32,143
    Long-term deferred tax liabilities, net         18,369    16,876
    Deferred employee benefits and other long-
     term liabilities                                3,077     3,099
                                                  --------  --------

      Total liabilities                             86,882   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 May 31,
     2009 and August 31, 2008, respectively;
     and 16,501,046 and 16,478,217 shares
     outstanding at May 31, 2009 and August 31,
     2008, respectively                                 18        18
    Additional paid-in capital                      85,479    82,647
    Retained earnings                              134,883   128,627
    Accumulated other comprehensive (loss) income   (3,228)    2,766
    Common stock held in treasury, at cost --
     1,563,498 shares                              (50,066)  (50,066)
                                                  --------  --------

      Total shareholders' equity                   167,086   163,992
                                                  --------  --------

      Total liabilities and shareholders' equity  $253,968  $270,673
                                                  ========  ========



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

                                                     Nine Months
                                                     Ended May 31,
                                                   ----------------
                                                    2009     2008
                                                   -------  -------
    Operating activities:
      Net income                                   $18,665  $22,969
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation and amortization                2,733    2,799
        Impairment of indefinite-lived
         intangible asset                            2,760        -
        Net gains on sales and disposals
         of property and equipment                     (48)      (6)
        Deferred income tax expense                  1,616      417
        Excess tax benefits from
         exercises of stock options
         and conversions of restricted
         stock units to common shares                  (14)    (158)
        Equity losses from related party               435      248
        Stock-based compensation                     2,174    1,887
        Provision for bad debts                        625      182
        Changes in assets and
         liabilities:
            Trade accounts receivable                1,792   (5,129)
            Product held at contract
             packagers                                 358     (363)
            Inventories                                548   (4,036)
            Other assets                              (979)     360
            Accounts payable and accrued
             expenses and liabilities               (9,612)  (4,560)
            Accounts payable to
             related party                            (320)  (1,141)
            Income taxes payable                     1,525    3,219
            Deferred employee benefits and
             other long-term liabilities               (10)   1,724
                                                   -------  -------

                Net cash provided by operating
                 activities                         22,248   18,412
                                                   -------  -------

    Investing activities:
      Capital expenditures                          (2,666)  (4,351)
      Proceeds from sales of property
       and equipment                                   208      142
      Purchases of marketable
       securities                                        -  (76,175)
      Proceeds from sales of
       marketable securities                             -   76,175
                                                   -------  -------

                Net cash used in investing
                 activities                         (2,458)  (4,209)
                                                   -------  -------

    Financing activities:
      Repayments of long-term debt                 (10,714) (10,714)
      Proceeds from issuance of
       common stock                                    640    3,278
      Excess tax benefits from
       exercises of stock options
       and conversions of restricted
       stock units to common shares                     14      158
      Dividends paid                               (12,409) (12,572)
      Treasury stock purchases                           -  (17,720)
                                                   -------  -------

                Net cash used in financing
                 activities                        (22,469) (37,570)
                                                   -------  -------

    Effect of exchange rate changes
     on cash and cash equivalents                   (3,079)    (164)
                                                   -------  -------

    Net decrease in cash and cash
     equivalents                                    (5,758) (23,531)

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

    Cash and cash equivalents at end
     of period                                     $36,225  $37,547
                                                   =======  =======



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

                                             Three Months     Nine Months
                                             Ended May 31,    Ended May 31,
                                            --------------  ----------------
                                              2009   2008     2009     2008
                                            ------- ------  -------  -------
    Net income                               $6,897  8,073  $18,665   22,969

    Other comprehensive income (loss):
      Equity Adjustment from foreign currency
       translation, net of tax                5,247   (151)  (5,994)    (482)

      Other, net of tax                           -     89        -       89
                                            ------- ------  -------  -------

    Total comprehensive income              $12,144 $8,011  $12,671  $22,576
                                            ======= ======  =======  =======

SOURCE WD-40

http://www.wd40company.com

Connect With Us


WD-40 Company Value
We value succeeding as a tribe while excelling as individuals.