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WD-40 Company Reports Record Year in Sales and Earnings

10/15/10

SAN DIEGO, Oct 15, 2010 /PRNewswire via COMTEX/ --

WD-40 Company (Nasdaq: WDFC) today reported net sales for the fourth quarter ended August 31, 2010 of $80.7 million, an increase of 4% from the fourth quarter of last fiscal year. Year-to-date net sales were $321.5 million, up 10% from last fiscal year. Fiscal year 2010 was a record year for sales and earnings for WD-40 Company.

Net income for the fourth quarter was $6.9 million, down 10% compared to the fourth quarter of last fiscal year. Diluted earnings per common share in the fourth quarter were $0.41 compared to $0.46 during the fourth quarter of last fiscal year. Year-to-date net income was $36.1 million, an increase of 37% from the last fiscal year. Year-to-date diluted earnings per common share were $2.15, compared to $1.58 for last fiscal year.

"This past year was the best in our company history and, while the gradual stabilization of the global economy has helped, our success is primarily due to our tribe members' unwavering focus and exceptional execution of our key strategic initiatives," said Garry Ridge, WD-40 Company President and CEO. "We were able to accomplish what was on our to do list, and that included a focus on both geographic expansion of our core brands and maximizing our position with multi-purpose maintenance products."

Summary

Net sales increased to $80.7 million for the fourth quarter, up 4% compared to the prior fiscal year's fourth quarter. Year-to-date net sales increased to $321.5 million, up 10% from last fiscal year.

Fourth quarter multi-purpose maintenance product sales, which include the WD-40(R), 3-IN-ONE(R), and BLUE WORKS(TM) brands, were $63.9 million, up 7% from the previous fiscal year, and $258.1 million for the full year, up 15% as compared to last fiscal year. Homecare and cleaning product sales, which include all of our other brands, were $16.8 million for the fourth quarter, down 7% from the fourth quarter of last fiscal year, and were $63.4 million year-to-date, down 5% from last fiscal year.

America's segment fourth quarter sales were up 2% compared to the prior fiscal year's fourth quarter and year-to-date were up 7% from the prior fiscal year. Europe segment sales for the fourth quarter were up 5% compared to the prior fiscal year's fourth quarter and were up 13% year-to-date from the prior fiscal year. Asia/Pacific segment sales for the fourth quarter were up 9% compared to the prior fiscal year's fourth quarter and were up 20% year-to-date compared to the prior fiscal year.

Fourth quarter gross margin was 50.7% of sales compared to 51.6% in the fourth quarter of last fiscal year. For the full year, gross margin was 51.4% of sales, compared to 49.5% in the prior fiscal year.

"During the year, we had some stabilization of certain input costs and that, combined with other cost management programs we implemented as well as reduced advertising and promotion discounts, have helped us exceed our long-stated goal of restoring our gross margin above the 50 percent level," Ridge said. "We have also seen some stabilization of our brands in the highly competitive household products arena."

Total sales by segment for the fiscal year were 56% from the Americas, 34% from Europe and 10% from Asia/Pacific. During the year, foreign currency exchange rates positively affected net sales by $3.1 million and net income by $0.5 million.

"During the quarter, while we experienced steady growth in the United States, 54% of our global sales were outside of the country," Ridge said. "The stable platform for growth that we have put in place across the globe and our continued focus on and execution of geographic expansion have proven to be very important to the company."

Advertising and sales promotion expenses were up 41% for the fourth quarter compared to the same period last fiscal year and were up 13% for the full year compared to the prior fiscal year.

Selling, general and administrative expenses in the fourth quarter were $24.1 million, up 16% compared to the prior fiscal year's fourth quarter and were $87.3 million for the full year, up 12% compared to the prior fiscal year.

"We launched Blue Works this past year and continue to focus on building this brand one customer at a time, for life," Ridge said. "We continue to explore other opportunities in the multi-purpose maintenance products arena, and expect to launch additional products in this category over the next two years in various geographic regions."

The board of directors of WD-40 Company declared on Friday, October 1, 2010 an 8% increase in the regular quarterly dividend to $0.27 per share, payable October 29, 2010 to stockholders of record on October 14, 2010.

Fiscal Year 2011 Guidance

WD-40 Company expects fiscal year 2011 net sales to grow 5.7 % to 10.4% to the range of $340 to $355 million. The company expects net income of $37.8 million to $40.3 million and diluted earnings per common share of $2.25 to $2.40 for fiscal year 2011 based on an estimated 16.8 million weighted average shares outstanding. The company expects advertising and sales promotion expenses to be within the range of 6.5% to 8.0% of net sales.

More detailed information will be available in WD-40 Company's Form 10-K that will be filed on October 18, 2010.

WD-40 Company, with headquarters in San Diego, is a global consumer products 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 three multi-purpose maintenance product brands - WD-40(R), 3-IN-ONE(R) and BLUE WORKS (TM) - and eight homecare and cleaning product brands: X-14(R) mildew stain remover 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 $322 million in fiscal year 2010. 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 raw materials, changes in foreign exchange rates, impacts of new product and brands 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 STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)





Three Months Ended August 31,


Fiscal Year Ended August 31,




2010


2009


2010


2009















Net sales

$

80,681


$

77,752


$

321,516


$

292,002

Cost of products sold(1)


39,776



37,596



156,210



147,469

















Gross profit


40,905



40,156



165,306



144,533















Operating expenses:













Selling, general and administrative


24,092



20,686



87,323



78,051


Advertising and sales promotion


5,824



4,121



22,061



19,459


Amortization of definite-lived intangible assets


176



122



724



468


Impairment of indefinite-lived intangible assets


-



3,950



-



6,710

















Total operating expenses


30,092



28,879



110,108



104,688















Income from operations


10,813



11,277



55,198



39,845















Other income (expense):













Interest income


50



51



174



428


Interest expense


(399)



(597)



(1,726)



(2,492)


Other (expense) income, net


(209)



(1)



(89)



543















Income before income taxes


10,255



10,730



53,557



38,324

Provision for income taxes


3,367



3,108



17,462



12,037

















Net income

$

6,888


$

7,622


$

36,095


$

26,287















Earnings per common share:













Basic

$

0.41


$

0.46


$

2.17


$

1.59
















Diluted

$

0.41


$

0.46


$

2.15


$

1.58















Shares used in per share calculations:













Basic


16,667



16,515



16,606



16,503
















Diluted


16,808



16,653



16,725



16,656















Dividends declared per common share

$

0.25


$

0.25


$

1.00


$

1.00


(1) Includes cost of products acquired from related party of $125 and $11,675 for the three months and fiscal year ended August 31, 2009, respectively.



WD-40 COMPANY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)












August 31,


August 31,




2010


2009

Assets






Current assets:







Cash and cash equivalents

$

75,928


$

45,956


Trade accounts receivable, less allowance for doubtful accounts of $299 and $694 at August 31, 2010 and August 31, 2009, respectively


47,846



48,061


Product held at contract packagers


1,536



1,797


Inventories


13,037



15,858


Current deferred tax assets, net


4,747



4,369


Other current assets


7,314



4,736



Total current assets


150,408



120,777









Property, plant and equipment, net


9,322



10,930

Goodwill


95,235



95,424

Other intangible assets, net


31,272



32,205

Other assets


2,871



3,281



Total assets

$

289,108


$

262,617

















Liabilities and Shareholders' Equity






Current liabilities:







Accounts payable

$

18,943


$

12,529


Accrued liabilities


14,382



15,233


Current portion of long-term debt


10,714



10,714


Accrued payroll and related expenses


14,265



7,168


Income taxes payable


1,516



2,570



Total current liabilities


59,820



48,214









Long-term debt


10,715



21,429

Long-term deferred tax liabilities, net


17,414



16,868

Deferred employee benefits and other long-term liabilities


4,635



3,159



Total liabilities


92,584



89,670









Shareholders' equity:







Common stock -- authorized 36,000,000 shares, $0.001 par value; 18,251,142 and 18,093,879 shares issued at August 31, 2010 and August 31, 2009, respectively; and 16,687,644 and 16,530,381 shares outstanding at August 31, 2010 and August 31, 2009, respectively


18



18


Additional paid-in capital


93,101



86,729


Retained earnings


157,805



138,367


Accumulated other comprehensive loss


(4,334)



(2,101)


Common stock held in treasury, at cost -- 1,563,498 shares at August 31, 2010 and August 31, 2009


(50,066)



(50,066)



Total shareholders' equity


196,524



172,947



Total liabilities and shareholders' equity

$

289,108


$

262,617


WD-40 COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)






Fiscal Year Ended August 31,





2010


2009

Operating activities:







Net income

$

36,095


$

26,287


Adjustments to reconcile net income to net cash provided by operating activities:








Depreciation and amortization


4,248



3,727



Impairment of indefinite-lived intangible assets


-



6,710



Net gains on sales and disposals of property and equipment


(43)



(17)



Deferred income taxes


(152)



(266)



Excess tax benefits from exercises of stock options and conversions of restricted stock units to common shares


(224)



(101)



Stock-based compensation


2,864



2,688



Unrealized foreign currency exchange losses (gains), net


931



(696)



Provision for bad debts


103



500



Equity losses from related party


-



435



Changes in assets and liabilities:









Trade accounts receivable


(1,723)



(1,349)




Product held at contract packagers


265



632




Inventories


2,702



2,034




Other assets


(2,738)



(1,643)




Accounts payable and accrued expenses and liabilities


12,967



(6,669)




Accounts payable to related party


-



547




Income taxes payable


(346)



1,732




Deferred employee benefits and other long-term liabilities


1,475



77




Net cash provided by operating activities


56,424



34,628










Investing activities:







Capital expenditures


(1,769)



(3,008)


Proceeds from sales of property and equipment


216



255




Net cash used in investing activities


(1,553)



(2,753)

Financing activities:







Repayments of long-term debt


(10,714)



(10,714)


Dividends paid


(16,657)



(16,547)


Proceeds from issuance of common stock


3,572



1,296


Excess tax benefits from exercises of stock options and conversions of restricted stock units to common shares


224



101




Net cash used in financing activities


(23,575)



(25,864)

Effect of exchange rate changes on cash and cash equivalents


(1,324)



(2,038)

Net increase in cash and cash equivalents


29,972



3,973

Cash and cash equivalents at beginning of period


45,956



41,983

Cash and cash equivalents at end of period

$

75,928


$

45,956








WD-40 COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)




Three Months Ended August 31,


Fiscal Year Ended August 31,



2010


2009


2010


2009














Net income

$

6,888


$

7,622


$

36,095


$

26,287














Other comprehensive income (loss):













Equity adjustment from foreign currency translation, net of income taxes


3,736



1,127



(2,233)



(4,867)

Total comprehensive income

$

10,624


$

8,749


$

33,862


$

21,420

SOURCE WD-40 Company

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