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WD-40 Company Reports 4% Increase in First Quarter Sales

01/10/11

SAN DIEGO, Jan 10, 2011 /PRNewswire via COMTEX/ --

WD-40 Company (Nasdaq: WDFC) today reported sales for the first quarter ended November 30, 2010, of $80.9 million, an increase of 4% from the first quarter last year. Net income for the first quarter was $9.1 million, down 4% from the prior fiscal year first quarter.

"We had a solid performance in the first quarter that reflects the hard work and focus we have put into our four strategic initiatives, and that continues to serve us well," said Garry O. Ridge, WD-40 Company president and chief executive officer. "As it relates to the geographic expansion strategic initiative, we have been successful in building our base business across the globe and we have seen robust growth in many international markets, while maintaining our gross margins above our target of 50%."

Summary

The Company's focus on its multi-purpose strategic initiative delivered sales growth during the first quarter. The first quarter multi-purpose maintenance products sales, which include the WD-40(R), 3-IN-ONE(R), and BLUE WORKS(TM) brands, were $66.5 million, up 10% from the same quarter last fiscal year. Homecare and cleaning products sales, which include all other brands, were $14.4 million in the first quarter, down 16% from the same period last fiscal year.

America's segment first quarter sales were $39.2 million, down 10% compared to the first quarter of last fiscal year. Europe segment sales in the first quarter were $30.8 million, up 13% compared to the same period last fiscal year. Asia-Pacific segment first quarter sales were $11.0 million, up 61% compared to the first quarter of last fiscal year.

Gross margin was 50.9% in the first quarter compared to 51.4% in the same quarter last fiscal year.

Diluted earnings per share for the first quarter were $0.53 versus $0.56 in the prior fiscal year period.

Percentage of total sales by segment for first the quarter were 48% from the Americas, 38% from Europe and 14% from Asia/Pacific.

Advertising and sales promotion expenses were up 17% for the first quarter compared to the same period last fiscal year.

Selling, general and administrative expenses were up 9% in the first quarter to $21.7 million compared to the same period last fiscal year.

"During the first quarter, 62% of our total sales were from outside the United States," Ridge said. "The solid growth we have seen in markets like China, where we doubled our sales in the first quarter, is a result of us building our core business coupled with significant promotional activity aimed at building distribution and increasing end-user awareness."

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.

Dividend and Share BuyBack Authorization

As previously announced, the board of directors declared on Tuesday, December 14, 2010 the regular quarterly dividend of $.27 per share, payable January 31, 2011 to stockholders of record on January 7, 2011. WD-40 Company also announced that at its regularly scheduled meeting on December 14, 2010, the board of directors authorized an open-ended buyback of Company shares up to $25 million over the next 12 months. The previous share buyback authorization expired December 8, 2010. No shares were acquired pursuant to that authorization.

"With respect to our strategic initiative focusing on the WD-40 brand exploration, we continue to investigate opportunities for the WD-40 brand. We have developed and will be testing several WD-40 branded items in selected channels in the UK and possibly other markets later this fiscal year," said Ridge. "We also launched Blue Works in the UK in the industrial markets during the first quarter. We expect to see the same slow steady sales growth that we are experiencing in the U.S. with this product line. While the Blue Works brand potential is much smaller, the model used to build distribution is similar to the WD-40 brand 'slow and steady build' distribution model. "

"We continue to investigate licensing opportunities for the WD-40 brand as well as continuing to look for targeted acquisitions that fit in our strategy" Ridge added.

More detailed information will be available on WD-40 Company's Form 10-Q that will be filed on January 10, 2011.

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 impacts of raw materials, changes in foreign currency exchange rates, new products 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.

http://www.wd40company.com

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)


















Three Months Ended November 30,







2010


2009












Net sales




$

80,927


$

77,721

Cost of products sold



39,705



37,808














Gross profit



41,222



39,913












Operating expenses:








Selling, general and administrative



21,649



19,801


Advertising and sales promotion



6,069



5,198


Amortization of definite-lived intangible assets



182



185














Total operating expenses



27,900



25,184












Income from operations



13,322



14,729












Other income (expense):








Interest income



55



35


Interest expense



(322)



(524)


Other income, net



197



114












Income before income taxes



13,252



14,354

Provision for income taxes



4,173



4,941














Net income


$

9,079


$

9,413












Earnings per common share:








Basic




$

0.54


$

0.57













Diluted




$

0.53


$

0.56












Shares used in per share calculations:








Basic





16,796



16,556













Diluted





16,991



16,652












Dividends declared per common share


$

0.27


$

0.25

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share amounts)



















November 30, 2010


August 31, 2010













Assets










Current assets:











Cash and cash equivalents




$

73,249


$

75,928


Trade accounts receivable, less allowance for doubtful








accounts of $327 and $299 at November 30, 2010








and August 31, 2010, respectively





46,939



47,846


Product held at contract packagers





1,547



1,536


Inventories






15,830



13,037


Current deferred tax assets, net





4,761



4,747


Other current assets





4,744



7,314















Total current assets





147,070



150,408













Property, plant and equipment, net





9,400



9,322

Goodwill






95,255



95,235

Other intangible assets, net





31,110



31,272

Other assets






2,897



2,871















Total assets





$

285,732


$

289,108

























Liabilities and Shareholders' Equity









Current liabilities:











Accounts payable




$

18,859


$

18,943


Accrued liabilities





15,351



14,382


Current portion of long-term debt





10,715



10,714


Accrued payroll and related expenses




7,107



14,265


Income taxes payable





364



1,516















Total current liabilities





52,396



59,820













Long-term debt






-



10,715

Long-term deferred tax liabilities, net





18,260



17,414

Deferred employee benefits and other long-term liabilities



4,669



4,635















Total liabilities





75,325



92,584













Shareholders' equity:










Common stock -- authorized 36,000,000 shares, $0.001 par value;









18,558,258 and 18,251,142 shares issued at November 30, 2010









and August 31, 2010, respectively; and 16,994,760 and









16,687,644 shares outstanding at November 30, 2010 and









August 31, 2010, respectively





19



18


Additional paid-in capital





101,939



93,101


Retained earnings





162,350



157,805


Accumulated other comprehensive loss




(3,835)



(4,334)


Common stock held in treasury, at cost -- 1,563,498 shares









at November 30, 2010 and August 31, 2010




(50,066)



(50,066)















Total shareholders' equity





210,407



196,524















Total liabilities and shareholders' equity



$

285,732


$

289,108

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)




















Three Months Ended November 30,








2010


2009

Operating activities:










Net income




$

9,079


$

9,413


Adjustments to reconcile net income to net cash provided by







operating activities:










Depreciation and amortization



978



1,082



Net gains on sales and disposals of property and equipment


(8)



(2)



Deferred income taxes




35



501



Excess tax benefits from exercises of stock options and








conversions of restricted stock units to common shares


(574)



(108)



Stock-based compensation




806



665



Unrealized foreign currency exchange losses (gains), net


566



(469)



Provision for bad debts




25



-



Changes in assets and liabilities:










Trade accounts receivable



514



3,798




Product held at contract packagers



(3)



405




Inventories





(2,737)



(1,629)




Other assets




2,414



534




Accounts payable and accrued expenses and liabilities


(7,036)



(1,133)




Income taxes payable




226



3,272




Deferred employee benefits and other long-term liabilities


27



(12)
















Net cash provided by operating activities


4,312



16,317













Investing activities:










Capital expenditures




(774)



(314)


Proceeds from sales of property and equipment


57



17
















Net cash used in investing activities



(717)



(297)













Financing activities:










Repayments of long-term debt




(10,714)



(10,714)


Dividends paid





(4,534)



(4,149)


Proceeds from issuance of common stock



8,124



859


Excess tax benefits from exercises of stock options and








conversions of restricted stock units to common shares


574



108
















Net cash used in financing activities



(6,550)



(13,896)













Effect of exchange rate changes on cash and cash equivalents


276



796













Net (decrease) increase in cash and cash equivalents


(2,679)



2,920













Cash and cash equivalents at beginning of period


75,928



45,956













Cash and cash equivalents at end of period


$

73,249


$

48,876

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)






Three Months Ended November 30,






2010


2009





















Net income




$

9,079


$

9,413











Other comprehensive income:








Equity adjustment from foreign currency








translation, net of income taxes



499



977











Total comprehensive income


$

9,578


$

10,390

SOURCE WD-40 Company

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