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WD-40 Company Reports Second Quarter Sales and Earnings

04/05/12

SAN DIEGO, April 5, 2012 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 29, 2012 of $86.0 million, an increase of 9% from the second quarter last fiscal year. Year-to-date net sales were $170.9 million, up 7% from the same period last fiscal year.

Net income for the second quarter was $10.6 million, an increase of 16% compared to the prior year fiscal quarter. Year-to-date net income was $17.4 million, a decrease of 4% from the prior fiscal year period.

Summary

  • Second quarter multi-purpose maintenance products sales, which include the WD-40® multi-use product, 3-IN-ONE®, BLUE WORKS® and the WD-40 Specialist™ product lines, were $71.4 million, up 9% from the same period last fiscal quarter, and $142.2 million year-to-date, up 8% from the same period last fiscal year. The multi-purpose maintenance products are considered a primary focus for the Company.  Homecare and cleaning products sales, which include all other brands, were $14.6 million for the second quarter, up 6%, and were $28.7 million year-to-date, up 2%, both as compared to the prior fiscal year periods. The U.S. homecare and cleaning products are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as the multi-purpose maintenance products sales grow.  

  • Americas segment sales in the second quarter were $46.0 million, up 21% compared to the second quarter last fiscal year and were $86.7 million year-to-date, up 12% compared to the prior fiscal year period. Europe segment sales in the second quarter were $28.0 million, down 12% and were $58.1 million year-to-date, down 7% compared to the same periods last fiscal year. Asia-Pacific segment sales were $11.9 million in the second quarter, up 28% and were $26.1 million year-to-date, up 29% compared to the same periods last fiscal year.

  • Diluted earnings per share were $0.65 in the second quarter, compared to $0.53 per share for the same quarter last fiscal year. Year-to-date diluted earnings per share were $1.07 compared to $1.06 in the same period last fiscal year.

"We are pleased with our overall results during the quarter and our tribe continues to deliver on our key strategic initiatives," said Garry Ridge, WD-40 Company president and chief executive officer. "This continued focus on the key areas of our business has, and will continue to ensure we stay focused on our long-term results."

Net sales by segment as a percent of total net sales were as follows: for the Americas, 53% for the second quarter and 51% year-to-date; for Europe, 33% for the second quarter and 34% year-to-date; and, for Asia-Pacific, 14% for the second quarter and 15% year-to-date.

"We continue to see short-term challenges in certain parts of Europe, but expect to return to our traditional growth patterns there as we get through the impact of what we see as a macroeconomic 'storm' rather than a  'climate change'," Ridge said.  "In China, we continue to be encouraged by our progress in building long-term sustainable growth. In the past several years, we have made great progress as we increase our local knowledge to understand how to best reach our target end users, to strengthen our operations and infrastructure, and methodically maintain momentum to execute on our goals for this complex yet promising market."

Foreign currency exchange rates positively affected net sales by $0.1 million for the second quarter and $1.2 million year-to-date as compared to the prior fiscal year periods.

Gross margin was 49.0% in the second quarter compared to 51.8% in the same quarter last fiscal year. Year-to-date, gross margin was 48.8%, compared to 51.4% in the same period last fiscal year.

"We did not hit our gross margin target of 50% or above during the quarter primarily due to the rising cost of petroleum-based materials and aerosol cans which were partially offset by the positive impacts of sales price increases we had previously taken," Ridge said. "While we have been monitoring oil costs as they rise and would like to see these costs roll back a little, we would be prepared to make price increase adjustments to offset their impact, if need be."

Selling, general and administrative expenses were up 1% in the second quarter to $21.9 million and were up 3% year-to-date to $44.5 million as compared to the same periods last fiscal year.

Advertising and sales promotion expenses were down 8% in the second quarter to $4.9 million compared to the same period last fiscal year and were up 12% year-to-date to $12.8 million compared to the same periods last fiscal year.

"During the quarter we had lower investments in advertising and promotions due to decreased promotional activities in the Europe segment and lower costs associated with promotional programs conducted in the Americas segment," Ridge said.  "We expect these investments to normalize during the remainder of the year."

"Following a successful pilot last fall, we launched five new products in the new WD-40 Specialist™ product line across the U.S. in the second quarter and while we are still in early stages of market acceptance, we are confident in the direction we have taken.  This is the beginning of the Company's journey to offer a greater diversity of WD-40 branded products within adjacent categories where we can meet end user needs," Ridge said.  "We are tracking well in our U.S. rollout and are just beginning our roll out in Europe."

Dividend and Share Buy-Back

As previously announced, WD-40 Company's board of directors declared on Tuesday, March 20, 2012 the regular quarterly dividend of $0.29 per share payable on April 30, 2012 to shareholders of record on April 13, 2012.

On December 13, 2011, the board of directors authorized a buyback up to $50.0 million of the Company's outstanding shares expiring on December 12, 2013. During the second quarter of 2012, WD-40 Company acquired 94,637 shares at a total cost of $4.1 million under the plan.

Fiscal Year 2012 Guidance

WD-40 Company expects fiscal year 2012 net sales of $353.0 million to $370.0 million. The Company expects net income of $37.2 million to $39.2 million and diluted earnings per share of $2.33 to $2.45 based on an estimated 16.0 million weighted average shares outstanding. Gross margin for the full year is expected to be close to 50.0%.  The Company expects advertising and promotion expenses of 7.0% to 8.0% of net sales.  

"Our tribe continues to focus and execute on our five core strategic initiatives that will bring us the long-term growth we are after," Ridge said. "Our strategic initiatives include maximizing the WD-40 brand, being the global leader in our product categories, long-term innovation efforts to ensure profitable growth of the company, developing strategic business relationships and the continued development of our people."

More detailed information will be available in WD-40 Company's Form 10-Q which will be filed on April 9, 2012.

About WD-40 Company

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 multi-purpose maintenance products - WD-40® multi-use product and, 3-IN-ONE®, BLUE WORKS® and WD-40 Specialist™ product lines. The company also markets homecare and cleaning brands: X-14® mildew stain remover and automatic toilet bowl cleaners, 2000 Flushes® automatic toilet bowl cleaners, Carpet Fresh® and No Vac® rug and room deodorizers, Spot Shot® aerosol and liquid carpet stain removers, 1001® household cleaners and rug and room deodorizers, and Lava® and Solvol® heavy-duty hand cleaners.

WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $336 million in fiscal year 2011. 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 may cause actual results to differ materially from the forward-looking statements, including the impact of commodity prices, changes in foreign currency exchange rates, the introduction of new products and fluctuating global 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 BALANCE SHEETS

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






February 29,
2012

August31,
2011


Assets




Current assets:




Cash and cash equivalents

$67,695

$56,393


Short-term investments

554

533


Trade accounts receivable, less allowance for doubtful accounts of $394and $412 at February 29, 2012 and August 31, 2011, respectively

59,599

58,324


Inventories

25,884

17,604


Current deferred tax assets, net

4,850

4,849


Assets held for sale

879


Other current assets

4,509

4,574






Total current assets

163,091

143,156






Property and equipment, net

9,227

8,482


Goodwill

95,324

95,452


Other intangible assets, net

28,659

29,933


Other assets

2,693

2,754






Total assets

$298,994

$279,777






Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable

$24,063

$19,373


Accrued liabilities

16,741

15,258


Current portion of long-term debt and short-term borrowings

40,000

10,715


Accrued payroll and related expenses

4,879

7,471


Income taxes payable

1,771

1,413






Total current liabilities

87,454

54,230






Long-term deferred tax liabilities, net

23,017

21,813


Deferred and other long-term liabilities

1,991

2,508






Total liabilities

112,462

78,551






Shareholders' equity:




Common stock— authorized 36,000,000shares, $0.001par value; 19,030,911 and 18,948,868shares issued at February 29, 2012 and August 31, 2011, respectively; and15,887,864and 16,367,913 shares outstanding at February 29, 2012 and August 31, 2011, respectively

19

19


Additional paid-in capital

118,684

117,022


Retained earnings

184,398

176,008


Accumulated other comprehensive loss

(2,419)

(358)


Common stock held in treasury, at cost —3,143,047and 2,580,955 shares at February 29, 2012and August 31, 2011, respectively

(114,150)

(91,465)






Total shareholders' equity

186,532

201,226






Total liabilities and shareholders' equity

$298,994

$279,777









WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)





Three Months Ended


Six Months Ended



February 29,

February 28,


February 29,

February 28,



2012

2011


2012

2011









Net sales

$85,966

$79,206


$170,911

$160,133


Cost of products sold

43,823

38,160


87,430

77,865









Gross profit

42,143

41,046


83,481

82,268









Operating expenses:







Selling, general and administrative

21,907

21,629


44,544

43,278


Advertising and sales promotion

4,947

5,375


12,763

11,444


Amortization of definite-lived intangible assets

580

181


1,165

363









Total operating expenses

27,434

27,185


58,472

55,085









Income from operations

14,709

13,861


25,009

27,183









Other income (expense):







Interest income

69

53


121

108


Interest expense

(83)

(219)


(325)

(541)


Other income (expense), net

8

(119)


(172)

78









Income before income taxes

14,703

13,576


24,633

26,828


Provision for income taxes

4,119

4,468


7,257

8,641









Net income

$10,584

$9,108


$17,376

$18,187









Earnings per common share:







Basic

$0.66

$0.53


$1.08

$1.07









Diluted

$0.65

$0.53


$1.07

$1.06









Shares used in per share calculations:







Basic

15,953

16,994


16,014

16,895









Diluted

16,069

17,172


16,137

17,081









Dividends declared per common share

$ 0.29

$ 0.27


$0.56

$ 0.54












WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)





Six Months Ended



February 29,


February 28,



2012


2011


Operating activities:





Net income

$17,376


$18,187


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





Depreciation and amortization

2,475


1,844


Net losses on sales and disposals of property and equipment

33


95


Deferred income taxes

383


244


Excess tax benefits from settlements of stock-based equity awards

(320)


(706)


Stock-based compensation

1,678


1,904


Unrealized foreign currency exchange losses (gains), net

820


(164)


Provision for bad debts

44


31


Changes in assets and liabilities:





Trade accounts receivable

(2,865)


(7,136)


Inventories

(8,408)


(5,182)


Other assets

17


3,580


Accounts payable and accrued liabilities

6,676


2,893


Accrued payroll and related expenses

(3,837)


(10,142)


Income taxes payable

1,618


2,468


Deferred and other long-term liabilities

(516)


43







Net cash provided by operating activities

15,174


7,959







Investing activities:





Purchases of property and equipment

(2,314)


(1,286)


Proceeds from sales of property and equipment

1,033


100


Purchases of short-term investments

(531)


-


Maturities of short-term investments

516


-







Net cash used in investing activities

(1,296)


(1,186)







Financing activities:





Repayments of long-term debt

(10,715)


(10,714)


Proceeds from revolving credit facility

89,600


-


Repayments of revolving credit facility

(49,600)


-


Dividends paid

(8,986)


(9,159)


Proceeds from issuance of common stock

984


11,531


Treasury stock purchases

(22,685)


(9,552)


Excess tax benefits from settlements of stock-based equity awards

320


706







Net cash used in financing activities

(1,082)


(17,188)







Effect of exchange rate changes on cash and cash equivalents

(1,494)


2,012







Net increase (decrease) in cash and cash equivalents

11,302


(8,403)







Cash and cash equivalents at beginning of period

56,393


75,928







Cash and cash equivalents at end of period

$67,695


$67,525










SOURCE WD-40 Company

Garry O. Ridge of WD-40 Company, +1-619-275-9324

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