2014

WD-40 Company Reports Second Quarter 2013 Sales And Earnings

SAN DIEGO, April 4, 2013 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 28, 2013 of $86.7 million, an increase of 1% from the second quarter last fiscal year. Year-to-date net sales were $182.0 million, up 6% from the same period last fiscal year.

Net income for the second quarter was $10.5 million, a decrease of 1% compared to the prior year fiscal quarter. Year-to-date net income was $21.4 million, an increase of 23% from the prior fiscal year period.

Summary

Second quarter multi-purpose maintenance products sales, which include the WD-40®, 3-IN-ONE® and BLUE WORKS® brands were $75.4 million, up 6% from the prior year fiscal quarter, and $157.2 million year-to-date, up 11% 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 $11.3 million for the second quarter, down 23%, and were $24.8 million year-to-date, down 14%, 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 $40.2 million, down 13% compared to the second quarter last fiscal year and were $85.6 million year-to-date, down 1% compared to the prior fiscal year period. Europe segment sales in the second quarter were $32.4 million, up 16% and were $67.6 million year-to-date, also up 16% compared to the same periods last fiscal year. Asia-Pacific segment sales were $14.1 million in the second quarter, up 18% and were $28.8 million year-to-date, up 10% compared to the same periods last fiscal year.

Diluted earnings per share were $0.66 in the second quarter, compared to $0.65 per share for the same quarter of the prior fiscal year. Year-to-date diluted earnings per share were $1.35 compared to $1.07 in the same period last fiscal year.

"We are pleased that we have turned the corner in many of our European markets and have met our expectations in these markets despite continuing economic turmoil," said Garry Ridge, WD-40 Company president and chief executive officer. "As we celebrate our 60th anniversary as a company, we continue to think big about our future and the path forward is clearer than ever before as we maintain growth based on solid implementation of our strategic objectives."

Net sales by segment as a percent of total net sales were as follows: for the Americas, 46% for the second quarter and 47% year-to-date; for Europe, 38% for the second quarter and 37% year-to-date; and, for Asia-Pacific, 16% for both the second quarter and year-to-date.

"We continue to execute our strategy market by market and are pleased with our continued growth," Ridge said.  "Our long-term execution approach in China is working as we make more people aware of our products and make them easier to buy, each and every day."

Gross margin was 50.9% in the second quarter compared to 49.0% in the same quarter last fiscal year. Year-to-date, gross margin was 50.5%, compared to 48.8% in the same period last fiscal year.

"We were able to maintain our gross margin due to several factors, including the price increases we took last year to offset product cost increases, the relative stability in commodity costs and the benefits of the supply chain initiatives we implemented in China and North America," Ridge added.

Selling, general and administrative expenses were up 9% in the second quarter to $24.0 million and were up 11% year-to-date to $49.3 million as compared to the same periods last fiscal year.

Advertising and sales promotion expenses were up 7% in the second quarter to $5.3 million compared to the same period last fiscal year and were down 11% year-to-date to $11.3 million compared to the same period last fiscal year.  

The WD-40 Specialist® product line was launched in fiscal year 2012 and was expanded into additional countries in the first half of fiscal year 2013. During the second quarter of fiscal year 2013, the company also launched three additional products in the WD-40 Specialist line: WD-40 Specialist Dirt & Dust Resistant Dry Lube, WD-40 Specialist Electrical Contact Cleaner Spray and WD-40 Specialist Machine & Engine Degreaser.  The company recently launched the WD-40 Specialist Motor Bike line in the UK as well.  

"We are pleased with the performance of the WD-40 Specialist product line and what it does to bring the power of the WD-40 shield to new products that meet the needs of our end-users," Ridge said. "As we planned, we continue to expand the WD-40 Specialist product line with new product offerings and in new categories, and later this year we will introduce a new line of products in the U.S. in the lawn and landscape arena.

"With our strategic focus on growing the multi-purpose maintenance products business, in March the Board of Directors authorized management to evaluate the strategic alternatives for the homecare and cleaning products in the Americas segment.  To date, this evaluation is in its early stages and no decisions have been made relative to the future strategic plans for these brands," Ridge said.

Dividend and Share Buy-Back

As previously announced, WD-40 Company's board of directors declared on Tuesday, March 19, 2013 the regular quarterly cash dividend $0.31 per share payable on April 30, 2013 to shareholders of record on April 12, 2013.

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 2013, WD-40 Company acquired an additional $4.4 million in shares, bringing the total purchased under this share buy-back plan to $33.7 million.

Revised Fiscal Year 2013 Guidance

WD-40 Company now expects fiscal year 2013 net sales of $356.0 million to $370.0 million. The Company expects net income of $36.5 million to $38.0 million and diluted earnings per share of $2.32 to $2.42 for fiscal year 2013 based on an estimated 15.7 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.  This guidance is based on using average fiscal year 2012 foreign currency exchange rates.

More detailed information will be available in WD-40 Company's Form 10-Q which will be filed on April 8, 2013.

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 – under the WD-40®, and 3-IN-ONE® and BLUE WORKS® brand names. 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 187 countries worldwide and recorded sales of $343 million in fiscal year 2012. 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, the introduction of new product lines 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 28,

        2013      

   August 31,

        2012       

Assets



Current assets:



Cash and cash equivalents

$          45,614

$          69,719

Short-term investments

29,812

1,033

Trade accounts receivable, less allowance for doubtful accounts of $683 and $391 at February 28, 2013 and August 31, 2012, respectively

57,461

55,491

Inventories

33,579

29,797

Current deferred tax assets, net

5,546

5,551

Other current assets

6,875

4,526




Total current assets

178,887

166,117




Property and equipment, net

8,490

9,063

Goodwill

95,139

95,318

Other intangible assets, net

26,628

27,685

Other assets

2,816

2,687




Total assets

$        311,960

$        300,870




Liabilities and Shareholders' Equity



Current liabilities:



Accounts payable

$          24,337

$          21,242

Accrued liabilities

15,938

16,492

Revolving credit facility

50,000

45,000

Accrued payroll and related expenses

8,113

5,904

Income taxes payable

2,029

807




Total current liabilities

100,417

89,445




Long-term deferred tax liabilities, net

25,032

24,007

Deferred and other long-term liabilities

2,006

1,956




Total liabilities

127,455

115,408




Shareholders' equity:



Common stock — authorized 36,000,000 shares, $0.001 par value; 19,323,124 and 19,208,845 shares issued at February 28, 2013 and August 31, 2012, respectively; and 15,558,855 and 15,697,534 shares outstanding at February 28, 2013 and August 31, 2012, respectively

19

19

Additional paid-in capital

129,480

126,210

Retained earnings

205,229

193,265

Accumulated other comprehensive loss

(6,504)

(2,727)

Common stock held in treasury, at cost —  3,764,269 and 3,511,311 shares at February 28, 2013 and August 31, 2012, respectively

(143,719)

(131,305)




Total shareholders' equity

184,505

185,462




Total liabilities and shareholders' equity

$        311,960

$        300,870

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)






Three Months Ended


Six Months Ended


February 28,

February 29,


February 28,

February 29,


2013

2012


2013

2012







Net sales

$          86,712

$        85,966


$      181,976

$      170,911

Cost of products sold

42,586

43,823


90,123

87,430







Gross profit

44,126

42,143


91,853

83,481







Operating expenses:






Selling, general and administrative

23,956

21,907


49,285

44,544

Advertising and sales promotion

5,270

4,947


11,337

12,763

Amortization of definite-lived intangible assets

465

580


931

1,165







Total operating expenses

29,691

27,434


61,553

58,472







Income from operations

14,435

14,709


30,300

25,009







Other income (expense):






Interest income

195

69


257

121

Interest expense

(176)

(83)


(301)

(325)

Other income (expense), net

535

8


587

(172)







Income before income taxes

14,989

14,703


30,843

24,633

Provision for income taxes

4,528

4,119


9,438

7,257







Net income

$          10,461

$        10,584


$        21,405

$        17,376







Earnings per common share:






Basic

$                   0.67

$                0.66


$                 1.36

$                 1.08







Diluted

$                   0.66

$                0.65


$                 1.35

$                 1.07







Shares used in per share calculations:






Basic

15,585

15,953


15,639

16,014







Diluted

15,679

16,069


15,744

16,137







Dividends declared per common share

$                  0.31

$               0.29


$                 0.60

$                 0.56

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)




Six Months Ended


February 28,


February 29,


2013


2012

Operating activities:




Net income

$        21,405


$        17,376

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




Depreciation and amortization

2,438


2,475

Net (gains) losses on sales and disposals of property and equipment

(5)


33

Deferred income taxes

263


383

Excess tax benefits from settlements of stock-based equity awards

(528)


(320)

Stock-based compensation

1,369


1,678

Unrealized foreign currency exchange (gains) losses, net

(822)


820

Provision for bad debts

382


44

Changes in assets and liabilities:




Trade accounts receivable

(2,203)


(2,865)

Inventories

(4,075)


(8,408)

Other assets

(2,543)


17

Accounts payable and accrued liabilities

2,770


6,676

Accrued payroll and related expenses

1,204


(3,837)

Income taxes payable

2,610


1,618

Deferred and other long-term liabilities

58


(516)





Net cash provided by operating activities

22,323


15,174





Investing activities:




Purchases of property and equipment

(1,151)


(2,314)

Proceeds from sales of property and equipment

70


1,033

Purchases of short-term investments

(31,279)


(531)

Maturities of short-term investments

1,037


516





Net cash used in investing activities

(31,323)


(1,296)





Financing activities:




Repayments of long-term debt


(10,715)

Proceeds from revolving credit facility

5,000


89,600

Repayments of revolving credit facility


(49,600)

Dividends paid

(9,441)


(8,986)

Proceeds from issuance of common stock

2,451


984

Treasury stock purchases

(12,414)


(22,685)

Excess tax benefits from settlements of stock-based equity awards

528


320





Net cash used in financing activities

(13,876)


(1,082)





Effect of exchange rate changes on cash and cash equivalents

(1,229)


(1,494)





Net (decrease) increase in cash and cash equivalents

(24,105)


11,302





Cash and cash equivalents at beginning of period

69,719


56,393





Cash and cash equivalents at end of period

$        45,614


$        67,695

SOURCE WD-40 Company



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http://www.wd40company.com

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