WD-40 Company Reports Third Quarter Sales and Earnings

SAN DIEGO, July 7, 2011 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the third quarter ended May 31, 2011 of $85.5 million, an increase of 4% from the third quarter last fiscal year. Year-to-date net sales were $245.7 million, up 2% from the same period last fiscal year.

Net income for the third quarter was $8.1 million, a decrease of 12% compared to the prior year fiscal quarter. Year-to-date net income was $26.2 million, a decrease of 10% from the prior fiscal year.

Summary

• Third quarter multi-purpose maintenance products sales, which include the WD-40® , 3-IN-ONE® and BLUE WORKS® brands, were $72.7 million, up 7% from the same period last fiscal quarter, and $204.6 million year-to-date, up 5% from the same period last fiscal year. Homecare and cleaning products sales, which include all other brands, were $12.9 million for the third quarter, down 12%, and were $41.0 million year-to-date, down 12%, both as compared to the prior fiscal year periods.
• Americas segment sales in the third quarter were $46.2 million, down 1% compared to the third quarter last fiscal year and were $123.5 million year-to-date, down 8% compared to last fiscal year. Europe segment sales in the third quarter were $28.1 million, up 4% and were $90.7 million year-to-date, up 9% compared to last fiscal year. Asia-Pacific segment sales were $11.2 million in the third quarter, up 23% and were $31.5 million year-to-date, up 33% compared to last fiscal year.
• Diluted earnings per share were $0.47 in the third quarter, compared to $0.54 per share for the same quarter last fiscal year. Year-to-date diluted earnings per share were $1.53 compared to $1.74 in the same period last fiscal year.

"More than ever before, our business is poised for growth. The continued attention on our four key strategic initiatives has positioned us well for long-term growth as we remain focused on expanding into markets across the globe, bringing innovation into existing markets, developing our business through acquisitions and strategic partnerships and using new marketing strategies to leverage the affinity our loyal end-users have for our brands," said Garry Ridge, WD-40 Company president and chief executive officer. "We have strategies in place to manage the short-term challenges while we continue to invest in our future."

Net sales by segment as a percent of total net sales were as follows: for the Americas, 54% for the third quarter and 50% year-to-date; for Europe, 33% for the third quarter and 37% year-to-date; and, for Asia/Pacific, 13% for both the third quarter and year-to-date.

"While we have seen sales declines in the U.S. in the current fiscal year, we see this as more of a bad weather situation than a change in climate, and we are working hard to address lost product offerings and promotional challenges we have had with certain key customers," Ridge said. "We continue to see our focus on global expansion pay off as we now have 60% of our total sales year-to-date outside the United States."

Foreign currency exchange rates positively affected net sales by $2.7 million for the third quarter and $1.8 million year-to-date as compared to the prior fiscal year periods.

Gross margin was 49.3% in the third quarter compared to 51.2% in the same quarter last fiscal year. Year-to-date, gross margin was 50.6%, compared to 51.7% in the same period last fiscal year.

"We are seeing the roll through from increases in commodity prices during this fiscal year which have negatively impacted our gross margin.  We are also experiencing sales challenges in the United States due to reduced product offerings and lost promotional opportunities with certain key customers," Ridge said.  "To help improve our margins, we are implementing price increases in some markets late this fiscal year, working to bring innovation to the market sooner, and focusing our marketing efforts on increasing product usage among our heavy users to pull more product off the shelf."

Advertising and sales promotion expenses were up 25% in the third quarter to $7.1 million compared to the same period last fiscal year and were up 14% year-to-date to $18.6 million compared to last fiscal year.

Selling, general and administrative expenses were down 3% in the third quarter to $22.6 million and were up 4% year-to-date to $65.9 million as compared to the same periods last fiscal year.

"We have made great progress in our strategic initiative to leverage our end-users loyalty for our brands, and we are excited about the development of our new WD-40 Specialist™ line, a portfolio of specialty problem solving products aimed at the trade and doer enthusiasts that will wear the famous WD-40 trademark and the yellow shield," Ridge said.  "We will be shipping the first three products in this line in the U.S. at the end of this fiscal year and will be adding new items as we roll out the full launch in the U.S. early in the next fiscal year and a launch in the U.K. later in 2012."

Dividend and Share Buy-Back

As previously announced, WD-40 Company's board of directors declared on Tuesday, June 21, 2011 the regular quarterly dividend of $0.27 per share, payable July 29, 2011 to shareholders of record on July 15, 2011.

On April 4, 2011, WD-40 Company's board of directors authorized an increase in the existing share buy-back plan of $25.0 million to a total of $60.0 million of its outstanding shares and to extend the expiration date of the plan to April 4, 2013. During the third quarter of 2011, WD-40 Company acquired an additional $11.7 million in shares, bringing the total purchased under the share buy-back plan to $21.3 million.

Updated Fiscal Year 2011 Guidance

As previously announced, WD-40 Company now expects fiscal year 2011 net sales of $330.0 million to $340.0 million. The Company expects net income of $34.9 million to $36.6 million and diluted earnings per share of $2.05 to $2.15 for fiscal year 2011 based on an estimated 17.0 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 to be close to 7.5% of net sales.  

More detailed information will be in WD-40 Company's Form 10-Q which will be filed on July 8, 2011.

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 three multi-purpose maintenance product brands - WD-40®, 3-IN-ONE® and BLUE WORKS® - and eight homecare and cleaning product 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 $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 may cause actual results to differ materially from the forward-looking statements, including the impact of commodity prices, changes in foreign currency exchange rates, promotional timing, 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.

SOURCE WD-40 Company