WD-40 Company Reports Record Year in Sales and Earnings

Oct 15, 2010, 16:00 ET from WD-40 Company

SAN DIEGO, Oct. 15 /PRNewswire-FirstCall/ -- 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®, 3-IN-ONE®, and BLUE WORKS™ 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



RELATED LINKS

http://www.wd40company.com