WD-40 Company Reports Second Quarter Sales and Earnings

SAN DIEGO, April 6, 2011 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended Feb. 28, 2011 of $79.2 million, a decrease of 2% from the second quarter last fiscal year. Year-to-date net sales were $160.1 million, up 1% from the same period last fiscal year.

Net income for the second quarter was $9.1 million, a decrease of 15% compared to the prior year fiscal quarter. Year-to-date net income was $18.2 million, a decrease of 9% from the prior fiscal year.

Second quarter multi-purpose maintenance products sales, which include the WD-40(R), 3-IN-ONE(R) and BLUE WORKS (TM) brands, were $65.4 million, flat as compared to the same quarter last year, and $132.0 million year-to-date, up 4% from the prior fiscal year. Homecare and cleaning products sales, which include all other brands, were $13.8 million for the second quarter, down 8%, and were $28.2 million year-to-date, down 12%, both as compared to the prior fiscal year periods.

Americas segment second quarter sales were $38.1 million, down 14% compared to the second quarter last fiscal year and were $77.3 million year-to-date, down 12% compared to the last fiscal year. Europe segment sales in the second quarter were $31.8 million, up 11% and were $62.5 million year-to-date, up 12% compared to last fiscal year. Asia-Pacific segment sales were $9.4 million in the second quarter, up 22% and were $20.3 million year-to-date, up 40% compared to last fiscal year.

Diluted earnings per share were $0.53 in the second quarter, compared to $0.64 per share for the same quarter last fiscal year. Through six months, diluted earnings per share were $1.06 compared to $1.20 in the same period last fiscal year.

"We continue to invest in our four core strategic initiatives, which are to expand into growth markets, to bring innovation into existing markets, to develop our business through acquisitions and strategic partnerships and to take advantage of new marketing strategies to leverage our loyal end-users' affinity for our brands." said Garry O. Ridge, WD-40 Company president and chief executive officer. "This focus continues to pay off as we plan for the future."

Net sales by segment as a percent of total net sales were as follows: for the Americas, 48% for both the second quarter and year-to-date; for Europe, 40% for the second quarter and 39% year-to-date; and, for Asia/Pacific, 12% for the second quarter and 13% year-to-date.

"Our focus on our global expansion strategic initiative continues to be a driving force for sales and profit growth, and we had sales growth of 11% outside the U.S. in the second quarter as compared to the same period last fiscal year while continuing to build our core business," Ridge said. "In the U.S., we saw some declines due to lost distribution, a lower level of replenishment orders and the timing of promotional activities with certain key customers."

Foreign currency exchange rates negatively affected net sales by $0.4 million for the second quarter and $0.9 million year-to-date as compared to the prior fiscal year periods.

Gross margin was 51.8% in the second quarter compared to 52.4% in the same quarter last fiscal year. Year-to-date, gross margin was 51.4%, compared to 51.9% in the same period last fiscal year.

"We continue to see challenges in terms of rising prices for many of our major input costs, and we will continue to work hard to manage them," Ridge said. "We do anticipate that price increases in the second half of the current fiscal year will offset the flow through of some of those costs."

Advertising and sales promotion expenses were flat for the second quarter compared to the same period last fiscal year and were up 8% year-to-date compared to last fiscal year.

"With respect to the multi-purpose maintenance products strategic initiative, we are now celebrating our first anniversary of the launch of the Blue Works product line."  Blue Works sales increased 32% in the U.S. in the second quarter," Ridge said. "In addition to our launch earlier this year in the UK, we plan to launch Blue Works in Canada later this calendar year, and we are testing the brand in one Latin American country as well."

Selling, general and administrative expenses were up 8% in the second quarter to $21.6 million and were up 9% year-to-date to $43.3 million as compared to the same periods last fiscal year.

"We are also focused on our acquisitions and joint ventures strategic initiative, and we continue to look for targeted acquisitions that fit with our strategy but have yet to find such an acquisition at the right price," Ridge added.

"Finally,  we are excited about our progress in the development of the new WD-40 Specialist™ line, which will feature a new line of products created out of our fourth strategic initiative, the exploration of the WD-40 brand" Ridge said.  "This product line will feature a portfolio of specialty problem solving products aimed at the trade and doer enthusiasts, and we will continue to do research on what appeals to our end users and use this research and learning to develop products that have "staying power" in the market to grow the overall category."

This specialty line will feature several new products and will be launched in both the U.S. and U.K. by the end of this fiscal year, and WD-40 Company expects phase one of the product line to be completed during fiscal year 2012. WD-40 Company will continually assess and update this product portfolio to reflect an offering that provides solutions for end-users and consumers.

As previously announced, WD-40 Company's board of directors declared on Tuesday, March 22, 2011 the regular quarterly dividend of $0.27 per share, payable April 29, 2011 to shareholders of record on April 15, 2011.

On April 4, 2011, WD-40 Company's board of directors authorized an increase in the existing share buyback plan of $25.0 million (of which $9.6 million has been utilized) to a total of $60.0 million of its outstanding shares and to extend the expiration date of the plan to April 4, 2013.  

Updated Fiscal Year 2011 Guidance

WD-40 Company now expects fiscal year 2011 net sales of $335.0 million to $350.0 million. The Company expects net income of $37.5 million to $39.5 million and diluted earnings per share of $2.23 to $2.35 for fiscal year 2011 based on an estimated 16.8 million weighted average shares outstanding. The Company expects advertising and promotion expenses to be within its historical range of 6.5% to 8.0% of net sales.

More detailed information will be in WD-40 Company's Form 10-Q which will be filed on April 7, 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) 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 may cause actual results to differ materially from the forward-looking statements, including the impact of commodity prices, changes in foreign currency exchange rates, inventory levels of our customers, 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