WD-40 Company Reports Third Quarter 2014 Financial Results

SAN DIEGO, July 9, 2014 /PRNewswire/ -- WD-40 Company (NASDAQ: WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products which solve problems in workshops, factories and homes around the world, today reported financial results for its fiscal third quarter ended May 31, 2014.

Financial Highlights and Summary

• Total net sales for the third quarter were $95.7 million, an increase of 3 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $285.4 million, an increase of 4 percent from the prior year fiscal period.
• Changes in foreign currency exchange rates had a favorable impact on sales for both the current quarter and year-to-date. On a constant currency basis total net sales were $93.2 million for the third quarter and $283.8 million year-to-date.
• Net income for the third quarter was $10.4 million, an increase of 1 percent compared to the prior year fiscal quarter. Year-to-date net income was $32.2 million, an increase of 2 percent from the prior year fiscal period.
• Diluted earnings per share were $0.69 in the third quarter, compared to $0.66 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.10 compared to $2.01 in the prior year fiscal period.
• Gross margin was 51.4 percent in the third quarter compared to 51.3 percent in the prior year fiscal quarter. Year-to-date, gross margin was 51.6 percent, compared to 50.8 percent in the prior year fiscal period.
• Selling, general and administrative expenses were up 5 percent in the third quarter to $26.9 million and also were up 7 percent year-to-date to $80.2 million when compared to the prior fiscal year periods.
• Advertising and sales promotion expenses were down 3 percent in the third quarter to $6.5 million compared to prior year fiscal quarter and were up 1 percent year-to-date to $18.1 million compared to the prior year fiscal period.

"We are pleased with the solid progress we have made for the year and remain confident that our strategic initiatives are well positioned to carry us into the future," said Garry Ridge, WD-40 Company's president and chief executive officer. "While we continue to see fluctuations in certain markets quarter to quarter, our long-term growth plans remain stable and we continue to deliver on our expectations."

• Net sales of multi-purpose maintenance products, which are considered the primary growth focus for the company, grew 3 percent in the third fiscal quarter and 6 percent year-to-date when compared to the prior fiscal year periods. This growth was driven by successful expansion of the WD-40 Specialist product line in all three segments and double-digit growth of WD-40 multi-purpose maintenance product sales in EMEA and Asia-Pacific.
• Net sales of homecare and cleaning products decreased 1 percent in the current quarter and 8 percent year-to-date when compared to the prior fiscal year periods. The homecare and cleaning products, particularly those in the U.S., are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as net sales of multi-purpose maintenance products grow per the execution of the Company's strategic initiatives.

• Net sales by segment as a percent of total net sales were as follows: for the Americas, 47 percent for both the third quarter and year-to-date; for EMEA, 38 percent for the third quarter and 39 percent year-to-date; and, for Asia-Pacific, 15 percent for the third quarter and 14 percent year-to-date.
• Increased sales in EMEA and Asia-Pacific more than offset declines in the Americas as total sales grew 3 percent in the third fiscal quarter when compared to the prior fiscal year period.
• The decline in sales in the Americas in the third quarter was primarily driven by the timing of promotional activities as well a number of unusual short-term factors that negatively impacted sales in Canada.
• The increase in sales in EMEA in the third quarter was primarily driven by the favorable impact of foreign currency exchange rates. On a constant currency basis EMEA net sales for the third quarter would have increased by $0.8 million or 2% compared to the prior fiscal period.
• The increase in sales in Asia-Pacific in the third quarter was due primarily to the backlog of second quarter distributor market customer orders that shipped during the third quarter.

Dividend and Share Buy-Back
As previously announced, WD-40 Company's board of directors declared on Tuesday, June 24, 2014 the regular quarterly cash dividend $0.34 per share payable on July 31, 2014 to shareholders of record on July 11, 2014. 

On June 18, 2013, the board of directors approved a share buy-back plan, which authorizes the Company to acquire up to $60.0 million of its outstanding shares effective from August 1, 2013 through August 31, 2015.  During the third quarter of fiscal year 2014, WD-40 Company acquired $8.2 million in shares under this plan.

Fiscal Year 2014 Guidance
The Company updates its previously issued guidance for fiscal year 2014.

• Net sales growth is projected to be between 3 and 5 percent with net sales expected to be between $380 million and $387 million.
• Gross margin for the full year is expected to be close to 51.5 percent.
• Projected advertising and promotion expenses of 6.0 percent to 7.0 percent of net sales.
• Net income is projected to be between $41 million and $43 million.
• Expect diluted earnings per share to be between $2.70 and $2.83 based on an estimated 15.2 million weighted average shares outstanding.

This guidance does not include any acquisitions or divestitures, and assumes that foreign currency exchange rates will remain close to current levels. 

"While we continue to see fluctuations and uncertainty in certain input costs, we believe we can continue to maintain our gross margins and achieve solid operating results despite additional expenses that come with global growth, such as those associated with operational enhancements and the protection of our intellectual property rights," continued Ridge.  "As the opportunities for infringement of our trademarks and copyrights grow across the globe, we continue to put more resources into protecting these intellectual property rights to protect our brands for the future."

Webcast Information
As previously announced, WD-40 Company management will host a live webcast at approximately 5:00 p.m. ET / 2:00 p.m. PT today to discuss these results. Other forward-looking and material information may also be discussed during this call.  Please visit http://investor.wd40company.com for more information and to view other supporting materials. 

About WD-40 Company
WD-40 Company is a global marketing organization dedicated to creating positive lasting memories by developing and selling products which solve problems in workshops, factories and homes around the world. The company markets its multi-purpose and specialty maintenance products and its homecare and cleaning products under the following well-known brands: WD-40®, 3-IN-ONE®, X-14®, 2000 Flushes®, Carpet Fresh®, No Vac®, Spot Shot®, 1001®, Lava® and Solvol®.  

Headquartered in San Diego, WD-40 Company currently markets its products in 188 countries worldwide and recorded net sales of $368.5 million in fiscal year 2013.  WD-40 Company is traded on the NASDAQ Global Select market under the ticker symbol "WDFC." For additional information about WD-40 Company please visit http://www.wd40company.com.

Forward-Looking Statements
Except for the historical information contained herein, this news release contains forward-looking statements concerning WD-40 Company's outlook for net sales, gross margins, advertising and sales promotion expenses, net income, 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, including foreign currency exchange rates, 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 Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents. More detailed information will be available in WD-40 Company's Form 10-Q for the period ended May 31, 2014 which the Company expects to file with the SEC on July 10, 2014.

All forward-looking statements included in this press release should be considered in the context of these risks. All forward-looking statements speak only as of July 9, 2014, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on our forward-looking statements.

SOURCE WD-40 Company