WD-40 Company Reports Third Quarter 2021 Financial Results

SAN DIEGO, July 7, 2021 /PRNewswire/ -- WD-40 Company (NASDAQ:WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its third fiscal quarter ended May 31, 2021.

Third Fiscal Quarter Financial Highlights

• Total net sales for the third quarter were $136.4 million, an increase of 39 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $372.9 million, an increase of 26 percent compared to the prior year fiscal period.
• Translation of the Company's foreign subsidiary results to U.S. dollars had a favorable impact on sales for the current quarter and year-to-date. On a constant currency basis, total net sales would have been $128.7 million for the third quarter and $359.7 million year-to-date.
• Net income for the third quarter was $21.0 million, an increase of 45 percent compared to the prior year fiscal quarter. Year-to-date net income was $61.8 million, an increase of 51 percent from the prior year fiscal period.
• Diluted earnings per share were $1.52 in the third quarter, compared to $1.06 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $4.48 compared to $2.98 in the prior year fiscal period.
• Gross margin was 53.1 percent in the third quarter compared to 54.0 percent in the prior year fiscal quarter. Year-to-date gross margin was 54.9 percent compared to 54.0 percent in the prior year fiscal period.
• Selling, general and administrative expenses were up 37 percent in the third quarter to $38.1 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were up 21 percent to $109.6 million compared to the prior year fiscal period.
• Advertising and sales promotion expenses were up 39 percent in the third quarter to $6.6 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were up 16 percent to $17.7 million compared to the prior year fiscal period.

"Our tribe continues to work together through the challenges and opportunities associated with the COVID-19 pandemic," said Garry Ridge, WD-40 Company's chairman and chief executive officer. In the third quarter we experienced unprecedented demand for our maintenance products and today we are reporting record net sales of $136.4 million, up 39 percent compared to the third quarter of last year." 

"The post-pandemic era is coming. We do not expect to see sales growth of this magnitude over the long-term, however, we believe that the new end users who have interacted with our products during the pandemic will become permanent users of our maintenance products."  

"To reflect the strong sales results we experienced in the third quarter, we've increased our revenue expectations and believe that net sales are likely to be in a range of between $475 million to $490 million for the full fiscal year which reflects year-over-year sales growth of between 16 and 20 percent.  As things get back to normal post the pandemic, consumer spending patterns will change again, and we expect consolidated net sales to grow in the mid to high single digits," Ridge concluded.

• Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 44 percent; for EMEA, 43 percent; and for Asia-Pacific, 13 percent.
• Net sales in the Americas increased 20 percent in the third quarter primarily due to higher sales of WD-40 Multi-Use Product in the United States, Latin America and Canada which increased 24 percent,138 percent and 74 percent, respectively. The increase in sales in the United States and Canada was driven by increased demand linked to renovation trends associated with the pandemic. In addition, sales in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic. The increase in sales in Latin America was primarily due to higher maintenance product sales in Mexico driven by a successful shift to a direct distribution model that the company began late in the third quarter of the prior fiscal year. In addition, sales in Latin America in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic.
• Net sales in EMEA increased 80 percent in the third quarter primarily due to higher sales of maintenance products in both the EMEA direct and distributor markets, which increased 85 percent and 70 percent, respectively. Higher sales of maintenance products in the EMEA direct markets were primarily due to increased sales of WD-40 Multi-Use Product driven by increased demand linked to renovation trends associated with the pandemic, increased sales through the ecommerce channel and increased promotional activities. In addition, sales in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic. Higher sales of maintenance products in the EMEA distributor markets were primarily attributable to improved economic conditions as a result of reductions in COVID-19 related movement restrictions. Changes in foreign currency exchange rates had a favorable impact on sales for the EMEA segment from period to period. On a constant currency basis, EMEA sales for the third quarter would have increased by 63 percent compared to the prior fiscal year quarter.
• Net sales in Asia-Pacific increased 14 percent in the third quarter. Changes in foreign currency exchange rates had a favorable impact on sales for the Asia-Pacific segment. On a constant currency basis, Asia-Pacific would have increased by 5 percent compared to the prior year fiscal quarter primarily due to higher sales of maintenance products in the Asia-Pacific distributor markets and Australia which increased 26 percent and 14 percent, respectively. Higher sales of maintenance products in the Asia-Pacific distributor markets were primarily attributable to improved economic conditions as a result of reductions in COVID-19 related movement restrictions. Higher sales of maintenance products in the Australia were primarily attributable to increased sales of 3-IN-ONE and WD-40 Specialist driven by increased demand linked to renovation trends associated with the pandemic. Partially offsetting these sales increases were lower sales of WD-40 Multi-Use Product in China which decreased 12 percent compared to the prior year fiscal quarter primarily due to a higher level of sales in the third quarter of fiscal year 2020 associated with the timing of COVID-19 restrictions and shipping activities during that period.

• Net sales of maintenance products, which are considered the primary growth focus for the Company, increased 45 percent in the third quarter when compared to the prior year fiscal quarter. This sales increase was primarily attributable to increased sales of WD-40 Multi-Use Product in all three segments driven by increased demand linked to renovation trends associated with the pandemic, improved market conditions due to a reduction of COVID-19 lockdown measures, and increased sales through the ecommerce channel.
• Net sales of homecare and cleaning products decreased 13 percent in the third quarter when compared to the prior year fiscal quarter. The Company started to experience an increase in sales of its homecare and cleaning products beginning in the third quarter of fiscal year 2020 due to increased demand for such products as a result of the COVID-19 pandemic. However, sales of homecare and cleaning products have returned to more normal levels due to improvements in public health and safety restrictions related to the pandemic in many regions. 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.

Dividend Information
As previously announced, WD-40 Company's board of directors declared on Tuesday, June 15, 2021 a regular quarterly dividend of $0.72 per share payable on July 30, 2021 to stockholders of record at the close of business on July 16, 2021.

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 including management's current view of the business in light of the COVID-19 pandemic.  Please visit http://investor.wd40company.com for more information and to view 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 that solve problems in workshops, factories and homes around the world. The Company markets a wide range of maintenance products and homecare and cleaning products under the following well-known brands: WD-40®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®. 

Headquartered in San Diego, WD-40 Company recorded net sales of $408.5 million in fiscal year 2020 and its products are currently available in more than 176 countries and territories worldwide. 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 press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect the Company's current expectations with respect to currently available operating, financial and economic information.  These forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements.

Our forward-looking statements include, but are not limited to, discussions about future financial and operating results, including:  growth expectations for maintenance products; expected levels of promotional and advertising spending; anticipated input costs for manufacturing and the costs associated with distribution of our products; plans for and success of product innovation; the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; expected tax rates and the impact of tax legislation and regulatory action; the length and severity of the current COVID-19 pandemic and its impact on the global economy and the Company's financial results; and forecasted foreign currency exchange rates and commodity prices. Our forward-looking statements are generally identified with words such as "believe," "expect," "intend," "plan," "could," "may," "aim," "anticipate," "target," "estimate" and similar expressions.

The Company's expectations, beliefs and forecasts 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 forecasts will be achieved or accomplished.

Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not limited to, those identified in Part I―Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2020, and in the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2021 which the Company expects to file with the SEC on July 7, 2021.

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 7, 2021, 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