WD-40 Company News

WD-40 Company Reports 5.8% Increase in Third Quarter Sales and 5.6% Increase in Third Quarter Net Income

SAN DIEGO, July 2 PRNewswire-FirstCall — WD-40 Company (Nasdaq: WDFC) today reported net sales for the third quarter ended May 31, 2008 of $82.1 million, an increase of 5.8% over the third quarter last year. Year-to-date net sales were $240.2 million, up 5.0% over the same period last year.

Net income for the third quarter was $8.1 million, up 5.6% compared to the prior year's quarter. Earnings per share in the third quarter grew to $0.49 compared to $0.44 during the same period last year. Year-to-date net income was $23.0 million, an increase of 3.1% from last year. Through nine months, earnings per share were $1.36, compared to $1.29 for the same period last year.

Summary

— Net sales increased 5.8% to $82.1 million for the third quarter. Year-to-date net sales grew 5.0% to $240.2 million.

— Third quarter lubricant sales were $61.2 million, up 8.2%, and $177.8 million for the first nine months, up 9.6%. Household products sales for the quarter were $19.2 million, down 1.0%, and were $57.7 million year-to-date, down 7.0%. Third quarter heavy-duty hand cleaner sales were $1.8 million, up 4.9%, and $4.7 million through nine months, up 1.6%.

— Americas region third quarter sales were up 5.8% from a year ago and are down 4.3% year-to-date. Europe region sales for the third quarter were up 3.4% and are up 17.9% year-to-date. Asia/Pacific region sales for the third quarter were up 16.1% from last year and are up 26.4% year-to-date.

— Net income for the third quarter grew 5.6% to $8.1 million. Year-to-date net income was up 3.1% to $23.0 million.

"We had a solid quarter around the globe," said Garry Ridge, WD-40 Company President and CEO. "During the quarter we saw a positive impact from our conversion to the Smart Straw(R) (http://www.wd40.com/products/smart-straw) delivery system on the WD-40(R) brand in the U.S."

"We were able to implement the conversion to Smart Straw smoothly, and are now moving into the promotional period for that product," Ridge added.

Updated Fiscal Year 2008 Guidance

WD-40 Company still expects fiscal year 2008 net sales to grow 4%-8% to $320-$332 million. The company now expects net income of $30.0-$31.2 million for fiscal year 2008, achieving earnings per share of $1.78 to $1.85 based on an estimated 16.8 million shares outstanding.

Third quarter gross margin was 46.5% of sales compared to 47.5% in the same period last year, reflecting higher underlying cost of goods. Through nine months, gross margin was 47.4% of sales, compared to 48.2% in the same period last year.

"Our cost of goods have been impacted by the general increases in commodity prices, particularly the sharp increases in oil and steel," Ridge said. "We are working hard to minimize the impact of these cost increases on our gross margin through a combination of price increases, innovation and cost reduction strategies around the globe."

Advertising and sales promotion expenses were down 16.1% for the third quarter compared to the same period last year and were down 4.1% for the first nine months of the year.

Selling, general and administrative expenses were up 6.1% in the third quarter to $21.4 million and were up 6.8% through nine months to $63.0 million.

"Recently we have also launched new products under the Spot Shot(R) (http://www.spotshot.com) brand that give our consumers the best of both worlds — they want powerful but environmentally safe products, and that's what we're delivering," Ridge said.

Spot Shot Instant Carpet Stain and Odor Eliminator(TM) and Spot Shot PetClean(TM) are non-toxic, certified biodegradable by the Scientific Certification System and environmentally friendly — containing no volatile organic compounds or phosphates — while still delivering the superior efficacy consumers have come to expect from Spot Shot.

"Also from our innovation program is the 3-IN-ONE(R) No-Rust Shield(TM) (http://www.norustshield.com/Default.asp?bhcp=1), a new product launching in the fourth quarter that protects tools, sporting goods and other items from rust and corrosion," Ridge added.

On June 24, 2008, the Board of Directors of WD-40 Company declared the regular quarterly cash dividend of $.25 per share, payable July 31, 2008 to shareholders of record on July 17, 2008.

Total sales for the third quarter were 59% from the Americas, 32% from Europe and 9% from Asia/Pacific.

WD-40 Company's 4th quarter fiscal 2008 earnings call is scheduled for Wednesday, October 15, 2008. WD-40 Company's 10-Q will be filed the week of July 7th, 2008.

WD-40 Company, with headquarters in San Diego, is a global consumer products company dedicated to building brand equities that are first or second choice in their respective categories. The Company will leverage and build the brand fortress of WD-40 Company by developing and acquiring brands that deliver a unique high value to end users and that can be distributed across multiple trade channels in one or more areas of the world. WD-40 Company produces multi-purpose lubricants, WD-40(R) and 3-IN-ONE(R), the Lava(R) and Solvol(R) brands of heavy-duty hand cleaners, and household products 2000 Flushes(R), X-14(R), Carpet Fresh(R), No Vac(R), Spot Shot(R) and 1001(R). WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $307.8 million in fiscal 2007. Additional information about WD-40 Company can be obtained online at http://www.wd40.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 impact of cost of goods, the impact of new product innovations and renovations, the impact of foreign currency exchange rates and the timing of advertising and sales promotion activities. 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 Condensed Consolidated Statements of Operations (Unaudited and in thousands, except per share amounts) Three Months Ended Nine Months Ended May 31, May 31, 2008 2007 2008 2007 Net sales $82,104 $77,581 $240,202 $228,868 Cost of products sold(1) 43,921 40,714 126,409 118,490 Gross profit 38,183 36,867 113,793 110,378 Operating expenses: Selling, general and administrative 21,446 20,215 63,014 59,006 Advertising and sales promotion 4,339 5,173 15,222 15,876 Amortization of intangible asset 147 147 449 434 Total operating expenses 25,932 25,535 78,685 75,316 Income from operations 12,251 11,332 35,108 35,062 Other (expense) income: Interest expense, net (433) (401) (1,229) (1,695) Other income, net 212 333 753 148 Income before income taxes 12,030 11,264 34,632 33,515 Provision for income taxes 3,957 3,620 11,663 11,238 Net income $8,073 $7,644 $22,969 $22,277 Earnings per common share: Basic $0.49 $0.45 $1.38 $1.31 Diluted $0.49 $0.44 $1.36 $1.29 Weighted average common shares outstanding, basic 16,431 17,144 16,700 17,070 Weighted average common shares outstanding, diluted 16,580 17,328 16,881 17,268 Dividends declared per share $0.25 $0.25 $0.75 $0.72 (1) Includes cost of products acquired from related party of $5,927 and $4,481 for the three months ended May 31, 2008 and 2007, respectively; and $17,104 and $14,276 for the nine months ended May 31, 2008 and 2007, respectively. WD-40 Company Condensed Consolidated Balance Sheets (Unaudited and in thousands, except share amounts) May 31, 2008 August 31, 2007 Assets Cash and cash equivalents $37,547 $61,078 Trade accounts receivable, less allowance for doubtful accounts of $537 and $369 at May 31, 2008 and August 31, 2007, respectively 52,097 47,204 Product held at contract packagers 1,810 1,447 Inventories 17,275 13,208 Current deferred tax assets, net 4,159 4,145 Other current assets 3,017 3,489 Total current assets 115,905 130,571 Property, plant and equipment, net 11,016 8,811 Goodwill 96,321 96,409 Other intangible assets, net 41,975 42,543 Investment in related party 767 1,015 Other assets 3,616 3,837 Total assets $269,600 $283,186 Liabilities and Shareholders' Equity Accounts payable $18,298 $21,854 Accounts payable to related party 365 1,506 Accrued liabilities 14,176 12,780 Current portion of long-term debt 10,714 10,714 Accrued payroll and related expenses 4,571 6,906 Income taxes payable 3,016 97 Total current liabilities 51,140 53,857 Long-term debt 32,143 42,857 Long-term deferred tax liabilities, net 16,601 16,005 Deferred employee benefits and other long-term liabilities 3,497 2,195 Total liabilities 103,381 114,914 Shareholders' equity: Common stock, $0.001 par value, 36,000,000 shares authorized — 18,004,565 and 17,883,299 shares issued at May 31, 2008 and August 31, 2007, respectively; and 16,441,067 and 16,848,601 shares outstanding at May 31, 2008 and August 31, 2007 respectively 18 18 Additional paid-in capital 81,063 74,836 Retained earnings 128,093 118,260 Accumulated other comprehensive income 7,111 7,504 Common stock held in treasury, at cost — 1,563,498 and 1,034,698 shares at May 31, 2008 and August 31, 2007, respectively (50,066) (32,346) Total shareholders' equity 166,219 168,272 Total liabilities and shareholders' equity $269,600 $283,186 WD-40 Company Condensed Consolidated Statements of Cash Flows (Unaudited and in thousands) Nine Months Ended May 31, 2008 2007 Cash flows from operating activities: Net income $22,969 $22,277 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,799 2,742 Net gains on sales and disposals of property and equipment (6) (17) Deferred income tax expense 417 1,622 Excess tax benefits from exercises of stock options (158) (436) Distributions received and equity losses (earnings) from related party, net 248 1 Stock-based compensation 1,887 1,502 Changes in assets and liabilities: Trade accounts receivable (4,947) 21 Product held at contract packagers (363) (674) Inventories (4,036) 449 Other assets 360 1,769 Accounts payable and accrued expenses and liabilities (4,560) 7,222 Accounts payable to related party (1,141) 720 Income taxes payable 3,219 83 Deferred employee benefits and other long-term liabilities 1,724 82 Net cash provided by operating activities 18,412 37,363 Cash flows from investing activities: Purchases of marketable securities (76,175) (171,625) Proceeds from sales of marketable securities 76,175 171,625 Capital expenditures (4,351) (1,628) Proceeds from sales of property and equipment 142 233 Proceeds from collections on note receivable - 25 Net cash used in investing activities (4,209) (1,370) Cash flows from financing activities: Repayments of long-term debt (10,714) (10,714) Proceeds from issuance of common stock 3,278 7,086 Excess tax benefits from exercises of stock options 158 436 Treasury stock purchases (17,720) - Dividends paid (12,572) (12,299) Net cash used in financing activities (37,570) (15,491) Effect of exchange rate changes on cash and cash equivalents (164) 274 Net (decrease) increase in cash and cash equivalents (23,531) 20,776 Cash and cash equivalents at beginning of period 61,078 45,206 Cash and cash equivalents at end of period $37,547 $65,982 WD-40 Company Condensed Consolidated Statements of Comprehensive Income (Unaudited and in thousands) Three Months Ended May 31, Nine Months Ended May 31, 2008 2007 2008 2007 Net income $8,073 $7,644 $22,969 $22,277 Other comprehensive (loss) income: Equity adjustment from foreign currency translation, net of tax (151) 529 (482) 1,734 Other, net of tax 89 - 89 - Total comprehensive income $8,011 $8,173 $22,576 $24,011

SOURCE WD-40 Company

Send this news item to a friend.

Print This Page