WD-40 COMPANY 
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 by Product Group (in thousands):
Three Months Ended May 31, Nine Months Ended May 31,
-------------------------- -------------------------
2014 2013 % 2014 2013 %
Change Change
------ ------
Multi-purpose maintenance products $84,817 $82,150 3% $252,607 $239,343 6%
Homecare and cleaning products 10,833 10,953 (1)% 32,768 35,736 (8)%
------ ------ ------ ------
Total $95,650 $93,103 3% $285,375 $275,079 4%
======= ======= ======== ========
-- 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 (in thousands):
Three Months Ended May 31, Nine Months Ended May 31,
-------------------------- -------------------------
2014 2013 % 2014 2013 %
Change Change
------ ------
Americas $45,096 $47,677 (5)% $134,366 $133,249 1%
EMEA 36,678 32,758 12% 111,305 101,116 10%
Asia-Pacific 13,876 12,668 10% 39,704 40,714 (2)%
------ ------ ------ ------
Total $95,650 $93,103 3% $285,375 $275,079 4%
======= ======= ======== ========
-- 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.
Table Notes
(1) The Company markets multi-
purpose maintenance products
under the WD-40(R) and 3-IN-
ONE(R) brand names. Currently
included in the WD-40 brand
are the WD-40 Multi-Use
Product and the WD-40
Specialist(R) and WD-40 BikeTM
product lines.
(2) The Company markets the
following homecare and cleaning
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.
(3) The Americas segment consists of
the U.S., Canada and Latin
America.
(4) The EMEA segment consists of
countries in Europe, the Middle
East, Africa and India.
(5) The Asia-Pacific segment
consists of Australia, China
and other countries in the Asia
region.
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share amounts)
May 31, August 31,
2014 2013
---- ----
Assets
Current assets:
Cash and cash equivalents $44,895 $53,434
Short-term investments 45,413 37,516
Trade accounts receivable, less allowance for doubtful
accounts of $729 and $540 at May 31, 2014 and August 31,
2013, respectively 62,079 56,878
Inventories 37,573 32,433
Current deferred tax assets, net 5,685 5,672
Other current assets 7,687 6,210
----- -----
Total current assets 203,332 192,143
Property and equipment, net 9,728 8,535
Goodwill 95,544 95,236
Other intangible assets, net 24,403 24,292
Other assets 3,166 2,858
----- -----
Total assets $336,173 $323,064
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $16,934 $19,693
Accrued liabilities 20,409 16,562
Revolving credit facility 83,000 63,000
Accrued payroll and related expenses 12,122 17,244
Income taxes payable 1,281 1,146
----- -----
Total current liabilities 133,746 117,645
Long-term deferred tax liabilities, net 24,500 24,011
Deferred and other long-term liabilities 1,931 1,901
----- -----
Total liabilities 160,177 143,557
------- -------
Commitments and Contingencies
Shareholders' equity:
Common stock ? authorized 36,000,000 shares, $0.001 par
value; 19,463,726 and 19,392,979 shares issued at May 31,
2014 and August 31, 2013, respectively; and 14,928,097 and
15,285,536 shares outstanding at May 31, 2014 and August 31,
2013, respectively 19 19
Additional paid-in capital 135,866 133,239
Retained earnings 231,143 214,034
Accumulated other comprehensive income (loss) 2,192 (5,043)
Common stock held in treasury, at cost ? 4,535,629 and
4,107,443 shares at May 31, 2014 and August 31, 2013,
respectively (193,224) (162,742)
Total shareholders' equity 175,996 179,507
------- -------
Total liabilities and shareholders'
equity $336,173 $323,064
======== ========
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share amounts)
Three Months Ended May 31, Nine Months Ended May 31,
-------------------------- -------------------------
2014 2013 2014
2013
----
Net sales $95,650 $93,103 $285,375 $275,079
Cost of products sold 46,511 45,319 138,005 135,442
------ ------ ------- -------
Gross profit 49,139 47,784 147,370 139,637
------ ------ ------- -------
Operating expenses:
Selling, general and administrative 26,887 25,662 80,237 74,947
Advertising and sales promotion 6,465 6,641 18,081 17,978
Amortization of definite-lived intangible assets 684 523 1,930 1,454
--- --- ----- -----
Total operating expenses 34,036 32,826 100,248 94,379
------ ------ ------- ------
Income from operations 15,103 14,958 47,122 45,258
Other income (expense):
Interest income 136 105 425 362
Interest expense (268) (182) (709) (483)
Other (expense) income, net (11) (94) (454) 493
--- --- ---- ---
Income before income taxes 14,960 14,787 46,384 45,630
Provision for income taxes 4,554 4,520 14,179 13,958
----- ----- ------ ------
Net income $10,406 $10,267 $32,205 $31,672
======= ======= ======= =======
Earnings per common share:
Basic $0.69 $0.66 $2.11 $2.02
===== ===== ===== =====
Diluted $0.69 $0.66 $2.10 $2.01
===== ===== ===== =====
Shares used in per share calculations:
Basic 14,977 15,460 15,152 15,579
====== ====== ====== ======
Diluted 15,051 15,561 15,229 15,682
====== ====== ====== ======
Dividends declared per
common share $0.34 $0.31 $0.99 $0.91
===== ===== ===== =====
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Nine Months Ended May 31,
-------------------------
2014 2013
---- ----
Operating activities:
Net income $32,205 $31,672
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 4,337 3,765
Net gains on sales and disposals of property and equipment (41) (12)
Deferred income taxes (330) 451
Excess tax benefits from settlements of stock-based equity awards (824) (666)
Stock-based compensation 1,942 1,859
Unrealized foreign currency exchange (gains) losses, net (159) 1,326
Provision for bad debts 174 399
Changes in assets and liabilities:
Trade accounts receivable (3,681) (4,395)
Inventories (4,716) (4,421)
Other assets (1,616) 144
Accounts payable and accrued liabilities 21 276
Accrued payroll and related expenses (6,924) 4,138
Income taxes payable 1,718 1,495
Deferred and other long-term liabilities 17 127
--- ---
Net cash provided by operating activities 22,123 36,158
------ ------
Investing activities:
Purchases of property and equipment (3,023) (1,975)
Proceeds from sales of property and equipment 250 112
Purchases of intangible assets (1,789) -
Purchases of short-term investments (5,756) (36,424)
Maturities of short-term investments 914 1,029
--- -----
Net cash used in investing activities (9,404) (37,258)
------ -------
Financing activities:
Proceeds from revolving credit facility 20,000 18,000
Dividends paid (15,096) (14,263)
Proceeds from issuance of common stock 1,265 3,213
Treasury stock purchases (30,482) (22,294)
Excess tax benefits from settlements of stock-based equity awards 824 666
--- ---
Net cash used in financing activities (23,489) (14,678)
------- -------
Effect of exchange rate changes on cash and cash equivalents 2,231 (1,668)
----- ------
Net decrease in cash and cash equivalents (8,539) (17,446)
Cash and cash equivalents at beginning of period 53,434 69,719
------ ------
Cash and cash equivalents at end of
period $44,895 $52,273
======= =======
SOURCE WD-40 Company
