WD-40 COMPANY 
SAN DIEGO, Oct. 19, 2016 /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 fourth quarter and fiscal ended August 31, 2016.
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Financial Highlights and Summary
-- Total net sales for the fourth quarter were $97.2 million, an increase
of 6 percent compared to the prior year fiscal quarter. Net sales for
the full fiscal year were $380.7 million, an increase of 1 percent
compared to the prior fiscal year.
-- Translation of the Company's foreign subsidiary results to U.S. dollars
had an unfavorable impact on sales for the current quarter and full
fiscal year. On a constant currency basis total net sales would have
been $102.9 million for the fourth quarter and $395.9 million for the
full fiscal year.
-- Net income for the fourth quarter was $14.2 million, an increase of 21
percent compared to the prior year fiscal quarter. For the full fiscal
year net income was $52.6 million, an increase of 17 percent from the
prior fiscal year.
-- Diluted earnings per share were $0.99 in the fourth quarter, compared to
$0.80 per share for the prior year fiscal quarter. Full fiscal year
diluted earnings per share were $3.64 compared to $3.04 in the prior
fiscal year.
-- Gross margin was 57.4 percent in the fourth quarter compared to 54.3
percent in the prior year fiscal quarter. Full fiscal year gross margin
was 56.3 percent compared to 52.9 percent in the prior fiscal year.
-- Selling, general and administrative expenses were up 17 percent in the
fourth quarter to $32.0 million when compared to the prior year fiscal
quarter. Selling, general and administrative expenses for the full
fiscal year were up 8 percent to $117.8 million compared to the prior
fiscal year.
-- Advertising and sales promotion expenses were down 9 percent in the
fourth quarter to $5.4 million compared to prior year fiscal quarter.
For the full fiscal year advertising and sales promotion expenses down 3
percent to $22.3 million compared to the prior fiscal year.
"We live in a world that is volatile, uncertain, complex and full of ambiguity. Despite all the events taking place in the world today the tribe delivered a solid end to fiscal year 2016," said Garry Ridge, WD-40 Company's president and chief executive officer. "During the full fiscal year we generated a significant amount of our sales in currencies other than the U.S. dollar, therefore foreign currency exchange headwinds had a significant impact our reported results. On a constant currency basis net sales for the full fiscal year were about $396 million, up 5 percent compared to last fiscal year. The tribe has never been more aligned and focused. We are clear about our purpose. We know why and how we do what we do, and our strategic initiatives focus us on how we use our time, talent, treasure and technology to achieve our long-term goals," concluded Ridge.
Net Sales by Segment (in thousands):
Three Months Ended August 31, Fiscal Year Ended August 31,
----------------------------- ----------------------------
2016 2015 % 2016 2015 %
Change Change
------ ------
Americas $51,565 $48,125 7% $191,397 $187,344 2%
EMEA 34,601 33,242 4% 135,235 136,847 (1)%
Asia-
Pacific 10,986 10,614 4% 54,038 53,959 -
------ ------ ------ ------
Total $97,152 $91,981 6% $380,670 $378,150 1%
======= ======= ======== ========
-- Net sales by segment as a percent of total net sales for the fourth
quarter were as follows: for the Americas, 53 percent; for EMEA, 36
percent; and for Asia-Pacific, 11 percent.
-- Net sales in the Americas increased 7 percent in the fourth quarter
primarily due to an 11 percent increase in maintenance products sales
which was slightly offset by a 10 percent decrease in homecare and
cleaning product sales. The increase in maintenance products sales in
the segment was driven primarily by increased sales in the United States
which benefitted from a higher level of promotional activities for all
maintenance products as well as expanded distribution of the WD-40 EZ
Reach Flexible Straw(TM) product.
-- Net sales in EMEA increased 4 percent in the fourth quarter primarily
due to a 23 percent increase in sales in the EMEA distributor markets
due to improving market conditions in Eastern Europe, particularly in
Russia. On a constant currency basis, EMEA sales for the fourth quarter
would have increased by $6.5 million or 20 percent compared to the prior
fiscal year period.
-- Net sales in Asia-Pacific increased 4 percent in the fourth quarter
primarily due to an increase in sales of WD-40((R)) Multi-Use Product in
China and Australia, which was partially offset by decreased sales of
this product in the Asian distributor markets. This overall growth was
driven primarily by increased promotional activities and a higher level
of purchases made by our customers in China in the fourth quarter.
Net Sales by Product Group (in thousands):
Three Months Ended August 31, Fiscal Year Ended August 31,
----------------------------- ----------------------------
2016 2015 % 2016 2015 %
Change Change
------ ------
Maintenance
products $86,532 $80,301 8% $339,974 $333,306 2%
Homecare and
cleaning
products 10,620 11,680 (9)% 40,696 44,844 (9)%
------ ------ ------ ------
Total $97,152 $91,981 6% $380,670 $378,150 1%
======= ======= ======== ========
-- Net sales of maintenance products, which are considered the primary
growth focus for the Company, increased 8 percent in the fourth fiscal
quarter when compared to the prior fiscal year period. This sales
growth was primarily attributable to strong WD-40 Multi-Use Product
sales in the United States and the Company's European distributor
markets as well as a 27% increase in global sales of WD-40
Specialist((R)) compared to the fourth quarter of last year.
-- Net sales of homecare and cleaning products decreased 9 percent in the
fourth quarter when compared to the prior fiscal year period. 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
maintenance products grow per the execution of the Company's strategic
initiatives.
Dividend and Share Repurchase
As previously announced, WD-40 Company's board of directors declared on Tuesday, October 11, 2016 a quarterly dividend of $0.42 per share payable October 31, 2016 to stockholders of record at the close of business on October 21, 2016.
On October 14, 2014 the board of directors approved a share repurchase plan. The plan became effective at the beginning of the fourth quarter of fiscal year 2015. Under the plan, the Company was authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2016. During the period from March 1, 2015 through August 31, 2016, the Company repurchased 503,127 shares at a total cost of $47.8 million under this $75.0 million plan.
On June 21, 2016 the board of directors approved a new share repurchase plan. This new plan became effective as of September 1, 2016. Under the new plan, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2018. The timing and the amount of any repurchases of common stock under either plan will be determined by management based on its evaluation of market conditions and other factors.
Fiscal Year 2017 Guidance
The Company's guidance for fiscal year 2017 is as follows:
-- Net sales growth is projected to be between 4 and 6 percent with net
sales expected to be between $395 million and $404 million.
-- Gross margin for the full year is expected to be near 56 percent.
-- Advertising and promotion investments are projected to be near 6.0
percent of net sales.
-- Net income is projected to be between $51.3 million and $52.3 million.
-- Diluted earnings per share is expected to be between $3.64 and $3.71
based on an estimated 14.1 million weighted average shares outstanding.
The net sales projections for fiscal year 2017 reflect the recent and significant deterioration of the British pound sterling. The foreign currency exchange rate for the British pound sterling against the U.S. dollar has recently declined by approximately 15 percent from the average exchange rates in fiscal year 2016. This guidance does not include any future acquisitions or divestitures and assumes that foreign currency exchange rates and crude oil prices will remain close to current levels for fiscal year 2017. In addition, this guidance does not assume any significant impact in other income from future balance sheet remeasurements as the Company experienced in fiscal year 2016.
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 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 its maintenance products and homecare and cleaning products under the following well-known brands: WD-40(R), 3-IN-ONE(R), GT85(R), X-14(R), 2000 Flushes(R), Carpet Fresh(R), no vac(R), Spot Shot(R), 1001(R), Lava(R) and Solvol(R).
Headquartered in San Diego, WD-40 Company recorded net sales of $381 million in fiscal year 2016 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; 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; 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," "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, 2016, which the company expects to file with the SEC on October 24, 2016.
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 October 19, 2016, 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 and General Definitions
(1) The Company markets maintenance
products under the WD-40(R),
GT85(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 BIKE(R) 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.
(6) Constant currency represents the
translation of the current quarter
and year-to-date results from the
functional currencies of the
Company's subsidiaries to U.S.
dollars using the exchange rate in
effect for the corresponding periods
of the prior fiscal year.
WD-40 COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
August 31, August 31,
2016 2015
---- ----
Assets
Current assets:
Cash and cash equivalents $50,891 $53,896
Short-term investments 57,633 48,603
Trade accounts receivable, less allowance for doubtful
accounts of $394 and $491 at August 31, 2016
and 2015, respectively 64,680 58,750
Inventories 31,793 32,052
Current deferred tax assets, net - 5,824
Other current assets 4,475 6,127
----- -----
Total current assets 209,472 205,252
Property and equipment, net 11,545 11,376
Goodwill 95,649 96,409
Other intangible assets, net 19,191 22,961
Deferred tax assets, net 621 -
Other assets 3,190 3,259
----- -----
Total assets $339,668 $339,257
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $18,690 $17,128
Accrued liabilities 15,757 15,200
Accrued payroll and related expenses 20,866 13,357
Income taxes payable 3,381 2,287
----- -----
Total current liabilities 58,694 47,972
Revolving credit facility 122,000 108,000
Deferred tax liabilities, net 16,365 23,145
Other long-term liabilities 2,214 2,282
----- -----
Total liabilities 199,273 181,399
------- -------
Commitments and Contingencies
Shareholders' equity:
Common stock authorized 36,000,000 shares, $0.001 par value;
19,621,820 and 19,546,888 shares issued at August 31, 2016 and 2015,
respectively; and 14,208,338 and 14,450,490 shares outstanding at
August 31, 2016 and 2015, respectively 20 20
Additional paid-in capital 145,936 141,651
Retained earnings 289,642 260,683
Accumulated other comprehensive income (loss) (27,298) (8,722)
Common stock held in treasury, at cost 5,413,482 and 5,096,398
shares at August 31, 2016 and 2015, respectively (267,905) (235,774)
-------- --------
Total shareholders' equity 140,395 157,858
------- -------
Total liabilities and shareholders' equity $339,668 $339,257
======== ========
WD-40 COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended August 31, Fiscal Year Ended August 31,
2016 2015 2016 2015
---- ---- ---- ----
Net sales $97,152 $91,981 $380,670 $378,150
Cost of products sold 41,364 42,009 166,301 177,972
------ ------ ------- -------
Gross profit 55,788 49,972 214,369 200,178
------ ------ ------- -------
Operating expenses:
Selling, general and administrative 32,012 27,449 117,767 108,873
Advertising and sales promotion 5,413 5,970 22,278 22,876
Amortization of definite-lived
intangible assets 734 759 2,976 3,039
Total operating expenses 38,159 34,178 143,021 134,788
------ ------ ------- -------
Income from operations 17,629 15,794 71,348 65,390
Other income (expense):
Interest income 166 159 683 584
Interest expense (481) (293) (1,703) (1,205)
Other income (expense), net 1,991 126 2,461 (1,659)
----- --- ----- ------
Income before income taxes 19,305 15,786 72,789 63,110
Provision for income taxes 5,073 4,063 20,161 18,303
----- ----- ------ ------
Net income $14,232 $11,723 $52,628 $44,807
======= ======= ======= =======
Earnings per common share:
Basic $0.99 $0.80 $3.65 $3.05
===== ===== ===== =====
Diluted $0.99 $0.80 $3.64 $3.04
===== ===== ===== =====
Shares used in per share calculations:
Basic 14,235 14,479 14,332 14,582
====== ====== ====== ======
Diluted 14,280 14,542 14,379 14,649
====== ====== ====== ======
WD-40 COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal Year Ended August 31,
----------------------------
2016 2015
---- ----
Operating activities:
Net income $52,628 $44,807
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation and amortization 6,465 6,464
Net gains on sales and disposals of property
and equipment (75) (71)
Deferred income taxes (2,227) (1,334)
Excess tax benefits from settlements of stock-
based equity awards (2,064) (1,205)
Stock-based compensation 3,655 2,782
Unrealized foreign currency exchange (gains)
losses, net (986) 2,086
Provision for bad debts 52 302
Changes in assets and liabilities:
Trade accounts receivable (9,936) (314)
Inventories (1,001) 2,037
Other assets 1,557 1,731
Accounts payable and accrued liabilities 2,871 (2,464)
Accrued payroll and related expenses 5,486 (2,722)
Income taxes payable 4,235 2,737
Other long-term liabilities (56) 228
--- ---
Net cash provided by operating activities 60,604 55,064
------ ------
Investing activities:
Purchases of property and equipment (4,354) (5,784)
Proceeds from sales of property and equipment 301 333
Purchases of intangible assets - -
Acquisition of business - (4,117)
Purchases of short-term investments (24,899) (10,575)
Maturities of short-term investments 8,032 3,192
----- -----
Net cash used in investing activities (20,920) (16,951)
------- -------
Financing activities:
Treasury stock purchases (32,131) (30,259)
Dividends paid (23,669) (21,720)
Proceeds from issuance of common stock 1,200 2,111
Excess tax benefits from settlements of stock-
based equity awards 2,064 1,205
Net proceeds from revolving credit facility 14,000 10,000
------ ------
Net cash used in financing activities (38,536) (38,663)
------- -------
Effect of exchange rate changes on cash and
cash equivalents (4,153) (3,357)
------ ------
Net (decrease) increase in cash and cash
equivalents (3,005) (3,907)
Cash and cash equivalents at beginning of
period 53,896 57,803
------ ------
Cash and cash equivalents at end of
period $50,891 $53,896
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SOURCE WD-40 Company
