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WD-40 Company Reports First Quarter 2013 Sales And Earnings

SAN DIEGO, Jan. 8, 2013 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the first quarter ended November 30, 2012 of $95.3 million, an increase of 12% from the first quarter last year. Net income for the first quarter was $10.9 million, an increase of 61% compared to the prior year fiscal quarter.

Summary

First quarter multi-purpose maintenance products sales, which include the WD-40®, 3-IN-ONE® and BLUE WORKS® brands were $81.8 million, up 15% from the prior year fiscal quarter. The multi-purpose maintenance products are considered a primary focus for the Company.  Homecare and cleaning products sales, which include all other brands, were $13.5 million for the first quarter, down 4% from the prior year first quarter. The U.S. homecare and cleaning products are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as the multi-purpose maintenance products sales grow. 

Americas segment sales in the first quarter were $45.4 million, up 12% compared to the first quarter of the prior fiscal year. Europe segment sales in the first quarter were $35.2 million, up 17% from the prior year fiscal quarter. Asia-Pacific segment sales were $14.7 million in the first quarter, up 3% from the prior year fiscal quarter.

Diluted earnings per share were $0.69 in the first quarter, compared to $0.42 per share for the same quarter of the prior fiscal year.

"We are pleased with our solid revenue growth during the first quarter, particularly in our multi-purpose maintenance products, and because we were able to hit our goal of a 50 percent gross margin, we achieved solid growth in our net income as well," said Garry Ridge, WD-40 Company president and chief executive officer. "We have remained disciplined in building our business for long-term, sustainable growth by implementing our core strategic drivers, and the results of the first quarter show a solid start to the year.  In fact, the first quarter of 2013 was the best sales quarter in company history."

Net sales by segment as a percent of total net sales were 48% from the Americas, 37% from Europe and 15% from Asia-Pacific.

"While we did have some sales we expected to hit in the fourth quarter of last fiscal year slide into the first quarter of this fiscal year, particularly in Europe, we are proud of the solid growth we had in all three of our trading blocs during the quarter," Ridge said. "Sales were a little softer in Asia/Pacific than we have seen recently due to the ebbs and flows of our long-term approach to building the market in China and other Asian countries."

Gross margin was 50.1% in the first quarter compared to 48.7% in the same quarter of the prior fiscal year.

"We were able to achieve our gross margin goal due to several factors, including the price increases we took throughout 2012, relative stability in our cost of goods and the benefits of the supply chain architecture project which we started more than a year ago," Ridge added.

Selling, general and administrative expenses were up 12% in the first quarter to $25.3 million compared to the same period last fiscal year.

Advertising and sales promotion expenses were down 22% in the first quarter to $6.1 million compared to the same period last fiscal year.

"The decrease in advertising and sales promotion expenses was a result of promotional phasing, and we expect such expenses to maintain their historic levels during the remainder of the year," Ridge said.

During fiscal year 2012, the company launched the WD-40 Specialist product line in the UK, France, Germany, Italy, Canada, the U.S., and throughout Asia and Latin America. During the first quarter of 2013 the company launched the WD-40 Specialist product line in Russia, the Middle East and several smaller markets, including Puerto Rico, Malaysia and Cyprus.

"The WD-40 Specialist product line is helping to solidify our leadership in the marketplace, and we are excited about the incremental sales this product line gives us," Ridge said. "We are also excited about the power this product line brings to the entire WD-40 brand. We can directly attribute some of our growth in WD-40 Multi-Use Product to the increased distribution and shelf presence we have generated with WD-40 Specialist."

On January 7, 2013, the Company amended its unsecured credit agreement with Bank of America, N.A., to extend the maturity date for five years and to increase the amount available from $75.0 million to $125.0 million.   "The amended facility gives us additional access to capital to support the continued growth of our business, our share buyback activity and other general business needs," Ridge said.

Dividend and Share Buy-Back

As previously announced, WD-40 Company's board of directors declared on Tuesday, December 11, 2012, a 7% increase in the regular quarterly cash dividend, increasing it from $0.29 per share to $0.31 per share. The dividend is payable on January 31, 2013 to shareholders of record on January 7, 2013.

On December 13, 2011, the board of directors authorized a buyback up to $50.0 million of the Company's outstanding shares expiring on December 12, 2013. During the first quarter of 2013, WD-40 Company acquired an additional $8.1 million in shares, bringing the total purchased under this share buy-back plan to $29.3 million.

Fiscal Year 2013 Guidance

WD-40 Company expects fiscal year 2013 net sales of $356.0 million to $370.0 million. The Company expects net income of $36.5 million to $38.0 million and diluted earnings per share of $2.31 to $2.40 for fiscal year 2012 based on an estimated 15.8 million weighted average shares outstanding. Gross margin for the full year is expected to be close to 50.0%.  The Company expects advertising and promotion expenses of 7.0% to 8.0% of net sales.  This guidance is based on using average fiscal year 2012 foreign currency exchange rates.

More detailed information will be available in WD-40 Company's Form 10-Q which will be filed on January 9, 2013.

About WD-40 Company
WD-40 Company, with headquarters in San Diego, is a global consumer products company dedicated to delivering unique, high-value and easy-to-use solutions for a wide variety of maintenance needs of "doer" and "on-the-job" users by leveraging and building the brand fortress of the company. The company markets multi-purpose maintenance products – under the WD-40®, 3-IN-ONE® and BLUE WORKS® brand names. The company also markets homecare and cleaning brands: X-14® mildew stain remover and automatic toilet bowl cleaners, 2000 Flushes® automatic toilet bowl cleaners, Carpet Fresh® and No Vac® rug and room deodorizers, Spot Shot® aerosol and liquid carpet stain removers, 1001® household cleaners and rug and room deodorizers, and Lava® and Solvol® heavy-duty hand cleaners.

WD-40 Company markets its products in 187 countries worldwide and recorded sales of $343 million in fiscal year 2012. Additional information about WD-40 Company can be obtained online at http://www.wd40company.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 the impact of commodity prices, changes in foreign currency exchange rates, the introduction of new product lines and fluctuating global market conditions, 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 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 BALANCE SHEETS

(Unaudited and in thousands, except share and per share amounts)

 



November 30,

  2012

   August 31, 2012

Assets



Current assets:



Cash and cash equivalents

$        52,435

$        69,719

Short-term investments

21,883

1,033

Trade accounts receivable, less allowance for doubtful accounts of $584 and $391 at November 30, 2012 and August 31, 2012, respectively

57,117

55,491

Inventories

30,767

29,797

Current deferred tax assets, net

5,556

5,551

Other current assets

5,096

4,526




    Total current assets

172,854

166,117




Property and equipment, net

8,846

9,063

Goodwill

95,368

95,318

Other intangible assets, net

27,257

27,685

Other assets

2,780

2,687




    Total assets

$      307,105

$      300,870




Liabilities and Shareholders' Equity



Current liabilities:



Accounts payable

$        23,315

$        21,242

Accrued liabilities

15,297

16,492

Revolving credit facility

45,000

45,000

Accrued payroll and related expenses

8,012

5,904

Income taxes payable

2,886

807




    Total current liabilities

94,510

89,445




Long-term deferred tax liabilities, net

24,963

24,007

Deferred and other long-term liabilities

2,016

1,956




    Total liabilities

121,489

115,408




Shareholders' equity:



Common stock — authorized 36,000,000 shares, $0.001 par value; 19,278,504 and 19,208,845 shares issued at November 30, 2012 and August 31, 2012, respectively; and 15,595,924 and 15,697,534 shares outstanding at November 30, 2012 and August 31, 2012, respectively

19

19

Additional paid-in capital

127,055

126,210

Retained earnings

199,630

193,265

Accumulated other comprehensive loss

(1,692)

(2,727)

Common stock held in treasury, at cost —  3,682,580 and 3,511,311 shares at November 30, 2012  and August 31, 2012, respectively

(139,396)

(131,305)




    Total shareholders' equity

185,616

185,462




  Total liabilities and shareholders' equity

$      307,105

$      300,870

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)

 


Three Months Ended

          November 30,         


2012

2011




Net sales

$        95,264

$        84,945

Cost of products sold

47,537

43,607




Gross profit

47,727

41,338




Operating expenses:



Selling, general and administrative

25,329

22,637

Advertising and sales promotion

6,067

7,816

Amortization of definite-lived intangible assets

466

585




Total operating expenses

31,862

31,038




Income from operations

15,865

10,300




Other income (expense):



Interest income

62

52

Interest expense

(125)

(242)

Other income (expense), net

52

(180)




Income before income taxes

15,854

9,930

Provision for income taxes

4,910

3,138




Net income

$        10,944

$          6,792




Earnings per common share:



Basic

$            0.69

$            0.42




Diluted

$            0.69

$            0.42




Shares used in per share calculations:



Basic

15,693

16,074




Diluted

15,807

16,205




Dividends declared per common share

$            0.29

$            0.27

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

 


Three Months Ended

November 30,


2012


2011

Operating activities:




Net income

$      10,944


$        6,792

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

1,203


1,218

Net (gains) losses on sales and disposals of property and equipment

(9)


58

Deferred income taxes

183


261

Excess tax benefits from settlements of stock-based equity awards

375


(298)

Stock-based compensation

619


745

Unrealized foreign currency exchange (gains) losses, net

(210)


336

Provision for bad debts

221


38

Changes in assets and liabilities:




  Trade accounts receivable

(1,111)


6,985

  Inventories

(890)


(5,698)

  Other assets

(613)


(940)

  Accounts payable and accrued liabilities

646


3,316

  Accrued payroll and related expenses

981


(2,103)

  Income taxes payable

3,199


2,075

  Deferred and other long-term liabilities

57


0





      Net cash provided by operating activities

15,595


12,785





Investing activities:




Purchases of property and equipment

(527)


(777)

Proceeds from sales of property and equipment

64


920

Purchases of short-term investments

(20,928)


0





    Net cash (used in) provided by investing activities

(21,391)


143





Financing activities:




Repayments of long-term debt

0


(10,715)

Proceeds from revolving credit facility

0


69,550

Repayments of revolving credit facility

0


(37,550)

Dividends paid

(4,579)


(4,330)

Proceeds from issuance of common stock

944


901

Treasury stock purchases

(8,091)


(18,601)

Excess tax benefits from settlements of stock-based equity awards

(375)


298





    Net cash used in financing activities

(12,101)


(447)





Effect of exchange rate changes on cash and cash equivalents

613


(2,230)





Net (decrease) increase in cash and cash equivalents

(17,284)


10,251





Cash and cash equivalents at beginning of period

69,719


56,393





Cash and cash equivalents at end of period

$      52,435


$      66,644

SOURCE WD-40 Company

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