SAN DIEGO, Jan. 9, 2017 /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 first
fiscal quarter ended November 30,
2016.
Financial Highlights and Summary
- Total net sales for the first quarter were $89.2 million, a decrease of 4 percent compared
to the prior year fiscal quarter.
- Translation of the Company's foreign subsidiary results from
their functional currencies to U.S. dollars had an unfavorable
impact on sales for the current quarter. On a constant
currency basis total net sales for the first quarter would have
been $95.1 million, an increase of 3
percent compared to the prior year fiscal quarter.
- Net income for the first quarter was $11.8 million, a decrease of 3 percent from the
prior year fiscal quarter.
- Diluted earnings per share were $0.82 compared to $0.83 in the prior year fiscal quarter.
- Gross margin percentage was 57.2 percent compared to 55.6
percent in the prior year fiscal quarter.
- Selling, general and administrative expenses were up 4 percent
in the first quarter to $29.0 million
when compared to the prior year fiscal quarter.
- Advertising and sales promotion expenses were down 15 percent
to $4.8 million compared to the prior
year fiscal quarter.
"As a global company that generates nearly 40 percent of its
sales in currencies other than the U.S. dollar, foreign currency
exchange headwinds continue to have an impact on our reported
results," said Garry Ridge, WD-40
Company's president and chief executive officer. "Even though the
global nature of our business exposes us to some currency risk, our
geographically diversified business also acts as a natural hedge
which can cushion us from the impact of localized events. At any
given time, depending on what is going on in a particular region,
some of our markets will over perform while others may
underperform. While we expect we will continue to see
fluctuations in the performance of certain markets quarter to
quarter, our long-term growth plans remain unchanged," concluded
Ridge.
Net Sales by Segment (in thousands):
|
Three Months Ended
November 30,
|
|
2016
|
|
2015
|
|
Change
|
Americas
|
$
|
42,840
|
|
$
|
44,412
|
|
|
(4)%
|
EMEA
|
|
30,257
|
|
|
32,086
|
|
|
(6)%
|
Asia-Pacific
|
|
16,151
|
|
|
16,024
|
|
|
1%
|
Total
|
$
|
89,248
|
|
$
|
92,522
|
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
- Net sales by segment as a percent of total net sales for the
first quarter were as follows: for the Americas, 48 percent; for
EMEA, 34 percent; and for Asia-Pacific, 18 percent.
- The decline in net sales in the Americas in the first quarter
was primarily driven by lower maintenance product sales in
the United States and Latin America. In the United States, in the comparable period
last fiscal year, sales were higher than normal due to the initial
launch of the WD-40 EZ-Reach Flexible Straw product offering.
In Latin America, maintenance product sales were lower primarily
due to the uncertain business climate in Mexico.
- The decline in net sales in EMEA in the first quarter was
primarily driven by unfavorable impacts of foreign currency
exchange rates as well as decreased sales in the Company's
distributor markets in Eastern Europe. Although market
conditions have begun to stabilize in Russia, sales of maintenance products are down
due to the market distributors in the region normalizing inventory
levels to meet current market needs. On a constant currency basis
EMEA sales for the first quarter would have increased by
$4.2 million or 13 percent compared
to the prior year fiscal year period.
- The increase in sales in Asia-Pacific in the first quarter was
primarily driven by new distribution and increased promotional
programs in Australia and
China. This sales increase was partially offset by a decrease
in sales in the Company's Asian distributor markets due to the
timing of promotional activities and customer orders. Maintenance
product sales were lower in the Asian distributor markets in the
first quarter due to certain customers buying product in advance of
a price increase that took place at the end of the first quarter of
fiscal year 2016.
Net Sales by Product Group (in thousands):
|
Three Months Ended
November 30,
|
|
2016
|
|
2015
|
|
Change
|
Maintenance
products
|
$
|
79,159
|
|
$
|
82,241
|
|
|
(4)%
|
Homecare and cleaning
products
|
|
10,089
|
|
|
10,281
|
|
|
(2)%
|
Total
|
$
|
89,248
|
|
$
|
92,522
|
|
|
(4)%
|
|
|
|
|
|
|
|
|
|
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, decreased 4 percent in the
first quarter when compared to the prior fiscal quarter
period. The decline in the first quarter was driven primarily
by the unfavorable impact of foreign currency exchange rates, the
timing of orders and promotional activities.
- Net sales of homecare and cleaning products decreased 2 percent
for the first quarter 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 but 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, December 13, 2016 a quarterly dividend
of $0.49 per share reflecting an
increase of 17 percent over the previous quarter's dividend. The
quarterly dividend is payable on January 31,
2017 to stockholders of record at the close of business on
January 20, 2017.
On June 21, 2016, the Company's
Board of Directors approved a share buy-back plan. Under the plan,
which became effective on September 1,
2016, the Company is authorized to acquire up to
$75.0 million of its outstanding
shares through August 31, 2018. The
timing and amount of repurchases are based on terms and conditions
as may be acceptable to the Company's Chief Executive Officer and
Chief Financial Officer and in compliance with all laws and
regulations applicable thereto. During the period from September 1, 2016 through November 30, 2016, the Company
repurchased 112,701 shares at a total cost
of $12.2 million under this $75.0
million plan.
Fiscal Year 2017 Guidance
The Company reaffirmed its
guidance for fiscal year 2017 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 percentage 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.
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 the
remainder of fiscal year 2017.
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®, 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 $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, and in the Company's Quarterly Report on Form 10-Q
for the period ended November 30, 2016 which the Company
expects to file with the SEC on January 9, 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 January 9, 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®, GT85® and 3-IN-ONE® brand
names. Currently included in the WD-40 brand are the WD-40
Multi-Use Product and the WD-40 Specialist® and WD-40 BIKE® product
lines.
|
(2)
|
The Company markets
the following 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.
|
(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
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited and in
thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
November
30,
|
|
August
31,
|
|
|
2016
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
33,482
|
|
$
|
50,891
|
|
Short-term
investments
|
|
67,339
|
|
|
57,633
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $242 and $394 at November 30, 2016
and August 31, 2016,
respectively
|
|
55,851
|
|
|
64,680
|
|
Inventories
|
|
34,206
|
|
|
31,793
|
|
Other current
assets
|
|
3,641
|
|
|
4,475
|
|
Total current
assets
|
|
194,519
|
|
|
209,472
|
|
Property and equipment,
net
|
|
22,016
|
|
|
11,545
|
|
Goodwill
|
|
95,432
|
|
|
95,649
|
|
Other intangible
assets, net
|
|
18,263
|
|
|
19,191
|
|
Deferred tax assets,
net
|
|
608
|
|
|
621
|
|
Other assets
|
|
2,817
|
|
|
3,190
|
|
Total
assets
|
$
|
333,655
|
|
$
|
339,668
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
18,131
|
|
$
|
18,690
|
|
Accrued
liabilities
|
|
15,889
|
|
|
15,757
|
|
Accrued payroll and
related expenses
|
|
13,363
|
|
|
20,866
|
|
Revolving credit
facility, current
|
|
12,354
|
|
|
-
|
|
Income taxes
payable
|
|
4,295
|
|
|
3,381
|
|
Total current
liabilities
|
|
64,032
|
|
|
58,694
|
|
Revolving credit
facility
|
|
122,000
|
|
|
122,000
|
|
Deferred tax
liabilities, net
|
|
16,521
|
|
|
16,365
|
|
Other long-term
liabilities
|
|
2,655
|
|
|
2,214
|
|
Total
liabilities
|
|
205,208
|
|
|
199,273
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock ―
authorized 36,000,000 shares, $0.001 par value; 19,653,335 and 19,621,820 shares issued at November
30, 2016 and August 31, 2016,
respectively; and 14,127,152 and 14,208,338 shares
outstanding at November 30, 2016 and
August 31, 2016, respectively
|
|
20
|
|
|
20
|
|
Additional paid-in
capital
|
|
146,498
|
|
|
145,936
|
|
Retained
earnings
|
|
295,402
|
|
|
289,642
|
|
Accumulated other
comprehensive income (loss)
|
|
(33,412)
|
|
|
(27,298)
|
|
Common stock held in
treasury, at cost ― 5,526,183 and 5,413,482 shares at November 30, 2016 and August 31, 2016,
respectively
|
|
(280,061)
|
|
|
(267,905)
|
|
Total shareholders'
equity
|
|
128,447
|
|
|
140,395
|
|
Total liabilities and
shareholders' equity
|
$
|
333,655
|
|
$
|
339,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WD-40
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited and in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Net sales
|
$
|
89,248
|
|
$
|
92,522
|
Cost of products
sold
|
|
38,208
|
|
|
41,114
|
Gross
profit
|
|
51,040
|
|
|
51,408
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
|
28,991
|
|
|
27,848
|
Advertising and sales
promotion
|
|
4,812
|
|
|
5,660
|
Amortization of
definite-lived intangible assets
|
|
721
|
|
|
755
|
Total operating
expenses
|
|
34,524
|
|
|
34,263
|
|
|
|
|
|
|
Income from
operations
|
|
16,516
|
|
|
17,145
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
income
|
|
147
|
|
|
148
|
Interest
expense
|
|
(531)
|
|
|
(372)
|
Other income (expense),
net
|
|
264
|
|
|
(51)
|
Income before income
taxes
|
|
16,396
|
|
|
16,870
|
Provision for income
taxes
|
|
4,638
|
|
|
4,808
|
Net income
|
$
|
11,758
|
|
$
|
12,062
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.82
|
|
$
|
0.83
|
Diluted
|
$
|
0.82
|
|
$
|
0.83
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
|
14,180
|
|
|
14,404
|
Diluted
|
|
14,221
|
|
|
14,461
|
Dividends declared
per common share
|
$
|
0.42
|
|
$
|
0.38
|
|
|
|
|
|
|
WD-40
COMPANY
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited and in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
|
2016
|
|
2015
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
11,758
|
|
$
|
12,062
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
1,620
|
|
|
1,661
|
|
Net gains on sales and
disposals of property and equipment
|
|
(54)
|
|
|
(3)
|
|
Deferred income
taxes
|
|
(405)
|
|
|
3
|
|
Excess tax benefits
from settlements of stock-based equity awards
|
|
(435)
|
|
|
(1,390)
|
|
Stock-based
compensation
|
|
1,622
|
|
|
633
|
|
Unrealized foreign
currency exchange losses, net
|
|
1,075
|
|
|
360
|
|
Provision for bad
debts
|
|
(120)
|
|
|
78
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade and other
accounts receivable
|
|
6,357
|
|
|
430
|
|
Inventories
|
|
(2,876)
|
|
|
(3,730)
|
|
Other
assets
|
|
1,070
|
|
|
1,688
|
|
Accounts payable and
accrued liabilities
|
|
203
|
|
|
3,617
|
|
Accrued payroll and
related expenses
|
|
(8,886)
|
|
|
(3,187)
|
|
Income taxes
payable
|
|
2,619
|
|
|
2,403
|
|
Other long-term
liabilities
|
|
(45)
|
|
|
20
|
|
Net cash provided by
operating activities
|
|
13,503
|
|
|
14,645
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(11,603)
|
|
|
(448)
|
|
Proceeds from sales of
property and equipment
|
|
162
|
|
|
-
|
|
Purchases of
short-term investments
|
|
(16,997)
|
|
|
(2,933)
|
|
Maturities of
short-term investments
|
|
4,548
|
|
|
2,846
|
|
Net cash used in
investing activities
|
|
(23,890)
|
|
|
(535)
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Treasury stock
purchases
|
|
(12,156)
|
|
|
(8,075)
|
|
Dividends
paid
|
|
(5,998)
|
|
|
(5,500)
|
|
Proceeds from issuance
of common stock
|
|
197
|
|
|
421
|
|
Excess tax benefits
from settlements of stock-based equity awards
|
|
435
|
|
|
1,390
|
|
Net proceeds from
revolving credit facility
|
|
12,354
|
|
|
10,000
|
|
Net cash used
in financing activities
|
|
(5,168)
|
|
|
(1,764)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1,854)
|
|
|
(1,171)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(17,409)
|
|
|
11,175
|
|
Cash and cash
equivalents at beginning of period
|
|
50,891
|
|
|
53,896
|
|
Cash and cash
equivalents at end of period
|
$
|
33,482
|
|
$
|
65,071
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wd-40-company-reports-first-quarter-2017-financial-results-300387920.html
SOURCE WD-40 Company