SAN DIEGO, April 6, 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 second
fiscal quarter ended February 28,
2017.
Financial Highlights and Summary
- Total net sales for the second quarter were $96.5 million, an increase of 2 percent compared
to the prior year fiscal quarter. Year-to-date total net sales were
$185.8 million, a decrease of 1
percent compared to the prior year fiscal period.
- Translation of the Company's foreign subsidiary results to U.S.
dollars had an unfavorable impact on sales for the current quarter
and year-to-date. On a constant currency basis total net sales
would have been $102.9 million for
the second quarter and $198.1 million
year-to-date.
- Net income for the second quarter was $12.4 million, a decrease of 10 percent compared
to the prior year fiscal quarter. Year-to-date net income was
$24.1 million, a decrease of 6
percent from the prior year fiscal period.
- Diluted earnings per share were $0.87 in the second quarter, compared to
$0.94 per share for the prior year
fiscal quarter. Year-to-date diluted earnings per share were
$1.69 compared to $1.77 in the prior year fiscal period.
- Gross margin was 56.4 percent in the second quarter compared to
55.4 percent in the prior year fiscal quarter. Year-to-date gross
margin was 56.8 percent compared to 55.5 percent in the prior year
fiscal period.
- Selling, general and administrative expenses were up 4 percent
in the second quarter to $29.8
million when compared to the prior year fiscal quarter.
Year-to-date selling, general and administrative expenses were up 4
percent to $58.8 million compared to
the prior year fiscal period.
- Advertising and sales promotion expenses remained relatively
constant at $5.0 million in the
second quarter compared to the prior year fiscal quarter.
Year-to-date advertising and sales promotion expenses were down 8
percent to $9.9 million compared to
the prior year fiscal period.
"Fluctuating foreign currency exchange rates continue to obscure
the true strength of our business and they negatively impacted both
our top-line and bottom line results in the second quarter," said
Garry Ridge, WD-40 Company's
president and chief executive officer. "Even with the impacts
of foreign currency headwinds included, we had 4 percent growth in
sales of our maintenance products, which continue to be our core
strategic focus, and a 5 percent increase in operating
income. Our net income was negatively impacted as a result of
fluctuations in some non-operating currency related items period
over period, as well as an adjustment that we recorded to our
income tax expense in the second quarter of this year. As we
look to the remainder of fiscal year 2017, we've updated our fiscal
year guidance and we remain confident in our strategy and are
staying the course."
Net Sales by Segment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February
28,
|
|
February
29,
|
|
|
|
|
February
28,
|
|
February
29,
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Americas
|
$
|
45,078
|
|
$
|
45,542
|
|
|
(1)%
|
|
$
|
87,918
|
|
$
|
89,954
|
|
|
(2)%
|
EMEA
|
|
36,205
|
|
|
35,626
|
|
|
2%
|
|
|
66,462
|
|
|
67,712
|
|
|
(2)%
|
Asia-Pacific
|
|
15,236
|
|
|
13,382
|
|
|
14%
|
|
|
31,387
|
|
|
29,406
|
|
|
7%
|
Total
|
$
|
96,519
|
|
$
|
94,550
|
|
|
2%
|
|
$
|
185,767
|
|
$
|
187,072
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales by segment as a percent of total net sales for the
second quarter were as follows: for the Americas, 47 percent; for
EMEA, 37 percent; and for Asia-Pacific, 16 percent.
- Net sales in the Americas were down 1 percent in the second
quarter primarily due to a 10 percent decrease in homecare and
cleaning product sales. Sales of maintenance products increased
slightly during the period primarily due to a 25 percent increase
in sales of maintenance products in Canada driven by successful promotional
programs and improving market and economic conditions, particularly
in Western Canada.
- Net sales in EMEA increased 2 percent in the second quarter
primarily due to a 10 percent increase in sales in the EMEA
distributor markets compared to the prior year fiscal period
primarily due to increased sales in Russia driven by improving market conditions
in the region. On a constant currency basis EMEA sales for the
second quarter would have increased by $7.0
million or 20 percent compared to the prior fiscal year
period.
- Net sales in Asia-Pacific
increased 14 percent in the second quarter primarily due to a 21
percent increase in sales in the Asia-Pacific distributor markets and a 17
percent increase in sales in China. The sales growth in the distributor
markets was primarily attributable to the timing of customer orders
for WD-40 Multi-Use Product and the growth in China was due to new distribution and
increased promotional activities. Changes in foreign currency
exchange rates did not have a material impact on sales in the
Asia-Pacific segment.
Net Sales by Product Group (in thousands):
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
February
28,
|
|
February
29,
|
|
|
|
|
February
28,
|
|
February
29,
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Maintenance
products
|
$
|
87,771
|
|
$
|
84,641
|
|
|
4%
|
|
$
|
166,930
|
|
$
|
166,882
|
|
|
-
|
Homecare and cleaning
products
|
|
8,748
|
|
|
9,909
|
|
|
(12)%
|
|
|
18,837
|
|
|
20,190
|
|
|
(7)%
|
Total
|
$
|
96,519
|
|
$
|
94,550
|
|
|
2%
|
|
$
|
185,767
|
|
$
|
187,072
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, increased 4 percent in the
second fiscal quarter when compared to the prior fiscal year
period. This growth was driven primarily by increased sales of
WD-40 Multi-Use Product within all three of the Company's segments,
but primarily in its Asia-Pacific
segment. This sales growth was also attributable to increased sales
of WD-40 Specialist throughout most of the Company's EMEA
segment.
- Net sales of homecare and cleaning products decreased 12
percent in the second 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 multi-purpose 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, March 21, 2017 a
quarterly dividend of $0.49 per share
payable April 28, 2017 to
stockholders of record at the close of business on April 14, 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 February 28, 2017, the Company has
repurchased 174,337 shares at a total cost
of $18.7 million under this $75.0
million plan.
Updated Fiscal Year 2017 Guidance
The Company updated its guidance for fiscal year 2017 as
follows:
- Net sales growth is projected to be between 2 and 4 percent
with net sales expected to be between $390 million and
$395 million.
- Gross margin percentage for the full year is expected to
be above 56 percent.
- Advertising and promotion investments are projected to be below
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 February 28, 2017 which the Company
expects to file with the SEC on April 6, 2017.
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 April 6, 2017, 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.
|
|
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|
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|
|
|
|
WD-40
COMPANY
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited and in
thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
February
28,
|
|
August
31,
|
|
|
2017
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
33,572
|
|
$
|
50,891
|
|
Short-term
investments
|
|
67,720
|
|
|
57,633
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $268 and $394 at February 28, 2017
and August 31, 2016,
respectively
|
|
66,086
|
|
|
64,680
|
|
Inventories
|
|
37,980
|
|
|
31,793
|
|
Other current
assets
|
|
6,187
|
|
|
4,475
|
|
Total current
assets
|
|
211,545
|
|
|
209,472
|
|
Property and equipment,
net
|
|
22,293
|
|
|
11,545
|
|
Goodwill
|
|
95,439
|
|
|
95,649
|
|
Other intangible
assets, net
|
|
17,550
|
|
|
19,191
|
|
Deferred tax assets,
net
|
|
621
|
|
|
621
|
|
Other assets
|
|
2,806
|
|
|
3,190
|
|
Total
assets
|
$
|
350,254
|
|
$
|
339,668
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
21,832
|
|
$
|
18,690
|
|
Accrued
liabilities
|
|
16,848
|
|
|
15,757
|
|
Accrued payroll and
related expenses
|
|
10,548
|
|
|
20,866
|
|
Revolving credit
facility, current
|
|
14,233
|
|
|
-
|
|
Income taxes
payable
|
|
3,119
|
|
|
3,381
|
|
Total current
liabilities
|
|
66,580
|
|
|
58,694
|
|
Revolving credit
facility
|
|
134,000
|
|
|
122,000
|
|
Deferred tax
liabilities, net
|
|
17,442
|
|
|
16,365
|
|
Other long-term
liabilities
|
|
2,668
|
|
|
2,214
|
|
Total
liabilities
|
|
220,690
|
|
|
199,273
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock ―
authorized 36,000,000 shares, $0.001 par value; 19,676,623 and 19,621,820 shares issued at February
28, 2017 and August 31, 2016,
respectively; and 14,088,804 and 14,208,338 shares
outstanding at February 28, 2017 and
August 31, 2016, respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
20
|
|
Additional paid-in
capital
|
|
148,498
|
|
|
145,936
|
|
Retained
earnings
|
|
300,797
|
|
|
289,642
|
|
Accumulated other
comprehensive income (loss)
|
|
(33,128)
|
|
|
(27,298)
|
|
Common stock held in
treasury, at cost ― 5,587,819 and 5,413,482 shares at February 28, 2017 and August 31, 2016,
respectively
|
|
|
|
|
|
|
|
(286,623)
|
|
|
(267,905)
|
|
Total shareholders'
equity
|
|
129,564
|
|
|
140,395
|
|
Total liabilities and
shareholders' equity
|
$
|
350,254
|
|
$
|
339,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WD-40
COMPANY
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited and in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
February
28,
|
|
February
29,
|
|
February
28,
|
|
February
29,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
96,519
|
|
$
|
94,550
|
|
$
|
185,767
|
|
$
|
187,072
|
|
Cost of products
sold
|
|
42,057
|
|
|
42,188
|
|
|
80,265
|
|
|
83,302
|
|
Gross
profit
|
|
54,462
|
|
|
52,362
|
|
|
105,502
|
|
|
103,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
29,842
|
|
|
28,692
|
|
|
58,833
|
|
|
56,540
|
|
Advertising and sales
promotion
|
|
5,041
|
|
|
5,017
|
|
|
9,853
|
|
|
10,677
|
|
Amortization of
definite-lived intangible assets
|
|
717
|
|
|
747
|
|
|
1,438
|
|
|
1,502
|
|
Total operating
expenses
|
|
35,600
|
|
|
34,456
|
|
|
70,124
|
|
|
68,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
18,862
|
|
|
17,906
|
|
|
35,378
|
|
|
35,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
133
|
|
|
183
|
|
|
280
|
|
|
331
|
|
Interest
expense
|
|
(598)
|
|
|
(417)
|
|
|
(1,129)
|
|
|
(789)
|
|
Other income
|
|
9
|
|
|
1,320
|
|
|
273
|
|
|
1,269
|
|
Income before income
taxes
|
|
18,406
|
|
|
18,992
|
|
|
34,802
|
|
|
35,862
|
|
Provision for income
taxes
|
|
6,046
|
|
|
5,323
|
|
|
10,684
|
|
|
10,131
|
|
Net income
|
$
|
12,360
|
|
$
|
13,669
|
|
$
|
24,118
|
|
$
|
25,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.87
|
|
$
|
0.95
|
|
$
|
1.69
|
|
$
|
1.78
|
|
Diluted
|
$
|
0.87
|
|
$
|
0.94
|
|
$
|
1.69
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
14,111
|
|
|
14,386
|
|
|
14,146
|
|
|
14,395
|
|
Diluted
|
|
14,143
|
|
|
14,429
|
|
|
14,182
|
|
|
14,445
|
|
Dividends declared
per common share
|
$
|
0.49
|
|
$
|
0.42
|
|
$
|
0.91
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WD-40
COMPANY
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited and in
thousands)
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
February
28,
|
|
February
29,
|
|
|
2017
|
|
2016
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
24,118
|
|
$
|
25,731
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,298
|
|
|
3,311
|
|
Net gains on sales and
disposals of property and equipment
|
|
(101)
|
|
|
(15)
|
|
Deferred income
taxes
|
|
155
|
|
|
(407)
|
|
Excess tax benefits
from settlements of stock-based equity awards
|
|
(936)
|
|
|
(1,544)
|
|
Stock-based
compensation
|
|
2,959
|
|
|
1,889
|
|
Unrealized foreign
currency exchange losses (gains), net
|
|
1,153
|
|
|
(1,116)
|
|
Provision for bad
debts
|
|
(102)
|
|
|
97
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade and other
accounts receivable
|
|
(4,088)
|
|
|
(14,828)
|
|
Inventories
|
|
(6,582)
|
|
|
(4,858)
|
|
Other
assets
|
|
(1,459)
|
|
|
(660)
|
|
Accounts payable and
accrued liabilities
|
|
4,793
|
|
|
3,199
|
|
Accrued payroll and
related expenses
|
|
(11,727)
|
|
|
(3,948)
|
|
Income taxes
payable
|
|
2,302
|
|
|
3,346
|
|
Other long-term
liabilities
|
|
(36)
|
|
|
84
|
|
Net cash provided by
operating activities
|
|
13,747
|
|
|
10,281
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(12,896)
|
|
|
(2,155)
|
|
Proceeds from sales of
property and equipment
|
|
271
|
|
|
92
|
|
Purchases of
short-term investments
|
|
(17,212)
|
|
|
(11,829)
|
|
Maturities of
short-term investments
|
|
4,517
|
|
|
4,278
|
|
Net cash used in
investing activities
|
|
(25,320)
|
|
|
(9,614)
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Treasury stock
purchases
|
|
(18,718)
|
|
|
(15,122)
|
|
Dividends
paid
|
|
(12,963)
|
|
|
(11,591)
|
|
Proceeds from issuance
of common stock
|
|
359
|
|
|
708
|
|
Excess tax benefits
from settlements of stock-based equity awards
|
|
936
|
|
|
1,544
|
|
Net proceeds from
revolving credit facility
|
|
26,233
|
|
|
14,541
|
|
Net cash used
in financing activities
|
|
(4,153)
|
|
|
(9,920)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(1,593)
|
|
|
(2,333)
|
|
Net decrease in cash
and cash equivalents
|
|
(17,319)
|
|
|
(11,586)
|
|
Cash and cash
equivalents at beginning of period
|
|
50,891
|
|
|
53,896
|
|
Cash and cash
equivalents at end of period
|
$
|
33,572
|
|
$
|
42,310
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wd-40-company-reports-second-quarter-2017-financial-results-300436141.html
SOURCE WD-40 Company