SAN DIEGO, Jan. 9, 2018 /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,
2017.
Financial Highlights and Summary
- Total net sales for the first quarter were $97.6 million, an increase of 9 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 a favorable impact
on sales for the current quarter. On a constant currency basis
total net sales for the first quarter would have been $96.2 million, an increase of 8 percent compared
to the prior year fiscal quarter.
- Net income for the first quarter was $12.6 million, an increase of 7 percent from the
prior year fiscal quarter.
- Diluted earnings per share were $0.90 compared to $0.82 in the prior year fiscal quarter.
- Gross margin percentage was 55.5 percent compared to 57.2
percent in the prior year fiscal quarter.
- Selling, general and administrative expenses were up 8 percent
in the first quarter to $31.2 million
when compared to the prior year fiscal quarter.
- Advertising and sales promotion expenses were up 6 percent to
$5.1 million compared to the prior
year fiscal quarter.
"The tribe has delivered solid first quarter results, reflecting
excellent execution of our first and second strategic initiatives
and the fact that for the first time in a long-time, foreign
currency exchange rates are not diluting our reported net sales
results," said Garry Ridge, WD-40
Company's president and chief executive officer.
"Our flagship product, WD-40 Multi-Use Product grew 10 percent
in the first quarter, and our WD-40 Specialist product line grew 29
percent compared to the prior year quarter.
"Overall we are off to a good start in 2018 and we believe our
focus on executing against our strategic initiatives will continue
to drive revenue growth, further strengthen our financial
foundation, and enhance shareholder value," Ridge
concluded.
Net Sales by Segment (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2017
|
|
2016
|
|
Change
|
Americas
|
$
|
46,163
|
|
$
|
42,840
|
|
|
8%
|
EMEA
|
|
35,028
|
|
|
30,257
|
|
|
16%
|
Asia-Pacific
|
|
16,406
|
|
|
16,151
|
|
|
2%
|
Total
|
$
|
97,597
|
|
$
|
89,248
|
|
|
9%
|
- Net sales by segment as a percent of total net sales for the
first quarter were as follows: for the Americas, 47 percent; for
EMEA, 36 percent; and for Asia-Pacific, 17 percent.
- Net sales in the Americans were up 8 percent in the first
quarter primarily due to strong maintenance product sales in
the United States, Latin America and Canada which increased overall by 11 percent
from period to period. This higher level of sales was primarily
attributable to an 11 percent increase of WD-40 Multi-Use Product
sales as well as a 16 percent increase of WD-40 Specialist sales
throughout the Americas segment compared to the prior year fiscal
quarter.
- Net sales in EMEA increased 16 percent in the first quarter
primarily due to strong maintenance product sales in both the
European direct and distributor markets which increased in total by
17 percent. This higher level of sales was primarily attributable
to a 14 percent increase of WD-40 Multi-Use Product sales as well
as a 77 percent increase of WD-40 Specialist sales throughout the
EMEA segment compared to the prior year fiscal quarter. Changes in
foreign currency exchange rates had a favorable impact on sales for
the EMEA segment from period to period. On a constant currency
basis EMEA sales for the first quarter would have increased by
$3.7 million or 12 percent compared
to the prior year fiscal quarter.
- Net sales in Asia-Pacific
increased 2 percent in the first quarter due to a 6 percent
increase in sales in the Asia-Pacific distributor markets which were
primarily attributable to a higher level of promotional activities.
The sales growth in the Asia
distributor markets was partially offset by a 9 percent sales
decline in China due to the timing
of customer orders in the region. Changes in foreign currency
exchange rates had a favorable impact on sales for the Asia-Pacific segment from period to period. On
a constant currency basis Asia-Pacific sales for the first quarter would
have been constant compared to the prior year fiscal quarter.
Net Sales by Product Group (in thousands):
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2017
|
|
2016
|
|
Change
|
Maintenance
products
|
$
|
88,030
|
|
$
|
79,159
|
|
|
11%
|
Homecare and cleaning
products
|
|
9,567
|
|
|
10,089
|
|
|
(5)%
|
Total
|
$
|
97,597
|
|
$
|
89,248
|
|
|
9%
|
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, increased 11 percent in the
first quarter when compared to the prior year fiscal quarter. This
increase was driven primarily by strong sales of both WD-40
Multi-Use Product and WD-40 Specialist.
- Net sales of homecare and cleaning products decreased 5 percent
in the first quarter compared to the prior year fiscal quarter. 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 12, 2017 a quarterly dividend
of $0.54 per share reflecting an
increase of 10 percent over the previous quarter's dividend. The
quarterly dividend is payable on January 31,
2018 to stockholders of record at the close of business on
January 19, 2018.
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, 2017, the Company
repurchased 328,823 shares at a total cost
of $35.0 million under this $75.0
million plan.
Fiscal Year 2018 Updated Guidance
The Company has
updated its net income and diluted earnings per share guidance to
reflect its recent adoption of the new accounting standard for
stock-based compensation:
- Net sales growth is projected to be between 4 and 6 percent
with net sales expected to be between $396 million and
$403 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 $54.4 million and $55.3 million.
- Diluted earnings per share is expected to be between
$3.91 and $3.98 based on an estimated 13.9
million weighted average shares outstanding.
This guidance does not include the impacts of the Tax Cuts and
Jobs Act. The Company has not yet performed a comprehensive
analysis of the Act and cannot determine the full extent of its
impact on the Company's fiscal year 2018 guidance. The Company
expects that the Act will have some favorable impact on its annual
effective income tax rate in fiscal year 2018. In addition, 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 2018.
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 2017 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, 2017, and in the Company's Quarterly Report on Form 10-Q
for the period ended November 30, 2017 which the Company
expects to file with the SEC on January 9, 2018.
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, 2018,
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,
|
|
|
2017
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
46,932
|
|
$
|
37,082
|
|
Short-term
investments
|
|
82,586
|
|
|
80,166
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $217 and $240 at November 30, 2017
and August 31, 2017,
respectively
|
|
64,054
|
|
|
64,259
|
|
Inventories
|
|
37,045
|
|
|
35,340
|
|
Other current
assets
|
|
4,849
|
|
|
8,007
|
|
Total current
assets
|
|
235,466
|
|
|
224,854
|
|
Property and equipment,
net
|
|
29,359
|
|
|
29,439
|
|
Goodwill
|
|
95,721
|
|
|
95,597
|
|
Other intangible
assets, net
|
|
15,790
|
|
|
16,244
|
|
Deferred tax assets,
net
|
|
482
|
|
|
495
|
|
Other assets
|
|
3,076
|
|
|
3,088
|
|
Total
assets
|
$
|
379,894
|
|
$
|
369,717
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
17,983
|
|
$
|
20,898
|
|
Accrued
liabilities
|
|
17,820
|
|
|
18,997
|
|
Accrued payroll and
related expenses
|
|
12,828
|
|
|
14,222
|
|
Short-term
borrowings
|
|
10,800
|
|
|
20,000
|
|
Income taxes
payable
|
|
881
|
|
|
1,306
|
|
Total current
liabilities
|
|
60,312
|
|
|
75,423
|
|
Long-term
borrowings
|
|
153,200
|
|
|
134,000
|
|
Deferred tax
liabilities, net
|
|
19,155
|
|
|
18,949
|
|
Other long-term
liabilities
|
|
1,874
|
|
|
1,958
|
|
Total
liabilities
|
|
234,541
|
|
|
230,330
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock ―
authorized 36,000,000 shares, $0.001 par value; 19,720,517 and 19,688,238 shares issued at November
30, 2017 and August 31, 2017,
respectively; and 13,981,212 and 13,984,183 shares
outstanding at November 30, 2017 and
August 31, 2017, respectively
|
|
20
|
|
|
20
|
|
Additional paid-in
capital
|
|
151,110
|
|
|
150,692
|
|
Retained
earnings
|
|
321,378
|
|
|
315,764
|
|
Accumulated other
comprehensive income (loss)
|
|
(24,248)
|
|
|
(28,075)
|
|
Common stock held in
treasury, at cost ― 5,739,305 and 5,704,055 shares at November 30, 2017 and August 31, 2017,
respectively
|
|
(302,907)
|
|
|
(299,014)
|
|
Total shareholders'
equity
|
|
145,353
|
|
|
139,387
|
|
Total liabilities and
shareholders' equity
|
$
|
379,894
|
|
$
|
369,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WD-40
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited and in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Net sales
|
$
|
97,597
|
|
$
|
89,248
|
Cost of products
sold
|
|
43,400
|
|
|
38,208
|
Gross
profit
|
|
54,197
|
|
|
51,040
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
|
31,217
|
|
|
28,991
|
Advertising and sales
promotion
|
|
5,115
|
|
|
4,812
|
Amortization of
definite-lived intangible assets
|
|
729
|
|
|
721
|
Total operating
expenses
|
|
37,061
|
|
|
34,524
|
|
|
|
|
|
|
Income from
operations
|
|
17,136
|
|
|
16,516
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
income
|
|
133
|
|
|
147
|
Interest
expense
|
|
(841)
|
|
|
(531)
|
Other income
|
|
128
|
|
|
264
|
Income before income
taxes
|
|
16,556
|
|
|
16,396
|
Provision for income
taxes
|
|
3,926
|
|
|
4,638
|
Net income
|
$
|
12,630
|
|
$
|
11,758
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.90
|
|
$
|
0.82
|
Diluted
|
$
|
0.90
|
|
$
|
0.82
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
|
13,976
|
|
|
14,180
|
Diluted
|
|
14,011
|
|
|
14,221
|
Dividends declared
per common share
|
$
|
0.49
|
|
$
|
0.42
|
WD-40
COMPANY
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited and in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
|
2017
|
|
2016
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
12,630
|
|
$
|
11,758
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
1,917
|
|
|
1,620
|
|
Net gains on sales and
disposals of property and equipment
|
|
(45)
|
|
|
(54)
|
|
Deferred income
taxes
|
|
261
|
|
|
(405)
|
|
Stock-based
compensation
|
|
1,777
|
|
|
1,622
|
|
Unrealized foreign
currency exchange losses
|
|
150
|
|
|
1,075
|
|
Provision for bad
debts
|
|
(21)
|
|
|
(120)
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade accounts
receivable
|
|
217
|
|
|
6,357
|
|
Inventories
|
|
(1,459)
|
|
|
(2,876)
|
|
Other
assets
|
|
3,219
|
|
|
1,070
|
|
Accounts payable and
accrued liabilities
|
|
(3,994)
|
|
|
203
|
|
Accrued payroll and
related expenses
|
|
(1,500)
|
|
|
(7,194)
|
|
Income taxes
payable
|
|
(492)
|
|
|
2,619
|
|
Other long-term
liabilities
|
|
(81)
|
|
|
(45)
|
|
Net cash provided by
operating activities
|
|
12,579
|
|
|
15,630
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(1,009)
|
|
|
(11,603)
|
|
Proceeds from sales of
property and equipment
|
|
116
|
|
|
162
|
|
Purchase of intangible
assets
|
|
(175)
|
|
|
-
|
|
Purchases of
short-term investments
|
|
(103)
|
|
|
(16,997)
|
|
Maturities of
short-term investments
|
|
-
|
|
|
4,548
|
|
Net cash used in
investing activities
|
|
(1,171)
|
|
|
(23,890)
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Treasury stock
purchases
|
|
(3,893)
|
|
|
(12,156)
|
|
Dividends
paid
|
|
(6,888)
|
|
|
(5,998)
|
|
Proceeds from issuance
of common stock
|
|
215
|
|
|
197
|
|
Proceeds from issuance
of long-term senior notes
|
|
20,000
|
|
|
-
|
|
Net (repayments)
proceeds from revolving credit facility
|
|
(10,000)
|
|
|
12,354
|
|
Shares withheld to
cover taxes upon conversions of equity awards
|
|
(1,763)
|
|
|
(1,692)
|
|
Net cash used
in financing activities
|
|
(2,329)
|
|
|
(7,295)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
771
|
|
|
(1,854)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
9,850
|
|
|
(17,409)
|
|
Cash and cash
equivalents at beginning of period
|
|
37,082
|
|
|
50,891
|
|
Cash and cash
equivalents at end of period
|
$
|
46,932
|
|
$
|
33,482
|
|
SOURCE WD-40 Company