SAN DIEGO, Jan. 9, 2019 /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,
2018.
Financial Highlights and Summary
- Total net sales for the first quarter were $101.3 million, an increase 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 first quarter. On a constant currency
basis, total net sales for the first quarter would have been
$102.4 million, an increase of 5
percent compared to the prior year fiscal quarter.
- Net income for the first quarter was $13.3 million, an increase of 5 percent from the
prior year fiscal quarter.
- Diluted earnings per share were $0.95 compared to $0.90 in the prior year fiscal quarter.
- Gross margin percentage was 55.1 percent compared to 55.5
percent in the prior year fiscal quarter.
- Selling, general and administrative expenses were up 5 percent
in the first quarter to $32.7 million
when compared to the prior year fiscal quarter.
- Advertising and sales promotion expenses were up 17 percent to
$6.0 million compared to the prior
year fiscal quarter.
"We are happy that fiscal year 2019 is off to a solid start,"
said Garry Ridge, WD-40 Company's
president and chief executive officer. "Sales of our 2025
brands – the brands we see taking us to our long-term revenue
objective of $700 million by the end
of fiscal year 2025 – are up 5 percent globally compared to the
first quarter of last year. Globally, our flagship product, WD-40
Multi-Use Product grew 5 percent in the first quarter, and our
WD-40 Specialist product line grew 13 percent compared to the prior
year.
"While we saw strength in our Americas and EMEA segments, our
Asia-Pacific segment reported
sales declines of 10 percent year over year. Due to the
geographically diverse nature of our business and depending on what
is going on in a region at any given time, some of our markets may
overperform while others may underperform. This is quite
normal for a business like ours that operates in 176 countries and
territories.
"Overall, we are off to a good start in 2019 and we believe the
tribe's hard work and dedication will continue to drive revenue
growth, strengthen our financial foundation, and enhance
shareholder value," Ridge concluded.
Net Sales by Segment (in thousands):
|
Three Months Ended
November 30,
|
|
2018
|
|
2017
|
|
Dollars
|
|
Change
|
Americas
|
$
|
47,791
|
|
$
|
46,163
|
|
$
|
1,628
|
|
4%
|
EMEA
|
|
38,745
|
|
|
35,028
|
|
|
3,717
|
|
11%
|
Asia-Pacific
|
|
14,746
|
|
|
16,406
|
|
|
(1,660)
|
|
(10)%
|
Total
|
$
|
101,282
|
|
$
|
97,597
|
|
$
|
3,685
|
|
4%
|
- 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, 38 percent; and for Asia-Pacific, 15 percent.
- Net sales in the Americas increased 4 percent in the first
quarter primarily due to higher sales of maintenance products in
the United States which increased
9 percent compared to the prior year fiscal period. This sales
increase was primarily due to higher sales of the WD-40 EZ-REACH™
Flexible Straw product, a 9 percent increase in sales of WD-40
Specialist, the timing of promotional programs, as well as expanded
distribution in the online, industrial and farm trade channels. The
increase in sales in the United
States was slightly offset by lower sales of maintenance
products in Canada and Latin
American primarily due to the timing of customer orders.
- Net sales in EMEA increased 11 percent in the first quarter
primarily due to strong sales of WD-40® Multi-Use Product in both
the European direct and distributor markets. The increase in sales
in the European direct markets was due to a higher level of
promotional activities, increased distribution and the timing of
customer orders. The increase in sales in the European distributor
markets was due to the timing of customer orders and improved
economic conditions in Eastern
Europe. Changes in foreign currency exchange rates had an
unfavorable 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 $4.3
million or 12 percent compared to the prior year fiscal
quarter.
- Net sales in Asia-Pacific
decreased 10 percent in the first quarter due to a 13 percent
decrease in sales in both the Asia-Pacific distributor markets and in
Australia primarily due to the
timing of customer orders. Changes in foreign currency exchange
rates had an unfavorable 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 decreased by $1.2 million or 7
percent compared to the prior year fiscal quarter.
Net Sales by Product Group (in thousands):
|
Three Months Ended
November 30,
|
|
2018
|
|
2017
|
|
Dollars
|
|
Change
|
Maintenance
products
|
$
|
92,468
|
|
$
|
88,030
|
|
$
|
4,438
|
|
|
5%
|
Homecare and cleaning
products
|
|
8,814
|
|
|
9,567
|
|
|
(753)
|
|
|
(8)%
|
Total
|
$
|
101,282
|
|
$
|
97,597
|
|
$
|
3,685
|
|
|
4%
|
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, increased 5 percent in the
first quarter when compared to the prior year fiscal quarter. This
increase was driven primarily by strong sales of WD-40 Multi-Use
Product in the EMEA segment and the
United States and strong sales of WD-40 Specialist in
the United States.
- Net sales of homecare and cleaning products decreased 8 percent
in the first quarter compared to the prior year fiscal quarter.
Many of the Company's 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 11,
2018 a quarterly dividend of $0.61 per share reflecting an increase of 13
percent over the previous quarter's dividend. The quarterly
dividend is payable on January 31,
2019 to stockholders of record at the close of business on
January 18, 2019.
On June 19, 2018, the Company's
Board of Directors approved a share buy-back plan. Under the plan,
which became effective on September 1,
2018, the Company is authorized to acquire up to
$75.0 million of its outstanding
shares through August 31, 2020. 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, 2018 through November 30, 2018, the Company
repurchased 41,184 shares at a total cost
of $6.9 million under this $75.0
million plan.
Fiscal Year 2019 Guidance
The Company reaffirmed its guidance for fiscal year 2019 as
follows:
- Net sales growth is projected to be between 4 and 7 percent
with net sales expected to be between $425 million and
$437 million.
- Gross margin percentage for the full year is expected to
be near 55 percent.
- Advertising and promotion investments are projected to be
between 5.5 and 6.0 percent of net sales.
- The provision for income tax is expected to be between 21 and
22 percent.
- Net income is projected to be between $62.2 million and $63.2 million.
- Diluted earnings per share is expected to be between
$4.51 and $4.58 based on an estimated 13.8
million weighted average shares outstanding.
This guidance does not include any future acquisitions or
divestitures.
"Our guidance reflects the Company's current view of the
business," said Jay Rembolt, WD-40
Company's vice president and chief financial officer.
"Although there are several global market dynamics going on outside
the Company's control that may impact specific elements of our
guidance, including the recent decline in the price of crude oil
and present trends in foreign currency exchange rates, we remain
comfortable with our current guidance range."
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 $408.5
million in fiscal year 2018 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; the impact of the "Tax Cuts and Jobs
Act"; 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,"
"target," "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, 2018, and in the Company's Quarterly Report on Form 10-Q
for the period ended November 30, 2018 which the Company
expects to file with the SEC on January 9, 2019.
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, 2019,
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,
|
|
2018
|
|
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
31,574
|
|
$
|
48,866
|
Short-term
investments
|
|
216
|
|
|
219
|
Trade accounts
receivable, less allowance for doubtful accounts of $282 and $340
at November 30, 2018 and August 31, 2018, respectively
|
|
69,850
|
|
|
69,025
|
Inventories
|
|
39,339
|
|
|
36,536
|
Other current
assets
|
|
5,253
|
|
|
13,337
|
Total current
assets
|
|
146,232
|
|
|
167,983
|
Property and equipment,
net
|
|
36,412
|
|
|
36,357
|
Goodwill
|
|
95,547
|
|
|
95,621
|
Other intangible
assets, net
|
|
12,735
|
|
|
13,513
|
Deferred tax assets,
net
|
|
508
|
|
|
511
|
Other assets
|
|
3,066
|
|
|
3,074
|
Total
assets
|
$
|
294,500
|
|
$
|
317,059
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
19,730
|
|
$
|
19,115
|
Accrued
liabilities
|
|
17,382
|
|
|
26,240
|
Accrued payroll and
related expenses
|
|
11,443
|
|
|
14,823
|
Short-term
borrowings
|
|
16,662
|
|
|
23,600
|
Income taxes
payable
|
|
1,670
|
|
|
2,125
|
Total current
liabilities
|
|
66,887
|
|
|
85,903
|
Long-term
borrowings
|
|
62,400
|
|
|
62,800
|
Deferred tax
liabilities, net
|
|
11,447
|
|
|
11,050
|
Other long-term
liabilities
|
|
1,798
|
|
|
1,817
|
Total
liabilities
|
|
142,532
|
|
|
161,570
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock ―
authorized 36,000,000 shares, $0.001 par value; 19,753,836 and
19,729,774 shares issued at November 30, 2018 and August 31, 2018,
respectively; and 13,833,291 and 13,850,413 shares outstanding at
November 30, 2018 and August 31, 2018, respectively
|
|
20
|
|
|
20
|
Additional paid-in
capital
|
|
153,009
|
|
|
153,469
|
Retained
earnings
|
|
356,699
|
|
|
351,266
|
Accumulated other
comprehensive loss
|
|
(29,267)
|
|
|
(27,636)
|
Common stock held in
treasury, at cost ― 5,920,545 and 5,879,361 shares at November 30,
2018 and August 31, 2018, respectively
|
|
(328,493)
|
|
|
(321,630)
|
Total shareholders'
equity
|
|
151,968
|
|
|
155,489
|
Total liabilities and
shareholders' equity
|
$
|
294,500
|
|
$
|
317,059
|
WD-40
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited and in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Net sales
|
$
|
101,282
|
|
$
|
97,597
|
Cost of products
sold
|
|
45,451
|
|
|
43,400
|
Gross
profit
|
|
55,831
|
|
|
54,197
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
|
32,731
|
|
|
31,217
|
Advertising and sales
promotion
|
|
5,966
|
|
|
5,115
|
Amortization of
definite-lived intangible assets
|
|
733
|
|
|
729
|
Total operating
expenses
|
|
39,430
|
|
|
37,061
|
|
|
|
|
|
|
Income from
operations
|
|
16,401
|
|
|
17,136
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
income
|
|
51
|
|
|
133
|
Interest
expense
|
|
(710)
|
|
|
(841)
|
Other income
|
|
376
|
|
|
128
|
Income before income
taxes
|
|
16,118
|
|
|
16,556
|
Provision for income
taxes
|
|
2,839
|
|
|
3,926
|
Net income
|
$
|
13,279
|
|
$
|
12,630
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.95
|
|
$
|
0.90
|
Diluted
|
$
|
0.95
|
|
$
|
0.90
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
Basic
|
|
13,846
|
|
|
13,976
|
Diluted
|
|
13,882
|
|
|
14,011
|
WD-40
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited and in
thousands)
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
2018
|
|
2017
|
Operating
activities:
|
|
|
|
|
|
Net income
|
$
|
13,279
|
|
$
|
12,630
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
1,925
|
|
|
1,917
|
Net gains on sales and
disposals of property and equipment
|
|
(3)
|
|
|
(45)
|
Deferred income
taxes
|
|
569
|
|
|
261
|
Stock-based
compensation
|
|
1,965
|
|
|
1,777
|
Unrealized foreign
currency exchange losses
|
|
210
|
|
|
150
|
Provision for bad
debts
|
|
10
|
|
|
(21)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
Trade accounts
receivable
|
|
(2,302)
|
|
|
217
|
Inventories
|
|
(2,851)
|
|
|
(1,459)
|
Other
assets
|
|
8,037
|
|
|
3,219
|
Accounts payable and
accrued liabilities
|
|
(8,089)
|
|
|
(3,994)
|
Accrued payroll and
related expenses
|
|
(3,310)
|
|
|
(1,500)
|
Other long-term
liabilities and income taxes payable
|
|
(431)
|
|
|
(573)
|
Net cash provided by
operating activities
|
|
9,009
|
|
|
12,579
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(1,292)
|
|
|
(1,009)
|
Proceeds from sales of
property and equipment
|
|
58
|
|
|
116
|
Purchase of intangible
assets
|
|
-
|
|
|
(175)
|
Purchases of
short-term investments
|
|
-
|
|
|
(103)
|
Net cash used in
investing activities
|
|
(1,234)
|
|
|
(1,171)
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
Treasury stock
purchases
|
|
(6,863)
|
|
|
(3,893)
|
Dividends
paid
|
|
(7,522)
|
|
|
(6,888)
|
Proceeds from issuance
of common stock
|
|
-
|
|
|
215
|
Proceeds from issuance
of long-term senior notes
|
|
-
|
|
|
20,000
|
Repayments of
long-term senior notes
|
|
(400)
|
|
|
-
|
Net repayments of
revolving credit facility
|
|
(6,938)
|
|
|
(10,000)
|
Shares withheld to
cover taxes upon conversions of equity awards
|
|
(2,425)
|
|
|
(1,763)
|
Net cash used
in financing activities
|
|
(24,148)
|
|
|
(2,329)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(919)
|
|
|
771
|
Net (decrease)
increase in cash and cash equivalents
|
|
(17,292)
|
|
|
9,850
|
Cash and cash
equivalents at beginning of period
|
|
48,866
|
|
|
37,082
|
Cash and cash
equivalents at end of period
|
$
|
31,574
|
|
$
|
46,932
|
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SOURCE WD-40 Company