SAN DIEGO, July 7, 2021 /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 third fiscal quarter ended May 31, 2021.

WD-40 Company (PRNewsFoto/WD-40 Company) (PRNewsfoto/WD-40 Company)

Third Fiscal Quarter Financial Highlights

  • Total net sales for the third quarter were $136.4 million, an increase of 39 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $372.9 million, an increase of 26 percent compared to the prior year fiscal period.
  • Translation of the Company's foreign subsidiary results to U.S. dollars had a favorable impact on sales for the current quarter and year-to-date. On a constant currency basis, total net sales would have been $128.7 million for the third quarter and $359.7 million year-to-date.
  • Net income for the third quarter was $21.0 million, an increase of 45 percent compared to the prior year fiscal quarter. Year-to-date net income was $61.8 million, an increase of 51 percent from the prior year fiscal period.
  • Diluted earnings per share were $1.52 in the third quarter, compared to $1.06 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $4.48 compared to $2.98 in the prior year fiscal period.
  • Gross margin was 53.1 percent in the third quarter compared to 54.0 percent in the prior year fiscal quarter. Year-to-date gross margin was 54.9 percent compared to 54.0 percent in the prior year fiscal period.
  • Selling, general and administrative expenses were up 37 percent in the third quarter to $38.1 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were up 21 percent to $109.6 million compared to the prior year fiscal period.
  • Advertising and sales promotion expenses were up 39 percent in the third quarter to $6.6 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were up 16 percent to $17.7 million compared to the prior year fiscal period.

"Our tribe continues to work together through the challenges and opportunities associated with the COVID-19 pandemic," said Garry Ridge, WD-40 Company's chairman and chief executive officer. In the third quarter we experienced unprecedented demand for our maintenance products and today we are reporting record net sales of $136.4 million, up 39 percent compared to the third quarter of last year." 

"The post-pandemic era is coming. We do not expect to see sales growth of this magnitude over the long-term, however, we believe that the new end users who have interacted with our products during the pandemic will become permanent users of our maintenance products."  

"To reflect the strong sales results we experienced in the third quarter, we've increased our revenue expectations and believe that net sales are likely to be in a range of between $475 million to $490 million for the full fiscal year which reflects year-over-year sales growth of between 16 and 20 percent.  As things get back to normal post the pandemic, consumer spending patterns will change again, and we expect consolidated net sales to grow in the mid to high single digits," Ridge concluded.

Net Sales by Segment (in thousands):




















Three Months Ended May 31,


Nine Months Ended May 31,


2021


2020


Change


2021


2020


Change

Americas

$

60,046


$

50,094



20%


$

160,390


$

143,672



12%

EMEA


58,587



32,521



80%



163,150



113,519



44%

Asia-Pacific


17,772



15,632



14%



49,329



39,661



24%

Total

$

136,405


$

98,247



39%


$

372,869


$

296,852



26%



















 

  • Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 44 percent; for EMEA, 43 percent; and for Asia-Pacific, 13 percent.
  • Net sales in the Americas increased 20 percent in the third quarter primarily due to higher sales of WD-40 Multi-Use Product in the United States, Latin America and Canada which increased 24 percent,138 percent and 74 percent, respectively. The increase in sales in the United States and Canada was driven by increased demand linked to renovation trends associated with the pandemic. In addition, sales in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic. The increase in sales in Latin America was primarily due to higher maintenance product sales in Mexico driven by a successful shift to a direct distribution model that the company began late in the third quarter of the prior fiscal year. In addition, sales in Latin America in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic.
  • Net sales in EMEA increased 80 percent in the third quarter primarily due to higher sales of maintenance products in both the EMEA direct and distributor markets, which increased 85 percent and 70 percent, respectively. Higher sales of maintenance products in the EMEA direct markets were primarily due to increased sales of WD-40 Multi-Use Product driven by increased demand linked to renovation trends associated with the pandemic, increased sales through the ecommerce channel and increased promotional activities. In addition, sales in the corresponding period of the prior fiscal year were negatively impacted by disruptions and lockdowns related to the early stages of the COVID-19 pandemic. Higher sales of maintenance products in the EMEA distributor markets were primarily attributable to improved economic conditions as a result of reductions in COVID-19 related movement restrictions. 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 third quarter would have increased by 63 percent compared to the prior fiscal year quarter.
  • Net sales in Asia-Pacific increased 14 percent in the third quarter. Changes in foreign currency exchange rates had a favorable impact on sales for the Asia-Pacific segment. On a constant currency basis, Asia-Pacific would have increased by 5 percent compared to the prior year fiscal quarter primarily due to higher sales of maintenance products in the Asia-Pacific distributor markets and Australia which increased 26 percent and 14 percent, respectively. Higher sales of maintenance products in the Asia-Pacific distributor markets were primarily attributable to improved economic conditions as a result of reductions in COVID-19 related movement restrictions. Higher sales of maintenance products in the Australia were primarily attributable to increased sales of 3-IN-ONE and WD-40 Specialist driven by increased demand linked to renovation trends associated with the pandemic. Partially offsetting these sales increases were lower sales of WD-40 Multi-Use Product in China which decreased 12 percent compared to the prior year fiscal quarter primarily due to a higher level of sales in the third quarter of fiscal year 2020 associated with the timing of COVID-19 restrictions and shipping activities during that period.

 

Net Sales by Product Group (in thousands):




















Three Months Ended May 31,


Nine Months Ended May 31,


2021


2020


Change


2021


2020


Change

Maintenance products

$

127,374


$

87,859



45%


$

344,446


$

268,676



28%

Homecare and cleaning products


9,031



10,388



(13)%



28,423



28,176



1%

Total

$

136,405


$

98,247



39%


$

372,869


$

296,852



26%



















 

  • Net sales of maintenance products, which are considered the primary growth focus for the Company, increased 45 percent in the third quarter when compared to the prior year fiscal quarter. This sales increase was primarily attributable to increased sales of WD-40 Multi-Use Product in all three segments driven by increased demand linked to renovation trends associated with the pandemic, improved market conditions due to a reduction of COVID-19 lockdown measures, and increased sales through the ecommerce channel.
  • Net sales of homecare and cleaning products decreased 13 percent in the third quarter when compared to the prior year fiscal quarter. The Company started to experience an increase in sales of its homecare and cleaning products beginning in the third quarter of fiscal year 2020 due to increased demand for such products as a result of the COVID-19 pandemic. However, sales of homecare and cleaning products have returned to more normal levels due to improvements in public health and safety restrictions related to the pandemic in many regions. 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 Information
As previously announced, WD-40 Company's board of directors declared on Tuesday, June 15, 2021 a regular quarterly dividend of $0.72 per share payable on July 30, 2021 to stockholders of record at the close of business on July 16, 2021.

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 including management's current view of the business in light of the COVID-19 pandemic.  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 a wide range of 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 2020 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; anticipated input costs for manufacturing and the costs associated with distribution of our products; 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; expected tax rates and the impact of tax legislation and regulatory action; the length and severity of the current COVID-19 pandemic and its impact on the global economy and the Company's financial results; 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, 2020, and in the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2021 which the Company expects to file with the SEC on July 7, 2021.

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 July 7, 2021, 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® 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, Mexico 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)








May 31,


August 31,


2021


2020

Assets






Current assets:






Cash and cash equivalents

$

80,362


$

56,462

Trade and other accounts receivable, less allowance for doubtful






accounts of $620 and $362 at May 31, 2021






and August 31, 2020, respectively


104,911



80,672

Inventories


47,768



41,264

Other current assets


7,902



6,756

Total current assets


240,943



185,154

Property and equipment, net


68,968



60,759

Goodwill


96,017



95,731

Other intangible assets, net


7,665



8,633

Operating lease right-of-use assets


9,158



8,168

Deferred tax assets, net


484



464

Other assets


4,652



3,728

Total assets

$

427,887


$

362,637







Liabilities and Shareholders' Equity






Current liabilities:






Accounts payable

$

31,307


$

21,676

Accrued liabilities


24,728



21,660

Accrued payroll and related expenses


21,485



14,767

Short-term borrowings


800



800

Income taxes payable


798



1,213

Total current liabilities


79,118



60,116

Long-term borrowings


116,498



113,098

Deferred tax liabilities, net


10,878



11,291

Long-term operating lease liabilities


7,344



6,520

Other long-term liabilities


11,417



11,299

Total liabilities


225,255



202,324







Commitments and Contingencies












Shareholders' equity:






Common stock ― authorized 36,000,000 shares, $0.001 par value;






19,855,666 and 19,812,685 shares issued at May 31, 2021 and






August 31, 2020, respectively; and 13,707,767 and 13,664,786 shares






outstanding at May 31, 2021 and August 31, 2020, respectively


20



20

Additional paid-in capital


162,240



157,850

Retained earnings


432,230



398,731

Accumulated other comprehensive loss


(23,778)



(28,208)

Common stock held in treasury, at cost ―  6,147,899 shares






at both May 31, 2021 and August 31, 2020


(368,080)



(368,080)

Total shareholders' equity


202,632



160,313

Total liabilities and shareholders' equity

$

427,887


$

362,637

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)














Three Months Ended May 31,


Nine Months Ended May 31,



2021



2020



2021



2020













Net sales

$

136,405


$

98,247


$

372,869


$

296,852

Cost of products sold


63,947



45,197



168,158



136,657

Gross profit


72,458



53,050



204,711



160,195













Operating expenses:












Selling, general and administrative


38,131



27,922



109,586



90,427

Advertising and sales promotion


6,642



4,764



17,673



15,211

Amortization of definite-lived intangible assets


364



552



1,084



1,856

Total operating expenses


45,137



33,238



128,343



107,494













Income from operations


27,321



19,812



76,368



52,701













Other income (expense):












Interest income


21



20



59



73

Interest expense


(615)



(778)



(1,795)



(1,813)

Other income (expense), net


183



27



513



(197)

Income before income taxes


26,910



19,081



75,145



50,764

Provision for income taxes


5,904



4,557



13,325



9,719

Net income

$

21,006


$

14,524


$

61,820


$

41,045













Earnings per common share:












Basic

$

1.53


$

1.06


$

4.50


$

2.98

Diluted

$

1.52


$

1.06


$

4.48


$

2.98













Shares used in per share calculations:












Basic


13,708



13,674



13,694



13,700

Diluted


13,746



13,700



13,727



13,727

 

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)








Nine Months Ended May 31,


2021


2020

Operating activities:






Net income

$

61,820


$

41,045

Adjustments to reconcile net income to net cash provided by






operating activities:






Depreciation and amortization


5,266



5,980

Net gains on sales and disposals of property and equipment


(185)



(115)

Deferred income taxes


(512)



(221)

Stock-based compensation


7,885



4,609

Unrealized foreign currency exchange (gains) losses


(529)



30

Provision for bad debts


253



98

Changes in assets and liabilities:






Trade and other accounts receivable


(20,053)



(3,006)

Inventories


(5,101)



(2,433)

Other assets


(1,777)



1,443

Operating lease assets and liabilities, net


11



224

Accounts payable and accrued liabilities


11,000



(2,367)

Accrued payroll and related expenses


6,202



(5,758)

Other long-term liabilities and income taxes payable


(305)



1,227

Net cash provided by operating activities


63,975



40,756







Investing activities:






Purchases of property and equipment


(10,789)



(17,411)

Proceeds from sales of property and equipment


418



321

Net cash used in investing activities


(10,371)



(17,090)







Financing activities:






Treasury stock purchases


-



(16,825)

Dividends paid


(28,321)



(26,840)

Repayments of long-term senior notes


(800)



(800)

Net (repayments) proceeds of revolving credit facility


(50,000)



84,595

Shares withheld to cover taxes upon conversions of equity awards


(3,494)



(2,640)

  Net cash used in financing activities


(30,615)



37,490

Effect of exchange rate changes on cash and cash equivalents


911



166

Net increase in cash and cash equivalents


23,900



61,322

Cash and cash equivalents at beginning of period


56,462



27,233

Cash and cash equivalents at end of period

$

80,362


$

88,555







Supplemental disclosure of noncash investing activities:






Accrued capital expenditures

$

1,700


$

454

 

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SOURCE WD-40 Company

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