WD-40 COMPANY 
By SAN DIEGO, Jan. 11 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported sales for the first quarter ended November 30, 2009, of $77.7 million, a decrease of 7.0% from the first quarter last year. Net income for the first quarter was $9.4 million, up 22.5% over the prior year first quarter.
Gross margin was 51.4% in the first quarter compared to 46.3% in the same quarter last year.
"Our continued focus has helped us weather these turbulent times and produce positive overall results," said Garry O. Ridge, WD-40 Company president and chief executive officer. "Staying focused has helped us get our gross margin back where we like it through a combination of product development initiatives such as the Smart Straw conversion, supply chain enhancements, including new manufacturing partners, and the benefits of the price increases we implemented last year to compensate for our increased cost of goods."
During the quarter foreign currency exchange rates negatively affected net sales by $1.8 million and net income by $0.3 million.
The Company's constant currency disclosures represent the translation of the Company's current fiscal year revenues and expenses from the functional currencies of WD-40 Company subsidiaries to U.S. dollars utilizing the exchange rates in effect for the corresponding period of the prior fiscal year.
Summary
-- First quarter multi-purpose maintenance products sales, which include
the WD-40(R) and 3-IN-ONE(R) brands, were $60.7 million, down 7.9% from
the same quarter last year. Homecare and cleaning products sales, which
include all other brands, were $17.0 million in the first quarter, down
3.8%.
-- Americas first quarter sales were $43.7 million, down 4.0% compared to
the first quarter last year. Europe sales in the first quarter were
$27.2 million, down 9.6%. Asia-Pacific quarter sales were $6.8 million,
down 14.4%.
-- Diluted earnings per share for the first quarter were $0.56 versus $0.46
in the prior period.
Total sales by segment for the quarter were 56% from the Americas, 35% from Europe and 9% from Asia/Pacific.
Advertising and sales promotion expenses were down 4.0% for the first quarter compared to the same period last year.
"While our overall advertising and sales promotion expenses were down in the quarter, they slightly increased as a percentage of net sales," Ridge said. "We saw some great success from the focused efforts we did during the quarter, including the Spot Shot promotion we did with the hit movie 'Cloudy With A Chance of Meatballs,' which generated positive sales lifts for this brand."
Selling, general and administrative expenses were down 6.2% in the first quarter to $19.8 million.
Fiscal Year 2010 Guidance
WD-40 Company expects fiscal year 2010 net sales to grow 2%-9% to $298-$318 million. The Company expects diluted earnings per share of $1.80 to $1.95 for fiscal year 2010 based on an estimated 16.8 million shares outstanding.
Dividend
As previously announced, the board of directors declared on Tuesday, December 8, 2009 the regular quarterly dividend of $.25 per share, payable January 29, 2010 to stockholders of record on January 8, 2010.
WD-40 Company also announced that at its regularly scheduled meeting on December 8, 2009, the board of directors authorized an open-ended buy back of Company shares up to $15 million over the next 12 months.
"We are also pleased to report that we began shipping our new BLUE WORKS(TM) line as we expected in early December and will start to see modest results in the second quarter as we begin to build distribution," said Ridge. "BLUE WORKS is aimed at the repair maintenance and overhaul segment of the market, so you will not find this new line at your local hardware store. We are encouraged by the feedback and the early acceptance we have received from this line that was developed specifically for our industrial customers."
More detailed information will be available on WD-40 Company's 10-Q that will be filed on January 11, 2010.
"We remain focused on committing our time, talent and treasure to our core strategic initiatives," Ridge added. "We will do this by continuing our efforts to expand around the world by helping end users in countries like Russia, China and others to solve their rust, squeak and other maintenance issues. We will continue focusing our R&D resources on our multi-purpose maintenance products and adjacent categories as we did with the new BLUE WORKS line. We will also continue developing our business through acquisitions and strategic partnerships and leveraging the trust the WD-40 brand has established with its broad user base."
WD-40 Company, with headquarters in San Diego, is a global consumer product company dedicated to delivering unique, high-value and easy-to-use solutions for a wide variety of maintenance needs of "doer" and "on-the-job" users by leveraging and building the brand fortress of the Company. The Company markets three multi-purpose maintenance product brands. WD-40(R), 3-IN-ONE(R) and BLUE WORKS(TM) - and eight homecare and cleaning product brands: X-14(R) hard surface cleaners and automatic toilet bowl cleaners, 2000 Flushes(R) automatic toilet bowl cleaners, Carpet Fresh(R) and No Vac(R) rug and room deodorizers, Spot Shot(R) aerosol and liquid carpet stain removers, 1001(R) carpet and household cleaners, and rug and room deodorizers, and Lava(R) and Solvol(R) heavy-duty hand cleaners.
WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $292 million in fiscal year 2009.
Except for the historical information contained herein, this news release contains forward-looking statements concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results. These statements are based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40 Company. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements, including the impact of changes in foreign currency exchange rates, the impact of new product introductions and fluctuating market conditions, both in the United States and internationally. The Company's expectations, beliefs and projections 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 projections will be achieved or accomplished.
The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents.
http://www.wd40company.com
WD-40 Company
Condensed Consolidated Statements of Operations
-----------------------------------------------
(Unaudited and in thousands, except share and per
share amounts)
-------------------------------------------------
Three Months Ended November 30,
-------------------------------
2009 2008
---- ----
Net sales $77,721 $83,597
Cost of products sold(1) 37,808 44,860
------ ------
Gross profit 39,913 38,737
------ ------
Operating expenses:
Selling, general and administrative 19,801 21,117
Advertising and sales promotion 5,198 5,413
Amortization of definite-lived
intangible assets 185 129
--- ---
Total operating expenses 25,184 26,659
------ ------
Income from operations 14,729 12,078
Other (expense) income:
Interest expense, net (489) (440)
Other income, net 114 221
--- ---
Income before income taxes 14,354 11,859
Provision for income taxes 4,941 4,174
----- -----
Net income $9,413 $7,685
====== ======
Earnings per common share:
Basic $0.57 $0.47
===== =====
Diluted $0.56 $0.46
===== =====
Shares used in per share calculations:
Basic 16,556,206 16,495,678
========== ==========
Diluted 16,651,944 16,673,569
========== ==========
Dividends declared per common share $0.25 $0.25
===== =====
(1) Includes cost of products acquired from related party of $4,260 for
the three months ended November 30, 2008
WD-40 Company
Condensed Consolidated Balance Sheets
---------------------------------------
(Unaudited and in thousands, except share and per share amounts)
November 30, August 31,
2009 2009
----- ----
Assets
Current assets:
Cash and cash equivalents $48,876 $45,956
Trade accounts receivable, less allowance for
doubtful accounts of $682 and $694 at
November 30, 2009 and August 31, 2009,
respectively 45,059 48,061
Product held at contract packagers 1,398 1,797
Inventories 17,573 15,858
Current deferred tax assets, net 4,380 4,369
Other current assets 4,438 4,736
----- -----
Total current assets 121,724 120,777
Property, plant and equipment, net 10,503 10,930
Goodwill 95,484 95,424
Other intangible assets, net 32,081 32,205
Other assets 3,000 3,281
----- -----
Total assets $262,792 $262,617
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $15,277 $12,529
Accrued liabilities 15,334 15,233
Current portion of long-term debt 10,714 10,714
Accrued payroll and related expenses 5,306 7,168
Income taxes payable 4,133 2,570
----- -----
Total current liabilities 50,764 48,214
Long-term debt 10,714 21,429
Long-term deferred tax liabilities, net 17,658 16,868
Deferred employee benefits and other long-term
liabilities 3,150 3,159
----- -----
Total liabilities 82,286 89,670
------ ------
Shareholders' equity:
Common stock -- authorized 36,000,000 shares,
$0.001 par value; 18,147,003 and 18,093,879
shares issued at November 30, 2009 and August
31, 2009, respectively; and 16,583,505 and
16,530,381 shares outstanding at November 30,
2009 and August 31, 2009, respectively 18 18
Additional paid-in capital 88,047 86,729
Retained earnings 143,631 138,367
Accumulated other comprehensive loss (1,124) (2,101)
Common stock held in treasury, at cost --
1,563,498 shares at November 30, 2009 and
August 31, 2009 (50,066) (50,066)
------- -------
Total shareholders' equity 180,506 172,947
------- -------
Total liabilities and shareholders' equity $262,792 $262,617
======== ========
WD-40 Company
Condensed Consolidated Statements of Cash Flows
-------------------------------------------------
(Unaudited and in thousands)
Three Months Ended
November 30,
------------
2009 2008
---- ----
Operating activities:
Net income $9,413 $7,685
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,082 909
Net gains on sales and disposals of property and
equipment (2) (3)
Deferred income tax expense 501 519
Excess tax benefits from exercises of stock options
and conversions of restricted stock units to
common shares (108) (14)
Stock-based compensation 665 625
Unrealized foreign currency exchange gains, net (469) (295)
Provision for bad debts - 135
Equity losses from related party - 243
Changes in assets and liabilities:
Trade accounts receivable 3,798 (864)
Product held at contract packagers 405 (1,263)
Inventories (1,629) (2,903)
Other assets 534 (950)
Accounts payable and accrued expenses and
liabilities (1,133) (2,873)
Accounts payable to related party - (380)
Income taxes payable 3,272 2,872
Deferred employee benefits and other long-
term liabilities (12) (33)
--- ---
Net cash provided by operating activities 16,317 3,410
------ -----
Investing activities:
Capital expenditures (314) (1,172)
Proceeds from sales of property and equipment 17 60
-- --
Net cash used in investing activities (297) (1,112)
---- ------
Financing activities:
Repayments of long-term debt (10,714) (10,714)
Dividends paid (4,149) (4,134)
Proceeds from issuance of common stock 859 640
Excess tax benefits from exercises of stock options and
conversions of restricted stock units to common
shares 108 14
--- --
Net cash used in financing activities (13,896) (14,194)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 796 (3,747)
--- ------
Net increase (decrease) in cash and cash equivalents 2,920 (15,643)
Cash and cash equivalents at beginning of period 45,956 41,983
------ ------
Cash and cash equivalents at end of period $48,876 $26,340
======= =======
WD-40 Company
Condensed Consolidated Statements
of Comprehensive Income
---------------------------------
(Unaudited and in thousands)
Three Months Ended November 30,
-------------------------------
2009 2008
---- ----
Net income $9,413 $7,685
Other comprehensive income (loss):
Equity adjustment from foreign currency
translation, net of tax 977 (8,250)
--- ------
Total comprehensive income (loss) $10,390 $(565)
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SOURCE WD-40 Company
