EXHIBIT 99.1
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| | | | | CONTACT: GARRY O. RIDGE |
| | | | | PHONE: 619-275-9324 |
WD-40 COMPANY REPORTS FIRST QUARTER SALES UP 10.8%, NET INCOME UP 33.3%
SAN DIEGO, Jan. 9 /PRNewswire-FirstCall/ – WD-40 Company (Nasdaq: WDFC) today reported net sales for the first quarter ended November 30, 2005 of $67.2 million, an increase of 10.8% over the first quarter last fiscal year.
Net income for the quarter was $7.5 million, up 33.3% compared to the prior year’s quarter. Earnings per share were $0.45 in the first quarter, compared to $0.34 per share in the same quarter last year, an increase of 32.9%.
“We had sales growth in lubricants, household products, and hand cleaners during the quarter which contributed to a good start to the year,” said Garry O. Ridge, WD-40 Company president and chief executive officer. “We are continuing to make progress in our product innovation program and in growing our fortress of brands.”
Cost of goods during the first quarter was 51.9% of sales compared to 49.6% in the first quarter last year.
“We remain concerned about rising costs,” Ridge said, “while we look for ways to improve our gross margin.”
Fiscal Year Guidance
In fiscal year 2006, WD-40 Company expects net sales to grow 9%-14% to $288-$299 million. WD-40 Company expects net income to be between $24.7 million and $28.0 million, achieving earnings per share of $1.45 to $1.65 based on an estimated 17 million shares outstanding. Fiscal year 2006 results include the expensing of stock options.
As previously announced on December 13, 2005, the board of directors declared a regular quarterly dividend on December 13, 2005 of $0.22 per share, payable January 31, 2006 to stockholders of record on January 6, 2006.
Total sales for the quarter were 69% from the Americas, 25% from Europe and 6% from Asia/Pacific. In the Americas, sales for the first quarter were up 8.0% from a year ago.
“We had growth in all our brands in the Americas during the quarter and are starting to see positive results from our innovation strategies,” Ridge said.
In Europe, sales were up 15.4% for the first quarter.
“We had growing sales in Eastern Europe, the Middle East, Germany, Italy, and the UK during the quarter,” Ridge said. “Our European business continues to be a significant and growing area of emphasis.”
In the Asia/Pacific region, sales for the quarter were up 26.8% from last year.
“We have made a positive turn in Asia and this region continues to represent important long-term growth opportunities for us,” Ridge said.
Global sales of the lubricants WD-40(R) and 3-IN-ONE Oil(R) were up 14.4% for the quarter.
“During the quarter we had a positive impact from the new WD-40 delivery systems across the globe,” Ridge said. “We are on target with the roll out of these products.”
Sales of heavy-duty hand cleaners Lava(R) and Solvol(R) were up 1.1% for the quarter.
Sales of household products X-14(R), Carpet Fresh(R), 2000 Flushes(R), Spot Shot(R) and 1001 (R) were up 5.3% compared to the previous year’s quarter.
WD-40 Company’s 10-Q will be filed on January 9, 2006.
WD-40 Company, with headquarters in San Diego, is a global consumer products company dedicated to building brand equities that are first or second choice in their respective categories. The company will leverage and build the brand fortress of WD-40 Company by developing and acquiring brands that deliver a unique high value to end users and that can be distributed across multiple trade channels in one or more areas of the world. WD-40 Company produces multi-purpose lubricants, WD-40(R), and 3-IN-ONE(R), the Lava(R) and Solvol(R) brands of heavy- duty hand cleaners, and household products 2000 Flushes(R), X-14(R), Carpet Fresh(R), Spot Shot(R) and 1001(R). WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $263.2 million in fiscal 2005.
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 cause actual results to differ materially from the
forward-looking statements, including impact of cost of goods, the impact of new product introductions, the uncertainty of market conditions, both in the United States and internationally, the impact of foreign currency exchange rates and the timing of advertising and sales promotion activities. 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.
WD-40 Company
Consolidated Condensed Statements of Income
(unaudited)
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| | | Three Months Ended November 30,
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| | | 2005
| | | 2004
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Net sales | | $ | 67,215,000 | | | $ | 60,688,000 | |
Cost of products sold(1) | | | 34,901,000 | | | | 30,119,000 | |
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Gross profit | | | 32,314,000 | | | | 30,569,000 | |
Operating expenses: | | | | | | | | |
Selling, general and administrative | | | 16,357,000 | | | | 15,371,000 | |
Advertising and sales promotion | | | 3,345,000 | | | | 5,261,000 | |
Amortization of intangible assets | | | 132,000 | | | | 135,000 | |
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Income from operations | | | 12,480,000 | | | | 9,802,000 | |
Other income (expense): | | | | | | | | |
Interest expense, net | | | (1,005,000 | ) | | | (1,456,000 | ) |
Other income, net | | | 141,000 | | | | 324,000 | |
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Income before income taxes | | | 11,616,000 | | | | 8,670,000 | |
Provision for income taxes | | | 4,103,000 | | | | 3,035,000 | |
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Net income | | $ | 7,513,000 | | | $ | 5,635,000 | |
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Earnings per common share: | | | | | | | | |
Basic | | $ | 0.45 | | | $ | 0.34 | |
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Diluted | | $ | 0.45 | | | $ | 0.34 | |
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Weighted-average common shares outstanding, basic | | | 16,688,982 | | | | 16,571,691 | |
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Weighted-average common shares outstanding, diluted | | | 16,776,627 | | | | 16,725,632 | |
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Dividends declared per share | | $ | 0.22 | | | $ | 0.20 | |
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| (1) | Includes cost of products acquired from related party of $10,750,000 and $9,572,000 for the three months ended November 30, 2005 and 2004, respectively. |
WD-40 Company
Consolidated Condensed Balance Sheets
(unaudited)
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| | | November 30, 2005
| | | August 31, 2005
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| Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 34,264,000 | | | $ | 37,120,000 | |
Trade accounts receivable, less allowance for cash discounts, returns and doubtful accounts of $1,572,000 and $1,506,000 | | | 37,349,000 | | | | 44,487,000 | |
Product held at contract packagers | | | 1,642,000 | | | | 1,814,000 | |
Inventories | | | 10,211,000 | | | | 8,041,000 | |
Current deferred tax assets, net | | | 2,944,000 | | | | 2,946,000 | |
Other current assets | | | 6,071,000 | | | | 6,784,000 | |
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Total current assets | | | 92,481,000 | | | | 101,192,000 | |
Property, plant and equipment, net | | | 8,693,000 | | | | 8,355,000 | |
Goodwill | | | 95,684,000 | | | | 95,858,000 | |
Other intangibles, net | | | 42,480,000 | | | | 42,884,000 | |
Investment in related party | | | 1,093,000 | | | | 1,112,000 | |
Other assets | | | 4,668,000 | | | | 4,852,000 | |
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| | | $ | 245,099,000 | | | $ | 254,253,000 | |
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| Liabilities and Shareholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of long-term debt | | $ | 10,714,000 | | | $ | 10,714,000 | |
Accounts payable | | | 11,548,000 | | | | 13,671,000 | |
Accounts payable to related party | | | 2,501,000 | | | | 1,945,000 | |
Accrued liabilities | | | 13,363,000 | | | | 14,058,000 | |
Accrued payroll and related expenses | | | 4,002,000 | | | | 3,828,000 | |
Income taxes payable | | | 2,345,000 | | | | 2,484,000 | |
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Total current liabilities | | | 44,473,000 | | | | 46,700,000 | |
Long-term debt | | | 53,571,000 | | | | 64,286,000 | |
Deferred employee benefits and other long-term liabilities | | | 1,862,000 | | | | 1,838,000 | |
Long-term deferred tax liabilities, net | | | 11,643,000 | | | | 11,363,000 | |
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Total liabilities | | | 111,549,000 | | | | 124,187,000 | |
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Shareholders’ equity: | | | | | | | | |
Common stock, $.001 par value, 36,000,000 shares authorized — 17,226,410 and 17,222,410 shares issued | | | 17,000 | | | | 17,000 | |
Paid-in capital | | | 53,373,000 | | | | 52,990,000 | |
Unearned stock-based compensation | | | — | | | | (136,000 | ) |
Retained earnings | | | 93,825,000 | | | | 89,983,000 | |
Accumulated other comprehensive income | | | 1,361,000 | | | | 2,238,000 | |
Common stock held in treasury, at cost (534,698 shares) | | | (15,026,000 | ) | | | (15,026,000 | ) |
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Total shareholders’ equity | | | 133,550,000 | | | | 130,066,000 | |
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| | | $ | 245,099,000 | | | $ | 254,253,000 | |
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WD-40 Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
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| | | Three Months Ended November 30,
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| | | 2005
| | | 2004
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Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 7,513,000 | | | $ | 5,635,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 848,000 | | | | 708,000 | |
Gains on sales and disposals of property and equipment | | | (9,000 | ) | | | (15,000 | ) |
Deferred income tax expense | | | 556,000 | | | | 886,000 | |
Tax benefit from exercise of stock options | | | — | | | | 61,000 | |
Excess tax benefits from exercise of stock options | | | (1,000 | ) | | | — | |
Distributions received (equity earnings) from related party, net | | | 19,000 | | | | (46,000 | ) |
Stock-based compensation | | | 412,000 | | | | — | |
Changes in assets and liabilities: | | | | | | | | |
Trade accounts receivable | | | 6,512,000 | | | | 8,085,000 | |
Product held at contract packagers | | | 171,000 | | | | 777,000 | |
Inventories | | | (2,303,000 | ) | | | 381,000 | |
Other assets | | | 595,000 | | | | 441,000 | |
Accounts payable and accrued expenses | | | (2,395,000 | ) | | | (2,612,000 | ) |
Accounts payable to related party | | | 557,000 | | | | (573,000 | ) |
Income taxes payable | | | (116,000 | ) | | | (1,033,000 | ) |
Deferred employee benefits and other long-term liabilities | | | 26,000 | | | | (42,000 | ) |
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Net cash provided by operating activities | | | 12,385,000 | | | | 12,653,000 | |
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Cash flows from investing activities: | | | | | | | | |
Capital expenditures | | | (989,000 | ) | | | (727,000 | ) |
Proceeds from sales of property and equipment | | | 19,000 | | | | 58,000 | |
Proceeds from collections on notes receivable | | | 30,000 | | | | — | |
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Net cash used in investing activities | | | (940,000 | ) | | | (669,000 | ) |
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Cash flows from financing activities: | | | | | | | | |
Repayments of long-term debt | | | (10,714,000 | ) | | | — | |
Proceeds from issuance of common stock | | | 106,000 | | | | 411,000 | |
Excess tax benefits from exercise of stock options | | | 1,000 | | | | — | |
Dividends paid | | | (3,671,000 | ) | | | (3,315,000 | ) |
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Net cash used in financing activities | | | (14,278,000 | ) | | | (2,904,000 | ) |
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Effect of exchange rate changes on cash and cash equivalents | | | (23,000 | ) | | | 203,000 | |
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(Decrease) increase in cash and cash equivalents | | | (2,856,000 | ) | | | 9,283,000 | |
Cash and cash equivalents at beginning of period | | | 37,120,000 | | | | 29,433,000 | |
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Cash and cash equivalents at end of period | | $ | 34,264,000 | | | $ | 38,716,000 | |
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WD-40 Company
Consolidated Condensed Statements of Comprehensive Income
(unaudited)
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| | | Three Months Ended November 30,
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| | | 2005
| | | 2004
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Net income | | $ | 7,513,000 | | | $ | 5,635,000 |
Other comprehensive income: | | | | | | | |
Equity adjustment from foreign currency translation, net of tax (benefit)/provision of ($260,000) and $854,000, respectively | | | (877,000 | ) | | | 1,089,000 |
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Total comprehensive income | | $ | 6,636,000 | | | $ | 6,724,000 |
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