EXHIBIT 99.1
| | | | | | | | |
| | | | | | | | Contact: Garry O. Ridge Phone: 619-275-9324 |
WD-40 COMPANY REPORTS 10.8% INCREASE IN THIRD QUARTER NET INCOME
SAN DIEGO, July 10, 2006 /PRNewswire/ — WD-40 Company (Nasdaq: WDFC) today reported net sales for the third quarter ended May 31, 2006 of $73.1 million, an increase of 12.1% over the third quarter last year. Year-to-date net sales were $211.7 million, up 13.3% over the same period last year.
Net income for the third quarter was $7.0 million, up 10.8% compared to the prior year’s quarter. Earnings per share in the third quarter grew to $0.42 compared to $0.38 during the same period last year. Year-to-date net income was $21.8 million, an increase of 26.1% from last year. Through nine months, earnings per share were $1.29 compared to $1.03 for the same period last year, an increase of 25.8%.
“We are pleased with our results through nine months and are on track to meet our expectations for the full year,” said Garry O. Ridge, WD-40 Company president and chief executive officer.
Updated Fiscal Year Guidance
In fiscal year 2006, WD-40 Company expects net sales to grow to $285 to $290 million. WD-40 Company has updated the net income guidance and now expects net income for the year to be between $26.4 million and $28.0 million, achieving earnings per share of $1.55 to $1.65 based on an estimated 17 million shares outstanding. Fiscal year 2006 results include the expensing of stock options, which were not included in previous years. Stock options expense, after tax, in the third quarter was $0.2 million or 1 cent per share. Year-to-date stock options expense, after tax, was $1.0 million or 6 cents per share.
“While we expect to see an increase in sales, we also expect to see a continued investment in marketing in the fourth quarter,” Ridge said. “We expect full year marketing expense to be in the range of 7.0% to 8.0% of net sales.”
The board of directors of WD-40 Company declared a regular quarterly dividend on June 27, 2006 of $0.22 per share, payable July 31, 2006, to stockholders of record on July 17, 2006.
We are still seeing significant impacts from increases in cost of goods, but the price increases we have implemented over the last year have helped offset some of those increases,” Ridge said.
Total sales for the quarter were 65% from the Americas, 28% from Europe and 7% from Asia/Pacific.
In the Americas, sales for the third quarter were up 7.9% from a year ago. In Europe, sales were up 22.8% for the third quarter. In the Asia/Pacific region, sales for the quarter were up 13.2% from last year.
“We’re pleased to see sales growth across most of our brands as well as across our geographic regions.” said Ridge.
Global sales of the lubricants WD-40® and 3-IN-ONE Oil® were up 13.2% for the quarter.
“We had another strong quarter across the globe in lubricant sales and have seen double digit increases each quarter this fiscal year,” Ridge said.
Sales of heavy-duty hand cleaners Lava® and Solvol® were down 15.9% for the quarter.
Sales of household products X-14®, Carpet Fresh, 2000 Flushes®, Spot Shot® and 1001 were up 12.3% compared to the previous year’s quarter.
“While we continue to face stiff competition in the household products arena, we have been able to achieve consistent growth in our household products brands so far this year,” Ridge said.
“We are seeing the sales impact from our innovation program as we move into increasing distribution and building consumer demand for these new product and packaging innovations,” Ridge said.
“We are also continuing to look for the right acquisition that meets our guidelines for success,” Ridge added.
WD-40 Company’s 10-Q will be filed on July 10, 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®, and 3-IN-ONE®, the Lava® and Solvol® brands of heavy-duty hand cleaners, and household products 2000 Flushes®, X-14®, Carpet Fresh®, Spot Shot® and 1001®. WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $263.2 million in fiscal 2005. Additional information about WD-40 Company can be obtained online atwww.wd40.com.
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 global sales trends, impact of cost of goods, the impact of new product innovations 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.
SOURCE WD-40 Company
WD-40 Company
Consolidated Condensed Statements of Income
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended May 31, | | | Nine Months Ended May 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Net sales | | $ | 73,052,000 | | | $ | 65,149,000 | | | $ | 211,747,000 | | | $ | 186,913,000 | |
Cost of products sold(1) | | | 37,633,000 | | | | 33,897,000 | | | | 109,738,000 | | | | 95,445,000 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 35,419,000 | | | | 31,252,000 | | | | 102,009,000 | | | | 91,468,000 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | 18,356,000 | | | | 15,425,000 | | | | 51,980,000 | | | | 47,537,000 | |
Advertising and sales promotion | | | 5,923,000 | | | | 4,650,000 | | | | 14,097,000 | | | | 13,359,000 | |
Amortization of intangible asset | | | 132,000 | | | | 141,000 | | | | 394,000 | | | | 418,000 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 11,008,000 | | | | 11,036,000 | | | | 35,538,000 | | | | 30,154,000 | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest expense, net | | | (953,000 | ) | | | (1,350,000 | ) | | | (2,811,000 | ) | | | (4,036,000 | ) |
Other income, net | | | 181,000 | | | | 128,000 | | | | 404,000 | | | | 459,000 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 10,236,000 | | | | 9,814,000 | | | | 33,131,000 | | | | 26,577,000 | |
Provision for income taxes | | | 3,190,000 | | | | 3,452,000 | | | | 11,341,000 | | | | 9,302,000 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 7,046,000 | | | $ | 6,362,000 | | | $ | 21,790,000 | | | $ | 17,275,000 | |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.42 | | | $ | 0.38 | | | $ | 1.30 | | | $ | 1.04 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.42 | | | $ | 0.38 | | | $ | 1.29 | | | $ | 1.03 | |
| | | | | | | | | | | | | | | | |
Weighted-average common shares outstanding, basic | | | 16,829,760 | | | | 16,671,190 | | | | 16,745,433 | | | | 16,612,003 | |
| | | | | | | | | | | | | | | | |
Weighted-average common shares outstanding, diluted | | | 16,969,770 | | | | 16,885,504 | | | | 16,857,735 | | | | 16,806,178 | |
| | | | | | | | | | | | | | | | |
Dividends declared per share | | $ | 0.22 | | | $ | 0.22 | | | $ | 0.66 | | | $ | 0.62 | |
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| (1) | Includes cost of products acquired from related party of $10,775,000 and $9,730,000 for the three months ended May 31, 2006 and 2005, respectively; and $31,221,000 and $27,682,000 for the nine months ended May 31, 2006 and 2005, respectively. |
WD-40 Company
Consolidated Condensed Balance Sheets
(unaudited)
| | | | | | | | |
| | | May 31, 2006 | | | August 31, 2005 | |
| Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 24,378,000 | | | $ | 37,120,000 | |
Short-term investments | | | 20,300,000 | | | | — | |
Trade accounts receivable, less allowance for cash discounts, returns and doubtful accounts of $1,885,000 and $1,506,000 | | | 40,087,000 | | | | 44,487,000 | |
Product held at contract packagers | | | 1,488,000 | | | | 1,814,000 | |
Inventories | | | 15,434,000 | | | | 8,041,000 | |
Current deferred tax assets, net | | | 4,704,000 | | | | 2,946,000 | |
Other current assets | | | 3,256,000 | | | | 6,784,000 | |
| | | | | | | | |
Total current assets | | | 109,647,000 | | | | 101,192,000 | |
Property, plant and equipment, net | | | 9,042,000 | | | | 8,355,000 | |
Goodwill | | | 96,044,000 | | | | 95,858,000 | |
Other intangibles, net | | | 42,753,000 | | | | 42,884,000 | |
Investment in related party | | | 893,000 | | | | 1,112,000 | |
Other assets | | | 4,305,000 | | | | 4,852,000 | |
| | | | | | | | |
| | $ | 262,684,000 | | | $ | 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 | | | 12,283,000 | | | | 13,671,000 | |
Accounts payable to related party | | | 714,000 | | | | 1,945,000 | |
Accrued liabilities | | | 12,071,000 | | | | 14,058,000 | |
Accrued payroll and related expenses | | | 5,296,000 | | | | 3,828,000 | |
Income taxes payable | | | 4,336,000 | | | | 2,484,000 | |
| | | | | | | | |
Total current liabilities | | | 45,414,000 | | | | 46,700,000 | |
Long-term debt | | | 53,571,000 | | | | 64,286,000 | |
Deferred employee benefits and other long-term liabilities | | | 1,958,000 | | | | 1,838,000 | |
Long-term deferred tax liabilities, net | | | 12,998,000 | | | | 11,363,000 | |
| | | | | | | | |
Total liabilities | | | 113,941,000 | | | | 124,187,000 | |
| | | | | | | | |
Shareholders’ equity: | | | | | | | | |
Common stock, $.001 par value, 36,000,000 shares authorized — 17,425,743 and 17,222,410 shares issued | | | 17,000 | | | | 17,000 | |
Paid-in capital | | | 59,326,000 | | | | 52,990,000 | |
Unearned stock-based compensation | | | — | | | | (136,000 | ) |
Retained earnings | | | 100,730,000 | | | | 89,983,000 | |
Accumulated other comprehensive income | | | 3,696,000 | | | | 2,238,000 | |
Common stock held in treasury, at cost (534,698 shares) | | | (15,026,000 | ) | | | (15,026,000 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 148,743,000 | | | | 130,066,000 | |
| | | | | | | | |
| | $ | 262,684,000 | | | $ | 254,253,000 | |
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WD-40 Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
| | | | | | | | |
| | | Nine Months Ended May 31, | |
| | | 2006 | | | 2005 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 21,790,000 | | | $ | 17,275,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 2,571,000 | | | | 2,182,000 | |
Gains on sales and disposals of property and equipment | | | (24,000 | ) | | | (13,000 | ) |
Deferred income tax expense | | | (437,000 | ) | | | 5,854,000 | |
Tax benefit from exercise of stock options | | | — | | | | 354,000 | |
Excess tax benefits from exercise of stock options | | | (321,000 | ) | | | — | |
Distributions received and equity losses (earnings) from related party, net | | | 219,000 | | | | (37,000 | ) |
Stock-based compensation | | | 1,396,000 | | | | 15,000 | |
Changes in assets and liabilities: | | | | | | | | |
Trade accounts receivable | | | 5,283,000 | | | | 4,995,000 | |
Product held at contract packagers | | | 326,000 | | | | 101,000 | |
Inventories | | | (7,029,000 | ) | | | (1,530,000 | ) |
Other assets | | | 3,623,000 | | | | (2,351,000 | ) |
Accounts payable and accrued expenses | | | (2,288,000 | ) | | | (2,164,000 | ) |
Accounts payable to related party | | | (1,231,000 | ) | | | (547,000 | ) |
Income taxes payable | | | 2,141,000 | | | | (1,998,000 | ) |
Deferred employee benefits and other long-term liabilities | | | 78,000 | | | | 112,000 | |
| | | | | | | | |
Net cash provided by operating activities | | | 26,097,000 | | | | 22,248,000 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Purchases of short-term investments | | | (20,300,000 | ) | | | — | |
Proceeds from collections on notes receivable | | | 50,000 | | | | — | |
Capital expenditures | | | (2,446,000 | ) | | | (1,996,000 | ) |
Proceeds from sales of property and equipment | | | 210,000 | | | | 92,000 | |
| | | | | | | | |
Net cash used in investing activities | | | (22,486,000 | ) | | | (1,904,000 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Repayments of long-term debt | | | (10,714,000 | ) | | | (10,000,000 | ) |
Proceeds from issuance of common stock | | | 4,755,000 | | | | 2,568,000 | |
Excess tax benefits from exercise of stock options | | | 321,000 | | | | — | |
Dividends paid | | | (11,043,000 | ) | | | (10,298,000 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (16,681,000 | ) | | | (17,730,000 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | 328,000 | | | | 16,000 | |
| | | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (12,742,000 | ) | | | 2,630,000 | |
Cash and cash equivalents at beginning of period | | | 37,120,000 | | | | 29,433,000 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 24,378,000 | | | $ | 32,063,000 | |
| | | | | | | | |
WD-40 Company
Consolidated Condensed Statements of Comprehensive Income
(unaudited)
| | | | | | | | | | | | | |
| | | Three Months Ended May 31, | | | Nine Months Ended May 31, |
| | | 2006 | | 2005 | | | 2006 | | 2005 |
Net income | | $ | 7,046,000 | | $ | 6,362,000 | | | $ | 21,790,000 | | $ | 17,275,000 |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Equity adjustment from foreign currency translation, net of tax | | | 1,935,000 | | | (1,209,000 | ) | | | 1,458,000 | | | 666,000 |
| | | | | | | | | | | | | |
Total comprehensive income | | $ | 8,981,000 | | $ | 5,153,000 | | | $ | 23,248,000 | | $ | 17,941,000 |
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