EXHIBIT 99.1
Contact: Garry O. Ridge
Phone: 619-275-9324
WD-40 Company Reports Second Quarter Results, Revised Fiscal Year Guidance
SAN DIEGO, April 9, 2008/ — WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 29, 2008.
Summary
| | • | | Net sales were $78.9 million, a decrease of 0.5% from the second quarter last year. Year-to-date net sales were $158.1 million, up 4.5% from the same period last year. |
| | • | | Net income for the second quarter was $8.7 million, down 3.1% compared to the prior year’s quarter. Year-to-date net income was $14.9 million, an increase of 1.8%. |
| | • | | Earnings per share were $0.51 in the second quarter, compared to $0.52 per share for the same quarter last year. Through six months, earnings per share were $0.87 compared to $0.85 in the same period last year. |
| | • | | Lubricant sales were up 4.5% for the second quarter and 10.4% for the first half. Household products sales were down 13.7% for the second quarter and down 9.7% through six months. Heavy-duty hand cleaner sales were down 0.7% in the second quarter and off 0.3% through six months. |
| | • | | The company announced it has completed its $35 million share repurchase authorization that expired in March 2008. |
“While the shakiness of the U.S. economy has created some challenges for us in our own backyard, our strategy of diversification is paying off as we continue to see strong growth in our international markets,” said Garry O. Ridge, WD-40 Company president and chief executive officer. “In fact, more than 57% of our sales in the second quarter were outside of the United States.”
Revised Fiscal Year 2008 Guidance
WD-40 Company now expects fiscal year 2008 net sales to grow 4%-8% to $320-$332 million. The company expects net income of $30.3-$31.9 million in 2008, achieving earnings per share of $1.80 to $1.90 based on an estimated 16.8 million shares outstanding. Under its original guidance, the company had expected sales growth of 7%-10%, net income of $31.1-$32.8 million, and earnings per share of $1.83-$1.93 based on an estimated 17 million shares outstanding.
“We recently announced that beginning in the third quarter of 2008 we will be converting many of our WD-40 can sizes in the United States to the Smart Straw format, which features a permanently attached straw,” Ridge said. “We are doing this to leverage the innovation of the Smart Straw to deliver added value to customers.”
“Due to the conversion and the weakening U.S. economy, we had a softening in promotional activity and saw some retailer inventory reductions in the second quarter,” Ridge added.
As previously announced, the WD-40 Company board of directors declared on Tuesday, March 25, 2008 the regular quarterly dividend of $0.25 per share, payable April 30, 2008 to stockholders of record on April 16, 2008.
Financial Highlights
Cost of goods during the second quarter was 51.7% of sales compared to 50.8% in the second quarter last year. Through six months, cost of goods was 52.2% versus 51.4% for the same period last year.
Advertising and sales promotion expenses were down 16.2% for the second quarter compared to the same period last year and were up 1.7% for the first six months of the year. The company expects its investment in global advertising and sales promotion expenses to be in the range of 6.5% to 8.5% of net sales for the fiscal year.
Total sales for the second quarter were 53.1% from the Americas, 37.7% from Europe and 9.3% from Asia/Pacific.
In the Americas, sales for the second quarter were down 14.4% from a year ago. Through six months, Americas sales were down 9.2%.
“While we saw sales declines in the U.S. during the quarter, we had solid growth in Canada and Latin America that made up for some of the loss,” Ridge said. “We are continuing to focus on innovation, and are rolling out two new non-toxic, biodegradable products under the Spot Shot brand in the third quarter.”
In Europe, sales were up 22.2% for the second quarter and are up 25.8% through six months. In the Asia/Pacific region, sales for the second quarter were up 20.9% from last year and up 32.3% year to date.
“Australia continued its strong growth trend with sales up 35.5% in the first half of this year,” Ridge said. “We are very pleased with our growth in China as we wrap up our first full year of direct distribution in that market.”
WD-40 Company’s 10-Q will be filed on April 9, 2008.
WD-40 Company’s 3rd quarter fiscal 2008 earnings call is scheduled for Wednesday, July 2, 2008.
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 $307.8 million in fiscal 2007. Additional information about WD-40 Company can be obtained online at http://www.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 impact of cost of goods, the impact of new product innovations and line extensions 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 Operations
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
February 29 or 28, | | | Six Months Ended
February 29 or 28, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net sales | | $ | 78,948,000 | | | $ | 79,331,000 | | | $ | 158,098,000 | | | $ | 151,287,000 | |
Cost of products sold(1) | | | 40,808,000 | | | | 40,293,000 | | | | 82,488,000 | | | | 77,776,000 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 38,140,000 | | | | 39,038,000 | | | | 75,610,000 | | | | 73,511,000 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | 20,344,000 | | | | 19,736,000 | | | | 41,568,000 | | | | 38,791,000 | |
Advertising and sales promotion | | | 4,243,000 | | | | 5,061,000 | | | | 10,883,000 | | | | 10,703,000 | |
Amortization of intangible asset | | | 150,000 | | | | 146,000 | | | | 302,000 | | | | 287,000 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 13,403,000 | | | | 14,095,000 | | | | 22,857,000 | | | | 23,730,000 | |
Other (expense) income: | | | | | | | | | | | | | | | | |
Interest expense, net | | | (390,000 | ) | | | (613,000 | ) | | | (796,000 | ) | | | (1,294,000 | ) |
Other income (expense), net | | | 229,000 | | | | (94,000 | ) | | | 541,000 | | | | (185,000 | ) |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 13,242,000 | | | | 13,388,000 | | | | 22,602,000 | | | | 22,251,000 | |
Provision for income taxes | | | 4,576,000 | | | | 4,449,000 | | | | 7,706,000 | | | | 7,618,000 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 8,666,000 | | | $ | 8,939,000 | | | $ | 14,896,000 | | | $ | 14,633,000 | |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.52 | | | $ | 0.52 | | | $ | 0.88 | | | $ | 0.86 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.51 | | | $ | 0.52 | | | $ | 0.87 | | | $ | 0.85 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares outstanding, basic | | | 16,784,469 | | | | 17,043,032 | | | | 16,836,803 | | | | 17,032,602 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares outstanding, diluted | | | 16,971,502 | | | | 17,232,563 | | | | 17,032,147 | | | | 17,236,795 | |
| | | | | | | | | | | | | | | | |
Dividends declared per share | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.50 | | | $ | 0.47 | |
| | | | | | | | | | | | | | | | |
(1) | Includes cost of products acquired from related party of $4,496,000 and $4,604,000 for the three months ended February 29, 2008 and February 28, 2007, respectively; and $11,177,000 and $9,795,000 for the six months ended February 29, 2008 and February 28, 2007, respectively. |
WD-40 Company
Consolidated Condensed Balance Sheets
(unaudited)
| | | | | | | | |
| | | February 29, 2008 | | | August 31, 2007 | |
| Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 23,394,000 | | | $ | 61,078,000 | |
Trade accounts receivable, less allowance for doubtful accounts of $391,000 and $369,000 | | | 52,866,000 | | | | 47,204,000 | |
Product held at contract packagers | | | 1,550,000 | | | | 1,447,000 | |
Inventories | | | 16,962,000 | | | | 13,208,000 | |
Current deferred tax assets, net | | | 4,157,000 | | | | 4,145,000 | |
Other current assets | | | 3,846,000 | | | | 3,489,000 | |
| | | | | | | | |
Total current assets | | | 102,775,000 | | | | 130,571,000 | |
Property, plant and equipment, net | | | 10,036,000 | | | | 8,811,000 | |
Goodwill | | | 96,340,000 | | | | 96,409,000 | |
Other intangibles, net | | | 42,145,000 | | | | 42,543,000 | |
Marketable securities | | | 6,075,000 | | | | — | |
Investment in related party | | | 996,000 | | | | 1,015,000 | |
Other assets | | | 3,690,000 | | | | 3,837,000 | |
| | | | | | | | |
| | $ | 262,057,000 | | | $ | 283,186,000 | |
| | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Current portion of long-term debt | | $ | 10,714,000 | | | $ | 10,714,000 | |
Accounts payable | | | 15,727,000 | | | | 21,854,000 | |
Accounts payable to related party | | | 525,000 | | | | 1,506,000 | |
Accrued liabilities | | | 15,159,000 | | | | 12,780,000 | |
Accrued payroll and related expenses | | | 3,878,000 | | | | 6,906,000 | |
Income taxes payable | | | 2,523,000 | | | | 97,000 | |
| | | | | | | | |
Total current liabilities | | | 48,526,000 | | | | 53,857,000 | |
Long-term debt | | | 32,143,000 | | | | 42,857,000 | |
Deferred employee benefits and other long-term liabilities | | | 4,842,000 | | | | 2,195,000 | |
Long-term deferred tax liabilities, net | | | 15,977,000 | | | | 16,005,000 | |
| | | | | | | | |
Total liabilities | | | 101,488,000 | | | | 114,914,000 | |
| | | | | | | | |
Shareholders’ equity: | | | | | | | | |
Common stock, $.001 par value, 36,000,000 shares authorized — 17,990,915 and 17,883,299 shares issued; and 16,427,417 and 16,848,601 shares outstanding | | | 18,000 | | | | 18,000 | |
Paid-in capital | | | 79,305,000 | | | | 74,836,000 | |
Retained earnings | | | 124,139,000 | | | | 118,260,000 | |
Accumulated other comprehensive income | | | 7,173,000 | | | | 7,504,000 | |
Common stock held in treasury, at cost (1,563,498 and 1,034,698 shares) | | | (50,066,000 | ) | | | (32,346,000 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 160,569,000 | | | | 168,272,000 | |
| | | | | | | | |
| | $ | 262,057,000 | | | $ | 283,186,000 | |
| | | | | | | | |
WD-40 Company
Consolidated Condensed Statements of Cash Flows
(unaudited)
| | | | | | | | |
| | | Six Months Ended February 29 or 28, | |
| | | 2008 | | | 2007 | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 14,896,000 | | | $ | 14,633,000 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 1,862,000 | | | | 1,820,000 | |
(Gains) losses on sales and disposals of property and equipment | | | (2,000 | ) | | | 22,000 | |
Deferred income tax expense | | | (151,000 | ) | | | 989,000 | |
Excess tax benefits from exercises of stock options | | | (149,000 | ) | | | (114,000 | ) |
Distributions received and equity losses (earnings) from related party, net | | | 19,000 | | | | — | |
Stock-based compensation | | | 1,391,000 | | | | 1,064,000 | |
Changes in assets and liabilities: | | | | | | | | |
Trade accounts receivable | | | (5,698,000 | ) | | | (4,663,000 | ) |
Product held at contract packagers | | | (103,000 | ) | | | (525,000 | ) |
Inventories | | | (3,727,000 | ) | | | 358,000 | |
Other assets | | | (446,000 | ) | | | 879,000 | |
Accounts payable and accrued expenses | | | (6,869,000 | ) | | | 3,801,000 | |
Accounts payable to related party | | | (981,000 | ) | | | 439,000 | |
Income taxes payable | | | 2,690,000 | | | | 107,000 | |
Deferred employee benefits and other long-term liabilities | | | 2,056,000 | | | | 55,000 | |
| | | | | | | | |
Net cash provided by operating activities | | | 4,788,000 | | | | 18,865,000 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Purchases of marketable securities | | | (76,175,000 | ) | | | (99,600,000 | ) |
Sales of marketable securities | | | 70,100,000 | | | | 99,600,000 | |
Proceeds from collections on notes receivable | | | — | | | | 25,000 | |
Capital expenditures | | | (2,656,000 | ) | | | (1,181,000 | ) |
Proceeds from sales of property and equipment | | | 108,000 | | | | 109,000 | |
| | | | | | | | |
Net cash used in investing activities | | | (8,623,000 | ) | | | (1,047,000 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Repayments of long-term debt | | | (10,714,000 | ) | | | (10,714,000 | ) |
Proceeds from issuance of common stock | | | 2,906,000 | | | | 2,025,000 | |
Excess tax benefits from exercises of stock options | | | 149,000 | | | | 114,000 | |
Treasury stock purchases | | | (17,720,000 | ) | | | — | |
Dividends paid | | | (8,453,000 | ) | | | (8,007,000 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (33,832,000 | ) | | | (16,582,000 | ) |
| | | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (17,000 | ) | | | 201,000 | |
| | | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (37,684,000 | ) | | | 1,437,000 | |
Cash and cash equivalents at beginning of period | | | 61,078,000 | | | | 45,206,000 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 23,394,000 | | | $ | 46,643,000 | |
| | | | | | | | |
WD-40 Company
Consolidated Condensed Statements of Comprehensive Income
(unaudited)
| | | | | | | | | | | | | | | |
| | | Three Months Ended
February 29 or 28, | | | Six Months Ended
February 29 or 28, |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 |
Net income | | $ | 8,666,000 | | | $ | 8,939,000 | | | $ | 14,896,000 | | | $ | 14,633,000 |
Other comprehensive (loss) income: | | | | | | | | | | | | | | | |
Equity adjustment from foreign currency translation, net of tax | | | (1,419,000 | ) | | | (111,000 | ) | | | (331,000 | ) | | | 1,205,000 |
| | | | | | | | | | | | | | | |
Total comprehensive income | | $ | 7,247,000 | | | $ | 8,828,000 | | | $ | 14,565,000 | | | $ | 15,838,000 |
| | | | | | | | | | | | | | | |
