WD-40 COMPANY 
By SAN DIEGO, Jan 10, 2011 /PRNewswire/ -- WD-40 Company (Nasdaq: WDFC) today reported sales for the first quarter ended November 30, 2010, of $80.9 million, an increase of 4% from the first quarter last year. Net income for the first quarter was $9.1 million, down 4% from the prior fiscal year first quarter.
"We had a solid performance in the first quarter that reflects the hard work and focus we have put into our four strategic initiatives, and that continues to serve us well," said Garry O. Ridge, WD-40 Company president and chief executive officer. "As it relates to the geographic expansion strategic initiative, we have been successful in building our base business across the globe and we have seen robust growth in many international markets, while maintaining our gross margins above our target of 50%."
Summary
The Company's focus on its multi-purpose strategic initiative delivered sales growth during the first quarter. The first quarter multi-purpose maintenance products sales, which include the WD-40(R), 3-IN-ONE(R), and BLUE WORKS(TM) brands, were $66.5 million, up 10% from the same quarter last fiscal year. Homecare and cleaning products sales, which include all other brands, were $14.4 million in the first quarter, down 16% from the same period last fiscal year.
America's segment first quarter sales were $39.2 million, down 10% compared to the first quarter of last fiscal year. Europe segment sales in the first quarter were $30.8 million, up 13% compared to the same period last fiscal year. Asia-Pacific segment first quarter sales were $11.0 million, up 61% compared to the first quarter of last fiscal year.
Gross margin was 50.9% in the first quarter compared to 51.4% in the same quarter last fiscal year.
Diluted earnings per share for the first quarter were $0.53 versus $0.56 in the prior fiscal year period.
Percentage of total sales by segment for first the quarter were 48% from the Americas, 38% from Europe and 14% from Asia/Pacific.
Advertising and sales promotion expenses were up 17% for the first quarter compared to the same period last fiscal year.
Selling, general and administrative expenses were up 9% in the first quarter to $21.7 million compared to the same period last fiscal year.
"During the first quarter, 62% of our total sales were from outside the United States," Ridge said. "The solid growth we have seen in markets like China, where we doubled our sales in the first quarter, is a result of us building our core business coupled with significant promotional activity aimed at building distribution and increasing end-user awareness."
Fiscal Year 2011 Guidance
WD-40 Company expects fiscal year 2011 net sales to grow 5.7 % to 10.4% to the range of $340 to $355 million. The company expects net income of $37.8 million to $40.3 million and diluted earnings per common share of $2.25 to $2.40 for fiscal year 2011 based on an estimated 16.8 million weighted average shares outstanding. The company expects advertising and sales promotion expenses to be within the range of 6.5% to 8.0% of net sales.
Dividend and Share BuyBack Authorization
As previously announced, the board of directors declared on Tuesday, December 14, 2010 the regular quarterly dividend of $.27 per share, payable January 31, 2011 to stockholders of record on January 7, 2011. WD-40 Company also announced that at its regularly scheduled meeting on December 14, 2010, the board of directors authorized an open-ended buyback of Company shares up to $25 million over the next 12 months. The previous share buyback authorization expired December 8, 2010. No shares were acquired pursuant to that authorization.
"With respect to our strategic initiative focusing on the WD-40 brand exploration, we continue to investigate opportunities for the WD-40 brand. We have developed and will be testing several WD-40 branded items in selected channels in the UK and possibly other markets later this fiscal year," said Ridge. "We also launched Blue Works in the UK in the industrial markets during the first quarter. We expect to see the same slow steady sales growth that we are experiencing in the U.S. with this product line. While the Blue Works brand potential is much smaller, the model used to build distribution is similar to the WD-40 brand 'slow and steady build' distribution model. "
"We continue to investigate licensing opportunities for the WD-40 brand as well as continuing to look for targeted acquisitions that fit in our strategy" Ridge added.
More detailed information will be available on WD-40 Company's Form 10-Q that will be filed on January 10, 2011.
WD-40 Company, with headquarters in San Diego, is a global consumer products 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) mildew stain remover 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 $322 million in fiscal year 2010. Additional information about WD-40 Company can be obtained online at http://www.wd40company.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 the impacts of raw materials, changes in foreign currency exchange rates, new products and brands, 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 per share amounts)
Three Months Ended
November 30,
------------------
2010 2009
---- ----
Net sales $80,927 $77,721
Cost of products sold 39,705 37,808
------ ------
Gross
profit 41,222 39,913
Operating expenses:
Selling, general and
administrative 21,649 19,801
Advertising and sales
promotion 6,069 5,198
Amortization of
definite-lived
intangible assets 182 185
--- ---
Total
operating
expenses 27,900 25,184
Income from
operations 13,322 14,729
Other income
(expense):
Interest income 55 35
Interest expense (322) (524)
Other income, net 197 114
--- ---
Income before income
taxes 13,252 14,354
Provision for income
taxes 4,173 4,941
----- -----
Net income $9,079 $9,413
Earnings per common
share:
Basic $0.54 $0.57
===== =====
Diluted $0.53 $0.56
===== =====
Shares used in per
share calculations:
Basic 16,796 16,556
====== ======
Diluted 16,991 16,652
====== ======
Dividends declared
per common share $0.27 $0.25
===== =====
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share amounts)
November 30, August 31,
2010 2010
------------- -----------
Assets
Current assets:
Cash and cash equivalents $73,249 $75,928
Trade accounts receivable,
less allowance for doubtful
accounts of $327 and $299 at
November 30, 2010
and August 31, 2010,
respectively 46,939 47,846
Product held at contract
packagers 1,547 1,536
Inventories 15,830 13,037
Current deferred tax
assets, net 4,761 4,747
Other current assets 4,744 7,314
----- -----
Total current assets 147,070 150,408
Property, plant and
equipment, net 9,400 9,322
Goodwill 95,255 95,235
Other intangible assets,
net 31,110 31,272
Other assets 2,897 2,871
----- -----
Total assets $285,732 $289,108
======== ========
Liabilities and
Shareholders' Equity
Current liabilities:
Accounts payable $18,859 $18,943
Accrued liabilities 15,351 14,382
Current portion of long-
term debt 10,715 10,714
Accrued payroll and related
expenses 7,107 14,265
Income taxes payable 364 1,516
--- -----
Total current liabilities 52,396 59,820
Long-term debt - 10,715
Long-term deferred tax
liabilities, net 18,260 17,414
Deferred employee benefits and
other long-term liabilities 4,669 4,635
----- -----
Total liabilities 75,325 92,584
------ ------
Shareholders' equity:
Common stock ? authorized
36,000,000 shares, $0.001 par
value;
18,558,258 and 18,251,142
shares issued at November 30,
2010
and August 31, 2010,
respectively; and 16,994,760
and
16,687,644 shares outstanding
at November 30, 2010 and
August 31, 2010,
respectively 19 18
Additional paid-in
capital 101,939 93,101
Retained earnings 162,350 157,805
Accumulated other
comprehensive loss (3,835) (4,334)
Common stock held in treasury,
at cost ? 1,563,498 shares
at November 30, 2010 and
August 31, 2010 (50,066) (50,066)
------- -------
Total shareholders'
equity 210,407 196,524
------- -------
Total liabilities and
shareholders' equity $285,732 $289,108
======== ========
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Three Months Ended November
30,
----------------------------
2010 2009
---- ----
Operating
activities:
Net
income $9,079 $9,413
Adjustments to
reconcile net income
to net cash provided
by
operating
activities:
Depreciation and
amortization 978 1,082
Net gains on sales and
disposals of property
and equipment (8) (2)
Deferred
income
taxes 35 501
Excess tax benefits
from exercises of
stock options and
conversions of
restricted stock
units to common
shares (574) (108)
Stock-
based
compensation 806 665
Unrealized foreign
currency exchange
losses (gains), net 566 (469)
Provision
for bad
debts 25 -
Changes in assets and
liabilities:
Trade accounts
receivable 514 3,798
Product held at
contract packagers (3) 405
Inventories (2,737) (1,629)
Other
assets 2,414 534
Accounts payable and
accrued expenses and
liabilities (7,036) (1,133)
Income
taxes
payable 226 3,272
Deferred employee
benefits and other
long-term
liabilities 27 (12)
--- ---
Net cash provided by
operating activities 4,312 16,317
----- ------
Investing
activities:
Capital
expenditures (774) (314)
Proceeds from sales of
property and
equipment 57 17
--- ---
Net cash used in
investing activities (717) (297)
---- ----
Financing
activities:
Repayments
of
long-
term
debt (10,714) (10,714)
Dividends
paid (4,534) (4,149)
Proceeds from issuance
of common stock 8,124 859
Excess tax benefits
from exercises of
stock options and
conversions of
restricted stock
units to common
shares 574 108
--- ---
Net cash used in
financing activities (6,550) (13,896)
------ -------
Effect of exchange
rate changes on cash
and cash equivalents 276 796
--- ---
Net (decrease)
increase in cash and
cash equivalents (2,679) 2,920
Cash and cash
equivalents at
beginning of period 75,928 45,956
------ ------
Cash and cash
equivalents at end of
period $73,249 $48,876
======= =======
WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited and in thousands)
Three Months Ended
November 30,
------------------
2010 2009
---- ----
Net income $9,079 $9,413
Other comprehensive
income:
Equity adjustment from
foreign currency
translation, net of income
taxes 499 977
--- ---
Total comprehensive
income $9,578 $10,390
====== =======
SOURCE WD-40 Company
