SAN DIEGO, April 8 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the second quarter ended February 28, 2009 of $61.8 million, a decrease of 21.7% from the second quarter last year. Year-to-date net sales were $145.4 million, down 8.0% from the same period last year.
Net income for the second quarter was $4.1 million, down 52.9% compared to the prior year's quarter. Year-to-date net income was $11.8 million, a decrease of 21.0%. Net income in the second quarter was impacted by a $2.8 million brand valuation charge against the Carpet Fresh(R) brand indefinite-lived intangible asset.
Summary
Second quarter multi-purpose maintenance products sales, which include the WD-40(R) and 3-IN-ONE(R) brands, were $47.1 million, down 20.6% versus the same quarter last year, and $113.0 million for the year-to-date, down 3.1%. Home care and cleaning products sales, which include all of our other brands, were $14.8 million for the second quarter, down 24.9%, and were $32.5 million year-to-date, down 21.7%.
Americas second quarter sales were $37.2 million, down 11.1% compared to the second quarter last year and were $82.8 million year-to-date, down 3.1%. Europe sales in the second quarter were $19.5 million, down 34.3% and were $49.7 million year-to-date, down 14.6%. Asia-Pacific sales were $5.1 million in the second quarter, down 30.9% and were $13.0 million year-to-date, down 10.4%.
Earnings per share were $0.25 in the second quarter, compared to $0.51 per share for the same quarter last year. Through six months, earnings per share were $0.71 compared to $0.87 in the same period last year.
"During the quarter, we were negatively impacted by the overall weakness in the global economy, the Carpet Fresh brand valuation charge as well as the negative impact of the foreign currency exchange rates," said Garry O. Ridge, WD-40 Company president and chief executive officer. "Even with these impacts, we ended the quarter within the range we guided, and we remain a resilient company with a strong balance sheet, good cash flows, limited debt and minimal capital requirements."
In the quarter, foreign exchange rates negatively affected net sales by $8.5 million and negatively affected net income by $1.6 million. Through six months, foreign exchange rates negatively impacted sales and net income by $14.0 million and $2.4 million, respectively.
"We are operating under turbulent times, but continue to see plenty of opportunity for growth in our international markets," Ridge said. "I recently returned from a three week trip around the globe visiting many of our international operations and I am excited by our tribe members' commitment to align around our global strategy."
Gross margin was 49.6% in the second quarter compared to 48.3% in the same quarter last year. For the year-to-date, gross margin was 47.7% of sales, compared to 47.8% in the same period last year.
"While we are still concerned about the high costs of tinplate, we are starting to see the flow through of lower oil prices," Ridge said.
Advertising and sales promotion expenses were up 8.5% for the second quarter compared to the same period last year and were down 8.0% for the year-to-date.
"We will continue to invest in our brands where we see opportunities to expand into new markets, where we can bring product innovation into our existing markets, and we can take advantage of new marketing techniques that leverage our loyal end-users affinity for our brands," Ridge added.
Selling, general and administrative expenses were down 12.3% in the second quarter to $17.8 million and were down 6.3% for the year-to-date to $39.0 million.
As previously announced, the WD-40 Company board of directors declared on Tuesday, March 24, 2009 the regular quarterly dividend of $.25 per share, payable April 30, 2009 to stockholders of record on April 16, 2009.
Updated Fiscal Year 2009 Guidance
WD-40 Company now expects fiscal year 2009 net sales of $279.0 million to $292.0 million. The company expects net income of $22.5 million to $25.8 million, which would achieve earnings per share of $1.35 to $1.55 based on an estimated 16.7 million shares outstanding. The net income range includes negative foreign currency exchange impact of $5.0 million or $0.30 per share.
WD-40 Company's 10-Q will be filed on April 9, 2009.
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 two multi-purpose maintenance product brands, WD-40(R), and 3-IN-ONE(R), 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 $317.1 million in fiscal year 2008. 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 impact of commodity prices, changes in foreign exchange rates 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.
WD-40 Company
Condensed Consolidated Statements of Operations
-----------------------------------------------
(Unaudited and in thousands, except share and per share amounts)
----------------------------------------------------------------
Three Months Ended Six Months Ended
February 28 or 29, February 28 or 29,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $61,837 $78,948 $145,434 $158,098
Cost of products
sold(1) 31,192 40,808 76,052 82,488
------ ------ ------ ------
Gross profit 30,645 38,140 69,382 75,610
------ ------ ------ ------
Operating expenses:
Selling, general
and administrative 17,836 20,344 38,953 41,568
Advertising and
sales promotion 4,604 4,243 10,017 10,883
Amortization of
intangible asset 110 150 239 302
Impairment of
indefinite-lived
intangible assets 2,760 - 2,760 -
----- ----- ----- -----
Total operating
expenses 25,310 24,737 51,969 52,753
------ ------ ------ ------
Income from
operations 5,335 13,403 17,413 22,857
Other (expense) income:
Interest expense,
net (510) (390) (950) (796)
Other income, net 480 229 701 541
--- --- --- ---
Income before income
taxes 5,305 13,242 17,164 22,602
Provision for income
taxes 1,222 4,576 5,396 7,706
----- ----- ----- -----
Net income $4,083 $8,666 $11,768 $14,896
====== ====== ======= =======
Earnings per common
share:
Basic $0.25 $0.52 $0.71 $0.88
===== ===== ===== =====
Diluted $0.25 $0.51 $0.71 $0.87
===== ===== ===== =====
Shares used in per
share calculations:
Basic 16,500,749 16,784,469 16,498,200 16,836,803
========== ========== ========== ==========
Diluted 16,649,840 16,971,502 16,661,691 17,032,147
========== ========== ========== ==========
Dividends declared
per share $0.25 $0.25 $0.50 $0.50
===== ===== ===== =====
(1) Includes cost of products acquired from related party of $3,460
and $4,496 for the three months ended February 28, 2009 and
February 29, 2008, respectively; and $7,720 and $11,177 for the
six months ended February 28, 2009 and February 29, 2008,
respectively
WD-40 Company
Condensed Consolidated Balance Sheets
-------------------------------------
(Unaudited and in thousands, except share and per share amounts)
February 28, 2009 August 31, 2008
----------------- ---------------
Assets
------
Cash and cash equivalents $28,494 $41,983
Trade accounts receivable, less
allowance for doubtful accounts
of $609 and $486 at
February 28, 2009 and
August 31, 2008, respectively 42,067 49,271
Product held at contract packagers 3,960 2,453
Inventories 18,542 18,280
Current deferred tax assets, net 4,006 4,045
Other current assets 4,118 3,453
----- -----
Total current assets 101,187 119,485
Property, plant and equipment, net 11,177 11,309
Goodwill 94,910 95,909
Other intangible assets, net 35,807 39,992
Other assets 3,399 3,543
Investment in related party - 435
------ ------
Total assets $246,480 $270,673
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Accounts payable $14,915 $22,985
Accounts payable to related party 285 547
Accrued liabilities 14,380 13,143
Current portion of long-term debt 10,714 10,714
Accrued payroll and related expenses 3,687 6,084
Income taxes payable 1,893 1,090
----- -----
Total current liabilities 45,874 54,563
Long-term debt 21,429 32,143
Long-term deferred tax
liabilities, net 17,686 16,876
Deferred employee benefits and
other long-term liabilities 3,008 3,099
----- -----
Total liabilities 87,997 106,681
------ -------
Shareholders' equity:
Common stock -- authorized 36,000,000
shares, $0.001 par value; 18,064,544
and 18,041,715 shares issued at
February 28, 2009 and August 31, 2008,
respectively; and 16,501,046 and
16,478,217 shares outstanding at
February 28, 2009 and August 31, 2008,
respectively 18 18
Additional paid-in capital 84,882 82,647
Retained earnings 132,124 128,627
Accumulated other comprehensive
(loss) income (8,475) 2,766
Common stock held in treasury,
at cost -- 1,563,498 shares (50,066) (50,066)
------- -------
Total shareholders' equity 158,483 163,992
------- -------
Total liabilities and
shareholders' equity $246,480 $270,673
======== ========
WD-40 Company
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(Unaudited and in thousands)
Six Months Ended February 28 or 29,
2009 2008
---- ----
Operating activities:
Net income $11,768 $14,896
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,780 1,862
Impairment of indefinite-lived
intangible assets 2,760 -
Net gains on sales and
disposals of property and
equipment (21) (2)
Deferred income tax expense
(benefit) 1,113 (151)
Excess tax benefits from
exercises of stock options and
conversions of restricted
stock units to common shares (14) (149)
Equity losses from related party 435 19
Stock-based compensation 1,577 1,391
Changes in assets and
liabilities:
Trade accounts receivable 1,544 (5,698)
Product held at contract
packagers (1,507) (103)
Inventories (1,324) (3,727)
Other assets (1,188) (446)
Accounts payable and accrued
expenses and liabilities (6,111) (6,869)
Accounts payable to
related party (262) (981)
Income taxes payable 1,214 2,690
Deferred employee benefits
and other long-term
liabilities (57) 2,056
----- -----
Net cash provided by
operating activities 11,707 4,788
------ -----
Investing activities:
Capital expenditures (2,019) (2,656)
Proceeds from sales of
property and equipment 126 108
Purchases of marketable
securities - (76,175)
Proceeds from sales of
marketable securities - 70,100
------ ------
Net cash used in investing
activities (1,893) (8,623)
------ ------
Financing activities:
Repayments of long-term debt (10,714) (10,714)
Proceeds from issuance of
common stock 640 2,906
Excess tax benefits from
exercises of stock options and
conversions of restricted stock
units to common shares 14 149
Dividends paid (8,271) (8,453)
Treasury stock purchases - (17,720)
------- -------
Net cash used in financing
activities (18,331) (33,832)
------- -------
Effect of exchange rate changes
on cash and cash equivalents (4,972) (17)
------ ---
Net decrease in cash and cash
equivalents (13,489) (37,684)
Cash and cash equivalents at
beginning of period 41,983 61,078
------ ------
Cash and cash equivalents at
end of period $28,494 $23,394
======= =======
WD-40 Company
Condensed Consolidated Statements of Comprehensive Income
---------------------------------------------------------
(Unaudited and in thousands)
Three Months Ended Six Months Ended
February 28 or 29, February 28 or 29,
--------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Net income $4,083 $8,666 $11,768 $14,896
Other comprehensive loss:
Foreign currency translation
adjustment, net of tax (2,991) (1,419) (11,241) (331)
------ ------ ------- ----
Total comprehensive income $1,092 $7,247 $527 $14,565
====== ====== ==== =======
