SAN DIEGO, April 9 /PRNewswire-FirstCall/ -- 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(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 $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 Six Months Ended
February 29 or 28, 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, August 31,
2008 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 Six Months Ended
February 29 or 28, 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
