WD-40 COMPANY 
SAN DIEGO, Oct. 19, 2017 /PRNewswire/ -- WD-40 Company (NASDAQ:WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its fourth quarter and fiscal year ended August 31, 2017.
Financial Highlights and Summary
-- Total net sales for the fourth quarter were $96.6 million, a decrease of
1 percent compared to the prior year fiscal quarter. Net sales for the
full fiscal year were $380.5 million, a decrease of $0.2 million
compared to the prior year fiscal year.
-- Translation of the Company's foreign subsidiary results to U.S. dollars
had an unfavorable impact on sales for the current quarter and full
fiscal year. On a constant currency basis total net sales would have
been $98.5 million for the fourth quarter and $399.6 million for the
full fiscal year.
-- Net income for the fourth quarter was $14.4 million, an increase of 1
percent compared to the prior year fiscal quarter. For the full fiscal
year net income was $52.9 million, also an increase of 1 percent from
the prior fiscal year.
-- Diluted earnings per share were $1.01 in the fourth quarter, compared to
$0.99 per share for the prior year fiscal quarter. Year-to-date diluted
earnings per share were $3.72 compared to $3.64 in the prior fiscal
year.
-- Gross margin was 56.0 percent in the fourth quarter compared to 57.4
percent in the prior year fiscal quarter. Full fiscal year gross margin
was 56.2 percent compared to 56.3 percent in the prior fiscal year.
-- Selling, general and administrative expenses were down 12 percent in the
fourth quarter to $28.2 million when compared to the prior year fiscal
quarter. Selling, general and administrative expenses for the full
fiscal year were down 3 percent to $114.6 million compared to the prior
fiscal year.
-- Advertising and sales promotion expenses were down 2 percent in the
fourth quarter to $5.3 million when compared to the prior year fiscal
quarter. Advertising and sales promotion expenses for the full fiscal
year were down 8 percent to $20.5 million compared to the prior fiscal
year.
"Although stronger sales growth in fiscal year 2017 would have been a preferred result, I believe today's financial results demonstrate that our robust business model and global diversification can deliver record earnings - even in times of currency headwinds," said Garry Ridge, WD-40 Company's president and chief executive officer.
"Our WD-40 Specialist product line continued to perform well and delivered 20 percent annual revenue growth in fiscal year 2017. This innovative product line, together with our ability to grow sales of the blue and yellow can with the little red top, represents a tremendous long-term opportunity for our organization.
"As we embark into fiscal year 2018 we believe the bulk of the recent foreign currency exchange headwinds are behind us and, accordingly, think it is an appropriate time to review our long-term revenue targets. Our revised long-term revenue target is to drive consolidated net sales to approximately $700 million in revenue by the end of fiscal year 2025," continued Ridge.
Net Sales by Segment (in thousands):
Three Months Ended August 31, Fiscal Year Ended August 31,
----------------------------- ----------------------------
2017 2016 % 2017 2016 %
Change Change
------ ------
Americas $47,965 $51,565 (7)% $184,929 $191,397 (3)%
EMEA 35,923 34,601 4% 136,771 135,235 1%
Asia-
Pacific 12,673 10,986 15% 58,806 54,038 9%
------ ------ ------ ------
Total $96,561 $97,152 (1)% $380,506 $380,670 -
======= ======= ======== ========
-- Net sales by segment as a percent of total net sales for the fourth
quarter were as follows: for the Americas, 50 percent; for EMEA, 37
percent; and for Asia-Pacific, 13 percent.
-- Net sales in the Americas were down 7 percent in the fourth quarter
primarily attributable to an 11 percent decrease in sales of maintenance
products in the United States. These declines were partially offset by
higher sales of maintenance products in Canada and Latin America. The
lower sales of maintenance products in the United States were due to the
phasing of promotional activities at some of our larger customers.
-- Net sales in EMEA increased 4 percent in the fourth quarter primarily
due to a 7 percent increase in sales in the EMEA direct markets compared
to the prior year fiscal period primarily due to higher sales of
maintenance products throughout most countries in the region. On a
constant currency basis EMEA sales for the fourth quarter would have
increased by $3.5 million or 10 percent compared to the prior fiscal
year period.
-- Net sales in Asia-Pacific increased 15 percent in the fourth quarter
primarily due to a 39 percent increase in sales in the Asia-Pacific
distributor markets and a 13 percent increase in sales in China. The
sales growth in the Asia distributor markets was primarily attributable
to the timing of promotional activities and increased distribution for
WD-40 Multi-Use Product. The growth in China was due to an increase in
promotional activities throughout the country. Changes in foreign
currency exchange rates did not have a material impact on sales in the
Asia-Pacific segment.
Net Sales by Product Group (in thousands):
Three Months Ended August 31, Fiscal Year Ended August 31,
----------------------------- ----------------------------
2017 2016 % 2017 2016 %
Change Change
------ ------
Maintenance
products $86,439 $86,532 - $342,295 $339,974 1%
Homecare and
cleaning
products 10,122 10,620 (5)% 38,211 40,696 (6)%
------ ------ ------ ------
Total $96,561 $97,152 (1)% $380,506 $380,670 -
======= ======= ======== ========
-- Net sales of maintenance products, which are considered the primary
growth focus for the Company, remained relatively constant at $86.4
million in the fourth quarter compared to $86.5 million in the prior
year period. Maintenance product sales increased within the EMEA and
Asia-Pacific segments but the growth was entirely offset by a decline of
sales in the Americas. This decline was entirely attributable to an 11
percent decrease in sales of maintenance products in the United States.
-- Net sales of homecare and cleaning products decreased 5 percent in the
fourth quarter when compared to the prior fiscal year period. The
homecare and cleaning products, particularly those in the U.S., are
considered harvest brands providing healthy profit returns to the
Company and are becoming a smaller part of the business as net sales of
multi-purpose maintenance products grow per the execution of the
Company's strategic initiatives.
Dividend and Share Repurchase
As previously announced, WD-40 Company's board of directors declared on Tuesday, October 10, 2017 a quarterly dividend of $0.49 per share payable October 31, 2017 to stockholders of record at the close of business on October 20, 2017.
On June 21, 2016, the Company's Board of Directors approved a share buy-back plan. Under the plan, which became effective on September 1, 2016, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2018. The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company's Chief Executive Officer and Chief Financial Officer and in compliance with all laws and regulations applicable thereto. During the period from September 1, 2016 through August 31, 2017, the Company has repurchased 290,573 shares at a total cost of $31.1 million under this $75.0 million plan.
Fiscal Year 2018 Guidance
The Company issued the following guidance for fiscal year 2018:
-- Net sales growth is projected to be between 4 and 6 percent with net
sales expected to be between $396 million and $403 million.
-- Gross margin percentage for the full year is expected to be near 56
percent.
-- Advertising and promotion investments are projected to be near 6.0
percent of net sales.
-- Net income is projected to be between $52.9 million and $53.8 million.
-- Diluted earnings per share is expected to be between $3.81 and $3.87
based on an estimated 13.9 million weighted average shares outstanding.
This guidance does not include any future acquisitions or divestitures and assumes that foreign currency exchange rates and crude oil prices will remain close to current levels for the remainder of fiscal year 2018.
Webcast Information
As previously announced, WD-40 Company management will host a live webcast at approximately 5:00 p.m. ET / 2:00 p.m. PT today to discuss these results. Other forward-looking and material information may also be discussed during this call. Please visit http://investor.wd40company.com for more information and to view supporting materials.
About WD-40 Company
WD-40 Company is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world. The Company markets its maintenance products and homecare and cleaning products under the following well-known brands: WD-40®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®.
Headquartered in San Diego, WD-40 Company recorded net sales of $381 million in fiscal year 2017 and its products are currently available in more than 176 countries and territories worldwide. WD-40 Company is traded on the NASDAQ Global Select market under the ticker symbol "WDFC." For additional information about WD-40 Company please visit http://www.wd40company.com.
Forward-Looking Statements
Except for the historical information contained herein, this press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect the Company's current expectations with respect to currently available operating, financial and economic information. These forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements.
Our forward-looking statements include, but are not limited to, discussions about future financial and operating results, including: growth expectations for maintenance products; expected levels of promotional and advertising spending; plans for and success of product innovation, the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; and forecasted foreign currency exchange rates and commodity prices. Our forward-looking statements are generally identified with words such as "believe," "expect," "intend," "plan," "could," "may," "aim," "anticipate," "estimate" and similar expressions.
The Company's expectations, beliefs and forecasts 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 forecasts will be achieved or accomplished.
Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not limited to, those identified in Part I?Item 1A, "Risk Factors," in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2017, which the company expects to file with the SEC on October 23, 2017.
All forward-looking statements included in this press release should be considered in the context of these risks. All forward-looking statements speak only as of October 19, 2017, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on our forward-looking statements.
Table Notes and General Definitions
(1) The Company markets maintenance
products under the WD-40(R),
GT85(R) and 3-IN-ONE(R) brand
names. Currently included in the WD-
40 brand are the WD-40 Multi-Use
Product and the WD-40 Specialist(R)
and WD-40 BIKE(R) product lines.
(2) The Company markets the following
homecare and cleaning 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)
household cleaners and rug and room
deodorizers and Lava(R) and
Solvol(R) heavy-duty hand cleaners.
(3) The Americas segment consists of the
U.S., Canada and Latin America.
(4) The EMEA segment consists of
countries in Europe, the Middle
East, Africa and India.
(5) The Asia-Pacific segment consists of
Australia, China and other countries
in the Asia region.
(6) Constant currency represents the
translation of the current quarter
and year-to-date results from the
functional currencies of the
Company's subsidiaries to U.S.
dollars using the exchange rate in
effect for the corresponding periods
of the prior fiscal year.
WD-40 COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share amounts)
August 31, August 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents $37,082 $50,891
Short-term investments 80,166 57,633
Trade accounts receivable, less allowance for
doubtful accounts of $240 and $394 at August
31, 2017 and 2016, respectively 64,259 64,680
Inventories 35,340 31,793
Other current assets 8,007 4,475
----- -----
Total current assets 224,854 209,472
Property and equipment, net 29,439 11,545
Goodwill 95,597 95,649
Other intangible assets, net 16,244 19,191
Deferred tax assets, net 495 621
Other assets 3,088 3,190
----- -----
Total assets $369,717 $339,668
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $20,898 $18,690
Accrued liabilities 18,997 15,757
Accrued payroll and related expenses 14,222 20,866
Revolving credit facility, current portion 20,000 -
Income taxes payable 1,306 3,381
----- -----
Total current liabilities 75,423 58,694
Revolving credit facility 134,000 122,000
Deferred tax liabilities, net 18,949 16,365
Other long-term liabilities 1,958 2,214
----- -----
Total liabilities 230,330 199,273
------- -------
Commitments and Contingencies
Shareholders' equity:
Common stock ? authorized 36,000,000 shares,
$0.001 par value; 19,688,238 and 19,621,820
shares issued at August 31, 2017 and 2016,
respectively; and 13,984,183 and 14,208,338
shares outstanding at August 31, 2017 and
2016, respectively
20 20
Additional paid-in capital 150,692 145,936
Retained earnings 315,764 289,642
Accumulated other comprehensive income (loss) (28,075) (27,298)
Common stock held in treasury, at cost ?
5,704,055 and 5,413,482 shares at August 31,
2017 and 2016, respectively (299,014) (267,905)
-------- --------
Total shareholders' equity 139,387 140,395
------- -------
Total liabilities and shareholders'
equity $369,717 $339,668
======== ========
WD-40 COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share amounts)
Three Months Ended August 31, Fiscal Year Ended August 31,
2017 2016 2017 2016
---- ---- ---- ----
Net sales $96,561 $97,152 $380,506 $380,670
Cost of products sold 42,465 41,364 166,621 166,301
------ ------ ------- -------
Gross profit 54,096 55,788 213,885 214,369
------ ------ ------- -------
Operating expenses:
Selling, general and administrative 28,169 32,012 114,560 117,767
Advertising and sales promotion 5,286 5,413 20,537 22,278
Amortization of definite-lived
intangible assets 723 734 2,879 2,976
--- --- ----- -----
Total operating expenses 34,178 38,159 137,976 143,021
------ ------ ------- -------
Income from operations 19,918 17,629 75,909 71,348
Other income (expense):
Interest income 116 166 508 683
Interest expense (760) (481) (2,582) (1,703)
Other income (expense), net 260 1,991 787 2,461
--- ----- --- -----
Income before income taxes 19,534 19,305 74,622 72,789
Provision for income taxes 5,166 5,073 21,692 20,161
----- ----- ------ ------
Net income $14,368 $14,232 $52,930 $52,628
======= ======= ======= =======
Earnings per common share:
Basic $1.02 $0.99 $3.73 $3.65
===== ===== ===== =====
Diluted $1.01 $0.99 $3.72 $3.64
===== ===== ===== =====
Shares used in per share calculations:
Basic 14,010 14,235 14,089 14,332
====== ====== ====== ======
Diluted 14,042 14,280 14,123 14,379
====== ====== ====== ======
WD-40 COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
Fiscal Year Ended August 31,
----------------------------
2017 2016
---- ----
Operating activities:
Net income $52,930 $52,628
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation and amortization 6,769 6,465
Net gains on sales and disposals of property
and equipment (115) (75)
Deferred income taxes 1,608 (2,227)
Excess tax benefits from settlements of stock-
based equity awards (1,539) (2,064)
Stock-based compensation 4,138 3,655
Unrealized foreign currency exchange losses
(gains), net 364 (986)
Provision for bad debts (138) 52
Changes in assets and liabilities:
Trade accounts receivable 482 (9,936)
Inventories (3,487) (1,001)
Other assets (3,514) 1,557
Accounts payable and accrued liabilities 2,827 2,871
Accrued payroll and related expenses (8,328) 5,486
Income taxes payable 605 4,235
Other long-term liabilities (265) (56)
---- ---
Net cash provided by operating activities 52,337 60,604
------ ------
Investing activities:
Purchases of property and equipment (20,150) (4,354)
Proceeds from sales of property and equipment 430 301
Purchases of short-term investments (27,136) (24,899)
Maturities of short-term investments 4,565 8,032
----- -----
Net cash used in investing activities (42,291) (20,920)
------- -------
Financing activities:
Treasury stock purchases (31,109) (32,131)
Dividends paid (26,808) (23,669)
Proceeds from issuance of common stock 775 1,200
Excess tax benefits from settlements of stock-
based equity awards 1,539 2,064
Net proceeds from revolving credit facility 32,000 14,000
------ ------
Net cash used in financing activities (23,603) (38,536)
------- -------
Effect of exchange rate changes on cash and
cash equivalents (252) (4,153)
---- ------
Net decrease in cash and cash equivalents (13,809) (3,005)
Cash and cash equivalents at beginning of
period 50,891 53,896
------ ------
Cash and cash equivalents at end of
period $37,082 $50,891
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SOURCE WD-40 Company
