SAN DIEGO, Jan. 9 /PRNewswire-FirstCall/ -- WD-40 Company (NASDAQ:WDFC) today reported results for the first quarter ended November 30, 2007.
Summary
-- Net sales increased 10.0% to $79.2 million for the first quarter
compared to the prior year first quarter. -- First quarter lubricant sales were $57.3 million, up 17.2% versus the
same quarter last year. Household products quarter sales were
$20.1 million, down 5.7%. First quarter hand cleaner sales were
$1.7 million, flat with the prior year quarter. -- Americas region first quarter sales were $43.6 million, down 3.5%
compared to the first quarter last year. Europe sales in the first
quarter were $28.4 million, up 29.7%. Asia-Pacific quarter sales were
$7.2 million, up 46.1%. -- Gross margin was 47.3% in the first quarter compared to 47.9% in the
same quarter last year. -- Net income for the first quarter was $6.2 million, up 9.4% over the
prior year first quarter. -- Earnings per share for the first quarter was 36 cents, up 10.4% versus
the prior year quarter. "We had a solid first quarter and are on track for the year," said Garry O. Ridge, WD-40 Company president and chief executive officer. "During the first quarter, our sales figures clearly represent the results of our on-going strategy to diversify the company across brands, borders and trade channels," Ridge said. "In fact, in the first quarter, 67% of WD-40(R) brand sales and 56% of our total sales were outside the United States, proving we are truly a global company." "In the Americas, Latin America sales growth was offset by declines in the US and Canada," Ridge said.
"We were pleased with our progress in Europe which achieved double digit sales growth in all of our markets with the exception of the UK, which was off slightly from last year," Ridge said.
"We had a very strong quarter in Asia/Pacific and saw growth in our key markets, including Australia, Singapore, Malaysia and the Philippines," Ridge said. "We also had a good quarter in China -- early evidence that our shift to direct operations there was a sensible move." Gross margin during the first quarter was 47.3% of sales compared to 47.9% in the first quarter last year.
"We continue to be concerned about the rising costs of oil, plastic, and steel. These factors affect us in our cost of goods across all our markets as well as in freight." Ridge said. "Our push to improve our margins through innovation, the evolution of our supply chain, and price increases where necessary have helped but have not yet been enough to mitigate the underlying cost increases." In an effort to leverage innovation to deliver added value to customers as well as address gross margin concerns, WD-40 Company plans to convert many WD-40 can sizes in the United States to the WD-40 Smart Straw format. The WD-40 Smart Straw features a permanently attached straw that flips up to provide either a pinpoint stream or a wide spray that solves the number one complaint about WD-40 -- losing the little red straw. WD-40 Company will begin the U.S. Smart Straw conversion in the third quarter of fiscal 2008. As a result, WD-40 Company will not see the full impact of this change in fiscal 2008.
"The WD-40 Smart Straw has earned consumer acceptance in many countries around the world by delivering added convenience," Ridge said, "so we're optimistic about this logical next step in the progress of the brand." Fiscal Year 2008 Guidance As previously announced, WD-40 Company expects fiscal year 2008 net sales to grow 7%-10% to $329-$339 million. The company expects net income of $31.1-$32.8 million in 2008, achieving earnings per share of $1.83 to $1.93 based on an estimated 17.0 million shares outstanding.
Outlook through 2011 WD-40 Company also released its four-year outlook, and expects total sales to grow at a compound annual rate of 6.7% to 8.7% per year through fiscal year 2011.
The company expects net income to grow at a compound annual rate of 9.0% to 11.1% per year over that same period and earnings per share to increase between 9.4% and 11.5%. Investors can find a link to the company's four-year outlook on the home page of the investor relations website at http://www.wd40.com/ir/.
Dividend As previously announced, the board of directors declared on December 11, 2007 the regular quarterly dividend of $0.25 per share, payable January 31, 2008 to shareholders of record on January 8, 2008.
WD-40 Company's 10-Q will be filed on January 9, 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 the impact from cost of goods, the impact of new product innovations, 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
Consolidated Condensed Statements of Operations
(unaudited) Three Months Ended November 30,
2007 2006 Net sales $79,150,000 $71,956,000
Cost of products sold (1) 41,680,000 37,483,000 Gross profit 37,470,000 34,473,000 Operating expenses:
Selling, general and administrative 21,224,000 19,055,000
Advertising and sales promotion 6,640,000 5,642,000
Amortization of intangible asset 152,000 141,000
Income from operations 9,454,000 9,635,000
Other (expense) income:
Interest expense, net (406,000) (681,000)
Other income (expense), net 312,000 (91,000)
Income before income taxes 9,360,000 8,863,000 Provision for income taxes 3,130,000 3,169,000
Net income $6,230,000 $5,694,000 Earnings per common share:
Basic $0.37 $0.33
Diluted $0.36 $0.33
Weighted-average common shares
outstanding, basic 16,889,137 17,022,286 Weighted-average common shares
outstanding, diluted 17,092,792 17,241,140 Dividends declared per share $0.25 $0.22
(1) Includes cost of products acquired from related party of $6,681,000
and $5,191,000 for the three months ended November 30, 2007 and 2006,
respectively.
WD-40 Company
Consolidated Condensed Balance Sheets
(unaudited) November 30, 2007 August 31, 2007 Assets
Current assets:
Cash and cash equivalents $50,364,000 $61,078,000
Trade accounts receivable, less
allowance for doubtful
accounts of $352,000 and $369,000 47,377,000 47,204,000
Product held at contract packagers 1,617,000 1,447,000
Inventories 15,673,000 13,208,000
Current deferred tax assets, net 4,155,000 4,145,000
Other current assets 5,297,000 3,489,000 Total current assets 124,483,000 130,571,000 Property, plant and equipment, net 9,238,000 8,811,000
Goodwill 96,514,000 96,409,000
Other intangibles, net 42,527,000 42,543,000
Investment in related party 1,056,000 1,015,000
Other assets 3,763,000 3,837,000 $277,581,000 $283,186,000
Liabilities and Shareholders' Equity Current liabilities:
Current portion of long-term debt $10,714,000 $10,714,000
Accounts payable 18,825,000 21,854,000
Accounts payable to related party 2,771,000 1,506,000
Accrued liabilities 13,271,000 12,780,000
Accrued payroll and related
expenses 4,350,000 6,906,000
Income taxes payable 871,000 97,000 Total current liabilities 50,802,000 53,857,000 Long-term debt 32,143,000 42,857,000
Deferred employee benefits and other
long-term liabilities 4,778,000 2,195,000
Long-term deferred tax liabilities,
net 15,602,000 16,005,000 Total liabilities 103,325,000 114,914,000 Shareholders' equity:
Common stock, $.001 par value,
36,000,000 shares authorized --
17,986,430 and 17,883,299 shares
issued; and 16,951,732 and
16,848,601 shares outstanding 18,000 18,000
Paid-in capital 78,281,000 74,836,000
Retained earnings 119,711,000 118,260,000
Accumulated other comprehensive
income 8,592,000 7,504,000
Common stock held in treasury, at
cost (1,034,698 shares) (32,346,000) (32,346,000) Total shareholders' equity 174,256,000 168,272,000 $277,581,000 $283,186,000 WD-40 Company
Consolidated Condensed Statements of Cash Flows
(unaudited) Three Months Ended November 30,
2007 2006
Cash flows from operating activities:
Net income $6,230,000 $5,694,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 931,000 924,000
(Gains) losses on sales and
disposals of property and
equipment (4,000) 8,000
Deferred income tax expense (535,000) 550,000
Excess tax benefits from exercise
of stock options (147,000) (71,000)
Distributions received and equity
(earnings) from related party,
net (41,000) 30,000
Stock-based compensation 493,000 423,000
Changes in assets and liabilities:
Trade accounts receivable 508,000 4,517,000
Product held at contract
packagers (170,000) 80,000
Inventories (2,317,000) (241,000)
Other assets (1,799,000) 720,000
Accounts payable and accrued
expenses (5,509,000) 497,000
Accounts payable to related
party 1,265,000 407,000
Income taxes payable 995,000 733,000
Deferred employee benefits and
other long-term liabilities 2,006,000 27,000 Net cash provided by
operating activities 1,906,000 14,298,000 Cash flows from investing activities:
Purchases of short-term investments (51,325,000) (59,075,000)
Sales of short-term investments 51,325,000 59,075,000
Capital expenditures (1,032,000) (550,000)
Proceeds from sales of property and
equipment 41,000 39,000 Net cash used in investing
activities (991,000) (511,000) Cash flows from financing activities:
Repayments of long-term debt (10,714,000) (10,714,000)
Proceeds from issuance of common
stock 2,784,000 1,633,000
Excess tax benefits from exercise
of stock options 147,000 71,000
Dividends paid (4,215,000) (3,747,000) Net cash used in financing
activities (11,998,000) (12,757,000) Effect of exchange rate changes on
cash and cash equivalents 369,000 200,000 (Decrease) increase in cash and cash
equivalents (10,714,000) 1,230,000 Cash and cash equivalents at
beginning of period 61,078,000 45,206,000 Cash and cash equivalents at end of
period $50,364,000 $46,436,000 WD-40 Company
Consolidated Condensed Statements of Comprehensive Income
(unaudited) Three Months Ended November 30,
2007 2006 Net income $6,230,000 $5,694,000 Other comprehensive income:
Equity adjustment from foreign currency
translation, net of tax provision
(benefit) of $45,000 and ($24,000) for
the three months ended November 30, 2007
and 2006, respectively 1,088,000 1,316,000 Total comprehensive income $7,318,000 $7,010,000
DATASOURCE: WD-40 Company CONTACT: Garry O. Ridge of WD-40 Company, +1-619-275-9324 Web site: http://www.wd40.com/
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