SAN DIEGO, Oct. 15 /PRNewswire-FirstCall/ -- WD-40 Company today reported net sales for the fourth quarter ended August 31, 2010 of $80.7 million, an increase of 4% from the fourth quarter of last fiscal year. Year-to-date net sales were $321.5 million, up 10% from last fiscal year. Fiscal year 2010 was a record year for sales and earnings for WD-40 Company.
Net income for the fourth quarter was $6.9 million, down 10% compared to the fourth quarter of last fiscal year. Diluted earnings per common share in the fourth quarter were $0.41 compared to $0.46 during the fourth quarter of last fiscal year. Year-to-date net income was $36.1 million, an increase of 37% from the last fiscal year. Year-to-date diluted earnings per common share were $2.15, compared to $1.58 for last fiscal year.
"This past year was the best in our company history and, while the gradual stabilization of the global economy has helped, our success is primarily due to our tribe members' unwavering focus and exceptional execution of our key strategic initiatives," said Garry Ridge, WD-40 Company President and CEO. "We were able to accomplish what was on our to do list, and that included a focus on both geographic expansion of our core brands and maximizing our position with multi-purpose maintenance products."
Summary
-- Net sales increased to $80.7 million for the fourth quarter, up 4% compared to the prior fiscal year's fourth quarter. Year-to-date net sales increased to $321.5 million, up 10% from last fiscal year.
-- Fourth quarter multi-purpose maintenance product sales, which include the WD-40®, 3-IN-ONE®, and BLUE WORKS(TM) brands, were $63.9 million, up 7% from the previous fiscal year, and $258.1 million for the full year, up 15% as compared to last fiscal year. Homecare and cleaning product sales, which include all of our other brands, were $16.8 million for the fourth quarter, down 7% from the fourth quarter of last fiscal year, and were $63.4 million year-to-date, down 5% from last fiscal year.
-- America's segment fourth quarter sales were up 2% compared to the prior fiscal year's fourth quarter and year-to-date were up 7% from the prior fiscal year. Europe segment sales for the fourth quarter were up 5% compared to the prior fiscal year's fourth quarter and were up 13% year-to-date from the prior fiscal year. Asia/Pacific segment sales for the fourth quarter were up 9% compared to the prior fiscal year's fourth quarter and were up 20% year-to-date compared to the prior fiscal year.
-- Fourth quarter gross margin was 50.7% of sales compared to 51.6% in the fourth quarter of last fiscal year. For the full year, gross margin was 51.4% of sales, compared to 49.5% in the prior fiscal year.
"During the year, we had some stabilization of certain input costs and that, combined with other cost management programs we implemented as well as reduced advertising and promotion discounts, have helped us exceed our long-stated goal of restoring our gross margin above the 50 percent level," Ridge said. "We have also seen some stabilization of our brands in the highly competitive household products arena."
Total sales by segment for the fiscal year were 56% from the Americas, 34% from Europe and 10% from Asia/Pacific. During the year, foreign currency exchange rates positively affected net sales by $3.1 million and net income by $0.5 million.
"During the quarter, while we experienced steady growth in the United States, 54% of our global sales were outside of the country," Ridge said. "The stable platform for growth that we have put in place across the globe and our continued focus on and execution of geographic expansion have proven to be very important to the company."
Advertising and sales promotion expenses were up 41% for the fourth quarter compared to the same period last fiscal year and were up 13% for the full year compared to the prior fiscal year.
Selling, general and administrative expenses in the fourth quarter were $24.1 million, up 16% compared to the prior fiscal year's fourth quarter and were $87.3 million for the full year, up 12% compared to the prior fiscal year.
"We launched Blue Works this past year and continue to focus on building this brand one customer at a time, for life," Ridge said. "We continue to explore other opportunities in the multi-purpose maintenance products arena, and expect to launch additional products in this category over the next two years in various geographic regions."
The board of directors of WD-40 Company declared on Friday, October 1, 2010 an 8% increase in the regular quarterly dividend to $0.27 per share, payable October 29, 2010 to stockholders of record on October 14, 2010.
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.
More detailed information will be available in WD-40 Company's Form 10-K that will be filed on October 18, 2010.
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 impact of raw materials, changes in foreign exchange rates, impacts of new product 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.
WD-40 COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended August 31, ------------------ 2010 2009 ---- ---- Net sales $80,681 $77,752 Cost of products sold(1) 39,776 37,596 ------ ------ Gross profit 40,905 40,156 ------ ------ Operating expenses: Selling, general and administrative 24,092 20,686 Advertising and sales promotion 5,824 4,121 Amortization of definite-lived intangible assets 176 122 Impairment of indefinite-lived intangible assets - 3,950 --- ----- Total operating expenses 30,092 28,879 ------ ------ Income from operations 10,813 11,277 Other income (expense): Interest income 50 51 Interest expense (399) (597) Other (expense) income, net (209) (1) ---- --- Income before income taxes 10,255 10,730 Provision for income taxes 3,367 3,108 ----- ----- Net income $6,888 $7,622 ====== ====== Earnings per common share: Basic $0.41 $0.46 ===== ===== Diluted $0.41 $0.46 ===== ===== Shares used in per share calculations: Basic 16,667 16,515 ====== ====== Diluted 16,808 16,653 ====== ====== Dividends declared per common share $0.25 $0.25 ===== ===== Fiscal Year Ended August 31, ----------------- 2010 2009 ---- ---- Net sales $321,516 $292,002 Cost of products sold(1) 156,210 147,469 ------- ------- Gross profit 165,306 144,533 ------- ------- Operating expenses: Selling, general and administrative 87,323 78,051 Advertising and sales promotion 22,061 19,459 Amortization of definite-lived intangible assets 724 468 Impairment of indefinite-lived intangible assets - 6,710 --- ----- Total operating expenses 110,108 104,688 ------- ------- Income from operations 55,198 39,845 Other income (expense): Interest income 174 428 Interest expense (1,726) (2,492) Other (expense) income, net (89) 543 --- --- Income before income taxes 53,557 38,324 Provision for income taxes 17,462 12,037 ------ ------ Net income $36,095 $26,287 ======= ======= Earnings per common share: Basic $2.17 $1.59 ===== ===== Diluted $2.15 $1.58 ===== ===== Shares used in per share calculations: Basic 16,606 16,503 ====== ====== Diluted 16,725 16,656 ====== ====== Dividends declared per common share $1.00 $1.00 ===== ===== (1) Includes cost of products acquired from related party of $125 and $11,675 for the three months and fiscal year ended August 31, 2009, respectively. WD-40 COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) August 31, August 31, 2010 2009 ---- ---- Assets Current assets: Cash and cash equivalents $75,928 $45,956 Trade accounts receivable, less allowance for doubtful accounts of $299 and $694 at August 31, 2010 and August 31, 2009, respectively 47,846 48,061 Product held at contract packagers 1,536 1,797 Inventories 13,037 15,858 Current deferred tax assets, net 4,747 4,369 Other current assets 7,314 4,736 ----- ----- Total current assets 150,408 120,777 Property, plant and equipment, net 9,322 10,930 Goodwill 95,235 95,424 Other intangible assets, net 31,272 32,205 Other assets 2,871 3,281 ----- ----- Total assets $289,108 $262,617 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $18,943 $12,529 Accrued liabilities 14,382 15,233 Current portion of long-term debt 10,714 10,714 Accrued payroll and related expenses 14,265 7,168 Income taxes payable 1,516 2,570 ----- ----- Total current liabilities 59,820 48,214 Long-term debt 10,715 21,429 Long-term deferred tax liabilities, net 17,414 16,868 Deferred employee benefits and other long-term liabilities 4,635 3,159 ----- ----- Total liabilities 92,584 89,670 ------ ------ Shareholders' equity: Common stock --authorized 36,000,000 shares, $0.001 par value; 18,251,142 and 18,093,879 shares issued at August 31, 2010 and August 31, 2009, respectively; and 16,687,644 and 16,530,381 shares outstanding at August 31, 2010 and August 31, 2009, respectively 18 18 Additional paid-in capital 93,101 86,729 Retained earnings 157,805 138,367 Accumulated other comprehensive loss (4,334) (2,101) Common stock held in treasury, at cost -- 1,563,498 shares at August 31, 2010 and August 31, 2009 (50,066) (50,066) ------- ------- Total shareholders' equity 196,524 172,947 ------- ------- Total liabilities and shareholders' equity $289,108 $262,617 ======== ======== WD-40 COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended August 31, ----------------- 2010 2009 ---- ---- Operating activities: Net income $36,095 $26,287 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,248 3,727 Impairment of indefinite-lived intangible assets - 6,710 Net gains on sales and disposals of property and equipment (43) (17) Deferred income taxes (152) (266) Excess tax benefits from exercises of stock options and conversions of restricted stock units to common shares (224) (101) Stock-based compensation 2,864 2,688 Unrealized foreign currency exchange losses (gains), net 931 (696) Provision for bad debts 103 500 Equity losses from related party - 435 Changes in assets and liabilities: Trade accounts receivable (1,723) (1,349) Product held at contract packagers 265 632 Inventories 2,702 2,034 Other assets (2,738) (1,643) Accounts payable and accrued expenses and liabilities 12,967 (6,669) Accounts payable to related party - 547 Income taxes payable (346) 1,732 Deferred employee benefits and other long-term liabilities 1,475 77 ----- --- Net cash provided by operating activities 56,424 34,628 ------ ------ Investing activities: Capital expenditures (1,769) (3,008) Proceeds from sales of property and equipment 216 255 --- --- Net cash used in investing activities (1,553) (2,753) ------ ------ Financing activities: Repayments of long-term debt (10,714) (10,714) Dividends paid (16,657) (16,547) Proceeds from issuance of common stock 3,572 1,296 Excess tax benefits from exercises of stock options and conversions of restricted stock units to common shares 224 101 --- --- Net cash used in financing activities (23,575) (25,864) ------- ------- Effect of exchange rate changes on cash and cash equivalents (1,324) (2,038) ------ ------ Net increase in cash and cash equivalents 29,972 3,973 Cash and cash equivalents at beginning of period 45,956 41,983 ------ ------ Cash and cash equivalents at end of period $75,928 $45,956 ======= ======= WD-40 COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three Months Ended August 31, ------------------ 2010 2009 ---- ---- Net income $6,888 $7,622 Other comprehensive income (loss): Equity adjustment from foreign currency translation, net of income taxes 3,736 1,127 ----- ----- Total comprehensive income $10,624 $8,749 ======= ====== Fiscal Year Ended August 31, ----------------- 2010 2009 ---- ---- Net income $36,095 $26,287 Other comprehensive income (loss): Equity adjustment from foreign currency translation, net of income taxes (2,233) (4,867) ------ ------ Total comprehensive income $33,862 $21,420 ======= =======
WD-40 Company
CONTACT: Garry O. Ridge of WD-40 Company, +1-619-275-9324
Web Site: http://www.wd40company.com/
