SAN DIEGO, Oct. 18, 2018 /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,
2018.
Financial Highlights and Summary
- Total net sales for the fourth quarter were $102.6 million, an increase of 6 percent compared
to the prior year fiscal quarter. Net sales for the full
fiscal year were $408.5 million,
an increase of 7 percent compared to the prior fiscal
year.
- Translation of the Company's foreign subsidiary results to U.S.
dollars had a favorable impact on sales for the current quarter and
full fiscal year. On a constant currency basis total net
sales would have been $102.2 million
for the fourth quarter and $398.0
million for the full fiscal year.
- Net income for the fourth quarter was $21.6 million, an increase of 51 percent compared
to the prior year fiscal quarter. For the full fiscal year net
income was $65.2 million, an increase
of 23 percent from the prior fiscal year.
- Diluted earnings per share were $1.54 in the fourth quarter, compared to
$1.01 per share for the prior year
fiscal quarter. Year-to-date diluted earnings per share were
$4.64 compared to $3.72 in the prior fiscal year.
- Gross margin was 55.2 percent in the fourth quarter compared to
56.0 percent in the prior year fiscal quarter. Full fiscal
year gross margin was 55.1 percent compared to 56.2 percent in the
prior fiscal year.
- Selling, general and administrative expenses were up 5 percent
in the fourth quarter to $29.7
million when compared to the prior year fiscal
quarter. Selling, general and administrative expenses for the
full fiscal year were up 6 percent to $121.4
million compared to the prior fiscal year.
- Advertising and sales promotion expenses were up 23 percent in
the fourth quarter to $6.5 million
when compared to the prior year fiscal quarter. Advertising and
sales promotion expenses for the full fiscal year were up 9 percent
to $22.3 million compared to the
prior fiscal year.
"In the fourth fiscal quarter, net income and diluted earnings
per share were positively impacted by a $7.1
million provisional tax adjustment we recorded during the
quarter associated with the Tax Cuts and Jobs Act," said
Jay Rembolt, WD-40 Company's Chief
Financial Officer. "Because of this adjustment we substantially
exceeded the guidance we issued in July of 2018 for both net income
and diluted EPS. This has been a very unusual tax year due to
the transition associated with the Tax Cuts and Jobs Act which
caused our effective income tax rate for fiscal year 2018 to be
approximately 13 percent. The exceptionally low tax rate we
recorded this year is not expected to carry into fiscal year 2019.
I suggest investors review our Annual Report on Form 10-K for more
detailed information on the impacts of Tax Cuts and Jobs Act."
WD-40 Company's president and CEO, Garry
Ridge added, "We are pleased that we achieved both sales and
earnings results in fiscal year 2018 which reflect new record highs
for the Company. Our maintenance products delivered solid
sales increases in the full fiscal year including 8 percent growth
of WD-40 Multi-Use Product and 22 percent growth of WD-40
Specialist. I'd like to thank the tribe for their
contributions during fiscal year 2018. The tribe has never been
more aligned and focused. We are clear about our purpose and we
know what we need to do to achieve our long-term goals," concluded
Ridge.
Net Sales by Segment (in thousands):
|
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|
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31,
|
|
Fiscal Year Ended
August 31,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Americas
|
$
|
48,749
|
|
$
|
47,965
|
|
|
2%
|
|
$
|
192,878
|
|
$
|
184,929
|
|
|
4%
|
EMEA
|
|
36,647
|
|
|
35,923
|
|
|
2%
|
|
|
150,878
|
|
|
136,771
|
|
|
10%
|
Asia-Pacific
|
|
17,244
|
|
|
12,673
|
|
|
36%
|
|
|
64,762
|
|
|
58,806
|
|
|
10%
|
Total
|
$
|
102,640
|
|
$
|
96,561
|
|
|
6%
|
|
$
|
408,518
|
|
$
|
380,506
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
- Net sales by segment as a percent of total net sales for the
fourth quarter were as follows: for the Americas, 47 percent; for
EMEA, 36 percent; and for Asia-Pacific, 17 percent.
- Net sales in the Americas were up 2 percent in the fourth
quarter entirely due to a 9 percent increase in sales of
maintenance products in the United States. This increase was
partially offset by lower sales of maintenance products in
Canada and Latin America. The higher sales of maintenance
products in the United States were
primarily due to an increase in sales of WD-40®
EZ-REACH™ as well as the timing of promotional programs in the
region.
- Net sales in EMEA increased 2 percent in the fourth quarter
primarily due to a 10 percent increase in sales in the EMEA direct
markets which was significantly offset by a 14 percent decrease in
sales in the distributor markets. The increase in the direct
markets was primarily due to higher sales of maintenance products
throughout most countries in the region, whereas the decline in the
distributor markets was due to decreased sales in Russia. Changes in foreign currency exchange
rates had a favorable impact on sales for the EMEA segment from
period to period. On a constant currency basis EMEA sales for the
fourth quarter would have increased by only $0.1 million compared to the prior fiscal year
period.
- Net sales in Asia-Pacific
increased 36 percent in the fourth quarter primarily due to a 128
percent increase in sales in the Asia distributor markets and a 30 percent
increase in sales in China. The sales growth in the
Asia distributor markets was
primarily attributable to increased sales as a result of the
Company completing its transition to new marketing distributors in
certain regions. The growth in China was due to the timing of customer orders
in the region. Changes in foreign currency exchange rates did
not have a significant impact on sales in the Asia-Pacific segment.
Net Sales by Product Group (in thousands):
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|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
August 31,
|
|
Fiscal Year Ended
August 31,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
Maintenance
products
|
$
|
93,203
|
|
$
|
86,439
|
|
|
8%
|
|
$
|
372,391
|
|
$
|
342,295
|
|
|
9%
|
Homecare and cleaning
products
|
|
9,437
|
|
|
10,122
|
|
|
(7)%
|
|
|
36,127
|
|
|
38,211
|
|
|
(5)%
|
Total
|
$
|
102,640
|
|
$
|
96,561
|
|
|
6%
|
|
$
|
408,518
|
|
$
|
380,506
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, increased 8 percent in the
fourth quarter when compared to the prior fiscal year period.
This sales growth was primarily attributable to increased sales of
WD-40® Multi-Use Product within the Asia-Pacific and Americas segments.
- Net sales of homecare and cleaning products decreased 7 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 9, 2018 a quarterly
dividend of $0.54 per share payable
October 31, 2018 to stockholders of
record at the close of business on October
19, 2018.
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 was authorized to acquire up to
$75.0 million of its outstanding
shares through August 31, 2018. The
timing and amount of repurchases were based on terms and conditions
that were 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, 2018, the Company repurchased 465,879
shares at a total cost of $53.7
million under this $75.0
million plan. During fiscal year 2018, the Company
repurchased 175,306 shares at an average price of $128.99 per share, for a total cost of
$22.6 million.
On June 19, 2018, the Company's
Board of Directors approved a new share buy-back plan.
Under the plan, which became effective on September 1, 2018 and will remain in effect
through August 31, 2020, the Company
is authorized to acquire up to $75.0
million of its outstanding shares 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 thereto.
Fiscal Year 2019 Guidance
The Company issued the
following guidance for fiscal year 2019:
- Net sales growth is projected to be between 4 and 7 percent
with net sales expected to be between $425 million and
$437 million.
- Gross margin percentage for the full year is expected to
be near 55 percent.
- Advertising and promotion investments are projected to be
between 5.5 and 6.0 percent of net sales.
- The provision for income tax is expected to be between 21 and
22 percent.
- Net income is projected to be between $62.2 million and $63.2 million.
- Diluted earnings per share is expected to be between
$4.51 and $4.58 based on an estimated 13.8
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 fiscal
year 2019. The provision for income tax is subject to changes
resulting from our continued analysis of the U.S. Tax Cuts and Jobs
Act and possible legislative changes to income tax laws.
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 $408.5
million in fiscal year 2018 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; the impact of the "Tax Cuts and Job
Act"; 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,"
"target," "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, 2018, which the company expects to file with the SEC on
October 22, 2018.
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 18, 2018,
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®,
GT85® and 3-IN-ONE® brand names.
Currently included in the WD-40 brand are the WD-40 Multi-Use
Product and the WD-40 Specialist® and WD-40
BIKE® product lines.
|
(2)
|
The Company markets
the following homecare and cleaning
brands: X-14® mildew stain remover and
automatic toilet bowl cleaners, 2000 Flushes® automatic
toilet bowl cleaners, Carpet Fresh® and no
vac® rug and room deodorizers, Spot Shot®
aerosol and liquid carpet stain removers, 1001®
household cleaners and rug and room deodorizers and
Lava® and Solvol® 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.
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|
|
|
WD-40
COMPANY
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(Unaudited and in
thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
August
31,
|
|
August
31,
|
|
|
2018
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
48,866
|
|
$
|
37,082
|
|
Short-term
investments
|
|
219
|
|
|
80,166
|
|
Trade accounts
receivable, less allowance for doubtful accounts of $340 and $240
at August 31, 2018 and 2017, respectively
|
|
69,025
|
|
|
64,259
|
|
Inventories
|
|
36,536
|
|
|
35,340
|
|
Other current
assets
|
|
13,337
|
|
|
8,007
|
|
Total current
assets
|
|
167,983
|
|
|
224,854
|
|
Property and equipment,
net
|
|
36,357
|
|
|
29,439
|
|
Goodwill
|
|
95,621
|
|
|
95,597
|
|
Other intangible
assets, net
|
|
13,513
|
|
|
16,244
|
|
Deferred tax assets,
net
|
|
511
|
|
|
495
|
|
Other assets
|
|
3,074
|
|
|
3,088
|
|
Total
assets
|
$
|
317,059
|
|
$
|
369,717
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
19,115
|
|
$
|
20,898
|
|
Accrued
liabilities
|
|
26,240
|
|
|
18,997
|
|
Accrued payroll and
related expenses
|
|
14,823
|
|
|
14,222
|
|
Short-term
borrowings
|
|
23,600
|
|
|
20,000
|
|
Income taxes
payable
|
|
2,125
|
|
|
1,306
|
|
Total current
liabilities
|
|
85,903
|
|
|
75,423
|
|
Long-term
borrowings
|
|
62,800
|
|
|
134,000
|
|
Deferred tax
liabilities, net
|
|
11,050
|
|
|
18,949
|
|
Other long-term
liabilities
|
|
1,817
|
|
|
1,958
|
|
Total
liabilities
|
|
161,570
|
|
|
230,330
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock ―
authorized 36,000,000 shares, $0.001 par value; 19,729,774 and 19,688,238 shares issued at
August 31, 2018 and 2017, respectively; and 13,850,413 and 13,984,183 shares
outstanding at August 31,
2018 and 2017, respectively
|
|
20
|
|
|
20
|
|
Additional paid-in
capital
|
|
153,469
|
|
|
150,692
|
|
Retained
earnings
|
|
351,266
|
|
|
315,764
|
|
Accumulated other
comprehensive income (loss)
|
|
(27,636)
|
|
|
(28,075)
|
|
Common stock held in
treasury, at cost ― 5,879,361 and 5,704,055 shares at August 31, 2018 and 2017,
respectively
|
|
|
|
|
|
|
|
(321,630)
|
|
|
(299,014)
|
|
Total shareholders'
equity
|
|
155,489
|
|
|
139,387
|
|
Total liabilities and
shareholders' equity
|
$
|
317,059
|
|
$
|
369,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
102,640
|
|
$
|
96,561
|
|
$
|
408,518
|
|
$
|
380,506
|
|
Cost of products
sold
|
|
45,990
|
|
|
42,465
|
|
|
183,255
|
|
|
166,621
|
|
Gross
profit
|
|
56,650
|
|
|
54,096
|
|
|
225,263
|
|
|
213,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
29,658
|
|
|
28,169
|
|
|
121,394
|
|
|
114,560
|
|
Advertising and sales
promotion
|
|
6,486
|
|
|
5,286
|
|
|
22,314
|
|
|
20,537
|
|
Amortization of
definite-lived intangible assets
|
|
735
|
|
|
723
|
|
|
2,951
|
|
|
2,879
|
|
Total operating
expenses
|
|
36,879
|
|
|
34,178
|
|
|
146,659
|
|
|
137,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
19,771
|
|
|
19,918
|
|
|
78,604
|
|
|
75,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
83
|
|
|
116
|
|
|
454
|
|
|
508
|
|
Interest
expense
|
|
(1,171)
|
|
|
(760)
|
|
|
(4,219)
|
|
|
(2,582)
|
|
Other income
|
|
426
|
|
|
260
|
|
|
339
|
|
|
787
|
|
Income before income
taxes
|
|
19,109
|
|
|
19,534
|
|
|
75,178
|
|
|
74,622
|
|
Provision for income
taxes
|
|
(2,528)
|
|
|
5,166
|
|
|
9,963
|
|
|
21,692
|
|
Net income
|
$
|
21,637
|
|
$
|
14,368
|
|
$
|
65,215
|
|
$
|
52,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.55
|
|
$
|
1.02
|
|
$
|
4.65
|
|
$
|
3.73
|
|
Diluted
|
$
|
1.54
|
|
$
|
1.01
|
|
$
|
4.64
|
|
$
|
3.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
13,869
|
|
|
14,010
|
|
|
13,929
|
|
|
14,089
|
|
Diluted
|
|
13,904
|
|
|
14,042
|
|
|
13,962
|
|
|
14,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WD-40
COMPANY
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited and in
thousands)
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
August 31,
|
|
|
2018
|
|
2017
|
|
Operating
activities:
|
|
|
|
|
|
|
Net income
|
$
|
65,215
|
|
$
|
52,930
|
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
7,800
|
|
|
6,769
|
|
Net gains on sales and
disposals of property and equipment
|
|
(164)
|
|
|
(115)
|
|
Deferred income
taxes
|
|
(7,186)
|
|
|
1,608
|
|
Stock-based
compensation
|
|
4,195
|
|
|
4,138
|
|
Unrealized foreign
currency exchange losses (gains), net
|
|
(302)
|
|
|
364
|
|
Provision for bad
debts
|
|
121
|
|
|
(138)
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade accounts
receivable
|
|
(5,635)
|
|
|
482
|
|
Inventories
|
|
(1,299)
|
|
|
(3,487)
|
|
Other
assets
|
|
(5,353)
|
|
|
(3,514)
|
|
Accounts payable and
accrued liabilities
|
|
6,107
|
|
|
2,827
|
|
Accrued payroll and
related expenses
|
|
590
|
|
|
(6,632)
|
|
Other long-term
liabilities and income taxes payable
|
|
733
|
|
|
340
|
|
Net cash provided by
operating activities
|
|
64,822
|
|
|
55,572
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
(12,356)
|
|
|
(20,150)
|
|
Proceeds from sales of
property and equipment
|
|
458
|
|
|
430
|
|
Purchases of
intangible assets
|
|
(175)
|
|
|
-
|
|
Purchases of
short-term investments
|
|
(83,704)
|
|
|
(27,136)
|
|
Maturities of
short-term investments
|
|
166,984
|
|
|
4,565
|
|
Net cash provided by
(used in) investing activities
|
|
71,207
|
|
|
(42,291)
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
Treasury stock
purchases
|
|
(22,616)
|
|
|
(31,109)
|
|
Dividends
paid
|
|
(29,585)
|
|
|
(26,808)
|
|
Proceeds from issuance
of common stock
|
|
215
|
|
|
775
|
|
Proceeds from issuance
of long-term senior notes
|
|
20,000
|
|
|
-
|
|
Repayments of
long-term senior notes
|
|
(400)
|
|
|
-
|
|
Net (repayments)
proceeds from revolving credit facility
|
|
(87,200)
|
|
|
32,000
|
|
Shares withheld to
cover taxes upon conversion of equity awards
|
|
(1,823)
|
|
|
(1,696)
|
|
Net cash used
in financing activities
|
|
(121,409)
|
|
|
(26,838)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(2,836)
|
|
|
(252)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
11,784
|
|
|
(13,809)
|
|
Cash and cash
equivalents at beginning of period
|
|
37,082
|
|
|
50,891
|
|
Cash and cash
equivalents at end of period
|
$
|
48,866
|
|
$
|
37,082
|
|
|
|
|
|
|
|
|
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SOURCE WD-40 Company