~ Global net sales grew 12 percent in the first
quarter compared to the prior year fiscal quarter ~
~ Management reiterates fiscal year 2024
guidance ~
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
first fiscal quarter ended November 30, 2023.
First Quarter Highlights and Summary:
- Total net sales for the first quarter were $140.4 million, an
increase of 12 percent compared to the prior year fiscal
quarter.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on net sales for the current quarter. On a non-GAAP constant
currency basis, total net sales in the first quarter would have
increased 9 percent to $136.5 million compared to the prior year
fiscal quarter.
- Gross margin was 53.8 percent compared to 51.4 percent in the
prior year fiscal quarter.
- Selling, general, and administrative expenses were up 10
percent to $44.1 million compared to the prior year fiscal
quarter.
- Advertising and sales promotion expenses were up 31 percent to
$7.0 million compared to the prior year fiscal quarter.
- Net income for the first quarter was $17.5 million, an increase
of 25 percent from the prior year fiscal quarter.
- Diluted earnings per share were $1.28 compared to $1.02 for the
prior year fiscal quarter.
“We have started fiscal year 2024 firing on all cylinders, with
significant volume-related sales growth across all three trade
blocs,” said Steve Brass, WD-40 Company’s president and chief
executive officer. “On a constant currency basis, global net sales
were up 9 percent in the first quarter which is in line with both
our fiscal 2024 guidance and our long-term growth projections. We
are also pleased that gross margin improved 240 basis points over
the prior year representing the highest level since the second
quarter of fiscal year 2021. Overall, we are incredibly pleased
with our solid first quarter performance and it provides us
confidence that we will achieve our 2024 financial goals,”
concluded Brass.
Net Sales by Segment (in thousands):
Three Months Ended November
30,
2023
2022
Dollars
Change
Americas (1)
$
64,075
$
58,014
$
6,061
10
%
EIMEA (2)
48,754
40,772
7,982
20
%
Asia-Pacific (3)
27,587
26,107
1,480
6
%
Total
$
140,416
$
124,893
$
15,523
12
%
First Quarter Highlights by Segment:
Americas
- The Americas segment represented 45 percent of total net sales
in the first quarter.
- Net sales in the Americas increased 10 percent in the first
quarter compared to the prior year fiscal quarter due primarily to
an increase in net sales of WD-40® Multi-Use Product. WD-40®
Multi-Use Product sales increased $5.4 million, or 12 percent,
primarily due to increases in the U.S. and Latin America of $2.5
million and $2.4 million, or 8 percent and 29 percent,
respectively.
- The increase of sales in the U.S. was due to higher volume
linked to successful promotional programs. In Latin America, sales
in the first quarter of fiscal year 2024 were favorably impacted by
higher volume as well as the timing of customer orders.
EIMEA
- The EIMEA segment represented 35 percent of total net sales in
the first quarter.
- Net sales in EIMEA increased 20 percent in the first quarter
compared to the prior year fiscal quarter due primarily to an
increase in net sales of WD-40® Multi-Use Product. WD-40® Multi-Use
Product sales increased most significantly in France, the Middle
East, and the DACH(4) region and were up $1.9 million, $1.6
million, and $1.5 million, respectively. These increases were
partially offset by a decrease in India of $0.9 million.
- The increase of sales in EIMEA was primarily due to higher
sales volume and the impact of price increases implemented in the
first quarter of fiscal year 2023, which resulted in reduced demand
in the comparative period. In addition, sales were favorably
impacted by changes in foreign currency exchanges rates.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on sales in EIMEA for the current quarter. On a non-GAAP constant
currency basis, net sales in EIMEA would have been $45.1 million
for the first quarter.
Asia-Pacific
- The Asia-Pacific segment represented 20 percent of total net
sales in the first quarter.
- Net sales in Asia-Pacific increased 6 percent in the first
quarter compared to the prior year fiscal quarter due primarily to
higher sales of WD-40® Multi-Use Product. WD-40® Multi-Use Product
sales increased $0.9 million, or 4 percent, primarily due to
increases in China and the Asia distributor markets which increased
8 percent and 4 percent, respectively.
- The increase of sales in China was primarily due to successful
promotional programs and marketing activities that increased sales
volume. In the Asia distributor markets, sales in the first quarter
of fiscal year 2024 were favorably impacted by price increases from
period to period and successful promotional programs in certain
regions.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had an unfavorable
impact on sales in Asia-Pacific for the current quarter. On a
non-GAAP constant currency basis, net sales in Asia-Pacific would
have been $28.0 million for the first quarter.
Net Sales by Product Group (in thousands):
Three Months Ended November
30,
2023
2022
Dollars
Change
WD-40 Multi-Use Product
$
107,677
$
94,587
$
13,090
14
%
WD-40 Specialist
16,842
15,406
1,436
9
%
Other maintenance products (5)
7,626
6,319
1,307
21
%
Total maintenance products
132,145
116,312
15,833
14
%
HCCP (6)
8,271
8,581
(310
)
(4
)%
Total
$
140,416
$
124,893
$
15,523
12
%
- Net sales of maintenance products, which are considered the
primary growth focus for the Company, represented 94 percent of
total net sales in the first quarter. Net sales of maintenance
products increased 14 percent in the first quarter when compared to
the prior year fiscal quarter due primarily to higher sales of
WD-40® Multi-Use Product in the United States, Latin America, and
Europe.
- Net sales of homecare and cleaning products represented 6
percent of total net sales in the first quarter. The homecare and
cleaning products, particularly those in the United States, are
considered harvest brands providing consistent profit returns to
the Company and are becoming a smaller part of the business as net
sales of maintenance products grow in alignment with the Company’s
Four-by-Four Strategic Framework. The Company is currently
conducting a strategic review regarding the future of its homecare
and cleaning brands.
Dividend and Share Repurchase Update
- On December 12, 2023, the Company’s board of directors declared
a regular quarterly dividend of $0.88 per share, reflecting an
increase of 6 percent compared to the previous quarter’s dividend
of $0.83, payable on January 31, 2024 to stockholders of record at
the close of business on January 19, 2024.
- On June 19, 2023, the Company’s board approved a share
repurchase plan that became effective on September 1, 2023. Under
the plan, the Company is authorized to acquire up to $50.0 million
of its outstanding shares through August 31, 2025.
- During the period from September 1, 2023 through the end of the
first quarter, the Company repurchased 11,500 shares at a total
cost of $2.4 million under this $50.0 million plan.
- The timing and amount of repurchases under the plan are based
on terms and conditions as may be acceptable to the Company’s chief
executive officer and chief financial officer, subject to present
loan covenants, and in compliance with all laws and regulations
applicable thereto.
“We’re off to a very solid start in fiscal year 2024 and we are
pleased to see sales volumes continue to recover as well as
continued improvement in our gross margin,” said Sara Hyzer, WD-40
Company’s vice president, finance and chief financial officer.
“However, we know our results can vary from quarter to quarter
based on the timing of promotional activities, market mix, and the
impacts from a world which is filled with volatility, uncertainty,
complexity, and ambiguity. Therefore, we continue to believe our
current guidance is our best estimate and so we are reiterating our
outlook for fiscal year 2024 today.”
Reiterated Fiscal Year 2024 Guidance
The Company reiterated the following guidance for fiscal year
2024:
- Net sales growth is projected to be between 6 and 12 percent
with net sales expected to be between $570 million and $600 million
on a non-GAAP constant currency basis.
- Gross margin for the full year is expected to be between 51 and
53 percent.
- Advertising and promotion investments are projected to be
between 5 and 6 percent of net sales.
- The provision for income tax is expected to be between 24 and
25 percent.
- Net income is projected to be between $65 million and $70
million.
- Diluted earnings per share is expected to be between $4.78 and
$5.15 based on an estimated 13.6 million weighted average shares
outstanding.
This guidance is expressed in good faith and is based on
management’s current view of anticipated results. Unanticipated
inflationary headwinds and other unforeseen events may further
affect the Company’s financial results. Net sales presented on a
non-GAAP constant currency basis use weighted average fiscal year
2023 foreign currency exchange rates.
Webcast Information
As previously announced, WD-40 Company management will host a
live webcast at approximately 2:00 p.m. PST 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 owns a wide range of well-known
brands that include maintenance products and homecare and cleaning
products: WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®,
GT85®, 2000 Flushes®, no vac®, 1001®, Spot Shot®, Lava®, Solvol®,
X-14®, and Carpet Fresh®.
Headquartered in San Diego, California, USA, WD-40 Company
recorded net sales of $537.3 million in fiscal year 2023 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. These forward-looking
statements are generally identified with words such as “believe,”
“expect,” “intend,” “plan,” “project,” “could,” “may,” “aim,”
“anticipate,” “target,” “estimate” and similar expressions.
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; anticipated input
costs for manufacturing and the costs associated with distribution
of our products; 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; expected tax
rates and the impact of tax legislation and regulatory action;
changes in the political conditions or relations between the United
States and other nations; the impacts from inflationary trends and
supply chain constraints; changes in interest rates; and forecasted
foreign currency exchange rates and commodity prices.
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. All forward-looking statements reflect the Company’s
expectations as of January 9, 2024. We undertake no obligation to
revise or update any forward-looking statements.
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, 2023 which the Company filed with the
SEC on October 23, 2023, and in the Company’s Quarterly Report on
Form 10-Q for the period ended November 30, 2023, which the Company
expects to file with the SEC on January 9, 2024.
Table Notes and General Definitions
(1)
The Americas segment consists of the U.S.,
Canada, and Latin America.
(2)
The EIMEA segment consists of countries in
Europe, India, the Middle East and Africa.
(3)
The Asia-Pacific segment consists of
Australia, China and other countries in the Asia region.
(4)
The DACH region is comprised of the
countries of Germany, Austria, and Switzerland.
(5)
The Company markets its other maintenance
products under the GT85® and 3-IN-ONE® brand names.
(6)
The Company markets its homecare and
cleaning products (“HCCP”) under the X-14®, 2000 Flushes®, Carpet
Fresh®, no vac®, Spot Shot®, 1001®, Lava®, and Solvol® brand
names.
(7)
In order to show the impact of changes in
foreign currency exchange rates on our results of operations, we
have included constant currency disclosures, where necessary, in
this press release. Constant currency disclosures represent the
translation of our current fiscal year revenues, expenses and net
income from the functional currencies of our subsidiaries to U.S.
dollars using the exchange rates in effect for the corresponding
period of the prior fiscal year. Results on a constant currency
basis are not in accordance with accounting principles generally
accepted in the United States of America (“non-GAAP”) and should be
considered in addition to, not as a substitute for, results
prepared in accordance with U.S. GAAP. We use results on a constant
currency basis as one of the measures to understand our operating
results and evaluate our performance in comparison to prior periods
in order to enhance the visibility of the underlying business
trends, excluding the impact of translation arising from foreign
currency exchange rate fluctuations. Management believes this
non-GAAP financial measure provides investors with additional
financial information that should be considered when assessing our
underlying business performance and trends. However, reference to
constant currency basis should not be considered in isolation or as
a substitute for other financial measures calculated and presented
in accordance with U.S. GAAP.
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited and in thousands,
except share and per share amounts)
November 30,
2023
August 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
50,317
$
48,143
Trade and other accounts receivable,
net
95,118
98,039
Inventories
81,603
86,522
Other current assets
10,619
15,821
Total current assets
237,657
248,525
Property and equipment, net
65,704
66,791
Goodwill
95,513
95,505
Other intangible assets, net
4,419
4,670
Right-of-use assets
11,483
7,820
Deferred tax assets, net
1,194
1,201
Other assets
14,636
13,454
Total assets
$
430,606
$
437,966
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
28,432
$
30,826
Accrued liabilities
27,787
30,000
Accrued payroll and related expenses
15,785
16,722
Short-term borrowings
24,456
10,800
Income taxes payable
2,360
494
Total current liabilities
98,820
88,842
Long-term borrowings
86,173
109,743
Deferred tax liabilities, net
10,921
10,305
Long-term operating lease liabilities
5,793
5,832
Other long-term liabilities
12,967
13,066
Total liabilities
214,674
227,788
Commitments and Contingencies
Stockholders’ equity:
Common stock — authorized 36,000,000
shares, $0.001 par value; 19,911,495 and 19,905,815 shares issued
at November 30, 2023 and August 31, 2023, respectively; and
13,557,614 and 13,563,434 shares outstanding at November 30, 2023
and August 31, 2023, respectively
20
20
Additional paid-in capital
173,139
171,546
Retained earnings
483,673
477,488
Accumulated other comprehensive loss
(30,816
)
(31,206
)
Common stock held in treasury, at cost —
6,353,881 and 6,342,381 shares at November 30, 2023 and August 31,
2023, respectively
(410,084
)
(407,670
)
Total stockholders’ equity
215,932
210,178
Total liabilities and stockholders’
equity
$
430,606
$
437,966
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited and in thousands,
except per share amounts)
Three Months Ended November
30,
2023
2022
Net sales
$
140,416
$
124,893
Cost of products sold
64,863
60,638
Gross profit
75,553
64,255
Operating expenses:
Selling, general and administrative
44,135
39,984
Advertising and sales promotion
6,983
5,339
Amortization of definite-lived intangible
assets
251
253
Total operating expenses
51,369
45,576
Income from operations
24,184
18,679
Other income (expense):
Interest income
74
44
Interest expense
(1,146
)
(1,169
)
Other (expense) income, net
(40
)
150
Income before income taxes
23,072
17,704
Provision for income taxes
5,590
3,707
Net income
$
17,482
$
13,997
Earnings per common share:
Basic
$
1.28
$
1.03
Diluted
$
1.28
$
1.02
Shares used in per share calculations:
Basic
13,560
13,590
Diluted
13,584
13,609
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited and in
thousands)
Three Months Ended November
30,
2023
2022
Operating activities:
Net income
$
17,482
$
13,997
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
2,261
1,896
Net (gains) losses on sales and disposals
of property and equipment
(58
)
122
Deferred income taxes
625
271
Stock-based compensation
2,271
2,719
Unrealized foreign currency exchange
losses (gains)
322
(1,481
)
Provision for credit losses
42
30
Write-off of inventories
811
65
Changes in assets and liabilities:
Trade and other accounts receivable
2,886
2,847
Inventories
4,042
(14,268
)
Other assets
196
4,573
Operating lease assets and liabilities,
net
(8
)
26
Accounts payable and accrued
liabilities
(4,697
)
(3,336
)
Accrued payroll and related expenses
(998
)
2,627
Other long-term liabilities and income
taxes payable
1,739
349
Net cash provided by operating
activities
26,916
10,437
Investing activities:
Purchases of property and equipment
(786
)
(1,458
)
Proceeds from sales of property and
equipment
115
158
Net cash used in investing activities
(671
)
(1,300
)
Financing activities:
Treasury stock purchases
(2,414
)
(4,072
)
Dividends paid
(11,297
)
(10,634
)
Repayments of long-term senior notes
(400
)
(400
)
Net (repayments) proceeds from revolving
credit facility
(9,713
)
3,364
Shares withheld to cover taxes upon
conversions of equity awards
(678
)
(600
)
Net cash used in financing activities
(24,502
)
(12,342
)
Effect of exchange rate changes on cash
and cash equivalents
431
2,244
Net increase (decrease) in cash and cash
equivalents
2,174
(961
)
Cash and cash equivalents at beginning of
period
48,143
37,843
Cash and cash equivalents at end of
period
$
50,317
$
36,882
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240109201521/en/
Media and Investor Contact: Wendy Kelley Vice President,
Stakeholder and Investor Engagement investorrelations@wd40.com
+1-619-275-9304
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