~ Global net sales grew 9 percent in the first
quarter compared to the prior year fiscal quarter ~
~ Management reiterates fiscal year 2025
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, 2024.
First Quarter Highlights and Summary:
- Total net sales were $153.5 million, an increase of 9 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 of approximately $1.5 million for the current
quarter.
- Total maintenance product sales were $145.5 million, an
increase of 10 percent compared to the prior year fiscal
quarter.
- Gross margin was 54.8 percent compared to 53.8 percent in the
prior year fiscal quarter.
- Selling, general, and administrative expenses were $50.5
million, up 14 percent compared to the prior year fiscal
quarter.
- Advertising and sales promotion expenses were $8.4 million, up
20 percent compared to the prior year fiscal quarter. These
expenses accounted for 5.5 percent of total net sales, up from 5.0
percent in the prior year fiscal quarter.
- Operating income was $25.1 million, an increase of 4 percent
from the prior year fiscal quarter.
- Net income was $18.9 million, an increase of 8 percent from the
prior year fiscal quarter.
- Diluted earnings per share were $1.39 compared to $1.28 in the
prior year fiscal quarter, an increase of 9 percent.
- In the first fiscal quarter the Company reclassified its
homecare and cleaning business portfolios in the Americas and EIMEA
segments to held for sale. Total net sales for these brands were
$5.6 million and gross margin would have been favorably impacted by
60 basis points if those brands were excluded from first quarter
results. In addition, operating income and diluted EPS would have
been reduced by $1.5 million and $0.08, respectively.
“In the first quarter, we executed well against our strategic
priorities, with strong growth across multiple regions including
the United States, Latin America, and EIMEA,” said Steve Brass,
WD-40 Company's president and chief executive officer. “Global
maintenance products, our core strategic focus, delivered a third
consecutive quarter of double-digit growth. These results continue
to demonstrate the strength of our business model and reinforce our
confidence in achieving our long-term objectives.
“As I look around the world, all I see is opportunity. Looking
ahead to fiscal year 2025 and beyond, our focus is clear: stay true
to our Four-by-Four Strategic Framework while embracing our
principle of 'few things, many places, bigger impact.' This
approach will help us unlock value in high-potential markets while
continuing to drive greater operational efficiency and profitable
growth across our trade blocs,” concluded Brass.
Net Sales by Segment (in thousands):
Three Months Ended November
30,
2024
2023
Dollars
Change
Americas (1)
$
69,436
$
64,075
$
5,361
8
%
EIMEA (2)
57,483
48,754
8,729
18
%
Asia-Pacific (3)
26,576
27,587
(1,011
)
(4
)%
Total
$
153,495
$
140,416
$
13,079
9
%
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 8 percent in the first
quarter compared to the prior year fiscal quarter primarily due to
an increase in net sales of WD-40® Multi-Use Product of 9 percent.
WD-40® Multi-Use Product sales increased most significantly in the
United States and Latin America, which were up $2.4 million and
$2.3 million, respectively. These increases were slightly offset by
lower sales in Canada, which were down by $0.2 million.
- Net sales of WD-40 Specialist® increased 16 percent primarily
due to new distribution and successful promotional programs in the
United States.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had an unfavorable
impact on net sales in the Americas of approximately $1.1 million
for the current quarter.
EIMEA
- The EIMEA segment represented 38 percent of total net sales in
the first quarter.
- Net sales in EIMEA increased 18 percent in the first quarter
compared to the prior year fiscal quarter primarily due to an
increase in net sales of WD-40® Multi-Use Product of 21 percent.
WD-40® Multi-Use Product sales increased in almost all regions.
Sales increased most significantly in India, France, the Benelux
regions, and Iberia, which were up $1.9 million, $1.0 million, $0.9
million and $0.9 million, respectively, from period to period.
- Net sales of WD-40 Specialist® increased 17 percent primarily
due to higher sales volume as a result of increased distribution
and stronger levels of demand most significantly in Iberia, U.K.
and Italy.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on net sales in EIMEA of approximately $2.0 million for the current
quarter.
Asia-Pacific
- The Asia-Pacific segment represented 17 percent of total net
sales in the first quarter.
- Net sales in Asia-Pacific decreased 4 percent in the first
quarter compared to the prior year fiscal quarter primarily due to
a decrease in sales of WD-40® Multi-Use Product of 6 percent.
WD-40® Multi-Use Product sales decreased most significantly in the
Asia distributor markets, which declined $2.6 million from the
prior year comparison. This decrease was partially offset by higher
sales in the China and Australia, which were up by $1.0 million and
$0.3 million, respectively.
- Net sales of WD-40 Specialist® increased 2 percent primarily
due to new distribution in China.
- Homecare and cleaning product sales, which remain strategic
focus for the Company in this segment, increased 20 percent due to
higher sales volume in Australia attributable to successful
promotional activities and improved packaging.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on net sales in Asia-Pacific of approximately $0.6 million for the
current quarter.
Net Sales by Product Group (in thousands):
Three Months Ended November
30,
2024
2023
Dollars
Change
WD-40 Multi-Use Product
$
118,547
$
107,677
$
10,870
10
%
WD-40 Specialist
19,172
16,842
2,330
14
%
Other maintenance products
(4)
7,788
7,626
162
2
%
Total maintenance products
145,507
132,145
13,362
10
%
HCCP (5)
7,988
8,271
(283
)
(3
)%
Total
$
153,495
$
140,416
$
13,079
9
%
- Net sales of maintenance products, which are considered the
primary strategic focus for the Company, represented 95 percent of
total net sales in the first quarter. Net sales of maintenance
products increased 10 percent in the first quarter when compared to
the prior year fiscal quarter primarily due to higher sales of
WD-40® Multi-Use Product in EIMEA, the United States, and Latin
America.
- Net sales of homecare and cleaning products represented 5
percent of total net sales in the first quarter. Net sales of the
homecare and cleaning products declined 3 percent in the first
quarter when compared to the prior year fiscal quarter primarily
due to lower sales of homecare and cleaning products in the United
States and the United Kingdom, which were partially offset by
higher sales in Australia. The Company has previously disclosed its
intent to actively pursue the sale of its homecare and cleaning
product portfolios in the United States and United Kingdom.
Dividend and Share Repurchase Update
- On December 11, 2024, the Company’s board of directors declared
a regular quarterly dividend of $0.94 per share payable on January
31, 2025 to stockholders of record at the close of business on
January 17, 2025.
- 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, 2024 through the end of the
first quarter, the Company repurchased 13,750 shares at a total
cost of $3.6 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.
Reiterated Fiscal Year 2025 Guidance
The Company reiterated the following fiscal year guidance on a
pro forma basis, excluding the full fiscal year financial impact of
the homecare and cleaning business portfolios the Company expects
to divest in fiscal year 2025 and the impacts of a favorable
non-cash income tax adjustment which the Company will discuss
during its first fiscal quarter earnings call:
- Net sales growth is from the pro-forma 2024 results is
projected to be between 6 and 11 percent with net sales between
$600 million and $630 million after adjusting for estimated
translation impacts of foreign currency.
- Gross margin for the full year is expected to be between 54 and
55 percent.
- Advertising and promotion investments are projected to be
around 6 percent of net sales.
- Operating income is projected to be between $95 million and
$100 million. This range reflects anticipated growth of between 6
to 12 percent compared to 2024 pro forma results.
- The provision for income tax is expected to be around 24
percent.
- Diluted earnings per share is expected to be between $5.20 and
$5.45 based on an estimated 13.5 million weighted average shares
outstanding. This range reflects anticipated growth of between 9 to
14 percent compared to 2024 pro forma results.
“Our first quarter results reflect strong execution and
significant progress on our gross margin expansion initiatives,”
said Sara Hyzer, WD-40 Company's vice president, finance and chief
financial officer. “We achieved gross margin of 54.8 percent, up
100 basis points from the prior year quarter, moving us
significantly closer to our target of 55 percent. This improvement
reflects favorable sales mix, and the benefit of various supply
chain initiatives executed across the globe. As we look ahead, we
remain confident in achieving our fiscal year 2025 guidance,”
concluded Hyzer.
This guidance is expressed in good faith and is based on
management’s current view of anticipated results on a pro forma
basis. Unanticipated inflationary headwinds and other unforeseen
events may further affect the Company’s financial results. Net
sales guidance is adjusted for estimated translation impact of
foreign currency use weighted average fiscal year 2024 foreign
currency exchange rates. In the event the Company is unsuccessful
in the divestiture of its assets currently held for sale, its
guidance would be positively impacted by approximately $23 million
in net sales, approximately $6 million in operating income, and
approximately $0.33 in diluted EPS for the full fiscal year.
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 $590.6 million in fiscal year 2024 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: expected benefits from the acquisition transaction or
divestiture transaction; acquired business not performing as
expected; assuming unexpected risks, liabilities and obligations of
the acquired business; disruption to the parties’ business as a
result of the announcement and acquisition transaction or
divestiture transaction; integration of acquired business and
operations into the company; the Company's ability to successfully
complete any planned divestiture; expected timing of the closing
for the divestiture; expected proceeds from the divestiture; the
intended use of proceeds by the Company from the divestiture
transaction; impact of the divestiture transaction on the Company's
stock price or EPS; 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 10, 2025. 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, 2024 which the Company filed with the
SEC on October 21, 2024, and in the Company’s Quarterly Report on
Form 10-Q for the period ended November 30, 2024, which the Company
expects to file with the SEC on January 10, 2025.
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 Company markets its other maintenance
products under the GT85® and 3-IN-ONE® brand names.
(5)
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.
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited and in thousands,
except share and per share amounts)
November 30,
2024
August 31,
2024
Assets
Current assets:
Cash and cash equivalents
$
54,914
$
46,699
Trade and other accounts
receivable, net
111,433
117,493
Inventories
74,887
79,088
Other current assets
21,567
12,161
Total current assets
262,801
255,441
Property and equipment, net
59,384
62,983
Goodwill
96,584
96,985
Other intangible assets, net
2,287
6,222
Right-of-use assets
10,581
11,611
Deferred tax assets, net
948
993
Other assets
14,739
14,804
Total assets
$
447,324
$
449,039
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
32,212
$
35,960
Accrued liabilities
29,132
31,272
Accrued payroll and related
expenses
20,581
26,055
Short-term borrowings
23,429
8,659
Income taxes payable
2,148
1,554
Total current liabilities
107,502
103,500
Long-term borrowings
84,552
85,977
Deferred tax liabilities, net
9,228
9,066
Long-term operating lease
liabilities
5,297
5,904
Other long-term liabilities
14,448
14,066
Total liabilities
221,027
218,513
Commitments and Contingencies
Stockholders’ equity: Common stock — authorized 36,000,000
shares, $0.001 par value; 19,940,370 and 19,925,212 shares issued
at November 30, 2024 and August 31, 2024, respectively; and
13,549,989 and 13,548,581 shares outstanding at November 30, 2024
and August 31, 2024, respectively
20
20
Additional paid-in capital
174,258
175,642
Retained earnings
506,898
499,931
Accumulated other comprehensive
loss
(35,453
)
(29,268
)
Common stock held in treasury, at
cost — 6,390,381 and 6,376,631 shares at November 30, 2024 and
August 31, 2024, respectively
(419,426
)
(415,799
)
Total stockholders’ equity
226,297
230,526
Total liabilities and
stockholders’ equity
$
447,324
$
449,039
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited and in thousands,
except per share amounts)
Three Months Ended November
30,
2024
2023
Net sales
$
153,495
$
140,416
Cost of products sold
69,408
64,863
Gross profit
84,087
75,553
Operating expenses:
Selling, general and
administrative
50,525
44,135
Advertising and sales
promotion
8,393
6,983
Amortization of definite-lived
intangible assets
47
251
Total operating expenses
58,965
51,369
Income from operations
25,122
24,184
Other income (expense):
Interest income
148
74
Interest expense
(873
)
(1,146
)
Other expense, net
(141
)
(40
)
Income before income taxes
24,256
23,072
Provision for income taxes
5,331
5,590
Net income
$
18,925
$
17,482
Earnings per common share:
Basic
$
1.39
$
1.28
Diluted
$
1.39
$
1.28
Shares used in per share
calculations:
Basic
13,548
13,560
Diluted
13,573
13,584
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited and in
thousands)
Three Months Ended November
30,
2024
2023
Operating activities:
Net income
$
18,925
$
17,482
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation and amortization
2,075
2,261
Amortization of cloud computing
implementation costs
416
57
Net gains on sales and disposals
of property and equipment
(41
)
(58
)
Deferred income taxes
522
625
Stock-based compensation
1,499
2,271
Unrealized foreign currency
exchange (gains) losses
(330
)
322
Provision for credit losses
994
42
Write-off of inventories
255
811
Changes in assets and
liabilities:
Trade and other accounts
receivable
(293
)
2,886
Inventories
(2,651
)
4,042
Other assets
(1,177
)
139
Operating lease assets and
liabilities, net
14
(8
)
Accounts payable and accrued
liabilities
(1,730
)
(4,697
)
Accrued payroll and related
expenses
(4,954
)
(998
)
Other long-term liabilities and
income taxes payable
1,406
1,739
Net cash provided by operating
activities
14,930
26,916
Investing activities:
Purchases of property and
equipment
(691
)
(786
)
Proceeds from sales of property
and equipment
124
115
Net cash used in investing
activities
(567
)
(671
)
Financing activities:
Treasury stock purchases
(3,627
)
(2,414
)
Dividends paid
(11,958
)
(11,297
)
Repayments of long-term senior
notes
(400
)
(400
)
Net proceeds (repayments) from
revolving credit facility
14,771
(9,713
)
Shares withheld to cover taxes
upon conversions of equity awards
(2,883
)
(678
)
Net cash used in financing
activities
(4,097
)
(24,502
)
Effect of exchange rate changes
on cash and cash equivalents
(2,051
)
431
Net increase in cash and cash
equivalents
8,215
2,174
Cash and cash equivalents at
beginning of period
46,699
48,143
Cash and cash equivalents at end
of period
$
54,914
$
50,317
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250110676157/en/
Media and Investor Contact: Wendy Kelley Vice President,
Stakeholder and Investor Engagement investorrelations@wd40.com
+1-619-275-9304
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