~ Second quarter consolidated net sales grew by 16 percent compared to prior year fiscal quarter ~
~ Company reports diluted EPS of $1.41 for the second quarter ~
SAN DIEGO, April 7, 2022 /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 second fiscal quarter ended February 28, 2022.
Second Fiscal Quarter Financial Highlights
"The resilience of the WD-40® Brand has enabled us to be off to a solid start in fiscal year 2022 with maintenance product sales up 14 percent year-to-date," said Garry Ridge, WD-40 Company's chairman and chief executive officer. "I am also happy to share with you that our commitment to continuous improvement has resulted in significant improvements to our supply chain in the United States. The enhancements we have made have enabled us to increase the production capacity of our highest volume products and return to solid growth in our largest market, the United States, which experienced a 26 percent increase in maintenance product sales in the second quarter."
"Like other companies, we are in a challenging inflationary environment, which has continued to deteriorate our gross margin. We are focused and committed to managing our business so that we can restore gross margin to or above our target of 55 percent over the longer-term. We will restore our gross margin over the near-term by implementing price increases to offset the higher input costs we are experiencing. Over the longer-term our margin accretive Must-Win Battles will further enhance gross margin."
"As we look to the remainder of the fiscal year, we've reduced our net income guidance by approximately two percent for the full fiscal year due to the challenging inflationary environment we are currently operating in. However, we have been able to maintain our revenue guidance and believe we will finish fiscal year 2022 with both topline and bottom-line growth," Ridge concluded.
Net Sales by Segment (in thousands):
Three Months Ended February 28, | Six Months Ended February 28, | ||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
Americas | $ | 54,497 | $ | 46,157 | 18% | $ | 110,785 | $ | 100,344 | 10% | |||||||
EMEA | 54,063 | 49,813 | 9% | 111,618 | 104,563 | 7% | |||||||||||
Asia-Pacific | 21,426 | 15,935 | 34% | 42,329 | 31,557 | 34% | |||||||||||
Total | $ | 129,986 | $ | 111,905 | 16% | $ | 264,732 | $ | 236,464 | 12% |
Net Sales by Product Group (in thousands):
Three Months Ended February 28, | Six Months Ended February 28, | ||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||
Maintenance products | $ | 121,901 | $ | 102,728 | 19% | $ | 247,931 | $ | 217,072 | 14% | |||||||
Homecare and cleaning products | 8,085 | 9,177 | (12)% | 16,801 | 19,392 | (13)% | |||||||||||
Total | $ | 129,986 | $ | 111,905 | 16% | $ | 264,732 | $ | 236,464 | 12% |
Dividend and Share Repurchase Update
As previously announced on March 15, 2022, WD-40 Company's board of directors declared a regular quarterly dividend of $0.78 per share payable on April 29, 2022 to stockholders of record at the close of business on April 15, 2022.
On October 12, 2021, the Company's board of directors approved a share repurchase plan that became effective on November 1, 2021. Under the plan the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2023. The timing and amount of repurchases will be based on terms and conditions acceptable to the Company and in compliance with applicable laws and regulations. During the period from November 1, 2021 through February 28, 2022, the Company repurchased 78,637 shares of its common stock at a total cost of $18.2 million, leaving $56.8 million available for the repurchase of common stock under this plan.
Updated Fiscal Year 2022 Guidance
The Company issued the following updated guidance for fiscal year 2022:
This guidance is based on management's current view of anticipated results and does not include any future acquisitions or divestitures or the impact of fluctuating foreign currency exchange rates. It assumes crude oil costs will be between $100 and $120 per barrel. Unanticipated inflationary headwinds and other unforeseen events may further impact the Company's financial results.
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 supplemental 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, WD-40 Company recorded net sales of $488.1 million in fiscal year 2021 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 are generally identified with words such as "believe," "expect," "intend," "plan," "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; the length and severity of the current COVID-19 pandemic and its impact on the global economy and the Company's financial results; changes in the political conditions or relations between the United States and other nations; the impacts from inflationary trends and supply chain constraints; 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.
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, 2021 which the Company filed with the SEC on October 22, 2021 and in the Company's Quarterly Report on Form 10-Q for the period ended February 28, 2022 which the Company expects to file with the Securities and Exchange Commission on April 7, 2022.
All forward-looking statements included in this presentation should be considered in the context of these risks. All forward-looking statements reflect the Company's expectations as of April 7, 2022, and the Company undertakes 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 these forward-looking statements.
Table Notes and General Definitions
WD-40 COMPANY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Unaudited and in thousands, except share and per share amounts) | |||||
February 28, | August 31, | ||||
2022 | 2021 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 43,322 | $ | 85,961 | |
Trade and other accounts receivable, less allowance for doubtful | |||||
accounts of $366 and $463 at February 28, 2022 | |||||
and August 31, 2021, respectively | 103,582 | 89,558 | |||
Inventories | 75,537 | 55,752 | |||
Other current assets | 12,158 | 9,948 | |||
Total current assets | 234,599 | 241,219 | |||
Property and equipment, net | 69,334 | 70,145 | |||
Goodwill | 95,754 | 95,869 | |||
Other intangible assets, net | 6,478 | 7,244 | |||
Operating lease right-of-use assets | 8,115 | 8,824 | |||
Deferred tax assets, net | 853 | 858 | |||
Other assets | 8,013 | 6,044 | |||
Total assets | $ | 423,146 | $ | 430,203 | |
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 39,655 | $ | 33,499 | |
Accrued liabilities | 28,130 | 25,658 | |||
Accrued payroll and related expenses | 13,133 | 25,662 | |||
Short-term borrowings | 2,038 | 800 | |||
Income taxes payable | 433 | 317 | |||
Total current liabilities | 83,389 | 85,936 | |||
Long-term borrowings | 112,809 | 114,940 | |||
Deferred tax liabilities, net | 10,717 | 10,401 | |||
Long-term operating lease liabilities | 6,356 | 7,062 | |||
Other long-term liabilities | 11,025 | 11,482 | |||
Total liabilities | 224,296 | 229,821 | |||
Commitments and Contingencies | |||||
Shareholders' equity: | |||||
Common stock ― authorized 36,000,000 shares, $0.001 par value; | |||||
19,887,516 and 19,856,865 shares issued at February 28, 2022 and | |||||
August 31, 2021, respectively; and 13,660,980 and 13,708,966 shares | |||||
outstanding at February 28, 2022 and August 31, 2021, respectively | 20 | 20 | |||
Additional paid-in capital | 164,192 | 163,737 | |||
Retained earnings | 448,179 | 430,735 | |||
Accumulated other comprehensive loss | (27,296) | (26,030) | |||
Common stock held in treasury, at cost ― 6,226,536 and 6,147,899 | |||||
shares at February 28, 2022 and August 31, 2021, respectively | (386,245) | (368,080) | |||
Total shareholders' equity | 198,850 | 200,382 | |||
Total liabilities and shareholders' equity | $ | 423,146 | $ | 430,203 |
WD-40 COMPANY | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||
Three Months Ended February 28, | Six Months Ended February 28, | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net sales | $ | 129,986 | $ | 111,905 | $ | 264,732 | $ | 236,464 | |||
Cost of products sold | 64,468 | 49,898 | 130,744 | 104,211 | |||||||
Gross profit | 65,518 | 62,007 | 133,988 | 132,253 | |||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 34,819 | 35,478 | 73,242 | 71,455 | |||||||
Advertising and sales promotion | 5,596 | 5,512 | 11,220 | 11,031 | |||||||
Amortization of definite-lived intangible assets | 360 | 362 | 723 | 720 | |||||||
Total operating expenses | 40,775 | 41,352 | 85,185 | 83,206 | |||||||
Income from operations | 24,743 | 20,655 | 48,803 | 49,047 | |||||||
Other income (expense): | |||||||||||
Interest income | 21 | 19 | 46 | 38 | |||||||
Interest expense | (613) | (610) | (1,233) | (1,180) | |||||||
Other income (expense), net | 252 | 151 | (77) | 330 | |||||||
Income before income taxes | 24,403 | 20,215 | 47,539 | 48,235 | |||||||
Provision for income taxes | 4,895 | 3,024 | 9,476 | 7,421 | |||||||
Net income | $ | 19,508 | $ | 17,191 | $ | 38,063 | $ | 40,814 | |||
Earnings per common share: | |||||||||||
Basic | $ | 1.41 | $ | 1.25 | $ | 2.76 | $ | 2.97 | |||
Diluted | $ | 1.41 | $ | 1.24 | $ | 2.75 | $ | 2.96 | |||
Shares used in per share calculations: | |||||||||||
Basic | 13,679 | 13,700 | 13,773 | 13,687 | |||||||
Diluted | 13,704 | 13,729 | 13,804 | 13,718 |
WD-40 COMPANY | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(Unaudited and in thousands) | |||||
Six Months Ended February 28, | |||||
2022 | 2021 | ||||
Operating activities: | |||||
Net income | $ | 38,063 | $ | 40,814 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 4,082 | 3,458 | |||
Net gains on sales and disposals of property and equipment | (123) | (104) | |||
Deferred income taxes | 367 | 152 | |||
Stock-based compensation | 4,776 | 4,542 | |||
Unrealized foreign currency exchange (gains) losses | (110) | 139 | |||
Provision for bad debts | (55) | 175 | |||
Changes in assets and liabilities: | |||||
Trade and other accounts receivable | (15,178) | (10,111) | |||
Inventories | (20,369) | (2,104) | |||
Other assets | (4,328) | (4,386) | |||
Operating lease assets and liabilities, net | 1 | 9 | |||
Accounts payable and accrued liabilities | 9,624 | 7,398 | |||
Accrued payroll and related expenses | (12,356) | 1,584 | |||
Other long-term liabilities and income taxes payable | (311) | 944 | |||
Net cash provided by operating activities | 4,083 | 42,510 | |||
Investing activities: | |||||
Purchases of property and equipment | (3,860) | (7,605) | |||
Proceeds from sales of property and equipment | 289 | 239 | |||
Net cash used in investing activities | (3,571) | (7,366) | |||
Financing activities: | |||||
Treasury stock purchases | (18,165) | - | |||
Dividends paid | (20,619) | (18,416) | |||
Proceeds from issuance of long-term senior notes | - | 52,000 | |||
Repayments of long-term senior notes | (400) | (400) | |||
Net proceeds (repayments) of revolving credit facility | 1,238 | (50,000) | |||
Shares withheld to cover taxes upon conversions of equity awards | (4,321) | (3,495) | |||
Net cash used in financing activities | (42,267) | (20,311) | |||
Effect of exchange rate changes on cash and cash equivalents | (884) | 1,086 | |||
Net (decrease) increase in cash and cash equivalents | (42,639) | 15,919 | |||
Cash and cash equivalents at beginning of period | 85,961 | 56,462 | |||
Cash and cash equivalents at end of period | $ | 43,322 | $ | 72,381 |
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SOURCE WD-40 Company