SAN DIEGO, April 8, 2021 /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, 2021.
Third Fiscal Quarter Financial Highlights
"We continue to experience very high demand for our maintenance products due to renovation trends associated with the pandemic, or what we call isolation renovation," said Garry Ridge, WD-40 Company's chairman and chief executive officer. "In addition, we are seeing improved market conditions due to a reduction of COVID-19 lockdown measures in many markets, particularly in China, as well as increased sales through the ecommerce channel."
"However, the pandemic has also caused some disruptions and constraints to our supply chain, primarily in the Americas, which impacted our ability to meet the increased end user demand we experienced in the United States during the second quarter. Despite these supply chain challenges in the United States, we continue to experience very strong point-of-sale end user demand for our maintenance products. We are working to address the supply chain challenges and there is a recovery plan underway which we expect will result in improved conditions in the back half of the year."
"We are off to a very strong start in the first half of fiscal 2021. Keeping up with demand in a COVID environment has been a challenge, but we've increased our revenue expectations and believe that net sales are likely to be in a range of between $445 million to $475 million for the full fiscal year. This upward revision is driven primarily by favorable changes in foreign currency exchange rates. Additionally, over the long-term, we are optimistic that many of the new end users who have interacted with our products during the pandemic will become permanent users of our maintenance and homecare solutions," Ridge concluded.
Net Sales by Segment (in thousands):
Three Months Ended February 28/29, | Six Months Ended February 28/29, | ||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||
Americas | $ | 46,157 | $ | 46,842 | (1)% | $ | 100,344 | $ | 93,578 | 7% | |||||||
EMEA | 49,813 | 41,753 | 19% | 104,563 | 80,998 | 29% | |||||||||||
Asia-Pacific | 15,935 | 11,454 | 39% | 31,557 | 24,029 | 31% | |||||||||||
Total | $ | 111,905 | $ | 100,049 | 12% | $ | 236,464 | $ | 198,605 | 19% |
Net Sales by Product Group (in thousands):
Three Months Ended February 28/29, | Six Months Ended February 28/29, | ||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||
Maintenance products | $ | 102,729 | $ | 91,147 | 13% | $ | 217,072 | $ | 180,817 | 20% | |||||||
Homecare and cleaning products | 9,176 | 8,902 | 3% | 19,392 | 17,788 | 9% | |||||||||||
Total | $ | 111,905 | $ | 100,049 | 12% | $ | 236,464 | $ | 198,605 | 19% |
Dividend InformationAs previously announced, WD-40 Company's board of directors declared on Tuesday, March 16, 2021 a quarterly dividend of $0.72 per share reflecting an increase of greater than 7 percent over the previous quarter's dividend. The quarterly dividend is payable on April 30, 2021 to stockholders of record at the close of business on April 16, 2021.
Webcast InformationAs 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 including management's current view of the business in light of the COVID-19 pandemic. Please visit http://investor.wd40company.com for more information and to view supporting materials.
About WD-40 CompanyWD-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 a wide range of 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 2020 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 StatementsExcept 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; 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; 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, 2020, and in the Company's Quarterly Report on Form 10-Q for the period ended February 28, 2021 which the Company expects to file with the SEC on April 8, 2021.
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 April 8, 2021, 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® 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, Mexico 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. |
WD-40 COMPANY | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(Unaudited and in thousands, except share and per share amounts) | |||||
February 28, | August 31, | ||||
2021 | 2020 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 72,381 | $ | 56,462 | |
Trade accounts receivable, less allowance for doubtful accounts of $550 and $362 at February 28, 2021and August 31, 2020, respectively | 93,577 | 80,672 | |||
Inventories | 44,539 | 41,264 | |||
Other current assets | 11,339 | 6,756 | |||
Total current assets | 221,836 | 185,154 | |||
Property and equipment, net | 67,077 | 60,759 | |||
Goodwill | 95,987 | 95,731 | |||
Other intangible assets, net | 8,020 | 8,633 | |||
Operating lease right-of-use assets | 8,741 | 8,168 | |||
Deferred tax assets, net | 498 | 464 | |||
Other assets | 3,828 | 3,728 | |||
Total assets | $ | 405,987 | $ | 362,637 | |
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 27,729 | $ | 21,676 | |
Accrued liabilities | 24,451 | 21,660 | |||
Accrued payroll and related expenses | 16,667 | 14,767 | |||
Short-term borrowings | 800 | 800 | |||
Income taxes payable | 2,236 | 1,213 | |||
Total current liabilities | 71,883 | 60,116 | |||
Long-term borrowings | 116,731 | 113,098 | |||
Deferred tax liabilities, net | 11,535 | 11,291 | |||
Long-term operating lease liabilities | 6,945 | 6,520 | |||
Other long-term liabilities | 11,313 | 11,299 | |||
Total liabilities | 218,407 | 202,324 | |||
Commitments and Contingencies | |||||
Shareholders' equity: | |||||
Common stock ― authorized 36,000,000 shares, $0.001 par value; 19,855,666 and 19,812,685 shares issued at February 28, 2021 and August 31, 2020, respectively; and 13,707,767 and 13,664,786 shares outstanding at February 28, 2021 and August 31, 2020, respectively | 20 | 20 | |||
Additional paid-in capital | 158,897 | 157,850 | |||
Retained earnings | 421,129 | 398,731 | |||
Accumulated other comprehensive loss | (24,386) | (28,208) | |||
Common stock held in treasury, at cost ― 6,147,899 and 6,147,899 shares at February 28, 2021 and August 31, 2020, respectively | (368,080) | (368,080) | |||
Total shareholders' equity | 187,580 | 160,313 | |||
Total liabilities and shareholders' equity | $ | 405,987 | $ | 362,637 |
WD-40 COMPANY | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||
Three Months Ended February 28/29, | Six Months Ended February 28/29, | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||
Net sales | $ | 111,905 | $ | 100,049 | $ | 236,464 | $ | 198,605 | |||
Cost of products sold | 49,898 | 46,447 | 104,211 | 91,460 | |||||||
Gross profit | 62,007 | 53,602 | 132,253 | 107,145 | |||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 35,478 | 29,906 | 71,455 | 62,505 | |||||||
Advertising and sales promotion | 5,512 | 4,857 | 11,031 | 10,447 | |||||||
Amortization of definite-lived intangible assets | 362 | 654 | 720 | 1,304 | |||||||
Total operating expenses | 41,352 | 35,417 | 83,206 | 74,256 | |||||||
Income from operations | 20,655 | 18,185 | 49,047 | 32,889 | |||||||
Other income (expense): | |||||||||||
Interest income | 19 | 28 | 38 | 53 | |||||||
Interest expense | (610) | (593) | (1,180) | (1,035) | |||||||
Other income (expense), net | 151 | (229) | 330 | (224) | |||||||
Income before income taxes | 20,215 | 17,391 | 48,235 | 31,683 | |||||||
Provision for income taxes | 3,024 | 3,064 | 7,421 | 5,162 | |||||||
Net income | $ | 17,191 | $ | 14,327 | $ | 40,814 | $ | 26,521 | |||
Earnings per common share: | |||||||||||
Basic | $ | 1.25 | $ | 1.04 | $ | 2.97 | $ | 1.92 | |||
Diluted | $ | 1.24 | $ | 1.04 | $ | 2.96 | $ | 1.92 | |||
Shares used in per share calculations: | |||||||||||
Basic | 13,700 | 13,712 | 13,687 | 13,713 | |||||||
Diluted | 13,729 | 13,737 | 13,718 | 13,741 |
WD-40 COMPANY | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(Unaudited and in thousands) | |||||
Six Months Ended February 28/29, | |||||
2021 | 2020 | ||||
Operating activities: | |||||
Net income | $ | 40,814 | $ | 26,521 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 3,458 | 4,024 | |||
Net gains on sales and disposals of property and equipment | (104) | (66) | |||
Deferred income taxes | 152 | (79) | |||
Stock-based compensation | 4,542 | 3,889 | |||
Unrealized foreign currency exchange losses | 139 | (249) | |||
Provision for bad debts | 175 | 61 | |||
Changes in assets and liabilities: | |||||
Trade accounts receivable | (10,111) | (1,313) | |||
Inventories | (2,104) | (1,648) | |||
Other assets | (4,386) | (1,781) | |||
Operating lease assets and liabilities, net | 9 | 211 | |||
Accounts payable and accrued liabilities | 7,398 | 1,969 | |||
Accrued payroll and related expenses | 1,584 | (7,345) | |||
Other long-term liabilities and income taxes payable | 944 | (812) | |||
Net cash provided by operating activities | 42,510 | 23,382 | |||
Investing activities: | |||||
Purchases of property and equipment | (7,605) | (10,695) | |||
Proceeds from sales of property and equipment | 239 | 212 | |||
Net cash used in investing activities | (7,366) | (10,483) | |||
Financing activities: | |||||
Treasury stock purchases | - | (9,658) | |||
Dividends paid | (18,416) | (17,642) | |||
Proceeds from issuance of long-term senior notes | 52,000 | - | |||
Repayments of long-term senior notes | (400) | (400) | |||
Net (repayments) proceeds of revolving credit facility | (50,000) | 20,524 | |||
Shares withheld to cover taxes upon conversions of equity awards | (3,495) | (2,640) | |||
Net cash used in financing activities | (20,311) | (9,816) | |||
Effect of exchange rate changes on cash and cash equivalents | 1,086 | 187 | |||
Net increase in cash and cash equivalents | 15,919 | 3,270 | |||
Cash and cash equivalents at beginning of period | 56,462 | 27,233 | |||
Cash and cash equivalents at end of period | $ | 72,381 | $ | 30,503 | |
Supplemental disclosure of noncash investing activities: | |||||
Accrued capital expenditures | $ | 1,638 | $ | 5,724 |
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SOURCE WD-40 Company