·

Total net sales for the second quarter were $130.0 million, an increase of 16 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $264.7 million, an increase of 12 percent compared to the prior year fiscal period.  

·

Translation of the Company’s foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and a favorable impact on sales year-to-date. On a constant currency basis, total net sales would have been $130.9 million for the second quarter and $262.2 million year-to-date.

·

Net income for the second quarter was $19.5 million, an increase of 13 percent compared to the prior year fiscal quarter. Year-to-date net income was $38.1 million, a decrease of 7 percent from the prior year fiscal period.

·

Diluted earnings per share were $1.41 in the second quarter, compared to $1.24 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.75 compared to $2.96 for the prior year fiscal period.

·

Gross margin was 50.4 percent in the second quarter compared to 55.4 percent in the prior year fiscal quarter. Year-to-date gross margin was 50.6 percent compared to 55.9 percent in the prior year fiscal period.

·

Selling, general and administrative expenses decreased 2 percent in the second quarter to $34.8 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses increased 3 percent to $73.2 million compared to the prior year fiscal period. 

·

Advertising and sales promotion expenses were up 2 percent in the second quarter to $5.6 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were  up 2 percent to $11.2 million compared to the prior year fiscal period. 







Three Months Ended February 28,

Six Months Ended February 28,



2022

2021

Change

2022

2021

Change

Americas

$

$

$

$

EMEA

Asia-Pacific

Total

$

$

$

$



·

Net sales by segment as a percent of total net sales for the second quarter were as follows: for the Americas, 42 percent; for EMEA, 42 percent; and for Asia-Pacific, 16 percent.

·

Net sales in the Americas increased 18 percent in the second quarter due primarily to higher sales of maintenance products in the United States which increased 26 percent compared to the prior year fiscal quarter.  The increase in sales was due primarily to greater product availability as a result of adjustments the Company made to its United States supply chain to increase the production capacity of its highest volume products. In addition, price increases that took effect in the first quarter of this fiscal year contributed to increased sales in the United States from period to period. Net sales in Latin America increased 18 percent in the second quarter. This growth was driven by successful promotional programs, increased product availability, the favorable impact of price increases, and the timing of customer orders. Net sales in Canada declined 2 percent in the second quarter.   

·

Net sales in EMEA increased 9 percent in the second quarter due primarily to higher sales of maintenance products in both the EMEA direct and distributor markets, which increased 7 percent and 13 percent, respectively. The increase in maintenance product sales in the EMEA direct markets was partially attributable to the favorable impact of price increases and the timing of customer orders. The increase in maintenance product sales in the EMEA distributor markets was primarily attributable to strong sales of maintenance products in Eastern and Southern Europe.  Changes in foreign currency exchange rates had an unfavorable impact on sales for the EMEA segment from period to period. On a constant currency basis EMEA sales for the second quarter would have increased by 10 percent compared to the prior year fiscal quarter.

·

Net sales in Asia-Pacific increased 34 percent in the second quarter due primarily to higher sales of maintenance products in the Asia-Pacific distributor markets and China, which increased 64 percent and 42 percent,  respectively.  In the Asia-Pacific distributor markets higher sales of maintenance products were primarily due to the timing of customer orders and successful promotion programs.  The increase in sales is also attributable to certain customers buying product in advance of future price increases. Higher sales of maintenance products in China were due primarily to successful promotional programs as well as the timing of customer orders related to price increases that went into effect in the current period.  Net sales in Australia decreased 5 percent in the second quarter due primarily to lower sales of homecare and cleaning products.  Changes in foreign currency exchange rates had an unfavorable impact on sales for the Asia-Pacific segment. On a constant currency basis, Asia-Pacific sales would have increased by 35 percent compared to the prior year fiscal quarter.







Three Months Ended February 28,

Six Months Ended February 28,



2022

2021

Change

2022

2021

Change

Maintenance products

$

$

$

$

Homecare and cleaning products

(12)%

(13)%

Total

$

$

$

$



·

Net sales of maintenance products, which are considered the primary growth focus for the Company, increased 19 percent in the second quarter when compared to the prior year fiscal quarter.  This sales increase was primarily attributable to increased sales of WD-40_® Multi-Use Product and WD-40 Specialist_® in all three segments driven primarily by increased product availability as well as the favorable impact of price increases.

·

Net sales of homecare and cleaning products decreased 12 percent in the second quarter when compared to the prior year fiscal quarter. The homecare and cleaning products, particularly those in the United States, are considered harvest brands providing healthy profits to the Company and are becoming a smaller part of the business as net sales of maintenance products grow, reflecting the execution of the Company’s strategic initiatives. 

·

Net sales growth is projected to be between 7 and 12 percent with net sales expected to be between $522 million and $547 million.

·

Gross margin percentage for the full year is expected to be between 50 and 51 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 20 and 21 percent.

·

Net income is projected to be between $70.7 million and $72.5 million.

·

Diluted earnings per share is expected to be between $5.14 and $5.27 based on an estimated 13.7 million weighted average shares outstanding.

(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 WD-40_® Multi-Use Product and 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,



2022

2021

Assets

Current assets:

Cash and cash equivalents

$

$

Trade and other accounts receivable, less allowance for doubtful

accounts of $366 and $463 at February 28, 2022

and August 31, 2021, respectively

Inventories

Other current assets

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Operating lease right-of-use assets

Deferred tax assets, net

Other assets

Total assets

$

$



Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

$

Accrued liabilities

Accrued payroll and related expenses

Short-term borrowings

Income taxes payable

Total current liabilities

Long-term borrowings

Deferred tax liabilities, net

Long-term operating lease liabilities

Other long-term liabilities

Total liabilities



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

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Common stock held in treasury, at cost ― 6,226,536 and 6,147,899

shares at February 28, 2022 and August 31, 2021, respectively

Total shareholders' equity

Total liabilities and shareholders' equity

$

$









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

$

$

$

$

Cost of products sold

Gross profit



Operating expenses:

Selling, general and administrative

Advertising and sales promotion

Amortization of definite-lived intangible assets

Total operating expenses



Income from operations



Other income (expense):

Interest income

Interest expense

Other income (expense), net

Income before income taxes

Provision for income taxes

Net income

$

$

$

$



Earnings per common share:

Basic

$

$

$

$

Diluted

$

$

$

$



Shares used in per share calculations:

Basic

Diluted





WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)





Six Months Ended February 28,



2022

2021

Operating activities:

Net income

$

$

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

Net gains on sales and disposals of property and equipment

Deferred income taxes

Stock-based compensation

Unrealized foreign currency exchange (gains) losses

Provision for bad debts

Changes in assets and liabilities:

Trade and other accounts receivable

Inventories

Other assets

Operating lease assets and liabilities, net

Accounts payable and accrued liabilities

Accrued payroll and related expenses

Other long-term liabilities and income taxes payable

Net cash provided by operating activities



Investing activities:

Purchases of property and equipment

Proceeds from sales of property and equipment

Net cash used in investing activities



Financing activities:

Treasury stock purchases

 -

Dividends paid

Proceeds from issuance of long-term senior notes

 -

Repayments of long-term senior notes

Net proceeds (repayments) of revolving credit facility

Shares withheld to cover taxes upon conversions of equity awards

 Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$