~ Third quarter consolidated net sales grew by 15 percent compared to the prior year fiscal quarter ~
~ Foreign currency exchange headwinds continue to negatively impact reported results ~
~ Board of directors approves new 50 million share buyback plan to replace expiring plan ~
SAN DIEGO--(BUSINESS WIRE)-- 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 third fiscal quarter ended May 31, 2023.
Financial Highlights and Summary
“I am happy to share with you that after two quarters of flat-to-down sales, we have returned to solid top line growth in the third fiscal quarter,” said Steve Brass, WD-40 Company’s president and chief executive officer. “As a global company with more than half of our revenue generated in currencies other than the U.S. dollar, we are exposed to the effects of changing foreign currency exchange rates. The impacts of changing foreign currency exchange rates have had a significant negative impact on our reported results in both the third quarter and year to date. On a constant currency basis, global sales were up 18 percent in the third quarter and 7 percent year to date. We target a compound annual growth rate for maintenance product revenue in the mid-to-high single digits on a constant currency basis. Achieving year to date growth of 7 percent in constant currency is in-line with our long-term objectives,” Brass concluded.
Net Sales by Segment (in thousands): | ||||||||||||||||||||||||
Three Months Ended May 31, |
| Nine Months Ended May 31, | ||||||||||||||||||||||
2023 |
| 2022 |
| Dollars |
| Change |
| 2023 |
| 2022 |
| Dollars |
| Change | ||||||||||
Americas | $ | 71,130 |
| $ | 61,453 |
| $ | 9,677 |
| 16 | % |
| $ | 192,034 |
| $ | 172,238 |
| $ | 19,796 |
|
| 11 | % |
EMEA |
| 52,524 |
|
| 49,450 |
|
| 3,074 |
| 6 | % |
|
| 140,105 |
|
| 161,068 |
|
| (20,963 | ) |
| (13 | )% |
Asia-Pacific |
| 18,063 |
|
| 12,764 |
|
| 5,299 |
| 42 | % |
|
| 64,664 |
|
| 55,093 |
|
| 9,571 |
|
| 17 | % |
Total | $ | 141,717 |
| $ | 123,667 |
| $ | 18,050 |
| 15 | % |
| $ | 396,803 |
| $ | 388,399 |
| $ | 8,404 |
|
| 2 | % |
Net Sales by Product Group (in thousands): | |||||||||||||||||||||||
Three Months Ended May 31, |
| Nine Months Ended May 31, | |||||||||||||||||||||
2023 |
| 2022 |
| Dollars |
| Change |
| 2023 |
| 2022 |
| Dollars |
| Change | |||||||||
Maintenance products | $ | 133,325 |
| $ | 115,494 |
| $ | 17,831 |
| 15 | % |
| $ | 371,741 |
| $ | 363,425 |
| $ | 8,316 |
| 2 | % |
HCCP (1) |
| 8,392 |
|
| 8,173 |
|
| 219 |
| 3 | % |
|
| 25,062 |
|
| 24,974 |
|
| 88 |
| — | % |
Total | $ | 141,717 |
| $ | 123,667 |
| $ | 18,050 |
| 15 | % |
| $ | 396,803 |
| $ | 388,399 |
| $ | 8,404 |
| 2 | % |
(1) Homecare and cleaning products (“HCCP”) |
Dividend and Share Repurchase Update
As previously announced, WD-40 Company’s board of directors declared on June 20, 2023, a regular quarterly dividend of $0.83 per share payable on July 31, 2023 to stockholders of record at the close of business on July 14, 2023.
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. During the period from November 1, 2021 through May 31, 2023, the Company repurchased 180,232 shares at a total cost of $36.6 million under this $75.0 million plan. During the third quarter, the Company repurchased 10,000 shares at a total cost of $1.8 million under this $75.0 million plan.
On June 19, 2023, the Company’s board approved a new share repurchase plan. Under this new plan, which will become effective on September 1, 2023, the Company is authorized to acquire up to $50.0 million of its outstanding shares through August 31, 2025. The timing and amount of repurchases under either 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 are pleased to be able to continue to return capital to our stockholders through regular buy-backs and dividends,” said Sara Hyzer, WD-40 Company’s vice president and chief financial officer. “In addition, I am happy to see we have returned to solid top line growth in the third fiscal quarter. While we are reiterating our guidance today, we do continue to operate in a volatile environment, and we will likely come in at the lower end of our guidance range.”
Reiterated Fiscal Year 2023 Guidance
The Company reiterated the following guidance for fiscal year 2023:
This guidance is expressed in good faith and is based on management’s current view of anticipated results.
Net sales guidance was calculated using recent foreign currency exchange rates. In non-GAAP constant currency, sales growth projection would be approximately 6.5 to 11.5 percent. This guidance does not include any future acquisitions or divestitures. Unanticipated inflationary headwinds, changes in foreign currency exchange rates, and other unforeseen events may further affect the Company’s financial results.
Webcast Information
As previously announced, WD-40 Company management will host a live webcast at approximately 2:00 p.m. PDT 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 $518.8 million in fiscal year 2022 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,” “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 July 10, 2023. 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, 2022 which the Company filed with the SEC on October 24, 2022, and in the Company’s Quarterly Report on Form 10-Q for the period ended May 31, 2023, which the Company expects to file with the SEC on July 10, 2023.
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, 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, 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) | 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) | |||||||
May 31, 2023 |
| August 31, 2022 | |||||
Assets |
|
|
| ||||
Current assets: |
|
|
| ||||
Cash and cash equivalents | $ | 38,403 |
|
| $ | 37,843 |
|
Trade and other accounts receivable, net |
| 100,556 |
|
|
| 89,930 |
|
Inventories |
| 95,326 |
|
|
| 104,101 |
|
Other current assets |
| 15,575 |
|
|
| 17,766 |
|
Total current assets |
| 249,860 |
|
|
| 249,640 |
|
Property and equipment, net |
| 66,636 |
|
|
| 65,977 |
|
Goodwill |
| 95,410 |
|
|
| 95,180 |
|
Other intangible assets, net |
| 4,898 |
|
|
| 5,588 |
|
Operating lease right-of-use assets |
| 7,981 |
|
|
| 7,559 |
|
Deferred tax assets, net |
| 647 |
|
|
| 679 |
|
Other assets |
| 12,618 |
|
|
| 9,672 |
|
Total assets | $ | 438,050 |
|
| $ | 434,295 |
|
|
|
|
| ||||
Liabilities and Stockholders’ Equity |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Accounts payable | $ | 26,780 |
|
| $ | 32,852 |
|
Accrued liabilities |
| 27,142 |
|
|
| 27,161 |
|
Accrued payroll and related expenses |
| 13,217 |
|
|
| 11,583 |
|
Short-term borrowings |
| 27,256 |
|
|
| 39,173 |
|
Income taxes payable |
| 914 |
|
|
| 51 |
|
Total current liabilities |
| 95,309 |
|
|
| 110,820 |
|
Long-term borrowings |
| 108,893 |
|
|
| 107,139 |
|
Deferred tax liabilities, net |
| 10,531 |
|
|
| 10,528 |
|
Long-term operating lease liabilities |
| 6,200 |
|
|
| 5,999 |
|
Other long-term liabilities |
| 11,290 |
|
|
| 11,185 |
|
Total liabilities |
| 232,223 |
|
|
| 245,671 |
|
|
|
|
| ||||
Commitments and Contingencies |
|
|
| ||||
Stockholders’ equity: |
|
|
| ||||
Common stock — authorized 36,000,000 shares, $0.001 par value; 19,896,477 and 19,888,807 shares issued at May 31, 2023 and August 31, 2022, respectively; and 13,568,346 and 13,602,346 shares outstanding at May 31, 2023 and August 31, 2022, respectively |
| 20 |
|
|
| 20 |
|
Additional paid-in capital |
| 171,166 |
|
|
| 165,973 |
|
Retained earnings |
| 472,221 |
|
|
| 456,076 |
|
Accumulated other comprehensive loss |
| (32,910 | ) |
|
| (36,209 | ) |
Common stock held in treasury, at cost — 6,328,131 and 6,286,461 shares at May 31, 2023 and August 31, 2022, respectively |
| (404,670 | ) |
|
| (397,236 | ) |
Total stockholders’ equity |
| 205,827 |
|
|
| 188,624 |
|
Total liabilities and stockholders’ equity | $ | 438,050 |
|
| $ | 434,295 |
|
WD-40 COMPANY | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited and in thousands, except per share amounts) | |||||||||||||||
Three Months Ended May 31, |
| Nine Months Ended May 31, | |||||||||||||
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
| |
|
|
|
|
|
|
|
| ||||||||
Net sales | $ | 141,717 |
|
| $ | 123,667 |
|
| $ | 396,803 |
|
| $ | 388,399 |
|
Cost of products sold |
| 69,955 |
|
|
| 64,682 |
|
|
| 194,708 |
|
|
| 195,426 |
|
Gross profit |
| 71,762 |
|
|
| 58,985 |
|
|
| 202,095 |
|
|
| 192,973 |
|
|
|
|
|
|
|
|
| ||||||||
Operating expenses: |
|
|
|
|
|
|
| ||||||||
Selling, general and administrative |
| 38,195 |
|
|
| 33,621 |
|
|
| 115,869 |
|
|
| 106,863 |
|
Advertising and sales promotion |
| 7,660 |
|
|
| 6,022 |
|
|
| 18,984 |
|
|
| 17,242 |
|
Amortization of definite-lived intangible assets |
| 250 |
|
|
| 358 |
|
|
| 753 |
|
|
| 1,081 |
|
Total operating expenses |
| 46,105 |
|
|
| 40,001 |
|
|
| 135,606 |
|
|
| 125,186 |
|
|
|
|
|
|
|
|
| ||||||||
Income from operations |
| 25,657 |
|
|
| 18,984 |
|
|
| 66,489 |
|
|
| 67,787 |
|
|
|
|
|
|
|
| |||||||||
Other income (expense): |
|
|
|
|
|
|
| ||||||||
Interest income |
| 69 |
|
|
| 27 |
|
|
| 164 |
|
|
| 73 |
|
Interest expense |
| (1,597 | ) |
|
| (669 | ) |
|
| (4,268 | ) |
|
| (1,902 | ) |
Other income (expense), net |
| 243 |
|
|
| (42 | ) |
|
| 558 |
|
|
| (119 | ) |
Income before income taxes |
| 24,372 |
|
|
| 18,300 |
|
|
| 62,943 |
|
|
| 65,839 |
|
Provision for income taxes |
| 5,477 |
|
|
| 3,820 |
|
|
| 13,525 |
|
|
| 13,296 |
|
Net income | $ | 18,895 |
|
| $ | 14,480 |
|
| $ | 49,418 |
|
| $ | 52,543 |
|
|
|
|
|
|
|
|
| ||||||||
Earnings per common share: |
|
|
|
|
|
|
| ||||||||
Basic | $ | 1.39 |
|
| $ | 1.07 |
|
| $ | 3.62 |
|
| $ | 3.83 |
|
Diluted | $ | 1.38 |
|
| $ | 1.07 |
|
| $ | 3.62 |
|
| $ | 3.82 |
|
|
|
|
|
|
|
|
| ||||||||
Shares used in per share calculations: |
|
|
|
|
|
|
| ||||||||
Basic |
| 13,573 |
|
|
| 13,656 |
|
|
| 13,582 |
|
|
| 13,683 |
|
Diluted |
| 13,600 |
|
|
| 13,680 |
|
|
| 13,606 |
|
|
| 13,712 |
|
WD-40 COMPANY | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited and in thousands) | |||||||
Nine Months Ended May 31, | |||||||
| 2023 |
|
|
| 2022 |
| |
Operating activities: |
|
|
| ||||
Net income | $ | 49,418 |
|
| $ | 52,543 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
| ||||
Depreciation and amortization |
| 5,939 |
|
|
| 6,140 |
|
Net losses (gains) on sales and disposals of property and equipment |
| 20 |
|
|
| (162 | ) |
Deferred income taxes |
| (376 | ) |
|
| 165 |
|
Stock-based compensation |
| 5,793 |
|
|
| 5,751 |
|
Unrealized foreign currency exchange (gains) losses |
| (1,780 | ) |
|
| 261 |
|
Provision for credit losses |
| 18 |
|
|
| 115 |
|
Write-off of inventories |
| 693 |
|
|
| 456 |
|
Changes in assets and liabilities: |
|
|
| ||||
Trade and other accounts receivable |
| (9,015 | ) |
|
| (6,932 | ) |
Inventories |
| 9,826 |
|
|
| (42,767 | ) |
Other assets |
| (326 | ) |
|
| (5,213 | ) |
Operating lease assets and liabilities, net |
| 55 |
|
|
| (2 | ) |
Accounts payable and accrued liabilities |
| (7,086 | ) |
|
| 9,899 |
|
Accrued payroll and related expenses |
| 1,470 |
|
|
| (12,085 | ) |
Other long-term liabilities and income taxes payable |
| 944 |
|
|
| (513 | ) |
Net cash provided by operating activities |
| 55,593 |
|
|
| 7,656 |
|
|
|
| |||||
Investing activities: |
|
|
| ||||
Purchases of property and equipment |
| (4,650 | ) |
|
| (7,115 | ) |
Proceeds from sales of property and equipment |
| 437 |
|
|
| 377 |
|
Net cash used in investing activities |
| (4,213 | ) |
|
| (6,738 | ) |
|
|
| |||||
Financing activities: |
|
|
| ||||
Treasury stock purchases |
| (7,434 | ) |
|
| (22,390 | ) |
Dividends paid |
| (33,273 | ) |
|
| (31,316 | ) |
Repayments of long-term senior notes |
| (800 | ) |
|
| (800 | ) |
Net (repayments) proceeds from revolving credit facility |
| (11,917 | ) |
|
| 15,576 |
|
Shares withheld to cover taxes upon conversions of equity awards |
| (600 | ) |
|
| (4,329 | ) |
Net cash used in financing activities |
| (54,024 | ) |
|
| (43,259 | ) |
Effect of exchange rate changes on cash and cash equivalents |
| 3,204 |
|
|
| (2,821 | ) |
Net increase (decrease) in cash and cash equivalents |
| 560 |
|
|
| (45,162 | ) |
Cash and cash equivalents at beginning of period |
| 37,843 |
|
|
| 85,961 |
|
Cash and cash equivalents at end of period | $ | 38,403 |
|
| $ | 40,799 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230710222075/en/
Media and Investor Contact: Wendy Kelley Vice President, Stakeholder and Investor Engagement investorrelations@wd40.com +1-619-275-9304
Source: WD-40 Company