WD-40 Company Reports Fourth Quarter and Fiscal Year 2014 Financial Results

SAN DIEGO, Oct. 16, 2014 /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 fiscal fourth quarter and fiscal year ended August 31, 2014.

Financial Highlights and Summary

• Total net sales for the fourth quarter were $97.6 million, an increase of 4 percent compared to the prior year fiscal quarter. Fiscal year total net sales were $383.0 million, an increase of 4 percent from the prior fiscal year.
• Changes in foreign currency exchange rates had a favorable impact on sales for both the current quarter and year-to-date. On a constant currency basis total net sales were $93.9 million for the fourth quarter and $377.7 million for the full fiscal year.
• Net income for the fourth quarter was $11.5 million, an increase of 42 percent compared to the prior year fiscal quarter. Fiscal year net income was $43.7 million, an increase of 10 percent from the prior fiscal year.
• Diluted earnings per share were $0.77 in the fourth quarter, compared to $0.53 per share for the prior year fiscal quarter. Fiscal year diluted earnings per share were $2.87 compared to $2.54 in the prior fiscal year.
• Gross margin was 52.7 percent in the fourth quarter compared to 53.0 percent in the prior year fiscal quarter. Fiscal year gross margin was 51.9 percent, compared to 51.3 percent in the prior fiscal year.
• Selling, general and administrative expenses were down 4 percent in the fourth quarter to $28.3 million and were up 4 percent year-to-date to $108.6 million when compared to the prior fiscal year periods.
• Advertising and sales promotion expenses were down 15 percent in the fourth quarter to $5.8 million compared to prior year fiscal quarter and were down 4 percent for the full fiscal year to $23.9 million compared to the prior fiscal year.

"We had a good quarter and a good year and are pleased we have been able to maintain sustainable growth across our core business globally," said Garry Ridge, WD-40 Company's president and chief executive officer. "While we saw both positive and negative impacts from changes in foreign currency exchange rates, we had local currency growth across key markets and the fourth quarter was our highest revenue quarter in history. We continue to focus on our key strategic initiatives, which include growing our core business of multi-purpose maintenance products, and we are pleased with our progress in this area," Ridge added. 

Net Sales by Product Group (in thousands):

• Net sales of multi-purpose maintenance products, which are considered the primary growth focus for the company, grew 5 percent in both the fourth fiscal quarter and the full fiscal year when compared to the prior fiscal year periods. This growth was driven primarily by successful expansion of the WD-40 Specialist product line in all three segments and double-digit growth of WD-40 multi-purpose maintenance product sales in EMEA and Asia-Pacific. Changes in foreign currency exchange rates also favorably impacted sales for both the fiscal quarter and the full fiscal year.
• Net sales of homecare and cleaning products increased 4 percent in the current quarter and decreased 5 percent for the full fiscal year when compared to the prior fiscal year periods. The homecare and cleaning products, particularly those in the U.S., are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as net sales of multi-purpose maintenance products grow per the execution of the Company's strategic initiatives.

Net Sales by Segment (in thousands):

• Net sales by segment as a percent of total net sales were as follows: for the Americas, 48 percent for the fourth quarter and 47 percent for the full fiscal year; for EMEA, 41 percent for the fourth quarter and 40 percent for the full fiscal year; and, for Asia-Pacific, 11 percent for the fourth quarter and 13 percent for the full fiscal year.
• Increased sales in EMEA and Asia-Pacific more than offset slight declines in the Americas as total sales grew 4 percent in the fourth fiscal quarter when compared to the prior fiscal year period.
• The decline in sales in the Americas in the fourth fiscal quarter was primarily due to the timing of promotional activities in the U.S. and certain short-term factors, including temporary shifts in distribution, which negatively impacted sales in Canada.
• The increase in sales in EMEA in the fourth quarter was driven by the favorable impact of foreign currency exchange rates, as well as increased promotional activities within the segment. On a constant currency basis EMEA net sales for the fourth quarter would have been relatively constant compared to the prior fiscal period.
• The increase in sales in Asia-Pacific in the fourth quarter was due primarily to expanded distribution, increased promotional activities and the continued expansion of the WD-40 Specialist product line.

Dividend and Share Repurchase
As previously announced, WD-40 Company's board of directors declared on Friday, October 3, 2014 the regular quarterly cash dividend of $0.34 per share payable on October 31, 2014 to shareholders of record on October 17, 2014. 

On June 18, 2013, the board of directors approved a share repurchase plan that authorizes the Company to acquire up to $60.0 million of its outstanding shares effective from August 1, 2013 through August 31, 2015. During the fourth quarter of fiscal year 2014, the Company repurchased $12.3 million in shares under this plan.  Since the plan's commencement on August 1, 2013, the Company has repurchased $45.4 million in shares under the plan. 

On October 14, 2014 the board of directors approved a new share repurchase plan which becomes effective when the Company's existing $60.0 million authorization is exhausted. Under the new share repurchase plan, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2016. The timing and the amount of any repurchases of common stock will be determined by management based on its evaluation of market conditions and other factors. 

Fiscal Year 2015 Guidance
The Company issued guidance for fiscal year 2015 as follows:

• Net sales growth is projected to be between 4 and 8 percent with net sales expected to be between $398 million and $413 million.
• Gross margin for the full year is expected to be close to 52 percent.
• Projected advertising and promotion expenses to be 6.0 percent to 7.0 percent of net sales.
• Net income is projected to be between $45.1 million and $46.4 million.
• Expect diluted earnings per share to be between $3.07 and $3.16 based on an estimated 14.7 million weighted average shares outstanding.

This guidance does not include any future acquisitions or divestitures, and assumes that foreign currency exchange rates will remain close to current levels.

"We continue to focus on protecting our brands and intellectual property rights around the world. And we are attentive to heightened regulatory requirements that come with the increasing importance of our global footprint," Ridge said. "We are also working hard in the area of product innovation and bringing new products and new brands, such as the recent acquisition of the GT85 brand, to our end-users across the globe as we work to grow revenues. If we continue to delight our customers, engage our tribe and stay focused and deliberate around managing the business, we will continue to perform well," Ridge said. "We set the table for a strong year ahead and are pleased we are able to reward our tribe for their hard work across the globe."

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 other 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 markets its multi-purpose and specialty maintenance products and its homecare and cleaning products under the following well-known brands: WD-40®, 3-IN-ONE®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®.  

Headquartered in San Diego, WD-40 Company currently markets and sells its products in 188 countries worldwide and recorded net sales of $383 million in fiscal year 2014.  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 news release contains forward-looking statements concerning WD-40 Company's outlook for net sales, gross margins, advertising and sales promotion expenses, net income, dividends and other financial results. These statements are based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40 Company. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements, including the impact of commodity prices, the introduction of new product lines and fluctuating global market conditions, including foreign currency exchange rates, both in the United States and internationally. The company's expectations, beliefs and projections 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 projections will be achieved or accomplished.   

The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents. More detailed information will be available in WD-40 Company's Form 10-K for the period ended August 31, 2014 which the Company expects to file with the SEC on October 21, 2014.

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 October 16, 2014, 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.

SOURCE WD-40 Company

Related Links

http://www.wd40company.com

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