WD-40 Co. (WDFC) Misses Q2 EPS by 19c, Revenues Miss; Withdraws FY20 Guidance

April 9, 2020 4:07 PM EDT

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WD-40 Co. (NASDAQ: WDFC) reported Q2 EPS of $1.04, $0.19 worse than the analyst estimate of $1.23. Revenue for the quarter came in at $100 million versus the consensus estimate of $105.94 million.

Second Fiscal Quarter Financial Highlights

  • Total net sales for the second quarter were $100.0 million, a decrease of 1 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $198.6 million, a decrease of 2 percent compared to the prior year fiscal period.
  • Translation of the Company\'s foreign subsidiary results to U.S. dollars had a favorable impact on sales for the current quarter and an unfavorable impact on sales year-to-date. On a constant currency basis, total net sales would have been $99.7 million for the second quarter and $200.6 million year to date.
  • Net income for the second quarter was $14.3 million, a decrease of 10 percent compared to the prior year fiscal quarter. Year-to-date net income was $26.5 million, a decrease of 9 percent from the prior year fiscal period.
  • Diluted earnings per share were $1.04 in the second quarter, compared to $1.14 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $1.92 compared to $2.09 in the prior year fiscal period.
  • Gross margin was 53.6 percent in the second quarter compared to 55.4 percent in the prior year fiscal quarter. Year-to-date gross margin was 53.9 percent compared to 55.3 percent in the prior year fiscal period.
  • Selling, general and administrative expenses were down 2 percent in the second quarter to $29.9 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were down 1 percent to $62.5 million compared to the prior year fiscal period.
  • Advertising and sales promotion expenses were down 6 percent in the second quarter to $4.9 million when compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were down 6 percent to $10.4 million compared to the prior year fiscal period.

"Our total sales declined in the second quarter primarily due to a 31 percent decline in sales within the Asia-Pacific segment." said Garry Ridge, WD-40 Company's chairman and chief executive officer. "This decline was mainly driven by a significant decrease in maintenance product sales in China due to disruptions related to the COVID-19 outbreak and resulting health crisis. Though the impact in the second quarter was significant, we are pleased that things appear to be slowly returning to normal for our tribe members in China."

"However, we currently find ourselves at the peak of uncertainty as it relates to this global health crisis and its effects on both our company and the global economy. To navigate these unprecedented times, we have three primary areas of focus for the company. First, the safety and wellbeing of our tribe members and their families is our top priority. Second, we need to stay connected with our customers and vendor partners to ensure we continue to meet market needs. Third, we need to maintain the infrastructure of our business operations. In support of this third area of focus, we have recently taken steps to strengthen our balance sheet."

"We know we will probably face some challenges in the coming weeks and months as we continue to operate a global business through these volatile and uncertain times. But we are a strong tribe and an enduring company. We are confident that we are well positioned to navigate this storm as it unfolds from both a financial and operational perspective and emerge on the other side a stronger company," concluded Ridge.

Withdrawal of Fiscal Year 2020 Guidance

Due to the rapidly evolving situation associated with the global health crisis caused by COVID-19 and its impact on the global economy, management has elected to withdrawal the fiscal year 2020 guidance which was reiterated on January 9, 2020. The extent to which the global health crisis will impact the Company\'s financial results and operations for fiscal year 2020 will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak and the international actions being taken to contain and treat it.

For earnings history and earnings-related data on WD-40 Co. (WDFC) click here.



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