WD-40 Company Reports Fourth Quarter and Fiscal Year 2017 Financial Results

SAN DIEGO, Oct. 19, 2017 /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 fourth quarter and fiscal year ended August 31, 2017.

Financial Highlights and Summary

• Total net sales for the fourth quarter were $96.6 million, a decrease of 1 percent compared to the prior year fiscal quarter. Net sales for the full fiscal year were $380.5 million, a decrease of $0.2 million compared to the prior year fiscal year.
• Translation of the Company's foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and full fiscal year. On a constant currency basis total net sales would have been $98.5 million for the fourth quarter and $399.6 million for the full fiscal year.
• Net income for the fourth quarter was $14.4 million, an increase of 1 percent compared to the prior year fiscal quarter. For the full fiscal year net income was $52.9 million, also an increase of 1 percent from the prior fiscal year.
• Diluted earnings per share were $1.01 in the fourth quarter, compared to $0.99 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $3.72 compared to $3.64 in the prior fiscal year.
• Gross margin was 56.0 percent in the fourth quarter compared to 57.4 percent in the prior year fiscal quarter. Full fiscal year gross margin was 56.2 percent compared to 56.3 percent in the prior fiscal year.
• Selling, general and administrative expenses were down 12 percent in the fourth quarter to $28.2 million when compared to the prior year fiscal quarter. Selling, general and administrative expenses for the full fiscal year were down 3 percent to $114.6 million compared to the prior fiscal year.
• Advertising and sales promotion expenses were down 2 percent in the fourth quarter to $5.3 million when compared to the prior year fiscal quarter. Advertising and sales promotion expenses for the full fiscal year were down 8 percent to $20.5 million compared to the prior fiscal year.

"Although stronger sales growth in fiscal year 2017 would have been a preferred result, I believe today's financial results demonstrate that our robust business model and global diversification can deliver record earnings - even in times of currency headwinds," said Garry Ridge, WD-40 Company's president and chief executive officer.  

"Our WD-40 Specialist product line continued to perform well and delivered 20 percent annual revenue growth in fiscal year 2017.  This innovative product line, together with our ability to grow sales of the blue and yellow can with the little red top, represents a tremendous long-term opportunity for our organization.

"As we embark into fiscal year 2018 we believe the bulk of the recent foreign currency exchange headwinds are behind us and, accordingly, think it is an appropriate time to review our long-term revenue targets.  Our revised long-term revenue target is to drive consolidated net sales to approximately $700 million in revenue by the end of fiscal year 2025," continued Ridge. 

Net Sales by Segment (in thousands):

• Net sales by segment as a percent of total net sales for the fourth quarter were as follows: for the Americas, 50 percent; for EMEA, 37 percent; and for Asia-Pacific, 13 percent.
• Net sales in the Americas were down 7 percent in the fourth quarter primarily attributable to an 11 percent decrease in sales of maintenance products in the United States. These declines were partially offset by higher sales of maintenance products in Canada and Latin America. The lower sales of maintenance products in the United States were due to the phasing of promotional activities at some of our larger customers.
• Net sales in EMEA increased 4 percent in the fourth quarter primarily due to a 7 percent increase in sales in the EMEA direct markets compared to the prior year fiscal period primarily due to higher sales of maintenance products throughout most countries in the region. On a constant currency basis EMEA sales for the fourth quarter would have increased by $3.5 million or 10 percent compared to the prior fiscal year period.
• Net sales in Asia-Pacific increased 15 percent in the fourth quarter primarily due to a 39 percent increase in sales in the Asia-Pacific distributor markets and a 13 percent increase in sales in China. The sales growth in the Asia distributor markets was primarily attributable to the timing of promotional activities and increased distribution for WD-40 Multi-Use Product. The growth in China was due to an increase in promotional activities throughout the country. Changes in foreign currency exchange rates did not have a material impact on sales in the Asia-Pacific segment.

Net Sales by Product Group (in thousands):

• Net sales of maintenance products, which are considered the primary growth focus for the Company, remained relatively constant at $86.4 million in the fourth quarter compared to $86.5 million in the prior year period. Maintenance product sales increased within the EMEA and Asia-Pacific segments but the growth was entirely offset by a decline of sales in the Americas. This decline was entirely attributable to an 11 percent decrease in sales of maintenance products in the United States.
• Net sales of homecare and cleaning products decreased 5 percent in the fourth quarter when compared to the prior fiscal year period. 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.

Dividend and Share Repurchase As previously announced, WD-40 Company's board of directors declared on Tuesday, October 10, 2017 a quarterly dividend of $0.49 per share payable October 31, 2017 to stockholders of record at the close of business on October 20, 2017.

On June 21, 2016, the Company's Board of Directors approved a share buy-back plan. Under the plan, which became effective on September 1, 2016, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2018. The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company's Chief Executive Officer and Chief Financial Officer and in compliance with all laws and regulations applicable thereto. During the period from September 1, 2016 through August 31, 2017, the Company has repurchased 290,573 shares at a total cost of $31.1 million under this $75.0 million plan.

Fiscal Year 2018 Guidance The Company issued the following guidance for fiscal year 2018:

• Net sales growth is projected to be between 4 and 6 percent with net sales expected to be between $396 million and $403 million.
• Gross margin percentage for the full year is expected to be near 56 percent. 
• Advertising and promotion investments are projected to be near 6.0 percent of net sales. 
• Net income is projected to be between $52.9 million and $53.8 million.
• Diluted earnings per share is expected to be between $3.81 and $3.87 based on an estimated 13.9 million weighted average shares outstanding.

This guidance does not include any future acquisitions or divestitures and assumes that foreign currency exchange rates and crude oil prices will remain close to current levels for the remainder of fiscal year 2018.

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 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 its 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 $381 million in fiscal year 2017 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; 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; 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," "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, 2017, which the company expects to file with the SEC on October 23, 2017. 

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 19, 2017, 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.

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SOURCE WD-40 Company