WD-40 Company Reports First Quarter 2022 Financial Results

SAN DIEGO, Jan. 6, 2022 /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 first fiscal quarter ended November 30, 2021.

Financial Highlights and Summary

"Our maintenance products delivered solid sales increases in the first quarter including 14 percent growth of WD-40 Multi-Use Product," said Garry Ridge, WD-40 Company's chairman and chief executive officer. "We are pleased with our topline results in the quarter, but we are facing a volatile and challenging environment that is deteriorating our gross margin and causing disruptions to our supply chain."

"This is a different game that we're playing and we are using a different playbook.We expect the operating environment to remain volatile and so we are proactively increasing the capacity and resiliency of our supply chain in many of our markets.In addition, in order to navigate the challenging inflationary environment, we are taking the necessary actions to restore our gross margins to historic levels.We're confident that our plans to rebuild margin, when coupled with the advancement of our Must-Win Battles, will enable us to deliver on both our long-term margin and revenue goals," concluded Ridge.

Net Sales by Segment (in thousands):

Three Months Ended November 30,

2021

2020

Change

Americas

$

56,288

$

54,188

4%

EMEA

57,555

54,749

5%

Asia-Pacific

20,903

15,622

34%

Total

$

134,746

$

124,559

8%

Net Sales by Product Group (in thousands):

Three Months Ended November 30,

2021

2020

Change

Maintenance products

$

126,030

$

114,343

10%

Homecare and cleaning products

8,716

10,216

(15)%

Total

$

134,746

$

124,559

8%

Dividend and Share Repurchase UpdateAs previously announced, WD-40 Company's board of directors declared on Monday, December 13, 2021 a quarterly dividend of $0.78 per share reflecting an increase of more than 8 percent over the previous quarter's dividend.The quarterly dividend is payable on January 31, 2022 to stockholders of record at the close of business on January 14, 2022.

On October 12, 2021, the Company's Board of Directors approved a share buy-back 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. The timing and amount of repurchases will be based on terms and conditions acceptable to the Company and in compliance with applicable laws and regulations. During the period from November 1, 2021 through November 30, 2021, the Company repurchased 32,000 shares at a total cost of $7.4 million under this $75.0 million plan.

Updated Fiscal Year 2022 GuidanceThe Company issued the following updated guidance for fiscal year 2022:

This guidance is based on management's current view of anticipated results and does not include any future acquisitions or divestitures or the impact of fluctuating foreign currency exchange rates. Unanticipated inflationary headwinds and other unforeseen events may further impact the Company's financial results.

Webcast InformationAs 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 owns a wide range of 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 $488.1 million in fiscal year 2021 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 visithttp://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; 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; the length and severity of the current COVID-19 pandemic and its impact on the global economy and the Company's financial results; the impacts from inflationary trends and supply chain constraints; 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," "target," "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, 2021, and in the Company's Quarterly Report on Form 10-Q for the period ended November 30, 2021 which the Company expects to file with the SEC on January 6, 2022.

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 January 6, 2022, 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.

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) Constant currency represents the translation of the current quarter results from the functional currencies of the Company's subsidiaries to U.S. dollars using the exchange rate in effect for the corresponding period of the prior fiscal year.

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share amounts)

November 30,

August 31,

2021

2021

Assets

Current assets:

Cash and cash equivalents

$

59,519

$

85,961

Trade and other accounts receivable, less allowance for doubtful

accounts of $451 and $463 at November 30, 2021

and August 31, 2021, respectively

95,542

89,558

Inventories

67,875

55,752

Other current assets

10,392

9,948

Total current assets

233,328

241,219

Property and equipment, net

68,980

70,145

Goodwill

95,723

95,869

Other intangible assets, net

6,828

7,244

Operating lease right-of-use assets

8,528

8,824

Deferred tax assets, net

840

858

Other assets

7,212

6,044

Total assets

$

421,439

$

430,203

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

35,303

$

33,499

Accrued liabilities

26,214

25,658

Accrued payroll and related expenses

18,096

25,662

Short-term borrowings

800

800

Income taxes payable

645

317

Total current liabilities

81,058

85,936

Long-term borrowings

112,729

114,940

Deferred tax liabilities, net

11,066

10,401

Long-term operating lease liabilities

6,722

7,062

Other long-term liabilities

11,466

11,482

Total liabilities

223,041

229,821

Commitments and Contingencies

Shareholders' equity:

Common stock ― authorized 36,000,000 shares, $0.001 par value;

19,886,937 and 19,856,865 shares issued at November 30, 2021 and

August 31, 2021, respectively; and 13,707,038 and 13,708,966 shares

outstanding at November 30, 2021 and August 31, 2021, respectively

20

20

Additional paid-in capital

162,382

163,737

Retained earnings

439,385

430,735

Accumulated other comprehensive loss

(27,923)

(26,030)

Common stock held in treasury, at cost ― 6,179,899 and 6,147,899

shares at November 30, 2021 and August 31, 2021, respectively

(375,466)

(368,080)

Total shareholders' equity

198,398

200,382

Total liabilities and shareholders' equity

$

421,439

$

430,203

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)

Three Months Ended November 30,

2021

2020

Net sales

$

134,746

$

124,559

Cost of products sold

66,276

54,313

Gross profit

68,470

70,246

Operating expenses:

Selling, general and administrative

38,423

35,977

Advertising and sales promotion

5,624

5,519

Amortization of definite-lived intangible assets

363

358

Total operating expenses

44,410

41,854

Income from operations

24,060

28,392

Other income (expense):

Interest income

25

19

Interest expense

(620)

(570)

Other income (expense), net

(329)

179

Income before income taxes

23,136

28,020

Provision for income taxes

4,581

4,397

Net income

$

18,555

$

23,623

Earnings per common share:

Basic

$

1.35

$

1.72

Diluted

$

1.34

$

1.72

Shares used in per share calculations:

Basic

13,716

13,675

Diluted

13,752

13,706

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

Three Months Ended November 30,

2021

2020

Operating activities:

Net income

$

18,555

$

23,623

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

1,987

1,700

Net losses (gains) on sales and disposals of property and equipment

9

(55)

Deferred income taxes

738

236

Stock-based compensation

2,891

2,665

Unrealized foreign currency exchange losses

541

52

Provision for bad debts

30

124

Changes in assets and liabilities:

Trade and other accounts receivable

(7,980)

(9,936)

Inventories

(13,054)

(345)

Other assets

(1,793)

(1,304)

Operating lease assets and liabilities, net

2

6

Accounts payable and accrued liabilities

4,126

4,590

Accrued payroll and related expenses

(7,324)

624

Other long-term liabilities and income taxes payable

325

1,941

Net cash (used in) provided by operating activities

(947)

23,921

Investing activities:

Purchases of property and equipment

(2,434)

(3,812)

Proceeds from sales of property and equipment

72

142

Net cash used in investing activities

(2,362)

(3,670)

Financing activities:

Treasury stock purchases

(7,386)

-

Dividends paid

(9,905)

(9,199)

Proceeds from issuance of long-term senior notes

-

52,000

Repayments of long-term senior notes

(400)

(400)

Net repayments of revolving credit facility

-

(50,000)

Shares withheld to cover taxes upon conversions of equity awards

(4,246)

(3,490)

Net cash used in financing activities

(21,937)

(11,089)

Effect of exchange rate changes on cash and cash equivalents

(1,196)

220

Net (decrease) increase in cash and cash equivalents

(26,442)

9,382

Cash and cash equivalents at beginning of period

85,961

56,462

Cash and cash equivalents at end of period

$

59,519

$

65,844

SOURCE WD-40 Company

 WD-40 Company Reports First Quarter 2022 Financial Results