Market Overview

WD-40 Company Reports Fourth Quarter and Fiscal Year 2019 Financial Results

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SAN DIEGO, Oct. 17, 2019 /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, 2019.

WD-40 Company (PRNewsFoto/WD-40 Company) (PRNewsfoto/WD-40 Company)

Financial Highlights and Summary

  • Total net sales for the fourth quarter were $106.7 million, an increase of 4 percent compared to the prior year fiscal quarter. For the full fiscal year, total net sales were $423.4 million, also an increase of 4 percent compared to the prior 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 $109.2 million for the fourth quarter and $433.8 million for the full fiscal year.
  • Net income for the fourth quarter was $8.6 million, a decrease of 60 percent compared to the prior year fiscal quarter. For the full fiscal year, net income was $55.9 million, a decrease of 14 percent from the prior fiscal year.
  • Diluted earnings per share were $0.63 in the fourth quarter, compared to $1.54 per share for the prior year fiscal quarter. For the full fiscal year, diluted earnings per share were $4.02 compared to $4.64 in the prior fiscal year.
  • Gross margin was 54.6 percent in the fourth quarter compared to 55.2 percent in the prior year fiscal quarter. For the full fiscal year, gross margin was 54.9 percent compared to 55.1 percent in the prior fiscal year.
  • Selling, general and administrative expenses were down 3 percent in the fourth quarter to $28.7 million when compared to the prior year fiscal quarter. Selling, general and administrative expenses for the full fiscal year were up 2 percent to $123.9 million compared to the prior fiscal year.
  • Advertising and sales promotion expenses were down 9 percent in the fourth quarter to $5.9 million when compared to the prior year fiscal quarter. Advertising and sales promotion expenses for the full fiscal year were up 4 percent to $23.3 million compared to the prior fiscal year.

"In the fourth quarter, net income and diluted earnings per share were negatively impacted by an $8.7 million reserve for an uncertain tax position that we recorded, and previously disclosed, during the fourth quarter," said Jay Rembolt, WD-40 Company's chief financial officer. "Because of this adjustment, our net income is significantly lower on a year-over-year basis in both the quarter and the full fiscal year. The good news is that this a one-time charge and the high tax rate we recorded is not expected to carry into fiscal year 2020. We expect the provision for income tax to be between 20 and 22 percent in fiscal year 2020," concluded Rembolt.

WD-40 Company's chief executive officer, Garry Ridge added, "We are pleased that we achieved sales results in fiscal year 2019 which reflect another solid year for the Company. Our maintenance products delivered solid sales increases in the full fiscal year including 4 percent growth of WD-40 Multi-Use Product and 13 percent growth of WD-40 Specialist. I'd like to thank the tribe for their contributions during fiscal year 2019. The tribe has never been more aligned and focused. We are clear about our purpose and we know what we need to do to achieve our long-term goals."

Net Sales by Segment (in thousands):


Three Months Ended August 31,


Fiscal Year Ended August 31,


2019


2018


%
Change


2019


2018


%
Change

Americas

$

49,318


$

48,749



1%


$

193,972


$

192,878



1%

EMEA


36,356



36,647



(1)%



160,615



150,878



6%

Asia-Pacific


21,070



17,244



22%



68,763



64,762



6%

 Total

$

106,744


$

102,640



4%


$

423,350


$

408,518



4%



















 

  • Net sales by segment as a percent of total net sales for the fourth quarter were as follows: for the Americas, 46 percent; for EMEA, 34 percent; and for Asia-Pacific, 20 percent.
  • Net sales in the Americas were up 1 percent in the fourth quarter due entirely to higher sales of maintenance products in the United States and Canada, which increased 2 percent and 19 percent, respectively. This increase was partially offset by lower sales of maintenance products Latin America. The higher sales of maintenance products in the United States were primarily due to an increase in sales of WD-40 Specialist. The higher sales of maintenance products in Canada were primarily due to strong sales of WD-40 Multi-Use Product.
  • Net sales in EMEA decreased 1 percent in the fourth quarter primarily due to changes in foreign currency exchange rates, which had an unfavorable impact on sales for the EMEA segment from period to period. On a constant currency basis EMEA sales for the fourth quarter would have increased by $1.6 million, or 4 percent, compared to the prior fiscal year period primarily due to higher sales of WD-40 Multi-Use Product within EMEA's distributor markets. EMEA also experienced strong sales of homecare and cleaning products which increased 16 percent compared to the prior year fiscal period.
  • Net sales in Asia-Pacific increased 22 percent in the fourth quarter primarily due to a 28 percent increase in sales in the Asia distributor markets and a 22 percent increase in sales in China. The sales growth in the Asia distributor markets was primarily attributable to increased sales driven by successful promotional programs as well as the timing of customer orders in certain countries. The growth in China was due to the timing of promotional activities as well as continued growth within the e-commerce channel. Changes in foreign currency exchange rates had an unfavorable impact on sales for the Asia-Pacific segment from period to period. On a constant currency basis Asia-Pacific sales for the fourth quarter would have increased by $4.3 million, or 25 percent, compared to the prior fiscal year period.

Net Sales by Product Group (in thousands):


Three Months Ended August 31,


Fiscal Year Ended August 31,


2019


2018


%
Change


2019


2018


%
Change

Maintenance products

$

97,273


$

93,203



4%


$

386,644


$

372,391



4%

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