~ Global net sales grew 4 percent for fiscal
year 2023 compared to prior year ~ ~ Management provides fiscal
year 2024 guidance ~
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, 2023.
Financial Highlights and Summary
- Total net sales for the fourth quarter were $140.5 million, an
increase of 8 percent compared to the prior year fiscal quarter.
For the full fiscal year, total net sales were $537.3 million, an
increase of 4 percent compared to the prior fiscal year.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on sales for the current quarter and an unfavorable impact for the
full fiscal year. On a non-GAAP constant currency basis, total net
sales would have been $139.2 million for the fourth quarter and
$555.0 million for the full fiscal year.
- Net income for the fourth quarter was $16.6 million, an
increase of 12 percent compared to the prior year fiscal quarter.
For the full fiscal year, net income was $66.0 million, a decrease
of 2 percent compared to the prior fiscal year.
- Translation of the Company’s foreign subsidiaries’ results from
their functional currencies to U.S. dollars had a favorable impact
on net income for the current quarter and an unfavorable impact for
the full fiscal year. On a non-GAAP constant currency basis, net
income would have been $16.3 million for the fourth quarter and
$68.4 million for the full fiscal year.
- Diluted earnings per share were $1.21 in the fourth quarter
compared to $1.08 in the prior year fiscal quarter. For the full
fiscal year, diluted earnings per share were $4.83 compared to
$4.90 for the prior fiscal year.
- Gross margin was 51.4 percent in the fourth quarter compared to
47.4 percent in the prior year fiscal quarter. For the full fiscal
year, gross margin was 51.0 percent compared to 49.1 percent in the
prior fiscal year.
- Selling, general, and administrative expenses were up 22
percent in the fourth quarter to $38.8 million compared to the
prior year fiscal quarter. Selling, general, and administrative
expenses for the full fiscal year were up 12 percent to $154.7
million compared to the prior fiscal year.
- Advertising and sales promotion expenses were down 3 percent in
the fourth quarter to $9.8 million compared to the prior year
fiscal quarter. Advertising and sales promotion expenses for the
full fiscal year were up 5 percent to $28.8 million compared to the
prior fiscal year.
“Fiscal year 2023 has been a landmark year as WD-40 Company
celebrates 70 years of bringing the blue and yellow can with the
little red top to end users around the world. Over that time, we
have continued to innovate and evolve our solutions to become a
household name known for quality, value, and performance,” said
Steve Brass, WD-40 Company’s president and chief executive
officer.
“Over the past year, we have made great progress against our
strategic goals and turned in a solid financial performance. For
fiscal year 2023, we grew total net sales by 4 percent and by 7
percent on a non-GAAP constant currency basis. We saw significant
improvement through the second half of the year as sales volumes
recovered. We also improved gross margins by 190 basis points and
generated strong cash flow for the fiscal year. We are encouraged
by the improvement in trends we experienced through the second half
of the year.
“As we enter fiscal year 2024, we are introducing our new
Four-by-Four Strategic Framework, which is tied to our purpose and
values. This framework includes our four Must-Win Battles, which
focus on net sales growth, and four Strategic Enablers, which focus
on operational excellence. These are the areas where we will focus
our time, talent, and treasure to guide our future performance.
“If we have learned anything over the last 70 years it is that
WD-40 Company is a resilient business. Our employees’ engagement
and dedication are the key to our success. I am proud of what we
have accomplished together and look forward to working across the
organization to achieve our long-term goals and deliver continued
value to all our stakeholders,” concluded Brass.
Net Sales by Segment (in thousands):
Three Months Ended August
31,
Fiscal Year Ended August
31,
2023
2022
Dollars
Change
2023
2022
Dollars
Change
Americas
$
74,738
$
67,995
$
6,743
10
%
$
266,772
$
240,233
$
26,539
11
%
EMEA
50,713
43,620
7,093
16
%
190,818
204,688
(13,870
)
(7
)%
Asia-Pacific
15,001
18,806
(3,805
)
(20
)%
79,665
73,899
5,766
8
%
Total
$
140,452
$
130,421
$
10,031
8
%
$
537,255
$
518,820
$
18,435
4
%
- Net sales by segment as a percentage of total net sales for the
fourth quarter were as follows: for the Americas, 53 percent; for
EMEA, 36 percent; for Asia-Pacific, 11 percent.
- Within the Americas, net sales increased 10 percent in the
fourth quarter as compared to the prior year fiscal quarter
primarily due to higher sales of maintenance products in the United
States, which increased 18 percent driven primarily by the impact
of price increases and strong demand resulting in increased sales
volume. In Canada, maintenance product sales decreased 3 percent
due to weaker economic conditions in certain regions that resulted
in lower levels of demand. In Latin America, maintenance product
sales decreased 12 percent driven by lower direct and distributor
market sales against a strong prior year fiscal quarter. Within
Latin America, maintenance product sales in Mexico grew 19 percent
as the Company continues to add new points of distribution and
customers within the direct market for that region.
- Within EMEA, net sales increased 16 percent in the fourth
quarter as compared to the prior year fiscal quarter primarily due
to price increases and successful promotional programs. Changes in
foreign currency exchange rates had a favorable impact on sales for
the EMEA segment in the fourth quarter compared to the prior year
fiscal quarter. On a non-GAAP constant currency basis, EMEA sales
would have increased by 13 percent compared to the prior year
fiscal quarter. Direct market sales increased 19 percent compared
to the prior year fiscal quarter primarily due to higher sales of
maintenance products as a result of price increases and promotional
programs, which were partially offset by lower demand and decreased
sales volume. Net sales in the EMEA distributor markets increased 9
percent in the fourth quarter as compared to the prior year fiscal
quarter primarily due to higher maintenance product sales in many
distributor markets.
- Within Asia-Pacific, net sales in Asia-Pacific decreased 20
percent in the fourth quarter as compared to the prior year fiscal
quarter primarily due to lower sales of maintenance products in the
Asia distributor markets. Sales of maintenance products in the Asia
distributor markets declined 38 percent compared to the prior year
fiscal quarter due to the timing of customer orders. Net sales in
Australia decreased 1 percent in the fourth quarter primarily due
to a lower sales volume of maintenance products which were driven
by weaker market and economic conditions, as well as unfavorable
changes in foreign currency exchange rates, and the impact of sales
price increases. Net sales in China decreased 4 percent in the
fourth quarter as compared to the prior year fiscal quarter
primarily due to the timing of customer orders. On a non-GAAP
constant currency basis, Asia-Pacific net sales would have
decreased by 17 percent compared to the prior year fiscal
quarter.
Net Sales by Product Group (in thousands):
Three Months Ended August
31,
Fiscal Year Ended August
31,
2023
2022
Dollars
Change
2023
2022
Dollars
Change
Maintenance products
$
131,817
$
121,901
$
9,916
8
%
$
503,558
$
485,326
$
18,232
4
%
HCCP (1)
8,635
8,520
115
1
%
33,697
33,494
203
1
%
Total
$
140,452
$
130,421
$
10,031
8
%
$
537,255
$
518,820
$
18,435
4
%
(1) Homecare and cleaning products (“HCCP”)
- Net sales of maintenance products increased 8 percent in the
fourth quarter when compared to the prior year fiscal quarter
primarily due to increased sales of WD-40® Multi-Use Product in the
United States and EMEA from period to period. Maintenance products
are considered the primary strategic focus for the Company.
- Net sales of homecare and cleaning products increased 1 percent
in the fourth quarter compared to the prior year fiscal quarter.
The homecare and cleaning products, particularly those in the
United States, are considered harvest brands providing consistent
profit returns to the Company and are becoming a smaller part of
the business as net sales of maintenance products grow in alignment
with the Company’s Four-by-Four Strategic Framework. The Company is
currently conducting a strategic review regarding the future of its
homecare and cleaning brands.
Dividend and Share Repurchase Update
On October 6, 2023, the Company’s board of directors declared a
regular quarterly dividend of $0.83 per share payable on October
31, 2023 to stockholders of record at the close of business on
October 20, 2023.
On October 12, 2021, the Company’s board of directors approved a
share repurchase plan that became effective on November 1, 2021.
Under the plan, the Company was authorized to acquire up to $75.0
million of its outstanding shares through August 31, 2023. During
fiscal year 2023, the Company repurchased 55,920 shares at an
average price of $186.09 per share, for a total cost of $10.4
million under this $75.0 million plan.
On June 19, 2023, the Company’s board of directors approved a
new share repurchase plan. Under this new plan, which became
effective on September 1, 2023, the Company is authorized to
acquire up to $50.0 million of its outstanding shares through
August 31, 2025. 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, subject to present
loan covenants and in compliance with all laws and regulations
applicable thereto.
“The solid top line growth that we experienced in fiscal year
2023 is a testimony to our resilient business model. Our net sales
growth of 7 percent on a non-GAAP constant currency basis aligns
with our long-term revenue target of mid-to-high single digit
growth. We also continue to generate strong cash flow, which is
attributable to our gross margin improvement, asset light business
model, and disciplined approach to capital allocation,” said Sara
Hyzer, WD-40 Company’s vice president, finance and chief financial
officer.
“Ultimately, we are focused on long-term value creation and our
guidance for fiscal year 2024 reflects that goal. We are making
near-term investments focused on our long-term financial objectives
and in support of our new Four-by-Four Strategic Framework. These
investments will guide our future performance and long-term
profitable growth,” concluded Hyzer.
Fiscal Year 2024 Guidance
The Company is providing guidance for fiscal year 2024 as
follows:
- Net sales growth is projected to be between 6 and 12 percent
with net sales expected to be between $570 million and $600 million
on a non-GAAP constant currency basis.
- Gross margin for the full year is expected to be between 51 and
53 percent.
- Advertising and promotion investments are projected to be
between 5 and 6 percent of net sales.
- The provision for income tax is expected to be between 24 and
25 percent.
- Net income is projected to be between $65 million and $70
million.
- Diluted earnings per share is expected to be between $4.78 and
$5.15 based on an estimated 13.6 million weighted average shares
outstanding.
This guidance is expressed in good faith and is based on
management’s current view of anticipated results. Unanticipated
inflationary headwinds and other unforeseen events may further
affect the Company’s financial results. Net sales presented on a
non-GAAP constant currency basis use weighted average fiscal year
2023 foreign currency exchange rates.
Webcast Information
As previously announced, WD-40 Company management will host a
live webcast at approximately 2:00 p.m. PDT 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 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 owns a wide range of well-known
brands that include maintenance products and homecare and cleaning
products: WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®,
GT85®, 2000 Flushes®, no vac®, 1001®, Spot Shot®, Lava®, Solvol®,
X-14®, and Carpet Fresh®.
Headquartered in San Diego, California, USA, WD-40 Company
recorded net sales of $537.3 million in fiscal year 2023 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 Statements
Except 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. These forward-looking
statements are generally identified with words such as “believe,”
“expect,” “intend,” “plan,” “project,” “could,” “may,” “aim,”
“anticipate,” “target,” “estimate” and similar expressions.
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;
changes in the political conditions or relations between the United
States and other nations; the impacts from inflationary trends and
supply chain constraints; changes in interest rates; and forecasted
foreign currency exchange rates and commodity prices.
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. All forward-looking statements reflect the Company’s
expectations as of October 19, 2023. We undertake no obligation to
revise or update any forward-looking statements.
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, 2022 which the Company filed with the
SEC on October 24, 2022, and in Part I—Item 1A, “Risk Factors,” in
the Company’s Annual Report on Form 10-K for the fiscal year ended
August 31, 2023, which the Company expects to file with the SEC on
October 23, 2023.
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)
In order to show the impact of changes in foreign currency
exchange rates on our results of operations, we have included
constant currency disclosures, where necessary, in this press
release. Constant currency disclosures represent the translation of
our current fiscal year revenues, expenses and net income from the
functional currencies of our subsidiaries to U.S. dollars using the
exchange rates in effect for the corresponding period of the prior
fiscal year. Results on a constant currency basis are not in
accordance with accounting principles generally accepted in the
United States of America (“non-GAAP”) and should be considered in
addition to, not as a substitute for, results prepared in
accordance with U.S. GAAP. We use results on a constant currency
basis as one of the measures to understand our operating results
and evaluate our performance in comparison to prior periods in
order to enhance the visibility of the underlying business trends,
excluding the impact of translation arising from foreign currency
exchange rate fluctuations. Management believes this non-GAAP
financial measure provides investors with additional financial
information that should be considered when assessing our underlying
business performance and trends. However, reference to constant
currency basis should not be considered in isolation or as a
substitute for other financial measures calculated and presented in
accordance with U.S. GAAP.
WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited and in thousands,
except share and per share amounts)
August 31, 2023
August 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
48,143
$
37,843
Trade and other accounts receivable,
net
98,039
89,930
Inventories
86,522
104,101
Other current assets
15,821
17,766
Total current assets
248,525
249,640
Property and equipment, net
66,791
65,977
Goodwill
95,505
95,180
Other intangible assets, net
4,670
5,588
Operating lease right-of-use assets
7,820
7,559
Deferred tax assets, net
1,201
679
Other assets
13,454
9,672
Total assets
$
437,966
$
434,295
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
30,826
$
32,852
Accrued liabilities
30,000
27,161
Accrued payroll and related expenses
16,722
11,583
Short-term borrowings
10,800
39,173
Income taxes payable
494
51
Total current liabilities
88,842
110,820
Long-term borrowings
109,743
107,139
Deferred tax liabilities, net
10,305
10,528
Long-term operating lease liabilities
5,832
5,999
Other long-term liabilities
13,066
11,185
Total liabilities
227,788
245,671
Commitments and Contingencies
Stockholders’ equity:
Common stock — authorized 36,000,000
shares, $0.001 par value; 19,905,815 and 19,888,807 shares issued
at August 31, 2023 and 2022, respectively; and 13,563,434 and
13,602,346 shares outstanding at August 31, 2023 and 2022,
respectively
20
20
Additional paid-in capital
171,546
165,973
Retained earnings
477,488
456,076
Accumulated other comprehensive income
(loss)
(31,206
)
(36,209
)
Common stock held in treasury, at cost —
6,342,381 and 6,286,461 shares at August 31, 2023 and 2022,
respectively
(407,670
)
(397,236
)
Total stockholders’ equity
210,178
188,624
Total liabilities and stockholders’
equity
$
437,966
$
434,295
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited and in thousands,
except per share amounts)
Three Months Ended August
31,
Fiscal Year Ended August
31,
2023
2022
2023
2022
Net sales
$
140,452
$
130,421
$
537,255
$
518,820
Cost of products sold
68,327
68,629
263,035
264,055
Gross profit
72,125
61,792
274,220
254,765
Operating expenses:
Selling, general and administrative
38,815
31,795
154,684
138,658
Advertising and sales promotion
9,823
10,101
28,807
27,343
Amortization of definite-lived intangible
assets
252
353
1,005
1,434
Total operating expenses
48,890
42,249
184,496
167,435
Income from operations
23,235
19,543
89,724
87,330
Other income (expense):
Interest income
67
29
231
102
Interest expense
(1,346
)
(840
)
(5,614
)
(2,742
)
Other income (expense), net
264
(463
)
822
(582
)
Income before income taxes
22,220
18,269
85,163
84,108
Provision for income taxes
5,645
3,483
19,170
16,779
Net income
$
16,575
$
14,786
$
65,993
$
67,329
Earnings per common share:
Basic
$
1.22
$
1.08
$
4.84
$
4.91
Diluted
$
1.21
$
1.08
$
4.83
$
4.90
Shares used in per share calculations:
Basic
13,567
13,622
13,578
13,668
Diluted
13,597
13,649
13,604
13,696
WD-40 COMPANY
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited and in
thousands)
Fiscal Year Ended August
31,
2023
2022
Operating activities:
Net income
$
65,993
$
67,329
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
8,151
8,294
Net gains on sales and disposals of
property and equipment
(90
)
(311
)
Deferred income taxes
(1,254
)
596
Stock-based compensation
6,434
6,697
Unrealized foreign currency exchange
(gains) losses, net
(1,702
)
1,035
Provision for credit losses
391
143
Write-off of inventories
713
595
Changes in assets and liabilities:
Trade and other accounts receivable
(5,339
)
(7,443
)
Inventories
19,367
(53,260
)
Other assets
(1,367
)
(12,578
)
Operating lease assets and liabilities,
net
49
(32
)
Accounts payable and accrued
liabilities
(213
)
5,208
Accrued payroll and related expenses
4,965
(13,133
)
Other long-term liabilities and income
taxes payable
2,293
(536
)
Net cash provided by operating
activities
98,391
2,604
Investing activities:
Purchases of property and equipment
(6,871
)
(8,303
)
Proceeds from sales of property and
equipment
655
612
Net cash used in investing activities
(6,216
)
(7,691
)
Financing activities:
Treasury stock purchases
(10,434
)
(29,156
)
Dividends paid
(44,581
)
(41,988
)
Repayments of long-term senior notes
(800
)
(800
)
Net (repayments) proceeds from revolving
credit facility
(28,372
)
38,394
Shares withheld to cover taxes upon
conversion of equity awards
(861
)
(4,461
)
Net cash used in financing activities
(85,048
)
(38,011
)
Effect of exchange rate changes on cash
and cash equivalents
3,173
(5,020
)
Net increase (decrease) in cash and cash
equivalents
10,300
(48,118
)
Cash and cash equivalents at beginning of
period
37,843
85,961
Cash and cash equivalents at end of
period
$
48,143
$
37,843
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231019693910/en/
Media and Investor Contact: Wendy Kelley Vice President,
Stakeholder and Investor Engagement investorrelations@wd40.com
+1-619-275-9304
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