·

Total net sales for the third quarter were  $95.7 million, an increase of 3 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $285.4 million, an increase of 4 percent from the prior year fiscal period.

·

Changes in foreign currency exchange rates had a favorable impact on sales for both the current quarter and year-to-date.  On a constant currency basis total net sales were $93.2 million for the third quarter and $283.8 million year-to-date.  

·

Net income for the third quarter was $10.4 million, an increase of 1 percent compared to the prior year fiscal quarter. Year-to-date net income was $32.2 million, an increase of 2 percent from the prior year fiscal period.

·

Diluted earnings per share were $0.69 in the third quarter, compared to $0.66 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.10 compared to $2.01 in the prior year fiscal period.

·

Gross margin was 51.4 percent in the third quarter compared to 51.3 percent in the prior year fiscal quarter. Year-to-date, gross margin was 51.6 percent, compared to 50.8 percent in the prior year fiscal period.

·

Selling, general and administrative expenses were up 5 percent in the third quarter to $26.9 million and also were up 7 percent year-to-date to $80.2 million when compared to the prior fiscal year periods. 

·

Advertising and sales promotion expenses were down 3 percent in the third quarter to $6.5 million compared to prior year fiscal quarter and were up 1 percent year-to-date to $18.1 million compared to the prior year fiscal period. 

Three Months Ended May 31,

Nine Months Ended May 31,

2014

2013

%
Change

2014

2013

%
Change

Multi-purpose maintenance products

$

$

$

$

Homecare and cleaning products

(1)%

(8)%

Total

$

$

$

$

·

Net sales of multi-purpose maintenance products, which are considered the primary growth focus for the company, grew 3 percent in the third fiscal quarter and 6 percent year-to-date when compared to the prior fiscal year periods.  This growth was driven by successful expansion of the WD-40 Specialist product line in all three segments and double-digit growth of WD-40 multi-purpose maintenance product sales in EMEA and Asia-Pacific.

·

Net sales of homecare and cleaning products decreased 1 percent in the current quarter and 8 percent year-to-date when compared to the prior fiscal year periods. 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. 

Three Months Ended May 31,

Nine Months Ended May 31,

2014

2013

%
Change

2014

2013

%
Change

Americas

$

$

(5)%

$

$

EMEA

Asia-Pacific

(2)%

Total

$

$

$

$

·

Net sales by segment as a percent of total net sales were as follows: for the Americas, 47 percent for both the third quarter and year-to-date; for EMEA, 38 percent for the third quarter and 39 percent year-to-date; and, for Asia-Pacific, 15 percent for the third quarter and 14 percent year-to-date.

·

Increased sales in EMEA and Asia-Pacific more than offset declines in the Americas as total sales grew 3 percent in the third fiscal quarter when compared to the prior fiscal year period. 

·

The decline in sales in the Americas in the third quarter was primarily driven by the timing of promotional activities as well a number of unusual short-term factors that negatively impacted sales in Canada.

·

The increase in sales in EMEA in the third quarter was primarily driven by the favorable impact of foreign currency exchange rates.  On a constant currency basis EMEA net sales for the third quarter would have increased by $0.8 million or 2% compared to the prior fiscal period.

·

The increase in sales in Asia-Pacific in the third quarter was due primarily to the backlog of second quarter distributor market customer orders that shipped during the third quarter.  

·

Net sales growth is projected to be between 3 and 5 percent with net sales expected to be between $380 million and $387 million. 

·

Gross margin for the full year is expected to be close to 51.5 percent. 

·

Projected advertising and promotion expenses of 6.0 percent to 7.0 percent of net sales. 

·

Net income is projected to be between $41 million and $43 million.

·

Expect diluted earnings per share to be between $2.70 and $2.83 based on an estimated 15.2 million weighted average shares outstanding. 

(1)

The Company markets multi-purpose maintenance products under the WD-40® and 3-IN-ONE® brand names. Currently included in the WD-40 brand are the WD-40 Multi-Use Product and the WD-40 Specialist® and WD-40 BikeTM product lines.

(2)

The Company markets the following homecare and cleaning brands:  X-14® mildew stain remover and 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.

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

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

May 31,

August 31,

2014

2013

Assets

Current assets:

Cash and cash equivalents

$

$

Short-term investments

Trade accounts receivable, less allowance for doubtful

accounts of $729 and $540 at May 31, 2014

and August 31, 2013, respectively

Inventories

Current deferred tax assets, net

Other current assets

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Other assets

Total assets

$

$

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

$

Accrued liabilities

Revolving credit facility

Accrued payroll and related expenses

Income taxes payable

Total current liabilities

Long-term deferred tax liabilities, net

Deferred and other long-term liabilities

Total liabilities

Commitments and Contingencies

Shareholders' equity:

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

19,463,726 and 19,392,979 shares issued at May 31, 2014 and

August 31, 2013, respectively; and 14,928,097 and 15,285,536 shares

outstanding at May 31, 2014 and August 31, 2013, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Common stock held in treasury, at cost ― 4,535,629 and 4,107,443

shares at May 31, 2014 and August 31, 2013, respectively

Total shareholders' equity

Total liabilities and shareholders' equity

$

$

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)

Three Months Ended May 31,

Nine Months Ended May 31,

2014

2013

2014

2013

Net sales

$

$

$

$

Cost of products sold

Gross profit

Operating expenses:

Selling, general and administrative

Advertising and sales promotion

Amortization of definite-lived intangible assets

Total operating expenses

Income from operations

Other income (expense):

Interest income

Interest expense

Other (expense) income, net

Income before income taxes

Provision for income taxes

Net income

$

$

$

$

Earnings per common share:

Basic

$

$

$

$

Diluted

$

$

$

$

Shares used in per share calculations:

Basic

Diluted

Dividends declared per common share

$

$

$

$

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

Nine Months Ended May 31,

2014

2013

Operating activities:

Net income

$

$

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization

Net gains on sales and disposals of property and equipment

Deferred income taxes

Excess tax benefits from settlements of stock-based equity awards

Stock-based compensation

Unrealized foreign currency exchange (gains) losses, net

Provision for bad debts

Changes in assets and liabilities:

Trade accounts receivable

Inventories

Other assets

Accounts payable and accrued liabilities

Accrued payroll and related expenses

Income taxes payable

Deferred and other long-term liabilities

Net cash provided by operating activities

Investing activities:

Purchases of property and equipment

Proceeds from sales of property and equipment

Purchases of intangible assets

 -

Purchases of short-term investments

Maturities of short-term investments

Net cash used in investing activities

Financing activities:

Proceeds from revolving credit facility

Dividends paid

Proceeds from issuance of common stock

Treasury stock purchases

Excess tax benefits from settlements of stock-based equity awards

 Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$