·

Total net sales for the second quarter were  $97.3 million, an increase of 3 percent compared to the prior year fiscal quarter.  Year-to-date total net sales were $193.7 million, an increase of 2 percent from the prior year fiscal period.

·

Translation of the Company’s foreign subsidiary results to U.S. dollars had an unfavorable impact on sales for the current quarter and year to date.  On a constant currency basis total net sales would have been  $100.6 million for the second quarter and $196.3 million year to date.

·

Net income for the  second quarter was $11.3 million, an increase of 10 percent compared to the prior year fiscal quarter.  Year-to-date net income was $22.1 million, an increase of 1 percent from the prior year fiscal period.

·

Diluted earnings per share were $0.76 in the second quarter, compared to $0.67 per share for the prior year fiscal quarter.  Year-to-date diluted earnings per share were $1.49 compared to $1.41 in the prior year fiscal period.

·

Gross margin was 52.6 percent in the second quarter compared to 51.6 percent in the prior year fiscal quarter.  Year-to-date gross margin was 52.1 percent compared to 51.8 percent in the prior year fiscal period.

·

Selling, general and administrative expenses were up 3 percent in the second quarter to $27.4 million when compared to the prior year fiscal quarter.  Year-to-date selling, general and administrative expenses were also up 3 percent to $54.8 compared to the prior year fiscal period. 

·

Advertising and sales promotion expenses were down 9 percent in the second quarter to $5.5 million compared to prior year fiscal quarter.  Year-to-date advertising and sales promotion expenses were down 2 percent to $11.4 million compared to the prior year fiscal period. 

Three Months Ended February 28,

Six Months Ended February 28,

2015

2014

%
Change

2015

2014

%
Change

Multi-purpose maintenance products

$

$

$

$

Homecare and cleaning products

Total

$

$

$

$

·

Net sales of multi-purpose maintenance products, which are considered the primary growth focus for the Company, grew 3 percent in the second fiscal quarter and 2 percent year to date when compared to the prior fiscal year periods.  This growth was driven primarily by strong WD-40 Multi-Use Product sales in Asia-Pacific.   

·

Net sales of homecare and cleaning products increased 3 percent in the current quarter and 1 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 February 28,

Six Months Ended February 28,

2015

2014

%
Change

2015

2014

%
Change

Americas

$

$

(1)%

$

$

 -

EMEA

Asia-Pacific

Total

$

$

$

$

·

Net sales by segment as a percent of total net sales for the second quarter were as follows: for the Americas, 46 percent; for EMEA, 40 percent; and for Asia-Pacific, 14 percent.

·

The decrease in sales in the Americas in the second quarter was primarily due to lower sales of WD-40 Multi-Use Product in the United States and Latin America as a result of the timing of promotional activities.  

·

The increase in sales in EMEA in the second quarter was primarily due to strong sales of WD-40 Multi-Use Product in the distributor markets in Northern Europe and the Middle East, which were partially offset by decreased sales in Eastern Europe due to the political crisis in Ukraine and Russia. The increases in the distributor market sales were offset by decreased sales in the direct markets in Europe which were primarily due to the unfavorable impacts of foreign currency exchange rates.  On a constant currency basis EMEA sales for the second quarter would have increased by $3.1 million or 8% compared to the prior year fiscal year period.

·

The increase in sales in Asia-Pacific in the second quarter was primarily due to strong sales of WD-40 Multi-Use Product throughout the distributor markets, including those in South Korea, Singapore and Indonesia, and the continued growth of the WD-40 Specialist product line.  Sales in China also increased in the second quarter due to expanded distribution of WD-40 Multi-Use Product.      

·

Net sales growth is projected to be between 1 and 4 percent with net sales expected to be between $387 million and $400 million. 

·

Gross margin for the full fiscal year is expected to be better than 52 percent. 

·

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

·

Net income is projected to be between $45.1 million and $46.0 million.

·

Expect diluted earnings per share to be between $3.07 and  $3.13 based on an estimated 14.7 million weighted average shares outstanding. 

(1)

The Company markets multi-purpose 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 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.

(6)

Constant currency represents the translation of the current quarter and year-to-date results from the functional currencies of the Company’s subsidiaries to U.S. dollars using the exchange rate in effect for the corresponding periods of the prior fiscal year. 

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

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

February 28,

August 31,

2015

2014

Assets

Current assets:

Cash and cash equivalents

$

$

Short-term investments

Trade and other accounts receivable, less allowance for doubtful

accounts of $523 and $406 at February 28, 2015

and August 31, 2014, 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

Other long-term liabilities

Total liabilities

Commitments and Contingencies

Shareholders' equity:

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

19,508,893 and 19,464,310 shares issued at February 28, 2015 and

August 31, 2014, respectively; and 14,598,538 and 14,754,362 shares

outstanding at February 28, 2015 and August 31, 2014, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Common stock held in treasury, at cost ― 4,910,355 and 4,709,948

shares at February 28, 2015 and August 31, 2014, 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 February 28,

Six Months Ended February 28,

2015

2014

2015

2014

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 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)

Six Months Ended February 28,

2015

2014

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 losses, net

Provision for bad debts

Changes in assets and liabilities:

Trade and other accounts receivable

Inventories

Other assets

Accounts payable and accrued liabilities

Accrued payroll and related expenses

Income taxes payable

Other long-term liabilities

Net cash provided by operating activities

Investing activities:

Purchases of property and equipment

Proceeds from sales of property and equipment

Purchase of intangible assets

 -

Acquisition of business

 -

Purchases of short-term investments

Maturities of short-term investments

Net cash used in investing activities

Financing activities:

Treasury stock purchases

Dividends paid

Proceeds from issuance of common stock

Excess tax benefits from settlements of stock-based equity awards

Proceeds from revolving credit facility

 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

$

$