·

Total net sales for the third quarter were $98.2 million, an increase of 2 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $283.9 million, an increase of $0.4 million compared to 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 $102.9 million for the third quarter and $301.0 million year-to-date.  

·

Net income for the third quarter was $14.4 million, an increase of 14 percent compared to the prior year fiscal quarter. Year-to-date net income was $38.6 million, an increase of $0.2 million from the prior year fiscal period.

·

Diluted earnings per share were $1.02 in the third quarter, compared to $0.88 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.71 compared to $2.65 in the prior year fiscal period.

·

Gross margin was 55.3 percent in the third quarter compared to 56.8 percent in the prior year fiscal quarter.  Year-to-date gross margin was 56.3 percent compared to 55.9 percent in the prior year fiscal period.

·

Selling, general and administrative expenses were down 6 percent in the third quarter to $27.6 million when compared to the prior year fiscal quarter.  Year-to-date selling, general and administrative expenses were up 1 percent to $86.4 million compared to the prior year fiscal period. 

·

Advertising and sales promotion expenses were down 13 percent in the third quarter to $5.4 million when compared to the prior year fiscal quarter.  Year-to-date advertising and sales promotion expenses were down 10 percent to  $15.3 million compared to the prior year fiscal period.    







Three Months Ended May 31,

Nine Months Ended May 31,



2017

2016

Change

2017

2016

Change

Americas

$

$

(2)%

$

$

(2)%

EMEA

 -

Asia-Pacific

Total

$

$

$

$

 -



·

Net sales by segment as a percent of total net sales for the third quarter were as follows: for the Americas, 50 percent; for EMEA, 35 percent; and for Asia-Pacific, 15 percent.

·

Net sales in the Americas were down 2 percent in the third quarter primarily due to lower sales of maintenance products in the U.S., which declined 3% from period to period.  This lower level of sales was primarily attributable to shifting buying patterns in some trade channels as well as efforts of certain of our customers to more closely manage their inventory levels. The sales decrease in the U.S. was partially offset by higher sales of maintenance products in Canada and Latin America.

·

Net sales in EMEA increased 4 percent in the third quarter primarily due to a 16 percent increase in  sales in the EMEA distributor markets compared to the prior year fiscal period primarily due to higher sales of WD-40 Multi-Use Product in Eastern Europe, particularly in Russia. Changes in foreign currency exchange rates had an unfavorable impact on sales for the EMEA segment from period to period. On a constant currency basis EMEA sales for the third quarter would have increased by $6.0 million or 18 percent compared to the prior fiscal year period.

·

Net sales in Asia-Pacific increased 8 percent in the third quarter primarily due to a 12 percent increase in sales in the Asia-Pacific distributor markets and a 6 percent increase in sales in China.  The sales growth in the Asia distributor markets was primarily attributable to the timing of customer orders and a  higher level of promotional activities for WD-40 Multi-Use Product. The growth in China was due to new distribution and continued growth in sales to the Company’s largest customers throughout China.  Changes in foreign currency exchange rates did not have a material impact on sales in the Asia-Pacific segment.







Three Months Ended May 31,

Nine Months Ended May 31,



2017

2016

Change

2017

2016

Change

Maintenance products

$

$

$

$

Homecare and cleaning products

(6)%

(7)%

Total

$

$

$

$

 -



·

Net sales of maintenance products, which are considered the primary growth focus for the Company, increased 3 percent in the third fiscal quarter when compared to the prior fiscal year period.  This growth was driven primarily by increased sales of WD-40 Specialist within all three of the Company’s segments.  This sales growth was also attributable to increased sales of WD-40 Multi-Use Product within the EMEA and Asia-Pacific segments.  

·

Net sales of homecare and cleaning products decreased 6 percent in the third quarter when compared to the prior fiscal year period. 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. 

·

Net sales are projected to be flat to up 2 percent with net sales expected to be between $382 million and $388 million.

·

Gross margin percentage for the full year is expected to be above 56 percent. 

·

Advertising and promotion investments are projected to be below 6.0 percent of net sales. 

·

Net income is projected to be between $51.3 million and $52.3 million.

·

Diluted earnings per share is expected to be between $3.64 and $3.71 based on an estimated 14.1 million weighted average shares outstanding.

(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 and the WD-40 Specialist® and WD-40 BIKE® 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)





May 31,

August 31,



2017

2016

Assets

Current assets:

Cash and cash equivalents

$

$

Short-term investments

Trade accounts receivable, less allowance for doubtful

accounts of $229 and $394 at May 31, 2017

and August 31, 2016, respectively

Inventories

Other current assets

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Deferred tax assets, net

Other assets

Total assets

$

$



Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

$

Accrued liabilities

Accrued payroll and related expenses

Revolving credit facility, current

 -

Income taxes payable

Total current liabilities

Revolving credit facility

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;

19,681,883 and 19,621,820 shares issued at May 31, 2017 and

August 31, 2016, respectively; and 14,023,428 and 14,208,338 shares

outstanding at May 31, 2017 and August 31, 2016, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive income (loss)

Common stock held in treasury, at cost ― 5,658,455 and 5,413,482

shares at May 31, 2017 and August 31, 2016, 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,



2017

2016

2017

2016



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 income (expense), 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,



2017

2016

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

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

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

Net 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

$

$