WD-40 Earnings Slide


WD-40 Earnings Slide

WD-40 posted net income of $14.3 million for the quarter ending Feb. 29, down 10 percent from the year-earlier period, with net sales down 1 percent at $100 million.

Earnings per diluted share dipped to $1.04, down from $1.14 a year earlier. San Diego-based WD-40’s fiscal year goes from Sept. 1 to Aug. 1.

Net sales climbed 7 percent in the Americas to $46.8 million, increased 2 percent in Europe, Middle East and Africa to $41.8 million and dropped 30 percent in Asia-Pacific to $11.5 million, compared to the year-earlier period.

The company credited the improved sales in the Americas primarily to higher sales of maintenance products in the United States and Canada, which increased 9 and 25 percent, respectively. The increase in sales in the U.S. and Canada was mainly driven by higher sales of its multi-use product due to successful promotional activities during the quarter. Canada also benefited from the timing of customer orders during the quarter. Sales of its specialist product were up 15 percent in the Americas, compared to a year earlier, benefiting from promotional programs and expanded online distribution.

WD-40 attributed improved net sales in the EMEA region primarily to higher sales of its multi-use product in the company’s European direct markets. Net sales in the region received a boost from promotional activities and the timing of customer orders.

The company attributed the sharp decrease in net sales in Asia-Pacific primarily to lower sales of its maintenance products in China and the Asia distributor market, which decreased 70 and 17 percent, respectively, compared to year-earlier results. The coronavirus pandemic situation impacted business in the region. “The decrease in sales in China was mainly due to disruptions related to the government’s response to the public health crisis caused by Covid-19,” WD-40 said in its earnings release. “The decrease in sales in the distributor markets was mainly driven by the timing of customer orders, particularly in Indonesia, South Korea and Thailand.”

WD-40 Chairman and CEO Garry Ridge added that, “Though the impact in the second quarter was significant, we are pleased that things appear to be slowly returning to normal for our tribe members in China.”

The company noted it has withdrawn its previously issued full fiscal year 2020 earnings guidance due to the rapidly evolving impact of the Covid-19 health crisis, which has injected a measure of uncertainty in its business, making it difficult to accurately forecast short-term financial results. “We are dealing with an unprecedented and extremely fluid situation,” WD-40 Vice President and Chief Financial Officer Jay Rembolt said in the release. “However, the good news is that the company’s financial position and liquidity remain strong. We believe our efficient business model and the recent steps we have taken to strengthen our balance sheet leave us positioned to manage our business through this crisis as it continues to unfold.”

Those steps included amending the company’s revolving credit agreement in March and electing to draw down an additional $80 million under the agreement. The company also suspended stock purchases made under its share buy-back plan to preserve its cash until WD-40 has a better idea of the long-term financial impacts of the covid-19 pandemic crisis.

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Business    Earnings    Finished Lubricants