WD-40 Co. reported net income of $18.6 million for the quarter ending Nov. 30, a 21% decrease from $23.6 million in the same period in 2020. The company citied ongoing supply chain disruptions and a volatile operating environment as factors.
Diluted earnings per share for the San Diego-based company decreased to $1.35 per share, down 22% from $1.72 per share in the year-earlier period. WD-40’s fiscal year runs from Sept. 1 to Aug. 31.
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Net sales for its maintenance products segment – which includes WD-40 lubricants – reached $126 million for the quarter, a 10% increase. The company attributed the increase primarily to increased sales of its WD-40 Multi-Use Product, driven by increased end-user demand in all regions.
The company’s overall net sales, including homecare and cleaning products, rose 8% to $134.7 million for the quarter.
In the Americas, net sales increased 4% to $56.3 million, due primarily to 42% higher sales of maintenance products in Latin America. Those were driven by strong sales of its multi-use product in Mexico and in Latin America distributor markets because of timing of customer orders, successful promotional programs and increased product availability. The higher sales were partly offset by lower sales of maintenance products in the United States (down 1%) and Canada (down 2%).
Net sales in Europe, the Middle East and Africa increased 5% in the quarter on higher sales of maintenance products in both the region’s direct and distributor markets, which increased 4% and 9%, respectively. Higher sales in the region’s direct markets were primarily the result of new distribution and promotional programs. Higher sales in the region’s distributor markets were attributed to new distribution, promotional programs and favorable changes in foreign currency exchange rates.
In Asia-Pacific, net sales jumped 34% in the quarter thanks to higher sales of maintenance products – by 36% in the Asia-Pacific distributor markets, by 69% in China and by 7% in Australia. In Asia-Pacific distributor markets, higher sales were primarily attributed to easing of COVID-19 lockdown measures in the region. Promotional programs and the timing of customer orders benefited sales in China.
“We are pleased with our topline results in the quarter, but we are facing a volatile and challenging environment that is deteriorating our gross margin and causing disruptions to our supply chain,” WD-40 Chairman and CEO Garry Ridge said in the company’s earnings news release. “This is a different game that we’re playing, and we are using a different playbook. We expect the operating environment to remain volatile, and so we are proactively increasing the capacity and resiliency of our supply chain in many of our markets. In addition, in order to navigate the challenging inflationary environment, we are taking the necessary actions to restore our gross margins to historic levels.”