falseQ2202000001051320000105132srt:MinimumMemberus-gaap:PurchaseCommitmentMember2019-09-012020-02-290000105132srt:MaximumMemberus-gaap:PurchaseCommitmentMember2019-09-012020-02-290000105132srt:MaximumMemberwdfc:ShelfNotesMember2020-02-290000105132wdfc:SeriesNotesMember2019-09-012020-02-290000105132srt:MaximumMemberwdfc:AmendedAndRestatedCreditAgreementMemberus-gaap:SubsequentEventMember2020-03-162020-03-160000105132us-gaap:MeasurementInputLongTermRevenueGrowthRateMember2020-02-290000105132us-gaap:MeasurementInputDiscountRateMember2020-02-290000105132wdfc:FifthAmendedCreditFacilityMember2020-02-290000105132wdfc:SeventhAmendedCreditFacilityMemberus-gaap:SubsequentEventMember2020-03-162020-03-160000105132wdfc:AmendedAndRestatedCreditAgreementMember2019-09-012020-02-290000105132wdfc:AmendedAndRestatedCreditAgreementYearTwoMemberus-gaap:SubsequentEventMember2020-03-160000105132wdfc:AmendedAndRestatedCreditAgreementYearThreeFourFiveAndSixMemberus-gaap:SubsequentEventMember2020-03-160000105132wdfc:AmendedAndRestatedCreditAgreementYearOneMemberus-gaap:SubsequentEventMember2020-03-160000105132wdfc:CashDiscountsMemberus-gaap:AccountingStandardsUpdate201409Member2019-08-310000105132us-gaap:TreasuryStockMember2019-12-012020-02-290000105132us-gaap:TreasuryStockMember2019-09-012019-11-300000105132us-gaap:TreasuryStockMember2018-12-012019-02-280000105132us-gaap:TreasuryStockMember2018-09-012018-11-300000105132srt:MaximumMemberwdfc:TwoThousandEightteenToTwoThousandTwentyShareRepurchaseProgramMember2020-02-290000105132wdfc:TwoThousandEightteenToTwoThousandTwentyShareRepurchaseProgramMember2020-02-290000105132us-gaap:CommonStockMember2019-12-012020-02-290000105132us-gaap:CommonStockMember2019-09-012019-11-300000105132us-gaap:CommonStockMember2018-12-012019-02-280000105132us-gaap:CommonStockMember2018-09-012018-11-300000105132us-gaap:RetainedEarningsMember2020-02-290000105132us-gaap:AdditionalPaidInCapitalMember2020-02-290000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-290000105132us-gaap:RetainedEarningsMember2019-11-300000105132us-gaap:AdditionalPaidInCapitalMember2019-11-300000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-3000001051322019-11-300000105132us-gaap:RetainedEarningsMember2019-08-310000105132us-gaap:AdditionalPaidInCapitalMember2019-08-310000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-08-310000105132us-gaap:RetainedEarningsMember2019-02-280000105132us-gaap:AdditionalPaidInCapitalMember2019-02-280000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-02-280000105132us-gaap:AdditionalPaidInCapitalMember2018-11-300000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-11-300000105132us-gaap:RetainedEarningsMember2018-08-310000105132us-gaap:AdditionalPaidInCapitalMember2018-08-310000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-08-310000105132us-gaap:LineOfCreditMember2019-09-012020-02-290000105132us-gaap:RevolvingCreditFacilityMemberwdfc:AutoborrowAgreementMember2020-02-290000105132us-gaap:RevolvingCreditFacilityMemberwdfc:AutoborrowAgreementMember2019-08-310000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2019-12-012020-02-290000105132wdfc:CashDiscountsMemberus-gaap:AccountingStandardsUpdate201409Member2019-12-012020-02-290000105132wdfc:MultiPurposeMaintenanceProductsMember2019-12-012020-02-290000105132wdfc:HomecareAndCleaningProductsMember2019-12-012020-02-290000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2019-09-012020-02-290000105132wdfc:CashDiscountsMemberus-gaap:AccountingStandardsUpdate201409Member2019-09-012020-02-290000105132wdfc:MultiPurposeMaintenanceProductsMember2019-09-012020-02-290000105132wdfc:HomecareAndCleaningProductsMember2019-09-012020-02-290000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2018-12-012019-02-280000105132wdfc:CashDiscountsMemberus-gaap:AccountingStandardsUpdate201409Member2018-12-012019-02-280000105132wdfc:MultiPurposeMaintenanceProductsMember2018-12-012019-02-280000105132wdfc:HomecareAndCleaningProductsMember2018-12-012019-02-280000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2018-09-012019-02-280000105132wdfc:CashDiscountsMemberus-gaap:AccountingStandardsUpdate201409Member2018-09-012019-02-280000105132wdfc:MultiPurposeMaintenanceProductsMember2018-09-012019-02-280000105132wdfc:HomecareAndCleaningProductsMember2018-09-012019-02-280000105132us-gaap:LineOfCreditMember2019-09-012020-02-290000105132us-gaap:PurchaseCommitmentMember2020-02-290000105132wdfc:MachineryEquipmentAndVehiclesMember2020-02-290000105132wdfc:ComputerAndOfficeEquipmentMember2020-02-290000105132us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-02-290000105132us-gaap:LandMember2020-02-290000105132us-gaap:FurnitureAndFixturesMember2020-02-290000105132us-gaap:ConstructionInProgressMember2020-02-290000105132us-gaap:BuildingAndBuildingImprovementsMember2020-02-290000105132wdfc:MachineryEquipmentAndVehiclesMember2019-08-310000105132wdfc:ComputerAndOfficeEquipmentMember2019-08-310000105132us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-08-310000105132us-gaap:LandMember2019-08-310000105132us-gaap:FurnitureAndFixturesMember2019-08-310000105132us-gaap:ConstructionInProgressMember2019-08-310000105132us-gaap:BuildingAndBuildingImprovementsMember2019-08-310000105132wdfc:TwoThousandEightteenToTwoThousandTwentyShareRepurchaseProgramMember2019-09-012020-02-290000105132wdfc:TwoThousandEightteenToTwoThousandTwentyShareRepurchaseProgramMember2018-09-012020-02-290000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-012020-02-290000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-012019-11-300000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-012019-02-280000105132us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-012018-11-300000105132us-gaap:AccountingStandardsUpdate201602Member2020-02-290000105132wdfc:SeriesNotesMember2020-02-290000105132us-gaap:SeniorNotesMember2020-02-290000105132us-gaap:RevolvingCreditFacilityMember2020-02-290000105132wdfc:SeriesNotesMember2019-08-310000105132us-gaap:RevolvingCreditFacilityMember2019-08-310000105132us-gaap:LineOfCreditMember2020-02-290000105132wdfc:EuropeMiddleEastAfricaAndIndiaSubsidiaryMemberwdfc:AmendedAndRestatedCreditAgreementMemberus-gaap:SubsequentEventMember2020-03-160000105132wdfc:AmendedAndRestatedCreditAgreementMemberus-gaap:SubsequentEventMember2020-03-160000105132wdfc:UnitedKingdomSubsidiaryMemberwdfc:SeventhAmendedCreditFacilityMember2020-02-290000105132wdfc:SeventhAmendedCreditFacilityMember2020-02-290000105132wdfc:OtherUnsecuredDebtMember2020-02-290000105132wdfc:UnitedKingdomSubsidiaryMemberwdfc:SeventhAmendedCreditFacilityMember2019-03-310000105132wdfc:SeventhAmendedCreditFacilityMember2019-03-310000105132wdfc:SixthAmendedCreditFacilityMember2019-03-220000105132wdfc:SeventhAmendedCreditFacilityMember2019-03-220000105132wdfc:SixthAmendedCreditFacilityMember2019-09-012020-02-290000105132wdfc:SeventhAmendedCreditFacilityMember2019-09-012020-02-290000105132us-gaap:SubsequentEventMember2020-03-270000105132us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2018-11-300000105132us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2018-11-300000105132us-gaap:IndemnificationGuaranteeMemberwdfc:SeniorOfficersAndDirectorsMember2020-02-290000105132wdfc:IndemnificationGuaranteeTwoMember2020-02-290000105132us-gaap:SubsequentEventMember2020-03-012020-03-3100001051322019-12-012019-12-010000105132us-gaap:ForeignExchangeForwardMember2019-12-012020-02-290000105132us-gaap:ForeignExchangeForwardMember2018-12-012019-02-280000105132us-gaap:EMEAMember2020-02-290000105132srt:AsiaPacificMember2020-02-290000105132srt:AmericasMember2020-02-290000105132us-gaap:EMEAMember2019-08-310000105132srt:AsiaPacificMember2019-08-310000105132srt:AmericasMember2019-08-310000105132us-gaap:CustomerListsMember2020-02-290000105132us-gaap:TradeNamesMember2020-02-290000105132us-gaap:RetainedEarningsMember2019-12-012020-02-290000105132us-gaap:RetainedEarningsMember2019-09-012019-11-300000105132us-gaap:RetainedEarningsMember2018-12-012019-02-280000105132us-gaap:RetainedEarningsMember2018-09-012018-11-300000105132us-gaap:ForeignExchangeForwardMember2020-02-290000105132us-gaap:ForeignExchangeForwardMember2019-09-012020-02-290000105132wdfc:EuropeMiddleEastAndAfricaSegmentsMember2019-12-012020-02-290000105132wdfc:AsiaPacificSegmentMember2019-12-012020-02-290000105132wdfc:AmericasSegmentMember2019-12-012020-02-290000105132us-gaap:CorporateNonSegmentMember2019-12-012020-02-290000105132wdfc:EuropeMiddleEastAndAfricaSegmentsMember2019-09-012020-02-290000105132wdfc:AsiaPacificSegmentMember2019-09-012020-02-290000105132wdfc:AmericasSegmentMember2019-09-012020-02-290000105132us-gaap:CorporateNonSegmentMember2019-09-012020-02-290000105132wdfc:EuropeMiddleEastAndAfricaSegmentsMember2018-12-012019-02-280000105132wdfc:AsiaPacificSegmentMember2018-12-012019-02-280000105132wdfc:AmericasSegmentMember2018-12-012019-02-280000105132us-gaap:CorporateNonSegmentMember2018-12-012019-02-280000105132wdfc:EuropeMiddleEastAndAfricaSegmentsMember2018-09-012019-02-280000105132wdfc:AsiaPacificSegmentMember2018-09-012019-02-280000105132wdfc:AmericasSegmentMember2018-09-012019-02-280000105132us-gaap:CorporateNonSegmentMember2018-09-012019-02-280000105132srt:MaximumMemberwdfc:ShelfNotesMember2019-09-012020-02-290000105132wdfc:SeriesNotesMemberwdfc:NoteAgreementMember2019-09-012020-02-290000105132wdfc:SeriesNotesMemberwdfc:NoteAgreementMember2020-02-290000105132wdfc:NoteAgreementMember2019-09-012020-02-290000105132wdfc:ShelfNotesMember2020-02-290000105132wdfc:SeriesNotesMemberwdfc:NoteAgreementMember2017-11-150000105132wdfc:AutoborrowAgreementMember2020-02-290000105132us-gaap:RetainedEarningsMember2018-11-3000001051322018-11-300000105132us-gaap:AccountingStandardsUpdate201409Member2020-02-290000105132us-gaap:AccountingStandardsUpdate201409Member2019-08-310000105132us-gaap:TreasuryStockMember2020-02-290000105132us-gaap:CommonStockMember2020-02-290000105132us-gaap:TreasuryStockMember2019-11-300000105132us-gaap:CommonStockMember2019-11-300000105132us-gaap:TreasuryStockMember2019-08-310000105132us-gaap:CommonStockMember2019-08-310000105132us-gaap:TreasuryStockMember2019-02-280000105132us-gaap:CommonStockMember2019-02-280000105132us-gaap:TreasuryStockMember2018-11-300000105132us-gaap:CommonStockMember2018-11-300000105132us-gaap:TreasuryStockMember2018-08-310000105132us-gaap:CommonStockMember2018-08-310000105132us-gaap:SubsequentEventMember2020-03-172020-03-1700001051322019-02-2800001051322018-08-310000105132us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-02-290000105132us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-02-290000105132us-gaap:AccountingStandardsUpdate201811Member2019-09-010000105132us-gaap:AccountingStandardsUpdate201602Member2019-09-010000105132us-gaap:EMEAMember2019-09-012020-02-290000105132srt:AsiaPacificMember2019-09-012020-02-290000105132srt:AmericasMember2019-09-012020-02-2900001051322018-09-012019-02-280000105132us-gaap:AdditionalPaidInCapitalMember2019-12-012020-02-2900001051322019-12-012020-02-290000105132us-gaap:AdditionalPaidInCapitalMember2019-09-012019-11-3000001051322019-09-012019-11-300000105132us-gaap:AdditionalPaidInCapitalMember2018-12-012019-02-2800001051322018-12-012019-02-280000105132us-gaap:AdditionalPaidInCapitalMember2018-09-012018-11-3000001051322018-09-012018-11-300000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2020-02-290000105132wdfc:RebateMemberus-gaap:AccountingStandardsUpdate201409Member2019-08-3100001051322020-02-2900001051322019-08-3100001051322020-04-0300001051322019-09-012020-02-29wdfc:agreementiso4217:GBPwdfc:itemwdfc:claimxbrli:pureiso4217:USDxbrli:sharesiso4217:USDxbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2020

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 000-06936

Commission Company Name: WD 40 CO

WD-40 COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

 

95-1797918

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

9715 Businesspark Avenue, San Diego, California

 

92131

(Address of principal executive offices)

 

(Zip code)

Registrant’s telephone number, including area code: (619) 275-1400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  þ        Accelerated filer  ¨  Non-accelerated filer  ¨       Smaller reporting company  ¨

Emerging growth company  ¨       

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common stock, par value $0.001 per share

WDFC

NASDAQ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  þ

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of April 3, 2020 was 13,668,439.

1


WD-40 COMPANY

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended February 29, 2020

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Page

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statements of Comprehensive Income

5

Condensed Consolidated Statement of Shareholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

8

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

45

Item 4.

Controls and Procedures

45

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 6.

Exhibits

48

2


PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

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

February 29,

August 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

30,503

$

27,233

Trade accounts receivable, less allowance for doubtful

accounts of $330 and $300 at February 29, 2020

and August 31, 2019, respectively

75,827

72,864

Inventories

42,960

40,682

Other current assets

8,973

7,216

Total current assets

158,263

147,995

Property and equipment, net

57,910

45,076

Goodwill

95,580

95,347

Other intangible assets, net

9,475

10,652

Operating lease right-of-use assets

8,324

-

Deferred tax assets, net

423

403

Other assets

3,356

3,189

Total assets

$

333,331

$

302,662

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

24,643

$

18,727

Accrued liabilities

20,627

18,513

Accrued payroll and related expenses

8,239

15,301

Short-term borrowings

41,729

21,205

Income taxes payable

186

844

Total current liabilities

95,424

74,590

Long-term borrowings

61,117

60,221

Deferred tax liabilities, net

11,665

11,688

Long-term operating lease liabilities

6,727

-

Other long-term liabilities

10,439

10,688

Total liabilities

185,372

157,187

Commitments and Contingencies (Note 13)

 

 

Shareholders' equity:

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

19,812,685 and 19,773,977 shares issued at February 29, 2020 and

August 31, 2019, respectively; and 13,705,795 and 13,718,661 shares

outstanding at February 29, 2020 and August 31, 2019, respectively

20

20

Additional paid-in capital

156,381

155,132

Retained earnings

382,939

374,060

Accumulated other comprehensive loss

(30,468)

(32,482)

Common stock held in treasury, at cost ― 6,106,890 and 6,055,316

shares at February 29, 2020 and August 31, 2019, respectively

(360,913)

(351,255)

Total shareholders' equity

147,959

145,475

Total liabilities and shareholders' equity

$

333,331

$

302,662

See accompanying notes to condensed consolidated financial statements.

3


WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)

Three Months Ended February 29/28,

Six Months Ended February 29/28,

2020

2019

2020

2019

Net sales

$

100,049

$

101,335

$

198,605

$

202,617

Cost of products sold

46,447

45,177

91,460

90,628

Gross profit

53,602

56,158

107,145

111,989

Operating expenses:

Selling, general and administrative

29,906

30,591

62,505

63,322

Advertising and sales promotion

4,857

5,184

10,447

11,150

Amortization of definite-lived intangible assets

654

668

1,304

1,401

Total operating expenses

35,417

36,443

74,256

75,873

Income from operations

18,185

19,715

32,889

36,116

Other income (expense):

Interest income

28

45

53

96

Interest expense

(593)

(685)

(1,035)

(1,395)

Other (expense) income, net

(229)

497

(224)

873

Income before income taxes

17,391

19,572

31,683

35,690

Provision for income taxes

3,064

3,666

5,162

6,505

Net income

$

14,327

$

15,906

$

26,521

$

29,185

Earnings per common share:

Basic

$

1.04

$

1.15

$

1.92

$

2.10

Diluted

$

1.04

$

1.14

$

1.92

$

2.09

Shares used in per share calculations:

Basic

13,712

13,828

13,713

13,837

Diluted

13,737

13,857

13,741

13,869

See accompanying notes to condensed consolidated financial statements.


4


WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

Three Months Ended February 29/28,

Six Months Ended February 29/28,

2020

2019

2020

2019

Net income

$

14,327

$

15,906

$

26,521

$

29,185

Other comprehensive (loss) income:

Foreign currency translation adjustment

(98)

313

2,014

(1,318)

Total comprehensive income

$

14,229

$

16,219

$

28,535

$

27,867

See accompanying notes to condensed consolidated financial statements.

5


WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

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

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Retained

Comprehensive

Treasury Stock

Shareholders'

Shares

Amount

Capital

Earnings

Income (Loss)

Shares

Amount

Equity

Balance at August 31, 2019

19,773,977 

$

20 

$

155,132 

$

374,060 

$

(32,482)

6,055,316 

$

(351,255)

$

145,475 

Issuance of common stock under share-based

compensation plan, net of shares withheld for taxes

22,342 

(2,640)

(2,640)

Stock-based compensation

2,214 

2,214 

Cash dividends ($0.61 per share)

(8,406)

(8,406)

Acquisition of treasury stock

26,800 

(4,957)

(4,957)

Foreign currency translation adjustment

2,112 

2,112 

Net income

12,194 

12,194 

Balance at November 30, 2019

19,796,319 

$

20 

$

154,706 

$

377,848 

$

(30,370)

6,082,116 

$

(356,212)

$

145,992 

Issuance of common stock under share-based

compensation plan, net of shares withheld for taxes

16,366 

-

Stock-based compensation

1,675