wdfc-20230406x8k

Exhibit 99.1

WD-40 Company Reports Second Quarter 2023 Financial Results

~ Foreign currency exchange headwinds continue to negatively impact reported results ~

~ Management updates previously issued fiscal year 2023 guidance ~

SAN DIEGO — April 6, 2023 — WD-40 Company (NASDAQ:WDFC), a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world, today reported financial results for its second fiscal quarter ended February 28, 2023.

Financial Highlights and Summary

Total net sales for the second quarter were relatively constant at $130.2 million compared to $130.0 million in the prior year fiscal quarter. Year-to-date total net sales were $255.1 million, a decrease of 4 percent compared to the prior year fiscal period of $264.7 million.

Translation of the Company’s foreign subsidiaries’ results from their functional currencies 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 $135.7 million for the second quarter and $270.1 million year-to-date.

Net income for the second quarter was $16.5 million, a decrease of 15 percent from the prior year fiscal quarter. Year-to-date net income was $30.5 million, a decrease of 20 percent from the prior year fiscal period.

Diluted earnings per share were $1.21 in the second quarter, compared to $1.41 in the prior year fiscal quarter. Year-to-date diluted earnings per share were $2.23 compared to $2.75 for the prior year fiscal period.

Gross margin percentage was 50.8 percent in the second quarter, compared to 50.4 percent in the prior year fiscal quarter. Year-to-date gross margin was 51.1 percent compared to 50.6 percent in the prior year fiscal period.

Selling, general and administrative expenses were up 8 percent in the second quarter to $37.7 million compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses increased 6 percent to $77.7 million compared to the prior year fiscal period.

Advertising and sales promotion expenses were up 7 percent in the second quarter to $6.0 million compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were up 1 percent to $11.3 million compared to the prior year fiscal period.

“While sales volumes in the second quarter were lighter than we anticipated, we continue to believe that most of our growth this fiscal year will be weighted toward the second half of the year,” said Steve Brass, WD-40 Company’s president and chief executive officer. “I am pleased to report that we have now made it through most of the price increase related disruptions and the prospects for revenue growth in the back half of the fiscal year are looking optimistic. I am happy to report that it’s looking like the month of March, though not yet fully finalized from an accounting perspective, will be a new record sales month for the company.”

“In the second fiscal quarter, while we saw double digit sales growth in our Americas segment which has already moved through price-increase related disruptions. Our EMEA and Asia-Pacific segments reported sales that were softer than we would like to see. The disruptions we have been experiencing in EMEA are due primarily to recent price-increase actions coupled with our loss of sales in Russia and Belarus. In our Asia-Pacific segment, we experienced some weaker economic conditions and pricing disruptions in our distributor markets. However, we are expecting a strong comeback in both EMEA and Asia-Pacific in the second half of the fiscal year.”

“Although gross margin in the second quarter improved compared to the same period last year, there continues to be pressure on gross margin. Progress is seldom linear, and many factors are currently impacting gross margin. The good news is that we are beginning to see input costs stabilize and inventory levels come down. We are hopeful that

this trend will persist, but it continues to be a dynamic environment. We remain confident that our plans to rebuild gross margin will enable us to restore our gross margin to 55 percent or higher,” Brass concluded.

Net Sales by Segment (in thousands):



	Three Months Ended February 28,								Six Months Ended February 28,
	2023		2022		Dollars		Change		2023		2022		Dollars		Change
Americas	$	62,890	$	54,497	$	8,393		15%	$	120,904	$	110,785	$	10,119		9%
EMEA		46,809		54,063		(7,254)		(13)%		87,581		111,618		(24,037)		(22)%
Asia-Pacific		20,494		21,426		(932)		(4)%		46,601		42,329		4,272		10%
Total	$	130,193	$	129,986	$	207		-	$	255,086	$	264,732	$	(9,646)		(4)%

Net sales by segment as a percent of total net sales for the second quarter were as follows: for the Americas, 48 percent; for EMEA, 36 percent; for Asia-Pacific, 16 percent.

Net sales in the Americas increased 15 percent in the second quarter due primarily to higher sales of maintenance products in the United States, which increased 22 percent compared to the prior year fiscal quarter. Increased maintenance product sales were driven primarily by the impact of price increases, increased production capacity and improved availability of certain products. These increases were partially offset by lower demand which resulted in decreased sales volume. In Canada, sales increased 10 percent due to the favorable impact of price increases partially offset by unfavorable changes in foreign currency exchange rates and weaker economic conditions that resulted in lower levels of demand and decreased sales volume. In Latin America, sales increased by 3 percent primarily due to higher sales in our direct market in Mexico as a result of increased distribution, successful promotional programs and price increases, as well as the favorable impact of changes in foreign currency exchange rates. These favorable impacts were significantly offset by decreased sales volumes to marketing distributors in Latin America due to weaker economic conditions in certain regions that resulted in lower levels of demand.

Net sales in EMEA decreased 13 percent in the second quarter primarily due to changes in foreign currency exchange rates, which had an unfavorable impact on sales for the EMEA segment in the second quarter compared to the prior year fiscal quarter. On a constant currency basis, EMEA sales for the second quarter would have decreased by 4 percent compared to the prior fiscal year quarter. In addition, decreases in sales volume unfavorably impacted sales of maintenance products in the EMEA, which was significantly offset by the favorable impact of price increases we implemented over the last twelve months. Direct market sales were unfavorably impacted by a lower level of customer orders, partially due to weaker market and economic conditions, which have led to reduced foot traffic in most regions and a lower level of promotional programs, partially offset by the favorable impact of price increases. Lower sales of maintenance products in the EMEA distributor markets were primarily attributable to the suspension in sales of our products to our marketing distributor customers in Russia and Belarus starting in March of 2022.

Net sales in Asia-Pacific decreased 4 percent in the second quarter primarily due to lower sales of maintenance products in the Asia-Pacific distributor markets, which decreased 11 percent in the second quarter compared to the prior year fiscal quarter. Lower sales of maintenance products in the Asia-Pacific distributor markets were primarily due to lower sales of WD-40_®Multi-Use Product driven by weaker market and economic conditions and distributors that had purchased product in advance of price increases implemented in December 2022, both of which lowered sales volumes in the second quarter of fiscal year 2023, particularly in Taiwan, Korea, Thailand and Malaysia. In China, sales remained relatively constant period over period. In Australia, sales increased by 6 percent primarily due to the favorable impact of price increases and successful promotional programs. Changes in foreign currency exchange rates had an unfavorable impact on sales for the Asia-Pacific segment. On a constant currency basis, Asia-Pacific sales would have decreased by 1 percent compared to the prior year fiscal quarter.

Net Sales by Product Group (in thousands):



	Three Months Ended February 28,								Six Months Ended February 28,
	2023		2022		Dollars		Change		2023		2022		Dollars		Change
Maintenance products	$	122,104	$	121,901	$	203		-	$	238,416	$	247,931	$	(9,515)		(4)%
HCCP (1)		8,089		8,085		4		-		16,670		16,801		(131)		(1)%
Total	$	130,193	$	129,986	$	207		-	$	255,086	$	264,732	$	(9,646)		(4)%

(1)

Homecare and cleaning products (“HCCP”)

Net sales of maintenance products, which are considered the primary growth focus for the Company, were relatively constant in the second quarter when compared to the prior year fiscal quarter. This is due to increased sales of maintenance products in the Americas segment from period to period, which were almost completely offset by decreased sales in the EMEA and Asia-Pacific segments.

Net sales of homecare and cleaning products were also relatively constant in the second quarter compared to the prior year fiscal quarter. The homecare and cleaning products, particularly those in the United States, are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as net sales of maintenance products grow in alignment with the Company’s strategic initiatives.

Dividend and Share Repurchase Update

As previously announced, WD-40 Company’s board of directors declared on March 21, 2023, a regular quarterly dividend of $0.83 per share payable on April 28, 2023 to stockholders of record at the close of business on April 14, 2023.

On October 12, 2021, the Company’s board of directors approved a share buy-back plan that became effective on November 1, 2021. Under the plan, the Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2023. The timing and amount of repurchases will be based on terms and conditions acceptable to the Company and in compliance with applicable laws and regulations. During the period from November 1, 2021 through February 28, 2023, the Company repurchased 170,232 shares at a total cost of $34.8 million under this $75.0 million plan. During the second quarter, the Company repurchased 9,250 shares at a total cost of $1.6 million under this $75.0 million plan.

Updated Fiscal Year 2023 Guidance

The Company updated the following guidance for fiscal year 2023:

Net sales growth is projected to be between 3.5 and 7.5 percent with net sales expected to be between $535 million and $560 million.

Gross margin percentage for the full year is expected to be between 51 and 52 percent.

Advertising and promotion investments are projected to be between 5.0 and 5.5 percent of net sales.

The provision for income tax is expected to be around 21 percent.

Net income is projected to be between $64.5 million and $68.5 million.

Diluted earnings per share is expected to be between $4.80 and $5.00 based on an estimated 13.6 million weighted average shares outstanding.

This guidance is expressed in good faith and is based on management’s current view of anticipated results.

Net sales guidance was calculated using recent foreign currency exchange rates. In constant currency, sales growth projection would be approximately 6.5 to 11.5 percent. This guidance does not include any future

acquisitions or divestitures. Unanticipated inflationary headwinds, changes in foreign currency exchange rates, and other unforeseen events may further affect the Company’s financial results.

Webcast Information

As previously announced, WD-40 Company management will host a live webcast at approximately 2:00 p.m. PDT today to discuss these results. Other forward-looking and material information may also be discussed during this call. Please visit http://investor.wd40company.com for more information and to view supporting materials.

About WD-40 Company

WD-40 Company is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories, and homes around the world. The Company owns a wide range of well-known brands that include maintenance products and homecare and cleaning products: WD-40_® Multi-Use Product, WD-40 Specialist_®, 3-IN-ONE_®, GT85_®, 2000 Flushes_®, no vac_®, 1001_®, Spot Shot_®, Lava_®, Solvol_®, X-14_®, and Carpet Fresh_®.

Headquartered in San Diego, California, USA, WD-40 Company recorded net sales of $518.8 million in fiscal year 2022 and its products are currently available in more than 176 countries and territories worldwide. WD-40 Company is traded on the NASDAQ Global Select Market under the ticker symbol “WDFC.” For additional information about WD-40 Company please visit http://www.wd40company.com.

Forward-Looking Statements

Except for the historical information contained herein, this press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect the Company’s current expectations with respect to currently available operating, financial and economic information. These forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements. These forward-looking statements are generally identified with words such as “believe,” “expect,” “intend,” “plan,” “could,” “may,” “aim,” “anticipate,” “target,” “estimate” and similar expressions.

Our forward-looking statements include, but are not limited to, discussions about future financial and operating results, including: growth expectations for maintenance products; expected levels of promotional and advertising spending; anticipated input costs for manufacturing and the costs associated with distribution of our products; plans for and success of product innovation; the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; expected tax rates and the impact of tax legislation and regulatory action; the length and severity of the current COVID-19 pandemic and its impact on the global economy and our financial results; changes in the political conditions or relations between the United States and other nations; the impacts from inflationary trends and supply chain constraints; and forecasted foreign currency exchange rates and commodity prices.

The Company’s expectations, beliefs and forecasts are expressed in good faith and are believed by the Company to have a reasonable basis, but there can be no assurance that the Company’s expectations, beliefs or forecasts will be achieved or accomplished. All forward-looking statements reflect the Company’s expectations as of April 6, 2023. We undertake no obligation to revise or update any forward-looking statements.

Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not limited to, those identified in Part I—Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022 which the company filed with the SEC on October 24, 2022, and in the Company’s Quarterly Report on Form 10-Q for the period ended February 28, 2023, which the Company expects to file with the SEC on April 6, 2023.

Table Notes and General Definitions

(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, WD-40 Specialist_® and WD-40 BIKE_® product lines.

(2)

The Company markets the following homecare and cleaning brands: X-14_® 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 results from the functional currencies of the Company’s subsidiaries to U.S. dollars using the exchange rate in effect for the corresponding period of the prior fiscal year. Results on a constant currency basis are not in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”) and should be considered in addition to, not as a substitute for, results prepared in accordance with U.S. GAAP.


WD-40 COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share amounts)

	February 28,		August 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	37,992	$	37,843
Trade and other accounts receivable, net		100,430		89,930
Inventories		108,565		104,101
Other current assets		16,442		17,766
Total current assets		263,429		249,640
Property and equipment, net		65,791		65,977
Goodwill		95,279		95,180
Other intangible assets, net		5,113		5,588
Operating lease right-of-use assets		8,095		7,559
Deferred tax assets, net		646		679
Other assets		11,984		9,672
Total assets	$	450,337	$	434,295

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,534	$	32,852
Accrued liabilities		28,427		27,161
Accrued payroll and related expenses		11,912		11,583
Short-term borrowings		47,477		39,173
Income taxes payable		246		51
Total current liabilities		116,596		110,820
Long-term borrowings		108,309		107,139
Deferred tax liabilities, net		10,447		10,528
Long-term operating lease liabilities		6,381		5,999
Other long-term liabilities		11,332		11,185
Total liabilities		253,065		245,671

Commitments and Contingencies

Stockholders’ equity:
Common stock — authorized 36,000,000 shares, $0.001 par value;
19,896,477 and 19,888,807 shares issued at February 28, 2023 and
August 31, 2022, respectively; and 13,578,346 and 13,602,346 shares
outstanding at February 28, 2023 and August 31, 2022, respectively		20		20
Additional paid-in capital		170,353		165,973
Retained earnings		464,641		456,076
Accumulated other comprehensive loss		(34,865)		(36,209)
Common stock held in treasury, at cost — 6,318,131 and 6,286,461
shares at February 28, 2023 and August 31, 2022, respectively		(402,877)		(397,236)
Total stockholders’ equity		197,272		188,624
Total liabilities and stockholders’ equity	$	450,337	$	434,295



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,
		2023		2022		2023		2022

Net sales	$	130,193	$	129,986	$	255,086	$	264,732
Cost of products sold		64,115		64,468		124,753		130,744
Gross profit		66,078		65,518		130,333		133,988

Operating expenses:
Selling, general and administrative		37,690		34,819		77,674		73,242
Advertising and sales promotion		5,985		5,596		11,324		11,220
Amortization of definite-lived intangible assets		250		360		503		723
Total operating expenses		43,925		40,775		89,501		85,185

Income from operations		22,153		24,743		40,832		48,803

Other income (expense):
Interest income		51		21		95		46
Interest expense		(1,502)		(613)		(2,671)		(1,233)
Other income (expense), net		165		252		315		(77)
Income before income taxes		20,867		24,403		38,571		47,539
Provision for income taxes		4,341		4,895		8,048		9,476
Net income	$	16,526	$	19,508	$	30,523	$	38,063

Earnings per common share:
Basic	$	1.21	$	1.41	$	2.24	$	2.76
Diluted	$	1.21	$	1.41	$	2.23	$	2.75

Shares used in per share calculations:
Basic		13,583		13,679		13,586		13,773
Diluted		13,608		13,704		13,608		13,804


WD-40 COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

	Six Months Ended February 28,
	2023		2022
Operating activities:
Net income	$	30,523	$	38,063
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		3,864		4,082
Net losses (gains) on sales and disposals of property and equipment		83		(123)
Deferred income taxes		(224)		367
Stock-based compensation		4,980		4,776
Unrealized foreign currency exchange gains		(1,820)		(110)
Provision for credit losses		53		(55)
Impairment of inventories		568		113
Changes in assets and liabilities:
Trade and other accounts receivable		(9,689)		(15,178)
Inventories		(4,159)		(20,482)
Other assets		(780)		(4,328)
Operating lease assets and liabilities, net		60		1
Accounts payable and accrued liabilities		(3,059)		9,624
Accrued payroll and related expenses		260		(12,356)
Other long-term liabilities and income taxes payable		287		(311)
Net cash provided by operating activities		20,947		4,083

Investing activities:
Purchases of property and equipment		(3,571)		(3,860)
Proceeds from sales of property and equipment		290		289
Net cash used in investing activities		(3,281)		(3,571)

Financing activities:
Treasury stock purchases		(5,641)		(18,165)
Dividends paid		(21,958)		(20,619)
Repayments of long-term senior notes		(400)		(400)
Net proceeds (repayments) from revolving credit facility		8,305		1,238
Shares withheld to cover taxes upon conversions of equity awards		(600)		(4,321)
Net cash used in financing activities		(20,294)		(42,267)
Effect of exchange rate changes on cash and cash equivalents		2,777		(884)
Net increase (decrease) in cash and cash equivalents		149		(42,639)
Cash and cash equivalents at beginning of period		37,843		85,961
Cash and cash equivalents at end of period	$	37,992	$	43,322


Delaware (State or other jurisdiction of incorporation or organization)	000-06936 (Commission File Number) WD 40 CO (Commission Company Name)	95-1797918 (I.R.S. Employer Identification Number)

	9715 Businesspark Avenue, San Diego, California 92131 (Address of principal executive offices, with zip code)

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

	n/a (Former name or former address, if changed since last report)


o	Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Title of each class	Trading Symbol	Name of exchange on which registered
Common stock, par value $0.001 per share	WDFC	NASDAQ


ITEM 2.02.		Results of Operations and Financial Condition

		On April 6, 2023, WD-40 Company issued a news release with respect to earnings for the quarter ended February 28, 2023. The full text of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. All of the information furnished in this Item 2.02 and Item 9.01 (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01.		Financial Statements and Exhibits
		(d) Exhibits


	Exhibit No.	Description

	99.1	News Release by WD-40 Company dated April 6, 2023.
	104	The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Date of Report (date of earliest event reported): April 6, 2023

WD-40 COMPANY


Date: April 6, 2023		/s/ SARA K. HYZER
		Sara K. Hyzer
		Vice President, Finance and
		Chief Financial Officer

Document And Entity Information	Apr. 06, 2023
Document And Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Apr. 06, 2023
Entity Registrant Name	WD-40 COMPANY
Entity Incorporation, State or Country Code	DE
Entity File Number	000-06936
Entity Tax Identification Number	95-1797918
Entity Address, Address Line One	9715 Businesspark Avenue
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92131
City Area Code	619
Local Phone Number	275-1400
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	WDFC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000105132
Amendment Flag	false