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WD40 Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 10, 2012 03:16PM

WD40 Company (WDFC) filed Quarterly Report for the period ended 2012-05-31. Wd-40 Company has a market cap of $817.1 million; its shares were traded at around $48.37 with a P/E ratio of 23.9 and P/S ratio of 2.4. The dividend yield of Wd-40 Company stocks is 2.3%. Wd-40 Company had an annual average earning growth of 2.6% over the past 10 years. GuruFocus rated Wd-40 Company the business predictability rank of 3-star.



Highlight of Business Operations:

Sales in Asia, which represented 63% of the total sales in the Asia-Pacific segment for the three months ended May 31, 2012, increased $1.1 million, or 15%, for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year primarily due to the stable economic conditions which currently exist throughout most of the Asia region. The distributor markets in the Asia region experienced a sales increase of $0.9 million, or 22%, for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year, primarily due to the continued growth of the WD-40 multi-use products throughout the distributor markets, including those in the Philippines, Malaysia and Thailand. Sales in China increased $0.2 million, or 5%, for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year due to the ongoing growth of the base business and the positive impacts of a more significant promotional program that was conducted during the third quarter of fiscal year 2012 as compared to the program that was conducted in the same period of the prior fiscal year.

Selling, general and administrative (“SG&A”) expenses for the three months ended May 31, 2012 increased $0.1 million, or 1%, to $22.7 million from $22.6 million for the corresponding period of the prior fiscal year. As a percentage of net sales, SG&A expenses decreased to 26.1% for the three months ended May 31, 2012 from 26.4% for the corresponding period of the prior fiscal year. The increase in SG&A expenses was largely attributable to higher employee-related costs and higher professional services costs. Employee-related costs, which include salaries, bonuses, profit sharing, stock-based compensation and other fringe benefits, increased $0.3 million for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year. This increase was primarily due to annual compensation increases and higher staffing levels, which were partially offset by lower stock-based compensation expense from period to period. Professional services costs increased $0.1 million due to higher legal and consulting fees. These increases in SG&A expenses were partially offset by a $0.2 million decrease in freight costs from period to period primarily due to truckload optimizations that we are starting to realize as a result of customer orders shipping from fewer distribution centers under our new supply chain architecture in North America. Other miscellaneous expenses, which primarily include research and development expenses, broker sales commissions, meeting expenses and office overhead expenses decreased by $0.1 million period over period. Changes in foreign currency exchange rates did not have a material impact on SG&A expenses for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year.

Advertising and sales promotion expenses for the three months ended May 31, 2012 decreased $0.4 million, or 6%, to $6.7 million from $7.1 million for the corresponding period of the prior fiscal year. As a percentage of net sales, these expenses decreased to 7.7% for the three months ended May 31, 2012 from 8.3% for the corresponding period of the prior fiscal year. The decrease in advertising and sales promotion expenses was primarily due to decreased promotional activities in the Europe segment and lower costs associated with promotional programs conducted in the Americas segment from period to period. Changes in foreign currency exchange rates did not have a material impact on advertising and sales promotion expenses for the three months ended May 31, 2012 compared to the corresponding period of the prior fiscal year. Investment in global advertising and sales promotion expenses for fiscal year 2012 is expected to be in the range of 7.0% to 8.0% of net sales.

Sales in Asia, which represented 67% of the total sales in the Asia-Pacific segment for the nine months ended May 31, 2012, increased $5.8 million, or 29%, for the nine months ended May 31, 2012 compared to the corresponding period of the prior fiscal year primarily due to the stable economic conditions which currently exist throughout most of the Asia region. The distributor markets in the Asia region experienced a sales increase of $3.7 million, or 27%, for the nine months ended May 31, 2012 compared to the corresponding period of the prior fiscal year, primarily due to the continued growth of the WD-40 multi-use products throughout the distributor markets, including those in Indonesia, Korea and Malaysia. Sales in China increased $2.1 million, or 34%, for the nine months ended May 31, 2012 compared to the corresponding period of the prior fiscal year due to the ongoing growth of the base business and the higher level of orders placed by our customers during promotional programs that were conducted in the first and third quarters of fiscal year 2012.

Selling, general and administrative expenses for the nine months ended May 31, 2012 increased $1.4 million, or 2%, to $67.3 million from $65.9 million for the corresponding period of the prior fiscal year. As a percentage of net sales, SG&A expenses decreased to 26.1% for the nine months ended May 31, 2012 from 26.8% for the corresponding period of the prior fiscal year. The increase in SG&A expenses was largely attributable to higher employee-related costs, increased freight expenses, higher professional services costs and the unfavorable impact of changes in foreign currency exchange rates from period to period. Employee-related costs, which include salaries, bonuses, profit sharing, stock-based compensation and other fringe benefits, increased $1.0 million for the nine months ended May 31, 2012 compared to the corresponding period of the prior fiscal year primarily due to annual compensation increases and higher staffing levels in all segments. This increase in compensation costs was partially offset by lower bonus and stock-based compensation expenses from period to period. Although we started to experience some reduction in our freight costs in the third quarter of fiscal year 2012 as a result of our North American supply chain restructure, freight costs increased overall by $0.7 million year over year primarily due to increased diesel costs and reduced truckload sizes as a result of smaller, more frequent orders being placed by our

Read the The complete Report



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