GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

WD40 Company Reports Operating Results (10-Q)

July 08, 2010 | About:
10qk

10qk

18 followers
WD40 Company (WDFC) filed Quarterly Report for the period ended 2010-05-31.

Wd40 Company has a market cap of $562.2 million; its shares were traded at around $33.9 with a P/E ratio of 16.4 and P/S ratio of 1.9. The dividend yield of Wd40 Company stocks is 3%. Wd40 Company had an annual average earning growth of 2% over the past 10 years.WDFC is in the portfolios of Jim Simons of Renaissance Technologies LLC, Murray Stahl of Horizon Asset Management.

Highlight of Business Operations:

Sales of homecare and cleaning products in the Americas segment decreased $1.9 million, or 14%, for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year. Sales of homecare and cleaning products in the U.S., which is where the majority of such sales originated, decreased $2.0 million, or 16%, from period to period. This was due to several factors, including lost distribution, the discontinuation of certain product offerings, the effect of competitive factors and our strategic decision to focus our research and development resources on our multi-purpose maintenance products and not our homecare and cleaning products.

Sales in Asia, which represented 63% of the total sales in the Asia-Pacific segment, increased $1.8 million, or 47%, for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year reflecting improved economic conditions throughout the Asia region. Sales in China increased $1.0 million, or 107%, due primarily to significant promotional activities, while sales throughout the rest of the Asia region increased $0.8 million, or 27%, due to higher sales of WD-40 products throughout the distributor markets during the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year.

Sales in Australia increased $1.2 million, or 56%, for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year primarily due to the favorable impact of changes in foreign currency exchange rates. On a constant currency basis, sales would have increased $0.4 million, or 17%, for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year primarily due to increased marketing and promotional activities.

Gross profit was $42.3 million, or 51.2% of net sales, for the three months ended May 31, 2010 compared to $35.0 million, or 50.9% of net sales, for the corresponding period of the prior fiscal year. Cost savings from product conversions and sourcing changes, primarily in the U.S., positively impacted gross profit by 0.7 percentage points on a combined basis for the three months ended May 31, 2010.

Note that our gross profits may not be comparable to those of other reporting entities, since some entities include all costs related to distribution of their products in cost of products sold, whereas we exclude the portion associated with amounts paid to third parties for distribution to our customers from our contract packagers and include these costs in selling, general and administrative expenses. These costs totaled $3.4 million and $3.1 million for the three months ended May 31, 2010 and 2009, respectively.

Selling, general and administrative (SG&A) expenses for the three months ended May 31, 2010 increased $4.9 million, or 27%, to $23.3 million from $18.4 million for the corresponding period of the prior fiscal year. As a percentage of net sales, SG&A expenses increased to 28.3% for the three months ended May 31, 2010 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 and the impact of changes in foreign currency exchange rates period over period. Employee-related costs, which include salaries, bonuses, profit sharing and other fringe benefits, increased $3.4 million for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year due primarily to higher bonus expense. Based on our most recent forecast and estimates in the third quarter of fiscal year 2010, many of our regions are expected to achieve higher sales and other profit performance metrics for fiscal year 2010 as compared to the prior fiscal year. As a result, bonus expense for the three months ended May 31, 2010 reflects these higher expected levels of achievement. In fiscal year 2009, achievement of such metrics by many of our regions was unusually low. Changes in foreign currency exchange rates increased SG&A expenses by $0.7 million for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year. Thus, on a constant currency basis, SG&A expenses for the three months ended May 31, 2010 would have been $22.6 million for an increase of $4.2 million, or 23%, from the corresponding period of the prior fiscal year. Professional services costs increased $0.3 million due to higher legal and consulting fees. Freight costs increased $0.2 million primarily due to higher sales volumes for the three months ended May 31, 2010 compared to the corresponding period of the prior fiscal year. Other miscellaneous expenses, including travel and entertainment expenses, broker sales commissions and bad debt expense, increased by $0.3 million period over period.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.0/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide