WD-40 Runs Past Analyst Predictions in Third Quarter

Andrew Klips  |

Shares of WD-40 Company (WDFC) are looking to gap up Tuesday morning, following a better-than-expected earnings report after Monday's closing bell, showing a 12-percent jump in net income that sent shares northbound to all-time highs. The company also hiked its earnings outlook for the fiscal 2013 year.

For the fiscal third quarter ended May 31, San Diego-based WD-40 reported revenue of $93.1 million, up 7 percent from $87.0 million in the year prior quarter. Net income for the recent quarter was $10.3 million, or 66 cents per share, versus $9.1 million, or 57 cents per share in the third quarter last year.

Wall Street was expecting EPS of 56 cents on revenue of $89.0 million.

Sales of multi-purpose maintenance products, which comprise the lion's share of total revenue and include WD-40, 3-In-One and Blue Works brands, rose 12 percent to $82.2 million. That increase more than offset an 18-percent decline in homecare and cleaning products sales to $10.9 million.

By location, segment sales in the Americas improved 8 percent to $47.6 million; Europe sales rose 8 percent to $32.5 million; and Asia-Pacific sales were essentially flat at $13.0 million. The company said it sees growth opportunities in China, but there will be "ups and downs" because of shifting growth patterns, amongst other reasons.

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Gross margin increased to 51.3 percent from 49.5 percent last year on price increases, less promotional offers and supply chain adjustments, helping the company hit a target of gross margin over 50 percent.

Selling, general and administrative costs rose 13 percent to $25.7 million, but advertising and sales promotion costs were lower by 1 percent at $6.6 million. Total operating expenses climbed 9.6 percent to $32.83 million.

"We are pleased with our performance across the globe this past fiscal year, and have confidence in our ability to continue to leverage the WD-40 shield and to create solid growth in our core product lines," said Garry Ridge, president and chief executive officer at WD-40.

Looking forward, WD-40 affirmed its fiscal year 2013 revenue in the range of $356.0 million to $370.0 million. Net income is now seen between $37.6 million and $39.0 million, equating to earnings per share between $2.40 and $2.48. Previously, the company said it expected EPS in the range of $2.32 to $2.42.

Analysts were expecting profits of $2.39 per share for the year.

Shares of WDFC closed down by 13 cents at $57.65 during regular trading hours on Monday, but surged after the release and are holding around $66 each in early pre-market activity on Tuesday, representing gains of more than 14 percent. Through Monday's close, shares are up about 23 percent in 2013.

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