WD-40 Company Reports Second Quarter 2017 Financial Results

SAN DIEGO, April 6, 2017

Financial Highlights and Summary

• Total net sales for the second quarter were $96.5 million, an increase of 2 percent compared to the prior year fiscal quarter. Year-to-date total net sales were $185.8 million, a decrease of 1 percent compared to the prior year fiscal period.
• Translation of the Company's foreign subsidiary results 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 $102.9 million for the second quarter and $198.1 million year-to-date.
• Net income for the second quarter was $12.4 million, a decrease of 10 percent compared to the prior year fiscal quarter. Year-to-date net income was $24.1 million, a decrease of 6 percent from the prior year fiscal period.
• Diluted earnings per share were $0.87 in the second quarter, compared to $0.94 per share for the prior year fiscal quarter. Year-to-date diluted earnings per share were $1.69 compared to $1.77 in the prior year fiscal period.
• Gross margin was 56.4 percent in the second quarter compared to 55.4 percent in the prior year fiscal quarter. Year-to-date gross margin was 56.8 percent compared to 55.5 percent in the prior year fiscal period.
• Selling, general and administrative expenses were up 4 percent in the second quarter to $29.8 million when compared to the prior year fiscal quarter. Year-to-date selling, general and administrative expenses were up 4 percent to $58.8 million compared to the prior year fiscal period.
• Advertising and sales promotion expenses remained relatively constant at $5.0 million in the second quarter compared to the prior year fiscal quarter. Year-to-date advertising and sales promotion expenses were down 8 percent to $9.9 million compared to the prior year fiscal period.

"Fluctuating foreign currency exchange rates continue to obscure the true strength of our business and they negatively impacted both our top-line and bottom line results in the second quarter," said Garry Ridge, WD-40 Company's president and chief executive officer.  "Even with the impacts of foreign currency headwinds included, we had 4 percent growth in sales of our maintenance products, which continue to be our core strategic focus, and a 5 percent increase in operating income.  Our net income was negatively impacted as a result of fluctuations in some non-operating currency related items period over period, as well as an adjustment that we recorded to our income tax expense in the second quarter of this year.  As we look to the remainder of fiscal year 2017, we've updated our fiscal year guidance and we remain confident in our strategy and are staying the course."

Net Sales by Segment (in thousands):

	Three Months Ended									Six Months Ended ARIVA.DE Börsen-Geflüster Kurse WD-40 Company 225,20 $ -0,66%
	February 28,			February 29,						February 28,			February 29,
	2017			2016			Change			2017			2016			Change
Americas	$	45,078		$	45,542			(1)%		$	87,918		$	89,954			(2)%
EMEA		36,205			35,626			2%			66,462			67,712			(2)%
Asia-Pacific		15,236			13,382			14%			31,387			29,406			7%
Total	$	96,519		$	94,550			2%		$	185,767		$	187,072			(1)%

• Net sales by segment as a percent of total net sales for the second quarter were as follows: for the Americas, 47 percent; for EMEA, 37 percent; and for Asia-Pacific, 16 percent.
• Net sales in the Americas were down 1 percent in the second quarter primarily due to a 10 percent decrease in homecare and cleaning product sales. Sales of maintenance products increased slightly during the period primarily due to a 25 percent increase in sales of maintenance products in Canada driven by successful promotional programs and improving market and economic conditions, particularly in Western Canada.
• Net sales in EMEA increased 2 percent in the second quarter primarily due to a 10 percent increase in sales in the EMEA distributor markets compared to the prior year fiscal period primarily due to increased sales in Russia driven by improving market conditions in the region. On a constant currency basis EMEA sales for the second quarter would have increased by $7.0 million or 20 percent compared to the prior fiscal year period.
• Net sales in Asia-Pacific increased 14 percent in the second quarter primarily due to a 21 percent increase in sales in the Asia-Pacific distributor markets and a 17 percent increase in sales in China. The sales growth in the distributor markets was primarily attributable to the timing of customer orders for WD-40 Multi-Use Product and the growth in China was due to new distribution and increased promotional activities. Changes in foreign currency exchange rates did not have a material impact on sales in the Asia-Pacific segment.

Net Sales by Product Group (in thousands):

• Net sales of maintenance products, which are considered the primary growth focus for the Company, increased 4 percent in the second fiscal quarter when compared to the prior fiscal year period. This growth was driven primarily by increased sales of WD-40 Multi-Use Product within all three of the Company's segments, but primarily in its Asia-Pacific segment. This sales growth was also attributable to increased sales of WD-40 Specialist throughout most of the Company's EMEA segment.
• Net sales of homecare and cleaning products decreased 12 percent in the second quarter when compared to the prior fiscal year period. The homecare and cleaning products, particularly those in the U.S., are considered harvest brands providing healthy profit returns to the Company and are becoming a smaller part of the business as net sales of multi-purpose maintenance products grow per the execution of the Company's strategic initiatives.

Dividend and Share Repurchase
As previously announced, WD-40 Company's board of directors declared on Tuesday, March 21, 2017 a quarterly dividend of $0.49 per share payable April 28, 2017 to stockholders of record at the close of business on April 14, 2017.

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