WD-40 pany(WDFC) - 2024 Q2 - Quarterly Report

Financial Performance - Consolidated net sales increased by $24.4 million, or 10%, compared to the same period last year, with sales volume contributing approximately$ 9.9 million and average selling price increases adding about $7.7 million[91]. - Consolidated net income increased by$ 2.5 million, or 8%, with a favorable impact of $1.2 million from foreign currency exchange rates[91]. - Diluted earnings per share were$ 2.42, compared to $2.23 in the prior fiscal year[91]. - Net income decreased 6% to$ 15.5 million, or $1.14 per common share for the three months ended February 29, 2024[137]. - Net income increased 8% to$ 33.0 million, or $2.42 per common share for the six months ended February 29, 2024[138]. - Cash provided by operating activities increased by$ 23.9 million to $44.9 million for the six months ended February 29, 2024, primarily driven by a net income increase[151]. - The company had$ 55.4 million in cash and cash equivalents as of February 29, 2024, indicating strong liquidity[148]. Sales Performance - The EIMEA segment accounted for 37% of consolidated sales, with net sales increasing by 16% in the three months ended February 29, 2024[93]. - Total maintenance products net sales increased by 10% to $263.4 million for the six months ended February 29, 2024[92]. - The Americas segment reported a 1% increase in net sales to$ 63.5 million for the three months ended February 29, 2024[93]. - Net sales in the Americas segment increased by $6.7 million, or approximately 6.7%, year-to-date, driven by a$ 4.0 million increase in average selling prices and a $1.5 million positive currency impact[95]. - WD-40 Multi-Use Product sales in the Americas increased by$ 6.0 million, or 7%, with significant contributions from Latin America (up $3.5 million, or 20%) and the U.S. (up$ 3.2 million, or 5%)[98]. - In the EIMEA segment, net sales increased by $15.5 million, or 18%, year-to-date, with WD-40 Multi-Use Product sales rising by$ 12.8 million, or 19%[99]. - Homecare and cleaning product sales in the Americas decreased by $0.5 million, or 6%, primarily due to lower demand in the U.S.[98]. - In the Asia-Pacific segment, total net sales increased by$ 2.3 million, or 5%, with WD-40 Multi-Use Product sales up by $1.3 million, or 3%[106]. - The WD-40 Multi-Use Product saw a sales increase in France, India, and Iberia, contributing significantly to the overall growth in the EIMEA segment[103]. Operating Expenses - Operating expenses rose by 18% to$ 52 million for the three months ended February 29, 2024[92]. - Selling, General and Administrative (SG&A) expenses increased by $7.3 million, or 19%, for the three months ended February 29, 2024, primarily due to higher employee-related costs[113][114]. - Research and development costs increased to$ 1.7 million for the three months ended February 29, 2024, compared to $1.2 million in the prior year, reflecting a focus on sustainability and product innovation[116]. - Advertising and Sales Promotion (A&P) expenses rose by$ 740,000, or 12%, for the three months ended February 29, 2024, driven by increased promotional programs[118][119]. - Total operating expenses increased to $52 million for the three months ended February 29, 2024, compared to$ 43.9 million for the same period in 2023[143]. Profitability Metrics - Gross profit as a percentage of net sales rose to 53.1%, up from 51.1% in the prior year[91]. - Gross profit for the three months ended February 29, 2024, was $72.9 million, up$ 6.9 million from the prior year, resulting in a gross margin increase of 160 basis points to 52.4%[110][111]. - Gross margin for the Americas segment increased from 48.1% to 49.4% primarily due to decreases in the costs of petroleum-based specialty chemicals[124]. - Gross margin for the EIMEA segment increased from 52.3% to 53.7% due to favorable changes in sales mix and decreases in costs of petroleum-based specialty chemicals[126]. - Gross margin for the Asia-Pacific segment increased from 55.3% to 58.5% due to favorable price increases and changes in input costs[128]. Future Outlook - New product introductions and product line extensions are anticipated to positively impact future sales growth[87]. - The company plans to continue focusing on product innovation and market expansion strategies to drive future performance[87]. Shareholder Returns - The Board approved a share repurchase plan allowing for the acquisition of up to $50.0 million of outstanding shares, with$ 44.7 million remaining available as of February 29, 2024[149]. - The company declared a cash dividend of $0.88 per share on March 19, 2024, payable on April 30, 2024[161]. Currency Impact - Net sales were negatively impacted by$ 0.7 million due to foreign currency exchange rate changes, but would have increased by 6% on a constant currency basis[110][112]. - The EIMEA segment experienced a favorable currency impact of $6.0 million, with constant currency sales increasing by 11%[105]. - The net effect of exchange rate changes resulted in a decrease in cash of$ 0.3 million for the six months ended February 29, 2024, compared to an increase of $2.8 million in the same period of 2023[156].