WD-40 Company Shares Surges After Q2 Earnings Beat

WD-40 Company (NASDAQ: WDFC) reported second-quarter FY22 sales growth of 16.2% year-over-year to $130 million, beating the consensus of $126.77 million. On a constant currency basis, total net sales were $130.9 million.

EPS improved to $1.41 from $1.24 in 2Q21, beating the consensus of $1.01. 

The Gross margin was 50.4% for the quarter compared to 55.4% last year. Selling, general and administrative expenses decreased 2% Y/Y in the quarter to $34.8 million.

Operating income was $24.74 million (+19.8% Y/Y), and the margin expanded by 58 bps to 19%.

Net cash provided by operating activities YTD was $4.08 million versus $42.51 million a year ago. WD-40 ended the Q2 with $43.20 million.

From November 1, 2021, through February 28, 2022, WDFC repurchased 78,637 shares for $18.2 million, with $56.8 million still available for repurchase under this plan.

"Like other companies, we are in a challenging inflationary environment, which has continued to deteriorate our gross margin. We are focused and committed to managing our business so that we can restore gross margin to or above our target of 55 percent over the longer term. We will restore our gross margin over the near-term by implementing price increases to offset the higher input costs we are experiencing. Over the longer-term, our margin accretive Must-Win Battles will further enhance gross margin," commented Garry Ridge, WD-40 Company's chairman and chief executive officer.

FY22 Outlook: WD-40 Company expects net sales growth to be between 7% and 12%, with net sales between $522 million and $547 million versus a consensus of $533.3 million. EPS is expected to be between $5.14 and $5.27, versus a consensus of $5.26.

WD-40 expects a gross margin between 50% and 51%. Net income is projected to be between $70.7 million and $72.5 million. It sees diluted earnings per share of $5.14 to $5.27 based on an estimated 13.7 million weighted average shares outstanding.

Price Action: WDFC shares are trading higher by 11.30% at $194.25 during the post-market session on Thursday.

photo via Wikimedia Commons