WD-40 Co. (WDFC), Monday reported a 25 percent decline in profit for the first quarter, as lower gross margin and increased expenses offset a 5 percent revenue growth. Both earnings and revenues for the quarter fell short of Street estimates. Looking ahead to the full year, the company reaffirmed its financial outlook. Following the news, shares of the company dropped over seven percent in after-hours trade.
San Diego, California-based WD-40's net income for the quarter dropped to $6.8 million or $0.42 per share from $9.1 million or $0.53 per share last year. On average, five analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
WD-40, which makes lubricants and hand soap, said sales for the quarter grew 5 percent to $84.9 million from $80.9 million last year. Four Wall Street analysts on a consensus estimated revenues of $86.13 million for the quarter.
Multi-purpose maintenance products segment sales improved 6 percent to $70.8 million, while Homecare and cleaning products segment sales fell 2 percent to $14.1 million from last year.
Geographically, sales in Americas were up 4 percent, while sales in Europe were down 2 percent. Asia Pacific sales for the quarter jumped 30 percent from last year.
Gross margin for the quarter dropped to 48.7 percent from 50.9 percent last year.
Chief Executive Garry Ridge said, "While we were not able to hit our gross margin target of 50 percent or above during the quarter, we see this as a temporary shortfall due to our sales mix during the quarter and the fact that we have not realized the full flow through of the recent price increases we implemented to offset higher commodity prices."
Advertising and sales promotion expenses were up 29 percent to $7.8 million due primarily to timing of promotional activity and support for the WD-40 brand. Selling, general and administrative expenses were up 5 percent to $22.6 million from last year.
Looking ahead to full year 2012, the company still expects net income of $37.2 million to $39.2 million, or $2.28 to $2.40 per share. Analysts currently expect earnings of $2.35 per share for the full year 2012.
The company continues to see net sales of $353.0 million to $370.0 million for the full year 2012, while analysts currently expect $359.42 million.
The company still expects gross margin for the full year to be close to 50.0 percent.
WDFC closed Thursday's trading on the Nasdaq at $41.08, up $1.19 or 2.98%. However, in after hours, the stock lost $3.08 or 7.50%. Trading volume for the day was 0.1 million shares.
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