The cleaning product company WD-40 Company (NASDAQ:WDFC) zipped past Wall Street’s earnings estimate in the fiscal fourth-quarter helped by corporate tax cuts, but its revenue fell short of expectations.
In the three months ended August 31, the San Diego, California, company reported net income of $21.6 million and diluted earnings per share of $1.54. Its per-share earnings adjusted for pre-tax gains of $1.03 exceeded the consensus estimate of $0.99 per share. But its sales of $102.6 million missed the Street’s estimate of $104.55 million.
Its gross margin also dropped in the quarter to 55.2% compared to 56% in the year-ago period.
CFO Jay Rembolt pointed out that tax cuts drove earnings higher in the quarter, as the company recorded a $7.1 million provisional tax adjustment. “Because of this adjustment we substantially exceeded the guidance we issued in July of 2018 for both net income and diluted earnings per share,” he said in a statement.
Rembolt warned, however, that the exceptionally-low tax rate “is not expected to carry into fiscal year 2019.”
The cleaning product company failed to keep a lid on its expenses, with its selling, general and administrative expenses climbing 5% to $29.7 million. Its advertising and sales promotion costs also jumped 23% in the quarter to $6.5 million.
Net sales in the Americas, which accounts for the bulk of business, jumped 2% from the year-ago quarter to $48.75 million while the Asia-Pacific region saw a 36% jump in sales to $17.24 million thanks to booming sales across China.
For the year, the company posted earnings of $65.2 million, or $4.64 per share. Revenue came in at $408.5 million.
WD-40 shares slipped slightly to finish at $156.50 on Thursday.
Contact Ellen Kelleher at [email protected]