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WD-40 stock slips on fiscal 4Q profit dip, uninspired 2020 guidance

The company blamed a 60% drop in net income on an $8.7 million tax reserve

WD-40 cans
Fiscal 2020 guidance was the company’s squeaky wheel

WD-40 Company (NASDAQ:NASDAQ:WDFC) shares slid after its fiscal fourth quarter results showed declining profits and underwhelming guidance. 

The maker of the signature solvent spray posted net income of $8.6 million in the quarter, a 60% drop year over year. 

Investors didn’t respond well, dropping WD-40’s share price 4% to $175.32.

READ: Coca-Cola's 3Q revenue tops estimates, pushing up shares in pre-market trading

The reason for such a significant dropoff, the company said, was an $8.7 million tax reserve. 

"In the fourth quarter, net income and diluted earnings per share were negatively impacted by an $8.7 million reserve for an uncertain tax position that we recorded, and previously disclosed, during the fourth quarter," CFO Jay Rembolt said in a statement. 

"Because of this adjustment, our net income is significantly lower on a year-over-year basis in both the quarter and the full fiscal year. The good news is that this a one-time charge and the high tax rate we recorded is not expected to carry into fiscal year 2020.”

That said, the company still beat expectations. Overall, WD-40 saw revenue grow 4% to $106.7 million and per share earnings  came in at $0.63. Analysts polled by FactSet had projected revenue of $106.3 million and earnings of $0.60 per share.

Guidance, though, was the company’s squeaky wheel. For fiscal 2020, WD-40 projected earnings between $4.74 and $4.83 per share, a range below analysts’ expectations of $4.96 per share. Revenue is expected to fall between $436 million and $453 million, while analysts project $445 million.

Contact Andrew Kessel at [email protected] 

Follow him on Twitter @andrew_kessel

Quick facts: WD-40 Company

Price: 189.71 USD

NASDAQ:WDFC
Market: NASDAQ
Market Cap: $2.59 billion
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