WD-40 (WDFC 106.55, -3.75) has given up 3.4% despite beating earnings expectations on in-line revenue.
The manufacturer of industrial lubricants reported above-consensus third quarter earnings of $1.02 per share on a 1.8% year-over-year increase in revenue to $98.20 million, which was just below market expectations.
While the company's sales were a bit short of expectations, they reached a new record, as did earnings per share. The stock, meanwhile, hit a record high of $125.00 in mid-July 2016 and has been backing away from that mark in recent months.
Gross margin declined to 55.3% from 56.8% one year ago. For the first three quarters of the fiscal year, gross margin hit 56.3%, up from 55.9% during the same period one year ago.
Advertising and sales promotion expenses declined 13.0% year-over-year to $5.40 million.
Looking at the regional sales breakdown, revenue in the Americas fell 2.0% year-over-year to $49.05 million. This was due to a 3.0% decline in sales of maintenance products in the U.S. Shifting buying patterns in some trade channels and inventory management efforts among customers were partially offset by higher sales of maintenance products in Canada and Latin America.
Europe, Middle East, and Africa sales grew 4.0% to $34.39 million. Sales in the EMEA distributor markets jumped 16.0%, mostly due to higher sales of the multi-use product in Eastern Europe. The benefit was partially offset by currency headwinds.
Sales in Asia-Pacific jumped 8.0% to $14.75 million. Sales in distributor markets jumped 12.0% due to the timing of orders and a higher level of promotional activities. Sales in China spiked 6.0% due to new distribution and continued growth in sales to the company's largest customers in China.
Looking ahead, the company expects that earnings for the full year will be between $3.64 per share and $3.71 per share, which is close to market expectations. However, the company lowered its revenue guidance, expecting sales between $380.90 million and $390.00 million, which is down from the previous outlook for revenue between $390.00 million and $395.00 million, and shy of current market expectations.