Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

<ul>
<li>WDFC reported fiscal second quarter (February) results continuing to depict a soft demand environment. WDFC reported a decline in unit volume across all major geographies</li>
<li>WDFC reported fiscal second quarter sales of $130.2 million compared to $124.9 million achieved in fiscal first quarter.</li>
<li>The Company reduced its inventory level only to raise its accounts receivable by more than the decline in inventory and the increase in sales</li>
</ul>


WDFC reported fiscal second quarter (February) results continuing to depict a soft demand environment. WDFC reported a decline in unit volume across all major geographies
WDFC reported fiscal second quarter sales of $130.2 million compared to $124.9 million achieved in fiscal first quarter.
The Company reduced its inventory level only to raise its accounts receivable by more than the decline in inventory and the increase in sales


<ul>
<li>WDFC reported fiscal first quarter (November 2022) results where sales declined more than expected while past price increases helped gross margin rebound from the August quarter</li>
<li>WDFC’s inventory maintained its incline reaching a new record and is now $119.1 million. We believe WDFC’s inventory hides the true cost of the business</li>
<li>The lack of demand remains a headwind that is leading to higher inventory levels. The scale of increase in inventory should continue to play a factor on WDFC’s earnings quality</li>
</ul>


WDFC reported fiscal first quarter (November 2022) results where sales declined more than expected while past price increases helped gross margin rebound from the August quarter
WDFC’s inventory maintained its incline reaching a new record and is now $119.1 million. We believe WDFC’s inventory hides the true cost of the business
The lack of demand remains a headwind that is leading to higher inventory levels. The scale of increase in inventory should continue to play a factor on WDFC’s earnings quality


<ul>
<li>WDFC reported fiscal fourth quarter (August) results missing the Company’s guidance due to slower roll out of price increases and continued inflationary pressures on input costs</li>
<li>The miss underscores our continued concerns in the business where WDFC is depending on price increases to solve demand shortfall with management affirming unit volumes declined in the quarter</li>
<li>WDFC’s sales benefited from certain customers pulling forward orders in anticipation of announced price increases in fiscal fourth quarter and fiscal first quarter</li>
</ul>


WDFC reported fiscal fourth quarter (August) results missing the Company’s guidance due to slower roll out of price increases and continued inflationary pressures on input costs
The miss underscores our continued concerns in the business where WDFC is depending on price increases to solve demand shortfall with management affirming unit volumes declined in the quarter
WDFC’s sales benefited from certain customers pulling forward orders in anticipation of announced price increases in fiscal fourth quarter and fiscal first quarter


<ul>
<li>The recent decline in crude oil has resulted in optimism WDFC’s gross margin would improve. There is a delay before WDFC sees a benefit/impact from the price of oil</li>
<li>We continue to maintain our viewpoint of WDFC experiencing slower demand for its products from consumers and retailers holding back on orders</li>
<li>WDFC’s exposure to international markets could negatively impact sales due to the strong US Dollar</li>
</ul>


The recent decline in crude oil has resulted in optimism WDFC’s gross margin would improve. There is a delay before WDFC sees a benefit/impact from the price of oil
We continue to maintain our viewpoint of WDFC experiencing slower demand for its products from consumers and retailers holding back on orders
WDFC’s exposure to international markets could negatively impact sales due to the strong US Dollar


WDFC: Expectations Set for Disappointment

<ul>
<li>We are initiating coverage of WD-40 Company (WDFC) with a Sell Rating and $88 target.</li>
<li>We believe WDFC is prone to an earnings decline stemming from higher input costs and the Company’s first in first out accounting practice.</li>
<li>People are no longer staying indoors. The squeaking door is not bothering anyone like it used to. WDFC benefited from people staying home during pandemic. Now inventory is rising</li>
</ul>


We are initiating coverage of WD-40 Company (WDFC) with a Sell Rating and $88 target.
We believe WDFC is prone to an earnings decline stemming from higher input costs and the Company’s first in first out accounting practice.
People are no longer staying indoors. The squeaking door is not bothering anyone like it used to. WDFC benefited from people staying home during pandemic. Now inventory is rising


WDFC: Spraying on a Sell Rating, Initiating

United States

WD-40 Company manufactures and markets multi-purpose lubricant products and heavy-duty hand cleaners.  The Company's WD-40 acts as a lubricant, rust preventative, penetrant, cleaner, and moisture displacer.  WD-40's 3-IN-ONE Oil is a drip oil lubricant that allows precise application. The Company also manufactures Lava heavy-duty hand cleaner and other household cleaning products.

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WD-40 Company (WDFC US)

WDFC: Slippery Times for the Stock

WDFC's accounts receivable increased faster than its sales and its inventory balance. Unit volumes continue to remain negative, and management is...

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WDFC: The Floodgates of Inventory

WDFC's inventory balance continues to march higher reaching $119.1M. There is no timing of when inventory would actually decline with management...

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WDFC: Negative Free Cash Flow

WDFC's latest quarterly results pushed its fiscal year free cash flow to negative. WDFC continues to carry increasing rate of inventory with...

BWS Financial Inc

WDFC: Expectations Set for Disappointment

The slower consumer spending environment has resulted in many retailers managing their inventory levels to a greater degree. WDFC's ability to...

BWS Financial Inc

WDFC: Spraying on a Sell Rating, Initiating

WDFC uses a first in first out account methodology for its inventory, which makes it prone to further gross margin impact as the balance has...

BWS Financial Inc

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