WD-40 (NASDAQ:WDFC) reported earnings for the first quarter yesterday. Is the company behind the famous brand a viable investment idea right now?

You can see the full rundown on the earnings in our Fool by Numbers, but here's a summary to refresh your mind. Net sales increased 7%, while operating income fell a whopping 23%, to $9.6 million. Net profit dropped 24%, and diluted earnings per share dived 26% to $0.33.

Well, that's not good. What happened? In a nutshell -- costs and expenses. While gross profit went up for the quarter, operating expenses related to selling, general, and administrative obligations rose to $19.1 million from $16.4 million. Marketing expenses jumped to $5.6 million from $3.3 million. The company believes that support of its new products is worth the short-term GAAP hit. There is logic to this thinking, since a consumer products business does need to continually innovate and broaden its portfolio over time to grow the value of its overall brand equity.

Sales increased 29% in the European territory. The Asia/Pacific region grew its top line by 23%. Sales of household products in the United States were weak, however, driving a decline of nearly 7% for brands such as Carpet Fresh and Spot Shot. Global revenues of the company's flagship lubricant were strong. And speaking of global, WD-40 plans to invest in a direct operation in the all-important China marketplace.

While the GAAP numbers may seem disconcerting, the cash flow picture looks brighter. Net cash from operations increased more than 15% to $14.3 million. Capital expenditures amounted to only $0.6 million -- that leaves a lot of free cash behind. In fact, it can be seen that the quarterly dividend obligation of $3.7 million was easily met. WD-40 recently announced that its quarterly dividend would be hiked to $0.25 per share, good for an increase of 14%.

When I last covered WD-40, I mentioned that it wasn't the first company to come to mind -- for me at least -- when it comes to consumer-product concerns. Businesses such as Procter & Gamble (NYSE:PG), Clorox (NYSE:CLX), and Colgate-Palmolive (NYSE:CL) might be higher on the list of potential investment ideas. Two negative issues for me were WD-40's dividend history -- which had been stagnant in the past -- and the erosion of its margins.

I suppose there would be some justification in feeling a bit more bullish on the company now, since it is currently yielding 3% and it has given shareholders a double-digit dividend increase. To be certain, I like that aspect of this story; I also like the company's international results and the idea of investing in China. I don't, however, necessarily enjoy the long-term sales decline and the continued pressure on margins, as detailed in Rich Smith's Foolish Forecast. While the gross profit margin remained stable at 47.9% this quarter, both the operating and net margin metrics continued the negative trend. I'd continue to look at some of WD-40's competitors as better places for investment dollars. One thing that would make me more interested is if the yield increased significantly; for now, I wouldn't be inclined to add WD-40 to a portfolio.

Further Foolish fun with WD-40:

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Fool contributor Steven Mallas owns none of the companies mentioned. As of this writing, he was ranked 3,579 out of 19,594 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.