WD-40 Company Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Is WD-40 Company a Top Scorer Stock based on the Dividend, High-Growth-Investing or Leverman Strategy?
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $2.57b | Revenue (TTM) = $674.68m
Market Cap = $2.57b | Estimated Revenue = $694.43m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $2.61b | Revenue (TTM) = $674.68m
Enterprise Value = $2.61b | Forward Revenue = $694.43m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
WD-40 Company Stock Analysis
Analyst Opinions
11 Analysts have issued a WD-40 Company forecast:
Analyst Opinions
11 Analysts have issued a WD-40 Company forecast:
WD-40 Company Events
Past Events
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AUG
19
40 Company - Special Call - WD-40 Company
about one month ago
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JUL
9
Q3 2026 Earnings Call
3 months ago
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APR
9
Q2 2026 Earnings Call
6 months ago
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JAN
8
Q1 2026 Earnings Call
9 months ago
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DEC
12
40 Company - Shareholder/Analyst Call - WD-40 Company
10 months ago
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OCT
22
Q4 2025 Earnings Call
11 months ago
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StocksGuide Free
WD-40 Company — 40 Company - Special Call - WD-40 Company
1. Question Answer
Welcome, everyone. I'm Linda Bolton-Weiser, Senior Analyst at Water Tower Research, and I'm pleased to be hosting today the management team of WD-40, ticker symbol WDFC. And today, we have for our fireside chat, we have CEO, Steve Brass; and CFO, Sara Hyzer.
Before we get started, I would like to point out that the company's safe harbor statements can be found at www.wd40company.com. Also, this fireside chat may not be reproduced or a written transcript distributed without the express written consent of Water Tower Research.
Now let's get started. So we'll start out with their long-term growth algorithm that the company -- so that long-term growth algorithm has a few key elements, including targeting maintenance product sales growth in the mid- to high single digits, gross margin above 55% and EBITDA to grow faster than sales. So to achieve these objectives, Steve and Sara and your team, your strategy has 4 must-win battles, and you've been very consistent with this strategy and what these are. So today, I thought we could frame our conversation around those 4 must-win battles to start out and how they support your growth algorithm. So why don't we start with must-win battle #1, which is to grow WD-40 Multi-Use Product through geographic expansion. Maybe you can tell us about your approach to global expansion and give us a little overview of some of your highest growth markets.
Sure. Thank you, Linda, and hello to everyone. It's great to be with you all today. So yes, I think it starts with a really strong position. We have a fortress position in our U.S. market. Our U.S. market is about 35% of our global sales. And so that provides us a stable platform from which to expand internationally. If you look at our U.S. market over the past 5 years, it's had a compound annual growth rate on maintenance products of in the order of 6% or 7%. And so the U.S. continues to grow. We still have growth opportunities in the U.S. And actually, in dollar terms, the U.S. has still been the fastest-growing market, growing about $55 million over the past 5 years heading into this fiscal year.
Outside of the U.S., about 65% of our business is already international. We are truly a global business. Our brand, WD-40 brand, is available to buy in 176 countries and territories across the world. And so we're laser-focused on our top 20 growth opportunities around the world. So outside of the U.S., we have growth opportunities just about everywhere you can look. So a very strong track record already in Latin America, and we've pretty well tripled our business in Latin America over the past 5 or 6 years, but still strong growth in Latin America. And in Europe and Asia, we pretty well have growth everywhere we look. So -- the European direct markets, which I used to manage back in the days, are about a further 30% of our business. And so the U.K., the France, the Germany, the Spain, et cetera, the Italy.
Those businesses are growing at very solid, predictable single to high digits, sometimes into the double-digit growth rates. And so that complements the U.S. market. And then looking kind of further afield at a lot of the emerging markets where we're consistently growing in places like China, which is our single largest growth opportunity, well into double digits. We have a great team.
We have a direct business in China of about 60 people. It's now our third largest market globally after the U.S. and France and delivering very strong growth. And then our second largest opportunity being India, where we actually partner with a local company in India, a business called Pidilite, who are a fantastic strategic partner for us. And we've been achieving super strong rates of growth in India as well, over 20%.
India is already our second largest market in unit terms, and so growing very, very quickly and a market one day that could rival the U.S. in terms of scale. And so you then overlay that with very strong growth opportunities in a lot of emerging markets. And so places like Indonesia and Turkey, which are growing in very high double-digit growth. And so overall, a mid- to high single-digit growth target, but with very fast growth available in a lot of these emerging markets.
Great. Thank you, Steve. So in terms of your must-win battle #2, this has to do with growing your sales and gross margin through the premiumization of WD-40 Multi-Use Product. Can you talk about what that is, what that entails and the economics of that premiumization? And how much opportunity do you still have here?
I'll go ahead and take that one, Linda. So for us, premiumization is really about improving the end user experience, and it also has the benefit of strengthening the economics of the business. These products, and of course, I brought products to show, the 2 products that we talk about when we talk about premiumization is the Smart Straw. So the biggest complaint -- end user complaint that we get is losing the straw on the classic can. So the Smart Straw solves that issue. So Smart Straw is one. And then the other one is the EZ-REACH. So the one with the flexible straw. Both of these products solve real user -- end user pain points and make the product, in this particular case, easier to get to a particular point and can save end users, particularly professionals, time and ultimately money.
This allows us to offer these higher-value formats and stronger gross margins and also deepens our brand loyalty. So year-to-date, these 2 formats sales combined were up 19% over the prior year and represents about 50% of our WD-40 Multi-Use Product sales. So really seeing good traction in those formats. In unit sales, though, our premium formats make up 40% of our MUP sales globally. And so we have a meaningful runway ahead of us for growth there.
For context, in a market -- a developed market like the U.S., we see about 80% of our sales in those premium formats. But then conversely, on the other side, in our emerging markets, the number is -- can be in the low single digits. We just recently unlocked or we are close to unlocking manufacturing capacity in China. And so really, that gives us the opportunity to bring the Smart Straw can into both China and our Asia marketing distributors, really in a region that has our lowest penetration of those formats.
From a gross margin standpoint, from a revenue standpoint, these can -- this sells at a 30% uplift to the classic can and the EZ-REACH sells at a 45% uplift, and it doesn't cost us either 30% or 45% more to make. So both of these are great margin enhancers for us. We continue to target our annual growth rate for these formats at 10%, supported by expanding distribution. And so this opportunity is not just to trade customers up, but it's really to make the brand more relevant and really to bring a more useful can to our end users.
Great. Thank you, Sara. Yes, that's a really powerful part of your strategy. So in terms of your must-win battle #3, this has to do with your WD-40 Specialist product line. Can you kind of tell us all what those products are and what the growth opportunity is that you see with Specialist?
Sure. So the WD-40 Specialist line was conceived about what, 12, 13 years ago. And it was really leveraging the core brand equity that we've built now in many places around the world. And whereas the WD-40 core product, the multi-use product that most folks will be familiar with, which is really the kind of Swiss Army knife, if you like, of general purpose maintenance products.
Specialist products are designed for professionals who seek a high degree of performance from Specialist products. And so things like high-performance penetrants or high-temperature lubricants, silicone sprays, cleaning and degreaser products, which a specialist or a professional would turn to, to solve more complex kind of maintenance problems. And so the Specialist range is currently our fastest-growing range as a sub-brand. It's been growing at a compound annual growth rate of about 14%.
But we're only just really getting going. It's -- we have an identified opportunity of around $600 million of growth on the Specialist range. And we're only selling about 90% of our sales to 10 countries. And so we really have the opportunity to take the Specialist range around the world to many of the countries where we've already introduced and have built the WD-40 core brand successfully. And so that is a very, very fast driver of growth.
It also performs extremely well online. And so it's really fueling strong e-commerce growth for us as well. And overall, between the 2, right, between the core product and the WD-40 Specialist range, it gives us an opportunity to take a category approach with our retail partners. And so protecting and maintaining the core strength of the core product, which typically accounts for perhaps 60% to 65% of the entire category sales, and surrounding and protecting the core brand, but also taking market share on those specific product areas from established competition around the world. So a very successful and fast-growing strategy.
That's a good segue into your fourth must-win battle, which has to do with digital capabilities. So your goal is to accelerate those capabilities in brand marketing and e-commerce, which is still relatively small for you, I believe, less than 10% of sales. Can you talk about that fourth must-win battle regarding digital capabilities?
Sure. So we do view digital as an accelerant across all of our other must-win battles, not necessarily as a stand-alone channel strategy. As you mentioned, Linda, e-commerce is less than 10% of our sales to date, but it is our fastest-growing channel. And year-to-date, we've seen our e-commerce sales up 22%, led by the U.S. and China. This must-win battle is both transactional, right, through the e-com and brand building. On the commerce side, we are improving our content quality, our search, our availability, our ratings and reviews and our execution with our key pure-play and omnichannel players.
We do not sell direct to consumers. We do -- 100% of our sales are through retail or through these online pure-play and omnichannel partners. On the brand side, right, we work with a lot of the influencers. We work through social media, video and digital education helps us reach end users at scale all over the world. And it really allows us to show them new uses, new formats that I talked about with our premiumization strategy and the new solutions, really bringing in that Specialist line. As Steve mentioned, Specialist does extremely well online because you can really serve up a specific solution when people are searching for something specific.
Digital also helps us premiumize because it gives us a better platform to explain why the Smart Straw and the EZ-REACH and the Specialist products are worth that trade-up. What people don't always appreciate is actually how digital the brand is online. For a 70-year-old brand, the amount of engagement that people have online around WD-40 is really not -- no other competitor can even touch the amount of online content that we have. Our end users love to share uses. They love to tell stories about how they use our products. And that peer-to-peer sharing is really invaluable. And again, no one else in our category has that. So we leverage our digital tools to really meet millions of users that are going online and now more -- and more than ever, they're going online in their path to purchase, and that's how we connect with our end users.
Great. Thanks, Sara. So switching a little bit more to immediate maybe issues that the company faces in the macro environment. You have several key input costs that go into the cost of the can of WD-40. Those include petroleum-based specialty chemicals, tin cans and plastic resin. So we've seen obviously a lot of volatility in oil that relates to a key input cost of yours. Can you explain how you manage through that and talk about your ability to take pricing where needed?
Sure. So let's talk about the cost of the can overall. So roughly 30% to 35% of the overall cost of our can is subject to that monthly spot pricing volatility that you mentioned. And it's tied to specialty chemicals, primarily solvents and base oils. We manage our input cost volatility usually within a range. We're usually comfortable within a range of it coming up a little bit, and it always comes back down. It usually flows within a range that's manageable. And so we don't -- we're not chasing price just by some within -- when those costs are within a band that we're comfortable with.
On the flip side, the other part of our cost structure that is less volatile relates to tinplate cans and manufacturing fees, which are longer-term contracts. And so specialty chemicals is only one piece of the equation. Those specialty chemical costs can move differently than the headline oil prices that we typically point investors to monitor at least that subset of our input costs. And recently, we have seen those, we call it decoupling. And so the cost of our input -- the cost of our input costs have gone up slightly higher, I want to say slightly higher than the cost of what you've seen in those trading markets.
In the near term, we are expecting there to be some pressure on our gross margin. We did reflect that in our most recent guidance that we put out between 54.5% and 55.5% is what we're expecting for the full year. So still in line with our 55-plus targets, but we will see it have an impact on us in the fourth quarter. We have taken price. We mentioned that as part of our third quarter earnings call. We have already taken some price actions in both Europe and Asia, and we are continuing to evaluate whether or not additional pricing actions are needed.
From a pricing standpoint, the strength of the brand, our high awareness and really the value that we deliver to end users gives us the ability to take reasonable price when necessary. And given the stickiness that we expect in the near term, we did adjust -- we did move on those price actions because we do believe that the input costs will be sticky for a period of time. We are thoughtful about the timing and our customer partnerships, but we have been very clear that we will defend our gross margin. It took us a lot of time to get back to the 55%. And so we want to make sure that we are able to hold that going forward.
Great. That's a great explanation. So can you talk about where your products are manufactured? And you've taken a lot of actions and continue to take actions to further strengthen your supply chain. Can you talk about that, please?
Sure. So we have a decentralized supply chain. And so we manufacture with broadly 20 external partners around the world. And so that gives us a lot of flexibility and actually enables us. And so in recent times, we've been able to move manufacturing and product manufacturing around, based upon the recent disruptions. And so it really gives us an optimal kind of cost base plus flexibility. And so it also helps us offset things like tariffs. And so because we're not shipping large amounts of product across borders by manufacturing locally, it's helped us offset tariffs and really is a big part of us being very flexible in market.
We've also put in a global supply chain team over the past few years that have really helped us figure out where next -- where do we need to be manufacturing next. And so recently, we're in the process of opening up manufacturing in Thailand to give us another option. We already manufacture in Asia, in China and in Australia. And so just adding another kind of opportunity there to spread that across Asia Pacific. And then the global supply chain has also been working on cost savings.
And so a couple of years in now, they have an annual program of cost savings, really leveraging the kind of global brand that we have and the global business position that we have and really sourcing much more smarter for the first time in terms of -- as opposed to just kind of like decentralized sourcing.
Looking at the big opportunity for cost savings. And those cost savings are quite considerable now. Each and every year, we have a program of cost-saving opportunities, which the team are executing really well in partnership with the trading bloc supply chain teams. And that's helping us offset the impact of tariffs or of the more recent disruption in quite a significant way.
Thanks, Steve. So as you just mentioned, you have an asset-light model and your CapEx is relatively low as a percentage of revenue. And therefore, you've been generating annual free cash flow that's pretty strong. I calculate before dividends of around $80 million in the last few fiscal years. So that's quite a bit of free cash flow. Can you talk about your capital allocation priorities?
Sure. So our capital allocation approach is really consistent and reflects what you mentioned, Linda, that asset-light model. The first of our focus is really on investing back into the business. So we invest primarily in brands, people. I mentioned we talked earlier about our digital capabilities. Steve just went through all the supply chain resilience and the productivity initiatives that we have. So our first focus is reinvesting back into the business for that growth.
Because we outsource the manufacturing and distribution, as Steve just walked through, our capital requirements are modest. So we target around 1% to 2% of net sales, and that really allows us to generate strong free cash flow that you just highlighted. So our second focus is really on returning that cash to stockholders, and we primarily do that through the use of dividends and share repurchases. We have paid dividends without interruption for more than 40 years. And our annual dividend target is approximately 50% of net income, and we've been well above that in the last few years.
We also like to be in a position where we can increase that dividend incrementally on an annual basis. We also then use share repurchases as our -- as a vehicle of returning capital to investors. And we do that more opportunistically. So at a minimum, we want to make sure that we're buying back what we're issuing every year, but we've been well in excess of that in the last few years. This year, we've spent $22.5 million on share repurchases year-to-date through the third quarter. And just recently, our Board authorized a new share repurchase plan of up to $100 million beginning next fiscal year.
We have a lot of flexibility on our balance sheet. Our leverage is low. And so that gives us a lot of optionality to invest both organically, which I mentioned, allows us to manage through the volatility that we're seeing right now and it gives us that flexibility if and when there is something strategic for us to go after that fits within our strategy. So overall, again, our priorities are to fund growth first. We'll protect that balance sheet, and then we really do return our excess cash to stockholders consistently over time, but in a disciplined way.
Great. Thank you, Sara. So I guess investors kind of might be wondering about the changing world we're seeing, the growth of -- and importance of technology, arguably, AI, all these different technology developments. Can you talk about any megatrends that would either decrease or increase demand for your core multipurpose maintenance products?
Sure. I'll start with one that will decrease demand, which is kind of well documented, right? So the rise of EVs around the world, EVs have much fewer moving parts. And so as that grows as a share of overall automotive fleet, then that side of the business will decline over time. Our automotive business is about 13% of our business today. And if we look out, and this thing is going to play out over 15 -- 10, 15 years, maybe even longer, depending on EV adoption. And so as that kind of trend increases, then there will be a reduction there.
Although in some markets like China, we didn't really have an automotive business in the first place to lose. And so you have to put that caveat out that a lot of these emerging markets are actually just going straight to kind of the EV side of things. That trend, which is well documented, I think, and accepted by investors and understood, is going to be considerably offset by lots of growth avenues. And so I mean you mentioned AI data centers, right? That is a use case for our products, both the Multi-Use Product and for contact cleaners, which are a fast-growing area as well as for products like white lithium grease.
So AI data centers, drone technology around the world, particularly in agriculture is a massive growth area for us. And so tapping into that growth opportunity, again for the core product and for the more Specialist products. Growth areas like robotics, automation also need significant lubrication, et cetera. And so lots of growth opportunities across robotics, automation, drone technology. And actually, another big kind of trend out there is aging capital equipment. And so older equipment tends to need and even the automotive fleet today in the medium term is aging around the world. And so they are trends that are also kind of driving further kind of consumption. And then you've got some of the other big ones, right, growth of emerging markets. And so we're certainly tapping into that.
You heard examples where we're growing very, very strongly in places like Indonesia and Turkey, where those economies are storming ahead. And then sustainability is another big one. And so there's a trend out there for particularly younger consumers, their preferences for sustainable products is changing, and so it's a generational thing. But then also with this tendency to kind of repair and not replace is a big kind of trend that we see out there. And one of our most successful global campaigns we run is the Repair Challenge, which invites end users to send us their stories and projects of how they're kind of keeping stuff out of landfill by renovating projects. And so that's something that we tap into and is a very powerful force for the future in terms of sustainable kind of attitudes changing.
Great. So finally, just to wrap things up, I guess I had a question about recent company developments. You've announced fairly recently that Sara will be transitioning out of the CFO role to become President of the Americas. Maybe you can just update us on where you are in that process of identifying a replacement and where we stand on that.
Sure. And so yes, Sara has been -- I mean, Sara and I both started at the same time 4 years ago in our current roles, and she's been a wonderful business partner to me and to the business in terms of being a super effective CFO and business partner. And so I'm really excited for her now as she takes on responsibility for leading our Americas team and driving almost half of our global revenues, 45% of our global revenues. And so really excited for her.
So we have gone out and we've looked externally. We are looking for an experienced public company CFO to replace Sara. And so we're currently in the middle of that process. And once we have some news, we will share it with investors, but we're very optimistic about the quality of the candidates we've been able to identify. Sara is very hard to replace, but we're very optimistic that we'll be able to find a high-caliber CFO to replace Sara. And then Sara will transition out of her current role probably in early November, and the new CFO would begin hopefully at that time.
Sounds good. All right. Well, I think that wraps it up here. We've had a great conversation. You've really covered all the bases and given us a lot of really insightful information. So thank you for joining us today, CEO, Steve Brass; and CFO, Sara Hyzer. Thank you.
Thank you, Linda.
Thank you.
More information on the company can be found on the company's website and our research can be found at www.watertowerresearch.com. The views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the written consent of Water Tower Research and should not be considered research nor a recommendation. WTR is an investor engagement firm, not a licensed broker, broker-dealer, market maker, investment bank, underwriter or investment adviser. Additional disclaimers can be found at watertowerresearch.com.
WD-40 Company — 40 Company - Special Call - WD-40 Company
Fireside chat: WD‑40 reiterates mid‑to‑high single‑digit growth, pushing premium formats, Specialist line and digital while defending margins amid input cost pressure.
🎯 Key Message
- Core thesis: WD‑40 targets mid‑to‑high single‑digit maintenance product sales growth, gross margin above 55%, and EBITDA growth faster than sales via geographic expansion, premium formats, Specialist products and stronger digital execution.
- Durable moat: A 70‑year brand with global reach (176 countries) and high awareness supports pricing and channel leverage.
⚡ Strategic Highlights
- Geographic push: U.S. is ~35% of sales; China and India are top growth markets (China direct team, India via partner Pidilite), Latin America and select emerging markets growing strongly.
- Premiumization: Smart Straw and EZ‑REACH formats increase user utility and margins (Smart Straw ~30% price uplift; EZ‑REACH ~45% uplift) and represent ~50% of WD‑40 Multi‑Use Product revenue.
- Specialist line: Professional‑grade lubricants/cleaners growing ~14% CAGR with an identified ~$600M white‑space opportunity and strong e‑commerce traction.
- Digital: E‑commerce <10% of sales but fastest‑growing channel (+22% YTD); digital drives education, premium trade‑ups and peer sharing.
🔭 New Information
- Margin outlook: Company expects FY gross margin ~54.5%–55.5% and anticipates some Q4 pressure from specialty chemical input cost stickiness.
- Actions taken: Pricing implemented in Europe and Asia; added China manufacturing capacity and opening Thailand manufacturing to diversify supply.
- Corporate moves: CFO Sara Hyzer will move to President, Americas; external CFO search underway; Board approved up to $100M new buyback program.
❓ Analyst Q&A
- Input costs: Specialty chemicals (solvents/base oils) drive monthly volatility for ~30–35% of can costs; management monitors bands and has taken selective pricing.
- Pricing & margins: Management signaled willingness to defend 55%+ gross margin via targeted price actions while balancing customer relationships.
- Supply resilience: Decentralized, outsourced manufacturing (20 partners) and new Thailand/China capacity reduce tariff/shock risk and enable cost‑saving programs.
⚡ Bottom Line
WD‑40 presents steady, brand‑driven growth: premium formats and the Specialist range offer margin expansion and upside, digital and international expansion sustain volume, and disciplined capital return continues. Near‑term margin risk from volatile inputs exists, but management is taking pricing and supply actions to protect margins while pursuing long‑term growth.
WD-40 Company — Q3 2026 Earnings Call
1. Management Discussion
Good day, and welcome to WD-40 Company's Third Quarter Fiscal Year 2026 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]
I will now turn the call over to Wendy Kelley, Vice President, Stakeholder and Investor Engagement. Please go ahead.
Thank you, and good afternoon. Thank you for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass; and Vice President and Chief Financial Officer, Sara Hyzer.
In addition to today's discussion, we encourage investors to review our earnings presentation, press release and Form 10-Q for the period ending May 31, 2026, available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be posted shortly.
We will discuss certain non-GAAP measures today, Reconciliations to GAAP results are available in our SEC filings and earnings materials. Today's call also includes forward-looking statements. Actual results may differ materially. Please refer to the risk factors in our SEC filings for more information.
Finally, please note that all information presented is current as of July 9, 2026, and we undertake no obligation to update forward-looking statements.
With that, I'll turn the call over to Steve.
Thanks, Wendy, and thanks to everyone for joining us today. I'll begin with an overview of our third quarter performance and progress against select areas of our 4x4 strategic framework. Sara will then review our financial results and outlook, and we'll conclude with your questions.
Third quarter consolidated net sales increased 24% year-over-year to $195.1 million. Maintenance products, which represented 97% of total net sales increased 26% to $189.7 million and were up 22% on a constant currency basis, exceeding our long-term growth expectations and setting a new record for the company.
Sales of maintenance products in our direct markets increased 28% year-over-year, while sales through our marketing and distributor markets increased 18%. We'll discuss the drivers of this performance in a moment.
Gross margin increased 40 basis points year-over-year to 56.6%. We're encouraged by this momentum and remain focused on the levers within our control. Although we expect gross margin to experience some temporary pressure from external cost factors in the coming months, we are confident that the actions we've taken position us well for recovery thereafter. We will vigorously defend our gross margins and may need to take further action in fiscal year 2027 as required. Sara will provide additional perspective on our outlook in a moment.
Now let's review third quarter sales results by trade block. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the third quarter of last fiscal year. Sales in the Americas increased 29% year-over-year to $101.2 million, driven by a 31% increase in maintenance products to $98.3 million. This growth was driven primarily by increased sales of WD-40 Multi-Use Products in the U.S. and Latin America, where sales increased $17.2 million and $2.6 million, respectively.
Strong performance of WD-40 Multi-Use product in the U.S. was driven by several factors, including expanded distribution, robust e-commerce sales and strong promotional activity, including a high-impact promotional campaign, featuring a limited edition can collaboration with Disney Entertainment and the Home Depot.
In Latin America, sales increased across Brazil and Mexico, supported by higher sales volume in Brazil and a combination of sales growth and favorable foreign currency translation in Mexico. WD-40 Specialties sales increased by 22%, driven by higher U.S. volumes, reflecting new distribution gains, strong placement with large retailers and growth in online sales.
Home care and cleaning product sales declined 9%, reflecting our strategic focus on higher-margin maintenance products. Sara will give an update on our U.S. home care and cleaning business later in the call.
Looking ahead, we expect low double-digit growth in maintenance products in the Americas for fiscal year 2026.
Turning to EMEA. Sales increased 17% year-over-year to $66.6 million, reflecting higher sales volume in both direct and distributor markets as well as favorable foreign currency exchange rates. On a constant currency basis, sales were up 10%. In our EMEA direct markets, sales increased by $6.6 million, driven by double-digit growth in maintenance products across key markets including Iberia and DACH. In these regions, sales and maintenance products rose by $2.2 million and $1.5 million, respectively, supported by strong commercial execution, promotional activity and merchandising.
In our distributor markets, sales increased by $4.4 million, reflecting a strong rebound after several softer quarters and positive impact of completed strategic distribution changes. Growth was driven by higher sales volumes across key markets, including Saudi Arabia and the United Emirates, supported by the timing of customer orders and increased inventory build within the region.
In India, sales increased $1.6 million, primarily due to favorable order timing and foreign currency impacts.
Sales in the EMEA region also benefited from some advanced buying as customers proactively manage inventory levels and the uncertainty around product availability, following geopolitical developments in the Middle East. We also experienced some advanced buying ahead of price increases, which became effective in early Q4. As a result of both of these factors, a portion of fourth quarter demand shifted into the third quarter.
WD-40 Specialist sales increased 31%, driven by growth across most of our direct and distributor markets. Growth was led by France and Iberia by strong marketing programs and new product introductions supported higher sales.
As a reminder, the divestiture of the U.K. home care and cleaning portfolio in fiscal 2025 reduced third quarter sales by $1.1 million.
Despite ongoing uncertainty in the Middle East, we expect maintenance product sales in EMEA to increase by low to mid-single digits in constant currency and high single digits in reported currency in fiscal year 2026.
In Asia Pacific, sales increased 24% year-over-year to $27.3 million and were up 18% on a constant currency basis. Growth was broad-based across the region, driven primarily by China and Asia distributor markets, which increased $3 million and $1.4 million, respectively.
In China, growth was driven by higher sales volumes, supported by promotional and marketing programs, including online influencers and expanding distribution across online retail and industrial channels. Sales also benefited from advanced buying ahead of planned price increases later in the year, which shifted a portion of expected fourth quarter demand into the third quarter.
In our Asia distributor market, sales increased driven by promotional programs, particularly in the Philippines, Indonesia and Malaysia.
WD-40 Specialist sales increased $1 million or 32%, driven by growth across the region with the strongest gains in China where higher volumes were supported by promotional and marketing programs and expanded distribution. We remain encouraged by regional momentum and expect high single-digit to double-digit growth in maintenance products in Asia Pacific for fiscal year 2026.
Now let's talk about our Must-Win Battles, a core element of our strategy to accelerate revenue growth in maintenance products. Starting with Must-Win Battle, #1 lead geographic expansion. Year-to-date sales of 40 multiuse product increased 13% to $398 million, driven by solid performance across all 3 trade blocks. We are seeing strong progress across key markets with year-to-date growth of 20% in the U.S., 21% in China and 27% in Iberia, we continue to execute from a proven playbook, expanding distribution and sampling programs to build awareness with end users across 176 countries and territories and 62 trade channels. We estimate the attainable market to WD-40 multi-use product to be approximately $1.9 billion. For fiscal year '25 sales of $478 million, we believe there remains a significant long-term growth opportunity.
Next is Must-Win Battle #2, accelerating premiumization. Year-to-date sales of WD-40 Smart Straw and easy reach when combined, increased 19% and now represent approximately 50% of WD-40 multi-use product sales. These premium formats strengthen brand loyalty, support gross margin expansion and provide meaningful runway for continued growth. We continue to target annual growth of more than 10% in premiumized products.
Our third Must-Win Battle is driving WD-40 Specialist growth. Year-to-date sales increased 22% to $72.9 million. We estimate the attainable market for WD-40 specialist at approximately $665 million. The fiscal year '25 sales of $82 million were still in the very early stages of capturing a significant growth opportunity. Today, 90% of our WD-40 specialist sales come from just 10 markets, highlighting a significant opportunity to expand through geographic growth and product innovation. In the third quarter, we launched our first bio-based lubricant across several European markets.
Whilst it's still early, we are very encouraged by the initial results and look forward to rolling out the product across additional markets in the coming quarters. We continue to target annual growth of more than 10% on WD-40 specialists as we expand our portfolio of purpose-built maintenance solutions.
Our fourth Must-Win Battle listed turbocharge digital commerce. Year-to-date e-commerce sales increased 22%, led by the United States and China. E-commerce pure-play remained 1 of our fastest-growing channels. Across digital, we're strengthening execution on key platforms. Our social media and video channels are driving much of our digital reach, helping us connect with both new and existing end users in more engaging ways. As a result, for reaching and engaging more end users than ever before. Digital commerce continues to support each of our Must-Win Battle by improving access to our products and increasing brand visibility and relevance.
We'll now move to our strategic enablers, which support operational excellence across the business. Zig Ziglar once said, "You don't build a business, you build people and then the people build the business." That philosophy is core to WD-40 Company and is the foundation of our people-first mindset. Our people are remarkably resilient, agile and innovative. Over the past 5 years, they have navigated a series of external challenges from the global pandemic to geopolitical uncertainty while strengthening cost discipline, implementing new systems, enhancing how we serve customers and leveraging our globally decentralized supply chain network all in the face of significant uncertainty.
Last month, we announced a planned leadership transition to build on the strong foundation we have in place. As part of this transition, we introduced new roles to strengthen alignment and accelerate strategy execution, ensuring we have the right structure and leadership in place to support continued growth. These new roles include Chief Strategy and Innovation Officer and Chief Brand and Marketing Officer, and will be filled by experienced the WD-40 company leaders transitioning from within the company. These newly created roles are designed to enhance collaboration, accelerate innovation and proactively harness AI and digital technologies to drive growth and advance the company's long-term strategy.
We also announced that Sara Hyzer will transition to President of our Americas division, reflecting our commitment to developing leaders from within. Sara will continue to serve in her current role during the transition until a successor is named. These changes are designed to support continued growth and position the business for long-term success.
With that, I'll now turn the call over to Sara.
Thanks, Steve. I appreciate the opportunity to take on my new role and excited about what lies ahead for our Americas business. In the meantime, I remain fully focused on my current responsibilities and on delivering value for our stakeholders.
Today, I will review our third quarter performance against our business model, introduce enhancements we are making to further strengthen it, provide an update on the divestiture of our Americas home care and cleaning business and discuss our fiscal year 2026 guidance and key assumptions.
We were encouraged by our third quarter performance with net sales up 24% and operating income growing 47% and reflecting the benefits of scale in our business. The difference between those growth rates highlights the leverage in our business model as higher revenue flowed through to profitability. As expected, results strengthened as the year progressed, with improvement across both the top and bottom line.
Turning to our business model. which expresses gross margin, cost of doing business and adjusted EBITDA as a percentage of revenue. This quarter, we are seeing the benefits of higher revenue and scale reflected across the model. Starting with gross margin, performance remains strong. Third quarter gross margin was 56.6%, up 40 basis points year-over-year. This increase was driven by 80 basis points from lower aerosol cans and selfies as well as 60 basis points from favorable sales mix and other miscellaneous mix, partially offset by 60 basis points of increases in other input costs.
Third quarter gross margin performed as expected despite external cost pressures, driven by recent geopolitical developments, reflecting the benefit of higher inventory levels entering the quarter. We expect those costs to move through our production and inventory cycles over the next several months.
In response, we have already implemented pricing and cost-saving initiatives across many regions, positioning the business to realize the benefits of these actions with most of the impact expected in fiscal year 2027.
As these actions take hold and the external environment stabilizes, we anticipate gross margin improvement over the course of fiscal year 2027.
While the exact timing and pace of that recovery are difficult to forecast, we believe we are well positioned to navigate the environment strengthen profitability and drive continued progress.
Turning to cost of doing business, which represents operating expenses adjusted for certain noncash items. It decreased to 34% of net sales from 38% last year, reflecting operating leverage from higher revenue and scale. Advertising and promotional investment increased to 6.1% of net sales from 5.8% last year, driven primarily by higher promotional activity in the U.S. We still anticipate being around 6% of net sales for the full year, which is in line with our guidance.
Finally, adjusted EBITDA margin increased to 23% from 20% last year, reflecting operating leverage from higher revenue and scale.
Now I'd like to provide an update on the Home Care and Cleaning divestiture. Last fiscal year, we announced our intent to sell these brands in the Americas and the U.K. We successfully completed the divestiture of the U.K. Home Care and Cleaning brands in August of 2025.
After extensive engagement with potential buyers, it became clear that the current macro environment was not conducive to divesting of these brands as a bundle. As a result, we are no longer actively marketing the experience for the foreseeable future and have reclassified these assets as held for youth. We continue to view these home care and cleaning brands as noncore. We will remain open and opportunistic and are evaluating each brand individually should the right opportunity present itself. For the time being, we will manage these as harvest brands, expecting gradual top line decline while continuing to generate attractive returns.
As a reminder, the Americas household brands combined represent $12 million in annual sales, less than 2% of our global revenue. Consistent with accounting guidance, we resumed amortization and recorded $1.3 million in expense during the quarter related to prior periods when these assets were classified as held for sale.
Given the onetime nature of this catch-up expense, we are including this as a non-GAAP adjustment to help investors better evaluate the underlying performance of the business.
Additionally, this decision will impact our reporting in 2 other ways. First, we issued fiscal year 2026 guidance on a pro forma basis, excluding the home care and cleaning businesses to provide clear visibility in the performance of the core business.
With the reclassification to held for use, our fiscal year 2026 guidance now includes associated sales and earnings from these assets. which favorably impacts elements of our outlook. I'll discuss in more detail when I walk through our updated guidance for the year.
Second, our decision to retain the home care and cleaning business prompted us to reassess and sense, our long-standing 55/30/25 business model. As part of this reassessment, we developed our new enduring business model, which provides a disciplined framework for how we manage the business and create long-term value. It is anchored in 4 key drivers. Maintenance product sales growth targeted at mid- to high single digits. Gross margin targeted above 55%. Adjusted EBITDA growing faster than net sales and an asset-light model that requires minimal capital investment. Together, these drivers support strong outcomes, including returns on invested capital above 25%. Strong free cash flow conversion and a balanced capital allocation approach that prioritizes organic growth, dividends and share repurchases. The enduring business model was designed to drive leverage and long-term returns for stockholders that are reflecting our strength as the perpetual compounder. We will continue to report under the 55/30/25 model through fiscal year 2026 and transition to the enduring business model in fiscal year 2027 to better align our metrics with our long-term strategy.
Turning now to other key measures of financial performance. Let's review operating income, net income and earnings per share for the third quarter. Operating income increased 47% to $40.3 million with foreign currency being a tailwind for us. On a constant currency basis, operating income increased by 42%, primarily driven by higher sales and improved gross margin, partially offset by increased operating expenses.
Excluding amortization expense related to the reclassification of our home care and cleaning brands, non-GAAP net income was $31.5 million, up 50% to prior year. On a non-GAAP basis, diluted earnings per common share were $2.33, up from $1.54 in the prior year quarter.
Turning from how we measure performance to how we deploy capital. Our balance sheet remains strong and supports a disciplined approach to investing in organic growth and returning value to stockholders. Our capital allocation strategy remains a consistent foundation. On June 15, 2026, our Board of Directors authorized a new share repurchase program of up to $100 million. The program has no expiration date and the timing and amount of repurchases will be determined based on market conditions and other factors.
So let's turn to fiscal year 2026 guidance. As a reminder, our fiscal year 2026 guidance was originally provided on a pro forma basis. Excluding the Americas home care and cleaning business that was classified as assets held for sale. Following the reclassification of these assets, to held for use. The business has been incorporated back into our guidance, and I will walk through the specific impact to our guidance to help bridge those changes. We have also narrowed our guidance ranges based on our year-to-date performance and outlook. In addition, our guidance is provided on a non-GAAP basis and excludes the onetime amortization catch-up expense of $1.3 million recorded in the third quarter.
For fiscal year 2026, we now expect net sales in constant currency to be between $652 million and $667 million, representing growth of 6% to 9% and compared to pro forma fiscal year 2025 net sales of $614 million. This outlook includes approximately $12 million in net sales from assets recently reclassified as held for use. It also reflects a narrower guidance range, providing a more refined view of our expected performance for the remaining part of the fiscal year. Based on current exchange rates, we expect reported net sales to be between $675 million and $690 million, representing growth of 10% to 12% compared to pro forma fiscal 2025 net sales. Gross margin is now expected to be between 54.5% and 55.5%. This revised outlook incorporates a 40 basis point adjustment due to the reclassification of home care and cleaning brands, along with an additional 60 basis points from higher-than-expected cost increases. The company has implemented pricing actions and cost-saving initiatives, with the majority of the expected benefit of anticipated in fiscal year 2027.
Advertising and promotion investment remains projected to be approximately 6% of net sales. We now expect non-GAAP operating income to be between $107 million and $113 million, representing growth of 5% to 11% compared to pro forma fiscal 2025 results. This outlook includes approximately $2.9 million in operating income related to those assets recently reclassified as held for use. Our provision for income tax is now expected to be around 22.5%.
Finally, we expect non-GAAP diluted earnings per share to be between $6.05 and $6.35 based on an estimated 13.5 million weighted average shares outstanding. This outlook includes approximately $0.17 per share related to the assets recently reclassified as held for use and represents growth of 6% to 11% compared to pro forma fiscal 2025 results. Our guidance reflects a euro to U.S. dollar exchange rate assumption of approximately $1.17 in the fourth quarter. Actual results may vary as conditions evolve.
That completes the financial overview. Now I would like to turn the call back to Steve.
Thank you, Sara. In summary, what did you hear from us today? You heard that we delivered 24% net sales growth and 47% operating income growth, demonstrating the operating leverage inherent in our business model.
You heard that third quarter sales benefited from advanced buying due to market uncertainty as well as planned price increases later in the year, which shifted a portion of expected fourth quarter demand into the third quarter.
You heard that our must-win battles continue to perform well with solid double-digit year-to-date growth in geographic expansion, WD-40 Specialist, premiumized products and e-commerce.
You heard that our People First mindset remains central to how we operate, supported by leadership changes that strengthen alignment and support long-term growth.
You heard gross margin was strong at 56.6% and up 40 basis points from last year, while higher input costs are expected to pressure margins in the near term, pricing and cost optimization actions are underway, and we expect margin recovery of those benefits are realized. We will vigorously defend our gross margins and may need to take further action in FY '27 as required.
You heard that we decided to no longer actively market our Americas home granting brands and have reclassified these assets as held for use.
You heard that we're introducing our enduring business model framework designed to drive leverage and long-term returns to stockholders better reflecting our strength as a perpetual compounder.
And you heard that we're updating our guidance to incorporate the home care and leading business into our outlook and to narrow our guidance ranges based on our year-to-date performance and outlook.
Thank you for joining our call today. We'd now be pleased to answer your questions.
[Operator Instructions] Your first question comes from the line of Aaron Reed from Northcoast Research.
2. Question Answer
Congratulations on that front. I guess my first question really is, I was wondering if you could speak to how sustainable do you think margins being above 55% are. It seems like something that obviously you're shooting towards that kind of 1 year or 2 on what's the sustainability? Or how would you kind of speak to that?
Aaron, this is Sara. Thanks for that question. We had indicated at the end of Q2 that we believed our margins were going to hold in the third quarter, and they did hold but that we did anticipate some cost increases as we were as a result of the disruption in the Middle East. And so those cost increases did happen in the months subsequent to Q2. We had enough inventory on the balance sheet to sustain our margin in the third quarter, but we do anticipate those cost increases to begin to flow through in the fourth quarter.
That said, we did also implement price increases, as Steve mentioned, and those price increases will begin to take effect really starting in fiscal year FY '27. So we'll start to mitigate some of those cost increases that we anticipate to see our cost increases impacting our P&L that we anticipate in the fourth quarter. So those actions have already been taken. We've also taken some cost reduction actions as well to help mitigate the exposure in the fourth quarter.
With that said, we're really pleased with where the full year is going to land between 54.5% and 55.5%. Considering what's happening around the world, we feel really good about where the year is landing.
Okay. Great. And I guess 1 other question is involved that when you rolled out the price increases -- and I'm not sure if the price of oil was a component to it. I know it's a small piece of that. But did oil return to $70 faster than you anticipated? Or when you're modeling that -- what do you expect in terms of input cost normalization?
Yes. So when we look at the rates that the cost increases went up, if we look at the kind of the range of the 95 to 115, that was indicating about a 40% increase. So reality is we did experience decoupling. So the input cost of the specialty chemicals and the base oils that we buy did go up in excess of the 40%. So in some cases, it was 50%. In some cases, it was double. So we saw really significant price increases in those 3 months. The good news is in June, we have started to see some of that pull back. So the reality is the pace of the -- while we've seen the spot pricing on the commodity pricing kind of come back down within that $70 range, you're not seeing the pacing of the cost decreases on the actual input costs come down at the same rate. And we are seeing them pull back about 20% to 25% in the month of June. And we do anticipate it to be a slower step down. It's just the nature of the environment, the costs go up pretty fast and then there's a slower pace for it to step down.
That said, assuming things don't escalate further in the Middle East, we do anticipate that pacing back down to the levels that we saw pre-war.
Your next question comes from the line of Michael Baker from D.A. Davidson.
All right. So I guess just to follow up on that question. Can you just talk about your -- the fourth quarter outlook of sort of implied guidance, if you will? Just the math, if you do the math on the full year guidance plus what you've earned year-to-date, it does seem like the sales are in line with the consensus earnings a little bit lower. But I guess my question, too, is, is your fourth quarter outlook now better, worse or the same as it was 3 months ago. My assumption is same on the top line, maybe a little bit worse on the margins because of how the oil is playing out. But I guess, just how are you looking at the fourth quarter now versus where you thought it 3 months ago?
Mike, it's Sara, again. So the fourth quarter outlook changed a little bit in the sense that there is some phasing, right, that we saw between Q3 and Q4. So there was a little bit more that was pulled into the third quarter. than it was in the fourth quarter. But when you look at the 2 quarters combined, we are landing in that mid- to higher end of our guidance range. And so it was really more timing that impacted ultimately the fourth quarter outlook. We feel good about the fourth quarter. It's going to actually be the second strongest quarter of the year. we knew going into the second half of the year that the majority of the growth this year was going to be in the back half and the phasing of that just really the timing of that fell more in the third quarter than it did into the fourth quarter. You did mention on the gross margin, there is a little bit more of a pullback than what we had anticipated coming out of Q2, and that was just -- it was really hard to anticipate the cost increases. But to be able to hold guidance within 50 to 60 basis points as to where we were a few months ago, considering the environment, I think we feel really good about that. And again, always a reminder that whatever pullback we get on those cost increases, there is an offset to that with our rewards program that helps protect the bottom line. And so really, when we look at the full year, we are increasing our bottom line guidance, both on operating income and EPS as a result of being able to reduce some of our discretionary spending in the fourth quarter to help protect the bottom line.
Okay. So that was -- just a follow up on that as my second question. Just because, frankly, there's a lot of sort of moving parts in question, tough to do the math. But what you're saying is your guidance is up not just on now, including the HCCP Americas business, but you're increasing your guidance on that, but also some things within the business, i.e., cost savings as you just mentioned?
Yes. So I'll give an example, Michael, if I look at the operating income of where we were in Q2, we guided to $103 million to $110 million. And if you add in the $2.9 million, that would have put us at $105.9 million to $112.9 million and we're guiding to $107 million to $130 million. So we are upping our bottom end by about $1.1 million, and we're pretty tight on the top end. So the narrowing that we've mentioned is really raising the bottom end of both our top end and our -- sorry, top line revenue and our operating income and EPS and a 3 scenarios, the bottom is coming up.
Your next question comes from the line of David Shakno from William Blair & Company.
6 This is David Shakno on for John Anderson. Two quick questions for me. First, you announced about a month ago or so, a promotion, a King of the Hill promotion at a large retailer. Just wanted to understand any early reads there and just how the performance there has been?
Sure. King of the Hill, yes, the promotion in partnership with Disney and with the Home Depot, is one of the largest promotions we've ever run in our history. If you walk into our Home Depot store, you're going to see some beautiful displays out there. It's been in the market for about a month. It's got a few months to go. We're in the process of ramping up our marketing activity. And so I believe in the month of July, we're going to be hitting about 80 million consumers across the U.S. in terms of targeting. And so yes, it's really driving really strong incremental sales. It's proving to be after 1 month, about 75% incremental and so there's very little cannibalization from the promotion. And so yes, we're very pleased. It's a major promotion for us. One of many promotions, right? It's not the only act we've got in the U.S. There's lots of things going on in the U.S. We've got -- coupled with strong distribution gains. We've got very strong WD-40 Specialist growth, very strong e-commerce growth. But this -- and a couple of other meaningful promotions are really helping drive the results you've got in the U.S.
Got it. And then just wanted to follow up on -- I know you talked about pricing a little bit earlier, but just wanted to understand more if you could help us with the magnitude at all of pricing? And also any -- I realize most of the impact is going to be in fiscal '27. So it's probably hard to see any kind of elasticities there. But I wanted to understand if there's been any pushback from retailers so far, just what the response has been in general?
Sure. And so the price increases we've executed are across Asia Pacific and Europe, if you recall or if you don't, we actually launched price increases in the first quarter in the U.S. earlier in the fiscal year. And so we will review the situation in the U.S. next year as well. But these price increases have been pretty well implemented across most of Europe and Asia Pacific, where the bulk of kind of the impact has been failed. Mid- to high single digits in terms of the scale of the increases a little bit more on our bulk products, which have felt a little bit more cost pressure. And they were implemented between June and July, some of that stretching perhaps into August, but the main impact of the price increases and so going in, you'll see that coming in the back half of Q4 and into Q1, you'll feel the full benefit. We did have a little bit of -- as well as some disruption, right? We talked about a pull forward. That was probably about a $3 million amount of business that was pulled forward globally between countries like India, which were concerned about security of supply and they just place larger inventory on hand. And in places like China, where we had a little bit of a kind of advanced buy-in as well as some of our European countries. So about $3 million in magnitude for the whole impact.
Your next question comes from the line of Daniel Rizzo from Jefferies.
Just a couple of things. One, I'm sorry, did you say it's a 20 -- roughly 20% contribution from home care for the year -- the U.S. home care for a year now. Is that -- that's how we kind of think about it going forward?
Yes, that's pretty close. If you look at the $12 million on the top line and then the operating income, Daniel, is just shy of $3 million.
Okay. I just want to make sure that I had that right. And then -- so you're kind of changing the way you're presenting things you walked away from some of the things we've done in the past. The regional sales kind of goals for the Americas for -- that you've talked about in the past? Are we not really focusing on that anymore either. It's kind of more holistic? Or is that something that's still kind of where we guide towards?
No, absolutely, that stays the same. That doesn't change. The 1 area that really changes with the enduring business model, Daniel, is really the commitment from the business to drive EBITDA growth ahead of revenue growth. And so that's a significant change. It's a commitment we want to make. And the reason we're making that is, over the past few years, we've had to make significant investments to -- in things like IT and sustainability and innovation. Those kind of -- a lot of those big investments are now incremental. And so we're in a position having recovered our gross margins as well, largely to really drive the bottom line faster than the revenue line. And so that is the commitment from leadership to achieve that going forward.
Okay. Excellent. That's great too. Okay. And then with the recent price hikes assuming things kind of -- and this is a big assumption, things kind of don't go crazy again. What you've already done in Playtech will that ultimately -- and the cost cutting, too. That will only offset the higher input costs that we're seeing now with everything being the same. So I mean, by the end of next year, you kind of be back to where you were, right, before the war started, frankly.
So we've guided to a midpoint of 55% gross margin, including the household brands, which brings down the margin by about 40 basis points globally for this fiscal year. I think it would be unwise for us to guide the next fiscal year given the volatility of the situation at the moment. Our stated goal, and I had talked to it in my strict, is a vigorous to defend our gross margins. And so you may have a couple of quarters going where it's reestablished the gross margin from here on in. But then the aim would absolutely be to defend our gross margin subject to the limitations of what's possible in the external environment.
Okay. And then final question. In the past, you kind of had the whole more inventory, but that was a unique situation with logistics. But I was wondering given the current volatility, if you're going to keep your inventories a little elevated, just to make sure you can meet demand like we've seen, and we saw it really during the post-COVID issues?
No. I think from an inventory balance standpoint, I mean, we were carrying higher inventory levels in Q2. That has started to rightsize a lot of that inventory shipped during the quarter. So we're back closer, I would not say we're at our 90 days, but we are closer to the 90 days. We still have a target and believe that even in this environment, getting back to 90 days is a good goal of ours and can still supply the demand at that level.
Your next question comes from the line of Linda Bolton-Weiser from Water Tower.
So I wanted to ask about the pricing action. We had -- you took pricing in your the previous cycle, a few years ago, when costs spiked quite a bit. And I think the price increases were in the, I don't know, even 15% to 25% range. you did lose, I think, some customers, I think it was mostly in Europe. Do you see things transpiring differently this time around in terms of your ability to keep customers versus lose them versus the last cycle? Is there anything that you can talk to that's different this time around?
Linda, good to hear from you. This is Steve. Yes, I think this is a very different curve circumstances, the price increases we're putting through and nothing like the scale of what we had to put through before. Obviously, that can change going forward. And so we've made some initial moves now quickly. We'll have to assess the situation and see what we need to do perhaps going into next fiscal year depending on what happens out there in the world. But yes, the scale of the increases and so the resulting kind of pushback, if you like, from partners has been significantly less and the price increases as being adopted across the world. Because of the scale, more limited scale quite easily, I think, this time.
Okay. Is there anything going on in your conversations with customers about the fact that like the spikes or the volatility in oil we're seeing are event driven. Does that make it harder in some way to put the price increases through because they could argue that it's temporary and event driven. Is there anything going on like that type of conversation?
And so I think we always try to -- we don't rush into making these decisions. We try and take a view on what's likely to happen beyond kind of events. And what's going to happen kind of multi-month and over the kind of the period over the next 12 to 18 months. And so we take that kind of view. And so the price increases we've put through now do not fully represent the scale of the cost increases we've seen. We've assumed some reduction, right, month by month, as Sara kind of highlighted. And so that's why we'll have to take another look in early '27 to see whether we need further action as well.
Okay. And then just finally on that topic of gross margin. Sara, I think you said something like we should expect in FY '27 progressive improvement. So I guess I sort of read that to mean gross margin down year-over-year, but down less year-over-year as the year progresses. Is that kind of watching that when you were talking about that?
It is hard, Linda, at this point for us to comment too far out into next fiscal year. We do expect there, right? I mean, based on what we are sitting on our balance sheet, we know that there will be some impact to our gross margin in the fourth quarter and going into next fiscal year, the length of how long it progressively or the pace of it progressively coming back up really does depend on how the next few months go from a cost reduction standpoint. And if we continue to see kind of the pacing of those costs reducing, which can change daily, frankly, based on what continues to be happening over in the Middle East. So it is -- just given the environment, it is hard to comment on that at this point in time.
Okay. And then my last question just has to do with the revenue line. I think you said earlier last quarter or something and maybe you mentioned again that you have like some new distribution in the U.S. I forgot what you said maybe dollar store channel or something, that combined with the really successful promotion you have this year, does that create really like unusually hard comparisons for next year? Like was there some channel sale related to the new customer? Anything like that we should be aware of as we think about next year?
I think sort of the new distribution you're referring to is a single point of distribution where we had about 7,000 new outlets. So it's a major new customer for use in a 2.75 ounce product. So driving incremental sales, and that will ramp up over a 2-year period as we expand distribution into all of those stores. And so more grows from that particular initiative next year.
In terms of promotion, it's just been 1 of those years for the U.S. where a lot of things went right. We've had promotions across multiple channels, across agriculture across hardware, the scale of this one, certainly the King of the Hill is very significant. But when you think about it, I mean, we can do that because of the iconic nature of our brand. And so when you take that formula of brand partnerships between the likes of WD-40 and Disney and the Home Depot. That's a powerful formula. It's a repeatable formula going forward. And so I think we've tapped into something, it can really leverage the power of the brand going forward and which is absolutely repeatable. Whether it's 1 big chunk or multiple smaller terms going forward, leveraging the brand with these sort of brand partnerships is a powerful formula.
Okay. And congratulations, Sara, on your new appointment.
Thank you, Linda.
Your next question comes from the line of Aaron Reed from Northcoast Research.
I'm back. I got 1 last question here for you. And that is, can you tell us a little bit more about where you're finding success with the specialist products. I feel like this is something that's been adopted a little bit faster than I would have anticipated. I was wondering if you could go into a little bit more what segments are you seeing the adoption in what channels is going through? If you can just kind of speak to that a little bit more.
Sure. Absolutely. So Aaron, yes, I mean put specialists is growing very strong double digits all across the world. And so we're very pleased. And so 1 of the things we've done with the mantra of kind of learn faster to grow faster is really leverage global teams to exchange best practice and look at what's working around the world. And so we very much have a focused concentration on the best-selling items within that range and getting those as distribution consistently executing around the biggest selling items. We have 6 products that do about some 80% of sales in the specialist range. And so that kind of disciplined execution and learning is really driving sales. And so you look at places like China where specialists is growing fantastically well. I mean, even in the U.S., we're in high double digits now, about 18%, 19% for the year-to-date. And in Europe continues to grow very, very well on the WD-40 specialist. You then layer over that new product innovations. And so Europe had a couple of big ones this year. degrees or products doing very, very well, for example, and then the new bio loop formulation in Europe is going very, very well as well. And so we're really pleased in France, which was our initial launch country for the BioLube product, which will be launched globally over the coming 18 months or so. The BioLube item has gone straight to 1 of the top-selling items on WD-40 specialists. And so a combination of simply expanding distribution, but also a little bit of innovation driving. We did also say that 90% of our WD-40 quality specialty sales come from 10 countries only. And so we're only just really getting going. We have a very, very significant runway for growth on specialists around the world, and we are really starting to pick up the pace.
Great. And our -- last follow-up question and then I'm done, are the distributors are fairly receptive to be specialist products as well, too, are they really much more focused on the multi-purpose product?
Now what -- I mean you've got to look at it both together, right? And so WD-40 specialist and WD-40 multi-use products together really help us have a category approach. And so we're helping retailers with their category approach. And so really, you're going to look at both of them acting together. And so the specialist range helps protect, gain shelf space for the overall brand. And so it's kind of like a virtuous circle of helping protect the core brand, but also leveraging specialists to take market share on those items, which may be newer to us.
At this time, there are no further questions. This concludes today's call. Thank you all for attending. You may now disconnect.
WD-40 Company — Q3 2026 Earnings Call
WD-40 Company — Q3 2026 Earnings Call
Q3 FY2026: Revenue surged 24% and operating leverage lifted profits, but near-term margin pressure from input costs and timing shifts remains a risk.
📊 Quarter at a Glance
- Revenue: $195.1M (+24% YoY)
- Maintenance: $189.7M (+26% YoY; 97% of net sales)
- Gross margin: 56.6% (+40 basis points YoY) (gross margin = gross profit ÷ revenue)
- Operating income: $40.3M (+47% YoY)
- EPS & EBITDA: Non‑GAAP diluted EPS $2.33 (vs $1.54); adjusted EBITDA margin 23% (adjusted EBITDA: EBITDA adjusted for certain items)
🎯 What Management Says
- 4x4 strategy: Execution focused on four "Must‑Win Battles"—geographic expansion, premium formats, WD‑40 Specialist portfolio, and digital commerce—to drive mid/high single‑digit maintenance growth.
- Margin defense: Company will "vigorously defend" gross margins via pricing and cost savings; expects most benefits to materialize in FY2027 as input costs normalize.
- Portfolio & leadership: Americas home care/cleaning brands reclassified as held for use (noncore, managed for harvest); internal leadership changes created to accelerate strategy and innovation.
🔭 Outlook & Guidance
- Net sales: FY2026 guidance constant currency $652M–$667M (+6% to +9% vs pro forma FY2025); reported $675M–$690M (+10% to +12%).
- Gross margin: Now expected 54.5%–55.5% (includes ~40 bps impact from reclassification and ~60 bps from higher costs).
- Profitability: Non‑GAAP operating income $107M–$113M; non‑GAAP diluted EPS $6.05–$6.35 (includes ~$0.17/sh from held‑for‑use assets); tax rate ~22.5%.
- Capital returns: Board authorized up to $100M share repurchase program (no expiration).
- Risks: Near‑term input cost volatility (Middle East), timing/advanced buying that shifted some Q4 demand into Q3, and execution of price increases.
❓ Analyst Q&A
- Margin sustainability: Management says Q3 margins benefited from higher inventory and mix; expects cost headwinds to flow into Q4 but pricing and savings will begin to offset in FY2027.
- Q4 phasing: Some demand was pulled into Q3 (advanced buying, price‑increase timing); combined H2 still aligns with guidance but Q4 comparability is affected by timing.
- Pricing & promotions: Price increases implemented in EMEA and APAC (mid‑ to high single digits) with limited retailer pushback so far; large U.S. promotion (Home Depot + Disney) is driving strong incremental sales.
⚡ Bottom Line
- Verdict: Strong top‑line growth and operating leverage validate the growth playbook, but near‑term margin volatility from input costs and timing effects temper visibility; guidance narrowed and management targets margin recovery into FY2027.
WD-40 Company — Q2 2026 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. Good day, and welcome to the WD-40 Company Second Quarter Fiscal Year 2026 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]
I would now like to turn the presentation over to the host for today's call, Wendy Kelley, Vice President, Stakeholder and Investor Engagement. Please proceed.
Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass; and Vice President and Chief Financial Officer, Sara Hyzer.
In addition to the financial information presented on today's call, we encourage is to review our earnings presentation, earnings press release and Form 10-Q for the period ending February 28, 2026. These documents will be made available on our Investor Relations website at investor.wd40company.com. A replay transcript of today's call will also be made available shortly after this call.
On today's call, we will discuss certain non-GAAP measures. Descriptions and reconciliations of these non-GAAP measures are available in our SEC filings as well as our earnings documents posted on Investor Relations website.
As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Actual results could differ materially. The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussions.
Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, April 9, 2026. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events or otherwise.
With that, I'd now like to turn the call over to Steve.
Thanks, Wendy, and thanks to everyone for joining us today. I'll begin with an overview of our sales performance for the second fiscal quarter of 2026, followed by an update on the progress we've made across select areas of our Four-by-Four Strategic Framework. Sara will then walk through the details of our second quarter results, recap our business model, share a brief update on the divestiture of our home care and cleaning business and review our guidance for fiscal 2026 and will conclude by taking your questions.
Today, we reported consolidated net sales of $161.7 million, an increase of 11% compared to last year. Let's spend a few moments looking more closely at those results and the factors contributing to our performance. Maintenance products continue to be our core strategic focus, accounting for roughly 97% of total net sales this quarter. Net sales in this category totaled $156.8 million, reflecting a 13% increase year-over-year. On a constant currency basis, net sales in this category increased 6% year-over-year, in line with our long-term growth expectations for maintenance products. As a reminder, we go to market through a mix of direct operations, which represents approximately 80% of global sales and marketing distributors, which account for the remaining 20%, two in the second quarter, sales of maintenance products in our direct markets grew 14% compared to the prior year. Sales through our marketing distributor network increased 9% year-over-year, driven primarily by sequential improvement across our Asia Pacific distributor markets as we anticipated rebound following a softer first quarter.
I'd also like to highlight that our gross margin remained solidly within our expected guidance range for fiscal year '26. In the second quarter, we delivered a gross margin of 55.6%, up 100 basis points year-over-year. On an adjusted basis, excluding assets held for sale, gross margin was 56%.
Now let's talk about second quarter sales results by segment, starting with the Americas. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the second quarter of last fiscal year. Sales in the Americas, which includes the United States, Latin America and Canada, was $71.8 million in the second quarter, an increase of 10% compared to last year. Sales and maintenance products in the Americas were $69.1 million, an increase of 11% or $6.7 million compared to last year. All of that growth was driven by higher sales of maintenance products in the U.S., which increased 15% compared to last year.
Sales performance of WD-40 Multi-Use Product in the U.S. was particularly strong, increasing by $5 million or 15%. This growth was driven by higher volumes with select customers and online retailers, supported by elevated promotional activity and modest price increases, which we implemented earlier in fiscal year '26. We expect a strong momentum in the U.S. to continue with numerous activities already planned for the second half of fiscal year '26.
In the Americas, maintenance product sales also benefited from strong growth of WD-40 Specialist which increased 17% compared to the prior year. That growth was driven primarily by expanding distribution and higher online sales in the U.S.
We saw modest sales growth in Latin America this quarter, which was largely offset by softer sales in Canada, leaving overall performance for the combined regions essentially unchanged.
Home care and cleaning product sales declined 13%, reflecting our strategic shift towards higher-margin maintenance products in alignment with our Four-by-Four Strategic Framework. In total, our Americas segment made up 44% of our global business in the second quarter.
With a significant number of initiatives planned in the back half of the fiscal year, our outlook for the Americas is very strong. As a result, we expect high single digit into low double-digit growth in the Americas this fiscal year, driven primarily by strong activity in the United States. This strong top line growth positions us well to help offset uncertainty associated with global economic and geopolitical conditions that could impact other areas of the business.
Now turning to EIMEA, which includes Europe, India, the Middle East and Africa. Sales of $64.9 million in the second quarter, an increase of 9% compared to last year. This increase was driven by favorable foreign currency exchange rates as most our EIMEA sales are transacted in euros or pound sterling and translated into U.S. dollars for reporting purposes. On a constant currency basis, sales were down 3% year-over-year.
Let's go into our EIMEA through a combination of direct operations as well as through market distributors. Net sales in our EIMEA direct markets, which accounted for 70% of the region's sales, increased 12% during the quarter to USD 45.6 million. Given that currency translation can obscure our reported results, we believe it's helpful to also consider performance in the local currencies in which we transact sales. In local currency, we continue to see double-digit growth of WD-40 Multi-Use Product across many of our direct markets, including France, Iberia and Benelux, our sales increased 16%, 12% and 12%, respectively, driven by successful promotional activities. These sales increases were entirely offset by lower volumes in our distributor markets. Sales in our EIMEA distributor markets, which accounted for 30% of the region's sales, increased 1% during the quarter to USD 19.2 million.
Sales in our EIMEA distributor markets were most notably patented in the Middle East, reflecting the timing of customer orders following strategic distribution changes. We transitioned to a new marketing distributor partner in a key country during the first half of fiscal '26, which shifted the timing of customer orders. With the transition now complete, we expect increased activity in the second half of the fiscal year, subject to further geopolitical disruption in the region.
As a reminder, we divested the U.K. home care and cleaning portfolio in fiscal '25, which negatively impacted second quarter sales by $1.5 million. In total, our EIMEA segment made up 40% of our global business in the second quarter.
As we look ahead, we expect a better second half performance in EIMEA. We are closely monitoring the geopolitical conditions in the Middle East Sales to the region directly affected by the current geopolitical tensions represented approximately 3% of global sales in fiscal year '25. Our presence in these markets is limited. The one manufacturing partner in the region but no significant operations beyond the distribution and sale of our books through third-party distributors. We will continue to monitor the situation closely and assess any potential impact of circumstances evolve.
Despite this disruption, we expect to achieve mid-single-digit growth on a constant currency basis this fiscal year. In reported currency based on current exchange rates, we would expect growth of maintenance products in EIMEA to be in the high single digits this fiscal year.
Now on to Asia Pacific. Sales in Asia Pacific, which includes Australia, China and other countries in the Asia region was $25 million in the second quarter, an increase of 19% or $1.3 million compared to last year. We did benefit from favorable currency movements in Asia Pacific, although to a lesser extent than in EIMEA. On a constant currency basis, sales in the region were up 16% versus last year. Most of that growth was driven by higher sales in China and our Asia distributor markets for sales and maintenance products increased 25% and 19%, respectively, compared to last year.
Sales of WD-40 Multi-Use Product was strong across the trade block. In China, sales WD-40 Multi-Use Product increased by $1.1 million or 18%, driven by higher volumes from effective promotional programs and marketing activities as well as expanded distribution, particularly through online retailers and industrial channels.
In our Asia distributor market, sales of WD-40 Multi-Use Product increased by $1.3 million or 17%, partially due to successful promotional programs, particularly in Malaysia and the Philippines. We are pleased to see a strong rebound in the Asian distributor markets as customers in the region have adjusted back to multiple inventory levels.
In Australia, sales of WD-40 Multi-Use Product increased 15%, driven by the timing of customer motions and expanded distribution.
In Asia Pacific, maintenance product sales also benefited from strong growth in WD-40 Specialist, which increased by 55% compared to the prior year. Sales increased most significantly in China, driven by successful promotional programs, along with expanded distribution, particularly through online retailers and industrial channels. In total, our Asia Pacific segment made up 16% of our global business in the second quarter. Based on current visibility, we expect this momentum to continue for the remainder of the fiscal year. However, like many companies, we remain cautious given ongoing global economic and geopolitical instability. We expect Asia Pacific to deliver strong growth in the back half of fiscal year '26, supporting mid- to high single-digit growth on a reported currency basis for the full fiscal year.
Now let's talk about our Must-Win Battle. A core element of our strategy is accelerated revenue growth in our maintenance products through our Must-Win Battle. Starting with Must-Win Battle #1, lead geographic expansion. Year-to-date sales of WD-40 Multi-Use Product reached $245 million, an increase of compared to the same period last year. We delivered solid performance in the Americas and EIMEA, sales growing 7% and 6%, respectively. Year-to-date sales in Asia Pacific remained flat. However, following the strong recovery experienced in the second quarter and the momentum we expect in the second half of the year, we anticipate solid growth in the region for the full fiscal year.
We continue to make excellent progress across many key markets, delivering strong year-to-date sales growth, including increases in local currency, 7% in the U.S., 4% in China, 10% in France and 14% in Iberia. We estimate the attainable market for WD-40 Multi-Use Product at about $1.9 billion with fiscal year '25 sales of $478 million. That leaves roughly $1.4 billion of long-term growth opportunity ahead of us.
Next is Must-Win Battle #2, accelerating premiumization. This is centered on accelerating growth in our premium WD-40 Multi-Use Product performance. Products such as Smart Straw and EZ-REACH develop for the end users of forefront of every decision. Strong focus on the end user enhancing brand loyalty supports gross margin growth and strength our competitive advantage.
Year-to-date, combined sales of WD-40 Smart Straw reached increased 9% compared to the prior year. Premiumized products represent approximately 50% WD-40 Multi-Use Product sales, leading meaningful runway for continued growth. We're targeting a compound annual growth rate for premiumized product net sales of greater than 10%.
Our third Must-Win Battle is to drive WD-40 Specialist growth. If WD-40 Multi-Use Product is a Swiss Army knife of maintenance, WD-40 Specialist is a dedicated tool, a hammer, screwdriver or range designed for specific jobs. This focused brand extension strengths our portfolio without diluting the iconic core. Year-to-date sales of WD-40 Specialist were $44.9 million, up 19% compared to last year by targeting a comp annual net sales growth rate for WD-40 Specialist of greater than 10%.
I'm excited to share that in the second half of this fiscal year, we launched our latest innovation within the WD-40 Specialist product line, a bio-based multiuse lubricant across several European markets. Formulated with 85% bio-based ingredients, the product meets stringent environmental standards while delivering the professional-grade performance our end users expect. This launch reflects our commitment to practical innovation and environmental stewardship.
Our thought must be value turbocharge digital commerce. Our digital commerce strategy plays a vital role in advancing each of our Must-Win Battle by increasing brand visibility, improving accessibility and deepening user engagement across global markets. Year-to-date, e-commerce sales increased 23%, driven primarily by strong momentum in the United States and China.
We'll now move to the second element of our Four-by-Four Strategic Framework, our strategic enablers, which focus on operational excellence. Today, I'll provide updates on strategic enablers 3 and 4. Our third strategic enabler is operational excellence in the supply chain. Profitable growth requires the supply chain is optimized high-performing and resilient.
In the second quarter, we delivered global on-time in full performance of 96%, reflecting the discipline and reliability of our operations. Our decentralized global supply chain is a strategic advantage enabling both resilience and agility into economic and geopolitical uncertainty. By limiting exposure to any single region, we reduced risk across the network. If a manufacturing partner is impacted by unforeseen circumstances, we can quickly pivot and shift production to other partner in weeks and agility that especially valuable in uncertain times.
We spent the last 3 years, strengthening our global supply chain adding even more manufacturing partners, optimizing inventory and building a more agile network. We recently added a new manufacturing partner in our EIMEA, further diversifying our European supply chain and transitioning from a single dominant partner to multiple partners across the continent. The logistics associated with this transition resulted in a temporary inventory build in EIMEA. At the same time, we also built inventory in the United States in anticipation of a strong third quarter. These higher inventory levels are beneficial as they help insulators from short term gross margin volatility, including the impact of near-term fluctuations in crude oil prices.
Based on current inventory levels, we do not expect gross margins to be significantly impacted in the third quarter, which provides us time to take mitigating actions to defend gross margin as needed. Overall, our supply chain is definitely more resilient today than it was historically. These changes support gross margin expansion and help insulate the business and met ongoing global economic and geopolitical uncertainty.
Our full strategic enablers to drive productivity to enhance systems at WD-40 Company, technology is a critical productivity and scale for building a digital foundation designed to support global growth and increase operating flexibility, helping us execute our strategy faster and more effectively.
We've made meaningful progress deploying proven AI-enabled platforms like Microsoft Dynamics 365, Salesforce and Atlas for supply chain. Our goal is personal efficiency, its rethinking processes across the business. We are where appropriate, leveraging artificial intelligence across certain parts of the business to improve efficiency and augmented decision-making. Our focus remains on practical responsible applications and enhance productivity and support. We continue to make progress in our enterprise resource planning or ERP implementation.
In the second quarter, we went live with another phase of the rollout in Canada. The new system is now operating across a substantial portion of the business, including the U.S. and Latin America and Asian distributor markets, operations and Canada, together representing roughly half of global revenue.
With that, I'll turn the call over to Sara.
Thanks, Steve. Today, I will go over our results against our business model and discuss the key factors driving our second quarter performance. I'll also provide an update on the planned divestiture of our Americas home care and cleaning business, along with our fiscal year 2026 guidance and the assumptions we made to provide more transparency. First, we were pleased with our second quarter performance and the momentum we're seeing in the business, with operating income this quarter, growing at 4% over prior year on a constant currency basis. As we noted last quarter, we expected results to strengthen as year progress, following a slow start, and that improvement is showing up across both the top line and the bottom line. As Steve mentioned the expected top line strength particularly in the U.S., will help to buffer any impact of the current geopolitical tension in the Middle East. And with that, I will cut to the chase that we are reaffirming our full year 2026 guidance. even through all this turbulence. I'll cover our assumptions behind the guidance later in my remarks.
With that as the lead, now let's take a closer look at our business model. This framework serves as a distant guide for how we manage and allocate resources across the business. It is anchored in 3 key components: gross margin, cost of doing business and adjusted EBITDA. In the near to midterm, we actively manage each element within defined ranges, which gives us strategic flexibility while remaining aligned with our long-term objectives. Because the model is fundamentally driven by revenue, changes in sales levels from quarter-to-quarter can result in some variability in model performance.
We will begin with gross margin performance, which continues to be strong. In the second quarter, our gross margin was 55.6%, up from 54.6% in the second quarter of last year, representing an improvement of 100 basis points. Gross margin was significantly impacted favorably by 80 basis points from lower specialty chemical costs and 70 basis points from higher average selling prices, including the impact of mix and premiumization. These positive impacts to gross margin were partially offset by higher other miscellaneous input costs, primarily in EIMEA, which negatively impacted our gross margin by 40 basis points.
Gross margin in the Americas increased 300 basis points, rising from 50.1% to 53.1%, driven by higher average selling prices and lower specialty chemical costs.
In EIMEA, gross margin declined slightly by 90 basis points from 58.1% to 57.2%, reflecting higher billing and warehousing fees, partially offset by lower costs for specialty chemicals.
In Asia Pacific, gross margin increased slightly by 30 basis points from 58.4% to 58.7%, primarily due to favorable changes in sales and market mix period-over-period.
We remain encouraged by the overall trajectory of gross margin while recognizing that the operating environment continues to present external headwinds. Subsequent to our quarter end, recent geopolitical developments in the Middle East have contributed to the increased cost of certain petroleum-based specialty chemicals and other input costs, which will impact our cost of products sold. There is typically a delay of between 90 and 120 days before changes in cost of raw materials impact our cost of products sold due to production and inventory life cycles.
As Steve discussed a few minutes ago, we do not expect that our gross margin will be significantly impacted until the fourth quarter of fiscal year 2026 based on current inventory levels. The duration of this conflict and its impact on our raw materials will drive our decisions around mitigation efforts, which we are currently assessing. For more reasons than just the impact to our business, we hope this development is short term in nature. I will go over our assumptions over the price of oil when I discuss our full year 2026 guidance.
Now turning to our cost of doing business, which we define as total operating expenses adjusted for certain noncash items. Cost of doing business is primarily influenced by 3 areas: our investment in people, global brand-building initiatives and freight costs associated with delivering our products to customers.
In the second quarter, our cost of doing business was unchanged from prior year at 38% of net sales. Investing in our future remains a top priority. While our long-term objective is to manage our cost of doing business within a 30% to 35% range, we have been making deliberate investments to support sales growth and improve operational efficiency. These investments are strengthening our foundation and positioning the business for long-term sustainable growth.
In addition, we continue to work with the revenue impact associated with the fourth quarter 2025 home care and cleaning divestiture in the United Kingdom. In dollar terms, our cost of doing business increased $7 million or 13% compared to the prior year quarter. Unfavorable foreign currency rates accounted for $3 million of that increase this quarter. So on a constant currency basis, the increase of 7%. The majority of the remaining increase, $2.3 million, was driven by higher employee-related expenses, including incremental headcount to support initiatives aligned with our Four-by-Four Strategic Framework.
Advertising and promotional expenses increased year-over-year, reflecting higher levels of promotional activity and marketing support, particularly in the Americas and EIMEA. As a percentage of net sales, A&P spend was 5.5% this quarter compared with 5.1% in the prior year.
While we are currently tracking slightly below our full year guidance of approximately 6% of net sales, we have brand-building initiatives planned for the remainder of the fiscal year, which we expect will bring A&P investment in line with our full year guidance. As the business grows, we expect leverage from higher revenues to move the cost of doing business towards the target range, with sales growth and cost control serving as the main catalyst for improvement.
Turning now to adjusted EBITDA. In the second quarter, our adjusted EBITDA margin was 18%, flat compared to last year. Adjusted EBITDA margin is an important indicator of both profitability and operational efficiency.
In the nearer term, we continue to believe we can return adjusted EBITDA margin to our midterm target range of 20% to 22% as we absorb the revenue impacts associated with the home care including divestitures. The 25% target at the high end of our range represents a long-term aspiration for the business. Getting there will be driven by scale, gross margin accretion and making progress on our cost of doing business targets.
Turning now to other key measures of financial performance, let's review income, net income and earnings per share for the second quarter. Operating income increased 13% to $26.3 million in the second quarter, with foreign currency being a tailwind for us this quarter. On a constant currency basis, operating income increased by 4%, primarily due to higher sales and improved gross margin, partially offset by increased operating expenses.
Net income was $20.3 million compared to $29.6 million in the prior year quarter. You may recall that in the second quarter of fiscal year 2025, we recorded a nonrecurring noncash tax benefit of $11.9 million that had a significant positive impact on the results last year. Excluding this onetime benefit, net income would have increased $2.4 million or 13% in the second quarter compared to the prior year.
Diluted earnings per common share were $1.50 in the second quarter compared to $2.19 in the prior year. Diluted EPS for the quarter reflects 13.5 million weighted average shares outstanding. Excluding the onetime tax benefit in the prior year, non-GAAP EPS would have increased 14% over the prior fiscal quarter. Additional details on last year's tax benefit are available in our SEC filings.
Turning now to our balance sheet and capital allocation. We continue to operate from a position of financial strength with solid liquidity that supports the discipline, strategy focused on long-term growth and the generation of reliable cash flow and returns for our stockholders. Our capital deployment decisions continue to emphasize discipline and accretion with the objective of enhancing long-term stockholder value. Our first focus is investing back into the business through advertising and promotional activities. After investing back in organic growth opportunities, dividends remain our top capital allocation priority with an annual payout target of more than 50% of earnings.
On March 16, our Board of Directors approved a quarterly cash dividend of $1.02 per share.
In the second quarter, we executed share repurchases totaling approximately 38,175 shares for an aggregate cost of $8 million under our authorized program. As of quarter end, roughly $14 million remains available for repurchases with the authorization set to expire at the end of the fiscal year. Given our confidence in the strength and durability of the business, we increased the pace of repurchases and intend to utilize the remaining authorization.
Before turning to guidance, I'd like to share a brief update on the household divestiture. We continue to advance the process to sell our American home care and cleaning brands with our investment banking partner actively engaged in discussions. While there can be no assurance that a transaction will be completed, we are encouraged by continued discussions and will provide updates as the process progresses.
So let's turn to fiscal year guidance. As a reminder, we issued this year's guidance on a pro forma basis, excluding the financial impact of the home care and cleaning brands currently classified as assets held for sale. Although the timing remains uncertain, this approach is intended to provide clear visibility in the performance of the core business and limit variability associated with the transaction.
While geopolitical developments in the Middle East and their potential impact on the global economy warrant caution, we are encouraged by the momentum in the business. We have clear visibility in promotional activity in the U.S. and are seeing improving momentum in both EIMEA and Asia Pacific. With a number of initiatives planned for the second half of the year, we are confident in delivering a solid full year outcome and so we are reaffirming our guidance today.
We continue to expect net sales in constant currency to land at the mid- to high end of our guidance range, reflecting the strength and visibility we have on the top line. At current exchange rates, we expect low double-digit revenue growth for the full fiscal year on a reported currency basis. However, the duration and potential impacts of ongoing geopolitical developments in the Middle East have introduced an increased level of uncertainty.
While we remain confident in achieving our full year guidance, we now expect metrics below the top line to fall within their respective guidance ranges as opposed to tracking towards the mid to high end. This guidance is based on several key assumptions, including crude oil prices ranging between $95 and $115 per barrel and an average euro-to-U.S. dollar exchange rate of approximately $1.15 for the back half of the year. It also reflects our current view of broader macroeconomic conditions. Actual results may vary as these inputs differ materially from our assumptions.
For fiscal year 2026, we expect net sales to be between $630 million and $655 million after adjusting for foreign currency impact, a growth of between 5% and 9% from the pro forma 2025 results. In reported currency, we expect revenues between $650 million and $680 million using current exchange rates in the back half of the year, excluding revenue from the assets held for sale. Gross margin is expected to be between 55.5% and 56.5%. Advertising and promotion investment is projected to be around 6% of net sales. Operating income is expected to be between $103 million and $110 million, representing growth of between 5% and 12% from the pro forma 2025 results. The provision for income tax is expected to be between 22.5% and 23.5%. And diluted earnings per share is expected to be between $5.75 and $6.15 which is based on an estimated $13.4 million weighted average shares outstanding. This range represents growth of between 5% and 12% over the pro forma 2025 results.
In the invest, we are unsuccessful in the divestiture of the American home care and cleaning brand. Our guidance would be positively impacted by approximately $12.5 million in net sales, $3.6 million in operating income. and $0.20 in diluted EPS on a full year basis. That completes the financial overview.
Now I would like to turn the call back to Steve.
Thank you, Sara. In summary, what did you hear from us on this call. You heard that in constant currency sales and maintenance products were up 6% in the second quarter, in line with our long-term growth expectations. You heard that in reported currency, Sales of WD-40 Multi-Use Product were up 12% in the second quarter to grow across all 3 trade blocks. You heard that in related currency, sales and maintenance products in our direct markets were up 14% in second quarter.
You heard that all our Must-Win Battles have performed well and that year-to-date in reported currency sales of WD-40 Specialist were up 19%, sales of premiumized products were up 9%, and sales in the e-commerce channel were up 23%. You heard that in the second quarter, our gross margin was 55.6%, up 100 basis points in the second quarter of last year. You heard that we continue to accelerate buybacks and plan to fully utilize our remaining authorization with the objective of enhancing long-term stockholder value. You heard that our decentralized global supply chain provides resilience and agility amid economic and geopolitical uncertainty and at recent supply chain initiatives along with higher inventory levels are supporting gross margin in the near term, giving us time to take mitigating actions as needed.
You heard that we have clear visibility into strong promotional activity in the U.S. in the back half of fiscal year '26, and we are seeing improving momentum across both EIMEA and Asia Pacific. You heard that while geopolitical developments in the Middle East, the potential impact on the global economy, warrant caution, we're encouraged by the momentum in the business and believe this momentum will help to mitigate impacts associated with global economic and geopolitical conditions that could affect other areas of the business.
And you heard there was a number of initiatives planned for the second half of the year, we are confident in delivering a solid full year outcome, and so we are reaffirming our guidance today. Thank you for joining our call today. We'd now be pleased to answer your questions.
[Operator Instructions] Our first question comes from the line of Michael Baker with D.A. Davidson.
2. Question Answer
Okay. Great. Congratulations on a good quarter. So just to make sure I have this right in so everyone has it right. I think there was the change in guidance, if the -- the sell changing guidance, I guess, is that after the first quarter, you expected top line and margins, profitability, bottom line to be towards the mid- to high end of the guided range. Now we have the same guided range and we expect the top line still to be mid- to high end. But I think what you said is that margin profitability now just within the range rather than specifically mid- to high end. I just want to make sure I heard that right, and that's the change. And then I'll have a follow-up question.
Sure, Michael. So this is good to hear from you. Yes, you understood that correctly. So we are maintaining our expectation for revenue growth in the mid- to high single digits. And just given the growth -- the risk right now that we see in the gross margins and considering some of the mitigation actions depending on how long this lingers, we believe we're kind of well within the range, but we're not necessarily saying the mid- to high for all of the other metrics.
Got it. And so that so again, I think as you said it, but that's because now we expect oil to be -- now it's based on oil to be $95 to $115, which starts to impact you in your fourth quarter. And I guess my question would be, I guess, so what was the expectation prior to the situation that's played out in the Middle East the last few months?
Yes, definitely. I mean we are seeing the input cost increase since the subsequent to our quarter end, in our previous guidance, it was closer to the, I think, $65 to $85 range, and so it has moved up quite a bit.
Got it. All right. So just to square it all put together, just so we all understand it was $65 to $85. Now we expect it to be $95 to $115. We all see what's going on in oil that's there is a delay, but that starts to impact you in the fourth quarter. And because of that, the gross margins will be more towards the within the range rather than the mid- to high end. Just does that summarize everything, so it's hopefully...
That was a very good summary. You probably said it better than I could.
Okay. Got it. Awesome. Now with that out of the way, can I ask just about a more sort of business-related question. Remind us again why this acceleration that we're seeing in the U.S., how do you have so much visibility? What are you hearing or seeing from your key partners in the U.S.?
Mike, this is Steve. So there's a lot going right in the U.S. And so you heard WD-40 Specialist is growing very, very nice and the strong digits. E-commerce is working very, very well for us with very strong growth in e-commerce. And then as we look, I mean, you've already seen very strong growth in the first half but compared to what's coming in the second half with the programs beginning in Q3, we have an extremely strong kind of unprecedented in recent history of the company outlook for the U.S. with a very, very substantial promotional program for the back half of the year.
And is that increased promotions and activity in existing customers? Or is it different channels? I know there's been an initiative to get more into the dollar channel or hard discounters? Or is it more just within the existing channels that you're in?
It's both. So the major promotions with our existing customers. We've also we have brought on board a major new customer in the discount channel as well, which is starting to add some nice additional revenue as new distribution.
Your next question comes from the line of David Shakno with William Blair.
By the way, this is David Shakno, stepping in for Jon Andersen. Just had a question on Asia Pacific. You talked about I think it grew or the specialist grew 55% this quarter. You hit a bit on this in the prepared remarks about promotional programs and distribution. But can you double-click into those drivers a little bit, especially on the promotional programs? Is there any sort of air pocket we should be considering for the region or specialists just overall in Q3?
So the increase in specialist was across the board. So we had China, the distributors and Australia all delivering very strong double-digit growth. So it wasn't a particular region or a particular channel. I'd say the underlying theme is new distribution and promotions combined as well as continued innovation and new products across the region. And so it's not one thing. We are seeing very, very strong -- I'm not sure we're 55% growth in every quarter, but you should expect WD-40 Specialist to continue to grow very strongly in Asia.
Got it. And if you don't mind me asking one other here. Just on premiumized products. So I think you said it's up to 50% now of the multi-use product sales. I think that's up from 49% last quarter, if I'm not mistaken, quite a strong achievement. How much of the remaining $1 billion, $1.5 billion, $1.4 billion growth opportunity depends on moving towards those premiumized products and premium formats and given the Middle East situation, given also just more broadly overall consumer sentiment, has that changed kind of your outlook there on premiumized products?
Not at all, in our premiumized products have consistently delivered around that 9%, 10% growth rate historically, there's absolutely no reason that, that can't continue. We see that building in the second half of the year, moving into double digits for the year. And so you've got $25 million plus or up about $250 million base now on petroleum products. And in terms of units sold globally, it's about 40% of units. So our best markets in terms of premiumization penetration are approaching 80% including the U.S. And so we have a long, long runway for growth, several hundred million dollars of growth out of that benchmark opportunity on nonpremium formats.
Your next question comes from the line of Daniel Rizzo with Jefferies.
First, with the mitigation efforts that you might have to take, when do you think -- I mean is there a drop dead date when we'll have to be that decision will have to be made? And two, as a rule of thumb, how far how long until that kind of flows through where we notice it in the P&L? Is it the same thing as with the cost where it's 90 -- or 6 months? Or how should we think about that?
Yes, Daniel, Steve. So yes, I mean, obviously, we're not rushing into things. And so we're carefully evaluating this situation. It seems on a daily basis, it's kind of changing. And we don't want to telegraph our kind of intentions help to competition on this call, in particular, but so we are looking at we are looking actively at mitigation, both in terms of potential price movement and further cost-saving initiatives, which would mitigate this thing. We did talk to having high inventories, right? And so the shift we made in EIMEA, we've built up considerable inventories. And with the U.S. with our strong promotional program for Q3, we have a strong inventory basis. And so that was either excellent strategic planning or good fortune, whichever way you look at it.
And so to cut to the chase, I suppose, in terms of the impact of decisions we will make today, you're going to see that impact in the fourth quarter, but maybe not the beginning of the fourth quarter. And so any measures we would begin to hit the business in the fourth quarter.
And with those elevated inventories, I assume that's going to have somewhat of a negative impact on working capital. And I was wondering what the effect of that will be in just in dollar amount.
We haven't disclosed the I mean, the dollar amount you're already starting to see some of that with the buildup of the inventory levels on our balance sheet in Q2. So some of that has already happened. And that was really to support, as Steve had mentioned, the planned back half motions. The buildup also did occur because the we actually were successful in transitioning to a new filler in Europe. And so we did also intentionally build some inventory as we work through that transition and that really happened right at the end of Q2. So I think what we're anticipating to see is the inventory build in Q2, it will continue to build a little bit into the third quarter. It will start to work its way down. And then really, I think you'll see a higher AR balance at the end of Q3, which that will get worked down before we get to the end of the fourth quarter. So there's going to be a little bit of a tail from a working capital perspective. But we have a strong balance sheet, and we can afford to have some blips there if we need to.
Okay. That's very helpful. And then the one thing that kind of quoted me here was the bio-based product that you're kind of introducing in Europe. It sounds interesting. One, how should we think about that ramping across the globe? Are you going to be introducing to other regions soon? How should we think about the growth over the next 3 years? And the second part of this question is the bio-based product, does that use less oil? Would that be something that's a long-term mitigator of the fluctuations in oil? Is that how we should think about that? It would seem so.
Thank you for the question, Daniel. And so the products you're launching across 7 or 8 European countries this quarter. And so you always have a build time to build. We have plans to roll that out globally, which will probably go into next fiscal year. And I don't want to create the expectations for this. This is it's the first iteration of our multi-use product essentially with a bio-based format. So it's 85% bio-based formulation, which meets all of the European kind of regulations around bio-based products. And yes, so ultimately, if it's very successful, yes, it will begin to reduce our dependence on oil going forward. And that will be a nice hedge. That's going to take multiple years for that to be meaningful revenues.
Your next question comes from the line of Aaron Reed with North Coast Research.
So one of the things that I wanted to get a little more color on is, we talked about it a little bit already, but given the ongoing geopolitical tension and really just the volatility across the global markets, can you give a little more color on the key assumptions underpinning your guidance and why you still believe it's achievable?
Yes, I can start that.
Go. Okay, Sara, you go ahead.
I can jump in, Steven, then I'll turn it over to wrap up. that one. So I mean, yes, it is the environment we're in today is definitely challenging to attempt to forecast. I think what is helping us right now is that we do have a fair amount of inventory sitting on the balance sheet which we can phase at when we can plan out when that's going to flow through. And so if oil stays within that range that I talked about between $95 and $115, the impact to the business, and this is potentially before mitigating factors that we might implement we're able to, within that range, I think, reasonably predict what the fourth quarter is going to look like. And with the third quarter and the fourth quarter, we believe we'll be able to stay within that guidance. There are some puts and takes there with access to certain markets, and maybe I'll let Steve talk a little bit about that, that might bring it down, but then there's still some upside to go after.
And if I could just add then to that. Yes, just a very strong basis in the U.S. And so I can't emphasize it the volatility around how that U.S. performance which we talked about could actually be into the double digits this fiscal year, which is a long time since we've achieved that in the U.S. And so that's a really positive kind of basis that's helped mitigating. We do have some exposure in the Middle East, obviously. That's about 3% of our business. And so yes, that may be just a few million dollars worth of risk in the Middle East in terms of the actual geographic region.
We've had Europe coming back outside of the Middle East. We did make a change in Europe in the first half of a distributor in one of our key territories. And so that's coming back in. We began to ship in March, again to that particular territory, believe it or not. And Europe sequentially in the second quarter was about 10% bigger in revenues, about EUR 55 million in local currency in euros, compared to around 50 in the first quarter in net sales. So you did see an uptick of around 10% in absolute terms in the first quarter. In Europe, and we do expect that despite the turbulence to continue in Q3 and Q4, much stronger revenue in EIMEA.
And in Asia Pacific, China is delivering solid double-digit growth continually and did so in the first half year. So we expect China to continue with strong double-digit growth for the year. There is potentially some downside risk in Asia, you've got a little bit contagion going on there at the moment in terms of potential kind of shutdowns of operations and kind of fuel availability. And so that is some downside risk, but we still see for the year in Asia overall, mid- to high single-digit growth. And so overall, the picture is looking reasonably bright subject of course to further turbulence.
Okay. And that kind of leads into my next question around the performance in Asia. What is driving that? And how sustainable is that momentum?
Yes. So it's things I think I've just kind of spoken to. So the China piece, I mean, the China team just continuously deliver these strong results. And it's just whatever is going on in the economy, we're continually opening new points of distribution. We're continually sampling. And so that's driving growth in China, whatever is going on with the economy. You've seen a strong -- the Asia distributors came back very strongly in Q2. That was really just a phasing question between Q4 and Q1. POS sales didn't really change between those periods which is just inventory levels. And so we kind of highlighted that would improve in Q2, and it did. And so that's good, and we expect that to continue. And then Australia is set up for a good typical kind of mid-single-digit growth for the year as well. And so yes, we're optimistic about the outlook for Asia.
Okay. And one more question here. European business has been flat to down year-to-date. What gives you confidence in a meaningful recovery in the second half? And really what leading indicators are you looking at that really support that? I think have one more question after that.
Okay. So yes, Europe, yes, it's been flat. We're very transparent. It's been kind of you make a little better with the currency kind of benefit there, but in volumes are kind of flat at the midyear.
Direct markets in Europe are actually up around 4% combined, and we did kind of talk about many of our markets are doing very well. We have market Iberia doing very well, well into double digits. France doing well. Benelux is doing very, very well. And so overall, direct markets are coming back. It was really just this 1 distributor issue, particularly in the Middle East, that undermined the kind of performance of about 3 million down versus prior year as well as a couple of promotional phasing issues with other MDs. But really, the Middle East one was the big one there. And so yes, we see Europe coming back with stronger growth in the second half. In that kind of mid-single-digit kind of level, depending on the exchange rate, the actual exchange that could actually get into double digits or at the very kind of low case, high single digits we believe for the year.
Okay. That makes sense. And one last item real quick here. My associates had me a headline saying you missed earnings by about $0.08. But when I look at consensus that says you beat. Are there other metrics that I -- or am I misunderstanding something on this?
You are not. We -- I'm actually looking at the same headline right now. And unfortunately, I think what they pull based on what I can do -- but based on what I can tell is they actually pulled the non-GAAP EPS number from Q2 last year, so they compared $1.32, unfortunately, which then drove the headline and then there was even a follow-on where they actually did pull the right $1.50 and then they compared it to the $1.40 and saying that the $1.50 fell short of the $1.40. So unfortunately, I think they just one, pulled the wrong number. But yes, it's an unfortunate situation that it hits the headline like that because that's not the case this quarter.
As long as I'm not misunderstanding something.
You were not, and I'm pulling my hair out. Thank you.
Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for participation on today's conference call and ask that you please disconnect your line.
WD-40 Company — Q2 2026 Earnings Call
WD-40 Company — Q2 2026 Earnings Call
WD-40 Company Q2 FY2026 Earnings Call — Summary
The WD-40 Company reported Q2 FY2026 results for the quarter ended February 28, 2026. Management reaffirmed full-year guidance amid geopolitical and macro uncertainty, highlighted strength in maintenance products, and emphasized progress across the Four-by-Four Strategic Framework with continued focus on digital commerce, premiumization, and supply-chain resilience.
- Key financial metrics
- Consolidated net sales: $161.7 million, up 11% year over year.
- Maintenance products: $156.8 million, +13% YoY; constant-currency +6% (in line with long-term growth expectations).
- Gross margin: 55.6% (up 100 bps YoY); adjusted gross margin 56% excluding assets held for sale.
- Operating income: $26.3 million, +13% YoY; constant currency +4%.
- Net income: $20.3 million; diluted EPS: $1.50 (prior year included a $11.9 million one-time tax benefit).
- Adjusted EBITDA margin: 18% (flat vs. prior year).
- Regional performance
- Americas: Net sales $71.8 million, +10%; maintenance $69.1 million, +11% (U.S. maintenance up 15%, WD-40 MUP +15%, WD-40 Specialist +17%).
- EIMEA: Net sales $64.9 million, +9% (constant currency -3%); direct markets +12% to $45.6 million; notable Middle East distributor timing; UK H&C divestiture impact of $1.5 million.
- Asia Pacific: Net sales $25.0 million, +19% (constant currency +16%); WD-40 MUP growth; WD-40 Specialist +55%; APAC 16% of global sales.
- Strategic management commentary (Four-by-Four)
- Must-Win Battle #1: geographic expansion; WD-40 MUP YTD $245 million; U.S. +7%, France +10%, Iberia +14% (APAC momentum improving).
- Must-Win Battle #2: accelerating premiumization; premiumized WD-40 MUP ~50%; target >10% CAGR for premiumized net sales.
- Must-Win Battle #3: WD-40 Specialist growth; +19% YTD; premiumization and distribution expansion cited; bio-based 85% formulation launched in Europe with global rollout planned next year.
- Digital commerce: e-commerce up 23% YTD; ongoing ERP and AI-enabled platform deployment (Dynamics 365, Salesforce, Atlas).
- Guidance and risk factors
- Full-year 2026 net sales: constant currency mid- to high end; reported currency low double-digit growth; oil price assumptions: $95–$115 per barrel; EURUSD ~1.15 in H2.
- Gross margin: 55.5%–56.5%; A&P around 6% of net sales; operating income $103–$110 million; tax rate 22.5%–23.5%; diluted EPS $5.75–$6.15 (≈13.4 million shares).
- Divestiture of Americas home care and cleaning brands could lift full-year results by roughly $12.5 million net sales, $3.6 million operating income, and $0.20 EPS if completed.
- Geopolitical tensions in the Middle East introduce uncertainty; management cites strong U.S. momentum as a buffer.
- Capital allocation and other notes
- Share repurchases: $8 million spent for 38,175 shares in Q2; about $14 million remaining; program to be continued.
- Inventory builds in EIMEA and the U.S. support H2; potential working capital tail; strong balance sheet to absorb near-term volatility.
WD-40 Company — Q1 2026 Earnings Call
1. Management Discussion
Good day, and welcome to the WD-40 Company's First Fiscal Year 2026 Earnings Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the presentation over to the host for today's call, Wendy Kelley, Vice President, Stakeholder and Investor Engagement. Please proceed.
Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass, President and Chief Financial Officer, Sara Hyzer. In addition to the financial information presented on today's call, -- we encourage investors to review our earnings presentation, earnings press release and Form 10-Q for the period ending November 30, 2025. These documents will be made available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be made available shortly after this call.
On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings as well as the earnings documents posted on our Investor Relations website.
As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Actual results could differ materially. The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.
Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, January 8, 2026. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events or otherwise. With that, I'd now like to turn the call over to Steve.
Thanks, Wendy, and thank you all for joining us today. Today, I'll start with an overview of our sales results for the first fiscal quarter of 2026, and then provide an update on the progress we've made against certain elements of our 4x4 strategic framework. Then Sara will dive deeper into our first quarter performance, review our business model give a brief update on the divestiture of our home care and cleaning business and review our outlook for fiscal year '26. After that, we'll open the floor for your questions.
Today, we reported consolidated net sales of $154.4 million, representing a 1% increase compared to last year. Let's take a closer look at these results and unpack what's driving our performance. Maintenance products remain our primary strategic focus, representing approximately 96% of total net sales for the quarter. Net sales for these products reached $148.9 million, a 2% year-over-year increase. While this performance came in below our long-term growth targets, we remain highly confident in the strength of our growth trajectory for both the fiscal year and longer term.
As you know, we go to market through a combination of direct operations and marketing distributors. Our direct markets accounted for 83% of our global sales during the first quarter and maintenance products grew by 8% in those markets, in line with our long-term growth targets. The softness we saw in the first quarter was primarily due to timing relating factors within our marketing distributor network, not a decline in end-user demand. Marketing distributors represent about 17% of our global sales and typically exhibit greater quarter-to-quarter variability. These markets offer significant long-term growth potential but can be more volatile period to period.
As I shared last quarter, we anticipated a Q1 pullback, particularly in Asia Pacific as distributors managed inventory levels. I'll provide more detail on Asia Pacific performance shortly. We remain confident in a strong rebound later this fiscal year. The second quarter is already off to an excellent start with solid growth across all 3 trade blocks. We have visibility into a number of upcoming initiatives, giving us confidence in delivering the solid fiscal year results.
I'm also pleased to report that our gross margin continues to strengthen. In the first quarter, we reported gross margin of 56.2%, which is an improvement of 150 basis points sequentially from the fourth quarter and 140 basis points compared to the first quarter of last fiscal year. Gross margin, excluding the impact of the assets we currently have held for sale was 56.7%. Sara will share more detail about our gross margin in just a few minutes.
Now let's talk about first quarter sales results by segment, starting with the Americas. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the first quarter of last fiscal year. Sales in the Americas, which includes the United States, Latin America and Canada, was $71.9 million in the first quarter, an increase of 4% compared to last year. Sales of maintenance products were $68.6 million, an increase of 5% or $3.2 million compared to last year. The bulk of this growth was driven by higher sales and maintenance products in the United States and Latin America, which increased 3% and 12%, respectively. In the United States, sales of WD-40 multi-use product increased following a modest price adjustment in the first quarter of fiscal year '26, but this was partially offset by lower volumes due to the timing of customer orders. In Latin America, higher sales of WD-40 multi-use product were primarily driven by expanded distribution and successful promotional activities in Mexico.
Maintenance product sales were also positively impacted by higher sales of WD-40 specialists, which increased 14%, primarily due to increased online retail sales new distribution and increased demand primarily in the United States. hOmecare and cleaning product sales declined 18%, reflecting our strategic shift toward higher-margin maintenance products in alignment with our 4 strategic framework. In total, our Americas segment made up 47% of our global business in the first quarter.
Now let's take a look at our sales in EMEA, which includes Europe, India, the Middle East and Africa. Excluding the impact of the homecare and cleaning brands we divested in the fourth quarter of FY '25 and net sales of $58.7 million, an increase of 5% or $2.8 million compared to last year. This growth was driven primarily by a 27% increase in W40 specialist sales fueled by heightened promotional activity and successful new product launches in key direct markets. Sales of WD-40 multiuse foretime remained relatively constant. We continue to see strong trends in many of our direct markets. However, the increased sales in our direct markets were fully offset by softer performance in our EMEA distributor markets, primarily due to the timing of customer orders reflecting the inherent variability we often experience in our distributor markets.
While distributor sales declined in aggregate, India was a standout, delivering a $1.4 million increase. In total, RMA segment made up 38% of our global business in the first quarter.
Now on to Asia Pacific, sales in Asia Pacific, which includes Australia, China and other countries in the Asia region, for $23.9 million, a decrease of 10% or $2.7 million compared to last year. Sales of WD-40 Multiused products were $18.3 million in the first quarter, a decrease of 12% compared to last year. Although segment sales declined in the first quarter, we achieved strong growth in China, where sales increased 8% over prior year. This performance was driven by expanding distribution and effective promotional initiatives. These gains were fully offset by lower sales of WD-40 multiuse product in our Asia distributor markets, where sales decreased by $3.3 million or 33%. As noted earlier, this was primarily driven by the timing of customer orders as distributors that heavily participate in promotional activities during the fourth quarter of fiscal year '25 adjusted to more typical inventory levels. This performance was anticipated and factored into our fiscal year 2016 guidance. Importantly, we continue to expect a strong rebound later in the fiscal year.
In Australia, sales of maintenance products remain constant on care and cleaning product sales, which remain a strategic focus for us in Australia, declined by 5% compared to last year, primarily due to the timing of customer orders. In Asia Pacific, sales of WD-40 Specialist were up 2% in the first quarter due to higher sales volume from successful promotions and marketing efforts in Australia and China. In total, our Asia Pacific segment made up 15% of our global business in the first quarter.
Now let's talk about our must-win battles. Our must win battles focused on accelerating revenue growth in maintenance products. Starting with must win battle #1, lead geographic expansion. In the first quarter, sales of WD-40 multi-use product reached $118 million, decreasing 1% compared to last year. While this performance does not align with our long-term growth objectives. We've made excellent progress this quarter in many key markets, strong sales growth of $1.4 million in India, $1.2 million in Mexico, $0.9 million in Iberia and $0.8 million in China. At 72 years young, we captured only about 25% of our global growth potential for our flagship product. We estimate the attainable market for WD-40 multi-use product to be approximately $1.9 billion compared to fiscal year '25 sales of $478 million, leaving an opportunity of roughly $1.4 billion to nearly quadruple current sales.
Capturing net growth simply means continuing what works, expanding brand awareness and distribution across 176 countries and territories. While occasional soft quarters are part of the journey, they don't change our strategy, our long-term opportunity or our positive outlook.
Next is must been battle net, accelerating premiumization. Our second must win battle is to accelerate the growth of premium formats of WD-40 multi-use products. Innovation drives this strategy. We design products like smart reach with end users at the heart of every decision. This end user-focused approach strengthens brand loyalty, supports gross margin growth and deepens our competitive advantage. In the first quarter, sales of WD-40 Smart and easy reach when combined, were up 4% over the prior year. Premiumized products currently account for approximately 49% of WD-40 multi-use product sales leaving considerable room for continued growth. We target a compound annual growth rate for net sales of premiumized products up greater 10%.
Our third must win battle is to drive WD-40 Specialist growth. When we introduced WD-40 specialist alongside the B40 multiuse product, we're not just adding variety, we're strengthening our brand, capturing new segments and offering end users more choice without diluting what makes our core brand iconic. In the first quarter, sales of WD-40 Specialist products was $22.5 million, up 18% compared to last year. We estimate the global attainable market for WD-40 Specialist to be about $665 million. with only 12% of that potential realized to date with roughly $583 million in growth opportunity ahead. We target a compound annual growth rate for net sales of WD-40 specialists at greater than 10%.
Our fourth must win battle is to turbocharge digital commerce. Our digital commerce strategy is a catalyst for growth across the business, not merely a channel for online sales. It plays a vital role in advancing each of our must-win battles by increasing brand visibility, improving accessibility and driving deeper engagement with end users across global markets. In the first quarter, e-commerce sales increased 22% and primarily driven by strong sales of WD-40 Specialist in the United States.
Now let's move to the second element of our 4x4 strategic framework, our strategic enablers, which emphasize operational excellence Today, I'll provide an update on strategic enablers 1 and 3. Our first strategic enablers to ensure a people-first mindset. At WD-40 company we've long held the belief that first, you build the people and the people build the business. We strive to be an employer of choice, but all employees but their best selves to work. November 25, we completed our latest employee engagement survey and I'm proud to share that we've been able to increase our employee engagement index score to 95%, a new record high for our organization. Additionally, 97% said they actively collaborate to share knowledge and ideas that drive better results. These results underscore how global collaboration accelerates our success and reflects our bold ambition to become a world-class global learning organization.
Our third strategic enabler is achieving operational excellence in supply chain. Profitable growth depends on the supply chain that's optimized, high-performing and resilient. This enabler has been key to expanding gross margins through cost reduction initiatives such as packaging improvements, logistics efficiencies and strategic sourcing. In the first quarter, we delivered global on-time performance of 97.6%, even while we continue to increase production capacity to support our must win battles. Our global supply chain team also made strong progress in engaging with key suppliers and advancing our responsible sourcing policy. With that, I'll now turn the call over to Sara.
Thanks, Steve. Today, I'll offer insights into our business model. highlight key takeaways from our first quarter performance and provide a brief update on the planned divestiture of our home care and cleaning business in the Americas. Today, we are reaffirming our full year 2026 guidance. While our guidance ranges remain unchanged, I will provide some additional color on our outlook.
Let's start with the big picture. While our first quarter results were below our long-term growth targets, we did expect to get off to a slower start this year, and we believe we are set up for a strong year. We have numerous activities scheduled in the back half of the year, giving us confidence that we will be at the mid to high end of our guidance ranges. Our results can fluctuate quarter-to-quarter, driven by timing of promotional activity and customer order patterns. WD-40 Company is built for durable value creation, driven by brand strength, operational discipline and a culture of continuous improvement. This foundation positions us for sustained growth and strong stockholder returns for decades to come.
And with that, let's start with taking a closer look at our business model. Our business model is a strategic tool we use to guide our business. It is built around 3 core areas: gross margin, cost of doing business and adjusted EBITDA. In the near to midterm, we continue to evaluate each component of the model within a range, allowing us to adapt while staying aligned with our long-term objectives. Because our business model is based on revenue, quarter-to-quarter variability in sales can lead to fluctuations in its performance.
We will begin with gross margin performance, which continues to be strong building off our solid recovery in fiscal year 2025. In the first quarter, our gross margin was 56.2%, up from 54.8% in the first quarter of last year. Representing an improvement of 140 basis points and was most significantly impacted by the following favorable factors: 110 basis points from lower specialty chemical costs and lower CAM costs and 60 basis points from higher average selling prices, including the impact of premiumization. These positive impacts to gross margin were partially offset by higher filling fees primarily in EMEA, which negatively impacted our gross margin by 50 basis points.
Gross margin in the Americas rose 290 basis points from 50.4% to 53.3%, driven by higher average selling prices and by lower specialty chemical costs and lower costs. Gross margin in EMEA increased 90 basis points from 57.8% to 58.7%, which was mostly driven by the favorable impact of foreign currency exchange rates, partially offset by higher billing fees. While still well above our 55% target, gross margin in Asia Pacific decreased slightly by 70 basis points from 59.6% to 58.9%, primarily due to decreases in average selling prices linked to changes in sales mix. We're very pleased with the trajectory of gross margin, but external risks like cost volatility, tariffs and inflation remain part of the landscape.
To mitigate these and strengthen margins over time, we're driving initiatives such as supply chain cost reductions, premiumization, new product introductions, geographic expansion and asset divestitures. These levers reinforce our confidence in our gross margin long-term potential.
Now turning to our cost of doing business, which we define as total operating expenses plus adjustments for certain noncash expenses. Our cost of doing business was primarily driven by 3 areas: strategic investments in people, global brand building efforts and freight expenses associated with delivering products to our customers. Investing in our future remains a top priority. While our long-term goal is to keep the cost of doing business within a 30% to 35% range, we're making strategic investments to drive sales growth and enhance operational efficiencies. These investments strengthen our foundation and position us for sustained growth.
We also need time to absorb the loss of revenues associated with the home care and cleaning divestitures. Revenue growth is a key driver of our cost of doing business ratio. With a slower start to the year and continued investments to fuel long-term growth, our cost of doing business temporarily moved above our target range. For the quarter, cost of doing business was 40% of net sales compared to 37% last year. Our first quarter typically carries higher expenses due to essential planning meetings that increased travel, which are critical for setting our strategic direction for the year. I view this quarter's cost of doing business as an anomaly. And as we execute our strategies to accelerate top line performance, we expect this ratio to improve over the course of the year.
In dollar terms, our cost of doing business increased $4.6 million or 8% compared to last year. Changes in foreign currency exchange rates had an unfavorable impact of $1.3 million this quarter. The majority of the remaining increase, $2.8 million was driven by higher employee-related expenses, including additional head count to advance initiatives in our strategic framework and strengthen our information systems, in addition to higher travel and median expenses this quarter over the prior year.
Advertising and promotional expenses decreased slightly year-over-year. As a percentage of net sales, A&P spend was 5.3% this quarter compared to 5.5% last year. While we are currently tracking below our full year guidance of around 6% of net sales, we have brand building initiatives planned for the remainder of the fiscal year, which we expect will bring A&P investment in line with our fiscal year guidance. While we always seek cost efficiencies, scale, not cost cutting, is what will move us toward our long-term cost of doing business targets. As revenues grow, we expect the cost of doing business to trend towards 30% to 35% with sales growth being the key driver of improvement.
Turning now to adjusted EBITDA. Adjusted EBITDA as a percentage of sales is a key measure of profitability and operational efficiency. Our 20% to 25% target range for adjusted EBITDA margin is a long-term aspiration. However, we continue to believe we can move adjusted EBITDA margin back to our midterm target range of 20% to 22% and once we have absorbed the loss of revenues associated with the homecare and cleaning divestitures. In the first quarter, our adjusted EBITDA margin was 17% compared to 18% last year. Adjusted EBITDA is a critical component of our business model. With our low debt capital-light structure, much of it converts to free cash flow, enabling consistent stockholder returns and long-term value.
Now let's turn to other key measures of our financial performance. Operating income, net income and earnings per share in the first quarter. Operating income declined 7% to $23.3 million in the first quarter, while net income fell 8% to $17.5 million. On a pro forma basis, which excludes the impact of the homecare and cleaning products divested and those classified as held for sale, Operating income and net income would have declined 4% and 5%, respectively. Declines in operating income and net income were primarily driven by softness in top line sales which we are expecting to bounce back over the course of the year. Decreases were also driven by higher SG&A expenses compared to the prior year. Diluted earnings per common share were $1.28 in the first quarter compared to $1.39 last year, reflecting a decrease of 8%. Our diluted EPS reflects 13.5 million weighted average shares outstanding. On a pro forma basis, EPS would have decreased 5%.
Now let's review our balance sheet and capital allocation strategy. We maintain a strong financial position and healthy liquidity, supporting a disciplined capital allocation strategy that drives long-term growth and deliver consistent cash flow and returns to our stockholders. Annual dividends will continue to be our priority and are targeted at greater than 50% of earnings. On December 10, our Board of Directors approved a quarterly cash dividend of $1.02 per share, an increase of more than 8% over the prior quarter. This reflects the Board's confidence in future cash flows and underscores our commitment to returning capital to stockholders through consistent dividends. During the first quarter, we repurchased approximately 39,500 shares of stock at a total cost of $7.8 million under our share repurchase plan. We have approximately $22 million remaining under our current repurchase plan, which expires at the end of this fiscal year. We have accelerated buybacks and plan to fully utilize the remaining authorization, reinforcing our strong conviction in the company's long-term fundamentals. Our focus remains on accretive capital returns that reflect confidence in the enduring value of our stock.
Finally, before I move to guidance, I would like to provide a brief update on the household divestiture. We continue to make progress on the sale of our Americas homecare and cleaning product brands. Our investment bank continues after discussions with multiple potential buyers. Although there is no certainty of a deal, we remain optimistic, and I will provide further updates as appropriate.
So let's turn to FY '26 guidance. As a reminder, we issued this year's guidance on a pro forma basis, excluding the financial impact of the homecare and cleaning brands currently classified as assets held for sale. While the exact timing of the transaction remains uncertain, we believe this approach will provide investors with clarity on the direction of the core business and help minimize the noise surrounding the transaction. While first quarter sales results were below our long-term growth targets, as we mentioned, we anticipated a slower start to fiscal 2026. The softness was driven by timing factors within our marketing distributor network, not by a decline in end-user demand. All indicators point to a strong rebound later in the fiscal year. Accordingly, we are reaffirming our guidance today.
With the visibility we have into numerous activities already scheduled for the back half of fiscal year 2026 we are highly confident in delivering results at the mid- to high end of our guidance ranges. For fiscal year 2026, we expect net sales to be between $630 million and $655 million after adjusting for foreign currency impacts, a growth of between 5% and 9% from the pro forma 2025 results. Gross margin is expected to be between 55.5% and 56.5%. Advertising and promotion investment is projected to be around 6% of net sales. Operating income is expected to be between $103 million and $110 million, representing growth of between 5% and 12% from the pro forma 2025 results. The provision for income tax is expected to be between 22.5% and 23.5%. And diluted earnings per share is expected to be between $5.75 and $6.15 million which is based on an estimated 13.4 million weighted average shares outstanding. This range represents growth of between 5% and 12% over the pro forma 2025 results.
This guidance assumes no major changes to the current economic environment. Unanticipated inflationary headwinds and other unforeseen events may affect our view of fiscal year 2026. In the event, we are unsuccessful in the divestiture of the Americas homecare and cleaning brands, our guidance would be positively impacted by approximately $12.5 million in net sales, $3.6 million in operating income and $0.20 in diluted EPS on a full year basis. That completes the financial overview. Now I would like to turn the call back to Steve.
Thank you, Sara. In summary, what did you hear from us today on this call. You heard that sales in our direct markets grew 8% in the first quarter, in line with our long-term growth targets. You heard there is increase in sales was partially offset by softer sales in our marketing distributor network relating to timing-related factors, not a decline in end-user demand. You heard that sales of WD-40 Specialist were up 18% in the first quarter. You heard that sales in the e-commerce channel were up 22% in the first quarter. You heard that after 72 years, we've captured only about 25% of our global growth potential in our core multi-use product, leaving roughly $1.4 billion in opportunity to nearly quadruple current sales.
You heard that in the first quarter, our gross margin was 56.2%, up 150 basis points from the fourth quarter and 140 basis points from the same period last year. You heard that we've been able to increase our employee engagement index score to 95%, a new record high for our organization. You heard that we've accelerated buybacks and plan to fully utilize our remaining authorization, reinforcing our strong conviction in the company's long-term fundamentals. You heard that our Board approved a quarterly cash dividend of $1.02 per share, up more than 8% from last quarter, and this increase reflects strong confidence in our cash flow outlook and our ongoing commitment to stockholder returns. You heard that we're off to a strong start in the second quarter with solid growth across all 3 trade blocks. And you heard that we've reaffirmed our guidance ranges with the visibility we have into numerous activities planned for the second half of fiscal 2026, we're highly confident in delivering results at the mid to high end of our guidance ranges.
Thank you for joining our call today. We would now be pleased to answer your questions.
[Operator Instructions] Our first question comes from the line of Mike Baker with D.A. Davidson.
2. Question Answer
Okay. I'll have a few. Let me start with Sara. You said you said it won't get the exact quote. All indicators point to strong results. So what -- if you could give us more detail on what these indicators are? And then the guidance so mid- to high end of the full year range, is that more bullish than when you originally gave the guidance? I could be wrong, but I don't remember -- I remember you're giving a range on the fourth quarter, but not necessarily planning to mid- to high end. So could you help me on that?
Yes. Sure thing, Mike. Nice to hear from you. So yes, as we sit here today and look forward into the back half of the year with the activities that we have locked in place. We do feel highly confident in being able to get to that mid- to high end of the range and that really is just coming from the promotional activities that we have scheduled and that we've been able to lock in even since year-end. So we're feeling really good about where the Americas is going to be landing the year and some of the variability will also be driven by Asia Pac's recovery in the back half of the year. So while they had a slower start, particularly in the marketing distributor markets, when we're starting to look at the recovery starting in Q2, but mostly that recovery will come in the back half of the year.
Okay. And to follow up on that, -- the -- are you -- it sounds like second quarter is off to a good start. Can we say are we specifically seeing a recovery in those Asia distributor markets? Or I guess you sort of just said it, it sounds like it's maybe starting a little bit, but it's more in the back half, but can we -- are we seeing a recovery yet in those Asia distributor markets?
Mike, it's Steve. So yes, we are -- we're already seeing that at the beginning of Q1, and that's our expectation. So here, we had a relatively softish Q1 overall. Q2, you're going to see stronger results, but then the real comes in the back half of the year. And so as Sara is alluding to, we're going to have a U.S. year like we haven't had in quite a while, a really strong year in the U.S., and that's the foundation. Our European direct markets are performing very, very well, and we expect that to continue. It's really about those Asia distributor markets and that kind of Q4, Q1 kind of impact with that beginning to recover beginning in Q2 and then into the back half, then also our European marketing distributor markets recovering also.
Got it. Let me sneak in 1 more. The buybacks. So last year, you bought back $12 million. I think at one point, you had said you expect it to double. That would be about $24 million. But now you're saying you expect to go through the entire another $22 million this year. That's more than double, I think, if my math is right? Or the level Yes. SP-3 So that's a more -- is that fair to say?
Yes, it's fair to say, Mike, that is good math. And yes, I think we -- as soon as the window opened up, we accelerated the buybacks and really just have it phased to utilize the entire I think, just under $30 million availability up through the end of the fiscal year.
Our next question comes from the line of Daniel Rizzo with Jefferies.
You guys mentioned taking -- reducing supply chain costs. I was just wondering if you could provide color on what specifically you guys are doing. I mean, are you, I don't know, sourcing multi-sourcing more or with just the steps you're taking?
Yes, sure. So we -- a couple of years ago, we actually invested in not only ahead of global supply chain, but also head of global sourcing. And so there's been some new thinking around how we source supply, and we started with cans. So some of the can reductions or the can reductions that you're starting to see impact the business in the back half of last year and into this year is really the result of a different way of thinking about sourcing more globally. And the next phase of that is going to be moving into the specialty chemicals area. So there are concrete actions that we are taking to look at how and where we are sourcing our raw materials from.
In addition to that, we are -- there's a lot of activity happening on the supply chain side around how to take cost of the miles traveled for our cost -- or miles traveled for our product costs out of the system, along with a fresh look at the distribution network, particularly in the United States and making sure that we are the distribution center, sorry, making sure that we're taking a look at how we're -- where our distribution centers are situated again, with the idea of trying to reduce the mileage that our products is traveling. So there are structural changes that are in the works. Some of that won't impact the business until FY '27. And beyond, but we're really excited about the work that the supply chain team has really taken on in the last couple of years and starting to see that come to fruition.
So with the increase in the distribution centers, would that suggest maybe that there's some CapEx spend or some sort of spend to kind of just improve your footprint in different in various regions? That's my first question. And two, given these moves, is -- I know your guidance is 55% gross margins, but it seems like where we are now and maybe even a little above is achievable or sustainable for over the long term?
So I'll address the CapEx piece. Since it's a completely outsourced model, a lot of the investments, if we do have to make investments are happening by our third-party providers. We may, at times, help supplement the cash investment that they have, but a lot of that doesn't qualify as CapEx from our perspective. So I think our guidance of 1% to 2% from a maintenance CapEx standpoint, is still going to be a very good target that we'll be landing within -- and then secondarily and of course, as I answer the CapEx question, I'm going on the second part of the question.
I was just wondering, given all the moves you're making with return.
Okay. Yes, the 55%. So I mean we're sitting above 55% right now. I hate to commit to something over the long term as we are always subject to oil availability and just specialty chemical variability, but we are continuing to find opportunities for us to take costs out of the system. And so we believe -- you can see in the guidance this year, we believe that there's opportunities for us to get margin accretion even this fiscal year and some of those initiatives that we have in the pipeline are going to benefit us in next fiscal year. So we'll be able to obviously guide to next fiscal year as we get to the end of this year, but there is -- right now, we're fairly confident with a strong gross margin.
Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation on today's conference call and ask that you please disconnect your line.
WD-40 Company — Q1 2026 Earnings Call
WD-40 Company — 40 Company - Shareholder/Analyst Call - WD-40 Company
1. Management Discussion
Hello, and welcome to the WD-40 Company's 2025 Annual Meeting of Stockholders. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Mr. Steve Brass, President and Chief Executive Officer of WD-40 Company. Mr. Brass, the floor is yours.
Good morning, and welcome to WD-40 Company's 2025 Annual Meeting of Stockholders. I'm Steve Brass, WD-40 Company's President and CEO, and I will preside at today's meeting. I'm very happy to welcome you to this year's Annual Meeting of Stockholders.
Before calling the meeting to order, I'd like to introduce today's meeting participants. The following directors are in virtual attendance today. Cynthia Burks served as Senior Vice President and Chief People and Culture Officer of Genentech, Inc; Daniel Carter served as Executive Vice President and Chief Financial Officer of BevMo! Inc.; Dan is the Chair of our Audit Committee. Eric Etchart served as Senior Vice President of the Manitowoc Company. Eric is the Nonexecutive Chairman of our Board. Laura Lee served as President of Orchard Supply Hardware. Edward Magee currently serves as Vice President, Strategic Operations for Belmont University. Trevor Mihalik is Executive Vice President and CFO at American Electric Power Company, Inc. Trevor is the outgoing Chair of our Finance Committee. Trevor is retiring at the conclusion of today's meeting. On behalf of the company, we extend our sincere gratitude to Trevor for his financial leadership and strategic insight. His disciplined approach to fiscal management and unwavering commitment to robust governance have been instrumental in guiding us through critical decisions.
Graciela Monteagudo served as President and CEO of Lala U.S. Inc. David Pendarvis served as Chief Administrative Officer, Global General Counsel and Secretary of ResMed Inc. David is the Chair of our Corporate Governance Committee. Anne Saunders served as President, U.S. of nakedwines.com, and is the Chair of our Compensation and People Committee.
Also participating on our call today are Phenix Kiamilev, our General Counsel and Chief Compliance Officer; Sara Hyzer, our Chief Financial Officer; and Wendy Kelley, our Vice President of Stakeholder Investor Engagement.
I would also like to introduce Jessica Allen and Jordan Gray from PricewaterhouseCoopers LLP, the company's auditors. They will be available to answer questions during the question-and-answer session of the meeting.
Phenix Kiamilev will act as Secretary of the meeting. We will now officially start the meeting by confirming that proper notice of the meeting has been given and that we have a quorum.
Thank you. I've been informed by the Inspector of Elections that they are present in person or by proxy stockholders entitled to vote holding at least a majority of the outstanding shares of common stock on the record date, October 15, 2025. Accordingly, a quorum is present, and the meeting is duly convened for purposes of transacting such business as may properly come before it.
Thank you. I now call this meeting to order. Following the Secretary's introduction of the matters to be acted upon by stockholder vote at this meeting, Sara and I will share a strategic business update, then we will take questions from the online audience and thereafter, the formal meeting of stockholders will adjourn.
There are 3 matters for stockholder consideration and voting at today's meeting. The election of directors, an advisory vote to approve executive compensation and the ratification of the appointment of our independent auditors.
Stockholders have been encouraged to vote in advance of the meeting. However, if you have not yet voted or would like to change your vote, any stockholder attending the virtual meeting today who have entered the meeting with a control number may vote at any time prior to the adjournment of today's meeting.
If you need a copy of the annual report or the proxy statement, the links are provided in the online meeting center. Instructions for voting and/or changing a previously submitted vote are provided on the Computershare meeting center website as well. The following matters are presented for stockholder approval.
The first matter is the election of directors. I'm pleased to report that all of the nominees have received sufficient votes to be elected to serve as directors until their successors are elected and qualified.
With respect to the advisory vote to approve executive compensation, I'm pleased to announce that at least 9,790,271 shares have been voted to approve executive compensation. The third matter presented for stockholder approval is the ratification of the Audit Committee's appointment of PricewaterhouseCoopers LLP as the company's independent accountants for fiscal year 2026. Representatives of PricewaterhouseCoopers are in attendance and have been offered the opportunity to make a statement and can respond to appropriate questions.
If any questions for the auditors are submitted prior to adjournment of the meeting, a PricewaterhouseCoopers representative will respond.
I'm pleased to announce that at least 11,489,839 shares were voted in favor of ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent accountants for the current fiscal year.
A current report on Form 8-K will be filed with the SEC within 4 business days, reporting the final results of the voting at today's meeting, a copy of which will be available on the company's website.
I'd like to thank all of our stockholders for their continued support. We will now share an update with you on the company and where it's headed in the future. Following management's presentation, we will answer questions from stockholders in attendance. Questions or comments may be submitted at any time during the virtual meeting by clicking on the Q&A message icon on the right-hand side of the Computershare meeting center website. We will collate all appropriate questions for a response.
Before we proceed, I'm going to ask Wendy Kelley to get us started on our business update and provide our required notices.
Thank you, Steve. As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Of course, actual results could differ materially. The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.
On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings as well as our presentation.
Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, December 12, 2025.
With that, I'd now like to turn the call back over to Steve.
Thank you, Wendy. The theme of our presentation today is future forward, leveraging our incredibly iconic hero brand to drive innovation in action. Our core Multi-Use Product has always had an amazing ability to reinvent itself over the decade, staying relevant to new generations of users. As some old uses fade away, people around the world keep discovering new ones, whether it's in emerging areas like robotics, drone technology, wind and solar energy or creative applications in more traditional spaces like protecting tools and machinery during monsoon season.
Usage innovation is a big driver of growth for our core product. As Bryan Gildenberg, Managing Director of Retail Cities recently said, we have almost unlimited potential for new uses. That's exciting when you consider this product represents about 80% of our sales and typically drives 70% of our annual growth.
At WD-40 Company, innovation isn't a single moment, it's a mindset. We're always looking for better ways to serve our end users and grow our business. That means finding fresh creative applications for our products to keep them relevant and valuable. It means refining how we go to market with flexible strategies that keep us close to customers across 176 countries and territories. It means leading the category by using our global brand strength to create new value, drive growth and stand out from the competition.
Innovation also drives through shared learning, thus when we share what works and what doesn't, we accelerate progress. And finally, we innovate through product development, always keeping our end users at the center of every design. At WD-40 Company, innovation is continuous, collaborative and focused on creating lasting value for our stakeholders and end users.
With our Four-by-Four Framework, we have a really simple strategy, 4 must-win battles to drive faster global revenue growth and 4 strategic enablers that support execution and drive operational excellence. Today, we'll talk to all of our must-win battles and strategic enablers, but with particular focus on our largest growth opportunity, geographic expansion of our core multiuse product.
We will also give investors an update on progress made on gross margin, and how we expect to drive operational efficiencies as we increasingly leverage global synergies going forward.
As I look around the WD-40 world, all I see are growth opportunities. It's amazing to me that 72 years young, we've only realized 25% of our global growth opportunity with a long-term opportunity to virtually quadruple current sales on our core Multi-Use Product from FY '25 sales of $478 million to more than $1.9 billion. In FY '25, our second largest market France overtook the U.S. market as a benchmark market of what is possible with our core product. To generate our $1.9 billion opportunity, we use our own internal benchmark algorithm, which uses France, our benchmark market, and illustrates the potential market around the world based upon purchase price parity and adjusted GDP. The algorithm represents a long-term view of our growth opportunity and should be taken by investors as directional long-term growth potential. We have several other key markets that are approaching the benchmark levels set by France, which gives us confidence in the benchmark.
Investors are likely already familiar with this slide showing the relative size of the growth opportunities we have around the world on our core product based upon our growth algorithm. The relative size of the bubble represents the size of the growth opportunity. At the very least, this analysis shows us where to allocate time, talent and treasure in order to drive the fastest growth.
In the new emerging multipolar world we live in, we don't believe in putting all our eggs in one geographic basket, rather in a focused diversification strategy, prioritizing the top 20 growth opportunities we highlight here.
With France, our second largest market globally, having now overtaken the U.S.A. in terms of penetration levels, the U.S. now appears here as a top growth opportunity. The U.S. represents 35% of global revenues and has actually been our fastest-growing market globally in dollar terms over the past 5 years, with maintenance product growth of $54 million, representing a compound annual growth rate of 6.5%. As such, the U.S. market offers us a stable foundational market to expand from internationally.
We are not done growing in the U.S. either, and strong growth opportunities remain in the industrial and e-commerce channels as well as with WD-40 Specialist brand extension. In recent years, we've taken several steps to accelerate growth in many of these high potential markets, and I'd like to talk next to progress made in several key markets for the future.
I'd like to start with Mexico detailed on the right of your screen. In 2020, we took the Mexico market direct, and since doing so, we've more than tripled our Mexico business from $6.8 million to $23.5 million in FY '25, and we're not done as we see Mexico as a $30 million to $40 million market over the coming years. Our success in Mexico gave us confidence to convert Brazil to a direct market in March 2024. So far, we're extremely pleased with the progress made in Brazil in our first full year of business as a direct market, and in FY '25, we achieved sales of $15 million, a more than sevenfold increase over the levels we were achieving via our prior distributor arrangement.
We expect Brazil to be a $20 million market within 3 to 5 years, and ultimately see a similar $30 million to $40 million potential to Mexico over the longer term.
Moving to the left of our screen, China has consistently delivered strong double-digit growth in recent years. We've been direct in China since 2006 with our highly capable team of approximately 60 in our simple, but effective strategy of expanding distribution while sampling 20,000-plus factories each and every year continues to deliver strong results despite a somewhat weaker economy.
India is one of, if not the most attractive growth markets in the world right now. Since entering into our strategic partnership with our local partner Pidilite 6 years or so ago, we've more than doubled our sales in India. India is now our second largest market in terms of unit sales after the U.S.A., and we see huge potential for future growth ahead. One day, we believe India can rival the U.S.A. in terms of market size.
Indonesia is another very fast-growing market for us with a compound annual growth rate of 29% over the past 5 years. Indonesia is now our largest marketing distributor market in dollar terms.
Indonesia is a hybrid market for us, but we have both an outstanding local marketing distributor partner, but also a small team in market, a formula that has really accelerated growth. In our fiscal year 2025, this increased focus on our key growth markets around the world yielded overall 6% growth for WD-40 Multi-Use Product.
Our second revenue battle is to accelerate sales of premium formats of our Multi-Use WD-40 Product. In FY '25, sales of our Smart Straw and EZ Reach formats combined increased by 8% or approximately $18 million over prior year. We've consistently delivered strong growth in our premium format, with a 5-year compound annual growth rate of 9.4%. Our expectations going forward are to deliver double-digit growth of 10% plus on premium formats.
Our premium formats delight our end users, but also help us drive margin expansion. With premium format sales representing approximately 40% of global unit sales in our core product, there is significant upside for growth, especially in Asia Pacific and within our distributor markets.
Through our WD-40 Specialist line, we aspire to achieve category leadership and increase our market share by leveraging core brand equity. When we introduce WD-40 Specialist alongside WD-40 Multi-Use Product, we're not just adding variety, we're strengthening our brand, capturing new segments and offering end users more choice without diluting what makes our core brand iconic.
For fiscal year '25, sales of WD-40 Specialist were up 11% or $7 million to $82 million. Over the past 5 WD-40 Specialist has been our fastest-growing brand with a 5-year compound annual growth rate of 14%. We target growth of 10% plus on a go-forward basis.
We're only just really getting going on WD-40 Specialist. We deploy a similar growth benchmark algorithm on WD-40 Specialist, leveraging our success in our benchmark market of Australia. Our Australian team has set the benchmark on what is possible under the WD-40 Specialist, with sales to our core Multi-Use Product of 34% in FY '25. Our benchmark assumes all markets operating at that 34% to Multi-Use Product sales level and generates a market potential on the WD-40 Specialist range of $665 million as compared to our FY '25 sales of $82 million.
We now have several key markets that are approaching similar penetration levels to Australia, which, once again, gives us confidence in the validity of this long-term potential for the battle.
We view digital commerce as the accelerator for all our other Must-Win Battles, but digital commerce strategy is not just about driving online sales, it's about building our brand in the digital space and accelerating all our other Must-Win Battles. For fiscal year '25, global sales within the pure play e-commerce channel grew 10% over the prior year. The highlight of our digital effort this year was the expansion of our global online marketing campaign, The Repair Challenge. This initiative, which now spans over 40 countries, exemplifying how we can leverage digital tools to build our brand globally while promoting sustainability.
So what does that mean for our future growth ambitions? Going forward, we expect to build on our historic consistent delivery of growth on our focused maintenance products, which have delivered growth at constant currency over the past 10 years of 6.7%. As we seek to divest most of our household brands and focusing even more on our significant organic growth opportunities around the world, we will target growth in the mid- to high single digits.
We are very clear where that growth will come from with growth expected from our Americas division of 5% to 8%, 8% to 11% in our EIMEA segment and 10% to 13% in Asia Pacific. Of course, the real key to delivering the future is by taking care of our people. At WD-40 Company we've long held the belief that first, you build the people and the people build the business. Our greatest asset is our 714 employees spread across 18 countries. We strive to be an employer of choice where all employees bring their best selves to work.
In November 2025, we conducted our latest employee engagement survey. I'm very proud of our new record 95% engagement score, a testament to our strong culture and the opportunities we provide to our people to learn, grow and succeed. Our success is accelerated through global collaboration and our bold ambition to become a true world-class global learning organization.
With that, I'll now hand over the presentation to Sara Hyzer.
Thanks, Steve. Now let's turn to Enabler #2, building an enduring business for the future. Our focus here is simplifying portfolio innovation with sustainability, making fewer, higher-impact choices that lower complexity while improving outcomes for customers, partners and the planet. As you evaluate our progress, please refer to our 2024 ESG report for the details behind our environmental impact plan, and how we're operationalizing sustainability across the portfolio.
For us, sustainability is pragmatic and value accretive. It guides innovation, informed sourcing and strengthens trust with stakeholders. We're integrating it where it matters most, into product design, packaging and supply decisions so that the choices we make today compound into durable advantages over time.
Enabler #3 is operational excellence in our global supply chain. This mandate is straightforward, increased forecast accuracy, elevate service and optimize inventory, while continuously improving our end-to-end processes. We're targeting on-time delivery above 95% and inventory on hand under 90 days. These are disciplined targets designed to protect the customer experience, free working capital and support growth without sacrificing resilience.
We're also advancing integrated end-to-end planning by segment so that all our segments get the right level of agility and reliability. This is how we scale capacity, build an outsourced, balanced global network and keep quality, cost and speed moving in the right direction.
Enabler #4 is systems-driven productivity. We are enabling global growth and operational resilience with data and AI-driven business solutions, modern tools that improve forecasting, service and decision velocity across the enterprise. This approach is anchored in intelligent IT, focused on a simple, scalable and resilient global digital infrastructure that optimizes service delivery, empowers a digital workforce and strengthens cyber resilience.
In short, we are building secure, reliable capabilities that turn data into speed and better business decisions.
I'll close this section with our operating philosophy, few things, many places, bigger impact. We focus on a concentrated set of high-value products. We distribute them widely and efficiently, and we unlock efficiencies by leveraging global synergies, shared systems, shared processes and shared learning. It's a disciplined model that scales margins and accelerates growth without adding complexity.
Let's turn to what truly sets WD-40 Company apart, our financial value drivers and outcomes. Our business model is asset light by design. We invest in brands and people, not factories and warehouses. This approach gives us a solid financial foundation, a strong balance sheet, predictable free cash flow and ready access to capital when opportunities arise. We run an efficient business. We leverage outsourced manufacturing and distribution. And in FY '25, we generated $860,000 in sales per employee, a testament to our productivity and focus.
Returns are powered by our iconic brands. We target a return on invested capital of 25% or more, supported by a diversified global footprint and a long runway for growth ahead. In short, we invest where it matters most, our brands and our people. This is how we convert brand strength into durable financial outcomes for our stockholders.
You can see this foundation reflected in our FY '25 results. Let's take a closer look at those results. Net sales of maintenance products, which is our primary focus, reached $591 million, up 6% versus the prior year. Gross margin improved to 55.1%, up 170 basis points from last year, and operating income rose to $103.8 million, an 8% increase. Net income was positively impacted by a onetime tax income adjustment. Excluding this benefit, adjusted net income would have been $79.1 million, an increase of 12% over the prior year.
Diluted EPS was also positively impacted by that same adjustment. Without it, adjusted diluted EPS would have been $5.82 per share, an increase of 14% over prior year.
These results reflect the strength of our business model and our disciplined approach to growth and capital allocation.
Turning to our highlights for the year, which is the recovery of our gross margin to above 55%. That 170 basis points improvement reflects a mix of structural and tactical levers, primarily cost optimization and increased selling prices driven by market mix and premiumization. Specifically, the increase was driven by lower specialty chemical costs, lower aerosol can costs and higher average selling prices, partially offset by higher warehousing, distribution and freight in the Americas segment.
And to give you a clear view of our core business, excluding assets held for sale, gross margin would have been 55.6% in FY '25. The takeaway, our margin playbook is working. Premium features, supply chain productivity and disciplined pricing are compounding into durable profitability.
Turning to our capital allocation priorities. Our strong capital optionality is supported by consistent free cash flow generation. Our first priority is long-term growth. We target revenue and earnings growth in the mid- to high single digits, with CapEx of 1% to 2% of net sales per year. Our strong free cash flow provide the liquidity needed to support that growth.
We have a strong balance sheet with access to liquidity should we need it. Annual dividends are targeted at over 50% of earnings, and we consistently maintain a strong payout ratio.
And finally, we allocate excess capital to the highest return alternative, organic growth initiatives, acquiring new users and new uses daily and share repurchases. Our aim is a return on invested capital of 25% or more.
Let's look at how these priorities translate into cash returns for our stockholders. We have a long history of returning cash to stockholders. Our company has paid dividends without interruption for over 40 years. Recently, our Board of Directors raised the dividend by more than 8%, which is above our 5-year CAGR of 7.4%, and we remain committed to delivering consistent and compelling cash returns to our stockholders.
Our Board of Directors also approved an extension of our current share repurchase plan through the end of FY '26 with $30 million remaining under the current authorization. We have begun to accelerate buybacks, and we plan to fully utilize the remaining authorization this fiscal year, which will more than double what we bought back in the prior year.
These disciplined capital allocation practices, combined with our strong financial results, positions WD-40 Company for continued growth and value creation.
Before we wrap it up, let me summarize what sets WD-40 Company apart as a compelling investment opportunity. We deliver unique, high-value and easy-to-use solutions for a wide variety of maintenance needs in workshops, factories and homes. Our sustainable competitive advantages empower a simple and easy-to-understand business model. Our iconic brand and category leadership provide the foundation for a resilient and sustainable profitable growth. Significant cash flow generation, an asset-light strategy and a strong balance sheet maximize stockholder returns. And it's our highly engaged culture with deep organizational talent that enables significant growth opportunities for the future.
Let me underscore the key financial benefits for our stockholders. We strive to consistently deliver mid- to high single-digit revenue growth. We strive to maintain a return on invested capital of 25% or more. Our asset-light strategy keeps us nimble and efficient. We're proud to be a dividend aristocrat with dividends over 50% of net income.
In short, WD-40 Company is built for durable value creation driven by brand strength, operational discipline and a culture that thrives on making things better every day. With this foundation, we're well positioned for continued growth and stockholder returns.
Finally, before I turn it back to Steve, I also want to thank our outgoing Board member, Trevor Mihalik, for his outstanding leadership and guidance as Finance Committee Chairman. His expertise, steady counsel and willingness to share his insights have been invaluable to me. I am deeply grateful for his support and for being such a tremendous resource.
Thank you for everything you've done to help me and the company succeed. With that, I will turn it back to Steve.
Thank you, Sara. Wendy Kelley has been monitoring the online questions being submitted. We would now be pleased to answer any questions from our virtual audience at this time.
Thank you, Steve. We have no questions from the virtual audience today. Back to you.
Thank you, Wendy. This concludes the WD-40 Company's 2025 Annual Meeting of Stockholders. The polls are now closed, and the meeting is now adjourned. I'd like to thank everyone for their participation.
This concludes today's meeting. You may now disconnect.
WD-40 Company — Q4 2025 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. Good day, and welcome to the WD-40 Company Fourth Quarter and Full Fiscal Year 2025 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]
I would like to turn the presentation over to our host for today's call, Wendy Kelley, Vice President, Stakeholder and Investor Engagement. Please proceed.
Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass; and Vice President and Chief Financial Officer, Sara Hyzer. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release and Form 10-K for the period ending August 31, 2025.
These documents will be made available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be made available shortly after this call.
On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings as well as the earnings documents posted on our Investor Relations website. As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Actual results could differ materially.
The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussions. Finally, for anyone listening to a webcast replay or reviewing of it in transcript of this call, please note that all information presented is current only as of today's date, October 22, 2025. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events or otherwise.
With that, I'd now like to turn the call over to Steve.
Thank you, Wendy, and thanks to all of you for joining us this afternoon. Fiscal year 2025 was marked by complexity and resilience, a tale of navigating global headwinds while making strategic progress. Despite challenges ranging from geopolitical tensions to shifting economic policies, WD-40 companies seized opportunities and continued to build on the strong foundation that has supported our success to more than 72 years.
Today, I'll start with an overview of our sales results for the fourth quarter and full fiscal year 2025 and then provide an update on the progress we've made against our 4x4 strategic framework. And Sara will dive deeper into our financial performance, review our business model, give an update on the divestiture of our home care and cleaning businesses and share our outlook for fiscal year 2026. After that, we'll open the floor for your questions.
Today, we reported consolidated net sales of $163 million for the fourth quarter and $620 million for the full fiscal year, each reflecting approximately 5% growth compared to the prior year. This performance represented a record quarter for the company and underscore the continued strength of our brand and the resilience of our business.
As you know, maintenance products remain our primary strategic focus, accounting for approximately 95% of total net sales in both the fourth quarter and the full fiscal year. Net sales for these products reached GBP 156 million in Q4 and $591 million for the year, each reflecting a 6% year-over-year increase. This performance is consistent with our long-term growth target of mid- to high single digits and reinforce the strength of [indiscernible] for business.
In addition, I'm pleased to report that our gross margin continues to improve and has now surpassed our target of 55%. For the full fiscal year, we delivered a gross margin of 55.1%. Gross margin would have been 55.6% if we remove the financial impact of the assets held for sale. For the fourth quarter, we delivered a gross margin of 54.7%, an impressive 730 basis point improvement from the fourth quarter of fiscal year 2021 when we hit our inflection point and our long-term gross margin recovery plan began to take hold. Sara will share more details about gross margin in just a few minutes.
Now let's talk about fourth quarter sales results in dollars by segment, starting with the Americas. Unless otherwise noted, I will discuss net sales on a reported basis compared to the fourth quarter of last fiscal year. Sales in the Americas, which includes the United States, Latin America and Canada, decreased 2% to $1.7 million to $77 million compared to last year. And reported currency sales of maintenance products decreased 2% or $1.2 million to $74 million compared to last year. The decline was primarily driven by lower sales in Latin America influenced by the impacts of foreign currency exchange fluctuations, the timing of customer orders and broader macroeconomic challenges, especially in Mexico.
Sales of maintenance products in the United States and Canada were also down slightly, primarily due to the timing of customer orders and in Canada, broader macroeconomic challenges. In the Americas, sales of WD-40 specialists remain compared to the same period last year. Health care and cleaning product sales declined $600,000 compared to last year, reflecting our strategic shift toward higher-margin maintenance products in alignment with our 4x4 strategic framework. In total, our Americas segment made up 47% of our global business in the fourth quarter.
For the full fiscal year, maintenance product sales in the Americas totaled $277 million reflecting a 4% increase compared to the prior year. Although this growth was slightly below our long-term target of 5% to 8% annual growth for the region, we remain confident in the trade blocks long-term growth potential. Now let's take a look at sales in EMEA, which includes Europe, India, the Middle East and Africa. Total sales grew 7% or $4.1 million to $63 million compared to last year. After adjusting for the impact of foreign currency translation, our May net sales romchanged in the same quarter last year. And reported currency sales of maintenance products increased 8% or $4.6 million to $60.7 million compared to last year.
The strong growth was driven most significantly by higher sales volumes of WD-40 multi-use products in our direct markets. Sales increased most significantly in [indiscernible], France and Benelux, which were up 20%, 19% and 23%, respectively. Strong sales in our direct markets were offset by softer performance in our EMEA distributor markets, driven by the timing of customer orders and ongoing instability in certain regions. In EMEA, [indiscernible] WD-40 Specialist increased 18% compared to last year driven primarily by increased demand and higher volumes across several direct markets, especially in DACH and France were targeted promotional activity with key customers proved highly effective.
Home care and cleaning product sales declined approximately $500,000 compared to the same period last year. In the fourth quarter, we completed the divestiture of our U.K. home care and leaning product businesses discipline [indiscernible] limited. This strategic move allows us to sharpen our focus on higher-growth, higher-margin maintenance products and reinforces our commitment to growing the blue and yellow brand with a LiveRetop.
In total, our EMEA segment made up 38% of our global business in the fourth quarter. For the full fiscal year, maintenance product sales in EMEA totaled $230 million, a 9% increase compared to the prior year. This growth aligns with our long-term target of 8% to 11% annual growth. Now turning to Asia Pacific. Sales in Asia Pacific, which includes Australia, China and other countries in the Asia region, grew 28% or $5.1 million to $23 million compared to last year.
Foreign currency translation had no material impact on our fourth quarter results. Sales and maintenance products increased 30% or $4.8 million to $21 million compared to last year. This growth was primarily driven by a 44% increase in sales under the 40 multi-use product in our Asia distributor markets, where we saw strong demand across nearly all countries, particularly in Indonesia, Malaysia, Singapore and Philippines, fueled by geographic expansion, broader distribution and the timing of customer orders. Sales and maintenance products also grew in Australia and China, increasing by 12% and 6%, respectively, compared to the same period last year.
In Asia Pacific, sales of WD-40 Specialist increased 38% compared to last year due to higher sales volume from successful promotions and marketing efforts in our Asia distributor markets in China. Sales of home care and cleaning products or [indiscernible] carpet cleaners and [indiscernible] handles sold in Australia, increased 15% or approximately $300,000 compared to the same period last year.
Our Home Care portfolio in Australia benefits from strong brand recognition, a solid competitive position and meaningful growth opportunities. In total, our Asia Pacific segment made up 15% of our global business in the fourth quarter. For the full fiscal year, maintenance product sales in Asia Pacific totaled $84 million, a 6% increase compared to the prior year. This growth fall short of our long-term target of 10% to 13% annual growth for the region, we remain confident in the strong fundamentals of this high-growth trade block.
Now let's take a look at the strategic progress we made in fiscal year 2025 against 4 x 4 strategic framework. As you recall, this framework was designed to drive profitable growth and sustainable value creation and is built around our former win battles and 4 strategic enablers. [indiscernible] focus on what we do to increase sales and profitability since these are long-term growth drivers will focus on full year results.
Starting with [indiscernible], number one, lead geographic expansion. Global sales of WD-40 multi-use products in fiscal year '25 were $478 million, representing growth of 6% over the prior year. We experienced solid sales of our signature multi-use product brands in all 3 trade blocks with 8% growth in EMEA, 4% growth in the Americas and 6% growth in Asia Pacific. We saw solid sales growth this year, 12% in Latin America, 10% in China, 14% in France and 20% in India. But what's most important to emphasize is that we still have significant room to grow. Geographic expansion is our most significant long-term growth opportunity.
Over the last 5 years, we've achieved a compound annual growth rate for net sales of 40 multi-use product up 9.4%. Our path forward is clear. We're expanding availability across more channels and geographies while deepening product penetration by increasing brand awareness through sampling and putting more cans in the hands of end users around the world. We estimate the global attainable market for WFD multi-use product to be approximately $1.9 billion based on our updated benchmark sales potential and to date, we've achieved only 25% of our benchmark growth potential, splitting a growth opportunity of approximately $1.4 billion.
Our second [indiscernible] is accelerating premiumization Innovation is at the core of this strategy. We developed products like Smart [indiscernible] easy reach with our end users at the center of every decision, their needs to drive our product development efforts enabling us to deliver high-performance solutions that solve real-world problems. This end user-focused innovation fosters brand loyalty and contributes to gross margin expansion and differentiated offerings. In fiscal year '25, global sales of Smart Straw and Easy Redwan combined were up 7% over the prior year.
Premiumize products currently account for approximately 50% of WD-40 multi-use product sales and 40% of units sold, leaving considerable room for continued growth. Over the last 5 years, we've achieved a compound annual growth rate for net sales of premiumized products at 9.4%. And -- on a go-forward basis, we'll be targeting a compound annual growth rate for net sales of premium format products but greater than 10%.
Our third most in battle is to drive growth in WD-40 specialists. This product line is a strategic extension of our trusted core brand designed to meet the evolving needs of professionals and industrial users. Let me introduce the WD-40 specialist alongside the WD-40 multi-use products -- we're not just adding variety and strengthening our brand, capturing new segments and offering end users more choice without diluting what makes our core brand iconic.
By leveraging the strength of the WD-40 brand, we are driving category leadership and expanding market share in adjacent segments. In fiscal year '25, global sales of WD-40 Specialist products were $82 million, up 11% over the prior year. Once again, we saw growth of WD-40 Specialist products across all 3 trade blocks with growth of 6% in the Americas, 15% in EMEA and 12% in Asia Pacific. Over the last 5 years, we've achieved a compound annual growth rate for net sales of WD-40 specialists of 14.4%.
On a go-forward basis, we'll be targeting a compound annual growth rate for net sales of WD-40 specialist of greater than 10%. As before the specialist has matured and its market base has expanded, we've recalibrated our long-term growth expectations to reflect the product line's evolution within its life cycle. We estimate the global attainable market for WD-40 specialist to be approximately $665 million based on our updated benchmark sales potential. And to date, we've achieved only 12% of our benchmark growth potential leaving a growth opportunity of approximately $583 million.
Our fourth and final [indiscernible] batteries to accelerate digital commerce, our digital commerce strategy is a catalyst for growth across the business. not nearly a channel to online sales plays a vital role in advancing each of our must-win battles by increasing brand visibility, improving accessibility and driving deeper engagement with end users across global markets. In fiscal year '25, the e-commerce sales increased 10%, reflecting strong momentum in our digital strategy. So digital is more than a transactional platform. It's a powerful engine for brand building and education. For example, the digital space serves a dynamic environment for product discovery.
It allows us to showcase new applications for our products or fostering peer to peer learning. Many of these insights originate from our end users themselves to continually uncover innovative ways to use our products, of in ways we haven't imagined by leveraging digital touch points or deepen engagement, enhancing product understanding and strengthening brand definity across the globe. Turning to the second element of our [indiscernible] strategic framework, our strategic enablers, our strategic enablers focus on operational excellence, and they collectively underpin and drive the success of our [indiscernible] battles.
Strategic enabler #1 is ensuring a people-first mindset, WD-40 Company, our most powerful competitive advantage is a commitment of our 714 employees. We've long said we're a purpose-driven values-guided organization, and that's not just a tagline. Our values as a foundation of our culture. They shape how we lead, how we collaborate and how we make decisions every day. In our February 2025 global engagement survey, 94% of our people before they've been engaged in their work more than 4x Gallup's global average of 21%. 90% said they feel a strong sense of belonging and 95% expressed prior in our purpose, mission and values. This deep connection to who we are and what we stand for translates directly into growth and opportunity.
Nearly 40% of our people experienced career progression within their first 5 years at the company. To our employees, thank you for consistently showing what it means to live our purpose, to create positive lasting memories in everything you do. What our investors and stakeholders see in our performance is a direct reflection of your commitment to doing meaningful work the right way.
Strategic enabler #2 is to build an enduring business for the future, ability for company long-term value creation means operating with a clear commitment to balancing economic growth, environmental responsibility and social impact. One of our primary objectives under this strategic enabler is to lead our category with high-performing products designed for environmental sustainability. I'm excited to share that in the upcoming fiscal year, will introduce a new innovation under the WD-40 Specialist product line, which will be our first bio-based format of our multiuse product.
Our latest maintenance product is designed to reduce our environmental impact to have a reduced carbon footprint, utilizing ISO standard 14067 while still delivering the trusted performance expected from WD-40 brand products. The product will launch in select European markets later this fiscal year, and we look forward to sharing updates with you in the quarters ahead.
Strategic enabler #3 is achieving operational excellence in our supply chain. Profitable growth at WD-40 company depends on the supply chain is optimized by performing and resilient. In fiscal year '25, the strategic enabler played a vital role in protecting gross margins. We delivered several million dollars in economic value through cost reduction initiatives such as packaging enhancements, logistics efficiencies and strategic sourcing. These efforts helped to offset the financial impact of tariffs, underscoring the importance of this enabler.
Operationally, in fiscal year 2025, we achieved global on-time delivery of 96.4%, above our current target and also inventory levels of 99 days on hand coming closer to our target of 90 days.
Strategic enable #4 is to drive productivity through enhanced systems. At WD-40 Company, technology a key enabler of productivity and resilience. We're building a scalable digital infrastructure designed to support global growth and enhance operational agility, accelerating our strategic execution. By partnering with leading technology companies, we're investing in proven AI-enabled systems such as D365 and Salesforce that we believe will drive future gains in productivity. While we are taking a pragmatic approach to adopting AI across our organization, we've already identified several promising use cases that will help us to boost employee productivity, build our brand more effectively around the world and accelerate learning and improve collaboration within our global community.
With that, I'll now turn the call over to Sara.
Thanks, Steve, for that overview of our sales results and strategic framework. I'm pleased to share that we delivered a strong fourth quarter performance, culminating in an excellent bottom line finish to fiscal year 2025. Today, I'll walk through how we performed against our fiscal year 2025 guidance, share insights into our business model and highlight key takeaways from our fourth quarter financial results.
I'll also provide an update on the divestiture of our home care and cleaning business in the U.K. and close with our outlook for fiscal year 2026. Let's start with a discussion about how we performed against our fiscal year 2025 guidance. As a reminder, we issued our guidance in fiscal year 2025 on a pro forma basis. I encourage investors to review our earnings presentation, which includes a pro forma view. Since we issued our fiscal year 2025 guidance on a pro forma basis, I will provide the following summary on the non-GAAP pro forma basis.
We expected net sales growth adjusted for currency to be between 6% and 9%, with net sales of between $600 million and $620 million over our pro forma 2024 results. Today, we reported pro forma net sales adjusted for currency of $603 million, a 6% increase over the 2024 pro forma results. If we include the assets held for sale, consolidated net sales adjusted for currency were $622 million in fiscal year 2025. We expected full year gross margin to be in the range of 55% to 56%. Today, we reported gross margin of 55.6%, in line with our expectations. We expected our advertising and promotion investment to be around 6% of net sales.
Today, we reported an A&P investment of 6%. We expected operating income to be between $96 million and $101 million. Today, we reported operating income of $98.1 million, in line with our expectations. We expected diluted EPS of between $5.30 and $5.60. Today, we reported diluted EPS of $5.50 in line with our expectations. I'm pleased with the resilience and performance of our business in what has been a volatile and uncertain environment.
Throughout fiscal year 2025, we navigated a range of challenges from tariffs and macroeconomic instability to geopolitical tensions and shifting policy landscape. Despite these headwinds, we grew our top line, expanded margins and delivered solid bottom line growth. Thank you to all our employees for their focus, adaptability and commitment to delivering meaningful results for our stakeholders.
Let's start with a look at our business model. Our business model is a strategic tool we use to guide our business. The model is built around 3 core areas: gross margin, cost of doing business and adjusted EBITDA. Let's look at our fourth quarter gross margin performance. In the fourth quarter, our gross margin was 54.7% compared to 54.1% last year, which represents an improvement of 60 basis points and was most significantly impacted by the following favorable factors: 110 basis points from lower specialty chemical costs, 110 basis points from higher average selling prices. including the impact of premiumization and 60 basis points from lower input costs. Offsetting those benefits to gross margin were a few unfavorable factors. 140 basis points from unfavorable sales mix and other miscellaneous mix impacts and 60 basis points from higher warehousing, distribution and freight costs, primarily in the Americas.
I'm happy to share that gross margin performance this quarter was strong across all 3 trade blocks with results either exceeding our stated target or showing year-over-year improvement. In the Americas, gross margin increased by 70 basis points compared to the prior year fourth quarter, reaching 53.2%. EMEA health study at 55.5%, remaining above our target. And in Asia Pacific, gross margin increased by 110 basis points compared to the prior year fourth quarter, reaching 57.5%.
For the full fiscal year, gross margin was 55.1% compared to 53.4% last year, which represents an improvement of 170 basis points. As Steve mentioned earlier, we're very encouraged by the consistent improvement to gross margin we've seen over the past 3 years. Today, we're proud to report full fiscal year gross margin over the high end of our targeted range of 50% to 55%, recovering our gross margin a year ahead of schedule and marking a significant milestone in our recovery journey. It's important for stakeholders to understand that while certain external risks such as cost volatility, tariff uncertainty and inflationary pressures will always be part of the operating environment. We're actively pursuing a range of initiatives designed to help us mitigate those risks and strengthened gross margin over time.
These include supply chain cost reduction projects, cost optimization efforts, progress on asset divestitures, new product introductions, premiumization strategies and geographic expansion. Each of these levers contribute positively to gross margin and reinforces our confidence in its long-term potential. [indiscernible] by our current performance and strategic initiatives, we're confident in our ability to sustain gross margin above 55% in fiscal year 2026.
In addition, gross margin enhancement remains a key priority for senior leaders who continue to be incentivized to drive further improvement. Now turning to our cost of doing business. which we defined as total operating expenses less adjusted for certain noncash expenses. Our cost of doing business is primarily driven by 3 key areas: strategic investments in our people, global brand building efforts and freight expenses associated with delivering products to our customers. In the fourth quarter, our cost of doing business was 36% compared to 38% in the prior year quarter. In dollar terms, our cost of doing business remained relatively stable period-over-period.
For the full fiscal year, cost of doing business was 37% compared to 36% last year. In dollar terms, our cost of doing business increased $19 million or 9% period-over-period. In the fourth quarter, advertising and promotion expenses increased $1.6 million or 15% and period-over-period. As a percentage of net sales, A&P investment was 7.6% this quarter compared to 7% in the same period last year.
The phasing of our A&P investments are not evenly distributed over the course of the year. And in recent years, our brand building activities have been more heavily weighted in the second half of the year. For the full fiscal year, our A&P investment remained within our annual expectations. While our long-term goal is to manage cost of doing business within the 30% to 35% range, we continue to make thoughtful strategic investments to support long-term growth.
WD-40 Company has long been committed to operating with discipline and efficiency, a commitment reflected in our ability to manage the business with just 714 employees, each generating approximately $860,000 in revenue. This level of productivity speaks volumes about the strength of our culture, the effectiveness of our operating model, the awareness of our brand and the value we deliver across our global footprint.
What continues to evolve is our need to operate as a global business an increasingly complex and uncertain environment. To reduce risk and drive top line growth, we've implemented a number of structural changes in recent years to strengthen and sustain our business for the future. We're investing with discipline across technology, sustainability, innovation, research and development, legal risk management, brand building to strengthen our foundation, build brand awareness and ensure long-term resilience and growth. We also need time to absorb the loss of revenues associated with the home care and cleaning divestitures.
These investments have pushed our cost of doing business above our target range. However, we believe they strengthened the business, enhanced its resilience and positioned us to deliver sustainable long-term value to our stakeholders.
Turning now to adjusted EBITDA margin. We believe adjusted EBITDA as a percentage of sales is a valuable metric for assessing both profitability and operational efficiency. It reflects our operating performance and cash generating ability, providing the clearest view of our company's underlying financial health. Our 25% target for adjusted EBITDA margin is a long-term aspiration. However, we continue to believe we can move adjusted EBITDA margin back to our midterm target range of 20% to 22% once we have absorbed the loss of revenues associated with the home care and cleaning divestitures.
In the fourth quarter, our adjusted EBITDA was $30.5 million, up 16% from the same period last year. Our adjusted EBITDA margin this quarter was 18% compared to 17% in the same period last year. For the full fiscal year, our adjusted EBITDA was $114.4 million, up 8% from the same period last year. Adjusted EBITDA margin this year was 18%, which is the same as last year. Now let's turn to other key measures of our financial performance. operating income, net income and earnings per share in the fourth quarter.
Operating income improved to $28 million in the fourth quarter, an increase of 17% over the prior period. Net income improved to $21.2 million in the fourth quarter, an increase of 27% compared to the prior period. Diluted earnings per common share for the quarter were $1.56 compared to $1.23 in the prior period, reflecting an increase of 27% over the prior period. Our diluted EPS reflects 13.6 million weighted average shares outstanding.
Now let's review our balance sheet and capital allocation strategy. We maintain a strong financial position and healthy liquidity, enabling a disciplined capital allocation approach that both fuels long-term growth and generate significant value for our stockholders.
Maintaining a disciplined and balanced capital allocation approach remains a priority for us. For the foreseeable future, we expect CapEx of between 1% and 2% of sales per fiscal year. which is in line with our asset-light strategy. Our cash flow from operations this quarter was $30 million, and we elected to use approximately $9.5 million of that cash to pay down a portion of our short-term higher interest rate borrowings. Although our usual target for debt to adjusted EBITDA is 1 to 2x, we are currently slightly below that range. This provides us with strategic flexibility as we explore opportunities to return capital to stockholders and drive long-term growth.
We continue to return capital to our stockholders through regular dividends and buybacks. Annual dividends will continue to be our priority and are targeted at greater than 50% of earnings. On October 9, our Board of Directors approved a quarterly cash dividend of $0.94 per share. During fiscal year 2025, we repurchased approximately 50,000 shares of stock at a total cost of $12.3 million under our share repurchase plan. We have approximately $30 million remaining under our current repurchase plan, which is set to expire at the end of this fiscal year.
Looking ahead, we intend to accelerate our buyback activity and fully utilize the remaining authorization, underscoring our strong conviction in the long-term fundamentals of the business. We're focused on accretive capital returns that reflect our confidence in the long-term value of our stock. In fiscal year 2025, excluding the positive impact of the onetime noncash income tax adjustment. Our return on invested capital was 26.9%, improving from 25.5% last fiscal year and ahead of our target of 25%.
In September, we announced the sale of our 1001 and 1001 carpet [indiscernible] brand in the U.K. to Supreme Imports Limited, a Manchester-based consumer products company. The all-cash transaction valued at up to $7.5 million was completed in the fourth quarter of fiscal year 2025. WD-40 Company is providing limited transition services for up to 3 months. This divestiture reflects our continued focus on optimizing our portfolio and directing resources toward areas that drive long-term value. We continue to make progress on the sale of our Americas home care and cleaning product brands.
Our investment base continues active discussions with multiple potential buyers. Although there is no certainty on the deal, we remain optimistic, and I will provide further updates as appropriate.
Now moving to FY '26 guidance. Given the anticipated divestiture of our Americas home care and cleaning brands, we are continuing to present this year's guidance on a pro forma basis, excluding the financial impact of the assets held for sale. We're also providing a pro forma view of fiscal year 2 excluding the brands we divested in the U.K. in the fourth quarter. The brand currently held for sale and the impact of the onetime tax benefit recorded in the second quarter to help with modeling and period-over-period comparison.
Please refer to our fourth quarter and full year earnings presentation on our Investor Relations website for those details. Now with that backdrop, let's take a closer look at our guidance for fiscal year 2026. We're excited about what lies ahead in fiscal year 2026. By balancing strong performance today with thoughtful investments for tomorrow. We're building a foundation for lasting growth and long-term value creation.
For fiscal year 2026, we expect net sales growth from the pro forma 2025 results is projected to be between 5% and 9%, with net sales between $630 million and $655 million after adjusting for foreign currency impact. Gross margin is expected to be between 55.5% and 56.5%. Advertising and promotion investment is projected to be around 6% of net sales. Operating income is expected to be between $103 million and $110 million, representing growth of between 5% and 12% from the pro forma 2025 results.
The provision for income tax is expected to be between 22.5% and 23.5%. And diluted earnings per share is expected to be between 575 and 615 which is based on an estimated 13.4 million weighted average shares outstanding. This range represents growth of between 5% and 12% over the pro forma 2025 results. This guidance assumes no major changes to the current economic environment. Unanticipated inflationary headwinds and other unforeseen events may affect our view of fiscal year 2022. In the event we are unsuccessful in the divestiture of the Americas Home Care and cleaning brands, our guidance would be positively impacted by approximately $12.5 million in net sales $3.6 million in operating income and $0.20 in diluted EPS on a full year basis. That completes the financial overview.
Now I would like to turn the call back to Steve.
Thank you, Sarah, for that update. As we close another fiscal year at WD-40 Company, I'm reminded how fortunate we are to lead to to remarkable business. We have a world-class brand with a sustainable competitive advantage, a highly diversified global footprint and a long runway for growth. Our capital-light efficient business model generates significant cash, providing a strong financial foundation that allows us to invest in growing our brands and accelerate the development of our future leaders while continuing to prioritize returning capital to our investors.
As if that's not enough, what did you hear from us on this call? You heard that we reported currency adjusted pro forma net sales of $603 million, a 6% increase over FY '24 results and right in line with our expectations. You heard that sales of our maintenance products were up 6% in both the fourth quarter and fiscal year and that this performance aligns with our long-term growth target. You heard that we estimate the benchmark sales opportunity for WD-40 multi-use product to be approximately $1.9 billion and that we have achieved only 25% of that benchmark opportunity.
You heard that we estimate the benchmark sales opportunity for WD-40 Specialist to be approximately $665 million and now have achieved only 12% of that benchmark opportunity. You heard that we sold our U.K. homecare and cleaning product brands. You heard that the full fiscal year, we delivered a gross margin of 55.1% or 55.6% if we remove the financial impact of the assets held for sale. You heard that for the fourth quarter, we delivered a gross margin of 54.7%, an impressive 730 basis point improvement from the fourth quarter of fiscal year 2021. You heard it supported by current performance and our strategic initiatives we believe we're well positioned to target a gross margin of above 55% in FY '26.
You heard that by looking ahead to fiscal year '26, we intend to accelerate our buyback activity and fully utilize the remaining authorization, underscoring our strong conviction and the long-term fundamentals of the business. And you heard that we're issuing guidance for fiscal year '26 on a pro forma basis, excluding the brands we expect to divest this year.
Thank you for joining our call today. We'd now be pleased to answer your questions.
[Operator Instructions] Your first question comes from the line of Daniel Rizzo from Jefferies.
2. Question Answer
I just need a clarification. So when you guys gave your initial guidance last year, that excluded the home care sales, same thing as this year. But when you report it throughout the year, you reported including the Home Care sales, is that correct?
Daniel, yes. So in the press release and in the 10-Q, you'll see those include them, obviously, because those are reported on a GAAP basis or a U.S. GAAP basis. In the investor deck on every quarter, we showed a pro forma view so that you could back out those sales, although -- you can easily see those sales in our footnotes because we do break out the HCCP sales in both the Americas and the EMEA regions, but the pro forma you went a step further to take you all the way down in the P&L, so you could actually see the impact down to EPS.
Okay. So I'm looking at pro forma was [indiscernible] in EPS in '25, right?
That's correct.
All right. Sorry. I just wanted a clarification on that. So then you mentioned I say, in of a mix headwind. I was wondering if you could provide color on that. I mean I assume the premiumization is kind of a mixed tailwind, but I was wondering what's kind of countering that that you pointed out on the gross margin.
On the gross margin from a tailwind for the year?
Well, you said there was a mix headwind and other things. I was wondering what you were referring to.
I think the mix, what I -- so maybe it wasn't clear. The mix is a sales mix and other miscellaneous sales or other miscellaneous mix impact. So yes, so the premiumization, if you look at it for the full year, Actually, it's more for the quarter, the impact for the quarter, the sales mix and other miscellaneous mix impacts had a headwind of up about 140 basis points.
I'm sorry, just looking what exactly that is? Is that like -- is that -- I mean, just going distributor versus direct or.
It's a mix -- so yes, it's a mix of both how the markets play out, so direct and distributors, but then it is also a mix of products. So premiumization point into that, but also bulk and specialist and MOP. It's just a general product sales mix in addition to the market mix.
Okay. And then my final question. With premiumization, that's doing fairly well with the multiuse product. I wonder if a premiumization like an easy reach draw or something like that would be applied to like the specialist product line. Is that something that's being considered? Or we kind of far from that? Or how we should think about it?
Daniel, it's Steve. And so specialists, the whole specialist line sells at a higher gross margin as well. So effective leader is a premium every can of specialist we sell is margin accretive. And so that is a separate form of premiumization. .
Having said that, we already -- in several countries around the world, we've also launched a particularly easy reach delivery system on things like our penetrant product, which you have in the U.S., 1 or 2 other countries around the world. And so -- and certainly, Smart Straw, we leverage as part of our specialist premiumization strategy. So yes, it applies to both the core product and to specialist as well, Daniel.
Your next question comes from the line of Keegan Cox from DA Davidson.
Keegan on for Mike Baker today. I just wanted to ask if you could give any color or thoughts on potential gross margin headwinds and tailwinds that you're expecting within your 2026 guidance?
Keegan, this is Sara. So yes, I would say in our guidance, we have built in both headwinds and tailwinds. We are -- we are seeing stability from a cost input standpoint. And when you look at what we've built into our gross margin guidance if oil stays at the levels that they're at right now, that could be a small tailwind for us as we've tried to be a little bit conservative in what we've built in for an oil assumption because you just never really know which direction that is going to go. But there are a number of cost-saving initiatives that we have in the pipeline based on actions that we've taken in FY '25. And that will feed into FY '26, along with new actions that we've built around cost, supply chain optimization and continuation of the efforts that we've had in FY '25 on the sourcing side. We had a lot of success this year from a global sourcing standpoint and exceeded our cost savings expectations that we had this year. Some of those will then benefit our margin going into FY '26.
Got it. And then as I looked at kind of the sales results in Asia Pacific, specifically, say that 5x. It looks like the distributors accounted for most of the growth there. What is kind of the runway left for, I guess, that distributor market?
Sure. It's a very, very long runway. And so China also had a good -- well, all 3 areas were up, right? So Australia, I believe, was up 6% for the year. China was up in double digits. And then, yes, for the fourth quarter, in particular, we added a very strong comeback in distributor markets. And so as we look at all of those markets, it's a very, very long runway for growth in places like Indonesia, where we've introduced our new kind of hybrid business model has been growing at a CAGR of around 20% over the past few years. Many of those other key markets across the Asia region have a very, very long run rate of growth.
And so improved performance in the back half in Asia. And there may be some kind of impact in terms of cost of the distributors are a little more lumpy, right? And so going into the first quarter, you may see some kind of pullback -- that's just really kind of inventory management in Asia for Q1. But beyond that, we see a really strong rebound in Asia Pacific later in the fiscal year.
Ladies and gentlemen, that does conclude our allotted time for questions. We thank you for your participation on today's conference call and ask that you please disconnect your line.
WD-40 Company — Q4 2025 Earnings Call
Financial data from WD-40 Company
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| May '26 |
+/-
%
|
||
| Revenue | 675 675 |
10%
10%
100%
|
|
| - Direct Costs | 298 298 |
8%
8%
44%
|
|
| Gross Profit | 377 377 |
12%
12%
56%
|
|
| - Selling and Administrative Expenses | 249 249 |
9%
9%
37%
|
|
| - Research and Development Expense | 8.20 8.20 |
5%
5%
1%
|
|
| EBITDA | 120 120 |
19%
19%
18%
|
|
| - Depreciation and Amortization | 1.61 1.61 |
266%
266%
0%
|
|
| EBIT (Operating Income) EBIT | 118 118 |
18%
18%
17%
|
|
| Net Profit | 89 89 |
3%
3%
13%
|
|
In millions USD.
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WD-40 Company Stock News
Company Profile
WD-40 Co. is a marketing company, which engages in the development and sale products that solve problems in workshops, factories, and homes. It operates through the following geographical segments: Americas, Europe, Middle East and Africa (EMEA), and Asia Pacific. The Americas segment consists of the Unites States, Canada, and Latin America. The EMEA segment comprises of countries in Europe, the Middle East, Africa, and India. The Asia-Pacific segment covers operations in Australia, China, and other countries in the Asia region. Its brands include WD-40, 3-IN-ONE, GT85, X-14, 2000 Flushes, Carpet Fresh, no vac, Spot Shot, 1001, Lava and Solvol. The company was founded by Sam Crivello and Norm Bernard Larsen in 1953 and is headquartered in San Diego, CA.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Brass |
| Employees | 714 |
| Founded | 1953 |
| Website | www.wd40.com |


