Wd-40 Co 2026 Q4 Earnings Call

Good afternoon, and thank you for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass, Vice President and Chief Financial Officer, Sara Hyzer, and Vice President, Global Finance and incoming Chief Financial Officer, Keith Stauffer. In addition to today's discussion, we encourage investors to review our earnings presentation, press release, and Form 10-K for the period ending August 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 October 21, 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'd like to welcome Keith Stauffer to his first WD-40 Company earnings call. As previously announced, Keith joined the company in September and will assume the role of Chief Financial Officer on November 2. At that time, Sara will transition to her new role as Division President of the Americas. Sara is joining us today for her final earnings call as CFO as we close out fiscal year 2026. I'd like to thank Sara for her outstanding leadership as Chief Financial Officer and for her partnership in supporting this transition. I'll begin with an overview of our fourth quarter and fiscal year results, including progress against our Four-by-Four Strategic Framework. Sara will then review our financial performance. Keith will discuss our outlook for fiscal year 2027, and we'll conclude with your questions.

At WD-40 Company, resilience is rooted in the strength of our business model. Our iconic global brand, disciplined execution, flexible global supply chain, and strong financial foundation provide the durability to navigate changing market conditions while continuing to deliver growth. Throughout FY 2026, we maintained a strong focus on executing our strategy and advancing our priorities, even amid geopolitical and economic uncertainty. Today, we reported consolidated net sales of $176.8 million for the fourth quarter and $688 million for the full fiscal year, up 8% and 11% respectively versus the prior year. As a long-term value creator, we focus less on any single quarter and more on our ability to deliver durable compounding growth over time. That's why we measure our performance against our long-term maintenance product sales target of 5%-9% growth in constant currency.

In the fourth quarter, maintenance product sales increased 9% to $170.5 million, bringing full-year maintenance product sales to $665.9 million, up 13% versus the prior year. On a constant currency basis, maintenance product sales increased 8% to $168.8 million in the fourth quarter and 9% to $644.7 million for the full year, in line with our long-term growth expectations. Let's turn to gross margin. Our fourth quarter gross margin of 52.8% reflects the temporary cost pressure we discussed last quarter. Full-year gross margin remained resilient at 55.3%, an increase of 20 basis points versus FY 2025, and in line with our guidance. Protecting gross margin remains a key priority, and we continue to take pricing and cost actions to offset cost inflation and preserve the strength of our business model.

Based on what we know today, we believe the fourth quarter marked the low point for gross margin, and we expect sequential improvement starting in the first quarter of fiscal 2027. For the full fiscal year 2027, we're targeting gross margin of 54%-55.5%, generally in line with our Enduring Business Model. Now let's review fourth quarter sales results by trade bloc. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the fourth quarter of fiscal 2025. Sales in the Americas increased 5% year-over-year to $81.3 million, driven by a 5% increase in maintenance products to $77.8 million. This growth was driven primarily by increased sales of WD-40 Multi-Use Product in Latin America, where sales increased by $2.7 million, reflecting strong performance across distributor markets, including Argentina and Ecuador, supported by enhanced inventory sourcing and distribution capabilities.

In the Americas, WD-40 Specialist sales increased 7%, driven primarily by higher U.S. volumes, reflecting new distribution gains, strong placement with large retailers, and growth in online sales. For the full fiscal year, maintenance product sales in the Americas increased 13% to $313.7 million, or 12% in constant currency, exceeding our long-term growth target for the segment. Turning to EIMEA, sales in the fourth quarter increased 10% year-over-year to $69.2 million, driven by a 14% increase in maintenance products. Growth was supported by higher sales volumes across both direct and distributor markets, while foreign currency had no meaningful impact on results. In our EIMEA direct markets, maintenance product sales increased to $2.3 million, driven primarily by strong sales of WD-40 Specialist. Growth was led by Southern Europe, where WD-40 brand sales increased by $3.9 million, supported by strong commercial execution, promotional activity, and merchandising.

In our EIMEA distributor markets, sales increased $6.2 million, driven by strong WD-40 Multi-Use Product sales and higher volumes across key markets. India and the Middle East contributed the strongest growth with $2.4 million and $1.2 million of growth respectively. Across EIMEA, WD-40 Specialist sales increased 27%, driven by strong growth in France, Italy, and Iberia, supported by effective marketing programs, successful new product introductions, and strong commercial execution. As a reminder, fourth quarter sales comparisons were impacted by the divestiture of the U.K. homecare and cleaning portfolio in FY 2025, which reduced reported sales by $2 million. We believe this strategic decision enhances the quality of our revenue base by increasing our focus on faster-growing, higher-margin maintenance products. For the full fiscal year, maintenance product sales in EIMEA increased 13% to $259.3 million.

On a constant currency basis, sales grew 6%, despite a dynamic geopolitical and economic environment, reflecting the resilience of our business model and the strength of our global supply chain. In Asia Pacific, sales in the fourth quarter increased 13% year-over-year to $26.3 million and were up 9% on a constant currency basis, reflecting broad-based growth across the region led by China, where sales increased by $1.8 million. In China, growth was driven by higher sales volumes, reflecting the successful execution of promotional marketing programs and expanded distribution across traditional and e-commerce channels. Growth also benefited from some customer purchases ahead of a planned price increase. Australia also delivered a strong quarter, with sales increasing just under $1 million year-over-year. In Asia Pacific, WD-40 Specialist sales increased 23%, driven primarily by strong growth in China.

Higher sales volumes reflected the successful execution of promotional and marketing programs, expanded distribution, and continued growth across e-commerce channels. For the full fiscal year, maintenance product sales in Asia Pacific increased 11% to $92.9 million, or 8% in constant currency. Now let's turn to the strategic progress we made in fiscal year 2026 against our Four-by-Four Strategic Framework. Designed to drive profitable growth and long-term value creation, the framework is built around four Must-Win Battles and four strategic enablers. Our Must-Win Battles focus on the initiatives that drive sales growth and profitability. Given their long-term nature, I'll focus on full-year results. Starting with Must-Win Battle number one, lead geographic expansion, global sales of our flagship product in fiscal year 2026 were $533 million, representing growth of 11% over prior year and 8% on a constant currency basis.

Sales of WD-40 Multi-Use Product increased across all three trade blocs, growing 13% in the Americas, 10% in EIMEA, and 8% in Asia Pacific. On a constant currency basis, growth was 11%, 4%, and 6% respectively. We made significant progress across many of our key priority markets this year, with sales increasing $21.6 million in the U.S., $5.3 million in China, $5.2 million in India, $3.1 million in France, and $2.5 million in Mexico. What's most important to emphasize is that we still have significant room to grow. Building on the success of our direct market transitions in Mexico and Brazil, we recently made Japan our newest direct market, expanding our presence in one of the world's largest economies. Japan is a compelling long-term growth opportunity. It's a mature, highly competitive market where building scale takes time and competing there will make us stronger.

The capabilities we build in Japan will support our long-term growth strategy. WD-40 Multi-Use Product remains the foundation of our growth strategy. Our path forward is clear: expand availability across more channels and geographies, build brand awareness, and put more cans into the hands of targeted end users. Benchmarked against France, our highest penetration market, we estimate the global attainable market at approximately 2.2 billion. Having achieved only 24% of that potential, we see a remaining growth opportunity of about 1.7 billion and a long runway for durable growth. The updated benchmark reflects higher penetration in France and a modest foreign currency impact. Next is Must-Win Battle number 2, accelerating premiumization. Premiumization remains an important driver of our growth strategy. Products such as Smart Straw and EZ Reach reflect our focus on developing differentiated solutions that address end-user needs.

This approach strengthens brand loyalty, supports premium pricing, and contributes to gross margin expansion. Combined global sales of Smart Straw and EZ Reach in fiscal year 2026 were $277.1 million, an increase of 17% over the prior year. With premiumized products representing 52% of WD-40 Multi-Use Product sales and 41% of units sold, we believe significant opportunity remains to further increase penetration. Over the last five years, we've achieved a compound annual growth rate for net sales of premiumized products of 8.9%. Supported by continued innovation, increased consumer adoption, and expanded manufacturing capacity, we are targeting a compound annual growth rate for premiumized product sales of greater than 10% over the long term. Our third Must-Win Battle is driving WD-40 Specialist growth. WD-40 Specialist extends our iconic brand into adjacent categories, serving professional and industrial end users and opening new avenues for profitable growth.