WD 40 CO

WD-40 Company is a global marketing organization that develops and sells products solving problems in workshops, factories and homes worldwide. The company was founded in 1953 and is headquartered in San Diego, California. For more than four decades, the company sold only one product, the WD-40 Multi-Use Product, a multi-purpose maintenance product that acts as a lubricant, rust preventative, penetrant and moisture displacer. Over the last several decades, the company has evolved and expanded its product offerings through both research and development activities and through the acquisition of several of its smaller brands worldwide. The company currently markets and sells its products in more than 176 countries and territories worldwide primarily through hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, warehouse club stores, farm supply stores, sport retailers, and independent bike dealers. Sales come from two product groups: maintenance products and homecare and cleaning products. Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, India, the Middle East and Africa. Homecare and cleaning products are sold primarily in North America, the United Kingdom and Australia.

The markets for the company's products are highly competitive and influenced by large retailers with significant negotiating power. Current trends among these large retailers include increased demand for new innovative products and marketing, requiring suppliers to maintain or reduce product prices and to deliver products within shorter lead times. The company's products compete both within their own product classes as well as within product distribution channels, competing with many other products for store placement and shelf space. Competition in international markets varies by country. The company is aware of many competing products, some of which sell for lower prices or are produced and marketed by companies with greater financial resources than those of the company. The company relies on the awareness of its brands among end users, the value offered by those brands as perceived by consumers, product innovation and renovation and its multiple channel distributions as its primary strategies. New products and entry into new markets typically encounter intense competition, which may require significant investments in advertising and promotional activities. The company's largest individual customer contributed to less than 10% of consolidated net sales in fiscal year 2025.

The company generates revenue from sales of its products to customers in its Americas, EIMEA and Asia-Pacific segments. Product sales include maintenance products and homecare and cleaning products. The company recognizes revenue related to the sale of these products when it satisfies a performance obligation in an amount reflecting the consideration to which it expects to be entitled. Sales are recorded net of allowances for damaged goods and other sales returns, sales incentives, trade promotions and cash discounts. The company considers each transaction to sell products as separate and distinct, with no additional promises made, and as a result, all of the company's sales are single performance obligation arrangements for which the transaction price is equivalent to the stated price of the product, net of any variable consideration for items such as sales returns, discounts, rebates and other sales incentives. The company recognizes sales at a point in time upon transferring control of its product to the customer. This typically occurs when products are shipped or delivered, depending on when risks of loss and title have passed to the customer per the terms of the contract. The company's sales do not reflect any significant degree of seasonality.

The company's maintenance products include multi-purpose maintenance products and specialty maintenance products. The signature product is WD-40 Multi-Use Product in the blue and yellow can with the little red top, which accounts for a significant majority of sales in the maintenance product category. The WD-40 Multi-Use Product is a market leader in many countries among multi-purpose maintenance products and is sold as an aerosol spray with various unique delivery systems, a non-aerosol trigger spray, a precision pen, and in liquid-bulk form. The WD-40 Specialist product line consists of a line of professional-grade specialty maintenance products that includes penetrants, degreasers, corrosion inhibitors, greases, lubricants and rust removers aimed at professionals and consumer enthusiasts. The 3-IN-ONE brand consists of multi-purpose drip oil, specialty drip oils, and specialty aerosol maintenance products, and is the market share leader among drip oils in many countries. The GT85 brand is a multi-purpose bike maintenance product line sold primarily in the bike market through the automotive and industrial channels in the U.K. Homecare and cleaning products include brands such as 2000 Flushes, Spot Shot, Carpet Fresh, Lava, X-14, no vac, Solvol, and 1001. The company is pursuing the sale of certain assets of the homecare and cleaning product portfolios in the Americas segment and is expecting the sale of these portfolios in fiscal year 2026. The company sold certain assets of the homecare and cleaning product brands in the EIMEA segment in the fourth quarter of fiscal year 2025. Certain homecare and cleaning product brands will continue to be held for use in the Asia-Pacific segment.

During the fourth quarter of fiscal year 2025, the company completed the sale of the company's business pertaining to homecare and cleaning products that are sold in EIMEA. On August 29, 2025, the company entered into an Asset Purchase Agreement to sell its homecare and cleaning product business for total consideration of up to $7.5 million ¹. Consideration under the APA consists of $1.7 million ² cash paid on the closing date, a $0.5 million ³ payment due within twelve months, inventory consideration of up to $1.4 million ⁴ due within one hundred twenty days, and annual contingent payments related to incremental revenue share for an earn out period of four years, not to exceed $3.9 million ⁵ in aggregate. During the fiscal year ended August 31, 2025, the company returned approximately $62.6 million ⁶ to its stockholders through share repurchases and dividends. On June 19, 2023, the Board approved a new share repurchase plan under which the company is authorized to acquire up to $50.0 million ⁷ of its outstanding shares through August 31, 2025. On June 16, 2025, the Board approved the extension of the expiration date to August 31, 2026 for the 2023 Repurchase Plan. During the fiscal year ended August 31, 2025, the company repurchased 50,250 ⁸ shares at an average price of $245.06 ⁹ per share, for a total cost of $12.3 million ¹⁰ under this $50.0 million ¹¹ plan. On December 11, 2024, the Board approved a 7% ¹² increase in the regular quarterly cash dividend, increasing it from $0.88 ¹³ per share to $0.94 ¹⁴ per share.

Consolidated net sales increased $29.4 million ¹⁵, or 5% ¹⁶, for fiscal year 2025 compared to the prior fiscal year. Increases in sales volume favorably impacted net sales by approximately $25.2 million ¹⁷ from period to period. Increases in the average selling price of products positively impacted net sales by approximately $5.6 million ¹⁸ from period to period. Changes in foreign currency exchange rates from period to period had an unfavorable impact of $1.4 million ¹⁹ on consolidated net sales for fiscal year 2025. Gross profit as a percentage of net sales increased to 55.1% ²⁰ for fiscal year 2025 compared to 53.4% ²¹ for the prior fiscal year. Consolidated net income increased $21.4 million ²², or 31% ²³, for fiscal year 2025 compared to the corresponding period of the prior fiscal year. Diluted earnings per common share for fiscal year 2025 were $6.69 ²⁴ versus $5.11 ²⁵ in the prior fiscal year. Excluding a one-time benefit from the release of an uncertain tax position, on a non-GAAP basis, adjusted diluted EPS was $5.82 ²⁶.

The company's future is guided by a long-term four-by-four strategic framework tied to its purpose and values. The first element of the four-by-four strategic framework, referred to as Must-Win Battles, focuses on increasing sales of maintenance products. The four Must-Win Battles include: growing WD-40 Multi-Use Product sales through geographic expansion; growing sales and gross margin through the premiumization of WD-40 Multi-Use Product; growing the WD-40 Specialist product line through category leadership; and accelerating capabilities in building the brand digitally and maximizing global digital commerce presence. The second element, referred to as Strategic Enablers, focuses on operational excellence and includes: ensuring a people-first mindset where the company can attract, develop and engage outstanding employees; building a sustainable business for the future; achieving operational excellence in supply chain; and driving productivity through enhanced systems. The company intends to continue to work on future products, product lines, product packaging, and product delivery systems, as well as promotional innovations and renovations to expand its product portfolio, build a more sustainable future, and help the company grow. The company is also focused on expanding its current brands in existing markets with new product development.

The company's growth strategy includes geographic expansion of WD-40 Multi-Use Product sales, premiumization of WD-40 Multi-Use Product to grow sales and gross margin, growing the WD-40 Specialist product line through category leadership, and accelerating digital commerce capabilities. The company continues to be focused and committed to innovation and renovation of its products, seeing these as important factors to long-term growth and enhancing the sustainability of its brands and product lines. Key innovations include WD-40 EZ-Reach Flexible Straw, WD-40 Smart Straw, WD-40 Trigger Pro, WD-40 Specialist, WD-40 Specialist Degreaser & Cleaner EZ-Pods, WD-40 Precision Pen, WD-40 BIKE, 3-IN-ONE RVcare and 3-IN-ONE Professional Garage Door Lube. The company's homecare and cleaning products in the Americas and Asia-Pacific segments are considered harvest brands, which continue to provide positive returns but are becoming a smaller part of the business as sales of maintenance products grow with the execution of the four Must Win Battles. The company is actively pursuing the sale in fiscal year 2026 of certain homecare and cleaning product brands in the Americas segment, which will allow the company to focus on its core, higher-margin maintenance products.

The company targets its gross margin to be 55% ²⁷ of net sales, its cost of doing business to be 30% ²⁸ of net sales, and its Adjusted EBITDA to be 25% ²⁹ of net sales. These targets are long-term in nature. For fiscal year 2025, gross margin was 55% ³⁰, cost of doing business as a percentage of net sales was 37% ³¹, and Adjusted EBITDA as a percentage of net sales was 18% ³². The company expects to make progress towards its cost of doing business and Adjusted EBITDA targets over time. Progression towards these targets may be challenged as the company continues to divest certain of its homecare and cleaning product businesses, due to the low level of operating expenses associated with these businesses. Despite these potential challenges, the company intends to focus its resources and proceeds from the sale of those brands on growing its higher growth and higher gross margin core business. Gross margin increased 170 ³³ basis points in fiscal year 2025, primarily due to lower costs of specialty chemicals, lower costs of aerosol cans, and increases in average selling prices, partially offset by higher warehousing, distribution and freight costs.

The company outsources its finished goods manufacturing directly or through its marketing distributors to various third-party manufacturers. The company or its marketing distributors use contract manufacturers in the U.S., Mexico, Brazil, Argentina, Colombia, the U.K., Italy, Poland, Australia, China, the Middle East, South Korea and India. The company also formulates and manufactures concentrate used in its WD-40 products at certain of its own facilities and at third-party contract manufacturers. The company relies on a limited number of third-party contract manufacturers and component suppliers, including single or sole-sourced suppliers, for certain raw materials, packaging, product components and other necessary supplies. Where possible and where it makes business sense, the company works with secondary or multiple suppliers to qualify additional supply sources. The company has historically experienced input cost inflation that impacted the cost of certain raw materials and freight services, and as a result, took actions to increase prices with customers to help mitigate some of these inflationary pressures and implemented cost savings initiatives. The company is currently implementing new information systems within its enterprise resource planning framework at certain offices in a phased manner; the first and most significant phase, implementation in the U.S., was completed in fiscal year 2024.

Research and development costs for fiscal years 2025 and 2024 were $8.7 million ³⁴ and $8.0 million ³⁵, respectively. The increase from period to period was partially due to a higher level of research and development activity associated with the company's sustainability initiatives. Purchases of property and equipment were $4.5 million ³⁶ for fiscal year 2025. The company has historically paid regular quarterly cash dividends on its common stock. On December 11, 2024, the Board approved a 7% ³⁷ increase in the regular quarterly cash dividend, increasing it from $0.88 ³⁸ per share to $0.94 ³⁹ per share. On October 9, 2025, the Board declared a cash dividend of $0.94 ⁴⁰ per share payable on October 31, 2025 to stockholders of record on October 20, 2025. Under the 2023 Repurchase Plan, the company is authorized to acquire up to $50.0 million ⁴¹ of its outstanding shares through August 31, 2026, of which $29.6 million ⁴² remained available for the repurchase of shares of common stock as of August 31, 2025.

Adverse developments in the global economy or key regional economies, a reduction in industrial outputs, or decreases in consumer spending or confidence could significantly decrease purchases of the company's products by its customers and end users. Consumer purchases of discretionary items, which could include the company's maintenance products and homecare and cleaning products, may decline during periods where disposable income is reduced or there is economic uncertainty. During unfavorable or uncertain economic times, end users may also increase purchases of lower-priced or non-branded products and competitors may increase their level of advertising and promotional activities. The company's sales and operating results may be affected by uncertain or changing economic and market conditions, including recession, inflation, deflation, tariffs and other geopolitical trade disruptions, prolonged weak consumer demand, political instability, public health crises and natural disasters. In April 2025, the U.S. government announced a number of tariffs on countries which include those the company trades with for certain input costs to its products. Certain inputs sourced by the company's third-party manufacturers to produce its products may increase in cost which may result in the company's inability to purchase sufficient inventory of inputs for production to meet customer demand.

Approximately 51% ⁴³ of the company's revenues in fiscal year 2025 were generated in currencies other than the U.S. Dollar, which is the company's reporting currency. All of the company's foreign operating subsidiaries have functional currencies other than the U.S. Dollar, and its largest subsidiary is in the U.K. and generates significant sales in Euros and Pounds Sterling. The company's financial results are negatively impacted when the foreign currencies in which its subsidiary offices operate weaken relative to the U.S. Dollar. The company's sales outside the U.S. were approximately 66% ⁴⁴ of consolidated net sales in fiscal year 2025. The company's ability to execute its strategic framework will continue to face substantial risks associated with having increased global operations outside the U.S., including economic or political instability in any of its global markets, challenges associated with conducting business in foreign jurisdictions, increasing tax complexity, a dispersed employee base, varying and complex privacy laws, and the imposition of tariffs or trade restrictions. The ongoing Russia-Ukrainian war and recent conflicts in the Middle East have periodically disrupted global markets and contributed to increased market volatility and other disruptions.

The company faces significant foreign currency exchange rate risk, as approximately 51% ⁴⁵ of revenues in fiscal year 2025 were generated in currencies other than the U.S. Dollar, and all foreign operating subsidiaries have functional currencies other than the U.S. Dollar. The company's financial results are negatively impacted when foreign currencies weaken relative to the U.S. Dollar. The company also faces substantial risk from global economic conditions, including recession, inflation, deflation, tariffs and other geopolitical trade disruptions. In April 2025, the U.S. government announced tariffs on countries the company trades with for certain input costs, which may increase costs and impact the company's ability to purchase sufficient inventory. The company relies on a limited number of third-party contract manufacturers and component suppliers, including single or sole source suppliers for certain raw materials, packaging, product components and other supplies, which could result in disruption to the business. The company's success is directly dependent on the success and reputation of its brands, particularly the WD-40 Brand, and any erosion of brand value due to quality issues, negative publicity, or competitive pressures could negatively impact financial results. The company's ability to achieve sales volume growth depends on executing its strategic framework, driving growth in new geographic markets, and capturing market share from competitors, which may be difficult in developed markets where products are widely used.

Management's message emphasizes the company's purpose-driven and values-guided culture, which generates an important competitive advantage through the ability to attract, develop, retain and engage outstanding people. The company's future is guided by a long-term four-by-four strategic framework tied to its purpose and values, with two main elements: Must-Win Battles focusing on increasing sales of maintenance products, and Strategic Enablers focusing on operational excellence. The company continues to be focused and committed to innovation and renovation of its products, seeing these as important factors to long-term growth and enhancing the sustainability of its brands and product lines. Management highlights that the company's homecare and cleaning products in the Americas and Asia-Pacific segments are considered harvest brands, which continue to provide positive returns but are becoming a smaller part of the business as sales of maintenance products grow. The company is pursuing the sale of certain assets of its homecare and cleaning product portfolios in the Americas segment and is expecting the sale of these portfolios in fiscal year 2026, which will allow the company to focus on its core, higher-margin maintenance products. Management targets gross margin to be 55% ⁴⁶ of net sales, cost of doing business to be 30% ⁴⁷ of net sales, and Adjusted EBITDA to be 25% ⁴⁸ of net sales, though these are long-term targets and the company expects to make progress towards them over time.