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    WDFC
    Earnings call· May 2026(Q3 FY26)

    WD 40 Q3 FY26 earnings call WDFC

    Jul 9, 2026 Source

    Executive summary

    WD-40 Company Q3 FY26 — Strong Sales and Operating Income Growth, Updated Guidance

    The company delivered robust Q3 FY26 results, driven by strong sales across all trade blocs and significant operating leverage. While anticipating near-term gross margin pressure from input costs, management has implemented pricing and cost-saving initiatives, positioning for recovery in FY27. The company also introduced a new "enduring business model" focused on driving EBITDA growth faster than revenue.

    Highlights

    5

    • Consolidated net sales increased 24% year-over-year to $195.1 million.

    • Operating income increased 47% to $40.3 million, demonstrating operating leverage.

    • Non-GAAP diluted EPS grew 50% to $2.33.

    • Gross margin improved 40 basis points year-over-year to 56.6%.

    • Year-to-date sales of WD-40 Multi-Use Product increased 13% to $398 million, with strong growth in the U.S. (20%), China (21%), and Iberia (27%).

    Concerns

    3

    • Gross margin is expected to experience temporary pressure from external cost factors in coming months, with a 60 basis point impact from higher-than-expected cost increases.

    • A portion of Q4 demand shifted into Q3 due to advanced buying ahead of price increases and geopolitical uncertainty, impacting Q4 outlook.

    • Americas homecare and cleaning brands are no longer actively marketed for divestiture, reclassified as held for use, and expected to see gradual top-line decline.

    Guidance & targets

    18
    CategoryTargetConfidence
    Net sales constant currency
    $652 million and $667 million
    high materiality
    High
    Net sales reported
    $675 million and $690 million
    high materiality
    High
    Gross margin
    54.5% and 55.5%
    high materiality
    High
    Advertising and promotion investment as % of net sales
    approximately 6%
    medium materiality
    High
    Non-GAAP operating income
    $107 million and $113 million
    high materiality
    High
    Provision for income tax
    around 22.5%
    medium materiality
    High
    Non-GAAP diluted earnings per share
    $6.05 and $6.35
    high materiality
    High
    Euro to U.S. dollar exchange rate assumption
    approximately $1.17
    low materiality
    High
    Maintenance product sales growth
    mid- to high single digits
    high materiality
    High
    Gross margin
    above 55%
    high materiality
    High
    Adjusted EBITDA growth
    growing faster than net sales
    high materiality
    High
    Returns on invested capital
    above 25%
    medium materiality
    High
    Americas maintenance products growth
    low double-digit growth
    medium materiality
    High
    EMEA maintenance products growth constant currency
    low to mid-single digits
    medium materiality
    High
    EMEA maintenance products growth reported currency
    high single digits
    medium materiality
    High
    Asia Pacific maintenance products growth
    high single-digit to double-digit growth
    medium materiality
    High
    Premiumized products annual growth
    more than 10%
    medium materiality
    High
    WD-40 Specialist annual growth
    more than 10%
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Growth driven by increased sales of WD-40 Multi-Use Products in the U.S. and Latin America, supported by expanded distribution, e-commerce, and promotional activity. WD-40 Specialist sales grew due to new distribution, large retailer placement, and online sales. Homecare and cleaning product sales declined due to strategic focus on higher-margin maintenance products.
    Maintenance products sales growth: 31%Maintenance products sales: $98.3 millionWD-40 Multi-Use Products sales increase (U.S.): $17.2 millionWD-40 Multi-Use Products sales increase (Latin America): $2.6 millionWD-40 Specialist sales growth: 22%Homecare and cleaning product sales decline: 9%
    		$101.2 million29%——
    EMEA
    Reflects higher sales volume in both direct and distributor markets and favorable foreign currency exchange rates. Growth in direct markets was driven by key markets like Iberia and DACH. Distributor markets saw a strong rebound, particularly in Saudi Arabia and UAE, due to order timing and inventory build. Sales benefited from advanced buying ahead of price increases and geopolitical uncertainty.
    Constant currency sales growth: 10%Direct markets sales increase: $6.6 millionDistributor markets sales increase: $4.4 millionIberia maintenance products sales increase: $2.2 millionDACH maintenance products sales increase: $1.5 millionIndia sales increase: $1.6 millionWD-40 Specialist sales growth: 31%Divestiture of U.K. homecare and cleaning impact on Q3 sales: -$1.1 million
    		$66.6 million17%——
    Asia Pacific
    Broad-based growth across the region, primarily driven by China and Asia distributor markets. China growth was supported by higher sales volumes, promotional programs, online influencers, and expanded distribution. Asia distributor markets benefited from promotional programs in the Philippines, Indonesia, and Malaysia. Sales also benefited from advanced buying ahead of planned price increases.
    Constant currency sales growth: 18%China sales increase: $3 millionAsia distributor markets sales increase: $1.4 millionWD-40 Specialist sales growth: 32%
    		$27.3 million24%——

    Operational metrics

    29
    Maintenance products sales as % of total net sales
    97%
    Q3 FY26

    Maintenance products represented 97% of total net sales.

    Maintenance products net sales
    $189.7 million26% YoY
    Q3 FY26

    Maintenance products sales increased 26% to $189.7 million and were up 22% on a constant currency basis.

    Direct markets maintenance products sales growth
    28%YoY
    Q3 FY26

    Sales of maintenance products in our direct markets increased 28% year-over-year.

    Marketing and distributor markets maintenance products sales growth
    18%YoY
    Q3 FY26

    Sales through our marketing and distributor markets increased 18%.

    Gross margin
    56.6%40 bps YoY
    Q3 FY26

    Gross margin increased 40 basis points year-over-year to 56.6%, driven by lower aerosol cans and fill fees, and favorable sales mix, partially offset by increases in other input costs.

    WD-40 Multi-Use Product year-to-date sales
    $398 million13% YoY
    YTD Q3 FY26

    Year-to-date sales of WD-40 Multi-Use Product increased 13% to $398 million.

    WD-40 Multi-Use Product attainable market
    $1.9 billion
    Long-term

    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.

    WD-40 Smart Straw and EZ Reach sales as % of WD-40 Multi-Use Product sales
    50%
    YTD Q3 FY26

    Year-to-date sales of WD-40 Smart Straw and EZ Reach when combined, increased 19% and now represent approximately 50% of WD-40 Multi-Use Product sales.

    WD-40 Smart Straw and EZ Reach year-to-date sales growth
    19%YoY
    YTD Q3 FY26

    Year-to-date sales of WD-40 Smart Straw and EZ Reach when combined, increased 19%.

    WD-40 Specialist year-to-date sales
    $72.9 million22% YoY
    YTD Q3 FY26

    Year-to-date sales increased 22% to $72.9 million.

    WD-40 Specialist attainable market
    $665 million
    Long-term

    We estimate the attainable market for WD-40 Specialist at approximately $665 million. Fiscal year '25 sales of $82 million.

    WD-40 Specialist sales from top 10 markets
    90%
    Current

    90% of our WD-40 Specialist sales come from just 10 markets.

    E-commerce year-to-date sales growth
    22%YoY
    YTD Q3 FY26

    Year-to-date e-commerce sales increased 22%, led by the United States and China.

    Cost of doing business as % of net sales
    34%down from 38% last year
    Q3 FY26

    Cost of doing business, which represents operating expenses adjusted for certain noncash items, decreased to 34% of net sales from 38% last year.

    Advertising and promotional investment as % of net sales
    6.1%up from 5.8% last year
    Q3 FY26

    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.

    Adjusted EBITDA margin
    23%up from 20% last year
    Q3 FY26

    Adjusted EBITDA margin increased to 23% from 20% last year, reflecting operating leverage from higher revenue and scale.

    Americas household brands annual sales
    $12 million
    Annual

    The Americas household brands combined represent $12 million in annual sales, less than 2% of our global revenue.

    Amortization expense (non-GAAP adjustment)
    $1.3 million
    Q3 FY26

    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. This is a one-time catch-up expense.

    Operating income
    $40.3 million47% YoY
    Q3 FY26

    Operating income increased 47% to $40.3 million with foreign currency being a tailwind. On a constant currency basis, operating income increased by 42%.

    Non-GAAP net income
    $31.5 million50% YoY
    Q3 FY26

    Excluding amortization expense related to the reclassification of our homecare and cleaning brands, non-GAAP net income was $31.5 million, up 50% to prior year.

    Non-GAAP diluted earnings per common share
    $2.33up from $1.54 in prior year
    Q3 FY26

    On a non-GAAP basis, diluted earnings per common share were $2.33, up from $1.54 in the prior year quarter.

    Share repurchase program authorization
    $100 millionnew program
    Open-ended

    Board of Directors authorized a new share repurchase program of up to $100 million with no expiration date.

    Impact of homecare and cleaning reclassification on FY26 operating income guidance
    $2.9 million
    FY26

    FY26 operating income outlook includes approximately $2.9 million in operating income related to those assets recently reclassified as held for use.

    Impact of homecare and cleaning reclassification on FY26 diluted EPS guidance
    $0.17
    FY26

    FY26 diluted EPS outlook includes approximately $0.17 per share related to the assets recently reclassified as held for use.

    Advanced buying impact on Q3 sales
    $3 million
    Q3 FY26

    About $3 million amount of business was pulled forward globally between countries like India and China due to concerns about security of supply and advanced buying ahead of price increases.

    King of the Hill promotion incrementality
    75%
    First month

    The King of the Hill promotion with Disney and Home Depot is proving to be about 75% incremental after 1 month.

    King of the Hill promotion marketing reach
    80 million
    July

    Marketing activity for the King of the Hill promotion is ramping up, hitting about 80 million consumers across the U.S. in July.

    WD-40 Specialist sales growth (U.S.)
    18-19%
    YTD Q3 FY26

    WD-40 Specialist growth in the U.S. is in high double digits, about 18-19% for the year-to-date.

    WD-40 Specialist top-selling items contribution
    80%
    Current

    6 products do about 80% of sales in the specialist range.

    Industry KPIs

    8
    MetricValueDetails
    Effective tax rate22.5%%
    Gross margin bridge56.6%%
    Organic sales growth22%%
    Regional emerging market growth20%%
    Advertising marketing investment6.1%% of net sales
    Commodity input cost sensitivityIncreased 50% to double%
    Innovation new product contributionBio-based lubricantproduct
    Core underlying EPS and operating margin$2.33USD

    Product announcements

    1
    ProductTypeDetails
    Bio-based lubricantlaunch

    Deals & partnerships

    1
    not stateddivestiturenot stated

    Successfully completed the divestiture of the U.K. Homecare and Cleaning brands in August of 2025.

    Risks & headwinds

    3
    Temporary pressure on gross margin from external cost factors and geopolitical developments (Middle East disruption).Coming months (Q4 FY26 and early FY27).

    60 basis points from higher-than-expected cost increases (input costs for specialty chemicals and base oils increased 50% to double).

    Mitigation: Implemented pricing actions (mid- to high single digits in EMEA and Asia Pacific) and cost-saving initiatives, with most benefits expected in FY27. Expects input costs to step down slowly (20-25% in June).

    Portion of fourth quarter demand shifted into the third quarter.Q3 FY26 (impacted Q4 FY26).

    Approximately $3 million globally.

    Mitigation: Not explicitly stated as a risk to mitigate, but acknowledged as a timing issue impacting Q4 outlook.

    Gradual top-line decline for Americas homecare and cleaning brands.Ongoing (managed as harvest brands).

    Americas household brands represent $12 million in annual sales (less than 2% of global revenue).

    Mitigation: Reclassified as held for use; will manage as harvest brands, remaining open and opportunistic for individual brand divestitures.

    Q&A highlights

    7

    How sustainable are gross margins above 55%, especially given anticipated cost pressures?

    Sara Hyzer confirmed Q3 margins held as expected due to inventory levels but anticipates cost increases from Middle East disruptions to flow through in Q4. Price increases implemented in Q3 (effective Q4/FY27) and cost reduction actions are expected to mitigate this, positioning for recovery in FY27.

    “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.”

    asked by Aaron Reed · answered by Sara Hyzer

    3 min read7 chapters

    Detailed Narrative

    01

    Strategic Framework Progress and Must-Win Battles

    The company reported strong progress against its Four-by-Four Strategic Framework, particularly in its "Must-Win Battles." Year-to-date sales of WD-40 Multi-Use Product increased 13% to $398 million, with significant growth in key markets like the U.S. (20%), China (21%), and Iberia (27%). Premiumized products (Smart Straw and EZ Reach) now represent approximately 50% of Multi-Use Product sales, growing 19% year-to-date. WD-40 Specialist sales increased 22% year-to-date to $72.9 million, with 90% of sales from only 10 markets, indicating substantial future growth potential.

    02

    Digital Commerce and Brand Engagement

    Digital commerce continues to be a key growth driver, with year-to-date e-commerce sales increasing 22%, led by the United States and China. The company is leveraging social media and video channels to enhance digital reach, connect with new and existing end-users, and improve brand visibility. This digital strategy supports all "Must-Win Battles" by increasing product accessibility and brand relevance.

    03

    Leadership Transition and Organizational Alignment

    WD-40 Company announced a planned leadership transition, including new roles like Chief Strategy and Innovation Officer and Chief Brand and Marketing Officer, to strengthen alignment and accelerate strategy execution. These roles will be filled internally, reflecting a "people-first mindset." Sara Hyzer will transition to President of the Americas division, with a successor for her CFO role to be named later. These changes aim to support continued growth and long-term success.

    04

    Homecare and Cleaning Business Reclassification

    The company has reclassified its Americas homecare and cleaning brands from "held for sale" to "held for use" after extensive engagement with potential buyers indicated the current macro environment was not conducive to divestiture. These brands, representing $12 million in annual sales (less than 2% of global revenue), will be managed as "harvest brands," expecting gradual top-line decline while generating attractive returns. The company remains opportunistic for individual brand divestitures.

    05

    New Enduring Business Model

    WD-40 introduced a new "enduring business model" to replace the long-standing 55/30/25 model, effective fiscal year 2027. This new framework targets mid- to high single-digit maintenance product sales growth, gross margin above 55%, adjusted EBITDA growing faster than net sales, and an asset-light model. It aims to drive strong outcomes, including returns on invested capital above 25% and strong free cash flow conversion.

    06

    Q3 Sales Drivers and Advanced Buying

    Third-quarter sales benefited from several factors, including expanded distribution, robust e-commerce, and strong promotional activity, such as a collaboration with Disney Entertainment and Home Depot in the U.S. Additionally, approximately $3 million in global sales were pulled forward📎 from Q4 into Q3 due to advanced buying ahead of price increases in EMEA and Asia Pacific, and customer inventory build-up due to geopolitical uncertainty🌐, particularly in the Middle East and India.

    07

    Gross Margin Dynamics and Mitigation

    While Q3 gross margin was strong at 56.6%, the company anticipates temporary pressure📎 in Q4 and early FY27 due to higher input costs from geopolitical developments. However, pricing actions implemented in EMEA and Asia Pacific (mid- to high single digits) and cost-saving initiatives are expected to mitigate these pressures, with most benefits realized in FY27. The company aims to vigorously defend its gross margins.

    AI-generated summary of the company’s earnings call. Not investment advice.