This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. Dive Brief: WD-40 Company is evaluating the locations of its distribution centers as it seeks to cut costs by reducing the delivery miles for its products, company executives said. The initiative will involve structural changes to its distribution centers, but it won't have a major impact on capital expenses because the centers are outsourced to 3PLs, ...

Group 1 - The requirement for nondisclosure agreements, a special key, and typically an executive title to access the handwritten formula indicates a high level of confidentiality and exclusivity in the information [1]

Financial Data and Key Metrics Changes - The company achieved gross margins over 55% in the past year, recovering from a low of 49% when the current management took over [7][31] - The company targets mid- to high single-digit growth on a year-over-year basis, with a consistent performance over the years [6][16] - The company aims to achieve EBITDA margins of 20% to 22% in the midterm, recovering from inflationary headwinds faced in FY 2022 [30] Business Line Data and Key Metrics Changes - The WD-40 Multi-Use Product represents nearly 80% of the company's revenues and is sold in over 176 countries [9] - The WD-40 Specialist line has grown to an $82 million business, with a compound annual growth rate (CAGR) of about 14% [13] - The company is divesting its cleaning and home care brands to focus on maintenance products, which are expected to drive significant growth [11] Market Data and Key Metrics Changes - The U.S. market accounts for 35% of the business, while international markets make up 65%, with significant growth opportunities identified in Asia-Pacific [15][21] - The company has seen a five-year CAGR of 6.5% in the U.S. market, indicating continued growth despite high market penetration [21] - Emerging markets like China and India are highlighted as key growth areas, with India showing a CAGR of 35% over the past five years [23] Company Strategy and Development Direction - The company focuses on a mantra of "few things, many places," concentrating on the 20% of products that drive 80% of the volume [11] - The strategic enablers include geographic expansion and premiumization, which are expected to enhance operational efficiency and margins [18][24] - The company aims to leverage its global brand presence and digital tools to drive growth and brand loyalty [26] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to maintain mid- to high-single-digit growth rates despite economic fluctuations [16][17] - The company sees significant growth potential in international markets, particularly in China and India, which are expected to rival the U.S. market in size over the long term [22][23] - Management emphasized the importance of a people-first culture, which contributes to low turnover rates and high employee engagement [15][16] Other Important Information - The company has a strong balance sheet and predictable free cash flow, allowing for shareholder-friendly capital allocation, including dividends and share repurchases [27][33] - The company has been a Dividend Aristocrat, consistently paying dividends for over 40 years, with a recent 8% increase authorized by the board [33][34] Q&A Session Summary Question: What are the growth opportunities in international markets? - Management highlighted that the core brand has significant growth potential internationally, particularly in markets like China and India, with a focus on expanding distribution and sampling [19][22] Question: How does the company plan to maintain its competitive advantage? - The company plans to leverage its strong brand equity and focus on premiumization and geographic expansion to drive growth and maintain its competitive moat [13][18] Question: What is the company's approach to capital allocation? - The company prioritizes returning cash to shareholders through dividends, targeting over 50% of earnings for this purpose, while also considering share repurchases as a lever for value creation [33][34]

Financial Data and Key Metrics Changes - The company achieved gross margins over 55% in the past year, recovering from a low of 49% [6][31] - The company targets mid- to high single-digit growth on a year-over-year basis, with a consistent performance over the years [5][15] - The company aims to achieve EBITDA margins of 20% to 22% in the midterm, recovering from inflationary headwinds [31] Business Line Data and Key Metrics Changes - The WD-40 Multi-Use Product represents nearly 80% of revenues and is the flagship brand with over 2,000 documented uses [7][10] - The WD-40 Specialist line has grown to an $82 million business, with a compound annual growth rate (CAGR) of about 14% [12][26] - The company is divesting its cleaning and home care brands to focus on maintenance products, which are expected to drive significant growth [10][11] Market Data and Key Metrics Changes - The U.S. market accounts for 35% of the business, while international markets represent 65%, with significant growth opportunities identified in Asia-Pacific [14][21] - The company has seen a five-year CAGR of 6.5% in the U.S. market, indicating continued growth despite high market penetration [21] - Emerging markets like China and India are highlighted as having the most substantial growth potential, with India already being the second-largest market globally [22][23] Company Strategy and Development Direction - The company focuses on a few key products that drive the majority of sales, adhering to the principle of "few things, many places" [10] - The strategy includes geographic expansion and premiumization of products, with a focus on maintaining high gross margins [32][34] - The company emphasizes a people-first culture, with high employee engagement scores and low turnover rates, which contribute to sustainable growth [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to maintain mid- to high single-digit growth rates despite economic fluctuations [15][16] - The company sees significant growth opportunities in international markets, particularly in Asia, and plans to leverage its strong brand equity [19][20] - Management highlighted the importance of digital channels and e-commerce as accelerators of growth [27] Other Important Information - The company has a robust balance sheet and strong free cash flow generation, allowing for shareholder-friendly capital allocation [6][28] - The company has a long history of paying dividends, with a commitment to return over 50% of earnings to shareholders [34][35] - Recent initiatives include an 8% increase in dividends and a plan to double share repurchases [35][36] Q&A Session Summary Question: What are the growth opportunities in emerging markets? - Management highlighted that China and India present the largest growth opportunities, with India already being the second-largest market and showing a CAGR of 35% over the past five years [22][23] Question: How does the company plan to maintain its competitive advantage? - The company focuses on its iconic brand, operational efficiency, and a strong culture to drive sustainable growth and maintain its competitive moat [12][14] Question: What is the company's approach to capital allocation? - The company prioritizes dividends and share repurchases, with a commitment to return a significant portion of earnings to shareholders while maintaining a strong balance sheet [34][35]

Core Viewpoint - WD-40's fiscal Q1 2026 earnings report fell short of analyst expectations, leading to a market sell-off, but this presents a potential buying opportunity for total return investors [2][3] Group 1: Revenue Performance - The company's revenue for Q1 was $154.4 million, growing less than 1%, primarily due to foreign exchange (FX) conversion, with a decline of over 2% on an FX-neutral basis [4] - Direct market sales increased by 8%, driven by growth in the Americas and EIMEA regions, as well as the Specialty products segment [4] - The company anticipates that indirect-market softness will normalize as the year progresses [5] Group 2: Profitability and Margins - Despite disappointing earnings, gross margin expanded by 140 basis points, indicating improved profitability and setting the stage for future earnings strength [6][7] - The increase in selling, general and administrative (SG&A) expenses by 10% was linked to non-recurring charges, which had minimal impact on cash flow [7] - The free cash flow margin remained stable at 17.5%, allowing for continued capital returns, including dividends and share repurchases [7] Group 3: Future Outlook - WD-40 reaffirmed its fiscal 2026 guidance, indicating expectations for results to fall at the high end of the range despite the weak Q1 results [9] - The stock is trading near long-term lows, suggesting a potential rebound that could yield high-double-digit total returns within a few years [8]

Core Insights - The article discusses the investment insights and services provided by Ian Bezek, a former hedge fund analyst with extensive experience in Latin American markets and a focus on high-quality growth stocks [2]. Group 1 - Ian Bezek has spent a decade conducting on-the-ground research in Latin America, particularly in Mexico, Colombia, and Chile, which enhances his investment analysis [2]. - The investing group led by Ian, known as Ian's Insider Corner, offers features such as a Weekend Digest, trade alerts, and direct access to Ian for members [2]. - The group focuses on identifying high-quality compounders and growth stocks at reasonable prices in both the US and developed markets [2].

Core Insights - The article discusses the investment insights and services provided by Ian Bezek, a former hedge fund analyst with extensive experience in Latin American markets and a focus on high-quality growth stocks [2]. Group 1 - Ian Bezek has spent a decade conducting on-the-ground research in Latin America, particularly in Mexico, Colombia, and Chile, which enhances his investment analysis [2]. - The investing group led by Ian, known as Ian's Insider Corner, offers features such as a Weekend Digest, trade alerts, and direct access to Ian for members [2]. - The group focuses on identifying high-quality compounders and growth stocks at reasonable prices in both the US and developed markets [2].

Core Insights - WD-40 Company will present at the 28th Annual ICR Conference on January 13, 2026, at 10:00 a.m. Eastern Time [1] - A live webcast of the event will be available on the company's investor relations website and archived for 90 days [2] Company Overview - WD-40 Company is a global marketing organization focused on creating lasting memories through problem-solving products for workshops, factories, and homes [3] - The company offers a diverse range of well-known brands, including WD-40® Multi-Use Product, WD-40 Specialist®, and 3-IN-ONE® [3] - Headquartered in San Diego, California, WD-40 Company reported net sales of $620.0 million in fiscal year 2025 and operates in over 176 countries and territories [4] - The company is publicly traded on the NASDAQ Global Select Market under the ticker symbol "WDFC" [4]

Core Viewpoint - WD-40 Company (WDFC) is highlighted as a favorite company, indicating a positive sentiment towards its business model and market position [1]. Group 1: Company Overview - WD-40 Company is recognized for its strong brand and product offerings, which are essential in various maintenance and repair applications [1]. Group 2: Investment Philosophy - The investment approach discussed emphasizes finding companies that are trading at a significant discount to their intrinsic value, utilizing Benjamin Graham's investment philosophy and a contrarian market approach [1].

Core Viewpoint - WD-40 Company (WDFC) is highlighted as a favorite company, indicating a strong appreciation for its business model and market position [1]. Group 1: Company Overview - WD-40 Company is recognized for its unique product offerings and brand strength, which contribute to its market presence [1]. Group 2: Investment Philosophy - The investment approach discussed emphasizes finding companies trading at significant discounts to their intrinsic value, utilizing Benjamin Graham's investment philosophy and a contrarian market perspective [1].