WD-40 is a famous name, but its stock price is just way too high to buy. Shares of the WD-40 Company (WDFC 3.04%) jumped 3.9% through 1:10 p.m. ET on Thursday after the famed manufacturer of household lubricants reported strong sales and earnings for its fiscal 2024 third-quarter last night. Heading into earning, analysts had expected WD-40 to report per-share profits of only $1.38 on $145.8 million in sales. In fact, it earned $1.46 per share on sales of $155 million, a beat on both the top and bottom line ...

Financial Data and Key Metrics Changes - The company reported consolidated net sales of $155 million for Q3 2024, an increase of over 9% year-over-year, marking a new record quarter [13][79] - Gross margin improved to 53.1%, up 70 basis points sequentially and 250 basis points compared to the same quarter last year [10][64] - Net income for the quarter was $19.8 million, a 5% increase from the prior year, with diluted earnings per share rising to $1.46 from $1.38 [73][84] Business Line Data and Key Metrics Changes - Sales in the Americas grew approximately 6% year-over-year to $75.1 million, with maintenance products growing over 10% [12][14] - Sales of WD-40 Multi-Use Products increased by 7% year-over-year, while WD-40 Specialists saw a 10% increase [16][22] - The home care and cleaning product brands experienced a decline of 15% in Q3, reflecting the company's strategic focus shift [27] Market Data and Key Metrics Changes - EIMEA sales grew approximately 13% year-over-year to $59.4 million, with WD-40 Multi-Use Products increasing by 17% [23][24] - Asia-Pacific sales rose approximately 14% to $20.5 million, driven by a 29% increase in maintenance products in China [28][29] - Latin America saw a significant sales increase of 32%, attributed to the acquisition of the Brazilian distributor and a direct market model [39][41] Company Strategy and Development Direction - The company is focused on its "Must-Win Battles," which include geographic expansion, premiumization, driving WD-40 Specialist growth, and accelerating digital commerce [35][37][45] - The strategic enablers supporting these battles include operational excellence, a people-first mindset, and building a sustainable business for the future [47][50][55] - The company aims to achieve a gross margin of 55% by the end of fiscal year 2026, with ongoing initiatives to improve operational efficiency and sales mix [67][88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term growth targets, with maintenance product sales expected to grow by 5% to 8% in the Americas and 10% to 13% in Asia-Pacific [86][87] - The company anticipates continued strong performance in Q4, particularly in Asia-Pacific, due to favorable year-over-year comparisons [98][99] - Management highlighted the importance of brand-building and distribution expansion in driving future growth, especially in emerging markets like Brazil and Mexico [36][41] Other Important Information - The company is in the process of divesting its U.S. and U.K. home care and cleaning product brands, which represent approximately 4% of total sales [62] - The ERP implementation has stabilized, with most critical issues resolved, allowing for improved operational efficiency [58][60] - The company continues to return capital to shareholders through dividends and share repurchases, with a quarterly cash dividend of $0.88 per share approved [74][82] Q&A Session Summary Question: Gross margin outlook for FY '25 - Management indicated that while guidance for FY '25 is not provided yet, they are tracking towards the high end of the range for FY '24 and targeting 55% gross margin by FY '26 [91][92] Question: Sales growth comparison for Q4 - Management confirmed that Q4 comparisons are expected to be easier, particularly in Asia-Pacific, which had a weak quarter last year [96][99] Question: ERP implementation status in Europe - The ERP rollout has not yet occurred in Europe, with plans to prioritize smaller locations before considering a broader implementation [106][108] Question: IT spending and future CapEx - Management disclosed that the total cost of the ERP system's first wave was approximately $10 million, with ongoing IT investments expected to trend higher [116][119] Question: Growth in Specialist product lines - Management confirmed that core products within the Specialist range are driving growth, with a focus on expanding distribution and replacing underperforming products [120]

Part I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for WD-40 Company for the periods ended May 31, 2024, including balance sheets, statements of operations, comprehensive income, stockholders' equity, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows the company's financial position as of May 31, 2024, with total assets increasing to **$443.6 million** and total liabilities decreasing, leading to higher stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Account | May 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $248,763 | $248,525 | | **Total assets** | $443,610 | $437,966 | | **Total current liabilities** | $105,241 | $88,842 | | **Total liabilities** | $221,368 | $227,788 | | **Total stockholders' equity** | $222,242 | $210,178 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations details the company's financial performance, with **net sales growing 10% to $434.6 million** and **net income increasing 7% to $52.9 million** for the nine months ended May 31, 2024 Key Performance Indicators (Nine Months Ended May 31, in thousands) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $434,566 | $396,803 | +9.5% | | Gross Profit | $230,882 | $202,095 | +14.2% | | Income from Operations | $72,301 | $66,489 | +8.7% | | Net Income | $52,860 | $49,418 | +7.0% | | Diluted EPS | $3.88 | $3.62 | +7.2% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement shows total comprehensive income, which was **$52.8 million** for the nine months ended May 31, 2024, remaining relatively flat due to foreign currency translation adjustments Comprehensive Income (in thousands) | Item | Nine Months Ended May 31, 2024 | Nine Months Ended May 31, 2023 | | :--- | :--- | :--- | | Net Income | $52,860 | $49,418 | | Foreign currency translation adjustment | ($94) | $3,299 | | **Total comprehensive income** | **$52,766** | **$52,717** | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement details changes in stockholders' equity, reflecting **net income of $52.9 million**, **cash dividends of $35.2 million**, and **common stock repurchases of $8.1 million** - Total stockholders' equity increased from **$210.2 million** at August 31, 2023, to **$222.2 million** at May 31, 2024[29](index=29&type=chunk) - During the nine months ended May 31, 2024, the company paid cash dividends totaling **$35.2 million** and repurchased **$8.1 million** of its common stock[29](index=29&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement shows **net cash from operating activities of $64.8 million**, with **$9.1 million used in investing** and **$58.1 million used in financing** for the nine months ended May 31, 2024 Cash Flow Summary (Nine Months Ended May 31, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $64,824 | $55,593 | | Net cash used in investing activities | ($9,103) | ($4,213) | | Net cash used in financing activities | ($58,145) | ($54,024) | | **Net (decrease) increase in cash** | **($2,843)** | **$560** | - Investing activities included **$6.2 million** for the acquisition of a business, net of cash acquired[53](index=53&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional detail and context for the financial statements, covering significant accounting policies, acquisitions, debt, revenue recognition, segment information, and other key financial matters - On March 4, 2024, a subsidiary acquired the company's Brazilian distributor, Theron Marketing Ltda., for total consideration of **$6.9 million**, resulting in **$1.5 million** of goodwill[86](index=86&type=chunk)[87](index=87&type=chunk) - The company's Board approved a share repurchase plan effective September 1, 2023, authorizing the acquisition of up to **$50.0 million** of its shares through August 31, 2025; during the nine months ended May 31, 2024, **34,250 shares** were repurchased for **$8.1 million**[130](index=130&type=chunk) - The effective income tax rate for the nine months ended May 31, 2024, was **23.1%**, an increase from **21.5%** in the prior year period, primarily due to higher tax rates in certain foreign jurisdictions[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for the three and nine months ended May 31, 2024, highlighting a **10% increase in consolidated net sales** and improvements in gross margin, alongside analysis of operating expenses and liquidity [Overview](index=22&type=section&id=Overview) This section provides a high-level summary of the company's business and financial highlights, including a **10% increase in consolidated net sales to $434.6 million** and the acquisition of its Brazilian distributor - On March 4, 2024, the company acquired its Brazilian distributor, Theron, and transitioned to a direct distribution model in Brazil[174](index=174&type=chunk) Financial Highlights (Nine Months Ended May 31, 2024 vs 2023, in thousands) | Metric | Change | Key Drivers | | :--- | :--- | :--- | | Consolidated Net Sales | +10% | Volume increases (+$23.0M), price increases (+$6.5M), favorable currency impact (+$8.3M) | | Gross Margin | 53.1% (from 50.9%) | N/A | | Consolidated Net Income | +7% | Favorable currency impact of $1.5M | | Diluted EPS | $3.88 (from $3.62) | N/A | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section details operating results, showing **10% growth in total maintenance products sales**, a **4% decline in homecare and cleaning products sales**, and a **220 basis point improvement in gross margin** Net Sales by Product Line (Nine Months Ended May 31, in thousands) | Product Line | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total maintenance products | $410,546 | $371,741 | +10% | | HCCP | $24,020 | $25,062 | -4% | | **Total net sales** | **$434,566** | **$396,803** | **+10%** | - Gross margin for the nine months ended May 31, 2024, increased to **53.1%** from **50.9%** in the prior year, an improvement of **220 basis points**[223](index=223&type=chunk) - Operating expenses for the nine months increased by **17%** to **$158.6 million**, primarily due to higher employee-related costs, professional services fees, and travel expenses[177](index=177&type=chunk)[248](index=248&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company's financial condition and liquidity remain strong, with **$64.8 million in cash generated from operating activities** and compliance with all debt covenants Cash Flow Summary (Nine Months Ended May 31, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $64,824 | $55,593 | | Net cash used in investing activities | ($9,103) | ($4,213) | | Net cash used in financing activities | ($58,145) | ($54,024) | - The increase in net cash from operating activities was driven by higher net income and favorable changes in non-cash adjustments[298](index=298&type=chunk) - As of May 31, 2024, **$41.9 million** remains available for share repurchases under the 2023 Repurchase Plan[271](index=271&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) The company's critical accounting estimates, involving subjective judgments, include revenue recognition and income taxes, with no material changes since the last Annual Report - Critical accounting estimates requiring significant judgment are related to revenue recognition and income taxes[12](index=12&type=chunk) - No material changes have occurred in the company's critical accounting estimates since the last Annual Report[304](index=304&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates market risk disclosures by reference from the company's most recent Form 10-K, indicating no material changes - Information regarding market risk is incorporated by reference from the company's most recent Form 10-K[323](index=323&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of May 31, 2024[324](index=324&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[306](index=306&type=chunk) Part II [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from the financial statement notes, with no pending proceedings expected to result in a probable loss - The company is subject to various claims and lawsuits in the ordinary course of business but believes no pending proceedings will result in a probable loss or have a materially adverse impact[112](index=112&type=chunk)[308](index=308&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors from those disclosed in its Annual Report on Form 10-K for the fiscal year ended August 31, 2023 - No material changes to the risk factors disclosed in the company's 2023 Form 10-K have been identified[7](index=7&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities during the third quarter of fiscal year 2024, with **11,250 shares repurchased at an average price of $246.69 per share** Share Repurchases (Three Months Ended May 31, 2024) | Period | Total of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 2024 | 5,000 | $255.65 | | April 2024 | 5,000 | $240.11 | | May 2024 | 1,250 | $237.15 | | **Total** | **11,250** | **$246.69** | - As of May 31, 2024, approximately **$41.9 million** remained available for future share repurchases under the publicly announced plan[327](index=327&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications, debt and acquisition agreements, and iXBRL formatted financial statements - Exhibits filed include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act, the Quota Purchase Agreement for the Theron acquisition, and amended credit agreements[311](index=311&type=chunk)[15](index=15&type=chunk)[328](index=328&type=chunk)

Dividend and Share Repurchase - The Company declared a quarterly dividend of $0.88 per share, payable on July 31, 2024[1] - A share repurchase plan was approved, allowing the Company to buy back up to $50.0 million of its shares, with $8.1 million spent to repurchase 34,250 shares by the end of the third quarter[1] Financial Projections - Fiscal Year 2024 net sales growth is projected between 6% and 12%, with expected net sales of $570 million to $600 million on a non-GAAP constant currency basis[2] - Gross margin for the full year is anticipated to be between 51.5% and 53%[2] - Net income is projected to be between $67.7 million and $71.8 million, with diluted earnings per share expected between $5.00 and $5.30[2] Sales Performance - Net sales of maintenance products, the primary focus, represented 95% of total net sales in the third quarter, increasing by 10% compared to the prior year[10] - Total net sales increased by 9% in the third quarter compared to the prior year fiscal quarter, reaching $155,045 million[27] - Total maintenance product sales reached $147.2 million, reflecting a growth of 10 percent year-over-year[42] - The Americas segment reported net sales of $75.1 million, a 6 percent increase year-over-year[39] - The EIMEA segment accounted for 38% of total net sales in the third quarter, with a 13% increase in net sales primarily driven by a 17% increase in WD-40 Multi-Use Product sales[33] - The Asia-Pacific segment represented 13% of total net sales, with a 14% increase in net sales, largely due to an 11% increase in WD-40 Multi-Use Product sales[34] - WD-40 Specialist sales in the Asia-Pacific segment increased by 30%, attributed to successful brand building and customer order timing[35] Profitability Metrics - Gross profit for the third quarter was $82,388 million, up from $71,762 million in the same quarter last year, representing a 14.5% increase[27] - Gross margin improved to 53.1 percent, up from 50.6 percent in the prior year fiscal quarter[42] - Net income for the quarter was $19.8 million, a 5 percent increase from the prior year fiscal quarter[42] - Net income for the nine months ended May 31, 2024, was $52,860 million, compared to $49,418 million for the same period last year, reflecting a 4.9% increase[31] - Diluted earnings per share were $1.46, compared to $1.38 in the prior year fiscal quarter[42] Expenses and Liabilities - Selling, general, and administrative expenses increased by 19 percent to $45.6 million compared to the prior year fiscal quarter[42] - Advertising and sales promotion expenses rose by 22 percent to $9.3 million, accounting for 6.0 percent of total net sales[42] - Total current liabilities increased to $105,241 million from $88,842 million, primarily due to higher short-term borrowings[27] - The company reported a total of $221,368 million in liabilities, a decrease from $227,788 million in the previous period[27] Strategic Initiatives - The Company is actively pursuing the divestiture of its U.S. and U.K. homecare and cleaning product portfolios, engaging an investment bank for potential buyers[3] - The company reiterated its fiscal year 2024 guidance during the earnings call[37]

Financial Data and Key Metrics Changes - For Q2 2024, the company reported net sales of $139 million, a 7% increase year-over-year, with a 5% growth excluding currency impacts [17][18] - Year-to-date net sales grew 10% on a reported basis and 7% excluding currency impacts, aligning with FY '24 guidance and long-term growth targets [17][18] - Gross margin improved by 160 basis points to 52.4%, benefiting from a favorable sales mix and lower costs associated with specialty chemicals [42][44] Business Line Data and Key Metrics Changes - Sales in the Americas reached approximately $63.5 million, growing 1% year-over-year, driven by strong demand in the U.S. despite ERP implementation challenges [19][20] - EIMEA sales increased 16% to $54.3 million, with WD-40 Multi-Use Product and WD-40 Specialist sales up 17% and 23% respectively [21][22] - Asia Pacific sales were $21.3 million, up 4%, with home care and cleaning products increasing by 23% [24][26] Market Data and Key Metrics Changes - The Americas segment accounted for 46% of global business, while EIMEA made up 39% and Asia Pacific contributed 15% [20][23][26] - The company expects the Brazilian market to drive revenue growth exceeding $10 million in the next year following the acquisition of Theron Marketing [10][12] Company Strategy and Development Direction - The company is focusing on geographic expansion, premiumization, and digital commerce as part of its 4x4 strategic framework [7][28][32] - The decision to divest U.S. and UK home care and cleaning product portfolios aims to reinvest in core maintenance products for long-term growth [11][12] - The implementation of a new ERP system is expected to enhance operational efficiency despite initial disruptions [14][40][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of sales trends and gross margin expansion, which supports the revised guidance for FY 2024 [18][60] - The company anticipates that the divestiture of home care products will have a short-term negative impact on sales but will allow for greater focus on higher-margin products [12][65] - Management remains optimistic about achieving revenue growth in key markets, particularly in Brazil and China [81][88] Other Important Information - The company has maintained an employee engagement score of around 93%, reflecting a strong organizational culture [34][66] - The board approved a quarterly cash dividend of $0.88 per share, with plans for continued share repurchases [55][56] Q&A Session Summary Question: What caused the 24% decline in Canada? - The decline was due to the hard conversion of the Smart Straw product, which negatively impacted revenue but is expected to recover in the second half of the year [67][68] Question: What is the EBITDA contribution from the home care products? - The home care products generated approximately $26 million in revenue, representing about 5% of overall sales, with lower gross margins [69] Question: Are there more acquisition opportunities like the Brazilian distributor? - The company is focused on geographic expansion and has identified top growth markets, with potential for further investments in those areas [70][72] Question: What is the impact of ERP implementation on revenue? - The ERP disruption resulted in an estimated $2.4 million reduction in top-line volume for the quarter, primarily in the U.S. [77][78] Question: Can you clarify the $10 million revenue opportunity in Brazil? - The $10 million represents an incremental revenue opportunity compared to the previous $2 million under the royalty model, with expectations for significant growth [79][81] Question: What were the volume and pricing impacts for the quarter? - For the quarter, volume increased by 2% and pricing had a 3% impact, with expectations for pricing to decrease in the second half of the year [83][85] Question: What is the outlook for Asia Pacific growth? - The company expects strong growth in Asia Pacific, particularly in China, with overall growth masked by currency fluctuations [87][88] Question: What drove the increase in EPS guidance? - The increase in EPS guidance is primarily due to improved visibility on gross margin performance for the second half of the year [89]

Financial Performance - Consolidated net sales increased by $24.4 million, or 10%, compared to the same period last year, with sales volume contributing approximately $9.9 million and average selling price increases adding about $7.7 million[91]. - Consolidated net income increased by $2.5 million, or 8%, with a favorable impact of $1.2 million from foreign currency exchange rates[91]. - Diluted earnings per share were $2.42, compared to $2.23 in the prior fiscal year[91]. - Net income decreased 6% to $15.5 million, or $1.14 per common share for the three months ended February 29, 2024[137]. - Net income increased 8% to $33.0 million, or $2.42 per common share for the six months ended February 29, 2024[138]. - Cash provided by operating activities increased by $23.9 million to $44.9 million for the six months ended February 29, 2024, primarily driven by a net income increase[151]. - The company had $55.4 million in cash and cash equivalents as of February 29, 2024, indicating strong liquidity[148]. Sales Performance - The EIMEA segment accounted for 37% of consolidated sales, with net sales increasing by 16% in the three months ended February 29, 2024[93]. - Total maintenance products net sales increased by 10% to $263.4 million for the six months ended February 29, 2024[92]. - The Americas segment reported a 1% increase in net sales to $63.5 million for the three months ended February 29, 2024[93]. - Net sales in the Americas segment increased by $6.7 million, or approximately 6.7%, year-to-date, driven by a $4.0 million increase in average selling prices and a $1.5 million positive currency impact[95]. - WD-40 Multi-Use Product sales in the Americas increased by $6.0 million, or 7%, with significant contributions from Latin America (up $3.5 million, or 20%) and the U.S. (up $3.2 million, or 5%)[98]. - In the EIMEA segment, net sales increased by $15.5 million, or 18%, year-to-date, with WD-40 Multi-Use Product sales rising by $12.8 million, or 19%[99]. - Homecare and cleaning product sales in the Americas decreased by $0.5 million, or 6%, primarily due to lower demand in the U.S.[98]. - In the Asia-Pacific segment, total net sales increased by $2.3 million, or 5%, with WD-40 Multi-Use Product sales up by $1.3 million, or 3%[106]. - The WD-40 Multi-Use Product saw a sales increase in France, India, and Iberia, contributing significantly to the overall growth in the EIMEA segment[103]. Operating Expenses - Operating expenses rose by 18% to $52 million for the three months ended February 29, 2024[92]. - Selling, General and Administrative (SG&A) expenses increased by $7.3 million, or 19%, for the three months ended February 29, 2024, primarily due to higher employee-related costs[113][114]. - Research and development costs increased to $1.7 million for the three months ended February 29, 2024, compared to $1.2 million in the prior year, reflecting a focus on sustainability and product innovation[116]. - Advertising and Sales Promotion (A&P) expenses rose by $740,000, or 12%, for the three months ended February 29, 2024, driven by increased promotional programs[118][119]. - Total operating expenses increased to $52 million for the three months ended February 29, 2024, compared to $43.9 million for the same period in 2023[143]. Profitability Metrics - Gross profit as a percentage of net sales rose to 53.1%, up from 51.1% in the prior year[91]. - Gross profit for the three months ended February 29, 2024, was $72.9 million, up $6.9 million from the prior year, resulting in a gross margin increase of 160 basis points to 52.4%[110][111]. - Gross margin for the Americas segment increased from 48.1% to 49.4% primarily due to decreases in the costs of petroleum-based specialty chemicals[124]. - Gross margin for the EIMEA segment increased from 52.3% to 53.7% due to favorable changes in sales mix and decreases in costs of petroleum-based specialty chemicals[126]. - Gross margin for the Asia-Pacific segment increased from 55.3% to 58.5% due to favorable price increases and changes in input costs[128]. Future Outlook - New product introductions and product line extensions are anticipated to positively impact future sales growth[87]. - The company plans to continue focusing on product innovation and market expansion strategies to drive future performance[87]. Shareholder Returns - The Board approved a share repurchase plan allowing for the acquisition of up to $50.0 million of outstanding shares, with $44.7 million remaining available as of February 29, 2024[149]. - The company declared a cash dividend of $0.88 per share on March 19, 2024, payable on April 30, 2024[161]. Currency Impact - Net sales were negatively impacted by $0.7 million due to foreign currency exchange rate changes, but would have increased by 6% on a constant currency basis[110][112]. - The EIMEA segment experienced a favorable currency impact of $6.0 million, with constant currency sales increasing by 11%[105]. - The net effect of exchange rate changes resulted in a decrease in cash of $0.3 million for the six months ended February 29, 2024, compared to an increase of $2.8 million in the same period of 2023[156].

Financial Performance - Global net sales for the second quarter increased by 7 percent to $139.1 million compared to the prior year fiscal quarter, with year-to-date total net sales reaching $279.5 million, a 10 percent increase[4]. - Net income for the second quarter was $15.5 million, a decrease of 6 percent from the prior year fiscal quarter, while year-to-date net income increased by 8 percent to $33.0 million[4]. - Net sales for the three months ended February 29, 2024, increased to $139.1 million, up 6.9% from $130.2 million in the same period of 2023[30]. - Gross profit for the six months ended February 29, 2024, was $148.5 million, representing a 13.9% increase compared to $130.3 million in the prior year[30]. - Net income for the six months ended February 29, 2024, was $33.0 million, a 4.9% increase from $30.5 million in the same period of 2023[30]. Sales by Segment - The Americas segment accounted for 46 percent of total net sales, with a 1 percent increase in net sales, primarily driven by WD-40 Multi-Use Product growth[9]. - The EIMEA segment represented 39 percent of total net sales, with a 16 percent increase, largely due to a 17 percent rise in WD-40 Multi-Use Product sales[9]. - The Asia-Pacific segment contributed 15 percent of total net sales, with a 4 percent increase, driven by a 3 percent rise in WD-40 Multi-Use Product sales[9]. - Maintenance products, the primary growth focus, represented 94 percent of total net sales, increasing by 7 percent in the second quarter[10]. Guidance and Future Outlook - The company is raising its fiscal year 2024 net income guidance to a range of $67.7 million to $71.8 million, up from the previous range of $65 million to $70 million[21]. - Diluted earnings per share guidance has been increased to a range of $5.00 to $5.30, compared to the prior guidance of $4.78 to $5.15[21]. Operating Expenses and Cash Flow - Operating expenses rose to $52.0 million for the three months ended February 29, 2024, compared to $43.9 million in the same period of 2023, reflecting a 18.5% increase[30]. - The company provided a net cash from operating activities of $44.9 million for the six months ended February 29, 2024, compared to $20.9 million in the same period of 2023[32]. Balance Sheet Highlights - Cash and cash equivalents at the end of the period increased to $55.4 million from $48.1 million at the beginning of the period[32]. - Total current assets as of February 29, 2024, were $250.5 million, slightly up from $248.5 million as of August 31, 2023[28]. - Total liabilities decreased to $225.7 million as of February 29, 2024, from $227.8 million as of August 31, 2023[28]. - The company’s total stockholders' equity increased to $216.3 million as of February 29, 2024, compared to $210.2 million as of August 31, 2023[28]. Strategic Decisions - The company announced the acquisition of its Brazilian marketing distributor and plans to sell its U.S. and U.K. Homecare and Cleaning Products portfolio to focus on higher-margin maintenance products[3]. - The company reported a basic earnings per share of $1.14 for the three months ended February 29, 2024, down from $1.21 in the same period of 2023[30].

WD-40 Company (NASDAQ:WDFC) Q1 2024 Earnings Conference Call January 9, 2024 5:00 PM ET Company Participants Wendy Kelley - Vice President of Stakeholder and Investor Engagement Steve Brass - President and Chief Executive Officer Sara Hyzer - Vice President and Chief Financial Officer Conference Call Participants Linda Bolton Weiser - D.A. Davidson Daniel Rizzo - Jefferies Operator Ladies and gentlemen, thank you for standing by. Good day and welcome to the WD-40 Company's First Quarter Fiscal Year 2024 Ear ...

Financial Performance - Consolidated net sales increased by $15.5 million, or 12%, compared to the same period last year, with a favorable impact of $3.8 million from foreign currency exchange rates[82] - Consolidated net income increased by $3.5 million, or 25%, with a constant currency basis showing a 21% increase[82] - Diluted earnings per share were $1.28, compared to $1.02 in the prior fiscal year period, reflecting a 25% increase[82] - Gross profit as a percentage of net sales rose to 53.8%, up from 51.4% in the prior year[82] - Gross profit for the three months ended November 30, 2023, was $75.6 million, an increase of $11.3 million from the prior year, with a gross margin of 53.8%[99] - Adjusted EBITDA as a percentage of net sales increased to 19% from 17% year-over-year[121] - Net income rose 25% to $17.5 million, or $1.28 per share, compared to $14.0 million, or $1.02 per share, in the prior year[115] Sales Performance by Segment - Net sales in the Americas segment increased by $6.1 million, or 10%, driven by a 12% increase in WD-40 Multi-Use Product sales[86] - EIMEA segment net sales rose by $7.98 million, or 20%, with WD-40 Multi-Use Product sales increasing by 23%[90] - Total maintenance products net sales increased by $15.8 million, or 14%, compared to the prior year[83] - The EIMEA segment accounted for 35% of consolidated sales for the three months ended November 30, 2023[82] - EIMEA segment net sales increased by $6.9 million, or 23%, driven by higher sales volume and price increases[93] - WD-40 Multi-Use Product sales in Asia-Pacific increased by $0.9 million, or 4%, with China sales up $0.5 million, or 8%[97] - Total net sales for the Asia-Pacific segment increased by 6% to $27.6 million, with a notable 131% increase in other maintenance products[94] - The favorable impact of foreign currency exchange rates contributed $3.6 million to net sales across various brands in the Asia-Pacific segment[96] Operating Expenses - SG&A expenses rose to $44.1 million, a 10% increase from the previous year, primarily due to higher employee-related costs and increased travel expenses[101] - Research and development costs increased to $1.9 million, up from $1.3 million, reflecting a focus on sustainability and product innovation[103] - A&P expenses increased by 31% to $7.0 million, driven by higher promotional programs and marketing support[104] - Total operating expenses increased to $51.4 million from $45.6 million, maintaining cost of doing business at 36% of net sales[120] Cash Flow and Financing - Cash provided by operating activities increased by $16.5 million to $26.9 million, driven by a net income increase of approximately $3.5 million[128] - Net cash used in investing activities decreased to $0.7 million, primarily due to lower manufacturing-related capital expenditures[130] - Net cash used in financing activities increased to $24.5 million, primarily due to net repayments on the revolving credit facility of $9.7 million[131] - The company has $50.3 million in cash and cash equivalents as of November 30, 2023, with no ongoing issues anticipated in repaying borrowings[125] Shareholder Returns - The Board approved a 2023 Repurchase Plan, authorizing up to $50.0 million in share repurchases, with $47.6 million remaining available[126] - The company's Board approved a 6% increase in the regular quarterly cash dividend, raising it from $0.83 per share to $0.88 per share, payable on January 31, 2024[137] Accounting and Compliance - The company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States[138] - There have been no material changes in critical accounting policies and estimates since the last annual report filed on October 23, 2023[140] - No recently issued accounting standards are expected to have a material impact on the consolidated financial statements[141] - Revenue recognition and accounting for income taxes require subjective judgments and estimates, which may materially differ from actual results[139] Supplier Relationships - The company has ongoing relationships with various third-party suppliers and contract manufacturers, with minimum purchase obligations that are immaterial compared to historical purchase volumes[133] - The company communicates supply needs to contract manufacturers based on short-term projections ranging from two to six months[133] - The company is obligated to work with contract manufacturers to sell through all products held during the termination notification period[134] - As of November 30, 2023, there were no outstanding commitments with other manufacturers to purchase finished goods and components[135] - The amounts for inventory purchased under termination commitments with contract manufacturers have been immaterial[134]

Part I [Business](index=4&type=section&id=Item%201.%20Business) WD-40 Company is a global marketing organization focused on maintenance and homecare products, driven by a 'four-by-four' growth strategy and outsourced manufacturing - The company's sales are divided into two main product groups: maintenance products (sold worldwide) and homecare/cleaning products (sold primarily in North America, U.K., and Australia)[25](index=25&type=chunk) - WD-40's growth strategy is centered on a 'four-by-four' framework, which includes four 'Must-Win Battles' to increase maintenance product sales and four 'Strategic Enablers' focused on operational excellence[26](index=26&type=chunk)[27](index=27&type=chunk)[32](index=32&type=chunk) - The company employs **613 people** across **17 countries**, with a global distribution of its workforce: **36% in the Americas**, **42% in EMEA**, **14% in Asia-Pacific**, and **8% corporate**[29](index=29&type=chunk) - Manufacturing of finished goods is outsourced to third-party manufacturers in various countries, while the company produces the concentrate for its WD-40 products at its own facilities and through contract manufacturers[41](index=41&type=chunk)[42](index=42&type=chunk) [Products](index=6&type=section&id=Products) This section details the company's product portfolio, distinguishing between primary growth-driving maintenance products and harvest-focused homecare/cleaning brands - **Maintenance Products:** This group includes the signature WD-40® Multi-Use Product, the WD-40 Specialist® line for professional use, 3-IN-ONE® multi-purpose oils, and the GT85® bike maintenance line[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - **Homecare and Cleaning Products:** This portfolio includes brands such as 2000 Flushes®, Spot Shot®, Carpet Fresh®, 1001®, Lava®/Solvol®, and X-14® These are considered 'harvest brands' with reduced marketing investment as the company focuses on maintenance products[28](index=28&type=chunk)[39](index=39&type=chunk) [Manufacturing and Raw Materials](index=7&type=section&id=Manufacturing%20and%20Raw%20Materials) The company outsources finished goods manufacturing to third parties globally and faces input cost inflation due to reliance on limited raw material suppliers - The company outsources its finished goods manufacturing to third-party contractors in the U.S., Mexico, Brazil, U.K., Italy, China, and other countries[41](index=41&type=chunk) - WD-40 relies on a limited number of suppliers for raw materials, packaging, and components, including single-source suppliers Key components like specialty chemicals and aerosol cans are subject to market price fluctuations[44](index=44&type=chunk) - The company has been experiencing input cost inflation and has implemented price increases and cost-saving initiatives to mitigate these pressures[44](index=44&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from adverse economic conditions, supply chain disruptions, raw material cost volatility, foreign currency fluctuations, cybersecurity threats, and intense competition - **Economic Conditions:** Adverse global economic conditions, inflation, and reduced consumer spending could decrease demand for the company's products[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - **Supply Chain & Costs:** Reliance on a limited base of third-party manufacturers and suppliers creates risks of disruption Volatility in the cost of raw materials (like specialty chemicals and aerosol cans), transportation, and other inputs could harm financial results[61](index=61&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - **Global Operations & Currency Risk:** With approximately **61% of sales outside the U.S.** in FY2023, the company is exposed to political instability, trade restrictions, and foreign currency exchange rate risks **46% of revenues** were generated in currencies other than the U.S. Dollar[63](index=63&type=chunk)[64](index=64&type=chunk) - **Brand Reputation & Competition:** Erosion of the success and reputation of leading brands, particularly the WD-40 Brand, could negatively impact the business The company faces intense competition from similar and alternative products, some from larger companies with greater financial resources[58](index=58&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) - **Cybersecurity & IT Systems:** Malfunctions, implementation issues with new ERP systems, or cyberattacks on critical information systems could disrupt business operations[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - **Customer Dependence:** A large percentage of net sales comes from a limited number of large retail customers The loss of, or a reduction in orders from, a significant customer could materially affect the business[94](index=94&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[112](index=112&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) The company owns its corporate office in San Diego and a UK facility, while leasing various other global office, R&D, and warehouse spaces - **Americas:** Owns an office in San Diego, CA Leases offices in Miami, FL; Pine Brook, NJ; Toronto, Canada; and Monterrey, Mexico[113](index=113&type=chunk) - **EMEA:** Owns an office and plant in Milton Keynes, UK Leases branch offices in Germany, France, Italy, Spain, Portugal, and the Netherlands[114](index=114&type=chunk) - **Asia-Pacific:** Leases office space in Australia, China, and Malaysia[115](index=115&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 12 — Commitments and Contingencies in the consolidated financial statements - The required information is incorporated by reference from Note 12 of the financial statements[116](index=116&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[117](index=117&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, with a recent dividend increase and a new $50.0 million share repurchase plan effective September 2023 - Common stock is traded on the NASDAQ Global Select Market under the symbol WDFC[120](index=120&type=chunk) - The quarterly cash dividend was increased by **6% from $0.78 to $0.83 per share** on December 13, 2022[121](index=121&type=chunk) - A new share repurchase plan authorizing up to **$50.0 million** in share buy-backs became effective on September 1, 2023, and will run through August 31, 2025[124](index=124&type=chunk) [Selected Financial Data](index=22&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is reserved as the requirement for selected financial data under Item 301 of Regulation S-K has been eliminated - This item is reserved pursuant to SEC amendments[125](index=125&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2023, consolidated net sales grew 4% to $537.3 million due to price increases, improving gross margin to 51.0%, but net income decreased 2% to $66.0 million due to higher operating expenses Financial Performance Overview | Financial Metric | FY 2023 | FY 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Net Sales | $537.3M | $518.8M | +4% | | Gross Profit | $274.2M | $254.8M | +8% | | Gross Margin | 51.0% | 49.1% | +190 bps | | Income from Operations | $89.7M | $87.3M | +3% | | Net Income | $66.0M | $67.3M | -2% | | Diluted EPS | $4.83 | $4.90 | -1% | - Net sales growth of **4%** was driven by price increases (+$81.9 million), partially offset by lower sales volume (-$45.8 million) and unfavorable foreign currency exchange rates (-$17.7 million)[131](index=131&type=chunk) - The company suspended sales to Russia and Belarus in March 2022, which continues to unfavorably impact business Prior to the suspension, these markets represented **3-4% of consolidated net sales**[136](index=136&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) In FY2023, Americas sales grew 11% due to price increases, EMEA sales fell 7% from currency and Russia suspension, and Asia-Pacific sales rose 8% due to eased lockdowns and promotions Segment Net Sales | Segment | FY 2023 Net Sales | FY 2022 Net Sales | Change (%) | | :--- | :--- | :--- | :--- | | Americas | $266.8M | $240.2M | +11% | | EMEA | $190.8M | $204.7M | -7% | | Asia-Pacific | $79.7M | $73.9M | +8% | - **Americas:** Sales increased **11%** due to price increases (+$40.1 million) that offset volume declines (-$14.4 million) U.S. sales grew **17%**, while Latin America sales decreased **8%**[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - **EMEA:** Sales decreased **7%** (but increased **1%** in constant currency) The decline was driven by unfavorable currency (-$14.9 million), suspension of sales to Russia (-$8.3 million), and volume declines in other markets (-$27.0 million), which were partially offset by price increases (+$36.3 million)[144](index=144&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - **Asia-Pacific:** Sales grew **8%** (**13%** in constant currency), driven by higher volumes in China and Asia distributor markets following the easing of COVID-19 lockdowns, along with price increases[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - Gross margin increased by **190 bps**, primarily due to a **720 bps** favorable impact from sales price increases, which was significantly offset by higher costs for aerosol cans (**-290 bps**) and specialty chemicals (**-260 bps**)[155](index=155&type=chunk) - SG&A expenses increased **12% to $154.7 million**, mainly due to higher employee-related costs (+$13.0 million), increased travel and meeting expenses (+$4.2 million), and higher professional services fees (+$3.4 million)[156](index=156&type=chunk)[157](index=157&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow significantly increased to $98.4 million in FY2023 due to inventory changes, while financing cash flow rose to $85.0 million from credit facility repayments, maintaining a strong financial position Cash Flow Activity | Cash Flow Activity (in millions) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $98.4 | $2.6 | | Net cash used in investing activities | ($6.2) | ($7.7) | | Net cash used in financing activities | ($85.0) | ($38.0) | - The substantial increase in operating cash flow was primarily due to a **$72.6 million** favorable impact from changes in inventory levels, as inventory decreased in FY2023 compared to a significant build-up in FY2022[186](index=186&type=chunk) - As of August 31, 2023, total borrowings were **$120.5 million**, consisting of **$52.9 million** from the revolving credit facility and **$67.6 million** in fixed-rate senior notes[182](index=182&type=chunk)[338](index=338&type=chunk) - A new **$50.0 million** share repurchase plan became effective on September 1, 2023, authorized through August 31, 2025[184](index=184&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies, Revenue Recognition and Accounting for Income Taxes, involve significant management judgment and estimates, particularly for variable consideration and tax positions - **Revenue Recognition:** Sales are recognized when control transfers to the customer The transaction price is recorded net of estimated variable consideration (rebates, discounts, returns) A **10% difference** in the accrual estimate for sales incentives at year-end would have impacted net sales by approximately **$1.3 million**[199](index=199&type=chunk)[201](index=201&type=chunk) - **Accounting for Income Taxes:** This policy requires significant judgment in determining the effective tax rate, establishing valuation allowances for deferred tax assets, and accounting for uncertain tax positions[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, commodity price volatility impacting specialty chemicals, and interest rate changes on its variable-rate revolving credit facility - **Foreign Currency Risk:** The company is exposed to translation risk as all international subsidiaries operate in functional currencies other than the U.S. Dollar It uses forward contracts to hedge some non-functional currency asset balances[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) - **Commodity Price Risk:** Volatility in oil prices directly impacts the cost of specialty chemicals, which can negatively affect gross margins The company does not currently hedge crude oil price volatility[209](index=209&type=chunk) - **Interest Rate Risk:** The primary exposure is from the variable interest rate on the **$150.0 million** revolving credit facility, which had a **$52.9 million** balance at year-end A **one percentage point increase** in variable rates would have reduced pretax earnings by approximately **$0.5 million** in FY2023[210](index=210&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section indicates that the company's consolidated financial statements and the Report of Independent Registered Public Accounting Firm are included in Item 15 of the report - The consolidated financial statements for the fiscal years ended August 31, 2023 and 2022, and the independent auditor's report are included in Item 15[211](index=211&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=40&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[213](index=213&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of August 31, 2023, a conclusion audited by PricewaterhouseCoopers LLP - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of August 31, 2023[214](index=214&type=chunk) - Management concluded that internal control over financial reporting was effective as of August 31, 2023, based on the COSO 2013 framework[215](index=215&type=chunk) - The independent registered public accounting firm, PricewaterhouseCoopers LLP, audited and confirmed the effectiveness of the company's internal control over financial reporting[217](index=217&type=chunk) [Other Information](index=41&type=section&id=Item%209B.%20Other%20Information) This section discloses information regarding the termination of a Rule 10b5-1 trading arrangement for one of the company's directors or officers - On June 14, 2023, Patricia Q Olsem's Rule 10b5-1 trading arrangement terminated pursuant to its terms[219](index=219&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=41&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no applicable information for this item - None[220](index=220&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=42&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's Proxy Statement for the 2023 Annual Meeting - Information is incorporated by reference from the Proxy Statement for the annual meeting on December 12, 2023[223](index=223&type=chunk) [Executive Compensation](index=42&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from various sections of the Proxy Statement, including 'Compensation Discussion and Analysis' and 'Executive Compensation'[225](index=225&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=42&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the Proxy Statement, with 172,878 securities remaining available for future issuance under equity compensation plans - Information on security ownership is incorporated by reference from the Proxy Statement[226](index=226&type=chunk) Equity Compensation Plan Information | Plan Category | Securities to be issued upon exercise (a) | Securities remaining available for future issuance (c) | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 137,829 | 172,878 | [Certain Relationships and Related Transactions, and Director Independence](index=42&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement under the headings 'Director Independence' and 'Audit Committee – Related Party Transactions Review and Oversight'[227](index=227&type=chunk) [Principal Accountant Fees and Services](index=43&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement under the heading 'Ratification of Appointment of Independent Registered Public Accounting Firm'[228](index=228&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=44&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including consolidated financial statements, auditor's report, and various exhibits - This item contains the list of financial statements, schedules, and exhibits filed with the Form 10-K[230](index=230&type=chunk) [Form 10-K Summary](index=46&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[233](index=233&type=chunk)