WD-40 pany(WDFC) - 2025 Q3 - Quarterly Results

Financial Performance Summary The company achieved record quarterly net sales and improved profitability, driven by core maintenance product growth and varied regional performance Third Quarter 2025 Financial Highlights WD-40 Company reported record quarterly net sales of $156.9 million for Q3 2025, a 1% increase year-over-year, driven by a 2% growth in its core maintenance products. Gross margin significantly improved by 310 basis points to 56.2%, exceeding the company's long-term target a year ahead of schedule. Net income rose 6% to $21.0 million, with diluted EPS increasing 5% to $1.54 Q3 2025 Financial Highlights vs. Q3 2024 | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $156.9M | $155.0M | +1% | | Gross Margin | 56.2% | 53.1% | +310 bps | | Operating Income | $27.4M | $27.2M | +1% | | Net Income | $21.0M | $19.8M | +6% | | Diluted EPS | $1.54 | $1.46 | +5% | - Achieved a new record high for net sales in a quarter at $156.9 million[3] - Gross margin reached 56%, exceeding the long-term target of 55% a full year ahead of schedule[3] - Core maintenance products sales grew 2% in the quarter and are up 6% year-to-date, aligning with long-term growth objectives[3] Performance by Business Segment In Q3 2025, the Americas segment, representing 50% of total sales, grew 4% to $78.2 million, primarily driven by strong performance in the United States. The EIMEA segment saw a 5% sales decrease to $56.7 million due to timing of customer orders in distributor markets. The Asia-Pacific segment posted a 7% increase in sales to $22.0 million, led by growth in China and other Asian distributor markets Net Sales by Segment (in thousands) | Segment | Q3 2025 Sales | Q3 2024 Sales | Change | YTD 2025 Sales | YTD 2024 Sales | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Americas | $78,162 | $75,103 | +4% | $213,127 | $202,685 | +5% | | EIMEA | $56,705 | $59,399 | -5% | $173,763 | $162,466 | +7% | | Asia-Pacific | $22,048 | $20,543 | +7% | $69,624 | $69,415 | —% | - Americas: Sales growth was driven by a $3.0 million increase in the U.S. due to increased promotional activity and timing of customer orders[9] - EIMEA: Sales decreased due to lower sales volume in distributor markets, particularly Turkey and the Middle East, related to order timing and operational changes[9] - Asia-Pacific: Growth was fueled by successful promotional programs and expanded distribution in China, along with increased demand in markets like Indonesia and Taiwan[9] Performance by Product Group Maintenance products, the company's primary strategic focus, accounted for 96% of total net sales in Q3 2025, with sales increasing 2% to $150.4 million. This growth was led by a 9% increase in WD-40 Specialist® sales. In contrast, homecare and cleaning products (HCCP) sales declined 17% to $6.5 million, reflecting the company's stated intent to divest these product lines Net Sales by Product Group (in thousands) | Product Group | Q3 2025 Sales | Q3 2024 Sales | Change | YTD 2025 Sales | YTD 2024 Sales | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Maintenance Products | $150,402 | $147,162 | +2% | $435,226 | $410,546 | +6% | | - WD-40 Multi-Use | $120,687 | $119,053 | +1% | $352,926 | $333,964 | +6% | | - WD-40 Specialist | $22,028 | $20,224 | +9% | $59,762 | $53,883 | +11% | | Homecare & Cleaning (HCCP) | $6,513 | $7,883 | -17% | $21,288 | $24,020 | -11% | - Maintenance products are the primary strategic focus, representing 96% of total net sales in the third quarter[10] - The company has announced its intention to sell its homecare and cleaning product portfolios in the Americas and the United Kingdom[10] Shareholder Returns and Outlook The company declared a quarterly dividend and extended its share repurchase plan, while updating its fiscal year 2025 guidance for net sales, operating income, and diluted EPS on a pro forma basis Dividend and Share Repurchase The company declared a regular quarterly dividend of $0.94 per share. The board also extended its 2023 Share Repurchase Plan to August 31, 2026, with $32.2 million remaining available for buybacks as of May 31, 2025. Since the beginning of the fiscal year, the company has repurchased 39,000 shares for a total of $9.7 million - A regular quarterly dividend of $0.94 per share was declared, payable on July 31, 2025[13] - The share repurchase plan was extended to August 31, 2026, with $32.2 million remaining available for repurchases[13] - From September 1, 2024, through Q3, the company repurchased 39,000 shares at a total cost of $9.7 million[13] Updated Fiscal Year 2025 Guidance WD-40 Company updated its pro forma guidance for fiscal year 2025, narrowing the net sales outlook while raising projections for operating income and EPS. Net sales are now expected to be between $600 million and $620 million (6-9% growth). Guidance for operating income was increased to a range of $96 million to $101 million, and diluted EPS was raised to between $5.30 and $5.60 FY 2025 Pro Forma Guidance | Metric | Updated Guidance | Growth vs. 2024 Pro Forma | | :--- | :--- | :--- | | Net Sales | $600M - $620M | 6% to 9% | | Gross Margin | 55% to 56% | N/A | | Advertising & Promotion | ~6% of net sales | N/A | | Operating Income | $96M - $101M | 7% to 12% | | Diluted EPS | $5.30 - $5.60 | 12% to 18% | - The guidance is provided on a pro forma basis, excluding the financial impact of homecare and cleaning products classified as assets held for sale[12] - If the company is unsuccessful in divesting these assets, its guidance would be positively impacted by approximately $20 million in net sales and $0.33 in diluted EPS for the full fiscal year[14] Consolidated Financial Statements The consolidated financial statements provide a detailed overview of the company's financial position, operational performance, and cash flow activities for the period Condensed Consolidated Balance Sheets As of May 31, 2025, the company's balance sheet showed total assets of $456.0 million and total liabilities of $198.9 million. This compares to total assets of $449.0 million and total liabilities of $218.5 million at the end of fiscal year 2024. The increase in total assets was accompanied by a decrease in total liabilities, resulting in a stronger stockholders' equity position of $257.1 million Balance Sheet Summary (in thousands) | Account | May 31, 2025 | August 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $51,682 | $46,699 | | Total Current Assets | $266,457 | $255,441 | | Total Assets | $455,952 | $449,039 | | Total Current Liabilities | $93,721 | $103,500 | | Total Liabilities | $198,890 | $218,513 | | Total Stockholders' Equity | $257,062 | $230,526 | Condensed Consolidated Statements of Operations For the third quarter ended May 31, 2025, the company generated $156.9 million in net sales, resulting in a gross profit of $88.1 million and net income of $21.0 million. For the nine-month period, net sales reached $456.5 million, with a gross profit of $251.9 million and a significantly higher net income of $69.8 million compared to $52.9 million in the prior year period Statement of Operations Summary (in thousands) | Account | Three Months Ended May 31, 2025 | Nine Months Ended May 31, 2025 | | :--- | :--- | :--- | | Net Sales | $156,915 | $456,514 | | Gross Profit | $88,111 | $251,914 | | Income from Operations | $27,365 | $75,767 | | Net Income | $20,977 | $69,753 | | Diluted EPS | $1.54 | $5.13 | Condensed Consolidated Statements of Cash Flows For the nine months ended May 31, 2025, net cash provided by operating activities was $58.0 million, a decrease from $64.8 million in the prior year period. The company used $2.8 million in investing activities and $49.3 million in financing activities, primarily for dividend payments ($37.5 million) and share repurchases ($9.7 million). This resulted in a net increase in cash of $5.0 million, bringing the cash and cash equivalents balance to $51.7 million Cash Flow Summary (Nine Months Ended May 31, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $57,980 | $64,824 | | Net cash used in investing activities | $(2,848) | $(9,103) | | Net cash used in financing activities | $(49,321) | $(58,145) | | Net increase (decrease) in cash | $4,983 | $(2,843) | | Cash and cash equivalents at end of period | $51,682 | $45,300 | - Major uses of cash in financing activities included $37.5 million for dividends paid and $9.7 million for treasury stock purchases[32]