WD 40 Co (WDFC)

WD-40 Company is a global marketing organization that develops and sells products solving problems in workshops, factories and homes around the world, marketing and selling its products in more than 176 countries and territories worldwide ¹ primarily through hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, warehouse club stores, farm supply stores, sport retailers, and independent bike dealers ². The markets for the company's products are highly competitive and influenced by large retailers with significant negotiating power, with current trends among these large retailers including increased demand for new innovative products and marketing, requiring suppliers to maintain or reduce product prices and to deliver products within shorter lead times ³. Products compete both within their own product classes as well as within product distribution channels, competing with many other products for store placement and shelf space, and competition in international markets varies by country ⁴. The company is aware of many competing products, some of which sell for lower prices or are produced and marketed by companies with greater financial resources ⁵. The company relies on the awareness of its brands among end users, the value offered by those brands as perceived by consumers, product innovation and renovation and its multiple channel distributions as its primary strategies ⁶. New products and entry into new markets typically encounter intense competition, which may require significant investments in advertising and promotional activities, and when a new product achieves end-user acceptance, ongoing advertising and promotional support may be required to maintain its relative market position ⁷.

The company's future is guided by a long-term four-by-four strategic framework tied to its purpose and values, with two main elements ⁸. The first element, referred to as Must-Win Battles, focuses on increasing sales of maintenance products through four battles: growing WD-40 Multi-Use Product sales through geographic expansion; growing sales and gross margin through the premiumization of WD-40 Multi-Use Product; growing the WD-40 Specialist product line through category leadership; and accelerating capabilities in building the brand digitally and maximizing global digital commerce presence ⁹. The second element, referred to as Strategic Enablers, focuses on operational excellence through four enablers: ensuring a people-first mindset to attract, develop, retain and engage outstanding employees; building an enduring business for the future; achieving operational excellence in supply chain; and driving productivity through enhanced systems ¹⁰. The company remains focused on innovation and renovation of its products, which it believes are critical to the long-term growth, competitiveness, and sustainability of its brands and product portfolio, with strategy including ongoing development of new products, product line extensions, packaging enhancements, delivery systems, and promotional innovations designed to expand the portfolio, support sustainability objectives and drive growth ¹¹. The company also continues to pursue growth opportunities within existing markets through the expansion and enhancement of current brands and product lines ¹². The company's purpose-driven and values-guided culture generates an important competitive advantage through its ability to attract, develop, retain, and engage outstanding people ¹³. The company's workforce is distributed globally in 19 countries, with approximately 39% in EIMEA, 32% in the Americas, 15% in Asia-Pacific, and 14% corporate employees ¹⁴. Women make up approximately 46% of the global workforce ¹⁵. The average tenure of the global workforce is eight years and the average employee retention rate is greater than 90% ¹⁶.

The company generates revenue from two product groups: maintenance products and homecare and cleaning products ¹⁷. Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, India, the Middle East and Africa, while homecare and cleaning products are sold primarily in North America and Australia ¹⁸. The company's sales do not reflect any significant degree of seasonality, though it is common for sales to fluctuate from period to period or year to year due to various factors including new or lost distribution, the timing of customer orders particularly in distributor markets and with wholesalers, the number of product offerings carried by a customer and the level of promotional activities and programs being run at customer locations ¹⁹. New or lost distribution occurs when the company gains or loses customers, when it gains or loses store count for a customer, or when its products are added to new locations within a store or removed from existing locations ²⁰. The number of product offerings refers to the number of brands and/or the number of products within each of those brands that customers offer for sale to end users ²¹. The level of promotional activities and programs relates to the number of events or volumes of purchases by customers in support of off-shelf or promotional display activities ²². The company distributes its products throughout the world in one of two ways: the direct distribution model, in which products are sold directly by the company to wholesalers and retailers in the U.S., Canada, Mexico, Brazil, Australia, China, the U.K., France and many other countries throughout Europe; and the marketing distributor model, in which products are sold to marketing distributors who in turn sell to wholesalers and retailers ²³. The marketing distributor model is generally used in countries where the company does not have direct Company-owned operations, with local companies performing the sales, marketing and distribution functions ²⁴. The company's largest individual customer contributed less than 10% of consolidated net sales in fiscal year 2026 ²⁵. The company's business is primarily based upon individual sales orders, and it typically does not enter into long-term contracts with its customers ²⁶.

The company's signature product is WD-40 Multi-Use Product in the blue and yellow can with the little red top, which accounts for a significant majority of sales in the maintenance product category ²⁷. WD-40 Multi-Use Product is a market leader in many countries among multi-purpose maintenance products and is sold as an aerosol spray with various unique delivery systems, a non-aerosol trigger spray, a precision pen, and in liquid-bulk form through mass retail stores, hardware stores, automotive parts outlets, online retailers, value retailers, warehouse club stores and industrial distributors and suppliers ²⁸. WD-40 Multi-Use Product serves a broad range of professional, industrial and consumer uses including household, marine, automotive, construction, repair, sporting goods and gardening applications ²⁹. For fiscal year 2026, WD-40 Multi-Use Product net sales were $532,651 thousand ³⁰, representing the largest product line. The WD-40 Specialist product line consists of professional-grade specialty maintenance products that includes penetrants, degreasers, corrosion inhibitors, greases, lubricants, and rust removers aimed at professionals and consumer enthusiasts, sold primarily in the U.S. and many countries in Europe, as well as parts of Canada, Latin America, Australia and Asia ³¹. WD-40 Specialist net sales were $99,083 thousand in fiscal year 2026 ³². Within the WD-40 Specialist product line, the company also sells bike-specific products across all segments, motorbike-specific products in Europe and Asia, lawn and garden specific products in Australia, and automotive specific products in Asia ³³. Other maintenance products, which include the 3-IN-ONE and GT85 brands, had net sales of $34,208 thousand in fiscal year 2026 ³⁴. The 3-IN-ONE brand consists of multi-purpose drip oil, specialty drip oils, and specialty aerosol maintenance products, with the multi-purpose drip and specialty oil lubricant featuring the Marksman Spout to deliver precise application to small mechanisms and assemblies, tool maintenance and threads on screws and bolts ³⁵. 3-IN-ONE Oil is the market share leader among drip oils in many countries and has wide industrial applications in such areas as locksmithing, HVAC, marine, farming and construction ³⁶. The GT85 brand is a multi-purpose bike maintenance product line consisting of professional spray maintenance products and lubricants sold primarily in the bike market through the automotive and industrial channels in the U.K. ³⁷. Homecare and cleaning products, which include 2000 Flushes, Spot Shot, Carpet Fresh, Lava, X-14, no vac, and Solvol brands, had net sales of $22,051 thousand in fiscal year 2026 ³⁸. These homecare and cleaning products in the Americas and Asia-Pacific segments are considered harvest brands, which continue to provide positive returns but are becoming a smaller part of the business as sales of the maintenance products grow with the execution of the four Must-Win Battles ³⁹. The company has continued to sell products within these brands but with a reduced level of marketing investment over time ⁴⁰.

During fiscal year 2026, the company reclassified its homecare and cleaning business in the Americas segment to held for use ⁴¹. During the third quarter of fiscal year 2026, the company reclassified certain homecare and cleaning products in the Americas and recorded an additional $1.3 million of related amortization expense ⁴². During the fourth quarter of fiscal year 2025, the company completed the sale of the EIMEA HCCP businesses ⁴³. The divestiture resulted in approximately $6.2 million reduction in net sales for the twelve months ended August 31, 2026 ⁴⁴. During the fiscal year ended August 31, 2026, the company repurchased 139,820 shares at an average price of $211.55 per share, for a total cost of $29.6 million under the 2023 Repurchase Plan ⁴⁵. On June 15, 2026, the Board of Directors approved a new share repurchase plan (the 2026 Repurchase Plan), under which the company is authorized to acquire up to $100.0 million of its outstanding shares, effective September 1, 2026 ⁴⁶. On December 10, 2025, the Board approved a 9% increase in the regular quarterly cash dividend, increasing it from $0.94 per share to $1.02 per share ⁴⁷. On October 8, 2026, the Board declared a cash dividend of $1.02 per share payable on October 30, 2026 to stockholders of record on October 19, 2026 ⁴⁸. During the fiscal year ended August 31, 2026, the company returned approximately $83.7 million to stockholders through share repurchases and dividends ⁴⁹. The company's research and development costs for the fiscal years ended August 31, 2026 and 2025 were $8.1 million and $8.7 million, respectively ⁵⁰. The company's research and development team currently conducts its activities at a laboratory facility that it leases in New Jersey ⁵¹.

Consolidated net sales increased $68.0 million, or 11%, for fiscal year 2026 compared to the prior fiscal year ⁵². Changes in foreign currency exchange rates from period to period had a favorable impact of $21.8 million on consolidated net sales for fiscal year 2026 ⁵³. On a constant currency basis, net sales would have increased by $46.2 million, or 7%, from period to period ⁵⁴. Increases in sales volume favorably impacted net sales by approximately $38.2 million from period to period, which includes an unfavorable impact of approximately $6.2 million related to reduced sales volume driven by the sale of the HCCP business in EIMEA during fiscal year 2025 ⁵⁵. Increases in the average selling price of products positively impacted net sales by approximately $8.0 million from period to period ⁵⁶. Gross profit as a percentage of net sales increased to 55.3% for fiscal year 2026 compared to 55.1% for the prior fiscal year ⁵⁷. Consolidated net income decreased $8.6 million, or 10%, for fiscal year 2026 compared to the corresponding period of the prior fiscal year ⁵⁸. Adjusted net income increased $4.6 million, or 6% from period to period ⁵⁹. Diluted earnings per common share for fiscal year 2026 were $6.08 versus $6.69 in the prior fiscal year ⁶⁰. Adjusted EPS increased 6% from period to period ⁶¹. During the second quarter of fiscal year 2025, the company released an uncertain tax position that generated a favorable income tax adjustment of $11.9 million ⁶². Excluding one-time items, on a non-GAAP basis, net income would have increased 6% compared to prior year ⁶³.

The company has implemented price increases in certain regions to mitigate the impact of cost increases in fiscal year 2027 ⁶⁴. The conflict in the Middle East resulted in an increase in the costs of oil and related petroleum-based specialty chemicals used in maintenance products during fiscal year 2026, and due to inventory life cycles, these increased costs most significantly affected cost of products sold in the fourth quarter of fiscal year 2026, impacting gross margin by 370 basis points in the fourth quarter of fiscal year 2026 compared to the fourth quarter of the prior fiscal year ⁶⁵. The company expects these components and raw materials to continue to be readily available in the future, and has developed sourcing alternatives and risk mitigation plans ⁶⁶. The company's future performance and growth depend, in part, on its ability to successfully develop and commercialize new products and line extensions ⁶⁷. The company competes in several product categories where there are frequent introductions of new products and line extensions, and such product introductions often require significant expenditure and support ⁶⁸. The company's ability to understand end-user needs and preferences is key to maintaining and improving the competitiveness of its product offerings ⁶⁹. The development and introduction of new products, as well as the renovation of current products and product lines, require substantial and effective research, development and marketing expenditure, which the company may be unable to recoup if the new or renovated products do not gain widespread market acceptance ⁷⁰. There are inherent risks associated with new product development and marketing efforts, including product development or launch delays, product performance issues during development, changing regulatory frameworks that affect the new products in development and the availability of key raw materials included in such products ⁷¹.

The company's ability to achieve sales volume growth will depend on its ability to execute the initiatives associated with its strategic framework, drive growth in new geographic markets by making targeted end users aware of its products and expanding distribution and market channels, including digital commerce, drive growth within existing markets through innovation, renovation and enhanced merchandising and marketing of established brands, and capture market share from competitors ⁷². It is more difficult for the company to achieve sales volume growth in developed markets where its products are widely used and widely distributed as compared to developing or emerging markets where its products are newly introduced or are not as well known by consumers or as widely distributed ⁷³. To protect existing market share or capture additional market share from competitors, the company may need to increase expenditure related to promotions and advertising or introduce and establish new products, new delivery systems or new product lines ⁷⁴. The company periodically implements sales price increases in response to increased costs associated with components, raw materials, manufacturing and distribution, and implemented sales price increases during fiscal year 2026 in response to increases in input costs as a result of macroeconomic impacts during the year, including those due to conflicts in the Middle East region ⁷⁵. Sales price increases to offset rising costs or the impact of tariffs may slow sales volume growth or cause declines in volume as customers and end users adjust to sales price increases or purchase alternative products at lower prices ⁷⁶. The company may lose a portion of its end-user base as a result of steep price actions ⁷⁷. The continued popularity and growth of the online retail sales channel presents both the company and its customers that sell products online with competitive pricing pressure and the challenge of balancing online and physical store retailing methods ⁷⁸. Alternative retail channels could become more prevalent than the traditional retailers upon which the company relies for the majority of its business and operating profit ⁷⁹. As a result of changes in end-user preference, sales are increasingly shifting to these online retail sales channels, and this shift may present a challenge in markets where the company has a less developed e-commerce business ⁸⁰. Although the company is engaged in e-commerce with respect to its products, if it is not successful in expanding sales in such alternative retail channels or experiences challenges with operating in such channels, its financial condition and results of operations may be negatively impacted ⁸¹. A change in the strategies of existing customers, including shelf simplification, the discontinuation of certain product offerings or the shift in shelf space to competitors' products could reduce sales and potentially offset sales volume increases achieved as a result of other sales growth initiatives ⁸².

The company may increase growth through business development activities such as acquisitions, joint ventures, licensing or other strategic partnerships ⁸³. If the company is not able to identify, acquire and successfully integrate acquired products or companies or successfully manage joint ventures or other strategic partnerships, it may not be able to maximize these opportunities ⁸⁴. The failure to properly manage business development activities because of difficulties in the integration of operations and products, the diversion of management's attention from other business concerns, the loss of key employees or other factors could have a material adverse effect on the business, financial condition and results of operations ⁸⁵. There can be no assurance that business development activities will be profitable or that they will achieve sales levels, profitability or synergies that justify the investments made ⁸⁶. Future acquisitions, joint ventures or strategic partnerships could also result in the incurrence of debt, potentially dilutive issuances of equity securities, contingent liabilities, amortization expenses related to certain intangible assets, unanticipated regulatory complications and/or increased operating expenses ⁸⁷. The company may consider divesting businesses or brands that do not meet its strategic objectives or do not meet its growth or profitability targets ⁸⁸. The company may not be able to complete desired divestitures or close divestiture transactions on terms favorable to it ⁸⁹. If the company does complete such desired divestitures, gains or losses on the sales of, or lost operating income from, those businesses or brands may harm its profitability and margins ⁹⁰. The company may not be able to effectively deploy the proceeds from a divestiture in a manner that is accretive to its earnings ⁹¹. If the company is unable to identify and execute on suitable investment opportunities, or if the investments it makes do not perform as expected, its financial condition and results of operations could be adversely affected ⁹². Additionally, the failure to effectively reinvest such proceeds could result in lower returns on investment and diminished stockholder value ⁹³.

The company's gross margin may be impacted by various factors. There is often a delay before changes in costs of raw materials, such as specialty chemicals used in the formulation of products, impact cost of products sold due to production and inventory life cycles, and such delays increase with higher production and inventory levels ⁹⁴. In general, the timing of advertising, promotional and other discounts may cause fluctuations in gross margin from period to period ⁹⁵. Advertising, promotional and other discounts that are given to customers are recorded as a reduction to sales, whereas advertising and sales promotional costs associated with promotional activities that the company pays to third parties are recorded as advertising and sales promotion expenses ⁹⁶. In the EIMEA segment, the cost of products sold are generated in the Euro and Pound Sterling, and the strengthening or weakening of the Pound Sterling and Euro against the U.S. Dollar may result in foreign currency related changes to the gross margin percentage in the EIMEA segment from period to period ⁹⁷. The company's gross profit and gross margin may not be comparable to those of other consumer product companies, since some of these companies include all costs related to distribution of their products in cost of products sold, whereas the company excludes the portion associated with amounts paid to third parties for shipment to its customers from its distribution centers and contract manufacturers and includes these costs in selling, general and administrative expenses ⁹⁸. These costs totaled $21.0 million and $18.2 million for the fiscal years ended August 31, 2026 and 2025, respectively ⁹⁹. The company's gross margin increased 20 bps primarily due to favorable impacts of 80 bps from increases in average selling prices, partially offset by unfavorable impacts of 80 bps from other raw materials and components costs ¹⁰⁰.

The company outsources its finished goods manufacturing directly or through its marketing distributors to various third-party manufacturers ¹⁰¹. The company or its marketing distributors use contract manufacturers in the U.S., Mexico, Brazil, Colombia, the U.K., Italy, Poland, Australia, China, the Middle East, South Korea and India ¹⁰². The company has minimum purchase obligations that primarily consist of contractual volume commitments with certain third-party packagers ¹⁰³. The company also formulates and manufactures concentrate used in its WD-40 products at certain of its own facilities and at third-party contract manufacturers ¹⁰⁴. In addition to commitments to purchase products from contract manufacturers, the company may also enter into commitments with other manufacturers from time to time to purchase finished goods and components to support innovation or supply chain initiatives ¹⁰⁵. The company relies on a limited number of third-party contract manufacturers and component suppliers, including single or sole-sourced suppliers, for certain raw materials, packaging, product components and other necessary supplies ¹⁰⁶. Where possible and where it makes business sense, the company works with secondary or multiple suppliers to qualify additional supply sources ¹⁰⁷. Historically, the company has been able to obtain adequate capacity and raw materials ¹⁰⁸. The primary components and raw materials for most products include specialty chemicals and aerosol cans, which are manufactured from commodities that are subject to market price fluctuations ¹⁰⁹. The availability of these components and raw materials is affected by a variety of supply and demand factors, including global market conditions, geopolitical instability or conflicts, tariffs imposed by the U.S. or foreign governments, plant capacity utilization, and natural disasters ¹¹⁰. The company has historically experienced input cost inflation that impacted the cost of certain raw materials and freight services, and as a result, took actions to increase prices with customers to help mitigate some of these inflationary pressures and implemented cost savings initiatives to mitigate those pressures ¹¹¹. The company's business results depend on the effective management and remedy of any supply disruptions ¹¹². The company monitors partnerships with third-party manufacturers and onboards new third-party manufacturers, as necessary, in order to allow for capacity and flexibility of its supply chain ¹¹³. Onboarding new third-party manufacturers involves inherent risks that can include delays in setting up production, testing and potential rework to ensure production quality, and higher costs ¹¹⁴. Actions taken in the past to increase inventory levels of certain raw materials and finished goods to mitigate challenges within supply chain and increased lead times required by suppliers have led to higher transportation, storage and distribution costs ¹¹⁵. It is not possible to estimate the degree of the impact or the costs associated with potential future disruptions within supply chain and distribution networks as such supply chain issues are being resolved ¹¹⁶.

The company's capital allocation priorities include returning capital to stockholders through share repurchases and dividends. On June 15, 2026, the Board of Directors approved a new share repurchase plan (the 2026 Repurchase Plan), under which the company is authorized to acquire up to $100.0 million of its outstanding shares, effective September 1, 2026 ¹¹⁷. The 2026 Repurchase Plan is not subject to any expiration date and may be suspended, discontinued, or modified at any time by the Board ¹¹⁸. The timing and amount of repurchases are based on terms and conditions as may be acceptable to the company's Chief Executive Officer, Chief Financial Officer or Treasurer, subject to present loan covenants and in compliance with all laws and regulations applicable thereto, including the company's insider trading policies ¹¹⁹. On December 10, 2025, the Board approved a 9% increase in the regular quarterly cash dividend, increasing it from $0.94 per share to $1.02 per share ¹²⁰. On October 8, 2026, the Board declared a cash dividend of $1.02 per share payable on October 30, 2026 to stockholders of record on October 19, 2026 ¹²¹. The Board presently intends to continue the payment of regular quarterly cash dividends on the company's common stock ¹²². The company's ability to pay dividends could be affected by future business performance, liquidity, capital needs, alternative investment opportunities and debt covenants ¹²³. The company may also reduce or suspend share repurchases depending on available or projected cash balances ¹²⁴. Research and development costs for the fiscal years ended August 31, 2026 and 2025 were $8.1 million and $8.7 million, respectively ¹²⁵. The company continued its research and development investment, almost entirely associated with its maintenance products, including efforts focused on sustainability, innovation and renovation of its products ¹²⁶. The level and types of expenses incurred within research and development can vary from period to period depending upon the types of activities being performed ¹²⁷.

The company faces structural headwinds and execution risks to its growth plan. Global economic conditions may negatively impact the company's financial condition and results of operations, as adverse developments in the global economy or key regional economies, a reduction in industrial outputs, or decreases in consumer spending or confidence could significantly decrease purchases of products by customers and end users ¹²⁸. Consumer purchases of maintenance products and homecare and cleaning products may decline during periods where disposable income is reduced or there is economic uncertainty ¹²⁹. During unfavorable or uncertain economic times, end users may also increase purchases of lower-priced or non-branded products and competitors may increase their level of advertising and promotional activities to spur sales ¹³⁰. The company's sales and operating results may be affected by uncertain or changing economic and market conditions, including war, recession, inflation, deflation, tariffs and other geopolitical trade disruptions, prolonged weak consumer demand, political instability, public health crises and natural disasters or other changes that may affect the principal markets, trade channels, and industrial segments in which the company conducts its business ¹³¹. In the past, global supply chain issues and other macroeconomic factors resulted in an inflationary environment that led to increased raw material and other input costs ¹³². Future occurrences of inflationary environments or constraints in supply chain and distribution networks, either globally or in key regions, may unfavorably impact gross margin and operating results ¹³³. The severity and duration of any recession or inflationary environment are uncertain and it is not possible to predict the extent to which such conditions will impact financial results and operations in the future ¹³⁴. It is also uncertain how such changes in recessionary or inflationary conditions could impact demand from customers and end users ¹³⁵. A decrease in demand from customers and end users would harm financial results ¹³⁶. If economic or market conditions in certain key markets deteriorate, the company may experience material adverse effects on its business, financial condition and results of operations ¹³⁷. Adverse economic and market conditions could also harm the business by negatively affecting the parties with whom the company does business, including customers, retailers, distributors and wholesalers, and third-party contract manufacturers and suppliers ¹³⁸. Such conditions could impair the ability of customers to pay for products they have purchased from the company, and as a result, allowances for credit losses and write-offs of accounts receivable from customers may increase ¹³⁹. In addition, third-party contract manufacturers and their suppliers may experience financial difficulties or business disruptions that could negatively affect their operations and their ability to supply the company with finished goods and the raw materials, packaging, and components required for its products ¹⁴⁰.

The company's global operations outside the U.S. expose it to additional risks and uncertainties that could affect financial results. Sales outside the U.S. were approximately 66% of consolidated net sales in fiscal year 2026 ¹⁴¹. Approximately 55% of revenues in fiscal year 2026 were generated in currencies other than the U.S. Dollar, which is the company's reporting currency ¹⁴². In addition, all foreign operating subsidiaries have functional currencies other than the U.S. Dollar, and the largest subsidiary is in the U.K. and generates significant sales in the Euro and Pounds Sterling ¹⁴³. As a result, the company is exposed to foreign currency exchange rate risk with respect to its sales, expenses, profits, cash and cash equivalents, other assets and liabilities denominated in currencies other than the U.S. Dollar ¹⁴⁴. Financial results are negatively impacted when the foreign currencies in which subsidiary offices operate weaken relative to the U.S. Dollar ¹⁴⁵. Conversely, a sustained weakening of the U.S. Dollar can have broad economic impacts that can include, but are not limited to, increased inflationary conditions in the U.S. market that impacts the purchasing power of end users and could lower consumer demand ¹⁴⁶. Although the company uses financial instruments to hedge certain foreign currency risks, primarily those associated with its U.K. subsidiary and net assets denominated in non-functional currencies, it is not fully protected against foreign currency fluctuations and, therefore, reported earnings are affected by changes in foreign currency exchange rates ¹⁴⁷. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time ¹⁴⁸. Additionally, global operations outside the U.S. are subject to risks relating to appropriate compliance with legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations, potentially higher incidence of fraud or corruption, credit risk of local customers and distributors and potentially adverse tax consequences ¹⁴⁹. As the company further develops and grows its business operations outside the U.S., it is exposed to additional complexities and risks, particularly in China, Mexico, Brazil as well as other emerging markets ¹⁵⁰. Business activities in such countries create the risk of unauthorized conduct by one or more employees, contractors, or agents that could be in violation of U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the Brazil Clean Company Act or other applicable anti-corruption laws and regulations ¹⁵¹. Any failure to comply with these laws, even if inadvertent, could result in significant penalties or otherwise harm reputation and business ¹⁵². Although the company has adopted policies and contract terms to mandate compliance with these laws and performs due diligence when necessary, there can be no assurance that all employees, contractors and agents will comply with its requirements ¹⁵³. Violations of these laws could be costly and disrupt the business, which could have a material adverse effect on business, financial condition and results of operations ¹⁵⁴.

Management's message to shareholders emphasizes the company's long-term four-by-four strategic framework tied to its purpose and values, with the first element, Must-Win Battles, focusing on increasing sales of maintenance products through geographic expansion of WD-40 Multi-Use Product, premiumization of WD-40 Multi-Use Product, growing the WD-40 Specialist product line through category leadership, and accelerating capabilities in building the brand digitally and maximizing global digital commerce presence ¹⁸². The second element, Strategic Enablers, focuses on operational excellence through ensuring a people-first mindset, building an enduring business for the future, achieving operational excellence in supply chain, and driving productivity through enhanced systems ¹⁸³. Management remains focused on innovation and renovation of products, which it believes are critical to the long-term growth, competitiveness, and sustainability of its brands and product portfolio, with strategy including ongoing development of new products, product line extensions, packaging enhancements, delivery systems, and promotional innovations designed to expand the portfolio, support sustainability objectives and drive growth ¹⁸⁴. The company also continues to pursue growth opportunities within existing markets through the expansion and enhancement of current brands and product lines ¹⁸⁵. Management's tone reflects confidence in the company's strategic direction, with consolidated net sales increasing $68.0 million, or 11%, for fiscal year 2026 compared to the prior fiscal year ¹⁸⁶. Changes in foreign currency exchange rates from period to period had a favorable impact of $21.8 million on consolidated net sales for fiscal year 2026 ¹⁸⁷. On a constant currency basis, net sales would have increased by $46.2 million, or 7%, from period to period ¹⁸⁸. Gross profit as a percentage of net sales increased to 55.3% for fiscal year 2026 compared to 55.1% for the prior fiscal year ¹⁸⁹. Consolidated net income decreased $8.6 million, or 10%, for fiscal year 2026 compared to the corresponding period of the prior fiscal year ¹⁹⁰. Adjusted net income increased $4.6 million, or 6% from period to period ¹⁹¹. Diluted earnings per common share for fiscal year 2026 were $6.08 versus $6.69 in the prior fiscal year ¹⁹². Adjusted EPS increased 6% from period to period ¹⁹³. During the fiscal year ended August 31, 2026, the company returned approximately $83.7 million to stockholders through share repurchases and dividends ¹⁹⁴. The company has implemented price increases in certain regions to mitigate the impact of cost increases in fiscal year 2027 ¹⁹⁵. The conflict in the Middle East resulted in an increase in the costs of oil and related petroleum-based specialty chemicals used in maintenance products during fiscal year 2026, and due to inventory life cycles, these increased costs most significantly affected cost of products sold in the fourth quarter of fiscal year 2026, impacting gross margin by 370 basis points in the fourth quarter of fiscal year 2026 compared to the fourth quarter of the prior fiscal year ¹⁹⁶. Management's strategic priorities for the period ahead include executing the four Must-Win Battles to grow maintenance product sales, continuing to invest in innovation and renovation of products, and maintaining a strong capital return program through dividends and share repurchases ¹⁹⁷.

For fiscal year 2026, total net sales were $687,993 thousand ¹⁹⁸, compared to $619,985 thousand ¹⁹⁹ in fiscal year 2025, an increase of $68,008 thousand, or 11% ²⁰⁰. Net income was $82,346 thousand ²⁰¹, compared to $90,994 thousand ²⁰² in the prior fiscal year, a decrease of $8,648 thousand, or 10% ²⁰³. Diluted earnings per common share were $6.08 ²⁰⁴, compared to $6.69 ²⁰⁵ in the prior fiscal year, a decrease of $0.61, or 9% ²⁰⁶. Income from operations was $108,937 thousand ²⁰⁷, compared to $103,793 thousand ²⁰⁸ in the prior fiscal year, an increase of $5,144 thousand, or 5% ²⁰⁹. Gross profit was $380,495 thousand ²¹⁰, compared to $341,343 thousand ²¹¹ in the prior fiscal year, an increase of $39,152 thousand, or 11% ²¹². Gross margin was 55.3% ²¹³, compared to 55.1% ²¹⁴ in the prior fiscal year, an increase of 20 bps ²¹⁵. Cost of products sold was $307,498 thousand ²¹⁶, compared to $278,642 thousand ²¹⁷ in the prior fiscal year, an increase of $28,856 thousand, or 10% ²¹⁸. Operating expenses were $271,558 thousand ²¹⁹, compared to $237,550 thousand ²²⁰ in the prior fiscal year, an increase of $34,008 thousand, or 14% ²²¹. SG&A expenses were $225,041 thousand ²²², compared to $199,936 thousand ²²³ in the prior fiscal year, an increase of $25,105 thousand, or 13% ²²⁴. SG&A expenses as a percentage of net sales were 32.7% ²²⁵, compared to 32.2% ²²⁶ in the prior fiscal year. A&P expenses were $44,706 thousand ²²⁷, compared to $37,431 thousand ²²⁸ in the prior fiscal year, an increase of $7,275 thousand, or 19% ²²⁹. A&P expenses as a percentage of net sales were 6.5% ²³⁰, compared to 6.0% ²³¹ in the prior fiscal year. Research and development costs were $8.1 million ²³², compared to $8.7 million ²³³ in the prior fiscal year. Total promotional costs recorded as a reduction to sales were $40.5 million ²³⁴, compared to $34.3 million ²³⁵ in the prior fiscal year, and total expenditure on A&P activities totaled $85.2 million ²³⁶, compared to $71.7 million ²³⁷ in the prior fiscal year. During the second quarter of fiscal year 2025, the company released an uncertain tax position that generated a favorable income tax adjustment of $11.9 million ²³⁸. During the third quarter of fiscal year 2026, the company reclassified certain homecare and cleaning products in the Americas and recorded an additional $1.3 million of related amortization expense ²³⁹. Excluding these one-time items, on a non-GAAP basis, net income would have increased 6% compared to prior year ²⁴⁰, and diluted EPS would have increased 6% compared to the prior year ²⁴¹. For segment performance, the Americas segment had net sales of $326,177 thousand ²⁴², EIMEA segment had net sales of $259,290 thousand ²⁴³, and Asia-Pacific segment had net sales of $102,526 thousand ²⁴⁴. The Americas segment had income from operations of $68,888 thousand ²⁴⁵, EIMEA segment had income from operations of $58,973 thousand ²⁴⁶, and Asia-Pacific segment had income from operations of $30,893 thousand ²⁴⁷. Unallocated corporate expenses were $(49,817) thousand ²⁴⁸.

The company's most material risks include global economic conditions that may negatively impact financial condition and results of operations, as adverse developments in the global economy or key regional economies, a reduction in industrial outputs, or decreases in consumer spending or confidence could significantly decrease purchases of products by customers and end users ¹⁵⁵. Consumer purchases of maintenance products and homecare and cleaning products may decline during periods where disposable income is reduced or there is economic uncertainty ¹⁵⁶. During unfavorable or uncertain economic times, end users may also increase purchases of lower-priced or non-branded products and competitors may increase their level of advertising and promotional activities to spur sales ¹⁵⁷. The company's sales and operating results may be affected by uncertain or changing economic and market conditions, including war, recession, inflation, deflation, tariffs and other geopolitical trade disruptions, prolonged weak consumer demand, political instability, public health crises and natural disasters or other changes that may affect the principal markets, trade channels, and industrial segments in which the company conducts its business ¹⁵⁸. In the past, global supply chain issues and other macroeconomic factors resulted in an inflationary environment that led to increased raw material and other input costs ¹⁵⁹. Future occurrences of inflationary environments or constraints in supply chain and distribution networks, either globally or in key regions, may unfavorably impact gross margin and operating results ¹⁶⁰. The severity and duration of any recession or inflationary environment are uncertain and it is not possible to predict the extent to which such conditions will impact financial results and operations in the future ¹⁶¹. It is also uncertain how such changes in recessionary or inflationary conditions could impact demand from customers and end users ¹⁶². A decrease in demand from customers and end users would harm financial results ¹⁶³. If economic or market conditions in certain key markets deteriorate, the company may experience material adverse effects on its business, financial condition and results of operations ¹⁶⁴. Adverse economic and market conditions could also harm the business by negatively affecting the parties with whom the company does business, including customers, retailers, distributors and wholesalers, and third-party contract manufacturers and suppliers ¹⁶⁵. Such conditions could impair the ability of customers to pay for products they have purchased from the company, and as a result, allowances for credit losses and write-offs of accounts receivable from customers may increase ¹⁶⁶. In addition, third-party contract manufacturers and their suppliers may experience financial difficulties or business disruptions that could negatively affect their operations and their ability to supply the company with finished goods and the raw materials, packaging, and components required for its products ¹⁶⁷. The company's global operations outside the U.S. expose it to additional risks and uncertainties that could affect financial results, with sales outside the U.S. approximately 66% of consolidated net sales in fiscal year 2026 ¹⁶⁸. Approximately 55% of revenues in fiscal year 2026 were generated in currencies other than the U.S. Dollar, which is the company's reporting currency ¹⁶⁹. In addition, all foreign operating subsidiaries have functional currencies other than the U.S. Dollar, and the largest subsidiary is in the U.K. and generates significant sales in the Euro and Pounds Sterling ¹⁷⁰. As a result, the company is exposed to foreign currency exchange rate risk with respect to its sales, expenses, profits, cash and cash equivalents, other assets and liabilities denominated in currencies other than the U.S. Dollar ¹⁷¹. Financial results are negatively impacted when the foreign currencies in which subsidiary offices operate weaken relative to the U.S. Dollar ¹⁷². Conversely, a sustained weakening of the U.S. Dollar can have broad economic impacts that can include, but are not limited to, increased inflationary conditions in the U.S. market that impacts the purchasing power of end users and could lower consumer demand ¹⁷³. Although the company uses financial instruments to hedge certain foreign currency risks, primarily those associated with its U.K. subsidiary and net assets denominated in non-functional currencies, it is not fully protected against foreign currency fluctuations and, therefore, reported earnings are affected by changes in foreign currency exchange rates ¹⁷⁴. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time ¹⁷⁵. Additionally, global operations outside the U.S. are subject to risks relating to appropriate compliance with legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations, potentially higher incidence of fraud or corruption, credit risk of local customers and distributors and potentially adverse tax consequences ¹⁷⁶. As the company further develops and grows its business operations outside the U.S., it is exposed to additional complexities and risks, particularly in China, Mexico, Brazil as well as other emerging markets ¹⁷⁷. Business activities in such countries create the risk of unauthorized conduct by one or more employees, contractors, or agents that could be in violation of U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the Brazil Clean Company Act or other applicable anti-corruption laws and regulations ¹⁷⁸. Any failure to comply with these laws, even if inadvertent, could result in significant penalties or otherwise harm reputation and business ¹⁷⁹. Although the company has adopted policies and contract terms to mandate compliance with these laws and performs due diligence when necessary, there can be no assurance that all employees, contractors and agents will comply with its requirements ¹⁸⁰. Violations of these laws could be costly and disrupt the business, which could have a material adverse effect on business, financial condition and results of operations ¹⁸¹.