WD-40 Company is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories, and homes around the world. The company's diverse portfolio includes the iconic WD-40 Multi-Use Product, WD-40 Specialist, 3-IN-ONE, GT85, X-14, 2000 Flushes, Carpet Fresh, no vac, Spot Shot, 1001, Lava, and Solvol brands.

Financials

For the fiscal year ended August 31, 2023, WD-40 Company reported annual net income of $65,993,000, annual revenue of $537,255,000, annual operating cash flow of $98,391,000, and annual free cash flow of $91,520,000. The company's maintenance products, which account for 95% of total sales, saw a 10% increase in sales during the nine months ended May 31, 2024, reaching $410,546,000. This growth was driven by strong performance across all three of the company's geographic segments: Americas, EIMEA (Europe, India, Middle East, and Africa), and Asia-Pacific.

In the third quarter of fiscal 2024, WD-40 Company reported net sales of $155,045,000, up 9.4% year-over-year, exceeding analysts' expectations. The company's gross margin expanded 250 basis points to 53.1%, reflecting favorable sales mix, lower costs of specialty chemicals, and reduced warehousing, distribution, and freight expenses. Net income for the quarter was $19,842,000, or $1.46 per diluted share, compared to $18,895,000, or $1.38 per diluted share, in the prior-year period.

Segment Performance

The Americas segment, which includes the United States, Latin America, and Canada, reported a 6% increase in net sales to $75,103,000 in the third quarter. This growth was primarily driven by a 7% increase in WD-40 Multi-Use Product sales, with strong performance in Latin America offsetting declines in the U.S. and Canada. The company's acquisition of its Brazilian distributor in the third quarter, which shifted the market to a direct distribution model, contributed $2.7 million in incremental sales.

The EIMEA segment, which includes Europe, India, the Middle East, and Africa, saw a 13% increase in net sales to $59,399,000. This was largely due to a 17% increase in WD-40 Multi-Use Product sales, as the region continued to recover from the impact of price increases implemented in the prior fiscal year. The Asia-Pacific segment, which includes Australia, China, and other countries in the region, reported a 14% increase in net sales to $20,543,000, driven by strong growth in WD-40 Multi-Use Product, WD-40 Specialist, and homecare and cleaning products.

Recent Developments

WD-40 Company's four "Must-Win Battles" continue to drive the company's strategic initiatives. In the first nine months of fiscal 2024, global sales of the WD-40 Multi-Use Product increased 11%, while WD-40 Specialist sales grew 11% and premiumized product sales (WD-40 Smart Straw and EZ-REACH) increased 14%. The company's focus on digital commerce also paid off, with e-commerce sales up 18% year-to-date.

The company's strategic enablers, which focus on operational excellence and supporting the achievement of the Must-Win Battles, are also progressing well. The recent implementation of a new enterprise resource planning (ERP) system in the U.S., Latin America, and Asia regional distributor businesses has stabilized, with customer on-time and in-full delivery scores exceeding 95% in the third quarter. The company is also making progress on the sale of its U.S. and U.K. homecare and cleaning product brands, which represent approximately 4% of total sales, as it focuses on its core maintenance product business.

Outlook

For the full fiscal year 2024, WD-40 Company is reiterating its guidance for net sales growth between 6% and 12%, with net sales expected to be between $570 million and $600 million on a constant currency basis. Gross margin is expected to be in the range of 51.5% to 53%, with the company anticipating it will come in closer to the high end of the range. Earnings per share are forecast to be between $5.00 and $5.30, based on an estimated 13.6 million weighted average shares outstanding.

Conclusion

WD-40 Company's strong brand recognition, diversified product portfolio, and global reach have enabled the company to navigate challenging macroeconomic conditions and deliver consistent growth. The company's focus on its Must-Win Battles, strategic enablers, and disciplined capital allocation have positioned it well for continued success. With a healthy balance sheet, robust cash flow, and a commitment to returning capital to shareholders, WD-40 Company remains a resilient consumer staple stock worthy of investor attention.