WD-40 Company

call. Today's call is being recorded. At this time, all participants are in a listen-only mode. At the end of the prepared remarks, we will conduct a question and answer session. To register a question at any time during this call, please press star 1 on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach your equipment. If at any time during the conference, you need to reach an operator, please press star on your telephone keypad. I would now like to turn the presentation over to the host for today's call, Wendy Kelly, Vice President, Stakeholder and Investor Engagement. Please proceed.

Thank you. Good afternoon, and thanks to everyone for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer, Steve Brass, and Vice President and Chief Financial Officer, Sarah Heiser. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release, and Form 10-Q for the period ending May 31, 2025. These documents will be made available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be made available shortly after this call. On today's call, we will discuss certain non-GAAP measures. The descriptions and reconciliations of these non-GAAP measures are available in our SEC filings, as well as the earnings documents posted on our investor relations website. As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance. Actual results could differ materially. The company's expectations, beliefs, and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion. Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date. July 10th, 2025. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events, or otherwise. With that, I'd now like to turn the call over to Steve.

Thanks, Wendy, and thank you all for joining us today. Today, I'll start with an overview of our sales results for the third fiscal quarter of 2025, along with updates on our must-win battles and key strategic enablers. Then Sarah will dive deeper into our third quarter performance, review our 55-30-25 business model, give a brief update on the expected divestiture of our home care and cleaning business, and share our updated outlook for fiscal year 25. After that, we'll open the floor for your questions. Today we reported third quarter net sales of 156.9 million, a 1% increase compared to the same period last year. This marks a record sales quarter for the company, reflecting continued progress and momentum. Changes in foreign currency exchange rates have continued to be a bit of a headwind for us. Adjusting for estimated translation impact of foreign currency, net sales would have been $158.6 million, reflecting an increase of 2% compared to the same period last year. We reported third quarter net sales of $150.4 million in maintenance products, our core strategic focus, reflecting a 2% year-over-year increase. While the quarter came in below our long-term growth targets for maintenance products, we remain confident in our growth trajectory. Year-to-date net sales of maintenance products reached $435.2 million, representing a 6% increase and aligns with our mid to high single-digit long-term growth target. We are also pleased to report a strong start to the fourth quarter, with June delivering robust performance across all three trade blocks. This positive momentum reinforces our confidence in concluding the fiscal year with solid growth. Now let's talk about third quarter sales results in dollars by segment, starting with the Americas. Sales in the Americas, which includes the United States, Latin America and Canada, increased 4% in the third quarter to $78.2 million compared to the same period last year. Adjusting for estimated translation impact of foreign currency, net sales in the Americas would have increased by 7% compared to the prior year fiscal quarter. Sales of maintenance products increased 4% in the third quarter to $75 million compared to the same period last year. The bulk of this growth was driven by higher sales of WD-40 multi-use product in the United States, which increased 7% driven by increased promotional activity and the timing of customer orders. Sales in Latin America remained constant. While distributor markets in the region experienced a decline in volume, primarily due to reduced promotional activity and the timing of customer orders, This was largely offset by solid growth in Brazil, which continues to demonstrate strong market momentum. Higher sales in the United States were partially offset by lower sales in Canada, which decreased 6% compared to the prior year quarter due to changes in distribution and reduced promotional activity. In the Americas, sales of W40 specialists increased 4% compared to the prior year fiscal quarter, primarily due to expanding distribution in the United States. Home care and cleaning product sales remain steady across periods, reflecting our strategic shift toward higher margin maintenance products in alignment with our 4x4 strategic framework. In total, our Americas segment set up 50% of our global business in the third quarter. Now let's take a look at our sales in IMAN, which includes Europe, India, the Middle East, and Africa. Total sales in IMEA declined 5% in the third quarter to $56.7 million compared to the same period last year. Foreign currency translation had no material impact on our third quarter results. Sales of maintenance products decreased 3% in the third quarter to $55.6 million compared to the same period last year. The decline was largely attributed to a 6% decrease in sales of WD-40 multi-use product which came after strong performance during the same period last year. The decline in sales of WD-40 multi-use product was primarily driven by lower sales volumes to our marketing distributor customers, particularly in Turkey and the Middle East, resulting in a $3.9 million impact. Sales in Turkey were impacted by the timing of customer orders, reflecting the inherent variability we often experience in our distributor markets. Sales in the Middle East were impacted by operational changes aligned with our long-term strategic objectives. As part of our commitment to manufacturing closer to end users, delivering both economic and environmental benefits, we recently onboarded a new manufacturing partner in the region. While this transition supports our long-term goals, it has resulted in short-term disruption as customers adapt to the new supply chain. However, we continue to see strong sales trends in most of our direct markets, where sales volumes of maintenance products remain strong. Notably, sales of these products increased by 9% in France, 14% in Dak, 13% in Iberia, and 7% in the United Kingdom. In IMEA, sales of W40 specialists increased 15% compared to the prior year fiscal quarter. driven primarily by higher volumes resulting from strong demand across many of our direct markets, as well as increased promotional activity for our WD-40 specialist bike line in the DAC region. Home care and cleaning product sales declined 1.2 million, primarily due to reduced demand in the UK, where lower levels of advertising and promotional activity impacted performance. This shift reflects our continued focus on driving growth in maintenance products, in alignment with our 4x4 strategic framework. In total, our EMEA segment made up 36% of our global business in the third quarter. Now on to Asia Pacific. Sales in Asia Pacific, which includes Australia, China, and other countries in the Asia region, increased 7% in the third quarter to $22 million compared to the same period last year. Adjusting for estimated translation impact of foreign currency, net sales in Asia-Pacific would have increased by 8% compared to the prior year fiscal quarter. Sales of maintenance products increased 9% in the third quarter to $19.8 million compared to the same period last year. This growth was driven by higher sales of WD-40 multi-use product in China and our Asia distributor markets, where sales increased 19% and 8% respectively. In China, the increase is fueled by successful promotional programs, expanded marketing activities, and broader distribution. In our Asia distributor markets, growth is supported by strong promotional execution and increased demand, particularly in Indonesia and Taiwan. In Australia, sales of maintenance products remained relatively constant. Home care and cleaning product sales declined 9%, primarily due to reduced promotional activity and the timing of customer orders. In Asia Pacific, sales of the V4D specialists were up 6% in the third quarter due to higher sales volume from successful promotions and marketing efforts in our Asia distributor markets in China. In total, our Asia Pacific segment made up 14% of our global business in the third quarter. Now let's talk about our must-win battles. Our must-win battles are centered on driving revenue growth in maintenance products and enhancing overall profitability. Execution across these priorities remains strong with performance generally tracking in line with expectations and supporting our long-term value creation objectives. Starting with must-win battle number one, lead geographic expansion. Year-to-date global sales of WD40 multi-use product reached 353 million, reflecting a 6% increase compared to the same period last year. This performance aligns with our long-term growth objective driven by solid execution across key markets. In IMEA, our flagship brand delivered 8% growth, while the Americas posted a 6% increase. Although sales in Asia Pacific were flat year-to-date, the region showed encouraging momentum with double-digit growth in the third quarter. We've made excellent progress year-to-date in many key markets, with strong sales growth at 19% in Latin America, 12% in France, 40% in India, 12% in China, 15% in Iberia, and 21% in Benelux. We estimate the global addressable market for W40 multi-use product to be approximately $1.6 billion based on benchmark sales potential. Our strategy to capture this opportunity remains focused and effective, expand product availability across channels and geographies, and increase penetration by placing more cans directly in the hands of our core end users worldwide. Next is Muslim battle number two, accelerating premiumization. Our second Muslim battle is to accelerate the growth of premium formats of W 40 multi-use product. Premiumization is a key driver of our strategy to enhance profitability and our premium offerings consistently deliver superior user experiences that foster strong brand loyalty and create positive lasting memories. The end to date sales of W 40 smart straw and easy reach when combined were up 7% compared to the prior year period. On a go-forward basis, we'll be targeting a compound annual growth rate for net sales of premiumized products of greater than 10%. Our third must-win battle is to drive WD-40 specialist growth. Through our WD-40 specialist product line, we're focusing on achieving category leadership and expanding market share by leveraging the strength and trust of our core brand. This approach allows us to extend our brand equity into adjacent categories while meeting the evolving needs of professional and industrial users. Year-to-date, sales of WD-40 specialist products were 59.8 million, up 11% compared to the same period last year. On a go-forward basis, we'll be targeting a compound annual growth rate for net sales of WD-40 specialists of greater than 15%. Our fourth must-win battle is to turbocharge digital commerce. Our digital commerce strategy is not solely focused on driving online sales. It plays a pivotal role in accelerating progress across all our must-win battles. E-commerce sales are up 11% year-to-date. The digital channel serves as far more than a transactional platform. It's a tool for building brand awareness and educating end users about the unique value of our products. By leveraging digital touchpoints, we deepen engagement, enhance product understanding, and strengthen brand affinity across our global customer base. Now let's move to the second element of our 4x4 strategic framework, our strategic enablers. which emphasize operational excellence. Today I'll provide an update on strategic enablers one and two. Our first strategic enabler is to ensure a people-first mindset. Today I want to highlight one important outcome of that commitment, employee tenure. Longer employee tenure creates meaningful economic value by reducing turnover costs, preserving institutional knowledge, enhancing productivity, and strengthening stakeholder relationships. all of which contribute to sustained profitable growth. While the median employee tenure at U.S. companies is approximately four years, the average tenure at WD-40 Company is double that, 80 years. We take great pride in this distinction. I want to take a moment to extend my deepest thanks to all our employees for your dedication, hard work, and passion. It's because of your unwavering commitment that WD-40 Company continues to achieve great things. Your contributions are the foundation of our success, and we are truly grateful. Moving on to our second strategic enabler, which is to build an enduring business for the future. W40 Company has long been committed to purpose-driven growth, operating in a way that balances economic performance, environmental stewardship, and social responsibility to create and protect long-term stakeholder value. Today, I want to highlight our commitment to social responsibility and share an update on our broader citizenship efforts. For over 40 years, W40 Company has supported communities by contributing to a wide range of nonprofit organizations and initiatives. Recently, we completed a re-evaluation of our social mission to ensure it reflects who we are today and where we're headed. Rooted in our People First culture, values, and brand mission, the purpose of our new citizenship framework is to empower doers around the world to build a better future. A new citizenship framework is anchored in three strategic pillars, training, preparation, and restoration. These pillars align with our 2030 strategy, reinforce our company's purpose, and support the United Nations sustainable development goals in meaningful ways. One way we're bringing the training pillar to life is through programs like Training the Trades. This program supports aspiring technicians and tradespeople around the world with the goal of developing the next generation of skilled professionals. By doing so, we help strengthen communities and address critical talent gaps in many of the regions where we operate. With that, I'll now turn over the call to Sarah.