WD-40 Company

Ladies and gentlemen, thank you for standing by. Good day and welcome to the WD-40 Company second quarter fiscal year 2026 earnings conference 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 our equipment. If at any time during the conference you need to reach an operator, please press star 0 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 February 28, 2026. 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 our 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, April 9th, 2026. 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 thanks to everyone for joining us today. I'll begin with an overview of our sales performance for the second fiscal quarter of 2026, followed by an update on the progress we've made across select areas of our four by four strategic framework. Sarah will then walk through the details of our second quarter results, recap our business model, share a brief update on the divestiture of our home care and cleaning business, and review our guidance for fiscal 2026. And we'll conclude by taking your questions. Today, we reported consolidated net sales of 161.7 million, an increase of 11% compared to last year. Let's spend a few moments looking more closely at those results and the factors contributing to our performance. Maintenance products continue to be our core strategic focus, accounting for roughly 97% of total net sales this quarter. Net sales in this category totaled 156.8 million, reflecting a 13% increase year-over-year. On a constant currency basis, net sales in this category increased 6% year-over-year, in line with our long-term growth expectations for maintenance products. As a reminder, we go to market through a mix of direct operations, which represent approximately 80% of global sales, and marketing distributors, which account for the remaining 20%. During the second quarter, sales of maintenance products in our direct market grew 14% compared to prior year. Sales through our marketing distributor network increased 9% year to year, increasing primarily by sequential improvement across our Asia-Pacific distributor markets, as we saw the anticipated rebound following a softer first quarter. I'd also like to highlight that our gross margin remains solidly within our expected guidance range for fiscal year 26. In the second quarter, we delivered a gross margin of 55.6%, up 100 basis points year over year. On an adjusted basis, excluding assets held for sale, gross margin was 56%. Now let's talk about second quarter sales results by segment, starting with the Americas. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the second quarter of last fiscal year. Sales in the Americas, which includes the United States, Latin America and Canada, were 71.8 million in the second quarter, an increase of 10% compared to last year. Sales of maintenance products in the Americas were 69.1 million, an increase of 11% or 6.7 million compared to last year. Nearly all of that growth was driven by higher sales of maintenance products in the U.S., which increased 15% compared to last year. Sales performance of W40 multi-use products in the U.S. was particularly strong, increasing by 5 million, or 15%. This growth was driven by higher volumes of select customers and online retailers, supported by elevated promotional activity and modest price increases, which we implemented earlier in fiscal year 26. We expect a strong momentum in the U.S. to continue with numerous activities already planned for the second half of fiscal year 26. In the Americas, maintenance product sales also benefited from strong growth of W40 specialists, which increased 17% compared to the prior year. That growth is driven primarily by expanded distribution and higher online sales in the U.S. We saw modest sales growth in Latin America this quarter, which is largely offset by softer sales in Canada, leaving overall performance for the combined regions essentially unchanged. Home care and cleaning product sales declined 13%, reflecting our strategic shift toward higher margin maintenance products in alignment with our 4x4 strategic framework. In total, our Americas segment made up 44% of our global business in the second quarter. With a significant number of initiatives planned in the back half of the fiscal year, our outlook for the Americas is very strong. As a result, we expect high single digit into low double digit growth in the Americas this fiscal year, driven primarily by strong activity in the United States. This strong top line growth positions as well to help offset uncertainty associated with global economic and geopolitical conditions that could impact other areas of the business Now turning to IMEA, which includes Europe, India, the Middle East, and Africa. Sales of 64.9 million in the second quarter, an increase of 9% compared to last year. This increase is driven by favorable foreign currency exchange rates, as most IMEA sales are transacted in euros or pounds sterling and translated into U.S. dollars for reporting purposes. On a constant currency basis, sales were down 3% year over year. We sell into IMEA through a combination of direct operations as well as through marketing distributors. Net sales in IMEA direct markets, which accounted for 70% of the region's sales, increased 12% during the quarter to $45.6 million in U.S. dollars. Given that currency translation can obscure our reported results, we believe it's helpful to also consider performance in the local currencies in which we transact sales. In local currency, we continue to see double-digit growth of WD-40 multi-use products across many of our direct markets, including France, Iberia, and Benelux, where sales increased 16%, 12%, and 12%, respectively, driven by successful promotional activities. These sales increases were entirely offset by lower volumes in our distributor markets. Net sales in our EMEA distributor markets, which accounted for 30% of the region's sales, increased 1% during the quarter. to 19.2 million in U.S. dollars. Thousand RMA distributor markets were most notably impacted in the Middle East, reflecting the timing of customer orders following strategic distribution changes. We transitioned to a new marketing distributor partner in a key country during the first half of fiscal 26, which shifted the timing of customer orders. With the transition now complete, we expect increased activity in the second half of the fiscal year, subject to further geopolitical disruption in the region. As a reminder, we divested the UK home care and cleaning portfolio in fiscal 25, which negatively impacted second quarter sales by 1.5 million. In total, our EMEA segment made up 40% of our global business in the second quarter. As we look ahead, we expect a better second half performance in EMEA, We are closely monitoring the geopolitical conditions in the Middle East. Sales to the region directly affected by the current geopolitical tensions represented approximately 3% of global sales in fiscal year 25. Our presence in these markets is limited. We have one manufacturing partner in the region, but no significant operations beyond the distribution and sale of our products through third party distributors. We will continue to monitor the situation closely and assess any potential impacts of circumstances at all. Despite this disruption, we expect to achieve mid-single-digit growth on a constant currency basis this fiscal year. In reported currency based on current exchange rates, we would expect growth of maintenance products in IMEA to be in the high single-digit this fiscal year. Now onto Asia Pacific. Sales in Asia Pacific, which includes Australia, China and other countries in the Asia region, were 25 million in the second quarter, an increase of 19% or 1.3 million compared to last year. We did benefit from favorable currency movements in Asia Pacific, although to a lesser extent than in EMEA. On a constant currency basis, sales in the region were up 16% versus last year. Most of that growth was driven by higher sales in China, and our Asia distributor market for sales and maintenance products increased 25% and 19%, respectively, compared to last year. Sales of W40 multi-use products was strong across the trade block. In China, sales of W40 multi-use products increased by 1.1 million, or 18%, driven by higher volumes from effective promotional programs and marketing activities, as well as expanded distribution. particularly through online retailers and industrial channels. In our Asia distributor market, sales of the W40 multi-use product increased by 1.3 million or 17%, partially due to successful promotional programs, particularly in Malaysia and the Philippines. We are pleased to see a strong rebound in the Asia distributor market as customers in the region have adjusted back to more typical inventory levels. In Australia, sales of W40 multi-use products increased 15%, driven by the timing of customer promotions and expanded distribution. In Asia Pacific, maintenance product sales also benefited from strong growth in W40 specialists, which increased by 55% compared to the prior year. Sales increased most significantly in China, driven by successful promotional programs, along with expanded distribution, particularly through online retailers and industrial channels. In total, our Asia-Pacific segment made up 16% of our global business in the second quarter. Based on current visibility, we expect this momentum to continue for the remainder of the fiscal year. However, like many companies, we remain cautious given ongoing global economic and geopolitical instability. We expect Asia-Pacific to deliver strong growth in the back half of fiscal year 26, supporting mid to high single-digit growth on a reported currency basis for the full fiscal year. Now let's talk about our must-win battles. A core element of our strategy is accelerating revenue growth in our maintenance products through our must-win battles. Starting with must-win battle number one, lead geographic expansion. Year-to-date sales of W40 multi-use products reached 245 million, an increase of 6% compared to the same period last year. We delivered solid performance in the Americas and the EMEA, with sales growing 7% and 6%, respectively, Year-to-date sales in Asia Pacific remain flat. However, following the strong recovery experience in the second quarter and the momentum we expect in the second half of the year, we anticipate solid growth in the region for the full fiscal year. We continue to make excellent progress across many key markets, delivering strong year-to-date sales growth, including increases in local currency at 7% in the U.S., 4% in China, 10% in France, and 14% in Iberia. We estimate the attainable market for W40 multi-use product at about $1.9 billion, with fiscal year 25 sales of $478 million. That leaves roughly $1.4 billion of long-term growth opportunity ahead of us. Next is Muslim battle number two, accelerating premiumization. This is centered on accelerating growth in our premium W40 multi-use product formats. Products such as SmartStraw and EasyReach are developed for the end user at the forefront of every decision. The strong focus on the end user enhances brand loyalty, supports gross margin growth, and strengthens our competitive advantage. Year-to-date combined sales of W40 SmartStraw and EasyReach increased 9% compared to the prior year. Premiumized products represent approximately 50% W40 multi-use product sales, leading meaningful runway for continued growth. We're targeting a compound annual growth rate for premiumized product net sales of greater than 10%. Our third Muslim battle is to drive W40 specialist growth. If W40 multi-use product is a Swiss army knife of maintenance, W40 specialist is a dedicated tool, a hammer, screwdriver, or wrench designed for specific jobs. Its focus brand extension strengthens our portfolio without diluting the iconic core. Year-to-date sales of W40 specialist were 44.9 million, up 19% compared to last year. By targeting a compound annual net sales growth rate, the W40 Specialist, of greater than 10%. I'm excited to share that in the second half of this fiscal year, we'll launch our latest innovation within the W40 Specialist product line, a bio-based multi-use lubricant across several European markets. Formulated with 85% bio-based ingredients, the product meets stringent environmental standards while delivering the professional-grade performance our end users expect. This launch reflects our commitment to practical innovation and environmental stewardship. Our fourth Muslim battle is to turbocharge digital commerce. Our digital commerce strategy plays a vital role in advancing each of our Muslim battles by increasing brand visibility, improving accessibility, and deepening end user engagement across global markets. Year-to-date e-commerce sales increased 23%, driven primarily by strong momentum in the United States and China. We'll now move to the second element of our four by four strategic framework, our strategic enablers, which focus on operational excellence. Today I'll provide updates on strategic enablers three and four. A third strategic enabler is operational excellence in the supply chain. Profitable growth requires the supply chain to optimize high performing and resilient In the second quarter, we delivered global on time in full performance of 96%, reflecting the discipline and reliability of our operations. Our decentralized global supply chain is a strategic advantage, enabling both resilience and agility in periods of economic and geopolitical uncertainty. By limiting exposure to any single region, we reduce risk across the network. If a manufacturing partner is impacted by unforeseen circumstances, we can quickly pivot and shift production to other partners within weeks, an agility that's especially valuable in uncertain times. We spent the last three years strengthening our global supply chain, adding even more manufacturing partners, optimizing inventory, and building a more agile network. We recently added a new manufacturing partner in IMEA, further diversifying our European supply chain, and transitioning from a single dominant partner to multiple partners across the continent. The logistics associated with this transition resulted in a temporary inventory build in IMEA. At the same time, we also built inventory in the United States in anticipation of a strong third quarter. These higher inventory levels are beneficial as they help insulators from short-term gross margin volatility, including the impact of near-term fluctuations in crude oil prices. Based on current inventory levels, we do not expect gross margins to be significantly impacted in the third quarter, which provides us time to take mitigating actions to defend gross margin as needed. Overall, our supply chain is significantly more resilient today than it was historically. These changes support gross margin expansion and help insulate the business amid ongoing global economic and geopolitical uncertainty. Our fourth strategic aim was to drive productivity through enhanced systems, At W40 Company, technology is a critical enabler of productivity and scale. We're building a digital foundation designed to support global growth and increase operational flexibility, helping us execute our strategy faster and more effectively. We've made meaningful progress deploying proven AI-enabled platforms like Microsoft Dynamics 365, Salesforce, and Atlas for supply chain. Our goal isn't just personal efficiency, it's rethinking processes across the business, We are, where appropriate, leveraging artificial intelligence across certain parts of the business to improve efficiency and augment decision making. Our focus remains on practical, responsible applications that enhance productivity and support our teams. In addition, we continue to make progress in our enterprise resource planning or ERP implementation. In the second quarter, we went live with another phase of the rollout in Canada. The new system is now operating across a substantial portion of the business, including the U.S., our Latin America and Asian distributive markets operations, and Canada, together representing roughly half of global revenue. With that, I'll now turn the call over to Sarah.