WD-40 Company

Good day, and welcome to WD-40 Company's third quarter fiscal year 2026 earnings conference call. Today's call is being recorded. All participants are currently in listen-only mode. Following the prepared remarks, we will open the call for questions. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now turn the call over to Wendy Kelley, Vice President, Stakeholder, and Investor Engagement. Please go ahead. Thank you and good afternoon.

Thank you 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, Sara Hyzer. In addition to today's discussion, we encourage investors to review our earnings presentation, press release, and form 10-Q for the period ending May 31, 2026, available on our investor relations website at investor.wd40company.com. A replay and transcript of today's call will also be posted shortly. We will discuss certain non-GAAP measures today. Reconciliations to GAAP results are available in our SEC filings and earnings materials. Today's call also includes forward-looking statements. Actual results may differ materially. Please refer to the risk factors in our SEC filings for more information. Finally, please note that all information presented is current as of July 9th, 2026, and we undertake no obligation to update forward-looking statements. With that, I'll turn the call over to Steve.

Thanks, Wendy, and thanks to everyone for joining us today. I'll begin with an overview of our third quarter performance and progress against select areas of our 4x4 strategic framework. Sara will then review our financial results and outlook, and we'll conclude with your questions. Third quarter consolidated net sales increased 24% year over year to 195.1 million. Maintenance products which represented 97% of total net sales increased 26% to 189.7 million. And we're up 22% on a constant currency basis, exceeding our long-term growth expectations and setting a new record for the company. Sales of maintenance products in our direct markets increased 28% year-over-year, while sales through our marketing distributor markets increased 18%. We'll discuss the drivers of this performance in a moment. Gross margin increased 40 basis points year-over-year to 56.6%. were encouraged by this momentum and remain focused on the levers within our control. Although we expect gross margin to experience some temporary pressure from external cost factors in the coming months, we are confident that the actions we've taken position as well for recovery thereafter. We will vigorously defend our gross margins and may need to take further action in fiscal year 2027 as required. Sara will provide additional perspective on our outlook in a moment. Now let's review third quarter sales results by trade block. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the third quarter of last fiscal year. Sales in the Americas increased 29% year over year to 101.2 million, driven by a 31% increase in maintenance products to 98.3 million. This growth was driven primarily by increased sales of WD-40 multi-use products in the US and Latin America, where sales increased $17.2 million and $2.6 million respectively. Strong performance of W-40 multi-use product in the US was driven by several factors, including expanded distribution, robust e-commerce sales, and strong promotional activity, including a high impact promotional campaign featuring a limited edition can collaboration with Disney Entertainment and the Home Depot. In Latin America, sales increased across Brazil and Mexico, supported by a higher sales volume in Brazil and a combination of sales growth and favorable foreign currency translation in Mexico. W-40 specialist sales increased by 22%, driven by higher U.S. volumes, reflecting new distribution gains, strong placement with large retailers, and growth in online sales. Home care and cleaning product sales declined 9%, reflecting our strategic focus on higher margin maintenance products. Sara will give an update on our U.S. home care and cleaning business later in the call. Looking ahead, we expect low double-digit growth in maintenance products in the Americas for fiscal year 2026. Turning to IMEA, sales increased 17% year-over-year to 66.6 million, reflecting higher sales volume in both direct and distributor markets, as well as favorable foreign currency exchange rates. On a constant currency basis, sales were up 10%. In our IMEA direct market, sales increased by 6.6 million, driven by double digit growth in maintenance products across key markets, including Iberia and DAC. In these regions, sales of maintenance products rose by 2.2 million and 1.5 million respectively, supported by strong commercial execution In our distributor market, sales increased by 4.4 million, reflecting a strong rebound after several softer quarters and the positive impact of completed strategic distribution changes. Growth was driven by higher sales volumes across key markets, including Saudi Arabia and the United Arab Emirates, supported by the timing of customer orders and increased inventory build within the region. In India, sales increased 1.6 million, primarily due to favorable order timing and foreign currency impacts. Sales in the AMA region also benefited from some advanced buying as customers proactively managed inventory levels and made uncertainty around product availability following geopolitical developments in the Middle East. We also experienced some advanced buying ahead of price increases, which became effective in early Q4. As a result of both of these factors, a portion of fourth quarter demand shifted into the third quarter. W-40 specialist sales increased 31%, driven by growth across most of our direct and distributor markets. Growth was led by France and Iberia, where strong marketing programs and new product introductions supported higher sales. As a reminder, the divestiture of the UK home care and cleaning portfolio in fiscal 2025 reduced third quarter sales by $1.1 million. Despite ongoing uncertainty in the Middle East, we expect maintenance product sales in IMEA to increase by low to mid-single digits in constant currency and high single digits in reported currency in fiscal year 2026. In Asia Pacific, sales increased 24% year-over-year to $27.3 million and were up 18% on a constant currency basis. Growth was broad-based across the region, driven primarily by China and Asia distributor markets, which increased 3 million and 1.4 million respectively. In China, growth was driven by higher sales volumes supported by promotional and marketing programs, including online influencers, and expanding distribution across online retail and industrial channels. Sales also benefited from advanced buying ahead of planned price increases later in the year, which shifted a portion of expected fourth quarter demand into the third quarter. In our Asia distributor market, sales increased driven by promotional programs, particularly in the Philippines, Indonesia, and Malaysia. W-40 specialist sales increased 1 million or 32% driven by growth across the region with the strongest gains in China where higher volumes were supported by promotional and marketing programs and expanded distribution. We remain encouraged by regional momentum and expect high single-digit to double-digit growth in maintenance products in Asia Pacific for fiscal year 2026. Now let's talk about our Muslim Battles, a core element of our strategy to accelerate revenue growth in maintenance products. Starting with Muslim Battle number one, lead geographic expansion, year-to-date sales of the W-40 multi-use product increased 13% to $398 million. driven by solid performance across all three trade blocks. We are seeing strong progress across key markets with year-to-date growth at 20% in the US, 21% in China, and 27% in Iberia. We continue to execute from a proven playbook, expanding distribution and sampling programs to build awareness with end users across 176 countries and territories and 62 trade channels. We estimate the attainable market for W-40 multi-use products to be approximately 1.9 billion. With fiscal year 25 sales of 478 million, we believe there remains a significant long-term growth opportunity. Next is Muslim battle number two, accelerating premiumization. Year-to-date sales of WD-40 SmartStraw and EasyReach when combined increased 19% and now represent approximately 50% of WD-40 multi-use product sales. These premium formats strengthen brand loyalty support gross margin expansion, and provide meaningful runway for continued growth. We continue to target annual growth of more than 10% in premiumized products. Our third Muslim battle is driving W-40 specialist growth. Year-to-date sales increased 22% to 72.9 million. We estimate the attainable market for W-40 specialist at approximately 665 million. With fiscal year 25 sales of 82 million, We're still in the very early stages of capturing this significant growth opportunity. Today, 90% of our WD-40 specialist sales come from just 10 markets, highlighting a significant opportunity to expand through geographic growth and product innovation. In the third quarter, we launched our first bio-based lubricant across several European markets. Whilst it's still early, we are very encouraged by the initial results, and look forward to rolling out the product across additional markets in the coming quarters. We continue to target annual growth of more than 10% on W-40 specialists as we expand our portfolio of purpose-built maintenance solutions. Our fourth must-win battle is to turbocharge digital commerce. Year-to-date e-commerce sales increased 22% led by the United States and China. E-commerce pure play remains one of our fastest growing channels. Across digital, we're strengthening execution on key platforms. Our social media and video channels are driving much of our digital reach, helping us connect with both new and existing end users in more engaging ways. As a result, we're reaching and engaging more end users than ever before. Digital commerce continues to support each of our Muslim battles by improving access to our products and increasing brand visibility and relevance. We'll now move to our strategic enablers, which support operational excellence across the business. Zig Ziglar once said, you don't build a business, you build people, and then the people build the business. That philosophy is core to D-40 Company and is the foundation of our people-first mindset. Our people are remarkably resilient, agile, and innovative. Over the past five years, they've navigated a series of external challenges, from the global pandemic to geopolitical uncertainty, while strengthening cost discipline, implementing new systems, enhancing how we serve customers, and leveraging our globally decentralized supply chain network, all in the face of significant uncertainty. Last month, we announced a planned leadership transition to build on the strong foundation we have in place. As part of this transition, we introduced new roles to strengthen alignment and accelerate strategy execution, ensuring we have the right structure and leadership in place to support continued growth. These new roles include Chief Strategy and Innovation Officer and Chief Brand and Marketing Officer and will be filled by experienced W-40 Company leaders transitioning from within the company. These newly created roles are designed to enhance collaboration, accelerate innovation, and proactively harness AI and digital technologies to drive growth and advance the company's long-term strategy. We also announced that Sara Hyzer will transition to President of our America's Division, reflecting our commitment to developing leaders from within. Sara will continue to serve in her current role during the transition until her successor is named. These changes are designed to support continued growth and position the business for long-term success. With that, I'll now turn the call over to Sara.