WD 40 CO Q4 FY2024 earnings call

• Must-Win Battles: Lead geographic expansion saw WD-40 Multi-Use Product global sales $453 million, up 11% y-o-y; accelerating premiumization had WD-40 Smart Straw and easy reach combined sales up 11% y-o-y; driving WD-40 Specialist growth had global sales nearly $74 million, up 11% y-o-y; accelerating digital commerce had pure-play e-commerce channel sales up 12% y-o-y with 'repair challenge' campaign attracting over 2 million visitors and 10,000+ projects in FY '24. - Strategic Enablers: Ensuring a people first mindset with 93% employee engagement rate in FY '24; build a sustainable business for the future with steps like adding ESG positions, environmental assessments, etc.; achieving operational excellence in supply chain with inventory reduction, on-time delivery rate, and ERP implementation; drive productivity by enhanced systems with successful rollout of new ERP system across 50% of business.

In the fourth quarter, Americas segment sales were $79 million, accounting for 51% of global business; EIMEA segment sales were $59 million, accounting for 37%; Asia Pacific segment sales were $18 million, accounting for 12%. For the full fiscal year, Americas maintenance product sales totaled $267 million, an increase of 7% compared to prior year; EIMEA maintenance product sales totaled $212 million, an increase of 17% compared to prior year; Asia Pacific maintenance product sales totaled $79 million, an increase of 10% compared to prior year.

• For fiscal year 2025, net sales growth from pro forma 2024 results is projected to be between 6% and 11%, with net sales between $600 million and $630 million in constant currency. - Gross margin is expected to be between 54% to 55%. - Operating income is expected to be between $95 million and $100 million, representing growth of between 6% to 12% over the pro forma 2024 results. - Diluted earnings per share is expected to be between $5.20 and $5.45, based on an estimated 13.5 million weighted average shares outstanding. - If unsuccessful in divesting home care and cleaning brands, guidance would be positively impacted by approximately $23 million in net sales, $6 million in operating income and $0.33 in diluted EPS on a full year basis.

• Unanticipated inflationary headwinds and other unforeseen events may affect the view of fiscal year 2025. - Uncertainty regarding the divestiture of home care and cleaning brands in the Americas and the United Kingdom.

Q: Daniel Rizzo asked about pricing headwind in the back half of '24, SG&A expenses with ERP rollout and divestiture, and other direct market opportunities.

A: Sara Hyzer said most was mix related, SG&A expenses will remain relatively elevated with ERP and Brazil expenses, and Steve Brass mentioned Mexico, Brazil growth and laser focus on top 20 growth opportunities globally with more such opportunities to come.

Q: Linda Bolton Weiser asked about guidance excluding household cleaning business, gross margin guidance, oil price assumption, cadence of pro forma sales growth, and China business.

A: Sara Hyzer confirmed guidance excludes household cleaning business, gross margin improvement will be at a lesser scale, oil price assumption is between $70 and $90, sales growth will have a similar first half to second half balance as last year, and Steve Brass noted China's growth from sampling program and distribution expansion.