WD-40 Company Q1 FY2026 earnings call

Management Statement and Operational Highlights:

• Strategic focus on maintenance products, with direct markets growing 8% in Q1 in line with long-term targets, while marketing distributors were soft due to timing factors.
• Gross margin in Q1 was 56.2%, an improvement of 150 basis points sequentially from Q4 and 140 basis points compared to Q1 of last fiscal year.
• Must Win Battles:
  • Lead geographic expansion: Made progress in key markets for WD-40 Multi-Use Product.
  • Accelerate premiumization: Sales of WD-40 Smart Straw and EZ REACH combined up 4% year-over-year, premiumized products account for ~49% of WD-40 Multi-Use Product sales.
  • Drive WD-40 Specialist growth: Sales up 18% in Q1, global attainable market for WD-40 Specialists is ~$665 million.
  • Turbocharge Digital Commerce: E-commerce sales increased 22% in Q1.
• Strategic enablers:
  • People-first mindset: Employee engagement index score increased to 95% in Nov 2025.
  • Operational excellence in supply chain: Global on-time performance 97.6% in Q1, progress in responsible sourcing.

Segment Performance:

• The Americas: First quarter net sales were $71.9 million, an increase of 4% compared to last year. Maintenance product sales were $68.6 million, up 5% or $3.2 million. Made up 47% of global business.
• EMEA: Excluding home care and cleaning divestiture impact, net sales were $58.7 million, an increase of 5% or $2.8 million. Made up 38% of global business.
• Asia Pacific: Sales were $23.9 million, a decrease of 10% or $2.7 million compared to last year. Made up 15% of global business. Maintenance products remain the primary focus, representing approximately 96% of total net sales for the quarter, with net sales of $148.9 million, a 2% year-over-year increase.

Guidance:

• Reaffirmed 2026 fiscal year guidance. Net sales expected to be between $630 million and $655 million after foreign currency impacts, growth of 5-9% from pro forma 2025 results.
• Gross margin expected to be between 55.5-56.5%.
• Advertising and promotion investment projected to be around 6% of net sales.
• Operating income expected to be between $103 million and $110 million, growth of 5-12% from pro forma 2025 results.
• Diluted earnings per share expected to be between $5.75 and $6.15, growth of 5-12% from pro forma 2025 results.
• If unsuccessful in divesting The Americas Home Care and Cleaning brands, guidance would be positively impacted by ~$12.5 million in net sales, ~$3.6 million in operating income, and $0.20 in diluted EPS.

Risks:

• External risks like cost volatility, tariffs, and inflation remain, which could impact margins.

Question and Answer: Q: Mike Baker asked about indicators pointing to strong results and if the guidance is more bullish than originally given.

A: Sara Hyzer said they feel confident in reaching the mid to high end of the range due to scheduled promotional activities and visibility into back half of the year activities. Steve Brass added Q2 is off to a good start and real power comes in the back half with recovery in Asia distributor markets and strong US and European performance.

Q: Daniel Rizzo asked about supply chain cost reduction specifics.

A: Sara Hyzer said they invested in global supply chain and sourcing, started with cans and are moving to specialty chemicals, looking at raw material sourcing and distribution network to reduce costs.