Wd-40 targets 5%-9% sales growth and $5.75-$6.15 EPS for fiscal 2026 while accelerating buybacks

Earnings Call Insights: WD-40 Company (WDFC) Q4 2025

MANAGEMENT VIEW

* Steve Brass, CEO, described fiscal 2025 as a year of “complexity and resilience,” noting record consolidated net sales of $163 million for the fourth quarter and $620 million for the full year, with both periods reflecting approximately 5% growth year over year. Maintenance products remained the primary focus, accounting for 95% of total net sales in both periods, with $156 million in Q4 maintenance product sales.
* Brass highlighted regional dynamics: Americas segment saw a 2% decline in Q4 sales driven by Latin America and macroeconomic pressures, while EMEA achieved 7% Q4 growth led by direct markets. Asia Pacific grew 28% in Q4, with distributor sales especially strong in Indonesia, Malaysia, Singapore, and the Philippines.
* Brass emphasized strategic progress on the 4x4 framework, noting that “global sales of WD-40 Multi-Use Products in fiscal year '25 were $478 million, representing growth of 6% over the prior year,” and that premiumized products now account for 50% of Multi-Use sales, with global sales of Smart Straw and EZ Reach up 7%.
* The company completed the divestiture of U.K. home care and cleaning brands, and is in talks to sell Americas home care and cleaning brands. Brass stated, “Our path forward is clear. We're expanding availability across more channels and geographies while deepening product penetration by increasing brand awareness through sampling and putting more cans in the hands of end users.”
* CFO Sara Hyzer reported, “Today, we reported pro forma net sales adjusted for currency of $603 million, a 6% increase over the 2024 pro forma results...gross margin of 55.6%, in line with our expectations...operating income of $98.1 million...diluted EPS of $5.50.” Hyzer confirmed successful cost control and margin expansion through supply chain and sourcing initiatives, and announced a board-approved quarterly cash dividend of $0.94 per share as well as accelerated buyback plans.

OUTLOOK

* The company projects fiscal 2026 net sales growth from pro forma 2025 results of 5% to 9%, with net sales between $630 million and $655 million after foreign currency adjustments.
* Gross margin guidance for 2026 is set at 55.5% to 56.5%.
* Advertising and promotion investment is expected to be around 6% of net sales.
* Operating income guidance is $103 million to $110 million, with diluted EPS projected between $5.75 and $6.15 based on 13.4 million weighted average shares outstanding. Hyzer noted, “This range represents growth of between 5% and 12% over the pro forma 2025 results.”
* Guidance assumes no major changes in the economic environment. If the Americas home care and cleaning brands are not divested, guidance would increase by approximately $12.5 million in net sales, $3.6 million in operating income, and $0.20 in diluted EPS.

FINANCIAL RESULTS

* Q4 gross margin was 54.7%, up from 54.1% year over year, attributed to lower specialty chemical costs, higher average selling prices, and lower input costs, partially offset by unfavorable sales mix and higher logistics costs.
* Americas gross margin increased by 70 basis points to 53.2%; EMEA gross margin was 55.5%; Asia Pacific gross margin increased by 110 basis points to 57.5%.
* Adjusted EBITDA for Q4 was $30.5 million, up 16% from the prior year period; adjusted EBITDA margin was 18%. Operating income for Q4 was $28 million, net income $21.2 million, and diluted EPS $1.56, reflecting a 27% increase year over year.
* Cash flow from operations was $30 million for the quarter, with $9.5 million used to pay down short-term borrowings. The company repurchased about 50,000 shares for $12.3 million in fiscal 2025 and plans to accelerate buybacks with $30 million remaining under the current plan.

Q&A

* Daniel Rizzo, Jefferies LLC: Asked for clarification on pro forma reporting and sales mix headwinds. Sara Hyzer explained, “In the press release and in the 10-Q, you'll see those include them, obviously, because those are reported on a GAAP basis...the pro forma view went a step further to take you all the way down in the P&L, so you could actually see the impact down to EPS.” Regarding mix impacts: “the premiumization…is kind of a mixed tailwind, but…I think the mix, what I...so maybe it wasn't clear. The mix is a sales mix and other miscellaneous sales or other miscellaneous mix impact.”
* Rizzo: Inquired about premiumization strategies for specialist products. CEO Brass responded, “Every can of WD-40 specialist we sell is margin accretive...we already in several countries around the world...launched particularly the EZ Reach delivery system on things like our penetrant product.”
* Keegan Cox, DA Davidson: Asked about gross margin headwinds and tailwinds for 2026. Hyzer replied, “We are seeing stability from a cost input standpoint...there are a number of cost-saving initiatives...that will feed into FY '26...We had a lot of success this year from a global sourcing standpoint and exceeded our cost savings expectations.”
* Cox: Asked about sales runway in Asia Pacific distributor markets. Brass stated, “There's a very, very long runway for growth in places like Indonesia, where we've introduced our new kind of hybrid business model...improved performance in the back half in Asia. There may be some kind of impact in terms of because the distributors are a little more lumpy...But beyond that, we see a really strong rebound in Asia Pacific later in the fiscal year.”

SENTIMENT ANALYSIS

* Analysts’ tone was neutral, seeking clarification on technical aspects of reporting, sales mix dynamics, margin drivers, and regional growth opportunities.
* Management maintained a confident and measured tone in prepared remarks, emphasizing “resilience,” “long runway for growth,” and “conviction in the long-term fundamentals.” In Q&A, management provided detailed explanations and remained constructive, with Hyzer stating, “We are seeing stability from a cost input standpoint.”
* Compared to the previous quarter, management’s tone remained confident but more focused on strategic execution and cost control, while analysts continued their fact-finding approach with little change in sentiment.

QUARTER-OVER-QUARTER COMPARISON

* Fiscal Q4 showed record sales and continued improvement in gross margin, but Americas revenue declined versus Q3, while EMEA and Asia Pacific saw stronger growth.
* Full-year guidance for 2026 is similar in structure to the prior quarter, but with explicit acceleration of buybacks and further emphasis on margin sustainability.
* The company completed the U.K. home care divestiture this quarter, advancing its portfolio optimization strategy. Management’s tone remained confident and focused on future growth, while analysts’ focus was consistent, with recurring questions on mix, margin, and regional growth.
* Key metrics such as adjusted EBITDA, EPS, and operating income all showed sequential improvement, while strategic priorities shifted further toward high-margin maintenance products and digital commerce expansion.

RISKS AND CONCERNS

* Management cited ongoing risks from cost volatility, tariff uncertainty, macroeconomic instability, and challenges in Latin America and distributor markets.
* Hyzer outlined mitigation strategies: “We're actively pursuing a range of initiatives designed to help us mitigate those risks and strengthen gross margin over time,” including supply chain optimization, cost reduction projects, and product innovation.
* Analysts raised concerns about sales mix headwinds, margin drivers, and regional sales volatility, particularly in Asia Pacific distributor markets.

FINAL TAKEAWAY

WD-40 Company’s fiscal Q4 and full-year 2025 results highlighted record sales, robust gross margin recovery, and continued progress on strategic portfolio optimization. Management projects 5% to 9% net sales growth and diluted EPS of $5.75 to $6.15 for fiscal 2026, supported by ongoing cost optimization, digital initiatives, and an accelerated share buyback program. The company’s focus remains on expanding high-margin maintenance products, deepening geographic and product penetration, and leveraging digital commerce to drive sustainable, long-term growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/wdfc/earnings/transcripts]

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