WD-40 (NASDAQ:WDFC) reported first-quarter fiscal 2026 consolidated net sales of $154.4 million, up 1% from the prior year, as growth in its direct markets was offset by softer results in its marketing distributor network. Management said the quarter’s performance was influenced primarily by timing-related factors tied to distributor ordering patterns rather than a decline in end-user demand, and the company reaffirmed its full-year guidance on a pro forma basis.
Sales trends: direct-market growth offset by distributor timing
Maintenance products remained the company’s strategic focus, representing about 96% of total net sales in the quarter. Net sales for maintenance products were $148.9 million, up 2% year over year. CEO Steve Brass said direct markets accounted for 83% of global sales and maintenance products grew 8% in those markets, which he characterized as in line with long-term growth targets.
Regional performance: Americas and OMEA grew, Asia Pacific declined
In the Americas, net sales were $71.9 million, up 4% from the prior year. Maintenance product sales increased 5% to $68.6 million. The company cited higher maintenance product sales in the United States (up 3%) and Latin America (up 12%). In the U.S., Brass said WD-40 Multi-Use Product sales increased after a modest price adjustment, partially offset by lower volumes due to the timing of customer orders. In Latin America, he attributed growth primarily to expanded distribution and promotions in Mexico. WD-40 Specialist sales in the Americas rose 14%, which management linked to increased online retail sales, new distribution, and higher demand, primarily in the U.S. Home care and cleaning product sales in the Americas declined 18% as the company continued shifting toward higher-margin maintenance products.
In OMEA (Europe, India, the Middle East, and Africa), net sales excluding the impact of home care and cleaning brands divested in the fourth quarter of fiscal 2025 were $58.7 million, up 5%. Growth was driven by a 27% increase in WD-40 Specialist sales, which management said reflected heightened promotional activity and new product launches in key direct markets. Multi-Use Product sales were described as relatively constant. Brass noted strong trends in many direct markets but said the increases there were “fully offset” by softer performance in distributor markets due to the timing of customer orders, though India stood out with a $1.4 million increase.
In Asia Pacific, net sales were $23.9 million, down 10% year over year. Multi-Use Product sales fell 12% to $18.3 million. Brass highlighted 8% sales growth in China, driven by expanded distribution and promotional initiatives, but said those gains were more than offset by a $3.3 million, or 33%, decline in Asia distributor markets, reflecting distributors adjusting inventory after heavier promotional participation in the prior quarter. In Australia, maintenance product sales were flat, while home care and cleaning sales declined 5% primarily due to timing of customer orders. WD-40 Specialist sales in Asia Pacific increased 2% on higher volume from promotions and marketing in Australia and China.
Gross margin improved; operating results declined amid higher expenses
Gross margin was 56.2% in the quarter, up 140 basis points from the year-ago quarter and 150 basis points sequentially, according to management. Brass said gross margin excluding assets held for sale was 56.7%.
CFO Sara Hyzer said the year-over-year improvement was driven primarily by 110 basis points from lower specialty chemical costs and lower CAM costs, plus 60 basis points from higher average selling prices, including premiumization. Those factors were partially offset by a 50-basis-point headwind from higher filling fees, primarily in OMEA.
- Americas gross margin rose 290 basis points to 53.3%, driven by higher average selling prices and lower specialty chemical and CAM costs.
- OMEA gross margin increased 90 basis points to 58.7%, helped by foreign exchange and partially offset by higher filling fees.
- Asia Pacific gross margin slipped 70 basis points to 58.9%, mainly due to lower average selling prices linked to changes in sales mix.
Hyzer said external risks such as cost volatility, tariffs, and inflation remain, and outlined margin support initiatives including supply chain cost reductions, premiumization, new product introductions, geographic expansion, and asset divestitures.
Cost of doing business rose to 40% of net sales from 37% a year earlier. Hyzer said the first quarter typically carries higher expenses due to planning meetings and travel, and she described the elevated ratio as an “anomaly.” In dollar terms, cost of doing business increased $4.6 million, or 8%, including a $1.3 million unfavorable impact from foreign currency. The remaining increase was largely attributed to higher employee-related costs tied to additional headcount and information systems initiatives, as well as higher travel and meeting expenses. Advertising and promotion spending was 5.3% of net sales versus 5.5% last year, and Hyzer said planned initiatives should bring the full-year level in line with the company’s around-6% guidance.
Adjusted EBITDA margin was 17% compared with 18% in the year-ago quarter. Operating income declined 7% to $23.3 million and net income fell 8% to $17.5 million. Diluted EPS was $1.28, down from $1.39, based on 13.5 million weighted average shares outstanding. On a pro forma basis excluding divested and held-for-sale home care and cleaning products, Hyzer said operating income, net income, and EPS would have declined 4%, 5%, and 5%, respectively.
Strategy updates: Specialist growth, e-commerce, and supply chain focus
Management emphasized progress on its “Must-Win Battles” within the company’s 4×4 strategic framework. Brass said WD-40 Specialist sales were $22.5 million, up 18% year over year, and e-commerce sales increased 22%, primarily driven by strong Specialist sales in the United States. He also reported that combined sales of WD-40 Smart Straw and Easy Reach rose 4%, and premiumized products accounted for about 49% of Multi-Use Product sales.
On operational execution, Brass said an employee engagement survey completed in November 2025 produced an engagement index score of 95%, which he called a record high, and that 97% of employees said they actively collaborate to share knowledge and ideas. He also reported global on-time performance of 97.6% in the supply chain.
During the Q&A, management provided more detail on supply chain cost-reduction actions, including global sourcing efforts (beginning with cans and moving toward specialty chemicals), steps to reduce product miles traveled, and a “fresh look” at the U.S. distribution network. Hyzer said the company’s model remains largely outsourced, and that expected maintenance capital expenditures remain within its 1% to 2% target range, with many investments made by third-party providers.
Capital returns, divestiture progress, and reaffirmed FY26 guidance
Hyzer said the board approved a quarterly cash dividend of $1.02 per share on December 10, representing an increase of more than 8% from the prior quarter. The company repurchased about 39,500 shares for $7.8 million during the quarter and had roughly $22 million remaining under its current repurchase authorization, which expires at fiscal year-end. In response to an analyst question, Hyzer confirmed the company has accelerated buybacks and plans to fully utilize the remaining authorization.
On the planned divestiture of the Americas home care and cleaning product brands, Hyzer said the investment bank continues active discussions with multiple potential buyers, adding there is no certainty of a deal but the company remains optimistic.
The company reaffirmed its fiscal 2026 guidance on a pro forma basis excluding the held-for-sale home care and cleaning brands. Hyzer said management feels confident it can deliver results at the mid to high end of the ranges, citing promotional activity scheduled for the back half of the year and an expected recovery in Asia distributor markets. Brass added that second-quarter trading had started strongly and that early signs of recovery in Asia distributor markets were already emerging.
- Net sales: $630 million to $655 million (after adjusting for foreign currency impacts), representing 5% to 9% growth from pro forma fiscal 2025 results
- Gross margin: 55.5% to 56.5%
- Advertising and promotion: around 6% of net sales
- Operating income: $103 million to $110 million (5% to 12% growth from pro forma fiscal 2025)
- Tax provision: 22.5% to 23.5%
- Diluted EPS: $5.75 to $6.15 (based on about 13.4 million weighted average shares outstanding), representing 5% to 12% growth from pro forma fiscal 2025
Hyzer also noted that if the company is unsuccessful in divesting the Americas home care and cleaning brands, guidance would be positively impacted on a full-year basis by approximately $12.5 million in net sales, $3.6 million in operating income, and $0.20 in diluted EPS.
About WD-40 (NASDAQ:WDFC)
WD-40 Company, headquartered in San Diego, California, is best known for its flagship WD-40® Multi-Use Product, a water-displacing spray used for lubrication, rust prevention and cleaning. Since its introduction in 1953 by the Rocket Chemical Company, the WD-40 brand has become a household and industrial staple. Over time, the company has broadened its portfolio to include complementary maintenance and cleaning brands such as 3-IN-ONE® oils, Lava® hand cleaners, Solvol® solvents, Spot Shot® stain removers and X-14® cleaning products.
WD-40 Company distributes its products in more than 176 countries through retail, industrial and automotive channels.
