WD-40 Q3 FY25 slides: 1% revenue growth with expanding margins amid currency headwinds

Introduction & Market Context

WD-40 Company (NASDAQ:WDFC) released its third-quarter fiscal year 2025 results on July 10, showing modest revenue growth amid currency headwinds while significantly improving profitability. The company, known for its iconic lubricant spray and maintenance products, reported a 1% increase in net sales to $156.9 million, with net income rising 6% to $21 million. Despite the positive results, WD-40’s stock has remained relatively stable, trading at $192.62 with minimal volatility, reflecting its defensive nature in uncertain markets.

The company’s presentation highlighted its progress on strategic initiatives and long-term growth trajectory while maintaining its full-year guidance, signaling confidence in its business model despite regional variations in performance.

Quarterly Performance Highlights

WD-40 delivered solid financial results for Q3 FY25, with net sales increasing 1% to $156.9 million compared to the same period last year. Without currency impacts, which had an unfavorable effect of approximately $1.7 million, sales would have increased by 2%. The company showed notable improvement in profitability metrics, with gross margin expanding 310 basis points to 56.2%.

As shown in the following financial results summary:

Operating income rose 1% to $27.4 million, while net income increased 6% to $21 million. Diluted earnings per share grew 5% to $1.54, aligning with the company’s long-term growth strategy. These results reflect WD-40’s ability to maintain growth momentum while improving operational efficiency.

CEO Steve Brass noted in the earnings call that "the third quarter was a record sales quarter for the company, reflecting continued progress and momentum," highlighting the company’s resilience in a challenging global economic environment.

Segment Analysis

WD-40’s performance varied across its three geographic segments, reflecting different regional dynamics and market conditions.

The Americas segment, which represents 50% of global net sales, showed strong performance with a 4% increase in reported sales. U.S. maintenance product sales grew by 7%, though this was partially offset by declines in Latin America (-1%) and Canada (-6%). The segment’s gross margin improved significantly to 54.2%, a 360 basis point increase over the prior year.

The following chart illustrates the Americas segment performance:

The EIMEA (Europe, India, Middle East, and Africa) segment, accounting for 36% of global net sales, experienced a 5% decrease in reported sales. Despite this overall decline, WD-40 Specialist products showed impressive growth of 15% in the region. Gross margin for the segment improved to 57.7%, a 290 basis point increase.

The regional breakdown for EIMEA is shown here:

The Asia-Pacific segment, representing 14% of global net sales, delivered the strongest regional performance with a 7% sales increase. China led growth with a 16% increase in maintenance product sales, while Asia distributor markets grew by 8%. Australia experienced a slight 1% decline. The segment achieved a gross margin of 59%, up 140 basis points from the prior year.

The Asia-Pacific performance breakdown is illustrated below:

Strategic Initiatives

WD-40’s presentation emphasized its "Four-by-Four" strategic framework, which includes four "Must-Win Battles" and four "Strategic Enablers" designed to drive long-term growth and value creation.

The company reported progress across its strategic priorities, with WD-40 Multi-Use Product sales up 6% in the Americas and 8% in EIMEA. Premium products like Smart Straw and EZ Reach grew 7%, while WD-40 Specialist products increased 11% globally. E-commerce sales rose 11%, reflecting the company’s successful digital commerce strategy.

The company’s historical growth trajectory demonstrates consistent performance across regions, with a 10-year compound annual growth rate (CAGR) of 6.4% for maintenance products. This provides context for WD-40’s long-term growth aspirations:

Looking forward, WD-40 has established clear long-term growth targets by region, aiming for mid-to-high single-digit overall growth:

The company’s business model is designed to enable long-term value creation through a combination of revenue growth, margin expansion, and efficient capital allocation:

Financial Outlook & Guidance

WD-40 maintained its fiscal year 2025 guidance, narrowing its sales growth projection to between 6% and 9% over 2024 pro forma results. The company expects net sales between $600 million and $620 million, with gross margin between 55% and 56%.

The detailed FY25 guidance is presented below:

The company’s gross margin improvement has been a highlight of recent quarters, as illustrated in the following trend chart:

CFO Sara Hyzer emphasized during the earnings call that "our financial position and liquidity remain strong, supporting a balanced capital allocation strategy." The company continues to target annual dividends at more than 50% of earnings, maintaining its 33-year streak of consistent dividend payments.

Despite currency headwinds and regional variations, WD-40’s Q3 results and maintained guidance reflect management’s confidence in the company’s strategic direction and ability to deliver sustainable growth while expanding margins. The focus on premiumization, geographic expansion, and digital commerce positions the company well for continued success in its core markets while pursuing growth opportunities in emerging regions.

Full presentation:

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