0000105132-26-000028
SEC filingWD-40's Q2 FY2026 net sales grew 11% YoY to $161.7M, driven by maintenance products and favorable FX, but net income fell 32% due to a prior-year $11.9M tax benefit.
For the three months ended February 28, 2026 (Q2 fiscal 2026), WD-40 Company reported net sales of $161.7 million, up 11% from $146.1 million in the same period last year. The increase was driven by strong growth in maintenance products across all segments, particularly the WD-40 Multi-Use Product line which rose 12% to $127.4 million. Foreign currency translation had a favorable impact of $7.4 million, primarily from the EIMEA segment.
Gross profit increased 13% to $89.9 million, and gross margin improved 100 basis points to 55.6% from 54.6%. The expansion was attributed to lower costs of specialty chemicals (80 bps) and higher average selling prices (70 bps), partially offset by other input costs (40 bps).
Operating income grew 13% to $26.3 million, with operating margin slightly up 32 bps to 16.3%. Selling, general, and administrative expenses increased 12% to $54.8 million, driven by higher employee-related costs and unfavorable FX. Advertising and sales promotion expenses rose 19% to $8.8 million.
Net income decreased 32% to $20.3 million ($1.50 per diluted share) from $29.9 million ($2.19 per diluted share). The decline was almost entirely due to a prior-year one-time tax benefit of $11.9 million from the release of an uncertain tax position. Excluding that item, adjusted net income would have increased approximately $0.8 million.
As of February 28, 2026, total assets were $473.7 million, compared to $475.8 million at August 31, 2025. Cash and cash equivalents decreased to $50.3 million from $58.1 million, primarily due to share repurchases and dividends. Trade receivables remained flat at $121.2 million, while inventories increased to $85.5 million from $79.9 million, reflecting higher finished goods levels. Total debt stood at $101.2 million, including $15.2 million of short-term borrowings and $86.1 million of long-term debt. The company maintained compliance with all debt covenants. Stockholders' equity was $269.0 million, essentially flat vs $268.2 million at year-end.
For the six months ended February 28, 2026, cash provided by operating activities was $24.3 million, up slightly from $22.9 million in the prior year. Net income of $37.8 million was the primary source, partially offset by working capital outflows of $15.9 million, mainly from inventory buildup and lower accrued payroll. Capital expenditures were $2.7 million, leading to free cash flow of $21.6 million. The company used $30.7 million in financing activities, including $15.8 million for share repurchases (77,675 shares at an average price of $203.22), $26.5 million for dividends, and $14.4 million in net proceeds from the revolving credit facility. The company has $13.8 million remaining under its $50.0 million share repurchase plan.
Management highlighted that maintenance products remain the core growth driver, with total maintenance sales up 13% in Q2. The company is actively monitoring geopolitical conflicts in the Middle East, which have caused raw material cost increases for petroleum-based specialty chemicals, expected to impact gross margin in the fourth quarter of fiscal 2026. Supply chain disruptions have affected the Middle East distribution network, but demand remains intact. Mitigation strategies are being evaluated.
The company continues to emphasize its 55/30/25 business model, targeting gross margin between 50-55%, cost of doing business between 30-35% of net sales, and Adjusted EBITDA between 20-25% of net sales. For Q2, gross margin was 55.6%, cost of doing business was 38% (non-GAAP), and Adjusted EBITDA was 18% of net sales.
Regarding the homecare and cleaning products divestiture, the EIMEA sale was completed in Q4 FY2025, reducing current year sales by approximately $1.5 million in Q2. The Americas HCCP assets remain classified as held for sale.
Segment performance: The Americas segment generated $71.8 million in sales (up 10%), with operating income of $15.0 million (up 14%) and operating margin of 20.9%. The EIMEA segment had $64.9 million in sales (up 9%), operating income of $15.7 million (up 2%), and operating margin of 24.1%. Asia-Pacific sales grew 19% to $25.0 million, with operating income of $8.7 million (up 18%) and operating margin of 34.8%.
Geopolitical risks: The ongoing Middle East conflicts have increased petroleum-based chemical costs, which will impact cost of goods sold from Q4 FY2026. Supply chain disruptions in the Middle East distribution network are being managed through alternative shipping routes.
No forward guidance was provided in the filing.