WD-40 Company (WDFC) Q3 2024 earnings summary

Executive summary

• Q3 FY24 net sales reached a record $155 million, up 9% year-over-year, with robust volume growth and all trade blocs contributing to growth.

• Maintenance product sales grew over 10% for both the quarter and year-to-date, aligning with long-term targets.

• Net income for Q3 was $19.8 million, up 5% from prior year; diluted EPS was $1.46 versus $1.38 last year.

• Progress made on strategic initiatives, including geographic expansion, premiumization, Specialist product growth, digital commerce, and a strong start in Brazil.

• Management reiterated FY24 guidance and highlighted ongoing divestiture of homecare and cleaning products in the US and UK.

Financial highlights

• Gross margin improved to 53.1%, up 250 basis points year-over-year, driven by favorable sales mix and lower specialty chemical costs.

• Adjusted EBITDA margin was 19% in Q3, stable year-over-year.

• Cost of doing business was 34% of sales in Q3, up from 32% last year, mainly due to higher employee costs, ERP implementation, and brand investments.

• Cash flow from operations YTD was $65 million; inventory reduced by 36% since peak in FY23.

• FX changes increased net sales by $0.4 million in Q3 FY24.

Outlook and guidance

• FY24 net sales growth projected at 6%-12%, with net sales of $570M-$600M in constant currency.

• Gross margin expected between 51.5%-53%, likely at the high end; targeting 55% by FY26.

• Net income guidance: $67.7M-$71.8M; diluted EPS: $5.00-$5.30.

• A&P investment to remain 5%-6% of net sales; tax rate expected at 23%-24%.

• All trade blocs expected to meet or exceed long-term growth targets for maintenance product sales.