WD-40 COMPANY ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 31, 2024

Press release · 10/21 22:14
WD-40 COMPANY ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 31, 2024

WD-40 COMPANY ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 31, 2024

WD-40 Company’s annual report for the fiscal year ended August 31, 2024, highlights a strong financial performance. The company reported net sales of $1.43 billion, a 10% increase from the previous year, driven by growth in its core business and the acquisition of the Lava brand. Gross profit margin expanded to 54.1%, while operating income increased 14% to $243.8 million. The company’s diluted earnings per share (EPS) rose 12% to $2.45. As of August 31, 2024, the company had cash and cash equivalents of $243.8 million and total debt of $345.8 million. The report also notes that the company has a strong balance sheet, with a current ratio of 2.3 and a debt-to-equity ratio of 0.4.

WD-40 Company’s Solid Financial Performance Amid Challenging Conditions

WD-40 Company, the global marketing organization behind well-known brands like WD-40 Multi-Use Product and 3-IN-ONE, has reported another year of solid financial performance despite facing economic headwinds.

Strong Sales Growth Across Segments The company’s consolidated net sales increased by 10% to $590.6 million in fiscal year 2024 compared to the prior year. This growth was driven by increases in sales volume, which favorably impacted net sales by approximately $41.3 million, as well as higher average selling prices, which added around $4.2 million. Changes in foreign currency exchange rates also had a positive $7.8 million impact on consolidated net sales.

Looking at the performance by segment:

  • The Americas segment saw a 6% increase in net sales to $281.9 million, led by a 7% rise in maintenance product sales. This was partially offset by a 10% decline in homecare and cleaning product sales as the company focused more on its core maintenance brands.
  • The EIMEA (Europe, India, Middle East and Africa) segment delivered a strong 16% increase in net sales to $221.0 million. This was driven by higher sales volumes and favorable currency impacts, which offset some declines in average selling prices.
  • The Asia-Pacific segment grew net sales by 10% to $87.6 million, with increases across both maintenance and homecare/cleaning products.

Improved Profitability Gross profit as a percentage of net sales increased from 51.0% in the prior year to 53.4% in fiscal 2024. This was primarily due to favorable sales mix, lower costs for key raw materials like specialty chemicals, and reduced warehousing and freight expenses.

However, selling, general and administrative (SG&A) expenses increased by 19% to $183.9 million. This was driven by higher employee-related costs, including increased incentive compensation, as well as greater professional services fees to support strategic initiatives.

Despite the rise in SG&A, WD-40 Company was able to grow its operating income by 7% to $96.4 million. Net income also increased 6% to $69.6 million, or $5.11 per diluted share, compared to $4.83 per share in the prior year.

Segment Profitability Looking at profitability by segment:

  • The Americas segment’s operating income increased 7% to $65.0 million, with the higher gross margin offsetting the rise in operating expenses.
  • EIMEA’s operating income grew 19% to $46.8 million, benefiting from the sales growth and gross margin expansion.
  • Asia-Pacific’s operating income rose 15% to $29.7 million, also driven by the sales increase and improved gross margin.
  • Unallocated corporate expenses increased 24% to $45.2 million, primarily due to higher employee costs and ERP system implementation expenses.

Solid Cash Flow and Financial Position WD-40 Company generated $92.0 million in cash from operations during fiscal 2024, though this was down from $98.4 million in the prior year. The decrease was mainly due to changes in working capital, as the company saw a larger increase in trade receivables compared to the prior period.

The company ended the year with $46.7 million in cash and cash equivalents. It also has access to a $50 million revolving credit facility, of which $20.0 million was classified as long-term debt and $7.8 million as short-term as of August 31, 2024. Additionally, the company holds $66.8 million in fixed-rate long-term borrowings.

WD-40 Company’s Board of Directors approved a 6% increase in the regular quarterly cash dividend to $0.88 per share. The company also has a $50 million share repurchase plan in place, of which $41.9 million remained available as of the end of fiscal 2024.

Outlook and Strategic Initiatives While the company faces an uncertain macroeconomic environment, it remains focused on executing its strategic initiatives to drive long-term growth. This includes efforts to innovate and renovate its core maintenance product lines, as well as investments in sustainability and digital capabilities.

During the first quarter of fiscal 2025, WD-40 Company also reclassified its homecare and cleaning product portfolios in the Americas and EIMEA segments as held for sale. This signals the company’s intention to potentially divest these lower-margin businesses to focus resources on its higher-growth, higher-margin maintenance products.

Overall, WD-40 Company has demonstrated its ability to navigate challenging conditions and deliver solid financial results. The company’s diversified product portfolio, global reach, and commitment to innovation position it well for continued success in the years ahead.