wdfc-20241130

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 000-06936

Commission Company Name: WD 40 CO

WD-40 COMPANY

(Exact name of registrant as specified in its charter)


Delaware			95-1797918
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9715 Businesspark Avenue, San Diego, California			92131
(Address of principal executive offices)			(Zip code)

Registrant’s telephone number, including area code: (619) 275-1400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common stock, par value $0.001 per share

WDFC

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of January 6, 2025 was 13,546,239.

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WD-40 COMPANY

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended November 30, 2024

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PART I — FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

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PART 1 — FINANCIAL INFORMATION

Item 1. Financial Statements

WD-40 COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share amounts)


	November 30, 2024		August 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	54,914	$	46,699
Trade and other accounts receivable, net	111,433		117,493
Inventories	74,887		79,088
Other current assets	21,567		12,161
Total current assets	262,801		255,441
Property and equipment, net	59,384		62,983
Goodwill	96,584		96,985
Other intangible assets, net	2,287		6,222
Right-of-use assets	10,581		11,611
Deferred tax assets, net	948		993
Other assets	14,739		14,804
Total assets	$	447,324	$	449,039

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	32,212	$	35,960
Accrued liabilities	29,132		31,272
Accrued payroll and related expenses	20,581		26,055
Short-term borrowings	23,429		8,659
Income taxes payable	2,148		1,554
Total current liabilities	107,502		103,500
Long-term borrowings	84,552		85,977
Deferred tax liabilities, net	9,228		9,066
Long-term operating lease liabilities	5,297		5,904
Other long-term liabilities	14,448		14,066
Total liabilities	221,027		218,513

Commitments and Contingencies (Note 11)

Stockholders’ equity:
Common stock — authorized 36,000,000 shares, $0.001 par value; 19,940,370 and 19,925,212 shares issued at November 30, 2024 and August 31, 2024, respectively; and 13,549,989 and 13,548,581 shares outstanding at November 30, 2024 and August 31, 2024, respectively	20		20
Additional paid-in capital	174,258		175,642
Retained earnings	506,898		499,931
Accumulated other comprehensive loss	(35,453)		(29,268)
Common stock held in treasury, at cost — 6,390,381 and 6,376,631 shares at November 30, 2024 and August 31, 2024, respectively	(419,426)		(415,799)
Total stockholders’ equity	226,297		230,526
Total liabilities and stockholders’ equity	$	447,324	$	449,039

See accompanying notes to condensed consolidated financial statements (unaudited).

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WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share amounts)


	Three Months Ended November 30,
		2024		2023

Net sales		$	153,495	$	140,416
Cost of products sold		69,408		64,863
Gross profit		84,087		75,553

Operating expenses:
Selling, general and administrative		50,525		44,135
Advertising and sales promotion		8,393		6,983
Amortization of definite-lived intangible assets		47		251
Total operating expenses		58,965		51,369

Income from operations		25,122		24,184

Other income (expense):
Interest income		148		74
Interest expense		(873)		(1,146)
Other expense, net		(141)		(40)
Income before income taxes		24,256		23,072
Provision for income taxes		5,331		5,590
Net income		$	18,925	$	17,482

Earnings per common share:
Basic		$	1.39	$	1.28
Diluted		$	1.39	$	1.28

Shares used in per share calculations:
Basic		13,548		13,560
Diluted		13,573		13,584

See accompanying notes to condensed consolidated financial statements (unaudited).

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WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)


	Three Months Ended November 30,
	2024		2023

Net income	$	18,925	$	17,482
Other comprehensive income (loss):
Foreign currency translation adjustment	(6,185)		390
Total comprehensive income	$	12,740	$	17,872

See accompanying notes to condensed consolidated financial statements (unaudited).

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WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands, except share and per share amounts)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders’ Equity

	Shares	Amount								Shares	Amount
Balance at August 31, 2024	19,925,212	$	20	$	175,642	$	499,931	$	(29,268)	6,376,631	$	(415,799)	$	230,526
Issuance of common stock under share-based compensation plan, net of shares withheld for taxes	15,158	-		(2,883)									(2,883)
Stock-based compensation				1,499									1,499
Cash dividends ($0.88 per share)						(11,958)							(11,958)
Repurchases of common stock										13,750	(3,627)		(3,627)
Foreign currency translation adjustment								(6,185)					(6,185)
Net income						18,925							18,925
Balance at November 30, 2024	19,940,370	$	20	$	174,258	$	506,898	$	(35,453)	6,390,381	$	(419,426)	$	226,297


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders’ Equity

	Shares	Amount								Shares	Amount
Balance at August 31, 2023	19,905,815	$	20	$	171,546	$	477,488	$	(31,206)	6,342,381	$	(407,670)	$	210,178
Issuance of common stock under share-based compensation plan, net of shares withheld for taxes	5,680	-		(678)									(678)
Stock-based compensation				2,271									2,271
Cash dividends ($0.83 per share)						(11,297)							(11,297)
Repurchases of common stock										11,500	(2,414)		(2,414)
Foreign currency translation adjustment								390					390
Net income						17,482							17,482
Balance at November 30, 2023	19,911,495	$	20	$	173,139	$	483,673	$	(30,816)	6,353,881	$	(410,084)	$	215,932

See accompanying notes to condensed consolidated financial statements (unaudited).

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WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)


	Three Months Ended November 30,
	2024		2023
Operating activities:
Net income	$	18,925	$	17,482
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,075		2,261
Amortization of cloud computing implementation costs	416		57
Net gains on sales and disposals of property and equipment	(41)		(58)
Deferred income taxes	522		625
Stock-based compensation	1,499		2,271
Unrealized foreign currency exchange (gains) losses	(330)		322
Provision for credit losses	994		42
Write-off of inventories	255		811
Changes in assets and liabilities:
Trade and other accounts receivable	(293)		2,886
Inventories	(2,651)		4,042
Other assets	(1,177)		139
Operating lease assets and liabilities, net	14		(8)
Accounts payable and accrued liabilities	(1,730)		(4,697)
Accrued payroll and related expenses	(4,954)		(998)
Other long-term liabilities and income taxes payable	1,406		1,739
Net cash provided by operating activities	14,930		26,916

Investing activities:
Purchases of property and equipment	(691)		(786)
Proceeds from sales of property and equipment	124		115

Net cash used in investing activities	(567)		(671)

Financing activities:
Treasury stock purchases	(3,627)		(2,414)
Dividends paid	(11,958)		(11,297)
Repayments of long-term senior notes	(400)		(400)
Net proceeds (repayments) from revolving credit facility	14,771		(9,713)
Shares withheld to cover taxes upon conversions of equity awards	(2,883)		(678)
Net cash used in financing activities	(4,097)		(24,502)
Effect of exchange rate changes on cash and cash equivalents	(2,051)		431
Net increase in cash and cash equivalents	8,215		2,174
Cash and cash equivalents at beginning of period	46,699		48,143
Cash and cash equivalents at end of period	$	54,914	$	50,317

Supplemental disclosure of noncash investing activities: Accrued capital expenditures	$	188	$	190
Finance lease obligation settled with prepaid deposit	$	—	$	3,855

See accompanying notes to condensed consolidated financial statements (unaudited).

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WD-40 COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. The Company

WD-40 Company (the “Company”), incorporated in Delaware and based in San Diego, California, is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world. The Company owns a wide range of brands that include maintenance products and homecare and cleaning products: WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®. Certain of our homecare and cleaning businesses are classified as held for sale as of November 30, 2024. Please refer to Note 3 Assets Held for Sale for additional information.

The Company’s products are sold in various locations around the world. Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, India, the Middle East and Africa. Homecare and cleaning products are sold primarily in North America, the United Kingdom (“U.K.”) and Australia. The Company’s products are sold primarily through hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, warehouse club stores, farm supply, sport retailers, and independent bike dealers.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Consolidation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company according to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The August 31, 2024 year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

In the opinion of management, the unaudited financial information for the interim periods shown reflects all adjustments necessary for a fair statement thereof and such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024, which was filed with the SEC on October 21, 2024.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

Global economies have experienced significant volatility in recent years. Although the Company’s estimates consider current conditions, the inputs into certain of the Company’s significant and critical accounting estimates include judgments and assumptions about the economic implications of factors that have been subject to such volatility and how management expects them to change in the future, as appropriate. It is possible that actual results experienced may materially differ from the Company’s estimates in future periods, which could materially affect its results of operations and financial condition.

Foreign Currency Forward Contracts

In the normal course of business, the Company employs established policies and procedures to manage its exposure to fluctuations in foreign currency exchange rates. The Company utilizes foreign currency forward contracts to limit its exposure to net asset balances held in non-functional currencies, primarily at its U.K. subsidiary. The Company monitors its foreign currency exchange rate exposures to ensure the overall effectiveness of its foreign currency hedge positions.

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While the Company engages in foreign currency hedging activity to reduce its risk, for accounting purposes, none of its foreign currency forward contracts are designated as hedges.

Foreign currency forward contracts are carried at fair value, with net realized and unrealized gains and losses recognized in other income (expense), net in the Company’s condensed consolidated statements of operations. Cash flows from settlements of foreign currency forward contracts are included in operating activities in the condensed consolidated statements of cash flows. Foreign currency forward contracts in an asset position at the end of the reporting period are included in other current assets, while foreign currency forward contracts in a liability position at the end of the reporting period are included in accrued liabilities in the Company’s condensed consolidated balance sheets. At November 30, 2024, the Company had a notional amount of $8.3 million outstanding in foreign currency forward contracts, which will mature in January 2025. Unrealized net gains and losses related to foreign currency forward contracts were not significant at November 30, 2024 and August 31, 2024. Realized net gains and losses related to foreign currency forward contracts were not significant for the three months ended November 30, 2024 and 2023. Both unrealized and realized net gains and losses are recorded in other (expense) income, net in the Company’s condensed consolidated statements of operations.

Functional Currencies

The reporting currency of the Company is the U.S. Dollar. The functional currency of each of the Company’s subsidiaries is based on the currency of the economic environment in which it operates. Management periodically assesses the functional currency of each subsidiary in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”.

The functional currency of the Company’s U.K. subsidiary, the entity in which the EIMEA results are generated, has been the Pound Sterling through August 31, 2024. However, trends within EIMEA have indicated a shift towards the Euro over time. During the first quarter of fiscal year 2025, management determined that changes in economic facts and circumstances, such as additional shifts in the currency mix of our operating income, represented a significant change that was other-than-temporary and required a change in functional currency from Pound Sterling to Euro at the Company’s U.K. subsidiary. In accordance with ASC 830-10-45-7, a change in functional currency should be made on the date that significant changes in economic facts and circumstances occurred. Although such a change could occur on any date during the fiscal year, the use of a date at the beginning of the most recent reporting period is permissible. Accordingly, the change in functional currency from Pound Sterling to Euro at the Company’s U.K. subsidiary was accounted for prospectively from September 1, 2024.

In the period of a functional currency change, nonmonetary assets and liabilities at the impacted subsidiary are remeasured into the new functional currency using the exchange rate on the date the asset or liability arose. These amounts are then translated into the Company’s reporting currency, the U.S. Dollar, based on the exchange rate at the date of the change in functional currency. The difference between this amount and the prior translated balance was not material and was recorded in accumulated other comprehensive loss in the Company’s consolidated balance sheet as of September 1, 2024. The balances previously recorded in accumulated comprehensive loss for prior periods through August 31, 2024 were not reversed upon this prospective change in functional currency. Monetary assets and liabilities not denominated in the new functional currency, the Euro, will create transaction gains and losses subsequent to the change in functional currency. The Company does not expect that the impact of such gains and losses will be material to the Company’s consolidated statements of operations.

Fair Value of Financial Instruments

ASC 820, “Fair Value Measurements and Disclosures”, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes its financial assets and liabilities measured at fair value into a hierarchy that categorizes fair value measurements into the following three levels based on the types of inputs used in measuring their fair value:

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities;

Level 2: Observable market-based inputs or observable inputs that are corroborated by market data; and

Level 3: Unobservable inputs reflecting the Company’s own assumptions.

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As of November 30, 2024, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy. The carrying values of cash equivalents and short-term borrowings are recorded at cost, which approximates their fair values, primarily due to their short-term nature. In

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addition, the carrying value of borrowings held under the Company’s revolving credit facility approximates fair value, based on Level 2 inputs, due to the variable nature of underlying interest rates, which generally reflect market conditions. The Company’s fixed rate long-term borrowings consist of senior notes and are recorded at carrying value. The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $60.3 million as of November 30, 2024, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $66.4 million. During the three months ended November 30, 2024, the Company did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments primarily require enhanced disclosures about significant segment expenses regularly provided to the Chief Operating Decision Maker and included within each reported measure of segment profit or loss. The amendments are effective for the Company’s annual periods beginning September 1, 2024, and interim periods beginning September 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company has been evaluating this ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning September 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” which includes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments are effective for the Company’s annual periods beginning September 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures.

Note 3. Assets Held for Sale

Reclassification to Held for Sale of Certain Homecare and Cleaning Product Businesses

In the first quarter of fiscal year 2025, the Company’s homecare and cleaning product businesses in the Americas and EIMEA segments met the criteria to be classified as held for sale. Management has determined that the planned sale of these brands does not represent a strategic shift having a major effect on the Company’s operations and financial results and therefore does not meet the criteria for classification as discontinued operations in the first quarter of fiscal year 2025. The Company expects to sell these homecare and cleaning product businesses in the Americas and EIMEA segments in fiscal year 2025.

Assets included as part of the disposal group classified as held for sale consisted of intangible assets, goodwill and inventory. There are no liabilities in the disposal group.

The following table summarizes assets held for sale (in thousands):


	November 30, 2024
Intangibles, Net	3,897
Goodwill	1,069
Inventory	4,899
Total assets held for sale (1)	$	9,865

(1) Total assets held for sale are included in other current assets on the Company’s condensed consolidated balance sheets.

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Note 4. Inventories

Inventories consisted of the following (in thousands):


	November 30, 2024		August 31, 2024
Product held at third-party contract manufacturers	$	6,035	$	8,199
Raw materials and components	9,356		10,037
Work-in-process	521		521
Finished goods	63,874		60,331
Inventory held for sale (1)	(4,899)		—
Total	$	74,887	$	79,088

(1) Inventory held for sale consists mostly of finished goods inventory and is included in other current assets on the Company’s condensed consolidated balance sheets.

Note 5. Property and Equipment and Capitalized Cloud Computing Implementation Costs

Property and equipment, net, consisted of the following (in thousands):


	November 30, 2024		August 31, 2024
Machinery, equipment and vehicles	$	52,886	$	53,844
Buildings and improvements	27,524		28,433
Computer and office equipment	6,573		6,652
Internal-use software	9,370		9,799
Furniture and fixtures	3,076		3,165
Capital in progress	2,732		3,344
Land	4,187		4,260
Subtotal	106,348		109,497
Less: accumulated depreciation and amortization	(46,964)		(46,514)
Total	$	59,384	$	62,983

As of November 30, 2024 and August 31, 2024, the Company’s condensed consolidated balance sheets included $13.7 million and $13.4 million, respectively, of capitalized cloud computing implementation costs recorded as other assets within the Company’s condensed consolidated balance sheets. Accumulated amortization associated with these assets was $2.5 million and $2.1 million as of November 30, 2024 and August 31, 2024, respectively. Amortization expense associated with these assets was $0.4 million for the three months ended November 30, 2024 and was not significant for the three months ended November 30, 2023.

Note 6. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amounts of goodwill by segment (in thousands):


	Americas		EIMEA		Asia-Pacific		Total
Balance as of August 31, 2024	$	86,765	$	9,011	$	1,209	$	96,985

Translation adjustments	86		582		-		668
Goodwill held for sale (1)	(995)		(74)		-		(1,069)
Balance as of November 30, 2024	$	85,856	$	9,519	$	1,209

SEC Form 10-Q filed by WD-40 Company