On July 10, 2025, WD-40 Company held its third quarter performance conference call, attended by the company's Vice Chairman and Chief Executive Officer, as well as the Vice President and Chief Financial Officer. They discussed the company's financial performance and non-GAAP indicators, while also reminding investors to be aware of the risks associated with forward-looking statements. The meeting also mentioned that related financial documents will be released on the investor relations website.

The conversation outlined the company's sales performance in the third fiscal quarter of 2025, reporting a net sales of 166.9 million US dollars, an increase of 1% compared to the same period last year. Despite challenges posed by fluctuations in foreign exchange rates, the company saw varying sales performances in the Americas and the EMEA region (including Europe, India, Middle East, and Africa). Sales in the Americas region grew by 4%, while sales in the EMEA region declined by 5%. Furthermore, the discussion also touched on the company's core strategic focus on product maintenance and its positive outlook for the second half of the year, emphasizing confidence in full-year growth.

In the third financial quarter, sales in the South Asia Pacific region, including Australia, China, and other Asian countries, increased by 7% year-on-year, reaching 22 million, with an even more significant growth after excluding the impact of foreign exchange rates. Maintenance product sales increased by 9% to 19.8 million, mainly benefiting from a significant increase in sales of Product 41 in China and the Asian distribution market, growing by 19% and 8% respectively. The growth in the Chinese market can be attributed to successful promotional activities, market expansion, and wider distribution channels. The Asian distribution market, especially in Indonesia and Taiwan, achieved growth due to strong promotional strategies and increased demand. Maintenance product sales in Australia remained stable. However, sales of household care and cleaning products decreased due to reduced promotional activities and adjustments in customer order times. Sales of professional products in the Asia Pacific region increased by 6%, benefiting from successful promotions and marketing efforts in China and the Asian distribution market. The Asia Pacific market represents a certain proportion of the global business in the third financial quarter.

WD-40 Company achieved global sales growth through geographical expansion, accelerating high-end product sales, driving growth in professional product lines, and strengthening digital commerce strategies, especially in EMEA, Latin America, France, India, China, Iberia, and Benelux markets. Its long-term goal is to enhance brand influence and profitability through these strategies, with an estimated global addressable market of $1.6 billion.

This update focuses on the second element of the company's strategic framework, strategic enablers, highlighting the importance of operational excellence. By emphasizing long-term employee service, or employee tenure, the company demonstrates its commitment to a 'people-oriented' philosophy. Long-term employee tenure not only reduces employee turnover costs, protects institutional knowledge, enhances productivity, but also strengthens relationships with various stakeholders, contributing to the company's sustainability and profitability growth. In expressing gratitude to employees, it emphasizes that employee dedication, efforts, and enthusiasm are the foundation of the company's achievements and success.

The company emphasizes its balanced development in terms of economy, environment, and social responsibility, aiming to protect and create shareholder value in the long term. By re-evaluating its social mission, the company has proposed a new corporate responsibility framework, which is based on three strategic pillars: training, readiness, and recovery, in line with the 2030 strategy and United Nations Sustainable Development Goals. Additionally, it specifically mentions the 'Training Trade' project that supports the global development of technical talents, aiming to nurture the next generation of technical professionals, while addressing talent shortages in key regions and strengthening communities.

In this quarter, the company achieved a gross profit margin of 56.2%, an increase of 310 basis points year-on-year, mainly due to the increase in average selling price, reduction in the cost of specialty chemicals, and a decrease in canning costs. In all three major trading regions, gross profit margins have significantly increased, with the Americas region increasing by 360 basis points, the IMAA region increasing by 290 basis points, and the Asia-Pacific region increasing by 140 basis points, all benefiting from the positive impact of higher average selling prices. At the same time, the company plans to continue adjusting its business model to meet its medium-term strategic goals and has updated its expectations for the 2025 fiscal year.

The focus of the company's senior management is to restore and surpass the target gross profit margin of 55%. Currently, the gross profit margin has increased from 53.1% to 55.2%, and it is expected to be between 55% and 56% for the current fiscal year. At the same time, the company's costs in strategic investment, brand building, and delivery expenses are also continuing to increase, primarily driven by employee-related expenses, additional human resources to support sales growth, and enhancements to information systems. However, the company anticipates that as sales increase, the cost-to-revenue ratio will gradually improve towards the long-term goal of 30% to 35%.

The company achieved an adjusted EBITDA profit margin of 20% in the third quarter, compared to 19% in the same period last year, while adjusted EBITDA reached $30.7 million, a 3% increase. Operating revenue increased by 1% to $27.4 million, and diluted earnings per share rose from $1.46 to $1.54, a 5% increase. The company's financial condition is solid, adopting a balanced capital allocation strategy, prioritizing investments in long-term growth and returning value to shareholders. During this quarter, the company used $35 million in operating cash flow to repay $20 million in short-term high-interest loans, with plans to further reduce high-interest borrowing in the current interest rate environment.

The company plans to continue returning capital to shareholders through dividends and stock repurchases, with an annual dividend target of over 50% of profits. The board of directors has approved a quarterly cash dividend of 94 cents per share and repurchased approximately 12,750 shares in the third quarter at a total cost of about $3 million. Additionally, the board has approved an extension of the repurchase program until August 31, 2026. In terms of financial outlook, the company expects net sales to grow by 6%-9% in the 2025 fiscal year, operating income to increase by 7%-12%, and has raised diluted earnings per share expectations to $530-$560. Furthermore, the company is actively engaged in negotiations to sell its home care business, and if successful, it will have a positive impact on the full year financial data.

The company achieved a sales record in the third quarter, demonstrating continuous progress and momentum. Despite a 6% year-on-year decrease in product sales, the overall performance is in line with long-term growth targets. The fourth quarter started strong, with all three trading divisions performing steadily in June. Sales of W 40 multipurpose products and Wd 40 professional products increased by 6% and 11% respectively. Sales through the e-commerce channel grew by 11%. The average tenure of company employees is 8 years, twice the U.S. median. The newly launched Citizen Platform aims to empower global go-getters. The gross profit margin for the third quarter was 56.2%, with an expected gross profit margin for the fiscal year 2025 between 55% and 56%. Net sales growth expectations have been adjusted to the mid to high single digits, consistent with long-term targets. Business profit and earnings per share (EPS) guidance for fiscal year 2025 has been revised upwards.

In this discussion, the recent performance of the company was the main focus, including strong results in June and Q3, while an explanation was provided for the guidance of Q4 performance, noting that the guidance range was set wider due to market uncertainties and fluctuations in order timing. Additionally, the discussion involved the performance and future expectations of gross profit margin. The company expressed confidence in maintaining or even increasing gross profit margin, despite possible inflationary pressures. Finally, the expected growth in G&A costs was discussed, with the company stating that although costs have risen in the past few years, efforts will be made to control cost growth in the future and avoid maintaining a double-digit growth rate.

The foreign exchange impact faced by the company reached its peak in the second quarter, then eased in the third quarter, and is expected to bring slight positive effects in the fourth quarter, especially in the European market. Although the currencies of Mexico and Brazil posed the biggest forex headwinds for the company throughout the year, this situation may continue in the fourth quarter. As for the impact of tariffs, although the company has some exposure in its U.S. operations, through supply chain measures, the company has largely offset the impact of tariffs, and no significant fluctuations or instability in order patterns have been observed as a result.

The questioner inquired about the reasons for the adjustment of the company's full-year financial guidance range, especially in the context of changes in revenue and improved profitability, and whether these changes are related to the performance in the third quarter, expectations for the fourth quarter, foreign exchange factors, or observations on the current year's performance.

As the end of the year approaches, the company's performance expectations for the fourth quarter have become clearer, with an expected growth rate of 6% to 9%, leading to adjustments in previous guidance. The performance in the European market has stabilized compared to last year, while emerging markets such as Turkey have brought unpredictability due to volatility. The company also mentioned introducing new manufacturing partners in Dubai to reduce inventory requirements and optimize product supply. Additionally, despite facing exchange rate fluctuations, overall, the company's performance is largely in line with the expectations at the beginning of the year, partly due to positive effects brought by currency rate changes.

The discussion delved into the company's marketing strategies, particularly the differences between brand building and promotional activities. The company has attracted new end-users through product trial activities on a global scale, especially in the Chinese and Indian markets. At the same time, promotional activities with large retailers in the Americas region are also an important part of its strategy. Although the proportion of promotions to sales has decreased, the company remains confident in the performance of the US market and expects a strong quarter with moderate single-digit growth.