WD-40 (WDFC, Financial) shares increased by 1% following the release of its Q3 results. The company reported a significant earnings per share (EPS) beat compared to the single analyst estimate. Despite facing a tough comparison from last year, WD-40 achieved modest growth this quarter, with revenue rising 1.2% year-over-year to $156.9 million. Additionally, WD-40 raised its fiscal year 2025 EPS guidance to $5.30-$5.60 from $5.25-$5.45, while slightly lowering the upper end of its revenue guidance.
- Americas sales, the largest segment at 50%, increased 4% year-over-year to $78.2 million, although Asia-Pacific sales grew faster at 7% year-over-year to $22 million. EIMEA sales declined 5% year-over-year to $56.7 million, mainly due to reduced sales volumes to marketing distributor customers, especially in Turkey and the Middle East. However, strong sales trends continue in direct EIMEA markets.
- WD-40 reported a solid increase in its gross margin, which rose to 56.2% in Q3, a 310 basis point improvement from last year's 53.1%. Gross margin improved across all trade blocks, and WD-40 is confident that it will achieve a gross margin of 55-56% for the year, meeting its target a year ahead of schedule.
- The company is making progress in its four "must-win battles": geographic expansion, accelerating premiumization, growing WD-40 Specialist, and increasing digital commerce. Global sales of WD-40 multi-use products grew 6% year-over-year, premium products increased 7%, specialist products rose 11%, and e-commerce sales were up 11%.
- WD-40 is considering divesting its household line in the US and the UK. If the divestment is unsuccessful, it would positively impact WD-40's guidance.
WD-40 shares are rebounding today after facing pressure before the Q3 results were released. The continued revenue growth, ahead-of-schedule improvement in gross margin, and positive developments in its strategic initiatives are boosting investor confidence.
