WD-40 reports 9% increase in net sales to $153.5 million, driven by growth in Americas and EIMEA.
From Nasdaq, Inc.: 2025-01-10 20:15:10
WD-40 Company held its Q1 2025 Earnings Call on Jan 10, 2025, reporting a 9% increase in net sales to $153.5 million, with maintenance product sales up 10% to $145.5 million. Gross margin improved to 54.8%, driving net income up 8% to $18.9 million. Sales growth was primarily driven by increased sales volume, with the Americas and EIMEA regions seeing 10% and 13% growth, respectively, while Asia-Pacific was down 8%. In the Americas, sales increased 8% to $69.4 million, with WD-40 multi-use product sales up 9% at $65.4 million, driven by successful promotional activities in the U.S. and Latin America.
The Motley Fool Stock Advisor team released their list of the 10 best stocks to buy now, excluding WD-40. Their service, which has outperformed the S&P 500 since 2002, offers guidance on building a successful portfolio with regular analyst updates and two new stock picks per month. Investors who followed their recommendations in the past have seen significant returns, like an $858,668 return from a $1,000 investment in Nvidia in 2005. The team’s insights provide valuable information for investors looking to maximize their portfolio’s potential. WD-40 reported an increase in net sales in the Americas by 2.9 million, or 15%, in the first quarter, with growth driven by sales of WD-40 Specialist. In EIMEA, net sales increased by 18% to 57.5 million, with strong growth in countries like India, France, and Benelux. Sales in Asia Pacific decreased by 4%, with lower sales in distributor markets offset by growth in China. Global sales of WD-40 multi-use product grew by 10% to 119 million, with significant growth opportunities remaining. The company is focusing on geographic expansion, with Mexico and Brazil showing promising growth prospects.
In the first quarter of 2025, WD-40’s global sales of multi-use product reached 119 million, showing a 10% increase from the previous year. EIMEA and the Americas saw significant growth, while Asia-Pacific experienced a decline. The company continues to focus on global expansion, with a potential $1.2 billion growth opportunity for WD-40 multi-use product worldwide. Key markets like Mexico and Brazil are expected to drive future growth, with Indonesia emerging as a high-potential market in Asia-Pacific. WD-40 Company is focusing on key growth markets, including China and India, to drive sales and expand distribution. The company has seen strong growth in China since 2006 and has doubled sales in India in the past six years. They plan to invest in building their flagship brand in fiscal year 2025. Additionally, WD-40 is accelerating premiumization of their products, targeting a compound annual growth rate of over 10% for net sales of premium formats. They are also driving growth of WD-40 Specialist products, targeting a compound annual growth rate of over 15% for net sales.
In the first quarter, WD-40 saw strong growth in e-commerce sales, up 22%, primarily in EIMEA. The company is focusing on digital commerce as an accelerator for their other growth strategies. WD-40 Company is committed to building an enduring business for the future, with a focus on purpose-driven growth and sustainability. They have set ambitious sustainability targets, including a 50% absolute reduction in scope 1 and 2 emissions by 2030. The company is divesting its homecare and cleaning business in the Americas and the U.K. to focus on key product lines and drive growth. Progress continues on the anticipated divestiture of certain brands, with discussions ongoing with potential buyers. Efforts to streamline systems and processes are driving operational efficiencies and global collaboration. Gross margin improved to 54.8% in the first quarter, with a target of 55% by fiscal year 2026. Cost of doing business increased to 37% due to higher expenses and investments. Adjusted EBITDA margin was 18%, with a target range of 20-22% over the medium term. Operating income improved by 4% to $25.1 million, and diluted EPS increased by 9% to $1.39 per share. The company will experience a favorable income tax adjustment of $11.9 million for fiscal year 2025 due to an unrecognized tax benefit. The functional currency of the U.K. subsidiary has been changed from pound sterling to euro due to shifts in operating landscape and strategic actions. The company plans to maintain a disciplined capital allocation strategy, returning capital to stockholders through dividends and buybacks. Quarterly cash dividend has been increased by 7% to $0.94 per share. FY ’25 guidance remains unchanged, with estimated net sales growth between 6% and 11%.
Sales of maintenance products, WD-40 multi-use products, and WD-40 Specialist were up in the first quarter, with strong volume performance driving nearly 90% of growth. Management is focused on unlocking opportunities to drive value for stockholders, with an increased focus on key growth markets globally. A company has announced its new sustainability targets and operational efficiencies mantra, “Few things, many places, bigger impact.” They are pleased with improvements in gross margin towards their 55% target, progress in selling their homecare and cleaning business, increased dividend, and reiterated full fiscal year guidance. Operating income in the Americas was down 11% due to timing of A&P spend, customer bankruptcy, and growth reward program. Gross margin is currently at 54.8% and expected to reach 55% by the end of 2026, with potential to reach it sooner. SG&A expenses increased by 14% year over year due to customer bankruptcy and higher growth reward program accrual. The bankruptcy had a $800,000 impact on the quarter and negatively affected certain trade blocks. Brass — President, Chief Executive Officer, and Director
You’re welcome, Linda. Thank you for your questions.
In a recent earnings call, the company discussed the impact of current exchange rates on global sales for the rest of the year. Despite challenges, retail sales are up, with a 4-5% increase in unit sales. The company saw strong growth in the U.S., Europe, and Brazil, with the potential for continued growth in the second quarter. If the cleaning business is not sold by the end of the second quarter, it will remain in the company’s reported results. Europe, including the U.K. and Italy, showed strong demand and performance in the first quarter. Overall, the company remains optimistic about future growth prospects. Brass, President, CEO, and Director, along with other key executives, participated in a Q&A session during an earnings call. Wendy Kelley, Vice President of Stakeholder and Investor Engagement, also took part in the call. The call lasted for 0 minutes and was open to questions from analysts and investors. The transcript of the conference call was produced by The Motley Fool, with a disclaimer about potential errors or inaccuracies. The Motley Fool does not hold any positions in the mentioned stocks and encourages independent research by listeners.
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