WD-40 Flags Fourth-Quarter Gross-Margin Low Point

The Tip Desk · October 27, 2026 · 4 min read

Gross margin fell to 52.8% as specialty-chemical costs hit, and the company said it expects sequential improvement in the first quarter of fiscal 2027.

WD-40 Company (WDFC) said higher specialty-chemical and other input costs compressed fourth-quarter gross margin to 52.8% from 54.7% a year earlier, and that the period marked the low point, with sequential improvement anticipated beginning in the first quarter of fiscal 2027.

The San Diego-based marketer of maintenance and homecare products reported net sales of $176.8 million for the three months ended Aug. 31, 2026, up 8% from a year earlier. On a constant-currency basis, net sales rose 7% to $174.9 million. Maintenance product sales, the company’s primary strategic focus, increased 9% to $170.5 million, or 8% in constant currency.

That growth slowed from the third quarter, when net sales rose 24% and maintenance product sales rose 26%. Operating income fell 32% to $19.1 million from $28.0 million a year earlier. Net income declined 32% to $14.4 million, and diluted earnings were $1.06 a share, compared with $1.56.

Selling, general and administrative expenses increased 19% to $58.2 million. The company said the rise reflected performance-based incentive compensation earned by every employee and higher freight costs to keep products available. Advertising and sales promotion expenses increased 26% to $15.8 million, which the company said supported sales growth and brand building.

The Americas segment, 46% of fourth-quarter net sales, posted $81.3 million, up 5%. The company attributed the increase primarily to higher sales of WD-40 Multi-Use Product in Latin America, including Argentina and Ecuador, supported by improved inventory sourcing and distribution. WD-40 Specialist added $0.7 million on new distribution, expanded placement with large retailers and online sales.

EIMEA, 39% of sales, posted $69.2 million, up 10%. After the fiscal 2025 divestiture of its homecare and cleaning portfolio in the region, maintenance products accounted for all of the segment’s net sales. Growth came from WD-40 Multi-Use Product in distributor markets, led by India and the Middle East, and from Southern Europe, where WD-40 Brand net sales rose $3.9 million on commercial execution, promotional activity and merchandising.

Asia-Pacific, 15% of sales, posted $26.3 million, up 13%. China led the region, with net sales up $1.8 million on higher volumes from promotional and marketing programs and expanded distribution across traditional and e-commerce channels. The company said growth also benefited from some customer purchases ahead of a planned price increase. WD-40 Specialist contributed a $0.6 million increase.

WD-40 Multi-Use Product net sales were $135.0 million in the quarter. Specialist sales were $26.2 million. Other maintenance products were $9.3 million. Homecare and cleaning products, 4% of total net sales, were $6.3 million after the company completed the divestiture of its entire United Kingdom homecare and cleaning portfolio in the fourth quarter of fiscal 2025.

For the full fiscal year ended Aug. 31, 2026, net sales increased 11% to $688.0 million. Maintenance product sales increased 13% to $665.9 million. Gross margin improved to 55.3% from 55.1%. Operating income improved 5% to $108.9 million. Net income decreased 10% to $82.3 million, and diluted earnings were $6.08 a share, compared with $6.69. The company said the decline reflected a favorable $11.9 million income-tax adjustment in fiscal 2025 related to the release of an uncertain tax position. Excluding that prior-year benefit and $1.3 million of amortization tied to reclassifying certain Americas homecare and cleaning products from held for sale to held for use, non-GAAP operating income improved 6% to $110.2 million and non-GAAP diluted earnings were $6.18 a share.

President and Chief Executive Officer Steve Brass said fiscal 2026 results were in line with guidance and that maintenance product sales grew at the top of the company’s long-term target range.

The board declared a quarterly cash dividend of $1.02 a share, payable Oct. 30, 2026. During the fourth quarter the company repurchased 30,895 shares for $7.0 million. On June 15, 2026, the board approved a new $100.0 million share-repurchase program, effective Sept. 1, 2026, with no expiration date.

For fiscal 2027, the company projects net sales growth of 4% to 7% versus fiscal 2026, with constant-currency net sales of $715 million to $735 million. Gross margin is expected at 54.0% to 55.5%. Operating income is projected at $114 million to $120 million, and diluted earnings at $6.40 to $6.70 a share, based on an estimated 13.4 million weighted-average shares. The outlook assumes crude oil prices remain near current levels through the first half of fiscal 2027 before moderating in the second half.