• Fourth Quarter Net Sales: $156 million, an increase of over 11%.
• Full Fiscal Year Revenue: $583 million, up 8% on a non-GAAP constant currency basis.
• WD-40 Multi-Use Product Sales: $453 million, an 11% increase over the prior year.
• Gross Margin: 54.1% in Q4, an improvement of 270 basis points from the prior year.
• Net Income: $69.6 million for the fiscal year.
• Diluted EPS: $5.11 for the fiscal year.
• Americas Sales: $79 million in Q4, a 6% increase over the prior year.
• EIMEA Sales: $59 million in Q4, a 16% increase over the prior year.
• Asia Pacific Sales: $18 million in Q4, a 21% increase over the prior year.
• Cash Flow from Operations: Approximately $92 million for fiscal year 2024.
• Return on Invested Capital: 25.5% for fiscal year 2024.

• Warning! GuruFocus has detected 6 Warning Signs with WDFC.

Release Date: October 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WD-40 Co (NASDAQ:WDFC) reported a record-breaking fourth quarter with net sales of $156 million, marking an increase of over 11% year-over-year.
• The company's gross margin improved to 54.1% in the fourth quarter, a 270 basis point increase compared to the same period last year.
• Sales in the EIMEA region grew by approximately 16%, driven by higher volume sales of WD-40 multi-use products.
• The transition to a direct market model in Brazil resulted in a $7 million increase in net sales for the full fiscal year.
• WD-40 Co (NASDAQ:WDFC) achieved strong growth in digital commerce, with global sales in the e-commerce channel up 12% compared to the prior year.

Negative Points

• Sales of WD-40 multi-use product in the United States decreased by 4% compared to the prior period.
• In Canada, sales of WD-40 multi-use product decreased 3% due to the phasing out of the classic can delivery system.
• The company's cost of doing business increased to 38% in the fourth quarter, up from 34% in the prior year, primarily due to higher employee-related costs.
• WD-40 Co (NASDAQ:WDFC) is facing challenges in achieving its 55% gross margin target, with current guidance indicating a range of 54% to 55% for fiscal year 2025.
• The divestiture of homecare and cleaning brands in the Americas and the UK is expected to temporarily impact certain aspects of the business model.

Q & A Highlights

Q: In the second half of '24, there was a mention of pricing being a headwind. Could you clarify if this was due to promotional activity or something else? A: Sara Hyzer, CFO: The swing in the back half of the year was mostly due to mix. It's challenging to separate mix from pricing in that metric, but there was no significant pricing decrease; it was primarily mix-related.

Q: With the ongoing ERP rollout and other investments, should we expect SG&A expenses to remain elevated in the coming quarters? A: Sara Hyzer, CFO: Yes, we are continuing to invest in ERP and have inherited Brazil expenses. While the growth rate won't match last year's, expenses will remain higher than in the past.

Q: Given the success of moving to a direct business model in Brazil and Mexico, are there plans for similar changes in other regions? A: Steve Brass, CEO: We are focused on top growth opportunities globally. While no immediate announcements are planned, our international growth is supported by strong partnerships with marketing distributors.

Q: Does the guidance for operating profit of $95 million to $100 million assume the household cleaning business is excluded for the entire year? A: Sara Hyzer, CFO: Yes, the guidance excludes the household cleaning business for the full year due to the uncertainty of the timing of its sale.

Q: Why is the gross margin guidance of 54% to 55% not higher, given the expected 60 basis point lift from the divestiture? A: Sara Hyzer, CFO: Most margin improvements have come from pricing, with supply chain initiatives having a smaller immediate impact. We plan to continue improving margins, but at a lesser scale than this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.