WD-40 Company (WDFC) Q4 2026 Earnings Report, Transcript and Summary

Good day, and welcome to WD 40 Company's fourth Quarter and Full Fiscal Year 26 Earnings Conference Call. Today's call is being recorded. All participants are currently in listen-only mode. Following the prepared remarks, we will open the call for questions. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now turn the call over to Wendy D. Kelley, vice president, stakeholder, and investor engagement. Please go ahead.

Thank you. Good afternoon, and thank you for joining us today. On our call today are WD-40 Company's president and chief executive officer, Steven A. Brass; vice president and chief financial officer, Sara Hyzer; and vice president, global finance, and incoming chief financial officer, Keith Stauffer. In addition to today's discussion, we encourage investors to review our earnings presentation, press release and Form 10-Ks for the period ending 08/31/2026. Available on our Investor Relations website at investor.wd40company.com. A replay and transcript of today's call will also be posted shortly. We will discuss certain non-GAAP measures today. Reconciliations to GAAP results are available in our SEC filings and earnings materials. Today's call also includes forward looking statements. Actual results may differ materially. Please refer to the risk factors and our SEC filings for more information. Finally, please note that all information presented is current as of 10/21/2026. And we undertake no obligation to update forward looking statements. With that, I will turn the call over to Steven.

Thanks, Wendy, and thanks to everyone for joining us today. I would like to welcome Keith Stauffer to his first WD-40 company earnings call. As previously announced, Keith joined the company in September and will assume the role of Chief Financial Officer on November 2. At that time, Sara will transition to her new role as Division President of The Americas. Sara is joining us today for her final earnings call as CFO, as we close out fiscal year 26. I would like to thank Sara for her outstanding leadership as Chief Financial Officer. And for her partnership in supporting this transition. I will begin with an overview of our fourth quarter and fiscal year results, including progress against our 4x4 strategic framework. Sara will then review our financial performance, Keith will discuss our outlook for fiscal year 27 and we will conclude with your questions. At WD-40 Company, Resilience is rooted in the strength of our business model. Our iconic global brand disciplined execution, flexible global supply chain and strong financials provide the durability to navigate changing market conditions, while continuing to deliver growth. Throughout fiscal year 26, we maintained a strong focus on executing our strategy and advancing our priorities. Even amid geopolitical and economic uncertainty. Today, we reported consolidated net sales of $177 million for the fourth quarter and $688 million for the full fiscal year, up 8%, 11%, respectively. Versus the prior year. As a long-term value creator, we focus less than any single quarter and more on our ability to deliver durable compounding growth over time. that is why we measure our performance against our long-term maintenance product sales target of 5% to 9% growth in constant currency. In the fourth quarter, maintenance product sales increased 9% to 171 million bringing full year maintenance product sales to 666 million up 13% versus the prior year. On a constant currency basis, maintenance product sales increased 8% $169 million in the fourth quarter, and 9% to $645 million for the full year in line with our long-term growth expectations. Let's turn to gross margin. Our fourth quarter gross margin of 52.8% reflects the temporary cost pressure we discussed last quarter, full year gross margin remained resilient at 55.3%. An increase of 20 basis points versus fiscal 25, and in line with our guidance. Protecting gross margin remains a key priority, and we continue to take pricing and cost actions to offset cost inflation, and preserve the strength of our business model. Based on what we know today, we believe the fourth quarter marked the low point for gross margin and we expect sequential improvement starting in the first quarter of fiscal 27. For the full fiscal year 2027, we are targeting gross margin of 54% to 55.5% generally in line with our enduring business model. Now let's review fourth quarter sales results by trade block Unless otherwise noted, I will discuss net sales on a reported basis compared to the fourth quarter of fiscal 25. Sales in The Americas increased 5% year over year to 81.3 million driven by a 5% increase in maintenance products to 77.8 million This growth is driven primarily by increased sales of WD-40 Multi Use Product in Latin America where sales increased by 2.7 million reflecting strong performance across distributor markets including Argentina and Ecuador, supported by enhanced inventory sourcing and distribution capabilities. In The Americas, WD-40 Specialist sales increased 7% driven primarily by higher U. S. Volumes, reflecting new distribution gains, strong placement with large retailers and growth in online sales. For the full fiscal year, maintenance product sales in The Americas increased 13% to $314 million or 12% in constant currency exceeding our long term growth target for the segment. Turning to EMEA, sales in the fourth quarter increased 10% year over year to $69.2 million driven by a 14% increase in maintenance products. Growth was supported by higher sales volumes, across both direct and distributor markets. While foreign currency had no meaningful impact on results. In our EMEA direct markets, maintenance product sales increased 2.3 million driven primarily by strong sales of WD-40 Specialist Growth was led by Southern Europe, where WD-40 brand sales increased by 3.9 million supported by strong commercial execution, promotional activity and merchandising. In our EMEA distributed markets, sales increased 6.2 million driven by strong WD-40 Multi Use Product Sales And Higher Volumes Across Key Markets. India and The Middle East contributed the strongest growth with 2.4 million and 1.2 million of growth, respectively. Across EMEA, WD-40 specialist sales increased 27% driven by strong growth in France, Italy and Iberia, supported by effective marketing programs, successful new product introductions, and strong commercial execution. As a reminder, fourth quarter sales comparisons were impacted by the divestiture of the UK home care and cleaning portfolio in fiscal 2025 which reduced reported sales by 2 million We believe this strategic decision enhances the quality of our revenue base by increasing our focus on faster growing higher margin maintenance products. For the full fiscal year, maintenance product sales in EMEA increased 13% 259 million On a constant currency basis, sales grew 6% despite a dynamic geopolitical and economic environment, reflecting the resilience of our business model and the strength of our global supply chain. In Asia Pacific, sales in the fourth quarter increased 13% year over year to $26.3 million and were up 9% on a constant currency basis, reflecting broad based growth across the region, led by China, where sales increased by 1.8 million In China, growth was driven by higher sales volumes, reflecting the successful execution of promotional marketing programs and expanded distribution across traditional and e commerce channels. Growth also benefited from some customer purchases ahead of a planned price increase. Australia also delivered a strong quarter with sales increasing just under $1 million year over year. In Asia Pacific, WD-40 Specialist sales increased 23% driven primarily by strong growth in China. Higher sales volumes reflected the successful execution of promotional and marketing programs expanded distribution and continued growth across e commerce channels. For the full fiscal year, maintenance product sales in Asia Pacific increased 11% to 92.9 million or 8% in constant currency. Now let's turn to the strategic progress we made in fiscal year 26 against our 4x4 strategic framework. Designed to drive profitable growth and long-term value creation the framework is built around 4 must win battles and 4 strategic enablers. Our Must Win Battles focus on the initiatives that drive sales growth and profitability. Given their long-term nature, I will focus on full year results. Starting with North American Battle 1, lead geographic expansion, global sales of our flagship product in fiscal year 26 were $533 million representing growth of 11% over prior year and 8% on a constant currency basis. Sales of WD-40 Multi Use Product increased across all 3 trade blocks growing 13% in The Americas, 10% in EMEA, and 8% in Asia Pacific, On a constant currency basis, growth was 11% and 4%, respectively. We made significant progress across many of our key priority markets this year with sales increasing $21.6 million in The United States, dollars 5.3 million in China, 5.2 million in India, dollars 3.1 million in France and $2.5 million in Mexico. what is most important to emphasize is that we still have significant room to grow. Building on the success of our direct market transitions in Mexico and Brazil, we recently made Japan a U.S. direct market. Expanding our presence in 1 of the world's largest economies. Japan is a compelling long term growth opportunity. it is a mature, highly competitive market where building scale takes time and competing there will make us stronger. The capabilities we build in Japan will support our long-term growth strategy. WD-40 Multi Use Product remains the foundation of our growth strategy. Our path forward is clear. Expand availability across more channels and geographies, build brand awareness and put more cans into the hands of targeted end users. Benchmark against France, our highest penetration market, we estimate the global attainable market at approximately $2.2 billion. Having achieved only 24% of that potential, we see a remaining growth opportunity of about $1.7 billion and a long runway for durable growth. The updated benchmark reflects higher penetration in France, and a modest foreign currency impact. Next is Must-Win Battle number 2, accelerating premiumization. Premiumization remains an important driver of our growth strategy. Products such as Smart Straw and Easy Reach reflect our focus on developing differentiated solutions that address end user needs. This approach strengthens brand loyalty, supports premium pricing, and contributes to gross margin expansion. Combined global sales of Smart Straw and Easy Reach in fiscal year 26 were 277 million an increase of 17% over the prior year. With premiumized products representing 52% of WD-40 Multi Use products sales and 41% of units sold, we believe significant opportunity remains to further increase penetration Over the last 5 years, we have achieved a compound annual growth rate for net sales of premiumized products, of 8.9%. Supported by continued innovation, increased consumer adoption expanded manufacturing capacity, we are targeting a compound annual growth rate for premiumized product sales of greater than 10% over the long term. Our third must win battle is driving WD-40 Specialist growth. WD-40 Specialist extends our iconic brand into adjacent categories, serving professional and industrial end users, and opening new avenues for profitable growth. In fiscal 26, global sales grew 20% to 99 million or 17% in constant currency. Growth was double digit in all 3 trade blocks. The Americas were up 15%, EMEA 25%, and Asia Pacific 26%. Innovation remains a key driver. In fiscal 26, we launched the WD-40 Specialist BIOLUBE Multi-Use, our first bio based lubricant. Across 8 European markets. Early results met our expectations and the product earned the 2026 Glee New Product Award in The UK. We plan to launch it in The Americas in fiscal 27. France is also our benchmark market under WD-40 Specialist. Their Specialist sales reached 43% of multi use product sales and several other markets are getting close, including Australia at 38% and Italy at 34%. We estimate the global attainable market for WD-40 Specialist at approximately $962 million with only 10% realized to date we see a remaining opportunity of about $863 million Over the last 5 years, we have achieved a compound annual growth rate for net sales of WD-40 Specialist of 18.4% and gives us confidence that we can grow WD-40 Specialist at a compound annual growth rate of more than 10% over the long-term. Our fourth must win battle is to turbocharge digital commerce. In fiscal 26, global pure play e commerce sales increased 19% to 66.7 million with double digit growth in all 3 trade blocks Pure play e commerce now accounts for 13% of global direct market maintenance product sales. While we are pleased with this growth, we view digital commerce as more than a sales channel. It is a strategic capability that enables us to reach consumers, wherever they choose to shop. Strengthen engagement with end users, and accelerate the execution of our must win battles around the world. Looking ahead, we believe artificial intelligence will play an increasingly important role in how consumers discover, evaluate and purchase brands. As AI powered search and recommendation tools continue to evolve, 1 of our key priorities in fiscal 2027 will be ensuring our brands are easy to find, they remain trusted and relevant across digital commerce search and AI driven platforms. Over the last 5 years, we have achieved a compound annual growth rate for net sales in the pure play e commerce channel of 13.1%. We expect e commerce to remain 1 of our fastest growing channels in fiscal 2027 and beyond. We are targeting long-term compound annual growth rate of more than 10%. More broadly, we view digital commerce as a strategic capability that drives engagement with end users online and accelerates progress across each of our Must-Win Battles. Turning to our strategic enablers, While our Must Win Battles drive top line growth, our strategic enablers strengthen the capabilities that make that growth more durable over time. They support operational excellence enhance the resilience of our business and provide the foundation for long-term value creation. Strategic enabler number 1 is ensuring a people first mindset. Our 753 employees across 19 countries are 1 of our most durable competitive advantages Their ability to learn, adapt and innovate drives our strategy. This year, despite a dynamic operating environment, our teams strengthened cost discipline, and used our decentralized supply chain to navigate disruption, serve customers, and support profitable growth. Earlier this year, we announced several leadership transitions designed to build on our strong foundation and support continued growth. In addition to the CFO transition I mentioned earlier, Patricia Q. Olsem will become Chief Strategy and Innovation Officer and Claudia Fenske will take on the newly created role of Chief Brand and Marketing Officer. These changes reflect our commitment to developing talent from within. They also strengthen alignment accelerate innovation, and expand our ability to leverage AI and digital technologies. Strategic enabler number 2 is to build an enduring business for the future, For more than 7 decades, we created value through strong relationships with employees, end users, customers, suppliers, stockholders, and our communities. Sustainability is an increasingly important part of that work. Consumers want safe, sustainable products, and many of our largest customers have environmental goals they expect suppliers to support. As a category leader, we believe meeting these needs strengthens our competitive position. In fiscal 26, we earned a bronze medal in our first company wide EcoVadis assessment. We scored 65 out of a 100 which ranked us in the top 35% of companies assessed over the prior 12 months. In the near term, we will publish our 2026 ESG Report from purpose to progress actions delivering results which highlights 2 years of progress and our future objectives. Strategic enabler number 3 is operational excellence in the supply chain, a critical competitive advantage and driver of predictable profitable growth. In fiscal 26, global on time delivery exceeded our target of more than 96%. Inventory fell to 95 days on hand, moving closer to our 90-day goal. The supply chain also helped protect gross margin, delivering more than $7 million in cost reductions through packaging enhancements, logistic efficiencies, and strategic sourcing. We achieved these results despite growing global volatility. A decentralized supply chain gives us the agility to navigate economic and geopolitical uncertainty while serving customers reliably. During the year, we added a new manufacturing partner in Europe together with strategic inventory investments this reduced risks support service levels and gives us more flexibility to manage cost volatility. Thanks to our global sourcing and supply chain team, our supply chain is stronger than ever. Strategic enabler number 4 is to drive productivity through enhanced systems. Technology strengthens the durability, scalability and resilience of our business model. We are transforming WD-40 company from a collection of decentralized systems into a connected global enterprise on shared digital platforms. In fiscal 26, we expanded our ERP platform into 2 more direct markets and advanced the adoption of shared AI enabled systems. These investments improve visibility, decision making, and collaboration across markets. Common systems, data, and processes create a scalable foundation that lets us leverage AI more effectively accelerate execution and support profitable growth. That is an increasingly important competitive advantage as we execute our 4x4 strategic framework. With that, I will now turn the call over to Sara.

Thanks, Steven. it is hard for me to believe that today is my final earnings call as CFO. However, I remain in my current role through November 1st, when I will pass the baton to Keith. He and I have worked closely together over the last several weeks to ensure a seamless transition. His financial expertise growth mindset, and leadership style make him an excellent fit for our company and culture. He also has a deep appreciation for the qualities that make 40 companies special. A resilient business model, durable competitive advantages, strong cash flow generation, and disciplined capital allocation. I am confident that he will help build on that foundation in the years ahead. Now let's start with a discussion about how we performed against our fiscal 2026 guidance. Overall, we delivered results that were in line with our guidance ranges across key financial metrics. Constant currency net sales increased 8% to $666 million near the high end of our guidance range and in line with our long term growth objectives. Reported net sales increased 11% to $688 million also near the high end of guidance. Gross margin was 55.3%, within our guidance range. While advertising and promotion investment was 6.5% of net sales. As we continued to invest behind our brands and growth initiatives. Non GAAP operating income increased 6% to 110 million while non GAAP diluted EPS rose 6% to $6.18 both within our guidance range. Our effective tax rate was 22.7%. These results demonstrate the resilience of our business model. The strength of our execution, and our continued investment in the strategic capabilities that will drive future growth. Turning to our business model. Last quarter, we announced our decision to sunset our long standing 25 business model. And introduced our new enduring business model. Our enduring business model provides a disciplined framework for how we manage the business and create value for stockholders. It is anchored in 4 key drivers. Maintenance product sales targeted at 5% to 9% growth, gross margin targeted at 55% or above adjusted EBITDA growth that exceeds maintenance product sales growth and an asset light operating model requiring minimal capital investment. This framework better reflects the characteristics that have long defined WD-40 Company as a high quality business. Durable growth, strong profitability, disciplined capital allocation, and long-term value creation. Collectively, these qualities position WD-40 Company to continue creating value as a perpetual compounder for years to come. Let's take a closer look at gross margin. Fourth quarter gross margin was 52.8%, down 190 basis points from the prior year. This decline was primarily driven by approximately 370 basis points of higher specialty chemical and raw material costs. These pressures were partially offset by approximately 170 basis points of benefit from lower aerosol can costs and lower fill fees resulting from supply chain enhancements implemented primarily in EMEA. While fourth quarter gross margin reflected the temporary cost pressures we are currently experiencing, full year gross margin remained resilient at 55.3%, above our long-term target. We expect these pressures to persist in the near term. However, based upon what we know today, we believe fourth quarter gross margin is likely to represent the low point of the cycle. As pricing actions and ongoing cost optimization initiatives begin to take effect over the next 1 to 2 quarters, we expect gross margin to improve sequentially throughout fiscal year 27, with recovery accelerating in the second half of the year. While the pace of improvement may vary quarter to quarter, our objective remains unchanged. Protecting gross margin and returning to our long-term target range of greater than 55%. Now let's turn to adjusted EBITDA in the fourth quarter. As a reminder, our objective is to grow adjusted EBITDA at a rate than maintenance product sales growth over time. Fourth quarter adjusted EBITDA reflected the temporary cost pressures impacting gross margin. As well as continued investments in our people, brands and strategic capabilities that we believe will support durable growth over the long term. Selling, general, and administrative expenses increased 9.4 million to 58.2 million or 8.7 million in constant currency. This quarter, we were impacted by the timing of accruing for our incentive compensation program which increased by approximately 3.8 million on a constant currency basis compared to prior year. Because our incentive plan is directly linked to business performance, and applies to every employee across the organization, we are pleased to recognize the contribution that helped drive our fiscal year 26 results. We also incurred higher freight costs of $1.5 million on a constant currency basis. Particularly in EMEA as we navigated Middle East related supply chain disruptions to maintain product availability for customers. Investment in talent to advance our must win battles and strategic enablers contributed to a 1.2 million increase in employee costs on a constant currency basis. In addition, SG&A expenses increased by approximately $800 thousand from higher software license and fees and bad debt expense. Investments in advertising and promotion, or A&P, were 15.8 million up 26% compared to the prior year. The increase reflects our continued investment in promotional activities to support brand growth, primarily in the U.S. As a percentage of sales, A&P investment was 8.9%, compared to 7.6% in the prior year period. Higher A&P spending in the fourth quarter is consistent with our historical spending patterns. A&P investment for the full year was 6.5% compared to 6% in the prior year. The increase was driven by both foreign currency headwinds and higher levels of promotional programs, particularly in The US. While these investments pressured fourth quarter results, full year adjusted EBITDA increased 6% to $121 million reflecting the underlying resilience of our business model and progress against our long-term growth strategy. Free cash flow for the year was 97.6 million resulting in free cash flow conversion of 117% of non GAAP net income. This strong cash generation reflects the strength of our asset light business model and disciplined working capital management. That completes the financial overview. Before I hand over the call, I would like to express my sincere gratitude for the opportunity to serve as WD-40 Company's CFO. While this is my final earnings call as CFO, I remain deeply committed to the company's future. And I am energized by the opportunity to help drive our next chapter of growth as division president of The Americas. I want to thank everyone who has been a part of this journey with me. With that, I would like to now turn the call over to Keith. For a review of our fiscal year 27 outlook.

Thanks, Sara, and thank you for the warm introduction. I am excited to officially begin my role on November 2nd. I am honored to join WD-40 Company. This is a high-quality business and its consistency and resilience have created significant value for stockholders over time. I look forward to helping compound that value in the years ahead. In my first few weeks, I visited each of our trading blocks and met our key leaders around the world. I have also gotten a strong sense of the culture and operating behind the company's success. I am excited about the opportunities ahead. Our 4x4 strategic framework gives us a clear roadmap for sustainable growth. Our enduring business model guides how we allocate capital. Balancing strong performance today with investments that build value over time. Maintaining a disciplined and balanced approach to capital allocation will remain a priority for me as CFO. This strategy has served the company well for many years. We will maintain a strong balance sheet invest behind our strategic priorities, and deploy capital with discipline to drive long term returns for stockholders. Consistent with our asset light business model, we expect capital expenditures to remain between 1% to 2% of net sales annually. We also remain committed to returning capital to stockholders through a combination of dividends and share repurchases. Dividends continue to be our first priority. With annual dividend payments targeted at a approximately 50% of earnings. In addition, under our new share repurchase program, which became effective on September 1, 2026, we are authorized to repurchase up to $100 million of our outstanding shares. We will continue to allocate capital in a disciplined manner, focusing on opportunities that are accretive, and reflect our confidence in the long term value creation potential of WD-40 Company. In fiscal year 26, our return on invested capital was 28.6%, improving from 26.9% in fiscal year 25 and well ahead of our target of 25%. Following exceptional top line growth, in fiscal year 26, we are targeting net sales growth in line with our long term goals. The timing of activities will be a little different this year, which will affect how growth unfolds quarter to quarter. Similar to recent prior years, we expect net sales to be higher in the second half than in the first half. But because we are comparing against a very strong second half of fiscal 26, we expect more of our year over year growth to occur in the first half of the year. We are encouraged by the start of this new fiscal year and have seen strong revenue and sequential gross margin improvements thus far. For fiscal year 27, we expect the following: Number 1, net sales growth of 4% to 7% with net sales of $715 million to $735 million on a constant currency basis. Number 2, gross margin of 54% to 55.5%. Generally in line with our long-term target of 55%. But also reflecting caution given the current geopolitical and economic uncertainty. Number 3, advertising and promotion investment of approximately 6% of net sales in line with historical performance. Number 4, operating income of 114 million to 120 million representing an increase of 5% to 10% compared to fiscal year 26. At the midpoint, operating income is expected to increase at a faster rate than net sales. Consistent with our enduring business model. Number 5, an effective tax rate of 22.5% to 23.5%. And number 6, diluted earnings per share of $6.40 to $6.70, representing year-over-year growth of approximately 5% to 10%. Our outlook assumes no material changes in the current economic environment. It also assumes crude oil prices remain near current levels through the first half of fiscal 27 before moderating in the second half. Unanticipated inflationary pressures or other unforeseen events could impact our results. Again, I am very excited to be a part of this great company and I look forward to providing an update on our progress during our first quarter call in January. Now back to Steven.

Thank you, Sara and Keith. In summary, what did you hear from us today? You heard that fiscal 26 sales grew 11% to $688 million and maintenance product sales grew 9% in constant currency at the top of our long-term target range. You heard that we see a long runway for durable growth with only 24% of its benchmark potential realized, WD-40 Multi-Use Product still has about $1.7 billion of opportunity ahead, and WD-40 Specialist adds another $863 million. You heard that full year gross margin remained resilient at 55.3% above our long-term target, and that we believe the fourth quarter marked the low point For fiscal 27, we are targeting gross margin of 54% to 55.5% even in the current cost environment. You heard that our globally decentralized supply chain continues to be a competitive advantage especially in challenging times. It helped us navigate volatility, keep on time delivery above 96%, and deliver more than $7 million in cost savings. You heard that we remain confident in our ability to deliver durable growth. Our resilient business model, strong cash flow and disciplined capital allocation make WD-40 Company a high-quality business, built to compound value for stockholders over time. And you heard that we are encouraged by the start of this new fiscal year and have seen strong revenue growth and sequential gross margin improvements. Thank you for joining our call today. We would now be pleased to answer your questions.

We will now open the call for questions. If you would like to ask a question, please press *1 on your telephone keypad. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question. And if you are muted locally, please remember to unmute your device. 1 moment please for the first question. Your first question comes from the line of Mike Baker from D.A. Davidson. Please go ahead.

Close enough. Hi, guys. I wanted to ask you about the Japan move to the direct market. I do not. I think that is a new callout. Correct me if I am wrong. And so can you remind us what typically happens, how that plays out in other markets and what the expectation could be for what happens in Japan?

Yeah. Hey, Mike. it is Steve. And so, yeah, I mean, you are familiar with our moves we have made over the past 5 or 6 years with Mexico and Brazil. Where we have achieved game changing growth in Mexico and then Brazil more recently also. And so Japan will probably be a bit more of a slow build if it is a more conservative kind of market. And so you should expect kind of more steady-paced growth as we build a longer-term kind of development over 5 to 10 years. Having said that, in our first year, we do expect to somewhere between 2x and 4x, what were quite moderate sales in our FY 2026. And so it is our first direct market move in Asia Pacific for 20 years since we took China direct in 2006 and so we are very excited We have a team of 5 now based out of Tokyo. Who are already in the business of writing orders and shipping. And so very excited about the future in the world's fourth-largest economy.

Excellent. 2 more quick questions. 1, did I hear you say right that so your CAGR over the last 5 years for the premium product has been 9%, but you are targeting 10%. So you are actually at this point, targeting an acceleration. Did I hear that right? And if so, what gives you that confidence?

Confidence? Yes. Correct. And so continued, yes, 8.9%, I believe, was the exact number. And so of the changes we have made over the past year is in implementing Smart Straw capacity manufacturing capacity in Asia Pacific, And so you are already beginning to see an acceleration in Asia Pacific. And I believe over the next 4 or 5 years, Asia has very, very ambitious plans for really driving premiumization across Asia. And so if you look at today, premiumization kind of penetration numbers across The Americas are around 60%, in Europe, it is more like 50-some percent. But in Asia, I believe, we are down at mid single double digits, 15% to 16%. And so considerable upside, which we are very excited about on premiumization in Asia Pacific.

Got it. Awesome. Makes sense. If I could just squeeze in 1 more. Understanding you do not give quarterly guidance, but you did give some parameters in terms of year over year sales growth. Higher in the first half versus the second half? Should each quarter be within the long-term or the full year range of, I think, 5% to 9%? Or is it possible that especially as you cycle up against that massive third quarter, should we expect some of the quarters to be outside of that range, either above or below? Thanks.

Yeah. We try not to wander too far into quarterly prognosis, because you can go wrong, right? But we already kind of talked about September being a very strong start. We are in the double digits already in September out of the gate. With good growth across all 3 trading blocks. And so we are very encouraged by that. And so high single digits into double digits for Q1, continued growth in Q2. Q3 is obviously a big 1 to lap, but we do see growth there, albeit maybe modest growth And so hopefully, that gives you enough of a picture for the year. Absolutely, it does. Appreciate it. Thank you.

Thank you. Your next question comes from the line of John Anderson from William Blair. Please go ahead.

Yeah. Thanks. And congratulations, Sara and Keith, on the new roles. I have 3 questions, 1 on sales, 1 on margin, and 1 on macro. With respect to sales, trying to understand a little bit the composition how much price and how much kind of volume you expect to contribute in fiscal 2027? And if there is any help you can give us on growth expectations by trade block, in 2027? Is it consistent with your long-term algo? Are there some variances that we need to consider by trade block? And then on margin, I think Keith might have said that assuming that crude remains near current levels, through the first half of fiscal 27 and then moderates in the second half. And I am just wondering if there is a little bit more detail you can provide and what is baked in, in terms of oil prices first half versus second half? And then last, just a bigger picture question on the consumer. Trying to understand the. Maybe economic sensitivity if the consumer is softer in the year ahead, does that work in your favor in terms of maybe more repair versus replace activity going on, you know, more use cases, I guess, for your product? Just trying to kind of understand what you have seen historically and how you think about that internally. Thanks so much.

Hey, John. Maybe I will jump in really quick first and just do a little bit of a rundown of the Q4 price volume, appreciating that you all do not have the details in the 10-Ks yet. So in the fourth quarter, volume was still a strong lever from a growth. It was the predominant 1. After you adjust for currency and the divest of the home care and cleaning products from the prior year roughly 75% of our growth in the quarter still came from volume. Price is starting to make a larger contribution in the fourth quarter, and we do expect that to continue into the first few quarters, but really into FY 2027 as those price actions begin to take effect. And then maybe I will let Steven kinda jump in on the future.

If we talk about some kind of like just going around the trading blocks kind of expectations and so obviously starting with The Americas, The U. S. Had such a strong year in fiscal 2026. Lapping that is obviously a challenge, right? We are the 1 that we are up for. But for the U.S., You should expect kind of modest single digit growth for the year as we lap that very high level of activity we had in fiscal 2026. That will be accompanied by very strong growth we see in Latin America, and in Canada as well. And so overall, The Americas, we will probably be heading for kind of the lower end of our typical guidance range. And then the slack will be picked up largely, we believe, by Europe and Asia Pacific. And so we have already seen a very strong start to the year the early part of the year in both of those regions, actually quite spectacular in Asia Pacific. China just keeps on doing its thing on the back of a 20% growth number in fiscal 2026. We expect continued double digit growth in China, which drove a large part of the growth in Asia Pacific in fiscal 2026. Japan is new to the game, and so that is going to drive incremental growth for Asia Pacific as well. And so, yes, stronger growth across Europe and Asia Pacific, you will see well, you should see it is hard to guarantee the Middle East, but the Middle East bouncing back somewhat in fiscal 2027. We did have a decline in U. S. Dollars of around 10% in FY 2026. And already, we are seeing a bounce back. You saw it in Q4. We reported on that, but also in the early part of fiscal 2027 that we are seeing a bounce back in the Middle East. And we have found workarounds logistics to get product to our customers across The Middle East. And then your final kind of point about consumers and economic sensitivity. I mean, I think that is true, right? And so in more difficult times, people do they are repairing old machinery or tools or equipment as opposed to buying new tools, machinery and equipment. And so that does favor us. Another trend around the world is engine infrastructure, right? I mean, you have got the car fleet is aging. I think we are at 13 years now, 12.8 years or so in The US and that is a trend that is playing out around the world. And so lots of older equipment does need more maintenance around the world. And hi. This is Keith. Look forward to meeting you. I think you had a second part of your question related to the price assumptions. And I would just say there are a lot of variables that impact the final input. Our final input costs. And so our working assumption is that the currently prevailing cost of the various oil prices and inputs is what we that is what we are assuming for the first half that they continue and then that they decline gradually over the course of the rest of the year. So that is that is as much as we are we are providing right now. Again, it is a quite complex in terms of crude oil and various other oil prices, but, currently prevailing is kind of the way we are characterizing that. And just to add to that, if things were to change sorry, significantly in the second half of the year, we would take further action to support gross margin. that is really helpful and you very much. Keith,

I look forward to meeting you as well.

Thank you. Your next question comes from the line of Aaron Reed from Northcoast Research. Please go ahead.

Sorry about that. Yeah. Thanks for the opportunity. I kind of just wanted to follow-up on that question about the elevated fuel prices. So it is my understanding, and if we are expecting fuel prices to remain elevated, for the first half of the year and starting to decline in the second half. The inputs that you use typically are pretty quick to increase in price and very slow to come down in price. Does that mean that you do not expect margin recovery to maybe not materialize until maybe the tail end of the third quarter? And into the fourth? Or how should I think about that in terms of the margin recovery? Hi, Aaron. This is Keith. Look forward to meeting you as well. And so there are various headwinds and tailwinds in our margin assumptions for the year. So I think you generally have it right in terms of how you are thinking about the oil prices, but we obviously do have our pricing actions that we are undertaking that are, that Steven noted are already starting to have an impact and will continue to have more of an impact as we move through this new year. Steven also noted in his prepared remarks that last year, we had quite an achievement in terms of cost savings. The $7 million was the number. We have equally robust pipeline of cost savings initiatives underway that will have a similar impact to FY 2027, And then we also have, our typical trends in terms of premiumization and our must win battles that will be accretive to the margin as we move forward. And then finally, the trading block mix. Given Steve's earlier answer around The Americas being relatively less of the growth in FY 27 than EMEA and Asia Pacific being more, that margin structure is also favorable. So those are some of the moving parts, within our in our guidance as we move through the year. Okay. Super helpful. Thank you. And I guess 1 other point to that is, so then how should I think about the cadence of that margin recovery? Is that something to where expect it to be fairly evenly distributed then throughout the year, or is this something where it is going to accelerate and then kind of peter out? How should I think about that margin recovery if this is kind of the trough right now? Yeah. I will take that 1 as well. It will be gradual. Throughout the year. So the 52.8% in Q4 we mentioned was the we believe is the low point. We also mentioned that we have already seen the rebound in September. That will continue, we believe, in Q1. And then progressively get better as we move through the year. Where in the back half of the year, again, assuming the oil price assumption that we talked about first half, second half, then we should be approaching above our target of the 55% if those assumptions hold true. Okay. Great. And then just 1 last question here, and I am getting a fair amount of. Anytime anybody brings up France, I know that was a pretty good market for you right now. Any meaningful concerns about the disruption in France, or is that kind of just smoke and it will just dissipate and really will not impact you, you think?

Well, let's hope that situation resolves itself quickly. I mean, you have got these protests. Hopefully, it is a short lived event and yes, France is an important market for us. And so there is been no disruption to our business so far and no disruption to our business so far. So let's hope the situation gets resolved. I appreciate it. Thank you very much.

Thank you. Your next question comes from the line of Linda Bolton Weiser from D.A. Davidson. Please go ahead.

Yes. Hello. Thank you. Well, nice to meet you, Keith. And, Sara, we will certainly miss you as we move on to your next role. So I was wondering about this announcement you made with a marketing partnership with Duluth Trading. It looked like there is like 9 or 10 apparel type items Will you be getting a licensing fee for this for the use of your brand, or how is that going to work? And it seems like you are getting more active with these partnership or promotions or whatever. Following the King of the Hill and now the Duluth. Can you talk about how that is like, if you are doing something different or thinking of things differently, like in the U.S. market. Maybe some of the new executives you have in sales and marketing, maybe they are driving some of these ideas. Maybe you could just comment on that. Thank you.

Thank you, Linda. What I would say is we are at the stage of experimenting. We have an extremely powerful brand. And so we have a partnership that we are exploring. And so leveraging key players like Duluth Trading to experiment with licensing in a couple of agreed areas. But it is small, it is not overly material. And so we are learning as we kind of progress. And so we will keep investors updated as we progress on Okay.

And then can you just kinda update us? I think you mentioned in your commentary a little bit about ERP implementation. Can you just remind us where we are? Like what still needs to be done and kind of what actions, if any, are occurring in FY 2027? Thanks.

Yeah, Linda, I can take that 1. So we successfully went live with 2 new locations this year, 1 of which was supporting the geographic expansion with the Go Direct move in Japan. So it was really excited to be able to support that effort with a system implementation. We do have a couple more in the pipeline in FY 2027, You know, the big area that is gonna take us a few years to work through is really bringing EMEA online, and so that is a sizable implementation, and so that is 1 that the team will be working on along with a number of the smaller locations that we still need to bring on. So we still need to bring on Mexico, and China are 2 of the other locations beyond This year, we have Brazil, and we have another small location in the pipeline. So the team is making progress. But we are. So we are, I would say, about halfway through where we need to be when we get to the end game. Okay.

Thanks very much and then just finally. And I am just curious again on the marketing front. You know, you did spend a lot relatively on A&P In the fourth quarter. Is there any way to, you know, explain to us, like, was it a particular promotion? That drove that or just kinda catching up to the budget you planned for the year? Like, was -- can you just give us a little more color on that spending level that occurred in the fourth quarter?

Sure. So a big part of it was actually activating the King of the Hill promotion in The U. S. And so that partnership, we had a lot of activity, and we actually created something like 1.2 billion impressions through that campaign. And so for us that is more than we typically create in the whole fiscal year. And so that was very concentrated effort against quite a sizable promotion in The US. And so that was a big part of it, plus some genuine catch up you have seen over the past few years. Think that kind of trend as we activate our global kind of campaigns, things like repair, do not replace and the sampling programs we put out globally, it has tended to be kind of like back-half focused. And so you do see A&P kind of phasing higher in the back half of the year. And there is also some caution always our general managers hit the year, seeing how things are going and so people are very cautious to phase kind of A&P spending in line with our business performance.

I might just add, Linda, just for context, that back-half weighting that Steven mentioned is fairly consistent with our historical investment patterns this quarter. It was 35% of our total spend was in the fourth quarter. You compare that to last year, it was actually 33%. So it is pretty consistent with some of the phasing of those promotional activities and the spending pattern as in prior years.

Okay. And then just finally, I guess this is a bigger picture question. You know, in sort of the construction, industrial infrastructure. You know, the building of data centers is a huge driver. it is huge in the attention span of investors. So I am kind of curious if you guys are like, doing anything in particular to target those types of customers, those construction areas, those particular channels that are doing a lot of work on that infrastructure? Is there anything that you are doing specifically in that area?

Sure. Yeah. And so it is a key growth area, obviously, within the I believe it is growing at like 15% a year already up a very large number. And so that is absolutely a very strong growing use case. Most of those facilities are kind of brand new, right? And so as they age, they will need more maintenance, that is for sure. But many of our products, several of our products we manufacture things like WD-40 Multi Use Product, but also contact cleaners, white lithium greases, etc. Have significant use in those kind of areas. So yes, they are growth areas for category. And yes, we are on it in terms developing the business. Okay.

Well, that is all for me. Thank you very much.

Thank you, Linda. Your final question comes from the line of Daniel Rizzo from Jefferies. Please go ahead.

This is Alfonso on for Daniel. Thank you for the opportunity. Just wanted to get more color on if there is any other input costs that might present a significant headwind or would prompt pricing actions? For example, have you shared before for how much freight costs are as a percentage of COGS? So just maybe any color on any other input costs aside from the oil related ones, which might be a significant headwind or would prompt you guys to do pricing to defend the gross margin? Thank you. Hi, Alfonso. This is Keith. Yes. So great question, and you hit on it, and it is really has to do with freight. So, and we did explain that is already impacted us in our fourth quarter and that is expected to continue forward as well. So, really, just it is the crude oil inputs, and it is the freight that are the main elevated costs, and we are kind of taking the same assumptions For both that we outlined earlier around first half and second half. Assumptions this year. Thank you. that is very helpful.

Sure.

Thank you. At this time, there are no further questions. We have this concludes today's call. Thank you for attending. You may now disconnect.