What changed in this filing

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Item 1. Financial Statements

2024-04-09 compared with 2024-01-09 · 142 added, 73 removed, 391 unchanged (35% of the section changed)

33 unchanged sentences

Common stock — authorized 36,000,000 shares, $ 0.001 par value;

19,911,495 and 19,905,815 shares issued at November 30, 2023 and August 31, 2023, respectively;

and 13,557,614 and 13,563,434 shares outstanding at November 30, 2023 and August 31, 2023, respectively

19,920,049 and 19,905,815 shares issued at February 29, 2024 and August 31, 2023, respectively;

and 13,554,668 and 13,563,434 shares outstanding at February 29, 2024 and August 31, 2023, respectively

Additional paid-in capital 173,263 171,546

1 unchanged sentence

Accumulated other comprehensive loss ( 31,249 ) ( 31,206 )

Common stock held in treasury, at cost — 6,353,881 and 6,342,381 shares at November 30, 2023 and August 31, 2023, respectively

Common stock held in treasury, at cost — 6,365,381 and 6,342,381 shares at February 29, 2024 and August 31, 2023, respectively

( 412,989 ) ( 407,670 )

5 unchanged sentences

(Unaudited and in thousands, except per share amounts)

Three Months Ended November 30,

Three Months Ended February 29/28, Six Months Ended February 29/28,

2024 2023 2024 2023

Net sales $ 139,105 $ 130,193 $ 279,521 $ 255,086

24 unchanged sentences

(Unaudited and in thousands)

Three Months Ended November 30,

Three Months Ended February 29/28, Six Months Ended February 29/28,

2024 2023 2024 2023

Net income $ 15,536 $ 16,526 $ 33,018 $ 30,523

22 unchanged sentences

Balance at November 30, 2023 19,911,495 $ 20 $ 173,139 $ 483,673 $ ( 30,816 ) 6,353,881 $ ( 410,084 ) $ 215,932

Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 8,554 - ( 1,742 ) ( 1,742 )

Stock-based compensation 1,866 1,866

Cash dividends ($ 0.88 per share)

( 11,976 ) ( 11,976 )

Repurchases of common stock 11,500 ( 2,905 ) ( 2,905 )

Foreign currency translation adjustment ( 433 ) ( 433 )

Net income 15,536 15,536

Balance at February 29, 2024 19,920,049 $ 20 $ 173,263 $ 487,233 $ ( 31,249 ) 6,365,381 $ ( 412,989 ) $ 216,278

See accompanying notes to condensed consolidated financial statements (unaudited).

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands, except share and per share amounts)

Common Stock Additional

14 unchanged sentences

Balance at November 30, 2022 19,896,477 $ 20 $ 168,092 $ 459,439 $ ( 34,873 ) 6,308,881 $ ( 401,308 ) $ 191,370

Stock-based compensation 2,261 2,261

Cash dividends ($ 0.83 per share)

( 11,324 ) ( 11,324 )

Repurchases of common stock 9,250 ( 1,569 ) ( 1,569 )

Foreign currency translation adjustment 8 8

Net income 16,526 16,526

Balance at February 28, 2023 19,896,477 $ 20 $ 170,353 $ 464,641 $ ( 34,865 ) 6,318,131 $ ( 402,877 ) $ 197,272

See accompanying notes to condensed consolidated financial statements (unaudited).

2 unchanged sentences

(Unaudited and in thousands)

Three Months Ended November 30,

Six Months Ended February 29/28,

Operating activities:

5 unchanged sentences

Stock-based compensation 4,137 4,980

Amortization of implementation costs associated with cloud computing arrangements 313 150

Unrealized foreign currency exchange losses (gains) 245 ( 1,820 )

22 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 260 ) 2,777

Net increase (decrease) in cash and cash equivalents 2,174 ( 961 )

Net increase in cash and cash equivalents 7,300 149

Cash and cash equivalents at beginning of period 48,143 37,843

30 unchanged sentences

Although the Company’s estimates consider current conditions, the inputs into certain of the Company’s significant and critical accounting estimates include judgments and assumptions about the economic implications of factors that have been subject to such volatility and how management expects them to change in the future, as appropriate.

It is reasonably possible that actual results experienced may differ materially from the Company’s estimates in future periods, which could materially affect its results of operations and financial condition.

It is possible that actual results experienced may differ materially from the Company’s estimates in future periods, which could materially affect its results of operations and financial condition.

Foreign Currency Forward Contracts

6 unchanged sentences

Foreign currency forward contracts in an asset position at the end of the reporting period are included in other current assets, while foreign currency forward contracts in a liability position at the end of the reporting period are included in accrued liabilities in the Company’s condensed consolidated balance sheets.

At November 30, 2023, the Company had a notional amount of $ 10.7 million outstanding in foreign currency forward contracts, which will mature in January 2024.

Unrealized net gains and losses related to foreign currency forward contracts were not significant at November 30, 2023 and August 31, 2023.

Realized net gains and losses related to foreign currency forward contracts were not significant for the three months ended November 30, 2023 and 2022.

Both unrealized and realized net gains and losses are recorded in other income (expense), net in the Company’s condensed consolidated statements of operations.

At February 29, 2024, the Company had a notional amount of $ 9.9 million outstanding in foreign currency forward contracts, which will mature in March 2024.

Unrealized net gains and losses related to foreign currency forward contracts were not significant at February 29, 2024 and August 31, 2023.

Realized net gains and losses related to foreign currency forward contracts were not significant for the three and six months ended February 29, 2024 and February 28, 2023.

Both unrealized and realized net gains and losses are recorded in other (expense) income, net in the Company’s condensed consolidated statements of operations.

Fair Value of Financial Instruments

5 unchanged sentences

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

As of November 30, 2023, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, except for foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

As of February 29, 2024, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, except for foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

The carrying values of cash equivalents and short-term borrowings are recorded at cost, which approximates their fair values, primarily due to their short-term nature.

1 unchanged sentence

The Company’s fixed rate long-term borrowings consist of senior notes and are recorded at carrying value.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 59.1 million as of November 30, 2023, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 67.2 million.

During the three months ended November 30, 2023, the Company did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 60.1 million as of February 29, 2024, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 67.2 million.

During the six months ended February 29, 2024, the Company did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” These amendments primarily require enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

The amendments are effective for the Company’s annual periods beginning September 1, 2024, and interim periods beginning September 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The amendments are effective for the Company’s annual periods beginning September 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is in the process of evaluating this ASU to determine its impact on the Company’s disclosures .

Inventories consisted of the following (in thousands):

18 unchanged sentences

Total $ 64,575 $ 66,791

As of November 30, 2023 and August 31, 2023, the Company’s condensed consolidated balance sheets included $ 12.2 million and $ 11.0 million, respectively, of capitalized cloud-based implementation costs recorded as other assets within the Company’s condensed consolidated balance sheets.

These balances primarily consist of capitalized implementation costs related to the new cloud-based enterprise resource planning system which the Company is in the process of implementing.

Accumulated amortization associated with these assets was $ 0.8 million and $ 0.7 million as of November 30, 2023 and August 31, 2023, respectively.

Amortization expense associated with these assets was not significant for the three months ended November 30, 2023 and 2022.

As of February 29, 2024 and August 31, 2023, the Company’s condensed consolidated balance sheets included $ 12.7 million and $ 11.0 million, respectively, of capitalized cloud-based implementation costs recorded as other assets within the Company’s condensed consolidated balance sheets.

These balances primarily consist of capitalized implementation costs related to a new cloud-based enterprise resource planning (“ERP”) system which the Company placed into service in the U.S.

during the second quarter of fiscal year 2024.

The useful lives of the Company’s internal-use software and capitalized cloud computing implementation costs are generally three to five years .

However, the useful lives of major information system installations such as implementations of ERP systems and certain related software are determined on an individual basis and may exceed five years depending on the estimated period of use.

The Company has determined the useful life of the new ERP system to be ten years and is amortizing over such period.

Accumulated amortization associated with these assets was $ 1.0 million and $ 0.7 million as of February 29, 2024 and August 31, 2023, respectively.

Amortization expense associated with these assets was not significant for the three and six months ended February 29, 2024 and February 28, 2023.

Goodwill and Other Intangible Assets

3 unchanged sentences

Translation adjustments ( 1 ) ( 5 ) - ( 6 )

Balance as of November 30, 2023 $ 85,437 $ 8,867 $ 1,209 $ 95,513

There were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill as of November 30, 2023.

Balance as of February 29, 2024 $ 85,435 $ 8,855 $ 1,209 $ 95,499

During the second quarter of fiscal year 2024, the Company performed its annual goodwill impairment test.

The annual goodwill impairment test was performed at the reporting unit level as of the Company’s most recent goodwill impairment testing date, December 1, 2023.

The Company performed a quantitative assessment to determine whether the fair value of any of its reporting units was less than each reporting unit’s carrying amount.

The Company determined the fair value of its reporting units by following the income approach, which uses a discounted cash flow methodology.

The discounted cash flow methodology bases the fair value of each reporting unit on the present value of its estimated future cash flows.

The discounted cash flow methodology also requires that management make assumptions about certain key inputs in the estimated cash flows, including long-term sales forecasts or growth rates, terminal growth rates and discount rates, all of which are inherently uncertain.

The forecast of future cash flows was primarily based on historical data and management’s best estimates of sales growth rates and operating margins for each reporting unit for the next five fiscal years.

The discount rate used was based on management’s estimate of the current weighted-average cost of capital for each reporting unit.

As these assumptions are largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy.

Based on quantitative analysis, the Company determined that the estimated fair value of each of its reporting units significantly exceeded their respective carrying values.

As a result, the Company concluded that no impairment of its goodwill existed as of December 1, 2023.

In addition, the Company concluded that there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to December 1, 2023 through February 29, 2024.

To date, there have been no impairment losses identified and recorded related to the Company’s goodwill.

Definite-lived Intangible Assets

The Company’s definite-lived intangible assets, which include the Spot Shot, Carpet Fresh, 1001, EZ REACH and GT85 trade names, are included in other intangible assets, net in the Company’s condensed consolidated balance sheets.

The following table summarizes the definite-lived intangible assets and the related accumulated amortization (in thousands):

2023 August 31,

Gross carrying amount $ 35,893 $ 35,877

Accumulated amortization ( 31,474 ) ( 31,207 )

Net carrying amount $ 4,419 $ 4,670

There has been no impairment charge for the three months ended November 30, 2023 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.

Changes in the carrying amounts of definite-lived intangible assets by segment for the three months ended November 30, 2023 are summarized below (in thousands):

Americas EIMEA Asia-Pacific Total

Balance as of August 31, 2023 $ 3,624 $ 1,046 $ - $ 4,670

Amortization expense ( 202 ) ( 49 ) - ( 251 )

Translation adjustments - - - -

Balance as of November 30, 2023 $ 3,422 $ 997 $ - $ 4,419

The estimated amortization expense for the Company’s definite-lived intangible assets is not significant in any future individual fiscal year.

The net carrying value of the Company’s definite-lived intangible assets, which include the Spot Shot, Carpet Fresh, 1001, EZ REACH and GT85 trade names, was $ 4.2 million and $ 4.7 million as of February 29, 2024 and August 31, 2023, respectively.

These balances are classified as other intangible assets, net in the Company’s condensed consolidated balance sheets.

Amortization expense related to these assets was not material for the three and six months ended February 29, 2024 and February 28, 2023.

Right-of-use assets and lease liabilities consisted of the following (in thousands):

8 unchanged sentences

(1) Current operating lease liabilities are classified in accrued liabilities on the Company’s condensed consolidated balance sheets.

During the three months ended November 30, 2023, the Company entered into a finance lease for a blending facility (the “Finance Lease”).

As of August 31, 2023, the Company had $ 3.8 million of prepaid deposits, which converted to a right-of-use asset at the commencement of the Finance Lease during the three months ended November 30, 2023.

Since the Finance Lease was fully prepaid at commencement, no lease liability exists related to it as of November 30, 2023.

During the six months ended February 29, 2024, the Company entered into a finance lease for a blending facility (the “Finance Lease”).

As of August 31, 2023, the Company had $ 3.8 million of prepaid deposits, which converted to a right-of-use asset at the commencement of the Finance Lease during the six months ended February 29, 2024.

Since the Finance Lease was fully prepaid at commencement, no lease liability exists related to it .

Accrued and Other Liabilities

12 unchanged sentences

Accrued payroll 5,441 4,298

Accrued profit sharing 4,917 3,561

Accrued payroll taxes 1,665 1,650

Accrued profit sharing 1,406 3,561

Other 513 515

Total $ 14,869 $ 16,722

As of November 30, 2023, the Company held borrowings under two separate agreements as detailed below.

As of February 29, 2024, the Company held borrowings under two separate agreements as detailed below.

Note Purchase and Private Shelf Agreement

1 unchanged sentence

(“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”).

As of November 30, 2023, the Company had outstanding balances on its series A, B and C notes issued under this Note Agreement.

As of February 29, 2024, the Company had outstanding balances on its series A, B and C notes issued under this Note Agreement.

Credit Agreement

6 unchanged sentences

Short-term and long-term borrowings under the Company’s Credit Agreement and Note Agreement consisted of the following (in thousands):

Issuance Maturities November 30,

Issuance Maturities February 29,

2024 August 31,

13 unchanged sentences

(1) The Company has the ability to refinance any draw under the line of credit with successive short-term borrowings through the maturity date.

Outstanding draws for which management has the ability and intent to refinance with successive short-term borrowings for a period of at least

twelve months are classified as long-term.

As of November 30, 2023, $ 19.8 million of this facility was classified as long-term and was entirely denominated in Euros.

Outstanding draws for which management has the ability and intent to refinance with successive short-term borrowings for a period of at least twelve months are classified as long-term.

As of February 29, 2024, $ 19.5 million of this facility was classified as long-term and was entirely denominated in Euros.

$ 29.0 million was classified as short-term and was denominated in U.S.

18 unchanged sentences

The consolidated interest coverage ratio means, as of any date of determination, the ratio of (a) consolidated EBITDA for the most recently completed four fiscal quarters to (b) consolidated interest charges for the most recently completed four fiscal quarters.

As of November 30, 2023, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

As of February 29, 2024, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

Share Repurchase Plan

2 unchanged sentences

The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company’s Chief Executive Officer and Chief Financial Officer, subject to present loan covenants and in compliance with all laws and regulations applicable thereto.

During the three months ended November 30, 2023, the Company repurchased 11,500 shares at an average price of $ 209.90 per share, for a total cost of $ 2.4 million under this $ 50.0 million plan.

During the six months ended February 29, 2024, the Company repurchased 23,000 shares at an average price of $ 231.26 per share, for a total cost of $ 5.3 million under this $ 50.0 million plan.

Earnings per Common Share

The table below reconciles net income to net income available to common stockholders (in thousands):

Three Months Ended November 30,

Three Months Ended February 29/28, Six Months Ended February 29/28,

2024 2023 2024 2023

Net income $ 15,536 $ 16,526 $ 33,018 $ 30,523

2 unchanged sentences

The table below summarizes the weighted-average number of common shares outstanding included in the calculation of basic and diluted EPS (in thousands):

Three Months Ended November 30,

Three Months Ended February 29/28, Six Months Ended February 29/28,

2024 2023 2024 2023

Weighted-average common shares outstanding, basic 13,558 13,583 13,559 13,586

1 unchanged sentence

Weighted-average common shares outstanding, diluted 13,583 13,608 13,583 13,608

For the three months ended November 30, 2023 and 2022, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 5,404 and 7,471 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive .

For the three months ended February 29, 2024, there were no anti-dilutive stock-based equity awards outstanding.

For the six months ended February 29, 2024, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 2,702 were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

For the three and six months ended February 28, 2023, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 10,734 and 9,103 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive .

The following table presents the Company’s revenues by segment and major source (in thousands):

Three Months Ended November 30, 2023

Americas EIMEA Asia-Pacific Total

Three Months Ended February 29, 2024 Six Months Ended February 29, 2024

Americas EIMEA Asia-Pacific Total Americas EIMEA Asia-Pacific Total

WD-40 Multi-Use Product $ 49,043 $ 41,572 $ 16,619 $ 107,234 $ 97,554 $ 78,616 $ 38,741 $ 214,911

5 unchanged sentences

Total net sales $ 63,507 $ 54,313 $ 21,285 $ 139,105 $ 127,582 $ 103,067 $ 48,872 $ 279,521

Three Months Ended November 30, 2022

Americas EIMEA Asia-Pacific Total

Three Months Ended February 28, 2023 Six Months Ended February 28, 2023

Americas EIMEA Asia-Pacific Total Americas EIMEA Asia-Pacific Total

WD-40 Multi-Use Product $ 48,405 $ 35,660 $ 16,196 $ 100,261 $ 91,562 $ 65,838 $ 37,449 $ 194,849

11 unchanged sentences

Revenue is subsequently recognized when revenue recognition criteria are met, generally when control of the product transfers to the customer.

The Company had contract liabilities of $ 3.1 million and $ 4.6 million as of November 30, 2023 and August 31, 2023, respectively.

Substantially all of the $ 4.6 million that was included in contract liabilities as of August 31, 2023 was recognized to revenue during the three months ended November 30, 2023.

The Company had contract liabilities of $ 3.3 million and $ 4.6 million as of February 29, 2024 and August 31, 2023, respectively.

Substantially all of the $ 4.6 million that was included in contract liabilities as of August 31, 2023 was recognized to revenue during the six months ended February 29, 2024.

These contract liabilities are recorded in accrued liabilities on the Company’s condensed consolidated balance sheets.

Contract assets are recorded if the Company has satisfied a performance obligation but does not yet have an unconditional right to consideration.

The Company did not have any contract assets as of November 30, 2023 and August 31, 2023.

The Company did not have any contract assets as of February 29, 2024 and August 31, 2023.

The Company has an unconditional right to payment for its trade and other accounts receivable on the Company’s condensed consolidated balance sheets.

These receivables are presented net of an allowance for credit losses, which was insignificant as of November 30, 2023 and August 31, 2023.

These receivables are presented net of an allowance for credit losses of $ 0.6 million as of February 29, 2024 and which was not significant as of August 31, 2023.

Commitments and Contingencies

1 unchanged sentence

The Company has ongoing relationships with various suppliers (contract manufacturers) that manufacture the Company’s products and third-party distribution centers that warehouse and ship the Company’s products to customers.

manufacturers maintain title and control of certain raw materials and components, materials utilized in finished products, and the finished products themselves until shipment to the Company’s third-party distribution centers or customers in accordance with agreed upon shipment terms.

Although the Company has contractual minimum purchase obligations with certain contract manufacturers, such obligations are immaterial or well below the volume of goods that the Company has historically purchased.

The contract manufacturers maintain title and control of certain raw materials and components, materials utilized in finished products, and the finished products themselves until shipment to the Company’s third-party distribution centers or customers in accordance with agreed upon shipment terms.

Although the Company has contractual minimum purchase obligations with certain contract manufacturers, such obligations are either immaterial or below the volume of goods that the Company has historically purchased.

In the ordinary course of business, supply needs are communicated by the Company to its contract manufacturers based on orders and short-term projections, ranging from two months to six months .

4 unchanged sentences

In addition to the commitments to purchase products from contract manufacturers described above, the Company may also enter into commitments with other manufacturers to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives.

As of November 30, 2023, no such commitments were outstanding.

As of February 29, 2024, no such commitments were outstanding.

From time to time, the Company is subject to various claims, lawsuits, investigations and proceedings arising in the ordinary course of business, including but not limited to, product liability litigation and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters.

As of November 30, 2023, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss.

As of February 29, 2024, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss.

As to claims that the Company believes may result in a reasonably possible loss, the Company believes that no reasonably possible outcome of any such claim will have a materially adverse impact on the Company’s financial condition, results of operations or cash flows.

4 unchanged sentences

As a result of the Company’s insurance coverage, management believes that the estimated fair value of these indemnification agreements is minimal.

Thus, no liabilities have been recorded for these agreements as of November 30, 2023.

Thus, no liabilities have been recorded for these agreements as of February 29, 2024.

From time to time, the Company enters into indemnification agreements with certain contractual parties in the ordinary course of business, including agreements with lenders, lessors, contract manufacturers, marketing distributors, customers and certain vendors.

All such indemnification agreements are entered into in the context of the particular agreements and are provided in an attempt to properly allocate risk of loss in connection with the consummation of the underlying contractual arrangements.

All such indemnification agreements are entered into in the context of the particular agreements and are provided in an attempt to allocate risk of loss in connection with the consummation of the underlying contractual arrangements.

Although the maximum amount of future payments that the Company could be required to make under these indemnification agreements is unlimited, management believes that the Company maintains adequate levels of insurance coverage to protect the Company with respect to most potential claims arising from such agreements and that such agreements do not otherwise have value separate and apart from the liabilities incurred in the ordinary course of the Company’s business.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of November 30, 2023.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of February 29, 2024.

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The provision for income taxes was 24.2 % and 20.9 % of income before income taxes for the three months ended November 30, 2023 and 2022, respectively.

The provision for income taxes was 21.6 % and 20.8 % of income before income taxes for the three months ended February 29, 2024 and February 28, 2023, respectively.

This 0.8 % increase in the effective tax rate from period to period was primarily due to the following impacts:

1 unchanged sentence

Unfavorable/(Favorable)

Higher tax rates in certain foreign jurisdictions from period to period

An increase in non-deductible performance based compensation

Windfalls from the settlement of stock-based equity awards in the second quarter of fiscal year 2024

Benefits related to income tax positions affected by expiring statutes of limitation

The provision for income taxes was 23.0 % and 20.9 % of income before income taxes for the six months ended February 29, 2024 and February 28, 2023, respectively.

This 2.1 % increase in the effective tax rate from period to period was primarily due to the following impacts:

Description of impacts on the Company’s estimated annual effective tax rate

Unfavorable/(Favorable)

A non-recurring charitable donation made in the first quarter of fiscal year 2023

Higher tax rates in certain foreign jurisdictions from period to period

Lower shortfalls from the settlements of stock-based equity awards in the first quarter of fiscal year 2024.

Lower year to date shortfalls from the settlements of stock-based equity awards in fiscal year 2024

The Company is subject to taxation in the U.S.

4 unchanged sentences

The Company is currently under audit in various state jurisdictions for fiscal years 2021 through 2022.

Estimated unrecognized tax benefits related to income tax positions affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months were not significant.

The Company has estimated that up to $ 12.4 million of unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months.

This includes $ 12.1 million associated with the Tax Cuts and Jobs Act’s mandatory one-time “toll tax” on unremitted foreign earnings.

Audit outcomes and the timing of settlements are subject to significant uncertainty.

10 unchanged sentences

Corporate (1)

November 30, 2023

February 29, 2024

Net sales $ 63,507 $ 54,313 $ 21,285 $ - $ 139,105

4 unchanged sentences

Interest expense $ 505 $ 502 $ 1 $ - $ 1,008

November 30, 2022

February 28, 2023

Net sales $ 62,890 $ 46,809 $ 20,494 $ - $ 130,193

4 unchanged sentences

Interest expense $ 1,087 $ 413 $ 2 $ - $ 1,502

For the Six Months Ended

February 29, 2024

Net sales $ 127,582 $ 103,067 $ 48,872 $ - $ 279,521

Income from operations $ 27,416 $ 21,602 $ 18,514 $ ( 22,407 ) $ 45,125

Depreciation and amortization expense (2)

$ 2,195 $ 2,224 $ 113 $ 151 $ 4,683

Interest income $ - $ 82 $ 58 $ - $ 140

Interest expense $ 1,065 $ 1,086 $ 3 $ - $ 2,154

February 28, 2023

Net sales $ 120,904 $ 87,581 $ 46,601 $ - $ 255,086

Income from operations $ 26,484 $ 16,666 $ 16,640 $ ( 18,958 ) $ 40,832

Depreciation and amortization expense (2)

$ 1,747 $ 1,870 $ 96 $ 151 $ 3,864

Interest income $ 4 $ 35 $ 56 $ - $ 95

Interest expense $ 1,977 $ 692 $ 2 $ - $ 2,671

(1) These expenses are reported separately from the Company’s identified segments and are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

1 unchanged sentence

The Company’s Chief Operating Decision Maker does not review assets by segment as part of the financial information provided, and therefore, no asset information is provided in the above table.

Subsequent Event

Subsequent Events

Acquisition of Theron Marketing

On March 4, 2024, the Company acquired a Brazilian marketing distributor, Theron Marketing Ltda.

Theron had been the exclusive distributor of WD-40 Brand products in Brazil for the last 27 years.

Pursuant to the terms of the transaction, WD-40 Holding Company Brasil Ltda., a wholly owned subsidiary of the Company established during the three months ended February 29, 2024, acquired all outstanding shares of capital stock of Theron for cash of approximately

$ 6.9 million (subject to a 90-day post closing adjustment).

With this transaction, the Company began direct distribution within Brazil in March 2024.

Dividend Declaration

On December 12, 2023, the Company’s Board approved a 6 % increase in the regular quarterly cash dividend, increasing it from $ 0.83 per share to $ 0.88 per share.

The $ 0.88 per share dividend declared on December 12, 2023 is payable on January 31, 2024 to stockholders of record on January 19, 2024.

On March 19, 2024, the Company’s Board declared a cash dividend of $ 0.88 per share payable on April 30, 2024 to stockholders of record on April 19, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements