What changed in this filing

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Item 1. Financial Statements

2024-07-10 compared with 2024-04-09 · 141 added, 90 removed, 443 unchanged (34% of the section changed)

33 unchanged sentences

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

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

19,924,268 and 19,905,815 shares issued at May 31, 2024 and August 31, 2023, respectively;

and 13,547,637 and 13,563,434 shares outstanding at May 31, 2024 and August 31, 2023, respectively

Additional paid-in capital 174,177 171,546

1 unchanged sentence

Accumulated other comprehensive loss ( 31,300 ) ( 31,206 )

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

Common stock held in treasury, at cost — 6,376,631 and 6,342,381 shares at May 31, 2024 and August 31, 2023, respectively

( 415,764 ) ( 407,670 )

5 unchanged sentences

(Unaudited and in thousands, except per share amounts)

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

Three Months Ended May 31, Nine Months Ended May 31,

2024 2023 2024 2023

25 unchanged sentences

(Unaudited and in thousands)

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

Three Months Ended May 31, Nine Months Ended May 31,

2024 2023 2024 2023

31 unchanged sentences

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

Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 4,219 - - -

Stock-based compensation 914 914

Cash dividends ($ 0.88 per share)

( 11,966 ) ( 11,966 )

Repurchases of common stock 11,250 ( 2,775 ) ( 2,775 )

Foreign currency translation adjustment ( 51 ) ( 51 )

Net income 19,842 19,842

Balance at May 31, 2024 19,924,268 $ 20 $ 174,177 $ 495,109 $ ( 31,300 ) 6,376,631 $ ( 415,764 ) $ 222,242

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

25 unchanged sentences

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

Stock-based compensation 813 813

Cash dividends ($ 0.83 per share)

( 11,315 ) ( 11,315 )

Repurchases of common stock 10,000 ( 1,793 ) ( 1,793 )

Foreign currency translation adjustment 1,955 1,955

Net income 18,895 18,895

Balance at May 31, 2023 19,896,477 $ 20 $ 171,166 $ 472,221 $ ( 32,910 ) 6,328,131 $ ( 404,670 ) $ 205,827

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

2 unchanged sentences

(Unaudited and in thousands)

Six Months Ended February 29/28,

Nine Months Ended May 31,

Operating activities:

5 unchanged sentences

Stock-based compensation 5,051 5,793

Amortization of implementation costs associated with cloud computing arrangements 313 150

Amortization of cloud computing implementation costs 650 212

Unrealized foreign currency exchange losses (gains) 108 ( 1,780 )

13 unchanged sentences

Proceeds from sales of property and equipment 457 437

Acquisition of business, net of cash acquired ( 6,201 ) -

Net cash used in investing activities ( 9,103 ) ( 4,213 )

3 unchanged sentences

Repayments of long-term senior notes ( 800 ) ( 800 )

Net (repayments) proceeds from revolving credit facility ( 4,177 ) 8,305

Net repayments from revolving credit facility ( 11,592 ) ( 11,917 )

Shares withheld to cover taxes upon conversions of equity awards ( 2,420 ) ( 600 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 419 ) 3,204

Net increase in cash and cash equivalents 7,300 149

Net (decrease) increase in cash and cash equivalents ( 2,843 ) 560

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

10 unchanged sentences

The Company’s products are sold in various locations around the world.

Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, the Middle East and Africa.

Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, India, the Middle East and Africa.

Homecare and cleaning products are sold primarily in North America, the United Kingdom (“U.K.”) and Australia.

15 unchanged sentences

Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

Global economic conditions have been adversely impacted and financial markets have experienced significant volatility in recent years.

Global economies have experienced significant volatility in recent years.

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.

8 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 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.

At May 31, 2024, the Company had a notional amount of $ 4.1 million outstanding in foreign currency forward contracts, which matured in June 2024.

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

Realized net gains and losses related to foreign currency forward contracts were not significant for the three and nine months ended May 31, 2024 and 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.

Functional Currencies

The reporting currency of the Company is the U.S.

The functional currency of each of the Company’s subsidiaries is based on the currency of the economic environment in which it operates.

Management periodically assesses the functional currency of each subsidiary in accordance with Accounting Standards Codification (“ASC”) 830, “ Foreign Currency Matters ”.

The functional currency of the Company’s U.K.

subsidiary, the entity in which the EIMEA results are generated, is the Pound Sterling.

Trends within EIMEA have indicated a shift towards the Euro over time, particularly those pertaining to sales, cost of products sold and operating expenses.

Management expects these trends may become other-than-temporary in a future period, which could result in a change in functional currency from Pound Sterling to Euro in that period.

While the Company is in the process of evaluating the materiality of the overall impact of such a change, it does not expect that the impact to income from operations would be material.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820, “ Fair Value Measurements and Disclosures” , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820, “ Fair Value Measurements and Disclosures ”, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company categorizes its financial assets and liabilities measured at fair value into a hierarchy that categorizes fair value measurements into the following three levels based on the types of inputs used in measuring their fair value:

3 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 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.

As of May 31, 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 $ 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.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 58.9 million as of May 31, 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 $ 66.8 million.

During the nine months ended May 31, 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

9 unchanged sentences

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

On March 4, 2024, WD-40 Holding Company Brasil Ltda., a wholly-owned subsidiary of the Company, acquired all of the issued and outstanding capital stock of the Company’s Brazilian distributor, Theron Marketing Ltda.

(“Theron”), from M12 Participações Empresarias S.A.

for total consideration of $ 6.9 million.

Contingent consideration of $ 0.3 million is included in the total purchase price and recorded as a liability in the Company’s condensed consolidated balance sheets.

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

Under the terms of the purchase agreement, the Company acquired assets with approximate fair values of $ 3.0 million of intangible assets, including customer relationships and a non-compete agreement, $ 3.4 million of accounts receivable, $ 0.6 million of inventory, and assumed liabilities with an approximate fair value of $ 1.6 million.

The total consideration paid less the fair value of net assets acquired resulted in $ 1.5 million of goodwill.

Transaction-related expenses were not material.

The following table summarizes the fair value of assets acquired and liabilities assumed on the condensed consolidated balance sheets as of March 4, 2024 (in thousands):

Fair value of consideration paid

Cash, net of cash acquired

Other consideration 703

Total consideration paid 6,904

Fair value of assets acquired

Definite-lived intangible assets 2,959

Tangible assets acquired 4,069

Total assets 7,028

Fair value of liabilities assumed 1,604

Fair value of net assets acquired 5,424

Goodwill incident to acquisition $ 1,481

The transaction was treated as a business combination.

The Company recognized goodwill of $ 1.5 million as of March 4, 2024, which is calculated as the excess of the consideration exchanged as compared to the fair value of identifiable assets acquired.

The Company’s accounting for the acquisition has not been finalized and could necessitate a one-year measurement period of determination from the acquisition date.

Goodwill is expected to be deductible for tax purposes.

See Note 6 to the condensed consolidated financial statements for further information on goodwill and other intangible assets.

Pro forma results are not presented because they are not material to the Company’s consolidated financial results.

Inventories consisted of the following (in thousands):

18 unchanged sentences

Total $ 63,903 $ 66,791

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.

As of May 31, 2024 and August 31, 2023, the Company’s condensed consolidated balance sheets included $ 12.4 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.

3 unchanged sentences

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.

Accumulated amortization associated with these assets was $ 1.4 million and $ 0.7 million as of May 31, 2024 and August 31, 2023, respectively.

Amortization expense associated with these assets was $ 0.6 million for the nine months ended May 31, 2024 and was not significant for three months ended May 31, 2024 or for the three and nine months ended May 31, 2023.

Goodwill and Other Intangible Assets

The Company recorded goodwill on March 4, 2024 incident to its acquisition of Theron.

At the time of acquisition a fair value study was conducted to determine the goodwill created as part of the transaction.

The following table summarizes the changes in the carrying amounts of goodwill by segment (in thousands):

1 unchanged sentence

Balance as of August 31, 2023 $ 85,436 $ 8,860 $ 1,209 $ 95,505

Goodwill incident to acquisition 1,481 - - 1,481

Translation adjustments ( 71 ) 12 - ( 59 )

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.

Balance as of May 31, 2024 $ 86,846 $ 8,872 $ 1,209 $ 96,927

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 May 31, 2024.

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

Definite-lived Intangible Assets

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.

The Company’s definite-lived intangible assets include the Spot Shot, Carpet Fresh, 1001, EZ REACH and GT85 trade names at both May 31, 2024 and August 31, 2023.

In addition, intangible assets related to customer relationships and a non-compete agreement were acquired in connection with the Company’s purchase of Theron during the nine months ended May 31, 2024.

All of these assets are included in other intangible assets, net in the Company’s condensed consolidated balance sheets.

The weighted-average useful life of the customer relationships and non-compete agreement acquired from Theron is 14.80 years.

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

2024 August 31,

Gross carrying amount $ 35,862 $ 35,877

Definite-lived intangible assets acquired 2,959 -

Accumulated amortization ( 32,139 ) ( 31,207 )

Net carrying amount $ 6,682 $ 4,670

There has been no impairment charge for the nine months ended May 31, 2024 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 nine months ended May 31, 2024 are summarized below (in thousands):

Americas EIMEA Asia-Pacific Total

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

Definite-lived intangible assets acquired 2,959 - - 2,959

Amortization expense ( 656 ) ( 150 ) - ( 806 )

Translation adjustments ( 135 ) ( 6 ) - ( 141 )

Balance as of May 31, 2024 $ 5,792 $ 890 - $ 6,682

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

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 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.

During the nine months ended May 31, 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 nine months ended May 31, 2024.

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

17 unchanged sentences

Total $ 18,740 $ 16,722

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

As of May 31, 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 February 29, 2024, the Company had outstanding balances on its series A, B and C notes issued under this Note Agreement.

As of May 31, 2024, the Company had outstanding balances on its series A, B and C notes issued under this Note Agreement.

The Note Agreement was most recently amended on April 30, 2024 (the “Fourth Amendment”).

The Fourth Amendment permitted the Company to enter into an amendment to its revolving credit agreement with Bank of America and also included certain conforming amendments to the credit agreement, including the revision of financial and restrictive covenants.

Credit Agreement

The Company’s Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) with Bank of America, N.A.

consists of a revolving commitment for borrowing by the Company up to $ 150.0 million with a sublimit of $ 100.0 million for WD-40 Company Limited, a wholly owned operating subsidiary of the Company for Europe, India, the Middle East and Africa.

On November 29, 2021, the Company entered into its most recent amendment to the Credit Agreement (the “LIBOR Amendment”) with Bank of America, N.A.

The LIBOR Amendment changed the Company’s index rates under the Credit Agreement for Pound Sterling and U.S.

Dollar borrowings from the London Interbank Offered Rate as administered by ICE Benchmark Administration to the Sterling Overnight Index Average Reference Rate and the Bloomberg Short-term Bank Yield Index rate, respectively, as well as certain definitions and clarifications within the Credit Agreement to accommodate the change in index rates.

The impact of the LIBOR Amendment was insignificant to the Company’s consolidated financial statements.

On April 30, 2024, the Company and certain subsidiaries of the Company, entered into a Second Amended and Restated Credit Agreement with Bank of America, N.A.

(the “Credit Agreement”).

The Credit Agreement modified certain terms and conditions of the Company’s previous Amended and Restated Agreement dated March 16, 2020 (as amended on September 30, 2020, and November 29, 2021), and extended the maturity date for the revolving credit facility from September 30, 2025 to April 30, 2029.

Borrowings under the Credit Agreement will be used for the Company’s various operating, investing and financing needs.

The Company’s Credit Agreement decreased the revolving commitment for borrowing by the Company from $ 150.0 million to $ 125.0 million and decreased the sublimit from $ 100.0 million to $ 95.0 million for WD-40 Company Limited, a wholly owned operating subsidiary of the Company for Europe, India, the Middle East and Africa.

In addition, the Company’s index rate under the Credit Agreement for U.S.

Dollar borrowings changed from the Bloomberg Short-term Bank Yield Index rate to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York.

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

Issuance Maturities February 29,

Issuance Maturities May 31,

2024 August 31,

14 unchanged sentences

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.

As of May 31, 2024, $ 19.5 million of this facility was classified as long-term and was entirely denominated in Euros.

$ 21.5 million was classified as short-term and was denominated in U.S.

Dollars and Pounds Sterling.

As of August 31, 2023, $ 42.9 million on this facility was classified as long-term and was denominated in Euros and Pounds Sterling.

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

As of May 31, 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 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.

During the nine months ended May 31, 2024, the Company repurchased 34,250 shares at an average price of $ 236.32 per share, for a total cost of $ 8.1 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 February 29/28, Six Months Ended February 29/28,

Three Months Ended May 31, Nine Months Ended May 31,

2024 2023 2024 2023

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

Three Months Ended May 31, Nine Months Ended May 31,

2024 2023 2024 2023

2 unchanged sentences

Weighted-average common shares outstanding, diluted 13,577 13,600 13,581 13,606

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 .

For the three months ended May 31, 2024, there were no anti-dilutive stock-based equity awards outstanding.

For the nine months ended May 31, 2024, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 1,801 were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

For the three months ended May 31, 2023, there were no anti-dilutive stock-based equity awards outstanding.

For the nine months ended May 31, 2023, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 6,068 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 February 29, 2024 Six Months Ended February 29, 2024

Three Months Ended May 31, 2024 Nine Months Ended May 31, 2024

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

6 unchanged sentences

Total net sales $ 75,103 $ 59,399 $ 20,543 $ 155,045 $ 202,685 $ 162,466 $ 69,415 $ 434,566

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

Three Months Ended May 31, 2023 Nine Months Ended May 31, 2023

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

12 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 $ 3.3 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.

The Company had contract liabilities of $ 2.2 million and $ 4.6 million as of May 31, 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 nine months ended May 31, 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 February 29, 2024 and August 31, 2023.

The Company did not have any contract assets as of May 31, 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 of $ 0.6 million as of February 29, 2024 and which was not significant as of August 31, 2023.

These receivables are presented net of an allowance for credit losses of $ 1.3 million as of May 31, 2024 and which was not significant as of August 31, 2023.

Commitments and Contingencies

9 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 February 29, 2024, no such commitments were outstanding.

As of May 31, 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 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 of May 31, 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 February 29, 2024.

Thus, no liabilities have been recorded for these agreements as of May 31, 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.

1 unchanged sentence

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 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.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of May 31, 2024.

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

The provision for income taxes was 23.2 % and 22.5 % of income before income taxes for the three months ended May 31, 2024 and 2023, respectively.

This 0.7 % increase in the effective tax rate from period to period was primarily due to the following impacts:

2 unchanged sentences

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.

An increase in benefit from the high tax exception associated with global intangible low-taxed income ( 1.1 )%

The provision for income taxes was 23.1 % and 21.5 % of income before income taxes for the nine months ended May 31, 2024 and 2023, respectively.

This 1.6 % 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

Description of impacts on the Company’s estimated annual effective tax rate Unfavorable/(Favorable)

Higher tax rates in certain foreign jurisdictions from period to period

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

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

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

An increase in benefit from the high tax exception associated with global intangible low-taxed income ( 0.7 )%

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

18 unchanged sentences

Corporate (1)

February 29, 2024

Net sales $ 75,103 $ 59,399 $ 20,543 $ - $ 155,045

4 unchanged sentences

Interest expense $ 807 $ 373 $ 2 $ - $ 1,182

February 28, 2023

Net sales $ 71,130 $ 52,524 $ 18,063 $ - $ 141,717

4 unchanged sentences

Interest expense $ 1,079 $ 516 $ 2 $ - $ 1,597

For the Six Months Ended

February 29, 2024

For the Nine Months Ended

Net sales $ 202,685 $ 162,466 $ 69,415 $ - $ 434,566

4 unchanged sentences

Interest expense $ 1,872 $ 1,459 $ 5 $ - $ 3,336

February 28, 2023

Net sales $ 192,034 $ 140,105 $ 64,664 $ - $ 396,803

7 unchanged sentences

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 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.

Subsequent Event

Dividend Declaration

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.

On June 18, 2024, the Company’s Board declared a cash dividend of $ 0.88 per share payable on July 31, 2024 to stockholders of record at the close of business on July 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