WD 40 CO 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations As used in this report, the terms “we,” “our,” and “us” and “the Company” refer to WD-40 Company and its wholly-owned subsidiaries, unless the context suggests otherwise. Amounts and percentages in tables and discussions may not total due to rounding. The following information is provided as a supplement to, and should be read in conjunction with, the unaudited condensed consolidated financial statements and notes thereto included in Part I—Item 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, which was filed with the Securities and Exchange Commission (“SEC”) on October 27, 2025. Use of Non-GAAP Constant Currency In order to show the impact of changes in foreign currency exchange rates on our results of operations, we have included constant currency disclosures, where necessary, in the Overview and Results of Operations sections which follow. Constant currency disclosures represent the translation of our current fiscal year revenues, expenses and net income from the functional currencies of our subsidiaries to U.S. Dollars using the exchange rates in effect for the corresponding period of the prior fiscal year. Results on a constant currency basis are not in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”) and should be considered in addition to, not as a substitute for, results prepared in accordance with U.S. GAAP. We use results on a constant currency basis as one of the measures to understand our operating results and evaluate our performance in comparison to prior periods in order to enhance the visibility of the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Management believes this non-GAAP financial measure provides investors with additional financial information that should be considered when assessing our underlying business performance and trends. However, reference to constant currency basis should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP. Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. This report contains forward-looking statements, which reflect our current views with respect to future events and financial performance. These forward-looking statements are generally identified with words such as “believe,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “aim,” “anticipate,” “target,” “estimate” and similar expressions. These forward-looking statements include, but are not limited to, discussions about future financial and operating results, including: expected benefits from any divestiture transaction; disruption to the parties’ business as a result of the announcement or completion of any divestiture transaction; the Company's ability to successfully complete any planned divestiture; expected timing for the closing of any divestitures; expected proceeds from any divestiture; the intended use of proceeds by the Company from any divestiture transaction; impact of any divestiture transaction on the Company's stock price or EPS; growth expectations for maintenance products; expected levels of promotional and advertising spending; anticipated input costs for manufacturing and the costs associated with distribution of our products; plans for and success of product innovation, the impact of new product introductions on the growth of sales; anticipated results from product line extension sales; expected tax rates and the impact of tax legislation and regulatory action; changes in the political conditions or relations between the United States and other nations; changes in trade policies and tariffs and the impact therefrom; the impacts from inflationary trends; the impacts from supply chain constraints and supply chain disruptions; changes in interest rates; and forecasted foreign currency exchange rates and commodity prices. We undertake no obligation to revise or update any forward-looking statements. These forward-looking statements are generally identified with words such as “believe,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “aim,” “anticipate,” “target,” “estimate” and similar expressions. We undertake no obligation to revise or update any forward-looking statements. Actual events or results may differ materially from those projected in forward-looking statements due to various factors, including, but not limited to, those identified in Part I—Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, and in Part II—Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q. 19 Table of Contents Overview The Company WD-40 Company based in San Diego, California, is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world. We own a wide range of well-known brands that include maintenance products and homecare and cleaning products: WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, Lava® and Solvol®. Our 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, India, the Middle East and Africa. Homecare and cleaning products are sold primarily in North America and Australia. We sell our products primarily through hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, warehouse club stores, farm supply stores, sport retailers, and independent bike dealers. During the prior fiscal year 2025, certain assets of our homecare and cleaning product businesses in the Americas segment were reclassified to held for sale and they continue to be classified as held for sale as of November 30, 2025. The Company sold its homecare and cleaning product brands in the EIMEA segment during the fourth quarter of fiscal year 2025. These brands are included in fiscal year 2025 financial results but will not be included in fiscal year 2026 financial results. Highlights The following summarizes the financial and operational highlights for our business during the three months ended November 30, 2025: • Consolidated net sales increased $0.9 million or 1%, to $154.4 million compared to the corresponding period of the prior fiscal year. Decreases in sales volume unfavorably impacted net sales by approximately $4.2 million from period to period, of which $1.6 million was related to the sale of our homecare and cleaning business at the end of fiscal year 2025. Increases in the average selling price of our products positively impacted net sales by approximately $1.7 million from period to period. Changes to net sales attributable to volumes and average selling price of our products are impacted by differences in sales mix related to products, markets and distribution channels from period to period. In addition, changes in foreign currency exchange rates from period to period had a favorable impact of $3.4 million on consolidated net sales for the first three months of fiscal year 2026. On a constant currency basis, net sales would have decreased by $2.4 million, or 2%, from period to period. This favorable impact from changes in foreign currency exchange rates mainly came from our EIMEA segment, which accounted for 38% of our consolidated sales for the three months ended November 30, 2025. • Gross profit as a percentage of net sales increased to 56.2% from 54.8% in the corresponding period of the prior fiscal year. • Consolidated net income decreased $1.5 million, or 8%, compared to the corresponding period of the prior fiscal year. • Diluted earnings per common share were $1.28 versus $1.39 in the prior fiscal year period. • During the three months ended November 30, 2025, we returned approximately $20.6 million to our stockholders through share repurchases and dividends. 20 Table of Contents Results of Operations Three Months Ended November 30, 2025 Compared to Three Months Ended November 30, 2024 Operating Items The following table summarizes operating data for our consolidated operations (in thousands, except percentages and per share amounts): Three Months Ended November 30, 2025 2024 Change from Prior Year Dollars Percent Net sales: WD-40 Multi-Use Product $ 117,798 $ 118,547 $ (749) (1) % WD-40 Specialist 22,538 19,172 3,366 18 % Other maintenance products 8,560 7,788 772 10 % Total maintenance products 148,896 145,507 3,389 2 % HCCP (1) 5,527 7,988 (2,461) (31) % Total net sales 154,423 153,495 928 1 % Cost of products sold 67,591 69,408 (1,817) (3) % Gross profit 86,832 84,087 2,745 3 % Operating expenses 63,574 58,965 4,609 8 % Income from operations $ 23,258 $ 25,122 $ (1,864) (7) % Net income $ 17,451 $ 18,925 $ (1,474) (8) % EPS – diluted $ 1.28 $ 1.39 $ (0.11) (8) % Shares used in diluted EPS 13,549 13,573 (24) — % (1) Homecare and cleaning products (“HCCP”). Approximately $1.6 million of the decrease in net sales of HCCP was driven by the sale of our HCCP business in EIMEA which occurred at the end of fiscal year 2025. Net Sales by Segment The following table summarizes net sales by segment (in thousands, except percentages): Three Months Ended November 30, 2025 2024 Change from Prior Year Dollars Percent Americas $ 71,873 $ 69,436 $ 2,437 4 % EIMEA (1) 58,675 57,483 1,192 2 % Asia-Pacific 23,875 26,576 (2,701) (10) % Total $ 154,423 $ 153,495 $ 928 1 % (1) EIMEA’s change to prior year was impacted by the sale of our HCCP business in EIMEA in late fiscal year 2025. Net Sales would have increased $2.8 million and 5% excluding the impact of HCCP product sales from the prior fiscal year of $1.6 million. 21 Table of Contents Americas Sales The following table summarizes net sales by product line for the Americas segment, which includes the U.S., Canada and Latin America (in thousands, except percentages): Three Months Ended November 30, 2025 2024 Change from Prior Year Dollars Percent WD-40 Multi-Use Product $ 54,584 $ 52,901 $ 1,683 3 % WD-40 Specialist 9,417 8,233 1,184 14 % Other maintenance products 4,575 4,274 301 7 % Total maintenance products 68,576 65,408 3,168 5 % HCCP 3,297 4,028 (731) (18) % Total net sales $ 71,873 $ 69,436 $ 2,437 4 % % of consolidated net sales 47 % 45 % CC Net sales – non-GAAP (1) $ 71,428 $ 69,436 $ 1,992 3 % Currency impact on current period – non-GAAP $ 445 (1) Current fiscal year constant currency net sales translated at the foreign currency exchange rates in effect for the corresponding period of the prior fiscal year, compared to prior period actual net sales. The following table summarizes management’s estimates of effects on net sales of changes in price, volume and foreign currency exchange rate impacts for the Americas segment (in millions): Change from Prior Year First Quarter Increase in average selling price (1) $ 0.6 Increase in sales volume (1) 1.4 Currency impact on current period 0.4 Increase in net sales $ 2.4 (1) Management’s estimates of changes in net sales attributable to volumes and the average selling price of our products are impacted by differences in sales mix related to products, markets and distribution channels from period to period. Americas Sales – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Net sales in the Americas segment increased from period to period, highlighted by the following: • WD-40 Multi-Use Product sales increased $1.7 million , or 3% , primarily due to increases in Latin America and U.S. by $1.4 million and $0.3 million, respectively. Latin America sales increased primarily due to a $1.2 million increase in Mexico, which was due to increased sales volume as a result of expanded distribution and successful promotional activities, as well as timing of customer orders. Mexico sales also benefited from favorable period to period changes in foreign currency exchange rates. The increase of Multi-Use Product sales in the U.S. was primarily due to a marginal price increase implemented in the first quarter of fiscal year 2026, partially offset by lower volumes due to the timing of customer orders. • WD-40 Specialist sales increased $1.2 million , or 14% , primarily due to increased online retail sales, new distribution and increased demand in the U.S. • Other maintenance product sales remained relatively constant period over period. • Homecare and cleaning product sales decreased $0.7 million, or 18%, primarily due to distribution changes and lower U.S. demand caused by reduced advertising and promotional activities, as we focus on increasing sales of maintenance products under our four-by-four strategic framework. 22 Table of Contents • For the three months ended November 30, 2025, 72% of sales came from the U.S., and 28% of sales came from Canada and Latin America combined compared to the three months ended November 30, 2024 when 73% of sales came from the U.S., and 27% of sales came from Canada and Latin America. EIMEA Sales The following table summarizes net sales by product line for the EIMEA segment, which includes Europe, India, the Middle East and Africa (in thousands, except percentages): Three Months Ended November 30, 2025 2024 Change from Prior Year Dollars Percent WD-40 Multi-Use Product $ 44,949 $ 44,866 $ 83 — % WD-40 Specialist 9,933 7,817 2,116 27 % Other maintenance products 3,793 3,194 599 19 % Total maintenance products 58,675 55,877 2,798 5 % HCCP (1) — 1,606 (1,606) (100) % Total net sales $ 58,675 $ 57,483 $ 1,192 2 % % of consolidated net sales 38 % 38 % CC Net sales – non-GAAP (2) $ 55,518 $ 57,483 $ (1,965) (3) % Currency impact on current period – non-GAAP (2) $ 3,157 (1) During the fourth quarter of fiscal year 2025, we completed the sale of the homecare and cleaning product businesses in the EIMEA segment. (2) Current fiscal year constant currency net sales translated at the foreign currency exchange rates in effect for the corresponding period of the prior fiscal year, compared to prior period actual net sales. The following table summarizes management’s estimates of effects on net sales of changes in price, volume and foreign currency exchange rate impacts for the EIMEA segment (in millions): Change from Prior Year First Quarter Decrease in average selling price (1) $ (0.2) Decrease in sales volume due to sale of HCCP (2) (1.6) Decrease in sales volume (1) (0.2) Currency impact on current period 3.2 Increase in net sales $ 1.2 (1) Management’s estimates of changes in net sales attributable to volumes and the average selling price of our products are impacted by differences in sales mix related to products, markets and distribution channels from period to period. (2) The Company sold its homecare and cleaning product brands in the EIMEA segment during the fourth quarter of fiscal year 2025. These brands are included in fiscal year 2025 financial results but will not be included in fiscal year 2026 financial results. The countries and regions in Europe where we sell through a direct sales force include the U.K., Italy, France, Iberia (which includes Spain and Portugal), DACH (which includes Germany, Austria and Switzerland) and Benelux (which includes Belgium, the Netherlands and Luxembourg). The regions in the EIMEA segment where we sell through local distributors include the Middle East, Africa, India, Eastern and Northern Europe. EIMEA Sales – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Net sales increased in the EIMEA segment from period to period, highlighted by the following: • WD-40 Multi-Use Product sales remained relatively constant period over period. Net sales were positively impacted by favorable changes in foreign currency exchange rates. Therefore, on a constant currency basis, sales would have decreased by approximately 5% period over period. Sales decreased $2.1 million in our distributor markets, most significantly in Saudi Arabia and the UAE region which decreased $1.2 million and $0.9 million, respectively, due to a decrease in sales volumes from timing of customer orders. This decrease in overall 23 Table of Contents distributor markets was partially offset by stronger sales in India which increased $1.4 million due to increased distribution. Sales to our direct markets continued their strong growth carried over from the prior fiscal year, particularly those in Iberia, the DACH region and France, which increased $0.9 million, $0.6 million and $0.5 million, respectively. • WD-40 Specialist product sales increased $2.1 million, or 27%, primarily due to increases in sales in France and Iberia of $0.8 million and $0.4 million, respectively. Sales growth in France and Iberia benefited from strong sales volume growth due to increased promotional activities as well as new product launches in the first quarter of fiscal year 2026. • Net sales were favorably impacted by $3.2 million across our various brands as a result of favorable changes in foreign currency exchange rates. On a constant currency basis, sales in EIMEA would have decreased 3%. Asia-Pacific Sales The following table summarizes net sales by product line for the Asia-Pacific segment, which includes Australia, China and other countries in the Asia region (in thousands, except percentages): Three Months Ended November 30, Change from Prior Year 2025 2024 Dollars Percent WD-40 Multi-Use Product $ 18,264 $ 20,780 $ (2,516) (12) % WD-40 Specialist 3,188 3,122 66 2 % Other maintenance products 193 320 (127) (40) % Total maintenance products 21,645 24,222 (2,577) (11) % HCCP 2,230 2,354 (124) (5) % Total net sales $ 23,875 $ 26,576 $ (2,701) (10) % % of consolidated net sales 15 % 17 % CC Net sales – non-GAAP (1) $ 24,113 $ 26,576 $ (2,463) (9) % Currency impact on current period – non-GAAP $ (238) (1) Current fiscal year constant currency net sales translated at the foreign currency exchange rates in effect for the corresponding period of the prior fiscal year, compared to prior period actual net sales. The following table summarizes management’s estimates of effects on net sales of changes in price, volume and foreign currency exchange rate impacts for the Asia-Pacific segment (in millions): Change from Prior Year First Quarter Increase in average selling price (1) $ 1.3 Decrease in sales volume (1) (3.8) Currency impact on current period (0.2) Decrease in net sales $ (2.7) (1) Management’s estimates of changes in net sales attributable to volumes and the average selling price of our products are impacted by differences in sales mix related to products, markets and distribution channels from period to period. Asia-Pacific Sales – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Net sales in the Asia-Pacific segment decreased from period to period, highlighted by the following: • WD-40 Multi-Use Product sales decreased $2.5 million, or 12%, primarily due to a decrease in Asia distributor markets of $3.3 million partially offset by an increase in China of $0.8 million. Asia distributor markets decreased as a result of lower volumes, primarily due to timing of customer orders from quarter to quarter as distributors that heavily participated in our promotional activities in the fourth quarter of fiscal year 2025 have been adjusting to more normal levels of inventory for our products in the first quarter of fiscal year 2026. These decreases were 24 Table of Contents partially offset by increases in China due to increased sales volume from successful promotional programs and marketing activities as well as new distribution within the first quarter of fiscal year 2026. Gross Profit The following general information is important when assessing fluctuations in our gross margin: • There is often a delay before changes in costs of raw materials, such as specialty chemicals used in the formulation of our products, impact cost of products sold due to production and inventory life cycles. Such delays increase with higher production and inventory levels. • In general, the timing of advertising, promotional and other discounts may cause fluctuations in gross margin from period to period. Advertising, promotional and other discounts that are given to our customers are recorded as a reduction to sales, whereas advertising and sales promotional costs associated with promotional activities that we pay to third parties are recorded as advertising and sales promotion expenses. • In the EIMEA segment, the cost of our products sold are generated in the Pound Sterling and Euro. The strengthening or weakening of the Pound Sterling and Euro against U.S. Dollar may result in foreign currency related changes to the gross margin percentage in the EIMEA segment from period to period. • Our gross profit and gross margin may not be comparable to those of other consumer product companies, since some of these companies include all costs related to distribution of their products in cost of products sold, whereas we exclude the portion associated with amounts paid to third parties for shipment to our customers from our distribution centers and contract manufacturers and include these costs in selling, general and administrative expenses. These costs totaled $4.7 million and $4.6 million for the three months ended November 30, 2025 and 2024. The following table summarizes gross margin and gross profit (in thousands, except percentages): Three Months Ended November 30, 2025 2024 Change from Prior Year Gross profit $ 86,832 $ 84,087 $ 2,745 Gross margin 56.2 % 54.8 % 140 bps (1) (1) Basis points (“bps”) change in gross margin. Gross Margin – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Gross margin increased 140 bps primarily due to the following favorable impacts: Favorable Explanations 110 bps Lower costs of specialty chemicals used in the formulation of our products and costs of aerosol cans. 60 bps Increases in average selling prices. (50 bps) Higher filling fees paid to our third-party contract manufacturers, primarily in the EIMEA segment. During the prior fiscal year 2025, certain assets of our homecare and cleaning product businesses in the Americas segment were reclassified to held for sale and they continue to be classified as held for sale as of November 30, 2025. Gross margin excluding these products would have been 0.5% higher during the three months ended November 30, 2025. 25 Table of Contents Selling, General and Administrative (“SG&A”) Expenses Three Months Ended November 30, 2025 2024 Change from Prior Year (in thousands) Dollars Percent SG&A expenses $ 55,336 $ 50,525 $ 4,811 10 % % of net sales 35.8 % 32.9 % SG&A Expenses – Three Months Ended – November 30, 2025 Compared to November 30, 2024 The increase in SG&A expenses was primarily due to increases in employee-related costs of $2.8 million due to annual compensation increases and higher headcount. These higher employee-related costs are to support various sales growth initiatives identified within our strategic framework and the enhancement of our information systems. SG&A also increased by $1.0 million due to higher travel and meeting expense across all three segments primarily in support of growth related initiatives. In addition, changes in foreign currency exchange rates increased SG&A expenses by $1.0 million, primarily in our EIMEA segment. We continued our research and development investment, the majority of which is associated with our maintenance products, including efforts focused on sustainability as well as our focus on innovation and renovation of our products. Research and development costs were $1.9 million for both the three months ended November 30, 2025 and 2024. Our research and development team engages in consumer research, environmental and sustainability initiatives, product development, product improvements and testing activities. This team leverages its development capabilities by collaborating with a network of outside resources including our current and prospective third-party contract manufacturers. The level and types of expenses incurred within research and development can vary from period to period depending upon the types of activities being performed. Advertising and Sales Promotion (“A&P”) Expenses Three Months Ended November 30, Change from Prior Year (in thousands) 2025 2024 Dollars Percent A&P expenses $ 8,189 $ 8,393 $ (204) (2) % % of net sales 5.3 % 5.5 % A&P Expenses – Three Months Ended – November 30, 2025 Compared to November 30, 2024 The decrease in A&P expenses was primarily due to a slightly lower level of promotional programs and marketing support, particularly in the Americas segment. Total promotional costs recorded as a reduction to sales were $9.0 million and $8.8 million for the three months ended November 30, 2025 and 2024, respectively. Therefore, our total expenditures on A&P activities were $17.2 million for both the three months ended November 30, 2025 and 2024. 26 Table of Contents Income from Operations by Segment The following table summarizes income from operations by segment (in thousands, except percentages): Three Months Ended November 30, 2025 2024 Change from Prior Year Dollars Percent Americas $ 15,039 $ 12,652 $ 2,387 19 % EIMEA 12,474 13,681 (1,207) (9) % Asia-Pacific 7,972 10,180 (2,208) (22) % Unallocated corporate (1) (12,227) (11,391) (836) (7) % Total $ 23,258 $ 25,122 $ (1,864) (7) % (1) Unallocated corporate expenses are general corporate overhead expenses not directly attributable to any one of the business segments. These expenses are reported separate from our identified segments and are included in selling, general and administrative expenses on our condensed consolidated statements of operations. Americas Americas Operating Income – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Income from operations for the Americas increased to $15.0 million, up $2.4 million, or 19%, primarily due to an increase in sales of $2.4 million and a higher gross margin partially offset by higher operating expenses. Gross margin for the Americas segment increased from 50.4% to 53.3%, primarily due to the favorable impact of increases in average selling prices and decreases in the costs of petroleum-based specialty chemicals and aerosol cans. Operating expenses increased $0.9 million primarily due to higher employee-related costs as a result of increased headcount and annual compensation increases, partially offset by a decrease in A&P expense. In addition, operating expenses increased due to a higher level of travel and meeting expenses. Operating income as a percentage of net sales increased from 18.2% to 20.9% period over period. EIMEA EIMEA Operating Income – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Income from operations for the EIMEA segment decreased to $12.5 million, down $1.2 million, or 9%, primarily due to higher operating expenses, partially offset by a $1.2 million increase in sales and a higher gross margin. Gross margin for the EIMEA segment increased from 57.8% to 58.7% primarily due to the favorable impact of foreign exchange rates pertaining to input costs from period to period as well as decreases in the costs of petroleum-based specialty chemicals, partially offset by higher third party manufacturing fees. Operating expenses increased $2.4 million primarily due to higher employee-related costs as a result of increased headcount and annual compensation increases as well as a higher level of A&P expenses from period to period. Operating income as a percentage of net sales decreased from 23.8% to 21.3% period over period. Asia-Pacific Asia-Pacific Operating Income – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Income from operations for the Asia-Pacific segment decreased to $8.0 million, down $2.2 million, or 22%, due to higher operating expenses, lower sales and lower gross margin. Gross margin for the Asia-Pacific segment decreased from 59.6% to 58.9% primarily due to the unfavorable impacts from higher discounts as well as changes in product and sales mix. Operating expenses increased $0.5 million primarily due to higher travel and meeting expenses. Operating income as a percentage of net sales decreased from 38.3% to 33.4% period over period. 27 Table of Contents Unallocated Corporate Unallocated Corporate Expenses – Three Months Ended – November 30, 2025 Compared to November 30, 2024 Unallocated corporate expenses increased to $12.2 million, up $0.8 million, or 7%, primarily due to higher employee-related costs as a result of increased headcount and annual compensation increases, as well as higher accrued incentive compensation costs. Non-Operating Items The following table summarizes non-operating income and expenses for our consolidated operations (in thousands): Three Months Ended November 30, 2025 2024 Change Interest income $ 179 $ 148 $ 31 Interest expense $ 648 $ 873 $ (225) Other expense, net $ (197) $ (141) $ (56) Provision for income taxes $ 5,141 $ 5,331 $ (190) Provision for Income Taxes The provision for income taxes was 22.8% and 22.0% of income before income taxes for the three months ended November 30, 2025 and 2024, respectively. Descriptions of impacts on our effective income tax rate are incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” Note 13 — Income Taxes included in this report. Net Income Net income decreased 8% to $17.5 million, or $1.28 per common share on a fully diluted basis, for the three months ended November 30, 2025 compared to $18.9 million, or $1.39 per common share on a fully diluted basis, for the corresponding period of the prior fiscal year. Changes in foreign currency exchange rates from period to period had a favorable impact of $0.5 million on consolidated net income for three months ended November 30, 2025. Thus, on a constant currency basis, net income would have decreased $2.0 million, or 11%, from period to period. Performance Measures and Non-GAAP Reconciliations In managing our business operations and assessing our financial performance, we supplement the information provided by our financial statements with certain non-GAAP performance measures. These performance measures are part of our current 55/30/25 business model, which includes gross margin, cost of doing business, and Adjusted EBITDA (defined below), the latter two of which are non-GAAP performance measures. Cost of doing business is defined as total operating expenses less amortization of definite-lived intangible assets, impairment charges related to intangible assets, amortization of implementation costs associated with cloud computing arrangements (“cloud computing amortization”) and depreciation in operating departments. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization of definite-lived intangible assets, and cloud computing amortization. We target our gross margin to be between 50% and 55% of net sales, our cost of doing business to be between 30% to 35% of net sales, and our Adjusted EBITDA to be between 20% and 25% of net sales. Results for these performance measures may vary from period to period depending on various factors, including economic conditions such as the inflationary environment we have experienced in the last several fiscal years, and our level of investment in activities for the future such as those related to quality assurance, regulatory compliance, information technology, sustainability, and intellectual property protection in order to safeguard our WD-40 brand. Our targeted ranges for gross margin, cost of doing business and Adjusted EBITDA are long-term in nature. We expect to make progress towards our cost of doing business and Adjusted EBITDA targets over time. Progression towards our cost of doing business and Adjusted EBITDA targets may be challenged as we continue to divest certain of our homecare and cleaning product businesses, due to the low level of operating expenses associated with these businesses. Despite these potential challenges, we intend to focus our resources and proceeds from the sale of those brands on growing our higher growth and higher gross margin core business. 28 Table of Contents The following table summarizes the results of these performance measures: Three Months Ended November 30, 2025 2024 Gross margin – GAAP 56 % 55 % Cost of doing business as a percentage of net sales – non-GAAP 40 % 37 % Adjusted EBITDA as a percentage of net sales – non-GAAP (1) 17 % 18 % (1) Percentages may not aggregate to Adjusted EBITDA percentage due to rounding and because amounts recorded in other income (expense), net on our condensed consolidated statements of operations are not included as an adjustment to earnings in the Adjusted EBITDA calculation. We use the performance measures above to establish financial goals and to gain an understanding of our comparative performance from period to period. We believe that these measures provide our stockholders with additional insights into how we run our business. We believe these measures also provide investors with additional financial information that should be considered when assessing our underlying business performance and trends. These non-GAAP financial measures are supplemental in nature and should not be considered in isolation or as alternatives to net income, income from operations or other financial information prepared in accordance with GAAP as indicators of our performance or operations. The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies. Reconciliations of these non-GAAP financial measures to our financial statements as prepared in accordance with GAAP are as follows: Cost of Doing Business (in thousands, except percentages) Three Months Ended November 30, 2025 2024 Total operating expenses – GAAP $ 63,574 $ 58,965 Amortization (1) (in operating departments) (462) (464) Depreciation (in operating departments) (962) (957) Cost of doing business $ 62,150 $ 57,544 Net sales $ 154,423 $ 153,495 Cost of doing business as a percentage of net sales – non-GAAP 40 % 37 % (1) Includes amortization of definite-lived intangible assets and cloud computing amortization. Adjusted EBITDA (in thousands, except percentages) Three Months Ended November 30, 2025 2024 Net income – GAAP $ 17,451 $ 18,925 Provision for income taxes 5,141 5,331 Interest income (179) (148) Interest expense 648 873 Amortization (1)(2) 558 464 Depreciation (2) 1,958 2,028 Adjusted EBITDA $ 25,577 $ 27,473 Net sales $ 154,423 $ 153,495 Adjusted EBITDA as a percentage of net sales – non-GAAP 17 % 18 % (1) Includes amortization of definite-lived intangible assets and cloud computing amortization. (2) Includes amortization and depreciation presented in both cost of products sold and operating departments. 29 Liquidity and Capital Resources Overview Our financial condition and liquidity remain strong. Although there continues to be uncertainty related to adverse global economic conditions, volatility in financial markets, the current inflationary environment and their impacts on our future results, we believe our efficient business model positions us to manage our business through such situations. We continue to manage all aspects of our business including, but not limited to, monitoring our liquidity, the financial health of our customers, suppliers and other third-party relationships, implementing gross margin enhancement strategies and developing new opportunities for growth. Our principal sources of liquidity are cash generated from operations and cash currently available from our existing unsecured revolving credit facility under the Credit Agreement with Bank of America, N.A. We use the revolving credit facility primarily for our general working capital needs. We also hold borrowings under the Note Agreement. See Note 8 — Debt, incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” for additional information on these agreements. We have historically held a balance of outstanding draws on our line of credit in either U.S. Dollars in the Americas segment, or in Euros and Pounds Sterling in the EIMEA segment. Euro and Pound Sterling denominated draws fluctuate in U.S. Dollars from period to period due to changes in foreign currency exchange rates. We regularly convert many of our draws on our line of credit to new draws with new maturity dates and interest rates. We have the ability to refinance any draws under the line of credit with successive short-term borrowings through the April 30, 2029 maturity date of the Credit Agreement. Outstanding draws for which we have both 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, 2025, $20.9 million of this facility was classified as long-term and was entirely denominated in Euros. $4.5 million was classified as short-term and was entirely denominated in U.S. Dollars. In the United States, we held $65.6 million in fixed rate long-term borrowings as of November 30, 2025, consisting of senior notes under our Note Agreement. We paid $0.4 million in principal payments on our Series A Notes during the first three months of fiscal year 2026. There were no other letters of credit outstanding or restrictions on the amount available on our line of credit or notes. Per the terms of both the Note Agreement and the Credit Agreement, our consolidated leverage ratio cannot be greater than three and a half to one and our consolidated interest coverage ratio cannot be less than three to one. See Note 8 — Debt incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” for additional information on these agreements for additional information on these financial covenants. At November 30, 2025, we were in compliance with all material debt covenants. We continue to monitor our compliance with all debt covenants and, at the present time, we believe that the likelihood of being unable to satisfy all material covenants is remote. At November 30, 2025, we had a total of $48.6 million in cash and cash equivalents. We do not foresee any ongoing issues with repaying our borrowings and we closely monitor the use of this credit facility. We believe that our future cash from domestic and international operations, together with our access to funds available under our unsecured revolving credit facility, will provide adequate resources to fund short-term and long-term operating requirements, capital expenditures, dividend payments, acquisitions, new business development activities and share repurchases. On June 16, 2025, the Board approved the extension of the expiration date to August 31, 2026 for the 2023 Repurchase Plan, which became effective on September 1, 2023 and was set to expire August 31, 2025. We are authorized to acquire up to $50.0 million of our outstanding shares through this expiration date of August 31, 2026, of which $21.8 million remains available for the repurchase of shares of common stock as of November 30, 2025. 30 Cash Flows The following table summarizes our cash flows by category for the periods presented (in thousands): Three Months Ended November 30, 2025 2024 Change Net cash provided by operating activities $ 9,985 $ 14,930 $ (4,945) Net cash used in investing activities (739) (567) (172) Net cash used in financing activities (18,692) (4,097) (14,595) Effect of exchange rate changes on cash and cash equivalents (101) (2,051) 1,950 Net (decrease) increase in cash and cash equivalents $ (9,547) $ 8,215 $ (17,762) Operating Activities Net cash provided by operating activities decreased $4.9 million to $10.0 million for the three months ended November 30, 2025. Cash flows from operating activities depend heavily on operating performance and changes in working capital. Our primary source of operating cash flows for the three months ended November 30, 2025 was net income of $17.5 million, which decreased approximately $1.5 million from period to period. Changes in our working capital, which decreased net cash provided by operating activities, were primarily attributable to unfavorable changes in accounts payable and accrued liabilities, partially offset by favorable changes in trade and other accounts receivable balances, as well as favorable changes in long-term liabilities and income taxes payable. Changes in working capital balances depend heavily on the impact of timing of payments made to vendors and tax authorities as well as collections from customers. Investing Activities Net cash used in investing activities remained relatively constant from period to period. Financing Activities Net cash used in financing activities increased $14.6 million to $18.7 million for the three months ended November 30, 2025 primarily due to net proceeds of $4.5 million on our revolving credit facility during the first three months of the fiscal year, compared to net proceeds of $14.8 million in the corresponding period of the prior fiscal year. Increases of treasury stock repurchases of $4.2 million also increased net cash used in financing activities for the first quarter of fiscal year 2026. Effect of Exchange Rate Changes All of our foreign subsidiaries currently operate in currencies other than the U.S. Dollar and a significant portion of our consolidated cash balance is denominated in these foreign functional currencies, particularly at our U.K. subsidiary. As a result, our cash and cash equivalents balances are subject to the effects of the fluctuations in these functional currencies against the U.S. Dollar at the end of each reporting period. The net effect of exchange rate changes on cash and cash equivalents, when expressed in U.S. Dollar terms, was a decrease in cash of $0.1 million for the three months ended November 30, 2025 as compared to a decrease in cash of $2.1 million for the three months ended November 30, 2024. These changes were primarily due to fluctuations in various foreign currency exchange rates from period to period, but the majority is related to the fluctuations in the Euro against the U.S. Dollar. Purchase Commitments See Note 12. Commitments and Contingencies, incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” for additional information on purchase commitments. Share Repurchase Plans The information required by this item is incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” Note 9 — Share Repurchase Plan included in this report. 31 Dividends On December 10, 2025, the Company’s Board declared a cash dividend of $1.02 per share payable on January 30, 2026 to stockholders of record at the close of business on January 16, 2026. Critical Accounting Estimates Our discussion and analysis of our operating results and financial condition is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Critical accounting estimates are those that involve subjective or complex judgments. The following areas all require the use of judgments and estimates: revenue recognition and accounting for income taxes. Estimates in each of these areas are based on historical experience and various judgments and assumptions that we believe are appropriate. Actual results may materially differ from these estimates. There have been no material changes in our critical accounting estimates from those disclosed in Part II—Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, which was filed with the SEC on October 27, 2025. Recently Issued Accounting Standards Information on Recently Issued Accounting Standards that could potentially impact our consolidated financial statements and related disclosures is incorporated by reference to Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, included in this report. Item 3. Quantitative and Qualitative Disclosures About Market Risk The information required by this item is incorporated by reference to Part II—Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, which was filed with the SEC on October 27, 2025.