WD-40 shares rose early Monday as the maker of lubricants and cleaning products reported higher fiscal first-quarter results on an annual basis and reiterated its full-year outlook. The company's net income came in at $1.39 per share for the quarter ended Nov. 30, an increase from $1.28 the previous year.
This indicates a positive trajectory for the company's profitability. Sales also saw growth, climbing 9% year over year to reach $153.5 million, further validating the effectiveness of WD-40's business strategies. In premarket activity, the stock increased by 3.3%. Chief Executive Steve Brass commented on the company's performance, stating, "In the first quarter, we executed well against our strategic priorities, with strong growth across multiple regions including the US, Latin America, and Europe, India, the Middle East and Africa." His remarks emphasize WD-40's robust business model and strategic execution which have been instrumental in driving growth in various global markets.
By product group, the WD-40 multi-use product showed impressive growth, with sales advancing by 10% year over year to $118.5 million. The WD-40 specialist line experienced an even more significant increase, climbing 14% to $19.2 million, while other maintenance products rose 2% to $7.8 million. However, revenue for homecare and cleaning products faced a decline of 3% to nearly $8 million, primarily due to lower sales in the US and the UK.
This mixed performance reflects the varying dynamics of different product segments. Gross margin increased by 100 basis points annually to 54.8% for the quarter, a favorable outcome attributed to a beneficial sales mix and various supply chain initiatives implemented globally. However, total operating expenses increased to nearly $59 million compared to $51.4 million in the previous year's quarter, indicating rising operational costs.
Notably, the company announced a reclassification of its homecare and cleaning business portfolios in the Americas and EIMEA segments to held for sale, following plans disclosed in April last year to divest its US and UK homecare and cleaning products portfolio. CFO Sara Hyzer highlighted the lack of certainty in identifying a buyer but expressed optimism about completing the divestiture within the coming months.
For fiscal 2025, WD-40's projections remain optimistic, with sales anticipated to fall between $600 million and $630 million, adjusted for foreign currency headwinds. Analysts polled by FactSet expect the figure to be around $622.9 million. The company has reaffirmed its EPS guidance range of $5.20 to $5.45, alongside a gross margin forecast of 54% to 55%.
Hyzer raised concerns regarding potential inflationary pressures and unforeseen events that may impact their fiscal year 2025 outlook. However, the guidance could benefit positively by approximately $23 million and $0.33 annually if the divestiture of held assets does not proceed as expected..