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WD-40 (WDFC) is trading sharply lower after reporting a sizable EPS miss with its fiscal Q1 (Nov) earnings results. Revenue increased just 0.6% yr/yr to $154.4 mln, which was roughly in line but modestly light relative to expectations. The key positive was management's decision to reaffirm FY26 guidance despite the earnings shortfall.

• Management acknowledged that its Q1 performance fell below long-term growth targets but reiterated that a slower start to the fiscal year had been anticipated.
• The softness was driven by timing issues within the marketing distributor network, rather than a deterioration in end-user demand, with indicators pointing to a strong rebound later in the fiscal year.
• WDFC reaffirmed FY26 guidance, citing numerous initiatives scheduled for the back half of the year and confidence in reaching the mid-to-high end of its guidance ranges.
• The company emphasized that results can fluctuate meaningfully on a quarterly basis due to the timing of promotional activity and customer order patterns.
• Gross margin improved to 56.2% from 54.8% a year ago, benefiting primarily from lower specialty chemical and can costs, along with higher average selling prices and continued premiumization.
• While encouraged by margin performance, WDFC cautioned that cost volatility, tariffs, and inflation remain ongoing external risks.
• The company continues to explore a potential sale of its Americas homecare and cleaning product brands, with its investment bank engaged in active discussions with multiple potential buyers. Although no deal is assured, management remains optimistic about a possible transaction.

Briefing.com Analyst Insight:

WD-40's sharp selloff reflects disappointment over the magnitude of the Q1 EPS miss, but management's tone suggests the weakness is largely a matter of timing rather than demand erosion. The reaffirmation of FY26 guidance, combined with expanding gross margins and confidence in a second-half rebound, helps put the quarter in better context. That said, investors will need to see clearer evidence of execution in the coming quarters, particularly as external risks such as tariffs and input cost volatility linger. Until results begin to align more closely with long-term growth targets, sentiment around the stock is likely to remain cautious.