WDFC 10-K & 10-Q changes, risk factors and insider trading

Adverse developments in the global economy or key regional economies, a reduction in industrial outputs, or decreases in consumer spending or confidence could significantly decrease purchases of our products by our customers and end users. Consumer purchases of discretionary items, which could include our maintenance products and homecare and cleaning products, may decline during periods where disposable income is reduced or there is economic uncertainty, which would negatively impact our financial condition and results of operations. During unfavorable or uncertain economic times, end users may also increase purchases of lower-priced or non-branded products and our competitors may increase their level of advertising and promotional activities to maintainspur sales volumes,sales, both of which may negatively impact our financial condition and results of operations.

In addition, our sales and operating results may be affected by uncertain or changing economic and market conditions, including recession, inflation, deflation, tariffs and other geopolitical trade disruptions, prolonged weak consumer demand, political instability, public health crises and natural disasters or other changes that may affect the principal markets, trade channels, and industrial segments in which we conduct our business. In the past, global supply chain issues and other macroeconomic factors resulted in an inflationary environment that led to increased raw material costs and other input costs. TheFuture additionaloccurrences costs resulting from anof inflationary environmentenvironments and theor constraints in our supply chain and distribution networksnetworks, either globally or in key regions, may unfavorably impactedimpact our gross margin and operating results and may do so in the future if such constraints and challenges recur.results. The severity and duration of any recession or inflationary environment are uncertain and it is not possible to predict the extent to which such conditions will impact our financial results and operations in the future. It is also uncertain how such changes in recessionary or inflationary conditions could impact demand from our customers and end users. A decrease in demand from our customers and end users would harm our financial results.

If economic or market conditions in certain of our key global markets deteriorate, we may experience material adverse effects on our business, financial condition and results of operations. Adverse economic and market conditions could also harm our business by negatively affecting the parties with whom we do business, including our customers, retailers, distributors and wholesalers, and third-party contract manufacturers and suppliers. Such conditions could impair the ability of our customers to pay for products they have purchased from us. As a result, allowances for credit losses and write-offs of accounts receivable from our customers may increase. In addition, our third-party contract manufacturers and their suppliers may experience financial difficulties or business disruptions that could negatively affect their operations and their ability to supply us with finished goods and the raw materials, packaging, and components required for our products.

Our sales outside of the U.S. were approximately 65%66% of consolidated net sales in fiscal year 2024.2025. As a result, our ability to execute our strategic framework will continue to face substantial risks associated with having increased global operations outside the U.S., including, but not limited to:

These risks could have a significant impact on our ability to sell our products on a competitive basis in global markets outside the United States. In addition, continued developments in global political climates have introduced greater uncertainty with respect to tax policies, trade relations, tariffs and government regulations affecting trade between the U.S. and other countries. For example, in FebruaryApril 2022,2025, Russianthe forcesU.S. launchedgovernment significantannounced militarya actionnumber againstof Ukraine,tariffs on countries which resultedinclude those we trade with for certain input costs to our products. Certain of these inputs sourced by our third-party manufacturers to produce our products may increase in conflictcost which may result in our inability to purchase sufficient inventory of inputs for production to meet customer demand and disruptionin turn impact our results. In addition, any supply chain constraints, inflationary impacts, additional or heightened tariffs or weakening in theconsumer region since that time, various economic sanctions levied against Russiademand as a result,result of changes to global economic conditions could impact our results. The ongoing Russia-Ukrainian war and increased volatility in the prices of certain specialty chemicals used in our products, among other supply chain disruptions. These geopolitical tensions have continued, and it is uncertain when conditions will improve or whether additional governmental sanctions will be enacted in the future. In addition, the recent hostilitiesconflicts in the Middle East have periodically disrupted global markets and contributed to increased market volatility and other disruptions. AMore disruptiondisruptions could occur as a result of any number of events including military conflicts, geopolitical developments, and war on terrorism.war. These disruptions could lead to delays in supply and manufacturing which could damage our current and prospective customer relationships. Commodity markets remain subject to heightened levels of volatility, especially as they relate to the price of certain specialty chemicals. The duration and severity of such volatility in the price of certain specialty chemicals are highly unpredictable and may unfavorably impact our cost of products sold for as long as these conditions exist. These developments, as well as the risks outlined above, could have a material adverse effect on our business, financial condition and results of operations.

Approximately 50%51% of our revenues in fiscal year 20242025 were generated in currencies other than the U.S. Dollar, which is our reporting currency. In addition, all our foreign operating subsidiaries have functional currencies other than the U.S. Dollar, and our largest subsidiary is in the U.K. and generates significant sales in Euros and Pounds Sterling. As a result, we are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, cash and cash equivalents, other assets and liabilities denominated in currencies other than the U.S. Dollar. Our financial results are negatively impacted when the foreign currencies in which our subsidiary offices operate weaken relative to the U.S. Dollar. Although we use instruments to hedge certain foreign currency risks, primarily those associated with our U.K. subsidiary and net assets denominated in non-functional currencies, we are not fully protected against foreign currency fluctuations and, therefore, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time.

Our success depends on our continuing ability to attract, engageengage, and develop highly qualified people who are committed to our culture. This ability creates an environment where people wish to build their careers, and the resulting retention of talent is a competitive advantage. We may be unable to attract, hire, develop and deploy talented employees in new markets and at the scale required by the growth of our business. In addition, our future success may increasingly depend on highly skilled employees with proficiency in working with artificial intelligence (“AI”), machine learning and other emerging technologies. Competition for these employees is intense and entities with more substantial resources may pursue this talent more aggressively. Our future performance depends in significant part on maintaining high levels of employee engagement and nurturing our values and culture. We believe that our company culture is a critical driver of our success and we invest substantial time and resources in building, maintaining and evolving our culture. Any failure to preserve and evolve our culture to maintain its relevance to our strategy could negatively affect our future success, including our ability to recruit, engage and retain employees. Our success also depends on the continued service of our executive officers, key employees and other talented people. Further, our ability to successfully execute organizational changes, including succession planning and the transition of our executive officers and key employees, is critical to the continued success of our business. The unexpected loss of the services of key employees or executive officers could have a material adverse effect on our business and prospects. In addition, certain economic conditions have led to competitive pressures in labor markets in which experienced personnel are in high demand. Since the competition for such talent is intense there can be no assurance that we can retain our key employees or attract, assimilate and retain employees who are fully engaged in the future. If we are unable to implement and successfully manage the initiatives associated with our strategic framework in accordance with our business plans, our business and financial results could be adversely affected. Moreover, there is no certainty that the implementation of the initiatives associated with our strategic framework will advance our business or financial results as intended.

Our products generally compete on the basis of brand recognition, product performance, quality, price, quality or other benefits to consumers and meeting end users’ needs. Advertising, promotions, merchandising and packaging also have a significant impact on consumer purchasing decisions. A newly introduced consumer product, whether improved or recently developed, usually encounters intense competition requiring substantial expenditures for advertising, sales and consumer promotion. Product adoption or consumer acceptance often requires sustained advertising, promotional support and product improvements in order to maintain or gain its relative market position.

Some companies with products that compete against our homecare and cleaning products have financial, management and operational resources greater than ours. These competitors may be able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions than us or have better economies of scale than we do. In addition, although our maintenance products often hold strong positions in certain markets, larger diversified companies may enter this market and leverage substantial resources and brand recognition to offer new competing products, which could have an adverse effect on our business, financial condition and results of operations.

Our ability to achieve sales volume growth will depend on our ability to (i) execute the initiatives associated with our strategic framework, (ii) drive growth in new geographic markets by making targeted end users aware of our products and expanding distribution and market channels, including digital commerce, (iii) drive growth within our existing markets through innovation, renovation and enhanced merchandising and marketing of our established brands, and (iv) capture market share from our competitors. It is more difficult for us to achieve sales volume growth in developed markets where our products are widely used as compared to developing or emerging markets where our products are newly introduced or are not as well known by consumers.consumers or as widely distributed. To protect our existing market share or capture additional market share from our competitors, we may need to increase our expenditure related to promotions and advertising or introduce and establish new products or product lines. In addition, we periodically implement sales price increases within certain markets or for certain product lines in response to increased costs associated with components, raw materials, manufacturing and distribution. For example, we implemented significant sales price increases during fiscal years 2022 and 2023 in response to significant increases in our cost of products sold caused by the inflationary environment during that time. Sales price increases to offset rising costs or the impact of tariffs may slow sales volume growth or createcause declines in volume in the short term as customers and end users adjust to sales price increases or purchase alternative products at lower prices. We may lose a portion of our consumerend-user base with steep price actions. In addition, the continued popularity and growth of the online retail sales channel presents both us and our customers that sell our products online with the challenge of balancing online and physical store retailing methods. Alternative retail channels could become more prevalent than the traditional retailers upon whom we rely for the majority of our business and operating profit. As a result of changes in end-user preference, sales are increasingly shifting to these online retail sales channels, and this shift may present a challenge in our markets where we have a less developed e-commerce business. Although we are engaged in e-commerce with respect to our products, if we are not successful in expanding sales in such alternative retail channels or we experience challenges with operating in such channels, our financial condition and results of operations may be negatively impacted. In addition, a change in the strategies of our existing customers, including shelf simplification, the discontinuation of certain product offerings or the shift in shelf space to competitors’ products could reduce our sales and potentially offset sales volume increases achieved as a result of other sales growth initiatives. If we are unable to increase market share in our existing product lines by developing product improvements, investing adequately in our existing brands, building usage among existing and new customers,end users, developing, acquiring or successfully launching new products or product line extensions, or successfully penetrating emerging and developing markets and sales channels globally, we may not achieve our sales volume growth objectives.

Volatility in the cost of finished goods, which may be driven by cost volatility for components, raw materials and third-party manufacturing fees, as well as volatility in the cost of transportation and other supplies or services may harm our financial condition and results of operations. Specialty chemicals and aerosol cans, which constitute a significant portion of the costs for many of our maintenance products, have experienced significant price volatility in the past, and may do so in the future. In particular, volatility in the price of oil indirectly impacts the cost of specialty chemicals, many of which are indexed to the price of regional crude oil or related refined products. Fluctuations in oilgasoline and diesel fuel prices, driven in part by crude oil price volatility, fluctuations in costs of cans including those related to the impact of tariffs, increased regulations imposed on the freight industry, and higher demand for transportation services as e-commerce grows have impacted the cost of transporting our products, the loss of low-cost trucking companies (particularly in the U.S.) that provide ground transport for our aerosol products, and additional macroeconomic factors which have resulted in increased freight costs. Our business operations could be adversely affected by labor disputes, strikes, or lockouts particularly those involving our employees or the employees of our suppliers and contractors. Any such disruptions could lead to delays in production, increased costs, and potential loss of revenue. For example, the COVID-19 pandemic resulted in global supply chain constraints and transportation disruptions that led to increased competition for freight resources, higher fees charged by our third-party manufacturers, increased raw material costs and other input costs that negatively impacted our results of operations. In the past, other macroeconomic factors resulted in an inflationary environment that compounded these impacts and led to further increases in raw material costs, manufacturing and distribution costs, and other input costs. When there are significant increases in the costs of components, raw materials, third-party manufacturing fees and other expenses, and we are not able to increase the prices of our products or achieve other cost savings to an extent that they will offset such cost increases, our gross margin and operating results will be negatively impacted.

In addition, if we are unable to contract with third-party manufacturers or suppliers for the quantity and quality levels needed for our business, we could experience disruptions in production and our financial results could be adversely affected. In particular, theglobal COVID-19health pandemic,crises, extreme weather eventsevents, military conflicts and other macroeconomic factors have resulted in significant supply chain constraints and transportation disruptions at times. Some of the challenges that we have experienced historically include general aerosol-related production capacity constraints and competition for such capacity by other companies who utilize the same third-party manufacturers for their aerosol production. These challenges have periodically resulted in us not being able to meet the demand for our products by customers and end users in certain markets where demand for aerosols has, for certain products, outpaced the available production capacity in thethose region.markets. We monitor partnerships with our third-party manufacturers and onboard new third-party manufacturers, if necessary, in order to allow for capacity and flexibility of our supply chain. Onboarding new third-party manufacturers involves inherent risks that can include delays in setting up production, testing and potential rework to ensure production quality, and higher costs. In addition, actions we have taken in the past to increase inventory levels of certain raw materials and finished goods to mitigate challenges within supply chain and increased lead times required by suppliers, have led to higher transportation, storage and distribution costs. It is not possible to estimate the degree of the impact or the costs associated with potential future disruptions within our supply chain and distribution networks as such supply chain issues are being resolved.

We sell our products through a network of domestic and international mass retail, trade supply and consumer retailers as well as through industrial distributors and suppliers. The retail industry has historically been the subject of consolidation and, as a result, the development of large chain stores has taken place. Today, the retail channel is comprised of several of these large chain stores that capture the bulk of the market share. Since many of our customers have been part of consolidations in the retail industry, these limited customers account for a large percentage of our net sales. Although we expect that a significant portion of our revenues will continue to be derived from this limited number of customers, our largest individual customer contributed to less than 10% of our consolidated net sales in fiscal year 2024.2025. However, changes in the strategies of our largest customers may have an adverse impact on our sales. Such changes in customer strategy may include, but are not limited to: demands for more liberal return rights, a reduction in willingness to transport and store goods of certain hazardous material ratings, a reduction in the number of brands they carry, or a shift in shelf space in favor of “private label” or competitors’ products. The loss of, or reduction in, orders or a higher volume of returns from any of our most significant customers could have a material adverse effect on our brand values, business, financial condition and results of operations. Large customers may seek price reductions, price protection, added support, product deliveries within shorter lead times, non-compliance fees or promotional concessions. If we agree to such customer demands and/or requests, it could negatively impact our ability to maintain existing profit margins.

To conduct our business, we extensively rely on information technology systems, networks and services, many of which are managed, hosted and provided by third-party service providers. There is no guarantee that our security measures will prevent cyberattacks resulting in breaches of our own or our third-party service providers’ databases and systems. Techniques used in these attacks change frequently and may be difficult to detect for periods of time. Although we have policies and procedures in place governing (i) the timely investigation of cybersecurity incidents, (ii) the timely disclosure of any related material nonpublic information resulting from a material cybersecurity incident, and (iii) the safeguarding against insider trading by directors, officers, and other corporate insiders between the period of investigation and the public disclosure of such an incident; cybersecurity incidents themselves, such as the release of sensitive data from our databases and systems, could adversely affect our business, financial condition and results of operations. The increasing number of information technology security threats and the development of more sophisticated cyberattacks, includingwhich includes the adoption of emerging technologies such as AI and machine learning, as well as other techniques such as ransomware, pose asignificant potential riskrisks to the security of our information technology systems and networks, as well as to the confidentiality, availability and integrity of our data. Increased integration of AI into our operations could significantly increase cybersecurity and privacy risks, including the risk of unauthorized or misuse of AI tools. In addition, thethreat increasedactors may leverage these tools to attack our systems. The continued use of remote work infrastructures also increases cybersecurity risks. Further,These suchemerging incidentsrisks could also materially increase the costs that we incur to protect against such risks. Although we maintain cyber insurance, our coverage may not be adequate for actual losses incurred, and an insurer may deny coverage of a future claim. There is no certainty that such insurance will continue to be available to us on economically reasonable terms, if at all, in the future.

In addition, system failure, malfunction or loss of data that is housed in our critical information systems or our third-party service providers’ critical information systems could disrupt our ability to ship products to our customers, timely and accurately process transactions and produce key financial reports, including information on our operating results, financial position and cash flows. Our information systems could be damaged or cease to function properly due to a number of other reasons, including catastrophic events and power outages. Although we have business continuity plans in place to address such service interruptions, there is no guarantee that these business continuity plans will provide alternative processes in a timely manner. As a result, we may experience interruptions in our ability to manage our daily operations, which could harm our business, financial condition and results of operations.

We are currently implementing new information systems within our enterprise resource planning framework at certain offices in a phased manner. The first and most significant phase, implementation in the U.S., iswas complete.completed in fiscal year 2024. We are strategically implementing these new information systems at certain other offices to better align with the new U.S. system environment and because the system they are currently using is not commonly used.environment. In addition, the company that owns and supports the legacy systemsystems used at these other offices may not be able to provide the same level of support as that of larger information systems companies. If the company that owns and supports the legacy systemsystems were to cease operations or were unable to provide support for this application prior to the implementation of our new information systems, it could adversely affect our daily operations or our business, financial condition and results of operations.Ifoperations. If we encounter difficulties in executing and completing the implementation of these new critical information systems at our other offices, or if the implementation takes longer than intended, we may experience interruptions in our ability to manage our daily operations and report financial results timely and we may experience significant incremental costs, which could adversely affect our business, financial condition and results of operations.

There has been an increasing focus from stakeholdersregulators and regulatorsother stakeholders related to environmental, social and governance (“ESG”) matters across all industries in recent years. ESG standard setting and stakeholder expectations continue to evolve. Criteria used to evaluate ESG practices and metrics may change rapidly at any time, which could result in increased expectations offrom public companiesstakeholders and may cause us to undertake costly initiatives to satisfy any new requirements. Non-compliance with these emergingsuch regulations or a failure to address various stakeholder expectations may result in cost increases, litigation, fines, penalties, production and sales restrictions, brand or reputational damage, loss of customers, failure to retain and attract talent, lower valuation and investor activism. Any failure or perceived failure, whether or not valid, to pursue and fulfill our ESG initiatives and objectives or to satisfy various ESG reporting standards in a timely manner could negatively impact our financial condition and results of operations.

In 2023, the European Commission’s Corporate Sustainability Reporting Directive (“CSRD”) became effective. The CSRD expands the number of companies required to publicly report ESG-related information and defines the ESG-related information that companies are required to report in accordance with European Sustainability Reporting Standards. While CSRD rules are prescriptive for the types of data to be reported, the standards to quantify and qualify such data are still evolving and uncertain and will impose increased costs on us related to complying with our reporting obligations. In 2023, California enacted Senate Bill (“SB”) 253 and SB 261, which require large businesses to report on greenhouse gas emissions and climate-related financial risks in accordance with the Task Force on Climate-Related Financial Disclosures framework. The increased attention directed towards publicly traded companies surrounding ESG matters includes the release of rules by the SEC requiring registrants to enhance and standardize disclosures related to climate change, but these rules have since been stayed due to litigation. Although the SEC attempted to end its defense of the rules in 2025, the litigation remains unsettled and additional rules could be proposed in the future by the SEC. We expect to be subject to these regulations in the future, which will result in cost increases. Failure to comply with such regulations could negatively impact our financial condition and results of operations.

We may increase growth through business development activities such as acquisitions, joint ventures, licensing and/or other strategic partnerships in the U.S. and internationally. For example, on March 4, 2024, we acquired all of the issued and outstanding capital stock of our Brazilian distributor, and began direct distribution within Brazil.partnerships. If we are not able to identify, acquire and successfully integrate acquired products or companies or successfully manage joint ventures or other strategic partnerships, we may not be able to maximize these opportunities. The failure to properly manage business development activities because of difficulties in the assimilation of operations and products, the diversion of management’s attention from other business concerns, the loss of key employees or other factors could have a material adverse effect on our business, financial condition and results of operations. In addition, there can be no assurance that our business development activities will be profitable or that they will achieve sales levels, profitability or synergies that justify the investments made.

In addition, we may consider divesting businesses or brands that do not meet our strategic objectives or do not meet our growth or profitability targets. For example, we are consideringpursuing the sale of certain of our homecare and cleaning product brands. We may not be able to complete desired divestitures or close divestiture transactions on terms favorable to us. If we do complete such desired divestitures, gains or losses on the sales of, or lost operating income from, those businesses or brands may harm our profitability and margins. We may not be able to effectively deploy the proceeds from a divestiture in a manner that is accretive to our earnings. If we are unable to identify and execute on suitable investment opportunities, or if the investments we make do not perform as expected, our financial condition and results of operations could be adversely affected. Additionally, the failure to effectively reinvest such proceeds countcould result in lower returns on investment and diminished stockholder value.

Significant judgment is required in determining our effective income tax rate and in evaluating tax positions, particularly those related to uncertain tax positions. We provide liabilities for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement requirements prescribed by the specific accounting standards for uncertain tax positions. Changes in uncertain tax positions or other adjustments resulting from tax audits and settlements with taxing authorities, including related interest and penalties, impact our effective tax rate. When tax matters arise, a number of years may elapse before such matters are audited and resolved, or the statute of limitations expires resulting in the release of the liability. Resolution of such matters or the expiration of the statute of limitations would be recognized as a reduction to our effective tax rate in the year of resolution. Any resolution of a tax matter may require the adjustment of tax assets or tax liabilities or the use of cash in the year of resolution. For additional information on such matters, see Part IV – Item 15, “Exhibits, Financial Statement Schedules” Note 1415 –— Income Taxes, in this report.

InternationalChanges in U.S. or international tax changeslaw that occur in the locations where we operate can also materially affect future financial results or operations. For example, we have significant operations in Europe that are subject to income tax rates and laws in multiple jurisdictions.jurisdictions Aand a significant portion of our European income is subject to taxation in the U.K. because our European subsidiary is headquartered in the U.K. In June of 2021, an Act of Parliament received Royal Assent, changing the U.K. corporate tax rate from 19% to 25% effective on April 1, 2023, resulting in an increase in our effective tax rate.

The Tax Act and Inflation Reduction Act have authorized the U.S. Department of the Treasury to issue regulations with respect to the new provisions. We cannot predict how subsequent changes in the Tax Act, the Inflation Reduction Act, regulations, or other guidance issued under each, including conforming or non-conforming state tax rules, might affect our business, financial condition and results of operations. In addition, there can be no assurance that U.S. tax laws, including the corporate income tax rate, will not undergo significant additional changes in the future.

The assessment for possible impairment of our goodwill and intangible assets involves judgments on several significant estimates and assumptions, including macroeconomic conditions, overall category growth rates, sales growth rates, cost containment and margin expansion and expense levels for advertising and promotions and general overhead, all of which are developed from a market participant standpoint. We may be required to record a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or intangible assets is identified, which could materially adversely affect our financial condition and results of operations. Strategic divestitures of certain businesses or brands could negatively impact our profitability as a result of a reduction in sales and operating income, decrease our cash flows, or cause us to recognize impairment charges. Changes in management estimates and assumptions as they relate to valuation of goodwill and intangible assets could affect our financial condition or results of operations in the future. For additional information, see Part IV – Item 15, “Exhibits, Financial Statement Schedules” Note 67 –— Goodwill and Other Intangible Assets, in this report.

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®, 1001®, 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, the United Kingdom (“U.K.”) and Australia. During the first quarter of fiscal year 20252025, our homecare and cleaning business in EIMEA was sold and we have reclassified our homecare and cleaning product portfoliosbusiness in the Americas and EIMEA segments to held for sale. Our homecare and cleaning business in the Asia-Pacific segment continues to be held for use. 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, sport retailers, and independent bike dealers.

•Consolidated net sales increased $53.3$29.4 million, or 10%,5%, for fiscal year 20242025 compared to the prior fiscal year. Increases in sales volume favorably impacted net sales by approximately $41.3$25.2 million from period to period. Increases in the average selling price of our products positively impacted net sales by approximately $4.2$5.6 million from period to period, primarily due to sales price increases implemented in certain regions during the prior fiscal year. 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 favorableunfavorable impact of $7.8$1.4 million on consolidated net sales for the fiscal year 2024.2025. OnGross profit as a constantpercentage currency basis,of net sales would have increased byto $45.5 million, or 8%55.1% for fiscal year 20242025 compared to 53.4% for the prior fiscal year. This favorable impact from changes in foreign currency exchange rates mainly came from our EIMEA segment, which accounted for 37% of our consolidated sales for the fiscal year ended August 31, 2024.

•Consolidated net income increased $3.7$21.4 million, or 6%,31%, for fiscal year 20242025 compared to the corresponding period of the prior fiscal year. Changes in foreign currency exchange rates from period to period had aan favorableinsignificant impact of $1.5 millioneffect on consolidated net income for fiscal year 2024. Thus, on a constant currency basis, net income would have increased by $2.2 million, or 3%, for fiscal year 2024 compared to the prior fiscal year.2025.

•During the firstfourth quarter of fiscal year 20252025, we reclassifiedcompleted ourthe sale of the Company’s business pertaining to homecare and cleaning productproducts portfoliosthat are sold in the Americas and EIMEA segments to held for sale.EIMEA.

The following table summarizes net sales by product line for the Americas segmentsegment, which includes the U.S., Canada and Latin America (in thousands, except percentages):

•WD-40 Specialist sales increased $1.9$2.0 million, or 6%, primarily due to increases in the U.S. due to new distribution and increased demand across all regions. Canada, in particular,mass sawretail anand increasehome incenter salesstores ofas $0.8well million,as oronline 46% from period to period primarily due to premiumization of the Specialist product line in the region.retailers.

•Homecare and cleaning product sales decreased $1.6$1.1 million, or 10%,7%, primarily due to changes in distribution as well as reduced demand in the U.S. as a result of a lower level of advertising and promotional activities associated with these brands, as we focus on increasing sales of maintenance products in support of our four-by-four strategic framework.

The following table summarizes net sales by product line for the EIMEA segmentsegment, which includes Europe, India, the Middle East and Africa (in thousands, except percentages):

•WD-40 Specialist and other maintenance product sales increased $3.8$4.8 million, or 14%,15%, and $1.2$0.2 million, or 11%,2%, respectively, primarily due to the combinedincreased impactdemand and new distribution in our direct markets associated with premiumization efforts in support of higherour salesstrategic volumeframework. acrossOther mostcontributing factors include increased promotional activities in many regions dueof toour increaseddirect distributionmarkets such as DACH and stronger levels of demand after customers adjusted to price increases.France.

The following table summarizes net sales by product line for the Asia-Pacific segmentsegment, which includes Australia, China and other countries in the Asia region (in thousands, except percentages):

•WD-40 Specialist sales increased $1.5$1.2 million, or 17%,12%, primarily due to increased sales volumevolumes in China dueand toAsia distributor markets as a result of successful promotional programs and marketing activities as well as increased sales volume due to distribution of a motorbike product line new to the region.activities.

•Homecare and cleaning product sales increased $0.7$0.4 million or 9%.4%, The increase wasprimarily due to higherincreased sales volume inas Australiaa attributableresult toof successful promotionalrelaunch activitiesof the Solvol soap bar in Australia. Our homecare and improvedcleaning packaging.businesses in the Asia-Pacific segment are not held for sale.

•In the EIMEA segment, the majoritycost of our cost of goodsproducts sold is denominated in Pound Sterling whereas sales are generated in the Pound Sterling, EuroSterling and the U.S. Dollar.Euro. The strengthening or weakening of the EuroPound Sterling and U.S. DollarEuro against the PoundU.S. SterlingDollar may result in foreign currency related changes to the gross margin percentage in the EIMEA segment from period to period.

Gross margin increased 240170 bps primarily due to the following favorable (unfavorable) impacts:

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 for the fiscal years ended August 31, 20242025 and 20232024 were $8.0$8.7 million and $6.2$8.0 million, respectively. The increase from period to period was partially due to a higher level of research and development activity associated with our sustainability initiatives. 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.

The increase in A&P expenses was primarily due to a higher level of promotional programs and marketing support, particularly in thecertain Americas and EIMEA segments. Changescountries in foreign currency exchange rates primarily inthe EIMEA segment hadas awell $0.9as millionU.S. unfavorableand impact on A&P expenses from period to period.China.

Total promotional costs recorded as a reduction to sales were $32.7$34.3 million and $29.1$32.7 million, or 5.5% and 5.4% of net sales,million for the fiscal years ended August 31, 20242025 and 2023,2024, respectively. Therefore, our total expenditure on A&P activities totaled $66.6$71.7 million and $57.9$66.6 million or 11.2% and 10.8% of net sales, for the fiscal years ended August 31, 20242025 and 2023,2024, respectively.

Income from operations for the Americas increasedremained torelatively $65.0constant million,year upover $4.2year. million,In orthe 7%, due toAmericas, a $15.1$8.7 million increase in sales and a higher gross margin,margin partiallywas mostly offset by higher operating expenses.expenses of $7.7 million. Gross margin for the Americas segment increased from 48.9%50.9% to 50.9%52.1% primarily due to the favorable impact of price increases and decreases toin the costs of petroleum-based specialty chemicalschemicals, asincreases wellin asaverage selling prices and a lower warehousing,level distributionof anddiscounts freightthat costswe from periodgave to period.our customers. These favorable impacts were partially offset by increaseshigher inwarehousing, thedistribution and freight costs ofincreases aerosolas canswell andas fillingincreases feesto atmiscellaneous ourother third-partyinput manufacturers.costs. Operating expenses increased $8.6$7.7 million primarily due to higher employee-related costs as a result of increased headcountheadcount, higher accrued incentive compensation and annual compensation increases. OperatingIn addition, operating expenses also increased due to to a higher level of A&P expensesexpenses, higher outbound freight costs due to increased sales and travelan and meeting expenseincrease in supportprovision offor ourcredit strategiclosses framework.from period to period. Operating income as a percentage of net sales increaseddecreased from 22.8%23.1% to 23.1%22.5% period over period.

Income from operations for the EIMEA segment increased to $46.8$52.3 million, up $7.4$5.5 million, or 19%,12%, primarily due to a $30.2$15.4 million increase in sales and a higher gross margin, which was partially offset by higher operating expenses. Gross margin for the EIMEA segment increased from 52.2%54.7% to 54.7%57.3% primarily due to favorable changes from foreign currency exchange rates and changes in sales mix and market mix, as well as the combinedfavorable impact of increases in average selling price and decreases in the costscost of petroleum-based specialty chemicals and aerosol cans fromand periodother toinput period.costs. Operating expenses increased $14.0$8.9 million primarily due to higher employee-related costs as a result of higher accrued incentive compensation, annual compensation increases and increased headcount. In addition, operating expenses increased due to higher A&P expenses, as well asa higher level of professional service costs and travel and meeting expenses in support of our strategic framework. Operating income as a percentage of net sales increased from 20.7%21.2% to 21.2%22.1% period over period.

Income from operations for the Asia-Pacific segment increased to $29.7$30.8 million, up $3.8$1.1 million, or 15%,4%, primarily due to a $8.0$5.3 million increase in sales and a slightly higher gross margin, partially offset by an increase in operating expenses. Gross margin for the Asia-Pacific segment increased slightly from 55.3%58.0% to 58.0% primarily due to changes in sales mix and market mix across most regions from period to period, as well as the favorable impact of price increases, particularly in Australia and Asia distributor markets.58.7%. Operating expenses increased $3.0$2.6 million from period to period primarily due to higher employee-related costs, including increased accrued incentive compensation.costs. In addition, operating expenses increased as a result of a higher level of A&P expenses, professional service costs and travel and meeting expenses. Operating income as a percentage of net sales increaseddecreased from 32.5%33.9% to 33.9%33.1% period over period.

Other Income (Expense) Income,, Net

Other income (expense) income,, net changed by $1.9$1.8 million from period to period which was primarily due to net foreign currency gainslosses during fiscal year 20232024 as compared to net foreign currency exchange lossesgains in fiscal year 20242025 due to fluctuations in the foreign currency exchange rates for both the U.S. DollarEuro and the EuroU.S. Dollar against the Pound Sterling.

The provision for income taxes was 23.9%10.5% and 22.5%23.9% of income before income taxes for the fiscal years ended August 31, 20242025 and 2023,2024, respectively. Descriptions of impacts on our effective income tax rate are incorporated by reference to Part IV—Item 15, “Exhibits, Financial Statement Schedules” Note 1415 –— Income Taxes, included in this report.

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 earnings before interest, income taxes, depreciation and amortization (“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. Beginning in fiscal year 2024, cloud computing amortization is included in our of cost of doing business and Adjusted EBITDA calculations. We have placed a new cloud-based enterprise resource planning system into service in the U.S., which we began to amortize in the second quarter of fiscal year 2024. Implementation of such systems is related to initiatives associated with our strategic framework to help us achieve greater operational efficiencies. Cloud computing amortization is recognized in selling, general and administrative expenses in our consolidated statements of operations.

We target our gross margin to be 55% of net sales, our cost of doing business to be 30% of net sales, and our Adjusted EBITDA to be 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 targets for gross marginmargin, cost of doing business and theseAdjusted other performance measuresEBITDA are long-term in naturenature. and weWe expect to make progress towards themour cost of doing business and Adjusted EBITDA targets over time. GivenProgression thetowards anticipatedour divestiturecost of doing business and Adjusted EBITDA targets may be challenged as we continue to divest certain of our householdhomecare brands,and progressioncleaning onproduct certainbusinesses, aspectsdue to the low level of ouroperating businessexpenses modelassociated maywith bethese challengedbusinesses. ifDespite thethese potential divestiture occurs. However,challenges, we intend to focus our resources and investmentsproceeds from the potential sale of those brands on growing our higher growth and higher gross margin core business.

(1)Percentages may not aggregate to Adjusted EBITDA percentage due to rounding and because amounts recorded in other income (expense), net on our consolidated statementstatements of operations are not included as an adjustment to earnings in the Adjusted EBITDA calculation.

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. DuringAt the beginning of the prior fiscal year 2025,year, 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 salesale. During the third quarter of fiscal year 2026, the Company reassessed its classification and recorded an amount to reclassify as ofheld Februaryfor 28,use 2026.as discussed in Part I—Item 1, “Notes to Condensed Consolidated Financial Statements” Note 3 — Assets Held for Sale included in this report. The Company sold its homecare and cleaning product brands in the EIMEA segment during the fourth quarter of fiscal year 2025. TheseAccordingly, these brands are included in fiscal year 2025 financial results but are not included in fiscal year 2026 financial results.

The following summarizes the financial and operational highlights for our business during the sixnine months ended FebruaryMay 28,31, 2026:

•Consolidated net sales increased $16.5$54.7 million or 6%,12%, to $316.1$511.2 million compared to the corresponding period of the prior fiscal year. Changes in foreign currency exchange rates from period to period had a favorable impact of $12.7$19.9 million on consolidated net sales for the first sixnine months of fiscal year 2026. On a constant currency basis, net sales would have increased by $3.8$34.8 million, or 1%,8%, from period to period. This favorable impact from changes in foreign currency exchange rates mainly came from our EIMEA segment, which accounted for 39%37% of our consolidated sales for the sixnine months ended FebruaryMay 28,31, 2026. Increases in sales volume favorably impacted net sales by approximately $30.3 million from period to period, which includes an unfavorable impact of approximately $4.2 million related to reduced sales volume driven by the sale of our HCCP business in EIMEA during fiscal year 2025. Sales volume would have increased $34.5 million for the nine months of fiscal year 2026 on a comparable basis to prior year. Increases in the average selling price of our products positively impacted net sales by approximately $4.5 million from period to period. Decreases in sales volume unfavorably impacted net sales by approximately $0.7 million from period to period, however, approximately $3.1 million of the decrease in sales volume for the six months ended February 28, 2026 was driven by the sale of our HCCP business in EIMEA during fiscal year 2025. Therefore, sales volume would have increased $2.4 million for the first six months of fiscal year 2026 on a comparable basis to prior year. 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.

•Consolidated net income decreased $11.0$1.8 million, or 23%,3%, compared to the corresponding period of the prior fiscal year.year, Duringdue to a favorable income tax adjustment of $11.9 million recognized in the second quarter of the prior fiscal year,year weupon releasedthe release of an uncertain tax positionposition. thatRefer generatedto aPerformance favorableMeasures incomeand taxNon-GAAP adjustmentReconciliations ofbelow $11.9for million.non-GAAP Excludingfinancial thismeasures, one-timeincluding benefitadjusted fromnet income, and their reconciliations to the priormost fiscaldirectly year,comparable GAAP measures. Adjusted net income would have increased $0.9$11.5 million, or 3%.20% from period to period.

•During the sixnine months ended FebruaryMay 28,31, 2026, we returned approximately $42.4$62.9 million to our stockholders through share repurchases and dividends.

In addition, these developments have caused supply chain disruptions within the EIMEA segment for our Middle East distribution network, impacting the sourcing of raw materials by certain of our third-party manufacturers as well as shipping routes to certain customers supplied withinto ourIndia and the Middle East distribution network.East. Our net sales to these regions were approximately 3%5% of consolidated net sales for fiscal year 2025 and approximately 2%4% of consolidated net sales for the firstnine halfmonths of fiscal year 2026. While supply chain constraints may impact our ability to service these areas, we anticipate that demand for our product will not be negatively impacted. We are actively managing these supply chain constraints and transportation disruptions through various temporary measures, such as utilizing different shipping routes within the region as well as working with our third-party manufacturers to ensure flexibility within our supply chain during these conflicts.

Three and SixNine Months Ended FebruaryMay 28,31, 2026 Compared to Three and SixNine Months Ended FebruaryMay 28,31, 2025

(1)Homecare and cleaning products (“HCCP”). Approximately $1.5$1.1 million and $3.1$4.2 million of the decrease in net sales of HCCP for the three and sixnine months ended FebruaryMay 28,31, 2026, respectively, was driven by the sale of our HCCP business in EIMEA during fiscal year 2025.

(2)During the second quarter of fiscal year 2025, we released an uncertain tax position that generated a favorable income tax adjustment of $11.9 million. Excluding this one-time benefit, on a non-GAAP basis, prior quarter and prior year net income was $17.9 million and $36.8$57.8 million for the three and sixnine months ended FebruaryMay 28,31, 2025,2025. respectively.Therefore, on a non-GAAP basis, net income would have increased 17% compared to prior year.

(3)Excluding the one-time tax benefit discussed above, on a non-GAAP basis, prior quarter and prior year adjusted diluted EPS was $1.32 and $2.71$4.26 for the three and sixnine months ended FebruaryMay 28,31, 2025,2025. respectively.Therefore, on a non-GAAP basis, EPS would have increased 18% compared to prior year.

(1)Prior fiscal year net sales include sales related to our EIMEA HCCP business, which was sold at the end of fiscal year 2025 and is no longer included in current year results. The divestiture resulted in approximately $1.5$1.1 million and $3.1$4.2 million reduction in net sales for the three and sixnine months ended FebruaryMay 28,31, 2026, respectively.

Americas Sales – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 Specialist sales increased $1.3$2.1 million, or 17%,22%, primarily due to increased sales volumes in the U.S. primarily from our large retailers and online retailers. WD-40 Specialist sales in the U.S. were driven by enhanced product placement and broader distribution at certain large retail customers.customers, Netas saleswell in the U.S. also increased due to continuedas increases in online retail sales in the fiscal year 2026.sales.

•Other maintenance and homecare and cleaning product sales combinedincreased remained$0.6 relativelymillion, constantor from13% due to increases in sales volume in the U.S. and Latin America period toover period.

•For the three months ended FebruaryMay 28,31, 2026, 72%75% of sales came from the U.S., and 28%25% of sales came from Canada and Latin America combined compared to the three months ended FebruaryMay 28,31, 2025 when 70%73% of sales came from the U.S., and 30%27% of sales came from Canada and Latin America.

Americas Sales – SixNine Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 Multi-Use Product sales increased $6.7$27.4 million, or 6%,17%, primarily due to increases in the U.S. and Latin America of $5.3$22.5 million and $1.5$4.1 million, respectively. U.S. sales increased primarily due to increasedthe online and large retail sales as well as higher sales volume due to higher levelsale of limited-edition promotional activitiescans as discussed above in the section for the three months ended FebruaryMay 28,31, 2026.2026, as well as strength in our online retailers and mass retailers and expanded distribution. Latin America sales increased primarily due to a $1.3 million increase in Mexico due to favorable period overto period changes in foreign currency exchange rates,rates as well as slight increases due to expanded distribution and successful promotional activities.activities, most significantly in Mexico and Brazil.

•WD-40 Specialist sales increased $2.5$4.6 million, or 16%,18%, primarily due to increased online retail sales, new distributionsales and large retailers due to increased demand in the U.S as discussed above in the section for the three months ended FebruaryMay 28,31, 2026. WD-40 Specialist sales also increased due to new distribution in fiscal year 2026.

•Other maintenance product sales increased $0.7$1.3 million, or 9%,11%, primarily due to increases in sales volume in the U.S. and Latin America period over period.

•For the sixnine months ended FebruaryMay 28,31, 20262026, 73% of sales came from the U.S., and 2025,27% of sales came from Canada and Latin America combined compared to the nine months ended May 31, 2025 when 72% of sales came from the U.S., and 28% of sales came from Canada and Latin America combined.America.

(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 are not be included in fiscal year 2026 financial results.

EIMEA Sales – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 Specialist sales increased $1.2$3.0 million, or 14%, almost entirely31%, due to increased sales in most of our direct and distributor markets as well as favorable changes in foreign currency exchange rates. On a constant currency basis, sales would have remainedincreased relatively constant22% period over period. Net sales increased most significantly in France and Iberia as both regions sales benefited from strong marketing activities and new product launches within the quarter. These increased sales were offset by decreased sales in our DACH region due to timing of customer orders.launches.

EIMEA Sales – SixNine Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 Multi-Use Product sales increased $6.0$13.2 million or 7%.10%. Net sales were positively impacted by favorable changes in foreign currency exchange rates. On a constant currency basis, sales would have decreasedincreased by approximately 3%1% period over period. Sales decreasedincreased most significantly in our distributordirect markets includingmost Saudinotably Arabiain Iberia and regionsDACH withinregion, the UAEprimarily due to thesuccessful strategicpromotional distributionactivities changesand merchandising efforts as discussed above in the section for the three months ended FebruaryMay 28,31, 2026. These decreasesincreases were partially offset by higher salesdecreases in our directdistributor markets particularlysuch inas FranceSaudi Arabia and Iberiaregions within the UAE due to thetiming reasonsof discussedcustomer aboveorders and strategic sourcing changes in the section for the three months ended February 28, 2026.region.

•WD-40 Specialist product sales increased $3.3$6.2 million, or 20%.24%. Net sales were positively impacted by favorable changes in foreign currency exchange rates. On a constant currency basis, sales would have increased by approximately 10%14% period over period. Net sales increased most significantly in France and Iberia direct markets which increased $1.7$2.6 million and $0.7$1.1 million, respectively. Sales growth in France and Iberia benefited from strong sales volume growth due to increased promotional activities as well as recentnew product launches.

Asia-Pacific Sales – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 SpecialistMulti-Use Product sales increased $1.3$3.9 million, or 55%,24%, primarily due to increased salesincreases in China of $0.7 million as well as increased sales in Australia and Asia distributor markets whichof each$2.2 increasedmillion $0.3and million.$1.5 million, respectively. Sales in China increased due to increased sales volume from successful promotional programs and marketing activitiesactivities, including the use of online influencers, as well as increased distribution, specificallydistribution through our online retailers and industrial channels. Sales in China also increased due to a higher level of customer orders in the third quarter of fiscal year 2026 in anticipation of price increases. Sales in Asia distributor markets increased due to successful promotional programs, particularly in Philippines, Indonesia and Malaysia.

Asia-Pacific Sales – SixNine Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

•WD-40 SpecialistMulti-Use Product sales increased $1.4$4.2 million, or 25%,8% primarily due to anincreased $0.8 million increasesales in China, as well as increasesChina of $0.4$4.1 million and $0.3 million in our Asia distributor markets and Australia, respectively.million. Sales in China increased due to increased sales volume from successful promotional programs and marketing activitiesactivities, primarily through our online retailers and industrial channels, as welldiscussed asabove increasedin distribution.the section for the three months ended May 31, 2026.

•In the EIMEA segment, the cost of our products sold are generated in the PoundEuro, SterlingU.S. Dollar and Euro.Pound Sterling. 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 $4.3$5.8 million and $4.6 million for each of the three months ended FebruaryMay 28,31, 2026 and 2025, respectively, $8.9and $14.7 million and $13.5 million for each of the sixnine months ended FebruaryMay 28,31, 2026 and 2025, respectively.

Gross Margin – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

Gross Margin – SixNine Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

Gross margin increased 120100 bps primarily due to the following favorable impacts:

SG&A Expenses – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

The increase in SG&A expenses was primarily due to unfavorable changes in foreign currency exchange rates which increased SG&A expenses by $1.9 million. On a constant currency basis, SG&A expenses would have increased by 6% period to period. In addition, SG&A expenses increased due to increases in employee-related costs of $2.3$1.1 million due tofrom higher headcount, annual compensation increases, accrued incentive compensation, and higherother stock-basedemployee compensationrelated expense.costs. These higher employee-related costs include additional headcount to support various sales growth initiatives identified within our strategic framework, as well asincluding headcount related to the enhancement of our information systems. Freight expense increased $0.9 million primarily in the Americas and EIMEA segments, due to the combined impacts of higher sales and increased costs. Software licenses and fees increased expenses $0.4$0.8 million primarily due to increased users and costs related to cloud computing solutions across all regions. Unfavorable changes in foreign currency exchange rates increased SG&A expenses by $2.5 million. On a constant currency basis, SG&A expenses would have increased by 7% period to period.

SG&A Expenses – SixNine Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025

The increase in SG&A expenses was primarily due to increases in employee-related costs of $5.1$6.1 million due to higher headcount, annual compensation increases, accrued incentive compensation, and higherother stock-basedemployee compensationrelated expense.cost. These higher employee-related costs are to support various sales growth initiatives identified within our strategic framework and the enhancement of our information systems. Unfavorable changes in foreign currency exchange rates increased SG&A expenses by $5.5 million. On a constant currency basis, SG&A expenses would have increased by 7% period to period. SG&A also increased by $1.2$1.6 million due to higher travel and meeting expense across all three segments primarily in support of growth related initiatives. Software licenses and fees increased expenses $0.7$1.5 million primarily due to increased users and costs related to cloud computing solutions across all regions. Unfavorable changes in foreign currency exchange rates increased SG&A expenses by $3.6 million. On a constant currency basis, SG&A expenses would have increased by 7% period to period.

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 $2.0$1.9 million and $2.5 million for both the three months ended FebruaryMay 28,31, 2026 and 2025, respectively, and $4.0$6.0 million and $3.9$6.3 million for the sixnine months ended FebruaryMay 28,31, 2026 and 2025, respectively. 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.

A&P Expenses – Three Months Ended – FebruaryMay 28,31, 2026 Compared to FebruaryMay 28,31, 2025