What WD-40 Company told the SEC could break it.

WD-40's maintenance products are formulated from petroleum-based specialty chemicals and packaged in aerosol and liquid formats, so its cost of products sold and gross margin move directly with petroleum/specialty-chemical prices. In fiscal 2025 the Americas gross margin improved (50.9% to 52.1%) in part because of decreases in the cost of petroleum-based specialty chemicals — illustrating the leverage. Rising oil/chemical and propellant/packaging costs (or supply tightness) compress margins when they cannot be fully or promptly offset with price increases.

“Gross margin for the Americas segment increased from 50.9% to 52.1% primarily due to decreases in the costs of petroleum-based specialty chemicals, increases in average selling prices and a lower level of discounts that we gave to our customers.”

WD-40 sells in over 176 countries, generates ~66% of sales outside the U.S., owns a plant in the U.K. and sources inputs and finished goods through contract manufacturers worldwide, exposing it to tariffs and trade restrictions. It notes that in April 2025 the U.S. government announced tariffs on a number of countries it trades with for certain input costs, and that certain inputs sourced by its third-party contract manufacturers are affected. New or heightened tariffs, trade restrictions and the resulting supply-chain constraints could raise input costs, limit its ability to buy sufficient inputs to meet demand, and pressure margins.

“For example, in April 2025, the U.S. government announced a number of tariffs on countries which include those we trade with for certain input costs to our products.”

WD-40 outsources production to third-party contract manufacturers and relies on a limited number of suppliers — including single or sole-source suppliers — for certain raw materials, packaging, product components and other necessary supplies. It works with secondary/multiple suppliers where it makes business sense, but it does not directly control these third parties' management or operations. A financial difficulty, capacity constraint or business disruption at a single-source contract manufacturer, logistics provider or component supplier could prevent WD-40 from obtaining sufficient finished goods or inputs to meet customer demand, adversely affecting its results.

“We rely on a limited number of third-party contract manufacturers and component suppliers, including single or sole-sourced suppliers, for certain of our raw materials, packaging, product components and other necessary supplies.”