How is a legend forged? WD-40—the 'Universal Lubricant'—exemplifies both the glory and the challenges of a blockbuster consumer product.

One trick, and you rule them all. In the fields of repair and DIY, WD-40 is regarded as a universal little blue bottle. Just as Cantonese people view herbal tea—as a cure-all for any physical discomfort, inflammation, headache, or itch—WD-40’s applications seem boundless: from fixing common joystick drift issues in Nintendo Switch game consoles, to unsticking jammed windows in Ford Focus automobiles, to cleaning dust and debris off DJI drone components. Seventy years after its launch, WD-40 Company (WDFC.O), the firm behind the product, still remains deliberately vague about WD-40’s actual efficacy—and even actively encourages outlandish anecdotes. For instance, its official website claims a user once successfully scared away a python hiding beneath their car using WD-40. This aura of mystery surrounding WD-40’s formula and function has fostered niche user communities dedicated to exploring its myriad uses—and even inspired near-fanatical devotion among some enthusiasts. From rocket maintenance to lubrication magic: stable operations Product-wise, WD-40 Company relies on its flagship multi-purpose lubricant to keep industrial gears running smoothly worldwide. Financially, over the past four decades, the company’s revenue and net income have shown broadly smooth growth. While quarterly figures fluctuate, annual performance has remained relatively steady, with no pronounced volatility. In fiscal year 2023 (ending August 31, 2023), the company reported $537 million in revenue, up 3.55% year-on-year; gross margin improved to 51.04%, up from 49.1% in the prior fiscal year. However, net income encountered some friction: it declined by 1.98% year-on-year to $66 million. (Note: The company’s most recent full fiscal year ran from August 31, 2022, to August 31, 2023. To align with the company’s reporting convention, this period is referred to herein as FY2023 (equivalent to the fiscal year); other fiscal years follow accordingly. Unless otherwise specified, all monetary figures in this article are in U.S. dollars.) (Source: Fingram App) The FY2023 revenue growth was primarily driven by a significant increase in Q3 revenue (+14.6% year-on-year). During that quarter, revenue rose across all regions. First, revenue in the Americas region grew 16% year-on-year, mainly due to higher sales of maintenance products in the U.S. (+21% year-on-year). This growth was largely price-driven; however, unit sales declined, partially offsetting the revenue uplift from higher prices. In Latin America, maintenance-product revenue rose 18% year-on-year, primarily because wholesale customers—anticipating future price hikes—increased bulk purchases. Additionally, revenue from the company’s direct operations in Mexico increased, driven by two factors: rising product prices and favorable exchange-rate effects stemming from the U.S. dollar’s appreciation. Although oil-sector activity in Western Canada rebounded year-on-year, boosting industrial demand for the company’s products, overall weakening demand in Canada led to a 23% decline in maintenance-product revenue there.

(28) 'Real Records of Value Investing': Case Study of Enterprises with Economic Franchises—Growth Value Analysis of WD-40 (Part I)

After appropriate adjustments for excessive depreciation and one-time expenses in 1994, average annual net profit stood at $21 million. ・ Net cash balance remained essentially unchanged; thus, the 86% dividend payout ratio was fully funded by earnings—and is sustainable. ・ Therefore, the cash return rate calculates to approximately 5.7% × 86% = 5%. ・ (2) Returns from Growth ・ Organic growth returns: Revenue and profit growth arising organically from WD-40’s existing product lines, distribution arrangements, and productivity improvements. ・ First, examine WD-40’s nominal revenue and inflation data, then compute real revenue. ・ Focus on the fundamental drivers of WD-40’s revenue growth: ・ (1) Rapid export growth into emerging economies—thus unbounded by slower growth in mature European and North American markets; ・ (2) Broad appeal across all household income levels—making it resilient to widening income inequality; ・ (3) As a physical product—not a service—it remains unaffected by the global consumption shift from goods toward services. ・ Integrating these factors, future demand growth for WD-40 is expected to slightly lag global GDP growth. Since 1998, global GDP growth has averaged 5% annually (comprising 1.5% population growth and 3.5% global productivity growth); WD-40’s real growth rate is therefore projected at ~4%. ・ With global inflation holding near 1.5%, nominal GDP growth stands at ~6–6.5% annually—implying WD-40’s nominal demand growth ceiling of ~4.5%. ・ Assuming minor margin compression—expected to persist post-1998—a 4% organic growth rate is reasonable. ・ WD-40’s organic growth investment composition: working capital requirements ・ WD-40 outsources all manufacturing and distribution. ・ Accounts receivable and inventory together amount to 20% of sales, partially offset by accounts payable and accrued liabilities totaling 6% of sales. ・ Thus, each additional $1 of sales requires $0.14 of incremental net working capital. ・ In 1998, sales totaled $144 million; at a 4.5% growth rate, sales increased by $6.5 million, requiring roughly $1 million ($6.5M × 14%) in additional net working capital—equivalent to 4.5% of the $21 million in sustainable profit that year. ・ If 86% of earnings continue to be distributed to shareholders, and 4.5% supports organic growth, approximately 10% of earnings remain available for active reinvestment. ・ In summary: a 5% cash return, plus 4% annual value growth from organic growth, totals 9%—while leaving ~10% of earnings for active reinvestment to generate further value. ・ Returns from active reinvestment: the return generated by active reinvestment programs ・ Amount allocated to active reinvestment: ・ Based on the above analysis, after allocating $19 million (86% of $22 million) to shareholders and reserving $1 million to support organic growth, the remaining $2 million of sustainable earnings is earmarked for active reinvestment.

Can WD-40’s (WDFC) Sales Growth and Margin Gains Offset Pressure on Profits?

Apr 12, 2026

WD-40 Company reported Q2 2026 sales of $161.67 million, up from the prior year, though net income declined; management reaffirmed full-year guidance citing strong maintenance product growth and expanded margins.