WD-40 Q4 2026: Revenue Beat Masked a Sharp Margin Squeeze
As seen on the 24/7 Wall St. homepage on October 21, 2026.
Specialty chemical costs pushed gross margin down to 52.8%, leaving earnings short of expectations. CEO Steve Brass called this the gross margin low point, with fiscal 2027 guidance of $6.40 to $6.70 in diluted EPS riding on that recovery starting next quarter.
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WD-40 Company's Q4 fiscal 2026 sales strength did not reach the bottom line: GAAP diluted EPS of $1.06 came in missing expectations, against net sales of $176.78 million that cleared consensus.
The gap between sales and earnings traces directly to margin pressure, with gross margin contracting to 52.8% as specialty chemical input costs rose. Higher performance-based incentive compensation and freight costs pushed SG&A up and operating income lower.
CEO Steve Brass characterized the quarter as the gross margin trough, a signal the company does not expect conditions to persist. He said management anticipates sequential improvement beginning in Q1 fiscal 2027, backed by formal guidance projecting gross margin recovering to between 54.0% and 55.5% and diluted EPS of $6.40 to $6.70 for the full fiscal year, representing 5% to 10% growth.
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Not every line in the quarter was under pressure, as WD-40 Specialist revenue grew 18% and Asia Pacific sales rose 13% year over year on expanded distribution in China. The company also declared a quarterly cash dividend of $1.02 per share and repurchased shares under a new buyback program approved in September 2026.
Q4's $1.06 result is the weakest in the trailing eight-quarter record, well below the $2.33 reported in Q3 2026. Whether the gross margin recovery management is forecasting materializes in Q1 fiscal 2027 is now the central question for investors weighing the full-year guidance range.
Mentioned: WDFC