WD 40 (WDFC) Q2 2026 earnings call transcript

Thank you. Good afternoon and thanks to everyone for joining us today. On our call today are WD-40 Company's President and Chief Executive Officer Steve Frass, and Vice President and Chief Financial Officer Sarah Heizer. In addition to the financial information presented on today's call, we encourage investors to review our earnings presentation, earnings press release, and form TIN-2 for the period ending February 28, 2026. These documents will be made available on our Investor Relations website at investor. wd40company. com.

A replay and transcript of today's call will also be made available shortly after this call. On today's call, we will discuss certain non-GAP measures. The descriptions and reconciliations of these non-GAP measures are available in our SEC filings, as well as our earnings documents posted on our Investor Relations website. As a reminder, today's call includes forward-looking statements about our expectations for the company's future performance.

Actual results could differ materially. The company's expectations, beliefs, and projections are expressed in good faith, but there can be no assurance that they will be achieved or accomplished. Please refer to the risk factors detailed in our SEC filings for further discussion.

Finally, for anyone listening to a webcast replay or reviewing a written transcript of this call, please note that all information presented is current only as of today's date, April 9, 2026. The company disclaims any duty or obligation to update any forward-looking information as a result of new information, future events, or otherwise.

With that, I'd now like to turn the call over to Steve.

Thanks, Wendy, and thanks to everyone for joining us today. I'll begin on an overview of ourselves' performance for the second fiscal quarter of 2026, followed by an update on the progress we've made across select areas of our four-by-four strategic framework. Sarah will then walk through the details of our second quarter results, recap our business model, share a brief update on the divestiture of our home care and cleaning business, and review our guidance for fiscal 2026, and we'll conclude by taking your questions.

Today we reported consolidated net sales of 161.7 million, an increase of 11% compared to last year. Let's spend a few moments looking more closely at those results and the factors contributing to our performance.

Maintenance products continue to be our core strategic focus, accounting for roughly 97% of total net sales as quarter. Net sales in this category totaled 156.8 million, reflecting a 13% increase year over year.

On a constant currency basis, net sales in this category increased 6% year over year, in line with our long-term growth expectations for maintenance products.

As a reminder, we go to market to a mix of direct operations which represent approximately 80% of global sales and marketing distributors which account for the remaining 20%. Two in the second quarter, sales and maintenance products in our direct market grew 14% compared to prior year. Sales through our marketing distributor network increased 9% year over year, cruising primarily by sequential improvement across our Asia Pacific distributor markets, as we saw the anticipated rebound following a softer first quarter.

I'd also like to highlight that our gross margin remains solidly within our expected guidance range of fiscal year 26. In the second quarter, we delivered a gross margin of 55.6% up 100 basis points year over year. On an adjusted basis, excluding assets held for sale, gross margin was 56%.

Now let's talk about second quarter sales results by segment starting with the Americas. Unless otherwise noted, I'll discuss net sales in a reported basis compared to the second quarter of last fiscal year. Sales in the Americas, which includes the United States, Latin America and Canada, the 71.8 million in the second quarter, an increase of 10% compared to last year.

Sales and maintenance products in the Americas were 69.1 million and increase of 11% was 6.7 million compared to last year.

Nearly all of that growth was driven by higher sales and maintenance products in the US, which increased 15% compared to last year. Sales performance of DB40 multi-use products in the US was particularly strong, increasing by 5 million of 15%. This growth was driven by higher volumes and select customers and online retailers, supported by elevated promotional activity and modest price increases, which we implemented earlier into school year 26.

We expect a strong momentum in the US to continue with numerous activities already planned for the second half of fiscal year 26.

In the Americas, maintenance products sales also benefited from strong growth of DB40 specialists, which increased 17% compared to the prior year. That growth was driven primarily by expanded distribution and higher online sales in the US. We saw modest sales growth in Latin America as quarter, which is largely offset by softer sales in Canada, leaving overall performance for the combine regions, essentially unchanged.

Home care and cleaning product sales declined 13%, reflecting our strategic shift toward higher margin maintenance products in alignment with our four by four strategic frameworks. In total, our Americas segment made up 44% of our global business in the second quarter.

With a significant number of initiatives planned in the back half of the fiscal year, our outlook for the Americas is very strong. As a result, we expect high single digits into low double digit growth in the Americas fiscal year, driven primarily by strong activity in the United States. This strong top line growth positions as well to help offset uncertainty associated with global economic and geopolitical conditions that could impact other areas of the business.

Now turning to IMAIA, which includes Europe, India, the Middle East and Africa. Cows are 64.9 million in the second quarter, an increase of 9% compared to last year. This increase is driven by favorable foreign currency exchange rates, as most IMAIA sales are transacted in euros or pound sterling and translated into US dollars for reporting purposes. On a constant currency basis, sales were down 3% here over here.

We sell into IMAIA through a combination of direct operations as well as through marketing distributors. Net sales and IMAIA direct markets, which accounted for 70% of the region's sales, increased 12% during the quarter to 45.6 million in US dollars.

Given that currency translation can obscure our reported results, we believe it's helpful to also consider performance in the local currencies in which we transact sales. In local currency, we continue to see double digit growth of WD40 multi-use products across many of our direct markets, including France, Iberia and Benalox. The sales increased 16% 12% and 12% respectively, driven by successful promotion activities.

These sales increases were entirely offset by lower volumes in our distributor market. Net sales and IMAIA distributor markets, which accounted for 30% of the region's sales, increased 1% during the quarter to 19.2 million in US dollars. 1,000 RMA distributor markets were most notably impacted in the Middle East, reflecting the timing of customer orders, following strategic distribution changes.

We transitioned to a new marketing distributor partner in a key country during the first half of fiscal 26, which shifted the timing of customer orders. With the transition now complete, we expect increased activity in the second half of the fiscal year, subject to further geopolitical disruption in the region. As a reminder, we divested the UK home care and cleaning port value in fiscal 25, which negatively impacted second quarter sales by 1.5 million.

In total, RMAIA segment made up 40% of our global business in the second quarter. As we look ahead, we expect a better second half performance in IMAIA. We are closely monitoring the geopolitical conditions in the Middle East. Sales to the region directly affected by the current geopolitical tensions represented approximately 3% of global sales in fiscal year 25.

Our presence in these markets is limited. We have one manufacturing partner in the region that knows significant operations beyond the distribution and sale of our products through third party distributors. We will continue to monitor the situation closely and assess any potential impacts of circumstances at all. Despite this disruption, we expect to achieve mid-single-digit growth on a constant currency basis this fiscal year.

In reported currency based on current exchange rates, we would expect growth of maintenance products in IMAIA to be in the high single-digit fiscal year.

Now on to Asia Pacific, 1000 Asia Pacific, which includes Australia, China and other countries in the Asia region for 25 million in the second quarter, an increase of 19% or 1.3 million compared to last year. We did benefit from favorable currency movements in Asia Pacific, although to a lesser extent than IMAIA. On a constant currency basis, 1000 the region were up to 16% versus last year.

Most of that growth has driven by higher sales in China and our Asia distributor markets with sales and maintenance products increased 25% and 19% respectively compared to last year. Sales and W40 multi-use products were strong across the trade block. In China, sales and W40 multi-use products increased by 1.1 million or 18% driven by higher volumes from effective promotional programs and marketing activities, as well as expanded distribution. Particularly through online retailers and industrial channels.

In our Asia distributor markets, sales and W40 multi-use products increased by 1.3 million or 17% partially due to successful promotional programs, particularly in Malaysia and the Philippines. We are pleased to see a strong rebound in the Asia distributor markets as customers in the region have adjusted back to more typical inventory levels. In Australia, sales and W40 multi-use products increased 15% driven by the timing of customer promotions and expanded distribution.

In Asia, Pacific maintenance products sales also benefited from strong growth in W40 specialists, which increased by 55% compared to the prior year. Sales increased most significantly in China, driven by successful promotional programs, along with expanded distribution, particularly through online retailers and industrial channels. In total, our Asia Pacific segment made up 16% of our global business and second quarter.

Based on current visibility, the expected momentum to continue for the remainder of the fiscal year. However, like many companies, remain cautious given ongoing global economic and geopolitical instability. We expect Asia Pacific to let a strong growth in the back half of the school year 26, supporting mid to high single digit growth on a reported currency basis for the fall fiscal year.

Now let's talk about our must-win battles. A core element of our strategy is accelerating revenue growth in our maintenance products through our must-win battles. In the beginning of the year 26, we are continuing to increase its 6% compared to the same period last year. We delivered solid performance in the Americas and in May, with sales going 7% and 6% respectively.

Year-to-date sales in Asia Pacific remained flat. However, following the strong recovery experience in the second quarter and the momentum we expect in the second half of the year, the anticipate solid growth in the region for the fall fiscal year. We continue to make excellent progress across many key markets, delivering strong year-to-date sales growth, including increases in local currency at 7% in the US, 4% in China, 10% in France and 14% in Iberia. We estimate the attainable market for W40 multi-use products at about 1.9 billion, with fiscal year 25 sales at 478 million, that leaves roughly 1.4 billion of long-term growth opportunity ahead of us.

Next is must-win battle number two, accelerating premiumization. This is centered on accelerating growth in our premium W40 multi-use product format. Products such as Smart Straw and Eevee Reach are developed for the end-user at the forefront of every decision. The strong focus on the end-user enhances brand loyalty, supports gross margin growth and strengthens our competitive advantage. Year-to-date, combined sales of W40 Smart Straw and Eevee Reach increased 9% compared to the prior year.

Premiumized products represent approximately 50% W40 multi-use product sales, leading meaningful runway for continued growth. They're targeting a compound annual growth rate for premiumized product net sales of greater than 10%. Our third must-win battle is to drive W40 specialist growth. If W40 multi-use product is a Swiss Army 9th of maintenance, W40 specialist is a dedicated tool, a hammer, screwdriver or range designed for specific jobs. This focused brand extensions strengthens our portfolio without diluting the iconic core.

Year-to-date sales of W40 specialist were 44.9 million, up 19% compared to last year. They're targeting a compound annual net sales growth rate for W40 specialist of greater than 10%. I'm excited to share it in the second half of this fiscal year, we'll launch our latest innovation within the W40 specialist product line, a bio-based multi-use lubricant across several European markets.

Formulated with 85% bio-based ingredients, the product meets stringent environmental standards, while delivering the professional grade performance our end users expect. This launch reflects our commitment to practical innovation and environmental stewardship. A fourth must-win battle is to turbocharge digital commerce. As it still commerce, strategy plays a vital role in advancing each of our must-win battles by increasing brand visibility, improving accessibility and deepening end-user engagement across global markets.

Year-to-date e-commerce sales increase 23%, driven primarily by strong momentum in the United States and China. We'll now move to the second element of our 4x4 strategic framework, our strategic enablers, which focus on operational excellence. Today, I'll provide updates on strategic enablers 3 and 4. Our third strategic enabler is operational excellence in the supply chain. Profitable growth requires the supply chain that's optimized, high performing and resilient. In the second quarter, we've delivered global on-time in full performance of 96%, reflecting the discipline and reliability of our operations.

Our decentralized global supply chain is a strategic advantage, enabling both resilience and agility in periods of economic and geopolitical uncertainty. By limiting exposure to any single region, we reduce risk across the network. If a manufacturing partner is impacted by unforeseen circumstances, we can quickly pivot and shift production to other partners within weeks, an agility that's especially valuable in uncertain times.

We spent the last three years strengthening our global supply chain, adding even more manufacturing partners, optimising inventory and building a more agile network. We recently added a new manufacturing partner in IMAIA, further diversifying our European supply chain and transitioning from a single dominant partner to multiple partners across the continent. The logistics associated with this transition resulted in a temporary inventory building IMAIA. At the same time, we also built inventory in the United States in anticipation of the strong third quarter.

These higher inventory levels are beneficial as they help interlators from short-term gross margin volatility, including the impact of near-term fluctuations in crude oil prices. Based on current inventory levels, we do not expect gross margins to be significantly impacted in the third quarter, which provides us time to take mitigating actions to defend gross margins as needed. Overall, our supply chain is significantly more resilient today than it was historically.

These changes support gross margin expansion and help insulate the business amid ongoing global economic and geopolitical uncertainty. Our full strategic enablers to drive productivity through enhanced systems, and the new fully-company technologies are critical enabler of productivity and scale. But building a digital foundation designed to support global growth and increase operational flexibility, helping us execute our strategy faster and more effectively.

We've made meaningful progress deploying proven AI-enabled platforms like Microsoft Dynamics 365, Salesforce, and Atlas for supply chain. Our goal isn't just personally efficiency, it's rethinking processes across the business. We are aware of appropriate leveraging artificial intelligence across certain parts of the business to improve efficiency and augment decision-making. Our focus remains on practical, responsible applications that enhance productivity and support our teams.

In addition, we continue to make progress in our enterprise resource planning or ERP implementation. In the second course, we went live with another phase of the rollout in Canada. The new system is now operating across the substantial portion of the business, including the U. S. , our Latin America Asian distributed markets operation and Canada, together representing roughly half of global revenue.

With that, I'll now turn the call over to Sarah.

Thanks, Steve. Today, I will go over our results against our business model and discuss the key factors driving our second quarter performance. I'll also provide an update on the planned divestiture of our America's home care and cleaning business, along with our fiscal year 2026 guidance and the assumptions we made to provide more transparency.

First, we were pleased with our second quarter performance and the momentum we're seeing in the business with operating income this quarter, growing at 4% over prior year on a constant currency basis. As we noted last quarter, we expected results to strengthen as the year progressed, following a slow start, and that improvement is showing us across both the top line and the bottom line. As Steve mentioned, the expected top line strengths, particularly in the U. S. , will help to buffer any impacts of the current geopolitical tension in the Middle East. And with that, I will cut to the chase that we are reaffirming our full year 2026 guidance, even through all this turbulence.

I'll cover our assumptions behind the guidance later in my remarks. With that as the lead, now let's take a closer look at our business model. This framework serves as a disciplined guide for how we manage and allocate resources across the business. It is anchored in three T components, growth margin, cost of doing business, and adjusted EBITDA. In the near to mid-term, we actively manage each element within defined ranges, which gives us strategic flexibility while remaining aligned with our long-term objectives.

Because the model is fundamentally driven by revenue, changes in sales levels from quarter to quarter can result in some variability in model performance.

We will begin with growth margin performance, which continues to be strong. In the second quarter, our growth margin was 55.6%, up from 54.6% in the second quarter of last year, representing an improvement of 100 basis points. Growth margin was most significantly impacted favorably by 80 basis points from lower specialty chemical costs and 70 basis points from higher average selling prices, including the impact of mixed and premiumization.

These positive impacts to growth margin were partially offset by higher other miscellaneous input costs, primarily in IMAAS, which negatively impacted our growth margin by 40 basis points.

Growth margin in the Americas increased 300 basis points, rising from 50.1% to 53.1%, driven by higher average selling prices and lower specialty chemical costs.

In IMAAS, growth margin declined slightly by 90 basis points, from 58.1% to 57.2%, reflecting higher filling and warehousing fees, partially offset by lower costs for specialty chemicals. In Asia Pacific, growth margin increased slightly by 30 basis points, from 58.4% to 58.7%, primarily due to favorable changes in sales and market mix periods over periods.

We remain encouraged by the overall trajectory of growth margin, while recognizing that the operating environment continues to present external headwinds. Subsequent to our quarter and recent geopolitical developments in the Middle East, I've contributed to the increased cost of certain petroleum based specialty chemicals and other input costs, which will impact our cost of product sold. As Steve discussed a few minutes ago, we do not expect that our growth margin will be significantly impacted until the fourth quarter of fiscal year 2026, based on current inventory levels.

The duration of this conflict and its impact on our raw materials will drive our decisions around mitigation efforts, which we are currently assessing. For more reasons than just the impact to our business, we hope this development is short-term in nature. I will go over our assumptions over the price of oil when I discuss our full year 2026 guidance.

Now, turning to our cost of doing business, which we define as total operating expenses adjusted for certain non-cash items. Cost of doing business is primarily influenced by three areas. Our investment in people, global brand building initiatives, and freight costs associated with delivering our products to customers.

In the second quarter, our cost of doing business was unchanged from prior year at 38% of net sales. Investing in our future may remains a top priority, while our long-term objective is to manage our costs of doing business within a 30 to 35% range. We have been making deliberate investments to support sales growth and improve operational efficiency.

These investments are strengthening our foundation and positioning the business for long-term sustainable growth. In addition, we continue to work through the revenue impact associated with the fourth quarter, 2025, home care, and cleaning divestiture in the United Kingdom.

In dollar terms, our cost of doing business increased 7 million or 13% compared to the prior year quarter. Unfavorable foreign currency exchange rates accounted for 3 million of that increase this quarter. So at a constant currency basis, the increase was 7%. The majority of the remaining increase, 2.3 million, was driven by higher employee related expenses, including incremental headcounts to support initiatives aligned with our 4x4 strategic framework.

Advertising and promotional expenses increased year over year, reflecting higher levels of promotional activity and marketing support, particularly in the Americas and IMAA. As a percentage of net sales, A&P spends was 5.5% this quarter, compared with 5.1% in the prior year. While we are currently tracking slightly below our full year guidance of approximately 6% of net sales, we have brand building initiatives planned for remainder of the fiscal year, which we expect will bring A&P investment in line with our full year guidance.

As the business grows, we expect leverage from higher revenues to move the cost of doing business toward the target range. With sales growth and cost control serving as the main catalyst for improvement, turning now to adjusted EBITDA. In the second quarter, our adjusted EBITDA margin was 18% flat compared to last year. Adjusted EBITDA margin is an important indicator of both profitability and operational efficiency.

In the nearer term, we continue to believe we can return adjusted EBITDA margin to our mid-term target range of 20 to 22%. As we absorb the revenue impacts associated with the home care and cleaning divestitures, the 25% target at the high end of our range represents the long-term aspiration for the business. Getting there will be driven by scale, growth margin accretion, and making progress on our cost of doing business targets.

Turning now to other key measures of financial performance, let's review operating income, net income, and earnings per share for the second quarter. Operating income increased 13% to 26.3 million in the second quarter, with foreign currency being a tailwind for us this quarter. On a constant currency basis, operating income increased by 4%, primarily driven by higher sales and improved growth margins, partially offset by increased operating expenses.

Net income was 20.3 million compared to 29.6 million in the prior year fiscal quarter. You may recall that in the second quarter of fiscal year 2025, we recorded a nonrecurring, non-cash tax benefit of 11.9 million that had a significant positive impact on the results last year. Excluding this one-time benefit, net income would have increased 2.4 million, or 13% in the second quarter compared to the prior year.

Deluded earnings per carbon share were $1.50 in the second quarter compared to $2.19 in the prior year. Deluded EPS for the quarter reflects 13.5 million weighted average shares outstanding. Excluding the one-time tax benefit in the prior year, non-gap EPS would have increased 14% over the prior fiscal quarter. Additional details on last year's tax benefit are available in our FBC filings.

Turning now to our balance sheet and capital allocation. We continue to operate from a position of financial strengths with solid liquidity that supports the discipline, strategy, focus on long-term growth, and the generation of reliable cash flow returns for our stockholders.

Our capital deployment decisions continue to emphasize discipline and accretion with the objective of enhancing long-term stockholder value. Our first focus is investing back into the business through advertising and promotional activities. After investing back in organic growth opportunities, dividends remain our top capital allocation priority with an annual payout target of more than 50% of earnings. On March 16, our board of directors approved a quarterly cash dividend of $1.02 per share.

In the second quarter, we executed share repurchases totaling approximately 38,175 shares for an aggregate cost of $8 million under our authorized program. As of quarter end, roughly 14 million remains available for repurchases, with the authorizations set to expire at the end of the fiscal year. Given our confidence in the strength and durability of the business, we increase the pace of repurchases and intend to utilize the remaining authorization.

Before turning the guidance, I'd like to share a brief update on the household divestiture. We continue to advance the process to sell our Americans' home care and cleaning brands, with our investment banking partner actively engaged in discussions.

While there can be no assurance that a transaction will be completed, we are encouraged by continued discussions and will provide updates as the process progresses.

So let's turn to fiscal year guidance. As a reminder, we issued this year's guidance on a pro forma basis, excluding the financial impact of the home care and cleaning brands currently classified as access Paltrow failed. Although the timing remains uncertain, this approach is intended to provide clearer visibility in his performance of the core business and limit variability associated with the transaction.

While geopolitical developments in the Middle East and their potential impact on the global economy warrant caution, we are encouraged by the momentum in the business. We have clear visibility and promotional activity in the U. S. and are seen improving momentum in both I may have and Asia Pacific. With a number of initiatives planned for the second half of the year, we are confident in delivering a solid full year outcome. And so we are reaffirming our guidance today.

We continue to expect net sales and constant currency to land at the mid to high end of our guidance range, reflecting the strength and visibility we have on the top line. At current exchange rates, we expect low double digit revenue growth for the full fiscal year on a reported currency basis.

However, the duration and potential impacts of ongoing geopolitical developments in the Middle East have introduced an increased level of uncertainty. While we remain confident in achieving our full year guidance, we now expect metrics below the top line to fall within their respective guidance ranges, as opposed to tracking towards the mid to high end. We expect metrics and 115 per barrel, and an average euro to US dollar exchange rate of approximately 1.15 for the back half of the year.

It also reflects our current view of broader macro economic conditions. Actual results may vary if these inputs differ materially from our assumptions.

For fiscal year 2026, we expect net sales to be between 630 and 655 million after adjusting for foreign currency impact, a growth of between 5 and 9% from the pro forma 2025 results. In reported currency, we expect revenues between 650 and 680 million using current exchange rates in the back half of the year, excluding revenues from the assets held for sale.

Growth margin is expected to be between 55 and a half and 56 and a half percent. Advertising and promotion investment is projected to be around 6% of net sales.

Operating income is expected to be between 103 and 110 million, representing growth of between 5 and 12% from the pro forma 2025 results.

The provision for income tax is expected to be between 22 and a half and 23 and a half percent. And diluted earnings per share is expected to be between 575 and 615, which is based on an estimated 13.4 million weighted average shares outstanding.

This range represents growth of between 5 and 12% over the pro forma 2025 results. In the event, we are unsuccessful in the divestiture of the American's home here in Cleaning Brands. Our guidance would be positively impacted by approximately 12.5 million in net sales, 3.6 million in operating income, and 20 cents in diluted EPS on a full year basis.

That completes the financial overview. Now, I would like to turn the call back to Steve.

Thank you, Sarah. In summary, what did you hear from us on this call? You heard that in constant currency sales of maintenance products were up 6% in the second quarter, in line with our long-term growth expectations.

You heard that in reported currency, sales of DIVI 40 multi-use products were up 12% in the second quarter that growth across all three trade blocks. You heard that in reported currency, sales of maintenance products in our direct markets were up 14% in the second quarter. You heard that all our muscle in battles are performing well, and that year to date in reported currency, sales of DIVI specialists were up 19%, sales of penalized products were up 9%, and sales in the e-commerce channel were up 23%. You heard that in the second quarter, our growth margin was 55.6% of 100 basis points in the second quarter of last year.

You heard that we continue to accelerate buybacks and plan to fully utilize our remaining authorization for the objective and enhancing long-term stockholder values. You heard that our decentralized global supply chain provides resilience and agility amid economic and geopolitical uncertainty, and at recent supply chain initiatives along with higher inventory levels are supporting growth margin in the near term, giving us time to take mitigating actions as needed.

You heard that we have cleared visibility into strong promotional activity in the US in the back half of the school year 26, and we are seeing improvement in momentum across both IMAIA and Asia Pacific. You heard that while geopolitical developments in the Middle East and their potential impact on the global economy warrant caution were encouraged by the momentum in the business and believe this momentum will help them mitigate impacts associated with global economic and geopolitical conditions that could affect for the rarest of the business.

And you heard it with a number of initiatives planned for the second half of the year are confident in delivering a solid full year outcome, and so we are reaffirming our guidance today. Thank you for joining our call today. We'd now be pleased to answer your questions.

Ladies and gentlemen, if you would like to register a question, please press star one on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. If your question has been answered and you would like to withdraw your registration, please press star one again. One moment please for the first question.

Sure, Michael. So this is good to hear from you. Yes, you understood that correctly. So we are maintaining our expectation for revenue growth in the mid to high single digits. And just given the growth, the risk right now that we see in the growth, growth margins and considering some of the mitigation actions, depending on how long this lingers, we believe were kind of well within the range. But we're not necessarily saying that mid to high for all of the other metrics.

Yes, definitely. I mean, we are seeing the input costs increase since the subsequent subsequent to our quarter end. In our previous guidance, it was closer to the 65 to 85 dollar range. And so it had moved up quite a bit.

So it's, hopefully, that was a very good summary. You probably said it better than I could.

Well, hey, Mike, it's Steve. So there's a lot going right in the US. And so you heard that we've already, specialist is growing very, very nice in the private digits. E-commerce is working very, very well for us with very strong growth and e-commerce. And then as we look, I mean, you've already seen very strong growth in the first half.

But, you know, compared to what's coming in the second half of the programs beginning in Q3, we have an extremely strong, you know, kind of unprecedented in recent history of the company, an outlook for the US with a very, very substantial promotional program for the back half of the year.

It's both. So the major promotions of within existing customers, we've also, we have brought on board and a major new customer in the discount channel as well, which is starting to add some nice additional revenue as new distribution.

So the increase in specialists was across the board. And so, you know, we had China, the distributors and Australia, all delivering very strong philanthropic growth. So it wasn't a particular region or a particular channel. I'd say the underlying theme is new distribution and promotions combined as well as a continued innovation and new products and across the region. And so it's not one thing.

You know, we are seeing very, very strong. I'm not sure we'll deliver 55% growth each and every quarter, but you should expect the 40 specialists to continue to grow very strongly in the nation.

Well, not at all in our premiumized products have consistent delivered around that 9 10% you know, growth rate historically. There's absolutely no reason why that can't continue. We see that building in the second half of the year and moving into double digits for the year. And so, you know, you've got, you know, $25 million plus or about $250 million based now on premium products. And, you know, in terms of units sold globally, it's about 40% of units. So our best markets, you know, in terms of premiumization penetration are approaching 80% including the US. And so we have a long, long runway for growth, several hundred million dollars of growth out of that benchmark opportunity on premium formats.

Yeah, Daniel. Hi, Steve. So, yeah, I mean, we obviously were not, you know, we're not, we're not rushing into things. And so we're carefully evaluating this situation. It seems it's almost on a daily basis. It's kind of changing.

And we don't want to telegraph our kind of intentions, you know, how to competition on this call in particular, but we are looking active. We are looking actively at mitigation, both in terms of, you know, potential price movement and for the cost saving initiatives, which would mitigate this thing. We did talk to having high inventories, right? And so with the shift we made in email, we've built up considerable inventories and with the US with our strong promotional programs for Q3, we have strong inventory basis. And so that was either excellent strategic planning or good fortune, whichever way you look at it.

And so to cook to the chase, I suppose, in terms of the impact of decisions we all make today, you're going to see that impact in the fourth quarter, but maybe not the beginning of the fourth quarter. And so any measures we take would begin to hit the business in the fourth quarter.

Yeah, we haven't disclosed the, I mean, the dollar amount, you're already starting to see some of that with the buildup of the inventory levels on our balance sheet and Q2. So some of that has already happened. And that was really to support, as Steve had mentioned, the planned back half promotions. The buildup also did occur because we actually were successful in transitioning to a new filler in Europe. And so we did also intentionally build some inventory as we worked through that transition. And that really happened right at the end of Q2. So I think what we're anticipating to see is the inventory building Q2, it'll continue to build a little bit into the third quarter.

It'll start to work its way down. And then really, I think you'll see a high or AR balance at the end of Q3, which that'll get worked down before we get to the end of the fourth quarter. So there's going to be a little bit of a tail from a working capital perspective, but we have a strong balance sheet and we can afford to have some blips there if we need to.

Thank you for the questions, Daniel. And so the products you're launching across seven or eight European countries, this quarter. And so, you know, you always have a build time to build. And we have plans to roll that out globally, which will probably go into next fiscal year.

And, you know, I don't want to create, you know, crazy expectations to this. This is a, it's a, it's a, it's the first iteration of our multi-use product, essentially with a bio-based form. So it's 85% bio-based formulation, which meets all of the European kind of regulations around bio-based products.

And, yeah, so, so, you know, ultimately, if it's very successful, yeah, it will begin to reduce our dependence on oil going forward. And that will be a nice, a nice hedge, you know, that's going to take multiple years for that to be meaningful revenues.

Yeah, I can, I can start that. I'll turn it over to you to wrap up that one. So, I mean, yes, it is, it is, the environment we're in today is definitely challenging to attempt to forecast. I think what is helping us right now is that we do have, you know, a fair amount of inventory sitting on the balance sheet, which we, you know, can phase out when we can plan out when that's going to flow through. And so, you know, if oil stays within that range that I talked about between 95 and 115, you know, the impact to the business, and this is, you know, potentially before mitigating factors that we might implement.

You know, we're able to, within that range, I think, reasonably predict what the fourth quarter is going to look like. And, you know, with the third quarter and the fourth quarter, you know, we believe we'll be able to stay within that guidance. There are some puts and takes there, you know, with access to certain markets.

And maybe I'll let Steve talk a little bit about that. That might bring it down, but then there's still some upside to go after.

Yeah, just very strong basis in the US. And so I can't emphasize in North, you know, given, you know, the volatility around how that US performance, which we talked about, could actually be into the double digits this fiscal year, which is, which is, you know, a long time since we've achieved that in the US. And so that's a really positive kind of basis.

And that's helped mitigating me. We do have some exposure in the Middle East, obviously, that's about 3% of our business. And so, you know, maybe just a few million dollars worth of risk in the Middle East in terms of the actual geographic region. But you've had Europe coming back outside of the Middle East. You know, we did make a change in Europe in the first half of a distributor in one of our key territories. And so that's coming back in. We began to ship in March again to that particular territory, believe it or not.

And Europe sequentially in the second quarter was about 10% bigger in revenues, about 55 million in local currency in euros compared to around 50 in the first quarter in next thousand. So, you did see an uptick of around 10% in absolute terms in the first quarter in Europe. And we do expect that despite the turbulence to continue in Q3 and Q4, much stronger revenue in in America.

And then Asia Pacific, you know, China is delivering solid double digit growth continually and did so in the first half year. So we expect China to continue with strong double digit growth for the year. And you know, there is potentially some downside risk in Asia, a little bit contagion going on there at the moment in terms of, you know, potential kind of shut down the operations and kind of fuel availability.

And so that is some downside risk, but we still see, you know, for the year in Asia overall mid to high single digit growth. And so overall, the picture is looking, you know, reasonably bright subject of course to further tokens.

Yeah, so it's things I think I've just kind of spoken to. So the China piece, I mean, the China team just continuously deliver these strong results. And it's just, you know, whatever's going on in the economy, we're continually opening new points of distribution, we're continually sampling. And so that's driving growth in China, whatever's going on with the economy.

You know, you've seen a strong, you know, the Asia distributors came back very strongly in Q2. And that was really just a phasing question between Q4 and Q1. You know, POS cells didn't really change between those periods, it was just inventory levels. And so we, you know, we kind of highlighted that would improve in Q2 and it did. And so that's good, and we expect that to continue.

And then, you know, Australia is set up for a good, you know, typical kind of mid single digit growth for the year as well. And so yeah, we're optimistic about the outlook for erosion.

Okay. So yeah, Europe, yeah, it's been flat with very transparent, you know, I mean, it's been, you know, kind of, you make it look a little better with the currency, there's a big currency kind of benefit there. But, you know, in volumes are kind of flat at the mid year. Direct markets in Europe are actually up around 4% combined. And we did kind of talk about many of our markets are doing very well. We have markets.

Iberia doing very well, well into double digits, brands doing well. I better looks doing very, very well. And so overall, direct markets are coming back. It was really just this one distributor issue, particularly in the Middle East, that undermined the kind of performance of about 3 million down versus prior year, as well as a couple of promotional phasing issues with other MDs, but really the Middle East one was the big one there. And so yeah, we see Europe coming back with stronger growth in the second half.

You know, in that kind of mid single digit kind of level, depending on the exchange rate or actual exchange, that could actually get into double digits or at the very kind of low case, high single digits we believe for the year.

You are not. I'm actually looking at the same headline right now. And unfortunately, I think what they pulled based on what I can do, based on what I can tell is they actually pulled the non gap EPS number from Q2 last year. So they compared the $1.32 unfortunately, which then drove the headline. And then there was an even a follow on where they actually did pull the right $1.50 and then they compared it to the $1.40 and saying that the $1.50 fell short of the $1.40. So unfortunately, I think they just won, pulled the wrong number.

But yeah, it's an unfortunate situation that it hits the headline like that, because that's not the case, this quarter.

We're not. And I'm pulling my hair out. Thank you.