WD 40 (WDFC) Q3 2026 earnings call transcript

I will now turn the call over to Wendy Kelly vice president stakeholder and investor engagement. Please go ahead. Thank you and good afternoon. Thank you for joining us today. On our call today are WD-40 companies president and chief executive officer Steve brass and vice president and chief financial officer Sarah hyzer. In addition to today's discussion, we encourage investors to review our earnings presentation, press release and form 10 to you for the period ending May 31, 2026.

Available on our investor relations website at investor dot WD-40 company dot com. A replay and transcript of today's call will also be posted shortly.

We will discuss certain non gap measures today. Reconciliation to gap results are available in our SEC filing and earnings material. Today's call also includes forward looking statement actual results may differ materially. Please refer to the risk factors in our SEC filings for more information.

Finally, please note that all information presented is current as of July 9, 2026, and we undertake no obligation to update forward looking statement. If that I'll turn the call over to Steve.

Thanks Wendy and thanks to everyone for joining us today. I'll begin with an overview of our third quarter performance and progress against select areas of our four by four strategic framework. Sarah will then review our financial results and outlook and will conclude with your questions. Third quarter consolidated net sales increased 24% year over year to 195.1 million maintenance products, which represented 97% of total net sale increased 26% to 189.7 million. And we're up 22% on a constant currency basis, exceeding our long term growth expectations and setting a new record for the company.

South of maintenance products in our direct markets increased 28% year over year, or sales through our marketing distributor markets increased 18%. We'll discuss the drivers of this performance in a moment. We're confident that the actions we've taken position as well for recovery thereafter. We will vigorously defend our gross margins and may need to take further action in fiscal year 2027 as required.

Sarah will provide additional perspective on our outlook in a moment. Now let's review third quarter sales results by trade block. Unless otherwise noted, I'll discuss net sales on a reported basis compared to the third quarter of last fiscal year. Sales in the Americas increased 29% year over year to 101.2 million, driven by a 31% increase in maintenance products to 98.3 million.

This growth was driven primarily by increased sales of W40 multi-use products in the US and Latin America, where sales increased 17.2 million and 2.6 million respectively.

Strong performance of W40 multi-use product in the US was driven by several factors, including expanded distribution, robust e-commerce sales and strong promotional activity, including a high impact promotional campaign featuring a limited edition can collaboration with Disney Entertainment and the Home Depot.

In Latin America, sales increased across Brazil and Mexico, supported by a higher sales volume in Brazil and a combination of sales growth and favorable foreign currency translation in Mexico.

W40 specialist sales increased by 22%, driven by higher US volumes, reflecting new distribution gains, strong placement with large retailers and growth in online sales.

Home care and cleaning product sales declined 9%, reflecting our strategic focus on higher margin maintenance products. Sarah will give an update on our US home care and cleaning business later in the call.

Looking ahead, we expect low double-digit growth in maintenance products in the Americas for fiscal year 2026. Turning to IMAIA, sales increased 17% year over year to 66.6 million, reflecting higher sales volume in both direct and distributed markets, as well as favorable foreign currency exchange rates. On a constant currency basis, sales were up 10%. In our IMAIA direct markets, sales increased by 6.6 million, driven by double-digit growth in maintenance products across key markets, including Iberia and Dak.

In these regions, sales of maintenance products rose by 2.2 million and 1.5 million respectively, supported by strong commercial execution, promotional activity and merchandise. In our distributor markets, sales increased by 4.4 million, reflecting a strong rebound after several softer quarters and the positive impact of completed strategic distribution changes. Growth was driven by higher sales volumes across key markets, including Saudi Arabia and the United Arab Emirates, supported by the timing of customer orders and increased inventory build within the region. In India, sales increased 1.6 million, primarily due to favorable order timing and foreign currency impacts.

Sales in the IMA region also benefited from some advanced buying as customers proactively manage inventory levels and get uncertainty around products availability following geopolitical developments in the Middle East. We also experienced some advanced buying ahead of price increases, which became effective in early Q4. As a result of both of these factors, a portion of four quarter demand shifted into the third quarter.

To be fully specialist, sales increased 31% driven by growth across most of our direct and distributed markets. Growth was led by France and Iberia by strong marketing programs and new product introductions, supported higher sales. As a reminder, the divestiture of the UK home care and cleaning portfolio in fiscal 2025, reduced third quarter sales by $1.1 million.

Despite ongoing uncertainty in the Middle East, we expect maintenance product sales in IMA to increase by low to mid single digits in constant currency and high single digits in reported currency in fiscal year 2026.

In Asia Pacific, sales increased 24% year over year to 27.3 million and were up 18% on a constant currency basis. Growth was brought based across the region, driven primarily by China and Asia distributed markets, which increased 3 million and 1.4 million respectively. In China, growth is driven by higher sales volumes supported by promotional and marketing programs, including online influences and expanding distribution across online retail and industrial channels.

Sales also benefited from advanced buying ahead of planned price increases later in the year, which shifted a portion of expected four quarter demand into the third quarter.

In our Asia distributor market, sales increased driven by promotional programs, particularly in the Philippines, Indonesia and Malaysia. To be 40 specialist sales increased 1 million or 32% driven by growth across the region, with the strongest gains in China where higher volumes were supported by promotional and marketing programs and expanded distribution. We remain encouraged by regional momentum and expect high single digit to double digit growth in maintenance products in Asia Pacific for fiscal year 2026.

Now, let's talk about our Muslim battles, a core element of our strategy to accelerate revenue growth in maintenance products. Starting with Muslim battle number one, lead geographic expansion. Year to date sales of the 40 multi-use product increased 13% to 398 million, driven by solid performance across all three trade blocks. We're seeing strong progress across key markets for the year to date growth of 20% in the US, 21% in China and 27% in Iberia. We continue to execute from a proven playbook, expanding distribution and sampling programs to build awareness with their users across 176 countries and territories and 62 trade channels.

We estimate the attainable market to the 40 multi-use product to be approximately 1.9 billion. With fiscal year 25 sales of 478 million, we believe there remains a significant long term growth opportunity.

Next is Muslim battle number two, accelerating premiumization. Year to date sales of the 40 smart straw and easy reach when combined increased 19% and now represent approximately 50% of the 40 multi-use product sale. These premium formats strengthen brand loyalty, support gross margin expansion and provide meaningful runway for continued growth. We continue to target annual growth of more than 10% in penalized products.

Our third Muslim battle is driving W40 specialist growth. Year to date sales increased 22% to 72.9 million. We estimate the attainable market for W40 specialist at approximately 665 million. With fiscal year 25 sales of 82 million, we're still in the very early stages of capturing this significant growth opportunity. Today, 90% of our W40 specialist sales come from just 10 markets, highlighting a significant opportunity to expand through geographic growth and product innovation.

In the third quarter, we launched our first bio based lubricant across several European markets. Whilst it's still early, we are very encouraged by the initial results and look forward to rolling out the product across additional markets in the coming quarters. We continue to target annual growth of more than 10% on W40 specialist as we expand our portfolio of purpose built maintenance solutions.

Our fourth Muslim battle is to turbo charge digital commerce. Year to date, e-commerce sales increased 22% led by the United States and China. E-commerce pure player remains one of our fastest growing channels. Across digital, we're strengthening execution on key platforms. Our social media and video channels are driving much of our digital reach, helping us connect with both new and existing end users in more engaging ways.

As a result, we're reaching and engaging more end users than ever before. Digital commerce continues to support each of our Muslim battles by improving access to our products and increasing brand visibility and relevance.

We'll now move to our strategic enablers, which support operational excellence across the business. Zig Ziglar once said, you don't build a business, you build people, and then the people build the business. That philosophy is core to the W40 company and is the foundation of our people first mindset.

Our people are remarkably resilient, agile and innovative. Over the past five years, they've navigated a series of external challenges from the global pandemic to geopolitical uncertainty, while strengthening cost discipline, implementing new systems, enhancing how we serve customers and leveraging our globally decentralized supply chain network, all in the face of significant uncertainty.

Last month, we announced a planned leadership transition to build on the strong foundation we have in place. As part of this transition, we introduced new roles to strengthen alignment and accelerate strategy execution, ensuring we have the right structure and leadership in place to support continued growth. These new roles include chief strategy and innovation officer and chief brand and marketing officer, and will be filled by experience of the 40 company leaders transitioning from within the company. These newly created roles are designed to enhance collaboration, accelerate innovation, and proactively harness AI and digital technologies to drive growth and advance the company's long-term strategy.

We also announced that Sarah Heizer will transition to president of our America's division, reflecting our commitment to developing leaders from within. Sarah will continue to serve in her current role during the transition until a successor is named. These changes are designed to support continued growth and position the business for long-term success.

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

Thanks Steve. I appreciate the opportunity to take on my new role and am excited about what lies ahead for our America's business. In the meantime, I remain fully focused on my current responsibilities and on delivering value for our stakeholders. Today, I will review our third quarter performance against our business model, introduce enhancements we are making to further strengthen it, provide an update on the divestiture of our America's home care and cleaning business, and discuss our fiscal year 2026 guidance and key assumptions.

We were encouraged by our third quarter performance with net sales up 24% and operating income growing 47%. Reflecting the benefits of scale in our business. The difference between those growth rates highlights the leverage in our business model as higher revenue flows through to profitability. As expected, results strengthened as the year progressed with improvement across both the top and bottom line.

Turning to our business model, which expresses growth margin, cost of doing business, and adjusted EBITDA as a percentage of revenue. This quarter, we are seeing the benefits of higher revenue and scale reflected across the model. Starting with growth margin, performance remains strong.

Third quarter growth margin was 56.6% of 40 basis points year over year. This increase was driven by 80 basis points from lower aerosol cans and fill fees, as well as 60 basis points from favorable sales mix and other miscellaneous mix. Partially offset by 60 basis points of increases and other input costs.

Third quarter growth margin performed as expected, despite external cost pressures driven by recent geopolitical developments. Reflecting the benefit of higher inventory levels entering the quarter.

We expect those costs to move through our production and inventory cycles over the next several months. In response, we have already implemented pricing and cost saving initiatives across many regions, positioning the business to realize the benefits of these actions, with most of the impact expected in fiscal year 2027.

As these actions take hold and the external environment stabilizes, we anticipate growth margin improvement over the course of fiscal year 2027. While the exact timing and pace of that recovery are difficult to forecast, we believe we are well positioned to navigate the environment, strength and profitability and drive continued progress.

Turning the cost of doing business, which represents operating expenses adjusted for certain non-cash items. It decreased to 34% of net sales from 38% last year, reflecting operating leverage from higher revenue and scale.

Advertising and promotional investment increased to 6.1% of net sales from 5.8% last year, driven primarily by higher promotional activity in the U. S. We still anticipate being around 6% of net sales for the full year, which is in line with our guidance.

Finally, adjusted even a margin increased to 23% from 20% last year, reflecting operating leverage from higher revenue and scale.

Now, I'd like to provide an update on the home care and cleaning divestiture. Last fiscal year, we announced our intent to sell these brands in the Americas and the U. K. We successfully completed the divestiture of the U. K. home care and cleaning brands in August of 2025.

After extensive engagement with potential buyers, it became clear that the current macro environment was not conducive to divesting of these brands as a bundle. As a result, we are no longer actively marketing these brands for the foreseeable future and have reclassified these assets as held for youth.

We continue to view these home care and cleaning brands as non-core. We will remain open and opportunistic and are evaluating each brand individually should the right opportunity present itself. For the time being, we will manage these as harvest brands, expecting gradual top line decline while continuing to generate attractive returns. As a reminder, the Americas has hold brands combined represent $12 million in annual sales, less than 2% of our global revenue.

Consistent with accounting guidance, we resumed amortization and recorded $1.3 million in expense during the quarter, related to prior periods when these assets were classified as held for sale. Given the one time nature of this catch up expense, we are including this as a non-gap adjustment to help investors better evaluate the underlying performance of the business.

Additionally, this decision will impact our reporting in two other ways. First, we issued fiscal year 2026 guidance on a pro forma basis, excluding the home care and cleaning businesses, to provide clear visibility into the performance of the core business. With the reclassification to help for use, our fiscal year 2026 guidance now includes associated sales and earnings from these assets, which favorably impacts elements of our outlook.

I'll discuss in more detail when I walk through our updated guidance for the year. Second, our decision to retain the home care and cleaning business prompted us to reassess and sunset our long-standing 5530-25 business model.

As part of this reassessment, we developed our new enduring business model, which provides a disciplined framework for how we manage the business and create long-term value.

It is anchored in four key drivers. Maintenance product sales growth targeted at mid to high single digits. Growth margin targeted above 55%. Adjusted EBITDA growing faster than net sales and an asset-like model that requires minimal capital investment.

Together, these drivers support strong outcomes, including returns on invested capital above 25%. Strong free cash flow conversion and a balanced capital allocation approach that prioritizes organic growth, dividends, and share repurchases. The enduring business model was designed to drive leverage and long-term returns for stockholders that are reflecting our strength as a perpetual compounder. We will continue to report under the 5530-25 model through fiscal year 2026 and transition to the enduring business model in fiscal year 2027 to better align our metrics with our long-term strategy, turning out other key measures of financial performance.

Let's review operating income, net income, and earnings per share for the third quarter. Operating income increased 47% to 40.3 million with foreign currency being a tailwind for us. On a constant currency basis, operating income increased by 42%, primarily driven by higher sales and improved growth margin, partially offset by increased operating expenses.

Excluding amortization expense related to the reclassification of our home care and cleaning brands, non-gap net income was 31.5 million, up 50% to prior year. On a non-gap basis, diluted earnings per common share were 233, up from 154 in the prior year quarter.

Turning from how we measure performance to how we deploy capital, our balance sheet remains strong and supports a disciplined approach to investing in organic growth and returning value to stockholders. Our capital allocation strategy remains a consistent foundation.

On June 15th, 2026, our Board of Directors authorized a new share repurchase program of up to $100 million. The program has no expiration date, and the timing and amount of repurchases will be determined based on market conditions and other factors.

So let's turn to fiscal year 2026 guidance. As a reminder, our fiscal year 2026 guidance was originally provided on a pro forma basis, excluding the America's home care and cleaning business that was classified as assets held for sale. Following the reclassification of these assets to help for use, the business has been incorporated back into our guidance, and I will walk through the specific impact to our guidance to help bridge those changes.

We have also narrowed our guidance ranges based on our year-to-date in addition, our guidance is provided on a non-GAP basis and excludes the one-time amortization catch-up expense of 1.3 million recorded in the third quarter.

For fiscal year 2026, we now expect net sales and constant currency to be between 652 and $667 million, representing growth of 6 to 9%, compared to pro forma fiscal year 2025 net sales of 614 million.

This outlook includes approximately 12 million in net sales from assets recently reclassified as held for use. It also reflects a narrower guidance range, providing a more refined view of our expected performance for the remaining part of the fiscal year.

Based on current exchange rates, we expect reported net sales to be between 675 and 690 million, representing growth of 10 to 12%, compared to pro forma fiscal 2025 net sales.

Growth margin is now expected to be between 54 and a half percent and 55 and a half percent. This revised outlook incorporates a 40 basis point adjustment due to the reclassification of home care and cleaning brands, along with an additional 60 basis points from higher than expected cost increases.

The company has implemented pricing actions and cost saving initiatives with the majority of the expected benefit of anticipated and fiscal year 2027.

Advertising and promotion investment remains projected to be approximately 6% of net sales. We now expect non-gap operating income to be between 107 and 113 million, representing growth of 5 to 11% compared to pro forma fiscal 2025 results. This outlook includes approximately 2.9 million in operating income related to those assets recently reclassified as held for use. Our provision for income tax is now expected to be around 22 and a half percent.

Finally, we expect non-gap diluted earnings per share to be between 6.05 and 6.35. Based on an estimated 13.5 million weighted average sales outstanding. This outlook includes approximately 17 cents per share related to the assets recently reclassified as held for use and represents growth of 6 to 11% compared to pro forma fiscal 2025 results.

Our guidance reflects a euro to US dollar exchange rate assumption of approximately $1.17 in the fourth quarter. Actual results may vary as conditions evolve. 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 today? You heard that we delivered 24% net sales growth and 47% operating income growth, demonstrating the operating leverage inherent in our business model. You heard that third quarter sales benefited from advanced buying due to market uncertainty as well as planned price increases later in the year, which shifted a portion of expected fourth quarter demand into the third quarter.

You heard that our must-wing battles continue to perform well, with solid double-digit year-to-day growth in geographic expansion, WD-40 specialists, premiumised products and e-commerce.

You heard that our people first mindset remain central to how we operate, supported by leadership changes that strengthen alignment and support long-term growth.

You heard gross margin was strong at 56.6% of 40 basis points from last year, while higher input costs are expected to pressure margins in the near term, pricing and cost optimisation actions are underway, and we expect margin recovery of those benefits I realise. We will vigorously defend our gross margins and may need to take further action in FY27 as required.

You heard that we decided to no longer actively market our America's home guaranteeing brands and have reclassified these assets as healthy use.

You heard that we're introducing our enduring business model framework designed to drive leverage and long-term returns to stockholders that are reflecting our strength as a perpetual compounder. And you heard that we're updating our guidance to incorporate the home care and cleaning business into our outlook and to narrow our guidance ranges based on our year-to-date performance and outlook.

Thank you for joining our call today. We'd now be pleased to answer your questions.

Hi, Sarah. Thanks for that question. You know, we had indicated at the end of Q2 that we believed our margins were going to hold in the third quarter and they did hold, but that we did anticipate some cost increases as we were, you know, as a result of the disruption in the Middle East. And so those cost increases did happen in the month subsequent to Q2. We had enough inventory on the balance sheet to sustain our margin in the third quarter, but we do anticipate those cost increases to begin to flow through in the fourth quarter. That said, we did also implement price increases, as Steve mentioned, and those price increases will begin to take effect really starting in fiscal year.

FY 27 will start to mitigate some of those cost increases that we anticipate to see, or cost increases impacting our P&L that we anticipate in the fourth quarter. So those actions have already been taken. We've also taken some cost reduction actions as well to help mitigate the exposure in the fourth quarter. But that said, we're really pleased with where the full year is going to land, you know, between 54 and a half and 55 and a half percent, you know, considering what's happening around the world. We feel really good about where the year is landing.

Yeah. So, so when we look at the rate that the cost increases went up, so if we look at the, you know, kind of the range of the 95 to 115, that was indicating about a 40% increase. The reality is we did experience decoupling. So the input cost of the specialty chemicals and the base oils that we buy did go up in excess of the 40%. So in some cases, it was 50. In some cases, it was, it was double. So we saw really significant price increases in those in three months. But good news is in June, we have started to see some of that pullback. So the reality is the pace of the, while we've seen the spot pricing on the, on the commodity pricing kind of come back down within that $70 range.

You're not seeing that the pacing of the cost decreases on the actual input cost come down at the same rate. And we are seeing them pullback about 20 to 25% in the month of June. And we do anticipate it to be a slower step down. It's just the nature of the environment. The cost go up pretty fast and then there's a slower pace for it to step down.

That said, you know, assuming things don't escalate further in the Middle East, we do anticipate that pacing back down to the levels that we would, that we thought pre-war.

Hi, my, Sarah. Again, so the fourth outlook changed a little bit in the sense that there is some phasing, right, that we saw between QC and Q4. So there was a little bit more that was pulled into the third quarter than it was in the fourth quarter. But when you look at the two quarters combined, you know, where we are landing in that mid to higher end of our guidance range. And so it was really more timing that impacted ultimately the fourth quarter outlook. We, you know, we feel good about the fourth quarter. It's going to actually be the second strongest quarter of the year. We knew going into the second half of the year that the majority of the growth this year was going to be in the back half.

And the phasing of that just, you know, really the timing of that fell more in the third quarter than it did into the fourth quarter. You did mention, you know, in the gross margin, there is a little bit more of a pullback than what we had anticipated coming out of Q2. And that was just, you know, it was really hard to anticipate the cost increases. But to be able to hold guidance, you know, within 50 to 60 basis points as to where we were a few months ago, considering the environment, I think we feel really good about that. And again, always a reminder that whatever pullback we get on, you know, those cost increases, there is an offset to that with our rewards program that helps protect the bottom line.

And so really, when we look at the full year, we are increasing our bottom line guidance, both in operating income and EPS as a result of being able to reduce some of our discretionary spending in the fourth quarter to help protect the bottom line.

Yeah, so I'll give an example, Michael, if I look at the operating income of where we were in Q2, we guided to 103 to 110. And if you add in the 2.9, that would have put us at 105.9 to 112.9, and we're guiding to 107 to 113. So we are upping our bottom end by about 1.1 million, and we're pretty tight on the top end. So the narrowing that we've mentioned is really raising the bottom end of both our top end. And our bottom, or sorry, top line revenue and our operating income and E. P. F. And all three scenarios, the bottom is coming up.

Sure. King of the Hill. Yeah, the promotion in partnership with Disney and with the Home Depot is one of the largest promotions we've ever wrote in our history. If you walk into our Home Depot store, you're going to see some beautiful displays of W40 out there. It's been in the market for about a month. It's got a few months to go. We're in the process of ramping up our marketing activity. And so I believe in the month of July, we're going to be hitting about 80 million consumers across the US in terms of targeting. And so, yeah, it's really driving really strong incremental sales. It's proving to be after one month about 75% incremental. And so there's very little cannibalization from the promotion.

And so, yeah, we're very pleased. It's a major promotion for us. One of many promotions, right? It's not the only act we've got in the US. There's lots of things going on in the US. We've got, you know, coupled with strong distribution gains. We've got very strong debit, 40 specialist growth, very strong e-commerce growth. But this and a couple of other meaningful promotions are really helping drive the results you've got in the US.

Sure. And so the price increases we've executed are across Asia Pacific and Europe. If you recall, although you don't, we actually launched price increases in the first quarter in the US earlier in the fiscal year. And so we will review the situation in the US next year as well. But these price increases have been pretty well implemented across most of Europe and Asia Pacific, where the bulk of kind of the impact has been felt.

Mid to high single digits in terms of the scale of the increases, a little bit more on our book products, which have felt a little bit more cost pressure. And they were implemented between June and July, some of that stretching perhaps into August, but the main impact of the price increases and so going in. And, you know, you'll see that coming in the back half of Q forward and into Q one, you'll feel the full benefit. We did have a little bit of, as well as some disruption, right? We talked about a pull forward. That was probably about a three million dollar amount of business that was pulled forward globally between, you know, countries like India, which were concerned about security of supply and though they just placed largely for inventory on hand.

And then places like China, where we had a little bit of a kind of advanced buy in, as well as some of our European countries. So about three million dollars in magnitude for the whole impact.

Yeah, that's pretty close. If you look at the 12 million on the top line and then the operating income Daniel is just shy of three million.

No, absolutely. That's safe to say and that doesn't change. The one area that really changes with the enduring business model, Daniel, is really the commitment from the business to drive a bit of growth ahead of revenue growth. And so that's the significant change. It's a commitment we want to make. And the reason we're making that is, you know, over the past few years, we've had to make significant investments to in things like IT and sustainability and innovation.

Those kind of innovating a lot of those big investments are now incremental. And so we're in a position, you know, having recovered our growth margins as well largely to really, you know, drive the bottom line faster than the revenue line. So that is a commitment from leadership to achieve that going forward.

And so, you know, we've guided to, you know, a midpoint of 55% gross margin, including the household brands, you know, we spring down the margin by about 40 basis points globally for this fiscal year. I think it would be on wise for us to guide the next fiscal year, given the volatility of the situation at the moment, our stated goal, and I did talk to it in my strict is the vigorous to defend our gross margins. And so you may have a couple of quarters going, you know, where it's reestablishing the gross margin, you know, from here on in, but then the aim would absolutely be to defend our gross margin, subject to the limitations of what's possible in the external environment.

No, I think from a inventory balance standpoint, I mean, we were carrying higher inventory levels in Q two that has started the right size, a lot of that inventory shipped during the quarter. So we're, we're back, you know, closer, I would not say we're at our 90 days, but we are closer to the 90 days, we still have a target and believe that even in this environment, getting back to 90 days is a good goal of ours. And, and can still supply the demand at that level.

Yeah, I think this is a very different sense is the price increases what putting through it, nothing like the scale of what we had to put through before obviously that can change going forward. And so, you know, we've made some initial moves now quickly and we'll have to assess the situation and see what we'd need to do, perhaps going into next fiscal year, depending on what happens out there in the world.

But yeah, the scale of the increases and so the, you know, resulting kind of pushback if you like from partners has been significantly less and get a price increases as being adopted across the world. And, you know, because of the scale, more limited scale, you know, quite easily, I think this time.

Okay, is there, is there any, anything going on in your conversations with customers about the fact that, like the spikes or the volatility in oil, we're seeing our event driven, does that make it harder in some way to put the price increases through because they could argue that it's temporary and event driven, is there, is there anything going on like that type of conversation.

And so I think we always try to, you know, we don't rush into making these decisions, we try and take a view on, you know, what's, what's likely to happen beyond kind of events and what's going to happen kind of, you know, multi month. And over the period of the next 12 to 18 months. And so we take that kind of view. And so the price increases we've put through now do not fully, you know, represent the scale of the costing creases we've seen with assumed some reduction right month by month of serotonin highlighted. And so that's why we'll have to take another look in early 27 to see whether we need further action as well.

It is hard land at this point for us to comment too far out into next fiscal year. We do expect there, right? I mean, based on what we are sitting on our balance sheet, we know that there will be some impact to our growth margin in the fourth quarter and going into next fiscal year that the length of how long it progressively or the pace of it progressively coming back up really does.

Depends on how the next few months go from a cost reduction standpoint. And if we continue to see kind of the pacing of those costs, reducing, which can change daily, frankly, based on what continues to be happening over in the Middle East. So it is just given the environment. It is hard to comment on that at this point in time.

I think the new distribution you're referring to was a single point of the distribution where we had about 7,000 new outlets. So it's a major new customer for us, not 2.75 ounce product. So driving incremental sales and will ramp up over two years period as we expand distribution into all of those stores. And so more grows from that particular initiative next year. You know, in terms of promotion, it's just in one of those years for the US where a lot of things went right. We've had promotions across multiple channels across agriculture, across hardware.

Yeah, the scale of this one, certainly the king of the hill is very significant. But when you think about it, I mean, we can we can do that because of the iconic nature of our brand. And so when you take that formula of brand partnerships between the likes of, you know, Liberty 40 and, you know, Disney and the Home Depot, that's a powerful formula. It's a repeatable formula going forward. And so I think we've tapped into something, you know, which can really leverage the power of the brand going forward and which is absolutely repeatable. Whether it's one big chunk or multiple smaller chunks going forward, leveraging the brand with these sort of brand partnerships is a powerful formula.

Oh, thank you, Linda.

Sure, absolutely. So, Aaron, yeah, I mean, typically specialist is growing very strong double digits all across the world. And so we're very pleased. And so one of the things we've done, you know, with a mantra of kind of learn faster to grow faster is really leverage, you know, global teams to exchange best practice and look at what's working around the world. And so we very much have a focus concentration on the best selling items within that range and getting those acts distribution and, you know, consistently executing around the biggest selling items. We have six products to do about 80% of sales in the specialist range.

And so, you know, that kind of disciplined execution and learning, you know, is really driving sales. And so you look at places like China where specialist is growing fantastically well. I mean, even the U. S. we're in heisting double digits now about 18, 19% for the year to date. And then Europe continues to grow very, very well under the 40 specialists.

You let you then layer over that, you know, new product innovations. And so Europe had a couple of big ones this year with degrees of products doing very, very well, for example, and then the new bio loop formulation in Europe is going very, very well as well. And so we're really pleased in France, which was our initial launch country for the bio loop product, which will be launched globally over the coming 18 months or so. The bio loop item has gone straight to one of the top selling items on the 40 specialists. And so a combination of simply expanding distribution for all innovation driving. We did also say that, you know, 90% of the quality specialty sales come from 10 countries own in.

So we're only just really getting going. We have a very, very significant roommate for growth and specialists around the world. And we are really starting to pick up the pace.

Now, what, what, when you've got to look at both together, right? And so to be 40 specialists and to be 40 multi use product together, you know, really helps us have a category approach. And so we're helping retailers, you know, with their category approach. And so really you're going to look at both of them acting together. And so, you know, the specialist range helps, you know, protect, gain shelter.

And so it's kind of like a virtuous circle of, you know, helping protect the core brand, but also leveraging specialists to take, you know, to take market share on those items which may be newer to us.