WD 40 COWDFC

WD 40 CO Leases Disclosure

10-KFiled Oct 27, 20252 min read
Leases
The Company leases real estate for its regional sales offices, a research and development facility, and offices located at its international subsidiaries and branch locations. The Company also leases an automobile fleet in the United States. In addition, the Company has identified warehouse leases within certain third-party distribution center service contracts and a lease of a blending room within a third-party manufacturing contract. All other leases are insignificant to the Company’s consolidated financial statements.
Right-of-use assets and lease liabilities consisted of the following (in thousands):
August 31,
2025		August 31,
2024
Assets:
Operating lease right-of-use assets$10,385 $8,077 
Finance lease right-of-use asset3,149 3,534 
Total right-of-use assets$13,534 $11,611 
Liabilities:
Current operating lease liabilities(1)
$2,282 $2,294 
Long-term operating lease liabilities8,423 5,904 
Total operating lease liabilities$10,705 $8,198 
(1)Current operating lease liabilities are classified in accrued liabilities on the Company’s consolidated balance sheets.
The Company’s maturities of its operating lease liabilities, including early termination and renewal options that management is reasonably certain to exercise, are as follows as of August 31, 2025 (in thousands):
Operating
Leases
Fiscal year 2026$2,844 
Fiscal year 20272,237 
Fiscal year 20281,522 
Fiscal year 20291,458 
Fiscal year 20301,372 
Thereafter3,114 
Total undiscounted future cash flows$12,547 
Less: Interest(1,842)
Present value of lease liabilities$10,705 
The Company recorded $2.6 million and $2.3 million in lease expense during the fiscal years ended August 31, 2025 and 2024, respectively. This lease expense was included in selling, general and administrative expenses. The Company recorded $1.1 million and $1.0 million of lease expense classified within cost of products sold for the fiscal years ended August 31, 2025, and 2024, respectively. During the fiscal year ended August 31, 2025 and 2024, the Company paid cash of $3.0 million and $2.6 million, respectively, related to lease liabilities. Variable lease expense under the Company’s lease agreements was not significant for both the fiscal years ended August 31, 2025 and 2024. As of August 31, 2025, the weighted-average remaining lease term was 6.2 years and the weighted-average discount rate was 5.1% for the Company’s operating leases. As of August 31, 2024, the weighted-average remaining lease term was 5.0 years and the weighted-
average discount rate was 5.0% for the Company’s operating leases. As of August 31, 2025, the Company did not have material additional operating or financing leases that have not yet commenced.
The Company had no significant short-term leases as of August 31, 2025. The Company obtained additional right-of-use assets of $6.0 million in exchange for lease obligations related to renewals of existing leases during fiscal year 2025. Residual value guarantees, restrictions, covenants, sublease income, net gains or losses from sale and leaseback transactions, and transactions with related parties associated with leases were also not significant.
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About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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