Oil-Dri Corp of America

Previous wording

Oil-Dri experienced strong results in the first quarter of fiscal year 2026. However, since net sales, gross profit and net income reached all-time highs in the first quarter of fiscal year 2025, we experienced a decrease when comparing the three months ended October 31, 2025 to the three months ended October 31, 2024. Consolidated net sales for the three months ended October 31, 2025, were $120.5 million, a 6% decrease compared to net sales of $127.9 million for the three months ended October 31, 2024. The decrease was driven by both our Business to Business and Retail and Wholesale product groups as further discussed below in the segment analysis.

Current wording

Consolidated net sales for the six months ended January 31, 2026 were $238.2 million, a 3% decrease compared to net sales of $244.9 million for the six months ended January 31, 2025. The decrease was driven primarily by softer volumes across both our Business to Business and Retail and Wholesale product groups when compared to the same period in fiscal year 2025. Further details of the drivers are discussed below in the segment analysis.

Previous wording

Consolidated gross profit in the three months ended October 31, 2025, was $35.5 million, a decrease of $5.3 million, or 13%, from gross profit of $40.8 million in the three months ended October 31, 2024. Gross margin (defined as gross profit as a percentage of net sales) in the three months ended October 31, 2025, decreased to 29.5% from 31.9% in the three months ended October 31, 2024. This reduction in gross margin was mainly driven by softer volume and higher costs, which led to unfavorable fixed cost coverage. For the three months ended October 31, 2025, the overall domestic per ton cost of goods sold increased 3% compared to the same period of fiscal year 2025. The increase was primarily driven by higher per ton manufacturing costs, including materials, which increased 8% when compared to three months ended October 31, 2024. These increases were slightly offset by a 6% decrease in per ton transportation costs, and 4% decrease in per ton packaging costs for the three months ended October 31, 2025, when compared to the three months ended October 31, 2024.

Current wording

Consolidated gross profit in the six months ended January 31, 2026 was $67.8 million, a decrease of $7.4 million, or 10%, from gross profit of $75.2 million in the six months ended January 31, 2025. Gross margin (defined as gross profit as a percentage of net sales) in the six months ended January 31, 2026 decreased to 28.5% from 30.7% in the six months ended January 31, 2025. This reduction in gross margin was mainly driven by softer volume and higher costs, which led to unfavorable fixed cost absorption. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. For the six months ended January 31, 2026, the overall domestic per ton cost of goods sold increased 3% compared to the same period of fiscal year 2025. The increase was primarily driven by higher per ton manufacturing costs, including materials, which increased 8% when compared to six months ended January 31, 2025. These increases were slightly offset by a 5% decrease in per ton transportation costs, and 3% decrease in per ton packaging costs for the six months ended January 31, 2026, when compared to the six months ended January 31, 2025.

Previous wording

Total SG&A expenses of $18.5 million for the three months ended October 31, 2025, were $1.1 million, or 5%, lower compared to $19.6 million for the three months ended October 31, 2024. The decrease was primarily driven by operating segment SG&A, which decreased by $0.8 million, and to a lesser extent a $0.2 million reduction in corporate unallocated expenses. SG&A expenses at the operating segments level are discussed below.

Current wording

Total SG&A expenses of $35.2 million for the six months ended January 31, 2026 were $1.4 million, or 4%, lower compared to $36.6 million for the six months ended January 31, 2025. The decrease was driven by a $1.5 million reduction in corporate unallocated expenses, primarily as a result of lower corporate human resource costs and a lower incentive bonus accrual. The decrease was partially offset by SG&A expenses at the operating segments level, which increased by $0.1 million, as discussed below.

Previous wording

Total other income, net was $0.7 million for the three months ended October 31, 2025, compared to other expenses, net of $1.0 million in the same period of fiscal year 2025. The $1.7 million gain was driven in part by the positive outcome of a confidential legal settlement in the matter of Oil-Dri Corporation of America vs. Entera Animal Health, et al.

Current wording

Total other income, net was $0.8 million for the six months ended January 31, 2026, a $3.0 million gain compared to other expenses, net of $2.2 million in the same period of fiscal year 2025. $0.8 million of this change was driven by the reduction in the estimated landfill modification costs recognized in fiscal year 2026 compared to an increase in the estimated cost recognized during the first half of fiscal year 2025 and $0.8 million was driven by foreign exchange gains. The gain was also in part driven by the positive outcome of a confidential legal settlement in the matter of Oil-Dri Corporation of America vs. Entera Animal Health, et al., as well as $0.5 million due to higher interest income and $0.2 million due to lower interest expense.

Previous wording

Tax expense was $2.2 million for the three months ended October 31, 2025, compared to $3.8 million for the three months ended October 31, 2024. $0.8 million of the decrease was due to a discrete tax benefit as a result of stock based compensation recognized in the first quarter of fiscal year 2026. The remaining decrease was primarily due to the conversion of certain legal entities from corporations to limited liability companies resulting in state tax benefits.

Current wording

Tax expense was $5.5 million for the six months ended January 31, 2026 compared to $7.2 million for the six months ended January 31, 2025. $0.8 million of the decrease was due to a discrete tax benefit as a result of stock-based compensation recognized in the first quarter of fiscal year 2026. The remaining decrease was primarily due to the conversion of certain legal entities from corporations to limited liability companies resulting in state tax benefits.

Previous wording

Our unaudited Condensed Consolidated Balance Sheet as of October 31, 2025 and our unaudited Condensed Consolidated Statement of Cash Flows for the three months ended October 31, 2025, show an $8.1 million decrease in total cash and cash equivalents from fiscal year-end 2025. The decrease was driven primarily by financing and investing activities, partially offset by positive cash flow from operations. Refer to the "Liquidity and Capital Resources" section below for more details.

Current wording

Our unaudited Condensed Consolidated Balance Sheet as of January 31, 2026 and our unaudited Condensed Consolidated Statement of Cash Flows for the six months ended January 31, 2026 show a $3.5 million decrease in total cash and cash equivalents from fiscal year-end 2025. The decrease was driven primarily by financing and investing activities, partially offset by positive cash flow from operations. Refer to the "Liquidity and Capital Resources" section below for more details.

Previous wording

Net sales of the Business to Business Products Group for the three months ended October 31, 2025, decreased $4.1 million, or 9%, compared to the three months ended October 31, 2024, driven primarily by a reduction in sales of our fluid purification and animal health products, partial offset by an increase in sales of our agricultural and horticultural products. Net sales of our fluids purification products for the three months ended October 31, 2025, decreased $3.9 million, or 13%, compared to the three months ended October 31, 2024. This decrease was due to lower volumes, primarily of our products used in renewable diesel filtration, which were significantly higher in the first quarter of fiscal year 2025 when several new customers began operations in new plants. Net sales of our animal health & nutrition products for the three months ended October 31, 2025, decreased $1.5 million, or 25%, compared to the three months ended October 31, 2024, due to lower volume. Net sales of our agricultural and horticultural chemical carrier products for the three months ended October 31, 2025, increased $1.3 million, or 12%, compared to the three months ended October 31, 2024, evenly due to favorable mix, higher volume and higher prices.

Current wording

Net sales of the Business to Business Products Group for the six months ended January 31, 2026 decreased $5.6 million, or 6%, compared to the six months ended January 31, 2025, driven primarily by a reduction in sales of our fluid purification and animal health products, partially offset by an increase in sales of our agricultural and horticultural products. Net sales of our fluids purification products for the six months ended January 31, 2026 decreased $5.0 million, or 9%, compared to the six months ended January 31, 2025. This decrease was due to lower volumes, primarily of our products used in renewable diesel filtration, which were significantly higher in fiscal year 2025 when several new customers began operations in new plants. Net sales of our animal health & nutrition products for the six months ended January 31, 2026 decreased $4.0 million, or 29%, compared to the six months ended January 31, 2025, due to lower volume primarily driven by the loss of a key customer at one of our distributors. Net sales of our agricultural and horticultural chemical carrier products for the six months ended January 31, 2026 increased $3.4 million, or 16%, compared to the six months ended January 31, 2025, due to a combination of favorable mix, higher volume and higher prices.

Previous wording

Net sales of the Retail and Wholesale Products Group for the three months ended October 31, 2025, decreased $3.3 million, or 4%, compared to the three months ended October 31, 2024, mainly due to decrease in cat litter sales. Domestic cat litter net sales, excluding co-packaged cat litter, were $56.2 million for the three months ended October 31, 2025, a decrease of $3.6 million, or 6%, when compared to the three months ended October 31, 2024. $2.5 million of the decrease was tied to high demand in the first quarter of fiscal year 2025 due to a large promotion at a key account, and $1.2 million was due to a private label account that was lost in the second quarter of fiscal year 2025. Net sales of co-packaged cat litter products increased 8% in the three months ended October 31, 2025, compared to the three months ended October 31, 2024. This increase was driven primarily by higher volumes. Net sales of our domestic industrial and sports products were $10.9 million for the three months ended October 31, 2025, a decrease of $0.1 million, or 1%, when compared to the three months ended October 31, 2024, mainly driven by volume. Net sales by our subsidiary in Canada, which include both our cat litter and industrial products, remained relatively flat for the three months ended October 31, 2025, when compared to the three months ended October 31, 2024.

Current wording

Net sales of the Retail and Wholesale Products Group for the six months ended January 31, 2026 decreased $1.1 million, or 1%, compared to the six months ended January 31, 2025, mainly due to a decrease in cat litter sales. Domestic cat litter net sales, excluding co-packaged cat litter, were $112.3 million for the six months ended January 31, 2026, a decrease of $3.3 million, or 3%, when compared to the six months ended January 31, 2025. $2.1 million of the decrease was due to a private label account that was lost in the second quarter of fiscal year 2025, and $1.5 million decrease was tied to high demand in fiscal year 2025 due to a large promotion at a key account. These losses were partially offset by revenue gains with other customers. Net sales of co-packaged cat litter products increased 20% in the six months ended January 31, 2026, compared to the six months ended January 31, 2025. This increase was driven primarily by higher volumes as we expanded our co-packaged offerings to include lightweight cat litter. Net sales of our domestic industrial and sports products were $21.2 million for the six months ended January 31, 2026, an increase of $0.3 million, or 1%, when compared to the six months ended January 31, 2025, mainly driven by higher prices to offset elevated costs. Net sales by our subsidiary in Canada, which include both our cat litter and industrial products, increased $0.1 million for the six months ended January 31, 2026 when compared to the six months ended January 31, 2025. Due to the Weather Event, several of our plants were shut down and unable to ship products or allow for customers to pick up orders. This drove our backlog of Retail and Wholesale products to increase by $2.8 million at the end of the second quarter when compared to the prior quarter.

Previous wording

Gross profit decreased 7% in the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This decrease was mainly due to lower sales resulting in unfavorable fixed cost coverage, and higher per ton manufacturing costs. Per ton manufacturing costs, including purchased materials, increased 6%, this increase was partially offset by a 13% reduction in transportation and 5% reduction in per ton packaging costs. Certain key customers shifting terms from delivery to pick-up was the primary driver of the reduction of transportation costs. SG&A expenses decreased $0.5 million, or 8%, during the three months ended October 31, 2025, compared to the three months ended October 31, 2024, primarily due to less bad debt expense related to customer bankruptcies.

Current wording

Gross profit decreased 5% in the six months ended January 31, 2026 compared to the six months ended January 31, 2025. This decrease was mainly due to lower sales resulting in unfavorable fixed cost absorption, and higher per ton manufacturing costs. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. Per ton manufacturing costs, including purchased materials, increased 8%, this increase was partially offset by a 10% reduction in transportation and 4% reduction in per ton packaging costs. Certain key customers shifting terms from delivery to pick-up was the primary driver of the reduction of transportation costs. SG&A expenses decreased $0.2 million, or 2%, during the six months ended January 31, 2026, compared to the six months ended January 31, 2025, primarily due to less bad debt expense related to customer bankruptcies.

Previous wording

Foreign operations include our subsidiaries in Canada and Netherlands, which are reported in the Retail and Wholesale Products Group, and our subsidiaries in the United Kingdom ("UK"), Mexico, China and Indonesia, which are reported in the Business to Business Products Group. Net sales by our foreign subsidiaries were $5.1 million for both the three months ended October 31, 2025, and October 31, 2024. Net sales by our foreign subsidiaries represented 4% of our consolidated net sales for both the three months ended October 31, 2025, and October 31, 2024.

Current wording

Foreign operations include our subsidiaries in Canada and the Netherlands, which are reported in the Retail and Wholesale Products Group, and our subsidiaries in the United Kingdom ("UK"), Mexico, China and Indonesia, which are reported in the Business to Business Products Group. Net sales by our foreign subsidiaries for the six months ended January 31, 2026 were $9.9 million, a decrease of $0.2 million compared to net sales of $10.1 million in the same period ended January 31, 2025, driven primarily by net sales decrease in sales volume in Mexico. Net sales by our foreign subsidiaries represented 4% of our consolidated net sales for both the six months ended January 31, 2026, and January 31, 2025.

Previous wording

Our foreign subsidiaries reported net income of $0.2 million for the three months ended October 31, 2025, compared to net loss of $0.2 million in the three months ended October 31, 2024. The increase in net income was primarily driven by the preliminary foreign VAT assessment recognized in the first quarter of fiscal year 2025.

Current wording

Our foreign subsidiaries reported net income of $0.2 million for the six months ended January 31, 2026, compared to net loss of $0.3 million in the six months ended January 31, 2025. The increase in net income was primarily driven by the preliminary foreign VAT assessment recognized in fiscal year 2025.

Previous wording

Identifiable assets of our foreign subsidiaries as of October 31, 2025, were $8.9 million, compared to $9.0 million as of July 31, 2025.

Current wording

Identifiable assets of our foreign subsidiaries as of January 31, 2026 were $9.2 million, compared to $9.0 million as of July 31, 2025.

Previous wording

Our principal liquidity needs are to fund our capital requirements, including funding working capital needs; purchasing and upgrading equipment, facilities, information systems, and real estate; supporting new product development; investing in infrastructure; repurchasing stock; paying dividends; and, from time to time, business acquisitions, and funding our debt service requirements. During the three months ended October 31, 2025, we principally funded these short and long-term capital requirements using cash from current operations as well as cash generated from previous borrowings under our Credit Agreement and Series B, C and D Senior Notes issued under the Note Agreement. See Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information relating to our existing borrowings.

Current wording

Our principal liquidity needs are to fund our capital requirements, including funding working capital needs; purchasing and upgrading equipment, facilities, information systems, and real estate; supporting new product development; investing in infrastructure; repurchasing stock; paying dividends; and, from time to time, business acquisitions, and funding our debt service requirements. During the six months ended January 31, 2026, we principally funded these short and long-term capital requirements using cash from current operations as well as cash generated from previous borrowings under our Credit Agreement and Series B, C and D Senior Notes issued under the Note Agreement. See Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information relating to our existing borrowings.

Previous wording

Cash and cash equivalents, including restricted cash, totaled $42.4 million and $13.5 million as of October 31, 2025, and 2024, respectively. The following table sets forth certain elements of our unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

Current wording

Cash and cash equivalents totaled $46.9 million and $22.6 million as of January 31, 2026, and 2025, respectively. The following table sets forth certain elements of our unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

Previous wording

In addition to net income, as adjusted for depreciation and amortization and other non-cash operating activities, the primary sources and uses of operating cash flows for the three months ended October 31, 2025, were as follows:

Current wording

In addition to net income, as adjusted for depreciation and amortization and other non-cash operating activities, the primary sources and uses of operating cash flows for the six months ended January 31, 2026, were as follows:

Previous wording

Accounts receivable, net of allowances decreased by $3.1 million in the three months ended October 31, 2025, as compared to the three months ended October 31, 2024. The decrease in accounts receivable was driven primarily by a decrease in net sales and timing of collections due to payment terms.

Current wording

Accounts receivable, net of allowances increased by $0.6 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The increase in accounts receivable was driven primarily by net sales and timing of collections.

Previous wording

Inventory increased by $5.1 million in the three months ended October 31, 2025, as compared to the three months ended October 31, 2024, mainly due to the building of finished goods inventory and other additives to meet anticipated demand.

Current wording

Inventory increased by $2.1 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025, mainly due to the building of finished goods inventory and purchases of other additives to meet anticipated demand.

Previous wording

Excluding the impact of payments related to capital expenditures, accounts payable increased by $0.3 million in the three months ended October 31, 2025, as compared to the three months ended October 31, 2024. The increase was mainly due to the timing of payments, cost of goods and services we purchase, production volume levels and vendor payment terms. In the three months ended October 31, 2025, there was a $3.2 million decrease in accounts payable related to capital expenditures recognized as cash used in investing activities as compared to the three months ended October 31, 2024.

Current wording

Excluding the impact of payments related to capital expenditures, accounts payable decreased by $2.9 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The decrease was mainly due to the timing of payments, cost of goods and services we purchase, production volume levels and vendor payment terms. In the six months ended January 31, 2026, there was a $3.7 million decrease in accounts payable related to capital expenditures recognized as cash used in investing activities as compared to the six months ended January 31, 2025.

Previous wording

Excluding the impact of payments made related to capital expenditures, accrued expenses decreased $13.8 million in the three months ended October 31, 2025, as compared to the three months ended October 31, 2024. The decrease was mainly due to the payout of annual bonuses and other miscellaneous expenses which fluctuate due to timing of payments, changes in the cost of goods and services we purchase, production volume levels, and vendor payment terms, including freight. In the three months ended October 31, 2025, there was a $1.3 million decrease in accrued expenses related to capital expenditures recognized as cash used in investing activities as compared to the three months ended October 31, 2024.

Current wording

Excluding the impact of payments made related to capital expenditures, accrued expenses decreased $10.6 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The decrease was mainly due to the payout of annual bonuses and other miscellaneous expenses which fluctuate due to timing of payments, changes in the cost of goods and services we purchase, production volume levels, and vendor payment terms, including freight. In the six months ended January 31, 2026, there was a $1.1 million decrease in accrued expenses related to capital expenditures recognized as cash used in investing activities as compared to the six months ended January 31, 2025.

Previous wording

Cash used in investing activities of $9.1 million in the three months ended October 31, 2025, was driven by capital expenditures. During the three months ended October 31, 2025, we continued to expand our plant equipment and improve our facilities to improve efficiency of our manufacturing process and meet customer demands.

Current wording

Cash used in investing activities of $14.8 million in the six months ended January 31, 2026 was driven by capital expenditures. During the six months ended January 31, 2026, we continued to expand our plant equipment and improve our facilities to improve efficiency of our manufacturing process and meet customer demands.

Previous wording

Cash used in financing activities of $9.4 million in the three months ended October 31, 2025, included $7.0 million for stock repurchases and $2.4 million for dividend payments.

Current wording

Cash used in financing activities of $17.2 million in the six months ended January 31, 2026, included $12.4 million for stock repurchases and $4.9 million for dividend payments.

Previous wording

Total cash balances held by our foreign subsidiaries of $4.8 million as of October 31, 2025, compared to $4.7 million as of July 31, 2025. See further discussion in "Foreign Operations" above.

Current wording

Total cash balances held by our foreign subsidiaries were $5.8 million as of January 31, 2026, compared to $4.7 million as of July 31, 2025.

Previous wording

As of October 31, 2025, we had remaining authority to repurchase 279,623 shares of Common Stock and 208,197 shares of Class B Stock under a repurchase plan approved by our Board. Repurchases may be made on the open market (pursuant to Rule 10b5-1 plans or otherwise) or in negotiated transactions. The timing, number and manner of share repurchases will be determined by our management pursuant to the repurchase plan approved by our Board.

Current wording

As of January 31, 2026, we had remaining authority to repurchase 174,742 shares of Common Stock and 208,197 shares of Class B Stock under a repurchase plan approved by our Board. Repurchases may be made on the open market (pursuant to Rule 10b5-1 plans or otherwise) or in negotiated transactions. The timing, number and manner of share repurchases will be determined by our management pursuant to the repurchase plan approved by our Board.