What changed in this filing

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Item 1. Financial Statements

2022-06-07 compared with 2022-03-11 · 134 added, 104 removed, 546 unchanged (30% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

ASSETS January 31,

ASSETS April 30,

2022 July 31,

2 unchanged sentences

Accounts receivable, less allowance of

$ 1,093 and $ 1,174 at January 31, 2022 and July 31, 2021, respectively

$ 1,149 and $ 1,174 at April 30, 2022 and July 31, 2021, respectively

43,287 40,923

9 unchanged sentences

Other intangibles, net of accumulated amortization

of $ 471 and $ 385 at January 31, 2022 and July 31, 2021, respectively

of $ 497 and $ 385 at April 30, 2022 and July 31, 2021, respectively

Customer list, net of accumulated amortization

of $ 7,464 and $ 7,321 at January 31, 2022 and July 31, 2021, respectively

of $ 7,536 and $ 7,321 at April 30, 2022 and July 31, 2021, respectively

Deferred income taxes 3,410 2,096

7 unchanged sentences

(in thousands, except share and per share amounts)

LIABILITIES & STOCKHOLDERS’ EQUITY January 31,

LIABILITIES & STOCKHOLDERS’ EQUITY April 30,

2022 July 31,

8 unchanged sentences

Notes payable, net of unamortized debt issuance costs

of $ 222 and $ 122 at January 31, 2022 and July 31, 2021, respectively

of $ 212 and $ 122 at April 30, 2022 and July 31, 2021, respectively

Deferred compensation 4,926 4,370

5 unchanged sentences

Stockholders’ Equity

Common Stock, par value $ .10 per share, issued 8,667,968 shares at January 31, 2022

Common Stock, par value $ .10 per share, issued 8,682,968 shares at April 30, 2022

and 8,561,311 shares at July 31, 2021

Class B Stock, par value $ .10 per share, issued 2,397,056 shares at January 31, 2022

Class B Stock, par value $ .10 per share, issued 2,397,056 shares at April 30, 2022

and 2,397,056 shares at July 31, 2021

7 unchanged sentences

Less Treasury Stock, at cost ( 3,535,568 Common and 351,641 Class B shares at

January 31, 2022 and 3,192,702 Common and 346,491 Class B shares at July 31, 2021)

April 30, 2022 and 3,192,702 Common and 346,491 Class B shares at July 31, 2021)

( 77,251 ) ( 66,154 )

3 unchanged sentences

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Operations

(in thousands, except for per share amounts)

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

Net Sales $ 255,431 $ 226,852

2 unchanged sentences

Selling, General and Administrative Expenses (1) ( 41,054 ) ( 39,083 )

Income from Operations 2,363 9,421

Other Income (Expense)

Loss on Impairment of Goodwill ( 5,644 ) —

(Loss) Income from Operations ( 1,664 ) 11,352

Other (Expense) Income

Interest expense ( 868 ) ( 542 )

2 unchanged sentences

Total Other Income, Net 892 722

Income Before Income Taxes 3,080 9,912

Income Tax Expense ( 524 ) ( 1,675 )

(Loss) Income Before Income Taxes ( 772 ) 12,074

Income Tax Benefit (Expense) 1,195 ( 1,651 )

Net Income 423 10,423

19 unchanged sentences

(in thousands of dollars)

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

Net Income Attributable to Oil-Dri $ 478 $ 10,510

6 unchanged sentences

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Operations

(in thousands, except for per share amounts)

For the Three Months Ended January 31,

For the Three Months Ended April 30,

Net Sales $ 85,761 $ 76,255

2 unchanged sentences

Selling, General and Administrative Expenses (1) ( 14,013 ) ( 13,035 )

Income from Operations 1,918 4,244

Other Income (Expense)

Loss on Impairment of Goodwill ( 5,644 ) —

(Loss) Income from Operations ( 4,027 ) 1,931

Other (Expense) Income

Interest expense ( 378 ) ( 186 )

2 unchanged sentences

Total Other Income, Net 175 231

Income Before Income Taxes 2,370 5,157

Income Tax Expense ( 409 ) ( 869 )

Net Income 1,961 4,288

(Loss) Income Before Income Taxes ( 3,852 ) 2,162

Income Tax Benefit 1,719 24

Net (Loss) Income ( 2,133 ) 2,186

Net Loss Attributable to Noncontrolling Interest ( 24 ) ( 41 )

Net Income Attributable to Oil-Dri $ 2,002 $ 4,299

Net Income Per Share

Net (Loss) Income Attributable to Oil-Dri $ ( 2,109 ) $ 2,227

Net (Loss) Income Per Share

Basic Common $ ( 0.32 ) $ 0.32

11 unchanged sentences

(1) See Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements for further information about amounts included in this line item.

(2) The effect of Basic Common and Basic Class B Common potential common stock equivalents related to non-vested restricted stock of 101 and 19 , respectively, were excluded from the computation of average diluted shares outstanding for the three months ended April 30, 2022 as inclusion would have been anti-dilutive.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Comprehensive (Loss) Income

(in thousands of dollars)

For the Three Months Ended January 31,

Net Income Attributable to Oil-Dri $ 2,002 $ 4,299

For the Three Months Ended April 30,

Net (Loss) Income Attributable to Oil-Dri $ ( 2,109 ) $ 2,227

Other Comprehensive (Loss) Income:

2 unchanged sentences

Other Comprehensive (Loss) Income ( 67 ) 277

Total Comprehensive Income $ 1,968 $ 4,636

Total Comprehensive (Loss) Income $ ( 2,176 ) $ 2,504

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share amounts)

For the Three Months Ended January 31

For the Three Months Ended April 30

Number of Shares

7 unchanged sentences

Stockholders’

Balance, October 31, 2020 10,919,617 ( 3,453,239 ) $ 1,092 $ 45,779 $ 178,761 $ ( 63,253 ) $ ( 11,854 ) $ ( 209 ) $ 150,316

Balance, January 31, 2021 10,937,617 ( 3,507,783 ) $ 1,094 $ 46,890 $ 181,265 $ ( 65,071 ) $ ( 11,517 ) $ ( 220 ) $ 152,441

Net Income (Loss) — — — — 2,227 — — ( 41 ) 2,186

4 unchanged sentences

Amortization of Restricted Stock — — — 559 — — — — 559

Balance, April 30, 2021 10,942,617 ( 3,533,292 ) $ 1,094 $ 47,591 $ 181,703 $ ( 65,948 ) $ ( 11,240 ) $ ( 261 ) $ 152,939

Balance, January 31, 2022 11,065,024 ( 3,732,596 ) $ 1,107 $ 50,220 $ 179,322 $ ( 72,862 ) $ ( 4,158 ) $ ( 338 ) $ 153,291

Balance, October 31, 2021 11,033,024 ( 3,618,510 ) $ 1,103 $ 49,377 $ 179,164 $ ( 68,922 ) $ ( 4,124 ) $ ( 297 ) $ 156,301

Net Income (Loss) — — — — 2,002 — — ( 41 ) 1,961

Net Loss — — — — ( 2,109 ) — — ( 24 ) ( 2,133 )

Other Comprehensive Loss — — — — — — ( 67 ) — ( 67 )

3 unchanged sentences

Amortization of Restricted Stock — — — 814 — — — — 814

Balance, January 31, 2022 11,065,024 ( 3,732,596 ) $ 1,107 $ 50,220 $ 179,322 $ ( 72,862 ) $ ( 4,158 ) $ ( 338 ) $ 153,291

For the Six Months Ended January 31

Balance, April 30, 2022 11,080,024 ( 3,887,209 ) $ 1,108 $ 51,117 $ 175,368 $ ( 77,251 ) $ ( 4,225 ) $ ( 362 ) $ 145,755

For the Nine Months Ended April 30

Number of Shares

7 unchanged sentences

Amortization of Restricted Stock — — — 1,849 — — — — 1,849

Balance, January 31, 2021 10,937,617 ( 3,507,783 ) $ 1,094 $ 46,890 $ 181,265 $ ( 65,071 ) $ ( 11,517 ) $ ( 220 ) $ 152,441

Balance, April 30, 2021 10,942,617 ( 3,533,292 ) $ 1,094 $ 47,591 $ 181,703 $ ( 65,948 ) $ ( 11,240 ) $ ( 261 ) $ 152,939

Balance, July 31, 2021 10,958,367 ( 3,539,193 ) $ 1,096 $ 48,271 $ 180,443 $ ( 66,154 ) $ ( 4,117 ) $ ( 307 ) $ 159,232

5 unchanged sentences

Amortization of Restricted Stock — — — 2,267 — — — — 2,267

Balance, January 31, 2022 11,065,024 ( 3,732,596 ) $ 1,107 $ 50,220 $ 179,322 $ ( 72,862 ) $ ( 4,158 ) $ ( 338 ) $ 153,291

Balance, April 30, 2022 11,080,024 ( 3,887,209 ) $ 1,108 $ 51,117 $ 175,368 $ ( 77,251 ) $ ( 4,225 ) $ ( 362 ) $ 145,755

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

CASH FLOWS FROM OPERATING ACTIVITIES 2022 2021

5 unchanged sentences

Provision for bad debts and cash discounts ( 1 ) ( 107 )

Loss on impairment of goodwill 5,644 —

Loss on impairment of patent applications 323 —

Loss on the disposals of property, plant and equipment 346 10

23 unchanged sentences

Effect of exchange rate changes on Cash and Cash Equivalents ( 21 ) 165

Net Increase (Decrease) in Cash and Cash Equivalents 4,418 ( 10,182 )

Net Decrease in Cash and Cash Equivalents ( 1,766 ) ( 10,572 )

Cash and Cash Equivalents, Beginning of Period 24,591 40,890

3 unchanged sentences

(in thousands)

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

Supplemental disclosures:

18 unchanged sentences

The unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring accruals and reclassifications which are, in the opinion of management, necessary for a fair presentation of the statements contained herein.

Operating results for the three and six months ended January 31, 2022 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2022.

Operating results for the three and nine months ended April 30, 2022 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2022.

Immaterial Correction of an Error in Previously Issued Financial Statements

Subsequent to the issuance of our Annual Report on Form 10-K for the fiscal year ended July 31, 2020, we identified an error in our historical financial statements related to the classification of certain costs as selling, general and administrative expenses relating to the production of our inventory that should be classified as cost of sales.

Subsequent to the issuance of our Annual Report on Form 10-K for the fiscal year ended July 31, 2020, we identified an error in our historical financial statements related to the classification of certain costs as selling, general and administrative (“SG&A”) expenses relating to the production of our inventory that should be classified as cost of sales.

These costs generally relate to our annual discretionary bonus and 401(k) employer match for our manufacturing employees, employee salaries for individuals in our support functions that spend a portion of their time related to our manufacturing operations such as IT, and other costs mostly related to consultants and outside services.

3 unchanged sentences

The revision to our historical condensed consolidated financial statements did not result in any impact to our consolidated net income.

The effects of the corrections to each of the individual affected line items in our unaudited Condensed Consolidated Statements of Income were as follows (in thousands):

For the Three Months Ended January 31, 2021

The effects of the corrections to each of the individual affected line items in our unaudited Condensed Consolidated Statements of Operations were as follows (in thousands):

For the Three Months Ended April 30, 2021

As Previously Reported Corrections As Corrected

1 unchanged sentence

Selling, General and Administrative Expenses $ ( 14,592 ) $ 1,557 $ ( 13,035 )

For the Six Months Ended January 31, 2021

For the Nine Months Ended April 30, 2021

As Previously Reported Corrections As Corrected

3 unchanged sentences

The effects of the corrections to our Notes to the unaudited Condensed Consolidated Financial Statements for Operating Segments were as follows (in thousands):

For the Three Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

For the Three Months Ended April 30, 2021

As Previously Reported Reclassifications Corrections As Corrected

Business to Business Products $ 7,146 $ ( 161 ) $ ( 564 ) $ 6,421

1 unchanged sentence

Corporate Expenses $ ( 8,113 ) $ 211 $ 1,557 $ ( 6,345 )

For the Six Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

For the Nine Months Ended April 30, 2021

As Previously Reported Reclassifications Corrections As Corrected

Business to Business Products $ 23,005 $ ( 479 ) $ ( 1,710 ) $ 20,816

1 unchanged sentence

Corporate Expenses $ ( 23,140 ) $ 629 $ 4,564 $ ( 17,947 )

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

These reclassifications related to the transition of personnel, were not corrections of an error, and had no effect on the previously reported net income.

Management Use of Estimates

49 unchanged sentences

We may require certain customers to provide payment in advance of product shipment.

We recorded a liability for these advance payments of $ 523,000 and $ 256,000 as of January 31, 2022 and July 31, 2021, respectively.

We recorded a liability for these advance payments of $ 531,000 and $ 256,000 as of April 30, 2022 and July 31, 2021, respectively.

This liability is reported in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet.

Revenue recognized during the six months ended January 31, 2022 that was included in the liability for advance payments at the beginning of the period was $ 155,000 .

Revenue recognized during the nine months ended April 30, 2022 that was included in the liability for advance payments at the beginning of the period was $ 187,000 .

We routinely commit to one-time or ongoing trade promotion programs directly with consumers, such as coupon programs, and with customers, such as volume discounts, cooperative marketing and other arrangements.

8 unchanged sentences

On March 27, 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into U.S.

The CARES Act provides for, among other things, deferral of the employer portion of social security taxes incurred through the end of calendar 2020.

As permitted by the CARES Act, we deferred approximately $ 2,300,000 in payroll taxes in calendar year 2020.

$ 1,150,000 of the $ 2,300,000 was paid in the fourth quarter of calendar year 2021 and $ 1,150,000 will be paid in the fourth quarter of calendar year 2022.

The CARES Act provides for, among other things, deferral of the employer portion of social security taxes incurred through the end of calendar year (December) 2020.

As permitted by the CARES Act, we deferred approximately $ 2,300,000 in payroll taxes in calendar year (December) 2020.

$ 1,150,000 of the $ 2,300,000 was paid in the fourth quarter of calendar year (December) 2021 and $ 1,150,000 will be paid in the fourth quarter of calendar year (December) 2022.

The remaining $ 1,150,000 accrual for these payroll taxes is included in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet.

NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS

Recently Issued Pronouncements

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other:

Simplifying the Test for Goodwill Impairment (ASC 350).

The standard eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (the Step 2 test) from the goodwill impairment test.

Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit.

The guidance is effective for us beginning with the first quarter of fiscal year 2023.

Early adoption is permitted.

We adopted this standard during the third quarter of fiscal year 2022 in conjunction with testing for our goodwill impairment.

See Note 5 for additional information regarding the results of the impairment test performed.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued guidance under ASC 848, Reference Rate Reform.

17 unchanged sentences

Inventory costs include the cost of raw materials, packaging supplies, labor and other overhead costs.

The inventory obsolescence reserve values at January 31, 2022 and July 31, 2021 were $ 541,000 and $ 641,000 , respectively.

The inventory obsolescence reserve values at April 30, 2022 and

July 31, 2021 were $ 610,000 and $ 641,000 , respectively.

Inventories, in all categories, have increased due to a combination of rising costs and building inventory levels for anticipated demand.

7 unchanged sentences

Cash equivalents are primarily money market mutual funds classified as Level 1.

We had no cash equivalents as of January 31, 2022 and July 31, 2021.

Balances of accounts receivable and accounts payable approximated their fair values at January 31, 2022 and July 31, 2021 due to the short maturity and nature of those balances.

We had no cash equivalents as of April 30, 2022 and July 31, 2021.

Balances of accounts receivable and accounts payable approximated their fair values at April 30, 2022 and July 31, 2021 due to the short maturity and nature of those balances.

Notes payable are reported at the face amount of future maturities.

The estimated fair value of notes payable, including current maturities, was $ 36,985,000 and $ 10,231,000 as of January 31, 2022 and July 31, 2021, respectively, and are classified as Level 2.

The estimated fair value of notes payable, including current maturities, was $ 35,051,000 and $ 10,231,000 as of April 30, 2022 and July 31, 2021, respectively, and are classified as Level 2.

The fair value was estimated using the exit price notion of fair value.

4 unchanged sentences

Intangible assets, other than goodwill, include trademarks, patents, customer lists and product registrations.

Intangible amortization expense was $ 138,000 and $ 150,000 in the second quarter of fiscal years 2022 and 2021, respectively.

Intangible amortization expense was $ 253,000 and $ 305,000 in the first six months of fiscal years 2022 and 2021, respectively.

Intangible amortization expense was $ 116,000 and $ 146,000 in the third quarter of fiscal years 2022 and 2021, respectively.

Intangible amortization expense was $ 369,000 and $ 451,000 in the first nine months of fiscal years 2022 and 2021, respectively.

Estimated intangible amortization for the remainder of fiscal year 2022 is $ 116,000 .

1 unchanged sentence

We have one acquired trademark recorded at a cost of $ 376,000 that was determined to have an indefinite life and is not amortized.

We performed our annual goodwill impairment analysis in the fourth quarter of fiscal year 2021 and no impairment was identified.

There have been no triggering events that would indicate a new impairment analysis is needed.

A lthough we have not identified any triggering events relating to goodwill or our intangibles, the ultimate effects of COVID-19 could change this assessment in the future.

Much of our goodwill cannot be specifically assigned to one of our operating segments because of the shared nature of our production facilities;

however, for purposes of our impairment analysis we estimated the goodwill allocation and assigned $ 5,644,000 to the Retail and Wholesale Products Group and $ 3,618,000 to the Business to Business Products Group.

Our goodwill impairment test is based on cash flow considerations and other approaches that require significant judgment with respect to volume, revenue, expenses and allocations.

We determined that, as a result of lower share prices and the continued adverse impacts of rising costs and additional expenses to prevent supply chain disruptions, that we had a triggering event during the third quarter of fiscal 2022 that necessitated a goodwill impairment test.

We performed a goodwill impairment test on our Retail and Wholesale Products Group and Business to Business Products Group reporting units and determined that the carrying value of our Retail and Wholesale Products Group reporting unit was higher than its fair value.

As a result, we recorded goodwill impairment of $ 5,644,000 which left no remaining goodwill in the Retail and Wholesale Products Group reporting unit.

We also performed a quantitative impairment analysis on the Business to Business Products Group reporting unit and concluded there was excess fair value over carrying value, therefore no impairment was recorded on this reporting unit.

We will continue to consider the need to re-perform impairment testing throughout the year when circumstances such as the ultimate effects of COVID-19, unexpected adverse economic factors, inflation, unanticipated technological changes, competitive activities and acts by governments and courts indicate that goodwill may become impaired.

ACCRUED EXPENSES

7 unchanged sentences

$ 26,697 $ 24,883

The decrease in salaries, wages, commissions and employee benefits relates primarily to the payment of annual discretionary bonuses during the first quarter of fiscal year 2022.

Changes in the accrual for trade promotions and advertising as well as real estate taxes differ due to timing.

The accrual for other is higher at January 31, 2022 than July 31, 2021 due to an increase in accrual for rising natural gas costs and timing of certain plant purchases and expenses.

The increase in freight cost is primarily due to increase in fuel prices, tight truck capacity, ongoing driver shortages, and supply chain issues.

The accrual for other is higher at April 30, 2022 than July 31, 2021 due to an increase in accrual for rising natural gas costs and timing of certain plant purchases and expenses.

OTHER CONTINGENCIES

3 unchanged sentences

Such party subsequently, in July 2020, filed a lawsuit seeking to require the Company to participate in binding mediation regarding this matter.

Although we believe this claim to be without merit, as of July 31, 2020, we have determined a reasonable estimate of this liability within a range, with no amount within that range being a better estimate than any other amount, and have therefore recorded that estimate in Other within Accrued expenses.

There have been no changes during fiscal 2021 or the three months ended January 31, 2022 that would have changed this estimate.

Although we believe this claim to be without merit, as of July 31, 2020, we determined a reasonable estimate of this liability within a range, with no amount within that range being a better estimate than any other amount, and therefore recorded that estimate in Other within Accrued expenses.

There have been no changes during fiscal 2021 or the nine months ended April 30, 2022 that would have changed this estimate.

We believe that any loss related to this matter is unlikely to be material.

15 unchanged sentences

Further information about our accounting policy for leases is included in Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements.

We have no material finance leases, and variable costs for operating leases are immaterial for the three and six months ended January 31, 2022.

We have no material finance leases, and variable costs for operating leases are immaterial for the three and nine months ended April 30, 2022.

Operating lease costs are included in Cost of Sales or SG&A expenses based on the nature of the lease.

The following table summarizes total lease costs for our operating leases (in thousands):

For the Three Months Ended January 31, For the Six Months Ended January 31,

For the Three Months Ended April 30, For the Nine Months Ended April 30,

2022 2021 2022 2021

3 unchanged sentences

Supplemental cash flow information related to leases was as follows (in thousands):

For the Three Months Ended January 31, For the Six Months Ended January 31,

For the Three Months Ended April 30, For the Nine Months Ended April 30,

2022 2021 2022 2021

4 unchanged sentences

Other supplemental balance sheet information related to leases was as follows:

January 31, 2022 July 31, 2021

April 30, 2022 July 31, 2021

Weighted-average remaining lease term - operating leases 8.8 years 9.1 years

Weighted-average discount rate - operating leases 3.90 % 3.88 %

The following table summarizes scheduled minimum future lease payments due within twelve months for operating leases with terms longer than one year for which cash flows are fixed and determinable as of January 31, (in thousands):

Thereafter 5,661

11 unchanged sentences

(in thousands)

For the Three Months Ended January 31, For the Six Months Ended January 31,

For the Three Months Ended April 30, For the Nine Months Ended April 30,

2022 2021 2022 2021

6 unchanged sentences

(in thousands)

For the Three Months Ended January 31, For the Six Months Ended January 31,

For the Three Months Ended April 30, For the Nine Months Ended April 30,

2022 2021 2022 2021

7 unchanged sentences

The Pension Plan is funded based upon actuarially determined contributions that take into account the amount deductible for income tax purposes, the normal cost and the minimum contribution required and the maximum contribution allowed under applicable regulations.

We were not required to make, and did no t voluntarily make, a contribution to the Pension Plan during the first six months of fiscal year 2022.

We were not required to make, and did no t voluntarily make, a contribution to the Pension Plan during the first nine months of fiscal year 2022.

We have no minimum funding requirements for the remainder of fiscal year 2022.

3 unchanged sentences

Pension Benefits Postretirement Health Benefits

For the Three and Six Months Ended January 31,

For the Three and Nine Months Ended April 30,

2022 2021 2022 2021

35 unchanged sentences

Business to Business Products Group Retail and Wholesale Products Group

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

Product 2022 2021 2022 2021

7 unchanged sentences

Business to Business Products Group Retail and Wholesale Products Group

For the Three Months Ended January 31,

For the Three Months Ended April 30,

Product 2022 2021 2022 2021

9 unchanged sentences

The asset allocation is estimated and is not a measure used by our chief operating decision maker about allocating resources to the operating segments or in assessing their performance.

January 31, 2022 July 31, 2021

April 30, 2022 July 31, 2021

(in thousands)

6 unchanged sentences

Corporate expenses also include the estimated annual incentive plan bonus accrual for employees dedicated to corporate operations.

In addition, Income from our Business to Business and Retail and Wholesale Products as well as Corporate Expenses for the three and six months ended January 31, 2021 were adjusted for an immaterial correction of an error.

In addition, Income from our Business to Business and Retail and Wholesale Products as well as Corporate Expenses for the three and six months ended April 30, 2021 were adjusted for an immaterial correction of an error.

See Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements.

For the Six Months Ended January 31,

For the Nine Months Ended April 30,

Net Sales Income

5 unchanged sentences

Corporate Expenses ( 19,603 ) ( 17,947 )

Income from Operations 2,363 9,421

(Loss) Income from Operations ( 1,664 ) 11,352

Total Other Income, Net 892 722

Income before Income Taxes 3,080 9,912

Income Tax Expense ( 524 ) ( 1,675 )

(Loss) Income before Income Taxes ( 772 ) 12,074

Income Tax Benefit (Expense) 1,195 ( 1,651 )

Net Income 423 10,423

1 unchanged sentence

Net Income Attributable to Oil-Dri $ 478 $ 10,510

For the Three Months Ended January 31,

For the Three Months Ended April 30,

Net Sales Income

5 unchanged sentences

Corporate Expenses ( 6,630 ) ( 6,345 )

Income from Operations 1,918 4,244

(Loss) Income from Operations ( 4,027 ) 1,931

Total Other Income, Net 175 231

Income before Income Taxes 2,370 5,157

Income Tax Expense ( 409 ) ( 869 )

Net Income 1,961 4,288

(Loss) Income before Income Taxes ( 3,852 ) 2,162

Income Tax Benefit 1,719 24

Net (Loss) Income ( 2,133 ) 2,186

Net Loss Attributable to Noncontrolling Interest ( 24 ) ( 41 )

Net Income Attributable to Oil-Dri $ 2,002 $ 4,299

Net (Loss) Income Attributable to Oil-Dri $ ( 2,109 ) $ 2,227

STOCK-BASED COMPENSATION

2 unchanged sentences

The total number of shares of stock subject to grants under the 2006 Plan may not exceed 1,219,500 .

As of January 31, 2022, there were 260,356 shares available for future grants under this plan.

As of April 30, 2022, there were 249,969 shares available for future grants under this plan.

Restricted Stock

All of our non-vested restricted stock as of January 31, 2022 was issued under the 2006 Plan with vesting periods generally between one and five years .

All of our non-vested restricted stock as of April 30, 2022 was issued under the 2006 Plan with vesting periods generally between one and five years .

We determined the fair value of restricted stock as of the grant date.

We recognize the related compensation expense over the period from the date of grant to the date the shares vest.

There were 32,000 and 18,000 restricted shares of Common Stock granted during the second quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 817,000 and $ 506,000 for the second quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 1,453,000 and $ 1,290,000 for the first six months of fiscal years 2022 and 2021, respectively.

There were 15,000 and 5,000 restricted shares of Common Stock granted during the third quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 814,000 and $ 559,000 for the third quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 2,267,000 and $ 1,849,000 for the first nine months of fiscal years 2022 and 2021, respectively.

A summary of restricted stock transactions is shown below:

5 unchanged sentences

Forfeitures ( 17 ) $ 34.56

Non-vested restricted stock outstanding at January 31, 2022 407 $ 33.90

Non-vested restricted stock outstanding at April 30, 2022 407 $ 33.73

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of January 31, 2022 (in thousands):

The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of April 30, 2022 (in thousands):

Pension and Postretirement Health Benefits Cumulative Translation Adjustment Total Accumulated Other Comprehensive (Loss) Income

3 unchanged sentences

Net current-period other comprehensive income (loss), net of tax 79 ( 187 ) ( 108 )

Balance as of January 31, 2022 $ ( 4,375 ) $ 217 $ ( 4,158 )

Balance as of April 30, 2022 $ ( 4,349 ) $ 124 $ ( 4,225 )

(a) Amount is net of tax expense of $ 24,930 .

3 unchanged sentences

One member of our Board of Directors (the “Board”) retired from the role of President and Chief Executive Officer of a customer of ours in September 2019 and is currently party to a post-employment agreement with the customer.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 81,000 and $ 71,000 for the second quarter of fiscal years 2022 and 2021, respectively and were $ 156,000 and $ 181,000 for the first six months of fiscal years 2022 and 2021, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 14,000 as of January 31, 2022 and $ 4,000 as of July 31, 2021.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 112,000 and $ 72,000 for the third quarter of fiscal years 2022 and 2021, respectively and were $ 268,000 and $ 253,000 for the first nine months of fiscal years 2022 and 2021, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 5,000 as of April 30, 2022 and $ 4,000 as of July 31, 2021.

One member of our Board is currently the President and Chief Executive Officer of a vendor of ours.

Total payments to this vendor for fees and cost reimbursements were $ 350,000 and $ 109,000 for the second quarter of fiscal years 2022 and 2021, respectively and were $ 565,000 and $ 201,000 for the first six months of fiscal years 2022 and 2021, respectively.

There were no outstanding accounts payable to that vendor as of January 31, 2022 or July 31, 2021.

Total payments to this vendor for fees and cost reimbursements were $ 64,000 and $ 72,000 for the third quarter of fiscal years 2022 and 2021, respectively and were $ 629,000 and $ 273,000 for the first nine months of fiscal years 2022 and 2021, respectively.

There were no outstanding accounts payable to that vendor as of April 30, 2022 or July 31, 2021.

SUBSEQUENT EVENTS

Effective June 3, 2022, we entered into Amendment No.

2 (the “Amendment”) to the Amended and Restated Note Purchase and Private Shelf Agreement (the “Note Agreement”) with PGIM, Inc.

(“Prudential”) and certain existing noteholders affiliated with Prudential named therein.

The Amendment, among other things, revises the definition of Consolidated EBITDA (Earnings Before Interest, Depreciation, and Amortization) within the Note Agreement.

Effective June 6, 2022, we entered into a modification (the “Modification”) to the credit agreement (the “Credit Agreement”) with BMO Harris N.A.

The Modification, among other things, revises the definition of Consolidated EBITDA and Consolidated EBITR (Earnings Before Interest, Taxes, and Rent) within the Credit Agreement.

The revised definitions of Consolidated EBITDA and consolidated EBITR are relevant to our quarterly covenant calculations based on the amended definitions noted above.

The goodwill impairment recorded in the three months ended April 30, 2022, described in Note 5 of the Notes to the unaudited Condensed Consolidated Financial Statements was excluded from the quarterly covenant calculations based on the amended definitions summarized above.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements