What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-10-10 compared with 2023-10-12 · 327 added, 307 removed, 647 unchanged (49% of the section changed)

12 unchanged sentences

Property, Plant and Equipment

Land 13,550 13,619

Buildings and leasehold improvements 41,648 40,940

2 unchanged sentences

Vehicles 24,617 17,663

Gross depreciable assets 261,818 238,638

Less accumulated depreciation and amortization ( 182,999 ) ( 175,374 )

Net depreciable assets 78,819 63,264

Construction in progress 20,974 15,856

Land and mineral rights 22,905 20,106

Capital parts, net 3,292 2,570

Mining assets 9,966 9,286

Capital parts 7,488 5,271

Less accumulated depreciation and amortization ( 195,765 ) ( 184,978 )

Total Property, Plant and Equipment, Net 137,796 120,872

Goodwill 15,443 3,618

Trademarks and patents, net of accumulated amortization

Trademarks, trade names and patents, net of accumulated amortization

of $ 625 and $ 578 in 2024 and 2023, respectively

17 unchanged sentences

Noncurrent Liabilities

Notes payable, net of unamortized debt issuance costs of $ 173 and $ 202 in 2023 and 2022, respectively

Long-term debt, net of unamortized debt issuance costs of $ 226 and $ 173 in 2024 and 2023, respectively

49,774 30,827

Deferred compensation 5,667 4,512

Pension and postretirement benefits 1,753 798

Long-term operating lease liabilities 15,391 8,810

2 unchanged sentences

Total Liabilities 144,017 109,159

Commitments and contingencies (See Note 12)

Stockholders’ Equity

3 unchanged sentences

Retained earnings 232,247 200,796

Noncontrolling interest — ( 369 )

Accumulated Other Comprehensive Income (Loss)

Pension and postretirement benefits 1,012 ( 2,242 )

Cumulative translation adjustment ( 264 ) 59

Total Accumulated Other Comprehensive Income (Loss) 748 ( 2,183 )

Accumulated other comprehensive income 769 748

Less treasury stock, at cost ( 3,702,185 Common and 362,649 Class B shares in 2024 and 3,658,989 Common and 351,641 Class B shares in 2023)

11 unchanged sentences

Selling, General and Administrative Expenses ( 73,449 ) ( 62,187 )

Loss on Impairment of Goodwill — ( 5,644 )

Income from Operations 51,645 41,040

3 unchanged sentences

Loss on pension termination — ( 4,652 )

Foreign exchange gain (loss) 105 ( 303 )

Foreign exchange (loss) gain ( 628 ) 105

Other, net ( 435 ) ( 816 )

Total Other (Expense) Income, Net ( 6,362 ) 888

Total Other Expense, Net ( 1,994 ) ( 6,362 )

Income Before Income Taxes 49,651 34,678

4 unchanged sentences

Net Income Per Share

Basic Common $ 4.45 $ 0.83

Basic Class B $ 3.35 $ 0.63

Diluted Common $ 4.13 $ 0.81

Diluted Class B $ 3.35 $ 0.62

Basic Common Stock

$ 5.85 $ 4.45

Basic Class B Stock

$ 4.40 $ 3.35

Diluted Common Stock

$ 5.43 $ 4.13

Diluted Class B Stock

$ 4.40 $ 3.35

Average Shares Outstanding

Basic Common 4,825 4,987

Basic Class B 1,959 1,934

Diluted Basic Common 6,784 5,099

Diluted Basic Class B 1,959 1,962

Basic Common Stock

Basic Class B Stock

Diluted Common Stock

Diluted Class B Stock

Dividends Declared Per Share

Class B Stock

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

19 unchanged sentences

Comprehensive

Loss Non-Controlling Interest Total

Income (Loss)

Non-Controlling Interest Total

Stockholders’

9 unchanged sentences

Amortization of restricted stock — — — 3,147 — — — — 3,147

Contributions from noncontrolling interests — — — ( 685 ) — — — 437 ( 248 )

Balance, July 31, 2023 11,147,279 ( 4,010,630 ) $ 1,115 $ 55,624 $ 200,796 $ ( 81,207 ) $ 748 $ — $ 177,076

Net income (loss) — — — — 29,551 — — ( 68 ) 29,483

Net income — — — — 39,426 — — — 39,426

Other comprehensive income — — — — — — 21 — 21

5 unchanged sentences

Amortization of restricted stock — — — 4,819 — — — — 4,819

Contributions from noncontrolling interests — — — ( 685 ) — — — 437 $ ( 248 )

Balance, July 31, 2024 11,361,729 ( 4,064,834 ) $ 1,136 $ 60,877 $ 232,247 $ ( 84,441 ) $ 769 $ — $ 210,588

10 unchanged sentences

Loss on pension termination — 4,652

Provision for deferred income taxes ( 4,431 ) ( 2,296 )

Provision for bad debts and cash discounts 284 ( 227 )

Loss on impairment of goodwill — 5,644

Deferred income tax expense (provision)

1,697 ( 4,431 )

Net (decrease) increase to provision for bad debts and cash discounts

Loss on impairment of patent applications — 61

Loss on impairment of Fixed Assets 914 —

Accretion for asset retirement obligation 211 161

Loss on the disposals of property, plant and equipment 130 334

Loss on impairments and disposals of property, plant and equipment 314 1,044

(Increase) decrease in:

8 unchanged sentences

Deferred compensation 1,155 ( 47 )

Pension and postretirement benefits ( 1,085 ) ( 1,938 )

Other liabilities ( 3,721 ) ( 1,362 )

4 unchanged sentences

Proceeds from sale of property, plant and equipment 182 70

Acquisition of business ( 44,298 ) —

Acquisition of equity in Agromex

1 unchanged sentence

Cash Flows from Financing Activities

Proceeds from issuance of notes payable — 25,000

Proceeds from long-term debt 20,000 —

Principal payments on notes payable ( 1,000 ) ( 1,000 )

2 unchanged sentences

Purchase of treasury stock ( 2,778 ) ( 1,078 )

Net Cash (Used in) Provided by Financing Activities ( 9,518 ) 4,703

Net Cash Provided by (Used in) Financing Activities 8,326 ( 9,518 )

Effect of exchange rate changes on cash and cash equivalents 204 ( 223 )

Net Increase (Decrease) in Cash and Cash Equivalents 15,456 ( 8,293 )

Cash and Cash Equivalents, Beginning of Year 16,298 24,591

Cash and Cash Equivalents, End of Year $ 31,754 $ 16,298

Net (Decrease) Increase in Cash and Cash Equivalents ( 7,273 ) 15,456

Cash, Cash Equivalents and Restricted Cash, Beginning of Year

31,754 16,298

Cash, Cash Equivalents and Restricted Cash, End of Year

$ 24,481 $ 31,754

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

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

2 unchanged sentences

Supplemental disclosure:

Reconciliation of cash, cash equivalents and restricted cash

Cash and cash equivalents

$ 23,481 $ 31,754

Restricted cash in prepaid expenses and other assets

Other cash flows:

Interest payments, net of amounts capitalized $ 1,089 $ 1,135

Income tax payments (refunds) $ 7,367 $ ( 178 )

Income tax payments $ 10,006 $ 7,367

Noncash investing and financing activities:

10 unchanged sentences

Our adsorbent products include bleaching clays, which are used for filtration of edible oils, pre-treatment of renewable diesel, and for purification of petroleum-based oils.

We also sell synthetic sorbents, which are used for industrial cleanup.

We also sell synthetic sorbents, which are used for industrial cleanup and cat litter.

P RINCIPLES OF C ONSOLIDATION

10 unchanged sentences

Actual results could differ from these estimates.

C ASH AND C ASH E QUIVALENTS

C ASH, C ASH E QUIVALENTS AND R ESTRICTED C ASH

Cash equivalents are highly liquid investments with maturities of three months or less.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as of July 31, 2024 and 2023 reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows (in thousands):

Cash and cash equivalents

$ 23,481 $ 31,754

Restricted cash included in prepaid expenses and other assets

Cash, cash equivalents, and restricted cash

$ 24,481 $ 31,754

T RADE R ECEIVABLES

4 unchanged sentences

Past due status is determined based on contractual terms and customer payment history.

We also include an allowance for expected cash discounts to be taken.

The composition of inventories was as follows as of July 31 (in thousands):

1 unchanged sentence

Packaging 8,995 8,007

Spare parts, net $ 5,981 $ 4,904

Spare parts 7,059 $ 5,981

Other 6,410 6,681

Inventories $ 42,612 $ 40,466

Inventories, net

$ 54,236 $ 42,612

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value.

2 unchanged sentences

The review surveyed all of our operating facilities and sales groups to ensure that both historical issues and new market trends were considered.

The obsolescence reserve not only considered specific items, but also took into consideration the overall value of the inventory as of the balance sheet date.

We recorded inventory obsolescence reserves of approximately $ 0.8 million as of both July 31, 2023 and July 31, 2022, respectively.

The obsolescence reserve not only considers specific items, but also takes into consideration the overall value of the inventory as of the balance sheet date.

We recorded inventory reserves of approximately $ 3.8 million as of July 31, 2024, and $ 3.6 million as of July 31, 2023.

The other category of inventories includes a variety of items including clay, additives, fragrances and other supplies.

Spare parts in inventory is recorded net of a valuation reserve based on aging.

The spare parts reserve was $ 2.9 million as of July 31, 2023, and $ 2.7 million as of July 31, 2022.

T RANSLATION OF F OREIGN C URRENCIES

4 unchanged sentences

I NTANGIBLES AND G OODWILL

We amortize most of our intangibles on a straight-line basis over periods ranging from 10 to 20 years.

Our customer list intangible asset is amortized at an accelerated amortization rate in the earlier years to reflect the expected pattern of decline in the related benefits over time.

Our intangible assets are mainly comprised of customer lists, patents, trademarks, trade names and goodwill.

We amortize customer lists and patents on a straight-line basis over periods ranging from 18 to 20 years.

During fiscal year 2024 we recorded additions of intangible assets of $ 37.4 million related to the acquisition of Ultra Pet, the components of which are customer list of $ 20.4 million amortized over a useful life of 18 years, $ 5.2 million of trade name and $ 11.8 million of goodwill.

Intangible amortization was $ 0.5 million in fiscal year 2024 and $ 0.3 million in fiscal year 2023.

Some intangible assets were determined to have indefinite lives and are not amortized, specifically one acquired trademark recorded at $ 0.4 million.

Our estimated intangible amortization expense for the next five fiscal years is as follows (in thousands):

3 unchanged sentences

Total intangible assets subject to amortization 17.6

We periodically review indefinite-lived intangibles and goodwill to assess for impairment.

Trademarks and trade names acquired through acquisition were determined to have indefinite lives.

We had $ 5.6 million and $ 0.4 million of indefinite life trademarks and trade names as of July 31, 2024 and 2023, respectively.

Goodwill by operating segment was as follows as of July 31 (in thousands):

Business to Business 3,618 3,618

Retail and Wholesale $ 11,825 —

Total $ 15,443 $ 3,618

We review indefinite-lived intangibles and goodwill to assess for impairment on the first day of our fiscal fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

We also perform a review for indicators of impairment each quarter to assess whether an interim impairment review is required for any reporting unit.

Our review entails a qualitative analysis of triggering events and, if identified, a further analysis is performed based on cash flow considerations and other approaches that require significant judgment with respect to volume, revenue, expenses and allocations.

Impairment occurs when the carrying value exceeds the fair value.

In fiscal year 2023, all of our goodwill was attributed only to the

Business to Business operating segment.

We performed our annual impairment assessment and identified no triggering events that would indicate the need for impairment of the goodwill.

During fiscal year 2022, we determined, 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 that necessitated a goodwill impairment test.

As a result, it was determined that the carrying value of our Retail and Wholesale Products Group reporting unit was higher than its fair value and recognized a goodwill impairment of $ 5.6 million, which left no remaining goodwill in the Retail and Wholesale Products Group reporting unit.

No impairment was recognized for the Business to Business operating segment in fiscal year 2022.

O VERBURDEN R EMOVAL AND M INING C OSTS

We surface mine sorbent minerals on property that we either own or lease as part of our overall operations.

A significant part of our overall mining cost is incurred during the process of removing the overburden from the mine site, thus exposing the sorbent material used in a majority of our production processes.

These stripping costs incurred during production are treated as a variable inventory production cost and are included in cost of goods sold in the period they are incurred.

Stripping costs included in cost of goods sold were approximately $ 4.0 million and $ 2.7 million for fiscal years 2023 and 2022, respectively.

Pre-production overburden removal costs associated with opening a new mine during the development phase are deferred.

Total pre-production costs, including the overburden removal costs, that were capitalized in fiscal years 2023 and 2022 were $ 0.1 million and $ 1.3 million respectively.

The decrease was due to a new mine going into production in fiscal year 2023.

Capitalized development costs are amortized when the sorbent material is removed from the mine and used to produce product for sale.

At the end of fiscal year 2023, the amount of development costs that are being amortized is $ 4.3 million.

Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal fees, survey fees and real estate fees.

The costs of obtaining mineral rights, including legal fees and drilling expenses, are also capitalized.

As of both fiscal years ending July 31, 2023 and July 31, 2022 we had $ 13.6 million of land and $ 2.2 million of gross mineral rights included in land and mineral rights on the Consolidated Balance Sheets.

Any prepaid royalties that may be offset against future royalties due upon extraction of the mineral are also capitalized.

Prepaid royalties included in current prepaid expenses and in non-current other assets on the Consolidated Balance Sheets were approximately $ 2.0 million for both fiscal years ending July 31, 2023 and July 31, 2022.

We perform ongoing reclamation activities during the normal course of our overburden removal.

As overburden is removed from a mine site, it is hauled to previously mined sites and is used to refill older sites.

This process allows us to continuously reclaim older mine sites and dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process.

On an annual basis we evaluate our potential reclamation liability in accordance with ASC 410, Asset Retirement and Environmental Obligations.

The reclamation assets are depreciated over the estimated useful lives of the various mines.

The reclamation liabilities are increased based on a yearly accretion charge over the estimated useful lives of the mines.

As of July 31, 2023 and 2022, we have recorded an estimated net reclamation asset of $ 2.2 million and $ 1.8 million, respectively, and a corresponding estimated reclamation liability of $ 4.5 million as of July 31, 2023 and $ 3.8 million as of July 31, 2022.

These values represent the discounted present value of the estimated future mining reclamation and landfill closure costs at the production plants.

Additional mining activity in fiscal year 2023 and disturbance of land accounts for a majority of the increase in the reclamation asset and liability.

We performed our impairment assessment and identified no triggering events in that would indicate the need for impairment of indefinite intangible assets or goodwill in either 2024 or 2023.

P ROPERTY , P LANT AND E QUIPMENT

Property, plant and equipment are generally depreciated using the straight-line method over their estimated useful lives which are listed below.

Property, plant and equipment are depreciated using the straight-line method over their estimated useful lives which are listed below.

Depreciation expense was $ 18.8 million and $ 15.3 million in fiscal years 2024 and 2023, respectively.

Major improvements and betterments are capitalized, while maintenance and repairs that do not extend the useful life of the applicable assets are expensed as incurred.

Major improvements and betterments are capitalized, while maintenance and repairs that do not extend the useful life or increase functionality of the applicable assets are expensed as incurred.

Interest expense may also be capitalized for assets that require a period of time to get them ready for their intended use.

7 unchanged sentences

Vehicles 2 - 15

Property, plant and equipment are carried at cost on the Consolidated Balance Sheets and are reviewed for possible impairment on an annual basis or when circumstances indicate impairment that an asset may become impaired.

Capital parts 3 - 7

Property, plant and equipment are carried at cost on the Consolidated Balance Sheets and are reviewed for possible impairment on an annual basis or when circumstances indicate that an asset may be impaired.

We take into consideration idle and underutilized equipment and review business plans for possible impairment.

When impairment is indicated, an impairment charge is recorded for the difference between the carrying value of the asset and its fair market value.

In fiscal year 2023, we recognized $ 0.9 million in impairment losses for fixed assets no longer in use.

The impairment is included in cost of goods sold on the Consolidated Statement of Operations.

There was no impairment recognized in fiscal year 2022.

Capital parts are long-lived spare parts that are recorded net of a valuation reserve based on aging.

The capital parts reserve was $ 2.0 million as of July 31, 2023, and $ 1.8 million as of July 31, 2022.

OTHER CURRENT AND NONCURRENT LIABILITIES

Other liabilities include the accruals for general expenses not yet paid, cash collected not yet vouchered, legal reserves, and reclamation liability accrual.

Current liabilities are due to be paid within the next 12 months.

Included in current liabilities within Accrued Expenses on the Consolidated Balance Sheet is $ 2.5 million for the Georgia landfill modification reserve which began in the third quarter of fiscal year 2023.

Refer to Note 11 for further details.

In fiscal year 2024, we recognized $ 0.1 million in impairment for fixed assets no longer in use, and $ 0.9 million in fiscal year 2023.

Impairment is included in cost of goods sold on the Consolidated Statement of Operations.

L AND AND M INING A SSETS

Our mining assets include mining properties, mineral rights and reclamation asset.

We surface mine sorbent minerals on property that we either own or lease.

A significant part of our mining cost is incurred during the process of removing the overburden from the mine site, thus exposing the sorbent material used in a majority of our production processes.

Pre-production overburden removal costs associated with opening a new mine during the development phase are deferred.

There were no capitalized pre-production costs incurred in fiscal year 2024.

In fiscal year 2023, $ 0.1 million of pre-production costs, including overburden removal costs, were capitalized.

Capitalized development costs are amortized when the sorbent material is removed from the mine and used to produce product for sale.

At the end of fiscal year 2024, the amount of development costs that are being amortized is $ 4.0 million.

Stripping costs incurred during production are treated as a variable inventory production cost and are included in cost of goods sold.

Stripping costs included in cost of goods sold were approximately $ 5.4 million and $ 4.0 million for fiscal years 2024 and 2023, respectively.

Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal, survey, and real estate fees.

The costs of obtaining mineral rights, including legal fees and drilling expenses, are also

As of both fiscal years ending July 31, 2024 and July 31, 2023 we had $ 13.6 million of land and $ 2.2 million of gross mineral rights.

Any prepaid royalties that may be offset against future royalties due upon extraction of the mineral are also capitalized.

Prepaid royalties included in current prepaid expenses and in non-current other assets on the Consolidated Balance Sheets were approximately $ 2.3 million as of July 31, 2024 and $ 2.0 million as of July 31, 2023.

We perform ongoing reclamation activities during the normal course of our overburden removal.

As overburden is removed from a mine site, it is hauled to previously mined sites and is used to refill the older sites.

This process allows us to continuously reclaim older mine sites and dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process.

On an annual basis we evaluate our potential reclamation liability in accordance with ASC 410, Asset Retirement and Environmental Obligations.

Reclamation assets are depreciated over the estimated useful lives of the various mines.

Reclamation liabilities are increased based on a yearly accretion charge over the estimated useful lives of the mines.

We recorded an estimated net reclamation asset of $ 2.2 million as of both July 31, 2024 and 2023, and a corresponding estimated reclamation liability of $ 4.8 million as of July 31, 2024 and $ 4.5 million as of July 31, 2023.

These values represent the discounted present value of the estimated future mining reclamation and landfill closure costs at the production plants.

Additional mining activity, disturbance of land, and higher costs account for a majority of the increase in the reclamation liability.

T RADE P ROMOTIONS

2 unchanged sentences

We have accrued liabilities at the end of each period for the estimated expenses incurred but not yet paid for these programs.

Promotional reserves are provided for sales incentives made directly to consumers, such as coupons, and sales incentives made to customers, such as slotting, discounts based on sales volume, cooperative marketing programs and other arrangements.

We use judgment for estimates to determine our trade spending liabilities.

We rely on our historical experience of trade spending patterns and that of the industry, current trends and forecast data.

Advertising costs for the development of printed materials, television commercials, web-based digital banners, web-based social media and sales videos are deferred and expensed upon the first use of the materials, unless such amounts are immaterial.

Promotional reserves are provided for sales incentives made directly to consumers, such as coupons, and sales incentives made to customers, including slotting, discounts based on sales volume, cooperative marketing programs and other arrangements.

We rely on our historical experience of trade spending patterns and that of the industry, current trends and forecast data to record estimates of our trade spending liabilities.

Costs paid for communicating advertising over a period of time, such as television air time, radio commercials and print media advertising space, are deferred and expensed on a pro-rata basis.

3 unchanged sentences

F AIR V ALUE OF F INANCIAL I NSTRUMENTS

Non-derivative financial instruments included in the Consolidated Balance Sheets are cash and cash equivalents and notes payable.

These instruments, except for notes payable, were carried at amounts approximating fair value as of July 31, 2023 and 2022.

Non-derivative financial instruments included in the Consolidated Balance Sheets are cash and cash equivalents, short-term investments, credit facilities, and notes payable.

These instruments, except for debt, were carried at amounts approximating fair value as of July 31, 2024 and 2023.

See Note 5 of the Notes to the Consolidated Financial Statements for additional information regarding the fair value of our financial instruments, including notes payable.

1 unchanged sentence

We recognize revenue when performance obligations under the terms of the contracts with customers are satisfied.

Our performance obligation generally consists of the promise to sell finished products to wholesalers, distributors and retailers or consumers and our obligations have an original duration of one year or less.

Our performance obligation generally consists of the promise to sell finished products to wholesalers, distributors, retailers or consumers and our obligations have an original duration of one year or less.

Control of the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract.

1 unchanged sentence

Taxes collected from customers and remitted to governmental authorities are excluded from net sales.

Sales returns are not material nor are warranties and any related obligations.

Sales returns are not material nor are warranties or any related obligations.

We have an unconditional right to consideration under the payment terms specified in the contract upon completion of the performance obligation.

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

We recorded a liability for these advance payments of $ 0.5 million as of July 31, 2022.

recorded a liability of $ 0.2 million as of July 31, 2024 for these advance payments.

There is no liability for advance payments as of July 31, 2023.

This liability is reported in Other Accrued Expenses on the Consolidated Balance Sheets.

Revenue recognized during fiscal year 2023 that was included in the liability for advance payments at the beginning of the year was $ 0.5 million.

C OST OF GOODS SOLD

There is no revenue recognized during fiscal year 2024 that was included in the liability for advance payments at the beginning of the year.

C OST OF G OODS S OLD

Cost of goods sold consists of all manufacturing costs, including depreciation and amortization related to assets used in the manufacturing and distribution process, inbound and outbound freight, inspection costs, purchasing costs associated with materials and packaging used in the production process and warehouse and distribution costs.

2 unchanged sentences

Shipping and handling costs are included in cost of goods sold and were approximately $ 59.2 million and $ 57.4 million for fiscal years 2024 and 2023, respectively.

The increase is primarily related to a key customer switching from pick up to delivered.

S ELLING , G ENERAL AND A DMINISTRATIVE E XPENSES

17 unchanged sentences

See Note 8 of the Notes to the Consolidated Financial Statements for additional information.

I NCOME TAXES

I NCOME T AXES

Deferred income tax assets and liabilities are recorded for the impact of temporary differences between the tax basis of assets and liabilities and the amounts recognized for financial reporting purposes.

8 unchanged sentences

See Note 6 of the Notes to the Consolidated Financial Statements for additional information about income taxes.

EARNINGS PER SHARE

E ARNINGS P ER S HARE

We utilize the two-class method to report our earnings per share ("EPS").

1 unchanged sentence

Common Stock is entitled to cash dividends equal to at least 133.33 % on a per share basis of the cash dividend paid on Class B Stock.

In computing earnings per share, the Company has allocated dividends declared to Common and Class B shares based on amounts actually declared for each class of stock and 33.33 % more of the undistributed earnings have been allocated to Common Stock than to the Class B shares on a per share basis.

In computing earnings per share, the Company has allocated dividends declared to shares of Common Stock and Class B Stock based on amounts actually declared for each class of stock and 33.33 % more of the undistributed earnings have been allocated to shares of Common Stock than to shares of Class B Stock on a per share basis.

Common Stock is entitled to one vote per share and Class B Stock is entitled to ten votes per share.

Common Stock have no conversion rights.

Class B Stock is convertible on a share-by-share basis into Common Stock at any time and is subject to mandatory conversion under certain circumstances.

Basic EPS is computed by dividing net earnings, reduced for any distributed and undistributed earnings allocated to unvested restricted shares, by the weighted-average number of shares outstanding during the period for each class of share.

Class B Stock is convertible by the holders thereof on a share-by-share basis into Common Stock at any time, and is subject to mandatory conversion under certain circumstances.

Diluted EPS, for each class of common stock, is computed by dividing net earnings by the weighted-average number of common shares and potential common shares outstanding during the period.

Dilution for common stock takes into consideration the effect of both unvested restricted shares and convertible Class B shares, if the effect is dilutive.

Dilution for Class B takes into consideration the effect of unvested restricted shares, if the effect is dilutive.

Dilution for Common Stock takes into consideration the effect of both unvested restricted shares and convertible shares of Class B Stock, if the effect is dilutive.

Dilution for Class B Stock takes into consideration the effect of unvested restricted shares, if the effect is dilutive.

Below is a reconciliation of the calculation of basic and diluted EPS.

13 unchanged sentences

Diluted EPS $ 5.43 $ 4.40

(1) The impact of unvested restricted stock was anti-dilutive therefore not included in the calculation of diluted EPS

(1) The impact of 158,861 shares of unvested Common Stock and 54,370 shares of unvested Class B Stock, restricted stock was anti-dilutive therefore not included in the calculation of diluted EPS.

For the year ended July 31, 2023

(in thousands, except for per share data)

Total Common Class B

Net income $ 29,551 $ 22,712 $ 6,839

Distributed and undistributed earnings on restricted shares ( 1,518 ) ( 1,232 ) ( 286 )

Income available to stockholders $ 28,033 $ 21,480 $ 6,553

Net Income (Numerator) $ 21,480 $ 6,553

Weighted Average Shares Outstanding (Denominator) 4,825 1,959

Basic EPS $ 4.45 $ 3.35

Effect of dilution - Net Income (2)

Net income assuming dilution (Numerator) $ 28,033 $ 6,553

Effect of dilution - Shares (2)

Shares assuming dilution (Denominator) 6,784 $ 1,959

Diluted EPS $ 4.13 $ 3.35

(2) The impact of 157,032 shares of unvested Common Stock and 35,695 shares of unvested Class B Stock, restricted stock was anti-dilutive therefore not included in the calculation of diluted EPS.

N EW A CCOUNTING P RONOUNCEMENTS

Recently Adopted Accounting Pronouncements

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

This guidance provides optional expedients and exceptions to account for debt, leases, contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met.

The guidance is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

On August 30, 2022 we amended our debt agreements to replace the LIBOR-based reference rate with an adjusted term Secured Overnight Financing Rate (SOFR), ASC 848 will allow us to account for the modification as a continuation of the existing contract without additional analysis.

There have been no other accounting pronouncements issued but not yet adopted by us which are expected to have a material impact on our Consolidated Financial Statements.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." These amendments primarily require enhanced disclosures and disaggregation of income tax information by jurisdiction in the annual income tax reconciliation and quantitative disclosures regarding income taxes paid.

These amendments are to be applied prospectively, with the option to apply the standard retrospectively, for annual periods beginning after December 15, 2024.

Early adoption is permitted.

We are currently evaluating the impact that the adoption of this guidance will have on our disclosures.

In November 2023, the FASB issued ASU No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." These amendments primarily require enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

In addition, ASU No.

2023-07 also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

These amendments are to be applied retrospectively for all periods presented in the financial statements and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact that the adoption of this guidance will have on our disclosures.

Recently Adopted Accounting Standards

There have been no new accounting pronouncements adopted in the period .

NOTE 2 – ACQUISITION

Ultra Pet acquisition

On May 1, 2024, pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated April 16, 2024, we acquired all of the issued and outstanding shares of capital stock of Ultra Pet, in order to enter into the crystal cat litter segment.

Ultra Pet became a wholly owned and consolidated subsidiary of Oil-Dri within the Retail and Wholesale Products Group operating segment, upon the closing of the acquisition on May 1, 2024.

The purchase was financed through cash on hand, a $ 10 million advance under the Credit Agreement, and the issuance of $ 10 million in aggregate principal amount of 6.47 % Series D Senior Notes due April 30, 2033 pursuant to the shelf facility

provisions of the Note Agreement.

Debt issuance costs of $ 0.1 million were deferred and are being amortized over the life of the note.

Refer to Note 4 of the Consolidated Financial Statements for additional details regarding the debt used in funding the acquisition.

As of July 31, 2024, the Company has completed a preliminary assessment to assign fair values to all tangible and intangible assets acquired and liabilities assumed.

However, the preliminary purchase price allocation will be subject to further refinement and may change over the measurement period, particularly as it relates to inventory and tax related balances.

These changes may relate to the allocation of purchase consideration to all tangible and intangible assets acquired and identified liabilities assumed.

The following table summarizes the consideration paid and the assets acquired and liabilities assumed at the acquisition date.

Consideration (in thousands)

Cash, net of cash acquired and restricted cash

Identifiable assets acquired and liabilities assumed

Accounts receivable 4,285

Inventories 7,068

Prepaid expenses and other assets

Property, plant and equipment 270

Trade name 5,200

Customer list 20,400

Operating lease right-of-use assets 1,463

Trade and other liabilities ( 1,654 )

Operating lease right-of-use liabilities ( 1,472 )

Deferred tax liabilities ( 4,083 )

Total identifiable net assets 32,472

Goodwill 11,826

Total $ 44,298

Various fair value methodologies were used for the valuation of identifiable intangibles including the 'excess earnings method' used for the valuation of the customer list and 'relief from royalty' method use for the valuation of the trade name.

Our fair value was based on the projected financial information and unobservable inputs including revenue growth rate, weighted average cost of capital, royalty rate, and customer attrition rates.

Finished goods inventory was valued using the net realizable value approach and approximate the selling price less disposal costs and allowance for a reasonable profit.

The goodwill of $ 11.8 million arising from the acquisition consists largely of intangible assets that do not qualify for separate recognition and were fully assigned to our Retail and Wholesale Products Group.

None of the goodwill recognized is expected to be deductible for income tax purposes.

Ultra Pet contributed net sales of $ 4.8 million and pre-tax income of $ 0.2 million for the period from May 1, 2024, to July 31, 2024, net of acquisition adjustments including non-cash inventory fair value step up amortization included in cost of goods sold and customer list amortization included in SG&A.

The total fair value step up adjustment to inventory was $ 0.8 million of which $ 0.4 million was amortized in fiscal year 2024.

The following unaudited pro forma summary presents consolidated information of Oil-Dri as if the business combination had occurred on August 1, 2022.

(unaudited) Pro forma year ended July 31,

Net Sales $ 455,139 $ 435,093

Pre-Tax Net Income $ 52,999 $ 35,489

These pro forma amounts above have been calculated after applying Oil-Dri’s accounting policies and adjusting the results of Ultra Pet, including the following adjustments:

(unaudited) Pro forma year ended July 31,

Acquisition related expenses (a)

Interest expense (b)

$( 1,158 ) $( 1,323 )

Customer list amortization (c)

$( 850 ) $( 1,133 )

Inventory step up adjustment (d)

$ 449 $( 783 )

(a) Adjustment for acquisition related expenses reflects the reversal of legal and other professional fees and integration costs incurred in fiscal year 2024.

These expenses are included in general and administrative expense on Oil-Dri consolidated income statement.

(b) Interest expense adjustments reflects higher interest expense associated with financing the Ultra Pet acquisition assuming financing occurred August 1, 2022.

(c) Customer list amortization adjustment reflects additional amortization assuming amortization began at August 1, 2022.

(d) Inventory step up adjustment reflects the reversal of the amortization recognized in fiscal year 2024 and recognition of the full step up adjustment in fiscal year 2023.

NOTE 3 – OPERATING SEGMENTS

As a result of a change in management organization during fiscal year 2022 and as part of our routine assessments of our segments, our wholly owned subsidiary located in the United Kingdom is now included in our Business to Business Products Group and our co-packaged coarse cat litter is now included in the Retail and Wholesale Products Group.

Prior year net sales and operating income have also been reclassified to reflect these changes.

The organization change was intended to better serve our customers and the segment information presented reflects the information regularly reviewed by our chief operating decision maker.

We have two reportable operating segments:

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The Retail and Wholesale Products Group customers include mass merchandisers, the farm and fleet channel, drugstore chains, pet specialty retail outlets, dollar stores, retail grocery stores, distributors of industrial cleanup and automotive products, environmental service companies, sports field product users and marketers of consumer products.

Given the similar nature of products and customers, sales of our silica gel based crystal litter are included with our cat litter products and reported as part of the Retail and Wholesale products group segment.

The Business to Business Products Group customers include:

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The accounting policies of the segments are the same as those described in the Note 1 of the Notes to the Consolidated Financial Statements.

We do not rely on any operating segment asset allocations and we do not consider them meaningful because of the shared nature of our production facilities;

We do not rely on any operating segment asset allocations and do not consider them meaningful because of the shared nature of our production facilities;

however, we have estimated the segment asset allocations below for those assets for which we can reasonably determine.

The unallocated asset category is the remainder of our total assets.

We have refined the basis of allocation for certain of our assets as of April 30, 2023, and we have restated the allocation of assets as of July 31, 2022 presented below to enhance comparability.

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.

The corporate expenses line in the table below represents certain unallocated expenses, including primarily salaries, wages and benefits, purchased services, rent, utilities and depreciation and amortization associated with corporate functions such as research and development, information systems, finance, legal, human resources and customer service.

Corporate expenses also include the annual incentive plan bonus accrual.

As of July 31,

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Total Assets $ 354,605 $ 286,235

Net sales and operating income for each segment are provided below.

Corporate expenses also include the annual incentive plan bonus accrual.

We have recast 2023 segment income to conform with current year presentation.

Year Ended July 31,

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Income from Operations 51,645 41,040

Total Other Income, Net ( 6,362 ) 888

Total Other Expense, Net

( 1,994 ) ( 6,362 )

Income Before Income Taxes 49,651 34,678

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Foreign subsidiaries $ — $ 69

Income (Loss) before income taxes:

Income before income taxes:

Domestic operations $ 48,995 $ 33,686

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NOTE 4 – DEBT

The composition of notes payable is as follows as of July 31 (in thousands):

The composition of long-term debt is as follows as of July 31 (in thousands):

Amended and Restated Note Purchase and Private Shelf Agreement.

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25,000 25,000

Amended and Restated Note Purchase and Private Shelf Agreement.

Annual principal installments on April 30:

$ 5,000 in each fiscal year 2032 through 2033.

Interest is payable semi-annually at an annual rate of 6.47 % [Series D]

Seventh Amendment to Credit Agreement.

Full principal amount is due on May 1, 2026 10,000 —

Less current maturities of notes payable ( 1,000 ) ( 1,000 )

Less unamortized debt issuance costs ( 226 ) ( 173 )

Noncurrent notes payable $ 30,827 $ 31,798

Long-term debt $ 49,774 $ 30,827

We are party to an Amended and Restated Note Purchase and Private Shelf Agreement (as amended, the "Note Agreement") with PGIM, Inc.

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On December 16, 2021 , under the Note Agreement we issued an additional $ 25 million in aggregate principal amount of our 3.25 % Series C Senior Notes due December 16, 2031 , all of which remained outstanding as of July 31, 2024.

The Amended Note Agreement also provides us with the ability to request, from time to time, that Prudential affiliate(s) purchase, at Prudential’s discretion and on an uncommitted basis, additional senior unsecured notes of Oil-Dri (the “Shelf Notes,” and collectively with the Series A Notes, Series B Notes, and Series C Notes, the “Notes”) in an aggregate principal amount of up to $ 75 million minus the aggregate principal amount of Notes then outstanding and Shelf Notes that have been accepted for purchase.

On April 30, 2024 , we issued $ 10 million in aggregate principal amount of our 6.47 % Series D Senior Notes due April 30, 2033 , all of which remained outstanding as of July 31, 2024.

The Amended Note Agreement also provides us with the ability to request, from time to time, that Prudential affiliate(s) purchase, at Prudential’s discretion and on an uncommitted basis, additional senior unsecured notes of Oil-Dri (the “Shelf Notes,” and collectively with the Series A Notes, Series B Notes, Series C Notes, and Series D Notes, the “Notes”) in an aggregate principal amount of up to $ 75 million minus the aggregate principal amount of Notes then outstanding and Shelf Notes that have been accepted for purchase.

Interest payable on any Shelf Note agreed to be purchased under the Note Agreement will be at a rate determined by Prudential and will mature no more than fifteen years after the date of original issue of such Shelf Note.

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and revised the existing financial covenants by replacing the consolidated debt covenant with a covenant to maintain a maximum debt to earnings ratio, lowering the minimum fixed charge coverage ratio level and revising the method for calculating the fixed charge coverage ratio.

On April 16, 2024, we entered into the Seventh Amendment to the Credit Agreement (the “Seventh Amendment”).

The Seventh Amendment amends the Credit Agreement to, among other things, revise the method for calculating consolidated EBITDA for purposes of financial covenant compliance under the Credit Agreement, provide specific conditions precedent to advance funds for the acquisition of Ultra Pet, and modify certain covenants and other provisions to permit certain indebtedness and liens of Ultra Pet and facilitate the acquisition.

As of July 31, 2024, and 2023, we were in compliance with the covenants.

There were no borrowings during either fiscal year 2023 or 2022.

However, we had $ 1.0 million of letters of credit outstanding as of July 31, 2023, and 2022 under this agreement.

As of July 31, 2024 we had $ 10 million drawn at a 6.66 % interest rate, $ 2.9 million in outstanding letters of credit and $ 32.1 million remaining available under the revolving credit facility.

As of July 31, 2023 we had $ 1 million in outstanding letters of credit and $ 44.0 million remaining available under the revolving credit facility.

The Credit Agreement states that we may select a variable interest rate based on either the BMO Harris prime rate or an adjusted SOFR-based rate, plus a margin that varies depending on our debt to earnings ratio, or a fixed rate as agreed between us and BMO Harris.

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equivalents on the Consolidated Balance Sheets.

We had $ 15.4 million cash equivalents as of July 31, 2023 and had no cash equivalents as of July 31, 2022.

Balances of accounts receivable and accounts payable approximated their fair values at July 31, 2023 and July 31, 2022 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 approximately $ 29.7 million as of July 31, 2023 and $ 31.8 million as of July 31, 2022.

We had $ 3.0 million cash equivalents as of July 31, 2024 and had $ 15.4 million cash equivalents as of July 31, 2023.

Balances of accounts receivable, short-term investments and accounts payable approximated their fair values at July 31, 2024 and July 31, 2023 due to the short maturity and nature of those balances.

Debt is reported at outstanding face value, less unamortized debt issuance costs.

The estimated fair value of debt, including current maturities, was approximately $ 51.1 million as of July 31, 2024 and $ 29.7 million as of July 31, 2023.

The fair value was estimated using the exit price notion of fair value and is classified as Level 2.

The decrease in fair value is attributable to the principal and interest payments.

See Note 4 of the Notes to the Consolidated Financial Statements for further information about such debt.

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State 2,243 2,119

Foreign 226 4

Current Income Tax Total 8,528 9,626

Federal 934 ( 3,864 )

Foreign — ( 41 )

State 778 ( 567 )

Foreign ( 15 ) —

Deferred Income Tax Total 1,697 ( 4,431 )

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Nondeductible officer compensation 2.2 1.5

Stock Based Compensation ( 2.1 ) —

Tax Impacts of Foreign Branch 1.3 ( 0.2 )

Tax credits ( 0.2 ) ( 0.3 )

Valuation allowance - foreign 0.4 ( 0.2 )

Foreign tax differential ( 0.6 ) ( 5.3 )

Statutory rate change of foreign subsidiaries 0.3 —

Prior year income taxes ( 0.3 ) ( 1.3 )

Goodwill impairment — 3.1

Foreign tax differential 0.1 ( 0.6 )

Other ( 0.3 ) ( 0.1 )

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effective tax rate for the year ended July 31, 2024 and July 31, 2023 were 20.6 % and 15.0 %, respectively, based on income before taxes.

The fiscal 2023 effective tax rate was lower than the statutory rate primarily due to favorable depletion deduction and a benefit from an anticipated federal tax return amendment.

The fiscal 2023 effective tax rate was negatively impacted primarily due to nondeductible excess officers compensation.

The fiscal 2022 effective tax rate benefited due to a favorable depletion deduction as well as federal tax return amendments.

The fiscal 2022 effective tax rate was also negatively impacted primarily due to a nondeductible goodwill impairment as well as nondeductible officers compensation.

The items contributing to a higher effective tax rate in fiscal 2024 were a higher net income and certain permanent items.

The Consolidated Balance Sheets included the following tax effects of cumulative temporary differences as of July 31 (in thousands):

Assets Liabilities Assets Liabilities

Amortization $ — $ 6,307 $ 935 $ —

Depreciation — 5,692 — 4,338

Lease liabilities 5,105 — 2,747 —

Lease right of use assets — 4,778 — 2,412

Accrued expenses 4,347 — 5,303 —

Federal & State NOL carryforward

Stock-based compensation 1,894 — 1,634 —

Foreign NOL carryforward

1,889 — 1,698 —

Deferred compensation 1,603 — 1,246 —

Capitalized R&D 783 — 269 —

Reclamation 712 — 627 —

Other assets 584 — 608 —

Postretirement benefits 454 — 478 —

Inventories 435 — 203 —

Depletion — 141 — 158

Goodwill 109 — — 24

Lease right of use assets — 2,412 — 2,700

Lease liabilities 2,747 — 3,040 —

Allowance for doubtful accounts 135 — 95 —

Allowance for credit losses

Deferred marketing expenses — 33 — 11

Other assets 608 — 1 —

Other liabilities — — — 301

Accrued expenses 5,303 — 2,362 —

Tax credits — — 301 —

Amortization 935 — 1,046 —

Inventories 203 — 366 —

Depletion — 158 — 154

Stock-based compensation 1,634 — 1,522 —

Reclamation 627 — 549 —

Other liabilities - foreign — 17 — 41

Other assets – foreign 1,698 — 1,761 —

Valuation allowance ( 2,470 ) — ( 1,698 ) —

Total deferred taxes $ 18,505 $ 16,968 $ 14,486 $ 7,285

Deferred tax assets for post retirement benefits were affected by the termination of our pension plan.

Deferred tax assets for postretirement benefits were affected by the termination of our pension plan.

See Note 9 of the Notes to the Consolidated Financial Statements for further information about postretirement benefits.

Deferred tax assets and liabilities related to lease decreased as leases are expiring.

Deferred tax assets and liabilities related to leases decrease as leases expire.

Deferred tax assets for accrued expenses reflected a higher accrual for the annual discretionary bonus.

We recorded a valuation allowance of $ 1.7 million and $ 1.8 million as of July 31, 2023 and July 31, 2022, respectively, for the amount of the deferred tax benefit related to our foreign net operating loss carryforwards since we believe it is unlikely we will realize the benefit of these tax attributes in the future.

We recorded a valuation allowance of $ 2.5 million and $ 1.7 million as of July 31, 2024 and July 31, 2023, respectively, for the amount of the deferred tax benefit related to our foreign net operating loss carryforwards and certain state net operating loss carryforwards since we believe it is unlikely we will realize the benefit of these tax attributes in the future.

As of July 31, 2024, we have total net operating loss carryforwards from state jurisdictions of approximately $ 12.6 million.

The carryforward expiration dates vary by state.

No valuation allowance has been established for these carryforwards since we expect our future profitability will allow us to fully realize these tax benefits.

With the exception of our foreign subsidiary in Canada, none of our foreign subsidiaries have generated any untaxed foreign income, therefore we have not provided for any related income taxes for these subsidiaries.

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federal income tax as well as income tax in multiple state and foreign jurisdictions.

We are currently being audited by the Internal Revenue Service ("IRS") for Fiscal Year 2020.

We were audited by the Internal Revenue Service ("IRS") for fiscal year 2020 with no adjustments upon closure of the audit.

The federal tax returns for fiscal years 2021-2023 remain open for examination.

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The state impact of any federal income tax changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

There are a limited number of open state and local income tax

audits in which no material issues have been preliminarily identified.

There are a limited number of

open state and local income tax audits in which no material issues have been preliminarily identified.

There are no material open or unsettled foreign income tax audits.

We believe our accrual for tax liabilities is adequate for all open audit years.

NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income by component (in thousands):

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Amounts reclassified from accumulated other comprehensive income, net of tax ( 36 ) — ( 36 )

Curtailment/Settlement on Pension Plan 1,554 b) — 1,554

Net current-period other comprehensive income (loss), net of tax 3,254 ( 323 ) 2,931

Balance as of July 31, 2023 $ 1,012 $ ( 264 ) $ 748

Other comprehensive income (loss) before reclassifications, net of tax 1,736 a) ( 323 ) 1,413

Other comprehensive income (loss) before reclassifications, net of tax 150 — 150

Amounts reclassified from accumulated other comprehensive income, net of tax ( 86 ) ( 43 ) ( 129 )

Curtailment/Settlement on Pension Plan 1,554 b) — 1,554

Net current-period other comprehensive income (loss), net of tax 64 ( 43 ) 21

Balance as of July 31, 2024 $ 1,076 $ ( 307 ) $ 769

a) Amounts are net of taxes of $ 0.4 million and $ 0.7 million in fiscal years 2023 and 2022, respectively, and are included in Other Comprehensive Loss.

b) Amount is net of taxes of $ 0.5 million in fiscal year 2023.

a) Amount is net of $ 0.4 million of tax in fiscal years 2023.

b) Amount is net of $ 0.5 million of tax in fiscal year 2023.

Amount is included in the components of net periodic benefit cost for the pension and postretirement health plans.

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The total number of shares of stock subject to grants under the 2006 Plan may not exceed 1,719,500 .

As of July 31, 2023, there were 241,540 shares available for future grants under this plan.

As of July 31, 2024, there were 626,730 shares of Common Stock or Class B Stock available for future grants under this plan.

RESTRICTED S TOCK

All non-vested restricted stock as of July 31, 2023 was issued under the 2006 Plan with vesting periods generally from two to five years .

All non-vested restricted stock as of July 31, 2024 was issued under the 2006 Plan with vesting periods generally from one to five years .

The fair value of restricted stock was determined by the closing market price of our Common Stock on the date of grant multiplied by the number of shares granted.

Fair value of shares vested is $ 2.6 million and $ 2.5 million in fiscal year 2023 and 2022, respectively.

Fair value of shares vested in fiscal year 2024 and 2023 is $ 9.8 million and $ 2.2 million, respectively as of their vesting dates.

A summary of restricted stock transactions under the plans is shown below.

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The Oil-Dri Corporation of America Pension Plan ("Pension Plan") was a defined benefit pension plan for eligible salaried and hourly employees.

Pension benefits were based on a formula of years of credited service and levels of compensation or stated amounts for each year of credited service.

On January 9, 2020, Oil-Dri amended the Pension Plan to freeze participation, all future benefit accruals and accrual of benefit service, including consideration of compensation increases, effective March 1, 2020.

Consequently, the Pension Plan was closed to new participants and existing participants no longer earned additional benefits on or after March 1, 2020.

On September 20, 2022, the Company's Board of Directors approved a resolution to terminate the Company's defined benefit pension plan.

On April 20, 2023, Oil-Dri settled $ 14 million of the pension obligation through the purchase of an annuity.

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On April 27, 2023, the Executive Committee of the Company's Board of Directors approved the distribution of the surplus to a qualified defined contribution retirement fund.

The remaining $ 0.8 million to be held by the 401(k) plan to cover qualified future plan expenses was recognized as a prepaid asset.

A postretirement health benefits plan is also provided to domestic salaried employees who meet specific age, participation and length of service requirements at the time of retirement.

A portion of the surplus to be distributed to pension participants was irrevocably distributed to the 401(k) plan on April 28, 2023, which resulted in an additional $ 2.8 million charge to net income included in "Loss on pension termination" within "Other Income (Expense), Net." The remaining $ 0.8 million to be held by the 401(k) plan to cover qualified future plan expenses was recognized as a prepaid asset.

During fiscal year 2024 we did not have an active pension plan, therefore there was no accumulated benefit obligation for the Pension Plan as of July 31, 2024 or July 31, 2023.

A postretirement health benefits plan is provided to domestic salaried employees who meet specific age, participation and length of service requirements at the time of retirement.

Eligible employees may elect to continue their health care coverage under the Oil-Dri Corporation of America Employee Benefits Plan until the date certain criteria are met, including attaining the age of Medicare eligibility.

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Obligations and Funded Status

The following tables provide a reconciliation of changes in the plans’ benefit obligations, asset fair values and funded status by fiscal year (in thousands):

Pension Benefits Postretirement Health Benefits

2023 2022 2023 2022

The following tables provide a reconciliation of changes in the plan's benefit obligations, asset fair values and funded status by fiscal year (in thousands):

Postretirement Health Benefits

Change in benefit obligation :

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Benefits paid ( 25 ) 6

Settlements ( 30,755 ) — — —

Benefit obligation, end of year 1,785 1,853

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Fair value of plan assets, beginning of year — —

Actual return on plan assets 502 ( 4,191 ) — —

Employer contribution 25 6

Benefits paid ( 25 ) ( 6 )

Settlements ( 30,755 ) — — —

Surplus Transfer ( 3,647 ) — — —

Fair value of plan assets, end of year — —

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See “Cash Flows” below for further information about employer contributions and benefits payments.

There was no accumulated benefit obligation for the Pension Plan as of July 31, 2023.

The accumulated benefit obligation for the Pension Plan was $ 33.7 million as of July 31, 2022.

The following table shows amounts recognized in the Consolidated Balance Sheets as of July 31 (in thousands):

Pension Benefits Postretirement Health

2023 2022 2023 2022

Postretirement Health

Deferred income taxes $ 454 $ 478

Other current assets $ 148 $ — $ — $ —

Other current liabilities $ ( 125 ) $ ( 100 )

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Accumulated other comprehensive loss – net of tax:

Net actuarial loss (gain) $ — $ 2,998 $ ( 1,012 ) $ ( 756 )

Net actuarial gain $ ( 1,076 ) $ ( 1,012 )

Benefit Costs and Amortizations

The following table shows the components of the net periodic pension and postretirement health benefit costs by fiscal year (in thousands):

Pension Cost Postretirement Health Benefit Cost

2023 2022 2023 2022

The following table shows the components of the net periodic postretirement health benefit costs by fiscal year (in thousands):

Postretirement Health Benefit Cost

Service cost $ 74 $ 84

Interest cost 83 73

Expected return on plan assets ( 1,673 ) ( 2,586 ) — —

Amortization of:

Prior service income ( 6 ) ( 6 )

Other actuarial loss 42 145 ( 83 ) —

Settlement cost 5,544 — — —

Net periodic benefit (income) cost $ 4,922 $ ( 1,373 ) $ 68 $ 175

Other actuarial gain ( 107 ) ( 83 )

Net periodic benefit cost $ 44 $ 68

Service cost is recorded in Other, net within Other Income (Expense) in the Consolidated Statements of Operations.

As the pension plan was frozen, there was no service cost recorded in fiscal years 2022 or 2023.

The following table shows amounts, net of tax, that are recognized in other comprehensive income by fiscal year (in thousands):

Pension Benefits Postretirement Health Benefits

2023 2022 2023 2022

Postretirement Health Benefits

Net actuarial gain $ ( 150 ) $ ( 324 )

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Amortization of actuarial loss 81 63

Curtailment/Settlement $ ( 1,554 ) $ — $ — $ —

Total recognized in other comprehensive income $ ( 64 ) $ ( 256 )

We have funded the Pension Plan 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 made no contributions in fiscal years 2022 or 2023.

The Pension Plan was terminated in fiscal year 2023 and there will be no more contributions to the Pension Plan.

The postretirement health plan is an unfunded plan.

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2030-2034 $ 809

Our pension benefit and postretirement health benefit obligations and the related effects on operations are calculated using actuarial models.

Critical assumptions that are important elements of plan expenses and asset/liability measurements include discount rate and expected return on assets for the Pension Plan and health care cost trend for the postretirement health plan.

Our postretirement health benefit obligations and the related effects on operations are calculated using actuarial models.

Critical assumptions that are important elements of plan expenses and asset/liability measurements include discount rate and health care cost trend for the postretirement health plan.

We evaluate these critical assumptions at least annually.

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Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

The assumptions used in the previous calculations by fiscal year were as follows:

Pension Benefits Postretirement Health Benefits

2023 2022 2023 2022

Discount rate for net periodic benefit costs — % 2.57 % 3.82 % 2.10 %

Discount rate for year-end obligations — % 4.05 % 4.90 % 3.82 %

Rate of increase in compensation levels for net periodic benefit costs — % — % — % — %

Rate of increase in compensation levels for year-end obligations — % — % — % — %

Long-term expected rate of return on assets — % 6.50 % — % — %

The discount rate was based on the FTSE Pension Discount Curve to determine for the Pension Plan and the postretirement health plan, the single equivalent rate that would yield the same present value as the specific plan’s expected cash flows.

Our expected rate of return on Pension Plan assets is determined by our asset allocation, our historical long-term investment performance, our estimate of future long-term returns by asset class (using input from our actuaries, investment managers and investment advisors), and long-term inflation assumptions.

The discount rate was based on the FTSE Pension Discount Curve to determine the single equivalent rate that would yield the same present value as the specific plan’s expected cash flows.

The discount rates for net periodic benefit costs were 4.90 % and 3.82 % in fiscal years 2024 and 2023, respectively.

The discount rates for year-end obligations were 5.03 % and 4.90 % as of July 31, 2024 and 2023, respectively.

For fiscal year 2024, the medical cost trend assumption used for the postretirement health benefit cost was 7.9 %.

The graded trend rate is expected to decrease to an ultimate rate of 4.9 % in fiscal year 2044 .

Pension Plan Assets

The investment objective for the Pension Plan assets was to optimize long-term return at a moderate level of risk in order to secure the benefit obligations to participants at a reasonable cost.

To reach this goal, our investment structure included various asset classes, asset allocations and investment management styles that, in total, have a reasonable likelihood of producing a sufficient level of overall diversification that balances expected return with expected risk over the long-term.

The Pension Plan does not invest directly in Company stock.

We measured and monitored the plan’s asset investment performance and the allocation of assets through quarterly investment portfolio reviews.

Investment performance was measured by absolute returns, returns relative to benchmark indices and any other appropriate basis of comparison.

The Pension Plan was terminated in fiscal year 2023 and there are no targeted allocation percentages of plan assets for 2024.

The actual allocation percentages of plan assets as of July 31, 2023:

Asset Allocation 2023 2022

Cash and accrued income 100 % — %

Fixed income — % 36 %

Equity — % 64 %

The following table sets forth by level, within the fair value hierarchy, the Pension Plan's assets carried at fair value (in thousands):

Fair Value At July 31, 2022

(Level 1) Significant

Cash and cash equivalents (a)

$ 51 $ 51 $ —

Equity securities (b) :

companies 15,389 10,387 5,002

International companies 521 521 —

Equity securities - international mutual funds:

Developed market (c)

4,025 923 3,102

Emerging markets (d)

1,517 1,149 368

Commodities (e)

1,137 1,137 —

Fixed Income:

Treasuries 3,019 904 2,115

Debt securities(f) 1,656 — 1,656

Government sponsored entities (g)

1,256 — 1,256

Multi-strategy bond fund (h)

5,079 — 5,079

Money market fund (i)

Total $ 34,989 $ 15,072 $ 19,917

(a) Cash and cash equivalents consists of highly liquid investments which are traded in active markets.

(b) This class represents equities traded on regulated exchanges, as well as funds that invest in a portfolio of such stocks.

(c) These mutual funds seek long-term capital growth by investing no less than 80 % of their assets in stocks of non- U.S.

companies that are primarily in developed markets, but also may invest in emerging and less developed markets.

(d) These mutual funds seek to track the performance of a benchmark index that measures the investment return of stock issued by companies located in emerging market countries.

(e) These investments seek attractive total return by investing primarily in a diversified portfolio of commodity futures contracts and fixed income investments.

(f) This class includes bonds and loans of U.S.

corporate issuers from diverse industries and bonds of domestic and foreign municipalities.

(g) This class represents a beneficial ownership interest in a pool of single-family residential mortgage loans.

These investments are generally not backed by the full faith and credit of the United States government, except for securities valued at $ 114,000 in our portfolio as of July 31, 2022.

(h) This class invests at least 80% of its net assets in bonds and other fixed income instruments issued by governmental or private-sector entities.

More than 30% of its net assets are invested in asset-backed and mortgage-backed securities.

The fund may invest up to 20% of its net assets in securities below investment grade.

(i) These money market mutual funds seek to provide current income consistent with liquidity and stability of principal by investing in a diversified portfolio of high quality, short-term, dollar-denominated debt securities.

These funds may include securities issued or guaranteed as to principal and interest by the U.S.

government or its agencies, short-term securities issued by domestic or foreign banks, domestic and dollar-denominated foreign commercial papers, and other short-term corporate obligations and obligations issued or guaranteed by one or more foreign governments.

(j) This class includes funds that use a number of other strategies, including arbitrage, to obtain long-term positive returns.

The portfolio of instruments may include equities, debt securities, real estate properties, warrants, options, swaps, future contracts, forwards or other types of derivative instruments.

NOTE 10 – DEFERRED COMPENSATION

Oil-Dri's deferred compensation plans permit directors and certain management employees to defer portions of their compensation and to earn interest on the deferred amounts.

Participants have deferred $ 0.6 million and $ 0.7 million into these plans in fiscal years 2023 and 2022, respectively.

Participants deferred $ 0.3 million and $ 0.6 million into these plans in fiscal years 2024 and 2023, respectively.

We recorded $ 0.2 million of interest expense associated with these plans in both fiscal years 2024 and 2023.

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The Oil-Dri Corporation of America Annual Incentive Plan provides certain executives with the opportunity to receive a deferred executive bonus award if certain financial goals are met.

Deferred executive bonus awards of $ 1.4 million were awarded for fiscal year 2023 and $ 0.7 million executive bonus was awarded for fiscal year 2022 as financial targets under the provisions of the plan were achieved.

Deferred executive bonus awards of $ 1.9 million and $ 1.4 million were awarded for fiscal year 2024 and fiscal year 2023, respectively as financial targets under the provisions of the plan were achieved.

These awards will vest and accrue interest over a 3-year period.

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Salaries, Wages, Commissions and Employee Benefits $ 20,711 $ 19,054

Payables 11,586 5,658

Freight 2,928 3,078

Georgia Landfill Modification Reserve 2,469 —

Trade promotions and advertising 2,743 2,292

Real Estate Tax 1,038 1,006

Taxes 1,736 1,776

Georgia Landfill Modification Reserve 1,208 2,469

Other 3,104 2,541

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NOTE 12 – OTHER CONTINGENCIES

We are party to various legal actions from time to time that are ordinary in nature and incidental to the operation of our business, including ongoing litigation.

We are party to various legal actions that arise from time to time that are ordinary in nature and incidental to the operation of our business, including ongoing litigation.

While it is not possible at this time to determine with certainty the ultimate outcome of these or other lawsuits, we believe that none of the pending proceedings will have a material adverse effect on our business, financial condition, results of operations or cash flows.

In June 2020, the Company received notice from a former service provider alleging a breach of contract regarding the payment of a contingency fee.

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 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.

In the fourth quarter of fiscal year 2023, we have updated our estimate to reflect the latest developments in this matter.

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

However, the outcome of this legal matter is subject to significant uncertainties.

The ability to predict the ultimate outcome of this legal matter involves judgments, estimates and inherent uncertainties.

The actual outcome could differ materially from management’s estimates.

In the second quarter of fiscal year 2023, we recorded a reserve of $ 2.5 million for anticipated modification costs that we expect to incur to address capacity issues at our sole landfill located in Ochlocknee, Georgia.

In the second quarter of fiscal year 2023, we recorded a reserve of $ 2.5 million for anticipated modification costs that we expected to incur to address capacity issues at our sole landfill located in Ochlocknee, Georgia.

Reserves are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

The amount of the reserve represents management’s best estimate of the costs for the modification with respect to this matter.

There have been no changes to the reserve estimate throughout the rest of fiscal year 2023.

The amount of the reserve represented management’s best estimate of the costs for the modification with respect to this matter, at the time.

During fiscal year 2024, work began on the modifications and we recorded an additional reserve of $ 0.6 million to reflect an update to our best estimate.

This has been offset by $ 1.9 million of payments made to date.

The modification work is expected to be completed during fiscal year 2025.

Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards, and emerging technologies for handling site modification.

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To determine the present value of the lease liability, we use an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments.

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

As provided in ASC 842, we have elected not to apply these measurement and recognition requirements to short-term leases (i.e., leases with a term of 12 months or less).

Short-term leases will not be recorded as ROU assets or lease liabilities on our consolidated balance sheet, and the related lease payments will be recognized in net earnings on a straight-line basis over the lease term.

We have no material finance leases, and variable costs for operating leases are immaterial.

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Operating lease cost $ 3,791 $ 2,640

Operating lease cost $ 2,640 $ 2,776

Short-term operating lease cost 2 553

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

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Cash paid for amounts included in the measurement of lease liabilities:

$ 3,112 $ 2,229

Right-of-use assets obtained in exchange for new operating lease liabilities 11,471 983

Operating lease ROU assets and operating lease liabilities are separately presented on the unaudited Consolidated Balance Sheet, excluding leases with an initial term of twelve months or less.

Operating lease ROU assets and operating lease liabilities are separately presented on the Consolidated Balance Sheets.

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

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Net lease obligation $ 19,947

NOTE 13 – SUBSEQUENT EVENTS

On September 21, 2023, the Company entered into Amendment No.

4 (the “Fourth Amendment”) to the Note Agreement with Prudential.

The Fourth Amendment extended the time frame for issuing and selling Shelf Notes to September 21, 2026.

NOTE 14 – RELATED PARTIES

One member of our Board of Directors retired from the role of President and Chief Executive Officer of a customer of ours on September 28, 2019 and is currently party to a post-employment consulting agreement with the customer.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 0.2 million and $ 0.3 million for fiscal years 2023 and 2022, respectively.

There was $ 10,768 of outstanding accounts receivable due from that customer, and its subsidiaries, as of July 31, 2023 and $ 5,608 outstanding accounts receivable as of July 31, 2022.

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

Total payments to this vendor for fees and cost reimbursements were $ 2.0 million and $ 0.2 million for fiscal years 2024 and 2023, respectively.

There were no outstanding amounts due to that vendor as of July 31, 2023 or July 31, 2022.

There were $ 0.1 million of outstanding fees due to that vendor as of July 31, 2024.

There were no outstanding amounts due to that vendor as of July 31, 2023.

Total sales to that customer, including sales to subsidiaries of that customer, were $ 0.2 million for both fiscal year 2024 and 2023.

There were no outstanding amounts due from that customer as of July 31, 2024 or 2023.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our internal controls over financial reporting as of July 31, 2023 have been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report which appears on the next page of this Annual Report on Form 10-K.

Our internal controls over financial reporting as of July 31, 2024 have been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report included below under the heading “Report of Independent Registered Public Accounting Firm.” The attestation report of Grant Thornton LLP on the Company’s internal control over financial reporting is also included under this heading below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinions on the financial statements and internal control over financial reporting

We have audited the accompanying consolidated balance sheets of Oil-Dri Corporation of America (a Delaware corporation) and subsidiaries (the “Company”) as of July 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended July 31, 2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of Oil-Dri Corporation of America (a Delaware corporation) and subsidiaries (the “Company”) as of July 31, 2024 and 2023, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended July 31, 2024, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).

We also have audited the Company’s internal control over financial reporting as of July 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

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The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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We believe that our audits provide a reasonable basis for our opinions.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Ultra Pet Company Inc.

(“Ultra Pet”), a wholly-owned subsidiary, whose financial statements reflect total assets and net sales constituting 3% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended July 31, 2024.

As indicated in Management’s Report, Ultra Pet, was acquired during 2024.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Ultra Pet.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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Critical audit matter(s)

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisition of Ultra Pet Company Inc.

- Valuation of Trade Name and Customer List Intangible Assets

As described further in Note 2 to the financial statements, the Company acquired Ultra Pet Company Inc.

(“Ultra Pet”), on May 1, 2024 for a total purchase price of approximately $44.3 million, net of cash acquired.

The Company has recorded, on a preliminary basis, the assets acquired and liabilities assumed based on their estimated fair values, including customer list and trade name intangible assets of $20.4 million and $5.2 million, respectively.

We identified the valuation of acquired Ultra Pet customer list and trade name intangible assets as a critical audit matter.

The principal considerations for our determination that the valuation of acquired Ultra Pet customer list and trade name intangible assets is a critical audit matter are (i) the significant judgment by management when determining assumptions used in the fair value measurement of acquired intangible assets (ii) the high degree of auditor judgment and subjectivity in performing procedures and evaluating management’s significant assumptions relating to the projected financial information including revenue growth rate, weighted average cost of capital (WACC), royalty rate, and customer attrition rates and (iii) the audit effort involved the use of professionals with specialized skills and knowledge.

Our audit procedures related to the valuation of the acquired customer list and trade name intangible assets included the following, among others:

• we tested the design and operating effectiveness of the controls over the Company’s acquisition and valuation process, including review of the valuation model, significant assumptions used, and the completeness and accuracy of the underlying data used

• we tested the projected financial information including forecasted revenue growth rate by assessing the reasonableness of management’s forecasts compared to historical results and forecasted industry trends

• with the assistance of our valuation specialists, we assessed the assumptions and methodologies used in developing the WACC, royalty rate, and customer attrition rates by developing a range of independent estimates and comparing those to the rates selected by management.

/s/ GRANT THORNTON LLP

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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-K

Item 8. Financial Statements and Supplementary Data