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Item 1. Financial Statements

2024-12-09 compared with 2024-06-06 · 158 added, 286 removed, 386 unchanged (53% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheet

(in thousands, except for share and per share amounts)

ASSETS April 30,

(in thousands, except for share and per share amounts, unaudited)

ASSETS October 31,

2024 July 31,

2 unchanged sentences

Accounts receivable, net of allowances

of $ 1,094 and $ 1,087 at April 30, 2024 and July 31, 2023, respectively

of $ 1,562 and $ 934 at October 31, 2024 and July 31, 2024, respectively

70,544 62,171

Inventories, net 56,025 54,236

Prepaid expenses 6,554 2,854

Prepaid expenses and other assets 5,040 7,270

Total Current Assets 144,115 147,158

Property, Plant and Equipment

Cost 322,526 305,851

Less accumulated depreciation and amortization ( 194,580 ) ( 184,979 )

Total Property, Plant and Equipment, Net 127,946 120,872

Property, plant and equipment, net 137,947 137,796

Goodwill 15,674 15,443

Intangible assets, net of accumulated amortization

of $ 8,394 and $ 8,341 at April 30, 2024 and July 31, 2023, respectively

Trademarks, trade names and patents, net of accumulated amortization

of $ 647 and $ 625 at October 31, 2024 and July 31, 2024, respectively

Customer list, net of accumulated amortization

of $ 8,431 and $ 8,149 at October 31, 2024 and July 31, 2024, respectively

19,754 20,036

Deferred income taxes 1,075 1,537

6 unchanged sentences

Condensed Consolidated Balance Sheet (continued)

(in thousands, except for share and per share amounts)

LIABILITIES & STOCKHOLDERS’ EQUITY April 30,

(in thousands, except for share and per share amounts, unaudited)

LIABILITIES & STOCKHOLDERS’ EQUITY October 31,

2024 July 31,

7 unchanged sentences

Noncurrent Liabilities

Notes payable, net of unamortized debt issuance costs

of $ 140 and $ 173 at April 30, 2024 and July 31, 2023, respectively

Long-term debt, net of unamortized debt issuance costs

of $ 223 and $ 226 at October 31, 2024 and July 31, 2024, respectively

44,777 49,774

6 unchanged sentences

Stockholders’ Equity

Common Stock, par value $ .10 per share, issued 8,827,223 shares at April 30, 2024

Common Stock, par value $ .10 per share, issued 8,884,473 shares at October 31, 2024

and 8,843,673 shares at July 31, 2024

Class B Stock, par value $ .10 per share, issued 2,518,056 shares at April 30, 2024

Class B Stock, par value $ .10 per share, issued 2,518,056 shares at October 31, 2024

and 2,518,056 shares at July 31, 2024

3 unchanged sentences

Less Treasury Stock, at cost ( 3,723,947 Common and 380,628 Class B shares at

April 30, 2024 and 3,658,989 Common and 351,641 Class B shares at July 31, 2023)

October 31, 2024 and 3,702,185 Common and 362,649 Class B shares at July 31, 2024)

( 87,001 ) ( 84,441 )

4 unchanged sentences

Condensed Consolidated Statements of Operations

(in thousands, except for per share amounts) For the Nine Months Ended April 30,

(in thousands, except for share and per share amounts, unaudited)

For the Three Months Ended October 31,

Net Sales $ 127,945 $ 111,438

6 unchanged sentences

Interest income 150 175

Loss on pension termination — ( 4,858 )

Other, net ( 404 ) ( 140 )

3 unchanged sentences

Net Income 16,376 10,742

Net Loss Attributable to Noncontrolling Interest — ( 68 )

Net Income Attributable to Oil-Dri $ 30,901 $ 17,632

Earnings Per Share

1 unchanged sentence

Basic Class B $ 1.82 $ 1.21

$ 3.45 $ 1.99

Diluted Common $ 2.25 $ 1.50

Diluted Class B $ 1.82 $ 1.21

$ 3.45 $ 1.97

Average Shares Outstanding

4 unchanged sentences

Dividends Declared Per Share

Basic Common $ 0.870 $ 0.840

Basic Class B

$ 0.654 $ 0.630

Common Stock $ 0.310 $ 0.290

Class B Stock $ 0.233 $ 0.218

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

1 unchanged sentence

Condensed Consolidated Statements of Comprehensive Income

(in thousands) For the Nine Months Ended April 30,

Net Income Attributable to Oil-Dri $ 30,901 $ 17,632

Other Comprehensive (Loss) Income:

Pension and postretirement (expenses) benefits (net of tax) ( 64 ) 2,947

Cumulative translation adjustment 14 ( 280 )

Other Comprehensive (Loss) Income ( 50 ) 2,667

Total Comprehensive Income $ 30,851 $ 20,299

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

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Operations

(in thousands, except for per share amounts)

For the Three Months Ended April 30,

Net Sales $ 106,779 $ 105,425

Cost of Goods Sold ( 76,642 ) ( 77,958 )

Gross Profit 30,137 27,467

Selling, General and Administrative Expenses ( 19,705 ) ( 13,011 )

Income from Operations 10,432 14,456

Other (Expense) Income

Interest expense ( 379 ) ( 363 )

Interest income 285 97

Loss on pension termination — ( 4,858 )

Other, net ( 200 ) 649

Total Other Expense, Net ( 294 ) ( 4,475 )

Income Before Income Taxes 10,138 9,981

Income Tax Expense ( 2,361 ) ( 1,493 )

(in thousands, unaudited)

For the Three Months Ended October 31,

Net Income $ 16,376 $ 10,742

Net Loss Attributable to Noncontrolling Interest — ( 47 )

Net Income Attributable to Oil-Dri $ 7,777 $ 8,535

Net Income Per Share

Basic Common $ 1.15 $ 1.28

Basic Class B

$ 0.87 $ 0.96

Diluted Common $ 1.07 $ 1.24

Diluted Class B

$ 0.87 $ 0.95

Average Shares Outstanding

Basic Common 4,912 4,838

Basic Class B

Diluted Common 6,892 5,003

Diluted Class B

Dividends Declared Per Share

Basic Common $ 0.290 $ 0.280

Basic Class B

$ 0.218 $ 0.210

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

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Comprehensive Income

(in thousands of dollars)

For the Three Months Ended April 30,

Net Income Attributable to Oil-Dri

$ 7,777 $ 8,535

Other Comprehensive (Loss) Income:

Pension and postretirement (expenses) benefits (net of tax) ( 21 ) 2,960

Other Comprehensive Loss:

Postretirement expenses (net of tax) ( 21 ) ( 19 )

Cumulative translation adjustment ( 21 ) ( 166 )

Other Comprehensive (Loss) Income ( 35 ) 2,809

Total Comprehensive Income

Other Comprehensive Loss:

( 42 ) ( 185 )

Total Comprehensive Income $ 16,334 $ 10,557

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

1 unchanged sentence

Consolidated Statements of Stockholders' Equity

For the Three Months Ended April 30

(in thousands, except for share amounts, unaudited)

For the Three Months Ended October 31

Number of Shares

Stock Treasury

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Income Non-Controlling Interest Total

Stockholders’

Balance, January 31, 2023 11,141,279 ( 3,976,318 ) $ 1,114 $ 54,328 $ 184,133 $ ( 79,886 ) $ ( 2,325 ) $ ( 390 ) $ 156,974

Net Income (Loss) — — — — 8,535 — — ( 47 ) 8,488

Other Comprehensive Income — — — — — — 2,809 — 2,809

Dividends Declared — — — — ( 1,868 ) — — — ( 1,868 )

Purchases of Treasury Stock — — — — — — — — —

Net issuance of stock under long-term incentive plans 1,300 ( 16,750 ) — 468 — ( 468 ) — — —

Amortization of Restricted Stock — — — 692 — — — — 692

Balance, April 30, 2023 11,142,579 ( 3,993,068 ) $ 1,114 $ 55,488 $ 190,800 $ ( 80,354 ) $ 484 $ ( 437 ) $ 167,095

Balance, January 31, 2024 11,342,279 ( 4,056,730 ) $ 1,134 $ 58,205 $ 219,995 $ ( 84,029 ) $ 733 $ — $ 196,038

Common & Class B Stock Treasury Stock Common & Class B Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Total Stockholders' Equity

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

Net Income — — — — 10,742 — — 10,742

4 unchanged sentences

Amortization of Restricted Stock — — — 1,108 — — — 1,108

Balance, April 30, 2024 11,345,279 ( 4,058,631 ) $ 1,135 $ 59,449 $ 225,818 $ ( 84,151 ) $ 698 $ — $ 202,949

For the Nine Months Ended April 30

(in thousands, except share amounts)

Number of Shares

Common & Class B Stock Treasury Stock Common & Class B Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Non-controlling Interest Total Stockholders' Equity

Balance, July 31, 2022 11,083,824 ( 3,961,579 ) $ 1,108 $ 52,467 $ 178,754 $ ( 79,428 ) $ ( 2,183 ) $ ( 369 ) $ 150,349

Net Income (Loss) — — — — 17,632 — — ( 68 ) 17,564

Other Comprehensive Income — — — — — — 2,667 — 2,667

Dividends Declared — — — — ( 5,586 ) — — — ( 5,586 )

Purchases of Treasury Stock — ( 7,493 ) — — — ( 225 ) — — ( 225 )

Net issuance of stock under long-term incentive plans 58,755 ( 23,996 ) 6 695 — ( 701 ) — — —

Amortization of Restricted Stock — — — 2,326 — — — — 2,326

Balance, April 30, 2023 11,142,579 ( 3,993,068 ) $ 1,114 $ 55,488 $ 190,800 $ ( 80,354 ) $ 484 $ ( 437 ) $ 167,095

Balance, October 31, 2023 11,329,279 ( 4,026,459 ) $ 1,133 $ 56,746 $ 209,585 $ ( 82,111 ) $ 563 $ 185,916

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

5 unchanged sentences

Amortization of Restricted Stock — — — 1,152 — — — 1,152

Balance, April 30, 2024 11,345,279 ( 4,058,631 ) $ 1,135 $ 59,449 $ 225,818 $ ( 84,151 ) $ 698 $ — $ 202,949

Balance, October 31, 2024 11,402,529 ( 4,104,575 ) $ 1,140 $ 62,601 $ 246,525 $ ( 87,001 ) $ 727 $ 223,992

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

(in thousands) For the Nine Months Ended April 30,

(in thousands, unaudited)

For the Three Months Ended October 31,

CASH FLOWS FROM OPERATING ACTIVITIES 2024 2023

3 unchanged sentences

Non-cash stock-based compensation 1,152 1,108

Loss on pension termination — 4,858

Deferred income taxes 84 ( 742 )

Provision for bad debts and cash discounts 628 28

Impairment of patents — 61

Loss on Impairment of Fixed Assets — 810

Loss on impairment of patent applications 48 —

Accretion of asset retirement obligation 47 53

4 unchanged sentences

Prepaid expenses 2,228 154

Deferred income taxes

Other assets 962 341

8 unchanged sentences

Capital expenditures ( 12,817 ) ( 8,064 )

Proceeds from sale of property, plant and equipment 181 10

Net Cash Used in Investing Activities ( 12,817 ) ( 8,064 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of notes payable 10,000 —

Payment of debt issuance costs — ( 7 )

Payments on revolving credit facility ( 5,000 ) —

Dividends paid ( 2,096 ) ( 1,927 )

Purchases of treasury stock ( 1,984 ) ( 872 )

Net Cash Provided by (Used in) Financing Activities 1,462 ( 5,806 )

Net Cash Used in Financing Activities ( 9,080 ) ( 2,799 )

Effect of exchange rate changes on cash and cash equivalents 3 124

Net Increase in Cash and Cash Equivalents 15,067 13,448

Cash and Cash Equivalents, Beginning of Period 31,754 16,298

Cash and Cash Equivalents, End of Period $ 46,821 $ 29,746

Net Decrease in Cash and Cash Equivalents ( 10,975 ) ( 2,175 )

Cash, Cash Equivalents and Restricted Cash, Beginning of Period 24,481 31,754

Cash, Cash Equivalents and Restricted Cash, End of Period $ 13,506 $ 29,579

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows - Continued

(in thousands) For the Nine Months Ended April 30,

(in thousands, unaudited)

For the Three Months Ended October 31,

Supplemental disclosures:

Reconciliation of cash, cash equivalents and restricted cash

Cash and cash equivalents $ 12,506 $ 29,579

Restricted cash in prepaid expenses and other assets $ 1,000 $ —

Other cash flows:

2 unchanged sentences

Non-cash investing and financing activities:

Capital expenditures accrued, but not paid $ 1,467 $ 1,441

Cash dividends declared and accrued, but not paid $ 1,958 $ 1,863

Change in capital expenditures in accounts payable $ ( 2,962 ) $ ( 843 )

Change in capital expenditures in accrued expenses $ ( 4,540 ) $ 96

Cash dividends declared and accrued $ 2,098 $ 1,953

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

12 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 nine months ended April 30, 2024 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2024.

Operating results for the three months ended October 31, 2024 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2025.

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

15 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.

Property, Plant and Equipment.

4 unchanged sentences

These assets 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.

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

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.

The composition of property, plant and equipment is as follows (in thousands):

2024 July 31,

Gross property, plant and equipment 335,921 333,561

Accumulated depreciation and amortization ( 197,974 ) ( 195,765 )

Total Property, Plant and Equipment, Net $ 137,947 $ 137,796

Land, Mining Property and Mineral Rights.

28 unchanged sentences

Some of our contracts may contain lease components as well as non-lease components, such as an agreement to purchase services.

As allowed under ASC 842, we have elected not to separate the lease components from non-lease components for all asset classes and we will not allocate the contract consideration to these components.

As allowed under ASC 842, we have elected not to separate the lease components from non-lease components for all

asset classes and we will not allocate the contract consideration to these components.

This policy was applied to all existing leases upon adoption of ASC 842 and will be applied to new leases on an ongoing basis.

10 unchanged sentences

We recorded a

liability for these advance payments of $ 0.1 million as of April 30, 2024, and no liability as of July 31, 2023.

liability for these advance payments of $ 0.2 million as of both October 31, 2024 and July 31, 2024.

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

There was no revenue recognized during the nine months ended April 30, 2024, that was included in the liability for advance payments at the beginning of the period.

There was $ 0.2 million revenue recognized during the three months ended October 31, 2024, that was included in the liability for advance payments at the beginning of the period.

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

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

Other noncurrent liabilities on the unaudited Condensed Consolidated Balance Sheet includes $ 4.6 million for the reclamation liability as of April 30, 2024 and $ 4.5 million as of July 31, 2023 and $ 1.9 million for postretirement health benefit as of April 30, 2024 and $ 1.8 million as of July 31, 2023, respectively.

Other noncurrent liabilities on the unaudited Condensed Consolidated Balance Sheet includes $ 4.8 million for the reclamation liability as of both October 31, 2024 and July 31, 2024 and $ 1.7 million for postretirement health benefit as of both October 31, 2024 and July 31, 2024, respectively.

New Accounting Pronouncements and Regulations.

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.

In November 2024, the FASB issued ASU No.

2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)." These amendments primarily require disaggregated disclosure, in the notes to the financial statements, of prescribed categories of expenses within relevant income statement captions.

The requirements will be applied prospectively, with the option to apply the standard retrospectively, for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is 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 .

EARNINGS PER SHARE

2 unchanged sentences

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 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 the shares of Common Stock than to the shares of Class B Stock 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 has 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.

Common Stock have no conversion rights.

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 shares of Class B Stock, 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 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.

For the Nine Months Ended April 30, 2024

For the Three Months Ended October 31, 2024

(in thousands, except for per share data)

11 unchanged sentences

Diluted EPS $ 2.25 $ 1.82

For the Three Months Ended April 30, 2024

(1) The impact of 131,525 shares of unvested Common Stock and 62,663 shares of unvested Class B Stock was anti-dilutive therefore not included in the calculation of diluted EPS

For the Three Months Ended October 31, 2023

(in thousands, except for per share data)

11 unchanged sentences

Diluted EPS $ 1.50 $ 1.21

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

NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS

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):

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):

In addition, ASU No.

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

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 .

(1) The impact of 210,675 shares of unvested Common Stock and 54,370 shares of unvested Class B Stock was anti-dilutive therefore not included in the calculation of diluted EPS

The composition of inventories is as follows (in thousands):

8 unchanged sentences

These reserves are based upon a combination of factors including historical issues and market trends.

Inventory reserves were $ 3.8 million and $ 3.6 million as of April 30, 2024 and July 31, 2023, respectively.

Inventory reserves were $ 3.7 million and $ 3.8 million as of October 31, 2024 and July 31, 2024, respectively.

FAIR VALUE MEASUREMENTS

5 unchanged sentences

Unobservable inputs.

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

We had $ 0.9 million in cash equivalents as of April 30, 2024 and $ 15.4 million in cash equivalents as of July 31, 2023.

Balances of accounts receivable and accounts payable approximated their fair values at April 30, 2024 and July 31, 2023 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 $ 41.1 million and $ 29.7 million as of April 30, 2024 and July 31, 2023, respectively, and are classified as Level 2.

The fair value was estimated using the exit price notion by discounting future cash flows based on an observable market rate.

Cash equivalents are classified as Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

These cash instruments are primarily money market funds and are included in cash and cash equivalents on the Consolidated Balance Sheets.

We had $ 0.9 million in cash equivalents as of October 31, 2024 and $ 3.0 million in cash equivalents as of July 31, 2024.

Balances of accounts receivable, short-term investments and accounts payable approximated their fair values at October 31, 2024 and July 31, 2024 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 $ 47.1 million and $ 51.1 million as of October 31, 2024 and July 31, 2024, respectively.

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

See Note 8 of the Notes to the Consolidated Financial Statements for further information about such debt.

We apply fair value techniques on at least an annual basis associated with:

2 unchanged sentences

GOODWILL AND OTHER INTANGIBLE ASSETS

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

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

During fiscal year 2024, we recorded additions of intangible assets of $ 37.4 million related to the acquisition of Ultra Pet Company, Inc.

("Ultra Pet"), the components of which were $ 20.4 million of customer list, $ 5.2 million of trade name and $ 11.8 million of goodwill.

During the first quarter of fiscal year 2025 we recognized a measurement period adjustment as a result of our acquisition of Ultra Pet, which increased our goodwill by $ 0.2 million.

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

Estimated intangible amortization for fiscal year 2025 is $ 1.2 million.

Estimated intangible amortization for each of the next five fiscal years is $ 1.2 million.

We have one acquired trademark recorded at a cost of $ 0.4 million that was determined to have an indefinite life and is not amortized.

There have been no triggering events in fiscal years 2024 or 2023 that would indicate a new impairment analysis is needed.

Trademarks and trade names acquired via acquisitions, with a carrying value of $ 5.6 million, were determined to have an indefinite life and are not amortized.

ACCRUED EXPENSES

1 unchanged sentence

2024 July 31,

Payables $ 9,522 $ 11,586

Salaries, Wages, Commissions and Employee Benefits 8,972 20,711

Taxes 4,352 1,736

Freight 4,033 2,928

Trade promotions and advertising 3,657 2,743

Georgia Landfill Modification Reserve 1,787 2,469

Real Estate Tax 802 1,038

Other 2,087 3,104

Georgia Landfill Modification Reserve

$ 33,443 $ 44,016

2 unchanged sentences

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 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.

In fiscal year 2023, we recorded a reserve 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 represented management’s best estimate of the costs for the modification with respect to this matter, at the time.

Work began on the modifications in the second quarter of fiscal year 2024 at which time we increased our reserve by $ 0.5 million to reflect an update to our best estimate.

This has been offset by $ 1.2 million of payments made to date.

The modification work is expected to be completed during the fourth quarter of fiscal year 2024, and we have not made any additional changes to our reserve in the third quarter of fiscal year 2024.

Work began on the modifications during fiscal year 2024.

During the first quarter of fiscal year 2025, we increased the total estimated cost by $ 0.4 million resulting in a total $ 3.5 million expense related to this matter.

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.

2 unchanged sentences

("Prudential") and certain existing noteholders and purchasers affiliated with Prudential named therein.

Pursuant to the Note Agreement, (i) on May 15, 2020 we issued $ 10 million in aggregate principal amount of our 3.95 % Series B Senior Notes due May 15, 2030 , of which $ 7 million aggregate principal amount remained outstanding as of April 30, 2024, (ii) on December 16, 2021 , 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 April 30, 2024, and (iii) 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 April 30, 2024.

Pursuant to the Note Agreement, (i) on May 15, 2020 we issued $ 10 million in aggregate principal amount of our 3.95 % Series

B Senior Notes due May 15, 2030 , of which $ 6 million aggregate principal amount remained outstanding as of October 31, 2024, (ii) on December 16, 2021 , 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 October 31, 2024, and (iii) 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 October 31, 2024.

The 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 Senior Notes, Series B Senior Notes, Series C Senior Notes, and Series D Senior 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.

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We are party to the Credit Agreement, dated as of January 27, 2006 (as previously amended, the “Credit Agreement”), among us, BMO Harris Bank N.A (“BMO”), and certain of our domestic subsidiaries.

The agreement provides for a $ 45 million unsecured revolving credit facility, including a maximum of $ 10 million for letters of credit.

The Credit Agreement provides for a $ 75 million unsecured revolving credit facility, including a maximum of $ 20 million for letters of credit.

The Credit Agreement contains restrictive covenants that, among other things and under various conditions, limit our ability to incur additional indebtedness or to dispose of assets.

On August 30, 2022, we entered into the Sixth Amendment to the Credit Agreement (the “Sixth Amendment”).

The Sixth Amendment extended the facility termination date to August 30, 2027 ;

replaced the LIBOR-based reference rate with an adjusted term Secured Overnight Financing Rate ("SOFR");

revised the method for calculating consolidated EBITDA and consolidated debt for purposes of the Credit Agreement;

modified certain restrictive covenants, including increasing the unsecured indebtedness basket from $ 50 million to $ 75 million;

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 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 Transaction (as defined in Note 15 below);

and modify certain covenants and other provisions to permit certain indebtedness and liens of Ultra Pet Company, Inc.

(“Ultra Pet”) and facilitate the Transaction.

As of April 30, 2024, and July 31, 2023, we were in compliance with the covenants.

There were no borrowings during the third quarter of fiscal year 2024.

However, we had $ 1.5 million and $ 1.0 million of letters of credit outstanding under the Credit Agreement as of April 30, 2024 and July 31, 2023, respectively.

These restrictive covenants include certain financial covenants such as a covenant to maintain a maximum debt to earnings ratio and to maintain a certain fixed charge coverage ratio.

On September 30, 2024, the Company entered into the Eighth Amendment to Credit Agreement (the “Eighth Amendment”).

The Eighth Amendment amends the Credit Agreement to, among other things:

increase the amount the Company may borrow from BMO from time to time pursuant to its revolving line of credit from up to $ 45 million to up to $ 75 million and to increase the aggregate maximum amount of letters of credit from up to $ 10 million to up to $ 20 million;

add an accordion provision to allow the Company to increase the revolving line of credit by up to an additional $ 50 million, subject to the terms and conditions set forth in the Eighth Amendment;

extend the termination date to September 30, 2029 ;

and increase certain restrictive covenant thresholds, including but not limited to, an increase to the permitted acquisitions threshold in the restricted covenants from a cumulative total of $ 45 million to $ 100 million.

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

There were no new borrowings during the first quarter of fiscal year 2025, however, on October 30, 2024 we elected to pay down $ 5 million of our total borrowings under the Credit Agreement.

As of October 31, 2024 we had $ 5 million drawn at a 6.66 % interest rate.

We also had $ 2.9 million of letters of credit outstanding under the Credit Agreement as of both October 31, 2024 and July 31, 2024.

The Credit Agreement states that we may select a variable interest rate based on either the BMO 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.

As of April 30, 2024, the variable rates would have been 8.50 % for the BMO prime-based rate or 5.33 % for the adjusted SOFR-based rate.

As of October 31, 2024, the variable rates would have been 8.00 % for the BMO prime-based rate or 5.81 % for the adjusted SOFR-based rate.

We have operating leases primarily for real estate properties, including corporate headquarters, customer service and sales offices, manufacturing and packaging facilities, warehouses, and research and development facilities, as well as for rail tracks, railcars and office equipment.

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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 nine months ended April 30, 2024.

We have no material finance leases, and variable costs for operating leases are immaterial for the three months ended October 31, 2024.

Operating lease costs are included in Cost of Goods Sold 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 April 30, For the Nine Months Ended April 30,

2024 2023 2024 2023

Operating Lease Cost

For the Three Months Ended October 31,

Operating lease cost $ 1,370 $ 546

Short-term operating lease cost 257 — 754 1

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

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

2024 2023 2024 2023

For the Three Months Ended October 31,

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

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

April 30, 2024 July 31, 2023

October 31, 2024 July 31, 2024

Weighted-average remaining lease term - operating leases 5.3 years 5.4 years

Weighted-average discount rate - operating leases 5.10 % 5.10 %

Lease liability maturities as of April 30, 2024, are as follows (in thousands):

Fiscal year 2024 (remaining three months) $ 852

Lease liability maturities as of October 31, 2024, are as follows (in thousands):

Fiscal year 2025 (remaining nine months) $ 4,061

Fiscal year 2026 4,724

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Net lease obligation $ 18,770

PENSION AND OTHER POSTRETIREMENT BENEFITS

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 (the "Board") approved a resolution to terminate the Company's defined benefit pension plan.

The pension obligations were fully settled in April 2023.

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.

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.

We have the right to modify or terminate the postretirement health benefit plan at any time.

The postretirement health plan is an unfunded plan.

We pay insurance premiums and claims from our assets.

The components of net periodic pension and postretirement health benefit costs were as follows:

Pension Benefits

(in thousands)

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

2024 2023 2024 2023

Interest cost $ — $ 336 $ — $ 1,009

Expected return on plan assets — ( 557 ) — ( 1,673 )

Amortization of:

Other actuarial loss — 14 — 42

Loss on pension termination $ — $ 4,858 $ — $ 4,858

Net periodic benefit cost $ — $ 4,651 $ — $ 4,236

Postretirement Health Benefits

(in thousands)

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

2024 2023 2024 2023

Service cost $ 19 $ 21 $ 56 $ 63

Interest cost 21 19 62 55

Amortization of:

Other actuarial loss ( 27 ) ( 21 ) ( 80 ) ( 62 )

Prior service costs ( 2 ) ( 2 ) ( 5 ) ( 5 )

Net periodic benefit cost $ 11 $ 17 $ 33 $ 51

The non-service cost components of net periodic benefit cost are included in Other Income (Expense) in the line item Other, net on the unaudited Condensed Consolidated Statements of Income.

The discount rate for the net periodic benefit cost used in the calculation of the postretirement health benefits was 4.90 % for the three and nine months ended April 30, 2024, and 3.82 % for the three and nine months ended 2023.

The medical cost trend assumption for postretirement health benefits was 8.20 %.

The graded trend rate is expected to decrease to an ultimate rate of 4.90 % in fiscal year 2044 .

OPERATING SEGMENTS

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Business to Business Products Group Retail and Wholesale Products Group

For the Nine Months Ended April 30,

Product 2024 2023 2024 2023

Cat Litter $ — $ — $ 178,357 $ 167,841

Industrial and Sports — — 33,937 $ 33,539

Agricultural and Horticultural 27,706 30,507 — —

Bleaching Clay and Fluids Purification 67,437 55,012 — $ —

Animal Health and Nutrition 16,448 18,734 — —

Net Sales $ 111,591 $ 104,253 212,294 $ 201,380

Business to Business Products Group Retail and Wholesale Products Group

For the Three Months Ended April 30,

For the Three Months Ended October 31,

Product 2024 2023 2024 2023

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Agricultural and Horticultural 11,582 10,315 — —

Bleaching Clay and Fluids Purification 22,322 17,771 — —

Animal Health and Nutrition 5,761 6,922 — —

Fluids Purification 30,603 22,406 — $ —

Animal Health & Nutrition 6,230 6,440 — —

Net Sales $ 48,415 $ 39,161 $ 79,530 $ 72,277

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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.

April 30, 2024 July 31, 2023

October 31, 2024 July 31, 2024

(in thousands)

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

For the Nine Months Ended April 30,

Net Sales Income

2024 2023 2024 2023

(in thousands)

Business to Business Products Group $ 111,591 $ 104,253 $ 32,713 $ 24,794

Retail and Wholesale Products Group $ 212,294 201,380 $ 34,080 27,000

Net Sales $ 323,885 $ 305,633

Corporate Expenses ( 28,040 ) ( 23,463 )

Income from Operations 38,753 28,331

Total Other Expenses, Net ( 1,103 ) ( 6,874 )

Income before Income Taxes 37,650 21,457

Income Tax Expense ( 6,749 ) ( 3,893 )

Net Income 30,901 17,564

Net Loss Attributable to Noncontrolling Interest — ( 68 )

Net Income Attributable to Oil-Dri $ 30,901 $ 17,632

For the Three Months Ended April 30,

For the Three Months Ended October 31,

Net Sales Income

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Net Income 16,376 10,742

Net Loss Attributable to Noncontrolling Interest — ( 47 )

Net Income Attributable to Oil-Dri $ 7,777 $ 8,535

STOCK-BASED COMPENSATION

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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 April 30, 2024, there were 636,977 shares of Common Stock or Class B Stock available for future grants under this plan.

As of October 31, 2024, there were 560,724 shares of Common Stock or Class B Stock available for future grants under this plan.

Restricted Stock

All of our non-vested restricted stock as of April 30, 2024 was issued under the 2006 Plan with vesting periods generally between one and five years .

All of our non-vested restricted stock as of October 31, 2024 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 73,000 and 59,000 restricted shares of Common Stock granted during the first nine months of fiscal years 2024 and 2023, respectively.

There were 125,000 restricted shares of Class B Stock granted during the first nine months of fiscal year 2024 and none in fiscal year 2023.

Stock-based compensation expense was $ 0.9 million and $ 0.7 million for the three-months ended April 30, 2024 and 2023 respectively, and $ 2.7 million and $ 2.3 million for the nine months ended April 30, 2024 and 2023, respectively.

There were 40,800 and 57,000 restricted shares of Common Stock granted during the three months ended October 31, 2024 and 2023, respectively.

There were no restricted shares of Class B Stock granted during the three months ended October 31, 2024 and 125,000 in the three months ended October 31, 2023.

Stock-based compensation expense was $ 0.9 million and $ 0.8 million for the three months ended October 31, 2024 and 2023, respectively.

A summary of restricted stock transactions is shown below:

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Forfeitures ( 11 ) $ 53.66

Non-vested restricted stock outstanding at April 30, 2024 393 $ 48.52

Non-vested restricted stock outstanding at October 31, 2024 350 $ 53.75

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated other comprehensive income (loss) by component as of April 30, 2024 (in thousands):

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

The following table summarizes the changes in accumulated other comprehensive income (loss) by component as of October 31, 2024 (in thousands):

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

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

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Net current-period other comprehensive (loss) income, net of tax ( 21 ) ( 21 ) ( 42 )

Balance as of April 30, 2024 $ 948 $ ( 250 ) $ 698

Balance as of October 31, 2024 $ 1,055 $ ( 328 ) $ 727

RELATED PARTY TRANSACTIONS

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 $ 1.2 million and $ 0.1 million for the first nine months of fiscal years 2024 and 2023, respectively.

There were no outstanding accounts payable to that vendor as of April 30, 2024 or July 31, 2023.

SUBSEQUENT EVENTS

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 for an aggregate cash consideration of approximately $ 46 million, subject to certain adjustments set forth in the Purchase Agreement, in order to enter into the crystal cat litter segment (the “Transaction”).

The purchase price 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.

Going forward, Ultra Pet will operate as a wholly-owned subsidiary of Oil-Dri.

For additional information about the Purchase Agreement and the Transaction, please see the Current Reports on Form 8-K we filed with the SEC on April 16, 2024 and May 1, 2024.

One member of our Board is currently the President and Chief Executive Officer of one of our vendors.

Total payments to this vendor for fees and cost reimbursements were $ 0.3 million and $ 0.1 million for the first three months of fiscal years 2025 and 2024, respectively.

There were $ 0.1 million of outstanding accounts payable due to that vendor as of both October 31, 2024 and July 31, 2024.

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

Total sales to that customer, including sales to its subsidiaries, were $ 0.1 million for the first three months of both fiscal years 2025 and 2024.

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

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