Oil-Dri Corp of America 10-Q

ITEM 1. Financial Statements OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Balance Sheet (in thousands, except for share and per share amounts, unaudited) ASSETS January 31, 2025 July 31, 2024 Current Assets Cash and cash equivalents $ 22,589 $ 23,481 Accounts receivable, net of allowances of $ 1,348 and $ 934 at January 31, 2025 and July 31, 2024, respectively 66,086 62,171 Inventories, net 55,231 54,236 Prepaid expenses and other assets 5,110 7,270 Total Current Assets 149,016 147,158 Other Assets Property, plant and equipment, net 137,416 137,796 Goodwill 15,706 15,443 Trademarks, trade names and patents, net of accumulated amortization of $ 653 and $ 625 at January 31, 2025 and July 31, 2024, respectively 6,630 6,662 Customer list, net of accumulated amortization of $ 8,713 and $ 8,149 at January 31, 2025 and July 31, 2024, respectively 19,471 20,036 Deferred income taxes 1,683 1,537 Operating lease right-of-use assets 16,417 18,667 Other 7,408 7,306 Total Other Assets 204,731 207,447 Total Assets $ 353,747 $ 354,605 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 3 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Balance Sheet (continued) (in thousands, except for share and per share amounts, unaudited) LIABILITIES & STOCKHOLDERS’ EQUITY January 31, 2025 July 31, 2024 Current Liabilities Current maturities of notes payable $ 1,000 $ 1,000 Accounts payable 14,004 15,009 Dividends payable 2,097 2,096 Operating lease liabilities 4,357 4,556 Accrued expenses 30,732 44,016 Total Current Liabilities 52,190 66,677 Noncurrent Liabilities Long-term debt, net of unamortized debt issuance costs of $ 204 and $ 226 at January 31, 2025 and July 31, 2024, respectively 39,796 49,774 Deferred compensation 5,956 5,667 Long-term operating lease liabilities 13,261 15,391 Other 6,684 6,508 Total Noncurrent Liabilities 65,697 77,340 Total Liabilities 117,887 144,017 Commitments and contingencies (See note 7) Stockholders’ Equity Common Stock, par value $ .10 per share, issued 15,215,961 shares at January 31, 2025 and 15,172,186 shares at July 31, 2024 1,522 1,517 Class B Stock, par value $ .10 per share, issued 4,650,484 shares at January 31, 2025 and 4,652,984 shares at July 31, 2024 465 465 Additional paid-in capital 63,195 60,031 Retained earnings 257,349 232,247 Accumulated other comprehensive income 561 769 Less Treasury Stock, at cost ( 4,895,344 Common and 380,628 Class B shares at January 31, 2025 and 4,867,880 Common and 362,649 Class B shares at July 31, 2024) ( 87,232 ) ( 84,441 ) Total Stockholders’ Equity 235,860 210,588 Total Liabilities & Stockholders’ Equity $ 353,747 $ 354,605 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 4 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Operations (in thousands, except for share and per share amounts, unaudited) For the Six Months Ended January 31, 2025 2024 Net Sales $ 244,859 $ 217,106 Cost of Goods Sold ( 169,631 ) ( 155,173 ) Gross Profit 75,228 61,933 Selling, General and Administrative Expenses ( 36,556 ) ( 33,612 ) Income from Operations 38,672 28,321 Other (Expense) Income Interest expense ( 1,340 ) ( 723 ) Interest income 236 472 Other, net ( 1,106 ) ( 558 ) Total Other Expense, Net ( 2,210 ) ( 809 ) Income Before Income Taxes 36,462 27,512 Income Tax Expense ( 7,165 ) ( 4,388 ) Net Income 29,297 23,124 Earnings Per Share Basic Common $ 2.17 $ 1.72 Basic Class B $ 1.63 $ 1.29 Diluted Common $ 2.01 $ 1.60 Diluted Class B $ 1.63 $ 1.29 Average Shares Outstanding Basic Common 9,870 9,712 Basic Class B 3,986 3,943 Diluted Common 13,856 13,655 Diluted Class B 3,986 3,943 Dividends Declared Per Share 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. 5 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Comprehensive Income (in thousands, unaudited) For the Six Months Ended January 31, 2025 2024 Net Income $ 29,297 $ 23,124 Other Comprehensive Loss: Postretirement expenses (net of tax) ( 47 ) ( 43 ) Cumulative translation adjustment ( 161 ) 28 Other Comprehensive Loss ( 208 ) ( 15 ) Total Comprehensive Income $ 29,089 $ 23,109 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 6 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Operations (in thousands, except for share amounts, unaudited) For the Three Months Ended January 31, 2025 2024 Net Sales $ 116,914 $ 105,668 Cost of Goods Sold ( 82,466 ) ( 74,726 ) Gross Profit 34,448 30,942 Selling, General and Administrative Expenses ( 16,966 ) ( 15,777 ) Income from Operations 17,482 15,165 Other (Expense) Income Interest expense ( 606 ) ( 362 ) Interest income 86 297 Other, net ( 702 ) ( 418 ) Total Other Expense, Net ( 1,222 ) ( 483 ) Income Before Income Taxes 16,260 14,682 Income Tax Expense ( 3,339 ) ( 2,300 ) Net Income 12,921 12,382 Net Income Per Share Basic Common $ 0.95 $ 0.92 Basic Class B $ 0.72 $ 0.69 Diluted Common $ 0.89 $ 0.85 Diluted Class B $ 0.72 $ 0.69 Average Shares Outstanding Basic Common 9,895 9,766 Basic Class B 4,004 3,955 Diluted Common 13,899 13,721 Diluted Class B 4,004 3,955 Dividends Declared Per Share Basic Common $ 0.1550 $ 0.1450 Basic Class B $ 0.1165 $ 0.1090 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 7 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Comprehensive Income (in thousands, unaudited) For the Three Months Ended January 31, 2025 2024 Net Income Attributable to Oil-Dri $ 12,921 $ 12,382 Other Comprehensive (Loss) Income: Postretirement expenses (net of tax) ( 26 ) ( 24 ) Cumulative translation adjustment ( 140 ) 194 Other Comprehensive (Loss) Income ( 166 ) 170 Total Comprehensive Income $ 12,755 $ 12,552 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 8 OIL-DRI CORPORATION OF AMERICA Consolidated Statements of Stockholders' Equity (in thousands, except for share amounts, unaudited) For the Three Months Ended January 31 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 Total Stockholders’ Equity Balance, October 31, 2023 19,792,720 ( 5,192,154 ) $ 1,979 $ 55,900 $ 209,585 $ ( 82,111 ) $ 563 $ 185,916 Net Income (Loss) — — — — 12,382 — — 12,382 Other Comprehensive Income — — — — — — 170 170 Dividends Declared — — — — ( 1,972 ) — — ( 1,972 ) Purchases of Treasury Stock — ( 24,746 ) — — — ( 1,703 ) — ( 1,703 ) Net issuance of stock under long-term incentive plans 13,000 ( 5,525 ) 1 213 — ( 215 ) — ( 1 ) Amortization of Restricted Stock — — — 1,246 — — — 1,246 Balance, January 31, 2024 19,805,720 ( 5,222,425 ) $ 1,980 $ 57,359 $ 219,995 $ ( 84,029 ) $ 733 $ 196,038 Balance, October 31, 2024 19,865,970 ( 5,270,270 ) $ 1,986 $ 61,755 $ 246,525 $ ( 87,001 ) $ 727 $ 223,992 Net Income — — — — 12,921 — — 12,921 Other Comprehensive Loss — — — — — — ( 166 ) ( 166 ) Dividends Declared — — — — ( 2,097 ) — — ( 2,097 ) Purchases of Treasury Stock — ( 4,419 ) — — — ( 180 ) — ( 180 ) Net issuance of stock under long-term incentive plans 475 ( 1,283 ) 1 50 — ( 51 ) — — Amortization of Restricted Stock — — — 1,390 — — — 1,390 Balance, January 31, 2025 19,866,445 ( 5,275,972 ) $ 1,987 $ 63,195 $ 257,349 $ ( 87,232 ) $ 561 $ 235,860 For the Six Months Ended January 31 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 Total Stockholders' Equity Balance, July 31, 2023 19,610,720 ( 5,176,325 ) $ 1,961 $ 54,778 $ 200,796 $ ( 81,207 ) $ 748 $ 177,076 Net Income (Loss) — — — — 23,124 — — 23,124 Other Comprehensive Loss — — — — — — ( 15 ) ( 15 ) Dividends Declared — — — — ( 3,925 ) — — ( 3,925 ) Purchases of Treasury Stock — ( 40,075 ) — — — ( 2,575 ) — ( 2,575 ) Net issuance of stock under long-term incentive plans 195,000 ( 6,025 ) 19 227 — ( 247 ) — ( 1 ) Amortization of Restricted Stock — — — 2,354 — — — 2,354 Balance, January 31, 2024 19,805,720 ( 5,222,425 ) $ 1,980 $ 57,359 $ 219,995 $ ( 84,029 ) $ 733 $ 196,038 Balance, July 31, 2024 19,825,170 ( 5,230,529 ) $ 1,982 $ 60,031 $ 232,247 $ ( 84,441 ) $ 769 $ 210,588 Net Income — — — — 29,297 — — 29,297 Other Comprehensive Loss — — — — — — ( 208 ) ( 208 ) Dividends Declared — — — — ( 4,195 ) — — ( 4,195 ) Purchases of Treasury Stock — ( 33,421 ) — — — ( 2,164 ) — ( 2,164 ) Net issuance of stock under long-term incentive plans 41,275 ( 12,022 ) 5 622 — ( 627 ) — — Amortization of Restricted Stock — — — 2,542 — — — 2,542 Balance, January 31, 2025 19,866,445 ( 5,275,972 ) $ 1,987 $ 63,195 $ 257,349 $ ( 87,232 ) $ 561 $ 235,860 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 9 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) For the Six Months Ended January 31, CASH FLOWS FROM OPERATING ACTIVITIES 2025 2024 Net Income $ 29,297 $ 23,124 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,817 8,854 Non-cash stock-based compensation 2,542 2,354 Provision for bad debts and cash discounts 415 ( 16 ) Loss on impairment of patent applications 49 — Accretion of asset retirement obligation 95 105 Loss on the disposals of property, plant and equipment 95 141 (Increase) decrease in assets: Accounts receivable ( 4,424 ) ( 64 ) Inventories ( 1,394 ) ( 3,666 ) Prepaid expenses 1,019 ( 3,217 ) Deferred income taxes 110 381 Other assets 2,094 311 Increase (decrease) in liabilities: Accounts payable 1,989 ( 3,243 ) Accrued expenses ( 8,371 ) ( 7,582 ) Deferred compensation 289 911 Other liabilities ( 2,292 ) ( 448 ) Total Adjustments 3,033 ( 5,179 ) Net Cash Provided by Operating Activities 32,330 17,945 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 17,806 ) ( 15,546 ) Acquisition of a business ( 115 ) — Net Cash Used in Investing Activities ( 17,921 ) ( 15,546 ) CASH FLOWS FROM FINANCING ACTIVITIES Payments on revolving credit facility ( 10,000 ) — Dividends paid ( 4,194 ) ( 3,889 ) Purchases of treasury stock ( 2,164 ) ( 2,575 ) Net Cash Used in Financing Activities ( 16,358 ) ( 6,464 ) Effect of exchange rate changes on cash and cash equivalents 57 111 Net Decrease in Cash and Cash Equivalents ( 1,892 ) ( 3,954 ) Cash, Cash Equivalents and Restricted Cash, Beginning of Period 24,481 31,754 Cash and Cash Equivalents, End of Period $ 22,589 $ 27,800 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 10 OIL-DRI CORPORATION OF AMERICA Condensed Consolidated Statements of Cash Flows - Continued (in thousands, unaudited) For the Six Months Ended January 31, 2025 2024 Supplemental disclosures: Restricted Cash: Beginning balance $ 1,000 $ — Converted to unrestricted cash $ ( 885 ) $ — Final settlement of acquisition of Ultra Pet $ ( 115 ) $ — Ending balance $ — $ — Other cash flows: Interest payments, net of amounts capitalized $ 848 $ 545 Income tax payments, net of refunds 7,860 8,072 Non-cash investing and financing activities: Change in capital expenditures in accounts payable $ ( 2,781 ) $ ( 1,813 ) Change in capital expenditures in accrued expenses $ ( 5,024 ) $ ( 739 ) Cash dividends declared and accrued $ 2,097 $ 1,963 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 11 OIL-DRI CORPORATION OF AMERICA Notes To Condensed Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in compliance with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements and the related notes are condensed and should be read in conjunction with the Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024. The unaudited Condensed Consolidated Financial Statements include the accounts of Oil-Dri Corporation of America and its subsidiaries. All significant intercompany transactions are eliminated. Except as otherwise indicated herein or as the context otherwise requires, references to "Oil-Dri," the "Company," "we," "us" or "our" refer to Oil-Dri Corporation of America and its subsidiaries. The unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring accruals and reclassifications which are, in the opinion of management, necessary for a fair presentation of the statements contained herein. Operating results for the three and six months ended January 31, 2025 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. These immaterial reclassifications had no effect on the previously reported net income. Stock Split On October 9, 2024, we announced that our Board of Directors (our "Board") approved a two -for-one stock split in the form of a stock dividend. Stockholders of record as of the close of business on December 20, 2024 received a distribution of one additional share of Common Stock, par value $ 0.10 per share ("Common Stock"), for each share of Common Stock held by such stockholder and one additional share of Class B Stock, par value $ 0.10 per share ("Class B Stock"), for each share of Class B Stock held by such stockholder as of the record date. The additional shares were distributed on January 3, 2025, and our Common Stock began trading on a post-split basis on January 6, 2025. The stock split did not affect the par value of the Common Stock or Class B Stock, however, in order to implement the stock split, we amended our Certificate of Incorporation on December 11, 2024 to increase the number of authorized shares of Common Stock from 15 million to 30 million. Proportionate adjustments were made to the number of shares that remain available for issuance pursuant to the Amended and Restated Oil-Dri Corporation of America 2006 Long Term Incentive Plan, as amended (the "2006 Plan"), as well as to the outstanding awards under the 2006 Plan. Unless noted, all Common Stock and Class B Stock share and per share amounts contained in the unaudited Condensed Consolidated Financial Statements and management's discussion and analysis have been retroactively adjusted to reflect the stock split. The impact to the Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Stockholders' Equity herein was an increase of $ 0.8 million to Common Stock and Class B Stock, with an offsetting decrease in Additional Paid-In-Capital, which has been retroactively adjusted for all periods presented. The change in treasury shares reflects the stock split on shares held by wholly owned subsidiaries which are presented as treasury shares on a consolidated basis. Management Use of Estimates The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period, as well as the related disclosures. Estimates and assumptions about future events cannot be made with certainty. All our estimates and assumptions are revised periodically. Actual results could differ from these estimates. 12 Summary of Significant Accounting Policies Our significant accounting policies, which are summarized in detail in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024, have not materially changed. The following is a description of certain of our significant accounting policies: Trade Receivables. We recognize trade receivables when control of finished products is transferred to our customers. We record an allowance for credit losses based on our expectations and a periodic review of our accounts receivable, including a review of the overall aging of accounts, consideration of customer credit risk, and analysis of facts and circumstances about specific accounts. A customer account is determined to be uncollectible when it is probable that a loss will be incurred after we have completed our internal collection procedures, including termination of shipments, direct customer contact and formal demand of payment. We retain outside collection agencies to facilitate our collection efforts. 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. Property, plant and equipment includes depreciable assets such as building, machinery, equipment, furniture, vehicles, and capitalized spare parts. These assets are depreciated using the straight-line method over their estimated useful lives. Major improvements are capitalized, while maintenance and repairs that do not extend the useful life 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. These assets are carried at cost on the Condensed Consolidated Balance Sheet and are reviewed for possible impairment on an annual basis or when circumstances indicate that an asset may become 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. The composition of property, plant and equipment is as follows (in thousands): January 31, 2025 July 31, 2024 Gross property, plant and equipment $ 340,000 $ 333,561 Accumulated depreciation and amortization ( 202,584 ) ( 195,765 ) Total Property, Plant and Equipment, Net $ 137,416 $ 137,796 Land, Mining Property and Mineral Rights. We surface mine sorbent materials 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 (non-usable material) from the mine site, thus exposing the sorbent material used in a majority of our production processes. These stripping costs are treated as a variable inventory production cost and are included in cost of goods sold in the period they are incurred. We defer and amortize the pre-production overburden removal costs during the development phase associated with opening a new mine. 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 patents, including legal fees and drilling expenses, are also capitalized. Pre-production development costs on new mines and any prepaid royalties that may be offset against future royalties due upon extraction of the minerals are also capitalized. All exploration related costs are expensed as incurred. Reclamation. 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 respective mines. The reclamation liabilities are increased based on a yearly accretion charge over the estimated useful lives of the respective mines. 13 Leases. ASC 842, Leases , provides that a contract is, or contains, a lease if it conveys the right to control the use of an identified asset and, accordingly, a lease liability and a related right-of-use ("ROU") asset is recognized at the commencement date on our Condensed Consolidated Balance Sheet. As provided in ASC 842, we have elected not to apply these measurements 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 Condensed Consolidated Balance Sheet, and the related lease payments will be recognized in net earnings on a straight-line basis over the lease term. For leases other than short-term leases, the lease liability is equal to the present value of unpaid lease payments over the remaining lease term. The lease term may reflect options to extend or terminate the lease when it is reasonably certain that such options will be exercised. To determine the present value of the lease liability, we used an incremental borrowing rate, which is defined as the rate of interest we 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. The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After a ROU asset is impaired, any remaining balance of the ROU asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. After the lease commencement date, we evaluate lease modifications, if any, that could result in a change in the accounting for leases. Certain of our leases provide for variable lease payments that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time. Variable lease payments that are dependent on an index or rate (e.g., the Consumer Price Index) are included in the initial measurement of the lease liability and the ROU asset. Variable lease payments that are not known at the commencement date and are determinable based on the performance or use of the underlying asset, are expensed as incurred. Our variable lease payments primarily include common area maintenance charges based on the percentage of the total square footage leased and the usage of assets, such as photocopiers. 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. This policy was applied to all existing leases upon adoption of ASC 842 and will be applied to new leases on an ongoing basis. Revenue Recognition. 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. Control of the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. We have completed our performance obligation when control is transferred, and we recognize revenue accordingly. 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. We have an unconditional right to consideration under the payment terms specified in the contracts 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 $ 0.1 million as of January 31, 2025, and $ 0.2 million as of July 31, 2024. This liability is reported in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet. There was $ 0.2 million revenue recognized during the six months ended January 31, 2025, 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. We estimate and accrue the expected costs of these programs. These costs are considered variable consideration under ASC 606, Revenue from Contracts with Customers , and are netted against sales when revenue is recorded. The accruals are based on our best estimate of the amounts necessary to settle future and existing obligations on products sold as of the balance sheet date. To estimate these accruals, we rely on our historical experience of trade spending patterns and that of the industry, current trends and forecasted data. Selling, General and Administrative Expenses. Selling, general and administrative expenses ("SG&A") include salaries, wages and benefits associated with staff outside the manufacturing and distribution functions, all marketing related costs, any miscellaneous trade spending expenses not required to be included in net sales, research and development costs, depreciation and amortization related to assets outside the manufacturing and distribution process, and all other non-manufacturing and non-distribution expenses. Other Current and Noncurrent Liabilities. Other liabilities include the accruals for general expenses not yet paid, cash collected not yet vouchered, legal reserves, postretirement health benefit obligations, and reclamation liability accrual. Current 14 liabilities are due to be paid within the next 12 months. Other noncurrent liabilities on the unaudited Condensed Consolidated Balance Sheet include $ 4.9 million and $ 4.8 million for the reclamation liability as of January 31, 2025, and July 31, 2024, respectively, and $ 1.7 million for postretirement health benefit as of both January 31, 2025 and July 31, 2024. 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 . 2. EARNINGS PER SHARE We utilize the two-class method to report our earnings per share ("EPS"). The two-class method is an earnings allocation formula that determines EPS for each class of common stock according to dividends declared and participation rights in undistributed earnings. 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 EPS, the Company has allocated dividends declared to shares of Common Stock and Class B Stock based on amounts 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 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. 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 common stock. Diluted EPS for Common Stock is derived utilizing the most dilutive result of the if-converted, treasury stock and two-class methods. In our case, the if-converted method is more dilutive than the two-class method and because our unvested restricted stock participates in dividends and is therefore anti-dilutive the treasury stock method does not apply. For Class B Stock, diluted EPS is derived utilizing the two-class method since, as with our Common Stock, our unvested restricted stock participates in dividends and is therefore anti-dilutive, making the treasury stock method inapplicable. The reverse treasury stock method is also inapplicable to both classes as we have no obligation to repurchase our common stock. In both methods, diluted EPS is computed by dividing net earnings by the weighted-average number of shares and potential shares outstanding during the period, taking into consideration different potential shares outstanding based on the method used. Dilution for Common Stock takes into consideration the effect of both unvested restricted shares and convertible shares of Class B Stock, unless such shares are anti-dilutive, in which case they are not considered. Dilution for Class B Stock takes into consideration the effect of unvested restricted shares, unless such shares are anti-dilutive, in which case they are not considered. 15 Below is a reconciliation of the calculation of basic and diluted EPS. For the Six Months Ended January 31, 2025 For the Six Months Ended January 31, 2024 (in thousands, except for per share data) (in thousands, except for per share data) Total Common Class B Total Common Class B Net income $ 29,297 $ 22,316 $ 6,981 $ 23,124 $ 17,597 $ 5,527 Distributed and undistributed earnings on restricted shares ( 1,412 ) ( 926 ) ( 486 ) ( 1,339 ) ( 905 ) ( 434 ) Income available to stockholders $ 27,885 $ 21,390 $ 6,495 $ 21,785 $ 16,692 $ 5,093 Net Income (Numerator) $ 21,390 $ 6,495 $ 16,692 $ 5,093 Weighted Average Shares Outstanding (Denominator) 9,870 3,986 9,712 3,943 Basic EPS $ 2.17 $ 1.63 $ 1.72 $ 1.29 Effect of dilution - Net Income (1) $ 6,495 $ — $ 5,093 $ — Net income assuming dilution (Numerator) $ 27,885 $ 6,495 $ 21,785 $ 5,093 Effect of dilution - Shares (1) 3,986 $ — 3,943 $ — Shares assuming dilution (Denominator) 13,856 $ 3,986 13,655 $ 3,943 Diluted EPS $ 2.01 $ 1.63 $ 1.60 $ 1.29 (1) The impact of 254,192 unvested shares of Common Stock and 116,949 unvested shares of Class B Stock was anti-dilutive therefore not included in the calculation of diluted EPS for the six months ended January 31, 2025. The impact of 368,382 unvested shares of Common Stock and 93,487 unvested shares of Class B Stock was anti-dilutive, and therefore not included in the calculation of diluted EPS for the six months ended January 31, 2024. For the Three Months Ended January 31, 2025 For the Three Months Ended January 31, 2024 (in thousands, except for per share data) (in thousands, except for per share data) Total Common Class B Total Common Class B Net income $ 12,921 $ 9,855 $ 3,066 $ 12,382 $ 9,415 $ 2,967 Distributed and undistributed earnings on restricted shares ( 598 ) ( 406 ) ( 192 ) ( 698 ) ( 453 ) ( 245 ) Income available to stockholders $ 12,323 $ 9,449 $ 2,874 $ 11,684 $ 8,962 $ 2,722 Net Income (Numerator) $ 9,449 $ 2,874 $ 8,962 $ 2,722 Weighted Average Shares Outstanding (Denominator) 9,895 4,004 9,766 3,955 Basic EPS $ 0.95 $ 0.72 $ 0.92 $ 0.69 Effect of dilution - Net Income (1) $ 2,874 $ — $ 2,722 $ — Net income assuming dilution (Numerator) $ 12,323 $ 2,874 $ 11,684 $ 2,722 Effect of dilution - Shares (1) 4,004 $ — 3,955 $ — Shares assuming dilution (Denominator) 13,899 $ 4,004 13,721 $ 3,955 Diluted EPS $ 0.89 $ 0.72 $ 0.85 $ 0.69 (1) The impact of 250,151 unvested shares of Common Stock and 105,024 unvested shares of Class B Stock was anti-dilutive therefore not included in the calculation of diluted EPS for the three months ended January 31, 2025. The impact of 317,055 unvested shares of Common Stock and 78,349 unvested shares of Class B Stock was anti-dilutive, and therefore not included in the calculation of diluted EPS for the three months ended January 31, 2024. 3. INVENTORIES The composition of inventories is as follows (in thousands): January 31, 2025 July 31, 2024 Finished goods $ 32,795 $ 31,772 Packaging 8,261 8,995 Spare parts 6,892 7,059 Other 7,283 6,410 Total Inventories $ 55,231 $ 54,236 16 Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory costs include the cost of raw materials, packaging supplies, labor, and other overhead costs. The Company maintains reserves against inventory to reduce the carrying value to the expected net realizable value. These reserves are based upon a combination of factors including historical issues and market trends. Inventory reserves were $ 3.6 million and $ 3.8 million as of January 31, 2025 and July 31, 2024, respectively. 4. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized into categories based on the lowest level of input that is significant to the fair value measurement. The categories in the fair value hierarchy are as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs for similar assets or liabilities or valuation models whose inputs are observable, directly or indirectly. Level 3: Unobservable inputs. 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 Condensed Consolidated Balance Sheet. We had $ 0.9 million in cash equivalents as of January 31, 2025 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 January 31, 2025 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 $ 40.4 million and $ 51.1 million as of January 31, 2025 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 unaudited Condensed Consolidated Financial Statements for further information about such debt. We apply fair value techniques on at least an annual basis associated with: (1) valuing potential impairment loss related to goodwill, trademarks and other indefinite-lived intangible assets and (2) valuing potential impairment loss related to long-lived assets. See Note 5 of the Notes to the unaudited Condensed Consolidated Financial Statements for further information about goodwill and other intangible assets. 5. GOODWILL AND OTHER INTANGIBLE ASSETS 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 fiscal year 2025, we recognized a measurement period adjustment as a result of our acquisition of Ultra Pet, which increased our goodwill by $ 0.3 million. We amortize customer lists on a straight-line basis over a useful life of 18 years and patents on a straight-line basis over periods ranging from 11 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. 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. 17 6. ACCRUED EXPENSES Accrued expenses is as follows (in thousands): January 31, 2025 July 31, 2024 Salaries, Wages, Commissions and Employee Benefits $ 11,961 $ 20,711 Payables 7,797 11,586 Freight 4,578 2,928 Trade Promotions and Advertising 2,764 2,743 Taxes 1,067 1,736 Georgia Landfill Modification Reserve 840 1,208 Other 1,725 3,104 $ 30,732 $ 44,016 7. 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. 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 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 during fiscal year 2024. During fiscal year 2025, we increased the total estimated cost by $ 0.6 million resulting in a total $ 3.7 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. Consequently, it is reasonably possible that modification costs in excess of amounts accrued could have a material impact on the Company’s results of operations, financial condition and cash flows. 8. DEBT We are party to an Amended and Restated Note Purchase and Private Shelf Agreement (as amended, the "Note Agreement") with PGIM, Inc. ("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 (the "Series B Senior Notes"), of which $ 6 million aggregate principal amount remained outstanding as of January 31, 2025, (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 (the "Series C Senior Notes"), all of which remained outstanding as of January 31, 2025, 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 (the "Series D Senior Notes"), all of which remained outstanding as of January 31, 2025. 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 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. 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. On September 21, 2023, the Company entered into Amendment No. 4 to the Note Agreement extending the time frame for issuing and selling Shelf Notes to September 21, 2026 . 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 Credit Agreement provides for a $ 75 million unsecured revolving credit facility, including a maximum of $ 20 million for letters of credit. 18 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. 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: (i) 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; (ii) increase the aggregate maximum amount of letters of credit from up to $ 10 million to up to $ 20 million; (iii) 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; (iv) extend the termination date to September 30, 2029 ; and (v) 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 January 31, 2025, and July 31, 2024, we were in compliance with the restrictive covenants under the Credit Agreement. There were no new borrowings during the second quarter of fiscal year 2025; however, during the first half of fiscal year 2025 we elected to pay down $ 10 million of our borrowings under the Credit Agreement. As of January 31, 2025, we do not have any outstanding borrowings under the Credit Agreement. We had $ 2.9 million of letters of credit outstanding under the Credit Agreement as of both January 31, 2025 and July 31, 2024. The Credit Agreement states that we may select a variable interest rate based on either the Bank of Montreal ("BMO") prime rate or an adjusted Secured Overnight Financing ("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 January 31, 2025, the variable rates would have been 7.50 % for the BMO prime-based rate or 5.55 % for the adjusted SOFR-based rate. 9. LEASES 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. Certain of our leases for a shared warehouse and office facility, rail track and railcars have options to extend which we are reasonably certain we will exercise and, accordingly, have been considered in the lease term used to recognize our ROU assets and lease liabilities. 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 unaudited Condensed Consolidated Financial Statements. We have no material finance leases, and variable costs for operating leases are immaterial for the six months ended January 31, 2025. Operating lease costs are included in Cost of Goods Sold or SG&A expenses in the unaudited Condensed Consolidated Statements of Operations based on the nature of the lease. The following table summarizes total lease costs for our operating leases (in thousands): For the Three Months Ended January 31, For the Six Months Ended January 31, 2025 2024 2025 2024 Operating lease cost $ 1,369 $ 1,084 $ 2,739 $ 1,630 Short-term operating lease cost $ 347 $ 481 $ 707 $ 1,023 19 Supplemental cash flow information related to leases was as follows (in thousands): For the Three Months Ended January 31, For the Six Months Ended January 31, 2025 2024 2025 2024 Cash paid for amounts included in the measurement of operating lease liabilities: $ 1,150 $ 1,062 $ 2,286 $ 1,686 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ 3,699 $ — $ 3,699 Operating lease ROU assets and operating lease liabilities are separately presented on the unaudited Condensed Consolidated Balance Sheet, excluding leases with an initial term of twelve months or less. Other supplemental balance sheet information related to leases was as follows: January 31, 2025 July 31, 2024 Weighted-average remaining lease term - operating leases 5.1 years 5.4 years Weighted-average discount rate - operating leases 5.11 % 5.10 % Lease liability maturities as of January 31, 2025, are as follows (in thousands): Fiscal year 2025 (remaining six months) $ 2,681 Fiscal year 2026 4,724 Fiscal year 2027 3,758 Fiscal year 2028 2,948 Fiscal year 2029 2,356 Thereafter 3,478 Total 19,945 Less: imputed interest ( 2,327 ) Net lease obligation $ 17,618 10. OPERATING SEGMENTS We have two operating segments: (1) Retail and Wholesale Products Group and (2) Business to Business Products Group. The Retail and Wholesale Products Group is comprised of our Cat Litter and Industrial and Sports Products and the Business to Business Products Group is comprised of our Agricultural and Horticultural, Fluids Purification, and Animal Health & Nutrition Products.These operating segments are managed separately, and each segment's major customers have different characteristics. 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. The Business to Business Products Group customers include processors and refiners of edible oils, renewable diesel, petroleum-based oils and biodiesel fuel, manufacturers of animal feed and agricultural chemicals, and distributors of animal health and nutrition products. Our operating segments are also our reportable segments. The accounting policies of the segments are the same as those described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2024. 20 Net sales for our principal products by segment are as follows (in thousands): Business to Business Products Group Retail and Wholesale Products Group For the Six Months Ended January 31, Product 2025 2024 2025 2024 Cat Litter $ — $ — $ 130,913 $ 120,187 Industrial and Sports — — 22,115 $ 21,524 Agricultural and Horticultural 20,757 19,593 — — Fluids Purification 57,115 45,115 — $ — Animal Health & Nutrition 13,959 10,687 — — Net Sales $ 91,831 $ 75,395 $ 153,028 $ 141,711 Business to Business Products Group Retail and Wholesale Products Group For the Three Months Ended January 31, Product 2025 2024 2025 2024 Cat Litter $ — $ — $ 63,237 $ 59,326 Industrial and Sports — — 10,261 10,108 Agricultural and Horticultural 9,175 9,278 — — Fluids Purification 26,512 22,709 — — Animal Health & Nutrition 7,729 4,247 — — Net Sales $ 43,416 $ 36,234 $ 73,498 $ 69,434 We do not rely on any segment asset allocations, and we 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. 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. Assets January 31, 2025 July 31, 2024 (in thousands) Business to Business Products Group $ 99,096 $ 92,300 Retail and Wholesale Products Group 196,844 200,187 Unallocated Assets 57,807 62,118 Total Assets $ 353,747 $ 354,605 21 Net sales and operating income for each segment are provided below. 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 Six Months Ended January 31, Net Sales Income 2025 2024 2025 2024 (in thousands) Business to Business Products Group $ 91,831 $ 75,395 $ 31,432 $ 22,108 Retail and Wholesale Products Group 153,028 141,711 $ 24,705 23,208 Net Sales $ 244,859 $ 217,106 Corporate Expenses ( 17,465 ) ( 16,995 ) Income from Operations 38,672 28,321 Total Other Expenses, Net ( 2,210 ) ( 809 ) Income before Income Taxes 36,462 27,512 Income Tax Expense ( 7,165 ) ( 4,388 ) Net Income $ 29,297 $ 23,124 For the Three Months Ended January 31, Net Sales Income 2025 2024 2025 2024 (in thousands) Business to Business Products Group $ 43,416 $ 36,234 $ 14,322 $ 10,985 Retail and Wholesale Products Group 73,498 69,434 11,328 11,877 Net Sales $ 116,914 $ 105,668 Corporate Expenses ( 8,168 ) ( 7,697 ) Income from Operations 17,482 15,165 Total Other Expenses, Net ( 1,222 ) ( 483 ) Income before Income Taxes 16,260 14,682 Income Tax Expense ( 3,339 ) ( 2,300 ) Net Income $ 12,921 $ 12,382 11. STOCK-BASED COMPENSATION The 2006 Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash-based awards. Our employees and outside directors are eligible to receive grants under the 2006 Plan. The total number of shares of stock subject to grants under the 2006 Plan may not exceed 3,439,000 . As of January 31, 2025, there were 1,126,883 shares of Common Stock or Class B Stock available for future grants under this plan. Restricted Stock All of our non-vested restricted shares as of January 31, 2025 were issued under the 2006 Plan with vesting periods generally between one and five years . We determined the fair value of restricted shares 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 82,550 and 140,000 restricted shares of Common Stock granted during the six months ended January 31, 2025 and 2024, respectively. There were no restricted shares of Class B Stock granted during the six months ended January 31, 2025 and 250,000 restricted shares of Class B Stock granted during the six months ended January 31, 2024. Stock-based compensation 22 expense was $ 1.1 million and $ 1.0 million for the three months ended January 31, 2025 and 2024, respectively, and $ 1.9 million and $ 1.8 million for the six months ended January 31, 2025 and 2024, respectively. A summary of restricted stock transactions is shown below: Restricted Shares (in thousands) Weighted Average Grant Date Fair Value (per share) Non-vested restricted stock outstanding at July 31, 2024 795 $ 24.82 Granted 83 $ 34.33 Vested ( 172 ) $ 19.98 Forfeitures ( 23 ) $ 27.24 Non-vested restricted stock outstanding at January 31, 2025 683 $ 27.10 12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in accumulated other comprehensive income (loss) by component as of January 31, 2025 (in thousands): Postretirement Health Benefits Cumulative Translation Adjustment Total Accumulated Other Comprehensive Income (Loss) Balance as of July 31, 2024 $ 1,076 $ ( 307 ) $ 769 Other comprehensive income before reclassifications, net of tax — ( 161 ) ( 161 ) Amounts reclassified from accumulated other comprehensive income, net of tax ( 47 ) — ( 47 ) Net current-period other comprehensive (loss) income, net of tax ( 47 ) ( 161 ) ( 208 ) Balance as of January 31, 2025 $ 1,029 $ ( 468 ) $ 561 13. RELATED PARTY TRANSACTIONS 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 $ 0.2 million and $ 0.4 million for the three months ended January 31, 2025 and January 31, 2024, respectively, and $ 0.5 million for the first six months of both fiscal years 2025 and 2024. There were no outstanding accounts payable due to that vendor as of January 31, 2025 and $ 0.1 million in outstanding accounts payable due as of 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 three months ended January 31, 2025. There were no sales to that customer for the three months ended January 31, 2024. Total sales to that customer, including sales to its subsidiaries, were $ 0.2 million and $ 0.1 million for the first six months of fiscal years 2025 and 2024, respectively. There were no outstanding amounts due from that customer as of either January 31, 2025 or July 31, 2024. 23