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Item 7. Management’s Discussion and Analysis

2025-10-09 compared with 2024-10-10 · 152 added, 173 removed, 92 unchanged (78% of the section changed)

11 unchanged sentences

Additional detailed descriptions of the operating segments are included in Item 1 “Business” above.

On October 9, 2024, the Company announced that 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 for each share of Common Stock held by such stockholder and one additional share of 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.

RESULTS OF OPERATIONS

Oil-Dri experienced another record-breaking year with consolidated net sales, gross profit and net income reaching an all-time high.

Record revenues were achieved across both operating segments driven primarily by cat litter sales within the Retail and Wholesale Product Group segment and fluid purification product sales in our Business to Business Product Group segment.

Within the Retail and Wholesale group growth from our existing products due to higher prices was further supplemented with the acquisition of Ultra Pet in the fourth quarter and the sales of silica-gel crystal cat litter.

Within the Business to Business Products Group, revenue growth was driven by higher prices coupled with increased volumes of our fluid purification products.

Despite higher per ton cost of goods sold and SG&A expenses our gross margin and consolidated income from operations increased in fiscal year 2024 when compared to fiscal year 2023.

Consolidated net income for fiscal year 2024 was $39.4 million, or $5.43 per diluted common share, a 33% increase compared to $29.6 million, or $4.13 per diluted common share in fiscal year 2023.

Driven primarily by the increase in operating income as well as fewer non-recurring transactions when compared to fiscal year 2023, offset by higher tax expense.

Fiscal year 2023 was impacted by the $2.5 million reserve for the Georgia landfill modification costs and the $4.7 million charge in connection with the termination of the Company's pension plan.

Refer to Notes 9 and 12 of the Consolidated Financial Statements for additional details.

Our Consolidated Balance Sheets as of July 31, 2024, and our Consolidated Statements of Cash Flows for the fiscal year 2024 show an decrease in total cash and cash equivalents from fiscal year-end 2023.

The decrease is mainly due to cash used in the acquisition of Ultra Pet, net of cash proceeds for financing the acquisition, and capital expenditures, off-set by improved net income.

Refer to the "Liquidity and Capital Resources" section below.

R ESULTS O F O PERATIONS

F ISCAL Y EAR 2025 C OMPARED T O F ISCAL Y EAR 2024

OVERVIEW & CONSOLIDATED RESULTS

For the Year Ended July 31,

(in thousands)

Consolidated Results

Consolidated net sales in fiscal year 2024 reached an all-time high of $437.6 million, a 6% increase from net sales of $413.0 million in fiscal year 2023.

Net sales increased for both our Retail and Wholesale and Business to Business Products Groups, primarily due to higher price increases implemented across both product groups, stronger sales volumes of fluid purification products, and new business from the Ultra Pet acquisition.

Consolidated gross profit in fiscal year 2024 was $125.1 million, an increase of $21.9 million, or 21%, from gross profit of $103.2 million in the prior fiscal year.

Our gross margin (defined as gross profit as a percentage of net sales) in fiscal year 2024 increased to 29% from 25% in fiscal year 2023.

Our domestic cost of goods sold per ton increased 6%, driven

primarily by per ton increases in non-fuel manufacturing and freight, offset by lower per ton natural gas and packaging costs.

Non-fuel manufacturing costs per ton increased 8% during fiscal year 2024 compared to fiscal year 2023, mainly due to higher per ton costs of labor and depreciation.

Domestic freight costs per ton increased approximately 10% in fiscal year 2024 compared to fiscal year 2023, driven primarily by the impact of a significant customer in our cat litter business that altered shipping terms in January 2023 from collect to delivered as well as the higher per ton freight cost of our crystal cat litter products.

Excluding the impact of these two factors, per ton domestic freight costs would have remained flat year over year.

Ocean freight costs have also decreased due to both lower rates and export fees.

However, our overall freight costs can vary between periods depending on the mix of products sold and the geographic distribution of our customers.

Per ton cost of natural gas decreased 28% in fiscal year 2024 compared to fiscal year 2023 due to natural gas prices.

Packaging costs per ton decreased by approximately 1% in fiscal year 2024 compared to fiscal year 2023 due to lower commodity costs, particularly as it relates to resin and pallet costs.

Many of our contracts for packaging purchases are subject to periodic price adjustments, which trail changes in underlying commodity prices.

Total selling, general and administrative expenses ("SG&A") increased 18% in fiscal year 2024 compared to fiscal year 2023.

Unallocated corporate expenses increased by $7.3 million, or 24%, driven by mainly by higher anticipated compensation costs including increased performance-based incentives and acquisition and integration related expenses incurred in the current year.

Additional expenses related to the integration of Ultra Pet are expected to be incurred in the first quarter of fiscal year 2025.

The discussion of the segments' operating incomes below describes the changes in SG&A expenses that were allocated to the operating segments.

Total other expenses, net were $2.0 million for fiscal year 2024, down $4.4 million compared to $6.4 million in fiscal year 2023.

This was mostly driven by higher non-recurring transactions in fiscal year 2023 due to the $4.7 million loss on pension termination and the $2.5 million reserve recorded for anticipated landfill capacity modification costs, offset by higher foreign exchange losses in fiscal year 2024.

$ 485,572 $ 437,587 $ 47,985 11%

$ 143,083 $ 125,094 $ 17,989 14%

Operating Income

$ 68,220 $ 51,645 $ 16,575 32%

$ 53,996 $ 39,426 $ 14,570 37%

Business to Business

$ 182,596 $ 150,471 $ 32,125 21%

Operating Income

$ 59,796 $ 45,589 $ 14,207 31%

Retail & Wholesale

$ 302,976 $ 287,116 $ 15,860 6%

Operating Income

$ 44,137 $ 43,804 $ 333 1%

Oil-Dri experienced another record-breaking year with consolidated net sales, gross profit and net income reaching all-time highs.

Consolidated net sales in fiscal year 2025 were $485.6 million, an 11% increase from net sales of $437.6 million in fiscal year 2024.

Record revenues were recognized by both operating segments, with net sales growth across all principal product groups.

Net sales for the Business to Business Products Group grew primarily due to fluids purification products used in the renewable diesel business and higher sales from agricultural and horticultural products.

Net sales for the Retail and Wholesale Products Group increased primarily due to the introduction of silica-gel crystal cat litter as a result of the acquisition of Ultra Pet in May 2024.

Despite higher cost of goods sold and selling, general and administrative expenses ("SG&A"), our gross profit and consolidated income from operations increased in fiscal year 2025 when compared to fiscal year 2024.

Consolidated gross profit in fiscal year 2025 was $143.1 million, an increase of $18.0 million, or 14%, from consolidated gross profit of $125.1 million in the prior fiscal year.

Gross margin (defined as gross profit as a percentage of net sales) of 29.5% in fiscal year 2025 increased from 28.6% in fiscal year 2024.

Cost of goods sold increased $30.0 million, or 10% in fiscal year 2025 compared to fiscal year 2024, primarily due to domestic per ton cost of goods sold which increased 5% compared to fiscal year 2024.

This increase was primarily driven by our product mix which resulted in higher overall per ton material and transportation costs, which increased 7% and 5%, respectively.

These increases were slightly offset by a 3% decrease in packaging costs for fiscal year 2025, compared to fiscal year 2024.

Total SG&A increased $1.4 million, or 2% in fiscal year 2025 compared to fiscal year 2024.

The increase was primarily driven by operating segment SG&A, which increased by $3.4 million, partially offset by a $2.0 million reduction in corporate unallocated expenses.

SG&A expenses at the operating segments level are discussed below in the discussion of our segments' operating income.

The decrease in corporate unallocated fiscal year 2025, was primarily due to a decrease in acquisition-related expenses compared to fiscal year 2024.

Total other expenses, net for fiscal year 2025 remained flat compared to fiscal year 2024 at $2.0 million.

Tax expense for fiscal year 2025 was $12.2 million with an effective tax rate of 18% compared to $10.2 million with an effective tax rate of 21% in fiscal year 2024.

The increase in tax expense was driven by higher book income.

The increase in tax expense was driven by higher net income.

Favorable return to provision adjustments for returns filed in 2025 drove a decrease in the 2025 effective tax rate.

Tax credits and a change in timing of deductions drove the lower 2024 tax return rate.

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

Consolidated net income for fiscal year 2025 was $54.0 million, or $3.70 per share of diluted Common Stock, compared to $39.4 million, or $2.72 per share of diluted Common Stock in fiscal year 2024.

This increase was primarily due to the increase in net sales which more than offset the increase in operating expenses, interest expenses and income tax.

Our Consolidated Balance Sheets as of July 31, 2025, and our Consolidated Statements of Cash Flows for fiscal year 2025 show an increase in total cash and cash equivalents from fiscal year-end 2024.

The increase is mainly due to cash flows from operating activities.

Refer to the "Liquidity and Capital Resources" section below for additional information about our cash and cash equivalents.

BUSINESS TO BUSINESS PRODUCTS GROUP

Net sales of the Business to Business Products Group for fiscal year 2024 were $150.5 million, an increase of $8.1 million, or 6%, from net sales of $142.4 million in fiscal year 2023, driven by sales of our fluid purification products.

Net sales of fluids purification products increased approximately $14.8 million or 19% in fiscal year 2024 compared with the prior year.

The increase was primarily driven by new customers in the renewable diesel business in North America, as well as continued demand for our products used in the filtration of edible oil and jet-fuel, and to a lesser extent higher prices.

Net sales increased in North America, our subsidiary in the UK, the Asia and the Europe, Middle East and Africa ("EMEA") regions, partially offset by a decrease in Latin America.

Net sales of our animal health and nutrition products remained flat in fiscal year 2024 compared to the fiscal year 2023.

Higher net sales in Latin America and North America were offset by softer sales in Asia and by our subsidiary in Mexico.

Latin America sales grew due to stronger demand while North American sales rose due to a combination of higher prices and favorable mix.

Net sales of our agricultural and horticultural chemical carrier products decreased approximately $6.7 million, or 17%, for fiscal year 2024 compared to fiscal year 2023 as a result of softer volumes offset partially by higher prices.

This decline in volume was primarily due to reduced demand from a key customer that was still working through inventory from last year.

See “Foreign Operations” below for a discussion of net sales for our foreign operations that sell our fluid purification and animal health and nutrition products.

SG&A expenses for the Business to Business Products Group increased approximately $0.3 million, or 2%, for fiscal year 2024 compared to the prior fiscal year.

The majority of the increase relates to higher compensation related expenses and research and development costs, offset by a reduction in technical service support costs from the research and development center and Microbiology Lab.

The Business to Business Products Group’s operating income for fiscal year 2024 was $45.6 million, an increase of $7.9 million, or 21%, from operating income of $37.7 million for fiscal year 2023.

The increase in operating income was mostly driven by higher net sales of our fluid purification products as discussed above.

(in thousands)

For the Year Ended July 31,

Business to Business Products Group 2025 2024 $ Change

Agricultural and Horticultural $ 44,338 $ 33,558 $ 10,780 32 %

Fluids Purification 110,105 92,464 17,641 19 %

Animal Health & Nutrition

28,153 24,449 3,704 15 %

Net Sales $ 182,596 $ 150,471 $ 32,125 21 %

Cost of Goods Sold $ (106,691) $ (89,789) (16,902) 19 %

Gross Profit $ 75,905 $ 60,682 $ 15,223 25 %

SG&A $ (16,109) $ (15,093) (1,016) 7 %

Operating Income $ 59,796 $ 45,589 $ 14,207 31 %

Net sales of the Business to Business Products Group for fiscal year 2025 were $182.6 million, an increase of $32.1 million, or 21%, from net sales of $150.5 million in fiscal year 2024, driven primarily by sales of our fluids purification products and, to a lesser extent, agricultural and animal health products.

Net sales of fluids purification products increased $17.6 million or 19% in fiscal year 2025 compared with fiscal year 2024, driven primarily by the increase in demand for our products used in renewable diesel filtration.

Net sales of our agricultural and horticultural chemical carrier products increased $10.8 million, or 32%, for fiscal year 2025 compared to fiscal year 2024 mainly as a result of stronger demand, primarily as key customers resumed purchasing after working through inventory surpluses.

Net sales of our animal health and nutrition products increased $3.7 million, or 15%, in fiscal year 2025 compared to the fiscal year 2024, primarily due to higher sales volumes.

Gross profit and operating income increased in fiscal year 2025 compared to fiscal year 2024, despite higher cost of goods sold and SG&A expenses.

Cost of goods sold increased 16.9 million, or 19%, mainly due to per ton cost of goods sold which increased 5% in the fiscal year 2025 compared to fiscal year 2024.

This increase was primarily due to higher transportation costs.

SG&A expenses for the Business to Business Products Group increased $1.0 million, or 7%, for fiscal year 2025 compared to fiscal year 2024.

The increase was mainly driven by higher research and development costs and a foreign value-added tax ("VAT") assessment, partially offset by cost reductions across other general and administrative expenses.

RETAIL AND WHOLESALE PRODUCTS GROUP

Net sales of the Retail and Wholesale Products Group for fiscal year 2024 were $287.1 million, an increase of $16.5 million, or 6%, from net sales of $270.6 million in fiscal year 2023 driven by increases of both our cat litter and industrial and sport products.

Total cat litter net sales increased $15.5 million, or 7%, compared to the prior fiscal year driven mostly by higher prices.

Domestic cat litter net sales were $212.8 million, an increase of $16.4 million from fiscal year 2023 due primarily to higher prices and the incremental sales of crystal cat litter in the fourth quarter.

This was supplemented by increases in organic volume growth of both our branded lightweight and branded coarse litters offset by softer volumes of our private label clay-based offerings.

Net sales of co-packaged products decreased by approximately $0.7 million compared to fiscal year 2023, mainly due to softer volumes which were partially driven by the cyberattack on one of our customers in the first quarter of fiscal year 2024.

Net sales of our global industrial and sports products increased by approximately $0.9 million, or 2%, compared to fiscal year 2023, primarily driven by higher prices implemented to continue to rebuild margins.

Net sales by our subsidiary in Canada increased period over period, as discussed in "Foreign Operations" below.

SG&A expenses for the Retail and Wholesale Products Group were $3.5 million, or 21%, higher during fiscal year 2024 compared to fiscal year 2023 due primarily to higher advertising costs, compensation, and the amortization of the customer list acquired through the purchase of Ultra Pet.

Advertising spend is expected to be lower in fiscal year 2025 compared to fiscal year 2024.

The Retail and Wholesale Products Group’s segment operating income for fiscal year 2024 was $43.8 million, an increase of $10.0 million or 30%, from operating income of $33.8 million in fiscal year 2023.

This was driven primarily by the increase in gross margins due to higher price on existing products and incremental sales of crystal cat litter, partially offset by higher cost of goods sold.

(in thousands)

For the Year Ended July 31,

Retail and Wholesale Products Group 2025 2024 $ Change % Change

Cat Litter $ 255,926 $ 241,884 $ 14,042 6 %

Industrial and Sports 47,050 45,232 1,818 4 %

Net Sales $ 302,976 $ 287,116 $ 15,860 6 %

Cost of Goods Sold $ (235,798) $ (222,704) $ (13,094) 6 %

Gross Profit $ 67,178 $ 64,412 $ 2,766 4 %

SG&A $ (23,041) $ (20,608) $ (2,433) 12 %

Operating Income $ 44,137 $ 43,804 $ 333 1 %

Net sales of the Retail and Wholesale Products Group for fiscal year 2025 were $303.0 million, an increase of $15.9 million, or 6%, from net sales of $287.1 million in fiscal year 2024, primarily driven by sales of our cat litter products.

Domestic cat litter net sales, excluding co-packaged cat litter, were $225.9 million for fiscal year 2025, an increase of $13.1 million, or 6%, when compared to fiscal year 2024.

Crystal cat litter sales represented $14.9 million of the increase, partially offset by a net decrease in clay-based litter.

$3.7 million of the decrease was due to the loss of a private label account and $3.2 million due to customer bankruptcies.

These losses were offset by other revenue gains within coarse and branded light-weight cat litter products due to new distribution with both existing and new customers.

Net sales of co-packaged products increased by $0.9 million in fiscal year 2025 compared to fiscal year 2024, mainly due to higher prices.

Net sales of our domestic industrial and sports products increased by $1.9 million, or 4%, compared to fiscal year 2024, primarily driven by higher pricing to offset elevated costs.

Net sales by our subsidiary in Canada remained flat in fiscal year 2025 compared to fiscal year 2024.

Gross profit and operating income increased in fiscal year 2025 compared to fiscal year 2024, despite higher cost of goods sold and SG&A expenses.

Cost of goods sold increased $13.1 million, or 6%, driven by the per ton cost of good sold which increased 5% in the fiscal year 2025 compared to fiscal year 2024.

This increase was primarily due to product mix.

SG&A expenses for the Retail and Wholesale Products Group increased $2.4 million in fiscal year 2025 compared to fiscal year 2024, primarily due to incremental SG&A expenses related to the recently acquired crystal cat litter business.

These elevated costs were partially offset by lower advertising expenses compared to fiscal year 2024.

FOREIGN SUBSIDIARIES

Foreign operations include our subsidiary in Canada and Netherlands, which is included in the Retail and Wholesale Products Group, and our subsidiaries in the United Kingdom, China, Mexico and Indonesia, which are included in the Business to Business Products Group.

Foreign operations include our subsidiaries in Canada and the Netherlands, which are included in the Retail and Wholesale Products Group, and our subsidiaries in the United Kingdom, China, Mexico and Indonesia, which are included in the Business to Business Products Group.

Net sales by our foreign subsidiaries during fiscal year 2025 were $20.1 million, a decrease of $0.9 million, or 4%, from net sales of $21.0 million during fiscal year 2024.

The decrease in net sales was driven mainly by our subsidiaries in China, Mexico, and Indonesia, offset by increases in UK and Canada.

Net sales of our subsidiary in China decreased $1.0 million, or 38%, during fiscal year 2024 compared to fiscal year 2023 primarily due to the sale of all existing inventory to the new master distributor, which occurred in the first quarter of fiscal year 2024.

Beginning January 2023, sales to China went directly through the Company and not through our subsidiary in China.

Net sales of our subsidiary in Mexico decreased $0.8 million, or 32% during fiscal year 2024 compared to fiscal year 2023.

Net sales of our subsidiary in the United Kingdom in fiscal year 2024 increased by $0.7 million, or 26%, compared to net sales in fiscal year 2023.

The increase is driven by an increase in both volume and prices.

Total net sales of our subsidiary in Canada during fiscal year 2024 increased by $0.2 million, or 1%, compared to fiscal year 2023, driven by higher prices in our industrial product sales offset by softer cat litter sales.

Net sales by our foreign subsidiaries represented 5% of our consolidated net sales in fiscal years 2024 and 2023.

For fiscal year 2024, our foreign subsidiaries reported a pre-tax net income of $0.7 million, compared to $1.0 million in fiscal year 2023.

The decrease in 2024 was mainly driven by lower sales in China as we moved to selling to a master distributor directly through the Company and not through our subsidiary, offset by higher income in Canada and the UK as discussed above.

The decrease in net sales was driven mainly by our subsidiary in China offset by increases in Mexico and the United Kingdom.

Net sales of our subsidiary in China decreased $1.7 million, or 100%, during fiscal year 2025 compared to fiscal year 2024 primarily due to the sale of all existing

inventory to a new master distributor in the first quarter of fiscal year 2024.

Beginning in January 2023, sales to China went directly through Oil-Dri Corporation of America and not through our subsidiary in China.

Net sales of our subsidiary in Mexico increased $0.5 million, or 27% during fiscal year 2025 compared to fiscal year 2024, due to higher volume.

Net sales of our subsidiary in the United Kingdom in fiscal year 2025 increased by $0.4 million, or 13%, compared to net sales in fiscal year 2024, driven by higher prices.

Total net sales of our subsidiary in Canada during fiscal year 2025 remained flat compared to fiscal year 2024.

Net sales by our foreign subsidiaries represented 4% of our consolidated net sales in fiscal year 2025, and 5% of consolidated net sales in fiscal year 2024.

For fiscal year 2025, our foreign subsidiaries reported a pre-tax net loss of $0.1 million, compared to $0.7 million of net income in fiscal year 2024.

The decrease in net income was primarily driven by the foreign VAT assessment.

Identifiable assets of our foreign subsidiaries as of July 31, 2025, were $9.0 million compared to $8.7 million as of July 31, 2024.

F ISCAL Y EAR 2024 C OMPARED T O F ISCAL Y EAR 2023

For a discussion of our fiscal year 2023 Results of Operations, including a discussion of our financial results for the fiscal year ended July 31, 2024 compared to the fiscal year ended July 31, 2023, refer to Part I, Item 7 of our annual report on Form 10-K filed with the SEC on October 10, 2024.

L IQUIDITY AND C APITAL R ESOURCES

Our principal short and long-term capital requirements include:

funding working capital needs;

Our principal liquidity needs are to fund our capital requirements, including funding working capital needs;

purchasing and upgrading equipment, facilities, information systems, and real estate;

supporting new product development;

spending on marketing and advertising costs;

investing in infrastructure;

1 unchanged sentence

paying dividends;

and, from time to time, business acquisitions.

During fiscal year 2024, we principally funded these short and long-term capital requirements using cash from current operations and additional debt to fund a portion of the acquisition of Ultra Pet.

Cash and cash equivalents totaled $23.5 million and $31.8 million as of July 31, 2024 and 2023, respectively.

We currently anticipate cash flows from operations and our available sources of liquidity will be sufficient to meet our cash requirements.

In addition, we are actively monitoring the timing and collection of our accounts receivable.

Given the current inflationary environment and impacts of supply chain disruption on our business, we continuously assess our liquidity needs and to actively manage our spending.

and, from time to time, business acquisitions and funding our debt service requirements.

During fiscal year 2025, we principally funded these short and long-term capital requirements using cash from current operations as well as cash generated from previous borrowings under our Credit Agreement and the Series B, C and D Senior Notes issued under the Note Agreement.

On September 30, 2024, we amended the Credit Agreement to, among other things, increase our line of credit from $45 million to $75 million, providing more financial flexibility.

See Note 4 of the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K for further information relating to our existing borrowings.

We believe that cash flow from operations, availability under our Note Agreement and revolving credit facility under our Credit Agreement, current cash balances and our ability to obtain other financing, if necessary, will provide sufficient liquidity for foreseeable working capital needs, capital expenditures at existing facilities, deferred compensation payouts, dividend payments and debt service obligations for the foreseeable future.

We continually evaluate our liquidity position and anticipated cash needs, as well as the financing options available to obtain additional cash reserves.

Our ability to fund operations, to make planned capital expenditures, to make scheduled debt payments and to remain in compliance with all financial covenants under debt agreements, including, but not limited to, the Credit Agreement, depends on our future operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors.

The timing and size of any new business ventures or acquisitions that we complete may also impact our cash requirements.

Cash and cash equivalents, including restricted cash, totaled $50.5 million and $24.5 million as of July 31, 2025, and 2024, respectively.

The following table sets forth certain elements of our Consolidated Statements of Cash Flows for the fiscal year (in thousands):

1 unchanged sentence

Net cash used in investing activities (32,526) (76,116)

Net cash provided by (used in) financing activities

8,326 (9,518)

Net cash (used in) provided by financing activities (21,744) 8,326

Effect of exchange rate changes on cash and cash equivalents 64 204

Net (decrease) increase in cash and cash equivalents $ (7,273) $ 15,456

Net increase (decrease) in cash and cash equivalents $ 25,977 $ (7,273)

Net cash provided by operating activities

In addition to net income, as adjusted for depreciation and amortization and other non-cash operating activities, the primary sources and uses of operating cash flow for fiscal year 2025 were as follows:

Excluding the impact of accounts receivable acquired through the purchase of Ultra Pet, accounts receivables, less allowance for credit losses and cash discounts, were $1.5 million lower at fiscal year-end 2024 compared to fiscal year-end 2023.

Accounts receivables, less allowance for credit losses and cash discounts, were $7.8 million higher at fiscal year-end 2025 compared to fiscal year-end 2024.

The variation in accounts receivable balances reflects differences in the level and timing of collections as well as the payment terms provided to various customers.

Excluding the impact of inventory acquired through the purchase of Ultra Pet, inventories were $4.7 million higher at fiscal year-end 2024 compared to fiscal year-end 2023.

The increase is primarily due to rising costs and building inventory levels to meet expected future demand.

During fiscal year 2024 we have continued to manage inventory balances primarily focusing on building finished goods inventory offset by decreases in packaging and other through strategic supply chain management.

Inventories were $2.3 million lower at fiscal year-end 2025 compared to fiscal year-end 2024.

The decrease is primarily due to timing and scheduled plant outages for maintenance in the fourth quarter of fiscal year 2025.

See Note 1 of the Notes to the Consolidated Financial Statements for further information regarding our inventory.

Excluding the impact of prepaid assets acquired through the purchase of Ultra Pet, prepaid expenses were $2.4 million higher at fiscal year-end 2024 compared to fiscal year-end 2023 driven primarily by an increase in prepaid tax and insurance expenses.

Excluding the impact of accounts payable acquired through the purchase of Ultra Pet, accounts payable were $2.8 million lower at fiscal year-end 2024 compared to fiscal year-end 2023.

The decrease is due to higher trade payables mainly due to timing.

Excluding the impact of payments related to capital expenditures, accounts payable were $0.9 million higher at fiscal year-end 2025 compared to fiscal year-end 2024.

The increase is due to higher trade payables mainly due to timing.

Changes in trade accounts payable in all periods are subject to normal fluctuations in the timing of payments, the cost of goods and services we purchased, production volume levels and vendor payment terms.

Excluding the impact of accrued expenses acquired through the purchase of Ultra Pet, accrued expenses were $2.4 million higher at fiscal year-end 2024 compared to fiscal year-end 2023.

The increase in accrued expenses during the fiscal year 2024 was driven by higher compensation-related expenses, higher advertising expense accruals, and accrued payables.

In fiscal year 2025, there was a $0.9 million increase in accounts payable related to capital expenditures which reduced the cash used in investing activities as compared to fiscal year 2024.

Excluding the impact of payments related to capital expenditures, accrued expenses were $2.4 million higher at fiscal year-end 2025 compared to fiscal year-end 2024.

The increase in accrued expenses during fiscal year 2025 was driven by higher accrued payables, accrued taxes, and trade promotions and advertising accruals, which fluctuate due to timing, cost of goods and services, and payment terms.

In fiscal year 2025, there was a $1.6 million decrease in accrued expenses related to capital expenditures recognized as cash used in investing activities as compared to the fiscal year 2024.

See Note 10 of the Notes to the Consolidated Financial Statements for further information regarding our accrued expenses.

Net cash used in investing activities

Cash used in investing activities was $32.5 million in fiscal year 2025.

Cash used in investing activities primarily related to the acquisition of Ultra Pet and capital expenditures to expand our plant equipment and improve our facilities in order to support increased demand for our products.

Net cash provided by (used in) financing activities

Cash provided by financing activities was $8.3 million in fiscal year 2024, which was driven by a $10 million advance under the Credit Agreement, and the issuance of $10 million in aggregate principal amount Series D Senior Notes.

This increase in cash was offset by payments for dividends, stock repurchases and debt repayments.

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

Total cash and investment balances held by our foreign subsidiaries as of July 31, 2024 and 2023 were $4.5 and $5.2 million, respectively.

See further discussion in the “Foreign Operations” section above.

As of July 31, 2024, we had remaining authority to repurchase 379,925 shares of Common Stock and 262,092 shares of Class B Stock under a repurchase plan approved by our Board of Directors.

Cash used in investing activities primarily related to capital expenditures to expand our plant equipment and improve our facilities in order to support increased demand for our products.

Net cash used in financing activities

Cash used in financing activities was $21.7 million in fiscal year 2025, primarily driven by $11 million in payment of our debt, including the full repayment of the borrowings under the Credit Agreement, as well as $8.4 million used for dividend payments and $2.3 million used for share repurchases.

Total cash and investment balances held by our foreign subsidiaries were $4.7 million as of July 31, 2025, and $4.5 million as of July 31, 2024.

See further discussion in the “Foreign Subsidiaries” section above.

As of July 31, 2025, we had remaining authority to repurchase 360,946 shares of Common Stock and 244,113 shares of Class B Stock under a repurchase plan approved by our Board.

Repurchases may be made on the open market (pursuant to Rule 10b5-1 plans or otherwise) or in negotiated transactions.

The timing and number of shares repurchased will be determined by our management pursuant to the repurchase plan approved by our Board of Directors.

The timing and number of shares repurchased will be determined by our management pursuant to the repurchase plan approved by our Board.

In fiscal years 2025 and 2024, we made repurchases of stock as further discussed in Item 5 "Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities."

We believe that cash flow from operations, availability under our revolving credit facility, current cash balances and our ability to obtain other financing, if necessary, will provide adequate cash funds for foreseeable working capital needs, capital expenditures at existing facilities, deferred compensation payouts, dividend payments and debt service obligations for at least the next 12 months.

We continually evaluate our liquidity position and anticipated cash needs, as well as the financing options available to obtain additional cash reserves.

Our ability to fund operations, to make planned capital expenditures, to make scheduled debt payments, and to remain in compliance with all financial covenants under debt agreements, including, but not limited to, the current credit agreement, depends on our future operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors.

The timing and size of any new business ventures or acquisitions that we complete may also impact our cash requirements.

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

O FF B ALANCE S HEET A RRANGEMENTS

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We review our financial reporting and disclosure practices and accounting policies annually to ensure that our financial reporting and disclosures provide accurate and transparent information relative to the current economic and business environment.

We believe that, of our significant accounting policies stated in Note 1 of the Notes to the Consolidated Financial Statements, the policies listed below involve a higher degree of judgment and/or complexity.

See Note 1 of the Notes to the Consolidated Financial Statements for a discussion of our significant accounting policies.

The preparation of the financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amounts of revenues and expenses during the reporting period.

Significant estimates include income taxes, promotional programs, pension accounting and allowance for credit losses.

GAAP requires management to make estimates and assumptions that have had, or are reasonably likely to have, a material impact on the reported amounts.

The critical accounting policies that reflect our more significant estimates include income taxes, trade promotion, reclamation, impairment of goodwill and other intangible assets, valuation of acquired goodwill and other intangible assets.

Actual results could differ from these estimates.

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Our effective tax rate on earnings was based on income, statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we operate.

Significant judgment was required in determining our effective tax rate and in evaluating our tax positions.

Significant judgment was required in determining our effective tax rate and in evaluating our tax positions, and in the calculation of tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities that arise from differences in the timing of expenses for tax and financial statement purposes.

Significant changes in these estimates may result in an increase or decrease to our tax provision in a subsequent period.

We determine our current and deferred taxes in accordance with Accounting Standards Codification (“ASC”) 740 Income Taxes .

The tax effect of the expected reversal of tax differences was recorded at rates currently enacted for each jurisdiction in which we operate.

To the extent that temporary differences will result in future tax benefit, we must estimate the timing of their reversal and whether taxable operating income in future periods will be sufficient to fully recognize any deferred tax assets.

To the extent that temporary differences will result in future tax benefits, we must estimate the timing of their reversal and whether taxable operating income in future periods will be sufficient to fully recognize any deferred tax assets.

We maintain valuation allowances where it is likely that all or a portion of a deferred tax asset will not be realized.

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In determining whether a valuation allowance is warranted, we take into account such factors as prior earnings history, expected future earnings and other factors that could affect the realization of deferred tax assets.

A change in the assessment of the realizability of deferred tax assets may materially impact our tax provision in the period in which a change of assessment occurs.

We recorded valuation allowances of $2.8 million and $2.5 million for the amount of the deferred tax benefit related to our foreign net operating loss carryforwards and certain state net operating loss carryforwards as of July 31, 2025 and 2024, respectively, because we believe it is unlikely we will realize the benefit of these tax attributes in the future.

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We recorded liabilities of approximately $3.1 million and $2.7 million for trade promotions as of July 31, 2025, and 2024, respectively.

Pension and Postretirement Benefit Costs.

We calculate our pension and postretirement health benefit obligations and the related effects on results of operations using actuarial models.

To measure the expense and obligations, we must make a variety of estimates including critical assumptions for the discount rate used to value certain liabilities and the expected return on plan assets set aside to fund these costs.

We evaluate these critical assumptions at least annually.

Other assumptions involving demographic factors, such as retirement age, mortality and turnover, are evaluated periodically and are updated to reflect actual experience.

As these assumptions change from period to period, recorded pension and postretirement health benefit amounts and funding requirements could also change.

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

The discount rate is the rate assumed to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments, would provide the necessary future cash flows to pay the pension benefits when due.

The discount rate is subject to change each year.

We refer to an applicable index and the expected duration of the benefit payments to select a discount rate at which we believe the benefits could be effectively settled.

The discount rate was the single equivalent rate that would yield the same present value as the plan’s expected cash flows discounted with spot rates on a yield curve of investment-grade corporate bonds.

The yield curve used in both fiscal years 2024 and 2023 was the FTSE Pension Discount Curve (formerly called the Citi Pension Discount Curve).

Our determination of pension expense or income is based on a market-related valuation of plan assets, which is the fair market value.

Our expected rate of return on plan assets is determined based on asset allocations and historical experience.

The expected long-term rate of inflation and risk premiums for the various asset categories are based on general historical returns and inflation rates.

The target allocation of assets is used to develop a composite rate of return assumption.

See Note 9 of the Notes to the Consolidated Financial Statements for additional information.

As further described in Note 9 of the Notes to the Consolidated Financial Statements, we terminated the pension plan in fiscal year 2023.

Trade Receivables.

We recognize trade receivables when control of finished products are 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 believe our allowance for credit losses is reasonable;

however, the unanticipated default by a customer with a material trade receivable could occur.

We also record an estimated allowance for cash discounts offered in our payment terms to some customers.

We recorded a total allowance for credit losses and cash discounts of $0.9 million and $1.1 million as of July 31, 2024 and 2023, respectively.

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 value inventories 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.

We perform a detailed review of our inventory to determine if a reserve adjustment is necessary, giving consideration to obsolescence, inventory levels, product deterioration and other factors.

The review also surveys all of our operating facilities and sales divisions to give consideration to historic and new market trends.

The inventory reserve value was $3.8 million as of July 31, 2024 and $3.6 million as of July 31, 2023.

During the normal course of our mining process, we remove overburden and perform on-going reclamation activities.

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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 .

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

On an annual basis we evaluate our potential reclamation liability

in accordance with ASC 410, Asset Retirement and Environmental Obligations .

We have recorded an estimated net reclamation asset of $3.1 million as of July 31, 2025, and $2.2 million, as of July 31, 2024, and a corresponding estimated reclamation liability of $5.9 million as of July 31, 2025, and $4.8 million as of July 31, 2024.

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

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

Accounting for reclamation obligations requires that we make estimates unique to each mining operation of the future costs we will incur to complete the reclamation work required to comply with existing laws and regulations.

Accounting for reclamation obligations requires that we make estimates unique to each mine site of the future costs we will incur to complete the reclamation work required to comply with existing laws and regulations.

These estimates are based on a variety of factors for each mine site such as, but not limited to, the size and unique nature of each property including the acreage and depth of our mines, costs for leveling, filling, and reseeding land, and the applicable laws and regulations the mine site is subject to.

Actual future costs incurred could significantly differ from estimated amounts.

Future changes to environmental laws could increase the extent of reclamation work required.

Future changes to environmental laws and the length of the period between the estimate and incurrence of actual costs could increase the extent of reclamation work required.

Any such increases in future costs could materially impact the amount incurred for reclamation costs.

Impairment of goodwill, trademarks and other intangible assets.

We review carrying values of goodwill, trademarks and other indefinite-lived intangible assets periodically for possible impairment in accordance ASC 350, Intangibles – Goodwill and Other.

Our impairment review requires significant judgment with respect to factors such as volume, revenue and expenses.

Impairment of goodwill and other intangible assets.

We review carrying values of goodwill, trademarks and other indefinite-lived intangible assets periodically for possible impairment in accordance with ASC 350, Intangibles – Goodwill and Other.

We first consider qualitative factors which include macro-economic conditions, industry-specific and company-specific considerations, legal and regulatory environments and historical performance.

If it is determined that further quantitative assessment is required, it would be based on cash flow considerations and other approaches that would require significant judgment with respect to factors such as volume, revenue and expenses.

Impairment occurs when the carrying value exceeds the fair value.

Our impairment analysis is performed in the third quarter of the fiscal year and may be re-performed during the year when indicators such as unexpected adverse economic factors, unanticipated technological changes, competitive activities and acts by governments and courts indicate that an asset may become impaired.

No such triggering events or impairment of goodwill was identified in fiscal year 2024 however this could change in the future, as outlined under Item 1A "Risk Factors."

In fiscal year 2025 we had goodwill associated with both our Business to Business and Retail and Wholesale operating segments.

Based on our qualitative assessment there were no indicators that required us to perform further quantitative assessment of the fair value of our goodwill or other indefinite-lived assets.

Accordingly, no impairment of goodwill was identified in fiscal year 2025, however this could change in the future, as outlined under Item 1A "Risk Factors."

Valuation of acquired goodwill and intangible assets.

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N EW A CCOUNTING P RONOUNCEMENTS

Recently Issued Accounting Standards Not Yet Adopted

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

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

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

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

Early adoption is permitted.

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

In November 2023, the FASB issued ASU No.

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

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

In addition, ASU No.

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

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

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

Recently Adopted Accounting Standards

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

For recent accounting pronouncements, see Note 1 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

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What changed 10-K

Item 7. Management’s Discussion and Analysis