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, 2026 July 31, 2025 Current Assets Cash and cash equivalents $ 46,933 $ 50,458 Accounts receivable, net of allowances of $ 1,375 and $ 1,493 at January 31, 2026 and July 31, 2025, respectively 70,180 69,370 Inventories, net 53,753 51,594 Prepaid expenses and other assets 5,897 5,961 Total Current Assets 176,763 177,383 Other Assets Property, plant and equipment, net 148,726 149,704 Goodwill 16,017 16,017 Trademarks, trade names and patents, net of accumulated amortization of $ 731 and $ 693 at January 31, 2026 and July 31, 2025, respectively 6,592 6,603 Customer list, net of accumulated amortization of $ 9,842 and $ 9,278 at January 31, 2026 and July 31, 2025, respectively 18,343 18,907 Deferred income taxes 879 1,291 Operating lease right-of-use assets 14,469 14,219 Other 6,338 7,553 Total Other Assets 211,364 214,294 Total Assets $ 388,127 $ 391,677 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, 2026 July 31, 2025 Current Liabilities Current maturities of notes payable $ 1,000 $ 1,000 Accounts payable 10,218 16,808 Dividends payable 2,749 2,444 Operating lease liabilities 4,030 4,071 Accrued expenses 33,220 44,864 Total Current Liabilities 51,217 69,187 Noncurrent Liabilities Long-term debt, net of unamortized debt issuance costs of $ 163 and $ 183 at January 31, 2026 and July 31, 2025, respectively 38,837 38,817 Deferred compensation 6,371 5,777 Long-term operating lease liabilities 11,517 11,296 Other 7,735 7,540 Total Noncurrent Liabilities 64,460 63,430 Total Liabilities 115,677 132,617 Commitments and contingencies (See note 7) Stockholders’ Equity Common Stock, par value $ .10 per share, issued 15,338,761 shares at January 31, 2026 and 15,276,261 shares at July 31, 2025 1,534 1,528 Class B Stock, par value $ .10 per share, issued 4,650,484 shares at January 31, 2026 and 4,650,484 shares at July 31, 2025 465 465 Additional paid-in capital 68,980 66,138 Retained earnings 300,343 277,500 Accumulated other comprehensive income 1,075 969 Less Treasury Stock, at cost ( 5,090,285 Common and 416,544 Class B shares at January 31, 2026 and 4,902,881 Common and 380,628 Class B shares at July 31, 2025) ( 99,947 ) ( 87,540 ) Total Stockholders’ Equity 272,450 259,060 Total Liabilities & Stockholders’ Equity $ 388,127 $ 391,677 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, 2026 2025 Net Sales $ 238,223 $ 244,859 Cost of Goods Sold ( 170,426 ) ( 169,631 ) Gross Profit 67,797 75,228 Selling, General and Administrative Expenses ( 35,150 ) ( 36,556 ) Income from Operations 32,647 38,672 Other Income (Expense) Interest expense ( 1,111 ) ( 1,340 ) Interest income 701 236 Other, net 1,251 ( 1,106 ) Total Other Income (Expense), Net 841 ( 2,210 ) Income Before Income Taxes 33,488 36,462 Income Tax Expense ( 5,463 ) ( 7,165 ) Net Income 28,025 29,297 Earnings Per Share Basic Common $ 2.07 $ 2.17 Basic Class B $ 1.56 $ 1.63 Diluted Common $ 1.93 $ 2.01 Diluted Class B $ 1.56 $ 1.63 Average Shares Outstanding Basic Common 9,901 9,870 Basic Class B 4,028 3,986 Diluted Common 13,929 13,856 Diluted Class B 4,028 3,986 Dividends Declared Per Share Common Stock $ 0.385 $ 0.310 Class B Stock $ 0.288 $ 0.233 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, 2026 2025 Net Income $ 28,025 $ 29,297 Other Comprehensive Income (Loss): Postretirement expenses (net of tax) ( 43 ) ( 47 ) Cumulative translation adjustment 149 ( 161 ) Other Comprehensive Income (Loss) 106 ( 208 ) Total Comprehensive Income $ 28,131 $ 29,089 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, 2026 2025 Net Sales $ 117,737 $ 116,914 Cost of Goods Sold ( 85,435 ) ( 82,466 ) Gross Profit 32,302 34,448 Selling, General and Administrative Expenses ( 16,609 ) ( 16,966 ) Income from Operations 15,693 17,482 Other Income (Expense) Interest expense ( 555 ) ( 606 ) Interest income 307 86 Other, net 369 ( 702 ) Total Other Income (Expense), Net 121 ( 1,222 ) Income Before Income Taxes 15,814 16,260 Income Tax Expense ( 3,245 ) ( 3,339 ) Net Income 12,569 12,921 Net Income Per Share Basic Common $ 0.94 $ 0.95 Basic Class B $ 0.70 $ 0.72 Diluted Common $ 0.87 $ 0.89 Diluted Class B $ 0.70 $ 0.72 Average Shares Outstanding Basic Common 9,884 9,895 Basic Class B 4,048 4,004 Diluted Common 13,932 13,899 Diluted Class B 4,048 4,004 Dividends Declared Per Share Basic Common $ 0.2050 $ 0.1550 Basic Class B $ 0.1530 $ 0.1165 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, 2026 2025 Net Income Attributable to Oil-Dri $ 12,569 $ 12,921 Other Comprehensive Income (Loss): Postretirement expenses (net of tax) ( 21 ) ( 26 ) Cumulative translation adjustment 171 ( 140 ) Other Comprehensive Income (Loss) 150 ( 166 ) Total Comprehensive Income $ 12,719 $ 12,755 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 8 OIL-DRI CORPORATION OF AMERICA Condensed 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, 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 Balance, October 31, 2025 19,978,445 ( 5,401,248 ) $ 1,998 $ 67,597 $ 290,523 $ ( 94,516 ) $ 925 $ 266,527 Net Income — — — — 12,569 — — 12,569 Other Comprehensive Income — — — — — — 150 150 Dividends Declared — — — — ( 2,749 ) — — ( 2,749 ) Purchases of Treasury Stock — ( 104,881 ) — — — ( 5,404 ) — ( 5,404 ) Net issuance of stock under long-term incentive plans 10,800 ( 700 ) 1 26 — ( 27 ) — — Amortization of Restricted Stock — — — 1,357 — — — 1,357 Balance, January 31, 2026 19,989,245 ( 5,506,829 ) $ 1,999 $ 68,980 $ 300,343 $ ( 99,947 ) $ 1,075 $ 272,450 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, 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 Balance, July 31, 2025 19,926,745 ( 5,283,509 ) $ 1,993 $ 66,138 $ 277,500 $ ( 87,540 ) $ 969 $ 259,060 Net Income — — — — 28,025 — — 28,025 Other Comprehensive Income — — — — — — 106 106 Dividends Declared — — — — ( 5,182 ) — — ( 5,182 ) Purchases of Treasury Stock — ( 222,120 ) — — — ( 12,364 ) — ( 12,364 ) Net issuance of stock under long-term incentive plans 62,500 ( 1,200 ) 6 37 — ( 43 ) — — Amortization of Restricted Stock — — — 2,805 — — — 2,805 Balance, January 31, 2026 19,989,245 ( 5,506,829 ) $ 1,999 $ 68,980 $ 300,343 $ ( 99,947 ) $ 1,075 $ 272,450 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 2026 2025 Net Income $ 28,025 $ 29,297 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,478 10,817 Non-cash stock-based compensation 2,805 2,542 Provision for bad debts and cash discounts ( 120 ) 415 Loss on impairment of patent applications — 49 Accretion of asset retirement obligation 126 95 Loss on the disposals of property, plant and equipment 352 95 (Increase) decrease in assets: Accounts receivable ( 637 ) ( 4,424 ) Inventories ( 2,058 ) ( 1,394 ) Prepaid expenses 95 1,019 Deferred income taxes 344 110 Other assets 3,079 2,094 Increase (decrease) in liabilities: Accounts payable ( 2,947 ) 1,989 Accrued expenses ( 10,602 ) ( 8,371 ) Deferred compensation 594 289 Other liabilities ( 2,099 ) ( 2,292 ) Total Adjustments 410 3,033 Net Cash Provided by Operating Activities 28,435 32,330 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 14,817 ) ( 17,806 ) Acquisition of a business — ( 115 ) Net Cash Used in Investing Activities ( 14,817 ) ( 17,921 ) CASH FLOWS FROM FINANCING ACTIVITIES Payments on revolving credit facility — ( 10,000 ) Dividends paid ( 4,877 ) ( 4,194 ) Purchases of treasury stock ( 12,364 ) ( 2,164 ) Net Cash Used in Financing Activities ( 17,241 ) ( 16,358 ) Effect of exchange rate changes on cash and cash equivalents 98 57 Net Decrease in Cash and Cash Equivalents ( 3,525 ) ( 1,892 ) Cash, Cash Equivalents and Restricted Cash, Beginning of Period 50,458 24,481 Cash, Cash Equivalents and Restricted Cash, End of Period $ 46,933 $ 22,589 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, 2026 2025 Supplemental disclosures: Restricted Cash included in prepaid expenses and other assets: 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 $ 829 $ 848 Income tax payments, net of refunds $ 5,785 $ 7,860 Non-cash investing and financing activities: Change in capital expenditures in accounts payable $ ( 3,653 ) $ ( 2,781 ) Change in capital expenditures in accrued expenses $ ( 1,128 ) $ ( 5,024 ) Cash dividends declared and accrued $ 2,749 $ 2,097 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, 2025. 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 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, 2026, are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2026. 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 have been retroactively adjusted, where applicable, to reflect the stock split. The impact on the unaudited Condensed Consolidated Balance Sheet and unaudited 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 as if the stock split had occurred at the beginning of the earliest period 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, and disclosure of contingent assets and liabilities as of the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of 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 of 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, 2025, 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 by our customers. Accounts receivable was $ 70.2 million, $ 69.4 million, and $ 62.2 million as of January 31, 2026, July 31, 2025, and July 31, 2024, respectively. 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 and betterments are capitalized, while maintenance and repairs that do not extend the useful life or increase functionality of the applicable assets are expensed as incurred. Interest expense may also be capitalized for assets that require a period of time to prepare them for their intended use. These assets are carried at cost on the unaudited 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, 2026 July 31, 2025 Gross property, plant and equipment $ 362,455 $ 356,079 Accumulated depreciation and amortization ( 213,729 ) ( 206,375 ) Total Property, Plant and Equipment, Net $ 148,726 $ 149,704 Land, Mining Property and Mineral Rights. We surface mine sorbent minerals on property that we either own or lease as part of our overall operations. A significant part of our overall mining cost is incurred during the process of removing the overburden (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, survey and real estate fees. The costs of obtaining mineral rights, 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 unaudited 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 unaudited 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 use 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, retailers or consumers and our obligations have an original duration of one year or less. Control of the finished products are generally transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the orders. We have one customer who requested that the title and risk of loss transfer when production is completed. For that customer, we produce and physically segregate finished goods in our warehouses. 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 or 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 $ 0.3 million as of January 31, 2026 and July 31, 2025. This liability is reported in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet. There was $ 0.3 million revenue recognized during the six months ended January 31, 2026, 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 also 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. 14 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 liabilities are due to be paid within the next 12 months. Other noncurrent liabilities on the unaudited Condensed Consolidated Balance Sheet include $ 6.0 million and $ 5.9 million for the reclamation liability as of January 31, 2026, and July 31, 2025, respectively, and $ 1.7 million and $ 1.6 million for the postretirement health benefit as of January 31, 2026 and July 31, 2025, respectively. New Accounting Pronouncements and Regulations. Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). 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. Refer to Note 10 - Operating Segments of this Form 10-Q for the enhanced disclosures added as a result of the adoption of ASU 2023-07. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued 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 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The pronouncement expands the disclosure requirements for expenses, specifically by providing more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact that ASU 2024-03 will have on the Company's consolidated financial statement disclosures. In July 2025, the FASB issued ASU 2025-05, "Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025-05"), which provides a practical expedient that assumes current conditions as of the balance sheet date remain unchanged when developing forecasts for estimating expected credit losses. Under ASU 2025-05, an entity is required to disclose that it has elected to use the practical expedient and the election should be applied prospectively. ASU 2025-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2025, with early adoption permitted. We do not expect the amendments to have a material impact on the Company's consolidated financial statement disclosures, however we will continue to assess through the adoption period. In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"), which provides clarification and improvements to the accounting for internal-use software costs under ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software. The guidance includes amendments related to capitalization of implementation costs, subsequent measurement, and related presentation and disclosure requirements. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. We are currently evaluating the impact that ASU 2025-06 will have on the Company's consolidated financial statement disclosures. 15 In December 2025, the FASB issued ASU 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities" ("ASU 2025-10"). This amendment establishes authoritative guidance on the recognition, measurement and presentation of government grants received by business entities. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, including interim periods within those years, with early adoption permitted. Given the nature of our existing government-related arrangements, we do not expect the amendments to have a material impact on the Company's consolidated financial statement disclosures, however we will continue to assess through the adoption period. In December 2025, the FASB issued ASU 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements" ("ASU 2025-11"). These amendments are intended to improve the navigability of interim reporting guidance, clarify when ASC 270 applies, and provide a comprehensive list of required interim disclosures including a requirement for entities to disclose events that occur after the end of the most recent annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact that ASU 2025-11 will have on the Company's consolidated financial statement disclosures. In December 2025, the FASB issued ASU 2025-12, "Codification Improvements" ("ASU 2025-12") which includes amendments for technical corrections, clarifications and revisions to existing codification intended to improve consistency of application, remove ambiguity and enhance overall usability. These improvements do not introduce new accounting requirements and are not expected to result in significant changes to accounting practices. ASU 2025-12 is effective for annual periods beginning after December 15, 2026, including interim periods within those fiscal years. We are currently evaluating the impact that ASU 2025-12 will have on the Company's consolidated financial statement disclosures. 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 or Class B Stock. In both the if-converted and two-class 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. Below is a reconciliation of the calculation of basic and diluted EPS. 16 For the Six Months Ended January 31, 2026 For the Six Months Ended January 31, 2025 (in thousands, except for per share data) (in thousands, except for per share data) Total Common Class B Total Common Class B Net income $ 28,025 $ 21,404 $ 6,621 $ 29,297 $ 22,316 $ 6,981 Distributed and undistributed earnings on restricted shares $ ( 1,197 ) $ ( 862 ) $ ( 335 ) $ ( 1,412 ) $ ( 926 ) $ ( 486 ) Income available to stockholders $ 26,828 $ 20,542 $ 6,286 $ 27,885 $ 21,390 $ 6,495 Net Income (Numerator) $ 20,542 $ 6,286 $ 21,390 $ 6,495 Weighted Average Shares Outstanding (Denominator) 9,901 4,028 9,870 3,986 Basic EPS $ 2.07 $ 1.56 $ 2.17 $ 1.63 Effect of dilution - Net Income (1) $ 6,286 $ — $ 6,495 $ — Net income assuming dilution (Numerator) $ 26,828 $ 6,286 $ 27,885 $ 6,495 Effect of dilution - Shares (1) 4,028 — 3,986 — Shares assuming dilution (Denominator) 13,929 4,028 13,856 3,986 Diluted EPS $ 1.93 $ 1.56 $ 2.01 $ 1.63 (1) The impact of 288,083 unvested shares of Common Stock and 139,276 unvested shares of Class B Stock were anti-dilutive therefore not included in the calculation of diluted EPS for the six months ended January 31, 2026. The impact of 254,192 unvested shares of Common Stock and 116,949 unvested shares of Class B Stock were anti-dilutive, and therefore not included in the calculation of diluted EPS for the six months ended January 31, 2025. For the Three Months Ended January 31, 2026 For the Three Months Ended January 31, 2025 (in thousands, except for per share data) (in thousands, except for per share data) Total Common Class B Total Common Class B Net income $ 12,569 $ 9,594 $ 2,975 $ 12,921 $ 9,855 $ 3,066 Distributed and undistributed earnings on restricted shares ( 474 ) ( 349 ) ( 125 ) ( 598 ) ( 406 ) ( 192 ) Income available to stockholders $ 12,095 $ 9,245 $ 2,850 $ 12,323 $ 9,449 $ 2,874 Net Income (Numerator) $ 9,245 $ 2,850 $ 9,449 $ 2,874 Weighted Average Shares Outstanding (Denominator) 9,884 4,048 9,895 4,004 Basic EPS $ 0.94 $ 0.70 $ 0.95 $ 0.72 Effect of dilution - Net Income (1) $ 2,850 $ — $ 2,874 $ — Net income assuming dilution (Numerator) $ 12,095 $ 2,850 $ 12,323 $ 2,874 Effect of dilution - Shares (1) 4,048 — 4,004 — Shares assuming dilution (Denominator) 13,932 4,048 13,899 4,004 Diluted EPS $ 0.87 $ 0.70 $ 0.89 $ 0.72 (1) The impact of 245,326 unvested shares of Common Stock and 103,461 unvested shares of Class B Stock were anti-dilutive therefore not included in the calculation of diluted EPS for the three months ended January 31, 2026. The impact of 250,151 unvested shares of Common Stock and 105,024 unvested shares of Class B Stock were anti-dilutive, and therefore not included in the calculation of diluted EPS for the three months ended January 31, 2025. 3. INVENTORIES The composition of inventories is as follows (in thousands): January 31, 2026 July 31, 2025 Finished goods $ 29,744 $ 29,401 Packaging 8,373 8,114 Spare parts 6,858 6,822 Other 8,778 7,257 Total Inventories $ 53,753 $ 51,594 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 17 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 $ 3.9 million as of January 31, 2026 and $ 3.7 million as of July 31, 2025. 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 unaudited Condensed Consolidated Balance Sheet. We had $ 28.8 million in cash equivalents as of January 31, 2026, and $ 35.3 million in cash equivalents as of July 31, 2025. Balances of accounts receivable, short-term investments and accounts payable approximated their fair values as of January 31, 2026, and July 31, 2025, 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 $ 40.8 million and $ 40.3 million as of January 31, 2026, and July 31, 2025, 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. 5. INTANGIBLE ASSETS AND GOODWILL Our intangible assets are mainly comprised of customer lists, patents, trademarks, trade names and goodwill. 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 7 to 20 years. Estimated intangible amortization for fiscal year 2026 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. There have been no triggering events in fiscal years 2026 or 2025 that would indicate a new impairment analysis is needed. 18 6. ACCRUED EXPENSES Accrued expenses are as follows (in thousands): January 31, 2026 July 31, 2025 Payables $ 12,749 $ 13,036 Salaries, Wages, Commissions and Employee Benefits 11,108 20,532 Trade Promotions and Advertising 2,637 3,105 Taxes 1,256 2,249 Freight 2,364 2,700 Georgia Landfill Modification Reserve 559 819 Other 2,547 2,423 $ 33,220 $ 44,864 7. OTHER CONTINGENCIES We are party to various legal actions that arise from time to time that are ordinary in nature and incidental to the operation of our business, including ongoing litigation. While it is not possible at this time to determine with certainty the ultimate outcome of these or other lawsuits, we believe that none of the pending proceedings will have a material adverse effect on our business, financial condition, results of operations or cash flows. In fiscal year 2023, we recorded a reserve of $ 2.5 million for anticipated modification costs that we expected to incur to address capacity issues at our sole landfill located in Ochlocknee, Georgia. Reserves are recorded when it is probable that a liability has been incurred, and the amount of the liability can be reasonably estimated. The amount of the reserve 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. We increased the total estimated cost by $ 0.6 million and $ 0.7 million in fiscal years 2024 and 2025, respectively. In fiscal year 2026, we decreased the total estimated cost by $ 0.2 million resulting in a total $ 3.6 million expense related to this matter. The modification work is expected to be completed during fiscal year 2026 and, as inherent uncertainties exist in these estimates, we will monitor through the completion of the modification but do not expect that remaining costs in excess of amounts accrued would 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 $ 5 million aggregate principal amount remained outstanding as of January 31, 2026, (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, 2026, 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, 2026. The Note Agreement also provides us with the ability to request, from time to time until September 21, 2026 , 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. 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 Bank”), 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. 19 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 Bank 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, 2026, and July 31, 2025, we were in compliance with the restrictive covenants under the Credit Agreement. There were no new borrowings during the second quarter of fiscal year 2026. As of January 31, 2026, we do not have any outstanding borrowings under the Credit Agreement. We had $ 3.0 million of letters of credit outstanding under the Credit Agreement as of both January 31, 2026, and July 31, 2025. 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, 2026, the variable rates would have been 6.75 % for the BMO prime-based rate or 5.06 % for the adjusted SOFR-based rate. 20 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, 2026. 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, 2026 2025 2026 2025 Operating lease cost $ 1,248 $ 1,369 $ 2,460 $ 2,739 Short-term operating lease cost $ 435 $ 347 $ 794 $ 707 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, 2026 2025 2026 2025 Cash paid for amounts included in the measurement of operating lease liabilities: $ 1,072 $ 1,150 $ 2,125 $ 2,286 Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,381 $ — $ 2,381 $ — 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, 2026 July 31, 2025 Weighted-average remaining lease term - operating leases 4.7 years 4.8 years Weighted-average discount rate - operating leases 5.18 % 5.12 % Lease liability maturities as of January 31, 2026 are as follows (in thousands): Fiscal year 2026 (remaining six months) $ 2,487 Fiscal year 2027 4,304 Fiscal year 2028 3,507 Fiscal year 2029 2,915 Fiscal year 2030 1,662 Thereafter 2,544 Total 17,419 Less: imputed interest ( 1,872 ) Net lease obligation $ 15,547 21 10. OPERATING SEGMENTS We have two reportable 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, 2025. 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 2026 2025 2026 2025 Cat Litter $ — $ — $ 129,676 $ 130,913 Industrial and Sports — — 22,284 22,115 Agricultural and Horticultural 24,173 20,757 — — Fluids Purification 52,140 57,115 — — Animal Health & Nutrition 9,950 13,959 — — Net Sales $ 86,263 $ 91,831 $ 151,960 $ 153,028 Business to Business Products Group Retail and Wholesale Products Group For the Three Months Ended January 31, Product 2026 2025 2026 2025 Cat Litter $ — $ — $ 65,110 $ 63,237 Industrial and Sports — — 10,650 10,261 Agricultural and Horticultural 11,242 9,175 — — Fluids Purification 25,473 26,512 — — Animal Health & Nutrition 5,262 7,729 — — Net Sales $ 41,977 $ 43,416 $ 75,760 $ 73,498 Our chief operating decision maker (“CODM”) is our President and CEO. The CODM regularly reviews net sales, gross profit, and operating income by segment to assess profitability and assist in the allocation of resources. Net sales and operating income for each segment are provided below, along with the significant segment expense categories that are regularly provided and used by the CODM when assessing segment profitability and the allocation of resources. The significant amounts within the segment operating expenses include cost of goods sold, compensation and benefits, and advertising. Other operating expenses in the table below is comprised of all other SG&A expenses which include but are not limited to travel, research & development, technical service support, and amortization of intangibles. Our CODM reviews the performance of each segment regularly by analyzing financial results in conjunction with our internal financial forecasts. The corporate expenses line in the table below represents certain unallocated expenses, including primarily salaries, wages and benefits, purchased services, rent, utilities and depreciation and amortization associated with corporate functions such as information systems, finance, legal, human resources and customer service. 22 For the Six Months Ended January 31, 2026 (in thousands) Business to Business Products Group Retail and Wholesale Products Group Total Net Sales $ 86,263 $ 151,960 $ 238,223 Cost of Goods Sold ( 52,640 ) ( 117,786 ) ( 170,426 ) Gross Profit 33,623 34,174 67,797 Compensation & Consultant ( 4,829 ) ( 4,277 ) ( 9,106 ) Advertising ( 567 ) ( 2,709 ) ( 3,276 ) Other Operating Expenses ( 2,794 ) ( 4,017 ) ( 6,811 ) Operating Income 25,433 23,171 48,604 Corporate Expenses ( 15,957 ) Income from Operations 32,647 Total Other Income, Net 841 Income Before Income Taxes 33,488 Income Tax Expense ( 5,463 ) Net Income $ 28,025 For the Six Months Ended January 31, 2025 (in thousands) Business to Business Products Group Retail and Wholesale Products Group Total Net Sales $ 91,831 $ 153,028 $ 244,859 Cost of Goods Sold ( 52,531 ) ( 117,100 ) ( 169,631 ) Gross Profit 39,300 35,928 75,228 Compensation & Consultant ( 4,352 ) ( 4,177 ) ( 8,529 ) Advertising ( 620 ) ( 2,830 ) ( 3,450 ) Other Operating Expenses ( 2,896 ) ( 4,216 ) ( 7,112 ) Operating Income 31,432 24,705 56,137 Corporate Expenses ( 17,465 ) Income from Operations 38,672 Total Other Expense, Net ( 2,210 ) Income Before Income Taxes 36,462 Income Tax Expense ( 7,165 ) Net Income $ 29,297 For the Three Months Ended January 31, 2026 (in thousands) Business to Business Products Group Retail and Wholesale Products Group Total Net Sales $ 41,977 $ 75,760 $ 117,737 Cost of Goods Sold ( 26,095 ) ( 59,340 ) ( 85,435 ) Gross Profit 15,882 16,420 32,302 Compensation & Consultant ( 2,322 ) ( 2,158 ) ( 4,480 ) Advertising ( 355 ) ( 1,446 ) ( 1,801 ) Other Operating Expenses ( 1,406 ) ( 2,044 ) ( 3,450 ) Operating Income 11,799 10,772 22,571 Corporate Expenses ( 6,878 ) Income from Operations 15,693 23 Total Other Income, Net 121 Income Before Income Taxes 15,814 Income Tax Expense ( 3,245 ) Net Income $ 12,569 For the Three Months Ended January 31, 2025 (in thousands) Business to Business Products Group Retail and Wholesale Products Group Total Net Sales $ 43,416 $ 73,498 $ 116,914 Cost of Goods Sold ( 25,711 ) ( 56,755 ) ( 82,466 ) Gross Profit 17,705 16,743 34,448 Compensation & Consultant ( 1,878 ) ( 2,121 ) ( 3,999 ) Advertising ( 450 ) ( 1,634 ) ( 2,084 ) Other Operating Expenses ( 1,055 ) ( 1,660 ) ( 2,715 ) Operating Income 14,322 11,328 25,650 Corporate Expenses ( 8,168 ) Income from Operations 17,482 Total Other Expense, Net ( 1,222 ) Income Before Income Taxes 16,260 Income Tax Expense ( 3,339 ) Net Income $ 12,921 We do not rely on any operating segment asset allocations, and we do not consider them meaningful because of the shared nature of our production facilities; 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, 2026 July 31, 2025 (in thousands) Business to Business Products Group $ 98,996 $ 104,857 Retail and Wholesale Products Group 207,747 200,644 Unallocated Assets 81,384 86,176 Total Assets $ 388,127 $ 391,677 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, 2026, there were 1,080,263 shares of Common Stock or Class B Stock available for future grants under this plan. Restricted Stock All of our non-vested restricted stock as of January 31, 2026 was 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. 24 There were 62,500 and 82,550 restricted shares of Common Stock granted during the six months ended January 31, 2026, and 2025, respectively. There were no restricted shares of Class B Stock granted during the six months ended January 31, 2026, and 2025. Stock-based compensation expense was $ 1.0 million and $ 1.1 million for the three months ended January 31, 2026, and 2025, respectively, and was $ 2.1 million and $ 1.9 million for the six months ended January 31, 2026, and 2025, 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, 2025 728 $ 28.52 Granted 62 $ 57.76 Vested ( 200 ) $ 21.42 Forfeitures ( 1 ) $ 36.26 Non-vested restricted stock outstanding at January 31, 2026 589 $ 34.01 12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in accumulated other comprehensive income (loss) by component as of January 31, 2026 (in thousands): Postretirement Health Benefits Cumulative Translation Adjustment Total Accumulated Other Comprehensive Income (Loss) Balance as of July 31, 2025 $ 1,205 $ ( 236 ) $ 969 Other comprehensive income before reclassifications, net of tax — 149 149 Amounts reclassified from accumulated other comprehensive income, net of tax ( 43 ) — ( 43 ) Net current-period other comprehensive (loss) income, net of tax ( 43 ) 149 106 Balance as of January 31, 2026 $ 1,162 $ ( 87 ) $ 1,075 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 $ 0.1 million and $ 0.2 million for the three months ended January 31, 2026 and January 31, 2025, respectively, and $ 0.8 million and $ 0.5 million for the first six months of fiscal years 2026, and 2025, respectively. There were no outstanding accounts payable due to that vendor as of either January 31, 2026, or July 31, 2025. One member of our Board retired from the role of President and Chief Executive Officer of a customer of ours on September 28, 2019, and was party to a post-employment consulting agreement with the customer until September 30, 2025. Total sales to that customer, including sales to its subsidiaries, were $ 0.1 million for both the three months ended January 31, 2026, and January 31, 2025, and $ 0.1 million and $ 0.2 million for the first six months of fiscal years 2026 and 2025, respectively. There were no outstanding amounts due from that customer as of either January 31, 2026, or July 31, 2025. 25