What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-10-08 compared with 2025-10-09 · 70 added, 71 removed, 173 unchanged (45% of the section changed)

16 unchanged sentences

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.

While ongoing geopolitical tensions and conflict in the Middle East have contributed to broader market volatility in the second half of fiscal year 2026, these conditions did not have a direct, material impact on our results for the current fiscal year.

However, continued uncertainty in the region may lead to increased input and transportation costs in future periods.

The Company continues to closely monitor developments and assess potential impacts on operations and costs.

RESULTS OF OPERATIONS

F ISCAL Y EAR 2026 C OMPARED T O F ISCAL Y EAR 2025

OVERVIEW & CONSOLIDATED RESULTS

CONSOLIDATED RESULTS

For the Year Ended July 31,

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$ 43,730 $ 44,137 $ (407) (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.

Fiscal year 2026 was another record year, with consolidated net sales and net income reaching all-time highs.

Consolidated net sales in fiscal year 2026 were $493.8 million, up 2% from net sales of $485.6 million in fiscal year 2025 driven by favorable mix.

The Retail and Wholesale operating segment drove the overall increase with higher cat litter volumes.

Although Business to Business net sales declined slightly due to softer volumes in fluid purification and animal health products, the decrease was partially offset by growth in demand of agriculture products.

Cost of goods sold increased $13.8 million, or 4% in fiscal year 2026 compared with fiscal year 2025, as domestic per-ton costs rose 4% compared to fiscal year 2025.

The increase was driven by higher per ton manufacturing and transportation costs.

Per ton manufacturing costs increased 6% in fiscal 2026 as compared to fiscal 2025, primarily due to higher labor, materials and depreciation costs.

Per ton transportation costs increased 3% mainly due to higher diesel costs and fourth-quarter trucking market impacts.

Per ton packaging costs remained flat, as many packaging supply contracts are subject to periodic price adjustments, which lag changes in underlying commodity prices.

These cost pressures resulted in a $5.6 million, or 4% decrease in consolidated gross profit in fiscal year 2026 compared to the prior fiscal year.

Gross margin (defined as gross profit as a percentage of net sales) declined to 27.8% in fiscal year 2026 from 29.5% in fiscal year 2025.

Operating income remained relatively flat as the decrease in SG&A offset the decrease in gross profit.

Total SG&A decreased $5.3 million, or 7% in fiscal year 2026 compared to fiscal year 2025.

The decrease was driven by a $4.6 million reduction in corporate unallocated expenses and, to a lesser extent, by SG&A incurred by the operating segments.

The decrease in corporate unallocated expenses in fiscal year 2026 as compared to fiscal year 2025 was primarily as a result of lower human resource costs attributed to corporate functions, lower incentive bonus and a reduction of outside services costs.

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 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.

Total other income, net for fiscal year 2026 was $1.5 million, a $3.5 million change from other expense, net of $2.0 million in fiscal year 2025.

This gain was driven by a number of items including $1.0 million due to a reduction in the landfill modification costs recognized in fiscal year 2026 compared to an increase in the estimated cost recognized during fiscal year 2025 and $0.9 million in higher interest income in fiscal year 2026 compared to the prior fiscal year.

The gain was also in part driven by the positive outcome of a confidential legal settlement in the matter of Oil-Dri Corporation of America vs.

Entera Animal Health, et al.

Tax expense for fiscal year 2026 was $12.5 million compared to $12.2 million with an effective tax rate of 18% in both fiscal year 2026 and fiscal year 2025.

Our effective tax rate is based on annual taxable income and our assessment of various tax adjustments, including depletion and discrete items.

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

Consolidated net income for fiscal year 2026 was $57.0 million, or $3.92 per share of diluted Common Stock, compared to $54.0 million, or $3.70 per share of diluted Common Stock in fiscal year 2025.

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.

Our Consolidated Balance Sheets as of July 31, 2026, and our Consolidated Statements of Cash Flows for fiscal year 2026 show an increase of $23.2 million in total cash and cash equivalents from fiscal year-end 2025.

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

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Operating Income $ 55,348 $ 59,796 $ (4,448) (7) %

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.

Net sales of the Business to Business Products Group for fiscal year 2026 were $180.2 million, a decrease of $2.4 million, or 1%, from net sales of $182.6 million in fiscal year 2025, driven primarily by a reduction in sales of our fluids purification and animal health products and partially offset by an increase in sales of agricultural and horticultural products.

Net sales of fluids purification products decreased $5.4 million or 5% in fiscal year 2026 compared with fiscal year 2025, driven primarily by the decrease in demand for our products used in renewable diesel filtration, which was significantly higher in fiscal year 2025 when several new customers began operations in new plants.

Net sales of our animal health and nutrition products decreased $1.9 million, or 7%, in fiscal year 2026 compared to the fiscal year 2025, due to lower volume primarily driven by the temporary loss of a key customer at one of our distributors.

Net sales of our agricultural and horticultural products increased $4.9 million, or 11%, for fiscal year 2026 compared to fiscal year 2025 mainly as a result of stronger demand from key customers.

Gross profit and operating income decreased in fiscal year 2026 compared to fiscal year 2025, due to lower net sales and higher cost of goods sold and SG&A.

Cost of goods sold increased $1.9 million, or 2%, mainly due to per ton cost of goods sold which increased 4% in the fiscal year 2026 compared to fiscal year 2025.

This increase was primarily due to higher transportation costs.

This increase was primarily due to higher per ton manufacturing costs, including materials, which increased 6%.

SG&A expenses for the Business to Business Products Group increased $0.1 million, or 1%, for fiscal year 2026 compared to fiscal year 2025.

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

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Operating Income $ 43,730 $ 44,137 $ (407) (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.

Net sales of the Retail and Wholesale Products Group for fiscal year 2026 were $313.6 million, an increase of $10.7 million, or 4%, from net sales of $303.0 million in fiscal year 2025, primarily driven by increased sales of our cat litter products.

Net sales of co-packaged products increased 47% in fiscal year 2026 compared to fiscal year 2025, mainly due to higher volumes as we expanded our co-packaged offerings to include lightweight cat litter.

Domestic cat litter net sales, excluding co-packaged cat litter, were $226.1 million for fiscal year 2026, which remained relatively flat when compared to fiscal year 2025.

However, crystal cat litter sales increased $3.2 million due to higher volumes, while overall clay-based litter sales declined when compared to the prior fiscal year.

The decrease in clay-based litter was driven by a $3.9 million decrease due to changes in private label distribution and a $1.7 million decrease related to the absence of non-recurring promotional activity from the prior year.

These losses were partially offset by revenue gains with other customers.

Net sales of our domestic industrial and sports products increased by $1.4 million, or 3%, compared to fiscal year 2025, primarily driven by higher pricing to offset increased costs including transportation costs.

Net sales by our subsidiary in Canada increased $0.3 million in fiscal year 2026 compared to fiscal year 2025.

Gross profit and operating income decreased in fiscal year 2026 compared to fiscal year 2025, primarily due to higher cost of goods sold.

Cost of goods sold increased $11.9 million, or 5%, driven by the per ton cost of goods sold which increased 4% in the fiscal year 2026 compared to fiscal year 2025.

This increase was primarily driven by higher per ton manufacturing costs, including materials, which increased 6% and per ton transportation costs, which increased 7% when compared to fiscal year 2025.

SG&A expenses for the Retail and Wholesale Products Group decreased $0.9 million in fiscal year 2026 compared to fiscal year 2025, primarily due to reduced advertising and R&D expenses.

FOREIGN SUBSIDIARIES

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Net sales by our foreign subsidiaries during fiscal year 2026 were $19.8 million, a decrease of $0.3 million, or 1%, from net sales of $20.1 million during fiscal year 2025.

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.

The decrease in net sales was driven mainly by our subsidiaries in Mexico and the United Kingdom, partially offset by an increase in Canada.

Net sales of our subsidiary in Mexico decreased $0.4 million, or 20%, during fiscal year 2026 compared to fiscal year 2025 primarily due decreased sales volumes and lower prices.

Net sales of our subsidiary in the United Kingdom decreased $0.1 million, or 3% during fiscal year 2026 compared to fiscal year 2025, due primarily to lower volume.

Net sales of our subsidiary in Canada in fiscal year 2026 increased by $0.3 million, or 2%, compared to net sales in fiscal year 2025, driven by higher sales of lightweight litter.

Net sales by our foreign subsidiaries represented 4% of our consolidated net sales in both fiscal year 2026 and fiscal year 2025.

For fiscal year 2026, our foreign subsidiaries reported a pre-tax net income of $0.1 million, compared to $0.1 million of pre-tax net loss in fiscal year 2025.

The increase was primarily driven by the foreign VAT assessment recognized in fiscal year 2025.

Identifiable assets of our foreign subsidiaries as of July 31, 2026, were $1.1 million compared to $1.2 million as of July 31, 2025.

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

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.

For a discussion of our fiscal year 2024 Results of Operations, including a discussion of our financial results for the fiscal year ended July 31, 2025 compared to the fiscal year ended July 31, 2024, refer to Part II, Item 7 of our annual report on Form 10-K filed with the SEC on October 9, 2025.

L IQUIDITY AND C APITAL R ESOURCES

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During fiscal year 2026, 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.

On October 7, 2026, we amended the Note Agreement to increase the aggregate principal amount of Shelf Notes from $75 million to $150 million and the Credit Agreement to increase our line of credit from $45 million to $75 million, among other things, 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.

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Net cash used in investing activities (32,875) (32,526)

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

Net cash used in financing activities (23,950) (21,744)

Effect of exchange rate changes on cash and cash equivalents (39) 64

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

Net increase in cash and cash equivalents $ 23,242 $ 25,977

Net cash provided by operating activities

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Accounts receivables, less allowance for credit losses and cash discounts, were $5.8 million higher at fiscal year-end 2026 compared to fiscal year-end 2025.

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.

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.

The increase in accounts receivable balances is primarily driven by the increase in net sales and timing of collections.

Inventories were $1.9 million higher at fiscal year-end 2026 compared to fiscal year-end 2025.

The increase compared to fiscal 2025 is primarily due to an increase in purchases of additives and packaging to meet anticipated demand.

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

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.

Excluding the impact of payments related to capital expenditures, accounts payable at fiscal year-end 2026 were flat

compared to fiscal year-end 2025.

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.

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 2026, there was a $0.7 million decrease in accounts payable related to capital expenditures which increased the cash used in investing activities as compared to fiscal year 2025.

Excluding the impact of payments related to capital expenditures, accrued expenses were $0.1 million lower at fiscal year-end 2026 compared to fiscal year-end 2025.

In fiscal year 2026, there was a $0.5 million decrease in accrued expenses related to capital expenditures recognized as cash used in investing activities as compared to the fiscal year 2025.

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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.

Cash used in financing activities was $24.0 million in fiscal year 2026, primarily driven by $12.6 million used for share repurchases and $10.4 million used for dividend payments.

Total cash and investment balances held by our foreign subsidiaries were $5.1 million as of July 31, 2026, and $4.7 million as of July 31, 2025.

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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."

In fiscal years 2026 and 2025, we made repurchases of stock as further discussed in Item 5 "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."

O FF B ALANCE S HEET A RRANGEMENTS

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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 .

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

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

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

We have recorded an estimated net reclamation asset of $3.0 million as of July 31, 2026, and $3.1 million, as of July 31, 2025, and a corresponding estimated reclamation liability of $5.8 million as of July 31, 2026, and $5.9 million as of July 31, 2025.

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

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

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

In fiscal year 2026 we released a portion of our asset retirement obligation based on our annual evaluation of the future costs, resulting in a net decrease of the liability.

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.

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Actual future costs incurred could significantly differ from estimated amounts.

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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis