Earnings call transcript: Oil-Dri’s Q4 2025 sees strong growth, stock fluctuates

Oil-Dri Corporation of America reported robust financial results for the fourth quarter of 2025, with significant growth in key areas. The company saw a notable increase in revenue and earnings per share (EPS), with diluted EPS reaching $3.70 for the last twelve months. According to InvestingPro data, the stock has delivered an impressive 78% return over the past year, although it experienced fluctuations post-announcement. The stock price initially surged by 6.84% following the earnings release but later settled down to a 2.82% decline from the previous close.

Key Takeaways

• Revenue increased by 10% year-over-year in Q4.
• B2B product revenue grew by 24%.
• Net cash from operating activities rose by 33% to $80 million.
• The stock initially rose by 6.84% but later declined by 2.82%.

Company Performance

Oil-Dri Corporation demonstrated strong performance in the fourth quarter, driven by a 10% increase in revenue compared to the same period last year. The B2B segment was a significant contributor, with a 24% rise in revenue. The company’s focus on innovation and strategic investments, such as the acquisition of UltraPet, are paying dividends.

Financial Highlights

• Revenue: $125.21 million, up 10% year-over-year.
• Net cash from operating activities: $80 million, a 33% increase.
• Full-year EBITDA: $90 million, up 29% from the previous year.
• Capital investments: $33 million.
• Debt reduction: $11 million.

Market Reaction

Following the earnings announcement, Oil-Dri’s stock initially surged by 6.84% to $64.82. However, in subsequent trading sessions, the stock declined by 2.82% to close at $61.71. The stock remains within its 52-week range, closer to the higher end, suggesting investor confidence despite recent volatility.

Outlook & Guidance

Looking ahead, Oil-Dri anticipates challenging comparisons in the first half of fiscal 2026 but remains confident in its growth potential. With a strong financial health score of 3.42 (rated "GREAT" by InvestingPro) and a current ratio of 2.56, the company is well-positioned to pursue strategic opportunities. The company is exploring mergers and acquisitions that align with its existing portfolio and continues to focus on creating value from sorbent minerals. Notably, Oil-Dri has maintained dividend payments for 51 consecutive years, demonstrating consistent shareholder returns.

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Executive Commentary

CEO Dan Jaffee emphasized the company’s cash generation capabilities, stating, "Earnings are an opinion, cash is a fact." CFO Susan Cray reiterated the commitment to value creation, saying, "We remain committed to our mission of creating value from sorbent minerals."

Risks and Challenges

• Potential challenges in achieving growth targets for fiscal 2026.
• Market volatility affecting stock prices.
• Competition in the agricultural and industrial sectors.
• Economic pressures impacting consumer demand.

Q&A

During the earnings call, analysts inquired about the potential of AI in research and development, the recovery of agricultural sales, and insights into the UltraPet acquisition. The management provided clarity on these topics, emphasizing strategic initiatives and competitive positioning.

Full transcript - Oil-Dri Corp Of America (ODC) Q4 2025:

Conference Operator: Day, and thank you for standing by. Welcome to the Oil Dri Corporation of America Fourth Quarter Fiscal twenty twenty five Discussion via Webcast. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Jaffee, President and CEO of Oil Dri. Please go ahead.

Dan Jaffee, President and CEO, Oil Dri Corporation: Thank you, and welcome, everyone, to our fourth quarter fiscal twenty twenty five teleconference. Joining me at various locations through the miracles of modern science are Susan Cray, our CFO and CIO, Aaron Christensen, VP of Operations, Chris Lansen with his new title and new responsibilities as Group Vice President of Business to Business and Strategic Growth Initiatives, Wade Roby, Vice President of Ag and President of Amlan International Laura Sheeland, VP and General Manager of the Consumer Products Division Bruce Pacey, VP of Fluids Purification Mervyn D’Souza, VP of R and D Tony Parker, VP of General Counsel and Secretary and then, of course, Leslie Garber, our Director of Investor Relations. And Leslie, please walk us through the Safe Harbor provisions.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Thank you, Dan, and welcome, everyone. On today’s call, comments may contain forward looking statements regarding the company’s performance in future periods. Actual results in those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company’s comments and in evaluating any investment in Oil Dri stock.

Thank you for joining us. Dan, turning it back over to you.

Dan Jaffee, President and CEO, Oil Dri Corporation: Yes. Thanks, Leslie. And I’m going to turn it over to Susan, and I’ll make my remarks after her because I don’t want to steal her thunder. So Susan, take it away.

Susan Cray, CFO and CIO, Oil Dri Corporation: Thank you, Dan. And in order to preserve the most time for questions, I’ll highlight a few financial matters and then address any other areas of interest in the Q and A portion of this call. But I wanted to start by giving a shout out to John Blake, Anna Tenenbaum, and the entire corporate accounting team. This is the first 10 Q that Oil Drives filed in which we were not using the SEC’s smaller reporting company designation. Not only were the additional requirements incorporated well, but in my opinion, is the highest quality 10 ks that the team has produced.

So a big thank you to our excellent accounting team. Now switching back to results, the team here at Oil Dri continues to deliver robust solutions for our customers that have resulted in the very strong financial performance that we continued to deliver during our fiscal fourth quarter. Revenue increases of 10% over the fourth quarter of the prior year were driven primarily by volume, but our results also benefited from product mix improvements which resulted in large part from the robust 24% year over year revenue growth in our B2B products, an excellent year for them. These products tend to have higher prices and margins than our retail and wholesale products and therefore as they increase as an overall part of the portfolio, the product mix becomes more favorable. On the manufacturing side of the business, during our fourth quarter, we had several planned outages in our production facilities.

We used these outages to complete capital projects for both growth initiatives and also to replace aged plant infrastructure. At the same time, we refreshed much of our information technology network hardware and we were able to upgrade our cybersecurity defenses. The financial impact of these outages was not only the capital that we invested, but also incremental contract services and repair expenses as well as the impact of lowering inventories. We used inventory on hand to serve our customers while we were not producing product and this enabled us to maintain our historically high service levels. As a team, we continue to work to strengthen our balance sheet and to demonstrate our ability to generate cash flow, which is the lifeblood for funding growth and providing returns to our stakeholders.

During fiscal year twenty twenty five, Oil Dri’s net cash provided by operating activities was $80,000,000 a remarkable increase of 33% compared to the net cash provided by operating activities during fiscal year twenty twenty four. Additionally, full year EBITDA of $90,000,000 was up 29% over the $70,000,000 EBITDA that was generated during fiscal year twenty twenty four. And with that amount of cash on hand, we continue to assess capital allocation in the following order of priority. Our top goal remains investing in our business for long term sustainability. We continue to invest in our fixed asset base, including our mobile mining equipment.

As mentioned earlier, in addition to replacing aged assets, we are investing capital to support current and future growth. For fiscal year twenty twenty five, we spent just under $33,000,000 on these types of investments. Additionally, we invest in people, process, and technology to support our growth strategies. One example of this is the investment that we have provided funding during the fiscal year to stand up a centralized data analytics function. This function has been funded to support our commitment to mining ball or Moneyball type analytics from a mining company.

While we are in the early stages of this journey, we plan to expand this area to help focus on opportunities to leverage AI or artificial intelligence in applications where the payback generates acceptable returns and doesn’t introduce unacceptable levels of risk. We also used our cash to service our debt. In fiscal year twenty twenty five, we paid down $11,000,000 in debt. Dollars 10,000,000 of that debt resulted from a draw on our revolving credit facility to partially finance the UltraPed acquisition. At this time, our revolving credit facility is undrawn and we have full access to the 75,000,000 financing vehicle.

We look for and evaluate M and A opportunities to expand our businesses and support our growth strategies. Our AlterPed acquisition, which hit its one year anniversary of being part of the Oil Dri portfolio during our 2025, is a great example. That acquisition has performed well and has been viewed by our customers very favorably as a value added product expansion to our portfolio. We also acquired some key talent with the acquisition that will help drive growth in our core business as well as our Ultra Pet product line. Because of our strong cash position, I often get asked what type of M and A opportunities are of interest to Oil Dri.

We remain committed to our mission of creating value from sorbent minerals. It’s what we do day in and day out, and our team has demonstrated that together we do it well. We believe we will create the most value if we acquire businesses that are closely aligned with our current portfolio. Additionally, we are open to exploring possibilities in other sorbent mineral based solutions as well as other businesses that would expand our mineral based product offerings to our current customers. UltraPet was a good example of this by providing us with an additional premium product to offer our existing customers.

Another high priority use of our cash is dividends. Our goal here is to provide predictable and sustainable dividends to our shareholders. The announcement during the 2025 of the 16% dividend per share increase for fiscal year twenty twenty six demonstrates that commitment. We also occasionally buy back shares of our stock to offset the dilution associated with our restricted stock program for our teammates, and we occasionally opportunistically repurchase shares when we believe they are undervalued by the market. During fiscal year twenty twenty five, we did not purchase any shares on the open market, but we did buy back shares turned in by our teammates to pay taxes when their restricted shares vested.

It’s very rewarding to be a part of a team that delivered a year like we had in fiscal twenty twenty five. Each year that we continue to set new financial records makes the comparisons more challenging for the next year. The team here at Oil Dri is up to that challenge as we continue to make strategic investments, launch new products, and maintain close relationships with our customers. Dan, with that, I’ll turn it back over to you.

Dan Jaffee, President and CEO, Oil Dri Corporation: Okay, great. Thank you. And before I open up to Q and A, I just want to embellish on a few things. First of all was, you’ll recall those of you who’ve owned our stock or followed us for the past few years, about three years ago, we launched what we called our capital recapture program. And what that was was a recognition, starting from our board, that we were pricing to historic replacement cost for our assets when they were put into service ten years, let’s say, on average ten years ago.

The problem was that those same assets were costing twice as much in today’s dollars versus what it cost us to put into service. So back in ’22, our annual depreciation was $13,000,000, 13 and a half to be exact. And we were pricing to that 13 and a half. But we realized it was gonna cost us at least double to replace those assets or 27,000,000 over time. And as you’ve been hearing from Susan, we’ve been spending 30 and 32 and 33,000,000.

So it’s going to get there eventually. And if you look at our financial statements, you’ll see that our annual depreciation, which was 13 and a half million back in ’22, was 19,300,000.0 in ’24 and was 22,000,000 last year. So clearly, as we’re replacing those assets, the depreciation is going up because we’re replacing them at twice the cost of the assets we’re taking off the books. Why am I telling you all this? I’m telling you all this because we get a lot of questions on margins, which we tend never to answer anyway because, look, it’s just we’re we’re never into the the guidance business.

We’re into focusing and delivering. But on an apples to apples basis, look, With mix, we’re clearly selling more and more of the high value stuff. That’s in line with our mission of creating value from sorbent minerals and playing what you read we call it miny ball, really getting into the analytics of our business. But apples to apples, let’s say a 40 pound bag of oil dry floor absorbent to a 40 pound bag of oil dry floor absorbent. Well, in 2022, that 40 pound bag was being charged at a depreciation rate based on the company of $13,000,000.

Now it’s $22,000,000. So clearly, the cost of those items is going up, and I could not be more appreciative of our customers who, when we went to them back in 2022, said we’re going to price to these higher depreciation levels even though that isn’t the cost currently being experienced. So, again, long winded way of saying apples to apples, there’s gonna be a lot of margin pressure on some of these historic price products because we’ve been pricing to a higher replacement cost. But the cash generation stays the same. And as Susan pointed out, and we have paid a dividend every year since we went public in 1971, and we’ve raised it now, I wanna say twenty two years in a row.

And so we’re we’re very protective of our cash flow. We run the business. You know, my dad always used to say, earnings are an opinion, cash is a fact. So for the first time in a long time, we gave some forward guidance on earnings just to help you see what we’re seeing. And if you look at the news release, I’ll just read it for you.

It says, as we enter fiscal year twenty twenty six, the first six months will be measured against a particularly strong 2025, creating challenging comparisons. However, we remain confident in our ability to build on our past success and continue to deliver growth of our diverse product portfolio. So what does all that mean? It means we’re gonna have a tough year to year comparison in the first half because, look, we it was gangbusters this past fiscal twenty twenty five records in every year. But the team and I have put together a plan and have every expectation of delivering a year that beats last year.

Obviously, we’ve given you the safe harbor. No one knows what’s gonna happen. But I will tell you, first half’s gonna be challenging. We are hoping for and planning for a very successful fiscal twenty twenty six. So with that, I will turn it over because I don’t wanna get into any more trouble with the lawyers or the safe harbor provisions.

But I think you’ll get hopefully, you understand or appreciate the guidance that I am giving. So Leslie, I’m going to turn it over to you and you can conduct the Q and A.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Okay, great. Everyone please submit your questions using the ask a question field on the webcast and click submit. I will start the first question which is from John Baer from Ascend Wealth Advisors. He says Doctor. Mervin D’Souza recently joined Oil Dri to lead R and D efforts.

What brought him to Oil Dri? What are his vision and goals related to Oil Dri’s R and D efforts and focus? And how did they align with Oil Dri? Is there a particular R and D emphasis envisioned? Or is it balanced between agricultural, animal health and industrial product development?

Mervyn?

Mervyn D’Souza, VP of R&D, Oil Dri Corporation: Thanks, Leslie. Appreciate the opportunity to address your question, John. My vision and goals indeed do align with Dan’s and the rest of the senior leadership teams to deliver innovation and create value from sorbent minerals, while helping the company grow within our existing markets and develop new products for different applications. I joined Oil Dri for a couple of reasons. The major one was Dan’s commitment to future growth as well as creating a culture where Oil Dri teammates can grow and develop.

Another reason was that Oil Dri is vertically integrated through owned and leased mines. We produce the raw material used to make our distinctive products. And last but not least, the opportunity to work with an R and D team again, many of whom are listening in from our R and D Innovation Campus at Vernon Hills. There’s a lot of room for innovation and creativity when we go all the way from our mines to various global markets and that is a unique advantage that many R and D leaders and companies don’t have. My R and D teammates have a diverse range of experiences and specialized expertise that we leverage when partnering with each oil dry division and the GM to support their specific growth strategies, be it with catheter, animal health, fluids purification or agricultural solutions.

The R and D team supports all our Oil Dri divisions, while our innovation processes and entrepreneurial culture allow us to flex resources for best and biggest opportunities across the company.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Great. Thank you so much. Our next question comes from Robert Smith at Center for Performance Investing. And he asks, in what ways is the current soybean situation affecting your business? And I’m going to have Bruce Pacey answer that.

Bruce Pacey, VP of Fluids Purification, Oil Dri Corporation: Hi, Robert. Thanks for the question. The current administration has put more emphasis on tax benefits for renewable business with the use of soybeans in the market. So we do expect there’ll be more crushing soybeans and more oil going into renewable plants, that will be processing this oil and turning it into diesel fuel. This will also probably generate more business that our current customers that are in the market as well.

And we saw this in the fourth quarter as more soybean oil was being produced in the marketplace and it helped drive some of our sales in the fourth quarter, and we expect that to continue in the F-twenty six.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Great. Thank you. The next question is from Ethan Starr. And both he and Robert Smith are interested in the future prospects for increased sales for both Amlin products in the upcoming year and for fluids purification. But I’m actually going to have Wade talk about Amlan.

Wade Roby, VP of Ag and President of Amlan International, Oil Dri Corporation: Thank you, Leslie, and thank you, Ethan, for the question. As many of you remember, in fiscal year twenty twenty four, there was a general downturn in the ag industry. And certainly the Amlan business and other of our agricultural businesses impacted by that downturn really driven by macro events that we built across the industry not just in The U. S. But in our international markets as well.

In fiscal year twenty twenty five, we saw good recovery. And again, that was across the industry, across our businesses and that led to improved profitability for our customers. As a result of that, in fiscal year twenty twenty five, we saw good growth and a return to more consistent growth as we had been forecasting previously. As we go into 2026, we expect that to continue. We still face regional challenges depending upon the geography in the world.

Some of the economies are still recovering coming out of the pandemic. But generally, we’ve returned to more consistent and predictable economies that we sell into. So going into 2026, we expect to see good growth across our businesses. Amlan is focused on continuing to expand into new geographies, both in Asia and in Latin America, adding new partnerships, adding new channels to the market. And so again, we expect a good year for the business and again more consistent growth that we can deliver.

Macro events can change, but we don’t see that necessarily on the near term horizon. So that would be how we look at the coming year.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Thank you. Next question is from John Baer. He said, you stated in the press release competitors continue to increase their promotional spending during the three month period ending 07/31/2025, which Oil Dri believes tempered its clay based litter sales. Does this promotional activity refer to competitors advertising activity as well as pricing discounts or couponing? Framing the question this way since Oil Dri also stated advertising expenses were down in Q4, so wondering if lower advertising might have had an impact if competitors were advertising more heavily.

Laura Sheiland, will you take that please?

Laura Sheeland, VP and General Manager of Consumer Products Division, Oil Dri Corporation: Sure. Good morning and thank you for the question. When referring to promotional activity in the release, we’re mostly referring to heavy price discounts, couponing, trade spend at large retailers such as rollbacks at Walmart or buy one get one freeze at Publix, as well as other discounting and couponing in the brick and mortar and e commerce channels. During this heavy promotional climate in fiscal year twenty five, we shifted some of our advertising promotional trade spend, hence the reference to the lower advertising spend. We do not view this lower advertising spend as a driver for the tempered clay sales, but more a strategic shift to kind of match what’s going on in the market.

As noted in the earnings release, we’re seeing that the lightweight cat litter segment expanded and surpassed the growth of the cat litter category. And this was largely due to competitors’ promotional spending on the lightweight products. While the competitive promotions can temper sales in the short term, the competitive spend on lightweight really helps drive consumer trial and educate consumers on the benefits of lightweight litter. We’ve articulated over the years our strategy of growing the lightweight litter pie as consumers learn the benefits of lightweight litter. All things being equal, from price and performance perspective, consumers will want to buy lightweight litter.

However, the concept of less weight but the same amount of uses can be difficult to convey to consumers on package since litter is sold by weight but used by volume. Therefore, we see the promotional spending on lightweight as a positive development in the long term because we view the trend of the growing lightweight segment as a key driver for the advancement of our branded and private label litter. So we remain focused on increased distribution and selling of our tax pride and privately labeled lightweight litter products. We remain very excited about our prospects for growth, especially as promotional activity subsides, which we expect it will, as consumers remain budget constrained and look for really high quality private label products and other value offerings.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Great. Next question from Robert Smith. I’m keenly interested in the prospect of using artificial intelligence in the innovation lab for R and D with respect to new product development. Can Doctor. D’Souza please give us his thoughts about this?

Mervyn D’Souza, VP of R&D, Oil Dri Corporation: Thanks, Leslie, and thanks, Bob. I too am excited about the potential for using automation and AI tools to increase the efficiency and effectiveness of R and D and innovation at Oil Dri. That being said, I am also a big fan of the crawl, walk, run philosophy. In my experience, the best outcomes are obtained when balancing automation with qualified human oversight. Currently, this hybrid approach seems to be appropriate for Oil Dri, given deep minerals and application expertise that we have with teammates from both our R and D and operations team and the current AI technology.

For new product development, AI can be used to quickly evaluate and then discard or elevate hypotheses and it can screen a lot of data more rapidly than humanly possible. I’ve been at Oil Dri for a little over five months now and the team and I are in the process of critically reviewing existing data with a focus on quality as a first step, in addition to implementing processes to ensure that we generate technical information that is robust, reliable and reproducible. When working with AI and machine learning algorithms, garbage in, garbage out. In the medium term, Oil Dri is actively assessing advancements in machine learning models, not just for R and D, but also AI applications as they relate to excavation, pooling, crushing and processing our minerals. We acknowledge the disruptive and transformative potential of AI, not just within R and D, but across our business to help with efficiency, sustainability and value creation.

At Oil Dri, we are employing a phased and strategic approach when it comes to AI that allows us to evaluate the cost benefit analysis for Oil Dri as a whole.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Great. Thank you. Next question is from Tyler Ventura from Diamond Hill Capital. And he asked agricultural sales surge 104% in Q4 to a record $11,900,000 You mentioned normalized purchasing patterns and one new key customer. Can you provide more color on the sustainability of this growth and the revenue contribution from the new customer versus normalized patterns?

And Wade, I’m going to turn that over to you.

Wade Roby, VP of Ag and President of Amlan International, Oil Dri Corporation: Yes. Thank you, Leslie, thank you, Tyler. So this goes back a little bit to or relates directly to the answer I gave a moment ago to a previous question. In FY 2024, we saw a pretty substantial downturn in the agricultural markets and this impacted the entire industry, as I mentioned, a lot of it international as well, but also our businesses. And so in fiscal year 2024, we did see reductions.

And part of that was driven by agricultural practices, part of that was driven by higher than normal inventories that had built up of products that farmers really use in broad acre production. As we moved into 2025, so the last fiscal year, we worked through those inventories. We saw recoveries in the market and that resulted in not only our legacy or long term customers expanding their purchases with us, but we also saw some new customers come on board with different types of applications. So fiscal year twenty twenty five was a real strong recovery year for us. As we move into fiscal year twenty twenty six, some of that is going to normalize.

We look to see growth in the Ag sector this year, both in our turf and ornamental segments, but also in our broad acre segments as well, our row crop segments. And again, it will return to what I would call more consistent and predictable growth than we saw between 2024 and 2025, where we saw the significant drop and then the strong rebound. Going forward, as we continue to see markets improve and become more technologically driven, as we saw we see population increase, as we see influence around the world increase and a desire to eat better and to have higher rates of animal protein, vegetable protein and diets. We see ag just continuing to grow on a consistent curve. Those will those macro events are going to impact our businesses very favorably and it’s why we’re very bullish about this segment for Oil Dri into the future.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Great. Thank you. Next question is from Bill Anderson from Bard Associates. He would like an update on the Ultra Pet business. Laura, can you give a brief overview of that, please?

Laura Sheeland, VP and General Manager of Consumer Products Division, Oil Dri Corporation: Yes. Thanks for the question. As Susan noted, we closed on the Ultra acquisition in May 2024, and it has been a great fit from a product, business, cultural and talent perspective. We are very pleased with the acquisition and really remain excited about the Crystal business and the synergies and opportunities that it adds to our business. During fiscal twenty twenty five, we leveraged our relationships with branded and private label customers and the expanded portfolio offering as well as synergies of being able to co load our clay and crystal products together to customers to exceed our estimates of distribution adds, some of which came on in F twenty twenty five and some which will continue in F twenty twenty six.

So in addition, we’ve also exceeded goals of synergies with freight and operations and other costs and SG and A, which has helped offsetting some softness in the legacy customers that came on with Ultra Pet. So all in all, we remain really excited about the acquisition and the opportunities that it’s allowing for our business. Great.

Leslie Garber, Director of Investor Relations, Oil Dri Corporation: Thank you. And we probably have we only have one more minute. So Dan, did you have any closing remarks?

Dan Jaffee, President and CEO, Oil Dri Corporation: Sure. Look, our focus, you guys can tell from the team. I mean, I used to run these teleconferences, it was like a one man band. And now it isn’t at all. And I’m glad you guys, you investors get to hear from the people that are making it happen every single day pulling together.

We’ve always said winning at Oil Dri is a team game, and that’s what you’re seeing here. Not every quarter is going to be as great as this one. So let’s enjoy it and we’re going to continue to do everything we can to create value from sorbent minerals. So thank you for your support and we’ll look forward to talking to you after the first quarter.

Conference Operator: Thank you, ladies and gentlemen. This concludes today’s presentation. We thank you for your participation. You may all disconnect and have a wonderful day.

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