Oil-Dri Corporation of America

What they do

Oil-Dri surface mines calcium bentonite, attapulgite and diatomaceous shale on leased or owned land near manufacturing facilities in Mississippi, Georgia, Illinois and California. It produces absorbent products such as Cat's Pride and Jonny Cat cat litter, Oil-Dri floor absorbents, Amlan animal health products and Agsorb and Verge agricultural chemical carriers, and adsorbent purification clays such as Ultra-Clear, Pure-Flo and Metal-X. The company sells through two reportable segments: Retail and Wholesale Products Group and Business to Business Products Group.

Revenue drivers

• Business to Business Products Group — Fiscal 2025 net sales of $182.6 million, up 21%, driven by fluids purification products for the renewable diesel business and higher agricultural and horticultural sales; segment operating income was $59.8 million.
• Retail and Wholesale Products Group — Fiscal 2025 net sales of $303.0 million, up 6%, with growth primarily from the silica-gel crystal cat litter acquired with Ultra Pet in May 2024; segment operating income was $44.1 million.
• Cat litter — Sold under Cat's Pride and Jonny Cat brands plus private label and co-packaged litter, including the EPA-approved Cat's Pride Antibacterial Clumping Litter launched in fiscal 2023.
• Agricultural and horticultural products — Agsorb and Verge chemical carriers and related products sold to agricultural chemical manufacturers; higher sales contributed to fiscal 2025 Business to Business growth.

Recent performance

For the third quarter ended April 30, 2026, consolidated net sales were $126.3 million, up 9% from $115.5 million, and net income was $14.5 million, up 25%. Third-quarter gross margin fell to 26.7% from 28.6% on a 6% increase in domestic per ton cost of goods sold, while SG&A declined 13% to $16.6 million on a lower corporate bonus accrual. For the nine months ended April 30, 2026, net sales were $364.6 million, up 1%, but operating income fell 5% to $49.7 million and gross margin decreased to 27.8% from 30.0%. The February 2026 report noted that January 2026 Winter Storm Fern temporarily shut down facilities and reduced production, and backlog declined $2.2 million sequentially in the third quarter.

Strategy

Management describes continued investment in new product introductions and extensions as necessary because much of the product portfolio sits in mature categories. Recent direction has included acquiring Ultra Pet in May 2024 to add silica-gel crystal cat litter to the Retail and Wholesale lineup, and growing fluids purification sales into renewable diesel. The company completed a two-for-one stock split distributed January 3, 2025, and continues paying a dividend ($0.645 per share in fiscal 2025). Management cited disciplined expense management and substantial cash generation as supporting shareholder returns.

Risks

• New product dependence — The 10-K states a significant part of future growth requires successful new products or extensions, and acquired lines such as Ultra Pet may not deliver expected profitability gains.
• Mature category volumes — The 10-K notes a significant portion of net sales comes from mature categories that have at times seen little or no volume growth or declines.
• Weather and operational disruption — Winter Storm Fern in January 2026 shut down affected facilities, reduced production and fixed cost absorption, and created a backlog that was still being worked down in the third quarter.
• Input and transportation cost inflation — Per ton domestic cost of goods sold rose 6% in the third quarter of fiscal 2026 and 4% over nine months, with management linking ongoing geopolitical unrest to possible further increases in transportation and input costs.

Outlook

CEO Daniel S. Jaffee said the company expects to achieve its annual plan and surpass last year's net income as it enters the final three months of fiscal 2026. He cautioned that ongoing geopolitical unrest and related increases in transportation and input costs could create headwinds. The 10-Q states that all operations affected by Winter Storm Fern have resumed normal activity.