What Oil-Dri Corporation Of America (ODC) Said on Its Q4 Earnings Call

Key Points

• Oil-Dri reported record fiscal 2026 sales and net income, with all-time-high fourth-quarter revenue. Business-to-business sales rose 4% to $50 million, while retail and wholesale sales increased 3% to $79 million.
• Fourth-quarter gross margin held at 27.8% despite higher freight and transportation costs, while operating income grew 17%. Favorable product mix, price increases and cost controls helped offset inflationary pressures.
• The company ended the year with $74 million in cash, generated $80 million in operating cash flow and expanded combined borrowing capacity to $375 million. Management plans to prioritize operational investment, dividends, strategic acquisitions and potential share repurchases.

Oil-Dri Corporation Of America NYSE: ODC reported record fiscal 2026 sales and net income, capped by all-time-high fourth-quarter revenue, as growth in its business-to-business and retail operations helped offset higher transportation costs and pressure on gross margins.

Chairman, President and CEO Dan Jaffee said the company had anticipated difficult year-over-year comparisons in the first half of fiscal 2026 but expected stronger results in the second half as it added business and introduced products. “You see the really great fourth quarter we had,” Jaffee said, adding that sales, net income and EBITDA rose for the full year.

Chief Financial Officer and Chief Information Officer Susan Kreh said fourth-quarter growth was broad-based. Business-to-business sales rose 4% to a record $50 million, while retail and wholesale sales increased 3% to $79 million. The revenue gains were primarily driven by product mix, including animal health, agricultural products and co-packaged cat litter.

Margins held steady amid freight pressure

Despite higher sales, Oil-Dri’s fourth-quarter gross margin remained flat at 27.8%. Kreh said domestic cost of goods sold per ton increased 3% from the prior-year quarter, largely reflecting higher freight and transportation expenses. Diesel-price effects tied to geopolitical conditions and lower trucking-industry capacity contributed to the increase, she said.

The transportation costs were particularly significant for the Retail and Wholesale Products Group, where higher cat litter freight costs contributed to a 5% decline in segment operating income despite sales growth. Depreciation and amortization also increased 6% during the quarter as the company continued to invest in its operations and enterprise capabilities.

Kreh said favorable product mix, targeted price increases and cost-reduction and expense-management efforts helped offset those pressures. Some price increases are expected to be implemented on a lagged basis for certain customers. Fourth-quarter operating income increased 17% from the prior-year period.

Cash generation and borrowing capacity expand

Oil-Dri ended the fiscal year with $74 million in cash and cash equivalents, a 45% increase from $51 million a year earlier. The company generated $80 million of operating cash flow and reported EBITDA of $93 million.

Kreh said the company has been investing in manufacturing infrastructure, data analytics and business intelligence capabilities. Fiscal 2026 capital expenditures totaled $34 million. While those investments are paid for in cash, the resulting depreciation expense creates pressure on reported gross margins, she said.

The company also expanded its financing capacity. It extended its variable-rate revolving credit facility and increased available borrowing capacity by 33% to $100 million. The facility’s accordion feature was increased 150% to $125 million. Oil-Dri separately extended its fixed-rate shelf facility and doubled borrowing capacity there to $150 million.

Combined borrowing capacity under the two facilities increased from $200 million to $375 million. Kreh said the company intends to continue prioritizing investment in operations, dividends, strategic acquisitions and, when appropriate, share repurchases. Oil-Dri increased its dividend twice during fiscal 2026 and paid more than $10 million to shareholders.

Amlan sees recovery and expansion opportunities

Wade Robey, vice president of agriculture and president of Amlan International, said Amlan’s strong fourth-quarter performance reflected a recovery from challenges earlier in the year, including the loss of a key Brazilian account and tariff-related impacts in global markets.

Robey said the business experienced consistent growth in Asia and recovered some sales in Latin America while adding customers and volumes in Brazil. He also cited regulatory developments in Brazil, where the MAPA agency has made changes that improve product-registration and claims capabilities, as well as bans on certain antibiotics used in animal feed.

Those antibiotic restrictions could increase demand for alternatives, including natural products in Amlan’s portfolio, Robey said. The company is also expanding distribution in Brazil, pursuing the ruminant market there and launching new products in North America that are being used by some large poultry customers.

While Robey said the exceptional fourth-quarter growth rate may not be sustainable, he said the company expects “very good growth year-over-year” as Amlan expands.

Cat litter, fluids purification and acquisition strategy

Chris Lamson, group vice president of business-to-business and strategic growth initiatives, said Oil-Dri remains focused on growing lightweight cat litter through co-manufacturing relationships. He declined to provide detailed customer or margin information because of contractual obligations, but said the company’s analysis indicates there is little, if any, interaction between the co-manufacturing business and its branded litter sales.

Lamson said Oil-Dri used existing capacity in several parts of the supply chain and made targeted capital investments where customer specifications or bottlenecks required them. Longer-term agreements with customers support the company’s confidence in those investments, he said.

Laura Scheland, vice president and general manager of the Consumer Products Division, said branded cat litter faces rising slotting costs, customer investment requirements, retail consolidation and elevated promotional activity from larger brands, smaller competitors and new entrants. Still, she said Oil-Dri remains the fourth-largest cat litter brand nationally by units and sees opportunities in innovation, e-commerce and its mix of branded and private-label products.

In fluids purification, Jaffee said full-year sales declined 5% largely because fiscal 2025 benefited from rising renewable diesel sales as new production facilities came online. He said the fiscal 2026 decline did not result from customer losses; instead, volumes varied based on oil types and feedstock quality. Demand from edible-oil and renewable-diesel customers remained solid, according to Jaffee.

On acquisitions, Lamson said the company will remain disciplined and focused on businesses or capabilities that create value from sorbent minerals. Kreh added that Oil-Dri may pursue larger internal investment opportunities if they offer appropriate long-term shareholder returns.

About Oil-Dri Corporation Of America (NYSE:ODC)

Oil-Dri Corporation of America develops, manufactures and markets mineral-based products designed to absorb, filter and control liquids and odors. The company serves consumer, industrial, agricultural and specialty markets, using products such as fuller's earth and other absorbent minerals in a range of applications.

Its consumer products include cat litter and related animal-care products sold under brands such as Cat's Pride and Jonny Cat. Oil-Dri also supplies absorbent products for industrial and commercial uses, including spill cleanup, oil and grease absorption, moisture control, filtration, sports-field maintenance and other specialized applications.

Founded in 1941, Oil-Dri is headquartered in Chicago, Illinois.

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