UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended October 31, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to ______________ Commission File Number 001-12622 OIL-DRI CORPORATION OF AMERICA (Exact name of the registrant as specified in its charter) ...

Financial Data and Key Metrics Changes - Consolidated net sales for fiscal year 2021 reached a record high of $305 million, representing an 8% growth over the prior year, with a 20% increase in the fourth quarter [10][5] - Annual consolidated gross profit decreased by $3.5 million year-over-year due to significant market-based inflation, with cost of goods sold per manufactured ton increasing approximately 8% compared to the prior year [12][10] - Full year net income attributed to Oil-Dri was $11.1 million, with net income per diluted common share at $1.57, down from $2.65 in the prior year, which included a one-time gain [16][10] Business Line Data and Key Metrics Changes - Sales of cat litter increased by 9%, while agricultural products saw a 19% increase year-over-year [10] - Revenues from Fluids Purification products were up 3%, and Industrial and Sports products revenues grew 9% year-over-year [11] - The Business to Business Products Group fourth quarter revenues reached $30 million, a 13% increase, driven by strong growth in Agricultural and Fluid Purification businesses [21] Market Data and Key Metrics Changes - The demand for poultry-related products has increased due to a shift in consumer preferences in China, while the swine market remains under pressure from oversupply [50][49] - The retail and wholesale products group saw fourth quarter revenues of $48 million, a 26% increase, driven by branded and private label cat litter products [25] Company Strategy and Development Direction - The company is focusing on strategic opportunities in lightweight cat litter products and positioning for future growth in Animal Health & Nutrition products [28] - Management emphasized the importance of cost control and price increases to mitigate the impact of rising input costs [20][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment and the need for ongoing price increases to cover rising input costs [20][28] - The company remains optimistic about long-term growth in Animal Health, despite current operational pressures [31] Other Important Information - The company ended the fiscal year with cash and cash equivalents of $25 million and a low debt-to-total capital ratio of about 5% [26] - The company repurchased approximately 88,000 shares of common stock for $3.1 million during fiscal year 2021 [27] Q&A Session Summary Question: Progress on marketing and selling Varium and NeoPrime - Management indicated that they expect activity in the second quarter and remain positive about long-term prospects despite current operational pressures [31] Question: Concerns about investor relations and company visibility - Management acknowledged the feedback and discussed the current valuation, emphasizing a focus on running the business rather than extensive marketing [36][40] Question: Demand shifts in China due to swine and poultry market changes - Management confirmed that the poultry market is stable and demand for poultry-related products is increasing, while the swine market faces challenges [50][52] Question: Details on sales growth for branded and private label cat litter - Growth in cat litter sales was attributed to both organic growth and new customer acquisitions, with volume accounting for half of the revenue growth [61][64]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____ to _____ Commission File Number 001-12622 OIL-DRI CORPORATION OF AMERICA (Exact name of the registrant as specified in its charter) Delaware 36-2048898 (State or other jur ...

Oil-Dri Corporation of America (NYSE:ODC) Q3 2021 Earnings Conference Call June 9, 2021 10:00 AM ET Company Participants Leslie Garber - Manager, IR Dan Jaffee - President and CEO Susan Kreh - CFO Molly VandenHeuvel - COO Jessica Moskowitz - VP and General Manager of the Consumer Products Division Fred Kao - VP, Global Sales for Amlan International Laura Scheland - General Counsel Conference Call Participants Ethan Star - Private Investor Robert Smith - Center for Performance Operator Good day. And thank yo ...

[Cover Page & General Information](index=1&type=section&id=Cover%20Page%20%26%20General%20Information) This section provides essential company filing details, cautionary statements regarding forward-looking information, and trademark notices [Form 10-Q Filing Details](index=1&type=section&id=Form%2010-Q%20Filing%20Details) This section details the Form 10-Q filing information, including registrant details, SEC compliance, filer status, and registered securities - The registrant is **Oil-Dri Corporation of America**, incorporated in Delaware, filing a **Quarterly Report on Form 10-Q** for the period ended April 30, 2021[1](index=1&type=chunk) - The company is an '**Accelerated Filer**' and a '**Smaller Reporting Company**'[3](index=3&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :-------------------------- | :---------------- | :---------------------------------------- | | Common Stock, par value $0.10 per share | ODC | New York Stock Exchange | - As of April 30, 2021, there were **5,358,760 shares of Common Stock** and **2,050,565 shares of Class B Stock** outstanding[3](index=3&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section cautions on forward-looking statements, noting actual results may differ due to risks and uncertainties - The report contains forward-looking statements based on current expectations, estimates, forecasts, and projections about future performance and business[7](index=7&type=chunk) - Such statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially, including those described in **Item 1A, Risk Factors**, of the **Annual Report on Form 10-K** and **Quarterly Report on Form 10-Q**[8](index=8&type=chunk) - The company does not intend or have an obligation to publicly update any forward-looking statements after the report's distribution, except as required by law[8](index=8&type=chunk) [Trademark Notice](index=2&type=section&id=Trademark%20Notice) This section identifies the registered trademarks owned by Oil-Dri Corporation of America - "**Oil-Dri**" and "**Agsorb**" are registered trademarks of **Oil-Dri Corporation of America**[10](index=10&type=chunk) [PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, and details on internal controls [Item 1. Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, detailing interim financial position and performance [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) This section presents the company's condensed consolidated balance sheet, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet (in thousands) | ASSETS | April 30, 2021 | July 31, 2020 | | :----------------------------------------- | :------------- | :------------ | | Cash and cash equivalents | $30,318 | $40,890 | | Accounts receivable, net | 39,088 | 34,911 |\n| Inventories | 23,584 | 23,893 | | Total Current Assets | 103,870 | 108,420 | | Property, Plant and Equipment, Net | 91,198 | 92,948 | | Total Assets | $229,634 | $235,882 | | LIABILITIES & STOCKHOLDERS' EQUITY | April 30, 2021 | July 31, 2020 | | :----------------------------------------- | :------------- | :------------ | | Current maturities of notes payable | $1,000 | $1,000 | | Accounts payable | 6,912 | 12,529 | | Total Current Liabilities | 35,909 | 46,207 | | Total Noncurrent Liabilities | 40,786 | 41,711 | | Total Liabilities | 76,695 | 87,918 | | Total Stockholders' Equity | 152,939 | 147,964 | | Total Liabilities & Stockhold\ners' Equity | $229,634 | $235,882 | - **Total assets** decreased by **$6.25 million** from July 31, 2020, to April 30, 2021, primarily due to a decrease in cash and cash equivalents[12](index=12&type=chunk) - **Total liabilities** decreased by **$11.22 million**, mainly driven by a reduction in accounts payable and accrued expenses[14](index=14&type=chunk) - **Total stockholders' equity** increased by **$4.98 million**, reflecting an increase in retained earnings[14](index=14&type=chunk) [Condensed Consolidated Statements of Income (For the Nine Months Ended April 30)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Nine%20Months%29) This section presents the condensed consolidated statements of income, outlining revenues, expenses, and net income Condensed Consolidated Statements of Income (in thousands, except per share amounts) | Metric | 2021 | 2020 | | :-------------------------------------- | :---------- | :---------- | | Net Sales | $226,852 | $218,383 | | Cost of Sales | (171,853) | (158,105) | | Gross Profit | 54,999 | 60,278 | | Selling, General and Administrative Expenses | (43,647) | (44,584) | | Income from Operations | 11,352 | 15,694 | | Income Before Income Taxes | 12,074 | 15,432 | | Net Income Attributable to Oil-Dri | 10,510 | 13,014 | | Basic Common Net Income Per Share | $1.52 | $1.85 | | Diluted Common Net Income Per Share | $1.49 | $1.82 | - **Net Sales** increased by **4%** to **$226.85 million** in 2021 from **$218.38 million** in 2020[16](index=16&type=chunk) - **Gross Profit** decreased by **8.75%** to **$54.99 million** in 2021 from **$60.27 million** in 2020[16](index=16&type=chunk) - **Net Income Attributable to Oil-Dri** decreased by **19.24%** to **$10.51 million** in 2021 from **$13.01 million** in 2020[16](index=16&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (For the Nine Months Ended April 30)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Nine%20Months%29) This section presents the condensed consolidated statements of comprehensive income, including net income and other comprehensive income Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | 2021 | 2020 | | :-------------------------------------- | :---------- | :---------- | | Net Income Attributable to Oil-Dri | $10,510 | $13,014 | | Other Comprehensive Income | 1,014 | 5,444 | | Total Comprehensive Income | $11,524 | $18,458 | - **Total Comprehensive Income** decreased by **37.57%** to **$11.52 million** in 2021 from **$18.46 million** in 2020[20](index=20&type=chunk) - **Other Comprehensive Income** significantly decreased from **$5.44 million** in 2020 to **$1.01 million** in 2021, primarily due to lower pension and postretirement benefits[20](index=20&type=chunk) [Condensed Consolidated Statements of Income (For the Three Months Ended April 30)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Three%20Months%29) This section presents the condensed consolidated statements of income, outlining revenues, expenses, and net income Condensed Consolidated Statements of Income (in thousands, except per share amounts) | Metric | 2021 | 2020 | | :-------------------------------------- | :---------- | :---------- | | Net Sales | $76,255 | $76,256 | | Cost of Sales | (59,732) | (54,871) | | Gross Profit | 16,523 | 21,385 | | Selling, General and Administrative Expenses | (14,592) | (15,685) | | Income from Operations | 1,931 | 5,700 | | Income Before Income Taxes | 2,162 | 5,597 | | Net Income Attributable to Oil-Dri | 2,227 | 4,648 | | Basic Common Net Income Per Share | $0.32 | $0.66 | | Diluted Common Net Income Per Share | $0.32 | $0.65 | - **Net Sales** remained flat at **$76.25 million** in the third quarter of fiscal year 2021 compared to the same period in 2020[23](index=23&type=chunk) - **Gross Profit** decreased by **22.73%** to **$16.52 million** in 2021 from **$21.38 million** in 2020[23](index=23&type=chunk) - **Net Income Attributable to Oil-Dri** decreased by **52.1%** to **$2.23 million** in 2021 from **$4.65 million** in 2020[23](index=23&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (For the Three Months Ended April 30)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Three%20Months%29) This section presents the condensed consolidated statements of comprehensive income, including net income and other comprehensive income Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | 2021 | 2020 | | :-------------------------------------- | :---------- | :---------- | | Net Income Attributable to Oil-Dri | $2,227 | $4,648 | | Other Comprehensive Income (Loss) | 277 | (6) | | Total Comprehensive Income | $2,504 | $4,642 | - **Total Comprehensive Income** decreased by **46.06%** to **$2.50 million** in 2021 from **$4.64 million** in 2020[26](index=26&type=chunk) - **Other Comprehensive Income** improved significantly from a loss of **$6,000** in 2020 to an income of **$277,000** in 2021[26](index=26&type=chunk) [Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in stockholders' equity, including retained earnings and treasury stock transactions - **Total Stockholders' Equity** increased from **$147.96 million** at July 31, 2020, to **$152.94 million** at April 30, 2021[31](index=31&type=chunk) - **Retained earnings** increased by **$5.12 million** during the nine months ended April 30, 2021, primarily due to **net income** offset by dividends declared[31](index=31&type=chunk) - **Treasury Stock** purchases amounted to **$2.93 million** for the nine months ended April 30, 2021, compared to **$4.62 million** in the prior year[31](index=31&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the condensed consolidated statements of cash flows, categorizing cash from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flows From | 2021 | 2020 | | :-------------------------------------------- | :---------- | :---------- | | Operating Activities | $8,340 | $22,269 | | Investing Activities | (10,753) | (10,758) | | Financing Activities | (8,324) | (12,852) | | Effect of exchange rate changes | 165 | 27 | | Net Decrease in Cash and Cash Equivalents | $(10,572) | $(1,314) | | Cash and Cash Equivalents, End of Period | $30,318 | $20,548 | - **Net cash provided by operating activities** decreased significantly to **$8.34 million** in 2021 from **$22.27 million** in 2020[34](index=34&type=chunk) - **Net cash used in financing activities** decreased to **$8.32 million** in 2021 from **$12.85 million** in 2020, primarily due to lower **treasury stock** purchases and no principal payments on **notes payable** in 2021[34](index=34&type=chunk) - The company experienced a **net decrease in cash and cash equivalents** of **$10.57 million** in 2021, compared to a **$1.31 million** decrease in 2020[34](index=34&type=chunk) [Notes To Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20To%20Condensed%20Consolidated%20Financial%20Statements) This section provides explanatory notes to the condensed consolidated financial statements, detailing accounting policies and disclosures [1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the basis of financial statement presentation and significant accounting policies applied - The unaudited **Condensed Consolidated Financial Statements** are prepared in accordance with **U.S. GAAP** for interim financial information and comply with **Form 10-Q** and **Regulation S-X**[39](index=39&type=chunk) - Management's estimates and assumptions, including those related to **COVID-19** impacts, are periodically revised, and actual results may differ[43](index=43&type=chunk) - Revenue is recognized when performance obligations are satisfied, typically upon shipment or receipt of finished products by customers[53](index=53&type=chunk) - The company deferred approximately **$2.3 million** in **payroll taxes** in calendar year 2020 under the **CARES Act**, payable equally in Q4 2021 and Q4 2022[58](index=58&type=chunk) [2. NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS](index=16&type=section&id=2.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS%20AND%20REGULATIONS) This section discusses new accounting pronouncements and regulations, and their potential impact on the company - The company is evaluating the impact of **ASC 848 (Reference Rate Reform)** on debt agreements referencing **LIBOR**, effective immediately[59](index=59&type=chunk) - **ASC 740 (Income Taxes)** guidance, simplifying income tax accounting, is effective for the first quarter of fiscal year 2022, with early adoption permitted[60](index=60&type=chunk) - **ASC 326 (Financial Instruments-Credit Losses)**, requiring an expected loss impairment model, is effective for the first quarter of fiscal year 2023[61](index=61&type=chunk) [3. INVENTORIES](index=16&type=section&id=3.%20INVENTORIES) This section details the composition of inventories and related accounting policies and reserves Composition of Inventories (in thousands) | Category | April 30, 2021 | July 31, 2020 | | :-------------- | :------------- | :------------ | | Finished goods | $14,528 | $14,500 | | Packaging | 4,663 | 4,587 | | Other | 4,393 | 4,806 | | Total Inventories | $23,584 | $23,893 | - **Total inventories** decreased slightly from **$23.89 million** to **$23.58 million**[63](index=63&type=chunk) - The **inventory obsolescence reserve** decreased from **$926,000** at July 31, 2020, to **$746,000** at April 30, 2021, due to better inventory management[64](index=64&type=chunk) - **Packaging inventories** increased due to anticipated sales demand and higher packaging costs, while **other inventories** decreased due to increased production[64](index=64&type=chunk) [4. FAIR VALUE MEASUREMENTS](index=17&type=section&id=4.%20FAIR%20VALUE%20MEASUREMENTS) This section describes the company's fair value measurements for financial instruments - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction[65](index=65&type=chunk) - **Cash equivalents**, primarily money market mutual funds, are classified as **Level 1**[65](index=65&type=chunk) - The estimated fair value of **notes payable** was **$11.38 million** at April 30, 2021, and **$11.63 million** at July 31, 2020, classified as **Level 2**[66](index=66&type=chunk) [5. GOODWILL AND OTHER INTANGIBLE ASSETS](index=17&type=section&id=5.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This section provides information on goodwill and other intangible assets, including amortization and impairment analysis Intangible Amortization Expense (in thousands) | Period | 2021 | 2020 | | :------------------------------------ | :--- | :--- | | Third Quarter | $146 | $184 | | First Nine Months | $451 | $600 | - Estimated **intangible amortization** for the remainder of fiscal year 2021 is **$144,000**[68](index=68&type=chunk) - The company has one **acquired trademark** recorded at **$376,000** with an indefinite life, which is not amortized[69](index=69&type=chunk) - No **goodwill impairment** was identified in the annual analysis for fiscal year 2020, and no triggering events for a new analysis have occurred, though **COVID-19** effects could change this[70](index=70&type=chunk) [6. ACCRUED EXPENSES](index=18&type=section&id=6.%20ACCRUED%20EXPENSES) This section details the composition of accrued expenses, including salaries, benefits, and trade promotions Accrued Expenses (in thousands) | Category | April 30, 2021 | July 31, 2020 | | :---------------------------------------- | :------------- | :------------ | | Salaries, Wages, Commissions and Employee Benefits | $11,051 | $14,798 | | Trade promotions and advertising | 1,321 | 2,349 | | Freight | 2,961 | 1,313 | | Real Estate Tax | 605 | 1,658 | | Other | 8,012 | 8,582 | | Total | $23,950 | $28,700 | - **Total accrued expenses** decreased by **$4.75 million**, primarily due to lower salaries, wages, commissions, employee benefits, and trade promotions[71](index=71&type=chunk) - **Freight accruals** increased due to higher freight rates during the nine months ended April 30, 2021[71](index=71&type=chunk) [7. OTHER CONTINGENCIES](index=18&type=section&id=7.%20OTHER%20CONTINGENCIES) This section discusses various legal actions and other contingencies that may affect the company - The company is involved in various ordinary legal actions, none of which are expected to have a material adverse effect on its business[72](index=72&type=chunk) - A lawsuit alleging breach of contract regarding a contingency fee from a former service provider was filed in July 2020; the company believes the claim is without merit and any loss is unlikely to be material[72](index=72&type=chunk) [8. LEASES](index=18&type=section&id=8.%20LEASES) This section outlines the company's operating lease arrangements, costs, and future payment obligations - The company primarily has **operating leases** for real estate properties, rail tracks, railcars, and office equipment[73](index=73&type=chunk) Operating Lease Costs (in thousands) | Period | 2021 (3 Months) | 2020 (3 Months) | 2021 (9 Months) | 2020 (9 Months) | | :------------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Operating lease cost | $592 | $517 | $1,944 | $1,551 | | Short-term operating lease cost | 173 | 190 | 535 | 590 | - The **weighted-average remaining lease term** for **operating leases** was **9.5 years** at April 30, 2021, with a **weighted-average discount rate** of **3.96%**[75](index=75&type=chunk) Scheduled Minimum Future Lease Payments (in thousands) | Year | Amount | | :-------- | :----- | | 2021 | $641 | | 2022 | 2,323 | | 2023 | 1,321 | | 2024 | 1,170 | | 2025 | 1,089 | | Thereafter| 6,204 | | Total | 12,748 | | Less: imputed interest | (2,169) | | Net lease obligation | $10,579 | [9. PENSION AND OTHER POSTRETIREMENT BENEFITS](index=20&type=section&id=9.%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) This section details the company's pension and other postretirement benefit plans, costs, and assumptions - The **Pension Plan** was amended to freeze participation and future benefit accruals effective March 1, 2020[76](index=76&type=chunk) Net Periodic Pension and Postretirement Health Benefit Costs (in thousands) | Benefit Type & Period | 2021 (3 Months) | 2020 (3 Months) | 2021 (9 Months) | 2020 (9 Months) | | :-------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Pension Benefits Net Cost | $(212) | $45 | $(638) | $1,164 | | Postretirement Health Benefits Net Cost | $47 | $47 | $140 | $143 | - The **Supplemental Executive Retirement Plan (SERP)** was terminated effective June 30, 2020, with benefits payable as a lump sum between June 30, 2021, and June 8, 2022[81](index=81&type=chunk) Assumptions for Net Periodic Benefit Cost | Assumption | Pension Benefits (2021) | Pension Benefits (2020) | Postretirement Health Benefits (2021) | Postretirement Health Benefits (2020) | | :---------------------------------------- | :---------------------- | :---------------------- | :------------------------------------ | :------------------------------------ | | Discount rate | 2.14 % | 3.35 % | 1.63 % | 2.93 % | | Rate of increase in compensation levels | — % | 3.50 % | — | — | | Long-term expected rate of return on assets | 6.50 % | 7.00 % | — | — | [10. OPERATING SEGMENTS](index=21&type=section&id=10.%20OPERATING%20SEGMENTS) This section provides financial information by operating segment, including net sales and income from operations - The company operates in two reportable segments: **Business to Business Products Group** and **Retail and Wholesale Products Group**[82](index=82&type=chunk) Net Sales by Segment (in thousands) - Nine Months Ended April 30 | Segment | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | | Business to Business Products Group | $80,098 | $77,632 | | Retail and Wholesale Products Group | $146,754 | $140,751 | | Total Net Sales | $226,852 | $218,383 | Income from Operations by Segment (in thousands) - Nine Months Ended April 30 | Segment | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | | Business to Business Products Group | $23,005 | $24,046 | | Retail and Wholesale Products Group | $11,487 | $15,380 | | Corporate Expenses | $(23,140) | $(23,732) | | Total Income from Operations | $11,352 | $15,694 | Net Sales by Segment (in thousands) - Three Months Ended April 30 | Segment | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | | Business to Business Products Group | $26,293 | $26,683 | | Retail and Wholesale Products Group | $49,962 | $49,573 | | Total Net Sales | $76,255 | $76,256 | Income from Operations by Segment (in thousands) - Three Months Ended April 30 | Segment | 2021 | 2020 | | :-------------------------------- | :---------- | :---------- | | Business to Business Products Group | $7,146 | $8,198 | | Retail and Wholesale Products Group | $2,898 | $6,412 | | Corporate Expenses | $(8,113) | $(8,910) | | Total Income from Operations | $1,931 | $5,700 | [11. STOCK-BASED COMPENSATION](index=23&type=section&id=11.%20STOCK-BASED%20COMPENSATION) This section describes the company's stock-based compensation plans and related expenses - The **2006 Long Term Incentive Plan** permits grants of stock options, restricted stock, and other awards, with **356,446 shares** available for future grants as of April 30, 2021[87](index=87&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | 2021 | 2020 | | :---------------- | :---------- | :---------- | | Third Quarter | $559 | $770 | | First Nine Months | $1,849 | $2,549 | Restricted Stock Transactions (in thousands, except fair value) | Metric | Restricted Shares | Weighted Average Grant Date Fair Value | | :-------------------------------------- | :---------------- | :------------------------------------- | | Non-vested restricted stock at July 31, 2020 | 390 | $33.19 | | Granted | 56 | $35.97 | | Vested | (67) | $33.10 | | Forfeitures | (25) | $29.58 | | Non-vested restricted stock at April 30, 2021 | 354 | $33.91 | [12. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME](index=24&type=section&id=12.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20%28LOSS%29%20INCOME) This section details changes in accumulated other comprehensive income (loss), including pension and translation adjustments Changes in Accumulated Other Comprehensive (Loss) Income (in thousands) | Component | Balance as of July 31, 2020 | Net current-period other comprehensive income, net of tax | Balance as of April 30, 2021 | | :-------------------------------------- | :-------------------------- | :-------------------------------------------------------- | :--------------------------- | | Pension and Postretirement Health Benefits | $(11,994) | $494 | $(11,500) | | Cumulative Translation Adjustment | $(260) | $520 | $260 | | Total Accumulated Other Comprehensive (Loss) Income | $(12,254) | $1,014 | $(11,240) | - **Accumulated Other Comprehensive Loss** improved from **$(12.25) million** at July 31, 2020, to **$(11.24) million** at April 30, 2021[91](index=91&type=chunk) - The improvement was driven by a **$494,000** increase in pension and postretirement benefits and a **$520,000** positive cumulative translation adjustment[91](index=91&type=chunk) [13. RELATED PARTY TRANSACTIONS](index=24&type=section&id=13.%20RELATED%20PARTY%20TRANSACTIONS) This section discloses transactions with related parties, including sales to customers and payments to vendors Related Party Transactions (in thousands) | Transaction Type & Period | 2021 (3 Months) | 2020 (3 Months) | 2021 (9 Months) | 2020 (9 Months) | | :------------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Net sales to customer with Board member | $72 | $103 | $253 | $263 | | Payments to vendor with Board member | $72 | $119 | $273 | $182 | - **Outstanding accounts receivable** from the related customer were **$10,000** at April 30, 2021, with no outstanding accounts payable to the related vendor[92](index=92&type=chunk)[93](index=93&type=chunk) [14. SUBSEQUENT EVENTS](index=25&type=section&id=14.%20SUBSEQUENT%20EVENTS) This section reports significant events that occurred after the balance sheet date - On May 4, 2021, the company purchased a pension annuity, settling **$8.5 million** of **projected benefit obligations** and recognizing a **settlement loss** of approximately **$0.6 million**[94](index=94&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations](index=24&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20Of%20Operations) This section analyzes financial condition and operations, covering **COVID-19** impact, segment performance, and liquidity [OVERVIEW](index=26&type=section&id=OVERVIEW) This section provides an overview of the company's business, products, and the impact of external factors like **COVID-19** - The company develops, mines, manufactures, and markets sorbent products primarily from clay minerals, serving two main customer groups: **Retail and Wholesale**, and **Business to Business**[97](index=97&type=chunk) - **COVID-19** has not significantly impacted the business as a whole, with facilities operating as essential businesses, but has caused changes in consumer purchasing patterns and increased costs[98](index=98&type=chunk) - Industrial and sports product sales declined in fiscal year 2020 but are showing positive trends with re-openings; fluids purification product sales were negatively impacted by reduced travel and plant test delays[99](index=99&type=chunk) - The company experienced increased transportation costs due to a national driver shortage and tight trucking capacity, and higher packaging and materials costs due to commodity price increases[105](index=105&type=chunk)[121](index=121&type=chunk) [NINE MONTHS ENDED APRIL 30, 2021 COMPARED TO NINE MONTHS ENDED APRIL 30, 2020](index=27&type=section&id=NINE%20MONTHS%20ENDED%20APRIL%2030%2C%202021%20COMPARED%20TO%20NINE%20MONTHS%20ENDED%20APRIL%2030%2C%202020) This section analyzes financial performance for the nine months ended April 30, 2021, compared to the prior year [CONSOLIDATED RESULTS](index=27&type=section&id=CONSOLIDATED%20RESULTS%20%28Nine%20Months%29) This section presents a consolidated analysis of the company's financial results, including sales, gross profit, and net income - **Consolidated net sales** increased by **4%** to **$226.85 million**, driven by both **Retail and Wholesale** and **Business to Business** segments[104](index=104&type=chunk) - **Consolidated gross profit** decreased to **24%** of **net sales** from **28%**, primarily due to higher freight (up **15%**), packaging (up **13%**), materials (up **5%**), natural gas (up **3%**), and non-fuel costs per manufactured ton[105](index=105&type=chunk) - **Total SG&A expenses** decreased by **2%** to **$43.65 million**, attributed to lower estimated annual incentive bonus accrual and pension costs, partially offset by increased 401(k) employer match[106](index=106&type=chunk)[107](index=107&type=chunk) - **Consolidated net income before taxes** decreased by **22%** to **$12.07 million**[109](index=109&type=chunk) - **Income tax expense** decreased to **$1.65 million** (**14%** effective tax rate) from **$2.57 million** (**17%** effective tax rate), due to lower expected annual taxable income and certain tax credits/deductions[110](index=110&type=chunk) [BUSINESS TO BUSINESS PRODUCTS GROUP](index=28&type=section&id=BUSINESS%20TO%20BUSINESS%20PRODUCTS%20GROUP%20%28Nine%20Months%29) This section details the financial performance of the **Business to Business Products Group** segment - **Net sales** increased by **3%** to **$80.10 million**, driven by a **13%** increase in **agricultural and horticultural chemical carrier products** and a **1%** increase in **fluids purification products**[111](index=111&type=chunk) - Agricultural sales benefited from a shift in timing of sales to a major customer, a new business application for Agsorb, and new smaller customers[111](index=111&type=chunk) - **Fluids purification sales** improved in Latin America and Europe but decreased in North America and Asia due to **COVID-19** impacts, good oil quality, and price competition[111](index=111&type=chunk) - **SG&A expenses** increased by **6%** due to investment in the animal health business (increased sales personnel, leadership, marketing), partially offset by lower travel and bad debt expenses[112](index=112&type=chunk) - **Operating income** decreased by **4%** to **$23.01 million**, primarily due to higher freight, packaging, materials, natural gas, and non-fuel costs, as well as increased **SG&A**[113](index=113&type=chunk) [RETAIL AND WHOLESALE PRODUCTS GROUP](index=29&type=section&id=RETAIL%20AND%20WHOLESALE%20PRODUCTS%20GROUP%20%28Nine%20Months%29) This section details the financial performance of the **Retail and Wholesale Products Group** segment - **Net sales** increased by **4%** to **$146.75 million**, primarily driven by a **5%** increase in **cat litter sales** (private label and branded scoopable) and a **2%** increase in **industrial and sports products**[114](index=114&type=chunk) - Increased pet adoption and overall macro spending on pets contributed to higher **cat litter sales**[114](index=114&type=chunk) - **Industrial and sports product sales** increased due to the re-opening of businesses and sports fields[114](index=114&type=chunk) - **SG&A expenses** decreased by **1%** due to lower travel and bad debt expenses, partially offset by higher advertising costs[115](index=115&type=chunk) - **Operating income** decreased by **25%** to **$11.49 million**, driven by lower sales and higher freight, packaging, materials, natural gas, and non-fuel costs[116](index=116&type=chunk) [FOREIGN OPERATIONS](index=29&type=section&id=FOREIGN%20OPERATIONS%20%28Nine%20Months%29) This section analyzes the financial performance and sales trends of the company's foreign subsidiaries - **Foreign subsidiaries' net sales** increased by **18%** to **$13.01 million**, representing **6%** of **consolidated net sales**[117](index=117&type=chunk) - Canada subsidiary's **cat litter sales** increased by **24%** and industrial absorbent granules by **31%** due to new products, existing customer sales, promotions, and re-openings[117](index=117&type=chunk) - **Animal health product sales** grew in China (up **49%** due to new contracts, increased sales, and marketing efforts) and Mexico[117](index=117&type=chunk) - **Net sales** in the United Kingdom decreased due to **COVID-19** lockdowns impacting demand for industrial floor granules and jet fuel purification products, and a customer discontinuing a product[117](index=117&type=chunk) - Foreign subsidiaries reported a **net loss** of **$177,000**, primarily due to continued investment in Indonesia and higher **SG&A** in Mexico, partially offset by higher **net income** from China[118](index=118&type=chunk) [THREE MONTHS ENDED APRIL 30, 2021 COMPARED TO THREE MONTHS ENDED APRIL 30, 2020](index=30&type=section&id=THREE%20MONTHS%20ENDED%20APRIL%2030%2C%202021%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20APRIL%2030%2C%202020) This section analyzes financial performance for the three months ended April 30, 2021, compared to the prior year [CONSOLIDATED RESULTS](index=30&type=section&id=CONSOLIDATED%20RESULTS%20%28Three%20Months%29) This section presents a consolidated analysis of the company's financial results, including sales, gross profit, and net income - **Consolidated net sales** were essentially flat at **$76.25 million**[120](index=120&type=chunk) - **Consolidated gross profit** decreased to **22%** of **net sales** from **28%**, driven by higher freight (up **28%**), packaging (up **19%**), materials (up **9%**), natural gas (up **11%**), and non-fuel costs per manufactured ton[121](index=121&type=chunk) - **Total SG&A expenses** decreased by **7%** to **$14.59 million**, mainly due to a lower estimated annual incentive bonus accrual[122](index=122&type=chunk) - **Consolidated net income before taxes** decreased to **$2.16 million** from **$5.60 million**[123](index=123&type=chunk) - The company reported a tax benefit of **$24,000** (effective tax rate of **-1%**) compared to a tax expense of **$947,000** (**17%** effective tax rate) in the prior year, due to lower expected annual taxable income, employment-related credits, and a foreign-derived income tax deduction[124](index=124&type=chunk) [BUSINESS TO BUSINESS PRODUCTS GROUP](index=31&type=section&id=BUSINESS%20TO%20BUSINESS%20PRODUCTS%20GROUP%20%28Three%20Months%29) This section details the financial performance of the **Business to Business Products Group** segment - **Net sales** decreased slightly by **1%** to **$26.29 million**[125](index=125&type=chunk) - **Agricultural and horticultural chemical carrier products** sales increased by **7%**, and **animal health and nutrition products** sales increased by **3%**, particularly in Asia and Latin America[125](index=125&type=chunk) - **Fluids purification products** sales decreased by **3%** due to timing, **COVID-19** impacts, and good oil quality in North America, but saw improvement in Latin America[125](index=125&type=chunk) - **Co-packaged coarse cat litter sales** decreased by **15%** due to normalized purchasing patterns after pantry loading in the prior year[125](index=125&type=chunk) - **Operating income** decreased by **13%** to **$7.15 million**, driven by increased manufacturing costs[127](index=127&type=chunk) [RETAIL AND WHOLESALE PRODUCTS GROUP](index=31&type=section&id=RETAIL%20AND%20WHOLESALE%20PRODUCTS%20GROUP%20%28Three%20Months%29) This section details the financial performance of the **Retail and Wholesale Products Group** segment - **Net sales** increased by **1%** to **$49.96 million**[128](index=128&type=chunk) - **Industrial and sports products sales** increased by **20%** due to the re-opening of businesses and sports fields[128](index=128&type=chunk) - **Cat litter sales** decreased by **3%** due to the timing of sales and a return to normalized purchasing after pantry loading in the prior year, despite continued positive impact from increased pet adoption[128](index=128&type=chunk) - **SG&A expenses** decreased by **5%** due to lower travel and bad debt expenses[129](index=129&type=chunk) - **Operating income** decreased by **$3.51 million** to **$2.90 million**, driven by lower sales and higher manufacturing costs[130](index=130&type=chunk) [FOREIGN OPERATIONS](index=32&type=section&id=FOREIGN%20OPERATIONS%20%28Three%20Months%29) This section analyzes the financial performance and sales trends of the company's foreign subsidiaries - **Foreign subsidiaries' net sales** increased by **9%** to **$4.17 million**, representing approximately **5%** of **consolidated net sales**[131](index=131&type=chunk) - Canada subsidiary's **cat litter sales** increased by **13%** and industrial absorbent granules by **64%** due to new products, existing customer sales, and re-openings[131](index=131&type=chunk) - **Animal health product sales** were slightly lower due to the timing of Chinese New Year[131](index=131&type=chunk) - **Net sales** in the United Kingdom decreased due to **COVID-19** lockdowns and a customer discontinuing a product[131](index=131&type=chunk) - Foreign subsidiaries reported a **net loss** of **$134,000**, compared to a **net loss** of **$31,000** in the prior year, due to higher **SG&A expenses** supporting foreign sales growth[132](index=132&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=32&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's liquidity, capital requirements, cash flows, and financing arrangements - Principal capital requirements include working capital, equipment upgrades, new product development, infrastructure investment, stock repurchases, dividends, pension contributions, and potential acquisitions[133](index=133&type=chunk) - **Cash flows from operations** and available liquidity are anticipated to be sufficient for cash requirements, despite **COVID-19** not having a significant impact on operations to date[134](index=134&type=chunk) Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flows From | 2021 | 2020 | | :-------------------------------------------- | :---------- | :---------- | | Operating Activities | $8,340 | $22,269 | | Investing Activities | (10,753) | (10,758) | | Financing Activities | (8,324) | (12,852) | | Net Decrease in Cash and Cash Equivalents | $(10,572) | $(1,314) | - **Net cash provided by operating activities** decreased significantly due to increases in accounts receivable and prepaid expenses, and decreases in accounts payable and accrued expenses[137](index=137&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - **Net cash used in financing activities** decreased due to lower **treasury stock** repurchases and no principal payments on **notes payable** in the current period[147](index=147&type=chunk) - The company has a **$45 million unsecured revolving credit agreement** with **BMO Harris Bank N.A.**, expiring January 31, 2024, and was in compliance with all covenants as of April 30, 2021[149](index=149&type=chunk) - A new debt instrument was entered into on May 15, 2020, issuing **$10 million** in **3.95% Series B Senior Notes** due May 15, 2030, with an ability to request up to **$75 million** in additional notes[150](index=150&type=chunk) - As of April 30, 2021, the company had **authority to repurchase 816,863 shares of Common Stock**[151](index=151&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=36&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights critical accounting policies and estimates that require significant management judgment - The preparation of financial statements requires estimates and assumptions, which are periodically revised, and actual results may differ[154](index=154&type=chunk) - This section refers to the critical accounting policies detailed in the **Annual Report on Form 10-K** for the fiscal year ended July 31, 2020[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204%3A%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section evaluates the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's **disclosure controls and procedures** were effective as of April 30, 2021[155](index=155&type=chunk) - These controls provide reasonable assurance that information required for Exchange Act reports is recorded, processed, summarized, and reported timely[155](index=155&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any changes in internal control over financial reporting during the period - No material impact to **internal controls over financial reporting** has been experienced despite employees working remotely due to **COVID-19**[156](index=156&type=chunk) - No changes in **internal control over financial reporting** occurred during the fiscal quarter ended April 30, 2021, that materially affected or are reasonably likely to materially affect it[157](index=157&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=36&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) This section acknowledges the inherent limitations of internal control systems - Management acknowledges that control systems provide only reasonable, not absolute, assurance and cannot prevent or detect all errors and fraud[158](index=158&type=chunk) - Limitations include resource constraints, faulty judgments, simple errors, circumvention by individual acts or collusion, and management override[158](index=158&type=chunk) [PART II – OTHER INFORMATION](index=34&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part covers risk factors, equity security sales, mine safety disclosures, a list of exhibits, and official signatures [Item 1A. Risk Factors](index=34&type=section&id=Item%201A%3A%20Risk%20Factors) This section refers to existing risk factors, noting no material changes since the last **Annual Report on Form 10-K** - No material changes to the company's risk factors have occurred since the **Annual Report on Form 10-K** for the year ended July 31, 2020, except as set forth in the **Quarterly Report on Form 10-Q** for the quarter ended January 31, 2021[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchase activities during the three months ended April 30, 2021 - No **unregistered securities** were sold during the three months ended April 30, 2021[162](index=162&type=chunk) Issuer Purchases of Equity Securities (Common Stock) - Three Months Ended April 30, 2021 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that may yet be Purchased Under Plans or Programs | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------- | | February 1, 2021 to February 28, 2021 | 14,689 | $34.83 | 14,689 | 823,333 | | March 1, 2021 to March 31, 2021 | 198 | $34.98 | 198 | 823,135 | | April 1, 2021 to April 30, 2021 | 6,272 | $34.71 | 6,272 | 816,863 | - The Board of Directors authorized the repurchase of **250,000 shares of Common Stock** on June 14, 2012, and an additional **750,000 shares** on March 11, 2019, with no stated expiration date[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This section indicates mine safety violations and regulatory matters are provided in **Exhibit 95** - Information concerning **mine safety violations** or other regulatory matters is included in **Exhibit 95** to this **Quarterly Report on Form 10-Q**[164](index=164&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206%3A%20Exhibits) This section lists all exhibits filed with the **Form 10-Q**, including certifications and **XBRL taxonomy documents** List of Exhibits | Exhibit No. | Description | | :---------- | :---------------------------------------------- | | 11 | Statement re: Computation of Earnings Per Share | | 31 | Certifications pursuant to Rule 13a–14(a) | | 32 | Certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 | | 95 | Mine Safety Disclosures | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | | 104 | Cover Page Interactive Data File | - Stockholders can request copies of the listed exhibits without fee from Investor Relations[165](index=165&type=chunk) [Signatures](index=36&type=section&id=Signatures) This section contains the official signatures of the registrant's authorized officers, confirming report submission - The report is signed by **Daniel S. Jaffee**, **Chairman, President and Chief Executive Officer**, and **Susan M. Kreh**, **Chief Financial Officer**, on behalf of **Oil-Dri Corporation of America**[168](index=168&type=chunk) - The report was dated June 8, 2021[168](index=168&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2021, Oil-Dri reported net sales of $74.5 million, a 5% increase compared to the same quarter in the previous year [16] - Gross profit for the quarter was $18.2 million, down $800,000 from the prior year, representing a 4% year-over-year decrease [21] - Net income attributed to Oil-Dri for Q2 2021 was $4.3 million, an 11% decrease from the prior year [25] - Selling, general and administrative expenses (SG&A) increased by 6% to $13.9 million, but were down 3% when excluding a one-time gain from the previous year [23] Business Line Data and Key Metrics Changes - The Business to Business Products Group grew by 7%, while the Retail and Wholesale Products Group grew by 4% [16] - Amlan International, the animal health business, achieved a 20% net sales growth during the quarter, marking an all-time high for any second quarter [17] - Agricultural and Horticultural Products saw a 10% growth, driven by increased sales with existing customers [19] - Co-packaged cat litter products grew by 5%, while cat litter sales in the Consumer Products group increased by 6% [20] Market Data and Key Metrics Changes - Strong growth was noted in China, Latin America, and Mexico for Amlan International [18] - The poultry market represents about 40% of the $3 billion global opportunity created by the elimination of antibiotics in the food chain, equating to a $1.2 billion opportunity for Oil-Dri [8][12] Company Strategy and Development Direction - The company is focusing on mineral-based animal feed additives and lightweight cat litter as key strategic areas [16] - Investments are being made in building a strong team and enhancing distribution channels, particularly in the poultry sector [5][8] - The company aims to capitalize on the domestic market in the U.S., which has been previously overlooked [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial conditions may worsen before improving due to increased SG&A and infrastructure investments [14] - The company is optimistic about long-term growth despite short-term cost pressures, with a commitment to maintaining its dividend policy [14][21] - Management expressed confidence in the company's ability to leverage its strong financial position for future growth opportunities [27] Other Important Information - The company ended the quarter with cash and cash equivalents of $31 million and a low debt-to-total capital ratio of 6% [26] - Oil-Dri repurchased 33,594 shares of common stock for $1.2 million, indicating confidence in its financial health [27] Q&A Session Summary Question: How are the trials with poultry integrators going? - Management did not confirm any trials with large poultry integrators and stated that no material updates could be shared at this time [30] Question: Do you see the sales cycle decreasing? - The sales cycle for poultry companies is typically 3 to 6 months, while for swine, it can extend to 1.5 years depending on usage [37] Question: Can you name the 11 markets you mentioned? - Management declined to specify the markets to avoid tipping off competitors but emphasized the significant opportunity represented by these markets [41] Question: How is the swine market in China proceeding? - The swine market is seeing increased focus due to the recovery from African swine fever, presenting opportunities for growth [50] Question: What feedback do you get from existing customers regarding Amlan products? - Feedback has been very positive, with customers increasing their orders after using products like Varium and NeoPrime, indicating strong ROI [55]

or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to ______________ Commission File Number 001-12622 OIL-DRI CORPORATION OF AMERICA UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended January 31, 2021 (Exact name of the registrant as specified in its charter) ...

Oil-Dri Corporation of America (NYSE:ODC) Q1 2021 Earnings Conference Call December 8, 2020 10:30 AM ET Company Participants Leslie Garber - Manager, IR Laura Scheland - General Counsel and Secretary Dan Jaffee - President and CEO Molly VandenHeuvel - COO Susan Kreh - CFO Jessica Moskowitz - VP, General Manager, Consumer Products Division Fred Kao - VP, Global Sales, Amlan International Conference Call Participants Operator Welcome to the 2020 Annual Meeting for Oil-Dri Corporation of America. Our host for ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements, management's analysis of operations, and evaluation of internal controls for the quarter [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents the unaudited Condensed Consolidated Financial Statements for the quarterly period ended October 31, 2020, including the Balance Sheet, Statements of Income, Comprehensive Income, Stockholders' Equity, and Cash Flows, along with detailed notes explaining the basis of presentation and significant accounting policies [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) The balance sheet as of October 31, 2020, shows a decrease in total assets to $227.4 million from $235.9 million at July 31, 2020, primarily due to a reduction in cash and cash equivalents, while total liabilities also decreased significantly to $77.1 million from $87.9 million, mainly from a reduction in accrued expenses, and total stockholders' equity increased slightly to $150.3 million | Balance Sheet Highlights (in thousands) | Oct 31, 2020 | July 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $102,285 | $108,420 | | **Total Assets** | $227,371 | $235,882 | | **Total Current Liabilities** | $34,470 | $46,207 | | **Total Liabilities** | $77,055 | $87,918 | | **Total Stockholders' Equity** | $150,316 | $147,964 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended October 31, 2020, the company reported a 7.0% year-over-year increase in net sales to $76.1 million, with gross profit seeing a slight increase, income from operations growing by 25.6% to $5.2 million, and net income attributable to Oil-Dri rising to $4.0 million, a 12.7% increase from the prior-year period | Income Statement (in thousands) | Q1 2021 (ended Oct 31, 2020) | Q1 2020 (ended Oct 31, 2019) | YoY Change | | :--- | :--- | :--- | :--- | | Net Sales | $76,097 | $71,122 | +7.0% | | Gross Profit | $20,304 | $19,935 | +1.8% | | Income from Operations | $5,177 | $4,121 | +25.6% | | Net Income Attributable to Oil-Dri | $3,984 | $3,536 | +12.7% | | Diluted EPS (Common) | $0.56 | $0.50 | +12.0% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of fiscal 2021, the company experienced a net cash outflow from operating activities of $3.4 million, a significant shift from the $6.7 million inflow in the same period last year, primarily due to an increase in accounts receivable and a decrease in accrued expenses, with investing activities using $3.6 million and financing activities using $2.8 million, resulting in a total decrease in cash and cash equivalents of $9.6 million | Cash Flow Summary (in thousands) | For the Three Months Ended Oct 31, 2020 | For the Three Months Ended Oct 31, 2019 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | $(3,435) | $6,692 | | Net Cash Used in Investing Activities | $(3,565) | $(3,900) | | Net Cash Used in Financing Activities | $(2,781) | $(5,344) | | **Net Decrease in Cash and Cash Equivalents** | **$(9,599)** | **$(2,602)** | [Notes To Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20To%20Condensed%20Consolidated%20Financial%20Statements) The notes provide further detail on accounting policies, the impact of COVID-19, segment performance, and other financial matters, including the minimal impact of COVID-19 on sales, the deferral of payroll taxes under the CARES Act, and a breakdown of sales and operating income by the company's two reportable segments - Despite the COVID-19 pandemic, the company has not experienced a **significant decline in customer orders and sales** in the first quarter of fiscal year 2021[34](index=34&type=chunk) - Under the CARES Act, the company deferred approximately **$1.8 million in payroll taxes** as of October 31, 2020, with the full deferral for calendar 2020 expected to be around **$2.5 million**[51](index=51&type=chunk) - The company's Pension Plan was amended to **freeze participation and all future benefit accruals**, effective March 1, 2020[71](index=71&type=chunk) | Segment Performance (Q1 2021 vs Q1 2020, in thousands) | Net Sales | Operating Income | | :--- | :--- | :--- | | **Business to Business Products Group** | $27,522 (↑4%) | $8,196 (↓1%) | | **Retail and Wholesale Products Group** | $48,575 (↑9%) | $4,478 (↑33%) | [Item 2: Management's Discussion and Analysis of Financial Condition and Results Of Operations](index=21&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20Of%20Operations) Management provides an analysis of the company's financial performance for the first quarter of fiscal 2021, covering the impact of COVID-19, consolidated results, detailed performance of its two business segments (Retail and Wholesale, and Business to Business), foreign operations, and liquidity and capital resources, with overall sales increasing 7% driven by strong cat litter demand, though profitability was slightly impacted by higher freight and packaging costs [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Consolidated net sales for Q1 FY2021 increased 7% to $76.1 million, driven by growth in both segments, while gross profit margin decreased slightly to 27% from 28% due to a 6% increase in both freight and packaging costs per ton, partially offset by a 9% decrease in natural gas costs, and SG&A expenses decreased by 4%, contributing to a 17% increase in consolidated net income before taxes - Consolidated net sales rose **7% YoY to $76.1 million** for the three months ended October 31, 2020[98](index=98&type=chunk) - Gross profit margin declined from **28% to 27%** of net sales, primarily due to higher costs for freight (**+6%**), packaging (**+6%**), and materials, which were partially mitigated by lower natural gas costs (**-9%**)[99](index=99&type=chunk) - Total SG&A expenses decreased by **4% YoY to $15.1 million**[100](index=100&type=chunk) [Business to Business Products Group](index=23&type=section&id=Business%20to%20Business%20Products%20Group) The Business to Business Products Group saw a 4% increase in net sales to $27.5 million, led by a 22% rise in agricultural and horticultural products and a 3% increase in fluids purification products, though sales of animal health and nutrition products declined by 17%, and despite higher sales, operating income fell by 1% to $8.2 million due to increased freight and packaging costs - Net sales increased by **4% YoY**, driven by a **22% increase in agricultural products** due to a shift in customer timing and new business applications[105](index=105&type=chunk) - Sales of animal health and nutrition products decreased by **17%**, primarily due to declines in Latin America and Africa[105](index=105&type=chunk) - Operating income decreased by **1% to $8.2 million**, as higher freight and packaging costs offset the benefits of increased sales and lower SG&A[107](index=107&type=chunk) [Retail and Wholesale Products Group](index=23&type=section&id=Retail%20and%20Wholesale%20Products%20Group) This segment reported a strong quarter with a 9% increase in net sales to $48.6 million, primarily driven by a 12% increase in cat litter sales, benefiting from new customers, promotions, e-commerce growth, and an overall increase in pet adoption, while industrial and sports product sales fell 4% due to COVID-19 related shutdowns, and operating income surged 33% to $4.5 million, thanks to higher sales and lower advertising expenses - Net sales grew **9% YoY**, led by a **12% increase in total cat litter sales** from both private label and branded products[108](index=108&type=chunk) - Sales of industrial and sports products decreased by approximately **4%** due to the continued impact of business and sports field shutdowns from COVID-19[108](index=108&type=chunk) - Operating income increased by **33% to $4.5 million**, driven by higher sales and a **9% reduction in SG&A expenses**, primarily from lower advertising costs[109](index=109&type=chunk)[110](index=110&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position changed, with net cash used in operating activities of $3.4 million compared to $6.7 million provided in the prior year, mainly due to working capital changes, while the company maintains a $45 million revolving credit facility and issued $10 million in senior notes in May 2020, and management believes existing cash, cash flow from operations, and available credit are sufficient to fund needs for the next 12 months - Net cash used in operating activities was **$(3.4) million**, a significant decrease from the **$6.7 million provided** in the prior-year period, driven by an increase in accounts receivable and a decrease in accrued expenses[116](index=116&type=chunk)[117](index=117&type=chunk)[122](index=122&type=chunk) - The company has a **$45 million unsecured revolving credit agreement** with BMO Harris, expiring in January 2024, with no borrowings during the quarter[127](index=127&type=chunk) - In May 2020, the company issued **$10 million in 3.95% Series B Senior Notes** due in 2030[128](index=128&type=chunk) [Item 4: Controls and Procedures](index=27&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of October 31, 2020, with no material changes to internal controls over financial reporting during the quarter, despite many employees working remotely due to COVID-19 - Based on an evaluation, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period[134](index=134&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[136](index=136&type=chunk) [PART II – OTHER INFORMATION](index=27&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section details risk factors, equity security transactions, mine safety disclosures, and other material information and exhibits [Item 1A: Risk Factors](index=28&type=section&id=Item%201A%3A%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended July 31, 2020 - There have been **no material changes to the company's risk factors** since the Annual Report on Form 10-K for the year ended July 31, 2020[139](index=139&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's stock repurchase activities during the first quarter of fiscal 2021, including repurchases made for both Common Stock and Class B stock, and discloses the remaining authority under its repurchase plan | Issuer Purchases of Equity Securities (Q1 2021) | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | **Common Stock** | 16,318 | $36.32 | | **Class B Stock** | 10,675 | $36.11 | - As of October 31, 2020, the company had remaining authority to repurchase **871,616 shares of Common Stock** and **278,250 shares of Class B Stock**[129](index=129&type=chunk)[142](index=142&type=chunk) [Item 4: Mine Safety Disclosures](index=28&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) The company discloses that information concerning mine safety violations and other regulatory matters required under the Dodd-Frank Act is included in Exhibit 95 to this quarterly report - Information concerning **mine safety violations** as required by section 1503(a) of the Dodd-Frank Act is included in Exhibit 95 to this Form 10-Q[143](index=143&type=chunk) [Item 5: Other Information](index=29&type=section&id=Item%205%3A%20Other%20Information) The company reports that on December 4, 2020, it entered into a fourth amendment to its "Fresh Step"® Memorandum of Agreement with a subsidiary of The Clorox Company, which extends the initial term of the agreement - On December 4, 2020, the company amended its agreement with a subsidiary of The Clorox Company for "Fresh Step"® to **extend the initial term**[144](index=144&type=chunk) [Item 6: Exhibits](index=29&type=section&id=Item%206%3A%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements, amendments, certifications required by the SEC, mine safety disclosures, and interactive data files (XBRL) - The report lists several exhibits, including the **fourth amendment to the "Fresh Step"® agreement**, an **Exclusive Supply Agreement with Church & Dwight Co., Inc.**, and **certifications pursuant to Sarbanes-Oxley**[145](index=145&type=chunk)

Financial Data and Key Metrics Changes - The company reported its completion of the 80th fiscal year, indicating a significant milestone in its operational history [3]. Business Line Data and Key Metrics Changes - Specific details regarding changes in business line performance were not provided in the available content. Market Data and Key Metrics Changes - Information on market data and key metrics changes was not included in the provided content. Company Strategy and Development Direction and Industry Competition - The management team, including the CEO and CFO, is focused on discussing the company's performance and future outlook, but specific strategic initiatives or competitive positioning were not detailed in the available content [4]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the presence of forward-looking statements regarding the company's performance in future periods, highlighting the importance of understanding risk factors and uncertainties that may affect future performance [5]. Other Important Information - The call included a range of company representatives, indicating a collaborative approach to discussing the company's performance and future direction [4]. Q&A Session Summary Question: General inquiries about the company's performance - The management team is prepared to address questions regarding the company's performance and outlook, although specific questions and answers were not detailed in the available content [2].