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 April 30, 2022 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) De ...

Financial Data and Key Metrics Changes - The company reported its financial performance for the second quarter of fiscal year 2022, with specific metrics to be discussed in detail during the call [2][4]. Business Line Data and Key Metrics Changes - Detailed performance metrics for each business line will be provided by the respective executives during the call [4]. Market Data and Key Metrics Changes - Market performance and metrics will be addressed in the context of the company's overall strategy and competitive landscape [4]. Company Strategy and Development Direction and Industry Competition - The management team will outline the company's strategic initiatives and how they plan to navigate the competitive environment in the industry [4]. Management's Comments on Operating Environment and Future Outlook - Management will provide insights into the current operating environment and their outlook for future performance, including potential risks and opportunities [6]. Other Important Information - The call will include a Safe Harbor statement highlighting the forward-looking nature of the comments made by management, emphasizing the importance of considering risk factors [6]. Q&A Session All Questions and Answers Question: What are the key drivers of growth for the company? - Management will address the key growth drivers during the Q&A session, focusing on market trends and internal initiatives [4]. Question: How does the company plan to mitigate risks in the current environment? - The management team will discuss their risk mitigation strategies in response to the current economic conditions [6].

[Forward-Looking Statements](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section clarifies that the report contains forward-looking statements subject to risks and that the company has no obligation to update them publicly - The report contains forward-looking statements based on current expectations, estimates, forecasts, and projections about future performance, business, beliefs, and management's assumptions[7](index=7&type=chunk) - Such statements are subject to certain risks, uncertainties, and assumptions that could cause actual results to differ materially, as described in Item 1A, Risk Factors[8](index=8&type=chunk) - The company has no intention or obligation to update publicly any forward-looking statements after the distribution of this report, except to the extent required by law[8](index=8&type=chunk) [Trademark Notice](index=2&type=section&id=TRADEMARK%20NOTICE) This section identifies "Oil-Dri" and "Ultra-Clear" as registered trademarks of Oil-Dri Corporation of America - "Oil-Dri" and "Ultra-Clear" 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 disclosures on controls and procedures [Item 1. Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements, including the balance sheet, income statements, comprehensive income statements, statements of stockholders' equity, and cash flow statements, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheet](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) The balance sheet shows an increase in total assets driven by current assets and property, plant, and equipment, alongside a significant rise in total liabilities, primarily noncurrent notes payable, while stockholders' equity decreased Balance Sheet Summary | Metric | Jan 31, 2022 (in thousands) | July 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------- | :------------------------- | :-------------------- | | Total Current Assets | $116,754 | $101,942 | +$14,812 | | Total Property, Plant and Equipment, Net | $99,861 | $95,940 | +$3,921 | | Total Other Assets | $30,599 | $29,684 | +$915 | | **Total Assets** | **$247,214** | **$227,566** | **+$19,648** | | Total Current Liabilities | $38,872 | $38,990 | -$118 | | Total Noncurrent Liabilities | $55,051 | $29,344 | +$25,707 | | **Total Liabilities** | **$93,923** | **$68,334** | **+$25,589** | | Total Stockholders' Equity | $153,291 | $159,232 | -$5,941 | | **Total Liabilities & Stockholders' Equity** | **$247,214** | **$227,566** | **+$19,648** | - Cash and cash equivalents increased from **$24,591 thousand** at July 31, 2021, to **$29,009 thousand** at January 31, 2022[12](index=12&type=chunk) - Noncurrent notes payable significantly increased from **$7,878 thousand** at July 31, 2021, to **$32,778 thousand** at January 31, 2022[14](index=14&type=chunk) [Condensed Consolidated Statements of Income (Six Months)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Six%20Months)) For the six months, net sales increased, but gross profit, income from operations, and net income attributable to Oil-Dri significantly decreased due to rising costs, leading to a substantial drop in diluted common EPS Six-Month Income Statement Summary | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Net Sales | $169,670 | $150,597 | +$19,073 | +12.7% | | Cost of Sales | $(140,266) | $(115,128) | -$(25,138) | +21.8% | | Gross Profit | $29,404 | $35,469 | -$6,065 | -17.1% | | Income from Operations | $2,363 | $9,421 | -$7,058 | -74.9% | | Net Income Attributable to Oil-Dri | $2,587 | $8,283 | -$5,696 | -68.8% | | Diluted Common EPS | $0.37 | $1.17 | -$0.80 | -68.4% | - Dividends declared per share for Basic Common Stock increased from **$0.5200** in 2021 to **$0.5400** in 2022[16](index=16&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Six Months)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Six%20Months)) Total comprehensive income for the six months significantly decreased, primarily reflecting the decline in net income and a negative shift in other comprehensive income Six-Month Comprehensive Income Summary | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Net Income Attributable to Oil-Dri | $2,587 | $8,283 | -$5,696 | -68.8% | | Other Comprehensive (Loss) Income | $(41) | $737 | -$778 | -105.6% | | **Total Comprehensive Income** | **$2,546** | **$9,020** | **-$6,474** | **-71.8%** | [Condensed Consolidated Statements of Income (Three Months)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Three%20Months)) For the three months, net sales increased, but gross profit, income from operations, and net income attributable to Oil-Dri decreased, resulting in a notable reduction in diluted common EPS Three-Month Income Statement Summary | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Net Sales | $87,210 | $74,500 | +$12,710 | +17.1% | | Cost of Sales | $(71,624) | $(57,811) | -$(13,813) | +23.9% | | Gross Profit | $15,586 | $16,689 | -$1,103 | -6.6% | | Income from Operations | $1,918 | $4,244 | -$2,326 | -54.8% | | Net Income Attributable to Oil-Dri | $2,002 | $4,299 | -$2,297 | -53.4% | | Diluted Common EPS | $0.28 | $0.61 | -$0.33 | -54.1% | - Dividends declared per share for Basic Common Stock increased from **$0.2600** in 2021 to **$0.2700** in 2022[22](index=22&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Three Months)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Three%20Months)) Total comprehensive income for the three months significantly decreased, primarily reflecting the decline in net income and a negative shift in other comprehensive income Three-Month Comprehensive Income Summary | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Net Income Attributable to Oil-Dri | $2,002 | $4,299 | -$2,297 | -53.4% | | Other Comprehensive (Loss) Income | $(34) | $337 | -$371 | -110.1% | | **Total Comprehensive Income** | **$1,968** | **$4,636** | **-$2,668** | **-57.5%** | [Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased, influenced by increased treasury stock purchases and dividends declared, partially offset by an increase in additional paid-in capital Stockholders' Equity Summary | Metric | Jan 31, 2022 (in thousands) | July 31, 2021 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------- | :------------------------- | :-------------------- | | Total Stockholders' Equity | $153,291 | $159,232 | -$5,941 | | Treasury Stock, at cost | $(72,862) | $(66,154) | -$(6,708) | | Retained Earnings | $179,322 | $180,443 | -$1,121 | | Additional Paid-In Capital | $50,220 | $48,271 | +$1,949 | - Purchases of treasury stock for the six months ended January 31, 2022, amounted to **$6,201 thousand**[30](index=30&type=chunk) - Dividends declared for the six months ended January 31, 2022, totaled **$3,708 thousand**[30](index=30&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly decreased, while investing activities used more cash, and financing activities shifted to a net cash provision due to new debt issuance, resulting in a net increase in cash and cash equivalents Cash Flow Summary | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | | Net cash provided by operating activities | $61 | $3,085 | -$3,024 | | Net cash used in investing activities | $(10,574) | $(7,595) | -$(2,979) | | Net cash provided by (used in) financing activities | $14,957 | $(5,795) | +$20,752 | | Net increase (decrease) in cash and cash equivalents | $4,418 | $(10,182) | +$14,600 | - Proceeds from issuance of notes payable were **$25,000 thousand** in the first six months of fiscal year 2022, compared to none in the prior year[32](index=32&type=chunk) - Capital expenditures increased from **$7,598 thousand** in 2021 to **$10,574 thousand** in 2022[32](index=32&type=chunk) [Notes To Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20To%20Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, reflecting normal recurring accruals and reclassifications. An immaterial error in classifying certain production-related costs was corrected, reclassifying them from SG&A to Cost of Sales, with no impact on net income. Key policies include revenue recognition upon transfer of control and specific treatment of mining costs [1. Basis of Presentation and Significant Accounting Policies](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, reflecting normal recurring accruals and reclassifications. An immaterial error in classifying certain production-related costs was corrected, reclassifying them from SG&A to Cost of Sales, with no impact on net income. Key policies include revenue recognition upon transfer of control and specific treatment of mining costs - The financial statements are unaudited and prepared under U.S. GAAP for interim information, reflecting management's necessary adjustments[37](index=37&type=chunk)[39](index=39&type=chunk) - An immaterial error in classifying manufacturing employee bonuses, 401(k) match, and IT support salaries was corrected, reclassifying **$1,483 thousand** (3 months) and **$3,007 thousand** (6 months) from SG&A to Cost of Sales, with no impact on consolidated net income[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Revenue is recognized when performance obligations are satisfied, generally upon shipment to, or receipt at, customers' locations[53](index=53&type=chunk) [2. New Accounting Pronouncements and Regulations](index=16&type=section&id=2.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS%20AND%20REGULATIONS) The company is evaluating the potential impacts of recently issued accounting pronouncements, including ASC 848 (Reference Rate Reform) for debt agreements referencing LIBOR and ASC 326 (Financial Instruments-Credit Losses) which requires an expected loss impairment model for financial assets - The company is evaluating ASC 848 (Reference Rate Reform) for debt agreements that reference LIBOR, which is effective immediately and may be applied prospectively[59](index=59&type=chunk) - The company is evaluating ASC 326 (Financial Instruments-Credit Losses), effective for the first quarter of fiscal year 2023, which requires an expected loss impairment model for financial assets[60](index=60&type=chunk) [3. Inventories](index=16&type=section&id=3.%20INVENTORIES) Total inventories increased by 26.3% from July 31, 2021, to January 31, 2022, driven by rising costs and increased inventory levels to meet anticipated demand Inventory Breakdown | Inventory Category | Jan 31, 2022 (in thousands) | July 31, 2021 (in thousands) | Change (in thousands) | Change (%) | | :----------------- | :-------------------------- | :------------------------- | :-------------------- | :--------- | | Finished goods | $15,702 | $14,179 | +$1,523 | +10.7% | | Packaging | $7,877 | $5,084 | +$2,793 | +55.0% | | Other | $6,218 | $4,335 | +$1,883 | +43.4% | | **Total Inventories** | **$29,797** | **$23,598** | **+$6,199** | **+26.3%** | - Inventories, in all categories, have increased due to a combination of rising costs and building inventory levels for anticipated demand[62](index=62&type=chunk) [4. Fair Value Measurements](index=17&type=section&id=4.%20FAIR%20VALUE%20MEASUREMENTS) Fair value measurements are categorized into Level 1, 2, and 3 inputs. Cash equivalents are Level 1, and notes payable are classified as Level 2, with an estimated fair value of $36,985 thousand as of January 31, 2022, significantly higher than July 31, 2021 - Cash equivalents are primarily money market mutual funds classified as **Level 1**[63](index=63&type=chunk) Notes Payable Fair Value | Metric | Jan 31, 2022 (in thousands) | July 31, 2021 (in thousands) | Change (in thousands) | | :-------------------- | :-------------------------- | :------------------------- | :-------------------- | | Estimated fair value of notes payable | $36,985 | $10,231 | +$26,754 | - Fair value techniques are applied annually for valuing potential impairment loss related to goodwill, trademarks, other indefinite-lived intangible assets, and long-lived assets[65](index=65&type=chunk) [5. Goodwill and Other Intangible Assets](index=17&type=section&id=5.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) Intangible assets include trademarks, patents, customer lists, and product registrations. Amortization expense for the first six months of fiscal year 2022 was $253 thousand. No goodwill impairment was identified in the last annual analysis, and no triggering events have occurred since Intangible Amortization Expense | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | | :-------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | | Intangible amortization expense | $253 | $305 | -$52 | - Estimated intangible amortization for the remainder of fiscal year 2022 is **$233 thousand**[66](index=66&type=chunk) - The annual goodwill impairment analysis in Q4 fiscal year 2021 identified **no impairment**, and no triggering events have occurred since[68](index=68&type=chunk) [6. Accrued Expenses](index=18&type=section&id=6.%20ACCRUED%20EXPENSES) Total accrued expenses decreased by 4.3% from July 31, 2021, to January 31, 2022, primarily due to lower salaries, wages, commissions, and employee benefits, partially offset by increases in trade promotions, advertising, and other accruals Accrued Expenses Breakdown | Accrued Expense Category | Jan 31, 2022 (in thousands) | July 31, 2021 (in thousands) | Change (in thousands) | Change (%) | | :----------------------- | :-------------------------- | :------------------------- | :-------------------- | :--------- | | Salaries, Wages, Commissions and Employee Benefits | $9,097 | $10,806 | -$1,709 | -15.8% | | Trade promotions and advertising | $2,178 | $1,653 | +$525 | +31.8% | | Freight | $3,034 | $2,845 | +$189 | +6.6% | | Real Estate Tax | $228 | $1,002 | -$774 | -77.2% | | Other | $9,265 | $8,577 | +$688 | +8.0% | | **Total Accrued Expenses** | **$23,802** | **$24,883** | **-$1,081** | **-4.3%** | - The decrease in salaries, wages, commissions, and employee benefits relates primarily to the payment of annual discretionary bonuses[70](index=70&type=chunk) - The accrual for 'Other' is higher due to an increase in accrual for rising natural gas costs and timing of certain plant purchases and expenses[70](index=70&type=chunk) [7. Other Contingencies](index=18&type=section&id=7.%20OTHER%20CONTINGENCIES) The company is involved in various legal actions, including a lawsuit from a former service provider alleging breach of contract. Management believes none of the pending proceedings will have a material adverse effect on the business, and any loss related to the specific lawsuit is unlikely to be material, though outcomes are subject to uncertainties - The company is party to various legal actions, including ongoing litigation, that are ordinary in nature and incidental to business operations[71](index=71&type=chunk) - A lawsuit from a former service provider alleging breach of contract for a contingency fee is considered unlikely to be material, but the ultimate outcome is subject to significant uncertainties[71](index=71&type=chunk) [8. Debt](index=18&type=section&id=8.%20DEBT) The company amended its Note Purchase and Private Shelf Agreement, introducing an excess leverage fee on interest rates if the Net Leverage Ratio exceeds certain thresholds. Concurrent with the amendment, $25 million in Series C Senior Notes were issued at an annual rate of 3.25%, maturing in 2031 with annual principal payments starting in 2027 - Amendment No. 1 to the Note Purchase and Private Shelf Agreement introduces an excess leverage fee (**0.25% or 1.00%**) if the Net Leverage Ratio is **2.00:1.00 or greater**, or **greater than 2.50:1.00**, respectively[73](index=73&type=chunk) - The company issued **$25,000,000** in Series C Senior Notes on December 16, 2021, bearing interest at an annual rate of **3.25%** and maturing on December 16, 2031[74](index=74&type=chunk) - Annual principal payments of **$5,000,000** for the Series C Notes are due December 16 of each fiscal year, beginning in 2027 and ending in 2031[74](index=74&type=chunk) [9. Leases](index=19&type=section&id=9.%20LEASES) The company primarily has operating leases for real estate and equipment, with a weighted-average remaining lease term of 8.8 years and a weighted-average discount rate of 3.86% as of January 31, 2022. Total operating lease costs for the six months ended January 31, 2022, were $1,352 thousand - The company has operating leases primarily for real estate properties, rail tracks, railcars, and office equipment[76](index=76&type=chunk) Operating Lease Terms and Rates | Metric | Jan 31, 2022 | July 31, 2021 | | :------------------------------------ | :----------- | :------------ | | Weighted-average remaining lease term - operating leases | 8.8 years | 9.1 years | | Weighted-average discount rate - operating leases | 3.86% | 3.88% | Operating Lease Costs | Lease Cost Category | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | | :------------------ | :----------------------------------- | :----------------------------------- | | Operating lease cost | $1,352 | $1,352 | | Short-term operating lease cost | $308 | $362 | [10. Pension and Other Postretirement Benefits](index=20&type=section&id=10.%20PENSION%20AND%20OTHER%20POSTRETIREMENT%20BENEFITS) The company's Pension Plan was frozen for participation and benefit accruals effective March 1, 2020. Net periodic pension benefit cost for the six months ended January 31, 2022, was a benefit of $687 thousand, while postretirement health benefit cost was $87 thousand. The Supplemental Executive Retirement Plan (SERP) was terminated in June 2020, with all participants paid in July 2021 - The Oil-Dri Corporation of America Pension Plan was amended to freeze participation and all future benefit accruals effective **March 1, 2020**[78](index=78&type=chunk) Net Periodic Benefit Costs | Benefit Cost Component | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | | :--------------------- | :----------------------------------- | :----------------------------------- | | Net periodic pension benefit cost | $(687) | $(426) | | Net periodic postretirement health benefit cost | $87 | $93 | - The Supplemental Executive Retirement Plan (SERP) was terminated effective **June 30, 2020**, and all participants were paid in the form of one lump sum in **July 2021**[84](index=84&type=chunk) [11. Operating Segments](index=21&type=section&id=11.%20OPERATING%20SEGMENTS) The company operates in two reportable segments: Business to Business Products Group and Retail and Wholesale Products Group. For the six months ended January 31, 2022, the Retail and Wholesale Products Group generated higher net sales ($108,117 thousand) but significantly lower operating income ($1,000 thousand) compared to the Business to Business Products Group ($61,553 thousand net sales, $14,336 thousand operating income) - The company has two operating segments: Business to Business Products Group and Retail and Wholesale Products Group, which are managed separately due to different customer characteristics[85](index=85&type=chunk) Net Sales by Operating Segment | Segment | Six Months Ended Jan 31, 2022 (Net Sales, in thousands) | Six Months Ended Jan 31, 2021 (Net Sales, in thousands) | YoY Change (Net Sales, in thousands) | YoY Change (Net Sales, %) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------- | :------------------------ | | Business to Business Products Group | $61,553 | $53,805 | +$7,748 | +14.4% | | Retail and Wholesale Products Group | $108,117 | $96,792 | +$11,325 | +11.7% | | **Total Net Sales** | **$169,670** | **$150,597** | **+$19,073** | **+12.7%** | Operating Income by Operating Segment | Segment | Six Months Ended Jan 31, 2022 (Income, in thousands) | Six Months Ended Jan 31, 2021 (Income, in thousands) | YoY Change (Income, in thousands) | YoY Change (Income, %) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------------------- | :--------------------- | | Business to Business Products Group | $14,336 | $14,713 | -$377 | -2.6% | | Retail and Wholesale Products Group | $1,000 | $6,728 | -$5,728 | -85.1% | | Corporate Expenses | $(12,973) | $(12,020) | -$(953) | +7.9% | | **Income from Operations** | **$2,363** | **$9,421** | **-$7,058** | **-74.9%** | [12. Stock-Based Compensation](index=23&type=section&id=12.%20STOCK-BASED%20COMPENSATION) The company's 2006 Long Term Incentive Plan allows for various stock-based awards. Stock-based compensation expense for the six months ended January 31, 2022, was $1,453 thousand, with 107 thousand restricted shares granted and 56 thousand vested during the period - The 2006 Long Term Incentive Plan permits the grant of stock options, restricted stock, and other awards, with **260,356 shares** available for future grants as of January 31, 2022[91](index=91&type=chunk) Stock-Based Compensation Expense | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | | :-------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | | Stock-based compensation expense | $1,453 | $1,290 | +$163 | Restricted Stock Activity | Restricted Stock Activity | Shares (in thousands) | Weighted Average Grant Date Fair Value | | :------------------------ | :-------------------- | :------------------------------------- | | Non-vested outstanding at July 31, 2021 | 370 | $33.96 | | Granted | 107 | $34.56 | | Vested | (56) | $35.20 | | Forfeitures | (14) | $35.20 | | Non-vested outstanding at January 31, 2022 | 407 | $33.90 | [13. Accumulated Other Comprehensive (Loss) Income](index=24&type=section&id=13.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20(LOSS)%20INCOME) Accumulated other comprehensive loss increased from $4,117 thousand at July 31, 2021, to $4,158 thousand at January 31, 2022, primarily due to a cumulative translation adjustment loss of $94 thousand, partially offset by a gain in pension and postretirement benefits Accumulated Other Comprehensive Income Components | Component | July 31, 2021 (in thousands) | Jan 31, 2022 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------- | :-------------------------- | :-------------------- | | Pension and Postretirement Health Benefits | $(4,428) | $(4,375) | +$53 | | Cumulative Translation Adjustment | $311 | $217 | -$94 | | **Total Accumulated Other Comprehensive (Loss) Income** | **$(4,117)** | **$(4,158)** | **-$(41)** | [14. Related Party Transactions](index=24&type=section&id=14.%20RELATED%20PARTY%20TRANSACTIONS) The company engages in transactions with entities where its Board members hold executive positions. Net sales to a customer whose former CEO is a Board member were $156 thousand for the six months ended January 31, 2022. Payments to a vendor whose CEO is a Board member were $565 thousand for the same period Related Party Transaction Summary | Transaction Type | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | | :--------------- | :----------------------------------- | :----------------------------------- | | Net sales to customer (Board member's former employer) | $156 | $181 | | Payments to vendor (Board member's current employer) | $565 | $201 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20Of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing the impact of COVID-19, detailed results of operations for consolidated and segment-level performance, liquidity, capital resources, and critical accounting policies [Overview](index=25&type=section&id=OVERVIEW) Oil-Dri Corporation of America develops, mines, manufactures, and markets sorbent products from clay minerals, serving two primary customer groups: Retail and Wholesale, and Business to Business. The company's facilities have operated as essential businesses during COVID-19, but the pandemic has impacted certain product sales and led to increased backlog due to supply chain disruptions and labor shortages - The company develops, mines, manufactures, and markets sorbent products principally produced from clay minerals, serving Retail and Wholesale Products Group and Business to Business Products Group[99](index=99&type=chunk) - All company facilities operated as essential businesses during COVID-19, but the pandemic negatively impacted some product sales (e.g., animal health and nutrition) and led to increased backlog due to supply chain disruptions and labor shortages[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Gross profit declined in both the second quarter and first six months of fiscal year 2022 compared to the same periods in fiscal year 2021, related to rising costs and supply chain disruptions[102](index=102&type=chunk) [Results of Operations](index=26&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the financial performance for both the six-month and three-month periods ended January 31, 2022, compared to the prior year, analyzing consolidated results and performance across the Business to Business Products Group, Retail and Wholesale Products Group, and Foreign Operations, highlighting sales growth, cost pressures, and impacts of the pandemic [Six Months Ended January 31, 2022 Compared to Six Months Ended January 31, 2021](index=26&type=section&id=SIX%20MONTHS%20ENDED%20JANUARY%2031,%202022%20COMPARED%20TO%20SIX%20MONTHS%20ENDED%20JANUARY%2031,%202021) This section compares the company's consolidated and segment-level financial performance for the six months ended January 31, 2022, against the prior year, detailing sales, costs, and operating income trends [Consolidated Results](index=26&type=section&id=CONSOLIDATED%20RESULTS) Consolidated net sales increased, but gross profit and income from operations significantly declined due to rising costs, despite a moderate increase in SG&A expenses Six-Month Consolidated Financial Highlights | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Net Sales | $169,670 | $150,597 | +$19,073 | +12.7% | | Gross Profit | $29,404 | $35,469 | -$6,065 | -17.1% | | Income from Operations | $2,363 | $9,421 | -$7,058 | -74.9% | | SG&A Expenses | $27,041 | $26,048 | +$993 | +3.8% | - Domestic freight costs per ton increased approximately **35%**, packaging costs per ton increased approximately **37%**, natural gas cost per ton increased **93%**, and non-fuel manufacturing costs per ton increased **14%**[106](index=106&type=chunk) - Unallocated corporate SG&A expenses were higher by **$953 thousand**, or **8%**, driven by higher professional fees related to growing business needs and strategic initiatives[107](index=107&type=chunk) [Business to Business Products Group](index=27&type=section&id=BUSINESS%20TO%20BUSINESS%20PRODUCTS%20GROUP) The Business to Business Products Group experienced net sales growth across all categories, but operating income slightly decreased due to higher SG&A expenses Six-Month Business to Business Net Sales by Category | Product Category | Six Months Ended Jan 31, 2022 (Net Sales, in thousands) | Six Months Ended Jan 31, 2021 (Net Sales, in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :------------------------ | :------------- | | Fluids Purification | $29,540 | $25,406 | +$4,134 | +16.3% | | Agricultural and Horticultural | $13,519 | $12,033 | +$1,486 | +12.4% | | Cat Litter | $9,327 | $7,612 | +$1,715 | +22.5% | | Animal Health and Nutrition | $9,167 | $8,754 | +$413 | +4.7% | Six-Month Business to Business Operating Income and SG&A | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :---------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Operating Income | $14,336 | $14,713 | -$377 | -2.6% | | SG&A Expenses | $6,771 (estimated) | $5,690 (estimated) | +$1,081 | +19.0% | - SG&A expenses increased due to higher headcount of sales and leadership personnel, increased travel costs, and increased marketing efforts associated with the animal health business[112](index=112&type=chunk) [Retail and Wholesale Products Group](index=27&type=section&id=RETAIL%20AND%20WHOLESALE%20PRODUCTS%20GROUP) The Retail and Wholesale Products Group saw increased net sales, particularly in industrial and sports products, but a substantial decline in operating income despite lower SG&A expenses Six-Month Retail and Wholesale Net Sales by Category | Product Category | Six Months Ended Jan 31, 2022 (Net Sales, in thousands) | Six Months Ended Jan 31, 2021 (Net Sales, in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :------------------------ | :------------- | | Cat Litter | $89,141 | $81,879 | +$7,262 | +8.9% | | Industrial and Sports | $17,940 | $13,972 | +$3,968 | +28.4% | Six-Month Retail and Wholesale Operating Income and SG&A | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :---------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Operating Income | $1,000 | $6,728 | -$5,728 | -85.1% | | SG&A Expenses | $7,900 (estimated) | $8,974 (estimated) | -$1,074 | -12.0% | - Cat litter net sales were boosted by increased pet adoption, the overall macro trend of increased spending on pets, and new customer business[114](index=114&type=chunk) [Foreign Operations](index=28&type=section&id=FOREIGN%20OPERATIONS) Foreign subsidiaries reported increased total net sales, primarily from Canada, but a significant net loss driven by lower sales in Mexico and increased costs in China Six-Month Foreign Operations Net Sales and Net Loss | Metric | Six Months Ended Jan 31, 2022 (in thousands) | Six Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------ | :------------- | | Total Net Sales (Foreign Subsidiaries) | $9,626 | $8,839 | +$787 | +8.9% | | Net Loss (Foreign Subsidiaries) | $(812) | $(42) | -$(770) | +1833.3% | - Net sales of the Canadian subsidiary increased by **$1,226 thousand**, or **27%**, driven by higher cat litter sales due to a key customer carrying three new products and price increases[118](index=118&type=chunk) - The net loss in foreign operations was primarily driven by lower net sales for the Mexican subsidiary, higher cost of sales, and increased SG&A expenses by the Chinese subsidiary due to investments in animal health and nutrition products[119](index=119&type=chunk) [Three Months Ended January 31, 2022 Compared to Three Months Ended January 31, 2021](index=28&type=section&id=THREE%20MONTHS%20ENDED%20JANUARY%2031,%202022%20COMPARED%20TO%20THREE%20MONTHS%20ENDED%20JANUARY%2031,%202021) This section compares the company's consolidated and segment-level financial performance for the three months ended January 31, 2022, against the prior year, detailing sales, costs, and operating income trends [Consolidated Results](index=28&type=section&id=CONSOLIDATED%20RESULTS) Consolidated net sales increased, but gross profit and income from operations significantly declined due to rising costs, alongside an increase in SG&A expenses Three-Month Consolidated Financial Highlights | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Net Sales | $87,210 | $74,500 | +$12,710 | +17.1% | | Gross Profit | $15,586 | $16,689 | -$1,103 | -6.6% | | Income from Operations | $1,918 | $4,244 | -$2,326 | -54.8% | | SG&A Expenses | $13,668 | $12,445 | +$1,223 | +9.8% | - Domestic freight costs per ton increased approximately **31%**, packaging costs per ton increased approximately **30%**, natural gas cost per ton increased **90%**, and non-fuel manufacturing costs per ton increased **9%**[123](index=123&type=chunk) - Unallocated corporate SG&A expenses increased due to higher professional fees related to growing business needs and strategic initiatives[124](index=124&type=chunk) [Business to Business Products Group](index=29&type=section&id=BUSINESS%20TO%20BUSINESS%20PRODUCTS%20GROUP) The Business to Business Products Group achieved net sales growth across all categories, leading to an increase in operating income despite higher SG&A expenses Three-Month Business to Business Net Sales by Category | Product Category | Three Months Ended Jan 31, 2022 (Net Sales, in thousands) | Three Months Ended Jan 31, 2021 (Net Sales, in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :------------------------ | :------------- | | Fluids Purification | $15,035 | $12,765 | +$2,270 | +17.8% | | Agricultural and Horticultural | $7,311 | $5,046 | +$2,265 | +44.9% | | Cat Litter | $4,691 | $3,736 | +$955 | +25.6% | | Animal Health and Nutrition | $5,587 | $4,736 | +$851 | +18.0% | Three-Month Business to Business Operating Income and SG&A | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :---------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Operating Income | $7,590 | $7,113 | +$477 | +6.7% | | SG&A Expenses | $3,569 (estimated) | $3,000 (estimated) | +$569 | +19.0% | - Agricultural and horticultural chemical carrier products saw a **45%** increase in net sales, driven by volume and a shift in timing of net sales from the first to the second quarter[128](index=128&type=chunk) [Retail and Wholesale Products Group](index=30&type=section&id=RETAIL%20AND%20WHOLESALE%20PRODUCTS%20GROUP) The Retail and Wholesale Products Group experienced increased net sales, but a substantial decline in operating income, despite relatively stable SG&A expenses Three-Month Retail and Wholesale Net Sales by Category | Product Category | Three Months Ended Jan 31, 2022 (Net Sales, in thousands) | Three Months Ended Jan 31, 2021 (Net Sales, in thousands) | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :------------------------ | :------------- | | Cat Litter | $45,246 | $41,085 | +$4,161 | +10.1% | | Industrial and Sports | $8,820 | $6,710 | +$2,110 | +31.4% | Three-Month Retail and Wholesale Operating Income and SG&A | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :---------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Operating Income | $926 | $3,178 | -$2,252 | -70.9% | | SG&A Expenses | $4,200 (estimated) | $4,241 (estimated) | -$41 | -1.0% | - Cat litter net sales increased due to increased sales volume, price increases, increased pet adoption, and existing customers increasing purchases[132](index=132&type=chunk) [Foreign Operations](index=30&type=section&id=FOREIGN%20OPERATIONS) Foreign subsidiaries reported increased total net sales, primarily from Canada, but a significant net loss due to decreased sales in Mexico and other cost pressures Three-Month Foreign Operations Net Sales and Net Loss | Metric | Three Months Ended Jan 31, 2022 (in thousands) | Three Months Ended Jan 31, 2021 (in thousands) | YoY Change (in thousands) | YoY Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------ | :------------- | | Total Net Sales (Foreign Subsidiaries) | $5,283 | $4,703 | +$580 | +12.3% | | Net Loss (Foreign Subsidiaries) | $(477) | $170 | -$(647) | -380.6% | - Net sales of the Canadian subsidiary increased by **$566 thousand**, or **24%**, driven by cat litter sales due to increased sales to existing customers and new product offerings[135](index=135&type=chunk) - The Mexican subsidiary's net sales decreased by **$298 thousand**, or **39%**, due to the discontinuation of products no longer part of the business strategy[136](index=136&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's principal capital requirements include working capital, equipment upgrades, new product development, stock repurchases, and dividends. These were primarily funded by cash from operations and borrowings in the first six months of fiscal year 2022. Net cash provided by operating activities significantly decreased, while financing activities shifted from a net use to a significant net provision of cash due to new debt issuance [Net cash provided by operating activities](index=31&type=section&id=Net%20cash%20provided%20by%20operating%20activities) Net cash provided by operating activities significantly decreased due to increased accounts receivable and inventories, reflecting rising costs and demand - Net cash provided by operating activities decreased significantly to **$61 thousand** for the six months ended January 31, 2022, from **$3,085 thousand** in the prior year[139](index=139&type=chunk)[140](index=140&type=chunk) - Accounts receivable increased by **$5,023 thousand** in the first six months of fiscal year 2022, compared to an increase of **$3,798 thousand** in the prior year, driven by significantly higher net sales[140](index=140&type=chunk) - Inventories increased by **$6,236 thousand** in the first six months of fiscal year 2022 (compared to a decrease of **$412 thousand** in 2021) due to rising costs and increased inventory levels to accommodate demand and thwart potential supply chain disruptions[141](index=141&type=chunk) [Net cash used in investing activities](index=32&type=section&id=Net%20cash%20used%20in%20investing%20activities) Net cash used in investing activities increased due to higher capital expenditures for plant equipment, facility improvements, and IT network upgrades - Net cash used in investing activities increased to **$10,574 thousand** for the six months ended January 31, 2022, from **$7,595 thousand** in the prior year[139](index=139&type=chunk)[146](index=146&type=chunk) - The increase in cash used in investing activities was driven by higher capital expenditures for plant equipment, facility improvements, and IT network upgrades to support increased demand[146](index=146&type=chunk) [Net cash used in financing activities](index=32&type=section&id=Net%20cash%20used%20in%20financing%20activities) Financing activities shifted from a net cash use to a significant net cash provision, primarily driven by proceeds from new notes payable, partially offset by increased treasury stock repurchases - Net cash provided by financing activities was **$14,957 thousand** for the six months ended January 31, 2022, a significant shift from a net use of **$5,795 thousand** in the prior year[139](index=139&type=chunk)[147](index=147&type=chunk) - This change was primarily due to **$25,000 thousand** in proceeds from the issuance of notes payable, partially offset by higher repurchases of treasury stock[147](index=147&type=chunk) [Other Liquidity Information](index=32&type=section&id=Other%20Liquidity%20Information) The company maintains a revolving credit agreement and has authority for additional senior unsecured notes and share repurchases, indicating available liquidity and capital flexibility - The company has a **$45,000,000** unsecured revolving credit agreement with BMO Harris Bank N.A., expiring **January 31, 2024**, and was in compliance with all covenants as of January 31, 2022[149](index=149&type=chunk) - The company issued **$25,000,000** in Series C Senior Notes under an amended note agreement, which also provides the ability to request up to **$75,000,000** in additional senior unsecured notes (minus outstanding notes) on an uncommitted basis[150](index=150&type=chunk)[151](index=151&type=chunk) - As of January 31, 2022, the company had remaining authority to repurchase **637,109 shares** of Common Stock and **273,100 shares** of Class B Stock under a Board-approved plan[152](index=152&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights that financial statement preparation involves estimates and assumptions, which are subject to revision and potential differences from actual results - The preparation of financial statements requires the use of estimates and assumptions that are periodically revised, and actual results could differ from these estimates[155](index=155&type=chunk) - Information concerning critical accounting policies and estimates is included under "Management's Discussion of Financial Condition and Results of Operations" in the Annual Report on Form 10-K for the fiscal year ended July 31, 2021[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of January 31, 2022, concluding they were effective. No material changes to internal control over financial reporting occurred, despite remote work due to COVID-19. The section also acknowledges inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of January 31, 2022, providing reasonable assurance for timely and accurate reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of January 31, 2022[156](index=156&type=chunk) - Disclosure controls and procedures provide reasonable assurance that information required to be disclosed in Exchange Act reports is recorded, processed, summarized, and reported timely[156](index=156&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes occurred in internal control over financial reporting during the quarter, with ongoing monitoring of COVID-19 impacts - No material changes in internal control over financial reporting occurred during the fiscal quarter ended January 31, 2022[159](index=159&type=chunk) - The company is continually monitoring and assessing the effects of COVID-19 on internal controls to minimize the impact on their design and operating effectiveness[157](index=157&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=35&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Management acknowledges that control systems provide only reasonable assurance due to inherent limitations like resource constraints, faulty judgments, and potential circumvention - Management acknowledges that control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that objectives will be met[160](index=160&type=chunk) - Inherent limitations include resource constraints, faulty judgments, circumvention by individual acts or collusion, and management override of controls[160](index=160&type=chunk) [PART II – OTHER INFORMATION](index=35&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part updates risk factors, details unregistered sales of equity securities and use of proceeds, provides mine safety disclosures, and lists all exhibits filed with the report [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the Annual Report on Form 10-K, highlighting new or emphasized risks related to price competition, trade concessions, and increasing operating costs (energy, commodity, transportation, labor) which may not be fully offset by price increases, potentially impacting profitability and sales volumes. Supply chain disruptions and capacity constraints are also noted - The company's products are subject to significant price competition, and the need to reduce prices or offer concessions to retain customers could adversely affect sales and profitability[164](index=164&type=chunk) - Increases in energy, commodity, transportation, and other costs (e.g., paper, plastic resins, synthetic rubber, steel, labor) would increase operating costs, and the company may be unable to pass all these increases on to customers, reducing profitability[165](index=165&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) - Supply, capacity, labor, information technology, and logistics disruptions (e.g., COVID-19, weather, geopolitical tensions, driver shortages) could adversely affect the ability to manufacture, package, or transport products, leading to backlogs and increased costs[165](index=165&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended January 31, 2022, the company did not sell any unregistered securities. It repurchased 113,236 shares of Common Stock at an average price of $34.51 per share, with 637,109 Common Stock and 273,100 Class B Stock shares remaining authorized for repurchase - No securities were sold that were not registered under the Securities Act of 1933 during the three months ended January 31, 2022[172](index=172&type=chunk) Common Stock Repurchase Activity | Period | Total Number of Shares Purchased (Common Stock) | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that may yet be Purchased Under Plans or Programs | | :-------------------------- | :------------------------------------ | :--------------------------- | :--------------------------------------------------------------- | :----------------------------------------------------------------------- | | Nov 1, 2021 to Nov 30, 2021 | 12,691 | $34.95 | 10,933 | 737,654 | | Dec 1, 2021 to Dec 31, 2021 | 303 | $32.80 | — | 737,351 | | Jan 1, 2022 to Jan 31, 2022 | 100,242 | $34.51 | — | 637,109 | - As of January 31, 2022, the company had remaining authority to repurchase **637,109 shares** of Common Stock and **273,100 shares** of Class B Stock[152](index=152&type=chunk)[173](index=173&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company's mining operations are subject to regulation by the Mine Safety and Health Administration. Required information concerning mine safety violations and other regulatory matters is included in Exhibit 95 of this report - The company's mining operations are subject to regulation by the Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977[174](index=174&type=chunk) - Information concerning mine safety violations or other regulatory matters is included in Exhibit 95 to this Quarterly Report on Form 10-Q[174](index=174&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including Amendment No. 1 to the Note Purchase and Private Shelf Agreement, computation of earnings per share, certifications, mine safety disclosures, and XBRL taxonomy documents - The section lists all exhibits filed with the Form 10-Q, including financial agreements, certifications, mine safety disclosures, and XBRL taxonomy documents[175](index=175&type=chunk) - Stockholders may receive copies of the listed exhibits, without fee, by written request, telephone, or e-mail[175](index=175&type=chunk) [Signatures](index=40&type=section&id=Signatures) This section confirms the report's official signing by the Chairman, President, CEO, and CFO of Oil-Dri Corporation of America, dated March 11, 2022 - The report is signed on behalf of Oil-Dri Corporation of America by Daniel S. Jaffee, Chairman, President and Chief Executive Officer, and Susan M. Kreh, Chief Financial Officer[178](index=178&type=chunk) - The report is dated **March 11, 2022**[178](index=178&type=chunk)

Start Time: 10:30 January 1, 0000 11:38 AM ET Oil-Dri Corporation of America (NYSE:ODC) Q1 2022 Earnings Conference Call December 08, 2021, 10:30 AM ET Company Participants Dan Jaffee - Chairman, President and CEO Susan Kreh - CFO Molly VandenHeuvel - COO Fred Kao - VP, Global Sales for Amlan International Wade Robey - VP, Marketing and Product Development Jessica Moskowitz - VP and General Manager, Consumer Products Division Laura Scheland - VP, General Counsel and Secretary Aaron Christiansen - VP of Manu ...

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]