Oil-Dri of America(ODC) - 2026 Q2 - Quarterly Report

Financial Performance - Net sales for the six months ended January 31, 2026, were $238.2 million, a decrease of 2.6% compared to $244.9 million for the same period in 2025[15] - Gross profit for the six months ended January 31, 2026, was $67.8 million, down 10% from $75.2 million in the prior year[15] - Net income for the six months ended January 31, 2026, was $28.0 million, a decrease of 4.3% from $29.3 million in the same period of 2025[15] - Earnings per share for basic common stock was $2.07 for the six months ended January 31, 2026, compared to $2.17 for the same period in 2025[15] - Total comprehensive income for the six months ended January 31, 2026, was $28.1 million, compared to $29.1 million for the same period in 2025[18] - Operating income for the six months ended January 31, 2026, was $48,604,000, compared to $56,137,000 for the same period in 2025, representing a decrease of 13.4%[89] - For the three months ended January 31, 2026, net income was $12,569,000, compared to $12,921,000 for the same period in 2025, a decrease of 2.7%[90] Assets and Liabilities - Total assets as of January 31, 2026, were $388.1 million, a slight decrease from $391.7 million as of July 31, 2025[11] - Total liabilities decreased to $115.7 million as of January 31, 2026, from $132.6 million as of July 31, 2025, reflecting a reduction in current liabilities[14] - The balance of cash, cash equivalents, and restricted cash at the end of the period was $46,933,000 for January 31, 2026, down from $50,458,000 at the beginning of the period[29] - The estimated fair value of debt was $40.8 million as of January 31, 2026, compared to $40.3 million as of July 31, 2025, reflecting a slight increase of about 1.2%[70] - Accrued expenses totaled $33.220 million as of January 31, 2026, down from $44.864 million as of July 31, 2025, a decrease of approximately 26.2%[75] Cash Flow and Dividends - Total cash provided by operating activities for the six months ended January 31, 2026, was $28,435,000, down from $32,330,000 in 2025, indicating a decline of about 11.1%[29] - Dividends paid during the six months ended January 31, 2026, totaled $4,877,000, compared to $4,194,000 in 2025, an increase of about 16.3%[29] - The company declared dividends of $0.385 per share for common stock and $0.288 per share for Class B stock for the six months ended January 31, 2026, compared to $0.310 and $0.233, respectively, in the prior year[15] Inventory and Receivables - Total inventories increased to $53.753 million as of January 31, 2026, from $51.594 million as of July 31, 2025, representing a growth of approximately 4.2%[66] - Inventory reserves were $3.9 million as of January 31, 2026, compared to $3.7 million as of July 31, 2025, indicating an increase of about 5.4%[67] - As of January 31, 2026, accounts receivable was $70.2 million, up from $69.4 million as of July 31, 2025, and $62.2 million as of July 31, 2024[40] Capital Expenditures and Expenses - Capital expenditures for the six months ended January 31, 2026, were $14,817,000, compared to $17,806,000 in 2025, representing a decrease of approximately 16.7%[29] - Selling, general and administrative expenses include salaries, marketing costs, and research and development costs[53] - Stock-based compensation expense for the three months ended January 31, 2026, was $1,000,000, down from $1,100,000 in the same period of 2025[94] Debt and Credit Facilities - The company has a $75 million unsecured revolving credit facility, with $3 million in letters of credit outstanding as of January 31, 2026[79][81] - The Eighth Amendment to the Credit Agreement increased the borrowing limit from $45 million to $75 million and extended the termination date to September 30, 2029[80] - The variable interest rates for the Credit Agreement as of January 31, 2026, were 6.75% for the BMO prime-based rate and 5.06% for the adjusted SOFR-based rate[82] Segment Performance - For the six months ended January 31, 2026, net sales for the Business to Business Products Group were $86.3 million, while the Retail and Wholesale Products Group reported $151.96 million[87] - The Business to Business Products Group reported net sales of $86,263,000 for the six months ended January 31, 2026, down from $91,831,000 in the same period of 2025, a decrease of 6.1%[89] - The Retail and Wholesale Products Group had net sales of $151,960,000 for the six months ended January 31, 2026, compared to $153,028,000 in the prior year, a decrease of 0.7%[89] Regulatory and Accounting Changes - The company is evaluating the impact of ASU No. 2023-09 on its disclosures, effective for fiscal years beginning after December 15, 2024[56] - ASU 2025-05, effective for fiscal years beginning after December 15, 2025, is not expected to have a material impact on the company's disclosures[58] - ASU 2025-10, effective for fiscal years beginning after December 15, 2028, is not expected to materially impact the company's disclosures[60]