Oil-Dri Earns Outperform Rating on Renewable Diesel, Ultra Pet Wins

Core Viewpoint - Oil-Dri Corporation of America (ODC) has been upgraded to an "Outperform" rating due to its strong execution and strategic investments, particularly in the renewable diesel segment and the Ultra Pet acquisition, which are driving performance beyond expectations [1][11] Renewable Diesel Segment - The fluids purification segment has seen a 27% increase in net sales, reaching $57.1 million in the first half of fiscal 2025, driven by rising demand for renewable diesel [2] - North American and European renewable diesel markets are stable, with new production facilities increasing demand, aligning ODC's offerings with the global energy transition [3] - ODC's vertical integration and operational agility allow it to effectively manage input cost inflation while meeting customer needs [3][4] Ultra Pet Acquisition - The Ultra Pet acquisition contributed $10.4 million in incremental domestic cat litter net sales in the first half of fiscal 2025, exceeding initial projections [5] - The integration of Ultra Pet has been efficient, leading to operational gains and positive retailer feedback, with expectations for expanded product placements [6] - Ultra Pet enhances ODC's position in the premium pet care market, particularly in the crystal cat litter segment, which is characterized by strong consumer demand and favorable margins [7] Financial Performance - ODC reported $244.9 million in sales for the first half of fiscal 2025, a 13% year-over-year increase, and generated $32.3 million in operating cash flow with no outstanding debt [8] - A recent two-for-one stock split has improved share liquidity and attracted a broader investor base, reflecting management's confidence in long-term growth [9] Outlook - ODC is well-positioned to outperform the broader market by focusing on sustainable energy and premium pet care trends, with ongoing momentum from renewable diesel expansion and Ultra Pet integration [10] - The "Outperform" rating is supported by expectations that both catalysts will sustain earnings growth and enhance market positioning in the future [11]