Oil-Dri Posts Record Q3 Earnings, Stock Rises 17% in a Month

Core Viewpoint - Oil-Dri Corporation of America has demonstrated strong financial performance in the third quarter of fiscal 2025, with significant growth in revenue and earnings per share, outperforming the S&P 500 index during the same period [1][2][12] Financial Performance - For the third quarter ended April 30, 2025, Oil-Dri reported net sales of $115.5 million, an 8% increase from $106.8 million in the same period last year, marking the 16th consecutive quarter of year-over-year sales growth [2] - Diluted earnings per share (EPS) rose 51% to 80 cents from 53 cents, while net income increased 50% to $11.6 million from $7.8 million a year earlier [2] - Operating income grew 33% to $13.9 million, and EBITDA increased 35% to $20.2 million [2] Segment-Level Performance - The Business-to-Business (B2B) segment saw net sales rise 18% year over year to $42.7 million, driven by strong growth in agricultural and fluids purification products [3] - Agricultural product sales surged 43% year over year to $11.6 million, while revenues from fluid purification increased 13% to $25.3 million [3] - In contrast, the Retail and Wholesale segment experienced muted growth, with net sales increasing 3% year over year to $72.8 million, but organic sales fell 4% [4] Management Commentary - CEO Daniel S. Jaffee attributed the strong results to Oil-Dri's diversified product portfolio and strategic acquisitions, emphasizing the company's focus on lightweight litter growth despite challenges in clay-based products [5] - The company has achieved its 13th consecutive quarter of gross profit growth, reflecting a commitment to long-term value creation [5] Factors Behind Growth - Sales gains were driven by a favorable product mix, increased volumes, and pricing power, with the Ultra Pet acquisition contributing approximately 4% to top-line growth [6] - Gross profit rose 10% to $33 million, with a slight improvement in gross margin to 28.6%, marking the 11th consecutive quarter of year-over-year gross margin growth [6] Cost Management - SG&A expenses declined 3% to $19.1 million, aided by the absence of prior-year acquisition-related costs and lower corporate overhead [7] Strategic Priorities - Management reiterated its focus on expanding the lightweight litter category and enhancing competitive advantages in agricultural and renewable diesel applications [8] Dividend Announcement - Oil-Dri's board announced a quarterly dividend increase of 16%, raising the common stock dividend to 18 cents per share, marking the company's 22nd consecutive year of dividend increases [10] Other Developments - The completion of final payments related to the Ultra Pet acquisition is contributing meaningfully to revenues, alongside continued investments in manufacturing infrastructure and logistics [11]