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Oil-Dri Q2 Earnings Rise Y/Y on Strong Sales in B2B & Cat Litter
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Shares of Oil-Dri Corporation of America (ODC - Free Report) have rallied 7.4% since reporting results for the second quarter of fiscal 2025. This compares with the S&P 500 index’s 0.4% growth over the same time frame. Over the past month, the stock has gained 13.4% against the S&P 500’s 8.4% decline.
Sales & Earnings Growth
ODC reported second-quarter fiscal 2025 diluted earnings per share of 89 cents, a 5% increase from the prior-year quarter’s 85 cents after adjusting for the company’s two-for-one stock split.
Oil-Dri reported second-quarter fiscal 2025 net sales of $116.9 million, an increase of 11% from $105.7 million in the prior-year quarter. Sales growth was driven by strong demand in the Business to Business (B2B) segment, particularly in fluids purification, and animal health and nutrition. Gross profit rose 11% to $34.4 million from $30.9 million a year ago, with a gross margin of 29.5% versus 29.3%.
Net income for the quarter was $12.9 million, up 4% from $12.4 million a year earlier.
Oil-Dri Corporation Of America Price, Consensus and EPS Surprise
The B2B segment’s net sales rose 20% year over year to $43.4 million, driven by strong demand for fluids purification products used in renewable diesel production, as well as growth in the Animal Health and Nutrition business. Net sales in Fluids Purification increased 17% to $26.5 million, whereas Animal Health and Nutrition sales jumped 82% to $7.7 million.
Operating income for the segment increased 30% to $14.3 million due to a favorable product mix and increased demand.
Retail & Wholesale
Net sales in the Retail and Wholesale segment increased 6% to $73.5 million, supported by the introduction of crystal cat litter products. Domestic cat litter sales rose 7% year over year, while co-packaged cat litter sales declined due to order timing issues in the prior-year quarter.
However, operating income for the segment declined 5% year over year to $11.3 million, impacted by higher SG&A expenses, including increased compensation costs, advertising spend and the amortization of acquired customer lists.
Factors Influencing Performance
Pricing & Cost Management
The company continued to implement pricing strategies to offset rising input costs, particularly in transportation, packaging and raw materials. Management emphasized the effectiveness of its "Mini Ball" approach, focused on optimizing product mix and extracting more value from resources while selling fewer tons.
The company also noted that its ability to maintain high service levels at retail (above 99%) has helped support its pricing initiatives.
Impact of Tariffs & Economic Conditions
Management is closely monitoring potential tariff changes but believes that its vertically integrated business model and the United States-focused operations will mitigate exposure. Meanwhile, demand for its products in Canada softened slightly due to economic conditions, though a major retail distribution expansion is expected in the fiscal third quarter.
Other Developments
Capital Allocation & Investments
In the quarter, Oil-Dri generated $22 million in EBITDA and used cash flow to pay down $5 million of debt tied to the Ultra Pet acquisition. The company has an undrawn credit facility available for growth financing.
Management reiterated its commitment to reinvesting in manufacturing infrastructure to improve capacity and efficiency, with a long-term capital plan in place.
M&A & Strategic Expansion
ODC remains open to acquisitions that complement its existing business. The Ultra Pet integration has progressed well, with sales and margins aligning with expectations.
Outlook
While no specific guidance was provided, management remains optimistic about growth in Fluids Purification and Animal Health, as well as ongoing pricing and efficiency initiatives. The company continues to expand its capabilities in renewable diesel filtration, a market expected to grow over the next 3-5 years.
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Oil-Dri Q2 Earnings Rise Y/Y on Strong Sales in B2B & Cat Litter
Shares of Oil-Dri Corporation of America (ODC - Free Report) have rallied 7.4% since reporting results for the second quarter of fiscal 2025. This compares with the S&P 500 index’s 0.4% growth over the same time frame. Over the past month, the stock has gained 13.4% against the S&P 500’s 8.4% decline.
Sales & Earnings Growth
ODC reported second-quarter fiscal 2025 diluted earnings per share of 89 cents, a 5% increase from the prior-year quarter’s 85 cents after adjusting for the company’s two-for-one stock split.
Oil-Dri reported second-quarter fiscal 2025 net sales of $116.9 million, an increase of 11% from $105.7 million in the prior-year quarter. Sales growth was driven by strong demand in the Business to Business (B2B) segment, particularly in fluids purification, and animal health and nutrition. Gross profit rose 11% to $34.4 million from $30.9 million a year ago, with a gross margin of 29.5% versus 29.3%.
Net income for the quarter was $12.9 million, up 4% from $12.4 million a year earlier.
Oil-Dri Corporation Of America Price, Consensus and EPS Surprise
Oil-Dri Corporation Of America price-consensus-eps-surprise-chart | Oil-Dri Corporation Of America Quote
Segmental Performance
B2B
The B2B segment’s net sales rose 20% year over year to $43.4 million, driven by strong demand for fluids purification products used in renewable diesel production, as well as growth in the Animal Health and Nutrition business. Net sales in Fluids Purification increased 17% to $26.5 million, whereas Animal Health and Nutrition sales jumped 82% to $7.7 million.
Operating income for the segment increased 30% to $14.3 million due to a favorable product mix and increased demand.
Retail & Wholesale
Net sales in the Retail and Wholesale segment increased 6% to $73.5 million, supported by the introduction of crystal cat litter products. Domestic cat litter sales rose 7% year over year, while co-packaged cat litter sales declined due to order timing issues in the prior-year quarter.
However, operating income for the segment declined 5% year over year to $11.3 million, impacted by higher SG&A expenses, including increased compensation costs, advertising spend and the amortization of acquired customer lists.
Factors Influencing Performance
Pricing & Cost Management
The company continued to implement pricing strategies to offset rising input costs, particularly in transportation, packaging and raw materials. Management emphasized the effectiveness of its "Mini Ball" approach, focused on optimizing product mix and extracting more value from resources while selling fewer tons.
The company also noted that its ability to maintain high service levels at retail (above 99%) has helped support its pricing initiatives.
Impact of Tariffs & Economic Conditions
Management is closely monitoring potential tariff changes but believes that its vertically integrated business model and the United States-focused operations will mitigate exposure. Meanwhile, demand for its products in Canada softened slightly due to economic conditions, though a major retail distribution expansion is expected in the fiscal third quarter.
Other Developments
Capital Allocation & Investments
In the quarter, Oil-Dri generated $22 million in EBITDA and used cash flow to pay down $5 million of debt tied to the Ultra Pet acquisition. The company has an undrawn credit facility available for growth financing.
Management reiterated its commitment to reinvesting in manufacturing infrastructure to improve capacity and efficiency, with a long-term capital plan in place.
M&A & Strategic Expansion
ODC remains open to acquisitions that complement its existing business. The Ultra Pet integration has progressed well, with sales and margins aligning with expectations.
Outlook
While no specific guidance was provided, management remains optimistic about growth in Fluids Purification and Animal Health, as well as ongoing pricing and efficiency initiatives. The company continues to expand its capabilities in renewable diesel filtration, a market expected to grow over the next 3-5 years.