Oil-Dri Posts Record $493.8 Million Sales And $57.0 Million Profit, Even As Gross Margin Slips To 27.8%
Fiscal 2026 net income rose 6% on lower overhead, while higher manufacturing and freight costs cut gross margin from 29.5%.
Oil-Dri reported record fiscal 2026 net sales of $493.8 million, up 2%, and record net income of $57.0 million, up 6%, in an 8-K filed Thursday. Lower overhead did the work: gross margin fell to 27.8% from 29.5% as freight and manufacturing costs climbed.
What the results show
Diluted earnings per common share were $3.92 for the year ended July 31, versus $3.70 a year earlier. Operating income was $68.0 million, essentially flat against $68.2 million.
Fourth-quarter sales were $129.3 million, up 3% and the highest quarterly revenue in the company's history. Quarterly operating income rose 17% to $18.2 million, and net income rose 10% to $14.4 million, or $1.00 per diluted share versus $0.89.
CEO Daniel S. Jaffee said the first half faced "difficult comparisons against a robust prior period," and that the team delivered results in the second half that "surpassed last year's performance."
Where margins gave way
Annual gross profit fell 4% to $137.5 million. The company tied the margin drop to a 4% rise in domestic per-ton cost of goods sold, from higher manufacturing and freight costs. In the fourth quarter, the margin held at 27.8%, with per-ton costs up 3% on freight; the company cited geopolitical pressure on diesel prices and reduced trucking capacity.
Selling, general and administrative expenses fell 7% to $69.5 million from $74.9 million, on lower corporate staffing costs, a smaller bonus accrual and less outside services spending. That offset the cost increases.
In the retail and wholesale group, which sells cat litter and related products, fourth-quarter operating income fell 5% to $9.3 million. The company blamed significantly higher costs to transport cat litter products.
Winners and laggards by product
Retail and wholesale sales reached a record $313.6 million, up 4%. Co-packaged cat litter rose 47% for the year and crystal litter 16%, while domestic clay litter sales slipped 1%. The company cited changes in private label distribution and the absence of certain one-time promotions.
In the fourth quarter, domestic cat litter excluding co-packaged products totaled $55.9 million, down 3%, as clay softened on promotion timing at a large account, retailer pricing and distribution changes, and heavier competitor trade spending. Co-packaged litter grew 60%.
Business-to-business sales were $180.2 million, down 1%. Agricultural carriers set a record, up 11%, while fluids purification fell 5% and animal health 7% against very strong prior-year results. Animal health did turn in a record fourth quarter of $9.9 million, up 18%.
Cash, dividend and an officer appointment
Cash reached a high of $73.7 million, from $50.5 million a year earlier, after $34.2 million of capital spending, $12.6 million of share repurchases and $10.4 million of dividends.
The board declared quarterly dividends of $0.225 per common share and $0.168 per Class B share, payable November 20 to holders of record on November 6. It also named Anthony W. Parker, vice president, general counsel and secretary, an executive officer. At Thursday's close, before the results, the stock was $84.37, down 3.92% (market data).
Oil-Dri holds its earnings webcast Friday at 10:00 a.m. Central Time, the first chance to hear management on freight costs and clay litter.
