Oil-Dri's New Bank Amendment Bars Dividends And Buybacks During A Default, 10-K Shows
A restricted-payments covenant arrived with a $100 million credit line, a day before the annual report, after payouts had been rising.
Oil-Dri signed a Ninth Amendment to its BMO Harris credit agreement on October 7 that adds a restricted-payments covenant, limiting dividends, distributions and share repurchases. The 10-K, filed Thursday, says payouts are allowed only when the company is not in default, or under other circumstances the amendment sets out.
What the amendment does
The same amendment raises the revolving credit line to up to $100 million from $75 million and pushes the termination date to October 7, 2031. It also widens the accordion, a provision for expanding the line, to the greater of an additional $125 million or 100% of Consolidated EBITDA, from $50 million.
Lenders loosened elsewhere: pricing falls by expanding the debt-to-earnings ratio bands, and the $100 million cumulative cap on permitted acquisitions is removed.
A companion Fifth Amendment to the Prudential note agreement lifts the Shelf Notes ceiling to $150 million from $75 million and extends the issuing window to October 7, 2029. It also adds certain restrictive covenants from the credit agreement.
The prior year's 10-K described covenants on debt, asset sales and financial ratios.
Payouts had been climbing
In fiscal 2026, share repurchases were $12.6 million, against $2.3 million a year earlier, and dividends paid were $10.4 million, against $8.4 million. Dividends declared per common share were $0.815, up from $0.645.
The company says it principally funded its needs from operations, along with earlier borrowings. It had $73.7 million in cash at July 31, up from $50.5 million, and no revolver borrowings during the year. Management says it was in compliance with its covenants.
Earnings were mixed. Net income was $57.0 million, or $3.92 per diluted common share, against $54.0 million, or $3.70. Gross margin fell to 27.8% from 29.5%, as per-ton manufacturing costs rose 6%. Selling and administrative costs fell $5.3 million, which held operating income about flat.
What to watch
Oil-Dri's stock closed at $84.37 on Thursday, down 3.92%, according to market data. Oil-Dri released fiscal fourth-quarter results after Thursday's close, with a webcast Friday at 10:00 a.m. Central.
The amendment itself, filed with an October 8 8-K, allows dividends and buybacks without a dollar cap as long as no default exists or would result, including on a pro forma test of the financial covenants. A smaller carve-out, up to $9 million a year of buybacks from directors, officers and employees, applies regardless.
The repurchase plan still had authority for 171,909 common and 208,197 Class B shares at July 31, the 10-K says.
Correction, October 9, 2026: An earlier version of this story's headline said the amendment lets lenders restrict payouts, and the story said its exceptions were not spelled out. The amendment bars dividends and buybacks only during a default or when one would result; its terms are filed with Oil-Dri's October 8 8-K. It also said payouts were funded from operations alone; the 10-K says operations and earlier borrowings.
Sources
- 10-K Filing — Oil-Dri (ODC) — SEC EDGAR
- 10-K Filing — Oil-Dri (ODC), FY2025 filed 2025-10-09 (comparison basis) — SEC EDGAR
- 10-Q Filing — Oil-Dri (ODC), filed 2025-12-08 (earlier disclosure) — SEC EDGAR
- 10-Q Filing — Oil-Dri (ODC), filed 2026-03-11 (earlier disclosure) — SEC EDGAR
- 10-Q Filing — Oil-Dri (ODC), filed 2026-06-08 (earlier disclosure) — SEC EDGAR
- Oil-Dri’s Board of Directors Appoints Anthony W. Parker as — globenewswire.com
