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

Shares of Oil-Dri Corporation of America ODC have gained 7.7% since reporting results for the third quarter of fiscal 2025. This compares with the S&P 500 index’s 1.1% growth over the same time frame. Over the past month, the stock has risen 17.2% compared with the S&P 500’s 3% rally.

Strong Growth in Revenue & EPS

For the third quarter ended April 30, 2025, Oil-Dri reported net sales of $115.5 million, up 8% from $106.8 million in the same period last year. The increase marks the company’s 16th consecutive quarter of year-over-year sales growth. Diluted earnings per share (EPS) for common stock jumped 51% to 80 cents from 53 cents, and net income climbed 50% to $11.6 million from $7.8 million a year earlier. Operating income rose 33% to $13.9 million, while EBITDA increased 35% to $20.2 million.

Segment-Level Performance Shows Mixed Results

Business-to-Business (B2B) Segment:The B2B segment drove much of the overall strength. Net sales rose 18% year over year to $42.7 million, supported by robust growth in agricultural and fluids purification products. Agricultural product sales rose 43% year over year to $11.6 million, benefiting from normalized customer purchasing patterns. Revenues from fluid purification increased 13% to $25.3 million due to strong demand for renewable diesel products. Segment operating income grew 26% year over year to $13.4 million despite an 8% increase in SG&A expenses.

Retail & Wholesale Segment:In contrast, the Retail and Wholesale segment posted more muted growth. Net sales increased 3% year over year to $72.8 million, aided by the contribution of $4.8 million in revenues from the recently acquired Ultra Pet crystal cat litter business. However, organic sales within this segment fell 4%, reflecting declines in clay-based litter products and co-packaged coarse litter due to reduced private label distribution and customer bankruptcies. Segment operating income declined 11% to $9.7 million, attributed to elevated operating costs and SG&A expenses that increased 21%.

Management Commentary Reflects Confidence

CEO Daniel S. Jaffee attributed the record-setting fiscal third-quarter results to Oil-Dri’s diversified product portfolio and recent strategic acquisition. “Though we faced some headwinds in clay-based cat litter, our focus on growing the lightweight litter segment remains strong,” he noted. Jaffee also highlighted the 13th consecutive quarter of gross profit growth and emphasized the company’s commitment to long-term value creation through ongoing investment and customer-focused execution.

Factors Behind the Numbers

Sales gains were propelled by a favorable product mix, increased volumes and pricing power. The acquisition of Ultra Pet added approximately 4% to top-line growth, complementing 4% organic expansion. Gross profit rose 10% to $33 million, and the gross margin improved slightly to 28.6%, marking the 11th straight quarter of year-over-year gross margin growth. Cost of goods sold per ton increased 5%, driven by higher material and freight expenses, but was partially offset by reduced packaging costs.

SG&A expenses declined 3% to $19.1 million, helped by the absence of prior-year acquisition-related costs. Lower corporate overhead also contributed to the decline in total SG&A as a percentage of sales.

Management View

Management reiterated its strategic priorities, particularly the continued emphasis on expanding the lightweight litter category and building on its competitive advantages in agricultural and renewable diesel applications.

Other Developments

Oil-Dri’s board of directors announced a quarterly dividend increase of 16%, raising the common stock dividend to 18 cents per share and the Class B dividend to 13.5 cents per share, payable August 22, 2025. This marks the company’s 22nd consecutive year of dividend increases, reflecting its financial strength and capital discipline.

The quarter also saw the completion of final payments tied to the Ultra Pet acquisition, a move that is already contributing meaningfully to revenues. The company noted continued investment in manufacturing infrastructure and logistics to support growth.

Oil-Dri’s fiscal third-quarter results affirm its capacity to deliver consistent growth, aided by a well-balanced portfolio and targeted acquisitions. While the Retail and Wholesale segment faces near-term challenges, the resilience of the B2B segment and long-term strategic vision keep the company on solid footing.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research