Executive Summary

Record Q2: Net sales $116.9M (+11% Y/Y), gross profit $34.4M (+11% Y/Y), net income $12.9M (+4% Y/Y), with gross margin at 29.5% (+20 bps Y/Y). B2B strength (fluids purification +17% to $26.5M; Amlan animal health +82% to $7.7M) and initial crystal litter contribution drove mix and pricing gains .
Mix/pricing offset higher SG&A and other expense; operating income rose 15% to $17.5M (15.0% margin), EBITDA +16% to $22.2M. CFO highlighted a higher estimated annual ETR given less depletion benefit from crystals (21% vs 16% prior year) .
Retail & Wholesale grew 6% to $73.5M as Ultra Pet contributed $4.4M; organic R&W sales were flat, with domestic clay litter +2% to $51.3M and industrial & sports +3% to $9.8M. Segment operating income declined 5% on higher compensation, advertising, and acquisition amortization .
Capital allocation: paid down the remaining $5M of revolver used for Ultra Pet; cash $22.6M; long‑term debt $39.8M; YTD CFO $32.3M; YTD capex $17.8M to support capacity/efficiency. Management is investing in data analytics and monitoring tariffs; advertising spend expected to be lower in FY25 vs FY24 .

What Went Well and What Went Wrong

What Went Well
- “Highest second quarter net sales, gross profit and net income on record,” driven by favorable mix, pricing, and execution in fluids purification, animal health, and crystal litter; 15th consecutive Y/Y sales growth quarter and 12th consecutive Y/Y gross profit improvement .
- B2B outperformance: fluids purification revenues +17% to $26.5M (renewable diesel demand), Amlan +82% to $7.7M (broad-based regional demand); B2B segment operating income +30% to $14.3M .
- Operational discipline and capital redeployment: EBITDA $22.2M; revolver fully repaid; continued infrastructure investments with capacity/cost initiatives; service levels enabling pricing power; natural gas hedged multi‑year to buffer cost volatility .
What Went Wrong
- R&W segment operating income down 5% Y/Y despite +6% sales growth, as higher compensation, advertising, and acquisition-related amortization offset gains; organic R&W sales were flat ex‑Ultra Pet .
- Higher other expense (net $1.2M vs $0.5M prior) from interest on Ultra Pet debt, FX losses, and lower interest income pressured below-the-line results .
- Canadian softness in litter and industrial absorbents and timing shifts (one major retail set slipped into Q3), though management views issues as timing/seasonal rather than systemic; Canada-specific opportunities exist given local filling operations .

Financial Results

Overall results (Q4’24 → Q1’25 → Q2’25)

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($M)	$113.7	$127.9	$116.9
Gross Profit ($M)	$33.0	$40.8	$34.4
Gross Margin %	29.0%	31.9%	29.5%
Operating Income ($M)	$12.9	$21.2	$17.5
Operating Margin %	11.3%	16.6%	15.0%
Net Income ($M)	$8.5	$16.4	$12.9
Net Income Margin %	7.5%	12.8%	11.1%
EBITDA ($M)	N/A	$26.2	$22.2

YoY comparison (Q2’24 → Q2’25)

Metric	Q2 2024	Q2 2025	Y/Y
Net Sales ($M)	$105.7	$116.9	+11%
Gross Profit ($M)	$30.9	$34.4	+11%
Gross Margin %	29.3%	29.5%	+20 bps
Operating Income ($M)	$15.2	$17.5	+15%
Net Income ($M)	$12.4	$12.9	+4%
Diluted EPS – Common	$0.85	$0.89	+5%
EBITDA ($M)	$19.2	$22.2	+16%

Segment performance (Q4’24 → Q1’25 → Q2’25)

Segment	Net Sales ($M) Q4’24	Net Sales ($M) Q1’25	Net Sales ($M) Q2’25	Seg. Op. Inc ($M) Q4’24	Seg. Op. Inc ($M) Q1’25	Seg. Op. Inc ($M) Q2’25
Business to Business	$38.9	$48.4	$43.4	$12.9	$17.1	$14.3
Retail & Wholesale	$74.8	$79.5	$73.5	$9.7	$13.4	$11.3

Product/KPI detail

KPI	Q4 2024	Q1 2025	Q2 2025
Fluids Purification Sales ($M)	$25.0	$30.1	$26.5
Amlan (Animal Health) Sales ($M)	$8.0	$6.2	$7.7
Agricultural Sales ($M)	$5.9	$11.6	$9.2
Domestic Clay Litter Sales ($M)	$51.6	$53.8	$51.3
Crystal Litter Contribution ($M)	N/A	$6.0 (Ultra Pet)	$4.4 (Ultra Pet)
Industrial & Sports Sales ($M)	$10.6	$11.0	$9.8

Balance sheet and cash flow (as of Jan 31, 2025; YTD through Jan 31)

Metric	Value
Cash & Cash Equivalents	$22.6M
Long‑Term Debt	$39.8M
Net Cash from Operations (YTD)	$32.3M
Capital Expenditures (YTD)	$(17.8)M
Revolver Paydown (YTD)	$10.0M (remaining $5.0M repaid in Q2)

Estimates vs Actuals (Q2’25)

Consensus estimates from S&P Global were unavailable at query time; as a result, a vs-consensus comparison is not provided. We will update when available.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Advertising Expense	FY 2025	Expected lower vs FY 2024 (stated in Q4’24 and Q1’25)	Expect lower vs FY 2024 (reiterated)	Maintained
Dividend (Common)	Q3 FY 2025 pay date 5/23/25	Prior quarterly rate post-split implied $0.155	Declared $0.155/share; Class B $0.1165/share; record 5/9/25	Maintained
Effective Tax Rate	FY 2025	N/A	Estimated annual ETR higher due to crystals (Q2 commentary: ~20.5% vs 15.7% prior year)	Informational (no explicit prior guidance)
Capex/Manufacturing	FY 2025–FY 2026	Ongoing investments guided in prior updates	Continued strategic investments to add capacity/cost compression; long-term sustained commitment	Maintained emphasis

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Mix/Price Discipline	Gross margin expansion to 29% in FY’24; 14th consecutive Y/Y sales growth in Q1’25 with 32% gross margin	10th consecutive Y/Y gross margin expansion; 15th straight Y/Y sales growth; operating margin 15.0%	Improving, sustained
Fluids Purification / Renew. Diesel	Record $25.0M in Q4’24; $30.1M in Q1’25 on NA renewable diesel demand	$26.5M (+17% Y/Y); capacity in place; market growth expected over 3–5 years	Strong, secular growth
Amlan (Animal Health)	Mixed by region in Q1’25; strength LATAM/NA	$7.7M (+82% Y/Y); broad-based demand; execution praised	Accelerating
Crystal Litter / Ultra Pet	Acquisition accretive; distribution builds in Q4’24/Q1’25	$4.4M Q2 contribution; near-term distribution gains to reaccelerate in fall reset cycle	Integrating; seasonal cadence
Advertising Spend	FY’25 expected lower vs FY’24 (Q4’24, Q1’25)	Reiterated lower FY’25 advertising vs FY’24	Cost discipline maintained
Data Analytics Investment	Noted focus on turning data into dollars in Q1’25	New leader for data analytics; multi‑year investment (FY’25–FY’26)	Scaling capabilities
Tariffs/Natural Gas	N/A specific in Q4’24; operations efficiency noted	Tariffs monitored; exposure limited; natural gas hedged 5 years out to buffer prices	Proactive risk mgmt
Canada / Regional Trends	Canada softness noted in Q1’25	Canadian retail timing shift to Q3; “Made in Canada” positioning seen as opportunity	Timing, not structural

Management Commentary

“We effectively implemented our strategies to significantly grow our fluids purification and animal health businesses, as well as secure a position in the crystal cat litter market… 15th consecutive quarter of year-over-year sales growth and the 12th consecutive quarter of year-over-year gross profit improvement.” — Daniel S. Jaffee, CEO .
“Our diluted earnings per common share of $0.89 reflects a 5% increase year-over-year… We generated $22 million of EBITDA… paid off the remaining $5 million of short-term debt on our revolving credit facility… As of the end of the quarter, the credit facility is undrawn.” — Susan Kreh, CFO & CIO .
“We do forward purchase natural gas… as far as 5 years… Nothing… with the mild to modest rise… was unexpected and unplanned for.” — Aaron Christiansen, VP Operations .
“Ultra Pet… acquisition economics are essentially exactly aligned… velocities… doing well… pushing… to achieve those same strong results again this next fall.” — Chris Lamson, Group VP R&W .
“This market [renewable diesel] will continue to grow over the next 3 to 5 years… we’re in a very good position to service the market.” — Bruce Patsey, VP Fluids Purification .

Q&A Highlights

Ultra Pet integration and distribution cadence: Economics tracking the deal model; major resets skew to fall, implying seasonal distribution gains later in FY’25 .
Amlan sustainability: Strength broad-based across regions; product performance and technical team support cited as drivers .
Manufacturing and capex: Long-term reinvestment program for cost compression and capacity additions; selective forward buys; construction services limit pre-buy opportunities .
Tariffs / Macro: Exposure limited due to domestic operations and vertical integration; proactive partner discussions; natural gas forward-hedged up to 5 years .
Canada dynamics: Q2 softness tied to weather/timing; one major retail set slipped into Q3; local Canadian filling provides “Made in Canada” advantage .
Margin sustainability: Three-pronged approach—pricing/value capture, mix shift (fluids, Amlan, lightweight/crystals), and daily operational efficiency—supports multi‑quarter expansion .

Estimates Context

Wall Street consensus (S&P Global) for Q2’25 revenue/EPS/EBITDA was unavailable at query time due to data access limits, so we cannot provide a beat/miss assessment. We will update the vs-consensus view once S&P Global data are accessible.

Key Takeaways for Investors

Mix-led growth and pricing power continue to drive record results; B2B strength (renewable diesel purification, Amlan) remains the core earnings engine, while crystal litter expands R&W’s addressable shelf space .
R&W profitability lagged sales growth on higher operating costs and amortization; watch for fall shelf resets to reaccelerate Ultra/Crystals distribution into 2H .
Cash generation supports reinvestment and balance sheet strength; revolver now undrawn, providing optionality for opportunistic M&A consistent with the Ultra playbook .
Margin trajectory supported by pricing discipline, mix, and manufacturing efficiency; hedges mitigate energy volatility; advertising spend slated lower Y/Y in FY’25 .
Tariff risk appears manageable given domestic footprint and vertical integration; Canadian timing issues seen as transitory with a potential branding advantage .
Monitor secular tailwinds in renewable diesel purification; management indicates capacity readiness and potential need to expand if growth persists over 3–5 years .

Sources: Q2 FY2025 8‑K, press release, dividend release, and earnings call; prior quarter releases for trend context .

Oil-Dri Corp of America (ODC)·Q2 2025 Earnings Summary