Oil-Dri Corporation Of America (NYSE:ODC) reported stronger fiscal third-quarter sales and operating income, while management cautioned that higher costs and an ongoing capital investment cycle are continuing to pressure margins.
On the company’s Q3 fiscal 2026 earnings webcast, Chief Financial Officer and Chief Information Officer Susan Kreh said net sales rose 9% year over year to $126 million. Income from operations increased 23% from the prior-year quarter, helped by top-line growth and lower selling, general and administrative costs.
“That is what happened during our third fiscal quarter,” Kreh said.
Cat litter and animal health drive sales growth
Kreh said Oil-Dri’s Retail and Wholesale Products Group posted significant growth in cat litter, with sales up 13% from the same quarter last year. The increase was driven by higher demand across coarse, lightweight, co-packaged and crystal products. She said the company expanded its co-packaged offering to include lightweight litter, while crystal cat litter volumes reached record sales levels.
Laura Scheland, vice president and general manager of the Consumer Products Division, said domestic cat litter sales, excluding co-packaged products, increased 10% year over year in the third quarter. She attributed the gain to higher demand, a shift of orders from the third quarter caused by delays from Winter Storm Fern, category growth tied to increased cat ownership, and stronger sales of crystal, lightweight and coarse litter.
Scheland said crystal cat litter reached a company record for quarterly sales, supported by both private label and branded products. She also said Oil-Dri launched new Cat’s Pride pail items, Cat’s Pride Max Power Pro as an e-commerce exclusive, and multiple private label clay items during fiscal 2026.
Management also pointed to growth in agricultural and animal health businesses within the business-to-business products group. Wade Robey, vice president of agriculture and president of Amlan International, said Amlan had been focused on regaining share at a key account lost earlier in the year and expanding business with new and existing customers.
“We haven’t 100% regained that key account, but we’ve gotten a foothold in there again and are seeing that business grow,” Robey said. He added that Amlan has expanded its customer base across each world area it serves and said the long-term outlook is “very good.”
Margin pressure remains a key issue
Despite the sales and operating income growth, Kreh said gross margin was unfavorably impacted by a 190-basis-point reduction compared with the prior-year quarter. Domestic cost per ton of goods sold increased 6% year over year, driven by higher purchased materials, labor, packaging and transportation costs.
Kreh said Oil-Dri is addressing those pressures through productivity initiatives, cost reductions, work with customers to identify savings and pricing adjustments where needed.
President and Chief Executive Officer Daniel Jaffee said investors should expect continued margin pressure as the company’s depreciation catches up with elevated capital spending. He said Oil-Dri averaged about $15 million in annual capital expense and $13 million in depreciation from fiscal 2017 to fiscal 2021. Over the past five years, he said the company has spent almost $32 million per year in capital, while depreciation has averaged $15.5 million and is now running at an annualized pace of about $22.5 million.
Jaffee said the investments were aimed at improving facilities to maintain service and product quality for customers, not expanding margins. He pointed to a 99.9% fill rate in the quarter as evidence of the company’s operational performance, saying Oil-Dri shipped 999 pallets for every 1,000 ordered.
“Zero in on the cash generation, and that’s where you’ll see what’s going on here at Oil-Dri,” Jaffee said.
Cash flow supports dividend increase
Kreh said Oil-Dri generated $25 million of net cash provided by operating activities during the fiscal third quarter. She said the cash flow supports continued investments in the business as well as returns to stakeholders.
The company’s board raised the quarterly dividend to $0.225 per common share, payable Aug. 21, 2026. Kreh said the increase represents a 10% rise over the most recent dividend paid and follows another dividend increase announced in December 2025.
“We understand the sustainability and predictability of our dividend, along with profitable growth, is important to our long-term shareholders and to our customers,” Kreh said.
Fluid purification outlook described as stable
In fluid purification, management said sales were down 1% year over year in the third quarter, but Bruce Patsey, vice president of fluid purification, said the North American business had a strong quarter. He attributed the overall decline to export markets, where a higher-quality crop required less clay for processing oil, rather than to lost business.
Patsey said the company is seeing increased business from mineral oil processing into jet fuel amid the Middle East conflict, as refinery margins remain high. He also said sustainable aviation fuel customers are seeing higher business levels, which is supporting Oil-Dri sales, and that additional SAF capacity expected over the next 12 months could help drive future demand.
Looking ahead, Patsey said demand in the fluid purification market remains healthy, with new plants coming in North America in both renewable and vegetable oil sectors. He described the market as stable over the next 12 to 18 months, citing tax incentives for renewable fuel production.
Company points to reserves and R&D
Jaffee said Oil-Dri’s vertical integration and mineral reserves remain central to its strategy. He said the company is committed to maintaining 40 years of reserves in all product lines and has more than 100 years of reserves in total.
Mervyn de Souza, vice president of research and development, said the R&D team is exploring opportunities to use Oil-Dri’s sorbent minerals in new applications and improve existing products. He said the company is also evaluating artificial intelligence to improve efficiency, vet technology more quickly and assess market attractiveness.
Jaffee declined to discuss specific future initiatives but said the company remains focused on creating value from calcium bentonite and sorbent minerals.
About Oil-Dri Corporation Of America (NYSE:ODC)
Oil-Dri Corporation of America is a specialty materials company that develops, manufactures and markets sorbent and filtration products for industrial, environmental and consumer applications. Its flagship offerings include clay- and diatomaceous earth–based cat litters, calcium silicate absorbents for spill control and cleanup, and purification media designed to remove contaminants from petroleum, chemical and food-processing streams.
Founded in 1941 and headquartered in Chicago, Illinois, the company has evolved from a single-product operation into a diversified provider of mineral- and chemical-based solutions.
