Oil-Dri Corporation of America Q2 FY2025 earnings call

• Dan Jaffee emphasized the team's success and the 'Mini ball' concept where data is turned into dollars.
• Susan Kreh discussed financial highlights including sales growth, gross margin increase, EBITDA, debt paydown, and monitoring of tariffs.
• Chris Lamson provided updates on Ultra Pet's performance, noting acquisition economics align with the business case and distribution efforts.
• Bruce Patsey talked about the Fluids Purification market and competition in North America and Europe.
• Aaron Christiansen discussed manufacturing infrastructure investment and operational efficiency efforts.
• Laura Scheland spoke about lightweight cat litter share and segment growth.
• Heath Wessels highlighted the Amlan business performance and commitment to Animal Health.

In the second quarter of Fiscal 2025, Oil-Dri saw double-digit sales growth in Fluids Purification and Animal Health products groups. The growth in high value-added products, combined with pricing initiatives, drove gross margin growth up 11% year-over-year. Diluted earnings per common share were $0.89, a 5% increase year-over-year. EBITDA for the quarter was $22 million. The Ultra Pet acquisition is performing well with acquisition economics aligned to the business case. The Fluids Purification and Animal Health segments contributed to sales growth, while Ultra Pet's distribution and sell-through are being monitored.

• Reinvestment in manufacturing infrastructure for strategic growth.
• Open to M&A opportunities that fit the business.
• Continued monitoring of tariffs and market conditions to navigate external factors.

• Potential impact of tariffs on business, though direct exposure is limited due to domestic operations and vertical integration.
• Natural gas price fluctuations, but forward purchasing and modeling mitigate risks.

Q: How is Ultra Pet doing? Are the number of SKU shelf placements continuing to increase? How is retail sell-through?

A: Chris Lamson responded that Ultra Pet is performing well with acquisition economics aligned, distribution builds are ongoing with retail customers resetting shelves, and early reads show continued distribution gains.

Q: What is the competitive treatment landscape for fluids purification in terms of U.S. versus international demand over the next six months?

A: Bruce Patsey stated that North America and Europe are leading regions for renewable diesel, the business is strong, and the landscape is competitive with stable growth expected.

Q: Is lightweight cat litter still gaining share?

A: Laura Scheland replied that the lightweight segment is growing, though Oil-Dri's share has declined slightly, which is part of a long-term strategy to grow the segment.

Q: How large is the market opportunity for fluids purification from new renewable diesel plants in North America and what competitive advantages does Oil-Dri possess?

A: Bruce Patsey said the market will grow over 3-5 years, Oil-Dri's unique mineral efficiently removes contaminants, and Aaron Christiansen added that the company prepared for this market with recent investments.