Oil-Dri Corporation of America Q2 FY2026 earnings call

• Daniel Jaffee introduced the team and mentioned the strong quarter and handling of winter storm Fern. • Susan Kreh highlighted strong financial performance, EBITDA in line, cash flows, and inventory building. • Aaron Christiansen discussed capital spending progress, asset base focus, and handling of winter storm Fern. • Wade Robey talked about agriculture and horticulture product market segments and performance. • Laura Scheland shared consumer products new product innovations. • Bruce Patsey addressed renewable diesel sales drivers and issues. • Christopher Lamson spoke about co-packaged lightweight litter and segment growth. • Aaron Christiansen covered manufacturing costs, transportation, and packaging costs. • Wade Robey and Mervyn de Souza touched on Amlan and AI in R&D respectively.

During the second quarter of fiscal 2026, Oil-Dri generated EBITDA of $22 million, in line with the same quarter a year ago. For the first six months, cash flows from operating activities were just over $28 million. Ended the quarter with $47 million in cash and cash equivalents and $40 million in debt. Agriculture and horticulture products saw good performance with broad-acre driven by planted acres and turf/ornamental with Verge granules. Consumer products division had new product launches like health monitoring litter, expanded crystal litter portfolio, and new Cat's Pride items. Renewable diesel sales had drivers related to blender's tax changes and feedstock oil issues. Amlan had an account loss early in the year but efforts to recover and broaden customer base.

Q: Several years ago, Oil-Dri made it known that considerable CapEx cost would be undertaken over a three- to five-year period to upgrade and modernize plant and equipment. How far along is that effort?

A: Aaron Christiansen said the program has progressed as intended, approaching completion of fourth year of elevated capital spending, not a discrete project with defined endpoint, focus on long-term replacement cost and reliability.

Q: What is the sales increase in agriculture and horticulture products, and is the increase in sales sustainable?

A: Wade Robey said broad-acre driven by planted acres increase, expected to continue, turf and ornamental with Verge granules with new customers and product opportunities.

Q: Will there be new product innovation introductions of note during the second half? Which areas, and can you share any color of expectations as to their importance?

A: Laura Scheland said new health monitoring litter, expanded crystal litter portfolio, new Cat's Pride items, and new lines for e-commerce.

Q: Can you give more details on underlying drivers spiking in renewable diesel sales? What are the bottlenecks in Golden Passat and MCP? When can we expect it to be steady?

A: Bruce Patsey said blender's tax change and feedstock oil changes caused disruption, 45Z rebate in place, expect growth in coming quarters.

Q: Are you selling the co-packaged lightweight litter to the same customer you sell other co-packaged litter to, or is it being sold to multiple customers?

A: Christopher Lamson said contractual obligations prevent sharing names, but revenue from contract manufacturing item is result of multiyear effort, segment growth is positive.

Q: In the recent 10-Q, you indicate that the year-over-year six-month per-ton manufacturing costs were up, but per-ton transportation and packaging costs were lower. Can you speak to the current trends in your manufacturing costs as well as transportation and packaging cost trends? Are the latter improvements due to your efficiency efforts or the macro environment?

A: Aaron Christiansen said manufacturing costs due to timing, weather disruption, labor benefits; transportation due to balanced freight environment and operational execution; packaging costs relatively stable with supplier engagement.

Q: Despite the rough quarter for Amlan, what progress are you making with Amlan, and do you expect sales growth for Amlan over the long term?

A: Wade Robey said working to recover lost account and broaden customer base, maintaining outlook for the business.

Q: From what you see now, what are the headwinds and tailwinds of the oil and gas situation—first with respect to the Fluids segment and then corporate-wide?

A: Bruce Patsey said higher fuel costs help renewable diesel margins but feedstock oil price increases may hurt, Aaron Christiansen spoke about natural gas forward buying strategy.

Q: Are you already at work using artificial intelligence in the microbiology center to identify targets for new product development for your clay?

A: Mervyn de Souza said Oil-Dri is working on integrating human and artificial intelligence into day-to-day operations for new product development and existing product improvement.