Oil-Dri posted record sales and net income in FY 2026, but the report shows a business leaning on product mix, lower SG&A and below-the-line help to offset clear cost pressure. The key question is whether pricing and mix can catch up if freight and input costs stay elevated.
Oil-Dri Corp of America · FY 2026 · Reported 8 Oct 2026 · US
Key figures
Million USD | FY 2026 | FY 2025 | Change |
|---|---|---|---|
Revenue | 493.84 | 485.57 | +1.7 % |
Gross profit | 137.51 | 143.08 | -3.9 % |
Operating income | 67.98 | 68.22 | -0.3 % |
Net income | 56.97 | 54.00 | +5.5 % |
Diluted EPS (common stock) | 3.92 USD/share | 3.70 USD/share | +5.9 % |
Operating cash flow | 80.11 | 80.18 | -0.1 % |
Gross margin | 27.8 % | 29.5 % | -1.6 pp |
Operating margin | 13.8 % | 14.0 % | -0.3 pp |
Net margin | 11.5 % | 11.1 % | +0.4 pp |
Figures in USD, as reported. Margins are computed from the reported lines.
Revenue grew, but the engine was narrow
Fiscal year 2026 revenue rose 1.7% to $493.84 million, with Retail and Wholesale up 4% to $313.646 million while Business to Business fell 1% to $180.198 million 8-K89. Management attributed the consolidated increase to favorable mix, with Retail and Wholesale led by higher cat litter volumes and Business to Business held back by softer fluids purification and animal health demand 8-K83.
The growth mix matters. In Retail and Wholesale, co-packaged cat litter rose 47% as the company expanded into lightweight litter, and crystal litter also increased, while domestic clay litter declined because of private label distribution changes and the absence of prior-year promotional activity 8-K. In Business to Business, agricultural and horticultural sales rose 11% on stronger demand from key customers, but that was more than offset by a 5% decline in fluids purification tied to unusually strong renewable diesel filtration demand in fiscal 2025 and a 7% decline in animal health after the temporary loss of a key customer at a distributor 8-K.
Cost inflation overwhelmed the sales gain
Gross profit fell 3.9% to $137.51 million and gross margin dropped to 27.8% from 29.5% even as revenue increased 8-K83. The company said domestic per-ton cost of goods sold rose 4%, driven by higher manufacturing and transportation costs, with manufacturing up 6% on labor, materials and depreciation and transportation up 3% on higher diesel costs and fourth-quarter trucking market impacts 84.
That pressure showed up in both segments. Retail and Wholesale sales increased 4%, but operating income still fell 1% to $43.730 million because cost of goods sold rose 5%, including a 7% increase in per-ton transportation costs 8-K. Business to Business was weaker: sales fell 1% and operating income dropped 7% to $55.348 million as lower volumes combined with higher per-ton manufacturing costs 86.
Earnings quality depended on expense cuts and other income
Operating income was essentially flat at $67.98 million because a 7% decline in SG&A to $69.5 million offset the gross profit decline 8-K. Management tied the SG&A reduction mainly to lower human resource costs in corporate functions, a lower incentive bonus accrual and reduced outside services expenses, with additional help from lower advertising and R&D in Retail and Wholesale 8-K8490.
Net income rose 5.5% to $56.97 million, but the improvement was not driven only by operations 8-K. Other income swung to $1.5 million from other expense of $2.0 million, helped by lower landfill modification costs, $0.9 million of higher interest income and a positive outcome from a confidential legal settlement, while the tax rate stayed at 18% in both years 8-K. That suggests the record net income overstates the underlying improvement in the core business relative to the flat operating line 85.
Cash generation was real, but working capital absorbed some of it
Operating cash flow was $80.106 million in fiscal year 2026, essentially flat with fiscal year 2025, while cash and cash equivalents increased to $73.7 million from $50.5 million 92. The company said the increase in cash was mainly due to operating cash flow, even as it spent $32.9 million on investing activities, primarily capital expenditures to expand plant equipment and improve facilities to support demand 92.
The cash build came despite some working capital drag. Accounts receivable increased by $5.8 million on higher sales and collection timing, and inventories increased by $1.9 million due to purchases of additives and packaging to meet anticipated demand 93. Oil-Dri still returned capital through $12.6 million of share repurchases and $10.4 million of dividends, and it expanded its note shelf and credit line after year-end, which improves flexibility rather than signaling a near-term liquidity issue 94.
What to watch next
Whether favorable mix can offset weak clay litter trends and softer demand in fluids purification and animal health 838789.
Whether manufacturing and freight inflation, including possible future transportation cost pressure tied to Middle East uncertainty, keeps compressing gross margin 8284.
Whether FY 2027 earnings growth can come from operations rather than SG&A cuts and other-income items such as legal settlement benefits and lower landfill-related costs 85.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's reported filings. AI was used in parts of the analysis and drafting. Figures come from the reported financial statements, and figures in the text are checked automatically against the cited filing passages. This is not investment advice.