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Oil-Dri Reports Y/Y Earnings Decline and Sales Increase in Q4
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Oil-Dri Corporation of America (ODC - Free Report) reported a mixed performance in its fourth-quarter fiscal 2024 results as the company navigated higher costs and tax expenses despite achieving record sales. The quarter saw growth driven by a recent acquisition, but profitability was impacted by inflationary pressures and weaker demand in certain areas.
The company’s business segments delivered uneven results, with strength in fluid purification products offset by a significant drop in agricultural sales. At the same time, rising expenses and cost dynamics presented challenges as the company continued integrating its Ultra Pet acquisition.
Oil-Dri Corporation Of America Price, Consensus and EPS Surprise
ODC reported fourth-quarter fiscal 2024 diluted earnings per share of $1.17, a 30% decrease from the prior-year quarter's $1.67. Net income attributable to Oil-Dri declined 28% year over year to $8.5 million from $11.9 million due to higher costs and increased tax expenses.
The company's net sales increased 6% to a record $113.7 million from $107.4 million in fourth-quarter fiscal 2023. This growth was driven by the acquisition of Ultra Pet, which contributed 5% to the top-line increase, while the remaining 1% came from organic growth in higher-priced products across its two main business segments.
Segmental Performances
Business-to-Business (B2B): The segment posted a modest 2% year-over-year increase in net sales to $38.9 million. This growth was mainly fueled by strong demand for fluid purification products, which rose 11% to a record $25 million due to heightened demand for renewable diesel projects in the United States. However, the agricultural business saw a 40% year-over-year sales decline, led by reduced demand from key customers.
Retail & Wholesale (R&W): The segment saw robust growth, with sales increasing 8% year over year to $74.8 million. The Ultra Pet acquisition contributed 7% to this rise, while organic growth in domestic clay-based cat litter and industrial products added 1%. Notably, branded lightweight litter sales increased, while private-label litter revenues softened due to a cyberattack that impacted one of the company’s key partners.
Profitability Metrics
Gross Profit: The company achieved a consolidated gross profit of $33 million in the fourth quarter of fiscal 2024, marking a quarterly record and representing a 9% year-over-year increase. The gross margin rose to 29% in fiscal 2024 from 28% in fiscal 2023, driven by successful profitability improvements, as evidenced by eight consecutive quarters of gross margin expansion.
Operating Income: The metric inched up 1% year over year to $12.9 million as sales growth slightly outpaced the rise in expenses.
Cost Dynamics
Oil-Dri's cost of goods sold (COGS) increased 10% year over year, with domestic COGS per ton rising due to higher freight and packaging costs, and a non-cash inventory adjustment linked to the Ultra Pet acquisition. These cost pressures were partially offset by lower natural gas costs, which contributed to a slight gross margin improvement.
Selling, general, and administrative (SG&A) expenses grew 14% year over year to $20.1 million. This increase reflected higher compensation and sales commissions, and integration costs associated with the Ultra Pet acquisition.
The increase in total operating costs was driven by inflationary pressures, notably higher freight and labor costs, though some relief was found in declining natural gas expenses. SG&A expenses were elevated, reflecting acquisition-related costs, though advertising costs are expected to moderate in fiscal 2025.
Cash & Debt
As of July 31, 2024, Oil-Dri's cash and cash equivalents totaled $23.5 million, down from $31.8 million a year earlier. This decline was attributed to the $45.3-million Ultra Pet acquisition and increased capital expenditure, which rose to $32 million in fiscal 2024, up from $24.4 million in 2023.
Total debt increased to $49.8 million from $30.8 million in the prior year, reflecting new debt assumed for the acquisition.
Other Developments
Oil-Dri completed its acquisition of Ultra Pet in May 2024, adding silica gel-based crystal cat litter products to its portfolio. The integration is progressing as planned, and the acquisition was accretive to earnings in the fourth quarter of fiscal 2024.
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Oil-Dri Reports Y/Y Earnings Decline and Sales Increase in Q4
Oil-Dri Corporation of America (ODC - Free Report) reported a mixed performance in its fourth-quarter fiscal 2024 results as the company navigated higher costs and tax expenses despite achieving record sales. The quarter saw growth driven by a recent acquisition, but profitability was impacted by inflationary pressures and weaker demand in certain areas.
The company’s business segments delivered uneven results, with strength in fluid purification products offset by a significant drop in agricultural sales. At the same time, rising expenses and cost dynamics presented challenges as the company continued integrating its Ultra Pet acquisition.
Oil-Dri Corporation Of America Price, Consensus and EPS Surprise
Oil-Dri Corporation Of America price-consensus-eps-surprise-chart | Oil-Dri Corporation Of America Quote
Q4 Earnings
ODC reported fourth-quarter fiscal 2024 diluted earnings per share of $1.17, a 30% decrease from the prior-year quarter's $1.67. Net income attributable to Oil-Dri declined 28% year over year to $8.5 million from $11.9 million due to higher costs and increased tax expenses.
The company's net sales increased 6% to a record $113.7 million from $107.4 million in fourth-quarter fiscal 2023. This growth was driven by the acquisition of Ultra Pet, which contributed 5% to the top-line increase, while the remaining 1% came from organic growth in higher-priced products across its two main business segments.
Segmental Performances
Business-to-Business (B2B): The segment posted a modest 2% year-over-year increase in net sales to $38.9 million. This growth was mainly fueled by strong demand for fluid purification products, which rose 11% to a record $25 million due to heightened demand for renewable diesel projects in the United States. However, the agricultural business saw a 40% year-over-year sales decline, led by reduced demand from key customers.
Retail & Wholesale (R&W): The segment saw robust growth, with sales increasing 8% year over year to $74.8 million. The Ultra Pet acquisition contributed 7% to this rise, while organic growth in domestic clay-based cat litter and industrial products added 1%. Notably, branded lightweight litter sales increased, while private-label litter revenues softened due to a cyberattack that impacted one of the company’s key partners.
Profitability Metrics
Gross Profit: The company achieved a consolidated gross profit of $33 million in the fourth quarter of fiscal 2024, marking a quarterly record and representing a 9% year-over-year increase. The gross margin rose to 29% in fiscal 2024 from 28% in fiscal 2023, driven by successful profitability improvements, as evidenced by eight consecutive quarters of gross margin expansion.
Operating Income: The metric inched up 1% year over year to $12.9 million as sales growth slightly outpaced the rise in expenses.
Cost Dynamics
Oil-Dri's cost of goods sold (COGS) increased 10% year over year, with domestic COGS per ton rising due to higher freight and packaging costs, and a non-cash inventory adjustment linked to the Ultra Pet acquisition. These cost pressures were partially offset by lower natural gas costs, which contributed to a slight gross margin improvement.
Selling, general, and administrative (SG&A) expenses grew 14% year over year to $20.1 million. This increase reflected higher compensation and sales commissions, and integration costs associated with the Ultra Pet acquisition.
The increase in total operating costs was driven by inflationary pressures, notably higher freight and labor costs, though some relief was found in declining natural gas expenses. SG&A expenses were elevated, reflecting acquisition-related costs, though advertising costs are expected to moderate in fiscal 2025.
Cash & Debt
As of July 31, 2024, Oil-Dri's cash and cash equivalents totaled $23.5 million, down from $31.8 million a year earlier. This decline was attributed to the $45.3-million Ultra Pet acquisition and increased capital expenditure, which rose to $32 million in fiscal 2024, up from $24.4 million in 2023.
Total debt increased to $49.8 million from $30.8 million in the prior year, reflecting new debt assumed for the acquisition.
Other Developments
Oil-Dri completed its acquisition of Ultra Pet in May 2024, adding silica gel-based crystal cat litter products to its portfolio. The integration is progressing as planned, and the acquisition was accretive to earnings in the fourth quarter of fiscal 2024.