Oil-Dri's Q4 2025 Earnings Call: Contradictions Emerge on Animal Health Growth, Soybean Market Impact, and Agricultural Sales Sustainability

The above is the analysis of the conflicting points in this earnings call

Date of Call: October 10, 2025

Financials Results

• Revenue: Q4 revenue increased 10% YOY, driven primarily by volume and favorable mix from 24% YOY growth in B2B products

Guidance:

• First half FY26 will face tough comps versus strong H1 FY25; near-term comparisons challenging.
• Management plans and expects FY26 to exceed FY25 results.
• Continued growth anticipated across the diverse product portfolio.
• Renewable diesel demand should keep soybean oil processing elevated, supporting fluids purification in FY26.
• Amlan expects good growth in FY26 via new geographies/partnerships in Asia and Latin America.
• Agriculture to normalize to steady growth across turf/ornamental and row crops.
• Ultra Pet distribution adds continue in FY26; synergy benefits to persist.

Business Commentary:

* Strong Financial Performance: - Oil-Dri Corporation reported a 10% increase in revenue for the fourth quarter of fiscal 2025 compared to the same period in the prior year. - This growth was driven by an increase in volume and favorable product mix improvements, particularly a 24% year-over-year revenue growth in B2B products.

• Investment and Cash Allocation:
• The company spent nearly $33 million on capital investments during fiscal 2025, focusing on updating fixed assets, including mining equipment, and replacing aged assets.

• Oil-Dri also invested in people, process, and technology to support its growth strategy and paid down $11 million in debt.

• Mergers and Acquisitions:

• The Ultra Pet acquisition, which completed its first anniversary during the fourth quarter of 2025, performed well and was viewed positively by customers.

• This was seen as a value-added product expansion for Oil-Dri's portfolio, potentially opening new opportunities for growth.

• R&D and AI Integration:

• Dr. Mervyn de Souza joined Oil-Dri to lead R&D efforts, with a vision to create value from sorbent minerals and align with the company's growth strategy.
• The company plans to leverage AI tools for efficiency and effectiveness in R&D and innovation, while maintaining a balance with qualified human oversight.

Sentiment Analysis:

• “Revenue increases of 10% over the fourth quarter of the prior year.” “Net cash provided by operating activities was $80 million, a 33% increase YOY.” “Full year EBITDA of $90 million was up 29% over FY24.” “Announcement of a 16% dividend per share increase for fiscal year 2026.” Management also noted H1 FY26 will have challenging comps but said they “have every expectation of delivering a year that beats last year.”

Q&A:

• Question from John Bair (Ascend Wealth Advisors): What brought Dr. Mervyn de Souza to Oil-Dri and what are his R&D vision and priorities across segments?
  Response: He joined for the growth-focused culture and vertical integration; will drive innovation from mines to markets across all divisions, flexing resources to the biggest opportunities.

• Question from Robert Smith (The Center for Performance Investing): How is the current soybean situation affecting your business?
  Response: Higher soybean crushing for renewable diesel is boosting demand; it aided Q4 sales and is expected to continue supporting FY26 fluids purification volumes.

• Question from Ethan Star (Not provided): Outlook for increased sales of Amlan products (and fluids purification)?
  Response: After industry recovery in FY25, Amlan expects good growth in 2026 via expansion in Asia/LatAm and new channels, with more consistent, predictable demand.

• Question from John Bair (Ascend Wealth Advisors): Do competitor promotions reflect advertising or pricing discounts, and did lower Oil-Dri advertising impact sales?
  Response: Promotions mainly mean price discounts/couponing; Oil-Dri shifted spend to trade promos. Lower advertising wasn’t the driver; competitor spend grew lightweight trial, a long-term positive for Oil-Dri’s lightweight offerings.

• Question from Robert Smith (The Center for Performance Investing): How will AI be used in R&D and new product development?
  Response: Adopting a phased, hybrid approach emphasizing data quality; leveraging AI/ML to screen hypotheses and drive efficiencies in R&D and operations, with human oversight.

• Question from Tyler Ventura (Diamond Hill Capital): Agricultural sales surged 104% in Q4 to $11.9M—how sustainable, and how much was a new customer vs. normalized patterns?
  Response: FY25 rebound reflected normalized purchasing plus new customers; FY26 should normalize to steady growth across turf/ornamental and row crops.

• Question from Bill Anderson (Bard Associates): Provide an update on the Ultra Pet business.
  Response: The acquisition is performing well; distribution adds exceeded estimates in FY25 with more in FY26, and synergy savings offset some legacy customer softness.