Oil-Dri Corp of AmericaODC
Oil-Dri Corp of America Income Taxes Disclosure
INCOME TAXES
The provision for income tax expense by fiscal year consists of the following (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current | ||||||||||||||||||||
| Federal | $ | 8,790 | $ | 6,059 | $ | 7,503 | ||||||||||||||
| State | 2,959 | 2,243 | 2,119 | |||||||||||||||||
| Foreign | 226 | 226 | 4 | |||||||||||||||||
| Current Income Tax Total | 11,975 | 8,528 | 9,626 | |||||||||||||||||
| Deferred | ||||||||||||||||||||
| Federal | 433 | 934 | (3,864) | |||||||||||||||||
| State | (233) | 778 | (567) | |||||||||||||||||
| Foreign | 40 | (15) | — | |||||||||||||||||
| Deferred Income Tax Total | 240 | 1,697 | (4,431) | |||||||||||||||||
| Total Income Tax Expense | $ | 12,215 | $ | 10,225 | $ | 5,195 | ||||||||||||||
Principal reasons for variations between the statutory federal rate and the effective rates by fiscal year were as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| U.S. federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||||||||
| Depletion deductions allowed for mining | (4.5) | (5.3) | (7.7) | |||||||||||||||||
| State income tax expense, net of federal tax expense | 3.6 | 3.5 | 2.9 | |||||||||||||||||
| Nondeductible officer compensation | 1.3 | 2.2 | 1.5 | |||||||||||||||||
| Stock Based Compensation | (1.0) | (2.1) | — | |||||||||||||||||
| U.S. Tax Impacts of Foreign Branch | 0.4 | 1.3 | (0.2) | |||||||||||||||||
| Tax credits | (0.4) | (0.2) | (0.3) | |||||||||||||||||
| Valuation allowance - foreign | 0.5 | 0.4 | (0.2) | |||||||||||||||||
| Statutory rate change of foreign subsidiaries | (0.1) | 0.3 | — | |||||||||||||||||
| Prior year income taxes | (1.7) | (0.3) | (1.3) | |||||||||||||||||
| Foreign tax differential | (0.1) | 0.1 | (0.6) | |||||||||||||||||
| Other | (0.6) | (0.3) | (0.1) | |||||||||||||||||
| Effective income tax rate | 18.4 | % | 20.6 | % | 15.0 | % | ||||||||||||||
The combination of tax credits claimed in fiscal year 2025 contributed to a reduction in the effective tax rate when compared to fiscal year 2024.
The Consolidated Balance Sheets included the following tax effects of cumulative temporary differences as of July 31 (in thousands):
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| 2025 | 2024 | |||||||||||||||||||||||||
| Assets | Liabilities | Assets | Liabilities | |||||||||||||||||||||||
| Amortization | $ | — | $ | 5,863 | $ | — | $ | 6,307 | ||||||||||||||||||
| Depreciation | — | 6,237 | — | 5,692 | ||||||||||||||||||||||
| Lease liabilities | 3,961 | — | 5,105 | — | ||||||||||||||||||||||
| Lease right of use assets | — | 3,670 | — | 4,778 | ||||||||||||||||||||||
| Accrued expenses | 4,494 | — | 4,347 | — | ||||||||||||||||||||||
Federal & State NOL carryforward | 2,470 | — | 2,975 | — | ||||||||||||||||||||||
| Stock-based compensation | 2,214 | — | 1,894 | — | ||||||||||||||||||||||
Foreign NOL carryforward | 2,197 | — | 1,889 | — | ||||||||||||||||||||||
| Deferred compensation | 1,931 | — | 1,603 | — | ||||||||||||||||||||||
| Capitalized R&D | 1,029 | — | 783 | — | ||||||||||||||||||||||
| Reclamation | 785 | — | 712 | — | ||||||||||||||||||||||
| Other assets | 555 | — | 693 | — | ||||||||||||||||||||||
| Postretirement benefits | 422 | — | 454 | — | ||||||||||||||||||||||
| Inventories | 185 | — | 435 | — | ||||||||||||||||||||||
| Depletion | — | 121 | — | 141 | ||||||||||||||||||||||
Allowance for credit losses | 213 | — | 85 | — | ||||||||||||||||||||||
| Other liabilities | — | 428 | — | 33 | ||||||||||||||||||||||
| Other liabilities - foreign | — | — | 8 | 17 | ||||||||||||||||||||||
| Valuation allowance | (2,846) | — | (2,470) | — | ||||||||||||||||||||||
| Total deferred taxes | $ | 17,610 | $ | 16,319 | $ | 18,513 | $ | 16,968 | ||||||||||||||||||
Deferred tax assets and liabilities related to leases decrease as leases expire.
We recorded a valuation allowance of $2.8 million and $2.5 million as of July 31, 2025 and July 31, 2024, respectively, for the amount of the deferred tax benefit related to our foreign net operating loss carryforwards and certain state net operating loss carryforwards since we believe it is unlikely we will realize the benefit of these tax attributes in the future. As of July 31, 2025, we have total net operating loss carryforwards from state jurisdictions of approximately $13.0 million. The carryforward expiration dates vary by state.
With the exception of our foreign subsidiary in Canada, none of our foreign subsidiaries have generated any untaxed foreign income, therefore we have not provided for any related income taxes for these subsidiaries.
We had no liabilities for unrecognized tax benefits based on tax positions related to the current and prior fiscal years as of July 31, 2025 and 2024; correspondingly, no related interest and penalties were recognized as income tax expense and there were no accruals for such items in either of these fiscal years.
We are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. We were audited by the Internal Revenue Service ("IRS") for fiscal year 2020 with no adjustments upon closure of the audit. The federal tax returns for fiscal years 2021-2024 remain open for examination. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. The state impact of any federal income tax changes remains subject to examination by various states for a period of up to one year after formal notification to the states. There are a limited number of open state and local income tax audits in which no material issues have been preliminarily identified. There are no material open or unsettled foreign income tax audits. We believe our accrual for tax liabilities is adequate for all open audit years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 9, 2025 | Showing above |
| 2024 | Oct 10, 2024 | |
| 2023 | Oct 12, 2023 | |
| 2022 | Oct 13, 2022 | |
| 2021 | Oct 13, 2021 | |
| 2020 | Oct 13, 2020 | |
| 2019 | Oct 10, 2019 | |
| 2018 | Oct 12, 2018 | |
| 2017 | Oct 10, 2017 | |
| 2016 | Oct 7, 2016 | |
| 2015 | Oct 9, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.