Oil-Dri (ODC) Q4 2026 Earnings Call Transcript

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DATE

Friday, Oct. 9, 2026

CALL PARTICIPANTS

• Chairman, President and Chief Executive Officer - Daniel S. Jaffee
• Chief Financial Officer and Chief Information Officer - Susan Marie Kreh
• Vice President of Operations - Aaron V. Christiansen
• Group Vice President of Business to Business and Strategic Growth Initiatives - Christopher Lamson
• Vice President of Agriculture and President of Amlan International - W. Wade Robey
• Vice President and General Manager of Consumer Products Division - Laura Guest Scheland
• Vice President Corporate Controller - Jonathan Blake
• Vice President General Counsel and Secretary - Anthony W. Parker

TAKEAWAYS

• Net Sales -- $493.8 million for the fiscal year, representing a 2% increase driven by a favorable product mix.
• Net Income -- $57.0 million for the fiscal year, an all-time high representing a 6% increase from the prior year.
• Diluted EPS -- $3.92 for the full year, a 6% increase from the $3.70 reported in the prior fiscal year.
• Quarterly Revenue -- $129.3 million in the fourth quarter, a record high and 3% increase over the previous year.
• EBITDA -- $93.3 million for the fiscal year, increasing 4% compared to $90.0 million in the prior year.
• Cash and Cash Equivalents -- $73.7 million at fiscal year end, a 45% increase from $50.5 million a year ago.
• Business to Business Sales -- $50.1 million in the fourth quarter, a 4% increase driven by record animal health and agricultural carrier demand.
• Retail and Wholesale Sales -- $79.2 million in the fourth quarter, a 3% increase reflecting growth in cat litter and industrial products.
• Co-packaged Cat Litter Sales -- growing 47% for the full year and 60% in the fourth quarter, supported by lightweight litter portfolio expansion.
• Animal Health Sales -- $9.9 million in the fourth quarter, an 18% increase reflecting volume gains in domestic and international markets.
• Agricultural Carrier Sales -- $12.6 million in the fourth quarter, a 6% increase driven by high corn and soybean plantings in the U.S.
• Domestic Clay Litter Sales -- declining 3% in the fourth quarter to $55.9 million, reflecting retailer pricing changes and competitive trade spending.
• Gross Margin -- 27.8% for the fiscal year, down from 29.5% in the prior year due to a 4% increase in per-ton domestic manufacturing and freight costs.
• SG&A Expenses -- $69.5 million for the fiscal year, a 7% reduction driven by lower human resource costs and reduced bonus accruals.
• Operating Cash Flow -- $80.1 million generated during the fiscal year, which management stated was used to fund infrastructure and return capital.
• Capital Expenditures -- $34.2 million for the fiscal year, focused on manufacturing infrastructure and enterprise data analytics capabilities.
• Total Borrowing Capacity -- increased to $375 million from $200 million through enhancements to credit and shelf facilities.
• Dividends Paid -- $10.4 million in fiscal 2026, including two dividend increases during the year.
• Share Repurchases -- $12.6 million worth of common stock during the fiscal year.
• Fluids Purification Sales -- $27.6 million in the fourth quarter, which management noted was the strongest quarterly performance in 12 months.
• Crystal Cat Litter Sales -- growing 16% for the full year as part of the Retail and Wholesale segment expansion.
• Industrial and Sports Product Sales -- $12.1 million in the fourth quarter, a 7% increase resulting from pricing actions to offset transportation costs.
• B2B Operating Income -- $17.0 million in the fourth quarter, a 13% increase as sales growth offset higher cost of goods sold.

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RISKS

• Kreh stated, "our gross per ton domestic cost of goods sold increased 3% over the same quarter in the prior year, primarily due to higher freight and transportation expenses, which were pressured by geopolitical impacts on diesel prices as well as reduced capacity in the trucking industry."
• Scheland noted that challenges for branded cat litter include "increasing slotting costs, customer investment requirements, and other spend requirements that are rising faster than our pricing and inflation."
• Scheland indicated that the branded segment faces "historically elevated spending from large brands and competition from a number of smaller brands and new entrants."

SUMMARY

Oil-Dri Corporation of America (NYSE:ODC) reported record annual sales and net income for fiscal year 2026, navigating a challenging first half to deliver growth in the final two quarters. Management stated that the company utilized its diverse product portfolio to offset specific segment headwinds, particularly within fluids purification and domestic clay litter. The company reported a significant increase in its financial flexibility by expanding credit facilities and generating historic levels of operating cash flow. Strategic focus remains on reinvesting in manufacturing infrastructure, funding research and development, and pursuing value-driven acquisitions.

• CEO Jaffee stated, "our cash generation has been fantastic, and that is really what fuels the growth and the health of the business."
• Management highlighted a shift in the Brazilian regulatory environment, where bans on subtherapeutic antibiotics are expected to drive demand for natural animal health alternatives.
• CFO Kreh noted that steady investment in manufacturing and data analytics over the last four years has increased noncash depreciation expenses, which has applied pressure to gross margins.
• The company increased its variable rate revolving credit facility by 33% and its accordion feature by 150% to provide additional liquidity for potential strategic priorities.
• W. Wade Robey indicated that high U.S. planting levels of corn and soybeans, reaching 95 million and 85 million acres respectively, supported the demand for agricultural clay carriers.
• Management indicated that while promotional spending in the cat litter category remains historically high, there are indications that such spending is beginning to subside.

INDUSTRY GLOSSARY

• Amlan International: Oil-Dri's animal health business focused on natural feed additives for livestock.
• Sorbent minerals: Materials such as clay that are used to absorb or adsorb liquids and gases.
• Fluids purification: The process of removing impurities from edible oils, petroleum-based oils, and biodiesel using bleaching clays.
• Slotting costs: Fees charged by retailers to manufacturers for placing products on their shelves.
• Accordion feature: An option that allows a borrower to increase the maximum amount allowed on a line of credit.
• Bio-ag: Short for biological agriculture, referring to the use of living organisms or natural substances to improve crop health and yield.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Oil Dri Corporation of America Fourth Quarter Fiscal Year 26 Earnings Discussion. At this time, participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Daniel S. Jaffee, Chairman, President and CEO. Please go ahead.

Daniel S. Jaffee: Thank you, and welcome, everybody, to the fourth quarter and fiscal year end 26 teleconference. Before we get started, Leslie, will you walk us through the safe harbor and also let everyone know who is on the call so they can ask questions?

Leslie A. Garber: Yeah. Sure. Thank you, Daniel. Welcome, everyone. Today on the call, we have Susan Marie Kreh, chief financial officer and chief information officer. Aaron V. Christiansen, our VP of operations Christopher Lamson, group vice president of business to business and strategic growth initiatives. W. Wade Robey, VP of agriculture and president of Amlan International; Laura Guest Scheland, vice president and general manager of consumer products division Jonathan Blake, VP corporate controller; Anthony W. Parker, VP general counsel and secretary. Unfortunately, not in attendance today is Bruce Patsey, vice president of fluid purification, but Daniel S. Jaffee, our CEO, will be able to answer those questions. Right now, I will read the safe harbor.

On today's call, comments may contain forward looking statements regarding the company's performance in future periods. Actual results and those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We ask that you review and consider those in evaluating the company's comments and in evaluating any investment in Oil-Dri stock. You again for joining us. Daniel, I will turn it back over to you.

Daniel S. Jaffee: Great. Thank you, Leslie. And before I turn it over to Susan, I would like to make some general comments. My grandpa Nick used to always say, do not debate. Demonstrate. And I was wondering how did he get this industry started? And my sister Aaron's been digging through our archives. And if you do not follow me on LinkedIn, I hope you will go look at it because we found some ads that he ran on the front page of newspapers that communicated the benefits of using Oil-Dri versus sawdust, which was very flammable, very strong compelling advantage. So it is interesting. That started that. And then Bud Selig, who is been on our board since 2 thousand.

His father, Ben, used to always say, nothing is good or bad except by comparison. And if you look at our year, many of the indices are extremely positive. But you could. If you wanted to, you could look at some of the comparison numbers and say, Well, that was sort of flat or that was slightly down. But any kind of perspective of 3, 4, 5 years, and you see how great this team is performing and how well we are doing, And then finally, my dad always said earnings are an opinion, cash is a fact, and Susan will highlight this.

But our cash generation is been fantastic, and that is really what fuels the growth and the health of the business. And so we have never been more happy or positive with how the company is doing. And I would say the final thing is, we did give some forward guidance back in the first quarter and second quarter. We said the first part of fiscal 2026 was going to be a tough comparison. But that we fully expected to equal or more than make up the distance in the back half.

And you see the really great fourth quarter we had which allowed us to do just that, pull ahead in many key indices sales, net income, things like that, EBITDA, all were up for the fiscal year. So very proud of what the team has delivered, and thank you for your questions. We will spend most of the time answering them. But before we do, I would love to turn it over to Susan so she can walk you through the results.

Susan Marie Kreh: Thank you, Daniel. And cash is a fact, and we will get into that in a minute. So it is a pleasure to be here with all of you this morning, especially coming off the headline we released that states Oil Dri delivers record annual financial results, including all time high fourth quarter sales and historic cash generation. Leslie A. Garber did a really nice job in the press release of highlighting the drivers of our performance. So, therefore, like Daniel said, I will keep my comments brief to allow for more time for your questions. in the Q&A session.

That being said, I would like to highlight that our continued strong performance has resulted in a very strong financial position. From which we are well positioned to grow. And keywords there being strong performance and strong financial position. So from a performance perspective, fiscal 26 demonstrated the strength of Oil Dri's diversified product portfolio and efficient operating model, we will talk about cost reductions in a minute. As we stated at the onset of the fiscal year, and as Daniel just reiterated in his opening comments, we knew the first half was going to be a challenge on a year over year comparative basis.

We noted that although the first half, we faced a very tough comparison, We expected to achieve meaningful growth during the second half of the year, as we gained incremental business and launched new products. The focus team here at Oil Dri delivered on that forecast achieving record full year sales and net income and closing the year with a record fourth quarter revenue.

And that fourth quarter growth was broad based across both product groups with business to business sales rising 4% to a record $50 million and retail and wholesale increasing 3% to $79 million Improved product mix was the primary driver of the growth in the fourth quarter revenue supported by strong growth in animal health sales, agricultural product sales, and copackaged cat litter sales. As we had anticipated. And while net sales grew nicely in the fourth quarter compared to the prior year, gross profit as a percent of sales or gross margin was under pressure and remained steady at 27.8%.

During the quarter, our gross per ton domestic cost of goods sold increased 3% over the same quarter in the prior year, primarily due to higher freight and transportation expenses, which were pressured by geopolitical impacts on diesel prices as well as reduced capacity in the trucking industry. This pressure was especially impactful in the retail and wholesale products group which experienced significantly higher costs to transport cat litter products contributing to a 5% decline in segment operating income despite the higher sales. Depreciation and amortization, a noncash component of our expenses, was also up 6% in the quarter due to the ongoing strategic investments we are making in our business.

These increases were offset by the favorable mix and targeted price increases some of which will get implemented on a lagged basis with some of our customers. In addition, cost reduction and expense management initiatives were key to holding the margin steady at 27.8%. And while gross margins did remain steady, fourth quarter operating income increased by 17% over the same quarter in the prior year, demonstrating the resilience of the portfolio and our ability to manage through a challenging cost environment. Now switching gears from strong performance, to strong financial position, and let's discuss cash and financial flexibility.

The substantial cash generated as a result of the strong performance we just discussed enables us to continue to invest in the business and return capital to our shareholders. Cash and cash equivalents reached an historic high of $74 million at year end up from $51 million a year ago marking a significant 45% increase. We generated operating cash flow of $80 million and EBITDA or earnings before interest, taxes, depreciation, and amortization of $93 million, underscoring the growth and the cash generating power of our portfolio And back to Daniel's opening comments, cash is a fact.

EBITDA is a notable metric for us as we have made the strategic decision to reinvest significantly in our business particularly in funding infrastructure and growth opportunities in our manufacturing facilities as well as funding the building of enterprise wide capabilities such as data analytics, and business intelligence. While those investments are funded in cash, as they are put into service, the noncash depreciation expense that they generate puts pressure on our gross margins and will continue to do so as we have been investing steadily at this rate for about 4 years now. As a result of that impact on our margins, we do monitor EBITDA very closely. To track the underlying performance of the business.

Our cash position together with our ability to access debt provides strong liquidity and gives us flexibility to fund strategic priorities, manage through volatility, and pursue attractive growth opportunities while maintaining a very disciplined balance sheet. And speaking of our ability to access debt capital markets, I would like to highlight some very recent enhancements to our financial flexibility. We have worked with 2 of our key financial partners to add more dry powder to our financing arsenal. We have extended our variable rate revolving credit facility and increased our borrowing capacity by 33% up to $100 million. In addition, that facility contains an accordion feature which we have increased by 150% up to $125 million.

At the same time, we extended our fixed rate shelf facility and increased our borrowing capacity by 100% up to $150 million. So in total, we have increased our ability to borrow under these 2 facilities from $200 million to $375 million which is reflective of continued strengthening of our financial position. Both of these were executed with favorable terms compared to our existing facilities. And both of these financing partners have been supporting Oil-Dri literally for decades. Those relationships are another key aspect of supporting our financial flexibility and our ability to fund growth. And as our financial position continues to strengthen, our capital priorities remain unchanged from what we have told you.

First, we will continue to invest in our business, including the manufacturing and capabilities investments mentioned above, as well as investments in people and research and development to support our future growth. During fiscal 26, we invested $34 million in capital expenditures to support infrastructure capabilities and long term growth. Second, we will continue to support our dividend. During fiscal 26, we increased our dividend not once, but twice and paid out over $10 million to our shareholders. Third, we will evaluate opportunities to achieve long term profitable growth through the pursuit of strategic acquisitions.

The combination of our cash position our strong operating cash flow and our manageable debt profile, including our enhanced access to capital markets funding, provide meaningful financial flexibility to evaluate and pursue acquisition opportunities. And as we evaluate acquisition opportunities, we will remain focused on our mission to create value from sorbent minerals seeking businesses and capabilities that reinforce and extend that core purpose and offer a clear path to long term value creation. And finally, we opportunistically evaluate potential value creation through share repurchases. And when it makes sense and generates long term value, we will pursue that. And with that, Daniel, I will turn it back over to you and Leslie for the question and answer session.

I am sure there will be a few.

Daniel S. Jaffee: Yep. Well, thank you, Susan, and, thank you for that recap.

Leslie A. Garber: And, Leslie, will you highlight which questions we are answering first? Yes. And as a reminder, for those who are interested in asking questions, please submit your question using the Ask a Question field on the webcast and click Submit. The first question we have comes from both Ethan Starr and Robert Smith. They have very similar questions. Was there a seasonal factor in Amlan's last quarter good numbers. What are the prospects for the run rate of $40 million being achieved in current year? And what are the prospects for maintaining or increasing Amlan's record Q4 sales going forward?

Daniel S. Jaffee: Wade, can you handle that?

W. Wade Robey: Yes. Absolutely, Leslie. And thank you, Robert, and Ethan both for that. Those questions. We actually as you see, had an exceptional quarter for Amlan in Q4 of the past year. And it was driven by a couple of things which, truly made it extraordinary. You may recall earlier in the year in previous webcasts, we talked about the loss of a key account in Brazil and we also spoke to, the impact that the tariff situation globally was having on our business and the impact specifically in a couple of key geographies like Brazil.

Those things combined early in the year to lower our sales to those regions, and then we worked very hard over the course of the year to overcome that. You saw that in solid growth in Q3 and then now the exceptional growth we have seen in Q4. So, obviously, logically, there was some rebound effect in the performance we saw over the course of the year. That being said, we are very bullish on the growth going forward for a couple of reasons. 1, we saw very strong growth consistently in Asia through the course of the year.

In Latin America, we have seen not only recovery to a certain degree of that key account that we lost, but also additional growth in our business in Brazil to certain co ops, gaining new customers and also new volume at existing customers. In addition, the regulatory agency in Brazil, MAPA, has made a number of changes, which is improving our ability to register our products and make additional claims. They have also, as many of you may have seen, have come out with new bans on certain antibiotics that are key and instrumental in the animal industry, including antibiotics like evaparcin, certain forms of bacitracin, and virginomycin, which are all key antibiotics used in subtherapeutic application in animal feeds.

As those products are removed in Brazil, that is going to drive alternatives and especially natural alternatives like we offer in our Amlan portfolio. Finally, in Brazil, I would note that we are expanding our sales with new distributors into the Middle and Northern States, including Margroso, Margroso de Sol up into Bahia, and then also in the Southern states down in Rio Grande do Sul. And that is expanding our business and building our base. Finally, we are moving more aggressively into the ruminant market in Brazil. You may have heard me say earlier, we sell a lot of our products into the dairy industry today, which is a form of ruminant, obviously.

In Brazil, the focus has been on feedlot for beef cattle. We have completed significant research there over the course of this year. And are seeing an opportunity for a lot of growth there. Finally, Robert and Ethan, we are also launching new products in North America over the last few months. Those are starting to be utilized by some of the largest of the top-10 poultry customers in the integrated poultry industry in North America. We are excited about that. that is a product very similar to Varian that we sell in Latin America where we have tremendous customer success. And it also is a very strong component product in our portfolio in addition to our base clays.

So for all of those reasons, we are very bullish on the growth going forward. The fourth quarter was again exceptional. that is a rate we probably cannot maintain. But we should see very good growth year over year as we continue to expand our Amlan business.

Leslie A. Garber: Great. Thank you so much. We had a couple of similar questions come in regarding Fluids Pure some from Robert Smith and John Bair. So I am going to summarize and ask the question, and Daniel S. Jaffee will answer this. 5% for the full year, but delivered their strongest quarterly performance in the fourth quarter What drove the improvement in Q4 compared to the rest of fiscal year 2020? Daniel?

Daniel S. Jaffee: Yep. Happy to answer the question. Bruce Patsey did supply me with a lot of the details, so, I am fairly confident I am on target here. it is important to note that the 5% year-over-year decline largely reflects a difficult comparison with fiscal 2025, when renewable diesel sales were increasing significantly as several new production facilities came online. Throughout fiscal 26, demand from both edible oil and renewable diesel customers remained solid. Although volumes varied as changes in oil type and feedstock quality impacted customers' needs. I think it is important to note that the decline in sales did not reflect customer losses. It was just variation in demand.

Which is what drove the positive fourth quarter, was a positive variation in demand. We are very happy that we are hanging on to our customer base. I think anytime a market is in its earliest stages, you are going to have more volatility than when the product line mature. So, you know, hang in there, but we are we are hanging on to our customers and we will ride the ups and have to deal with the downs as they figure out their supply and demand equation.

Leslie A. Garber: Thanks, Daniel. The next question comes from Tyler Ventura from Diamond Hill Capital. He asks, co-packaged cat litter grew 47% this year and 60% in Q4, which you have identified as your single biggest growth driver in the category. Walk us through the capacity and customer concentration dynamics. Specifically, how many customers drive this 47% growth? what is the gross margin profile of co package relative to your domestic branded business? And is the expansion of your lightweight offering with this partner a multiyear ramp up or approaching maturity?

The reason I ask is because your domestic clay litter sales are actually declining despite Cat's Pride antibacterial posting 7 straight quarters of growth, which makes me wonder if co package success is partially cannibalizing your own branded distribution or if that is a separate dynamic tied to competitive promotional intensity. A lot in there. Christopher Lamson, if you could address that, that would be great.

Christopher Lamson: Sure. Thanks, Leslie, and thanks, Tyler, for the question. Tyler, we are obligated under our contracts with, our co-man customers. To not disclose, you know, a ton about the nature of those relationships. But with that being said, what I can share, we are obviously extremely pleased with the new business within lightweight. And the growth that you reflected in the question. We are also. And, you know, if you go back really through, investor calls like this 1 and our annual shareholder meeting. We have been extremely consistent, be it me or Laura, over the last, you know, 7 or 8 years.

Around how focused we are on growing the lightweight segment and we believe, lightweight segment growth is good for Oil-Dri period. With that being said, more tactically, I would say we have you know, very good analytical tools that would tell us that you know, particularly with the folks we are supporting, with co-man relationships, There is not much if any, real interaction, with those businesses. But, again, we like the large brands driving lightweight and having great lightweight product. And we believe that is good for the overall development of the lightweight category and for both our private label and branded business in litter.

Regarding capacity and capital specifically, I would say it is a bit of a mixed bag. We were able to leverage existing capacity in many key areas within the supply chain, and where either the customer required, specific product needs that in. That called on additional capital investment. Or pockets of further capital need, maybe to address a bottleneck or 2. Really, the nature of our longer term agreements in this area really help us feel very good about capital that we did put in, to support this ongoing relationship. So thank you again for the question, and, we are we are excited to have this business and to continue to grow with our customers in Lightweight.

Leslie A. Garber: Thank you. The next question is from Ethan Starr. Could you please discuss the challenges and opportunities you see in growing your branded cat litter distribution and sales? Will you take that?

Laura Guest Scheland: Sure. Good morning, and thanks for the question. We will take the question in 2 parts. First, with respect to the challenges some of the challenges we have seen in the past year for our branded cat litter distribution, are increasing slotting costs, customer investment requirements, and other spend requirements that are rising faster than the price in than our pricing and inflation, but continue to try to stay in front of. Along with retail consolidation in the brick and mortar channel. In addition, we continue to see some historically elevated spending from large brands and competition from a number of smaller brands and new entrants.

However, turning to opportunities, all in, we remain very excited about the great opportunities for our brand. We remain the number 4 brand nationally in units. And are dedicated to growing with innovation, and the distribution and focus. During fiscal 2026, we are excited to launch a number of new items, and we continue to focus to do so in the coming years. Another area of opportunity that we remain excited about is e-commerce. In the past year, we have grown our product offering across different, retailers, and are seeing great growth and adoption from consumers. And then on the promotional spending level, while f 2026 was a time of heightened spend, and we continue to see promotions be elevated.

We are seeing indications that spending is starting to subside. and staying at a historically high level. So we remain diligent in managing our promotional spend and the way to optimize our return on spend, but also our consumer value on an everyday basis. To be kind of the best choice for our consumers. And then finally, I know the question was with respect to branded items. But a key point of differentiation for us among our branded competitors and our private label competitors. Is that our diversification with strong offerings in both branded and private label channels across the non clumping, clumping, and crystal segments.

With this diversification of offerings, we are able to fill trucks to customers and optimize logistics and inventory carrying costs for our customers. And fill a large range of their litter needs. And we will continue to focus to grow both our branded and private label distribution with our strategic customers. So all in, balancing out the challenges and opportunities, we remain very excited about future for both our branded private label products and remain committed to growing across both e-commerce and brick and mortar channel.

Leslie A. Garber: Thanks, Laura. We have another question for Wade, this time on the ag side of the business. The question is, the ag business has delivered year-over-year sales growth in each quarter of fiscal year 2026. What is structurally driving this growth? Wait.

W. Wade Robey: Yeah. Thank you for that question, Leslie. There are a number of things that really drive the growth in the types of businesses that we target with this division. Just to remind the audience, our 2 primary channels that we go to are markets are really 1 on the what I will call, the turf and ornamental side, which is more of engineered granules to higher use applications for specialty products. And then more, our standard carrier products, are targeted for what I will call broad acre or row crop agricultural applications. And in both cases, we have seen good growth in that business.

We have been, I think, very fortunate and hopefully strategically smart in we have aligned with certain leaders in those segments. Working with some of the largest producers, which as they grow has allowed our business to grow as well. Kind of some of the macro events underpinning that we have had really large plantings. If you look at the more of the broad acre or row crop side of our business where again customers might lend on a herbicide or a pesticide or even a bio-ag or other bioactive product onto our clay to put on, let's say, row crops. That. Those plantings have been very high over the course of the last 12, 18 months.

We saw over 95 million acres of corn planted in The US this past season. About 85 million of soy. So very, very high in the range of what we typically plant That then drives naturally more tonnage of those products that need our clay as a as a functional carrier into that into that solution. So all those things have kind of come together to help us grow our business. Again, we have a strong competitive position We are partnering with some of the leaders in those various sectors. And then we have seen just general growth in ag and in the plantings that year over year have helped drive the business.

So all those things have come together to help our business grow.

Leslie A. Garber: Thanks, Wade. The next question comes from Jan Verbraecken from Value Square Funds. He asks, with the expanded revolver and the removal of the $100 million acquisition cap, how should we think about the size and focus of acquisitions you are considering, and what leverage would you be-commercefortable with? Also, if the number 1 capital allocation will be organic investment, should we expect CapEx to increase above the plus/minus $35 million per year of the last couple of years. Any guidance on balance sheet and the usage of a bit of financial leverage would be helpful leverage would be helpful. Christopher, I am gonna have you answer that. And, Susan, feel free to chime in too.

Christopher Lamson: Sure. I will really start out with the piece that is M&A oriented. And then if Susan would like to chime in on the ongoing capital spending, that is great. And really, Susan alluded to this piece too, I can tell you we are very disciplined around being mission led around value. Creating value with sorbent minerals. And then we have really got some key strategic filters that we then you know, run, ourselves through before we engage And then we are incredibly disciplined around remaining value driven and where we do not believe that we can drive value and return it to folks like you. You know, we will remove ourselves from deals.

I would say, in thinking about M&A, we are certainly grateful to Susan's team, for the additional dry powder, maybe spelled d r I. Play on words, that they have provided us. And, obviously, the cash, that I think just came across in 1 of Tyler's questions, that the business is generating for us. We are gonna be prudent here. And I think there is 85 years of history that shows, we will be prudent relative to, you know, the leverage coming from the balance sheet.

Susan Marie Kreh: And hi. This is Susan. I will just add 1 more thing on Yes, I think it is lower risk to reinvest in our team and in our business because we actually know how to run this company and the operating team runs it well. So I definitely am pushing Aaron and his team to look for more opportunities that create long term value for the shareholders and have the right returns and to think bigger than they have in the past. So it is possible you could see some bigger reinvestment in the business at levels higher than you have seen in the past.

Leslie A. Garber: Great. Well, we are at time. Daniel, I do not know if you have any closing remarks.

Daniel S. Jaffee: Closing remarks? Yeah. Thank you, everybody. And we will look forward to talking to you next quarter. This was a great quarter, and onward and upward from here.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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