Scoopable litter has been around for 25 years, so coarse litter has had many years in which to decline. Frankly, as long as ODC can take share in scoopable private label (and they've been doing that recently, with the lightweight litter), I'm happy that coarse litter is declining, because scoopable litter sells for a higher price and is more profitable.
Bib, I think that gd, you and I are all saying the same thing. ODC does not have the $$$ to try and buy market share. So no new customers, + existing customers just trading up = no sales growth. Course litter has tanked faster than expected. I am not a big fan of Jaffe but I cannot blame him for this. Company will survive but I would not pay a growth stock premium for it..
I disagree that cat litter is moving away from clay sources. There are a wider variety of alternative cat litters on the market today, than there were 20 years ago, but even so, they are all niche products - not a single one has taken a significant share from clay cat litters. ODC is definitely targeting growth in the private label scoopable market, with their lightweight cat litter. While ODC still has a large share of the private label market for traditional cat litter (non-scoop), that sector has been in serious decline ever since scoopable litter was introduced around 1990. Plus, private label scoopable litter, sells for a considerably higher price, than does private label traditional litter.
I agree that ODC could do a better job promoting the Fresh & Light litter. Obviously, they will never be able to compete with Nestle Purina, Clorox, and Church & Dwight in terms of marketing/ad dollars, so the key is for them to get free media - articles in major publications about ODC's innovations in light weight cat litter. I sent ODC's CEO a snail mail letter a couple of months ago urging him to pursue this path. Not sure what will come of that, but with any luck Consumer Reports will eventually evaluate the light weight litters. From looking at the reviews online, competing lightweight litters are not doing as well in consumer satisfaction - of the competitors, Fresh Step's lightweight seems to get the best reviews. Church & Dwight's Clump & Seal lightweight is often poorly reviewed, and a good number of the 5-star reviewers got free litter.
Re China, it's still early, and the hog market there is so big, they should make money at some point - though obviously, the sooner the better.
One possible positive for Q4 results, is the departure late in Q3 of the executive running the cat litter division. While this is speculation on my part, this executive had previously spent several years at Kraft, and thus may have been used to spending all kinds of money on marketing/advertising, and obviously ODC doesn't have that kind of money. With ODC's CEO now running the cat litter division, hopefully he will find ways to save money.
Man, you have nailed it. Apparently ODC's plan is to reach a dominant position in the off-label market. Not a bad idea as they do not have the financial capacity to compete with the big boys in the name brand market. Cat litter is moving away from clay sources. What they should do is concentrate ad dollars to their strongest markets. This is a stock that should sell about 8x free cash flow, or between 10-20 dollars per share.
Thanks, but I prefer to hold on to my ODC stock in my taxable account. With capital gains taxes what they are, I would have had to sell back in Dec. 2013, when ODC was around $40, to make it worthwhile. In any case, with the stock at $24 and change, I'll get more shares when the next dividend is reinvested. I'm thinking sales will be increasing over the next year, and thus I am still in no hurry to sell.
You might be right about good things in the future, but you need to take something off the table every now and then and not worry about taxes especially with this company. You know better than anyone that they're capable of shooting themselves in foot, and surely last quarter was one of those times.
The last quarter was obviousily not that great. I've never been crazy about management here and probably never will. They seemed to come out with a great product with the fresh & lite cat litter, but now with the competition heading there way, it seems they just have trouble finding their way. Reading the conference call it would seem from their words that they have the best product for the money, yet, they don't know how to tell the world. I'm thinking what the hell are they afraid of, what is Tidy cat going to get mad at them. Who cares, beat them up, aim your marketing right at them, tell the world their product is inferior, maybe poltical correctness has settled into their thinking, hence, the lumpy quarters year after year. China, I'll bet they'll realize like most companies you cant make any money there. From the conference call, they're losing money, well, if you are trying to manage it from america, most likely you are never going to make any money there. Eventually we'll get the message that they're closing it down. Now, with energy cost way down, it should be a bonaza since they learned their lesson from hedging, so with their good fortune, they should see their cost really hitting the bottom line, yet, that doesn't seem to happen here. As for the next quarters earnings, hell, its anybody's guess what they'll earn. And why is everything always a big secret in the conference calls.
Listen to a PKE conference call with CEO, brian shore, and at least he tells it like it is. by the way, the guy is making his first insider purchases that i can tell from following the company for so long. Of course the stock is depressed and he probably sees the company as a bargain. Not so much here, insiders never seem to think the stock price is a bargain and more inclined to sell. The one thing about ODC, the stock price always seems to flounder from time to time, which sets up for a buying opportunity. Interestingly, the only reason to stay around is the value and the div
I've seen a lot of this in my investment years . its awesome when the small caps catch fire, you think you are so smart, then when they tank even though you tell yourself you bot value stocks, they still have a way of getting oversold until the next cycle. the market is now pretty narrow with very few stock making new highs if your invested in good small cap value stocks you are feeling the pain. Trying to find a small cap stock in today's world that consistently increasing earnings each year is getting harder and harder. probably becuase the economies of the world are slow and all this QE stuff is all fluff, not really doing much for the economies. Hell, the fed wants to raise rates not becuse the economy is booming, nope, they just want to have the ability to go back to zero when they needd too. Look at ODC hitting 40 not too long ago - It seems for most small caps, 40 always seems like the high after a big runup - hindsight - selling at 40 would have been the smart thing to do.