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Edited Transcript of ODC earnings conference call or presentation 11-Dec-18 3:30pm GMT

Q1 2019 Oil-Dri Corporation of America Earnings Call

CHICAGO Jan 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Oil-Dri Corporation of America earnings conference call or presentation Tuesday, December 11, 2018 at 3:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bruce Patsey

* Curtis Wellborn

* Daniel S. Jaffee

Oil-Dri Corporation of America - Chairman, CEO & President

* Karen Jaffee Cofsky

Oil-Dri Corporation of America - VP of Compensation & Benefits

* Laura Guest Scheland

Oil-Dri Corporation of America - VP, General Counsel & Secretary

* Leah Craft

* Leslie Stephenshaw

* Lisa Mak

* Mark E. Lewry

Oil-Dri Corporation of America - Former COO

* Michael Andrew McPherson

Oil-Dri Corporation of America - Chief Development Officer & Group VP of B2B

* Michelle Hueser

* Toni Mitchell

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Conference Call Participants

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* Robert Smith

* Ethan Starr

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Presentation

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [1]

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Good morning, ladies and Gentlemen. I'm Laura Scheland, General Counsel of Oil-Dri Corporation. This year is the first year that the Annual Meeting is available via phone line and webcast, so hence opening the lines.

Our agenda for today is, I will first conduct the Annual Meeting of Stockholders, covering the election of directors and other stockholder voting items. I'll try to move through this quickly and auction your voice, so we can move on to some more interesting points -- part of the meeting.

Next will be the presentation and business review followed by time for Q&A. So we ask that you hold your questions until the Q&A portion of the meeting.

It is now 9:31 on December 11, 2018, and I now call to order the 2018 Annual Meeting of Stockholders of Oil-Dri Corporation of America.

While I conduct the meeting, Tony Parker, the Assistant Secretary of Oil-Dri, will record the minutes for the meeting.

As you entered the meeting room, you should have received an agenda and the rules of conduct that will govern this meeting. We ask that you adhere to these rules.

Stockholders who previously voted by proxy using the Internet, telephone or mail, may not cast ballots today unless they wish to change their vote on the proxy.

We'll provide ballots for those who desire them at the appropriate time. Oil-Dri has appointed Gary Farrar of Broadridge Financial Solutions, Inc. to serve as the Inspector of Elections for the meeting. He is present and has taken the oath of (inaudible). Commencing on October 31, 2018, a notice regarding the availability of proxy material or a copy of the proxy material was mailed to all Oil-Dri stockholders of record as of close of business on October 15, 2018, which is the record date fixed for this meeting.

I have an affidavit of mailing signed by Broadridge confirming the foregoing, and such affidavit is available for examination by any stockholder present here today.

As described in the proxy statement, the purpose of this meeting to elect 9 directors, ratify the appointment of Grant Thornton LLP as Oil-Dri's independent auditor for the fiscal year ending July 31, 2019, and transact any other business as may properly come before this meeting.

As of October 15, 2018, the record date for this meeting, there were 5,172,007 shares of Oil-Dri common stock, and 2,269,238 shares of Oil-Dri Class C stock outstanding.

I have an alphabetical list of the holders of such outstanding shares, and such list is available for examination by any stockholder present here today.

As many of you may know, holders of our common stock are entitled to vote 1 vote per share and holders of our Class B stock are entitled to 10 votes per share, and generally vote together without regard to class.

A quorum is present at this meeting as holders of a majority of all common stock and Class B stock outstanding and entitled to vote are present in person or represented by proxy. Thus the number of votes necessary to constitute a quorum at the meeting is 13,932,195 votes.

Mr. Farrar has informed me that there are more than such number votes representative in this meeting. Therefore, I declare that a quorum is present. And accordingly, this meeting is properly convened and ready for the transaction of business.

As described in the proxy statement, the first item is the election of 9 directors. The proxy statement listed Oil-Dri's nominees for director, each of whom currently serves as a director of Oil-Dri.

These nominees are Daniel S. Jaffee, Ellen-Blair Chube, J. Steven Cole, Joseph C. Miller, Michael A. Nemeroff, George C. Roeth, Allan H. Selig, Paul E. Suckow and Lawrence E. Washow.

In accordance with Oil-Dri's bylaws, stockholders are required to provide advance notice of their intent to nominate candidates for director. No such notice was received, therefore, I declare the nominations for directors close.

A motion to elect 9 directors as described in the proxy statement is now in order.

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Karen Jaffee Cofsky, Oil-Dri Corporation of America - VP of Compensation & Benefits [2]

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My name is Karen Jaffee Cofsky, and I am a stockholder of record. I hereby move that each of Daniel S. Jaffee, Ellen-Blair Chube, J. Steven Cole, Joseph C. Miller, Michael A. Nemeroff, George C. Roeth, Allan H. Selig, Paul E. Suckow and Lawrence E. Washow be elected as directors to serve until the 2019 Annual Meeting of Stockholders or until their respective successors are elected and qualified.

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Leslie Stephenshaw, [3]

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My name is Leslie Stephenshaw, and I am a stockholder of record. I second the motion.

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [4]

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Are there any questions or comments on this motion? I hereby call the question and declare the polls open to vote on the motion.

We'll provide ballots to any stockholders who have not previously given their proxy or who desire to change their vote. Please raise your hand if you would like a ballot.

(Voting)

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [5]

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I now declare the polls closed on this motion.

As described in the proxy statement, the second item of business is the ratification of the appointment of Grant Thornton LLP as Oil-Dri's independent auditor for the fiscal year ending July 31, 2019. Grant Thornton has just completed fifth year as Oil-Dri's independent auditor.

The audit committee of the Board of Directors of Oil-Dri has appointed Grant Thornton to again serve in the role for fiscal year 2019 and has directed that the appointment be submitted for ratification by the stockholders at this meeting.

A motion to ratify Grant Thornton as Oil-Dri's independent auditor for the fiscal year ending July 31, 2019 is now in order.

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Michelle Hueser, [6]

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My name is Michelle Hueser, and I am a stockholder of record. I hereby move that the appointment of Grant Thornton LLP as Oil-Dri's independent auditor for the fiscal year ending July 31, 2019 be ratified.

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Bruce Patsey, [7]

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My name is Bruce Patsey, and I am a stockholder of record. I second the motion.

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [8]

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Are there any questions or comments on the motion? I hereby call the question and declare the polls open to vote on the motion.

(Voting)

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [9]

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I now declare the polls closed on this motion.

I will now report the results of the voting at this meeting. As described in the proxy statement, a director may only be elected by plurality of votes cast. The 9 nominees who receive the largest number of votes will be elected.

Mr. Farrar has informed me that the 9 candidates nominated by Oil-Dri received the largest number of votes. I, therefore, find that each of Oil-Dri's nominees for director has been elected as a Director, Oil-Dri to serve until the 2019 Annual Meeting of Stockholders or until his or her respective successor is elected and qualified. Congratulations to each of you.

As described in the proxy statement, an affirmative majority of the votes represented at this meeting is necessary for ratification of the appointment of Grant Thornton as Oil-Dri's independent auditor for fiscal year ending July 31, 2019.

Mr. Farrar has informed me that such ratification received more than a majority of the votes represented at this meeting. I, therefore, find the appointment of Grant Thornton as Oil-Dri's independent auditor for fiscal year ending July 31, 2019, has been ratified.

Note that representatives of Oil-Dri are here with us today and will be available after the meeting to answer any appropriate questions.

You have now heard the results of the voting, and this completes the business to be conducted at the meeting.

Since there are no other matters to come before this meeting, a motion to adjourn is now in order.

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Curtis Wellborn, [10]

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My name is Curtis Wellborn. I'm a stockholder of record. I hereby move that this meeting be adjourned.

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Toni Mitchell, [11]

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My name is Toni Mitchell, and I am a stockholder of record. I second the motion.

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Laura Guest Scheland, Oil-Dri Corporation of America - VP, General Counsel & Secretary [12]

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All in favor of the motion of adjournment, please signify by saying aye. Those opposed, please signify by saying no.

The motion has been carried. It is now 9:38 on December 11, 2018, and I hereby declare this meeting adjourned. Thank you for attending.

I'm happy to invite Dan Jaffee, our President and Chief Executive Officer, to provide a review of Oil-Dri's business.

Please note that Dan's presentation and any commentary by any Oil-Dri employee today may contain forward-looking statements of expected future performance. Any such forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially.

We highlight a number of important risk factors that may affect our future performance and our SEC filings, including our Annual Report for the fiscal year ended July 31, 2018.

We urge you to review and consider these factors carefully in validating the company's comments and in evaluating any investment in Oil-Dri's stock. Thank you.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [13]

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Good morning. Thank you, Laura. Let's back up a little bit. There we go. We'll go to here. So what I'd like to do a start by introducing the Board. As I call your name, please stand up and then let's hold our applause until they've all been introduced. And before I start their introduction, I just want to emphasize what a increasingly valuable role the board is playing in helping me devise the strategy, and then I hope help us to execute that strategy. It's not just governance, it's really all of a wide array of business experience. And with my father's passing, I think I've been leaning on the board harder and harder. And it's been nice to know they've been there to help me run the business. So I appreciate what you guys have done.

I'm going to ask you to stand or you want me to raise that up? Okay. Fine. Okay.

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Unidentified Company Representative, [14]

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Is that good? I'm a smart-a**.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [15]

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I'm a smart-a**, yes. Good. Well, I'll call your names in order of importance. No, I'm just kidding. Alphabetical order, that's my typical joke.

Ellen-Blair Chube, Steve Cole, Joe Miller, Michael Nemeroff, George Roeth, Bud Selig, Bud, if you're on the line, you can stand up, Paul Suckow and Larry Washow. Let's please recognize the Board of Directors.

Thank you, and most of you are going to recognize people who were promoted during the year to positions of Vice President or higher. And in the essence of time, because I really -- we have a long program to do today. We've got a lot to cover. We're going to cover our supply chain and B2B and then a lot of exciting things that are going on in consumer.

I'm just going to recognize these individuals, so please stand when you're called, but I encourage you, you can go out on the web and learn more about them, either news releases or LinkedIn and so forth, but they're all playing a very, very valuable role with the company.

Yasmith Bernal is our Vice President of our Agricultural Products division. Yasmith?

Susan Kreh is brand new to the company. She's our Chief Financial Officer.

Flemming Mahs is not here. He's traveling, he's in Asia, but he's running our global Animal Health business. And he's the president of Amlan International, our Animal Health division. Cheers to Flemming.

And Mike McPherson, Chief Development Officer and Vice President of B2B.

And finally, you got to see and hear from Laura, but she -- we're very happy. She is our Vice President and General Counsel and Secretary.

And those of you who've been to these in the past or who follow my presentations, you'll see the same slides. We just drop off the old and add the new. But I'll add some color commentary to the play-by-play.

You can see our net sales grew a little bit from fiscal '17 to '18, but again, I'll remind you, we've been executing a really 15-year strategy. As we've been layering on profitable new business, in many cases, we've been jettisoning sort of legacy low-profit business. And so it's allowed us to manage our capacity very well and not use up our natural resources. So while our sales have gone up slightly, 1.4% compound annual growth over the decade from $232 million to $266 million, you can see that our tons sold have actually declined.

So we were over 1 million tons, we're now down to 742,000 tons. So we took decline in the usage of our clay by 25%, which is pretty dramatic, given that this is a nonrenewable resource. And we want to make sure that every time we chip, it has the value commensurate to justify all the processing and work that goes into it.

So when you divide the one by the other, you quickly can see that our net sales per ton have been growing pretty dramatically from 226,000 up to 359,000 in the most recent fiscal year. And then you can see in the first quarter, it was up again to 366,000 tons.

We're continuing that trend of delivering on our mission, which is 5 simple words, creating value from sorbent minerals. And one of the ways to measure the value is certainly what our customers are willing to pay per unit for it, but then obviously, you, as shareholders and stakeholders in the company, want to make sure from our standpoint there is profit going along with those sales.

And as you can see, we were making $45 a ton. Back a decade ago, we made over $97 a ton. So up over 100% during that period of time.

And then you can see in the quarter, it was down to $89, which are on a relative basis that the path is still pretty good, but a pretty dramatic drop from last year. And that's really because of the new system implementation won and then the logistics explosion during the quarter as we announced in our press release for the first quarter. Our logistics cost went up over $2 million this year's first quarter versus last year's first quarter to ship relatively the same amount of goods.

So it was just really the increased cost of doing it and then some inefficiency surrounding our new system implementation and having to expedite trucks, to send trucks out that were not necessarily full, just so that we could get products out to our customers.

Net income has been up and down per ton, depends on all sorts of things, not much to say about that.

Earnings per share, the one thing I want to say about this as well our reported earnings per share for F '18 where it's all the laws, and you know with the new tax law.

We had to take a onetime tax adjustment that was the noncash adjustment that then will accrue to our benefit as we go forward, because our income tax rate is actually coming down.

And so when you adjust for that $0.54 a share hit on an apples-to-apples basis against fiscal '17, it would have been $1.47 against the $1.65. But regardless, it was a very good year. You can call it the maybe third-best year we had from an EPS standpoint.

But most of our holders are in this for the long haul, and the thing they focus on is our dividend, we've raised our dividend 15 years in a row. We did still again last year. You can see a very nice compound annual growth rate on the dividend payout. And same deal, we raised this by $0.01 a quarter, $0.04 per share for the year, up from $0.88 to $0.92. And now we're on a run rate of $0.96 per share, and we always sort of take up the dividend payout rate at our June meeting, so that one we'll cover it again with the board.

Closing price has been up, down and sideways, but mostly up, most certainly over the decade, it's definitely been dramatically up. Recently down a bit, again, probably in reaction to the quarter and the system go-live and the impact on short-term earnings, that's fine.

We always make investments in the short run that may hurt the short run but that are expected to accrue to our benefit in the long run. They don't always do it, as Laura has -- gave the safe harbor provision.

Not everything we project always come true. But certainly our intention is to grow the business's profitability and cash flow over the long haul, and we believe the investment in the new system does exactly that. It's a long-term investment that may have hurt the first quarter of this fiscal year, but will be accruing to our benefit for a long, long time to go.

We do talk about our cash flow, and you can see that while we have spent significant amounts of money during this decade, we've spent almost $0.25 billion on various things. You've got CapEx leading the way at $129 million, then you've got the dividends paid were almost $50 million, the bonus to our stakeholders, $37 million. And then we actually invested that $25 million in really tangible R&D. We probably did more than that through our product development work at our plants and so forth, but these are dollars we can actually capture. So that's $240 million invested over the decade in our business and in our stakeholders, and yet our net indebtedness has gone the other way. We now have more cash than debt. I think we're down to $6 million of long-term debt, which is a real nice place to be. So our balance sheet is very, very strong. We certainly have the debt capacity to take on new opportunities as they come. We're continuously looking for opportunities that are right in line with our mission of creating value from sorbent minerals. We're really not going to deviate from that. We feel there was enough nearing opportunities that fits right -- very well with that mission, where we don't have to extend this pricing.

We can pretty much sit back and look for those (inaudible) down the middle, and it's been working.

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Operator [16]

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Pardon me, this is the operator. Would you please turn up the volume on your end?

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [17]

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Sure. I guess I got to lean in. That's probably better now. Is that better?

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Operator [18]

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Much better. Thank you.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [19]

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Okay, apologize. And now I'm done. So, Mark, you're going to have to do this.

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Mark E. Lewry, Oil-Dri Corporation of America - Former COO [20]

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Good morning. Can you hear me? I have several slides to share with you this morning. We're going to go over this past year of fiscal '18, and then we'll talk also about some of the challenges we faced in Q1.

Okay. Manufacturing actually had a really good fiscal '18. From a quality standpoint, we had a gap in our -- particularly in our consumer products. We had to close that gap, so we invested in our manufacturing infrastructure. We invested in our quality systems and our quality team. And really delivered products -- and are delivering products now that meet or exceed what the business requires.

From an efficiency standpoint, we started measuring efficiencies in our plants and our packaging lines a couple years ago. We evolved to a new metric this past year, called TEEP, which is total effective equipment performance. And what that does is not only measure your packaging systems and lines, but also upstream and downstream from there. So it's a more comprehensive measure, and we had great success, of course, what you measure is going to improve on, as we like to say at Oil-Dri. And we did with improvement of 20%. On the cost side of the equation, again, we had good success with a number of initiatives to deliver cost savings, particularly for the consumer business, by streamlining our manufacturing and driving some efficiencies there. And that's really was one of the key support legs for the consumer business strategy.

Shifting over now to look at the beginning of this fiscal year, there have been some highlights as well as lowlights. Quality continues to be outstanding. So despite the turbulence we've had, we continue to stay the course there. We've had another good news element, there's the growth in our business, Cat Litter business has been up significantly, one of our brands is up actually 30%. So -- and we've had a large new agricultural customer that we've acquired. So it's put a significant pressure on the manufacturing capacity.

The good news is we anticipated some of that. We invested this year and grew our capacity, and that cutoff of the clay, which, as we call, the intermediate cut, is not the larger or the small, it's kind of the middle by about 20% this year.

So if we hadn't done that, we'd really be challenged, and thank goodness, we had the foresight to get ahead of it.

But with the growth in the business, with a couple hurricanes, one that directly hit our Georgia plant, and with JD Edwards, as Dan mentioned, it's been a challenging first quarter, and our service levels have suffered.

Just pulled a couple of key customers here. And they have some data on the Q1 where with one customer, we dropped to 88%, the other one down actually to 58%. But you can see the recovery now as we've kind of grown through that and worked through that up back in the 90s.

Logistics cost has been mentioned in our release, and Dan mentioned this morning, have jumped dramatically last year for the entire year. They're up over $3 million. This quarter alone, they were up over $2 million or over 20%. We tried to break this down to give you a feel for why -- what's occurring there. Most of that is market-based rates, but some of that is the growth of the business. The consumer business and the Ag business. About 30% of that was due to growth in that segment of our business.

And then we did have some service disruptions, so we accelerated some logistics to try and get product to our customers and that was about 10% of those costs.

Looking forward to the rest of the year, we see continued challenges on the horizon, and logistics costs are going to continue, we see, at about that same rate, about $1.5 million to $2 million in the next 2 quarters. Again, driven by market rates and growth of the business. Natural gas, if you -- anybody has been -- I don't know if anybody tracks natural gas, but it's jumped up significantly in the past month, and is expected to be up now for the winter, which is the next really 3 months. And that will probably cost us anywhere from $0.5 million to $1 million over that time period.

And then as I mentioned earlier, we, in manufacturing, the supply chain need to keep up with the growth of the business, and so we need to continue and invest, particularly in that intermediate cut of product.

So all in all, great year last year. Challenges as we started off this year, but we're staying up with it. And we're excited about the rest of this year.

Okay. With that, I'll turn it over to Mike.

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Michael Andrew McPherson, Oil-Dri Corporation of America - Chief Development Officer & Group VP of B2B [21]

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We're coming off a one of the best performing years of our B2B groups last year. And what I thought I would do today is give everybody an overview of what type of markets we're involved in, in our B2B groups. I'll talk a little bit about some of the highlights for certain aspects of the business. And then I'm going to give a little bit of a glimpse of some new products we have coming out of the pipeline.

So when I meet with customers, prospective customers that are not familiar with the company, probably one of the most common questions I get is, could you explain to me a little bit what B2B is? And what type of markets you're involved in when you say B2B? We understand the consumer side of the business, we don't really understand when you say B2B. And my answer to them is, our B2B group in Oil-Dri largely is involved in the agricultural marketplace in the broader sense.

If you look at the top of the supply chain, that's where Yasmith Bernal and her group focuses, which are agricultural inputs. So this is seeds that grow plants, fertilizers that help the plants grow, crop protection chemicals that help protect the plant from weeds and insects, and increasingly, which we'll talk a little bit later about some of our R&D investments, natural pesticides, microorganisms that help control insects and weeds instead of synthetic chemicals.

Since Yasmith has taken over as Vice President and General Manager of that business group, sales into that marketplace have nearly -- I'd say the profit has nearly tripled. And she's done that by helping better align, as Dan mentioned, our investment in R&D.

We have an incredible laboratory, incredible equipment and knowledgeable people on how to make these synthetic and microorganisms be compatible with our clay. It sounds simple, but it's a little more than just absorbing them on. But she's done a masterful job kind of getting that alignment together.

So what happens when you grow these crops like corn, soybeans, canola, sunflower oil? You then go and crush those seeds and you make oil that goes on to be consumed by humans and animals. That oil then leads into our Fluids Purification group, which is managed by Bruce Patsey. He took over that business in 2005. It's -- he's grown it masterfully. They're one of the largest, most profitable businesses within Oil-Dri. And so array of products that not only can treat the oil and prepare it for human consumption, but then it goes further down the agricultural supply chain and gets into biofuels like biodiesel, as an example, and we've developed products that help purify that.

That's the oil side. What happens to the stuff that's left over after you crush the seed? That's called meal. It's the #1 component to feed livestock.

So the companies that we serve on the oil side, like Cargo and ADM, also are involved in animal feed production.

You take that meal, you combine it with other things like vitamins and minerals and tactical products, like our Amlan products that help the animal reduce stress, improve their intestinal health and help them better grow. All of those areas and all of those different markets that are involved in animal and plant livestock production is where our B2B businesses operate.

During the year, we've continued on our transition of our Amlan business. In the first phase, the first 10 years of Amlan when it was created, we focused on shoring up the science. We were selling historically our minerals into the livestock base, but we didn't have a very good understanding about what it actually did to an animal. As it turns out, as Dan funded the research into our mineral, it's amazing, the things that the mineral can do and how beneficial it is to controlling bacterial related diseases in animals. We've done an incredible amount of research. We built our research capabilities up to be able to support that business. And now we're transitioning how we go to market in pretty dramatic ways.

For those of you that were here last year and remember, I presented about our investment in Amlan in China. That was the first step in our transition to actually directly employ people that we could train, have them understand the value of our medicinal-based products, and how they benefit livestock production, and control the way we go to market, the way we sell and the way we present our value to prospective customers. Three years after we invested in China, we had a 10% market share. And the 15 years prior to that, selling through distribution, we never had more than 0.5% market share. And it's clear when you have people and you wake up every day and you promote your own products, we can be more successful.

So we continued that this year in May of 2018. We acquired a controlling interest in our Mexican distributor, called AgroMex. I was just there last week. Tremendous opportunities. We presented our products to prospective customers. Everyone we met with is now trialing the product. It's the difference between Oil-Dri and Amlan people that understand the value and know how to deliver the value versus selling through distribution, where, if you're lucky, you get 1/10 of their attention and 1/10 of your sales resources.

Just last Friday, we completed our transaction to create PT Amlan. It's a 100% foreign-owned subsidiary in Jakarta, Indonesia. Flemming is there now beginning to prepare the business to do -- begin to supply. We expect that we'll begin initial market development activity in the third quarter, and we see there a tremendous market opportunity.

Indonesia banned the use of antibiotics in January of 2018. I was there 2 months ago, and I met with the producers, and I said, what's your single biggest challenge? They said, "Well, the government eliminated antibiotics, but there's no solution. We're trying 3, 4 different additives to try to control bacterial diseases, nothing works."

Barium, a product that you've, I'm sure, heard about from various press releases. Barium is a single-dose product. It does what 3 or 4 of these other products can do. We're entering that market at an absolute perfect time for antibiotic alternatives.

Similarly, there's 2 or 3 other markets that we're currently looking and preparing business cases to present to Dan that we hope that we'll invest in the future.

Another big change we did that speaks to the evolution of the global livestock market is what I call showcase selling. This was originated from, quite honestly, watching the activities that happen down the hall with Dan and the consumer groups, is they were challenged in guerrilla marketing. How do we get people that are used to buying some of their brand to try our product? Reagan and I, who's now the new director of B2B marketing, we sat down, and she asked what's the single biggest challenge with Amlan? You walk into an account, they don't know who you are, we're not Pfizer, we haven't been around 75 years. They don't believe what we present. The competition does an effective job of saying that the picture of them that they present of the Wrigley building. That's a chewing gum company. That's not actually -- they're not in that building. They don't really have a laboratory. They don't really have any people. So it's too easy when you're sitting in some remote rural area in Brazil to believe that Amlan doesn't exist, that Oil-Dri doesn't exist.

So what we did to better focus our marketing spend, we targeted the top producers that we wanted to do business with that matched our business model, something that Dan talks a lot about. We got to find the people that fit the way we do business. These are people that believed in antibiotic-free production, people that supply McDonald's and Kentucky Fried Chicken, their protein. And we said, instead of going down there and trying to convince them in 15 to 20 minutes, while their phone's ringing and people come into their office, we're going to bring them up to Chicago. We're going to have you meet Dan. We're going to have you walk around the office. We're going to have you see that we're a real company. You're going to meet the people that will support your business. We're going to take you out to our R&D facility, and you're going to see it's state-of-the-art.

Equipped with the people and the analytical equipment is critical to any pharmaceutical company. The result of that, of the 30 people that we brought to showcase our company, not present our product, but showcase our company and our science and our technology, 28 of the 30 people are now customers of Amlan, and it generated a significant amount of incremental profit last year for our Amlan business.

Thank you. So continuing that, we realized after 10 years of building our research capabilities, we have incredible relationships with leading researchers and thought leaders on going in antibiotic-free production. We said, why don't we take these prospective customers that have the same interest as ours and bring them all together and share our net worth with these prospective customers. So in August, we had our first major global symposium, where people from all over the world, poultry producers that had the same vision of the future of livestock production as we do, we brought them here. It was 1 big mash-up of technical people. We had Tyson Foods there. We had OSI, which is a leading meat producer for McDonald's and Kentucky Fried Chicken. Again, further building the relationships with what is increasingly to be very concentrated global livestock producer.

Years ago, there were thousands of farms. Now in any country, usually about 7 or 8 producers control all the production of -- in poultry. So you have to have strong relationships, less mass marketing, more micro-marketing. That's the big ship that's going down with an end in order to then make sure we can support that growth.

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Operator [22]

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Pardon me, this is the operator. Your audio has dropped volume, again. Can you please adjust?

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Michael Andrew McPherson, Oil-Dri Corporation of America - Chief Development Officer & Group VP of B2B [23]

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Sure. I'll move closer to the mic. To support this business, we looked across the commonalities in all of Oil-Dri's businesses. And increasingly, the commonality is microbiological sciences. When our research center was built 25 or 30 years ago, it was a traditional chemistry-based facility. That's the core of Oil-Dri for 75 years, where a lot of the future growth opportunities though aren't grounded in that type of science. And Yasmith's business, what's emerged are microorganisms that control weeds and kill insects, not synthetic chemicals that a lot of consumers and governments would like to eliminate.

In order to understand how to develop new products and solutions for our customers, you have to actually understand something about living microorganisms, bacteria, fungus and other things that can control it.

And our Cat Litter business, if you want to make improved odor control products, you have to understand what causes the odor, which is bacteria, not just you have to understand the mineral. So that's been the fundamental shift to try to make our products more potent, more effective to the consumer. You have to control bacteria. That required a skill that we didn't historically have.

And obviously, in our Amlan business, we've been incubating, within Oil-Dri, a life science company. To develop the type of intestinal health and disease management products, you have to have the ability and knowledge to do that work.

We were fortunate that Dan approved the Richard M. Jaffee Laboratory for applied microbiology. It was approved in the summer of 2017. It became operational in August of 2018, so the start of our fiscal year.

And his question of the time was, okay, what do you hope to accomplish from this other than obviously you've got to support the business? And I said, "Well, the hope would be, we're going to accelerate our research." We're outsourcing an incredible amount of work to outside microbiology laboratory. So the first step will be easy, it'll reduce our cost. But the hope is, we're going to compress the time line from months to get preliminary results back on a new prototype. So what we hope will be weeks.

I'm very happy to say it went much better than anybody anticipated, even those people and microbiologists that work in the lab. Two products are now coming out of the pipeline as a result of this investment. I'm only going to give you just a little bit of a sampling of the product. But our Amlan business focuses on disease management. The easiest way to understand it, if you don't know the livestock market, think of human supplement. They're not pharmaceutical products, but they're non-pharmaceuticals that have medicinal effects on humans. These are the same types of products.

Our first product that's coming out of the pipeline that we'll be registering in the next couple months that we expect to launch it in fiscal 2020, is a formulated antimicrobial feed additive. This is a synergistic blend of multiple ingredients that are highly pathogenic to the 3 most harmful pathogenic bacteria that exist in the livestock market. So you take any one of these ingredients by themselves, they have some effect. The mixture of these 5 are absolutely incredible. They annihilate these bacteria, like clostridium perfringens, E. coli. We're excited about that product. And again, we're not going to get deep into the research, but we've done numerous clinical studies. And the single most important criteria a livestock producer looks at is something they call feed conversion. If I feed an ounce of animal food to a bird or to a pig, how much of that ounce gets converted to body weight? What prevents it? Disease. They're exposed to incredible amount of viruses, bacteria. They have intestinal damage, so they have a hard time converting the food they eat to weight gain.

That's measured in something called feed conversion. The lower the feed conversion, the better that animal is converting food into weight gain. So this data shows, if you look to the far left, we have a very healthy bird. It's not -- doesn't have a bacterial infection.

You have the lowest feed conversion, which is what you would want in an ideal situation, that's doesn't exist in the real world.

If you look at the next bar over, that's what happens when you have an unhealthy bird with a bacterial infection, but very high level of feed conversion.

The bar next to that is what happens when you have an infected bird and you feed it with the most commonly used antibiotic. You can reduce the feed conversion not all the way down to the healthy level, because they're still infected, but to a lower level.

The product to the right is our new prototype. It's statistically equivalent to a long-standing pharmaceutical product in terms of controlling the bacteria to the level that you have the same amount of feed conversion as you do when you're feeding them a pharmaceutical. That's a major achievement. We're very excited about the product and equally excited about our new anticoccidial product.

Cocci is a parasite. It causes the second most prevalent disease in poultry. It's a $2 billion or $3 billion problem. Parasite gets in, damages the intestinal lining of broilers and layers, ultimately causes high mortality, low feed conversion.

Again, we've done numerous clinical studies. This is just one of the highlights. You'll look at the feed conversion. You'll look at our new prototype and you compare it to the most commonly used treatment to control cocci, which is a class of antibiotics called an ionophore. Statistically, our new prototype is equal in feed conversion to our pharmaceutical product.

That's the future of our Amlan business, and a lot of our R&D is focused in on these types of gut health supplements to improve the profitability of livestock producers.

That's all I had. So I'm going to turn it over to Leah. Thank you.

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Leah Craft, [24]

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Thanks. Good morning, everyone. My name is Leah. I am in Division III, working on our Litter for Good program. So this time last year, we announced the new program was going to be launching in January. So today, I wanted to talk to you about our Cat's Pride Litter for Good program success today.

So the Cat's Pride Litter for Good program is a program, as I mentioned, that we launched in January of 2018 with the main goal of helping animal shelters in need. So how the program has worked is with every green jug of Cat's Pride purchase, we donate 1 pound to animal welfare organizations. And what we hope that to do is to increase our sales of Cat's Pride Fresh & Light. We hope that it frees up resources for animal welfare organizations. And ultimately, this is not a on-off promotion. This is something we plan on doing from now and into the future.

So how does Litter for Good work? First, we reach out to all of our shelter relationships, letting them know about the Litter for Good program. We developed marketing and educational resources that they can then use to spread awareness to all of their supporters, letting them know to, number one, go out and buy a green jug; and number two, join the Cat's Pride club and nominate their local or favorite shelter. And with that, we then see increase in trial of our Cat's Pride Fresh & Light green jug as well as those consumers letting all of their friends and family know about the program as well, so really increasing that Cat's Pride brand awareness.

When we first launched the program and throughout the year, we had a 360-degree marketing support. So everything from the shelter word-of-mouth program to digital display, mobile, social, our website, search, marketing, digital SSI and shopper marketing. And across the entire year, we saw amazing results and interaction with not only the Cat's Pride brand, but really pushing that green jug. So all of those 360-degree marketing support led to over 282 million traditional impressions and over 1.6 billion digital impressions.

Now jumping into the specific data of the Litter for Good program. We have over 2,700 shelters within our database. And of that, we have had over 1,194 shelters register for that program and receiving the actual litter donations and spreading that word to the supporters. Over 16,000 shelter nominations, so those our consumers that have joined our Cat's Pride club and nominated a shelter. Our Cat's Pride club membership has grown by over 19,000. When looking at the organic or nonpaid reach of our program, we have seen over 220 million social impressions in reach. A big part of our program are the videos with Katherine Heigl and Dan Jaffee sharing about the Litter for Good program, and we saw an increase of over 295% in our YouTube video views. And then to date, we have promised over 3.6 million pounds in litter donation.

Overall, we have seen many thank you notes from shelters letting us know that without this program, they would've been short in terms of helping pay for vet bills, adoption events. When they hear how much litter they're eligible to receive, all of them almost say this is too good to be true. I cried when I received the email and the call. So overall, we've seen great success not only in terms of awareness for our consumers and trying and repeat trial of our green jug, but then those shelters are actually benefiting and helping more animals in need.

We had an exciting partnership this year with NBC Telemundo, partnering with their Clear the Shelters event, which is a single largest day adoption event occurring across the United States. Through that partnership, we had TV, digital, social, on-site promotion, support. We had press releases, PR celebrity outreach. We had a 30-second brand spot as well as a 2-minute integration that played following Clear the Shelters that featured our Litter for Good program as well as participating shelter in the program. This is a no-brainer in terms of a partnership. We both were aligned directly in terms of what our overall mission was in helping animals in need.

Here is our 30-second brand spot with NBC.

(presentation)

And here is the 2-minute integration.

(presentation)

So when looking at the impact of Clear the Shelters. We saw a great return. We were able to partner with over 1,200 shelters and really spread that Litter for Good and Cat's Pride brand message. There were over 100,000 animals adopted. We saw over 33 million digital impressions, 21 million TV impressions, and over 16.5 million users were reached via social. And what was even more exciting to see is that it really did impact our brand and our overall brand and purchase intent. So we saw a 29% increase in what people thought of Cat's Pride and having that excellent perception. We saw a 58% increase in Cat's Pride ad recall, 18% increase in purchase intent and a 50% lift in actual purchase of our product.

So overall, we have seen great success in Litter for Good and what we have seen in the past year, but we are excited to see what is to come. As we mentioned, this isn't a one-off promotion. We're doing this from now into the future. So when you take a look at our overall Cat's Pride Lightweight sales velocity, you do see that increase in our unit sales. And we're hoping this continues to impact not only our green jug, but we see a halo effect over our Cat's Pride products as a whole. Thank you.

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Unidentified Company Representative, [25]

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Hi, everyone. My name is Jessica [Moskowitz], and I am on the marketing team for Cat's Pride in the branded side of the business in Division III. I have the fun job today of talking to you about our latest TV integration. But before I do that, I want to give you a little bit of an update on our spokesperson.

So in 2016, we signed a 2-year partnership with Katherine Heigl. That will be coming to an end as of the end of December. She has been instrumental in helping us build the Cat's Pride brand, relaunch Ultimate Care, and most importantly, really expanding our Litter for Good program. She's got her own ties, philanthropic efforts, and though with her passion for animal welfare has really shined through for Cat's Pride as well. So while that partnership is going to be coming to an end, we are excited to announce that we've actually identified a new spokesperson. This spokesperson has an equal passion for animal rights and a long-term commitment to helping animals in need. He also has an unmatched passion for the Cat's Pride brand. And as shareholders, you will be excited to hear that we received this spokesperson at a significant, significant discount to Katherine. So without further ado, I'd like to introduce our new spokesperson, none other than, up, Dan Jaffee.

But in all seriousness, I want to share with you our most recent TV integration this past October. We had the privilege of sponsoring Cat Week in October of this past year on the Ellen Degeneres show, garnering over 36 million impressions over the course of that week. What was particularly exciting about this opportunity -- clearly, getting a TV integration is unique in itself of this nature, but it was particularly synergistic for a number of reasons. I think as we looked at Ellen and the opportunity to partner with the Ellen Degeneres show, there were a lot of synergies. Clearly, the audience matches up with the 25 to 50-year-old consumer. This sort of approach that we take from a down-to-earth accessible humor. But more importantly, it was this connection to animals. So the Cat Week embodies so holistically as well as really the tie to giving back what's Litter for Good is all about. So this partnership was very exciting. I'm excited to show you some highlights and results from the partnerships. We'll start out with a clip that just kind of exemplifies. It's just a couple of minutes we had. We were on the show for the entire week, so this is just a couple of minutes of that highlighting that integration.

(presentation)

The on-air portion of this integration was critical. But beyond that, I wanted to make sure that we were really joining the online and off-line components to these programs. So after -- in terms of working on the integration, doing everything along the marketing funnel, everything from obviously the air time, but spreading the word digitally through this expansive network, everything from branded, branded banner ads to search to everything and then all the way down to driving people to our own website and then increasing the number of Cat's Pride club members.

The initial results for this program are highly encouraging. We saw double-digit increases in both traffic to our website as well as social impressions. And even preliminary velocity data, as Leah -- building on what Leah said, in the weeks surrounding Cat Week, were highly encouraging from a velocity spiking perspective. And not only did we see velocity spike around Cat Week, we have continued to see those hold firm in the following subsequent weeks as well. So highly encouraging for the integration, the Ellen integration.

So we are super excited about this integration and continue to look for additional high impact yet highly efficient programs where we can spread the Litter for Good message and continue to build the brand. So thank you so much. That concludes the business portion, and I will now turn it over to Dan for Q&A.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [26]

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Let's have another round of applause for our presenters. I'm trying to get closer to the mic. I think you got a great glimpse into who we are, which are creative product innovators, and how we're trying to take this unique mineral that Mother Nature put into the ground billions of years ago and put really everything we need to thrive and survive in it. It's just up to us to figure out what's in there and how we can economically get that to consumers, whether it’s in the food chain or whether it's for cats. And so we are just so excited about the future, and I hope you got a feel for that excitement from the presenters.

I'd love to open it up to Q&A to answer any questions you guys might have. We've got 3 different segments of Q&A going on. Let's start with the phone lines. And please, after you ask your question, put your phone back on mute just so we don't get any background noise. And Reagan, I think you'll handle the phone lines. So we'll take the 17th caller.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [2]

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Maybe no phone questions.

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Operator [3]

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Our first question comes from Ethan Starr, an investor.

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Ethan Starr, [4]

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Fabulous presentations, really very excited to be going forward. And my question is this. To what extent will cost related to the new ERP system affect second quarter results? And also how will the system help you save -- help save you money over the longer term?

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [5]

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Good questions and not totally quantifiable. I mean, they're certainly going to have a negative economic impact on the second quarter and then we absolutely believe positive economic impact going forward. We are still spending money on consulting, on bringing in programmers and developers to help us refine, tweak and make sure that the system is doing everything it was intended to do and all of those dollars are being expensed. Those aren't capitalized at this point because we went wide. So it's really hard to quantify, and I hate to be evasive. You know we don't really give guidance, and I've just sort of given you generic guidance. I will just put it in the terms of it's not going to impact our ability to invest in our growth opportunities, and it's not going to impact the dividend. So that's about the best guidance I could give you. And as a long-term shareholder, those are probably the 2 things which you'd be most interested in. Are you going to have to ramp, pull back on some of these great new product opportunities? The answer is no. And are you going to hurt my dividend? And the answer is no. So that's the best way I can answer your question.

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Operator [6]

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Our next question comes from Robert Smith with the Center for Performance Investing.

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Robert Smith, [7]

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Dan, thanks to your eloquent and gracious and loving tribute to your dad in the stakeholders letter, was deserving and I admire it. My question is that you expressed disappointment with the first quarter results, and I'm wondering how you plan to address the disappointments and challenges in the immediate future.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [8]

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Yes, and let me talk about the disappointment. My disappointment was not certainly with the team's effort. Our team put forth an incredible effort trying to overcome things that probably should've been tested and validated before we went live. And so my disappointment was not that it was painful, but that we didn't anticipate all the pain that we experienced. We knew it was not going to be easy going live. Everybody launches these ERP systems, goes through what we did. They take longer, they cost more. And we put in so much time doing these conference room pilots that my expectation was we were going to know where the high fastballs were coming from. But as we went live, all of a sudden, we started seeing curveballs and knuckleballs and everything else. So we frankly didn't do a good job of testing on the front end, so we were learning and training on the fly. That's where my disappointment came from, it was more of a lack of anticipating. It certainly was not in the lack of execution. Our team did an amazing job on that. I think you had a 2-part, and I can't remember what the second part was. Oh, how are we addressing it. Well, first and foremost -- and you can't connect all the dots, but certainly, we are going to continue to upgrade the talent level at Oil-Dri, that we are playing in the major leagues and we need major league hitters. And so bringing in someone with Susan's background, not only on the CFO side, but also on the IT side. I mean, just yesterday at lunch, we took the IT team out to lunch and then we took the accounting folks out to dinner. And during the IT session, just the question she was asking and her understanding of what it takes to go live, all I said was, boy, I wish you were with us 24 months ago. And so that's how we're going to address it. We need to make sure that everybody who's occupying a position at Oil-Dri is capable of delivering at the level we need because we've got new products, and we've got exciting growth opportunities. And what that kind of growth does is it starts to expose weakness in our own infrastructure. And so thank God we put the system in. I wish we'd put it in a year earlier, frankly. But we are going to need this because having visibility into our warehousing, into our fulfillment is going to be critical as consumers continue to demand our product. And so while we have disappointed some customers, we haven't lost any distribution. The disappointment has come from, we want your product, it's flying off our shelves. I mean, as Mark alluded to, Cat's Pride Scoopable was up 30% in the quarter. Our private label Lightweight was up over 20% in the quarter, and we're still rolling out to new customers as we speak. And then as we're doing that, we're actually getting more SKUs with existing customers. So we've got some winning strategies on the cat litter side, and we clearly have very winning strategies on the B2B side, both on the ag, the human health and the animal health. So we've got to make sure that our support team, what we call [2 to infinity,] have the resources they need and the people they need to meet those orders and get out in front, because we've been playing catch-up. There's no doubt about it. Well, as I tell our sales team, these are good problems to have. The worst problem to have is your product's not moving, come and get it. That's the worst problem to have. The best scenario is your product flying and you're meeting all orders. There's no doubt that's what we're trying to do. But if you had to pick between your products not moving, come and get it; and we're angry at you because your products are moving so fast and we were missing sales, you'd rather have the latter.

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Operator [9]

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And we do have a follow-up question from Ethan Starr.

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Ethan Starr, [10]

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Yes. How could you address the trucking -- the cost of the trucking issue? I don't know if you've been -- raised prices on that before the next fiscal year or not. And also, I see you have a new darker green jug on the Cat's Pride Fresh & Light.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [11]

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Good catch. So we did raise prices [8/1] in anticipation of 8% to 10%, maybe even 15% in some areas of rate increases. But what we experienced in the first quarter was well north of that. We are going to be going out with a second round of price increases this fiscal year. However, in the consumer business for sure, we've got to get our supply numbers, our still rates up. Because you can't go into an account where you're filling a 59% or even 90%. You've got to be in the 95%, 96%, 97%. And then you have the -- you're on the solid ground to go ahead and raise the price. When you're at 50%, 60% and 70% and then tell them on top of that you're going to be raising their price, those meetings don't go very well. So we will definitely be raising a second round of prices this fiscal year. All of our competition has been raising their prices. All of the retailers -- retail prices are going up. This is not an Oil-Dri issue. This is an industry, nationwide systemic issue. Not just cat litter, but anyone who's shipping truckload products is experiencing the lack of supply and the increase in demand so the costs are going up. And we will be getting our prices out, but we will be lagging this next bump. We we're leading the first bump, but we'll be lagging the second bump. And thank you for noticing our green jug. That was just we're putting so much brand equity behind Look for the Green Jug that Lisa and her marketing team, rightly so, tested all sorts of new packaging. You'll see some new packaging design either later this fiscal year or early next fiscal year. But in conjunction with that or in advance of that, we really wanted to enhance the ability of the green jug to pop at retail and that new green jug just does that.

Should we switch to webcast? Okay, let's switch over to webcast, then we'll take question from there. I would love to encourage people to type their questions. Can we do webcast last, then, while they're typing? So if you have -- if you're on the web and you want to type some questions, we'll gather them and we will ask them. But we will open it up to our audience here, and we've got some microphones that we will hand-deliver if you have any questions. John, you have a question? Let's get John a microphone.

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Unidentified Participant, [12]

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Dan, it's a great presentation, and congratulate all the different divisions in what they're doing. I think this is my seventh attendance to an annual meeting, and I always gain some pretty incredible insights as to what you're doing and where you're going. And I'm particularly excited about the animal health related business. So I have a couple of questions regarding that. Number one is the cost effectiveness of using the Amlan product versus the traditional antibiotics and if that is a good selling point for you. And along similar lines, the recent problems that China has had with the pig disease, I think, it's an African -- no, it's a virus, I think, if I'm not correct, so maybe that's not really applicable. But has that helped out in your efforts in selling over there? I've got a follow-up question, too.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [13]

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Mike?

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Michael Andrew McPherson, Oil-Dri Corporation of America - Chief Development Officer & Group VP of B2B [14]

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How the industry looks at antibiotic usage really depends by country and by producer. I met with a company last week that uses 3x -- I mean, it's not spoken about, 3x the normal recommended dose, which costs about $9 per metric ton of feed. That's extremely favorable compared to Varium and NeoPrime. If you look at -- sometimes, a typical producer, the cost of an antibiotic, especially if it's used in a generic one from China, might only cost $1.50 per metric ton. We're not going to replace those types of -- that type of usage of antibiotics. If you go antibiotic-free or you operate a farm that's so heavily diseased and poorly run, which is typically the case in many developing countries, they're using products like Variam and NeoPrime on top of their antibiotics. There's only so much you could put into an animal before it starts to harm them. So we find the market is plenty big enough for alternatives to antibiotics, where the cost of our products are not prohibitive. And in many cases, you have people that are using such a large amount of antibiotics that the cost for the total amount of dose compares favorably to our new products. So we don't think that will impede growth at all. In terms of the African swine flu, which is a virus, that slowed the business a little bit in China because they are now beginning to call -- the large producers are all pretty heavily infected. They're calling a large percentage of the pigs now. And they're just kind of stopping the use of any new additives, adding more cost to their diet. They're really now trying to figure out how are they going to slaughter and how are you going to process and landfill 10,000, 20,000, 30,000 pigs per producer across 20, 30, 40 producers. It's a lot of pigs. So right now, it's disrupted the sales process there, but it's not having a negative impact. It's just slowing our growth down in China.

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Unidentified Participant, [15]

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Okay. My follow-up question is for the Litter for Good program. Dan, I think you indicated that initially, a lot of the product that was being donated was "old product," and so I'm wondering kind of where you are in working through that. And if the current product that is on the market for consumers is what's being used -- appears to be, given the videos there. And as I side on this, have you considered using billboard advertising along heavily trafficked Interstate 94 and other areas? With those big green jugs on the picture there, I think, personally think that might be an interesting thought there if you're not already doing it.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [16]

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Okay, thanks. And Leah, why don't you handle the -- where are the litters coming from? And what kind of runway we have before we're going to actually have to produce first run product.

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Leah Craft, [17]

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So in terms of the donated product, we are still donating obsolete product, so we have not run out of that obsolete product. Shelters can either pick it up at our plants or warehouses or pay for third-party freight to have it delivered. And all shelters who are eligible for over a pallet of litter are able to receive that. And then just for efficiencies, if it's anything under a pallet, we provide coupons for the litter to be picked up. When looking at our obsolete report, we do have probably over 6 months left in terms of providing obsolete. And that report continues to ebb and flow based on whatever we're running and if packaging changes, et cetera. So things are looking good in terms of those cost savings.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [18]

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Yes. From the manufacturing efficiency standpoint, it's been good for us because we're either paying for that space somewhere on an outside warehouse or it's been taking up valuable space on our owned warehouses. So either way, we cleared up a lot of space, which is good. Regarding billboards, we look at cost per thousand of impression and we certainly look at all sorts of different ways to communicating and I'm sure we looked at billboard, but at the moment, it's not part of our mix. Yes?

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Unidentified Participant, [19]

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Is there other (inaudible) can you see what (inaudible)

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [20]

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There are other vehicles that are more efficient on that cost per thousand in price. Is it million or cost per thousand? Cost per thousand impression. Do we have any typed questions?

Okay. One more audience. You want it? Oh, you moved on me. You were over there. You're like Where's Waldo?

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Unidentified Participant, [21]

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It's easier to see you up here. (inaudible) long-time Oil-Dri shareholder. And I have quick questions and suggestions, one about marketing and the other about acquisition. But first, I'd like firstly to give my condolence to the passing of your father. I wish he were here to see me with serious questions and maybe in the future wearing a suit and a haircut. My first question concerns marketing. And anecdotally, while living at (inaudible), my friends and neighbors who used Cat's Pride preferred Fresh & Light Multi-Cat Unscented. It's sometimes difficult to find with all the myriad of the other flavors, and whereas, Multi-Cat Unscented is the highest priced of them. And if it's the highest price, then the best, it should be the one that people automatically pick. But lots of luck trying to find it in supermarkets. I hope you can encourage markets to at least have a double row of that or much more of it and sure in stock. And the second part is Oil-Dri is a local company here in Chicago, [coupling] up for the piece of 20-follower local, classical radio station. And when they do fundraising, they used to have something called the cat fund and the dog fund. Cats always won. And most people have classical radio, lots of times, they have a cat. It's worth trying, at least for a couple of times, putting advertisement which are announcing that live. It's worth the try. You could even probably hear it out there and follow them here.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [22]

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Great. Well, first of all on the first one, Dave, who manages our e-commerce business, are those items on Chewy?

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Unidentified Company Representative, [23]

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Yes.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [24]

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So you can go to chewy.com, and they deliver for free and they have those items. So if your neighbors can't find the item, tell them to go to www.chewy.com, and they can order it and it will be delivered to their home for free.

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Unidentified Participant, [25]

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Well, I think my neighbors are a little old fashioned. Just rather grab what they prefer at the grocery store. So...

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [26]

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All right. So you buy a bunch of them, and then I'll charge them and sell.

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Unidentified Analyst, [27]

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That's what I do with these coupons.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [28]

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Good job.

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Unidentified Participant, [29]

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Which is really good for Chewy this year.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [30]

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Thank you. Okay, good. Louise, we'll (inaudible)

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Unidentified Analyst, [31]

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Wait. There's more, the second one concerning acquisition. Bayer, or as we call at the United States, Bayer AG, which invented aspirin and just took over my sample, has decided to sell their pet care and animal -- pardon me, animal health products. It's a limited amount of animal from an animal health products, and I'm wondering if Oil-Dri investigate if it might be a good fit to acquire them?

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [32]

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Certainly, to the extent it fit with our mission. So I appreciate that you gave me some information on it, and we will follow up. Thank you.

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Operator [33]

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We have a follow-up from Ethan. It's twofold. Last quarter, you indicated you'd be adding a new private label cat litter customer in the month. Will there continue to be new private label cat litter customers added in the upcoming months? And the second part, for the Litter for Good program, are there any plans to provide marketing material to veterinary practices that treat felines only?

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [34]

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I'll take the first part, and either Lisa or Leah, however, you guys can take the second part. Yes. We will continue to rollout both new customers on the private label Lightweight, Scoopable and new SKUs with existing customers. So it's moving so well that they want to expand their elbowroom and shelf presence with the Lightweight. So both are happening. And we're rolling out a major Canadian customer. I won't tell who, Ethan. I'll have to go up to Canada and find out who are you guys. When -- have we started shipping that yet? Maybe the next week. There is (inaudible) -- it was there in the PON or no, not yet? Okay. So we're waiting for the initial PO. But certainly by January 1, that ought to be out in Canada. And it's with a major Canadian retailer, who was the first one to take a real swing at the private label Lightweight that's seen how successful it's been in the United States. And we'll get Lisa Mak, our Vice President of Marketing, the microphone, in the consumer business.

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Lisa Mak, [35]

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Ethan, so to answer your question about reaching out to veterinarians, I think that's a great idea. We do have a database of that, that we actually can reach out to and spread the word about Litter for Good. And also we have some promotional materials that we can eventually have at their -- ship out to the veterinarian's offices so they can hand out to their consumers, because I think it's a great idea to reach them at the point of inception. And with an expert, like a veterinarian, making a recommendation of litter, I think that's a great place to start. So thanks.

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Daniel S. Jaffee, Oil-Dri Corporation of America - Chairman, CEO & President [36]

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Great. And Ethan, thank you. And if you appear in the audience, too, I'm going to be very, very impressed. Those are multimedia questions. You did the phone, you did the typing, and now I'm sort of looking for you. But I don't see you, so I will wish you a happy holiday season. And I wish all of our investors a happy holiday season. And I'll sort of close how we started. The real goal for Oil-Dri for long term, we are extremely excited about the long term. My family and I have increased our ownership, my sisters and I, in the company. And that's just a testament to our belief in the long-term future of this incredible mineral that we've been blessed with. And you can see, we have an incredible team who wakes up every morning trying to maximize our value out of that mineral. So thank you very much, and we will see you again next year.

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Operator [37]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.