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Oil-Dri Announces Third Quarter and First Nine-Months of Fiscal 2020 Results

CHICAGO, June 08, 2020 (GLOBE NEWSWIRE) -- Oil-Dri Corporation of America (ODC), producer and marketer of sorbent mineral products, today announced results for its third quarter and first nine-months of fiscal 2020.

  Three Months Ended Nine Months Ended
  Ended April 30 Ended April 30
  2020 2019 Change 2020 2019 Change
Consolidated Results            
Net Sales $76,256,000 $70,885,000 8% $218,383,000 $206,908,000 6%
Net Income Attributable to Oil-Dri $4,648,000 $5,619,000 (17)% $13,014,000 $8,812,000 48%
Earnings per Diluted Share $0.61 $0.74 (18)% $1.69 $1.17 44%
Business to Business            
Net Sales $26,683,000 $26,041,000 2% $77,632,000 $77,825,000 —%
Segment Operating Income $8,198,000 $7,454,000 10% $24,046,000 $21,758,000 11%
Retail and Wholesale            
Net Sales $49,573,000 $44,844,000 11% $140,751,000 $129,083,000 9%
Segment Operating Income $6,412,000 $4,161,000 54% $15,380,000 $6,823,000 125%

Daniel S. Jaffee, President and Chief Executive Officer, stated, “With the outbreak of the novel coronavirus (“COVID-19”), Oil-Dri’s top priority has been to protect the health and safety of our teammates. We have transitioned to a remote work environment, where appropriate, and implemented CDC recommended safety measures and sanitation procedures at our plants.  We have successfully managed our supply chain and manufacturing operations to ensure that our essential products reach our customers.  Furthermore, our company has been able to support several local hospitals, clinics and nursing homes with the donation of much needed N-95 respirator masks.  I am incredibly proud of our team and their efforts to respond to this crisis.  Oil-Dri will continue to adapt to this evolving situation and will work hard to keep our business running to meet the changing needs of our customers.  We feel very fortunate that, so far, our teammates are healthy and most of our products are deemed “essential.”  Our thoughts and prayers go out to the millions and probably billions of people negatively impacted, both physically and financially, by the global pandemic.

During the third quarter, all the Company’s manufacturing facilities remained open, and we continue to operate to keep pace with demand.  We achieved record quarterly consolidated net sales of $76.3 million, reflecting an 8% increase over the third quarter last year.  Cat litter, in particular, was in high demand during the months of March and April as consumers stocked up on our products in response to state mandated shelter-in-place orders due to COVID-19.  Our Business to Business Group’s diversified product portfolio proved to be resilient during this unprecedented time, as we experienced sales growth within our agricultural, animal health and nutrition, and co-packaging businesses.  Consolidated gross margins rose to 28% during the third quarter from 24% in the same period last year, due to lower freight and natural gas costs which more than offset temporary wage increases given to our front-line teammates.  These gains were further offset by an 8% increase in Selling, General and Administrative (“SG&A”) expenses over the prior year.  Higher incentive bonus accruals and other compensation and benefits costs accounted for the increase.  Third quarter consolidated operating income was $5.7 million compared to $2.3 million a year ago, demonstrating exceptional growth of 145%.

Our Business to Business Products Group’s third quarter sales reached $26.7 million.  Revenues increased for three of our four principal products within the group.  Sales of our agricultural products rose 11% in the quarter versus the prior year, primarily driven by higher demand of our traditional granules from a large customer.  Our animal health and nutrition products delivered topline growth of 25% in the third quarter compared to the same period last year, mainly due to increased sales of feed additives in foreign markets, including Latin America and Asia, excluding China.  After being closed for several months due to the outbreak of the novel coronavirus, our sales office in China is now open.  However, business operations were negatively impacted by COVID-19 during the third quarter as Chinese government restrictions delayed product shipments.  Furthermore, sales to pork producers within China remained soft as a result of the continued spread of the African swine fever within some areas of the country.  Revenues from fluid purification products declined 8% in the third quarter compared to the prior year.  Lower demand from edible oil producers due to worldwide COVID-19 closures of restaurants and schools impacted sales.  Local pricing competition in foreign markets caused by unfavorable exchange rates and the closure of a domestic biodiesel processing plant also contributed to the decline.  Our co-packaging coarse cat litter business realized sales gains of almost 10% in the quarter over the same period last year as consumers loaded up on pet care items due to the current pandemic.

Operating Income in the Business to Business Group was up 10% in the third quarter versus the prior year.  Higher sales combined with lower freight and natural gas costs offset a 17% increase in SG&A expenses over the prior year.  These increased SG&A costs reflect greater compensation related expenses and other costs to support the business.

The Retail and Wholesale Products Group experienced record quarterly sales of $49.6 million, representing an 11% gain over the third quarter last year.  This growth was driven by a 20% increase in domestic cat litter revenues primarily due to unprecedented demand caused by the COVID-19 pandemic.  Inventory loading by retailers resulted in double digit sales growth for both branded and private label cat litter products.  Increases were led by scoopable litter items, followed by gains in coarse litter and accessories.  Our e-commerce business experienced a triple digit percentage increase in sales for the quarter compared to last year, as more people shopped online while sheltering-in-place.  Revenue from our subsidiary in Canada also rose within the quarter as a result of higher cat litter sales.  Decreased demand of our industrial and sports products due to COVID-19 offset some of the sales gains within the Retail and Wholesale Products Group.  These markets were negatively impacted by customer closures and the national shutdown of sports fields. 

Operating Income for the Retail and Wholesale Products Group reached a record $6.4 million in the third quarter reflecting a 54% gain over the prior year.  Increased sales and lower freight and natural gas costs helped to offset higher SG&A costs. These elevated SG&A costs include employee compensation, advertising and other costs to support the business.  Due to a shift in program timing, our advertising spending increased in the third quarter when compared to the same period last year.  We expect adverting costs for the full fiscal year to be higher than last year.”

The Company will host its third quarter of fiscal 2020 earnings teleconference on Wednesday, June 10, 2020 at 10:00 a.m. Central Time. Participation details are available on our website’s events page.

While Oil-Dri’s founding product was granular clay floor absorbents, it has since greatly diversified its portfolio. The Company’s mission to “Create Value from Sorbent Minerals” is supported by its wide array of consumer and business to business product offerings. In 2016, Oil-Dri celebrated its seventy-fifth year of business and looks forward to the next milestone.

“Oil-Dri” and “Cat’s Pride” are registered trademarks of Oil-Dri Corporation of America.

Certain statements in this press release may contain forward-looking statements that are based on our current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs, and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in other press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls, and conference calls. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” or variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially including, but not limited to, the dependence of our future growth and financial performance on successful new product introductions, intense competition in our markets, volatility of our quarterly results, risks associated with acquisitions, our dependence on a limited number of customers for a large portion of our net sales and other risks, uncertainties and assumptions that are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, intended, expected, believed, estimated, projected or planned. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except to the extent required by law, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this press release, whether as a result of new information, future events, changes in assumptions, or otherwise.

Category: Earnings

Contact:
Leslie A. Garber
Manager of Investor Relations
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515

                             
CONSOLIDATED STATEMENTS OF INCOME        
(unaudited)
Three Months Ended April 30
(in thousands, except per share amounts)
2020   % of Sales   2019   % of Sales
Net Sales
$ 76,256     100.0 %   $ 70,885     100.0 %
Cost of Sales
(54,871 )   (72.0 )%   (54,051 )   (76.3 )%
Gross Profit
21,385     28.0 %   16,834     23.7 %
Selling, General and Administrative Expenses
(15,685 )   (20.6 )%   (14,507 )   (20.5 )%
Operating Income
5,700     7.5 %   2,327     3.3 %
Interest Expense
(108 )   (0.1 )%   (141 )   (0.2 )%
Other Income (1)
5     %   4,518     6.4 %
Income Before Income Taxes
5,597     7.3 %   6,704     9.5 %
Income Tax Expense
(947 )   (1.2 )%   (1,143 )   (1.6 )%
Net Income
4,650     6.1 %   5,561     7.8 %
Net Income (Loss) Attributable to Noncontrolling Interest
2     %   (58 )   (0.1 )%
Net Income Attributable to Oil-Dri
$ 4,648     6.1 %   $ 5,619     7.9 %
               
Net Income Per Share:  Basic Common $ 0.66         $ 0.81      
  Basic Class B Common $ 0.50         $ 0.61      
  Diluted Common $ 0.61         $ 0.74      
Avg Shares Outstanding:  Basic Common 5,126         5,126      
  Basic Class B Common 2,036         2,068      
  Diluted Common 7,288         7,253      
                 
    Nine Months Ended April 30
    2020   % of Sales   2019   % of Sales
Net Sales
$ 218,383     100.0 %   $ 206,908     100.0 %
Cost of Sales
(158,105 )   (72.4 )%   (158,660 )   (76.7 )%
Gross Profit
60,278     27.6 %   48,248     23.3 %
Selling, General and Administrative Expenses
(44,584 )   (20.4 )%   (42,091 )   (20.3 )%
Operating Income
15,694     7.2 %   6,157     3.0 %
Interest Expense
(314 )   (0.1 )%   (434 )   (0.2 )%
Other Income (1)
52     %   4,653     2.2 %
Income Before Income Taxes
15,432     7.1 %   10,376     5.0 %
Income Tax Expense
(2,573 )   (1.2 )%   (1,599 )   (0.8 )%
Net Income
12,859     5.9 %   8,777     4.2 %
Net Loss Attributable to Noncontrolling Interest
(155 )   (0.1 )%   (35 )   %
Net Income Attributable to Oil-Dri
$ 13,014     6.0 %   $ 8,812     4.2 %
               
Net Income Per Share: Basic Common $ 1.85         $ 1.27      
  Basic Class B Common $ 1.39         $ 0.95      
  Diluted Common $ 1.69         $ 1.17      
Avg Shares Outstanding:  Basic Common 5,152         5,108      
  Basic Class B Common 2,042         2,068      
  Diluted Common 7,310         7,245      

(1) See Note 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the period ending April 30, 2020 for further information about amounts included in this line item for the years presented.

                 
                 
CONSOLIDATED BALANCE SHEETS        
(in thousands, except per share amounts)        
(unaudited)        
         
    As of April 30
    2020   2019
Current Assets      
Cash and Cash Equivalents $ 20,548     $ 16,224  
Short-term Investments     730  
Accounts Receivable, Net 41,846     35,906  
Inventories 24,096     26,738  
Prepaid Expenses and Other 7,623     7,210  
Total Current Assets 94,113     86,808  
Property, Plant and Equipment, Net 90,133     87,086  
Other Noncurrent Assets (1) 31,735     24,584  
Total Assets $ 215,981     $ 198,478  
         
Current Liabilities      
Current Maturities of Notes Payable $ 3,074     $ 3,083  
Accounts Payable 10,524     8,608  
Dividends Payable 1,735     1,689  
Other Current Liabilities 25,614     18,121  
Total Current Liabilities 40,947     31,501  
Noncurrent Liabilities      
Notes Payable     3,045  
Other Noncurrent Liabilities (1) 28,379     26,417  
Total Noncurrent Liabilities 28,379     29,462  
Stockholders' Equity 146,655     137,515  
Total Liabilities and Stockholders' Equity $ 215,981     $ 198,478  
         
Book Value Per Share Outstanding $ 20.39     $ 19.16  
         
Acquisitions of:      
Property, Plant and Equipment Third Quarter $ 3,584     $ 3,963  
  Year To Date $ 10,870     $ 10,162  
Depreciation and Amortization Charges Third Quarter $ 3,470     $ 3,310  
  Year To Date $ 10,399     $ 9,849  

(1) Amounts as of April 30, 2020 include right-of-use operating lease assets and related liabilities required by adoption of Accounting Standards Codification 842, Leases.

       
       
CONSOLIDATED STATEMENTS OF CASH FLOWS      
(in thousands)      
(unaudited)      
  For the Nine Months Ended
  April 30
  2020   2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net Income $ 12,859     $ 8,777  
Adjustments to reconcile net income to net cash      
provided by operating activities:      
Depreciation and Amortization 10,399     9,849  
Increase in Accounts Receivable (7,296 )   (2,185 )
Increase in Inventories (72 )   (4,248 )
Increase in Accounts Payable 3,859     2,873  
Increase (Decrease) in Accrued Expenses 4,612     (1,762 )
(Decrease) Increase in Pension and Postretirement Benefits (5,482 )   1,287  
Other 3,390     773  
Total Adjustments 9,410     6,587  
Net Cash Provided by Operating Activities 22,269     15,364  
       
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital Expenditures (10,870 )   (10,162 )
Net Dispositions of Investment Securities     6,404  
Other 112      
Net Cash Used in Investing Activities (10,758 )   (3,758 )
       
CASH FLOWS FROM FINANCING ACTIVITIES      
Principal Payments on  Notes Payable (3,082 )   (3,083 )
Dividends Paid (5,292 )   (4,967 )
Purchase of Treasury Stock (4,620 )   (141 )
Other 142      
Net Cash Used in Financing Activities (12,852 )   (8,191 )
       
Effect of exchange rate changes on Cash and Cash Equivalents 27     52  
       
Net (Decrease) Increase in Cash and Cash Equivalents (1,314 )   3,467  
Cash and Cash Equivalents, Beginning of Period 21,862     12,757  
Cash and Cash Equivalents, End of Period $ 20,548     $ 16,224