Oil-Dri Corporation of America (NYSE:ODC) today announced net
income of $10,792,000 or $1.47 of earnings per diluted share for
fiscal 2017, compared to net income of $13,613,000 or $1.87 of
earnings per diluted share in the prior year. Net sales for the
twelve-months were $262,307,000 compared to net sales of
$262,313,000 in the same period of fiscal 2016.
Net income for the fourth quarter of fiscal 2017 was $1,322,000
or $0.18 of earnings per diluted share, compared to net income of
$5,261,000 or $0.72 per diluted share in the same period of the
prior year. Net sales for the fourth quarter were $65,776,000
compared to net sales of $64,916,000 in the same period of fiscal
2016.
A higher, but more traditionally normal tax rate drove a lower
net income in fiscal 2017 compared to fiscal 2016. The unusually
low tax rate in fiscal 2016 resulted from the full release of the
valuation allowance associated with the deferred tax asset for
domestic AMT credits. Our Cash and Investment balances grew by
approximately $3,900,000 over fiscal 2016. We now have
approximately $20,000,000 more in cash and investments than we have
in short and long term debt.
BUSINESS REVIEW
President and Chief Executive Officer, Daniel S. Jaffee said,
“The positives of fiscal 2017 performance might be missed when
performance is only compared with the prior year and fourth quarter
results, which benefited from a tax rate that was about 25% of our
historical average. Fiscal 2017 had the second highest pre-tax
income in our company’s history, but the return to our historical
average tax rate resulted in much of the overall per share earnings
decline.
We are confident in our strategy to concentrate on profitable
lightweight cat litter and value-added Business to Business
products. We have plans in place to respond to the approximate 8%
per ton increase in manufacturing costs that negatively impacted an
otherwise improving gross profit. Manufacturing increases were
driven by increased labor, employee benefits and depreciation
costs, many of which should be positively impacted by the
production efficiency initiatives that will be implemented in
2018.
The private label lightweight segment of the cat litter market
continued to grow during the year. Sales of our private label
lightweight litter increased significantly during fiscal 2017. This
increase is the result of additional distribution and increased
sales velocity as our retail partners line priced the lightweight
items with their heavy scoopable items.
Sales increased over the prior year for the Business to Business
Products Group. Our Amlan International business benefited from
increased sales by its subsidiary in China and increased sales of
Varium, our natural growth promotion product for poultry. Sales of
Pure-Flo bleaching earths in the EMEA region (Europe, the Middle
East and Africa) increased for the quarter and positively impacted
sales in 2017.”
SEGMENT REVIEW
BUSINESS TO BUSINESS Fourth
Quarter |
|
|
Three-Month Period |
|
|
|
|
May 1 - July 31 |
|
Change |
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
|
Net Sales |
|
$ |
25,526,000 |
|
|
$ |
25,525,000 |
|
|
N/M |
Segment Income |
|
$ |
8,310,000 |
|
|
$ |
9,415,000 |
|
|
-12 |
% |
|
|
|
|
|
|
|
Fiscal Year |
|
|
Twelve-Month Period |
|
|
|
|
August 1 - July 31 |
|
Change |
|
|
Fiscal 2017 |
|
Fiscal 2016 |
|
|
Net Sales |
|
$ |
100,419,000 |
|
|
$ |
96,444,000 |
|
|
4 |
% |
Segment Income |
|
$ |
33,343,000 |
|
|
$ |
33,464,000 |
|
|
N/M |
Year-Over-Year:
- Net sales of Amlan International animal health products were up
approximately 14% worldwide.
- Net sales of our fluids purification products increased
approximately 4%.
- Net sales of our agricultural carrier products were
approximately 2% higher.
- Selling, general and administrative expenses decreased
approximately 2% due to reduced costs for promotion and development
of our animal health products.
RETAIL AND WHOLESALE
Fourth Quarter |
|
|
Three-Month Period |
|
|
|
|
May 1 - July 31 |
|
Change |
|
|
Fiscal 2017
|
|
Fiscal 2016
|
|
|
Net Sales |
|
$ |
40,250,000 |
|
|
$ |
39,391,000 |
|
|
|
2 |
% |
Segment Income (Loss) |
|
$ |
779,000 |
|
|
$ |
(673,000 |
) |
|
|
N/M |
|
|
|
|
|
|
|
Fiscal Year |
|
|
Twelve-Month Period |
|
|
|
|
August 1 - July 31 |
|
Change |
|
|
Fiscal 2017 |
|
Fiscal 2016 |
|
|
Net Sales |
|
$ |
161,888,000 |
|
|
$ |
165,869,000 |
|
|
|
-2 |
% |
Segment Income |
|
$ |
6,775,000 |
|
|
$ |
5,009,000 |
|
|
|
35 |
% |
Year-Over-Year:
- Net sales of our branded and private label coarse non-clumping
litter were down approximately 7%. The decline was partially a
result of our decision not to pursue continued business with two
major low margin customers.
- Net sales decreased for heavyweight scoopable litters due to
competition from new competitive products.
- Selling, general and administrative expenses decreased
approximately 17%.
- Segment income increased due to a $4,300,000 reduction in
advertising costs and the benefit of higher selling prices.
FINANCIAL REVIEW(Fiscal
Year 2017 Ended July 31)
At July 31, 2017, cash, cash equivalents, and short-term
investments totaled $32,671,000, a 13% increase compared to
$28,813,000 one year ago.
Cash provided by operating activities was $26,949,000, which was
$1,778,000 higher than the $25,171,000 for the same period last
year. The change in deferred income taxes contributed to the
increase. Deferred income tax changes were driven by accruals
for postretirement benefits and trade promotions. Increased
accounts payable and lower inventory levels also improved cash from
operating activities. Higher accounts receivable and prepaid
expenses partially offset these cash increases.
Capital expenditures for the period totaled $14,763,000, which
was $1,991,000 more than depreciation and amortization of
$12,772,000. Capital expenditures included spending for the new
enterprise resource planning system implementation and related
infrastructure improvements, as well as equipment replacement at
our manufacturing facilities. By comparison, capital expenditures
totaled $10,684,000 one year ago.
On June 14, 2017, Oil-Dri’s Board of Directors declared
quarterly cash dividends of $0.23 per share of outstanding Common
Stock and $0.173 per share of outstanding Class B Stock. The
dividends were paid on September 1, 2017, to stockholders of record
at the close of business on August 18, 2017. The Company has paid
cash dividends continuously since 1974 and has increased dividends
annually for each of the last fourteen years. At the end of the
fourth quarter, the annualized dividend yield on the Company’s
Common Stock was 2.2%, based on the closing stock price on
July 31, 2017 of $41.36 per share and the latest quarterly
cash dividend of $0.23 per share.
LOOKING FORWARD
President and Chief Executive Officer, Daniel Jaffee continued,
“We are focused on long-term growth and supporting our most
profitable products. We have started fiscal 2018 with a strong cash
position and know that it will be an exciting year as we continue
investing in our future. We will be launching a new integrated
marketing campaign in support of our lightweight litters and expect
advertising expense in fiscal 2018 to be at similar levels as
fiscal 2017. Also in 2018, we will continue promoting our
value-added Business to Business products as they gain market
share, implement a new enterprise resource planning system and
improve overall production efficiencies.
In an effort to engage more dynamically with our investor
community, we have decided to focus our energies on quarterly
teleconferences. This news release is the last scheduled
earnings-focused news release. Our financial results will continue
to be available in our quarterly 10-Q and annual 10-K filings and
will be discussed on our investor teleconferences. Please sign-up
for notifications on our new website
(http://investors.oildri.com/email-notification) and receive
regular communications, including quarterly filings and
teleconference details. Join us for our next call on Wednesday,
October 11, 2017 from 10:00 am to 10:30 am, Central Time.
Teleconference details are now available on our website
(http://investors.oildri.com/events).”
FIVE-YEAR SUMMARY(Key
Metrics as of July 31)
|
|
|
Fiscal 2017 |
|
Fiscal 2016 |
|
Fiscal 2015 |
|
Fiscal 2014 |
|
Fiscal 2013 |
Cash, cash
equivalents and short-term investments |
|
$ |
32,671,000 |
|
|
$ |
28,813,000 |
|
|
$ |
22,328,000 |
|
|
$ |
18,999,000 |
|
|
$ |
42,494,000 |
|
Net cash
provided by operations |
|
$ |
26,949,000 |
|
|
$ |
25,171,000 |
|
|
$ |
26,976,000 |
|
|
$ |
16,296,000 |
|
|
$ |
23,366,000 |
|
Cash, cash
equivalents and short-term investments less notes payable
(1) |
|
$ |
20,427,000 |
|
|
$ |
13,515,000 |
|
|
$ |
3,574,000 |
|
|
$ |
(3,158,000 |
) |
|
$ |
16,903,000 |
|
Net
Income |
|
$ |
10,792,000 |
|
|
$ |
13,613,000 |
|
|
$ |
11,368,000 |
|
|
$ |
8,356,000 |
|
|
$ |
14,586,000 |
|
Net income per
diluted share |
|
$ |
1.47 |
|
|
$ |
1.87 |
|
|
$ |
1.59 |
|
|
$ |
1.17 |
|
|
$ |
2.07 |
|
Return on
average stockholders’ equity |
|
8.9 |
% |
|
12.0 |
% |
|
10.6 |
% |
|
8.1 |
% |
|
15.5 |
% |
Capital
expenditures |
|
$ |
14,763,000 |
|
|
$ |
10,684,000 |
|
|
$ |
15,859,000 |
|
|
$ |
18,566,000 |
|
|
$ |
9,795,000 |
|
Dividends
paid |
|
$ |
5,926,000 |
|
|
$ |
5,600,000 |
|
|
$ |
5,247,000 |
|
|
$ |
4,965,000 |
|
|
$ |
4,630,000 |
|
Dividends paid
per Common Stock share |
|
$ |
0.88 |
|
|
$ |
0.84 |
|
|
$ |
0.80 |
|
|
$ |
0.76 |
|
|
$ |
0.72 |
|
(1)
Prior year amounts have been retrospectively adjusted to
conform to the current year presentation of debt issuance costs
required by new guidance under Accounting Standards Codification
(“ASC”) 835, Simplifying the Presentation of Debt Issuance
Cost. |
While granular clay floor absorbents were Oil-Dri’s founding
product, it has since diversified its portfolio to include both
consumer and business to business product offerings that supply pet
care, animal health, fluids purification, agricultural ingredient,
sports field, industrial and automotive markets. In 2016,
Oil-Dri celebrated its seventy-fifth year of business and looks
forward to the next milestone.
The Company will host its fourth quarter earnings teleconference
on Wednesday, October 11, 2017 and its first
quarter fiscal 2018 earnings teleconference on Monday,
December 11, 2017. Both conferences will commence at 10:00
am, Central Time. Teleconference details will be communicated via
web alert approximately one week prior to the call. Oil-Dri will
host its Annual Meeting of Stockholders on Tuesday,
December 12, 2017 starting at 9:30 am, Central Time. The
meeting will be held at The Standard Club, 320 South Plymouth
Court, Chicago, Illinois 60604. The record date for voting
eligibility at the Annual Meeting is October 16, 2017.
“Oil-Dri”, “Pure-Flo” and “Amlan” are registered trademarks of
Oil-Dri Corporation of America. “Varium” is a trademark 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,” 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.
CONSOLIDATED STATEMENTS OF INCOME |
(in
thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
Fourth Quarter Ended July 31, |
|
2017 |
|
% of Sales |
|
2016 |
|
% of Sales |
Net
Sales |
$ |
65,776 |
|
|
100.0 |
% |
|
$ |
64,916 |
|
|
100.0 |
% |
Cost of
Sales |
(49,695 |
) |
|
(75.6 |
)% |
|
(46,050 |
) |
|
(70.9 |
)% |
Gross
Profit |
16,081 |
|
|
24.4 |
% |
|
18,866 |
|
|
29.1 |
% |
Selling,
General and Administrative Expenses
|
(13,230 |
) |
|
(20.1 |
)% |
|
(15,394 |
) |
|
(23.8 |
)% |
Operating
Income |
2,851 |
|
|
4.3 |
% |
|
3,472 |
|
|
5.3 |
% |
Interest
Expense |
(166 |
) |
|
(0.3 |
)% |
|
(267 |
) |
|
(0.4 |
)% |
Other Income
(Loss) |
169 |
|
|
0.3 |
% |
|
(224 |
) |
|
(0.3 |
)% |
Income Before
Income Taxes |
2,854 |
|
|
4.3 |
% |
|
2,981 |
|
|
4.6 |
% |
Income Tax
(Expense) Benefit |
(1,532 |
) |
|
(2.3 |
)% |
|
2,280 |
|
|
3.5 |
% |
Net
Income |
$ |
1,322 |
|
|
2.0 |
% |
|
$ |
5,261 |
|
|
8.1 |
% |
Net Income Per
Share: |
|
|
|
|
|
|
|
Basic Common |
$ |
0.20 |
|
|
|
|
$ |
0.78 |
|
|
|
Basic Class B Common |
$ |
0.15 |
|
|
|
|
$ |
0.59 |
|
|
|
Diluted Common |
$ |
0.18 |
|
|
|
|
$ |
0.72 |
|
|
|
Average Shares
Outstanding: |
|
|
|
|
|
|
|
Basic Common |
5,024 |
|
|
|
|
4,999 |
|
|
|
Basic Class B Common |
2,088 |
|
|
|
|
2,050 |
|
|
|
Diluted Common |
7,179 |
|
|
|
|
7,122 |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended July 31, |
|
2017 |
|
% of Sales |
|
2016 |
|
% of Sales |
Net
Sales |
$ |
262,307 |
|
|
100.0 |
% |
|
$ |
262,313 |
|
|
100.0 |
% |
Cost of
Sales |
(188,595 |
) |
|
(71.9 |
)% |
|
(185,164 |
) |
|
(70.6 |
)% |
Gross
Profit |
73,712 |
|
|
28.1 |
% |
|
77,149 |
|
|
29.4 |
% |
Selling,
General and Administrative Expenses |
(58,482 |
) |
|
(22.3 |
)% |
|
(61,736 |
) |
|
(23.5 |
)% |
Operating
Income |
15,230 |
|
|
5.8 |
% |
|
15,413 |
|
|
5.9 |
% |
Interest
Expense |
(888 |
) |
|
(0.3 |
)% |
|
(1,035 |
) |
|
(0.4 |
)% |
Other Income
(Loss) |
203 |
|
|
0.1 |
% |
|
(21 |
) |
|
— |
% |
Income Before
Income Taxes |
14,545 |
|
|
5.6 |
% |
|
14,357 |
|
|
5.5 |
% |
Income Tax
Expense |
(3,753 |
) |
|
(1.4 |
)% |
|
(744 |
) |
|
(0.3 |
)% |
Net
Income |
$ |
10,792 |
|
|
4.2 |
% |
|
$ |
13,613 |
|
|
5.2 |
% |
Net Income Per
Share: |
|
|
|
|
|
|
|
Basic Common |
$ |
1.60 |
|
|
|
|
$ |
2.04 |
|
|
|
Basic Class B Common |
$ |
1.20 |
|
|
|
|
$ |
1.53 |
|
|
|
Diluted Common |
$ |
1.47 |
|
|
|
|
$ |
1.87 |
|
|
|
Average Shares
Outstanding: |
|
|
|
|
|
|
|
Basic Common |
5,017 |
|
|
|
|
4,986 |
|
|
|
Basic Class B Common |
2,083 |
|
|
|
|
2,050 |
|
|
|
Diluted Common |
7,158 |
|
|
|
|
7,094 |
|
|
|
CONSOLIDATED BALANCE SHEETS |
(in
thousands, except per share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
As of July 31, |
|
|
2017 |
|
2016 |
Current
Assets |
|
|
|
|
Cash and Cash Equivalents |
|
$ |
9,095 |
|
|
$ |
18,629 |
|
Short-term Investments |
|
23,576 |
|
|
10,184 |
|
Accounts Receivable, Net |
|
32,750 |
|
|
30,386 |
|
Inventories |
|
22,615 |
|
|
23,251 |
|
Prepaid Expenses |
|
8,981 |
|
|
8,723 |
|
Total Current Assets |
|
97,017 |
|
|
91,173 |
|
Property, Plant
and Equipment, Net |
|
84,033 |
|
|
80,711 |
|
Other Assets
(1) |
|
31,525 |
|
|
32,931 |
|
Total
Assets |
|
$ |
212,575 |
|
|
$ |
204,815 |
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
Current Maturities of Notes Payable |
|
$ |
3,083 |
|
|
$ |
3,083 |
|
Accounts Payable |
|
9,594 |
|
|
6,635 |
|
Dividends Payable |
|
1,553 |
|
|
1,477 |
|
Accrued Expenses |
|
18,724 |
|
|
19,545 |
|
Total Current
Liabilities |
|
32,954 |
|
|
30,740 |
|
Noncurrent
Liabilities |
|
|
|
|
Notes Payable (1) |
|
9,161 |
|
|
12,215 |
|
Other Noncurrent Liabilities |
|
44,423 |
|
|
46,309 |
|
Total Noncurrent
Liabilities |
|
53,584 |
|
|
58,524 |
|
Stockholders'
Equity |
|
126,037 |
|
|
115,551 |
|
Total
Liabilities and Stockholders' Equity
|
|
$ |
212,575 |
|
|
$ |
204,815 |
|
|
|
|
|
|
Book Value Per
Share Outstanding |
|
$ |
17.75 |
|
|
$ |
16.42 |
|
|
|
|
|
|
Acquisitions
of: |
|
|
|
|
Property, Plant
and Equipment |
Fourth
Quarter |
$ |
4,345 |
|
|
$ |
3,632 |
|
|
Year To
Date |
$ |
14,763 |
|
|
$ |
10,684 |
|
Depreciation
and Amortization Charges |
Fourth
Quarter |
$ |
3,219 |
|
|
$ |
3,201 |
|
|
Year To
Date |
$ |
12,772 |
|
|
$ |
12,192 |
|
(1) Prior year amounts have been
retrospectively adjusted to conform to the current year
presentation of debt issuance costs required by new guidance under
Accounting Standards Codification (“ASC”) 835, Simplifying the
Presentation of Debt Issuance Cost.
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
For the Twelve Months Ended
|
|
July 31, |
|
2017 |
|
2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net
Income |
$ |
10,792 |
|
|
$ |
13,613 |
|
Adjustments to
reconcile net income to net cash |
|
|
|
provided by
operating activities, net of acquisition: |
|
|
|
Depreciation and Amortization |
12,772 |
|
|
12,192 |
|
(Increase) Decrease in Accounts Receivable |
(2,331 |
) |
|
942 |
|
Decrease (Increase) in Inventories |
666 |
|
|
(1,954 |
) |
Increase (Decrease) in Accounts Payable |
2,423 |
|
|
(931 |
) |
(Decrease) Increase in Accrued Expenses |
(845 |
) |
|
2,746 |
|
Increase in Pension and Postretirement
Benefits |
209 |
|
|
4,171 |
|
Other |
3,263 |
|
|
(5,608 |
) |
Total Adjustments |
16,157 |
|
|
11,558 |
|
Net Cash
Provided by Operating Activities |
26,949 |
|
|
25,171 |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital Expenditures |
(14,763 |
) |
|
(10,684 |
) |
Net Purchase of Investment Securities |
(13,345 |
) |
|
(7,984 |
) |
Other |
64 |
|
|
261 |
|
Net Cash Used
in Investing Activities |
(28,044 |
) |
|
(18,407 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Principal Payments on Long-Term Debt |
(3,083 |
) |
|
(3,484 |
) |
Dividends Paid |
(5,926 |
) |
|
(5,600 |
) |
Purchase of Treasury Stock |
(135 |
) |
|
(18 |
) |
Other |
594 |
|
|
660 |
|
Net Cash Used
in Financing Activities |
(8,550 |
) |
|
(8,442 |
) |
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents |
111 |
|
|
169 |
|
|
|
|
|
Net Decrease in
Cash and Cash Equivalents |
(9,534 |
) |
|
(1,509 |
) |
Cash and Cash
Equivalents, Beginning of Period |
18,629 |
|
|
20,138 |
|
Cash and Cash
Equivalents, End of Period |
$ |
9,095 |
|
|
$ |
18,629 |
|
Reagan B. CulbertsonInvestor
Relations ManagerOil-Dri Corporation of
Americareagan.culbertson@oildri.com(312) 706-3256
Oil Dri Corp of America (NYSE:ODC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Oil Dri Corp of America (NYSE:ODC)
Historical Stock Chart
From Apr 2023 to Apr 2024