Oil-Dri Corporation of America (NYSE: ODC), producer and marketer
of sorbent mineral products, today announced results for its fourth
quarter and fiscal year 2020.
|
Fourth Quarter |
Fiscal Year |
|
Ended July 31 |
Ended July 31 |
|
|
2020 |
|
2019 |
Change |
|
2020 |
|
2019 |
Change |
Consolidated Results |
|
|
|
|
|
|
Net Sales |
$64,844,000 |
$70,117,000 |
(8)% |
$283,227,000 |
$277,025,000 |
2% |
Net Income Attributable to Oil-Dri |
$5,886,000 |
$3,799,000 |
55% |
$18,900,000 |
$12,611,000 |
50% |
Earnings per Common Diluted Share |
$0.83 |
$0.54 |
54% |
$2.65 |
$1.80 |
47% |
Business to Business |
|
|
|
|
|
|
Net Sales |
$26,628,000 |
$28,052,000 |
(5)% |
$104,260,000 |
$105,877,000 |
(2)% |
Segment Operating Income |
$7,172,000 |
$9,630,000 |
(26)% |
$31,218,000 |
$31,388,000 |
(1)% |
Retail and Wholesale |
|
|
|
|
|
|
Net Sales |
$38,216,000 |
$42,065,000 |
(9)% |
$178,967,000 |
$171,148,000 |
5% |
Segment Operating Income |
$479,000 |
$1,860,000 |
(74)% |
$15,859,000 |
$8,683,000 |
83% |
Daniel S. Jaffee, President and Chief Executive Officer, stated,
“Fiscal year 2020 was one for the record books. We began the year
with strong sales and margin improvement. In mid-March, COVID-19
descended upon us and put our people and infrastructure to the
test. The value of our essential product portfolio, along with our
hard-working teammates, our solid sales and operations planning
(“S&OP”) process and enterprise resource planning (“ERP”)
system, and an undisrupted supply chain allowed our business to
thrive during these unprecedented times. In the midst of the
coronavirus pandemic, all of our plants remained fully operational,
and our results reflected our team’s successful efforts. In the
fourth quarter, the initial increase in cat litter demand due to
COVID-19 began to reverse as consumers unloaded their full
pantries. Revenues from other products also reflect the slow
recovery from the impact of the pandemic. However, we entered into
a confidential license agreement in exchange for a one-time lump
sum payment which helped the fourth quarter results. Overall,
we experienced record net sales, a significant increase in gross
profit, and record net income for the twelve-month period. We
continue to focus on the health and safety of our teammates and
meeting the needs of our customers. Although the coronavirus
pandemic continues, our momentum is strong. We look forward to a
successful and healthy fiscal 2021."
Full Year ResultsConsolidated
net sales for fiscal year 2020 reached an all-time record high of
$283 million, reflecting a 2% increase over the prior year. This
growth was primarily due to increased demand of our cat litter and
animal health products. Total annual cat litter sales within the
U.S. and Canada increased by 9% compared to the prior year. Our
co-packaging coarse cat litter business also saw significant gains
of 6% over last year. Full year sales of our animal health products
increased 12% versus the prior year, primarily in Latin America,
Mexico, Africa, and Asia, excluding China. Revenues from our
agricultural, fluid purification, industrial, and sports products
all suffered from the negative impact of COVID-19 on our
customers.
Annual consolidated gross profit increased 16% with margins
improving from 24% in the past year to 27% in fiscal 2020. These
gains were a result of lower freight, natural gas and warehouse
costs, offset by slightly higher packaging and non-fuel
manufacturing costs. The prior year also included significant
expenses related to the implementation of our ERP system and
hurricane Michael.
Further elevating our financial position was a one-time pre-tax
gain of $13 million in connection with an intellectual property
license agreement in the fourth quarter of fiscal year 2020.
Selling, general and administrative (“SG&A”) costs for the last
twelve-month period increased 16% over the prior year primarily due
to higher advertising spending, compensation, and benefits costs.
These higher expenses were partially offset by lower legal costs,
deferred compensation costs, and the curtailment gain related to
our supplemental executive retirement plan. Full year net income
attributed to Oil-Dri reached a record high of $19 million,
reflecting a 50% increase over the prior year.
With cash and cash equivalents of $41 million and approximately
$10 million of debt on our balance sheet, we are in a very strong
liquidity position.
Fourth Quarter
ResultsConsolidated net sales in the fourth
quarter declined by 8% compared to last year, while gross margins
remained relatively flat. Weaker demand for products within all
areas of our business, except for our animal health products,
resulted in this decrease. A one-time pre-tax gain of $13 million
resulting from an intellectual property license agreement helped
consolidated net income attributed to Oil-Dri reach a quarterly
record high of $6 million, reflecting a 55% increase over the prior
year.
Product Group ReviewOur Business to Business
Products (“B2B”) Group’s fourth quarter revenues decreased 5%
compared to last year. Sales of our agricultural
products declined by 10% versus the prior year as a result of
COVID-19 related demand delays from a large customer, as well as a
shift in timing of orders for our Verge product. Sales of our fluid
purification products also declined this quarter by 6% compared to
the fourth quarter in the prior year, mainly due to improved
quality of edible oil in North America, thus resulting in reduced
need of our bleaching clay. COVID-19 has made product testing at
edible oil plants difficult and also resulted in decreased demand
for our products used to process jet fuel as air travel has
subsided dramatically all over the world. Sales from co-packaging
coarse cat litter declined by 8% in the fourth quarter compared to
the prior year, which can be attributed to pantry deloading by
consumers. Animal health products saw significant sales gains of 8%
which partially offset the aforementioned losses. Increases were
primarily experienced in Mexico, due to higher customer demand and
the sale of animal health related equipment, and in Africa. Local
pricing competition in foreign markets caused by unfavorable
exchange rates continues to negatively impact several segments
within our B2B Group.
Operating income in the B2B Group declined 26% in the fourth
quarter versus the same period in the prior year. Lower sales,
unfavorable product mix and cost allocation shifts offset a 4%
reduction in SG&A expenses over the previous fourth
quarter.
Revenues within our Retail and Wholesale Group decreased by 9%
in the fourth quarter compared to the same period in fiscal year
2019. While sales of our cat litter items grew significantly in the
third quarter due to COVID-19 pantry loading, they leveled off in
the fourth quarter as a result of decreased demand from consumers
who had stocked up on our products. The combined net sales for the
third and fourth quarters reflect an increase of 7% over the same
quarters in the prior year, representing ongoing momentum. In the
fourth quarter, consumers demanded more private label scoopable
products, including lightweight litter, when compared to the same
quarter last year, while sales of private label coarse litter
declined. However, our e-commerce business experienced double-digit
sales growth for the fourth quarter compared to the same period
last year, as more people continued to shop online during the
pandemic. Revenues from cat litter within our Canadian subsidiary
demonstrated a 20% increase over the prior year. Our industrial and
sports products unfortunately were hit hard during the fourth
quarter, as these markets continue to be negatively impacted by
COVID-19. Decreased demand and the national shutdown of sports
fields continued to cause weak sales.
Operating income for the Retail and Wholesale Products Group was
$479,000 in the fourth quarter, reflecting a 74% decrease compared
to last year. This decline can be attributed to lower sales and
significantly higher advertising spending. A targeted digital media
campaign will continue into the next fiscal year, and we expect
advertising costs for the upcoming fiscal 2021 to be comparable to
fiscal 2020.
In the fourth quarter, Oil-Dri entered into an amended and
restated note purchase and private shelf agreement. The company
incurred $10 million of debt payable over a 10-year term as part of
a $75 million shelf agreement which provides Oil-Dri the ability to
request additional financing in the future to grow our business, if
needed.”
The Company will host its fourth quarter of fiscal 2020 earnings
teleconference on Wednesday, October 14, 2020 at 9:00 a.m. Central
Time. Participation details are available on our website’s events
page.
Oil-Dri Corporation of America is a leading
manufacturer and supplier of specialty sorbent products for the pet
care, animal health and nutrition, fluids purification,
agricultural ingredients, sports field, industrial and automotive
markets. Oil-Dri is vertically integrated which enables the company
to efficiently oversee every step of the process from research and
development to supply chain to marketing and sales. With over 75
years of experience, the company continues to fulfill its mission
to Create Value from Sorbent Minerals.
“Oil-Dri” and “Verge” 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: EarningsContact:Leslie A.
GarberManager of Investor RelationsOil-Dri Corporation of
AmericaInvestorRelations@oildri.com(312) 321-1515
CONSOLIDATED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
(in thousands,
except per share amounts) |
|
|
|
(unaudited) |
|
Fourth Quarter Ended July 31, |
|
|
|
|
2020 |
|
% of Sales |
|
2019 |
|
% of Sales |
|
Net Sales |
|
$ |
64,844 |
|
|
100.0 |
% |
|
$ |
70,117 |
|
|
100.0 |
% |
Cost of
Sales |
|
(49,299 |
) |
|
(76.0 |
)% |
|
(52,705 |
) |
|
(75.2 |
)% |
Gross
Profit |
|
15,545 |
|
|
24.0 |
% |
|
17,412 |
|
|
24.8 |
% |
Other Operating
Income (1) |
|
13,000 |
|
|
20.0 |
% |
|
— |
|
|
— |
% |
Selling,
General and Administrative Expenses
(2) |
(19,412 |
) |
|
(29.9 |
)% |
|
(13,157 |
) |
|
(18.8 |
)% |
Operating
Income |
|
9,133 |
|
|
14.1 |
% |
|
4,255 |
|
|
6.1 |
% |
Interest
Expense |
|
(204 |
) |
|
(0.3 |
)% |
|
(160 |
) |
|
(0.2 |
)% |
Other Income
(3) |
|
(1,341 |
) |
|
(2.1 |
)% |
|
77 |
|
|
0.1 |
% |
Income Before Income
Taxes |
|
7,588 |
|
|
11.7 |
% |
|
4,172 |
|
|
6.0 |
% |
Income Tax
Expense |
|
(1,707 |
) |
|
(2.6 |
)% |
|
(334 |
) |
|
(0.5 |
)% |
Net
Income |
|
5,881 |
|
|
9.1 |
% |
|
3,838 |
|
|
5.5 |
% |
Net (Loss)
Income Attributable to Noncontrolling Interest |
(5 |
) |
|
— |
% |
|
39 |
|
|
0.1 |
% |
Net Income
Attributable to Oil-Dri |
$ |
5,886 |
|
|
9.1 |
% |
|
$ |
3,799 |
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share: |
Basic
Common |
$ |
0.85 |
|
|
|
|
$ |
0.54 |
|
|
|
|
Basic Class B
Common |
$ |
0.63 |
|
|
|
|
$ |
0.41 |
|
|
|
|
Diluted
Common |
$ |
0.83 |
|
|
|
|
$ |
0.54 |
|
|
|
|
Diluted Class B
Common |
$ |
0.62 |
|
|
|
|
$ |
0.40 |
|
|
|
Avg Shares
Outstanding: |
Basic
Common |
5,139 |
|
|
|
|
5,126 |
|
|
|
|
Basic Class B
Common |
1,954 |
|
|
|
|
2,068 |
|
|
|
|
Diluted
Common |
5,255 |
|
|
|
|
5,191 |
|
|
|
|
Diluted Class B
Common |
1,966 |
|
|
|
|
2,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF INCOME |
|
|
|
|
|
|
|
(in thousands,
except per share amounts) |
|
|
|
(audited) |
|
Twelve Months Ended July 31, |
|
|
|
|
2020 |
|
% of Sales |
|
2019 |
|
% of Sales |
|
Net
Sales |
|
$ |
283,227 |
|
|
100.0 |
% |
|
$ |
277,025 |
|
|
100.0 |
% |
Cost of
Sales |
|
(207,404 |
) |
|
(73.2 |
)% |
|
(211,365 |
) |
|
(76.3 |
)% |
Gross
Profit |
|
75,823 |
|
|
26.8 |
% |
|
65,660 |
|
|
23.7 |
% |
Other Operating
Income (1) |
|
13,000 |
|
|
4.6 |
% |
|
— |
|
|
— |
% |
Selling,
General and Administrative Expenses
(2) |
(63,996 |
) |
|
(22.6 |
)% |
|
(55,248 |
) |
|
(19.9 |
)% |
Operating
Income |
|
24,827 |
|
|
8.8 |
% |
|
10,412 |
|
|
3.8 |
% |
Interest
Expense |
|
(518 |
) |
|
(0.2 |
)% |
|
(594 |
) |
|
(0.2 |
)% |
Other Income
(3) |
|
(1,289 |
) |
|
(0.5 |
)% |
|
4,730 |
|
|
1.7 |
% |
Income Before Income
Taxes |
|
23,020 |
|
|
8.1 |
% |
|
14,548 |
|
|
5.3 |
% |
Income Tax
Expense |
|
(4,280 |
) |
|
(1.5 |
)% |
|
(1,933 |
) |
|
(0.7 |
)% |
Net
Income |
|
18,740 |
|
|
6.6 |
% |
|
12,615 |
|
|
4.6 |
% |
Net (Loss)
Income Attributable to Noncontrolling Interest |
(160 |
) |
|
(0.1 |
)% |
|
4 |
|
|
— |
% |
Net Income
Attributable to Oil-Dri |
$ |
18,900 |
|
|
6.7 |
% |
|
$ |
12,611 |
|
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share: |
Basic
Common |
$ |
2.70 |
|
|
|
|
$ |
1.82 |
|
|
|
|
Basic Class B
Common |
$ |
2.02 |
|
|
|
|
$ |
1.36 |
|
|
|
|
Diluted
Common |
$ |
2.65 |
|
|
|
|
$ |
1.80 |
|
|
|
|
Diluted Class B
Common |
$ |
1.99 |
|
|
|
|
$ |
1.35 |
|
|
|
Avg Shares
Outstanding: |
Basic
Common |
5,149 |
|
|
|
|
5,112 |
|
|
|
|
Basic Class B
Common |
2,020 |
|
|
|
|
2,068 |
|
|
|
|
Diluted
Common |
5,246 |
|
|
|
|
5,165 |
|
|
|
|
Diluted Class B
Common |
2,046 |
|
|
|
|
2,086 |
|
|
|
(1) See Note 1 of the Notes to the Unaudited Condensed
Consolidated Financial Statements in our Annual Report on Form 10-K
for the period ending July 31, 2020 for further information
about amounts included in this line item for the years
presented.(2) See Note 9 of the Notes to the Unaudited Condensed
Consolidated Financial Statements in our Annual Report on Form 10-K
for the period ending July 31, 2020 for further information
about amounts included in this line item for the years
presented.(3) See Notes 2 and 8 of the Notes to the Unaudited
Condensed Consolidated Financial Statements in our Annual Report on
Form 10-K for the period ending July 31, 2020 for further
information about amounts included in this line item for the years
presented.
CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
(in thousands, except per
share amounts) |
|
|
|
|
(audited) |
|
|
|
|
|
|
|
|
|
|
|
As of July 31 |
|
|
2020 |
|
2019 |
Current
Assets |
|
|
|
|
Cash and Cash Equivalents |
|
$ |
40,890 |
|
|
$ |
21,862 |
|
Accounts Receivable, Net |
|
34,911 |
|
|
35,459 |
|
Inventories |
|
23,893 |
|
|
24,163 |
|
Prepaid Expenses and Other |
|
8,726 |
|
|
7,792 |
|
Total Current Assets |
|
108,420 |
|
|
89,276 |
|
Property, Plant and
Equipment, Net |
|
92,948 |
|
|
90,798 |
|
Other Noncurrent
Assets (1) |
|
34,514 |
|
|
25,153 |
|
Total
Assets |
|
$ |
235,882 |
|
|
$ |
205,227 |
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
Current Maturities of Notes Payable |
|
$ |
1,000 |
|
|
$ |
3,083 |
|
Accounts Payable |
|
12,529 |
|
|
8,092 |
|
Dividends Payable |
|
1,808 |
|
|
1,761 |
|
Other Current Liabilities |
|
30,870 |
|
|
19,670 |
|
Total Current Liabilities |
|
46,207 |
|
|
32,606 |
|
Noncurrent
Liabilities |
|
|
|
|
Notes Payable |
|
8,848 |
|
|
3,052 |
|
Other Noncurrent Liabilities
(1) |
|
32,863 |
|
|
34,023 |
|
Total Noncurrent Liabilities |
|
41,711 |
|
|
37,075 |
|
Stockholders'
Equity |
|
147,964 |
|
|
135,546 |
|
Total Liabilities and
Stockholders' Equity |
|
$ |
235,882 |
|
|
$ |
205,227 |
|
|
|
|
|
|
Book Value Per Share
Outstanding |
|
$ |
20.64 |
|
|
$ |
18.88 |
|
|
|
|
|
|
Acquisitions
of: |
|
|
|
|
Property, Plant and
Equipment |
Fourth
Quarter |
$ |
3,870 |
|
|
$ |
4,867 |
|
|
Year
To Date |
$ |
14,740 |
|
|
$ |
15,029 |
|
Depreciation and
Amortization Charges |
Fourth
Quarter |
$ |
3,524 |
|
|
$ |
3,481 |
|
|
Year
To Date |
$ |
13,923 |
|
|
$ |
13,330 |
|
(1) Amounts as of July 31, 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) |
|
|
|
(audited) |
|
|
|
|
For the Twelve Months Ended |
|
July 31 |
|
2020 |
|
2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net
Income |
$ |
18,740 |
|
|
$ |
12,615 |
|
Adjustments to
reconcile net income to net cash |
|
|
|
provided by operating
activities: |
|
|
|
Depreciation and Amortization |
13,923 |
|
|
13,330 |
|
Increase in Accounts Receivable |
(12 |
) |
|
(1,729 |
) |
Decrease (Increase) in Inventories |
213 |
|
|
(1,693 |
) |
Increase in Accounts Payable |
4,238 |
|
|
590 |
|
Increase (Decrease) in Accrued Expenses |
8,632 |
|
|
(589 |
) |
(Decrease) Increase in Pension and Postretirement
Benefits |
(5,684 |
) |
|
3,307 |
|
Other |
2,412 |
|
|
912 |
|
Total Adjustments |
23,722 |
|
|
14,128 |
|
Net Cash Provided by
Operating Activities |
42,462 |
|
|
26,743 |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital Expenditures |
(14,740 |
) |
|
(15,029 |
) |
Net Dispositions of Investment Securities |
— |
|
|
7,134 |
|
Other |
63 |
|
|
7 |
|
Net Cash Used in
Investing Activities |
(14,677 |
) |
|
(7,888 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Proceeds from Issuance of Notes Payable |
10,000 |
|
|
— |
|
Principal Payments on Notes Payable |
(6,321 |
) |
|
(3,083 |
) |
Dividends Paid |
(7,030 |
) |
|
(6,656 |
) |
Purchase of Treasury Stock |
(5,541 |
) |
|
(147 |
) |
Other |
142 |
|
|
— |
|
Net Cash Used in
Financing Activities |
(8,750 |
) |
|
(9,886 |
) |
|
|
|
|
Effect of exchange
rate changes on Cash and Cash Equivalents |
(7 |
) |
|
136 |
|
|
|
|
|
Net Increase in Cash
and Cash Equivalents |
19,028 |
|
|
9,105 |
|
Cash and Cash
Equivalents, Beginning of Period |
21,862 |
|
|
12,757 |
|
Cash and Cash
Equivalents, End of Period |
$ |
40,890 |
|
|
$ |
21,862 |
|
Oil Dri Corp of America (NYSE:ODC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Oil Dri Corp of America (NYSE:ODC)
Historical Stock Chart
From Sep 2023 to Sep 2024