Oil-Dri Corporation of America (NYSE: ODC), producer and marketer
of sorbent mineral products, today announced results for its first
quarter of fiscal year 2021.
|
First
Quarter |
|
Ended October
31 |
|
2020 |
2019 |
Change |
Consolidated Results |
|
|
|
Net
Sales |
$76,097,000 |
$71,122,000 |
7% |
Net Income Attributable
to Oil-Dri |
$3,984,000 |
$3,536,000 |
13% |
Earnings per Common
Diluted Share |
$0.56 |
$0.50 |
12% |
Business to Business |
|
|
|
Net
Sales |
$27,522,000 |
$26,478,000 |
4% |
Segment Operating
Income |
$8,196,000 |
$8,296,000 |
(1)% |
Retail and Wholesale |
|
|
|
Net
Sales |
$48,575,000 |
$44,644,000 |
9% |
Segment Operating Income |
$4,478,000 |
$3,360,000 |
33% |
Daniel S. Jaffee, President and Chief Executive Officer, stated,
“Coming off of a year with record sales and net income, I am
extremely pleased that our momentum has continued into the first
quarter of fiscal 2021. These solid results demonstrate how we are
succeeding in our mission to Create Value from Sorbent Minerals as
we align with a diversified customer base spanning many different
industries and countries. Revenues from cat litter remain strong
both domestically and internationally, as more consumers embrace
the value of our lightweight litter. We achieved sales gains within
our Business to Business (“B2B”) Products Group while setting
quarterly net sales records for both our agricultural products and
our co-packaged coarse cat litter business. However, COVID-19 and
other market challenges caused headwinds for our animal health,
industrial, sports, and jet fuel processing businesses.
Fortunately, our diversified product portfolio generated
significant consolidated revenues, operating income and net income,
all of which increased in the first quarter over the prior
year.
While I am pleased with our strong performance this quarter, I
am disappointed with our lack of progress in Amlan International,
our animal health business. As a result, I recently assumed the
responsibilities of President of Amlan International in addition to
my role as CEO. I had similar dual responsibilities during the
launch of our revolutionary lightweight cat litters and then
successfully handed off those responsibilities when the timing was
right. I plan to do the same with Amlan. My goal is to position
Amlan for rapid growth and then appoint a new leader as president
at the opportune time for the growth of the
business.
As we continue to persevere through the pandemic, we remain
committed to ensuring the health and safety of our teammates and
servicing our customers with the highest level of standards. We
continue to focus on our growth strategies and are well positioned
for the future.”
Consolidated ResultsConsolidated net sales for
the first quarter of fiscal 2021 reached $76 million, reflecting a
7% increase over the prior year. This growth was primarily driven
by increased demand of our cat litter, agricultural, and fluids
purification products. Consolidated gross profit rose 2%, while
margins declined slightly to 27% in the first quarter of fiscal
2021 from 28% in the same period last year. This margin reduction
can be attributed to higher freight, packaging and, to some extent,
material and non-fuel manufacturing costs. Transportation costs per
manufactured ton were higher in the first quarter due to a national
driver shortage and tight trucking capacity, in part caused by the
return of non-essential businesses and the pre-holiday inventory
build driven by e-commerce and brick and mortar retailers.
Packaging costs per manufactured ton increased due to product mix.
Lower natural gas costs helped to offset these increases. Total
selling, general and administrative (“SG&A”) expenses for the
first quarter were $687,000 lower than the prior year, a 4%
decrease, resulting from reduced advertising and travel expenses.
Consolidated operating income was $5.2 million, a 26% increase over
the prior year. During the first three months of fiscal 2021,
Oil-Dri experienced unfavorable exchange rate losses, higher
interest expenses and a 2% tax rate increase versus a year ago. Net
income attributed to Oil-Dri reached $4.0 million in the first
quarter which represents a 13% increase over the prior year.
Our balance sheet remains strong, with cash and cash equivalents
of $31 million and approximately $10 million of debt.
Products Group
ReviewThe Business to Business Products Group’s first
quarter revenues increased 4% compared to the prior year. The
majority of this gain was due to a 22% increase in sales of our
agricultural products, primarily resulting from a significant
uptick in demand from a large customer. In addition, there was an
expected shift in timing of sales to a key customer from the fourth
quarter of fiscal 2020 to the first quarter of fiscal 2021. Within
the agricultural products business, we experienced revenue growth
from many of our existing customers and gained new distribution as
well. The B2B Products Group also benefitted from a 3%
increase in sales within the fluids purification business. Sales of
our bleaching clay products were strong in Europe, Africa and Latin
America, while softer revenues were experienced in North America
due to crop conditions. Since COVID-19 has caused a reduction in
air travel, sales of our Ultra-Clear products used for jet fuel
processing continued to suffer. During the first three months of
the fiscal year, our animal health business faced several
challenging conditions resulting in a 17% sales decrease from the
prior year. COVID-19 and African Swine Fever continue to present
obstacles in many feed additive markets in which we sell. Changes
in distributors and unfavorable exchange rates resulted in revenue
declines in Latin America. Sales within Africa decreased due to a
shift in timing of orders, while higher revenues within China,
Mexico and Indonesia partially offset the losses in other regions
of the world. Our co-packaging coarse cat litter business delivered
strong top line growth of 5% in the first quarter over the same
period last year which helped raise overall B2B sales. This
increase reflects the upward trend of pet ownership and the early
build of inventory in anticipation of potential pantry loading
related to COVID-19.
Operating income in the B2B Products Group was $8.2 million in
the first quarter, a 1% decrease over the prior year. Higher sales
and lower SG&A expenses were offset by increases in freight and
packaging costs. Decreased SG&A costs were mainly due to lower
travel expenses related to COVID-19.
Our Retail & Wholesale Products Group’s first quarter
revenues reached $48.6 million, representing a 9% gain over the
same period last year. Our total domestic cat litter sales
increased by 12% which exceeded category growth of 2.1% for the
12-week period ended October 31, 2020, according to third-party
market research data for retail sales1. Oil-Dri’s growth was due to
strong demand for our private label products, both lightweight and
heavyweight, and branded scoopable items. Sales gains were achieved
through customer base expansion, new item launches, and increased
demand from existing customers. In-store promotions and the impact
of COVID-19 on increased pet adoptions also helped to boost sales.
We experienced continued momentum from e-commerce retailers as
demonstrated by a double-digit sales increase in the first quarter
as compared to the same period last year. Revenues of cat litter
from our Canadian subsidiary also remained elevated with gains of
17% in the first quarter versus a year ago. Unfortunately, COVID-19
continues to negatively impact sales of our industrial and sports
products, as customers have reduced their demand and many sports
fields remain closed.
Operating income for the Retail and Wholesale Products Group was
$4.5 million in the first quarter, reflecting a 33% increase over
the prior year. This increase can be attributed to higher revenues,
lower natural gas costs and reduced SG&A expenses. Advertising
spending declined in the first quarter compared to the prior year,
as a result of a shift in the timing of our programming. We
continue to implement our highly targeted digital media strategy
and expect total advertising costs for the full 2021 fiscal year to
be comparable to fiscal 2020 spending levels.
Due to the uncertainty and concerns relating to the COVID-19
pandemic, Oil-Dri will host its first quarter fiscal 2021 earnings
discussion and its Annual Meeting of Stockholders virtually via a
live webcast on Tuesday, December 8, 2020 at 9:30 a.m. Central
Time. Participation details are available on the company’s
website’s Events page.
1Based in part on data reported by Nielsen through its Scantrack
Service for the Cat Litter Category in the 12-week period ended
October 31, 2020, for the U.S. xAOC+Pet Supers market. Copyright ©
2020 Nielsen.
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”, “Amlan”, and “Ultra-Clear” 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. GarberManager of Investor
RelationsOil-Dri Corporation of
AmericaInvestorRelations@oildri.com(312) 321-1515
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF
INCOME |
(in thousands,
except per share amounts) |
(unaudited) |
First Quarter Ended October
31 |
|
|
2020 |
|
% of Sales |
|
2019 |
|
% of Sales |
Net Sales |
$ |
76,097 |
|
|
100.0 |
% |
|
$ |
71,122 |
|
|
100.0 |
% |
Cost of
Sales |
(55,793 |
) |
|
(73.3 |
)% |
|
(51,187 |
) |
|
(72.0 |
)% |
Gross
Profit |
20,304 |
|
|
26.7 |
% |
|
19,935 |
|
|
28.0 |
% |
Selling,
General and Administrative Expenses |
(15,127 |
) |
|
(19.9 |
)% |
|
(15,814 |
) |
|
(22.2 |
)% |
Operating
Income |
5,177 |
|
|
6.8 |
% |
|
4,121 |
|
|
5.8 |
% |
Interest
Expense |
(192 |
) |
|
(0.3 |
)% |
|
(103 |
) |
|
(0.1 |
)% |
Other
(Expense) Income |
(230 |
) |
|
(0.3 |
)% |
|
59 |
|
|
0.1 |
% |
Income
Before Income Taxes |
4,755 |
|
|
6.2 |
% |
|
4,077 |
|
|
5.7 |
% |
Income Tax
Expense |
(806 |
) |
|
(1.1 |
)% |
|
(617 |
) |
|
(0.9 |
)% |
Net
Income |
3,949 |
|
|
5.2 |
% |
|
3,460 |
|
|
4.8 |
% |
Net Loss
Attributable to Noncontrolling Interest |
(35 |
) |
|
— |
% |
|
(76 |
) |
|
(0.1 |
)% |
Net Income
Attributable to Oil-Dri |
$ |
3,984 |
|
|
5.2 |
% |
|
$ |
3,536 |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
Net Income Per Share
(1): |
Basic
Common |
$ |
0.57 |
|
|
|
|
$ |
0.51 |
|
|
|
|
Basic Class B Common |
$ |
0.43 |
|
|
|
|
$ |
0.38 |
|
|
|
|
Diluted
Common |
$ |
0.56 |
|
|
|
|
$ |
0.50 |
|
|
|
|
Diluted Class B
Common |
$ |
0.42 |
|
|
|
|
$ |
0.37 |
|
|
|
Avg Shares
Outstanding: |
Basic
Common |
5,149 |
|
|
|
|
5,149 |
|
|
|
|
Basic Class B
Common |
1,926 |
|
|
|
|
2,050 |
|
|
|
|
Diluted
Common |
5,276 |
|
|
|
|
5,229 |
|
|
|
|
Diluted Class B
Common |
1,978 |
|
|
|
|
2,077 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Our Form 10-Q for three months ended October 31, 2020 and
2019 reflects a change in presentation for net income per share. We
have historically disclosed net income per share for our diluted
Common and Class B Common shares in total. As we have two classes
of common shares, we have elected to change our net income per
share presentation to reflect net income per share for both of our
classes of common shares - our diluted Common shares and our
diluted Class B Common shares.
|
|
|
|
|
CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
(in thousands, except per
share amounts) |
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
As of October 31 |
|
|
2020 |
|
2019 |
Current
Assets |
|
|
|
|
Cash and Cash Equivalents |
|
$ |
31,291 |
|
|
$ |
19,260 |
|
Accounts Receivable, Net |
|
39,212 |
|
|
36,269 |
|
Inventories |
|
23,493 |
|
|
23,803 |
|
Prepaid Expenses and Other |
|
8,289 |
|
|
6,213 |
|
Total Current Assets |
|
102,285 |
|
|
85,545 |
|
Property, Plant and
Equipment, Net |
|
91,038 |
|
|
90,206 |
|
Other Noncurrent
Assets |
|
34,048 |
|
|
33,991 |
|
Total
Assets |
|
$ |
227,371 |
|
|
$ |
209,742 |
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
Current Maturities of Notes Payable |
|
$ |
1,000 |
|
|
$ |
3,059 |
|
Accounts Payable |
|
9,745 |
|
|
7,942 |
|
Dividends Payable |
|
1,807 |
|
|
1,766 |
|
Other Current Liabilities |
|
21,918 |
|
|
17,235 |
|
Total Current Liabilities |
|
34,470 |
|
|
30,002 |
|
Noncurrent
Liabilities |
|
|
|
|
Notes Payable |
|
8,857 |
|
|
— |
|
Other Noncurrent Liabilities |
|
33,728 |
|
|
41,804 |
|
Total Noncurrent
Liabilities |
|
42,585 |
|
|
41,804 |
|
Stockholders'
Equity |
|
150,316 |
|
|
137,936 |
|
Total Liabilities and
Stockholders' Equity |
|
$ |
227,371 |
|
|
$ |
209,742 |
|
|
|
|
|
|
Book Value Per Share
Outstanding |
|
$ |
21.25 |
|
|
$ |
19.16 |
|
|
|
|
|
|
Acquisitions
of: |
|
|
|
|
Property, Plant and
Equipment |
First
Quarter |
$ |
3,568 |
|
|
$ |
3,900 |
|
|
Year To
Date |
$ |
3,568 |
|
|
$ |
3,900 |
|
Depreciation and
Amortization Charges |
First
Quarter |
$ |
3,504 |
|
|
$ |
3,469 |
|
|
Year To
Date |
$ |
3,504 |
|
|
$ |
3,469 |
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
|
|
|
(in thousands) |
|
|
|
(unaudited) |
|
|
|
|
For the Three Months Ended |
|
October 31 |
|
2020 |
|
2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net Income |
$ |
3,949 |
|
|
$ |
3,460 |
|
Adjustments to
reconcile net income to net cash |
|
|
|
provided by operating
activities: |
|
|
|
Depreciation and Amortization |
3,504 |
|
|
3,469 |
|
Increase in Accounts Receivable |
(4,196 |
) |
|
(980 |
) |
Decrease in Inventories |
462 |
|
|
371 |
|
(Decrease) Increase in Accounts Payable |
(1,435 |
) |
|
835 |
|
Decrease in Accrued Expenses |
(8,106 |
) |
|
(3,812 |
) |
Increase in Pension and Postretirement
Benefits |
173 |
|
|
621 |
|
Other |
2,214 |
|
|
2,728 |
|
Total Adjustments |
(7,384 |
) |
|
3,232 |
|
Net Cash (Used in)
Provided by Operating Activities |
(3,435 |
) |
|
6,692 |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital Expenditures |
(3,568 |
) |
|
(3,900 |
) |
Other |
3 |
|
|
— |
|
Net Cash Used in
Investing Activities |
(3,565 |
) |
|
(3,900 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Principal Payments on Notes Payable |
— |
|
|
(3,083 |
) |
Dividends Paid |
(1,803 |
) |
|
(1,761 |
) |
Purchase of Treasury Stock |
(978 |
) |
|
(500 |
) |
Net Cash Used in
Financing Activities |
(2,781 |
) |
|
(5,344 |
) |
|
|
|
|
Effect of exchange
rate changes on Cash and Cash Equivalents |
182 |
|
|
(50 |
) |
|
|
|
|
Net
Decrease in Cash and Cash
Equivalents |
(9,599 |
) |
|
(2,602 |
) |
Cash and Cash
Equivalents, Beginning of Period |
40,890 |
|
|
21,862 |
|
Cash and Cash
Equivalents, End of Period |
$ |
31,291 |
|
|
$ |
19,260 |
|
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