Oil-Dri Announces Fourth Quarter and Fiscal 2018 Results

CHICAGO, Oct. 12, 2018 — Oil-Dri Corporation of America (NYSE: ODC), producer and marketer of sorbent mineral products, announced today its fourth quarter and fiscal year 2018 earnings.

 Fourth QuarterFiscal Year
 Ended July 31, 2018Ended July 31, 2018
       
 F18F17ChangeF18F17Change
Consolidated Results      
Net Sales$65,613,000$65,776,000—%$266,000,000$262,307,0001%
Net Income Attributable to Oil-Dri$2,701,000$1,322,000104%$8,240,000$10,792,000(24)%
Earnings per Diluted Share$0.36$0.18100%$1.11$1.47(24)%
Business to Business      
Net Sales$25,817,000$25,526,0001%$105,043,000$100,419,0005%
Segment Operating Income$8,929,000$8,310,0007%$35,120,000$33,343,0005%
Retail and Wholesale      
Net Sales$39,796,000$40,250,000(1)%$160,957,000$161,888,000(1)%
Segment Operating Income$(35,000)$779,000N/A$6,975,000$6,775,0003%

Daniel S. Jaffee stated, “Every fiscal year we are finding new and better ways to deliver on our mission to Create Value From Sorbent Minerals. In fiscal 2018, our consolidated results were negatively impacted by a one-time tax expense increase of approximately $0.54 per diluted share and incremental spending for our new enterprise resource planning (ERP) system. However, we are confident this short-term system investment will yield positive long-term results.

We continued to experience exciting sales growth in value-added areas of our business, such as our animal health products, lightweight cat litter, agricultural products and our fluids purification products. However, consolidated gross profit decreased due primarily to higher freight, packaging and non-fuel manufacturing costs.

Total cash, cash equivalents and short-term investments decreased $12,790,000 from fiscal 2017. The attached financial statements reflect the results of both routine operating activities and significant non-recurring investments in the business, including an incremental $11,500,000 pension contribution and capital expense spending for the implementation of the ERP system.

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The investment in “going live” August 1st on our new system is anticipated to have a negative impact on first quarter cash flow, sales and profitability. We expect that the new system, when fully implemented, will enable us to support the future growth of our business. I am very proud of the way our team has stepped-up to minimize the impact to our customers.

Sales increased for all of our Business to Business product groups in the year. Growth originated from Agsorb agricultural chemical carrier granules, Ultra-Clear clarification media for petroleum oil and Amlan livestock intestinal-health products, including Varium and Calibrin-Z.

Overall cat litter sales decreased 1% compared to fiscal 2017. However, sales of private label lightweight scoopable litter increased 71% to $8.4 million for the fiscal year. This increase was driven by new distribution and increased sales to current customers, including e-commerce.

In fiscal 2019, we are excited to have a major TV brand integration in connection with our Litter for Good campaign that will drive awareness and purchases of our Cat’s Pride Fresh & Light products. We expect our overall advertising expense in 2019 to be flat with fiscal 2018.

For more details on our financial results, please review the Form 10-K that was filed today and join us for our next earnings teleconference on Monday, October 15th. Call details are available on our website’s ‘Events’ page.”

FIVE-YEAR SUMMARY (Key Metrics as of July 31)

  Fiscal 2018 Fiscal 2017 Fiscal 2016 Fiscal 2015 Fiscal 2014
Cash, cash equivalents and short-term investments $19,881,000  $32,671,000  $28,813,000  $22,328,000  $18,999,000 
Net cash provided by operations $10,612,000  $26,949,000  $25,171,000  $26,976,000  $16,296,000 
Cash, cash equivalents and short-term investments less notes payable $10,691,000  $20,427,000  $13,515,000  $3,574,000  $(3,158,000)
Net Income attributable to Oil-Dri $8,240,000  $10,792,000  $13,613,000  $11,368,000  $8,356,000 
Net income per diluted share $1.11  $1.47  $1.87  $1.59  $1.17 
Return on average stockholders’ equity 6.4% 8.9% 12.0% 10.6% 8.1%
Capital expenditures $15,074,000  $14,763,000  $10,684,000  $15,859,000  $18,566,000 
Dividends paid $6,230,000  $5,926,000  $5,600,000  $5,247,000  $4,965,000 
Dividends paid per Common Stock share $0.92  $0.88  $0.84  $0.80  $0.76 

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.

The Company will host its fourth quarter fiscal 2018 earnings teleconference on Monday, October 15, 2018 at 10:00am Central Time, and its first quarter fiscal 2019 earnings teleconference on Monday, December 10, 2018 at 10:00 am Central Time. All teleconference dial-in details will be communicated via web alert approximately one week prior to each call.

Oil-Dri will host its Annual Meeting of Stockholders on Tuesday, December 11, 2018 at 9:30 am Central Time. The meeting will be held at The University of Chicago Booth School of Business, Gleacher Center, 450 Cityfront Plaza Drive, Chicago, IL 60611. The record date for voting eligibility at the Annual Meeting is October 15, 2018.

“Oil-Dri”, “Agsorb”, “Amlan”, “Calibrin”, “Cat’s Pride”, “Ultra-Clear”, and “Varium” are registered trademarks of Oil-Dri Corporation of America. “Litter for Good” 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,” 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.

CONSOLIDATED STATEMENTS OF INCOME    
(quarter unaudited)(in thousands, except per share amounts)
 Fourth Quarter Ended July 31,
 2018 % of Sales 2017 % of Sales
Net Sales$65,613  100.0% $65,776  100.0%
Cost of Sales(49,963) (76.1)% (49,695) (75.6)%
Gross Profit15,650  23.9% 16,081  24.4%
Selling, General and Administrative Expenses(12,767) (19.5)% (13,230) (20.1)%
Operating Income2,883  4.4% 2,851  4.3%
Interest Expense(127) (0.2)% (166) (0.3)%
Other (Loss) Income(95) (0.1)% 169  0.3%
Income Before Income Taxes2,661  4.1% 2,854  4.3%
Income Tax Benefit (Expense)22  % (1,532) (2.3)%
Net Income2,683  4.1% 1,322  2.0%
Net Loss Attributable to Noncontrolling Interests(18)      
Net Income Attributable to Oil-Dri$2,701  4.1% $1,322  2.0%
Net Income Per Share:       
Basic Common$0.40    $0.20   
Basic Class B Common$0.30    $0.15   
Diluted Common$0.36    $0.18   
Average Shares Outstanding:       
Basic Common5,049    5,024   
Basic Class B Common2,091    2,088   
Diluted Common7,239    7,179   
 Twelve Months Ended July 31,
 2018 % of Sales 2017 % of Sales
Net Sales$266,000  100.0% $262,307  100.0%
Cost of Sales(193,998) (72.9)% (188,595) (71.9)%
Gross Profit72,002  27.1% 73,712  28.1%
Selling, General and Administrative Expenses(57,332) (21.6)% (58,482) (22.3)%
Operating Income14,670  5.5% 15,230  5.8%
Interest Expense(676) (0.3)% (888) (0.3)%
Other Income872  0.3% 203  0.1%
Income Before Income Taxes14,866  5.6% 14,545  5.6%
Income Tax Expense(6,644) (2.5)% (3,753) (1.4)%
Net Income8,222  3.1% 10,792  4.2%
Net Loss Attributable to Noncontrolling Interests(18) %   %
Net Income Attributable to Oil-Dri$8,240  3.1% $10,792  4.2%
Net Income Per Share:       
Basic Common$1.22    $1.60   
Basic Class B Common$0.91    $1.20   
Diluted Common$1.11    $1.47   
Average Shares Outstanding:       
Basic Common5,036    5,017   
Basic Class B Common2,097    2,083   
Diluted Common7,222    7,158   

CONSOLIDATED BALANCE SHEETS    
(in thousands, except per share amounts)    
(unaudited)    
     
  As of July 31,
  2018 2017
Current Assets    
Cash and Cash Equivalents $12,757  $9,095 
Short-term Investments 7,124  23,576 
Accounts Receivable, Net 33,602  32,750 
Inventories 22,521  22,615 
Prepaid Expenses (1) 7,010  6,194 
Total Current Assets 83,014  94,230 
Property, Plant and Equipment, Net 86,706  84,033 
Other Assets (1) 24,962  34,312 
Total Assets $194,682  $212,575 
     
Current Liabilities    
Current Maturities of Notes Payable $3,083  $3,083 
Accounts Payable 6,543  9,594 
Dividends Payable 1,627  1,553 
Accrued Expenses 19,696  18,724 
Total Current Liabilities 30,949  32,954 
Noncurrent Liabilities    
Notes Payable 6,107  9,161 
Other Noncurrent Liabilities 25,741  44,423 
Total Noncurrent Liabilities 31,848  53,584 
Stockholders’ Equity 131,885  126,037 
Total Liabilities and Stockholders’ Equity $194,682  $212,575 
     
Book Value Per Share Outstanding $18.49  $17.75 
     
Acquisitions of:    
Property, Plant and EquipmentFourth Quarter$4,541  $4,345 
 Year To Date$15,074  $14,763 
Depreciation and Amortization ChargesFourth Quarter$3,179  $3,219 
 Year To Date$12,756  $12,772 

(1) Prior year amounts have been retrospectively adjusted to conform to the current year presentation of current deferred income taxes required by new guidance under Accounting Standards Codification (ASC) 740, Balance Sheet Classification of Deferred Taxes.

CONSOLIDATED STATEMENTS OF CASH FLOWS   
(in thousands)   
(unaudited)   
    
 For the Twelve Months Ended
 July 31,
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES   
Net Income$8,222  $10,792 
Adjustments to reconcile net income to net cash   
provided by operating activities, net of acquisition:   
Depreciation and Amortization12,756  12,772 
  (Increase) in Accounts Receivable(522) (2,331)
  Decrease in Inventories225  666 
  (Decrease) Increase in Accounts Payable(2,436) 2,423 
  Increase (Decrease) in Accrued Expenses771  (845)
  (Decrease) Increase in Pension and Postretirement Benefits(11,048) 209 
Other2,644  3,263 
Total Adjustments2,390  16,157 
Net Cash Provided by Operating Activities10,612  26,949 
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital Expenditures(15,074) (14,763)
Net Purchase of Investment Securities16,581  (13,345)
Other1,065  64 
Net Cash Provided by (Used in) Investing Activities2,572  (28,044)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Principal Payments on Long-Term Debt(3,083) (3,083)
Dividends Paid(6,230) (5,926)
Purchase of Treasury Stock(26) (135)
Other  594 
Net Cash (Used in) Financing Activities(9,339) (8,550)
    
Effect of exchange rate changes on cash and cash equivalents(183) 111 
    
Net Increase (Decrease) in Cash and Cash Equivalents3,662  (9,534)
Cash and Cash Equivalents, Beginning of Period9,095  18,629 
Cash and Cash Equivalents, End of Period$12,757  $9,095 

 

Reagan B. Culbertson Investor Relations Manager Oil-Dri Corporation of America [email protected] (312) 321-1515

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