SOURCE: Oil-Dri Corporation of America

Oil-Dri Corporation of America

December 05, 2014 16:04 ET

Oil-Dri Announces First Quarter Fiscal 2015 Results

CHICAGO, IL--(Marketwired - Dec 5, 2014) - Oil-Dri Corporation of America (NYSE: ODC) today announced net sales of $66,044,000 for the first quarter ended October 31, 2014, a 4% increase compared with net sales of $63,546,000 in the same quarter one year ago. Net income for the first quarter was $2,120,000 or $0.30 per diluted share, down from $2,887,000 or $0.41 per diluted share in the first quarter of fiscal 2014. 

BUSINESS REVIEW

President and Chief Executive Officer Daniel S. Jaffee said, "While sales increased in the quarter, the overall mix of products sold negatively impacted earnings. Our costs for natural gas moderated in the quarter, but costs continue to rise in other areas.

"In the Business to Business segment, sales were essentially flat as compared to the prior year's first quarter. Volume decreased for our fluids purification products and for our co-packaged traditional coarse cat litter.

"In the Retail and Wholesale segment, we are encouraged that the retail sales of Cat's Pride Fresh & Light continue to grow. Other branded litter suppliers have entered the Scoopable segment with lightweight products of their own and we are seeing increased promotional spending by these launches. Despite this aggressive spending and new products, Fresh & Light grew 8% across all outlets in the last twelve-week period, according to market data.

"Due to the activity around lightweight innovation, lightweight litter accounted for over 80% of the dollar growth in the Scoopable segment in the same twelve-week period reported by a third-party market research company.

"We are very proud that for the third consecutive year, Oil-Dri was voted by our own teammates as one of The Chicago Tribune's Top 100 Workplaces in the Chicagoland area."

SEGMENT REVIEW

First Quarter Results

 
Business to Business
Products
  Three Month Period
August 1 - October 31
  Change
    Fiscal 2015   Fiscal 2014    
Net Sales   $23,648,000   $23,915,000   -1%
Segment Income   $6,871,000   $7,651,000   -10%
             

There were 7% fewer tons sold of Business to Business products in the period, resulting in a slight decrease of net sales. Sales of fluids purification products and co-packaged traditional coarse cat litter sales were down. Declines were partially offset by higher average selling prices and improved sales of agricultural products.

Reduced sales and increased costs for packaging materials and freight negatively impacted segment income. Selling, general and administrative expenses increased in the period primarily because of our new subsidiary in China, Amlan Trading (Shenzhen) Company, Ltd.

         
Retail and Wholesale
Products
  Three Month Period
August 1 - October 31
  Change
    Fiscal 2015   Fiscal 2014    
Net Sales   $42,396,000   $39,631,000   7%
Segment Income   $886,000   $1,275,000   -31%
             

In the Retail and Wholesale segment, overall cat litter volume increased 18%, resulting in improved net sales. The acquisition of MFM costumers increased private label cat litter sales approximately 50%. Sales of industrial absorbents and sports turf products also increased in the period. Sales of our Canadian and United Kingdom subsidiaries declined in the quarter.

Product mix and higher resin costs for packaging materials caused segment income to decline in the period. A decrease in advertising expense reduced selling, general and administrative expenses in the quarter.

FINANCIAL REVIEW

Cash, cash equivalents, restricted cash and short-term investments at October 31, 2014, totaled $10,407,000 compared to $32,963,000 a year ago. Significant uses of cash in the past twelve months included the purchase of MFM assets, capital expenditures, regularly scheduled debt payments and quarterly dividends.

Capital expenditures for the three months ended October 31, 2014 totaled $5,717,000, which was $2,797,000 more than depreciation and amortization of $2,920,000. By comparison, capital expenditures totaled $3,382,000 in the first three months of fiscal 2014. Capital expenditures were primarily made for business growth projects and equipment replacement at our manufacturing facilities. Cash provided by operating activities was $1,748,000 for the period compared to cash used in operating activities of $652,000 for the same period of fiscal 2014.

On October 16, 2014, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.20 per share of outstanding Common Stock and $0.15 per share of outstanding Class B Stock. The dividends were paid on November 28, 2014 to stockholders of record at the close of business on November 14, 2014. The Company has paid cash dividends continuously since 1974 and has increased dividends annually for the past eleven years. At the end of the first quarter, the annualized dividend yield on the Company's Common Stock was 2.7%, based on the quarter's closing stock price of $30.18 per share and the latest quarterly cash dividend of $0.20.

LOOKING FORWARD

Jaffee continued, "Some of the challenges that we faced during the last half of fiscal year 2014 moderated by the close of this quarter. We have more efficiently incorporated the production of tons acquired through the MFM acquisition, there was a 5% decline in the cost of natural gas used to operate kilns that dry our clay and transportation fuel surcharges have declined.

"Calibrin animal health and nutrition products are gaining momentum in China and other foreign markets. Our research and development team is working on several new projects that will further develop the division's product offerings and growth potential.

"On the Consumer side of the business, we plan to launch new and innovative lightweight cat litter products, both branded and private label, during the second half of the fiscal year. Our promotional dollars for these and existing products will be directed away from mass media and toward targeted trade and consumer promotion."

Oil-Dri Corporation of America is a leading supplier of specialty sorbent products for agricultural, horticultural, fluids purification, specialty markets, industrial and automotive, and is the world's largest manufacturer of cat litter.

The Company will offer a live webcast of the first quarter earnings teleconference on Monday, December 8, 2014 from 10:00 am to 10:30 am, Central Time. To listen via the web, visit www.streetevents.com or www.oildri.com. An archived recording of the call and written transcripts of all teleconferences are posted on the Oil-Dri website.

The Company will host its Annual Meeting of Stockholders on Tuesday, December 9, 2014 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 was October 17, 2014.

Amlan, Cat's Pride, Fresh & Light and Calibrin 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," 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 for per share amounts)  
(unaudited)  
    First Quarter Ended October 31,  
    2014     % of Sales     2013     % of Sales  
Net Sales   $ 66,044     100.0 %   $ 63,546     100.0 %
Cost of Sales     (52,275 )   79.2 %     (47,046 )   74.0 %
Gross Profit     13,769     20.8 %     16,500     26.0 %
Operating Expenses     (10,609 )   16.0 %     (12,158 )   19.2 %
                             
Operating Income     3,160     4.8 %     4,342     6.8 %
Interest Expense     (382 )   0.6 %     (424 )   0.7 %
Other Income     87     0.1 %     (25 )   0.0 %
                             
Income Before Income Taxes     2,865     4.3 %     3,893     6.1 %
Income Taxes     (745 )   1.1 %     (1,006 )   1.6 %
Net Income   $ 2,120     3.2 %   $ 2,887     4.5 %
                             
                             
Net Income Per Share:                            
Basic Common   $ 0.32           $ 0.44        
Basic Class B Common   $ 0.24           $ 0.33        
Diluted   $ 0.30           $ 0.41        
                             
Average Shares Outstanding:                            
Basic Common     4,948             4,955        
Basic Class B Common     2,009             1,992        
Diluted     7,016             6,973        
                             
                             
                             
CONSOLIDATED BALANCE SHEETS
(in thousands, except for per share amounts)
(unaudited)
             
        As of October 31,
        2014   2013
Current Assets                
  Cash and Cash Equivalents       $ 8,406   $ 17,776
  Restricted Cash         100     --
  Short-term Investments         1,901     15,187
  Accounts Receivable, Net         31,893     31,732
  Inventories         24,332     22,344
  Prepaid Expenses         7,729     9,503
    Total Current Assets         74,361     96,542
Property, Plant and Equipment, Net         78,212     67,230
Other Assets         28,154     14,657
Total Assets       $ 180,727   $ 178,429
                 
Current Liabilities                
  Current Maturities of Notes Payable       $ 3,483   $ 3,500
  Accounts Payable         5,599     6,907
  Dividends Payable         1,313     1,242
  Accrued Expenses         15,548     15,665
    Total Current Liabilities         25,943     27,314
Noncurrent Liabilities                
  Notes Payable         15,417     18,900
  Other Noncurrent Liabilities         34,020     27,345
    Total Noncurrent Liabilities         49,437     46,245
Stockholders' Equity         105,347     104,870
Total Liabilities and Stockholders' Equity       $ 180,727   $ 178,429
                 
Book Value Per Share Outstanding       $ 15.14   $ 15.10
                 
                 
Acquisitions of                
Property, Plant and Equipment   First Quarter   $ 5,717   $ 3,382
    Year To Date   $ 5,717   $ 3,382
Depreciation and Amortization Charges   First Quarter   $ 2,920   $ 2,231
    Year To Date   $ 2,920   $ 2,231
                 
                 
                 
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(unaudited)  
             
    For the Three Months Ended  
    October 31,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net Income   $ 2,120     $ 2,887  
Adjustments to reconcile net income to net cash provided by operating activities:                
  Depreciation and Amortization     2,920       2,231  
  Increase in Accounts Receivable     (940 )     (604 )
  Decrease (Increase) in Inventories     151       (1,621 )
  (Decrease) Increase in Accounts Payable     (1,632 )     367  
  Decrease in Accrued Expenses     (2,000 )     (4,313 )
  Increase in Pension and Postretirement Benefits     357       277  
  Other     772       124  
    Total Adjustments     (372 )     (3,539 )
  Net Cash Provided by (Used in) Operating Activities     1,748       (652 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
  Capital Expenditures     (5,717 )     (3,382 )
  Advance Payment for Acquisition     --       (800 )
  Restricted Cash     29       --  
  Net Dispositions of Investment Securities     740       3,273  
  Other     123       14  
  Net Cash Used in Investing Activities     (4,825 )     (895 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
  Principal Payments on Long-Term Debt     (3,500 )     (3,500 )
  Dividends Paid     (1,311 )     (1,236 )
  Other     25       64  
  Net Cash Used in Financing Activities     (4,786 )     (4,672 )
                 
Effect of exchange rate changes on cash and cash equivalents     39       (40 )
                 
Net Decrease in Cash and Cash Equivalents     (7,824 )     (6,259 )
Cash and Cash Equivalents, Beginning of Period     16,230       24,035  
Cash and Cash Equivalents, End of Period   $ 8,406     $ 17,776  
                 

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