SOURCE: Oil-Dri Corporation of America

Oil-Dri Corporation of America

December 07, 2012 16:02 ET

Oil-Dri Announces Record Quarterly Earnings

CHICAGO, IL--(Marketwire - Dec 7, 2012) -  Oil-Dri Corporation of America (NYSE: ODC) today announced net sales of $61,417,000 for the first quarter ended October 31, 2012, a 3% increase compared with net sales of $59,582,000 in the same quarter one year ago. Net income for the first quarter was a record high of $4,452,000, or $0.64 per diluted share, a significant increase compared with net income of $1,075,000 or $0.15 per diluted share, for the same quarter one year ago.

First Quarter Business Review
President and Chief Executive Officer Daniel S. Jaffee said, "This quarter's results underscore the positive sales momentum of our high-value products into profitable markets from both business segments. Our continued focus on these products led to record profits and an expansion of gross margins from 23.8% to 28.1%. Our cash generation remained strong even as we continued to invest in our business. 

"We are encouraged by the net sales and segment income growth from the Retail and Wholesale Products Group. Spending in support of Cat's Pride Fresh & Light cat litters was significantly reduced in this quarter as we refocused our promotional strategy. While we spent $2,600,000 less on total advertising for our branded products compared to the same period one year ago, sales momentum has been maintained. In addition, our Business-to-Business Products Group maintained net sales and income growth despite increased costs."

First Quarter Segment Review

Business to Business First Quarter % Change
  Fiscal 2013 Fiscal 2012  
Net Sales $21,782,000 $20,934,000 4%
Segment Income $7,523,000 $7,440,000 1%

Net sales for the Company's Business-to-Business Products Group were up 4% from one year ago driven by a higher average net selling price and increased volume. Group income in the quarter was relatively flat. Net sales were up for animal health products, agricultural carriers, and co-packaged cat litters while fluids purification product sales were down. The Group benefited from incremental sales of its engineered Verge granular carrier used for the professional pesticide and agricultural markets.

Retail and Wholesale First Quarter % Change
  Fiscal 2013 Fiscal 2012  
Net Sales $39,635,000 $38,648,000 3%
Segment Income $4,524,000 ($1,219,000) -

Net sales for the Company's Retail and Wholesale Products Group for the first quarter were up 3%. Group income was up substantially due to an increase in branded sales and a reduction in advertising spending. Net sales for Cat's Pride Fresh & Light benefited from increased distribution and repeat sales. Net sales and volume were down slightly for Industrial and Automotive.

Financial Review
On October 16, 2012, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.18 per share of outstanding Common Stock and $0.135 per share of outstanding Class B Stock. The dividends were payable November 30, 2012 to stockholders of record at the close of business on November 16, 2012. 

On December 4, 2012, Oil-Dri's Board of Directors declared accelerated cash dividends of $0.36 per share of outstanding Common Stock and $0.27 per share of outstanding Class B Stock, which reflect dividends for the third and fourth quarters of fiscal 2013. The dividends will be payable on December 28, 2012 to stockholders of record at the close of business on December 14, 2012. 

The Company has paid cash dividends continuously since 1974 and has increased dividends annually for the past 9 years.

At the end of the first quarter, the annualized dividend yield on the Company's Common Stock was 3.2%, based on the quarter's stock closing price of $22.40 per share and the latest cash quarterly dividend of $0.18. 

Cash, cash equivalents and short-term investments at October 31, 2012, totaled $35,117,000. Capital expenditures for the first quarter totaled $2,157,000, which was $98,000 less than the quarter's depreciation and amortization of $2,255,000.

Net cash provided by operating activities was $4,424,000 in the first quarter compared to $377,000 for the same period one year ago due to the increase in income and improvements in working capital.

Looking Forward
Jaffee continued, "We are pleased with the growing distribution and sales of our Cat's Pride Fresh & Light. We anticipate increased advertising and promotional spending for Cat's Pride Fresh & Light and other branded products for the remainder of the fiscal year. Our overall advertising expenses for fiscal 2013 will be more than historical norms but less than fiscal 2012. Many of the expenditures in fiscal 2012 associated with the launch of Fresh & Light were one-time in nature and will not recur in fiscal 2013. Examples of these one-time expenditures include slotting allowances and TV commercial production. We expect to see continued positive results from the Business-to-Business Products Group.

"We are paying close attention to the contract discussions between the longshoremen's union and the East and Gulf Coasts port employers as a strike would negatively impact our ability to supply our export customers. We are communicating with our international customers about this potential strike and evaluating production and logistics alternatives."

The Company will offer a live webcast of the first quarter earnings teleconference on Monday, December 10, 2012 from 10:00 a.m. to 10:30 a.m., Chicago Time. To listen to the call via the web, please 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.

Cat's Pride, Fresh & Light and Verge are all registered trademarks of Oil-Dri Corporation of America. 

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.

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," "believe", "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.

                     
   
O I L - D R I C O R P O R A T I O N O F A M E R I C A  
   
Consolidated Statements of Income  
(in thousands, except for per share amounts)  
(unaudited)  
                         
    Three Months Ended October 31,  
    2012     % of Sales     2011     % of Sales  
Net Sales   $ 61,417     100.0 %   $ 59,582     100.0 %
Cost of Sales     (44,186 )   71.9 %     (45,379 )   76.2 %
Gross Profit     17,231     28.1 %     14,203     23.8 %
Operating Expenses     (10,820 )   17.6 %     (12,407 )   20.8 %
Capacity Rationalization Charges     (12 )   0.0 %     --     0.0 %
                             
Operating Income     6,399     10.4 %     1,796     3.0 %
Interest Expense     (481 )   0.8 %     (524 )   0.9 %
Other Income     139     0.2 %     201     0.3 %
                             
Income Before Income Taxes     6,057     9.9 %     1,473     2.5 %
Income Taxes     (1,605 )   2.6 %     (398 )   0.7 %
Net Income   $ 4,452     7.2 %   $ 1,075     1.8 %
                             
                             
Net Income Per Share:                            
  Basic Common   $ 0.69           $ 0.16        
  Basic Class B Common   $ 0.52           $ 0.12        
  Diluted   $ 0.64           $ 0.15        
                             
Average Shares Outstanding:                            
  Basic Common     4,879             5,114        
  Basic Class B Common     1,943             1,920        
  Diluted     6,879             7,100        
                             
                             
                             
O I L - D R I C O R P O R A T I O N O F A M E R I C A
 
Consolidated Balance Sheets
(in thousands, except for per share amounts)
(unaudited)
 
    As of October 31,
    2012   2011
             
Current Assets            
  Cash and Cash Equivalents   $ 27,177   $ 21,000
  Investment in Short-term Securities     7,940     8,390
  Accounts Receivable, net     31,381     31,294
  Inventories     20,998     22,263
  Prepaid Expenses     8,501     8,932
    Total Current Assets     95,997     91,879
Property, Plant and Equipment     64,412     67,285
Other Assets     14,299     13,354
Total Assets   $ 174,708   $ 172,518
             
Current Liabilities            
  Current Maturities of Notes Payable   $ 5,000   $ 3,800
  Accounts Payable     6,551     6,621
  Dividends Payable     1,156     1,132
  Accrued Expenses     15,953     15,921
    Total Current Liabilities     28,660     27,474
Long-Term Liabilities            
  Notes Payable     22,400     27,400
  Other Noncurrent Liabilities     34,610     22,264
    Total Long-Term Liabilities     57,010     49,664
Stockholders' Equity     89,038     95,380
Total Liabilities and Stockholders' Equity   $ 174,708   $ 172,518
             
Book Value Per Share Outstanding   $ 13.05   $ 13.56
             
Acquisitions of            
  Property, Plant and Equipment       First Quarter   $ 2,157   $ 1,611
          Year to Date   $ 2,157   $ 1,611
  Depreciation and Amortization Charges       First Quarter   $ 2,255   $ 2,345
          Year to Date   $ 2,255   $ 2,345
             
             
             
O I L - D R I C O R P O R A T I O N O F A M E R I C A  
Consolidated Statements of Cash Flows  
(in thousands)  
(unaudited)  
   
    For the Three Months Ended  
    OCTOBER 31, 2012  
CASH FLOWS FROM OPERATING ACTIVITIES   2012     2011  
                 
Net Income   $ 4,452     $ 1,075  
                 
Adjustments to reconcile net income to net cash provided by operating activities:                
  Depreciation and Amortization     2,255       2,345  
  Capacity Rationalization Plan Charges     12       --  
  (Increase) in Accounts Receivable     (1,187 )     (2,102 )
  (Increase) in Inventories     (1,325 )     (3,033 )
  Increase in Accounts Payable     17       449  
  (Decrease) Increase in Accrued Expenses     (1,530 )     539  
  Increase in Pension and Postretirements benefits     674       500  
  Other     1,056       604  
    Total Adjustments     (28 )     (698 )
  Net Cash Provided by Operating Activities     4,424       377  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
  Capital Expenditures     (2,157 )     (1,611 )
  Net Dispositions of Investment Securities     1,225       7,435  
  Other     4       10  
  Net Cash (Used in) Provided by Investing Activities     (928 )     5,834  
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
  Principal Payments on Long-Term Debt     (2,300 )     (2,100 )
  Dividends Paid     (1,155 )     (1,130 )
  Purchase of Treasury Stock     (9 )     0  
  Other     73       109  
  Net Cash (Used in) Financing Activities     (3,391 )     (3,121 )
                 
Effect of exchange rate changes on cash and cash equivalents     (21 )     25  
                 
Net Increase in Cash and Cash Equivalents     84       3,115  
Cash and Cash Equivalents, Beginning of Year     27,093       17,885  
Cash and Cash Equivalents, October 31   $ 27,177     $ 21,000  

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