SOURCE: Oil-Dri Corporation of America

Oil-Dri Corporation of America

March 10, 2010 16:30 ET

Oil-Dri Announces Second Quarter and Six-Month Results

CHICAGO, IL--(Marketwire - March 10, 2010) - Oil-Dri Corporation of America (NYSE: ODC) reported net sales for the second quarter of $54,734,000, a 7% decrease compared with net sales of $59,130,000 for the same quarter of the previous year. Net income for the second quarter was $2,262,000, or $0.31 per diluted share, a 6% decrease compared with net income of $2,372,000, or $0.33 per diluted share in the same quarter one year ago.

Net sales for the six-month period were $108,138,000, a 12% decrease compared with net sales of $122,258,000 for the same period one year ago. Net income for the six-month period was $4,456,000, or $0.61 per diluted share, a 5% decrease compared with net income of $4,618,000, or $0.64 per diluted share, in the same period one year ago.

SECOND QUARTER REVIEW

President and Chief Executive Officer Daniel S. Jaffee said, "While we continue to experience the effects of Walmart's plan to focus on a reduced number of brands, the overall business is healthy, showing substantial cash generation, improved margins and income growth in our Business to Business Products Group.

"By focusing on profitable markets, we have experienced significant growth in our bleaching clay and animal health products. We have also benefited from lower production costs. The combination of these two factors improved our gross profit margin in the quarter from 20% to 23%."

QUARTERLY BUSINESS REVIEW

   -- Net sales for the Company's Business to Business Products Group were
      $36,133,000 and group income was $9,426,000 for the six-month
      period.  Net sales for the quarter were $18,563,000 and group income
      was $4,917,000.  Net sales and unit volume were up for Pure-Flo
      bleaching clays and Calibrin enterosorbents.  Net sales and unit
      volume were down for agricultural chemical carriers, flowability
      aids and co-packaged cat litter products due to weaker demand and
      competitive pricing.

   -- Net sales for the Company's Retail and Wholesale Products Group
      were $72,005,000 and group income was $6,332,000 for the six-month
      period.  Net sales for the quarter were $36,171,000 and group
      income was $3,116,000.  Net sales and unit volume were down for
      Cat's Pride branded cat litter products primarily due to Walmart's
      decision to reduce distribution of those products.  These declines
      were partially offset by 34% unit growth of Cat's Pride Scoopable
      cat litter in our grocery retail partners based on market data
      provided by Information Resources, Inc. for the 12-week period
      ending January 31, 2010.  Net sales and unit volume were down for
      industrial and automotive products due to lower demand.

FINANCIAL REVIEW

On December 8, 2009, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.15 per share of outstanding Common Stock and $0.1125 per share of outstanding Class B Stock. The dividends were paid March 5, 2010 to stockholders of record at the close of business on February 19, 2010.

At the January 31, 2010 closing price of $15.88 per share and assuming cash dividends continue at the same rate, the annual yield on the Company's Common Stock is 3.8%. The Company has paid cash dividends continuously since 1974 and has increased dividends annually for the last seven years.

During the quarter the Company repurchased 34,000 shares of Common Stock at an average price of $15.83 per share. The Company's current repurchase authorization has 238,243 shares of Common Stock remaining.

Cash, cash equivalents and short-term investments at January 31, 2010 totaled $26,863,000. Capital expenditures for the fiscal year totaled $4,818,000, which was $1,107,000 more than the fiscal year's depreciation and amortization of $3,711,000.

During the second quarter, the Company acquired approximately 800 acres of land in the vicinity of its Thomas County, Georgia production plant. These purchases totaled $2,300,000. The Company believes that this land contains high quality mineral reserves.

The effective tax rate for the first six months of fiscal 2010 was 29% compared with 26% for the same period in fiscal 2009. The increase in the rate is based on the Company's projected level and composition of income. The percentage of income attributable to new higher margin Business to Business products is greater this fiscal year.

Cash provided by operations was $13,763,000 for the six-month period primarily due to improvements in our working capital commensurate with our net sales declines.

LOOKING FORWARD

Jaffee continued, "We are pleased that orders have been received from Walmart reinstating our Cat's Pride Scoopable and Cat's Pride Complete cat litter products in a limited number of stores. While the new store count overall remains materially reduced from our store count at the end of fiscal year 2009, we believe that gaining these stores is recognition that Walmart shoppers are loyal to our Cat's Pride brand. Our customers will begin to see Cat's Pride Scoopable and Cat's Pride Complete in the reinstated Walmart stores during the third quarter.

"The Producer Price Index is up 5% versus last year, so manufacturers' costs are on the rise. We are hopeful that we can continue to manage these costs going forward in the second half of fiscal 2010."

The Company will offer a live webcast of the second quarter earnings teleconference on March 12, 2010 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.

Calibrin, Cat's Pride, and Pure-Flo, and 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)

                                         Second Quarter Ended January 31,
                                        ----------------------------------
                                                   % of              % of
                                           2010    Sales     2009    Sales
                                        ---------  -----  ---------  -----
Net Sales                               $  54,734  100.0% $  59,130  100.0%
Cost of Sales                             (42,064)  76.9%   (47,217)  79.9%
                                        ---------  -----  ---------  -----
Gross Profit                               12,670   23.1%    11,913   20.1%
Operating Expenses                         (9,187)  16.8%    (8,342)  14.1%
                                        ---------  -----  ---------  -----

Operating Income                            3,483    6.4%     3,571    6.0%
Interest Expense                             (341)   0.6%      (478)   0.8%
Other Income                                   79    0.1%        85    0.1%
                                        ---------  -----  ---------  -----

Income Before Income Taxes                  3,221    5.9%     3,178    5.4%
Income Taxes                                 (959)   1.8%      (806)   1.4%
                                        ---------  -----  ---------  -----

Net Income                              $   2,262    4.1% $   2,372    4.0%
                                        =========  =====  =========  =====

Net Income Per Share:
                 Basic Common           $    0.34         $    0.36
                 Basic Class B Common   $    0.26         $    0.27
                 Diluted                $    0.31         $    0.33
Average Shares Outstanding:
                 Basic Common               5,206             5,131
                 Basic Class B Common       1,890             1,873
                 Diluted                    7,269             7,199


                                            Six Months Ended January 31,
                                        ----------------------------------
                                                   % of              % of
                                          2010     Sales     2009    Sales
                                        ---------  -----  ---------  -----
Net Sales                               $ 108,138  100.0% $ 122,258  100.0%
Cost of Sales                             (83,145)  76.9%   (97,969)  80.1%
                                        ---------  -----  ---------  -----
Gross Profit                               24,993   23.1%    24,289   19.9%
Operating Expenses                        (18,158)  16.8%   (17,080)  14.0%
                                        ---------  -----  ---------  -----

Operating Income                            6,835    6.3%     7,209    5.9%
Interest Expense                             (715)   0.7%      (983)   0.8%
Other Income                                  156    0.1%        29    0.0%
                                        ---------  -----  ---------  -----

Income Before Income Taxes                  6,276    5.8%     6,255    5.1%
Income Taxes                               (1,820)   1.7%    (1,637)   1.3%
                                        ---------  -----  ---------  -----
Net Income                              $   4,456    4.1% $   4,618    3.8%
                                        =========  =====  =========  =====


Net Income Per Share*:
                 Basic Common           $    0.67         $    0.70
                 Basic Class B Common   $    0.50         $    0.53
                 Diluted                $    0.61         $    0.64

Average Shares Outstanding:
                 Basic Common               5,200             5,129
                 Basic Class B Common       1,885             1,868
                 Diluted                    7,259             7,196





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 January 31,
                                                        -------------------
                                                          2010      2009
                                                        --------- ---------

Current Assets
             Cash and Cash Equivalents                  $  20,864 $   2,272
             Investment in Treasury Securities              5,999    14,494
             Accounts Receivable, net                      27,210    31,399
             Inventories                                   16,985    19,235
             Prepaid Expenses                               6,975     6,563
                                                        --------- ---------
                          Total Current Assets             78,033    73,963
                                                        --------- ---------
Property, Plant and Equipment                              60,370    55,196
Other Assets                                               15,463    14,432
                                                        --------- ---------
Total Assets                                            $ 153,866 $ 143,591
                                                        ========= =========

Current Liabilities
             Current Maturities of Notes Payable        $   4,500 $   1,700
             Accounts Payable                               5,450     6,330
             Dividends Payable                                997       921
             Accrued Expenses                              15,053    13,327
                                                        --------- ---------
                          Total Current Liabilities        26,000    22,278
                                                        --------- ---------
Long-Term Liabilities
             Notes Payable                                 16,800    21,300
             Other Noncurrent Liabilities                  18,819    10,380
                                                        --------- ---------
                          Total Long-Term Liabilities      35,619    31,680
                                                        --------- ---------
Stockholders' Equity                                       92,247    89,633
                                                        --------- ---------
Total Liabilities and Stockholders' Equity              $ 153,866 $ 143,591
                                                        ========= =========

Book Value Per Share Outstanding                        $   13.02 $   12.81

Acquisitions of Property, Plant and Equipment
                                         Second Quarter $   3,491 $   4,205
                                           Year to Date $   4,818 $   7,757
Depreciation and Amortization Charges
                                         Second Quarter $   1,822 $   1,799
                                           Year to Date $   3,711 $   3,684





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 Six Months
                                                         Ended January 31,
                                                        ------------------
CASH FLOWS FROM OPERATING ACTIVITIES                      2010      2009
                                                        --------  --------

Net Income                                              $  4,456  $  4,618

Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and Amortization                            3,711     3,684
  Decrease (Increase) in Accounts Receivable               1,842       (89)
  Decrease (Increase) in Inventories                         810    (1,491)
  Increase (Decrease) in Accounts Payable                    285      (972)
  Increase (Decrease) in Accrued Expenses                    783    (2,784)
  Other                                                    1,876    (1,020)
                                                        --------  --------
    Total Adjustments                                      9,307    (2,672)
                                                        --------  --------
  Net Cash Provided by Operating Activities               13,763     1,946
                                                        --------  --------

CASH FLOWS FROM INVESTING ACTIVITIES
  Capital Expenditures                                    (4,818)   (7,757)
  Net Dispositions of Investment Securities                2,005     6,531
  Other                                                      337        11
                                                        --------  --------
  Net Cash Used in Investing Activities                   (2,476)   (1,215)
                                                        --------  --------

CASH FLOWS FROM FINANCING ACTIVITIES
  Principal payments on Long-Term Debt                      (200)   (4,080)
  Dividends Paid                                          (1,991)   (1,838)
  Purchase of Treasury Stock                                (538)     (649)
  Other                                                      463       162
                                                        --------  --------
  Net Cash Used in Financing Activities                   (2,266)   (6,405)
                                                        --------  --------

Effect of exchange rate changes on cash and cash
 equivalents                                                   4     1,098

Net Increase (Decrease) in Cash and Cash Equivalents       9,025    (4,576)
Cash and Cash Equivalents, Beginning of Year              11,839     6,848
                                                        --------  --------
Cash and Cash Equivalents, January 31                   $ 20,864  $  2,272
                                                        ========  ========