Oil-Dri Corporation of America (NYSE: ODC), producer and marketer
of sorbent mineral products, today announced results for its first
quarter of fiscal year 2022.
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First Quarter |
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(in
thousands, except per share amounts) |
Ended October 31 |
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2021 |
2020 |
Change |
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Consolidated Results |
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Net
Sales |
$82,460 |
$76,097 |
8 |
% |
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Net
Income Attributable to Oil-Dri |
$585 |
$3,984 |
(85 |
)% |
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Earnings
per Common Diluted Share |
$0.08 |
$0.56 |
(86 |
)% |
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Business to Business |
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Net
Sales |
$28,929 |
$27,522 |
5 |
% |
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Segment
Operating Income* |
$6,746 |
$7,600 |
(11 |
)% |
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Retail and Wholesale |
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Net
Sales |
$53,531 |
$48,575 |
10 |
% |
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Segment Operating Income* |
$74 |
$3,550 |
(98 |
)% |
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*Segment operating
income for three months ended October 31, 2020 have been adjusted.
See Note 1 of the unaudited Notes to the Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q for the
three months ended October 31, 2021. |
Daniel S. Jaffee, President and Chief Executive Officer, stated,
“We achieved record high quarterly consolidated net sales for the
first three months of fiscal 2022. Cost pressures continued
to exceed price increases. Pricing actions were implemented
during the first quarter, and additional increases will be executed
in the second quarter in order to offset higher costs. Our
supply chain continued to be challenged as a result of the
nationwide labor shortage along with a tight trucking market and
delays from ocean freight carriers. During the first quarter
of fiscal 2022, we experienced a surge of unanticipated demand for
our products which led to a backlog of some orders. While the
majority of this backlog was due to delayed pick-ups by customers
and longer lead times for materials needed to fulfill this demand,
a portion of this was due to our own capacity constraints.
However, we have expanded our production shifts and added necessary
equipment in order to resolve these issues. While we navigate
this current environment, we continue to aggressively implement
pricing strategies, cost savings measures, and operational
enhancements in order to improve profitability and drive our
business forward.”
Consolidated ResultsConsolidated net sales in
the first quarter of fiscal 2022 reached an all-time quarterly high
of $82 million, an 8% increase over the prior year. This
growth was primarily driven by an increase in demand for our cat
litter, fluids purification, and industrial and sports
products. While we also experienced revenue gains from our
co-packaging coarse cat litter business, sales of our agricultural
and animal health products declined in the first quarter compared
to last year. Price increases across all product lines helped
contribute to the improvement in consolidated net sales.
First quarter consolidated gross profit decreased by
approximately $5 million or 26%, while margins were reduced to 17%
in fiscal 2022 from 25% in fiscal 2021. This decline can be
attributed to a 15% increase in domestic cost of goods sold per
manufactured ton compared to the prior year. During the first
quarter of fiscal 2022, the effects of extreme inflation impacted
many of our key cost inputs. High resin prices contributed to
a 44% increase in our domestic packaging costs per manufactured ton
for the first quarter of fiscal 2022 compared to last year.
Domestic natural gas per manufactured ton increased 97% versus the
prior year. Domestic non-fuel operating costs per
manufactured ton increased 15%, as a result of higher labor,
purchased materials and repair costs in the first quarter of fiscal
2022 compared to the same period last year. A tight trucking
market along with high fuel costs generated a 37% increase in
domestic freight per manufactured ton, excluding the freight that
is no longer charged to a large customer whose freight terms have
changed.
In the first quarter of fiscal 2022, consolidated operating
income was approximately $445,000 compared to $5.2 million in
fiscal 2021. Significantly higher cost of goods offset
revenue gains and a 2% reduction in selling, general and
administrative (“SGA”) expenses. Advertising costs decreased
in the first quarter of fiscal 2022 compared to the same period
last year, while expenses related to the growth of our animal
health business and corporate professional services fees
increased. In addition, a change in allocation of SGA
expenses to cost of goods sold affected quarterly segment operating
income in fiscal year 2021 by $1.5 million. This
reclassification did not impact consolidated operating or net
income. First quarter consolidated net income attributed to
Oil-Dri was $585,000 in fiscal 2022 compared to $4 million in
fiscal 2021.
Cash and cash equivalents decreased to $13 million at the end of
the first quarter of fiscal 2022 as compared to $31 million at the
end of same period last year. This was a result of higher
cost of goods sold caused by inflationary headwinds and an increase
in capital expenditures. Debt decreased to approximately $9
million as of October 31, 2021 from $10 million a year ago.
Oil-Dri has financing options available that would provide
additional cash used to operate the business and allow for
strategic capital investments necessary for growth in the
future. During the first quarter of fiscal year 2022, the
company repurchased 55,999 shares of common stock as part of
publicly announced plans or programs, with a total value of
approximately $1.9 million.
Product Group ReviewThe Business to Business
Products (“B2B”) Group’s first quarter of fiscal 2022 revenues were
$29 million, a 5% gain over the prior year. Increased demand
for fluids purification and co-packaged coarse cat litter products
offset decreases in sales from our agricultural and animal health
businesses. Fluids purification product revenues reached a
record quarterly high of $15 million. We experienced sales
improvement in the first quarter of fiscal 2022 from customers
within North America, Latin America, and Asia, primarily due to
increased volumes, and to a lesser extent, due to price
increases. However, sales of bleaching clay products to
Europe decreased as a result of timing of orders and ocean freight
shipping delays. First quarter of fiscal 2022 sales of our jet fuel
purification products rebounded to pre-pandemic levels due to an
increase in global air travel. Our co-packaging coarse cat
litter experienced record quarterly net sales which reflect an
increase of 20% in the first quarter compared to the prior
year. This topline growth was primarily a result of higher
pricing and, to some extent, an increase in volume. In the
first quarter of fiscal 2022, revenues from our agricultural
products business declined by 11% when compared to last year
primarily due to timing of orders. In addition, several
agricultural customers experienced their own supply chain issues
which resulted in delayed or cancelled orders of our
products. First quarter revenues of animal health products
decreased by 11% compared to the same period last year. Sales
declined within China, Mexico, and North America which offset
increases within Latin America and Asia, excluding China.
African swine fever and the ongoing pandemic continued to
create challenges for the global animal protein production market,
including feed additives. In addition, product mix, timing of
sales, and ocean freight delays contributed to the revenue
decreases we experienced in this area of our business.
Operating income for the B2B Products Group was $6.7 million in
the first quarter of fiscal 2022 compared to $7.6 million in fiscal
2021, reflecting an 11% decrease. The prior year’s results
include the reallocation of $596,000 between SG&A expenses and
cost of goods sold. Higher sales were offset by inflation on
cost of goods sold and a 20% increase in SG&A expenses over
last year. These elevated SG&A costs include higher
compensation and travel expenses which demonstrate our investment
in our animal health business through additional sales personnel
and leadership.
The Retail and Wholesale (“R&W”) Products Group’s first
quarter revenues reached a record quarterly high of $54 million, or
a 10% increase over the prior year. This was driven by an 8%
increase in total cat litter sales as well as a 26% increase in
total industrial and sports products revenues. Higher demand of our
scoopable litter and related accessories contributed to a rise in
domestic cat litter revenues. Sales from our combined branded
and private label lightweight litter products rose 12% in the first
quarter of fiscal 2022 compared to the prior year, exceeding the
lightweight litter sub-category sales growth of 6% for the 12-week
period ended October 30, 2021, according to third party research
data for retail sales1. Our e-commerce business experienced
substantial double digit revenue gains for the first quarter
compared to the same period last year, setting a quarterly sales
record for this distribution channel. Cat litter sales from
our Canadian subsidiary increased significantly in the first three
months of fiscal 2022 when compared to the prior year. This
success was a result of new product sales and increased demand from
several large existing customers, and to a lesser extent, from
price increases. Topline growth of 29% from our domestic industrial
and sports business was also achieved in the first quarter of
fiscal 2022 versus the prior year. Leading drivers of this
increase can be attributed to the return of pre-pandemic industrial
product purchasing levels, the reopening of sports fields across
the United States, and higher pricing. However, sales of
industrial products from our Canadian subsidiary declined as some
customers struggled to source co-loaded items which, in turn,
caused a reduction in demand for our products during the
quarter.
Operating income for the R&W Products Group was $74,000 in
the first quarter of fiscal year 2022 compared to $3.6 million in
fiscal year 2021. Prior year’s results reflect the
reallocation of $928,000 between SG&A expenses and cost of
goods sold. SG&A expenses for the first quarter of fiscal
year 2022 declined by 20% from last year. This was primarily
due to a reduction in advertising spending to help offset
inflationary headwinds and other supply chain and operational
related constraints. We expect total advertising costs for
the full fiscal year 2022 to be essentially flat compared to fiscal
year 2021. Adjustments to advertising spending for the
remainder of the year may occur due to any upcoming volatility in
the economic environment.
Due to the ongoing public health concerns related to the
COVID-19 pandemic, Oil-Dri will host its first quarter fiscal 2022
earnings discussion and its fiscal 2021 Annual Meeting of
Stockholders virtually via a live webcast on Wednesday, December 8,
2021 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 NielsenIQ through its
Scantrack Service for the Cat Litter Category in the 12-week period
ended October 30, 2021, for the U.S. xAOC+Pet Supers market.
Copyright © 2021 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 80 years of experience, the company continues to fulfill its
mission to Create Value from Sorbent Minerals.
“Oil-Dri” is a registered 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,” “potential,” and
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 |
|
2021 |
|
% of Sales |
|
2020 |
|
% of Sales |
Net
Sales |
$ |
82,460 |
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|
100.0 |
% |
|
$ |
76,097 |
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|
100.0 |
% |
Cost of Sales
(1) |
(68,642 |
) |
|
(83.2 |
)% |
|
(57,317 |
) |
|
(75.3 |
)% |
Gross
Profit |
13,818 |
|
|
16.8 |
% |
|
18,780 |
|
|
24.7 |
% |
Selling,
General and Administrative Expenses (1) |
(13,373 |
) |
|
(16.2 |
)% |
|
(13,603 |
) |
|
(17.9 |
)% |
Operating
Income |
445 |
|
|
0.5 |
% |
|
5,177 |
|
|
6.8 |
% |
Interest
Expense |
(177 |
) |
|
(0.2 |
)% |
|
(192 |
) |
|
(0.3 |
)% |
Other Income
(Expense), Net |
442 |
|
|
0.5 |
% |
|
(230 |
) |
|
(0.3 |
)% |
Income Before
Income Taxes |
710 |
|
|
0.9 |
% |
|
4,755 |
|
|
6.2 |
% |
Income Tax
Expense |
(115 |
) |
|
(0.1 |
)% |
|
(806 |
) |
|
(1.1 |
)% |
Net
Income |
595 |
|
|
0.7 |
% |
|
3,949 |
|
|
5.2 |
% |
Net Income
(Loss) Attributable to Noncontrolling Interest |
10 |
|
|
— |
% |
|
(35 |
) |
|
— |
% |
Net Income
Attributable to Oil-Dri |
$ |
585 |
|
|
0.7 |
% |
|
$ |
3,984 |
|
|
5.2 |
% |
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Net Income Per Share: |
Basic Common |
$ |
0.08 |
|
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|
$ |
0.57 |
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Basic Class B Common |
$ |
0.07 |
|
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$ |
0.43 |
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Diluted Common |
$ |
0.08 |
|
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|
$ |
0.56 |
|
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|
Diluted Class B Common |
$ |
0.06 |
|
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|
$ |
0.42 |
|
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|
Avg Shares
Outstanding: |
Basic Common |
5,113 |
|
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|
5,149 |
|
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Basic Class B Common |
1,921 |
|
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|
1,926 |
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Diluted Common |
5,237 |
|
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|
5,276 |
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Diluted Class B Common |
1,967 |
|
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|
1,978 |
|
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(1) Subsequent to the issuance of our Annual Report on Form 10-K
for the fiscal year ended July 31, 2020, we identified an
immaterial error in our historical financial statements related to
the classification of certain costs as selling, general and
administrative expenses as it relates to the production of our
inventory and should be classified as cost of sales. These costs
generally relate to our annual discretionary bonus and 401(k)
employer match for our manufacturing employees, employee salaries
for individuals in our support functions that spend a portion of
their time related to our manufacturing operations such as IT, and
other costs mostly related to consultants and outside services.
Since the error was not material to any prior period interim or
annual financial statements, we have adjusted for these errors by
revising our historical consolidated financial statements. See Note
1 of the unaudited Notes to the Condensed Consolidated Financial
Statements in our Quarterly Report on Form 10-Q for the three
months ended October 31, 2021 for further information about amounts
included in this lien item for the periods presented. |
CONSOLIDATED BALANCE SHEETS |
(in thousands,
except per share amounts) |
(unaudited) |
|
|
As of October 31 |
|
2021 |
|
2020 |
Current
Assets |
|
|
|
Cash and Cash Equivalents |
$ |
13,055 |
|
|
$ |
31,291 |
|
Accounts Receivable, Net |
43,082 |
|
|
39,212 |
|
Inventories |
28,692 |
|
|
23,493 |
|
Prepaid Expenses and Other Assets |
12,675 |
|
|
8,289 |
|
Total Current Assets |
97,504 |
|
|
102,285 |
|
Property,
Plant and Equipment, Net |
98,757 |
|
|
91,038 |
|
Other
Noncurrent Assets |
27,627 |
|
|
34,048 |
|
Total
Assets |
$ |
223,888 |
|
|
$ |
227,371 |
|
|
|
|
|
Current
Liabilities |
|
|
|
Current Maturities of Notes Payable |
$ |
1,000 |
|
|
$ |
1,000 |
|
Accounts Payable |
10,173 |
|
|
9,745 |
|
Dividends Payable |
1,864 |
|
|
1,807 |
|
Other Current Liabilities |
25,469 |
|
|
21,918 |
|
Total Current Liabilities |
38,506 |
|
|
34,470 |
|
Noncurrent
Liabilities |
|
|
|
Notes Payable |
7,884 |
|
|
8,857 |
|
Other Noncurrent Liabilities |
21,197 |
|
|
33,728 |
|
Total Noncurrent Liabilities |
29,081 |
|
|
42,585 |
|
Stockholders' Equity |
156,301 |
|
|
150,316 |
|
Total
Liabilities and Stockholders' Equity |
$ |
223,888 |
|
|
$ |
227,371 |
|
|
|
|
|
Book Value
Per Share Outstanding |
$ |
22.22 |
|
|
$ |
21.25 |
|
|
|
|
|
Acquisitions of: |
|
|
|
Property, Plant and Equipment |
First Quarter |
$ |
6,736 |
|
|
$ |
3,568 |
|
|
Year To
Date |
$ |
6,736 |
|
|
$ |
3,568 |
|
Depreciation and
Amortization Charges |
First
Quarter |
$ |
3,456 |
|
|
$ |
3,504 |
|
|
Year To
Date |
$ |
3,456 |
|
|
$ |
3,504 |
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(in
thousands) |
(unaudited) |
|
For the Three Months Ended |
|
October 31 |
|
2021 |
|
2020 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
Net Income |
$ |
595 |
|
|
$ |
3,949 |
|
Adjustments to
reconcile net income to net cash |
|
|
|
provided by operating
activities: |
|
|
|
Depreciation and Amortization |
3,456 |
|
|
3,504 |
|
(Increase) in Accounts Receivable |
(2,250 |
) |
|
(4,196 |
) |
(Increase) Decrease in Inventories |
(5,084 |
) |
|
462 |
|
Increase (Decrease) in Accounts Payable |
1,251 |
|
|
(1,435 |
) |
Increase (Decrease) in Accrued Expenses |
689 |
|
|
(8,106 |
) |
(Decrease) Increase in Pension and Postretirement
Benefits |
(303 |
) |
|
173 |
|
Other |
1,050 |
|
|
2,214 |
|
Total Adjustments |
(1,191 |
) |
|
(7,384 |
) |
Net Cash Used in
Operating Activities |
(596 |
) |
|
(3,435 |
) |
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital Expenditures |
(6,736 |
) |
|
(3,568 |
) |
Other |
— |
|
|
3 |
|
Net Cash Used in
Investing Activities |
(6,736 |
) |
|
(3,565 |
) |
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
Dividends Paid |
(1,865 |
) |
|
(1,803 |
) |
Purchase of Treasury Stock |
(2,291 |
) |
|
(978 |
) |
Net Cash Used in
Financing Activities |
(4,156 |
) |
|
(2,781 |
) |
|
|
|
|
Effect of exchange
rate changes on Cash and Cash Equivalents |
(48 |
) |
|
182 |
|
|
|
|
|
Net Decrease in Cash
and Cash Equivalents |
(11,536 |
) |
|
(9,599 |
) |
Cash and Cash
Equivalents, Beginning of Period |
24,591 |
|
|
40,890 |
|
Cash and Cash
Equivalents, End of Period |
$ |
13,055 |
|
|
$ |
31,291 |
|
Oil Dri Corp of America (NYSE:ODC)
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