Oil-Dri Announces Third Quarter and Year-to-Date Fiscal 2018 Results

Company Release - 6/8/2018 4:10 PM ET

CHICAGO, June 08, 2018 (GLOBE NEWSWIRE) -- Oil-Dri Corporation of America (NYSE:ODC), producer and marketer of sorbent mineral products, announced today its third quarter and nine-month fiscal 2018 earnings.

 Third QuarterYear to Date
 Ended April 30, 2018Ended April 30, 2018
       
 F18F17ChangeF18F17Change
Consolidated Results      
Net Sales$64,847,000$64,745,000N/A$200,387,000$196,531,0002%
Net Income$3,585,000$3,211,00012%$5,539,000$9,470,000(42)%
Earnings per Diluted Share$0.48$0.449%$0.75$1.29(42)%
Business to Business      
Net Sales$24,784,000$24,159,0003%$79,226,000$74,893,0006%
Segment Operating Income$7,556,000$7,810,000(3)%$26,191,000$25,033,0005%
Retail and Wholesale      
Net Sales$40,063,000$40,586,000(1)%$121,161,000$121,638,000N/A
Segment Operating Income$2,223,000$1,516,00047%$7,010,000$5,996,00017%

Daniel S. Jaffee stated, “Our business diversity and strategy to develop and support value-added products continues to prove effective. Net sales were an all-time record for the nine-month period.

The consolidated net income detailed above was significantly impacted by the one-time tax expense adjustment made to reflect the effect on deferred income tax assets under the 2017 Tax Cut and Jobs Act. The adjustment reduced tax expense by $1,095,000 for the third quarter and increased tax expense by $3,996,000 for the nine-month period. The adjustment effectively increased diluted net income by $0.15 per share in the third quarter and reduced diluted net income by $0.54 per share year-to-date.

Business to Business product groups showed strong performance for the nine-month period and increased net sales over the same period in fiscal 2017. Year-to-date net sales of Agsorb and Verge agricultural products improved 13% as a result of increased usage as synthetic and biological active ingredient carriers. Similarly, net sales of our fluids purification products improved 5% driven by strong sales of Ultra-Clear attapulgite granules used to refine jet fuel. Net sales of Amlan animal health products were 7% higher. The increase was primarily attributed to further adoption of Varium and Calibrin-Z intestinal health products.

Within the Retail and Wholesale segment, sales for the quarter and the nine-month period were relatively flat while segment income was up 47% in the third quarter and 17% year-to-date.  The use of more targeted promotional spending allowed for reduced advertising spending in both periods and accounted for profit improvement in the segment. At the end of this fiscal year, we expect overall advertising costs to be less than fiscal 2017.

Net sales of our private label lightweight cat litter continued to grow, up 79% year-to-date. We believe this represents continued consumer preference for high-quality, lightweight litter and is driving our increase in market share.

Our Cat’s Pride Litter for Good campaign continues to gain traction. To date, we have received over 8,400 shelter nominations and promised over 1,574,112 pounds of litter donations. We are excited to continue to watch these numbers grow over the remainder of fiscal 2018 and years to come.

In the third quarter, we elected to contribute an incremental $11.5 million to our pension plan before filing our 2017 income tax returns. This contribution was deductible at the previous 35% Federal tax rate and allowed us to recapture over $1 million of the negative tax rate impact discussed above. We believe the incremental contribution also will reduce our pension expense and Pension Benefit Guarantee Corporation insurance premiums not only for the quarter, but for years to come. The contribution reduced our cash and investment balances along with our long-term pension liability. To facilitate the payment, we utilized $6 million from our line of credit, which we anticipate paying back in the fourth quarter. 

For more details on our financial results, tax adjustment and pension contribution, please review the Form 10-Q that was filed today and join us for our next earnings teleconference on June 11th. Call details are available on our website’s ‘Events’ page.”

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 third quarter fiscal 2018 earnings teleconference on Monday, June 11, 2018 and its fourth quarter teleconference on Monday, October 15, 2018. Both teleconferences will commence at 10:00 am, Central Time. Dial-in details will be communicated via web alert approximately one week prior to the calls.

“Oil-Dri”, “Amlan”, “Agsorb”, “Calibrin”, “Cat’s Pride”, “Ultra-Clear”, “Varium” and “Verge” 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    
(in thousands, except per share amounts)      
(unaudited)       
 Third Quarter Ended April 30
 2018 % of Sales 2017 % of Sales
Net Sales$64,847  100.0% $64,745  100.0%
Cost of Sales(47,104) (72.6)% (46,964) (72.5)%
Gross Profit17,743  27.4% 17,781  27.5%
Selling, General and Administrative Expenses(14,629) (22.6)% (14,035) (21.7)%
Operating Income3,114  4.8% 3,746  5.8%
Interest Expense(149) (0.2)% (233) (0.4)%
Other Income330  0.5% 255  0.4%
Income Before Income Taxes3,295  5.1% 3,768  5.8%
Income Tax Benefit (Expense)290  0.4% (557) (0.9)%
Net Income$3,585  5.5% $3,211  4.9%
Net Income Per Share:       
Basic Common$0.53    $0.48   
Basic Class B Common$0.40    $0.36   
Diluted Common$0.48    $0.44   
Average Shares Outstanding:       
Basic Common5,037    5,022   
Basic Class B Common2,102    2,088   
Diluted Common7,222    7,164   
        
 Nine Months Ended April 30
 2018 % of Sales 2017 % of Sales
Net Sales$200,387  100.0% $196,531  100.0%
Cost of Sales(144,035) (71.9)% (138,900) (70.7)%
Gross Profit56,352  28.1% 57,631  29.3%
Selling, General and Administrative Expenses(44,565) (22.2)% (45,252) (23.0)%
Operating Income11,787  5.9% 12,379  6.3%
Interest Expense(549) (0.3)% (722) (0.4)%
Other Income967  0.5% 34  %
Income Before Income Taxes12,205  6.1% 11,691  5.9%
Income Tax Expense(6,666) (3.3)% (2,221) (1.1)%
Net Income$5,539  2.8% $9,470  4.8%
Net Income Per Share:       
Basic Common$0.82    $1.41   
Basic Class B Common$0.62    $1.06   
Diluted Common$0.75    $1.29   
Average Shares Outstanding:       
Basic Common5,032    5,015   
Basic Class B Common2,099    2,081   
Diluted Common7,217    7,151   



CONSOLIDATED BALANCE SHEETS    
(in thousands, except per share amounts)    
(unaudited)    
     
  As of April 30
  2018 2017
Current Assets    
Cash and Cash Equivalents $10,613  $13,603 
Short-term Investments 14,297  18,700 
Accounts Receivable, Net 32,566  31,969 
Inventories 23,415  23,813 
Prepaid Expenses (1) 6,241  9,992 
Total Current Assets 87,132  98,077 
Property, Plant and Equipment, Net 84,807  81,543 
Other Assets (1) 26,071  32,433 
Total Assets $198,010  $212,053 
     
Current Liabilities    
Current Maturities of Notes Payable $3,083  $3,083 
Short-term borrowing 6,000  0 
Accounts Payable 7,747  8,105 
Dividends Payable 1,559  1,485 
Accrued Expenses 17,330  20,098 
Total Current Liabilities 35,719  32,771 
Noncurrent Liabilities    
Notes Payable 6,099  9,154 
Other Noncurrent Liabilities 27,179  47,340 
Total Noncurrent Liabilities 33,278  56,494 
Stockholders' Equity 129,013  122,788 
Total Liabilities and Stockholders' Equity $198,010  $212,053 
     
Book Value Per Share Outstanding $18.09  $17.30 
     
Acquisitions of:    
Property, Plant and EquipmentThird Quarter$3,683  $3,139 
 Year To Date$10,533  $10,418 
Depreciation and Amortization ChargesThird Quarter$3,164  $3,164 
 Year To Date$9,577  $9,553 

(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 Nine Months Ended
 April 30
 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES   
Net Income$5,539  $9,470 
Adjustments to reconcile net income to net cash   
provided by operating activities, net of acquisition:   
Depreciation and Amortization9,577  9,553 
  Decrease (Increase) in Accounts Receivable35  (1,665)
  Increase in Inventories(783) (617)
  (Decrease) Increase  in Accounts Payable(888) 1,848 
  (Decrease) Increase in Accrued Expenses(1,198) 627 
  (Decrease) Increase in Pension and Postretirement Benefits(11,223) 1,133 
Other (2)1,730  684 
Total Adjustments(2,750) 11,563 
Net Cash Provided by Operating Activities2,789  21,033 
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Capital Expenditures(10,533) (10,418)
Net Disposition (Purchase) of Investment Securities9,375  (8,500)
Other1,766  60 
Net Cash Provided by (Used in) Investing Activities608  (18,858)
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Principal Payments on Long-Term Debt(3,083) (3,083)
Dividends Paid(4,671) (4,441)
Purchase of Treasury Stock(27) (135)
Proceeds from short-term borrowing6,000   
Other  398 
Net Cash Used in Financing Activities(1,781) (7,261)
    
Effect of exchange rate changes on cash and cash equivalents(98) 60 
    
Net Increase (Decrease) in Cash and Cash Equivalents1,518  (5,026)
Cash and Cash Equivalents, Beginning of Period9,095  18,629 
Cash and Cash Equivalents, End of Period$10,613  $13,603 


(2) Includes a $3,996 one-time adjustment to deferred tax assets required upon enactment of the 2017 Tax Cut and Jobs Act.

Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515

 

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