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 Quarter |
Year to Date |
|
Ended April 30, 2018 |
Ended April 30, 2018 |
|
|
|
|
|
|
|
|
F18 |
F17 |
Change |
F18 |
F17 |
Change |
Consolidated
Results |
|
|
|
|
|
|
Net Sales |
$ |
64,847,000 |
$ |
64,745,000 |
N/A |
$ |
200,387,000 |
$ |
196,531,000 |
2 |
% |
Net Income |
$ |
3,585,000 |
$ |
3,211,000 |
12 |
% |
$ |
5,539,000 |
$ |
9,470,000 |
(42 |
)% |
Earnings per Diluted
Share |
$ |
0.48 |
$ |
0.44 |
9 |
% |
$ |
0.75 |
$ |
1.29 |
(42 |
)% |
Business to
Business |
|
|
|
|
|
|
Net Sales |
$ |
24,784,000 |
$ |
24,159,000 |
3 |
% |
$ |
79,226,000 |
$ |
74,893,000 |
6 |
% |
Segment Operating
Income |
$ |
7,556,000 |
$ |
7,810,000 |
(3 |
)% |
$ |
26,191,000 |
$ |
25,033,000 |
5 |
% |
Retail and
Wholesale |
|
|
|
|
|
|
Net Sales |
$ |
40,063,000 |
$ |
40,586,000 |
(1 |
)% |
$ |
121,161,000 |
$ |
121,638,000 |
N/A |
Segment Operating
Income |
$ |
2,223,000 |
$ |
1,516,000 |
47 |
% |
$ |
7,010,000 |
$ |
5,996,000 |
17 |
% |
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
Profit |
17,743 |
|
|
27.4 |
% |
|
17,781 |
|
|
27.5 |
% |
Selling,
General and Administrative Expenses |
(14,629 |
) |
|
(22.6 |
)% |
|
(14,035 |
) |
|
(21.7 |
)% |
Operating
Income |
3,114 |
|
|
4.8 |
% |
|
3,746 |
|
|
5.8 |
% |
Interest
Expense |
(149 |
) |
|
(0.2 |
)% |
|
(233 |
) |
|
(0.4 |
)% |
Other
Income |
330 |
|
|
0.5 |
% |
|
255 |
|
|
0.4 |
% |
Income Before
Income Taxes |
3,295 |
|
|
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 Common |
5,037 |
|
|
|
|
5,022 |
|
|
|
Basic Class B Common |
2,102 |
|
|
|
|
2,088 |
|
|
|
Diluted Common |
7,222 |
|
|
|
|
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
Profit |
56,352 |
|
|
28.1 |
% |
|
57,631 |
|
|
29.3 |
% |
Selling,
General and Administrative Expenses |
(44,565 |
) |
|
(22.2 |
)% |
|
(45,252 |
) |
|
(23.0 |
)% |
Operating
Income |
11,787 |
|
|
5.9 |
% |
|
12,379 |
|
|
6.3 |
% |
Interest
Expense |
(549 |
) |
|
(0.3 |
)% |
|
(722 |
) |
|
(0.4 |
)% |
Other
Income |
967 |
|
|
0.5 |
% |
|
34 |
|
|
— |
% |
Income Before
Income Taxes |
12,205 |
|
|
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 Common |
5,032 |
|
|
|
|
5,015 |
|
|
|
Basic Class B Common |
2,099 |
|
|
|
|
2,081 |
|
|
|
Diluted Common |
7,217 |
|
|
|
|
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 Equipment |
Third
Quarter |
$ |
3,683 |
|
|
$ |
3,139 |
|
|
Year To
Date |
$ |
10,533 |
|
|
$ |
10,418 |
|
Depreciation
and Amortization Charges |
Third
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 Amortization |
9,577 |
|
|
9,553 |
|
Decrease
(Increase) in Accounts Receivable |
35 |
|
|
(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 Activities |
2,789 |
|
|
21,033 |
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
Capital Expenditures |
(10,533 |
) |
|
(10,418 |
) |
Net Disposition (Purchase) of Investment
Securities |
9,375 |
|
|
(8,500 |
) |
Other |
1,766 |
|
|
60 |
|
Net Cash
Provided by (Used in) Investing Activities |
608 |
|
|
(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 borrowing |
6,000 |
|
|
— |
|
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 Equivalents |
1,518 |
|
|
(5,026 |
) |
Cash and Cash
Equivalents, Beginning of Period |
9,095 |
|
|
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. CulbertsonInvestor
Relations ManagerOil-Dri Corporation of
AmericaInvestorRelations@oildri.com(312) 321-1515
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