Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
March 11, 2019
 
Oil-Dri Corporation of America
(Exact name of registrant as specified in its charter) 
 
Delaware
 
001-12622
 
36-2048898
(State or other jurisdiction of
incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)
 
410 North Michigan Avenue
Suite 400
Chicago, Illinois
 
60611-4213
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code
(312) 321-1515
 
 
(Former name or former address, if changed since last report.) 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¬
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¬
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¬
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¬
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company   ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨
 
 
 
 
 






 
Item 2.02
Results of Operations and Financial Condition.
 
On March 11, 2019, Oil-Dri Corporation of America (the “Registrant”) issued a press release announcing its results of operations for its second quarter ended January 31, 2019. A copy of the press release is attached as Exhibit 99.1 and the information contained therein is incorporated herein by reference. The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), and it shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 
Item 9.01
Financial Statements and Exhibits.
 
(d)
Exhibits
Exhibit
 
 
Number
 
Description of Exhibits
 
 
 
99.1

 






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
OIL-DRI CORPORATION OF AMERICA
 
 
 
 
By:
/s/   Laura G. Scheland
 
 
 
Laura G. Scheland
 
 
Vice President and General Counsel
 
Date: March 11, 2019



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

397066230_oildrilogo_imagea17.gif
410 N. Michigan Ave. Chicago, Illinois 60611, U.S.A

News Announcement
For Immediate Release
 
Exhibit 99.1

Oil-Dri Announces Second Quarter and First Six-Months of Fiscal 2019 Results

CHICAGO-(March 11, 2019)-Oil-Dri Corporation of America (NYSE: ODC), producer and marketer of sorbent mineral products, today announced results for its second quarter and first six-months of fiscal 2019.

 
Second Quarter
Year to Date
 
Ended January 31, 2019
Ended January 31, 2019
 
 
 
 
 
 
 
 
F19
F18
Change
F19
F18
Change
Consolidated Results
 
 
 
 
 
 
Net Sales
$69,880,000
$68,894,000
1%
$136,023,000
$135,540,000
—%
Net Income Attributable to Oil-Dri
$2,287,000
($1,096,000)
N/A
$3,193,000
$1,954,000
63%
Earnings per Diluted Share
$0.30
($0.15)
N/A
$0.42
$0.26
62%
Business to Business
 
 
 
 
 
 
Net Sales
$26,458,000
$27,355,000
(3)%
$51,784,000
$54,442,000
(5)%
Segment Operating Income
$7,272,000
$9,759,000
(25)%
$14,304,000
$18,635,000
(23)%
Retail and Wholesale
 
 
 
 
 
 
Net Sales
$43,422,000
$41,539,000
5%
$84,239,000
$81,098,000
4%
Segment Operating Income
$2,653,000
$2,422,000
10%
$2,662,000
$4,787,000
(44)%



Daniel S. Jaffee, President and CEO, stated, “Our financial results are disappointing but reflect short-term growing pains and industry-wide challenges. While some of the negative impacts were anticipated, some were not. However, as I have stated previously, I am confident that our long-term strategies are working. We are gaining traction in our focused markets, and as Head Coach of the Oil-Dri Team, I can assure you we have every intention of staying the course and winning over the long run.


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



397066230_oildrilogo_imagea17.gif
 

The areas listed below are where the business experienced the greatest incremental approximate cost increases, year-over-year:

Freight
Quarter: $2M
Six-Months: $4M
Packaging
Quarter: $900,000
Six-Months: $1.7M
New Enterprise Resource Planning (ERP) System
Quarter: $250,000
Six-Months: $1.2M
Customer Compliance Fines
Quarter: $200,000
Six-Months: $700,000

The most significant increases were largely outside of our control and driven by industry conditions, such as freight rates, natural gas cost and packaging material commodity pricing. We believe similar pressures will continue to affect our business for several future periods. We raised cat litter prices effective August 1, 2018, but this increase has proven to be insufficient. In hindsight, we should have done a better job anticipating the magnitude of market conditions and adjusted our prices accordingly. For this reason, we are implementing another price increase on all cat litter products effective May 1, 2019.

In the first six-months of fiscal 2019, our costs related to non-fuel manufacturing increased approximately 7% year over year due to increased product transfers between plants and warehouses, repairs and preventative maintenance of our mining equipment, labor, additional leased warehousing space to house incremental inventory during our ERP implementation, and waste disposal. During the period, inventory increased by $5.6 million which can be attributed to anticipated sales requirements, incremental safety stock during our ERP implementation, and related higher product costs. We are working diligently to improve manufacturing efficiencies and expect these costs to progressively decrease in the second half of fiscal 2019.

While our cash position is slowly improving, it reflects the investment we made in our new ERP system and difficulties we experienced during the implementation process. We continue to address customer invoicing delays and other issues related to the new system. This contributed to an increase of approximately $4.7 million in accounts receivable during the first half of the year.

Challenges were also faced by our Business to Business Product Group. Sales of fluids purification products were down internationally due to price competition, and animal

2
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515



397066230_oildrilogo_imagea17.gif
 


health products were negatively impacted in Asia by the widespread African Swine Fever. However, Amlan products, such as Varium for poultry and NeoPrime for piglets, are being trialed and adopted to improve feed efficiency around the world. Specifically, sales momentum is increasing in Latin America. We believe this can be attributed to an increased sales presence as well as a new marketing strategy.

Sales were up in both periods for the Retail and Wholesale Product Group, led primarily by increased sales of our private label lightweight products to existing large-scale accounts. According to third-party market data from the latest 12-week period ending January 26, 2019, Oil-Dri’s branded and private label products accounted for 14.2% unit share of the overall cat litter category compared to 13.3% in the same period of 2018. However, the group’s operating income for the first six months of fiscal year 2019 was negatively impacted by the higher freight, packaging and non-fuel manufacturing costs discussed above.

We have strategically used our advertising dollars to focus more on the digital promotion of our Litter for Good program. Since the program launched in January 2018, we have promised 5 million pounds of litter to 1,211 shelters. As an on-going program, Litter for Good truly reflects many of Oil-Dri’s core values, and we are very proud of the program’s success.

We have made several changes in leadership over the past few months to support the future growth of our business. Our investment in infrastructure (ERP System) and people will allow us to capitalize on the incremental opportunities in the markets in which we participate.

Looking forward, the team and I are very confident that while fiscal 2019 may not be a record year financially, we will all look back at the organizational changes and investments that were made and realize it was one of our most strategic years in company history. We very much appreciate your support in this bumpy and somewhat painful journey towards becoming a larger, more sophisticated company.”

###

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 second quarter teleconference on Monday, March 11, 2019 at 3:30pm Central Time. Participation details are available on our website’s Events page.



3
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515



397066230_oildrilogo_imagea17.gif
 

“Oil-Dri”, “Amlan”, “Cat’s Pride”, “Varium”, and “NeoPrime” 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.




4
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515



397066230_oildrilogo_imagea17.gif
 

CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(unaudited)
Second Quarter Ended January 31
(in thousands, except per share amounts)

2019
 
% of Sales
 
2018
 
% of Sales
Net Sales
$
69,880

 
100.0
 %
 
$
68,894

 
100.0
 %
Cost of Sales (1)
(54,476
)
 
(78.0
)%
 
(49,237
)
 
(71.5
)%
Gross Profit
15,404

 
22.0
 %
 
19,657

 
28.5
 %
Selling, General and Administrative Expenses (1)
(12,577
)
 
(18.0
)%
 
(14,474
)
 
(21.0
)%
Operating Income
2,827

 
4.0
 %
 
5,183

 
7.5
 %
Interest Expense
(142
)
 
(0.2
)%
 
(199
)
 
(0.3
)%
Other Income (1)
103

 
0.1
 %
 
87

 
0.1
 %
Income Before Income Taxes
2,788

 
4.0
 %
 
5,071

 
7.4
 %
Income Tax Expense
(506
)
 
(0.7
)%
 
(6,167
)
 
(9.0
)%
Net Income (Loss)
2,282

 
3.3
 %
 
(1,096
)
 
(1.6
)%
Net Loss Attributable to Noncontrolling Interest
(5
)
 

 

 

Net Income (Loss) Attributable to Oil-Dri
$
2,287

 
3.3
 %
 
$
(1,096
)
 
(1.6
)%
Net Income (Loss) Per Share:
 
 
 
 
 
 
 
Basic Common
$
0.33

 
 
 
$
(0.17
)
 
 
Basic Class B Common
$
0.25

 
 
 
$
(0.12
)
 
 
Diluted Common
$
0.30

 
 
 
$
(0.15
)
 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
Basic Common
5,121

 
 
 
5,035

 
 
Basic Class B Common
2,068

 
 
 
2,104

 
 
Diluted Common
7,229

 
 
 
7,139

 
 
 
Six Months Ended January 31
 
2019
 
% of Sales
 
2018
 
% of Sales
Net Sales
$
136,023

 
100.0
 %
 
$
135,540

 
100.0
 %
Cost of Sales (1)
(104,609
)
 
(76.9
)%
 
(96,908
)
 
(71.5
)%
Gross Profit
31,414

 
23.1
 %
 
38,632

 
28.5
 %
Selling, General and Administrative Expenses (1)
(27,584
)
 
(20.3
)%
 
(29,234
)
 
(21.6
)%
Operating Income
3,830

 
2.8
 %
 
9,398

 
6.9
 %
Interest Expense
(293
)
 
(0.2
)%
 
(400
)
 
(0.3
)%
Other Income (Expense) (1)
135

 
0.1
 %
 
(88
)
 
(0.1
)%
Income Before Income Taxes
3,672

 
2.7
 %
 
8,910

 
6.6
 %
Income Tax Expense
(456
)
 
(0.3
)%
 
(6,956
)
 
(5.1
)%
Net Income
3,216

 
2.4
 %
 
1,954

 
1.5
 %
Net Income Attributable to Noncontrolling Interest
23

 
 %
 

 
 %
Net Income Attributable to Oil-Dri
$
3,193

 
2.3
 %
 
$
1,954

 
1.5
 %
Net Income Per Share:
 
 
 
 
 
 
 
Basic Common
$
0.46

 
 
 
$
0.29

 
 
Basic Class B Common
$
0.34

 
 
 
$
0.22

 
 
Diluted Common
$
0.42

 
 
 
$
0.26

 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
Basic Common
5,099

 
 
 
5,030

 
 
Basic Class B Common
2,069

 
 
 
2,097

 
 
Diluted Common
7,242

 
 
 
7,215

 
 
(1) Prior year amounts have been retrospectively adjusted to conform to the current year presentation of the non-service cost components of net periodic benefit cost required by new guidance under Accounting Standards Codification (ASC) 715, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.

5
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515



397066230_oildrilogo_imagea17.gif
 

CONSOLIDATED BALANCE SHEETS
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of January 31
 
 
2019
 
2018
Current Assets
 
 
 
 
Cash and Cash Equivalents
 
$
9,375

 
$
9,381

Short-term Investments
 
480

 
21,894

Accounts Receivable, Net
 
38,282

 
32,309

Inventories
 
28,123

 
22,603

Prepaid Expenses
 
6,040

 
7,967

Total Current Assets
 
82,300

 
94,154

Property, Plant and Equipment, Net
 
86,193

 
84,289

Other Assets
 
24,644

 
27,092

Total Assets
 
$
193,137

 
$
205,535

 
 
 
 
 
Current Liabilities
 
 
 
 
Current Maturities of Notes Payable
 
$
3,083

 
$
3,083

Accounts Payable
 
7,882

 
8,089

Dividends Payable
 
1,680

 
1,559

Accrued Expenses
 
18,444

 
20,603

Total Current Liabilities
 
31,089

 
33,334

Noncurrent Liabilities
 
 
 
 
Notes Payable
 
3,038

 
6,092

Other Noncurrent Liabilities
 
26,246

 
39,847

Total Noncurrent Liabilities
 
29,284

 
45,939

Stockholders' Equity
 
132,764

 
126,262

Total Liabilities and Stockholders' Equity
 
$
193,137

 
$
205,535

 
 
 
 
 
Book Value Per Share Outstanding
 
$
18.52

 
$
17.72

 
 
 
 
 
Acquisitions of:
 
 
 
 
Property, Plant and Equipment
Second Quarter
$
2,141

 
$
2,805

 
Year To Date
$
6,199

 
$
6,850

Depreciation and Amortization Charges
Second Quarter
$
3,234

 
$
3,221

 
Year To Date
$
6,539

 
$
6,413





6
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515



397066230_oildrilogo_imagea17.gif
 

CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
(in thousands)
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
For the Six Months Ended
 
January 31
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net Income
$
3,216

 
$
1,954

Adjustments to reconcile net income to net cash
 
 
 
provided by operating activities:
 
 
 
Depreciation and Amortization
6,539

 
6,413

     (Increase) Decrease in Accounts Receivable
(4,529
)
 
362

     (Increase) Decrease in Inventories
(5,607
)
 
75

     Increase (Decrease) in Accounts Payable
2,295

 
(743
)
     (Decrease) in Accrued Expenses
(1,390
)
 
(3,637
)
     Increase in Pension and Postretirement Benefits
859

 
649

Other
1,309

 
6,556

Total Adjustments
(524
)
 
9,675

Net Cash Provided by Operating Activities
2,692

 
11,629

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital Expenditures
(6,199
)
 
(6,850
)
Net Dispositions of Investment Securities
6,654

 
1,739

Other

 
11

Net Cash Provided by (Used In) Investing Activities
455

 
(5,100
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Principal Payments on Long-Term Debt
(3,083
)
 
(3,083
)
Dividends Paid
(3,287
)
 
(3,112
)
Purchase of Treasury Stock
(135
)
 
(27
)
Net Cash Used in Financing Activities
(6,505
)
 
(6,222
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(24
)
 
(21
)
 
 
 
 
Net (Decrease) Increase in Cash and Cash Equivalents
(3,382
)
 
286

Cash and Cash Equivalents, Beginning of Period
12,757

 
9,095

Cash and Cash Equivalents, End of Period
$
9,375

 
$
9,381



7
 
Reagan B. Culbertson
Investor Relations Manager
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515

(Back To Top)