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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)
December 6, 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.) 
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.10 per share
ODC
New York Stock Exchange

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 December 6, 2019, Oil-Dri Corporation of America (the “Registrant”) issued a press release announcing its results of operations for its first quarter ended October 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: December 6, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

401461561_oildrilogo_aa01.gif
410 N. Michigan Ave. Chicago, Illinois 60611, U.S.A

News Announcement
For Immediate Release
 
Exhibit 99.1
Oil-Dri Announces First Quarter of Fiscal 2020 Results

CHICAGO-(December 6, 2019)-Oil-Dri Corporation of America (NYSE: ODC), producer and marketer of sorbent mineral products, today announced its first quarter fiscal 2020 earnings.
 
First Quarter
 
Ended October 31
 
F20
F19
Change
Consolidated Results
 
 
 
Net Sales
$71,122,000
$66,143,000
8%
Net Income Attributable to Oil-Dri
$3,536,000
$906,000
290%
Earnings per Diluted Share
$0.46
$0.12
283%
Business to Business
 
 
 
Net Sales
$26,478,000
$25,326,000
5%
Segment Operating Income
$8,296,000
$7,032,000
18%
Retail and Wholesale
 
 
 
Net Sales
$44,644,000
$40,817,000
9%
Segment Operating Income
$3,360,000
$9,000
NMF*
*Not Meaningful

Daniel S. Jaffee, President and CEO, stated, “Our financial results for the first quarter of fiscal 2020 were extremely strong and reflect the successful impact of our prior year’s investments. We achieved record consolidated net sales for the quarter which demonstrates meaningful progress in the execution of our strategies. Increases in customer purchasing trends as well as margin expansion occurred both within our Retail & Wholesale and Business to Business Products Groups. Our new Sales and Operations Process (S&OP) is underway, and our team is focused on its implementation in order to reap the numerous related benefits.

Reductions in freight costs, due in part to increased truck availability, and lower natural gas costs, helped to improve margins in all business sectors. Furthermore, the first quarter of the prior year included one-time freight expenses and other costs associated with operational inefficiencies that occurred as a result of the implementation of our Enterprise Resource Planning System as well as disruptions due to Hurricane Michael. These


 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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benefits were partially offset by slight increases in packaging and non-fuel related manufacturing costs. Although total Selling, General and Administrative (SG&A) and income tax expenses were higher in the first quarter of fiscal 2020 versus the same period last year, our net income attributable to Oil-Dri reached $3.5 million which reflects a 290% increase over the prior year.

Our Business to Business Products Group’s first quarter revenues increased 5% compared to the same quarter last year. The Animal Health & Nutrition division delivered topline growth of 16% versus the prior year due to higher sales of our Calibrin and ConditionAde animal health products. While the African Swine Flu continues to impede our sales efforts in China, we achieved significant revenue growth in our Latin American, Asian, and African animal health markets. Our Fluids Purification business once again delivered increased sales of bleaching clay products used to filter edible oil, although these gains were partially offset by softer domestic sales to biodiesel producers. Sales within our Agricultural products division declined by 6% in the first quarter compared to last year, due to the loss of a large customer who purchased our traditional agricultural carrier products. Considerable momentum of our engineered granules and higher traditional agricultural carrier sales to an existing customer helped offset the negative impact. Finally, first quarter sales of our coarse cat litter from our Co-Packaging division surpassed revenues from the same period last year by 15%.

Operating Income in the Business to Business segment was up 18% in the first quarter versus the prior year. Although SG&A expenses increased slightly, improved revenues and decreases in freight costs helped raise the overall profitability of the Business to Business Products Group.

The Retail & Wholesale Products Group experienced a sales increase of 9% over the prior year, primarily due to higher demand of private label litter in our Consumer Division. Not only did sales of our private label scoopable products increase this quarter as a result of organic growth, but private label coarse revenues grew significantly due to new distribution and price increases. Our private label unit share of the total cat litter market, according to third party data1, increased by 18.7% in the 12 weeks ending November 3, 2019 compared to the same period the prior year. Our branded and private label lightweight litter continues to gain traction in the marketplace.


2
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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Operating Income for the Retail & Wholesale Products group reached $3.4 million versus $9,000 for the first quarter last year. Higher sales, improved freight costs, and lower SG&A expenses, including a slight reduction in advertising costs, all enhanced the bottom line. We continue to refine our advertising spending to increase our return on investment by focusing on digital and geographically targeted media. We expect total advertising expenses in fiscal 2020 to be higher than in fiscal 2019.

In October, Oil-Dri was pleased to be featured in an episode of “EARTH” with John Holden on the Fox Business Network. The program highlighted how Oil-Dri created lightweight cat litter from its unique clay mineral and revolutionized the industry. This media coverage reached national audiences and generated additional awareness of our brand. To view the video segment, please visit our website’s home page.

Oil-Dri will combine its first quarter of fiscal 2020 earnings teleconference with its Annual Meeting of Stockholders on Wednesday, December 11, 2019 at 9:30 am Central Time. The meeting will be held at The University of Chicago Booth School of Business, Gleacher Center, 450 Cityfront Plaza Drive, Chicago, IL 60611. Participation 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.

1Based in part on data reported by Nielsen through its Nielsen Answers Core Service for the Pet Care Category for the 12 week period ended November 3, 2019, for the U.S. market. Copyright © 2019 Nielsen.

“Oil-Dri”, “Calibrin”, and “ConditionAde” are registered trademarks 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.


3
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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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
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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

2019
 
% of Sales
 
2018
 
% of Sales
Net Sales
$
71,122

 
100.0
 %
 
$
66,143

 
100.0
 %
Cost of Sales
(51,187
)
 
(72.0
)%
 
(50,133
)
 
(75.8
)%
Gross Profit
19,935

 
28.0
 %
 
16,010

 
24.2
 %
Selling, General and Administrative Expenses
(15,814
)
 
(22.2
)%
 
(15,007
)
 
(22.7
)%
Operating Income
4,121

 
5.8
 %
 
1,003

 
1.5
 %
Interest Expense
(103
)
 
(0.1
)%
 
(151
)
 
(0.2
)%
Other Income
59

 
0.1
 %
 
32

 
 %
Income Before Income Taxes
4,077

 
5.7
 %
 
884

 
1.3
 %
Income Tax (Expense) Benefit
(617
)
 
(0.9
)%
 
50

 
0.1
 %
Net Income
3,460

 
4.9
 %
 
934

 
1.4
 %
Net (Loss) Income Attributable to Noncontrolling Interest
(76
)
 

 
28

 
 %
Net Income Attributable to Oil-Dri
$
3,536

 
5.0
 %
 
$
906

 
1.4
 %
Net Income Per Share: Basic Common
$
0.51

 
 
 
$
0.13

 
 
                                       Basic Class B Common
$
0.38

 
 
 
$
0.10

 
 
                                       Diluted Common
$
0.46

 
 
 
$
0.12

 
 
Avg Shares Outstanding: Basic Common
5,149

 
 
 
5,076

 
 
                                       Basic Class B Common
2,050

 
 
 
2,069

 
 
                                       Diluted Common
7,306

 
 
 
7,243

 
 

5
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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CONSOLIDATED BALANCE SHEETS
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of October 31
 
 
2019
 
2018
Current Assets
 
 
 
 
Cash and Cash Equivalents
 
$
19,260

 
$
9,019

Short-term Investments
 

 
2,652

Accounts Receivable, Net
 
36,269

 
39,935

Inventories
 
23,803

 
25,413

Prepaid Expenses
 
6,213

 
8,200

Total Current Assets
 
85,545

 
85,219

Property, Plant and Equipment, Net
 
90,206

 
87,338

Other Assets (1)
 
33,991

 
24,394

Total Assets
 
$
209,742

 
$
196,951

 
 
 
 
 
Current Liabilities
 
 
 
 
Current Maturities of Notes Payable
 
$
3,059

 
$
3,083

Accounts Payable
 
7,942

 
13,287

Dividends Payable
 
1,766

 
1,656

Other Current Liabilities
 
17,235

 
17,691

Total Current Liabilities
 
30,002

 
35,717

Noncurrent Liabilities
 
 
 
 
Notes Payable
 

 
3,031

Other Noncurrent Liabilities (1)
 
41,804

 
26,416

Total Noncurrent Liabilities
 
41,804

 
29,447

Stockholders' Equity
 
137,936

 
131,787

Total Liabilities and Stockholders' Equity
 
$
209,742

 
$
196,951

 
 
 
 
 
Book Value Per Share Outstanding
 
$
19.16

 
$
18.44

 
 
 
 
 
Acquisitions of:
 
 
 
 
Property, Plant and Equipment
First Quarter
$
3,900

 
$
4,058

 
Year To Date
$
3,900

 
$
4,058

Depreciation and Amortization Charges
First Quarter
$
3,469

 
$
3,305

 
Year To Date
$
3,469

 
$
3,305

(1) Amounts as of October 31, 2019 include right-of-use operating lease assets and related liabilities required by adoption of Accounting Standards Codification 842, Leases.




6
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515



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CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
(in thousands)
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
For the Three Months Ended
 
October 31
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net Income
$
3,460

 
$
934

Adjustments to reconcile net income to net cash
 
 
 
provided by operating activities:
 
 
 
Depreciation and Amortization
3,469

 
3,305

Increase in Accounts Receivable
(980
)
 
(6,367
)
Decrease (Increase) in Inventories
371

 
(2,933
)
Increase in Accounts Payable
835

 
7,290

Decrease in Accrued Expenses
(3,812
)
 
(1,780
)
Increase in Pension and Postretirement Benefits
621

 
479

Other
2,728

 
(244
)
Total Adjustments
3,232

 
(250
)
Net Cash Provided by Operating Activities
6,692

 
684

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital Expenditures
(3,900
)
 
(4,058
)
Net Dispositions of Investment Securities

 
4,482

Net Cash (Used in) Provided by Investing Activities
(3,900
)
 
424

 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Principal Payments on Long-Term Debt
(3,083
)
 
(3,083
)
Dividends Paid
(1,761
)
 
(1,627
)
Purchase of Treasury Stock
(500
)
 
(135
)
Net Cash Used in Financing Activities
(5,344
)
 
(4,845
)
 
 
 
 
Effect of exchange rate changes on Cash and Cash Equivalents
(50
)
 
(1
)
 
 
 
 
Net Decrease in Cash and Cash Equivalents
(2,602
)
 
(3,738
)
Cash and Cash Equivalents, Beginning of Period
21,862

 
12,757

Cash and Cash Equivalents, End of Period
$
19,260

 
$
9,019



7
 
Leslie A. Garber
Investor Relations Manager
Oil-Dri Corporation of America
[email protected]
(312) 321-1515

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