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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)
June 8, 2020
 
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 June 8, 2020, Oil-Dri Corporation of America (the “Registrant”) issued a press release announcing its results of operations for its third quarter ended April 30, 2020. 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: June 8, 2020



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

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

News Announcement
For Immediate Release
 
Exhibit 99.1

Oil-Dri Announces Third Quarter and First Nine-Months of Fiscal 2020 Results

CHICAGO-(June 8, 2020)-Oil-Dri Corporation of America (NYSE: ODC), producer and marketer of sorbent mineral products, today announced results for its third quarter and first nine-months of fiscal 2020.
 
Three Months Ended
Nine Months Ended
 
Ended April 30
Ended April 30
 
2020
2019
Change
2020
2019
Change
Consolidated Results
 
 
 
 
 
 
Net Sales
$76,256,000
$70,885,000
8%
$218,383,000
$206,908,000
6%
Net Income Attributable to Oil-Dri
$4,648,000
$5,619,000
(17)%
$13,014,000
$8,812,000
48%
Earnings per Diluted Share
$0.61
$0.74
(18)%
$1.69
$1.17
44%
Business to Business
 
 
 
 
 
 
Net Sales
$26,683,000
$26,041,000
2%
$77,632,000
$77,825,000
—%
Segment Operating Income
$8,198,000
$7,454,000
10%
$24,046,000
$21,758,000
11%
Retail and Wholesale
 
 
 
 
 
 
Net Sales
$49,573,000
$44,844,000
11%
$140,751,000
$129,083,000
9%
Segment Operating Income
$6,412,000
$4,161,000
54%
$15,380,000
$6,823,000
125%


Daniel S. Jaffee, President and Chief Executive Officer, stated, “With the outbreak of the novel coronavirus (“COVID-19”), Oil-Dri’s top priority has been to protect the health and safety of our teammates. We have transitioned to a remote work environment, where appropriate, and implemented CDC recommended safety measures and sanitation procedures at our plants. We have successfully managed our supply chain and manufacturing operations to ensure that our essential products reach our customers. Furthermore, our company has been able to support several local hospitals, clinics and nursing homes with the donation of much needed N-95 respirator masks. I am incredibly proud of our team and their efforts to respond to this crisis. Oil-Dri will continue to adapt to this evolving situation and will work hard to keep our business running to meet the changing needs of our customers. We feel very fortunate that, so far, our teammates are healthy and most of our products are deemed “essential.” Our thoughts and prayers go out to the millions and probably billions of people negatively impacted, both physically and financially, by the global pandemic.




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During the third quarter, all the Company’s manufacturing facilities remained open, and we continue to operate to keep pace with demand. We achieved record quarterly consolidated net sales of $76.3 million, reflecting an 8% increase over the third quarter last year. Cat litter, in particular, was in high demand during the months of March and April as consumers stocked up on our products in response to state mandated shelter-in-place orders due to COVID-19. Our Business to Business Group’s diversified product portfolio proved to be resilient during this unprecedented time, as we experienced sales growth within our agricultural, animal health and nutrition, and co-packaging businesses. Consolidated gross margins rose to 28% during the third quarter from 24% in the same period last year, due to lower freight and natural gas costs which more than offset temporary wage increases given to our front-line teammates. These gains were further offset by an 8% increase in Selling, General and Administrative (“SG&A”) expenses over the prior year. Higher incentive bonus accruals and other compensation and benefits costs accounted for the increase. Third quarter consolidated operating income was $5.7 million compared to $2.3 million a year ago, demonstrating exceptional growth of 145%.

Our Business to Business Products Group’s third quarter sales reached $26.7 million. Revenues increased for three of our four principal products within the group. Sales of our agricultural products rose 11% in the quarter versus the prior year, primarily driven by higher demand of our traditional granules from a large customer. Our animal health and nutrition products delivered topline growth of 25% in the third quarter compared to the same period last year, mainly due to increased sales of feed additives in foreign markets, including Latin America and Asia, excluding China. After being closed for several months due to the outbreak of the novel coronavirus, our sales office in China is now open. However, business operations were negatively impacted by COVID-19 during the third quarter as Chinese government restrictions delayed product shipments. Furthermore, sales to pork producers within China remained soft as a result of the continued spread of the African swine fever within some areas of the country. Revenues from fluid purification products declined 8% in the third quarter compared to the prior year. Lower demand from edible oil producers due to worldwide COVID-19 closures of restaurants and schools impacted sales. Local pricing competition in foreign markets caused by unfavorable exchange rates and the closure of a domestic biodiesel processing plant also contributed to the decline. Our co-packaging coarse cat litter business realized sales gains of almost 10% in the quarter over the same period last year as consumers loaded up on pet care items due to the current pandemic.

Operating Income in the Business to Business Group was up 10% in the third quarter versus the prior year. Higher sales combined with lower freight and natural gas costs





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offset a 17% increase in SG&A expenses over the prior year. These increased SG&A costs reflect greater compensation related expenses and other costs to support the business.

The Retail and Wholesale Products Group experienced record quarterly sales of $49.6 million, representing an 11% gain over the third quarter last year. This growth was driven by a 20% increase in domestic cat litter revenues primarily due to unprecedented demand caused by the COVID-19 pandemic. Inventory loading by retailers resulted in double digit sales growth for both branded and private label cat litter products. Increases were led by scoopable litter items, followed by gains in coarse litter and accessories. Our e-commerce business experienced a triple digit percentage increase in sales for the quarter compared to last year, as more people shopped online while sheltering-in-place. Revenue from our subsidiary in Canada also rose within the quarter as a result of higher cat litter sales. Decreased demand of our industrial and sports products due to COVID-19 offset some of the sales gains within the Retail and Wholesale Products Group. These markets were negatively impacted by customer closures and the national shutdown of sports fields.

Operating Income for the Retail and Wholesale Products Group reached a record $6.4 million in the third quarter reflecting a 54% gain over the prior year. Increased sales and lower freight and natural gas costs helped to offset higher SG&A costs. These elevated SG&A costs include employee compensation, advertising and other costs to support the business. Due to a shift in program timing, our advertising spending increased in the third quarter when compared to the same period last year. We expect adverting costs for the full fiscal year to be higher than last year."

The Company will host its third quarter of fiscal 2020 earnings teleconference on Wednesday, June 10, 2020 at 10:00 a.m. Central Time. 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.

“Oil-Dri” and “Cat’s Pride” 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,”



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“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.

Contact:
Leslie A. Garber
Manager of Investor Relations
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515




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CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(unaudited)
Three Months Ended April 30
(in thousands, except per share amounts)

2020
 
% of Sales
 
2019
 
% of Sales
Net Sales
$
76,256

 
100.0
 %
 
$
70,885

 
100.0
 %
Cost of Sales
(54,871
)
 
(72.0
)%
 
(54,051
)
 
(76.3
)%
Gross Profit
21,385

 
28.0
 %
 
16,834

 
23.7
 %
Selling, General and Administrative Expenses
(15,685
)
 
(20.6
)%
 
(14,507
)
 
(20.5
)%
Operating Income
5,700

 
7.5
 %
 
2,327

 
3.3
 %
Interest Expense
(108
)
 
(0.1
)%
 
(141
)
 
(0.2
)%
Other Income (1)
5

 
 %
 
4,518

 
6.4
 %
Income Before Income Taxes
5,597

 
7.3
 %
 
6,704

 
9.5
 %
Income Tax Expense
(947
)
 
(1.2
)%
 
(1,143
)
 
(1.6
)%
Net Income
4,650

 
6.1
 %
 
5,561

 
7.8
 %
Net Income (Loss) Attributable to Noncontrolling Interest
2

 
 %
 
(58
)
 
(0.1
)%
Net Income Attributable to Oil-Dri
$
4,648

 
6.1
 %
 
$
5,619

 
7.9
 %
 
 
 
 
 
 
 
 
Net Income Per Share: Basic Common
$
0.66

 
 
 
$
0.81

 
 
                                       Basic Class B Common
$
0.50

 
 
 
$
0.61

 
 
                                       Diluted Common
$
0.61

 
 
 
$
0.74

 
 
Avg Shares Outstanding: Basic Common
5,126

 
 
 
5,126

 
 
                                       Basic Class B Common
2,036

 
 
 
2,068

 
 
                                       Diluted Common
7,288

 
 
 
7,253

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended April 30
 
2020
 
% of Sales
 
2019
 
% of Sales
Net Sales
$
218,383

 
100.0
 %
 
$
206,908

 
100.0
 %
Cost of Sales
(158,105
)
 
(72.4
)%
 
(158,660
)
 
(76.7
)%
Gross Profit
60,278

 
27.6
 %
 
48,248

 
23.3
 %
Selling, General and Administrative Expenses
(44,584
)
 
(20.4
)%
 
(42,091
)
 
(20.3
)%
Operating Income
15,694

 
7.2
 %
 
6,157

 
3.0
 %
Interest Expense
(314
)
 
(0.1
)%
 
(434
)
 
(0.2
)%
Other Income (1)
52

 
 %
 
4,653

 
2.2
 %
Income Before Income Taxes
15,432

 
7.1
 %
 
10,376

 
5.0
 %
Income Tax Expense
(2,573
)
 
(1.2
)%
 
(1,599
)
 
(0.8
)%
Net Income
12,859

 
5.9
 %
 
8,777

 
4.2
 %
Net Loss Attributable to Noncontrolling Interest
(155
)
 
(0.1
)%
 
(35
)
 
 %
Net Income Attributable to Oil-Dri
$
13,014

 
6.0
 %
 
$
8,812

 
4.2
 %
 
 
 
 
 
 
 
 
Net Income Per Share: Basic Common
$
1.85

 
 
 
$
1.27

 
 
                                       Basic Class B Common
$
1.39

 
 
 
$
0.95

 
 
                                       Diluted Common
$
1.69

 
 
 
$
1.17

 
 
Avg Shares Outstanding: Basic Common
5,152

 
 
 
5,108

 
 
                                       Basic Class B Common
2,042

 
 
 
2,068

 
 
                                       Diluted Common
7,310

 
 
 
7,245

 
 
(1) See Note 8 of the Notes to the Unaudited Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the period ending April 30, 2020 for further information about amounts included in this line item for the years presented.



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CONSOLIDATED BALANCE SHEETS
 
 
 
 
(in thousands, except per share amounts)
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
As of April 30
 
 
2020
 
2019
Current Assets
 
 
 
 
Cash and Cash Equivalents
 
$
20,548

 
$
16,224

Short-term Investments
 

 
730

Accounts Receivable, Net
 
41,846

 
35,906

Inventories
 
24,096

 
26,738

Prepaid Expenses and Other
 
7,623

 
7,210

Total Current Assets
 
94,113

 
86,808

Property, Plant and Equipment, Net
 
90,133

 
87,086

Other Noncurrent Assets (1)
 
31,735

 
24,584

Total Assets
 
$
215,981

 
$
198,478

 
 
 
 
 
Current Liabilities
 
 
 
 
Current Maturities of Notes Payable
 
$
3,074

 
$
3,083

Accounts Payable
 
10,524

 
8,608

Dividends Payable
 
1,735

 
1,689

Other Current Liabilities
 
25,614

 
18,121

Total Current Liabilities
 
40,947

 
31,501

Noncurrent Liabilities
 
 
 
 
Notes Payable
 

 
3,045

Other Noncurrent Liabilities (1)
 
28,379

 
26,417

Total Noncurrent Liabilities
 
28,379

 
29,462

Stockholders' Equity
 
146,655

 
137,515

Total Liabilities and Stockholders' Equity
 
$
215,981

 
$
198,478

 
 
 
 
 
Book Value Per Share Outstanding
 
$
20.39

 
$
19.16

 
 
 
 
 
Acquisitions of:
 
 
 
 
Property, Plant and Equipment
Third Quarter
$
3,584

 
$
3,963

 
Year To Date
$
10,870

 
$
10,162

Depreciation and Amortization Charges
Third Quarter
$
3,470

 
$
3,310

 
Year To Date
$
10,399

 
$
9,849

(1) Amounts as of April 30, 2020 include right-of-use operating lease assets and related liabilities required by adoption of Accounting Standards Codification 842, Leases.







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CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
(in thousands)
 
 
 
(unaudited)
 
 
 
 
For the Nine Months Ended
 
April 30
 
2020
 
2019
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net Income
$
12,859

 
$
8,777

Adjustments to reconcile net income to net cash
 
 
 
provided by operating activities:
 
 
 
Depreciation and Amortization
10,399

 
9,849

Increase in Accounts Receivable
(7,296
)
 
(2,185
)
Increase in Inventories
(72
)
 
(4,248
)
Increase in Accounts Payable
3,859

 
2,873

Increase (Decrease) in Accrued Expenses
4,612

 
(1,762
)
(Decrease) Increase in Pension and Postretirement Benefits
(5,482
)
 
1,287

Other
3,390

 
773

Total Adjustments
9,410

 
6,587

Net Cash Provided by Operating Activities
22,269

 
15,364

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital Expenditures
(10,870
)
 
(10,162
)
Net Dispositions of Investment Securities

 
6,404

Other
112

 

Net Cash Used in Investing Activities
(10,758
)
 
(3,758
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Principal Payments on Notes Payable
(3,082
)
 
(3,083
)
Dividends Paid
(5,292
)
 
(4,967
)
Purchase of Treasury Stock
(4,620
)
 
(141
)
Other
142

 

Net Cash Used in Financing Activities
(12,852
)
 
(8,191
)
 
 
 
 
Effect of exchange rate changes on Cash and Cash Equivalents
27

 
52

 
 
 
 
Net (Decrease) Increase in Cash and Cash Equivalents
(1,314
)
 
3,467

Cash and Cash Equivalents, Beginning of Period
21,862

 
12,757

Cash and Cash Equivalents, End of Period
$
20,548

 
$
16,224




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