Oil-Dri Achieves Record Results for the Second Quarter and Triples its Net Income
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Insights
Oil-Dri Corporation of America's reported second quarter net sales increase of 4% and a net income surge of 221% over the previous year are significant indicators of the company's current financial health and operational efficiency. The substantial growth in net income, even after excluding nonrecurring events, is particularly noteworthy, indicating a robust underlying business performance. This performance is further underscored by an impressive gross profit increase of 34%, leading to a gross margin expansion from 22.6% to 29.3% year-over-year. Such an expansion suggests effective cost management and pricing strategies in the face of potential inflationary pressures.
Investors may find the record sales in fluids purification products, driven by increased demand for renewable diesel and other applications, as a positive sign of diversification and adaptability in Oil-Dri's product portfolio. The company's ability to acquire new customers in this sector could imply a strengthening market position and potential for future revenue streams. However, the decline in agricultural and animal health businesses warrants attention, as it may indicate challenges in these segments that could offset gains in other areas if not addressed.
From a liquidity perspective, the increase in cash and cash equivalents is a positive signal, enhancing the company’s financial flexibility. The strategic use of this cash for capital investments and dividend payouts reflects a balanced approach to growth and shareholder returns. Investors should monitor the effectiveness of these capital investments in improving manufacturing infrastructure and whether they lead to sustained improvements in efficiency and profitability.
The reported increase in net sales and income for Oil-Dri Corporation of America is reflective of broader industry trends, where companies with diversified product lines and innovative offerings, such as renewable diesel, are outperforming. The company's strategic focus on gross margin improvement through better product mix and pricing strategies is in line with industry best practices for enhancing profitability.
However, the segment-specific performance reveals that success is not uniform across all product lines. The growth in fluids purification and cat litter products contrasts with declines in the agricultural and animal health businesses. This suggests a potential need for strategic reassessment in the underperforming segments, which could involve re-evaluating product offerings, market approach, or operational efficiency.
Furthermore, the increase in SG&A expenses, particularly due to advertising, indicates an aggressive marketing strategy. While this could bolster brand recognition and drive sales, it also raises the cost structure, which investors should consider when assessing the sustainability of profit margins. The company's ability to leverage third-party research data, showing an increase in market share within the lightweight litter segment, demonstrates a keen understanding of market dynamics and consumer trends.
The financial results of Oil-Dri Corporation of America include references to non-GAAP financial measures. While these are common in financial reporting to provide additional insight into a company's performance, it is crucial that these measures are reconciled with GAAP measures, as the company has done. This transparency allows stakeholders to fully understand the basis of the company's reported financial health.
It is also important to note the company's strategic shift in sales through Oil-Dri's subsidiary in China to a master distributor model. This change could have implications for future revenue recognition and international trade compliance. As geopolitical tensions and trade regulations evolve, the company's ability to adapt its international sales strategy will be critical to maintaining growth and minimizing legal and regulatory risks.
Additionally, the mention of the newly launched EPA-approved Cat’s Pride Antibacterial Clumping Litter highlights the company's compliance with environmental regulations, which is increasingly important to consumers and investors alike. This compliance with regulatory standards not only mitigates legal risks but can also enhance the brand's reputation and competitive edge in the market.
CHICAGO, March 07, 2024 (GLOBE NEWSWIRE) -- 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 year 2024.
| Second Quarter | Year to Date | |||||||||
| (in thousands, except per share amounts) | Ended January 31, | Ended January 31, | ||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||
| Consolidated Results | ||||||||||
| Net Sales | $ | 105,668 | $ | 101,669 | $ | 217,106 | $ | 200,208 | ||
| Net Income Attributable to Oil-Dri | $ | 12,382 | $ | 3,856 | $ | 23,124 | $ | 9,097 | ||
| Net Income Attributable to Oil-Dri Excluding Nonrecurring Events † | $ | 12,844 | $ | 5,833 | $ | 23,586 | $ | 11,074 | ||
| Diluted EPS - Common | $ | 1.70 | $ | 0.56 | $ | 3.19 | $ | 1.34 | ||
| Diluted EPS - Common, Excluding Nonrecurring Events † | $ | 1.77 | $ | 0.85 | $ | 3.25 | $ | 1.63 | ||
| Business to Business | ||||||||||
| Net Sales | $ | 36,234 | $ | 35,154 | $ | 75,395 | $ | 68,841 | ||
| Segment Operating Income | $ | 10,985 | $ | 7,734 | $ | 22,108 | $ | 14,991 | ||
| Retail and Wholesale | ||||||||||
| Net Sales | $ | 69,434 | $ | 66,515 | $ | 141,711 | $ | 131,367 | ||
| Segment Operating Income | $ | 11,877 | $ | 8,682 | $ | 23,208 | $ | 16,256 | ||
† Please refer to Reconciliation of Non-GAAP Financial Measures below for a reconciliation of Non-GAAP items to the comparable GAAP measures.
Daniel S. Jaffee, President and Chief Executive Officer, stated, “I am pleased to report another exceptional quarter, marked by growth in consolidated net sales, gross profit, and net income. Increased sales of renewable diesel and cat litter products pushed our revenues to record highs for the second quarter. Our strategic initiatives to improve gross margins yielded positive results in the second quarter of fiscal 2024 which generated cash to help fund the replacement of aging manufacturing assets. Our net income more than tripled in the second quarter of fiscal 2024, compared to the prior year. These achievements can be attributed to our team’s ongoing dedication and the diverse product offerings derived from our unique minerals. In the periods ahead, we remain committed to sustaining this momentum, investing in our manufacturing infrastructure, and delivering our value- added products and services to our loyal customers.”
Consolidated Results
Consolidated net sales reached
Consolidated gross profit of
Selling, general and administrative (“SG&A”) expenses were
In the second quarter of fiscal 2024, consolidated operating income more than doubled to
Total other expense, net was
Income tax expense increased to
The Company set a record for the highest second quarter net income attributable to Oil-Dri of
Cash and cash equivalents for the three month period ending January 31, 2024, totaled
Product Group Review
The Business to Business Products Group’s second quarter of fiscal 2024 revenues were
During the second quarter of fiscal 2024, SG&A costs within the B2B Products Group increased by
Operating income for the B2B Products Group was
The Retail and Wholesale (“R&W”) Products Group’s second quarter revenues reached
During the second quarter of fiscal 2024, SG&A expenses within the R&W Products Group increased by
Operating income for the R&W Products Group reached
Oil-Dri will host its second quarter of fiscal year 2024 earnings discussion via a live webcast on Friday, March 8, 2024 at 10:00 a.m. Central Time. Participation details are available on the Company’s website’s Events page.
1Based in part on data reported by NielsenIQ through its Scantrack Service for the Cat Litter Category in the 13-week period ended January 27, 2024, for the U.S. xAOC+Pet Supers market. Copyright © 2024 NielsenIQ.
“Oil-Dri”, “Cat’s Pride”, “Sorbiam”, and “Amlan” are registered trademarks of Oil-Dri Corporation of America.
About Oil-Dri Corporation of America
Oil-Dri Corporation of America is a leading manufacturer and supplier of specialty sorbent products for the pet care, animal health and nutrition, fluids purification, agricultural ingredients, sports field, industrial and automotive markets. Oil-Dri is vertically integrated which enables the Company to efficiently oversee every step of the process from research and development to supply chain to marketing and sales. With over 80 years of experience, the Company continues to fulfill its mission to Create Value from Sorbent Minerals.
Forward-Looking Statements
Certain statements in this press release may contain forward-looking statements, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, 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. Forward-looking statements can be identified by words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” “potential,” “strive,” and similar references to future periods.
Such statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially, including, but not limited to, those described in Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended January 31, 2024 and our most recent Annual Report on Form 10-K and from time to time in our other filings with the Securities and Exchange Commission. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, intended, expected, believed, estimated, projected, planned or otherwise expressed in any forward-looking statements. Investors 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
Director of Investor Relations
Oil-Dri Corporation of America
InvestorRelations@oildri.com
(312) 321-1515
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| (in thousands, except per share amounts) | |||||||||||||
| Second Quarter Ended January 31, | |||||||||||||
| 2024 | % of Sales | 2023 | % of Sales | ||||||||||
| Net Sales | $ | 105,668 | 100.0 | % | $ | 101,669 | 100.0 | % | |||||
| Cost of Goods Sold | (74,726 | ) | (70.7 | )% | (78,653 | ) | (77.4 | )% | |||||
| Gross Profit | 30,942 | 29.3 | % | 23,016 | 22.6 | % | |||||||
| Selling, General and Administrative Expenses | (15,777 | ) | (14.9 | )% | (15,710 | ) | (15.5 | )% | |||||
| Operating Income | 15,165 | 14.4 | % | 7,306 | 7.2 | % | |||||||
| Other Expense, Net | (483 | ) | (0.5 | )% | (2,267 | ) | (2.2 | )% | |||||
| Income Before Income Taxes | 14,682 | 13.9 | % | 5,039 | 5.0 | % | |||||||
| Income Taxes Expense | (2,300 | ) | (2.2 | )% | (1,193 | ) | (1.2 | )% | |||||
| Net Income | 12,382 | 11.7 | % | 3,846 | 3.8 | % | |||||||
| Net Loss Attributable to Noncontrolling Interest | — | — | % | (10 | ) | — | % | ||||||
| Net Income attributable to Oil-Dri | $ | 12,382 | 11.7 | % | $ | 3,856 | 3.8 | % | |||||
| Net Income Per Share: Basic Common | $ | 1.84 | $ | 0.58 | |||||||||
| Basic Class B | $ | 1.38 | $ | 0.44 | |||||||||
| Diluted Common | $ | 1.70 | $ | 0.56 | |||||||||
| Diluted Class B | $ | 1.38 | $ | 0.43 | |||||||||
| Avg Shares Outstanding: Basic Common | 4,883 | 4,829 | |||||||||||
| Basic Class B | 1,977 | 1,964 | |||||||||||
| Diluted Common (1) | 6,860 | 4,965 | |||||||||||
| Diluted Class B | 1,977 | 1,985 | |||||||||||
(1) Please see Note 1 of the unaudited Notes to the Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the three months ended January 31, 2024.
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| (in thousands, except per share amounts) | |||||||||||||
| Six Months Ended January 31, | |||||||||||||
| 2024 | % of Sales | 2023 | % of Sales | ||||||||||
| Net Sales | $ | 217,106 | 100.0 | % | $ | 200,208 | 100.0 | % | |||||
| Cost of Goods Sold | (155,173 | ) | (71.5 | )% | (154,882 | ) | (77.4 | )% | |||||
| Gross Profit | 61,933 | 28.5 | % | 45,326 | 22.6 | % | |||||||
| Selling, General and Administrative Expenses | (33,612 | ) | (15.5 | )% | (31,451 | ) | (15.7 | )% | |||||
| Operating Income | 28,321 | 13.0 | % | 13,875 | 6.9 | % | |||||||
| Other Expense, Net | (809 | ) | (0.4 | )% | (2,399 | ) | (1.2 | )% | |||||
| Income Before Income Taxes | 27,512 | 12.7 | % | 11,476 | 5.7 | % | |||||||
| Income Taxes Expense | (4,388 | ) | (2.0 | )% | (2,400 | ) | (1.2 | )% | |||||
| Net Income | 23,124 | 10.7 | % | 9,076 | 4.5 | % | |||||||
| Net Loss Attributable to Noncontrolling Interest | — | — | % | (21 | ) | — | % | ||||||
| Net Income Attributable to Oil-Dri | $ | 23,124 | 10.7 | % | $ | 9,097 | 4.5 | % | |||||
| Net Income Per Share: Basic Common | $ | 3.44 | $ | 1.37 | |||||||||
| Basic Class B | $ | 2.58 | $ | 1.03 | |||||||||
| Diluted Common | $ | 3.19 | $ | 1.34 | |||||||||
| Diluted Class B | $ | 2.58 | $ | 1.02 | |||||||||
| Avg Shares Outstanding: Basic Common | 4,856 | 4,817 | |||||||||||
| Basic Class B | 1,971 | 1,953 | |||||||||||
| Diluted Common (1) | 6,827 | 4,937 | |||||||||||
| Diluted Class B | 1,971 | 1,975 | |||||||||||
(1) Please see Note 1 of the unaudited Notes to the Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the six-months ended January 31, 2024.
| CONSOLIDATED BALANCE SHEETS | |||||
| (in thousands, except per share amounts) | |||||
| As of January 31, | |||||
| 2024 | 2023 | ||||
| Current Assets | |||||
| Cash and Cash Equivalents | $ | 27,800 | $ | 13,951 | |
| Accounts Receivable, Net | 59,336 | 57,179 | |||
| Inventories | 46,230 | 37,938 | |||
| Prepaid Expenses and Other Assets | 6,067 | 7,602 | |||
| Total Current Assets | 139,433 | 116,670 | |||
| Property, Plant and Equipment, Net | 125,027 | 114,597 | |||
| Other Noncurrent Assets | 31,692 | 24,777 | |||
| Total Assets | $ | 296,152 | $ | 256,044 | |
| Current Liabilities | |||||
| Current Maturities of Notes Payable | $ | 1,000 | $ | 1,000 | |
| Accounts Payable | 12,009 | 11,048 | |||
| Dividends Payable | 1,963 | 1,858 | |||
| Other Current Liabilities | 31,191 | 35,635 | |||
| Total Current Liabilities | 46,163 | 49,541 | |||
| Noncurrent Liabilities | |||||
| Notes Payable | 30,851 | 31,809 | |||
| Other Noncurrent Liabilities | 23,100 | 17,720 | |||
| Total Noncurrent Liabilities | 53,951 | 49,529 | |||
| Stockholders' Equity | 196,038 | 156,974 | |||
| Total Liabilities and Stockholders' Equity | $ | 296,152 | $ | 256,044 | |
| Book Value Per Share Outstanding | $ | 28.72 | $ | 23.19 | |
| Acquisitions of: | |||||
| Property, Plant and Equipment | |||||
| Second Quarter | $ | 7,482 | $ | 5,903 | |
| Year To Date | $ | 15,546 | $ | 12,640 | |
| Depreciation and Amortization Charges | |||||
| Second Quarter | $ | 4,486 | $ | 3,751 | |
| Year To Date | $ | 8,854 | $ | 7,274 | |
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in thousands) | |||||||
| For the Six Months Ended | |||||||
| January 31, | |||||||
| 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net Income | $ | 23,124 | $ | 9,076 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities: | |||||||
| Depreciation and Amortization | 8,854 | 7,274 | |||||
| Increase in Accounts Receivable | (64 | ) | (5,738 | ) | |||
| Increase in Inventories | (3,666 | ) | (2,717 | ) | |||
| (Increase) Decrease in Prepaid Expenses | (3,217 | ) | 626 | ||||
| (Decrease) Increase in Accounts Payable | (3,243 | ) | 180 | ||||
| (Decrease) Increase in Accrued Expenses | (7,582 | ) | 3,891 | ||||
| Other | 3,739 | 1,625 | |||||
| Total Adjustments | (5,179 | ) | 5,141 | ||||
| Net Cash Provided by Operating Activities | 17,945 | 14,217 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital Expenditures | (15,546 | ) | (12,640 | ) | |||
| Other | — | 5 | |||||
| Net Cash Used in Investing Activities | (15,546 | ) | (12,635 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Dividends Paid | (3,889 | ) | (3,711 | ) | |||
| Purchases of Treasury Stock | (2,575 | ) | (225 | ) | |||
| Net Cash Used In Financing Activities | (6,464 | ) | (3,936 | ) | |||
| Effect of exchange rate changes on Cash and Cash Equivalents | 111 | 7 | |||||
| Net Decrease in Cash and Cash Equivalents | (3,954 | ) | (2,347 | ) | |||
| Cash and Cash Equivalents, Beginning of Period | 31,754 | 16,298 | |||||
| Cash and Cash Equivalents, End of Period | $ | 27,800 | $ | 13,951 | |||
Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||
| (in thousands) | |||||||||||
| Second Quarter | Year to Date | ||||||||||
| Ended January 31, | Ended January 31, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| CONSOLIDATED RESULTS | |||||||||||
| GAAP: Net Income Attributable to Oil-Dri | $ | 12,382 | $ | 3,856 | $ | 23,124 | $ | 9,097 | |||
| Landfill Modification Loss, Net of Tax | $ | 462 | $ | 1,977 | $ | 462 | $ | 1,977 | |||
| Non-GAAP: Net Income Attributable to Oil-Dri excluding Nonrecurring Events | $ | 12,844 | $ | 5,833 | $ | 23,586 | $ | 11,074 | |||
| GAAP: Diluted EPS - Common | $ | 1.70 | $ | 0.56 | $ | 3.19 | $ | 1.34 | |||
| Landfill Modification Loss, Net of Tax | $ | 0.07 | $ | 0.29 | $ | 0.06 | $ | 0.29 | |||
| Non-GAAP: Diluted EPS - Common, excluding Nonrecurring Events | $ | 1.77 | $ | 0.85 | $ | 3.25 | $ | 1.63 | |||
FAQ
What were the net sales for Oil-Dri Corporation of America (ODC) in the second quarter of fiscal year 2024?
How much did the net income attributable to Oil-Dri increase by in the second quarter of fiscal year 2024?
What was the gross profit for Oil-Dri Corporation of America in the second quarter of fiscal year 2024?
How much did the operating income for the Business to Business Products Group increase by in the second quarter of fiscal year 2024?
When will Oil-Dri host its second quarter of fiscal year 2024 earnings discussion?
