Oil-Dri Announces Capital Improvement Driven Price Increases

Rhea-AI Summary

Oil-Dri Corporation of America (NYSE: ODC) announced plans to increase prices due to significant rises in capital improvement costs driven by global supply chain challenges and inflation. CEO Daniel S. Jaffee highlighted that fixed asset replacement costs have nearly doubled their historic levels, necessitating these adjustments to maintain business operations. The company anticipates long-term price hikes of approximately 4%, in addition to inflationary increases prompted by higher commodity, transportation, and labor costs. These measures aim to support ongoing investments in infrastructure to meet customer demands.

Positive

• The anticipated price increases will help offset rising capital improvement costs.
• The company is committed to maintaining high service levels and product quality.

Negative

• Rising capital improvement costs nearly double historic acquisition costs.
• Ongoing inflationary pressures could affect operational expenses and profitability.

CHICAGO, Aug. 01, 2022 (GLOBE NEWSWIRE) -- Oil-Dri Corporation of America (NYSE: ODC) today announced that it plans to raise prices due to increased capital improvement costs.    

Daniel S. Jaffee stated, “Global supply chain challenges coupled with rampant inflation have resulted in fixed asset replacement costs that are nearly double their historic acquisition costs. Our customers rely on us to keep our processes lean and operations robust enough to meet their ever-growing demand for high quality products with strong service levels. As such, we now find it necessary to pass through price increases that allow us to replace equipment as it exceeds its useful life. As noted in our publicly filed documents, our capital expenditures have significantly exceeded our annual deprecation over the past three years, and that trend is expected to continue into the future. In order to maintain a strong and sustainable capital-intensive business, it is necessary to increase our prices so that we can continue to invest in our infrastructure to meet and exceed our customers' expectations.

Over the coming weeks, we will be announcing product specific price increases to incorporate these rapidly rising capital improvement costs. These capital related increases, which equate to approximately 4% over the long term, will be added to inflationary increases driven by the rising costs of commodities, transportation, labor and other manufacturing costs.

We very much appreciate our loyal customers’ partnership and support. We have always taken a long-term approach to our business and will continue to do so.”

About Oil-Dri
Oil-Dri Corporation of America is a leading manufacturer and supplier of specialty sorbent products for the pet care, animal health and nutrition, bleaching clay and 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. To learn more about the Company, visit oildri.com.

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

FAQ

Why is ODC increasing prices?

ODC is raising prices due to significant increases in capital improvement costs resulting from global supply chain challenges and inflation.

What percentage price increase is ODC planning?

ODC plans to implement price increases of approximately 4% due to rising capital improvement costs, alongside additional inflation-related adjustments.

When will ODC announce the new prices?

ODC will be announcing product-specific price increases in the coming weeks as part of their strategy to incorporate rising capital improvement costs.

What factors are driving ODC's price increases?

The price increases are driven by increased commodity prices, transportation costs, labor expenses, and an overall rise in manufacturing costs.

How does ODC plan to maintain operational efficiency?

ODC aims to maintain operational efficiency by passing on price increases to customers, which will enable continued investment in necessary infrastructure.