1 News Release
RELEASE:Immediate CONTACT:
Ronda J. Williams
312-706-3232
OIL-DRI REPORTS SIGNIFICANT IMPROVEMENT IN SECOND QUARTER AND
SIX MONTH EARNINGS
CHICAGO - February 26, 2003 - Oil-Dri Corporation of America (NYSE: ODC)
announced sales of $44,456,000 for its second quarter ended January 31, 2003,
1.5% greater than sales of $43,780,000 in the same quarter one year ago. The
company reported net income of $1,219,000 or $0.21 per fully diluted share for
the quarter, a significant improvement compared to the $74,000 or $0.01 per
fully diluted share for the same quarter a year ago.
Sales for the six months ended January 31, 2003 were $82,186,000, 1.9% lower
than sales of $83,803,000 in the same period a year ago. Net income for the
six months was $1,630,000 or $0.29 per fully diluted share, compared to 341,000
or $0.06 per fully diluted share a year ago.
The company's pre-tax income for the second quarter was $1,772,000 including a
one-time contractual payment of $675,000 from a customer who failed to meet
minimum purchase requirements under a supply agreement with the company. The
company's six-month pre-tax income was $2,357,000 which includes this
contractual payment and a gain of $139,000 from the sale of mineral rights
in Tennessee.
SECOND QUARTER OVERVIEW
President and Chief Executive Officer, Daniel S. Jaffee commented, "This year's
improved results are a sign of the company's growing financial strength. It is
also a year of great opportunity. Not only are we pleased with the significant
increase in reported earnings but also with the acquisition of assets related
to the Jonny Cat(R) brand of cat litter, including a plant in Taft, Calif., that
is furthering our national distribution.
"Our second quarter and year to date progress show significant improvement over
last year's second quarter and six months. Though we saw only a slight increase
in sales, our income is very strong. We are benefiting from new programs and
our continued focus on reducing the cost of production and distribution. Gross
margins for the second quarter improvedfrom 18.2% to 21.6% and from 18.9% to
21.1% for the six months. The second quarter also marked the end of extra
overburden removal costs at our Georgia plant and the continued effectiveness
of our current forward fuel purchasing strategies.
"Significant increases in year over year sales and contribution from the
agricultural group also helped make this quarter successful. In particular,
demand for Agsorb(R) carriers, as well as increased sales of Pro's Choice(R)
sports field products, have positively impacted the quarter.
"In light of critical world events affecting the nation's natural gas and fuel
oil prices, we are pleased with our efforts to manage these rising costs.
While we are fairly well protected for the remainder of Fiscal 2003, if fuel
prices remain high or continue to climb, we may experience increased
manufacturing costs in Fiscal 2004. If the increase in fuel prices proves to
be long-term in nature it is our intention to try to recoup these costs through
price increases."
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BUSINESS REVIEW
o Though profitability was up, sales for the CONSUMER PRODUCTS GROUP were
down 1% for the quarter and 6% for the half. The continued and growing
presence of the Cat's Pride(R) brand, as well as Kat Kit(R), Smart Snacks
(R)dog treats and Jonny Cat litter at Wal-Mart have offset some of the
lost sales of Wal-Mart's Special Kitty(R) cat litter brand.
The non-litter consumer products, which include Smart Snacks dog treats
and Jonny Cat liners, are showing notable strength. While Smart Snacks
continue to grow in distribution and sales, the Jonny Cat liners business
shows promise as an important contributor.
o Sales for the CROP PRODUCTION AND HORTICULTURAL PRODUCTS GROUP were
ahead 22% when compared to last year's second quarter and 18% for the six
months. Strong sales of Agsorb agricultural carriers and increased
sports turf business in the golf industry were main contributors to the
division's growth.
Last year, producers of agricultural chemicals decreased inventory
levels in anticipation of genetically modified crops. However, since the
acceptance of GMO crops has been slower than expected, it is currently
creating a higher demand for Agsorb carriers.
o The continued sluggish manufacturing sector has made things difficult
for the INDUSTRIAL AND AUTOMOTIVE PRODUCTS GROUP. However, the division
is holding steady. Sales were up 2% for the quarter and flat for the
half. The remainder of the year will be dedicated to integrating and
expanding absorbent business acquired in our Taft acquisition.
o Sales were down 4% for the SPECIALTY PRODUCTS GROUP in the quarter and
flat for the half. Profitability, however, was strong both in the
quarter and year to date principally due to contributions from Ultra
Clear(R) clarification aid and PelUnite(TM) as well as, a favorable sales
mix.
FINANCIAL OVERVIEW
On December 3, 2002, Oil-Dri's Board of Directors approved a regular
quarterly cash dividend of $0.09 per share of Common Stock. At an average
stock price of $9.00, and assuming cash dividends continue at the same rate,
the annual yield is 4.0%.
Cash, cash equivalents and short-term investments at January 31, 2003,
totaled $10,144,000. Operating cash flow was $2,079,000. Capital
expenditures for the six months totaled $6,368,000, which was $2,194,000
more than the depreciation and amortization of $4,174,000. Approximately
$4,255,000 of the year's capital expenditures is related to the Taft plant
acquisition.
As announced in the second quarter, the company has reinstated its stock
repurchase program. During the second quarter the company purchased 16,400
shares.
LOOKING FORWARD
Jaffee further commented, "The integration of the Taft facility into our
manufacturing operation has been quite smooth. We are now looking to
energize the Jonny Cat brand and increase the utilization of the plant by
expanding output. Through new line extensions and progressive marketing
strategies, we feel confident that this acquisition will prove to be a great
positive for Oil-Dri.
"As previously communicated, our earnings estimate for the year was $0.20 to
$0.40 per fully diluted share. In light of our strong performance during
the first six months of this fiscal year and the one-time, pre-tax gain
resulting from the contractual payment of $675,000 mentioned above, we are
raising our estimate to $0.30 to $0.50 per fully diluted share."
###
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Oil-Dri Corporation of America is the world's largest manufacturer of cat
litter and a leading supplier of specialty sorbent products for industrial,
automotive, agricultural, horticultural and specialty markets.
This release contains certain forward-looking statements regarding the
company's expected performance for future periods, and actual results for
such periods might materially differ. Such forward-looking statements are
subject to uncertainties which include, but are not limited to, competitive
factors in the consumer market; the level of success in implementation of
price increases and surcharges; changes in overall agricultural demand;
increasing regulation of the food chain; the risk of war or international
instability; changes in the market conditions, the overall economy, energy
prices, and other factors detailed from time to time in the company's annual
report and other reports filed with the Securities and Exchange Commission.
3
OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
SECOND QUARTER ENDED JANUARY 31,
% OF % OF
2003 SALES 2002 SALES
---------------- ----------------
NET SALES $44,456 100.0% $43,780 100.0%
COST OF SALES 34,833 78.4% 35,833 81.8%
---------------- ----------------
GROSS PROFIT 9,623 21.6% 7,947 18.2%
OTHER CONTRACTUAL INCOME 675 1.5% -- --
OPERATING EXPENSES (7,952) -17.8% (7,167) -16.4%
---------------- ----------------
OPERATING INCOME 2,346 5.3% 780 1.8%
INTEREST EXPENSE (661) -1.5% (664) -1.6%
GAIN ON THE SALE OF MINERAL RIGHTS -- -- -- --
OTHER INCOME (EXPENSE) 87 0.2% (9) 0.0%
---------------- ----------------
INCOME BEFORE INCOME TAXES 1,772 4.0% 107 0.2%
INCOME TAXES 553 1.2% 33 0.1%
---------------- ----------------
NET INCOME $1,219 2.7% $ 74 0.1%
NET INCOME PER
SHARE:
BASIC $ 0.22 $ 0.01
DILUTIVE $ 0.21 $ 0.01
AVERAGE SHARES
OUTSTANDING:
BASIC 5,616 5,614
DILUTIVE 5,701 5,648
SIX MONTHS ENDED JANUARY 31,
% OF % OF
2003 SALES 2002 SALES
---------------- -----------------
NET SALES $82,186 100.0% $83,803 100.0%
COST OF SALES 64,810 78.9% 67,999 81.1%
---------------- ----------------
GROSS PROFIT 17,376 21.1% 15,804 18.9%
OTHER CONTRACTUAL INCOME 675 0.8% -- --
OPERATING EXPENSES (14,569) -17.7% (14,101) -16.9%
---------------- ----------------
OPERATING INCOME 3,482 4.2% 1,703 2.0%
INTEREST EXPENSE (1,348) -1.6% (1,343) -1.5%
GAIN ON THE SALE OF MINERAL RIGHTS 139 0.2% -- --
OTHER INCOME (EXPENSE) 84 0.1% 120 0.1%
---------------- ----------------
INCOME BEFORE INCOME TAXES 2,357 2.9% 480 0.6%
INCOME TAXES 727 0.9% 139 0.2%
---------------- ----------------
NET INCOME $ 1,630 2.0% $ 341 0.4%
NET INCOME PER
SHARE:
BASIC $ 0.29 $ 0.06
DILUTIVE $ 0.29 $ 0.06
AVERAGE SHARES
OUTSTANDING:
BASIC 5,615 5,614
DILUTIVE 5,687 5,643
4
OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
(UNAUDITED)
AS OF JANUARY 31,
2003 2002
----------- -----------
CURRENT ASSETS $ 57,160 $ 57,071
PROPERTY, PLANT AND EQUIPMENT 50,829 54,060
OTHER ASSETS 18,762 18,658
----------- -----------
TOTAL ASSETS $ 126,751 $ 129,789
CURRENT LIABILITIES $ 23,003 $ 20,225
LONG-TERM LIABILITIES 34,053 38,335
STOCKHOLDERS' EQUITY 69,695 71,229
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 126,751 $ 129,789
BOOK VALUE PER SHARE OUTSTANDING $ 12.41 $ 12.69
ADDITIONS TO PROPERTY, SECOND QUARTER $ 5,053 $ 740
PLANT AND EQUIPMENT YEAR TO DATE $ 6,368 $ 2,092
DEPRECIATION AND SECOND QUARTER $ 2,140 $ 2,205
AMORTIZATION CHARGES YEAR TO DATE $ 4,174 $ 4,427
SUPPLEMENTAL INFORMATION
(1) (2)
SECOND SIX
QUARTER ENDED MONTHS ENDED
JANUARY 31, JANUARY 31,
2002 2002
----------- -----------
NET SALES AS ORIGINALLY REPORTED $ 45,427 $ 86,880
RECLASSIFICATION (1,647) (3,077)
----------- -----------
RECLASSIFIED NET SALES $ 43,780 $ 83,803
AS REQUIRED BY RECENT ACCOUNTING PRONOUNCEMENTS, NET SALES WAS REDUCED
BY COSTS INCURRED FOR COUPONS, VOLUME REBATES, SLOTTING FEES, BUYDOWNS AND
COOPERATIVE ADVERTISING ARRANGEMENTS. THE DECREASE IN NET SALES WAS OFFSET BY
A CORRESPONDING DECREASE IN OPERATING EXPENSES AND RESULTED IN NO CHANGE TO
NET INCOME.