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
February 27, 2004
------------------------------------------
Date of Report (Date of earliest event
reported)
Oil-Dri Corporation of America
------------------------------------------
(Exact name of registrant as specified
in its charter)
Delaware 0-8675 36-2048898
---------------------- ------------------ ----------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
410 North Michigan Avenue
Suite 400
Chicago, Illinois 60611-4213
----------------------------- -----------
(Address of principal (Zip Code)
executive offices)
(312) 321-1515
------------------------------------------
Registrant's telephone number
Item 7. Financial Statements and Exhibits
(c) Exhibits: The following document is attached as an exhibit to this
report:
Exhibit
Number Description
99 Press Release dated February 27, 2004.
Item 9. Regulation FD Disclosure
Item 12. Results of Operations and Financial Condition
On February 27, 2004, the Registrant issued a press release announcing the
results of operations for the second quarter and first half of its 2004 fiscal
year. A copy of the press release is attached as Exhibit 99. This information
is being provided under both Items 9 and 12, as suggested by the Commission in
Release 33-8216, though it is required to be provided only under Item 12.
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/ Charles P. Brissman
Charles P. Brissman
Vice President and General Counsel
Date: March 1, 2004
Release: Immediate Contact: Ronda J. Williams
312-706-3232
Oil-Dri Corporation of America Reports
38% Increase in Earnings on Sales Increase of 7.5% for
the Second Quarter
CHICAGO - February 27, 2004 - Oil-Dri Corporation of
America (NYSE: ODC) today announced net sales of
$47,800,000 for the second quarter ended January 31,
2004, an increase of 7.5% over net sales of $44,456,000
in the same quarter one year ago. Net income for the
quarter was $1,728,000 or $0.29 per fully diluted share,
compared to $1,219,000 or $0.21 per fully diluted share
for the same quarter one year ago.
Net sales for the current six-month period were
$94,092,000, an increase of 14.5% over sales of
$82,186,000 in the same period a year ago. Net income
for the six-month period was $3,446,000 or $0.59 per
fully diluted share, compared to $1,630,000 or $0.29 per
fully diluted share last year.
Second quarter pre-tax income of $2,433,000 included a
loss on impaired assets of $464,000 related to a
write-off of box line packaging equipment. The company
also took a $200,000 reserve for obsolete Smart Snacks
branded packaging inventory in conjunction with the sale
of the Phoebe Products dog treats business and general
market decline of that brand. Excluding these items, the
company had pre-tax income of $3,097,000.
Last year's second quarter pre-tax income of $1,772,000
included 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.
Excluding this item, the company earned a pre-tax income
of $1,097,000.
The company's six-month pre-tax income of $4,853,000
includes the $464,000 loss on impaired assets mentioned
above and $200,000 for the reserve of obsolete inventory
mentioned above. Excluding these items the company had
pre-tax income of $5,517,000 for the six months.
Last year's six-month pre-tax income of $2,357,000
included the contractual payment of $675,000 mentioned
above and a gain of $139,000 from the sale of mineral
rights. Excluding these items, the company earned
pre-tax income of $1,543,000.
Second Quarter Overview
President and CEO Daniel Jaffee commented on the quarter,
"Our business has delivered strong earnings growth for
six consecutive quarters and our financial results
reflect improved performance in all business segments.
This quarter's results show management's continued
commitment to efficiently managing operations while
increasing sales.
"I am most encouraged by our ability to increase earnings
per share by more than 100% in the first six months of
the fiscal year. This is a significant accomplishment.
"As expected, we are experiencing substantial increases
in our energy costs. Year over year our costs have
increased by 24%. However, despite these escalating
costs, we have continued to expand our gross margins. We
remain focused on streamlining our manufacturing
processes and implementing price increases as needed to
offset these rising costs.
"Late in the second quarter, the company decided to sell
its wholly owned subsidiary, Phoebe Products Co. In
conjunction with this decision and in consideration of
the continued market decline of the Smart Snacks product
line, the company recorded a $200,000 pre-tax obsolete
inventory reserve in the second quarter. Other than the
obsolete inventory reserve, the sale of Phoebe Products
will not have a material impact on the sales or
profitability of the company. This decision was
triggered by our desire to concentrate on our core
businesses." The company concluded the sale of Phoebe
Products on February 19, 2004.
Business Review
The Consumer Products Group continued to outpace prior year
sales 8% by for the quarter and 17% for the half. Strong
branded sales for Cat's Pride scoop and Jonny Cat litters
drove this quarter's business. Sales and profit contribution
from the Canadian operation were up for both the quarter
and half due mainly to increased sales of branded product
and positive currency exchange rates.
Crop Production and Horticultural Group sales were flat for
the quarter and up 17% for the half. Agsorb agricultural
carrier sales continued to outpace historical norms but
are expected to level off in the second half of the year.
Increased sales of Flo Fre processing aids helped to
offset slower demand for Pro's Choice sports field
products in the quarter.
The Industrial and Automotive Products Group enjoyed
increased sales of 8% for the quarter and 11% for the
six months. The increase was driven by increased floor
absorbent sales from new business accounts.
Sales were up 12% for the Specialty Products Group in the
quarter and 6% for the half. A favorable sales mix and
increased sales of Pure-Flo bleaching clay positively
contributed to growth in the quarter. Animal Health and
Nutrition sales remain strong year over year as well.
Financial Review
On December 2, 2003, Oil-Dri's Board of Directors
declared a regular quarterly cash dividend of $0.10 per
share of Common Stock. The dividend will be payable on
March 12, 2004 to shareholders of record at the close of
business on February 13, 2004. At the January 31, 2004
closing price of $16.85 and assuming cash dividends
continue at the same rate, the annual yield is 2.4%.
During the fiscal year to date the company repurchased
55,350 shares of stock, under the stock repurchase
program, at an average price of $13.67 per share. The
company has 246, 660 shares remaining under the current
stock purchase authorization.
Cash, cash equivalents and short-term investments at
January 31, 2004, totaled $17,933,000. Operating cash
flow was $6,711,000 for the six-month period. Capital
expenditures for the six months totaled $2,227,000, which
was $1,897,000 less than the depreciation and
amortization of $4,124,000.
Looking Forward
Jaffee said, "As we head into the second half of the year
we will begin to increase our marketing investment in new
product introductions. I am enthusiastic about the
opportunities that will come from our innovative
efforts.
"We are also watching the progress of the California
grocery workers strike. Consumer growth in this market
has disrupted our West Coast grocery business but we are
actively working to mitigate any setbacks we face because
of the strike.
"In light of strong performance, we are raising our
earnings per share estimate range to $0.85 - $0.95 for
fiscal 2004. This conservative range is based upon
historically slower sales during the third and fourth
quarters and also reflects our plans for investment
spending in the second half of the year. We delivered
earnings of $0.54 per fully diluted share for the entire
year of fiscal 2003, so we are pleased to have finished
the first half of fiscal 2004 at $0.59."
###
=====================================================================
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; 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.
O I L - D R I C O R P O R A T I O N O F A M E R I C A
Consolidated Statements of Income
(in thousands, except for per share amounts)
(unaudited)
Second Quarter Ended January 31,
--------------------------------
2004 % of 2003 % of
-------------------------------- Sales Sales
Net Sales $47,800 100.0% $44,456 100.0%
Cost of Sales 36,507 76.4% 34,833 78.4%
--------------------------------
Gross Profit 11,293 23.6% 9,623 21.6%
Loss on Impaired
Long-Lived Assets (464) -1.0% -- --
Other Contractual Income -- -- 675 1.5%
Operating Expenses (8,039) -16.8% (7,952) -17.8%
--------------------------------
Operating Income (Loss) 2,790 5.8% 2,346 5.3%
Interest Expense (533) -1.1% (661) -1.5%
Gain on the Sale of
Mineral Rights -- -- -- --
Other Income (Expense) 176 0.4% 87 0.2%
--------------------------------
Income (Loss) Before
Income Taxes 2,433 5.1% 1,772 4.0%
Income Taxes (Benefit) 705 1.5% 553 1.2%
--------------------------------
Net Income (Loss) $ 1,728 3.6% $ 1,219 2.7%
================================
Net Income Per Share:
Basic $ 0.32 $ 0.22
Diluted $ 0.29 $ 0.21
Average Shares Outstanding:
Basic 5,447 5,616
Diluted 6,000 5,701
Six Months Ended January 31,
---------------------------------
2004 % of 2003 % of
Sales Sales
---------------------------------
Net Sales $94,092 100.0% $82,186 100.0%
Cost of Sales 71,921 76.4% 64,810 78.9%
---------------------------------
Gross Profit 22,171 23.6% 17,376 21.1%
Loss on Impaired
Long-Lived Assets (464) -0.5% -- --
Other Contractual Income -- -- 675 0.8%
Operating Expenses (16,148) -17.2% (14,569) -17.7%
---------------------------------
Operating Income (Loss) 5,559 5.9% 3,482 4.2%
Interest Expense (1,064) -1.1% (1,348) -1.6%
Gain on the Sale of
Mineral Rights -- -- 139 0.2%
Other Income (Expense) 358 0.4% 84 0.1%
---------------------------------
Income (Loss) Before
Income Taxes 4,853 5.2% 2,357 2.9%
Income Taxes (Benefit) 1,407 1.5% 727 0.9%
---------------------------------
Net Income (Loss) $ 3,446 3.7% $ 1,630 2.0%
=================================
Net Income Per Share:
Basic $ 0.63 $ 0.29
Diluted $ 0.59 $ 0.29
Average Shares Outstanding:
Basic 5,454 5,615
Diluted 5,873 5,687
O I L - D R I C O R P O R A T I O N O F A M E R I C A
Consolidated Balance Sheets
(in thousands, except for per share amounts)
(unaudited)
As of January 31,
-------------------
2004 2003
-------------------
Current Assets
Cash, Cash Equivalents $ 17,933 $ 10,144
and Investments
Accounts Receivable, net 27,142 27,159
Inventories 12,361 12,887
Prepaid Expenses 7,787 6,970
Other Current Assets
-------------------
Total Current Assets 65,223 57,160
-------------------
Property, Plant and Equipment 46,963 50,829
Other Assets 14,856 18,762
-------------------
Total Assets $127,042 $126,751
===================
Current Liabilities
Current Maturities of $ 4,000 $ 4,350
Notes Payable
Accounts Payable 5,264 4,205
Dividends Payable 512 472
Accrued Expenses 15,029 13,976
-------------------
Total Current Liabilities 24,805 23,003
-------------------
Long-Term Liabilities
Notes Payable 24,900 28,900
Other Noncurrent Liabilities 5,679 5,153
-------------------
Total Long-Term Liabilities 30,579 34,053
-------------------
Stockholders' Equity 71,658 69,695
-------------------
Total Liabilities and Stockholders' Equity $127,042 $126,751
===================
Book Value Per Share Outstanding $ 13.14 $ 12.41
Additions to and Acquisitions of
Property, Plant and Equipment
Second Quarter $ 1,187 $ 5,053
Year to Date $ 2,227 $ 6,368
Depreciation and Amortization
Charges
Second Quarter $ 2,042 $ 2,140
Year to Date $ 4,124 $ 4,174