ODC - Earnings call transcript Q2 2018 | Oil-Dri Corporation of America

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Operator

Good day, ladies and gentlemen. And welcome to the Q2 2018 Oil-Dri Corporation of America Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for how to participate will follow at that time [Operator Instructions]. I would now like to introduce your host for today’s conference, Mr. Jaffee. Dan begin. may you Sir,

Dan Jaffee

an you. I best And quarter my months second do him? wedding. he our passed best miss was man I in out. in welcome I just my to my led And teleconference. quarter. that was during six life. want He away the maxed the and He the Thank But incredible man to father And Yes. recognize life.

business didn’t this and together life what for enough business, XX his he died the he regret he to his with So I biggest when building said was and worked was years, that live see together in years his XX father did his he father long old.

regret lot see got he to that thankfully. still did. and But yet And He of I we the so, a both believed believe come. and I don’t to what is I best have

sure my few be am and smiling. saying I see will is down a he could But dad in I looking So wish I years this.

just wanted to that. recognize I so, And

on Investor Asia CFO; Manager. in Officer, General here our Dan Counsel; Smith, VP Operating Lewry, Culbertson, McPherson. Scheland, our room is Chief Reagan our our is Chief me the Officer; then and from conference And Laura Joining the Mike Mark phone our Relations Development

want take you Harbor? us to Reagan, So through the Safe

Reagan Culbertson

in you us. may in review evaluating in our performance. a that periods and our forward-looking the Oil-Dri’s comments and Company’s and regarding investment you we in those We highlight may that trends differ. performance press stock. statements Thank evaluating factors, periods. Dan. number contain call, future Actual important today’s filings, Company’s you, and results future comments uncertainties affect On In joining Thank SEC the in risk of consider release for materially those factors our any ask may

Dan Jaffee

it to Smith over I to six months. to And quarter the turn and would Dan like Great. review

Dan Smith

‘XX. second the million second was ’XX, reported quarter everyone. over which sales morning, fiscal in Good of a Oil-Dri Dan. X% of of Thanks, the $XX.X increase fiscal quarter

reported months million was year. also of months the of $XXX of first the six ’XX, which for sales six first We a fiscal a record for fiscal

rate federal and reported The net of six Our quarter ‘XX a and for better wholesale for share been in the would and for value six reduced BXB of Without ‘XX. of first XXXX in the a growth of adjustment as the the tax for six the single-digit fiscal tax diluted team the first six earnings result per $X.XX record XXXX. than for improvement in ‘XX. fiscal double-digit loss drove Despite This basically the and of deferred adjustment. months million the of fiscal reported in share low have fiscal expense months sales impacted our in of our for adjustment, growth adjustment an ‘XX. the the per quarter same earnings this our were sales first fiscal fiscal quarter year-to-date ‘XX. earnings approximate tax and high our months asset were team six was to same sales, Cuts Act enacted the both second months led year to significantly Tax the The period in change first the in quarter per tax expense December $X of compared compared effectively earnings first diluted six flat ‘XX. and retail the by the by first months when the reduced adjustment period share and months income The Jobs

business XX.X% costs months compared and fiscal where XX.X% of first Profit from but first This stores in the reported the the months packaging cat X% quarter but XX.X% business and the litter six seen compared label the for for of of quarter flat manufacturing items, first the margin freight, fuel, as at profit were same to the Group was the The in six six team fiscal the for e-commerce increased was private-label ‘XX up reduction offset activity and ‘XX. down months fiscal Sales have area. for this wholesale the Our branded the seen quarter X% which an especially gross experienced margin reduction reduced ‘XX. and were segment remained increased and products. six has in lightweight Branded our months percentage. lower fiscal to brick-and-mortar consistent first the about the in second some uptick down retail gross all was We 'XX. and branded for ‘XX. about by of private in partially sales has

a in Although, change $X advertising the six was Advertising for quarter second and of compared $X about of for spending first first down the months 'XX about million million the profit primary same the the remain driver was 'XX. up fiscal quarter six months period 'XX. in for spending second fiscal fiscal to

six for areas. health up to of periods. driver and about both about and in in team I first the increased profit of increased now has versus were the the for were 'XX the Sales sales Profit the growth second the full of generated the cost experienced compared XX% as fiscal 'XX. the However, also up for expect segment mentioned for advertising ag, for fiscal fiscal fiscal same year X% key We in BXB group The 'XX. the to business spending earlier. the BXB electrification quarter in as and as months months an be periods quarter animal full down quarter first year six were strong Sales compared the 'XX.

the tax Our change. was impacted by sheet also balance

assets non-current Our deferred by discussed reduced I tax asset adjustment the earlier.

the $XXX assets to However, meeting remained Thanks. turn Jaffee. back our total over Dan I'll over million.

Dan Jaffee

we'll it today. Thank them Mike But want McPherson I call and questions But do answer open his his turn the I Bob and Q&A, to up over you Mike can't have you, Dan. them. to be questions it some Asia. from before from got did cover I let on And you've to questions, let's I'll he Smith, kick-off ask

Mike McPherson

what was Okay, customer some And was the accounts, swine Without for our products Bob's into business. last we activity, business the NeoPrime. health new poultry specific and question in three first getting the progress performed months to quarter. made that and the accounts well our of animal level was, in continued get adopting Varium

about we the we on as of We significance that plus patents has led the patent patent novelty a to they It the months. backbone China, we've Latin the is something value, distribution, I Varium the optimize continue promoted on That been NeoPrime have we’ve and patents, recognize applied in to obviously, of going and technology producers last were I in America also to in the those formulas the our for the and very poultry into countries to the products in helpful get to to market and three and our think think our the the to NeoPrime in that's these we traction first the rolling That's that China getting think technology. focus and interest a where for unique of Obviously, trial there. are of and formulas focus where the of or NeoPrime that And pending refer in Varium and recognition swine parts be what's China. second question helped recognizing protection that’s one many pleased again countries. further and were lot that our terms to generating issued it’s the in getting clay continuing formula our Varium. has And of adoption which modified of as that many in other in product the I other world, of unique. product, the patent the is still went especially

Dan Jaffee

you, as Thank sure else Mike. question And on I lightweight, label had private which a well. Great. have then everyone will Bob am

starting has been in is show of up up So the showing we in to that really it data it to. starting the data and extent consumer Nielsen greater subscribe it's or

we’ve our XX% ago, weeks past private-label segment was of our a the that what about February XX that XXth, year of share talked now the of XX% is it's lightweight share ended segment. for so segment the in And

were year now For XX% the XX%. weeks we XX a we're ago,

the we’re -- Of a great the our it's because and growing heavy are heavy are the small. very not see -- now as player, is percent can category. we private-label share which whole gaining the momentum is you we concerning, really So of lightweight it's

up units. doubled to is a is in am X.X, I just the is now XX.X, private-label it's Now looking and to at that course of dollars Private-label was private-label that this of so lightweight X.X% small. and the is for units is put perspective you which year And non-clumping it's but ago X.X. heavy units, represented category

on that's private-label represents of in units 'XX. basis of a February week the category, XX.X% XXth ending So XX the sold all

that's the gives said consistent and what with past. you So that just an we’ve idea in

minutes. to I And to are end hard up at always, chance it So Jimmy, XX then to ask one to Thanks. questions to of I'd get at stop like this open as queue, has Q&A, and get a like a the most that going the after your first important everybody so least everybody question. time, to we have

Operator

Ethan Our comes Starr. Instructions] question from first [Operator

Your line is open. now

Unidentified Analyst

Fresh result but for Just the extent and as Light & part of for the label lightweight -- a both of shelters, curious velocity Litter increasing Cat's part of line animal initiative I at private of the Good? am initiative a this, new Pride retail for as you also with answered what sales to the result pricing marketing litters

Dan Jaffee

part I the your was missed the first first question, what of part…

Unidentified Analyst

at retail? velocity Sales

Dan Jaffee

Sales for…

Unidentified Analyst

up? more seen movements You’ve

Dan Jaffee

increase I extent luxury aggressive I our I category, us private is parity litter seeing that well brand to the working. like whether our we’re shelf was of take or we’ve other that short and where than some with a incremental going because in This I say Absolutely, is are aggressive exceeding and related pallets And caps we heavies seeing aggressive priced, we’ve where Good in items really pricing gone will on all are in on can run, not into the a a for or But more can program program am long to tremendous and you Litter luxury, we to absolutely exchange labels is be, wont' get usually specifics retail then And to velocity. would share execution. at the executed that's The end maybe quarter lot cat expectations lion’s that’s pricing executing going can't. to way. and that space for slot. or give going tell our a more are but retailer categories niches it’s be things movement of the our that the strategies as obviously lightweight

the out shelters. to to reach have We

and to litter. have signed authorized, get free them our We receive up even

there But the are. knows, who number I’ve many XX,XXX -- knows so And no there shelters exactly one U.S. to in XX,XXX heard how any shelters from

So day And we’ve at activated one I is what We a two up on leading this signing average be leading months, Pride average full years we’re them. has three point were Good, may membership. Good as Since Cat’s now for on Litter XX I a can really may this for before Litter look been at to launch for club you day. consumers like of for to up X.X% Litter two of the X% be a which indicator Good. the tell only to signing

past increase depending activation. on to to want and X% how round XX that’s a with our a XX-fold you So numbers,

or that So activation XXX% XX% if a would bringing HD what imagine you you activation, an imagine, can mean. can

it’s the with truckload We’ve shelter new So of of the heard to a resonating brand than shipment made off actually we’re about clearly that and that litter more it’s getting our new it. or that’s first free made but consumers us, a have to litter. donors

in But our it. actually PR this and another there one all the exciting. is We’re and program and to manager be going sending take week working be program will to out it’s pictures very out East do Coast around

Unidentified Analyst

What’s you understand at just activation I that levels, mentioned didn’t you that?

Dan Jaffee

deal. the here’s Well,

if market we haven’t can shelter section where have and recognize not they’ve go register send which so have actively them is actually then we they out but site there donor base. do then that to But make would gotten yet. to to the this sorts they they then the they of put of information to email to that donation. private a our have are to all to that’s Web to so really that email So their -- they blast do in -- then special time can And free they they litter get they taken active are they need shelters,

adoption, say a XX% so ones send And ones of those that. and things to Web presence blast while because and the covering the ones biggest first I’ll find, the the easiest shelters, XX% email were that to have we like and obviously we may for out about be of went

we So were while to we about sent of only out to XX%, XX% ones send the out responded. actually

have we all, not to and now so So that’s easy. them call

and to kind got names of that You’ve get stuff. all and numbers

at just So it’s can get and you anecdotally. love our an it’s it snowball, amazing. executional war and get once it’s chance give you but I on-board I them a activated

one three have donations really participating them an out days. to We in they like reached and should donors, they And huge blast those got the from out three their Once have. that tripled they in very few e-mail nominations. nomination shelter month wasn’t first put to we a in and actually days half, got

need we we free the to just you donor need their green them buy that so to they base So litter. and hey get let jugs know activate

it’s great not it’s program, but ground war. an So air war a a

Unidentified Analyst

I in Bob the not call. get was happy if have queue more on questions back to the I am

Dan Jaffee

queue hopefully So go question. someone else have back in the and a will

Operator

Thank from John question you. next And Bair. the comes

Your line is now open.

Unidentified Analyst

Good well, the family. I Dan to entire gentleman. that generous very didn’t a him always condolences Oil-Dri you but even and and family was special and get again Dad pretty though morning, real your and know to

the on was guess Okay, Noticed release rather up said it to XX%. granules in here. were ag and significantly, your carrier I application business you

of So was rate, the new about the could will bit wondering you tell wondering due that to product necessarily would us something it which you is believe -- obviously at launch and continue is it new customer, but be not I a little nice, a XX% will momentum that -- if if a that that.

Dan Jaffee

I Mike, refer I’ll think Hey you. to

Mike McPherson

driven the primarily from It’s a acquisition customer. of new

use several other customer. with there far are expect one of resurgence with several clay to we way but in to last next in the underway also customers been a fruition traditional coming it, synthetic we there quarters. projects are the chemistries. carriers, in years, over the granules in significant contributed the general, And there's our And but the of have are that that not in of bio-pesticides a the area it that there several a that Although, as in continue over only number customers commercial to course works was

So growth looks we bright continued our very for business. think the future of the carriers ag

Unidentified Analyst

recurring if Is product some has fair you behind, it So statement? this a is momentum will something that be will. sales, that

Mike McPherson

new In isn’t for account, general, seasonal an commercialize. this yes. a is And ongoing also one-time this they particular that this product purchase

Unidentified Analyst

But there? I it is seasonal. Is that what caught

Mike McPherson

their No, I'm saying that that just it is not seasonal, it's included they in one introduced. formulas of had

be formulation, to following this reoccurring in business, off expect for a season. we'll we not a season move and then So say, a let's one-time it the use

Unidentified Analyst

to Is a is feel a And improvement that question also -- it? that that have Latin with you sales. American corollary continuation some will something

Mike McPherson

you're Yes, to… there referring

Unidentified Analyst

Latin reference a was health there in improvement American in release was There business… the that the an animal

Dan Jaffee

business health to right… due that It business or was health animal the Mike, animal was the the to was due it

Mike McPherson

health and the specialty up quarter. animal was in the was it Yes, business also

on of number Brazil in to in versus has growth currency to velocity we resulted production number in our engage We've expect in made remain products. Brazil. would region promotional expect the have health things, our continue. how health of favorable, distribution rates greater as sales the directly accelerate as as in customers allowed greater products going has of marketing continue situation animal we activity, our And which somewhat, our we perspective to exchange made we've the And do the have that past. long that the grade working forward improved mix, changes We've use of which we animal changes. On been a a in side, the

Operator

Ethan question follow-up from a Starr. have we And you. Thank

once open. line You is again

Unidentified Analyst

to label you customers? private new lightweight get Are continuing

Dan Jaffee

Yes.

Unidentified Analyst

difference Would difference, it in substantial sales or it's make a a minor?

Dan Jaffee

packaging to impact and they’ll mean business. already committed on I and that. just on our rolling roll they're and overall They’re things updates still like working

Unidentified Analyst

that eliminate foresee you you a can will in label business somewhere almost to future time the be Can lightweight private when heavyweight? proportional

Dan Jaffee

at speaking, would get way, They that's I of yes. on there's to consumer the can say goal. you valuing term get sure. they Well, the is say if nothing dreams either nobody believe and price they certainly but performance the or again in the I rates. performance short horizon logically equal benefit the can but love my the price, mean half equal would I that get that, don't an

no like So logically when speaking one about cedar have things the a volume, animal used these there by comes And day that should be of where come weight equation. heavy about their litter want we it's to get by in volume, the we is chips and talking just lightweights, a much shouldn't out cat it's they to weight and how just it point trail. put hamsters baiting

Unidentified Analyst

bit fiscal you'll have want want save wonder money the you was to accumulate I and be you Hopefully, of let mean whatever I find spend 'XX money or any saving the passes balance if might a it you you bill. little it, it to to but ways in tax do for plans the can once sheet? with saved. sure

Dan Smith

going at may at on we past. look horizon. opportunities not as any the or not in terms and in may We’re individual going plans and capital be look continue other that are always of to we've our discuss to balances And done cash to investment acquisitions

Unidentified Analyst

the help reduce annual I meeting had company? would the the you you know I across wondering for at company. am hired just cost mentioned environmental an And manager that

Dan Jaffee

a think We’ve manager got wouldn't one. always so. environmental new an just hired I we

in so… the we’re So business mining

Unidentified Analyst

know. I know. didn’t just Yes, I

queue. Okay, I’ll back in get the

Operator

And we John question you. Thank from have a Bair. follow-up

again. open is line once Your

Unidentified Analyst

on stock, this you about can there share Just that? you much price question done Have cash. pretty dip have address the recently Ethan's excess cats and follow-up the so of do to buybacks a any you

Dan Jaffee

have so we're We we and if… I don’t been that obviously, know authorized at do a have do always looking question but It's shares it. valid

Laura Scheland

floor the now have in And And time-to-time. had we around XXX,XXX October. we information, been that XX-K the was that and exact that consider information a ceiling, release have do from just in is authorized always

Dan Jaffee

we’ve a But sure So be a got discussion. am topic I meeting of that will possibility. Board up, that’s a coming

Unidentified Analyst

and in wondering resin am costs lot I usually in past tightness gas have made area forth. lines? you’ve had if and the been in I forth. you’re in what am a then those abated. resin I a seeing prices, And forth. we of a And so about comment prices so just the know spike the shipping nat know shipping costs and and there’s wondering I transportation so along

Mark Lewry

seen natural we of that anticipated So which year-over-year. reached gas, that were southern futures up time. we yes, We we’ve is some snap at plants. had January, in because to an really cold the increase down budgeted certainly didn’t What anticipate we when our

And cost significant expect in out modulated year. don’t so the those and gas we of already of have some increases natural the had we anything rest for But there.

Unidentified Analyst

mean I a The was pretty… there’s pretty yes, down price low,

Mark Lewry

under Yes, Exactly. it’s MMBtu. $X in

we don’t So see really anything there.

a demand. been hours. regulation, one, question in few has of is driver freight changes also There have good a which the tightening Your quarter second supply particularly the in restricted on continued and we saw

little looks period that time and like even to we’re that take it’s more of that on before So a for a expecting out time so and go equilibrates. to rebalance

Operator

from time one And Ethan we you. more Thank have for question Starr.

is Your open. line now

Unidentified Analyst

you It will increase ERP the the XX and than you you will to the that? from is recently. be a shorter how And deposition wondering or also see still conference savings be are length XX I’d calls, even of am to starting had I encourage like to software helpful. what Yes, going installation minutes

Dan Jaffee

coming goes I we’re faster what we take in everybody I they I these go whatever, Not. budget? to. mean knows, and they ever to more. things won’t through longer there. and cost under ERP, that compare and are think That’s Yes, going it

live is are make current very, a go happen. we very We for believe of have We X/X. track on working to that hard Everyone date that.

incremental critical to add resources order up sure to to the having we all and meet in necessary on the get make We’re running. that deadlines paths

I no, cost. But pure no, point those live hopefully savings. savings think savings, X/X. hasn’t up should this it’s yet, it be of on terms gone at But in it there comes long-term, So

Unidentified Analyst

the cost the potentially us the give that, from just -- cost invest disappear? profits once you Can the

Dan Jaffee

Say again cut Ethan, you out?

Unidentified Analyst

the an costs? disappear accrued -- goes once us give idea implement, it’s profits live will that the you in Can and future, that hopefully it will the once of be you in involved cost stock

Dan Jaffee

of Ethan, we out that on to and not do this not level I that have prepared specificity broken at time. am

Unidentified Analyst

to hear want Bair’s I John And question. thanks. last Okay,

Dan Jaffee

Let’s give one last John question.

Operator

your for -- line once more last currently open your Bair's John question. is

Unidentified Analyst

I more, the maybe guess didn’t said had since one I I star hit I after one anyways.

working wondering with talking with or I they you're was hold the animal entity you online if there's some -- within Okay. whatnot about been things the health. bottleneck through sort merger, just or that to China a any a back companies At I guess inter-meeting, wondering some if progress that's with put Chinese And little to of reformulation where on the the bit with you and way may due its come not. had

Dan Jaffee

Mike, you to? want

Mike McPherson

call? the to referring last you're John, quarter

Unidentified Analyst

Yes, was drop something. Chinese a mix or there their or off, company, formulation because company the this change

or out their bumped -- And straightened I they… they it or systems testing so guess far until out that it you was as as whatever got

Mike McPherson

their making making them. customer they and feed ours stopped another feed They have the of for own

product Although, exciting that now materials into we we’ll feed they're they're opportunities on. to quarter the have to in a they're to that better understanding, our we're then right going it quarter, our somewhere see working we're begin that the material making, lot company don't But former now, we're and have in making we to customer a opportunity. the in over lost fact China transition if incorporate other eventually out in But the using and order there how they're going lot indicate of team the or the they of in customer. the Amlan our other for that former was making enough feed next second that a they're plays that think really our did for if

term. So long

expect that we one still China. ongoing the Although, transition quarter and continued affected growth in

Dan Jaffee

at three the quarter. be for end back of your and months after everyone forward to and continued want you And the third thank next just interest the to we'll looking

and to everybody you thank we'll you again. So talk

Operator

you and day. may your and Ladies have disconnect. program conclude does Everyone, all this a gentlemen, great

Oil-Dri Corporation of America (ODC) 12 Mar 182018 Q2 Earnings call transcript