ODC - Earnings call transcript Q3 2019 | Oil-Dri Corporation of America

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Operator

Good day, ladies and gentlemen, and welcome to the Oil-Dri Corporation of America and Q3 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded for replay purposes.

It is now my pleasure to hand the conference over to Mr. Dan Jaffee, President and Chief Executive Officer. Sir, you may begin.

Dan Jaffee

everyone third welcome months and and teleconference. you to quarter our nine Thank the in us Parker, room our me you're heads conference With in Relations Investor here Safe and Garber Officer and Harbor. Kreh, up our Counsel to Chief Susan Chicago the CFO, General Tony walk Assistant going Leslie who through Development McPherson, Mike

Leslie Garber

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

Dan Jaffee

Great. Thanks, Leslie.

to turn any As through color always, add to role of going to I'll the I'm to her it play-by-play. walk quarter, then details us the and Susan over

Susan Kreh

to increase the have the of to third X% fiscal able we been which third experiencing Perfect. the subside. are quarter strengthening pleased quarter a finally sales sales quarter some momentum during million over be experienced increases I'm $XX.X to XXXX, the with third share at XXXX. a beginning was when for time We reported quarter results. fiscal year-over-year And of cost We of of our some

cat continue strong products. demand branded Cat’s we label strong XX% Scoopable the litter our group litter. up our private in in very driven demand and Pride and quarter, by product wholesale Sales lightweight growth quarter, for a experience we experienced In the retail to in were in our strong year-over-year XX%

quarter, climbing same to third XX.X% cat last our quarter of year. segment XX.X% the overall to of the unit grow litter the share from During continued in

last levels. of had trend the same grew year over in where group X% products year, business-to-business previous reversing two the quarter prior Our sales below quarters the been

in Latin American markets products, We favorably in the were XX% edible purification crop. impacted our growth by primarily recent experienced fluid characteristics where to producers of oil sales North and

granules sales saw also strength our in sector. engineered of our agricultural in We

Conversely, health be our impact widespread the levels, continues Amlan business animal swine sales the in last by to African our year's to in decreases below continued flu. business driven as experience Asia of

Amlan on As we a in in turnaround that adoption we well quarter reminder, last geographies to industry as as as with business our work such customers poultry. channels, immediate as our other some continue we said the do for don't Asia, an of swine while we project in other products expect recovery and in trials

of in year. reported above our products the X% million and prior prior over year $XXX.X wholesale reported group was sales retail Year-to-date, same the for by XXXX we which in cat X% period strong that performance the litter. fiscal sales Again, up driven were

that third year. of we in the group products two year-over-year was not decreases to offset this as were business-to-business enough segment that experienced quarter the quarters X% reported The sales growth the year-over-year down year-to-date in first

third to attributable $X.X to a quarter year million Our quarter in the million ago. net Oil-Dri was income $X.X third compared

making third of booked $X.X For also out benefit quarter our will deductible that tax $XX purposes income during we settlement our in tax million in onetime we point that that pension fiscal plan. a incurred of comparability, the from item was in a of fund favorable In had fiscal to confidential XXXX, I a million of financial XXXX; other onetime statements. form contribution the legal resulted a

to were XXXX. share quarter share share of per per XX% $X.XX diluted compared earnings fiscal third diluted per in quarter third Our the

year XX% and natural as from third freight see was of this as cost. in XX.X% gas started margin we in second and profit sales our quarter, sequentially strengthened up gross some quarter During to the easing

quarter freight gross the a costs. profit in margin and year. last basis This The increased manufacturing by gross margin compares packaging impacted percent XX.X% to same on was year-over-year adversely

call increased in an fiscal quarter. quarter, price effective offset partially investor during May effort we benefit increased that As in to we litter some prices fourth we expect of costs, last X seeing cat and to begin stated of our increase of the the our these

Now operating wholesale. segment; first, and let's a retail bit about our talk

up As I of were XXXX. mentioned months and first fiscal for X% up for compared and XX% in earlier, quarter were retail wholesale to the nine fiscal sales the team the as XXXX

same was third up quarter Profits the the for in segment prior over in million $X.X quarter the the year.

was The third continue of compared $X of advertising experienced quarter share. litter to we for program to down good last to as we but year the in by quarter quarter, third us lower benefit impacted allowing being capture XXXX million advertising the fiscal the levels, our

the Now let's sales natural the stronger was the higher Profit due impacts manufacturing, take year a of last compared BXB down to same quarter freight, quarter and packaging. at cost look our for segment. despite gas to the

months in working few comments both on for trade on the sales and lower discussion, the compared our XXXX, segment making to the increased fiscal to round progress out we're brief for our as I'll just reducing the make the that And on based Income down BXB nine mentioned. costs was capital. first a I same period

the our of of new implementation, start Xst. months on our year nine at system on working August XXXX, ERP trade our capital was impacted went fiscal our we the fiscal During live first as by

leverage capabilities in kinks was XXXX fund as the system. learned well new receivables, used out and work ERP fiscal inventory our during Cash the to as to building we but the

goods of the year and beginning packaging. the Inventory million primarily from $X.X in fiscal increased finished

the costs stock, new the this increases is launching inventory platform. resulting earlier, has and safety been the of our impact some ERP increased of from build Some discussed by of incremental driven

increase sales XXXX. of month as fiscal more moved of This third inventory seen occurred of fiscal driven goods stock April, quarter, and year. in of on from dropped primarily compared reducing XXXX This our X.X levels, to in second During made beginning X.X progress the the also by normal primarily finished of the from in XXXX. towards inventory July receivables quarter is the million the an we We've as levels. million stronger safety

the second over and XXXX, related invoicing During we with ERP quarter of $X.X quarter, million through by other receivables our quarter call. you the investor resulting we fiscal our backlog from third our discussed aged previously receivables worked second as implementation that improved the of in issues

us Dan, a turn with brief that few to back over and I'll So it you. highlights, summary,

Dan Jaffee

XX.X had million ever covered first the want quarter. in was we broken I only All The everything well. right. to time the And Thank XX really thing very you've is you. the highlight million

record in the quarter, but not Oil-Dri. for of For any only quarter, history for third the the

So that fun. was

as least and most then to your one first Let's the always open opportunity ask go important to end of question. the ask up the and everybody the question allow at queue line that

Operator

Instructions] [Operator Bair come you from question of line sir. Thank first John Wealth Advisors. the Our will with Ascend

open. Your line now is

John Bair

How Thank Dan? And good you. doing morning. are

A - Jaffee Dan

are How you? good. Doing

John Bair

I'm control, to whatever get ready a under try are try this good. the there of all to over is. lay that? gets or market you doing for doing question doing a What recovery got kind for re-establish What what great. it situation to the you you all starts and breeding when that regards you with swine are to to I'm for I kind with of are -- the issue. groundwork swine to flu operations

A - Dan Jaffee

let but some McPherson I'm have I going to well. Mike comments handle it, as

Mike McPherson

the reliant taken market overabundance the the we entered a growth, Flemming That the the China, on lot effort to was the August the Varium of that and spread China swine swine but on promotion since a layers, to Amlan, flu. who's on the to spread most and the extent for that's Flu, an has and The market swine poultry the fuel of trials penetrating going directed of now overly are help was the over was due into to for of President offset the there more continued active already lot poultry, maybe breeders, that of towards we Swine have of swine more broilers Calibrin-Z the Coincidental poultry. historically African will initially the on sales and of thus the market. the Mahs, area turn sorry so -- focusing I focused team and business heavily on that in when I'm

A Jaffee Dan -

swine Yes intake to and They're win [ph] XX%, we're [Indiscernible]. way. is in That's down and people mean because or meats to other participate I either by production caloric then XX% have meats switching XX% XX% still exactly they're doesn't mean just we the eating. people right just their move. all down in need cut or China

that's our strategy. So

Operator

Thank you.

the line of Robert question with will from next Center Our come Performance. Smith

open. now is line Your

Smith Q - Robert

offset ability costs? the an us idea Hi, price good morning. Could increases to as to your implement you sufficient to give increased

A - Jaffee Dan

up. did extra Yes. actually, went The to a were the Got jumped bit. We freight come increases then, starting rounds some And in. is XX. Then news down good take of rates we that increases. cost

So I I mentioned but to the than from of both them the the per sequential at right increase know moving margins. second think were percentages, look in the direction Susan you ton more it quarter third in quarter.

you'll the see I see and it quarter fiscal continue think, in to to the continue you'll in then fourth XXXX. that

that So good think yes, I standpoint. shape from we're in

Operator

Thank Investor. from Starr, Our will come Private Instructions] you. [Operator next question Ethan

Your line now open. is

Unidentified Analyst

are Oil-Dri’s and could you Oil-Dri's if strategies strategies. press strategies last X acquisitions. And What in both such the acquisition? your an key criteria considering releases Good included include morning. phrase discuss growth please growth

A - Jaffee Dan

Sure.

So using foundation house our a analogy. all growth to strong strategy get was first the of

multi-million want build And system. that multi the on our to dollar You came foundation. weak with investment in house don't ERP a a new

Laura level, to be Susan making Officer. Chief new people the over highest names seen of that leverage lot Jessica we've We we the consumer in. General take Molly order was products a and you've And division, infrastructure to sure at and of promoted growth place, part Scheland right Operating Moskowitz had to the faces in promoted Counsel. and companies who's Second our invested the new strategy our the in our

got So don't the remember what were your top Mike we've changes the title you Officer. but Development had then some and you promoted, Chief company of good is, old I at

do what you people people the that and them. when the raise those to happens, And bar with reporting then then

that's And all happened. so

the got sort the new And And folks skipping are got world into step, included. then skills class old the are so you've you've and myself of their experienced bringing company. who them

in no things got to you've you order other long have to get two to then down to And got term is, firepower done. We're to finally one the it grow, financial debt. have almost

maturities we're to down current of long think $X debt. just term I million of

to So almost debt down we're nothing side. the on

we balance announce, as sheet, revolver we we have million. have a and a $XX under untapped So of highly leveraged

gunpowder? you have do the is shoot? of Do the that's part it equation. And first something you So then have of second to part the

think it I we're And we're going that side going again, to because mean, other not into you’re to football. lead the I'm run, answer much is too yes. play yardage here not the in to to tend to do what going I just get And either. to – doesn't specifics, more yelling

So it accelerator. the firepower, is say, just suffice infrastructure to going is there, the in hitting team to and we're we've got start place, the

Operator

And line follow we Ascend coming Wealth Bair you. John a Thank have with the of question up from Advisors.

line is open. Your now

John Bair

and from Good. that. up that these on the previous Quick thing? might actual On kind of to might and studies it do that sales, you studies, revenue you. where on trial actually follow Thank that, some turn positive is forth. When you see results my trial question so that

Jaffee A - Dan

that to the growth We in from see start fourth should quarter.

John Bair

cat on here you. merchants litter demand good. overall existing customers. to very Thank up to Okay or our follow -- that, sales the just possible, mix increase added due one new from is in increase a existing being if that And

Dan Jaffee - A

of which But for towns lost again, increasing the Both. at third have losing didn't largest account not didn't I we it is which mean kind We existing or guys them much lost. performance. fourth you it. we're know the year fourth still X% ago. announced a been We lose All lapped colder. you I this them third as real. lose in quarter lack year-to-date we because mean of the would And velocities how through or above. we dramatically we of account the up tells largest our we was had

for whatever Our were was moving that It reasons in top products third we didn't their understand. the of strategic product line.

very have on a course, said then, label our private is And business But business. putting with new doing having also been on business and existing that, lightweight, we so put certainly some traditional account well.

that. on above the of all it's So

if that in in So now over we Certainly are -- we the grocery on are Susan of results unit share we're mentioned, category. product the of division. we Clorox, the up in going almost proud a And well you add as make the to XX that. we're what's for

of every out shopping an There's -- we're shopping one out product of Oil-Dri in And there. every America. five in carts one so probably in

so And have we this in mass category. critical clearly

Operator

up line questions from you. with Thank have And Smith the coming Performance. follow we of Center Robert

line Your now open. is

Robert Smith

give effort Dan, color where on focused moment? the you it's some at could us R&D the

A Jaffee Dan -

I say like again, where get or the specific we're equal continuing it we've to this and is what mean, don't spend of be would just I is just going where going. to going. competition to very greater tip to I bullish as we continue too we're done historically rates spending about that to

So, get to into going I think don't specifics. I'm any

Robert Smith

about quarter? how fourth expense And Okay. advertising in the

Dan Jaffee

I trend forward a I quarter, guidance Susan great don't want it's give point. very a I because important. to little In that. made fourth get just the historically, like mean think I you

XX% for last quarter down to-date, year. for lost half the of of half this that and significantly. year Litter the year of And yet We is X% our And total in Kroger up are for half losing sales is this year. Good. of and advertising despite them Our power

That’s every Cat's buy Pride shelters. the program friends actively of to coast solicit time we have buy their then only because all to and do roots pound coast the to a thousand the we to jug donate shelters they the base but grass engaged not go to join a to where green litter over donor out and tell whole

year-to-date was So at back advertising our total at $XX look if you million, in back half five. all, XXXX it's

in advertising increased That deliver sales. and able been up consumer spent working per dramatically yet TV to dollar means going profit cut division. national the we've is So

the we So, can outspend we we don't should. don't we and believe big boys believe

and And a so we have smarter. to little be nimble a more little

it's working. And so far

Operator

our will question come And line you. Thank of Private from the Investor. Starr, next Ethan

is open. line now Your

Unidentified Analyst

Oil-Dri's Did total received in in litigation? litigation the patent exceed settlement Yes. the expenses

Susan - Kreh A

did. it Yes,

Unidentified Analyst

have mentioned the grow That's added. to label you mention with there to private in Do queue several good more Okay. you also know. was of still new customers in label And private customers? new room

Dan Jaffee

customer coming the And so and with Certainly some because out is industry and continue cases pretty biggest share have to we as price hard. getting freight and execute large Northwest sodium come has of parity. rail to bentonite even costs now growth new we in hit a the going the

going and more the is the that now we're priced a the So to to with actually can sell. seeing under some continue accounts lightweight more happen heavy product we're

increase say opportunity bigger with new will existing than velocity but a I'd both accounts a is accounts, So play role.

Unidentified Analyst

and quick them when differ more current and One [ph] Okay. Proveta question. How do Metal you expect to revenue? X from do products generate your

Dan Jaffee

answer. never Since these but fourth [Indiscernible] trademarks Ids new question. to I've Do I answer heard wouldn't experimental that one be can't products them. of field that have going like both you of any Are trademarks yes, [indiscernible]? the I in are are like tested either quarter.

Unidentified Analyst

queue. you. to Thank the in back go Okay. I’ll

Operator

you. Thank

Performance. have We up with follow Robert out a for coming Center Smith question of

Your line is open. now

Robert Smith

of idea swine the in opportunity Amlan market? us you of could give an Hi. the versus Mike, poultry

Mike - McPherson A

a they're a and share. And large very Asia all in China extremely large don't large it's we of which market have very even markets. Globally both

So there great is opportunity. a

in Our to they equally products work poultry getting if the swine, it’s focus on team well in it. just do

Dan Jaffee

we it so don't we need resistance article in antibiotics York get in The global this regarding having the huge to chain end to Times human chain that the A them the food food shift of from away out when up weekend New them. continued

what's to trend them. to best And right to the get The are look way at so question market? continuing lines And the we're direction. in is the

Robert Smith

going while on. all this So is

correct? You that going tests have these on is

- McPherson A Mike

Correct.

Robert Smith

mark test The customers. potential with

Mike McPherson - A

margins market new product, test are a much thin. poultry and razor validate is slower Yes. the to because The

launched swine Amlan. China A on our a let's So sales. in beginning actually since to swine and the focused result longer work was in has overly poultry to sometimes upwards in we the that product been to new been of producers of these they evaluate XXX% But think year, hasn't It make sure a expected that the we of most go lot Asia. and I it probably products poultry. tend It say works. in see do ultimately just growth will

Robert Smith

Thanks.

Operator

follow Thank you. we Ethan questions from Private Star, And coming have up Investor.

now is open. line Your

Unidentified Analyst

inventory cash as Susan we'll comments, and higher decrease ERP soon. I'm and well? but a in Yes. I And installed receivables to in numbers than touched her continue are increase like this the goes see period those time on hoping this with of I'd still and system being longer guess tandem for

A - Kreh Susan

when and quarter did we seeing quarter I over said, I we as third did. the told last And some -- we you talked we that improvement Yes. anticipated

the normal what at call yet. would new aren't We I

opportunity more on think still there's I side. particularly inventory the

got still that more system us the as be you'll people we've think down. stock it drive I see into built comfortable to safety some get able

Unidentified Analyst

Okay. well? about How as drop Will DSO? that

- Kreh A Susan

pre-implementation to XXXX levels DSO today. July is back

you better as to So business end we a of with we types know with really the opportunity can customers customer outside longer there get and we mix. is end terms, but terms, the up we up other U.S. move

So to -- for tell we I DSOs improve it. are now would just but look back to to ways have and as you, normal,

Unidentified Analyst

Okay, you. Thank great.

And ERP these so some going better of the much days? is system

A Kreh - Susan

much these going is better It days.

Unidentified Analyst

Okay. you. Thank

Operator

you. Thank

Center coming a Performance. for up Smith from have We Robert question follow with

line is open. Your now

Robert Smith

just curve, an it a your price that mean get of the the this or and increases. look you there price I question question do is you back I try the at costs of opportunity wanted is of to I Is own a Yes. cost going to Projections mean, ahead of? question to increase? how implement that? circle when what forward of

Dan Jaffee

Yes.

Now Xst And last definitely Xst, August under right. we predicting were that's increases. exactly August with

that did shipping was Xst August in not increase what crunch our anticipate fiscal the quarter took adequately in So occurred first we the

was pretty predicting and of catch-up October, we predict it we're and one's the be that. that the this They ahead year. last again. and after But expecting so no dynamic that year either. September didn't But are to playing August, curve

Robert Smith

Thanks.

Operator

Thank questions. no you. And further I'm showing

is hand closing pleasure Dan Jaffee, the President or to and Executive Chief back remarks. So it my conference comments of now Officer to Mr. over

End of Q&A

Dan Jaffee

think and you was call oxymoron. live. Great thanks thank I of today and we've the I you're but everyone. going anything absorbed an Well questions It which Great. go-live, that rounds ERP seeing

where neutral both the quarter first in the from in And to now But benefit was the of look shooting Going us. actually, that's us sort It system to to to you're say what is everyone and would get. ourselves continuing we going feet, system. we helping it. getting got I is predicts hurting team to forward actually but the

And Molly then actually reactive allow a offense team of get and robust a out defense. and her that implement program front instead to just in where we will things the lot of forecasting can of play

about future, really guidance, very of give of term So, long forward Oil-Dri. the in both but and we're excited future very bullish about short, kind always any mid the general never

support loyal your for and you we'll you back be after thank So the quarter. fourth at

Operator

participation gentlemen, you the today’s program disconnect. wonderful have a and Everybody This your day. for thank Ladies conference. and all conclude we on may does

Oil-Dri Corporation of America (ODC) 10 Jun 192019 Q3 Earnings call transcript