ODC - Earnings call transcript Q2 2020 | Oil-Dri Corporation of America

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Oil-Dri Corporation of America Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] And as a reminder, today’s program may be recorded.

I would now like to introduce your host for today’s program, Dan Jaffee, President and Chief Executive Officer. sir. ahead, go Please

Daniel Jaffee

Officer; morning, Relations. six-month everybody in investor is through our Harbor? Chief conference Good Counsel; Safe Assistant second Leslie the will and the the you quarter room Garber, Financial our Kreh, and teleconference. of Susan Parker, and you. our to General Investor welcome Manager Oil-Dri Chicago Tony Leslie, Thank With us me walk

Leslie Garber

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

you Dan? for us. joining Thank

Daniel Jaffee

turn you the She’s I’m comments Susan. it and make going to Thank some the of we’ll and details a Great. through six then quarter and I’ll it to to you. Q&A. months, over up the walk bunch open to going of

over? So, Susan, take

Susan Kreh

Thanks, Pleased here talk quarter quarter to be second for to would a you as compare sales, morning, good especially per to you Overall, second Dan, net quarters those it share. as and that net and other earnings about a be our earnings record income released very metrics strong and to we on yesterday. Yes. was everybody. as it far us. key And

quarter. good So

the higher of same or in than sales with start sales net X% let’s million, So quarter last year. net $XX

cities. a is growth that within tale of embedded two Now

decline we Group, Retail growth where business offset during to experience we other our in by was where driven Group, growth our year-over-year X.X% our the in X.X%. the to was Litter continue and hand, of strong The experienced Business quarter. growth Cat a XX% by On strong city, year-over-year our growth of one Business Wholesale

caused couple by note. Now, loss think that our a that top important of a in business unfavorably. line part things of there in I are was the agricultural customer our impacted to there’s year-over-year decline The large

impact the loss our for negligible, fiscal second a wasn’t quarter was this it because Oil-Dri the result of XXXX. business business of profitable in on gross as However, the profit of

And was business sales in we while quarter, basically been other in adopt African year-over-year experienced net where growth the regions has market net the Animal sales previously, year-over-year offset decline in that by China products. our Health impacted were in talked by fever as that in customers about the swine we’ve flat our

ago. XX% gas gross offset improvements in same of costs. by packaging in Our costs, quarter our the were natural was a just profit $XX as well year Reductions increased than operations million slightly as higher manufacturing freight,

that million, Our that, the result freezing $X.X the SG&A executive and about one-time quarter a towards our talk in favorable as a $XX.X end. million includes a retirement of was And impact, bit I’ll plan. little again, supplemental but

quarter second to of than income $X.X the diluted the second double XXXX. $X.XX net share per Our And quarter Oil-Dri second was income compared was share million, million year per in a net the to attributable $X.X in second more quarter, $X.XX ago. quarter in this quarter our common fiscal

$XX.X generation. focus $X make The This million working on and pension contribution drove to to end still the benefit cash equivalents. cash defined a along of strong a strong quarter performance in us solid plan with performance the and operating million with enabled quarter, our capital, cash strong

we’re strong So there. sitting

these of defined plan. Staying and the March our as pension financial these freezing benefit amended supplemental included the of plans on second in the X, results. we of retirement and theme executive our from second frozen plans was quarter our during quarter, the of impact our Both pension, were curtailments plan resulting both

mentioned There benefit our our no supplemental plan. executive the the retirement the from of resulting freezing pension the on plan. benefit of million net impact defined earlier, income was freeze $X.X I resulting from

interested, we for for Note curtailment. X, Benefits liabilities in those our of Other I our stockholders’ impact point – and would the our XX-Q, information stuff discussed Pension real some Post-retirement equity and in to However, got We’ve on pension where there specific you.

that, highlight that’s the kind Dan. of And of quarter, the with

it turn you. to over back So

Daniel Jaffee

Thanks. Great.

I of this open will recognize quarter I who’ve the company like to love may been well. be new in perspective you our longtime those lot just these up, of I And into you a of able those Before of analytics are getting who numbers trends. the not But business. holders thought, put these to

while I look all-time back and XXX,XXX quarter, XXX,XXX for was a sold we saw actually we XXXX, record that our sold in this I tons back tons. quarter

actually tons but So – key ago. some And here the our XX tons years were facts. down XX,XXX from of are

ton. a year, was This Our $XXX then average a $XXX back it ton. price selling was

$X.XX income EPS our ton then, was was per back ton made $X.XX Actually, $X.XX income net and $X.XX. net the EPS. sorry, we – the a And was

we $X.XX $X.XX a made we And on As tonnage. $XX when quarter. ton, know, ton this report dramatically those a you making instead less of

Susan on we can you a money big you to put last that versus when were account all account the it. strategy of with deal value that But from break-even said, losing year. of Sorbent yes, our having we’ve to So Minerals, creating costs ag as see and lost

and reported it losing from a was positive cash a standpoint. a actually, flow income So

continue to where these So the we’re guidelines, on to going business money plowing we’re to keep going R&D. run into

our closer and get to to customers. going We’re trying closer to and keep closer

So where role might a those meeting and our unmet in that have they needs. play out might needs we minerals can figure

them to wins value, can share that then some with that so us help happy So of value that in create they’re we equation. everybody the and

again, And it’s continue bullish. to So be very working.

quarter. We’re think to sort But the the is long-term, yet come. proud of best of we

So Q&A. let’s open it up to

what’s on hear minds. Let’s our investors’

get the if end the of a third. But question And a at question go your we’ll let let’s second one least even – then and maybe you’ll to always, have ask most first, everyone in. get As time, important queue. question we

Operator

Star, of investor. comes Ethan [Operator the Instructions] Our private first question line from

Your question, please?

Unidentified Analyst

quarter. morning. Good Great

Daniel Jaffee

you. Thank

Unidentified Analyst

question is first And be market? for also swine. a very that used I’m are you sounds any and the competing It like Nutrapath? with exciting And can there just The already prospects the wondering, Nutrapath. can both discuss product poultry on products about

Daniel Jaffee

to them. I which to Yes. to broken we’re to before talk a signal what soon I plays too way on many not run, the Nutrapath. get say would because hate Again, I’m you going about tend we yards competition, record. run – as

about that in business our material, new time but feel energy and put that a line products Animal of pass it’s it. lot another into So on we we’ve cover it, to real Health I’m question. When going we will it’s of and positive certainly

Unidentified Analyst

ask you then? I Can other Okay. question

Daniel Jaffee

Sure. we’ll give punted that bonus I on you question. a Since one,

Unidentified Analyst

for on what Okay. increase back-half that? you year I mean, in in of going you’re XX-Q, the spending advertising litter. are the the can for the to it can plans What discuss? cat says – you If

Daniel Jaffee

well. of actual spending, take it’ll over movement the – be one be spending. for I’ll lot as going call where large And we be won’t up. hugely a prior we direct it’s to It what get Yes, that year. the material up

that like be to back-half to things going a you’re help that the of accelerate. and in year. TV So, will working of a be us seeing direct new the continue commercials dollars not It’ll lot spend,

some when that to our that is and label on two talked lightweight the in on value for think punting not And category that sure brands of I information your consumer the the make trying of I to relationship priced for that the getting sort growing. questions, is I’m – appropriate be their I’ve – then since purchase. is priced, player popularly working you’ll our value about price that to be private And see the brought focus past in

XX.X% is XX. then the So were unit XX% we February shows were to XXXX, in XX-week In baskets. XX%, jumped to data that share, market up all ending in of up XXXX, and XX.X%. we This

So, we’re the and weeks and XX even XX a stronger market with actually to for the of XX.X%. than XX.X% weeks XX.X% it’s is XX.X% up all baskets

tells we’re is XX-week, the our XX-week our kind on upswing. of you than share So which greater

buying we’re in out six – mass. one that almost critical America So, baskets litter, that’s someone every cat market of who’s of in and

well. doing We’re

Unidentified Analyst

branded? Okay, that’s

Daniel Jaffee

branded That’s private and label.

Unidentified Analyst

Okay.

Daniel Jaffee

I well, is XX.X% branded the breakdown and private of – is XX.X% can that you label. – is Branded the is X.X% tell

Unidentified Analyst

emphasize to price of plans the Any value branded Okay. the and advertising? in

Daniel Jaffee

Yes. I well, yes. mean –

load idea. the could all sorts emphasize. We repeat, time. things. be up be try in-store consumer the definitely either first product and/or It So the our incentivize whole could that’s could It I different try that and It of mean, to be for features. things

Unidentified Analyst

the Great. you. Thank I’ll get queue. in back

Daniel Jaffee

Thanks.

Operator

Thank you.

comes Wealth Our the next Ascend of from question John Bair line Advisors. from

please? question, Your

John Bair

were revenue with there I’m that’s regards are you if seasonality echo Ethan any kind this quarter. what isn’t of paralleling seeing here quarter. Got Indonesian nice this they looks going your and I’ll there? flat Animal say, like kind you. really, wondering Health, operations? the Are the on? it to that’s question Thank or coronavirus in of if some with Thanks. seasonal And by being is really a impacted business And – impact that

Susan Kreh

Yes.

seasonal a on swine was that impact the is swine the heavily we the sure fever at impact, year-over-year seeing in – inside market is decline Animal where I’m Health. I’m impact. seasonal and Susan. been is So continued primarily flat over not by look there. And of were a that China, couple this There’s things I’m virus year-over-year when in in the African going performance What we of that’s seeing impacted

starting we products trials where decline and still in year-over-year, but to there. is growth are customers success see running with we’ve see That and starting to in been we’re other regions, other

there’s looking decline. flat, offsetting So it’s while growth a

that we see or that when comes China around, expect back so in And momentum. and swine more to the poultry market market turns

John Bair

affecting… How’s that

Daniel Jaffee

Yes, – listen okay.

John Bair

Yes.

Daniel Jaffee

John. ahead, Go

John Bair

in any having effect Indonesia in ramp-up you Are or…? your

Daniel Jaffee

about investor I we’re the have And I a about next be to making. upcoming in going call. going available be I’m general, mean, little Fleming on our actually, Leslie bit to will talk – presentations

about to talking going that. talk and guys out you publicly we’re we’ll So actually be to

all talked I Fleming placed, vessels, there scheduled all been But are delivery. has beforehand. delayed few for said, but orders they’re to “Look, a He

to isn’t China productive.” but in our our supply to Is it they’re We they’re exposure impacting decimated. are is office chain slim, and staying minerals. control working not The course, all people Our but is allowed us? in, closed. remotely because Of come our it

So that’s it. beauty of the

has to been product, the getting now they they chain And When companies like companies can workarounds sell devastated. so they it’s you the so get have them. parts, see Apple because to build find and these can just are supply automobile the crushed,

is, we’re good us the for So making. news

We’re manufacturing.

We’re been nothing ready little just that logistics to a some devastating have imagination. of the inland the vessels bit by the in any It’s stretch of go. maybe challenging, and but

John Bair

Yes.

products you you so and market with this swine the Have helping And so is forth? domestically any? towards Animal the Health seen

Daniel Jaffee

that, wouldn’t. I say yes, helping. I wouldn’t it’s No, but

John Bair

Yes.

Daniel Jaffee

Speakers] [Multiple

John Bair

queue. the I’ve in got I’ll other questions. get back

Daniel Jaffee

you. Thank Okay.

John Bair

Yep. Okay.

Operator

you. Thank

comes Smith next Robert the Performance. Our from line Center question of for from

question, Your please?

Robert Smith

me? Can right. you All hear

Daniel Jaffee

Yes.

Robert Smith

Oh, earnings of I’d quarter. bottom of that congratulations a and on a the continuation excellent see here yes. line. record Yes, an Also, love shred to maybe

Dan, with have So private think, I my I much the had penetration label you mean, question to as the something you label of you percent, is, far go XX% as mentioned do like of lightweight, private what vendors? further lightweight? how

Daniel Jaffee

Yes.

So we huge bigger. now share. make size is goal have the The to pie a the of

the or larger getting with doing of smaller consumer different way in and and product untended And and forth. with formulas whether high-quality it offerings, – it. to lightweight the introducing try So private adopt and offerings, both baking it is then new that soda so be sizes, label pails we’re terms

is share currently our at Yes, XX%.

right around there, were said. think, what You it’s I I’ve XX%, it’s right

so And ginormous. it’s

private Our market, mineral, under was old so the really because we scoopable didn’t heavy of have compete. label couldn’t the X% share we

tests growing. really want manufacturers and going to testing going into. are a and of not you, it’s I just both I I’m how So positive. all detail far there and so the actually sure are can lightweight much just get retailers tell who matter look

that, do lightweight supply because then is the on our products. us, the for they it as win more side, label partners private better the those we And we’ll with

good good it’s environment, it’s for Oil-Dri. cat So for it’s for the it’s the owners, retailers, for all and the good good

So it’s great trend. a

Robert Smith

Thank you.

Daniel Jaffee

Thanks.

Operator

Thank you.

from follow-up from a line Our Ascend Wealth John Advisors. Bair next is of the question

Your question, please?

John Bair

perhaps or in I up greater your you. more energy wondering, And your of drop is fleet attribute and costs. in Thank and forth? it quantify in, you drop function just some freight of system, prices general lining can to a trucking nice or that the fully for availability so ERP Really Great. a was new

Susan Kreh

as prices inefficient struggling year, completely a were we’re this than point. It’s It’s our ERP as because be. we the of we things. overall wanted at of couple you product market. when the is this around to in as look more should That just to moving have, we certainly effective it we get at behind it second still a quarter-over-quarter, out quarter paying were lot But last

in head high probably better. says our all-time more logistics for transparency, now the is And, to at of visibility, and and an fact, customers more going due a definitely our got that that we’ve fulfillment our now is that better ERP. The things are tools

So customer in our down our – that being well. finds results as

of kind three-part it’s So a answer.

John Bair

yes, new there? line implementation program you’re But seeing from of Yes. bottom the the is, the benefits

Susan Kreh

We are.

We them seeing are them as seeing we’re and areas in here other well.

yes. So

John Bair

Okay.

Okay. And you on the have one sidecar a…

Daniel Jaffee

[Multiple Speakers]

John Bair

any, a buyback all? you queue? any I at consideration ended, any ….yes, or done But evidence executing have mean, is that open that there on seeing of you’ve in thoughts share that’s been have authorization you the to

Daniel Jaffee

share, books the where ask that certainly price, considering. that’s a something a and be stock Certainly, debt retire with now a every at question. cash below time X.X%. a XX, the price on good no to will buy it’s that And fair we you Certainly, question dividend, you X.X% that’s having in and

John Bair

Okay. again, Well, Very congratulations. good.

Daniel Jaffee

Thank you.

Operator

Thank you.

Our the next a from question line Center of for Performance. Smith from is Robert follow-up

Your please? question,

Robert Smith

speak. more things might so see coming And that I’d to some to as couple like seven hear And the stock like the I a you. and compelling mentioned last stock to price here. gone nowhere you about comment I’d I’m robust that value you effort, echo that investor. Yes. just I has Relations about Thank remind for have up, the Investor long-term then well? to a of want the But of the years. you

Leslie Garber

Leslie Robert. Hi, Garber. It’s

We are investor on actually conferences. at presenting different three planning

November, June it’s We out And called IDEAS It’s Then also we XX, in East in on have XX. June be Conference, XX. will and coming put the scheduled XX. one Dallas that IDEAS Conference. Southwest three-part that will investors, in the up in Chicago, Midwest August Coast have IDEAS by then November be a on Conference and it’s Boston

be I information. from So the But all our website. putting right details conference, are on are who the this will as I posting And all the will information I people more those now. get on dates the upload

Oil-Dri’s get And there to really we spread so message hope the to and growth everyone. out do about

Robert Smith

Congratulations, again.

Daniel Jaffee

Yes, we did it that and well year Bob, point activity. we is interest, Yes, increased taken. last noticed in increased Chicago

And so got out we there. our doubt, to message get no

year. And them going so we’re to of do three this

Susan Kreh

a to…. be change it’ll And

Robert Smith

you. Thank

Susan Kreh

Health. …highlight pursuing what Animal we’re in

Robert Smith

Yes.

Susan Kreh

what interested in. is ..which are people

Robert Smith

Thanks. I’m Yes, well. as

Daniel Jaffee

Okay, great.

Operator

Thank you.

Star, the follow-up private Our from next question is a line investor. of Ethan

Your question, please?

Unidentified Analyst

X% just me the nice very the three can doing label the bigger size as I’m lightweight how My be That’s the Id’ thrilled is market conferences. say, much pie? And stock X.X%. the be let or second, that get as to you’ll private to wonderful. pie First, like as echo of of buyback far in even suggestion, the see, would question even

Daniel Jaffee

XX% market is branded XX% label, to it’s label-driven. heavy, been mirrored what roughly more Well, gone of so, always Canada, XX% if label on just to heavy European, like for private In in rest private the the it in U.S. has instance, is the more up. is XX% – and private is

just I’m the at give the In we’ll It’s private total If totally can do at – at it Otherwise, moment. X%. looking little as less percentage still a quickly, label, a sheet. my looking I and sorry, just the I’ll percentage. the lightweight category I’m it. small it’s I’ll the numbers lightweight of these than the It’s on find – U.S. you,

long go. say X% it’s way to X%. So it’s and got between a going to I’m

that to starting are – to carrying is do get growing a to are in is And see have to going and of customers XX%, lightweight. It’s is even saying, not we retail happen, do benefits “Well, favor. take six discussions to who this heavy.” I’m that’s So and but XX% well. it, the time talking adoption could you’re if times. it So just trend The we long-term starting it’s good our the the customers rate we could this mid are to to they believe go up going it

Robert Smith

the about how really can part adding guess, as I Okay. as the retailers? of far I That’s was pie question. thinking more one grow big

Daniel Jaffee

be of see stores. a heavy. scoopable category, of it to you They’re if club some the big because enough in they guess, that lion’s the the start could not adding still gets is of share percentage participating I moment, the

of heavy few private label and so carry Club their they If tipped, So stores. SKUs market offerings Costco the variety. are and Sam’s and the the at DJ’s

reconsider I’ve walking without I’m If of certainly pound not velocity the their market them, that. like a where stores. that. up, to do the tip, And started then they stores you When go XX was been would down, watching because a with selling their to lightweight, half unit that convinced out because their it over market be pound heavy, in I would heavy. XX could

seen sorry, I’ve because not I cat too I but just these grocery picking products ask my And cat get Costco. their my then why and like at not to they’re heavy. and get food, cat and up and pounds, XX cat at litter, – to litter get buy people I’ll like litter go cat them clubs I’m and food here it’s intercept I’ll

I category that incentivized So be do heavily believe if switch. flip, to would to they starts the

label So, I you and say, retailer do every – why minute, it’s why our and you isn’t Cat’s about point. it Pride is major Walmart? opening price Walmart there might well, wait lightweight? other much, pretty scoopable what We doing in a their their have private aren’t

but shopper a wants our value, getting it’s lightweight So, real a wants that offering. who brand, and good we’re

ourselves cannibalizing be at just we So point. that

you get we be shelf. feel and we matter increasing a everywhere moment, can of of a it’s greater now increasing share offerings we kind like So are we’re at and the – velocity the of

Robert Smith

Thank sounds you. good. Okay,

Daniel Jaffee

Yep. Thanks.

Operator

you. Thank

a Bair Advisors. Ascend from from John question follow-up is of next the Wealth line Our

Your question, please?

John Bair

a to think this my just part. on aspect, the buyback One comment going Thanks. back share is thing I

With – from good of reasons although Robert’s the and it standpoint, the rather – value float, that comment. the that’s think perhaps buy an to low investor makes from one I I address – hopefully standpoint, company it’s

So so that that may amounts many shares company institutions may high be of feel doesn’t just trade that comfortable a and in buying of volume, part not thing.

actually, volume But it the of opposed increase any people forth? are and so my seeing in a that will? other activity stores in through you platform, online getting litter traction seeing as more question my to grocery picking was, up buying any as from in you you Are question, if

Daniel Jaffee

good Walmart.com to go well. is cat Chewy.com Amazon after value selling trying Definitely, directly Amazon, and It’s now another item. online. question. doing really heavy is litter very low But Prime they’re a

So data. it’s some period-over-period. profit get into understand because not on started list. it their high I growing going And I data, is think, looking We’ve It mean, don’t totally it was, trending. the the what I’m at at not buy I’m I to to it’s moment.

to it is is. heavy going per the what lightweight that because regardless, e-commerce, double We But better to believe again, rapidly. growing skew value pound is is

$XX, selling pound you’re weight be shipped heavy XX at that can XX around. the $XX if pound to sell parity you’re So for pricing a needs jug for half a paying jug lightweight and you for

So it’s definitely a high area focus for us.

We’re lot it. putting on a attention of

growing the field. we playing most it’s feel, Our business And e-commerce. is also rapidly in level

cat the physical side, was historically, because if their dominance the reality of Unilever it’s into to consumer dog you the Nestle Purina, chow, about or P&G all items. chow their the think beauty product they companies, control cat go shelf. other in the They If whether have want it litter major you health aisle, pet and and

item, playing there. getting to go XX you’re SKUs page you launch lined So because they We got And already get it’s of they’ve the same level e-commerce, a field. shelf, up get. and a the X/XXth new

hit. pay they being Now for quicker can a

corner. so squeezed there’s you you field. you and the level Cat, doing a get you’re playing clip on, at search on But and pretty it’s look litter we Tidy Chewy versus and cat no go not It’s buy, a go to Pride off strips so doubt. to forth in when If the Cat’s like behind

than So e-commerce we can can brand. long-term actually like in better with our brick-and-mortar feel we do in we

John Bair

maybe – what jugs you Well, standpoint, pick consumer the actually more rather from in the I than where and judges setting delivered the you would to up jugs front them rather might up. think have door, also, walk retail and a in pick

stuff don’t not, checkout to seeing at I order see know you’re it to number opposed line, online as of the the any say, evidence any if So higher get individual or whether or with so? an a of you of, that

Daniel Jaffee

growing Yes. at I and be at mean, the is e-commerce to growing X%-ish category XX%. seems

not I head. no doubt there’s mean, the want and it sitting to having litter it I buying the think and on there. item hit bad. So XXX e-commerce you nail that you And a don’t on be work while cat share. doesn’t your day. milk sits It’s is taking It’s just go on you’re shipped, degree doorstep problem. bulky you get But a

doubt to So that appeal has there’s an it consumers. no

John Bair

And too. likely a probably to of be victim bandits, less porch

So anyways, all good. very That’s I have.

Daniel Jaffee

was and Well, good. hit our focus listen, and that we’re our time, right, All We’ve appreciate pumpkin everyone’s – XX:XX time. attention. thing out of

investor You to be through you presentations then. doing. will be to will Leslie next are getting with will these be Thank and or Boston, going you going but one to we the us all information, speaking XXrd look better you. getting to in the be June forward we’re more access a access

Operator

program. today’s This and conference. participation the for in you, gentlemen, does conclude Thank your ladies

disconnect. Good You now day. may

Oil-Dri Corporation of America (ODC) 6 Mar 202020 Q2 Earnings call transcript