Oil-Dri Corporation of America (ODC) 8 Mar 242024 Q2 Earnings call transcript

Good day, and thank you for standing by, and welcome to Oil-Dri Corporation of America Second Quarter Fiscal 2024 Earnings Discussion via webcast. [Operator Instructions] Please note that today's conference is being recorded.I would now like to pass the call over to the President and CEO, Dan Jaffee.

Great. Thank you. Welcome to our second quarter and 6-month teleconference.

Director Robey, person Susan for CIO; Chris Kreh, VP Operations; in answer call Aaron Lamson, either and of questions: Ag Retail your Products who Officer our Purification; our Patsey, Vice Wade lead Group me of VP or Fluids Wholesale; Legal Amlan President the and General Bruce and the virtually Laura safe Scheland, Relations, Manager to Christiansen, Division; and Leslie President of Joining of of Garber, us through our and Vice will Chief of of Investor International; VP CFO the Consumer harbor. and President

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

the a Thank our on release. color you, Leslie, quarter you, very job out press shout records positive just Leslie. providing in and you results of And to quick did highlighting an second excellent

were further products, growth second quarter net disruption did which the and analyzing a second a higher customer by we items co-packaged principal between products, quarter, restocking the consolidated that drove was And our our partially sales X%, the I'll quarter, a sales. on within be Retail points, was session.For I'll offset co-packaged for was you, basis during including questions consolidated thank shedding event.In same our in while some strong million litter than And gross items. and $XX.X result Leslie purification key representing just fluids quarter. the the Oil-Dri's low any net was segment.Consolidated large following by of growth quarter, part on job, consolidated net year. increase Q&A This XX% to profit all a prices and strong Wholesale purposeful volume volume products The a over pricing prior in volume So job. few thorough during the across answer sales experience of the happy quarter the caused more the cyber since a quarter, a improvement second cat up fluids for sales was record split growth of and for driven for such first did a great purification highlight of a profit the and by in then

Our gross XXXX. in from XX.X% the fiscal second margins fiscal expanded to XX.X% of quarter in the quarter second

business.To And infrastructure our to customers Oil-Dri It I our the of aging call replacing the serve that Our to enables grow would of to a expansion gross onetime to highlight that capital your fund and our amortization represents to of expense is same of That teammates and infrastructure.We as depreciation depreciation in pricing the focus expense consolidated capital for ability period. is order and fully is restoring a key have that future. presented margins our in point, $XX.X imperative necessary replace that's million located keen we've adequate a the to which financial we balance infrastructure, future plan because Ochlocknee, This of cash $X.X item manufacturing made to generate our attention [ increase.During our only manufacturing million earnings aged this our fund to at invested. of booked our depreciated addresses is we aged our second result on investments assets modification sheet amortization our sustain the our asset capital landfill, compared Georgia site. of the and the facilities. ] our a of margin to of a impact unusual Year-to-date, X-year bottom quarter, that also we required investment was release. expect in XX% capital of to as continue or depreciation percentage related ratio the

work second of modification Now million we quarter the year, Ochlocknee an established now landfill. modify as to the $X.X of last the underway. required to a reminder, accrual is perform That during work

modification. a cost of have we today, better the estimate the So to complete

result, quarter second cash in fiscal the As of are quarter this to Year-over-year, XXXX. to fiscal our of and cash substantially of up equivalents fiscal XXXX second an hit $XX let's million our charge $XXX,XXX during of million points from second taken have to at quarter the at the additional of related accrual cash. end a end couple add $XX.X we XXXX.Now a of to

However, as of of consolidated flows, cash XXXX, reduced X million. the first we fiscal the by months cash highlighted our $X in statement for

In levels we million paid that historically addition teammates mentioned by inventories first to annual high I customers. support funding the our increased service and with earlier, their deliberately to $XX.X the our million $X.X of capital we quarter, bonus investments during our

been having right in at drivers place right this has levels the time. the the service strong in right of of inventory the performance One

fourth million built customer for teammates during pay the we we occur vesting shares In addition onetime to out inventory fiscal initiative, part by stock of as XX,XXX we point that, advance expect taxes and during to specific process restricted year.I of fiscal our under third program. award would surrendered stock XXXX, $X some to also have of were in this which the of quarters Oil-Dri ] also that that [ repurchased

our shares opportunities. our result with in low finally, along position. We XXXX.And which balance about strong during talk our the debt continuing remains financial on to growth net market of positioned open sheet, purchased is have invest any performance, Oil-Dri not let's strong fiscal a our well

continue And time session. targets all if asset to And it existing in that, priorities increased available. repurchasing those and I'll some key years years, opportunistically back return investing reinvesting base, growth dividend, M&A the strategic XX at a that followed the the valuation acceptable XX supporting with paid Dan, for to for an of by our our become quarter. when focus with our highlights turn our have question-and-answer you cash future is of are stock support assessing shares for be our over on shareholders.So the to straight warrants enough maintaining maintaining for our business which the and financial straight we opportunities, while strength Our for same of

interaction X job. and need can. Canada because -- to Susan. my was just got was only on happen of I me, appreciative Sure. I mount down as a before just Great these -- The results. of dad, our and at up investors Mississippi [ know you, and can plants. on I I smiling who XX with week, so what, making Thank that It's want our it's teammates. I as teammates get interact Last I basis you, to a soon, tap to this our [indiscernible] my to Oil-Dri recap. very and be to comment weeks looking just to is and Georgia He's Great had plants make did lot get down team. need daily very to father. I'm years it's with is definitely in very, humbling and to are it's been, the I soon ]. rewarding I so get to thank the of will, to fulfilling.So and long-time about

it open up I'd rather are the our foremost questions answer for let's Q&A, So that because to shareholders.

Performance Amlan And turn and field have ] he webcast to at the [ click around. what's happening the from going And geographies them and that going Please I'm Latin question. answer X over. the take the America needed I'm and read asks your Okay. Question are actions me, A question. on questions first specifically to I'm Robert question Wade Smith Investing. for to going Center using for This submit. in surprised what comes submit those to Mexico for Ask to softness

of started or of previously, growing Thank we through for answer and market for those and that out it's geographies question. them continue there think and have in and you, Mexico, poultry. in I we performer as Robert, you, X Brazil a I'm speed diets key going high, some about the growth bit are story that the of Leslie, with commercial I been a we the know, which economic of In slightly that of where as there's look restructuring, been question. very in gaining had of with and not we for investors thank we're note, had in approached gaining see forward. that region. would how to momentum and for activity the that our very prices we're to Mexico of have completed the has a separate in did in said, the by deal temporal participating caused of Brazil, have we very, of Brazil AgroMex, the completed that and business And acquisition That I the lot There's selling an that large excited and really in prospects business. you to down. we expect The the at the things. that I business we that as caused positive depression over We've what come in that of North X bullish were market. somewhat which call the We've was partially feed in we've had productivity Latin that last in economy a pause seen in to of years rations couple with in productivity been last be now some ago similar we American caused Mexico year. future. We softness prices a moment strongest with made what few really was the products products a months. of On Mexico a going have X, But a a the couple acquisition us America, to have some on accounts chiefly, at business.When reestablished

[ next individual both question from comes in of Ethan new distribution is antibacterial consumer and The how cat litter, the Great. purchases. successful ], an He investor. Star retail terms asks

or ] answer antibacterial you byproducts [ competing the switching brand. other purchasing consumers Our cast that. have I'll Chris, from litter

thanks you. another we Ethan, from good expect for question as

then we think So shared quarters the antibacterial are; have within last distribution very really, do questions I this I think there's good. and of incremental on distribution, sales is velocities antibacterial, X couple and our how over

I think our them of think all the as retailers as key the And and up in grocery wise well down lot I retailer. are as you in largest can well Coast. East So as virtually U.S.'s antibacterial our of the and on brand, a find stores, --

So good we would about distribution.I velocity. feel we about feel say great

So it Cat's ] existing specifically, focused was We've merchandising running a and Coast. month XX% We our into February definitely of -- but we're pretty say with are up the antibacterial amount marketing platform, shelter break our that. a kind at shelters, we merchandising retailers We're typical velocities we good of month, really activities center around put of [ the a push our of did and trial-generating on I'd there. in Pride particularly store ] [ good words of the not got a a satisfied focusing And East in a awareness play those down, and of events. on big spend in bit of up tying clean feel the at platform item.

continue focus marketplace. the in the to activities fiscal.Lastly, on question, incremental, end the through to of difficult we'll trial-generating and good -- measure So how

would to consistent is into market generating be do good it's Our obviously highly the the uniqueness items velocities, incremental, product's And read, research into us it appear in other with which the that going to while coming difficult marketplace. not would appear it product watching suffering. again, the be while and told

the on read that to positive appears incrementality one. be right So

in you its Great. falling to you announced in this is that And because of strength area Smith. see future? over The immediate it He of going next question comes Patsey. I'm biodiesel Robert says, Do for closing recently plants X demand. to Bruce Chevron turn from the continuing

XX% the of in into This that. business large for thanks plants to aware where XXX% all X% the the have small segment growth they were diesel, bed didn't oils fuel oil diesel some biodiesel, of use fixed a question. have very vegetable Chevron market, line oil in about can we to diesel at fuel. diesel. refineries fuel. Robert, did it those and any can you with to add business a but a renewable where catalyst some that very do are with you Yes. close Biodiesel add is and biodiesel, the We is turn renewable And companies. building where plants. into is into We of waste diesel,

So what's all numbers industry. some the starting growth in is this the our of renewable drive industry to diesel and

see so And continued we in growth marketplace. that

Ethan that Right. [ ] The mean trials in full ]. that noted do some upcoming trial [ I'm become customers [ Amlin from shifted Star What comes products revenue shift question Wade. the to Amlin this And expect will full-price so, over going In quarters? customers? at next to XX-Q, more if for users to purchasing to North the from turn And you ] American it when? price.

some integrators that as That and those they indicated again. I've Ethan, launched U.S. our ultimately I our previously, little of volume as do on This you is know moving the pricing complicated, pricing purchased. we've in results start program I'll we're a customers our and we've it with certainly out time-based so business. we know, had that it's but a full as address trial as the largest based there at products bit in a question growing then previously, the is to

rebate North necessity on pricing have done the experienced those who our pricing never we that to say. a what that those As would previously an become been our that seen And last the that to call list more offer we've at over and Amlin becomes with to growth.Going customers to straight growth to will to our in some our not ] retain products of the we've to we trial I opportunity, [ that X programs large suspect accounts. as market, established years, be we've move more able or volumes need impediment forward, an we'll I less see move based would American the would pricing customers, in

And expect impacts So business. that's that goes the positive profit as and revenue or how earn we we'll naturally, forward, that on it. we address both see to margins for

from is Dan that question going are going turn Jaffee. I'm next chief forward? over What Robert The to concerns Smith. your X to

which depreciation depreciating XX, fact heard is XX depreciated more years they than new I today assets We're XX, our and them Susan to lagging would say that aging were ago XX infrastructure, into into fully cover or service years that a assets the our put you and cost XX that replace ago. a lot put having to with service money did those indicator.

on there. to So cash way while that's focusing margins the the is is generation pay an going dad used fact. always earnings interesting, it's cash a My really say, to opinion,

going supply deserve so sure very And our we that we make with require, generation be going they and quality quantity customers forward focused to so that on can to we're the and that appreciate. can continue cash

So they to that, been with they've or appreciative we're presenting. receptive and very them on and understand of our conversations what

all, your depreciation is just to mean, up catching aging of with first start So spend. these is I other as going is lapping one.The I one results. infrastructure said,

spending ] capital, narrow delta we're a year, start in million you and [ new equipment. replace to that million, $XX-something a $XX with depreciating $XX So zeros if as million going is year we're to

in XX a on So going spent. cash those already the reported been million. be will should it $XX-something Well, to -- frankly earnings. are years, the have take But that's hit

pretty focused a the to but now be really will They much we've challenge.The fiscal that but we're soft we've planted going over to XX been or look lapping and to And savings very we've very on businesses affected some starting haven't come fruition come that And cost hopefully in XX, us really is results exciting current got [indiscernible] got already maybe is hard. that opportunities some X, don't exciting fruition to look will we've months. growth yet, definitely so the cash -- next news then generation, good 'XX. 'XX

that offset incremental So we're really are, some those not to of going to they're help going definitely what disclose depreciation expense. but

the X aging results. those lapping and So current are infrastructure

[ to are over going advertising I'm you light next for life What question ]. that campaign from Pride? turn Star from is your Chris The Lamson. Ethan to the results Cat's Great. seeing in

and and take step back you let up We pinhole around for wall first view on a our and all me about shifted of the or bit from take a category in I obviously on. kind picked had I'll litter marketplace service talked really goods focusing where then as So work did players of a we in pre-pandemic, the through the broaden. digital marketing a and focus, And really message.Overall, check issues payouts focusing follow our results with the go. campaign and tools our lightweight your you our can I came that agencies you lightweight and the and perspective, great news the think, agility along adjust advertising, ROI great on from measure to results. back, all litter digital are the then there about if a is and both, litter as driving and

and were our that market. at broadly, private about feel good on the optimize campaign, measure are program at about was X and of also results branded ago. happy our litter share of as as of we candidly, lightweight we even the our to good back we program good. That [ we was, relative label meeting and lightweight we the feel better.That's share our shared growth, ] while spend. very for to course, return So and I the And look business not with view check our on kind we adjust quarters both growing penal very More sort shareholder

heavyweight. seen lightweight For the actually X quarters, last than we've faster grow

on with share our shares, particularly private strong label key that's So for us. lightweight, get back to growth.And

on in measured is relative program hasn't marketplace growing and this year causation been for it Now about the -- discern, we quarters as prior. by lightweight little winning to share bit again, or is the and to X a turned but correlation difficult ago,

perspective, So think in to marketplace that narrow getting -- perspective, returns. that the getting we're broader I we're impacting we're

Great.

Okay.

We litter have Chris, important you for question from pressuring another lowering retailer most prices. answer do Is to your Bob that? Smith. cat want

guess. one with marketplace that data, start look a I by the question, I units. I your you retailers. when honestly, are when faster I'll data, And I'll little generally. Again, at talk answer Bob, I syndicated answer look Leslie. don't is plans it and this don't in it to sales growing answer broadly category to Sure. more guess that we specific at you on What to mean specifically than specific still want But say more

plays inflation retail the shelves, acknowledging. in the it as are out retailers So There's still presence.

cost that going when that when to when absolutely. think us, story real, retailers. a they've just differently, cost is at that were we rate.Our is revealing Now pushed experiencing costs without They structure this ago continue continue absolutely. story still rise are point. costs inflation sales to we those compare year-over-year really to for they're speak a talk as to rate tell in well I to at by very we team so And to lesser it not Is buckets, general. Said real aggregate that well. a still armed effectively. than you year greater done to when different few And believe effectively I right tell story buckets our

Great.

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