Oil-Dri Announces Second Quarter and Six-Month Results

CHICAGO, March 10 -- Oil-Dri Corporation of America today announced that net sales for the second quarter were $59,130,000, a 2% increase compared with sales of $58,026,000 in the same quarter one year ago. The Company reported net income for the quarter of $2,372,000, or $0.33 per diluted share, a 14% increase compared with net income of $2,089,000, or $0.29 per diluted share, in the same quarter one year ago.

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Net sales for the six-month period were $122,258,000, an 8% increase compared with net sales of $113,311,000 in the same period one year ago. Net income for the six-month period of $4,618,000, or $0.64 per diluted share was, flat compared with $4,573,000, or $0.64 per diluted share, in the same period last fiscal year.

Second Quarter Review

President and Chief Executive Officer Daniel S. Jaffee said, "We are satisfied with our results in light of current economic conditions. During the second quarter we experienced sales growth in the Retail and Wholesale Products Group, in particular with our private label products, where consumers are taking advantage of lower priced cat litter. The Business-to-Business Products Group, however, experienced lower net sales due to market conditions and competitive challenges.

"Our gross profit margin for the quarter was up 0.5% from last year, but for the six months we have seen our margins shrink by 1.1%, finishing this period at 19.9%. We are sensitive to how the economy is impacting our customers and, as always, take a long-term approach to relationship building; therefore, we do not feel this is the appropriate environment in which to aggressively repair our profit margins."

Business Review

Net sales for the Company's Retail and Wholesale Products Group were $40,926,000 and group income was $4,053,000 in the second quarter. Net sales for the six-month period were $83,409,000 and group income was $7,215,000. In the quarter, sales of private label cat litter were strong in both units and dollars. Sales of industrial and automotive products were down in units and flat in dollars due to the slow down in the manufacturing sector.

Net sales for the Company's Business-to-Business Products Group were $18,204,000 and group income was $3,480,000 in the quarter. Net sales for the six-month period were $38,849,000 and group income was $7,906,000. In the quarter, sales were down across all product lines in both units and dollars with the exception of co-packaged cat litter products. A combination of foreign currency exchange rates, global economic factors, higher than normal product inventories of animal health products and aggressive competitive pricing negatively impacted net sales and volume growth.

Financial Review

On December 9, 2008, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.14 per share of outstanding Common Stock and $0.105 per share of outstanding Class B Stock. The dividends were paid on March 6, 2009 to stockholders of record at the close of business on February 20, 2009. At the January 30, 2009 closing price of $16.05 per share and assuming cash dividends continue at the same rate, the annual yield on the Company's Common Stock is 3.5%.

The Company has paid cash dividends continuously since 1974. The Company's Board of Directors has increased dividends annually for the past five years.

During the quarter, the Company repurchased 300 shares of Common Stock at an average price of $16.24 per share. Cash, cash equivalents and short-term investments at January 31, 2009, totaled $16,766,000. Capital expenditures for the six-month period of $7,757,000 include strategic investments primarily related to new product development. Capital expenditures in this period were $4,073,000 more than depreciation and amortization of $3,684,000.

Looking Forward

Jaffee continued, "While we are pleased that the markets we serve have been relatively stable, we remain diligent in managing our expenses and using our resources wisely. We will continue to invest in our business where we believe our return will give us the greatest long-term benefit."

The Company will offer a live web cast of the second quarter earnings teleconference on Wednesday, March 11, 2009, from 10:00a.m. - 10:30a.m. CDT. To listen to the call via the web, please visit www.streetevents.com or www.oildri.com. An archived recording of the call and written transcripts of all teleconferences are posted on the Oil-Dri website.

Oil-Dri Corporation of America is a leading supplier of specialty sorbent products for agricultural, horticultural, fluids purification, specialty markets, industrial and automotive, and is the world's largest manufacturer of cat litter.

Certain statements in this press release may contain forward-looking statements that are based on our current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs, and our management's assumptions. In addition, we, or others on our behalf, may make forward-looking statements in other press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, web cast, phone calls, and conference calls. Words such as "expect," "outlook," "forecast," "would", "could," "should," "project," "intend," "plan," "continue," "believe," "seek," "estimate," "anticipate," "may," "assume," variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially including, but not limited to, the dependence of our future growth and financial performance on successful new product introductions, intense competition in our markets, volatility of our quarterly results, risks associated with acquisitions, our dependence on a limited number of customers for a large portion of our net sales and other risks, uncertainties and assumptions that are described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and other reports we file with the Securities and Exchange Commission. Should one or more of these or other risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, intended, expected, believed, estimated, projected or planned. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except to the extent required by law, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this press release, whether as a result of new information, future events, changes in assumptions, or otherwise.

  O I L  -  D R I   C O R P O R A T I O N    O F    A M E R I C A

  Consolidated Statements of Income
  (in thousands, except for per share amounts)
  (unaudited)
                                          Second Quarter Ended January 31,
                                                    % of            % of
                                            2009   Sales    2008   Sales

  Net Sales                               $59,130  100.0% $58,026  100.0%
  Cost of Sales                           (47,217)  79.9% (46,678)  80.4%
  Gross Profit                             11,913   20.1%  11,348   19.6%
  Operating Expenses                       (8,342)  14.1%  (8,251)  14.2%

  Operating Income                          3,571    6.0%   3,097    5.3%
  Interest Expense                           (478)   0.8%    (570)   1.0%
  Other Income                                 85    0.1%     355    0.6%

  Income Before Income Taxes                3,178    5.4%   2,882    5.0%
  Income Taxes                               (806)   1.4%    (793)   1.4%

  Net Income                               $2,372    4.0%  $2,089    3.6%

  Net Income Per Share:
                     Basic Common           $0.36           $0.32
                     Basic Class B Common   $0.29           $0.26
                     Diluted                $0.33           $0.29
  Average Shares Outstanding:
                     Basic Common           5,131           5,062
                     Basic Class B Common   1,873           1,853
                     Diluted                7,242           7,239

                                              Six Months Ended January 31,
                                                     % of             % of
                                             2009   Sales     2008   Sales

  Net Sales                               $122,258  100.0% $113,311  100.0%
  Cost of Sales                            (97,969)  80.1%  (89,533)  79.0%
  Gross Profit                              24,289   19.9%   23,778   21.0%
  Operating Expenses                       (17,080)  14.0%  (17,111)  15.1%

  Operating Income                           7,209    5.9%    6,667    5.9%
  Interest Expense                            (983)   0.8%   (1,144)   1.0%
  Other Income                                  29    0.0%      785    0.7%

  Income Before Income Taxes                 6,255    5.1%    6,308    5.6%
  Income Taxes                              (1,637)   1.3%   (1,735)   1.5%
  Net Income                                $4,618    3.8%   $4,573    4.0%

  Net Income Per Share:
                     Basic Common            $0.70            $0.70
                     Basic Class B Common    $0.56            $0.57
                     Diluted                 $0.64            $0.64

  Average Shares Outstanding:
                     Basic Common            5,129            5,033
                     Basic Class B Common    1,868            1,846
                     Diluted                 7,245            7,196

  O I L  -  D R I   C O R P O R A T I O N    O F    A M E R I C A

  Consolidated Balance Sheets
  (in thousands, except for per share amounts)
  (unaudited)

                                                      As of January 31,
                                                       2009      2008

  Current Assets
                 Cash and Cash Equivalents            $2,272     $4,325
                 Investment in Treasury
                  Securities                          14,494     24,355
                 Accounts Receivable, net             31,399     29,973
                 Inventories                          19,235     16,396
                 Prepaid Expenses                      6,563      6,299
                             Total Current Assets     73,963     81,348
  Property, Plant and Equipment                       55,196     51,732
  Other Assets                                        14,432     12,281
  Total Assets                                      $143,591   $145,361

  Current Liabilities
                 Current Maturities of Notes Payable  $1,700     $8,080
                 Accounts Payable                      6,330      6,130
                 Dividends Payable                       921        846
                 Accrued Expenses                     13,327     14,366
                            Total Current
                             Liabilities              22,278     29,422
  Long-Term Liabilities
                 Notes Payable                        21,300     23,000
                 Other Noncurrent Liabilities         10,380      8,001
                             Total Long-Term
                              Liabilities             31,680     31,001
  Stockholders' Equity                                89,633     84,938
  Total Liabilities and Stockholders' Equity        $143,591   $145,361

  Book Value Per Share Outstanding                    $12.81     $12.35

  Acquisitions of
    Property, Plant and Equipment    Second Quarter   $4,205     $1,681
                                     Year to Date     $7,757     $3,828
    Depreciation and Amortization
     Charges                         Second Quarter   $1,799     $1,873
                                     Year to Date     $3,684     $3,735

  O I L  -  D R I   C O R P O R A T I O N    O F    A M E R I C A
  Consolidated Statements of Cash Flows
  (in thousands)
  (unaudited)

                                                For the Six Months Ended
                                                          January 31,
    CASH FLOWS FROM OPERATING ACTIVITIES                 2009    2008

    Net Income                                         $4,618  $4,573

    Adjustments to reconcile net income to net cash
     provided by operating activities:
         Depreciation and Amortization                  3,684   3,735
         (Increase) in Accounts Receivable                (89) (2,159)
         (Increase) in Inventories                     (1,491) (1,159)
         (Decrease) Increase in Accounts Payable         (972)    144
         (Decrease) in Accrued Expenses                (2,784) (1,893)
         Other                                         (1,020)   (519)
             Total Adjustments                         (2,672) (1,851)
         Net Cash Provided by Operating Activities      1,946   2,722

    CASH FLOWS FROM INVESTING ACTIVITIES
         Capital Expenditures                          (7,757) (3,828)
         Net Dispositions (Purchases) of Investment
          Securities                                    6,531  (6,006)
         Other                                             11      28
         Net Cash Used in Investing Activities         (1,215) (9,806)

    CASH FLOWS FROM FINANCING ACTIVITIES
         Principal payments on Long-Term Debt          (4,080)    (80)
         Dividends Paid                                (1,838) (1,678)
         Purchase of Treasury Stock                      (649)     --
         Other                                            162   1,199
         Net Cash Used in Financing Activities         (6,405)   (559)

    Effect of exchange rate changes on cash and cash
     equivalents                                        1,098    (165)

    Net Decrease in Cash and Cash Equivalents          (4,576) (7,808)
    Cash and Cash Equivalents, Beginning of Year        6,848  12,133
    Cash and Cash Equivalents, January 31              $2,272  $4,325
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