Oil-Dri Reports Second Quarter and First Half Results
CHICAGO, Feb. 27, 2007 -- Oil-Dri Corporation of America today announced increased net income on decreased net sales for the second quarter ended January 31, 2007.
The Company reported net sales of $52,873,000 for the quarter, a 2% decrease compared with net sales of $53,963,000 in the same quarter one year ago. The Company reported net income for the quarter of $1,963,000, or $0.28 per diluted share, an 8% increase compared with net income of $1,867,000, or $0.26 per diluted share, in the same quarter one year ago.
Net sales for the first six-month period were $105,002,000, a 3% increase compared with sales of $101,752,000 in the same period one year ago. Net income for the six-month period was $3,610,000, or $0.52 per diluted share, a 30% increase compared with net income of $2,895,000, or $0.40 per diluted share, in the same period last fiscal year.
Second Quarter Review
President and Chief Executive Officer Daniel S. Jaffee said, "This quarter we experienced year over year income growth in our Retail and Wholesale Products Group. In light of weak net sales in our Business-to-Business Products Group, this demonstrates the strength of our diverse markets.
"We are encouraged with the progress we have made repairing our gross profit margins. Despite the sales decline for the quarter, earnings grew and margins expanded, primarily as a result of price increases implemented earlier this year.
"Our operating cash flow for the six-month period was $7,113,000, up significantly from $455,000 in the same period last fiscal year.
"At January 31, 2007, we became an accelerated filer for Securities and Exchange Commission reporting purposes. As a result, we will be required to comply with all of the requirements of Section 404 of the Sarbanes-Oxley Act as of July 31, 2007. While we will experience increased expenses over the remainder of the fiscal year as a result of our compliance efforts, we do not expect these expenses to have a material impact on our results of operations."
Business Review
Net sales for the Company's Business-to-Business Products Group were $16,897,000 and group income was $2,851,000 for the second quarter. Net sales were $33,782,000 and group income was $6,249,000, for the six-month period. Decreased sales of the Group's agricultural carriers, bleaching clays, and animal health and nutrition products, in both units and dollars, negatively impacted quarterly results.
Net sales for the Company's Retail and Wholesale Products Group were $35,976,000 and group income was $4,540,000 for the second quarter. Net sales were $71,220,000 and group income was $8,089,000, for the six-month period. Price increases drove improved sales dollars for both cat litter and industrial and automotive products in the United States and Canada and helped repair some of the margin damage caused a year ago by the dramatic increase in the cost of natural gas.
Financial Review
On December 5, 2006, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.12 per share of outstanding Common Stock and $0.09 per share of outstanding Class B Stock. The dividends will be payable on March 16, 2007, to stockholders of record at the close of business on February 9, 2007. At the January 31, 2007 closing price of $16.36 per share and assuming cash dividends continue at the same rate, the annual yield on the Company's Common Stock is 2.9%. The Company has paid cash dividends continuously for 32 years.
The Company did not repurchase any Common Stock in the six-month period ended January 31, 2007.
Cash, cash equivalents and short-term investments at January 31, 2007, totaled $28,418,000. Capital expenditures for the six-month period totaled $4,098,000, which was $426,000 more than the period's depreciation and amortization of $3,672,000.
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,
2007 % of Sales 2006 % of Sales
Net Sales $52,873 100.0% $53,963 100.0%
Cost of Sales (41,376) 78.3% (43,395) 80.4%
Gross Profit 11,497 21.7% 10,568 19.6%
Operating Expenses (8,651) 16.4% (7,742) 14.3%
Operating Income 2,846 5.4% 2,826 5.2%
Interest Expense (641) 1.2% (539) 1.0%
Other Income 475 0.9% 262 0.5%
Income Before Income
Taxes 2,680 5.1% 2,549 4.7%
Income Taxes (717) 1.4% (682) 1.3%
Net Income $1,963 3.7% $1,867 3.5%
Net Income Per Share*:
Basic Common $0.32 $0.30
Basic Class B
Common $0.23 $0.22
Diluted $0.28 $0.26
Average Shares
Outstanding*:
Basic Common 4,871 5,007
Basic Class B
Common 1,815 1,822
Diluted 6,987 7,256
Six Months Ended January 31,
2007 % of Sales 2006 % of Sales
Net Sales $105,002 100.0% $101,752 100.0%
Cost of Sales (82,842) 78.9% (82,757) 81.3%
Gross Profit 22,160 21.1% 18,995 18.7%
Gain on Sale of
Long-Lived Assets -- -- 415 0.4%
Operating Expenses (16,812) 16.0% (15,001) 14.7%
Operating Income 5,348 5.1% 4,409 4.3%
Interest Expense (1,258) 1.2% (969) 1.0%
Other Income 838 0.8% 512 0.5%
Income Before Income
Taxes 4,928 4.7% 3,952 3.9%
Income Taxes (1,318) 1.3% (1,057) 1.0%
Net Income $3,610 3.4% $2,895 2.8%
Net Income Per Share*:
Basic Common $0.58 $0.46
Basic Class B
Common $0.43 $0.34
Diluted $0.52 $0.40
Average Shares
Outstanding*:
Basic Common 4,861 5,005
Basic Class B
Common 1,810 1,823
Diluted 6,952 7,263
* Net Income Per Share and Average Shares Outstanding for the three months and the six months ended January 31, 2006 have been restated to reflect the Company's five-for-four stock split, on September 8, 2006.
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,
2007 2006
Current Assets
Cash, Cash Equivalents and Investments $28,418 $29,485
Accounts Receivable, net 26,920 28,165
Inventories 14,429 15,444
Prepaid Expenses 6,840 8,514
Total Current Assets 76,607 81,608
Property, Plant and Equipment 51,313 48,618
Other Assets 12,615 12,916
Total Assets $140,535 $143,142
Current Liabilities
Current Maturities of Notes Payable $4,080 $3,080
Accounts Payable 6,184 6,158
Dividends Payable 758 608
Accrued Expenses 14,588 14,951
Total Current Liabilities 25,610 24,797
Long-Term Liabilities
Notes Payable 31,080 35,160
Other Noncurrent Liabilities 8,610 7,850
Total Long-Term Liabilities 39,690 43,010
Stockholders' Equity* 75,235 75,335
Total Liabilities and Stockholders' Equity $140,535 $143,142
Book Value Per Share Outstanding $11.28 $11.03
Acquisitions of
Property, Plant and
Equipment Second Quarter $1,746 $1,589
Year to Date $4,098 $4,624
Depreciation and
Amortization Charges Second Quarter $1,848 $1,810
Year to Date $3,672 $3,607
* Stockholders' Equity at January 31, 2007, reflects an adjustment of $1,235,000 (net of tax) taken August 1, 2006 as part of the Company's implementation of EITF 04-06 "Accounting for Stripping Costs Incurred during Production in the Mining Industry".
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 2007 2006
Net Income $3,610 $2,895
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and Amortization 3,672 3,607
(Increase) in Accounts Receivable (1,010) (4,711)
Decrease (Increase) in Inventories 1,268 (2,758)
(Decrease) Increase in Accounts Payable (968) 1,030
(Decrease) Increase in Accrued Expenses (95) 1,283
Other 636 (891)
Total Adjustments 3,503 (2,440)
Net Cash Provided by Operating Activities 7,113 455
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (4,098) (4,624)
Net Dispositions/(Purchase) of Investment
Securities 848 (8,894)
Other 30 1,000
Net Cash Used in Investing Activities (3,220) (12,518)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on Long-Term Debt (80) (80)
Dividends Paid (1,509) (1,165)
Purchase of Treasury Stock -- (1,826)
Proceeds from Issuance of Long-Term Debt -- 15,000
Other 618 1,307
Net Cash (Used in) Provided by Financing
Activities (971) 13,236
Effect of exchange rate changes on cash and
cash equivalents 43 (245)
Net Increase in Cash and Cash Equivalents 2,965 928
Cash and Cash Equivalents, Beginning of Year 6,607 5,945
Cash and Cash Equivalents, January 31 $9,572 $6,873