Oil-Dri reports record sales and successful Ultra Pet integration, positioned for future growth

From Investing.com: 2024-10-13 05:35:14

Oil-Dri Corporation of America (NYSE: ODC) reported record consolidated net sales of $437.6 million for fiscal year 2024, a 6% increase from the previous year. The company successfully integrated its acquisition of Ultra Pet, which contributed $4 million in net sales and $200,000 in pre-tax income in its first quarter of ownership. Key Takeaways:• Record consolidated net sales of $437.6 million for fiscal 2024 • Gross profit reached a record $125 million, up 21% year-over-year • Ultra Pet acquisition completed for $44.3 million, accretive to earnings • Added 5,700 points of distribution across 16 retailers for Cat’s Pride and Ultra brands • Amended credit agreement, increasing revolving line of credit to $75 millionCompany Outlook • Anticipates continued sales growth in fluid purification products, particularly in North America • Exploring opportunities in Brazil for expansion • Focusing on balancing growth-oriented and defensive advertising spending • Targeting $1 billion market in mycotoxin mitigation and gut health for food production animalsBullish Highlights • Successful integration of Ultra Pet acquisition • Strong distribution success for Cat’s Pride and Ultra brands • Record operating income of $51.6 million • Positive uptake of Cat’s Pride antibacterial litter following state registrations • Competitive advantage from vertically and horizontally integrated business modelBearish Highlights • Challenges in agricultural and co-packaged coarse litter segments • Uncertainty in future cost trends affecting gross margins • Slightly higher tax rate expected due to Ultra Pet acquisitionQ&A Highlights • Management discussed strategy to expand private label crystal litter business • Emphasized importance of clay reserves, with a minimum of 40 years of reserves across major product lines • Addressed regulations and capital requirements for building new plants • Discussed total addressable market for Amlan products, estimating over $9 billion opportunity in mycotoxin mitigation and gut health Oil-Dri Corporation of America’s management highlighted the company’s significant growth trajectory, noting that it took 51 years to reach $100 million in sales but only two years to surpass $400 million. The integration of Ultra Pet, acquired for $44.3 million, has been successful and accretive to earnings in its first quarter of ownership. The company reported strong distribution success, adding 5,700 points of distribution across 16 retailers for both the Cat’s Pride and Ultra brands. This expansion contributed to the record consolidated net sales of $437.6 million for fiscal 2024, representing a 6% increase from the previous year. Oil-Dri faced challenges in its agricultural and co-packaged coarse litter segments but maintained overall strong performance due to its diverse product portfolio. The company’s gross profit reached a record $125 million, up 21% year-over-year, while operating income hit a record high of $51.6 million. Management discussed the strategy to expand the private label segment of its crystal litter business while maintaining growth in branded offerings. They noted strong engagement with national and super-regional retailers to develop private-label products, indicating a favorable market for value-oriented options in the crystal litter category. The company anticipates continued sales growth in fluid purification products, particularly in North America, and is exploring opportunities in Brazil. Oil-Dri is also targeting a $1 billion market in mycotoxin mitigation and gut health for food production animals through its Amlan products. Oil-Dri amended its credit agreement with BMO Bank, increasing its revolving line of credit from $45 million to $75 million, providing greater financial flexibility. The company also announced a stock split proposal set for approval on December 11, 2024, with an expected distribution on January 3, 2025. Looking ahead, Oil-Dri will transition away from SEC smaller reporting company status starting fiscal year 2025, leading to expanded disclosures. The management emphasized the competitive advantage of the company’s vertically and horizontally integrated business model, which enhances cost efficiency due to its geographic distribution of plants.InvestingPro Insights Oil-Dri Corporation of America’s strong financial performance in fiscal year 2024 is further supported by data from InvestingPro. The company’s market capitalization stands at $503.05 million, reflecting its solid position in the industry. With a P/E ratio of 11.43, Oil-Dri appears to be trading at an attractive valuation relative to its earnings, which aligns with the company’s record financial results reported in the article. InvestingPro Tips highlight Oil-Dri’s financial strength and shareholder-friendly policies. The company has maintained dividend payments for an impressive 50 consecutive years and has raised its dividend for 11 consecutive years. This consistent dividend history underscores Oil-Dri’s commitment to returning value to shareholders, which is particularly noteworthy given the record sales and profitability mentioned in the article. Moreover, Oil-Dri’s financial health is robust, with liquid assets exceeding short-term obligations and the company operating with a moderate level of debt. This financial stability supports the company’s ability to pursue growth initiatives, such as the successful Ultra Pet acquisition discussed in the article. The company’s profitability over the last twelve months and strong return over the last five years, as noted in the InvestingPro Tips, reinforce the positive outlook presented in the article. With a dividend yield of 1.85% and a dividend growth rate of 10.71% in the last twelve months, Oil-Dri continues to reward its investors while maintaining a growth trajectory. For investors seeking more comprehensive insights, InvestingPro offers an additional 8 tips for Oil-Dri Corporation of America, providing a deeper understanding of the company’s financial position and market performance. Full transcript – Oil-Dri Corp Of America (NYSE:) Q4 2024: Operator: Good day, and thank you for standing by. Welcome to the Oil-Dri Corporation of America Fourth Quarter and Fiscal Year 2024 Earnings Discussion. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, President and CEO, Dan Jaffee. Please go ahead. Dan Jaffee: Thank you, Daniel, and welcome everyone to our fiscal year end investor teleconference. We are expanding today to up to 45 minutes. If we have questions, we want to give you extra time. And we’re also going to cover the very exciting Ultra Pet acquisition. With me on the call today is Susan Kreh, our CFO and CIO; Aaron Christiansen, our VP of Operations; Wade Robey, VP of Ag and President of Amlan International; Chris Lamson, Group VP of Retail and Wholesale; Laura Scheland, Chief Legal Officer and Vice President and General Manager of Consumer Products Division; Tony Parker, Vice President of Legal; and Leslie Garber, Director of Investor Relations. And Leslie, will you take us through the safe harbor? Leslie Garber: Yes. Thank you, Dan. Welcome, everyone. On today’s call, comments may contain forward-looking statements regarding the company’s performance in future periods. Actual results in those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends, and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company’s comments and in evaluating any investment in Oil-Dri stock. Thank you for joining us. Dan? Dan Jaffee: Great. Yes. Thanks, Leslie. And before I turn over to Chris, just some general 50,000-foot comment. We were at our Board meeting this week, and it was very nice at the end. We always go around and we have all our Board members give their perspective on anything that they want to contribute. And Commissioner Emeritus, Bud Selig, who’s been on our Board since 1969, was remarking how amazed both my father and my grandfather would be. He knew both and he’s been on our Board since ’69. I look back and we did $5,700,000 of sales the year Commissioner Selig joined our Board. We went public in ’71 with only $7.2 million in sales, which is sort of remarkable. It took us 51 years to get to $100 million. It then took us 15 more to get to $200 million in sales. Another 15 million to get to $300 million in sales. And then it took us two years, fiscal ’23 to get to $400 million. And the question is, where will we be in fiscal ’25? Nobody knows we have our safe harbor. But I can tell you given the momentum of…



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