June 07, 2022 16:06 ET | Source: Oil-Dri Corporation Of America Oil-Dri Corporation Of America
CHICAGO, June 07, 2022 (GLOBE NEWSWIRE) -- Oil-Dri Corporation of America (NYSE: ODC), producer and marketer of sorbent mineral products, today announced results for its third quarter and first nine-months of fiscal year 2022.
Daniel S. Jaffee, President and Chief Executive Officer, stated. “Despite the volatile macroeconomic environment, I am encouraged by our increased consolidated net sales for the third quarter over the prior year and the gradual recovery of compressed margins. We have also achieved record consolidated net sales for the first nine-months of fiscal 2022. With several rounds of price increases behind us and more planned for the fourth quarter, we are on our way to enhanced profitability. For the first time since last fiscal year, I am pleased to report that we have achieved an increase in quarterly gross profit over the prior year. However, the impact of a one-time non-cash goodwill impairment charge resulted in an operating loss. Had this not occurred, we would have experienced an operating gain. As we continue into the last quarter of our fiscal year, we remain dedicated to further optimizing profitability and strengthening our manufacturing operations to support the growth we anticipate in our future.”
Consolidated Results Consolidated net sales reached $86 million for the third quarter of fiscal 2022, a 12% increase over the same period last year. All of our principal products achieved revenue growth, primarily driven by price increases and, to a lesser extent, by higher volume. Sales from cat litter, fluids purification and industrial & sports products fueled a significant portion of the growth. Third quarter consolidated gross profit increased by approximately $664,000 or 4%, with margins of 18.2% in fiscal 2022 compared to 19.6% in fiscal 2021. This marks the second consecutive quarter of margin improvement within the current fiscal year, demonstrating that our pricing actions are catching up with inflationary cost pressures. Domestic cost of goods sold per ton increased 11% compared to the prior year as a result of challenges including inflation, supply chain disruptions and logistics delays.
In the third quarter of fiscal 2022, consolidated operating loss was approximately $4.0 million compared to operating income of $1.9 million in fiscal 2021. The loss was due to a one-time non-cash goodwill impairment charge of $5.6 million for the Retail & Wholesale (“R&W”) Products Group. It was determined that the carrying value had exceeded its fair value due to the adverse impacts of rising costs on our gross margins. There was no recorded impairment loss for the Business to Business (“B2B”) Products Group. Excluding this goodwill impairment charge, consolidated operating income for the third quarter of fiscal 2022 was $1.6 million. Consolidated selling, general and administrative (“SGA”) expenses increased by 8% in the third quarter versus the prior year. A reduction in advertising spending was offset by higher expenditures on compliance penalties caused by supply chain disruptions and other costs to support the business.
The company experienced an income tax benefit of $1.7 million in the third quarter of fiscal year 2022 compared to a $24,000 benefit in the same period last year. This increased benefit was driven primarily by the tax impact of the aforementioned goodwill impairment. Consolidated net loss attributed to Oil-Dri was $2.1 million in the third quarter of fiscal 2022 compared to net income of $2.2 million in the same period of fiscal 2021.
Cash and cash equivalents decreased to $23 million at the end of the third quarter of fiscal 2022 as compared to $30 million at the end of same period last year. The Company purchased 151,913 shares of Oil-Dri’s Common Stock with a total value of approximately $4.3 million in the third quarter of fiscal 2022.
Product Group Review The Business to Business Products Group’s third quarter of fiscal 2022 revenues reached $31 million, a 19% gain over the prior year. All principal products within the B2B Products Group demonstrated topline growth. Sales of fluids purification and agricultural products drove the majority of the increase, followed by revenue gains from our animal health and co-packaged coarse cat litter businesses. Fluids purification product sales were $14 million, a 16% increase over the prior year. This growth was primarily driven by higher sales to North America as a result of increased pricing and elevated demand of our products. Expanded distribution to both new and existing customers contributed to higher bleaching clay revenues, while a return to air travel has boosted customers’ need for our jet fuel purification products. Third quarter sales of agricultural products reached an all-time high of approximately $8 million which reflects a 20% increase over the same period last year. Higher prices contributed to the majority of this revenue improvement, and to a lesser extent, volume increases. Our animal health business showed strong growth both domestically and internationally as demonstrated by third quarter sales of $5 million, a 23% increase over the same period last year. This success is a direct result of our strategic focus and increased SG&A efforts to grow this area of our business. Revenue increases were primarily concentrated in North America due to expanded customer distribution and a new product line. Third quarter sales to China rose 40% over the prior year despite COVID-19 restrictions and quarantine requirements imposed within the country. Sales to Latin America also increased but were offset by revenue declines in Mexico and Asia. Our co-packaging coarse cat litter business experienced net sales of $4 million, an increase of 25% in the third quarter compared to the prior year. This topline growth was primarily driven by higher pricing and, to some extent, an increase in volume.
Operating income for the B2B Products Group was $5.7 million in the third quarter of fiscal 2022 compared to $6.4 million in fiscal 2021, reflecting an 11% decrease. Higher sales were offset by inflation on cost of goods sold and a 34% increase in SG&A expenses over last year. These elevated SG&A costs primarily relate to growing our animal health business.
The Retail and Wholesale Products Group’s third quarter revenues reached $54 million, or a 9% gain over the prior year. Leading drivers of this growth were an 8% increase in global cat litter sales and an 11% increase in global industrial and sports products revenues. Pricing actions, expanded distribution and organic volume increases contributed to the revenue enhancement. Both our scoopable and coarse cat litter products demonstrated growth in the third quarter resulting in a 7% improvement in domestic cat litter revenues. Sales from our combined domestic branded and private label lightweight litter items rose 13% in the third quarter of fiscal 2022 compared to the prior year. Once again, we exceeded the lightweight litter sub-category sales growth of 9% for the 12-week period ended April 23, 2022, according to third-party research data for retail sales2. Topline growth of 16% from our domestic industrial and sports business was also achieved in the third quarter of fiscal 2022 over the prior year. Sales within this area of our business reached an all-time record high, mainly due to increased prices in response to rising costs, and to a lesser degree, from higher demand.
Operating loss for the R&W Products Group was $3.1 million in the third quarter of fiscal year 2022 compared to operating income of $1.9 million in fiscal year 2021. This loss is due to the aforementioned $5.6 million goodwill impairment. Excluding this one-time non-cash charge, third quarter of fiscal 2022 operating income for the R&W Group was $2.5 million, a 36% increase over the prior year. Revenue gains and reduced SG&A expenses were partially offset by significant inflation on cost of goods. SG&A expenses for the third quarter of fiscal year 2022 declined by 7% from last year.
The Company will host its third quarter of fiscal 2022 earnings discussion via webcast on June 8, 2022 at 9:00 a.m. Central Time. Participation details are available on the company’s website’s Events page.
Non-GAAP Financial Information In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included throughout this press release, the Company has provided information regarding “Segment Operating Income Excluding Goodwill Impairment,” a non-GAAP financial measure. This financial measure excludes a one-time non-cash goodwill impairment charge in the third quarter of fiscal year 2022. This non-GAAP financial measure is intended to serve as a supplement to the results provided in accordance with GAAP. Management believes that such information provides an additional measurement and consistent historical comparison of the Company’s performance and further believes that this non-GAAP financial measure is useful to both management and investors in their analysis of the Company’s financial position and results of operations by excluding a one-time impairment charge that is not indicative of the Company’s operating performance or that may obscure trends useful in evaluating the Company’s continuing operating activities. The non-GAAP financial measure, as determined and presented by the Company, may not be comparable to related or similarly titled measures reported by other companies. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in this news release.
1See Note 5 of the unaudited Notes to the Condensed Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the nine months ended April 30, 2022.
2Based in part on data reported by NielsenIQ through its Scantrack Service for the Cat Litter Category in the 12-week period ended April 23, 2022, for the U.S. xAOC+Pet Supers market. Copyright © 2022 Nielsen.
Oil-Dri Corporation of America is a leading manufacturer and supplier of specialty sorbent products for the pet care, animal health and nutrition, fluids purification, agricultural ingredients, sports field, industrial and automotive markets. Oil-Dri is vertically integrated which enables the company to efficiently oversee every step of the process from research and development to supply chain to marketing and sales. With 80 years of experience, the company continues to fulfill its mission to Create Value from Sorbent Minerals.
“Oil-Dri” is a registered trademark of Oil-Dri Corporation of America.
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, webcasts, phone calls, and conference calls. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” “potential,” and 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, price fluctuations and pressures, increases in costs, disruptions to our and our counterparties’ businesses and operations and other uncertainties and assumptions that are described in Item 1A (Risk Factors) of our Quarterly Report on Form 10-Q for the quarter ended April 30, 2022 and 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, planned or otherwise expressed in any forward-looking statements. 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.
Contact: Leslie A. Garber Manager of Investor Relations Oil-Dri Corporation of America InvestorRelations@oildri.com (312) 321-1515