December 7, 2021 16:15 Eastern Time | Source: Oil-Dri Corporation of America Oil-Dri Corporation of America
Chicago, December 7, 2021 (GLOBE NEWSWIRE) - Oil-Dri Corporation of America (NYSE: ODC), a producer and marketer of adsorbent mineral products, today announced its results for the first quarter of fiscal year 2022 .
President and CEO Daniel S. Jaffee said: "We achieved record quarterly consolidated net sales in the first three months of fiscal 2022. Cost pressures continue to outweigh price increases. Pricing measures were implemented in the first quarter and in the second quarter. Will be further increased to offset higher costs. Due to the national labor shortage, the tight trucking market and the delays of ocean carriers, our supply chain continues to face challenges. In the first quarter of fiscal year 2022, there was an unexpected surge in demand for our products , Leading to a backlog of some orders. Although most of the backlog is due to customers’ delayed pick-up and the long delivery time of materials needed to meet this demand, part of it is due to our own capacity limitations. However, in order to solve these problems, we Expanded production shifts and added necessary equipment. While we are navigating the current environment, we continue to actively implement pricing strategies, cost-saving measures, and operational improvements to increase profitability and drive our business forward."
Comprehensive Performance In the first quarter of fiscal year 2022, consolidated net sales reached a record high of US$82 million, an increase of 8% over the previous year. This increase was mainly due to increased demand for our cat litter, liquid purification, and industrial and sports products. Although our joint packaging coarse cat litter business also achieved revenue growth, our agricultural and animal health products sales declined in the first quarter compared to last year. The price increase for all product lines has helped to improve consolidated net sales.
In the first quarter, consolidated gross profit fell by approximately US$5 million, or 26%, while the profit margin fell from 25% in fiscal year 2021 to 17% in fiscal year 2022. This decline can be attributed to a 15% increase in domestic cost of sales per manufactured ton compared to last year. In the first quarter of fiscal year 2022, the impact of extreme inflation has affected many of our key cost inputs. Compared with last year, high resin prices have caused our domestic packaging costs per manufactured ton to increase by 44% in the first quarter of fiscal year 2022. Domestic natural gas per manufactured ton increased by 97% over the previous year. Due to the increase in labor, purchased materials and maintenance costs in the first quarter of fiscal year 2022 compared with the same period last year, domestic non-fuel operating costs per manufactured ton have increased by 15%. The tight trucking market and high fuel costs have resulted in a 37% increase in domestic freight per manufactured ton, excluding freight charges that are no longer charged to major customers whose freight terms have changed.
In the first quarter of fiscal year 2022, consolidated operating income was approximately US$445,000, compared to US$5.2 million in fiscal 2021. The significant increase in the cost of goods offset revenue growth and a 2% reduction in sales, general and administrative ("SGA") expenses. Compared with the same period last year, advertising costs in the first quarter of fiscal year 2022 have fallen, while expenses related to the growth of the animal health business and corporate professional services have increased. In addition, changes in the allocation of SGA expenses and cost of sales affected the quarterly divisional operating income of US$1.5 million in the 2021 fiscal year. This reclassification does not affect consolidated operating income or net income. In fiscal year 2022, Oil-Dri's first-quarter consolidated net profit was $585,000, compared to $4 million in fiscal 2021.
By the end of the first quarter of fiscal year 2022, cash and cash equivalents have decreased from US$31 million in the same period last year to US$13 million. This is due to inflation headwinds and increased capital expenditures leading to higher sales costs. As of October 31, 2021, debt has fallen to approximately US$9 million from US$10 million a year ago. Oil-Dri has available financing options that can provide additional cash for operating the business and allow for strategic capital investment needed for future growth. In the first quarter of fiscal year 2022, as part of a publicly announced plan or plan, the company repurchased 55,999 shares of common stock with a total value of approximately $1.9 million.
Product Group Review Business-to-Business Products ("B2B") Group revenue for the first quarter of fiscal year 2022 was $29 million, an increase of 5% over the previous year. Increased demand for liquid purification and co-packaged coarse cat litter products offset the decline in sales of our agriculture and animal health businesses. Revenue from fluid purification products reached a record quarterly high of $15 million. We experienced sales growth from customers in North America, Latin America, and Asia in the first quarter of fiscal year 2022, mainly due to increased sales, and to a lesser extent due to price increases. However, due to order schedules and shipping delays, sales of bleached clay products to Europe declined. Due to the increase in global air travel, sales of our aviation fuel purification products rebounded to pre-pandemic levels in the first quarter of fiscal year 2022. The quarterly net sales of our co-packaged coarse cat litter hit a record high, and the first quarter increased by 20% compared to last year. This increase in revenue is mainly due to higher pricing and, to some extent, the result of increased sales. In the first quarter of fiscal year 2022, our agricultural product business revenue fell by 11% compared to last year, mainly due to the timing of orders. In addition, some agricultural customers have encountered problems in their own supply chain, which caused the delay or cancellation of orders for our products. The revenue of animal health products fell 11% year-on-year in the first quarter. Sales in China, Mexico, and North America fell, offsetting growth in Latin America and Asia (excluding China). African swine fever and the ongoing pandemic continue to pose challenges to the global animal protein production market, including feed additives. In addition, product mix, sales time and shipping delays have caused our revenue in this business area to decrease.
B2B Products Group’s operating income was US$6.7 million in the first quarter of fiscal year 2022, compared with US$7.6 million in fiscal year 2021, a decrease of 11%. The results of the previous year included a reallocation of $596,000 between SG&A expenses and the cost of goods sold. The increase in sales was offset by inflation in the cost of sales and a 20% increase in SG&A expenses compared to last year. These higher SG&A costs include higher salaries and travel expenses, which shows that we have invested in our animal health business through additional sales staff and leadership.
The Retail and Wholesale ("R&W") Product Group’s revenue in the first quarter reached a record quarterly high of $54 million, an increase of 10% over the previous year. This was driven by an 8% increase in total cat litter sales and a 26% increase in total revenue from industrial and sports products. The higher demand for our scoopable cat litter and related accessories has driven the growth of domestic cat litter revenue. In the first quarter of fiscal year 2022, sales of our combined brand and private label lightweight waste products increased by 12% compared to the same period last year, exceeding the 12-week period ending October 30, 2021. Sub-category sales increased by 6%, according to third-party retail research data1. Compared with the same period last year, our e-commerce business achieved double-digit revenue growth in the first quarter, setting a quarterly sales record for this distribution channel. Compared with the previous year, our Canadian subsidiary's cat litter sales increased significantly in the first three months of fiscal 2022. This success is the result of new product sales and increased demand from several large existing customers, and to a lesser extent due to price increases. Compared with last year, our domestic industrial and sports business also achieved 29% revenue growth in the first quarter of fiscal year 2022. The main drivers of this growth can be attributed to the restoration of pre-pandemic industrial product purchasing levels, the reopening of sports fields across the United States, and higher prices. However, our Canadian subsidiary’s sales of industrial products declined because some customers had difficulty in purchasing co-loaded items, which led to a decrease in demand for our products this quarter.
R&W Products Group's operating income in the first quarter of fiscal year 2022 was $74,000, compared to $3.6 million in fiscal year 2021. The previous year's performance reflects a reallocation of $928,000 between SG&A expenses and the cost of goods sold. SG&A expenses in the first quarter of fiscal year 2022 are down 20% from last year. This is mainly due to reduced advertising spending to help offset inflation headwinds and other supply chain and operational related constraints. We expect total advertising costs for the entire fiscal year 2022 to be basically the same as that for fiscal 2021. Due to the imminent fluctuations in the economic environment, advertising expenditures for the remainder of this year may be adjusted.
Due to the ongoing public health issues related to the COVID-19 pandemic, Oil-Dri will virtually host its first quarter fiscal year 2022 earnings discussion and fiscal year 2021 shareholder meeting through a live webcast at 9:00 on Wednesday, December 8, 2021: 30 o'clock in the morning central time. Participation details can be found on the event page of the company website.
1 Partly based on data reported by NielsenIQ through its Scantrack Service, which was conducted for the cat litter category of the xAOC+Pet Supers market in the United States for the 12 weeks ending October 30, 2021. Copyright © 2021 Nielsen.
Oil-Dri Corporation of America is a leading manufacturer and supplier of special adsorbent products for pet care, animal health and nutrition, liquid purification, agricultural ingredients, sports fields, industrial and automotive markets. Oil-Dri is vertically integrated, which enables the company to effectively supervise every step of the process from R&D to supply chain to marketing and sales. With 80 years of experience, the company continues to fulfill its mission of creating value from adsorbent minerals.
"Oil-Dri" is a registered trademark of Oil-Dri Corporation in the United States.
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Contact: Leslie A. Garber, Investor Relations Manager, Oil-Dri Corporation, USA, InvestorRelations@oildri.com (312) 321-1515