THOMSON REUTERS STREETEVENTS
EDITED TRANSCRIPT
ODC - Q1 2012 OIL-DRI
CORPORATION OF AMERICA
EARNINGS CONFERENCE CALL
EVENT DATE/TIME: DECEMBER 09, 2011 / 04:00PM GMT
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
CORPORATE PARTICIPANTS
Dan Jaffe Oil-Dri Corp of America - President, CEO
Ronda Williams Oil-Dri Corp of America - IR
Jeffrey Libert Oil-Dri Corp of America - CFO
CONFERENCE CALL PARTICIPANTS
Ethan StarrAnalyst
Robert Smith Center for Performance Investing - Analyst
Stephen PurdyAnalyst
PRESENTATION
Operator
Good day, ladies and gentlemen, and welcome to the first-quarter 2011 Oil-Dri Corporation of America earnings conference call. My name is Regina, and I will be
your conference operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).
Today's event is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Mr. Dan Jaffe, President and Chief Executive Officer. Please go ahead, sir.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Thank you, Regina. Welcome, everybody, to our teleconference, and as usual, Jeff Libert, Chief Financial Officer, Doug Graham, our Vice President and General
Counsel, and Ronda Williams, who heads up our investor relations effort is here.
And Ronda, you will cover the Safe Harbor?
Ronda Williams - Oil-Dri Corp of America - IR
Yes, I will. Thank you, Dan. 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 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's stock.
Thank you.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Thank you, and before I turn it over to Jeff, let me just say this was a dynamic quarter, to say the least. The B2B group really performed exceedingly well, across the
board. And then on the retail side, we launched what we believe to be a game-changing new cat litter, changing litter for good, Cat's Pride Fresh & Light. And so we've
got a lot going on, on all fronts. And obviously, when you have that kind of activity in a company our size, ultimately it is called investment spending, where you are
spending more than the profits would cover in those quarters where you are getting the new product off the ground. And so you saw it in our bottom line, that our EPS
was down significantly in the quarter.
So, Jeff, with that little lead-in, why don't you take us through some of the details?
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Jeffrey Libert - Oil-Dri Corp of America - CFO
Thank you, Dan. I think you left a little bit for me to talk about. Sales were up 6% for the quarter. They were a little under $59.6 million for the quarter, as you
mentioned a second ago, EPS was down, it was $0.15 a share, which is down 57% versus a year ago. The story this quarter was all about Cat's Pride Fresh & Light
launch. The additional sales drove our sales higher, but we spent $3 million in additional advertising and promotional expenses, and ultimately that accounts for our
reduced earnings. Our gross margins have increased slightly from 23.5% to 23.8%, reflecting a higher-margin product mix.
B2B had a very strong quarter. Sales increased 10%, and contribution increased 41%. Animal Health and Bleaching Earth sales increased. Agricultural carriers were
flat, and co-pack litters declined. Our Animal Health and Bleaching Earth products continue to find new customers. Our co-pack was down, due to the continued shift to
scoopable litters.
Retail and wholesale, where cat litter resides, sales were up 4% for the quarter. I mentioned earlier that the Fresh & Light launch reduced our income during the quarter,
but drove increased sales. Our ability to predict the timing of distribution gains and consumer acceptance is somewhat limited, honestly. So, our understanding of how
we're going to perform during the year is going to be highly variable, based on how well the product gets distribution and when it gets distribution.
Despite all the encouraging news we have received about the products, fiscal 2012 will be a year of investments, as Dan mentioned a minute ago, due to the launch, and
we now believe our earnings will be somewhat reflective of that investment. Our other scooping litters grew during the quarter, on the positive side, and sales of
traditional litters declined. Our Industrial and Sports Field products increased during the quarter.
As for the balance sheet, we continue to be in a very strong position. Our cash and investment balance is now $29.4 million. Our net debt, which is our cash less our
outstanding debt, is a little under $2 million. We spent $1.6 million in the quarter on capital. And that is somewhat down from where we have been in past quarters.
We've spent a lot of money last year in fiscal 2011 on launching Fresh & Light, and with that launch now underway, we expect our capital to be a little lower for this
year.
We remain committed to dividends. Our quarter dividend of $0.17 per share represents a 3.4% yield at the quarter's closing price. That pretty much summarizes the
quarter, financially.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Great. And rather than me try and guess what's first and foremost on our investors' minds, Regina, what I would like to do is open it up for Q&A, and please encourage
everyone, prioritize your questions. Ask your most important question first, and then get back to the end of the queue to allow others to ask their questions before we
run out of time.
QUESTION AND ANSWER
Operator
(Operator Instructions). Your first question today comes from the line of [Ethan Starr].
Ethan Starr Analyst
Good morning. Looks like Calibrin did well in the first quarter. Could you please provide us some color on how Calibrin did, as well as some numbers?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I anticipated this question, and my second answer first, no, I won't provide any numbers. I was stymied by our Vice President and General Counsel, and he said I can
make him the bad cop so I'm making him the bad cop. So let me stick with the color, and you are right. We had a great quarter in B2B in general, so in Animal Health
resides in there. And really at the end of the day, it's not in anyone's best interest, meaning the investors or ours to get into too much detail, because all we would do if
then let everyone else know where they should go and attack our business.
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Just so you know, that is why we do it. We are not trying to hide anything, we're not trying to not be transparent. We are merely -- at the end of the day, trying to protect
all of our investment. So if I answered your question in detail, you would be satisfied for the next hour, but long-term it would really hurt your investment. I know you
don't want that, and I don't want that. So anyway, it was a good quarter on the Animal Health side, and really across the board in B2B, and I think that is probably as
much as we want to get into.
Ethan Starr Analyst
Do you see this trend improving?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I would love the trend to continue. It was a really good quarter. We see a lot of momentum on B2B side. A lot of good things happened in the quarter, so the second
quarter may or may not look exactly the same, but we are expecting good things for the year.
Ethan Starr Analyst
Okay. I'll get back in the queue. Thanks.
Operator
(Operator Instructions). Your next question is from the line of Robert Smith.
Robert Smith - Center for Performance Investing - Analyst
Are Calibrin sales at a new high and can you give us some color as to what is driving that?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I think I can answer? Well, but I can give him relative, right? Okay, good. Because I went back and I just looked at the past five years, because that is really what we
quote-unquote went all-in on Animal Health. The sales in the quarter basically were up 50% from the past year's trend, so that gives you an idea that we did really have
a good quarter. Which was obvious from the results. So does that help answer your question?
Robert Smith - Center for Performance Investing - Analyst
So it is at a new high?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Yes. Absolutely.
Robert Smith - Center for Performance Investing - Analyst
Can you give us what is driving it? The elements there.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
I will give you the product performance attributes, which is what it is.
Robert Smith - Center for Performance Investing - Analyst
So is it new territory or what is happening?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Yes, I'm not going to get into that, Bob, for all the reasons I just said.
Robert Smith - Center for Performance Investing - Analyst
All right.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
But I will tell you that what it is, is a wider market acceptance of our mineral, which is really unique, and does a great job of binding a wide array of mycotoxins,
aflatoxins, [aralinol] and we've even been approved now on a wider broad range. So it's really a validation of the product's performance.
Robert Smith - Center for Performance Investing - Analyst
Okay. I will get back in the queue.
Operator
You have a follow-up question from the line of Ethan Starr.
Ethan Starr Analyst
Yes. I'm wondering how the Cat's Pride Fresh & Launch is going at retail. Is it good sell-through, and also, will it be carried by either CVS or Walgreens?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I'm not going to get into detailed distribution at the moment, but obviously, we are presenting it to all classes of trade. Drug, food, mass, and so -- wholesale clubs. So
you will see it over time everywhere. It is doing very well. It is out there in wide distribution now, in many more accounts than just down in Bentonville. But obviously,
they were the earliest to put it out on their shelves and so we are starting to get some real market data, and we can see strong repeat and continued build. So it's very
positive.
Ethan Starr Analyst
Is the strong repeat and continued build true of non-Walmart accounts?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Too soon, there. So we are seeing reorders and so forth, so that's a good sign, but it hasn't shown up yet really in IRI, which you know is the market data that is
available to us for most accounts. It's just starting to show up, because it is always on a lag.
Ethan Starr Analyst
Okay. I'll get back in the queue.
Operator
And you have a follow-up question from the line of Robert Smith.
Robert Smith - Center for Performance Investing - Analyst
So specifically to Walmart, is -- in the data that you are seeing, is there much cannibalization of products?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Good question. No. What we are seeing and what we're being told is that what they are seeing is, it's helping quote-unquote drive the growth of their category. So they
are seeing it as incremental. And that is very good news. And from our perspective they didn't discontinue any brands to put Fresh & Light in there. They just probably
squeezed some facings of various brands to create room on their shelf. So for then for them to see that those brands are still moving, and doing what they were doing,
and now they're bringing incremental customers into their stores to buy Fresh & Light, they are very happy with that.
Robert Smith - Center for Performance Investing - Analyst
Do you have all of the time buys under your belt, or how is that going to play out during the year?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
The time buys?
Robert Smith - Center for Performance Investing - Analyst
As in the pricing and the promotion?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
That is really going to be back-end loaded. We did obviously some in the first quarter, but a lot of what you saw in that $3 million were one-time expenses related to
new distribution and other marketing activities. The real TV is going to start slowly in February, then build March, April, May and then tail off in June. That is when we
are running them.
Robert Smith - Center for Performance Investing - Analyst
That will be dependent upon performance as well on the shelf?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Absolutely.
Robert Smith - Center for Performance Investing - Analyst
Got you. I'll get back in the queue.
Operator
You have a follow-up question from the line of Ethan Starr.
Ethan Starr Analyst
Yes, Dan, I'm wondering what is your long-term strategy regarding Oil-Dri's factories in Canada and the UK.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Good question. And I would say historically, the last 12 to 24 months have not been good for those units. We believe that there are positive strategic opportunities
there. I don't really want to get into too much detail, but we are optimistic about the mid-to long-term. The short run, nothing gets turned around quickly. We do have
new management in place. Very excited about that, and working closely with them to turn things around.
Ethan Starr Analyst
Is that new management in Chicago or at the plants?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
In those locations, so primarily in Canada.
Ethan Starr Analyst
Okay. Thanks. I'll go back in the queue.
Operator
And you have a follow-up question from Robert Smith.
Robert Smith - Center for Performance Investing - Analyst
It's like I'm flying on Ethan's coat-tails. Again for the foreign subs, when you are seeing increased competition, can you give us more detail as to what is happening
there?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I said increased competition? I don't think I did Bob.
Robert Smith - Center for Performance Investing - Analyst
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
In the foreign subs? Really? I thought I caught that.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
We have may have put it somewhere in the news release. Got you. I thought you said I just said it. Got you. In Canada in particular, our reason to be historically was
that we had a patented process that allowed us to have a cost advantage over the local competition, so we could provide a local blended granule that was very
efficacious, but also cost-efficient. Over time, that position has eroded, where the process that we have really isn't giving us much of an advantage. And in fact, it's not
giving us any advantage at all, so what it is allowed is other local players to pop up and compete on price.
Whereas in the past, we had an advantage, now we really don't. So now what we need to do is change our model and rather than try to be the low-cost price guy, we
have to do what we have done here in the States and outside with all of our other businesses, which is create value from adsorbent minerals and value in the is in the
eyes of the customer. And therefore, they are happy to pay you more if they are receiving that value. So it will be a tough transition, but we believe there are really
positive opportunities out there, where we can do it. We just have to put the management focus in place to get it done.
Robert Smith - Center for Performance Investing - Analyst
Okay. Let me ask two more questions quickly and Ethan will have plenty of time to get back on. So are you looking to add to supplies of calcium bentonite at this
moment?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
You mean raw material?
Robert Smith - Center for Performance Investing - Analyst
Yes.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
We always are. Yes, so our -Robert Smith - Center for Performance Investing - Analyst
Are you looking more diligently?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
No. We're always being diligent. It's hard to be looking more diligently.
Robert Smith - Center for Performance Investing - Analyst
All right. Okay. I just want to make sure that my feelings about the dividend, so given -Dan Jaffe - Oil-Dri Corp of America - President, CEO
You caught it, right, Bob?
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Robert Smith - Center for Performance Investing - Analyst
No, I'm more interested again in the very gradual incremental increase in the dividend. I just want to make sure that you guys feel comfortable in looking at that as a
probability again this fiscal year.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
We always sort of take that up at our June meeting. That tends to be when it gets to be on the agenda to look at it. And look, here is what is exciting. Even though we
did all of the investing we did, and the earnings weren't what any of them would love us to be, although they were certainly sort of what we expected them to be, we
finished the quarter with almost $30 million in cash. So we're still doing a great job at cash generation. And ultimately, your ability to pay a dividend is on your cash,
not your earnings. Now the two have to coincide over time, but in any given period, you are much better off, as I've always said, earnings are an opinion, and cash is a
fact. Your points are well-taken, but we feel very good about our business from a cash generation standpoint.
Robert Smith - Center for Performance Investing - Analyst
Sure and the general market is up today, the stock is down somewhat. So if the Street takes the numbers -- the actual numbers in a certain way I mean the stock -- just
say, if the stock comes off further will you be back -- come back into the market to buy additional shares?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
We are always looking at the best use for our cash. And so yes, we have an authorization where we can be opportunistic and go after it. Certainly if all of us -- you and
me and everybody would see the stock price as something that is the best use of that cash. Let's do it.
Robert Smith - Center for Performance Investing - Analyst
Well, you haven't done it for a while, I just want to make sure that it is still in your thoughts.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
We didn't do it because we're in the midst of a huge launch.
Robert Smith - Center for Performance Investing - Analyst
I understand that completely. Thanks, much. All the best, and good luck.
Operator
And you do have a follow-up question from the line of Ethan Starr.
Ethan Starr Analyst
Following up on Bob's question regarding cash flow, do you expect cash flow generation to improve throughout the year?
Jeffrey Libert - Oil-Dri Corp of America - CFO
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
I expect cash flow to be positive this year, Ethan. In terms of it improving, that is going to be all dependent on our earnings, and as you know, we don't give guidance
on that, but we expect to have good cash flow.
Ethan Starr Analyst
Okay. Will CapEx be lower than depreciation this year you think?
Jeffrey Libert - Oil-Dri Corp of America - CFO
I don't know. It will be closer than it's been in the last couple years.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
I don't know that it will be lower.
Ethan Starr Analyst
Okay. Anything will help -- even that will help cash flow. I would like to echo Bob's call for another dividend increase. Hopefully your cash flow should be quite good
this year, and you can do it out of cash flow.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
You have been talking to my mother and my sisters, haven't you?
Ethan Starr Analyst
No. Haven't talked to them.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
That is a combined effort there.
Ethan Starr Analyst
Well, you know I like to reinvest the dividends.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Absolutely. Thank you.
Ethan Starr Analyst
Okay, well, I'm encouraged by the Fresh & Light launch and look forward to future good news. These very much.
Operator
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Your next question is from the line of [Stephen Purdy].
Stephen Purdy Analyst
I was wondering just how massive of a advertising program do you have that would cut so much from your earnings?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Doug, how much can I use? You could probably extrapolate, when you see what we spent in the quarter, and we're going to keep divulging it sort of on a retrospective
historic basis, so we're not really going to prospectively talk too much about it. But look, for those who are current investors in the Company here is the bet. The bet is
that this category needs to lighten up. The consumer wants a lighter product.
You have to ask yourself, do I think consumers want a heavier -- if performance and price is the same, do I think a consumer wants a heavier product, a same-weight, or
a lighter product? I think if you talk to most cat owners and tell them I can get you a cat litter with the same performance as are currently getting, at the same prices as
you're currently paying, and I can lighten it up, they're going to be ecstatic. But you have to come to your own conclusion.
They have to talk about the trade. Does the trade want to do anything from an environmental standpoint? Right now we are weighting out on trucks. So that means we're
shipping a lot of air with every truckload, because we hit that 44,750 pounds. So by having 25% lighter product, we can actually put 22% more units on every truckload,
which ultimately, if the whole category were to switch, would result in a 22%-ish reduction in greenhouse gas emissions and carbon foot impact from cat litter. So our
bet is the trade is interested. Lo and behold they have been very interested in our story, and they understand, we are the calcium bentonite guys, we have to get the
dominoes flipping, but hopefully the whole category switches.
So it took Leiber and P&G $110 million to communicate the change in liquid detergent, and our goal is not to spend anywhere near as much as they spent, but to ride on
that equity that they have really educated a lot of consumers about the benefits that something smaller and lighter could actually be equal to or better than something
that they used to be getting, and that transition has been universal in liquid detergent, and really we are riding in their wake, and when we did the in-home use tests, and
the focus groups, and the segmentation study, it was clear the that consumers got it. Now that they had already made the switch in liquid detergent, but prior to that, I
can tell you I spent the first 20 years of my career trying to sell our light density and it was so confounding and frustrating, because the consumer had been conditioned
to believe price per pound. The cheaper I pay per pound, the better my value.
So you could ultimately put lead shavings in the cat litter and give them a jug that was the size of a thimble, and obviously at that extreme nature, they would figure out
there getting ripped off, but the Department of Weights and Measures was basically telling manufacturers, densify, go heavier because we're telling you it's better to
have a cheaper price per pound in the eyes of the consumer than it is to give them a better product at a lower price per use. Or price per load, like liquid detergent.
Stephen, I know I've probably digressed off your original question, but I think it's important for investors as they are assessing okay what's in it for Oil-Dri, do they
need a 25 share for this thing to succeed, and the answer is we really don't.
What we need to make this a huge success is to have the dominoes start falling. So that then a Walmart would say, you know what? I just don't want a brand. I also want
my Special Kitty to be light. Can you guys do that for me? And of course, we would love to do it. That has been our proposition all along. We do brand, we do private
label, we do co-pack.
We would love to manufacture for other of our competitors to the extent they would want to buy our light density mineral, which has been proven for 50 years as the cat
litter mineral of choice, and its only drawback was it didn't clump, and sodium bentonite, which does clump. You put the two together in the right ratios, and the right
blends and you really get the best cat litter. I know I sound like a cat litter commercial, but that is really why my family and I and the rest of the company are putting so
much behind this.
Stephen Purdy Analyst
I agree totally with you on the whole idea and the concept. Are any other companies -- have you noticed any competition in that line?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Not yet. It will take time for the big guys to respond, because rightfully so, they are not just going to knee-jerk react. They're going to wait and see how does the market
receive this. And on the private-label front, we have been deflecting any inquiries at the moment, because we need to pay back our launch. And they get it. And look.
P&G and Leiber wouldn't have just launched this liquid detergent to immediately give it off to private-label, so we need some time to build our brand, recoup our
investment and follow on with the private-label offering, right when the market will be ready and looking for it. So, so far, everything has been pretty positive.
Stephen Purdy Analyst
And what percentage of your cat litter sales are this light product?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
No, we are not getting into that level of detail on this call.
Stephen Purdy Analyst
Is it growing, or?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Absolutely.
Stephen Purdy Analyst
That's a new thing. You are also not exposing what other retailers have it besides Walmart?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
No. But it is getting pretty universal. We getting a lot of acceptance. No rejection. Just timing, meaning accounts set their planograms, they do their shelves, not when
we show up with a new product, but on their own basis, so they rotate categories. Otherwise, it would be total chaos. So we are in queue to get into numerous accounts
when they reset their shelves in the spring and even early summer. So we're waiting for that.
I can tell you, because I gave you general numbers, and again I ran five-year numbers on our total scoopable litter business, and if you've been following Oil-Dri, you
know about two years ago we took a major step back with Walmart. They have now re-embraced our brand, put our historic line back in, and have been an unbelievable
partner on the Fresh & Light launch. But so, if you just go back five years which then predates that whole project impact, down in Bentonville, which got us drastically
reduced, our scoopable business in this quarter was up nearly almost 50% -- 45% from that sort of high water mark five years ago. So that is good news.
Stephen Purdy Analyst
Okay. And the stock is trading above that. I also would love the dividend growing. I expect to see another $0.01 shortly?
Dan Jaffe - Oil-Dri Corp of America - President, CEO
Like I said, my family is right there with you.
Stephen Purdy Analyst
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DECEMBER 09, 2011 / 04:00PM GMT, ODC - Q1 2012 Oil-Dri Corporation of America Earnings
Conference Call
Thanks so much.
Operator
And gentlemen, there are no further questions in the queue at this time.
Dan Jaffe - Oil-Dri Corp of America - President, CEO
And we're couple minutes from closing bell here. So well, thank you. Hopefully you can send our enthusiasm, and it isn't just on the retail and wholesale side. I want to
make sure I thank and kudos to the B2B teammates who helped underwrite some of this launch. Obviously, we out spent even what they were able to contribute, but we
are going to keep rolling this out.
I would say from an expectation standpoint, second quarter is going to be -- continued spending as we get distribution but not a huge ramp-up and sales. It will be
somewhat, but competing with the Thanksgiving and now Christmas holiday season, retailers are not cutting in a lot of product in this time period when it comes to cat
litter. So it is really going to be after the first that they start cutting in our product in earnest. And then you start getting the pipeline fill and then hopefully the
repurchase movement. So it's really come, which is why we are trying the media that way. It is really come the early spring, that we're going to start seeing significant
momentum with Fresh & Light. So thank you for your support, and we look forward to talking with you all in 90 days-ish. Thanks.
Operator
Ladies and gentlemen thank you so much for your participation in today's presentation. You may now disconnect. Have a wonderful weekend.
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