Oil-Dri Announces Record Second Quarter Net Sales and Increased Earnings

CHICAGO, March 7 /PRNewswire-FirstCall/ -- Oil-Dri Corporation of America (NYSE:ODC) today announced record net sales of $58,026,000 for its second fiscal quarter ended January 31, 2008, a 10% increase compared with net sales of $52,873,000 in the same quarter one year ago. The Company reported net income for the quarter of $2,089,000, or $0.29 per diluted share, a 4% increase compared with net income of $1,963,000, or $0.28 per diluted share, in the same quarter one year ago.

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Net sales for the six-month period were $113,311,000, an 8% increase compared with sales of $105,002,000 in the same period one year ago. Net income for the six-month period was $4,573,000, or $0.64 per diluted share, a 23% increase compared with net income of $3,610,000, or $0.52 per diluted share, in the same period last fiscal year.

On November 1, 2007, the Company completed the sale of emission reduction credits to an unaffiliated party in the State of California. The Company received net proceeds of $507,000, which were recorded as a reduction of cost of sales. The sale of these emission reduction credits added $0.05 per diluted share to reported earnings in the quarter.

Second Quarter Review

President and Chief Executive Officer Daniel S. Jaffee said, "This quarter we experienced overall sales and volume growth. Private label cat litter, bleaching clay adsorbents and animal health and nutrition products drove the business in the second quarter; however, we experienced significantly higher material and freight costs which contributed to a reduction in our gross profit margin from 22.5% in the first quarter to 19.6% in the second quarter. We are disappointed that the price increases we have been executing have fallen short of the cost increases we have incurred. We will certainly strive to repair our margins during the back half of this fiscal year."

Business Review

Net sales for the Company's Retail and Wholesale Products Group were $39,463,000 and group income was $3,883,000 in the second quarter. Net sales for the six-month period were $77,831,000 and group income was $8,233,000. Net sales and volume growth were primarily driven by private label cat litter products. The Group also realized increased sales of Oil-Dri industrial products in the United Kingdom. Significant increases in freight costs, however, negatively impacted gross profit for the Group in the quarter.

Net sales for the Company's Business-to-Business Products Group were $18,563,000 and group income was $3,656,000 in the second quarter. Net sales for the six-month period were $35,480,000 and group income was $7,657,000. Net sales and volume growth were driven by sales of our bleaching clays and animal health and nutrition products. The Group also realized net sales and volume increases in its co-packaged cat litter business. Higher freight and materials costs negatively affected gross profit for the Group in the quarter.

Financial Review

On December 4, 2007, Oil-Dri's Board of Directors declared quarterly cash dividends of $0.13 per share of outstanding Common Stock and $0.0975 per share of outstanding Class B Stock. The dividends will be payable on March 7, 2008 to stockholders of record at the close of business on February 22, 2008. At the January 31, 2008 closing price of $20.05 per share and assuming cash dividends continue at the same rate, the annual yield on the Company's Common Stock is 2.6%.

Cash and cash equivalents totaled $4,325,000 and short-term investments totaled $24,355,000 at January 31, 2008. Capital expenditures for the six-month period totaled $3,828,000, which was $93,000 more than the depreciation and amortization of $3,735,000.

Looking Forward

Jaffee said, "We are focused on new business growth and implementing price increases in the second half of the fiscal year to cover our rising costs of goods. We have been vigilant in monitoring our costs and identifying ways in which we can profitably manage our business. We are very aware of the volatile energy environment and are proactively taking steps to manage unforeseen variances to our production, materials and freight costs."

The Company will offer a live webcast of the second quarter earnings teleconference on Monday, March 10, 2008, at 10AM CT. To listen to the call via the web, please visit http://www.streetevents.com/ or
Trademark Notice: Oil-Dri is a registered trademark of Oil-Dri Corporation of America or of its subsidiaries.

Oil-Dri Corporation of America is a leading supplier of specialty sorbent products for agricultural, horticultural, fluids purification, specialty markets, industrial and automotive, and is the world's largest manufacturer of cat litter.

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," "believe", "may," "assume," or 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, uncertainties and assumptions that are described in Item 1A (Risk Factors) of 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 or planned. 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.

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,
2008 % of Sales 2007 % of Sales
Net Sales $58,026 100.0% $52,873 100.0%
Cost of Sales (46,678) 80.4% (41,376) 78.3%
Gross Profit 11,348 19.6% 11,497 21.7%
Operating Expenses (8,251) 14.2% (8,651) 16.4%

Operating Income 3,097 5.3% 2,846 5.4%
Interest Expense (570) 1.0% (641) 1.2%
Other Income 355 0.6% 475 0.9%

Income Before Income Taxes 2,882 5.0% 2,680 5.1%
Income Taxes (793) 1.4% (717) 1.4%

Net Income $2,089 3.6% $1,963 3.7%

Net Income Per Share:
Basic Common $0.32 $0.32
Basic Class B Common $0.26 $0.23
Diluted $0.29 $0.28
Average Shares Outstanding:
Basic Common 5,062 4,871
Basic Class B Common 1,853 1,815
Diluted 7,239 6,987

Six Months Ended January 31,
2008 % of Sales 2007 % of Sales
Net Sales $113,311 100.0% $105,002 100.0%
Cost of Sales (89,533) 79.0% (82,842) 78.9%
Gross Profit 23,778 21.0% 22,160 21.1%
Operating Expenses (17,111) 15.1% (16,812) 16.0%

Operating Income 6,667 5.9% 5,348 5.1%
Interest Expense (1,144) 1.0% (1,258) 1.2%
Other Income 785 0.7% 838 0.8%

Income Before Income Taxes 6,308 5.6% 4,928 4.7%
Income Taxes (1,735) 1.5% (1,318) 1.3%
Net Income $4,573 4.0% $3,610 3.4%

Net Income Per Share:
Basic Common $0.70 $0.58
Basic Class B Common $0.57 $0.43
Diluted $0.64 $0.52

Average Shares Outstanding:
Basic Common 5,033 4,861
Basic Class B Common 1,846 1,810
Diluted 7,196 6,952

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 Sheet
(in thousands, except for per share amounts)
(unaudited)

As of January 31,
2008 2007

Current Assets
Cash and Cash Equivalents $4,325 $9,572
Investment in Treasury Securities 24,355 18,846
Accounts Receivable, net 29,973 26,920
Inventories 16,396 14,429
Prepaid Expenses 6,299 6,840
Total Current Assets 81,348 76,607
Property, Plant and Equipment 51,732 51,313
Other Assets 12,281 12,615
Total Assets $145,361 $140,535

Current Liabilities
Current Maturities of Notes Payable $8,080 $4,080
Accounts Payable 6,130 6,184
Dividends Payable 846 758
Accrued Expenses 14,366 14,588
Total Current Liabilities 29,422 25,610
Long-Term Liabilities
Notes Payable 23,000 31,080
Other Noncurrent Liabilities 8,001 8,610
Total Long-Term Liabilities 31,001 39,690
Stockholders' Equity 84,938 75,235
Total Liabilities and Stockholders' Equity $145,361 $140,535

Book Value Per Share Outstanding $12.35 $11.28

Acquisitions of
Property, Plant and Equipment Second Quarter $1,681 $1,746
Year to Date $3,828 $4,098
Depreciation and Amortization Charges Second Quarter $1,873 $1,848
Year to Date $3,735 $3,672

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 2008 2007

Net Income $4,573 $3,610

Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and Amortization 3,735 3,672
(Increase) in Accounts Receivable (2,159) (1,010)
(Increase) Decrease in Inventories (1,159) 1,268
Increase (Decrease) in Accounts Payable 144 (968)
(Decrease) in Accrued Expenses (1,893) (95)
Other (519) 636
Total Adjustments (1,851) 3,503
Net Cash Provided by Operating Activities 2,722 7,113

CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (3,828) (4,098)
Net (Purchases) Dispositions
of Investment Securities (6,006) 848
Other 28 30
Net Cash Used in Investing Activities (9,806) (3,220)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on Long-Term Debt (80) (80)
Dividends Paid (1,678) (1,509)
Other 1,199 618
Net Cash Used in Financing Activities (559) (971)

Effect of exchange rate changes on cash
and cash equivalents (165) 43

Net (Decrease) Increase in Cash and Cash
Equivalents (7,808) 2,965
Cash and Cash Equivalents, Beginning of Year 12,133 6,607
Cash and Cash Equivalents, January 31 $4,325 $9,572

First Call Analyst:
FCMN Contact:

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Source: Oil-Dri Corporation of America

CONTACT: Ronda J. Williams of Oil-Dri Corporation of America,
+1-312-706-3232

Web site: http://www.oildri.com/

2008-03-07 16:35:04 0307504 PRNEWSWIRE