Q1 2021 Oil-Dri Corporation of America Earnings Call

Hi, I notice regarding the availability of proxy materials or a copy of the proxy materials was mailed to all oil dri stock holders of record as of the close of business on October nine 2020, which is the record date fixed by oil Dri is board of directors for the termination of stockholders entitled to notice of intent.

Boat at the meeting broad.

Broadridge financial solutions Inc. has delivered an affidavit confirming the foregoing.

Oil Dri has appointed Peter Sulick, a C.T. hagberg to serve as the inspector of election for this meeting he is president and has taken the list of office.

As of October 19, 2020, the record date for this meeting there were 5.384 million 560 shares of oil Dri is common stock and 2 million 77599 shares of oil Dri is class B stock outstanding.

Holders of our common stock are entitled to vote, one to one vote per share and holders of our class B stock earned titled to 10 boats per share and generally vote together without regard to class a.

On a quorum is present at this meeting of holders of a majority of our common stock and cost be stock outstanding and entitled to vote, our president and per in person or webcast are represented by proxy.

Yes, the number of voters necessary to constitute a quorum at this meeting is 13 million 80276, but Mr.

Mr. Slab of like has informed me that there are more than session number of votes represented at this meeting there.

Therefore, I declare there is a clear and present for purposes of transacting business.

Now I will present, the matters to be voted upon.

If any stockholder would like to make a comment regarding any of our the proposals. Please submit your comment through the ask a question field in the web portal and we will review any comments on the proposals themselves. After all proposals have been presented.

I'll move to the first proposal.

As described in the proxy statement. The first item of business is the election of eight directors the.

The proxy statement listed oil dries nominees for directors each of whom currently serves as a director of oil Dri.

Those nominees are Daniel S. Jaffee.

Alan Blair shoe Paul.

Paul M. Hinesley, Michael A. Nemeroff.

George C. rose.

Alan H.C. like per.

Paul East to go and Lawrence E. wash off [noise].

The second night of of business is the ratification of the appointment of grant Thornton LLP as oil Dri independent auditor for the fiscal year ended July ending July 31st 2021.

The audit committee of the board of directors of oil price has appointed grant Thornton to serve as the company's independent auditors for fiscal year 2021, and has directed that the appointment be submitted for ratification by the stockholders at this meeting.

The third order of business is the approval on advisory basis of the compensation of the named executive officers disclosed in the proxy statement [noise].

At this time, we'll check four and review any comments on the proposals that have been submitted.

It looks like no comments have been received so we will proceed with opening of Poles.

It is now 935 am on December eight 2020, and the pulls are now open.

Any stockholder, who hasn't yet voted or wishes to change their vote may do so by clicking on the vote here button on your screen.

Stockholders, who of sent in proxies are voted via telephone or Internet and who do not want to change their votes do not need to take any further action [noise].

Wally allow time for stockholders, who havent read on so to complete their voting I'll take the time now to remind you that the business presentation and any other commentary by any of oil Dri is employees today may contain forward looking statements of expected future performance.

Any such forward looking statements are subject to certain risks uncertainties and assumptions that could cause could cause actual results to differ materially.

We highlight a number of important risk factors that may affect our future performance in our SEC filings, including our annual report for the fiscal year ended July 30, Onest 2020.

We urge you to review and consider those risk factors carefully in evaluating the company's comments and in evaluating any investment in oil Dri stock.

Copies of our SEC filings are available through the company or on line.

Alright, one last minute finish voting.

Okay. At this point the pools are closed and I will now report the preliminary results of the voting.

We will be reporting final vote results in a form 8-K to be filed within four business days.

As described on the proxy statement, a director may only be elected by plurality of votes cast.

The eight nominees who received the largest number of votes will be elected.

We have been informed by the inspector of election that the preliminary.

Vote report shows that the eight candidates nominated by oil Dri received the largest number of assets.

Regarding the second item of business, an affirmative majority of the votes represented at this meeting is necessary for ratification of the appointment of grant Thornton as oil Dri independent auditor for the fiscal year ending July 31st 2021.

We have been informed by the inspector of elections at the preliminary vote report shows that such ratification received more than a majority of the votes represented at this meeting.

For the third item of business, we have been form of the inspection inspector of election that the preliminary vote report shows that Confirmative majority of the votes represented at this meeting approved the compensation of the named executive officers by advisory vote.

This completes the business to be conducted at this meeting.

There being no further business to come before the meeting the 2020 on meeting of stockholders of oil Dri Corporation is now adjourned I.

I am now happy to introduce Dan Jaffee, our President and Chief Executive Officer to cash kick off our business presentations and financial review.

Thank you, Laura Hello, and welcome everybody and first and foremost thing from <unk> tone of all four of them since of work My way I will not be making on unsubstantiated claims of vote of abroad are suing any of our electorate. So I'm happy to walk through your were properly voted on and I will on or the vote.

You know fiscal two one of its one is truly a zero that none of us will ever forget and we always say here of the company. The women your oil Dri as a team game on this your examples like that.

To an incredible level and I just want to make sure I think slope on thinking and that sort of is by thanking me oil dri team globally, because none of this kind of happened without them and it is truly my honor to be leading such a great group of people who share of core values and then work every day to create value from sort of of minerals for our industry.

And this year, we have the dual charge of not just keeping everybody of.

Fiscally healthy, but also physically healthy on so we have been virtual since March for all our non front line workers on our front line workers have been coming in every day and we do a strictly adhere to all social distancing, we clean the plants run times a day, we do a super gleaming on the weekends.

And knock on wood to date, we have had a few colin on teammates who have had colder but to our knowledge. They didn't get it out on oil dri, but got it somewhere else and because of our policy of letting people stay home and recover and sequestered. So four corners and I have not brought it into on.

Facility. So I just want to thank everybody for on keeping world was physically and physically healthy and it allowed us to raise our dividend from the Seventeens you're on the ROE, which was our way of thinking of shareholders for their loyal support at the same time, because we delivered such an incredible year, we were actually of.

Bill to pay double bonus for all of our on 800 plus teammates worldwide on it. It just feels really good to to be able to navigate this pandemic and you know sometimes they say, it's better to be lucky than good am I grew up on net used to always say the harder I worked a lot of your I guess would you ever loved on.

Our luck of being a central of that you know no one thought about that before and now I don't think anyone will ever forget again, whether or not the businesses they happen to be on or central or the businesses. They happened to be investing in our of central because you could be the greatest team on the world and the great to see you on the world and if you're running you know a movie.

Dealer business or a cruise line or something like that you know your business is hurting because nothing you know everything is grounded at this point in time, so I feel very fortunate that our products of it'd been tied of rubber to food ends of pets and a you know.

I think we've all seen the trend in pubs and you'll be hearing from Jessica Moscowitz book, you know our free for like of friends are always important to us but in times of stress and pressure there are even more important to us and with people living at home with their family and kids and so forth adoptions went through the roof.

As many of you know I've had the pleasure of serving on the board of the anti cruelty Society for over 20 years of the Midwest larger shelter and we actually ran out of dogs in April they all got adopted them on our cat population is way down as well. So it's just you know we're finding of rubber homes for our for like of friends and that makes us feel.

Good as well as I said on winning on worldwide as a team game and I always like to highlight the.

New products Vice president of during the year, because an investment in oil Dri relieves an investment in our people we have two new vice presidents during the year, So I'm going to highlight them right now Ah first on is Rachel Bill on day. She is our vice president of sales for non foods, and Rachel a received or be a from Wisconsin.

Madison, She you know colored TV getting great brand experience of Miller Brewing company of Pepsico, Dan and Dr. Pepper My favorite on.

Rachel by the way of you can get me diet, Dr. Pepper Cherry I'd be forever in your debt I cant seem to find it anymore.

Snapple, a in category management and sales and she's also on private label experience with Hartland food products and as you well know we are a reason to be our unique positioning in the cat litter category is that we not only sell.

Popularly priced and high performing branded items, but we also partner up with retailers from coast to coast of provide their own brand their private label and so her dual experience make sort of uniquely qualified to be our VP of sales of non foods also as you know my.

Many of you know in the consumer products industry, you know the days of of Schmoozing, the buyers and wining and dining them is over it is now all about data management and it's all about helping them better run their categories on the day can look better and advance their careers and so her background and Cindy.

Good day to management analysis, and insights with Fireeye Nielsen again made sort of affect day seller and as we always like to say an oil dri everyone's entitled to their opinion, but they're not entitled to the facts and so fact day selling is always fantastic. Her role now with US is a we're on trusting our largest and most of them.

Important cat litter business too or.

Among our most important she's got Walmart target Meijer and she's been with us on a year and a half and I look forward to her being with us for years and years to come sort of Rachel Congratulations and thank you for being our VP of sales and non foods and then over on the other side as you well know or other incredible growth opportunity.

I'd isn't Amlan international and fraud Cow has joined US recently of our vice President of global sales.

He received his Bachelor of Science in poultry science from the University of Arkansas. So he is a razorback. He has had over 20 years experience on the poultry industry. All was primary breeding companies. He's got global experience, the U.S. Europe Middle East Africa and Asia.

He recently before coming to US he was the managing director of the Asia Pacific region for Cobb mantras on one of the largest poultry producers in the world if not the largest and ER for US you know he's been already been able to hit the ground sprinting he's responsible for setting strategy.

From our sales team globally. This includes sales and technical support it aligns our regional marketing strategy with am loans global strategy and Fred is like our seal of approval because he's joined US we have been able to recruit and onboard just an incredible what I call a dream team.

And we've we've been able to rapidly enhance our skill set in our sales team. Thanks to from you know day. They are initially see us because of fraud and then they get involved with our lab in our science on our data and that seals them on the fact that we're sitting on a gold mine and it's up to us to figure out how to how to monetize.

Is that and mine that and for those of you who saw the news release I was recently demoted eye on mine now of running the M. on international business.

And I'm very excited to do it you know I I did the same thing when we invented lightweight cat litter and got it up on off the ground and then was I'm very happy to hand that off into the able hands of Jessica Moscowitz and her team and they're doing such a great job as you can tell from the news release.

Now I can focus on M.

And get that up on off the ground and so I'm I'm happy to roll on my sleeves really understand it in a granular way and then I will be handing that off when it's ready to someone who is better suited than I am to do the daily of blocking and tackling that is necessary, but right now a lot of it is about strategy setting and global Puds.

Visioning and Fred and I are working on it you know daily if not hourly together to make that happen. So Fred Thank you for joining oil dri or like I said, you've hit the ground sprinting and it's really been a pleasure to work with you on directly and I'm I'm glad we're getting the ability to do that so those are our two new vice presidents.

At this point in time, I would like to turn it over to Susan Cray, Our Chief Financial Officer, and she will walk you through on some of our financial highlights.

Thank you, Dan and I know you love to sometimes add color on the finance stuff, so feel free to jump in.

It's a privilege to be here today at our first ever virtual annual meeting on behalf of my teammates here well try to share the financial results of our record fiscal year in 2020 as well as our strong first quarter fiscal 2020 line.

Fiscal 2020 was a record year for oil Dri, both for net sales and net income and the momentum continued to carry into the first quarter fiscal 2021, which had the highest net sales of any of oil price first quarters.

Because I proceeds from these slides I will be sharing of look back at the past decade of performance trends as well as focusing on our first quarter results. So lets start by looking at 10 years of net sales growth.

Noting the stronger growth in the past two years, driven by our retail and wholesale products group, where we're seeing the benefit of our strategic focus on the lightweight and of private label segments of the catheter market.

Looking at the first quarter fiscal 2021 to 76 million in first quarter net sales represents year over year growth of 7% and is driven by 9% growth in our retail and wholesale products group the company by 4% growth in our business to business products group.

Strong sales of our agricultural products.

Partially offset by a year over year reduction in net sales of our am on products.

As Dan mentioned, we have made some key organizational changes in our family of business to better position us to serve the animal health market Indiana's refocus the team on the execution of our animal health products strategy.

Taking a 10 year looked at our tons. So you can see the downward impact as we very purposely continue to focus on our mission of creating value through sorbent minerals.

We continue to review our product portfolio to weed out products that no longer achieve our mission of value creation, well developing new products that do create additional value for our customers.

And as we looked at net sales per day one.

We see the tenure impact of focusing on creating value because low volume has decreased 16% over the past 10 years. Our net sales per ton has increased from $244 to $375 per ton an increase of 54%.

And that continued focus led to a net sales per tonne of $383 in the first quarter of fiscal 2021, an all time record for oil Dri.

Right.

[laughter] not only on really driving growth internet sales per tonne, we're driving even stronger growth at a 10 year compound annual growth rate of 6% and our gross profit per ton a key profitability metrics that we use to manage the performance of our business.

In fact, the 100 dollar gross profit per ton that we achieved in fiscal year 2020 was an all time high ROI sales right and we continued that momentum into the first quarter of fiscal 2021, delivering gross profit per ton of $102.

Next to conceived of their strong gross growth in gross profit per ton over the past decade has translated into an even stronger 10 year compound annual growth rate of 8.6% on net income per tonne.

The $25 of net income per time as another all time record for oil Dri.

Looking at our first quarter performance gross profit of 20.3 million was 400000 higher than the same quarter in the prior year.

At the same time, our selling general and administrative expenses were down by 700000.

<unk>, primarily to reduce travel and related expenses and some timing shift in advertising.

With our first quarter net income attributable to oil Dri of 4 million, which is a 5% increase over the same quarter in the prior year, we generated a strong $20 net income per ton in the quarter.

On an earnings per basic common share basis, we came off a record year at $2.70 per share to deliver 57 cents per share of the first quarter of six cents per share over the first quarter last year.

Next we see the tenure delivery of dividends per share that are both predictable and are growing.

The dividend per share during our first quarter rose to 26 cents from 25 cents per share marking as Dan noted earlier 17 consecutive years of growth and the dividends, we paid to our shareholders.

We continue to maintain a strong balance sheet and our solid financial performance enables us to invest on multiple fronts.

In addition to the return to our shareholders through dividends, we saw on new product development to R&D, we maintain our plants and at least on cost reduction opportunities in those plants there were a cabinet capex.

And in fiscal year, 2020, we repurchased 5.5 million of our outstanding shares.

From a liquidity standpoint oil dri is well positioned with a low level of debt and with of 75 million share financing arrangement that is already in place that's.

That should enable us to have quicker access to funding when the right investment opportunity arises.

And speaking of opportunities.

With a focus and alignment on our key strategies and cat litter and animal health and with some key investments that have been made in technology in organizational capacity and leadership.

Combined with the strong financial performance of our business, we are eager to pursue the right investment opportunities when they become available.

And with that summary.

It is my pleasure to turn this over to tamales end of Hugel, our chief operating officer.

You then.

Good morning, Susan mentioned on my valuable the Chief operating Chief Operating Officer died and I also want to start the discussion with a cool then recap and impact Dan just summarize some of this but I'll get into a little bit more detail.

So 2021 of that to most of US here, but it is times like these where the true values and the core of the company become evident that oil price core focus on keeping our teammates and our business healthy and as you heard from Susan We did we did keep our business is very healthy and I'll talk about how we kept our teammates healthy.

And how we kept our business operations running.

So first of all being in a central business was a key component.

We our sense of through many of our applications to name a few were part of the food supply chain and I'll purification, we supply antibiotic alternative for animal health and of course that litter is still essential for cat owners more so now that we're all inside at home.

So we needed to make sure that we kept our business running well keeping us healthy.

Our teammates have been flat out amazing and we have done that we can't of support them their physical safety financial house and emotional well being has been a top of our priority list.

At the start of hands on that we pivoted quickly.

Anyone that was not directly needed for production worked remotely we.

We had a paradigm here before the pandemic that many of these roles in the past of could not be affective remotely.

Our very important customer service representative.

But we leverage.

Many of our teammates and many of our assumptions and many of our process to make the adjustment and break that paradigm and we insert a rapid and successful transition that every day has reinforced to us something we say often on withstand even said earlier is winning had oil dri is the team game.

So for our teammates still on the front line some of the things we have done at the production facilities and our R&D labs.

Our teammates day, including a include deep cleaning process its the one Shelley.

So on sort of this picture.

Social distancing requirements.

On the online video meeting, even often on where at the same location and of course mapped line and in most cases. This is 100% of of time well on property assets.

We have some specific oil dri math that we have made.

Oh. So these actions have been successful and we prevented any outbreak or transmission that will drive.

So through this transition we had no major impact customer service and in some cases, we shipped and produce record quantity.

Not only has oil dri survived this hands on it we work of the team to thrive and well continue.

Okay, so with that let's talk a little bit about operations on c. with them this year.

Yeah. So.

So last year I reviewed the sales and operations planning process, we were implementing it will die.

As a reminder of this is a holistic process and how we run the business.

It is a regular cadence of meetings of each month and tools and processes to better.

Our our end to end and cross functional decision.

Good day.

Yeah.

Oh my screen. So it turns out of that having this foundation prior to the pandemic has been instrumental in our success this year.

So it has really helped us through the online transition and he's not organized and focused and its a tighter process for communications data sharing and overall resolution.

So there's a lot of things that we implemented in the last year and I want to brag about here that we've implemented on talk about that's part of the ethanol from process.

So the first one is the first review meeting is the portfolio management review.

That's a lot of time on this and we now have a very real goal of robust list of potential new items for all of our divisions in various projects.

We've spent a lot of time redefining the current project success criteria and ideally many of you really breakthrough and rose generating product ideas for the split.

[noise] projects still must meet financial hurdles at each stage and have detailed timelines that are managed to keep us on cash.

We're setting ourselves up for a healthy future growth of new product solutions that create value from sort of mineral.

We also have on monthly demand process. It's a consolidated set of demand for cash that is forward looking in around the 12 to 18 month horizon and it utilizes <unk>.

Yeah, our p. or enterprise resource planning systems day event, we implemented two years ago. There were further leveraging that that's on system that was implemented.

That gets set of supply them monthly basis.

We've also done a lot of income and so by area.

Once a day is now we actually have what's called a rough cut capacity planning process and two of them play.

Well this lesson lets us look at how much capacity is needed by product platform by line looking out in the 12 to 18 month horizon.

It allows us to see potential capacity GAAP quite early and then developed plans to close the gap.

This is one tool that's enabled service level improvements and better utilizing our sometimes expense of cat capacity throughout the year.

So I also want to talk about results from the operations were on the last year I share I focus on our main areas and and and supply chain of operations around the force the customer of cost cash and capability.

So how did we do in those areas.

First one of the customer.

And as you can see that both internal and external and the internal customer is our teenagers and other than the cobot assays. We work we were able to continue to support our teammates and on that.

Total customer we have new metrics that are tracking on improving again, we're talking of proven against including cash fill rate on time of promising on kind of order and I'm very pleased to say that we saw a step change improvement in all of those matters and fiscal 20 as compared to fiscal 19 on.

Focus on quality is also on through what's my many new Master and for example, one of investing continually improving is our consumer complaints per million unit that is at a record low and so continuing some free.

The necessary cost of hiring human cost. The simple answer here is that we took out of $5 million of costs in the supply chain of 2020, helping to improve gross profit with the bottom line adjustment.

The non simple answer is that took an incredible amount of effort and coordination from the entire team with hundreds of saving projects completed and hundreds of underway.

Really great results on cost, helping us overall.

The third is cash or cash and inventory position as a whole. It did not significantly change has slightly reduced but I will say that Nick and active inventory has improved considerably. We spent a lot of time rightsizing. The working capital that we have we're focused.

On inventory balance you.

And we've reduced our obsolete inventory improving both service and GAAP.

And then last but not least this capability.

So the supply chain and operations team and oil Dri overall has implemented numerous from.

Offices to sustain these are low and really too many to even start to work.

Things like cross functional service meetings and of course, as you know p. as I talked earlier.

And this has really built us a strong foundation for continued improvement in the force either for the foreseeable future.

So with that I'd like to hand, it off to Jeff from Asquith, who is our VP and general manager for our consumer products Division.

Thank you Molly Hello, Good morning to every line my name is that from off price and as Mike mentioned on the Vice President and general manager of that consumer products Division.

I can see where division continues to post from growth in 2021 coming off of an 8% net sales growth in 2020 net sales were up 12% in Q1, 2021, driven primarily by gains in our branded cat litter and private label Cat litter business then.

These gains reflect continued focus on again three key pillars. The first of which is creating value through vertical integration are inhibited assets or premium light make clean line across the country. It drives value of front wheel drive, but it also drives value for our customer partners and our pet parent consumer of.

Vertical integration, coupled with our 80 plus percent year history and expertise in cat litter have provided with a real meaningful point of difference.

Secondly, we continued and vast resources of the focus on continuous improvement in quality, ensuring that we're delighting consumers by offering them a great product at a great value.

And then on your team we celebrate in a brief on holiday calendar day care in both on a long time for our decade long commitment to getting back channel Hodnett, but also on the day to day decisions and strategies that we sat [laughter].

From a product of course, yes on the cat litter side Weve been intensely focused on expanding and growing the lightweight portion of our business.

For all of the reasons, we've been talking about since the launch late 2012 first.

Firstly lightweight cat litter directly to keep him quaint per calendar consumer cat litter is traditionally very happy.

Second our vertical integration and lightweight materials allows us uniquely offer that premium by assets consumers of the value.

And thirdly, as you'll see on your right language not only benefits of consumer but also the entire supply chain, meaning last week last spring and ultimately light truck on the road.

Sure enough focus on lightweight we continue to see growth across both our private label cat litter, So see a new customer acquisition and organic growth as well as in our branded portfolio on.

On the brand of side, we continue to focus on our best performing lightweight product.

Thanks to an impressive cross functional team I from this year, we launched two new items under our best performing Formula National care and bacterial odor control. So on product combined a 25% lighter formula with a 10 day odor control called out you reported man power.

Ads.

Well, you're thinking on when to find out of fuel our growth and how continue to refine our lightweight strategy into the future our lightweight learnings of been impetus behind. The addition of a new pillar of our strategy surrounding of watch on the new line Lachapelle cat litter.

So you might ask why we're really focused on lots of bomb well, let's go back of the foundation of our success in lately.

I just lightly we're starting with the key consumer pinpoint.

Handling and disposing of cat litter.

We know of 30 plus percent of consumers are keeping on litter box on their background and we got lots of on cat litter consumer of engine group and price.

In reality its name on cat litter aren't flush of all so consumers are still being putting it in a bad backing up the letter and then throwing it in the garbage. So for example line consumer we felt wed love in a high rise apartment you scope of the cat litter, which isn't a bad walk on the other side of it as high rise buildings today on the garbage channel.

With more consumers at home on orders are feeling closer and consumers recognize now more than ever the value of coping and flashing.

Backend also like light weight and you have accessing their all of that are inherently clash of all meaning we can offer the premiums on I think you can see America at a value.

And finally, it seem flush of all is better for consumers, but it also means lastly in landfill.

Just doesn't sound, especially California, I was specially formulated suggests no and glass, but consumers don't typically think of cat litter as possible and that he had tradition on litter non hard on that create blockage and pointless hi.

You can see that in the end it on a lot.

Our flexible litter shown in engine on the right. If you need and then it on assets football, but dissolves ones, it's just burst into a toilet height, making it thanks taposh.

I think I mentioned before of the consumers are beginning to see the benefits of flashing of Leonard today, only about 1.4 percentage points of distribution are dedicated to flexible products of 5.6% of buyers are already purchasing fashionable product and 8% of consumer on.

Actually looking for and seeking profitable products.

Clearly creates not only an opportunity for distribution outside but also consumer pull through on lots of the upside once these products start to gain distribution.

Furthermore, I want studies show that 80% of consumers are seeking possibility, we believe that the percentage of or places like urban areas is much higher where there's no based on internal right and is that flexibility becomes available and more marketed this percentage will only go up look at a 30% of consumers that already have of litter box on her bathroom and on either.

Realized that they can flush their cat litter.

We agree on quite the courts lots of all with a highly targeted marketing campaign geared towards those consumers who are already looking for a bunch of all who are looking for cash and alternative.

Both immediate plans as well as the Trina will reflect this okay.

Our immediate plan will be digitally focused with a combination of digital tactics like social media video sampling and social Influencers.

And our P eight and will focus on how easy flexible cat litter. It to you and I just scooping in Flushing consumer index, Slashdot and forget it.

Further will tie in of the insight that many consumers are sharing now are hearing things, there's some kind of oh with their free friend and be able to flex your cat litter leave more time on that.

In closing I'd like to thank the entire division three team when we talk about growth driver I can't think of a more important and critical on the team. We continue doing back to elevate our team and I'm, So proud and honored to work with such a dedicated driven and down to Earth team group of teammates that ultimate.

He has held on to become the catalyst that cares.

Thank you.

And with that I'll turn it over to price how from Amlan International.

Thank you Jessica and thank you again for the introduction of the here. Good morning on say go I'm, the Vice President of Global sales Force and one I'm here to talk about opportunity for oil price, you're making in a row seem to go whole food production line.

During our most exciting animal health product and why has so much of potential to make huge impact in this three nearly $3 billion antibiotic world. When the trend is going towards no antibiotic ever on many more countries. China is age on both sides of that in July 20 Twond.

On the speech of building America aired in September our CEO, Dan Jaffee emphasizes the importance of volume nation in the low to capture the animal health market for years to come out I say mother nature of puts everything on this earth and we need to survive and I'll end my international businesses on nearing.

They use opening that will take college to reduce day, and even elimination of body excuse to from OCO coaching.

Okay.

So I see sets and on the part of the key Differentiators.

Not only does and on has the best scientists working out innovation center, we have a growing portfolio and we have the most important it's factor.

Which is our mineral technology.

We have the net of all to acknowledge that is young and the competitors that we face in the marketplaces. Please allow me to elaborate.

On the value of vertical integration net.

It's taken a little further to know why we had the significant advantages on the other similar products in the market I, knowing what Oh tribe excess industry reported integrated it says Oh animal health products number one our mine reserves, we have hundreds of years of reserves that we do not have to worry about going go on.

Our most precious for material net.

On the two not many companies all of the agency that control their goal material that we do this is such an important factor as we are not dependent and we are independent and show protocol T S well.

On the three well mineral company.

Oh, we do.

Our evolving around our minerals and with 80 gifts experiences as high income.

Well, we have to do is to what we do best.

[noise] Oh activated mineral are not only treating the animals fungus charges or we can actually prevent it from happening price Rusty bacterial communication. This low actually this call corn sensing wishing hits its effect area up on each other and take all of that hosts.

Not only does our mineral able to absorb or they can also absorbed by and share of the fact of your molecule to the solid article on mineral.

Of force it bites of harmful talk C suite of outside of the body subtypes of animals, but we can actually try to prevent it from happening in the first place.

And now all of these things are done with only all activated mineral compared to other more cost free products in the market well combine attitudes I need to just do the job.

So all of this at work a simple why a simplified way of saying his whole minimal acts as a magnet.

Got it okay now.

So Michael tossing bacterial toxins and balls hoxsey, all very common challenges in animal protein production.

While we do supply our mineral west of speed and ease of the animals, we are focusing on healthy attitudes can help with this.

Yes, that's of the animals, it's I sort of talk sales within that got us a screeched the bond the toxic assets to the seasons.

On the natural advantages when using our product customers enjoy a nice two points EPS yacht, which is called feed conversion ratio. This to put EPS yacht vintages, It's got a nice sized company processed roughly 5 million or one of those first week, he's an additional call it or the <unk>.

Saving of $3.12 million U.S. dollars per year by calculating the total of be safe multiplied by the price of the fee forget a total of saving on additional pockets.

As illustrated in slide.

How we execute the key tactics.

It's all growth strategy with am one number one identify opportunities.

On the to grow that she was strategic placement.

Number three toguchi players on the right customers on distributors, each country and region.

Non before a line marketing initiatives on sales objectives.

On the fives, a set of rate growth with both new and existing automobile.

This is just a slide showing no antibiotic ever I wish on before.

The key account opportunities while Asia is so important now of growing plan is shown on this slide that is slide in the last few weeks were able to get positive feedback from our very on Barry.

The number one.

Okay producers in the country, Philippines received a similar response on the top five could use of haven't swell of this.

So to be 17 million net you coffee company, China, just double orders of 2021 last month.

And I will continue to push for the low North American mop. It just seems like our newest customer we sizable orders. The last few weeks. She goes out she accounts strategy, we said on who just a few months ago.

So going on with Ti this.

The size of the circle indicates what the percentage of the key accounts opportunity east on the previous slide with emphasis on getting the right person for our target area, we hired Dr. Howard So for China, Mr. East West So slow North America Division to boost total each CCG on the ground was NIS.

On the reader and top of locking America, Ms. Claire Rohbock weight.

With all of plan to hire the regional director of sales in the Europe Middle East and knock on its likely to complete a sales team as all of next phase of sanctioning of work.

The growth side is we're hiring we plan to take of all the size of team members in the upcoming years, plus we recently acquired nice sales license from different parts of the world to pursue with out each of the sales strategy with a set of rating marketing effort and technical service.

Data services provided to the customers, we position ourselves on the right place to grow rapidly.

I'll go to market strategy.

To ensure that we are not forgetting about the small and medium bars, where on the lead with three major animal health pharma companies in the world in various countries pretty sure all products and reach every corner of the animal industry by selling both branded and private label products.

The diagnostic service and biologics and one on the developments will only strengthen our position as we saw a push forward with the right sales strategy to all key accounts in the markets.

That's the right sales of key accounts, starting on slide 20, m. on be on targeting key accounts medium large poultry and swine integrators and approximately 30 strategic countries with approximately 200 different companies.

As explained in the last slide this is just reemphasize what was discussed and how important it is to set of our regional business hubs in control of that part of it's just shelf registration and to support of our sales process going forward.

[noise] innovation mineral technologies, our core competency and our competitive advantage by building on that let's developing natural feed additives solution for talk free coating production.

With a lot of slide here all like to show you how ready we are as we show you our long term development and adoption process.

We can take up of 12 years, just to get a product of belt and out of the door, including product evaluation, meaning the trials and validation period [noise] would.

On a different uses internationally.

Another one of the fears of key accounts adoption can take the whole product acceptability to a longer than desired period of time.

So the good thing is that we have quite a few products in the pipeline that we released continuously upcoming years, because we know the importance of keeping on something you need the animal the end user and the customers needs.

Thank you very much with that I'll pass it back to our CEO Dan Jaffee.

Fred Thank you and I'm really impressed of your quick grasp of our business and we're going to turn it over to Q1 day, we've got a bunch of questions about Hamlin and the changes and you answered a lot of of what's out there of the lovely one of you read the questions and then we will yes, we have two related questions I'm going to read them both together.

First one is from Robert Smith of center for performance investing and he asked where one of the direction failure at Hamlin and how will your approach be different do you believe you will be able to accomplish standard the sanchez from.

Progress during the current fiscal year and then the second related question is from Ethan Starr private investor Aside from the pandemic what are the biggest challenge isn't growing and low sales and why we use succeed where others have not great. Thank you and I'm going to take the 50000 foot I think you heard a lot of from from phenomena emphasize what he was talking about.

I'm Gonna mail jars of to what went on with lightweight cat litter before we revolutionized cat litter cat litter was denominated on of price per pound basis, those with the lowest price per pound were perceived to be the best value. Despite the fact that not of a consumer of America or the world used to buy pound they all use the buyback.

Volume so what that it incentivized was a race to the bottom putting in the most dense materials you could actually adding rock. So that you can get your weight of up your costs down on your price per pound perceived value to be enhanced what we did was during the inside of the category on a day.

Head to the advantage of the consumer who uses of by volume and the environment, because we were able to cut the carbon footprint by 50% because were able to book twice as many units on a truck yeah on cup the number of trucks going into our retailers distribution centers and a half so its been to their advantage too. So it's been a win win win forever.

The body of picks up the entrenched players in the category and it really took on.

A couple of things that took a contrary in mind and it took you know sort of.

Unilateral control I mean, it just did I mean, I I was in a unique position to make this happen because I am of very much a contrarian and I had control of the company and so I can take a 35 million dollar bet that we could turn on a $2 billion U.S. Mark.

Good and frankly, a global market on its head, which you know, it's pretty daunting and most people of they were betting their careers wouldn't do it because of the odds of success are low on the odds of ending up with a career limiting move are high but you know I was on that unique position and so we did it and you see the results of the best is yet to come I mean the book.

Snowball continues to grow well over an M. You know we were again being letting the competition define the playing field. So they were painting a minerals in general as a negative and so our prior regime was sort of getting sucked into fighting the battle on the field of the Comparators.

Cash and wanted to fight well, that's not a winning strategy you know the key is we want to make them come to our field and what we control is what Fred said, we of quality all the weight of the source nobody can say that you'll hear from farm to table, where we control it from mine to from and so will the ultimate and.

On controlling our quality and our unique mineral is the reason why our products are working so well and do something of.

That really nobody else in the globe is doing you know antibiotics by definition antibiotics is killing of the bacteria on the bacteria or not the problem I'm reading a break great book that I highly recommend called the great influenza, which covers the span of slew of 1918, because everything that is happening today, helping them and only worse.

And in the book they literally talk about how and this is Simon Flexner, who is the first on head of the Rockefeller Institute in New York.

And they talk about how it isn't that they figured on it isn't the bacteria. That's the problem. It's the toxins day, a mill and that's exactly what our play does it bind the toxins. It's it's an add on air absorbent and so when you put it on the animals got it binds the toxins, which would be causing the problem the animal excrete them.

Which as you know a fancy way of saying Poops allowed any animal rights and our dual mode of action is also what Fred talked about his quorum sensing. These bacteria don't take over the host until they recognize that there are a number of these bad actors in the neighborhood to cause a day a major problem.

And so our play actually inhibits quorum sensing aware of intellectual property around them and so our use of the integrator should be using our play not only reactively. When there was an outbreak book prophylactically to prevent it in the first voice and so our dual mode of action is a unique reason for us to be.

Be successful and Fred also talked about the feed conversion ratio into works, we have to monetize of the yield on creating value from zorba minerals means creating value for our customers not for oil dri, we get the benefit in that value creation, because there has to be enough of it for them, where they're happy to pay on <unk>.

Price, where we can make our margin and they still win on the equation well we are doing a much better job now of making sure we communicate the value to the consumer we communicate why our players not just there but as vs. Central reason for our success and then finally focus you on on maniacal.

On disciplined and focused and I I got involved in immediately it occurred to me you know look yes, there was a $3 billion global opportunity around antibiotic replacement, 40% of that as in poultry you know that's a 1.2 billion dollar opportunity for this tiny little less than 300 million dollar company, we've got from.

One of the poultry expert on you mentioned are Heath and Harold who are both poultry experts, we have a team of existing poultry experts and yes, we of swine and we're not going to walk away from those businesses, but clearly Fred and his teams and Jim Gip sales calls on open doors at every major player around the country and they understand.

And how our products are used how the nutritionists and decision makers are making their decisions in order to decide how to move away from antibiotics or where do they go to and so we're going to lean heavily into poultry just like we're leaning heavily into lightweight even though the majority of the category of still hubby.

We are winning every day on lightweight.

And now we're going to be winning heavily on flush ability. So I hope that answers. Your question really what I'm, bringing to the division first of all is rapid decision, making you know accounts out of later, so it's never going to be as good as of EIM hands on involved because I can make the calls working with from immediately freeing up resources are working on.

With my colleagues on the I C or the supply chain on getting decisions made that frankly, we're stuck in bureaucracy and we're such a little company. It's ironic that we have bureaucracy, but we didn't of red tape and I've been able to immediately come through that just through common sense and just part of from decision, making power no great genius on my own.

Full you know benefits this year on the answer is absolutely, yes, but of different depends on how you define it I think we're going to be taking a step or two back before we take about 800 steps forward, we've got to fix them things on our go to market strategy, we buy.

All of our solutions, because we are basic or we are on a great position to sell the big players direct the key to that of having the right distribution channel. So that we can sell the big the big players direct and so you know we got to owner of licenses. We go in to do all of the product registrations things like that so we've got on source.

As of work to do so that we're in a better position.

So the biggest players directly so we will make huge progress during fiscal 21, a while the financial progress is going to come from Jessica and the cat litter business. So that by the time 22, 23 and 24 roll around you know then then the Amlan team will be on coming over the hill.

To help save the day. So a were again always thankful that we have such a diverse business that we have you know everything is doing well the AG business generated and the while the pros choice business has been heard by cold. It obviously of sportster, the industrial business is doing well of our fluids purification.

On business is doing well so fiscal 21 will be of solid financial year, and it will be a pivotal year for the future of animals.

Right. So lovely wells. We go Okay. We have next question from John Bair from ascend wealth advisors and he says congrats on a great year in a difficult time are there any new markets in animal house outside of poultry and swine that R&D efforts are either being evaluated on being actively pursued if so what my baby and how far along at a price.

Are you to possibly launch any new product you have I think I hope my competitions listening because I'll tell you exactly what we're going to do so that they can for all our upwards of a John you know me well good question, but I'm not going to answer it and I think I did sort of answer you that we are really going to be leaning into poultry. So I think being great at one species is better than.

On being average it all species, so we're really leaning into poultry and we're going to continue to do so so next well I didn't really close on the supply chain, let's deal that we do on Ethan Starr has the next question of the $5 million of savings in the supply chain of very impressive could you. Please give some examples of how this was achieved.

One of the prospects on for any possible future sales Molly take it away certain yet so I look at savings on three main bucket logistic service.

Bashing and in fiscal 20 by far the savings were on logistic.

Some of that is market, driven, but I will say that our VP of bridges.

Person really capitalize on the market last year, and then but really great content from.

But he also but a considerable amount of savings projects that either reduced mild or extra handling or.

Personnel costs. So for example, we were able to consolidate some of our ancillary warehouses.

He's mileage handling and some extra cost on and that's the theme that he's driven.

Last year, and then free logistics this here as me.

Right on our first quarter results, we actually are going to have to offset some of it maybe.

Pretty significant increases in the market and so we do have some other similar type of logistics saving project really handling mileage and.

Improve our utilization of from Florida.

From manufacturing, we've really seen from overall process improvement so Erin Christensen RBC.

He manufacturing of that team has really put a foundational processes in place.

Optimize the way we run our business and we'll continue to do so and then in fiscal 21 of the manufacturing area, we actually will be starting out of some pretty significant capital that we said that we will see the saving for the first of me you're looking at alternative energy.

In our possibility solar panels on my home services of it's pretty Great project.

And then we have some on automation and optimization of one of our one of our joint line. So that'll be pretty significant and then the last well get it in procurement and that is getting a great focus by our procurement team.

Really look at opportunity either renegotiate find different buyers.

Or in some cases just reads on the product that are often line.

We are seeing great progress last year.

Great. Thank you Roslyn or trucks and next question comes from Ethan Starr I'm pleased with the growth in cat litter sales what opportunities are there for continued sales growth on the addition of new retail customers great. Jessica you on take this one.

Sure.

I, even think sort of question. So you know I think you look at our business, we definitely continue to see opportunities for both customer acquisition as well as organic growth.

How we look at our business in terms of change and reacting to change clearly consumers are rapidly changing and we need to make sure that we're adapting but we're also doing so on a very focus on data driven way. So like you talked about in the presentation. We continue to be keenly focused on lightweight and flexibility Ah and free.

Yes, it's really about looking at whats working and whats not in today's world. We're you know we're very fortunate to have a lot of data and a lot of opportunities to evaluate what's working and what not in it sounds simple, but it's really about a value meeting with working and doubling down on that as well is reacting to consumers and understanding.

You know how consumers are changing and on how we can change in a way that it doesn't really advantageous to us and that really benefits I think on where we have the right when I'm looking at marketing working its sale of understanding what's working and then doubling down on both from a resource dollars perspective, as well as investing again, a human resource.

Since then and team against their key efforts. They are really working we think and lightweight there's a lot more runway in terms of growth. Both again at your customer acquisition goes on the private label side as well as the branded side.

Great. Good answer thank you, Jessica and we're out of questions and I want to thank you on I promise to finish the way I started which is thinking the oil dri teammates are globally for Ah onez, keeping not only ourselves fiscally on physically healthy, but also our investors I know a lot.

Out of people you know rely on our dividend and appreciate our dividend and a you know keeping oil dri. It's on a lot of companies had to cut their dividend on some cut it just worried that things were going to happen because they had enough data and so forth we entered into the pandemic. That's the part of the wasn't Lucky you know, we've always run our business very.

Very fiscally soundly and we entered into the pandemic in great financial shape. So we didnt panic, we we just sort of let's see how this plays out and it played out very well we saw a surge in cat litter, we saw continued demand and almost all businesses.

We're starting to see a weakening and you know our jet fuel purification business as global miles loans has gone down and that's not a surprise and you know we are cautiously optimistic that with the vaccine, which I guess is starting in the UK day. This week, which is exciting of that of that starts to roll out globally.

You know it'll it'll come to the U.S. and we will see of pitchers and catchers report sometime in April maybe or maybe low pushed the season back a month, maybe it'll be may, but then that will mean that universities and municipalities and per our districts will be doing the same and that our pros troys business will pop back sometime in the late spring early summer of next year. So.

Thank you for your continued support and we'll look forward to talking to you after our next quarter.

That concludes today's conference. Thank you for your participation and have a pleasant day.

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