Q1 2023 Oil-Dri Corporation of America Earnings Call

As of October 10, 2020 to the record date for this meeting there were $5 million 75302 shares in oil drives common stock and $2 million 45415 shares of oil drives class B stock outstanding.

Holders of our common stock are entitled to one vote per share and holders of our class B stock are entitled to 10 votes per share and generally boat together without regard to class.

A quorum is present at this meeting and holders of a majority of our common stock and class B stock outstanding and entitled to vote are present in person or represented by proxy.

Thus the number of votes necessary to constitute a quorum at this meeting is $12 million 790255 votes.

Mr. Sablich has informed me that there are more than such numbers of votes represented at this meeting.

Therefore, I declare there is a quorum 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 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.

As described in the proxy statement. The first item of business is the election of nine directors. The proxy statement lifted oil dry as nominees for director each of whom currently serves as a director of oil dry.

Those nominees are Daniel S. Jaffe, Ellen Blair Cube, Paul M Hinesley, Michael a nemeroff George see Roes.

E L. Ryan Alan H C like Paul E to go and warranty washout.

The second item of business is the ratification of the appointment of grant Thornton LLP as oil drives independent auditor for the fiscal year ended July 31 2023.

The audit committee of the board of directors of oil dry has appointed grant Thornton to serve as the company's independent auditor for fiscal year 2023, and has directed that appointment.

Submitted for ratification by the stockholders at this meeting.

At this time, we will transfer and review any comments on the proposals that have been submitted.

Okay.

Okay.

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

It is 930 a M.

935, a M on December seven 2022, and the polls 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 have sent in proxies or voted via telephone or Internet and who do not wish to change their vote do not need to take any further action.

While we allow time for stockholders, who haven't already done so to complete their voting I'd like to remind you that the business presentation and any comments other commentary by any of them oil drives 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 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 31 2022.

We urge you to review and consider those risks factors carefully in evaluating the company's comments and evaluating any investment in oil dry dockings copies of our SEC filings are available through the company or online.

Alright, one last nickel finish studying.

Okay. At this point the points are closed the polls are closed and I will now report to a preliminary results of the voting we will be reporting the final vote results in a form 8-K to be filed with us within four business days with the SEC.

As described in the proxy statement, a director may only be elected by a plurality of votes cast. The nine 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 nine candidates nominated by oil and dry it received the largest number of votes.

Regarding the second item of business, an affirmative majority of the votes represented at the meeting if necessary for ratification of the appointment of grant Thornton as oil drives independent auditor for the fiscal year ending July 31 2023.

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

This completes the business to be conducted at this meeting there being no further business to come before the meeting the 2022 annual meeting of stockholders of oil drag Corporation is now adjourned.

I am now happy to introduce Dan Jaffee, President and Chief Executive Officer for our business presentations and financial overview.

Thank you Laura and welcome to our shareholders, our oral drug teammates I know they tune in and I know, we even have some parents have teammates that are tuning in today and so welcome everyone. Thank you.

Proud of the quarter proud of how the team performed at a very dynamic environment. Those of you who owned our shares for a long time know what I'd like to do at this point in the presentation is cover new promotions of existing people in new positions.

Importance of the company and then also vice Presidents, who joined us during the year or people, who have been promoted to vice presidential level. During the year, because I know thats been an oil do I really as a twofold investment number one you are investing in our mineral and its value and our ability to understand that then you're really investing in our team.

Who is going to help communicate that value to our customers and then sharing that value with them. So with that being your twofold investments you know about our mineral and you'll hear more about our opportunities as we move forward I'd like to cover our new Vice presidents and senior promotions that occurred during the year.

First Chris Lamson, as our group Vice President of retail and wholesale we feel very fortunate that Chris joined our team almost a year ago. He received his BS in finance from St. Marys of California. You. Then spent 18 years with Clorox, many positions, including VP General manager of the food and charcoal Division and <unk>.

<unk> president of the Walmart customer team.

He spent four and a half years as a senior VP at Central Garden, <unk> pet again, giving them knowledge not only of the consumer products arena, but the actual pet arena that we compete in and as I said he has been here a little bit under a year.

Currently in oil dry he has full oversight of our domestic and Canadian consumer product businesses, our industrial and sports businesses.

Sure.

One of our co pack relationships and he is leading our ethanol process, which is really how we run the company now and et cetera measure.

Positive impact on our ability to supply our customers in a very dynamic environment. So welcome Chris to the team.

And then Aaron Christiansen, you've seen him before so this is a old face and a new job. He was promoted during the year to vice President of operations. He received SBS in mechanical engineering from wash U and St. Louis.

He joined US five and a half years with Procter <unk> Gamble as a processing engineered quality assurance manager and then 10 years with Unilever in the last two as manufacturing manager at their largest consumer product plant in Jefferson City, Missouri is now below the seven years, which is amazing.

He has been a great addition to the team and his current responsibilities include oversight of all of our activities relating to mining manufacturing engineering logistics procurement customer service and planning and if we had any more we give them to him.

<unk> always said, if you want to get something done find a busy person and assigned it to them.

What ive done there and then his promotion opened up a promotion for David Downs Who's now our VP of manufacturing, taking Aaron's former role.

David received his BS in mechanical engineering from BMI. He his past experience include a BPM plant manager at lime and mineral U S Lam and minerals lots of mining experience. He then was a senior engineer at Nestle Purina is cat litter plant in Virginia and is now below the six years.

As our plant manager first in Ripley, and then as a regional manager in Georgia. His new responsibilities include oversight of all manufacturing at our <unk> plants in the U S and Canada, and we're very fortunate to have David on OTT.

Next I'd fired myself as the head of Amlin I missed I missed a plan for a month. So I terminated myself no I'm just kidding about that really what I did for a couple of years was just get the strategy get the people in place get the team in place.

We added a lot of teammates and one of the major additions was Doctor Wade <unk>, who joined US at the time as our VP of marketing.

So now he is being promoted to president of Amlin International He received his BFS in AG Sciences from Auburn his masters in avian physiology from Auburn and his Phd in animal nutrition from Virginia Tech. So you can see is absolutely got the educational experience to lead our team and many of the work experience, which really is.

Been stellar 30, plus year career in animal health and biotech he has been with such notable.

Global multinational companies with Monsanto Novus, where he was director of Nutrition research Cargill. He was in R&D directors Syngenta.

And then Poland Senior VP and Chief Technology Officer mentioned, he's been with US two years. He recently also began overseeing product development.

<unk>.

And now he's got an oversight of our entire global animal health business and he has an incredible team beneath him and we're just really excited about the future and appreciative that Wade is on our team and leading our business Wade. Thank you very much for that.

His promotion open up room for another promotion so Reagan culbertson.

Been with US for 15 years, you received a BS in media Arts and design communication studies from northeastern in Boston.

She's been with US a long time, she was promoted to global marketing director in 2020, and she led the turnaround at Amlin by clarifying our message and promoting the efficacy of our mineral is our unique selling proposition that is our reason to be in the category and we are leveraging that heavily in a lot of that is with her helping communication.

So her new role will be oversight of all of our <unk> strategic marketing. So that includes our AG division in our fluids purification division branding.

Branding communications and product management Reagan congratulations and thank you for taking on these new responsibilities.

Next again as.

Wade was promoted to president of Amlin. He gave up his oversight responsibilities out at the IC and so very happy and proud that Aldo Rossi, who is a DBM is being promoted to VP of innovation and Tech service, although received as BS and biological Sciences from the University of Cal Davis also is.

Doctorate of veterinary medicine from the University of Cal Davis. He has had over 20 years' experience with <unk>, those including five years as VP of R&D for years as World Q&A Vet and lab services and then five years as GM of North America, just incredible work experience that fits right in with our mission and vision for the Amlin.

Team he has been with a six months and as I mentioned he will have oversight of Tech service regulatory affairs and the innovation center. So Aldo. Thank you very much and very very happy to have you in that seat and then last but not least we have a new vice president of human resources, Pat Walsh patent received as BS and psychology from the universe.

Steve, Illinois his masters in HR and industrial relations also from the University of Illinois. He spent 14 years with Pepsico Frito lay he was a senior HR director HR manager. He has been with US a little under a year and has already had a major impact on our company are really embracing our lessons learned in our core.

Core values and leading the charge from that and then also spearheading our talent management program, which we are really is nascent and he has been doing a great job at that so Pat really happy to have you on the team and investors you should be proud of the team that is everyday trying to maximize your shareholder value I'm not going to get in.

The details because thats, what Susan <unk>, so I'm going to turn it over to our CFO and Chief Information Officer, Susan correct.

Thank you Dan.

Going to talk a little bit about fiscal year 2022, but thats history. It was a tough year, we're glad to have that behind us and we will look at the results here for the first quarter of 2023.

If I start with.

For 2022, our net sales were up 14% over the prior year with a lot of the trajectory and the momentum coming in the back half of the year.

And that momentum carried forward into the first quarter of fiscal 23, when we achieved record sales of 99 million, representing 19% growth over the first quarter and fiscal 2022.

And that 19% growth is entirely attributable to pricing.

We did have some shift in mix in volume, meaning that we were down about 5% in volume in the quarter in our retail and wholesale business, but that was offset by the same amount of growth in our <unk> business and <unk>.

Can you give us a little color on what happened there in the first quarter.

It's noted in the management discussion is well seasoned.

Primarily in our in our <unk> business.

<unk> partner exited really the entirety of the international piece of their business.

We will lap that in March so really single biggest driver if you look back at our consumer business and our industrial business.

<unk> were flat to slightly up.

Thanks, Craig.

Internally, we assess our profitability on a per ton basis to ensure that we're generating the most value out of our nonrenewable resources, our Monroe as Dan mentioned earlier.

So volume was up 6% in terms of time in fiscal year 'twenty, two with volume gains in both the retail and wholesale and business to business channel.

Moving forward to the first quarter of fiscal 'twenty three.

<unk> was essentially flat and again with the shift in mix <unk> being up retail and wholesale being down for the reasons just gave you color on.

When we look at net sales.

One of $421.

Highlight the impact of our pricing actions in fiscal 2022, and dial forward to the first quarter of fiscal 'twenty, three and that number is a record $473 per tonne and you can see that compares to 394 in the first quarter of 2002.

'twenty two.

As we've talked about throughout all of fiscal 2022 gross profit per ton was adversely impacted by the timing of cost increases that hit us.

The timing and when we were able to get pricing into the market and into our customers. So a challenging year on the gross profit per ton basis. In 2022 that we are excited about where we are sitting in 2023 with the first quarter gross profit per ton.

<unk> hundred $7 per tonne.

An increase of 62% over the first quarter a year ago.

That flowed through to net income per ton, both in the year and for the quarter.

And that flows through to our basic earnings per common share, which you see in Q1 at.

At <unk> 80 per share is almost equal to fiscal 2022 full year number of 83 per share.

So momentum is on our side, we're seeing the impact of our price increases.

And continue to be committed to our dividend.

And then her share at 28 cents per share here in the first quarter.

So thats one cash outlander, if I take a look back the past couple of years that are significant cash outlays.

Our continued investment in.

Our plan and our infrastructure.

With our capital spending being the largest commitment of our cash outlays.

We intend to invest at a similar rate here in fiscal 'twenty three.

And if anyone's interested in some comments on sort of question on that.

A little bit later.

So the challenges with this team and Dan talked about team and it really does take the team the challenges that <unk> faced and you can see looking back for the last several quarters.

During fiscal 2022 were quite large as costs came at us very pressed increases came out as rapidly.

Unanticipated level.

So you look at fiscal 'twenty first quarter and you can see we've got momentum on our side and that is what we said in the fourth quarter. When we were talking to you as we were feeling that the momentum was there that we had price increases going into the market in the first quarter and we have some more going in.

The second quarter of fiscal 2023.

So just to wrap it up.

Where we've been and we've talked a little bit about cash investments in our business.

One further one in the first quarter. If you noted in the cash flow statement, we made some investments in inventory pretty significant to the tune of $5 1 million. So I thought I'd invite Aaron to just make a couple of comments on what we're doing there and how we're supporting the business with that investment.

Thanks, Susan happy to field that question.

As we've alluded to in prior quarters service has been immensely challenged over the past year.

One of our priorities has clearly been to his restore service levels to historic levels. One of the ways. We've done that is with very intentional and selective choice. For addition of inventory in the right places in our highest value added products to ensure that we can leverage our superior service as an advantage compared to our.

Competitors and other customers.

Wonderful.

With that I'm going to wrap it up and actually turn it over to you Larry.

Thanks, Susan.

Today I'd like to take a few minutes.

Really excited to have the opportunity to talk about how oil dry is investing in our future.

We invest in many ways, we invest in our brands, we invest in our culture investing our minerals and reserves will definitely environment, we invest in new products and innovation.

And our teammates.

Today, I would specifically like to talk about how we invest in our infrastructure.

There is an 80 year business producing facilities are foundation to what we do.

I'm going to provide some really brief insight into our capital outlay.

Some examples of how we have invested and are continuing to invest in our facilities.

Our capital spend both Susan and Dan made comments and there is a note in the disclosure in our press release about our ongoing commitment.

First I'd like to talk about our philosophy any business finds itself with the continual conflict between investing in business growth endeavors cost savings and business continuity and by business continuity on the savings environmental compliance safety and the ongoing simple maintenance of our facilities.

Cities.

All dry lips for very intentional and intelligent ways to find investments that align with our growth strategy, but also deliver on cost compression and continuity of business.

In fiscal 'twenty, two oil dry spent just less than $23 million I believe there is a question you fielded in portable Susan alluded to it earlier, we fully anticipate and expect investing in a very similar way similar philosophy and similar level in the years ahead.

Later today Youre going to hear from several of our commercial leaders about our growth strategies in those areas specifically in the area of litter in animal health.

Im going to take a few minutes and show. Some examples in these four areas of investments we have already made that deliver on all three cost savings business growth and business continuity.

I hope they are insightful in ways that are meaningful to our investors.

Before I talk in those talk to those four areas I'd like to talk to talk about our mine operations oil dry at its core is a claim mining and mining and minerals company that is foundational to our business, we make substantial investments every year and our main assets in mine equipment.

It is essential that day in and day out we can deliver clay to our factories and wait it's reliable.

Look for ways to do so that are more efficient more modern.

Every each and every year. It is a continued commitment.

I'd like to take a moment to also talk about how we reinvest in the land that we have leveraged and used oil dry has a substantial commitment to land reclamation every single year, you can see images on the screen here.

Land that we have mined in use it's been written.

<unk> restored to hunting and fishing property lakes and ponds interviews for the years ahead.

While dry hasnt annual commitment to restore land that we used to its natural state.

So now I'll take a few minutes and talk about examples of where we've made investments in front of our growth agenda.

First is the renewable diesel area, while drives looked at ways to Debottleneck, our milling operations prepare for the future years in advance and build capacity that we fully anticipate needing.

We also take advantage to do so.

And Matt in manners, and also improve our environmental footprint.

Reducing particulate matter.

<unk>, we've been able to leverage our environmental agenda at the same time that we deliver capacity for growth.

Chris will talk shortly about lightweight cat litter, we bought a multiyear journey to add capacity reduced cost and modernize our lightweight cat litter packaging operations. It's also an area. We've invested in ways that are better for our teammates modern robotics line.

Layouts lighting ways that make us an attractive employer for our teammates.

And ultimately help develop build and develop the culture.

That we want to.

Flourish and are producing facilities.

Thirdly, I'd like to talk about how we have and are investing in our agricultural products whats.

What's shown here is an image of the investments made in one of our facilities that supports our highest value added agricultural products. We've used modern design techniques <unk> modeling advanced methods to optimize design and construction.

And grow our grow our producing base in ways that are.

Yes.

Yes.

Rapid.

We chose the equipment selection that reduces maintenance costs long term.

As well as electricity and utility costs. So that we can reduce costs from those products and ultimately reduce both utility and repair costs.

Lastly, and Youll be hearing from Dr. <unk> later I'd like to talk about how we've invested in our animal health producing footprint. This is really the most transformational area over the last 12 months and we expect it to be similar over the next year or two.

Very wide ranging scope of investments made are really fundamentally built to add capacity. We've added air handling capacity, which also shrinks, our environmental footprint automation and modern drawing assets such that we are prepared for the growth of head instead of being behind the April .

Hopefully this has been insightful and answered some questions that have been fielded on the portal about our plans in the years ahead, we continue to look many years into the future.

To make sure that we are well in advance of our commercial teams plans to grow the business.

Speaking of plans to grow the business I'd like to hand, the baton to Mr. Chris Lamson, who is our VP of retail and wholesale.

Thanks, a bunch Erin good to be with you all this morning and.

We're going to talk about staying the course.

Our focus on lightweight litter would've loved the double entendre, we were talking about staying the course with our coarse litter.

And we feel good about that business, but really.

We see our growth coming in the lightweight litter business, both on the branded side and on the private label side.

<unk> talked about maybe in about a year into the role and as I came in and looked at strategy sometimes of the new person wants to come in and candidly makes a bunch of changes and really this presentations about why we're not.

We'll talk about a few new tactics and a few things that we're excited about in terms of lifting both our branded and our private label business, but fundamentally we are staying in the course of private label, because one highly consumer relevant.

Who wouldn't want all other things equal who wouldn't want a product that is a lot easier to shop for a lot easier to handle at the point of consumption incredibly customer relevant significantly lower costs than our freight labor business for our customers and virtually all of our major customers are also.

Driving environmental programs fixed trucks off the road.

And we're advantaged here.

Our mineral.

As the best natural way to achieve.

Lightweight litter.

And in a couple of slides.

The focus here is working so well share that as well so again, a few tweaks, but we are staying the course in terms of our focus on lightweight litter.

Overall quick look.

The growth in the overall cat litter business.

2018.

Impressive compounded growth up at the top I did a little math, what's also impressive.

I would think investors would want to take note of the growth been remarkably consistent here.

And I think I think it ranges between eight eight and 10, 9% annually.

And it's accelerating a bit with the last couple of years up.

Nine and 11% year on year, So love the love the consistency.

Next slide would show us.

Why I shared with you that we're we're staying focused from a results perspective on lightweight. So you just saw the 10% CAGR so on and on.

Our total litter business, our overall compounded growth on the lightweight business is 50% higher at 15%.

And I would also share with you when you look here also accelerating so the 15 is in the 10 and driving solid growth year over year I will say, if you're if you're <unk>.

Looking at close details and Leslie will probably wants me to note. This this slide is looking at our U S business. The previous slide have the Canadian business in it which is the difference in the two CAGR. So.

Why are we staying the course, it's working you see the growth here.

Okay.

So fundamentally most of our tactics are staying.

Pretty darn similar to where we've been a lightweight growth with a couple of modest tweaks that are really centered around making sure that our activities and our investments our activities.

On the consumer side, our activities relative to innovation benefit both our branded business as well as the private label lightweight business. Okay.

So we will share with you our continued focus on base product performance.

Are the <unk> benefits that we drive.

With customers as we saw the customers in terms of why they should be driving lightweight at the shelf.

Our innovation that we're really amping up boasting both against our base and some innovative both product and packaging ideas and and how we're moving from focusing on litter for good on our brand to lightweight at the center of our consumer messaging.

Starting with with this fundamental focus on product quality all of this work.

Preceded me, but as a company I think we're very proud of I sit here and look at are and who you just heard from.

Enormously proud of the folks in our in our manufacturing facilities and the support that we've also gotten out of our innovation center in terms of driving fundamental product quality.

And.

Why would we be so focused on something like a dust index right is that really that exciting Walter it's a key consumer attribute are really a key consumer dissatisfied and I can tell you that other consumer attributes like clumping.

Would show exactly the same sort of progress over the last several years and that's why on the chart on the right.

Do you see.

A significant decline in consumer complaints.

Low below really kind of a targeted thresholds that of that 0.05.

Again why does this matter.

And I think the old adage right word of mouth.

Best form of advertising.

And of course, that's always been important but.

I'm not telling you anything you don't know, but social media around word of mouth has been.

Absolute LOE X.

Financial multiplier or maybe a super spreader, if you will.

A word of mouth, so, particularly important in terms of our focus on the fundamentals here on product quality. Additionally.

We are more longer term focused on reaching absolute parity or better performance of our lightweight litter to heavyweight later I'd say, we have a little bit of work to do and the clumping space, but overall when we when we look across consumer attributes.

We're on our way and continue to look for further breaking a real breakthrough in addition to focusing on the fundamentals of product quality.

This slide you've seen.

And again in terms of staying the course, we're not going to apologize for that.

The.

Really the first two buckets here deal with our ability to.

To help the customer the retail customer understand the benefit of lightweight.

And while the idea hasnt changed very proud of the team over the last year in terms of its ability to actually go into a model for customers how lightweight litter actually grows their profitability in the business that is.

The total value of the litter is 30%, 40% wrapped up in freight.

By being able to get 30% to 50% more product on a truck.

The customer and ultimately the consumer win from that and we're going into a major customers modeling that benefit showing them why whether it shows up on the buyer's scorecard in some cases or Douglas in the case of other retailers why that benefit of lightweight litter flows to their bottom line and then I'm going to speak in a moment to really amping up.

Up our consumer message on the latter half of the continuum around consumer usage and shop ability and the benefits of lightweight there.

This slides really intended to trigger these last couple of ideas are not just about branded.

What about raising both boats as I talked about raising both the private label business and the lightweight business together.

So our innovation that will get into here in a moment.

We're looking to apply to both our branded and our private label business and by moving from consumer messaging on the brand that was centered around.

The litter for good messaging to a message that focuses on lightweight we're really driving a sub category benefit around lightweight that benefits, our private label business as well as our branded business.

Really.

Double click on what we're doing the key changes in terms of in terms of our go forward planning on driving lightweight.

Innovation so.

We're being a little larger your kg or something like that here.

The couple of Big innovation ideas.

Have yet to hit the street and I would say within the next couple of quarters. When we visit with you all again.

We will be able to share specifics, but a couple of things that we're excited about and one.

Say, okay, a value branded player and a private label player.

Should you be innovating, hey, we innovated the lightweight litter segment over a decade ago arguably with our <unk> partner, we innovated the lightweight segment and course more than 35% or 40 years ago in partnership with them. So really a great track record of innovation.

We have some product innovation that I can tell you.

Probably can't tell you much more but it takes a fundamental category benefit and takes it to the next level in terms of how we can talk about it.

And again initial plans are to bring that into branded but also use it as an opportunity to drive premium private label and the marketplace and then those of you that keep up on particularly consumer packaged goods, specifically see a move towards packaging that Ho.

And then on the things about packaging that are particularly consumer relevant in the consumer's ready willing to pay for but strips other costs out and ensures that the value is.

As in the us.

And the saucer and the clay if you will in this case and we've got some things in the works.

We're studying very hard now from both a.

Manufacturing perspective and of course, a consumer perspective.

But we're feeling very excited about particularly as a value brands and private label private label producers, where we think we will that will have particular impact on on driving value for us in ways that may be the larger three brands cannot.

Really lastly, and Theres a few slides to illustrate this we are just getting rolling on shifting that message and to be clear, we're very proud of our social platform around letter for goods. It will continue to be.

A secondary message I was comparing a couple of the brands have similar programs I can tell you that our impact.

We can we consider around this table and its shareholders and employees you can be very proud of we're making a significant impact in our litter for good program visa.

Vis vis some others that are that are driving some of our programs.

With that said the primary message is going to lightweight litter.

Celebrating our performance I showed you a few slides a few pages ago that that.

<unk> enables us to do that with the progress that we've made on our portfolio over the last few years and we're doing this is kind of a typical CPG 360 degree marketing.

Slide it.

It could be another companies and a lot of ways, but we're really emphasizing digital shopper influencers that I'll talk about in a minute social and E Commerce and the reason I talk about those are those are all places where I look at Susan It should make her happy we can measure return.

And really drive too I.

I think the <unk>.

Industry term right now is performance marketing, but we're.

We're excited to drive the business in places, where we can see.

Reasonably immediate results.

Starting to see a little bit a copy I would tell you. This is actually temporary.

We're we're really looking to leverage our influencers, who are picking pictured here and really.

The Kitten Lady.

It has been a long term partner with over $4 million.

Followers, Dr. Evan Hansen, almost as handsome as our CEO .

It's very close.

We did a survey data.

In closing.

So it was an employee survey earlier.

Dr. <unk> is newer to us, but both have driven the litter for good platform for us, but both an authenticity is important here both are very much bought into the.

Lightweight.

Benefit as well and we're beginning to drive that content, which this is actually an illustration of that so theres getting lady with her over 4 million followers.

Racing.

A bottle.

Jud rather of our of our lightweight litter, we were going I wanted to show a video.

But.

And they are in our kind of approval culture Leslie didn't want to spend the extra three grand.

I put that out there.

Yes.

Anyway, we feel very good about about where we are in terms of developing some rich content around that shift to lightweight and youll start to see this.

Out on the Internet over the next quarter.

So finally wrapping up.

Staying the course and you saw the results that drive to why we're staying the course.

And yet I think the big strategic takeaway is.

Really tactics that drive both our branded and our private label business.

Going forward, particularly around consumer messaging and importantly around innovation.

My pleasure to turn things over to our Dan spoke of our newly promoted.

The president of the Hamlin business Dr Wei Ravi.

Thank you, Chris and good morning, everyone. It's a real privilege to be able to speak with you. This morning and to represent the Amlin animal nutrition and health team globally very excited about the opportunity we have with Amazon to build another very strong element of oil drive business and really bring.

<unk>, a tremendous amount of value to it industry.

It isn't really great need of innovation as we continue to meet the challenges to feed a hungry world.

As we as I talked this morning, I want to focus on our North America team had really highlight one of the key regions of the world, where Amazon has tremendous opportunity to grow our business, but before I do that I'd like to start where we always like to start which is the.

Advantage that Amazon has being part of oil dry and the legacy that they will drive corporation brings to our business. There are a number of key elements to that first and foremost is the leadership that we have with Dan.

And the Jaffe family Dan is the third generation leader of our business and because of that we have very consistent strategy focus and and our strong core values that we bring to this business oil dry also has as I mentioned, a very diverse portfolio.

Amlin and animal Nutrition health business is a great addition to that.

We leverage the very strong vertical integration of oil dry.

Being able to control the product from the ground all the way to the customer.

Ensuring that we have quality and traceability and sustainability in our products. We use the single source mineral number of locations, but a single source mineral that brings tremendous technology to this space and oil dry has been very consistent over the years and the investments we have an innovation building out our innovation campus and a strong team.

R&D professionals that really allow us to create differentiating value for the marketplace.

As we look at the type of products and portfolio that Amlin is developing and where we focus on the market. It really is around four key areas that are reflected on the left and then the illustration of the value opportunity in the in the animal diet on the right side of the slide.

As antibiotics and other pharmaceuticals are removed very rapidly now from animal diets, driven both by regulatory compliance requirements as well as strong consumer preferences.

A tremendous opportunity for oral dry amlin to develop products that can meet the needs as these products pharmaceutical products or remove the diets. These help support animal growth in productivity and improve the efficiency of animal production.

The pharmaceutical products that are being removed also help prevent disease in animals and allow producers veterinarians nutritionists to to have high productivity and reduce the challenges that disease in their operations. All dry has a whole host of natural products that can help support and animals natural.

Immune system support the natural development.

The microbial oncology in the gut of the animal and really improve the performance as an animal digest and utilizes nutrients for growth and reproduction. So again oil dry Amazon has a tremendous opportunity to target this segment.

The other areas that we focus on are a little harder to quantify in terms of the absolute value, but we know that maintaining a optimal gut health and immunity in the animal really improves that utilization of nutrients and allows for optimal productivity.

Then of course, the animal welfare and sustainability healthy animals are animals that have a much more productive life.

It allows us to produce animals in a much more sustainable way for food production and it's the absolute requirement now that consumers have that we're mindful of animal welfare and sustainability and Amazon is a big part of helping the industry achieved that.

Now I'm going to shift my focus to the North American market and talk to you a little bit about why we're so excited about this region for growth for the Hamlin business.

As we look at the the opportunity in North America. It really starts with our team there we have a team of professionals with over 100 years of collective experience in this industry.

Team members that are well known by our customers and that have high credibility in this market.

Vessels as the VP of sales for the Americas for Amazon. So that includes not only North America, but also our Latin American business, where we also are going to see tremendous opportunities for growth in the future Dr.

Dr. Aldo Rossi was mentioned earlier being promoted to VP of innovation and technical service. Although also has long experience in this industry well respected veterinarian and will help us align and develop a world class technical service team as well as manage our regulatory affairs and innovation activities for Hamlin.

J Hughes as our director of technical service for the Americas.

<unk> also has a long history in the industry working at both the primary breeder company as well as an agricultural statistics company J is well known by our customers and we will be optimizing our technical services programs for the Americas, helping customers utilize our products and also helping to manage field issues.

But they may be experiencing in their operations and then Chuck Snipes, Chuck as our key account manager in North America, again, and well known in this industry tremendous relationships across the various species that is covering.

<unk> has been a great attribute to the team and is really helping to drive the growth that we're seeing in North America.

Now why are we why are we interested in north American market why why is it a focal point for for Amylin. This chart illustrates that on the left Y axis you see the 2021 feed production in million metric tonnes and on the bottom of this chart and the X axis you see the compounded annual growth rates.

Wine and broiler production is tremendous in the United States and beef also with a tremendous volume of feed that is required for this market.

The North American region, as the world's largest broiler meat.

Producer per capita and Theres, a very high correlation as you've seen this chart between the poultry and swine industries.

The top 10 producers in the North America dominate the market. This gives us very far.

Focused access to the market and the opportunity to grow. These companies are large global vertically integrated cross species food and feed companies.

Which again gives us the opportunity to grow not only in poultry, but also the other species that are important to us.

As the world's largest producer broiler meat and a fresh milk and we're second in the production of <unk>.

Pork and beef meat, so tremendous opportunity in the North American market and OEM on this focused here.

As we reported earlier, we launched our new product portfolio in North America about a year ago at the international poultry Exposition in Atlanta, you can see here on this slide the portfolio that we're bringing to the U S market <unk> is our single ingredient or our core <unk> technology.

This product really provides broad efficacy in animal nutrition. It helps producers support optimal gut health and the optimal utilization of nutrients in the diets. They are providing then below soyabean. When we have a range of formulated products that utilize our clay as its backbone, but also bring.

In other additional compounds, our adjuvant that allow us to have a broad portfolio of focusing on a range of opportunities again as pharmaceuticals.

Other drugs or chemicals or removed from the diet.

Driven both by regulatory requirements as well as consumer demand for clean food and feed. So this is the portfolio, we are bringing to the United States very excited about the opportunity that it offers and we're seeing good acceptance by our customers as we roll this out.

Year over year, the amylin global sales have increased approximately 18% tremendously strong growth again, driven by growth in all world areas, but also our rollout of our U S products in North American products that are starting to penetrate the market.

Feed prices rise in the state. We currently have a high commodity prices with the ban in Europe on meat being fed antibiotics. All of these are helping to drive the need for natural solutions that can provide the value that products previously utilized once did so we're seeing growth that.

We believe will be sustained and rapid across North America. Our sales have doubled in this region as we launched our new branded portfolio as I mentioned in this in large part is due to the team that we have and the strong efficacy that customers are seeing as they test them begin to utilize our products I do want to mention that Asia is still remains important to.

To our long term growth, we expect our sales in China to stabilize.

Fiscal year 2023, we saw a lot of challenges in the region from the pandemic from supply chain from the African swine flu, but all of these are starting to stabilize and we're starting to see growth again in this region. The balance of Asia is expected to show significant growth in 2023 as demand rebounds, and really at the <unk>.

Bottom line the world's demand for high quality protein will continue unabated, we have to be more efficient we have to produce more and higher quality protein to meet the demands of the world and Hamlin is going to be a key part of that for the industry.

So finally looking ahead North America is going to be a key element to our success and within the Americas North America.

Is going to be a strong focus for us in the next coming in the coming years.

Our customers are global food producers as I mentioned, and our sales and marketing approaches are key to that and focus to the fact that these companies produce feed for multi species and have most of them multiple end markets that they serve we're currently in field testing with some of the largest producers in North America.

<unk> completed a number of trials, we are seeing good adoption and we're seeing growth in our in our business as a result.

The growth will be rapid it'll be stair step and volatile over the first year or two because some of these customers are extraordinarily large and as they come online we will see dramatic step ups and the volume that we sell into this market.

We've also on the marketing side done a great job with the team that we have we've launched a new global website that will provide support for our products internationally, but also with it with a new focus in North America, and we have filled that website with a lot of information our customers can utilize from research articles blogs and expert advice.

This not only on the use of our products, but addressing the reason why our products are necessary the underlying situations or conditions that producers deal with every day and we're providing information to support our customers in targeting those those elements.

We have our upcoming IPP convention here in January in Atlanta.

It is the launching pad as I mentioned, a moment ago for our North American portfolio, a year ago, and it's a conference that attracts people from all around the world. So we're exciting to be.

Demoing there again in IPP with both presentations as well as our booth to service our customers and then lastly, coming up in March Vib in Bangkok is one of the largest international shows Avalon will be there again with the boost again with a full complement of staff.

To support our customers to meet with new customers that are interested in our products and really helped drive the growth of our business. So with that I'll conclude my remarks, and I'll hand, it back over to Dan for Q&A.

Wade. Thank you very very much. Thank you to the whole oil dry team as I opened up an investment in oil drives the investment in our people and I'm sure euros impressed with our team as I am and so that we have a lot of momentum heading into the next quarters in the next fiscal years, we're going to open up the floor for questions.

People are submitting their questions using the ask a question field on the webcast questions or remarks, obviously must be relevant to the meeting and pertinent to the matters brought before the meeting Leslie will read the questions and then I will either answer it directly or directed to a specific oil dry teammate to field the questions Leslie number one okay.

First one in the queue is can you. Please address the implications of the Albertsons program merger on oil dry specifically and the branded private label Cat litter market more broadly as I recall Nestle has a plant in California that is dedicated to supply and kroger's private label that may or may not be the case, great. Thank you Chris.

Thanks, Leslie and Dan.

We do business with both customers today.

We see the I think we see the impending merger as having both the potential for a real upside.

Candidly and I think probably others are across CPG that selling the billing to one or both like we do let's say, there's a little bit of a little bit of risk as well.

I think most importantly, our existing business with them is in the.

Litter, Eric sorry in the lightweight segment of litter.

With our existing business within the context of both where.

And hopefully took this from the last presentation or from my presentation, we have a significant advantage.

Probably as evidenced by by our private label market share being north of north of 70% of our private label market share, but then within lightweight so.

That gives us confidence I'd also say the question alluded to California.

In terms of a private label producer of lightweight, but even of course I'd set our footprint up.

Again.

Really against anybody we compete with we have a we have a great footprint, which is particularly important given the freight cost driver that we talked about before and specifically.

To have a manufacturing facility, that's vertically integrated like all of ours in California.

Great. Thank you.

Okay. So we have two questions related one is from John Bair and then the second one is from Robert Smith, So I'm going to just read them sort of together.

Julian answer what is your outlook for Amarin sales growth that is driven from the combination of both from repeat orders from early adopters of products versus new potential customers.

And then secondly are you able to reaffirm your $40 million revenue budget target for Ameren fiscal year, great and I'll feed.

This weighed because you've covered a lot of it in your presentation, but we're in a very dynamic state with with Amlin, because it's truly a startup.

We're in touch with major customers and as Wade sort of any one of them begins to rollout and we have every confidence that they will it will have a dramatic impact on the overall.

Not just the division, but the whole business. So we do we have communicated that our plan for the year was $40 million, we did $5 5 million in the first quarter, which only annualize to 'twenty two.

It was a 52% increase over the prior year, but we're still not we're still in trials with these companies that could flip the needle pretty dramatically. So if you put a gun to my head what I would say, we're going to do $40 million. This year I'd, probably take the under but the momentum is in the right. The right direction. So let's say we.

Hope at the very least we will have a run rate of $40 million in the fourth quarter, but I'd like to actually make it just it's so dynamic that I'm not willing to bet my life on it but we're still very very very bullish on the short medium and long term future of Amazon.

Okay great.

The next question comes from Ethan Star Congratulations on a nice quarter, Dan you mentioned last quarter that aniline products are numerous trials.

What's the average length of the trial before a decision is made to buy or not buy Ams products, what percentage of companies that try and those products end up purchasing that way and I.

I'll turn this over to you and its very subjective because this is all new but I would like to tap in your experience here and have you answer that question.

Yes, Thank you Dan and thank you for the question and.

It will depend a lot by world area, but let me kind of give you a general sense and this really plays off what Dan mentioned a moment ago.

The runway or the time necessary to trial, the product and to convince customers of the efficacy and the value really takes a number of months, we've generally work through.

The presentation of information and data in R&D to move into field trials with customers and then gradual adoption in their various complex as they roll it out across our operation. So understandably that can take a number of months to achieve I can report to you that we're well into that process in North America, and certainly around the world both with exist.

<unk> products and the new products that we have launched we've consistently seen excellent performance.

And not only re trialing, but beginning of commercial use by these large customers. So as Dan said, we're very bullish on the year.

The volume will come in large tranches as customers adopt and begin begin utilizing approximate our commercial operations and we hope by by year end it would be at a run rate that is consistent with our targets.

Great. Thank you. Thank you.

On the next two questions that are related to come from John Bair, and Ethan Star food purification sales growth is this the result of higher domestic demand or is there much of this attributable to international sales if mostly domestic what are your opportunities internationally and then the second related question.

Dan in your annual and your annual sorry in your letter to stakeholders in the 2022 annual report you noted that several renewable diesel plants are scheduled to begin operating in 2023, how many plants do you expect to begin operating in what is the size of the opportunity for oil dry yeah, and I'm going to turn this over to Bruce <unk>.

Our vice President of the fluids purification division with the one caveat he's not in the room with US here. So Bruce just a general we don't give specifics on absolute numbers of plants or absolute dollars, but your general.

Our comments would be appreciated.

Sure. Thanks, Dan.

Basically we had growth mostly in our domestic in North America, and Latin America is where we saw growth this year or the first quarter I should state and we do have opportunities internationally going forward I think both in the fats and oils business and the renewable diesel business will have opportunities.

As we look out in 'twenty three 'twenty four.

With regard to the second question.

There's going to be there's not going to be 1 million plants coming on these are very large facilities. So there'll be several plants in the next two years that will be built and be up and operating of course oil drive will be going after as much business as we possibly can in this marketplace.

I would take a guess that we might have a chance to get 15% to 30% growth in terms of production of our bleaching clay products in this market space, but but we'll see we'll be working hard to earn that business.

Fantastic and for those of you who are new to the oil drilling investment.

In many of our businesses, it's very much like the game of risk. If you played out when you were growing up meaning you can only attack contiguous properties. So our plan is in Georgia, and so we have a.

Unique competitive advantage in North America against our competitors, who are in Malaysia, or Singapore or even in Europe .

Conversely, they are a big advantage to us in those markets and so there is not a coincidence that a lot of our growth comes in U S. In particular in North America in general and in South America in the bleaching Earth business, because we are closer to those markets than many many many of our competitors, but then there.

Opposite is also true as you as you cross or most of the Atlantic and Pacific Oceans. So thank you Bruce.

Okay. Next question are you seeing any meaningful improvement in your logistics bottlenecks what are the biggest pressure point, meaning trucking route maritime shipping.

Great and I'll call on J T Harrison, our vice president of logistics and procurement.

And if you are on mute.

Paul.

Can you hear me Dan.

Yes, we do.

So maritime shipping is still the biggest bottleneck that we face.

Our freight procurement strategies executed for domestic trucking for rail for North American intermodal shipping are all driving great successes to prevent or alleviate any bottlenecks. The maritime market is still a difficult one for us and most shippers the global vessel schedule reliability is continuing to hover around 40 per.

<unk>, which is a huge challenge.

And despite that we have unlocked some successes.

And by our internal metrics, we are outperforming the market by 30% and some of that success is the inventory. We have built that was mentioned earlier not just having that inventory, but also positioning closer to the key export ports that we utilized to give us the agility to meet the constantly changing vessel scheduled to be ocean carriers.

Sure.

Awesome. Thank you J T.

The question that actually came in to me, which is ironic, but I got it and the question is we've talked in the past about how Canada has gone all lightweight for Nestle Purina and how I think what about 55% of the market is now lightweight and the question is if the U S replicated that lightweight percentage.

<unk>, what would the growth be potentially in the United States.

So Dan I'm doing a little back of the envelope math here, but we've obviously, obviously looked at this and you're right. The number one player in Canada went.

Were benefiting significantly in that market.

If the same thing were to happen in the U S.

By the way today is around a $400 million at retail.

Category.

It would more than double that so growth sorry, the growth would be more than double that.

So the growth would be about $800 million.

The lightweight category it really if heavyweight in lightweight were roughly split would grow to over $1 billion.

$801 million or so ago.

Yeah. So a great great opportunity. There is no reason to believe that U S cat so that different from Canadian guests, having lived in Canada and I can tell you they look pretty much the same.

Tumor might be lightened up there exactly trickled.

Trickle down so we're very very bullish I'm going to summarize we're out of questions and at a time, but you can see all of our business units are thriving and doing very well, even our industrial and sports business, which is sort of the granddaddy of the divisions is doing well and then some of our strategic initiatives.

We're all starting to hit at the same time, you've got renewable diesel our AG business is booming you've got a lightweight cat litter and again.

We've talked about in the past, but it is very much on ESG efforts.

A whole country adopted lightweight cat litter like they did with detergent with concentrated detergent. They forced the shelves to go concentrated for carbon footprint reasons and logistical reasons, if the whole country, what lightweight it would reduce the carbon footprint of cat litter by about 40% and so that genie is not going back in.

The bottle I don't see people in the future, saying I want a heavier I want to have a bigger impact on the environment I see the exact opposite where I want lighter and I want to do things that are good for the environment, especially if they don't cost me money and don't suffer from performance. So I've always said all things being equal if when lightweight and we believe it is.

The right price and the right performance the whole category is going.

And so very excited in the animal health business again.

Jamie is not going back in the bottle theyre not going to reverse field and say, okay. You guys, you're going to start pumping antibiotics back into the food production for humans, it's not happening. So we're in the right place and the right time and we believe again, we have the best non antibiotic all natural solution to a lot of these issues, which is why.

You've seen the team these folks with <unk>.

20, plus years' experience in this industry are all joining us at the same time because they believe in we believe we have the best answer.

<unk> sells like confidence.

They are very confident in our product line. So I am very confident in the future of the business you will see and I always get.

Chest is for selling shares to pay taxes on my own.

Restricted shares the best and I realize there was sort of an idiot to us gives us I didn't pay my taxes I'd go to jail, but this year I actually wrote a big Chuck and paid all the taxes out of cash, which my financial adviser would say with not a great idea, but my heart and brain. All tell me and you can decide I'm either in Spain, or I actually know something.

Tell me that the future of oil drives very bright and so that's why I did it and so I'm very happy to keep all my restricted shares this year and I'm very bullish on the future. So thank you for your attention your loyalty your support and we'll be back at you. After the next quarter finishes, but wish everyone, a happy and healthy holiday season.

That concludes today's conference call. Thank you for joining and have a pleasant day.

The host has ended this call goodbye.