Q2 2023 Oil-Dri Corporation of America Earnings Call

Speaker 1: Thank you for standing by and welcome to Oil Drives Q2 Fiscal Year 2023 Investor Conference Call. At this time, all participants are in a listen-only mode. I would now like to hand the call over to Chairman, President, and CEO , Dan Jaffe. Please go ahead. Let's get started.

Speaker 2: Thank you very much and welcome everyone to our second quarter and first six months of fiscal 2023 investor teleconference. With me today virtually is Susan Kray, our CFO , Aaron Christensen, VP of operations, Chris Lamson, group vice president of retail and wholesale.

Speaker 2: Laura Sheelan, VP of strategic partnerships and general counsel. David Atkinson, VP controller. And Leslie Garber, manager of investor relations. I'd like everyone to know, you'll see that Wade Roby is not on the call today. Our animal health team is currently at the VIV show in Asia. It's in Bangkok, Thailand. I'm good.

Speaker 2: for the third quarter earnings teleconference when he will be back on the call. And again, Wade is our president of Amlan International. So Leslie, please walk us through the safe harbor.

Speaker 3: Great, thank you, Dan, and welcome everyone. On today's call, comments may contain forward-looking statements regarding the company's performance in future periods. Actual results in those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends, and uncertainties that may affect our future performance.

Speaker 2: financials, just some general 50,000 foot comments that are highlighted in the

Speaker 2: in the release but are worth re-mentioning. So first of all, very excited. We broke 100 million for the quarter. We're at 200 million through the halfway point in revenues, which is great. You can see that we have had improved margins. We only made 17.3% last year in the quarter, now 22.6. And we're at the top of the quarter. We're at the bottom of the quarter. We're at the bottom of the quarter. We're at the bottom of the quarter.

Speaker 2: But the point being from first quarter to second quarter relatively flat around the 22.5% margin. And we are very mindful that we need to get back to historic norms of 27-28%. We still have pricing action and fortunately some costs are starting to come down. You'll hear about those.

Speaker 2: And so we do feel confident that we will continue to show sequential margin improvement going forward, and we're very much living our mission of creating value from sorbent minerals. So I don't want to steal too much of her thunder, so I'll turn it over to Susan to walk us through the financials. OK, fine.

Speaker 4: Thank you, Dan.

Speaker 4: As a reminder from our last quarterly call, our investors have asked us to reserve more of the time on this investor call for questions and to spend less of the call on formal comments. So we understand that you've read the materials, or we'll assume that, that we published, so I'll just make a few brief comments on the quarter. First of all, as Dan highlighted, net sales of $102 million.

Speaker 4: was up 19% in the quarter compared to the same period last year and the pricing increase was offset by a 2% decrease in volume primarily attributable to low margin products in our consumer cat litter business.

Speaker 4: The strong year-over-year performance and pricing drove a significant 48% improvement in gross margin dollars.

Speaker 4: That being said, and as Dan pointed out in his opening comments, our gross margin percent of 22.6 remains flat with the first quarter of fiscal 2023, so we still have some work to do in pricing in order to cover our costs in return to pre-pandemic gross margin levels.

Speaker 4: During the quarter, we booked a one-time charge of $1,977,000 net of tax.

Speaker 4: to establish a reserve.

Speaker 4: I thought I would provide a little bit of the backstory here. And if you have further questions, we have Dave Atkinson, our Vice President Corporate Controller on the line, as well as Erin Christensen, our VP of Operations, who have in-depth knowledge around this matter. Our signing H.E. in the DE energy committee is going to have to Maneh you recommended this committee if you need or knowing this, or any other transfer needs or public comment, there are no pageids at this meeting. I am sorry for your time, a mic or one of your uint fueled topics will also

Speaker 4: But to go back, in 1996, OilDry began operating a landfill at our Oquakne, Georgia plant in order to dispose of waste generated at the plant to avoid using public landfills.

Speaker 4: This waste is primarily unusable clay discarded during processing along with some packaging and lumber.

Speaker 4: This is actually the only landfill that the company operates.

Speaker 4: In 2018, our regular monitoring and permit renewal activity identified that the landfill exceeded its permitted expense in height and area.

Speaker 4: We self-identified this issue and reported it to the Georgia Environmental Protection Division.

Speaker 4: A task force made up of oil dry leaders was created with a directive to find viable sales outlets for this waste material. However, this met with little success.

Speaker 4: Fast forward to September 14, 2022. The Georgia Environmental Protection Division sent a letter to oil dry, noting that the landfill was overfilled and that oil dry was being required to provide a work plan to relocate the overflow overfilled in the current cells within.

Speaker 4: the permitted landfill boundaries.

Speaker 4: The oil dry team engaged outside consultants to advise on the preparation of a response to the Georgia Environmental Protection Division and to develop viable plans for modification of the landfill.

Speaker 4: In the second quarter, oil dry determined its only viable option was to begin excavating new landfill cells within the permitted extents and to relocate the overfill into those new cells.

Speaker 4: This plan is expected to take up to two years and is currently estimated to cost two and a half million dollars before tax.

Speaker 4: or $1,977,000 net of tax, and that is the amount that was booked in the quarter.

Speaker 4: So those being the two most notable results, the strong pricing and the one-time accrual in our very strong quarter. With that, Dan, I'll turn it back over to you.

Speaker 2: Great, thank you. And Leslie, let's go through the questions. We appreciate it. We had a lot of good questions come in and we'll cover as many of them as we can.

Speaker 3: Great. For those of you, please submit your questions on the webcast using the Ask a Question field and click submit. So we have a few in the queue already. The first one comes from Brad Evans at Heartland Funds. He says, I'm hearing from multiple players that Private Label is taking share from branded players.

Speaker 3: across categories based on widening price gaps and struggling consumer finances. What are you seeing on private label demand and how that might be helping or hurting your branded products shelf space with your retail partners?

Speaker 3: Chris, do you want to address that?

Speaker 5: Sure, thanks Leslie and thanks Brad and Brad you're hearing right.

Speaker 5: That is, I think, a broader trend in fast-moving consumer goods and definitely holds true in litter as well from a total category perspective. We've been asked this question kind of in different forms probably over the last three quarters.

Speaker 5: The answer really remains the same, and I'll talk about it from a category perspective first, and then how it impacts us at Oil Dry in our consumer litter business. Really, we're seeing, again, you're right, we're seeing a bifurcation in the market where private label and value brands are not the same, and that's why we're seeing a bifurcation in the market.

Speaker 5: are gaining share and by bifurcation I also mean the upper end of the market is gaining share as well. So, Crystal alternatives are doing very well as well. Getting squeezed in the middle is really and we saw it.

Speaker 5: probably most significantly in this last quarter, private label gain share, well ahead of the big three consumer brands in the category. I would also note, and maybe a new trend consistent with price value, the course.

Speaker 5: segment or the non-scoopable segment, which has been on a slow decline in favor of scoopable and alternatives over many, many, many years, actually showed a modest uptick relative to scoop, so actually the segment.

Speaker 5: gained a slight amount of share over the last quarter. So lots of signs pointing to the consumer in the face of inflation being very price value sensitive and cash out like so.

Speaker 5: But for us, the question may have been framed a little bit as, hey, could that be hurting you? The short answer is no, it's not. So it's not from a standpoint of value brands are also benefiting along with private label. And it's not from the perspective of we still have a decent size business in the course.

Speaker 5: And finally, it's also not hurting us and in fact helping us from the perspective of we've got a strong and growing and premium private label lightweight business that we feel very good about. It is experiencing tailwinds just as the rest of us.

Speaker 3: Back to you, Leslie. Great, thank you. OK, the next question comes from Robert Smith from the Center for Performance Investing. I'm actually going to combine two of his questions. Are you capable of reaching $40 million in revenues for AML in this fiscal year? I'm not really convinced.

Speaker 3: And what are the parameters for pricing Amlan products? And then his second submission was, what is the recent close target range for Amlan over the next several years? Dan, do you want to take that?

Speaker 2: Sure. So the blunt answer is no, we're not going to make 40 million this year. At the midway point, you know, we're up a good 30%. We feel we'll finish the year up about 33%. And, you know, last year, we did about 21 million, we think we can do about 28 million.

Speaker 2: and we price our products so that they are of a significant value to our customer as they use our products to do all sorts of beneficial things, live birth rate and you know obviously less mortality, weight gain, all the different metrics that they use.

Speaker 2: then we try and share in that value. Regarding going farther out, you know, Bob your guess would be as good as mine at this point. It's so dependent, you know, it's like I've said all along, I'm amazed that we are hitting some singles here or doubles being up 33%, but it's pretty much a business of grand slams or strikeouts and

Speaker 2: You know, we're still in the testing phase at a lot of major customers. We're getting a lot of activity. We had a great show in Atlanta. I'm hearing feedback. We're having a great show in Bangkok. So we are still very bullish on it. And in the meantime, all of our other businesses are also doing well. So it's sort of a good time to be oil dry.

Speaker 6: Great, thank you.

Speaker 3: The next question comes from Ethan Star, a private investor, and he asks, are you expanding your capacity to manufacture Amlin products? If so, if the previous capacity was x, what will the new capacity be as a multiple of x?

Speaker 2: Aaron, do you want to field that? Ethan, I'm happy to field your question. I believe we've provided a similar update in past quarters, so it's a great opportunity to update on the work. The simple answer is we already have and are continuing to invest in added capacity in front of the Amlin growth.

Speaker 2: A large appropriation was made in the prior fiscal year 22 and in fiscal 23 to add capacity in at least one of our facilities for Amlin. Approximately 2 thirds of that work is complete. The remaining third will take place in front of the anticipated Amlin growth curve. Timing is to be determined.

Speaker 2: We would prefer for a number of reasons to not devote the details of the size of the capital allocation and specifics of the capacity that is added. But I can assure you, we have a very well put together plan to have capacity in front of the animal growth. Great. Thanks, Erin.

Speaker 3: The next question is from Eric Sinemand from Palm Valley Capital and he asks, there was a time when oil dry hedged half of its natural gas use. Given the sharp decline in natural gas prices, has there been any consideration of re-implementing the natural gas hedging program? Erin, do you want to take that one also?

Speaker 2: Yeah, Eric, that's a great question. I'll start with saying yes. Welldrea has reenacted the purchase of buying natural gas forward. I do want to speak to the word hedge that's inverting your question.

Speaker 2: We don't think of it as a means to beat the market. We are purchasing natural gas in a very conservative and algorithmic way to average price over time. It provides our businesses better visibility to allow for pricing decisions, and takes volatility out of the cost structure.

Speaker 2: Our purchase strategy will have no more than 40% of the required volume any given month that's bought in a mechanism that has gas secured forward.

Speaker 6: Great.

Speaker 3: Okay, thank you. The next question is from Bill Patterson, individual investor, and he asks how much stock has been repurchased by the company year-to-date and how much left under authorization. Susan?

Yeah sure. Hey, Bill, thanks for the question. We've actually made no open market share repurchases year-to-date. However, we have repurchased 7,493 shares at a cost of 225,000 that were surrendered by employees to pay taxes related to respect.

restricted stop awards. So that's the only activity we've had in that category.

As far as what's left outstanding, we have authorization to repurchase 429,033 shares left under our current authorization.

Great. Thank you.

The next question is from Ethan Star. Recently there's been an increase in expenses to support strategic initiatives, including money spent on outside services. Could you please discuss these strategic initiatives and how they will make a difference?

Dan, do you want to talk about some of the B2B? Yes, I'll take the B2B and then I'll turn it over to Chris for the retail and wholesale. And as I alluded to in one of my answers, it is a good time to be oil dry. We have winning strategies in each of our major business units.

And so you know about Amlan and it is winning, it is growing, we're continuing to attract global talent. We just hired a person to take over Latin America for us. We hired him from Tyson's Cobb. He's joining his fellow Cobb teammates.

We have a whole new team there, but he's very talented, very successful, and we're excited about the impact he's going to have on our business south of the border and all the way south through Latin and Central and South America. And so our strategies are working in Amlin. We're continuing to leverage our clay.

as our unique sustainable competitive advantage and it's what gives us traceability and quality all the way to the mine. Then over in our next largest B2B business, it's in the fluids purification side and the trend towards renewable diesel is great for us and specifically it's in our backyard. A lot of new plants opening up in the future.

step. And so that strategy is working very well. The ag business is continuing to grow our you know, specifically tailored spherical granules, our verge granules, which has been a big investment over the years. We are basically sold out and putting in more capacity there. And that's that.

all very much in line with creating value from sorbents minerals. So our strategies are working on B2B and we've got some exciting strategies over on the consumer side as well that I'll let Chris talk about.

And I think we highlighted these.

and put a pretty good spotlight on them in the...

in the shareholder meeting or our annual meeting last time around. We continue to be extremely excited about the lightweight segment of the cat litter category and what our unique mineral does within that category and the strong performance that drives within the category. We really see it as our role to do everything we can to ignite the

the lightweight segment. We've talked this before, it's just below 20% of the overall scoopable segment. But if you look up to Canada, it's well above 50% now. And the opportunity to move the US in that direction is obviously enormous.

to oil dry, it's enormous from an environmental benefit. You take upwards of 30,000 truckloads a year off the roads of the US. So we're doing a number of things. Really, what I think of as kind of a 360-degree consumer is not a lot by

letter for good. That's probably the closest and most tangible thing that you'll be able to see play out in the marketplace again you know over the next over the coming month through the end of the fiscal year and beyond.

In addition to that, we're extremely focused on, and Dan says it well, if the product performed as well as heavyweight, why wouldn't everybody, who's going to choose heavyweight? Don't want to lug 50% more weight upstairs of their apartment building.

you know, really nobody. Our product performs well, can it perform better? Yes, and we're extremely focused in our IC against that product performance improvement. And candidly, you know, we'd be, you know, under and here I'll get a little more veiled but...

we would be interested in helping other players in the category ignite lightweight as well. So through selling innovation, for instance. Now that clearly is further out. So a ton of effort focused on growing lightweight and you know.

sort of pun intended, we do see what happened in the Canadian market as a bit of our North Star.

end, we do see what's happened in the Canadian market as a bit of our North Star. Great. Thanks, Chris.

So we have two remaining questions in the queue, but they are really best answered by Wade Roby, our president of Amlan International, and as we mentioned before, he is not on the call this quarter. So we're going to save those for next quarter when he is in attendance. And Dan, I'm just going to turn it back to you for any closing remarks. Great. Well, thank you and thanks to the oil dry team and for our...

And we're benefiting this year from investments that were made years ago that are starting to come to fruition. So thank you for your patience and...

I think you know we've got the next board meeting is in March but then in the June board meeting is when we will discuss any kind of dividend action but we're certainly proud of our record of increased dividends and I'm sure dividend increase will be a hot topic of conversation at our June meeting so

Thank you for your support and we will talk to you again in about three months.

This concludes today's conference call. Thank you for participating. You may now disconnect.

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I would now like to hand the call over to Chairman, President, and CEO Dan Jaffe. Go ahead.

Thank you very much and welcome everyone to our second quarter and first six months of fiscal 2023 investor teleconference. With me today virtually is Susan Kray, our CFO , Aaron Christensen, VP of operations, Chris Lamson, group vice president of retail and wholesale, Laura Schiehlen, VP of strategic partnerships and general counsel.

David Atkinson, VP Controller, and Leslie Garber, Manager of Investor Relations. I'd like everyone to know, you'll see that Wade Roby is not on the call today. Our animal health team is currently at the VivVIV show in Asia. It's in Bangkok, Thailand. I'm getting texts and videos. It's going very well.

But due to the time change and their commitments, we will be answering any questions that we can related to Amlin and our animal health business. But if there's questions that are better answered by Wade, we will save those for the third quarter earnings teleconference when he will be back.

the call. And again, Wade is our president of Amlan International. So Leslie, please walk us through the safe harbor. Great, thank you, Dan. And welcome everyone. On today's call, comments may contain forward looking statements regarding the company's performance in future periods. Actual results in those periods may materially differ.

In our press release and in our SEC filings, we highlight a number of important risk factors, trends, and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company's comments and in evaluating any investment in oil dry stock. Thank you for joining us. Dan?

Great, before I turn it over to Susan Cray for her to walk us through the financials, just some general 50,000 foot comments that are highlighted in the in the release but are worth re-mentioning. So first of all very excited we broke a hundred million for the quarter. We're at 200 million through the halfway point in revenues, which is great. You can see that we have had improved margins. We only made 17.3%

Last year in the quarter now 22.6. But the point being from first quarter to second quarter relatively flat around the 22.5% margin. And we are very mindful that we need to get back to historic norms of 27-28%. We still have pricing action and fortunately some costs are starting to come down.

You'll hear about those and so we do feel confident that we will continue to show sequential margin improvement going forward and we're very much living our mission of creating value from sorbent minerals. So I don't want to steal too much of her thunder so I'll turn it over to Susan to walk us through the financials. It's looking very similar.

And so we do feel confident that we will continue to show sequential margin improvement going forward and and we're very much living our mission of creating value from sorbent minerals. So I don't want to steal too much of her thunder. So I'll turn it over to Susan to walk us through the financials. Thank you, Dan.

As a reminder from our last quarterly call, our investors have asked us to reserve more of the time on this investor call for questions and to spend less of the call on formal comments. So we understand that you've read the materials, or we'll assume that, that we published, so I'll just make a few brief comments on the quarter. First of all, as Dan highlighted, net sales of $102 million represent an all-time record of workings, due to the lack of naval and protected aircraft dot com. fold.

period last year, and the pricing increase was offset by a 2% decrease in volume, primarily attributable to low margin products in our consumer cat litter business.

The strong year-over-year performance and pricing drove a significant 48% improvement in gross margin dollars.

That being said, and as Dan pointed out in his opening comments, our gross margin percent of 22.6 remains flat with the first quarter of fiscal 2023, so we still have some work to do in pricing in order to cover our costs in return to pre-pandemic gross margin levels. In the quarter, we booked a one-time...

who have in-depth knowledge around this matter.

But to go back, in 1996, OilDry began operating a landfill at our O'Clockney, Georgia plant in order to dispose of waste generated at the plant to avoid using public landfills.

This waste is primarily unusable clay discarded during processing along with some packaging and lumber.

This is actually the only landfill that the company operates.

In 2018, our regular monitoring and permit renewal activity identified that the landfill exceeded its permitted expense in height and area.

We self-identified this issue and reported it to the Georgia Environmental Protection Division.

A task force made up of oil dry leaders was created with a directive to find viable sales outlets for this waste material. However, this met with little success.

Fast forward to September 14, 2022, the Georgia Environmental Protection Division sent a letter to oil dry, noting that the landfill was overfilled and that oil dry was being required to provide a work plan to relocate the overflow overfilled in the current cells within the permitted landfill boundaries.

The oil dry team engaged outside consultants to advise on the preparation of a response to the Georgia Environmental Protection Division and to develop viable plans for modification of the landfill.

In the second quarter, oil dry determined its only viable option was to begin excavating new landfill cells within the permitted extents and to relocate the overfill into those new cells. This plan is expected to take up to two years.

and is currently estimated to cost two and a half million dollars before tax.

or $1,977,000 net of tax, and that is the amount that was booked in the quarter.

So those being the two most notable results, the strong pricing and the one-time accrual in our very strong quarter, with that, Dan, I'll turn it back over to you.

Great, thank you. And Leslie, let's go through the questions. We appreciate it. We have a lot of good questions come in and we'll cover as many of them as we can.

Great. For those of you, please submit your questions on the webcast using the Ask a Question field and click submit. So we have a few in the queue already. The first one comes from Brad Evans at Heartland Funds. He says, I'm hearing from multiple players that private label is taking share from branded players across categories based on widening price gaps and struggling consumer finances.

What are you seeing on private label demand and how that might be helping or hurting your branded product shelf space with your retail partners? Chris, do you want to address that?

Sure, thanks Leslie and thanks Brad and Brad you're hearing right.

That is, I think, a broader trend in fast-moving consumer goods and definitely holds true in litter as well from a total category perspective. We've been asked this question in different forms probably over the last three quarters.

The answer really remains the same, and I'll talk about it from a category perspective first, and then how it impacts us at Oil Dry in our consumer litter business. Really, we're seeing, again, you're right, we're seeing a bifurcation in the market where private label and value brands...

are gaining share and by bifurcation, I also mean the upper end of the market is gaining share as well. So, Crystal alternatives are doing very well as well. Getting squeezed in the middle is really, and we saw it.

probably most significantly in this last quarter, private label gain share, well ahead of the big three consumer brands in the category. I would also note, and maybe a new trend consistent with price value, the course segments or the non-scoopable segment.

which has been on a slow decline in favor of scooper bulls and alternatives over many, many, many years, actually showed a modest uptick relative to scoop. So actually, the segment gained a slight amount of share over the last quarter. So.

Lots of signs pointing to the consumer in the face of inflation being very price value sensitive and cash outlay sensitive. For us, the question may have been framed a little bit as, hey, could that be hurting you? The short answer is no, it's not. Thank you for the answer. OK.

So it's not from a standpoint of value brands are also benefiting along with private label. And it's not from the perspective of we still have a decent size business and course. And finally, it's also not hurting us and in fact helping us from the perspective of you've got a strong and growing and premium.

private label lightweight business that we feel very good about. And it is experiencing tailwinds just as the rest of private label is in the segment. So across the board these trends are providing, I call them modest to solid tailwinds that we don't see letting up. Back to you, Leslie.

Great, thank you. Okay, the next question comes from Robert Smith from the Center for Performance Investing. I'm actually going to combine two of his questions. Are you capable of reaching $40 million in revenues for Amlan this fiscal year? And what are the parameters for pricing Amlan products?

And then his second submission was, what is the recent close target range for Amlan over the next several years? Dan, do you want to take that?

Sure. So the blunt answer is no, we're not going to make 40 million this year. At the midway point, you know, we're up a good 30%. We feel we'll finish the year up about 33%. And, you know, last year, we did about 21 million, we think we can do about 28 million. Will our running rate be in the 30?

of a significant value to our customer as they use our products to do all sorts of beneficial things, live birth rate and you know obviously less mortality, weight gain, all the different metrics that they use and then we try and share in that value. Regarding going farther out, you know.

Bob, your guess would be as good as mine at this point. It's so dependent. You know, it's like I've said all along, I'm amazed that we are hitting some singles here or doubles being up 33%, but it's pretty much a business of grand slams or strikeouts. And...

We're still in the testing phase at a lot of major customers. We're getting a lot of activity. We had a great show in Atlanta. I'm hearing feedback. We're having a great show in Bangkok. So we are still very bullish on it. And in the meantime, all of our other businesses are also doing well. So it's sort of a good time to be oil dry. Great, thank you. The next question comes from Ethan Star, a private investor. And he...

and are continuing to invest in added capacity in front of the Amlin growth.

A large appropriation was made in the prior fiscal year 22 and in fiscal 23 to add capacity in at least one of our facilities for Amlin.

Approximately two-thirds of that work is complete. The remaining third will take place in front of the anticipated Amlin growth curve. Timing is to be determined. We would prefer for a number of reasons to not devote the details of the size of the capital allocation and specifics.

the capacity that is added, but I can assure you you have a very well put together plan to have capacity in front of the animal growth. Great, thanks Aaron. The next question is from Eric Sinemand from Palm Valley Capital and he asks...

There was a time when oil dry hedged half of its natural gas use. Given the sharp decline in natural gas prices, has there been any consideration of reimplementing the natural gas hedging program? Aaron, do you want to take that one also? Yeah, Eric, that's a great question. I'll start with saying yes, oil dry has reenacted the purchase of buying natural gas forward. I do want to speak to the word hedge that's inverting your question.

We don't think of it as a means to beat the market. We are purchasing natural gas in a very conservative and algorithmic way to average price over time. It provides our businesses better visibility to allow for pricing decisions and takes volatility out of the cost structure.

Our purchase strategy will have no more than 40% of the court required volume any given month that's bought in a mechanism that has gas secured forward.

Great.

Okay, thank you. The next question is from Bill Patterson, individual investor, and he asks how much stock has been repurchased by the company year-to-date and how much left under authorization. Susan?

Yeah sure, hey Bill thanks for the question. We've actually made no open market share repurchases year-to-date however we have repurchased 7,493 shares at a cost of 225,000 that were surrendered by employees to pay taxes related to respect.

restricted staff awards. So that's the only activity we've had in that category. As far as what's left outstanding, we have authorization to repurchase 429,033 shares left under our current authorizations.

Great, thank you. The next question is from Ethan Star. Recently there's been an increase in expenses to support strategic initiatives, including money spent on outside services. Could you please discuss these strategic initiatives and how they will make a difference? Dan, do you want to talk about some of the B2B? Yeah.

Yep, I'll take the B2B and then I'll turn it over to Chris for the retail and wholesale and as I alluded to And one of my answers, you know, it is a good time to be oil dry. We have we have winning strategies in each of our major business units And so you know about Amlan and it is winning. It is growing. We're continuing to attract

successful and we're excited about the impact he's going to have on our business south of the border and all the way south through Latin and Central and South America. And so our strategies are working in Amlin, we're continuing to leverage our clay as our unique sustainable competitive advantage and it's what gives us traceability and quality all the way to the mine.

Then over in our next largest B2B business, it's in the fluids purification side, and the trend towards renewable diesel is great for us, and specifically it's in our backyard. A lot of new plants opening up in the United States, and they use our clay to remove trace metals.

And the beauty of it is they're buying oil that's already been refined many times by our clay to remove other things. And then when they get the oil, they then need to use another one of our products as a final polishing step. And so that strategy is working very well. The ag business is continuing to grow our you know,

specifically tailored spherical granules, our verge granules, which has been a big investment over the years. We are basically sold out and putting in more capacity there. And that's that's all a very much in line with creating value from sorbents minerals. So our strategies are working on B2B. And we've got some exciting strategies over on the consumer side as well that I'll let Chris talk about.

And I think we highlighted these and put a pretty good spotlight on them in the shareholder meeting, our annual meeting last time around. We continue to be extremely excited about the lightweight segment of the cat litter category and what our unique mineral does within that category. So thanks for joining us today at the

and the strong performance that drives within the category. But we really see it as our role to do everything we can to ignite the lightweight segment. We've talked this before, it's just below 20% of the overall scoopable segment. But if you look up to Canada, it's well above.

50% now and the opportunity to move the US in that direction is obviously enormous to oil drive. It's enormous from an environmental benefit. You take upwards of 30,000 truckloads a year off the roads in the US. So we're doing it.

a number of things, really, you know, what I think of as kind of a 360 degree consumer approach to get there in the short term. And you'll see this over the next, over the back half of the year, we're totally focusing on our consumer demand spend.

on the lightweight segment, really shifting from previously where we focused on litter for good. That's probably the closest and most tangible thing that you'll be able to see play out in the marketplace over the coming months through the end of the fiscal year and beyond.

In addition to that, we're extremely focused on, and Dan says it well, if the product performed as well as heavyweight, why wouldn't everybody, who's going to choose heavyweight? Go to WannaLug, 50% more weight upstairs of their apartment building.

you know, really nobody. Our product performs well, can it perform better? Yes, and we're extremely focused in our IC against that product performance improvement. And candidly, you know, we'd be, you know, under, and here I'll get a little more veiled, but we would be interested in helping.

other players in the category ignite lightweight as well. So, you know, through selling innovation.

Now that clearly is further out. So a ton of effort focused on growing lightweight and sort of pun intended, we do see what's happened in the Canadian market as a bit of our North Star.

Great, thanks Chris. So we have two remaining questions in the queue, but they are really best answered by Wade Roby, our president of Amlan International, and as we mentioned before, he is not on the call this quarter. So we're going to save those for next quarter when he is in attendance. And Dan, I'm just going to turn it back to you for any closing remarks.

Great, well thank you and thanks to the Oil Dry team and for our loyal shareholders. It was a very good quarter. We believe we have a lot of positive momentum heading into the third and then finally into the fourth quarters of this fiscal year. And as always, we look to the long term, so we are making investments that may or may not pay off this year.

but we're confident they will pay out in the long run. And we're benefiting this year from investments that were made years ago that are starting to come to fruition. So thank you for your patience and...

I think you know we've got the what the next board meeting is in March, but then in the June board meeting is when we will discuss any kind of dividend action but we're certainly proud of our record of increased dividends and I'm sure dividend increase will be a hot topic of conversation at our June meeting so

Thank you for your support, and we will talk to you again in about three months. This concludes today's conference call. Thank you for participating. You may now disconnect.