Q1 2024 Oil-Dri Corp of America Earnings Call
Costs on your screen under meeting materials, you will find the meeting agenda rules of contact list of stockholders of record and oil drives proxy statement and annual report.
During the meeting today, we will be covering the election of directors and four other proposals next will be the business presentations and financial review followed by time for Q&A.
We ask that used to meet your questions online under the ask a question field on your screen only stockholders of record are able to ask questions. During the meeting stockholders will also be able to vote online by clicking the vote here button on your screen now.
Now it is my pleasure to introduce Lora sealant, our chief legal officer, and Vice President and General manager of the consumer products Division. She will conduct the formal portion of today's meeting.
Lora sealant: Good morning, ladies and gentlemen, I now call to order. The 2023 annual meeting of stockholders of oil <unk> Corporation of America to conduct the formal business set forth in the notice of meeting and proxy statement.
Lora sealant: One thing on October 32023, a notice regarding the availability of proxy materials or a copy of the proxy materials was mailed to.
Lora sealant: All oil dry stockholders of record as of the close of business on October 16, 2023, which is the record date fixed by oil drives board of directors for the determination of stockholders entitled to notice of and to vote at this meeting.
Lora sealant: Broadridge Financial Solutions, Inc has delivered an affidavit confirming the foregoing.
Lora sealant: Oil dry has appointed Peter Sablich of BT, Hamburg LLC to serve as the inspector of elections for this meeting he is present on the webcast and has taken the oath of office.
Lora sealant: As of October.
Lora sealant: <unk> 2023, the record date for this meeting there were $5 million 108734 shares of oil dry common stock and $2 million 170415 shares of oil drive class B stock outstanding.
Lora sealant: Holders of our common stock are entitled to vote, one one vote per share and holders of our class B stock entitled to 10 votes per share and generally vote together without regard to class.
Lora sealant: A quorum is present at this meeting holders of a majority of our common stock and class feedstock Outstandings are present in person or represented by proxy.
Lora sealant: The number of votes necessary to constitute a quorum at this meeting is $13 million and 416505.
Lora sealant: Mr. Sablich has informed me that there are more than such number of votes represented meeting. Therefore, I declare there is a quorum present for purposes of transacting business.
Lora sealant: Now I will present, the matters to be voted upon if any stockholder would like to make a comment during 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.
Lora sealant: As described in the proxy statement. The first item of business is the election of nine directors.
Lora sealant: The proxy statement lifted oil drives nominees for directors each of whom currently serves as a director of oil dry.
Lora sealant: Those nominees are.
Lora sealant: Daniel S Jaffe, Ellen Blair Cube, Paul M Hinesley, Michael Nemeroff.
Lora sealant: George C Road, Amy L. Ryan.
Speaker Change: <unk> J Shmita, Alan H, Sealy and Lawrence E washout.
Speaker Change: The second item of business is the ratification of the appointment of grant Thornton LLP as oil drives independent auditor for the fiscal year ending July 31 2024.
Speaker Change: 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 2024, and has directed that the appointment be submitted for ratification by the stockholders at this meeting.
Speaker Change: The third item of business is the approval on an advisory basis of the compensation of the named executive officers as described in the proxy statement.
Speaker Change: The fourth item of business is to select on an advisory basis, the frequency for which future advisory votes will be held on the compensation of the named executive officers described in the proxy statement.
Speaker Change: Stockholders may choose whether they prefer we speak about every one two or three years or they may have seen from voting.
Speaker Change: The fifth item of business is the approval of the amended and restated oil drag Corporation of America 2006, long term incentive plans, which increases the number of shares of stock authorized for issuance thereunder and increases the maximum individual branch size among other modifications.
Speaker Change: At this time, we will check for and review any comments on the proposals that have been submitted.
Speaker Change: It looks like no comments have been received so we will proceed with opening the pool.
Speaker Change: It is 935 a M on December 13, 2023, and the polls are now open.
Speaker Change: 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.
Speaker Change: Stockholders, who have sent in proxies or voted via telephone or Internet and who do not wish to change their votes do not need to take any further action.
Speaker Change: While we allow some time for stockholders, who haven't already done so to complete their voting I'd like to remind you that the business presentations and any other commentary by any other 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 with.
Speaker Change: 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 23.
Speaker Change: We urge you to review and consider those risk factors carefully in evaluating the company's comments and in evaluating any investment in oil dry stock.
Speaker Change: Copies of our SEC filings are available through the company or online.
Speaker Change: Alright, one last minute to finish voting.
Speaker Change: Okay. At this point the point the polls are closed and I will now report the preliminary results of the voting will be reporting the final vote results in a form 8-K to be filed within four business days.
Speaker Change: As described in the proxy statement, a director may only be elected by orality of votes cast.
Speaker Change: The nine nominees who received the largest number of votes will be elected.
Speaker Change: We have been informed by the inspector of election that the preliminary vote report shows that the nine candidates nominated by all dry received the largest number of votes.
Speaker Change: Regarding the second item of business and affirmative majority of votes represented at this meeting is necessary for ratification of the appointment of grant Thornton as oil drives independent auditor for the fiscal year ending July 31 2024.
Speaker Change: We have been informed by the inspector of elections that the preliminary vote report shows that such ratification receive more than a majority of the votes represented at this meeting.
Speaker Change: Regarding the third item of business and the affirmative majority of votes represented at this meeting as needed to improve on an advisory and nonbinding basis the.
Speaker Change: Executive compensation of the named executive officers as disclosed in the proxy statement.
Speaker Change: We have been informed by the inspector of election that the preliminary vote report shows that such approval received more than a majority of the votes represented at the meeting.
Speaker Change: On the fourth item of business, which is the non advisory nonbinding advisory vote on the frequency of future advisory votes on executive compensation. The frequencies every one two or three years, receiving the greatest number of votes cast will be considered to be the recommendation of the stockholders.
Speaker Change: We have been informed by the inspector of election that the preliminary vote report shows that three years received the greatest number of votes cast at this meeting.
Regarding the fifth and final item of business and affirmative majority of votes represented at this meeting is needed to approve the amended and restated oil <unk> Corporation of America 2006 long term incentive plan we have.
Speaker Change: Been informed by the inspector of election that the preliminary vote shows that such approval received more than a majority of the votes represented at this meeting.
Speaker Change: This completes the business to be conducted at this meeting there being no further business to come before the meeting the 2023 annual meeting of stockholders of oil Dry Corporation of America is now adjourned I am now happy to introduce Dan Jaffee, Our President and Chief Executive Officer for our business presidents presentations and financial rigor.
Speaker Change: Hugh.
Hugh: Thank you Laura and welcome everyone to the business section we've got.
Hugh: Great wine a presentation for you today fiscal 'twenty three was our third year in business and it was our best.
Hugh: In fiscal 'twenty four it will be our 84th and were off to a great start and you'll hear all about that coming up.
Hugh: Memorial Day is truly an investment in our people and I cannot overemphasize, how great. Our team is and how appreciative I am for their work I mean, it's the most talented most cohesive most positive team.
Hugh: Ever seen in business and I think most of our teammates feel the exact same way and that's a direct correlation to the results youre seeing it.
Hugh: Coincidence, so I would like to highlight a few of the teammates who made the biggest contribution no I'm kidding. It's really people that were promoted during the year everybody made a big contribution which is why we go out and want a teammate because raw on the same team, but this just highlights some of the people that during the year were promoted took on new challenges and are adding value.
Hugh: In a new area.
Hugh: First and foremost Laura Sheila who as you saw it has the longest title in corporate America.
Legal officer, Vice President and general manager of the consumer products Division and all around great person.
Speaker Change: We currently have oiled Rajiv oversight oversees our legal affairs, but also.
Grabbing the reins of the largest division, which is the cat litter business the consumer products Division.
Speaker Change: You can see she comes to us with a wealth of background and experience, but aside from being a lawyer. She was actually an accounting major back at Notre Dame and so it clearly has a strong business background. She has been with US now 10 years has continued to get promoted and as Michael Nemeroff, One of our board of Directors says when she was a better price.
It's absolutely one of the all time best Associates, So Laura congratulations on your promotion and thank you for taking on new challenges.
Her move up created room for Tony Parker to jump up into the role of Vice President of legal.
Speaker Change: He will oversee the entire well most of the legal department I think about including Nobody's going to corporate matters intellectual property litigation and employment issues are received his J D from northern Illinois.
You can see he's been with us five years.
Speaker Change: And was a chicken scholar went back in college.
Speaker Change: Impressive and in fact, it's got me to where I know support them every year, because it's a it's really a cool thing congratulations to Tony for the great career, He's put together and thank him for taking on new challenges going forward. We're in great shape in the legal area and last but not least Jacobs Smith rejoined the team.
Speaker Change: And he is our vice president of finance and Treasury and he.
Speaker Change: Has oversight over all of our Treasury corporate and divisional finance and accounts receivable D. Once he's a double Indiana double Hoosier undergrad finance and accounting with an MBA also from Indiana, a total experience with US is five years before that he was with Pepsi. So please recognize and congratulate Jacob.
Speaker Change: Myth on his new role.
Speaker Change: I don't want to steal any of Susan credits Thunder, especially since last time I had to cover her entire presentation. So I'm going to turn it over to Susan for a financial review of the.
Susan Thunder: The fiscal year and the first quarter.
Susan Thunder: Thank you Dan about open Mic night too.
[laughter], it's truly a privilege to be here today to share some highlights of our fiscal year 'twenty, three which was an all time record year for oil dry as well as to share some highlights for the first quarter of fiscal 'twenty, four where we continue to see momentum as the team and Dan mentioned, it's a really strong team delivered.
Double digit net sales growth across the board and doubled net income over the first quarter of fiscal 'twenty three.
Susan Thunder: Yeah.
As I perceive through the slides I will be sharing a look back at the past five years of performance trends as well as focusing on our first quarter results.
Susan Thunder: As you're reviewing the trends you will note that the global pandemic had a significant impact not on our top line or on our sales, but on oil drives earnings as the costs associated with the disruptions in the global supply chain. It was faster than we were able to pass on in pricing.
Susan Thunder: You will see that not only have we recovered, but we emerged stronger than ever spurred by a tailwind of growth in high value products, such as lightweight cat litter specialty products, which include edible oils and renewable diesel diesel and animal health and nutrition products.
That recovery and growth resulted from our keen focus on our growth strategies.
Susan Thunder: During tough economic times that were incurred during the pandemic.
Under Dan's guidance, our team stayed focused on our long term goals will successfully navigating the short term challenges presented by the supply chain and we are benefiting from that long term focus today.
Susan Thunder: No I don't want to steal their thunder, even though I'm going to just a little but I will share the highlights in a few minutes, Chris Lampkin will discuss the successful launch of our cat's pride anti bacterial clumping litter.
Susan Thunder: Dr. <unk> will share some of the highlights that drove the double digit growth in our Amlin animal health products.
Speaker Change: And Bruce Patsy joins US this morning to brief us on the renewable diesel market and the opportunities that presents to oil dry.
Speaker Change: Next I'll move through the financial section of this morning's presentation quickly highlighting some key events and performance metrics, primarily focusing on the first quarter of fiscal 'twenty four.
Speaker Change: But first lets dive a little deeper and look at where the growth is coming from.
Speaker Change: You will note that all five of our principal product groups have turned in double digit compound annual growth rates over the past three years.
Speaker Change: Inside the retail and wholesale segments, we achieved cat litter growth of over 13% and.
Speaker Change: In industrial and supports growth of over 17%.
Speaker Change: And within our higher margin.
Speaker Change: The business segment.
Speaker Change: Compound annual growth rates of 24%.
Speaker Change: Our agricultural and horticultural products.
Speaker Change: Growth of over 21% for bleaching clay and fluids purification products.
Speaker Change: And 15, 5% growth for animal health and nutrition products in other words, we are firing on all cylinders and growing significantly in all product groups.
Speaker Change: We've experienced five years of sales growth even throughout the pandemic.
Speaker Change: And as people adopted animals as they were working from home and that continues to grow into fiscal 'twenty four and you see the nice growth to $111 million a record for sales in our first quarter of 2024.
Speaker Change: When we look at tons sold.
Speaker Change: We see.
Speaker Change: The impact in fiscal 'twenty three of a specific decision we made to shed some low to no margin business inside our consumer division.
And that actually helps with profitability and as we look at Q1 here in fiscal 'twenty four youll see that we are actually below the prior year in terms of tons sold and we were impacted there.
Speaker Change: A very large customer that.
Speaker Change: <unk> had an outage as a result of a ransomware attack that customer is back online in the second quarter and pretty much back to business as usual.
Speaker Change: If I look at net sales per ton you can see the impact of the pricing initiatives that were obviously very significant and are help driving our profitability today and we continue to see the benefit of that into Q1, where our net sales per tonne.
<unk> risen to $563 per ton a remarkable story and excellent work on the part of our sales teams.
Speaker Change: If I go to gross profit per ton.
Speaker Change: When I said in my opening comments coming through the pandemic the impact of the increasing cost to supply, but that we've recouped a lot of that today find ourselves at $156 per ton.
Speaker Change: Record.
Speaker Change: We still have a little more work to do as our gross margin percent.
Speaker Change: Is timing back up to 27, 8%, but not quite at the levels. It was prior to 2019. So the teams are focused on on profitability focused on serving the right business and we see continue to see the benefit of that focus.
Speaker Change: If I look at net income per ton I would just point out that in fiscal 'twenty. Three we had a nonrecurring charge related to the termination of our pension defined benefit pension plan.
Speaker Change: And that was $4 6 million net of taxes.
Speaker Change: That actually positions us nicely, because we no longer have the volatility.
Speaker Change: Of a defined benefit plan with respect to either the pension liability or actually the related assets that go along with that.
So that actually makes our debt capacity even.
Speaker Change: Better as we look forward and think about what we might want to do in the area of acquisitions.
Speaker Change: And again that net income per ton in Q1 rising to $54 more than double what we saw in the same quarter last year.
Speaker Change: Earnings per basic common share you see the us strong.
Speaker Change: The strong benefit of the first quarter here again more than double what we posted in the first quarter of last year and $1 61 per share.
Speaker Change: And B, our continued commitment to our dividend.
Speaker Change: <unk> 29 per share here in Q1 versus 28 last year, and 20 years of continuously increasing dividends or oil dry.
Speaker Change: And returning to our shareholders.
Speaker Change: If we look at our significant cash outlays and we'll be hearing from Aaron Christiansen pretty soon our VP of operations.
Speaker Change: We are making some very specific investments both in growth and in replacing aged assets inside our manufacturing and mining facilities.
See that's the biggest piece of the pie and it's a priority for us as we are performing well and reinvesting in the business. We also see a significant investment in working capital in fiscal 'twenty three as the business is growing and actually growing outside the U S.
Speaker Change: You need to build our working capital.
Speaker Change: Specifically inventories and receivables in order to support our customers.
Speaker Change: That's debt, that's a really nice position to be as far as net debt, meaning we have a lot of dry capacity and a lot of debt capacity available to us moving forward to pursue strategic.
T J initiative.
Speaker Change: And here's the one that I think making everybody smiled these days.
Speaker Change: That is are our share price.
Speaker Change: And the stock obviously after we released earnings the other day was received favorably and we saw at that point in time as well.
Speaker Change: Free cash flow is continues to be.
Good and we will focus on cash and move on from there.
Speaker Change: And then I'll just conclude with a couple of highlights here.
Speaker Change: We are going to hear about our innovative products youre going to hear a commitment to grow the business using the cash that we're generating in order to not only invest in growth assets.
Speaker Change: But also potentially have some dry powder for any potential strategic acquisitions that may come along.
Speaker Change: There's also been a significant investment in alternatives and alternative energy and our past, California plants that I'm really excited about it's up it's operational early indications are that it'll be even more beneficial from a financial standpoint than we originally thought when we made the inverse.
Speaker Change: On booking at Erin and with that that's a good segue to turn this over to Aaron Christiansen, our VP of operations.
Speaker Change: Susan.
Susan Thunder: I'm really excited to have a chance again this year to talk to our shareholders from a brief minute.
Susan Thunder: Much like last year, I'm going to speak exclusively to the multiyear continued commitment and capital reinvestment in our business.
Minder and I shared a similar message a year ago oil drives continually looking for ways to invest in business continuity through the.
Susan Thunder: Reestablishment of our aging asset base looking for savings opportunities and growth opportunities. We also are continually looking for unique ways to invest in working conditions for our teammates our mineral reserves, which is the lifeblood of our business and our facilities themselves.
Speaker Change: Shown here is the past five years trend for capital reinvestment Susan alluded to this earlier.
Speaker Change: 23 was the highest year of capital expenditure and authorized history investing approximately $24 million in capital.
Speaker Change: Fiscal 'twenty, four and beyond our anticipated being at or above these levels, while drives committed in the years ahead as Susan alluded to to reinvesting in our business for our consumers.
Speaker Change: And our shareholders.
Speaker Change: Okay.
Speaker Change: I'm going to talk through three specific investments that have been made and completed or will be made in the year ahead to give our shareholders. Some insight into the array of things oil dry is spending capital into.
Speaker Change: Susan Susan just alluded to this one.
Speaker Change: We've invested in a series of alternative energy technologies, and our task, California client I've had a chance to talk with us multiple times over the past quarterly and annual meetings and has been a long journey to get to the point. We are now it is now fully operational its a combination of OLED lighting some power monitoring.
Speaker Change: <unk> and the two primary solutions, which are a combination of PV solar and natural gas fired turbine generators that use natural gas to generate our own one one christy.
Speaker Change: These technologies do not make us energy independence, but do deliver a very large percentage of both instantaneous demand and monthly usage. We are really excited to bring them to life and as Susan alluded to early indications just in the past months are extraordinarily encouraging.
Speaker Change: We will continue to look for places that we can reapply similar technology in our other facilities as it makes good business sense.
Speaker Change: The next investment I'd like to talk about.
Speaker Change: As an investment in our agricultural products and capacity.
Speaker Change: Over the last number of years, all dry has made capacity investments in our spherical more premium verge products. This is an investment being made in our more traditional angular export products.
Speaker Change: The capital has been appropriate detailed engineering is underway and some time in late fiscal 'twenty more or early fiscal 'twenty five capacity will come online.
The uniqueness in this investment isn't the bottlenecks constrained production operations in one of our plants.
Speaker Change: <unk> is a unique way to add capacity for growth deliver some cost compression and rehabilitate old technology and an aging part of one of our primary producing plants, we're very excited.
Speaker Change: To be adding capacity to support this piece of business.
Speaker Change: Okay.
Speaker Change: The last series of investments I'll talk too, which is a preview of what Bruce will be speaking to later today.
Speaker Change: A series of investments being made in our fluids purification.
Speaker Change: <unk> largely to support renewable diesel.
Speaker Change: Also appropriated and well along the way, we're making investments to debottleneck. The core part of our milling operation, but also add rail infrastructure to be able to move product more effectively and efficiently in and out of the plant.
Speaker Change: Rail infrastructure investments come online this coming February soon.
Speaker Change: And sometimes like we no later than the fourth quarter of this year capacity will come online to support more sales or top and bottomline growth.
Speaker Change: We are very excited to deliver growth opportunities for our reaching reaching earth and fluids purification business.
Speaker Change: With that being said I'd like to hand, the baton to our group Vice president of retail and wholesale Chris Lambson.
Chris Lambson: Thanks, Aaron and good morning, everyone. Good to be back with you again this year and talking about exactly what we talked about last year relative to the lightweight business and hopefully you feel good about that hopefully that demonstrate strategic consistency last year. I think we were talking it was more of a tail than a show.
Chris Lambson: We were really talking to you about some systems shifts and strategic plans to further accelerate our growth in lightweight this year will be more show themselves.
Chris Lambson: Activated.
Chris Lambson: A number of those plans and were excited.
Chris Lambson: Give you a better feel for today by.
Chris Lambson: Sure.
Chris Lambson: We started I think over the last several years with a few slides just ground you in what's been very solid growth across our litter business. So this gives you a picture of our domestic cat litter business as a whole.
Chris Lambson: The strong growth just over.
Chris Lambson: Just over 10% in personal loans.
Chris Lambson: And I think the consistency of the growth.
Chris Lambson: With partners in Q2.
Chris Lambson: Then shifting to our lightweight litter business.
You saw an 11% compounded growth on the previous slide here, you see 17% growth.
Chris Lambson: And if you pay particular attention to this last year.
Chris Lambson: First I'm wondering why some of our long term shareholders that can go out and buy $100000 more in litter.
Chris Lambson: So we could have could hit triple digits, there and gotten to a $100 million help a guy out but.
Chris Lambson: In all seriousness.
Chris Lambson: About 30% growth year over year on the lightweight business.
Chris Lambson: Which speaks to I think some of that strategic consistency now.
Chris Lambson: It should come as no surprise, given that kind of growth given that 30% growth that we're growing share within the lightweight segment, we actually grew share overall within cat litter over the past year. So the first two bars really first two charts really.
Speaker Change: Isn't that so.
Speaker Change: Growth.
Speaker Change: An overall share of lightweight.
Speaker Change: And then significant growth in private label lightweight approaching about 80%.
Speaker Change: Well, we always need something to work on.
Speaker Change: Which is.
Speaker Change: We really do believe.
Speaker Change: And in fact, either dollar shares worthy unit.
Speaker Change: Share leader.
Speaker Change: And lightweight litter, it's incumbent upon us to grow the lightweight segment really what most of the revenue presentation about and I know my boss is pretty pretty passionate about this topic.
Speaker Change: Dan.
Dan Jaffee: Yeah, because what the market is saying is that 15% of the category has moved ish to lightweight now we know that over half the category in Canada has moved to lightweight and we'd actually don't believe that Canadian cats or Canadian consumers are that much different from their U S. Counterparts. So there is some disconnect there and we can talk about that and Chris.
<unk> talked about it but if you just look mathematically and say, okay. So a 15% like lightweight does that mean that 85% of consumers all things being equal and we know the consumer in cat litter tends to be women 25 to 54 years of age so youre, saying women in general pursue.
Dan Jaffee: Refer a product thats two to three times heavier.
Dan Jaffee: And I think the operative word is all things being equal. The fact is it's not equal there is we're able to get a better value. We have competitors that have decided to charge, 30% to 40% more for library well, that's a big hit on an annual budget. So there are consumers that says for that Delta I'm, taking home a heavier product we have competitors.
Dan Jaffee: Who have launched somewhat inferior products or they're good products, but they're really not that light. So there really isn't all things being equal the consumer doesn't have that and so we have launched projects Utopia and thats. Our goal. Our goal is to give the consumer what they want with the efficacy we want at a price point that they believe there is real value.
Dan Jaffee: And at that point.
Dan Jaffee: We believe vouchers lightweight so I'll turn it back to you because if you can tell I'm very passionate about this because I don't believe that all things being equal consumers prefer three times, the weight and by the way the carbon footprint is three times worse, because we weigh out trucks. So if we can just the consumer what they want it'll actually help the environment in a big way.
Dan Jaffee: So really a perfect setup.
Dan Jaffee: The rest of the presentation is really how do we further stimulate growth in NII.
Dan Jaffee: 60, plus up in Canada.
Dan Jaffee: How do we transform the U S category.
Dan Jaffee: This is a.
Dan Jaffee: Your destiny.
Speaker Change: Thank you Joe.
Olivia.
Speaker Change: Yes.
Speaker Change: So how do we get there.
Speaker Change: Clearly a journey, it's one that I think really the top box there as the top box for a reason it's going to take.
Speaker Change: Significant innovation, Dan gave you our internal project name.
Speaker Change: Which is which is project utopia.
Speaker Change: It is sort of what it implies it is all about removing the barriers that Dan spoke to be the value barriers.
Speaker Change: We control be them be them quality and performance barriers.
Speaker Change: But we have exemplified the.
Speaker Change: We.
Speaker Change: Smaller player on the category can bring breakthrough innovation, we did it in 2011 with lightweight litter.
Speaker Change: We believe this year we launched.
Speaker Change: Within the last quarter very end of last fiscal year significant innovation, our customers are telling us that significant innovation in the first and only EPA approved anti bacterial catheter will talk more about that.
Speaker Change: The second.
Speaker Change: Piece of the platform. If you will is really making sure lightweight.
Speaker Change: And the benefits of lightweight are at the center of our consumer message. We'll show you some of that here in a minute and then finally in with I think a lot of consistency.
Dan Jaffee: A lot of the same benefits as Dan just spoke of.
Dan Jaffee: Round, the carbon footprint and the ability to handle the ability to fill trucks in a more effective way and growing consumer need for lightweight.
Dan Jaffee: All of the center of our message with our retailers.
Dan Jaffee: They're listening in.
Dan Jaffee: Candidly driving the lightweight business.
Dan Jaffee: With us so those are really the three platforms. All three of those we talked about last year, what we're going to show you on the next couple of slides.
Dan Jaffee: So first are going a little bit deeper on the new anti bacterial clumping litter. So.
Dan Jaffee: Environmental Protection agency that actually approves or gives us the right to say that your product your surface cleaner.
Dan Jaffee: Is either anti bacterial load.
Dan Jaffee: They put you through appropriately a rigorous process to be able to fund that.
Dan Jaffee: Our year to two years with the federal government and then another year to two years right.
Dan Jaffee: One takeaway there is.
Dan Jaffee: Scrutiny got work right. The other takeaway is we've got a we've got a heck of a multiple parameters is.
Dan Jaffee: Is there a consumer need you bet I mean, there is two real key consumer drivers in this category in the soup category in particular is clump strengths.
Dan Jaffee: But really odor control and they go one two depending on when you run the consumer study right.
Dan Jaffee: So talk about order control for a long time and controlling odor, causing bacteria. This is the first and only product that can say that we actually kill those order, causing bacteria and I'll tell you. The response from customers has been fantastic.
Speaker Change: Really what you are looking at us as a good look at.
Speaker Change: The customers are processing.
As immediately as they could have a couple of really large customers on this page that brought the product and even after their shelf change cycle. They were that enthused about it.
Really the prevailing word we got on this back from consumers. Thanks for bringing real innovation, thanks for bringing real product innovation and not just consumer noise right.
Speaker Change: Sure.
Speaker Change: Next piece and this is a again a bit of a bit of a shift for us.
Speaker Change: We've had a and continue to have a fantastic social good campaign called litter for good.
We donate.
Speaker Change: I would say a ton of product.
Speaker Change: Two shelters.
Speaker Change: That are very much in need and very much appreciate it and we.
Speaker Change: You've been talking about as it relates for our Cat's Pride brand litter for good for some time.
Speaker Change: We have shifted now to really talk about the lightweight the benefits of lightweight litter.
Speaker Change: And we're doing it across as you would expect a variety of media channels and three of those three areas three way.
Speaker Change: Some traditional television I'd tell you not much candidly.
Speaker Change: Digital television I'm going to give you a couple of examples here in a minute and share some media from that digital banner.
Speaker Change: Banner ads like you see pictured here and.
Speaker Change: And really this is that we're very active here in terms of measuring our rois and shifting media around but the real key is the messaging that we're driving in terms of lightweight litter because again, we are the share leader with them.
Speaker Change: From a unit perspective from a volume perspective with a lightweight we're not driving this message to it.
Speaker Change: So Nick if you wouldn't mind sharing the couple shots of media you can see our base in India and then our.
Speaker Change: Some of the media reporting our new anti bacterial detection.
Speaker Change: And our lives.
Speaker Change: Leighton yours.
Speaker Change: Cat's pride naturally lately performance just like heavyweight. Please ask a 40% later.
Speaker Change: Yes.
Speaker Change: We love them right back.
Speaker Change: Mike in your life.
Speaker Change: Okay.
The Chiller, Inc.
And now there Linda.
Speaker Change: <unk> home sanitary with the leader that kills 99, 9% of odor, causing bacteria.
Speaker Change: Curt Brian the only anti bacterial cat litter.
Speaker Change: Back to you Chris.
Speaker Change: Yeah.
Chris Lambson: Thanks, Nick.
Speaker Change: Sure.
Speaker Change: Finally, we will wrap up in.
Speaker Change: A little bit difficult to depict for you.
Speaker Change: Our sales sales folks.
Speaker Change: Selling with buyers.
Speaker Change: We talked about.
Speaker Change: What has been really extraordinary results here.
Speaker Change: In terms of in terms of distribution in particular, so as you look across our lightwave business in that share on the private label side, we cannot be that over 50% of all.
Speaker Change: Outlet individual doors El cat litter.
Speaker Change: Oil drive private label lightweight cat, which is which is fairly remarkable.
Speaker Change: And some of the doors that probably the majority of the doors that.
Speaker Change: Our actually doors that just don't sell priorities here.
Speaker Change: At least lightweight cat litter period.
Speaker Change: We've also really experienced over the last couple of years I think as we you've heard me talk before on calls about great progress relative to getting our price value relationship right, we've done that particularly well.
Speaker Change: In E Com and you can see that since 2021.
Speaker Change: Actually just a little more than doubled our share.
Speaker Change: On Amazon.
Speaker Change: And then finally.
Speaker Change: Really solid new distribution gains, particularly around private label.
Speaker Change: New doors.
Speaker Change: So it's a brand new outlets and then.
Speaker Change: It relates to the brand what we've seen and actually saw this question pop up.
Speaker Change: Approximately address it.
Speaker Change: Really the on the branded side.
Speaker Change: Been a story more of expanded distribution.
Where we already have distribution, particularly.
Speaker Change: Particularly behind the anti bacterial innovation, where almost all of those new doors for incremental distribution said differently, we didn't lose anything.
Speaker Change: Just game.
Speaker Change: Yes.
Speaker Change: So really just to wrap it up.
Speaker Change: This story begins with us innovating in this category back in 2011.
Speaker Change: Retailers responded to gain distribution.
Speaker Change: We level up on consumer messaging into the market and is driving strong rois that.
Dan Jaffee: That drives further distributions fuels further innovation that Dan alluded to.
Dan Jaffee: But we're yeah.
Dan Jaffee: We did drive true innovation around anti bacterial but we're focused over the long term on removing any and all of the areas for light weighting there.
Dan Jaffee: They are chasing that market.
Dan Jaffee: Hello.
Speaker Change: So with that I will turn it over to Bruce <unk>.
Speaker Change: We love the call Bruce Almighty Yep.
Speaker Change: Yes.
Speaker Change: Very funny.
Speaker Change: Thank you very much I appreciate it it's exciting to see all of the growth in your markets.
Speaker Change: I'm, a brisk pace, the vice president of food purification group and one of the items I'll be talking about a new offer new market opportunity as you've heard about renewable diesel.
Speaker Change: In this presentation.
Speaker Change: <unk>.
Speaker Change: Our our filtration unit, we sell the three main categories.
Speaker Change: So we sell them the vegetable oil business and we sell into jet fuel processing, where we're adding a small granule to cleanup jet fuel before it goes to the yard to be put in the plane and then lastly, we sell in the Biofuels market, which is both renewable and <unk>.
Speaker Change: Biodiesel.
Speaker Change: And we sell a couple of our new absorbent metal acts in metals at the end of this marketplace.
Speaker Change: Where we're seeing a lot of growth in our business.
Speaker Change: If you take a look over the last five years of our business, you'll find that in 'twenty fiscal 'twenty, two and 'twenty three we have seen significant growth in our business and a lot of that is tied to the renewable diesel business and also we picked up some new vegetable oil customers.
Speaker Change: Timeline as well.
Speaker Change: Which is very exciting for our business.
Speaker Change: What is renewable diesel renewable diesel as an advanced biofuel that derived from vegetable oils natural fats and greases.
Speaker Change: It burns cleaner than diesel regular oil diesel fuel from the ground and emits less carbon dioxide than petroleum diesel, which is a big driver and why this industry is really starting to growth above that.
Speaker Change: How is it different from biodiesel biodiesel has been around for a while a renewable diesel is chemically the same control as petroleum diesel and you can blend it in at a 100% right into diesel fuel. So that's driving a lot of oil companies that make mineral oil theyre putting in renewables.
Speaker Change: Plant next to these facilities and they are just bringing the oil and and mixing it together.
Speaker Change: Biodiesel is a chemically different then.
Speaker Change: Petroleum diesel and you can only blend that in and of 10 or 15%.
Speaker Change: <unk> seen at the pumps.
Speaker Change: For trucks in that so.
Speaker Change: So it's a difference.
Speaker Change: A different type of fuel.
Speaker Change: Metal acts and metals Z are the two products I mentioned for this market that we brought in and its a powder mineral and they put it into the oil and the slurry.
Speaker Change: Contact with these contaminants trying to remove and again the main thing thats trying to take out our trace metal calcium magnesium sodium and things like that that are in the oil as well as pull out organic and inorganic phosphorus.
Speaker Change: And why are they pulling these out of the oil and why do they need us in their processes because downstream when they convert the fat into diesel fuel and renewable diesel fuel.
Speaker Change: Catalyst is very expensive.
Speaker Change: Yes.
Speaker Change: Trace metals in class for us and actually reduced the life of the catalyst. So they try to remove these before the oil gets to that part of the process.
Speaker Change: Optimize production efficiencies so our products really do help in the production capacity of these plants because they allow the oil to go through the mineral very fast and much faster than a lot of our competitors and what does that mean, because when the clay is Larry it is a powder they take it out in a filter press.
Speaker Change: Clay builds on the screens of the filter press the oil is pushed through that clay.
Speaker Change: <unk> doesn't like the oil go through very easy exposed production arent clay allows.
Speaker Change: Oils Woods go through fast which helps.
Speaker Change: Big companies to produce a lot of oil.
Speaker Change: Here's a driver growth that you can see in this market. So by 2030, approximately theyre trying to get to seven 4 billion gallons of renewable diesel in the marketplace and today. They are right around $4 1 million to 1 billion gallons in this market. So you can see that there is a lot.
Speaker Change: Growth happening.
Speaker Change: There are going to have to happen in order to get to these volumes.
This industry.
Speaker Change: Benefits of renewable fuels.
Speaker Change: First there's government incentives.
Speaker Change: Just for an example in January one of 2025, it's going to.
Speaker Change: Approximately a $1 tax credit for every gallon of non aviation fuel produced I mean, that's very significant the amount of money that are going to these plants really help these companies to actually build the facilities. So.
Speaker Change: Is the government behind this industry, which is key.
Speaker Change: Reduction in Seo to guests so up to 80% is reducing greenhouse gas emissions. When you drop this fuel into the marketplace. So again, that's a big driver as everyone knows it to the concern with the warming of the planet. So anything we can do in that area will help and the big.
Speaker Change: Driver for this industry.
Speaker Change: Repurposing of existing refineries. So some of the refineries in the past have been shut down or reduced because of environmental reasons.
Speaker Change: Big oil companies can now actually put in these facilities that will.
Speaker Change: Be able to use the same land and some shared equipment to produce renewable diesel and then overall cleaner burning fuel.
Speaker Change: Theres, not any software or oxygen and.
Speaker Change: Different aromatics that are in this oil so that when a burns burns cleaner when youre talking about renewable diesel.
Speaker Change: As we look forward.
Speaker Change: The new renewable diesel plants are going to be coming on in 24 to 30. There are some already in the marketplace producing and that you can see that in the growth of our business, there's more coming on in the next six years.
Speaker Change: Continued growth in the vegetable oil market one to meet the needs of this renewable diesel industry, but also as we theres more and more people on the planet people have to eat and there is growth and the need for vegetable oil processing.
Speaker Change: Increased growth in our core market and what is our core market, while North America is our core market, that's where our plants located so this is really positive for the profitability of our business that we can sell competitively and make.
Speaker Change: Maximize our profits in our core market and then experienced sales team.
Speaker Change: Ive been general manager for 20 years in this business and most of the salespeople that are out there today are still the same people that were with me back in 2004, and we bring a lot of value to these refineries we know how to.
Speaker Change: Process. The oil we can help them reduce the amount of consumption of clay and improve their economics of their plan and then improvement of manufacturing Aaron talked about the infrastructure with the improved for railcar movement in our plants, where we've got railcars on order to meet the demands of this market and then.
Speaker Change: Increased capacity for billing so I think the future is very bright for our business and we really look forward to that.
Speaker Change: Rest of fiscal 'twenty four and beyond.
Speaker Change: With that.
Speaker Change: Im going to turn it over to Wade <unk>, who is the.
Wade <unk>: Current vice President of our agricultural Division and the President of Amlin International So take it away. Thank you Bruce and good morning, everyone. It's my privilege. This morning to talk to you about our Amlin International business.
Wade <unk>: Emlen is the animal nutrition and health business of oil Drive Corporation of America I'm going to start this morning, with an overview of our portfolio just to level set everyone and hope everyone understand how we go to market around the world.
Wade <unk>: We have a unique set of branded.
Wade <unk>: Branded items that we sell in North America. We launched these just a couple of years ago, which I'll show you on a on a subsequent graph, but we address this market with a number of different products that are designed to improve.
Wade <unk>: The productivity of animals to help them reach their their potential and really help the economics of production when.
Wade <unk>: When we look internationally, we have an opportunity to targeted very specific specific segments of the market. So we organize our products a little bit differently, and we brand them differently and promote them differently in the market. So under our deep disease prevention sector. We have a couple of new products, we've launched a product called neutral path that will discuss a little bit later.
Wade <unk>: In our product spotlight and also a product called <unk> <unk> or <unk> fusion, which is a natural and a cox video product that can work either individually or synergistically.
Wade <unk>: Bio shuttle program with other in our caucus videos, whether they be chemicals or.
Wade <unk>: Antibiotics or even in a Cox video vaccines. We also have products that target just general productivity or feed efficiency in animals, that's a very in or near Prime products and then lastly, our Cadillac products for Biotoxins control Calabrese and caliber and a as you look at our.
Wade <unk>: <unk> over the last five years from 2019, obviously moving through the pandemic, we've seen nice growth in the Hamlin business with a compounded annual growth rate of 11.3% coming out of the pandemic as we started to return to more normal business. In 2022, we saw a very sharp growth of 18% year over year.
Wade <unk>: And then 17% last year with the fiscal year ending at the end of July now. This was in spite of not only the pandemic interruptions in the logistics that we saw around the world and the ability to serve markets, but also a pretty significant disease outbreaks with African swine fever, and avian influenza, which is still persistent.
Wade <unk>: Actually in the United States. So we have seen very nice growth through that period, and we expect to accelerate that into the future. You can see on this chart Sorbian listed at the bottom of the X axis, we launched that North American portfolio as we started into 2022, so really our north American sales started their insignificant.
Wade <unk>: Sure there and we're seeing the reflection of that now in fiscal year 'twenty, three and we expect to see that accelerate even more into the future.
Wade <unk>: If you look at our sales by region. This is again as FY2023 versus FY 'twenty two.
Again, my mention of a launch in North America, and the very rapid growth of the North American market, we expect the north American market to be our largest market in just a couple of years, which is consistent with other feed additive markets, we see with with other suppliers to this industry Latin America grew very strongly as well driven especially by Bruce.
Wade <unk>: <unk>, which is a major exporter of broiler meat, our Mexico business grew well.
Wade <unk>: We also at the same time in 2023 completed the final acquisition of <unk>, which is our Mexican operation.
Wade <unk>: The business is now completely run by oil dry Amlin and we expect a very strong growth going forward in Mexico as we continue to sell direct to keep producers there in China. We saw a downturn some of that was due to market conditions. Some of that was due to a pretty significant restructuring we did of the China business, we had pre.
Wade <unk>: <unk> gone to market direct in China, with a very large staff with a very large suite of distribution partners.
Wade <unk>: We have now narrowed that significantly we've got a couple of representatives now in China running that business and working with a single master distributor, which helps us address that market more efficiently with less risk less financial risk to the company and then finally Asia still grew 2%, 2% in spite of lingering effects of the pandemic.
Wade <unk>: Again pretty significant downturn caused by African swine fever, which caused pretty severe to populations in the in the swine herds.
Wade <unk>: So wired wire consumers interested in amylin products why do we see the growth that we're seeing in our business. It really is a global move by consumers to desire will call clean food or food that is produced more naturally more sustainably without the use of pharmaceuticals without the use of harsh chemicals.
Wade <unk>: Amazons products fit very naturally very nicely within that demand.
Wade <unk>: Our products are based on oil drives natural mineral sources that really offer a broad range of efficacy to our customers, but bring them in a natural way. It allows producers to grow animals without the use of pharmaceuticals in many cases. So we are the right products at the right place and the right time.
Wade <unk>: When you look at the market or the overall opportunity in spite of the pandemic in spite of the conditions of avian influenza African swine fever as I mentioned it is an enormously large market you can see in the graph on the left.
Wade <unk>: The broiler and swine markets dominate.
Wade <unk>: The ruminant market pets Aqua culture, both finfish and Chris stations are also significant smart markets as well and growing rapidly. The graph represents the curve from 2007 to 2017 to 2022 as we look forward, we expect the market to grow about three 5% annually and we expect pet.
Wade <unk>: <unk> and swine to lead as we look towards 2030.
Wade <unk>: Yes.
Speaker Change: One of the markets, we target very directly is in <unk> control on the left side of this chart you see that the micro toxin market that we're targeting are the control market is about $1 billion in 2022, it's growing at about a 5% CAGR and mycotoxin is really touch all species from poultry all the way to companion animals Chris.
Stations to dairy cattle and the quality of milk, so the need to control micro toxins as urgent for our customers and it ensures that we have the highest quality milk milk meat and eggs for producers.
Speaker Change: As you look at the right side of this chart you can see how the toxin control market has kind of laid out boilers and layers of the poultry side is the largest segment followed by swine ruminants Aqua in companion animals, We expect companion animals will grow significantly in the future it will be a growth opportunity for four amlin.
Speaker Change: How do we work our technology is really based on sorption science or the absorption in adsorption of toxins to.
Speaker Change: Two our claim mineral substrate you can see on the left side of this chart that only one kilogram of our ammo and mineral once process has 60 soccer fields of surface area for binding in the intestines or the animal. So it's a tremendously porous material that allows toxins to bind to the surface.
Speaker Change: In apps adsorption or be absorbed into the inside of the matrix and being trained and removed. So it is a highly effective natural protective for the animal that allows them to reach their potential.
Speaker Change: Here's a product spotlight of a new product. We just launched this last year, it's a product called <unk>.
Speaker Change: We also have a similar product were promoting in the United States, but our international product neutral path. It's based on our claim mineral but it also includes includes additional compounds in a formulation, where adjuvant and see if I can say that hopefully directly neutralize pathogenic organisms like someone like.
Speaker Change: Like Kempler Baxter light clustered in it's a product that producers can use when they don't want to use antibiotics or when resistance has grown and they can substitute.
Speaker Change: Natural product in their portfolio to address passages in the field. So we're very excited about neutral path. We believe it will be a significant product in our portfolio going forward. So overall why are we excited about this business why do we believe we will win not only for oral dry but also for our customers.
Speaker Change: It's the selectivity, it's the uniqueness of our mineral we source it in mining in a proprietary way process. It in a way that really broadens its efficacy or utility in animal rations were vertically integrated we control the mining to the delivery of the product to our customers and the support of those products in the field with a with a global technical serve.
Speaker Change: This team so we're able to ensure the quality of the consistency the value the ROI for our customers and lastly, our diverse business portfolio. We have 80 years of experience in mineral science as Bruce and Chris mentioned earlier, we sell in a variety of industries. So we have a lot of utility from what is a natural product that brings tremendous value.
Speaker Change: Due to the market.
Speaker Change: We also have this ability of our company and the leadership we've had over those eight years, which really allows us to plan developed to invest for the long term. So we're excited about this business and excited about the growth that will come in the animal nutrition and health sector.
Speaker Change: So with that thank you for your attention and I'll hand, it back to Leslie Garber, our director of Investor Relations.
Leslie Garber: Great. Thanks.
Thank you all for listening to our presentation I will now open up the floor to questions. Please submit your question using the ask a question field on the webcast questions or remarks must be relevant to the meeting.
Leslie Garber: The matters brought before the meeting.
Leslie Garber: I will now read the first question it.
Leslie Garber: It comes from Ethan Star, an individual investor and he.
Speaker Change: What are the prospects for significant revenue growth for amyris products and when might that happen.
Speaker Change: Thank you Ethan I appreciate the question and I would argue that it's already happening we're seeing tremendous growth in this business. There are markets like North America that we are really have only been in for about a year and a half now. So we obviously expect North America to continue to grow very rapidly and at the highest CAGR of any of our business.
Speaker Change: We also are seeing pretty significant rebound now in Asia as those economies recover and again a continually strong performance in Latam. So we expect in the next couple of years to be reflective of what we've seen over the last year with strong growth in this business and continued use of our products by all species within there.
Speaker Change: Industries.
Speaker Change: Thank you.
Speaker Change: Our next question comes from John Bair from ascend wealth advisors and he asks do you plan to increase advertising spending.
Speaker Change: Comparable rates as was seen in fiscal 'twenty, three and into the first quarter of 2024.
Speaker Change: Primary focus on retail consumer or B to B and what product lines are you primarily.
Speaker Change: Okay, Thanks, Leslie and thanks John.
Speaker Change: Strong majority of.
Speaker Change: The advertising spending that you see it goes against the consumer business, that's not to say that.
Speaker Change: The <unk> business doesn't.
Speaker Change: Really kind of scale their scale their sales platforms through through some really good marketing as well, but majority within within consumer.
Speaker Change: And.
Speaker Change: And I think we've spoken to this in the past we spent pretty heavily in Q4, we hadn't been spending prior to that for a couple of good reasons, primarily and we were in kind of a bit of a of a global supply malaise. We came out of that and started spending in Q4 against the new platforms that you just saw a little heavy as replacements.
Like Q1, this year is pretty predictive of what Youll see going forward and that's a level as we look at rois that we like.
Speaker Change: Great. Thank you.
Speaker Change: Our next question comes from Robert Smith Center for performance investing.
Speaker Change: This R&D is the lifeblood of future long term growth plan.
Speaker Change: Commensurate increase in this area to reflect your new earnings level also in this respect how you measure productivity. Thank you Bob for your question and yes, I mean, R&D is the lifeblood of our future and our past and our present growth. So our mission statement is you long time investors know is creating value.
Speaker Change: From sorbent minerals and layered on top of that is a real commitment to playing what we call Miami ball, which is our version of Moneyball, which is getting the data and trying to make.
Fact based decisions on where do we have a competitive advantage and where do our customers value us the most and trying to lean into there and likewise and walking away from things, where we just don't provide the value and frankly, there could be another supplier or somewhere who could better serve that customer and the only way to them to hang onto those customers is through low margins, which are.
Speaker Change: Isn't healthy for the long term so how do we measure it is ultimately through the value that we're deriving from the minerals were selling so you've heard me talk about this before but it's really startling and well worth repeating.
Speaker Change: Back in 2001, when the company was not doing very well.
Speaker Change: Maxed out with over a million tons sold but our average selling price was just 156 million up $156 a ton. So we generated $161 million in sales and our gross profit was only $28 a ton so we had $29 million.
Speaker Change: Gross profit this last full fiscal year in 'twenty, three we grew from that 161% to $413 million or gross profit.
Speaker Change: <unk> per ton jumped from $28 to $127 a ton so almost six times clearly a one five times.
Speaker Change: The growth and remember we did a million tons back in 2001, we only did 811000 tonnes 20, something years later and Thats. This commitment to value based selling so a lot of times you guys see less I mean, our topline is growing anyway, but a long time.
Speaker Change: As you see it as a.
Speaker Change: Maybe not as good as it could be but it's really a conscious decision to walk away from unprofitable business and to put this momentum and perspective, so while that was a record for us in F. 'twenty three average selling price of $509 a ton up from $1 50, 620 years ago. It was $5 62.
Speaker Change: In the first quarter and again that GP per tonne from $28 a ton up to 127 was $1 56 in the first quarter. So that's how we measure it I mean, we are clearly creating value. Yes, we believe and we believe there's many different ways to achieve that value. It is through products pricing and performance.
Speaker Change: But it's also very much with the service that we provide so we know that all close to 1000 teammates globally are helping contribute towards delivering value to our customers every day and we're very appreciative of that and our customers are too. So thanks for a great question and we take this very very seriously.
Speaker Change: Okay.
Speaker Change: The next question is from John Bair.
Speaker Change: Aniline International top line growth was attributed to the sale of existing inventory to the company's master distributor in China. How does this affect current and projected near term sales to the master distributor and they sell down the acquired inventory.
Speaker Change: Yes, Thank you Leslie and thank you John.
Speaker Change: And activity that happens specifically in China with the establishment of our Master distributor. Obviously this was a big part of the restructuring of the business and important for us to conclude to be able to move that product from amlin ownership in China to that distributor for sale in the market as you might imagine.
Speaker Change: In those warehouses that we maintained we had a mix of products.
Speaker Change: And we also had some products to some of our largest customers that were in fairly low inventories so that master distributor sure better while selling down the products. Currently is also already ordering.
Speaker Change: So the products.
Speaker Change: Our replenishing what they need to service the market and we're seeing some of our key customers there, especially in the dairy sector grow so significantly that that is exceeding our expectations. So we expect all of that volume to be consumed this year.
Speaker Change: Fairly early in the year and we're seeing orders are ready to to replace those that transfer of inventory.
Thank you.
Speaker Change: The next question is from Ethan Starr last quarter. There was mention of two new aniline products are you able to tell us more about those at present.
Speaker Change: Yeah, Ethan Thank you and as we've talked about in other sessions the sales cycle can be fairly long in this industry. Those two products were launched this past year.
Speaker Change: They are both in trials currently.
Speaker Change: The first one I'll mention is the <unk> product, which we sell internationally.
Speaker Change: And Ah Cox video, it's actually been in direct field trials now for about seven months with one of the largest integrators in the world.
Speaker Change: That trial is performing well, we hope for it to conclude sometime in the spring and they're going to basically run a full year trial utilizing the products. So well, that's a little bit lengthier than sometimes happen. It is indicative of the long sales cycle. The second product in neutral paths, we saw a similar product in the United States called <unk>.
Speaker Change: That product is entering trials right now, we expect a little bit shorter cycle with that and we hope to have sales sometime in the spring time of that product to some of the largest U S. Integrators. So excited about those products, but we are still working through field trials on both of them that will conclude shortly.
Speaker Change: Yes.
Speaker Change: We have another question from John Bair, any comments on the company's pursuit.
Speaker Change: Outlook on the M&A landscape. Thanks.
Speaker Change: Thanks, John for your question and look capital allocation is a major focus for the management team and the board of directors and as we continue to repair our margins. We are generating cash which is great and then how are we going to use that cash first.
Speaker Change: First and foremost it's investing in our people in our plants and our processes.
Speaker Change: We are delivering more value and as our customers are demanding more value. It puts more pressure on our processes. So what was acceptable five years ago from a quality standpoint, we will not be acceptable in five years and we have to stay ahead of that curve. So clearly reinvesting in our plants and our people is number one obviously maintaining and grew.
Speaker Change: The dividend is a major use of our capital we've raised the dividend 20 years in a row and as I somewhat facetiously, but not totally always joke my sisters liked to be invited the family picnics and so forth, so keeping that dividend healthy and growing as important to me and my sisters and all shareholders seriously.
Speaker Change: And so very proud of our record there and want to keep that up.
Speaker Change: Like buybacks could be a piece of the equation.
Speaker Change: Certainly we have an authorization to do that if and when we feel it's opportunistic in the use of cash is right for that and then finally is our M&A and M&A activity and that one will be very narrowly focused on our mission and creating value from sorbent minerals. So you will not be seeing us get into semiconductors or anything like that anytime soon.
Speaker Change: <unk>.
Speaker Change: So when opportunities come up within that.
Speaker Change: That mission, we will be very aggressive and we have been we've made numerous acquisitions over the years and we will continue to.
Speaker Change: Got them as they come forward. Unfortunately have a lot of debt capacity, if we needed it.
Speaker Change: And are generating cash so yes, all M&A will definitely be a part of our growth strategy, but it's not like we're going to make deals just to make deals. So we will be very opportunistic and they will be bolt ons. They will not be tangential jumps into different areas that we're not familiar with.
Speaker Change: Yeah.
Speaker Change: Okay, one more from John Bair. He asks what gives you confidence that the <unk> sales trends seen in quarter, one of fiscal 'twenty four can or will continue throughout fiscal 'twenty four.
Speaker Change: You want to take that sure.
Speaker Change: Very good question. Thank you for the question.
Speaker Change: As I talked about the renewable diesel business. These plants are very large and they're pulling in a lot of different type of oil and different feedstock oils vegetable oil being one of them in soybeans.
Speaker Change: Big crop that is going to continue to grow to feed this industry just to feed the general growth of the vegetable oil industry as they produce oil from soybeans. They produce a lot of protein that gets sold into.
The different applications for feeding animals.
Speaker Change: So all of our <unk> businesses are.
Speaker Change: It relates to the AG industry and with all of this growth that's going on in the marketplace.
Speaker Change: It's clear that theres going to be continued growth in our businesses through this fiscal year and beyond based on what's happening right now.
Speaker Change: The growth of this business great. Thank you Bruce and before we conclude just general comments on the economy and how it relates to our ability to compete I'm reading the articles and inflation. While it is toning down is still well north of where the fed funds to be most recent CPI was up for a little over 4% are always targeting for <unk>.
Speaker Change: <unk>.
Speaker Change: And so while it's slowing down and the slope of getting less it still is here and so we will have to continue to be.
Speaker Change: <unk> been diligent on making sure that the.
Speaker Change: We pass along cost increases as we incur them that are outside of our control we are doing very well with our own efficiency.
Speaker Change: But there are plenty of things that are outside of our control that would impair our ability to give our customers the value and the quality and the service that they demand and that they deserve so just mindful of that.
Speaker Change: We will see how it goes going forward I am very happy that I don't see a recession I would have predicted one than I would have been wrong, but.
Speaker Change: But I'm glad to be wrong on that front. So thank you very much as you can see where the fiscal 'twenty three once literally our best fiscal year ever and we're off to a great start in fiscal 'twenty four and while this is a forward looking statement I will just say I hope fiscal 'twenty four it turns out to be even better than fiscal 'twenty three.
Speaker Change: Let's keep our fingers crossed but hope isn't our strategy and what is the strategy as everyone pulling together all of us to make it happen and I'm very very supportive and confident of the team. So thank you for your support as a loyal shareholder and we'll look forward to talking to you again after the second quarter.
Speaker Change: The meeting is now concluded thank.
Speaker Change: Thank you for joining and have a pleasant day.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.