Q1 2025 Oil-Dri Corp of America Earnings Call and Annual Shareholders Meeting
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On your screen under meeting materials, you will find the meeting agenda, rules of conduct the list of stockholders of record, oil, drives, proxy materials and annual report.
During the meeting today, we will be covering the election of directors and 2 other proposals, followed by business presentations, and a financial review. And lastly, time for Q&A, we ask that you submit 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 on the vote here, button on your screen. Now it is my pleasure to introduce Anthony W. Parker our vice president general counsel and secretary. He will conduct the formal portion of today's meeting.
good morning, ladies and gentlemen, I now call to order the 2024 annual meeting of stockholders of oil, dry Corporation of America to conduct the formal business set forth and the notice of meeting and proxy statement,
Commencing on October 29th, 2024 a notice regarding the availability of proxy materials or a copy of the proxy, materials was mailed to all oil, dry stockholders of record, as of the close of business on October 14th 2024, which is the record date fixed by oil, dries Board of Directors for the determination of stockholders entitled to notice of and to vote at this meeting broadridge Financial Solutions in.
Has delivered an affidavit confirming. The foregoing.
Oil dry has appointed Richard cracks of Hagberg Associates, LLC to serve as the inspector of election for this meeting. He is present on the webcast and has taken the oath of office.
As of October 14th 2024, the record date for this meeting. There were 5,134,478, shares of oil, dries, common stock, and 2,155,407, shares of oil, dries Class, B, stock outstanding.
Folders of our common stock are entitled to 1 Vogt per share and holders of our class. B. Stock are entitled to 10 votes per share, and generally vote together. Without regard to class. With the exception of proposal. Number 3, the approval of an amendment to the certificate of incorporation to increase the number of authorized shares of common stock in which, in addition to the general voting practice holders of our common stock will vote separately as a class as required by oil dry certificate of Incorporation.
A quorum is present at this meeting. If holders of a majority of our Capital stock outstanding are present in person for represented by proxy. Thus the number of votes necessary to constitute a quorum at this meeting is 13,344,275 votes.
Mr. Kruh has informed me that there are more than such number of votes represented at this meeting. Therefore, I declare this a quorum present for the purposes of transacting business.
Now, I will present the matters. If you voted upon Each of which is described in the proxy statement. If any stockholder would like to make a comment regarding any of the proposals, please submit your comment through the ask a question field in the web portal and we will review any comments on the proposals themselves. After all proposals have been presented,
the first item of business is the election of 9 directors. The proxy statement listed oil dries, nominees for director. Each of whom currently serves as a director of the company, those nominees are Daniel, S jaffee Alan, Blair tube, Paul Hamm hinesley, Michael a Nero, George C, Roth Amy. L Ryan Patricia J, schmida, Alan H, cig and Lawrence Eva.
An item of business is the ratification of the appointment of Grant Thorton as oil dries, independent auditor, for the fiscal year ending July 31st, 2025 the audit Committee of the board of directors, of oil. Dry has appointed Grant Thorton to serve as the company's independent auditor for fiscal year 2025, and has directed that the appointment fee, submitted for ratification by the stockholders at this meeting.
The third item of business is the approval of an amendment to our certificate of incorporation to increase the number of authorized shares of common stock from 15 million to 30 million in order to implement a 2 for 1 stock, split of our common stock and Class B stock in the form of a stock dividend. At this time, we will check for review of any comments on the proposals that have been submitted.
It looks like no comments have been received so we will proceed with opening the polls.
It is 9:35 a.m. on December 11th 2024 in the polls. Are now open any stockholder who hasn't yet voted or who wishes to change their vote May do so, by clicking on the vote here, button on your screen,
Stockholders who have sent in proxies or voted via telephone or Internet and who do not want to change their vote, do not need to take any further action.
While we allow time for stockholders who haven't already done. So, to complete their voting. I'd like to remind you that the business presentation and any other commentary by any of oil drives employees who we refer to as teammates today may contain forward-looking statements of expected future performance.
And he's such forward-looking statements are subject to certain risks.
Uncertainties and assumptions that could cause actual results to differ materially.
We highlight a number of important risk factors, that may affect our future performance and our SEC filings including our annual report for the fiscal year ended July 31st.
2024. We urge you to review and consider those risk factors carefully in evaluating the company's comments and evaluating any investment in oil dry, stock copies of our SEC filings are available through the company or online. All right 1, last pause to finish voting.
Okay, at this point, the polls are closed. And I will now report the preliminary results of the voting provided by the inspector of election, we will be reporting the final vote results in a Form 8K to be filed within 4 business days.
As described in the proxy, a director may only be elected with by plurality of votes, cast the 9 nominees, who received the largest vote number of votes will be elected. We have been informed by the inspector of election that the preliminary vote report shows that the 9 candidates nominated by oil dry received the largest number of votes.
Regarding the second item of business and affirmative majority of the votes represented. At this meeting is necessary for ratification of the appointment of Grant Thorton as oil, drives independent auditor for the fiscal year ending July, 31st, 2025 we have been informed by the inspector of election that the preliminary vote reports that such ratification received more than a majority of the votes represented at this meeting.
Regarding the third item of business, the approval of a majority of the votes. Entitled to be cast by the holders of our outstanding, common stock voting separately. As a class, in addition to the approval of the majority of the votes, entitled to be cast by the holders of our outstanding common stock and Class C stock voting together. As a single class is necessary to approve, the amendment to our certificate of incorporation to increase.
Increase the number of authorized shares of common stock. We have been informed by the inspector of election that the preliminary vote report shows that such proposal received approval of more than a majority of the votes. Entitled to be cast by the holders of our outstanding common stock voting separately as a class, in addition, to approval of more than a majority of the votes, entitled to be cast by the holders of our outstanding, common stock, and Class B stock voting together, as a single class.
This concludes the business to be conducted at this meeting there being no further business to come before the meeting, the 2024 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 presentation and financial review.
Thank you, Tony and welcome everybody to the presentation portion of our annual meeting. You'll be hearing from uh several teammates, uh, and then also, we'll be happy to respond to questions of things. We don't cover in the formal presentations. As always, I'm always uh,
Happy to to to emphasize that an investment in oil Drive is very much an investment in our people and obviously our strategies. And so I like to cover new vice presidents, and Senior leadership promotions that happen since the last annual meeting and put them in alphabetical order. So we'll start with Tom adio. Uh, Tom is our vice president of concern.
division, product development and
Commercial. He joined us with the ultra pet acquisition. You can see, he's only been with about 7 months, has that deal closed May 1st. But 18 years with ultra pet, uh, 26 years with Kroger Target, and bylaw. He comes with a wealth of consumer package experience, uh, and received his undergraduate degree from Georgia. So, Tom, welcome to the team. We're very happy to have. You be part of our senior leadership team. Also, during the year Don McAllister joined us. He is our vice president of sales for the consumer grocery division.
He oversees all of our grocery pad club channels uh and then internal business planning strategy and integration. He spent 23 years with the Clorox company. Uh most recently a senior director for sales capabilities but he's been involved in clubs, uh, Channel supply chain. He also spent 3 years with Walmart, uh, and you can see his, his educational experience has been with the University of Arkansas, both undergrad, and MBA, and we're very happy to have Don on the team.
Tony Parker you heard from Tony, and he was promoted during the year, uh, to become our general counsel, vice president, general counsel, and secretary, he has oversight of all of our legal Affairs. In the company. He's been with the oil Drive, 6 years, uh, education. I received his law degree from Northern Illinois. Undergrad from Wisconsin, Madison. Uh and loves to know he was an Evans scholar recipient uh as part of their their caddie program which is very cool.
Encourage everyone to take a look at that program. They do a lot of good things, I've become a donor. Uh next Deans, Southern VP and general manager, industrial automotive and sports division. Um, he's been with us 24 years. He's worked his way up from Regional sales manager to national sales manager and uh, was being groomed for when Curtis Wellborn our longtime VP and GM retired, uh, Dean stepped in and took over the Baton. Uh, he's doing a great job. He's got his ba from North Carolina, Charlotte and uh, he has had promotions Underneath Him and the team has really rallied around and is doing great things.
And we're very happy to have Jose leading our Treasury and FBA functions. So those are the teammates who uh moved into senior roles during the year, I would now like to turn it over to Susan kreh, our Chief Financial Officer and Chief Information officer and this came through in 1 of the comments. But I'd like to highlight it here. She is also the CFO of the year for Chicago for midcap public companies. I was very exciting event. And as she always says, it's recognition of the whole team, uh, and her leadership there, but we are very proud to have Susan B, that recipient and be our leader. So Susan, you're up, thanks Dan, and it is the whole team.
Also, reflect the strategy execution in the efforts of the whole team.
So, and Dan, feel free to jump in and add color. Um, I'm going to just go over a few highlights and then we'll go through a bunch of bar charts that show a really nice trajectory as we continue to benefit from the execution of the strategies that we've laid out for you.
So,
The highlights include, you know, continuing to set uh Records in terms of, net sales, gross profit and net income. We did. So in fiscal 2023 we did. So in fiscal 2024 and the first quarter of the pixel 2025 which we uh, released after the close of Market on Monday continues to be
So, strong results.
We also during fiscal 2024 completed, the largest acquisition in the oil Drive history with the acquisition of ultra pet company, and you'll get to hear some more about that. When Chris Lamson goes through the business update, it's been very exciting.
I'm speaking of other exciting business initiatives. Uh, Bruce Casey will walk us through the significant growth. In fluids purification where we definitely have a Tailwind from the renewable diesel business.
And part of all the success is sharing it with you as the shareholders. So we did double our dividend increase from 4 cents per share to 8 cents per share and that's prior to the stock split, and we'll talk about this stock split. It's a little later.
And in order to keep some, uh, capacity in case, there are any other opportunistic Acquisitions for us. We actually upsized our revolving credit facility from 45 million to 75 million.
To make sure that if something comes up, we are ready to go. Um, we also integrated that the, uh, Ultra pet acquisition into our Erp during the quarter. So we made that cut over on October 1st and the integration is going very, very well. So lots of good news coming out of oil dry
Now, if we take a look at some of our principal products, um, we'll start here with the retail and wholesale you can see the growth in the capital business. Um, you'd see a nice Trend there. And if we take a look over at fluids or at the B2B side, I do want to point out the growth in fluids purification because 1 of the things, you may have noticed in the first quarter was the strong gross profit performance.
Well, this is a high value added business. So is this becomes a bigger part of our portfolio? We see the upswing in gross profit and that is certain part of the strategy and Bruce and his team are executing well.
The other thing I would point out on this slide because it also helped to drive first quarter performance is in agriculture and Horticultural products. You see that? Um,
the, the growth has been
Go up. Let me
you see that last year?
How do I say this? Um, our customers built inventory 2 years ago,
And they still had some to work through last year. So you see the movement from 22 to 23 up significantly and a little drawback in in fiscal 24. And as we moved into the first quarter of fiscal, 25, they it seems they have worked through those inventories and that businesses back and it's strong and it's growing and it is also a high value added business. So also contributing to the performance Improvement in gross profit in the first quarter. Hey Susan, go back. I would add 1 thing on the animal health side which was a year ago in the first quarter of fiscal 23. We made the decision to no longer be a direct entity into China, but worked through a distributor and we transferred all that inventory, over to that party. They're doing great. And they're working it out, but that transfer occurred a year ago in the first quarter and it really had nothing to do with the first quarter per se maybe a quarter of it did but not the whole thing and so I I can just tell you that the animal health and nutrition division did
The way I look at it like same store sales like they do in retail uh had a very strong first quarter which was great. Absolutely.
All right, so there you see the nice 5-year Trend? And as we continue on, you see the Strong, net sales record, net sales here in the first quarter of fiscal 25, and you'll get to hear more about those stories when Chris and Bruce, share their business updates.
What was driving it? Well, uh, you see the pricing, but there's also significant me in that. So, actually volume was down a bit and this is the year over year from 23 to 24. Um, and we pointed to the agricultural a minute ago, and then you see the uptake from the successful acquisition of ultra pet which occurred on May 1st. So, we don't have a full year in fiscal 24, but we will have that in fiscal 25. And that continues to do well.
This is 1 of my favorite slides to talk about, and it's the tons sold, and that you can see that they peaked in The Last 5 Years, in fiscal 2022, and that's in line with, when we really, um, started talking about something inside oil, dry called Mighty ball.
So it's Moneyball from mining company and really focusing on products that add value and actually peeling some of the things out of the portfolio that are not profitable and you so you see the volumes moving down but you saw the results, right? So
Canceled going down over that period of time.
And net sales per ton going up.
So that's the focus on, improving the mix and you see that, that continues into fiscal 25, where our net sales per ton have risen to 594 dollars per ton. And again, that's being influenced, not only by the focus on. Uh, we talked a minute ago about the strong first quarter in agricultural products, and the strong first quarter includes purification. But also the focus over in um the cat litter business as well.
So, lots of good stories and they've all been part of the strategies that we've been sharing with you.
and you see that following through to gross profit per ton, um, doing very, very well, not only the Improvement in mix the additional sales in our high value added product products but we also had a strong
And we'll bring in the first quarter. We also had a very strong quarter um here in q1 because the volumes were very high and our plants and then we end up getting um realizing production efficiencies based on those High volumes. So a lot of things going very well for oil dry during the first quarter, which then you'd see the improvements in the gross margin. Hey, it's Susan dovetailing on that. I hope everyone got the chance to read my president's letter in the annual report. If not, I encourage you to do
Do so because I highlight exactly what Susan was talking about was, which is our supply chain, which really helped us deliver, you know, we sell a daily reusable. So, when we put on an account, if we do it. Well, if the product's inspect on time. Uh, invoice correctly, the quality is there. Um, Services? There they reward us with another order and you can see they're continually rewarding us because we take that part of our our business. Very seriously so much so that our Global sales meeting where we have almost 200 teammates there only about 40 of them are direct sales, people who have Direct customer contact. But the other 160 are in the supply chain and we actually give out sales Awards to our supply chain because these people helped us, get those repeat orders. So we always say the first order is the sales team, but 2 through Infiniti is the supply chain and they're really working well together. So it's a hats off to the entire team there.
Kind of great.
So we see the benefit flowing through to net income. I like this chart the earnings before interest taxes, depreciation, and amortization tells a really good story for oil dry coming out of. Um, good time period when we've really been focusing on Moneyball. And you see another strong uh, measure here for the first quarter, this is a non-GAAP measure. So for those of you who love the details, we've put the reconciliation back to the gaap financial statement measurements in the appendix for you.
And earnings per common share, you see the continued growth and strong performance there as well. Hey, I do want to make your comments that I've made go back, you know, publicly before, but it's very important for the investment Community. Look, I have been at the president. This is now my 30th year, which is ridiculous. So, I was the president in 20 and 21 and 22 when things were going south and happened to be the president too. And 23 and 24 came. The big difference is the team. It really is, I haven't changed that much but we've in, you know, we've implemented us and op we have integrated business planning. We have forecasting. The team works together very well, to make sure that we meet or exceed, our customers expectations and you're seeing it in the numbers. So, this is just my time to thank the team and let the investors know that's really what's driving the results here. It's our Global team of almost a thousand people pulling together and playing Miami Bal, uh, and
Delivering value every day.
We definitely are seeing the benefit of that and so are the shareholders speaking and benefit and we continue to focus on our dividends and 2221 years in a row of increases.
Did I steal your thunder? No, no. I love it when you do the color, all right, good. Um, another uh, look at the business and this is really the capital allocation and how do we think about it? Note that in fiscal 24, there was a significant investment as we've mentioned in an acquisition that we funded partially in cash, partially in that, that had a variable rate and partially, in debt, that had a fixed rate and we'll talk about that in just a minute.
So you see the debt going up? And yes, we we took on $20 million in debt to help fund that and the rest had come out as cash.
And here's the here's a good story. Our first quarter was very very strong as we've talked about and we were able to pay down 5 million of the variable rate debts that we
need to fund that acquisition.
That was 1 of our uses of the cashier in the first quarter and that we can take a look at net set.
and,
Free cash flow, these are all related but still very, very strong.
And we have a lot of ability to fund our capital. I believe Aaron has a slide in his deck, paying him up a little bit that shows that as our business has grown, we continue to use cash to support that growth and replace aged infrastructure. And obviously with the performance of the business, we can do that easily here.
Um share price. This 1's already outdated. Right? Um I the share price was I think a little about eighty dollars at the close of March 8449 right now right now. Yeah so um good good Market acceptance of our first quarter results.
And parts that comes with that is we are no longer considered a small recording company for SEC purposes which means that you will see more disclosures in our filings going forward. Both our our 10 cues or 10ks and our proxy.
So that's a good 1 and then I'll just close with a few things here you guys can read but we we do continue to invest in our manufacturing infrastructure as well as um make investments to help improve cost and operational efficiencies.
We are seeing the synergies that we expected begin to unlock with the ultra pet acquisition.
And Dan mentioned earlier and Tony of course reads that both we will have Implement a 2 for 1 stock split the record date will be December 20th and we will trade on a post conflict spaces. Beginning January, 6th, and thank you shareholders for supporting that. Because as we mentioned the B side, we we all voted for it and it was going to happen. The common side, voted independently and it came in
Overwhelmingly in favor of the split. So thank you for supporting that initiative.
And with that, I'm going to turn it over to