Oil-Dri of America(US:ODC)2021-03-12 20:13Financial Data and Key Metrics Changes - In Q2 2021, Oil-Dri reported net sales of $74.5 million, a 5% increase compared to the same quarter in the previous year [16] - Gross profit for the quarter was $18.2 million, down $800,000 from the prior year, representing a 4% year-over-year decrease [21] - Net income attributed to Oil-Dri for Q2 2021 was $4.3 million, an 11% decrease from the prior year [25] - Selling, general and administrative expenses (SG&A) increased by 6% to $13.9 million, but were down 3% when excluding a one-time gain from the previous year [23] Business Line Data and Key Metrics Changes - The Business to Business Products Group grew by 7%, while the Retail and Wholesale Products Group grew by 4% [16] - Amlan International, the animal health business, achieved a 20% net sales growth during the quarter, marking an all-time high for any second quarter [17] - Agricultural and Horticultural Products saw a 10% growth, driven by increased sales with existing customers [19] - Co-packaged cat litter products grew by 5%, while cat litter sales in the Consumer Products group increased by 6% [20] Market Data and Key Metrics Changes - Strong growth was noted in China, Latin America, and Mexico for Amlan International [18] - The poultry market represents about 40% of the $3 billion global opportunity created by the elimination of antibiotics in the food chain, equating to a $1.2 billion opportunity for Oil-Dri [8][12] Company Strategy and Development Direction - The company is focusing on mineral-based animal feed additives and lightweight cat litter as key strategic areas [16] - Investments are being made in building a strong team and enhancing distribution channels, particularly in the poultry sector [5][8] - The company aims to capitalize on the domestic market in the U.S., which has been previously overlooked [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial conditions may worsen before improving due to increased SG&A and infrastructure investments [14] - The company is optimistic about long-term growth despite short-term cost pressures, with a commitment to maintaining its dividend policy [14][21] - Management expressed confidence in the company's ability to leverage its strong financial position for future growth opportunities [27] Other Important Information - The company ended the quarter with cash and cash equivalents of $31 million and a low debt-to-total capital ratio of 6% [26] - Oil-Dri repurchased 33,594 shares of common stock for $1.2 million, indicating confidence in its financial health [27] Q&A Session Summary Question: How are the trials with poultry integrators going? - Management did not confirm any trials with large poultry integrators and stated that no material updates could be shared at this time [30] Question: Do you see the sales cycle decreasing? - The sales cycle for poultry companies is typically 3 to 6 months, while for swine, it can extend to 1.5 years depending on usage [37] Question: Can you name the 11 markets you mentioned? - Management declined to specify the markets to avoid tipping off competitors but emphasized the significant opportunity represented by these markets [41] Question: How is the swine market in China proceeding? - The swine market is seeing increased focus due to the recovery from African swine fever, presenting opportunities for growth [50] Question: What feedback do you get from existing customers regarding Amlan products? - Feedback has been very positive, with customers increasing their orders after using products like Varium and NeoPrime, indicating strong ROI [55]