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OilDri Corp. of America Reports Operating Results (10-Q)

December 08, 2010 | About:
10qk

10qk

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OilDri Corp. of America (ODC) filed Quarterly Report for the period ended 2010-10-31.

Oildri Corp. Of America has a market cap of $111.2 million; its shares were traded at around $21.87 with a P/E ratio of 16.9 and P/S ratio of 0.5. The dividend yield of Oildri Corp. Of America stocks is 3%. Oildri Corp. Of America had an annual average earning growth of 9.5% over the past 5 years.ODC is in the portfolios of Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

Consolidated net sales for the three months ended October 31, 2010 were $56,285,000, an increase of 5% from net sales of $53,404,000 for the three months ended October 31, 2009. Net income for the first quarter of fiscal 2011 was $2,519,000, an increase of 15% from net income of $2,194,000 in the first quarter of fiscal 2010. Diluted net income per share for the first quarter of fiscal 2011 was $0.35 compared to $0.30 for the first quarter of fiscal 2010.

Net sales of the Business to Business Products Group for the first quarter of fiscal 2011 were $19,045,000, an increase of $2,268,000, or 14%, from net sales of $16,777,000 in the first quarter of fiscal 2010. The Group benefited from a greater proportion of sales from products with a higher net selling price, along with a 4% increase in tons sold. Net sales of fluid purification and agricultural chemical carrier products increased, while net sales of animal health and nutrition products and co-packaged cat litter decreased. Net sales of fluid purification products increased 19% with 17% more tons sold in the first quarter of fiscal 2011 compared to the first quarter of fiscal 2010. Sales to new customers and increased sales to existing customers contributed to the higher net sales. Sales in some export markets improved in part due to a weaker U.S. dollar relative to certain foreign currencies, which made our products more competitive in the global marketplace. This year s soybean crop also requires more clay to bleach impurities during oil processing compared to the prior year s crop. Net sales of agricultural chemical carrier products increased 59% with 49% more tons sold. The higher net sales in the first quarter of fiscal 2011 reflected a return to more historical levels of tons sold. Sales were exceptionally low in the first quarter of fiscal 2010 as high customer inventory levels contributed to lower demand for our products. Agricultural chemical carrier sales also benefited from a greater proportion of sales from higher priced products. Animal health and nutrition products net sales decreased 12% compared to the first quarter of fiscal 2010. Sales of our enterosorbent animal health products declined due primarily to the loss of a customer. Our co-packaged traditional coarse cat litter net sales decreased 1% due to the continued decline of the coarse cat litter market as a whole.

Net sales of the Retail and Wholesale Products Group for the first quarter of fiscal 2011 were $37,240,000, an increase of $613,000, or 2%, from net sales of $36,627,000 in the first quarter of fiscal 2010. The increase in net sales was driven by higher sales of cat litter and industrial absorbents. These increases outweighed a decrease in sales by our foreign subsidiaries as described under Foreign Operations below. Cat litter net sales were up approximately 5% due to a greater proportion of sales from products with a higher net selling price and lower trade spending for product promotion, which is deducted from net sales. Net sales of branded cat litter increased approximately 12% due to 6% more tons sold and lower trade spending. Wal-Mart Stores, Inc. (“Wal-Mart”) began to carry a reduced number of cat litter brands in the first quarter of fiscal 2010. During the third quarter of fiscal 2010, Wal-Mart reinstated our branded scoopable litter in a limited number of stores; however, the new store count remains materially reduced from the store count at the end of fiscal 2009. Sales to Wal-Mart for the first quarter of fiscal 2011 were higher than for the first quarter of fiscal 2010, but remain lower than historical periods. Our branded cat litter net sales also increased at customers other than Wal-Mart. Partially offsetting the increase in branded cat litter sales was a 1% decrease in net sales of private label cat litter. Industrial absorbents net sales increased 4% compared to the first quarter of fiscal 2010 due primarily to increased demand from industrial distributors.

Total assets decreased $2,639,000, or 2%, during the first three months of fiscal 2011. Current assets decreased $2,142,000, or 3%, from fiscal 2010 year end balances due primarily to lower cash and cash equivalents and investment in short-term securities. These decreases were partially offset by increases in inventories, accounts receivable and prepaid expenses. The changes in current assets are described below in Liquidity and Capital Resources. Property, plant and equipment, net of accumulated depreciation, decreased $411,000 during the first three months of fiscal 2011 due to depreciation expense in excess of additions. Additions were primarily for replacement of machinery and other capital projects at our manufacturing facilities. Other noncurrent assets decreased $86,000 from fiscal 2010 year end balances due to amortization of certain other assets and lower deferred income taxes. These decreases were partially offset by increased cash surrender value of life insurance on key employees.

Cash provided by investing activities was $473,000 in the first three months of fiscal 2011 compared to cash used in investing activities of $2,323,000 in the first three months of fiscal 2010. In the first three months of fiscal 2011, $2,001,000 net cash was provided by dispositions of investment securities, compared to the first three months of fiscal 2010 when $996,000 net cash was used to purchase investment securities. In the first quarter of fiscal 2011, cash from dispositions was used to fund larger payments on long-term debt, bonus payouts and capital expenditures compared to the first quarter of fiscal 2010. Purchases and dispositions of investment securities in both periods are subject to variations in the timing of investment maturities. Cash used for capital expenditures was $1,638,000 in the first three months of fiscal 2011 compared to $1,327,000 in the same period in fiscal 2010.

Cash used in financing activities was $2,634,000 in the first three months of fiscal 2011 compared to $1,140,000 in the first three months of fiscal 2010. Cash used for payment of long-term debt in the first three months of fiscal 2011 was $1,300,000 more than in the first three months of fiscal 2010. Cash used for dividend payments was $48,000 higher in the first quarter of fiscal 2011 due to a dividend increase. In addition, cash used to purchase treasury stock was $511,000 in the first quarter of fiscal 2011, while no purchases were made in the same period of fiscal 2010. Conversely, cash provided by issuance of Common Stock and treasury stock in connection with stock option exercises was $240,000 higher in the first three months of fiscal 2011 than in the first three months of fiscal 2010.

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