Oil-Dri Corp of America 10-Q for FY2020 Q3

About this 10-Q

Headline figures

Oil-Dri Corp of America (ODC)

10-Q 2020-06-08 For: 2020-04-30

Added on April 07, 2026

Oil-Dri Corp of America filed this 10-Q on June 8, 2020, covering the quarter ended April 30, 2020 (FY2020 Q3).

For the Three Months Ended April 30, 2020

For the Nine Months Ended April 30, 2020

Operating Lease Cost

Operating lease cost

Short-term operating lease cost

Quarter ended April 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $76.26M; up 7.6% from $70.89M a year earlier
Net income: $4.65M; down 17.3% from net income of $5.62M a year earlier
Diluted EPS: $0.61; down 17.6% from $0.74 a year earlier

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Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company x	Emerging growth company o



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	ODC	New York Stock Exchange




	PART I – FINANCIAL INFORMATION
		Page
Item 1:	Financial Statements	3

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results Of Operations	24

Item 4:	Controls and Procedures	32

	PART II – OTHER INFORMATION

Item 1A:	Risk Factors	32

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 4:	Mine Safety Disclosures	34

Item 6:	Exhibits	35

	Signatures	36



	(unaudited)
ASSETS	April 30, 2020			July 31, 2019
Current Assets
Cash and cash equivalents	$	20,548		$	21,862
Accounts receivable, less allowance of $1,324 and $644 at April 30, 2020 and July 31, 2019, respectively	41,846			35,459
Inventories	24,096			24,163
Prepaid repairs expense	5,163			4,708
Prepaid expenses and other assets	2,460			3,084
Total Current Assets	94,113			89,276

Property, Plant and Equipment
Cost	257,123			249,834
Less accumulated depreciation and amortization	(166,990		)	(159,036		)
Total Property, Plant and Equipment, Net	90,133			90,798

Other Assets
Goodwill	9,262			9,262
Other intangibles, net of accumulated amortization of $415 and $299 at April 30, 2020 and July 31, 2019, respectively	1,551			1,599
Customer list, net of accumulated amortization of $6,739 and $6,297 at April 30, 2020 and July 31, 2019, respectively	1,046			1,488
Deferred income taxes	6,397			7,755
Operating lease right-of-use assets	8,327			—
Other	5,152			5,049
Total Other Assets	31,735			25,153

Total Assets	$	215,981		$	205,227



	(unaudited)
LIABILITIES & STOCKHOLDERS’ EQUITY	April 30, 2020			July 31, 2019
Current Liabilities
Current maturities of notes payable, net of unamortized debt issuance costs of $10 at April 30, 2020	$	3,074		$	3,083
Accounts payable	10,524			8,092
Dividends payable	1,735			1,761
Operating lease liabilities	1,561			—
Accrued expenses:
Salaries, wages and commissions	10,559			6,740
Trade promotions and advertising	1,853			1,588
Freight	2,216			2,635
Other	9,425			8,707
Total Current Liabilities	40,947			32,606

Noncurrent Liabilities
Notes payable, net of unamortized debt issuance costs of $31 at July 31, 2019	—			3,052
Deferred compensation	4,847			6,014
Pension and postretirement benefits	12,565			23,721
Long-term operating lease liabilities	8,285			—
Other	2,682			4,288
Total Noncurrent Liabilities	28,379			37,075

Total Liabilities	69,326			69,681

Stockholders’ Equity
Common Stock, par value $.10 per share, issued 8,371,197 shares at April 30, 2020 and 8,284,199 shares at July 31, 2019	837			828
Class B Stock, par value $.10 per share, issued 2,511,958 shares at April 30, 2020 and 2,576,479 shares at July 31, 2019	251			258
Additional paid-in capital	44,149			41,300
Retained earnings	172,504			164,756
Noncontrolling interest	(169		)	(14		)
Accumulated Other Comprehensive Loss:
Pension and postretirement benefits	(9,217		)	(14,891		)
Cumulative translation adjustment	(378		)	(148		)
Total Accumulated Other Comprehensive Loss	(9,595		)	(15,039		)
Less Treasury Stock, at cost (3,063,813 Common and 335,816 Class B shares at April 30, 2020 and 2,926,547 Common and 324,741 Class B shares at July 31, 2019)	(61,322		)	(56,543		)
Total Stockholders’ Equity	146,655			135,546

Total Liabilities & Stockholders’ Equity	$	215,981		$	205,227



☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended April 30, 2020



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to ______________



	(unaudited)
	For the Nine Months Ended April 30,
	2020			2019

Net Sales	$	218,383		$	206,908
Cost of Sales	(158,105		)	(158,660		)
Gross Profit	60,278			48,248
Selling, General and Administrative Expenses	(44,584		)	(42,091		)
Income from Operations	15,694			6,157

Other (Expense) Income
Interest expense	(314		)	(434		)
Interest income	238			149
Other, net (1)	(186		)	4,504
Total Other (Expense) Income, Net	(262		)	4,219

Income Before Income Taxes	15,432			10,376
Income Tax Expense	(2,573		)	(1,599		)
Net Income	12,859			8,777
Net Loss Attributable to Noncontrolling Interest	(155		)	(35		)
Net Income Attributable to Oil-Dri	13,014			8,812

Net Income Per Share
Basic Common	$	1.85		$	1.27
Basic Class B Common	$	1.39		$	0.95
Diluted Common	$	1.69		$	1.17
Average Shares Outstanding
Basic Common	5,152			5,108
Basic Class B Common	2,042			2,068
Diluted Common	7,310			7,245
Dividends Declared Per Share
Basic Common	$	0.7500		$	0.7200
Basic Class B Common	$	0.5625		$	0.5400



	(unaudited)
	For the Three Months Ended April 30,
	2020			2019

Net Sales	$	76,256		$	70,885
Cost of Sales	(54,871		)	(54,051		)
Gross Profit	21,385			16,834
Selling, General and Administrative Expenses	(15,685		)	(14,507		)
Income from Operations	5,700			2,327

Other (Expense) Income
Interest expense	(108		)	(141		)
Interest income	48			53
Other, net (1)	(43		)	4,465
Total Other (Expense) Income, Net	(103		)	4,377

Income Before Income Taxes	5,597			6,704
Income Tax Expense	(947		)	(1,143		)
Net Income	4,650			5,561
Net Income (Loss) Attributable to Noncontrolling Interest	2			(58		)
Net Income Attributable to Oil-Dri	4,648			5,619

Net Income Per Share
Basic Common	$	0.66		$	0.81
Basic Class B	$	0.50		$	0.61
Diluted Common	$	0.61		$	0.74
Average Shares Outstanding
Basic Common	5,126			5,126
Basic Class B	2,036			2,068
Diluted Common	7,288			7,253
Dividends Declared Per Share
Basic Common	$	0.2500		$	0.2400
Basic Class B	$	0.1875		$	0.1800



	For the Nine Months Ended April 30
	(unaudited)
	Number of Shares
	Common & Class B Stock	Treasury Stock		Common & Class B Stock		Additional Paid-In Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Non-Controlling Interest			Total Stockholders’ Equity
Balance, July 31, 2018	10,555,828	(3,238,833	)	$	1,056	$	38,473	$	158,935		$	(55,946	)	$	(10,615	)	$	(18	)	$	131,885
Net Income (Loss)				—		—		8,812			—			—			(35		)	8,777
Other Comprehensive Income				—		—		—			—			430			—			430
Dividends Declared				—		—		(5,029		)	—			—			—			(5,029		)
Purchases of Treasury Stock		(4,545	)	—		—		—			(141		)	—			—			(141		)
Net issuance of stock under long-term incentive plans	297,600	(7,737	)	29		420		—			(450		)	—			—			(1		)
Amortization of Restricted Stock				—		1,594		—			—			—			—			1,594
Balance, April 30, 2019	10,853,428	(3,251,115	)	$	1,085	$	40,487	$	162,718		$	(56,537	)	$	(10,185	)	$	(53	)	$	137,515



Balance, July 31, 2019	10,860,678	(3,251,288	)	$	1,086	$	41,300	$	164,756		$	(56,543	)	$	(15,039	)	$	(14	)	$	135,546
Net Income (Loss)	—	—		—		—		13,014			—			—			(155		)	12,859
Other Comprehensive Income	—	—		—		—		—			—			5,444			—			5,444
Dividends Declared	—	—		—		—		(5,266		)	—			—			—			(5,266		)
Purchases of Treasury Stock	—	(143,391	)	—		—		—			(4,620		)	—			—			(4,620		)
Net issuance of stock under long-term incentive plans	22,477	(4,950	)	2		158		—			(159		)	—			—			1
Amortization of Restricted Stock	—	—		—		2,549		—			—			—			—			2,549
Contributions from noncontrolling interests	—	—		—		142		—			—			—			—			142
Balance, April 30, 2020	10,883,155	(3,399,629	)	$	1,088	$	44,149	$	172,504		$	(61,322	)	$	(9,595	)	$	(169	)	$	146,655



	For the Three Months Ended April 30
	(unaudited)
	Number of Shares
	Common & Class B Stock	Treasury Stock		Common & Class B Stock		Additional Paid-In Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Non-Controlling Interest			Total Stockholders’ Equity
Balance, January 31, 2019	10,812,928	(3,249,728	)	$	1,081	$	39,730	$	158,788		$	(56,480	)	$	(10,360	)	$	5		$	132,764
Net Income (Loss)				—		—		5,619			—			—			(58		)	5,561
Other Comprehensive Income				—		—		—			—			175			—			175
Dividends Declared				—		—		(1,689		)	—			—			—			(1,689		)
Purchases of Treasury Stock		—		—		—		—			(6		)	—			—			(6		)
Net issuance of stock under long-term incentive plans	40,500	(1,387	)	4		47		—			(51		)	—			—			—
Amortization of Restricted Stock				—		710		—			—			—			—			710
Balance, April 30, 2019	10,853,428	(3,251,115	)	$	1,085	$	40,487	$	162,718		$	(56,537	)	$	(10,185	)	$	(53	)	$	137,515



Balance, January 31, 2020	10,881,155	(3,269,059	)	$	1,088	$	43,149	$	169,590		$	(57,138	)	$	(9,589	)	$	(171	)	$	146,929
Net Income (Loss)	—	—		—		—		4,648			—			—			2			4,650
Other Comprehensive Income	—	—		—		—		—			—			(6		)	—			(6		)
Dividends Declared	—	—		—		—		(1,734		)	—			—			—			(1,734		)
Purchases of Treasury Stock	—	(127,770	)	—		—		—			(4,097		)	—			—			(4,097		)
Net issuance of stock under long-term incentive plans	2,000	(2,800	)	—		88		—			(87		)	—			—			1
Amortization of Restricted Stock	—	—		—		770		—			—			—			—			770
Contributions from noncontrolling interests (1)	—	—		—		142		—			—			—			—			142
Balance, April 30, 2020	10,883,155	(3,399,629	)	$	1,088	$	44,149	$	172,504		$	(61,322	)	$	(9,595	)	$	(169	)	$	146,655



	(unaudited)
	For the Nine Months Ended April 30,
CASH FLOWS FROM OPERATING ACTIVITIES	2020			2019
Net Income	$	12,859		$	8,777
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,399			9,849
Amortization of investment net discount	—			(10		)
Stock-based compensation	2,549			1,590
Deferred income taxes	1,367			277
Provision for bad debts and cash discounts	704			(151		)
Loss on the sale of fixed assets	102			4
Curtailment gain on SERP Plan	(1,296		)	—
(Increase) Decrease in assets:
Accounts receivable	(7,296		)	(2,185		)
Inventories	(72		)	(4,248		)
Prepaid expenses	120			(201		)
Other assets	816			(564		)
Increase (Decrease) in liabilities:
Accounts payable	3,859			2,873
Accrued expenses	4,612			(1,762		)
Deferred compensation	129			(421		)
Pension and postretirement benefits	(5,482		)	1,287
Other liabilities	(1,101		)	249
Total Adjustments	9,410			6,587
Net Cash Provided by Operating Activities	22,269			15,364

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(10,870		)	(10,162		)
Proceeds from sale of property, plant and equipment	112			—
Purchases of short-term investments	—			(4,678		)
Dispositions of short-term investments	—			11,082
Net Cash Used in Investing Activities	(10,758		)	(3,758		)

CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable	(3,082		)	(3,083		)
Dividends paid	(5,292		)	(4,967		)
Purchase of treasury stock	(4,620		)	(141		)
Contributions from noncontrolling interests	142			—
Net Cash Used in Financing Activities	(12,852		)	(8,191		)
Effect of exchange rate changes on Cash and Cash Equivalents	27			52
Net (Decrease) Increase in Cash and Cash Equivalents	(1,314		)	3,467
Cash and Cash Equivalents, Beginning of Period	21,862			12,757
Cash and Cash Equivalents, End of Period	$	20,548		$	16,224



	April 30, 2020		July 31, 2019
Finished goods	$	14,250	$	13,957
Packaging	5,576		5,681
Other	4,270		4,525
Total Inventories	$	24,096	$	24,163



2021	$	547
2022	$	397
2023	$	202
2024	$	69
2025	$	47



2020	$	1,912
2021	1,507
2022	983
2023	781
2024	767
Thereafter	6,320
Total	12,270
Less: imputed interest	(2,424		)
Net lease obligation	$	9,846



2020	$	2,255
2021	1,640
2022	1,513
2023	1,038
2024	899
Thereafter	7,422



	Business to Business Products Group				Retail and Wholesale Products Group
	For the Nine Months Ended April 30,
Product	2020		2019		2020		2019
Cat Litter	$	11,026	$	9,943	$	116,010	$	101,754
Industrial and Sports	—		—		22,906		25,509
Agricultural and Horticultural	16,518		18,320		—		—
Bleaching Clay and Fluids Purification	37,142		38,116		1,835		1,820
Animal Health and Nutrition	12,946		11,446		—		—
Net Sales	$	77,632	$	77,825	$	140,751	$	129,083

	Business to Business Products Group				Retail and Wholesale Products Group
	For the Three Months Ended April 30,
Product	2020		2019		2020		2019
Cat Litter	$	3,779	$	3,441	$	41,040	$	34,141
Industrial and Sports	—		—		7,894		10,080
Agricultural and Horticultural	6,222		5,622		—		—
Bleaching Clay and Fluids Purification	12,537		13,662		639		623
Animal Health and Nutrition	4,145		3,316		—		—
Net Sales	$	26,683	$	26,041	$	49,573	$	44,844



	For the Nine Months Ended April 30, 2020
Weighted-average remaining lease term - operating leases	10.6 years
Weighted-average discount rate - operating leases	4.02%



	Pension Benefits
	(in thousands)
	For the Three Months Ended April 30,						For the Nine Months Ended April 30,
	2020			2019			2020			2019
Service cost	$	122		$	407		$	973		$	1,220
Interest cost	444			529			1,456			1,586
Expected return on plan assets	(688		)	(702		)	(2,102		)	(2,107		)
Amortization of:
Prior service costs	—			—			—			1
Other actuarial loss	167			192			837			578
Net periodic benefit cost	$	45		$	426		$	1,164		$	1,278

	Postretirement Health Benefits
	(in thousands)
	For the Three Months Ended April 30,						For the Nine Months Ended April 30,
	2020			2019			2020			2019
Service cost	$	29		$	27		$	87		$	79
Interest cost	20			24			61			73
Amortization of:
Prior service costs	(2		)	(2		)	(5		)	(5		)
Net periodic benefit cost	$	47		$	49		$	143		$	147



	Pension Benefits				Postretirement Health Benefits
	For the Three and Nine Months Ended April 30,
	2020		2019		2020		2019
Discount rate for net periodic benefit cost	3.35	%	4.04	%	2.93	%	3.81	%
Rate of increase in compensation levels	3.50	%	3.50	%	—		—
Long-term expected rate of return on assets	7.00	%	7.00	%	—		—



	Assets
	April 30, 2020		July 31, 2019
	(in thousands)
Business to Business Products Group	$	69,184	$	66,655
Retail and Wholesale Products Group	100,636		95,593
Unallocated Assets	46,161		42,979
Total Assets	$	215,981	$	205,227



	For the Nine Months Ended April 30,
	Net Sales				Income
	2020		2019		2020			2019
	(in thousands)
Business to Business Products Group	$	77,632	$	77,825	$	24,046		$	21,758
Retail and Wholesale Products Group	140,751		129,083		15,380			6,823
Net Sales	$	218,383	$	206,908
Corporate Expenses					(23,732		)	(22,424		)
Income from Operations					15,694			6,157
Total Other (Expense) Income, Net					(262		)	4,219
Income before Income Taxes					15,432			10,376
Income Tax Expense					(2,573		)	(1,599		)
Net Income					12,859			8,777
Net Loss Income Attributable to Noncontrolling Interest					(155		)	(35		)
Net Income Attributable to Oil-Dri					$	13,014		$	8,812


	For the Three Months Ended April 30,
	Net Sales				Income
	2020		2019		2020			2019
	(in thousands)
Business to Business Products Group	$	26,683	$	26,041	$	8,198		$	7,454
Retail and Wholesale Products Group	49,573		44,844		6,412			4,161
Net Sales	$	76,256	$	70,885
Corporate Expenses					(8,910		)	(9,288		)
Income from Operations					5,700			2,327
Total Other (Expense) Income, Net					(103		)	4,377
Income before Income Taxes					5,597			6,704
Income Tax Expense					(947		)	(1,143		)
Net Income					4,650			5,561
Net Income (Loss) Attributable to Noncontrolling Interest					2			(58		)
Net Income Attributable to Oil-Dri					$	4,648		$	5,619



	Restricted Shares (in thousands)		Weighted Average Grant Date Fair Value
Non-vested restricted stock outstanding at July 31, 2019	414		$	33.09
Granted	23		$	33.33
Vested	(41	)	$	32.34
Forfeitures	(5	)	$	32.33
Non-vested restricted stock outstanding at April 30, 2020	391



	Pension and Postretirement Health Benefits				Cumulative Translation Adjustment			Total Accumulated Other Comprehensive (Loss) Income
Balance as of July 31, 2019	$	(14,891	)		$	(148	)	$	(15,039	)
Other comprehensive loss before reclassifications, net of tax	—				(230		)	(230		)
Amounts reclassified from accumulated other comprehensive income, net of tax	634			(a)	—			634
Curtailment on Pension Plan	$	5,040		(b)	$	—		$	5,040
Net current-period other comprehensive income (loss), net of tax	5,674				(230		)	5,444
Balance as of April 30, 2020	$	(9,217	)		$	(378	)	$	(9,595	)



ISSUER PURCHASES OF EQUITY SECURITIES
	(a)	(b)	(c)	(d)
For the Three Months Ended April 30, 2020	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that may yet be Purchased Under Plans or Programs¹
Common Stock
February 1, 2020 to February 29, 2020	—	$—	—	1,041,371
March 1, 2020 to March 31, 2020	74,393	$31.49	74,393	966,978
April 1, 2020 to April 30, 2020	53,377	$32.86	53,377	913,601



Exhibit No.	Description	SEC Document Reference
10.1	Amended and Restated Note Purchase and Private Shelf Agreement, dated as of May 15, 2020, among Oil-Dri Corportion of America, PGIM, Inc. and existing noteholders and purchasers named therein.	Incorporated by reference to Exhibit 10.1 to Oil Dri's (file No. 001-12622) Current Report on Form 8-K filed on May 21, 2020.

11	Statement re: Computation of Earnings per Share.	Filed herewith.

31	Certifications pursuant to Rule 13a–14(a).	Filed herewith.

32	Certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.

95	Mine Safety Disclosures	Filed herewith.

101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith.

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

101.LAB	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.

101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed herewith.

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101	File herewith.


1.	I have reviewed this quarterly report on Form 10-Q of Oil-Dri Corporation of America (the “registrant”);


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and