Oil-Dri Corp. of America (NYSE:ODC) Q4 2018 Earnings Conference Call - Final Transcript

Oct 15, 2018 • 11:00 am ET

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Oil-Dri Corp. of America (NYSE:ODC) Q4 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 Oil-Dri Corporation of America Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for how to participate will follow at that time. (Operator Instructions) As a remainder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Dan Jaffee, President and CEO. Sir, you may begin.

Executive
Dan Jaffee

All right. Thank you. Welcome everyone to the fourth quarter and fiscal year 2018 Oil-Dri investor teleconference. With me today participating will be Laura Scheland, our General Counsel; Dan Smith, CFO; Mike McPherson, CDO; Mark Lewry, COO; and Reagan Culbertson, our Director of IR. And Reagan, if you would walk us through the Safe Harbor, I'd appreciate it.

Executive
Reagan Culbertson

No problem. Good morning.

(Forward-Looking Cautionary Statements). We ask that you review and consider those factors in evaluating the Company's comments and in evaluating any investment in Oil-Dri's stock. Thank you for joining us.

Executive
Dan Jaffee

Thank you, Reagan. And then as always, I'd like to turn it over to Dan Smith to walk us through the quarter and year-end, and then we'll obviously open it up to Q&A.

Executive
Dan Smith

Thank you, Dan. Good morning, everyone. Oil-Dri reported earnings per share of $1.11 per diluted share for fiscal 2018. This value was down from $1.47 reported in fiscal 2017. The decline was driven by a one-time tax expense increase of about $0.54 per diluted share in fiscal 2018. Without this adjustment, Oil-Dri would have reported plus (ph) 4% increase in EPS as compared to fiscal 2017. Sales for fiscal 2018 were up about 1% from last year, we reported sales of approximately $266 million which was slightly below our record year of fiscal 2014. The B2B team reported sales growth of about 5% as compared to fiscal 2017. Retail wholesale group sales were down about 1% compared to fiscal 2017. Our gross margin percentage for fiscal 2018 was 27.1%, which was lower than the 28.1% we reported in fiscal 2017.

We experienced higher freight, packaging and non-fuel manufacturing costs in fiscal 2018. Freight costs were up about 12% compared to fiscal 2017. The new federal regulations and an industry-wide driver shortage both impacted our freight expense for the year. (inaudible) fuel costs were relatively flat with fiscal 2017. Our retail wholesale team reported about $7 million profit for fiscal 2018. This value was about 3% improvement from fiscal 2017.

Sales for the segment were down slightly from fiscal 2017. lower branded cat litter sales were mostly offset by increased private-label lightweight cat litter sales. Increases in cost of goods sold adversely impacted gross margins for the segment. With these (inaudible) in gross margin was offset by over $3 million decrease in advertising expenses in fiscal 2018 versus fiscal 2017.

Our B2B team was up almost 5% from fiscal 2018 -- fiscal 2017 for sales. Improved sales of ag, fluid purification and animal health products more than offset the