Oil-Dri Corp. of America (NYSE:ODC) Q2 2020 Earnings Conference Call - Final Transcript

Mar 06, 2020 • 11:00 am ET

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Oil-Dri Corp. of America (NYSE:ODC) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Oil-Dri Corporation of America Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to introduce your host for today's program, Dan Jaffee, President and Chief Executive Officer. Please go ahead, sir.

Executive
Daniel S. Jaffee

Thank you. Good morning, and welcome, everybody, to the Oil-Dri's second quarter and six month investor teleconference. With me in the Chicago conference room is Susan Kreh, our Chief Financial Officer; Tony Parker, our Assistant General Counsel; and Leslie Garber, our Manager of Investor Relations.

Any

Leslie, will you walk us through the safe harbor?

Executive
Leslie Garber

Yes. Welcome, everyone. On today's call, comments may contain forward-looking statements regarding the Company's performance in future periods. Actual results in those periods may materially differ. In our press release and SEC filings, we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the Company's comments and in evaluating any investment in Oil-Dri stock.

Thank you for joining us. Dan?

Executive
Daniel S. Jaffee

Great. Thank you. I'm going to turn it over to Susan. She's going to walk you through a bunch of the details of the quarter and the six months, and then I'll make some comments, and we'll open it up to Q&A. So Susan, take over.

Executive
Susan M. Kreh

Yes. Thanks, Dan, and good morning, everybody. Pleased to be here to talk to you about our second quarter, and we released those earnings yesterday. Overall, it was a very strong quarter for us. And especially if you compare it to other second quarters on key metrics that would be a record as far as net sales, net income and earnings per share. So a good quarter.

So let's start with net sales of $71 million or 2% higher than net sales in the same quarter last year. Now embedded within that growth is a tale of two cities. On the one hand, we continue to experience strong growth in our retail and wholesale group where year-over-year growth of 7.2% was driven by 10% growth in our Cat Litter business during the quarter. This strong growth was offset by our other city, our business-to-business group, where we experienced a year-over-year decline of 7.5%. Now there's a couple of things there that I think are important to note. The decline, year-over-year, was caused in part by the loss of a large customer in our Agricultural business that impacted our top line unfavorably. However, the impact on our gross profit, as a result of the loss of this business, was negligible because it wasn't a profitable business for Oil-Dri in the second quarter of fiscal 2019.

And while net sales in our Animal Health business were basically flat year-over-year in the quarter, we experienced a year-over-year decline in net sales in China that we've talked about previously, where