CHICAGO, May 20 /PRNewswire/ -- Oil-Dri Corporation of America (NYSE: ODC) announced today net sales for the company's third quarter ended April 30, 1999 were $42,405,000, up 11% over year ago sales of $38,334,000. Net income for the quarter was $1,195,000, down 14% from the $1,389,000 reported for the same quarter a year ago. Diluted earnings per share for the quarter were $0.20, down 13% from $0.23 earned last year. Net sales for the nine months were $133,510,000, up 12% over year ago sales of $118,995,000. Net income for the nine months was $5,499,000, an increase of 2% over the $5,402,000 reported a year ago before a special charge. Diluted earnings per share for the nine months were $0.92, an increase of 6% over the $0.87 per share earned before the special charge. "We are very pleased with the continued growth of the Cat's Pride(R) brand and the year over year profitability increases in all our specialty businesses," said Daniel S. Jaffee, President and Chief Executive Officer. "Costs associated with the launch of our new Scoop 'N Flush(TM) and DustStopper(TM) paper cat litters, including marketing and advertising costs were considerable and negatively impacted the earnings of the quarter by approximately $0.07 per share. Our Canadian business also under performed during the period due to higher raw material costs and more intense competition. "In the fourth quarter we will have lapped last year's acquisition of American Colloid's fuller's earth business, so sales growth is expected to slow. However, despite the results of the third quarter, we are cautiously optimistic about achieving our previously stated earnings goal of $1.25 per share for this fiscal year. "We are very bullish about next year. Non-recurring expenses associated with Phase I of the paper cat litter launch, including slotting, and advertising production, will be behind us. Improved operational efficiencies with new box packaging, paper litter production and resolution of capacity allocation through the various facilities, will also reduce costs next year. These savings, combined with the benefit of a full year's sales and profitability from Phase I of the paper litter launch and other new business opportunities, make us very confident about achieving the current earnings estimate of approximately $1.40 per share in fiscal 2000. Pet Products "Cat litter sales, representing 63% of the company's net sales, were up 11% in the quarter and 16% in the nine months. Phase I of the Scoop 'N Flush and DustStopper recycled paper cat litters launch has targeted about two thirds of the country's distribution through mass and grocery channels. The new products have achieved 45% ACV distribution year-to-date. The launch has also helped increase the "power rating" of Cat's Pride products, an indicator of the number of Cat's Pride items carried in each point of distribution. "Cat litter category retail sales through grocery and mass outlets in the twelve week period ended April 18, 1999 were up 7.5% according to IRI. Cat's Pride cat litter retail sales outstripped category growth by four fold, showing an increase of 28.5%. Cat's Pride clay litters, excluding the new paper items, grew twice as fast as the category at 13%, showing the synergistic growth benefits of the new product launch on our core products. "Oil-Dri Canada had a difficult quarter. Shortages of a critical raw material drove manufacturing costs up. At the same time, competition put pressure on margins and some planned sales did not materialize due to customer consolidation. On the positive side, a new technology that we hope will help significantly reduce material costs is in development and looks promising. Specialty Products "All the non-consumer businesses were able to increase profitability in the quarter," continued Jaffee. "Sales of specialty adsorbents, representing 10% of net sales, were up 7% year-to-date, but down 6% in the last three months. Domestic sales of Pure-Flo(R) bleaching adsorbents for edible oil refining were in line with the same quarter a year ago following seasonal demand. In Europe, higher crude oil quality reduced bleaching clay usage and production volumes were down due to softer demand from Eastern Europe and Russia. Despite these slower sales in the quarter, productivity improvements have helped increase the profitability of these fluids purification products. "Sales of agricultural products, accounting for 14% of net sales, were up 13% in the nine months and 22% in the quarter. Products for sports turf applications, including Terra-Green(R) and private label brands were up substantially in the quarter as were animal health and nutrition offerings. Demand for Agsorb(R) carriers for crop protection, which would normally be tapering off due to the season, was also up from a year ago, primarily due to some adjustments in customer formulation schedules. Industrial & Automotive Products "Sales of Oil-Dri(R) absorbents for industrial and automotive channels, representing 13% of net sales, were up 19% year-to-date and 17% in the quarter. New consumer packaging is being used to sell these "professional" clean-up absorbents into the retail automotive and hardware market. Financial Highlights "The balance sheet remains strong with current ratio at 3.5 to 1 and book value up to $12.83 per share. Capital expenditures continue to run lower than depreciation and amortization year to date. "During the quarter, the company bought back 24,700 shares of Oil-Dri stock at a cost of $371,000. For the year to date, the company has bought back 110,900 shares at a cost of $1,502,000. There are another 89,100 shares left to repurchase under the current authorization. Delivering on our Strategic Plan "While spending associated with the new products significantly impacted earnings in this period, progress on the launch has been very good. Anticipated business developments in the fourth quarter, including realization of a return on our investment in Kamterter II, the research and development company specializing in solid matrix priming, should help us achieve our earnings goal for the year. "Reducing costs, developing new business opportunities and launching Phase II of the paper cat litter launch should contribute to sales and earnings growth in fiscal 2000." This release contains certain forward-looking statements regarding the company's expected performance for future periods and actual results for such periods may materially differ. Such forward-looking statements are subject to uncertainties, which include, but are not limited to, competitive factors in the grocery, mass merchandise and club segments of the consumer market; the level of success of new products; integration of recent acquisitions, changes in planting activity and overall agricultural demand; changes in market conditions and the overall economy, and other factors detailed from time to time in the company's annual report and other reports filed with the Securities and Exchange Commission. Oil-Dri Corporation of America delivers innovative solutions that help our customers make the world cleaner, safer and healthier. The company serves consumer and specialty markets. Investors will have the opportunity to listen to the conference call (2:15 CST, Friday, May 21, 1999) over the Internet through Vcall at www.vcall.com. Please go to the Vcall web site approximately 15 minutes early to register, download, and install any necessary audio software. For investors unable to listen to the live broadcast, a replay will be available at the Vcall web site shortly after the end of the call and a transcript will be posted on Oil-Dri's web site at http://www.oildri.com. OIL-DRI CORPORATION OF AMERICA Consolidated Statements of Income (dollars in thousands, except for per share amounts) (unaudited) Third Quarter Ended April 30, 1999 % of Sales 1998 % of Sales Net Sales $42,405 100.0% $38,334 100.0% Cost of Sales 29,390 69.3% 26,148 68.2% Gross Profit 13,015 30.7% 12,186 31.8% Operating Expenses 10,743 25.3% 9,850 25.7% Operating Income 2,272 5.4% 2,336 6.1% Interest Expense (807) -1.9% (452) -1.2% Other Income (Expense) 207 0.4% 58 0.2% Income Before Income Taxes 1,672 3.9% 1,942 5.1% Income Taxes 477 1.1% 553 1.5% Net Income $ 1,195 2.8% $1,389 3.6% Net Income Per Share*: Basic $0.21 $0.23 Dilutive $0.20 $0.23 Average Shares Outstanding: Basic 5,813 6,053 Dilutive 6,036 6,070 Nine Months Ended April 30, 1999 % of Sales 1998 % of Sales Net Sales $133,510 100.0% $118,995 100.0% Cost of Sales 91,202 68.3% 81,615 68.6% Gross Profit 42,308 31.7% 37,380 31.4% Operating Expenses 32,704 24.5% 28,550 24.0% Restructuring Charge * 0 0.0% 3,129 2.6% Operating Income 9,604 7.2% 5,701 4.8% Interest Expense (2,401) -1.8% (1,253) -1.1% Other Income (Expense) 488 0.4% (22) 0.0% Income Before Income Taxes * 7,691 5.8% 4,426 3.7% Income Taxes 2,192 1.7% 1,261 1.0% Net Income * $ 5,499 4.1% $3,165 2.7% Net Income Per Share*: Basic $0.94 $0.51 Dilutive $0.92 $0.51 Average Shares Outstanding: Basic 5,846 6,197 Dilutive 5,995 6,232 * Note: In the second quarter of fiscal 1998, the Company recorded a restructuring charge to cover the costs of exiting the transportation business and writing off certain non-performing assets. This charge reduced fiscal 1998 income before income taxes by $3.1 million, net income by $2.2 million, and earnings per share by $0.36 for the nine months ended April 30, 1998. OIL-DRI CORPORATION OF AMERICA Consolidated Balance Sheets (dollars in thousands, except for per share amounts) (unaudited) As of April 30, 1999 1998 Current Assets $52,074 $52,190 Property, Plant and Equipment 62,702 54,067 Other Assets 18,543 24,741 Total Assets $133,319 $130,998 Current Liabilities $14,855 $13,461 Long-Term Liabilities 44,025 46,683 Stockholders' Equity 74,439 70,854 Total Liabilities and Stockholders' Equity $133,319 $130,998 Book Value Per Share Outstanding $12.83 $11.99 Additions to Property, Plant and Equipment Third Quarter $2,636 $1,630 Year To Date $6,201 $4,529 Depreciation and Amortization Charges Third Quarter $2,050 $1,832 Year To Date $6,311 $5,676  