ODC - NYSE

Welcome to the Annual Meeting for Oil-Dri Corporation of America. Our host for today's call is Leslie Garber, Manager of Investor Relations. At this time, all participants will be in a listen-only mode. I will now turn the call over to your host, Leslie Garber, you may begin.

Good morning and welcome to Oil-Dri Corporation of America's 2022 Annual Meeting of Stockholders. My name is Leslie Garber and I am the Manager of Investor Relations at Oil-Dri. We are conducting this meeting virtually, a format utilized during the COVID-19 pandemic, which enables greater stockholder attendance and participation, improved efficiencies, increases our ability to communicate with stockholders and reduces costs. On your screen under Meeting Materials, you will find the Meeting Agenda, Rules of Conduct, List of Stockholders of Record and Oil-Dri's Proxy Statement and Annual Report. During the meeting today, we will be covering the election of directors and one other proposal. Next will be the business presentations and financial review followed by time for Q&A. We ask that you submit your questions online under the Ask a Question field on your screens. Only stockholders of record are able to ask questions during the meeting. Stockholders will also be able to vote online by clicking on the Vote Here button on your screens. Now it is my pleasure to introduce our General Counsel and Secretary, Laura Scheland, who will conduct the formal portion of today's meeting.

Good morning ladies and gentlemen. I now call to order the 2022 Annual Meeting of Stockholders of Oil-Dri Corporation of America to conduct the formal business set forth in the notice of meeting and proxy statements. Commencing on October 25, 2022, a notice regarding the availability of proxy materials or a copy of the proxy materials was mailed to all Oil-Dri stockholders of record as of the close of business on October 10, 2022, which is the record date fixed by Oil-Dri's Board of Directors for the determination of stockholders entitled to notice of and to vote at this meeting. Broadridge Financial Services has delivered an affidavit confirming the foregoing. Oil-Dri has appointed Peter Sablich of CT Hagberg to serve as the Inspector of Election for this meeting. He is present on the webcast and has taken the oath of office. As of October 2022 the record date for this meeting, there were 5,075,302 shares of Oil-Dri's common stock and 2,045,415 shares of Oil-Dri's Class B stock outstanding. Holders of our common stock are entitled to one vote per share and holders of our Class B stock are entitled to 10 votes per share and generally vote together without regard to Class. A quorum is present at this meeting if holders of a majority of our common stock and Class B stock outstanding and entitled to vote are present in person or represented by proxy. Thus, the number of votes necessary to constitute a quorum at this meeting is 12,790,255 votes. Mr. Sablich has informed me that there are more than such numbers of votes represented at this meeting. Therefore, I declare there is a quorum present for purposes of transacting business. Now, I will present the matters to be voted upon. If any stockholder would like to make a comment regarding any of the proposals, please submit your comment through the Ask a Question field in the Web portal and we will review any comments on the proposals themselves after all proposals have been presented. As described in the proxy statement, the first item of business is the election of nine Directors. The proxy statement listed Oil-Dri's nominees for Director, each of whom currently serves as a Director of Oil-Dri. Those nominees are Daniel S. Jaffee, Ellen-Blair Chube, Paul M. Hindsley, Michael A. Nemeroff, George C. Roeth, Amy L. Ryan, Allan H. Selig, Paul E. Suckow and Lawrence E. Washow. The second item of business is the ratification of the appointment of Grant Thornton LLP as Oil-Dri's independent auditor for the fiscal year ended July 31, 2023. The Audit Committee of the Board of Directors of Oil-Dri has appointed Grant Thornton to serve as the company's independent auditor for fiscal year 2023 and has directed that appointment to be submitted for ratification by the stockholders at this meeting. At this time, we'll transfer and review any comments on the proposals that have been submitted. It looks like no comments have been received, so we will proceed with opening the poll. It is 9:35 AM on December 7, 2022 and the polls are now open. Any stockholder who hasn't yet voted or wishes to change their vote may do so by clicking on the Vote Here button on your screen. Stockholders who have sent in proxies or voted via telephone or Internet and who do not wish to change their vote do not need to take any further action. While we allow time for stockholders who haven't already done so to complete their voting, I'd like to remind you that the business presentation and other commentary by any of Oil-Dri's employees today may contain forward-looking statements of expected future performance. Any such forward-looking statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially. We highlight a number of important risk factors that may affect our future performance in our SEC filings, including our annual report for the fiscal year ended July 31, 2022. We urge you to review and consider those risk factors carefully in evaluating the company's comments and evaluating any investment in Oil-Dri stock. Copies of our SEC filings are available through the company or online. All right, one last minute to finish voting. Okay. At this point, the polls are closed and I will now report the preliminary results of the voting. We will be reporting the final vote results in a Form 8-K to be filed within four business days to the SEC. As described in the proxy statement, a Director may only be elected by a plurality of votes cast. The nine nominees who receive the largest number of votes will be elected. We have been informed by the Inspector of Elections that the preliminary vote report shows that the nine candidates nominated by Oil-Dri received the largest number of votes. Regarding the second item of business, an affirmative majority of the votes represented at the meeting is necessary for ratification of the appointment of Grant Thornton as Oil-Dri's independent auditor for the fiscal year ending July 31, 2023. We have been informed by the Inspector of Elections that the preliminary vote report shows that such ratification received more than a majority of the votes represented at this meeting. This completes the business to be conducted at this meeting. There being no further business to come before the meeting, the 2022 Annual Meeting of Stockholders of Oil-Dri Corporation is now adjourned. I am now happy to introduce Dan Jaffee, our President and Chief Executive Officer for our business presentation and financial review.

Thank you, Laura and welcome to our shareholders, our Oil-Dri teammates, I know they tune in and I know we even have some parents of teammates that are tuning in today, and so welcome everyone. Thank you. Proud of the quarter, proud of how the team performed in a very dynamic environment. Those of you who have owned our shares for a long time know what I like to do at this point in the presentation is cover new promotions of existing people in new positions of importance of the company and then also Vice Presidents who have joined us during the year or people that have been promoted to the Vice Presidential level during the year, because an investment in Oil-Dri really is a twofold investment. Number one, you're investing in our mineral and its value and our ability to understand that, but then you're really investing in our team who is going to help communicate that value to our customers and then sharing that value with them. So with that being your twofold investment, you know about our mineral and you'll hear more about our opportunities as we move forward. I'd like to cover our new Vice Presidents and senior promotions that occurred during the year. First, Chris Lamson is our Group Vice President of Retail and Wholesale. We feel very fortunate that Chris joined our team almost a year ago. He received his BS in Finance from St. Mary's of California. He then spent 18 years with The Clorox in many positions, including VP, General Manager of the Food and Charcoal Division, and Vice President of the Walmart Customer Team. He spent four and a half years as a Senior VP at Central Garden and Pet, again, giving him knowledge not only of the consumer products arena, but the actual pet arena that we compete in and as I said, he has been here a little bit under a year. Currently at Oil-Dri he has full oversight of our domestic and Canadian consumer product businesses, our industrial and sports turf businesses, and one of our copack relationships. And he is leading our S&OP process, which is really how we run the company now, and has had a major positive impact on our ability to supply our customers in a very dynamic environment. So welcome Chris to the team. Next, Aaron Christensen, you've seen him before. So this is an old face and a new job. He was promoted during the year as Vice President of Operations. He received his BS in Mechanical Engineering from Washington University in St. Louis. Before he joined us, five and a half years with Procter & Gamble as a processing engineer, quality assurance manager, and then 10 years with Unilever and the last two as manufacturing manager at their largest consumer product plant in Jefferson City, Missouri. He has now been with us seven years, which is amazing. It's just he's been a great addition to the team and his current responsibilities include oversight of all of our activities relating to mining, manufacturing, engineering, logistics, procurement, customer service and planning. And if we had any more, we'd give them to him. My dad always said, if you want to get something done, find a busy person and assign it to them. So that's what I've done there. And then his promotion opened up a promotion for David Downs, who is now our VP of Manufacturing taking Aaron's former role. David received his BS in Mechanical Engineering from VMI. His past experience includes VP and Plant Manager at United States Lime & Minerals, lots of mining experience. He then was a Senior Engineer at Nestlé Purina's Cat Litter plant in Virginia, and he's now been with us six years as our Plant Manager, first in Ripley, and then as our Regional Manager in Georgia. His new responsibilities include oversight of all manufacturing at our eight plants in the U.S. and Canada, and we're very fortunate to have David on our team. Next I fired myself as the Head of Amlan. I missed a plan for a month, so I terminated myself. No, I'm just kidding about that. Really what I did for a couple of years was just get the strategy, get the people in place, get the team in place. We added a lot of teammates and one of the major additions was Dr. Wade Robey, who joined us at that time as our VP of Marketing. And so now he is being promoted to President of Amlan International. He received his BS in Ag Sciences from Auburn, his Masters in Avian Physiology from Auburn, and his PhD in Animal Nutrition from Virginia Tech. So you can see he has absolutely got the educational experience to lead our team. And then he has the work experience, which really has been stellar 30 plus year career in animal health and biotech. He's been with such notable global multinational companies as Monsanto; Novus, where he was Director of Nutrition Research; Cargill, he was an R&D Director; Syngenta and then POET, Senior VP and Chief Technology Officer. I mentioned he's been with us two years. He recently also began overseeing product development out at VIC [ph] and now he is got oversight of our entire global animal health business and he has an incredible team beneath him and we're just really excited about the future and appreciative that Wade is on our team and leading our business. So Wade, thank you very much for that. His promotion opened up room for another promotion. So Reagan Culbertson who's been with us for 15 years, she received her BS in Media Arts and Design, Communication Studies from Northeastern and Boston. She's been with us a long time. She was promoted to Global Marketing Director in 2020 and she led the turnaround at Amlan by clarifying our message and promoting the efficacy of our mineral as our unique selling proposition. That is our reason to be in the category and we are leveraging that heavily and a lot of that is with her help and communication. So her new role will be oversight of all of our B2B strategic marketing. So that includes our Ag division and our fluids purification division, our branding communications and product management. Reagan, congratulations and thank you for taking on these new responsibilities.

And then last but not least, we have a new Vice President of Human Resources, Pat Walsh. Pat received his BS in Psychology from the University of Illinois, his Masters in HR and Industrial Relations, also from the University of Illinois. He spent 14 years with PepsiCo Frito Lay. He was a Senior HR Director, HR Manager. He's been with us a little under a year and has already had a major impact on our company, really embracing our lessons learned and our core values and leading the charge from that. And then also spearheading our talent management program which we -- really is nascent and he's been doing a great job at that. So Pat, really happy to have you on the team and investors you should be proud of the team that is every day trying to maximize your shareholder value. I'm not going to get into any of the details because that's what Susan Kreh is for. So I'm going to turn it over to our CFO and Chief Information Officer, Susan Kreh.

And then last but not least, we have a new Vice President of Human Resources, Pat Walsh. Pat received his BS in Psychology from the University of Illinois, his Masters in HR and Industrial Relations, also from the University of Illinois. He spent 14 years with PepsiCo Frito Lay. He was a Senior HR Director, HR Manager. He's been with us a little under a year and has already had a major impact on our company, really embracing our lessons learned and our core values and leading the charge from that. And then also spearheading our talent management program which we -- really is nascent and he's been doing a great job at that. So Pat, really happy to have you on the team and investors you should be proud of the team that is every day trying to maximize your shareholder value. I'm not going to get into any of the details because that's what Susan Kreh is for. So I'm going to turn it over to our CFO and Chief Information Officer, Susan Kreh.

And then last but not least, we have a new Vice President of Human Resources, Pat Walsh. Pat received his BS in Psychology from the University of Illinois, his Masters in HR and Industrial Relations, also from the University of Illinois. He spent 14 years with PepsiCo Frito Lay. He was a Senior HR Director, HR Manager. He's been with us a little under a year and has already had a major impact on our company, really embracing our lessons learned and our core values and leading the charge from that. And then also spearheading our talent management program which we -- really is nascent and he's been doing a great job at that. So Pat, really happy to have you on the team and investors you should be proud of the team that is every day trying to maximize your shareholder value. I'm not going to get into any of the details because that's what Susan Kreh is for. So I'm going to turn it over to our CFO and Chief Information Officer, Susan Kreh.

Thank you, Dan. So we're going to talk a little bit about fiscal year 2022, but that's history. It was a tough year. We're glad to have that behind us. And we'll look at the results here for the first quarter of 2023. If I start fiscal 2022, our net sales were up 14% over the prior year with a lot of the trajectory and momentum coming in the back half of the year. And that momentum carried forward into the first quarter of fiscal '23 when we achieved record sales of $99 million, representing 19% growth over the first quarter in fiscal 2022. And that 19% growth is entirely attributable to pricing. Now, we did have some shift in mix in volume, meaning that we were down about 5% in volume in the quarter in our retail and wholesale business, but that was offset by the same amount of growth in our B2B business. And I think, Chris, can you give us a little color on what happened there in the first quarter?

Yes, and I think it's noted in the management discussion as well Susan. Primarily in our Co-man business, our Co-man partner exited really the entirety of the international piece of their business, expect we will lap that in March. So really, single biggest driver, if you look back at our consumer business and our industrial business volumes were flat slightly.

Thanks Chris. Internally, we assess our profitability on a per ton basis to ensure that we're generating the most value out of our non-renewable resources, our mineral, as Dan mentioned earlier. The volume was up 6% in terms of tons in fiscal year 2022 with volume gains in both the retail and wholesale and business to business channels. Moving forward to the first quarter of fiscal 2023, volume was essentially flat. And again, with the shift in mix, B2B being up, retail and wholesale being down for the reason Chris just gave you color on. When we look at net sales per ton of $421, that highlights the impact of our pricing actions in fiscal 2022 and dial forward to the first quarter of fiscal 2023 and that number is a record $473 per ton. And you can see that compares to $394 in the first quarter of 2022. As we talked about throughout all of fiscal 2022, gross profit per ton was adversely impacted by the timing of cost increases that hit us versus the timing of when we were able to get pricing into the market and into our customers. So a challenging year on a gross profit per ton basis in 2022, so we are excited about where we are sitting in 2023 with the first quarter gross profit per ton being $107 per ton, an increase of 62% over the first quarter a year ago. That flows through to net income per ton, both in the year and for the quarter. And that flows through to our basic earnings per common share, which you see in Q1 at $0.80 per share is almost equal to fiscal 2022's full year number of $0.83 per share. So momentum is on our side. We're seeing the impact of our price increases and we continue to be committed to our dividends, so dividends per share at $0.28 per share here in the first quarter. So that's one cash outlay. And if I take a look back the past couple of years at our significant cash outlays, you can see our continued investment in our plants, in our infrastructure, with our capital spending being the largest commitment of our cash outlays. We intend to invest at a similar rate here in fiscal 2023. And if anyone's interested in some comments, I saw a question on that, we can get that a little bit later. So the challenges with this team and Dan talked about team and it really does take a team, the challenges this team faced, and you can see looking back for the last several quarters during fiscal 2022 were quite large as costs came at us, very -- cost increases came at us rapidly in an unanticipated level. So if you look at fiscal 2023 first quarter and you can see we've got momentum on our side, and that is what we said in the fourth quarter when we were talking to you as we were feeling that the momentum was there, that we had price increases going into the market in the first quarter and we have some more going in the second quarter of fiscal 2023. So just to wrap it up, we know where we've been. We talked a little bit about cash investments in our business. There's one further one in the first quarter if you noted in the cash flow statement, we made some investments in inventory, pretty significant to the tune of $5.1 million. So I thought I'd invite Aaron to just make a couple of comments on what we're doing there and how we're supporting the business with that investment.

Thanks, Susan. Happy to field that question. You know, as we've alluded to in prior quarters, service has been immensely challenged over the past year. One of our priorities has clearly been to restore service levels to historic levels. One of the ways we've done that is with very intentional and selective choiceful addition of inventory in the right places and our highest value added products to ensure that we can leverage our superior service as an advantage compared to our competitors and other customers.

Wonderful, thanks. With that, I'm going to wrap it up and actually turn it over to you, Aaron.

Thanks, Susan. Today I'd like to take a few minutes and I'm really excited to have the opportunity to talk about how Oil-Dri is investing in our future. We invest in many ways. We invest in our brands, we invest in our culture, we invest in our minerals and reserves, we invest in the environment, we invest in new products and innovation, and we invest in our teammates. Today, I would specifically like to talk about how we invest in our infrastructure. Oil-Dri is an 80-year business. Our producing facility is our foundation to what we do. I'm going to provide some really brief insight into our capital outlay, not in depth, but some examples of how we have invested and are continuing to invest in our facilities through our capital spend. Both Susan and Dan have made comments and there's a note in the disclosure and press release about our ongoing commitment. First, I'd like to talk about our philosophy. Any business finds itself with a continual conflict between investing in business growth endeavors, cost savings, and business continuity. And by business continuity, I mean savings, environmental compliance, safety, and the ongoing simple maintenance of our facilities. Oil-Dri looks for very intentional and intelligent ways to find investments that align with our growth strategy, but also deliver on cost compression and continuity of business. In fiscal 2022, Oil-Dri spent just less than $23 million. I believe there's a question that's been fielded in the portal. Susan alluded to it earlier. We fully anticipate and expect investing in a very similar way, similar philosophy and similar level in the years ahead. Later today, you're going to hear from several of our commercial leaders about our growth strategies in those areas, specifically in the area of litter and animal health. I'm going to take a few minutes and show some examples in these four areas of investments we have already made that deliver on all three; cost savings, business growth, and business continuity. I hope they're insightful in ways that are meaningful to our investors. Before I talk in those, talk through those four areas, I'd like to talk about our mine operations. Oil-Dri at its core is a clay mining and minerals company. That is foundational to our business. We make substantial investments every year in our mine assets and mine equipment. It is essential that day in and day out we can deliver clay to our factories in a way that's reliable. We look for ways to do so that are more efficient, more modern each and every year. It is a continual commitment. I'd like to take a moment to also talk about how we reinvest in the land that we have leveraged and used. Oil-Dri has a substantial commitment to land reclamation every single year. You can see images on the screen here of land that we have mined and used. It's been restored to hunting and fishing property, lakes and ponds that are used for the years ahead. Oil-Dri has an annual commitment to restore land that we used to its natural state. So now I'll take a few minutes and talk about examples of where we've made investments in front of our growth agenda. The first is the renewable diesel area. Oil-Dri has looked at ways to debottleneck our milling operations, prepare for the future years in advance and build capacity that we fully anticipate needing. We also take advantage to do so in manners that also improve our environmental footprint, reducing particulate matter and emissions. We've been able to leverage our environmental agenda at the same time that we deliver capacity for growth. Chris will talk shortly about lightweight cat litter. We are on a multi-year journey to add capacity, reduced cost, and modernized our lightweight cat litter packaging operations. It's also an area we've invested in ways that are better for our teammates; modern robotics, line layouts, lighting, ways that make us an attractive employer for our teammates, and ultimately help build and develop the culture that we want to flourish in our producing facilities. Thirdly, I'd like to talk about how we have and are investing in our agricultural products. What's shown here is an image of investments made in one of our facilities that supports our highest value added agricultural products. We've used modern design techniques, 3D modeling, advanced methods to optimize design and construction and grow our producing base in ways that are rapid. We chose equipment selection that reduces maintenance costs long-term as well as electricity and utility costs so that we can reduce costs from those products and ultimately reduce both utility and repair costs. Lastly and you'll be hearing from Dr. Wade Robey later, I'd like to talk about how we've invested in our animal health producing footprint. This is really the most transformational area over the last 12 months, and we expect it to be similar over the next year or two. A very wide ranging scope of investments made a really fundamentally built to add capacity. We've added air handling capacity, which also shrinks our environmental footprint, automation and modern drying assets, sets that we're prepared for the growth ahead instead of being behind the eight ball. Hopefully this has been insightful and has answered some questions that have been fielded on the portal about our plans in the years ahead. We continue to look many years into the future to make sure that we are well in advance of our commercial team's plans to grow the business. Speaking of plans to grow the business, I'd like to hand the baton to Mr. Chris Lamson, who is our Group VP of Retail and Wholesale.

Thanks a bunch, Aaron. Good to be with you all this morning. And we're going to talk about staying the course and our focus on lightweight litter. I would have loved the double entendre if we were talking about staying the course with our coarse litter. And we feel good about that business, but really we see our growth coming in the lightweight litter business, both on the branded side and on the private label side. And Dan talked about may be and about a year into the role, and as I came in and looked at strategy, sometimes the new person wants to come in and candidly make a bunch of changes and really this presentation is about why we're not. We'll talk about a few new tactics and a few things that we're excited about in terms of lifting both of our branded and our private label business. But fundamentally, we are staying the course of private label because one highly consumer relevant. Who wouldn't want all other things equal, who wouldn't want a product that is a lot easier to shop for, a lot easier to handle at the point of consumption? Incredibly customer relevant, significantly lower cost than a freight laden business for our customers. And virtually all of our major customers are also driving environmental programs. It takes trucks off the road and we're advantaged here. Our mineral is the best natural way to achieve lightweight litter. And in a couple slides the focus here is working, so we'll share that as well. So again, a few tweaks, but we are staying the course in terms of our focus on lightweight litter. Overall a quick look at the growth in the overall cat litter business since 2018. You see impressive compounded growth up at the top. I did a little math, what's also impressive and I would think investors would want to take note of, the growth has been remarkably consistent here. And I think it ranges between 8.8% and 10.9% annually and it's accelerating a bit with the last couple years up 9% and 11% year-on-year. So love the -- love the consistency. Next slide would show us why I shared with you that we're staying focused from a results perspective on lightweight. So you just saw the 10% CAGR or so on our total litter business. Our overall compounded growth on the lightweight business is 50% higher at 15%. And I would also share with you when you look here, also accelerating. So the 15 is, is in the 10 and driving solid growth year-over-year. I will say if you're looking at close details and Leslie would probably wants me to note this, this slide is looking at our U.S. business. The previous slide had the Canadian business on it, which is the difference in the two CAGRs. So why are we staying the course? It's working. You see the growth here. So fundamentally most of our tactics are staying pretty darn similar to where we've been on lightweight growth with a couple of modest tweaks that are really centered around making sure that our activities and our investments, our activities on the consumer side, our activities relative to innovation benefit both our branded business as well as the private label lightweight business. Okay? So we'll share with you our continued focus on base product performance, the end-to-end benefits that we drive with customers as we sell to customers in terms of why they should be driving lightweight at the shelf, our innovation that we're really amping up hosting it both against our base and some innovatives both product and packaging ideas and how we're moving from focusing on Litter For Good on our brand to lightweight at the center of our consumer messaging. Starting with this fundamental focus on product quality, all this work preceded me, but as a company, I think we're very proud as I sit here and look at Aaron, who you just heard from, enormously proud of the folks in our manufacturing facilities and the support that we've also gotten out of our innovation center in terms of driving fundamental product quality. And I think why would we be so focused on something like a dust index, right? Is that really that exciting? Well, it's a key consumer attribute or really a key consumer dissatisfier. And I can tell you that other consumer attributes like clumping would show exactly the same sort of progress over the last several years. And that's why on the churn on the right you see a significant decline in consumer complaints below really kind of a targeted threshold of that 0.05. Again, why does this matter? And I think it's the old adage, right? Word of mouth is the best form of advertising. And of course that's always been important, but in a -- and I'm not telling you anything you don't know, but social media around word of mouth has been an absolute, exponential multiplier and maybe a super spreader if you will of word of mouth, so particularly important in terms of our focus on the fundamentals here and product quality. Additionally, we are more longer-term focused on reaching absolute parity or better performance of our lightweight litter to heavyweight litter. I'd say we have a little bit of work to do in the clumping space, but overall, when we look across consumer attributes, we're on our way and, and continue to look for further break or real breakthrough in addition to focusing on the fundamentals of product quality. This slide you've seen and again, in terms of staying the course, we're not going to apologize for that. Really the first two buckets here deal with our ability to help the customer, the retail customer understand the benefit of lightweight. And while the idea hasn't changed, very proud of the team over the last year in terms of its ability to actually go in and model for customers how lightweight litter actually grows their profitability. And in a business that is, where the total value of the litter is 30%, 40% wrapped up in freight by being able to get 30% to 50% more product on a truck, the customer and ultimately the consumer win from that. And we're going into major customers modeling that benefit, showing them why, whether it shows up on the buyer scorecard in some cases or it doesn't in the case of other retailers, why that benefit of lightweight litter flows to their bottom line. And then I'm going to speak in a moment to really amping up our consumer message on the latter half of the continuum around consumer usage and shopability and the benefits of lightweight there. This slide is really intended to trigger these last couple of ideas are not just about branded, but about raising both, as I talked about, raising both the private label business and the lightweight business together. So our innovation that, we'll get into here in a moment, we're looking to apply to both, our branded and our private label business and by moving from consumer messaging on the brand that we're centered around the Litter For Good messaging to a message that focuses on lightweight, we're really driving a subcategory benefit around lightweight that benefits our private label business as well as our branded business. That's really, as you double click on what we're doing, the key changes in terms of our go forward plan on driving lightweight. Innovation, so we're being a little dodgy or cagey or something like that here. These -- the couple of big innovation ideas have yet to hit the street. I would say within the next couple of quarters when we visit with you all again we'll be able to share specifics, but a couple things that we're excited about and one, you might say, okay, a value branded plan and private label player, should you be innovating? Hey, we had innovated the lightweight litter segment over a decade ago, arguably with our [indiscernible] partner, we innovated, the lightweight segment in coarse, more than 35 or 40 years ago in partnership with them, so really a great track record of innovation. We have some product innovation that I can tell you and probably can't tell you much more, but takes a fundamental category benefit and takes it to the next level in terms of how we can talk about it. And again, initial plans are to bring that into branded, but also use it as an opportunity to drive premium private label in the marketplace. And then, those are you that keep up on particularly consumer package goods specifically see a move towards packaging that hones in on the things about packaging that are particularly consumer relevant, the consumer is ready, willing to pay for, but strips other costs out and ensures that the value is in the sauce or in the clay if you will in this case. And we've got some things in the works that we're studying very hard now from both a manufacturing perspective and of course a consumer perspective that we're feeling very excited about, particularly as a value brand and a private label producer where we think that will have particular impact on driving value for us in ways that maybe the larger three brands could not. Really lastly, and there's a few slides to illustrate this, we are just getting rolling on shifting that message. And to be clear we're very proud of our social platform around Litter For Good. It will continue to be a secondary message. I was comparing a couple of the brands have similar programs I can tell you that are impact. We can sit around this table and as shareholders and employees, you can be very proud of, we're making a significant impact in our Litter For Good program vis-à-vis some others that are driving similar programs. With that said, the primary message is going to lightweight litter. It's celebrating our performance. I showed you a few slides or a few pages ago that enables us to do that with the progress that we've made on core quality over the last few years. And we're doing it, this is kind of a typical CPG 360 degree marketing slide. It could be in other companies in a lot of ways, but we're really emphasizing digital shopper influencers that I'll talk about in a minute, social and e-commerce. And the reason, I talk about those are, those are all places where, I look at Susan. It should make her happy. We can measure return and really drive to I think the pop industry term right now is performance marketing. But we're excited to drive the business in places where we can see reasonably immediate results. Start to see a little bit of copy. I'd tell you, this is actually temporary. We're really looking to leverage our influencers, who are pictured here and really the Kitten Lady, it has been a long-term partner with over 4 million followers. Dr. Evan Antin, almost as handsome as our CEO is not even close. We did a survey Dan, it was close. Dr. Evan Antin is newer to us, but both have driven the Litter For Good platform for us. But both and authenticity is important here, both are very much bought into the lightweight benefit as well, and we're beginning to drive that content, which this is actually an illustration of that. So there's Kitten Lady with over 4 million followers hoisting a bottle or a jug rather of our lightweight litter. We were going -- I wanted to show a video. But in our kind of approval culture Leslie didn't want to spend the extra three grand to put that out there. Anyway, we feel very good about where we are in terms of developing some rich content around that shift to lightweight. And you'll start to see this out on the Internet over the next quarter. So finally wrapping up staying the course and you saw the results that drive to why we're staying the course. And yet, I think the big strategic takeaway is really tactics that drive both our branded and our private label business going forward, particularly around consumer messaging and importantly around innovation.

Thank you, Chris and good morning everyone. It's a real privilege to be able to speak with you this morning and to represent the Amlan Nutrition and Health team globally. Very excited about the opportunity we have with Amlan to build another very strong element of Oil-Dri’s business, and really bring a tremendous amount of value to an industry that is in really great need of innovation as we continue to meet the challenges to feed a hungry world. As we -- as I talked this morning, I want to focus on our North American team and really highlight one of the key regions of the world where Amlan has tremendous opportunity to grow our business. But before I do that, I'd like to start where we always like to start, which is the advantage that Amlan has being part of Oil-Dri and the legacy that the Oil-Dri Corporation brings to our business. There are a number of key elements to that. First and foremost is the leadership that we have with Dan and the Jaffee family. Dan is the third generation leader of our business, and because of that, we have very consistent strategy focus and our strong core values that we bring to this business. Oil-Dri also has, as I mentioned, a very diverse portfolio Amlan and the Animal Nutrition Health business is a great addition to that. We leveraged the very strong vertical integration of Oil-Dri being able to control the product from the ground all the way to the customer, ensuring that we have quality and traceability and sustainability in our products. We use a single source mineral, a number of locations, but a single source mineral that brings tremendous technology to this space. And Oil-Dri has been very consistent over the years in the investments we have on innovation, building out our innovation campus, and a strong team of R&D professionals that really allow us to create differentiating value for the marketplace. As we look at the type of products in portfolio that Amlan is developing, and where we focus in the market, it really is around four key areas that are reflected on the left, and then the illustration of the value opportunity, in the animal diet on the right side of this slide. As antibiotics and other pharmaceuticals are removed very rapidly now from animal diets, driven both by regulatory compliance requirements, as well as strong consumer preferences, there's a tremendous opportunity for Oil-Dri, Amlan to develop products that can meet the need as these products, pharmaceutical products are removed from diets; these help support animal growth and productivity and improve the efficiency of animal production. The pharmaceutical products that are being removed also help prevent disease in animals and allow producers, veterinarians, nutritionists to have high productivity and reduce the challenges of disease in their operations. Oil-Dri has a whole host of natural products that can help support an animal's natural immune system, support the natural development of the microbial ecology in the gut of the animal, and really improve the performance as an animal digests and utilizes nutrients for growth and reproduction. So again, Oil-Dri, Amlan has a tremendous opportunity to target this segment. The other areas that we focus on are a little harder to quantify in terms of the absolute value, but we know that maintaining an optimal gut health and immunity in the animal really improves its utilization of nutrients and allows for optimal productivity and then, of course animal welfare and sustainability. Healthy animals are animals that have a much more productive life. It allows us to produce animals in a much more sustainable way for food production. And it's the absolute requirement now that consumers have that we are mindful of animal welfare and sustainability, and Amlan is a big part of helping the industry achieve that. Now I'm going to shift my focus to the North American market and talk to you a little bit about why we're so excited about this region for growth for the Amlan business. As we look at the opportunity in North America, it really starts with our team there. We have a team of professionals with over a hundred years of collective experience in this industry. Team members that are well known by our customers and that have high credibility in this market. Heath Wessels is the VP of Sales for the Americas for Amlan. So that includes not only North America, but also our Latin American business, where we also are going to see tremendous opportunities for growth in the future. Dr. Aldo Rossi was mentioned earlier, being promoted to VP of Innovation and Technical Service. Aldo also has long experience in this industry, well respected veterinarian, and will help us align and develop a world class technical service team, as well as manage our regulatory affairs and innovation activities for Amlan. Jay Hughes is our Director of Technical Service for the Americas. Jay also has a long history in the industry, working at both a primary breeding company as well as an agricultural statistics company. Jay is well known by our customers and will be optimizing our technical services programs for the Americas, helping customers utilize our products, and also helping to manage field issues that they may be experiencing in their operations. And then Chuck Snipes, Chuck is our key Account Manager in North America, again well known in this industry, tremendous relationships across the various species that he's covering. Chuck has been a great attribute to the team and is really helping to drive the growth that we're seeing in North America. Now, why are we interested in North American market? Why is it a focal point for Amlan? This chart illustrates that on the left or Y-axis, you see the 2021 feed production in million metric tons. And on the bottom of this chart, in the X-axis, you see the compounded annual growth rates. The swine and broiler production is tremendous in the United States and beef also with a tremendous volume of feed that is required for this market. The North American region is the world's largest broiler meat producer per capita. And there's a very high correlation, as you see in this chart between the poultry and the swine industries. The top 10 producers in North America dominate the market. This gives us a very focused access to the market and the opportunity to grow. These companies are large, global, vertically integrated cross species, food and feed companies, which again gives us the opportunity to grow not only in poultry, but also the other species that are important to us. The U.S. is the world's largest producer of broiler meat, and of fresh milk. And we're second in the production of pork meat and beef meat. So a tremendous opportunity in the North American market and why Amlan is focused here.

Then below sorbent, we have a range of formulated products that utilize our clay as its backbone, but also bring in other additional compounds or adjuvants that allow us to have a broad portfolio focusing on a range of opportunities. Again, as pharmaceuticals other drugs or chemicals are removed from the diet driven both by regulatory requirements as well as consumer demand for clean food and feed. So this is the portfolio we're bringing to the United States, very excited about the opportunity that it offers, and we're seeing good acceptance by our customers as we roll this out. Year-over-year, the Amlan global sales have increased approximately 18%, tremendously strong growth, again driven by growth in all world areas, but also our rollout of our U.S. products, our North American products that are starting to penetrate the market. As feed prices rise in this state, we currently have a high commodity prices with the ban in Europe on meat being fed antibiotics. All of these are helping to drive the need for natural solutions that can provide the value that products previously utilized or once did. So we're seeing growth that we believe will be sustained and rapid across North America. Our sales have doubled in this region as we launched our new branded portfolio, as I mentioned, and this in large part is due to the team that we have and the strong efficacy that customers are seeing as they test and begin to utilize our products. I do want to mention that Asia still remains important to our long-term growth. We expect our sales in China to stabilize in fiscal year 2023. We saw a lot of challenges in the region from the pandemic, from supply chain, from the African swine flu. But all these are starting to stabilize, and we're starting to see growth again in this region. The balance of Asia is expected to show significant growth in 2023 as demand rebounds. And really at the bottom line, the world's demand for high quality protein will continue unabated. We have to be more efficient. We have to produce more and higher quality protein to meet the demands of the world, and Amlan is going to be a key part of that for the industry. So finally, looking ahead, North America is going to be a key element to our success. And within the America's, North America is going to be a strong focus for us in the next coming years. Our customers are global food producers, as I mentioned, and our sales and marketing approaches are key to that and focused to the, the fact that these companies produce feed for multi-species and have multiple end markets that they serve. We're currently in field testing with some of the largest producers in North America. We've completed a number of trials. We're seeing good adoption, and we're seeing growth in our business as a result. The growth will be rapid. It'll be stair step and volatile over the first year or two because some of these customers are extraordinarily large. And as they come online, we'll see dramatic step ups in the volume that we sell into this market. We've also, on the marketing side, done a great job with the team that we have. We've launched a new global website that will provide support for our products internationally, but also with a new focus in North America. And we have filled that website with a lot of information our customers can utilize from research articles to blogs and expert advice, not only on the use of our products, but addressing the reason why our products are necessary, the underlying situations or conditions that producers deal with every day and we're providing information to support our customers in targeting those elements. We have our upcoming IPPE Convention here in January in Atlanta. It is the launching pad as I mentioned a moment ago for our North American portfolio a year ago. And it's a conference that attracts people from all around the world. So we're excited to be demoing there again at IPPE with both presentations as well as a booth to service our customers. And then lastly, coming up in March the VIV in Bangkok is one of the largest international shows. Amlan will be there again with a booth, again with a full compliment of staff to support our customers, to meet with new customers that are interested in our products and really help drive the growth of our business. So with that, I'll conclude my remarks and I'll hand it back over to Dan for Q&A.

Wade, thank you very, very much. Thank you to the whole Oil-Dri team. As I opened up an investment in Oil-Dri’s and investment in our people, and I'm sure you are as impressed with our team as I am, and so that we have a lot of momentum heading into the next quarters and the next fiscal years. We're going to open up the floor for questions. People who are submitting their questions, using the Ask a Question field on the webcast, questions or remarks obviously must be relevant to the meeting and pertinent to the matters brought before the meeting. Leslie will read the questions and then I will either answer it directly or direct it to a specific Oil-Dri teammate to field the question. So Leslie, number one?

Okay, the first one in the queue is, can you please address the implications of the Albertsons Kroger merger on Oil-Dri specifically, and the branded private label cat little market more broadly? As I recall, Nestle has a plant in California that is dedicated to supplying Kroger's private label that may or may not still be the case.

Great, thank you. Chris?

Yes, thanks, Leslie. We and Dan, we do business with both customers today. We see the -- I think we see the impending merger as having both some potential for real upside candidly, and I think, probably others across CPG that's selling to selling into one or both like we do would say there's a little bit of, a little bit of risk as well. I think most importantly, our existing business with them is in the litter – in the lightweight segment of litter with our existing business within the context of both where, and hopefully took this from the last presentation or from my presentation, we have significant advantage probably as evidenced by our private label market share being north of 70% our private label market share with lightweight. So that gives us confidence. I'd also say the question alluded to California in terms of a private label producer of lightweight, but even of course, I put our footprint up against really against anybody we compete with. We have a great footprint, which is particularly important given the freight cost driver that we talked about before. And specifically we too have a manufacturing facility that's vertically integrated like all of ours in California.

Great. Thank you.

Thank you.

Okay, so we have two questions related. One is from John Bair. And then the second one is from Robert Smith. So I'm going to just read them sort of together and have a joint answer. What is your outlook for Amlan sales growth that is driven from the combination of both, from repeat orders, from early adopters of products versus new potential customers? And then secondly, are you able to reaffirm your $40 million revenue budget target for Amlan in this fiscal year?

Great. And I'll field this Wade because you've covered a lot of it in your presentation, but we're in a very dynamic state with Amlan because it's truly a startup. We are in tests with major customers, and as Wade said, if any one of them begins to roll out and we have every confidence that they will, it will have a dramatic impact on the overall not just the division, but the whole business. So, we do -- we have communicated that our plan for the year is $40 million. We did $5.5 million in the first quarter, which only annualizes to 22. But it was a 52% increase over the prior year. But we're still not -- we're still in trials with these companies that could flip the needle pretty dramatically. So if you put a gun to my head, would I say we're going to do $40 million this year? I'd probably take the under, but the momentum is in the right direction. So let's say we hope at the very least we'll have a run rate of $40 million in the fourth quarter. But I'd like to actually make it, I just, it's so dynamic that, I'm not willing to bet my life on it, but we're still very, very, very bullish on the short, medium, and long-term future of Amlan.

Okay, great. The next question comes from Ethan Starr. Congratulations on a nice quarter. Dan. You mentioned last quarter that Amlan products are in numerous trials. What's the average length of a trial before a decision is made to buy or not buy Amlan's products? What percentage of companies that try Amlan’s product end up purchasing them?

Yes. And Wade, I'll turn this over to you. And it's very subjective because this is all new, but I would like to tap in your experience here and have you answer that question?

Yes, thank you, Dan. And thank you for the question. And it'll depend a lot by world area, but let me kind of give you a general sense. And this really plays off what Dan mentioned a moment ago. The runway or the time necessary to trial the products and to convince customers of the efficacy and the value really takes a number of months. We've generally worked through a presentation of information and data and R&D to moving to field trials with customers and then gradual adoption in their various complexes as they roll it out across an operation. So, understandably, that can take a number of months to achieve. I can report to you that we're well into that process in North America and certainly around the world, both with existing products and the new products that we have launched, we've consistently seen excellent performance and not only re-trialing, but beginning of commercial use by these large customers. So, as Dan said, we're very bullish on the year. We believe the volume will come in large tranches as customers adopt and be begin utilizing across their commercial operations. And we hope by year end, it'll be at a run rate that is consistent with our targets.

Great. Thank you, Wade.

Thank you. The next two questions that are related come from John Bair and Ethan Star, fluids purification sales growth. Is this a result of higher domestic demand, or is there much of this attributable to international sales? If mostly domestic what are your opportunities internationally? And then the second related question it says, Dan in your annual sorry, in your letter to stakeholders in the 2022 annual report, you noted that several renewable diesel plants are scheduled to begin operating in 2023. How many plants, do you expect to begin operating and what's the size of the opportunity for Oil-Dri?

Yes, and I'm going to turn this over to Bruce Patsey, our Vice President of Fluids purification Division, with the one caveat, he's not in the room with us here. So Bruce, just stay general. We don't give specifics on absolute numbers of plants or absolute dollars, but your general comments would be appreciated.

Sure. Thanks Dan. Basically we had growth mostly in our domestic, in North America and Latin America is where we saw our growth this year or the first quarter, I should say. And we do have opportunities internationally going forward. I think both in the fats and oils business and the renewable diesel business will have opportunities, as we look out in 2023 and 2024. With regard to the second question, there's going to be, there's not going to be a million plants coming on. These are very large facilities, so there'll be several plants in the next two years that will be built and be up and operating. Of course, Oil-Dri will be going after as much business as we possibly can in this marketplace. If I would take a guess that we might have a chance to get 15% to 30% growth in terms of production of our bleaching clay products in this market space. But we'll see, we'll be working hard to get earn that business.

Fantastic. And for those of you who are, I guess, new to the Oil-Dri investment, in many of our businesses, it's very much like the game of risk. If you played that when you were growing up, meaning you can only attack contiguous properties. So our plant is in Georgia, and so we have a unique competitive advantage in North America against our competitors who are in Malaysia or Singapore, or even in Europe. Conversely, they have a big advantage to us in those markets. And so that -- it's not a coincidence that a lot of our growth comes in U.S., in particular North America in general, and then South America in the bleaching of the business because we are closer to those markets than many, many of our competitors. But then the opposite is also true as you cross our moats of the Atlantic and Pacific oceans. So, thank you, Bruce.

Okay, next question. Are you seeing any meaningful improvement in your logistics bottlenecks? What are the biggest pressure points, meaning trucking rail, maritime shipping so on?

Great, and I'll call on J.T. Harrison, our Vice President of Logistics and Procurement. And if you're on mute, JT?

Good question, folks. And can you hear me, Dan?

Yes, we do. Thank you.

So maritime shipping is still the biggest bottleneck that we face. Our freight procurement strategies executed for domestic trucking for rail, for North American intermodal shipping are all driving great successes to prevent or alleviate any bottlenecks. The maritime market is still a difficult one for us, and most shippers. The global vessels schedule reliability is continuing to hover around 40%, which is a huge challenge. And despite that, we have unlocked some successes by our internal metrics. We are outperforming the market by 30%. And some of that success is the inventory we have built that was mentioned earlier, not just having that inventory, but also positioning it closer to the key export ports that we utilize to give us agility to meet the constantly changing vessel schedules of the ocean carriers.

Awesome, thank you, JT. We have one question that actually came into me, which is ironic, but I got it. And the question is, we've talked in the past about how Canada has gone all lightweight for Nestle Purina and how I think what about 55% of the market is now lightweight. And the question is, if the U.S. replicated that lightweight percentage, what would the growth be potentially in the United States?

Yes, so Dan, I'm doing a little back of the envelope math here, but we've obviously looked at this, and you're right, the number one player in Canada, we're benefiting significantly in that market. If the same thing were to happen in the U.S. by way today is around a $400 million at retail category it would more than double that. So I'm sorry, the growth would be more than double that. So the growth would be, about $800 million. So the lightweight category, if really if heavyweight and lightweight were roughly split would grow to over a $1 billion, so $800 million or so growth.

Fantastic. Yes, so great opportunity. And there's no reason to believe that U.S. cats are that different from Canadian cats.

Having lived in Canada, I can tell you they look pretty much the same. Consumer might be even more enlightened up there -- trickle down.

So we're very, very bullish. Like, I'm going to summarize, we're out questions and out of time, but you can see all of our business units are thriving and doing very well. Even, our industrial and sports business, which is sort of the Granddaddy of the divisions is doing well. And then some of our strategic initiatives are all starting to hit at the same time. You've got renewable diesel, our ag business is booming. You've got a lightweight cat litter. And again, we've talked about in the past, but it's very much an ESG effort. I mean, if the whole country adopted lightweight cat litter like they did with detergent, with concentrated detergent, they forced the shelves to go concentrated for carbon footprint reasons and logistical reasons. If the whole country went lightweight, it would reduce the carbon footprint of cat litter by about 40%. And so that Genie's not going back in the bottle. I don't see people in the future saying, I want heavier. I want to have a bigger impact on the environment. I see the exact opposite where I want lighter and I want to do things that are good from the environment, especially if they don't cost me money and don't suffer from performance. So I've always said all things being equal, if the, when lightweight and we believe it is, is at the right price and the right performance, the whole category's going. And so I'm very excited about the animal health business. Again, Genie is not going back into bottle. They're not going to reverse fields and say, okay, you guys, you can all start pumping antibiotics back into food production for humans. It's not happening. So we're in the right place in the right time, and we believe, again, we have the best non-antibiotic, all natural solution to a lot of these issues, which is why the -- you've seen the team, these folks with 20 plus years experience in this industry are all joining us at the same time because they believe and we believe we have the best answer. And nothing sells like confidence and they're very confident in our product line. So I'm very confident in the future of the business. You'll see, and I always get chastised for selling shares to pay taxes on my restricted shares the best. And I always say, well, sort of an idiot test because if I didn't pay my taxes, I'd go to jail. But this year I actually wrote a big check and paid all the taxes out of cash, which my financial advisor would say was not a great idea, but my heart gut, and brain all tell me. And you can decide I'm either insane or I actually know something. Tell me that the future of Oil-Dri is very bright and so that's why I did it, and so that I'm very, was happy to keep all my restricted shares this year and I'm very bullish on the future. So thank you for your attention, your loyalty, your support, and we'll be back at you after the next quarter finishes, but I wish everyone a happy and healthy holiday season.