Welcome to Oil-Dri Corporation of America Q4 and fiscal year 2023 earnings discussion. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. I would now like to hand the call over to Chairman, President, CEO, Dan Jaffee. Please go ahead. Thank you very much and welcome, everybody. First, we're in virtual mode, so I want to introduce who's all on the various lines ready to answer your questions. Thank you for getting those into the portal in advance. Susan Kreh, CFO and CIO, Aaron Christiansen, VP of Operations, Dr. Wade Robey, VP of Agriculture and President of Amlan International, Chris Lamson, Group VP of Retail and Wholesale, Laura Scheland, VP of Strategic Partnerships and General Counsel, David Atkinson, VP Corporate Controller, and last but not least, Leslie Garber, our Manager of Investor Relations, who will walk us through our safe harbor provision. Thank you, Dan, and 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 in our 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, I'm turning it back over to you. Sounds good. Before I turn it over to Susan, I'd like to make some general comments. We just concluded our 83rd fiscal year, and one of the things we're very proud of is our accumulated lessons learned, and we like to carry them on from my grandfather to my dad to me and on into the next generation. One of those is winning at Oil-Dri is a team game, and that's what you guys saw in fiscal 2023. The outstanding results, the record performance, was all due to the collective effort of our nearly 900 teammates globally. And I just want to make sure I give them proper recognition. I mean, just recently, we went through a flawless ERP upgrade, which is almost impossible to do. We've been, in the fourth quarter, we're near perfect scores for on-time deliveries and on our customer scorecards, really received plenty of kudos moving all the way to the top, which was very exciting. And so all of those things had to happen to deliver, you know, the championship year we just delivered. And we're obviously entering the new fiscal year with a lot of momentum, but mindful of the fact, you know, what have you done for us lately? That we're going to have to lap these results as we move forward. And I think you'll hear that we're all very confident, that we have a lot of good growth plans in place, and that fiscal 2023, while the best we've ever had, is the best is still yet to come, and, and, and we believe that. So, Susan, I'll turn it over to you, and then we will get into our Q&A. Susan, we don't hear you, so you may be on mute. Susan, can you hear us? I wonder if Susan got disconnected. I'll go. You know me, I'll—I like open mic night. I'll cover some of the highlights, and Susan, if you get yourself back connected, I'm happy to turn the floor over to you. But the fourth quarter was a record, $107 million in net sales, up 15% over the prior year. You know, and that helped us finish the year for over $400 million for the first time, $413 million, up 18%, all year long. You know, obviously, it's really what happened at the bottom line that was very exciting. What we reported was an increase in the fourth quarter of 129%, up to $11.9 million, and a 421% increase, up to $29.5 million. But the real story is to back out the two nonrecurring events. You'll remember we had an impairment charge back in fiscal 2022, which was an accounting non-cash charge. And then, really good for our future, is we finally closed our defined benefit plan, our pension plan, and replaced it with a very generous defined contribution plan in the 401(k). So when you back out those two nonrecurring events, what you're really looking at from an apples-to-apples standpoint is an increase from $10.136 million a year ago to $36.469 million this year, and you know, that's a 260% increase. Obviously, we report by segment. You've got our business-to-business segment, and their results were very much similar to what the company saw. Sales up 18% in the quarter, 26% year to date, and then operating income up 63% and 50%. And then over on the retail and wholesale group, led by Chris Lamson and his team, sales were up 14% and 15% and 67% and a robust 478%. Now, if you put that impairment charge back in, he and his team up only 204%. You know, you guys can read the news release yourselves, so you don't need me to go through any more of it. We've got a lot of great questions from our investors. I appreciate that, and we have the team on hand to handle those questions. So Leslie, I'm going to turn it back over to you, and let's get into the Q&A and hear what our investors would like to hear from us about. ... Okay, sounds great. Susan, if you are back on the call, let us know. Otherwise, we're just gonna continue. Our first question comes from Robert Smith, and he is from the Center for Performance Investing. His first question is: With respect to Amlan, you say there were timing issues that affected the fourth quarter shortfall. What would the quarter have looked like without those issues? Will the current quarter include all the shipments that missed the last quarter? What are the prospects for Amlan in fiscal 2024? Thanks. Wade, can you please take that? Yes. Thank you, Leslie, and thank you, Robert, for the question. You've got a number of questions in there. I'll try to hit all of them pretty quickly. So with respect to our business in the animal nutrition space, we don't see a lot of seasonality quarter to quarter. So typically, we're pretty smooth as we continue to grow in all the world areas where we're participating. We do sometimes see timing issues as you've noted in your question. We have a logistics timing concern that comes in periodically in terms of how long it takes product to get to our Asian markets or to our Latin American markets, and that can sometimes cause us month to month or quarter to quarter to have more volatility than the business itself would typically show. And so that generally has affected our, our numbers at times on an individual quarter basis. Going forward, certainly anything that we missed in the fourth quarter of the previous year, we would expect then to pick up and, and show in the next quarter. And, and we're seeing that as our business continues to, to move forward. So I believe I've covered all of your key questions. And, and again, thank you for that, for that question to us. Perfect. Thank you. So next, we're gonna combine two questions regarding advertising. The first is from Robert Smith: What were advertising expenses in the fourth quarter? How much of an increase are you budgeting for fiscal 2024? And then the second part is from Ethan Starr, an individual investor, and it also relates to advertising: What results are you seeing from the most recent Cat's Pride celebrity endorsement campaign with a prominent actress? Are the results meeting or exceeding your expectations for return on investment? And I'm gonna turn that over to Chris Lamson to answer. Yeah, good morning, Robert and Ethan. Thanks for the questions. The relative advertising in this past year and the flow of our spend and what, looking ahead to next year, the consumer business spends the overwhelming majority of our advertising dollars, so that's why I'm answering it. Yes, we did spend roughly two-thirds of our total fiscal spend in Q4. I looked back at notes from previous calls. I know I'd been signaling that for most of this past fiscal year on these calls. There were three reasons for it. One was we really wanted to, you know, advertise to full shelves, and we knew that the supply chain would be stable. Dan alluded to it, and better than stable. We're really nailing our service levels now, so we wanted to advertise to full shelves. And we were moving our ad campaigns from our Litter for Good campaign, which we've been on for the last several years, to really emphasizing the benefits of lightweight. And we were basically getting that content in the can and ready to go, which is now done and is hitting the air. And the third reason for it was we launched antibacterial litter at the very end of the fiscal year, and we were wanting to support that out of the gate and obviously into fiscal 2024. Looking forward into fiscal 2024, we will have modest uptick in spend on the full year, but it will be spread much more evenly than it was in the past year for the very three reasons that I articulated around why it was loaded in Q4. All three of those things are now present going forward. So I think that hits Robert's question. Relative to influencers and our investments in content with celebrities and influencers, I would say overall, we like influencers. We're looking at these ROIs constantly in real time. They're pretty dynamic. And it's fun to play with the mix, candidly, and drive the highest ROIs. The content you're referring to did well for us. Other category experts in terms of influencers do extremely well for us. So expect us to keep up, influencers. I'd say expect us to probably lean into those category experts. Great. Thank you. The next question comes from John Baer. There have been numerous announcements recently of poultry and swine plant shutdowns in the U.S. Since quarter end, have you seen any impact to your domestic sales efforts? Backing out the timing of shipments causing softness in animal health sales in Latin America, Asia, and China regions, as noted in the press release, are animal health sales trends continuing to improve? Wade? Thank you, Leslie. And again, thank you, John, for that question. Let me, let me start with the last question or part of the question that you asked, and that was our animal health sales trends continuing to improve. And the answer is yes, although albeit, differential depending upon the world area. So we are continuing to see impacts in the animal production industry around the world based on lingering effects of the pandemic, as well as regional economies. But we are continuing to see that improve and the opportunity for our products to continue to improve and grow in those markets. In the U.S., yes, there has been some depression of profitability among some of the largest integrators and producers. What that really causes is a little bit more scrutiny as they look at new products and maybe a little longer lead time for us to penetrate and begin commercial sales. But because we're new in a couple of these markets, like the U.S. with our new portfolio, we don't expect a significant impact. We'll work through it, and we continue to see good testing, good adoption, and good growth, specifically in the U.S, but around the world. So, yes, conditions are continuing to persist a little bit, and we hear that as we travel around and visit customers, but we continue to see great interest in our products and lots of new adoption and growth in all the markets that we're serving. Thank you. Okay, the next question comes from Ethan Starr, and he asks: "To what extent are your costs continuing to increase, if at all?" And I think we're gonna have Aaron Christiansen handle that question. Leslie, thank you, and Ethan, thanks for the question. I'm happy to answer it. Unfortunately, costs do continue to rise. I'll cite four things quickly. The first is the ECI, or Employment Cost Index. Right now, total compensation costs are up 4.5% over the last 12 months and have peaked as high as five point five in recent months. Oil-Dri continues to find ways to be competitive in total compensation for our teammates. So that's one key cost input. Second is the cost of materials and material inputs. The Consumer Price Index is up nine months in a row. Many of our suppliers and material bases peg their costs on the CPI. That's another area we're continuing to battle rising cost inputs. The third, and Dan alluded to it earlier, Ethan, is our ongoing repair, both through expense and capital of our asset base. Oil-Dri has an aging infrastructure. Much of our asset base is now being replaced through a multiyear capital strategy. The costs to both repair and replace those assets is significantly higher than what it was initially put on the book for. It is mathematically impossible for us to maintain our depreciation base. And the last I'll mention, Ethan, is remind the audience, we're a mining and milling company. Mining costs continue to rise, the cost of environmental and other regulation, as well as the natural reality of moving deeper and further from our factories. So I hope I answered your question, Ethan. Thanks, Aaron. The next question is from Robert Smith, and he asks: "What accounts for the dramatic increase in diluted common shares?" And I'm gonna turn that over to David Atkinson. Thank you, Leslie, and thank you, Robert, for the question. What I would like to point to is you'll notice we added an earnings per share reconciliation to Note I. Although extremely unlikely, we included the potential impact of all of our Class B shares being converted to common. There have been no issuances of new shares other than those to support the restricted stock program, which has been consistent with prior years, and you can see those numbers in footnote number eight on the 10-K. Okay, thank you. We will move on. Robert Smith asks: "Discuss your R&D efforts. Are there new products coming in into the current fiscal year? And what is the R&D budget for the current year? Did it really decline meaningfully last year, and if so, why?" I'm also gonna combine this, because we're gonna talk about some new products. I'm gonna combine this question, with John Baer's question, which I will read, which is: "When did you receive EPA approval for your new antibacterial product? Will this be marketed solely as a new standalone product, or will the additive component be incorporated into your other product offerings to enhance your overall marketing efforts?" So first, I'm gonna have Wade answer the first part of the question, and then he will turn it over to Chris to talk about our new antibacterial cat litter. Wade, do you wanna start us off? Yeah. Thank you, Leslie, and again, thank you, Robert. We look at our R&D efforts really in two buckets. What we would call traditional R&D that we do at our innovation center, and then at contract research organizations, as we do true discovery and product development. The second element of it is really our field validation work that we either do directly with customers or at regional universities that help validate the performance of our products and encourage customer adoption. As a result of that, we can see pretty significant volatility, either within a year or across years, because obviously, the R&D efforts that we do in research and discovery tend to be a lot more expensive than the field validation work. Currently, we're really focusing on field validation as we have two new products that we're introducing into the market. Those are being evaluated both at universities, as I mentioned, but also in direct customer trials. These sorts of evaluations allow us to be a lot more efficient with our spend. Oftentimes, we're actually selling the product as we move into the market, sometimes at a discounted price, but selling the product as we do those field validations with customers. So it really offsets some of the R&D expense that you would normally see. That's what causes our volatility, and again, given where we are in the rollout of the existing two products into the marketplace, it's causing us or allowing us to be a little bit more efficient in R&D spend in the current year. Okay. With that, I'll turn it over to Chris. Thanks, Wade, and thanks for the question, John. I'll pull back really quick and just elaborate on the launch. At the very end of fiscal 2023, we launched Oil-Dri Cat's Pride Antibacterial Clumping Litter, the first and only EPA-approved antibacterial litter here in the U.S. Destroys, kills 99.9% of odor-causing bacteria, and, you know, helps obviously further, you know, the high effectiveness of our clay. This really helps further it relative to odor control and then obviously the broader sanitary home, and the consumer very much takes this benefit to the cat not tracking, nasties, if you will, through the home. We're excited about it, and I can tell you, retailers are excited about it. So, you know, where Cat's Pride is, is particularly strong, which is up and down the East Coast and then to the Southeast, virtually all of our customers have taken it into distribution, and not only just distribution, but incremental distribution. I'll come back to your question on timing, but insightful question around launching it against, you know, everything or launching it against the base versus, an incremental item. That choice out of the gate was deliberate. We wanted to use it as an opportunity to build out our shelf space and really highlight a new benefit to the category. We are, as we speak, innovating further against this benefit. We think it's a big deal. Our customers think it's a big deal. Our consumer returns on it, both from an early takeaway perspective, but also from the research that led up to it, were all very positive. I will tell you, the EPA process is quite long, which is a good thing and a bad thing. It builds a really nice moat around us, driving this benefit. We received federal approval at this point, more than 18 months ago. You then and these cannot be parallel paths. Once you have federal approval, you go through each of the states and gain their approval as well, which, like I said, builds a moat around things, but will also, you know, create long lead times for our further development here, which, like I said, is very much underway. We're excited about the benefit, and we're excited about the initial returns we're getting on the item. Thanks, Chris. Okay, the question comes from Ethan Starr, and he asks: Is Amlan making progress towards getting one or more significant orders from large producers of cattle, poultry, or swine? And Wade, can you please answer that? Yes. Thanks, Leslie, and again, thank you, Ethan. The simple answer is yes. If you look at the market in North America, we're already selling to several of the largest integrators in the North American market. That is continuing to grow with recent penetration, again, in a number of the key accounts here in North America. So great progress there as we continue to launch our portfolio here in the United States. As you look around the world, we have been in those markets a little bit longer, and so they're a little bit more established for us. But we continue to see expanded growth of our sales into alternative species to poultry. So in the ruminant market, specifically in dairy, some of our largest customers in Asia are actually in the dairy sector, and we're seeing that being replicated now in Latin America, in the cattle market, in the beef cattle market, so another ruminant species. But we're seeing new testing and moving towards adoption of some of the largest cattle operations in Latin America, specifically in Brazil. So we're excited about that. Continue to see the broad multi-species applicability of our products and the application of them in solutions that are really allowing us to grow our participation in these markets. So, yes, absolutely, and we expect to see continued progress in this way in the coming year. Great. Thank you. Next question comes from John Baer, and he says, "A recent article in The Wall Street Journal headlined Ocean Freight Rates Pressured, which highlight a significant drop in East Coast to China shipping costs, among other routes. So are you seeing or beginning to see any benefit in your shipping costs?" I'm going to turn that over to Aaron to answer. Yeah, John, I'm happy to answer the question. You heard me earlier talk about where we're still struggling with inflating cost inputs. This definitely is an area where we're seeing cost relief. Freight, both domestic and export, has come down and stabilized. We are seeing that and have been able to take advantage of it. That was the place, however, where it became the most extreme and most inflated during the supply chain challenges in pre-pandemic. Those costs are not back to historical levels, but we've definitely seen relief. As important, if not more so to us, has been the improvement in reduction in lead times. Dan alluded earlier to our great service. We're thankful to be back to a place where international freight is more predictable in lead time to allow us to meet our customers' on-time needs. Perfect. Great. Thank you. So I am going to... See, Susan, is your line working now? Okay, so the next question I'm gonna have Dan Jaffee answer is from Robert Smith. "Please remind me about the seasonality and the quarterly numbers." Dan, do you want to take that? ... Yeah, a good question. I think what you see is that generally, there's not a lot of seasonality in our business when you take into account our diversified portfolio of products. Obviously, there is some seasonality within the individual products. You've got the Pro's Choice, which is, you know, reliant on ball field usage. So while we do an early sell in the winter months, really the predominant use is in the spring, the summer, and the fall. You've then got our bleaching fluids purification business, which is very much tied to when they harvest the crops. So, you know, their fourth quarter could be our biggest of the year. But net, net, net, net, net, when you put it all together, we're relatively flat, which is nice, which again, further, validates our diverse portfolio, and that's what we've always tried to do. We've always tried to, you know, supply markets and deliver value across a wide range of applications so that over the course of a year, some are up, some are down. We just happen to get very fortunate that last year they pretty much were all up, which was it was a great time to be in, in our calcium bentonite business last year, and we see a lot of momentum heading in new. So, so thank you for your question, but there's really not enough seasonality across the consolidated business that you would have to take that into your model. I see a question just came in about Clorox. I'm happy to take that one. Aaron, obviously, you could take it, too, but I've got the mic, and I'm not giving it up. Yeah, and, Chris, actually, you could talk to, but you guys have educated me on this. For those of you are wondering where this question is coming from, they've put out, they meaning Clorox, have put out a lot of news releases around the fact that they've had some cyber problems, cyber security problems with their ERP system, and it has wreaked havoc on them. There's no doubt that their supply chains then got shrunk, or their inventories were sold through, and the shelves were getting pretty bare. Happy to say that they seem to have fixed their problems. The orders are back, and they seem to be even playing catch-up mode. So, you know, what do I think the impact will be on us? They're our second-largest customer, so obviously, they're very important to us. But I think in the first quarter, which is August, September, and October, by the time we hit the peaks and the valleys, they'll generally be. It, it'll be an immaterial difference. That's what I'm hoping for. It might be slightly material, but it's not going to derail our quarter. So good question, and we do certainly support and wish Clorox the best as they dig themselves out of this. Leslie, are there any other questions you wanna cover before I head out, close it up? Well, there's just one. We're gonna take this one last question from John Baer, and his question is: Do you see any significant increase or need to increase capital expenditures for upgrades or replacements of plant operations over the next three years? And I know Aaron, you talked about- I'm gonna have Aaron. Yeah. Yeah, have Aaron do it, but the answer is a resounding yes. But Aaron, you know, talk about it. Yeah, Dan already answered the key message, which is a resounding yes, John. But it's also already planned for. Dan alluded to it earlier, and I alluded to it earlier. We are already in the midst of a multi-year cycle of a higher level of capital spending than historical. It is built. We already have a very intelligently built five to 10-year plan that plans for it. We're looking for intelligent ways to overlap business continuity investments, growth investments, and savings investments. So yes, and, and already well planned for and aligned on organizationally, John. And I would add, you know, I just wanna thank our, our customers because we've had to go out to them and say, "Look, this depreciation that we're charging is based on historic costs, and as we're replacing these assets, it's costing twice, easily twice as much to replace these assets that were put into service 15 and 20 years ago." And they want us to be healthy. They want us to be, you know, be able to replace our capital so that we can continue to supply them the quality and, and quantity that they require and, and value. And they've received the message very well, and we very much appreciate it. So if my customers are listening, if our customers are listening, thank you very much. Obviously, we're all in this together. We're out of time. I am assuming everyone is happy with the quarter, happy with the fiscal year. I know the team and I are, and we very much look forward to talking to you after our first quarter, which ends October 31st, and, we'll be at our next teleconference. It'll be the first quarter of F 2024. So until then, be safe, be healthy, and thank you very much for your support. This concludes today's conference call. Thank you for participating. You may now disconnect.