Welcome to the first quarter 2009 Oil-Dri Corporation of America conference call. (Operator Instructions) I would now like to turn the call over to Daniel Jaffee, President and CEO.

Welcome everyone to our first quarter teleconference. Joining me today are Andy Peterson our CFO; Charlie Brissman, our General Counsel and Rhonda Williams our Director of Investor Relations. Rhonda, do you want to do a Safe Harbor?

Absolutely. Thanks Dan. Welcome everyone and thank you for joining us today. 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 our SEC filings we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We urge you to review and consider those factors in evaluating the company’s comments and in evaluating any investment in Oil-Dri stock.

Thank you Rhonda. As always we will have some introductory comments and opening comments by me but then we want to dedicate the majority of our 30 minutes responding to any questions and concerns you might have. At that time we will open it up. Please prioritize your most important question first and then get back into the queue so we can be sure everybody has a chance to at least have one or two questions. I think I will turn it over to Andy and let him go through the play-by-play for the quarter and then I have some 50,000 foot comments I’d like to make. Andy?

Thanks Dan. We had a strong first quarter revenue growth in both the retail and wholesale products group and the business to business products group. We had record sales of $63.1 million for the quarter, up 14% from last year’s $55.3 million. The increase was due to higher average selling prices and increased volume. We were disappointed in the 19.6% gross profit margin in the quarter down from last year’s 22.5%. Margins were negatively impacted by higher fuel, packaging and transportation costs. The cost of kiln fuel to Dri our products was up almost 50% or $2 million from the prior year. Operating expenses were 13.8% of sales which is down from 16% as a percentage of sales in last year’s first quarter. Net income was 3.6% of sales which was down from 4.5% in last year’s first quarter and EPS was $0.31, a decrease of 11% compared to $0.35 in last year’s first quarter. Looking at the balance sheet and cash flow, cash used in operations in the first quarter was $2.6 million compared to flat in the prior year. Higher accounts receivable and inventory balances relating to the 14% increase in first quarter sales reduced cash from operations by $3.5 million. Cash from operations in the first quarter is negatively impacted by paying out the incentive bonus from the prior year. Cash expenditures of $3.6 million were up 64% from $2.2 million in last year’s first quarter. Debt payments were up $4 million in comparison with last year’s first quarter. Dividends paid of $919,000 were up 10% when compared to last year’s first quarter. The company repurchased 40,834 shares of stock at a cost of $644,000 compared with no purchases in last year’s first quarter. Our average costs for the shares repurchased was $15.78 per share. Cash and investments at October 31, 2008 was $15.8 million, down $10.9 million compared to last year. Notes payable of $23 million was down $8.1 million compared to last year. Thank you. Dan?

As you said, we were disappointed with the gross margin as we put in the news release while we were successful in implementing price increases in nearly every product group. They weren’t enough to cover the tremendous cost increases. Saying this was a dynamic, volatile environment is an understatement. If you look, we reported the greatest year-over-year increase in our per ton selling price ever in the company’s history. I keep these stats going all the way back and our average selling price is up nearly $20 per ton in this year’s quarter versus a year ago and yet margins still went down which shows you we were shooting constantly at a moving target. So, yes short-term for the quarter margins were down. Nobody knows what the long-term looks like anymore. So the near-term costs seem to be stable to declining. We are still rolling out the price increases in selected businesses, particularly in the retail and wholesale group where you see our sales were growing in double-digits but the profits were declining and they were down in the segment by 27%. Clearly we have not yet covered all the cost increases we incurred since our last round of increases 6-12 months ago. You tend to price protect those customers for a one year basis. So we are still having to recover. So even though we are having discussions with accounts and they say in the short run costs seem to be down but when you take them back to a longer term horizon, a year or two years, and show them where costs have gone and where our pricing has gone it doesn’t take a math major to see margins are declining, i.e. we have raised prices to a lesser extent than we have incurred cost increases. So we…

(Operator Instructions) The first question comes from the line of John [Barr]. John [Barr]: I am a new shareholder and very excited about what you guys are doing. I was interested in new products. You talked about having 2-3% with ConditionAde. What do you think we can expect over the course of a couple of years with Calibrin-A and Z in terms of market share?

It is a good question and probably one that we are not going to answer with too much specificity only because first of all we don’t know. Second of all it is all speculation at this point. From our vantage point historically we had two people company wide really involved in selling this. We had really little or no R&D effort. We had no data behind it. All we had was sort of anecdotal customer field inklings that our products did what we thought they were going to do. Fast forward now that we have spent two years and multiple millions of dollars doing field studies in Brazil and the Del [Marber] region and really throughout the world. We’ve got I think eight now DVM’s either on our payroll or through contract employment. We are all very excited about this talking to our distributors, talking to our end users. From my vantage point as a major investor in this company it just defies logic to think that we have maximized this opportunity. So how high is up? I really don’t know but I would be stunned if all we did was convert our existing customers over to this. I would call that a defeat. We all expect this is going to help us especially given that now we are getting into a whole new toxin market, the zearalanone market, that we are very bullish. That is all I can do. If I were to throw numbers out it would only be speculation at this point. John [Barr]: Are there other things you need to do in the channel other than support them with the DVM’s?

Yes. Certainly we are in trade shows throughout the world and we are supporting them with promotional materials in all sorts of languages. We have this infomercial that is very powerful. But at the same time we also need to keep doing, and we are, research on how to improve the products we have. You always need that next generation of what’s new and what’s exciting. But then also going after maybe other toxins and so forth. These aren’t the only ones. These are the major two but there are others. So Dr. Cravens has really a great 3, 5 and 10 year vision for this business. Like I said we are excited. John [Barr]: Do you think the gross margin structure here is above the corporate average?

Yes. I think that is a safe assumption.

The next question comes from Ethan Star – Private Investor. Ethan Star – Private Investor: The 10Q mentions a purchase of land in the first quarter. I’m wondering where was the purchase and was the purchase made to increase clay reserves?

We are always actively acquiring land in our attempt to increase our reserves. I’m pretty sure, I know because I signed off on stuff during the quarter and it showed up in the Q. Specifically which region and all that we are doing it in all of our core plant areas.

The next question comes from Brad Evans – Heartland Advisors. Brad Evans – Heartland Advisors: Just thinking about the gross margins as we move forward throughout the year is it fair to say we can expect to see some gross margin expansion as the result of the falling of raw material costs?

Yes, I would say if the cost profile stays even relatively consistent with what we are seeing yes. That is a safe assumption. If all of a sudden things spike up for whatever crazy reason we always take a long-term approach. We are not just going to immediately, as I say put our customers in cardiac arrest, but if the profile stays where it is yes you should see quarter after quarter inching back towards where we were historically. Brad Evans – Heartland Advisors: Could you just give us a little color as to how volumes across various products have held up since late September in terms of giving us a sense of how business has held up in light of the deteriorating economic situation for the country?

That is an excellent question. There is always a big element of luck in business and I think from our vantage point there is a lot of luck in the absorbent mineral business in the sense that our products tend to be not discretionary or luxury purchases. They are day to day uses in core things like pet ownership, companion animals, where we are skewed. We are skewed more towards the end of the market. We really have it all covered. Our relationship with Clorox takes us into the premium end no doubt and Fresh Step is healthy which is good. But certainly our direct relationships with our brands, which tend to be popular priced or the fact that we book so heavily on private label for our major partners like Wal-Mart clearly those private labels have more relevance in a down economy than they do in an up economy. So I think that had a large reason why our volume came in so strong and we are continuing to see orders going forward equal to or better than the past. So we are not seeing any deterioration there fortunately. Over on the B2B side, if you think about it the clays we sell to ADM and [Car Deal] and companies like that to purify edible oil, people still need to eat and they are not changing their eating habits. They may not go out as much, I’m sure that is happening, but you still have to ingest the same calories pretty much you were before. So, that business is still steady. It tends to be more dependent on what the quality of the oil crop is than in these ranges anyway what is going on in the economy. So that is good news. Our Ag products, I’d say if…

Maybe but only in an effort to roll out more profitable products. Certainly nothing in the core business. We have that managed well. Without getting on my soapbox but I think you guys as investors have a right to understand and I think if we all asked these questions maybe some of the insanity that is going on in America wouldn’t be going on. We all fly coach. For me, all the way through. We use online purchasing vehicles like Priceline to book our hotels and book our cars. We are very frugal with the company’s money. Even though you could say it is your money, it isn’t. The Jaffee family controls just 30% of the equity and we take it very seriously that 70% of the money in the company is from non-Jaffee’s and everyone from myself all the way through spends the money very wisely. When it is our personal money then it will be our decision. Although we tend to be frugal there too although we wouldn’t have to be. But with the company’s money we are very tight. The SG&A is what it is but I can tell you we are not lavish with anything we do.

The next question comes from James Schwartz – Harvey Partners. James Schwartz – Harvey Partners: On Calibrin-A and Z could you go through two things for me? Number one, the type of clay that is used and how it differentiates from the other clay you might have. Then when the swine or chicken when they ingest it do you kind of just chuck it into the feed? Is it given to them specially? How is the delivery process done?

In terms of the type of the clay I think as an investor what you really want to get at is how proprietary is it or how unique is it to Oil-Dri because I don’t want to get into specifics. It would be like giving you the formula to Coca Cola or something like that. It is very proprietary. We spent a lot of time and a lot of money surveying our literally hundreds of millions of tons of reserves to find a, not inexhaustible nothing is inexhaustible, but in the order of magnitude of financial impact of this company it will be a great day when we run out of this clay because it will mean huge sales, huge profits for the company. So within a 10-year window inexhaustible quantity of reserves which we then specifically mined and segregate and then we actually process it at a different location, specially processing each of them differently. So Calibrin-A is processed differently than Calibrin-Z. You couldn’t use A to effectively go after zearalanone and you wouldn’t want to use Z to go after aflatoxin because it is priced higher. It is more specific to get the zearalanone. It is more of a special application. So from an investor standpoint, very, very proprietary. Very unique. Then obviously really what gives people the confidence is the data. It is the support behind it. If you think about any pharmaceutical product you buy personally someone could create an exact duplicate of it but if they haven’t proven that it works or there is no data or support behind it how likely are you going to be to ingest it or take it. Having said that you get into generic analogies and all that but in this business we don’t know of anyone that has…

It is all conjecture. We are excited. We wouldn’t have gone all in on it if we didn’t feel like it could be a big deal. But we don’t even have a re-order yet. We have orders because we have stuff out with distributors but now they are getting to the end-users and so forth. I would say let’s save it for another quarter and the first question ought to be do we have any re-orders and we can start talking about that. Then we can start talking about how big the snowball and how much bigger is it getting every quarter. At the moment we have got sales out there. We have product loaded up in a number of our distributors. We have been registered in about 60% of our existing market countries. So we still have registration to go. We are still hoping to knock off China. That is something we can talk about next quarter. Actually we are hoping that does happen maybe by the end of next quarter. It might even fall into the beginning of the fourth quarter but certainly China is one of the next big countries we are looking to get our products registered in. But we are registered in Mexico, Brazil, the Philippines, Thailand and Korea. It is really a creep, crawl, walk thing but it is exciting. James Schwartz – Harvey Partners: But I assume this was a pull product not a push? You didn’t just hire scientists and get this done because you thought it conceptually was ready? You did it because there was some kind of demand?

There is $300 million of demand but they are currently buying other products as well. So it is going to take time. They are not just going to convert on a dime. They make a rational decision based on data, based on efficacy and based on performance. The people you sell to tend to be nutritionists who say I’m not buying this because it is a clay or because you want me to. I’m buying it because it delivers value to me or apropos to your conversation or question on margin it is a value based scenario not a cost-plus based scenario. So yes the margin expectations are higher because we are sharing in sum a sliver off of the value. There is so much value out there with the way these products work. I’d say just keep hammering the questions each quarter but more along the lines of okay where are you registered now and do you have repeat orders, what is the snowball doing? I think we are at our half-hour point. I hope everyone who wanted to ask a question got a question in. These are very dynamic times but as I always say it is the best time in not only my short, although I have been with the company 21 years but even my father’s horizon and he just celebrated his 50th year with Oil-Dri, it is the best time ever to be a turtle or a tortoise. We are the ultimate tortoise in the tortoise and hare race and we never apologize for that because the tortoise wins. Every time I read that story the tortoise always crosses the finish line ahead of the hare. When you ask most people they all want to be hares and I scratch my head. Now isn’t a time to be a hare. Great time to be a tortoise. We are inching along but I think you see we try every time you look up to make some progress. We are looking forward to talking to you again in a quarter. Have a happy and healthy holiday season. Thanks for your support.

This concludes the presentation. You may all now disconnect.