Good day, ladies and gentlemen, and welcome to the Q4 2014 Oil-Dri Corporation of America earnings conference call. My name is Michelle, and I would be your operator for today. At this time all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Mr. Dan Jaffee. Please proceed, sir.

Thank you, Michelle; and welcome, everybody, to our year-end teleconference. With me in the Chicago conference room is Dan Smith, our CFO; and Doug Graham, VP and General Counsel; and Reagan Culbertson, our Investor Relations Manager. She is going to walk us through the Safe Harbor provision.

Thank you, Dan. 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 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 evaluating any investment in Oil-Dri stock. Thank you for joining us.

Thank you, Reagan; and I would like to turn it over to Dan Smith for a review of the year and the quarter.

Very good. Good morning, everyone. Oil-Dri’s sales for the fourth quarter and the full year of fiscal 2014 have continued to benefit from additional private-label cat litter business from the MFM acquisition and improved branded cat litter sales. For the full year we generated $266.3 million in sales, up 6% from fiscal 2013. However, our earnings reflected increased materials packaging freight costs for both business segments, along with incremental promotional spending for our cat litter products. Our EPS of $0.07 per diluted share for the quarter and $1.17 for the full year were both down significantly from the same periods in fiscal 2013. Our gross profit percentage for the year was 22.4% versus 26.5% in fiscal 2013. Gross profit was negatively impacted by the cost increases that I previously stated, plus 21% increase in the cost of natural gas used in our manufacturing facilities, and the fact that our private-label cat litter business generate lower gross profit per sales dollar. Also impacting our earnings in fiscal 2014 was our tax rate, which was 26.3%, which was much higher than the 16.6% in fiscal 2013, but more in line with historical norms. Our retail wholesale team reported strong top-line sales growth for both the quarter and the year. Sales of Cat's Pride Fresh & Light products led the way with a 33% increase for the year. Also, our private-label litter sales were up 24% for the year; however, the retail and wholesale group reported significantly reduced earnings for the quarter and the year. Increased costs and increased advertising and promotional spending were key drivers of this change. B2B sales were up for the year but down for the quarter as compared to fiscal 2013. Sales increased to edible oil processors and to users of our animal health and nutrition products. Our ag team generated reduced sales to corn rootworm pesticide formulators. Finally, our co-pack traditional cat litter sales were down slightly. Increased costs adversely impacted the segment's income for both the quarter and the year as compared to fiscal 2013's values. Our balance sheet remains strong. Our cash and investment balance at the end of the year was about $19 million, which was down $23 million from fiscal 2013 but similar to the $20 million at the end of the third quarter of fiscal 2014. The decrease was driven in large part by the approximate $13 million November 1 asset acquisition of the MFM Industries Inc. and our capital spending for the year. Finally, we increased our dividend payments for the 11th straight year. We paid out just under $5 million in dividends in fiscal 2014. Thanks, and I'll turn the meeting back over to Dan Jaffee.

Thank you, Dan. And as always, we would like to open it up to Q&A so we can cover those areas that are most interesting to our investors. And so, Michelle, I would just like to encourage everybody to prioritize as to most important question first and then go to the end of the queue, as we are on a strict 30-minute timeline. So, Michelle, let's open up the question lines.

[Operator Instructions] The question we have comes from the line of Jim Schwartz from Harvey Partners. Please go ahead. Jim Schwartz – Harvey Partners, LLC: Hey, Dan. How are you?

Hi, Jim. Fine. How are you? Jim Schwartz – Harvey Partners, LLC: Good. Thanks. A question for you, just on Fresh & Light, the sales are up 33% year over year. Can you kind of just go through the payoff that, as investors, we'll see from you guys being kind of the disruptor in a space that has never really been disrupted before. Obviously hard to tell with the numbers right now, but in future years, what kind of payoff do you expect from the investment that you are making here?

Sure. That's a great question, and that's really what's at the heart of the strategic investment in Oil-Dri, is – and I won't get into too much historic detail for our longtime investors, but it's important to put it all into context. You mentioned being a disruptor. So the last major disruption was in 1991, when sodium bentonite – scoopable cat litter – was launched. And it was all about when the animal urinated, it formed a clump; the consumer could scoop it out and get that odor out of the box altogether. So fast-forward – that was 0% of the category when it launched, and it's become 70% of the dollars-ish of the category. So it's been a major disruptor of the category. While sodium bentonite has a lot of nice attributes in terms of swelling and clumping, it has a major disadvantage in that it's very heavy in bulk density. If you took a cubic foot – a box that was a cubic foot and filled it with sodium bentonite, it's going to weigh anywhere from 65 to 75 pounds per cubic foot. Historically, cat litter has weighed about 35 to 45 pounds a cubic foot. So it's almost doubled the density, meaning the consumer is getting half as much material. And we all know consumers use it by volume, not by weight. So they buy it by weight, but they put it in their tray up to 2 and 3 inches. So you are weighting out trucks; you are shipping all this heavy sodium bentonite all over the United States; and the consumer is having to use way more material to fill a box in terms of pounds than they ever had to use before. So major negatives from that standpoint. So Oil-Dri is sitting on the…

Yes, and I can do it in general terms. Jim Schwartz – Harvey Partners, LLC: Okay.

In general terms, our brands have not carried enough gross margin to enable us to support them with media. So internally, everyone says, oh, Dan is anti-media; Dan is anti-marketing. No, Dan is anti-losing money. So when our margins are too low, like they have been historically, we couldn't support it. These items carry healthy consumer product margins, where – you know, Paul Ziemnisky was from Kraft; and Lisa Mak was from Kraft; Kati Rust from ConAgra. We've got real – Anheuser-Busch – Craig is from Anheuser-Busch. We've get real consumer product people on our sales team who is all from the consumer-product world. They are all used to these margins, and this is what it takes to fight in that arena. Now, having said that, way better to be Tidy Cat with these margins – and they have a 20%-some-odd share – than be Fresh & Light, who is just trying to grow as a 2% share. So, clearly, we've got to get the critical mass there to actually make money. But these products do carry the margin necessary to support them going forward. Jim Schwartz – Harvey Partners, LLC: Thanks, Dan.

Okay, thank you.

The next question we have comes from the line of John Bair from Ascend Wealth Advisors. Please go ahead. Your line is now open. John Bair – Ascend Wealth Advisors: Thank you. Good morning. Dan, a number of questions. I'll give you 2 here, and then I'll get back in the queue. It seems that every quarter that we get higher costs of shipping and resin costs, looking in your K at resin costs and so forth. And yet we see a pretty good decrease in the cost of natural gas and so forth. I realize your fourth quarter, the recent decline didn't hit until end of this first quarter. So looking at your expense there, are you able to improve the cost of goods sold? What are you working on to do that? Because that seems to be a variable every quarter. So if you could talk about that a little bit? Because – I could start to refer you to the prior year. Hopefully your gas prices, which have dropped quite a bit, should help you out quite a bit in your operating costs. Thanks.

Absolutely. No, look, it's a great question. And you have as an investor every expectation going forward. As we start to become more business-as-usual with what I'm calling the tsunami, absolutely – we should be able to get the cost of goods down. However, when you are in the middle of the tsunami, you've got 2 choices: meet the orders or cut the costs. It's very hard to do both. So we had many dynamic periods where the growth was outstripping what our supply chain was really happy to be handling. And at the same time, we them acquired the mid-Florida mining business and threw that on top of it. So I can just tell you – we missed orders, and we focused too hard on cutting costs and process improvement projects while under-delivering and underwhelming our customers. Not a good long-term move for Oil-Dri. Now, wouldn't it have been great if we could do both? Absolutely. We didn't. Clearly, we didn't; it shows in the margins. But the top line was up; the customers are happy; the business is moving. And so, going forward, we will absolutely be more focused on being more efficient at cutting costs and getting our margins where they need to be. However, I will tell you, in any given period, if we see the opportunity to keep our foot on the accelerator in this lightweight opportunity, we are going to do it. This is not a quarterly – I have always said, we really don't run for the quarters. We are in a, as Jim said, disruptive, game-changing, paradigm-shifting moment in the cat litter category. And Oil-Dri is the one that is going to benefit the most if we play this hand out right. And so that's where our focus is. I will be happy to apologize to you guys that maybe we didn't save as much as we could have on packaging efficiency, or running Lean manufacturing while the storm was hitting us. But I will guarantee you that once the storm settles down, and our boat is nicely afloat at the top of the heap, we will definitely dedicate the time and energy to that. It's not an all-or-nothing, but I can just tell you where the focus and priority is.

Okay. Well, I'm just looking at it from the standpoint of – you know, you had mentioned in your K, I think, costs of resins were up. That seemed a little counterintuitive to me, given that a lot of – with the shale boom, and all the energy-derivative products that are coming out of natural gas liquids, and natural gas prices starting to come down, that I would think there would be some benefit there. But – and to your point about the quarter to quarter, I get that. I've been a long-term holder of the stock, so I've watched the ups and downs. One last quick question, and that is: you mentioned that your CapEx for next year is probably going to be on track with what you spent in 2014. Could you address what you are doing at your plants that is requiring the maintaining of those capital expenditure levels? And I'll get in the queue. Thanks.

John, this is Dan Smith. I'll take your question on CapEx. As Dan has already indicated, we are looking at spending quite a little bit of money in the lightweight cat litter business. We are looking at expanding our capacities in our other plants to support that business. So that's where a lot of the CapEx coming up in fiscal 2015 will be at. In terms of your comments on packaging resin, we have contracts with our resin suppliers. Those contracts adjust based on the cost of the input, so we feel pretty good about our contract pricing. But they do have inflators or deflators, depending on the increases or decreases they see in the marketplace or the inputs. And then, finally, in terms of natural gas prices, yes, natural gas prices have started to come down; however, looking through July, they were still up. And, certainly, they were still up as compared to similar periods in the prior fiscal year. So more of… John Bair – Ascend Wealth Advisors: Right. No, I recognize…

More of that move-down has been in recent months. John Bair – Ascend Wealth Advisors: Yes, and that should benefit you, hopefully, in this first quarter by a decent amount. Okay. Thank you.

The last question we had come from the line of Robert Smith from Center For Performance Investing. Please go ahead. Robert, your line is now open. Please go ahead.

Michelle, I'd be happy to field a question from Ethan, if he's got one, because I went long on my little soliloquy. It sounds like Bob does not have a question. Do we had anybody else in the queue?

Yes. We have another question from John Bair from Ascend Wealth Advisors. John Bair – Ascend Wealth Advisors: Very good. Thanks. Since those other ones aren't in there – wanted to ask you about Flo-Fre, the microgranules you had mentioned in your K, that there was a drop-off in that. Was that a function of grain inventories overall, that the end users that are using that product were not buying as much? And do you see any change in the trends there? And, actually, is that a very meaningful and high-margin product for you?

Yes, John, this is Dan Smith. Flo-Fre we see as more of an opportunistic product than anything. So it depends on our supply availability, which depends on the mix of products we are selling; and, to some extent, what the grain suppliers and other waste handlers are using the product for. So it's really more of an opportunistic product. John Bair – Ascend Wealth Advisors: Is there a seasonality to it?

Not that I am immediately aware of.

And it's not that meaningful. If you are making an investment in Oil-Dri, it's not… All right, well, good. Well, listen – thank you, everybody. And I hope you can sense from our comments and everything our long-term – mid- and long-term enthusiasm remains extremely high. Having said that, would it be – as we put in here in the news release, we are never happy when earnings are down compared to the prior year. It's just the fact. So while we don't run the business for the quarter, and we are not going to do anything to manufacture earnings or do anything like that, we are not Pollyanna-ish, either. So when the quarter is down, we are disappointed. When the quarter is up, we are happy. But from a long-term and mid-term perspective, we are very happy. My family is continuing to increase ownership in the Company. I've got some restricted stock that's vesting, and I'm going to have to pay some tax on that, but I'm going to, net, walk away with, again, an increased position. And that should tell you I'm putting my money where my mouth is, and you guys will have to decide what you are going to do. But I absolutely appreciate both your input and your loyal ownership and look forward to doing my best and the team's best to rewarding you over the long term. So thank you, and we will talk to you again in 90 days.

Thank you for participation in today's conference call. This concludes your presentation. You may now disconnect. Thank you for joining.