Welcome to the Annual Meeting of Stockholders 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 not turn the call over to your host, Leslie Garber. You may begin.

Good morning, and welcome to Oil-Dri Corporation of America's 2021 Annual Meeting of Stockholders. My name is Leslie Garber, and I'm the Manager of Investor Relations at Oil-Dri. Due to the current pandemic, we are conducting this meeting virtually to ensure everyone's health and safety. By hosting this meeting via live webcast, we are able to be more inclusive, reach a greater number of our stockholders and save 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 screen. 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 screen. 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 2021 Annual Meeting of Stockholders of Oil-Dri Corporation of America to conduct the formal business set forth in the notice of meeting and proxy statement. Commencing on October 26, 2021, 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 11, 2021, 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 Solutions, Inc. has delivered an affidavit confirming the foregoing. Oil-Dri has appointed Peter Sablich of CT Hagberg LLC 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 11, 2021, the record date for this meeting, there were 5,330,359 shares of Oil-Dri's common stock and 2,050,565 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 12,918,006 votes. Mr. Sablich has informed me that there are more than such number of votes represented at this meeting. Therefore, I declare there the quorum present for purposes of transacting business. Now I will present the matters to be voted upon. If any stockholder would like to…

Great. Thank you, Laura, and thank you, everyone. Welcome to our Annual Meeting. It's our -- we completed our 81st fiscal year, which is exciting. I want to thank our loyal shareholders for your continued support. I want to particularly thank our frontline workers who helped us navigate the pandemic. We're still in the midst of it just when you thought it was safe to go back in the water, they dumped a variant and now the -- the optimizing [ph] with all the different variants, but it just keeps happening. And so they keep coming into work and they keep filling the orders. And we're shipping and billing. And that's -- we continue to set records. From a sales standpoint, very proud that we broke $300 million in revenue for the first time. You'll hear from Susan Kreh, our CFO, with some more detailed numbers review. We also suffered the massive cost pressures and external supply chain issues. You'll hear from Molly VandenHeuvel about our supply chain. And my dad always used to joke when people would ask, how's your wife? He would say compared to who? And that's sort of how's your supply chain? Compared to who? We're very fortunate that we control a huge percentage of what goes into our product, i.e. our raw material, our play. You look at these companies who are purely reliant on external suppliers and supply chains that reach all the way across the globe and they're having massive issues filling orders, whether it's buying a car or getting an iPad, whatever, I think we've all experienced that just getting a bed [ph] takes months. So we are doing a great job, but we're clearly under a lot of pressure and we're navigating our way through it. Fortunately, we're in a rational…

Thanks, Dan. As I proceed through the following slides, I will be sharing a look back at the past decade of performance trends as well as focusing on our first quarter results. We will see that we are achieving growth and winning business when Oil-Dri, like so many other companies across the globe, is facing inflation in our input costs that are growing at rates faster than we have experienced in decades. Let's start by looking at 10 years of net sales growth, noting that consolidated net sales reached an all-time record high of 305 million in fiscal 2021, as Dan mentioned earlier, which represents 8% growth over the prior year. This was primarily due to higher demand of our cat litter and agricultural products, which increased by 9% and 19%, respectively, over the prior year. That sales growth momentum continued into the first quarter of fiscal 2022, where consolidated net sales reached an all-time quarterly high of 82 million, an 8% increase over the prior year. This growth was primarily driven by an increasing demand for our cat litter, fluids purification products, and industrial and sports products. While we also experienced revenue gains from our co-packaging coarse cat litter business, sales of our agricultural and animal health products declined in the first quarter compared to the same quarter last year. As I mentioned during our previous fourth quarter fiscal 2021 investor call, we've been increasing prices across all product lines to help offset rising costs. And those increases helped contribute to the improvement in consolidated net sales that we saw during the first quarter. Our business to business products group grew 5% over the prior year and our retail and wholesale products group grew 10%, reaching a record quarterly high of 54 million. In addition to the favorable impact…

Thank you, Susan. I appreciate that. And I'm going to talk supply chain today. And as you heard from both Dan and Susan, within supply chain, this was a difficult year for all of us. But I was truly impressed with the way the team persevered in light of all the challenges from COVID-19 and now the broader market impacts. Most of you are aware of the global supply chain constraints that all industries are encountering today. Oil-Dri is not immune to these challenges. But in the Oil-Dri way, we have addressed these head on and have worked to mitigate and reduce the negative impact to the business, but also to amplify the positive impact. So let me start with the positive impact. Our commercial teams have set up share growth plans for some time. In the midst of these times, they have grown share and net sales much faster than we originally anticipated. A partial driver of the strong sales has been our ability to deliver product at service levels better than the industry average and keeping product on the shelf. This does put more pressure on all of our people processing tools, but we have worked to address the issues. We have strong systems and a majority of our product is vertically integrated, as Dan mentioned, so we have control of a large part of our supply chain. However, we are not immune to the global supply chain impacts as you can see here, which have also impacted our results as reported in our 10-K and 10-Q, and as summarized by Susan. Our teammates remained agile to adapt manufacturing, adapt supply chain and procurement and adapt customer service. In fact, we adjusted just about every part of our business to align production with customer demand and continually to…

Thanks, Molly. I could not be [indiscernible] in our lightweight business consumer division. We are continuing to see our entire portfolio of lightweight litter products and our consumer division has posted average growth of 9% from 2018 to '21, driven by [indiscernible] businesses, both branded scoop cat litter and private label cat litter. On a quarterly basis, Q1 2022 represented a record quarter also representing strong growth across both private label and branded sides of the business. In the [indiscernible] vertically integrated has never been more key to our success in lightweight. Recall that Oil-Dri mines across the country with lightweight calcium bentonite clay. Calcium bentonite has the same [indiscernible] as its heavy counterpart sodium bentonite, but is lighter in weight for that same amount of volume. Our lightweight clay [indiscernible] key consumer that Dan mentioned earlier for litter, it's traditionally very heavy. In addition to providing consumers with added convenience, the benefits of lightweight span the entire supply chain, starting with [indiscernible] less weight overall means less freight costs. Beyond that, [indiscernible] reaching the truck’s weight capacity before the truck is even filled with product. With lightweight litter [indiscernible] many units on the truck, less trucks on the road [indiscernible]. In the same way, our litter being [indiscernible] wider cuts means more efficiencies for our customers when transporting our litter, putting in stocking shelves and DCs. Looking at the current litter category, [indiscernible] 14% of total U.S. cat litter sales and has outpaced the growth of traditional heavy litter for the latest 52 weeks. As we continue to increase our quality and do so at a value, we expect consumers to continue to turn to our products for convenient options to litter categories. As Dan also mentioned, we've been looking at Canada as a case study for particularly high…

Thank you, Jessica. Good morning, ladies and gentlemen. I'd like to go through the Amlan sales part of the presentation to share what we have accomplished since 12 months ago. As most of you already know, all the key points for me as a VP of Global Sales is to recruit. And we have done that with the addition of key positions in key areas. We already introduced Dr. Robey to our marketing team. Mr. Jay Hughes is our Global Director of Technical Service joining us in February of 2021. We needed finding someone to be our technical team, and it's really good to have another person with 20 plus years of experiences from either trials, analysis and also with strong technical background to be the leader of our technical team. We also added two key directors; Mr. Heath Wessels in the U.S. and Harold Zhou in China. They both joined in December of 2020 with numbers of years in the poultry industry, and they will be the key driver to build a strong foundation in those key markets to complement what Ms. Margarita Santa is currently doing in our team in North American region. We added key sales positions in Asia, U.S. and Mexico on top of a brand new 10 people team in China since FY '20. We also added a marketing and HR position for China and APAC region to build a much bigger team in the region for future growth needs. Asia and China's regional technical manager, Dr. King and Dr. Michael Hua are just examples of our direct dedications to not just add sales personnel, but also adding after sales customer support to be a complete global focus team. We now hold patents in 15 major markets and many of them are still pending to…

Fred, I appreciate that. Good morning, everyone. It's a pleasure to be speaking to our shareholders. And I know the information Fred shared is very exciting, and I'm now going to focus on some of the background information around our strategy and how we're approaching the market as we grow our Amlan business. The first slide I'm going to start with is our new tagline, which really could clearly underscore some of the things that Dan mentioned about the refocus of our business. It's minerals by nature, performance by design. Those are two very important concepts for us. When we talk about minerals by nature, it's because our products are all natural. We don't alter our mineral clay with harsh chemicals during processing. We really focus on generating products that are good for the environment and good for our customers and that are sustainable. And then performance by design. As Dan also mentioned, we're investing literally millions of dollars as we build out our technical capabilities, we research our products and we bring forward value propositions to our customers that are validated with real data, both in vitro events, but also in vivo and animal studies. So these two concepts together really give us a differentiating advantage in the marketplace. So our focus is really about creating value, it's improving the sustainability of animal production and we're going to do that through leveraging our unique mineral. This is truly our differentiating and advantage, and the thing that is going to be most prominent in our marketing messages to our customers. That's going to allow us to pursue opportunities to develop novel natural ingredients. And really, our products are designed to work in concert with the nutritional elements of an animal's diet, to support optimal health, to improve and support a…

Thank you, Wade, and thank you shareholders for listening to our presentation. We're going to open up the floor to questions. Please submit your questions using the Ask a Question field on the webcast. Questions or remarks must be relevant to the meeting and pertinent to the matters brought before the meeting. And Leslie is going to moderate our questions. So Leslie, which one are we going with first?

So our first question comes from Robert Smith, the Center for Performance Investing. And he asked how does the company protect its intellectual property while operating in China?

Laura?

Sure. So Oil-Dri's global IP strategy includes an analysis of high value countries, countries where we have a great potential opportunity, as well as high risk countries, countries with risk of IP theft and infringement. While we definitely recognize that enforcement of IP rights and enforced jurisdictions can be difficult, we do apply and register for both trademarks and patent applications and we have filed for both patent trademarks in China. However, given the enforceability concerns, we do not rely solely on the registrations to protect our business. Practically speaking, our biggest defense is not the registrations, but it's about -- is the fact that the value of Amlan's products are based on aspects that can't be easily replicated. So, for example, our R&D and technical knowledge, our relationships with our customers and our unique mineral. Especially with key accounts and the long sales cycle that has been previously mentioned, products are not swapped out lightly and our sales team works really closely with the key accounts while they do their own trials, and evaluate the performance of our products before making switch to our products or to competitors' products. In this process, our team develops close relationships with our customers and proves to be reliable and provide exemplary technical service. Therefore, the customer relationships and the performance of our products in trials is surely our best defense to protect against knockoff substitutes.

Thank you, Laura.

Okay. The next question comes from Lawrence Richards [ph], a private investor. He asks, I'm concerned about the liquidity of the stock. I feel the extremely high bid-ask spread may discourage some interest in the stock. While I appreciate the share buybacks, they are continuously reducing the liquidity from an already low 7 million shares. Under what circumstances might Oil-Dri consider a stock split?

Lawrence, thank you for your question and it's a valid question. And we do have a Board meeting coming up after this annual meeting and I'll be sure that we discuss it with the Board. This would be something the Board would address and consider. And so just take it under advisement that we will consider it at today's Board meeting. Not sure we're going to do anything, but it's a good question.

Thank you.

The next question comes from Ethan Star [ph], a private investor. Thank you to everyone at Oil-Dri for the hard work in a difficult environment. Dan, could you and the team please further detail the reasons behind your excitement for the animal health business?

Yes, it's a great question. And as you heard from Fred, he and Wade have been able to really rebuild our team. And it's a team of incredibly talented animal health professionals who are all joining for the same reason, because they love me so much. No, they're joining us -- I mean, maybe they do love me, I don't know. But I do know that they're joining us because they really took a lot of time and energy into looking at our technology, our data, our trials that we've done, and they absolutely -- everyone sees the shift that's going on in the globe away from antibiotics. And honestly, Fred taking the plunge first definitely paved the way for Heath and Harold and Jay and Chuck, and all the teammates sort of joined us since to say, wait a minute, if someone like Fred could join, maybe I should be looking at this. And then anything on the marketing side, someone like Wade, with his experience and an educational background, is seeing value in this mineral and this is what they're doing, maybe I ought to take a look at this too. So it's really -- it started with that. It started with building the team around people that believe and understand that our clay is the unique point of difference. We have hundreds of millions of tons in our total reserve portfolio in terms of proven and inferred and likely so on, say 100 million, because I don't know what we disclose in our Q and our K. But we have unlimited reserves honestly in our lifetime. But what we're doing is selectively mining and processing to absolutely maximize what Mother Nature already put in place billions of years ago. We wouldn't be here if Earth couldn't sustain…

Okay, great. We'll move on to the next question from John Bair from Ascend Wealth Advisors. He asks, I've seen many Oil-Dri were hiring positions on LinkedIn lately, and you have had numerous new hire announcements for analysts. Are these LinkedIn postings a function of expanding internal personnel needs or due to personnel turnover or retirement?

Great question. It is a combination of expanding and then desired turnover. Fred and I get along very well. Those of you who are new to Oil-Dri, we have a corporate culture that is summarized by our acronym WE CARE. W is work-life balance. E is ethics then communication, accountability, respect and excellence. And I can tell you that Fred absolutely embodies our WE CARE core values. And as he's brought in people, they embody those values. And what's happened is we have some teammates who were not necessarily embracing all of our core values, and we had to change. I believe a team -- if you think about a tug of war, everybody needs to be pulling in the same direction to maximize your performance. While some people are pulling in some direction and other people are pulling another direction that ribbon doesn't move. And so we are all pulling in the same direction, and it's very exciting. So we've had no retirements, but we've definitely had expansion and then we've had what I'm going to call desire turnover where we've had to part ways with certain teammates to bring in and make way for other teammates. So it's really the team is in incredible shape today and it's really a much different team that we have even a year ago.

Great. The next question comes from Ethan Star. He asks, are you continuing to add new customers for both branded and private label cat litter in both the U.S. and Canada? And to what extent are more consumers choosing the Cat's Pride brand, which offers better quality at lower prices?

Yes, great question, Ethan. And Jessica, you can open up your line. I'd love to have you answer that question.

Sure. Thanks for the question, Ethan. Yes, we are continuing to bring in new customers and grow both via new customer acquisition as well as organic growth within our existing customer. So absolutely seeing new customers on both the branded and the private label side. In terms of your question around branded, as we look across the last two years and even the last year for our branded business, we are seeing more concern [indiscernible] just for what you mentioned, a great product at a great value. And as we look across the last two years, we're seeing expanded distribution, elevated demand. We've got market share growing, repeat purchases [indiscernible] and just an overall improvement in consumer sentiment. So very optimistic about the direction of the brand as well as private label.

Great. Thank you. Next question?

Next question from John Bair. Is Oil-Dri facing any extra capital expenditure costs related to clay mining and product processing operations as it relates to reducing any emissions? Are you able to capture and reuse the heat generated from your kiln operations?

John, great question. And operator, please open up the line of Aaron Christiansen. He's our Vice President of Manufacturing and Warehousing. And Aaron, if you would field that one, I'd appreciate it.

Yes. Dan, can you hear me now? It looks like they’ve unmuted my line.

Yes, you’re on.

Yes, that’s a good question. I’d love to take that one. I'm going to take a couple of different ways. So one way maybe is the opposite that's inferred in the question. We're just finishing an investment in one of our factories that actually takes the latent heat from a turbine generator to power and fuel our kiln. So it's really the opposite. We're trying to cogenerate our own electricity. At the same time, we use the heat to power the dryer. The utility cost in the state of California make that a very obvious and homerun investment that will come online sometime this spring or summer. And we look forward to learning from that. The other thing inferred in your question really about emissions is all of our sites and all of our kilns are permitted. We have emission standards to meet. Those standards continue to get tighter and tighter in many areas and facilities. And we're obligated to maintain those. So there is a direct overlap between our ability to maintain emission standards and get more efficient with fuel. Fortunately, there's overlap between the two. But definitely our capital plan has allocations made to make sure we continue to meet emission standards.

Thank you, Aaron. Great question. Leslie?

The next question is also from John Bair. Are Amlan products manufactured in the U.S. and shipped worldwide? And if so, is that what is hindering faster growth worldwide due to shipping supply chain difficulties? If not, where else are they manufactured?

Right. So this is Molly VandenHeuvel. I'll answer that for you. So yes, our Amlan products are manufactured in the U.S. and shipped worldwide. It is our key mineral that we want to make sure we have full control over, so we still manage that within the U.S. And we ship ocean freight worldwide. We've talked several times about the global -- the constraining transportation market, ocean freight is no different there. It is very difficult to get bookings on ocean freight and the lead times have significantly increased. So just as one example, just to book ocean free, so not the time it takes to sail. It went from four weeks pre-pandemic and expansion to eight weeks. So just to book a vessel can take eight weeks that doesn't include the transportation time. So as we are seeing the opportunities ramp up, it is a long lead time for us to get product on the ocean into our customers. And that's the biggest constraint we're seeing.

Great. Thank you. So that concludes our Q&A. I do want to wrap up by just commenting that all of our businesses are really doing well. We got the industrial and sports businesses is cranking and doing well, the ag business is doing very well, our fluids purification business, again, with renewable diesel and just the edible and non-edible oil business, purification is doing very well. So it's a unique period of time where all pistons are firing. And obviously, it's incumbent upon us to make sure we're getting the prices that properly value what we're doing, i.e. to get our margins back where they need to be. So that's where we're 100% focused. You'll continue to see you that progress. And we're going to continue to raise prices as the costs continue to go up, which is -- you can read all sorts of articles on whether inflation is just a temporary thing or here to stay for a few years. Everything I can see is a tiered set. So we're assuming it's here to stay and that's how we're approaching our margin repair strategy. So thank you very much. It was a record fiscal year in many ways, lots of challenges in many ways. And again, I want to close by the way I started just thanking our frontline workers because they really made it all possible by -- we kept COVID out of our plants, we really did and it's due to the focus of our leadership down at each of the plants and then our teammates adhering to strict social distancing and wearing the mask when necessary, and keeping COVID out of our facilities. So thank you, everybody. And we'll talk to you again at the end of next quarter.

That concludes today's conference. Thank you for joining and have a pleasant day.