Oil Dri Corporation of America (ODC) CEO Daniel Jaffee on Q1 2019 Investor Teleconference & Annual Meeting of Stockholders Conference Call (Transcript)

About: Oil Dri Corporation of America (ODC)
by: SA Transcripts

Call Start: 10:30 January 1, 0000 11:52 AM ET

Oil Dri Corporation of America (NYSE:ODC)

Q1 2019 Investor Teleconference & Annual Meeting of Stockholders Conference Call

December 11, 2018 10:30 ET


Laura Scheland - VP & General Counsel, Secretary

Daniel Jaffee - President & CEO

Mark Lewry - COO

Michael Nemeroff - President & CEO, Vedder P.C.

Lisa Mak - VP, Marketing


Ethan Starr - Private Investor

Robert Smith - Center for Performance Investing

Laura Scheland

Hi, good morning, ladies and gentlemen. I'm Laura Scheland, General Counsel of Oil Dri Corporation. This year is the first year that the Annual Meeting is available via phone line and webcast, so hence opening the lines. Our agenda for today is, I will first conduct the Annual Meeting of Stockholders covering the Election of Directors and other stockholder voting items. I'll try to move through this quickly and [indiscernible]; so we can move on to the more interesting point part of the meeting. Next, will be the presentation and business review followed by time for Q&A. So we ask that you hold your questions until the Q&A portion of the meeting.

It is now 09:31 on December 11, 2018, and I now call to order the 2018 Annual Meeting of Stockholders of Oil Dri Corporation of America. While I conduct the meeting, Tony Parker, the Assistant Secretary of Oil Dri will record the minutes for the meeting. As you enter the meeting room, you should have received an agenda and the rules of conduct that will govern this meeting. We ask that you adhere to these rules. Stockholders who previously voted by proxy using the internet, telephone or mail may not cast ballot today unless they wish to change their vote on the proxy. We'll provide ballots to those who desire them at the appropriate time. Oil Dri has appointed Gary Farrar of Broadridge Financial Solutions Inc. to serve as the Inspector of Elections for the meeting. He is present and has taken the oath [ph].

Commencing on October 31, 2018, 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 close of business on October 15, 2018, which is the record date fixed for this meeting. I have an affidavit of mailing signed by Broadridge confirming the foregoings and such affidavit is available for examination by any stockholder present here today. As described in the proxy statement, the purpose of this meeting is to elect 9 directors, ratify the appointment of Grant Thornton LLP as Oil Dri's Independent Auditor for the fiscal year ending July 31, 2019, and transact any other business as may properly come before this meeting.

As of October 15, 2018, the record date for this meeting, there were 5,172,007 shares of Oil Dri common stock and 2,269,238 shares of Oil Dri Class B stock outstanding. I have an alphabetical list of the folders of such outstanding shares and such list is available for examination by any stockholder present here today.

As many of you may know, holders of our common stock are entitled to vote one vote per share and holders of our Class B stock are entitled 10 votes per share, and generally, vote together without regard to class. A qurmance [ph] present at this meeting, if holders of a majority of all 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 reform at the meeting is 13,932,195 votes. Mr. Ferrar has informed me that there are more than such number of votes represented at this meeting. Therefore, I declare that a form is present and accordingly, this meeting properly convened and ready for the transaction of business.

As described in the proxy statement, the first item is the election of 9 directors. The proxy statement listed Oil Dri's nominees for Director, each of whom currently serves as a Director of Oil Dri. These nominees are Daniel S. Jaffee, Ellen-Blair Chube, J. Steven Cole, Joseph C. Miller, Michael A. Nemeroff, George C. Roeth, Allan H. Selig, Paul E. Suckow and Lawrence E. Washow. In accordance with Oil Dri's bylaws, stockholders are required to provide advanced notice of their intent to nominee a candidate for Director. No such notice was received, therefore I declare the nominations for Directors closed. Emotion to elect 9 directors as described in the proxy statement is now in order.

Unidentified Company Representative

My name is Karen Jokhosvky [ph] and I am a stockholder of record. I hereby move that each of Daniel S. Jaffee, Ellen-Blair Chube, J. Steven Cole, Joseph C. Miller, Michael A. Nemeroff, George C. Roeth, Allan H. Selig, Paul E. Suckow and Lawrence E. Washow be elected as Directors to serve until the 2019 Annual Meeting of Stockholders or until their respective successors are elected and qualified.

Unidentified Company Representative

My name is Leslie Stephenchow [ph] and I am a stockholder of record. I second the motion.

Laura Scheland

Are there any questions or comments on this motion? I hereby call the question and declare the polls open to vote on the motion. We'll provide ballots to any stockholders who have not previously given their proxy or who desire to change their votes. Please raise your hand if you would like the ballot.

I now declare the polls closed on this motion. As described in the proxy statement, 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 ending July 31, 2019. Grant Thornton has just completed it's fifth year as Oil Dri's independent auditor. The Audit Committee and the Board of Directors of Oil Dri has appointed Grant Thornton to again serve in the role for fiscal year 2019 and has directed that the appointment be submitted for ratification by the stockholders at this meeting. A motion to ratify Grant Thornton as Oil Dri's independent auditor for the fiscal year ending July 31, 2019 is now in order.

Unidentified Company Representative

My name is Michelle Hazer [ph] and I am a stockholder of record. I hereby move to the appointment of Grant Thornton LLP as Oil Dri's independent auditor for the fiscal year ending July 31, 2019, be ratified.

Unidentified Company Representative

My name is Bruce Payty [ph], and I am a stockholder of record. I second the motion.

Laura Scheland

Are there any questions or comments on the motion? I hereby call the question and declare the polls open to vote on the motion.

I now declare the polls closed on this motion. I will now report the results to the voting at this meeting.

As described in the proxy statement, a Director may only be elected plurality of votes count. The 9 nominees who received the largest number of votes will be elected. Mr. Ferrar has informed me that the 9 candidates nominated by Oil Dri received the largest number of votes. I therefore find that each of Oil Dri's nominees for Director has been elected as a Director of Oil Dri to serve until the 2019 Annual Meeting of Stockholders or until his/her respective successor is elected and qualified. Congratulations to each of you.

As described in the proxy statement, affirmative majority of the votes represented in this meeting is necessary for ratification of the appointment of Grant Thornton as Oil Dri's independent auditor for the fiscal year ending July 31, 2019. Mr. Ferrar has informed me that such ratification received more than a majority of the votes represented at this meeting. I therefore find the appointment of Grant Thornton as Oil Dri's independent auditor for the fiscal year ended July 31, 2019 has been ratified.

Note, that representatives of Oil Dri are here with us today and will be available after the meeting to answer any appropriate question.

You have now heard the results of the voting and this completes the business to be conducted at the meeting. Since there are no other matters that come before this meeting, a motion to adjourn is now in order.

Unidentified Company Representative

My name is Curtis Welburm [ph], I am a stockholder of record. I hereby move that this meeting be adjourned.

Unidentified Company Representative

My name is Tony Mitchel [ph] and I am a stockholder of record. I second the motion.

Laura Scheland

All in favor of the motion of adjournment, please signify by saying 'aye'. Those opposed, please signify by saying 'no'. The motion has been carried. It is now 09:38 on December 11, 2018 and I hereby declare this meeting adjourned. Thank you for attending.

I am happy to invite Dan Jaffee, our President and Chief Executive Officer to provide a review of Oil Dri's business. Please note that Dan's presentation and any commentary by any Oil Dri's employees today may contain forward-looking statements of expected future performance. Any such forward-looking statements are subjects 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 and our SEC filings including our Annual Report for the fiscal year ended July 31, 2018.

We urge you to review and consider these factors carefully in validating the company's comments and evaluating any investment in Oil Dri stock. Thank you.

Daniel Jaffee

Good morning. Thank you, Laura. What I'd like to do is start by introducing the Board. As I call your name, please stand up and then let's hold our applause until they've all been introduced. Before I start that introduction, I just want to emphasize what an increasingly valuable role the Board is playing helping me devise strategy and I hope that stacks [ph] to keep that strategy, it's not just governance, it's really they all have a wide array of business experience. And with my father's passing, I think I've been leaning on the Board harder and harder and it's been nice to know they've been there to help me run the business. So I appreciate what you guys have done.

I'm going to ask you to stand or do you want me to raise it up? Okay, fine. Good, while I call your names in order of importance, I'm just kidding, alphabetical order, that's my typical joke. Ellen-Blair Chube, Steve Cole, Joe Miller, Michael Nemeroff, George Roeth, Bud Selig -- Bud, if you're on the line, you can stand up; Paul Suckow, and Larry Washow; let's please recognize the Board of Directors.

Thank you. I'm also going to recognize people who were promoted during the year to positions of Vice President or higher, and in the essence of time because I really -- we have a long program for you today. We've got a lot to cover, we're going to cover our supply chain, and B2B and then a lot of exciting things that are going on at consumer; I'm just going to recognize these individuals, so please stand when you're called, but I encourage you, you can go out on the web and learn more about them either from news releases, or LinkedIn and so forth. But they're all playing a very, very valuable role with the company.

Yasmith [ph] is our Vice President of our Agricultural Products Division. Susan [ph] is brand-new to our company. She is our Chief Financial Officer. Leming Miles is not here. He is traveling, he is in Asia, but he's running our Global Animal Health Business and he's the President of AMLAN International, our Animal Health Division. And Mike McPherson, our Chief Development Officer and Vice President of B2B. And finally we got to see and hear from Laura, but she were very happy. She is our Vice President and General Counsel and Secretary.

And those of you who have been to these in the past or who followed my presentations, you'll see the same slides. We just drop off the old and add the new. But I'll add some colored commentary to the play-by-play.

You can see our net sales grew a little bit from fiscal 2017 to 2018. But again, I'll remind you, we've been executing a really 15-year strategy. As we've been layering on profitable new business, in many cases we've been [indiscernible] sort of legacy low-profit systems; and so it's allowed us to manage our capacity very well and not use up our natural resource. So while our sales have gone up slightly, 1.4% compound annual growth over the decade from $232 million to $266 million, you can see that our tons sold have actually declined. So we are over a million tons, we're now down to 742,000. So this decline, the usage of our play by 25% which is pretty dramatic, given that this is a non-renewable resource and we want to make sure that every time we shift, it has the value of commensurate, to justify all the processing and more vehicles into it.

So when you divide the one by the other, you quickly can see that our net sales per ton has been growing pretty dramatically from 226,000 up to 359,000 in the most recent fiscal year. And then you can see in the first quarter, it was up again to 362,000 tons.

You can see in that trend of delivering on our mission, which is five simple words: creating value from sorbent minerals, and one of the ways to measure the value is certainly what our customers are willing to pay per unit for us, but obviously you're a shareholder and stakeholders in the company, we want to make sure from our standpoint there's profit going along with those sales. And as you can see, we were making $45 a ton. Back a decade ago, we made over $97, so it's over 100% during that period of time and then you can see in that quarter, it was down to $89 which were on relative basis to the batch is still pretty good, but a pretty dramatic drop from last year and that's really because of the new system implementation, one; and then the logistics explosion during the quarter.

As we announced in our press release in the first quarter, our logistic cost went up over $2 million; this year's first quarter versus last year's first quarter. To ship relatively, the same amount of goods, so it was just really the increased cost of doing it and then submit inefficiencies surrounding our new system implementation and having the direct [indiscernible], I trust and necessary; just so that we could get product to our customers.

Net income has been up and down per ton, depends on all sorts of thing; not much to say about that. Earnings per share, the one thing I want to say about this is while our reported earnings per share for F18 were $1.11, you know it's the new tax law, we had to take a one-time tax adjustment that was a non-cash adjustment, that time we'll accrue to our benefit as we go forward because our income tax rate is actually coming down; so when we adjust for that, $0.54 a share hit. On an apples-to-apples basis against fiscal 2017, it would have been $1.47 against $1.65. But regardless, it was a very good year. You can call it the maybe third best year we've had from an EPS standpoint.

For most of our holders' are in this for the long haul and the thing they focus on is our dividend. We've raised our dividend 15 years in a row. We did tow again last year, you can see a very nice compounded annual growth rate on the dividend payout and same deal, we raised this by a penny of by penny of $440,66 million [ph] for the year, up from $88 to $92 and now we're on a running rate of $96 points a share. And we always sort of take up the dividend payout rate at our June meeting so that's where again with the board.

Closing price has been up, down, and sideways, but mostly up or certainly over the decade, it has been dramatically up. Recently down a bit. Again, probably a reaction through the quarter and the system go live and the impact on short-term earnings. But time, we always make investments in the short-run that may hurt the short-run, but that are expected through our crude oil to our benefit in the long run. They don't always do it as Laura has. Safe Harbor Provision, not everything we project always come through, but certainly our intention is to grow the business with profitability and cash flow over the long haul, and we believe the investment in the new system is exactly that. It's a long-term investment that may have hurt the first quarter of this fiscal year, but will be accruing to our benefit for a long, long time to come.

We do talk about our cash flow and you can see that while we've spent significant amount of money during this decade, we spent almost a $250 billion on various things. You've got CapEx leading the way at $129 million, then you've got this dividend paid were almost $50 million, the bonus to our stakeholders, $37 million, and then we actually invested $25 million in really tangible R&D. We probably did more than that through a product development work at our plans and so forth, but these are dollars we can actually capture. So that $240 million invested over the decade in our business and in our stakeholders, and yet our net indebtedness has gone the other way. We now have more cash than debt. I think we're down to $6 million of long term debt, which is a real nice [ph] to be.

So our balance sheet is very, very strong. We certainly have the debt capacity to take on new opportunities as they come. We're continuously looking for opportunities that are right in line with our mission of creating value. We're not going to deviate from that. We feel that there's enough opportunities that fit right very well with that mission, but we don't have to extend this [indiscernible] middle and it's been working.


This is the operator. Would you please turn up the volume on your end?

Daniel Jaffee

Sure. I guess I got to lean in. That's probably better now. Is that better?


Much better, thank you.

Daniel Jaffee

Okay. And now I'm done. So Mark, you're going to have to do this.

Mark Lewry

Good morning. I have several slides to share with you this morning. We're going to go over the past year of fiscal 2018 and then we'll talk also about some of the challenges we've faced in Q1.

Manufacturing actually had a really good fiscal 2018. From a quality standpoint, we had a gap particularly in our consumer products. We had to close that gap so we invested in our manufacturing infrastructure, we invested in our quality systems, in our quality team and really delivering products now that meet-or-exceed what the business requires. From an efficiency standpoint, we start at measuring efficiencies in our plans, in our packaging lines a couple of years ago.

We evolve to a new metric this past year called TEEP, which is Total Effective Equipment Performance. And what that does is not only measure your packaging systems in lines, but also upstream and downstream from there, so it's a more comprehensive measure and we had great success -- of course which measure you can approve on because we like to stay at Oil Dri and we did with an improvement of 20%. On the cost side of the equation, again, we're a good success with a number of initiatives to deliver cost savings basically to the consumer business by streamlining our manufacturing and driving some efficiencies there. That's really one of the key port leg for the consumer business strategy.

Shifting over now to look at the beginning of this fiscal year, there have been some highlights, as well as low lights. Quality continues to be outstanding so despite the turbulence we've had, we continue to stay the course there, had another good news, element that's the growth in our business. Cat litter business has been up significantly. One of our brands is up actually 30% and we've had a large new agricultural customer that we've acquired so it has put up significant pressure on the manufacturing capacity. The good news is we anticipated some of that. We invested this year, grew our capacity in that cut of the clay which we call the intermedia. Cut is now the large or the small, it's the middle by about 20% this year. If we hadn't done that, we'd really be challenged and thank goodness we had the floor sight to get ahead of it.

But with the growth in the business, with a couple of hurricanes, the one that directly hit our Georgia plant and with JD Edwards as Dan mentioned, it's been a challenging first quarter and our service bubbles have suffered. Just for the couple key customers here and has some data on the Q1 where with one customer, we dropped to 88%, the other one down actually to 58%. But you can see the recovery now as we've grown through that and worked through that up back in the 90s.

Logistics cost as been mentioned in our release and Dan mentioned it this morning have jumped dramatically last year for the entire year. They're up over $3 million. This quarter alone they were up over $2 million, over 20%. We tried to break this down to give you a feel for what's occurring there. Most of that is market-based rates, but some of that is the growth of the business -- consumer business and the ad business, about 30% of that was due to growth in that segment of our business and then we did have some service disruptions so we accelerated some logistics to try and get product to our customers and that was about 10% of those costs.

Looking forward for the rest of the year; we seek continued challenges on the horizon and logistics cost are going to continue. We see at about that same rate, about $1.5 million to $2 million in the next two quarters. Again, driven by market rates and growth of the business. Natural gas, if anybody tracks natural gas but it has jumped up significantly in the past month and is expected to be up now for the winter which is the next really three months, then that will probably cost us anywhere from $0.5 million to $1 million over that time period. And then as I mentioned earlier, we and manufacturing the supply chain need to keep up with the growth of the business, so we need to continue to invest particularly in that intermediate product.

All in all, great year last year. Challenges as we started off this year, but we're staying up with it and we're excited about the rest of this year.

Okay. With that, I'll turn it over to Mike.

Michael Nemeroff

One of the best performing years for our B2B groups last year and what I thought I would do today is give everybody an overview of what type of markets were involved in our B2B groups. I'll talk a little bit about some of the highlights for certain aspects of the business and then I'm going to give a little bit of a glimpse on some new products we have coming out of the pipeline.

When I meet with customers -- perspective customers that are not familiar with the company -- probably one of the most common questions I get is, 'could you explain to me a little bit what B2B is and what type of markets you're involved in when yours ay B2B? We understand the consumer side of the business. We don't really understand when you say B2B.' My answer to them is our B2B group in Oil Dri largely is involved in the agricultural marketplace in the broader sense. If you look at the top of the supply chain, that's where [indiscernible] and her group focuses, which are agricultural input. This is seeds that grow plants, fertilizers that helps the plants grow, crop protection chemicals that help protect the plan from weeds and insects and increasingly which we'll talk a little bit later about some of our R&D investments, natural pesticides, microorganisms that help control insects and weeds instead of synthetic chemical.

Since [indiscernible] has taken over as Vice President and General Manager of that business group, sales into that market place have nearly -- I would say the profit is nearly tripled and she has done that by helping better-align as Dan mentioned, our investment at R&D, we have an incredible laboratory, incredible equipment and knowledgeable people on how to make these synthetic and microorganisms be compatible with our play. It sounds simple, but it's a little more than just absorbing them on. But she has done a masterful job getting that alignment together.

So what happens when you grow these crops like corn, soy beans, canola, sunflower oil? You then go and crush those seeds and you make oil that goes on to be consumed by humans and animals. That oil then leads into our fluids purification group which is managed by Bruce Pacy [ph], he took over that business in 2005. He grown it, masterfully to one of the largest and most profitable businesses within Oil Dri. So array of products that not only can treat the oil and prepare it for human consumption, but then it goes further down the agricultural supply chain and gets into biofuels like biodiesel, as an example, and we've developed products that help purify that. That's the oil side.

What happens to the stuff that's left over after you crushed the seed? That's called mill. It's the number one component of feed livestock. So the companies that we serve on the oil side like Cargill and ADM also are involved in animal feed production. You take that meal, you combine it with other things like vitamins and minerals and technical products like our M1 products that help the animal reduce stress, improve their intestinal health and help them better-grow. All of those areas and all of those different markets that are involved in animal and plant livestock production is where our B2B businesses operate.

During the year, we've continued on our transition of our M1 business and the first phase, the first 10 years of M1 when it was created, we focused on shoring up the science. We were selling historically our minerals into the livestock base, but we didn't have a very good understanding about what it actually did to an animal. As it turns out as Dan funded the research into our mineral, it's amazing the things that the mineral can do and how beneficial it is to controlling bacterial-related thesis in animals. We've done an incredible amount of research, we've built our research capability to be able to support that business and now we're transitioning how we go to market in pretty dramatic ways.

For those of you that were here last year and remember, I presented about our investment in M1 China. That was the first step in our transition to actually directly employ people that we could train, have them understand the value of our medicinal based products and how they benefit livestock production and control the way we go to market, the way we sell and the way we present our value to perspective customers. Three years after, we invested in China. We had a 10% market share and the 15 years prior to that, selling through distribution, we never had more than 0.5% market share and it's clear when you have people and you wake up every day and you promote your own products. We can be more successful. So we continue that this year. In May of 2018, we acquired a controlling interest in our Mexican distributor called Agrimax. I was just there last week, tremendous opportunities we presented our products to perspective customers. Everyone we met with is now trialing the product. It's the difference between Oil Dri and M1 people that understand the value and know how to deliver the value versus selling through distribution where if you're lucky, you get one-tenth of their attention and one-tenth of their sales/business.

Just last Friday, we completed our transaction to create PT Emelyn, it's a 100% four known subsidiary in Jakarta Indonesia. Fleming is there now beginning to prepare the business to begin to supply. We expect it will begin initial market development activity in the third quarter and we see that a tremendous market opportunity. Indonesia banned the use of antibiotics in January of 2018. I was there two months ago. I met with the producers and I said, 'What's your single biggest challenge?' They said, 'Well, the government eliminated antibiotics, but there's no solution.' We're trying three or four different additives to try to control bacterial diseases. Nothing works.

Varium of product that you've -- I'm sure heard about in various press releases -- Varium is a single-dose product that does like three or four of these other products can do. We're entering that market at an absolute perfect time for antibiotic alternatives. Similarly, there are two or three other markets that we're currently looking and preparing business cases to present to Dan that we hope that we'll invest in the future.

Another big change we did that speaks to the evolution of the global livestock market is what I call showcase selling. This was originated from quite honestly, watching the activities that happened down the hall with Dan and the consumer groups as they were challenged in gorilla marketing. How do we get people that are used to buying some of their brand to try our product? Reagan and I, who is now the new Director of B2B marketing, we sat down and she asked what's the single biggest challenge with M1. We walk into an account, they don't know who you are, we're not Pfizer, haven't been around 75 years, they don't believe what we present, the competition has done effective job of saying that the picture of them that they present are the Wrigley Building; that's a chewing gum company, that's not actually -- they are not in that building. They don't really have a laboratory, they don't really have any people. So it's too easy when you're sitting in some remote rural area in Brazil to believe that M1 doesn't exist, that Oil Dri doesn't exist.

So what we did to better-focus our marketing spend, we targeted the top producers that we wanted to do business with, that matched our business model, something that Dan talks a lot about. We've got to find that people that fit the way we do business. These are people that believed in antibiotic pre-production, people that supply McDonalds, Kentucky Fried Chicken, they're approaching and we said instead of going down there and trying to convince them in 15-20 minutes while their phones are ringing and people will come into their office, Chicago. We're going to help you meet Dan, we're going to have you walk around the office, we're going to have you see that we're a real company, you're going to meet the people that will support your business, we're going to take you on to our R&D facility and you're going to see it's state-of-the-art.

A quick with the people and the analytical equipment is good as any pharmaceutical company. The result of that -- of the 30 people that we brought to showcase our company, not present a product, but showcase our company and our science and our technology. 28 out of 30 people are now customers of M1 and it generated a significant amount of incremental profit last year for our M1 business. Thank you.

So continuing that, we realized after 10 years of building our research capabilities, we have incredible relationships with leading researchers and thought leaders on going antibiotic pre-production. We said why don't we take these perspective customers that has the same interest as ours and bringing them all together and share our network with these perspective customers. In August, we had our first major global symposium where people from all over the world, culture producers that had the same vision of the future of livestock production as we do, we brought them here, it was one big mash up of technical people, we have Tyson Foods there, we had OSI which is a leading meat producer for McDonalds and Kentucky Fried Chicken.

Again, further building the relationships with what is increasingly is a very concentrated global livestock. Years ago there were thousands of farms, now on any country, usually about seven or eight producers control all the production or poultry, so you have to have strong relationships, less mass marketing, more micro marketing. That's a big ship that's going out of ammo.

In order to then make sure we can support that growth...


Pardon me. This is the operator. Your audio has dropped volume again. Can you please adjust?

Michael Nemeroff

Sure. I'll move closer to the mike To support this business, we looked across the commonalities of all of Oil Dri's businesses and increasingly, the commonality is microbiological sciences. When our research center was built 25 or 30 years ago, it was a traditional chemistry-based facility; that's the core of Oil Dri for 75 years where a lot of the future growth opportunities though aren't grounded in that type of science.

In Yasnus [ph] business, what's emerged are microorganisms that control weeks and kill insects, not synthetic chemicals that a lot of consumers and governments would like to eliminate. In order to understand how to develop new products and solutions for our customers, you have to actually understand something about living microorganisms -- bacteria, fungus and other things that can control it. In our Cat Litter business, if you want to make improved odor-controlled products, you have to understand what causes the odor, which is bacteria, not just you have to understand the mineral. So that's has been the fundamental shift to try to make our products more potent, more effective to the consumer, you have to control bacteria at required scale that we didn't historically have. And obviously in our M1 business, we've been incubating within Oil Dri Lifescience company. To develop the type of intestinal health and disease management products, you have to have the ability and knowledge to do that work.

We were fortunate that Dan approved The Richard & Jaffee Laboratory for Applied Microbiology, it was approved in the summer of 2017, it became operational in August of 2018, so the start of a fiscal year. And his question at the time was, 'What do you hope to accomplish from this other than obviously it's going to support the business?' And I said well, the hope would be we're going to accelerate our research. We're outsourcing an incredible amount of work to outside microbiology laboratory, so the first step will be easy, it will reduce our cost. But the hope is we're going to compress the timeline from months to get preliminary results back on a new prototype to what we hope will be weeks. I'm very happy to say it went much better than anybody anticipated, even though it's people and microbiologists that work on the lab; two products are now coming out of the pipeline as a result of this investment. I'm only going to give you just a little bit of a sampling of the product, but our Emelyn [ph] business focuses on disease management. The easiest way to understand it if you don't know the livestock market, think of human supplements, they are not pharmaceutical products but they are non-pharmaceuticals that have medicinal effects on humans -- these are the same types of products.

Our first product that's coming out of the pipeline that we'll be registering in the next couple of months, and we expect to launch it in fiscal 2020 is a formulated antimicrobial feed additive; this is a synergistic blend of multiple ingredients that are highly pathogenic to the three most harmful pathogenic bacteria that exist on the livestock market. So you take any one of these ingredients by themselves, they have some effect, the mixture of these five are absolutely incredible, they annihilate these bacteria like Clostridium.perfringens, E.coli. We're excited about that product, and again, we're not going to get deep into the research but we've done numerous clinical studies and the single-most important criteria a livestock producer looks at is something they call feed conversion. If I feed an ounce of animal food to a bird or to a pig, how much of that ounce gets converted to body weight? What prevents it? Disease. They were exposed to incredible amount of viruses, bacteria, they have intestinal damage, so they have a hard time converting the food they eat to weight gain; that's measured in something called feed conversion. The lower the feed conversion, the better that animal is converting food into weight gain.

So this status shows; if you have look to the far left, we have a very healthy bird, it doesn't have a bacterial infection, you have the lowest feed conversion which is what you would want in an ideal situation, that doesn't exist in the real world. If you look at the next bar over, that's what happens when you have an unhealthy bird with a bacterial infection, a very high level of feed conversion. The bar next to that is what happens when you have an infected bird and you feed it with the most commonly used antibiotic. You can reduce the feed conversion -- not all the way down to the healthy level because they're still infected but to a lower level. The product to the right is our new prototype, it's statistically equivalent to a long-standing pharmaceutical product in terms of controlling the bacteria to the level that you have the same amount of feed conversion as you do when you're feeding [indiscernible] pharmaceutical; that's a major achievement, we're very excited about the product and equally excited about our new anticoccidial product.

Cocci is a parasite, it causes the second most prevalent disease in poultry, it's a $2 billion or $3 billion problem. The parasite gets in, damages the intestinal lining of broilers and layers, ultimately causes high mortality, low feed conversion. Again, we've done numerous clinical studies, this is just one of the highlights, you look at the feed conversion, you look at our new prototype and you compare it to the most commonly used treatment to control cocci which is a classic antibiotics called [indiscernible]. Statistically, our new prototype is equal in feed conversion to a pharmaceutical product, that's the future of our Emelyn [ph] business and a lot of our R&D is focused in on these types of good health supplements to improve the profitability of livestock producers.

That's all I have. So I'm going to turn it over to Lea [ph]. Thank you.

Unidentified Company Representative

Thanks. Good morning, everyone. My name is Lea [ph], I'm in Division 3 working on our Litter for Good Pride program. So this time last year, we announced the new program that's going to be launching in January. So today, I wanted to talk to you about our Cat's Pride Litter for Good program success to-date.

So the Cat's Pride Litter for Good program is a program as I mentioned that we launched in January of 2018 with the main goal of helping animal shelters in need. So how the program would work is with every green jug of Cat's Pride purchase we donate one pound to the Animal Welfare Organization. And what we hope that to do is to increase our sales of Cat's Pride Fresh & Light, we hope that it frees up resources for Animal Welfare Organization, and ultimately, this is not a one-off promotion, this is something we plan on doing from now and into the future.

So how does Litter for Good work? First, we reach out to all of our shelter relationship, letting them know about the Litter for Good program. We developed marketing and educational resources that they can then use to spread awareness to all of their supporters, letting them know to; 1) go out and buy a green jug; and 2) join the Cat's Pride Club and nominate their local or favorite shelter. And with that, we then see increase in trial of our Cat's Pride Fresh & Light green jug, as well as those consumers letting all of their friends and family know about the program as well; so really increasing the Cat's Pride brand awareness.

When we first launched the program and throughout the year we have a 360 degree marketing support, so everything from the shelter word-of-mouth program to digital display, mobile, social, our website, search, marketing, digital FSSI [ph] and shopper marketing. Coming across the entire year we saw amazing results and interaction with not only the Cat's Pride brand, but really pushing that green jug; so all of those 360 degree marketing support led to over 282 million traditional impressions and over 1.6 billion digital impressions.

Now jumping into the specific data of the Litter for Good program. We have over 2,700 shelters within our database and of that, we have had over 1,194 shelters registered for that program and receiving the litter donations and spreading that word to the supporters. Over 16,000 shelter nominations for those are consumers that have joined our Cat's Pride club and nominated a shelter. Our Cat's Pride club membership has grown by over 19,000. When looking at the organic or non-paid reach of our program we have seen over 220 million social impressions in reach, a big part of our program are the videos with and Katherine Heigl and Dan Jaffee sharing about the Litter for Good program and we saw an increase of over 295% in our YouTube video views. And then to-date, we have promised over 3.6 million pounds in litter donations.

Overall, we have seen many thank you notes from shelters letting us know that without this program they would have been short in terms of helping fee for vet bills, adoption events; when they hear how much litter the eligible did receive, all of them almost state, you know, this is too big to be true; I cried when I received the email or the call. So overall, we've seen great success not only in terms of awareness for our consumers and trying and repeat trial of our Green Jug, but then those shelters actually benefiting and helping more animals in need.

We had an exciting partnership this year with NBC Telemundo, partnering with their Clear the Shelters event which is a single largest day adoption event occurring across the United States. Through that partnership we had TV, digital, social, onsite promotion support, we had press releases, PR celebrity outreach, we had a 30-grand second spot as well as a two-minute integration that played following Clear the Shelters that featured our Litter for Good program, as well as participating shelter in the program. This is a no-brainer in terms of a partnership, we both were aligned directly in terms of what our overall mission was, and helping animals need.

Here is our 32nd grand spot with NBC; [Video Ad / Commercial is being played].

So we're looking at the impact of Clear the Shelters, we saw a great return, we were able to partner with over 1,200 shelters and really spread that Litter for Good and Cat's Pride brand message. There were over 100,000 animals adapted, we saw over 33 million digital impressions, 21 million TV impressions and over 16.5 million users were reached via social and which was even more exciting to see as it really did impact our brand and our overall brand and purchase intent. So we saw a 29% increase in what people thought of Cat's Pride and having that excellent reception. We saw 58% increase in Cat's Pride ad recall, 18% increase in purchase [indiscernible], and a 50% lift in actual purchase of our product.

So overall, we have seen great success in Litter for Good, and what we have seen in the past year but we are excited to see what is to come; as we mentioned, this is an one-off promotion, we're doing this from now into the future. So when you take a look at our overall Cat's Pride lightweight sales velocity, you do see that increase in our unit sales and we're hoping this continues to impact not only our Green Jug, but we see a halo effect over our Cat's Pride products as a whole. Thank you.

Unidentified Company Representative

Hi everyone, my name is Jessica Moskovitz [ph], and I am on the marketing team for Cat's Pride and the brand side of the business in Division 3. I have the fun job today of talking to you about our latest TV integration but before I do that, I want to give you a little bit of an update on our spokesperson.

So in 2016, we signed a 2-year partnership with Katherine Heigl, that will be coming to an end as of the end of December. She's been instrumental in helping us build the Cat's Pride brand, relaunch Ultimate Care, and most importantly, really expanding our Litter for Good program. She's got her own ties, philanthropic efforts, and so her passion for animal welfare has really shined through for Cat's Pride as well. So well, that partnership is going to be coming to an end, we are excited to announce that we've actually identified a new spokesperson. This spokesperson has an equal passion for animal rights and a long-term commitment to helping animals in need, he also has an unmatched passion for the Cat's Pride brand; and as shareholders, you will be excited to hear that we received the spokesperson at a significant, significant discount to Katherine. So without further ado, I'd like to introduce our new spokesperson, none other than up, Dan Jaffee.

But in all seriousness, I want to share with you our most recent TV integrations this past October, we had the privilege of sponsoring Cat Week in October of this past year on The Ellen DeGeneres Show, garnering over 36 million impressions over the course of that week. While we're particularly excited about this opportunity, clearly, getting a TV integration is unique in itself of this nature but it was particularly synergistic for a number of reasons. I think as we looked at Ellen and the opportunity to partner with The Ellen DeGeneres Show there were a lot of synergies, clearly, the audience matches up with this 25 to 50-year old consumer, the sort of approach that we take from a down-to-earth accessible humor. But more importantly, it was this connection to animals. So the Cat Week embodied so holistically, as well as really they are tied to giving back with Litter for Good is all about.

So this partnership was very exciting. I'm excited to show you some highlights and results from the partnership, we'll start out with a clip that just kind of exemplifies just a couple of minutes we had. We were on the show for the entire week, so this is just a couple of minutes of that -- highlighting that integration. [Video Clip / Commercial is being played].

The on-Air portion of this integration was critical but beyond that we wanted to make sure that we were really joining the online and offline components throughout these programs. So after in terms of working on the integration, doing everything along the marketing funnel, everything from obviously the airtime but spreading the word digitally through this extensive network, everything from branded [indiscernible], to search, to everything; and then all the way down to driving people to our own website and then increasing the number of Cat's Pride club member.

The initial results for this program are highly encouraging. We saw double-digit increases in both traffic to our website, as well as social impressions and even preliminary velocity data as building on what Lea [ph] said, in the week surrounding Cat Week, we're highly encouraging from the velocity spiking perspective, and not only did we see velocity spike around Cat Week, we have continued to see those hold firm in the following subsequent weeks as well. So highly encouraging syllabus [ph] for the integration -- that one integration.

So we are super excited about this integration and continue to look for additional high impact, yet highly efficient programs where we can spread the Litter for Good messaging and continue to build the brand.

So thank you so much. That concludes the business portion and I will now turn it over to Dan for Q&A. Thank you so much.

Daniel Jaffee

How about another round of applause for our presenters. I think you've got a great glimpse into who we are, which are creative product innovators and we're trying to take this unique mineral that mother nature into the ground billions of years ago, and put really everything we need to thrive and survive in it. It's just upto us to figure out what's in there and how we can economically get that to consumers, whether it's in the food chain or whether it's for cat. And so we are just so excited about the future and I hope you got a feel for that excitement from the presenters.

I'd love to open it upto Q&A to answer any questions you guys might have. We've got three different segments of Q&A going on. Let's start with the phone lines and please after you ask your question, put your phone back on mute just so we don't get any background noise. And Reagan [ph], I think you will handle the phone line. So we'll take the 17th caller.

Question-and-Answer Session


[Operator Instructions] Our first question comes from Ethan Starr, an investor.

Ethan Starr

Good morning, Dan and everyone. Fabulous presentation, really very excited we're going forward. And my question is, this, to what extent will cost related to the new ERP system, in fact second quarter results? And also how will the system help save you money over the longer term?

Daniel Jaffee

Good questions, and not totally quantifiable. I mean there is certainly going to have a negative economic impact on the second quarter and then we absolutely believe positive economic impact going forward. We are still spending money on consulting, on bringing in programmers and developers to help us refine, tweak, and make sure that the system is doing everything it was intended to do, and all of those dollars are being expenses, those aren't capitalized at this point because we went live. So it's really hard to quantify and I hate to be evasive, you know, we don't really give guidance and I've just sort of given you generic guidance; I will just put it in the terms of it's not going to impact our ability to invest in our growth opportunities and it's not going to impact the dividend. So that's about the best guidance I can give you and as a long-term shareholder, those are the private two things you'd be most interested in. Are you going to have to pull back on some of these great new product opportunities, the answer is no; and are you going to hurt my dividend, and the answer is no. So that's the best way I can answer your questions.


Our next question comes from Robert Smith with the Center for Performance Investing.

Robert Smith

Dan, thanks for your eloquent and gracious and loving tribute to your dad in the stakeholder's letter, it was deserving and I admire them. My question is, you expressed disappointment with the first quarter results, and I'm wondering how you plan to address the disappointments and challenges in the immediate future?

Daniel Jaffee

Let me talk about the disappointment. My disappointment was not certainly with the team's effort, our team put forth an incredible effort trying to overcome things that probably should have been tested and validated before we went live. And so my disappointment was not that it was painful but that we didn't anticipate all the pain that we experienced, we knew it was not going to be easy going live, everybody launches these ERP systems, it goes through what we did, they take longer, they cost more, and we put in so much time doing these conference room pilots that my expectation was, we were going to know where the high fast balls were coming from, but as we went live, all of a sudden we started seeing curved balls and knuckle balls and everything else that we frankly didn't do a good job of testing on the front-end; so we were learning and training on the fly, that's where my disappointment came from, it was more of a lack of anticipating, it certainly was not in the lack of execution, our team did an amazing job on that.

I think you had a two part, I can't remember what the second part was. Oh, how are we addressing it? Well, first of all, you can't connect all the dots but certainly we're going to continue to upgrade the talent level at Oil Dri, that we are playing in the major leagues and we need major league hitters. And so bringing in someone with Susan's background, not only on the CFO side, but also on the IT side; I mean, just yesterday at lunch we took the IT team out for lunch and then we took the accounting folks out to dinner and during the IT session, just the questions she was asking in her understanding of what it takes to go live, you know, her [indiscernible] with us 24 months ago, and so that's how we're going to address it. We need to make sure that everybody who was occupying a position at Oil Dri is capable of delivering at the level we need because we've got new products and we've got exciting growth opportunities and what that kind of growth does is it starts to expose weakness in our own infrastructure.

And so thank god we've put the system in, I wish we put it in the year-over-year frankly, but we are going to need this because having visibility into our warehousing, into our fulfillment is going to be critical as consumers continue to demand our products; and so while we have disappointed some customers, we haven't lost any distribution, the disappointment has come from -- we want your product, it's lying off our shelf, I mean as Mark alluded to; Cat's Pride scoopable was up 30% in the quarter, our private label lightweight was up 20% in the quarter and we're still rolling out new customers as we speak; and then as we're doing that, we're actually getting more SKUs with existing customers. So we've got some winning strategies on the cat litter side and we clearly have very winning strategies on the beetus-bee [ph] side, both on the Ag, the human health, and the animal health.

So we've got to make sure that our support team, what we call truthful [ph] infinity has the resources they need and the people they need to meet those orders and get out in front because we've been playing catch-up, there is no doubt about it. But as I tell our sales team, these are good problems to have, the worst problem to have is, your product is not moving, come and get it, that's the worst problem to have. The best scenario is, your product is lying and you're meeting all orders, there is no doubt that's what we're trying to do. But if you had to pick between your products not moving, come get it, and we're angry at you because you're product is moving so fast and we're missing sales, you'd rather have a width [ph].


Thank you. And we do have a follow-up question from Ethan Starr.

Ethan Starr

How can you address the cost of the trucking issue? I don't know if you can raise prices on that before the next fiscal year or not? And also I see you have a new Dr.Green [ph] jug on the Cat's Pride Fresh & Light.

Daniel Jaffee

Good catch. So we did raise prices 81 [ph] in anticipation of 8% to 10%, maybe even 15% in some areas of freight increases but what we experienced in the first quarter was well north of that. We are going to be going out with a second round of price increases this fiscal year, however, in the consumer business for sure, we've got to get our supply numbers, our fill rates up because you can't go into an account where you're filling at 59% or even 90%, you've got to be in the 95%, 96%, 97% and then you have the -- that you're on the solid ground to go ahead and raise their price. When you're at 50%, 60% and 70% and then tell them, on top of that you're going to be raising their price, those meetings don't go very well. So we will definitely be raising our second round of prices this fiscal year, all of our competition has been raising their prices, all of the retailers -- retail prices are going up, this is not an oil dry issue, this is an industry -- nation-wide systemic issue, not just cat litter but anyone who is shipping truckload product is experiencing the lack of supply and the increase and demand.

So the cost are going up, and we will be getting our prices out but we will be lagging this next bump, we were leading the first bump but we will be lagging the second bump. And thank you for noticing our green jug [ph], that was just we're putting so much brand equity behind look for the green jug that Lisa and her marketing team rightly so tested all sorts of new packaging, you will see some new packaging design either later this fiscal year or early next fiscal year but in conjunction with that or in advance of that we really wanted to enhance the ability of the green jug to pop at retail and that new green jug does just that.

Okay, let's switch over to webcast and we'll take questions from there. I would love to encourage people to type their questions, did we do webcast live than other typing. So if you have your envelope and you want to type some questions, we'll get out of the room and we will ask them but we will open it up to all audience here and we've got some microphones that we will hand deliver if you have any questions.

John, you have a question? Let's get John a microphone.

Unidentified Analyst

Thank you, Dan. It's a great presentation and I congratulate all the different divisions and what they're doing. I think this is my seventh attendance to an annual meeting and always gained some pretty incredible insights as to what you're doing and where you're going. And particularly excited about the animal health related business; so I have a couple of questions regarding that. Number one is, the cost effectiveness of using [indiscernible] product versus the traditional antibiotics and if that is a good selling point for you. And along similar lines, the recent problems that China's had with the pig disease, I think it's in African -- I know it's a virus I think, so I'm not correct, so maybe that's not really applicable but has that helped out in your efforts in selling over there? Thank you. I've got a follow-up question.

Mark Lewry

How the industry looks at antibiotic usage really depends by country and by producer. I meet with a company last week that uses 3x, I mean it's not spoken about, 3x the normal recommended dose which cost about $9 per metric ton of feed, that's extremely favorable compared to vary [ph] near prime. If you look at sometimes a typical producer, the cost of an antibiotic especially if they used a generic one from China might only cost $1.50 per metric ton, we're not going to replace those types of -- that type of use of antibiotics. If you go antibiotic-free or you operate a farm [ph] that's so heavily diseased and poorly run which is typically the case at many developing countries. They are using products like Varium and NeoPrime on top of their antibiotics, there is only so much you could put into an animal before it starts to harm them.

So we find the market is plenty big enough for alternatives antibiotics where the cost of our products are not prohibitive, and in many cases you have people that are using such a large amount of antibiotics that the cost for the total amount of dose compares favorably to our new products. So we don't think that will impede growth at all. In terms of the African swine flu which is a virus that slowed the business a little bit in China because they are now beginning to call the large producers are all pretty heavily infected. They are calling a large percentage of the pigs now, and they are just kind of stopping the use of any new additives, adding more cost to their -- that really now trying to figure out how they're going to slaughter and how are you going to process and landfill 10,000, 20,000, 30,000 pigs per producer across 20, 30, 40 producers; it's a lot of pigs. So right now it disrupted the sales process there but it's not having a negative impact, it's just slowing our growth down in China.

Unidentified Analyst

My follow-up question is; for Litter for Good program, Dan, I think you indicated that initially a lot of the product that was being donated was 'old product' and so I'm wondering kind of where you are and working through that? And if the current product that is on the market for consumers is what's being used appears to be given the videos there. And as I sight [ph] on this, have you considered using billboard advertising along heavily trafficked Interstate 94 and other areas with those big green jugs on the picture there? I think -- personally, I think that might be a interesting thought there if you're not already doing it. Thanks.

Daniel Jaffee

Lea [ph], why don't you handle where the litter is coming from and what kind of runway we have before we can actually have to produce first-run product.

Unidentified Company Representative

So in terms of the donated product, we are still donating obsolete product, so we have not run out of that obsolete product, shelters can either pick it up at our plants or warehouses or pay for third-party freight to have it delivered. And all shelters who are eligible for over a pellet of litter are able to receive that and then just for efficiencies, if it's anything under our pellet we provide coupons for the litter to be picked up. When looking at our obsolete report, we do have probably over 6 months left in terms of providing obsolete, I mean that report continues to add inflow based on whatever we're running and if packaging changes etcetera. So things are looking good in terms of those cost savings.

Daniel Jaffee

Yes, and from the manufacturing efficiency standpoint, it's been good for us because we're either paying for this space, somewhere on an outside warehouse or it's been taking up valuable space on our own warehouses, so either way, we've cleared up a lot of space which is good. Regarding billboards, we look at cost per thousand of impression, and we certainly look at all sorts of different ways to communicating and I'm sure we looked at billboards but at the moment, it's not part of our mix.

Unidentified Analyst


Daniel Jaffee

What are the vehicles that are more efficient on our cost per thousand price? There are millions of cost per thousand impression. We have any typed questions? Okay, one more audience, who wants it? You moved on, you were over there.

Unidentified Analyst

[Indiscernible]. I'm a long time Oil Dri shareholder, and I have good questions, the suggestions one about marketing and the other about acquisition but first I want to personally give my condolence to the passing of your father. I wish he were to see me with serious questions, and maybe in the future, wearing a suit and a haircut. My first question consumes marketing and anecdotally [indiscernible] my friends and neighbors who used Cat Pride -- preferred light multi-cat uncentered [ph]; it's sometimes difficult to find what all the other flavors and whereas multi-cat uncentered [ph] is the highest price of them and if it's the highest priced and the best, it should be the one that people ordered [indiscernible] but lots of luck trying to find it in supermarkets. I hope you can encourage supermarkets to at least have double row of that or much more of it in-stock.

And the second type is; with Oil Dri as the local company here in Chicago, WFNP [ph] is a 20-filler [ph] local classical radio station and when they do fundraising, they used to have something called at Cat Fund and the Dog Fund; cats always won. And those people have classical radio, lots of times they have a cat, it's worth trying at least for a couple of times putting advertisement which are announcing that life, it's worth a try, you could even probably care [indiscernible].

Daniel Jaffee

Well, first of all on the first one, Dave, who manages our e-commerce business, those items are on Chewy, so you can get a chewy.com and they deliver for free, and they have those items. So if you're neighbors can't find the item, tell them to go to www.chewy.com and they can order and it will be delivered to their home for free.

Unidentified Analyst

I think my neighbor is a little old fashioned, just we have to grab what they prefer at the grocery store. So for instance, you buy a bunch of them and then I'll charge them and sell. That's what I do with these coupons which is limited to two this year.

Daniel Jaffee

Okay, good.

Unidentified Analyst

Wait this one, the second one concerning acquisition; Bayer or as we call in The United States, Bayer AG, which exempted [ph] Aspirin and just took over Monsanto has decided to sell their pet care and animal health products. It's a limited line that's animal from an animal health products, and I'm wondering your [indiscernible] investigate if it might be a good fit to enquire them?

Daniel Jaffee

Certainly to the extent booked with our motion [ph], I appreciate that you gave me some information on it and we would file it up. Thank you.


We have a follow-up from Ethan, two-fold. Last quarter you indicated you'd be adding a new private label cat litter customer in the month. Will there continue to be new private label cat litter customers added in the upcoming months? And the second part, for the Litter for Good program, are there any plans to provide marketing materials to that new practices that treat feelings only?

Daniel Jaffee

I'll take the first part and either Lisa or Leo, however, you guys can take the second part. Yes, I mean we're continuing to roll out both, new customers and the private label lightweight, scoopable and new skills with existing customers. So it's moving so well that they want to expand their [indiscernible] presence with the light weight. So both of that happening and we're rolling out a major Canadian customer, I won't tell who, Ethan will have to go upto Canada and find it [indiscernible]. One, have we started shipping that yet; maybe the next week. The orders are in -- maybe, it was earlier and the PO is in or not yet [ph]? Okay, so we're awaiting for the initial PO but certainly by January 1 that ought to be out in Canada and through the major Canadian retailer who is the first one to take a real swing at the private label lightweight, they've seen how successful it's been in the United States.

We'll give Lisa Mak, our Vice President, Marketing the microphone, in the consumer.

Lisa Mak

So to answer your question about reaching out to veterinarians, I think it's a great idea, we do have a database that we actually can reach out to and rather worried about Litter for Good. And also we have some promotional materials that we can eventually have it there, ship out to the veterinarians offices so they can hand out to their consumers because I think it's a great idea to reach them at the point of inception and with an expert like a veterinarian making a recommendation on litter, I think that's a great place to start. Thanks.

Daniel Jaffee

Great Lisa, thank you. And if you're pooling the audience too, I'm going to be very, very impressed, those are multimedia questions, you did the phone, you did the typing and now I'm sort of looking for you. But I don't see you, so I will wish you a happy holiday season. And I wish all of our investors a happy holiday season, and I'll sort of close how we started. The rule go for all guys for long-term, we are extremely excited about the long-term, my family and I have increased our ownership, my sisters and I in the company, and that's just a testament to our belief in the long-term future of this incredible mineral that we've been blessed with, and you can see, we have an incredible team who wakes up every morning trying to maximize our value out of that mineral.

So thank you very much and we will see you again next year.


Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.