Oil-Dri Corporation of America (ODC) 2023 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Oil-Dri Corporation of America Q3 Fiscal Year 2023 Teleconference. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Oil-Dri Corporation of America 2023 財年第三季度電話會議。 （操作員指示）請注意，今天的會議正在錄製中。

I would now like to hand the conference over to your speaker today, Dan Jaffee, President and Chief Executive Officer. Please go ahead.

現在我想將會議交給今天的發言人、總裁兼首席執行官丹·賈菲 (Dan Jaffee)。請繼續。

Thank you, and welcome, everybody, to our third quarter teleconference. I'd like to review with you the people who are on. We are conducting this virtually. So we're not all in the same room, but we're all on and available to answer questions. Susan Kreh, CFO and CIO; Aaron Christiansen, VP of Operations; Wade Robey, VP of Ag and President of Amlan International; Chris Lamson, Group VP of Retail and Wholesale; Laura Scheland, VP of Strategic Partnerships and General Counsel; David Atkinson, VP, Corporate Controller; and Leslie Garber, Manager of Investor Relations. And Leslie, please walk us through the safe harbor.

謝謝大家，歡迎大家參加我們的第三季度電話會議。我想和大家一起回顧一下現場的人。我們正在虛擬地進行這項工作。所以我們並不都在同一個房間，但我們都可以回答問題。 Susan Kreh，首席財務官兼首席信息官； Aaron Christiansen，運營副總裁； Wade Robey，Ag 副總裁兼 Amlan International 總裁； Chris Lamson，零售和批發集團副總裁； Laura Scheland，戰略合作副總裁兼總法律顧問； David Atkinson，副總裁、公司財務總監；和投資者關係經理 Leslie Garber。萊斯利，請帶我們穿過安全港。

Thank you, Dan, and welcome, everyone. On today's call, comments may contain forward-looking statements regarding the company's performance in future periods. Actual results in those periods may materially differ. In our press release and in our SEC filings, we highlight a number of important risk factors, trends and uncertainties that may affect our future performance. We ask that you review and consider those factors in evaluating the company's comments and in evaluating any investment in Oil-Dri stock.

謝謝丹，歡迎大家。在今天的電話會議上，評論可能包含有關公司未來時期業績的前瞻性陳述。這些時期的實際結果可能存在重大差異。在我們的新聞稿和向 SEC 提交的文件中，我們強調了一些可能影響我們未來業績的重要風險因素、趨勢和不確定性。我們要求您在評估公司的評論以及評估 Oil-Dri 股票的任何投資時審查並考慮這些因素。

Thank you for joining us. Dan?

感謝您加入我們。擔？

Great. Yes, I'd like to make some general remarks, and then I'll turn it over to Susan Kreh for some more detailed remarks. What you're seeing is a great quarter, and it's the culmination of a team that is working very well together in every aspect of the business. Both our line team and our support team are pulling together to make this happen, and so I just want to make sure I thank and recognize our team. It was a great quarter, and we believe even if -- I'm looking at the stock price is doing and it's running up. And I'll let you guys do your own math, but whatever kind of EPS you want to apply for a year and any kind of multiple you want to do, you can see that we should have a lot of upward pressure on the stock price.

偉大的。是的，我想發表一些一般性評論，然後我會將其交給 Susan Kreh 進行一些更詳細的評論。您所看到的是一個出色的季度，這是一個在業務各個方面都非常合作的團​​隊的巔峰之作。我們的一線團隊和支持團隊正在齊心協力實現這一目標，因此我只想確保我感謝並認可我們的團隊。這是一個很棒的季度，我們相信，即使 - 我正在關注股價的走勢，而且它正在上漲。我會讓你們自己算一下，但是無論你想申請一年的每股收益，無論你想要做什麼樣的倍數，你都可以看到我們的股價應該有很大的上行壓力。

So the Board has authorized us to be opportunistic. We're generating a lot of cash and to restart our stock buyback program. So we will be opportunistic with it. We will abide by all the training rules that we need to do, but we see our stock as a good buy at this level.

因此董事會授權我們投機取巧。我們正在產生大量現金並重新啟動我們的股票回購計劃。所以我們會抓住機會。我們將遵守我們需要執行的所有培訓規則，但我們認為我們的股票在這個水平上是一個不錯的選擇。

Susan, I'll turn it over to you for some of the details.

蘇珊，我會把它交給你了解一些細節。

Sure. Thank you, Dan. So during our last 2 investor calls, we've talked about the positive momentum we are experiencing in the business as our entire team is focused on serving our customers and working to restore pre-pandemic margins. During the third quarter, Aaron Christiansen and the entire supply chain team achieved an all-time high in on-time shipments, thus providing outstanding service to our customers.

當然。謝謝你，丹。因此，在最近兩次投資者電話會議中，我們談到了我們在業務中所經歷的積極勢頭，因為我們整個團隊都專注於為客戶服務並努力恢復大流行前的利潤率。第三季度，Aaron Christiansen 和整個供應鏈團隊在按時發貨方面創下了歷史新高，從而為我們的客戶提供了出色的服務。

Our sales teams have also been very successful in taking price to the market. And while we have not yet recovered margins to our pre-pandemic levels, we made significant progress during the quarter in growing our gross profit margin to 26.1% from 22.6% during the prior quarter, while at the same time growing our net sales 23% over the third quarter and the prior year. Most of that growth resulted from pricing initiatives to recover cost increases and restore our margins. However, we also had meaningful volume growth of 25% within our Business to Business segment, which on a consolidated basis, was offset by the purposeful shedding of some low-profit volume within our Retail and Wholesale segment.

我們的銷售團隊在將價格推向市場方面也非常成功。雖然我們的利潤率尚未恢復到大流行前的水平，但我們在本季度取得了重大進展，毛利率從上一季度的 22.6% 提高到 26.1%，同時淨銷售額增長了 23%第三季度和去年同期。大部分增長來自於旨在彌補成本增加和恢復利潤的定價舉措。然而，我們的企業對企業部門的銷量也實現了 25% 的有意義增長，但在合併基礎上，我們的零售和批發部門有目的地削減了一些低利潤的銷量，從而抵消了這一增長。

During our fiscal third quarter, the Oil-Dri team achieved another major milestone. As of April 30, 2023, Oil-Dri's fully funded defined benefit pension plan was terminated and all funds were dispersed. The accounting for this was a nonrecurring noncash charge of $4.8 million net of tax, resulting from the combination of recognizing the unrealized losses on our pension investments and the transfer of our surplus to our defined contribution 401(k) plan for the benefit of our participants. For those of you who are interested in more details, you can find them in Note 10, pension and other postretirement benefits in our 10-Q filing. And as a reminder, the third quarter in the prior year also included a significant nonrecurring noncash charge of $4.5 million net of tax related to the impairment of goodwill associated with our Retail and Wholesale segment.

在第三財季，Oil-Dri 團隊實現了另一個重要里程碑。截至 2023 年 4 月 30 日，Oil-Dri 全額資助的固定福利養老金計劃終止，所有資金均已分散。對此的會計處理是一項 480 萬美元的非經常性非現金費用（稅後淨額），這是由於確認了我們養老金投資的未實現損失以及為了我們的參與者的利益而將我們的盈餘轉移到我們的固定繳款 401(k) 計劃中造成的。 。如果您對更多詳細信息感興趣，您可以在我們的 10-Q 文件中的附註 10、養老金和其他退休後福利中找到它們。提醒一下，去年第三季度還包括與我們的零售和批發部門相關的商譽減值相關的 450 萬美元的重大非經常性非現金費用（稅後淨額）。

One final metric I would like to comment on is cash generation during the third quarter. So for the first 9 months of fiscal 2023, net cash provided by operating activities was $36.8 million, which compares to $5.5 million in the prior fiscal year. Of the $36.8 million in the current year, $21.9 million or 60% of net cash provided by operating activities was generated during this very strong fiscal third quarter. Our cash priorities continue to be investing and reinvesting in our business with a focus on future growth activities -- opportunities to support our customers while maintaining our existing asset base supporting our dividend, which we just increased for the 20th straight year; maintaining enough financial strength to support strategic M&A as targets become available; followed by, as Dan just discussed, opportunistically repurchasing shares of our stock when we believe the valuation justifies this, which we do now.

我想評論的最後一個指標是第三季度的現金生成。因此，2023 財年的前 9 個月，經營活動提供的淨現金為 3680 萬美元，而上一財年為 550 萬美元。在本年度的 3680 萬美元中，經營活動提供的淨現金中有 2190 萬美元，即 60% 是在這個非常強勁的第三財季產生的。我們的現金優先事項繼續是對我們的業務進行投資和再投資，重點關注未來的增長活動——支持我們客戶的機會，同時維持我們現有的資產基礎以支持我們的股息，我們剛剛連續 20 年增加了股息；保持足夠的財務實力，以在目標確定時支持戰略併購；接下來，正如丹剛才討論的那樣，當我們相信估值證明這一點是合理的時，機會主義地回購我們的股票，我們現在就這麼做了。

And so with that, Dan, I'll turn it back over to you for any additional comments you might have and for Q&A.

因此，丹，我會將其轉回給您，以供您提出任何其他意見並進行問答。

Great. Thank you, and thank you for your recap. Yes, what I wanted to talk about because you talked about the -- I remember how you said it, you said it very well, the purposeful shedding of some unprofitable business. So I think most of the people on the call will have heard of the concept of Moneyball as it applied to Major League Baseball. So at Oil-Dri, we play Moneyball, where we really try and get into the data and the details and make decisions because we do have a nonrenewable resource. And we always want to live up to our mission of creating value from sorbent minerals.

偉大的。謝謝您，也謝謝您的重述。是的，我想談論的是，因為你談到了——我記得你是怎麼說的，你說得很好，有目的地放棄一些無利可圖的業務。因此，我認為大多數參加電話會議的人都會聽說過應用於美國職業棒球大聯盟的“點球成金”概念。因此，在 Oil-Dri，我們玩點球成金遊戲，我們真正嘗試了解數據和細節並做出決策，因為我們確實擁有不可再生資源。我們始終希望履行從吸附劑礦物中創造價值的使命。

So I thought it was interesting to -- and I've mentioned a lot of these metrics before over the years. But in general, back around the turn of the century from '99 through '04, we did over 1 million tons a year, yet our average selling price was around $155 a ton. This year -- these past years, we do a little over 800,000 tons. So 22 years later, our volume is down 20%, but our average selling price in the quarter was $530-ish a ton. And therefore then, a lot of that is inflation and so forth and so on. So it didn't all go to the bottom line, but we were making as low as $30, $28 a ton back in '01 on those 1 million tons. And in the quarter, we made $138 a ton gross profit. So that's that 26% that Susan talked about.

所以我認為這很有趣——多年來我之前已經提到過很多這些指標。但總的來說，從 99 年到 04 年世紀之交，我們每年的產量超過 100 萬噸，但我們的平均售價約為每噸 155 美元。今年——過去幾年，我們的產量略高於 80 萬噸。 22 年後，我們的銷量下降了 20%，但本季度的平均售價為每噸 530 美元左右。因此，其中很多是通貨膨脹等等。所以這並沒有全部達到盈利，但我們在 01 年那 100 萬噸的產量低至每噸 30 至 28 美元。本季度，我們每噸毛利潤為 138 美元。這就是 Susan 所說的 26%。

So I just -- I always want the investors to be mindful. We do not grow for growth's sake. And we -- any time we're running out of capacity in a certain line, we look and see if there is some low-margin business that's gumming it up, that we raise prices. If it fits, great. That means the customer valued it. If it doesn't, it goes away, and we clear those runways for the newer, faster jets that we're selling, where we're really partnering with our customers to add real value. And part of that value is our quality and our service, and huge kudos to Aaron and his team for setting our all-time record on-time deliveries in the quarter, which is a fantastic job by the supply chain.

所以我只是——我總是希望投資者保持警惕。我們不會為了增長而增長。每當我們某條生產線的產能耗盡時，我們都會查看是否有一些低利潤業務在搞砸，然後我們就會提高價格。如果合適的話，那就太好了。這意味著客戶重視它。如果沒有，它就會消失，我們會為我們銷售的更新、更快的噴氣式飛機清理跑道，我們真正與客戶合作以增加真正的價值。這一價值的一部分是我們的質量和服務，對亞倫和他的團隊在本季度創造了按時交貨的歷史記錄表示極大的讚譽，這對供應鏈來說是一項出色的工作。

We always talk about how our sales team gets the first order, but our supply team gets to through infinity and support team. Every repeat order is because we have met or exceeded our customers' expectations and then they reward us with a follow-up order. And so we try and re-earn their business every day.

我們總是談論我們的銷售團隊如何獲得第一個訂單，但我們的供應團隊是通過無限和支持團隊獲得的。每一次重複訂單都是因為我們達到或超出了客戶的期望，然後他們獎勵我們後續訂單。因此，我們每天都在努力重新贏得他們的生意。

Leslie, I will turn it to you because we do have a number of good questions from our fateful shareholders, and we would like to cover as many of them as we can.

萊斯利，我將把它交給你，因為我們確實有很多來自我們命運攸關的股東的好問題，我們希望盡可能多地回答這些問題。

Great. Thank you, Dan. (Operator Instructions) We already have a bunch of questions in the queue, so I'll start right now. The first one is from Sarah Donnelly at Gabelli Funds, and she asks, approximately how much clay is needed to filter 1 gallon of renewable diesel? And I can actually answer that, and it is the amount of absorbent clay is about 0.5% to 1% of the weight of the oil being processed.

偉大的。謝謝你，丹。 （操作員說明）我們已經有一堆問題在隊列中，所以我現在就開始。第一個來自 Gabelli Funds 的 Sarah Donnelly，她問道，過濾 1 加侖可再生柴油大約需要多少粘土？我實際上可以回答這個問題，吸收性粘土的量約為所加工油重量的 0.5% 至 1%。

The next question comes from Ethan [Starr], a private investor, and he asks, what feedback are you receiving from Amlan customers, both in the United States and internationally, regarding the efficacy and value of Amlan products? And I'm going to turn that over to Wade Robey to answer.

下一個問題來自私人投資者 Ethan [Starr]，他問道，關於 Amlan 產品的功效和價值，您從美國和國際上的 Amlan 客戶那裡收到了哪些反饋？我將把這個問題交給韋德·羅比來回答。

Yes. Thank you, Leslie. And Ethan, thank you for that question. As you know, we've been selling internationally with Amlan products for a number of years. Our presence in the U.S. market has really only been significant for about the last 1.5 years. So a little different in the answer based on region.

是的。謝謝你，萊斯利。伊森，謝謝你提出這個問題。如您所知，多年來我們一直在國際上銷售 Amlan 產品。我們在美國市場的影響力真正重要只是在過去 1.5 年左右。因此，根據地區的不同，答案略有不同。

Internationally, we have a long history of performance, a long history of customer use and established efficacy. In the United States, we're building that, obviously, as we launch and penetrate the large, vertically integrated industry that we serve in the poultry sector specifically, but also in swine.

在國際上，我們擁有悠久的業績歷史、悠久的客戶使用歷史和既定的功效。顯然，在美國，我們正在建立這一點，因為我們啟動並滲透了我們服務的大型垂直一體化行業，特別是家禽行業，也包括養豬行業。

The feedback has been excellent so far. We've been working very hard to penetrate and begin to sell at all the largest integrators in the U.S. in the poultry market. We are already making substantial progress there in the short time we've been launched. And the feedback has been overwhelmingly positive, not only for our core technology, which is our mineral clay, but also as customers have tried our formulated products to get broader spectrum efficacy as they seek to improve animal performance and help their flocks, their herds reach optimum potential.

到目前為止，反饋非常好。我們一直在努力滲透並開始向美國所有最大的家禽市場集成商銷售。在推出的短時間內，我們已經在這方面取得了實質性進展。反饋非常積極，不僅針對我們的核心技術（即我們的礦物粘土），而且還因為客戶嘗試了我們的配方產品以獲得更廣泛的功效，因為他們尋求提高動物性能並幫助他們的羊群、牛群達到目標最佳潛力。

So overall, extremely positive feedback and great momentum, both in the new North American market we're targeting, but continued momentum internationally.

總的來說，在我們瞄準的新北美市場，反饋非常積極，勢頭強勁，但國際上的勢頭依然強勁。

Okay. Great. The next question comes from Robert Smith for Center for Performance Investing. And I'm actually going to combine his question with a question from Ethan [Starr], so I'll read both of them. With respect to Amlan, we've been awaiting the landing of some big fish and assume you are further along this track. Last June, you shared a target for this year and wonder whether you're willing to give us a target for fiscal '24. If not, would it be reasonable on my part to expect a figure of, say, $50 million based on the probability of reeling in a big one.

好的。偉大的。下一個問題來自績效投資中心的羅伯特·史密斯。實際上，我將把他的問題與伊森 [斯塔爾] 的問題結合起來，所以我將閱讀這兩個問題。關於阿姆蘭，我們一直在等待一些大魚的登陸，並假設您沿著這條路線走得更遠。去年 6 月，您分享了今年的目標，並想知道您是否願意為我們提供 24 財年的目標。如果不是，那麼我根據獲得大筆獎金的概率來預期 5,000 萬美元是否合理？

And then that's also in conjunction with Ethan [Starr's] question that says, on last quarter's webcast, Dan said that Amlan is pretty much a business of grand slams or strike out. While nothing is certain until you have a contractual purchase, does the Amlan team state that has been getting closer to one or more of those grand slams? So Wade, I'm going to have you answer both of those.

然後，這也與伊森（斯塔爾）的問題相結合，在上個季度的網絡廣播中，丹說阿姆蘭幾乎是一個大滿貫或三振的生意。雖然在簽訂合同之前一切都還不確定，但阿姆蘭團隊是否表示已經更接近一項或多項大滿貫了？所以韋德，我會讓你回答這兩個問題。

Again, thank you, Leslie, and thank you, Robert and Ethan again for those questions. Robert, I'm not going to give a specific number or target. I don't think I should do that. But what I'll talk about is really the question I think both you and Ethan are asking, which is are we closer to really transformational growth within the Amlan business. And I would say, "Yes, we're very encouraged by the momentum." The North American market, which we just launched in about 1.5 years ago, is already our largest market in terms of tons sold. It is a highly concentrated, highly vertically integrated market, as you know. So as we penetrate and are successful at these top producers in the United States, we didn't have very large stairsteps of growth. And so we expect that to happen, and we are actually seeing that in our commercial progress today.

再次感謝萊斯利，並再次感謝羅伯特和伊森提出的這些問題。羅伯特，我不會給出具體的數字或目標。我認為我不應該這樣做。但我要談論的實際上是我認為您和伊森都在問的問題，即我們是否更接近 Amlan 業務的真正轉型增長。我會說，“是的，我們對這種勢頭感到非常鼓舞。”北美市場是我們大約 1.5 年前剛剛推出的，就銷量而言，已經是我們最大的市場。如您所知，這是一個高度集中、高度垂直整合的市場。因此，當我們滲透到美國這些頂級生產商並取得成功時，我們並沒有取得很大的增長階梯。因此，我們期望這種情況發生，並且我們實際上在今天的商業進展中看到了這一點。

Internationally, the market tends to be a little bit more diffuse, more distributed. So the growth tends to be, say, in Lat Am or in Asia more against the steady curve of compounded growth you might expect as you continue to launch new products and grow in these markets. But because of the North American significance to our overall market opportunity, our addressable market, we will see very significant growth in steps and expect that in the coming years. Again, great progress in the U.S. this year. It's already our largest market in terms of tons, and we expect that to continue.

在國際上，市場往往更加分散、更加分散。因此，在拉美或亞洲，隨著您繼續推出新產品並在這些市場上實現增長，您可能會預期，增長趨勢會更傾向於復合增長的穩定曲線。但由於北美對我們的整體市場機會、我們的潛在市場的重要性，我們將看到非常顯著的增長，並預計在未來幾年內會出現這種情況。今年美國再次取得了巨大進步。就噸數而言，它已經是我們最大的市場，我們預計這種情況將繼續下去。

Thanks, Wade. I'm going to do the same thing again and combine 2 very similar questions, one from Robert Smith, one from Ethan [Starr]. First part of the question, with respect to Amlan in China and the change to a master distributor, what are the puts and takes to this change in marketing and your expectations for the coming year?

謝謝，韋德。我將再次做同樣的事情，並結合兩個非常相似的問題，一個來自 Robert Smith，一個來自 Ethan [Starr]。問題的第一部分，關於Amlan在中國和總經銷商的變更，您對這一營銷變化有何看法以及您對來年的期望？

And then the second part is -- please -- could you please explain the reasoning behind the restructuring of Amlan's China business? How many employees does Amlan's Chinese subsidiary have? Are any former Amlan employees now employed by the new master distributor? And why do you think this change will lead to higher sales and profits in China? Wade?

第二部分是——請問——您能解釋一下安蘭中國業務重組背後的原因嗎？ Amlan中國子公司有多少員工？新的總經銷商現在是否僱用任何前 Amlan 員工？您認為為什麼這一變化會帶來中國銷售額和利潤的提高？韋德？

Okay. Thank you, Leslie. And again, thank you, Robert and Ethan, an excellent question or series of questions. And there's a number of questions embedded in there. I'll try to hit them all as I can as I go through. Like a lot of multinationals that are trying to sell into China, Amlan, Oil-Dri made the decision this year, that rather than trying to go in directly and build a large infrastructure and really learn as we spend as we try to penetrate that market, that we would take a step back and really focus on what has been our strongest distributor in that market to date, which is Zhongnong that we announced in our press release. They're a very significant distributor within China. They have a large team and really service across China, across the species that we want to target. So an excellent partner for us to grow with, and we felt to make that move to a master distributor was really the best decision for the company and the most efficient use of our investment as we grow that market.

好的。謝謝你，萊斯利。再次感謝羅伯特和伊森，這是一個很好的問題或一系列問題。其中隱藏著許多問題。在我經歷的過程中，我會盡我所能地擊敗他們。像許多試圖向中國銷售產品的跨國公司一樣，Amlan、Oil-Dri 今年做出了決定，而不是試圖直接進入並建造大型基礎設施，並在我們嘗試滲透該市場時真正學習。 ，我們將退後一步，真正專注於迄今為止我們在該市場上最強大的經銷商，即我們在新聞稿中宣布的中農。他們是中國非常重要的經銷商。他們擁有一支龐大的團隊，真正為中國各地、我們想要瞄準的物種提供服務。因此，這是一個與我們一起成長的優秀合作夥伴，我們認為，成為一個總經銷商對於公司來說確實是最好的決定，也是我們在發展該市場時最有效地利用我們的投資的決定。

China, as you probably know, is the largest swine market in the world. It's second in poultry. So it's very significant to our business. And we didn't want to step back, we simply wanted to make more efficient the way we went to market, the channels we chose and how we invested for growth. The team in China is going to be small. We'll have a couple of representatives there that will support Zhongnong from a technical and a business perspective. As Zhongnong has a significant team already on the ground, we don't need to build a large team going forward. We'll just support their efforts with training, with materials, with product in trial support. So we can do that with a very efficient team, a very efficient spend. And then again, we expect the China market to grow significantly.

您可能知道，中國是世界上最大的生豬市場。在家禽中排名第二。所以這對我們的業務非常重要。我們不想後退，我們只是想提高進入市場的方式、選擇的渠道以及增長投資的效率。中國的團隊將會很小。我們將派幾位代表從技術和業務角度為中農提供支持。由於中農已經擁有一支重要的團隊，因此我們未來不需要建立一支龐大的團隊。我們將通過培訓、材料和產品試用支持來支持他們的努力。因此，我們可以通過非常高效的團隊和非常高效的支出來做到這一點。話又說回來，我們預計中國市場將大幅增長。

It will continue to be a significant part of our portfolio, a significant part of our sales globally. And we expect growth in that region over the next couple of years that will be reflective of the investments we make. So very excited about China, excited about these changes.

它將繼續成為我們產品組合的重要組成部分，也是我們全球銷售的重要組成部分。我們預計該地區未來幾年的增長將反映我們所做的投資。對中國非常興奮，對這些變化感到興奮。

Great. Thanks, Wade. Our next question comes from Eric Cinnamond from Palm Valley Capital. And he asks, can you provide an estimate on how much lower natural gas prices help gross margins during the quarter?

偉大的。謝謝，韋德。我們的下一個問題來自 Palm Valley Capital 的 Eric Cinnamond。他問道，您能否估計一下天然氣價格下降對本季度毛利率的幫助有多大？

Susan, will you take that one, please?

蘇珊，請你拿走那個好嗎？

Sure. Thanks for the question. Well, we don't actually give component-by-component cost. What I would point you to is that even with the very substantial 27% decrease in the quarter because costs like freight, which rose 19% and the manufacturing, excluding steel rose 7%, we were up 12% in the quarter and we still continue to see prices increasing.

當然。謝謝你的提問。嗯，我們實際上並沒有給出逐個組件的成本。我想向您指出的是，儘管由於運費等成本上漲了 19%，製造業（不包括鋼鐵）上漲了 7%，本季度下降了 27%，但我們本季度仍上漲了 12%，而且我們仍在繼續看到價格上漲。

And just to put a little more color on it, the manufacturing excluding fuel, that's where you see costs like labor which is we've seen significant increases in, our contracted labor for mining. Depreciation is going up as we continue to reinvest at higher levels in our business, and then our repairs where the labor and the parts are more expensive year-over-year, those are all influencing that 17% year-over-year increase. But again, that's a bigger piece of the pie and freight is a bigger piece of the pie than natural gas, so that's why you see the costs continue to increase.

只是為了增加一點色彩，不包括燃料的製造業，這就是您看到勞動力等成本的地方，我們已經看到我們的採礦合同勞動力顯著增加。隨著我們繼續對業務進行更高水平的再投資，折舊率也在上升，而人工和零部件的維修費用也逐年上漲，這些都影響了 17% 的同比增長。但同樣，這是一個更大的部分，而貨運比天然氣更大，所以這就是為什麼你會看到成本持續增加。

Great. Thank you. The next question comes from John Bair at Ascend Wealth Advisors. And he asks -- first he said, congrats on a fantastic quarter and results. Once again, patience wins out for long-term shareholders. Question is related to logistics issues and if you are seeing relief in shipping cost and delivery times.

偉大的。謝謝。下一個問題來自 Ascend Wealth Advisors 的 John Bair。他問——首先他說，祝賀一個出色的季度和業績。對於長期股東來說，耐心再一次勝出。問題與物流問題以及您是否看到運輸成本和交貨時間有所緩解有關。

Aaron Christiansen, will you please answer that?

亞倫·克里斯蒂安森，你能回答一下嗎？

Yes, John, I'm happy to answer the question. I think you asked a similar question last quarter. I'll split the answer into 2 parts and to talk domestic freight and logistics and international freight logistics separately. Domestic freight, both from a cost and a lead time or delivery time point of view, has stabilized the pre-pandemic and pre-supply chain levels. Our freight logistics team has been very opportunistic, taking advantage of freight contracts that helps stabilize these costs. Buried in our great service metrics that both Susan and Dan spoke to is, in fact, the freight market domestically that's returned to pre-pandemic levels.

是的，約翰，我很高興回答這個問題。我想你上個季度也問過類似的問題。我把答案分成兩部分，分別談談國內貨運物流和國際貨運物流。國內貨運，無論是從成本還是交貨時間或交貨時間的角度來看，都穩定了疫情前和供應鏈之前的水平。我們的貨運物流團隊非常善於把握機會，利用貨運合同來幫助穩定這些成本。事實上，蘇珊和丹談到的我們出色的服務指標中隱藏的是國內貨運市場已恢復到大流行前的水平。

On the export side, we're much improved over the past 2 quarters, both from a cost and service perspective. The recovery has been slower. We're most certainly not back to where we would like to be from a lead time point of view, but dramatically improved from 2 quarters ago. Hopefully, that answers your question, John.

在出口方面，無論是從成本還是服務的角度來看，我們在過去兩個季度都有了很大的進步。恢復速度較慢。從交貨時間的角度來看，我們肯定還沒有回到我們想要的狀態，但比兩個季度前有了顯著改善。希望這能回答你的問題，約翰。

Thanks, Aaron. Okay. Now I'm going to answer another question from Ethan [Starr]. Aside from a higher level of advertising concentrated in the fourth quarter, what else are you doing to really drive higher sales of lightweight litter, both in terms of increased distribution and retail sell-through?

謝謝，亞倫。好的。現在我要回答 Ethan [Starr] 的另一個問題。除了集中在第四季度的更高水平的廣告之外，您還採取了哪些措施來真正推動輕質垃圾的銷量增加，無論是在增加分銷還是零售銷售方面？

Chris Lamson, please answer that for anything.

克里斯·拉姆森，請回答這個問題。

Sure. Good morning, everybody, and very much appreciate the good question, Ethan. I think I got a good one for me every quarter or 2. So let me break that down into both our private label lightweight business and our branded business. And Ethan, you broke it down, I think, perfectly really between distribution and sell-through and/or velocity. And obviously, those 2 things work together. So let me start with sell-through and velocity and then jump to distribution.

當然。大家早上好，非常感謝伊森提出的好問題。我想我每兩個季度都會得到一個很好的機會。所以讓我將其分解為我們的自有品牌輕量級業務和我們的品牌業務。伊森，我認為，你在分銷、銷售和/或速度之間完美地分解了它。顯然，這兩件事是協同作用的。因此，讓我從銷售率和速度開始，然後跳到分銷。

So really, I think on both branded and private label, we have a very strong consumer value proposition really comprised of a really good product. And I think Dan and Aaron have both alluded to the quality at which we're producing that product, I think, continues to improve and become more and more consistent. And that's a lot of hard work in the trenches. And then I'd say we're very much in a place right now where we feel like we're at the right price. So good quality product at the right price.

所以說真的，我認為無論是品牌還是自有品牌，我們都擁有非常強大的消費者價值主張，真正由真正優質的產品組成。我認為丹和亞倫都提到了我們生產該產品的質量，我認為，我們正在繼續改進並變得越來越一致。這是在戰壕中進行的大量艱苦工作。然後我想說，我們現在感覺我們的價格非常合適。以合適的價格提供優質的產品。

I saw your question. I wanted to give you some evidence of that being true from the marketplace and maybe one piece of data that we can point to. If you look at the private label lightweight business, where we have a commanding share and you look at the private label business in heavyweight, the share of private label, again, where we have a commanding share in lightweight is almost double that of the share that other private label providers have in heavyweight. And we think that is perfect evidence of winning in the marketplace and that strong consumer value that we've got.

我看到你的問題了。我想向您提供一些來自市場的證據，也許還有我們可以指出的一項數據。如果你看看自有品牌輕量級業務，我們在輕量級業務中佔據主導地位，再看看重量級自有品牌業務，那麼自有品牌的份額同樣如此，我們在輕量級領域佔據主導地位，幾乎是重量級份額的兩倍其他自有品牌提供商的重量級產品。我們認為這是贏得市場以及我們擁有的強大消費者價值的完美證據。

On private label, and I'd say branded similarly, really no different. We're very pleased with our product, and we're very pleased with our price gaps. Tactically, I would say our price gaps percentage-wise are back to -- pricing has been an adventure in the marketplace and an adventure on shelf and it's bounced around, stabilizing a little bit. We're stabilizing at gaps where we've seen success and share growth in the marketplace historically from a percentage basis. But as prices have gone up, those price gaps from a dollar perspective are actually a little bit bigger. So percentage, about the same; dollar-wise, a little bit bigger, and we think that's also worked in our favor. And that's why we're seeing really modest share growth on the branded side and fairly significant share growth on the private label side.

在自有品牌上，我想說的是類似的品牌，真的沒有什麼不同。我們對我們的產品非常滿意，對我們的價格差距也非常滿意。從戰術上講，我想說我們的價格差距百分比又回到了——定價一直是市場上的一次冒險，也是貨架上的一次冒險，它會反彈，穩定一點。我們正在穩定在歷史上從百分比基礎上看到的成功和市場份額增長的差距。但隨著價格上漲，從美元角度來看，這些價格差距實際上會更大一些。所以百分比大致相同；就美元而言，規模更大一些，我們認為這也對我們有利。這就是為什麼我們看到品牌方面的份額增長非常溫和，而自有品牌方面的份額增長相當顯著。

So distribution is tied to that. If you're growing velocity and growing share, it's easier to put on distribution, obviously. And I think -- and we are putting on a fair amount of distribution on the private label side of the business, put on good distribution in the dollar channel over the last 12, 18 months, for instance, and that's a channel that's winning. So as you grow distribution there, you have a bit of a tailwind.

所以分配與此相關。如果您的速度和份額都在增長，那麼顯然，分發會更容易。我認為，例如，我們在業務的自有品牌方面進行了大量的分銷，在過去 12、18 個月的美元渠道中進行了良好的分銷，這是一個正在獲勝的渠道。因此，當你在那裡擴大分銷時，你會遇到一些順風車。

On the branded side, I'd say we're probably holding serve from a distribution perspective, but we're holding serve what were most developed, and this is strategic and purposeful. And as years of good work, we're winning with -- or we're doing the best with folks that are winning in the marketplace that are retailers that are growing share. And that's probably no coincidence. This tend to be retailers that are sharp on value, and we have a value brand, and that's more important in the marketplace right now with cost pressures on the consumer probably as it's ever been. So we're winning with the right folks on the branded side and again, seeing some modest share growth as we build margins as a result.

在品牌方面，我想說，我們可能從分銷的角度持有服務，但我們持有最發達的服務，這是戰略性和有目的的。經過多年的努力，我們正在贏得——或者說我們正在與那些在市場上獲勝的人一起努力，這些人是份額不斷增長的零售商。這可能並非巧合。這往往是對價值敏感的零售商，我們擁有一個價值品牌，這在目前的市場上更為重要，因為消費者面臨的成本壓力可能一如既往。因此，我們在品牌方面與合適的人一起贏得了勝利，並且隨著我們提高利潤率，我們再次看到了一些適度的份額增長。

Great. Thanks, Chris. I'm going to turn it back to Wade to answer a question from Ethan [Starr]. How are the various trials of Amlan products with potential customers going? And how long is it before a purchase decision is made?

偉大的。謝謝，克里斯。我將把它轉回到韋德來回答伊森[斯塔爾]的問題。 Amlan 產品與潛在客戶的各種試驗進行得怎麼樣？做出購買決定之前需要多長時間？

Yes. Thank you, Ethan. And so as I mentioned a moment ago in one of my previous answers, the trials have been pretty much uniformly positive over the -- really across the globe as we've not only tested our existing products with new customer opportunities or our new products in the marketplace that we're launching. When you look at the typical cycle time from maybe first call trial to successful sale, it can differ pretty significantly depending upon the size of the company, whether they're vertically integrated or not.

是的。謝謝你，伊森。因此，正如我剛才在之前的一個回答中提到的，在全球範圍內，這些試驗幾乎都是積極的，因為我們不僅用新的客戶機會或我們的新產品來測試我們的現有產品。我們正在推出的市場。當您查看從第一次通話試用到成功銷售的典型週期時間時，您會發現，根據公司的規模（無論是否垂直整合），它可能會有很大差異。

But typically, in a new trial situation, it may take 6, 9 months to work through a trial and then get to a successful sale. That may seem like a long time, but when you look at a lot of these large, again, vertically integrated companies, many of them are global in their business. And so take example in Asia, a company may be headquartered in Thailand, we'll have operations in the Philippines, in Indonesia, in Vietnam. And so as we're successful with the regional trial, because of the vertical integration, the strong nutritional veterinary staffs that run the nutritional and medicated programs for these companies, we see the benefits cut across the company itself and actually have impact in all the regions where they do business. So that cycle time or time to first sale from a trial although can seem long, it can be multiplicative in its impact as these vertically integrated companies then roll out a program across their operations.

但通常情況下，在新的試用情況下，可能需要 6、9 個月的時間才能完成試用，然後才能成功銷售。這可能看起來很長一段時間，但當你觀察許多大型垂直整合公司時，你會發現其中許多公司的業務都是全球性的。以亞洲為例，一家公司的總部可能位於泰國，我們將在菲律賓、印度尼西亞、越南開展業務。因此，當我們的區域試驗取得成功時，由於垂直整合，以及為這些公司運行營養和藥物計劃的強大營養獸醫人員，我們看到了整個公司本身的好處，並且實際上對所有領域都產生了影響。他們開展業務的地區。因此，從試用到首次銷售的周期時間或時間雖然看起來很長，但隨著這些垂直整合的公司隨後在其運營中推出一個計劃，它的影響可能是倍增的。

So again, very successful trials. We've had very few circumstances where we haven't had very, very strong positive results, and those have led in almost all cases to new business penetration in these large companies.

再說一次，試驗非常成功。我們很少遇到沒有取得非常非常強勁的積極成果的情況，而這些成果幾乎在所有情況下都導致了這些大公司的新業務滲透。

Thanks, Wade. Next question is from John Bair. How active is Oil-Dri in utilizing none-yet-developed and reclaimed mining properties to installing solar arrays or wind turbines? And does the company see opportunities there, both from an environmental and tax credit beneficial basis?

謝謝，韋德。下一個問題來自約翰·貝爾。 Oil-Dri 在利用尚未開發和回收的礦產來安裝太陽能電池陣列或風力渦輪機方面有多積極？公司是否從環境和稅收抵免的有利基礎上看到了那裡的機會？

Aaron, please answer that for John.

亞倫，請替約翰回答這個問題。

Yes, really excited to get to answer that question. First and foremost, Oil-Dri does have a 0.75 of a megawatt alternative power generation facility in our California plant. That's a combination of an operable solar array as well as natural gas turbine generators that convert natural gas into electricity. Because of the utility rate structure as well as the days per year that we have full sun, the economics of that type of investment make the most sense in California.

是的，很高興能回答這個問題。首先也是最重要的是，Oil-Dri 在我們的加州工廠確實擁有 0.75 兆瓦的替代發電設施。這是可操作的太陽能電池陣列和將天然氣轉化為電力的天然氣渦輪發電機的組合。由於公用事業費率結構以及每年有充足陽光的天數，此類投資的經濟效益在加利福尼亞州最有意義。

We have evaluated similar investments in the other facilities. For a variety of reasons, they're not as economically friendly. We do rent property near one of our other plants to an organization that manages a solar array on it, and we recover, call it, leasing rights. And we're in the process of evaluating a similar arrangement in 1 or 2 of our other plants, where we partner with a company that actually install zones and operates the solar array, whereby we gain the advantage of the land.

我們評估了其他設施的類似投資。由於多種原因，它們在經濟上並不那麼友好。我們確實將我們其他工廠之一附近的房產租給了一個管理太陽能電池陣列的組織，然後我們收回了，稱之為租賃權。我們正在評估我們其他一兩個工廠的類似安排，我們與一家實際安裝區域並運營太陽能電池陣列的公司合作，從而獲得了土地優勢。

I will go back to the California investment. We did receive very large federal and state tax incentives associated with that investment. Very proud of how far out we've reached in that area, to be honest.

我將回到加州的投資。我們確實獲得了與該投資相關的非常大的聯邦和州稅收優惠。老實說，我們對我們在該領域取得的進展感到非常自豪。

Great. Thanks, Aaron. The next question is also from John Bair. It's a follow-up question, and he asks, are you continuing to partially hedge your natural gas purchases?

偉大的。謝謝，亞倫。下一個問題也來自約翰·貝爾。這是一個後續問題，他問道，您是否繼續部分對沖天然氣採購？

Aaron, do you want to take that also?

亞倫，你也想拿那個嗎？

Yes. And the short answer is yes. John, I think you asked the same thing last quarter, so I can really just effectively give an update. We are now fully in the program. I think the way I responded a quarter ago was to say, we don't like the word hedge. Hedging infers that you're attempting to beat the market. And I like to think of it as dollar-cost averaging. So we are purchasing in a very algorithmic way, layered strip gas that help us buffer against upside and downside in the market. We've purchased just a portion of our natural gas needs that are a bit different by facility that allow us to dollar-cost average.

是的。簡短的回答是肯定的。約翰，我想你上個季度也問過同樣的問題，所以我真的可以有效地提供更新。我們現在已完全參與該計劃。我認為我一個季度前的回應是，我們不喜歡對沖這個詞。對沖意味著您正試圖擊敗市場。我喜歡將其視為平均成本。因此，我們正在以一種非常算法化的方式購買分層剝離天然氣，這有助於我們緩衝市場的上漲和下跌。我們只購買了一部分天然氣需求，這些需求因設施而異，使我們能夠以平均成本計算。

The first of those became activated in the third quarter, and we have one more 6-month cycle to really get us fully into the intended program. But we're now in a place where we very much have buffered future potential headwinds in the area of natural gas and really stepped into a, call it, a modern purchase and usage strategy. I don't -- sorry, one other follow-up, Leslie. I don't anticipate any changes in that routine for quite some time to come.

其中第一個在第三季度啟動，我們還有一個 6 個月的周期來真正讓我們完全進入預期的計劃。但我們現在已經在很大程度上緩衝了天然氣領域未來潛在的不利因素，並真正邁入了現代購買和使用策略。我不——抱歉，還有一位跟進者，萊斯利。我預計在未來相當長的一段時間內這一慣例不會發生任何變化。

Okay. Thank you, Aaron. And that concludes our Q&A session. Dan, do you want to comment on anything else before we sign off?

好的。謝謝你，亞倫。我們的問答環節到此結束。丹，在我們結束之前你還想評論什麼嗎？

Oh, sure. We hit it -- yes, we hit it perfectly at 10:30. And I want to thank you guys for your -- as you said, your patience and your long-term commitment to Oil-Dri. And thank you for your questions. I thought today's session was fantastic, and I think you saw the power of our team. I did very little, and that's because these guys are doing all the heavy lifting. And so thank you, Oil-Dri team, and thank you all of our stakeholders. We will talk to you again after the fourth quarter and probably the end of our fiscal year. So be safe, everybody. Thank you.

哦沒問題。我們達到了目標——是的，我們在 10:30 完美地達到了目標。正如你們所說，我要感謝你們的耐心以及對 Oil-Dri 的長期承諾。感謝您的提問。我認為今天的會議非常棒，我想您也看到了我們團隊的力量。我做得很少，那是因為這些人承擔了所有繁重的工作。感謝 Oil-Dri 團隊，感謝我們所有的利益相關者。我們將在第四季度之後甚至可能在我們的財政年度結束後再次與您交談。所以大家一定要注意安全。謝謝。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。