# DEAR STAKEHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_ODC_2018/NYSE_ODC_2018.mmd` · pages 1-7_

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DEAR STAKEHOLDERS,

During this past fiscal year, my dad, Dick Jaffee, passed away. He was President of Oil-Dri from 1960-1995. More importantly to me, he was my Best Man in my wedding and the best man in my life. I am very grateful that he and I worked together closely for 31 years and that he lived long enough to see the transition of Oil-Dri from a high-volume, commodity manufacturer to a global supplier of value-added specialty sorbents.

His father, Nick Jaffee, Oil-Dri's founder, passed away when my dad was only 26 years old. My dad often lamented that he wished his father would have lived long enough to see the company grow from a small distributor of floor absorbents to a vertically integrated, highly successful NYSE-listed company. Under his leadership, Oil-Dri's sales grew from \(1.9 million in 1962 to \)153 million in 1995 when he handed over the reins to me. That's an outstanding 14% CAGR over the entire 33 year period!

So, what is my dad going to miss? I believe, "a whole lot." We have just scratched the surface on monetizing the cat litter category-changing innovation of lightweight litter that Oil-Dri launched and patented 6 years ago. Our lightweight private label business is booming and our branded Litter for Good \( ^{™} \)  program is changing for good the lives of shelter cats across America. This program was launched on January 1, 2018 and at fiscal year's end, we had donated over 1 million pounds to 1,000 different shelters across the country!

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Cat's Pride \( ^{®} \)  Club membership grew by 40% and our YouTube views grew 295% to 3.4 million! By the time you read this report, we will have donated over 3 million pounds and completed national advertising integrations with, "Live with Kelly and Ryan" on ABC, sponsored Cat Week with "The Ellen Show" on NBC and other syndications and joined NBC Universal's "Clear The Shelters \( ^{™} \) " nationwide pet adoption campaign. We finished Fiscal 2018 with just under a 3% share on our green jug brands. I am confident this number will grow during F19.

My dad will also miss the continued growth of our B2B businesses, the foundation of which is due to our ground-breaking research at the Nick Jaffee Center for Innovation. We have taken my dad's commitment to Research and Development to new heights. Our animal health product, Varium \( ^{™} \) , is succeeding in plant trials across the globe, offering poultry producers a natural, drug-free alternative to improving feed efficiency and enhancing profit margins. These trials will lead to new business in F19 and beyond.

![](images/2_0.jpg)

RICHARD M. JAFFEE
LABORATORY FOR
APPLIED MICROBIOLOGY

During the year we opened and dedicated the Richard M. Jaffee Laboratory for Applied Microbiology. We are now performing testing on site. In the past, we had to commission to have these tests completed off site, which was time consuming and very expensive. Someday, we believe the lab will not only be a competitive advantage for Oil-Dri, but also a profit center, when we sell our services to customers.

I would be remiss if I did not highlight the great opportunities in our other divisions, as well. Our Industrial and Sports Division launched lightweight floor absorbent, which absorbs the same amount of liquids as many competitive products with less weight to ship and carry. Our Ag Division has many exciting opportunities which delivered strong results this fiscal year and they are carrying that momentum into F19. Our Fluids Purification Division had another outstanding year and is poised to do so again next year.

My dad will miss seeing the continuing transformation of our manufacturing and support teams. The sales teammates mentioned above are responsible for getting order #1, but our support teams' great work and dedication to meeting or exceeding our customers' expectations is the reason our customers look at us as their partner, not just a supplier. They know Oil-Dri has their backs, and they rely on us to help them win in their very competitive markets. We are committed to continuous improvement and have seen that as our quality rises, so does our manufacturing efficiency, helping us offset the increasing cost of transportation and other outside inputs.

My dad will miss seeing the long-term benefit of our new software implementation (we call this ODIN, Oil-Dri Information Network). This transition is currently painful as we are evolving from a manual operation to one that strictly adheres to prescribed processes. I have witnessed firsthand our teammates in Chicago and the plants embrace the new technology. I am so thankful for their positive, "can do" attitudes. We at Oil-Dri firmly believe that, "those who say it can't be done have to get out of the way of those of us who are doing it!"

We are always mindful that all of the above is performed for one reason and that is to deliver long-term appreciation to our investors. F18 marked the 15th consecutive year that we raised our annual dividend. Thank you for your support!

![](images/2_1.jpg)

DANIEL S. JAFFEE

President & Chief Executive Officer