Press Releases
Church & Dwight Reports Q3 2017 Results
2017 Third Quarter Results | 2017 Full Year Outlook | |
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Third quarter 2017 reported net sales grew 11.2% to
Third Quarter Review
Consumer Domestic reported net sales were
Specialty Products reported net sales were
Gross margin decreased 10 basis points to 45.3% primarily due to the increased promotion and coupon investments in the domestic business offset by volume and positive impact of acquisitions and divestitures.
Marketing expense was
Selling, general, and administrative expense (SG&A) was
Income from Operations on a reported and adjusted basis was
The reported effective tax rate was 28.7% compared to 35.6% last year. The current quarter rate includes a 400 basis point benefit due to the reversal of a tax reserve related to a prior year impairment charge. The full year adjusted tax rate is expected to be approximately 33%.
Operating Cash Flow
For the first nine months of 2017, net cash from operating activities
was
At
2017 New Products
Mr. Farrell commented, “Innovation continues to be a big driver of our success. In support of our long-term strategy to drive revenue and earnings growth, we have launched and supported new products in several categories. We launched ARM & HAMMER SLIDE cat litter, a revolutionary new litter that doesn’t stick to the litter box. Of the fifteen new products that have launched in the category since 2011, SLIDE ranks second in repeat consumer purchases. ARM & HAMMER PLUS OXICLEAN unit dose 3-in-1 POWER PAKS laundry detergent has contributed to ARM & HAMMER unit dose laundry detergent growing share at six times the category rate in the third quarter while achieving its highest quarterly share in three years. The OXICLEAN liquid laundry detergent restage with improved efficacy, claims and packaging continues to build share as the restage progresses. TROJAN launched a new XOXO upscale condom targeting both men and women with a soft touch, aloe-lubricated latex in a unique portable carrying case. This launch has opened up new opportunities for condom advertising in prime-time television. We have expanded offerings and distribution of the BATISTE brand, leveraging its #1 U.S. share position to almost a one-third share of the dry shampoo category.”
Share Repurchase Programs
On
Mr. Farrell commented, “The share repurchase program reflects the Company’s desire for stockholders to benefit from our continued strong growth and is an indication of our confidence in the Company’s performance. Importantly, the Company continues to expect to generate significant free cash flow (cash from operating activities less capital expenditures). Our robust cash flow enables us to return cash directly to our stockholders while maintaining significant financial flexibility to continue to aggressively pursue acquisitions.”
Outlook for 2017
With regard to 2017, Mr. Farrell said, “This has been an exciting year
for
In conclusion, Mr. Farrell said, “For the fourth quarter, we expect
reported sales growth of approximately 12% and organic sales growth of
approximately 2.5%. We expect EPS of
This press release contains forward-looking statements, including,
among others, statements relating to net sales and earnings growth;
gross margin changes; trade and marketing spending; marketing expense as
a percentage of net sales; sufficiency of cash flows from operations;
earnings per share; cost savings programs; consumer demand and spending;
the effects of competition; the effect of product mix; volume growth,
including the effects of new product launches into new and existing
categories; the impact of competitive laundry detergent products,
including unit dose laundry detergent; the impact of foreign exchange
and commodity price fluctuations; the impact of acquisitions and
divestitures; the impact of the Waterpik acquisition; capital
expenditures; the impact of pension settlement charges; and the
Company’s effective tax rate. These statements represent the intentions,
plans, expectations and beliefs of the Company, and are based on
assumptions that the Company believes are reasonable but may prove to be
incorrect.In addition, these statements are subject to risks,
uncertainties and other factors, many of which are outside the Company’s
control and could cause actual results to differ materially from such
forward-looking statements.Factors that could cause such
differences include a decline in market growth, retailer distribution
and consumer demand (as a result of, among other things, political,
economic and marketplace conditions and events); unanticipated increases
in raw material and energy prices; delays or other problems in
manufacturing or distribution; adverse developments affecting the
financial condition of major customers and suppliers; competition,
including The Procter & Gamble Company’s participation in the value
laundry detergent category and
For a description of additional factors that could cause actual
results to differ materially from the forward looking statements, please
see Item 1A, “Risk Factors” in the Company’s annual report on Form 10-K.The Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by the U.S. federal
securities laws.You are advised, however, to consult any further
disclosures the Company makes on related subjects in its filings with
the
This press release also contains non-GAAP financial information.Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of the Company’s financial performance, identifying trends in its results and providing meaningful period-to-period comparisons. The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP. See the end of this press release for these reconciliations. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded. They should be read in connection with the Company’s financial statements presented in accordance with GAAP.
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES |
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Three Months Ended | Nine Months Ended | |||||||||||||||
(In millions, except per share data) |
September 30, |
September 30, |
September 30, |
September 30, |
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Net Sales | $ | 967.9 | $ | 870.7 | $ | 2,743.1 | $ | 2,597.1 | ||||||||
Cost of sales | 529.4 | 475.1 | 1,494.9 | 1,414.5 | ||||||||||||
Gross Profit | 438.5 | 395.6 | 1,248.2 | 1,182.6 | ||||||||||||
Marketing expenses | 111.9 | 98.2 | 333.6 | 310.9 | ||||||||||||
Selling, general and administrative expenses | 127.9 | 101.4 | 396.6 | 320.9 | ||||||||||||
Income from Operations | 198.7 | 196.0 | 518.0 | 550.8 | ||||||||||||
Equity in earnings of affiliates | 2.7 | 2.5 | 7.9 | 6.7 | ||||||||||||
Other income (expense), net | (14.4 | ) | (6.1 | ) | (31.9 | ) | (21.1 | ) | ||||||||
Income before Income Taxes | 187.0 | 192.4 | 494.0 | 536.4 | ||||||||||||
Income taxes | 53.6 | 68.4 | 156.2 | 187.8 | ||||||||||||
Net Income | $ | 133.4 | $ | 124.0 | $ | 337.8 | $ | 348.6 | ||||||||
Net Income per share - Basic | $ | 0.53 | $ | 0.48 | $ | 1.34 | $ | 1.35 | ||||||||
Net Income per share - Diluted | $ | 0.52 | $ | 0.47 | $ | 1.32 | $ | 1.33 | ||||||||
Dividends per share | $ | 0.19 | $ | 0.18 | $ | 0.57 | $ | 0.53 | ||||||||
Weighted average shares outstanding - Basic | 249.7 | 258.0 | 251.2 | 258.0 | ||||||||||||
Weighted average shares outstanding - Diluted | 255.3 | 262.7 | 256.9 | 262.7 | ||||||||||||
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES |
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(Dollars in millions) | September 30, 2017 | Dec. 31, 2016 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and Cash Equivalents | $ | 236.5 | $ | 187.8 | |||
Accounts Receivable | 377.9 | 287.0 | |||||
Inventories | 336.1 | 258.2 | |||||
Other Current Assets | 52.7 | 23.8 | |||||
Total Current Assets | 1,003.2 | 756.8 | |||||
Property, Plant and Equipment (Net) | 601.8 | 588.6 | |||||
Equity Investment in Affiliates | 8.5 | 8.5 | |||||
Trade Names and Other Intangibles | 2,151.9 | 1,431.8 | |||||
Goodwill | 2,072.6 | 1,444.1 | |||||
Other Long-Term Assets | 114.8 | 124.3 | |||||
Total Assets | $ | 5,952.8 | $ | 4,354.1 | |||
Liabilities and Stockholders’ Equity | |||||||
Short-Term Debt | $ | 317.2 | $ | 426.8 | |||
Other Current Liabilities | 635.4 | 575.1 | |||||
Total Current Liabilities | 952.6 | 1,001.9 | |||||
Long-Term Debt | 2,104.1 | 693.4 | |||||
Other Long-Term Liabilities | 943.0 | 680.9 | |||||
Stockholders’ Equity | 1,953.1 | 1,977.9 | |||||
Total Liabilities and Stockholders’ Equity | $ | 5,952.8 | $ | 4,354.1 | |||
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES |
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Nine Months Ended | ||||||||
(Dollars in millions) |
September 30, |
September 30, |
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Net Income | $ | 337.8 | $ | 348.6 | ||||
Depreciation and amortization | 91.6 | 80.2 | ||||||
Deferred income taxes | 32.3 | 19.8 | ||||||
Non-cash compensation | 14.9 | 14.1 | ||||||
Non-cash pension settlement charge | 31.7 | 0.0 | ||||||
Other | (0.7 | ) | 1.5 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (40.3 | ) | 13.2 | |||||
Inventories | (33.1 | ) | (6.5 | ) | ||||
Other current assets | (6.5 | ) | 3.0 | |||||
Accounts payable and accrued expenses | 2.4 | 18.8 | ||||||
Income taxes payable | (7.4 | ) | 33.4 | |||||
Excess tax benefit on stock options exercised | 0.0 | (29.4 | ) | |||||
Other | 1.4 | (1.7 | ) | |||||
Net cash from operating activities | 424.1 | 495.0 | ||||||
Capital expenditures | (20.9 | ) | (28.1 | ) | ||||
Acquisitions | (1,260.0 | ) | (175.5 | ) | ||||
Other | 2.6 | 0.8 | ||||||
Net cash (used in) investing activities | (1,278.3 | ) | (202.8 | ) | ||||
Net change in long-term debt | 1,421.3 | 0.0 | ||||||
Net change in short-term debt | (109.6 | ) | (127.1 | ) | ||||
Payment of cash dividends | (143.2 | ) | (137.4 | ) | ||||
Stock option related | 37.9 | 77.4 | ||||||
Purchase of treasury stock | (300.0 | ) | (200.0 | ) | ||||
Deferred financing and other | (17.8 | ) | (5.6 | ) | ||||
Net cash provided by (used in) financing activities | 888.6 | (392.7 | ) | |||||
F/X impact on cash | 14.3 | 2.6 | ||||||
Net change in cash and cash equivalents | $ | 48.7 | $ | (97.9 | ) | |||
2017 and 2016 Product Line Net Sales |
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Three Months Ended | Percent | ||||||||||||
9/30/2017 | 9/30/2016 | Change | |||||||||||
Household Products | $ | 423.3 | $ | 400.7 | 5.6 | % | |||||||
Personal Care Products | 305.9 | 264.1 | 15.8 | % | |||||||||
Consumer Domestic | $ | 729.2 | $ | 664.8 | 9.7 | % | |||||||
Consumer International | 162.8 | 133.8 | 21.7 | % | |||||||||
Total Consumer Net Sales | $ | 892.0 | $ | 798.6 | 11.7 | % | |||||||
Specialty Products Division | 75.9 | 72.1 | 5.3 | % | |||||||||
Total Net Sales | $ | 967.9 | $ | 870.7 | 11.2 | % | |||||||
Nine Months Ended | Percent | ||||||||||||
9/30/2017 | 9/30/2016 | Change | |||||||||||
Household Products | $ | 1,228.6 | $ | 1,186.8 | 3.5 | % | |||||||
Personal Care Products | 838.5 | 795.6 | 5.4 | % | |||||||||
Consumer Domestic | $ | 2,067.1 | $ | 1,982.4 | 4.3 | % | |||||||
Consumer International | 451.0 | 397.6 | 13.4 | % | |||||||||
Total Consumer Net Sales | $ | 2,518.1 | $ | 2,380.0 | 5.8 | % | |||||||
Specialty Products Division | 225.0 | 217.1 | 3.6 | % | |||||||||
Total Net Sales | $ | 2,743.1 | $ | 2,597.1 | 5.6 | % | |||||||
Non-GAAP Measures:
The following discussion addresses the non-GAAP measures used in this press release and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the comparable GAAP measures. The following non-GAAP measures may not be the same as similar measures provided by other companies due to differences in methods of calculation and items and events being excluded.
Organic Sales Growth:
This press release provides information regarding organic sales growth, namely net sales growth excluding the effect of acquisitions, divestitures and foreign exchange rate changes. Management believes that the presentation of organic sales growth is useful to investors because it enables them to assess, on a consistent basis, sales trends related to products that were marketed by the Company during the entirety of relevant periods, excluding the impact of acquisitions, divestitures and excluding foreign exchange rate changes that are out of the control of, and do not reflect the performance of, the Company and management.
Adjusted EPS:
This press release also presents adjusted EPS, namely, earnings per
share calculated in accordance with GAAP, as adjusted to exclude
significant one-time items that are not indicative of the Company’s
period to period performance. We believe that this metric provides
investors a useful perspective of underlying business trends and results
and provides useful supplemental information regarding our year over
year earnings per share growth. Adjusted and forecasted EPS for 2017
excludes charges related to the Brazil Specialty Products business, the
settlement charge related to our
Free Cash Flow:
Free cash flow is defined as cash from operating activities less capital expenditures. Management views this as a measure of how effective the Company manages its cash flow relating to working capital and capital expenditures.
CHURCH & DWIGHT CO., INC. |
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Three Months Ended 9/30/2017 | ||||||||||||||||||
Total | Worldwide | Consumer | Consumer | Specialty | ||||||||||||||
Company | Consumer | Domestic | International | Products | ||||||||||||||
Reported Sales Growth | 11.2% | 11.7% | 9.7% | 21.7% | 5.3% | |||||||||||||
Less: | ||||||||||||||||||
Acquisitions | 8.2% | 8.4% | 7.6% | 11.9% | 6.1% | |||||||||||||
Add: | ||||||||||||||||||
FX / Other | -0.5% | -0.5% | 0.0% | -3.1% | 0.0% | |||||||||||||
Divestitures | 0.7% | 0.0% | 0.1% | -0.5% | 8.3% | |||||||||||||
Organic Sales Growth | 3.2% | 2.8% | 2.2% | 6.2% | 7.5% | |||||||||||||
Nine Months Ended 9/30/2017 | ||||||||||||||||||
Total | Worldwide | Consumer | Consumer | Specialty | ||||||||||||||
Company | Consumer | Domestic | International | Products | ||||||||||||||
Reported Sales Growth | 5.6% | 5.8% | 4.3% | 13.4% | 3.6% | |||||||||||||
Less: | ||||||||||||||||||
Acquisitions | 4.0% | 4.1% | 3.5% | 7.4% | 3.2% | |||||||||||||
Add: | ||||||||||||||||||
FX / Other | 0.2% | 0.3% | 0.0% | 1.6% | -0.5% | |||||||||||||
Divestitures | 0.6% | 0.2% | 0.2% | 0.8% | 5.4% | |||||||||||||
Organic Sales Growth | 2.4% | 2.2% | 1.0% | 8.4% | 5.3% | |||||||||||||
CHURCH & DWIGHT CO., INC. |
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(Dollars in millions, except per share data) | ||||||||||||||||||||||
For the quarter ended September 30, 2017 |
For the quarter ended September 30, 2016 |
Change | ||||||||||||||||||||
Adjusted Income Tax Expense and Rate Reconciliation |
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Income Tax Expense and Rate - Reported | $ | 53.6 | 28.7 | % | $ | 68.4 | 35.6 | % | (690 | ) | bps | |||||||||||
Joint Venture Impairment Tax Benefit | $ | 7.6 | 4.0 | % | $ | - | 400 | bps | ||||||||||||||
Income Tax Expense and Rate - Adjusted (non-GAAP) | $ | 61.2 | 32.7 | % | $ | 68.4 | 35.6 | % | (290 | ) | bps | |||||||||||
Adjusted Diluted Earnings Per Share Reconciliation |
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Diluted Earnings Per Share - Reported | $ | 0.52 | $ | 0.47 | 10.6 | % | ||||||||||||||||
Joint Venture Impairment Tax Benefit | $ | (0.03 | ) | $ | - | |||||||||||||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 0.49 | $ | 0.47 | 4.3 | % | ||||||||||||||||
Reported and Organic Forecasted Sales Reconciliation |
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For the Quarter | For the Year | |||||||
Ended | Ended | |||||||
December 31, 2017 | December 31, 2017 | |||||||
Reported Sales Growth | 12.0% | 7.3% | ||||||
Less: | ||||||||
Acquisitions | 10.3% | 5.6% | ||||||
Add: | ||||||||
FX / Other | 0.1% | 0.2% | ||||||
Divestitures | 0.7% | 0.6% | ||||||
Organic Sales Growth | 2.5% | 2.5% | ||||||
Reported and Adjusted Fourth Quarter Forecasted EPS Reconciliation |
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For the Quarter Ended December 31, | |||||||||||
2016 Actual |
2017 Forecast |
Percent Change |
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Reported (US GAAP) | $ | 0.42 | $ | 0.50 | +19% | ||||||
Charge related to the Brazilian business | $ | 0.02 | |||||||||
Adjusted EPS (Non-GAAP) | $ | 0.44 | $ | 0.50 | +14% | ||||||
Reported and Adjusted Full Year Forecasted EPS Reconciliation |
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For the Year Ended December 31, | |||||||||||
2016 Actual |
2017 Forecast |
Percent Change |
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Reported (US GAAP) | $ | 1.75 | $ | 1.82 | +4% | ||||||
Charge related to the Brazilian business | $ | 0.02 | $ | 0.01 | |||||||
Joint Venture Impairment Tax Benefit | $ | - | $ | (0.03 | ) | ||||||
U.K. Pension Settlement Charge | $ | - | $ | 0.12 | |||||||
Adjusted EPS (Non-GAAP) | $ | 1.77 | $ | 1.92 | +9% | ||||||
Reported and Adjusted Forecasted 2017 Tax
Rate |
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Reported (US GAAP) | 32.5 | % | ||
Brazil Charge | -0.2 | % | ||
U.K. Pension Settlement Charge | -0.4 | % | ||
Joint Venture Impairment Tax Benefit | 1.1 | % | ||
Adjusted (non-GAAP) | 33.0 | % | ||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005674/en/
Source:
Church & Dwight Co., Inc.
Rick Dierker, 609-806-1200
Chief
Financial Officer