Press Releases
Church & Dwight Reports Q4 and FY2017 Results
2017 Fourth Quarter Results | 2017 Full Year Results | |||
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Full year adjusted EPS excludes a 2017 one-time tax benefit (non-cash)
of
Full year net sales grew 8.1% to
Fourth Quarter Review
Reported net sales increased
Consumer Domestic net sales were
Specialty Products net sales were
Gross margin increased 110 basis points to 46.6%. Excluding the
prior year
Marketing expense was
Selling, general, and administrative expense (SG&A) was
Income from Operations was
The effective tax rate was -104.2% compared to 34.9% in 2016. The
2017 adjusted tax rate was 33.2% compared to 2016 adjusted rate of
33.9%. 2017 was impacted by the U.S. tax reform while 2016 was impacted
by the
Operating Cash Flow
For the full year 2017, net cash from operating activities was
At
14% Dividend Increase
The Company’s Board of Directors today declared an 14% increase in the
regular quarterly dividend from
Mr. Farrell commented, “This action reflects the Company’s desire for stockholders to benefit from our strong growth and is an indication of our confidence in the continuation of the Company’s strong performance. The Company expects to generate significant cash flow over the next three years. Our robust cash flow enables us to deliver higher value directly to our stockholders while maintaining significant financial flexibility.”
Focus on
The Company has partnered with
2018 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 are pleased to announce 2018 new product launches in several categories. We are launching ARM & HAMMER CLUMP & SEAL lightweight unscented cat litter with guaranteed 7-day odor control which builds on the success of our innovative CLUMP & SEAL franchise. We are expanding our ODOR BLASTERS laundry platform leveraging technology that helps eliminate tough odors. We are introducing new VITAFUSION and L’IL CRITTERS probiotics gummy vitamins supporting digestive health by providing friendly bacteria in a great tasting gummy. WATERPIK is launching a water flosser to restore whiteness while flossing with a new infuser technology. TROJAN is launching NIRVANA, an assortment of sensation condoms celebrating self-expression in an exclusive package design. BATISTE will continue to expand distribution with three unique fragrances leveraging its 2017 growth and #1 U.S. share position.”
Outlook for 2018
Mr. Farrell stated, “We now expect EPS of
Mr. Farrell continued, “We expect sales growth of approximately 8% and organic sales growth of approximately 3%. We expect gross margin to be flat as productivity programs will offset rising commodity costs and product enhancements. While recent acquisitions require lower levels of marketing, we expect to increase our spending to sustain marketing at approximately 12% of sales. SG&A will increase as a percentage of sales largely due to recent acquisitions which have intangible amortization expenses, integration costs and higher levels of SG&A. The new tax law is expected to reduce our tax burden by lowering our effective tax rate to approximately 24-25% compared to 32% (excluding tax reform) for 2017. Our estimate is based on our current understanding of the new Tax Act which may change as regulations are finalized.
"For the first quarter, we expect sales growth of approximately 11% and
organic sales growth of approximately 2%. 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; the impact of
U.S. tax reform 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;
changes in marketing and promotional spending; growth or declines in
various product categories and the impact of customer actions in
response to changes in consumer demand and the economy, including
increasing shelf space of private label products; consumer and
competitor reaction to, and customer acceptance of, new product
introductions and features; the Company’s ability to maintain product
quality and characteristics at a level acceptable to our customers and
consumers; disruptions in the banking system and financial markets;
foreign currency exchange rate fluctuations; implications of the
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.
Condensed
Consolidated Statements of Income (Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
(In millions, except per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Sales | $ | 1,033.1 | $ | 896.0 | $ | 3,776.2 | $ | 3,493.1 | ||||||||
Cost of sales | 551.7 | 488.0 | 2,046.6 | 1,902.5 | ||||||||||||
Gross Profit | 481.4 | 408.0 | 1,729.6 | 1,590.6 | ||||||||||||
Marketing expenses | 120.6 | 116.3 | 454.2 | 427.2 | ||||||||||||
Selling, general and administrative expenses | 146.1 | 118.3 | 542.7 | 439.2 | ||||||||||||
Income from Operations | 214.7 | 173.4 | 732.7 | 724.2 | ||||||||||||
Equity in earnings (losses) of affiliates | 2.9 | 2.5 | 10.8 | 9.2 | ||||||||||||
Other income (expense), net | (18.9 | ) | (6.4 | ) | (50.8 | ) | (27.5 | ) | ||||||||
Income before Income Taxes | 198.7 | 169.5 | 692.7 | 705.9 | ||||||||||||
Income taxes | (206.9 | ) | 59.1 | (50.7 | ) | 246.9 | ||||||||||
Net Income | $ | 405.6 | $ | 110.4 | $ | 743.4 | $ | 459.0 | ||||||||
Net Income per share - Basic | $ | 1.63 | $ | 0.43 | $ | 2.97 | $ | 1.78 | ||||||||
Net Income per share - Diluted | $ | 1.60 | $ | 0.42 | $ | 2.90 | $ | 1.75 | ||||||||
Dividends per share | $ | 0.19 | $ | 0.18 | $ | 0.76 | $ | 0.71 | ||||||||
Weighted average shares outstanding - Basic | 248.9 | 256.4 | 250.6 | 257.6 | ||||||||||||
Weighted average shares outstanding - Diluted | 253.7 | 260.3 | 256.1 | 262.1 | ||||||||||||
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars in millions) | Dec. 31, 2017 | Dec. 31, 2016 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and Cash Equivalents | $ | 278.9 | $ | 187.8 | |||
Accounts Receivable | 345.9 | 287.0 | |||||
Inventories | 330.7 | 258.2 | |||||
Other Current Assets | 44.7 | 23.8 | |||||
Total Current Assets | 1,000.2 | 756.8 | |||||
Property, Plant and Equipment (Net) | 607.7 | 588.6 | |||||
Equity Investment in Affiliates | 9.3 | 8.5 | |||||
Trade names and Other Intangibles | 2,320.5 | 1,431.8 | |||||
Goodwill | 1,958.9 | 1,444.1 | |||||
Other Long-Term Assets | 118.2 | 124.3 | |||||
Total Assets | $ | 6,014.8 | $ | 4,354.1 | |||
Liabilities and Stockholders’ Equity | |||||||
Short-Term Debt | $ | 270.9 | $ | 426.8 | |||
Other Current Liabilities | 664.1 | 575.1 | |||||
Total Current Liabilities | 935.0 | 1,001.9 | |||||
Long-Term Debt | 2,103.4 | 693.4 | |||||
Other Long-Term Liabilities | 758.4 | 680.9 | |||||
Stockholders’ Equity | 2,218.0 | 1,977.9 | |||||
Total Liabilities and Stockholders’ Equity | $ | 6,014.8 | $ | 4,354.1 | |||
Condensed
Consolidated Statements of Cash Flow (Unaudited)
Twelve Months Ended | ||||||||
December 31, | December 31, | |||||||
(Dollars in millions) | 2017 | 2016 | ||||||
Net Income | $ | 743.4 | $ | 459.0 | ||||
Depreciation and amortization | 125.4 | 107.6 | ||||||
Deferred income taxes | (237.6 | ) | 24.9 | |||||
Non-cash compensation | 18.1 | 16.0 | ||||||
Non-cash pension settlement charge | 31.7 | - | ||||||
Other | (0.3 | ) | 3.6 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (9.7 | ) | (12.7 | ) | ||||
Inventories | (25.2 | ) | 19.2 | |||||
Other current assets | 10.2 | 2.1 | ||||||
Accounts payable and accrued expenses | 30.3 | 50.5 | ||||||
Income taxes payable | (11.2 | ) | 32.8 | |||||
Excess tax benefit on stock options exercised | - | (30.0 | ) | |||||
Other | 6.4 | (17.7 | ) | |||||
Net cash from operating activities | 681.5 | 655.3 | ||||||
Capital expenditures | (45.0 | ) | (49.8 | ) | ||||
Acquisition | (1,260.0 | ) | (305.3 | ) | ||||
Other | 1.6 | 0.5 | ||||||
Net cash (used in) investing activities | (1,303.4 | ) | (354.6 | ) | ||||
Net change in long-term debt | 1,421.3 | - | ||||||
Net change in short-term debt | (155.8 | ) | 68.9 | |||||
Payment of cash dividends | (190.4 | ) | (183.0 | ) | ||||
Stock option related | 42.1 | 80.5 | ||||||
Purchase of treasury stock | (400.0 | ) | (400.0 | ) | ||||
Deferred financing and other | (18.3 | ) | (6.0 | ) | ||||
Net cash provided by (used in) financing activities | 698.9 | (439.6 | ) | |||||
F/X impact on cash | 14.1 | (3.3 | ) | |||||
Net change in cash and cash equivalents | $ | 91.1 | $ | (142.2 | ) | |||
2017 and 2016 Product Line Net Sales
Three Months Ended | Percent | ||||||||||||
12/31/2017 | 12/31/2016 | Change | |||||||||||
Household Products | $ | 411.4 | $ | 406.6 | 1.2 | % | |||||||
Personal Care Products | 376.4 | 288.8 | 30.3 | % | |||||||||
Consumer Domestic | $ | 787.8 | $ | 695.4 | 13.3 | % | |||||||
Consumer International | 170.1 | 127.6 | 33.3 | % | |||||||||
Total Consumer Net Sales | $ | 957.9 | $ | 823.0 | 16.4 | % | |||||||
Specialty Products Division | 75.2 | 73.0 | 3.0 | % | |||||||||
Total Net Sales | $ | 1,033.1 | $ | 896.0 | 15.3 | % | |||||||
Twelve Months Ended | Percent | ||||||||||||
12/31/2017 | 12/31/2016 | Change | |||||||||||
Household Products | $ | 1,640.0 | $ | 1,593.4 | 2.9 | % | |||||||
Personal Care Products | 1,214.9 | 1,084.4 | 12.0 | % | |||||||||
Consumer Domestic | $ | 2,854.9 | $ | 2,677.8 | 6.6 | % | |||||||
Consumer International | 621.1 | 525.2 | 18.3 | % | |||||||||
Total Consumer Net Sales | $ | 3,476.0 | $ | 3,203.0 | 8.5 | % | |||||||
Specialty Products Division | 300.2 | 290.1 | 3.5 | % | |||||||||
Total Net Sales | $ | 3,776.2 | $ | 3,493.1 | 8.1 | % | |||||||
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 Gross Margin:
This press release provides information regarding adjusted gross margin, namely gross margin excluding the effect of charges taken in 2016 and 2017 related to the Brazil Specialty Products business. We believe that excluding these charges from gross margin provides a useful measure of the Company’s ongoing operating performance and a more effective comparison to prior periods by excluding significant one-time events.
Adjusted Operating Income and Margin:
This press release provides information regarding adjusted operating
income and margin, which exclude the effect of charges taken in 2016 and
in 2017 related to the Brazil Specialty Products business and a 2017
settlement charge related to our
Adjusted Tax Rate:
This press release provides information regarding the adjusted tax rate which excludes the 2017 impact of the U.S. tax reform and the 2016 impact related to the Brazil Specialty Products business. We believe that excluding these charges from the tax rate provides a useful measure of the Company’s ongoing taxes and a more effective comparison to prior periods excluding significant one-time events.
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 2017 EPS excludes a one-time
tax benefit to adjust deferred tax accounts and reflect deemed
repatriation of foreign subsidiary earnings as result of the Tax Cuts
and Jobs Act, charges related to the Brazil Specialty Products business,
a
Organic Sales
Three Months Ended 12/31/2017 | |||||||||||||||||||
Total | Worldwide | Consumer | Consumer | Specialty | |||||||||||||||
Company | Consumer | Domestic | International | Products | |||||||||||||||
Reported Sales Growth | 15.3% | 16.4% | 13.3% | 33.3% | 3.0% | ||||||||||||||
Less: | |||||||||||||||||||
Acquisitions | 11.8% | 12.3% | 10.6% | 22.0% | 5.9% | ||||||||||||||
Add: | |||||||||||||||||||
FX / Other | -0.9% | -0.8% | 0.0% | -5.5% | 0.0% | ||||||||||||||
Divestitures | 0.8% | -0.1% | 0.0% | 0.0% | 8.0% | ||||||||||||||
Organic Sales Growth | 3.4% | 3.2% | 2.7% | 5.8% | 5.1% | ||||||||||||||
Twelve Months Ended 12/31/2017 | |||||||||||||||||||
Total | Worldwide | Consumer | Consumer | Specialty | |||||||||||||||
Company | Consumer | Domestic | International | Products | |||||||||||||||
Reported Sales Growth | 8.1% | 8.5% | 6.6% | 18.3% | 3.5% | ||||||||||||||
Less: | |||||||||||||||||||
Acquisitions | 6.0% | 6.2% | 5.2% | 11.1% | 3.7% | ||||||||||||||
Add: | |||||||||||||||||||
FX / Other | 0.0% | 0.0% | 0.0% | -0.1% | -0.4% | ||||||||||||||
Divestitures | 0.6% | 0.2% | 0.0% | 0.7% | 5.9% | ||||||||||||||
Organic Sales Growth | 2.7% | 2.5% | 1.4% | 7.8% | 5.3% | ||||||||||||||
Reconciliation of GAAP
Measures to Non-GAAP Measures (Unaudited)
(Dollars in millions, except per share data) | ||||||||||||||||||||||
For the quarter ended December 31, 2017 |
For the quarter ended December 31, 2016 |
Change | ||||||||||||||||||||
Adjusted Gross Profit and Margin Reconciliation |
||||||||||||||||||||||
Gross Profit and Margin - Reported | $ | 481.4 | 46.6 | % | $ | 408.0 | 45.5 | % | 110 | bps | ||||||||||||
Brazil Charge | $ | - | 0.0 | % | $ | 4.9 | 0.6 | % | (60 | ) | bps | |||||||||||
Gross Profit and Margin - Adjusted (non-GAAP) | $ | 481.4 | 46.6 | % | $ | 412.9 | 46.1 | % | 50 | bps | ||||||||||||
Adjusted Operating Profit Margin Reconciliation |
||||||||||||||||||||||
Operating Profit and Margin - Reported | $ | 214.7 | 20.8 | % | $ | 173.4 | 19.3 | % | 150 | bps | ||||||||||||
Brazil Charge | $ | - | 0.0 | % | $ | 4.9 | 0.6 | % | (60 | ) | bps | |||||||||||
Operating Profit and Margin - Adjusted (non-GAAP) | $ | 214.7 | 20.8 | % | $ | 178.3 | 19.9 | % | 90 | bps | ||||||||||||
Adjusted Income Tax Expense and Rate Reconciliation |
||||||||||||||||||||||
Income Tax Expense and Rate - Reported | $ | (206.9 | ) | -104.2 | % | $ | 59.1 | 34.9 | % | (13,910 | ) | bps | ||||||||||
Brazil Charge - No $ Tax Effect | $ | - | 0.0 | % | $ | - | -1.0 | % | 100 | bps | ||||||||||||
U.S. TCJA Tax Reform | $ | 272.9 | 137.4 | % | $ | - | 0.0 | % | 13,740 | bps | ||||||||||||
Income Tax Expense and Rate- Adjusted (non-GAAP) | $ | 66.0 | 33.2 | % | $ | 59.1 | 33.9 | % | (70 | ) | bps | |||||||||||
Adjusted Diluted Earnings Per Share Reconciliation |
||||||||||||||||||||||
Diluted Earnings Per Share - Reported | $ | 1.60 | $ | 0.42 | 281.0 | % | ||||||||||||||||
Brazil Charge | $ | - | $ | 0.02 | ||||||||||||||||||
U.S. TCJA Tax Reform | $ | (1.08 | ) | $ | - | |||||||||||||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 0.52 | $ | 0.44 | 18.2 | % | ||||||||||||||||
For the year ended December 31, 2017 |
For the year ended December 31, 2016 |
Change | ||||||||||||||||||||
Adjusted Gross Profit and Margin Reconciliation |
||||||||||||||||||||||
Gross Profit and Margin - Reported | $ | 1,729.6 | 45.8 | % | $ | 1,590.6 | 45.5 | % | 30 | bps | ||||||||||||
Brazil Charge | $ | 1.3 | 0.0 | % | $ | 4.9 | 0.2 | % | (20 | ) | bps | |||||||||||
Gross Profit and Margin - Adjusted (non-GAAP) | $ | 1,730.9 | 45.8 | % | $ | 1,595.5 | 45.7 | % | 10 | bps | ||||||||||||
Adjusted Diluted Earnings Per Share Reconciliation |
||||||||||||||||||||||
Diluted Earnings Per Share - Reported | $ | 2.90 | $ | 1.75 | 65.7 | % | ||||||||||||||||
Brazil Charge | $ | 0.01 | $ | 0.02 | ||||||||||||||||||
Joint Venture impairment Tax Benefit | $ | (0.03 | ) | $ | - | |||||||||||||||||
U.K. Pension Termination | $ | 0.12 | $ | - | ||||||||||||||||||
U.S. TCJA Tax Reform | $ | (1.06 | ) | $ | - | |||||||||||||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 1.94 | $ | 1.77 | 9.6 | % | ||||||||||||||||
Reconciliation of GAAP
Measures to Non-GAAP Measures (Unaudited)
Reported and Organic Forecasted Sales Reconciliation |
|||||||
For the Quarter | For the Year | ||||||
Ended | Ended | ||||||
March 31, 2018 | December 31, 2018 | ||||||
Reported Sales Growth | 11% | 8% | |||||
Less: | |||||||
Acquisitions | 9% | 4% | |||||
FX / Other | 1% | 1% | |||||
Add: | |||||||
Divestitures | 1% | 0% | |||||
Organic Sales Growth | 2% | 3% | |||||
For the quarter ended | |||||||||||||||
March 31, 2018 | March 31, 2017 | Change | |||||||||||||
Forecasted Adjusted Diluted Earnings Per Share Reconciliation |
|||||||||||||||
Diluted Earnings Per Share - Reported | $ | 0.61 | $ | 0.51 | 19.6 | % | |||||||||
Brazil Charge | $ | - | $ | 0.01 | |||||||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 0.61 | $ | 0.52 | 17.3 | % | |||||||||
Reported Adjusted Income Tax Expense and Rate Reconciliation |
|||||
For the Year | |||||
Ended | |||||
December 31, 2017 | |||||
Income Tax Expense and Rate - Reported | -7.3 | % | |||
U.S. TCJA Tax Reform | 39.4 | % | |||
Brazil Charge - No $ Tax Effect | 0.1 | % | |||
U.K. Pension Termination | 1.1 | % | |||
Joint Venture Impairment Tax Benefit | -1.1 | % | |||
Income Tax Expense and Rate - Adjusted (non-GAAP) | 32.2 | % | |||
Forecasted Adjusted Diluted Earnings Per Share Reconciliation |
||||||||||||
For the Year Ended December 31, | ||||||||||||
2018 | 2017 | % Change | ||||||||||
Diluted Earnings Per Share - Reported | $ | 2.24 - 2.28 | $ | 2.90 | -21% to -23% | |||||||
Brazil Charge | $ | - | $ | 0.01 | ||||||||
U.K. Pension Settlement Charge | $ | - | $ | 0.12 | ||||||||
Joint Venture Impairment Tax Benefit | $ | - | $ | (0.03 | ) | |||||||
U.S. TCJA Tax Reform | $ | - | $ | (1.06 | ) | |||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 2.24 - 2.28 | $ | 1.94 | 16% to 18% | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180205005312/en/
Source:
Church & Dwight Co., Inc.
Rick Dierker, 609-806-1200
Chief
Financial Officer