Press Releases
Church & Dwight Reports Q1 Reported EPS of $0.51; Adjusted EPS of $0.52 Exceeds Q1 Outlook
2017 Full Year EPS Outlook:
2017 First Quarter Results | 2017 Full Year Outlook | |
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First quarter 2017 reported net sales grew 3.3% to
First Quarter Review
Consumer Domestic reported net sales were
Specialty Products reported net sales were
Gross margin increased 90 basis points to 45.5% on a reported
basis. On an adjusted basis, excluding the
Marketing expense was
Selling, general, and administrative expense (SG&A) was
Income from Operations on a reported basis was
The reported effective tax rate was 30.9%, compared to 34.7% last
year. On an adjusted basis, the effective rate was 30.3%, excluding the
Operating Cash Flow
For the first three months of 2017, net cash from operating activities
was
At
Acquisition
On
The acquisition was financed with debt and is expected to be neutral to EPS in 2017 due to transition costs. In 2018, we expect the acquisition to be accretive to EPS. The Company intends to continue to aggressively pursue acquisitions.
Sale of Brazil Chemical Business
In March, the Company completed the previously announced sale of its
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 new products in several categories. We launched ARM & HAMMER SLIDE cat litter, a revolutionary new litter that doesn’t stick to the litter box, and ARM & HAMMER PLUS OXICLEAN unit dose 3-in-1 POWER PAKS laundry detergent. We are restaging OXICLEAN liquid laundry detergent with improved efficacy, claims and packaging. VITAFUSION is launching a new energy gummy vitamin that supports everyday energy needs and alertness. 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. We are expanding offerings and distribution of the BATISTE brand, leveraging its #1 U.S. share position in the dry shampoo category.”
Outlook for 2017
Mr. Farrell stated, “2017 is off to a strong start with solid first quarter results. We believe that we are positioned to continue to deliver strong sales and earnings growth with our balanced portfolio of value and premium products, the launch of innovative new products, aggressive productivity programs and tight management of overhead costs. Although categories are growing slower than expected due to continued discounting by competitors, we are confident in achieving our 2017 business targets.”
With regard to 2017, Mr. Farrell said, “We expect reported and organic
sales growth of approximately 3%. We expect reported and adjusted gross
margin to expand by approximately 60 and 40 basis points, respectively,
reflecting rising commodity costs and foreign exchange headwinds. We
expect marketing spending to be 12.0% of net sales, a 20 basis point
decrease, as we make incremental investments in trade and couponing in
support of our new products. SG&A is expected to increase 160 basis
points. On an adjusted basis, SG&A is expected to increase 20 basis
points to 12.8% of net sales after excluding expenses related to the
sale of the
Mr. Farrell said, “2017 will be an exciting year for
The 2017 outlook equates to 9.5% currency neutral adjusted EPS growth excluding a 1% negative impact from foreign exchange. In 2017, we expect adjusted free cash flow to exceed adjusted net income as we have in previous years.”
In conclusion, Mr. Farrell said, “For the second quarter, we are off to
a strong start and expect reported and organic sales growth of
approximately 1-2%. We are supporting our key new product launches with
a significant increase in promotion and coupon support and, as planned,
a significant shift of marketing spend from Q4 into Q2 and Q3 to support
our innovation. Gross margin for the first half is expected to be flat.
Marketing is expected to be in excess of 14% of net sales in Q2. We
expect reported 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; the impact of new accounting pronouncements; 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; 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.
All applicable amounts in the condensed consolidated financial
statements and related disclosure included in this press release have
been retroactively adjusted to reflect the Company’s two-for-one stock
split effected
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) |
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Three Months Ended | ||||||||
(In millions, except per share data) | March 31, 2017 | March 31, 2016 | ||||||
Net Sales | $ | 877.2 | $ | 849.0 | ||||
Cost of sales | 477.9 | 470.0 | ||||||
Gross Profit | 399.3 | 379.0 | ||||||
Marketing expenses | 90.8 | 92.5 | ||||||
Selling, general and administrative expenses | 112.4 | 107.0 | ||||||
Income from Operations | 196.1 | 179.5 | ||||||
Equity in earnings of affiliates | 2.1 | 1.7 | ||||||
Other income (expense), net | (8.0 | ) | (8.2 | ) | ||||
Income before Income Taxes | 190.2 | 173.0 | ||||||
Income taxes | 58.7 | 60.0 | ||||||
Net Income | $ | 131.5 | $ | 113.0 | ||||
Net Income per share - Basic | $ | 0.52 | $ | 0.44 | ||||
Net Income per share - Diluted | $ | 0.51 | $ | 0.43 | ||||
Dividends per share | $ | 0.19 | $ | 0.178 | ||||
Weighted average shares outstanding - Basic | 254.1 | 258.8 | ||||||
Weighted average shares outstanding - Diluted | 259.7 | 263.6 |
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) |
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(Dollars in millions) | Mar. 31, 2017 | Dec. 31, 2016 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and Cash Equivalents | $ | 139.5 | $ | 187.8 | |||
Accounts Receivable | 305.2 | 287.0 | |||||
Inventories | 280.1 | 258.2 | |||||
Other Current Assets | 29.7 | 23.8 | |||||
Total Current Assets | 754.5 | 756.8 | |||||
Property, Plant and Equipment (Net) | 578.9 | 588.6 | |||||
Equity Investment in Affiliates | 8.2 | 8.5 | |||||
Trade Names and Other Intangibles | 1,538.1 | 1,431.8 | |||||
Goodwill | 1,481.3 | 1,444.1 | |||||
Other Long-Term Assets | 126.8 | 124.3 | |||||
Total Assets | $ | 4,487.8 | $ | 4,354.1 | |||
Liabilities and Stockholders’ Equity | |||||||
Short-Term Debt | $ | 585.7 | $ | 426.8 | |||
Other Current Liabilities | 581.1 | 575.1 | |||||
Total Current Liabilities | 1,166.8 | 1,001.9 | |||||
Long-Term Debt | 692.9 | 693.4 | |||||
Other Long-Term Liabilities | 692.4 | 680.9 | |||||
Stockholders’ Equity | 1,935.7 | 1,977.9 | |||||
Total Liabilities and Stockholders’ Equity | $ | 4,487.8 | $ | 4,354.1 |
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flow (Unaudited) |
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Three Months Ended | ||||||||
(Dollars in millions) | March 31, 2017 | March 31, 2016 | ||||||
Net Income | $ | 131.5 | $ | 113.0 | ||||
Depreciation and amortization | 29.3 | 27.9 | ||||||
Deferred income taxes | 9.4 | 7.6 | ||||||
Non cash compensation | 2.0 | 5.8 | ||||||
Other | 0.9 | 1.2 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (11.2 | ) | 5.2 | |||||
Inventories | (21.3 | ) | (8.7 | ) | ||||
Other current assets | (3.5 | ) | (1.7 | ) | ||||
Accounts payable and accrued expenses | (47.9 | ) | (5.5 | ) | ||||
Income taxes payable | 39.3 | 42.4 | ||||||
Excess tax benefit on stock options exercised | 0.0 | (7.9 | ) | |||||
Other | 3.0 | (1.5 | ) | |||||
Net cash from operating activities | 131.5 | 177.8 | ||||||
Capital expenditures | (2.8 | ) | (8.5 | ) | ||||
Acquisitions | (160.3 | ) | (175.0 | ) | ||||
Other | 3.8 | (0.6 | ) | |||||
Net cash (used in) investing activities | (159.3 | ) | (184.1 | ) | ||||
Net change in short-term debt | 158.8 | 93.8 | ||||||
Payment of cash dividends | (48.4 | ) | (46.1 | ) | ||||
Stock option related | 22.7 | 21.2 | ||||||
Purchase of treasury stock | (157.1 | ) | (200.0 | ) | ||||
Other | (0.4 | ) | (5.0 | ) | ||||
Net cash (used in) financing activities | (24.4 | ) | (136.1 | ) | ||||
F/X impact on cash | 3.9 | 6.7 | ||||||
Net change in cash and cash equivalents | $ | (48.3 | ) | $ | (135.7 | ) |
2016 and 2015 Product Line Net Sales |
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Three Months Ended | Percent | ||||||||||
3/31/2017 | 3/31/2016 | Change | |||||||||
Household Products | $ | 394.5 | $ | 388.3 | 1.6 | % | |||||
Personal Care Products | 265.2 | 259.5 | 2.2 | % | |||||||
Consumer Domestic | $ | 659.7 | $ | 647.8 | 1.8 | % | |||||
Consumer International | 143.1 | 127.4 | 12.3 | % | |||||||
Total Consumer Net Sales | $ | 802.8 | $ | 775.2 | 3.6 | % | |||||
Specialty Products Division | 74.4 | 73.8 | 0.8 | % | |||||||
Total Net Sales | $ | 877.2 | $ | 849.0 | 3.3 | % |
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 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 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 SG&A:
This press release presents information regarding adjusted SG&A, namely
selling, general and administrative expenses excluding 2017 charges
related to the Brazil Specialty Products business and a 2017 expected
settlement charge related to our
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
expected to be taken in 2017 related to the Brazil Specialty Products
business and an expected settlement charge related to our
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 and
the settlement charges related to our
Free Cash Flow:
Free cash flow is defined as cash from operating activities less capital expenditures. Management views free cash flow as an important measure because it is one factor in determining the amount of cash available for dividends and discretionary investment.
Free Cash Flow as Percentage of Adjusted Net Income:
Free cash flow as percentage of adjusted net income is defined as the
ratio of free cash flow to net income excluding the Brazil Specialty
Products business and the settlement charges related to our
CHURCH & DWIGHT CO., INC. Organic Sales |
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Three Months Ended 3/31/2017 | ||||||||||||||||||
Total | Worldwide | Consumer | Consumer | Specialty | ||||||||||||||
Company | Consumer | Domestic | International | Products | ||||||||||||||
Reported Sales Growth | 3.3% | 3.6% | 1.8% | 12.3% | 0.8% | |||||||||||||
Less: | ||||||||||||||||||
Acquisitions | 1.8% | 1.7% | 1.4% | 5.1% | 0.0% | |||||||||||||
Add: | ||||||||||||||||||
FX / Other | 0.8% | 0.7% | 0.4% | 4.6% | -1.1% | |||||||||||||
Organic Sales Growth | 2.3% | 2.6% | 0.8% | 11.8% | -0.3% |
CHURCH & DWIGHT CO., INC. Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited) |
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(Dollars in millions, except per share data) | ||||||||||||||||||||
For the quarter ended March 31, 2017 |
For the quarter ended March 31, 2016 |
Change | ||||||||||||||||||
Adjusted Gross Profit and Margin Reconciliation |
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Gross Profit and Margin - Reported | $ | 399.3 | 45.5 | % | $ | 379.0 | 44.6 | % | 90 | bps | ||||||||||
Brazil Charge | $ | 1.3 | 0.2 | % | $ | - | 0.0 | % | 20 | bps | ||||||||||
Gross Profit and Margin - Adjusted (non-GAAP) | $ | 400.6 | 45.7 | % | $ | 379.0 | 44.6 | % | 110 | bps | ||||||||||
Adjusted SG&A Reconciliation |
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SG&A - Reported | $ | 112.4 | 12.8 | % | $ | 107.0 | 12.6 | % | 20 | bps | ||||||||||
Brazil Charge | $ | (2.2 | ) | -0.2 | % | $ | - | 0.0 | % | (20 | ) | bps | ||||||||
SG&A - Adjusted (non-GAAP) | $ | 110.2 | 12.6 | % | $ | 107.0 | 12.6 | % | - | bps | ||||||||||
Adjusted Operating Profit Margin Reconciliation |
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Operating Profit and Margin - Reported | $ | 196.1 | 22.4 | % | $ | 179.5 | 21.1 | % | 130 | bps | ||||||||||
Brazil Charge | $ | 3.5 | 0.4 | % | $ | - | 0.0 | % | 40 | bps | ||||||||||
Operating Profit and Margin - Adjusted (non-GAAP) | $ | 199.6 | 22.8 | % | $ | 179.5 | 21.1 | % | 170 | bps | ||||||||||
Adjusted Income Tax Expense and Rate Reconciliation |
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Income Tax Expense and Rate - Reported | $ | 58.7 | 30.9 | % | $ | 60.0 | 34.7 | % | (380 | ) | bps | |||||||||
Brazil Charge | $ | - | -0.6 | % | $ | - | 0.0 | % | (60 | ) | bps | |||||||||
Income Tax Expense and Rate- Adjusted (non-GAAP) | $ | 58.7 | 30.3 | % | $ | 60.0 | 34.7 | % | (440 | ) | bps | |||||||||
Adjusted Diluted Earnings Per Share Reconciliation |
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Diluted Earnings Per Share - Reported | $ | 0.51 | $ | 0.43 | 18.6 | % | ||||||||||||||
Brazil Charge | $ | 0.01 | $ | - | ||||||||||||||||
Diluted Earnings Per Share - Adjusted (non-GAAP) | $ | 0.52 | $ | 0.43 | 20.9 | % |
CHURCH & DWIGHT CO., INC. Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited) |
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For the Year Ended |
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2017 | 2016 | Change | ||||||||||
Adjusted Gross Margin Reconciliation |
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Gross Margin - Reported | 46.1 | % | 45.5 | % | 60 | bps | ||||||
Brazil Charge | 0.0 | % | 0.2 | % | (20 | ) | bps | |||||
Gross Margin - Adjusted (non-GAAP) | 46.1 | % | 45.7 | % | 40 | bps | ||||||
Adjusted SG&A Reconciliation |
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SG&A - Reported | 14.2 | % | 12.6 | % | 160 | bps | ||||||
Pension Settlement Charge | -1.4 | % | 0.0 | % | (140 | ) | bps | |||||
Brazil Charge | 0.0 | % | 0.0 | % | - | bps | ||||||
SG&A - Adjusted (non-GAAP) | 12.8 | % | 12.6 | % | 20 | bps | ||||||
Adjusted Operating Profit Margin Reconciliation |
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Operating Profit Margin - Reported | 19.9 | % | 20.7 | % | (80 | ) | bps | |||||
Pension Settlement Charge | 1.4 | % | 0.0 | % | 140 | bps | ||||||
Brazil Charge | 0.0 | % | 0.2 | % | (20 | ) | bps | |||||
Operating Profit Margin - Adjusted (non-GAAP) | 21.3 | % | 20.9 | % | 40 | bps | ||||||
Reported and Adjusted Forecasted EPS Reconciliation |
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For the Year Ended December 31, | |||||||||||||
Q2 2017 Forecast |
2016 Actual |
2017 Forecast |
Percent Change |
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Reported (US GAAP) | $0.21 - $0.23 | $ | 1.75 | $1.75 - $1.77 | -% to +1% | ||||||||
Charge related to the Brazilian business | $ | - | $ | 0.02 | $ | 0.01 | |||||||
U.K. Pension Settlement Charge | $0.16 - 0.14 | $ | - | $0.16 - 0.14 | |||||||||
Adjusted EPS (Non-GAAP) | $ | 0.37 | $ | 1.77 | $ | 1.92 | +9% | ||||||
Currency Impact | $ | - | $ | - | $ | 0.02 | |||||||
Currency Neutral EPS (Non-GAAP) | $ | 0.37 | $ | 1.77 | $ | 1.94 | +10% |
CHURCH & DWIGHT CO., INC. Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited) |
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Reported and Adjusted Forecasted EPS Reconciliation |
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For the Six Months Ended June 30, | |||||||||
2016 Actual |
2017 Forecast |
Percent Change |
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Reported (US GAAP) | $ | 0.85 | $0.72 - $0.74 | -15% to -13% | |||||
Charge related to the Brazilian business | - | 0.01 | |||||||
U.K. Pension Settlement Charge | - | 0.16 - 0.14 | |||||||
Adjusted EPS (Non-GAAP) | $ | 0.85 | $ | 0.89 | +5% | ||||
Reported and Adjusted Forecasted 2017 Tax Rate Reconciliation | |||
Reported (US GAAP) | 34.7 | % | |
Brazil Charge | -0.2 | % | |
U.K.Pension Settlement Charge | -1.0 | % | |
Adjusted (non-GAAP) | 33.5 | % |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005695/en/
Source:
Church & Dwight Co., Inc.
Rick Dierker, 609-806-1900
Chief
Financial Officer