Church & Dwight Co., Inc. (CHD) 2024 Q2 Earnings Call Summary
August 2, 2024 
Church & Dwight Co., Inc. (CHD)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Reported Sales Growth Exceeds Outlook: Sales growth was 3.9%, surpassing the forecast of 3.5% due to strong performance across domestic, international, and Specialty Products divisions.
- Organic Sales Growth: Achieved 4.7% organic sales growth, outperforming the 4% Q2 outlook, with volume contributing significantly.
- Adjusted Gross Margin Expansion: Gross margin expanded by 150 basis points, alongside increased marketing spending and market share gains in most categories.
- Adjusted EPS Above Outlook: Adjusted EPS was $0.93, $0.10 higher than the $0.83 outlook, driven by unexpected sales growth and gross margin expansion.
- Innovation Driving Success: New product launches, such as ARM & HAMMER Deep Clean and Power Sheets, have been highly incremental to sales and market share.
Pessimistic Highlights
- Gummy Vitamins Business Drag: The gummy vitamins category declined, with Church & Dwight's consumption down significantly more than the category.
- Private Label Share Gains: Notable private label share gains in gummy vitamins and litter categories, contributing to challenges in those businesses.
- Consumer Spending Slowdown: A slowdown in consumption observed in June and July, indicating potential consumer spending caution.
Company Outlook
- Tightened Organic Revenue Outlook: Organic sales growth expectation adjusted to approximately 4%, at the lower end of the prior 4% to 5% range, due to moderated consumption growth.
- Full Year Adjusted EPS Growth: Anticipated at the low end of the 8% to 9% growth range, factoring in increased SG&A spend and potential for more promotional activities.
- Gross Margin Expansion: Expected to be around 100 to 110 basis points for the full year, with continued focus on productivity and volume.
Q & A Highlights
Q: Can you discuss the promotional backdrop and expectations for the balance of the year? (Rupesh Parikh, Oppenheimer)
A: Promotional activity varies by category, with some like liquid laundry detergent seeing a decrease in deals. The company is prepared for potential increases in promotional activities, especially in household categories like laundry and litter. (Matt Farrell)
Q: Regarding the slowdown in June and July, is it across categories, and how does it impact discretionary versus essential offerings? (Rupesh Parikh, Oppenheimer)
A: The slowdown is broad-based across categories, not limited to discretionary or essential products. The company's balanced portfolio is well-suited to adapt to changing consumer buying patterns. (Matt Farrell)
Q: On the additional spending mentioned for Q3, is it new incremental spending or a shift from Q2? (Chris Carey, Wells Fargo)
A: The Q2 marketing spend was as planned, and Q3 will see a significant increase to support new products, with Q4 expected to decrease as part of a strategic reallocation. (Rick Dierker)
Q: Can you provide more detail on the international category growth and expectations for the second half? (Peter Grom, UBS)
A: International business delivered strong growth, with expectations for continued above-target performance. The outlook remains positive, with no significant concerns about international consumer spending. (Matt Farrell)