Church & Dwight Tops Estimate - Analyst Blog

Church & Dwight Co. Inc. (CHD), a leading consumer products company, posted third-quarter earnings of 96 cents a share, outpacing the Zacks Consensus Estimate of 89 cents a share.  However, earnings fell short of the prior-year figure of 98 cents a share.

Church & Dwight's topline grew 1.7% to $656.9 million for the third quarter of fiscal 2010 with organic sales growth of 2.8%. The growth in organic sales was attributable to volume expansion of 5.0%. Volume growth was, however, offset by 2.2% from unfavorable mix and price.

Consumer Domestic net sales dipped by a marginal 0.1% to $481.3 million. On an organic basis, sales rose by 1.4% during the quarter driven by higher sales of ARM & HAMMER liquid laundry detergent and ARM & HAMMER Super Scoop cat litter. This was, however, moderately offset by lower sales of  XTRA liquid laundry detergent, ARM & HAMMER Dental Care and ARRID Deodorant.  

Consumer International sales jumped 4.9% during the quarter to $109.1 million. On an organic basis, sales rose 9.2%, as Canada, Brazil, UK, France and Australia experienced higher sales in the quarter.

Specialty Products sales climbed 10.1% to $66.5 million. On an organic basis, sales increased 9.2%, reflecting higher sales in animal nutrition.  

Gross margin decreased marginally by 0.1% to 44.0%, reflecting increased trade spending and commodity cost partially offset by better manufacturing facility and an alteration in customer delivery arrangement. 

Other Financial Details

Church & Dwight ended the quarter with cash and cash equivalents of $453.5 million, net debt of $204.0 million and shareholders' equity of $1,818.5 million. Year to date, net cash provided by operating activities came in at $288.7 million.

Outlook

Church & Dwight expects organic sales to increase by 3.0% in fiscal 2010 on the back of a 5% volume growth. The company expects to earn $3.93–$4.00 per share in fiscal 2010.

Church & Dwight's shares maintain a Zacks #3 Rank, which translates into a short-term Hold rating. Our long-term recommendation on the stock remains Neutral.