Church & Dwight Gains On Q3 Earnings Beat, New Buyback Plan; Faces Margin Pressure

Church & Dwight Co Inc CHD reported third-quarter FY21 sales growth of 5.7% year-on-year, to $1.31 billion, beating the analyst consensus of $1.28 billion.
Net sales from Consumer Domestic rose 4.6% Y/Y, Consumer International grew 6.3%, and Specialty Products jumped 18.5%.
The gross margin decreased 130 basis points Y/Y to 44.2%, affected by significant inflation of material, component, and co-packer costs.
The operating margin was 23%, and operating income for the quarter rose 10% to $301.4 million.
The company held $180 million in cash and equivalents as of September 30, 2021. Net cash provided by operating activities for nine months totaled $653.6 million, down 18.1% from last year.
Adjusted EPS of $0.80 beat the analyst consensus of $0.71.
"Looking forward, we expect input costs and transportation costs to remain elevated in Q4 and expect significant incremental cost increases in 2022," said CEO Matthew Farrell.
On October 28, 2021, the company's board authorized a new stock repurchase program under which up to $1 billion of common stock may be repurchased. The company terminated the previously approved share repurchase program.
Outlook: Church & Dwight sees FY21 sales growth to ~5.5% (prior view 5%). Organic sales growth outlook is unchanged at 4%. The company expects FY21 adjusted EPS growth of 6%.
Citing incremental costs, the company sees full-year gross margin to decrease 170 basis points (prior view for decline 75 basis points).
For Q4, it expects reported sales growth of 3% and organic sales growth of 2%. Adjusted EPS to be $0.61, below the consensus of $0.69.
Price Action: CHD shares traded higher by 2.40% at $87.34 on the last check Friday.

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