Church & Dwight Surpasses Q3 Expectations: Strong Sales Growth And Brand Investments Fuel Gains

Church & Dwight Co CHD shares are trading higher in the morning session on Friday.

The company reported a third-quarter adjusted earnings per share of 79 cents, beating the street view of 68 cents. Quarterly revenues of $1.51 billion beat the analyst consensus of $1.495 billion.

Net sales increased by 3.8%, with domestic sales rising by 3.3% and international sales growing by 9.5%, while sales in the SPD segment down by 8.0%.

Organic sales grew by 4.3%, driven by a 3.3% increase in domestic sales, an 8.1% rise in international sales, and a 7.5% increase in the SPD segment.

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Consumer Domestic net sales reached $1.170 billion, reflecting a 3.3% increase primarily driven by growth in personal care sales. Consumer International net sales rose to $267.7 million, marking a 9.5% increase. In contrast, Specialty Products net sales declined to $72.1 million, an 8.0% decrease, due to the exit from the Megalac business in the first quarter and the food safety business in the second quarter.

Additionally, the adjusted gross margin improved by 60 basis points, reflecting improved productivity, the benefit of higher volumes and mix, and net of the impact of higher manufacturing costs.

“Volume was the primary driver of organic growth, which we expect to continue in Q4. We increased the investment in our brands in the quarter. Marketing as a percent of sales increased 80 basis points driving consumption and share gains,” said Matthew Farrell, Chief Executive Officer.

The company noted that global online sales represented 20.7% of total consumer sales in the third quarter.

“Finally, the combination of strong sales, margin expansion, and efficient working capital management resulted in strong cash flow generation through the first nine months, with over $1 billion of cash from operations expected in the full year,” added Farrell.

At September 30, cash on hand was $752.1 million, while total debt was $2.2 billion.

Outlook: Church & Dwight continues to expect 2024 adjusted EPS increase of 8%, compared with the prior view of the lower end of the 8-9% range, and continues to expect full-year reported sales to be approximately 3.5% and organic sales growth to be approximately 4%.

“We are raising our outlook for full year adjusted gross margin expansion to approximately 110 basis points versus 2023 (previously 100-110 basis points). We continue to expect carryover pricing, improved mix, higher volume and productivity to offset higher manufacturing costs,” the company said.

For the fourth quarter, the company expects reported sales growth of approximately 1.5% to 2.5% and organic sales growth of approximately 2% to 3%. As a result, it expects reported EPS of $0.75 and adjusted EPS of $0.76, against the consensus estimate of $0.86.

Price Action: CHD shares are trading higher by 5.59% to $105.50 at last check Friday.

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