Church & Dwight Co Inc 10-Q for FY2025 Q1
Church & Dwight Co Inc (CHD)
About this 10-Q
Church & Dwight Co Inc filed this 10-Q on May 1, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.47B
- down 2.4% from $1.5B a year earlier
- Net income
- $220.1M
- down 3.3% from net income of $227.7M a year earlier
- Diluted EPS
- $0.89
- down 4.3% from $0.93 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code: (
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 29, 2025, there were
TABLE OF CONTENTS
PART I
Item |
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1. |
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3 |
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2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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22 |
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3. |
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28 |
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4. |
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PART II
1. |
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30 |
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1A. |
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30 |
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2. |
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30 |
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5. |
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6. |
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31 |
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2
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share data)
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Net Sales |
$ |
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$ |
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Cost of sales |
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Gross Profit |
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Marketing expenses |
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Selling, general and administrative expenses |
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Income from Operations |
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Equity in earnings of affiliates |
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Interest income |
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Interest expense |
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( |
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Other income (expense), net |
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( |
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Income before Income Taxes |
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Income taxes |
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Net Income |
$ |
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$ |
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Weighted average shares outstanding - Basic |
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Weighted average shares outstanding - Diluted |
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Net income per share - Basic |
$ |
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$ |
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Net income per share - Diluted |
$ |
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$ |
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Cash dividends per share |
$ |
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$ |
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Net Income |
$ |
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$ |
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Other comprehensive income, net of tax: |
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Foreign exchange translation adjustments |
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( |
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Defined benefit plan adjustments gain (loss) |
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( |
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Income (loss) from derivative agreements |
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Other comprehensive income (loss) |
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( |
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Comprehensive income |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
3
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share and per share data)
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March 31, |
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December 31, |
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2025 |
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2024 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable, less allowances of $ |
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Inventories |
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Other current assets |
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Total Current Assets |
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Property, Plant and Equipment, Net |
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Equity Investment in Affiliates |
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Trade Names and Other Intangibles, Net |
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Goodwill |
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Other Assets |
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Total Assets |
$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current Liabilities |
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Accounts payable |
$ |
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$ |
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Accrued expenses and other liabilities |
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Income taxes payable |
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Total Current Liabilities |
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Long-term Debt |
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Deferred Income Taxes |
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Deferred and Other Long-term Liabilities |
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Total Liabilities |
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Stockholders' Equity |
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Preferred Stock, $ |
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Common Stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Common stock in treasury, at cost: |
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( |
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( |
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
4
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In millions)
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Cash Flow From Operating Activities |
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Net Income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation expense |
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Amortization expense |
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Deferred income taxes |
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( |
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( |
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Equity in net earnings of affiliates |
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( |
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( |
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Distributions from unconsolidated affiliates |
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Non-cash compensation expense |
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Asset impairment charge and other asset write-offs |
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Other |
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Subtotal |
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Accounts receivable |
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( |
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Inventories |
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( |
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Other current assets |
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( |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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( |
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Income taxes payable |
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Other operating assets and liabilities, net |
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( |
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( |
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Change in Working Capital |
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( |
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( |
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Net Cash Provided By Operating Activities |
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Cash Flow From Investing Activities |
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Additions to property, plant and equipment |
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( |
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( |
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Other |
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( |
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( |
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Net Cash Used In Investing Activities |
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( |
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( |
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Cash Flow From Financing Activities |
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Long-term debt (repayments) |
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( |
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Proceeds from issuance of common stock related to employee equity plans |
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Payment of cash dividends |
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( |
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( |
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Payment of business acquisition liability |
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( |
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Other |
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( |
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Net Cash Used In Financing Activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net Change In Cash and Cash Equivalents |
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Cash and Cash Equivalents at Beginning of Period |
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Cash and Cash Equivalents at End of Period |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
5
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW-CONTINUED
(Unaudited)
(In millions)
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Cash paid during the period for: |
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Interest (net of amounts capitalized) |
$ |
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$ |
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Income taxes |
$ |
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$ |
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Supplemental disclosure of non-cash investing activities: |
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Property, plant and equipment expenditures included in Accounts Payable |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
6
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In millions)
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Number of Shares |
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Amounts |
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Common |
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Treasury |
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Common |
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Additional |
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Retained |
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Accumulated |
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Treasury |
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Total |
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December 31, 2023 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net income |
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0.0 |
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0.0 |
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Other comprehensive |
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0.0 |
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0.0 |
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( |
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( |
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Cash dividends |
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0.0 |
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0.0 |
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( |
) |
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( |
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Stock based compensation |
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0.0 |
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( |
) |
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March 31, 2024 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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December 31, 2024 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Net income |
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0.0 |
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0.0 |
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Other comprehensive |
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0.0 |
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0.0 |
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Cash dividends |
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0.0 |
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0.0 |
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( |
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( |
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Stock based compensation |
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0.0 |
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( |
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March 31, 2025 |
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( |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In millions, except per share data)
These condensed consolidated financial statements have been prepared by Church & Dwight Co., Inc. (the “Company”). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations and cash flows for all periods presented have been made. Results of operations for interim periods may not be representative of results to be expected for the full year.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Form 10-K”).
The Company incurred research and development expenses in the first quarter of 2025 and 2024 of $
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The standard was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and was applied retrospectively to all prior periods presented in the financial statements. The Company has adopted the standard which resulted in additional disclosures. Refer to Note 18.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure which includes amendments that further expand income tax disclosures, by requiring the disaggregation of information in the rate reconciliation table, and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and are to be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adoption on the Company’s related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses. ASU 2024-03, as clarified by ASU 2025-01 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with prospective or retrospective application permitted. The Company is currently evaluating the impact of adoption on the Company’s related disclosures.
8
Inventories consist of the following:
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March 31, |
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December 31, |
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2025 |
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2024 |
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Raw materials and supplies |
$ |
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$ |
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Work in process |
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Finished goods |
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Total |
$ |
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$ |
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PP&E consists of the following:
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March 31, |
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December 31, |
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2025 |
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2024 |
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Land |
$ |
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$ |
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Buildings and improvements |
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Machinery and equipment |
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Software |
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Office equipment and other assets |
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Construction in progress(1) |
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Gross PP&E |
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Less accumulated depreciation |
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Net PP&E |
$ |
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$ |
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(1)
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Depreciation expense on PP&E |
$ |
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$ |
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Basic EPS is calculated based on income available to holders of the Company’s common stock (“Common Stock”) and the weighted average number of shares outstanding during the reported period. Diluted EPS includes additional dilution from potential Common Stock issuable pursuant to the Company's stock-based compensation plans.
The following table sets forth a reconciliation of the weighted average number of shares of Common Stock outstanding to the weighted average number of shares outstanding on a diluted basis:
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Three Months Ended |
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March 31, |
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March 31, |
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2025 |
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2024 |
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Weighted average common shares outstanding - basic |
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Dilutive effect of stock options and other unvested stock-based awards |
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Weighted average common shares outstanding - diluted |
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Antidilutive stock options outstanding |
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9
The Company's Long-Term Incentive Program (“LTIP”) provides employees with an award of stock options and initial grants of restricted stock units (“RSUs”), and grants of performance share units ("PSUs") to members of the Company's Executive Leadership Team ("ELT"). Awards are granted in the first quarter of each year. The Company recognizes the grant-date fair value for each of these awards, less estimated forfeitures, as compensation expense ratably over the vesting period. For employees and directors that meet retirement eligibility requirements, the expense related to share-based compensation is recognized on the date of grant as there is no future service period required for the awards to vest.
Stock Options
The following table provides a summary of option activity:
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Weighted |
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Average |
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Weighted |
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Remaining |
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Average |
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Contractual |
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Aggregate |
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Exercise |
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Term |
|
|
Intrinsic |
|
||||
|
Options |
|
|
Price |
|
|
(in Years) |
|
|
Value |
|
||||
Outstanding at December 31, 2024 |
|
|
|
$ |
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at March 31, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The following table provides information regarding the intrinsic value of stock options exercised and stock compensation expense related to stock option awards:
|
Three Months Ended |
|
|||||
|
March 31, |
|
|
March 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Intrinsic Value of Stock Options Exercised |
$ |
|
|
$ |
|
||
Stock Compensation Expense Related to Stock Option Awards |
$ |
|
|
$ |
|
||
Issued Stock Options |
|
|
|
|
|
||
Weighted Average Fair Value of Stock Options issued (per share) |
$ |
|
|
$ |
|
||
Fair Value of Stock Options Issued |
$ |
|
|
$ |
|
||
|
Three Months Ended |
|
|||||
|
March 31, |
|
|
March 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Risk-free interest rate |
|
% |
|
|
% |
||
Expected life in years |
|
|
|
|
|
||
Expected volatility |
|
% |
|
|
% |
||
Dividend yield |
|
% |
|
|
% |
||
Restricted Stock Units
The Company granted employees
Additionally, in connection with the Hero Acquisition (see Note 10),
10
associated with the Hero Acquisition for the three months ended March 31, 2025 and 2024 was $
Performance Stock Units
In the first quarter of each of 2025 and 2024, the Company granted PSUs to members of the Executive Leadership Team including the CEO, with an aggregate award of
Discounted Employee Stock Purchase Plan
The Company’s discounted Employee Stock Purchase Plan (“ESPP”) was adopted in February 2023 by the Company’s Board of Directors and became effective in April 2023 upon approval by the Company’s stockholders. There are
On October 28, 2021, the Board authorized the Company's share repurchase program, under which the Company may repurchase up to $
The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments at March 31, 2025 and December 31, 2024:
|
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
Input |
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
|
Level |
|
Amount |
|
|
Value |
|
|
Amount |
|
|
Value |
|
||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
Level 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Level 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The Company recognizes transfers between input levels as of the actual date of the event. There were no transfers between input levels during the three months ended March 31, 2025.
11
Refer to Note 2 in the Form 10-K for a description of the methods and assumptions used to estimate the fair value of each class of financial instruments reflected in the condensed consolidated balance sheets.
Changes in interest rates, foreign exchange rates, the price of the Company's Common Stock and commodity prices expose the Company to market risk. The Company manages these risks by the use of derivative instruments, such as cash flow and fair value hedges, diesel and commodity hedge contracts, equity derivatives and foreign exchange forward contracts. The Company does not use derivatives for trading or speculative purposes. Refer to Note 3 in the Form 10-K for a discussion of each of the Company’s derivative instruments in effect as of December 31, 2024.
The notional amount of a derivative instrument is the nominal or face amount used to calculate payments made on that instrument. Notional amounts are presented in the following table:
|
|
Notional |
|
|
Notional |
|
||
|
|
Amount |
|
|
Amount |
|
||
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Derivatives designated as hedging instruments |
|
|
|
|
|
|
||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
||
Diesel fuel contracts |
|
|
|
|
||||
Commodities contracts |
|
|
|
|
||||
Derivatives not designated as hedging instruments |
|
|
|
|
|
|
||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
||
Equity derivatives |
|
$ |
|
|
$ |
|
||
The fair values and amount of gain (loss) recognized in income and Other Comprehensive Income (“OCI”) associated with the derivative instruments disclosed above did not have a material impact on the Company’s condensed consolidated financial statements during the three months ended March 31, 2025.
12
On June 3, 2024, the Company acquired substantially all of the issued and outstanding shares of capital stock of Graphico, Inc. ("Graphico"), a Japan-based distributor focused on consumer goods primarily in the Japanese market (the “Graphico Acquisition”). The Company paid $
The preliminary fair values of the net assets at acquisition are set forth as follows:
Accounts receivable |
$ |
|
|
Inventory |
|
|
|
Other current assets |
|
|
|
Other long-term assets |
|
|
|
Customer relationship intangible asset |
|
|
|
Goodwill |
|
|
|
Accounts payable, accrued and other liabilities |
|
( |
) |
Long-term debt |
|
( |
) |
Deferred income taxes |
|
( |
) |
Cash purchase price (net of cash acquired) |
$ |
|
The customer relationship intangible asset was valued using a discounted cash flow model and has a useful life of
The Company has intangible assets of substantial value on its consolidated balance sheet. These intangible assets are generally related to intangible assets with a useful life, indefinite-lived trade names and goodwill. The Company determines whether an intangible asset (other than goodwill) has a useful life based on multiple factors, including how long the Company intends to generate cash flows from the asset. These intangible assets are more fully explained in the following sections.
Intangible Assets With a Useful Life
The following table provides information related to the carrying value of intangible assets with a useful life:
|
March 31, 2025 |
|
|
|
|
December 31, 2024 |
|
||||||||||||||||||||||
|
Gross |
|
|
|
|
|
|
|
|
Amortization |
|
Gross |
|
|
|
|
|
|
|
|
|
|
|||||||
|
Carrying |
|
|
Accumulated |
|
|
|
|
|
Period |
|
Carrying |
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||
|
Amount |
|
|
Amortization |
|
|
Net |
|
|
(Years) |
|
Amount |
|
|
Amortization |
|
|
Impairments(1) |
|
|
Net |
|
|||||||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trade Names |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Customer Relationships |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
Patents/Formulas |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||||
Total |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
(1)
Intangible amortization expense was $
13
Indefinite-Lived Intangible Assets
The following table presents the carrying value of indefinite lived intangible assets:
|
March 31, |
|
|
December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Gross Carrying Value Trade Names |
$ |
|
|
$ |
|
||
VMS impairment |
|
|
|
|
|
||
Net Carrying Value Trade Names |
$ |
|
|
$ |
|
||
The Company’s indefinite lived intangible impairment review is completed in the fourth quarter of each year.
Fair value of indefinite-lived trade names was estimated based on a “relief from royalty” or “excess earnings” discounted cash flow method, which contains numerous variables that are subject to change as business conditions change, and therefore could impact fair values in the future. The key assumptions used in determining fair value are sales growth, profitability margins, tax rates, discount rates and royalty rates. The Company determined that the fair value of all indefinite-lived trade names for each of the years in the three-year period ended December 31, 2024 exceeded their respective carrying values based upon the forecasted cash flows and profitability, with the exception of the Vitamins, Minerals and Supplements ("VMS") business described below.
During the third quarter of 2024, the Company continued to experience a decline in market share and a deterioration in the financial performance of its VMS business, which includes the VITAFUSION® and L'IL CRITTERS® trade name, primarily due to significant product competition coming from new category entrants, including private label. The continued decline in profitability caused management to reassess its long-term strategy and financial outlook of the business. The revised financial outlook reflects lower estimates of future sales growth and cash flows which resulted in a triggering event in the third quarter. The triggering event required the Company to review the carrying value of assets supporting the business. The assets supporting the VMS business include the VITAFUSION® and L'IL CRITTERS® indefinite-lived trade name, a definite-lived customer relationship intangible asset and PP&E specific to the VMS business.
The Company used an excess earnings discounted cash flow model to determine the fair value of the trade name. The assumptions used in the model require significant judgment in determining the expected future cash flows. The key assumptions utilized in the Company's impairment analysis included, but were not limited to, net sales growth rates between -15.2% and 2.1%, EBITA margins in the low single digits, and a discount rate of
The Company also evaluated its ability to recover the carrying value of long-lived assets supporting the VMS business by comparing the carrying amount of those assets to the future undiscounted cash flows over the estimated life of the identified primary asset. The result of this evaluation was that the cash flows would not be sufficient to recover the carrying value of the assets requiring the Company to compare the carrying value of those assets to their fair value. The Company used an excess earnings discounted cash flow model to determine the estimated fair value of the long-lived assets. The key assumptions utilized in the Company's impairment analysis were the same as those used to estimate the fair value of the trade name. The valuation resulted in a fair value of the long-lived assets that is below their carry value requiring a pre-tax impairment charge of $
A summary of the VMS intangible and fixed asset impairment charges recorded in the third quarter of 2024 are as follows:
|
December 31, |
|
|
|
2024 |
|
|
Trade Name |
$ |
|
|
Customer Relationship Intangible Asset |
|
|
|
PP&E |
|
|
|
Total VMS impairment charges |
$ |
|
|
14
The Company’s global WATERPIK® business has continued to experience a significant decline in customer demand for many of its products, primarily due to lower consumer spending for discretionary products from inflation and a growing number of water flosser consumers switching to more value-branded products. As a result, the WATERPIK® business has experienced declining sales and profits resulting in a reduction in expected future cash flows which have eroded a substantial portion of the excess between the fair and carrying value of the trade name. This indefinite-lived intangible asset may be susceptible to impairment and a continued decline in fair value could trigger a future impairment charge of the WATERPIK® trade name. The carrying value of the WATERPIK® trade name was $
Goodwill
The carrying amount of goodwill is as follows:
|
Consumer |
|
|
Consumer |
|
|
Specialty |
|
|
|
|
||||
|
Domestic |
|
|
International |
|
|
Products |
|
|
Total |
|
||||
Balance at December 31, 2024 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Balance at March 31, 2025 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company tests goodwill for each reporting unit which are also the Company's reportable segments. The result of the Company’s annual goodwill impairment test, performed in the beginning of the second quarter of 2024, determined that the estimated fair value substantially exceeded the carrying values of all reporting units. The determination of fair value contains numerous variables that are subject to change as business conditions change and therefore could impact fair value in the future.
The Company leases certain manufacturing facilities, warehouses, office space, railcars and equipment. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet. All recorded leases are classified as operating leases and lease expense is recognized on a straight-line basis over the lease term. For leases beginning in 2019, lease components (base rental costs) are accounted for separately from the nonlease components (e.g., common-area maintenance costs). For leases that do not provide an implicit rate, the Company uses its estimated secured incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
A summary of the Company’s lease information is as follows:
|
|
March 31, |
|
December 31, |
|
||
|
Classification |
2025 |
|
2024 |
|
||
Assets |
|
|
|
|
|
||
Right of use assets |
$ |
|
$ |
|
|||
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
||
Current lease liabilities |
$ |
|
$ |
|
|||
Long-term lease liabilities |
|
|
|
|
|||
Total lease liabilities |
|
$ |
|
$ |
|
||
|
|
|
|
|
|
||
Other information |
|
|
|
|
|
||
Weighted-average remaining lease term (years) |
|
|
|
|
|
||
Weighted-average discount rate |
|
|
% |
|
% |
||
15
|
Three Months |
|
|
Three Months |
|
||
|
Ended |
|
|
Ended |
|
||
|
March 31, 2025 |
|
|
March 31, 2024 |
|
||
Statement of Income |
|
|
|
|
|
||
Lease cost(1) |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Other information |
|
|
|
|
|
||
Leased assets obtained in exchange for new lease liabilities net of modifications(2) |
$ |
|
|
$ |
|
||
Cash paid for amounts included in the measurement of lease liabilities |
$ |
|
|
$ |
|
||
The Company’s minimum annual rentals including reasonably assured renewal options under lease agreements are as follows:
|
|
Operating |
|
|
|
|
Leases |
|
|
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 and thereafter |
|
|
|
|
Total future minimum lease commitments |
|
|
|
|
Less: Imputed interest |
|
|
( |
) |
Present value of lease liabilities |
|
$ |
|
|
16
Accounts payable, accrued and other liabilities consist of the following:
|
March 31, |
|
|
|
December 31, |
|
||
|
2025 |
|
|
|
2024 |
|
||
Trade accounts payable |
$ |
|
|
|
$ |
|
||
Accrued marketing and promotion costs |
|
|
|
|
|
|
||
Accrued wages and related benefit costs |
|
|
|
|
|
|
||
Other accrued current liabilities |
|
|
|
|
|
|
||
Total |
$ |
|
|
|
$ |
|
||
In 2015, the Company initiated a Supply Chain Finance program (“SCF Program”). Under the SCF Program, qualifying suppliers may elect to sell their receivables from the Company for early payment. Participating suppliers negotiate their receivables sales arrangements directly with a third party. The Company is not party to those agreements and do not have an economic interest in the suppliers' decisions to sell their receivables and has not been required to pledge any assets as security nor to provide any guarantee to third-party finance providers or intermediaries. The SCF Program may allow suppliers more favorable terms than they could secure on their own. The terms of the Company's payment obligations are not impacted by a supplier’s participation in the SCF Program. The Company's payment terms with suppliers are consistent between suppliers that elect to participate in the SCF Program and those that do not participate. As a result, the program does not have an impact to the Company's average days outstanding.
As of March 31, 2025 and December 31, 2024, the obligations outstanding related to the SCF program amounted to $
Long-term debt consist of the following:
|
March 31, |
|
|
December 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Long-term debt |
|
|
|
|
|
||
|
|
|
|
|
|||
Less: Discount |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|||
Less: Discount |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|||
Less: Discount |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|||
Less: Discount |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|||
Less: Discount |
|
( |
) |
|
|
( |
) |
Debt issuance costs, net |
|
( |
) |
|
|
( |
) |
Total long-term debt |
$ |
|
|
$ |
|
||
17
The components of changes in accumulated other comprehensive income (loss) are as follows:
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
||||
|
Foreign |
|
|
Defined |
|
|
|
|
|
Other |
|
||||
|
Currency |
|
|
Benefit |
|
|
Derivative |
|
|
Comprehensive |
|
||||
|
Adjustments |
|
|
Plans |
|
|
Agreements |
|
|
Income (Loss) |
|
||||
Balance at December 31, 2023 |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Other comprehensive income (loss) before reclassifications |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts reclassified to consolidated statement of |
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Tax benefit (expense) |
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Other comprehensive income (loss) |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at March 31, 2024 |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at December 31, 2024 |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Amounts reclassified to consolidated statement of |
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Tax benefit (expense) |
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at March 31, 2025 |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
16. Commitments, Contingencies and Guarantees
Commitments
a. The Company has a partnership with a supplier of raw materials that mines and processes sodium-based mineral deposits. The Company purchases the majority of its sodium-based raw material requirements from the partnership. The partnership agreement terminates upon two years’ written notice by either partner. Under the partnership agreement, the Company has an annual commitment to purchase
b. As of March 31, 2025, the Company had commitments of approximately $
c. As of March 31, 2025, the Company had various guarantees and letters of credit totaling $
d. In connection with the December 1, 2020 acquisition of the ZICAM® brand (the “Zicam Acquisition”), the Company deferred an additional cash payment of $
In connection with the December 24, 2021 acquisition of the THERABREATH® brand (the "TheraBreath Acquisition"), the Company deferred payment of a $
In connection with the October 13, 2022 Hero Acquisition, the Company deferred an additional cash payment of $
18
Legal proceedings
e. In addition, in conjunction with the Company’s acquisition and divestiture activities, the Company entered into select guarantees and indemnifications of performance with respect to the fulfillment of the Company’s commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. Representations and warranties that survive the closing date generally survive for periods up to five years or the expiration of the applicable statutes of limitations. Potential losses under the indemnifications are generally limited to a portion of the original transaction price, or to other lesser specific dollar amounts for select provisions. With respect to sale transactions, the Company also routinely enters into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on the Company’s financial condition, results of operations and cash flows.
f. In addition to the matters described above, from time to time in the ordinary course of its business the Company is the subject of, or party to, various pending or threatened legal, regulatory or governmental actions or other proceedings, including, without limitation, those relating to, intellectual property, commercial transactions, product liability, purported consumer class actions, employment matters, antitrust, environmental, health, safety and other compliance related matters. Such proceedings are generally subject to considerable uncertainty and their outcomes, and any related damages, may not be reasonably predictable or estimable. Any such proceedings could result in a material adverse outcome negatively impacting the Company’s business, financial condition, results of operations or cash flows.
The following summarizes the balances and transactions between the Company and Armand Products Company (“Armand”) and the ArmaKleen Company (“ArmaKleen”), in each of which the Company held a
|
Armand |
|
|
ArmaKleen(2) |
|
||||||||||
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||||||
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Purchases by Company |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales by Company |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outstanding Accounts Receivable |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Outstanding Accounts Payable |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Administration & Management Oversight Services (1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Segment Information
The Company operates
Segment revenues are derived from the sale of the following products:
Segment |
|
|
Products/Other |
|
Consumer Domestic |
|
Household and personal care products |
||
Consumer International |
|
Primarily personal care products |
||
SPD |
|
Specialty Products |
||
The Company also has equity in earnings of affiliates which is not reflected in a reportable segment. As of March 31, 2025, the Company held
19
October of 2024. The Company’s equity in earnings of Armand and ArmaKleen, totaled $
Our reportable segments comprise the structure used by our Chief Executive Officer, who has been determined to be the Chief Operating Decision Maker ("CODM") to make key operating decisions and assess performance. The CODM considers Operating Income for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment. Asset information and capital expenditures are not regularly provided to the CODM.
The following tables present financial information relating to the Company’s segments for the three months ended March 31, 2025 and 2024:
|
|
Three Months Ended March 31, 2025 |
|
|||||||||||||||||
|
|
Consumer Domestic |
|
|
Consumer International |
|
|
SPD |
|
|
Consolidating Reclassification(1) |
|
|
Total Consolidated |
|
|||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Marketing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and Development(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Income from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Three Months Ended March 31, 2024 |
|
|||||||||||||||||
|
|
Consumer Domestic |
|
|
Consumer International |
|
|
SPD |
|
|
Consolidating Reclassification(1) |
|
|
Total Consolidated |
|
|||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gross Profit |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Marketing expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and Development(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Income from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other segment expenses for the first quarter of 2025 and the first quarter of 2024 include the following:
|
|
Consumer Domestic |
|
|
Consumer International |
|
|
SPD |
|
|
Total Consolidated |
|
||||
Depreciation & Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
First Quarter of 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
First Quarter of 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
20
Product line revenues from external customers are as follows:
|
Three Months Ended |
|
|||||
|
March 31, |
|
|
March 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Household Products |
$ |
|
|
$ |
|
||
Personal Care Products |
|
|
|
|
|
||
Total Consumer Domestic |
|
|
|
|
|
||
Total Consumer International |
|
|
|
|
|
||
Total SPD |
|
|
|
|
|
||
Total Consolidated Net Sales |
$ |
|
|
$ |
|
||
Strategic Business Decisions
The Company announced on May 1, 2025 that it will be taking strategic actions for the Flawless, Spinbrush and Waterpik showerhead businesses, which includes shutting down or selling these businesses. These businesses generate approximately $
21
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
(In millions, except per share data)
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company’s financial condition and results of operations should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 13, 2025, and the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q.
Overview
We develop, manufacture and market a broad range of consumer household and personal care products and specialty products focused on animal and food production, chemicals and cleaners. Our well-recognized brands include ARM & HAMMER® baking soda, cat litter, laundry detergent, carpet deodorizer and other baking soda-based products; OXICLEAN® stain removers, cleaning solutions, laundry detergents and bleach alternatives; VITAFUSION® and L’IL CRITTERS® gummy dietary supplements for adults and children, respectively; BATISTE® dry shampoo; WATERPIK® water flossers; THERABREATH® oral care products; HERO® acne treatment products; TROJAN condoms, lubricants and vibrators; FIRST RESPONSE home pregnancy and ovulation test kits; NAIR depilatories; ORAJEL oral analgesic; XTRA laundry detergent; and ZICAM cold shortening and relief products. Seven of those brands are designated as "power brands" because they compete in large categories, and we believe they have the potential for significant global expansion. Those seven brands are ARM & HAMMER®; OXICLEAN®; VITAFUSION® and L’IL CRITTERS®; BATISTE®; WATERPIK®; THERABREATH®; and HERO® and represent approximately 70% of our net sales and profits.
We sell our consumer products under a variety of brands through a broad distribution platform that includes supermarkets, mass merchandisers, wholesale clubs, drugstores, convenience stores, home stores, dollar and other discount stores, pet and other specialty stores and websites and other e-commerce channels, all of which sell our products to consumers. We sell our specialty products to industrial customers, livestock producers and through distributors.
We operate in three principal segments: Consumer Domestic, Consumer International, and our Specialty Products Division (“SPD”).
Recent Developments
Global Economic Conditions and Trade Policies
We are experiencing increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty primarily due to rapid changes in U.S. trade policies including recent sweeping tariff increases, as well as retaliatory tariffs by foreign countries. This global uncertainty has also resulted in product purchase cancellations and boycotts by customers and consumers globally. Additionally, U.S. consumers are increasingly worried about persistent inflation and looming tariffs, leading them to cut back on discretionary spending. We believe that retailers are lowering their consumer-packaged goods inventories and making targeted decisions to build inventory of certain products in advance of additional tariffs. We will continue to evaluate these evolving developments and have begun to take action to mitigate their impact on our business, including taking strategic actions for certain business lines (see Strategic Business Decisions), shifting production and relocating manufacturing operations, finding alternative sources of supply, most notably ceasing the import of Waterpik flossers from China into the U.S., potential price increases, adjusting inventories, lobbying and seeking exemptions with respect to tariffs. While the tariff situation remains fluid, we are focused on managing through these challenges. From a gross risk perspective, we are currently projecting a twelve-month run-rate gross tariff exposure of approximately $190.0. We expect that the impact of our strategic business decisions and a series of rapid supply chain actions, such as ceasing the import of Waterpik flossers from China into the U.S., will reduce our tariff exposure by approximately 80%. Over the next 12 months, we believe our remaining tariff exposure can be mitigated through additional supply chain efforts and surgical pricing.
Strategic Business Decisions
On May 1, 2025, we announced that we will be taking strategic actions for the Flawless, Spinbrush and Waterpik showerhead businesses, which includes shutting down or selling these businesses. These businesses generate approximately $150.0 of annual Net Sales. We expect to record a charge of $60.0 to $80.0 in the second quarter of 2025 as a direct result of these actions, primarily comprised of non-cash charges related to impairments of intangible and fixed assets, as well as inventory reserves.
22
Other
For additional discussion, please refer to Item 1A, "Risk Factors", and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K.
Results of Operations
Consolidated results
|
Three Months Ended |
|
|
Change vs. |
|
Three Months Ended |
|
||
|
March 31, 2025 |
|
|
Prior Year |
|
March 31, 2024 |
|
||
Net Sales |
$ |
1,467.1 |
|
|
-2.4% |
|
$ |
1,503.3 |
|
Gross Profit |
$ |
659.6 |
|
|
-4.0% |
|
$ |
687.0 |
|
Gross Margin |
|
45.0 |
% |
|
-70 basis points |
|
|
45.7 |
% |
Marketing Expenses |
$ |
136.6 |
|
|
-10.1% |
|
$ |
152.0 |
|
Percent of Net Sales |
|
9.3 |
% |
|
-80 basis points |
|
|
10.1 |
% |
Selling, General & Administrative Expenses |
$ |
227.7 |
|
|
-1.0% |
|
$ |
230.0 |
|
Percent of Net Sales |
|
15.5 |
% |
|
+20 basis points |
|
|
15.3 |
% |
Income from Operations |
$ |
295.3 |
|
|
-3.2% |
|
$ |
305.0 |
|
Operating Margin |
|
20.2 |
% |
|
-10 basis points |
|
|
20.3 |
% |
Net income per share - Diluted |
$ |
0.89 |
|
|
-4.3% |
|
$ |
0.93 |
|
Net Sales
Net sales for the quarter ended March 31, 2025 were $1,467.1, a decrease of $36.2 or 2.4% as compared to the same period in 2024. The components of the net sales decrease are as follows:
|
Three Months Ended |
|
|
|
March 31, |
|
|
Net Sales - Consolidated |
2025 |
|
|
Product volumes sold(1) |
|
(1.4 |
%) |
Pricing/Product mix(2) |
|
0.2 |
% |
Foreign exchange rate fluctuations |
|
(0.7 |
%) |
Exit of product lines (net of acquisition)(3) |
|
(0.5 |
%) |
Net Sales decrease |
|
(2.4 |
)% |
(1) The volume change reflects decreased product unit sales in the Consumer Domestic segment, partially offset by increased product unit sales in the Consumer International and SPD segments.
(2) Price/mix was favorable in the Consumer Domestic and SPD segments, partially offset by the Consumer International segment.
(3) In the first quarter of 2024, we exited the MEGALAC supplement portion of the SPD Animal Nutrition business. In the second quarter of 2024 we acquired substantially all of Graphico and sold the Passport food safety business.
Gross Profit / Gross Margin
Our gross profit was $659.6 for the three months ended March 31, 2025, a $27.4 decrease as compared to the same period in 2024. Gross margin decreased 70 basis points (“bps”) in the first quarter of 2025 compared to the same period in 2024, due to higher manufacturing costs including labor and commodities of 230 bps, unfavorable foreign exchange of 20 bps, partially offset by the impact of productivity programs of 160 bps, benefits from the Graphico Acquisition of 10 bps and favorable price/mix/volume of 10 bps.
Operating Expenses
Marketing expenses for the three months ended March 31, 2025 were $136.6, a decrease of $15.4 or 10.1% as compared to the same period in 2024. Marketing expenses as a percentage of net sales in the first quarter of 2025 decreased by 80 bps to 9.3% as compared to 10.1% in the same period in 2024 due to 100 bps on lower expense primarily due to marketing program timing.
23
SG&A expenses were $227.7 in the first quarter of 2025, a decrease of $2.3 or 1.0% as compared to the same period in 2024. SG&A as a percentage of net sales increased 20 bps to 15.5% in the first quarter of 2025 as compared to 15.3% in the same period in 2024. The increase is due to 40 bps from lower sales partially offset by 20 bps on lower expenses. The lower expenses for the three-month period ended March 31, 2025 compared to 2024 are primarily due to lower expense on Company issued equity awards.
Nonoperating Expenses
Interest income for the three months ended March 31, 2025 increased $5.9 to $9.3, as compared to the same period in 2024, due to higher interest income primarily associated with higher cash balances.
Interest expense for the three months ended March 31, 2025 decreased $1.7 to $23.3, as compared to the same period in 2024, primarily due to lower average outstanding debt.
Other income (expense) was nominal for the three months ended March 31, 2025 and 2024.
Income Taxes
The effective tax rate for the three months ended March 31, 2025 was 22.0%, compared to 19.9% in the same period in 2024. The increase in the tax rate is primarily from a lower tax benefit on reduced stock option exercises in 2025 compared to 2024.
Segment results
We operate three reportable segments: Consumer Domestic, Consumer International and SPD. These segments are determined based on differences in the nature of products and organizational structure. We also have equity in earnings of affiliates which is not reflected in a reportable segment.
Segment |
|
|
Products / Other |
Consumer Domestic |
|
Household and personal care products |
|
Consumer International |
|
Primarily personal care products |
|
SPD |
|
Specialty chemical products |
|
Segment net sales and income from operations for the three months ended March 31, 2025 and March 31, 2024 are as follows:
|
Consumer |
|
|
Consumer |
|
|
|
|
|
|
|
||||
|
Domestic |
|
|
International |
|
|
SPD |
|
|
Total |
|
||||
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
||||
First Quarter of 2025 |
$ |
1,129.8 |
|
|
$ |
261.9 |
|
|
$ |
75.4 |
|
|
$ |
1,467.1 |
|
First Quarter of 2024 |
|
1,165.2 |
|
|
|
255.0 |
|
|
|
83.1 |
|
|
|
1,503.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from Operations |
|
|
|
|
|
|
|
|
|
|
|
||||
First Quarter of 2025 |
$ |
244.8 |
|
|
$ |
37.7 |
|
|
$ |
12.8 |
|
|
$ |
295.3 |
|
First Quarter of 2024 |
|
257.5 |
|
|
|
35.9 |
|
|
|
11.6 |
|
|
|
305.0 |
|
Product line revenues from external customers are as follows:
|
Three Months Ended |
|
|||||
|
March 31, |
|
|
March 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Household Products |
$ |
614.9 |
|
|
$ |
638.9 |
|
Personal Care Products |
|
514.9 |
|
|
|
526.3 |
|
Total Consumer Domestic |
|
1,129.8 |
|
|
|
1,165.2 |
|
Total Consumer International |
|
261.9 |
|
|
|
255.0 |
|
Total SPD |
|
75.4 |
|
|
|
83.1 |
|
Total Consolidated Net Sales |
$ |
1,467.1 |
|
|
$ |
1,503.3 |
|
Household Products include laundry, deodorizing, and cleaning products. Personal Care Products include condoms, pregnancy kits, oral care products, skin care and hair care products, cold and remedy products, and gummy dietary supplements.
24
Consumer Domestic
Consumer Domestic net sales in the first quarter of 2025 were $1,129.8, a decrease of $35.4 or 3.0% as compared to the same period in 2024. The components of the net sales change are the following:
|
Three Months Ended |
|
|
|
March 31, |
|
|
Net Sales - Consumer Domestic |
2025 |
|
|
Product volumes sold |
|
(3.1 |
%) |
Pricing/Product mix |
|
0.1 |
% |
Net Sales decrease |
|
(3.0 |
)% |
The decrease in net sales for the three months ended March 31, 2025, includes declines from VITAFUSION® and L’IL CRITTERS® gummy dietary supplements, OXICLEAN® Stain Fighters and ARM & HAMMER® cat litter, partially offset by growth from THERABREATH® mouth wash and ZICAM® cold shortening and relief products.
Consumer Domestic income from operations for the first quarter of 2025 was $244.8, a decrease of $12.7 as compared to the first quarter of 2024. The decrease is due primarily to higher manufacturing and distribution expenses of $25.4, the impact of lower sales volumes of $22.2, and unfavorable price/mix of $3.4, partially offset by the benefit of productivity programs of $20.6, lower marketing expenses of $14.1, and lower SG&A expenses of $3.6.
Consumer International
Consumer International net sales were $261.9 in the first quarter of 2025, an increase of $6.9 or 2.7% as compared to the same period in 2024. The components of the net sales change are the following:
|
Three Months Ended |
|
|
|
March 31, |
|
|
Net Sales - Consumer International |
2025 |
|
|
Product volumes sold |
|
5.9 |
% |
Pricing/Product mix |
|
(0.1 |
%) |
Foreign exchange rate fluctuations |
|
(4.4 |
%) |
Acquired product lines (1) |
|
1.3 |
% |
Net Sales increase |
|
2.7 |
% |
Excluding the impact of foreign exchange rates, sales growth is driven by ARM & HAMMER® Liquid Detergent, THERABREATH® mouth wash, NAIR® depilatories, and ARM & HAMMER® dental care in Mexico, HERO® acne treatment products, WATERPIK® Flossers and THERABREATH® mouth wash in Canada, HERO® acne treatment products, BATISTE® Dry Shampoo and ANUSOL in Europe, and HERO® acne treatment products in Australia.
Consumer International income from operations was $37.7 in the first quarter of 2025, an increase of $1.8 as compared to the first quarter of 2024. The increase is due primarily to favorable product mix of $7.5, the impact of higher sales volumes of $7.2, and lower marketing expenses of $1.7, partially offset by unfavorable foreign exchange rates of $7.8, higher manufacturing and commodity costs of $3.5, and higher SG&A expenses of $3.2.
25
Specialty Products (“SPD”)
SPD net sales were $75.4 in the first quarter of 2025, a decrease of $7.7 or 9.3% as compared to the same period in 2024. The components of the net sales change are the following:
|
Three Months Ended |
|
|
|
March 31, |
|
|
Net Sales - SPD |
2025 |
|
|
Product volumes sold |
|
0.3 |
% |
Pricing/Product mix |
|
2.9 |
% |
Foreign exchange rate fluctuations |
|
1.1 |
% |
Exit of product lines (1) |
|
(13.6 |
%) |
Net Sales decrease |
|
(9.3 |
%) |
(1) We exited the MEGALAC supplement portion of the Animal Nutrition business in the first quarter of 2024 and sold the Passport food safety business in the second quarter of 2024.
Net sales excluding product line divestitures increased in the first quarter of 2025 primarily due to growth in our Performance Products and Commercial & Professional businesses.
SPD income from operations was $12.8 in the first quarter of 2025, an increase of $1.2 as compared to the same period in 2024, due to favorable price/product mix of $2.1 and favorable SG&A expenses of $2.1 mainly from divestitures, partially offset by the impact of lower sales volumes of $1.9 and unfavorable manufacturing costs of $1.1.
Equity in Earnings of Affiliates
Equity in earnings of affiliates represents the results of Armand in the first three months of 2025 and 2024 and ArmaKleen in the first three months of 2024. In October 2024, the Company sold its 50% interest in ArmaKleen to our joint venture partner.
26
Liquidity and Capital Resources
On June 16, 2022, we entered into a credit agreement (the “Credit Agreement”) that provides for our $1,500.0 unsecured revolving credit facility (the “Revolving Credit Facility”) that matures on June 16, 2027, unless extended. We have the ability to increase our borrowing up to an additional $750.0, subject to lender commitments and certain conditions as described in the Credit Agreement. Borrowings under the Credit Agreement are available for general corporate purposes and are used to support our $1,500.0 commercial paper program.
As of March 31, 2025, we had $1,074.5 in cash and cash equivalents, and approximately $1,494.0 available through the Revolving Credit Facility and our commercial paper program. To preserve our liquidity, we invest cash primarily in government money market funds, prime money market funds, short-term commercial paper and short-term bank deposits.
The current economic environment presents risks that could have adverse consequences for our liquidity. See “Our operating results have been, and could be in the future, adversely affected by natural disasters, public health crises, political crises, or other catastrophic events, or unfavorable worldwide, regional and local economic and financial market conditions” under “Risk Factors” in Item 1A of the Form 10-K. We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our customers, suppliers and other third-party relationships, implementing gross margin enhancement strategies and developing new opportunities for growth. We do not anticipate that current economic conditions will adversely affect our ability to comply with the financial covenant in the Credit Agreement because we currently are, and anticipate that we will continue to be, in compliance with the maximum leverage ratio requirement under the Credit Agreement.
On October 28, 2021, the Board authorized a share repurchase program, under which we may repurchase up to $1,000.0 in shares of Common Stock (the “2021 Share Repurchase Program”). The 2021 Share Repurchase Program does not have an expiration. We continue to maintain our evergreen share repurchase program, authorized by the Board on January 29, 2014, under which we may repurchase, from time to time, Common Stock to reduce or eliminate dilution associated with issuances of Common Stock under its incentive plans.
We have $658.9 of share repurchase availability under the 2021 Share Repurchase Program as of March 31, 2025.
On January 29, 2025, the Board declared a 4% increase in the regular quarterly dividend from $0.28375 to $0.295 per share, equivalent to an annual dividend of $1.18 per share payable to stockholders of record as of February 14, 2025. The increase raises the annual dividend payout from $277.0 to approximately $287.0 on an annualized basis.
We anticipate that our cash from operations, together with our current borrowing capacity, will be sufficient to fund our share repurchase programs to the extent implemented by management, pay debt and interest as it comes due, pay dividends at the latest approved rate, and meet our capital expenditure program costs, which are expected to be approximately $130.0 in 2025 including manufacturing capacity investments for Therabreath and Sterimar and an enterprise resource planning (ERP) project. Cash, together with our current borrowing capacity, may be used for acquisitions that would complement our existing product lines or geographic markets.
Cash Flow Analysis
|
Three Months Ended |
|
|||||
|
March 31, |
|
|
March 31, |
|
||
|
2025 |
|
|
2024 |
|
||
Net cash provided by operating activities |
$ |
185.7 |
|
|
$ |
263.0 |
|
Net cash used in investing activities |
$ |
(16.7 |
) |
|
$ |
(46.8 |
) |
Net cash used in financing activities |
$ |
(61.0 |
) |
|
$ |
(209.1 |
) |
Net Cash Provided by Operating Activities – Our primary source of liquidity is the cash flow provided by operating activities, which is dependent on net income and changes in working capital. Our net cash provided by operating activities in the three months ended March 31, 2025 decreased by $77.3 to $185.7 as compared to $263.0 in the same period in 2024 due to an increase in working capital and a decrease in cash earnings (net income adjusted for non-cash items). The increase in working capital is primarily related to lower accounts payable and accrued expense balances because of the timing and management strategy related to marketing spend plus higher inventory partially offset by higher cash collections. The higher inventory balance is mainly due to lower sales in our consumer domestic business. We measure working capital effectiveness based on our cash conversion cycle. The following table presents our cash conversion cycle information for the quarters ended March 31, 2025 and 2024:
27
|
As of |
|
|
|
|
||||||
|
March 31, 2025 |
|
|
March 31, 2024 |
|
|
Change |
|
|||
Days of sales outstanding in accounts receivable ("DSO") |
|
37 |
|
|
|
32 |
|
|
|
5 |
|
Days of inventory outstanding ("DIO") |
|
70 |
|
|
|
67 |
|
|
|
3 |
|
Days of accounts payable outstanding ("DPO") |
|
79 |
|
|
|
71 |
|
|
|
(8 |
) |
Cash conversion cycle |
|
28 |
|
|
|
28 |
|
|
|
- |
|
Our cash conversion cycle (defined as the sum of DSO and DIO less DPO) which is calculated using a two-period average method, was the same as the prior year. The increase in DSO is primarily due to higher accounts receivable balances as we reduced our accounts receivable factoring program in response to higher interest rates. Higher DIO is generally the result of lower sales in the first quarter of 2025. The increase in DPO is primarily from agreeing to extended payment terms with some vendors. We continue to focus on reducing our working capital requirements.
Net Cash Used in Investing Activities – Net cash used in investing activities during the first three months of 2025 was $16.7, primarily reflecting $16.5 for property, plant and equipment additions. Net cash used in investing activities during the first three months of 2024 was $46.8, primarily reflecting $46.3 for property, plant and equipment additions.
Net Cash Used in Financing Activities – Net cash used in financing activities during the first three months of 2025 was $61.0 reflecting $72.4 of cash dividend payments and $5.9 related to the payment of a business acquisition liability, partially offset by $19.3 of proceeds from stock option exercises. Net cash used in financing activities during the first three months of 2024 was $209.1 reflecting $200.0 of net debt payments, $69.0 of cash dividend payments, partially offset by $59.9 of proceeds from stock option exercises.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk
For quantitative and qualitative disclosures about market risk affecting the Company, see “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of Part II in the Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
a) Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, are effective to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission (the “Commission”), and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding the disclosure.
b) Change in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurring during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION
This report contains forward-looking statements, including, among others, statements relating to net sales and earnings growth; the impact of tariffs; 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; recessionary conditions; interest rates; inflation; 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 decline of condom usage; the Company’s hedge programs; the impact of foreign exchange, and commodity price fluctuations; impairments and other charges; the Company’s investments in joint ventures; the impact of acquisitions and divestitures; capital expenditures; the Company’s effective tax rate; the
28
impact of tax audits; tax changes; the effect of the credit environment on the Company’s liquidity and capital resources; the Company’s fixed rate debt; compliance with covenants under the Company’s debt instruments; the Company’s commercial paper program; the Company’s current and anticipated future borrowing capacity to meet capital expenditure program costs; the Company’s share repurchase programs; payment of dividends; environmental and regulatory matters; the availability and adequacy of raw materials, including trona reserves and the conversion of such reserves; and the customers and consumer acceptance of certain ingredients in our products. Other forward-looking statements in this report are generally identified by the use of such terms as “may,” “could,” “expect,” “intend,” “believe,” “plan,” “estimate,” “forecast,” “project,” “anticipate,” “to be,” “to make” or other comparable terms. 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), including those relating to the outbreak of contagious diseases; the impact of new regulations and legislation and change in regulatory priorities of the new U.S. presidential administration; transition to, and shifting economic policies in the United States; potential changes in export/import and trade laws, regulations and policies of the United States and other countries, including any increased trade restrictions or tariffs; increased or changing regulation regarding the Company's products and its suppliers in the United States and other countries where it or its suppliers operate; the impact on the global economy of the Russia/Ukraine war or increased conflict in the Middle East, including the impact of export controls and other economic sanctions; potential recessionary conditions or economic uncertainty; the impact of continued shifts in consumer behavior, including accelerating shifts to on-line shopping; unanticipated increases in raw material and energy prices, including as a result of the Russia/Ukraine war or conflict in the Middle East; delays and increased costs in manufacturing and distribution; increases in transportation costs; labor shortages; the impact of price increases for our products; the impact of inflationary conditions; the impact of supply chain and labor disruptions; the impact of severe weather on raw material and transportation costs; adverse developments affecting the financial condition of major customers and suppliers; competition; changes in marketing and promotional spending; growth or declines in various product categories and the impact of customer actions in response to changes in consumer demand and the economy, including increasing shelf space or on-line share of private label and retailer-branded products or other changes in the retail environment; consumer and competitor reaction to, and customer acceptance of, new product introductions and features; the Company’s ability to complete the announced strategic alternatives for certain of our businesses and realize the intended benefits; the risk that the announcement of strategic alternatives could have an adverse effect on the Company; the Company’s ability to maintain product quality and characteristics at a level acceptable to our customers and consumers; disruptions in the banking system and financial markets; the Company’s borrowing capacity and ability to finance its operations and potential acquisitions; higher interest rates; foreign currency exchange rate fluctuations; market volatility; issues relating to the Company’s information technology and controls; the impact of natural disasters, including those related to climate change, on the Company and its customers and suppliers, including third party information technology service providers; integrations of acquisitions or divestiture of assets; the outcome of contingencies, including litigation, pending regulatory proceedings and environmental matters; and changes in the regulatory environment in the countries where we do business.
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 United States federal securities laws. You are advised, however, to consult any further disclosures the Company makes on related subjects in its filings with the Commission.
29
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General
The Company, in the ordinary course of its business, is subject of, or party to, various pending or threatened legal actions, government investigations and proceedings from time to time, including, without limitation, those relating to commercial transactions, product liability, purported consumer class actions, employment matters, antitrust, environmental, health, safety and other compliance related matters. Such proceedings are subject to many uncertainties and the outcome of certain pending or threatened legal actions may not be reasonably predictable and any related damages may not be estimable. Certain legal actions could result in an adverse outcome for us, and any such adverse outcome could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A, “Risk Factors” in the Form 10-K, which could materially affect the Company’s business, financial condition or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company repurchases shares of its Common Stock from time to time pursuant to its publicly announced share repurchase programs.
During the first quarter of 2025 the Company did not repurchase any shares of Common Stock pursuant to its share repurchase programs. The following table contains information for shares repurchased during the first quarter of 2025, which was solely due to shares of Common Stock withheld by the Company to satisfy tax withholding obligations in connection with the vesting of restricted stock.
As of March 31, 2025, there remains $658.9 of share repurchase availability under the 2021 Share Repurchase Program.
Period |
|
Total |
|
|
Average |
|
|
Total Number of |
|
|
Approximate Dollar |
|
||||
1/1/2025 to 1/31/2025 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
658,905,959 |
|
2/1/2025 to 2/28/2025 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
658,905,959 |
|
3/1/2025 to 3/31/2025 |
|
|
17,593 |
|
|
|
111.11 |
|
|
|
- |
|
|
$ |
658,905,959 |
|
Total |
|
|
17,593 |
|
|
$ |
111.11 |
|
|
|
- |
|
|
|
|
|
|
ITEM 5. OTHER INFORMATION |
(c) During the quarter ended March 31, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company
30
ITEM 6. EXHIBITS
Exhibit Index
|
|
|
|
|
|
|
(3.1) |
|
|
|
|
|
|
|
|
|
(3.2) |
|
|
|
|
|
|
|
|
|
(3.3) |
|
|
|
|
|
|
|
|
|
(3.4) |
|
|
|
|
|
|
|
|
|
(10.1) |
|
|
|
|
|
|
|
|
|
(31.1) |
|
|
|
|
|
|
|
|
|
(31.2) |
|
|
|
|
|
|
|
|
|
(32.1) |
|
|
|
|
|
|
|
|
|
(32.2) |
|
|
|
|
|
|
|
|
|
(101.INS) |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
(101.SCH) |
|
Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents. |
|
|
|
|
|
|
|
(104) |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
|
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
CHURCH & DWIGHT CO., INC. |
|
|
|
|
(REGISTRANT) |
|
|
|
|
|
DATE: |
|
May 1, 2025 |
|
/s/ Lee B. McChesney |
|
|
|
|
LEE B. MCCHESNEY |
|
|
|
|
Executive Vice President |
|
|
|
|
and Chief Financial Officer |
|
|
|
|
(Principal Financial Officer) |
|
|
|
|
|
DATE: |
|
May 1, 2025 |
|
/s/ Joseph J. Longo |
|
|
|
|
JOSEPH J. LONGO |
|
|
|
|
VICE PRESIDENT AND |
|
|
|
|
CONTROLLER |
|
|
|
|
(PRINCIPAL ACCOUNTING OFFICER) |
32
EXHIBIT 31.1
CERTIFICATIONS
I, Richard A. Dierker, certify that:
|
|
|
|
Date: |
May 1, 2025 |
|
/s/ Richard A. Dierker |
|
|
|
Richard A. Dierker |
|
|
|
President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATIONS
I, Lee B. McChesney, certify that:
|
|
|
|
Date: |
May 1, 2025 |
|
/s/ Lee B. McChesney |
|
|
|
Lee B. McChesney |
|
|
|
Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350
I, Richard A. Dierker, President and Chief Executive Officer of Church & Dwight Co., Inc. (the “Company”), hereby certify that, based on my knowledge:
1. The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
By: |
|
/s/ Richard A.Dierker |
|
|
|
|
Richard A. Dierker |
|
|
|
|
President and Chief Executive Officer |
|
|
|
|
|
|
|
Dated: |
|
May 1, 2025 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT AND
18 U.S.C. SECTION 1350
I, Lee B. McChesney, Executive Vice President and Chief Financial Officer of Church & Dwight Co., Inc. (the “Company”), hereby certify that, based on my knowledge:
1. The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
By: |
|
/s/ Lee B. McChesney |
|
|
|
|
Lee B. McChesney |
|
|
|
|
Executive Vice President and Chief Financial Officer |
|
|
|
|
|
|
|
Dated: |
|
May 1, 2025 |