01—Abstract
Summary
Summary of the 10-K filed February 24, 2009. Cited figures are marked; the original filing is the authoritative source.
Church & Dwight Co., Inc. (CHD) reported strong performance in its 2008 10-K filing, with net sales reaching $2.42 billiona, an increase of 9.1% year-over-year.
This growth was driven by a combination of higher volumes and increased selling prices, as well as the significant contribution from the Orajel Acquisition completed in July 2008. The company successfully managed increased raw material costs through cost improvement programs and price adjustments, leading to a healthy increase in gross margin to 40.1% and a 10.5% rise in operating income to $340.3 millionb. The company also highlighted strategic initiatives such as the planned construction of a new laundry detergent plant in Pennsylvania, which is expected to improve operational efficiencies.
Despite a challenging economic environment, CHD demonstrated resilience, with robust operating cash flow and effective management of its debt levels. The company's diversified product portfolio, spanning household, personal care, and specialty products, and its strong brand recognition, particularly with ARM & HAMMER and TROJAN, position it well for continued performance.
02—Key points
Key Highlights
- Net sales grew by 9.1% to $2.42 billion in 2008, driven by volume, pricing, and the Orajel acquisition.
- Gross margin improved by 100 basis points to 40.1% due to price increases, cost savings, and product concentration.
- Operating income increased by 10.5% to $340.3 million.
- The company is investing in future growth with the construction of a new manufacturing facility in York County, Pennsylvania.
- Net cash provided by operating activities increased significantly by 35.2% to $336.2 million.
- The company's debt-to-capitalization ratio improved to 39% from 44% in the prior year.
- Significant investments were made in marketing ($294.1M) and R&D ($51.2M) to support growth initiatives and new product development.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Church & Dwight Co Inc kept $0.08.
- Revenue$2.42B100.0%
- Cost of revenue−$1.45B59.9%
- Gross profit$971.7M40.1%
- Operating costs−$631.4M26.1%
- Operating income$340.3M14.0%
- Interest, other & tax−$145.2M6.0%
- Net income$195.2M8.1%
Where FY2008 revenue went
$2.42B- Cost of revenue: $1.45B, 60% of revenue
- SG&A: $337.3M, 14% of revenue
- Other operating costs: $294.1M, 12% of revenue
- Net income: $195.2M, 8.1% of revenue
- Interest, other & tax: $145.2M, 6.0% of revenue
Kept 8.1% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 24, 2009Financial Statements
| Revenue | $2.42B |
| Cost of Revenue | $1.45B |
| Gross Profit | $971.72M |
| SG&A Expenses | $337.26M |
| Operating Income | $340.33M |
| Interest Expense | $46.95M |
| Net Income | $195.17M |
| EPS (Basic) | $0.72 |
| EPS (Diluted) | $0.69 |
| Shares Outstanding (Basic) | 271.48M |
| Shares Outstanding (Diluted) | 284.46M |
05—Questions
Frequently Asked Questions
What were the key strategic moves made by Church & Dwight in 2008?
In 2008, Church & Dwight made several strategic moves, including the significant acquisition of the Del Pharmaceuticals over-the-counter business (Orajel Acquisition) for $383.4 million. They also announced plans to construct a new integrated laundry detergent manufacturing plant and distribution center in York County, Pennsylvania, and began the process of closing their North Brunswick, New Jersey facility. Additionally, the company divested its British subsidiary, Brotherton Speciality Products Ltd., and its consumer products subsidiary in Spain.
How did the company manage rising raw material costs?
Church & Dwight experienced substantially higher raw material costs in 2008, particularly for soda ash, surfactants, and diesel fuel. The company managed these increases by implementing cost improvement programs and by raising prices on many of its products. Despite these pressures, the gross margin improved due to these offsetting actions and the benefits of product concentration and acquisitions.
What are the main risks highlighted by the company in its 10-K filing?
Key risks highlighted include the impact of adverse economic conditions on consumer demand and customer financial health, disruptions in the banking system, increased competition and pricing pressure from private label products, potential erosion of brand reputation, the success of new product introductions, product recalls, and the concentration of sales with major customers like Wal-Mart. The company also noted risks related to its substantial indebtedness and potential future acquisitions.
How did the Orajel Acquisition impact the company's financials?
The Orajel Acquisition, completed in July 2008, contributed approximately 1.6% to the overall increase in net sales for the year. It also resulted in increased operating expenses related to the integration of the acquired business, which were partially offset by the higher margins associated with the acquired products. The acquisition was funded by a combination of additional bank debt and available cash.
06—Continue