10-KPeriod: FY2013

CHURCH & DWIGHT CO INC /DE/ Annual Report, Year Ended Dec 31, 2013

Filed February 21, 2014For Securities:CHD

Summary

Church & Dwight Co., Inc. (CHD) reported strong performance in its 2013 fiscal year, characterized by a 9.3% increase in net sales to $3.2 billion, driven by the acquisition of its gummy vitamin business and growth across key consumer segments. The company demonstrated improved profitability with gross and operating margins expanding due to productivity initiatives, outpacing commodity cost increases. Diluted earnings per share saw a significant 14% rise to $2.79. CHD also maintained a focus on returning capital to shareholders, repurchasing shares and increasing its dividend, signaling financial strength and confidence in its strategic direction. The company highlighted its core "power brands," particularly the "mega brands" of ARM & HAMMER, OXICLEAN, TROJAN, and the combined L’IL CRITTERS and VITAFUSION gummy vitamins, which are central to its growth strategy. Despite ongoing economic softness and intensified competition, especially in the laundry detergent category, CHD managed to grow market share in six of its nine power brands. The company is actively managing its cost structure, investing in new product development, and exploring strategic acquisitions to drive future growth and maintain competitive positioning.

Financial Highlights

56 data points
Beta

Revenue

$3.19B

45.0% Gross Margin

Net Income

$394.40M

12.3% Net Margin

EPS (Diluted)

$1.40

Total Assets

$4.24B

Cash & Equivalents

$496.90M

Free Cash Flow

$432.50M

Financial Statements
Beta
Revenue$3.19B
Cost of Revenue$1.76B
Gross Profit$1.44B
R&D Expenses$61.80M
SG&A Expenses$416.00M
Operating Income$622.20M
Interest Expense$27.70M
Net Income$394.40M
EPS (Basic)$1.43
EPS (Diluted)$1.40
Shares Outstanding (Basic)277.20M
Shares Outstanding (Diluted)282.40M

Key Highlights

  • 1Net sales increased by 9.3% to $3.2 billion in 2013, primarily due to the acquisition of the gummy vitamin business and growth in core consumer segments.
  • 2Gross margin improved by 80 basis points to 45.0%, and operating margin increased by 80 basis points to 19.5%, driven by productivity programs and SG&A leverage.
  • 3Diluted earnings per share rose by approximately 14% to $2.79, reflecting improved operational performance.
  • 4The company returned $205 million to stockholders through dividends and share repurchases, demonstrating a commitment to shareholder value.
  • 5Market share was gained in six of nine 'power brands,' including laundry detergent, despite a challenging competitive environment.
  • 6Significant new product launches are planned for 2014 across core brands like ARM & HAMMER and OXICLEAN, targeting expansion into new categories.
  • 7The company successfully managed its debt levels, with net debt decreasing by approximately $254 million from the prior year.

Frequently Asked Questions

Sales growth was primarily driven by the acquisition of the L’IL CRITTERS and VITAFUSION gummy vitamin dietary supplement business, which significantly contributed to the Consumer Domestic segment. Growth was also seen in key brands like ARM & HAMMER laundry detergent, OXICLEAN laundry additives, TROJAN products, and FIRST RESPONSE diagnostic kits.

Church & Dwight improved profitability through a combination of factors, including the benefit of productivity improvement programs which outpaced commodity inflation, and leverage in selling, general, and administrative (SG&A) expenses. Despite increased marketing investments and unfavorable price/mix in some areas, these efforts led to an expansion of gross and operating margins.

The company's strategy focuses on strengthening its 'mega brands' (ARM & HAMMER, OXICLEAN, TROJAN, and L’IL CRITTERS/VITAFUSION) through innovation and new product launches. They also plan to continue geographic expansion, maintain a balance of premium and value brands, and pursue strategic acquisitions to complement their existing portfolio.

In 2013, Church & Dwight returned $205 million to shareholders through dividends and share repurchases. The company also announced an increased quarterly dividend and authorized a new $500 million share repurchase program, indicating a strong commitment to rewarding shareholders.