01—Abstract
Summary
Summary of the 10-K filed February 21, 2014. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 $2.79b. 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.
02—Key points
Key Highlights
- Net 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.
- Gross 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.
- Diluted earnings per share rose by approximately 14% to $2.79, reflecting improved operational performance.
- The company returned $205 million to stockholders through dividends and share repurchases, demonstrating a commitment to shareholder value.
- Market share was gained in six of nine 'power brands,' including laundry detergent, despite a challenging competitive environment.
- Significant new product launches are planned for 2014 across core brands like ARM & HAMMER and OXICLEAN, targeting expansion into new categories.
- The company successfully managed its debt levels, with net debt decreasing by approximately $254 million from the prior year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Church & Dwight Co Inc kept $0.12.
- Revenue$3.19B100.0%
- Cost of revenue−$1.76B55.0%
- Gross profit$1.44B45.0%
- Operating costs−$815.8M25.5%
- Operating income$622.2M19.5%
- Interest, other & tax−$227.8M7.1%
- Net income$394.4M12.3%
Where FY2013 revenue went
$3.19B- Cost of revenue: $1.76B, 55% of revenue
- SG&A: $416.0M, 13% of revenue
- Net income: $394.4M, 12% of revenue
- R&D: $61.8M, 1.9% of revenue
- Other operating costs: $338.0M, 11% of revenue
- Interest, other & tax: $227.8M, 7.1% of revenue
Kept 12% as net incomeR&D $61.8M · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 21, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $3.19B$2.92B | +9.3% |
| Cost of Revenue | $1.76B$1.63B | +7.7% |
| Gross Profit | $1.44B$1.29B | +11.4% |
| R&D Expenses | $61.80M$54.80M | +12.8% |
| SG&A Expenses | $416.00M$389.00M | +6.9% |
| Operating Income | $622.20M$545.10M | +14.1% |
| Interest Expense | $27.70M$14.00M | +97.9% |
| Net Income | $394.40M$349.80M | +12.8% |
| EPS (Basic) | $1.43$1.25 | +14.0% |
| EPS (Diluted) | $1.40$1.23 | +13.9% |
| Shares Outstanding (Basic) | 277.20M280.20M | −1.1% |
| Shares Outstanding (Diluted) | 282.40M285.40M | −1.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Church & Dwight's sales growth in 2013?
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.
How did Church & Dwight manage its profitability in a competitive market?
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.
What is Church & Dwight's strategy for future growth?
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.
What is the company's approach to returning capital to shareholders?
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.
06—Continue