01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
Church & Dwight Co., Inc. (CHD) demonstrated resilience in its February 19, 2016, 10-K filing, showcasing consistent net sales growth driven by both volume increases and strategic acquisitions in 2015.
The company's diversified portfolio, featuring strong "power brands" like ARM & HAMMER, OXICLEAN, TROJAN, and LIL CRITTERS/VITAFUSION, positions it well across various economic conditions, with a balanced mix of premium and value offerings. Despite facing intense competition and pricing pressures in key markets like laundry detergent, CHD managed to grow market share in seven of its ten power brands during 2015. The company also continues to actively return capital to shareholders through dividends and share repurchases, underscoring its commitment to shareholder value while maintaining a healthy financial position and investing in innovation and strategic growth opportunities.
02—Key points
Key Highlights
- Net sales grew 2.9% to $3.39 billion in 2015, driven by volume, acquisitions (Lil Drug Store Brands, VI-COR), and a favorable price/mix, despite negative foreign exchange impacts.
- Operating margin improved to 19.9% in 2015, up from 19.4% in 2014, reflecting higher gross margins and controlled marketing expenses.
- The company's "mega brands" (ARM & HAMMER, OXICLEAN, TROJAN, LIL CRITTERS/VITAFUSION) represent approximately 60% of sales and profits, indicating a strong focus on core, high-performing brands.
- Despite competitive pressures, Church & Dwight successfully grew market share in seven of its ten power brands during 2015.
- The company returned $538.4 million to stockholders through dividends and share repurchases in 2015, demonstrating a commitment to capital return.
- Acquisitions of Lil Drug Store Brands (2014) and VI-COR (2015) have contributed to sales growth, with the company actively seeking further strategic acquisitions.
- Church & Dwight maintained effective internal controls over financial reporting and reported an unqualified opinion from its independent auditors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Church & Dwight Co Inc kept $0.12.
- Revenue$3.39B100.0%
- Cost of revenue−$1.88B55.5%
- Gross profit$1.51B44.5%
- Operating costs−$837.6M24.7%
- Operating income$674.2M19.9%
- Interest, other & tax−$263.8M7.8%
- Net income$410.4M12.1%
Where FY2015 revenue went
$3.39B- Cost of revenue: $1.88B, 55% of revenue
- SG&A: $420.1M, 12% of revenue
- Net income: $410.4M, 12% of revenue
- R&D: $64.7M, 1.9% of revenue
- Other operating costs: $352.8M, 10% of revenue
- Interest, other & tax: $263.8M, 7.8% of revenue
Kept 12% as net incomeR&D $64.7M · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.39B$3.30B | +2.9% |
| Cost of Revenue | $1.88B$1.84B | +2.1% |
| Gross Profit | $1.51B$1.45B | +4.1% |
| R&D Expenses | $64.70M$59.80M | +8.2% |
| SG&A Expenses | $420.10M$394.80M | +6.4% |
| Operating Income | $674.20M$641.20M | +5.1% |
| Interest Expense | $30.50M$27.40M | +11.3% |
| Net Income | $410.40M$413.90M | −0.8% |
| EPS (Basic) | $1.57$1.53 | +2.6% |
| EPS (Diluted) | $1.54$1.51 | +2.0% |
| Shares Outstanding (Basic) | 262.20M270.20M | −3.0% |
| Shares Outstanding (Diluted) | 267.20M275.00M | −2.8% |
05—Questions
Frequently Asked Questions
What are Church & Dwight's main business segments and key brands?
Church & Dwight operates across three primary segments: Consumer Domestic, Consumer International, and Specialty Products Division (SPD). Its key consumer brands, known as 'power brands,' include ARM & HAMMER, TROJAN, OXICLEAN, SPINBRUSH, FIRST RESPONSE, NAIR, ORAJEL, XTRA, LIL CRITTERS, VITAFUSION, and BATISTE. The company considers ARM & HAMMER, OXICLEAN, TROJAN, and LIL CRITTERS/VITAFUSION as its 'mega brands' and focuses on their growth.
How did the company perform financially in 2015 compared to 2014?
In 2015, Church & Dwight reported a 2.9% increase in net sales to $3.39 billion, with growth across all segments. Gross margin improved to 44.5% from 44.1%, and operating margin increased to 19.9% from 19.4%. Diluted earnings per share were $3.07, a slight increase from $3.01 in 2014. Cash provided by operations also saw a significant increase.
What are the primary risks facing Church & Dwight, as highlighted in the filing?
Key risks include intense competition from larger companies with greater financial resources, which can lead to price reductions and increased marketing spending. The company is also heavily reliant on a few major customers, notably Wal-Mart, making it vulnerable to changes in their purchasing strategies. Other risks involve potential cost increases for raw materials and energy, the need for successful new product introductions, managing international operations, and potential disruptions to information technology systems.
What is the company's strategy for future growth?
Church & Dwight's strategy focuses on strengthening its core 'mega brands' through innovation and marketing investment, pursuing strategic acquisitions to expand its portfolio and geographic reach, and maintaining tight cost control. The company aims to balance its offering of premium and value brands to appeal to a broad consumer base and manage diverse economic environments.
06—Continue