10-KPeriod: FY2015

CHURCH & DWIGHT CO INC /DE/ Annual Report, Year Ended Dec 31, 2015

Filed February 19, 2016For Securities:CHD

Summary

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.

Financial Highlights

55 data points
Beta

Revenue

$3.39B

44.5% Gross Margin

Net Income

$410.40M

12.1% Net Margin

EPS (Diluted)

$1.54

Total Assets

$4.26B

Cash & Equivalents

$330.00M

Free Cash Flow

$544.30M

Financial Statements
Beta
Revenue$3.39B
Cost of Revenue$1.88B
Gross Profit$1.51B
R&D Expenses$64.70M
SG&A Expenses$420.10M
Operating Income$674.20M
Interest Expense$30.50M
Net Income$410.40M
EPS (Basic)$1.57
EPS (Diluted)$1.54
Shares Outstanding (Basic)262.20M
Shares Outstanding (Diluted)267.20M

Key Highlights

  • 1Net 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.
  • 2Operating margin improved to 19.9% in 2015, up from 19.4% in 2014, reflecting higher gross margins and controlled marketing expenses.
  • 3The 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.
  • 4Despite competitive pressures, Church & Dwight successfully grew market share in seven of its ten power brands during 2015.
  • 5The company returned $538.4 million to stockholders through dividends and share repurchases in 2015, demonstrating a commitment to capital return.
  • 6Acquisitions of Lil Drug Store Brands (2014) and VI-COR (2015) have contributed to sales growth, with the company actively seeking further strategic acquisitions.
  • 7Church & Dwight maintained effective internal controls over financial reporting and reported an unqualified opinion from its independent auditors.

Frequently Asked Questions

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.

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.

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.

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.