10-KPeriod: FY2017

CHURCH & DWIGHT CO INC /DE/ Annual Report, Year Ended Dec 31, 2017

Filed February 23, 2018For Securities:CHD

Summary

Church & Dwight Co., Inc. (CHD) demonstrated robust growth in its fiscal year ending December 31, 2017, with net sales increasing by 8.1% to $3.78 billion. This growth was largely driven by strong volume increases across all segments, significantly boosted by strategic acquisitions, including the notable Waterpik acquisition for approximately $1 billion and the Viviscal brand acquisition for $160 million. The company maintained healthy gross margins, which improved slightly to 45.8%, attributed to favorable volume and cost efficiencies, despite some unfavorable price/mix impacts. However, operating margins saw a slight decrease due to increased SG&A expenses, notably including a pension settlement charge and acquisition-related costs. Diluted EPS saw a substantial increase of 66% to $2.90, partly due to a significant tax benefit from the Tax Cuts and Jobs Act. Looking ahead, Church & Dwight remains focused on its strategic initiatives, including investing in its power brands, driving innovation, managing costs, and pursuing further strategic acquisitions. The company's diversified portfolio of premium and value brands positions it well to navigate a competitive market and deliver long-term shareholder value.

Financial Highlights

55 data points
Beta

Revenue

$3.78B

45.8% Gross Margin

Net Income

$743.40M

19.7% Net Margin

EPS (Diluted)

$2.90

Total Assets

$6.01B

Cash & Equivalents

$278.90M

Free Cash Flow

$636.50M

Financial Statements
Beta
Revenue$3.78B
Cost of Revenue$2.05B
Gross Profit$1.73B
R&D Expenses$70.80M
SG&A Expenses$542.70M
Operating Income$732.70M
Interest Expense$52.60M
Net Income$743.40M
EPS (Basic)$2.97
EPS (Diluted)$2.90
Shares Outstanding (Basic)250.60M
Shares Outstanding (Diluted)256.10M

Key Highlights

  • 1Net sales grew by 8.1% to $3.78 billion in FY 2017, driven by volume growth and strategic acquisitions.
  • 2Acquisitions, notably Waterpik and Viviscal, significantly contributed to the company's top-line growth.
  • 3Gross margin improved slightly to 45.8%, aided by favorable volume and lower manufacturing costs.
  • 4Diluted EPS increased significantly by 66% to $2.90, boosted by a favorable tax adjustment related to the Tax Cuts and Jobs Act.
  • 5The company continues to return value to shareholders through increased dividends and ongoing share repurchase programs.
  • 6Despite increased SG&A expenses, the company maintained a strong operating margin of 19.4%.
  • 7The company's brand portfolio includes 11 'power brands' with strong market positions, such as ARM & HAMMER, OXICLEAN, and TROJAN.

Frequently Asked Questions

Revenue growth was primarily driven by an 8.1% increase in net sales, reaching $3.78 billion. This growth was fueled by volume increases across all operating segments, significantly supported by the strategic acquisitions of Waterpik and Viviscal during the year.

Gross margin improved slightly to 45.8% due to favorable volume and cost efficiencies, offsetting some unfavorable price/mix impacts. However, operating margin decreased to 19.4% from 20.7% in the prior year, primarily due to higher selling, general, and administrative (SG&A) expenses, which included a pension settlement charge and acquisition-related costs.

The Tax Cuts and Jobs Act enacted in late 2017 resulted in a provisional net tax credit of approximately $273 million for the year, primarily due to the adjustment of deferred tax assets and liabilities to the new lower corporate tax rate. This significantly boosted net income and diluted EPS for the year.

Church & Dwight continues to focus on strategic acquisitions to complement its existing product lines and geographic markets. The company emphasizes growing its 11 'power brands' through product innovation, increased marketing and trade spending, and maintaining a balance of premium and value offerings to appeal to a wide consumer base.