01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
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 billionb 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 $2.90c, 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.
02—Key points
Key Highlights
- Net sales grew by 8.1% to $3.78 billion in FY 2017, driven by volume growth and strategic acquisitions.
- Acquisitions, notably Waterpik and Viviscal, significantly contributed to the company's top-line growth.
- Gross margin improved slightly to 45.8%, aided by favorable volume and lower manufacturing costs.
- Diluted EPS increased significantly by 66% to $2.90, boosted by a favorable tax adjustment related to the Tax Cuts and Jobs Act.
- The company continues to return value to shareholders through increased dividends and ongoing share repurchase programs.
- Despite increased SG&A expenses, the company maintained a strong operating margin of 19.4%.
- The company's brand portfolio includes 11 'power brands' with strong market positions, such as ARM & HAMMER, OXICLEAN, and TROJAN.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Church & Dwight Co Inc kept $0.20.
- Revenue$3.78B100.0%
- Cost of revenue−$2.05B54.2%
- Gross profit$1.73B45.8%
- Operating costs−$996.9M26.4%
- Operating income$732.7M19.4%
- Interest, other & tax$10.7M0.3%
- Net income$743.4M19.7%
Where FY2017 revenue went
$3.78B- Cost of revenue: $2.05B, 54% of revenue
- Operating income: $732.7M, 19% of revenue
- SG&A: $542.7M, 14% of revenue
- R&D: $70.8M, 1.9% of revenue
- Other operating costs: $383.4M, 10% of revenue
Kept 19% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.78B$3.49B | +8.1% |
| Cost of Revenue | $2.05B$1.90B | +7.6% |
| Gross Profit | $1.73B$1.59B | +8.7% |
| R&D Expenses | $70.80M$63.20M | +12.0% |
| SG&A Expenses | $542.70M$439.20M | +23.6% |
| Operating Income | $732.70M$724.20M | +1.2% |
| Interest Expense | $52.60M$27.70M | +89.9% |
| Net Income | $743.40M$459.00M | +62.0% |
| EPS (Basic) | $2.97$1.78 | +66.9% |
| EPS (Diluted) | $2.90$1.75 | +65.7% |
| Shares Outstanding (Basic) | 250.60M257.60M | −2.7% |
| Shares Outstanding (Diluted) | 256.10M262.10M | −2.3% |
05—Questions
Frequently Asked Questions
What were the key drivers of Church & Dwight's revenue growth in 2017?
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.
How did the company's profitability perform in 2017?
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.
What was the impact of the Tax Cuts and Jobs Act on Church & Dwight's financial results?
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.
What is the company's strategy regarding acquisitions and brand development?
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.
06—Continue