01—Abstract
Summary
Summary of the 10-K filed February 18, 2021. Cited figures are marked; the original filing is the authoritative source.
Church & Dwight Co., Inc. (CHD) demonstrated robust growth in 2020, with net sales increasing by 12.3% to $4.9 billiona, driven by strong volume gains across all three segments: Consumer Domestic, Consumer International, and Specialty Products Division.
The company also saw a significant improvement in profitability, with operating margin expanding by 170 basis points to 21.0%, and diluted earnings per share rising by 27.9% to $3.12b. This performance was supported by increased consumer demand for many of its core products, particularly in the cleaning and personal wellness categories, partly attributed to the COVID-19 pandemic. The company actively managed its capital structure, returning $537.3 million to stockholders through dividends and share repurchases, while also making strategic investments, most notably the acquisition of the ZICAM brand for $512.7 million.
Despite some cost pressures, such as higher manufacturing costs and tariffs, CHD effectively leveraged its scale, brand recognition, and productivity programs to offset these impacts and deliver strong financial results. The company maintains a positive outlook, focused on innovation, strategic acquisitions, and global expansion to drive future growth and stockholder value.
02—Key points
Key Highlights
- Net sales grew by 12.3% to $4.9 billion in 2020, with all three operating segments contributing to this increase.
- Operating margin improved by 170 basis points to 21.0%, reflecting strong cost management and operational efficiencies.
- Diluted earnings per share increased by 27.9% to $3.12, showcasing enhanced profitability.
- The company acquired the ZICAM brand for $512.7 million, strengthening its portfolio in the cold remedy category.
- Cash provided by operations increased by $125.8 million to $990.3 million, demonstrating robust cash generation.
- Church & Dwight returned $537.3 million to stockholders in 2020 through dividends and share repurchases.
- The company's strong cash flow and financial position provide flexibility for future growth initiatives, including potential acquisitions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Church & Dwight Co Inc kept $0.16.
- Revenue$4.90B100.0%
- Cost of revenue−$2.68B54.8%
- Gross profit$2.21B45.2%
- Operating costs−$1.18B24.2%
- Operating income$1.03B21.0%
- Interest, other & tax−$243.8M5.0%
- Net income$785.9M16.1%
Where FY2020 revenue went
$4.90B- Cost of revenue: $2.68B, 55% of revenue
- Net income: $785.9M, 16% of revenue
- SG&A: $593.3M, 12% of revenue
- R&D: $102.6M, 2.1% of revenue
- Other operating costs: $488.6M, 10.0% of revenue
- Interest, other & tax: $243.8M, 5.0% of revenue
Kept 16% as net incomeR&D $102.6M · 2.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 18, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $4.90B$4.36B | +12.3% |
| Cost of Revenue | $2.68B$2.37B | +13.0% |
| Gross Profit | $2.21B$1.98B | +11.6% |
| R&D Expenses | $102.60M$93.60M | +9.6% |
| SG&A Expenses | $593.30M$628.80M | −5.6% |
| Operating Income | $1.03B$840.20M | +22.6% |
| Interest Expense | $61.00M$73.60M | −17.1% |
| Net Income | $785.90M$615.90M | +27.6% |
| EPS (Basic) | $3.18$2.50 | +27.2% |
| EPS (Diluted) | $3.12$2.44 | +27.9% |
| Shares Outstanding (Basic) | 246.80M246.20M | +0.2% |
| Shares Outstanding (Diluted) | 252.20M252.10M | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of Church & Dwight's net sales growth in 2020?
The primary driver of net sales growth in 2020 was a combination of favorable product volumes across all three segments and favorable pricing/product mix in the Consumer Domestic and Consumer International segments. Increased consumer demand for many of its products, partly influenced by the COVID-19 pandemic, also contributed significantly.
How did the ZICAM acquisition impact the company's financial performance?
The ZICAM acquisition, completed in December 2020 for $512.7 million, is managed within the Consumer Domestic segment and contributed to the overall sales growth. While specific profit contributions are not detailed separately in the summary, the acquisition is part of the company's strategy to diversify and strengthen its brand portfolio.
What is the company's approach to returning capital to shareholders?
Church & Dwight returned a significant amount of capital to shareholders in 2020, totaling $537.3 million through a combination of dividends and share repurchases. The company also recently declared a 5.2% increase in its regular quarterly dividend, signaling confidence in its financial health and future earnings.
What are the key risks the company faces, as highlighted in the filing?
Key risks identified include intense competition, reliance on a few large customers like Walmart, potential decreases in product demand due to economic factors or changing consumer preferences, and challenges in managing supply chains and raw material costs. The company also acknowledges risks related to its international operations and the impact of global events like the COVID-19 pandemic.
06—Continue