01—Abstract
Summary
Summary of the 10-Q filed November 5, 2012. Cited figures are marked; the original filing is the authoritative source.
Church & Dwight Co., Inc. reported solid financial results for the nine months ended September 30, 2012.
Net sales increased by 4.7% to $2,112.2 milliona, driven by volume growth across its Consumer Domestic and Consumer International segments. Net income saw a significant increase of 10.7% year-over-year, reaching $269.0 million, or $1.88 per diluted share. This performance demonstrates the company's ability to grow its top line and translate that into strong profitability.
A major development during the period was the acquisition of Avid Health, Inc. for approximately $650 millionb, funded by senior notes, commercial paper, and cash. This strategic acquisition significantly expands the company's presence in the growing vitamin, mineral, and supplement category. While the integration is ongoing, the company anticipates this acquisition will be managed within its Consumer Domestic segment and is expected to contribute to future growth.
The company also continues to return capital to shareholders through increased dividends and a new share repurchase authorization. Investors should note the company's robust operating cash flow, which supports its growth initiatives and shareholder returns.
Despite some headwinds such as unfavorable product mix and commodity costs in certain areas, the company's productivity programs and strategic acquisitions position it well for continued performance. The company's financial health remains strong, with a manageable leverage ratio and adequate liquidity.
02—Key points
Key Highlights
- Net sales increased by 4.7% to $2,112.2 million for the nine months ended September 30, 2012, compared to the prior year.
- Net income grew by 10.7% to $269.0 million, or $1.88 per diluted share, for the nine months ended September 30, 2012.
- Completed the acquisition of Avid Health, Inc. for approximately $650 million, significantly expanding its presence in the vitamin and supplement market.
- Raised $400 million in 2.875% Senior Notes due 2022 to help finance the Avid Health acquisition.
- Net cash provided by operating activities was $315.9 million for the nine months ended September 30, 2012.
- Increased the regular quarterly dividend to $0.24 per share in February 2012.
- Authorized a new share repurchase program for up to an additional $300 million of common stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Church & Dwight Co Inc kept $0.13.
- Revenue$725.2M100.0%
- Cost of revenue−$397.7M54.8%
- Gross profit$327.5M45.2%
- Operating costs−$182.1M25.1%
- Operating income$145.4M20.0%
- Interest, other & tax−$51.5M7.1%
- Net income$93.9M12.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed November 5, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $725.20M$701.00M | +3.5% |
| Cost of Revenue | $397.70M$391.10M | +1.7% |
| Gross Profit | $327.50M$309.90M | +5.7% |
| R&D Expenses | $13.70M$14.00M | −2.1% |
| SG&A Expenses | $89.90M$91.80M | −2.1% |
| Operating Income | $145.40M$126.30M | +15.1% |
| Interest Expense | $2.60M$2.20M | +18.2% |
| Net Income | $93.90M$79.60M | +18.0% |
| EPS (Basic) | $0.34$0.28 | +21.8% |
| EPS (Diluted) | $0.33$0.27 | +22.2% |
| Shares Outstanding (Basic) | 279.00M287.40M | −2.9% |
| Shares Outstanding (Diluted) | 284.40M292.60M | −2.8% |
05—Questions
Frequently Asked Questions
What was the financial performance of Church & Dwight for the nine months ended September 30, 2012?
For the nine months ended September 30, 2012, Church & Dwight reported net sales of $2,112.2 million, an increase of 4.7% compared to the same period in 2011. Net income rose by 10.7% to $269.0 million, resulting in diluted earnings per share of $1.88.
What significant event occurred during this reporting period regarding growth strategy?
The most significant event was the acquisition of Avid Health, Inc. for approximately $650 million, which closed on October 1, 2012. Avid Health is a leader in the vitamin, mineral, and supplement category, and this acquisition is expected to strengthen Church & Dwight's position in this growing market. The acquisition was financed through a combination of senior notes, commercial paper, and cash.
How is the company returning value to shareholders?
Church & Dwight is returning value to shareholders through increased dividends and share repurchases. The regular quarterly dividend was increased to $0.24 per share in February 2012. Additionally, in October 2012, the Board of Directors authorized a new share repurchase program for up to an additional $300 million of common stock.
What is the company's cash flow situation?
The company generated $315.9 million in net cash from operating activities for the first nine months of 2012. As of September 30, 2012, the company had $891.2 million in cash and cash equivalents (including $650 million held in escrow for the Avid Health acquisition), and approximately $250 million available through its credit facilities and commercial paper program, indicating strong liquidity to fund operations and strategic initiatives.
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