10-QPeriod: Q3 FY2012

CHURCH & DWIGHT CO INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 5, 2012For Securities:CHD

Summary

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 million, 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 million, 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.

Financial Highlights

55 data points
Beta

Revenue

$725.20M

45.2% Gross Margin

Net Income

$93.90M

12.9% Net Margin

EPS (Diluted)

$0.33

Total Assets

$3.84B

Cash & Equivalents

$241.20M

Free Cash Flow

$117.00M

Financial Statements
Beta
Revenue$725.20M
Cost of Revenue$397.70M
Gross Profit$327.50M
R&D Expenses$13.70M
SG&A Expenses$89.90M
Operating Income$145.40M
Interest Expense$2.60M
Net Income$93.90M
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)279.00M
Shares Outstanding (Diluted)284.40M

Key Highlights

  • 1Net sales increased by 4.7% to $2,112.2 million for the nine months ended September 30, 2012, compared to the prior year.
  • 2Net income grew by 10.7% to $269.0 million, or $1.88 per diluted share, for the nine months ended September 30, 2012.
  • 3Completed the acquisition of Avid Health, Inc. for approximately $650 million, significantly expanding its presence in the vitamin and supplement market.
  • 4Raised $400 million in 2.875% Senior Notes due 2022 to help finance the Avid Health acquisition.
  • 5Net cash provided by operating activities was $315.9 million for the nine months ended September 30, 2012.
  • 6Increased the regular quarterly dividend to $0.24 per share in February 2012.
  • 7Authorized a new share repurchase program for up to an additional $300 million of common stock.

Frequently Asked Questions

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.

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.

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.

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.