10-QPeriod: Q3 FY2014

CHURCH & DWIGHT CO INC /DE/ Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 3, 2014For Securities:CHD

Summary

Church & Dwight Co., Inc. (CHD) reported solid performance for the nine months ended September 30, 2014, with net sales increasing by 2.5% to $2.43 billion and net income rising by 1.7% to $307.3 million, or $2.23 per diluted share. The third quarter showed similar positive trends, with net sales up 4.6% to $841.8 million and net income increasing by 7.4% to $115.9 million, or $0.85 per diluted share. A significant event during the period was the acquisition of feminine care brands REPHRESH and REPLENS for $216.1 million, funded by debt. This acquisition contributed to an increase in goodwill and intangible assets. The company also continued its aggressive share repurchase program, buying back approximately 6.4 million shares for $435 million in the first nine months of 2014, reflecting a strong commitment to returning capital to shareholders. Despite increased trade spending and commodity costs impacting gross margins, the company demonstrated effective cost management, with SG&A expenses decreasing year-over-year.

Financial Highlights

54 data points
Beta

Revenue

$841.80M

43.7% Gross Margin

Net Income

$115.90M

13.8% Net Margin

EPS (Diluted)

$0.42

Total Assets

$4.33B

Cash & Equivalents

$370.20M

Free Cash Flow

$182.80M

Financial Statements
Beta
Revenue$841.80M
Cost of Revenue$474.30M
Gross Profit$367.50M
R&D Expenses$14.80M
SG&A Expenses$93.70M
Operating Income$177.20M
Interest Expense$6.90M
Net Income$115.90M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)267.40M
Shares Outstanding (Diluted)272.00M

Key Highlights

  • 1Net sales for the nine months ended September 30, 2014, increased by 2.5% to $2,432.1 million compared to the prior year.
  • 2Net income for the nine months ended September 30, 2014, rose to $307.3 million, or $2.23 per diluted share.
  • 3The company completed the acquisition of feminine care brands REPHRESH and REPLENS for $216.1 million in September 2014.
  • 4A significant share repurchase program was active, with $435 million spent on repurchasing approximately 6.4 million shares of common stock in the first nine months of 2014.
  • 5Gross margin declined by 130 basis points to 43.7% for the nine-month period, primarily due to higher commodity costs and trade promotion spending.
  • 6Selling, general, and administrative (SG&A) expenses decreased by $18.3 million for the nine-month period, indicating effective cost control.
  • 7Cash provided by operating activities increased to $408.7 million for the nine-month period, supporting investment and financing activities.

Frequently Asked Questions

For the nine months ended September 30, 2014, Church & Dwight Co., Inc. reported a net sales increase of 2.5% to $2,432.1 million and a net income increase of 1.7% to $307.3 million, or $2.23 per diluted share. The third quarter of 2014 also showed growth, with net sales up 4.6% to $841.8 million and net income up 7.4% to $115.9 million, or $0.85 per diluted share.

The company made a significant acquisition, purchasing feminine care brands REPHRESH and REPLENS for $216.1 million, funded by debt. Additionally, Church & Dwight continued its aggressive share repurchase program, investing $435 million in buying back approximately 6.4 million shares of its common stock. This reflects a focus on brand expansion and returning value to shareholders.

Gross profit for the nine-month period saw a slight decrease, with gross margin declining to 43.7% from 45.0% in the prior year. This was attributed to higher commodity costs and increased trade promotion spending. However, the company managed its operating expenses effectively, with SG&A expenses decreasing by $18.3 million for the nine-month period, contributing to a stable income from operations.

As of September 30, 2014, the company had $370.2 million in cash and cash equivalents, with additional borrowing capacity available. Net cash provided by operating activities increased to $408.7 million for the first nine months of 2014. The company's capital allocation strategy involved significant share repurchases and capital expenditures, and it anticipates sufficient cash flow to meet its obligations and fund its programs.