10-QPeriod: Q1 FY2015

CHURCH & DWIGHT CO INC /DE/ Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 7, 2015For Securities:CHD

Summary

Church & Dwight Co., Inc. (CHD) reported a solid first quarter in 2015, with net sales increasing by 3.9% to $812.3 million compared to the prior year. This growth was driven by a combination of increased product volumes across segments and strategic acquisitions, notably the VI-COR Acquisition. The company demonstrated improved profitability, with gross profit rising 4.7% and operating income increasing 6.2%, leading to diluted EPS of $0.80, up from $0.73 in the prior year. The company also continued its commitment to shareholder returns through an increased quarterly dividend and active share repurchase program. Despite some headwinds from unfavorable foreign exchange rates impacting international sales, the overall financial performance indicates operational strength and successful integration of recent acquisitions, positioning the company favorably for the remainder of the year. Management remains focused on driving growth through product innovation and market penetration.

Financial Highlights

53 data points
Beta

Revenue

$812.30M

43.8% Gross Margin

Net Income

$107.20M

13.2% Net Margin

EPS (Diluted)

$0.40

Total Assets

$4.34B

Cash & Equivalents

$299.70M

Free Cash Flow

$122.30M

Financial Statements
Beta
Revenue$812.30M
Cost of Revenue$456.80M
Gross Profit$355.50M
R&D Expenses$13.80M
SG&A Expenses$94.60M
Operating Income$172.10M
Interest Expense$7.60M
Net Income$107.20M
EPS (Basic)$0.41
EPS (Diluted)$0.40
Shares Outstanding (Basic)264.00M
Shares Outstanding (Diluted)269.20M

Key Highlights

  • 1Net sales increased by 3.9% to $812.3 million for the three months ended March 31, 2015, compared to $782.0 million in the prior year.
  • 2Diluted Earnings Per Share (EPS) grew to $0.80 from $0.73 year-over-year.
  • 3Gross Profit increased by 4.7% to $355.5 million, with Gross Margin improving by 40 basis points.
  • 4Operating Income rose by 6.2% to $172.1 million, indicating improved operational efficiency.
  • 5The company completed the VI-COR Acquisition for $74.9 million, adding to its Specialty Products Division.
  • 6Cash Flow from Operations saw a significant increase of $41.8 million to $144.2 million.
  • 7The company increased its regular quarterly dividend by 8% to $0.335 per share.

Frequently Asked Questions

Net sales growth was primarily driven by an increase in product volumes across all segments (3.2%), a positive pricing and product mix (0.4%), and the contribution from recently acquired product lines (2.5% from LDS and VI-COR Acquisitions). These were partially offset by negative foreign exchange rate fluctuations (-2.2%).

Marketing expenses saw a slight increase of 1.1% but decreased as a percentage of net sales to 10.9% due to leverage on higher sales. Selling, General & Administrative (SG&A) expenses increased by 5.6%, primarily due to one-time and ongoing costs related to the LDS and VI-COR Acquisitions, leading to a slight increase in SG&A as a percentage of net sales to 11.7%.

The company recently completed the VI-COR Acquisition and plans to use its available cash and borrowing capacity for future acquisitions that complement its existing product lines or geographic markets. Management anticipates sufficient cash flow from operations and existing cash balance to meet capital expenditure programs, fund share repurchases, pay dividends, and fund pension plan contributions and liquidations.

Unfavorable foreign exchange rate fluctuations negatively impacted net sales by 2.2% and had an unfavorable effect of 30 basis points on gross margin. Additionally, foreign exchange rate changes contributed to an increase in other expenses and had an impact on Consumer International segment income before income taxes.