Church & Dwight Earned 57 Cents per Share

This morning, Church & Dwight (CHD) reported Q2 earnings of 57 cents per share. That’s up 16.3% over last year. Wall Street had been expecting 52 cents per share.

Gross margins rose to 44.6% and organic sales rose by 4.9% (9.1% internationally).

Matthew Farrell, Chief Executive Officer, commented, “Q2 organic sales growth of 4.9% was exceptionally strong and exceeded our 3.5% outlook. Q2 was the fifth consecutive quarter of greater than 4% organic growth and the fourth consecutive quarter of positive price and product mix (+4.8%). Our categories continue to grow, our market shares are healthy, and we’ve introduced new products in many of our categories. Thirteen of our 15 domestic categories grew during the quarter and more than half have grown for at least 7 consecutive quarters. In the domestic business, 9 out of 12 power brands met or exceeded category growth in the second quarter. The international business continues to perform strongly with reported sales growth of 6.0% and organic growth of 9.1%.”

The company now sees full-year earnings of $2.47 per share, and 60 cents per share for Q3. The previous EPS guidance was for $2.43 to $2.47.

Mr. Farrell stated, “We have delivered a strong first half. As a result, we now expect full year 2019 sales growth to be approximately 6% (previously 5 – 6%) and organic sales growth to be approximately 4% (previously 3.5%). We now expect full year gross margin to expand 80 basis points (previously 50 basis points) reflecting a lower inflationary outlook and the impact of acquisitions. We continue to expect marketing dollars to increase year over year and now expect marketing as a percentage of sales to be flat versus prior year (previously down 20 basis points). We continue to expect adjusted operating profit expansion to be in-line with our evergreen model of +50 basis points. We expect to achieve $2.47 per share or 9% adjusted EPS growth (previously 7-9%). To the extent we over-deliver on organic sales growth or gross margin expansion, we expect to spend back on long-term brand building activities, research and development, and new product investments. Our strong full year performance is expected to exceed our evergreen model.”

“For Q3, we expect year over year reported sales growth of approximately 6%, organic sales growth of approximately 3%, higher marketing expense, and higher SG&A associated with the FLAWLESS acquisition. We expect adjusted EPS to be $0.60 per share, a 3% increase over last year’s Q3 EPS excluding the earn-out adjustment from our acquisition of the FLAWLESS business.”

The shares are up about 1% today.

Posted by on July 31st, 2019 at 11:14 am


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