Church & Dwight - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 net sales fell 2.4% to $1.467B as U.S. category growth slowed and retailers destocked; adjusted EPS was $0.91, a penny above the company’s outlook, while gross margin contracted 60 bps adjusted to 45.1%.
• Management cut FY25 guidance materially: organic sales now 0–2% (from 3–4%), adjusted EPS growth 0–2% (from 7–8%), and adjusted gross margin expected to contract 60 bps (from +25 bps); cash from operations lowered to $1.05B (from $1.15B).
• Strategic portfolio pruning (Flawless, Spinbrush, Waterpik showerheads) and supply-chain actions aim to mitigate a projected $190M 12‑month tariff exposure by ~80%; a Q2 charge of $60–80M is expected and tariffs’ net P&L impact in 2025 is ~ $30M per management.
• Q2 2025 outlook: organic sales −2% to flat and adjusted EPS of $0.85 (−9% YoY); marketing held at ~11% of sales, EPS growth weighted to 2H25 as spend is front‑loaded.
• Near‑term stock narrative catalysts: tariff mitigation speed, U.S. consumption stabilization, and execution in vitamins turnaround (new reformulations/launches) vs. increased promotional intensity across categories.

What Went Well and What Went Wrong

What Went Well

• Share gains despite softer categories: “We gained share in 9 of our 14 major brands…online sales now ~23%” with ARM & HAMMER laundry, cat litter, THERABREATH, and HERO outperforming their categories.
• International strength: Consumer International net sales +2.7% and organic +5.8%, with broad-based subsidiary growth led by HERO, THERABREATH, and WATERPIK.
• Decisive tariff/portfolio actions: Management expects ~80% tariff exposure reduction via pruning and supply-chain shifts (e.g., no longer sourcing Waterpik flossers from China for U.S.).

What Went Wrong

• U.S. consumption and retailer destocking: Domestic organic −3.0% driven by ~300 bps headwind from retailer inventory reductions amid slowing category growth; category consumption turned negative in April.
• Margin pressure: Adjusted gross margin down 60 bps to 45.1% on commodity inflation, higher manufacturing costs, and lower volume despite strong productivity.
• Vitamins drag: Gummy vitamins consumption −19% with distribution pressure; turnaround hinges on reformulation, taste improvements, and targeted promotional actions.

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to the Church & Dwight's First Quarter 2025 Earnings Conference Call. Before we begin, I have been asked to remind you that on this call, the company's management may make forward-looking statements regarding, among other things, the company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company's SEC filings. I would now like to introduce your host for today's call, Mr. Rick Dierker, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

Rick Dierker (President and CEO)

All right. Good morning, everyone. Thanks for joining us today. I'll begin with some thoughts on the macro environment and review our Q1 results, and then I'll turn the call over to Lee Mcchesney, our new CFO. When Lee is done, we'll open the call up for questions. As you read in the release, we have several topics to discuss this morning, including Q1 results, portfolio changes, tariff management, U.S. consumer spending, and a revised full-year outlook. With that, let's turn to how we performed in Q1. During our presentation at Cagney in February, we stated we expected our organic sales growth to be at the low end of 0%-2% range due to retail destocking and weakening consumer demand. As it turned out, organic sales decreased 1.2%, falling short of our outlook. Retailer destocking accounted for a drag of approximately 300 basis points on organic growth.

The good news is our strong brand performance. We gained share in nine of our 14 major brands as our consumption outpaced category growth. 80% plus of our business grew volume share in the quarter. Contributing to our Q1 results is our success in the online class of trade, with online sales as a percentage of global sales now reaching close to 23%. In a few minutes, I'll contrast our Q1 consumption with category growth when I comment on the major categories. Regarding earnings per share, adjusted EPS was $0.91, beating our outlook by a penny. Now let's discuss the strategic actions we outlined in the press release. Each year, our management team reviews our brand portfolio with the board of directors, and in concert with that review, the company completes evaluation exercises for each and every brand.

As a result of that review, the company is pursuing strategic alternatives for the Flawless, Spinbrush, and Waterpik showerhead business, which means we'll be shutting down or selling these businesses. These businesses generate $150 million of net sales, or around 2% of our total net sales, with below-average profitability. We expect to take a charge in Q2 relative to this decision. This decision will prune our portfolio, sharpen our focus on core brands, and mitigate a significant tariff exposure, which is the next topic I would like to discuss. Turning to tariffs, while the tariff situation remains fluid, the company is currently projecting a gross 12-month run rate tariff exposure of $190 million. The net impact of the portfolio decisions and a series of supply chain actions is expected to reduce our tariff exposure by approximately 80%.

The supply chain actions include no longer sourcing Waterpik flossers from China for the U.S. market. Our ability to move with urgency to execute these changes is a testament to the Church & Dwight culture. I'm very proud of the company and the reaction that we've done here. Now I'm going to turn my comments to each of the three businesses. First up is the U.S. Consumption was positive in the quarter for the U.S. business, while organic sales declined 3%, entirely driven by negative volume from retail destocking. Let's look at the trend line. In the U.S., consumer spending continues to sequentially weaken. For context, I've instructed to look back at our U.S. year-over-year category growth since around mid-2024. In the second half of 2024, category growth averaged 2.5%. In Q1, our categories grew around 1.5%.

March was flat, and April was -1%. Remember, for context, over the last 10 years or so, category growth is typically around 3%. In addition to the consumer, retailers took inventory actions, which impacted our top line. Now I'm going to provide a bit of color for a few of our important categories. Let's start off with laundry detergent. Arm & Hammer liquid laundry detergent consumption grew 3.4%, in contrast to zero category growth. Arm & Hammer's share in the quarter reached 14.7%. There's a similar story on unit dose. Arm & Hammer unit dose saw consumption growth of 26.9%, which drove 120 basis points share gain to reach a 5.5 share. This is in contrast to a weak unit dose category, which declined 1.1%. Now moving to litter, similar story as to laundry.

The category was up 1.9%, while Arm & Hammer litter consumption grew 2.3%, which outpaced the category, and share reached 24.9%. The gummy vitamin business continues to be a drag on the company's organic growth. The gummy vitamin category grew 4.8%, which is the second consecutive quarter of growth. The bad news is our consumption was down 19%. The plans that we shared with you on previous calls will begin to be visible in the market starting in May. Those actions include new products, an enhanced taste profile, and new creative marketing. We'll update you on our progress on the Q2 call. Next up is Batiste. Consumption was down 5% in the quarter, with share declining 3.4%. There are a couple of contributing factors. One is we were experiencing some supply chain issues that have since been resolved.

In addition, a competitor had a significant price increase that impacted our dollar share. On a positive note, Batiste continues to be the global leader in dry shampoo, and this year we're launching Batiste Lite. As a leading brand, our innovations continue to attract new users to the category and increase household penetration. Over in mouthwash, TheraBreath continues to perform extremely well. While the mouthwash category was flat in Q1, TheraBreath consumption grew 26% and is now the number two mouthwash with a 20.3% share. Remember, we believe there's a lot of runway here, as our household penetration for TheraBreath currently sits around 10.5%, versus the category of 65%. Hero is the number one brand in acne care, with a 22% share and continues to drive growth. Hero grew consumption by 13%, outpacing a 1.1% decline in the category.

Hero market share grew 280 basis points in the quarter. Similar to the TheraBreath story, we believe household penetration growth is key for this brand. Currently, it sits at 8.7%, versus the category at 25%. Hero continues to launch innovative solutions and patches and is entering the growing body care segment in 2025 with the Mighty Patch Body. Looking ahead, we're excited about our pipeline of new products, which remain a key driver of our success. In 2025, we expect continued innovation to power our growth and build on our momentum, especially in several core categories where we're leading the way. We spoke about many of these at our analyst day in New York. Now turning to international and SPD. Our international business delivered sales growth of 2.7% in the quarter. Organic sales increased 5.8%, largely due to higher volume.

Growth was led by Hero, TheraBreath, and Waterpik, and was broad-based, with all of our subs delivering growth. Finally, SPD organic sales increased 3.2% due to a combination of higher price and product mix and higher volume. This business continues to deliver, and we continue to be excited about the future. Looking ahead, our full-year organic growth outlook is now 0%-2%, driven by a weaker U.S. consumer. We expect our Q1 brand share momentum to continue, bolstered by our new product launches, our distribution gains, and sustained full-year investment in marketing. After considering the trend line that I shared with you, we do not see a catalyst for improvement in the U.S. consumer. Our outlook also reflects no bounce back from Q1 retailer destocking.

For adjusted EPS, we now expect 0%-2% growth, which reflects the impact of lower sales and the impact of tariffs. I'll close by saying that despite a slowdown in category consumption, our brands are strong. They're doing well. We're gaining both dollar and volume share across much of the portfolio, with a healthy mix of value and premium offerings, and we're well equipped to navigate the current environment. The strategic actions we announced today will position the company well for the future, and we continue to be on the hunt for the right acquisitions. I'd like to thank all the Church & Dwight employees for executing well in a volatile environment. I will now hand it over to Lee for more detail on the quarter.

Lee McChesney (CFO)

Thank you, Rick, and good day to everyone. Before I jump into the quarter, I do want to say thank you to Rick and the entire Church & Dwight team for the warm welcome. I've only been here for a month or so. I've already seen what makes this company such a strong performer as a team is focused on execution. We're acting swiftly to address the challenging macro environment that nearly every company is facing today. With that, let's dive into the first quarter and our outlook. We'll start with EPS. First quarter adjusted EPS was $0.91, down 5.2% from the prior year. The $0.91 was slightly better than our $0.90 outlook. Reported revenue was down 2.4%, and organic sales was down 1.2%. The organic sales decline was due to lower volume of 1.4%, partially offset by positive pricing and mix of 0.2%.

Our first quarter adjusted gross margin was 45.1%, a 60 basis point decrease from a year ago, with improved productivity, positive mix, and higher margin acquisitions being offset by the impact of commodity inflation, higher manufacturing cost, and lower volume. Let me walk you through our Q1 gross margin bridge. We saw 160 basis points from productivity, a favorable 10 basis points from the combination of mix and price, and a positive 10 basis points related to the acquisitions. Those factors were offset by the headwinds I just mentioned above and 20 basis points related to FX. Moving to marketing, our marketing expenses as a percentage of sales was 9.3%, or 80 basis points lower than Q1 of last year. For the year, we are targeting 11% of net sales, and accordingly, we expect to continue our first quarter momentum in gaining market share.

For SG&A, Q1 adjusted SG&A increased 40 basis points year-over-year, primarily due to the year-over-year volume change. Other expense decreased by $7.7 million, inclusive of lower interest expense and higher interest income. We continue to expect other expense for the full year to be approximately $50 million on an adjusted basis. In Q1, our effective tax rate was 22%, compared to 19.9% in Q1 of 2024, a 210 basis point year-over-year increase. The expected adjusted effective tax rate for the full year continues to be 23%. Now to cash. For the three months of 2025, cash from operating activities was $185.7 million, a decrease of $77.3 million versus last year due to lower cash earnings and the sales time impact on working capital. Capital expenditures for the first three months was $16.5 million, a $29.8 million decrease from the prior year.

We expect 2025 CapEx of approximately $130 million as we return to historical levels of 2% of sales in 2025. Let's now take a few minutes to walk through our outlook. For the full year, we now expect our organic revenue outlook to be approximately 0%-2%. Previously, that was 3%-4%. The sales outlook now reflects the slow category growth and the retailer inventory reductions that we do not expect to recover. Full-year gross margin is now expected to contract 60 basis points versus 2024. Previously, that was a positive 25 basis points outlook, as we expect the tariff impacts, persistent commodity input inflation costs to offset the incremental productivity. We now expect full-year adjusted EPS to be 0%-2%, down from our previous view of 7%-8%. This is primarily due to lower sales outlook and the tariff pressures.

Cash flow from operations for the full year is now estimated to be approximately $1.05 billion due to the impact of our lower EPS and the one-time charges. For Q2, we expect organic sales of approximately -2% to flat. As a result, we expect adjusted EPS of $0.85 per share, a decrease of 9% versus last year, last year's adjusted Q2 EPS. As our outlook implies, we expect EPS growth to be weighted towards the back half of 2025 due to the marketing investment timing versus last year. Finally, as we noted in our release, this adjusted outlook as of April 1, 2025, excludes charges and the ongoing results for the Flawless, Spinbrush, and Waterpik showerhead business. Those charges are expected to be between $60 million-$80 million, largely recorded in Q2, and two-thirds is expected to be non-cash.

With that, Rick and I would be happy to take any questions.

Operator (participant)

We will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Rupesh Parikh with Oppenheimer. Please go ahead.

Rupesh Parikh (Senior Equity Research Analyst)

Good morning. Thanks for taking a question. Obviously a lot of areas to cover, but maybe I'll just start out. Just, you know, as we look at your updated organic sales growth guide, is there any way to get updated expectations by segment? And related to that, to international, how does that play out with your expectations for Q1?

Rick Dierker (President and CEO)

Yeah, sure, Rupesh. Yeah, Q1 was spot on for international. Lee, do you have the vision that you can share?

Lee McChesney (CFO)

Sure. So, you know, international, as we talked about, had good growth in the first quarter. Organically, about 6%. SPD was about 3%. As we look forward, you know, we expect international to, you know, to be in that zone, maybe a little bit of pressures, some of the macro pressures spread across the globe. SPD, you know, will be maybe slightly better than it was in the first quarter. The domestic business, you know, obviously we're, you can imply in the outlook, we had negative 3% in the first quarter. We're looking for a similar performance here in QQ and then an improvement in the back half. Still be slightly negative to get to the overall outlook of still 0%-2% organic for us in total.

Rupesh Parikh (Senior Equity Research Analyst)

Great. I guess maybe it's just my follow-up question. Just given a softer category outlook and a backdrop that you're seeing right now, what do you see on the promotional backdrop for the quarter? How do you think, you know, and do you expect the promotional backdrop to intensify from here?

Rick Dierker (President and CEO)

Yeah, no, it's a fair question. You know, for the quarter, when we talk about promotional, we really talk about laundry. And laundry in Q1 was 34% amount sold on deal, very similar to what Q4 was, very similar to what Q3 was. Not a huge step up right now. A lot of things happening in the laundry category. You know, there's concentration happening from one of the peers. There's some price increases in another part of the peers as they switch out different offerings. It looks like there's a little bit more promotional going on right now as they work through those old inventory, you know, and transitions. You know, litter is the other example. Litter promotion was around 17.8% in the quarter. Sorry, 17.8% in the quarter. It was 18.8% last time. Again, stable.

As categories are flat, though, people tend to increase their promotional spend and say, "We're well positioned for what we think is the right level of promotion." Our assumption for category growth, you know, used to be around 2.5% for the year. It's closer to, you know, 1%-1.5% these days.

Rupesh Parikh (Senior Equity Research Analyst)

Oh, great. Thank you. I'll pass it on.

Operator (participant)

Your next question comes from the line of Anna Lizzul with Bank of America. Please go ahead.

Anna Lizzul (VP of Equity Research)

Hi, good morning, and thank you so much for the question.

Rick Dierker (President and CEO)

Yeah, hi, Anna.

Anna Lizzul (VP of Equity Research)

I was wondering, hi, Rick. I was wondering if you could just discuss maybe your expectations for the category relative to market share growth since you did mention softer trends in April. Are you seeing a significant difference here across the premium and value segments of the business in terms of a slowdown? Just on the value side, are you trying to see any benefit here from trade down or anticipating a benefit as we're moving through the year? Thank you.

Rick Dierker (President and CEO)

Yeah. You know, if you take a big step back and you look at our outlook, organically, we're saying the midpoint's around 1%. We saw -1% in Q1. We're saying Q2 looks a lot like that, so maybe -1%. That implies something closer to around 2% in the back half. Like I just told Rupesh, you know, the categories themselves, we used to think were going to grow 2.5%, and we were going to grow faster than that. We think the categories are going to grow maybe 1%-1.5%, and we grow a little bit faster than that. In terms of trade down, you know, surprisingly, we're still not seeing the amount of trade down that we would expect if this type of environment perpetuates.

Orange Box still isn't growing faster than Black Box on litter, as an example. The value part of the laundry category is not growing as fast as the mid-tier. The mid-tier, again, is growing a lot behind Deep Clean, our new innovation. When trade down happens, those two things will be a trigger. You know, I expect, you know, our Extra business as well will do better. It's just we have to be down like this for a period of time. I believe that we're in early days of this type of environment, and we're well positioned for when we stay here.

Anna Lizzul (VP of Equity Research)

Okay. Thanks very much.

Operator (participant)

Your next question comes from the line of Chris Carey with Wells Fargo. Please go ahead.

Chris Carey (Equity Analyst)

Hey, hey, good morning, everyone. Can you guys frame within the reduction in earnings for the year how much was the revenue call down versus tariffs? And maybe just, you know, simply put, you know, what is the tariff impact that you're embedding for this year? And can you help give us a bit of clarity on, you know, the wraparound tariff impact in the 2026 on mitigated for some of the sourcing changes you're making? And then perhaps how you're thinking about your 2026 absolute tariff exposure. I mean, effectively, there's this $190 million number, but what we're going to end up seeing in the P&L is like substantially lower. So how does that look in 2025 and 2026? Then I have a follow-up.

Rick Dierker (President and CEO)

Yeah, sure. I'll give you my thoughts. If Lee has anything to add, he can do it. Just taking a big step back on the tariffs, I really do think this is a great example of Church & Dwight moving with speed and urgency. You know, a gross impact of around $190 million on a 12-month run rate basis. I just want to be clear, we're not taking those strategic actions because of tariffs. We've been discussing internally for some time, and they've been on the list of businesses that we believe either have a better owner elsewhere or we're going to shut down. Even as recently as this past summer, we went through those details with the board. Those three businesses, though at marginal profit levels at $150 million of sales, are really hit extremely hard by tariffs.

It made sense to kind of fast forward that discussion and that decision. That $180 million goes down to $100 million when those three businesses have strategic options around it. It goes down to around $40 million after we have made the manufacturing decisions for Waterpik flossers as we have moved that business out of China over time. To be able to go from $190 gross to kind of a $40 million number is fantastic. We are going to continue to be working, you know, through supply chain activities and maybe nuanced pricing over time to reduce that even further. In the P&L for 2025, to answer your question, there is a net number of around $30 million in our outlook.

If you do the wraparound to 2026, you know, that's why we kind of say it takes 12 months to do some of the rest of the supply chain activities. We won't go through all the detail, but we expect to further mitigate that number over time. You know, is it an issue? Yes. After all that work, that's a manageable issue that we feel pretty confident on being able to mitigate over the next 12 months or so.

Chris Carey (Equity Analyst)

Thank you. From the connected in a way to what you were saying about some of these businesses that, you know, you had presented to the board and, you know, had thought about strategic alternatives, conscious of the vitamin business, you know, how to plan for this year, but on a performance to category, you know, is widening. You know, at what point does patience with plan, you know, run out? I'm conscious you have, you know, a strong balance sheet, which gives you a lot of options to do many things. Maybe give us updated thoughts on, you know, where vitamin sits within your medium to long-term plans and maybe what's happening this year that hasn't gone as well as maybe what you would have hoped relative to your, you know, going plans. Thanks so much.

Rick Dierker (President and CEO)

Yep. Fair question. I think right now we're kind of in that a little bit of that circle where you have negative consumption that leads to lower TDP growth. Lower TDP growth distribution points leads to lower consumption. What we're laser-focused on is the innovation, the best-tasting reformulation, change in marketing to reach the right consumer, and to do some couponing to go drive trial. Loyalty rate's actually very low in the vitamin category. I think it was like 8% or 9%. If we can go, you know, get those consumers to retry our best-tasting formulas. Again, the new innovation is Power Plus, our most powerful vitamins. I think we have a good chance to have some green shoots and inflection points on that business. That business is not meeting expectations.

We said last call that we needed from April through July to see if this innovation turnaround and investment is working. That is why in my prepared remarks I said we'll talk more about that after Q2.

Chris Carey (Equity Analyst)

Okay. Thanks, Rick.

Operator (participant)

Your next question comes from the line of Andrea Teixeira at JPMorgan. Please go ahead.

Andrea Teixeira (Managing Director)

Thank you, Bruno. Good morning, everyone. Welcome, Lee, to the call. I wanted to just go back. You called out in terms of consumption, you called out the 300 basis points reduction in consumer domestic for the inventory destocking. If you can comment also on Hero, it was a big motor of growth. I understand all the actions you're taking, and, you know, the brand continues to be strong, but I'm assuming it is hitting a very tough comp. As you said, like for vitamins, it's obviously a completely different story between Hero and the vitamin side. Talk about the distribution points and how we can think about that brand continue to grow as you lap the growth.

On the commentary, just a clarification on the promo side, I understand the depth and, you know, and how the percentages are still on promo. If you can comment on the depth of the promotions, if there is a, to your point, some of these categories, litter and laundry, perhaps, you know, having a little bit more depth and for how long you think that's going to normalize. Thank you.

Rick Dierker (President and CEO)

Yeah. Thanks for that question, Andrea. I would say for Hero, we are still really pleased with consumption. You know, it's double-digit consumption up 13% in the quarter. I think the nuance that's happening in Hero is, remember, it's overexposed to a few retailers. You know, it started at a few that are having foot traffic issues. It's doing great growth almost everywhere, apples to apples, but foot traffic declines at a few different retailers. It kind of over-indexes to Hero. Overall, you know, with that said, you know, double-digit consumption is fantastic. We still think we have TDP growth. We believe we, you know, with our share of market, we're under-indexed at shelf in many places. Not only just going to new retailers and new distribution, but just being able to spread out on shelf.

You know, it still happens that by Sunday or Monday, the shelf could be empty. I think we gave the example at a few of our conferences that at a few retailers at times, especially at Temple events, at times the number, the top three units or dollar sales at any retailer is water, paper towels, and Hero. It is doing really, really well, and it still is. We have some great distribution gains ahead of us. Moving to sold on promo, you're right. The percentages kind of tell you the frequency. Depth is a different story. You know, most of the, I would say it's a little opaque out there, but different concentration moves and different pricing moves and some of it is being spent back on promotion.

I would say right now we view that as transitory because of, you know, size changes and SKU changes and whatnot. If that extends for a period of time, we'll talk more about that on Q2. For now, I would say pretty much in line with what we were expecting.

Andrea Teixeira (Managing Director)

Thank you.

Operator (participant)

Your next question comes from the line of Steve Powers with Deutsche Bank. Please go ahead.

Steve Powers (Equity Research Analyst)

Good morning. Welcome, Lee, as well. You know, I guess, Rick, the guidance implies I think your expectations are explicit about back half improvement in organic growth. I'm just juxtaposing that against your expectation that you're not really expecting consumption to improve, and we've seen the step down in April. You know, acknowledging that the destocking in Q1 probably does not continue as a base case, just what's the bridge to back half improvement?

Rick Dierker (President and CEO)

Yeah. I think it's a fair question. I think positive category growth, I think it is kind of unique for us to have. I went through it in the release, but I'll say it in my script, but I'll say it again, right? 2.5% growth in the back half of 2024, 1.5% growth in the quarter. March was flat. April was down 1%. It is extremely odd for these categories to be negative. That is just not something that we have seen, and we don't expect that to continue, you know, for a very long period of time. They tend to grow around 3%. I get that we're in a volatile environment, weak consumer confidence, a more volatile world than ever. These categories over time, we still expect to return to growth.

We have distribution gains happening in the back half. We have innovation, even incremental innovation that we did not necessarily share in New York. We have strong marketing. We are going to keep our marketing where it is at. You know, the long-term strength of the business is to drive share over time. We did that well in Q1. We expect that to happen throughout the year.

Steve Powers (Equity Research Analyst)

Okay. Fair enough. And then, you know, just back to your commentary on vitamins and, you know, the initiatives you're putting in place between now and July, as we follow along from the outside, you know, what does success look like in terms of, you know, monitoring things as we go? And then ultimately, what is the, you know, what is the, I mean, the expectation? Clearly, the ambition is to be winning and growing. But what's the expectation as you think about the initiatives you're putting in place and the returns you're likely to get, you know, in the back half and into, you know, as we exit 2025?

Rick Dierker (President and CEO)

Yeah. Look, the green shoots or the inflection points that we want to see are things like, and they're going to be very obvious. Part of it's going to be our weekly POS on our multi-vite business, right? Given all the reformulation work and the advertising and the trial that we're pushing, we need to see the trends inflect higher. You know, I would say customer and consumer reviews are a big deal. Like, are we taking a step up, and are we hitting the mark on what the consumer needs and wants? That's a big deal. Are we getting, have we stopped the decline in TDPs because the retailers believe in the story of our innovation? Because we're not just launching a new multi-vite. We're doing a reformulation across the entire lineup. We're doing a new Power Plus vitamin. We're doing sugar-free variants.

We're doing a GLP offering. It is a holistic innovation. Is that enough to give it a shot on shelf? Those are some of the tactical things that we're going to be looking for over the next few months. I would say probably the most important one for me is, are we growing from here? We've made and are making some strategic decisions that we don't need to be in all classes of trade. We don't need to be in every subsegment of vitamins. We want to make sure we're retrenched a bit, but we can grow and are confident of growth from here. That is what, again, over the next three months, we're going to make that call.

Steve Powers (Equity Research Analyst)

Okay. Perfect. Thanks for the context. Appreciate it.

Rick Dierker (President and CEO)

Yep.

Operator (participant)

Your next question comes from the line of Olivia Tong with Raymond James. Please go ahead.

Olivia Tong (Managing Director)

Great. Thanks, and welcome, Lee. You guys mentioned the potential for pricing, realizing it will be very surgical. Given the macros and declining categories, how do you layer in price and what's your view on the promotional environment going forward? Given the spec drop, how do you think you can continue? Could you talk about how you continue to drive penetration in your newer categories, like Hero and TheraBreath, so that they can continue to contribute in the outsized way that they have? Thank you.

Rick Dierker (President and CEO)

Yeah. Good questions, Olivia. You know, on pricing, I'm actually really pleased with, again, the commercial organization here at Church & Dwight. We're handling this just like we did COVID, really, the first few weeks. We have stand-up meetings every week, sometimes multiple times a day. We're doing all types of actions. Because in this environment, you're exactly right. The last thing you want to do when categories are flat and down is try to go take price. It's not good for the consumer. It's not good for the brand. We've worked really hard to mitigate 80% in the short term and probably more than that over the medium term. That's going to enable us not to take price. There might be a couple of examples where we do.

That is going to evolve based on how the external environment evolves because things change from, you know, Thursday to next Tuesday. I am just happy and pleased with the culture of this company and how quickly we can move when we need to. I would say overall, so far, we have been able to not have to lean in and take price. The second one was on penetration, especially for some of our new businesses like Hero and TheraBreath. That is the story in my mind. We are so under-indexed still on household penetration. I think I gave you the numbers in the prepared comments, but like around 9% for Hero and 25% for acne. TheraBreath, much bigger opportunity for sure. That means in an environment like this, we should be doing a couple of things.

One, we're reallocating media where needed to higher and best use. Those two brands have a higher and best use for sure. We're committed to spending at the 11% of marketing clip, even in an environment like this, because we want to go drive awareness and household penetration. That's the name of the game. That means these two businesses have years of growth ahead of them. Combined with the marketing investment, we're going to continue to innovate with those two businesses. We have global expansion for those two businesses. We're thrilled with kind of the growth curve that's happening.

Olivia Tong (Managing Director)

Got it. Thanks. Just following up, can you talk about the drivers for the 85 basis point change in the gross margin guide to down 60? How much of that is deleverage, potentially some negative mix? You talked about potential for more trade down as the year progresses versus what you meant in terms of tariffs. It seems like it is mostly tariffs, but just the flexibility within the rest of the P&L or within the operating guide if you do start to see more trade down and that impacts the gross margin line.

Lee McChesney (CFO)

Yeah. I'll jump in there. Again, good morning. Thanks for the welcome. I think similar to what you saw in the first quarter, right? We're down 60 basis points. We're saying actually that's the view for the year as well. Behind that, obviously, we talked about the kind of inflation and operations costs being mitigated by productivity, a little bit of price mix, and then benefit from the mix into acquisition, higher margins. As you think about from a full-year perspective, productivity is still strong. We're, frankly, driving incremental productivity. There's a bit more inflation still holding in there. There's even a little bit more coming in the marketplace versus four months ago, which is weird to think about in this macro environment, but that's the case.

To your point, the big driver, though, just difference-wise is tariffs. You know, we talked about a little bit earlier, you know, the holistic 12-month number and just what we think will settle in into this year. Obviously, as we work through our different actions, there are obviously different timing events to those as well. That is the primary driver.

Olivia Tong (Managing Director)

Great. Thank you.

Operator (participant)

Your next question comes from the line of Peter Grom with UBS. Please go ahead.

Peter Grom (Equity Research Analyst)

Great. Thanks, operator. Good morning, everyone. Welcome, Lee, as well. Lee, maybe just a quick question for you. I mean, I think you mentioned that Q2 U.S. or domestic sales would be similar to Q1. Could you just unpack that a bit? I think the guidance assumes market share gains. I think Rick mentioned that category growth would be down kind of one. I guess I'm just curious how you kind of get to that minus three.

Rick Dierker (President and CEO)

Yeah. No, it's a good question. I mean, to your point, we noted what happened the first quarter with the inventory impact. You know, we certainly don't expect that much impact in the second quarter, but there's still a bit more. As Rick talked about, the category, the consumption levels have continued to slow down. You know, one should be less of a negative, and then one's going to be a new negative for us to manage. You know, that's what we're seeing here in April. Again, it's all about us driving share, but the macro is just a bit softer, so.

Peter Grom (Equity Research Analyst)

Got it. That makes sense. Rick, just a question for you. I think you said it's odd what you're seeing in terms of category growth. You know, I'd just be curious, why do you think this is ultimately happening? Why is it happening as quickly as it is? Just on the April commentary, I get you have different categories, geographic exposure, but it is a bit different from what we've heard from some of your peers thus far. What do you think is causing the difference in terms of your April performance or what you're seeing versus maybe what some of your peers are seeing?

Rick Dierker (President and CEO)

Yeah. No, Peter, it's a fair question. No, I would just say usually our categories are a good bellwether because we're going across so many different categories. Like, you know, we play in 18 categories. You know, this represents most of those categories. I would just say it goes back to the core consumer feeling pressed. I think even before tariffs, you know, we were seeing signs of the core consumer being pressed. We talked, I think, even back in January, maybe at the end of the year, that our categories were growing 4.5%, maybe 4% or so in the first half of 2024. They were decelerating to 2.5%. We had called that out, and maybe it was at Barclays, and everyone thought that we were being a bit of an alarmist, I would say, at the time.

We were just trying to be as transparent as we can. We said, "Oh, this is what we're seeing. This is kind of the curve of what the consumer is doing." That started going down a little bit further in Q1. The whole tariff noise started happening. I think that uncertainty exacerbated what was already going on. When that uncertainty happens, it is going across many different categories, ours included. I also think it is that type of feeling, transitory as this environment hopefully is. While I think we have a malaise with the consumer for a period of time, maybe a year, 18 months, whatever it is, I think right now it is exacerbated. This volatility is causing people to take a step back. That is what we are seeing. That is what the consumer—this is not us. This is our categories.

I think more of our peers will start saying that if they have not already.

Peter Grom (Equity Research Analyst)

Got it. Thanks so much. I'll pass it on.

Operator (participant)

The next question comes from the line of Lauren Lieberman with Barclays. Please go ahead.

Lauren Lieberman (Equity Research Analyst)

Thanks. Good morning. Sort of boring housekeeping, I'll admit. In the release, you talked about that as of April 1, you'll exclude the businesses that you're going to be divesting or exiting or excluded from results. I was just curious how we should handle that as we model. Like, are we putting it in the structural line, or is it in net sales or just completely gone? Will you be restating the base just so we, again, know how to model?

Rick Dierker (President and CEO)

Yeah. This is—we're trying to—it's a complicated situation. We're trying to keep it as clean as possible. Our organic outlook excludes the impact from April 1-December 31 of those three businesses. Our adjusted earnings will exclude the profit from those businesses from April 1-December 31. The other lines of the P&L, because it's a reported and adjusted P&L, they will have it in there. We're going to do our best to be as clear as we can. Those are the two lines that I think really matter. That's how we've laid it out.

Lauren Lieberman (Equity Research Analyst)

Okay. We should think about, for adjusted EPS, the absence of those businesses is still a headwind for me to EPS?

Rick Dierker (President and CEO)

The absence of those businesses, we're going to put the—in that one-time charge will be mostly the non-cash charges. As we run out those businesses, there will be a lower sales and profit impact to those businesses. Net sales would be down reported. We'll also have a charge partially in Q2, but for those businesses in Q3 and Q4 that represents the profit for those. We'll try to delineate that for you.

Lauren Lieberman (Equity Research Analyst)

Okay. All right. Great. All right. Thank you.

Rick Dierker (President and CEO)

That was not a boring question.

Rupesh Parikh (Senior Equity Research Analyst)

For me, it was. No, I appreciate it.

Operator (participant)

All right. The next question comes from the line of Korinne Wolfmeyer with Piper Sandler. Please go ahead.

Korinne Wolfmeyer (Senior Research Analyst)

Hey, good morning. Thank you for taking the question. I just want to go back to the retailer destocking comment and kind of what's changed between now and a couple of months ago when you were anticipating that those orders to kind of come back over the year progresses. I mean, obviously, like a lot has changed with the tariff situation and consumers pulling back. Why do you think the retailers wouldn't restock if the consumption is still, you know, still there? Then separately, just any updated thinking around the M&A environment? I know you've been talking a little bit more about maybe looking at some international assets to add to the portfolio. Any change in thinking with the current macro situations going on? Thank you.

Rick Dierker (President and CEO)

Yeah. Thanks, Korinne. I would say you hit it on the head. You know, the pullback in the consumer, the agita around tariffs, I think that's what's going on. That is why categories, even in the month of April so far, are negative. That is why in March they were flattish for us. Retail inventory, even a few months ago, we thought would recover because it was exactly that. Our consumption was running ahead of our shipments. We said, "Oh, okay. That is just a matter of timing. We've seen that play before and no problem." The longer it's gone on and the more uncertainty that's out there, it just feels like everyone's retrenching a bit is what I would say. On international M&A, international M&A is, yep, still a strategy. We've got to find the right one. We're looking at different countries.

In many cases, we would love to do what we did in Japan with Graphico as you create really a subsidy infrastructure and you can bring your brands there in an easier way. We are always on the lookout for those kind of bolt-on acquisitions. Meanwhile, you know, the team is spending, the leadership team is spending an awful lot of their time looking for the right acquisition. You know, we've had a bit of a dry spell, but we still believe the number one use of cash and capital allocation, as does the board, is M&A. This management team spends a large percentage of time looking for the right acquisition, both here in the U.S. and outside the U.S.

Korinne Wolfmeyer (Senior Research Analyst)

Great. Thanks so much.

Operator (participant)

The next question comes from the line of Kaumil Gajrawala with Jefferies. Please go ahead.

Kaumil Gajrawala (Managing Director)

Hey, guys. Good morning. It'd be a follow-up on the inventory levels at retail. I guess what gives you the confidence that inventory shouldn't bounce back or that there shouldn't be a restock? Is there something you're seeing in the market? Is it channel mix? Maybe you were high on inventories towards the end of 2024. The idea of sort of consumption being ahead of inventories and then sort of staying that way for the whole of the year just feels like something that maybe we don't see that frequently. I'm just curious what might have changed or what gives you that confidence that, "Hey, this was a one-time step down. This is where it is going to be.

Rick Dierker (President and CEO)

Yeah. It's a fair question. I would say it's probably the expectation that Q2 looks a lot like Q1, given what we see in orders, that there's not a bounce back coming. I think when you have negative or flat consumption across many categories, the retailer doesn't maybe want to lean back in to get to what we think is the right level. We have heard other retailers continue to talk about taking down weeks of supply. Now, do I think there's an incremental risk for retail inventory? I absolutely do not overall because there's only a certain level that the businesses can be run effectively with. I don't really feel like it's an incremental risk. Maybe it's a little bit of conservatism, and maybe we'll be proven wrong. We just think there's, you know, flat to slowing consumption in the near term.

We said for the back half, we think it's closer to 1.5%, which is lower than our 3% typically. Yeah. You know, just the inflection point a little bit is what's driving our thinking there.

Kaumil Gajrawala (Managing Director)

Okay. Got it. I guess in the context of everything you mentioned on the consumer, you talked a bit about promo activity being rational, but maybe how do you feel like where it's going to play out over the course of the year? If the consumer stays in this sort of condition that they might be in, would you expect promotional activity to take up, or is it not a pricing thing? There's just something else going on.

Rick Dierker (President and CEO)

No, I think, you know, we've seen this play out before back in 2008 and 2009. If categories are flat for an extended period of time, competitors tend to go after share in a bigger way. As you look at all the transcripts, everyone's talking about how they're going to gain share. Well, not everybody can gain share. We've proven in an environment like this that we do tend to gain share because we have the right promotional strategy, the right marketing spend. We have the right products and value offering and innovation. We are usually set up better than most. Promotional levels do tend to go up if categories are flat for a period of time. What I just said is why we believe that we tend to take share.

Kaumil Gajrawala (Managing Director)

Got it. Thank you.

Operator (participant)

The next question comes from the line of Javier Escalante with Evercore. Please go ahead.

Javier Escalante (Equity Research Analyst)

Hi. Good morning, everyone. I managed to still have a question on the inventory issue. If you could help us if there is anything to learn about the categories and the type of retailers where you are seeing greater lag in terms of reorders. I am specifically thinking about the drugstores, very important for vitamins. There is a lot of changes there, and there is a lot of problems with traffic. Is this particularly a pressure area? If so, how that informs the relaunch of the vitamin business, which is a category that is increasingly going online?

Rick Dierker (President and CEO)

Yeah. Sure, Javier. You know, gummies in the drug class of trade are very, very promotional. You know, you walk in and you see a whole aisle full of yellow tags, which tend to be, you know, buy one, get one free. As we're looking to retrench, we're making decisions on what class of trades we want to play in. I would say, you know, the sales and profits are not as appealing in that class of trade typically. We are kind of retrenching on what SKUs, what offerings, what promotion depth that we're willing to go to in that class of trade. There is a slight traffic concern in drug, in the drug class of trade. There's also, you know, one of the retailers is, you know, not as financially stable as some others.

There is a lot of noise, I guess, going on in the drug class of trade. Again, we retrench to where we have strength and we grow from there for vitamins. The online class of trade is interesting. Online class of trade is actually half of all vitamins. We have to make sure that we are hitting the innovation and advertising, but really also focused on the online class of trade. Specifically, it is very fragmented, but half the category. We are looking hard at what the right innovation strategy is and the short-term innovation strategy is to make sure that we are going after those subsegments appropriately online because if that is where the growth is, that is where the focus needs to be.

Javier Escalante (Equity Research Analyst)

Rick, if I may, if you can expand better on the laundry detergent piece. There was a very quick read in April, I believe it is the guys in Germany. If you can unpack a little bit, I mean, you mentioned it, but it was very briefly that there is a lot of moving pieces. If you can unpack what is happening in detergents in the context of your push with Deep Clean and the trade down into mid-tier, that would be very helpful. Thank you.

Rick Dierker (President and CEO)

Yeah. Look, the laundry business is healthy. In Q1, you know, we had 3.4% consumption growth for Arm & Hammer. I think we had 26% or 27% growth for unit dose. Even for Scent Boosters, we had 8%+ growth. Extra had positive growth as well. Largely for us, we continue to gain share in all those subsegments. We think we are doing and executing really well. I kind of alluded to it. There is some noise going on in the category. One competitor is catching up on some of the concentration activities that happened a year or two ago. One competitor is taking price at the top end and spending a bit more, I guess, in the low and mid-tiers. One major retailer introduced a private label at the premium end.

There are a lot of moving pieces, and I would say we're better positioned than ever in this type of environment. What tends to happen in a recessionary-like environment, and that's why I would start to call this environment that we're in, right, consumer confidence as we look forward to the 12-year low, you know, this turmoil, what tends to happen is folks trade down to value. Even Deep Clean, while it's a mid-tier to us, you know, the consumer doesn't know what mid-tier or premium or value really mean. They just know that it's a 20% discount to premium, the premium tier of laundry. They know that it's more expensive than our most basic offering. We have a good, better, best strategy so that Base Arm & Hammer can do well, Arm & Hammer AHOC can do well, and now Deep Clean does as well.

We're well positioned to wherever the consumer trades, you know, up or down to.

Javier Escalante (Equity Research Analyst)

Thank you very much.

Operator (participant)

The next question comes from the line of Dara Mohsenian with Morgan Stanley. Please go ahead.

Dara Mohsenian (Managing Director of Equity Research)

Hey, good morning. I just wanted to touch on U.S. share. You guys mentioned you still expect to gain share in the U.S. despite the category weakness. The track channels added does look like it's decelerated in terms of your share so far in April. I would assume the Q2 corporate org sales guidance, when you back out international, which is robust, as well as presumed growth in SPD, that you're assuming share loss probably implicitly in that Q2 guidance. Can you just shed some light on maybe overall share trends in the U.S. as you look at April, your thoughts and the balance of the year here on a go-forward basis also? Thanks.

Rick Dierker (President and CEO)

Yep. Good question, Dara. I am never assuming share loss is what I would tell you. I believe, like I talked earlier, because of our portfolio, because of our brands, because of the advertising and the innovation and the promotional program we have in place, we have a long track record of growing faster than the category. I fully expect that to happen now. As we have a stretched consumer, our brands are made for this time as well. All that's going to help and lead to share gains. April, you're right. I think I said the category's down 1%. We gained share in Q1. I expect to gain share in Q2. Sometimes it's just promotional timing to some degree. That's the short answer to the question.

Dara Mohsenian (Managing Director of Equity Research)

Okay. That's helpful. Obviously the external environment has changed fairly significantly in recent months. You're taking decisive actions on portfolio structure. I was just hoping you could review capital allocation from here, given your strong balance sheet. Might share repurchases be a greater priority? Perhaps there's more M&A opportunities from an external environment standpoint, given the difficult environment, and just how you think about those two pieces. Thanks.

Rick Dierker (President and CEO)

Yeah. We talk about it a lot. Even though we haven't done a deal in a couple of years, it doesn't mean that's not number one on the capital allocation priority. I know I joked at previous conferences that M&A is number one, two, three, four on the list. That's still true. We believe that we have a competency in identifying and acquiring and integrating and growing acquisitions. There's no better value creator for the company than just that. We have a huge amount of firepower. The math that we showed at Cagney was around $6 billion. We could do a couple of deals. The organization can tend to do a couple of deals, even sequentially. That's the number one capital allocation in focus.

You know, if you look back at our history, if we go a long period of time without doing acquisitions, then we tend to look at buybacks. In some cases, given this type of low leverage, we could probably do both. Number one, I want to keep the powder dry for M&A. If we do not do M&A for a while, we will look at and talk more about doing maybe any buybacks. Lee, anything to add to that?

Lee McChesney (CFO)

Yeah. I would just add, you know, number one, one of the reasons I came here, I completely believe in this capital allocation methodology. I have a whole history of doing M&A, making sure you have a discipline in doing M&A. And we've shown that we find the right acquisitions and we drive value, you know, value-enhancing TSR. Obviously, you know, that's one, two, and three. I guess we'll do behind that is we're continuing to invest in the business, even in this environment, whether it's, you know, we talked about the marketing side, the innovation side. You know, obviously, you know, things like, you know, debt and shares that Rick talked about would be on the list too. You know, every day we're focused on number one, number two, number three, which again, go find that right deal to bring to the portfolio.

We will remain very disciplined.

Operator (participant)

The next question comes from the line of Filippo Falorni with Citi. Please go ahead.

Filippo Falorni (Director of Equity Research)

Hey. Hey. Good morning, everyone. I had two quick clarifications on the guidance. First, within the organic sales guidance of 0%-2%, can you give us a sense of what you're assuming for the full year for volume and price? You mentioned the price increases, some surgical price increases. Maybe can you give us some sense of timing and some magnitude there?

Rick Dierker (President and CEO)

Yeah. I mean, I would tell you we talked about, you know, we had a pretty clear position. We talked about price quite a bit. I mean, price has been positive. You know, it was 0.2 in 1Q. You know, we'll just say it's going to be flattish for the rest of the year. It's, you know, our outlook is all about volume growth, so.

Yep. The price increases that we're talking about, that is over time if we can't offset, you know, tariffs. In my mind, we're going to work like heck to do just that. We believe that'll be a competitive advantage versus other folks.

Filippo Falorni (Director of Equity Research)

Got it. That makes sense. On the tariff front, you mentioned the $30 million net tariff impact after the mitigation. Is that what is embedded in the gross margin and EPS guidance? Should we think about somewhere around 50 basis points of negative hit on gross margins and then somewhere around like $0.09 on EPS? Is that the right word to put that in?

Lee McChesney (CFO)

I think it's 40-50 basis points. You know, obviously, you know, the exact timing will play out depending on, you know, actions and mitigations and things like that. That's a good number.

Filippo Falorni (Director of Equity Research)

Okay. Got it. Thank you so much, guys.

Operator (participant)

The next question comes from the line of Kevin Grundy with BNP Paribas. Please go ahead.

Kevin Grundy (Managing Director)

Great. Thanks. Morning, everyone.

Rick Dierker (President and CEO)

Hey, Kevin.

Kevin Grundy (Managing Director)

A couple of, hey, Rick, a couple from me. Rick, just getting back to the decisions around the portfolio pruning. The business lines that you're exiting certainly make sense, not hugely impactful at about 2% of sales. I think there might have been some sense among some in the market that the divestitures or exits could have been larger. Is this pencils down for the year given it's an annual review process, or would you consider further divestitures in the future? I'm curious, what's your commitment to a business like vitamins? Presumably, you'd want to exit from a position of strength. Maybe that's the reason that that is perhaps on hold for now. A quick review, maybe just on the criteria at a high level for hold versus an exit. I have a question for Lee. Thanks.

Rick Dierker (President and CEO)

Yeah. Look, we do go through a portfolio strategy review every year. Like I said before, we value each and every brand. There's a handful that are always on the list, and then we turn to a few of them and say, can we internally improve those businesses? Some of those things are underway. It doesn't mean that if those businesses don't do and accomplish those KPIs that we want, that we couldn't wake up and say, yep, you know, that's on the list to do something with. Just because we have an annual review, it doesn't mean that there aren't other things in motion that we're always working on. You know, vitamins, we want to inflect that business and turn that positive for all the reasons I gave earlier. We'll talk more after Q2 on how we're doing with that.

I think that's a better question to ask, you know, after that quarter.

Kevin Grundy (Managing Director)

Okay. Fair enough. Lee, welcome. Quick question for you. You mentioned the M&A dynamic and the appeal of that in terms of coming on board. What are your early impressions more broadly? Any potential areas where you think your background can potentially enhance the way Church is doing things, whether this is around productivity, whether it's around revenue growth management, capital structure, etc.? Would love to get your early impressions and thoughts. Thanks.

Lee McChesney (CFO)

No, I appreciate you asking that nice question. I mean, number one, very impressed with the Church & Dwight team. I mean, obviously, I can follow everything from the outside, and the track record speaks for itself. To be inside the building and to meet the people, I mean, the culture, the mindset to execute, I think of my first five weeks, everything we're showing here, you know, the tariff situation continued to be a bigger challenge. You know, look at the plan we've laid out here in just less than two months as everyone's dealing with that. The team is very focused on, I love where I see where it's going on innovation. Certainly, the continued focus on brand development, winning share, those are all things I fundamentally believe in. This business, my focus right now is to learn this business.

This business has been successful. I want to understand that. I want to obviously get more time to get out and meet people and understand what goes on across the globe at our different manufacturing sites. You know, my mindset is just to contribute my experience to what we have focused here. I believe in the evergreen model. You know, as I went through the process and got to spend time with Rick and other members of the leadership team, you know, we have very similar thoughts and very focused on, you know, driving share, always making decisions with that in mind. At the same token, follow the facts, you know, find that right balance that protects gross margin, you know, this efficiency with how we run the business to drive, you know, this overall, you know, high level of cash return.

Those are all things that, you know, frankly just match with me. That's one of the reasons why I'm here. I can just say with now six weeks in, it's everything I thought it'd be and more. I'm optimistic as we look forward here.

Rick Dierker (President and CEO)

Yeah. Lee's being humble as well. Like he has a great, you know, pedigree experience on M&A, right? Decades of experience with M&A on acquiring, integrating. He has decades of experience, not just as a CFO, but as a president of different businesses. To have somebody in the seat that's an operating CFO is exactly the culture of this place. We're going to be better off for it.

Kevin Grundy (Managing Director)

Okay. Very good. Thank you. Good luck.

Lee McChesney (CFO)

Thank you.

Operator (participant)

Our last question comes from the line of Robert Moskow with TD Cowen. Please go ahead.

Robert Moskow (Managing Director)

Hi. Thanks. Rick, you've talked about having the right advertising, the right promo, the right spend. The world's changing quite a bit in the last four months. Other than vitamins, are there any categories where you've had to shift your tactics, maybe lean in a little more from a promotional standpoint, or because your market share is good, you feel like, hey, we can just keep executing the plan as it stands?

Rick Dierker (President and CEO)

Yeah. Not from a promotional perspective, really. I'll tell you, we are pivoting a little bit on our advertising. We just walked the board through it. Stacy's our CMO. She's doing a great job. She laid out how we're shifting our messaging more towards value in this environment, right? Some big steps in doing that, reminding people across the Arm & Hammer brand that we are of value, but across our other brands too. I think that messaging is going to be important in times like this. That's kind of one pivot we're making. We're pivoting a little bit on what brands we allocate media to and where we over-index or under-index.

Robert Moskow (Managing Director)

Okay. All right. Thank you.

Operator (participant)

I'll now turn the call back over to Rick Dierker for closing remarks. Please go ahead.

Rick Dierker (President and CEO)

Great. Thank you for your time today. I would just tell you that the company is laser-focused on growing share, launching our innovation to delight the consumer. We are a stronger company for these portfolio actions. I look forward to talking to everybody next quarter. Thanks very much.

Operator (participant)

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.