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 .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$1.503	$1.582	$1.467
Reported EPS ($)	$0.93	$0.76	$0.89
Adjusted EPS ($)	$0.96	$0.77	$0.91
Gross Margin (%)	45.7%	44.7%	45.0%
Adjusted Gross Margin (%)	45.7%	44.6%	45.1%
Income from Operations ($USD Millions)	$305.0	$256.7	$295.3

Segment net sales (dollars; oldest → newest):

Segment ($USD Millions)	Q1 2024	Q4 2024	Q1 2025
Consumer Domestic	$1,165.2	$1,225.7	$1,129.8
Consumer International	$255.0	$285.1	$261.9
Specialty Products Division (SPD)	$83.1	$71.2	$75.4
Total Net Sales	$1,503.3	$1,582.0	$1,467.1

Q1 2025 organic growth by segment:

Segment	Organic Sales Growth
Worldwide Consumer	−1.5%
Consumer Domestic	−3.0%
Consumer International	+5.8%
Specialty Products	+3.2%

Key KPIs (oldest → newest):

KPI	Q1 2024	Q1 2025
Cash from Operations ($USD Millions)	$263.0	$185.7
Capital Expenditures ($USD Millions)	$46.3	$16.5
Effective Tax Rate (%)	19.9%	22.0%
Global Online Sales (% of Consumer Sales)	N/A	22.9%
Marketing Expense ($USD Millions)	$152.0	$136.6

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Sales Growth	FY 2025	~3–4%	~0–2%	Lowered
Adjusted Gross Margin vs 2024	FY 2025	+25 bps	−60 bps	Lowered
Adjusted EPS Growth	FY 2025	+7–8%	+0–2%	Lowered
Cash from Operations ($B)	FY 2025	~$1.15	$1.05	Lowered
Marketing as % of Sales	FY 2025	Exceed ~11%	~11%	Slightly Lower
SG&A as % of Sales	FY 2025	Lower vs 2024	Lower vs 2024	Maintained
Other Expense ($M)	FY 2025	~50	~50	Maintained
Tax Rate (%)	FY 2025	~23	~23	Maintained
Capital Expenditures ($M)	FY 2025	~130	~130	Maintained
Organic Sales	Q2 2025	N/A	−2% to Flat	New
Adjusted EPS ($)	Q2 2025	N/A	$0.85	New
Dividend per Share ($)	Q2 2025	N/A	$0.295 (payable Jun 2)	New

Notes:

Portfolio actions (Flawless, Spinbrush, Waterpik showerheads): estimated Q2 charge $60–80M; adjusted outlook excludes April–December contribution from these businesses .
Tariff mitigation expected to reduce ~$190M gross exposure by ~80% through portfolio and supply-chain shifts .

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev‑2)	Q4 2024 (Prev‑1)	Q1 2025 (Current)	Trend
Tariffs/macro	Adjusted GM +60 bps; category moderation; vitamin impairment hit reported EPS	Adjusted GM flat; favorable tariff ruling benefited reported GM; tightened organic outlook	$190M 12‑month tariff exposure; ~80% mitigation plan; ~$30M net 2025 impact; consumer malaise and April negative consumption	Increasing macro/tariff pressure; mitigation actions accelerating
U.S. retailer destocking	Not highlighted	Retailer reductions noted (HERO prior year gains)	~300 bps drag on organic; no bounce-back assumed; Domestic organic −3%	Destocking persists through Q2 per orders
Product performance	HERO, THERABREATH strong; vitamins weak	ARM & HAMMER laundry, HERO, THERABREATH led	THERABREATH #2 mouthwash at 20.3% share; HERO 22% share; ARM & HAMMER unit dose +26.9% consumption	Core power brands gaining share
Promotions	Marketing >11% in Q3	Higher spend to support innovation	Laundry sold on deal ~34% (stable QoQ); litter promotions stable; risk of promo rising in flat categories	Promotional intensity could rise
Vitamins turnaround	Impairment recorded	Focused on reformulation/innovation	Consumption −19%; reformulation, taste, sugar-free, GLP offering; judge success Apr–Jul	Execution critical in Q2/Q3
E‑commerce penetration	20.7% of consumer sales	21.4% in FY24	~22.9% in Q1	Rising penetration

Management Commentary

“Retailer destocking accounted for a drag of approximately 300 basis points on organic growth…we gained share in 9 of our 14 major brands…online sales as a percentage of global sales now reaching close to 23%” — CEO Rick Dierker .
“Gross 12‑month run rate tariff exposure of $190 million…portfolio decisions and supply chain actions expected to reduce our tariff exposure by ~80%” — CEO Rick Dierker .
“First quarter adjusted EPS was $0.91…our adjusted gross margin was 45.1%…offset by commodity inflation, higher manufacturing costs and lower volume” — CFO Lee McChesney .
“We now expect full year adjusted EPS growth for 2025 of 0% to 2%…organic sales 0% to 2%…adjusted gross margin to contract 60 bps” — CEO Rick Dierker .

Q&A Highlights

Tariffs quantification and mitigation: ~$190M gross exposure reduced to ~$40M after actions; ~ $30M net P&L impact in 2025; further supply chain mitigations expected over ~12 months .
Segment outlook: International organically ~6% in Q1; expected “in the zone” with some pressure; SPD slightly better; Domestic similar to Q1 in Q2, then modest back‑half improvement .
Promotions and category dynamics: Laundry ~34% sold on deal; Litter ~17.8%; promotional levels may rise if categories remain flat; management reallocating media and shifting messaging to value .
Vitamins strategy: Reformulation across lineup, Power Plus launch, sugar‑free variants; success gauges include POS inflection, consumer reviews, TDP stabilization; decision milestone after Q2 .

Estimates Context

Q1 2025 actual vs consensus: Revenue $1.467B vs $1.512B consensus (miss); adjusted EPS $0.91 vs $0.897 consensus (beat).
| Metric | Q1 2025 Consensus | Q1 2025 Actual | |--------|--------------------|----------------| | Revenue ($USD Billions) | $1.512* | $1.467 | | Adjusted EPS ($) | $0.897* | $0.91 |
Q2 2025 guide vs consensus at the time: Management guided adjusted EPS $0.85 vs consensus ~$0.858* and organic sales −2% to Flat (no explicit revenue figure provided) .
| Metric | Q2 2025 Consensus | Q2 2025 Guidance | |--------|--------------------|------------------| | Adjusted EPS ($) | $0.858* | $0.85 | | Organic Sales | N/A | −2% to Flat |

Values marked with * were retrieved from S&P Global.

Implications: Consensus for Q1 earnings was slightly low on EPS and high on revenue; given FY guide-down, Street likely revises FY25 revenue and margin assumptions lower, with tariff headwinds and U.S. consumption softness driving estimate reductions .

Key Takeaways for Investors

Near‑term execution hinges on tariff mitigation and retailer inventory normalization; actions to cut exposure by ~80% and ~ $30M net P&L impact in 2025 reduce downside but margin pressure persists through mid‑year .
Despite macro and destocking, core brands are gaining share (ARM & HAMMER laundry, THERABREATH, HERO), supporting back‑half recovery as categories normalize and innovation scales .
FY25 guide reset (organic 0–2%, adjusted EPS 0–2%, GM −60 bps) lowers expectations; marketing held at ~11% suggests sustained brand support over near‑term earnings optimization .
Vitamins remain a swing factor; watch Q2 POS trends, TDP stabilization, and consumer receptivity to reformulations and new offerings (Power Plus, sugar‑free, GLP) for potential inflection .
Promotional intensity could rise if categories stay flat; CHD’s good‑better‑best price architecture and “value” messaging pivot should defend share without broad pricing, aiding volume trajectory .
International growth broad‑based and e‑commerce penetration rising (~22.9% of consumer sales), providing structural tailwinds even as U.S. consumer remains tentative .
Q2 setup: modest topline (-2% to flat organic) and lower EPS ($0.85) with spend timing; trading tactically, monitor signs of consumption stabilization and incremental tariff relief to gauge 2H EPS reacceleration .

CHURCH & DWIGHT CO INC /DE/ (CHD)·Q1 2025 Earnings Summary