Sign in

    Church & Dwight Co Inc (CHD)

    Q2 2024 Earnings Summary

    Reported on Jan 6, 2025 (Before Market Open)
    Pre-Earnings Price$100.01Last close (Aug 1, 2024)
    Post-Earnings Price$96.94Open (Aug 2, 2024)
    Price Change
    $-3.07(-3.07%)
    • Strong new product pipeline expected to drive future growth: Church & Dwight is having a great year with new product ideas and expects these products to be big drivers next year as they continue to build distribution and awareness. Additionally, they have new product ideas coming as well .
    • Strength of brands gaining market share despite market slowdown: The company’s brands are outperforming categories, with 5 out of 7 power brands gaining market share in the quarter, and 10 out of 14 major brands growing share in Q1 and Q2. This success is attributed to the strength of their brands, innovation, and a balanced portfolio of premium and value offerings .
    • Successful product launches attracting new customers and driving growth: The launch of ARM & HAMMER Deep Clean is attracting both existing customers trading up and new customers switching from other brands. They anticipate Deep Clean to be a source of growth for the company .
    • 1. Decelerating Category Growth Leading to Reduced Outlook*:
    • The company observed that consumption across key categories like laundry detergent, litter, and mouthwash is decelerating ( , ).
    • For example, laundry detergent category growth slowed from 2% in May to flat in June and down nearly 1% in July ( ).
    1. Slowing Category Growth
      Q: Does guidance assume further slowdown?
      A: Categories have slowed, such as Laundry and Litter being flat in July. The company expects the slowdown to remain at current levels, not worsen. They plan to grow by gaining share, especially through new products.

    2. Promotional Spending 'Dry Powder'
      Q: Is additional spending factored into outlook?
      A: The company is prepared to deploy 'dry powder' for promotions if categories decline further or the promotional environment intensifies. This is primarily for household businesses like laundry and litter, and also applicable to vitamins.

    3. Vitamins Business Challenges
      Q: Is vitamin business stable? Timeline for improvements?
      A: The vitamins category is slightly down, but the company's issues are internal. Renovation of the portfolio has been slower than expected, and they don't expect to stabilize the business this year as planned. They need more time to turn it around. ,

    4. Gross Margin Outlook
      Q: What factors drive expected deceleration in H2 gross margin?
      A: Q2 gross margin benefited from favorable mix, with higher-margin products selling more than expected. In H2, modest inflation increases and potential promotional spending may impact margins. ,

    5. Key Brands Performance
      Q: What are growth expectations for THERABREATH and HERO?
      A: Both brands continue strong growth. While growth rates may moderate due to the law of large numbers, they expect strong double-digit growth ahead. They hold leading market shares in their categories. ,

    6. Marketing Investment
      Q: Is Q3 marketing spend incremental or shifted from Q2?
      A: Marketing spend was as expected in Q2 at 10.1%. The company plans to significantly increase spending in Q3 to support new products, then reduce it in Q4 to align phasing.

    7. M&A Activity
      Q: Any changes in M&A outlook?
      A: The company is actively looking at opportunities and sticking to their criteria. They acknowledge cash building on the balance sheet and note that the market is active. ,

    8. Executive Departure
      Q: Impact of Barry's departure? Plans to refill role?
      A: Barry has been a key part of their success; they are sorry to see him go. They have time to figure out how to fill the position, and it's business as usual.

    9. Retail Inventory Adjustments
      Q: Details on retail inventory reductions impacting sales?
      A: Disconnect due to prior HERO pipeline in the year-ago period and unexpected retail inventory adjustments, primarily in laundry. There's more noise as retailers manage inventory.

    10. International Performance
      Q: Expectations for international business in H2?
      A: International had a strong first half with 9% growth. The company expects around 7% growth in the back half, still exceeding their annual target of 8%.