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CHURCH & DWIGHT CO INC /DE/ (CHD)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 came in slightly better than internal expectations and beat Wall Street: revenue $1.51B (+0.1% organic; -0.3% reported) and adjusted EPS $0.94 vs $0.85 outlook; beats vs S&P consensus on both EPS and revenue driven by higher-than-expected organic sales and resilient margins . EPS consensus $0.858*; revenue consensus $1.489B*.
  • Domestic weakness (negative price/mix, retail destocking) was offset by International strength and continued share gains in key power brands; adjusted gross margin 45.0% (-40 bps YoY) absorbed tariff and recall costs, partly offset by productivity and mix .
  • Full-year 2025 outlook maintained: Net Sales +0–2%, Organic +0–2%, adjusted gross margin contraction ~60 bps, adjusted EPS +0–2%, CFO raises “Other expense” to ~$65M (from $50M) and reiterates cash from operations ~$1.05B; Q3 guide: organic +1–2% and adjusted EPS $0.72 (-9% YoY) with ~100 bps GM contraction as tariff timing shifts into Q3 .
  • Strategic actions continue: exits of FLAWLESS, SPINBRUSH and Waterpik showerheads (pre-tax charges ~$51M in Q2) and a strategic review of the Vitamins business; Touchland acquisition closed in July, now CHD’s 8th power brand, margin-rate accretive long term .

What Went Well and What Went Wrong

  • What Went Well

    • International momentum: Consumer International net sales +5.3% reported; organic +4.8% with broad-based gains across subsidiaries; share growth across power brands . “We were able to grow share in all of our power brands in the quarter, which is a great achievement.”
    • Power brands outperforming categories: THERABREATH consumption +22.5% with 21% share; HERO acne +11.4% consumption and #1 in acne; ARM & HAMMER liquid laundry consumption +3.2% vs category +1.3% .
    • Execution vs outlook and S&P consensus: Adjusted EPS $0.94 vs $0.85 outlook, driven by higher organic sales and margin resilience; tariffs partly deferred to Q3 and productivity programs offset inflation .

  • What Went Wrong

    • Domestic pressures: Consumer Domestic organic -1.0% on negative price/mix (‑1.1%), retail destocking still ~100 bps drag in Q2; vitamins remain a notable headwind with ~25% consumption decline early in quarter (improving through June) .
    • Gross margin headwinds: Adjusted GM 45.0% (-40 bps YoY) impacted by tariffs, recall costs (ZICAM/ORAJEL), promotional pricing and mix; Q3 to see ~100 bps GM contraction as tariff timing shifts .
    • BATISTE softness: Consumption down ~7% on competitive price actions, economic trade-down, and earlier supply issues (now resolved); remediation via innovation and price/size architecture underway .

Financial Results

MetricQ2 2024Q1 2025Q2 2025Q2 2025 ConsensusBeat/Miss
Revenue ($USD Millions)$1,511.2 $1,467.1 $1,506.3 $1,488.5*Beat
Reported EPS ($)$0.99 $0.89 $0.78 N/AN/A
Adjusted EPS ($)$0.93 $0.91 $0.94 $0.858*Beat
Adjusted Gross Margin (%)45.4% 45.1% 45.0% N/AN/A
Adjusted Operating Margin (%)20.9% 20.6% 21.0% N/AN/A
Marketing as % of Sales10.1% 9.3% (calc from $136.6M/$1,467.1M) — use disclosed: “expected ~11%” 10.4% N/AN/A
Adjusted SG&A as % of Sales14.4% 15.2% 13.6% N/AN/A
Effective Tax Rate (%)24.0% 22.0% 23.8% N/AN/A

Note: Consensus figures marked with * are Values retrieved from S&P Global.

Segment net sales and growth

SegmentQ2 2024 Net Sales ($M)Q2 2025 Net Sales ($M)YoY Reported %Organic Sales Growth %
Consumer Domestic$1,170.6 $1,154.1 -1.4% -1.0%
Consumer International$263.7 $277.6 +5.3% +4.8%
Specialty Products (SPD)$76.9 $74.6 -3.0% +0.1%
Total$1,511.2 $1,506.3 -0.3% +0.1%

Selected KPIs

KPIQ2 2024Q1 2025Q2 2025
Global online sales as % of consumer sales22% (full-year 2024 21.4% context) 22.9% 23%
Cash from Operations (YTD) ($M)N/A$185.7 $416.5
Share Repurchase ($M)N/AN/A$300 ASR executed in Q2
Cash ($M)N/A$1,074.5 (3/31/25) $923.2 (6/30/25)
Total Debt ($B)$2.2 (12/31/24) $2.205 (3/31/25) $2.2 (6/30/25)

Guidance Changes

MetricPeriodPrevious Guidance (Q1 PR, 5/1/25)Current Guidance (Q2 PR, 8/1/25)Change
Net Sales Growth (reported)FY 2025~0–2% implied via outlook narrative; primary focus on organic (no explicit reported % in Q1 PR) ~0–2% Maintained
Organic Sales GrowthFY 20250–2% (cut from 3–4%) 0–2% Maintained
Adjusted Gross Margin vs 2024FY 2025Contract ~60 bps Contract ~60 bps Maintained
Marketing as % of SalesFY 2025~11% ~11% Maintained
Adjusted EPS GrowthFY 20250–2% 0–2% Maintained
Other Expense (Adjusted)FY 2025~$50M ~$65M Raised expense
Adjusted Tax RateFY 2025~23% ~23% Maintained
Cash from OperationsFY 2025~$1.05B ~$1.05B Maintained
Capital ExpendituresFY 2025~$130M ~$130M Maintained
Revolver CapacityCurrent$1.5B (baseline)Expanded to $2.0B in July Increased
Sales Growth (reported & organic)Q3 2025N/A+1–2% (reported/organic) New
Adjusted Gross MarginQ3 2025N/A~-100 bps YoY New
Adjusted EPSQ3 2025N/A$0.72 (‑9% YoY) New

Earnings Call Themes & Trends

TopicQ4 2024 (prior-2)Q1 2025 (prior-1)Current (Q2 2025)Trend
Category growth and shareBroad-based growth; organic +4.2% in Q4, share gains; online 21.4% US category growth slowed; retail destocking (~300 bps drag); organic -1.2% Category growth improved to ~2.5% in key categories; share gains in 5 of 7 power brands Stabilizing/improving consumption, share gains continue
TariffsNot central to Q4 outlook commentary12-month run-rate exposure ~$190M; planned 80% reduction via exits/supply chain; mitigation via supply chain/pricing 2025 impact ~ $30M; 12-month ~$60M; timing shift moves more cost into Q3; proactive mitigation ongoing Headwind persists, better quantified and managed
Gross marginAdj GM flat in Q4; FY24 +110 bps Adj GM 45.1% (-60 bps) on inflation/volume vs productivity/mix Adj GM 45.0% (-40 bps) with tariffs, recall, mix; Q3 ~-100 bps expected Near-term pressure; pricing/productivity offsets
Vitamins (VMS)Not a central strategic item in Q4 PRContinued weakness; strategy to improve core multi and innovation Strategic alternatives (sale/JV/right-size) underway; consumption down ~25% early in Q2 but improving into teens/single-digit declines Under review; signs of stabilization
PromotionsTypical levels referencedN/ALaundry promo levels consistent with LT norms (low-30% sold on deal); litter more elevated category-wide Rational in laundry; elevated in litter
M&A/portfolioN/AAnnounced exits (Flawless/Spinbrush/Waterpik showerheads) Touchland acquisition closed; now 8th power brand Portfolio tilt to higher-margin growth

Management Commentary

  • “Adjusted EPS was $0.94, which was $0.09 higher than our $0.85 outlook… since [May], things have begun to improve… Q2 category consumption for our largest categories finishing around 2.5%.” — CEO Rick Dierker .
  • “[International] delivered sales growth of 5.3%... we were able to grow share in all of our power brands in the quarter.” — CEO .
  • “Our second quarter adjusted gross margin was 45.0%… productivity and higher margin acquisition business mix drove 170 bps… offset by 140 bps from inflation/tariffs… and 30 bps from the ZICAM ORAJEL swab recall.” — CFO Lee McChesney .
  • “We continue to expect full year Adjusted EPS growth for 2025 of 0 to 2%… includes the Touchland acquisition, the cost of the product recall and the wind-down of the three exited brands.” — CEO .
  • On Vitamins: “We are undertaking a strategic review… options include divestiture, JV/partnership, or right-sizing for profitability.” — CEO .

Q&A Highlights

  • Vitamins strategic alternatives: Options include sale, JV/partnership, or right-sizing; running the business as if owned “forever” while process advances; green shoots in multivitamins as declines improved from ~25% to single digits late in quarter .
  • Promotional environment: Laundry promotion levels remain within historical norms (low-30% sold on deal); litter elevated due to competitor activity; depth of promotion unchanged .
  • Tariff headwinds: 2025 dollar impact unchanged but timing shifts more cost into Q3; 12-month run-rate discussed (~$60M earlier, moving toward ~$50M after policy changes), mitigation via productivity and targeted pricing .
  • BATISTE actions: Addressing category disruption from competitor pricing and size architecture; supply issues resolved; expanding sizes/innovation (Batiste Light) to reaccelerate consumption .
  • Touchland priorities: Strong growth drivers (Sephora/Ulta/Amazon), low household penetration (~6% vs category 37%); international rollout and innovation to continue; EPS neutral in 2025 .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Adjusted EPS $0.94 vs $0.858*; Revenue $1,506.3M vs $1,488.5M*; EPS based on 16 estimates*, revenue based on 13 estimates*. Beat on both EPS and revenue ; consensus from S&P Global*.
  • Outlook implications: Street likely to hold FY EPS near prior levels given maintained FY guide, but Q3 EPS guide ($0.72) and ~100 bps GM compression may drive modest cuts to Q3 estimates while back-half organic growth (implied ~2.5%) supports FY pacing .

Note: Consensus figures marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Small but meaningful beat: Organic sales at the high end and margin resiliency drove an EPS and revenue beat vs consensus, despite domestic softness and recall/tariff headwinds .
  • Mix of offense and defense: International, THERABREATH, HERO, and ARM & HAMMER laundry continue to gain share; management is defending margins via productivity and surgical pricing while sustaining ~11% marketing investment .
  • Near-term GM pressure is transitory: Tariff timing and exit-related mix compress Q3 margins (~-100 bps), but structural mitigation and portfolio cleanup should reduce headwinds over the next 12 months .
  • Vitamins is a 2H watch item: Strategic review underway with paths to value creation; improving trend lines reduce downside risk, but execution and timing are key .
  • Touchland adds a scalable growth vector: Closed in July, margin-rate positive and underpenetrated; expect incremental growth and eventual accretion, neutral to 2025 EPS .
  • Capital deployment remains active: $300M ASR in Q2 and revolver expanded to $2.0B provide flexibility for M&A while maintaining ~$1.05B CFO guidance and ~$130M capex plan .
  • Trading setup: Beats plus maintained FY guide are constructive, but Q3 EPS/GM guide likely tempers near-term enthusiasm; watch category growth trajectory, promo rationality in household, and vitamin decision by year-end 2025 for next catalysts .

Appendix: Additional Data Points

  • Domestic/International/SPD organic growth: -1.0% / +4.8% / +0.1% .
  • Adjusted operating income: $315.9M in Q2 (operating margin 21.0%) .
  • Effective tax rate: 23.8% in Q2 (vs 24.0% in Q2’24) .
  • Dividend per share in Q2: $0.30 .