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CHURCH & DWIGHT CO INC /DE/ (CHD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 outperformed internal outlook: net sales $1.582B (+3.5% YoY) vs 1.5–2.5% guide; organic +4.2% vs 2–3% guide; adjusted EPS $0.77 vs $0.76 guide; reported EPS $0.76 (+22.6% YoY). Mix was volume-led (+3.0% volume, +1.2% price/mix). Gross margin was 44.7% (adjusted 44.6%, flat YoY).
  • Divisional mix: Domestic +2.7% (ARM & HAMMER laundry, HERO acne, THERABREATH mouthwash); International +10.2% (+9.6% organic); Specialty Products -6.6% reported but +10.3% organic (exit of Megalac and food safety).
  • FY24 cash from operations $1.16B; Board raised the quarterly dividend 4% to $0.295 (29th consecutive increase). Management guided FY25 sales +2.5–3.5% (organic +3–4%), gross margin +25 bps, adjusted EPS +7–8% (back-half weighted), CFO ~+$1.15B, capex ~$130M.
  • Stock catalysts for 2025: innovation ramp (Deep Clean laundry, Power Sheets, Hardball litter, BATISTE Light; HERO body patch; VITAFUSION renovation), accelerating international rollout (HERO to 50+ countries), and M&A “dry powder” >$6B with leverage at ~1.5x.

What Went Well and What Went Wrong

What Went Well

  • Beat internal Q4 outlook on revenue, organic growth, and adjusted EPS; CFO: “we ended the year with momentum… EPS… up almost 19%” (Q4 adj EPS +18.5% YoY).
  • International and e-commerce strength: International +10.2% reported (+9.6% organic) in Q4; full-year online sales reached 21.4% of consumer sales.
  • Innovation and brand momentum: ARM & HAMMER Deep Clean, Power Sheets, Hardball litter, THERABREATH expansion, BATISTE Light; HERO continues to drive acne category; management emphasized “Product innovation continues to be a big driver.”

What Went Wrong

  • Vitamins (VMS) softness persisted and took a $357.1M non-cash impairment in Q3; management expects further near-term decline while new launches ramp.
  • Q4 adjusted gross margin was flat YoY at 44.6% due to higher manufacturing costs; reported GM up just 10 bps.
  • Q1 2025 guide calls for adj EPS $0.90 (-6% YoY), ~1% reported sales growth, ~2% organic, flat gross margin, reflecting cautious US consumer and phasing of higher 1H marketing.

Financial Results

Quarterly P&L snapshot

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$1,511.2 $1,510.6 $1,582.0
GAAP Diluted EPS ($)$0.99 (tariff benefit) -$0.31 (impairment) $0.76
Adjusted Diluted EPS ($)$0.93 $0.79 $0.77
Gross Margin (%)47.1 (reported) 45.2 (reported) 44.7 (reported)
Adjusted Gross Margin (%)45.4 45.0 44.6
Marketing Expense ($mm)$152.4 $185.8 $207.9
Adjusted SG&A (% of Sales)14.4% 15.0% 15.2%
Income from Operations ($mm, reported)$336.9 $(91.5) (impairment) $256.7

Notes: Q2 reported GM/EPS include a favorable tariff ruling; Q3 GAAP reflects VMS impairment; Q4 adjusted GM flat as cost inflation offset productivity and mix.

Q4 Segment and Product Line Mix

Segment / LineQ4 2024 Net Sales ($mm)YoY ReportedYoY Organic
Consumer Domestic$1,225.7 +2.7% +2.7% (Vol +2.0, Mix +0.7)
Consumer International$285.1 +10.2% +9.6% (Vol +7.1, Mix +2.5)
Specialty Products (SPD)$71.2 -6.6% (divestitures) +10.3% (Vol +5.3, Mix +5.0)
Household Products$654.8 +4.4% N/A
Personal Care Products$570.9 +0.9% N/A
Total Consumer Net Sales$1,510.8 +4.1% N/A
Total Net Sales$1,582.0 +3.5% +4.2%

Q4 KPI details (mix and drivers)

KPICompanyDomesticInternationalSPD
Organic Sales Growth (%)+4.2% +2.7% +9.6% +10.3%
Volume Contribution (pp)+3.0 +2.0 +7.1 +5.3
Price/Mix Contribution (pp)+1.2 +0.7 +2.5 +5.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrentChange
Reported Sales GrowthQ4 2024+1.5% to +2.5% +3.5% (actual) Raised vs guide
Organic Sales GrowthQ4 2024+2% to +3% +4.2% (actual) Raised vs guide
Adjusted EPS ($)Q4 2024$0.76 $0.77 (actual) Slightly above
Reported EPS ($)Q4 2024$0.75 $0.76 (actual) Above
Reported Sales GrowthFY 2025N/A~+2.5% to +3.5% New
Organic Sales GrowthFY 2025N/A~+3% to +4% New
Gross MarginFY 2025N/AExpand ~25 bps vs 2024 New
Marketing (% of sales)FY 2025N/A>11% New
Other Expense ($mm)FY 2025N/A~50 New
Tax RateFY 2025N/A~23% New
Adjusted EPS GrowthFY 2025N/A+7% to +8% (≈1% FX drag; excludes ~1% ERP costs) New
Cash from Operations ($B)FY 2025N/A≈$1.15 New
Capex ($mm)FY 2025N/A≈$130 New
Adjusted EPS ($)Q1 2025N/A$0.90 (-6% YoY) New
Dividend/Share (Quarterly)2025 run-rate$0.28375 prior $0.295 (+4%) Raised

Earnings Call Themes & Trends

TopicQ2 2024 (prior-2)Q3 2024 (prior-1)Q4 2024 (current)Trend
Category growth / macroCategory growth moderated; tightened FY organic guide to ~4%; consumer under pressure. Cautious on Q4 categories; raised adj GM guide to +110 bps. Baseline categories ~2.5% for 2025; promotions normalized; consumer still cautious. Slower category growth; cautious stance maintained
TariffsQ2 reported GM/EPS aided by favorable tariff ruling. Non-GAAP reconciliations include tariff ruling adjustments. Non-GAAP excludes tariff effects; 2025 outlook excludes tariff impacts. Clean comp adjustments; planning excludes tariff volatility
InnovationDeep Clean, Power Sheets, Hardball; THERABREATH antiseptic; HERO adjacency. Continued momentum across new launches. 2025 launches: Deep Clean Free & Clear, Power Sheets Fragrance-Free, Plant Power litter, BATISTE Light, HERO Mighty Patch Body, VITAFUSION renovation/Power Plus/sugar-free. Pipeline expanding; bigger bets
E-commerce & AIOnline sales 21.2% of consumer sales. Online sales 20.7% of consumer sales. FY online 21.4%; 82% of marketing is digital; AI used to optimize creative and conversion; >90% media links to cart. Digital advantage sustained
International9–10% organic growth; Graphico (Japan) acquisition. Subs +~5%, GMG +19%; broad-based growth. HERO in 40→50+ countries; OxiClean and Power Sheets expanding globally. Accelerating rollout
Vitamins (VMS)Category slowed; strategy tightening. $357.1M impairment; adjusted EPS beat. Expect near-term decline; major 2025 renovation (taste, Power Plus, sugar-free) to drive inflection. Transition year; rebuild in progress
Pricing & promo——No price increases contemplated; productivity to offset inflation; promotions back to pre-COVID norms. Value focus; cost takeout over pricing

Management Commentary

  • “We ended the year with momentum… 3.5% reported sales growth… EPS… up almost 19%.” — CFO Rick Dierker (Q4 discussion)
  • “We are thrilled to deliver another year of strong results… Volume was the primary driver of organic growth… Global online sales grew to 21.4% of total consumer sales in 2024.” — CEO Matthew Farrell (press release)
  • “In 2025 we expect reported sales growth of approximately 2.5% to 3.5%… gross margin… expand approximately 25 bps… Adjusted EPS expectation… 7% to 8% growth.” — CEO Matthew Farrell (outlook)
  • “Price increases are not really anything that’s being discussed right now… The consumer is exhausted… we’re offsetting [inflation] with productivity.” — CFO Rick Dierker
  • “We have… over $6 [billion] of firepower… dry powder to do M&A.” — CFO Rick Dierker
  • “HERO has been a fantastic brand… we’re already in number one positions in patches [internationally]… before we’ve introduced NPD.” — CFO/EVP International

Q&A Highlights

  • Vitamins trajectory: Expect further near-term decline; major innovation wave (renovation, Power Plus, sugar-free) aims to trigger an inflection; shelf space gains contingent on reestablishing growth proof points.
  • HERO & THERABREATH durability: Double-digit growth runway driven by low awareness and household penetration; international rollout to 50+ countries underway; early markets already #1 in patches.
  • Category growth and promos: 2025 baseline categories ~2.5% with normalized promos; CHD to win on share gains within that backdrop.
  • Margin/inflation: FY25 GM +25 bps despite moderate inflation (ethylene/resins, natural gas, depreciation/3PL); offset via productivity; tariff exposure reduced; outlook excludes tariff changes.
  • ERP: Upgrade costs (~1% EPS drag in 2025) excluded from adjusted EPS; go-live targeted 1H26.

Estimates Context

  • S&P Global Wall Street consensus data was unavailable at the time of retrieval due to an API limit. As a result, we cannot provide definitive “vs. consensus” for Q4. However, CHD beat its own Q4 outlook on revenue, organic growth, and adjusted EPS.
  • Where estimates may adjust: Q1 2025 adj EPS guide ($0.90, -6% YoY) and full-year 7–8% adj EPS growth with back-half weighting likely drive near-term downward 1H and upward 2H estimate phasing; moderate gross margin expansion (+25 bps) and higher 1H marketing should be reflected in models.

Key Takeaways for Investors

  • Clean beat vs internal Q4 outlook on sales, organic growth, and adjusted EPS amid flat adjusted gross margin, signaling strong execution and volume-led momentum into FY25.
  • FY25 setup is conservative but constructive: organic +3–4%, GM +25 bps, adj EPS +7–8% with back-half weighting; Q1 guide (EPS -6% YoY) reflects front-loaded marketing. Trading setup skews to 2H acceleration.
  • Brand engines intact: ARM & HAMMER Deep Clean, Power Sheets, Hardball litter; HERO and THERABREATH continue to take share; international rollout a multi-year growth vector.
  • Vitamins is the swing factor: $357M impairment behind, but category and brand still in transition; 2025 renovation (taste, Power Plus, sugar-free) is key to inflection. Monitor sell-through and shelf presence.
  • Strong cash generation ($1.16B FY24; ~$1.15B FY25) supports 4% dividend hike and optionality for M&A (> $6B dry powder; net leverage ~1.5x).
  • Pricing restraint should aid volume/share as consumer remains stretched; cost productivity program remains the primary margin lever.
  • Risk watchlist: macro category growth (~2.5%), input cost inflation (ethylene/resins, natural gas), tariff policy shifts (excluded from outlook), and execution on VMS turnaround.

Appendix: Prior Quarter Trend Context

  • Q3 2024: Net sales $1.511B (+3.8%); organic +4.3%; adjusted EPS $0.79; reported loss per share -$0.31 due to VMS impairment; adjusted GM +60 bps YoY; marketing 12.3% of sales.
  • Q2 2024: Net sales $1.511B (+3.9%); organic +4.7%; adjusted EPS $0.93; reported EPS $0.99 (tariff benefit); adjusted GM +150 bps YoY; marketing 10.1% of sales.