Church & Dwight Cfo Says On Conf Call Co's Outlook Exclusive Of Impact From Tariffs

Church & Dwight Co., Inc. CHD reported solid fourth-quarter 2024 results, as the top and bottom lines increased year over year, and sales beat the Zacks Consensus Estimate.

The company delivered another year of strong performance, underscoring the strength of its brands, the success of new product launches and a continued focus on execution. Organic growth was primarily driven by volume, a trend expected to persist into 2025. Global online sales formed 21.4% of total consumer sales in 2024. Strategic brand investments position the company well for future growth.

Quarterly adjusted earnings of 77 cents per share came in line with the Zacks Consensus Estimate. The bottom line increased 18.5% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Net sales of $1,582 million advanced 3.5% year over year and surpassed the Zacks Consensus Estimate of $1,563 million. Organic sales increased 4.2% due to gains from volume to the tune of 3%, favorable product mix and pricing of 1.2%. We had expected organic sales growth of 2.5% in the quarter.

Church & Dwight Co., Inc. Price, Consensus and EPS Surprise

Church & Dwight Co., Inc. price-consensus-eps-surprise-chart | Church & Dwight Co., Inc. Quote

A Closer Look at CHD’s Q4 Results

Church & Dwight’s gross margin expanded 10 basis points (bps) to 44.7%. The adjusted gross margin was 44.6%, flat year over year, as enhanced productivity, gains from favorable volumes and mix and high-margin buyouts were countered by elevated manufacturing costs.

Marketing expenses declined $11.1 million year over year to $207.9 million. The company continued making incremental investments in its brands, which helped drive consumption and share. Adjusted SG&A expenses, as a percentage of net sales, decreased 40 bps to 15.2%.

CHD Provides Insights by Segment

Consumer Domestic: Net sales in the segment increased 2.7% to $1,225.7 million due to improved personal care and household sales growth. Our estimate for segment sales growth for the quarter was 2%. Organic sales increased 2.7%, driven by favorable price and product mix (up 0.7%) and volume (up 2%). The uptick was backed by strength in THERABREATH mouthwash, HERO acne products and ARM & HAMMER liquid laundry detergent, somewhat offset by softness in the vitamin business and SPINBRUSH.

Consumer International: Net sales in the segment increased 10.2% to $285.1 million. Organic sales jumped 9.6%, driven by favorable pricing, a product mix of 2.5% and higher volumes to the tune of 7.1%. Sales growth was fueled by THERABREATH, HERO and OXICLEAN.

Specialty Products: Sales in the segment declined 6.6% to $71.2 million, including the impact of exiting the Megalac and food safety businesses. Organic sales grew by 10.3%, driven by higher prices and an improved product mix, which contributed 5%, along with a volume increase of 5.3%.

CHD’s Financial Health Snapshot

This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $964.1 million and long-term debt of $2,204.6 million. For the full-year 2024, cash from operations totaled $1.16 billion. Capital expenditures were $179.8 million in the same time frame.

The company expects about $130 million in capital expenditures for 2025, as it anticipates capital expenditures to return to nearly 2% of sales. For 2025, Church & Dwight expects cash flow from operations of nearly $1.15 billion.

Management announced a 4% dividend hike, taking its quarterly dividend to 29.5 cents per share. This increases the company’s annual dividend payout to nearly $287 million. The raised dividend is payable on March 3, 2025, to shareholders of record as of Feb. 14.

What to Expect From CHD?

In 2024, the company expanded its market share within growing categories, fueled by targeted innovation, impactful marketing and strategic promotional investments. The strength of its brands, coupled with ongoing investments, reinforces confidence heading into 2025. For 2025, the company projects reported sales growth of nearly 2.5-3.5% and organic sales growth (to be driven by volumes) of around 3-4%. This view continues to include expectations of a cautious U.S. consumer due to persistent inflation and high interest rates.

For 2025, management expects the gross margin to expand about 25 bps year over year. Increased input costs are likely to be compensated by a positive mix, improved volume and productivity. The company anticipates marketing expenses as a percentage of sales to exceed 11%. SG&A, as a percentage of sales, is expected to be lower year over year, though the company remains committed to making investments, particularly in e-commerce and international.

CHD expects 2025 adjusted EPS growth of 7-8%, including a 1% headwind from currency movements. Reported EPS is expected to jump around 53-55% in 2025. The anticipated tax rate is roughly 23%. Management expects the EPS growth to be more skewed toward the second half of 2025, as marketing expenditure is more weighted toward the first half.

For the first quarter of 2025, the company expects reported sales growth of around 1% and organic sales growth of about 2%. The gross margin is likely to be flat year over year, and the tax rate is likely to be higher. Church & Dwight expects adjusted EPS of 90 cents per share, representing a 6% decrease year over year.

The company’s shares have risen 2.3% in the past three months against the industry’s 0.2% decline.

Some Solid Staple Bets

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely United Natural Foods, Inc. UNFI, Freshpet FRPT and Tyson Foods TSN.

United Natural currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average. The consensus estimate for United Natural’s current financial-year sales and earnings indicates growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.

Freshpet, a pet food company, presently sports a Zacks Rank #1. FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.

Tyson Foods, a meat product behemoth, currently carries a Zacks Rank #2 (Buy). TSN delivered a trailing four-quarter average earnings surprise of around 57%.

The consensus estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of about 2% and 13.6%, respectively, from the prior-year reported levels.

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Church & Dwight (CHD) reported $1.58 billion in revenue for the quarter ended December 2024, representing a year-over-year increase of 3.5%. EPS of $0.77 for the same period compares to $0.65 a year ago.

The reported revenue represents a surprise of +1.22% over the Zacks Consensus Estimate of $1.56 billion. With the consensus EPS estimate being $0.77, the company has not delivered EPS surprise.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Church & Dwight performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Net sales- Total Consumer Net Sales: $1.51 billion versus the nine-analyst average estimate of $1.49 billion. The reported number represents a year-over-year change of +4.1%.
• Net sales- Consumer- Consumer Domestic: $1.23 billion versus $1.22 billion estimated by nine analysts on average. Compared to the year-ago quarter, this number represents a +2.7% change.
• Net sales- Consumer- Consumer International: $285.10 million compared to the $273.57 million average estimate based on nine analysts. The reported number represents a change of +10.2% year over year.
• Net sales- Specialty Products Division: $71.20 million compared to the $71.60 million average estimate based on nine analysts. The reported number represents a change of -6.6% year over year.
• Net sales- Consumer- Consumer Domestic - Household Products: $654.80 million compared to the $639.46 million average estimate based on seven analysts. The reported number represents a change of +4.4% year over year.
• Net sales- Consumer- Consumer Domestic - Personal Care Products: $570.90 million versus the seven-analyst average estimate of $577.65 million. The reported number represents a year-over-year change of +0.9%.

View all Key Company Metrics for Church & Dwight here>>>

Shares of Church & Dwight have returned +3.2% over the past month versus the Zacks S&P 500 composite's +2.9% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

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