Church & Dwight Co. (CHD) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 28, 2023 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Church & Dwight’s Second Quarter 2023 Earnings Conference Call. Before we begin, I have been asked to remind you that on this call, the company’s management may make forward-looking statements regarding, among other things, the company’s financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in the company’s SEC filings.

I would now like to introduce your host for today’s call, Mr. Matt Farrell, President and Chief Executive Officer of Church & Dwight. Please go ahead, sir.

Matt Farrell

Thank you, operator. Okay. Good morning, everyone. Thanks for joining us today. I’ll begin with a review of Q2 results, and then I’ll turn the call over to Rick Dierker, our CFO. And when Rick is wrapped up, we’ll open the call up for questions. Q2 was an excellent quarter for Church & Dwight. Reported revenue was up 9.7%, exceeding our 7% outlook. And this is thanks to strong results from several brands, including our two most recent acquisitions, HERO and THERABREATH.

Organic sales grew 5.4%. This exceeded our 3% Q2 outlook. Gross margin expanded 270 basis points and marketing as a percentage of sales increased 130 basis points. Two items that are worthy of note. First one is 18% of our global sales were purchased online, compared to 17.5% in the year-ago quarter. And second, private label is stable in our categories, both in the U.S. and internationally.

Adjusted EPS was $0.92, and this was $0.14 higher than our $0.78 EPS outlook. And that result was driven by higher sales, higher-than-expected gross margin and a lower tax rate. Now I’m going to comment on each business. First up is the U.S. The U.S. consumer business had 6.3% organic sales growth and six of our 14 power brands held or gained market share in the quarter. And for context, the brands that grew share represent 65% of our U.S. sales.

Now I want to look at a few of the more important categories in the U.S., starting with laundry. So laundry is a real success story in Q2. Church & Dwight closed out the quarter as the fastest-growing overall laundry detergent, liquid detergent, unit dose detergent and scent booster manufacturer in both dollar and unit share. ARM & HAMMER liquid laundry continues to see strong consumption growth, driven in part by the continued trade down to value brands and in part by media support behind our new, Give it the Hammer master brand advertising campaign.