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Leading consumer products company, Church & Dwight Co. Inc. (CHD - Snapshot Report) posted fourth-quarter 2012 earnings of 57 cents a share that came in line with the Zacks Consensus Estimate and increased 8% from 53 cents earned in the comparable prior-year quarter. However, including one-time items, earnings jumped 30% year over year.

This Zacks Rank #2 (Buy) stock witnessed an improvement of 10.8% in its top line to $809.7 million and surpassed the Zacks Consensus Estimate of $803 million. Organic sales increased 4.4%, reflecting 4.3% growth in volume and a positive effect of 0.1% through pricing.

The company’s close competitors, Clorox Corporation (CLX - Analyst Report) and Colgate-Palmolive Company (CL - Analyst Report) also came up with strong results. Clorox posted adjusted earnings of 90 cents a share, up 13.9% year over year and surpassed the Zacks Consensus Estimate of 81 cents.

Colgate-Palmolive came up with fourth-quarter 2012 adjusted earnings of $1.41 per share, approximately 8.5% above the year-ago quarter’s adjusted earnings of $1.30. Moreover, quarterly earnings came ahead of the Zacks Consensus Estimate of $1.40 per share.

Segment Details

Consumer Domestic's net sales elevated 17.3% year over year to $609.4 million, driven by a 42.7% jump in personal care products revenues to $252.3 million coupled with a 4.2% growth in household products revenues to $357.1 million.

On an organic basis, sales rose 5.5% during the quarter, reflecting higher sales of ARM & HAMMER liquid laundry detergents. Moreover, higher sales of ARM & HAMMER cat litter, TROJAN products, ARM & HAMMER CRYSTAL BURST unit dose laundry detergent, TOOTHTUNES toothbrushes and ARM & HAMMER SPINBRUSH battery-operated toothbrushes boosted results. This was, however, partially offset by sluggish sales of ANSWER diagnostic kits, ARM & HAMMER powdered laundry detergent, and ARM & HAMMER dental care toothpaste.

Increases in organic growth represent a 5.8% improvement in volume, while product mix and pricing unfavorably impacted sales by 0.3%.

Consumer International's sales declined 6% year over year to $136.3 million. Organic sales increased 2.7% attributable to healthy sales in Australia, Canada, Brazil and Mexico. The rise in organic revenue reflected 3.5% growth in volume, while product mix and pricing unfavorably impacted sales by 0.8%.

Specialty Products' sales decreased 3.8% year over year to $64 million. Moreover, organic sales inched down 0.3%, reflecting 5.8% contraction in volume, partially offset by a favorable contribution of 5.5% from product pricing. The positive impact on pricing was a result of recovery of input costs through customers.

Margins

Gross profit increased 13.2% to $358.4 million compared with $316.5 million in the prior- year quarter. Moreover, adjusted gross margin expanded 210 basis points to 45.4%, reflecting sales growth in high margin personal care products, increases in cat litter price coupled with in-house production of unit dose detergent and lower trade spending.

Operating income escalated 14.7% year over year to 136.4 million during the quarter. Moreover, operating margin expanded approximately 50 basis points to 16.6%, reflecting a decrease in marketing expenses as a percentage of sales.

Other Financial Details

Church & Dwight ended the quarter with cash and cash equivalents of $343 million, long-term debt of $649.4 million and shareholders’ equity of $2,061.1 million.

During the quarter, the company repurchased $50 million worth of shares, while it repurchased another $50 million worth of shares in Jan 2013. The company currently has $220 million left under the current share buyback program.

On Jan 30, 2013management increased its quarterly dividend by 17%, bringing the annualized payout to $1.12 per share. The quarterly dividend, after the hike, will come to 28 cents a share, up from the prior payment of 24 cents. The enhanced quarterly dividend will be payable on Mar 1, 2013, to shareholders of record as on Feb 15, 2013.

Moreover, during 2012, the company generated operating cash flow of $523.6 million, reflecting an increase of 19.6% year over year and incurred $74.5 million in capital expenditures. Going forward, the company expects to generate more than $1.2 billion in free cash flow in the upcoming three years.

Outlook

The company expects innovative product launches to continue boosting organic sales in 2013, and anticipates organic growth to be in the range of 3%-4%. Church & Dwight forecasts commodity prices to remain stable and expects gross margin to rise by 25 –50 basis points.

Management anticipates earnings per share to be $2.79 for 2013 and expects first quarter 2013 earnings to increase by 8% year over year.

Other Stock to Consider

Besides Church & Dwight, Proctor & Gamble Company (PG - Analyst Report) carrying a favorable Zacks Rank #2 (Buy), is another stock in the household products industry worth considering.

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