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Church & Dwight (CHD) Tops Q4 Earnings Estimate, Hikes Dividend
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Church & Dwight Co., Inc. (CHD - Free Report) posted fourth-quarter 2023 results, with the top and the bottom line beating the Zacks Consensus Estimate. Net sales and earnings increased year over year.
The company is benefiting from strength in its brand portfolio, innovations and focus on execution. Church & Dwight is also benefiting from buyout gains. Its recently-acquired THERABREATH mouthwash and the HERO brand delivered impressive consumption growth and boosted market share. Management hiked its quarterly dividend.
Quarter in Detail
Church & Dwight posted adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 64 cents. The bottom line rose 4.8% year over year.
Net sales of $1,528 million advanced 6.4% year over year and beat the Zacks Consensus Estimate of $1,511.6 million. Organic sales increased 5.3% on the back of gains from volume to the tune of 1.3% as well as favorable product mix and pricing of 4%. We had expected organic sales growth of 4% in the quarter.
Church & Dwight Co., Inc. Price, Consensus and EPS Surprise
Gross margin expanded 260 basis points (bps) to 44.6%. The upside can be attributed to better pricing, volume, productivity and gains from the Hero acquisition, which were somewhat offset by increased manufacturing costs. We had expected the gross margin to expand 230 bps to come in at 44.3%.
Marketing expenses increased by $29.3 million year over year to $219 million. As a percentage of net sales, the figure rose 100 bps to 14.3%. Adjusted SG&A expenses, as a percentage of sales, escalated 210 bps to 15.6%, mainly due to increased incentive compensation, among other reasons.
Segmental Details
Consumer Domestic: Net sales in the segment increased 6.4% to $1,193 million on the back of household and personal care sales growth. Our estimate for segment sales for the fourth quarter was $1,181.8 million.
Organic sales increased 5.7% due to favorable price and product mix (up 4.2%) and volume (up 1.5%). The uptick was backed by strength in THERABREATH mouthwash, HERO acne treatments, ARM & HAMMER baking soda, ARM & HAMMER Cat Litter and ARM & HAMMER unit dose laundry detergent.
Consumer International: Net sales in the segment increased 11.9% to $258.8 million. Our estimate for segment sales was $244.5 million. Net sales benefited from favorable currency to the tune of 2.7%. Organic sales were up 9%, driven by favorable pricing and product mix of 5.1% and higher volumes to the tune of 3.9%. Organic sales growth was mainly fueled by THERABREATH, STERIMAR, ARM & HAMMER baking soda and HERO.
Specialty Products: Sales in the segment dropped 9.2% to $76.2 million. Organic sales also fell 9.2% due to soft volumes (down 9%) stemming from challenges in the dairy business.
Image Source: Zacks Investment Research
Other Updates
The Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $344.5 million and long-term debt of $2,202.2 million. For the 12 months ended Dec 31, 2023, cash from operating activities was $1,030.6 million.
Capital expenditures were $223.5 million in the same time frame. The company expects about $180 million in capital expenditures for 2024. It anticipates capital expenditures to return to nearly 2% of sales in 2025.
For 2024, Church & Dwight expects cash flow from operations of nearly $1 billion.
The company announced a 4% hike in quarterly dividend from 27.25 cents to 28.375 cents per share. The revised quarterly dividend will be payable on Mar 1, 2024, to shareholders of record as of Feb 15. This marks the company’s 28th consecutive year of dividend hike.
2024 Guidance
Church & Dwight expects 2024 reported and organic sales growth of 4-5%. Management anticipates reported gross margin expansion of 50-75 bps year over year. The company expects to witness a rise in manufacturing costs mainly due to capacity-related investments, a rise in third-party manufacturing expenses and moderate commodity inflation. Carryover product pricing, mix, favorable volume and productivity are likely to more than offset such costs. Church & Dwight anticipates marketing, as a percentage of sales, to be nearly 11%.
The company projects 2024 adjusted earnings per share (EPS) growth of 7-9% growth, which includes a 1% drag associated with the MEGALAC business. Excluding the MEGALAC impact, adjusted EPS is likely to increase 8-10%. Management expects an annual tax rate of approximately 23%.
Q1 View
For the first quarter of 2024, Church & Dwight expects a nearly 4% increase in reported and organic sales. Management expects to witness gross margin expansion in the quarter alongside expecting a rise in marketing. Management expects adjusted EPS of 85 cents, flat year over year.
Shares of the company have increased 16.5% in the past three months compared with the industry’s 5.8% growth.
3 Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.8%, respectively, from the year-ago reported’s numbers.
Flowers Food (FLO - Free Report) produces and markets packaged bakery food products. FLO currently has a Zacks Rank #2. Flowers Food has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for FLO’s current financial-year sales suggests growth of 5.9% from the year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.
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Church & Dwight (CHD) Tops Q4 Earnings Estimate, Hikes Dividend
Church & Dwight Co., Inc. (CHD - Free Report) posted fourth-quarter 2023 results, with the top and the bottom line beating the Zacks Consensus Estimate. Net sales and earnings increased year over year.
The company is benefiting from strength in its brand portfolio, innovations and focus on execution. Church & Dwight is also benefiting from buyout gains. Its recently-acquired THERABREATH mouthwash and the HERO brand delivered impressive consumption growth and boosted market share. Management hiked its quarterly dividend.
Quarter in Detail
Church & Dwight posted adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 64 cents. The bottom line rose 4.8% year over year.
Net sales of $1,528 million advanced 6.4% year over year and beat the Zacks Consensus Estimate of $1,511.6 million. Organic sales increased 5.3% on the back of gains from volume to the tune of 1.3% as well as favorable product mix and pricing of 4%. We had expected organic sales growth of 4% 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
Gross margin expanded 260 basis points (bps) to 44.6%. The upside can be attributed to better pricing, volume, productivity and gains from the Hero acquisition, which were somewhat offset by increased manufacturing costs. We had expected the gross margin to expand 230 bps to come in at 44.3%.
Marketing expenses increased by $29.3 million year over year to $219 million. As a percentage of net sales, the figure rose 100 bps to 14.3%. Adjusted SG&A expenses, as a percentage of sales, escalated 210 bps to 15.6%, mainly due to increased incentive compensation, among other reasons.
Segmental Details
Consumer Domestic: Net sales in the segment increased 6.4% to $1,193 million on the back of household and personal care sales growth. Our estimate for segment sales for the fourth quarter was $1,181.8 million.
Organic sales increased 5.7% due to favorable price and product mix (up 4.2%) and volume (up 1.5%). The uptick was backed by strength in THERABREATH mouthwash, HERO acne treatments, ARM & HAMMER baking soda, ARM & HAMMER Cat Litter and ARM & HAMMER unit dose laundry detergent.
Consumer International: Net sales in the segment increased 11.9% to $258.8 million. Our estimate for segment sales was $244.5 million. Net sales benefited from favorable currency to the tune of 2.7%. Organic sales were up 9%, driven by favorable pricing and product mix of 5.1% and higher volumes to the tune of 3.9%. Organic sales growth was mainly fueled by THERABREATH, STERIMAR, ARM & HAMMER baking soda and HERO.
Specialty Products: Sales in the segment dropped 9.2% to $76.2 million. Organic sales also fell 9.2% due to soft volumes (down 9%) stemming from challenges in the dairy business.
Image Source: Zacks Investment Research
Other Updates
The Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $344.5 million and long-term debt of $2,202.2 million. For the 12 months ended Dec 31, 2023, cash from operating activities was $1,030.6 million.
Capital expenditures were $223.5 million in the same time frame. The company expects about $180 million in capital expenditures for 2024. It anticipates capital expenditures to return to nearly 2% of sales in 2025.
For 2024, Church & Dwight expects cash flow from operations of nearly $1 billion.
The company announced a 4% hike in quarterly dividend from 27.25 cents to 28.375 cents per share. The revised quarterly dividend will be payable on Mar 1, 2024, to shareholders of record as of Feb 15. This marks the company’s 28th consecutive year of dividend hike.
2024 Guidance
Church & Dwight expects 2024 reported and organic sales growth of 4-5%. Management anticipates reported gross margin expansion of 50-75 bps year over year. The company expects to witness a rise in manufacturing costs mainly due to capacity-related investments, a rise in third-party manufacturing expenses and moderate commodity inflation. Carryover product pricing, mix, favorable volume and productivity are likely to more than offset such costs. Church & Dwight anticipates marketing, as a percentage of sales, to be nearly 11%.
The company projects 2024 adjusted earnings per share (EPS) growth of 7-9% growth, which includes a 1% drag associated with the MEGALAC business. Excluding the MEGALAC impact, adjusted EPS is likely to increase 8-10%. Management expects an annual tax rate of approximately 23%.
Q1 View
For the first quarter of 2024, Church & Dwight expects a nearly 4% increase in reported and organic sales. Management expects to witness gross margin expansion in the quarter alongside expecting a rise in marketing. Management expects adjusted EPS of 85 cents, flat year over year.
Shares of the company have increased 16.5% in the past three months compared with the industry’s 5.8% growth.
3 Appetizing Food Bets
Ingredion Incorporated (INGR - Free Report) , which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, carries a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.8%, respectively, from the year-ago reported’s numbers.
Flowers Food (FLO - Free Report) produces and markets packaged bakery food products. FLO currently has a Zacks Rank #2. Flowers Food has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for FLO’s current financial-year sales suggests growth of 5.9% from the year-ago reported figure.
Lamb Weston (LW - Free Report) , which offers frozen potato products, currently carries a Zacks Rank #2. LW delivered an earnings surprise of 3.6% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings implies growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.