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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several negative indicators: declining EPS and revenue, reduced organic sales, and decreased gross margins due to tariff and inflation pressures. The lack of share repurchase or dividend announcements and unclear management responses further add to the negative sentiment. Despite some positive aspects, like a stable promotional environment and international growth, the overall sentiment is negative due to weak financial performance and guidance.
Adjusted EPS $0.91, down 5.2% year-over-year due to lower sales and tariff pressures.
Reported Revenue Down 2.4% year-over-year, primarily due to lower volume and retailer destocking.
Organic Sales Down 1.2% year-over-year, driven by a 1.4% decline in volume, partially offset by a 0.2% positive pricing and mix.
Adjusted Gross Margin 45.1%, a decrease of 60 basis points year-over-year due to commodity inflation and higher manufacturing costs, despite improved productivity and positive mix.
Marketing Expense as a Percentage of Sales 9.3%, down 80 basis points year-over-year, as the company targets 11% for the year.
Adjusted SG&A Increased 40 basis points year-over-year, primarily due to volume changes.
Cash from Operating Activities $185.7 million, a decrease of $77.3 million year-over-year due to lower cash earnings and sales timing impact on working capital.
Capital Expenditures $16.5 million, a decrease of $29.8 million year-over-year, with an expectation of approximately $130 million for the full year.
Effective Tax Rate 22%, up 210 basis points year-over-year.
Full Year Cash Flow from Operations Estimated at approximately $1.05 billion, impacted by lower EPS and one-time charges.
New Product Launches: BATISTE Light is set to launch this year, continuing innovation in the dry shampoo category.
New Product Initiatives: Plans for new products and enhanced taste profiles in the gummy vitamin segment are expected to be visible starting in May.
Innovative Solutions: HERO is launching innovative solutions and patches, entering the body care segment in 2025.
Market Share Growth: Church & Dwight gained share in nine of its 14 major brands, with 80% of its business growing volume share in Q1.
International Sales Growth: International business delivered sales growth of 2.7% in Q1, with organic sales increasing 5.8%.
U.S. Market Performance: U.S. organic sales declined 3%, driven by negative volume from retail destocking.
Operational Efficiency: The company expects to reduce tariff exposure by approximately 80% through portfolio decisions and supply chain actions.
Cost Management: Adjusted gross margin was 45.1%, with improved productivity offsetting commodity inflation and higher manufacturing costs.
Portfolio Management: Church & Dwight is pursuing strategic alternatives for the Flawless, Spinbrush, and Waterpik showerhead business, which generates $150 million in net sales.
Revised Financial Outlook: The full year organic growth outlook is now 0% to 2%, down from a previous forecast of 3% to 4%.
Retail Destocking Impact: Organic sales decreased 1.2%, primarily due to retailer destocking, which accounted for a drag of approximately 300 basis points on organic growth.
Weakening Consumer Demand: Consumer spending continues to weaken, with organic sales in the U.S. declining 3%, driven entirely by negative volume from retail destocking.
Tariff Exposure: The company projects a gross 12-month run rate tariff exposure of $190 million, with portfolio decisions expected to reduce this exposure by approximately 80%.
Supply Chain Challenges: Supply chain issues impacted the BATISTE brand, contributing to a decline in consumption and market share.
Economic Factors: The outlook for organic revenue growth has been revised down to 0% to 2%, reflecting slower category growth and retailer inventory reductions that are not expected to recover.
Profitability of Divested Brands: The decision to pursue strategic alternatives for the Flawless, Spinbrush, and Waterpik showerhead business is due to their below-average profitability, generating $150 million in net sales.
Adjusted EPS Outlook: Adjusted EPS growth is now expected to be 0% to 2%, down from a previous outlook of 7% to 8%, primarily due to lower sales and tariff pressures.
Portfolio Changes: The company is pursuing strategic alternatives for the Flawless, Spinbrush, and Waterpik showerhead business, which will involve shutting down or selling these businesses. This decision is expected to prune the portfolio and sharpen focus on core brands.
Tariff Management: The company projects a gross 12-month run rate tariff exposure of $190 million, but expects to reduce this exposure by approximately 80% through portfolio decisions and supply chain actions.
New Product Launches: The company is excited about its pipeline of new products, which are expected to drive growth and build on momentum, especially in core categories.
Organic Revenue Outlook: The full year organic revenue outlook is now expected to be approximately 0% to 2%, down from a previous forecast of 3% to 4%.
Adjusted EPS Outlook: The full year adjusted EPS is now expected to grow by 0% to 2%, down from a previous view of 7% to 8%.
CapEx Expectations: Capital expenditures for 2025 are expected to be approximately $130 million, returning to historical levels of 2% of sales.
Cash Flow from Operations: Cash flow from operations for the full year is estimated to be approximately $1.05 billion.
Q2 Adjusted EPS: For Q2, adjusted EPS is expected to be $0.85 per share, a decrease of 9% versus last year.
Share Repurchase Program: The company has not mentioned any share repurchase program during the call.
Dividend Program: There was no discussion regarding a dividend program in the transcript.
The earnings call summary indicates strong financial performance with organic sales growth, increased cash flow, and significant share repurchases. The Q&A section reveals optimism about brand performance, particularly TOUCHLAND, and strategic focus on M&A. Despite some uncertainties, such as future guidance and international challenges, the overall sentiment is positive, with strong brand momentum and innovation strategies. The positive aspects outweigh concerns, suggesting a likely positive stock price movement.
The earnings call highlights a cautious outlook with lowered revenue and EPS guidance, indicating potential struggles. Despite optimism in product innovation and international expansion, the focus on divestitures and tariff management suggests underlying challenges. The Q&A section reveals management's reluctance to provide specifics on strategic decisions and financial impacts, adding uncertainty. The combination of these factors, along with a reduced growth outlook, suggests a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
The earnings call reveals several negative indicators: declining EPS and revenue, reduced organic sales, and decreased gross margins due to tariff and inflation pressures. The lack of share repurchase or dividend announcements and unclear management responses further add to the negative sentiment. Despite some positive aspects, like a stable promotional environment and international growth, the overall sentiment is negative due to weak financial performance and guidance.
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