• Organic Sales Growth: Decreased by 1.2%, impacted by retail destocking.
• Adjusted EPS: $0.91, down 5.2% from the prior year, but beat the outlook by $0.01.
• Gross Margin: 45.1%, a decrease of 60 basis points from the previous year.
• Marketing Expense: 9.3% of sales, 80 basis points lower than Q1 of last year.
• SG&A Expense: Increased by 40 basis points year over year.
• Cash from Operating Activities: $185.7 million, a decrease of $77.3 million from last year.
• Capital Expenditures: $16.5 million, a decrease of $29.8 million from the prior year.
• Full Year Organic Revenue Outlook: Revised to 0% to 2% from 3% to 4%.
• Full Year Gross Margin Outlook: Expected to contract by 60 basis points versus 2024.
• Full Year Adjusted EPS Outlook: Revised to 0% to 2% growth, down from 7% to 8%.
• Cash Flow from Operations: Estimated at approximately $1.05 billion for the full year.
• Q2 Organic Sales Outlook: Expected to be approximately negative 2% to flat.
• Q2 Adjusted EPS Outlook: Expected to be $0.85 per share, a decrease of 9% versus last year.

• Warning! GuruFocus has detected 2 Warning Sign with CHD.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Church & Dwight Co Inc (NYSE:CHD) gained market share in 9 of its 14 major brands, with over 80% of its business growing volume share in Q1.
• Online sales have grown significantly, now accounting for nearly 23% of global sales.
• Adjusted EPS for Q1 was $0.91, beating the company's outlook by $0.01.
• The company is taking strategic actions to reduce tariff exposure by approximately 80%, including no longer sourcing Waterpik flossers from China for the US market.
• International business delivered sales growth of 2.7% in Q1, with organic sales increasing by 5.8% due to higher volume.

Negative Points

• Organic sales decreased by 1.2% in Q1, falling short of the company's outlook due to retail destocking and weakening consumer demand.
• The Gummy Vitamin business continues to be a drag on organic growth, with consumption down 19% despite the category growing 4.8%.
• The company revised its full-year organic growth outlook to 0% to 2%, down from a previous 3% to 4%, due to a weaker US consumer.
• First quarter adjusted gross margin decreased by 60 basis points from a year ago, impacted by commodity inflation and higher manufacturing costs.
• Full-year adjusted EPS growth is now expected to be 0% to 2%, down from a previous view of 7% to 8%, primarily due to lower sales outlook and tariff pressures.

Q & A Highlights

Q: Can you provide updated expectations for organic sales growth by segment, and did international performance meet your expectations for Q1? A: International performed as expected in Q1 with organic growth of about 6%, and SPD grew by about 3%. Looking forward, international may face some pressure due to global macroeconomic factors, while SPD is expected to perform slightly better than in Q1. The domestic business saw a negative 3% in Q1, and similar performance is expected in Q2, with improvement anticipated in the back half of the year. (Rick Dierker, CEO; Lee McChesney, CFO)

Q: How do you view the promotional environment given the softer category outlook, and do you expect it to intensify? A: In Q1, laundry promotions were stable at 34% of sales on deal, similar to previous quarters. Litter promotions were also stable. As categories remain flat, promotional spending may increase, but we believe we are well-positioned with the right level of promotion. (Rick Dierker, CEO)

Q: What is the impact of tariffs on your earnings guidance, and how do you plan to mitigate this in 2025 and beyond? A: The gross impact of tariffs is around $190 million on a 12-month run rate basis. Strategic actions, including exiting certain businesses, will reduce this to $100 million, and further supply chain actions will bring it down to $40 million. For 2025, the net tariff impact in our outlook is around $30 million, and we aim to further mitigate this over the next 12 months. (Rick Dierker, CEO)

Q: How are you addressing the challenges in the vitamin business, and what are your expectations for its performance? A: We are focused on innovation, reformulating for better taste, and enhancing marketing to drive trial. We expect to see green shoots and inflection points in the business by July. The goal is to stop the decline in distribution points and grow from here. We will provide more updates after Q2. (Rick Dierker, CEO)

Q: Can you discuss your capital allocation strategy, particularly regarding M&A and share repurchases? A: M&A remains our top priority for capital allocation, as it is a significant value creator. We have substantial firepower for acquisitions and are actively looking for the right opportunities. If we do not engage in M&A for an extended period, we may consider share repurchases, but our focus is on keeping resources available for potential acquisitions. (Rick Dierker, CEO; Lee McChesney, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.