Business Segments & Portfolio - Church & Dwight's domestic segment accounts for 77% of its business, while international contributes 18%, and the Specialty Products Division (SPD) makes up 5%[11] - In 2024, Church & Dwight's total company net sales were approximately $6.1 billion[12] - Approximately 75% of Church & Dwight's sales and profits are represented by 8 power brands[15] - In 2024, Church & Dwight's portfolio was divided into Household (49%), Personal Care (46%), and SPD (5%)[16] - Church & Dwight's product portfolio consists of 36% value products and 64% premium products[18] Brand Performance & Market Share - In the liquid laundry detergent category, Arm & Hammer experienced a 3.4% increase in dollar sales in Q1 2025 and a 3.1% increase in Q2 2025, compared to category growth of 0.2% and 1.4% respectively[45] - Arm & Hammer's liquid laundry dollar share has grown from 5% in 2006 to 14.8% YTD 2025[48] - In the clumping litter category, Arm & Hammer litter saw a 2.1% increase in dollar sales in Q1 2025 and a 4.1% increase in Q2 2025, compared to category growth of 2.3% and 3.4% respectively[57] - Arm & Hammer litter's dollar share has consistently increased from 23.2% in 2020 to 24.7% YTD 2025[59] - Hero acne brand experienced a 13% increase in dollar sales in Q1 2025 and an 11.4% increase in Q2 2025, compared to category declines of -1.2% and growth of 1.7% respectively[65] - Hero's total acne dollar share has grown from 1.2% in 2020 to 21.8% YTD 2025, making it the 1 acne brand[68] - TheraBreath mouthwash experienced a 26.2% increase in dollar sales in Q1 2025 and a 22.5% increase in Q2 2025, compared to category declines of -0.5% and -1.6% respectively[81] - TheraBreath's total mouthwash dollar share has grown from 3.9% in 2020 to 20.7% YTD 2025, achieving an all-time share high and becoming the 2 mouthwash brand[84] - Batiste dry shampoo experienced a -4.9% decrease in dollar sales in Q1 2025 and a -6.9% decrease in Q2 2025, compared to category growth of 2.7% and 6.8% respectively[97] - Batiste's dry shampoo dollar share has grown from 36.7% in 2020 to 41.9% YTD 2025, maintaining its position as the 1 dry shampoo brand[98] Financial Performance & Outlook - The company's evergreen model targets include +4% organic sales growth, +25 to +50 bps gross margin improvement, flat % but higher $ marketing spend, -25 to 0 bps SG&A reduction, +50 bps operating margin improvement, and +8% EPS growth[181] - The company's financial outlook for FY 2025 (as of August 1, 2025) includes 0% to +2% organic sales growth, -60 bps adjusted gross margin, ~11% marketing %, lower adjusted SG&A, ~23% effective tax rate, 0% to +2% adjusted EPS growth, and ~$1.05 billion cash from operations[200] - The company anticipates a ~$190 million impact from tariffs, with ~$50 million in mitigating actions[204] - The company's acquisition power is approximately $5.3 billion[214]

Core Insights - Insider buying activity is closely monitored by investors as it may indicate long-term company prospects [1][5] - Recent insider purchases have been made by CEOs of Church & Dwight (CHD), Eli Lilly (LLY), and Viatris (VTRS) [1][7] Church & Dwight (CHD) - The CEO of Church & Dwight purchased approximately 5,500 shares for a total cost of just over $500,000 in mid-August [2] - Despite a 10% decline in share price in 2025, insider buying activity has been noted as a positive sign [2] Eli Lilly (LLY) - Eli Lilly's shares have decreased by 5% in 2025, underperforming the S&P 500 [4] - Following a period of selling, insiders have begun to buy shares after the company's earnings report [4][5] Viatris (VTRS) - Viatris CEO Scott Smith acquired 22,000 shares at a total cost of approximately $220,000 [6] - The company's shares have lagged the S&P 500 by about 12% in 2025, yet insider buying has been observed at discounted prices [6]

Group 1 - The article compares Grocery Outlet Holding Corp. (GO) and Church & Dwight (CHD) as potential undervalued stocks in the Consumer Products - Staples sector [1] - GO has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to CHD, which has a Zacks Rank of 3 (Hold) [3] - Value investors consider various fundamental metrics, including P/E ratio, P/S ratio, earnings yield, and cash flow per share, to identify undervalued stocks [4] Group 2 - GO has a forward P/E ratio of 24.12, while CHD has a forward P/E of 26.19, suggesting that GO may be more attractively priced [5] - The PEG ratio for GO is 3.33, compared to CHD's PEG ratio of 3.75, indicating that GO may offer better value relative to its expected earnings growth [5] - GO's P/B ratio is 1.53, significantly lower than CHD's P/B of 5.04, contributing to GO's Value grade of B versus CHD's Value grade of D [6]

Core Insights - Church & Dwight Company, Inc. reported better-than-expected second-quarter results with adjusted earnings per share of 94 cents, surpassing the analyst consensus estimate of 85 cents [1] - Quarterly sales reached $1.51 billion, exceeding the expected $1.48 billion [1] - The company reaffirmed its FY25 adjusted earnings per share guidance at $3.44–$3.51, aligning with consensus estimates of approximately $3.48 [1] Financial Expectations - For the third quarter, Church & Dwight anticipates reported and organic sales growth of approximately 1%-2% [2] - The company expects adjusted gross margin contraction of approximately 100 basis points due to inflation, tariff costs, lower margins from exited businesses, and increased marketing investments [2] - Adjusted EPS for the third quarter is projected to be 72 cents per share, reflecting a 9% decrease compared to last year's adjusted third-quarter EPS [2] Market Reaction - Following the earnings announcement, Church & Dwight shares fell 2.5% to trade at $91.70 [3] - Analysts adjusted their price targets for Church & Dwight after the earnings report [3] Analyst Ratings - Barclays analyst Lauren Lieberman maintained an Underweight rating and lowered the price target from $84 to $83 [5] - Evercore ISI Group analyst Javier Escalante maintained an In-Line rating and reduced the price target from $102 to $101 [5] - JP Morgan analyst Andrea Teixeira also maintained an Underweight rating, lowering the price target from $97 to $92 [5]

Core Insights - Church & Dwight Co., Inc. (CHD) reported second-quarter 2025 results with both net sales and earnings exceeding the Zacks Consensus Estimate, despite a year-over-year decline in net sales [1][9] - Adjusted earnings per share (EPS) for the quarter was 94 cents, surpassing the estimate of 85 cents and reflecting a 1% increase from the previous year [1][9] Financial Performance - Net sales totaled $1,506.3 million, a decrease of 0.3% year over year, but above the Zacks Consensus Estimate of $1,480 million [2] - Organic sales increased by 0.1%, driven by a 0.8% rise in volume, which was partially offset by a 0.7% decline in pricing and product mix [2][9] - Gross margin contracted by 410 basis points to 43%, with an adjusted gross margin of 45%, down 40 basis points year over year due to higher manufacturing costs and product mix issues [3][9] Segment Performance - Consumer Domestic segment net sales fell 1.4% to $1,154.1 million, with organic sales declining by 1% [5] - Consumer International segment saw a 5.3% increase in net sales to $277.6 million, with organic sales climbing 4.8% [6] - Specialty Products segment experienced a 3% decline in sales to $74.6 million, although organic sales grew by 0.1% [7] Financial Health - The company ended the quarter with cash and cash equivalents of $923.2 million and long-term debt of $2,205.8 million [8] - Cash from operations for the first half of 2025 was $416.5 million, with capital expenditures amounting to $39 million [8] Future Outlook - For 2025, CHD anticipates organic sales growth of around 0-2%, influenced by the Touchland acquisition and the impact of exiting certain businesses [11] - The company expects a full-year reported gross margin of 44%, with adjusted gross margin projected to contract by 60 basis points compared to 2024 [12] - Marketing expenses as a percentage of sales are expected to be approximately 11%, reflecting continued investment in brands and innovation [12][13]

Core Insights - Church & Dwight reported Q2 2025 earnings per share of $0.94 (Non-GAAP), exceeding analyst expectations of $0.86 and its own guidance of $0.85 adjusted EPS [1][5] - Net sales (GAAP) reached $1,506.3 million, surpassing estimates by $19.1 million but down 0.3% year-over-year [1][5] - The company faces challenges with gross margin tightening and underperformance in certain product categories, particularly vitamins [1][7] Financial Performance - Non-GAAP EPS for Q2 2025 was $0.94, a 1.1% increase from $0.93 in Q2 2024 [2] - GAAP revenue was $1,506.3 million, a slight decrease of 0.3% from $1,511.2 million in Q2 2024 [2] - Organic sales growth was minimal at 0.1%, with domestic organic sales declining by 1.0% while international sales grew by 4.8% [2][6] Business Strategy - The company focuses on "power brands" that contribute approximately 70% of net sales and profits, including laundry detergent and vitamins [3] - Recent strategies include acquisitions, international expansion, and optimizing brand mix, while also pruning underperforming businesses [4] - The vitamin segment is under review for potential restructuring or divestment due to ongoing underperformance [11] Market Dynamics - Five out of seven power brands gained market share, with HERO, ARM & HAMMER, and THERABREATH identified as key growth drivers [9] - The newly acquired Touchland brand has become the eighth power brand, contributing to growth [10] - E-commerce sales accounted for 23% of total consumer sales, up from 22% in Q2 2024 [10] Operational Challenges - Gross margin decreased to 45.0% (Non-GAAP), down 0.4 percentage points from the previous year, impacted by rising manufacturing costs and tariffs [2][7] - The company incurred approximately $51 million in pre-tax charges related to exits from underperforming businesses [8] - Cash from operations fell by $83.4 million to $416.5 million due to working capital changes and lower operating earnings [13] Future Outlook - For fiscal 2025, management expects net sales and organic sales growth in the range of 0% to 2%, with adjusted EPS also projected to rise by 0% to 2% [14] - Q3 2025 guidance anticipates reported and organic sales growth of 1% to 2%, but adjusted EPS is expected to decline to $0.72, a 9% decrease from the prior year [15] - Strategic decisions regarding the vitamin business are expected by the end of fiscal 2025 [15]

PART I – FINANCIAL INFORMATION [ITEM 1: FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201%3A%20FINANCIAL%20STATEMENTS) Unaudited condensed consolidated financial statements, including income, comprehensive income, balance sheets, cash flows, and equity, are presented with detailed notes [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company's income statements show a decline in net sales, gross profit, and net income for both the three and six months ended June 30, 2025, compared to 2024 **Three Months Ended June 30, 2025 vs. 2024:** | Metric | 2025 (Millions) | 2024 (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Net Sales | $1,506.3 | $1,511.2 | -0.3% | | Gross Profit | $647.0 | $712.1 | -9.1% | | Income from Operations | $261.7 | $336.9 | -22.3% | | Net Income | $191.0 | $243.5 | -21.6% | | Diluted EPS | $0.78 | $0.99 | -21.2% | | Cash dividends per share | $0.30 | $0.28 | 7.1% | **Six Months Ended June 30, 2025 vs. 2024:** | Metric | 2025 (Millions) | 2024 (Millions) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Net Sales | $2,973.4 | $3,014.5 | -1.4% | | Gross Profit | $1,306.6 | $1,399.1 | -6.6% | | Income from Operations | $557.0 | $641.9 | -13.2% | | Net Income | $411.1 | $471.2 | -12.8% | | Diluted EPS | $1.66 | $1.91 | -13.1% | | Cash dividends per share | $0.59 | $0.57 | 3.5% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income decreased for both the three and six-month periods, with foreign exchange translation adjustments showing a positive shift **Comprehensive Income (Millions):** | Period | 2025 | 2024 | | :------------------- | :----- | :----- | | Three Months Ended June 30 | $198.7 | $243.7 | | Six Months Ended June 30 | $423.6 | $469.3 | **Other Comprehensive Income (Loss) Components (Six Months Ended June 30, 2025 vs. 2024):** | Component | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :-------------- | :-------------- | | Foreign exchange translation adjustments | $23.2 | $(6.3) | | Defined benefit plan adjustments gain | $0.4 | $(0.2) | | Income (loss) from derivative agreements | $(11.1) | $4.6 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight decrease in total assets and liabilities, while total stockholders' equity increased from December 2024 to June 2025 **Balance Sheet Highlights (Millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total Current Assets | $2,229.8 | $2,240.6 | | Total Assets | $8,788.2 | $8,883.1 | | Total Current Liabilities | $1,208.6 | $1,315.9 | | Total Liabilities | $4,394.5 | $4,522.3 | | Total Stockholders' Equity | $4,393.7 | $4,360.8 | [Condensed Consolidated Statements of Cash Flow](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) Net cash provided by operating activities decreased, while net cash used in investing activities also decreased, and net cash used in financing activities increased significantly **Cash Flow Summary (Six Months Ended June 30, Millions):** | Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net Cash Provided By Operating Activities | $416.5 | $499.9 | | Net Cash Used In Investing Activities | $(39.6) | $(91.5) | | Net Cash Used In Financing Activities | $(426.8) | $(257.4) | | Net Change In Cash and Cash Equivalents | $(40.9) | $147.2 | | Cash and Cash Equivalents at End of Period | $923.2 | $491.7 | - Cash paid for interest (net of capitalized amounts) was **$46.6 million** in 2025 and **$48.2 million** in 2024. Income taxes paid were **$146.7 million** in 2025 and **$140.0 million** in 2024[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased from January 1, 2025, to June 30, 2025, influenced by net income, cash dividends, stock purchases, and other comprehensive income adjustments **Stockholders' Equity Changes (Millions):** | Metric | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :------------ | | Total Stockholders' Equity | $4,360.8 | $4,393.7 | | Net income | $220.1 (Q1) / $191.0 (Q2) | | | Cash dividends | $(72.4) (Q1) / $(72.6) (Q2) | | | Stock purchases | | $(300.0) | | Accumulated Other Comprehensive Income (Loss) | $(30.9) | $(18.4) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) Unaudited financial statements, including normal adjustments and R&D in SG&A, should be read with the 2024 10-K - Research and development expenses were **$35.8 million** for Q2 2025 (vs. **$33.0 million** in Q2 2024) and **$68.6 million** for the first six months of 2025 (vs. **$63.1 million** in 2024)[21](index=21&type=chunk) [2. New Accounting Pronouncements](index=10&type=section&id=2.%20New%20Accounting%20Pronouncements) ASU 2023-07 (Segment Reporting) was adopted retrospectively; other ASUs on income taxes and expense disaggregation are being evaluated - ASU 2023-07, Segment Reporting, was adopted retrospectively for fiscal years beginning after December 15, 2023, leading to enhanced disclosures about significant segment expenses[22](index=22&type=chunk) - ASU 2023-09 (Income Taxes) and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures) are not yet adopted, and the Company is evaluating their potential impact[23](index=23&type=chunk)[24](index=24&type=chunk) [3. Inventories](index=11&type=section&id=3.%20Inventories) Inventory balances slightly increased from December 2024 to June 2025, primarily due to higher finished goods **Inventories (Millions):** | Category | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Raw materials and supplies | $134.8 | $140.4 | | Work in process | $40.2 | $45.4 | | Finished goods | $447.4 | $427.5 | | **Total** | **$622.4** | **$613.3** | [4. Property, Plant and Equipment, Net ("PP&E")](index=11&type=section&id=4.%20Property%2C%20Plant%20and%20Equipment%2C%20Net%20(%22PP%26E%22)) Net PP&E slightly decreased, while depreciation expense increased year-over-year for both periods **Net PP&E (Millions):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Gross PP&E | $1,867.9 | $1,851.8 | | Less accumulated depreciation | $944.4 | $920.1 | | **Net PP&E** | **$923.5** | **$931.7** | **Depreciation Expense on PP&E (Millions):** | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Three Months Ended June 30 | $22.5 | $20.4 | | Six Months Ended June 30 | $45.1 | $38.8 | - An impairment charge of **$60.0 million** related to Construction in progress assets was recorded in SG&A in the Consumer Domestic segment during Q3

Financial Data and Key Metrics Changes - Organic sales grew by 0.1%, exceeding the outlook of -2% to flat [4][22] - Adjusted EPS was $0.94, which was $0.09 higher than the $0.85 outlook [5][22] - Adjusted gross margin decreased by 40 basis points to 45% [4][22] - Reported revenue was down 0.3% [22] Business Line Data and Key Metrics Changes - U.S. Consumer business organic sales declined by 1%, with volume growth offset by negative price mix [11] - ARM and HAMMER liquid laundry detergent consumption grew by 3.2%, outpacing the category growth of 1.3% [12] - ARM and HAMMER Litter consumption grew by 3.4%, while the category was up 4.1% [13] - TheraBreath consumption grew by 22.5%, despite the mouthwash category being down [14] - HERO outpaced the acne category with consumption growth of 11.4% compared to 1.5% category growth [15] - International business delivered sales growth of 5.3%, with organic growth of 4.8% [17] Market Data and Key Metrics Changes - Online sales as a percentage of global sales reached 23% [7] - Category consumption for the largest categories finished around 2.5% in Q2 [5] - Consumer confidence levels have started to recover after hitting a twelve-year low [6] Company Strategy and Development Direction - The company is focused on a balanced portfolio of value and premium products, with a strong emphasis on innovation [6][7] - Strategic actions include exiting the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses [8] - The company is undertaking a strategic review of its vitamin business, exploring options for divestiture or joint ventures [10][36] Management's Comments on Operating Environment and Future Outlook - The macro environment remains volatile and uncertain, but the company is confident in achieving its full-year organic outlook of 0% to 2% [6][19] - Management noted that category consumption is looking better than three months ago, with brands gaining both dollar and volume share [19][20] - The company expects continued innovation to drive growth in the back half of the year [19][68] Other Important Information - The company closed the acquisition of Touchland, which is experiencing strong growth [7][49] - Cash from operating activities for the first six months was $416.5 million, a decrease of $83 million from last year [25] - The company executed a $300 million share repurchase [25] Q&A Session Summary Question: Can you provide context on the strategic review of the vitamin business? - Management outlined three options: divestiture, joint venture, or restructuring the business for profitability [34][36] Question: What is driving the good consumption trends in the laundry business? - The company is seeing market share performance due to effective pricing and sizing strategies [39][40] Question: Can you quantify the impact of retailer destocking? - The destocking was around a 100 basis point drag in Q2, down from 300 basis points in Q1 [44][45] Question: What are the priorities for the Touchland business post-acquisition? - Touchland is focused on driving category growth and expanding household penetration [49][50] Question: How does the company view the promotional environment? - The promotional landscape is mixed, with litter promotions spiking while laundry promotions remain consistent [82][85] Question: What is the outlook for gross margins? - Gross margins are expected to contract by 60 basis points due to tariffs and inflation, but productivity efforts are ongoing [27][89]

Financial Data and Key Metrics Changes - Organic sales grew by 0.1%, exceeding the outlook of -2% to flat [4][23] - Adjusted EPS was $0.94, which was $0.09 higher than the $0.85 outlook [5][23] - Adjusted gross margin decreased by 40 basis points to 45% [4][23] - Reported revenue was down 0.3% [23] Business Line Data and Key Metrics Changes - U.S. Consumer business organic sales declined by 1%, with volume growth offset by negative price mix [11] - ARM and HAMMER liquid laundry detergent consumption grew by 3.2%, while the category grew by 1.3% [12] - TheraBreath consumption grew by 22.5%, maintaining a 21% share in the mouthwash category [14] - International business delivered sales growth of 5.3%, with organic sales increasing by 4.8% [17] Market Data and Key Metrics Changes - Category consumption for the largest categories finished around 2.5% in Q2 [6] - Online sales as a percentage of global sales reached 23% [7] - The gummy vitamin category grew almost 4%, marking the third consecutive quarter of growth [10] Company Strategy and Development Direction - The company is focused on a balanced portfolio of value and premium products, emphasizing innovation [6][8] - Strategic actions include exiting the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses [8] - The company is undertaking a strategic review of its vitamin business, exploring divestiture options and potential partnerships [10][122] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has started to recover after hitting a twelve-year low [6] - The macro environment remains volatile, with uncertainty around the U.S. Consumer and global economy [18] - The full-year organic growth outlook remains at 0% to 2%, reflecting a balanced view of the macro environment [27] Other Important Information - The company closed the acquisition of Touchland, which is the fastest-growing brand in the hand sanitizer category in the U.S. [7] - Cash from operating activities for the first six months was $416.5 million, a decrease of $83 million compared to last year [26] - The company executed a $300 million share repurchase through an accelerated share repurchase program [26] Q&A Session Summary Question: Can you provide context on the strategic review of the vitamin business? - Management outlined three options: divestiture, joint venture, or shrinking the business for profitability [38][122] Question: What is driving the good consumption trends in the laundry business? - The company highlighted effective pricing strategies and consumer trading up to larger sizes [44] Question: Can you quantify the impact of retailer destocking? - Management estimated a 100 basis point drag in Q2, down from 300 basis points in Q1 [49] Question: What are the priorities for the Touchland business post-acquisition? - Focus on driving category growth, increasing household penetration, and launching new products [52][54] Question: How does the company view the promotional environment? - The promotional landscape is mixed, with litter category promotions spiking above historical averages while laundry promotions remain consistent [88] Question: What is the outlook for gross margins? - Gross margin is expected to contract by 60 basis points due to elevated input costs and tariffs [28][92]

Core Insights - Church & Dwight (CHD) reported quarterly earnings of $0.94 per share, exceeding the Zacks Consensus Estimate of $0.85 per share, and showing a slight increase from $0.93 per share a year ago, resulting in an earnings surprise of +10.59% [1][2] - The company achieved revenues of $1.51 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.76%, consistent with year-ago revenues [2] - Church & Dwight has outperformed consensus EPS estimates three times over the last four quarters, indicating a positive trend in earnings performance [2] Earnings Outlook - The sustainability of the stock's price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $1.54 billion, and for the current fiscal year, it is $3.48 on revenues of $6.11 billion [7] Industry Context - The Consumer Products - Staples industry, to which Church & Dwight belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]