Core Viewpoint - The market anticipates Church & Dwight (CHD) will report a year-over-year increase in earnings driven by higher revenues for the quarter ending December 2024, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The upcoming earnings report is expected on January 31, 2025, with a consensus EPS estimate of $0.77, reflecting an 18.5% increase year-over-year. Revenues are projected to be $1.56 billion, up 2.4% from the previous year [3][4]. Estimate Revisions - The consensus EPS estimate has been revised 0.22% higher in the last 30 days, indicating a positive reassessment by analysts [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +0.11%, suggesting a likelihood of beating the consensus EPS estimate. The stock currently holds a Zacks Rank of 3 [11][10]. Historical Performance - Church & Dwight has consistently beaten consensus EPS estimates, achieving this in the last four quarters, including a surprise of +16.18% in the most recent quarter [12][13]. Conclusion - Church & Dwight is positioned as a strong candidate for an earnings beat, but investors should consider additional factors influencing stock performance beyond earnings results [14][16].

Albert Anthony is the pen name / stage name of markets analyst, contributor & host of The Future Investor, on the global investor platform Seeking Alpha, where he has covered over +200 companies, provides general markets commentary, and rates stocks in multiple sectors, while having grown a fan base of over +1K followers since 2023. Going beyond the investor platform, he is also a hobby investor of his own home-based fund called The Future Investor Fund, and talks investor topics on his Future Investor Chan ...

Core Insights - Church & Dwight Co., Inc. (CHD) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 28.24, which is higher than the industry average of 22.11 and the S&P 500's 22.21, raising concerns about meeting investor expectations [1] - The company is facing challenges due to shifting consumer spending patterns, with a notable slowdown in dollar consumption growth from 4.5% to approximately 2.5% in July 2024 [5] - Despite these challenges, Church & Dwight remains optimistic about its brand performance and expects its portfolio to outpace category growth, projecting organic revenue growth of about 4% for the full year [6] Financial Performance - The Zacks Consensus Estimate for earnings per share has seen upward revisions, with current and next fiscal year estimates increased by 0.3% to $3.44 and by 0.5% to $3.74 per share, indicating expected year-over-year growth rates of around 8.5% and 8.7% respectively [9] - Reported sales growth is anticipated to be slightly lower at approximately 3.5% due to divestitures and adverse currency impacts [6] Market Position and Strategy - Online sales now account for 20.7% of global sales, with the company focusing on expanding its direct-to-consumer platforms and optimizing its omnichannel presence [7] - Continued innovation, such as ARM & HAMMER Power Sheets and TheraBreath's Deep Clean Oral Rinse, is driving growth and enhancing market presence [8] - The company has been increasing marketing expenses, expected to exceed 11% of net sales in 2024, to enhance brand awareness and drive long-term momentum [18] Challenges and Outlook - Church & Dwight's shares have lost 4.5% over the past month, slightly better than the industry's 4.9% dip but worse than the broader Consumer Staples' 4.3% decline [15] - The company remains cautious about U.S. consumer trends and category growth rates as it heads into the fourth quarter, despite some improvement in consumption during September and October [17] - The company's strong brand equity and pricing power allow it to pass on cost increases to consumers with minimal impact on demand, as evidenced by its robust performance in the third quarter of 2024 [19]

Company Overview - Church & Dwight Co., Inc. is a leading U.S. producer of sodium bicarbonate, known for its household, personal care, and specialty products [15]. Investment Insights - Church & Dwight (CHD) holds a Zacks Rank of 3 (Hold) with a VGM Score of B, indicating a solid position in the market [16]. - The company is projected to experience year-over-year earnings growth of 8.8% for the current fiscal year, supported by positive revisions from analysts [16]. - The Zacks Consensus Estimate for CHD's earnings has increased by $0.02 to $3.45 per share, reflecting a favorable outlook [16]. - CHD has an average earnings surprise of 10%, suggesting it has a history of exceeding earnings expectations [16]. - With a strong Zacks Rank and favorable Growth and VGM Style Scores, CHD is recommended for investors' consideration [17].

Financial Performance - Net loss for Q3 2024 was $75.1 million, compared to a net income of $177.5 million in Q3 2023[6] - Comprehensive loss for Q3 2024 was $64.2 million, compared to a comprehensive income of $175.9 million in Q3 2023[6] - Net income for Q3 2024 was $177.5 million, compared to $203.2 million in Q1 2023 and $221.2 million in Q2 2023[12][13] - Net income for the nine months ended September 30, 2024, was $396.1 million, down from $601.9 million in the prior year period[10] - Net sales for the three months ended September 30, 2024 increased by 3.8% to $1,510.6 million compared to $1,455.9 million in the same period in 2023[84] - Gross profit for the three months ended September 30, 2024 increased by 5.7% to $683.1 million, with gross margin improving by 80 basis points to 45.2%[84] - Net sales for the nine months ended September 30, 2024 were $4,525.1 million, a 4.3% increase compared to $4,339.9 million in the same period in 2023[85] - Gross profit for the nine months ended September 30, 2024 was $2,082.2 million, a 9.2% increase compared to $1,907.2 million in the same period in 2023[85] - Marketing expenses for the three months ended September 30, 2024 increased by 10.7% to $185.8 million, representing 12.3% of net sales, up 80 basis points from the same period in 2023[89] - SG&A expenses for the three months ended September 30, 2024 were $231.7 million, a 4.0% increase compared to $222.7 million in the same period in 2023[84] - The effective tax rate for the three months ended September 30, 2024 was a benefit of 25.9%, impacted by the non-cash VMS impairment charge[93] - Interest income for the three months ended September 30, 2024 increased by $6.1 million to $10.6 million, primarily due to the favorable Waterpik tariff ruling and higher interest rates[92] Cash Flow and Liquidity - Cash and cash equivalents increased to $752.1 million as of September 30, 2024, up from $344.5 million at the end of 2023[8] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $863.9 million, up from $795.1 million in the same period of 2023[10] - Net change in cash and cash equivalents was $407.6 million for the nine months ended September 30, 2024, up from $303.0 million in the same period of 2023[10] - Cash equivalents increased to $571.9 million as of September 30, 2024, compared to $217.7 million as of December 31, 2023[37] - Net cash provided by operating activities increased by $68.8 to $863.9 in the first nine months of 2024, compared to $795.1 in the same period in 2023, primarily due to higher cash earnings[118] - Net cash used in investing activities was $138.1 in the first nine months of 2024, primarily for property, plant, and equipment additions ($125.2) and the Graphico Acquisition ($19.9)[119] - Net cash used in financing activities was $318.3 in the first nine months of 2024, reflecting $200.4 in net debt payments and $207.4 in cash dividend payments, partially offset by $90.3 from stock option exercises[119] - The company anticipates capital expenditure program costs of approximately $180.0 in 2024, primarily for manufacturing capacity investments in laundry and litter to support future sales growth[117] - The company repaid the remaining $200.0 of its Term Loan due December 22, 2024, with cash on hand in Q1 2024[114] Assets and Liabilities - Total current assets rose to $2,016.7 million as of September 30, 2024, compared to $1,529.7 million at the end of 2023[8] - Accounts receivable increased to $555.3 million, up from $526.9 million at the end of 2023, indicating higher sales activity[8] - Inventories grew to $658.5 million, up from $613.3 million at the end of 2023, reflecting increased production or slower sales turnover[8] - Total liabilities decreased to $4,472.5 million, down from $4,713.8 million at the end of 2023, primarily due to reductions in current liabilities[8] - Long-term debt as of September 30, 2024, is $2,208.2 million, compared to $2,202.2 million at December 31, 2023[62] - The company's short-term borrowings as of September 30, 2024, decreased to $3.4 million from $3.9 million at December 31, 2023[62] - Accounts payable as of September 30, 2024, increased to $705.9 million from $630.6 million at December 31, 2023[60] - The company's lease liabilities as of September 30, 2024, total $201.3 million, with current lease liabilities at $30.4 million and long-term lease liabilities at $170.9 million[58] - Lease costs for the nine months ended September 30, 2024, amounted to $29.8 million, compared to $23.5 million for the same period in 2023[58] - The company's minimum annual rentals under lease agreements, including reasonably assured renewal options, total $241.2 million, with the present value of lease liabilities at $201.3 million[59] Impairments and Amortization - Tradename and other asset impairments were $357.1 million for the nine months ended September 30, 2024, compared to $0.0 million in the same period of 2023[10] - The company recorded a $281.3 million impairment charge for the VITAFUSION and L'IL CRITTERS trade names due to declining market share and profitability[50][51] - The company recorded a $75.8 million pre-tax impairment charge for long-lived assets supporting the VMS business, including $60.0 million for PP&E and $15.8 million for customer relationship intangible assets[52] - The total VMS impairment charges for the third quarter of 2024 amounted to $357.1 million, including trade name, customer relationship intangible asset, and PP&E impairments[54] - Intangible amortization expense for the third quarter of 2024 was $30.7 million, with an estimated annual expense of $117.0 million for 2024[47] - Intangible amortization expense for the first nine months of 2024 was $92.2 million, with an estimated annual expense of $117.0 million for 2024[47] Acquisitions and Divestitures - The company acquired Graphico, Inc. for $19.9 million, with annual net sales of $38.0 million in 2023, aiming to expand in the Asia-Pacific region[41] - The fair value of Graphico's net assets at acquisition includes $8.4 million for customer relationship intangible assets and $2.8 million for goodwill[42] - The company acquired Hero Cosmetics, Inc. for $546.8 million, with annual net sales of $179.0 million in 2022, managed in the Consumer Domestic segment[43] - The fair value of Hero's net assets at acquisition includes $400.0 million for the trade name and $156.1 million for goodwill[44] - The company sold its Passport food safety business in the second quarter of 2024 for cash proceeds of $6.6 million, resulting in a gain of $0.1 million[81] - The company exited the MEGALAC supplement portion of its Animal Nutrition business in the first quarter of 2024, with net sales for the nine months ended September 30, 2024 being $7.6 million compared to $29.7 million in the same period in 2023[80] Segment Performance - The company's Consumer Domestic segment generated $1,170.8 million in net sales for Q3 2024, compared to $1,133.1 million in Q3 2023[76] - The company's Consumer International segment generated $267.7 million in net sales for Q3 2024, compared to $244.4 million in Q3 2023[76] - The company's Specialty Products Division (SPD) generated $72.1 million in net sales for Q3 2024, compared to $78.4 million in Q3 2023[76] - The company's total consolidated net sales were $1,510.6 million for Q3 2024, compared to $1,455.9 million in Q3 2023[77] - Consumer Domestic net sales increased by 3.3% to $1,170.8 million in Q3 2024 compared to Q3 2023, driven by growth in HERO® acne treatment products and ARM & HAMMER® baking soda[101] - Consumer International net sales grew by 9.5% to $267.7 million in Q3 2024, driven by OXICLEAN® stain removers and THERABREATH® mouth wash[103] - SPD net sales decreased by 8.0% to $72.1 million in Q3 2024 due to the exit of product lines, including the MEGALAC supplement and Passport food safety business[108] - Consumer Domestic loss before income taxes was $(107.1) million in Q3 2024, impacted by a $327.4 million non-cash impairment charge[102] - Consumer International loss before income taxes was $(4.7) million in Q3 2024, impacted by a $29.7 million non-cash impairment charge[107] - SPD income before income taxes increased by $1.2 to $7.4 in Q3 2024, driven by favorable price/mix ($2.6), lower manufacturing costs ($1.0), and reduced SG&A and marketing costs ($0.5 and $0.1 respectively), partially offset by lower sales volumes ($3.0) due to product line exits[110] Stockholders' Equity and Share Repurchases - Total stockholders' equity grew to $4,193.7 million as of September 30, 2024, up from $3,489.9 million at the end of 2022[12][13] - Retained earnings reached $6,200.9 million as of September 30, 2024, up from $5,524.6 million at the end of 2022[12][13] - Additional paid-in capital increased to $534.7 million as of September 30, 2024, from $366.2 million at the end of 2022[12][13] - Treasury stock decreased to $(2,817.4) million as of September 30, 2024, from $(2,665.3) million at the end of 2022[12][13] - As of September 30, 2024, there remains $658.9 million of share repurchase availability under the 2021 Share Repurchase Program[35] - The company declared a 4% increase in the regular quarterly dividend to $0.28375 per share, raising the annual dividend payout from $267.0 to approximately $276.0[114] Research and Development - Research and development expenses increased to $36.0 million in Q3 2024 from $30.3 million in Q3 2023[16] Stock-Based Compensation - Stock-based compensation expense and stock option plan transactions totaled $30.5 million in Q3 2024[12] - Stock compensation expense related to stock option awards increased to $24.8 million for the nine months ended September 30, 2024, up from $22.7 million in the same period in 2023[28] - The company granted 105,600 RSUs with a total fair value of $10.8 million during the nine months ended September 30, 2024, compared to 119,570 RSUs with a total fair value of $10.3 million in the same period in 2023[30] - Restricted stock expense associated with the Hero Acquisition decreased to $17.2 million for the nine months ended September 30, 2024, down from $21.9 million in the same period in 2023[31] - The company granted 19,960 PSUs to members of the Executive Leadership Team in the first quarter of 2024, valued at a weighted average grant date fair value of $122.24 per PSU[32] Debt and Financing - Long-term debt repayments amounted to $200.6 million for the nine months ended September 30, 2024, consistent with $200.0 million in the same period of 2023[10] - The fair value of 3.15% Senior notes due August 1, 2027 decreased to $415.1 million as of September 30, 2024, compared to $406.9 million as of December 31, 2023[37] - The notional amount of foreign exchange contracts designated as hedging instruments decreased from $228.9 million on December 31, 2023, to $219.7 million on September 30, 2024[40] Commitments and Guarantees - The company has an annual commitment to purchase 240,000 tons of sodium-based raw materials at the prevailing market price under a partnership agreement[65] - The company had commitments of approximately $408.6 million as of September 30, 2024, including raw materials, packaging supplies, and services[66] - The company had guarantees and letters of credit totaling $6.0 million as of September 30, 2024[66] - The company deferred an additional cash payment of $20.0 million related to the Zicam Acquisition, payable five years from the closing if not used for indemnity obligations[67] - The company deferred an additional cash payment of $14.0 million related to the TheraBreath Acquisition, with installments of $2.0 million paid in January 2024, $7.0 million to be paid in December 2024, and $5.0 million in December 2025[68] - The company deferred an additional cash payment of $8.0 million related to the Hero Acquisition, payable five years from the closing if not used for indemnity obligations[69] Other Financial Metrics - The company's seven "power brands" represent approximately 70% of its net sales and profits[79] - The company received a favorable tariff ruling from the U.S. government, resulting in $37.6 million in cash refunds (pre-tax) for the nine months ended September 30, 2024[81] - The company's equity in earnings from affiliates Armand and ArmaKleen totaled $3.0 million in Q3 2024, down from $1.7 million in Q3 2023[96] - The Graphico acquisition contributed 1.9% to Consumer International net sales growth in Q3 2024[103] - Excluding divestitures, SPD net sales increased in Q3 2024 due to growth in animal nutrition and specialty chemicals segments[109] - Corporate segment income before income taxes rose to $3.0 in Q3 2024 from $1.7 in Q3 2023, while the nine-month income decreased to $7.2 in 2024 from $8.1 in 2023, following the sale of a 50% interest in Armakleen[111] - The cash conversion cycle increased by 2 days to 29 days in Q3 2024, driven by a 6-day increase in DSO and a 5-day decrease in DIO[119]

Core Insights - Church & Dwight Co., Inc. (CHD) reported strong third-quarter 2024 results, with both earnings and net sales exceeding expectations, driven by robust consumer demand and effective execution [1][2][3] Financial Performance - Adjusted earnings per share (EPS) reached 79 cents, surpassing the Zacks Consensus Estimate of 68 cents, marking a 6.8% year-over-year increase [2] - Net sales totaled $1,510.6 million, a 3.8% increase year over year, exceeding the Zacks Consensus Estimate of $1,493.8 million [3] - Organic sales grew by 4.3%, supported by a volume increase of 3.1% and a favorable product mix and pricing contributing 1.2% [3] Segment Performance - Consumer Domestic segment net sales rose 3.3% to $1,170.8 million, driven by personal care sales growth, with organic sales also increasing by 3.3% [6] - Consumer International segment net sales increased 9.5% to $267.7 million, with organic sales jumping 8.1% [7] - Specialty Products segment sales declined 8% to $72.1 million, although organic sales grew by 7.5% [8] Cost and Margin Analysis - Gross margin expanded by 80 basis points to 45.2%, with adjusted gross margin at 45%, up 60 basis points [4] - Marketing expenses increased by $18 million year over year to $185.8 million, representing 12.3% of net sales [4] - Adjusted SG&A expenses as a percentage of net sales rose 20 basis points to 15% due to investments in various operational areas [5] Financial Health and Future Outlook - The company ended the quarter with cash and cash equivalents of $752.1 million and long-term debt of $2,208.2 million [9] - For 2024, CHD anticipates reported sales growth of nearly 3.5% and organic sales growth of around 4% [11] - Management raised its full-year adjusted gross margin expansion guidance to approximately 110 basis points compared to 2023 [12] - The company expects a reported EPS decline of nearly 23% due to an asset impairment charge, while adjusted EPS growth is projected to be around 8% [13] - For Q4 2024, reported sales growth is expected to be between 1.5-2.5%, with adjusted EPS projected at 76 cents, a 17% year-over-year increase [14]

Financial Data and Key Metrics - Reported sales growth was 3.8%, beating the outlook of 2.5%, driven by strong performance in domestic, international, and specialty products businesses [4] - Organic sales grew 4.3%, exceeding the 3% outlook, with volume contributing 3.1% of the growth [5] - Adjusted EPS was $0.79, $0.12 higher than the $0.67 outlook, driven by higher-than-expected sales growth and gross margin expansion [6] - Adjusted gross margin expanded by 60 basis points, with marketing spending increasing and market share gains in most categories [5][6] - Online sales accounted for approximately 21% of global sales, continuing to perform well [6] Business Line Performance - **US Business**: Organic sales grew 3.3%, with volume growth of 2.6%, marking the fifth consecutive quarter of volume growth [7] - **Laundry Detergent**: ARM & HAMMER Liquid Laundry Detergent consumption grew 2%, outpacing a flat category, with market share reaching 14.7% [9] - **Litter**: ARM & HAMMER litter consumption declined 1.5%, but the new lightweight clumping litter outperformed expectations [12][13] - **Personal Care**: Gummy vitamins business declined 10%, leading to a $357 million write-down of assets [14][15] - **BATISTE**: Dry shampoo consumption grew 6%, with market share reaching 46% [16] - **THERABREATH**: Alcohol-free mouthwash grew 11%, with a 35% market share in the non-alcohol category [17] - **HERO**: Acne care brand grew patch market share by 1.7 basis points to 57% [19] - **International Business**: Organic growth of 8.1%, driven by strong performance across subsidiaries and global markets [22] - **Specialty Products**: Organic sales increased 7.5%, with confidence in achieving 5% growth for the year [23] Market Performance - US consumer consumption decelerated in Q3, with category growth slowing from 4.5% in the first five months to 2.5% in June, July, and August [24] - September saw a rebound to 3% growth, while October saw a 5% increase, influenced by external factors like hurricanes and port strikes [25] - Promotional levels in laundry detergent remained stable, while litter promotions increased significantly, driven by a major competitor [20][21] Company Strategy and Industry Competition - The company is focused on innovation, with new product launches like ARM & HAMMER Deep Clean and Power Sheets driving growth in laundry detergent [10][11] - In litter, the lightweight clumping litter is gaining market share, with Hardball becoming the number two brand in the lightweight segment [13] - The company is investing in marketing and innovation to stabilize underperforming segments like gummy vitamins, with new packaging and formulas expected in 2025 [15] - International expansion continues to be a priority, with strong growth in all subsidiaries and global markets [22] Management Commentary on Operating Environment and Future Outlook - Management remains cautious about the US consumer and category growth rates in Q4, despite some improvement in September and October [25][34] - The company expects full-year organic revenue growth of approximately 4% and reported sales growth of 3.5%, with adjusted EPS growth of 8% [34] - Gross margin expansion is expected to be around 110 basis points, with marketing spending as a percentage of sales above 11% [35] Other Important Information - The company recorded a $357 million write-down of the gummy vitamins business due to slower-than-expected improvement [15] - Cash flow from operations for the first nine months was $864 million, with full-year expectations of $1.1 billion [32] - Capital expenditures for 2024 are expected to be $180 million, with a return to historical levels of 2% of sales in 2025 [33] Q&A Session Summary Question: Outlook for Q4 and inventory dynamics [37] - **Answer**: No significant inventory timing dynamics impacting Q4, with cautious outlook on category growth rates due to economic uncertainty [38][39] Question: US business top-line growth objective [42] - **Answer**: The US business is expected to grow at 3%, with international at 8% and specialty products at 5%, contributing to the overall 4% growth target [43][44] Question: Path to stabilization and growth in the vitamin business [47] - **Answer**: Stabilization efforts include new packaging, upgraded formulas, and innovation expected in 2025, with some green shoots in L'IL CRITTERS [48][49][50] Question: Marketing investments and strategy [52] - **Answer**: Marketing spend is expected to increase to 11-11.5% of sales, with a focus on innovation and international expansion [53][54][56] Question: Promotional environment in laundry and litter [81] - **Answer**: Promotional levels in laundry remain stable, while litter promotions have increased, driven by a major competitor [82][83] Question: Gross margin outlook and commodity costs [76] - **Answer**: Gross margin expansion is expected to be around 110 basis points, with higher manufacturing costs partially offset by productivity gains [77][78] Question: Innovation contribution and future plans [108] - **Answer**: Innovation contributed approximately 2% incremental net sales in 2024, with strong pipelines for 2026 and beyond [109][110] Question: Vitamin business and impairment charge [114] - **Answer**: The impairment charge reflects reduced growth and profit expectations, with stabilization efforts focused on innovation rather than increased spending [115][116][117] Question: Premium price innovation and trade-up opportunities [122] - **Answer**: Premium innovations like Deep Clean and Power Sheets are performing well, with consumer interest in sustainable products driving growth [123][124][125] Question: International business and Japan acquisition [128] - **Answer**: International business is performing well, with opportunistic marketing spend in Q4, while the Japan acquisition is still in early stages [129][131] Question: R&D and SG&A spend for 2025 [134] - **Answer**: R&D and SG&A spend is expected to remain around 2% of sales, with an SAP project implementation in 2025 [135]

Group 1 - Church & Dwight reported revenue of $1.51 billion for the quarter ended September 2024, reflecting a 3.8% increase year-over-year [1] - The company's EPS for the quarter was $0.79, up from $0.74 in the same quarter last year, exceeding the consensus estimate of $0.68 by 16.18% [1][3] - The reported revenue surpassed the Zacks Consensus Estimate of $1.49 billion, resulting in a surprise of 1.12% [1] Group 2 - Total Consumer Net Sales reached $1.44 billion, exceeding the average estimate of $1.42 billion, marking a year-over-year increase of 4.4% [3] - Consumer Domestic sales amounted to $1.17 billion, slightly above the average estimate of $1.16 billion, with a year-over-year change of 3.3% [3] - Consumer International sales were reported at $267.70 million, surpassing the average estimate of $262.50 million, reflecting a 9.5% increase year-over-year [3] Group 3 - Specialty Products Division sales were $72.10 million, below the estimated $73.81 million, representing an 8% decline compared to the previous year [3] - Household Products sales in the Consumer Domestic segment were $637.40 million, lower than the average estimate of $657.10 million, with a minimal year-over-year change of 0.2% [3] - Personal Care Products sales in the Consumer Domestic segment reached $533.40 million, exceeding the estimated $500.45 million, showing a year-over-year increase of 7.4% [3] Group 4 - Church & Dwight's stock has returned -1.4% over the past month, compared to a -1% change in the Zacks S&P 500 composite [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [4]

Core Viewpoint - Church & Dwight (CHD) reported quarterly earnings of $0.79 per share, exceeding the Zacks Consensus Estimate of $0.68 per share, and showing an increase from $0.74 per share a year ago, indicating a 16.18% earnings surprise [1][2] Financial Performance - The company achieved revenues of $1.51 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.12% and up from $1.46 billion year-over-year [2] - Over the last four quarters, Church & Dwight has consistently exceeded consensus EPS estimates and revenue estimates [2] Stock Performance - Church & Dwight shares have increased approximately 5.7% since the beginning of the year, while the S&P 500 has gained 19.6%, indicating underperformance relative to the broader market [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.86 for the coming quarter and $3.43 for the current fiscal year, alongside expected revenues of $1.57 billion and $6.08 billion respectively [7] - The Zacks Rank for Church & Dwight is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Soap and Cleaning Materials industry, to which Church & Dwight belongs, is currently ranked in the top 10% of over 250 Zacks industries, indicating a favorable industry outlook [8]

[Executive Summary & Q3 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q3%20Highlights) Church & Dwight exceeded Q3 2024 expectations with strong sales growth, gross margin expansion, and increased adjusted EPS, driven by robust consumer demand and strategic investments [Q3 2024 Performance Overview](index=1&type=section&id=Q3%202024%20Performance%20Overview) Church & Dwight exceeded its Q3 2024 outlook with stronger sales growth, gross margin expansion, and a 6.8% increase in adjusted EPS to $0.79, driven by robust consumer demand Q3 2024 Key Performance Metrics | Metric | Q3 2024 Performance | Outlook/Change | | :----- | :------------------ | :------------- | | Net Sales | +3.8% to $1,510.6M | Exceeded outlook | | Organic Sales | +4.3% | - | | Adjusted Gross Margin | +60 bps | Exceeded outlook | | Reported Loss per Share | -$0.31 | Due to impairment | | Adjusted EPS | $0.79 (+6.8%) | Exceeded outlook of $0.67 | | YTD Cash from Operations | $863.9M | - | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Matthew Farrell attributed strong Q3 results to brand strength, new product success, and execution, with volume driving organic growth and increased marketing boosting consumption and online sales - Volume was the primary driver of organic growth in Q3, a trend expected to continue in Q4[2](index=2&type=chunk) - Marketing as a percentage of sales increased **80 basis points**, driving consumption and share gains[2](index=2&type=chunk) - Global online sales grew to **20.7% of total consumer sales** in Q3[2](index=2&type=chunk) [Third Quarter Detailed Review](index=2&type=section&id=Third%20Quarter%20Review) This section provides a detailed breakdown of the company's financial performance across divisions, gross margin, and operating expenses for the third quarter [Consumer Domestic Division](index=2&type=section&id=Consumer%20Domestic%20net%20sales) Consumer Domestic net sales grew 3.3% to $1,170.8 million, driven by personal care, with organic sales also up 3.3% from volume and price/mix contributions Consumer Domestic Division Q3 2024 Performance | Metric | Q3 2024 Performance | | :----- | :------------------ | | Net Sales | $1,170.8 million | | Net Sales Growth | +3.3% | | Organic Sales Growth | +3.3% | | Volume Contribution | +2.6% | | Price & Product Mix Contribution | +0.7% | - Growth was led by HERO™ acne products, THERABREATH™ mouthwash, ZICAM™ supplements, SPINBRUSH™ toothbrushes, and ARM & HAMMER™ Scent Boosters[4](index=4&type=chunk) [Consumer International Division](index=2&type=section&id=Consumer%20International%20net%20sales) Consumer International net sales increased 9.5% to $267.7 million, with organic sales growing 8.1% driven by volume and positive price/mix, led by key brands Consumer International Division Q3 2024 Performance | Metric | Q3 2024 Performance | | :----- | :------------------ | | Net Sales | $267.7 million | | Net Sales Growth | +9.5% | | Organic Sales Growth | +8.1% | | Volume Contribution | +5.3% | | Price & Product Mix Contribution | +2.8% | - Growth was led by HERO, THERABREATH and OXICLEAN™[5](index=5&type=chunk) [Specialty Products Division](index=2&type=section&id=Specialty%20Products%20net%20sales) Specialty Products net sales decreased 8.0% to $72.1 million due to business exits, yet organic sales grew 7.5% from price/mix and volume, reflecting a profitable growth strategy Specialty Products Division Q3 2024 Performance | Metric | Q3 2024 Performance | | :----- | :------------------ | | Net Sales | $72.1 million | | Net Sales Growth | -8.0% | | Organic Sales Growth | +7.5% | | Price & Product Mix Contribution | +3.9% | | Volume Contribution | +3.6% | - The decrease in net sales reflects the exit of the Megalac business in Q1 and the food safety business in Q2, aligning with a strategy to focus on more profitable growth[3](index=3&type=chunk)[5](index=5&type=chunk) [Gross Margin Analysis](index=2&type=section&id=Gross%20margin%20increased%2080%20basis%20points) Reported gross margin increased 80 basis points to 45.2%, with adjusted gross margin expanding 60 basis points to 45.0%, driven by productivity, higher volumes, and favorable mix Gross Margin Performance | Metric | Q3 2024 | Q3 2023 | Change (bps) | | :----- | :------ | :------ | :----------- | | Reported Gross Margin | 45.2% | 44.4% | +80 | | Adjusted Gross Margin | 45.0% | 44.4% | +60 | - Gross margin improvement was due to improved productivity, the benefit of higher volumes and mix, net of the impact of higher manufacturing costs[6](index=6&type=chunk) [Marketing Expense](index=2&type=section&id=Marketing%20expense%20was%20%24185.8%20million) Marketing expense increased by $18.0 million to $185.8 million, representing 12.3% of net sales, an 80 basis point increase reflecting strategic investment in brands Marketing Expense Overview | Metric | Q3 2024 | Q3 2023 | Change | | :----- | :------ | :------ | :----- | | Marketing Expense | $185.8M | $167.8M | +$18.0M | | Marketing % of Net Sales | 12.3% | 11.5% | +80 bps | [Selling, General, and Administrative Expense (SG&A)](index=2&type=section&id=Selling%2C%20general%2C%20and%20administrative%20expense%20%28SG%26A%29) Reported SG&A was $231.7 million, with adjusted SG&A at $226.9 million (15.0% of net sales), a 20 basis point increase driven by investments in International, R&D, and IT SG&A Expense Overview | Metric | Q3 2024 | Q3 2023 | Change (bps) | | :----- | :------ | :------ | :----------- | | Reported SG&A | $231.7M | $222.7M | - | | Adjusted SG&A | $226.9M | $215.4M | - | | Adjusted SG&A % of Net Sales | 15.0% | 14.8% | +20 | - The increase in adjusted SG&A was primarily due to investments in International, R&D, and IT[7](index=7&type=chunk) [Income from Operations](index=2&type=section&id=Income%20from%20Operations%20was%20a%20loss%20of%20%2491.5%20million) The company reported an Income from Operations loss of $91.5 million due to an impairment charge, while adjusted Income from Operations increased 1.6% to $267.2 million despite higher investments Income from Operations Performance | Metric | Q3 2024 | Q3 2023 | Change | | :----- | :------ | :------ | :----- | | Reported Income from Operations | -$91.5M | $255.8M | - | | Adjusted Income from Operations | $267.2M | $263.1M | +1.6% | - The reported loss was due to the non-cash impairment charge, while adjusted income from operations increased despite higher marketing and SG&A investments[8](index=8&type=chunk) [Other Expense](index=2&type=section&id=Other%20Expense%20decreased%20%2411.9%20million) Other Expense decreased by $11.9 million, with adjusted other expense down $7.3 million, primarily due to lower outstanding debt and higher interest income Other Expense Performance | Metric | Q3 2024 | Q3 2023 | Change | | :----- | :------ | :------ | :----- | | Reported Other Expense, net | -$12.9M | -$23.5M | -$10.6M | | Adjusted Other Expense, net | -$14.5M | -$21.8M | -$7.3M | - The decrease in adjusted other expense was primarily due to lower outstanding debt and higher interest income[8](index=8&type=chunk) [Tax Rate](index=2&type=section&id=There%20was%20a%20tax%20benefit%20in%20Q3%20of%2025.9%25) The company recorded a 25.9% tax benefit in Q3 due to vitamin impairment, resulting in an effective tax rate of 23.8% (excluding impairment), with the full-year adjusted rate now expected at 22.5% Tax Rate Overview | Metric | Q3 2024 | Q3 2023 | | :----- | :------ | :------ | | Reported Tax Benefit | 25.9% | - | | Effective Tax Rate (excl. impairment) | 23.8% | 24.1% | | Full Year Adjusted Effective Tax Rate Outlook | ~22.5% | ~23% (previous) | [Operating Cash Flow](index=2&type=section&id=Operating%20Cash%20Flow) Cash from operations for the first nine months of 2024 increased by $68.8 million to $863.9 million, with the full-year outlook raised to $1.1 billion, while capital expenditures also increased Operating Cash Flow and Capital Expenditures | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Change | | :----- | :-------------------------- | :-------------------------- | :----- | | Cash from Operations | $863.9M | $795.1M | +$68.8M | | Capital Expenditures | $125.2M | $121.5M | +$3.7M | - Full year cash flow from operations is now expected to be approximately **$1.1 billion** (previously $1.08 billion)[1](index=1&type=chunk)[10](index=10&type=chunk)[21](index=21&type=chunk) - At September 30, 2024, cash on hand was **$752.1 million**, while total debt was **$2.2 billion**[10](index=10&type=chunk) [Intangible Asset Impairment](index=2&type=section&id=Intangible%20Asset%20Impairment) Church & Dwight recorded a **$357.1 million** pre-tax non-cash impairment charge in Q3 on assets from its 2012 vitamin business acquisition, reflecting reduced long-term growth expectations Q3 2024 Impairment Charges | Metric | Q3 2024 Impairment | | :----- | :----------------- | | Pre-tax Impairment Charge | $357.1M | | After-tax Impairment Charge | $270.1M | - The impairment charge was due to a reduction in the Company's expectations about the long-term growth and profit outlook for the VMS business (vitamin business)[11](index=11&type=chunk) [2024 New Product Launches](index=3&type=section&id=2024%20New%20Products) Product innovation remains a key driver, with several new launches in 2024 across major brands aimed at meeting consumer demands, expanding market share, and enhancing value - ARM & HAMMER™ Laundry launched Deep Clean™ Liquid and Unit Dose Laundry Detergent, entering the mid-tier category with superior clean[12](index=12&type=chunk) - ARM & HAMMER™ Laundry POWER SHEETS™ Laundry Detergent, initially launched online, is now available in select brick & mortar retailers due to online success, offering an effective, convenient, and plastic-bottle-waste-eliminating solution[13](index=13&type=chunk) - ARM & HAMMER™ Hardball™ Clumping Litter expanded nationally, a plant-based, lightweight litter designed for no-mess scooping to capture greater share in the lightweight litter category[14](index=14&type=chunk) - THERABREATH™ entered the antiseptic segment with Deep Clean Oral Rinse, formulated to kill **99.9% of germs** without the burn[15](index=15&type=chunk) - BATISTE™ launched Sweat Activated and Touch Activated dry shampoos, offering longer-lasting results with advanced fragrance-release technology[16](index=16&type=chunk) - HERO™ continues to drive acne category growth as the **1 patch brand**, launching innovative solutions like Dissolve Away Daily Cleansing Balm to broaden offerings for acne-prone skin[17](index=17&type=chunk) [Full Year 2024 Outlook](index=3&type=section&id=Outlook%20for%202024) The company provides its full-year 2024 outlook for sales, gross margin, marketing investments, EPS, and cash flow, along with specific Q4 projections [Sales Outlook](index=3&type=section&id=Sales%20Outlook) Despite cautious Q4 consumer growth, Church & Dwight affirms its full-year reported sales growth outlook of approximately **3.5%** and organic sales growth of approximately **4%** Full Year 2024 Sales Outlook | Metric | Full Year 2024 Outlook | | :----- | :--------------------- | | Reported Sales Growth | ~3.5% | | Organic Sales Growth | ~4.0% | [Gross Margin Outlook](index=3&type=section&id=Gross%20Margin%20Outlook) The company is raising its full-year adjusted gross margin expansion outlook to approximately **110 basis points**, driven by pricing, improved mix, higher volume, and productivity, offsetting manufacturing costs Full Year 2024 Gross Margin Outlook | Metric | Full Year 2024 Outlook | Previous Outlook | | :----- | :--------------------- | :--------------- | | Adjusted Gross Margin Expansion | ~110 bps | 100-110 bps | [Marketing & SG&A Investment Outlook](index=3&type=section&id=Marketing%20%26%20SG%26A%20Investment%20Outlook) Church & Dwight plans continued investment in brands, expecting marketing as a percentage of sales to be above **11%**, with Q4 investments aimed at driving future growth and 2025 momentum Full Year 2024 Marketing Outlook | Metric | Full Year 2024 Outlook | Previous Outlook | | :----- | :--------------------- | :--------------- | | Marketing as % of Sales | >11% | ~11% | - Q4 investments will focus on driving future growth with higher marketing and SG&A investments to build momentum for 2025[20](index=20&type=chunk) [EPS Outlook](index=4&type=section&id=EPS%20Outlook) Full-year reported EPS is expected to decline approximately **23%** due to impairment, while adjusted EPS growth is anticipated at approximately **8%**, with an adjusted tax rate of **22.5%** Full Year 2024 EPS Outlook | Metric | Full Year 2024 Outlook | | :----- | :--------------------- | | Reported EPS Growth | ~-23% | | Adjusted EPS Growth | ~+8% | | Adjusted Tax Rate | ~22.5% | [Cash Flow & Capital Expenditures Outlook](index=4&type=section&id=Cash%20flow%20from%20operations%20is%20now%20expected) Cash flow from operations is now expected at approximately **$1.1 billion**, with capital expenditures projected at **$180 million** for 2024, and a continued focus on accretive acquisitions Full Year 2024 Cash Flow & Capital Expenditures Outlook | Metric | Full Year 2024 Outlook | Previous Outlook | | :----- | :--------------------- | :--------------- | | Cash Flow from Operations | ~$1.1B | ~$1.08B | | Capital Expenditures | ~$180M | - | - Capital spending is expected to return to historical levels (approximately **2% of sales**) in 2025[22](index=22&type=chunk) - Capital allocation priorities remain unchanged, with an emphasis on pursuing accretive acquisitions of fast-moving consumable products (e.g., ZICAM, THERABREATH, and HERO)[22](index=22&type=chunk) [Q4 2024 Specific Outlook](index=4&type=section&id=For%20Q4%2C%20we%20expect%20reported%20sales%20growth) For Q4 2024, reported sales growth is expected at **1.5-2.5%** and organic sales growth at **2-3%**, with adjusted EPS projected at **$0.76**, a **17%** increase year-over-year Q4 2024 Outlook | Metric | Q4 2024 Outlook | | :----- | :-------------- | | Reported Sales Growth | 1.5-2.5% | | Organic Sales Growth | 2-3% | | Reported EPS | $0.75 | | Adjusted EPS | $0.76 (+17% YoY) | [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on the Q3 webcast, company profile, sustainability efforts, and important disclosures regarding forward-looking statements and non-GAAP financial measures [Webcast Details](index=4&type=section&id=Church%20%26%20Dwight%20Co.%2C%20Inc.%20%28NYSE%3A%20CHD%29%20will%20host%20a%20webcast) Church & Dwight hosted a webcast on November 1, 2024, at 10:00 a.m. (ET) to discuss Q3 2024 results, with a replay available until November 8, 2024 - Webcast for Q3 2024 results was held on November 1, 2024, at 10:00 a.m. (ET) and was available for replay until November 8, 2024[24](index=24&type=chunk) [Company Profile & Brands](index=4&type=section&id=Church%20%26%20Dwight%20Co.%2C%20Inc.%20%28NYSE%3A%20CHD%29%20founded%20in%201846) Founded in 1846, Church & Dwight Co., Inc. (NYSE: CHD) is a leading U.S. producer of sodium bicarbonate, marketing a wide range of personal care, household, and specialty products under well-known brands - Church & Dwight is the leading U.S. producer of sodium bicarbonate (baking soda)[25](index=25&type=chunk) - Key brands include ARM & HAMMER®, TROJAN®, OXICLEAN®, SPINBRUSH®, FIRST RESPONSE®, NAIR®, ORAJEL®, XTRA®, L'IL CRITTERS®, VITAFUSION®, BATISTE®, WATERPIK®, ZICAM®, THERABREATH®, and HERO®[25](index=25&type=chunk) [Sustainability Initiatives](index=4&type=section&id=Church%20%26%20Dwight%20has%20a%20heritage%20of%20commitment%20to%20people%20and%20the%20planet) Church & Dwight demonstrates a long-standing commitment to sustainability, evidenced by early recycled packaging and phosphate-free detergents, earning recognition on various environmental and responsibility lists - Company has a heritage of commitment to people and the planet, using recycled paperboard since early 1900s and launching the first nationally distributed, phosphate-free detergent in 1970[26](index=26&type=chunk) - Recognized on Newsweek's America's Most Responsible and America's Greenest Companies lists, EPA's Green Power Partnership-Top 100 list, and the FTSE4Good Index Series in 2023[26](index=26&type=chunk) [Forward-Looking Statements](index=4&type=section&id=This%20press%20release%20contains%20forward-looking%20statements) This press release contains forward-looking statements subject to various risks and uncertainties, including market conditions, raw material prices, and regulatory changes, advising investors to consult 10-K and 10-Q filings for detailed risk factors - Forward-looking statements are subject to risks and uncertainties, including market growth, economic conditions, raw material and energy prices, competition, and regulatory changes[27](index=27&type=chunk)[28](index=28&type=chunk) - Investors should consult Item 1A, 'Risk Factors' in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q for additional factors[29](index=29&type=chunk) [Non-GAAP Financial Measures Explanation](index=5&type=section&id=This%20press%20release%20also%20contains%20non-GAAP%20financial%20information) The press release includes non-GAAP financial measures, used by management for internal analysis and provided for investor insight, with reconciliations to GAAP measures, but should not be considered in isolation - Non-GAAP measures are used by management for internal analysis and are believed to be informative for investors to gauge financial performance and identify trends[30](index=30&type=chunk) - Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included at the end of the release[30](index=30&type=chunk) - Non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures and may differ from similar measures provided by other companies[30](index=30&type=chunk) [Financial Statements & Reconciliations](index=6&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section presents the condensed consolidated financial statements and reconciliations of non-GAAP measures for the quarter and nine months ended September 30, 2024 [Condensed Consolidated Statements of (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20%28Loss%29%20Income%20%28Unaudited%29) The condensed consolidated statements of (loss) income show a Q3 2024 net loss of **$75.1 million** due to a **$357.1 million** impairment charge, impacting nine-month net income which fell to **$396.1 million** Condensed Consolidated Statements of (Loss) Income (Unaudited) | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Sales | $1,510.6 | $1,455.9 | $4,525.1 | $4,339.9 | | Gross Profit | $683.1 | $646.3 | $2,082.2 | $1,907.2 | | Tradename and other asset impairments | $357.1 | $0.0 | $357.1 | $0.0 | | (Loss) Income from Operations | $(91.5) | $255.8 | $550.4 | $841.3 | | Net (Loss) Income | $(75.1) | $177.5 | $396.1 | $601.9 | | Net (Loss) Income per share - Diluted | $(0.31) | $0.71 | $1.61 | $2.43 | | Dividends per share | $0.28 | $0.27 | $0.85 | $0.82 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of September 30, 2024, total assets increased to **$8,666.2 million** from **$8,569.2 million** at year-end 2023, primarily due to a rise in cash, offset by a decrease in intangibles from impairment Condensed Consolidated Balance Sheets (Unaudited) | Metric (in millions) | Sep 30, 2024 | Dec 31, 2023 | | :------------------- | :----------- | :----------- | | Cash and Cash Equivalents | $752.1 | $344.5 | | Total Current Assets | $2,016.7 | $1,529.7 | | Trade Names and Other Intangibles | $2,919.7 | $3,302.3 | | Total Assets | $8,666.2 | $8,569.2 | | Total Current Liabilities | $1,246.6 | $1,422.0 | | Long-Term Debt | $2,208.2 | $2,202.2 | | Stockholders' Equity | $4,193.7 | $3,855.4 | | Total Liabilities and Stockholders' Equity | $8,666.2 | $8,569.2 | [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow%20%28Unaudited%29) For the nine months ended September 30, 2024, net cash from operating activities increased to **$863.9 million**, with net cash used in investing and financing activities leading to a **$407.6 million** net change in cash Condensed Consolidated Statements of Cash Flow (Unaudited) | Metric (in millions) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :----------------------------- | :----------------------------- | | Net Income | $396.1 | $601.9 | | Tradename and other asset impairments | $357.1 | $0.0 | | Net cash from operating activities | $863.9 | $795.1 | | Net cash (used in) investing activities | $(138.1) | $(128.4) | | Net cash (used in) financing activities | $(318.3) | $(363.0) | | Net change in cash and cash equivalents | $407.6 | $303.0 | [Product Line Net Sales](index=9&type=section&id=2024%20and%202023%20Product%20Line%20Net%20Sales) For Q3 2024, total net sales grew **3.8%** to **$1,510.6 million**, driven by Consumer Domestic and International growth, while nine-month total net sales increased **4.3%** to **$4,525.1 million** 2024 and 2023 Product Line Net Sales (in millions) | Product Line | Q3 2024 Net Sales (M) | Q3 2023 Net Sales (M) | Q3 Change (%) | 9M 2024 Net Sales (M) | 9M 2023 Net Sales (M) | 9M Change (%) | | :----------- | :-------------------- | :-------------------- | :------------ | :-------------------- | :-------------------- | :------------ | | Household Products | $637.4 | $636.2 | 0.2% | $1,929.5 | $1,857.0 | 3.9% | | Personal Care Products | $533.4 | $496.9 | 7.3% | $1,577.1 | $1,521.2 | 3.7% | | Consumer Domestic | $1,170.8 | $1,133.1 | 3.3% | $3,506.6 | $3,378.2 | 3.8% | | Consumer International | $267.7 | $244.4 | 9.5% | $786.4 | $716.9 | 9.7% | | Total Consumer Net Sales | $1,438.5 | $1,377.5 | 4.4% | $4,293.0 | $4,095.1 | 4.8% | | Specialty Products Division | $72.1 | $78.4 | -8.0% | $232.1 | $244.8 | -5.2% | | Total Net Sales | $1,510.6 | $1,455.9 | 3.8% | $4,525.1 | $4,339.9 | 4.3% | [Organic Sales Reconciliation](index=9&type=section&id=Organic%20Sales%20Growth) Organic sales growth for Q3 2024 was **4.3%** for the total company, with Consumer International leading at **8.1%**, while nine-month total company organic sales growth reached **4.7%** Organic Sales Growth Reconciliation | Segment | 9 Months Ended Sep 30, 2024 Organic Sales Growth | 3 Months Ended Sep 30, 2024 Organic Sales Growth | | :------ | :----------------------------------------------- | :----------------------------------------------- | | Total Company | 4.7% | 4.3% | | Worldwide Consumer | 4.7% | 4.2% | | Consumer Domestic | 3.8% | 3.3% | | Consumer International | 8.7% | 8.1% | | Specialty Products | 6.1% | 7.5% | [Adjusted Gross Margin Reconciliation](index=9&type=section&id=Adjusted%20Gross%20Margin) For Q3 2024, reported gross margin was **45.2%**, with adjusted gross margin at **45.0%**, representing a **60 basis point** increase from Q3 2023 after a tariff ruling adjustment Adjusted Gross Margin Reconciliation | Metric | Q3 2024 | Q3 2023 | Change (bps) | | :----- | :------ | :------ | :----------- | | Gross Margin - Reported | 45.2% | 44.4% | +80 | | Tariff Ruling Adjustment | -0.2% | 0.0% | -20 | | Gross Margin - Adjusted (non-GAAP) | 45.0% | 44.4% | +60 | [Adjusted SG&A Reconciliation](index=9&type=section&id=Adjusted%20Selling%2C%20General%2C%20and%20Administrative%20Expense%20%28SG%26A%29) For Q3 2024, reported SG&A was **15.3%** of net sales, with adjusted SG&A at **15.0%**, a **20 basis point** increase from Q3 2023 after Hero Restricted Stock adjustments Adjusted Selling, General, and Administrative Expense (SG&A) Reconciliation | Metric | Q3 2024 | Q3 2023 | Change (bps) | | :----- | :------ | :------ | :----------- | | SG&A - Reported % of NS | 15.3% | 15.3% | 0 | | Hero Restricted Stock Adjustment % of NS | -0.3% | -0.5% | +20 | | SG&A - Adjusted (non-GAAP) % of NS | 15.0% | 14.8% | +20 | [Adjusted Income From Operations Reconciliation](index=9&type=section&id=Adjusted%20Income%20from%20Operations) For Q3 2024, reported Income from Operations was a loss of **$91.5 million** (-6.1% of net sales), while adjusted Income from Operations was **$267.2 million** (17.7% of net sales), a **40 basis point** decrease from Q3 2023 Adjusted Income from Operations Reconciliation | Metric | Q3 2024 % of NS | Q3 2023 % of NS | Change (bps) | | :----- | :-------------- | :-------------- | :----------- | | (Loss) Income From Operations - Reported | -6.1% | 17.6% | -2370 | | Hero Restricted Stock Adjustment | 0.3% | 0.5% | -20 | | Tradename and other asset impairments Adjustment | 23.7% | 0.0% | +2370 | | Tariff Ruling Adjustment | -0.2% | 0.0% | -20 | | Income From Operations - Adjusted (non-GAAP) | 17.7% | 18.1% | -40 | [Adjusted Other Income (expense) Reconciliation](index=10&type=section&id=Adjusted%20Other%20Income%20%28expense%29) For Q3 2024, reported other income (expense), net, was **$(9.9) million** (-0.7% of net sales), with adjusted other income (expense), net, at **$(14.5) million** (-1.0% of net sales), a **50 basis point** improvement from Q3 2023 Adjusted Other Income (expense) Reconciliation | Metric | Q3 2024 % of NS | Q3 2023 % of NS | Change (bps) | | :----- | :-------------- | :-------------- | :----------- | | Other income (expense), net - Reported | -0.7% | -1.5% | +80 | | Tariff Ruling Adjustment | -0.3% | 0.0% | -30 | | Other income (expense) - Adjusted (non-GAAP) | -1.0% | -1.5% | +50 | [Adjusted Diluted Earnings Per Share Reconciliation](index=10&type=section&id=Adjusted%20EPS) For Q3 2024, reported diluted EPS was **$(0.31)**, while adjusted diluted EPS was **$0.79**, a **6.8%** increase from Q3 2023 after various adjustments Adjusted Diluted Earnings Per Share Reconciliation | Metric | Q3 2024 | Q3 2023 | Change (%) | | :----- | :------ | :------ | :--------- | | Diluted (Loss) Earnings Per Share - Reported | $(0.31) | $0.71 | -143.7% | | Hero Restricted Stock Adjustment | $0.02 | $0.03 | - | | Tradename and other asset impairments Adjustment | $1.10 | $0.00 | - | | Tariff Ruling Adjustment | $(0.02) | $0.00 | - | | Diluted Earnings Per Share - Adjusted (non-GAAP) | $0.79 | $0.74 | +6.8% | [Forecasted Sales and EPS Reconciliation](index=12&type=section&id=Reported%20and%20Organic%20Forecasted%20Sales%20Reconciliation) For Q4 2024, reported sales growth is forecasted at **1.5-2.5%** and organic sales growth at **2-3%**, with full-year adjusted diluted EPS projected at **$3.43**, an **8%** increase from 2023 Forecasted Sales and EPS Reconciliation | Metric | Q4 2024 Forecast | Full Year 2024 Forecast | Full Year 2023 | Change (FY) | | :----- | :--------------- | :---------------------- | :------------- | :---------- | | Reported Sales Growth | 1.5-2.5% | 3.5% | - | - | | Organic Sales Growth | 2-3% | 4.0% | - | - | | Reported EPS (Diluted) | $0.75 | $2.35 | $3.05 | -23% | | Adjusted EPS (Diluted) | $0.76 (+17% YoY) | $3.43 | $3.17 | +8% |