Church & Dwight (CHD) Curtails View Despite Q2 Earnings Beat

Core Viewpoint - Church & Dwight Co., Inc. (CHD) reported strong second-quarter 2024 results, with both earnings and net sales increasing year over year, driven by robust consumer demand across its portfolio [1] Financial Performance - Adjusted earnings were 93 cents per share, exceeding the Zacks Consensus Estimate of 84 cents, reflecting a 1.1% year-over-year increase [3] - Net sales reached $1,511.2 million, a 3.9% year-over-year increase, surpassing the Zacks Consensus Estimate of $1,508 million [4] - Organic sales grew by 4.7%, supported by a volume increase of 3.5% and a favorable product mix and pricing of 1.2% [4] Margin and Expenses - Gross margin expanded by 320 basis points to 47.1%, aided by a one-time benefit from a favorable tariff ruling [5] - Adjusted gross margin was 45.4%, up 150 basis points, driven by enhanced productivity and higher volume despite increased manufacturing costs [5] - Marketing expenses rose by $20.2 million year over year to $152.4 million, representing 10.1% of net sales, an increase of 100 basis points [6] Segment Performance - Consumer Domestic segment net sales increased by 3.8% to $1,170.6 million, driven by household and personal care sales growth [7] - Consumer International segment net sales rose by 9% to $263.7 million, with organic sales up 9.3% [8] - Specialty Products segment sales declined by 8.6% to $76.9 million, impacted by the winding down of the Megalac business [9] Future Guidance - The company adjusted its organic revenue growth forecast to about 4%, down from the previous range of 4-5% for 2024 [11] - Reported sales growth is projected to be around 3.5%, influenced by divestitures and adverse currency fluctuations [11] - Full-year adjusted gross margin expansion is now expected to be approximately 100-110 basis points, an increase from the previously expected 75 basis points [12] Earnings Outlook - The company anticipates reported earnings per share (EPS) growth in the range of 12-13%, up from the previous forecast of 9.5-10.5% [14] - For the third quarter of 2024, reported sales growth is expected to be about 2.5%, with organic sales growth of nearly 3% [15]