Church & Dwight(US:CHD)2025-05-01 14:00Financial Data and Key Metrics Changes - Adjusted EPS for Q1 was $0.91, down 5.2% from the prior year, slightly above the outlook of $0.90 [24][30] - Reported revenue decreased by 2.4%, and organic sales declined by 1.2% due to lower volume [24][30] - Adjusted gross margin was 45.1%, a decrease of 60 basis points year over year, impacted by commodity inflation and lower volume [25][30] Business Line Data and Key Metrics Changes - U.S. organic sales decreased by 3%, driven entirely by negative volume from retail destocking [9][30] - International business delivered sales growth of 2.7%, with organic sales increasing by 5.8% [18] - SPD organic sales increased by 3.2% due to higher price and product mix [19] Market Data and Key Metrics Changes - U.S. consumer spending continues to weaken, with category growth averaging around 1.5% in Q1, down from 2.5% in the second half of 2024 [10][20] - Retailer destocking negatively impacted organic sales by approximately 300 basis points [5][30] - The Gummy Vitamin category grew by 4.8%, but the company's consumption was down 19% [13] Company Strategy and Development Direction - The company is pursuing strategic alternatives for the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses, which represent about 2% of total net sales [7] - The company expects to reduce tariff exposure by approximately 80% through portfolio decisions and supply chain actions [7][8] - Continued focus on innovation and marketing investment is expected to drive growth in core categories [17][20] Management's Comments on Operating Environment and Future Outlook - The company expects full-year organic growth outlook to be 0% to 2%, revised down from 3% to 4% due to weaker U.S. consumer conditions [29][30] - Management noted that despite a slowdown in category consumption, the brands are performing well, gaining both dollar and volume share [20][30] - The company does not foresee a catalyst for improvement in U.S. consumer spending in the near term [20] Other Important Information - Cash from operating activities for Q1 was $185.7 million, a decrease of $77.3 million compared to the previous year [28] - Capital expenditures for Q1 were $16.5 million, a decrease of $29.8 million from the prior year [28] - The company expects to take a charge in Q2 related to the strategic decisions regarding the divested businesses [7][31] Q&A Session Summary Question: Updated expectations for organic sales growth by segment - Management confirmed that international organic sales were about 6% in Q1, while SPD was about 3% [34] Question: Promotional backdrop for the quarter - Promotional activity in laundry was stable at 34%, with litter promotions around 17.8% [36][38] Question: Expectations for category growth and market share - Management indicated that categories are expected to grow around 1% to 1.5%, with the company aiming to grow slightly faster [46] Question: Tariff impact on earnings - The gross impact of tariffs is projected at $190 million, expected to reduce to around $40 million after strategic actions [52][54] Question: Vitamin business performance and expectations - Management is focused on innovation and marketing to improve the vitamin business, with results expected to be visible by July [58][60] Question: Confidence in retail inventory levels - Management expressed that the expectation for Q2 is similar to Q1, with no significant bounce back anticipated [98][128]