Church & Dwight(US:CHD)2025-05-01 14:00Financial Data and Key Metrics Changes - Organic sales decreased by 1.2%, falling short of the expected range of 0% to 2% growth, primarily due to retailer destocking which accounted for approximately 300 basis points of the decline [6][24] - Adjusted EPS was $0.91, slightly above the outlook of $0.90, but down 5.2% from the prior year [24][30] - Reported revenue declined by 2.4% [24] Business Line Data and Key Metrics Changes - In the U.S. business, organic sales declined by 3%, driven entirely by negative volume from retail destocking [10] - The Gummy Vitamin business negatively impacted organic growth, with consumption down 19% despite the category growing by 4.8% [14] - ARM and HAMMER liquid laundry detergent consumption grew by 3.4% against zero category growth, while unit dose consumption grew by 26.9% [12][13] - TheraBreath consumption grew by 26%, making it the number two mouthwash brand with a 20.3% share [17] Market Data and Key Metrics Changes - International business delivered sales growth of 2.7%, with organic sales increasing by 5.8% largely due to higher volume [19] - SPD organic sales increased by 3.2% due to a combination of higher price and product mix along with higher volume [19] Company Strategy and Development Direction - The company is pursuing strategic alternatives for the FLAWLESS, Spin Brush, and WATERPIK showerhead businesses, which generate $150 million in net sales, to sharpen focus on core brands and mitigate tariff exposure [8][20] - The full-year organic growth outlook has been revised to 0% to 2%, reflecting a weaker U.S. consumer and no expected recovery from Q1 retailer destocking [20][30] - The company is committed to maintaining marketing investments at 11% of net sales to drive brand share momentum [26][88] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending continues to weaken, with category growth declining from an average of 2.5% in the second half of 2024 to around 1.5% in Q1 2025 [10][11] - The company expects no bounce back from Q1 retailer destocking and anticipates continued challenges in the U.S. consumer environment [20][21] - Despite the slowdown, management expressed confidence in the strength of their brands and their ability to navigate the current environment [21][22] Other Important Information - The company expects to take a charge in Q2 related to the strategic decisions regarding the divested businesses, estimated at $140 million, with two-thirds expected to be non-cash [32] - Cash from operating activities was $185.7 million, a decrease of $77.3 million compared to the previous year [28] 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%, with expectations for similar performance in Q2 [34][35] Question: Promotional backdrop for the quarter - Management indicated that promotional activity in laundry was stable, with 34% sold on deal, and litter promotions around 17.8% [36][38] Question: Category performance and market share growth - Management noted that categories are expected to grow around 1% to 1.5%, with trade down not yet significantly impacting performance [46] Question: Revenue call down versus tariffs impact - Management clarified that the gross impact of tariffs is projected at $190 million, which is expected to be mitigated through strategic actions [50][54] Question: Vitamin business performance and expectations - Management acknowledged that the vitamin business is not meeting expectations and emphasized the focus on innovation and marketing to drive growth [58][60] Question: Retailer destocking and inventory levels - Management expressed confidence that the current retail destocking is a result of consumer pullback and macroeconomic pressures, leading to a cautious outlook on restocking [116][118]