Church & Dwight(US:CHD)2023-04-27 17:02Financial Data and Key Metrics Changes - Q1 reported revenue growth was 10.2%, with organic sales increasing by 5.7%, exceeding the initial outlook of 4% [26][33] - Adjusted EPS for Q1 was $0.85, which was $0.10 higher than the expected $0.75, driven by strong consumer demand and higher-than-expected gross margins [27][33] - Cash from operating activities increased to $273 million, with full-year cash flow from operations expected to be approximately $950 million [11] Business Line Data and Key Metrics Changes - ARM & HAMMER laundry detergent grew by 9.3%, gaining market share, while the overall liquid laundry category grew by 3.6% [28][155] - The HERO brand saw a year-over-year consumption growth of 43.5%, achieving a 9.1% market share in the acne treatment category [30][33] - THERABREATH mouthwash grew by 70% in consumption, increasing its market share to 22.5% in the alcohol-free mouthwash segment [5][156] Market Data and Key Metrics Changes - The international business delivered organic growth of 11.6% in Q1, driven by strong performance across various global regions [157] - In the U.S. consumer market, organic sales growth was 5.5%, with eight out of fourteen power brands holding or gaining market share [154] - The dry shampoo category grew by 11.8%, with BATISTE achieving a 46.2% market share [155] Company Strategy and Development Direction - The company plans to increase marketing investments to support brand growth and new product launches, with a target of 10.5% of sales for marketing [12][140] - The focus remains on both premium and value brands, with a strategy to capitalize on consumer trade-down trends [4][114] - The company expects to make incremental investments in brands and capabilities in future quarters, reflecting confidence in business strength [12][140] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to volume growth later in the year, following flat volume growth in Q1 [9][12] - The company noted that while inflation remains a concern, pricing and productivity improvements are expected to offset inflationary pressures [12][118] - Management highlighted the importance of sustainability projects and alternative packaging as part of their long-term strategy [38] Other Important Information - The company raised its full-year outlook for sales, EPS, gross margin, and cash flow based on strong Q1 results [12][140] - The effective tax rate for Q1 was 24.4%, an increase from 23.2% in the previous year, with expectations for the full year to be around 23% [11] Q&A Session Summary Question: How is HERO performing relative to expectations? - Management indicated that HERO is performing better than expected, with both distribution and velocity exceeding initial forecasts [22][39] Question: What is the outlook for the personal care business? - Management noted that the personal care business is stabilizing, with expectations for improved performance in the second half of the year [40][65] Question: What are the expectations for gross margin and pricing? - Management expects gross margin to expand by approximately 120 basis points year-over-year, with pricing expected to contribute positively [12][38] Question: How is the company addressing consumer trade-down behavior? - Management acknowledged that both brand strength and consumer trade-down are contributing factors, with ARM & HAMMER benefiting from its strong brand presence [114][125] Question: What is the company's view on input costs and inflation? - Management stated that input costs are mixed, with some costs moderating while others remain high, but overall inflation expectations are unchanged [118][120]