Church & Dwight Reports Q1 Results

Church & Dwight Co., Inc. (NYSE: CHD):

2019 First Quarter Results		2019 Full Year Outlook
Sales growth +3.8%; Organic +4.5% Domestic Sales +4.5%; Organic growth +4.5% Gross margin +20 bps. to 45.1% EPS growth +11.1%		Sales growth raised to 5% - 6%; Organic Sales growth +3.5% Gross margin outlook raised to +50 bps. Adjusted EPS $2.43-$2.47, +7-9%¹ Cash from operations approximately $800 million

Church & Dwight Co., Inc. (NYSE: CHD) today announced first quarter 2019
EPS of $0.70, an 11.1% increase, exceeding the Company’s outlook.

First quarter net sales grew 3.8% to $1,044.7 million. Organic sales
grew 4.5% driven by global consumer products growth of 5.2% which was
driven by volume growth of 2.7% and positive product mix and pricing of
2.5%.

Matthew Farrell, Chief Executive Officer, commented, “Q1 organic sales
growth of 4.5% was exceptionally strong and exceeded our 3.5% to 4.0%
outlook. Q1 was the fourth consecutive quarter of greater than 4%
organic growth and the third consecutive quarter of positive price and
product mix (+2.3%). Pricing actions successfully executed late in 2018
contributed to gross margin expansion. Our categories continue to grow
and our market shares are healthy. Ten of our 14 domestic categories
grew during the quarter and more than half have grown for at least 6
consecutive quarters. In the domestic business, 8 out of 11 power brands
met or exceeded category growth in the first quarter. The international
business continues to perform strongly with sales growth of 3.3% and
organic growth of +8.5%.”

First Quarter Review

Consumer Domestic net sales were $784.9 million, a $33.5 million
or 4.5% increase driven by household and personal care sales growth.
Organic sales increased 4.5% due to higher volume (+1.0%) and positive
price and product mix (+3.5%). Growth was led by ARM & HAMMER liquid and
unit dose laundry detergent, ARM & HAMMER clumping cat litter, TROJAN
condoms, XTRA liquid laundry detergent, L’IL CRITTERS gummy vitamins,
and BATISTE dry shampoo.

Consumer International net sales were $186.7 million, a $6.0
million or a 3.3% increase driven by growth of our Global Markets Group
(formerly Export) business, and broad-based household and personal care
sales growth. Organic sales increased 8.5% due to higher volume (+10.2%)
offset by unfavorable price and product mix (-1.7%). Organic sales were
driven primarily by FEMFRESH, BATISTE, STERIMAR, and ARM & HAMMER liquid
laundry detergent in the Global Markets Group business, ARM & HAMMER
clumping cat litter and liquid laundry detergent in Canada, BATISTE in
Germany, and WATERPIK in several countries.

Specialty Products net sales were $73.1 million, an $0.8 million
or 1.1% decrease. Organic sales decreased 4.2% due to lower volume
(-4.5%) offset by positive pricing (+0.3%). Although demand for our
products continues to grow in the poultry industry, demand in the dairy
industry continues to be significantly reduced due to low milk prices.

Gross margin increased 20 basis points to 45.1% due to price
increases, volume growth, and productivity programs, partially offset by
higher commodity and manufacturing costs.

Marketing expense was $98.1 million, a decrease of $1.8 million
or 1.8%. Marketing expense as a percentage of net sales decreased 50
basis points to 9.4%.

Selling, general, and administrative expense (SG&A) was
$131.9 million, a decrease of $0.6 million, or 12.6% of net sales, a 50
basis point decrease.

Income from Operations was $240.8 million or 23.1% of net sales
which is a 120 basis point increase.

Other Expense was $17.4 million, a decrease of $4.3 million,
primarily driven by lower interest expense as a result of lower
outstanding debt.

The effective tax rate was 21.9% compared to 21.4% in 2018, an
increase of 50 basis points.

Operating Cash Flow

For the first three months of 2019, net cash from operating activities
was $137.9 million, a $17.6 million decrease from the prior year as
higher cash earnings were more than offset by an increase in working
capital. The Company continues to expect to generate $800 million of net
cash flow from operating activities for the full year, a $36 million
increase from year ago. Capital expenditures for the first three months
were $11.7 million, a $1.8 million increase from the prior year.

At March 31, 2019, cash on hand was $97.9 million, while total debt was
$1,906.9 million.

FLAWLESS Acquisition

On May 1, 2019, the Company closed on its previously announced
acquisition of the FLAWLESS™ and FINISHING TOUCH™ (”FLAWLESS”) hair
removal business from Ideavillage Products Corporation. FLAWLESS is the
market leader in women’s electric hair removal products. The Company
paid $475 million at closing and will make an additional earn-out
payment of up to a maximum of $425 million in cash, based on a trailing
twelve-month net sales target ending no later than December 31, 2021.
FLAWLESS is the Company’s 12th power brand. FLAWLESS’ net sales for the
trailing twelve months ended December 31, 2018 were approximately $180
million. The transaction is expected to be neutral to 2019 adjusted
earnings per share. FLAWLESS is expected to increase cash earnings (4%
accretion). The expected cash earnings increase will be offset by a
one-time inventory purchase at the end of the transition period and a
one time working capital build which will be approximately $30 million
in total. As a result, the full year effect of the acquisition on 2019
operating cash flow is expected to be neutral.

Based on the agreement, FLAWLESS will continue to operate the business
during a transition period which will last approximately 4 months.
During that 4 month transition period (May 1 through August 31), the
FLAWLESS operating results will be included in the Company’s net sales.
For the remaining 4 months (September 1 through December 31), FLAWLESS’
results will be consolidated within specific P&L line items. The impact
of FLAWLESS on the Company’s full year 2019 results compared to 2018 is
expected to be: Net Sales (+200 bps), Gross Margin (+20 bps), Marketing
(-10bps), and SG&A (-50 bps).

2019 New Products

Mr. Farrell commented, “Innovation continues to be a big driver of our
success. In support of our long-term strategy to drive revenue and
earnings growth, we have launched new products in several categories.”

“In the household products portfolio, we launched ARM & HAMMER CLUMP &
SEAL CLOUD CONTROL cat litter that eliminates 100% of dust, keeping
dander in the litter box in an allergen-free light scent with a 7-day
odor control guarantee. ARM & HAMMER Plus OXICLEAN laundry detergent
launched FADE DEFENSE combining stain fighting power with clothing
protection to brighten and protect against fading for vibrant whites and
bright colors. OXICLEAN launched DARK PROTECT laundry booster for dark
and black fabrics that incorporates anti-fade technology, cold water
solubility, and OXICLEAN stain fighters.

“In the personal care portfolio, WATERPIK launched SONIC-FUSION, the
world’s first flossing toothbrush combining the convenience of a sonic
toothbrush with a water flosser in a single device. VITAFUSION and L’IL
CRITTERS launched USDA certified organic gummy vitamins. BATISTE
launched a Hair Benefits line with a hydrating dry shampoo for dry hair,
and a volumizing dry shampoo for fine hair. NAIR launched LEG MASKS hair
removal, a first for legs, with natural clay, seaweed, and charcoal.
ORAJEL launched toothache strips with a patent-pending innovative strip
technology that targets pain by adhering to teeth and gums for instant,
long-lasting, better tasting, targeted relief. TROJAN launched THE EDGE
condom designed to excite and elevate the experience with changing
sensations and both inside and outside lubrication.”

Outlook for 2019

Mr. Farrell stated, “We are off to a strong start. We continue to expect
2019 adjusted EPS of $2.43 to $2.47, an increase of 7-9%, excluding the
earn-out adjustment from our acquisition of the FLAWLESS business. This
reflects continued strong business performance in line with our
evergreen model.”

Mr. Farrell continued, “We now expect full year 2019 reported sales
growth of approximately 5-6% due to the FLAWLESS acquisition and
continue to expect organic sales growth to be approximately 3.5%
reflecting growth with exciting new product introductions in our most
important categories. We now expect gross margin to increase 50 basis
points (previously 10 basis points). Stronger productivity programs,
favorable price (including incremental pricing actions), and product mix
is expected to drive a 30 basis point increase in the core business
gross margin. An additional 20 basis points in gross margin benefit is
expected due to the accounting for the FLAWLESS brand during the
transition period. We continue to expect marketing dollars to increase
year over year and marketing as a percentage of sales is now expected to
be down 20 basis points due to the FLAWLESS transition period
(previously down 10 basis points) as we invest in our ARM & HAMMER MORE
POWER TO YOU campaign. As a result of amortization and transition
expenses related to the FLAWLESS acquisition, adjusted SG&A as a
percentage of sales is now expected to be approximately 13.8%
(previously 13.3%) compared to 13.6% in 2018. We continue to expect
adjusted operating profit margin expansion to be in-line with our
evergreen model of +50 basis points (previously +50 basis points). Cash
flow from operations is still expected to be approximately $800 million
inclusive of FLAWLESS cash earnings and one-time working capital
increase. We continue to aggressively pursue accretive acquisitions that
meet our strict criteria.

“For Q2, we expect reported sales growth of approximately 4% and organic
sales growth of approximately 3.5%. We expect adjusted EPS to be $0.52
per share, a 6% increase over last year’s Q2 EPS, when excluding the
earn-out adjustment from our acquisition of the FLAWLESS business.”

¹This press release does not provide a reconciliation of adjusted SG&A,
operating profit, and EPS to reported SG&A, operating profit, and EPS,
the most directly comparable GAAP financial measure, expected for 2019
or for the second quarter of 2019, because we are unable to provide such
a reconciliation without unreasonable effort. We have excluded the
Company’s potential earn-out liability from our acquisition of the
FLAWLESS business from our expected adjusted EPS for these periods. We
are required to review the fair value of the earn-out liability
quarterly based on changes in sales forecasts, discount rates,
volatility assumptions, and other inputs. Our inability to provide a
reconciliation to GAAP EPS is due to the uncertainty and inherent
difficulty of predicting what these changes will be on a
quarter-by-quarter basis. For the same reasons, we are unable to address
the probable significance of the unavailable information, which could be
material to our future results.

Church & Dwight Co., Inc. will host a conference call to discuss first
quarter 2019 earnings results on May 2, 2019 at 10:00 a.m. (ET). To
participate, dial 877-322-9846 within the U.S. and Canada, or
631-291-4539 internationally, using access code 3499666. A replay will
be available at 855-859-2056 using the same access code. You also can
participate via webcast by visiting the Investor Relations section of
the Company’s website at www.churchdwight.com.

The Church & Dwight Co., Inc. (NYSE: CHD) founded in 1846, is the
leading U.S. producer of sodium bicarbonate, popularly known as baking
soda. The Company manufactures and markets a wide range of personal
care, household, and specialty products under recognized brand names
such as ARM & HAMMER, TROJAN, OXICLEAN, SPINBRUSH, FIRST RESPONSE, NAIR,
ORAJEL, XTRA, L’IL CRITTERS and VITAFUSION, BATISTE, WATERPIK, and
FLAWLESS. These twelve key brands represent approximately 80% of the
Company’s consumer products sales. For more information, visit the
Company’s website.

Church & Dwight has a strong heritage of commitment to people and the
planet. In the early 1900’s, we began using recycled paperboard for all
packaging of household products. Today, virtually all our paperboard
packaging is from certified, sustainable sources. In 1970, the ARM &
HAMMER™ brand introduced the first nationally-distributed,
phosphate-free detergent. That same year, Church & Dwight was honored to
be the sole corporate sponsor of the first annual Earth Day. Church &
Dwight is notably ranked in the 2018 Barron’s 100 Most Sustainable
Companies and on EPA’s Green Power Partnership Top 100 List of Green
Power Users.

For more information, see the Church & Dwight 2018 Sustainability Report
at: https://churchdwight.com/pdf/Sustainability/2018-Sustainability-Report.pdf.

This press release contains forward-looking statements, including,
among others, statements relating to net sales and earnings growth;
gross margin changes; trade and marketing spending; marketing expense as
a percentage of net sales; sufficiency of cash flows from operations;
earnings per share; cost savings programs; consumer demand and spending;
the effects of competition; the effect of product mix; volume growth,
including the effects of new product launches into new and existing
categories; the impact of foreign exchange, U.S. tariffs, and commodity
price fluctuations; the impact of acquisitions; capital expenditures;
and the Company’s effective tax rate. These statements represent the
intentions, plans, expectations and beliefs of the Company, and are
based on assumptions that the Company believes are reasonable but may
prove to be incorrect. In addition, these statements are subject
to risks, uncertainties and other factors, many of which are outside the
Company’s control and could cause actual results to differ materially
from such forward-looking statements. Factors that could cause
such differences include a decline in market growth, retailer
distribution and consumer demand (as a result of, among other things,
political, economic and marketplace conditions and events);
unanticipated increases in raw material and energy prices; delays or
other problems in manufacturing or distribution; increases in
transportation costs; adverse developments affecting the financial
condition of major customers and suppliers; changes in marketing and
promotional spending; growth or declines in various product categories
and the impact of customer actions in response to changes in consumer
demand and the economy, including increasing shelf space of private
label products; consumer and competitor reaction to, and customer
acceptance of, new product introductions and features; the Company’s
ability to maintain product quality and characteristics at a level
acceptable to our customers and consumers; disruptions in the banking
system and financial markets; foreign currency exchange rate
fluctuations; implications of the United Kingdom’s withdrawal from the
European Union; transition to, and shifting economic policies in the
United States; potential changes in export/import and trade laws,
regulations and policies of the United States and other countries,
including any increased trade restrictions or tariffs, including the
actual and potential effect of tariffs on Chinese goods imposed by the
United States; issues relating to the Company’s information technology
and controls; the impact of natural disasters on the Company and its
customers and suppliers, including third party information technology
service providers; the integration of acquisitions or divestiture of
assets; the outcome of contingencies, including litigation, pending
regulatory proceedings and environmental matters; and changes in the
regulatory environment.

For a description of additional factors that could cause actual
results to differ materially from the forward-looking statements, please
see Item 1A, “Risk Factors” in the Company’s annual report on Form 10-K.
The Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by the U.S. federal
securities laws. You are advised, however, to consult any further
disclosures the Company makes on related subjects in its filings with
the United States Securities and Exchange Commission.

This press release also contains non-GAAP financial information. Management
uses this information in its internal analysis of results and believes
that this information may be informative to investors in gauging the
quality of the Company’s financial performance, identifying trends in
its results and providing meaningful period-to-period comparisons. The
Company has included reconciliations of these non-GAAP financial
measures to the most directly comparable financial measure calculated in
accordance with GAAP. See the end of this press release for these
reconciliations. These non-GAAP financial measures should not be
considered in isolation or as a substitute for the comparable GAAP
measures. In addition, these non-GAAP financial measures may not be the
same as similar measures provided by other companies due to potential
differences in methods of calculation and items being excluded. They
should be read in connection with the Company’s financial statements
presented in accordance with GAAP.

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Income (Unaudited)

			Three Months Ended
(In millions, except per share data)			March 31, 2019					March 31, 2018
Net Sales			$	1,044.7				$	1,006.0
Cost of sales				573.9					554.5
Gross Profit				470.8					451.5
Marketing expenses				98.1					99.9
Selling, general and administrative expenses				131.9					131.3
Income from Operations				240.8					220.3
Equity in earnings of affiliates				1.7					2.1
Other income (expense), net				(17.4	)				(21.7	)
Income before Income Taxes				225.1					200.7
Income taxes				49.4					42.9
Net Income			$	175.7				$	157.8
Net Income per share - Basic			$	0.71				$	0.64
Net Income per share - Diluted			$	0.70				$	0.63
Dividends per share			$	0.23				$	0.22
Weighted average shares outstanding - Basic				246.1					244.9
Weighted average shares outstanding - Diluted				251.9					250.0

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)

(Dollars in millions)		March 31, 2019					December 31, 2018
Assets
Current Assets
Cash and Cash Equivalents		$	97.9				$	316.7
Accounts Receivable			384.6					345.3
Inventories			399.5					382.8
Other Current Assets			31.7					33.4
Total Current Assets			913.7					1,078.2
Property, Plant and Equipment (Net)			558.8					598.2
Equity Investment in Affiliates			9.4					8.5
Trade Names and Other Intangibles			2,256.3					2,274.0
Goodwill			1,992.9					1,992.9
Other Long-Term Assets			229.5					117.4
Total Assets		$	5,960.6				$	6,069.2
Liabilities and Stockholders’ Equity
Short-Term Debt		$	99.8				$	1.8
Current portion of Long-Term debt			297.7					596.5
Other Current Liabilities			735.8					728.0
Total Current Liabilities			1,133.3					1,326.3
Long-Term Debt			1,509.4					1,508.8
Other Long-Term Liabilities			818.6					780.3
Stockholders’ Equity			2,499.3					2,453.8
Total Liabilities and Stockholders’ Equity		$	5,960.6				$	6,069.2

CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flow (Unaudited)

			Three Months Ended
(Dollars in millions)			March 31, 2019					March 31, 2018
Net Income			$	175.7				$	157.8
Depreciation and amortization				38.6					35.7
Deferred income taxes				2.8					(2.5	)
Non-cash compensation				2.4					3.1
Other				(1.7	)				(1.0	)
Subtotal				217.8					193.1
Changes in assets and liabilities:
Accounts receivable				(36.0	)				(11.3	)
Inventories				(15.9	)				(23.5	)
Other current assets				0.5					(4.7	)
Accounts payable and accrued expenses				(59.2	)				(32.6	)
Income taxes payable				34.3					34.5
Other				(3.6	)				-
Net cash from operating activities				137.9					155.5
Capital expenditures				(11.7	)				(9.9	)
Acquisitions				-					(49.9	)
Other				(0.7	)				(0.2	)
Net cash (used in) investing activities				(12.4	)				(60.0	)
Net change in long-term debt				(300.0	)				0.0
Net change in short-term debt				98.0					(17.4	)
Payment of cash dividends				(55.9	)				(53.0	)
Proceeds from stock option exercises				15.1					16.4
Purchase of treasury stock				(100.0	)				(200.0	)
Deferred financing and other				(1.5	)				(1.6	)
Net cash (used in) financing activities				(344.3	)				(255.6	)
F/X impact on cash				-					1.0
Net change in cash and cash equivalents			$	(218.8	)			$	(159.1	)

2018 and 2017 Product Line Net Sales
				Three Months Ended										Percent
				3/31/2019					3/31/2018					Change
Household Products				$	443.3				$	413.0					7.3	%
Personal Care Products					341.6					338.4					0.9	%
Consumer Domestic				$	784.9				$	751.4					4.5	%
Consumer International					186.7					180.7					3.3	%
Total Consumer Net Sales				$	971.6				$	932.1					4.2	%
Specialty Products Division					73.1					73.9					-1.1	%
Total Net Sales				$	1,044.7				$	1,006.0					3.8	%

Non-GAAP Measures:

The following discussion addresses the non-GAAP measures used in this
press release and reconciliations of these non-GAAP measures to the most
directly comparable GAAP measures. These non-GAAP financial measures
should not be considered in isolation from or as a substitute for the
comparable GAAP measures. The following non-GAAP measures may not be the
same as similar measures provided by other companies due to differences
in methods of calculation and items and events being excluded.

Organic Sales Growth:

This press release provides information regarding organic sales growth,
namely net sales growth excluding the effect of acquisitions,
divestitures and foreign exchange rate changes. Management believes that
the presentation of organic sales growth is useful to investors because
it enables them to assess, on a consistent basis, sales trends related
to products that were marketed by the Company during the entirety of
relevant periods, excluding the impact of acquisitions, divestitures,
and foreign exchange rate changes that are out of the control of, and do
not reflect the performance of the Company and management.

Adjusted EPS:

This press release also presents adjusted earnings per share, namely,
EPS calculated in accordance with GAAP, as adjusted to exclude
significant one-time items that are not indicative of the Company’s
period-to-period performance. We believe that this metric provides
investors a useful perspective of underlying business trends and results
and provides useful supplemental information regarding our
year-over-year EPS growth. Adjusted 2019 EPS excludes an estimated
earn-out adjustment related to the FLAWLESS acquisition.

CHURCH & DWIGHT CO., INC. Organic Sales
			Three Months Ended 03/31/2019
			Total			Worldwide			Consumer			Consumer			Specialty
			Company			Consumer			Domestic			International			Products
Reported Sales Growth			3.8%			4.2%			4.5%			3.3%			-1.1%
Less:
Acquisitions			0.3%			0.0%			0.0%			0.0%			3.1%
Add:
FX / Other			1.0%			1.0%			0.0%			5.2%			0.0%
Divestitures			0.0%			0.0%			0.0%			0.0%			0.0%
Organic Sales Growth			4.5%			5.2%			4.5%			8.5%			-4.2%

CHURCH & DWIGHT CO., INC.
Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited)
Reported and Organic Forecasted Sales Reconciliation
				For the Quarter					For the Year
				Ended					Ended
				June 30, 2019					December 31, 2019
Reported Sales Growth				4.5%					5.5%
Less: Acquisition				-1.5%					-2.3%
Add: FX / Other				+0.5%					+0.3%
Organic Sales Growth				3.5%					3.5%

View source version on businesswire.com: https://www.businesswire.com/news/home/20190502005262/en/