Church&Dwight Co. Inc.

We believe C&D can rapidly deleverage because of its solid cash-flow generating capability, track record as an effective acquirer, and financial flexibility with respect to share-repurchase activity. For example, it restored leverage to 2x from the high-2x area within 18 months of acquiring WaterPik for about $1 billion in the summer of 2017, its largest acquisition to date. The company pulled back on share repurchases and prioritized debt reduction. The stable outlook reflects our expectation that C&D will continue to increase organic revenues in the low-single-digit percent and generate consistently solid free cash flow, while maintaining an appetite for accretive acquisitions such that long-term leverage is sustained in the low-2x area. We believe leverage could occasionally increase to the high-2x

...Church & Dwight Co. (C&D) has had consistent organic revenue growth with a portfolio that benefits from current trends. C&D's long-term target is at least 3% organic revenue growth. Historically, the company has met or exceeded that target. Most recently, for the first quarter ended March 31, 2021, C&D generated organic revenue growth of nearly 5%, with volumes up 3% and price/mix up 2%. Demand remained robust for the company's consumer domestic segment with sales up 5.8%, consumer international up 9%, and specialty products up 6%. C&D expects gummy vitamins, laundry additives, cat litter, and depilatories will maintain elevated levels in 2021. However, it expects pregnancy test kits, baking soda, toothache, carpet deodorizer, and adult cold shortening to decline from COVID-19 highs. Categories that were hit by limited consumer mobility should recover, including condoms, dry shampoo, women's electric grooming, and power flossers. The company expects the laundry category to remain steady...

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