Church & Dwight Co Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Rupesh Parikh - Oppenheimer & Co., Inc. - Analyst : Good morning and thanks for taking a question. So obviously, a lot of areas to cover. But maybe I'll just start out, just as we look at your updated organic sales growth guide, is there any way to get updated expectations by segment? And then related to that, did international play out with your expectations for Q1?

Question: Rupesh Parikh - Oppenheimer & Co., Inc. - Analyst : Great. And then I guess, maybe just my follow-up question. Just given a softer category outlook and the backup that you're seeing right now, what do you see on the promotional backdrop in the quarter? And then how are you thinking -- and then do you expect the promotional backdrop to intensify from here?

Question: Rupesh Parikh - Oppenheimer & Co., Inc. - Analyst : Oh great. Thank you. I'll pass it on. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Anna Lizzul - Bank of America - Analyst : Hi, good morning and thank you so much for the question.

Question: Anna Lizzul - Bank of America - Analyst : Hi Rick. I was wondering if you could just discuss maybe your expectations for the category relative to market share growth since you did mention software trends in April. Are you seeing a significant difference here across the premium and value segments of the business in terms of the slowdown? And just on the value side, are you trying to see any benefit here from trade down or anticipating a benefit as we're moving through the year? Thank you.

Question: Anna Lizzul - Bank of America - Analyst : Okay. Thanks very much.

Question: Chris Carey - Wells Fargo Securities - Analyst : Hey, good morning everyone. Can you guys frame within the reduction in earnings for the year, how much was the revenue call down versus tariffs? And maybe just simply put, what is the tariff effect that you're embedding for this year? And can you help give us a bit of clarity on the wraparound tariff impact into 2026 unmitigated for some of the sourcing changes you're making and then perhaps how you're thinking about your 2026 absolute tariff exposure? I mean, effectively, there's this $190 million number. But what we're going to end up seeing in the P&L is substantially lower? So how does that look in '25 and 2026? Then I have a follow-up.

Question: Chris Carey - Wells Fargo Securities - Analyst : Thank you. From the connected in a way that what you were saying about some of these businesses that you had presented to the Board and have thought about strategic alternatives, how conscious, the vitamin business, how to plan for this year on a performance category is widening. At what point does patients with plan run out content you have a strong balance sheet, which gives you a lot of options to do many things? And so maybe give us updated thoughts on where vitamin sits within your meeting the long-term plans and maybe what's happening this year that hasn't gone as well as maybe what you would have hoped relative to your going plans? Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Chris Carey - Wells Fargo Securities - Analyst : Okay. Thank you.

Question: Andrea Teixeira - JP Morgan - Analyst : Thank you and good morning everyone and welcome Lee to the call. I wanted to just go back, you called out in terms of consumption, I called out the 300 basis points reduction in customer domestic for the inventory destocking. But if you can comment also on HERO, it was a big model of growth. And I understand all the actions you're taking and the brand continues to be strong, but I'm assuming it is hitting a very tough comp. And as you said, like for vitamins is obviously completely different story between the -- between HERO and the vitamin side. But talk about the distribution points and how we can think about that brand continue to grow as you lap the growth? And then on the commentary just on a clarification on the promo side, I understand the depth and how the percentages are, so still on promo, but if you can comment on the depth of the promotions, if there is a -- to your point, some of these categories, leader in laundry, perhaps having a little bit more depth and for how long do you think that's going to normalize? Thank you.

Question: Andrea Teixeira - JP Morgan - Analyst : Thank you.

Question: Stephen Powers - Deutsche Bank - Analyst : Good morning and welcome Lee as well. I guess, Rick, the guidance implies -- I think your expectations are explicit about back half improvement in organic growth. And I'm just juxtaposing that against your expectation that you're not really expecting consumption to improve and we've seen the step down in April. So acknowledging that the destocking in 1Q probably doesn't continue as a base case. Just what's the bridge to back half improvement?

Question: Stephen Powers - Deutsche Bank - Analyst : Okay. Fair enough. And then just back to your commentary on vitamins and the initiatives you're putting in place between now and July. As we follow along from the outside, what does success look like in terms of monitoring things as we go? And then ultimately, what is the, I mean, the expectation clearly the ambition is to be winning and growing. But what's the expectation as you think about initiation putting in place and the returns you're likely to get in the back half and then as we exit '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Stephen Powers - Deutsche Bank - Analyst : Okay. Perfect. Thanks for the context. Appreciate it.

Question: Olivia Tong - Raymond James - Analyst : Great. Thanks and welcome Lee. You guys mentioned the potential for pricing realizing it will be very surgical. But given the macros in declining categories, how do you layer in price? And what's your view on the promotional environment going forward? And then given this backdrop, how do you think you can continue -- could you talk about how you continue to drive penetration in your newer categories like our own there so that they can continue to contribute in the outsized way that they have. Thank you.

Question: Olivia Tong - Raymond James - Analyst : Got it. Thanks. And then just following up, can you talk about the drivers for the 85 basis point change in the gross margin guide to down 60 basis point. How much of that is deleverage, potentially some negative mix? You talked about potential for more trade down as the year progresses versus what you embedded in terms of tariffs. It seems like it's mostly tariffs, but just the flexibility within the rest of the P&L or within the operating guide, if you do start to see more trade down, and that impacts the gross margin line?

Question: Olivia Tong - Raymond James - Analyst : Great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Peter Grom - UBS - Analyst : Great. Thanks operator. Good morning everyone. Welcome Lee as well. Lee, maybe just a quick question for you. I mean, I think you mentioned that 2Q US or domestic sales will be similar to 1Q. Could you just unpack that a bit? I think the guidance assumes market share gains. And I think Rick mentioned that category growth would be down kind of one. So I guess I'm just curious how you kind of get to that minus [3%]?

Question: Peter Grom - UBS - Analyst : Got it. That makes sense. And then, Rick, just a question for you. I think you said it's odd what you're seeing in terms of category growth. I'd just be curious, why do you think this is ultimately happening? Why is it happening as quickly as it is? And then just on the April commentary, I get different categories, geographic exposure, but it is a bit different from what we've heard from some of your peers thus far. So what do you think is causing the difference in terms of your April performance or what you're seeing versus maybe what some of your peers are saying?

Question: Peter Grom - UBS - Analyst : Got it. Thank you so much. I'll pass it on.

Question: Lauren Lieberman - Barclays - Analyst : Thanks, good morning. Sort of boring housekeeping I'll admit. But in the release, you talked about that as of April 1, you'll exclude the businesses that you're going to be divesting or exiting or excluded from results. I was just curious how we should handle that as we model? Like are we putting it in the structural line? Or is it in net sales or just completely gone? And will you be restating the base just so we again, know how to model?

Question: Lauren Lieberman - Barclays - Analyst : Okay. So we should think about the adjusted EPS, the absence of those businesses is still a headwind for EPS.

Question: Lauren Lieberman - Barclays - Analyst : Okay. All right. Great. All right. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Lauren Lieberman - Barclays - Analyst : For me it was, for me it was. I appreciate it.

Question: Korinne Wolfmeyer - Piper Sandler & Co. - Analyst : Hey, good morning. Thank you for taking the question. Just want to go back to the retailer destocking comment and kind of what's changed between now and a couple of months ago when you were anticipating that -- those orders to kind of come back over the year progresses? I mean, obviously, like a lot has changed with the tariff situation and consumers pulling back. But why do you think the retailers wouldn't restock if the consumption is still there? And then separately, just any updated thinking around the M&A environment? I know you've been talking a little bit more about maybe looking at some international assets to add to portfolio, any change in thinking with the current macro situations going on? Thank you.

Question: Korinne Wolfmeyer - Piper Sandler & Co. - Analyst : Great. Thanks so much.

Question: Kaumil Gajrawala - Jefferies - Analyst : Hey guys, good morning. Maybe a follow-up on the inventory levels at retail. I guess what gives you the confidence that inventory shouldn't bounce back or that there should be a restock. Is there -- is there something you're seeing in the market? Is it channel mix? Maybe you were high on inventories towards the end of '24. But the idea of sort of consumption being ahead of inventories and then sort of staying that way for the whole of the year? Just feels like something that maybe we don't see that frequently. So I'm just curious what might have changed and what gives you that confidence that this was a onetime step down. This is where it is going to be?

Question: Kaumil Gajrawala - Jefferies - Analyst : Okay. Got it. And I guess in the context of everything you mentioned on the consumer, you talked a bit about promo activity being rational, but maybe how do you feel like where it's going to play out over the course of the year if the consumer stays in the sort of conditions that they might be in? Would you expect promotional activity to pick up? Or is it not a pricing thing, there's just something else going on?

Question: Kaumil Gajrawala - Jefferies - Analyst : Got it. Thank you.

Question: Javier Escalante - Evercore ISI - Analyst : Hi, good morning, everyone. I've managed to still have a question on the inventory issue. So if you could help us if there is anything to learn about the categories and the type of retailers where you're seeing greater lag in terms of reorders. I'm specifically thinking about the drug stores, very important for vitamins. And there is a lot of changes there, and there is a lot of problems with traffic is this particularly a pressure area? And if so, how that informs the relaunch of the vitamin business which is a category that is increasingly going online.

Question: Javier Escalante - Evercore ISI - Analyst : And Rick, if I may, if you can expand better on the laundry detergent piece. So there was a very weak read in April, I believe, is the guys in Germany. So if you can unpack a little bit, I mean you mentioned it, but it was very briefly that there is a lot of moving pieces. But if you can unpack what is happening in detergents in the context of your push with the clean and the trade down into mid-tier? That would be very helpful. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Javier Escalante - Evercore ISI - Analyst : Thank you very much.

Question: Dara Mohsenian - Morgan Stanley - Analyst : Hey, good morning. So I just wanted to touch on US share. You guys mentioned you still expect to gain share in the US despite the category weakness. But the tracked channels and it does look like it's decelerated in terms of your share so far in April. And I would assume the Q2 corporate org sales guidance when you back out international, which is robust as well as presumed growth in SPD that you're assuming share loss probably implicitly in that Q2 guidance. Can you just shed some light on maybe overall trends in the US as you look at April your thoughts in the balance of the year here on a go-forward basis also? Thanks.

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. That's helpful. And then obviously, the external environments changed fairly significantly in recent months. You're taking decisive actions on portfolio structure. I was just hoping you could review capital allocation from here given your strong balance sheet, might share repurchases a greater priority perhaps there's more M&A opportunities from an external environment standpoint given the difficult environment and just how you think about those two pieces. Thanks.

Question: Filippo Falorni - Citi - Analyst : Hey, good morning, everyone. I had two quick clarification on the guidance. First, within the organic sales guidance of 0% to 2%, can you give us a sense of what you're assuming for the full year for volume and price you mentioned price increases, some surgical price increases, maybe can you give us some sense of timing and some magnitude there?

Question: Filippo Falorni - Citi - Analyst : Got it. That makes sense. And then on the tariff front, you mentioned the $30 million net tariff impact after the mitigation is that what is embedded in the gross margin and EPS guidance? Or should we think about somewhere around 50 basis points of negative hit on gross margin and then somewhere around like $0.09 on EPS. Is that the right way to think about it.

Question: Filippo Falorni - Citi - Analyst : Okay. Got it. Thank you so much, guys.

Question: Kevin Grundy - BNP Paribas - Analyst : Great. Thanks. Good morning, everyone.

Question: Kevin Grundy - BNP Paribas - Analyst : Hey Rick. A couple for me. Rick, just getting back to the decisions around the portfolio pruning. So the business lines that you're exiting certainly makes sense not hugely impactful at about 2% of sales. I think there might have been some sense among some in the market as the divestitures directives could have been larger. Is this pencils down for the year, given it's an annual review process? Or would you consider further divestitures in the future? I'm curious what's your commitment to a business like vitamins. Presumably, you want to exit from a position of strength. So maybe that's the reason that, that is perhaps on hold for now. A quick review, maybe just on the criteria at a high level for hold versus an exit. And I have a question for Lee. Thanks REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 2:00PM, CHD.N - Q1 2025 Church & Dwight Co Inc Earnings Call

Question: Kevin Grundy - BNP Paribas - Analyst : Okay. Fair enough. Lee, welcome. Quick question for you. You mentioned the M&A dynamic and the appeal of that in terms of coming on board. What are your early impressions more broadly? Any potential areas where you think your background can potentially enhance the way Church is doing things, whether this is around productivity, whether it's around revenue growth management, capital structure, et cetera. Would love to get your early impressions and thoughts. Thanks.

Question: Kevin Grundy - BNP Paribas - Analyst : Okay, very good. Thank you. Good luck.

Question: Robert Moskow - TD Cowen - Analyst : All right. Thanks. Rick, you've talked about having the right advertising, the right promo, the right spend. And -- but the world is changing quite a bit in the last four months. So other than vitamins, are there any categories where you've had to shift your tactics maybe lean in a little more from a promotional standpoint? Or because your market share is good, you feel like, hey, we can just keep executing the plan as it stands?

Question: Robert Moskow - TD Cowen - Analyst : Okay. All right. Thank you.