Church & Dwight (CHD) Tops Q2 EPS by 3c; Guides Q3 EPS Below Consensus

Church & Dwight (NYSE: CHD) reported Q2 EPS of $0.73, $0.03 better than the analyst estimate of $0.70. Revenue for the quarter came in at $847.1 million versus the consensus estimate of $839.24 million.

Church & Dwight sees Q3 2015 EPS of $0.87-$0.88, versus the consensus of $0.91.

Outlook for 2015

Mr. Craigie said, “2015 is off to a strong start with a solid first half. We continue to believe that we are positioned to deliver strong sales and earnings growth with our balanced portfolio of value and premium products, the launch of innovative new products, aggressive productivity programs and tight management of overhead costs. Despite aggressive competition and the increasing drag of foreign currency, we feel confident in achieving our 2015 business targets.”

With regard to the full year outlook for 2015, Mr. Craigie said, “We continue to expect organic sales growth of approximately 3% in 2015 behind new product introductions on our core business. We expect gross margin to expand by approximately 25 to 35 basis points. We intend to heavily invest in the OXICLEAN brand as 2015 will mark the second year of our quest to establish it as our next megabrand across multiple categories. Marketing spending is expected to be approximately 12.5% of sales, comparable to the 2014 and 2013 rate of investment. To the extent the Company over-delivers on gross margin expansion, we expect to incrementally invest in marketing spending behind our mega brands. We continue to expect to achieve approximately 50 to 60 basis points of operating margin expansion, excluding the second quarter pension termination charge, or operating margin expansion of 25 to 35 basis points on a reported basis.”

In conclusion, Mr. Craigie said, “Based on our focus on innovation, and confidence in gross margin expansion, we expect to achieve 7-9% adjusted EPS growth in 2015, despite the F/X headwinds. This excludes both the pension termination charge and the Natronx impairment charge. The midpoint of our 7-9% 2015 outlook now equates to 11.5% currency neutral adjusted EPS growth, excluding an estimated 3.5% EPS negative impact from foreign exchange. This EPS growth is top tier within the consumer packaged goods industry. We delivered double digit earnings growth in the first half of the year behind 4% organic growth. Due to a more difficult comparative period, we expect approximately 2% organic sales growth and 5% EPS growth in the second half of the year. This earnings forecast does not include any benefit from potential acquisitions, which we continue to aggressively pursue.”

For earnings history and earnings-related data on Church & Dwight (CHD) click here.

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