Church & Dwight (CHD) Tops Q4 EPS by 1c, Offers Outlook

January 29, 2021 6:58 AM EST

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Church & Dwight (NYSE: CHD) reported Q4 EPS of $0.53, $0.01 better than the analyst estimate of $0.52. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.26 billion.

Outlook for 2021:

Mr. Farrell stated, “We had an extraordinary 2020 and delivered 15% adjusted earnings growth. We expect 2021 to be another strong year with adjusted EPS of $3.00 to $3.06, an increase of 6-8%, driven by operating income growth.1 This reflects continued strong business performance in-line with our Evergreen model.”

Mr. Farrell continued, “We expect full year 2021 reported sales growth to be approximately 4.5% and organic sales growth to be approximately 3% after posting almost 10% organic growth in 2020. In 2021, we expect several categories to remain at elevated consumption levels, including gummy vitamins, laundry additives, hair growth supplements, and cat litter. With respect to gummy vitamins, household penetration is increasing and existing households are consuming more vitamins. We continue to supplement our existing gummy manufacturing capacity with third party support to meet demand.

“We expect modest growth from the laundry category in 2021. Dry shampoo, condoms, and women’s grooming are expected to improve with increased consumer mobility. We expect growth in water flossers in 2021 due to the wellness trend and as higher traffic returns to dental offices. Other categories are expected to pull back from 2020 highs, such as baking soda, toothache, and pregnancy kits. Additionally, we have confidence in 2021 as we have compelling new product launches in many categories to help drive growth. Investments in our International business continue to pay off, particularly in our Global Markets Group. Finally, our Specialty Products business is also expected to have a strong year driven by a more balanced dairy and non-dairy business.

“We expect full year reported gross margin to be up 50 basis points, with improvement weighted to the back half of 2021 (first half -50 bps, second half +150 bps). We expect inflation and tariffs to be offset by productivity, a reduction in COVID-19 incremental costs, and trade promotional efficiency. Marketing spend in dollars is expected to increase in 2021, but decline as a percentage of sales by 30 basis points as we return to pre-pandemic levels. We expect SG&A as a percentage of sales to improve by 20 basis points. As a result of these improvements, we expect adjusted operating profit margin expansion of 100 basis points, which exceeds our Evergreen model of +50 basis points.¹ The 2021 effective tax rate is expected to be approximately 21-22%. Cash flow from operations is expected to be approximately $1 billion. We expect FLAWLESS and ZICAM to be fully integrated by the end of 2021 and we continue to pursue accretive acquisitions that meet our strict criteria.

“For Q1, we expect reported sales growth of approximately 3.0%, organic sales growth of approximately 2.0%, gross margin contraction as we lap artificially low promotional levels, and adjusted EPS of $0.80 per share, a 4% decrease over last year’s adjusted Q1 EPS.1 Our Q1 EPS outlook includes higher marketing dollars versus a year ago to support our new product launches.”

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

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