Church & Dwight Co., Inc. (CHD) Bundle
Understanding Church & Dwight Co., Inc. (CHD) Revenue Streams
Understanding Church & Dwight Co., Inc.’s Revenue Streams
Church & Dwight Co., Inc. reported net sales of $1,510.6 million for the quarter ended September 30, 2024, representing an increase of $54.7 million or 3.8% compared to the same period in 2023. For the nine months ended September 30, 2024, net sales reached $4,525.1 million, up $185.2 million or 4.3% year-over-year.
Revenue Sources Breakdown
The consolidated net sales for the third quarter and first nine months of 2024 are broken down by segment as follows:
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) |
|---|---|---|---|---|
| Consumer Domestic | $1,170.8 | $1,133.1 | $3,506.6 | $3,378.2 |
| Consumer International | $267.7 | $244.4 | $786.4 | $716.9 |
| Specialty Products (SPD) | $72.1 | $78.4 | $232.1 | $244.8 |
| Total | $1,510.6 | $1,455.9 | $4,525.1 | $4,339.9 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates for each segment for the third quarter of 2024 compared to 2023 are as follows:
- Consumer Domestic: 3.3% increase
- Consumer International: 9.5% increase
- Specialty Products (SPD): 8.0% decrease
Contribution of Different Business Segments
For the nine months ended September 30, 2024, the contribution of different business segments to overall revenue is as follows:
- Consumer Domestic: 77.5% of total revenue
- Consumer International: 17.4% of total revenue
- Specialty Products (SPD): 5.1% of total revenue
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The exit of the MEGALAC supplement portion of the SPD segment and the sale of the Passport food safety business, which negatively impacted net sales by 15.5% for SPD in Q3 2024.
- Net sales for Consumer International benefited from an increase in product volumes sold by 5.3% in Q3 2024.
Overall, the increase in net sales for the first nine months of 2024 was primarily driven by growth in the Consumer Domestic and Consumer International segments, while the SPD segment showed a decline due to strategic exits from certain product lines.
A Deep Dive into Church & Dwight Co., Inc. (CHD) Profitability
A Deep Dive into Church & Dwight Co., Inc.'s Profitability
Gross Profit and Gross Margin:
For the three months ended September 30, 2024, the gross profit was $683.1 million, an increase of $36.8 million compared to the same period in 2023. The gross margin for this quarter increased to 45.2%, reflecting an increase of 80 basis points year-over-year.
For the nine months ended September 30, 2024, the gross profit was $2,082.2 million, up by $175.0 million from the previous year, with a gross margin of 46.0%, a rise of 210 basis points compared to 2023.
Operating Profit and Operating Margin:
The operating income for the third quarter of 2024 was $(91.5) million, reflecting a decrease of 135.8% compared to $255.8 million in the same quarter of 2023, resulting in an operating margin of (6.1)%. For the first nine months of 2024, operating income was $550.4 million, down 34.6% from $841.3 million in 2023, leading to an operating margin of 12.2%.
Net Profit and Net Profit Margin:
Net income for the third quarter of 2024 was $(107.1) million, compared to $203.4 million in the prior year. The diluted net income per share was $(0.31), a decline of 143.7% from $0.71 in 2023. For the nine months ended September 30, 2024, net income was $405.3 million, down from $662.8 million in the same period of 2023.
Trends in Profitability Over Time
The profitability metrics indicate a decline in net income and operating income over the past year. The gross margin has shown improvement, suggesting better cost management strategies are in place, despite the overall decline in profitability due to impairment charges and increased operational costs.
Comparison of Profitability Ratios with Industry Averages
| Metric | 2024 CHD | Industry Average |
|---|---|---|
| Gross Margin | 46.0% | 40.5% |
| Operating Margin | 12.2% | 15.0% |
| Net Profit Margin | 9.0% | 12.0% |
The gross margin of 46.0% exceeds the industry average of 40.5%, indicating strong pricing power and cost control. However, the operating and net profit margins are below industry averages, reflecting challenges in operational efficiency and higher expenses.
Analysis of Operational Efficiency
Operational efficiency has been impacted by increased costs in manufacturing and distribution, leading to higher marketing expenses and SG&A costs. Marketing expenses for the three months ended September 30, 2024, were $185.8 million, up 10.7% from $167.8 million in 2023, representing 12.3% of net sales compared to 11.5% in 2023. SG&A expenses were $231.7 million, which is 15.3% of net sales.
Despite the challenges, the increase in gross profit and margin indicates a focus on productivity improvements, with gross margin enhancements attributed to favorable pricing and cost management initiatives.
Debt vs. Equity: How Church & Dwight Co., Inc. (CHD) Finances Its Growth
Debt vs. Equity: How Church & Dwight Co., Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total long-term debt of Church & Dwight Co., Inc. was approximately $1,200.0 million. Additionally, the company had $300.0 million in short-term debt, resulting in a combined total debt of $1,500.0 million.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company is calculated as follows:
- Total Debt: $1,500.0 million
- Total Equity: $3,855.4 million
- Debt-to-Equity Ratio: 0.39
This ratio is below the industry average of approximately 0.50, indicating a conservative approach to leverage.
Recent Debt Issuances and Credit Ratings
In June 2022, the company entered a credit agreement for a $1,500.0 million unsecured revolving credit facility, which matures in June 2027. The company has the option to increase borrowing by an additional $750.0 million. As of September 30, 2024, the company maintained a credit rating of Baa2 from Moody's and BBB from S&P, reflecting stable creditworthiness.
Refinancing Activity
In the first quarter of 2024, the company repaid the remaining $200.0 million of its term loan due December 2024, utilizing cash on hand for this repayment. This move was aimed at reducing interest expenses and improving cash flow management.
Balancing Debt Financing and Equity Funding
The company continues to balance its financing strategy by utilizing both debt and equity. In the nine months ending September 30, 2024, cash dividends paid amounted to $207.4 million, while net cash provided by operating activities stood at $863.9 million, allowing for strategic investments and debt repayments.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Long-Term Debt | $1,200.0 |
| Total Short-Term Debt | $300.0 |
| Total Debt | $1,500.0 |
| Total Equity | $3,855.4 |
| Debt-to-Equity Ratio | 0.39 |
| Credit Rating (Moody's) | Baa2 |
| Credit Rating (S&P) | BBB |
| Cash Dividends Paid (9 months) | $207.4 |
| Net Cash from Operating Activities (9 months) | $863.9 |
Assessing Church & Dwight Co., Inc. (CHD) Liquidity
Assessing Church & Dwight Co., Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.62, indicating that current assets are 1.62 times the current liabilities.
Quick Ratio: The quick ratio stands at 1.06, suggesting that the company can cover its current liabilities with its most liquid assets.
Working Capital Trends
Working Capital: For the nine months ended September 30, 2024, working capital is calculated as:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $2,166.0 million | $1,334.3 million | $831.7 million |
The working capital has increased compared to the previous year, reflecting positive liquidity management.
Cash Flow Statements Overview
The cash flow from operating, investing, and financing activities for the nine months ended September 30, 2024, is as follows:
| Cash Flow Type | Amount (in millions) |
|---|---|
| Operating Activities | $863.9 |
| Investing Activities | $(138.1) |
| Financing Activities | $(318.3) |
Net cash provided by operating activities increased by $68.8 million compared to the same period in 2023, reflecting a solid operational performance.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company holds $752.1 million in cash and cash equivalents, with an additional $1,495.0 million available through its revolving credit facility. This strong cash position underlines its ability to meet short-term obligations.
Moreover, the company maintains a share repurchase program with $658.9 million available for future stock buybacks, which may enhance shareholder value while ensuring liquidity remains robust.
Is Church & Dwight Co., Inc. (CHD) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Church & Dwight Co., Inc. (CHD) provides insights into whether the company is overvalued or undervalued based on key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the diluted earnings per share (EPS) was $1.61. With a stock price around $70.00, the P/E ratio is calculated as follows:
- P/E Ratio = Stock Price / EPS = $70.00 / $1.61 = 43.48
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, is $8.33. The P/B ratio is calculated using the current stock price:
- P/B Ratio = Stock Price / Book Value per Share = $70.00 / $8.33 = 8.40
Enterprise Value-to-EBITDA (EV/EBITDA)
The enterprise value (EV) as of September 30, 2024, is calculated as follows:
- Market Capitalization = Stock Price Shares Outstanding = $70.00 244.6 million = $17.122 billion
- Total Debt = $2.208 billion
- Cash and Cash Equivalents = $752.1 million
- EV = Market Capitalization + Total Debt - Cash = $17.122 billion + $2.208 billion - $0.7521 billion = $18.578 billion
- EBITDA for the last twelve months is approximately $1.1 billion.
- EV/EBITDA = $18.578 billion / $1.1 billion = 16.89
Stock Price Trends
The stock price over the last 12 months has shown fluctuations:
- 12 Months Ago: $80.00
- Current Price: $70.00
- Percentage Change: -12.5%
Dividend Yield and Payout Ratios
The company declared a quarterly dividend of $0.28375 per share as of January 31, 2024, translating to an annual dividend of $1.135 per share.
- Dividend Yield = Annual Dividend / Stock Price = $1.135 / $70.00 = 1.62%
- Payout Ratio = Annual Dividend / EPS = $1.135 / $1.61 = 70.5%
Analyst Consensus
As of the latest reports, analysts have provided the following ratings:
- Buy: 5
- Hold: 10
- Sell: 3
| Metric | Value |
|---|---|
| P/E Ratio | 43.48 |
| P/B Ratio | 8.40 |
| EV/EBITDA | 16.89 |
| Current Stock Price | $70.00 |
| Dividend Yield | 1.62% |
| Payout Ratio | 70.5% |
| Analyst Consensus | 5 Buy, 10 Hold, 3 Sell |
Key Risks Facing Church & Dwight Co., Inc. (CHD)
Key Risks Facing Church & Dwight Co., Inc. (CHD)
Church & Dwight Co., Inc. faces a variety of internal and external risks that impact its financial health. These include industry competition, regulatory changes, and shifting market conditions.
Industry Competition
The company has reported a significant $357.1 million in non-cash impairment charges related to its Vitamins, Minerals, and Supplements (VMS) business due to increased competition, particularly from private label products. This competitive pressure has led to a deterioration in financial performance and market share.
Regulatory Changes
Regulatory changes, especially concerning tariffs on imported goods, can significantly affect operations. In 2024, the company received $37.6 million in cash refunds due to a favorable tariff ruling, which positively impacted cost of goods sold. However, ongoing changes in trade policies pose a risk to profit margins.
Market Conditions
Fluctuations in market conditions, including consumer demand and economic downturns, can adversely affect sales. For the nine months ended September 30, 2024, net sales increased by 4.3% to $4,525.1 million, but the company continues to monitor the economic environment for potential adverse impacts on liquidity and demand.
Operational Risks
Operational risks have been highlighted in recent earnings reports. The company reported a loss from operations of $91.5 million for the third quarter of 2024, compared to a profit of $255.8 million in the prior year. This decline was influenced by increased marketing expenses and the aforementioned impairment charges.
Financial Risks
Financial risks include rising interest expenses, which decreased to $23.4 million in the third quarter of 2024 compared to $27.2 million in the same period of 2023. However, fluctuations in interest rates can affect borrowing costs and overall financial stability.
Strategic Risks
Strategically, the company is reassessing its long-term outlook due to the decline in profitability in its VMS segment. The impairment charges have necessitated a review of asset valuations and future growth projections. As of September 30, 2024, the company reported total assets of $8,666.2 million.
Mitigation Strategies
The company continues to implement strategies to enhance gross margins and reduce operational costs. For instance, marketing expenses increased by 16.1% year-over-year to $490.2 million for the first nine months of 2024. Additionally, management is focused on monitoring customer and supplier financial health to navigate potential adverse economic conditions.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition from private label products | $357.1 million impairment charges |
| Regulatory Changes | Tariff changes affecting cost structure | $37.6 million cash refunds |
| Market Conditions | Fluctuations in consumer demand | Net sales increase of 4.3% |
| Operational Risks | Loss from operations | $91.5 million loss in Q3 2024 |
| Financial Risks | Interest expense fluctuations | $23.4 million in Q3 2024 |
| Strategic Risks | Reassessment of long-term outlook | Total assets of $8,666.2 million |
Future Growth Prospects for Church & Dwight Co., Inc. (CHD)
Future Growth Prospects for Church & Dwight Co., Inc.
Analysis of Key Growth Drivers
Church & Dwight Co., Inc. is strategically positioned for growth through various drivers:
- Product Innovations: Significant product innovations include the introduction of new personal care items and household products that cater to shifting consumer preferences. For instance, net sales for personal care products increased by 7.3% in Q3 2024 compared to Q3 2023, totaling $533.4 million.
- Market Expansions: The company has expanded its international presence, with Consumer International net sales reaching $267.7 million in Q3 2024, marking a 9.5% increase from Q3 2023.
- Acquisitions: The acquisition of Graphico in June 2024 contributes to growth, providing new product lines and enhancing market share.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected at a compound annual growth rate (CAGR) of approximately 4.5% through 2026. Earnings per share (EPS) estimates suggest a recovery, with projections of $1.85 for 2024, up from $1.61 in 2023.
Strategic Initiatives or Partnerships
Strategic initiatives include:
- Increased Marketing Spend: Marketing expenses rose to $185.8 million in Q3 2024, a 10.7% increase from the previous year, aimed at boosting brand visibility and supporting new product launches.
- Partnerships: Collaborations with retailers to enhance distribution channels, particularly in e-commerce, are expected to drive sales growth.
Competitive Advantages
The company's competitive advantages include:
- Diverse Product Portfolio: A wide range of products across household and personal care segments provides resilience against market fluctuations.
- Strong Brand Recognition: Established brands such as OXICLEAN® and VITAFUSION® maintain consumer loyalty, driving repeat purchases.
- Operational Efficiency: Gross margin improved to 46.0% in the first nine months of 2024, reflecting effective cost management and productivity enhancements.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales (Total) | $1,510.6 million | $1,455.9 million | 3.8% |
| Net Sales (Consumer Domestic) | $1,170.8 million | $1,133.1 million | 3.3% |
| Net Sales (Consumer International) | $267.7 million | $244.4 million | 9.5% |
| Net Sales (SPD) | $72.1 million | $78.4 million | -8.0% |
| Gross Margin | 46.0% | 43.9% | 210 bps |
As of September 30, 2024, the company reported cash and cash equivalents of $752.1 million, with a strong liquidity position to support ongoing growth initiatives.
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Article updated on 8 Nov 2024
Resources:
- Church & Dwight Co., Inc. (CHD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Church & Dwight Co., Inc. (CHD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Church & Dwight Co., Inc. (CHD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.