Net Sales for Church & Dwight Reach $1.4 Billion in Q1 2023

Church & Dwight Co., Inc. announced that it exceeded its outlook with double-digit sales growth and 90 basis points of gross margin expansion. 

 

In the first quarter, net sales grew 10.2% to $1.4 billion. The company continues to experience strong consumer demand for many of its products. Organic sales grew 5.7% driven by positive product mix and pricing of 5.7% while volume was flat to last year.

 

First quarter 2023 reported EPS was $0.82; a decrease of 1.2% compared to 2022 reported EPS. First quarter adjusted EPS was $0.85; an increase of 2.4% versus prior year EPS. First quarter adjusted EPS exceeded the company’s outlook of $0.75 driven by higher sales and higher than expected gross margins.

 

“Our Q1 results reflect the strength of our brands and our focus on execution,” said Matthew Farrell, CEO. “Consumer demand and improved case fill is resulting in strong revenue growth. Volume being flat in Q1 is an encouraging sign after declining volumes in the last six quarters. We expect volume to be positive for the full year 2023 and show positive trends in the second half of the year. Our recent acquisitions, Therabreath mouthwash and Hero, the maker of Mighty Patch acne care products, both experienced double-digit consumption growth and market share gains. Both of these businesses are rapidly gaining new distribution at retail. Distribution of Therabreath has doubled since we acquired the brand in December 2021 while consumer and retailer enthusiasm for the Hero brand has exceeded expectations.

 

“Our domestic brands grew consumption in 12 of 17 categories in which we compete. The trade down to value laundry detergent continued as Arm & Hammer liquid detergent experienced strong consumption growth and share gains in Q1,” said Farrell. “Arm & Hammer liquid detergent and Arm & Hammer Unit Dose both grew volume, consistent with the prior quarter. Arm & Hammer litter consumption grew double digits and outpaced the category. The Domestic business gained market share in 8 of our 14 power brands. Market share gains are expected to continue as we progress through 2023 and increase our marketing spending as a percent of sales. Global online sales as a percentage of total sales were 16.3% in Q1.”

 

He continued, “Organic revenue growth for the International division was double digit driven by our country subsidiaries and better than expected sales growth in the Global Markets Group. Gross margin in the quarter expanded ahead of our expectations as productivity and pricing offset inflation and our margin accretive HERO acquisition grew faster than expected. Throughout the year, we expect sequential improvement in gross margin. Gross margin is expected to be positively impacted by the February round of litter pricing to cover cost increases as well as a second round of laundry concentration which was executed at the end of Q1. Strong sales growth, margin expansion and working capital management were all key drivers of our strong cash flow generation in the first quarter.”
 

Consumer Domestic net sales were $1.1 billion, a 12.2% increase versus prior year driven by both household and personal care sales growth. Organic sales increased 5.5% due to price and product mix (+6.4%), offset by volume (-0.9%). Growth was led by Arm & Hammer Liquid Detergent, Arm & Hammer Cat Litter, Therabreath mouthwash and Xtra liquid detergent, partially offset by expected declines in the Vitamin business, Flawless and Waterpik.

 

Consumer international net sales were $230.6 million, a 7.5% increase versus prior year. Foreign currency exchange rates negatively impacted sales by (-4.1%). Organic sales increased 11.6% due to higher volume (+6.8%) and higher pricing/mix (+4.8%). Q1 organic sales were primarily driven by Batiste, Vitamins and Femfresh.