Church & Dwight Reports First Quarter 2012 Results

PRINCETON, N.J.--(BUSINESS WIRE)--

Church & Dwight Co., Inc. (NYSE:CHD - News) today reported net income for the quarter ended March 31, 2012 of $95.8 million or $0.66 per share, compared to last years reported net income of $83.6 million or $0.58 per share. This reflects an earnings per share increase of 13.8%.

First Quarter Review

Reported net sales for the first quarter increased 7.5% to $690.6 million. Organic sales increased 8.4% driven by 10.5% volume growth offset by 2.1% unfavorable product mix and pricing. Organic sales exclude the impact of an acquisition and foreign exchange rate changes, but includes an estimated 1.4% effect of sales resulting from a timing shift in customer orders from the first quarter of 2012 to the fourth quarter of 2011, in anticipation of the January 2012 U.S. information system upgrade. The Company believes such sales would have occurred in the first quarter of 2012 were it not for the timing shift.

James R. Craigie, Chairman and Chief Executive Officer, commented, We are very pleased with our first quarter business results in what continues to be a difficult economic environment. The organic sales increase of 8.4% reflects strong volume growth. While category consumption continues to be weak in the U.S., we increased market share on five of our eight power brands in the quarter.

Consumer Domestic net sales were $510.6 million, a $39.5 million increase or 8.4% above the prior year first quarter sales. First quarter organic sales increased by 10.1%, primarily due to higher sales of ARM & HAMMER liquid laundry detergent. Other products that contributed to volume growth were XTRA liquid laundry detergent, ARM & HAMMER cat litter, and the introduction of ARM & HAMMER CRYSTAL BURST power pack laundry detergent. These increases were partially offset by lower sales of ARM & HAMMER SPINBRUSH battery-operated toothbrushes, TROJAN condoms and ORAJEL oral analgesic products. Volume growth contributed approximately 13.4% to sales, partially offset by the 3.3% unfavorable product mix and pricing. Organic sales reflect an estimated 1.7% effect of including sales resulting from a timing shift in customer orders in anticipation of the January 2012 U.S. information system upgrade.

Consumer International net sales were $121.4 million, an $11.8 million increase or 10.7% above the prior year first quarter sales. Organic sales increased by 7.2%, primarily due to increased sales in Canada, Australia, and France, as well as increased U.S. exports. Volume growth contributed approximately 8.7% to sales, partially offset by 1.5% unfavorable product mix and pricing. Organic sales exclude a 5.0% benefit from an acquisition and the 1.5% effect of unfavorable foreign exchange rate changes.

Specialty Products net sales were $58.6 million, a $3.0 million decrease or 4.9% below the prior year first quarter sales. Organic sales were lower by 2.5% due to softness in end markets. Lower volumes of 8.1%, were partially offset by favorable pricing of 5.6%. The positive pricing is primarily due to a pass-through of raw material increases to customers. Organic sales reflect an estimated 1.6% effect of including sales resulting from a timing shift in customer orders in anticipation of the January 2012 information system upgrade, and excludes the 0.8% effect of unfavorable foreign exchange rate changes.

Gross margin contracted to 43.8% in the first quarter compared to 44.9% in the same quarter last year. The decrease is principally due to unfavorable product mix. The unfavorable product mix reflects a 14.4% increase in net sales of lower margin consumer domestic household products compared to a 2.6% decline in net sales of higher margin consumer domestic personal care products. Gross margin is also effected by start-up costs related to the Companys new California manufacturing and distribution facility, which is scheduled to begin commercial production of liquid laundry detergent and cat litter products in May 2012 and be fully operational in July 2012. Although commodity costs were higher in the quarter, the increases were largely offset by the effect of cost reduction programs. First quarter gross margin was 50 basis points higher than the fourth quarter of 2011. We expect full year gross margin to increase to the lower end of our 25-50 basis point annual target, which reflects the impact of product mix.

Marketing expense was $68.0 million in the first quarter, a slight decrease of $1.2 million or 1.7% in comparison with the prior year first quarter. Marketing expense as a percentage of net sales was 9.8% in the quarter, a decrease of 100 basis points compared to the prior year first quarter due to timing. We expect marketing support to be approximately 13% of net sales for the full year, which is consistent with the prior year.

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Church & Dwight Reports First Quarter 2012 Results