Church & Dwight at dbAccess Conference: Strategic Growth and Challenges

On Tuesday, 03 June 2025, Church & Dwight (NYSE:CHD) presented its strategic initiatives and financial outlook at the 2025 dbAccess Global Consumer Conference. The company emphasized its commitment to organic growth and strategic acquisitions, while addressing challenges such as tariff impacts and competitive pressures. Despite a volatile start to 2025, Church & Dwight remains optimistic about its diversified portfolio and new growth opportunities.

Key Takeaways

• Church & Dwight continues to focus on its Evergreen Model, targeting 4% organic growth and gross margin improvements.
• The acquisition of Touchland for $700 million is expected to drive future growth as the company’s eighth power brand.
• The international business aims for 8% organic growth, with expansion plans for recently acquired brands.
• The company is mitigating tariff exposure through strategic divestitures and supply chain adjustments.
• Online sales have grown significantly, now representing 23% of total sales.

Financial Results

• Evergreen Model Targets:

- Organic growth: 4% (3% US, 8% international, 5% Specialty Products Division)

- Gross margin improvement: 25-50 basis points annually

- Marketing spend: 10-12% of sales

- EPS growth: 8%

• 2025 Outlook:

- Organic growth: 0-2%

- Adjusted gross margin: Down 60 basis points due to inflation and tariffs

- Marketing: 11% of sales

- Adjusted EPS growth: 0-2%

- Cash from operations: Approximately $1 billion

• Tariff Mitigation:

- Initial exposure: $190 million

- Current exposure: $30-40 million, with plans to reduce further through supply chain actions

Operational Updates

• Category Growth:

- Early 2024: 4.5%

- Back half of 2024: 2.5%

- Positive growth in April and May 2025

• Share Performance:

- FabricAir’s market share grew to 14.7% in Q1

- Euro acne business and TheraBreath mouthwash showed double-digit consumption growth

• Acquisition and International Expansion:

- Touchland acquisition to become a key growth driver

- TheraBreath and Euro expanded to over 50 countries

- Online sales increased from 2% to 23% of total sales

Future Outlook

• International and Specialty Products:

- Targeting 8% organic growth for international sales

- Specialty Products Division aiming for 5% organic growth

• M&A and Innovation:

- Over $5.5 billion available for future acquisitions

- New product launches contributed significantly to past growth

Q&A Highlights

• Trade Policy and Expansion:

- Progress in scaling operations and establishing local manufacturing

• ERP System:

- Key to integrating and growing acquired brands

• Vitamins Category:

- Focused on innovation and targeted marketing to revitalize the brand

In conclusion, Church & Dwight is strategically positioned to overcome current challenges and capitalize on growth opportunities. For a more detailed discussion, refer to the full transcript below.

Full transcript - 2025 dbAccess Global Consumer Conference:

Rick, Unidentified role, Church and Dwight: Baking soda. We were founded in 1846, and this has been just the core of the company. And it’s enabled us to do many, many things over the years. But this ARM and HAMMER brand is in so many different categories. It’s in personal care.

It’s in household. It’s in plays premium at times. It it plays value at times. Cat litter, water detergent, toothpaste, it’s known for deodorizing, refreshing. It’s it’s known for home remedies.

It’s known for cooking and baking. And this brand, if you look a ways back, back in the year February, was about a billion dollars. So from 1846 all the way to the year February, we were in a billion dollars at the Arm and Hammer brand. And then over many, many years, that $1,000,000,000 has turned into $2,000,000,000. So a strong brand that goes across many categories has been growing close to a mid single digit CAGR for for many years.

And then that’s enabled the company to do acquisitions. And so we’ve bought other brands and businesses. And now when we look up, we have a $2,000,000,000 ARM and HAMMER portfolio, and we have a $4,000,000,000 of of a collection of other brands and businesses. Let’s move to the categories. So categories, we we talk about seven power brands that compete in eight categories.

Arm and Hammer competes in in laundry and litter, and we have a great track record of growth for our categories. If you look back, not just five years, but, you know, even longer than that, ten or fifteen, our categories tend to grow between two and a half and 3%. Now recently, there was a lot of discussion about category growth as as the world is in turmoil and and volatile these days. But for us, our categories are a good cross section of The US consumer. And our categories grew about four and a half percent in early first half of twenty twenty four.

They grew two and a half percent in the back half I mean, sorry, in the front half yeah, in the back half of twenty twenty four. And then January grew. February was growing, decelerated a bit, and then March was flat. And on the earnings call, I said that April was actually negative for the first couple And then what happened? A little bit more certainty arrived.

Consumer confidence improved a bit, and we were actually positive for the month of April. And we’re positive for the month of May, our categories again. So that’s a good a good early sign. Now categories are only half the equation. The other half is what we’re doing in terms of share.

And I I’m proud to say that more often than not, when you look back over ten years, about two thirds of the time, we tend to gain share across our portfolio. And five of seven of our power brands were gaining share in 2024. So let’s talk about a few of the categories. FabricAir. So the category was largely flat for liquid water detergent in q one.

We grew a little bit above 3%. So we’re getting share there. We actually hit an all time share high, 14.7. When you look, your eyes go across the page. Remember, we started at a five share, and we have stair stepped over many, many years to a 14.7% share.

And Arm and Hammer, again, is one of the core pieces of this company. And the benefit is if we advertise on Arm and Hammer laundry, it helps litter, it helps toothpaste, it helps across the different categories. The other thing helping arm and hammer laundry these days is our good, better, best strategy. We’re we are we have the base arm and hammer SKU, which is good. We have arm and hammer with oxy, which is better.

And then we have deep clean, which is our best product yet. Moving to cat litter. Cat litter, the category has been growing around 2%. We’re growing a little bit faster than that, so taking a little bit of share. Over a long period of time, we continue to have share gains, and that’s largely driven through innovation.

Euro, this is a really exciting story. This is acne. You know, for a long time, this category was a $500,000,000 category. And then the new forum was introduced by by Euro largely in The US, and that category now is closer to a $1,000,000,000 So it’s not just a household penetration story for Hero and for patches. It’s also when you find the right brand, it can grow the category in a big way.

So acne in the in the quarter was actually flat to down slightly, and acne hero business had double digit consumption growth. And share gains are following. Right? It’s going at a very high clip all the way from 1% to 20% plus from a a share perspective. And we believe that there’s still a lot of room to run for Hero.

Not only TDP growth, but we have we have distribution opportunities. We have ability to to, in my mind, double or triple our our shelf set because these are such fast moving SKUs. Sometimes they run out over the weekend. We want multiple points of display. So that’s the story that we’re talking to with retailers these days.

Our our household penetration is around nine, and the opportunity for the acne category is closer to to 30. TheraBreath mouthwash. Again, flat category growth, but we’re growing the category because of of TheraBreath more often than not. So double digit consumption growth, all time share highs, which is fantastic. And, again, we believe we have more room to run here, not just TDPs, but we’re not just the number one or number two nonalcohol mouthwash anymore.

We’re the number two mouthwash in The US. And so we’re going back to retailers with with with the the story on share of shelf, right, and and how much room we deserve. But household penetration is also a fantastic runway. We have about a 10 share on household penetration, and the category itself is around 65%. So optimistic.

And here’s the transition over time, again, hitting a 20 plus share as the number two mouthwash. Our latest acquisition. So this is new news today. This is our Touchland acquisition that we just announced, the signing of a few weeks ago. It’s one of the fastest growing brands.

It’s actually in the hand sanitizer business. We think there’s a lot of parallels between the acne category that was maybe a old steady category that hadn’t grown much over the over the last decade. We believe we can drive category growth here. It’s the number two hand sanitizer in the distribution channels it’s in. Purchase price is $700,000,000 of cash plus a hundred and $80,000,000 of an earn out.

Trailing sales are a hundred and 30 million. Hold that thought. I’ll show you some math on Hero and TheraBreath as well, and we expect to close that in the next few weeks. And that this this brand will become our eighth power brand. So Touchlin is really if you think about Touchlin and the experience for hand sanitizer, I’ve been telling a lot of investors, it’s it’s really about the current products are medicinal.

Right? You go to the hospital. It has that smell. It’s not a a good consumer experience. This makes it a great consumer experience.

It has fragrance. It has moisturizer. It’s in a package that is premium. It’s on the go, all the things that attract consumers. And consumers are choosing to use hand sanitizer more often than not, and touchless bringing new users into the category.

It’s in a couple of different categories right now. It’s in hand sanitizer and early days in body mist. It’s a $640,000,000 category, as I said before. Household penetration is six, and hand sanitizers is around 37. And then here’s my favorite slide that we put together.

Just as context, when we bought Hero and TheraBreath, they were around a hundred million dollar businesses from a trailing twelve months perspective. After a couple of years, those businesses are three to four times larger than they were, and we have similar expectations over time for Touchland. And then my last slide before I move on a bit is really Sephora. You know, these the Touchland brand is only in Canada today. They’re now launching in The Middle East.

And actually, past weekend, they were at the number one store in the world, Sephora in Dubai, and this is just a fantastic display and support. So really, really excited about this business in a similar way that Mike and his team in the international side have really blown out distribution. We’re in 50 countries for for TheraBreath and Hearing within twelve months. We believe, while we’re gonna be a little bit more purposeful on what partners we go after, we believe we have an advantage here as this business grows. Online is a core competency for Church and Dwight.

We’ve moved from 2% of sales to 23% of sales. How do we do that? More often than not, we’re gaining share. We have record online shares for Arminghammer Laundry, for TheraBreath, for Nair. There’s Zicam.

It’s not just a US competency. It’s a global competency. And then innovation is a big a big reason why we can grow organic organically year after year after year. Half of our company’s 4% organic growth last year came from new products. That’s an exceedingly high number, and it gives us a lot of confidence.

We’ve built the muscle. We went through that during analyst day. It’s not just a one or two year initiative. It’s it’s really we have four or five different vectors that new products come from now. And in 2025, we’re we launched a few variants on DeepClean, free and clear.

We got behind vitamins in a much bigger way, Power Plus, a new body SKU for Hero and a new variant for Batiste. All right. Well, with that, I’m going turn it over to Mike, and he’s going to talk to you about how confident we are in the future for international.

Mike, Unidentified role, Church and Dwight: Great. Thanks, Rick. And thanks, Steve and Deutsche Bank for another great conference. All right, I’m going to talk about Consumer International and our Specialty Products division. So as Rick mentioned, about 18% of our sales in total comes from international and we aim to grow our business 8% organic year on year.

We’re a little over $1,000,000,000 in size. And if you think of the we’re split into two ways. We operate through what is now seven subsidiary markets. We added Japan with the acquisition of a long time partner, Graphico in Japan in 2024. So about twothree of our business is direct through subsidiary market.

The remaining onethree is operated through what we call our Global Markets Group. We partner with about 400 distributor partners across the globe and operate in more than 100 countries. We’ve had a long standing track record of high single digit growth, and that informs what is our 8% CAGR rate and that will continue as we move forward. When we talk about 18%, that’s a far cry from many of our peers in the CPG space. So we’re still very early in our global expansion, 18% of revenues.

Many of our peers are in the 40%, fifty sixty % range. So we have a lot of global expansion, a lot of white space from a geographic perspective. I think most importantly, as we have brands that travel really, really well. So it’s just that intersection between white space geography and brands that will expand into new markets is why we have so much confidence in growth ahead. We kind of think about it in a few different ways.

One is we’ve got a good track record of taking large U. S. Brands like ARM and HAMMER and OxiClean into global markets. We also have a large personal care and OTC portfolio that is unique to our international division as well as we’ve done a much better job of taking recently acquired acquisitions and blowing them out. So as Rick mentioned, we’ve got into over 50 countries, both Hero and TheraBreath in a really quick period of time.

That’s not a muscle or capability we had a number of years ago. That’s kind of newer to our business. And that gives us a lot of excitement certainly about the addition of TouchLand. We’ll have a sort of similar pace. And as Rick said, we’ll be selective about where we do that, but our ability to get it out into multiple geographies is encouraging.

So just from an international perspective, the way I kind of summarize and this isn’t an exhaustive list, but we’re making a lot of investments to continue to grow our business. We made the acquisition in one of the largest geographies in Japan. We can we’ve added an ERP system to support our global markets group. We’ve widened out a lot of our regulatory and IT infrastructure. We’ve expanded offices that support our global markets group in Panama, in China and Singapore.

We’re much better, as I mentioned, rapid expansion of our acquisitions. And we’ve quite purposely put some M and A resources both in Europe and in Singapore to start getting into the deal loop from an international perspective. Historically, we’ve been largely taking U. S. Brands and taking them globally.

We are on the hunt for looking at international opportunities to help build scale in key geographies. As we move to Specialty Products, similarly, we’ve got our Evergreen Model, we aim to grow 5% organically from our Specialty Products division. This is a little bit smaller of a group, dollars 300,000,000 broken up into three parts. The main part of our business is almost 60% is animal nutrition. So prebiotics and probiotics, largely for the beef, poultry and swine space.

We’ve got about onethree of our business is what we call performance products, which are special chemicals, everything from baking to water treatment to kidney dialysis. And then our smallest division is actually our fastest growing one, which is our commercial and professional. So this is where we’re taking our consumer brands into the B2B spaces. Similar to our consumer portfolio, international expansion is a key focus. This is largely our Animal Nutrition business as now almost 30% of its sales comes from non U.

S. Markets. We’ve made some divestitures within our SPD business, but most importantly is we’ve had a bit of an up and down from an organic perspective. But we’ve now got that as we’ve repurposed the portfolio and started to expand globally. We do now have kind of five straight quarters of growth and are much more stable growth pattern.

So expecting some good consistent growth ahead for our specialty products. And with that, I’ll pass over to Lee.

Lee, Unidentified role, Church and Dwight: All right, Steve, thank you again as well. Good week as Rick talked about, we got to travel across Europe and I think it’s been a nice day with Mike and his team yesterday hearing about our Europe plans. So as you just talked, some good momentum there. So let’s start with for the financial update, really a view of just a reminder of our Evergreen Model. I mean the foundation that really is our approach to running Church and Dwight.

This model served us well, and it keeps the team focused on the right priorities and certainly aligned across the globe. First up in the model is certainly our focus on delivering 4% organic growth. That’s made up of 3% organic growth in The US domestic business, 8% for international and then 5% for SPD. And how have we done? Well, certainly, it looks pretty good there.

We’ve averaged over 4% over a number of years despite a lot of macro events. So it’s certainly not something new for us, and it’s what we’ve been doing for year in and year out. Next up would be gross margin. Again, just

Rick, Unidentified role, Church and Dwight: one more slide.

Lee, Unidentified role, Church and Dwight: All right. Sorry, thank you. Next up is gross margin. So just a hallmark for Church and Dwight, we believe that gross margin expansion is one of the most important objectives there is. Gross margin expansion leads to EBITDA growth, which drives free cash flow, which is what we really think valuation is based on.

And while new to Church and Dwight, gross margin is certainly a topic that Rick and I have a long career driving in our respective businesses. Each year, we ensure our teams drive a series of actions to drive 25 to 50 basis points of improvement. So as you can see on the slide, we’ve ended the last year about 45% after driving programs to really offset the headwinds we’ve all faced coming out of COVID. We also call out marketing in our Evergreen model as it’s fundamental to driving our brands in the marketplace. It’s a short, medium and long term investments in our brands.

We’ve really ranged anywhere from between 1012%, but 11% is really sweet spot as for the company as we grow in size. And then for SG and A, we’re focused on driving leverage from sales growth, but also continuing to make incremental investments in areas like international and e commerce. And those elements in the end, are what makes up our model growth target growth of 8% EPS growth. And when you look back at 2017, a lot has happened in the world. Our evergreen model has delivered above that objective with a nice mix of high single digit and low double digit growth.

So as we pivot to ’twenty five here, it’s certainly been a bit volatile. And not unlike a couple of those years you just saw and what we walked through. This year, some days felt frankly a little bit like the stress points of COVID and the first round of global tariffs. And the tariff news certainly drove consumer sentiment to decline. It was challenges for our retailers.

And our resilient categories actually slowed and went negative for a few weeks. However, we have remained focused on what we can control. Our growth across the globe, we’re poised to deliver another year of record productivity, and our innovation and brand investments continue to drive sales growth and share growth. That combination will still be a positive for 2025 as we communicated on our May 1 earnings call. So on May 1, we talked about zero to 2% organic growth.

We did talk about a gross adjusted gross margin was down 60 basis points. That’s primarily from the inflation and tariffs and the timing associated with tariffs. Marketing again, still 11%, still investing in the brands. SG and A is slightly lower and then adjusted EPS growth of 0% to 2%. And then cash from operations just about 1,000,000,000 Now in May, we also conveyed an update that we were discontinuing or divesting three businesses, Spin Brush, Flawless and Waterpik Showerheads.

This was a culmination of our view that has been conducted with the Board in 2024. And their potential tariff pressure in early ’twenty five just frankly accelerated the decision for us. These businesses represent 2% of our sales, and we’re positioned to drive 45% of our company tariff exposure. Now we also conveyed that our tariff exposure on May 1 was about $190,000,000 But after you focus on the discontinuation of the three businesses and completing the next phases of the water pick water flasher manufacturing shifts out of China, we shared our net exposure was between 30,000,000 and $40,000,000 which we will mitigate through supply chain actions over the next twelve months. Now let’s look forward from a cash flow perspective.

Our ten year average has been a best in class January free cash flow conversion. This enables us to deliver meaningful capital allocation. And cash flow really represents true results as we get there through the focus on the EPS and on working capital management. Now the sustained cash flow certainly comes through in our investment grade balance sheet. Again, over a period of time when many hurdles came at all the businesses we’ve still delivered, and it provides us strong flexibility.

Back in January, we shared a potential for $6,000,000,000 of acquisition firepower. That means the close of the Touchwood acquisition in 2Q leaves us with plenty of dry powder, over $5,500,000,000 available to do additional acquisitions certainly in 2025 and beyond. And that is what our stated top focus of the use of free cash flow is. We think the number one value creating opportunity is looking for the next business or brand to bring into Church and Dwight. We certainly will remain disciplined as we go through that process.

That’s you’ve certainly seen us do that over the last couple of years. Beyond that, certainly, we continue to invest in organic, where there’s CapEx organic growth, our productivity programs and certainly MPD. Number four is debt reduction. And then certainly, we have a great track record of paying dividends and buying back shares to return cash to shareholders. And this chart is certainly one of my favorites, a long track record, like a hundred and twenty four years over a century of paying dividends.

Credibility, consistency, no matter the environment is certainly what Church and Dwight is known for. So I’ll end with where Rick started us. We’re in a good place despite the volatile environment. We have a balanced portfolio. We’re driving share gains.

Certainly, the Tussion acquisition is a nice opportunity for us in the back half of the year as we think it will close in the second quarter. The online channel continues to grow in significance for Church and Dwight. Innovation is certainly driving our record on NPD. And as we just talked about, the international business is a nice growth opportunity. So we’re certainly confident about the strength of the Evergreen model, even when you have some volatile periods like we just went through here to start 2025.

With that, Steve, turn it to you for Q

Mike, Unidentified role, Church and Dwight: and A.

Steve, Deutsche Bank Analyst, Deutsche Bank: Great. Thanks. Right on time.

Rick, Unidentified role, Church and Dwight: Just

Steve, Deutsche Bank Analyst, Deutsche Bank: like you said, Rick. Okay. So Rick, I guess, maybe as you said, things have picked up since consumption levels anyway have picked up since early April. As we think about the progress in the second quarter, acknowledging there’s still work to do, any callouts in terms of consumption versus shipment expectations for Church and Dwight specifically? Any any known any known disconnects that we should be thinking about, you know, whether it’s destocking or just timing dynamics?

Rick, Unidentified role, Church and Dwight: Yeah. I think it’s a it’s a fair question. Like, we walked through in the beginning. Consumption for our categories is a little bit better than we had seen early on in the quarter, and that’s always encouraging. I I I said on the earnings call that our category, when we flip to negative, that it’s not normal.

It wouldn’t be we didn’t think it would last very long. And I’m glad to say that, you know, the volatility of the world today and sometimes that drives, you know, consumer confidence in in categories. You know, shipment to consumption, we when you have that volatility in the world, and and then that leads to consumers being volatile, it also leads into retailers. And there’s when that happens, and I think choices are made and and people retrench a bit. Foot traffic is down in some cases, and that leads to ripple effects on on inventory.

Some of that happened to us in q one. I would say I would just repeat what I said during the q one call is we think there’s a little bit of that in q two, but not nearly to the extent that we saw in q one. I think maybe back in January, we thought that would bounce back. Being a little bit more conservative these days and say, you know what? This is kind of a new world we’re living in.

So we’re just we’re we’re more enthused than ever that April turned positive and May was positive as well. Good.

Steve, Deutsche Bank Analyst, Deutsche Bank: Okay. Mike, the the speaking of Agita, the the tariff trade environment, obviously, hugely dynamic. As you think and map out the longer term opportunities and ambitions for Church and Dwight internationally, how does the evolving trade policy regime globally impact that in terms of your reliance on export models in a world where that has reputable effect. Have you rethought at all the path towards international expansion.

Mike, Unidentified role, Church and Dwight: Yes. I think there’s rethink on specifics, but I’d say we are already on a natural progression to start scaling up in certain regions and moving away from purely an export into establishing infrastructures and local manufacturing where it made sense. We already do that today in some regards. I think it just helps inform kind of where we have to hurry up that offense in certain areas. But yes, I think it validates what we’ve already started and it just will continue to pick up the pace.

But I think for us to be consumer insightful and competitive in global markets and not just rely on sort of a US export mentality is just the natural step that we’re taking as a global organization. Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: And, Lee, you know, new on the block, fitting right in.

Lee, Unidentified role, Church and Dwight: Mhmm.

Steve, Deutsche Bank Analyst, Deutsche Bank: I guess, a little bit little bit more of your first impressions or your first and a half impressions. We’ve heard from you a little bit on this on this topic, but just, you know, you’re you’re welcome into the Church and Dwight organization and kind of what imprint you you hope to leave as as you go forward.

Lee, Unidentified role, Church and Dwight: Yeah. Thank you. So, I mean, obviously, I joined because I was impressed by Church and Dwight. That’s what I would say with you on the outside was in my, I guess, we’re now rounding into the third month. I continue to be impressed with the quality of the team at multiple levels throughout the organization.

It’s interesting. Probably the most common experience I have is when I meet some of my new nutrition, they want to tell me what they’re not doing. And it’s always interesting perspective. Well, let’s look at what you’ve already done over the last, whether it’s one year, three years, ten years, which is great. Mean, it speaks to the culture.

We’re just constantly focused on improving. Now, you know, you know, my mindset is, yeah, I’ve got to experience. I’ve been through certainly one organization went through rapid growth from a couple billion dollars up to, you know, double digits, And there’s lessons learned. So hopefully, can bring some of those to the fold here. But I do have the fortune I’ve done many financings, a lot of M and A, a lot of operating roles as well.

So just hopefully, we can make a few less mistakes and probably have learned from the past and pass it on to the team here and just keep us on our journey here. There’s a century of success here and certainly the last twenty years has been pretty impressive.

Steve, Deutsche Bank Analyst, Deutsche Bank: Great. Here on TheraBreath, consistent, you know, your your optimism in those brands ability to to continue to grow. When you think about the the drivers of growth, maybe there was more than this. But if I think about sort of just, you know, distribution opportunities on the base business, just marking brand awareness, marketing awareness opportunities, and then incremental innovation and adjacency expansion. How do you stack up those drivers?

It’s probably a little combination of all of the above, but where are they in terms of maturity?

Rick, Unidentified role, Church and Dwight: Yes. There’s it’s not one. There’s three, four or five, Right? And it’s it’s household penetration. That’s why we we showed that in the presentation.

It’s further distribution opportunities. Innovation is doing doing fantastic as well, especially on TheraBreath as we as we widen that that lineup. I think international is one that you didn’t quite mention, but, you know, maybe five or ten years ago, if we would have bought TheraBreath or Hero, it would have been a $5,000,000 opportunity. It’s tens of millions of dollars already. And and I just think that it has such potential as as it’s such a great story for not just Church and Dwight, but for retailers, for the category, for a country’s category growth.

So I think international is a big one as well.

Steve, Deutsche Bank Analyst, Deutsche Bank: Yeah. Okay. Good. Now the you put up the slide in terms of the analogies of here on Therabreath getting the three x, the original size alluded to Touchland doing the same or aspiring to do the same. What’s the path to three x on on Touchland?

Because it’s it seems like the the, you know, the starting point in terms of retail footprint and and the the path to get there is probably a little bit different. So, you know, what does that what are the differences, and where’s the confidence lie that you you that that’s a fair aspiration?

Rick, Unidentified role, Church and Dwight: Yeah. There’s similarities and there’s differences. So the the example I gave earlier was for the for the category. Right? Hero, half a billion half an half a billion dollar category, new problem solution brand and and form comes in, and it’s a billion and a half today.

I do think that will be a driver in hand sanitizer. I think it’s people are choosing new consumers who are coming into the category. That’s a big deal. I think it’s household penetration. Like I said earlier, you know, six or 7% going to 37% for hand sanitizer.

And what what what we found is the the the young consumers are loving the brand, but they’re bringing their parents into the brand. And the research we really did is we spent time on what those consumers are doing, and there’s a great loyalty rate and repeat rate for people between the ages of 20 and 55. And so as that brand builds, because remember, they don’t really spend marketing today. It’s unpaid endorsements over time. As we build that brand and, yep, EBITDA margins will come down from the forties, but we’re going to build the brand for the long term.

And and over time, as as touchline goes into other categories and body mist is a good example, already off to a fast start, that will build, again, just awareness, penetration, that that cachet and that premium prestige brand will do really well in The US. And we think there’s a lot of opportunity globally as well, like I mentioned before. So all those things together, I think, are are why we believe in in in that business is growing by leaps and bounds.

Steve, Deutsche Bank Analyst, Deutsche Bank: Mike, what’s the timeline in terms of I mean, you gotta close the deal first. But, like, in terms of you know, slotting TouchLand into your your your playbook, you know, how how how far up the the the ladder does that fall?

Mike, Unidentified role, Church and Dwight: Yeah. We’re gonna we’re gonna do it similar to what we do here on Therabreath is we’re gonna first understand kind of the regulatory pathway of getting into different markets. And then it’s really just about finding the right markets where we can be selective and find the right retail partner. It’s gone to market a little bit differently in The U. S.

Through a very select set customers. We’re going to try to replicate that playbook into international. But I would say our ability and our reach to do that is far more advanced today than it was a number of years ago. So we’re already kind of laying out that thinking in order to kind of accelerate as quickly as we can.

Steve, Deutsche Bank Analyst, Deutsche Bank: Okay. What the average price point on the core hand sanitizer, like $10?

Rick, Unidentified role, Church and Dwight: Yep. Dollars 10 for the hand sanitizer, 10 for the body spray.

Steve, Deutsche Bank Analyst, Deutsche Bank: Has has how has growth powered through the the first part of this year in with consumers being increasingly value sensitive and a bit skittish overall? Has it proved to be more durable? Or has it proved to be more discretionary at that price point?

Rick, Unidentified role, Church and Dwight: No. Similar to a a TheraBreath or or a hero. When you have a great problem solution brand, you know, consumers are are are choosing to go that direction because it solves a need. And and so there’s momentum. There’s acceleration still.

Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: Vitamins. Been at the point of struggle, kind of through ’24 into ’25. Lots of lots of, you know, initiatives in the hopper as the year started and kind of progressing as we go. And yet, you know, with but the same time, trends are still, you know, lagging. Where’s your confidence in in the program for ’25 relative to the start of ’25?

And just your your overall outlook on vitamins, both the category and arm sorry. Church and Dwight’s place within it.

Rick, Unidentified role, Church and Dwight: Yeah. Sure. So vitamins, we’ve been very transparent like we always are. I think we’re more transparent than most. Look.

The category for a long time was a mid to high single digit grower. It attracted a lot of a lot of competitors. When we entered the business, there were six. Now there’s a hundred competitors. Vitamins gummy vitamins back in the day were maybe a little bit nuanced, and now they’re almost ubiquitous, right?

You go and buy vitamin D. You want if you don’t have this brand, you’re going go to the next brand. And so we’ve been really focused on trying to build the brand over the years, but our efforts have been fragmented. And so, you know, two things that we’re really been focused on is fast forwarding really two or three years of innovation in the last twelve to eighteen months. And so we’ve launched a better tasting formula across the whole lineup, Power Plus, which are is our most powerful vitamin, and then 80% of the SKUs have a sugar free alternative.

When you when you do you know, that’s how you build brands over time. You got to have a consumer leading innovation. You also have to be talking to the consumer and the right consumer correctly. So we put a lot of time, effort, and energy into those two things. All those efforts are hitting May, June, July.

Mhmm. So we’re gonna make an assessment of that business post that period, and I’m optimistic that we’re going to have some green shoots. Are we going to go from minus 20 consumption to positive? No. But that’s not what I’m looking for.

I’m looking for incremental improvement because as I said, maybe I said it publicly or not, but there’s only a 9% loyalty rate really to to the vitamin business these days. And so we have a great opportunity to go grab some share back to get those those folks, those consumers reengaged and to learn to love the the best tasting vitamin again. So I’m gonna kinda hold comments until probably August because that’s what I wanna see those KPIs. The good news is our new our new vitamin, the power plus variant has phenomenal reviews on Amazon, but it’s early days. Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: Great. In the ARM and HAMMER portfolio, laundry and litter. Laundry, there’s been some choppiness, you know, both for the category and and for the the kind of relative brand performance. In Litter, we’ve been talking about and monitoring kind of promotional battles now for, I guess, over a year essentially. When you zero in on both those categories and your position, what are you seeing from a category dynamic in terms of just level of competition, rationality, consumer loyalty to brands or not and just your relative optimism as you go forward?

Rick, Unidentified role, Church and Dwight: Yeah. The laundry and litter, any brand that falls any product that falls under the Armour and Hammer brand, we always have a lot of confidence in. Like like I said before, even the CAGR over the last few years for the whole Armour and Hammer brand is mid single digits, so it’s fantastic. Laundry and litter, you know, when we promote, we’re promoting behind innovation. So lightweight litter, a hardball, and deep clean laundry detergent, that’s where our dollars go.

Because we wanna go try you know, drive trial, drive trade up, drive repeat and loyalty over time, and that’s working well. And I just showed you the first quarter we gained share in both of those categories. You know, when we talk about promotional levels, household is the only real business that we talk about promotion. That’s that is laundry and litter. I would say they’re still in in relatively bounds within historical levels.

It helps when the the category starts to recover a little bit, which it has done over the past few few months. So I I overall, I would say it’s still rational. Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: Yeah. Mike, in your slide, you talked about you you noted the the the ERP rollout. You know, I think there’s been a lot of investment in the IT infrastructure and sort of, you know, quietly transition this ERP. You’re you’re how how do you guys think about the technology journey inside Church and Dwight? And, I guess, why isn’t it a a bigger, you know, proactive narrative from the company as opposed to something behind the scenes that’s just a quiet enabler?

Rick, Unidentified role, Church and Dwight: Yeah. I’ll have a few comments. If you either one of you guys wanna add, that’s that’s fine. Look. It is a key enabler.

And, actually, under under the hood, it is probably one of the great reasons why we have a competency in integrating and growing brands through acquisition. You know, to have a North American ERP system that I can get daily sales on every single day, you know, we’ve both come from other companies where that is not the case. And so to have information free flowing that quickly is fantastic. To be able to have people in the organization that have been doing integration for not one or two years, but for a decade or longer. And the same playbook happens because you have a a normal and a a clear ERP system way to do it is fantastic.

It’s a repeatable process. So, you know, I I I think we tend not to highlight our IT spending as the strategic, you know, direction of the company, but it certainly is an enabler for us. We’re we’re we have a SAP system in Europe. I think the SAP system we just added for our g and g business is key. We added one for China as well.

So I guess the message is we’ve laid the groundwork. We’ve laid the investment so that when we scale, we can do so in a modular way that’s easier. Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: It wouldn’t be a church and dwight session without talking about m and a. Got a minute left. So Lee, sort of organization’s readiness for m and a, you know, above and beyond TouchLand. And then, Mike, you know, the relative priority international M and A plays, especially in kind of a global volatile market.

Lee, Unidentified role, Church and Dwight: Well, certainly, I mentioned we have the balance sheet for capacity, but as you talk about also the organizational capacity. You think about the model we look for when we were finding acquisitions, we’re looking for things that enhance the portfolio, in particular, they’re asset light. We’re not bringing in factories, we’re not bringing in thousands of employees. So we have experienced people who been doing this for in many cases decades. So we certainly have the ability to something was to come available in the back half this year, we could handle it, probably a capacity maybe two to three on a every twelve to eighteen months.

But again, we’re going to be disciplined and make sure it hits all the marks on our filter.

Mike, Unidentified role, Church and Dwight: Yes. Think from an international perspective, the criteria is the same. I think the additional one is we’re trying to look for things that allow us to scale up in select countries. So that wouldn’t we wouldn’t sort of throw out the criteria in order to do that. But where those two things meet, then there’s an opportunity to kind of think differently about starting internationally and building scale through acquisition in select markets.

Okay.

Steve, Deutsche Bank Analyst, Deutsche Bank: Right at zero. Thanks, guys. Appreciate it. Thanks, everybody, for joining.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.