Church & Dwight Reports Fourth Quarter and 2012 Results

  Church & Dwight Reports Fourth Quarter and 2012 Results

                        Strong Q4 Sales and EPS Growth

                Affirms High End of 2013 EPS Outlook at $2.79

                      Announces 17% Increase In Dividend

Business Wire

EWING, N.J. -- February 5, 2013

Church & Dwight Co., Inc. (NYSE:CHD) today announced that full year 2012
reported earnings per share increased 15.6% to $2.45 per share compared to
$2.12 per share in the prior year. Excluding a deferred tax valuation
allowance charge of $0.09 per share incurred in the fourth quarter of 2011,
2012 earnings per share increased 10.9%. Full year 2012 net sales increased
6.3% to $2,922 million from $2,749 million in 2011. Organic sales growth for
2012 was 5.2%, driven by volume growth of 6.3% and partially offset by the
1.1% negative effect of price.

James R. Craigie, Chairman and Chief Executive Officer, commented, “We are
proud of the business results we accomplished in 2012. Despite continuing weak
category consumption in the U.S., we delivered 5.2% organic sales growth and
10.9% adjusted EPS growth; we increased market share on six of our eight power
brands and we significantly increased our dividend to return value to
shareholders. In October 2012, we also acquired Avid Health, Inc., the leader
in gummy form vitamins and supplements. The acquisition of Avid’s gummy
vitamins business represents a great addition to our existing portfolio and
brings to our Company a new growth platform in one of the fastest-growing
segments of the attractive vitamin / mineral / supplement category.”

Fourth Quarter Review

Reported earnings per share in the fourth quarter increased 30% to $0.57 per
share compared to $0.44 per share for the same period in the prior year.
Excluding the tax valuation allowance in 2011, earnings per share increased
8%, from $0.53 per share to $0.57 per share. The Avid acquisition was earnings
neutral. Reported net sales for the fourth quarter increased 10.8% to $809.7
million. Organic sales increased 4.4%, driven by volume growth of  4.3% and
the 0.1% positive effect of price. The business exited 2012 with strong
momentum as quarterly share gains were achieved on seven of our eight power
brands.

Consumer Domestic net sales were $609.4 million, an $89.8 million or 17.3%
increase over the prior year fourth quarter sales. Fourth quarter organic
sales increased by 5.5%, primarily due to higher sales of ARM & HAMMER liquid
laundry detergent, ARM & HAMMER cat litter, ARM & HAMMER SPINBRUSH
battery-operated toothbrushes, TOOTHTUNES toothbrushes, TROJAN products and
ARM & HAMMER CRYSTAL BURST unit dose laundry detergent. These increases were
partially offset by lower sales of ARM & HAMMER powdered laundry detergent,
ANSWER diagnostic kits and ARM & HAMMER dental care toothpaste. Volume growth
contributed approximately 5.8% to organic sales, partially offset by 0.3%
unfavorable product mix and pricing.

Consumer International net sales were $136.3 million, an $8.7 million or 6.0%
decrease from the prior year fourth quarter sales, largely due a change in
fiscal calendar for certain subsidiaries in the fourth quarter of 2011.
Organic sales increased by 2.7%, primarily due to increased sales in Canada,
Australia, Mexico and Brazil. Volume growth contributed approximately 3.5% to
organic sales, partially offset by 0.8% unfavorable product mix and pricing.

Specialty Products net sales were $64.0 million, an $2.5 million or 3.8%
decrease from the prior year fourth quarter sales. Fourth quarter organic
sales decreased by 0.3%. Lower animal nutrition volumes accounted for 5.8% of
the decrease, partially offset by favorable pricing which contributed 5.5% and
was primarily due to a pass-through of raw material increases to customers.

Gross margin for the total company, including the impact of the Avid
acquisition, expanded 100 basis points to 44.3% in the fourth quarter compared
to 43.3% in the prior year fourth quarter. Excluding the impact of the Avid
acquisition, gross margin expanded 210 basis points. The improvement is due
primarily to a cat litter price increase, sales growth of our higher margin
personal care business, in-house production of unit dose detergent, the new
Victorville, California facility and a reduction in trade spending. The
Company delivered full year gross margin expansion of 30 basis points,
excluding the impact of the Avid acquisition.

Marketing expense was $108.7 million in the fourth quarter, the highest
spending of the year, representing an increase of $3.1 million or 2.9% in
comparison with the prior year fourth quarter. Marketing expense as a
percentage of net sales was 13.4% in the fourth quarter, a decrease of 100
basis points from the prior year fourth quarter, reflecting Avid’s lower
marketing expense as a percentage of sales. The marketing spending in the
fourth quarter was effective in driving share gains on seven of our eight
power brands.

Selling, general, and administrative expense (SG&A) was $115.1 million in the
fourth quarter, a $21.6 million increase over the prior year fourth quarter,
primarily due to the inclusion of the Avid business, acquisition transaction
costs, and higher incentive compensation. SG&A as a percentage of net sales
was 14.2%, a 140 basis point increase from the prior year fourth quarter.

Income from Operations was $134.6 million in the fourth quarter, an increase
of $17.2 million or 14.7% over the prior year fourth quarter. Operating income
as a percentage of net sales was 16.6%, a 50 basis point increase over the
prior year fourth quarter.

Other expense increased by $4.9 million in the fourth quarter, primarily due
to higher net interest expense of $3.2 million in the fourth quarter of 2012
related to the debt financing in connection with the Avid acquisition.

The effective tax rate in the fourth quarter was 37.9%, compared to 45.9% in
the fourth quarter of 2011. Excluding the deferred tax valuation allowance of
approximately $13 million, the tax rate was 35.1% in the fourth quarter of
2011. The full year 2012 effective tax rate is 35.5%.

Operating Cash Flow

For the full year 2012, reported net cash from operating activities was $523.6
million, an increase of $85.8 million or 19.6% over the prior year. The fourth
quarter estimated Federal tax payment was deferred from December 2012 to
January 2013 as a result of Hurricane Sandy relief, which increased 2012 net
cash from operating activities by $36 million. The increase in net cash from
operating activities is also a result of improvements in working capital and
higher net income. Capital expenditures for the full year 2012 were $74.5
million, a $2.1 million decrease from the prior year.

17% Dividend Increase

On January 30, 2013 the Company’s Board of Directors declared a 17% increase
in the regular quarterly dividend from $0.24 to $0.28, equivalent to an annual
dividend of $1.12 or a current dividend yield of approximately 2.0% per share.
The higher dividend raises the dividend payout from $135 million to
approximately $155 million, which represents 40% of 2013 projected net income.
The quarterly dividend will be payable March 1, 2013 to stockholders of record
at the close of business on February 15, 2013. It is the Company’s 448^th
regular consecutive dividend. The Company last increased its dividend in
February 2012 when it was raised 41%.

Mr. Craigie commented, “Today’s action reflects the Company’s desire for
shareholders to benefit from our continued strong growth and is an indication
of our confidence in the Company’s performance. Importantly, the Company
expects to generate over $1.2 billion in free cash flow over the next three
years. Our robust cash flow enables us to deliver higher value directly to our
shareholders while maintaining significant financial flexibility to continue
to aggressively pursue acquisitions.”

Outlook for 2013

Mr. Craigie said, “We continue to expect a challenging economic environment in
2013. Consumer spending and category growth is expected to remain weak due to
consumer uncertainty. Commodity prices are expected to remain stable and
competition will remain fierce. We believe we are in an excellent position to
continue to deliver value to our shareholders with our balanced portfolio of
value and premium products, the launch of innovative new products, increased
distribution in many major accounts, aggressive cost cutting, tight management
of overhead costs, and the accretive benefit of our recent acquisition of
Avid.”

With regard to 2013, Mr. Craigie said, “Our long term algorithm has not
changed for the base business. We expect organic sales growth of 3-4% in 2013
while increasing gross margin in our base business by 25-50 basis points, and
further leveraging SG&A. As previously communicated, we anticipate that 2013
will be a much stronger year for reported sales growth due to the faster
growing Avid business and effectively a neutral year for gross margin as the
margin improvement for the base business will be offset by the lower margin
Avid business. We also plan to increase our marketing spending in 2013 focused
behind the launch of innovative new premium products on our power brands,
which we expect will continue to drive share gains.”

In conclusion, Mr. Craigie said, “As a result of these factors, we are
forecasting earnings per share to be $2.79, which is the upper end of our
previously communicated range of $2.74 to $2.79, and an increase of 14% on a
reported basis. We expect first quarter earnings per share to increase
approximately 8% compared to the prior year.”

Church & Dwight Co., Inc. will host a conference call to discuss fourth
quarter 2012 results on February 5, 2012 at 12:30p.m. (ET). To participate,
dial in at (877) 741-4354, access code: 87774263 (International: (706)
758-7438, same access code: 87774263). A replay will be available two hours
after the call at 855-859-2056 or 404-537-3406 (same access code: 87774263).
Also, you can participate via webcast by visiting the Investor Relations
section of the Company’s website at www.churchdwight.com.

Church & Dwight Co., Inc. manufactures and markets a wide range of personal
care, household and specialty products under the ARM& HAMMER brand name and
other well-known trademarks.

This release contains forward-looking statements relating to, among other
things, the effect of product mix; the impact of the Avid acquisition;
earnings per share; reported net sales growth and organic sales growth; volume
growth, including the effects of new products; gross margin; operating margin;
marketing spending; commodity price increases; consumer spending; cost savings
programs; marketing support; effective tax rate; net cash from operating
activities; capital expenditures; competition; and customer response to new
products. These statements represent the intentions, plans, expectations and
beliefs of the Company, and are subject to risks, uncertainties and other
factors, many of which are outside the Company’s control and could cause
actual results to differ materially from such forward-looking statements. The
uncertainties include assumptions as to market growth and consumer demand
(including the effect of political and economic events on consumer demand),
retailer actions in response to changes in consumer demand and the economy,
raw material and energy prices, the financial condition of major customers and
suppliers, interest rate and foreign currency exchange rate fluctuations, and
changes in marketing and promotional spending. With regard to the new product
introductions referred to in this release, there is particular uncertainty
relating to trade, competitive and consumer reactions. Other factors that
could materially affect actual results include the outcome of contingencies,
including litigation, pending regulatory proceedings, environmental matters
and the acquisition or divestiture of assets. For a description of additional
factors that could cause actual results to differ materially from the forward
looking statements, please see the Company’s quarterly and annual reports
filed with the SEC, including information in the Company’s annual report on
Form 10-K in Item 1A, “Risk Factors”.

                                                
                                                                              
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income
(Unaudited)
                                                                              
                    Three Months Ended        Twelve Months Ended
(In millions,              Dec. 31,      Dec. 31,        Dec. 31,       Dec. 31,
except per           2012        2011         2012         2011
share data)
Net Sales                  $ 809.7     $ 731.1       $  2,921.9     $ 2,749.3
Cost of sales         451.3     414.6      1,630.5     1,534.8 
Gross profit                 358.4         316.5          1,291.4         1,214.5
Marketing                    108.7         105.6          357.3           354.1
expenses
Selling,
general and           115.1     93.5       389.0       367.8   
administrative
expenses
Income from                  134.6         117.4          545.1           492.6
Operations
Equity in
earnings of                  1.6           1.7            8.9             10.0
affiliates
Other income          (6.0  )    (1.1  )     (11.5   )    (8.0    )
(expense), net
Income before                130.2         118.0          542.5           494.6
taxes
Income taxes          49.4      54.2       192.7       185.0   
Net Income
attributable         $ 80.8     $ 63.8     $  349.8      $ 309.6   
to Church &
Dwight
Net Income per             $ 0.58        $ 0.45        $  2.50          $ 2.16
share - Basic
Net Income per
share -              $ 0.57     $ 0.44     $  2.45       $ 2.12    
Diluted
Dividend per               $ 0.24        $ 0.17        $  0.96          $ 0.68
share
Weighted
average shares               139.2         143.0          140.1           143.2
outstanding -
Basic
Weighted
average shares        141.7     145.6      142.7       145.8   
outstanding -
Diluted
                                                                                  
                                                                                  

                                                    
                                                                 
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)
                                                                 
(Dollars in millions)              Dec. 31, 2012     Dec. 31, 2011
Assets                                              
Current Assets                                       
Cash, equivalents and                      $  343.0              $   251.4
securities
Accounts receivable                           303.1                  264.6
Inventories                                   242.2                  200.7
Other current assets                 45.5             38.5
Total Current Assets                 933.8            755.2
Property, Plant and                           586.0                  506.0
Equipment (Net)
Equity Investment in                          23.0                   12.0
Affiliates
Tradenames and Other                          1,254.9                904.1
Intangibles
Goodwill                                      1,213.8                868.4
Other Long-Term Assets               86.6             71.9
Total Assets                       $  4,098.1       $   3,117.6
Liabilities and                                      
Stockholders’ Equity
Short-Term Debt                            $  253.8              $   2.6
Other Current Liabilities            471.8            381.0
Total Current Liabilities            725.6            383.6
Long-Term Debt                                649.4                  249.7
Other Long-Term                               662.0                  443.5
Liabilities
Stockholders’ Equity                 2,061.1          2,040.8
Total Liabilities and              $  4,098.1       $   3,117.6
Stockholders’ Equity
                                                                     
                                                                     

                                                       
                                                                 
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flow (Unaudited)
                                                                 
                                      Twelve Months Ended
(Dollars in millions)                  Dec. 31, 2012    Dec. 31, 2011
                                                                            
Net Income                                   $  349.8            $  309.6
                                                                            
Depreciation and amortization                   85.0                77.1
Deferred income taxes                           13.2                59.4
Non cash compensation                           12.4                11.0
Other                                           2.4                 3.8
                                                                            
Changes in assets and
liabilities:
Accounts receivable                             (9.0    )           (35.3   )
Inventories                                     (1.1    )           (9.0    )
Other current assets                            2.0                 (6.1    )
Accounts payable and accrued                    30.7                27.4
expenses
Income taxes payable                            58.7                19.1
Excess tax benefits on stock                    (14.6   )           (12.1   )
options exercised
Other liabilities                        (5.9    )       (7.1    )
Net cash from operating                         523.6               437.8
activities
                                                                            
Acquisitions                                    (652.3  )           (69.1   )
Capital expenditures                            (74.5   )           (76.6   )
Investment in joint venture                     (13.7   )           (3.2    )
Other                                    (0.8    )       1.1     
Net cash used in investing                      (741.3  )           (147.8  )
activities
                                                                            
Long-term borrowing                             399.6               0.0
Net change in short-term debt                   251.3               (87.4   )
Payment of cash dividends                       (134.5  )           (97.4   )
Stock option related                            42.6                39.2
Purchase of treasury stock                      (250.4  )           (80.2   )
Deferred financing costs                 (3.4    )       (0.7    )
Net cash provided by (used in)                  305.2               (226.5  )
financing activities
                                                                            
F/X impact on cash                       4.1            (1.3    )
                                                                            
Net change in cash and                 $  91.6         $  62.2    
investments
                                                                            
                                                                            

                                                           
                                                                       
2012 and 2011 Product Line Net Sales
                                                                       
                             Three Months Ended                        Percent
                             12/31/2012      12/31/2011      Change
                                            
Household                    $  357.1             $  342.8             4.2   %
Products
Personal Care                  252.3          176.8        42.7  %
Products
Consumer                        609.4                519.6             17.3  %
Domestic
Consumer                       136.3          145.0        -6.0  %
International
Total Consumer                  745.7                664.6             12.2  %
Net Sales
Specialty
Products                       64.0           66.5         -3.8  %
Division
Total Net Sales              $  809.7        $  731.1        10.8  %
                                                                       
                             Twelve Months Ended                       Percent
                             12/31/2012      12/31/2011      Change
                                                                       
Household                    $  1,411.3           $  1,295.0           9.0   %
Products
Personal Care                  745.6          684.1        9.0   %
Products
Consumer                        2,156.9              1,979.1           9.0   %
Domestic
Consumer                       510.1          509.1        0.2   %
International
Total Consumer                  2,667.0              2,488.2           7.2   %
Net Sales
Specialty
Products                       254.9          261.1        -2.4  %
Division
Total Net Sales              $  2,921.9      $  2,749.3      6.3   %
                                                                             
                                                                             

The following discussion addresses the non-GAAP measures used in this press
release and reconciles such non-GAAP measures to the most directly comparable
GAAP measures.

We believe that the presentation of these non-GAAP financial measures, which
our management relies on to assess our operating results, provides enhanced
visibility into our net sales, earnings per share growth, income tax rate, and
gross margin structures and facilitates the comparison of our results to the
results of our peer companies. It is important to view each of these non-GAAP
financial measures in addition to, rather that as a substitute for, the GAAP
measures of net sales, earnings per share, income tax rate, and gross margin,
respectively. These non-GAAP measures may not be the same as similar measures
provided by other companies due to differences in methods of calculation and
items and events being excluded.

Organic Sales Growth

The press release provides information regarding organic sales growth, namely
net sales growth excluding the effect of acquisitions, the change in the
fiscal calendar for three foreign subsidiaries,foreign exchange rate changes,
and the impact resulting from a timing shift in customer orders due to the
information systems upgrade. Management believes that the presentation of
organic sales growth is useful to investors because it enables them to assess,
on a consistent basis, sales trends related to products that were marketed by
the Company during the entirety of relevant periods, excluding the effect of
sales timing shifts and foreign exchange rate changes that are out of the
control of, and do not reflect the performance of, management.

                  
                         
                         Three Months Ended 12/31/2012
                                                                             
                         Total         Worldwide       Consumer       Consumer            Specialty
                         Company       Consumer        Domestic       International       Products
                                                                                          
Reported                 10.8  %       12.2   %        17.3  %        -6.0     %          -3.8   %
Sales Growth
Add:
FX                       0.1   %       -0.1   %        -             -0.3     %          2.1    %
Sales in
Anticipation             1.1   %       1.2    %        1.8   %        -1.1     %          1.4    %
of ERP
Conversion
Change in
Fiscal                   2.2   %       2.3    %        -             10.1     %          -
Calendar Q4
2011
                                                                                          
Less:
Acquisitions             9.8   %       10.7   %        13.6  %        -                  -
                                                                                      
                                                                                          
Organic                  4.4   %       4.9    %        5.5   %        2.7      %          -0.3   %
Sales Growth
                                                                                          
                         Twelve Months Ended 12/31/2012
                                                                                          
                         Total         Worldwide       Consumer       Consumer            Specialty
                         Company       Consumer        Domestic       International       Products
                                                                                          
Reported                 6.3   %       7.2    %        9.0   %        0.2      %          -2.4   %
Sales Growth
Add:
FX                       0.8   %       0.7    %        -             3.3      %          2.4    %
Sales in
Anticipation             0.6   %       0.7    %        0.8   %                            0.8    %
of ERP
Conversion
Change in
Fiscal                   0.6   %       0.6    %        -             2.9      %          -
Calendar Q4
2011
                                                                                          
Less:
Acquisition              3.1   %       3.5    %        3.5   %        3.1      %          -
                                                                                      
                                                                                          
Organic                  5.2   %       5.7    %        6.3   %        3.3      %          0.8    %
Sales Growth
                                                                                          
                                                                                          

Percentage Increase in Earnings Per Share, Adjusted Income Tax Rate and
Adjusted Gross Margin Improvement

The press release provides information regarding the Company's net income per
share growth and income tax rate adjusted to exclude the deferred tax charge
of $13 million or $0.09 per share in the fourth quarter of 2011 and gross
margin improvement to exclude the impact of the Avid acquisition. Management
believes that the presentation of adjusted net income per share, adjusted
income tax rate, and adjusted gross margin improvement is useful to investors
because it enables them to assess the Company's historical performance
exclusive of extraordinary events that do not reflect the Company's day-to-day
operations and the gross margin of products that were marketed by the Company
during the entirety of relevant periods.

                                                  
                                                               
                                           Three month         Twelve month
                                           Ended               Ended
                                           December 31, 2012
Reported Gross Margin                      44.3    %           44.2    %
Add:
Impact of Avid acquisition                 1.1     %           0.3     %
Adjusted Gross Margin                      45.4    %           44.5    %
                                                                       
                                                                       

Contact:

Church & Dwight Co., Inc.
Rick Dierker, 609-806-1900
VP, Corporate Finance
 
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