Church & Dwight Company, Inc. · NYSE:CHD
Church & Dwight — Investor Day (February 2023)
148 slides from Church & Dwight's investor day presentation, Feb 3, 2023
Slide 1: Church & Dwight Co., Inc. 2023 Analyst Day
CHURCH & DWIGHT CO., INC. 2023 ANALYST DAY
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation contains forward-looking statements, including, among others, statements relating to net sales and earnings growth; the impact of the COVID-19 pandemic and the Company’s response; gross margin changes; trade, marketing, and SG&A spending; sufficiency of cash f
Slide 3: Who From Management is With Us Today?
Who From Management is With Us Today? Matt Farrell Chairman and Chief Executive Officer Barry Bruno Chief Marketing Officer & President, U.S. Consumer Business Brian Buchert Strategy, M&A and Business Partnerships Patrick de Maynadier General Counsel Rick Dierker Chief Financial Officer and Head of
Slide 4: Agenda
AGENDA Who We Are Financials U.S. Consumer and New Products Digital Acceleration International Story Specialty Products How We Run the Company Q&A
Slide 5: A Look Back at 2022
A Look Back at 2022 1 Inflation resulted in unplanned materials, labor and transportation costs. 2 Additional pricing action was taken again in our largest categories, laundry and litter. 3 ARM & HAMMER Litter, ARM & HAMMER LLD and Batiste achieved all time high market shares. 4 Zicam, TheraBreath a
Slide 6: 13 out of 17: Q4 consumption by category
A LOOK AT Q4 CONSUMPTION BY CATEGORY COLD SHORTENING DRY SHAMPOO ACNE PATCHES CLUMPING LITTER BAKING SODA ALCOHOL FREE MW STAIN FIGHTERS LAUNDRY PREGNANCY TEST KITS Consumption grew in HAIR GROWTH TOOTHPASTE 13 out of 17 CONDOMS GUMMY VMS POWER FLOSSING TOOTHACHE key C&D categories in Q4 BATTERY TOO
Slide 7: Historical Total Shareholder Return
Historical Total Shareholder Return 10 YEAR: 5 YEAR: 3 YEAR: 2022: 13.3% 11.4% 5.9% (20.4%) CHURCH & DWIGHT ANALYST DAY 2023 7
Slide 8: We have confidence in our future
We have confidence in our future. Steady U.S. Sustainable high Consistent Digitally Long-term Strong 2023 growth International innovation savvy evergreen fundamentals ahead growth rate model is healthy CHURCH & DWIGHT ANALYST DAY 2023 8
Slide 9: Who We Are
MATT FARRELL CHAIRMAN AND CHIEF EXECUTIVE OFFICER Who We Are
Slide 10: Church & Dwight's Business Segments
Church & Dwight’s Business Segments TOTAL COMPANY 2022 Net Sales: $5.4 BILLION 77% Domestic 17% International 6% Specialty Products Division CHURCH & DWIGHT ANALYST DAY 2023 10
Slide 11: Power Brands
FIRST RESPONSE POWER BRANDS
Slide 12: 14 Power Brands
more than 85% of sales & profits are represented by these 14 POWER BRANDS
Slide 13: Our Winning Formula
Our Winning Formula 1 2 3 4 A balanced Low private Strong and Acquisitive and label consistent Company diversified exposure innovation portfolio CHURCH & DWIGHT ANALYST DAY 2023 13
Slide 14: Product Portfolio of Both Value and Premium Products
Product Portfolio of Both Value and Premium Products 40% 60% Value Premium CHURCH & DWIGHT ANALYST DAY 2023 14
Slide 15: A Balanced and Diversified Portfolio
A Balanced and Diversified Portfolio 6% SPD 46% Household 2022 48% Personal Care CHURCH & DWIGHT ANALYST DAY 2023 15
Slide 16: Low Private Label Exposure
Low Private Label Exposure Weighted Average Private Label Share of Our Categories 20% Private Label Consistently 15% ~12% 10% 5% 0% 2017 2018 2019 2020 2021 2022 -5% Source: Nielsen Total U.S. AOC CHURCH & DWIGHT ANALYST DAY 2023 16
Slide 17: Only 5 Of Our 17 Categories Have Private Label Exposure
Only 5 Of Our 17 Categories Have Private Label Exposure Pregnancy Test Kits Baking Soda Gummy Vitamins 50% 30% 20% 40% 25% 15% 20% 30% 15% 10% 20% 10% 5% 10% 5% 0% 0% 0% Toothache Clumping Litter 30% 20% 15% 20% 10% 10% 5% 0% 0% Source: Nielsen Total U.S. AOC, data through 12/25/22 CHURCH & DWIGHT A
Slide 18: Consistent Innovation
Consistent Innovation CHURCH & DWIGHT ANALYST DAY 2023 18
Slide 19: Long History of Growth Through Acquisitions
Long History of Growth Through Acquisitions Net Sales $ Billions $5.4 $1.5 2004 2005 2006 2008 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note: Trojan, Nair and First Response acquired in two parts – 2001 and 2004. CHURCH & DWIGHT ANALYST DAY 2023 19
Slide 20: Acquired 13 of 14 Power Brands Since 2001
Acquired 13 of 14 Power Brands Since 2001 ACQUIRED 2001 ACQUIRED 2001 ACQUIRED 2001 ACQUIRED 2001 ACQUIRED 2005 ACQUIRED 2006 ACQUIRED 2008 #1 CONDOM #1 EXTREME #2 PREGNANCY #1 DEPILATORY #2 BATTERY #1 LAUNDRY #1 ORAL CARE VALUE LAUNDRY TEST KIT POWERED ADDITIVE PAIN RELIEF DETERGENT TOOTHBRUSH ACQU
Slide 21: We Have Clear Acquisition Criteria
We Have Clear Acquisition Criteria Primarily #1 High growth and Asset Leverage C&D Deliver or #2 share high margin light manufacturing, sustainable brands brands that are logistics and competitive fast moving purchasing advantage consumables CHURCH & DWIGHT ANALYST DAY 2023 21
Slide 22: 14 Power Brands Today, 20 Tomorrow
14 Power Brands Today, 20 Tomorrow $6.0 Net Sales $ Billions $5.5 14 $5.0 13 12 $4.5 $4.0 11 $3.5 $3.0 10 9 $2.5 8 $2.0 7 6 $1.5 $1.0 5 $0.5 1 $0.0 1846 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note: Trojan, Nair and
Slide 23: Our Winning Formula
Our Winning Formula 1 2 3 4 A balanced Low private Strong and Acquisitive and label consistent Company diversified exposure innovation portfolio CHURCH & DWIGHT ANALYST DAY 2023 23
Slide 24: Financials
RICK DIERKER CHIEF FINANCIAL OFFICER AND HEAD OF BUSINESS OPERATIONS Financials
Slide 25: Evergreen Model
Evergreen Model Organic Sales +3% Gross Margin +25 bps Marketing FLAT SG&A -25 bps Operating Margin +50 bps EPS Growth +8% CHURCH & DWIGHT ANALYST DAY 2023 25
Slide 26: Q4 2022 Financial Highlights
Q4 2022 Financial Highlights Q4 OUTLOOK ACTUALS (as of October 28th) Reported Sales Growth 2% 4.9% Organic Sales Growth -1% 0.4% Gross Margin contraction -50 bps -9% to -3% -3% Adjusted EPS $0.58 to $0.62 $0.62 Cash from Operations $266MM $351MM Organic sales and adjusted EPS are non-GAAP measures.
Slide 27: FY 2022 Financial Highlights
FY 2022 Financial Highlights FY OUTLOOK ACTUALS (as of October 28th) Reported Sales Growth 3% 3.6% Organic Sales Growth 1% 1.4% Gross Margin contraction -170 bps -3% to -2% -2% Adjusted EPS $2.93 to $2.97 $2.97 -13% to -11% -49% Reported EPS $2.90 to $2.94 $1.68 Cash from Operations $800MM $885MM Or
Slide 28: Outlook
2022 2023 OUTLOOK 2024
Slide 29: 2023 Adjusted EPS Growth Breakdown
2023 Adjusted EPS Growth Breakdown (outlook 0-4%) Core Adjusted EPS Growth 10% Incremental Marketing (3%) Incentive Comp Normalization (3%) Interest and Taxes (ex. Hero) (2%) Adjusted EPS Growth 2% (mid-point) Adjusted EPS is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most
Slide 30: FY 2023 Financial Outlook
FY 2023 Financial Outlook Reported Sales Growth 5% to 7% Domestic: 2-3% Organic Sales Growth 2% to 4% International: 3-5% SPD: 5-6% Gross Margin +100 to +120 bps Marketing +50 bps, 10.5% SG&A higher Operating Profit Margin flattish Other Expense ~-$110M Effective Tax Rate ~23% Adjusted EPS Growth 0
Slide 31: Reported Sales Growth: 10 Year History
Reported Sales Growth: 10 Year History 14.0% 12.0% 10.0% 10 Year 5% - 7% 8.0% Average: 6.3% 6.0% 4.0% 2.0% 0.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E CHURCH & DWIGHT ANALYST DAY 2023 31
Slide 32: Organic Sales Growth: 10 Year History
Organic Sales Growth: 10 Year History 10.0% 9.0% 8.0% 7.0% 6.0% 10 Year 5.0% Average: 2% - 4% 4.0% 3.9% 3.0% Evergreen 2.0% Target: 1.0% 3.0% 0.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E Organic sales is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most direc
Slide 33: Volume Trend Improving
Volume Trend Improving 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% FY14 FY15 FY16 FY 17 FY 18 FY 19 FY 20 FY21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E CHURCH & DWIGHT ANALYST DAY 2023 33
Slide 34: 2023 Focus On Gross Margin
2023 Focus On Gross Margin 45.5% 45.2% 1 Inflation moderating 44.4% +100 bps to 43.6% +120 bps 2 Productivity programs 41.9% 3 Margin accretive acquisition 4 Improved case fill 2018 2019 2020 2021 2022 2023E CHURCH & DWIGHT ANALYST DAY 2023 34
Slide 35: Gross Margin - 2023 vs. 2022
Gross Margin- 2023 vs. 2022 2022 2023 midpoint Price/Volume/Mix +210 bps +180 bps Inflation (540) bps (240) bps Acquisition +50 bps +70 bps Productivity Programs +110 bps +100 bps FX Flat Flat Gross Margin Change (170) bps +110 bps CHURCH & DWIGHT ANALYST DAY 2023 35
Slide 36: 2023 Marketing Spend Target
2023 Marketing Spend Target 12.1% 11.7% 11.8% 1 Full year marketing support on 11.1% +50 bps improved product supply 10.0% 2 10.5% of sales which includes $30M incremental marketing investment 2018 2019 2020 2021 2022 2023E CHURCH & DWIGHT ANALYST DAY 2023 36
Slide 37: 2023 SG&A
2023 SG&A higher 14.2% 14.1% 13.6% 13.0% 1 Hero stand alone SG&A 2 $30M normalization of 2023 incentive compensation 3 Long term evergreen leverage targets remain in place 2019 2020 2021 2022 2023E Note: Adjusted SG&A is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comp
Slide 38: Consistent Strong Adjusted EPS Growth
Consistent Strong Adjusted EPS Growth flat to +4% $3.02 $2.97 $2.83 $2.47 $2.27 $1.94 $1.77 9.3% 9.6% 17.0% 8.8% 14.6% 6.7% -1.5% 2016 2017 2018 2019 2020 2021 2022 2023E Note: Adjusted EPS growth is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measures.
Slide 39: EPS 2023
EPS 2023 First Half EPS Impacted By: 1 Continued choppiness from discretionary brands 2 International supply challenges 3 Return-to-normal promotional activity 4 Higher marketing dollars Second Half EPS Impacted By: 1 Productivity outpacing inflation 2 Improved global supply 3 Lapping lower performa
Slide 40: "Best In Class" FCF Conversion
“Best In Class” FCF Conversion 10 Year Average: 119% 128% 129% 131% 126% 126% 125% 123% 116% elevated 112% CAPEX 108% 97% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Refer to the Appendix for a reconciliation to the most directly comparable GAAP measures. CHURCH & DWIGHT ANALYST DAY 2023
Slide 41: Cash Conversion Cycle
Cash Conversion Cycle Tight Control Of Working Capital Drives Cash Conversion Cycle Improvement 52 40 34 36 elevated 32 32 inventories 27 21 22 22 18 18 19 15 days 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CHURCH & DWIGHT ANALYST DAY 2023 41
Slide 42: Strong Balance Sheet
Strong Balance Sheet TOTAL DEBT/BANK EBITDA 2.6x 2.2x 1.9x 1.9x 1.6x 2.1x 1.5x 1.4x 1.7x 1.4x 1.7x 1.4x 1.2x 0.7x CREDIT RATING 0.5x A3/BBB+ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E Note: Total debt/EBITA is a non-GAAP measure. Refer to the Appendix for a reconcili
Slide 43: Significant Financial Capacity
Significant Financial Capacity (in $millions) Cash & Cash $270 Equivalents on Hand Leverage Acquisition • 2022 TTM Bank EBITDA = $2,900 Capacity $1,226M Power: $3.2B • Example: Acquisition EBITDA multiple of 12x Current Debt Outstanding $2,675 *as of December 31, 2022 CHURCH & DWIGHT ANALYST DAY 202
Slide 44: Prioritized Uses Of Free Cash Flow
Prioritized Uses Of Free Cash Flow 1 TSR-Accretive M&A 2 Capex For Organic Growth & G2G 3 New Product Development 4 Debt Reduction 5 Return Of Cash To Shareholders CHURCH & DWIGHT ANALYST DAY 2023 44
Slide 45: Ensuring A Steady Supply For Our Categories
Ensuring A Steady Supply For Our Categories 2021 - 2023 LLD Litter Baking Soda VMS Technology Capacity Sustainability CHURCH & DWIGHT ANALYST DAY 2023 45
Slide 46: Minimal Capital Investment
Minimal Capital Investment Capital Expenditures as a % of Sales 5.4% 4.4% 3.3% 3.0% 2.8% 2.5% 2.5% 2.3% 2.1% 2.1% 2.0% 2.0% 1.8% 1.7% 1.4% 1.4% 1.2% $135 $64 $77 $75 $67 $71 $62 $50 $45 $60 $74 $99 $119 $179 $250 $180 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024E
Slide 47: 4% Dividend Increase In 2023
4% Dividend Increase In 2023 $1.05 $1.09 $1.01 $0.96 $0.87 $0.91 122 $0.76 consecutive years of dividends +119% +7.0% +14.5% +4.6% +5.5% +5.2% +4.0% +4.0% +35% 2017 2018 2019 2020 2021 2022 2023 CHURCH & DWIGHT ANALYST DAY 2023 47
Slide 48: U.S. Consumer and New Products Update
BARRY A. BRUNO EVP, CHIEF MARKETING OFFICER & PRESIDENT, U.S. CONSUMER BUSINESS U.S. Consumer and New Products Update
Slide 49: U.S. Consumer Business: Our Future Is Bright
U.S. Consumer Business: Our Future Is Bright 1 2 3 We are leaders We thrive in Acquisitions in growing difficult have room categories environments to run CHURCH & DWIGHT ANALYST DAY 2023 49
Slide 50: We're Leaders In Healthy, Growing Categories
1 We’re Leaders In Healthy, Growing Categories IRI Market Advantage; Total US – MULO; Data through WE12.26.21 CHURCH & DWIGHT ANALYST DAY 2023 50
Slide 51: We Know How To Grow Share
We Know How To Grow Share 2018 2019 2020 2021 2022 1.0 1.0 1.0 -14.0 0.2 1.0 1.0 1.0 -1.0 0.6 7 out of 14 -1.0 -1.0 -1.0 -1.0 -0.2 -1.0 -1.0 1.0 1.0 -0.5 power brands 1.0 -1.0 -1.0 -1.0 -2.8 maintained or 1.0 1.0 1.0 1.0 -2.0 grew share in 2022. -1.0 -1.0 -1.0 -1.0 -0.3 -1.0 -1.0 -1.0 -1.0 0.1 -1.0
Slide 52: Case Fill Improvements: Expect 9 of 14 Brands to Grow Share
And With Case Fill Improvements, We Expect 9 Out of 14 Brands to Grow Share Quarterly Fill Rates ~97% ~97% ~93% ~93% 91% 90% 89% Below 80% Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Actual Estimate CHURCH & DWIGHT ANALYST DAY 2023 52
Slide 53: We Thrive In Difficult Environments
2 We Thrive In Difficult Environments 40% of Our Portfolio is Value Low Interaction With Private Label ONLY 5 OF OUR 17 CATEGORIES HAVE EXPOSURE Source: IRI Data CHURCH & DWIGHT ANALYST DAY 2023 53
Slide 54: 13 out of 17: Q4 consumption by category
A LOOK AT Q4 CONSUMPTION BY CATEGORY COLD SHORTENING DRY SHAMPOO ACNE PATCHES CLUMPING LITTER BAKING SODA ALCOHOL FREE MW STAIN FIGHTERS LAUNDRY PREGNANCY TEST KITS Consumption grew in HAIR GROWTH TOOTHPASTE 13 out of 17 CONDOMS GUMMY VMS POWER FLOSSING TOOTHACHE key C&D categories in Q4 BATTERY TOO
Slide 55: Fabric Care
FABRIC CARE The clean you need at a fraction of the cost.
Slide 56: Liquid Laundry Detergent
LIQUID LAUNDRY DETERGENT LLD CATEGORY $ Sales Chg vs. YAG $ Sales Chg vs. YAG 2022 2022 15.5% 10.2% 7.7% 6.7% 6.8% 5.6% 5.1% 3.3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Category growth moderated while A&H consumption grew, achieving record share. Source: IRI Data
Slide 57: ARM & HAMMER LLD All-Time Share High in Q4 2022
In Fact, ARM & HAMMER Liquid Laundry Detergent Achieved an All-Time Share High in Q4 2022 16 15 14.9 14 13 12 11 10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 '17 '17 '17 '17 '18 '18 '18 '18 '19 '19 '19 '19 '20 '20 '20 '20 '21 '21 '21 '21 '22 '22 '22 '22 2017 2018 2019 2
Slide 58: Consumer Migration From Premium To Value Detergent
Consumer Migration From Premium To Value Detergent Accelerating In Recessionary Environment Premium vs Value Liquid Laundry Detergent Dollar Share LLD PREMIUM LLD VALUE 3.0 1.7 2.0 1.2 LLD VALUE 1.0 0.0 0.3 -1.0 -2.0 -3.0 LLD PREMIUM -4.0 -2.9 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Source:
Slide 59: Litter
LITTER Litter Slides Right Out
Slide 60: Cat Litter
CAT LITTER $ Sales Chg vs. YAG 2022 14.9% 13.9% 13.5% 12.8% Q1 Q2 Q3 Q4 ARM & HAMMER Litter consumption continued double-digit growth in 2022. Source: IRI Data
Slide 61: A&H Litter Only Major Brand To Grow Share In 2022
A&H Litter Only Major Brand To Grow Share In 2022 Clumping Litter Dollar Share Source: IRI Total MULO + Pet A&H Clumping Litter Sales, PE 12.25.2022 CHURCH & DWIGHT ANALYST DAY 2023 61
Slide 62: A&H Litter Value Portfolio A Pennywise Choice
A&H Litter Value Portfolio A “Pennywise” Choice For Consumers In Recessionary Environment A&H Value “Orange Box” – Dollar Share 11.6 10.5 Source: IRI Total MULO + Pet A&H “Orange Box” Clumping Litter Sales, PE 12.25.2022 CHURCH & DWIGHT ANALYST DAY 2023 62
Slide 63: Cold & Flu Remedies
COLD & FLU REMEDIES Shortens Colds!
Slide 64: Cold Shortening
COLD SHORTENING COLD SHORTENING CATEGORY $ Sales Chg vs. YAG $ Share of Cold Shortening 2018 - 2022 19.3% 3.2% 9.8% 77.0% 0.8% 75.0% 2018 2019 2020 2021 2022 73.0% 72.0% 71.0% -29.7% 2018 2019 2020 2021 2022 Double-digit category growth fueled by category-leading ZICAM Source: IRI Data
Slide 65: Zicam Reaches All-time Share High In 2022
Zicam Reaches All-time Share High In 2022 as Consumers Have Faced a Surge In Illness Positive Influenza Tests Reported to CDC, 2016-2022 Zicam Share of Cold Shortening Sources: Centers for Disease Control and Prevention, IRI Total MULO data through 12/25/22 CHURCH & DWIGHT ANALYST DAY 2023 65
Slide 66: Our Acquisitions Are Just Getting Started
3 and, if That’s Not Enough… Our Acquisitions Are Just Getting Started December 2021 October 2022 New distribution + Waterpik New distribution + Dental Hygienist Detailing = International Runway = continued growth momentous expansion CHURCH & DWIGHT ANALYST DAY 2023 66
Slide 67: Alcohol-Free Mouthwash
ALCOHOL-FREE MOUTHWASH Don’t Feel the Burn
Slide 68: Total Mouthwash Category
TOTAL MOUTHWASH CATEGORY $ Share of Total Mouthwash $ Sales 2019 - 2022 Category 2019 - 2022 #2 Non- Alcohol Mouthwash +49% 8.1% +45% 5.6% +59% 3.9% +19% 2.6% 2019 2020 2021 2022 2019 2020 2021 2022 Innovation, displays, and distribution gains continue to deliver THERABREATH growth in Total Mouthwas
Slide 69: Plenty Of Room To Run On Distribution
And There’s Plenty Of Room To Run On Distribution … TOTAL POINTS OF DISTRIBUTION 2,000 3.8x 1,800 3.6x 1,600 1,400 1,200 2.5x 1,000 800 1.4x 600 400 200 0 Total Points of 1,968.9 1,878.7 1,295.0 740.8 524.8 Distribution TDP -26.3% +7.1% -5.8% -6.2% +60.7% Change vs YA Source: IRI, Total US – Multi O
Slide 70: Acne Patch
ACNE PATCH Revealing the Hero Within
Slide 71: Acne Patch
ACNE PATCH ACNE PATCH CATEGORY $ Sales $ Sales 2018 - 2022 2018 - 2022 +54% $343 +519% $264 $110 +362% $20 $57 +++% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Double-digit category growth fueled by category-leading HERO MIGHTY PATCH Source: Numerator Data
Slide 72: Huge Runway For Growth
HUGE RUNWAY FOR GROWTH Total Points of Distribution Distribution Opportunity Neutrogena Clean & Clear Clearasil Hero Total Points of 1,955 461 332 Distribution Only in TDP Change +116 -77 -127 Target vs YA 72 IRI Total US – Multi Outlet L52 w/e 12/25/22
Slide 73: In Summary
In Summary … 1 2 3 We are leaders We thrive in Acquisitions in growing difficult have room categories environments to run and we haven’t even talked about our 2023 New Product pipeline yet … CHURCH & DWIGHT ANALYST DAY 2023 73
Slide 74: 2023 Innovation
2023 Innovation
Slide 75: Insight-Driven Litter Innovation Drives Record-Breaking Sales
Insight-Driven Litter Innovation Drives Record-Breaking Sales 75 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 CHURCH & DWIGHT ANALYST DAY 2023 2002 2001 2000 1999 1998
Slide 76: Our Next Litter Revolution: HardBall
Our Next Litter Revolution: HardBall 2023 Launch $328MM Lightweight (80% incr.) Litter: Perfected! $280MM HardBall Clump & Seal ORANGE BOX Orange Box IRI Data: Total US MULO + Pet CY 2022 Ending 1/1/23 CHURCH & DWIGHT ANALYST DAY 2023 76
Slide 77: HardBall Has The Potential To Transform the Category
HardBall Has The Potential To Transform the Category Total Clumping Share Lightweight Share 75% 95% Other Other 25% 5% A&H A&H IRI Data: Total US MULO + Pet CY 2022 Ending 1/1/23 CHURCH & DWIGHT ANALYST DAY 2023 77
Slide 78: What is HardBall?
What is HardBall? A sorghum-based new and different kind of litter What is Sorghum? What is HardBall? Sustainable non-clay Easy, no-mess scooping lightweight grain CHURCH & DWIGHT ANALYST DAY 2023 78
Slide 79: Virtually Indestructible Clumps Make Maintenance a Breeze
Virtually Indestructible Clumps Make Maintenance a Breeze Clean Compact Clumps Stays Clean Easy Less Waste Longer Maintenance CHURCH & DWIGHT ANALYST DAY 2023 79
Slide 80: HardBall Delivers Key Category Benefits
HardBall Delivers Key Category Benefits It's surprisingly lightweight, yet exceptionally strong! Virtually indestructible clumps make maintenance a breeze! Sustainable: Renewable, Light Weight to Transport CHURCH & DWIGHT ANALYST DAY 2023 80
Slide 81: Big Ideas and New Benefits Drive 2023 Launches
Big Ideas and New Benefits Drive 2023 Launches CHURCH & DWIGHT ANALYST DAY 2023 81
Slide 82: Give it the Hammer!
Give it the Hammer! New ARM & HAMMER Masterbrand Campaign
Slide 83: The recession is looming
$396 Additional amount spent by the average U.S. household per month for the same goods versus a year ago The recession is looming. 53% Financial issues are sapping have had to make different people’s spirits, leaving them choices due to a lack of money feeling overwhelmed, anxious, and exhausted. 9
Slide 84: They feel powerless
They feel : a| powerless.
Slide 85: An open window for reconsideration
21% Are reusing products more It’s leading to an open 22% Are buying more products in bulk window for reconsideration. People are reconsidering brands 37% Are shopping different stores that were once on autopilot — Are shopping all in the name of finding maximum 46% different brands value in limited
Slide 86: ARM & HAMMER is made for this moment
ARM & HAMMER is made for this moment. The hardworking brand that’s packed with power, priced to be accessible to all, and eager to help.
Slide 87: Slide 87
Slide 88: Building Desire and Demand with Consumers: Our 360 Plan
Building Desire and Demand with Consumers: Our 360 Plan NATIONAL TV & DIGITAL VIDEO INFLUENCER & BRANDED SOCIAL eRETAIL PR CHURCH & DWIGHT ANALYST DAY 2023 88
Slide 89: Digital Acceleration
SURABHI POKHRIYAL CHIEF DIGITAL GROWTH OFFICER Digital Acceleration
Slide 90: Digital Acceleration is a Strategic Priority
Digital Acceleration is a Strategic Priority VISUAL 70% of ALL purchases 81% of US consumers are Online, the digital shelf will be ‘digitally omnichannel shoppers changes by the minute! influenced’ by 2027 SOURCE: Forrester, WARC, Profitero CHURCH & DWIGHT ANALYST DAY 2023 90
Slide 91: To Meet The Consumer Where They Are
To Meet The Consumer Where They Are… Building authentic Omni-Channel & relationships Seamless CHURCH & DWIGHT ANALYST DAY 2023 91
Slide 92: We Continue To Grow Online
We Continue To Grow Online Percentage of Net Sales 16% 15% 8% 7% 7% 5% 2% 2016 2017 2018 2019 2020 2021 2022 CHURCH & DWIGHT ANALYST DAY 2023 92
Slide 93: Continued eCommerce growth
Continued eCommerce growth ~16%* of sales Continued post COVID Momentum & Year on Year Growth *Excludes last milers, scan and go etc.
Slide 94: We Have a Digital-First Ambition
We Have a Digital- First Ambition with a… Commerce BUILD AUTHENTIC Excellence in Future Proof RELATIONSHIPS Mindset (Digital) Media our Talent Action Insight Data CHURCH & DWIGHT ANALYST DAY 2023 94
Slide 95: Commerce Mindset to Excel Across all Channels
Commerce Mindset to Excel Across all Channels IN-STORE ONLINE ✓ Eye-level ✓ Short form video ✓ Easily reachable ✓ Strong product & lifestyle images ✓ Adjacency ✓ Compelling descriptions ✓ Relevant keywords CHURCH & DWIGHT ANALYST DAY 2023 95
Slide 96: Personalization Drives Efficiency and Efficacy of Media
Personalization Drives Efficiency and Efficacy of Media The right media, with the right messaging, for the right hair type BUILDStraight AUTHENTIC Hair Curly Hair RELATIONSHIPS PERSONALIZATION DRIVES REAL RESULTS! Consumer engagements +125% | Purchase Intent +222% | #1 Dry Shampoo brand | Record Mar
Slide 97: Preparing For Future-Ready Shopper Behaviors
And Preparing For Future-Ready Shopper Behaviors SOCIAL COMMERCE SOCIAL COMMERCE IN CHINA IN USA 60,000 bottles sold in 28MM live one 5-minute live stream views stream event (cross –portfolio) CHURCH & DWIGHT ANALYST DAY 2023 97
Slide 98: Excellence in Digital Media
Excellence in Digital Media Right Content for the Right Vehicles YESTERDAY TODAY FY 2023 Digital ~70% media spend as % of total PRINT STORE TV VIDEO* SOCIAL INFLUENCERS RETAIL MEDIA AUDIO A few assets per campaign Dozens of assets per campaign *Video includes streaming/OTT CHURCH & DWIGHT ANALYST DA
Slide 99: Digital Acceleration is Fueled By People
Digital Acceleration is Fueled By People Digital Upskilling Best of breed partners & agencies Actionable analytics CHURCH & DWIGHT ANALYST DAY 2023 99
Slide 100: Laying The Foundation for Future Growth
Laying The Foundation for Future Growth Consumer Intelligence Leaning Into Commercial Team & Analytics Digitally Savvy Brands DIGITAL A Social Listening Ratings + Reviews CHURCH & DWIGHT ANALYST DAY 2023 100
Slide 101: International & Specialty Products
MIKE READ PRESIDENT CONSUMER INTERNATIONAL AND SPECIALTY PRODUCTS International & Specialty Products
Slide 102: International Story
International Story
Slide 103: International Organic Sales Evergreen Target
International Organic Sales Evergreen Target: +6% 2% United States 3% 6% International 5% Specialty Products CHURCH & DWIGHT ANALYST DAY 2023 103
Slide 104: International Today: Sales By GMG + Subsidiaries
International Today: Sales By GMG + Subsidiaries 28% Canada INTERNATIONAL 2022 Net Sales: ~$900M 35% Global Markets 22% Europe Group 8% 7% Australia Mexico CHURCH & DWIGHT ANALYST DAY 2023 104
Slide 105: Historical Organic Performance vs. Evergreen Target
Historical Organic Performance vs. Evergreen Target 10.0% 9.2% 8.6% Evergreen 8.1% 7.8% 7.8% Model: 6.0% 5.0% 3.3% 2.8% Orders & Demand Supply Fill Rates China Lockdowns 2014 2015 2016 2017 2018 2019 2020 2021 2022 Organic sales growth is a non-GAAP measure. Refer to the Appendix for a reconciliatio
Slide 106: 2022 Organic Growth of 2.8%
2022 Organic Growth of 2.8% Despite supply challenges and Russia sales suspension, the Subsidiaries and 4 of 5 GMG regions posted positive growth ~4% Intermittent Covid lockdowns and water-flosser contraction Organic sales is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most
Slide 107: Brands Consumers Love That Travel The Globe
Brands Consumers Love That Travel The Globe U.S. Power Brand International OTC & Acquisition Expansion and Personal Care Acceleration Leveraging Innovation Portfolio CHURCH & DWIGHT ANALYST DAY 2023 107
Slide 108: Geographic Expansion: International Runway Ahead
Geographic Expansion….International Runway Ahead % of % of % of International U.S. Domestic International Sales Sales Sales Top 10 CPG Company 41% 59% AVG% Church & Dwight 82% 18% CHURCH & DWIGHT ANALYST DAY 2023 108
Slide 109: Key Investments For Growth
Key Investments For Growth eCommerce & Direct eCommerce & Digital Pricing & Revenue Selling Capability in China Capability Acceleration Growth Management Local Manufacturing and 2023 Officially Opened India & Infrastructure Expansion in Asia Middle East Region in March/22 CHURCH & DWIGHT ANALYST DAY
Slide 110: Committed To International Organic Growth
Committed To International Organic Growth • Long international runway for existing brands • Leverage newly acquired brands • Global Markets Group fueled by Emerging Markets • Strategic investments in Resources & Capabilities CHURCH & DWIGHT ANALYST DAY 2023 110
Slide 111: Specialty Products
Specialty Products
Slide 112: SPD Organic Sales Evergreen Target
SPD Organic Sales Evergreen Target: 5% 2% Domestic 3% 6% International 5% Specialty Products CHURCH & DWIGHT ANALYST DAY 2023 112
Slide 113: Specialty Products Division
Specialty Products Division SPD 2022 Net Sales: $350M 69% +3.7% vs 2021 Animal Nutrition 31% Specialty Chemicals CHURCH & DWIGHT ANALYST DAY 2023 113
Slide 114: Animal Productivity: Pre-Biotics, Pro-Biotics, & Food Processing Safety
Animal Productivity: Pre-Biotics, Pro-Biotics, & Food Processing Safety CHURCH & DWIGHT ANALYST DAY 2023 114
Slide 115: Animal Productivity: Growing International Presence
Animal Productivity: Growing International Presence % INTERNATIONAL SALES 12% <6% 2015 2022 CHURCH & DWIGHT ANALYST DAY 2023 115
Slide 116: SPD is Becoming Less Cyclical
SPD is Becoming Less Cyclical 20% 10% 0% -10% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CHURCH & DWIGHT ANALYST DAY 2023 116
Slide 117: Positioned For Organic Growth
Positioned For Organic Growth • Trusted brand • Aligned with consumer trends • Diversified to multiple species • Global growth runway CHURCH & DWIGHT ANALYST DAY 2023 117
Slide 118: How We Run the Company
How We Run the Company
Slide 119: Diversified Portfolio
Diversified Portfolio FABRIC CARE HOME HEALTH & HAIR & SKIN PERSONAL WATERPIK INTERNATIONAL CARE WELL-BEING CARE CARE CHURCH & DWIGHT ANALYST DAY 2023 119
Slide 120: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Brands consumers Long history of Highly productive We strive to be Good shareholder love around the being a friend to people in a place asset light returns beco
Slide 121: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Highly productive Asset Light Good shareholder people in a place returns become where people great shareholder matter returns CHURCH & DWIGHT ANALYST DAY 2023 1
Slide 122: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Brands consumers Long history of Highly productive We strive to be Good shareholder love around the being a friend to people in a place asset light returns beco
Slide 123: Church & Dwight Heritage
Church & Dwight Heritage 1888 1907 1970s 2017 2018 2021 Company Company Sole sponsor Partnering 100% of Commitment introduces institutes the of first Earth with the global to Science pro- use of Day. Arbor Day electricity Based environmental recycled Foundation demand Targets wall charts paperboard
Slide 124: Environmental Goals
Environmental Goals AIR WATER SOLID WASTE 100% carbon neutral 10% reduction of via offsets by 2025 water use annually** 75% recycling rate Committed to 1.5 C o science-based targets over the next 10 years for scope 1 and 2* o * Well below 2 C for scope 3 ** Normalized CHURCH & DWIGHT ANALYST DAY 202
Slide 125: ESG Recognition
ESG Recognition CHURCH & DWIGHT ANALYST DAY 2023 125
Slide 126: Climate Is More Relevant Than Ever, Especially For Younger Consumers
Climate Is More Relevant Than Ever, Especially For Younger Consumers 67% top priority to ensure sustainable planet Datapoints shown for Gen Z Source: Pew Research Center, survey April 20-29, 2021; NCP survey, 2021 CHURCH & DWIGHT ANALYST DAY 2023 126
Slide 127: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Highly productive Asset Light Good shareholder people in a place returns become where people great shareholder matter returns CHURCH & DWIGHT ANALYST DAY 2023 1
Slide 128: Industry Leading Revenue Per Employee
Industry Leading Revenue Per Employee $1,020 Revenue per Employee (in ‘000s) CHD CLOROX PG ENERGIZER COLGATE RECKITT NEWELL EDGEWELL KIMBERLY Source: Most recent 10K filings CHURCH & DWIGHT ANALYST DAY 2023 128
Slide 129: Simple Compensation Structure
Simple Compensation Structure 1. Bonuses are tied 100% to Gross business results. Net Revenue Margin Expansion 2. Equity compensation is 100% stock options. 3. Management is required to be heavily invested in Cash From EPS company stock. Operations CHURCH & DWIGHT ANALYST DAY 2023 129
Slide 130: All Employees Focus On Gross Margin
All Church & Dwight Employees Focus On Gross Margin Gross margin is 25% of all employees’ a n n u a l b o n u s . CHURCH & DWIGHT ANALYST DAY 2023 130
Slide 131: Key Gross Margin Growth Drivers
Key Gross Margin Growth Drivers Good to Supply Great Cost Chain Optimization Optimization Acquisition New Synergies Products CHURCH & DWIGHT ANALYST DAY 2023 131
Slide 132: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Highly productive Asset Light Good shareholder people in a place returns become where people great shareholder matter returns CHURCH & DWIGHT ANALYST DAY 2023 1
Slide 133: Minimal Capital Investment
Minimal Capital Investment Capital Expenditures as a % of Sales 5.4% 4.4% 3.3% 3.0% 2.8% 2.5% 2.5% 2.3% 2.1% 2.1% 2.0% 2.0% 1.8% 1.7% 1.4% 1.4% 1.2% $135 $64 $77 $75 $67 $71 $62 $50 $45 $60 $74 $99 $119 $179 $250 $180 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024E
Slide 134: We Have Five Operating Principles
We Have Five Operating Principles 1 2 3 4 5 Leverage Friend of the Leverage Leverage Leverage Brands Environment People Assets Acquisitions Highly productive Asset Light Good shareholder people in a place returns become where people great shareholder matter returns CHURCH & DWIGHT ANALYST DAY 2023 1
Slide 135: Long History of Growth Through Acquisitions
Long History of Growth Through Acquisitions Net Sales $ Billions $5.4 $1.5 2004 2005 2006 2008 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note: Trojan, Nair and First Response acquired in two parts – 2001 and 2004. CHURCH & DWIGHT ANALYST DAY 2023 135
Slide 136: We Have Clear Acquisition Criteria
We Have Clear Acquisition Criteria Primarily #1 High growth and Asset Leverage C&D Deliver or #2 share high margin that light manufacturing, sustainable brands are fast moving logistics and competitive consumable purchasing advantage brands CHURCH & DWIGHT ANALYST DAY 2023 136
Slide 137: 14 Power Brands Today, 20 Tomorrow
14 Power Brands Today, 20 Tomorrow $6.0 Net Sales $5.5 $ Billions 14 $5.0 13 12 $4.5 $4.0 11 $3.5 $3.0 10 9 $2.5 8 $2.0 7 6 $1.5 $1.0 5 $0.5 1 $0.0 1846 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note: Trojan, Nair and
Slide 138: A Look Ahead to 2023 – Strong Fundamentals
A Look AHEAD to 2023 – Strong Fundamentals 1 Top line strength including organic sales growth and solid contribution from recent acquisitions. 2 Meaningful gross margin expansion. 3 New product pipeline providing consumers with exciting new offerings. 4 Advertising investment to strengthen the long-
Slide 139: Slide 139
Slide 140: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Church & Dwight Co., Inc.’s Reconciliation of Non-GAAP Measures: The following pages provide definitions of the non-GAAP measures used in this presentation and reconciliations of these non- GAAP measures to the most directly comparable GAAP measures. These non-GAA
Slide 141: Reconciliation of Non-GAAP Measures: Organic Sales Growth
RECONCILIATION OF NON-GAAP MEASURES ORGANIC SALES GROWTH The presentation provides information regarding organic sales growth, namely net sales growth excluding the effect of acquisitions, divestitures and foreign exchange rate changes, from year-over-year comparisons. Management believes that the p
Slide 142: Reported & Adjusted Non-GAAP Reconciliations
REPORTED & ADJUSTED NON-GAAP RECONCILIATIONS For the year ending December 31, 2022 2021 2000 2019 Adjusted SG&A Reconciliation SG&A - Reported 20.8% 11.7% 12.1% 14.4% Brazil Charge 0.0% 0.0% 0.0% -0.2% Flawless Earnout Adjustment 0.0% 1.9% 1.9% -0.2% Flawless I ntangible Assets I mpairment -7.7% 0.0
Slide 143: Reconciliation of Non-GAAP Measures: Earnings Per Share
RECONCILIATION OF NON-GAAP MEASURES EARNINGS PER SHARE This presentation discloses reported EPS excluding the following, namely, earnings per share calculated in accordance with GAAP adjusted to exclude significant one-time items that are not indicative of the Company’s period-to-period performance.
Slide 144: Reported & Adjusted Non-GAAP Reconciliations
REPORTED & ADJUSTED NON-GAAP RECONCILIATIONS For the year ending December 31, 2022 2021 2020 2019 2018 2017 2016 Adjusted EPS Reconciliation EPS - Reported $ 1.68 $ 3.32 $ 3.12 $ 2.44 $ 2.27 $ 2.90 $ 1.75 Pension Settlement Charge $ - $ - $ - $ - $ - $ 0.12 $ - Brazil Charge $ - $ - $ - $ 0.03 $ - $
Slide 145: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Free Cash Flow: Free cash flow (a non-GAAP measure) is defined as cash from operating activities (a GAAP measure) less capital expenditures (a GAAP measure). Management views free cash flow as an important measure because it is one factor in determining the amount
Slide 146: Reconciliation of Non-GAAP Measures: Total Debt to Bank EBITDA
RECONCILIATION OF NON-GAAP MEASURES TOTAL DEBT TO BANK EBITDA Total Debt to Bank EBITDA is a ratio used in our debt agreements. Bank EBITDA (a non-GAAP measure) is a form of adjusted EBITDA, and represents earnings from Income (a GAAP measure), excluding interest income, interest expense, and before
Slide 147: Reconciliation of Non-GAAP Measures: Total Debt to Bank EBITDA, Continued
RECONCILIATION OF NON-GAAP MEASURES TOTAL DEBT TO BANK EBITDA, Continued Total Debt to Bank EBITDA is a ratio used in our debt agreements. Bank EBITDA (a non-GAAP measure) is a form of adjusted EBITDA, and represents earnings from Income (a GAAP measure), excluding interest income, interest expense,
Slide 148: Reconciliation of Non-GAAP Measures (Q4'22)
RECONCILIATION OF NON-GAAP MEASURES (Q4’22) CHURCH & DWIGHT ANALYST DAY 2023 148