Church & Dwight Company, Inc. · NYSE:CHD
Church & Dwight — dbAccess Global Consumer Conference 2023
82 slides from Church & Dwight's conference presentation, Jun 8, 2023
Slide 1: Church & Dwight Co., Inc.
CHURCH & DWIGHT CO., INC. dbAccess Global Consumer Conference 2023
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 We Are
Who We Are 3
Slide 4: Historical Total Shareholder Return
Historical Total Shareholder Return 10 YEAR: 5 YEAR: 3 YEAR: 2022: 2023 YTD: 13.3% 11.4% 5.9% (20.4%) 16.4% 2023 YTD is through June 2, 2023 dbAccess Global Consumer Conference 2023 4
Slide 5: Evergreen Model
Evergreen Model Organic Sales +3% Gross Margin +25 bps Marketing FLAT SG&A -25 bps Operating Margin +50 bps EPS Growth +8% dbAccess Global Consumer Conference 2023 5
Slide 6: Reported Sales Growth: 10 Year History
Reported Sales Growth: 10 Year History 14.0% 12.0% 10.0% 10 Year 6% to 7% Average: 8.0% 6.3% 6.0% 4.0% 2.0% 0.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E dbAccess Global Consumer Conference 2023 6
Slide 7: Organic Sales Growth: 10 Year History
Organic Sales Growth: 10 Year History 10.0% 9.0% 8.0% 7.0% 6.0% 10 Year 3% to 4% Average: 5.0% 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 dire
Slide 8: Power Brands
FIRST RESPONSE VheraBreath POWER BRANDS
Slide 9: 14 Power Brands
more than 85% of sales & profits are represented by these 14 POWER BRANDS
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 dbAccess Global Consumer Conference 2023 10
Slide 11: Product Portfolio of Both Value and Premium Products
Product Portfolio of Both Value and Premium Products 40% 60% Value Premium dbAccess Global Consumer Conference 2023 11
Slide 12: 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. dbAccess Global Consumer Conference 2023 12
Slide 13: 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 14: 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 15: Financials
Financials
Slide 16: Evergreen Model
Evergreen Model Organic Sales +3% Gross Margin +25 bps Marketing FLAT SG&A -25 bps Operating Margin +50 bps EPS Growth +8% dbAccess Global Consumer Conference 2023 16
Slide 17: Outlook Progression
Outlook Progression FY OUTLOOK FY OUTLOOK (as of February 3) (as of April 27) Reported Sales Growth 5-7% 6-7% Organic Sales Growth 2-4% 3-4% Gross Margin +100 to +120 bps +120 bps Adjusted EPS 0-4% 2-4% Cash from Operations $925MM $950MM dbAccess Global Consumer Conference 2023 17
Slide 18: Organic Sales Growth: 10 Year History
Organic Sales Growth: 10 Year History 10.0% 9.0% 8.0% 7.0% 6.0% 10 Year Average: 5.0% 3% to 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 dire
Slide 19: 2023 Focus On Gross Margin
2023 Focus On Gross Margin 45.5% 45.2% 240 bps 44.4% +120 bps delta to 43.6% pre-COVID 43.1% levels 41.9% 2018 2019 2020 2021 2022 2023E dbAccess Global Consumer Conference 2023 19
Slide 20: 2023 Marketing Spend Target
2023 Marketing Spend Target 12.1% 11.7% 11.8% +50 bps 1 Full year marketing support on 11.1% improved product supply 10.5% 10.0% 2 10.5% of sales which includes $30M incremental marketing investment 2018 2019 2020 2021 2022 2023E dbAccess Global Consumer Conference 2023 20
Slide 21: Consistent Strong Adjusted EPS Growth
Consistent Strong Adjusted EPS Growth 2% 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. db
Slide 22: 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 dbAccess Global Consumer Conference 2023 22
Slide 23: Ensuring A Steady Supply For Our Categories
Ensuring A Steady Supply For Our Categories 2021 - 2023 LLD Litter Baking Soda VMS Technology Capacity Sustainability dbAccess Global Consumer Conference 2023 23
Slide 24: 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 25: Why We Are Winning
Why We Are Winning TROJAN
Slide 26: 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 dbAccess Global Consumer Conference 2023 26
Slide 27: A Balanced and Diversified Portfolio
A Balanced and Diversified Portfolio 6% SPD 46% Household 2022 48% Personal Care dbAccess Global Consumer Conference 2023 27
Slide 28: Low Private Label Exposure
Low Private Label Exposure Weighted Average Private Label Share of Our Categories 20% 18% Private Label 16% Consistently 14% ~12% 12% 10% 8% 6% 4% 2% 0% 2017 2018 2019 2020 2021 2022 Source: Nielsen Total U.S. AOC dbAccess Global Consumer Conference 2023 28
Slide 29: Private Label Exposure
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 MOUTHWASH 30% 20% 15% 15% 20% 10% 10% 10% 5% 5% 0% 0% 0% Source: Nielsen Total U.S. AOC, data through 12/25/22 dbAccess Global Consumer C
Slide 30: Fabric Care Trade Down – A&H Is Winning
Fabric Care Trade Down – A&H Is Winning Liquid Laundry Detergent - Dollar Share of Custom Sub Segment Change vs YA Total US - Multi Outlet 3.0 2.0 1.6 Value 1.0 0.2 0.0 -0.1 -1.0 -2.0 -2.3 Premium -3.0 -4.0 -5.0 Nov '21 Nov '22 Dec '21 Feb '22 Jul '22 Sep '22 Dec '22 Feb '23 Jan '22 Jun '22 Jan '23
Slide 31: A&H is Winning In Litter, Too
A&H is Winning In Litter, Too Dollar Sales Growth Trend vs. Category Unit Sales Growth Trend vs. Category 14.3% 1.3% 0.8% 0.3% 13.1% 12.7% 12.3% -2.2% L13W PE 5.14.23 L52W PE 5.14.23 L13W PE 5.14.23 L52W PE 5.14.23 Clumping Litter Arm & Hammer Clumping Litter Arm & Hammer dbAccess Global Consumer Co
Slide 32: Consistent Innovation
Consistent Innovation dbAccess Global Consumer Conference 2023 32
Slide 33: 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 dbAccess Global Consumer Conference 2023 33
Slide 34: Entering Larger Categories with Acquisitions
Category Size ($ Billions) $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Liquid Laundry Detergent $6.3 Toothpaste Gummy Vitamins $3.4 $3.1 Clumping Litter Unit Dose dbAccess Global Consumer Conference 2023 $2.2 $2.0 Mouthwash $1.7 Scent Boosters $1.2 Acne Treatments $0.8 Stain Fighters Battery Toothbrush Pr
Slide 35: Our Recent Acquisitions have Room to Run
Our Recent Acquisitions have Room to Run Acquired December 2021 • #5 most loved brand by Gen Z • New distribution +Waterpik Hygienist Detailing + International Expansion = = Big Growth Runway • 100% increase in distribution so far Source: Numerator dbAccess Global Consumer Conference 2023 35
Slide 36: Kids oral care rinses
• Builds healthy oral care habits among kids ages 6-12 • Dentist-formulated rinses are free of dyes • Made with certified organic flavors dbAccess Global Consumer Conference 2023 36
Slide 37: Our Recent Acquisitions have Room to Run
Our Recent Acquisitions have Room to Run Acquired October 2022 • #1 most loved brand by Gen Z • New distribution + International Expansion = Big Growth Runway • 50% increase in distribution since acquisition Source: Numerator dbAccess Global Consumer Conference 2023 37
Slide 38: Micropoint XL for Blemishes
Micropoint XL for Blemishes • Targets early-stage blemish clusters • Features 1,385 dissolving Micropoints • Specially contoured to fit jawline, cheeks and chin
Slide 39: Digital Acceleration
Digital Acceleration
Slide 40: We Continue To Grow Online
We Continue To Grow Online Percentage of Net Sales 16%* 15% 13% 8% 7% 5% 2% 2016 2017 2018 2019 2020 2021 2022 *Excludes last milers, scan and go etc. dbAccess Global Consumer Conference 2023 40
Slide 41: Digital Acceleration is Fueled By People
Digital Acceleration is Fueled By People Digital Upskilling Best of breed partners & agencies Actionable analytics dbAccess Global Consumer Conference 2023 41
Slide 42: Laying The Foundation for Future Growth
Laying The Foundation for Future Growth Consumer Intelligence Leaning Into Commercial Team & Analytics Digitally Savvy Brands DIGITAL Social Listening Ratings + Reviews dbAccess Global Consumer Conference 2023 42
Slide 43: International Story
International Story
Slide 44: International Organic Sales
International Organic Sales Evergreen Target: +6% 2% United States 3% 6% International 5% Specialty Products dbAccess Global Consumer Conference 2023 44
Slide 45: International Today: Sales By GMG + Subsidiaries
International Today: Sales By GMG + Subsidiaries 28% INTERNATIONAL Canada 2022 Net Sales: ~$900M 35% Global Markets 22% Europe Group 8% 7% Australia Mexico dbAccess Global Consumer Conference 2023 45
Slide 46: 6 Subsidiaries & 5 Global Markets Group Offices
6 Subsidiaries & 5 Global Markets Group Offices dbAccess Global Consumer Conference 2023 46
Slide 47: Historical Organic Performance vs. Evergreen Target
Historical Organic Performance vs. Evergreen Target 10.0% 9.2% Evergreen 8.6% 8.1% 7.8% 7.8% Model: 6.0% 5.0% 3.3% 2.8% 2014 2015 2016 2017 2018 2019 2020 2021 2022 Orders & Demand Supply Fill Rates China Lockdowns Organic sales growth is a non-GAAP measure. Refer to the Appendix for a reconciliatio
Slide 48: International Quarterly Organic Growth
International Quarterly Organic Growth 11.6% Evergreen • All 6 Subsidiaries & 5 Global Target: Market Regions are growing 5-7% 6.0% • 2023 is back on track to meet the Evergreen target 0.3% Q1 22 Q1 23 FY 23 E dbAccess Global Consumer Conference 2023 48
Slide 49: 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 dbAccess Global Consumer Conference 2023 49
Slide 50: 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% dbAccess Global Consumer Conference 2023 50
Slide 51: 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 & Middle Infrastructure Expansion in Asia East Region in March 2022 dbAccess Global Consumer
Slide 52: Committed To International Organic Growth
Committed To International Organic Growth • Long international runway for existing brands • Leverage newly acquired brands • GMG fueled by Emerging Markets • Investments in Resources & Capabilities dbAccess Global Consumer Conference 2023 52
Slide 53: Specialty Products Division
Specialty Products Division
Slide 54: SPD Organic Sales
SPD Organic Sales Evergreen Target: 5% 2% Domestic 3% 6% International 5% Specialty Products dbAccess Global Consumer Conference 2023 54
Slide 55: Specialty Products Division
Specialty Products Division SPD 2022 Net Sales: $350M 69% +3.7% vs 2021 Animal Nutrition 31% Specialty Chemicals dbAccess Global Consumer Conference 2023 55
Slide 56: Animal Productivity: Pre-Biotics, Pro-Biotics, & Food Processing Safety
Animal Productivity: Pre-Biotics, Pro-Biotics, & Food Processing Safety dbAccess Global Consumer Conference 2023
Slide 57: Animal Productivity: Growing International Presence
Animal Productivity: Growing International Presence % INTERNATIONAL SALES 12% <6% 2015 2022 dbAccess Global Consumer Conference 2023 57
Slide 58: Positioned For Organic Growth
Positioned For Organic Growth • Trusted brand • Aligned with consumer trends • Diversified to multiple species • Global growth runway dbAccess Global Consumer Conference 2023 58
Slide 59: How We Run the Company
How We Run the Company
Slide 60: Diversified Portfolio
Diversified Portfolio FABRIC CARE HOME HEALTH & HAIR & SKIN PERSONAL WATERPIK INTERNATIONAL CARE WELL-BEING CARE CARE dbAccess Global Consumer Conference 2023 60
Slide 61: 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 62: 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 63: 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 64: 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 65: Environmental Goals
Environmental Goals AIR WATER SOLID WASTE 100% carbon neutral 10% reduction of 75% recycling rate via offsets by 2025 water use annually** 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 dbAccess Global Consumer Confer
Slide 66: Our ESG Scores Continue to Improve
Our ESG Scores Continue to Improve 2020 CCC B BB BBB A AA AAA 2021 CCC B BB BBB A AA AAA 2022 CCC B BB BBB A AA AAA dbAccess Global Consumer Conference 2023 66
Slide 67: 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 68: Industry Leading Revenue Per Employee
Industry Leading Revenue Per Employee $1,020 Revenue per Employee (in ‘000s) CHD CLOROX PG ENERGIZER COLGATE KIMBERLY RECKITT NEWELL EDGEWELL Source: Most recent 10K filings dbAccess Global Consumer Conference 2023 68
Slide 69: Simple Compensation Structure
Simple Compensation Structure Gross Net Margin • Bonuses are tied 100% to business Revenue Expansion results. Cash • Management is required to be heavily EPS From invested in company stock. Operations Strategic Initiatives dbAccess Global Consumer Conference 2023 69
Slide 70: All Church & Dwight Employees Focus On Gross Margin
All Church & Dwight Employees Focus On Gross Margin Gross margin is of all 20% employees’ annual bonus. dbAccess Global Consumer Conference 2023 70
Slide 71: Key Gross Margin Growth Drivers
Key Gross Margin Growth Drivers Good to Supply Great Cost Chain Optimization Optimization Acquisition New Synergies Products dbAccess Global Consumer Conference 2023 71
Slide 72: 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 73: 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 74: 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 75: 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. dbAccess Global Consumer Conference 2023 75
Slide 76: Slide 76
Slide 77: 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 78: 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 79: 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 80: 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 81: 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 82: 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
Church & Dwight — dbAccess Global Consumer Conference 2023 on 6ix