Church & Dwight Company, Inc. · NYSE:CHD
Church & Dwight — Oppenheimer 13th Annual Consumer Conference (June 2013)
132 slides from Church & Dwight's conference presentation, Jun 26, 2013
Slide 1: Oppenheimer 13th Annual Consumer Conference
> Oppenheimer 13" Annual Consumer Conference Presentation by: Jim Craigie, Chairman & CEO Rick Dierker, VP Corporate Finance June 26th, 2013
Slide 2: Safe Harbor Statement
afe Harbor Statement This presentation contains forward-looking statements relating, among others, to short- and long-term financial objectives, sales and earnings growth, margin improvement, marketing spending, new product introductions, the timing of new product launches, consumer demand for the C
Slide 3: Agenda
Agenda HA Sara rey, 1. Opening Remarks Jim Craigie 2. “Top 10" TSR Drivers Jim Craigie 3. Full Year 2012 Financials Rick Dierker 4. 2013 Outlook and Q1 Results Rick Dierker 5. Q&A Jim Craigie Rick Dierker
Slide 4: Excellent 2012 Results — Exited with Strong Momentum
Excellent 2012 Results — Exited with Strong Momentum Expect Continued Challenging Environment In 2013 Aggressive But Achievable 2013 Targets Outstanding Innovations and Distribution Gains Will Drive Organic Growth Recent Avid Acquisition Will Deliver Incremental EPS Great Cash Machine - Hungry For A
Slide 5: Agenda
Agenda a, 1. Opening Remarks Jim Craigie 2. “Top 10" TSR Drivers Jim Craigie 3. Full Year 2012 Financials Rick Dierker 4. 2013 Outlook and Q1 Results Rick Dierker 5. Q&A Jim Craigie Rick Dierker
Slide 6: Cumulative total shareholder return vs peers
300% 292% 31% 250% 200% 183% 58% 145% 150% 261% 117% 66% 100% 39% 80% 77% 74% 2% 125% 56% 46% 37% 50% 79% 78% 78% 31% 26% 30% 38% 25% 0% Reckitt Unilever Colgate Energizer Kimberly- Clorox P&G S&P 500 Benckiser Clark Source: Bloomberg of 12/31/2012. 6 (1) Represents cumulative $USD return to equity
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Slide 8: Great History, But What About The Future?
ia Great History, But What About The Future? 10 Reasons Why CHD Can Continue to Deliver Superior TSR Results!
Slide 9: Top 10 TSR Drivers: Recession Resistant Product Portfolio
“Top 10” TSR Drivers y 1. Recession Resistant Product Portfolio
Slide 10: Retailer Q1 comparable sales and consumer sentiment
Q1 Walmart 1.4% “We continue to monitor how four factors are affecting consumer Target 0.6% confidence – the overall state of the economy, fluctuating gas prices, payroll taxes, and government policy uncertainty. While Dollar 2.6% there are signs of a better economy, the improvement is not robust. C
Slide 11: Our Unique Product Portfolio Has Both Value and Premium Products
Our Unique Product Portfolio Has Both Value and Premium Products 60% Premium 11
Slide 12: Category Brands Price vs. Premium Brands
Category Brands Price vs. Premium Brands Laundry Detergent 50-65% lower than Tide Fabric Softener Sheets Over 50% lower than Bounce Toothpaste 50% Lower than Crest /Colgate Pregnancy Kits 30% Lower than ClearBlue Cleaners 45% lower than Scrubbing Bubbles 12
Slide 13: Premium, Mid, Value tier growth
+14.2% +1.5% -3.7% -8.4 Premium Mid Value Extreme Value Source: Nielsen Homescan Panel 52 W/E 6/28/08 vs. 52 Weeks Ending 12/22/12. 13
Slide 14: Liquid detergent share by price tier
% Liquid Detergent $ Share Priced Tiers 2009 2012 Premium 42.1% 42.0% Mid-Priced 28.4% 26.1% Value 25.9% 28.6% Private Label 3.6% 3.2% Source: C&D Custom Nielsen Scanning Database – Expanded AOC 52 wks end 12/22/12 and 2009. 14
Slide 15: Consumer trading down to value
60.0% 51% 50.0% 40.0% 32% 32% 30.0% 20.0% 10.0% 0.0% Value Mid Premium Nielsen Homescan Panel 52 Weeks ending December 2012. 15
Slide 16: CHD liquid detergent dollar share
14.9% 13.6% 12.3% 11.4% 10.1% 9.1% 2007 2008 2009 2010 2011 2012 Source: AC Nielsen, $ Share AOC 52 Weeks Ending December 2012 and For All Prior Years. 16
Slide 17: Dollar Share Liquid Detergent Manufacturers
Dollar Share Liquid Detergent Manufacturers 2009 2012 Change P&G 57.0% 56.6% (0.5 pts.) Sun 17.1% 14.6% (2.4 pts.) CHD 11.4% 14.9% +3.5 pts. Henkel 7.0% 6.7% (0.2 pts.) All Other 7.6% 7.3% (0.3 pts.) Source: C&D Custom Nielsen Scanning Database – Expanded AOC 52 Weeks Ending 12/22/12 and 2009. 17
Slide 18: Liquid detergent share by segment
Rem Phoenix Rem MF Phoenix MF Brands 0.7% 0.6% Brands 4.9% 3.0% P&G 8.1% P&G 9.1% Sun Sun 15.3% C&D 11.7% 44.1% C&D 52.0% Henkel 23.6% Henkel 27.0% Source: C&D Custom Nielsen Scanning Database – Expanded AOC 52 wks end 12/22/12 . 18
Slide 19: Liquid Laundry Washload Shares 2009 vs. 2012
Liquid Laundry Washload Shares 2009 vs. 2012 Share Point 2009 2012 Change Procter & Gamble 39.0 37.4 -1.6 Church & Dwight 20.4 25.8 +5.4 Sun Products 21.7 18.9 -2.8 Henkel 9.8 10.0 +0.2 Private Label 4.9 4.0 -0.9 All Other 4.1 3.9 -0.2 Source: C&D Custom Nielsen Scanning Database – Expanded AOC 52 w
Slide 20: Outlook: Expect Continued Strong Growth of CHD Laundry Brands
013 Outlook Expect Continued Strong Growth of CHD Laundry Brands in 2013!
Slide 21: Increased Distribution of CHD Laundry Brands
ncreased Distribution of CHD Laundry Brands _at Major North American Accounts in 2013 = Accounts increasing ARM & HAMMER and XTRA shelf space to keep up with increased consumer == a pm pm “yi fer reve ia 21
Slide 22: Which Major North American Accounts?
Which Major North American Accounts? @: Sorry — No Details For Competitive Reasons. 22
Slide 23: New Products
N ew Products Both ARM & HAMMER and XTRA Will Launch Great New Products to Drive Increased Sales! 23
Slide 24: Two New XTRA Products
Fiwo New XTRA Products = XTRA Provides Extreme Value To Consumers. = XTRA Laundry Detergent Achieved All-time High Share In Q4 2012 (6.4%). « XTRA is Now Bigger Than P&G’s Era (2.8%) And Cheer (1.7%) Brands Combined. Ss = XTRA is Now Bigger Than Vestar’s Sun (3.1%) a And Wisk (1.7%) Brands Combined.
Slide 25: New ARM & HAMMER Ultra Power
Ne MRQANTSGL ee ew ARM & HAMMER Ultra Power Everyone Wins With A&H Ultra Power 1. 2. Consumer: v Improved Value: 20% More Loads Free! ¥ Smaller Bottle for Easier Handling. v Environmentally Friendly - Less Waste. v¥ Consumer-controlled Dosage. Retailer: Lower Transportation Costs. Higher Shelf ROI.
Slide 26: Nielsen scanning data
Source: Nielsen Scanning Data, All Outlets through May 18, 2013 26
Slide 27: Nielsen share data
Source: Nielsen, FDMx WM, 52 W/E 6/30/07 vs. 52 W/E 6/27/09. 27
Slide 28: Top 10 TSR Drivers: Build Power Brands Share
“Top 10” TSR Drivers Gg y 2. Build Power Brands Share (
Slide 29: CHD Past Success Driven by Power Brands
CHD Past Success Driven by 8 Power Brands 29
Slide 30: Power Brands Represent Over 80% of CHD's Sales & Profits
lhe 6 Power Brands Represent Ove! 80% CHD’s Sales & Profits 30
Slide 31: Power brands: market positions
A&H A&H Products in 86% of US Households Trojan #1 Condom Brand XTRA #1 Extreme Value Laundry Detergent First Response #1 Pregnancy Kit Brand Nair #1 Depilatory Brand Spinbrush #1 Battery Powered Toothbrush Brand OxiClean #1 Laundry Additive Brand Orajel #1 Oral Care Pain Relief Brand 31
Slide 32: CHD's Consistent Share Growth Formula
iP CHD’s Consistent Share Growth Formula Innovative New Products mI os Increased Marketing Spending =a Increased Distribution | | Share Growth on Power Brands 32
Slide 33: 2013 New Products: Building on Successful Platforms
2013 New Products: Building on Successful Platforms G3 Sensitive cz SHIAN yee Ee cow ew ——— = fran Me ey! __ ho Se Freshening | with Flavor Burst
Slide 34: New Size of A&H Ultra Last Cat Litter
PNew Size of A&H “Ultra Last” Cat Litter ; « Every Granule is Coated EXTRA VALUE With Baking Soda for port Ete soo Long Lasting Freshness. = #1 New Cat Litter Launch L : Since 2005. ee ONSEN LASTING ] _ es, __sesrorsoane__Il « Larger Size Expansion in (@O.ssie. = : waking 2013. 34
Slide 35: NEW: Trojan Pure Ecstasy
_ _NEW: Trojan Pure Ecstasy =" Revolutionary Patent Design Feels Like Nothing’s There! = Ultrasmooth™ Lubricant for a Purely Smooth Experience. 35
Slide 36: NEW: Nair Spa Clay Total Care Trio
) NEW: Nair Spa Clay Total Care Trio ; = Individual Spa Clay Products Nair Were #1 Innovations in 2012. MEM srazicra * Building on 2012 Success SPA CLAY With Trio Products for Face | | and Body: \ i v Prepare Skin @ REMOVE © moisturize v Remove Hair ¥ Moisturize Skin 36
Slide 37: 2013 New Products: Expanding Into New White Space Categories
2013 New Products: Expanding Into New “White Space” Categories
Slide 38: Expand CHD Power Brands Into White Space Categories
Expand CHD Power Brands Into 4"“White Space” Categories Category Size «= Manual Toothbrush: $800 Million = Cold Sore: $200 Million = Dishwashing Additives: $140 Million » Sexual Lubricants: $250 Million 38
Slide 39: Manual Toothbrush: ARM & HAMMER Tooth Tunes
, Manual Toothbrush: ARM & HAMMER Tooth Tunes = Launched in Second Half of 2012. « Proprietary Technology Plays 2 Minutes of Top Rated Music. «" Encourages Kids To Brush Longer (Moms Like). = Achieved Top 3 Kid’s Manual Toothbrush in Q4 2012. 39
Slide 40: Big Toothtunes News
a “Big” Toothtunes News in aie wy ¥ Sold over 23MM Singles, Albums and DVDs. ¥ Named Billboard’s and MTV’s Top New Artist of 2012. ¥ 2013 World Tour Sold Out!! ¥ One Direction 3D Movie Premiers August 2013. 40
Slide 41: Cold Sore: Orajel Single Dose Treatment
Cold Sore: Orajel Single Dose Treatment = Launched in Second Half of 2012. = Patented Cold Sore Instant Pain Relief . Tech nology. FoR COLD SORES . ONE DAY, ONE DOSE, « Treatment Starts Healing HEALING BEGINS: SINGLE DOSE Patented Cold Sore Treatment With One Dose. Tz |) " Achieved Top 10 SKU = = St
Slide 42: Dishwashing Additives: OxiClean
Dishwashing Additives: OxiClean Dishwashing Booster REMOVES: 1 Cloudy Film 1 Food Particles CRYSTAL CLEAR GLASSES & DISHES! 15.6FLOZ (461ml) meiagwseea #1 New Product in Dishwashing Additives Category Launched in Second Half of 2012. Restores Cleaning Power of Dishwashing Brands Due to Government Ba
Slide 43: Big 2013 News: Trojan Entering Sexual Lubricant Category
Big 2013 News: Trojan ENTERING Sexual Lubricant Category 5 TROJAN LUBRICANTS = New “Crazy Sexy Feel” Line is wy ¥ a Strong Fit With Trojan aS Brand. = Expand the Category by Appealing to Younger Gen Y. Feel” Vrecuas « 3SKU’s: Arouses & Intensifies, Continuous Silkiness & Tingly Warmth. = Heavy Sampl
Slide 44: New Trojan Lubricants - Update
“New Trojan Lubricants - Update = Off to a strong start = Achieved 5-6% SOM in 3 months = First ever Trojan commercials allowed on Prime Time 44
Slide 45: Trojan goals: condoms, vibrations, lubricants
Condoms Vibrations Lubricants Grow to 66% Become Leading Premium Become Leading Premium Share of $500MM Brand in $300MM Brand in $250MM NA Market NA Market NA Market 45
Slide 46: 2012 Market Share
U.S. Canada Mexico Total NA 2012 Market Share $’s 76.1% 57.9% 20.7% 65.7% vs. YAG +0.5 pt. +4.6 pts. +0.4 pt. +0.9 pt. Source: Nielsen AOC Latest 52 Weeks Ending 12/22/12 and Prior Years. 46
Slide 47: Condom, lubricant and vibrator use by age
60 50 40 30 20 10 0 18-24 25-34 35-44 45-60 Condom Use Lubricant Use Vibrator Use Lubricants information from BASES I; to be confirmed with IU Study data. All data among women: Lubricant data from 2012 BASES I Lubricant Study, (n=375), past 6 month usage. Condom data from 2009 Indiana University (IU
Slide 48: Vibrating product range
Vibrating \_Rings _/ Finger/Mini \ Vibrators y, twister axe i : i Full Size S Vibrators yy, \ Vibrators ) 48
Slide 49: Source: 2008 IU Vibrator Study
Source: 2008 IUVibrator Study, 49
Slide 50: 2012: Sex Gaining Mainstream Acceptance
2012: Sex Gaining “Mainstream” Acceptence “Fifty Shades of Grey” #1 Best Seller for 25 Weeks ovie Planned for 2014 EL James 41 Mow York Times Beseselle EL James al Mow York Dimes Lestseller 50
Slide 51: Press coverage of free vibrator giveaways
N.Y. Post N.Y. Post August 9, 2012 August 10, 2012 FREE VIBRATORS ON AGAIN! OH, YES! FT City ste stops vibrator osm rates re Sy eh St om aera bole) City Hall OKs 51
Slide 52: Free Vibrator Giveaway in Cities Across America
2 Free Vibrator Giveaway in 15 Cities Across America = Drive Expanded Distribution in Traditional Retail Channels 52
Slide 53: CHD's Consistent Share Growth Formula
CHD’s Consistent Share Growth Formula Innovative New Products wi ae Increased Marketing Spending =a Increased Distribution | | Share Growth on Power Brands 53
Slide 54: Trade and marketing investments growth
+4% +8% +6% +23% 2009 2010 2011 2012 Includes Trade + Marketing Investments 54
Slide 55: CHD's Consistent Share Growth Formula
-CHD’s Consistent Share Growth Formula in Innovative New Products wi a. Increased Marketing Spending =a Increased Distribution eae | Share Growth on Power Brands 55
Slide 56: Change in All Channel Distribution
Change in All Channel Distribution 2012 Change 2009 - Index vs. 2009 - Index A&H Liquid Detergent 100 142 A&H Clumping Litter 100 143 Trojan 100 112 First Response 100 118 XTRA Liquid Detergent 100 123 Nair 100 104 Spinbrush 100 116 OxiClean 100 133 Source: Nielsen AOC 52 Weeks Ending 12/22/12 vs. 1
Slide 57: CHD's Consistent Share Growth Formula
-CHD’s Consistent Share Growth Formula Innovative New Products im Increased Marketing Spending wl 7 Increased Distribution | | Share Growth on Power Brands 57
Slide 58: Power brand share by year
2008 2009 2010 2011 2012 CHD CHD CHD CHD CHD A&H Liquid XTRA OxiClean First Response (PTK) Nair Trojan Spinbrush Orajel (Toothache) Source: Nielsen All Outlet YE 2007, 2008, 2009, 2010, 2011, 2012 All Outlet. 58
Slide 59: A&H liquid detergent sales and launches
Launched Unit Dose Sensitive Skin + Scent Launched Power Gels Increased Media $682 A&H + A&H+ OxiClean OxiClean HE plus Incr $569 Launch Media 1st Detergent + $504 Softener in Value Full Year $405 Print Support $354 $301 $276 $240 198.545 180.798 59
Slide 60: Source: Nielsen
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Nielsen 60
Slide 61: Co-branded A&H Plus OxiClean
*Co-Branded : A&H Plus OxiClean includes Kaboom, Detergent and Carpet Source: 2006-2008 Nielsen Channel Views; 2009-12 Total U.S.AOC 61
Slide 62: First Response pregnancy dollar share
“6 Days Sooner” “6 Days” Claim & Claim Economic Empathy More Media Programs “Moment” Campaign Pregnancy $ Share 30.1% 30.2% 28.6% Went on TV Increased Media 26.2% 25.4% 24.3% 22.7% 21.5% 19.1% 15.5% 13.6% 12.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 We Tell You Only Test Tells Y
Slide 63: CHD Power Brands Had Great Year in 2012
“CHD Power Brands Had Great Year in 2012 and Exited With Momentum L] 4 ré "aoago 6° = 6 of 8 Power Brands Grew Annual Share in 2012 to. Record Levels. ‘ ~~ » Exited 2012 With Great Momentum: Y 7 of 8 Grew Share in Q4 vs. YAG. Y 4of 8 Hit “All-time” Record Quarterly Shares in Q4. 63
Slide 64: Top 10 TSR Drivers: Ferociously Defend Our Brands
“Top 10” TSR Drivers y 3. Ferociously Defend Our Brands fj
Slide 65: Ferociously Defend our Brands
Ferociously Defend our Brands 65
Slide 66: Stain Fighters Share
Stain Fighters Share 40.7% 27.0% 2006 2009 Nielsen FDMxWM, Dollar Share of Stain Fighters. 66
Slide 67: Defending through innovation: new forms, products, claims
We Did This Through Innovation New Forms, New Products, and Claims... Increased Pretreat Support “See It Work Before Your Eyes” 2008 Premium Pretreat Line Extension “The Best in Stain Removal” Increased Liquid Support “Cleaner, Whiter, Brighter” 2009-10 Versatility Emphasis “Gets Tough Stains Out Al
Slide 68: Annual Marketing Index
500 Annual Marketing Index 450 400 350 300 250 500 200 150 100 50 0 100 2006 2009 Source: First Response Actual Yearly Marketing Spending. 68
Slide 69: Competitor attacked category with major launch
In Mid-2009, the #1 Laundry Brand Attacked the Category With Major New Product Launch ide yide ide 4 rele / =—s = 7 69
Slide 70: Competitor product claims
More Power Clings to Seeks out In Every Drop! and breaks stains in your wash! down stains! 70
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Slide 72: Fabric Care Reported Media Spending
100 60 36 35 24 2 Fabric Care Reported Media Spending, Kantar Strategy 52 Weeks Ending October 2012. 72
Slide 73: Market Share
Market Share 2009 2012 Change OxiClean 40.7% 41.3% +0.6 P&G 11.5% 13.1% +1.6 Reckitt 13.9% 9.2% -4.7 SC Johnson 20.2% 20.8% +0.6 Source: Nielsen Scanning Database – AOC 52-week 12/22/12 and for 2009. 73
Slide 74: Top 10 TSR Drivers: Driving International Growth
“Top 10” TSR Drivers y 4. Driving International Growth @
Slide 75: CHD 2001 — 2012 Geographic Mix
CHD 2001 — 2012 Geographic Mix Transformation CHD has transformed from almost totally a U.S. business to more of a global player. 2001 2012 INTERNATIONAL - 2% INTERNATIONAL - 18% United States United States 98% 82% 75
Slide 76: International sales mix by subsidiary
5% 4% 9% 37% 12% 15% 18% * Includes Exports From These Subsidiaries to Over 100 Countries. 76
Slide 77: 2007 vs. 2012 CAGR by country
2007 vs. 2012 CAGR Australia +13% England +9% Brazil +7% Canada +6% Mexico +4% France (1)% 77
Slide 78: International growth strategy
1. Continue to Grow International Power Brands 2. Expanding Corporate Power Brands Canada: A&H Laundry Detergent, Cat Litter & Toothtunes Mexico: A&H Laundry Detergent UK: A&H Toothpaste & Toothtunes Australia: A&H Toothpaste, Baking Soda & Spinbrush 3. Building Scale Through Acquisitions
Slide 79: Top 10 TSR Drivers: Expanding Gross Margin
“Top 10” TSR Drivers y 5. Expanding Gross Margin (
Slide 80: CHD 2001 — 2012 Gross Margin
CHD 2001 — 2012 Gross Margin Expanded 1,510 bps 39.1% 2001 2007 44.2% 2012 80
Slide 81: Gross Margin vs peers
Gross Margin 2007 2012 Change CHD 39.1% 44.2% +510 bps Colgate 56.2% 58.1% +190 bps Kimberly-Clark 31.2% 32.0% +80 bps Clorox* 43.1% 42.1% (100 bps) P&G* 52.3% 49.3% (300 bps) Source: SEC Filings *June 30 Fiscal Year End 81
Slide 82: Gross margin actions
Actions Good to Great Cost Optimization Program Supply Chain Restructuring Acquisition Synergies Price / Mix Examples Reformulation, Reduce Packaging, Reduce SKU’s, Laundry Compaction, Hedges New Laundry & Cat Litter Plants - York, PA (2008) - Victorville, CA (2012) Acquire Higher Margin Brands And
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Slide 84: Clear Acquisition Guidelines
We Have Clear Acquisition Guidelines e to Ensure Accretive Acquisitions LZ m Primarily #1 or #2 Share Brands m Higher Growth, Higher Margin Brands = Asset Light m Leverage CHD Capital Base in Manufacturing, Logistics and Purchasing = Deliver Sustainable Competitive Advantage 84
Slide 85: Church & Dwight Revenue Development – Past Years
CHURCH & DWIGHT REVENUE DEVELOPMENT – PAST 12 YEARS $MM CARTER- SIMPLY CARTER- WALLACE ORAJEL SALINE AVID WALLACE (50%) OXICLEAN (50%) FELINE PINE USA SPINBRUSH BATISTE DETERGENTS $2,922 $2,422 $2,521 $2,589 $2,749 $2,221 $1,946 $1,737 $1,462 $960 $1,047 $1,057 $691 2000 2001 2002 2003 2004 2005 200
Slide 86: Acquired brands and year acquired
YEAR ACQUIRED Arm & Hammer $1 Billion Brand --- Trojan #1 Condom Brand 2001 XTRA #1 Extreme Value Laundry Detergent 2001 First Response #1 Pregnancy Kit Brand 2001 Nair #1 Depilatory Brand 2001 Spinbrush #1 Battery Powered Toothbrush Brand 2005 OxiClean #1 Laundry Additive Brand 2006 Orajel #1 Oral
Slide 87: Pre-acquisition share vs 2012 share
Year Pre-Acquisition 2012 Acquired Share Share Trojan 2001 68.9% 76.1% XTRA 2001 5.1% 6.2% First Response 2001 12.0% 30.2% Nair 2001 22.8% 43.3% Spinbrush 2005 30.1% 41.6% OxiClean 2006 26.1% 41.3% Nielsen All Outlet Scanning Share for 2012. Nielsen FDMx Share for 2005 and Later. IRI FDMx Share prio
Slide 88: M&A — Market is Active, Debt is Still Cheap, However...
M&A — Market is Active, Debt is Still Cheap, However... " Sellers are reluctant given lower returns in fixed income market. = Buyers are cautious given expectations of high multiples for entire portfolio (no pure plays). 88
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Slide 90: Free cash flow conversion of net income
$MM 2002 2004 2006 2008 * 2010 * 2012 ** 111.9% NI 183.1% NI 100% NI 143.9% NI 131.0% NI 118.1% NI • Excludes 2008 York Plant And 2010 Pension Related Funding. ** 2012 FCF Excludes a $36 Million Federal Tax Payment That Was Deferred From December 2012 to January 2013. 90
Slide 91: Free cash flow conversion vs peers
Year Average 2007 - 2011 CHD 2012 118.0% Church & Dwight 118.5% Clorox 114.3% Energizer 114.1% Estee Lauder 111.4% Heinz 105.9% Colgate 99.4% P&G 96.1% Brown-Forman 92.6% Constellation 92.5% Consumer Staples Average 90.3% Monster 90.2% General Mills 89.5% Coca-Cola Enterprises 89.1% Kellogg 88.9% Kr
Slide 92: Superior Overhead Management
8. Superior Overhead Management
Slide 93: Revenue, employees and EPS 2004 vs 2012
2004 2012 Change Revenue $1.5B $2.9B 93% # Employees 3,800 4,350 15% EPS $0.68 $2.45 260% 93
Slide 94: Revenue per employee vs peers
Revenue Revenue Per Employees ($MM) Employee Church & Dwight 4,350 $2,922 $671,000 Clorox 8,100 $5,231 $645,800 Procter & Gamble 129,000 $82,600 $640,300 Colgate 39,200 $15,564 $397,000 Kimberly Clark 57,000 $19,746 $346,400 Energizer 15,000 $4,646 $309,700 Avon 42,000 $10,863 $258,600 Source: SEC F
Slide 95: Management Team Walks the Walk on Tight Overhead Controls
anagement Team “Walks the Walk” on Tight Overhead Controls 95
Slide 96: New Health Care Plan; New Information System
New Health Care Plan New Information System 96
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Slide 98: Leadership Expertise and Longevity
| elieve in Leadership Expertise and Longevity _ Versus Cross-Functional Experiences and Management Turnover i _ m= The Average Tenure of Our 8 Strategic Business Unit Leaders (SBUs) in Their Current Role is 5 Years. m The Average Experience of Our SBU Leaders in The CPG Industry is 23 Years. 98
Slide 99: Power brands exceeded category growth; outstanding execution
8 Power Brands Exceeded Category Growth Rate 30 Out of 40 Times in Last 5 Years. Able to Minimize Headcount Growth. Outstanding Execution Across All Functions. Able to Absorb Acquisitions With Minimal Additional Headcount. Source: Nielsen All Outlet 2008-2012. 99
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Slide 101: Adjusted FCF
*Adjusted FCF Excludes a $36 Million Federal Tax Payment That Was Deferred From December 2012 To January 2013. 101
Slide 102: Delivered Outstanding Returns to Our Shareholders
F And Delivered Outstanding Returns Swe to Our Shareholders Vy —- EE .... ee — 10YEAR —— / TSRCAGR ™ as Ae a 19. ah oy
Slide 103: Driven by a Great Team of TSR Junkies
Driven by a Great Team of TSR Junkies
Slide 104: Bonuses Tied 100% to Business Results
Bonuses Tied 100% to Business Results: ¥ 25% Net Revenue ¥ 25% Gross Margin Expansion ¥ 25% EPS v 25% Cash Flow Equity Compensation is 100% Stock Options. Required to be Heavily Invested in Company Stock. 104
Slide 105: Top 10 TSR Drivers
op 10 TSR Drivers 1. Recession Resistant Product Portfolio 2. Build Power Brand Shares 3. Ferociously Defend Our Brands 4. Driving International Growth 5. Expanding Growth Margin 6. Proven Track Record on Acquisitions 7. “Best in Class” Free Cash Flow Conversion 8. Superior Overhead Management 9. Ex
Slide 106: Agenda
Agenda 1. Opening Remarks 2. “Top 10" TSR Drivers 3. Full Year 2012 Financials 4. 2013 Outlook and Q1 Results 5. Q&A Jim Craigie Jim Craigie Rick Dierker Rick Dierker Jim Craigie Rick Dierker 106
Slide 107: Guidance
Guidance Organic Sales +3-4% Gross Margin +25-50 bps Operating Margin +60-70 bps EPS Growth 8%-10% Dividend Yield 2.0% TSR 10%-12% 107
Slide 108: Adjusted EPS 2008-2012
$2.45 $2.21 $1.98 $1.74 $1.43 2008 2009 2010 2011 * 2012 * Adjusted EPS Excludes a Deferred Tax Valuation Allowance Charge of $0.09 From Q4 2011. 108
Slide 109: Organic sales growth 2008-2012
7% 5% 5% 4% 3% 2008 2009 2010 2011 2012 109
Slide 110: Gross margin excluding Avid
44.8% +30 bps 44.7% 44.5% 44.2% 44.2% x-Avid X-AVID 40.5% 2008 2009 2010 2011 2012 2012 110
Slide 111: Marketing spending as percent of sales
2012 Marketing Spending Remains in the 12% to 13% ma, ee . © 0% 1 13.1% 12.9% 12.2% oO 2008 2009 2010 2011 2012 111
Slide 112: 2012 Growth
2012 Growth * Market share is Nielsen 52-week 12/22/12 All-Outlet. 112
Slide 113: Free cash flow 2008-2012
FCF = Operating Cash - CAPEX $500.0 $413 $400.0 $375 $361 $339 $300.0 $289 $200.0 $100.0 $0.0 2008 2009 2010 2011 2012 Excludes New Plant, Abbott Settlement in 2009. Excludes Pension Settlement in 2010. Excludes a $36 million federal tax payment that was deferred from Dec 2012 to Jan 2013. 113
Slide 114: Free cash flow conversion
Conversion % = Free Cash Flow / 100% Net Income 2012 118% 2011 112% 2010 131% 2009 136% 2008 143% Excludes New Plant, Abbott Settlement in 2009. Excludes Pension Settlement in 2010. Excludes a $36 million federal tax payment that was deferred from Dec 2012 to Jan 2013. 114
Slide 115: Metric 2007-2012 excluding Avid
52 42 38 36 28 26* 2007 2008 2009 2010 2011 2012 *Excludes Avid in Q4 2012. 115
Slide 116: Q4 Avid $650M Acquisition
Q4 Avid $650M Acquisition 2008 2009 2010 2011 2012 116
Slide 117: Capital expenditures 2008-2012
5.4% 4.1% 2.5% 2.8% 2.6% $51 $85 $47 $50 $64 $77 $75 2008 2009 2010 2011 2012 117
Slide 118: Significant Financial Capacity
Significant Financial Capacity (in millions) Cash and Cash Equivalents on Hand $280 Acquisition Power $2.0B Leverage Capacity $1,750 Credit Rating Current Debt $850 BBB/Baa2 2012 EBITDA = $650M; Leverage capacity to 3.25x EBITDA Acquisition EBITDA multiple of As of Q1 2013 12x 118
Slide 119: Prioritized Uses of Free Cash Flow
P Prioritized Uses of Free Cash Flow (<3 2 As Soy 1. TSR-Accretive M&A. 2. New Product Development. 3. Capex For Organic Growth & G2G. 4. Return Of Cash To Shareholders. 5. Debt Reduction. 119
Slide 120: Dividends per share
$1.12 $0.96 $0.68 +17% $0.31 $0.23 +41% +119% +35% +35% 2009 2010 2011 2012 2013 120
Slide 121: Share repurchases and shares outstanding
(In Millions) $250 $80 $50 $0 $0 $0 2008 2009 2010 2011 2012 2013 Outstanding Shares: 142.2 141.4 121
Slide 122: Agenda
1. 2. 3. Opening Remarks “Top 10" TSR Drivers Full Year 2012 Financials 2013 Outlook and Q1 Results Q&A Jim Craigie Jim Craigie Rick Dierker Rick Dierker Jim Craigie Rick Dierker 122
Slide 123: EPS history 2001-2013
+14% $2.79 $2.45 $2.21 +11% $1.98 +12% $1.74 +14% $1.43 +22% $1.23 +16% $0.92 $0.83 +19% $0.67 $0.67 +13% +10% $0.54 +25% $0.46 +24% +16% +64% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 123
Slide 124: 2013 Guidance
2013 Guidance Organic Sales +3-4% Gross Margin +25-50 bps Operating Margin +60 bps EPS $2.79 (+14%) Dividend Yield 2.0% 124
Slide 125: First Quarter 2013
First Quarter 2013: 12.8% Total Company Reported Sales. 1 2.0% Total Company Organic Sales . Grew Market Share on 7 of 8 Power Brands Gross Margin up 110 Basis Points. Operating Margin up 100 Basis Points. EPS up 15.2% to $0.76. 2 Adjusted Free Cash Flow down 1% to $98MM. 1 The calcula
Slide 126: Agenda
Agenda 1. Opening Remarks Jim Craigie 2. “Top 10” TSR Drivers Jim Craigie 3. Full Year 2012 Financials Rick Dierker 4. 2013 Outlook and Q1 Results Rick Dierker 5. Q&A Jim Craigie Rick Dierker 126
Slide 127: Thank You
Thank You
Slide 128: Non-GAAP measures and reconciliations
The following pages address the non-GAAP measures used in this presentation and reconciliations of non-GAAP measures to the most directly comparable GAAP measures: Non-GAAP measures: Organic Sales Growth, Adjusted Gross Margin, Adjusted Selling, General and Administrative Expenses Adjusted Opera
Slide 129: Organic Sales Reconciliation
Organic Sales Reconciliation Acq Discontinued System Calendar Shipping Year Reported FX /Div Operations Upgrade Other Terms Organic 2012 6.3 0.8 -3.1 0.0 0.6 0.6 0.0 5.2 Q412 10.8 0.1 -9.8 0.0 1.1 2.2 0.0 4.4 Q312 3.5 1.2 -0.3 0.0 0.2 0.0 0.0 4.6 Q212 3.2 1.6 -1.1 0.0 0.0 0.0 0.0 3.7 Q112 7.5 0.3 -0
Slide 130: Reconciling Items 2007-2012
Reconciling Items 2007-2012 2012 2011 2010 2009 2008 2007 Net Sales NA NA 2,589.2 2,520.9 2,422.4 NA Rpt Gross Margin NA NA NA 43.7% 40.1% NA Adjustment NA NA NA -28.4 -10.2 NA Adj Gross Margin NA NA NA 44.8% 40.5% NA Rpt SG&A NA NA 374.8 NA NA Rpt Patent Settlement 20.0 Adjustment NA NA -24.3 -20.0
Slide 131: Reconciling Items Footnote 2008-2012
Reconciling Items Footnote 2008-2012 Reconciling Items by year 2012 –Cash flow excludes a $36 million federal tax payment that was deferred from Dec 2012 to Jan 2013 2011 - $12.8 million deferred tax valuation allowance 2010 - $24.3 million charge for settlement of the Company’s US pension benefit o
Slide 132: Reconciling Items Q4 2012 & Q4 2010
Reconciling Items Q4 2012 & Q4 2010 Q4 2012 Q4 2011 Q4 2010 Net Sales NA NA 656.9 Rpt SG&A NA NA 116.3 Adjustment NA NA -24.3 Adj SG&A 92.0 Reported Op Margin NA NA 12.2% Adj Op Margin 15.9% Rpt Taxes NA 54.2 NA Adjustment -12.8 Adj Taxes 41.4 Effective Tax Rate NA 45.9% Adjusted Tax Rate 35.1% Rpt
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