Slide 1: CAGNY 2021
CAGNY 2021
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; gross margin changes; trade and marketing spending; marketing expense as a percentage of net sales; sufficiency of cash flows from operations; e
Slide 3: Who We Are
01 Who We Are Matt Farrell, Chairman and 3 Chief Executive Officer
Slide 4: Deliver Outstanding Returns to Our Shareholders
DELIVER OUTSTANDING RETURNS TO OUR SHAREHOLDERS 15 YEAR: 10 YEAR: 5 YEAR: 3 YEAR: 2020: 24.2% 19.5% 17.2% 21.9% 25.5% 4
Slide 5: We Have an Evergreen Business Model
WE HAVE AN EVERGREEN BUSINESS MODEL 3% Organic Sales Growth 8% EPS Growth 5
Slide 6: Over Ten Years of Solid Organic Sales Growth
OVER TEN YEARS OF SOLID ORGANIC SALES GROWTH 4.1% organic sales average 10.0% 9.6% 9.0% 8.0% 7.0% 6.0% Evergreen 5.0% Model: 4.0% 3.0% 3.0% 2.0% 1.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 6
Slide 7: Consistent Strong Adjusted EPS Growth
CONSISTENT STRONG ADJUSTED EPS GROWTH 11.4% adjusted EPS growth average 18.0% 16.0% 14.6% 14.0% Evergreen 12.0% Model: 10.0% 8.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 7
Slide 8: Organic Sales – Sources
ORGANIC SALES – SOURCES 2% United States 3% 6% International 5% Specialty Products 8
Slide 9: Power Brands
LE fi hd Orajel ae eto waterpik: FINISHING TOUCH* FLAWLESS® ZICAM. = 13 POWER BRANDS
Slide 10: These Brands Drive Our Results
THESE 13 BRANDS DRIVE OUR RESULTS more than 80% of sales & profits are represented by these 13 POWER BRANDS 10
Slide 11: Our Portfolio Is Balanced & Diversified
OUR PORTFOLIO IS BALANCED & DIVERSIFIED A well-balanced portfolio of household and personal care products. Household: 46% Specialty Products: Personal Care: 48% 6% 11
Slide 12: Diversified Product Portfolio
DIVERSIFIED PRODUCT PORTFOLIO Our Unique Product Portfolio Has Both Value and Premium Products Premium: 58% Value: 42% 12
Slide 13: Long International Runway
LONG INTERNATIONAL RUNWAY U.S. Consumer International Consumer 77% 17% Specialty Products 6%
Slide 14: Our Advantage: Nimble Organizational Structure
OUR ADVANTAGE: NIMBLE ORGANIZATIONAL STRUCTURE quick decision easy ability to adapt making communication 14
Slide 15: Long History of Growth Through Acquisitions
LONG HISTORY OF GROWTH THROUGH ACQUISITIONS Net Sales (Billions) $4.9 $1.5 2004 2005 2006 2008 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 Note: Trojan, Nair and First Response acquired in two parts – 2001 and 2004. 15
Slide 16: Acquired 12 of Our 13 Power Brands Since 2001
ACQUIRED 12 OF OUR 13 POWER BRANDS SINCE 2001 Acquired 2001 Acquired 2001 Acquired 2001 Acquired 2001 Acquired 2005 Acquired 2006 #1 EXTREME VALUE #2 BATTERY LAUNDRY POWERED #1 LAUNDRY #1 CONDOM DETERGENT #1 PREGNANCY KIT #1 DEPILATORY TOOTHBRUSH ADDITIVE Acquired 2008 Acquired 2011 Acquired 2012 Ac
Slide 17: We Are Growing Online
WE ARE GROWING ONLINE PERCENTAGE OF NET SALES 13% 8% 7% 5% 2% 1% 2015 2016 2017 2018 2019 2020 17
Slide 18: Low Exposure to Private Label
LOW EXPOSURE TO PRIVATE LABEL Weighted Average Private Label Share of our Categories 20% Private Label Consistently ~12% 10% 0% 2016 2017 2018 2019 2020 Source: Nielsen Total U.S. AOC 18
Slide 19: Private Label Shares
PRIVATE LABEL SHARES 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% 10% 5% 5% 0% 0% 0% ORAJEL EQUIVALENT CLUMPING CAT LITTER 30% 20% 15% 20% 10% 10% 5% 0% 0% Source: Nielsen Total U.S. AOC / 2012
Slide 20: U.S. Consumer Business
02 U.S. Consumer Business Britta Bomhard, EVP and Chief Marketing Officer
Slide 21: US Organic Sales Evergreen Target: +2%
US ORGANIC SALES EVERGREEN TARGET: +2% 2% United States 3% 6% International 5% Specialty Products 21
Slide 22: 2021 Key US Growth Drivers
2021 KEY US GROWTH DRIVERS Vitamin growth continues as gummy conversion accelerates As dental offices get back to normal, Waterpik growth continues Flawless growth from new products, influencers and better store foot traffic Core brands level out from Covid extremes Brand equity strength and media e
Slide 23: We Are in the Right Categories
WE ARE IN THE RIGHT CATEGORIES (NIELSEN) 2016 2017 2018 2019 2020 Clumping Litter Power Flossing Dry Shampoo Toothache Gummy VMS Toothpaste Baking Soda Battery Toothbrush Laundry Hair Growth Pregnancy Test Kits Stain Fighters Condoms Depilatories Carpet Deodorizers Women’s Electric Grooming Adult Co
Slide 24: 2020 Category Growth Rates
2020 CATEGORY GROWTH RATES Gummy Vitamins 58.1% Baking Soda 18.4% Carpet Deodorizers 12.2% Adult Cold Shortening 12.0% Toothache 11.4% Pregnancy Test Kits 9.4% Laundry 5.5% Toothpaste 3.3% Depilatories 2.4% Battery Toothbrush 2.4% Clumping Litter 2.2% Stain Fighters 2.1% Women's Electric Grooming -0
Slide 25: 2021 Category Expectations
2021 CATEGORY EXPECTATIONS MAINTAIN DECLINE FROM RECOVER FROM STEADY ELEVATED LEVELS COVID HIGHS COVID LOWS STATE Gummy Vitamins Pregnancy Test Kits Condoms Battery Toothbrush Laundry Additives Baking Soda Dry Shampoo Toothpaste Cat litter Toothache Hair Growth Laundry Depilatories Carpet Deodorizer
Slide 26: 2020 % Change in Household Penetration
2020 % CHANGE IN HOUSEHOLD PENETRATION Baking Soda Hair Growth Depilatories Stain Fighters Gummy VMS Clumping Litter Battery Toothbrush Toothache Carpet Deodorizers Laundry Toothpaste Power Flossing 11 out of 17 Women’s Electric Grooming Pregnancy Test Kits Dry Shampoo categories have higher Adult C
Slide 27: We Are Growing Households for Our Brands
WE ARE GROWING HOUSEHOLDS FOR OUR BRANDS ARM & HAMMER 8.6 million more households were buying in 2020 OxiClean: 2.4 million more household were buying in 2020 Vitafusion: In the second half alone, Vitafusion added 3 million more households Source: Nielsen and Company data 27
Slide 28: Gummy Vitamins
GUMMY VITAMINS CATEGORY 2020 dollar change YOY category 120% consumption: 100% 80% +58% 60% 40% 20% 0% • immunity Mar Apr May Aug Jan Feb Sep Oct Nov Dec Jun Jul • stress Source: Nielsen Total U.S. AOC 28
Slide 29: Consumer Habit Survey: Vitamins
“The average time it takes a person to create a new habit is 66 days” “20% of consumers have started taking vitamins or supplements“ “57% of consumers now take vitamins daily” “33% of consumers plan to purchase more immune support supplements.” Source: Covid Behavior Study, Dec 2020
Slide 30: Adult Conversion to Gummies Has Accelerated
ADULT CONVERSION TO GUMMIES HAS ACCELERATED 2019 2020 82% 18% 77% 23% All Other Gummy All Other Gummy Source: Nielsen Total U.S. AOC 30
Slide 31: Power Flosser
POWER FLOSSER CATEGORY 2020 units by month category 120% 100% consumption: 80% 60% 40% • 1H down 20% 20% • 2H improving 0% Mar Apr May Aug Jan Feb Sep Oct Nov Dec Jun Jul -20% -40% -60% Source: Nielsen Total U.S. AOC 31
Slide 32: Dental Flosser Sales Remained Stable
“Despite dental office closures, number of dental flossers sold in 2020 remained stable." "99% of dental offices are back open but 60% of dental offices have reduced traffic.” “Consumer confidence in dental practices will return.” Source: ADA Dec 2020, Covid Behavior Study, Dec 2020
Slide 33: Women's Electric Grooming
WOMEN’S ELECTRIC GROOMING CATEGORY 2020 dollar change YOY category 60% 50% consumption: 40% 30% 20% -0.4% 10% 0% -10% • beauty retailer closure -20% -30% • reduced foot traffic Mar Apr May Aug Jan Feb Sep Oct Nov Dec Jun Jul Source: Nielsen Total U.S. AOC 33
Slide 34: Laundry
LAUNDRY CATEGORY “Increase in number of loads due to desire to remove Covid related germs.” dollar change YOY 2020 category 40% consumption: 10% 8% +5.5% 6% 4% 2% 0% -2% • Covid concerns -4% -6% • more time to do -8% -10% laundry Mar Apr May Aug Jan Feb Sep Oct Nov Dec Jun Jul Source: Nielsen Total
Slide 35: Clumping Litter
CLUMPING LITTER CATEGORY “New cat ownership has climbed steadily with cat litter household penetration up 6% versus pre-Covid time period.” dollar change YOY 2020 category 25% consumption: 20% 15% +2.2% 10% 5% 0% • huge ecommerce -5% growth not reflected -10% (underrepresented in Nielsen -15% Mar Ap
Slide 36: Dry Shampoo
DRY SHAMPOO CATEGORY “As consumer mobility returns, dry shampoo usage will increase.” dollar change YOY 2020 category 20% consumption: 15% 10% -4.0% 5% 0% -5% -10% -15% • beauty retail store -20% closures -25% -30% -35% • decreased usage Mar Apr May Aug Jan Feb Sep Oct Nov Dec Jun Jul occasions Sour
Slide 37: Condom
CONDOM CATEGORY “As consumer mobility returns, condom usage will increase.” dollar change YOY 2020 category 15% consumption: 10% 5% -6.0% 0% -5% -10% • fewer ‘hookups’ -15% -20% • 40% drop in singles -25% going out on dates Mar Apr May Aug Jan Feb Nov Dec Jun Jul Sep Oct Source: Nielsen Total U.S. A
Slide 38: Consistent Innovation
03 Consistent Innovation Steve Cugine, EVP of GNPI
Slide 39: Consumer Insight: Germs in Laundry
CONSUMER INSIGHT: 79% of consumers want germs removed from their laundry. N=1003 Survey Completed May 2019
Slide 40: Kills 99.9% of Bacteria and Viruses
• Kills 99.9% of bacteria and viruses • Removes germs, odors & stains
Slide 41: Consumer Insight: Cleaning Household Surfaces
CONSUMER INSIGHT: Consumers have been hyper-focused on cleaning household surfaces.
Slide 42: Multi-Purpose Disinfectant Sprays
Multi-Purpose Disinfectant Sprays Kills COVID. Powerful cleaning and disinfecting without chlorine bleach Note: claims pending
Slide 43: Consumer Insight: Small Bathrooms
CONSUMER INSIGHT: Consumers with smaller bathrooms struggle with counter space and outlets.
Slide 44: The Same Amazing Clean, Unplugged!
The same amazing clean, unplugged! • 30% smaller than traditional plug-in models. • 90 seconds of water capacity • lithium-ion battery that lasts up to 4 weeks with a single charge
Slide 45: Consumer Insight: Condom Fit and Feel
CONSUMER INSIGHT: Men seek condoms that fit and feel the best.
Slide 46: A Selection of Our Best Condoms
A selection of our best condoms • personalized fit and feel • better feel = more usage
Slide 47: Consumer Insight: At-Home Beauty Routines
CONSUMER INSIGHT: Consumers are becoming more confident in doing beauty routines at home and are aware of the cost savings.
Slide 48: For Your At Home Solutions
CLEANSE For your “at home” solutions. SALON NAILS
Slide 49: Consumer Insight: Immune Support
CONSUMER INSIGHT: 33% of consumers plan to purchase more immune support supplements. Source: Covid Behavior Study, Dec 2020
Slide 50: Super Immune Support
Super Immune Support • Only gummy to deliver over 100% Daily Value of the top 3 immune ingredients: vitamin C, zinc and elderberry • Includes hot new ingredient: manuka honey • First vitafusion item in the cough and cold aisle!
Slide 51: History of Launching New VMS Items
HISTORY OF LAUNCHING NEW VMS ITEMS 5 new items 22 new items 12 new items 51
Slide 52: International Story
04 International Story Barry Bruno, EVP of International
Slide 53: International Net Sales
INTERNATIONAL NET SALES ~$828 MM 81% ~$535 MM United States 2014 2020 53
Slide 54: International Composition: Subsidiaries + GMG
INTERNATIONAL COMPOSITION: SUBSIDIARIES + GMG 54
Slide 55: International Composition: Subsidiaries + GMG
INTERNATIONAL COMPOSITION: SUBSIDIARIES + GMG 2020 INTERNATIONAL Global Markets Group Canada 29% NET SALES: 34% $828 million Mexico Europe 6% 23% Australia 8% 55
Slide 56: 2020 Sources of International Organic Growth
2020 SOURCES OF INTERNATIONAL ORGANIC GROWTH Subsidiary Markets: +4.8% Global Markets Group: +19.0% 56
Slide 57: 2021 Key Growth Drivers
2021 KEY GROWTH DRIVERS Subsidiary Markets: • Delivering outsized growth, more than double CPG competitor average growth, Approaching Scale Global Markets Group: • Emerging Markets serve as future growth driver Acquisitions: • Waterpik & Flawless still under-represented in International markets vs.
Slide 58: Fuel for Growth: Subsidiary Markets
FUEL FOR GROWTH: SUBSIDIARY MARKETS 1. Power Brand Expansion: Arm & Hammer, OxiClean, Trojan 2. Acquisition Acceleration: Waterpik & Flawless 3. Pricing 58
Slide 59: International Organic Sales Evergreen Target: 6%
INTERNATIONAL ORGANIC SALES EVERGREEN TARGET: 6% 2% United States 3% 6% International 5% Specialty Products 59
Slide 60: Committed to International Organic Growth
COMMITTED TO INTERNATIONAL ORGANIC GROWTH • Long int’l runway for existing U.S. power brands • Leverage newly acquired brands • Global Markets Group fueled by Emerging Markets • Strategic investments in Resources & Capabilities 60
Slide 61: Animal Productivity Story
05 Animal Productivity Story
Slide 62: SPD Organic Sales Evergreen Target: 5%
SPD ORGANIC SALES EVERGREEN TARGET: 5% 2% United States 3% 6% International 5% Specialty Products 62
Slide 63: Specialty Products Division
SPECIALTY PRODUCTS DIVISION Animal Non-Dairy 2020 SPD 18% NET SALES: Animal Dairy $300 million 49% Specialty Chemical 33% 63
Slide 64: Nutritional Supplements
FARM-TO-FORK SOLUTIONS TO HELP IMPROVE PRODUCTIVITY NUTRITIONAL SUPPLEMENTS 64
Slide 65: The Cyclical Dairy Industry Drives SPD Organic Revenue
THE CYCLICAL DAIRY INDUSTRY DRIVES SPD ORGANIC REVENUE Organic Sales 30% 22.6% 20% 11.5% 10% 6.0% 0.4% 0% -10% 2011 2014 2017 2020 65
Slide 66: Acquisitions Created a More Balanced Business
ACQUISITIONS CREATED A MORE BALANCED BUSINESS Non-dairy sales expected to grow approximately 10% in 2021. % OF NON-DAIRY SALES 30% <1.0% 2015 2021 66
Slide 67: Positioned for Organic Growth
POSITIONED FOR ORGANIC GROWTH • Trusted brand • Aligned with consumers’ trend • Multiple species • Global growth 67
Slide 68: How We Run the Company
06 How We Run the Company
Slide 69: We Have Five Operating Principles
WE HAVE FIVE OPERATING PRINCIPLES Brands Consumers Love 1 Leverage Brands 2 Friend of the Environment 3 Leverage People Highly productive people in a place where people matter 4 Leverage Assets Asset Light 5 Leverage Acquisitions GOOD shareholder returns become GREAT shareholder returns 69
Slide 70: Brands Consumers Love
BRANDS CONSUMERS LOVE Brands Consumers Love 70
Slide 71: Friend of the Environment
FRIEND OF THE ENVIRONMENT Company institutes the use of recycled paperboard to package household products. Company introduces Sole sponsor of first pro-environmental Earth Day. wall charts & trading cards as product Launches first non- promotion. polluting, phosphate- free laundry detergent. 71
Slide 72: Friend of the Environment
FRIEND OF THE ENVIRONMENT Partnering with the Arbor Day Foundation to plant millions of trees in the Mississippi River Valley. 50% of global 100% of global electricity demand electricity demand supplied by offset by green renewable energy energy. sources. 72
Slide 73: Environmental Goals
ENVIRONMENTAL GOALS Water: to reduce water and/or wastewater by 25% by 2022* Solid waste: to increase solid waste recycling rate to 75% by the end of 2021. Air: to achieve 100% carbon neutral status for all global operations by end of 2025. * using 2016 as a baseline. 73
Slide 74: ESG Recognition
ESG RECOGNITION 2020 NATIONAL TOP 100 74
Slide 75: Highly Productive People in a Place Where People Matter
HIGHLY PRODUCTIVE PEOPLE IN A PLACE WHERE PEOPLE MATTER Revenue per Employee $958 (in ‘000s) $761 $717 $465 $461 $458 $402 $336 $324 CHD CLOROX PG ENERGIZER KIMBERLY COLGATE RECKITT EDGEWELL NEWELL Source: Most recent 10K filings 75
Slide 76: 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 76
Slide 77: 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 . 77
Slide 78: Asset Light
ASSET LIGHT 2.5% Capital Expenditures as a % of Sales 2.0% 2.1% 2.0% 1.8% 1.5% 1.7% 1.5% 1.4% 1.0% 1.2% 0.5% 0.0% 2014 2015 2016 2017 2018 2019 2020 Outlook as of July 31, 2020 78
Slide 79: Strong M&A Platform
07 Strong M&A Platform
Slide 80: We Have Five Operating Principles
WE HAVE FIVE OPERATING PRINCIPLES Brands Consumers Love 1 Leverage Brands 2 Friend of the Environment 3 Leverage People Highly productive people in a place where people matter 4 Leverage Assets Asset Light 5 Leverage Acquisitions GOOD shareholder returns become GREAT shareholder returns 80
Slide 81: Long History of Growth Through Acquisitions
LONG HISTORY OF GROWTH THROUGH ACQUISITIONS Net Sales (Billions) $4.9 $1.5 2004 2005 2006 2008 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 Note: Trojan, Nair and First Response acquired in two parts – 2001 and 2004. 81
Slide 82: We Have Clear Acquisition Criteria
WE HAVE CLEAR ACQUISITION CRITERIA Primarily #1 Higher growth, Asset Light Leverage CHD Deliver or #2 share higher margin manufacturing, sustainable brands brands logistics and competitive purchasing advantage 82
Slide 83: Zicam: #1 Zinc Supplement in the United States
#1 zinc supplement in the United States in the Adult cold shortening category. 83
Slide 84: 13 Power Brands Today, 20 Tomorrow
13 POWER BRANDS TODAY, 20 TOMORROW Net Sales (Billions) $5.0 13 $4.5 12 $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 2001 2005 2006 2008 2011 2012 2017 2019 2020… Note: Trojan, Nair and First Response acquired in two parts – 2001 and 2004. 84
Slide 85: Financials
08 Financials Rick Dierker EVP and Chief Financial Officer
Slide 86: We Have an Evergreen Business Model
WE HAVE AN EVERGREEN BUSINESS MODEL 3% Organic Sales Growth 8% EPS Growth 86
Slide 87: Evergreen Model
EVERGREEN MODEL TSR Model Organic Net Sales Growth +3.0% Gross Margin +25 bps Marketing FLAT SG&A -25 bps Operating Margin ∆ +50 bps EPS Growth 8%
Slide 88: Full Year 2020 Highlights
FULL YEAR 2020 HIGHLIGHTS Domestic 10.7% International 8.6% Organic Sales Growth +9.6% SPD 0.4% Gross Margin 45.2%, -30 bps Marketing % 12.1%, +30 bps Adjusted SG&A 14.1%, -10 bps Adjusted EPS +14.6% to $2.83 Cash from Operations $990MM FCF Conversion 125% Organic sales, adjusted SG&A and adjusted E
Slide 89: 2021: +6-8% EPS Growth
2021: +6-8% EPS Growth 2021 Outlook Reported Sales Growth ~4.5% Domestic +2% Organic Sales Growth ~3.0% International +6% SPD +5% Gross Margin +50 bps Marketing -30 bps Adjusted SG&A -20 bps Adjusted Operating Profit Margin +100 bps Effective Tax Rate ~21-22% Adjusted EPS Growth +6-8% Cash From Oper
Slide 90: Organic Sales – 10 Year Trend
ORGANIC SALES – 10 YEAR TREND 10.0% 9.0% 8.0% 7.0% 10-year 6.0% average: 5.0% 4.1% 4.0% 3.0% 2.0% 1.0% 0.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Outlook as of February 16, 2021. 90
Slide 91: Focus on Adjusted Gross Margin
FOCUS ON ADJUSTED GROSS MARGIN +50 bps 45.8% 45.5% ~45.7% 45.2% 44.4% 2017 2018 2019 2020 2021E Note: Percentages are adjusted gross margin, a non-GAAP measure. See appendix for adjustments to gross margin presented in accordance with GAAP. Normalized gross margin and excludes prior year Flawless 91
Slide 92: Gross Margin Expansion in 2021
GROSS MARGIN EXPANSION IN 2021 2020 2021 Price/Volume/Mix +150 bps +80 bps Inflation, Covid (240) bps (130) bps Productivity Programs +140 bps +100 bps Tariffs (50) bps (40) bps Acquisition +10 bps +40 bps Flawless Accounting (40) bps - Gross Margin Change (30) bps +50 bps 92
Slide 93: Gross Margin 2021
GROSS MARGIN 2021 First Half Gross Margin Impacted By: +150 bps • More normal promotional activity • Higher Waterpik tariffs • Covid costs +50 bps • Higher commodity costs Second Half Gross Margin Impacted By: • Lower Covid costs -50 bps • Tariff remediation 1H 2H FY21E • Improved promotional effici
Slide 94: Marketing Spend Target: ~11% - ~12%
MARKETING SPEND TARGET: ~11% - ~12% 5-year average: 12.0% 12.1% 11.7% 11.8% ~11.8% ~11.8% 2017 2018 2019 2020 2021E 94
Slide 95: SG&A Leverage
“SG&A” LEVERAGE -20 bps 13.6% 14.2% 14.1% ~13.9% 13.3% 2017 2018 2019 2020 2021E Note: Adjusted SG&A is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measures. 95
Slide 96: SG&A Leverage Ex Acquisition Amortization
“SG&A” LEVERAGE EX ACQUISITION AMORTIZATION “FLATTISH” 11.6% 11.8% 11.6% 11.6% ~11.0% 2017 2018 2019 2020 2021E Note: Adjusted SG&A is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measures. 96
Slide 97: Consistent Strong Adjusted EPS Growth
CONSISTENT STRONG ADJUSTED EPS GROWTH ~$3.00 - ~$3.06 $2.83 $2.47 +6-8% $2.27 14.6% $1.94 8.8% 17.0% 9.6% 2017 2018 2019 2020 2021E Note: Adjusted EPS growth is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most comparable GAAP measures. Excludes Waterpik. 97
Slide 98: EPS 2021
EPS 2021 First Half EPS Impacted By: ~20% • More normal promotional activity • Higher Waterpik tariffs • Covid costs • Higher Commodity Costs +6-8% Second Half EPS Impacted By: • Return to historical marketing levels • Improved promotional efficiency ~(5%) • Lower Covid costs 1H 2H FY21E • Tariff re
Slide 99: Best in Class FCF Conversion
“BEST IN CLASS” FCF CONVERSION 10-Year Average: 122% 129% 131% 128% 126% 126% 125% 123% 116% 112% 108% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sources: Nasdaq Actual and Consensus 99
Slide 100: Cash Conversion Cycle
CASH CONVERSION CYCLE TIGHT CONTROL OF WORKING CAPITAL DRIVES CCC IMPROVEMENT 52 40 32 34 36 32 27 21 18 22 21 18 16 days 16 13 days excluding 8 7 5 Waterpik & Flawless 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Outlook as of February 16, 2021. 100
Slide 101: Strong Balance Sheet
STRONG BALANCE SHEET TOTAL DEBT/BANK EBITDA 2.6x 2.2x 1.6x 1.5x 1.7x 1.4x 1.9x 1.2x 1.4x 1.4x 1.3x CREDIT RATING 0.6x A3/BBB+ 0.5x 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Note: Total debt/EBITA is a non-GAAP measure. Refer to the Appendix for a reconciliation to the most co
Slide 102: Significant Financial Capacity $4.2B
SIGNIFICANT FINANCIAL CAPACITY as of December 31, 2020 (in $millions) Cash & Cash $185 Equivalents on Hand Acquisition Power: Leverage Capacity $4,000 $4.2B • 2020 TTM Bank EBITDA = $1,295M Current $2,165 • Leverage capacity to 3.75x EBITDA Outstanding Debt • Example: Acquisition EBITDA multiple of
Slide 103: 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 103
Slide 104: Minimal Capital Investment
MINIMAL CAPITAL INVESTMENT Capital Expenditures as a % of Sales 5.4% Evergreen 3.5% Model: 2.5% 2.8% 2.5% 2.0% 2.1% 2.1% 2.0% 1.8% 1.7% 1.4% 1.5% 1.2% $135 $64 $77 $75 $67 $71 $62 $50 $45 $60 $74 $99 $180 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E Outlook as of February 16, 20
Slide 105: Ensuring a Steady Supply for Our Categories
ENSURING A STEADY SUPPLY FOR OUR CATEGORIES 2020 LLD Unit Dose Baking Soda Cleaners VMS 2021- 2022 LLD Litter Baking Soda VMS Technology Capacity 105
Slide 106: 5.2% Dividend Increase in 2021
5.2% DIVIDEND INCREASE IN 2021 $1.01 $0.96 $0.91 120 $0.87 +5.2% +5.5% $0.76 +14.5% +4.6% +7.0% consecutive years of dividends +119% +35% 2017 2018 2019 2020 2021 106
Slide 107: Slide 107
Slide 108: Reconciliations
Reconciliations www.churchdwight.com 108
Slide 109: 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 110: Reconciliation of Non-GAAP Measures
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
Slide 111: Total Company Organic Sales Reconciliation
TOTAL COMPANY ORGANIC SALES RECONCILIATION Acquisitions & Discontinued System Calendar Shipping Year Reported FX Divestitures Operations Upgrade / Other Terms Organic 2020 12.3% 0.1% -2.8% 0.0% 0.0% 0.0% 0.0% 9.6% 2019 5.1% 0.5% -1.2% 0.0% 0.0% 0.0% 0.0% 4.4% 2018 9.8% 0.0% -5.5% 0.0% 0.0% 0.0% 0.0%
Slide 112: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Adjusted Gross Profit Margin This presentation discloses the Company’s Gross Profit Margin. Adjusted Gross Profit Margin , as used in this presentation, excludes significant one-time items that are not indicative of the Company’s period-to-period performance. We b
Slide 113: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Adjusted SG&A: This presentation discloses the Company’s SG&A expenses as a percent of net sales. Adjusted SG&A, as used in this presentation, is defined as selling, general and administrative expenses excluding significant one-time items that are not indicative o
Slide 114: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Adjusted Operating Profit Margin: The presentation discloses Operating Profit margin (a GAAP measure) and Adjusted Operating Profit Margin (a non-GAAP measure) which excludes significant one-time items that are not indicative of the Company's period-to-period perf
Slide 115: Reported & Adjusted Non-GAAP Reconciliations
REPORTED & ADJUSTED NON-GAAP RECONCILIATIONS For the year ending December 31, 2020 2019 2018 2017 Adjusted Gross Margin Reconciliation Gross margin Reported 45.2% 45.5% 44.4% 45.8% Brazil Charge 0.0% 0.0% 0.0% 0.0% Gross Margin - Adjusted (non-gaap) 45.2% 45.5% 44.4% 45.8% Adjusted SG&A Reconciliati
Slide 116: SG&A less Amortization Expense Reconciliation
Church & Dwight Co., Inc. and Subsidiaries SG&A less Amortization Expense Reconciliation 2020 2019 2018 2017 SG&A as % of Net Sales - Reported 12.1% 14.4% 13.6% 14.4% Pension Settlement Charge - - - -1.0% Brazil Charge - -0.2% - -0.1% Passport Earn-out Reversal - 0.2% Flawless Earn-out Adjustment 1.
Slide 117: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Adjusted EPS: 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. We b
Slide 118: Reported & Adjusted Non-GAAP Reconciliations
REPORTED & ADJUSTED NON-GAAP RECONCILIATIONS For the year ending December 31, 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Adjusted EPS Reconciliation EPS - Reported $ 3.12 $ 2.44 $ 2.27 $ 2.90 $ 1.75 $ 1.54 $ 1.51 $ 1.40 $ 1.23 $ 1.06 $ 0.94 $ 0.85 Restructuring Charges $ - $ - $ - $
Slide 119: 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 120: Reconciliation of Non-GAAP Measures
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 befor
Slide 121: Debt to Bank EBITDA Reconciliation
DEBT TO BANK EBITDA RECONCILIATION Church & Dwight Co., Inc ($ in millions) 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Total Debt as Presented (1) $ 2,163.9 $ 2,063.1 $ 2,107.1 $ 2,374.3 $ 1,120.1 $ 1,050.0 $ 1,086.6 $ 797.3 $ 895.6 $ 246.7 $ 333.3 Other Debt per Cov enant (2) 1.5 15.9 5
Slide 122: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Non-GAAP Reconciliations for Fourth Quarter of Fiscal Year 2020 122