Church & Dwight Company, Inc. · NYSE:CHD
Church & Dwight — Shareholder Meeting (April 2021)
35 slides from Church & Dwight's shareholder meeting presentation, Apr 29, 2021
Slide 1: Annual Shareholders' Meeting 2021
ANNUAL SHAREHOLDERS’ MEETING 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: 2020 was another solid year. We have confidence in our future.
2020 was another solid year. We have confidence in our future. Evergreen Digitally Consistent model is savvy innovation healthy Steady US Sustainable High Strong 2021 growth ahead International Growth Rate Outlook 3
Slide 4: Church & Dwight: Who We Are
CHURCH & DWIGHT: Who We Are
Slide 5: We Started with ARM & HAMMER Baking Soda
We Started with ARM & HAMMER Baking Soda 5
Slide 6: We Are a $4.9 Billion Company
WE ARE A $4.9 BILLION COMPANY Fabric Care Health & Well-Being Home Care Personal Care Specialty Hair Care Waterpik 6
Slide 7: Power Brands
TROJAN ® Vu [Re nse: Nair spinbrush | 3 GB, EET gals - _ | POWER “iWin waterpik =| BRANDS FINISHING TOUCH* FLAWLESS® ZICAM.
Slide 8: These Brands Drive Our Results
THESE 13 BRANDS DRIVE OUR RESULTS more than 80% of sales & profits are represented by these 13 POWER BRANDS 8
Slide 9: 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 10: 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. 10
Slide 11: 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. 11
Slide 12: 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 12
Slide 13: How We Run the Company
How We Run the Company
Slide 14: 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% 14
Slide 15: Organic Sales Evergreen Model
ORGANIC SALES EVERGREEN MODEL Domestic 2.0% International 6.0% SPD 5.0% Total Organic Sales +3.0% 15
Slide 16: 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 16
Slide 17: 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 17
Slide 18: 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. 18
Slide 19: 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. 19
Slide 20: 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. 20
Slide 21: Earth Day 2020 – Making an Impact, Safely
EARTH DAY 2020 – MAKING AN IMPACT, SAFELY Each individual doing something small is doing something for the greater good of all. Over 20 thousand pine tree seedlings mailed to consumers’ homes Over 150 thousand wildflower seed cards sent to homes 21
Slide 22: ESG Recognition
ESG RECOGNITION 2020 NATIONAL TOP 100 22
Slide 23: Financials
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Slide 24: 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, adjusted EPS
Slide 25: First Quarter 2021 Highlights
FIRST QUARTER 2021 HIGHLIGHTS Domestic +5.1% International +3.2% Organic sales growth +4.9% SPD +6.0% Gross Margin 44.5%, -120 bps Marketing % 8.0%, -30 bps Adjusted SG&A 13.6%, +60 bps Adjusted EPS flat Cash from Operations $100MM Organic sales, adjusted SG&A and adjusted EPS are non-GAAP measures.
Slide 26: 2021 Headwinds
2021 HEADWINDS • Higher commodity costs • resin • surfactants • High transportation costs • Tariffs • Texas freeze
Slide 27: 2021 Outlook: +6-8% Adjusted EPS Growth
2021 OUTLOOK: +6-8% ADJUSTED EPS GROWTH 2021 OUTLOOK Reported Sales Growth +5-6% Organic Sales Growth +4-5% Gross Margin Flat Adjusted Operating Profit Margin +80 bps Effective Tax Rate ~22% Adjusted EPS Growth +6-8% Cash From Operations ~$1B Outlook as of April 29, 2021. Organic sales, gross margin
Slide 28: 5.2% Dividend Increase in 2021
5.2% DIVIDEND INCREASE IN 2021 $1.01 $0.96 $0.87 $0.91 120 +5.2% +5.5% $0.76 +14.5% +4.6% +7.0% consecutive years of dividends +119% +35% 2017 2018 2019 2020 2021 28
Slide 29: Reconciliations
Reconciliations www.churchdwight.com 29
Slide 30: Acquisition Accounting Impact
ACQUISITION ACCOUNTING IMPACT Organic Sales May-Jun Q3 Q4 May-Dec 2019 Reported Sales $8 $20 $26 $53 2019 Proforma Sales $28 $60 $43 $131 Organic Adjustment $20 $40 $17 $78 Gross Margin Q2 Q3 Q4 FY 2020 bps impact (30) bps (90) bps (30) bps (40) bps 30
Slide 31: 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-GAAP
Slide 32: 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 33: 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 34: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Adjusted Selling, General, and Administrative Expense (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 signi
Slide 35: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Non-GAAP Reconciliations for First Quarter of Fiscal Year 2021 Organic Sales Growth: Adjusted SG&A Reconciliation: Adjusted Diluted Earnings Per Share Reconciliation: 35