Summary of Church & Dwight Co., Inc. Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales: Increased by 0.2%, exceeding expectations for a decline.

Organic Sales Growth: Rose by 5%, surpassing the 3% outlook.

Adjusted Gross Margin: Expanded by 130 basis points to 46.4%.

Adjusted EPS: Reported at $0.95, a 4.4% increase year-over-year, above the $0.92 forecast.

Cash Flow from Operations: $174.8 million, with capital expenditures at $31.9 million.

2Strategic Updates and Business Highlights

The U.S. consumer business saw organic sales growth of 5.4%, driven by strong brands like TheraBreath, ARM & HAMMER, and OxiClean.

E-commerce sales accounted for approximately 24% of total consumer sales.

Church & Dwight achieved the highest distribution points gained in the consumer packaged goods (CPG) sector.

Continued focus on innovation, with new product launches expected to contribute significantly to organic growth.

The international segment reported organic sales growth of 3.7%, led by brands like TheraBreath and Hero, despite challenges in the Middle East.

3Forward Guidance and Outlook

Full-Year 2026 Outlook:

Organic sales growth expected to be approximately 3% to 4%.

Reported sales growth anticipated to decline by 1.5% to 0.5% due to strategic portfolio actions.

Gross margin expansion of about 100 basis points is expected.

Adjusted EPS growth projected at 5% to 8%.

Q2 Expectations: Anticipated reported sales decline of approximately 1% with organic sales growth of around 3%. Adjusted EPS expected at $0.88.

4Bad News, Challenges, or Points of Concern

Inflationary Pressures: The ongoing geopolitical situation in the Middle East is expected to create $25 million to $30 million in additional inflationary pressure on commodities and transportation costs.

OxiClean Performance: Experienced a decline in market share due to distribution losses, although trends improved throughout the quarter.

Toppik Sales: Consumption growth slowed compared to a strong prior year, raising concerns about sustaining double-digit growth moving forward.

Consumer Sentiment: Remains pressured due to inflation and high borrowing costs, which could impact future sales.

5Notable Q&A Insights

Management highlighted that distribution gains are a significant tailwind for future growth, with recent gains being about 10-11%.

The company plans to offset inflationary pressures primarily through productivity improvements rather than price increases, as consumer sentiment is currently weak.

Toppik is performing well in untracked channels like clubs and Amazon, but traditional beauty channels are lagging.

The company remains optimistic about M&A opportunities but did not provide specific details on potential targets. Overall, Church & Dwight reported a strong start to 2026, with solid execution and strategic initiatives driving growth, despite facing inflationary pressures and challenges in certain product segments.