Church & Dwight's (NYSE:CHD) Q1 Earnings Results: Revenue In Line With Expectations
Household products company Church & Dwight (NYSE:CHD) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 5.1% year on year to $1.50 billion. It made a non-GAAP profit of $0.96 per share, improving from its profit of $0.85 per share in the same quarter last year.
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Church & Dwight (CHD) Q1 CY2024 Highlights:
- Revenue: $1.50 billion vs analyst estimates of $1.49 billion (small beat)
- EPS (non-GAAP): $0.96 vs analyst estimates of $0.87 (10.1% beat)
- EPS (non-GAAP) Guidance for Q2 CY2024 is $0.83 at the midpoint, below analyst estimates of $0.92
- Full year guidance for organic sales growth maintained (up 4-5% year on year), EPS (non-GAAP) raised slightly (to 8-9% year on year growth)
- Gross Margin (GAAP): 45.7%, up from 43.5% in the same quarter last year
- Free Cash Flow of $216.7 million, up 62.3% from the previous quarter
- Organic Revenue was up 5.2% year on year (beat)
- Sales Volumes were up 3.7% year on year (beat)
- Market Capitalization: $25.92 billion
Matthew Farrell, Chief Executive Officer, commented, “The Company is performing extremely well with all three divisions delivering strong growth. I want to thank our global employees for their great efforts each and every day. Our outstanding Q1 results reflect the strength of our brands, the early success of our new products, and our perennial focus on execution. Volume was the primary driver of organic growth, and we expect volume growth to continue for the rest of the year. Marketing as a percent of sales increased 150 bps driving strong consumption and share gains. Global online sales grew to 20.5% of total consumer sales in Q1, a dollar increase of 14.9% compared to Q1 2023. Finally, the combination of strong sales, margin expansion, and efficient working capital management resulted in strong cash flow generation in the first quarter, leading to over $1 billion of cash from operations expected in the full year outlook.
Best known for its Arm & Hammer baking soda, Church & Dwight (NYSE:CHD) is a household and personal care products company with a vast portfolio that spans laundry detergent to toothbrushes to hair removal creams.
Household Products
Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options. These trends can be double-edged swords that benefit companies who innovate quickly to take advantage of them and hurt companies that don't invest enough to meet consumers where they want to be with regards to trends.
Sales Growth
Church & Dwight is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 6.1% over the last three years was mediocre, but to its credit, consumers bought more of its products.
This quarter, Church & Dwight grew its revenue by 5.1% year on year, and its $1.50 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4.1% over the next 12 months, a deceleration from this quarter.
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Organic Revenue Growth
When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.
The demand for Church & Dwight's products has generally risen over the last two years but lagged behind the broader sector. On average, the company's organic sales have grown by 3.7% year on year.
In the latest quarter, Church & Dwight's organic sales rose 5.2% year on year. This growth was in line with the 5.7% year-on-year increase it posted 12 months ago.
Key Takeaways from Church & Dwight's Q1 Results
We were impressed that Church & Dwight beat analysts' organic revenue growth expectations this quarter. We were also glad its gross margin outperformed Wall Street's estimates. On the other hand, its earnings forecast for next quarter was underwhelming. Looking towards the full year, though, organic sales guidance was maintained and EPS was raised slightly. Overall, this quarter's results were mixed, but we certainly liked the topline performance that exceeded expectations. The stock is flat after reporting and currently trades at $105.95 per share.
So should you invest in Church & Dwight right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
