The operator introduces the Church & Dwight's Second Quarter 2024 Earnings Conference Call and reminds listeners of the company's forward-looking statements. CEO Matt Farrell reviews the company's Q2 results, which exceeded expectations with 3.9% reported sales growth and 4.7% organic sales growth. CFO Rick Dierker will provide more details later. The U.S. consumer business had 3.8% organic sales growth, driven by 3.3% volume growth, marking the fourth consecutive quarter of volume growth in the U.S.

Church & Dwight had the highest dollar consumption growth and five of their power brands gained market share in the quarter. Their success is attributed to innovation, which is evident in their new product launches. In the laundry detergent category, ARM & HAMMER liquid laundry detergent achieved an all-time high record share and two new products, ARM & HAMMER Deep Clean and ARM & HAMMER Power Sheets, have been well received by consumers. In the litter category, ARM & HAMMER litter grew consumption by 6%, which was double the category growth.

In Q2, ARM & HAMMER's new lightweight Hardball Clumping Litter has exceeded expectations and is expected to continue growing. However, the gummy vitamin business continues to decline, despite efforts to improve it through new packaging and marketing. BATISTE dry shampoo is seeing strong consumption growth and has launched new products to attract new users. THERABREATH mouthwash remains the number one alcohol-free brand and has recently entered the antiseptic segment with a new product.

The paragraph discusses the success of the company's launch into the antiseptics market, which has contributed to market share gains in the mouthwash category. The HERO brand continues to drive growth in the acne category and has become the number 1 brand with innovative solutions. Private label has seen notable share gains in gummy vitamins and litter, but ARM & HAMMER Litter continues to gain share. Consumption in the first half of the year was strong, but has slowed down in June and July, possibly due to consumers being more cautious with their spending.

The company has experienced strong growth in all three divisions, with a balanced portfolio of value and premium offerings well suited to changes in consumer buying patterns. International and Specialty Products showed significant organic growth, and the company is confident in achieving its evergreen growth target. Second quarter adjusted EPS was better than expected, primarily due to higher sales growth and gross margin expansion. The majority of the company's brands gained share, and both reported revenue and organic sales saw significant increases.

The company experienced strong organic growth driven by increased volume, resulting in a 320 basis point increase in gross margin. Marketing expenses were higher, but led to share gains. Adjusted SG&A also increased, primarily due to international R&D and costs related to an acquisition. Other expenses decreased and the effective tax rate was higher due to stock options exercised. Cash from operating activities was $499 million for the first six months, with a full year expectation of approximately $1.80 billion.

The company's capital expenditures for the first six months of the year increased by 13.4 million, and they expect to spend approximately 180 million for the full year as they complete expansion projects. They have adjusted their organic revenue outlook to approximately 4% due to moderated consumption growth and expect adjusted EPS to grow by 8-9%. The increase in SG&A and potential promotional activity in the second half may impact EPS. Gross margin is expected to expand by 100-110 basis points due to productivity and higher volume. Marketing expenses are expected to remain at approximately 11% of net sales.

Matt and Rick are discussing the promotional backdrop for their company's products. They note that liquid laundry detergent sold on deal decreased by 190 basis points year-over-year and 200 basis points sequentially. This was largely due to a large premium brand being down 900 basis points sequentially and 600 basis points year-over-year. In contrast, litter saw an increase in sold-on deal from Q1 to Q2, driven by one competitor. Overall, their company's brands had an all-time high share in liquid laundry and close to an all-time high in litter in Q2. Unit dose also saw an increase from 26% to 31% year-over-year.

The company experienced significant changes in various categories during the second quarter, with one brand in liquid laundry and one brand in litter causing a swing in numbers. However, the company does not believe there was any increase in promotions during this time. In regards to the recent slowdown in consumer spending, the company attributes it to price-consciousness and a decrease in volume growth in staple categories. However, the company's strong brand and successful innovation efforts have helped them maintain market share.

The speaker discusses the company's outlook for the second half of the year, citing a 3% organic growth projection based on category trends and data. They also mention the possibility of keeping some "dry powder" for additional spending in certain categories, such as Litter.

The speaker is discussing the company's preparedness for potential declines in certain categories and a possible increase in promotional activity. They mention their success with new products and increased marketing efforts. The expected range for the next 6 months is 3%, but there is potential for this to decrease depending on category trends. The speaker also mentions keeping an eye on specific categories and clarifies that the question is not related to BMS.

The speaker, Matt Farrell, responds to a question about the predictability of their business and mentions that they are in 16-17 categories and have seen softening across the board. He also mentions that they have not been able to renovate their portfolio as quickly as they had hoped, which has affected their vitamin category. He states that their organic growth guidance takes into account the current pressure on category growth, but there may be potential downside risk in the future.

The speaker discusses the slowdown in certain categories, such as laundry and litter, and the importance of taking share in order to grow. They mention their success in doing so with new products, such as Hardball. They expect the slowdown to continue for the rest of the year, but still anticipate growth and plan to focus on volume-driven organic growth. They also mention the growth of the dry shampoo category and the importance of innovation. In regards to marketing investment, they mention a step-up in Q3 but do not specify the amount.

In the paragraph, the speaker explains that there was a 6% difference in sales between Circana and domestic organic, with 200 basis points being attributed to a HERO pipe from the previous year and the remaining 400 basis points due to a retail inventory adjustment. The adjustment primarily affected the laundry category, but the speaker notes that there is currently more volatility in the system as retailers manage their inventory. Overall, the company is in a good position and prepared for success.

Peter Grom asks Rick Dierker about the international business and its expected performance in the second half of the year. Dierker responds by saying that the international business had a strong first half and is expected to continue performing well, with an annual growth rate of 8%. He also mentions that they are keeping an eye on the international consumer, but so far things have been holding up well. Dierker then gives more specific numbers, stating that they saw 9% growth in the first half and are expecting around 7% in the back half. Steve Powers then asks about any known timing differences that could affect the business in the third and fourth quarters, to which Dierker responds that there are no major issues at this point and any store closures or rightsizing have already been factored into their outlook.

The company has been caught off guard by the turbulence in the drug and dollar classes of trade, but they still met their outlook on organic growth. There is concern about the slowing promotional environment and the potential for increased competition, especially as many companies have higher gross margins going into this uncertain period. However, the company is focused on innovation to drive growth beyond these categories.

Dara Mohsenian from Morgan Stanley asks about the performance of THERABREATH and the VMS portfolio. The executives discuss the strong growth of THERABREATH and potential trade down due to its higher price. They also mention the interventions in packaging and marketing for the VMS portfolio and when they expect to see results.

The company has a 17% share in the category and is ranked third, with Listerine and Crest being the top two competitors. The launch into antiseptic is expected to drive growth for the company. THERABREATH, a premium brand, has shown strong performance even without promotions, as seen in its ranking on Prime Day. However, the vitamin business has not stabilized as expected and the company is working on different strategies. The growth of THERABREATH and HERO brands has slowed down, possibly due to the law of large numbers, but the company is still seeing strong performance in their respective categories.

The growth rate of the two brands is important for the company's overall outlook, but it is expected to decrease over time. However, strong double-digit growth is still expected in the future. Market share trends have been softer in June and July, possibly due to the slowdown in the acne category, but the company's internal data may differ from Nielsen's.

The company's shares have not been affected by sluggishness, with 10 out of 14 power brands showing growth in Q1, and 9 out of 14 in June and July. The pace of growth has also been reflected in the company's second half call, with 5% organic growth in the first half and 3% in the second half. The company expects to continue gaining market share in the second half. In regards to the VMS segment, the company faces a competitive market with over 60 competitors and struggles in the bricks and mortar category, but has seen success in the online class of trade, particularly on Amazon.

The company has been renovating their category by changing formulas and launching new forms, but this has been slower than expected and retailers have not been helpful. The category grew rapidly during COVID, but is now struggling to find its footing. The company is trying to innovate quickly, but they are struggling. The company evaluates all of their businesses annually, but cannot comment further on potential M&A.

The speaker is addressing the company's recent Analyst Day and asking about potential acquisitions, the lack of growth through organic means, and the performance of the WATERPIK brand. The company has been actively looking at potential acquisitions but has not made any in the past 18 months. They are still busy and the market is active. The WATERPIK brand has experienced a 1% headwind in the first quarter but has seen high single to low double digit consumption. The brand is expected to be slightly down for the full year due to sales in the first quarter.

An analyst asks about the company's gross margin outlook for the second half, specifically regarding pricing and commodity inflation. The company's representative responds that there has been some inflation in certain commodities, but overall there is no change in the net perspective due to improved productivity. The company also plans to spend on trade and promotional activities and new product support. The analyst then asks about the departure of a key executive and the company's plans to refill the role. The company's CEO declines to comment on certain aspects of the question.

The speaker discusses the departure of a colleague named Barry, who has been with the company for 11 years and played a significant role in their success. They mention that it is business as usual and they have time to figure out how to fill the position. The next question asks about gross margin and the speaker explains that there was upside in Q2 due to favorable mix, but they expect a deceleration in the second half due to inflation, personal care mix, and dry powder. The call is then passed to another speaker who asks a question related to the previous one.

During a conference call, the company's executives were asked about the risk of negative pricing in the back half of the year and their ability to pivot their innovation pipeline to cater to the changing market. The executives stated that they are able to pivot quickly to create different price points and do not expect negative pricing in the future. They also clarified that the 40% incremental growth of the Deep Clean detergent was due to both trading up from ARM & HAMMER and gaining new users from other brands. They also discussed the decrease in personal prices, stating that it could be due to promotional activity or a price correction.

The speaker discusses the company's strategy of offering good, better, and best products, with Deep Clean being the best. They mention gaining market share and potential growth from consumers switching to Deep Clean. They also mention the deployment of dry powder and the strength of the supply chain. A question is asked about the strength of the company's product pipeline for next year.

The company is having a successful year with new product ideas and plans to continue releasing new products next year. They do not anticipate changing their portfolio mix between premium and value products in the near future. The company is not seeing a decrease in asset prices for potential M&A. The effectiveness of gummy vitamins may be impacting consumer perception and there may be opportunities for education and improvement in the product.

The speaker discusses the changes in the vitamin market, including the growth of gummies and the decline in overall vitamin sales due to the end of the COVID-19 pandemic. They also mention their company's focus on improving their sugar-free options and taste profile to stay competitive. The call concludes with an optimistic outlook for the second half of the year.

This summary was generated with AI and may contain some inaccuracies.