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

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 ProductsHousehold 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 GrowthChurch & 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.

Organic Revenue GrowthWhen 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.