Leading consumer products company,
Church & Dwight Co. Inc
) posted fourth-quarter 2012 earnings of 57 cents a share that
came in line with the Zacks Consensus Estimate and increased 8%
from 53 cents earned in the comparable prior-year quarter.
However, including one-time items, earnings jumped 30% year over
This Zacks Rank #2 (Buy) stock witnessed an improvement of
10.8% in its top line to $809.7 million and surpassed the Zacks
Consensus Estimate of $803 million. Organic sales increased 4.4%,
reflecting 4.3% growth in volume and a positive effect of 0.1%
The company's close competitors,
) also came up with strong results. Clorox posted adjusted
earnings of 90 cents a share, up 13.9% year over year and
surpassed the Zacks Consensus Estimate of 81 cents.
Colgate-Palmolive came up with fourth-quarter 2012 adjusted
earnings of $1.41 per share, approximately 8.5% above the
year-ago quarter's adjusted earnings of $1.30. Moreover,
quarterly earnings came ahead of the Zacks Consensus Estimate of
$1.40 per share.
Consumer Domestic's net sales elevated 17.3% year over year to
$609.4 million, driven by a 42.7% jump in personal care products
revenues to $252.3 million coupled with a 4.2% growth in
household products revenues to $357.1 million.
On an organic basis, sales rose 5.5% during the quarter,
reflecting higher sales of ARM & HAMMER liquid laundry
detergents. Moreover, higher sales of ARM & HAMMER cat
litter, TROJAN products, ARM & HAMMER CRYSTAL BURST unit dose
laundry detergent, TOOTHTUNES toothbrushes and ARM & HAMMER
SPINBRUSH battery-operated toothbrushes boosted results. This
was, however, partially offset by sluggish sales of ANSWER
diagnostic kits, ARM & HAMMER powdered laundry detergent, and
ARM & HAMMER dental care toothpaste.
Increases in organic growth represent a 5.8% improvement in
volume, while product mix and pricing unfavorably impacted sales
Consumer International's sales declined 6% year over year to
$136.3 million. Organic sales increased 2.7% attributable to
healthy sales in Australia, Canada, Brazil and Mexico. The rise
in organic revenue reflected 3.5% growth in volume, while product
mix and pricing unfavorably impacted sales by 0.8%.
Specialty Products' sales decreased 3.8% year over year to $64
million. Moreover, organic sales inched down 0.3%, reflecting
5.8% contraction in volume, partially offset by a favorable
contribution of 5.5% from product pricing. The positive impact on
pricing was a result of recovery of input costs through
Gross profit increased 13.2% to $358.4 million compared with
$316.5 million in the prior- year quarter. Moreover, adjusted
gross margin expanded 210 basis points to 45.4%, reflecting sales
growth in high margin personal care products, increases in cat
litter price coupled with in-house production of unit dose
detergent and lower trade spending.
Operating income escalated 14.7% year over year to 136.4
million during the quarter. Moreover, operating margin expanded
approximately 50 basis points to 16.6%, reflecting a decrease in
marketing expenses as a percentage of sales.
Other Financial Details
Church & Dwight ended the quarter with cash and cash
equivalents of $343 million, long-term debt of $649.4 million and
shareholders' equity of $2,061.1 million.
During the quarter, the company repurchased $50 million worth
of shares, while it repurchased another $50 million worth of
shares in Jan 2013. The company currently has $220 million left
under the current share buyback program.
On Jan 30, 2013management increased its quarterly dividend by
17%, bringing the annualized payout to $1.12 per share. The
quarterly dividend, after the hike, will come to 28 cents a
share, up from the prior payment of 24 cents. The enhanced
quarterly dividend will be payable on Mar 1, 2013, to
shareholders of record as on Feb 15, 2013.
Moreover, during 2012, the company generated operating cash
flow of $523.6 million, reflecting an increase of 19.6% year over
year and incurred $74.5 million in capital expenditures. Going
forward, the company expects to generate more than $1.2 billion
in free cash flow in the upcoming three years.
The company expects innovative product launches to continue
boosting organic sales in 2013, and anticipates organic growth to
be in the range of 3%-4%. Church & Dwight forecasts commodity
prices to remain stable and expects gross margin to rise by 25
-50 basis points.
Management anticipates earnings per share to be $2.79 for 2013
and expects first quarter 2013 earnings to increase by 8% year
Besides Church & Dwight,
Proctor & Gamble Company
) carrying a favorable Zacks Rank #2 (Buy), is another stock in
the household products industry worth considering.
CHURCH & DWIGHT (CHD): Free Stock Analysis
COLGATE PALMOLI (CL): Free Stock Analysis
CLOROX CO (CLX): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis
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