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DATE
Friday, Oct. 31, 2025 at 10 a.m. ET
CALL PARTICIPANTS
Chief Financial Officer — Rick Dierker
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TAKEAWAYS
- Adjusted EPS -- $0.81 adjusted EPS, a 2% increase in adjusted EPS versus the prior year, surpassing the $0.72 company outlook on higher volume and favorable gross margin.
- Reported Revenue Growth -- Reported revenue was up 5% versus the prior year.
- Organic Sales Growth -- 3.4%, driven by broad-based contributions from pricing, mix, and volume.
- Gross Margin -- 5.1%, up 10 basis points versus the prior year and 110 basis points ahead of internal projections, primarily reflecting productivity gains of 170 basis points, partially offset by 200 basis points of inflation and tariff costs; acquisitions and FX added a combined 30 basis points.
- Marketing Spend -- 12.8% of sales, up 50 basis points from last year, with a full-year target now set to exceed 11% of net sales in fiscal 2025 to support future sales initiatives.
- Adjusted SG&A -- Adjusted SG&A increased 20 basis points year over year, while adjusted other expense rose by $3.9 million due to reduced interest income.
- Adjusted Tax Rate -- 21.6% adjusted tax rate, adjusted tax rate down 170 basis points year over year, with full-year adjusted tax rate expectation at 22.5%.
- Cash Flow from Operations -- $435.5 million cash flow from operations, up 19.6% versus the prior year, with capital expenditures for the first nine months of 2025 at $67.2 million, a $58 million decline from the prior year over the first nine months.
- Share Repurchases -- $300 million in share repurchases during the third quarter, totaling $600 million year-to-date.
- Full-Year Sales Guidance -- Expected reported sales growth revised up to approximately 1.5% in fiscal 2025, with organic sales growth at 1% in fiscal 2025, and a full-year adjusted EPS forecast of $3.49 in fiscal 2025.
- Fourth-Quarter Outlook -- Anticipated reported sales growth of 0.5% in Q4 2025 and organic sales growth of 1.5% in Q4 2025; adjusted EPS guidance set at $0.83 in Q4 2025, a 0.8% year-over-year increase in adjusted EPS; company expects a $30 million, or 200-basis-point, sales drag from discontinued products.
- Gross Margin Outlook -- Full-year gross margin contraction expected at only 40 basis points compared to 2024, aided by productivity offsetting inflation and tariffs; Q4 adjusted gross margin projected to decline by 50 basis points, with lower marketing spend than last year.
- Cash Flow Guidance -- Management raised full-year sales and cash flow guidance for FY2025.
- Tariff Cost Reduction -- Management lowered 12-month tariff cost outlook from up to $190 million (as of April) to $25 million currently, supported by pricing actions, productivity, and negotiations.
- Touchland Performance -- Management stated Touchland is "coming through better than expected," according to Chris Carey, with momentum forecast to extend into Q4 2025.
- Discontinued Businesses Impact -- Q4 2025 sales will be negatively impacted by discontinued lines running out of inventory, specifically noted as $30 million of lower sales and a 200-basis-point drag.
SUMMARY
Church & Dwight's (CHD 1.61%) third-quarter results demonstrated margin improvement through productivity initiatives, allowing higher marketing investments without sacrificing profitability. Management raised full-year sales and cash flow guidance for fiscal 2025 while highlighting successful tariff mitigation and an effective share-repurchase program. The contribution from Touchland exceeded initial expectations, with continued positive momentum anticipated. Looking ahead, management acknowledged heightened volatility from discontinued product lines in Q4 of fiscal 2025 and specified Q4 as a transition period due to these exits.
- Full-year gross margin expected to contract only 40 basis points versus 2024, citing productivity efforts that offset inflation and tariffs.
- Company flagged the Q4 2025 sales drag from discontinued products as "a bigger pressure point in the fourth quarter."
- Tariff burden for the 12 months has been cut to $25 million through targeted measures, putting the company in what management described as "a really good place," according to Rick Dierker, for 2026 planning.
- Share buybacks and the Touchland acquisition are priorities, with management emphasizing a focus on M&A, balanced by opportunistic repurchases supported by robust cash flow.
INDUSTRY GLOSSARY
- Organic Sales Growth: Sales growth excluding the effects of currency, acquisitions, and divestitures.
- SG&A: Selling, general, and administrative expenses, representing overhead and operational costs.
- Adjusted EPS: Earnings-per-share metric excluding items identified as non-recurring or exceptional.
Full Conference Call Transcript
Rick Dierker: All right. Thank you. Good morning, everyone. Thanks for joining us. I'll begin with some thoughts on our strength and reliability. Growth across the Arm & Hammer share and, more importantly, term continues to matter. Thank you, Rick. And good morning to everyone on this Halloween Friday. Our Church & Dwight Co., Inc. team members across the globe delivered a quarter to be proud of. The highlights once again show the many strengths of our portfolio and our team's execution. Let's jump into the third quarter and our outlook. We'll start with EPS.
Third quarter adjusted EPS was $0.81, up 2% from the prior year. $0.81 was better than our $0.72 outlook, driven by higher volume and gross margin results favorable to our outlook. Reported revenue was up 5% and organic sales were up 3.4%. The organic sales were broad-based across the globe, pricing, and mix. Beyond organic results, we were delighted with sales exceeding our initial projections. Margin was 5.1%, a 10 basis point increase from a year ago and 110 basis points better than our outlook.
Our results versus last year were driven by 170 basis points from productivity programs, 20 basis points from higher margin acquisitions, 10 basis points from FX, and 10 basis points from the combination of volume, price, and mix. These factors offset 200 basis points of inflation and tariff costs. Moving to marketing, our marketing expense as a percentage of sales was 12.8%, or 50 basis points higher than the third quarter of last year. For the year, we are now targeting to exceed 11% of net sales, as we leverage our sales growth to invest for the future. Q3 adjusted SG&A increased 20 basis points year over year.
Adjusted other expense increased by $3.9 million due to lower interest income compared to last year. We continue to expect other expense for the full year to be approximately $65 million on an adjusted basis, reflecting the lower interest income fall.
Rick Dierker: In 3Q, our adjusted tax rate was 21.6%, compared to 23.3% of 2024, a 170 basis point year-over-year decrease. The expected adjusted effective tax rate for the year is now 22.5%. Now to cash. We delivered strong cash results in the quarter as cash flow from operations increased 19.6% versus last year to $435.5 million. Capital expenditures for the first nine months were $67.2 million, a $58 million decrease from the prior year due to a return to normalized capital spending in 2025. Finally, in the third quarter, the company repurchased an additional $300 million of shares, bringing our year-to-date share repurchase up to $600 million for our shareholders. Certainly, a third quarter full of accomplishments.
Let's now turn to our outlook. Broadly, we are in an environment of economic uncertainty, and the results have improved our outlook in several areas. For the year, we now expect reported sales growth of approximately 1.5% versus the prior year midpoint view of 1.0%, as we expect Touchland's momentum to continue in the fourth quarter. We also remain on track to deliver 2025 organic growth of 1%, the midpoint of our previous outlook, and we now expect full-year gross margin to contract only 40 basis points versus 2024. Based on the progress our teams are delivering from productivity programs to counter inflation and tariff headwinds.
As I noted earlier, the combination of a stronger sales and gross margin outlook allows us to increase our marketing investments beyond our prior outlook in 2025. For the year, we now expect an adjusted EPS of $3.49, which exceeds the midpoint of our prior outlook. Specifically for 4Q, we now expect our reported sales growth of approximately 0.5% and organic sales growth of approximately 1.5%. In 4Q, I note that our reported sales outlook includes a larger decline in sales from our discontinued product lines as these products run out of inventory. For some context, we expect $30 million of lower sales or 200 basis points of drag in the fourth quarter versus last year from these discontinued businesses.
I'd also note that our organic growth for 4Q was impacted by the prior year port strike and the negative consumption trends in our BMS business. In 4Q, our adjusted gross margin will contract 50 basis points primarily from inflation and tariff costs. Marketing will be lower compared to last year. We expect an adjusted EPS of $0.83 per share, which is an increase of 0.8% versus last year's adjusted EPS. My final comment on the outlook really covers cash flow properly. As noted in our press release, we've increased our outlook from $1.1 billion to $1.2 billion in consideration of our progress on several fronts. As our teams look forward, we are optimistic.
Our teams across the globe have delivered significant accomplishments. We continue to fuel share gains, we've made strategic choices to exit brands in our portfolio, we've acquired Touchland, which is off to a great start, and we returned $600 million to our shareholders through share repurchases. A big thank you to our teams across the globe for leaning forward and executing through the first part of the year. Very well done. Eric, let's move to Q&A.
Operator: If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Chris Carey from Wells Fargo Securities, please go ahead.
Chris Carey: Hi. Good morning, everyone. Good morning, Rick. So Touchland is coming through better than expected, which is great to see. Can you talk about how you might view the benefits of Touchland going into 2026? Specifically, how might the positive contribution from Touchland help offset any of the potential outcomes you could envision from actions you may take on the vitamin business? And then, of course, a follow-up.
Rick Dierker: Yeah. I mean, you're right. On our books and obviously have...
Chris Carey: The follow-up is just on the competitive environment. Picking up a bit. I think you mentioned that your laundry promotional activity would actually be down a bit relative to last year. Can you confirm that? And in general, how would you view the competitive backdrop right now and your potential need to respond to any activity that you're seeing? And maybe just the level of confidence that the really strong volume share performance that you've been delivering is sustainable and what might be needed to sustain that level of execution? Obviously, you have teased innovation plans for next year, but also just the potential level of brand support. Thanks.
Rick Dierker: Much. Time, eight the value year, category as consumers are pressed. The...
Operator: Peter Grom with UBS. Please go ahead. Question comes from the line of Rupesh Parikh with Oppenheimer. Please go ahead.
Rupesh Parikh: Morning, and thanks for taking my questions. So I guess just going to international, another strong quarter even on a difficult comparison. So curious, are you guys seeing any changes there, macro consumer-wise? How do you feel about this same momentum in the international segment for the balance of the year?
Rick Dierker: Yeah. As I said, I was just in Argentina a couple of weeks ago, and there's a ton of excitement about innovation, excitement.
Rupesh Parikh: Maybe just one quick follow-up. You know, to share buybacks again, you know, another quarter of significant buybacks. Your stock could obviously pull back. So does anything change in terms of your priorities, buybacks versus M&A? Should we just expect the...
Rick Dierker: So to your point, definitely took advantage of the value opportunity there. You know, we typically try to just, you know, you know our priorities are. We want to focus on M&A, focus. Focus of...
Rupesh Parikh: And, yeah, we're market. Accordingly.
Rick Dierker: But if any opportunities come up to maybe accelerate a little bit of our share buybacks, you know, we'll do that. And as we sit here today, you know, we've done everything. We've done the $600 million. Bought Touchland. You know, we've got great cash flow. Balance sheet's in a good place. As we look forward, focused on M&A. And, you know, we obviously just gone through, you know, a review. We just re-saw our treasury balance sheet get upgraded as well. So I just think on many fronts, we've got a quality balance sheet. Strong cash flow gives us a lot of optionality. So, you know, frankly, potential to do both things. So...
Rupesh Parikh: Great. Thank you.
Operator: Your next question comes from the line of Bonnie Herzog with Goldman Sachs. Please go ahead.
Bonnie Herzog: Alright. Thank you. Good morning, everyone. I had a question on the promotional environment. Hoping just for some more color on that. And then, you know, your volume growth was quite strong in the quarter, but price mix was slightly negative. So I guess just could you kind of drill down on what sort of drove that? You know, was it the higher promotions and the need for spending behind some of your brands? And, you know, if so, should we expect that to continue in Q4 and possibly next year?
Rick Dierker: Of actually were pretty much we were up much...
Bonnie Herzog: Alright. Thanks for that. And if I may, I just wanted to know, ask a quick follow-up question on Touchland. Could you give us a sense of maybe how the brand has been performing in the different channels, DTC and then certainly Sephora? And then maybe talk a little bit more about your strategy to expand the brand in additional channels and, I don't know, possibly other special retail channels. You know, maybe how has that evolved since the transaction is closed? Thanks.
Rick Dierker: It's really we don't really have a plan to change that strategy. In being in that adjacent categories of our retailers, we're really excited about that approach. Across we hit that the right partner, and to make sure that we keep that kind of cache...
Bonnie Herzog: Okay. Thank you.
Operator: Your next question comes from the line of Peter Grom with UBS. Please go ahead.
Peter Grom: Any better now?
Rick Dierker: Oh, maybe better. Commentary some of that was some strong 2Q. So can you maybe just speak to why down and would come in below 2% category growth you mentioned? One week that was percent. That math, all of a sudden, Q4s and Q3 and Q...
Rick Dierker: Said in on August 1. Comforting the two and a half percent organic outlook. What we're still saying. Today. The macro doing what it's doing. Speaks the categories, how we're and minuses, but we're still sitting at that two and a half percent organic. And, you know, do think about 3Q to 4Q, you know, you know, the you know, just on a total sales perspective, I mentioned it, Mike, prepared remarks, and we are running out these discontinued business...
Peter Grom: You know, we're getting the...
Rick Dierker: Point now where that will be a bigger pressure point in the fourth quarter. So I noted that was kind of the $30 million or 200 basis of drag.
Rick Dierker: And then...
Rick Dierker: Yeah, I think we're covered very elegantly the organic piece. You adjust for that where you're you're right in right on track, and certainly gives us this confidence in the fourth as you look at the beyond that as well.
Peter Grom: That's So I wanted to get your...
Rick Dierker: Speak.
Peter Grom: Category growth and your portfolio for January. But accelerate from 2% in...
Rick Dierker: So...
Rick Dierker: Are doing. Many, many years. Is around...
Rick Dierker: There.
Operator: Your next question comes from the line of Andrea Teixeira with JPMorgan. Please go ahead.
Andrea Teixeira: Thank you. I was just hoping, Rick, if you can kind of a bit of the price. Mix. And then you mentioned you have you know, all the a good I would positioning value. Segment. But thinking as the consumer continues to particular, laundry, that value segment effect And then just as a clarification on the FX going forward, I mean, this is something that is benefit benefiting you know, some of the in the other direction think about those tailwinds...
Rick Dierker: Adjustments. And to Rick's point, also, I mean, it's it's a pretty nominal amount for us I mean, I think that they call it an organic is also just as discontinued momentum. With volume.
Andrea Teixeira: Really driving...
Rick Dierker: I say this. Know, the international team is doing a really nice job of growing They, you know, they're they're very much focused on margins. So, yeah, FX you know, can be a pressure point, you know, tariffs you know, inflation fee. And then we combat it. We combat it with productivity, you know, with RGM practices. So, yeah, if FX turns out to be a little bit of favorable, that could be helpful. But you look at that business, they've been growing. And they've been doing a good job of all also you know, bringing gross margin forward as well. So...
Andrea Teixeira: We'll we'll a possible.
Andrea Teixeira: And if I can this is super helpful. If I can just go back to Rick's comment on But Rick's comment on the price pricing and promo back when you're saying promo has been technically benign. For you and you're gaining share. In particular in lounger. Opportunity. To gain share and you're competitor has been increasing more promo. I understand that they also are kind of going into a more valuable proposition. Are you seeing any pressure on that most recent launch? In liquid? I do exit the Thank you, Rick.
Operator: Your next question comes from the line of Steve Powers with Deutsche Bank. Please go ahead.
Steve Powers: Great Thank you. Two questions, which I guess, as I look at my notes, is kinda three. Laundry, not the beat a dead horse, but just can you just help us square the help me square the circle just a little bit more? There's definitely a narrative out there that Church & Dwight Co., Inc. has been more promotional through the third quarter. We've certainly price mix dip negative, kind of accelerate negative in the quarter. So just is it what explains that as a mix within your portfolio? Where you've been directing the promotion? Just any more color there?
Steve Powers: And how that's likely to trend going forward, number one. And then on vitamins, you mentioned some green shoots because you just elaborate a bit more on what those are? And then just update us? If you think you'll have a kind of a more comprehensive outlook and business strategy around that segment come January. Thank you.
Rick Dierker: Sure. Yeah. That's first one mixed negative. For we on can...
Steve Powers: Thank you on all that.
Operator: Your next question comes from the line of Anna Lizzul with Bank of America. Please go ahead.
Anna Lizzul: Hi. Good morning. Thank you much for the question. I have two parts. To a question. First, I wanted to ask on retailer presence and packs. Size. We're continuing to hear from peers in your space about the movement of sales to club and online which have seen better growth versus food, drug, and mass. So I was curious if you could talk about this dynamic within your categories.
Anna Lizzul: And then secondly, on the M&A front, while you're still digesting Touchland, it has performed better than expected. And it's an interesting acquisition given Touchland is in some of the specialty beauty stores like Sephora. You've done well in acquisitions the last few years, and personal care. And I'm sure you'd like to get back to your more regular cadence of one tuck-in acquisition annually. So I was wondering if we should expect to continue to focus on personal care or maybe if you'd be willing to explore more in the adjacent beauty space.
Rick Dierker: Yeah. And I different channels are Okay. Great.
Anna Lizzul: Thanks so much.
Operator: Your next question comes from the line of Filippo Falorni with Citi. Please go ahead.
Filippo Falorni: Hi. Good morning, everyone. Two questions for me. One on the retailer inventory levels Obviously, you had some destocking. In the first half of the year. Did you see any impact in Q3? I know you're assuming no impact in Q4? And then as we think about '26, should we think about the first half of the year having particularly component retailer inventory? So maybe faster growth in the first half? I know you haven't given guidance, but just a high level how we think about it. And then the second question on the margin, you review the drivers of the lower tariff guidance? And maybe if you can give some color also the broader commodity outlook? Thank you.
Rick Dierker: Okay. Let's try that. Couple questions in there. So on the retailer inventory side, to your point, beginning of the year, we had some pressure points there. About 300 basis points first quarter. Maybe 100 basis points of pressure in 2Q. Not really seeing that. We've seen kind of kinda stable levels here. In the back half. That's what we expect. Experienced.
Rick Dierker: In the third quarter. Quarter, and that's forward here. Closely. In terms of moving on to tariffs commodities and like that. Go back. We've made a lot of progress on tariffs. So we go back to April we were looking at a bill, you know, it could have been as high as a $190 million. Rallied the organization around that. We made some tough strategic decisions. But we've also really you know, focused on, you know, you know, additional productivity, targeted pricing actions, We've now moved that down to what is essentially is a $25 million twelve month number. And you know, we released back on August 1. That number was about six It's moved you know, really threefold.
Rick Dierker: It's moved because we've driven more actions around the globe in terms of, you know, whether it's negotiations, movements, side. There's been a your husband's some targeted pricing and then, frankly, the rates change. But you know, that puts us in a really good place. We noted in the release. Kinda look forward to 2026. You know, we should be able to just have an environment of all say, normal commodity inflation. And know, tariffs should not be a drag. You know, it could actually turn out to be an opportunity.
Rick Dierker: Still been sticky. You would sit here today with what our commodity view was for the year. It's still slightly up. What it was in the beginning of the year. I think as we look forward, you know, we're kind of expecting more of the same, but we'll we'll leave the rest. Of the 26 comments...
Filippo Falorni: Super awful.
Operator: Your next question comes from the line of Olivia Tong with Raymond James. Please go ahead.
Olivia Tong: Great. Thanks. First, just to clarify I assume there wasn't any pull forward from Q3 to Q4 or any other changing. Timing that helped contribute to the line upside quarter? Very easy. And then just thinking about it a different way in terms of laundry, given the strength there, and obviously consumer desire for value, how do you think about the that are front of you Clearly, you've done very well in the category. You've driven profit. Profitability in the category.
Is there you know, as you think about the options in front of you, is there thought around potentially being more aggressive on price or things for those consumers who are struggling potentially looking at it from a share perspective. You know, given the opportunity that you have front of you and the fact that gross margins have actually shown some pretty nice upside.
Rick Dierker: Great. Thank you.
Operator: Your next question comes from the line of Javier Escalante with Evercore ISI. Please go ahead.
Javier Escalante: Hit Good morning, everyone. Why do you think the brother sector environment like hero continue doing great, compounding There is no forest. Striking. Impact. For them. Why is that? Is this differences in channel? Are these different consumers? Sets? Legacy brands from which you can gain market share. Anything that you can tell us to explain? Explain what's happening and what does it mean? For your future growth in 2026? Thank you.
Rick Dierker: Yeah. Never one lot of opportunity my Category...
Operator: Your next question comes from the line of Lauren Lieberman with Barclays. Please go ahead.
Lauren Lieberman: Great. Thanks. Morning, guys. Just one thing I wanna talk about was Cooper. And just how much couponing is currently part of your strategy? How much activity there's been? Because this is something that kinda shows up you know, differently. Right? It's in market. You can't necessarily see it. In the Nielsen data. So I was curious if you could talk about coop couponing And then also just looking specifically at laundry in the data, it does show price for EQ. As down low single digits. So even though like you said, the percentage that's on promotion is low. Just curious broadly about pricing in the market and if the depth is worth talking about. Thanks.
Rick Dierker: Yeah. I think the shown in Nielsen's...
Lauren Lieberman: And that's the case in laundry as well?
Rick Dierker: Yes. Okay. I mean, we obviously have a of questions here. I'll bring it back gross margin. Gross margin. Are doing they're doing. Which speaks to...
Operator: Your next question comes from the line of Robert Moskow with TD Cowen. Please go ahead.
Robert Moskow: Hi. For the question. You know, I think the messaging here is that despite a lot of challenges for the consumer, your categories have been pretty stable in the aggregate. Running around 2%. And adjusting for some things you're gaining share. But when I look at your retail tracking data, least in my metrics, you know, that things do get weaker in October. Can I assume that's a comparison to last year's port strike and maybe just refresh me on why that influenced consumer spending in your categories rather than just you know, timing of shipment?
Rick Dierker: Yeah. Robert. Yeah. In my prepared remarks, I kinda...
Robert Moskow: Sure. I understand. But you know, you November and December, I would imagine the pantry loading would be kinda over.
Robert Moskow: So I guess I'm just you know, I'm I'm like, how that would affect your overall results in a quote. Quarter. And then when I look at your quarterly results last year, it was very stable. You know, third quarter, fourth quarter were exactly the same. So you know, are it did it is it that much of a tough comparison to a year ago despite that?
Rick Dierker: Yeah. A year ago.
Robert Moskow: Thank you very much.
Operator: Your last question comes from the line of Kevin Grundy with Credit Suisse. Your BNP Paribas. Please go ahead.
Kevin Grundy: Great. Thanks. Good morning, everyone. And congrats on the good this quarter. First one to kinda revisit the four portfolio. And trade down risk. And then second one gonna be on AI. So the first one Rick, did how do you assess the portfolio? Today relative to say, like the global Financial crisis. And I think you know, the view would be that Church & Dwight Co., Inc. was a big beneficiary agree with that. Of trade down risk, Arm & Hammer well. Value Laundry detergent did well. But it is a more premium portfolio to today than it was in Branson. You've had six success with, like, and TheraBreath. And then Hero TOUCHLAND. Are more premium price points.
So how do you assess particularly in those of your portfolio, today, how do you sort of square that with some of the trade down that we're seeing? And granted it's in household product categories, which do tend to a little bit more trade down. But I'd just be kind of curious to get your thoughts on that, Rick. You know, I granted it skews higher the hiring can consumers. It does offer unique benefits. But can you kind of have it both ways where the consumer is weak with within the higher end the portfolio are gonna continue to sustain.
Kevin Grundy: Follow-up. Thanks.
Kevin Grundy: Yeah. And I that, you know, just around artificial intelligence. And what that evolution is gonna mean for this CPG industry. Matt. Like the Farrell used to refer these the crystal ball kind of questions. But particularly on the heels of the Walmart (WMT +0.43%) announcement and collaboration with OpenAI, I'd be curious to kind of get your thoughts, Rick, you know, in a world where AI is matching in greater levels of adoption. Do you see this evolution as a favorable development big brands? And your portfolio specific? And relatedly, on the heels of Walmart announcement, how do you assess the risk here that this potentially leads to a balance of power shift?
To retailers as they exert greater control over the virtual shelf. Thank you.
Rick Dierker: Yeah. I think you know, my crystal probably say, is through our innovation, based on consumer our products, what the reviews say.
Kevin Grundy: News And advertising sales for...
Kevin Grundy: Makes sense.
Kevin Grundy: Thanks, Rick.
Operator: There are no further questions at this time. I'd now like to turn the call over to Mr. Rick Dierker for closing remarks. Please go ahead. Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.