Church & Dwight Q3 Profit Beats Estimates, But Sees Q4 Earnings Below View

(RTTNews) - Church & Dwight Co., Inc. (CHD), a provider of household, personal care and specialty products, on Friday reported a 15 percent increase in profit for the third quarter on double-digit revenue growth that was primarily driven by the Avid gummy vitamin business acquired by the company in October 2012. Earnings per share beat analysts' expectations, while revenues missed their estimates.

Looking ahead, the company forecast earnings for the fourth quarter below Street estimates, but affirmed its earnings outlook for fiscal 2013, also below analysts' expectations.

James Craigie, Chairman and Chief Executive Officer of Church & Dwight said, "We are pleased with our third quarter business results. Despite continuing weak category consumption in the U.S., we delivered 15.2% EPS growth, while increasing market share for seven of our nine power brands."

Ewing, New Jersey-based Church & Dwight's net income for the third quarter was $107.9 million or $0.76 per share, up from $93.9 million or $0.66 per share in the year-ago period. On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 11 percent to $804.8 million from $725.2 million in the prior-year quarter. Analysts had a consensus revenue estimate of $814.31 million.

Organic sales for the quarter increased 1.6 percent, driven by 4.7 percent volume growth, partially offset by 3.1 percent unfavorable product mix and pricing.

Gross margin for the quarter expanded 20 basis points to 45.4 percent and represented the fifth consecutive quarter of gross margin improvement. The increase was due to productivity programs, partially offset by unfavorable price/mix. The company noted that the majority of commodity costs were flat in the quarter versus the prior-year period.

Total consumer segment net sales for the quarter increased 12 percent to $739.8 million. Of this, Consumer Domestic net sales grew 14 percent to $605.3 million, while Consumer International net sales rose 3 percent to $134.5 million.

Meanwhile, Specialty Products net sales increased 2 percent to $65.0 million.

Looking ahead to the fourth quarter, Church & Dwight forecast earnings of about $0.65 per share. Analysts expect the company to earnings of $0.69 per share for the quarter.

Looking ahead to fiscal 2013, Church & Dwight reaffirmed its outlook for earnings of $2.79 per share and organic sales growth of about 1.5 percent to 2 percent over the prior year. Analysts expect the company to report earnings of $2.80 per share for the year.

Craigie said, "Consumer spending and category growth are expected to remain weak in the fourth quarter of 2013 and, in some categories, are being exacerbated by increased price competition. Nevertheless, we are in a strong position to continue to deliver value to our stockholders as a result of our unique portfolio of value and premium products, a strong pipeline of innovative new products, strong marketing support, and disciplined cost management."

Further ahead, for fiscal 2014, Church & Dwight forecast organic sales growth at the top end of its historical 3 percent to 4 percent range. The company said it will announce its earnings outlook for the full-year as part of its fourth quarter earnings release at the beginning of February 2014.

In Friday's regular trading session, CHD is trading at $64.53, down $0.62 or 0.95 percent on a volume of 299,610 shares.