Church & Dwight Q3 Results Beat View, Names CFO Farrell To Addl. Role Of COO

(RTTNews) - Church & Dwight Co., Inc. (CHD) on Monday reported a 7 percent increase in profit for the third quarter from last year, reflecting higher revenues across all segments. Both revenue and earnings per share for the quarter beat analysts' expectations. However, gross margin for the quarter contracted, reflecting higher trade spending and commodity costs.

Looking ahead, the company forecast earnings for the fourth quarter below Street estimates and raised its fiscal 2014 earnings outlook.

In a separate statement, Church & Dwight said it has appointed Chief Financial Officer Matthew Farrell to the combined role of Chief Operating Officer/CFO, with effect from November 3.

James Craigie, Chairman and Chief Executive Officer of Church & Dwight, said, "We are pleased with the sales and earnings growth. In early 2014, we launched innovative new products in every one of our major categories and in three new categories as we believe that innovation is the key to increasing our market share and reviving category growth in this challenging economy."

Church & Dwight Co manufactures and markets a wide range of personal care, household and specialty products, under the Arm & Hammer brand name and other well-known trademarks.

The New Jersey-based company's net income for the third quarter increased to $115.9 million or $0.85 per share from $107.9 million or $0.76 per share in the year-ago period.

On average, twenty analysts polled by Thomson-Reuters expected the company to report earnings of $0.82 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter grew 5 percent to $841.8 million from $804.8 million in the year-ago period. Analysts had a consensus revenue estimate of $828.76 million for the quarter.

Organic sales growth for the quarter was 4.7 percent and was driven by volume growth of 5.2 percent. This was partially offset by 0.5 percent unfavorable product mix and pricing.

Total Consumer segment net sales for the quarter increased 3 percent from the prior-year period to $763.4 million, while Specialty Products net sales grew 21 percent to $78.4 million. Household Products sales rose 3 percent to $379.5 million and Personal Care Products sales increased 5 percent to $247.7 million.

The company's gross margin contracted 170 basis points to 43.7 percent, as expected by the company. The gross margin contraction was driven primarily by higher trade spending and commodity costs.

Looking ahead to the fourth quarter, Church & Dwight forecasts earnings per share of $0.78, representing a 20 percent increase over the year-ago period, on organic sales growth of about 3 percent. The company expects its gross margin to expand amid a relatively normalized promotional environment.

Analysts expect the company to earn $0.82 per share for the quarter on revenues of $853.56 million.

For fiscal 2014, Church & Dwight raised its outlook for earnings per share to a growth range of 8 percent or $3.01 per share, from the prior range of 7 percent to 9 percent growth.

The company continues to expect organic sales growth for the year of about 3 percent and gross margin to be approximately 75 basis points lower than last year.

Street expects the company to report earnings of $3.02 per share for the year on revenues of $3.27 billion.

For fiscal 2015, Church & Dwight forecasts high single digit earnings per share, which is top tier within the consumer packaged goods industry, inclusive of foreign exchange headwinds. Acording to the company, 2015 will mark the second year of its quest to establish Oxiclean as its next megabrand. Analysts expect earnings of $3.32 per share for the year.

In a separate statement, Church & Dwight said it has appointed Chief Financial Officer Matthew Farrell to the combined role of Chief Operating Officer/CFO, with effect from November 3.

James Craigie, CEO and Chairman of Church & Dwight said, "In his new role Matt will lead all line functions along with the finance organization, allowing me to focus more time on long term corporate strategy and accretive mergers and acquisitions."

Farrell has been the company's Executive Vice President Finance and CFO since May 2007. From September 2006 through May 2007, he was the company's Vice President and CFO.

Farrell was EVP and CFO of Alpharma Inc. from April 2002 through August 2006. Prior to that, from July 2000 through April 2002, he served as Vice President, Investor Relations & Communications at Ingersoll-Rand Ltd. From November 1994 through June 2000, he held various senior financial positions at AlliedSignal Inc.

CHD closed Friday's trading at $72.41, up $0.09 or 0.1 percent on a volume of 841,137 shares.