Church & Dwight Reports First Quarter EPS Rose 20% to $0.36 Per Share on 13% Sales Increase; Adjusted EPS Rose 27% to $0.42 Per Share.Business Editors PRINCETON, N.J.--(BUSINESS WIRE)--May 6, 2002 Church & Dwight Co., Inc. (NYSE NYSE See: New York Stock Exchange :CHD CHD coronary heart disease. ChD abbr. Latin Chirurgiae Doctor (Doctor of Surgery) CHD, n.pr See disease, coronary heart. CHD canine hip dysplasia. ) today reported first quarter net income of $14.9 million or $0.36 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $12.1 million or $0.30 per share in the same period last year. This year's results include a $0.06 per share accounting charge related to the step-up of opening inventory values by the Company's recently formed affiliate, Armkel, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , which is more fully described below. Last year's results included a $1.4 million or $0.02 per share charge related to a plant shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down , and a $0.7 million or $0.01 per share charge related to intangibles amortization that was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: in 2002 with the adoption of accounting standard FAS 142. Adjusting for these unusual items, earnings per share increased by $0.09 per share or 27% to $0.42 per share from $0.33 in the comparable period last year. Robert A. Davies, III, Chairman and Chief Executive Officer of Church & Dwight, commented, "We are pleased at the strong first quarter results which stemmed stemmed adj. 1. Having the stems removed. 2. Provided with a stem or a specific type of stem. Often used in combination: stemmed goblets; long-stemmed roses. from solid growth in most of our base businesses as well as earlier-than-expected acquisition benefits from our October 2001 purchase of Carter-Wallace's consumer businesses. "Our strategy is to reinvest re·in·vest tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. a high percentage of the acquisition benefits in increased marketing and product development, which will tend to moderate profit growth for the next two or three quarters. In view of the strong first quarter performance, as well as the change in intangibles amortization, however, we now expect adjusted earnings per share to be somewhat higher than current analyst estimates of $1.45 to $1.51 per share, and to be in the range of $1.58 to $1.60 per share for the full year." The Company estimates that its base business, excluding the Carter-Wallace product lines and related financing costs, contributed about $0.36 per share of the $0.42 earnings per share for the quarter. The Arrid(R) and Lambert-Kay(R) product lines, acquired directly from Carter-Wallace, essentially broke even; and Armkel, which acquired the rest of the Carter-Wallace business, contributed the remaining $0.06 per share after adjusting for the accounting charge. Total Church & Dwight sales, excluding Armkel and other affiliates, increased 13.2% to $256.8 million from $226.8 million in the previous year. Consumer products sales increased 15.9% to $212.8 million, primarily due to the addition of the Arrid antiperspirant antiperspirant /an·ti·per·spir·ant/ (-per´spir-ant) inhibiting or preventing perspiration, or an agent that does this. an·ti·per·spi·rant n. and Lambert Kay pet care businesses. Excluding the acquired brands, consumer sales increased 2%, with higher deodorizers, household cleaners and laundry products, partially offset by lower personal care products. Specialty products sales increased 1.9% to $44 million, primarily due to the acquisition of a new animal nutrition product line, partially offset by a discontinued specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. line. Mr. Davies added, "We should point out that total sales, including affiliates, advanced over 50% led by growth in personal care and consumer international, primarily due to the Carter-Wallace acquisition." These results reflect the adoption of new accounting standards relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the treatment of trade and consumer promotions (EITF's 00-14 and 00-25), which reduced reported sales for both 2002 and 2001 by around 11%, but had no effect on earnings. During the quarter, the Company relaunched its Arm & Hammer(R) deodorant deodorant /de·odor·ant/ (de-o´der-int) 1. masking offensive odors. 2. an agent that so acts. de·o·dor·ant n. antiperspirant line under the Arm & Hammer Ultramax(TM) name. The new product line, which features a time-release baking soda baking soda: see sodium bicarbonate. formula guaranteeing 36-hour odor odor (o´der) a volatile emanation perceived by the sense of smell. o·dor n. 1. The property or quality of a thing that affects, stimulates, or is perceived by the sense of smell. protection, and a new yellow package designed to evoke e·voke tr.v. e·voked, e·vok·ing, e·vokes 1. To summon or call forth: actions that evoked our mistrust. 2. the imagery of Arm & Hammer Baking Soda, will receive strong marketing support over the next few months. In laundry, the Company expanded its range of high-fragrance laundry detergents. In deodorizing and pet care, the Company decided to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: the Lambert Kay hardware line acquired from Carter-Wallace, which accounted for about $2 million in first quarter sales. The Company, however, continues to regard pet care as a major growth area, and gained further distribution for Arm & Hammer Crystal Blend(TM), a premium scoopable cat litter utilizing baking soda and silica silica or silicon dioxide, chemical compound, SiO2. It is insoluble in water, slightly soluble in alkalies, and soluble in dilute hydrofluoric acid. Pure silica is colorless to white. crystals. ARMKEL, LLC Armkel, LLC, a 50/50 joint venture between Church & Dwight and the private equity group, Kelso & Company, reported net income of $0.3 million after a previously announced accounting charge related to the step-up in the value of opening inventories in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). acquisition accounting principles. As these inventories are sold, the step-up is charged to current operations. The total step-up was $23.2 million, of which $15.1 million was charged in the final quarter of 2001 and the balance of $8.1 million was charged in the first quarter 2002. Adjusting for this accounting charge, Armkel would have earned $8.4 million and, as reported above, Church & Dwight's 50% share would have been equivalent to $0.06 per share after related financing costs. Armkel reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $96.5 million, a $2.2 million or 2.3% increase over the same product sales made by the predecessor Carter-Wallace Company for the comparable period in the previous year. This increase included a significant gain in condom 1. condom - The protective plastic bag that accompanies 3.5-inch microfloppy diskettes. Rarely, also used of (paper) disk envelopes. Unlike the write protect tab, the condom (when left on) not only impedes the practice of SEX but has also been shown to have a high failure sales related to the Trojan(R) Extended Pleasure(TM) and Magnum(R) XL line extensions introduced in 2001. During the second quarter, the Company will introduce another major line extension under the Trojan Her Pleasure(TM) name as well as a line of Trojan personal lubricants This article has multiple issues: * It does not cite any references or sources. Please help improve this article by citing reliable sources. * Its tone or style may not be appropriate for Wikipedia. . The Company will also intensify in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: marketing support for the First Response(R) pregnancy kit and Nair(R) depilatory depilatory (dĭpĭl`ətôr'ē), substance used to remove hair. In preparing hides for tanning, lime is the chief depilatory. lines. During the first quarter, the Company began to transfer production of Arrid antiperspirants and Nair depilatories from the former Carter-Wallace plant at Cranbury, NJ, to Church & Dwight's plant at Lakewood, NJ. This process will be completed in the second quarter; however, because of inventory run-out and plant decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
DEBT STRUCTURE AND CASH FLOW Church & Dwight had outstanding long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $407 million, and cash less short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. of $42 million, for a net debt position of $365 million at quarter-end. In addition, the Company had unused revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. bank lines of $100 million. Based on the definition in its loan agreements, the Company's cash flow (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) is estimated at $34 million for the quarter. Armkel had outstanding long-term debt of $438 million and cash less short-term and related party debt of $28 million, for a net debt position of $410 million at quarter-end. In addition, Armkel had unused revolving credit bank lines of $85 million. Based on its loan agreements, Armkel's cash flow (EBITDA) is estimated at $24 million for the quarter. ORGANIZATION CHANGES As previously announced, the Company elected two senior executives to corporate management positions during the quarter. Bradley A. Casper, 42, joined the Company as President, Personal Care, and was also named President of the Domestic Operations of Armkel. He was previously with The Procter & Gamble Company, most recently as Vice President, Strategic Planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. for the Fabric Care Business, having spent most of his career at Procter & Gamble in their beauty and personal care businesses, both in the U.S. and abroad. Joseph A. Sipia, Jr., 53, joined the Company as President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of the Specialty Products Division. He was previously with FMC See fixed mobile convergence. Corporation in a series of senior commercial and operations positions, most recently as head of their Alkali alkali (ăl`kəlī) [Arab., al-gili=ashes of saltwort], hydroxide of an alkali metal. Alkalies are readily soluble in water and form strongly basic solutions with a characteristic acrid taste. Chemical Division. Church & Dwight will host a conference call to discuss first quarter 2002 earnings with the investment community on May 6 at 10:00 a.m. (ET). To listen, please visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's web site at www.churchdwight.com or dial in at 877-851-4789. A replay will be available two hours after the call through May 13, 2002. The replay number is 800-642-1687, access code 4034778. In addition, the replay can be heard at www.churchdwight.com. Church & Dwight Co., Inc. is the manufacturer of household, personal care and specialty products, sold under the ARM & HAMMER and other well-known brand names. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating, among others, to financial objectives, sales growth and cost improvement programs. These statements, including the statements above as to the impact of the Carter-Wallace acquisition on sales and earnings, represent the intentions, plans, expectations and beliefs of Church & Dwight, and are subject to risks, uncertainties and other factors, many of which are outside the Company's control. These factors, which include the ability of Church & Dwight to successfully integrate the operations of the consumer products business of Carter-Wallace into the Armkel joint venture and Church & Dwight, and assumptions as to market growth and consumer demand (including the effect of recent political and economic events on consumer purchases), and the outcome of contingencies, including litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a and the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of assets, could cause actual results to differ materially from such forward-looking statements. With regard to new product introductions, there is particular uncertainty related to trade, competitive and consumer reactions. For a description of additional cautionary statements, see Church & Dwight's quarterly and annual reports filed with the SEC, as well as Carter-Wallace's historical SEC reports.
Church & Dwight Co., Inc. and Subsidiaries
Product Line Net Sales
1st Quarter 2002 vs. 1st Quarter 2001
Dollars in Thousands
2002 2001
------------------ ----------------------
EXTERNAL (Excluding Affiliates)
Laundry $ 100,210 $ 97,936
Deodorizing and Cleaning $ 62,507 $ 50,065
Personal Care $ 41,851 $ 27,546
International $ 8,263 $ 8,070
--------------- --------------
Total Consumer $ 212,831 $ 183,617
Specialty Products $ 43,971 $ 43,163
--------------- ---------------
Total External Net Sales $ 256,802 $ 226,780
=============== ===============
2002 2001
------------------- ------------------
INTERNAL (Including Affiliates) (1)
Laundry $ 100,210 $ 97,936
Deodorizing and Cleaning $ 62,507 $ 50,065
Personal Care $ 90,511 $ 27,546
International $ 56,056 $ 8,070
--------------- ----------------
Total Consumer $ 309,284 $ 183,617
Specialty Products $ 53,989 $ 55,496
--------------- ---------------
Total Internal Net Sales $ 363,273 $ 239,113
Less: Unconsolidated
Affiliates $ 106,471 $ 12,333
--------------- --------------
Total External Net Sales $ 256,802 $ 226,780
=============== ===============
Note: Net sales for both periods defined under the rules of EITF
00-14 "Accounting for Certain Sales Incentives" and EITF
00-25 "Vendor Income Statement Characterization of
Consideration from a Vendor to a Retailer."
(1) Includes 100% of net sales of 50%-owned affiliates
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per Three Months Ended
share data) Mar. 29, 2002 Mar. 30, 2001
Net Sales $256,802 $226,780
Cost of sales 183,552 162,429
--------------- ---------------
Gross Profit 73,250 64,351
Marketing expenses 16,832 16,386
Selling, general and administrative
expenses 29,191 27,013
--------------- ---------------
Income from Operations 27,227 20,952
Equity in earnings of affiliates 917 1,032
Other income (expense), net (5,716) (1,268)
--------------- ---------------
Income before minority interest and
taxes 22,428 20,716
Minority interest 89 1,984
--------------- ---------------
Income before taxes 22,339 18,732
Income taxes 7,416 6,585
--------------- ---------------
Net Income $ 14,923 $ 12,147
--------------- ---------------
Net Income Per Share - Basic $0.38 $0.32
Net Income Per Share - Diluted $0.36 $0.30
--------------- ---------------
Dividends Per Share $0.075 $0.07
--------------- ---------------
Weighted average shares outstanding
- Basic 39,267 38,538
Weighted average shares outstanding
- Diluted 41,488 40,333
--------------- ---------------
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) Mar. 29, 2002 Mar. 30, 2001
Assets
Current Assets
Cash, equivalents and securities $ 53,852 $ 20,768
Accounts receivable 101,551 85,205
Inventories 101,970 58,296
Other current assets 37,519 16,418
--------------- ---------------
Total Current Assets 294,892 180,687
--------------- ---------------
Property, Plant and Equipment (Net) 239,375 169,399
Equity Investment in Affiliates 115,336 19,781
Intangibles and other assets 318,873 115,467
--------------- ---------------
Total Assets $968,476 $485,334
--------------- ---------------
Liabilities and Stockholders' Equity
Short-Term Debt $ 12,235 $ 13,185
Other Current Liabilities 174,644 145,151
--------------- ---------------
Total Current Liabilities 186,879 158,336
--------------- ---------------
Long-Term Debt 406,995 19,749
Other Long-Term Liabilities 74,893 55,268
Stockholders' Equity 299,709 251,981
--------------- ---------------
Total Liabilities and Stockholders'
Equity $968,476 $485,334
--------------- ---------------
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion