Church & Dwight Reports First Quarter Results Reaffirms 2003 EPS Objective of $1.77 - $1.81 Per Share.Business Editors PRINCETON Princeton, borough (1990 pop. 12,016) and surrounding township (1990 pop. 13,198), Mercer co., W central N.J.; settled late 1600s, borough inc. 1813, township est. 1838. A leading education center, it is the seat of Princeton Univ. , N.J.--(BUSINESS WIRE)--May 5, 2003 Church & Dwight Dwight , Timothy 1752-1817. American clergyman, author, and educator who was a leading supporter of Federalism and served as president of Yale University (1795-1817). His grandson Timothy (1828-1916) was also president of Yale (1886-1899). 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 $20.9 million or $0.50 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, a 39% increase over the $14.9 million or $0.36 per diluted share for the same period last year. Last year's results included a $0.06 per share accounting charge related to the step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. of opening inventory values by the Company's affiliate, Armkel, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Adjusting for this item, earnings per share increased by $0.08 per share or 19% to $0.50 per share from $0.42 per share last year. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. A. Davies, III, Chairman and Chief Executive Officer of Church & Dwight, commented, "We are pleased with our 19% earnings growth, and sales were consistent with our objective for the quarter. During the quarter we were cautious on marketing spending, and now expect to increase expenditures in support of new product initiatives for the remainder of the year." Church & Dwight sales declined 3.3% to $248.3 million from $256.8 million in the same period of the previous year. Most of this $8.5 million decline was due to the rationalization rationalization, in psychology: see defense mechanism. of the former Carter-Wallace pet care and USA Detergents candle and cleaner product lines, a high percentage of which were 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: during 2002, and the transfer of certain export operations to Armkel. In addition, this year's first quarter was one day shorter than the first quarter of last year. At the product line level, strong growth in liquid laundry Laundry can be:
Before industrialization detergent detergent (dētûr`jənt, dĭ–), substance that aids in the removal of dirt. Detergents act mainly on the oily films that trap dirt particles. , and moderately higher sales of toothpaste toothpaste, n See dentifrice. were offset by lower sales of laundry detergent powder, fabric softeners Fabric softener (also called Fabric Conditioner) is used to prevent static cling and make fabric softer. Popular brand names include Lenor, Lenor/Downy, Snuggle, and Comfort. and household cleaners. On a combined basis, including Armkel and other unconsolidated affiliates, sales increased 1.3% to $358.0 million from $353.3 million last year. This gain reflects strong growth by Armkel's U.S. and International businesses, described later in this release. With the completion of the integration projects in late 2002, the Company stepped up its rate of new product activity in the first quarter of 2003. In personal care, the Company launched a new line of Arrid(R) antiperspirants targeted primarily at women under the Arrid Total name, and added significant new extensions to its Arm & Hammer(R) Dental Care toothpaste and Arm & Hammer Ultramax(R) 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. lines. In laundry, the Company expanded distribution of both its Arm & Hammer and Xtra(R) liquid laundry detergent brands in the mass channel, and introduced a new Arm & Hammer liquid fabric softener line. These new products should reach broad national distribution in the second quarter. During the second quarter, the Company will also begin shipments of Brillo(R) Scrub'n'Toss(TM), a disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. cleaning pad, and a reformulated Arm & Hammer Pet Fresh(TM) Carpet Deodorizer deodorizer or deodorant, substance used to absorb or eliminate offensive odors. Disinfectants such as hydrogen peroxide, chlorine, and chlorine compounds eliminate odors caused by microorganisms. , which provides a significant new consumer benefit. Gross margin improved 1.2 points to 29.7% from 28.5% in the same quarter last year. At current prices, the Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. over $10 million in energy and other commodity-based cost increases for the year, for materials such as resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing , surfactants and palm oil. While these cost increases will slow down gross margin growth, the Company still expects to achieve a gross margin improvement for the year, through reductions in other raw and packaging materials costs, and improved manufacturing and distribution efficiencies. During the quarter, the Company repaid debt of approximately $29 million. At quarter-end, the Company had total outstanding debt of $340 million, and cash of $67 million, for a net debt position of $273 million, a reduction of $92 million from the same period-end last year. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Armkel, LLC Armkel, a 50/50 joint venture between Church & Dwight and the private equity group, Kelso & Company, reported net income of $15.2 million compared to $0.3 million in the same period last year. Last year's results included an $8.1 million accounting charge related to the valuation of opening inventories. Adjusting for this item, net income increased $6.8 million or 81% to $15.2 million from $8.4 million last year. Armkel sales increased $12.3 million or 14.1% to $99.7 million compared to $87.4 million in the previous year. Domestic sales increased 7.2% to $52.1 million, led by gains in condoms and pregnancy kits, and the launch of a new line of specialty skin care products under the name Lineance(R). During the second quarter, the Company is introducing a major new pleasure enhancing line extension to the Trojan A program that appears legitimate, but performs some illicit activity when it is run. It may be used to locate password information or make the system more vulnerable to future entry or simply destroy programs or data on the hard disk. (R) 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 line. International sales were $47.5 million, a 14% increase over last year excluding foreign exchange gains, reflecting higher oral and skin care sales in Europe and condom sales in Mexico. As previously reported, Armkel sold its Italian subsidiary during the quarter for $22.6 million, and recognized a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern gain of approximately $1.9 million. Armkel had total outstanding debt of $415 million, and cash of $48 million, for a net debt position of $367 million at quarter-end. This compares with a net debt position of $402 million a year ago. During the past 12 months, Armkel has paid approximately $40 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , integration and other costs, primarily related to the closing of its Cranbury, N.J. facility in mid- mid- pref. Middle: midbrain. 2002. Based on the definition in its bank loan agreements, Armkel's EBITDA is estimated at approximately $28 million for the quarter. Davies added that, "An important measure of the success of the integration effort in 2002 was the significant improvement in the cost structure of both Church & Dwight and Armkel. As we look at the companies' operating performance, we are very pleased to see that Church & Dwight and its unconsolidated affiliates, in combination, reported a first quarter operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $55.0 million compared to $46.8 million, adjusted for the previously mentioned inventory accounting charge, in the same period last year. Combined gross profit improved to 37.7% from the prior year's 35.8%, and combined operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 15.4% from 13.3% a year ago. We believe we can continue to improve both gross and operating margins in the next few years. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , we feel comfortable with the previously stated objective of $1.77 - $1.81 earnings per share for 2003." Church & Dwight will host a conference call to discuss first quarter 2003 earnings results with the investment community on May 5 at 10:00 a.m. (ET). To participate, dial in at 800/299-0148. A replay will be available two hours after the call at 888/286-8010, access code 4268251, as well as on the company's Web site. Also, you can participate via webcast by visiting 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. Church & Dwight Co., Inc. is the manufacturer of household, personal care and specialty products, sold under the ARM & HAMMER brand name and other well-known trademarks. 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 short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial objectives, sales growth, cash flow and cost improvement programs. These statements 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 and could cause actual results to differ materially from such forward-looking statements. The uncertainties include assumptions as to market growth and consumer demand (including the effect of political and economic events on consumer demand), raw material and energy prices, the financial condition of major customers, and the Company's determination and ability to exercise its option to acquire the remaining 50% interest in Armkel. With regard to the new product introductions referred to in this release, there is particular uncertainty relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc trade, competitive and consumer reactions. Other factors, which could materially affect the results, include the outcome of contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , 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. , pending regulatory proceedings, 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 acquisition or 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. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures the Company makes on related subjects in its filings with the U.S. Securities and Exchange Commission. This discussion is provided as permitted by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995.
CHURCH & DWIGHT CO., INC.
Product Line Net Sales, Gross Profit and Operating Profit
Including Unconsolidated Affiliates
1st QUARTER 2003 vs. 2002
----------------------------------------------------------------------
(Dollars in Millions) THREE MONTHS ENDED MARCH 28, 2003
----------------------------------------
CHD CHD &
As Affiliates Adj's Affiliates
Reported (a)
----------------------------------------
Deodorizers & Cleaning $ 53.2 $ - $ - $ 53.2
Laundry $ 100.6 $ - $ - $ 100.6
Personal Care $ 42.6 $ 52.1 $ - $ 94.7
International $ 7.9 $ 47.5 $ (0.8) $ 54.7
----------------------------------------
Total Consumer Products $ 204.3 $ 99.7 $ (0.8) $ 303.2
Specialty Products Division $ 44.0 $ 11.9 $ (1.2) $ 54.8
----------------------------------------
Total Reported Net Sales $ 248.3 $ 111.6 $ (1.9) $ 358.0
Gross Profit $ 73.8 $ 61.0 $ - $ 134.8
% of Net Sales 29.7% 37.7%
Operating Profit $ 28.8 $ 26.2 $ - $ 55.0
% of Net Sales 11.6% 15.4%
(Dollars in Millions) THREE MONTHS ENDED MARCH 29, 2002
----------------------------------------
CHD CHD &
As Affiliates Adj's Affiliates
Reported (a)
----------------------------------------
Deodorizers & Cleaning $ 62.6 $ - $ - $ 62.6
Laundry $ 100.2 $ - $ - $ 100.2
Personal Care $ 41.6 $ 48.6 $ - $ 90.2
International $ 8.4 $ 38.7 $ (0.1) $ 47.0
----------------------------------------
Total Consumer Products $ 212.8 $ 87.4 $ (0.1) $ 300.1
Specialty Products Division $ 44.0 $ 10.0 $ (0.7) $ 53.2
----------------------------------------
Total Reported Net Sales $ 256.8 $ 97.4 $ (0.9) $ 353.3
Gross Profit $ 73.3 $ 45.2 $ 8.1 $ 126.5
% of Net Sales 28.5% 35.8%
Operating Profit $ 27.2 $ 11.5 $ 8.1 $ 46.8
% of Net Sales 10.6% 13.3%
(a) Adjustments due to the elimination of intercompany sales and, in
2002, the inventory step-up charge.
Reconciliation of Net Cash Provided by (Used in) Operating Activities
to EBITDA:
(Dollars in Millions) CHD
As Armkel
Reported
--------------------
Net Cash Provided by $ 28.7 $ (1.4)
(Used in)
Operating Activities
Interest Expense $ 5.2 $ 8.0
Current Income Tax Provision $ 7.2 $ 3.1
Proceeds from Affiliates $ 0.7 $ -
Change in Working Capital $ (2.9) $ 16.6
Interest Income $ (0.3) $ (0.3)
Other $ (2.1) $ 2.0
--------------------
EBITDA $ 36.5 $ 28.0
====================
CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended
----------------------------------------------------------------------
(In thousands, except per share data) Mar. 28, Mar. 29,
2003 2002
----------------------------------------------------------------------
Net Sales $ 248,298 $ 256,802
Cost of sales 174,464 183,552
----------------------------------------------------------------------
Gross Profit 73,834 73,250
Marketing expenses 16,943 16,832
Selling, general and administrative expenses 28,110 29,191
----------------------------------------------------------------------
Income from Operations 28,781 27,227
Equity in earnings of affiliates 8,152 917
Other income (expense), net (4,871) (5,716)
----------------------------------------------------------------------
Income before taxes and minority interest 32,062 22,428
Income taxes 11,107 7,416
Minority interest 9 89
----------------------------------------------------------------------
Net Income $ 20,946 $ 14,923
----------------------------------------------------------------------
Net Income Per Share - Basic $ 0.52 $ 0.38
Net Income Per Share - Diluted $ 0.50 $ 0.36
----------------------------------------------------------------------
Dividends Per Share $ 0.075 $ 0.075
----------------------------------------------------------------------
Weighted average shares outstanding -
Basic 39,945 39,267
Weighted average shares outstanding -
Diluted 41,852 41,488
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CHURCH & DWIGHT CO., INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) Mar. 28, Mar. 29,
2003 2002
----------------------------------------------------------------------
Assets
----------------------------------------------------------------------
Current Assets
Cash, equivalents and securities $ 67,242 $ 53,852
Accounts receivable 96,831 101,551
Inventories 85,912 101,970
Other current assets 25,204 37,519
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Total Current Assets 275,189 294,892
----------------------------------------------------------------------
Property, Plant and Equipment (Net) 240,755 239,375
Equity Investment in Affiliates 136,503 115,336
Intangibles and other assets 333,063 318,873
----------------------------------------------------------------------
Total Assets $ 985,510 $ 968,476
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
----------------------------------------------------------------------
Short-Term Debt $ 66,418 $ 12,235
Other Current Liabilities 176,038 174,644
----------------------------------------------------------------------
Total Current Liabilities 242,456 186,879
----------------------------------------------------------------------
Long-Term Debt 273,603 406,995
Other Long-Term Liabilities 101,461 74,893
Stockholders' Equity 367,990 299,709
----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 985,510 $ 968,476
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