CHD - Earnings call transcript Q1 2020 | Church & Dwight Co., Inc.

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Operator

Good morning ladies and gentlemen and welcome to the Church & Dwight First Quarter 2020 Earnings Conference call. [Operator Instructions]

Before we begin, I have been asked to remind you that on this call the company’s management may make forward-looking statements regarding among other things the company’s financial objectives and forecasts. These statements are subject to risk and uncertainties and other factors that are described in detail in the company’s SEC filings. I would now like to introduce your host for today’s call, Mr. Officer & Executive ahead please Chief sir. Farrell, of Dwight, Church go Matt

Matt Farrell

Thanks today. And up by joining a morning Rick the I’ll for Good everyone. call over call us is QX and the to finished, of turn open the the our discussion impact I’ll Rick COVID-XX, for of followed CFO. questions. review Dierker, results then when of with begin we’ll

the addressing of on impact Dwight. I’ll start by Church COVID-XX &

X,XXX our the where are brands. the health ensuring now employees, right around keep of to committed and retailers, other’s recognize & during communities meeting of we safety. Church safety going the the priorities each we and consumers Our to for has I want their our pandemic. the needs our Dwight and employees and company dedication strength helping of to live employees are the Church Dwight world &

every and are have to who keeping X,XXX day plants work our running. reporting people We warehouses

our safety checking, areas and through protecting work sparing expense no We temperature are our of pods, promote supply to working social and chain. sanitization we are employees in distancing frequent in

another had to have to invested Teams. from Microsoft home the X, We from easy. are be & switching XXX using who We Dwight’s tools to so work working prove remotely, in work already Church home

how are learning to We be a virtual company.

for both equipment to and to our internal We for produce protective monetary to pantries products at food local donations. our donations we shelters, hospitals, communities are and schools. are UK donations pet product hand And preparing local personal and supporting and shelters use local and of with plant sanitizer and

our understand more we products now ever. respect With than consumers to retailers, the need and for

in we closely short-term retail steps April. manufacturing suppliers We demand pace keep capacity increase and have with are increased to working and partners to with taken

talk and our margin, let’s all exceptional about expectations. revenues, cash was an operating QX exceeded the earnings quarter, now results. flow Okay, gross significantly

of exceeded EPS March. was gross the Organic by outlook influenced Reported Earnings $X.XX growth X.X% $X.XX. positive margin exceeded our by pantry X%. sales in of in our were loading of outlook part and expanded of results quarter. the growth month XX.X% in sales Our share per

consumers more sales online. dotcoms. have XX% in we online growth seen consumer of were retailer and our all e-commerce, Regarding QX, moved In

expect our of XXXX. online We sales X% to exceed easily target in

shares label Private always noteworthy. are

As you know, shares private label is QX. categories were private label our unchanged in exposure to limited to and five

shipments to out Now make March and rates. a and sense let’s consumption, look April, of take at use-up

in grew categories. combined March Our our consumption U.S. for XX%

Dose, still and combined Critters, includes of For growth the The and is in our positive. positive brands OxiClean news consumption consumption additives, that Vitafusion April month slightly both This Gummy included L’il April, is U.S. Vitamins, the measured good consumption with The non-measured channels. Unit with Response consumption. in include FLAWLESS, year-over-year grooming, HAMMER First oral WATERPIK that’s & April women’s negative HAMMER ARM and Orajel brands SPINBRUSH, ARM analgesics. kits, and pregnancy TROJAN, Soda Baking and & growth BATISTE

Let’s the shipments. look categories, significantly most Shipments to our in largely due across were up pantry March of loading. at

vitamins and shipments litter month as and led levels at our U.S. continue of retailer for elevated are tracking replenish up be and by April, X% For to the centers. stores combined distribution laundry, categories we

a We’ve are It’s using March shipments categories not scientific, which backdrop they have in now if month but what weekly we learned. April, to both here’s strong regarding consumers Now been ask and use-up determine with ago compete. to of the we attempted we surveys rates. more in than completely conducting

for including rate survey an elevated April, showed detergent, products additives household In and laundry soda. laundry our baking use-up consumer

is good brands news no Cat products health for for where usage. fighter for more, Litter, household of they So was XX% washing say laundry near-term our exception in brands. example, of are our stain there is and consumers The reported the change which

usage elevated and sprays, an Most reported consumers shampoo, do use and toothbrushes personal oral kits, elevated dry categories not our of care, condoms, other such up-rate. pregnancy personal analgesics. vitamins, as report care nasal Regarding

So time to those the experience to extent work that some may March, take those off. in higher categories shipments it

WATERPIK of was water our dental to due offices. category, in down by XX% of flosser flossers retailers closures, retailer water closure April consumption In and some deprioritization

consumption which recent are As be of dental in water important for you FLAWLESS April. weeks could recommendations time XX% closed there know, flosser dental source a emergency spot, offices procedures, with by first so except are buyers. no growth an year-over-year in professionals, bright are

at-home to team consumers the our of on is from our focusing With do in and moved of to marketing what quickly change Teams trend. women messages. dramatic products, contributed be closure female FLAWLESS camera and the FLAWLESS can has ready. the in marketing interest FaceTime are use that could Zoom, has salons, one that The home the increase our they at benefit so grooming of brands can

will economy. product our investments, this in always in prior QX Now balance some respect sheet. attract And accretive businesses. retailer portfolio to Innovative value we the no in believe new open are continue to of in an many turning With impact, have to resets although products brands we positioned and COVID to even launches, been in invest virus. ahead, given There or due downturn business. with of respect the and new consumers the acquisitions, new intend shipping balanced we premium in new We acquiring R&D economic to began to to pullback delayed well spending our to are our TSR development. in strong months product is products

XX% how value, which when XX% our might recessions growth for products In times of was In organic XXXX X.X%. portfolio natural considered our value. are to of is similar is was like these, XXXX to Today our it company to perform now. of comparisons make a prior indications

brands We in two recession. have FLAWLESS of and to XX discretionary compared although brands of eight are more power XXXX, in those times WATERPIK today

much today And the in on litter our laundry equity Our focused brand vitamin brands, Critters due are stronger, are is of categories. L’il especially health. which the and Vitafusion flagship demand to HAMMER & and great consumer in ARM

Our growth past sales CAGR by international today grow portfolio larger years. the more opportunities business diverse as to our and over with X% a is more evidenced four

are with globally Asia markets. business more mature and dependent less We more upon in are balanced Pacific we well

the the impact international XX% growth delivers fact, weathered of Coronavirus business and initial Asia. in the In QX organic in

The path-forward. XXXX downturn many is severe economic are recession. not more of the simply XXXX the a that There influenced version differences

and well dental and the interruptions this there’s We closure have retailer and social risk And foot affect year. focus a resurgence offices the the over always the orders, later new Because of online. wellness, retailers. the supply virus, distancing, grooming cleaning, trends quarantining, if do. of on and of endure we including decline may the and our emerging potential routines consumer trends closures, personal long-term in government they shutdown which buying virus spike business the traffic consumer of of positioned are the chain are These

confidence to consumers. economic there to reasons Church do The The we have both thing economic lots largely well are are essential in Dwight. play In of great times which categories company and conclusion, in to good are our downturns. in about & we positioned is in

value and a balance products. of have premium We

one a in low number are have brands their to we and power label. private exposure two categories number or Our

downturn of of one this off balance are in and in entering a with and We strength best strong our sheet. XXXX position are coming the years

well and to So the in finally ensure we ahead. performed months have our the brands sense the ambition the that common resources,

the details to up give Next you Rick quarter. is on first

Rick Dierker

Matt, you, good start and We’ll Thank morning, EPS. with everybody.

$X.XX on $X.XX adjusted better a drag in with as compared which the a due volume behind than quarter global margins $X.XX First of from gain products grew to earn-out We demand XX.X% dollar not higher pandemic March, was associated an marketing. and increase lower a $X.XX, adjustment The drag rate. international Also XXXX. guidance. a is $X.XX many our EPS, excludes a higher strengthened the in with $X.XX our the brand FX primarily QX currency did assumed our in impact better and for have outlook, and of significant sale $X.XX to in included tax from gross the to the

QX earn-out continue up Reported conclusion in the in earn-out XX.X% consumer sales period. organic tripling discussed of The were growth global our driven our by we to up our consumer demand X%. increase a X.X%. was approximately will X.X% revenue reflecting was of calls, As adjustment the COVID-XX. of products significant beat Organic previous outlook until due for sales more the quarterly than

increase for and We especially demand. short-term laundry to actions capacity, due to overwhelming have taken several litter

then hindsight can Laundry so products. Oxi profitable and drug And We to class were promotional laundry private focus were extra less and this trade. right able time exit fast reduce detergent the decision decisions planned forward exit expansion at we we laundry core activity label made like the of capacity QX the from to in for for ones a our vitamins on to the

segments. the review let’s Now

mix. Consumer increased by gummy XX.X% volume ARM positive baking clumping stain First, well and cat Growth vitamins, Domestic. led & CRITTERS detergent, fighters, sales to L’IL laundry ARM HAMMER Organic and dry liquid as as BATISTE HAMMER & due was OXICLEAN VITAFUSION shampoo. by soda, litter higher and price

our we Nielsen. for the is bridge can One back asked XX% we business growth question to are domestic usually

quarter, offsetting online basis due of Nielsen had the comparable For our have strong adjustments. and Matt when we this unusual We largely two organic circumstance to points are growth untracked XXX channel large of there mentioned. actually sales growth are the

say the consumption for quarter was to we would closer So XX%.

XX%. Our I was said, organic growth, as

barometer March. as One growth usually data, pandemic of we has XXX scanner couldn’t inventory With to of the keep for a while much indicator. brick-and-mortar. exceed thing means during is class by data time us, is current the in well that in measured fill good all this currently online online So at less is not retail orders in trade data scanner an Nielsen made points of mind that the declined basis

would week indicate in scanner we example, ending down X/XX, For XX% the consumption. roughly data were for that

point which positive. retailers, slightly that was on across data we sale based While our have, all includes channels consumption of online

laundry for growth, STERIMAR driven in ARM pantry Germany. delivered quarter cat HAMMER detergent loading. Growth nasal baby BATISTE wipes from spray X.X% the Australia, shampoo feminine in the strong International CURASH by liquid also Canada hygiene was a dry and in & litter, in benefiting and FEMFRESH in UK, organic

in sales Demand organic continues to grow business, poultry the industry. SPD increased For X.X%.

On the the the in the there could negative for the impact and outlook lower other on demand in from Negative a COVID-XX hand, milk result industry. reversal been sector. dairy has market impact dairy

margin. now to gross Turning

from FX. XXX increase margin pricing a higher gross quarter first point by a COVID-related bridge expenses XX.X%, productivity, is basis year Our XX gross plus margin and basis for to XX costs. due bps, bps XX costs, minus mix, points higher ago the bps manufacturing of partially basis make quarter The offset distribution price/volume was for basis XX plus up costs which for basis for XXX higher COVID plus for points XXX less points then less points and XX for acquisitions, productivity, manufacturing currency for and costs

Commodities have oil. moved significantly, especially

moved the they’ve move six where it HDPE, with tailwind, as such for XXXX longer resins commodities typically or and oil. them ethylene takes commodity be down, in no COVID-related benefit. to a doubt hedged but like commodities unfortunately about other XX% more concert will offset costs than any entered for However, months and We

For example, and of month in QX, the for of primarily COVID we million that about costs $X were was April.

Marketing be yet have marketing. coronavirus quarter net back driven for March likely primarily percentage less due new activities. to Marketing spend marketing now X.X%. as expense in points a basis marketing decreased related the with We typically XXX and spending to to and consumption to is $X.X half delayed Moving sales million products by QX lowest late was QX demand of is to by down year-over-year. and our launched. being QX to

increased SG&A related primarily basis to adjusted to intangible QX SG&A, points For amortization acquisitions. XX due year-over-year

on margin Net for $XX.X This And million primarily increase income QX. quarter Other the XX%. was driven adjusted operating the XXXX, basis XXXX. of year-over-year for for was drag an primarily interest $X.XX quarter by driven our to point lower option in all-in expense in rate a XXX exercises. represents by effective expense. XX.X% operating points QX increase basis stock was tax, compared XX.X% was XXX profit, This over EPS

cash. to now And

lower of increase For from the were a earnings due prior XX.X% cash cash increase almost the to XXXX, $XXX first in three year and working from months million capital. to higher million, $XX operating a increased activities

being year full $XX the are $XX due largely million to to plan Our start delayed. gone million Pandemic has to upgrades delayed CapEx locations access plant dates. and has limited from IT

of Our the times strive maintain liquidity credit We two end rating strong. year. to sub expecting our to is by be the while

demand we’ve As consumer our communicated, is in and for increase flow significant we’re products, cash of many previously thus, a experiencing stronger.

proactively of need the termed we remainder market quarters the rates. Furthermore, and during until and February, borrowings commercial January actions our favorable Those year. the third for to CP at for access eliminated out us the second paper the

we as flexibility. billion cash $XXX given exceeded balances current Our ample revolver, drew us million $X from our

issued market is are We’re thing haven’t debt confident open great in our revolver though is about us. liquidity, downs even The quickly that we for draw they is the long-term repayable. which why

outlook. its virus due the issued the situation, not the degree economy, to the company XXXX, company demand withdrawing XX, the release on relating previously impact guidance. Now of including the guidance high include and as turning did of COVID-XX, which of fiscal uncertainty is the in consumer impacts global the to The fiscal its evolving rapidly XXXX you to January XXXX read

As of second to pace and demand quarter, strength retailers of the our we of safety to to the ensuring is focus supply keep primary which the brands with the really comment employees, will outlook. is company’s extent sustain the and on the that higher our maintaining

$X.XX share, declared Board quarterly as dividend. company’s the X.X% a of XXXth a cash regular ago of per year a dividend the yesterday, consecutive Wrapping up, quarterly regular versus increase Directors

that and be to happy I questions. Matt take with would any And

Matt Farrell

questions? No

Operator

Instructions] Thank from first Our Parikh with you. Rupesh [Operator comes question Oppenheimer.

is Your line open.

Rupesh Parikh

for morning. on congrats Thanks my question, Good a taking quarter. and strong

their So some in on April out I guess Beyond with all, customers the Bath even your just consumption of with stores. of flows, surprising with all commentary terms in Bed, mean, you’re the really that strength & I seeing side, starting closed

trying buying any results. guess, Zoom I more product of product understand see in women of, better some I just more just and you that this I’m more. using I just to impressed online, consumers using those our guess strength they’re the what’s now to So terms buying it’s know and But where more driving gave color, your color product? really more

Matt Farrell

Yes.

In XX% numbers, zero the weekly at XX%, fact year-over-year. if percent, you look they went up

yes, So you’re it’s been building through right. the And month April. of

XXXX. some you distribution If the our back said, the points things we XX% said in about of to to we going expand we go were

right people that’s So are you are But done, that online. check. moving

a Amazon dot coms as in our big seen big of but retailers other Amazon April And uptick So in we’ve well, course, sales. year-over-year. up time us for have the also is

Rick Dierker

about business to the only closed XX% of there has add I’d thing is have down. And that Rupesh, been retailers that

that’s we more numbers, say when So consumption impressive. even those

Matt Farrell

yet is and were remarkable stores are Yes. the close where they’re it’s specialty year-over-year. considering Which you up going

Rupesh Parikh

Okay.

– Okay. Great. perspective, And I shipments a had then a clearly, guess growing out-of-stock strong just April. from monthly so in you

go at we so, Or product? are the If your you retailers products I guess, look at, of want to categories, other now product store, I still out-the-stocks your fully some stocked that guess like across your all categories? find if we key

Matt Farrell

be of Yes. I’d say if the there you look at that X% shipment vitamins. growth big in April, would the litter and month laundry, drivers

you So us got wiped in we the that’s where if find March. out more of would out-of-stocks for

Rupesh Parikh

Okay.

in So you’re out-of-stock still there’s today a retailer, saying? even

Matt Farrell

Yes, absolutely right.

for still playing we’re up three. catch those So

Rupesh Parikh

balance environment any promotional question, And terms the you has as Okay. then for just promotional year? what of the guess just look I less been last at [indiscernible] lately, but thoughts my in look the like of could

Matt Farrell

like Yes, what look QX. well, it I tell you can in

down the amount in category laundry the sold at XXX QX, on points. look you basis If deal was

everybody back. pulled So

QX. was by back going a people in to And case, on back sold all the the category. Henkel Rupesh. XX P&G, really eliminated A Church Fresh to Tidy pull ARM promotions category as any lot driven had Dwight pulled buying and because & for stores, just That’s up entirely was Step. promotions retailers were HAMMER in litter, as well & product. the laundry litter Cat, of just tell deal. of on now, bps right That lot in as too It’s early So

and early end So reduced of in they – month April. of were the March

going speculate promotional So in what’s right happen environment. with to respect I the to now don’t care to

Rupesh Parikh

you. Thank Great. Okay.

Matt Farrell

Rupesh. Okay

Operator

you. Thank

Our Mohsenian Stanley. question with Morgan from Dara comes next

open. is line Your

Dara Mohsenian

doing well. Hey, guys. morning, Hope are good you

Matt Farrell

Dara. Hi,

Dara Mohsenian

was down mix I consumer social curious trade mentioned, on as as move you Matt, you’re your value premium distancing phase for we and of thoughts the COVID, the position, unique potential in beyond fairly So of brands. with a

do come? you are down? And so significant you it’s far to how would positioned trade seen expecting So consumer for you that? Have you’re indicate anything think that

Matt Farrell

advantage Yes. if is get move the categories, okay, or directed Sun. your when any mid-tier value. find categories, of biggest question, our value. make it’s brand Purex with we Once only from, premium in to our say, are It’s still we I detergent, and the we across XXXX, any of consumers lately, to all attracting mean, to we greatly to advertised I that are to spent that trade one lot you’ve compete I’m restocked, benefited we’ll shelves more – respect call towards predictions sure, laundry in And the to have and too the supermarkets brands able down. unfair be now time right back would and what that’s a we in tell, with the early what’s

we premium stand movement a be to to from value still So gain down there detergents. laundry should

you value, We XXXX, XX%. because down if in back a feel and we’re our place, they’re of XX% great to like were go products today,

XXXX largely look back like we So did just as we as our portfolio. far in

Rick Dierker

And XXXX, would I what X% indication times remind how the about domestic it recessionary as be, this you in not of is saying our but growth for do organic business. in would that an was we

Dara Mohsenian

Right.

phenomenon? That’s a on the Is and And the detail of Okay. some And you helpful. you the temporary? of care more that’s bit think that a just on do and extent mentioned strength weakness you that there forward? then in weakness the Or of more lingering specifically versus is you see us category give portfolio there? Can something growth going rest brands. other some personal Trojan BATISTE,

Matt Farrell

in first Well, Trojan quarter. BATISTE did and well

phenomenon. So now it’s – in a April,

simple month in of And the reason April. is are people they’re home. staying at that So significantly down the

up, the in did March. you you somewhat condoms, survey – having impact sex. down. far BATISTE, going look the as if what’s respect at of we Trojan and at And with if are social as with was distancing loaded use quarantining, people look to It less So the that’s when pantry on

restrictions So it’s to that a is are going lifted. Trojan be until those natural also down

Dara Mohsenian

Okay, great. Thanks.

Matt Farrell

Okay.

Operator

you. Thank

with comes Grundy question Kevin next Jefferies. from Our

now is open. line Your

Kevin Grundy

guys. good Hey, morning And you doing I well. are hope

Matt Farrell

Hi.

Kevin Grundy

want perhaps I and start on year how to investment those priorities Matt. this about have and you’re some how that the tailwinds emerged Hi, just may shifted. have of thinking investment

levels now, clearly lower. least sharply significantly, demand, significantly for higher. consumer costs at So commodity Promo down

and of perhaps just shifted lot even of Matt, three level, but and way two about things kind a to withdrew how thinking about that you’re understanding perhaps guidance, So your at high past a investment how that talk you months? maybe over the going

Matt Farrell

opening that new annual unchanged. R&D the Yes. is on mentioned Well, my in remarks I spend Okay. and products

In But would this fact, the simple the the back the commented just the million on one parties now. million of plan, we can be we’d access to us can’t year. that plants, third for spend we be plant reason and the that year $XX installations. with get access to with Rick to the destinations equipment or we get went $XX either that want we’re at CapEx, a right into might helping

we million. went $XX from So million $XX to

The of projects. is access. Same is of issue related was other thing million to IT that part $XX there limited dip

mentioned and As I some also have go, just think really OXICLEAN. HAMMER I the are there, is obviously, help we XTRA, cleaning, far brands but some that trends we & that us. have trends and of ARM strong as the not One to going

really of March a big had month strong and also in April. OXICLEAN So

The personal is next. wellness

demand now. Gummy plants, Vitamins, obviously, that So great captive we have plants in right – make obviously, two we two

immunity are before the you towards consumer directed immunity. to interested Vitamins Gummy naturally, or help think So the are that more would in

is that us. grooming And be other one. routines the So a would destination new for the

benefits ready. People be camera That wanted certainly to FLAWLESS.

marketing amount because behind dollars, is new growth one that another one forward, we it’s be a would of in. opportunity that, that a for to see be and tremendous on a to and So money going it invest more brand, put destination

Rick Dierker

just a And cash maybe one is one other from investment.

a are as We cat a in in about at well. We I said more my new bit right? we chain, capacity, capacity litter little investing the are in – prepared laundry looking supply remarks

well making example. in an vitamins positioned future litter that laundry, as for the sure we’re this We’re and surge,

Matt Farrell

Yes.

In fact, line online new we Kevin, coming laundry have now. a right

Rick Dierker

investing sure we in I then to so supply, our And have right? co-packers, and want partners. make backup we’re also also

Matt Farrell

that’s good Yes, a point.

we I of – risk later the things the mentioned of with in in risk the supply of the One And chain. you also virus have the is upstream resurgence the have always year.

our raw it So this plants, some to it’s supply our redundancy so about that not any also resurge of worse can packaging investments you across worry suppliers materials co-packers Should but chain. later have sure make make or we just we get and some year.

Kevin Grundy

ask of on. seeing will e-commerce best terms will when more pass of just been talk and then Okay. to be there you capital maybe And you in what are the a it’d a bit viable That’s as trends, From helpful. perspective, little timing think, from then environment? We’re shift prevalent? all deployment about you the in more kind become the I transact? there’s one know working potentially today, same more an to watching obvious home it

view environment, of you with on. be perhaps more And two, I’ll cycles, then does with look would next all? and – current couple number go back replacement of also, longer defensive, Matt, informed you. at the point sort core it I’d of be discretionary, those asset curious to pass deals, then one; the number the think WATERPIK the consistent sort daily would portfolio? sort sort less Thank FLAWLESS, use, at get and point of we of more you’d the trends, your past Do

Matt Farrell

Yes. quite That’s of question. last a my a list

my accretive with In start Let’s now. that for Kevin. mentioned right I TSR remarks, M&A, open we’re

sheet, window – balance our and so We have strong very open. a is the

as were far WATERPIK cycles. As have purchase you’re longer right. go, that yes, Those and brands FLAWLESS two

of brands our and fast or would number gross were brands, were device. they those six acquiring months a is purchase five that criteria, product. FLAWLESS years. a were more a margins, a met we say closer expensive number wouldn’t asset only it’s they so That’s new around few or cycle that because less light. brand, FLAWLESS three for Waterpik’s they high they shorter preclude two I of growing, a than years. maybe WATERPIK, to to one been Both had all

to you to dental of And a traditional So a in brand, years, be prior for either say, recommendations for water us. of the closure now That’s impacted is a disproportionately as attractive device would comparison the WATERPIK of whether offices. big one of flossers. right certainly, source use us or, it’s because

I that So know should definitely help that your that else once though, if come ask? all don’t questions life. Kevin. hit is I business resolved, to did back you What

Kevin Grundy

No. be time No. That’s guys Thanks for and perfect. well. the

Matt Farrell

Okay.

Operator

Thank you.

Our comes Lauren Barclays. Lieberman next question from with

now Your line is open.

Lauren Lieberman

Great. Thank that just to on the back more I right? They’re just given you. go positive strongly, the about Rick, decision I negative easy to so seemingly than mean, coming want revolver. outlook. fact draw the to sales But to clear are more certainly your point it’s through that talking is of repay.

to commercial tap You don’t drawn revolver the need a at have why all? paper, so into

Rick Dierker

No, it’s fair a question, Lauren.

you And still uncertain remarks, year, just we But expect what want it’s less can really of my cash than it’s to I about two I and put think think all in balance infer uncertain from the said, you that. our I be by the we levered so sheet. the prepared times. times, times end on

have plans anything to to no We the get the end year. like before with we’ll and repaid it, do of

Matt Farrell

Yes. And are these the about repayable. thing is easily things good that

Lauren Lieberman

down, gauge. then just about to thinking the you I okay. Matt, it’s know said, just Yes, trade early And

in interesting XXXX, your thing laundry I at how one Just market much is right. had to versus share thought grown was look

the of on work said even kind financial advertised the largely the brand share that gained. you you So it’s In the the the that crisis, like, capitalized opportunity price in in the laundry Any really back only held of structure long-term? had you on thoughts pre-COVID. category tier, and presumably done, you that but

like private label of shake categories, how feels time, for on price premium? you thoughts laundry? could tiers value to that a being ends Because I have feeling over some element it like think there’s up an any there look out And what the

Matt Farrell

Yes. Yes.

shares X.X%. If laundry you XXXX, they’re around to today, back go And XX%. were our

has back winning. and we laundry XXXX. winning So The much been in been been the has premium has bigger time we’re laundry detergent, in were over shared donor value and than mid-tier

So we expect time. continue consequently, would that would over

also seeing come You Persil from brought the the an grow saw into end, presume in to Europe, their opportunity in end. high share it premium product

even for I & then of other trade, back HAMMER. national the and weren’t brand. all in ARM doors end, on we classes XXXX, a And talked We all even in weren’t about

advertised we’re way, a only brand. today always value brand. I stronger So advantage way the more being And say unfair of and have as recognizable we the

value So positioned growth and I think term. long for we’re

Lauren Lieberman

That’s marketing great. spending. And you appeared was that other quickly one just to Okay. as during was you adjust the just as quarter. question surprised then I even could the see to

Now you about just basis, it’s about but it’s a very adjust intra-quarter? booked to not curve to So marketing smart of but kind be on sales that because because a may was not be your that curious quick able I seems that, I it like – decision, was curious that too.

Rick Dierker

we quarter Remember, of were had our we Lauren, million lower be. QX higher to originally lowest only Usually, us. QX anyway. than and March spend planned Rick. say in for are numbers few I’d it’s Well, a QX is

And pretty wasn’t typically, we’re nimble. of it big that adjustment. So

in quickly So we were able to March. react pretty

Matt Farrell

see half, March Yes. we was move could We moved really the what to QX coming. out second to because quickly in

part that to that make clairvoyant it a to our was tend – be on So decision.

Lauren Lieberman

Thank so Okay. All right. you much.

Operator

you. Thank

from Powers comes Steve question with next Bank. Deutsche Our

Your line is now open.

Steve Powers

Great. Thanks.

categories best tight You ability about across close supply retailers’ inventories that And demand? your like you’ll Or and guess? focus but guys to mentioned XQ it you’re a more cleaning, have to it food, that about it and Is you is is think point this to catching water? at gap? do paper when beyond ability sense up, you fully

Matt Farrell

No.

in on I focused categories, March. wiped think I we’re Vitamins our the mentioned. that three that categories

part up. far ago. But that’s up big me, X,XXX in pardon than and consumers a increase April. month We so – We study. And the vitamins more learned a use is did taking were of shipment – are that they that in way consumption

QX. say would I got to – That a out. We’ve be it’s wouldn’t until to it’s So take way months long Steve. here, going two go

hope we issues of all have all be to resolved classes quarter, of in end the would So of by our trade. the to, –

Rick Dierker

incremental the consumption is. Yes. Based today on what we and know

Matt Farrell

Right.

Steve Powers

they also I go All the – you inventories, those of right. XXXX? the from I prepare guess potential of when or second I Great. retailers a guess, this do to redundancy, into half on for how you the on I build inventories, retail thinking? is think And is which about as And back topic in build back recurrence two think perspectives we’ll that forward, factoring on more guess topic mentioned, your actually one redundancy: inventory

from And redundancies you’re cost perspective? from a that of perspective, cost chain how what some is to there much future? then, now of thinking size to be a cost And into like doing is be we’ll that supply own the a about your you’re way structural place the now likely in putting

Rick Dierker

take what I’ll the structure like stuff to or COVID litter, and structural investments one capacity for include those second March, for that I things alluded anyway. are upcharges first, kind costs be The month co-packer would of like laundry were Rick. would and the in Yes. vitamins for making and the CapEx like of we that it’s that.

be have or would those just time moving things. line up We them underway. of some on the been of And completed some already

some co-packer our the one that. be aspect labor revolver March. to are even $X it happened be. out – really to was yes, exactly thrown costs the into I So in that along would $X ready tell or with month higher fees that million frame cleaning don’t would just donations, how for million of And you internally, costs, I that think big we’re upcharges,

that’s second question. the So

Matt Farrell

we We for to Steve. my on have plants, is The we conclusive Yes. remarks building good three capacity have have coming I with the that now, did right in we your that resurgence inventory. respect of new and mention us the news example, anything potential that there’s now. don’t right And question laundry in first retailers the virus fall. online the for have, for laundry,

So anticipation that inventory the were can captive vitamins two better it build to we in having with some in is of to advantage of position be it for to happen, take even true plants. a same

build a we – it inventory can we year. in should be in can the We later be position and resurge again, can

days, to people Zooming the as And and trend, positioned everything a right new particularly to looks home two the respect grooming think more Teams FLAWLESS, So personal still sitting lot we when as up, opens other one as trends: even FaceTiming well. And going-forward. now, are where like doing like far they’re I and and using with be and going we’re cleaning wellness. early those well

that So a there’ll for product well. need as be

Steve Powers

All much. right, so Thanks great.

Matt Farrell

Okay.

Operator

Thank you.

next comes Tong Olivia question from America. Bank of with Our

line Your is now open.

Olivia Tong

Great, want morning. at retail, it emerge into evolution a just your seems I your you like on more thanks. share, view given ability into pantries recession. of demand dig now. and as Good expecting bit the what full on deeper to you’re up-phase value-tilted points a obviously and to little stock to then There’s pretty but replenish price out are home obviously need the of

helps are the as as that share grow of So terms come do far the home you to ability your pantries are when they we in hurts of think lockup? fact or you out

Rick Dierker

good consumption, remarks, big incremental you heard comments, vitamins, Well, Yes. we’ve that and the assuming actually kind that categories of about laundry say categories you’re would that studies our Matt his pantry in seen. like Procter, And I were know, all agree fully and it’s are XX% thing thought one day of prepared we like some said other of for with incremental loaded. that what Olivia is according consumption to laundry you

we consumption seeing in is, for in still positive consumption big part and we’re So April. numbers it laundry there’s and incremental spikes of like April saw in

tell So that deloading isn’t you that really happening. would the

for So consumption it’s real as an laundry example.

Matt Farrell

positive – was all some Critters, that those who we in �� is consumption additives well. the with remember did did were we which using analgesics we Dose, HAMMER also the studies analgesics had detergent, OxiClean And laundry had people of personal additives, oral for the & were respect some were Vitafusion ARM we our of that the mentioned to laundry are brands and positive as elevated. Unit found a Yes. baking And and also Orajel consumption, vitamin Olivia oral the vitamins Soda Baking up and consumption. on more, April elevated and all I FLAWLESS in soda care, found gummies, two L’il the things where

use-up said I some of this than faster got you it’s indication others. get in it not my to some but you the which at and things, off give shipments categories why that’s look worked you loading the extent remarks, scientific, rates to So can and will consumption pantry three

Rick Dierker

XX%, it Here’s a up up or in in on still soda, consumption or baking was stat April was great March XX% I XX%. XX% think

So as just you a consumption and consumption can consumption. see, it’s and

Olivia Tong

right out sure, talk bit can then Great. little very can your impact the assortment? want much pandemic? of if And as with in helpful. a now, retailers thinking but about any shelve you That’s of come how in expectation affordability of still brands how since discussions those Obviously, and products your some many this what’s carry. terms many about terms I’m happen how your – of discussions carry, on you there keeping even Thanks. to they focused stock changes I’m thinking or this, how brands they’re not they just about longer-lasting about, also of shelf Just

Matt Farrell

look, retailers of discussions think, haven’t right Yes. had sorts I Well we now. with those

and what’s and look likely about more us know, you brands number good we some a bigger you their that written real and brands are number well some known that known less XX in one to are at for are category. do two If that, brands the trends well of brands that’s because of is as consumer very better and consumers recognizable than have so

well brands now, brands, do brands. better ones will the than smaller bigger think I will So the people likely trust known bigger right probably because

Rick Dierker

supply conversations and are and about the expect would stock you types As of numbers. right now of those happening most

Olivia Tong

Thank you.

Matt Farrell

Olivia. Okay,

Operator

Thank you.

with Altobello question Joe comes next Our Raymond James. from

Your now line is open.

Joe Altobello

Good Thanks. morning. Hey guys.

Matt Farrell

Joe. Hey,

Joe Altobello

to just back something said, usage. incremental, about in what’s of go to you terms wanted Rick, Just right, truly

rest quantify plus over example, there delta years, with a of to you truly quarter this for at the it call For for much look of your been U.S. two that’s way let’s of years. Is was pantry organic that just X.X last the stays trending to how you much XX% the loading? plus plus how number X% that If was example, X%, pandemic? business,

Rick Dierker

it’s tried the Yes, the is a was we guess X% say envelope I and outlook to organic of really were as. back to But organic. for tracking QX, our probably we best do We would a know what outbreak. this X% I’ll pre caveat

of part sales in best there. that has the incremental in guess incremental consumption laundry, vitamins is Our

be of would or would with that’s maybe so our virus guess. that have and terms in loading, and been organic of driven envelope then the going that’s just X% to the the pantry around X% for So the incremental the balance consumption, best back of

Joe Altobello

And brands going are seems Would brands, earlier, than gravitating this touched I you secondly shelf retailers toward come on Okay. imagine bit very had out little helpful. on shelf space, space it focusing more. a expect leading guys like on That’s but are and consumers you bigger of more just this you that to in? with

Matt Farrell

that’s dream sure. for Well, the

think I shelf influence space. supply can the ability the to

other we have voids product So may you to gain. in competitors stand have the have or producing extent you to getting and difficulty to that that access product

in example, brands. we capacity of this coming to on the smaller for So laundry any get through upsets extent for new

will be those. We to able fill

Rick Dierker

– pantry consumers, And don’t loading comment for lower income a other load. they afford now maybe Joe lot value for is, question portfolio about one that on they pantry our talked the we last of to can’t

especially value brands. So lot for it consumption really is a of the

Joe Altobello

you great. Okay, Thank guys.

Operator

you. Thank

with Our next Andrea question JPMorgan. Teixeira comes from

open. is line Your

Andrea Teixeira

I you. hope is all well. Thank

SIMPLE & back to coming the Just launching spend. CLEAN

in the the follow And you different the to you quarter. So the how second up out how worked did I on a see tracking bridge dynamics? did are and have displays then

Matt Farrell

& asking. for Yes, thanks excited ARM we’re Andrea, SIMPLE, about super & HAMMER CLEAN

that’s we we in we’ve result in even is way and started stores actually that were news. It’s distribution we’ve early. good more of spread – COVID and the particular able the that hit shipping than to a still before retailer also as gotten we so retailer expected the spread out COVID-XX Obviously more, at really out, So one have traffic down.

money is this right a displays, and ingredients probably spending is et on spin most So detergent the it’s cetera, now, it that but XX. not trend, has XX on to detergents have six good a the extent to of

and consumer is believes well that more. less we’re positioned So on-trend for the

Rick Dierker

and And this biggest is it you you deal Andrea, launches that one we how bigger done, were in was period. York, saw thought think we’ve New of we the

Andrea Teixeira

breach quarter. comments the for helpful. and consumption follow just That’s the getting on that I second And trying know the shipments to in both the to and we’re up

by first quarter You XXX said shipments all April. and consumption the channels basis in you’re XXX points in shipments outpaced U.S. points in basis for the looking the

remarks So like bridge destocking in the June. called to expect out and you to the just May new that a trying prepared

May still the you what because of negative takes or at June in you’re just to and quarter, so and to think second So about trying be elevated you’re how of into looking in terms puts the trend going a mentioned consumption. shipment

Rick Dierker

of I still Nielsen the that or detailed and get that’s have low, may would of are shipments an and May too can we’re to June, question outlook. they retail we But volatile It’s not quarter, the because we’re positive for to was days there’s in you shipments to channels next to did you you. in last true. inventories again, tell shipments not over mean – have kind days some positive to have not because of it’s a tell forecast going that’s give wanted zero We even you that trying just the not that’s reporting into just we’re what the would might’ve math, now. just XX XX of are if pretty you going said higher flagging really I it’s all I if we the visibility and going a and stock, and to weeks just actually – untracked say, tell seen well, slightly consumption right need couple back negative to. get the you

a bit So it’s little actually better.

Matt Farrell

U.S. that shipment products would more kind number is even that can X% are. and Yes. around some everybody number. the International information of our understand April the providing helpful businesses And ahead is be we is that April. so for And X% where specialty for we thought running

Rick Dierker

start we’re QX. encouraged for about the really So,

Matt Farrell

respect predictions with any make can’t But, Yes. May and to June.

Andrea Teixeira

very you That’s fair. much. Thank Okay.

Operator

you. Thank

question comes with next Steve Strycula from Our UBS.

is line now Your open.

Steve Strycula

Hi, good quarter. morning good and congratulations a on

of are tends the We question commodities to real to market decision a I be exposure, want and have a guidance recession. a very emerging or during on surprise really you deflationary lot there. doing would is achievability it do function the little just QX a no my in withdraw wider companies just strong, because was of well understand range this are to And ask of so context, So this scenarios? portfolio

against push guidance So why, to someone through still a saying, as just if your well you And the have follow-up. could you isn’t achievable? help mindset me back how pretty I

Matt Farrell

Yes.

to will of the government here’s, the we social shut Which country? quarantining retailers the we to will which how asked, with to just when a parts remain And none kind have ever are following, is going What prior they to office be answers be, of if going close, been knew conditions to distancing continue, long going the in going store would when open? they’re and will reopen? orders well, of hours? different questions have none these of ever have what’s There’s Okay, a think have? do these dental downturn. traffic What foot in economic down occurred

So looked are can’t we many said we those and there’s that too predict. just we other at right factors now

guidance. withdraw So consequently, what’s the thing to do is sensible

Rick Dierker

Yes.

was financial there. would it have definitely we higher kept or If a XXXX this more would seen have you recession like and out unemployment guidance just

Matt Farrell

year, guidance. think Yes. were the and organic not have we U.S. I company’s sales in was XXXX in XXXX a withdraw And X.X% I had we the business. good and did with company

I X% around XXXX. in was think up that

more this not So just is different. severe version of XXXX, a it’s

Steve Strycula

drew helpful? some locked to what’s we XXXX way comment feel Okay. a of pretty kind like of that percentage are in you Thanks. of say now the type you’ve tail would like XXXX? vein, the what and In more because for be and help can in think can about, what confident in have added on about put that T-bar to businesses any Then is where if we perspective what you of portfolio exposure through is there about were parts about Rick, to portfolio What think there so maybe any left like hedged would scenarios? you we relative us you versus the XXXX,

Matt Farrell

was we we compared had than XXXX, just have the in if in pulled detergent, we those, train FLAWLESS. which be we value a And XXXX is were to way we detergent, because big we second through Well WATERPIK power a vitamin brands, is for four train that have Yes. terrific right to XX took now to place eight vitamins, XXXX. pull really vitamins, today trade in we and And the added economic Right and us see have an was it laundry laundry now BATISTE downturn. value it And down. was its us, help was XXXX. a stronger back still the engine

so is those happen don’t time a recommendations therapeutic it’s some that right dental good obviously feel that of need the But we’re big that But is off coming at month signs start but will more Yes, should back. from, the offices when true open the will we that, now, will we recently purchased know those WATERPIK was down because point. that of FLAWLESS in offices April. flossers, in when for closures. water that days, again, I recent and there them. real a dental like seeing think start expect could first start looks we we up, about benefit branded to rough

more So more risk have have you your actually brands when more. you categories, you and spread

of a degrees think – freedom in actually we lot we’re XXXX. more position a more a lot got we in We’ve So and than in were now better weapons.

Rick Dierker

of said demand incremental see happens terms what do its for to you’ll not times let prepared I about about hedging, course hedged to remarks, we’re XX% in but to play this XXXX. in commodity And us in then And the best lot we’re of my I in like XXXX, XX% market. see as hedged think a likely hedging

Steve Strycula

Right. Thank you.

Operator

Thank you.

comes from Chappell SunTrust. Bill question next Our with

is now Your open. line

Bill Chappell

morning. Good Thanks.

Matt Farrell

Bill. Hey,

Bill Chappell

into things, any surfactants as realize kind your next kind it’s few we costs, still of the hedge as XXXX? early, one resident I on heads, of but lung, move change over you of we just know but couple thoughts just out A how months, it the would go I on

Rick Dierker

that Yes, it’s a or what of asked, I’ll bit with Steve fair question. start little A first. said

for a hedged to because much demand and really down. our layer not right to on in demand and going XX% XXXX game opinion those now markets we’re is it’s more hedges We’re

ethylene pricing Polypro commodities time HDPE is out. just that it’s said for some And – long we’re that’s and you down X%, from shows how oil is, February shake what is to XX%, down wait I’ll down for oil oil March. those large, give a but see just and So going spot is a long from flat, examples, But unless down X% we’ve is by stays to time. disconnected and

I when say long So months. time, six four to

tailwind, So to we see that wait could out. that a be but how plays have and

Bill Chappell

You to question as the guess half? we stores, malls for this? back kits, expecting than faster little the and marketing advertising are moving go may Georgia then vitamins, you it. as out others changing come people of have seeing on bit I you my is some be of heard trends just Got And a to state or near-term, some this to near-term Or just or kind kind weekend trends? it push or you – do pregnancy back just of it adjust really of regular it do be advertising of change some your the marketing some everything be towards

Matt Farrell

have Bill. question, be the of a messages recognizing contemporary behavior adjusting Yes, in very marketers all to marketing been great of in a change busy advertising. consumer all we have That’s Yes. our our in

circumstances the that things that they’re Now you blank, you these that consumer recognizes the are office, to the have can’t right in salon, go you fill to blank, dental go the fill in. communicate to can’t now the in to the that that

spend spending online the and our past. this been racing lot on going all digital messages changing than for more brands have of year because of a and think in to we’re consumers we’re percentage that media digital do to probably So we money, our we as a moving total of more we’ve

Bill Chappell

it. Got Thanks so much.

Matt Farrell

Okay, Bill.

Operator

you. Thank

from comes Mark Stifel. question Astrachan last with Our

is now line open. Your

Mark Astrachan

so good to on Thanks morning, just it Yes. much on how adoption, bigger ask and everybody. seems e-commerce wanted to touched I be. you

stores to and specifically online categories? opportunity how kind that do you are I far of of consumers companies on out business, going coming and think buying share, your much that how what’s your of would in and a online thus and your expectations on away seeing way capitalize key be on. we bunch What whole stay position that you from how think across about of do those especially

Matt Farrell

permanent in would a permanent online a It’s Yes, change. I step it’s say sales. up

and adopters, so a see big who have were had you not of Not late click sales also people collect, up a Do think requirements well. as is store pickup online in now discovered huge lot uptick? because home. purchased stay of online, buy quarantining just online to it and in I at but

all by have discovered these been So consumers.

So few a a and got of change years development I in permanent online that’s months of think we couple a for probably sales.

that’s So good.

XXXX, that probably well good How at Last a X%, a – of this look as In will target we’ll we had thing. of we that. our exceed we year, would X% online. sales had X%, year

So over a in years few think be in a the ourselves we’ve position of to I are. online formidable we and lot putting done a work last competitor

we So fine we’re where that with we’re that think happen. to should trend,

Mark Astrachan

Thank you.

Matt Farrell

[ph]. Steve Thanks,

Operator

would And now to you. closing today’s Thank back any I for like conclude does the session. hand management that to question-and-answer call remarks.

Matt Farrell

going a great I forward. think Yes, we’re in position

sheet, balance strong a of lots well and in As terrific we’re well everybody I to again perform cash, we’ll bad, August. in in and got coming good what’s times talk we positioned earlier, brands said and we’ve for

Operator

Ladies participating for and you gentlemen, today’s conference. thank in

disconnect. now may You

Church & Dwight (CHD) 30 Apr 202020 Q1 Earnings call transcript